By the book

Cruel, but not unusual

MUSLIMS the world over are horrified by the executions carried out by Islamic State (IS) in the name of their religion. On June 28th the Syrian Observatory for Human Rights, an NGO based in Britain, said it knew of more than 3,000 in the past year. More than half were of civilians—and 74, of children. Yet the self-declared caliphate is not the only Muslim “state” keen on the death penalty and other brutal punishments. At least nine countries have stoning as a judicial sentence, and five have amputation. All are Islamic.

Why? Islam’s sacred texts are not more bloodthirsty than those of Judaism or Christianity. The Old Testament names 36 misdeeds, including using magic and striking a parent, as meriting death; the Koran just two: hiraba (“spreading mischief”) and murder. It says that the family of a murder victim may forgive and therefore spare the killer. Death, stoning, amputation and lashes are reserved for a small number of serious crimes, including theft and adultery, collectively known as hudud.

Under the Ottoman empire, just one...

from The Economist: International http://ift.tt/1R7jVu0

On the way out—with grisly exceptions

DEPENDING on where you are, the death penalty may look as if it is in rude health. On June 29th America’s Supreme Court upheld Oklahoma’s use of midazolam, a sedative, in executions—despite evidence that it can fail to cause unconsciousness, leaving those being killed in agony from the lethal drugs with which it is combined. Meanwhile some countries in the Muslim world, notably Indonesia, Iran, Pakistan and Saudi Arabia, are executing people with increasing enthusiasm. Several others, including Nigeria and Egypt, are sentencing large numbers to death, though most of those sentences are unlikely to be carried out.

Indonesia has executed at least 14 people this year for drug crimes, most of them foreigners. Between 1994 and 2014 it executed at most 30. Using figures from official and human-rights sources, Amnesty International, a watchdog, counts 352 executions in the first four months of this year in Iran, which for its size probably executes more people than anywhere else. The true figure may much higher. Since ending a moratorium in December, Pakistan has hanged or shot at least 150 people. Saudi Arabia has beheaded or shot 100 already this year,...

from The Economist: International http://ift.tt/1FV51ev

Return to China

EACH day on the dot of noon, a former naval artillery piece is fired from a platform at the eastern end of Causeway Bay in Hong Kong. Pulling the trigger is one of the 430,000 employees of Jardine Matheson, a British-run and family-owned conglomerate with interests in retail, property and carmaking. The ceremony harks back to Jardines’ origins in the 1830s as an intrepid tea-and-opium trader, and is usually attended by a gaggle of tourists. It is an oddly public display by a firm that otherwise prefers to pass unnoticed.

Over the past decade few Asian conglomerates have performed as consistently as Jardines. Propelled by a well-timed expansion into South-East Asia, the group’s revenues have risen by about 18% annually since 2005. As the chart shows, the performance of its main listed vehicle since Britain’s handover of Hong Kong to China in 1997 has been strong even compared with that of two other successful “hongs” with roots in colonial times: Swire and Hutchison Whampoa. (The latter has just merged with Cheung Kong, another of Li Ka-shing’s companies, to form CK Hutchison.) It is a sharp contrast to Jardines’ sickly state at the...

from The Economist: Business http://ift.tt/1C2yt73

Plucky contender

Lovely picture, but will people pay for it?

AN EXECUTIVE at Samsung, asked recently what he thought of LG, his company’s domestic arch-rival, said with a wry smile that customers for electronic goods will always want to have a second, third or fourth choice, but that his competitor does not have the engineers, the technology, the budget or the leadership to be number one in most types of gadget. There was a time when LG was the local champion. In 1959 Lucky Goldstar, as it was then called, produced South Korea’s first radio and, soon after, its first electric fan and telephone. By 1970 it was selling the country’s first fridges, televisions and air conditioners. Yet now it beats its old adversary in selling only one type of appliance, washing-machines, and is struggling to recover the ground it has lost.

Samsung has emerged in recent years as one of the world’s dominant makers of microchips and smartphones. Last year its electronics businesses, including display screens, had almost four times as much revenue, and almost 15 times as much operating profit, as LG’s equivalent divisions. LG was once big in...

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

McJobs and UberJobs

THE French enjoy nothing more than resisting the forces of Anglo-Saxon capitalism. On June 25th French taxi drivers paralysed Paris in protest against Uber, a ride-sharing service, and attacked a few Uber cars for good measure. On June 29th police arrested two of Uber’s managers in France for “illicit activity”. But from Uber’s point of view, all this is but a minor inconvenience: Paris is just one of 300 cities it serves. Far more worrying is what is happening in the company’s own backyard in San Francisco.

On June 3rd the California Labour Commissioner ruled that Uber owes a former driver, Barbara Ann Berwick, $4,152, mostly in expenses, on the ground that she was an employee rather than, as Uber claims, an independent contractor. Uber is appealing against the ruling. But it is a harbinger of things to come: San Francisco courts are also hearing two more cases that hinge on the same question. If the rulings go against the company, its labour costs may rise significantly, as it is forced to pay drivers’ social security and other benefits as well as their expenses. Its valuation, which is currently above $40 billion, may suffer.

Uber...

from The Economist: Business http://ift.tt/1C2ysQK

Fractured finances

FROM atop Houston’s skyscrapers you can see evidence of the good times just gone. New towers are still being erected all around the city centre, a lagging indicator of the energy boom that ended abruptly in mid-2014 when the price of crude in America dropped from $100 to $43 (today it is around $57). The victims of that crash are harder to spot. “Look! Over there!,” says an oil man, pointing down at the offices of Goodrich Petroleum. A midsized exploration firm specialising in shale oil, its share price has collapsed, its debts are six times as big as the market value of its equity and it does not currently have any rigs in operation. (Goodrich says it has ample liquidity and may sell assets to raise funds.)

At the start of 2015 it seemed that there would be a lot more firms like Goodrich. When OPEC, the oil cartel led by Saudi Arabia, decided to keep pumping oil, it hoped that lower prices would irreparably damage the finances of America’s shale-oil companies. They have revolutionised the energy industry, using junk bonds and a technique known as fracking—that blasts water, sand and chemicals at rock to release oil and gas—to boost America’s share...

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

Business and finance correspondent

Job ad: The Economist is seeking a business and finance correspondent, based in New York. The successful candidate will have strong financial-analysis skills and demonstrate a deep interest in companies, management and finance. Applicants should send a curriculum vitae and an article of no more than 500 words suitable for publication. The closing date for applications is 31st August. Applications should be sent to nybizjob@economist.com

from The Economist: Business http://ift.tt/1C2ys3e

Instant karma

Noodlegeddon

IT TAKES only minutes to prepare, but India’s most popular processed-food dish is at the centre of a drawn-out dispute over its safety. On June 30th the Bombay High Court said that Nestlé India was free to export its Maggi brand of instant noodles but a ban on local sales remains in place. The Indian subsidiary of the Swiss food giant was making a second visit to the court to try to overturn the ban, which was imposed by the Food Safety and Standards Authority of India (FSSAI) on June 5th.

Nestlé’s troubles began when a local food-safety agency in Uttar Pradesh state said it had found excessive levels of lead in the noodles. Nestle insisted they were safe to eat but recalled them hours before the ban was imposed, saying the public’s trust had been compromised. Nestlé has so far incinerated 17,000 tonnes of suspect noodles. Rivals such as Unilever have also pulled their instant noodles from the market until the air clears.

The FSSAI told the court it did not object to Nestlé exporting its noodles, although it stood by its earlier decision to ban them in India. This seems a curious decision given...

from The Economist: Business http://ift.tt/1C2ysQB

A Caribbean fuse

On the verge of a tumultuous descent

FOR more than two years Alejandro García Padilla, Puerto Rico’s governor, told the island’s creditors what they wanted to hear. The autonomous American territory, he said, had a “moral obligation” to service its $72 billion debt. It could not default on its “general-obligation” bonds, he added, because its constitution gives payments on them priority over all other expenses. He called attention to his record of tax increases and spending cuts. But after 30 months of reassurances, the governor reversed course this week and announced that he would seek to restructure Puerto Rico’s liabilities. “The public debt…is unpayable,” he declared on June 29th. “This isn’t about politics. It’s about math.”

Mr García Padilla demanded a multi-year moratorium on debt service. “The alternative”, he says, “would be a unilateral and unplanned non-payment of obligations.” Puerto Rican bond yields duly soared, and shares in the island’s banks, which own lots of the bonds, plunged.

Mr García Padilla’s announcement coincided with the release of a report by Anne Krueger, a former IMF official,...

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

Beautifying bankruptcy

Heavy weather for small businesses

IN MEDIEVAL Italy, when a merchant did not pay his debts, the bench at which he conducted business was smashed to force him to stop trading. The word “bankrupt” derives from banco rotto, meaning “broken bench”. Italy’s contemporary bankruptcy laws are less violent (though until 2006 debtors lost their right to vote, and had their mail read by liquidators). But the system is painfully slow, and usually ends in liquidation rather than restructuring.

Italy’s justice ministry has appointed a commission to come up with plans for a comprehensive overhaul. It is due to report in December. In the meantime, the government last week introduced an emergency decree aimed at unblocking a backlog of bad loans. The hope is that this would allow banks to lend to more deserving companies instead and so boost the economy, which after three years of recession grew by 0.3% in the first quarter.

Italy’s slow and inefficient civil-justice system is one of the biggest constraints on growth and investment. The World Bank’s “Doing Business” report ranks Italy 147th out...

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

Cornering the markets

THE world’s biggest consumer of commodities is no longer just an insatiable buyer of everything from coal to gold. A richer, slower-growing and choosier China is becoming an exporter as well as importer. It is also using its clout to change the way commodities are traded, bringing markets closer to home and drawing up rules that suit its needs instead of those of producers and Western financiers.

This week, for example, Chinese regulators gave the go-ahead for foreigners to trade crude-oil futures in Shanghai. When that starts—probably by November—it will be the first time that outsiders have been allowed to buy and sell a listed Chinese futures contract. This is part of a clear plan to change the way commodities are traded, says Owain Johnson of the Dubai Mercantile Exchange (DME). The exchange in Dalian, a port through which many commodities enter China, has become the biggest trading centre for iron ore in the world in less than two years. Shanghai has developed big markets in nickel and copper.

Many expect more gold trading to move to China too. Allegations of rigging have rocked the current hub, in London. China—the world’s...

from The Economist: Finance and economics http://ift.tt/1GR7YgU

Credit where taxes are due

IN RECENT years tax credits for the poorly paid have become a big part of the welfare systems of America and Britain. Nearly a quarter of Americans are eligible for the Earned Income Tax Credit (EITC), which can boost the income of workers with big families by over $6,000 a year by reducing their taxes. In Britain similar credits account for 14% of all welfare spending.

The credits have critics. Left-wing activists have long complained that although the tax credits are paid to the poor, it is really “corporate welfare queens” such as McDonald’s and Walmart that benefit, since the credits allow them to pay lower wages. Now politicians on the right are joining in. David Cameron, Britain’s prime minister, has hinted that tax credits might be next for the chop in his government’s austerity drive.

Wage subsidies had been politically popular because they help the poor while still encouraging work. But politicians like Mr Cameron wonder whether the same objective could be achieved at less cost to taxpayers by raising the minimum wage that firms must pay workers. The hitch, of course, is that a higher minimum wage might dent employment. Tax...

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

Small is ugly

IF THE recent actions of China’s regulators are anything to judge by, its lenders need help. Over the past ten days alone, the central bank has pumped extra cash into the financial system, cut interest rates and lowered the portion of deposits banks must hold in reserve; the government has scrapped a ceiling on their loan-to-deposit ratios. The combined effect is to free more cash for banks to lend—a boost for banks seeking to improve the return on their assets as well as a prop for the sputtering economy and plunging stockmarket. The official data, though, suggest China’s lenders are still in rude health: bad loans make up just 1.4% of their balance-sheets. That is a touch above the level of the past few years, but still more than two-thirds lower than before the global financial crisis.

How to explain the discrepancy? One possible answer is that bad loans are a lagging indicator. It is only after the economy has struggled for a while that borrowers begin to suffer. Looked at this way, China is trying to anticipate problems, keeping its banks in good nick by sustaining economic growth of nearly 7% year-on-year. Another, more...

from The Economist: Finance and economics http://ift.tt/1GR7YgI

A middle-class mirage

AMERICA’S workers have seen better days. Over the past decade private-sector wages have grown at an average yearly rate of just 0.3% after accounting for inflation—a fraction of their typical pace of growth. One response, embraced by Barack Obama this week, is to oblige firms to grant 5m more workers “overtime pay”—1.5 times their normal wage—for any period they work in excess of 40 hours a week. Hillary Clinton, the probable Democratic candidate for president, called it “a win for our economy and workers”. The economic evidence behind the policy, though, does not justify her enthusiasm.

The Fair Labour Standards Act (FLSA) of 1938 fixes a threshold salary above which workers are not entitled to overtime. The intention is to strip out managers and supervisors who, the argument goes, are harder to coerce into working unreasonable hours and are well compensated for their trouble anyway. But the exemption has not kept pace with inflation. It is now $23,660 a year, below the poverty line for a family of four ($24,250). The proportion of full-time salaried workers eligible for overtime pay has fallen from 62% in 1975 to 8% today. Mr Obama plans to...

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

Right back where we started

ANY investor who fell asleep on January 1st and woke up on June 30th might feel they had not missed anything. The S&P 500 index ended the first half pretty much where it started; the same is true of London’s FTSE 100 index. The ten-year Treasury-bond yield edged up by around a fifth of a percentage point (see chart). Nor would a reawakened investor be particularly surprised to find that Europe was still engulfed in a Greek crisis.

But a lot did change in the first half of the year and recent events have emphasised three lessons. The first is that political risk is very real. Over the past decade or so, investors seem to have decided that such risks are overblown. Middle East crises have come and gone without the straits of Hormuz being blocked and oil supplies impeded. Congress has repeatedly threatened to shut down the government and drive America into technical default by refusing to raise the limit on its debts—but at the last minute, deals get done. Scotland did not vote to leave the United Kingdom. Russia and the West may be at loggerheads over Ukraine, but that has affected Russian markets, not those in Europe or America...

from The Economist: Finance and economics http://ift.tt/1GR7Y0g

Time to call the FARC’s bluff

IT WAS never going to be easy. Three times since the 1980s Colombian governments have tried but failed to broker peace with the guerrillas of the Revolutionary Armed Forces of Colombia (FARC). Even so, the latest talks seemed set to succeed in ending a conflict that has dogged Latin America’s third-most-populous country. Facing strengthened security forces, the FARC, a narco-Stalinist outfit, has lost all hope of military victory. Unlike the previous efforts, the negotiations are following a tight agenda, of five points, aimed at ending the conflict for good. They take place in Havana, opaquely, in an effort to insulate them from the continuing conflict back home.

But the process has been grindingly slow. After 32 months agreements have been reached on only three of the five points. In the past year the two sides have become bogged down on the most difficult issue—transitional justice, or what punishment, if any, guerrilla leaders accused of war crimes should face.

Now, for the first time, the whole peace process looks in jeopardy. In April the FARC killed 11 soldiers bivouacked in a village sports centre in Cauca, in the south of the...

from The Economist: The Americas http://ift.tt/1f5kUtD

A furious beating of wings

Prepare for a pecking

MAKING a politician who is given to bursts of rage and colourful language seem cuddly and reassuring is a hard job. So too is transforming the image of a party that is branded by opponents as a bunch of tax-and-spend socialists who would bungle the nation’s economy.

Both makeovers will be needed if Thomas Mulcair is to capitalise on the chance he has to lead his New Democratic Party (NDP) to victory and become Canada’s first really left-wing prime minister. After overturning four decades of Progressive Conservative rule in the province of Alberta in May, the NDP is now tipped to come top in national elections in October.

But does the party, or its leader, have the gravitas to govern? The label of “Angry Tom”—fine for an opposition gadfly but not for the leader of a big, important country—has dogged Mr Mulcair at least since 2008. That was when, as a newish MP, he lost his cool with the Conservatives during a row over a Malaysian asylum-seeker. What happened is disputed, but he was called to order by the Speaker after some Tories said he made menacing gestures. He once called a...

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

Tickets to paradise, and beyond

“THIS is a remarkably rewarding industry,” Timothy Harris, the prime minister of St Kitts & Nevis, told the leaders of three similarly small island nations—Antigua, Dominica and Grenada—last month.

Selling passports is indeed a boon to those four mini-states. Clients do well too: their documents give them visa-free entry to many countries, including Britain and the 26 European nations of the Schengen area. (In May, Grenada and Dominica joined the other two in enjoying Schengen access.) Apart from money, the islands don’t ask much. You have to spend five days on Antigua; the others do not demand even that.

In St Kitts, this year’s budget statement called the sales a “mainstay”. The country’s income topped $100m in 2013: over 13% of GDP, and more than one-third of state revenue. It entered the business in 1984 but sales surged after the terms were revised in 2007. A cheap option is a $250,000 gift to the Sugar Industry Diversification Foundation, a state body that has published no accounts since 2011.

Every so often, there is trouble. In 2013 an Iranian flew to Canada on a St Kitts passport; he falsely...

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

The cat’s miaow

AS SOON as she was born, Tama-chan (“Little Treasure”) knew she was divine. Most cats presume it; she was sure of it. Her immediate situation—whelped by a stray in the workers’ waiting room at Kishi station, on a rural railway line in western Japan—did not augur brightly. But as soon as her eyes opened, she saw what she was. Rolling languorously on her back, she admired her white underside; delicately twisting her neck to wash, she noted the black and brown bars on her back. She was a tortoiseshell, or a calico cat to Americans. They had been four in the litter; only she carried the propitious marks.

Tortoiseshells had long been prized in Japan. In another age she would probably have been a temple cat, leading a contemplative life among maple and ginkgo trees, killing mice and, in exchange, earning the regard of monks and pilgrims. Tales were legion of poor priests or shopkeepers who had shared their few scraps with the likes of her and had, in return, found riches. Or she might have been a ship’s cat, since tortoiseshells had the power to keep away the ghosts of the drowned, whose invisible bodies filled the sea and whose flailing, imploring hands...

from The Economist: Obituary http://ift.tt/1LKm4bg

Making friends again

WHEN Barack Obama took his Brazilian counterpart, Dilma Rousseff, for a stroll around the Martin Luther King memorial on June 29th, the sky over Washington was cloudless. There was no hint, either, of the heavy weather caused by revelations two years ago that American spooks had spied on Ms Rousseff’s e-mail. She reacted by calling off a state visit, plunging relations into a wintry gloom. Nobody expects that upset to be forgotten, but the rapport between the presidents (pictured, with a ranger) has warmed.

So too have political ties, including in sensitive areas such as climate-change diplomacy. The leaders exchanged vows to generate 20% of their countries’ electricity from renewable sources (other than hydropower) by 2030. For Brazil, some recent emollience in American foreign policy smoothed the path to reconciliation: it felt easier to make up with an American president who is exchanging embassies with Cuba (see story) and pursuing a nuclear deal with Iran.

Apart from the fence-mending, Ms Rousseff’s trip was dominated by trade. She wooed...

from The Economist: The Americas http://ift.tt/1GQKo4F