Graduating from destitution

THE poor do not just lack money. They are also often short of basic know-how, the support of functioning institutions and faith in their own abilities. As a result, note Abhijit Banerjee and Esther Duflo of the Massachusetts Institute of Technology in their book, “Poor Economics”, published in 2004, it takes “that much more skill, willpower and commitment” for the poor to get ahead. No wonder escaping extreme poverty—usually defined as living on less than $1.25 a day—is so hard.

Even the most successful schemes to lift (and keep) people out of dire poverty seem to work only for some people, in some places, some of the time. For example, microcredit works best for the relatively enterprising, who are rarely the very poorest. Similarly, cash transfers linked to school attendance are useful, but require a working education system. What succeeds in one country may fail elsewhere, thanks to different conditions and cultural norms. And the poorest are often the hardest to help.

This dispiriting picture makes a new paper* by...

from The Economist: Finance and economics http://ift.tt/1Jymf8h

Rising penetration rate

For galoshes, size does matter

IT USED to be that condoms could be found in China only during business hours, at government family-planning clinics, on production of a marriage certificate. In recent years they have become far more readily available—in vivid and sometimes intimidating variety—alongside the chewing gum, cigarettes and crisps on offer at all-night convenience stores, in hotel rooms and in vending machines. Sales of biyuntao, literally, “pregnancy-avoidance sheaths”, are growing fast.

The name biyuntao, however, suggests why use of them is low in China compared with many other countries. Contraception is widely seen as a woman’s responsibility—indeed, abortion is one of the most common methods.

Open discussion of sex remains taboo in most quarters, making it difficult to raise awareness of how useful condoms are, not only to prevent pregnancy but also the spread of disease. Aditya Sehgal of Durex, a British brand, says about 10% of Chinese who potentially are sexually active are regular condom users. That is about the same proportion as in Hong...

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

Need a weatherman

ROW after giant row of wind turbines marches towards the snowy peaks of the Tian Shan range, harvesting energy from the air. On a blustery July day in Xinjiang in China’s far west, it is hard to stand upright beside the structures, each 90m (nearly 300 feet) high. China is better known as a land of coal and smog, but it is now increasing the generation of electricity from renewable sources faster than any other country, with more than 100 gigawatts a year of installed generating capacity from wind, a third of the world’s total (see chart). In future, wind power will be a vital source of renewable energy. If it can integrate large-scale wind generation into its electricity network, China will be an example for other countries.

By many counts wind generation in China is a success story. Over the past decade generating capacity has increased tenfold, while the cost of building wind farms has fallen. Three of the...

from The Economist: China http://ift.tt/1KBdRq3

Gutted

In happier times

WHEN Alina, a Moldovan student, had her bank card rejected by a cash machine last week, her first thought was to wonder whether the bank had quietly gone under. Happily, the cause was a fleeting technical glitch—but her reaction was not far-fetched. The country’s financial system is limping badly. In November, thieves stole $1 billion from Moldova’s three biggest banks through a series of fraudulent loans and transfers. Moldova, sandwiched between Romania and Ukraine, is the poorest country in Europe; the theft amounted to more than an eighth of GDP. It has set in train a series of events that will leave the government unable to pay salaries by the end of the summer, according to the recently departed finance minister.

The fraud left the three banks insolvent, so the National Bank of Moldova, the central bank, has taken them over, injecting 12.5 billion Moldovan lei ($660m) in new capital. It did not have such a sum to hand, however—it had to create it. The huge expansion of the money supply caused inflation to double to 8% and the currency to drop. It has fallen by 20% against the dollar this year...

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

Flightless

New dawn, gathering clouds

THERE is much to make investors jittery about Turkey. It is becoming ever more involved in the chaos in neighbouring Syria (see article). The Kurdish insurgency in the east of the country appears to have restarted. Politicians are still wrangling over a coalition after an indecisive election in June. The country may be in for a period of unstable, short-lived government or even a fresh election. Worse, Turkey has long been identified as one of the most vulnerable emerging markets, with slowing growth, a large current-account deficit and high corporate dollar-denominated debt. It is little wonder that the lira has been one of the world’s weakest currencies this year.

Fans of the Justice and Development (AK) party and its longtime leader (now president), Recep Tayyip Erdogan, like to boast of its stellar economic record since first forming a government in 2002. It is true that, after the bumpy 1990s and the humiliating bust of 2001,...

from The Economist: Finance and economics http://ift.tt/1Dd53nj

The vanishing surplus

The end of the festa

WHEN Brazil won an investment-grade credit rating in 2008, Luiz Inácio Lula da Silva, the then president, compared its earlier, junk-rated incarnation to a ne’er-do-well who spends twice as much as he earns, mainly on gambling and booze. Henceforth, the president crowed in typically folksy fashion, Brazil would be a respectable worker who “looks after the family”. Yet under Lula’s protégée and successor, Dilma Rousseff, Brazil risks falling off the wagon.

On July 28th Standard & Poor’s, a rating agency, said the country may lose its cherished status if it doesn’t sober up. The warning was precipitated by the government’s decision last week to lower its targets for primary surpluses (ie, before debt-service costs) for 2015-18. The goal for this year and next shrank from 1.1% and 2% of GDP, respectively, to 0.15% and 0.7%. The target for 2017 was cut from 2% to 1.3%, even though the IMF had recently suggested that it ought to go up to 2.5%. “The government seems to have thrown in the towel on the fiscal adjustment,” complains one investment banker. The other big rating agencies are expected to...

from The Economist: Finance and economics http://ift.tt/1Dd54I7

Rajan in chains

A FEW years ago, when Alan Greenspan was boss of the Federal Reserve, a central banker in Europe remarked how much he disliked it when he saw a headline such as “Greenspan cuts rates”. The Fed’s standing was hurt by such a personalisation of its policymaking, he explained. After all, it is actually all 12 members of the Federal Open Market Committee (FOMC) who decide America’s interest rates, not just its chairman.

In India the Reserve Bank of India (RBI) and its present governor, Raghuram Rajan, are as closely entwined in the popular mind as the Fed was with Mr Greenspan. Yet on July 23rd the government published an external commission’s draft of a new financial code, which would reduce Mr Rajan’s authority over interest rates. It proposes to set up a new monetary-policy committee (MPC) with seven members: four government appointees, the governor of the RBI and two other representatives of the central bank.

The proposal was immediately condemned as an assault on the RBI’s independence, but the reality is more nuanced. Unlike the Fed, the RBI is not technically independent. The governor has the authority to set interest rates...

from The Economist: Finance and economics http://ift.tt/1Dd536Z

Roaring ahead

IT IS a victory for the humble—for the investment equivalent of a puttering hatchback over a gleaming Porsche. The exchange-traded-fund (ETF) industry is now bigger than the more established business of hedge funds. Assets in the global ETF industry were $2.971 trillion at the end of June, according to ETFGI, a research firm, $2 billion ahead of the hedgies’ $2.969 trillion, as calculated by Hedge Fund Research (see chart 1). In 1999 the ETF industry was less than a tenth the size of its ritzier rival.

ETFs are pooled funds, quoted on stockmarkets, that are designed to replicate the performance of an asset class. They usually do so by tracking a benchmark such as the S&P 500 (for American equities). Once the fund is set up, portfolio changes are mechanical, responding to changes in the underlying benchmark. Funds can track almost anything from the gold price to commercial property. Some have extremely low expenses...

from The Economist: Finance and economics http://ift.tt/1Dd54HW

Graduating from destitution

THE poor do not just lack money. They are also often short of basic know-how, the support of functioning institutions and faith in their own abilities. As a result, note Abhijit Banerjee and Esther Duflo of the Massachusetts Institute of Technology in their book, “Poor Economics”, published in 2004, it takes “that much more skill, willpower and commitment” for the poor to get ahead. No wonder escaping extreme poverty—usually defined as living on less than $1.25 a day—is so hard.

Even the most successful schemes to lift (and keep) people out of dire poverty seem to work only for some people, in some places, some of the time. For example, microcredit works best for the relatively enterprising, who are rarely the very poorest. Similarly, cash transfers linked to school attendance are useful, but require a working education system. What succeeds in one country may fail elsewhere, thanks to different conditions and cultural norms. And the poorest are often the hardest to help.

This dispiriting picture makes a new paper* by...

from The Economist: Finance and economics http://ift.tt/1Dd536T

Material difficulties

FIVE years ago, two views were fairly common. The future belonged not to the sluggish, ageing advanced economies but to the emerging markets. Furthermore, those economies had such demand for raw materials that a “commodity supercycle” was well under way and would last for years.

Commodity prices peaked in 2011, and have been heading remorselessly downwards ever since. Their decline of more than 40% so far is a huge bear market; had it happened in equities, the talk would be of calamity and collapse.

News coverage in the Western media tends to view the decline in commodity prices as a benign phenomenon, as indeed it is for countries that are net importers. But it is not good for commodity exporters, many of which are emerging markets. That helps explain why emerging-market equities have had only one positive year since 2011, and have underperformed their rich-country counterparts by a significant margin in recent years (see chart). The latest sign of trouble came in China, where the Shanghai Composite fell by 8.5% on July 27th.

The growth rate of emerging economies is likely to slow in 2015 for the fifth...

from The Economist: Finance and economics http://ift.tt/1Dd52Qx

When the cloud parted

Nagasaki: Life After Nuclear War. By Susan Southard. Viking; 389 pages; $28.95 and £20.

AMERICA dropped its atom bomb on Nagasaki at 11.02am on August 9th 1945, three days after Little Boy fell on Hiroshima. In the years that followed, the story of Nagasaki’s hibakusha (the “explosion-affected people”, or survivors of the atom bomb) took second place. The best-known symbol of the world’s first use of nuclear weapons was always Hiroshima.

It is this imbalance which Susan Southard’s searing account of the experiences of five teenagers who lived through the attack on Nagasaki tries to redress. The second nuclear bomb, which killed over 70,000 civilians (with many more dying afterwards), struck as Japan’s wartime leaders, shocked by Hiroshima, were already deliberating how to surrender. So, there has long been a sense that this second fireball was less justified than the first.

For a time, Nagasaki’s citizens were thought by many Japanese to have accepted their city’s obliteration more stoically than their fellow hibakusha in Hiroshima...

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

On to the beginning

Wind/Pinball: Two Novels. By Haruki Murakami. Translated by Ted Goossen. Knopf; 256 pages; $25.95. Harvill Secker; £16.99.

IN 1978, over the course of six months or so, Haruki Murakami juggled running a Tokyo jazz bar with writing a novel. A year later, using the same routine, he penned a sequel. “Hear the Wind Sing” and “Pinball, 1973”, to give the two books their full titles, launched the author’s career in Japan and went on to comprise the first two-thirds of his “Trilogy of the Rat”. Never before published in English outside Japan, these two early works now appear in a single volume expertly translated by Ted Goossen.

“Hear the Wind Sing” follows the summer escapades of an unnamed narrator and his friend, known as the Rat. The hero spends his university break propping up J’s bar with the Rat, listening to music, meditating on writing, reminiscing about ex-girlfriends (mourning one who hanged herself) and chasing a potential new one who has nine fingers.

The meatier and more surreal “Pinball, 1973” follows on directly. The narrator has moved on from university and away from the Rat. He now manages a translation company in Tokyo, lives with identical twin girls and becomes obsessed with the “occult world of pinball”—a turnaround from the previous novel in which he scorned the pinball machine as a “piece of junk that...

from The Economist: Books and arts http://ift.tt/1Dc9yii

Blind alley

Russia and the New World Disorder. By Bobo Lo. Brookings Institution Press and Chatham House; 341 pages; $34 and £25.50.

SEEN from the Kremlin, Vladimir Putin’s foreign policy is a series of triumphs. He has killed NATO expansion, regained Crimea and exposed the weakness and hypo-crisy of the West. In Russia’s eyes, argues Bobo Lo in a thoughtful new book, “the humiliated nation of the 1990s has metamorphosed into a resurgent global power”. It is now “more independent, more indispensable, more self-confident, and more influential than at any time since the fall of the Soviet Union”. As a result, it believes it can dictate the terms of its engagement with the West. The outside world must adjust to Russia, not the other way round, treating it as an equal, respected partner.

Mr Lo, a former Australian diplomat who now works at the Chatham House think-tank in London, adopts a commendably calm approach to a topic which attracts plenty of polemic. At every stage he outlines Russian views of the world fairly, and highlights Western mistakes and misapprehensions, before proceeding to paint the full picture in precise and sometimes scathing terms.

The fundamental problem is that the Kremlin’s perception of the world is skewed. It exaggerates the West’s weakness and its own strength. It prizes hard power, which it lacks, and...

from The Economist: Books and arts http://ift.tt/1Dc9wal

Feel the beat

Music, rhythm and dance are the beating heart of two vibrant exhibitions in Paris. “Beauté Congo” at the Fondation Cartier puts André Magnin’s long experience as a curator and collector of African art to good use, from the discoveries he made at the Africa Museum at Tervuren, Belgium, of Albert Lubaki’s watercolours of the 1920s to the boisterous recent works of Pierre Bodo, who died earlier this year, and J.P. Mika’s “Kiese na Kiese” from 2014 (pictured), which feels almost as if it is pulsating. Across town, at the Fondation Louis Vuitton, Suzanne Pagé has overseen the assembly of a dynamic show of music and video art: from the gunshot-operatics of Chris Marclay’s “Crossfire” to the ever more menacing trombones in “Viva España” by Pilar Albarracìn and "The Krazy House", Rineke Dijkstra’s rediscovery of the joys of youth.

• 
  ...

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

Poppy love

A sharp price to pay

Dreamland: The True Tale of America’s Opiate Epidemic. By Sam Quinones. Bloomsbury; 368 pages; $28 and £18.99.

AMERICA is battling a massive epidemic of heroin and its pharmacological substitutes. By 2008 drug overdoses, mostly from opioids, overtook car crashes as the leading cause of accidental death. In a related development, the number of annual users of heroin jumped from 370,000 in 2007 to 680,000 in 2013.

The epidemic, as Sam Quinones, an American journalist, outlines in “Dreamland”, a meticulously researched new book, has two root causes. One is a failure of regulation in the pharmaceutical industry; the other is retail innovation in the black market.

In 1995 Purdue Pharma, a drug company in Stamford, Connecticut, was given permission by the Food and Drug Administration to market a powerful new opioid called OxyContin for moderate pain. Doctors, wary about prescribing opioids because of their markedly addictive nature, had previously used it for severe pain only. Many patients duly became addicts and “pill mills”, pain clinics that handled...

from The Economist: Books and arts http://ift.tt/1Dc9y1O

Did I lock the back door?

Worrying: A Literary and Cultural History. By Francis O’Gorman. Bloomsbury; 173 pages; $20 and £14.

WHEN he is not teaching Victorian literature at the University of Leeds or writing books, Francis O’Gorman admits to doing a lot of unnecessary brooding. “Worrying: A Literary and Cultural History” is his affectionate tribute to low-level fretting—what the author calls “the hidden histories of ordinary pain”—in everyone’s life.

The word itself is comparatively new. Although it was used in the 16th century, in all of Shakespeare’s works “worry” appears just once—as a transitive verb denoting strangling or choking. Only in the Victorian era did its contemporary meaning come into widespread use. The advent of literary modernism in the 20th century placed the personal inner world centre-stage. From James Joyce’s Leopold Bloom to Virginia Woolf’s Mr Ramsay, worriers came to abound in the modernist canon.

Humanity’s sense of anxiety has deep roots. Contemporary angst is inextricably tied up with living in an advanced, hyper-modern society, and yet, when worrying takes hold, it often does so in ways...

from The Economist: Books and arts http://ift.tt/1Dc9waf

Goldenballs

The Richest Man Who Ever Lived: The Life and Times of Jacob Fugger. By Greg Steinmetz. Simon and Schuster; 283 pages; $27.95.

ALBRECHT DÜRER’S portrait of Jacob Fugger shows a man with thin lips and unforgiving eyes. He wears a fine fur tippet about his shoulders and a brown cap; for the time, his dress is strikingly plain. Greg Steinmetz, formerly a journalist with the Wall Street Journal and now a securities analyst in New York, declares that he was the most influential businessman who ever lived. He makes a better case for this extravagant claim than for his assertion that Fugger was also the richest man in history.

A late-medieval banker from Augsburg in southern Germany, Fugger has never been as celebrated as Cosimo de Medici and his Florentine sons and cousins, whose reputation as bankers was burnished by their excellent taste in Renaissance art. But Fugger was the better banker. Were he alive today, he would have cut a swathe through Wall Street and the City, and yet his remarkable history is still little known. Mr Steinmetz’s prose does not always sparkle and some...

from The Economist: Books and arts http://ift.tt/1Dc9vTU

Fatal distraction

THEY are sometimes portrayed as invincible, with enough cunning to outfox financial markets and enough clout to outgun governments. But hedge funds have been bested by an unassuming rival: exchange-traded funds (ETFs). These claim no special expertise, just the ability to make average returns at minimal cost. In 1999 ETFs controlled a mere tenth of the assets of hedge funds; today they have more money under management. The rise of ETFs is welcome, but hedge funds, which frequently charge both a 2% annual fee and 20% of performance, are still raking in money. For the pension schemes that are the hedgies’ latest target, handing over cash makes no sense.

Delta blow

For one thing, the hedge funds’ performance does not justify a large inflow of new money. Since the golden years of the 1990s, their average return has been disappointing (see article). The industry used to promote itself as being able to make profits whether the underlying markets were...

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

Erdogan’s dangerous gambit

TURKEY’S allies in the West have felt increasingly queasy about its wayward president, Recep Tayyip Erdogan. At home he has become authoritarian and wants to change the constitution to give himself more power. Abroad he has been indulgent towards militants passing through his country to fight in Syria. In the year since the jihadists of Islamic State (IS) declared their caliphate in parts of Iraq and Syria, and America gathered a coalition to “degrade and ultimately destroy” them, Mr Erdogan has refused to let NATO allies use Turkish bases.

Perhaps he feared that the jihadists would target Turkey. Or perhaps he thought they were useful pawns in the violent geopolitics of the Middle East. Such illusions should have been blown away on July 20th, when a suicide-bomber killed 32 people in Suruc, a Turkish town on the border with Syria. Within days Turkey said it would allow America to use its base at Incirlik, and its own jets bombed IS. There is now talk of creating a buffer zone in Syria to cut off IS’s last supply lines.

Many hope Mr Erdogan has at last had a moment of clarity about the IS menace. So far, though, he has only added to...

from The Economist: Leaders http://ift.tt/1I4BxPL

Puffs of hope

ON THE afternoon of July 25th renewable generators fulfilled about 78% of Germany’s domestic demand. Such a remarkable figure, combined with news of booming wind industries in America (see article) and China (article), might lead you to think that the renewables revolution is more or less victorious, with the world moving forward into the broad, sunlit—and windy—uplands of copious clean energy. Alas, this is not the case.

In some places wind turbines and solar cells are now a cheaper way of generating electricity than fossil fuels are. And in a lot of others subsidies and regulatory requirements encourage their use regardless. But despite this progress, bought at great expense, renewables other than hydropower still provide less than 3% of the world’s energy. The impressive growth of wind power lags behind the rate that the...

from The Economist: Leaders http://ift.tt/1I4BxPH

What laws in the jungle?

SPYING typically involves stealing secrets by lying and cheating. How then should law-governed states deal with this lawless branch of government? Technology is making old rules increasingly inadequate (see article). Modern life leaves abundant electronic clues, which businesses already exploit for profit. Intelligence agencies can and should use such data to monitor terrorists, criminals and spies, as well as hostile states.

But the advent of big data is blurring old definitions. Simply collecting and analysing the “metadata”—the outward details of communications, but not their content—reveals much about an individual. It is ever-harder to distinguish information involving foreigners (usually fair game) and a country’s own people (whose privacy should usually be protected). A lack of public trust compounds the problem. Spooks may shrug at the naivety and suspicion displayed in the reaction to revelations by Edward Snowden, who worked at America’s National Security Agency (NSA). But the public...

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

Building castles on sand

Reach for the sky

WERE it built to its original design, the Burj Khalifa would have just 90 floors, says Muhammad Alabbar, the chairman of Emaar Properties, which developed the skyscraper. But when Mr Alabbar presented his plans to Sheikh Muhammad bin Rashid al-Maktoum, the ruler of Dubai, he was told to do better. So, 73 floors were added, making the Burj Khalifa far taller than any other building when it opened in 2010.

The rise of Emaar has been just as vertiginous—and similarly influenced by Dubai’s ruler. Since it was founded by Mr Alabbar in 1997, the firm has grown to become the emirate’s biggest property developer by market value. Its profits rose by 30% in 2014, to $912m, and its spectacular buildings and planned communities have helped put Dubai on the map. The question now facing Emaar is whether it can sustain this momentum as it seeks to become a global business.

Emaar has undoubtedly benefited from the right connections. About 30% of it is owned by a sovereign-wealth fund; and Mr Alabbar says he doesn’t do anything without talking to Sheikh Muhammad. In many ways the firm is a reflection...

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

A recipe for sustainability

A fruitful endeavour

TOSS the fruit of the oil palm in your hand—a reddish-orange lozenge not much bigger than a chestnut—and it is difficult to imagine all the trouble it has caused. At Carey Island, an enormous plantation run by Sime Darby, a Malaysian grower, more than a million shady palm trees buttress Kuala Lumpur’s outermost sprawl. Workers with telescopic scythes cut down fruit bunches a bit bigger than footballs, which break into pieces on the ground. At an old, clanking mill, where the greasy nuggets are pressed and steam-sterilised, the air smells sweetly of syrup.

Yet Carey Island is the presentable face of an industry which has done a lot of harm. Driven by swiftly-rising demand for vegetable oils (see chart 1), over the past two decades the spread of oil-palm plantations has destroyed swathes of tropical forest, releasing much of their trapped carbon into the atmosphere. Indigenous people have been chased off land they had long occupied, and the migrants brought in to tend the plantations have often suffered appalling working conditions.

...

from The Economist: Business http://ift.tt/1Iu8Nl1

Read all about us

IN RECENT years a variety of global names in journalism have been put forward as potential buyers of the Financial Times. But it came as a surprise when, on July 23rd, the FT’s owner, Pearson, announced that it was selling the newspaper to Nikkei of Japan, for £844m ($1.3 billion). Pearson wants to concentrate on its education businesses, and its boss, John Fallon, argued that with the growth of mobile and social-media platforms, a better home for the FT would be a global, digital news company.

However, it is not clear quite how Nikkei fits the bill. It publishes Japan’s largest business newspaper, the Nikkei. But it is almost entirely focused on the domestic market. Its daily has 2.7m paid subscribers to the FT’s 720,000, but only one-sixth of them receive the paper digitally. The FT is much further along in the transition from print, with two-thirds of subscribers having gone digital.

Nikkei has promised to respect the FT’s editorial independence, even though its own journalistic culture is far removed from that of the British paper. It is a willing participant...

from The Economist: Business http://ift.tt/1DShmR8

Myths about millennials

ONE of the perks of getting old is that you are allowed to talk nonsense about the young. Plato was said to have complained that young people “disrespect their elders” and “ignore the law”. Peter the Hermit griped that they “think of nothing but themselves” and are “impatient of all restraint”. Today, grizzled business pundits tend to mix in some praise with their gripes. But they abuse the privilege of age as much as anyone ever did.

Such modern-day sages tell employers they must adjust their management styles to meet the expectations of millennials—those born between 1980 and 2000, also known as generation Y. These people are now the largest group in America’s workforce, making up 37% of the total, compared with 34% for the baby-boomers—those born up to the mid-1960s, now retiring in droves. It is often pointed out that millennials are the first generation to have grown up in the digital era. That is true, but much else that is said about them is conjecture. They are said to be natural collaborators. Everything from their education in kindergartens to their participation in social media has turned them into team players. But at the same time they...

from The Economist: Business http://ift.tt/1Iu8NkU

Counterfeit.com

THE grand golden doors of 500 Pearl Street, in Manhattan, have welcomed such glamorous names as Hermès, Tiffany & Co and Kering, a French conglomerate whose treasures include Gucci and Bottega Veneta. The building is not a posh hotel or department store. It is the federal court for the Southern District of New York, a favoured battleground for the decidedly unglamorous war against counterfeit goods.

The court is now the venue for Kering’s suit against Alibaba, a Chinese e-commerce giant. Kering alleges that Alibaba helps fakers sell goods on its websites. The French firm is not the only one to be incensed. On July 17th the American Apparel & Footwear Association (AAFA) demanded that Alibaba crack down on counterfeits. Alibaba insists it has extensive measures in place to do just that. It is trying to distance itself from counterfeiters, who are also accused by Kering. On August 6th Alibaba plans to argue to the court that it risks being unfairly implicated as a co-conspirator. A bitter trial looks likely.

The fight against copycats has been long and arduous. Kering’s suit is the industry’s most important in a decade—Alibaba...

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

Cyber-boom or cyber-bubble?

ISRAEL’S arms exports fell last year. Cutbacks in the defence budgets of many Western countries pushed the global sales of Israeli weapons systems down to $5.7 billion, $1 billion less than in 2013. Unexpectedly, another security-related industry took up the slack. For the first time, the country sold more cyber-wares than arms. According to figures published recently by the cyber-task-force in the prime minister’s office, in 2014 Israeli companies sold around $6 billion of internet-security software, equivalent to about a tenth of the entire worldwide sales of such stuff.

A big chunk of that came from Check Point, best known for its ZoneAlarm antivirus software for home computers, and a provider of a broad range of online-security products for business. Its revenues last year were $1.5 billion. But Israel is also producing lots of cyber-security startups. Last year eight of them were sold to foreign investors, for a total of $700m. In September CyberArk, which specialises in protecting firms against attackers who pose as system administrators and other insiders, had one of the year’s biggest IPOs on the American NASDAQ market, and its current...

from The Economist: Business http://ift.tt/1Iu8PsX

A scholar in the desert

ISLAM arose with remarkable speed and mystery. Patricia Crone’s well-stocked mind, clear prose and unflinching intellectual honesty were devoted to explaining why. She had little time for Islam’s own accounts of its origins: “debris” as far as historians were concerned, and hopelessly inconsistent. Far better, she reckoned, to fill the gap with contemporary sources and knowledge of other cultures, from messianic Maoris to Icelanders.

That required both personal and intellectual bravery. The central beliefs of Islam, such as the way the Koran took shape, the life of Muhammad and Islam’s relations with other religions, are sensitive subjects. Outside scrutiny can make tempers flare, especially when the conclusions are expressed in a witty and sardonic style.

That is one reason why copies of “Hagarism”, Ms Crone’s first book, long out of print, now sell for hundreds of dollars. It was published in 1977, the year she whirled like a tornado into Oxford, terrifying the dusty dons. (The Oriental Institute was then a notable source of spies for MI6, despite the fact that the history syllabus for the BA in Arabic ended at 1258, the year the...

from The Economist: Obituary http://ift.tt/1INPPb8

Scraping the barrel

VISITORS arriving at Quito’s new airport are swept to Ecuador’s capital, 35km (22 miles) away, along a brand new six-lane motorway. Together with new hospitals, schools, social housing and benefits and student grants, the vastly improved road network is the work of President Rafael Correa’s “Citizens’ Revolution”. With his melange of technocratic modernisation and leftist populism, Mr Correa leads a strong and hitherto popular government that has lasted eight years in a country where none of his three predecessors completed their terms.

But now Mr Correa is running out of money and the citizens are starting to turn against him. In June, in the biggest of many protests, some 350,000 people took to the streets of the port city of Guayaquil to demonstrate against plans to impose punitive additional taxes on inheritances and gains from property transactions.

The protests came as the plunge in the oil price and the strength of the dollar—which Ecuador has used as its currency since 2000—have combined to halt economic growth. The economy contracted in the first quarter of this year compared with the previous one. Independent economists...

from The Economist: The Americas http://ift.tt/1SP07Hl

The scion and the heir

A COUNTDOWN clock hangs over the desks in the open-plan political headquarters of Mauricio Macri, the mayor of Buenos Aires, who hopes to be Argentina’s next president. It tells skinny-jeaned campaign workers how many days, hours and minutes there are “until change”. The clock will hit zero on August 9th, when political parties hold primaries to select their presidential candidates. Then, presumably, it will be reset for the first round of the election itself, to be held on October 25th.

The primaries are less momentous than the clock suggests. There is little suspense about who will win. Mr Macri (pictured, left) is way ahead of rivals to be the candidate of Cambiemos (“Let’s change”), an electoral front that consists of his Republican Proposal and two other parties. The other main contender for the presidency is likely to be Daniel Scioli (pictured, right), the governor of Buenos Aires province. He is the only candidate from the Front for Victory (FPV), the party of Argentina’s president, Cristina Fernández de Kirchner.

Even so, the primaries matter. If pollsters’ guesses are correct, the presidential election is a two-horse...

from The Economist: The Americas http://ift.tt/1SP07Hb

Slaves of the past

FOR Peruvians it was a reminder of a long-ago nightmare. On July 27th soldiers and police rescued 26 children, ten women and three men whom they said had been held as slaves for up to 30 years by Sendero Luminoso (“Shining Path”), a Maoist terrorist group. The captives, some of whom are from the Ashaninka Amerindian tribe, were growing food for the guerrillas. Officials said the women had been raped. All had received political indoctrination; some were reluctant to be rescued.

Sendero, as Peruvians call it, was the strangest and most vicious of Latin America’s once-numerous insurgent groups. Its creator, Abimael Guzmán, a philosophy professor who espoused the Maoism of the Chinese Cultural Revolution, launched a “People’s War” against the Peruvian state in 1980, as the country returned to democracy after 12 years of military dictatorship.

Sendero imposed a reign of terror in Andean peasant communities, and bombed and murdered in cities. The army response was a “dirty war” in which civilians were victims. Patient police work led to the capture of...

from The Economist: The Americas http://ift.tt/1SP09Pe

Girlfriend in a conga

THE lugubrious strains of “Heaven Knows I’m Miserable Now” waft across a sunny beach in Acapulco. If that song in that setting surprises you, then you do not know about the strange affinity between Mexicans and Morrissey, the morbid, underdog-loving front-man of The Smiths, a British band of the 1980s, who then went solo.

In Mexico City a band called Mexrrissey is hard at work recording an album of his songs in styles ranging from trumpet-blaring mariachi to to throbbing norteño. Its creator, disc jockey Camilo Lara, calls it “Girlfriend in a Conga”, a play on one of The Smiths’ wickedest songs (which puts the girlfriend in a coma). It’s not a tribute album. Morrissey’s lyrics, dripping with black humour, are translated into the mischievous Spanish of Mexico City. Morrissey’s “First of the Gang to Die”, about a murdered gangster, fades out in its Mexican version with ay güey, pobre güey (“hey dude, poor dude”).

Mr Lara says the bitter melodrama of Morrissey’s poetry strikes a chord in Mexico, where even in soap operas the poor make it up the social ladder...

from The Economist: The Americas http://ift.tt/1SP07qS

A sweet Jewish moment

FOR Rilli Willow, as for many others in Berlin this week, a “circle is closing”. Her great-aunt Dora was once a Jewish opera singer in Berlin. Deported at 33 to Auschwitz, Dora was forced to sing for its guards until she perished. Now Rilli, 32 and born in Israel, is also a singer and lives in Berlin, married to a German. And on July 28th she proudly sang the German anthem at the opening of the 14th Maccabi Games, Europe’s largest Jewish sporting event, which for the first time is taking place in Germany. Eleven motorcyclists (pictured) rode to the contest from Israel, taking a detour through Poland to stop by the Auschwitz death camp.

The Maccabi Games are a sort of Zionist mini-Olympics (though Gentiles can compete). The movement began in the late Ottoman empire, where Jews who were barred from sports clubs began their own. In the 1920s a Maccabi youth movement was born in Europe.

The rise of Hitler seemed to quash it. A bitter foretaste of what was to follow came in 1936, when Hitler staged the Olympic Games in a purpose-built and grandiose stadium in Berlin. Many of the Jewish athletes who turned up were sent away hours before...

from The Economist: Europe http://ift.tt/1Dd51vR

Eternal headaches

MAYORS need watching, as any national leader knows. Some are terrible liabilities, like the crack-loving Marion Barry who ran Washington, DC, until 1999. Others, like Jacques Chirac, who managed Paris until 1995, and Boris Johnson, looking after London since 2008, have wider political ambitions.

In two years as mayor of Rome, Ignazio Marino has displayed no vices, but his ill-starred administration has been an embarrassment. A great city has fallen into decay, its parks choked with litter. And this summer travellers on the dire underground railway often waited more than half an hour for trains with little or no air conditioning. Strikes have snarled up the buses.

Whatever their faults, mayors are hard to remove. For weeks Mr Marino’s ultimate boss, the head of the centre-left Democratic Party and prime minister, Matteo Renzi, havered; he had no power to fire a mayor, but hinted he should “go home”.

On July 28th Mr Marino reshuffled his team and pledged a new start. It was his second decisive move in a few days. A week earlier, he vowed to fire his urban transport bosses and open the system to private funds. This drew quick, if conditional, backing from the prime minister: “If he manages to get concrete results…he won’t lack support from the government.”

A surgeon who has worked in America, Mr Marino is not a political novice; he entered...

from The Economist: Europe http://ift.tt/1Ib2qPK

Making waves, if not ruling them

MORE than a year after America and its allies set out to punish the Kremlin for backing rebels in Ukraine and annexing Crimea, Russia is finding new friends and dealing with the West from a position of growing strength. At any rate, that is the message that Vladimir Putin has been delivering to his own people and anybody else who will listen.

In his latest flexing of muscles, the president set out a naval doctrine on July 26th which aspires to challenge the Atlantic alliance in all its areas of operation, in reply to NATO’s “unacceptable” plans to move some forces close to Russia and expand its global reach. He wants an ocean-going navy, especially active in the Arctic and the Atlantic, to replace a fleet whose ageing ships mostly hug the coast.

This capped a month of diplomatic showmanship, in which the Russian city of Ufa, on the boundary between Europe and Asia, hosted summits of two organisations which aspire to challenge America’s global leadership. One is a mainly economic club known as the BRICS (including Brazil, India, China and South Africa); the other is the Shanghai Co-operation Organisation (SCO), focused on defence...

from The Economist: Europe http://ift.tt/1Dd50bf

The snail loses pace

GÜNTER GRASS, an enthusiast for the centre-left ideas of Willy Brandt, chronicled the slow post-war rise of social democracy in an elegant memoir called “From the Diary of a Snail”. The creature struck the writer as an apt metaphor for that school of thought. It was unhurried but purposeful: a “politics of small progressions”, defying setbacks and promising moderation. It avoided both the reactionary tendencies of many conservative movements, and the revolutionary posturing of the far left.

But the snail is stuck. In recent years, governments of the centre-right have eclipsed their rivals in elections across Europe. Strikingly, parties of the centre-left have failed to capitalise on the most profound crisis in capitalism brought by the financial crash of 2007-08. Far from seizing the opportunity to win an argument for greater state regulation and a less intense embrace of free-markets, the left has been swept out of power in many places and found it hard to return.

In Germany Angela Merkel, the Christian Democratic chancellor, has been in office since 2005. In Britain a Tory-led government has held power since 2010, and the twice-...

from The Economist: Europe http://ift.tt/1Ib2oHE

Putin v Punk Pussy

THREE years ago Nadia Tolokonnikova donned a balaclava and, with two partners in the Pussy Riot band, cavorted near the altar of Moscow’s biggest cathedral, screeching out a “punk prayer” in protest against the imminent re-election of Vladimir Putin as president. For her pains she was sentenced to two years in a penal colony. Though still an ardent opponent of Russia’s leader, Ms Tolokonnikova has narrowed the focus of her dissent to the conditions of prisoners in the country’s far-flung archipelago of jails. It is a worthy cause.

At the last count there were 657,000 Russians behind bars, one of the world’s highest ratios of prisoners to population. “Our current, vile law-enforcement system”, she says, “still grinds people to a pulp and spits them out into their graves.” The frequency of deaths in custody amounts to a “Russian Ebola”. Tuberculosis is the commonest killer, she says, followed by HIV-AIDS, which may affect 75,000 prisoners. The offences for which Russians are most often imprisoned, she says, concern drugs.

When she was first incarcerated in Penal Colony 14 in Mordovia, a Stalin-era camp about 500km (310 miles) south-...

from The Economist: Europe http://ift.tt/1Ib2orp

A new age of espionage

CYBER-CAFÉS were once a favoured tool of Western intelligence and security agencies. They were inconspicuous, cheap to establish and highly effective. Set up near an international summit buzzing with targets, or close to a mosque favoured by Islamist extremists, these facilities allowed their masters to monitor browsing habits, obtain targets’ logins and passwords, and plant spyware for future use. This was legal: consent was buried in the terms and conditions which users clicked on without reading. And in a neat twist, security-conscious people trying to avoid using their own computers favoured such places. Some would hop between cafés, unaware that all the convenient ones were run by the authorities.

Not any more. Edward Snowden, a fugitive former contractor for America’s National Security Agency (NSA) now living in Moscow, revealed the use of cyber-cafés to spy on the G20 summit in London in 2009. Now people are wary. In many countries the cyber-cafés have been closed. The staff who ran them have had to be moved (and in some cases given costly new identities). As a result, keeping track of terrorism suspects is now harder, spooks say.

...

from The Economist: International http://ift.tt/1eD7q7f

No assembler required

COMPUTING has always been a youngster’s game. The founders of Apple, Facebook, Google and Microsoft were in their teens or 20s when they started the businesses that made their fortunes. But even by the standards of Messrs Jobs, Zuckerberg, Brin, Page, Gates et al, the code jockeys of a programming language called KIBO are wet behind the ears.

KIBO is designed for those aged four to seven. Instead of arranging, as an older programmer might, a set of constants, variables, operations and expressions, all written in something resembling English, into a logical sequence, a KIBO programmer arranges wooden blocks that carry stickers bearing symbols. These symbols tell a plastic robot what to do next. A straight arrow means “move ahead by one foot”. A curved one means “turn in the direction in which the arrow is pointing”. Two semicircular arrows pointing towards each other’s tails means “perform the previous instruction again”—a command that is particularly important, because it introduces neophytes to the concept of recursion.

For more complicated commands, such as “shine a light”, “make a noise” or “wait here until I clap before moving...

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

Hot stuff

ANY sufficiently advanced technology, as Arthur C. Clarke once observed, is indistinguishable from magic. And one that seems routinely to be ascribed magical properties is graphene. It has been proposed for the manufacture of transistors and light bulbs, as a replacement for bone and a way of delivering drugs, for storing power and for transmitting it, and for lubricating things and waterproofing them. Its latest suggested role, though, is to help turn heat directly into electricity.

The Seebeck effect, first seen in 1821 by a German physicist of that name, is a property of some materials whereby heating part of an object made of that material drives electrons from the hot part to the cold part, creating a current. Generating electricity from heat in this way will never substitute for creating it in a power station specially designed for the purpose but it might, some believe, permit the exploitation of heat that would otherwise go to waste—that produced by car engines, for example; or, indeed, by the power station itself.

The problem is that materials which exhibit a strong enough Seebeck effect to be potentially useful do so...

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

The big bug hunt

“IT CAN be kind of addictive,” says Emily Stark, a Californian engineer who started looking for bugs in websites in her evenings after work. “There’s a lot of low-hanging fruit out there.”

There are also a lot of Emily Starks out there, for anyone with a computer and a penchant for puzzles can be a bughunter. You learn the basics from online guides and discussion forums, and practise on websites built to be broken into, such as Google Gruyere, which gives hackers a training ground. Ms Stark earned a tidy sum reporting bugs to Twitter, Square, Slack, WePay and Coinbase. She got so good at it that Google recruited her, and she now has a full-time job in the firm’s security division. But Google also offers opportunities for those who wish to stay freelance. Its bug-bounty programme pays anything from $500 for spotting a minor security error to $50,000 for breaking into a Google-made laptop.

For Ms Stark, in her freelance days, a typical session began as it would start for many bughunters. She would pick a promising website and enumerate the ways in which users could engage with and change it, for these are the points of vulnerability...

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

The last view of Pluto

This picture of Pluto’s atmosphere, backlit by the sun, is a Parthian shot of the place taken on July 15th (but transmitted to Earth a week later) by New Horizons, NASA’s probe to the dwarf planet. It is a last, backward glance as the spacecraft hurtles away into the Kuiper belt of frozen asteroids that lies beyond the part of the solar system inhabited by planets. New Horizons’ mission has been a revelation. The Pluto it portrays is a russet-pink body of mountains kilometres high, of giant icy plains and of glaciers of frozen nitrogen. Altogether, the craft has been able to photograph about half of Pluto’s surface in reasonable detail, recording features as little as 1km across. What the other half looks like will remain a mystery for a long time. No future mission is planned and, for a telescope in orbit around Earth to achieve a resolution equivalent to that of New Horizons’ cameras, it would need a main mirror 3km across.

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

The $1-a-week school

ACROSS the highway from the lawns of Nairobi’s Muthaiga Country Club is Mathare, a slum that stretches as far as the eye can see. Although Mathare has virtually no services like paved streets or sanitation, it has a sizeable and growing number of classrooms. Not because of the state—the slum’s half-million people have just four public schools—but because the private sector has moved in. Mathare boasts 120 private schools.

This pattern is repeated across Africa, the Middle East and South Asia. The failure of the state to provide children with a decent education is leading to a burgeoning of private places, which can cost as little as $1 a week (see article).

The parents who send their children to these schools in their millions welcome this. But governments, teachers’ unions and NGOs tend to take the view that private education should be discouraged or heavily regulated. That must change.

Chalk and fees

Education in most of the developing world is...

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

Seeing triple

The eyes have it

GIVING sight to robots is an important goal, but a tricky one. Most attempts use cameras that produce the sort of image a human being is used to, and then apply computing power to simplify it (for example, by searching for the edges of objects) in ways that tell a robot what it needs to know (ie, do not blunder into that edge).

Dario Floreano of the Swiss Federal Institute of Technology, in Lausanne, has, however, taken a different approach. If simplicity is what is required, then simplicity is what needs to be supplied in the first place. Dr Floreano went to the natural world to look at a group of animals—the insects—that have often inspired robotmakers, with a view to copying the way that they organise vision. As he and his colleagues report in the Journal of the Royal Society Interface, the result is an artificial version of an insect’s compound eye.

Insect eyes are made of thousands of hexagonal columns called ommatidia, each of which focuses light through a lens down a transparent tube called a rhabdom to a set of photosensitive cells at the bottom. Such...

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

Looks could kill

PEOPLE decide quickly how trustworthy a stranger is, based on what his face looks like. And experiments show that, regarding any particular individual, they generally come to the same conclusion. There really are, it seems, trustworthy and untrustworthy faces—though, surprisingly, there is little consensus among researchers as to whether someone whose face is deemed devious really is more likely to betray a trust. The perceivedly untrustworthy do, however, suffer for their phizogs. And a study published in this month’s Psychological Science suggests that in extreme cases—in America at least—this suffering may be fatal.

John Wilson and Nicholas Rule, psychologists at the University of Toronto, looked at convicted murderers in the American state of Florida, which retains the death penalty. They selected 371 prisoners on death row and a further 371 who were serving life sentences. To avoid confounding variables, all those chosen were male and were either black or white (no Asians or other ethnic groups). Each sample included 226 white convicts and 145 black ones. A group of 208 volunteers whom Dr Wilson and Dr Rule had...

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

Spilling the beans

“I’M THE one who looks the patient in the eye and tells them the trial is beneficial,” says Tim Crater, a research physician at the Hutchinson Clinic in Kansas. Dr Crater runs drug tests for large pharmaceutical firms. He says volunteers are interested in more than just the promise of payment. “A lot of people want to help, they are altruistic to a certain degree and want to advance science.” Dr Crater’s experience is typical. Those who participate in trials often believe that they are, in a small way, contributing to the advancement of medicine and that any suffering on their part will help others.

Unfortunately, this is not always the case. Though pertinent trials carried out by companies do have to be reported to those responsible for licensing drugs and medical devices, there is no obligation on firms to make them public. That means such trials cannot be scrutinised by outsiders. The licensing authorities look at them, of course, so anything approved should, in theory, be safe, and have at least some beneficial effect. But the practitioners who go on to use them do not know all the details.

Some estimates suggest the results of...

from The Economist: Science and technology http://ift.tt/1MpZjK7

Boxed in

Where’s the beef?

BOXING is Hollywood’s favourite sport. Baseball and basketball may be contenders, but it is boxing that has the violence, the theatricality and the winner-takes-all simplicity which underpin so much of American cinema—hence its central place in films from “Body and Soul” and “Raging Bull” to such recent award-winners as “Million Dollar Baby” and “The Fighter”.

How, then, can a new boxing drama do anything that hasn’t been done countless times before? “Southpaw”, directed by Antoine Fuqua (“Training Day”) and written by Kurt Sutter (creator of “Sons of Anarchy”), appears to have solved this problem by starting where its predecessors finish. Its hero, Billy Hope (Jake Gyllenhaal), is already a world champion at the start of the film. He is married to his childhood sweetheart (Rachel McAdams), and they live with their daughter in a mansion bigger than most Loire chateaux. The intriguing question is whether Billy will retire while he is still relatively compos mentis, or whether he will sign the $30m contract which his manager (Curtis “50 Cent” Jackson) is waving under his broken...

from The Economist: Books and arts http://ift.tt/1VAnhW6

Powers of persuasion

The Emergence of Modern Shiism: Islamic Reform in Iraq and Iran. By Zackery Heern. Oneworld; 220 pages; $30 and £20.

WHENEVER the non-Islamic world has confronted the Muslim one, militant movements have arisen from within that impeded crusty regimes from seeing off the external threat. Under attack from Crusaders in the west and Mongols in the east in the early medieval period, jihadist groups and firebrand preachers turned on heterodoxy in the ranks. Saladin overthrew the Shia imamate in Cairo and set troops on the Crusaders. He also established law schools that reduced multiple legal interpretations into rigid codes. In the 13th century Taqi al-Din Ibn Taymiyya, a Sunni scholar in Damascus, adopted the notion of takfir, denouncing as apostates Muslims whom he deemed wayward, a crime punishable by death.

Five centuries later, buffeted by Western colonial military and economic might, a crop of Muslim movements turned on their distant all-encompassing Ottoman, Safavid and Mughal overlords in much the same way. Muhammad Ibn Abd al-Wahhab (1703-92) sought to...

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

Citoyen, citoyenne

The History of Modern France: From the Revolution to the Present Day. By Jonathan Fenby. Simon and Schuster; 536 pages; £25.

FRANCE breathes its history, and engraves the past on its landscape. No French town is complete without an Avenue Charles de Gaulle. The boulevards and train stations of Paris—the Gare d’Austerlitz, Avenue de la Grande Armée—recall great battles waged and won. In speeches modern politicians draw on France’s past glories in a way that British leaders, say, might feel was an uncomfortable expression of national vanity. So it is always useful to take a fresh look at how history shapes the country’s politics today.

Jonathan Fenby, The Economist’s correspondent in Paris in the early 1980s, is a veteran and affectionate observer of France, and a biographer of de Gaulle. In his latest book, he takes the long view, recounting the country’s modern history, starting in 1789 and ending with the Charlie Hebdo terrorist attacks of January this year. The bulk of the book is a well-told narrative account, and so valuable primarily as a text of...

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

Global power

Spanish spearhead

Spain: The Centre of the World 1519-1682. By Robert Goodwin. Bloomsbury; 587 pages; $40 and £30.

HABSBURG Spain in the 16th century was the world’s first global superpower, with an empire stretching east across most of Europe to the Philippines and India and west across the Atlantic to the Americas. It was an age of expansion and cultural efflorescence and ended with Spain’s steep decline from which it never fully recovered.

Robert Goodwin’s new book begins with the arrival in Seville in 1519 of the Santa María, the first ship to reach Europe from the newly conquered coast of Mexico, laden with such riches that “there was no other ballast than gold”, and ends in 1682 with Juan Valdés Leal’s gruesome painting “In Ictu Oculi” (“In the Twinkling of an Eye”), an allegory of death—and for the author a perfect symbol for the “end times” of Spanish imperialism.

Mr Goodwin, a research fellow at University College London, has mined deep in the archives and produced a wealth of wonderfully evocative and offbeat detail that is both...

from The Economist: Books and arts http://ift.tt/1VAnfh1