Unnatural aristocrats

CLOSELY tracking the Shanghai Composite Index in its downward slide in August was the reputation of China’s government for consistency, competence and even common sense. Worse, its hapless response to the bursting of a stockmarket bubble, which its own propaganda had helped to inflate, was only one of a number of bungles. It mismanaged a modest devaluation of its currency, the yuan. And a catastrophic explosion in the northern port city of Tianjin revealed appalling lapses in the enforcement of regulations. All governments make mistakes. But China’s bases its legitimacy on its performance rather than a popular mandate. Now foreigners and citizens alike are asking whether the Chinese authorities have lost the plot.

Despite the rash of bad news, the Chinese Communist Party can still boast more than three decades of success in fostering spectacular economic growth and in raising China’s global standing. A few rough weeks do not give the lie to “the China model”—in which authoritarian one-party rule is said to be justified because it produces the social order and wise leadership that beget economic growth. Supporters of this idea like to point to the...

from The Economist: China http://ift.tt/1OcyTcy

Euregas!

ITALY’S state-controlled oil and gas company, ENI, has been in Egypt since it signed deals with Gamal Abdel Nasser, the country’s then dictator, in 1954. Now one of the world’s biggest oil firms and the largest foreign oil and gas producer in Africa, ENI said on August 30th that it had discovered a vast gasfield off the Egyptian coast. The Zohr field is thought to contain 30 trillion cubic feet of gas, equivalent to 5.5 billion barrels of oil. If so, Zohr will almost double Egypt’s reserves, and be the largest gas discovery in the Mediterranean. More may be found on further exploration.

The find is a boon for ENI at a time of plunging oil prices, and for Egypt, which has gone from being an exporter to an importer of gas. It may prove positive for other energy firms operating in Egypt, though it undermines Israel’s plans to develop its own fields and export gas to its neighbour.

Claudio Descalzi, ENI’s boss, says the discovery vindicates the firm’s strategy of focusing on developing markets in which it has long been present, and on conventional production rather than newer methods such as the fracking of shale beds. He...

from The Economist: Business http://ift.tt/1OcAfnw

Univision’s blurry picture

Entertaining the masses in Spanish

THE strongest selling-point for Univision is that it is the most popular Spanish-language broadcaster in America, where the Hispanic population is young, 57m-strong and growing. However, the company is heavily in debt, and losing both money and viewers. What is more, it is going for an initial public offering at a time when shares in several of America’s main English-language broadcasters are being savaged, amid worries about the future of the television business, not to mention general stockmarket turmoil.

The company’s flagship Univision network is available in 92% of Hispanic households in the United States. With its mix of telenovelas and other light entertainment, it has 13 of the country’s top 20 prime-time shows in Spanish. The group’s Univision Deportes network is the most-watched Spanish-language sports channel on cable, and it has local television stations in most of America’s biggest markets.

However, a leveraged buy-out in 2007 led by Haim Saban, an American-Israeli entrepreneur, has left it with so much debt that it struggles to turn a profit. It now owes $10....

from The Economist: Business http://ift.tt/1NcGieJ

Kicking the Apple addiction

INSIDE an obscure warehouse in the southern Chinese city of Shenzhen, the robot revolution is under way, but it is far from glamorous. The test lab is hot, steamy and a bit dusty. Dozens of giant, aquamarine-coloured units are whirring and gyrating in patterns designed to test their endurance as they do polishing, machining and assembly. And forget about artificial intelligence: these tireless drudges will not move autonomously or learn by doing.

“We are a business,” explains Day Chia-Peng of the robotics group at Foxconn, the contract-manufacturing arm of Hon Hai of Taiwan. And his frugal bosses will not pay for his team to make flashy kit that does not add value. Foxconn says it already has more than 30,000 robots in use, including thousands at a factory in Chengdu that has fewer than 100 workers. Besides making bespoke robots in-house, the firm has also invested $118m in a division of Softbank, the Japanese firm that makes Pepper, an advanced automaton (pictured).

The push into robotics as a producer, not just a user, is just one part of Hon Hai’s strenuous attempts to diversify. Foxconn is so good at high-quality, high-volume...

from The Economist: Business http://ift.tt/1NcGfjk

Faster, cheaper fashion

STAFF line a wide aisle, cheering. Blue balloons bob in anticipation. Then the doors open and throngs of women rush in, clutching shopping bags to gather up their bounty—dresses, jumpers, shoes and other treasure. The scene, captured in a video of a store opening in France last year, is common for Primark—the company dubs such exuberance “Primania”. The Irish retailer, owned by Associated British Foods (ABF), now sells more clothes than any other retailer in Britain. In 2006 Primark opened its first store in Spain. Since then it has marched steadily across the continent, establishing outposts in the Netherlands, Portugal, Germany, Belgium, Austria and France. Sales rose by 150% between 2009 and 2014, making Primark a new force in the global rag trade (see chart).

Now the retailer is plotting its boldest invasion. On September 10th it will open its first shop in America, the world’s biggest clothing market. Boston will...

from The Economist: Business http://ift.tt/1OcAdw2

You have waked me too soon…

BRITAIN’S health department calls it “the silent killer”. Others have labelled it “the new smoking”. Lack of physical activity has crept up the list of global causes of death to fourth place, after high blood pressure, smoking and high blood sugar—not least because it helps waistlines expand.

Even a little exercise has a huge health effect, whether or not people shed their extra pounds. Research presented on August 30th at a cardiology conference in London suggests that walking fast for 25 minutes a day can buy three to seven years of extra life. A bigger study by a team at Cambridge University tracked 300,000 Europeans over 12 years, and found that a brisk daily 20-minute walk, or the equivalent, cut the annual death rate for people of normal weight by a quarter, and for the obese by 16%. Getting everyone sedentary to do this would save twice as many lives as ending obesity, says Ulf Ekelund, the lead researcher.

Walking 20 minutes a day falls just short of the minimum exercise that the World Health Organisation (WHO) recommends. Adults, it says, should do at least 150 minutes weekly of moderate exercise, such as walking...

from The Economist: International http://ift.tt/1hXfZwt

Streetwise

AT 6am on a sweltering Sunday the centre of Gurgaon, a city in northern India, is abuzz. Children queue for free bicycles to ride on a 4km stretch of road that will be cordoned off from traffic for the next five hours. Teenagers pedal about, taking selfies; middle-aged men and women jog by. On a stage, a black-belt demonstrates karate; yoga practice is on a quieter patch down the street. Weaving through the crowd dispensing road-safety tips is a traffic cop with a majestic moustache.

Gurgaon’s weekly jamboree is called Raahgiri, (“reclaim your streets”). Amit Bhatt of EMBARQ, a green think-tank, started it in 2013, inspired by Bogotá’s ciclovía, pictured above, for which Colombia’s capital closes 120km of streets on Sundays and holidays. Such events are part of a movement that is accelerating around the world.

From Guangzhou to Brussels to Chicago, cities are shifting their attention from keeping cars moving to making it easier to walk, cycle and play on their streets. Some central roads are being converted into pedestrian promenades, others flanked with cycle lanes. Speed limits are...

from The Economist: International http://ift.tt/1hXfX7S

A charge that sticks

The road to dusty death

THE widespread use in recent years of nets, insecticides and new drugs has helped to bring malaria under a measure of control—but evolution is constantly pushing back by generating resistant strains of both the parasite that causes the disease and the mosquito that spreads it. Even resistant mosquitoes, however, can take only so much chemical abuse, and Marit Farenhorst, a researcher at In2Care, a Dutch mosquito-control firm, and her colleagues think they have devised a way to dish out more of it.

Their method, as they report in the Proceedings of the National Academy of Sciences, is a version of the party trick of making a balloon stick to a wall by imbuing it with static electricity. Substituting mosquito nets and insecticide particles for walls and balloons, Dr Farenhorst believes, yields a way of delivering more, and more diverse, insecticides, and really making them stick where they are needed—on the cuticle of the target insect.

Current mosquito nets are woven from fibres impregnated throughout with an insecticide. This permits them to be washed and used...

from The Economist: Science and technology http://ift.tt/1KtFEZY

What Europe means to the young

IT IS Sunday night at the rooftop bar of the Wombat’s Hostel in Berlin and the tequila is starting to flow. But there is still time for a quick chat about the European Union’s common agricultural policy. Drew, a sparky 20-year-old University of London student, cannot abide the “mad” subsidies the EU pays to its farmers. “In many ways,” he adds, “I’m an anarchist.” And yet he thinks Britain would be foolish to vote to leave the European Union in the referendum the government will hold by the end of 2017.

Drew and his 19-year-old girlfriend Emma, like millions of young Europeans before them, are spending the summer in a carefree haze of travel and fun, the fruits of the freedom afforded by an Interrail pass. Launched in 1972 to mark the 50th anniversary of an international rail industry group, Interrail was a single ticket that granted access to a large part of Europe’s rail network, turning much of the...

from The Economist: Europe http://ift.tt/1hXdWbD

Sprechen Sie power?

SUCH was the status of German in the 19th century—for Europeans generally and for Jews in particular—that Theodor Herzl, the founder of Zionism, once proposed making it the official language of a future state of Israel. In the event, devotees of Hebrew won out. After the Holocaust, German was particularly despised. But times change. Israeli 14- to 15-year-olds going back to school after the summer holidays now have the option of German as a foreign language for the first time at five public schools, to be followed by more.

German is also becoming popular among adult Israelis, and not only the more than 20,000 who have moved to Berlin in recent years. This reflects a broader shift in perceptions. Fifty years after Germany and Israel established diplomatic relations, 70% of Israelis have a positive view of the country, according to a poll by the Konrad Adenauer Foundation, a German think-tank. Many find Germans honest and trustworthy. With the possible exception (at least lately) of Greece, people elsewhere agree, polls show.

This suggests a big gain for Germany in “soft power”. Joseph Nye of Harvard University, who coined the term in...

from The Economist: Europe http://ift.tt/1JDNUD6

Waiting for the train

Armoured warfare on the eastern front

THE hills surrounding Walbrzych, an old mining town in south-west Poland, have been a hive of activity since two men claimed last month to know the underground whereabouts of a train missing since the second world war. According to legend, the Nazis dispatched it laden with gold from the then-German city of Breslau (now called Wroclaw and in Poland) farther west in the final months of the war. It then apparently vanished near Walbrzych.

Locals are used to false alarms. The train has nonetheless become a national matter. Piotr Zuchowski, deputy minister of culture, says he is “over 99% certain” that the train has been found. He is less certain about its contents. They could include military equipment or archives.

The train has also stirred up memories of wartime loss and looting. The World Jewish Congress calls for any items stolen from Jews to be returned to their former owners or heirs. If none can be found, the gold should go to other Polish Holocaust survivors, who have “never been adequately compensated”, the congress says.

Russia could yet get involved. Some speculate that the train...

from The Economist: Europe http://ift.tt/1hXdVo9

From protest to power

Build your mosque somewhere else, says Mr Nauth

THE neat rows of polished headstones and potted geraniums in the municipal cemetery of Mantes-la-Ville speak of fresh memories and civic diligence. Yet the solemn calm masks its place in a sour struggle following the election as mayor 18 months ago of Cyril Nauth from the National Front (FN), France’s far-right party.

Previously run by Socialists and Communists, Mantes-la-Ville long supplied workers for a giant power station and car factories on a stretch of the Seine valley between Paris and Normandy. Today the industrial certainties of the past have given way to disquiet, and to votes for xenophobes. The new mayor’s preoccupation is stopping local Muslims, who make up an estimated third of the town’s population, from buying a disused tax-collection office, which sits next to the municipal cemetery, to turn it into a mosque.

“Lots of people are hostile,” declares Mr Nauth, a 33-year-old teacher with the cautious manner of a political novice. “They understand the right to a place of worship,” he says. “But they don’t want it near them.” Instead, he proposes to...

from The Economist: Europe http://ift.tt/1hXdTfX

Ruffians in Rome

ON AUGUST 27th the coastal district of Rome, with a population of around 230,000, became the biggest administrative unit in Italy to be put under direct government control because of mobster subversion. The chairman of its council had been arrested in June, accused of chumminess with a band of alleged gangsters who will be put on trial in November. Prosecutors claim that they developed corrupt ties involving politicians and officials not only in Ostia, Rome’s recreational port and playground, but in other parts of the city too. The overall council for the metropolis only narrowly avoided being disbanded on grounds of infiltration by mafiosi.

For years Italians had assumed that although Sicily and much of the south were prey to the mafia, their beautiful capital was much less vulnerable: the last criminal syndicate to win notoriety in Rome was the so-called Banda della Magliana in the 1970s and 1980s. Recent events have shown that comforting vision to be wrong on two counts. Italy’s southern mafias have been quietly building stakes in the capital’s economy, and Rome has been revealed to host an autonomous underworld more...

from The Economist: Europe http://ift.tt/1JDNSv4

Our turn to eat

ON STREET duty in Amsterdam, a 35-year-old Dutch police officer bemoans four years without a pay rise. “The economy is picking up, the rich are getting richer and yet we at the police continue to suffer,” he says. Unhappy with new terms offered by the government (a salary increase of 5% over two years along with a possible pension cut), members of the national police union plan to stop all but essential work on September 15th and besiege government offices on the 16th.

European workers are having a decidedly discontented summer. Calls for higher wages are picking up as they sense a recovery. Airport staff in Spain, dock hands in France and crèche employees and train drivers in Germany have been on strike. More are likely to follow. In Germany the number of workdays lost to industrial action has gone up from 156,000 last year to about 1m already this year.

Maarten Keune, a labour-market expert at the University of Amsterdam, detects a feeling throughout austerity-hit Europe of “being owed”. He says, “Before the downturn people were told wages had to stay low to stimulate exports, then came the crash so wages continued...

from The Economist: Europe http://ift.tt/1hXdV7K

Travels through a mindscape

WHEN Oliver Sacks was asked his profession, he often replied “Explorer”. He did not mean this in the geographical sense. As a boy he had devoured Prescott’s books on the conquests of Mexico and Peru; as a young man he had travelled by foot, train and motorbike the length and breadth of North America. But what became an obsession with him was to climb inside the brains of his patients. He chose specifically those with right-hemisphere disorders; and, having reached those “furthest Arctics and Tropics”, slipping on ice or hacking through the unimaginable, near-impenetrable jungles of the self, he would then describe in extensive and sympathetic detail the world as it appeared from there. So compelling was this urge that even when teaching, as a professor of neurology at Columbia and NYU, and even when in great demand on the lecture circuit, he retained his ordinary medical practice in order to keep exploring.

Over the years he accumulated stacks of clinical records, abundant with every detail of the quirks and tribulations of his patients. He often wrote late into the night, monkish in his solitude. Hundreds of articles and essays, 13 books and (...

from The Economist: Obituary http://ift.tt/1Fligq2

Being Franzen’s friends

Purity. By Jonathan Franzen. Farrar, Straus and Giroux; 576 pages; $28. Fourth Estate; £20.

“THE reader is a friend, not an adversary, not a spectator,” Jonathan Franzen, an American novelist, has said. Following this rule, he has written two exceptional books that bring readers deep into the lives of troubled Midwestern families. “The Corrections”, about grown-up children home for Christmas, won a National Book Award in 2001, and “Freedom”, about a troubled marriage in the George Bush era, was even more emotionally deft and haunting.

“Purity”, his latest novel, follows a now-familiar formula, tracing the interlocking lives and personal musings of a cast of broken characters. The protagonist Pip, whose real name is Purity, is a lost young woman with $130,000 in student loans, searching for the identity of her father. Like Pip in Dickens’s “Great Expectations”, she evolves from innocent to worldly wise through a novel full of twists and unlikely coincidences. Pip moves from Oakland to Bolivia to be an intern for Andreas Wolf, a German internet activist who runs the Sunlight Project, a...

from The Economist: Books and arts http://ift.tt/1hDep1Y

Net worth

Herring Tales: How the Silver Darlings Shaped Human Taste and History. By Donald Murray. Bloomsbury Publishing; 272 pages; $26 and £16.99.

THE herring is hardly the grandest of fish, but as a cheap source of protein it is hard to beat, and herring-fishing was a way of life for many communities around the North Atlantic from the Middle Ages up to the 20th century. Trade in the fish made merchants wealthy. In Scotland herring are known as “the silver darlings”; in Norway they are called, even more lovingly, “the gold of the sea”.

A new account of the herring industry by Donald Murray, a journalist and poet, has almost as many facets as his slippery subjects have scales. His tale offers fillets of history, culture and zoology, with an emphasis on the eclectic—not to say wilfully eccentric. Yet his approach faithfully reflects our relationship with Clupea harengus, which has never been straightforward.

Part of the herring’s attraction for mankind lies in its sociability. It forms vast shoals, a trail of silver below the ocean’s surface that is irresistible for fishermen. But this is...

from The Economist: Books and arts http://ift.tt/1hDenqS

The arc of history

The Gay Revolution: The Story of the Struggle. By Lillian Faderman. Simon and Schuster; 816 pages; $35 and £25.

OF THE quarter of a million people who massed in Washington, DC, on August 28th 1963 to hear Martin Luther King proclaim “I have a dream”, few would have noticed—much less known what to make of—the six white men who stood in the crowd with signs identifying them as members of the “Mattachine Society”. One of them surveyed the vast ocean of faces and later asked his fellows, “Why aren’t we gays having civil-rights marches too?”

With gay Americans’ astonishing strides in the past decade, it is easy to forget that just a half-century ago the very notion of gay or transgender civil rights was as strange to most Americans as black civil rights had been a century earlier. Until the early 1960s government employees were fired for being homosexual, and the American Civil Liberties Union generally sided with the government. The few “homophile” organisations took deliberately obscure names; Mattachine was supposedly a French medieval secret fraternity.

Lillian Faderman’s new book, “The Gay Revolution...

from The Economist: Books and arts http://ift.tt/1LXlcks

East meets West

• 
  Desk on stand by José Manuel de la Cerda. Lacquered and polychrome wood with painted decoration

  Source: Museum of Fine Arts, Boston/ Hispanic Society of America, NY
• 
  “Southern Barbarians Come to Trade” by Kano Naizen. Japanese, Edo period, c.1600. Ink and gold leaf on paper

  Source: Museum of Fine Arts, Boston
• ...

from The Economist: Books and arts http://ift.tt/1hDenak

Drugs that live long will prosper

WHATEVER ails you, if you have to take two pills a day for it instead of one, you can blame metabolic clearance. Before they can get busy, drug molecules must run a biochemical gauntlet as the body’s machinery tries to break them down. As a result, much of what is in a pill may be excreted in useless pieces before it has had a chance to work its wonders.

Last month, though, America’s pharmaceutical regulator, the Food and Drug Administration, received a request to approve a drug, currently called SD-809, that could change this. SD-809 is intended to treat the palsy caused by Huntington’s chorea—a rare and terrible genetic illness. If approved, it will open the gates for a new type of drug that, thanks to a few well-placed atoms of a variant of hydrogen called deuterium, is able to evade metabolic clearance, and thus remain active longer.

An atom’s chemical properties are determined by its electrons, which interact with those of other atoms. Those electrons are equal in number to the protons in an atom’s nucleus (electrons are negative and protons positive, so the atom’s overall charge is zero), and this number in turn defines an atom’...

from The Economist: Science and technology http://ift.tt/1PNytdh

Punishingly profitable

The South’s other megachurches

Billion Dollar Ball: A Journey Through the Big-Money Culture of College Football. By Gilbert Gaul. Viking; 272 pages; $27.95.

OUTSIDE the United States, university is where you study. But for thousands of supersized American males, it is where you go to run into other men of similar proportions like particles in the Large Hadron Collider. College football has been a cornerstone of American sports culture for over a century, and inspires nearly religious fervour in the Deep South. In recent years critics have accused American universities, which together earn $10 billion a year in athletic revenue, of exploiting an unpaid labour force. Moreover, numerous players have filed lawsuits demanding a piece of the pie. In “Billion Dollar Ball” Gilbert Gaul, a journalist, eschews these criticisms in favour of a more fundamental angle of attack: that running such large entertainment businesses is incompatible with the core task of universities.

Mr...

from The Economist: Books and arts http://ift.tt/1LXlcki

Slippery customers

THE flip side of evolution is extinction. The fossil record is replete with groups, once mighty, that are no more. But sometimes the Darwinian reaper misses a species or two within such a group and these, the last of their kind, cling on to existence to remind the world of the way it once was.

The coelacanth, a fish from the Indian Ocean; the tuatara, a reptile from New Zealand; the pearly nautilus, a tentacled mollusc of the tropical seas—all are “living fossils” of this sort. And so is Trichoplax, a flat, sheet-like creature about half a millimetre across that is the only known member of a phylum called the Placozoa. This species seems little changed from the Ediacaran period, before the Cambrian explosion of animal life.

The Ediacarans are a mystery, not least because none of those known from fossils has any sign of a gut, or any other obvious way of feeding itself. But a study of Trichoplax, just published in PLOS One, by Carolyn Smith of the National Institute of Neurological Diseases and Stroke, in Bethesda, Maryland, and her colleagues, may explain how they...

from The Economist: Science and technology http://ift.tt/1PNyvBF

Bloodied brothers

Not in God’s Name: Confronting Religious Violence. By Jonathan Sacks. Hodder & Stoughton; 305 pages; £20. To be published in America in October by Schocken; $28.95.

THE Western world is less and less capable of offering any coherent spiritual alternative to the grim certainties of the terrorist groups which commit atrocities in the name of religion. That stark warning comes as a shock in the final pages of a book by a former chief rabbi of Britain whose earlier chapters have addressed, with diligence and sensitivity, an old conundrum. The puzzle that Lord Sacks sets out to solve is why a broadly similar set of narratives and role-models (in this case, the patriarchal figures shared by the Abrahamic faiths) can in some circumstances inspire compassionate humanism, and in others terrible and destructive sectarian hatred.

In an intelligent analysis of old and new connections between religion and violence, he dissects stories like those of Cain and Abel, Isaac and Ishmael, Esau and Jacob, and of course, Abraham himself. He tackles this task with the tenderness of a believer and the...

from The Economist: Books and arts http://ift.tt/1LXlc3Y

Drawing the line

OCEAN fishermen are constantly on the lookout for new places to ply their trade, as they exhaust the old ones. Thus, in the 1970s, Europe’s trawlermen turned to the deep seabed of the north-east Atlantic to replace the shallow continental-shelf fisheries closer to home that they had stripped near-bare.

But those replacement grounds, too, are not what they were. A study published in 2009 suggested that in all but the deepest of their waters—those with a seabed closer than 1,500 metres to the surface—yields had dropped by 70% over 25 years. Even in the abyss below that depth, the fall was 20%. To try to stem this decline the European Union, which regulates fishing in much of the area, is proposing to limit the depth at which trawling can take place. This would, in effect, create a marine reservoir below that level, a form of protection additional to the system of species-specific quotas that already exists. The question is where the line below which trawl-gear is forbidden should be drawn. And, until now, there have been few scientific data to inform that decision.

This has just changed, however, with the timely publication, in...

from The Economist: Science and technology http://ift.tt/1KtFC4d

A tax on the poor

AFTER sweating through a day’s work under the hot Dubai sun, the last thing an Indian construction worker wants is to donate a slug of his earnings to a bank or money-transfer outfit. Yet that is what he must do. On average, 6.9 cents of every dollar remitted to India from another country is eaten up by fees and foreign-exchange margins, according to the World Bank. Indians get off relatively lightly. A sub-Saharan African migrant loses an average of 9.7 cents.

In 2009 the G8 pledged to cut the average cost of international remittances to 5% of the sum sent within five years. Rates have since come down, but not by much: the average is now 7.7%. And the implicit tax on remittances is even higher than these figures suggest, since they are based on transfers of $200, but many payments are smaller.

In part, Dilip Ratha of the World Bank blames the exclusive agreements signed by banks and other companies involved in handling remittances. By reducing competition, these keep prices high. Some countries, including India, have banned such tie-ups, but they remain common in Africa. In 2014 the Overseas Development Institute, a think-tank,...

from The Economist: Finance and economics http://ift.tt/1UpfNqL

Like manna from heaven

From Arabia with love

“GULF house”, says Dinesh Kumar every few seconds, gesturing out of the window of a car as it drives through Vennicode, in south-west India. His commentary is hardly necessary. The new houses, built with money sent home by people working in Dubai, Oman and other Gulf countries, flash like gold teeth in this backwater village surrounded by coconut palms. Vennicode has a brand new private school, too, as well as huge advertisements for jewellery shops and much more traffic than its narrow roads can handle. It is a tribute to emigration.

Last year India received $70 billion in remittances—more than any other country in the world. The state of Kerala, where Vennicode is located, got far more than its fair share. A comprehensive household survey organised by Irudaya Rajan of the Centre for Development Studies, a local academic institution, finds that 2.4m Keralites were living and working overseas in 2014. The money they send home is equivalent to fully 36% of the state’s domestic product. “For all practical purposes, it’s a remittance economy,” says C.P. John of the state government.

Economic migration has...

from The Economist: Finance and economics http://ift.tt/1fXets4

With great power

WELCOME back from the holidays. After suffering their worst month in more than three years in August, American equities again fell sharply on September 1st, along with shares in Europe and Japan. This sudden bout of turmoil owes much to doubts about the continuation of two great economic experiments. And it also reflects the aftermath of a huge philosophical change about the role that governments should play in the markets.

The first experiment is the Chinese attempt to shift their economy away from an investment- and export-led model towards one based on consumption. The Chinese are also grappling with the consequences of a debt-fuelled boom and with the effect of volatility in their property, equity and currency markets. Many investors fear they will be unable to manage this transition successfully, and the impact on other economies (a sharp fall in South Korea’s exports, disappointing second-quarter growth in Australia) is becoming clear.

Quantitative easing (QE) in the developed world is the other great experiment. Holding down bond yields may have prevented the financial crisis from turning into another Depression. But interest rates have been at rock-...

from The Economist: Finance and economics http://ift.tt/1UpfNak

Inflated claims

AS THE world’s biggest exporter, China dominates global shipments of everything from smartphones to sofas. Recently, attention has turned to another Chinese export that appears to be washing up on distant shores: deflation. China’s producer-price index (PPI) has been falling for 41 months straight. Economic growth is slowing; many Chinese industries are suffering from overcapacity; its ravenous appetite for commodities is waning. All that slack must surely be putting downward pressure on prices across much of the world.

It is not the first time that China has been accused of exporting deflation. Before the global financial crisis, China’s impact on world prices seemed a good thing, making televisions and fridges more affordable. Now, it is seen as baleful. The worry is that anaemic inflation is hurting the world economy. Consumers have less incentive to spend, companies have less reason to invest and debts, fixed in nominal terms, remain onerous.

Yet several studies show that China was never quite the deflationary force that it was said to be before the crisis—or at least that it caused both inflation and deflation. By...

from The Economist: Finance and economics http://ift.tt/1UpfNac

Emerging troubles

IN THEORY, HSBC and Standard Chartered, two British banks with large Asian operations, are still mulling whether they should relocate their headquarters somewhere east of Suez. Given the turmoil that has afflicted emerging markets in recent weeks—and a useful tax break from the British government—few now expect the duo to decamp. Having been celebrated by investors for global networks spanning the likes of China, India and Brazil, banks are now being punished for them.

Emerging markets boomed partly on the back of cheap funds that Citigroup, HSBC, StanChart and others helped shovel their way—a flow now operating in reverse. Bankers battled to lend money to firms digging mines, erecting skyscrapers and building factories on the assumption that growth in China would never falter.

Those loans look less canny now that China’s slowing economy and tumbling commodity prices have dimmed the currencies and prospects of many emerging markets. A few customers will undoubtedly default, starting with firms which borrowed in dollars but relied on income in ringgit, rand or rupiah to meet repayments.

Loan losses are starting to creep up. StanChart,...

from The Economist: Finance and economics http://ift.tt/1fXesVc

Dope springs eternal

A new opium for the people

ROBIN DOUGLAS apologises for not putting on his shirt while giving a sermon to a parishioner via Skype. His listener doesn’t mind; she doesn’t feel well enough to drive the hour from her home to the Church of the Holy Smoke in White Rock, a seaside town near Canada’s border with the United States. So she gets his rambling advice via a laptop.

Even in the Vancouver area, mocked by Canadians from elsewhere as a nest of decadence, Pastor Douglas, as he calls himself, leaves nobody indifferent. His parish office is a wooden house with hand-written signs at the front and old pizza boxes inside. His central place of “worship” is a tatty tent; the main liturgical practice is smoking marijuana.

The rich folk who share the beach-front rejoiced in midsummer when the council told him to fold the tent and put an end to the smoke, garbage and noise. He is unrepentant. “We are a church,” he insists. “We do good works, we help cancer patients with free marijuana. I could be a millionaire if I sold it.”

How strong is his legal case? Canadian courts, like American ones, have been asked...

from The Economist: The Americas http://ift.tt/1NcFwyv

Still in business

FINANCIAL markets started September as they ended August, with share prices falling and investors fretting about China’s cooling economy. The latest sell-off was triggered by a survey of Chinese purchasing managers which suggested that manufacturing had contracted in August. Nerves were further pinched by grim data on exports from South Korea, on manufacturing from Taiwan and on growth from Brazil. Rich countries are also affected: GDP in Australia, a big exporter of raw materials to China, slowed almost to a standstill.

Amid the misery in emerging markets, one economy stands out for its comparative resilience. Figures released at the end of August showed that GDP rose by 7% in the second quarter, year on year. India’s official growth rate is thus on a par with China’s and much stronger than that of trouble spots such as Brazil, Russia and South Africa (see chart).

As in China, the GDP figures probably overstate how well the economy is doing (in India’s...

from The Economist: Finance and economics http://ift.tt/1fXesEL

Not so serene

“I AM completely calm,” declared Otto Pérez Molina, stoutly, at a press conference on August 31st. He was referring to the corruption allegations he faced. By the next evening, he had much less reason to be sanguine, because the country’s lawmakers voted to end his immunity from prosecution. Hours later, he was barred from leaving the country; then an arrest warrant was issued, and he resigned.

Mr Pérez becomes the first leader of Guatemala to be forced out of office and made to face legal proceedings because of sleaze. For anti-corruption campaigners throughout Latin America, the news was a rare and sweet breakthrough for the principle that holders of high office must be held to account like everybody else. In Guatemala, a land which is still riven by social divisions and demands for justice after a long civil war which ended in 1996, street protesters cheered enthusiastically.

The president stands accused of involvement in “La Línea”, a scheme named after the hotline it used, in which customs officials are alleged to have accepted kickbacks in exchange for reducing the import duties companies were required to pay.

Allegations linking the president to La Línea are not new. Congressmen had already voted once before on removing Mr Pérez’s immunity, but supporters of the move did not reach the two-thirds threshold required by the constitution. On...

from The Economist: The Americas http://ift.tt/1OcyOpl

Desperate times, desperate moves

WHEN a president has single-figure approval ratings, faces calls for her impeachment, and has lost control of her political base, is she in a position to play hardball with the country’s legislators? Brazilians will soon find out.

On August 31st Dilma Rousseff, their president, sent Congress a budget for 2016 with a gaping primary deficit (before interest payments) of 30.5 billion reais ($8 billion), or 0.5% of GDP, challenging its members to close the gap. It was a break with the sound-money practices that have underpinned Brazil’s economy. It was, some critics say, illegal. Certainly nothing similar has happened since at least 2000, when Fernando Henrique Cardoso, then the president, transformed public finances.

On a charitable view, Ms Rousseff was shocking legislators into making hard decisions rather than simply blocking her fiscal proposals. A harsher reading is that she does not know how to lead...

from The Economist: The Americas http://ift.tt/1NcFw1B

Clueless and immoral

TO UNDERSTAND how far South Africa has strayed from Nelson Mandela’s legacy, one need only peruse the latest foreign-policy paper drafted by grandees of the ruling African National Congress (ANC). The fall of the Berlin Wall, it reads, marked not the freeing of captive nations in Europe but a regrettable triumph of Western imperialism. The pro-democracy protests in Tiananmen Square in China were an American-backed counter-revolution. Russia’s invasion of eastern Ukraine is a conflict “directed from Washington”. America’s policies in Africa and the Middle East have “the sole intention” of toppling democratic governments. As “part of the international revolutionary movement to liberate humanity from the bondage of imperialism”, South Africa should seek to have American military bases thrown out of Africa.

If this were a spoof, it might be amusing. Yet the document is entirely serious: its contents are to be debated at the ANC’s policy conference in October. Its authors include several serving and retired cabinet ministers, including a former foreign minister. South Africa risks becoming a laughing-stock, not least in Africa itself.

When...

from The Economist: Leaders http://ift.tt/1L7lnUC

Costly cash

SUPPOSE there were a way of getting money to some of the world’s poorest people precisely when they need it. Suppose, too, that the flow hardly ever diminished, even during a global financial crisis. Finally, suppose the cash could not be creamed off by corrupt local officials. Surely every right-minded government in the world would want to encourage this and make it as cheap and easy as possible?

Alas, no. Remittances, the packets of money sent home by migrant workers from India, the Philippines and elsewhere, are individually tiny but collectively enormous. The World Bank estimates that flows to developing countries will be worth $440 billion this year—more than twice as much as foreign aid. And that is just the payments the bank can track.

The money earned from feeding toddlers, sweeping floors or writing code in richer countries brings all sorts of benefits when it returns home (see article). It eases poverty and boosts consumption. When poor families begin to receive remittances, they tend to yank their children out of menial jobs and send them to...

from The Economist: Leaders http://ift.tt/1KtFlOS

Tanks a lot

Greetings, now go home

EVERY city suffers some inconvenience for the sake of pageantry. The authorities in Beijing show little restraint in inflicting it. Residents are used to coping with road closures, car-use bans and the suspension of subway and bus services before large events. But aggravation related to the staging of a military parade through the city centre on September 3rd—the first in six years—went much further. Occupants of buildings overlooking the procession were told not to open windows or take photos, much less line the streets. Some hospitals stopped admitting new patients for the day, lest the movement of the sick disrupt that of the thousands of troops. Offices along the main route were told to shut for most of August. Flights to Beijing were subject to delays for an entire month while military aircraft trained for their flypast.

The biggest disruption resulted from efforts to ensure that Beijing’s ever-present smog gave way to what state media call yuebing lan, or “parade blue” skies. Outdoor barbecues (a popular Beijing cuisine) were shut down. Road transport fell by 35-...

from The Economist: China http://ift.tt/1KtgXwV

Parade’s end

AFTER weeks of market mayhem, it must have made a nice change for Xi Jinping, China’s president, to be reviewing ranks of smartly-dressed people who move in perfect synchronicity and do exactly what he tells them. Vast military parades may have gone out of fashion elsewhere, but Asian countries still like to strut their stuff. After displays of hardware and prowess in India, Pakistan, Russia and Taiwan this year, China held the most vainglorious march-past yet under clear blue skies (especially seeded for the purpose) in Tiananmen Square on September 3rd.

The event marked Victory Day, which was invented as a holiday only in 2014 to mark the end of the People’s War of Resistance against Japanese Aggression, as the years leading up to and during the second world war are known in China. It was China’s first large-scale military parade since 2009, the first to celebrate anything other than the Communist Party’s rule and the first involving foreign troops. But Mr Xi (pictured above) did not have to hold it. Such parades had always been reserved for the decennial anniversaries of the founding of the People’s Republic on October 1st 1949. This one...

from The Economist: China http://ift.tt/1ObOlFN

Merkel the bold

ANGELA MERKEL may be the most powerful politician in Europe, but she has rarely shown much inclination for bold leadership. Both in domestic politics and, especially, during the euro crisis, the German chancellor’s style has been one of cautious incrementalism. She has eschewed sweeping visions, put off decisions whenever possible and usually reflected, rather than shaped, public opinion. The European Union has paid a heavy price for her small-bore instincts, not least because they made the euro-zone crisis deeper and more protracted than it needed to be.

Against that background, Mrs Merkel’s approach to Europe’s migrant crisis is remarkable. As throngs of Africans and Arabs turn Italian and Greek islands, and eastern European railway stations, into refugee camps (and are found dead in Austrian lorries), the chancellor has taken a brave stand. She has denounced xenophobes, signalled Germany’s readiness to take more Syrian refugees and set out a European solution to a politically explosive problem.

On August 31st Mrs Merkel issued a dramatic call to arms, warning that today’s refugee misery will have graver consequences for the future...

from The Economist: Leaders http://ift.tt/1JB8Ate

Trump’s America

“THIS country is a hellhole. We are going down fast,” says Donald Trump. “We can’t do anything right. We’re a laughing-stock all over the world. The American dream is dead.” It is a dismal prospect, but fear not: a solution is at hand. “I went to the Wharton School of Business. I’m, like, a really smart person,” says Mr Trump. “It’s very possible”, he once boasted, “that I could be the first presidential candidate to run and make money on it.”

When Mr Trump first announced that he was running for president, he was dismissed as a joke. A wheeler-dealer with lots of experience of reality TV but none whatsoever of elective office wants to be commander-in-chief? Surely, sophisticates scoffed, no one could want this erratic tycoon’s fingers anywhere near the nuclear button. But for weeks now he has led the polls for the Republican nomination, despite saying things that would have torpedoed any normal campaign. Americans are waking up to the possibility that a man whose hobby is naming things after himself might—conceivably—be the nominee of the party of Lincoln and Reagan. It is worth spelling out why that would be a terrible thing. Fortunately, the...

from The Economist: Leaders http://ift.tt/1N5kIHy

All fall down

PLENTY of countries run deficits. And when recessions occur, loosening the public purse strings makes sense for many of them. But Brazil is not most countries. Its economy is in deep trouble and its fiscal credibility is crumbling fast.

The end of the global commodity boom and a confidence-sapping corruption scandal, after years of economic mismanagement, have extinguished growth. Brazil’s GDP is expected to contract by 2.3% this year. Fast-rising joblessness, together with falling real private-sector pay and weak consumption, are squeezing tax receipts. Meanwhile rising inflation, allied to a free-falling currency, means investors demand higher returns on government debt. The result is a budgetary disaster. This year a planned primary surplus (ie, before interest payments) has vanished. Once interest payments are included, the total deficit this year is projected to be 8-9% of GDP.

Faced with the prospect of public finances slipping out of control, Brazil’s policymakers have stuck their heads in the sand. The 2016 draft budget sent to Congress this week by the president, Dilma Rousseff, builds in a primary...

from The Economist: Leaders http://ift.tt/1N5kIHr

The Trump in every leader

DONALD TRUMP cheerfully breaks all the rules of good leadership, as codified in management books and taught in business schools. The modern CEO is supposed to be a consummate team player, modest and self-effacing, committed to equality and diversity, good at handling risk and adept at dealing with the press. Mr Trump flies around in a private plane with his name emblazoned on it. He humiliates job applicants in his television show, “The Apprentice”. Four Trump-themed businesses have declared bankruptcy since 1991. He refers to women as “pieces of ass” and boasts about how well he gets on with “the blacks”. NBC and Univision have stopped broadcasting his “Miss USA” and “Miss Universe” competitions over his comments on Mexican immigrants. He has also faced a firestorm of criticism for his misogynist comments on a Fox News journalist, Megyn Kelly.

But is there a little bit of Mr Trump in all powerful people? This question kept occurring to your columnist while reading a new book, “Friend and Foe”, by Adam Galinsky and Maurice Schweitzer. The two academics are among the pioneers of a technique called “power priming”, that helps people feel more...

from The Economist: Business http://ift.tt/1UupYVT

Work to rule

EVERY few decades there is a sea change in the rules governing labour relations in the United States. In the 1930s Franklin Roosevelt shifted the balance of power towards labour. In the 1980s Ronald Reagan shifted it back towards employers. Two new legal rulings raise the possibility that the balance of power is changing again.

On August 27th the National Labour Relations Board (NLRB) ruled that Browning-Ferris Industries, a Californian recycling company, is the “joint employer” of people hired by one of its contractors, thereby obliging it to engage in collective bargaining with the Teamsters union. On September 1st a federal judge allowed a class-action lawsuit to proceed against Uber, a taxi-hailing service, in which three drivers argue they should be treated as employees.

The NLRB, which has a 3-2 Democratic majority, has been getting more assertive since 2011, when it issued a (still ongoing) complaint against Boeing for transferring an aircraft production line to a non-union factory. It is currently mulling a ruling that could define McDonald’s as a joint employer of staff in franchised restaurants. In June FedEx agreed to pay $228m to settle a court case brought by Californian drivers who complained of being misclassified as contractors. In the same month an Uber driver won a ruling from California’s labour...

from The Economist: Business http://ift.tt/1OaMtgp

Freedom force

Fighters in the Shadows: A New History of the French Resistance. By Robert Gildea.Belknap; 608 pages; $35. Faber & Faber; £20.

GUY MOQUET was just 17 years old when he was executed by firing squad in Nazi-occupied France. In a poignant letter to his family before his death in 1941, the young Communist résistant wrote: “My life has been short, I have no regrets, if only that of leaving you all. I am going to die…Mummy, what I ask you, what I want you to promise me, is to be brave and to overcome your sorrow.” Môquet swiftly entered French history as a Resistance martyr, and remains a potent symbol. In 2007, on the day of his inauguration as president, Nicolas Sarkozy vowed that Môquet’s farewell letter would be read out each year in every French high school.

That a Gaullist president should devote his first day in office to the memory of a Communist is a measure of how far the narrative of the Resistance continues to shape France’s sense of itself. Môquet, said Mr Sarkozy, embodied more than a patriotic belief in France: he showed that “the greatness of man is to dedicate himself to a cause greater than himself.” To this day, French history textbooks dwell on such Resistance heroes. Men in berets, rifles slung over their shoulders, have become in the collective imagination an emblem of the national...

from The Economist: Books and arts http://ift.tt/1EZtikG

Hydra-headed

The New Threat from Islamic Militancy. By Jason Burke. The New Press; 304 pages; $24.95. Bodley Head; £16.99.

ISLAMIC STATE (IS) poses a terrorist threat that is greater than any before or since the terrorist attacks of September 11th 2001, at least according to the British home secretary, Theresa May, speaking last November as she sought to justify extensive new counter-terrorist powers for the government. Barack Obama, also seeking greater powers to attack the group, made a similar assertion three months later: that IS threatens the American homeland itself. With the fall of Ramadi in Iraq and Palmyra in Syria in May, IS has shown that it is still on the march. How much ought the West to fear the self-styled “caliphate”?

Perhaps not as greatly as politicians make out, according to Jason Burke. In his latest book, “The New Threat from Islamic Militancy”, he usefully divides the dangers into three main sources, and readers may gain a degree of reassurance from each; so long, that is, as they are not living in the Middle East or parts of Africa.

Into the first category of threat fall the two main organised groups, al-Qaeda and IS. Much of the book consists of a detailed (if somewhat familiar) account of their history and progress. Al-Qaeda, Mr Burke rightly notes, has been constrained and degraded by punishing drone...

from The Economist: Books and arts http://ift.tt/1NCBPSJ

Blighting the horizon

The Silo Effect: The Peril of Expertise and the Promise of Breaking Down Barriers. By Gillian Tett. Simon & Schuster; 304 pages; $28.00. Little, Brown; £20.

WHY do organisations fail? Sometimes it is because their market or purpose disappears completely, as in the case of, say, video-rental shops. But often it is because as they grow, they lose the same innovative streak that made them a success. Like individuals, groups can become stuck in their ways, with fatal results.

In her new book Gillian Tett, a columnist with the Financial Times, blames silos for such failures to adapt. Through eight fables, Ms Tett argues that internal divisions and classifications, say, between doctors and surgeons, hold back creative thinking and encourage turf wars. Breaking them down can lead to innovation and, subsequently, success.

Take Sony. Having invented the path-breaking Walkman, a portable cassette player, in the late 1970s, Sony was one of the world’s foremost technology companies. Yet it fell behind during the transition to digital music,...

from The Economist: Books and arts http://ift.tt/1EZtfFB

Bones of contention

Ivory Vikings: The Mystery of the Most Famous Chessmen in the World and the Woman Who Made Them. By Nancy Marie Brown. St. Martin’s Press; 288 pages; $26.99.

IN 2010 an amateur Icelandic historian gatecrashed an international symposium on the Lewis chessmen, the greatest cache of medieval game pieces ever found. Gudmundur Thorarinsson, a chess-player (and an engineer by profession), hoped to convince the assembled scholars that the 92 walrus ivory pieces unearthed on the Isle of Lewis, off the west coast of Scotland, in 1831 were the work of a woman carver commissioned by a medieval Icelandic bishop. He was dismissed as a “nuthead”. Though no one really knows where the chessmen were made, the consensus of curators of the Lewis hoard held by the British Museum and the National Museum of Scotland is that they probably originated in Norway late in the 12th century.

Mr Thorarinsson’s theory, however, caught the eye of Nancy Marie Brown, an American who has written extensively on the Viking age. Alerted by the disparaging of medieval Iceland as a “scrappy place full of farmers”, she begged to...

from The Economist: Books and arts http://ift.tt/1NCBRtN

Ties that bind

The Story of the Lost Child. By Elena Ferrante. Translation by Ann Goldstein. Europa; 464 pages; $18 and £11.99.

NOVELS become literary blockbusters for many reasons. Some are created by mountains of marketing cash, some by media saturation. “Fifty Shades of Grey” and Harper Lee’s long-lost work, “Go Set a Watchman”, both fit this mould. Others are fuelled by something quite different, and their success is impossible to predict. In recent years “The Neapolitan Novels”, four volumes by an anonymous Italian author calling herself Elena Ferrante, have become a fictional juggernaut that not even the author’s English-language publishers, Europa Editions, saw coming.

Starting with “My Brilliant Friend”, which came out in Italy in 2011, the books focus on the lifelong attachment of two women from a tough Neapolitan neighbourhood. In America, where Ms Ferrante had a modest following, not much happened until 2013, when the translation was written up by James Wood, chief critic of the New Yorker. (Ann Goldstein, the translator, is an editor at the magazine.) By the time the...

from The Economist: Books and arts http://ift.tt/1EZtekV

Educating Aida

Good clean family fun

A BABY giggles as its headphones supply a critique on Japanese society to accompany a video of school girls whirling with phallic “moya-moya” sticks fashioned from imaginary heart tissue. The video installation is part of an exhibition at the Museum of Contemporary Art Tokyo that includes Makoto Aida, who has specialised for years in being offensive. Bizarrely, the show is intended for youngsters on their summer holidays, and is all the more provocative for that.

Mr Aida is often labelled sadist, racist and misogynist. An exhibition at the private Mori Art Museum in 2012-13 included a video of himself masturbating in front of the kanji characters for “beautiful young girl”. Another notorious work showed countless naked and bloodied schoolgirls being mashed up in a fruit blender. 

The artist usually demurs when asked what his works mean, but here he says his aim is to show a highly unusual family speaking in a blunt way, to encourage others. His wife, also an artist, and his son built some of the exhibits. Japanese mothers are mocked in a study of a Chanel-...

from The Economist: Books and arts http://ift.tt/1NCBQWO

The new rustbelt

IF YOU visit south-western Ontario and the Niagara peninsula you will see scenes of industrial decay. Steel mills, vehicle-parts factories and food processors sit abandoned, their car parks studded with tufts of grass. The region has the look of a rustbelt, and that has Canadians worried.

Manufacturing took a beating in the late 2000s and early 2010s, when high oil prices drove up the value of the Canadian dollar, making factories less competitive. But Canada should now be recovering from that bout of Dutch disease. The “loonie”, as Canadians call their currency, has been dropping along with oil prices. On August 25th it fell to its lowest level in a decade against the American dollar. That, plus the strong economy in the United States, the market for three-quarters of Canada’s exports, should have scraped off much of the rust.

So far it has not. Factory sales rose 1.2% in June, but were 3.1% below their level of a year earlier. The failure of manufacturing to respond to the tonic of a weaker currency is one reason why the economy probably contracted during the first half of 2015.

Now Canadians are starting to suspect that much of what they lost may never come back. In 2000 manufacturing accounted for 18% of GDP, not much lower than the share in Germany; by 2013 that had dropped to 10%, about the level in Britain and the United States. Factory...

from The Economist: The Americas http://ift.tt/1Kn7oOr

Plaguing paradise

Not how it looked in the brochure

SPEYSIDE on the island of Tobago has taken a direct hit. So have Skeete’s Bay, Bathsheba and other beaches on the southern and eastern coasts of Barbados. Cancún, a Mexican resort, has been struck. The bombardment takes the form of globs of sargassum seaweed which have landed on Caribbean beaches this year, forming piles that are sometimes metres deep. They emit a rotten-egg stench when they decompose, ruining holidays for anyone with a sense of smell. Hilary Beckles, the vice-chancellor of the University of the West Indies, calls it “the greatest single threat to the Caribbean economy I can imagine.”

There are more than 100 species of sargassum, possibly named after a Portuguese water flower. S. natans and S. fluitans spend their lives afloat and normally bother nobody. Buoyed by gas-filled bladders, they drift from nutrient-rich waters in the Gulf of Mexico into the Sargasso Sea.

They can be as friendly to marine life as a coral reef. Ten species of fish live only in sargassum...

from The Economist: The Americas http://ift.tt/1LDdYSu