Ten Million Reasons to Vaccinate the World Our New Model of the True

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The Israeli- Palestinian conflict: another lethal spiral

MAY 15TH–21ST 2021

Ten million reasons to vaccinate the world

Our new model of the true death toll from covid-19

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RICHARD MILLE BOUTIQUES

BEIJING HONGKONG MACAU SHANGHAI SEOUL SINGAPORE FUKUOKA HANOI JAKARTA KOBE KUALALUMPUR NAGOYA OSAKA TAIPEI TOKYO

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012 Contents The Economist May 15th 2021 3

The world this week Asia 5 A summary of political 19 SouthEast Asia’s and business news second wave 20 Inoculation in Indonesia Leaders 21 Hunting in Taiwan 7 The pandemic Vaccinating the world 21 India’s hidden toll The Korean stalemate 8 Israel and Palestine 22 Stopping the cycle 23 Banyan Islamism in the Maldives 9 Supply shortages The bottleneck economy China 9 British politics The wrong conservatism 24 Football and money 10 Corporate-tax dodging 25 Icehockey woes On the cover End the contortions 26 Chaguan Youngsters A model built by The playing it safe Economist reveals the true Letters course of the pandemic. Here is 13 On Taiwan, Scotland, what to do next: leader, page 7. Spain, suicide, patents, Our covid-19 model, page 14. workers, Dickens, the United States How can the world increase its Csuite New York’s mayoral race vaccine supply? Page 16. Some 27 28 Colonial Pipeline hacked politicians want pharma Briefing patents to be weakened. Is 29 Skid Row 14 The covid-19 pandemic that a good idea? Page 59. Counting the dead 30 The eviction experiment A worrying new wave of Another epidemic covid-19 is hitting South-East 16 Producing more vaccines 30 Asia, page 19. Death of an The insufficient miracle 32 Lexington Liz Cheney and Indian bookseller: obituary, the triumph of Trumpism page 78 The Americas The Israeli-Palestinian conflict 33 Postcovid economies Only negotiations will bring 34 Hunger in Brazil lasting peace: leader, page 8. Another cycle of violence leaves 35 A postal eccentricity scores of people dead, page 36

Supply bottlenecks America’s boom is increasing worries about an inﬂation scare: leader, Middle East & Africa page 9. What an inﬂation 36 The Holy Land erupts surprise tells you about 37 Saudi Arabia turns nice America’s re-opening, page 61 38 Lake Victoria transformed Corporate tax Time for new Schumpeter For some 39 Camelnomics rules: leader, page 10, and American chief 40 Nigeria’s economy slumps analysis, page 64. Corporate executives, it was as if taxes are likely to rise in America. covid19 never happened, Who will shoulder the costs? page 60 Free exchange, page 66

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012 4 Contents The Economist May 15th 2021

Europe Finance & economics 41 French politics 61 American inflation 42 Scandal in Bulgaria 62 Buttonwood The bull 42 Green steel in Sweden case for Britain 43 Turkish tourism 63 China’s census 44 Europe’s welfare states 63 David Swensen 45 Charlemagne The coming 64 Taxing multinationals boom 66 Free exchange Corporate taxes Britain 47 Winning the peace Science & technology 48 Voter id 68 Recycling car batteries... 48 Political realignment 69 ...and rare earths 49 Slaughter in Ballymurphy 70 Gender dysphoria 50 Bagehot Labour’s big 71 Charismatic megaflora divide 71 Hypersonic flight

International Books & arts 51 The complexities of truth commissions 72 Stacey Abrams 73 Thomas Becket’s murder 74 Opioids in America 75 Napoleon’s art theft 75 Heist ﬁction

Business Economic & ﬁnancial indicators 53 SpaceX 76 Statistics on 42 economies 56 Bartleby Working mothers Graphic detail 57 Harley-Davidson revs up 77 Park attendance and changing birth rates 57 Europe’s lobbying swamp 58 Musical plagiarism Obituary 59 Pharma patents under ﬁre 78 T.S. Shanbhag, proprietor of a piece of old Bangalore 60 Schumpeter Bosses’ pay

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012 The world this week Politics The Economist May 15th 2021 5

headquarters to Texas was Seven children and two adults thrown out of court. The judge were killed in a shooting at a Coronavirus briefs found that the gun lobby was school in theRussian city of To 6am GMT May 13th 221 using what is supposed to be a Kazan; 23 others, most of them financial course of action to children, were injured. Presi Weekly confirmed cases by area, m avoid possible charges of dent Vladimir Putin said he 3 corruption in New York, where would review the country's India 2 it is incorporated. guncontrol laws. The assail Western Europe ant was a former pupil. 1 Protests continued in Colom- Other US bia for a third week. At least 13 A car bomb outside a girls' 0 people have been recorded as school in Kabul killed at least 2020 2021 Israel and Hamas, the militant being killed, though the actual 85 people, mostly pupils. The Vaccination doses group that controls Gaza, were number may be higher. Taliban denied responsibility. % of adults with on the brink of war. The crisis Around 60 investigations into The attack, which occurred in a Total ’000 1st dose nd began with clashes around the police brutality have opened. part of the city that is home to Israel 10,515 97 91 alAqsa mosque, Islam’s third President Iván Duque attempt the Hazara ethnic minority, Bhutan 482 95 0 holiest site. Israeli police fired ed to negotiate with protest has intensified concerns that UAE 11,273 86 54 stungrenades and rubber leaders, with little success. the American withdrawal from Mongolia 2,310 82 31 bullets at rockthrowing Pales What started as an outcry Afghanistan in September Malta 393 74 36 Maldives 438 74 33 tinians. Hamas and its allies against an unpopular pro will be followed by greater Britain 53,676 68 35 then fired more than 1,600 posed tax law has broadened violence against women and Bahrain 1,416 63 46 rockets at Israel, which re into a larger push for reform. minorities. Meanwhile the United States 263,133 62 44 sponded with hundreds of air Taliban seized control of a Chile 15,872 61 51 strikes on Gaza. Scores of The Scottish National Party’s district near Kabul, the second Sources: Johns Hopkins University CSSE; people, mostly Palestinians, drive for an independent in a week. Our World in Data; United Nations were killed. Israel said it had Scotland faltered after it failed killed Hamas officials. Adding to win an outright majority in India’s covid crisis continued The United States reported its to the turmoil, street fighting elections to the Scottish Parlia to engulf the country, spread lowest number of new daily broke out in several Israeli ment. Together with seats held ing into the rural hinterland cases since June. Just over cities between Jews and Arabs. by the proindependence and spilling over the country’s 22,200 cases were recorded on Greens, there is a majority for a borders. Daily recorded May 10th, down from a peak of Iran confirmed that it was referendum in the Parliament, infections in Nepalhave more than 312,000 in early talking to Saudi Arabia, its but polling has swung a bit jumped by a factor of 25 in the January. Daily deaths fell to archrival, in an effort to re against holding another vote. past month and one in every 280 on May 9th; in January solve the many issues that A bruising battle to break from two tests returns a positive they peaked at over 4,000. divide them. The secret dis the rest of the United Kingdom result, twice India’s already cussions were mediated by wouldn’t be easy. Brexit has high rate, suggesting many America’s Food and Drug Iraq and started in Baghdad proved that. cases are going undetected. Administration approved the early last month. Meanwhile, Infections are also rising use of the Pfizer vaccine in an American Coast Guard ship Britain’s Labour Party lost across SouthEast Asia, testing children aged 12 to 15. fired warning shots at boats Hartlepool in a byelection, a the capacity of health systems. from Iran’s Revolutionary constituency it had held since The World Health Organisa Guard in the Strait of Hormuz its creation in 1974. A huge Debris from China’s Long tion recommended the use of when they got too close to swing gave the Conservatives March 5b rocket plunged into the Sinopharm vaccine, the American naval vessels, the 52% of the vote, nearly twice the Indian Ocean. The Chinese first vaccine from China ever second incident in two weeks. that of Labour; sitting govern government announced that to be endorsed by the global ments have won byelections the “great majority” of the body. Produced by a state Republicans in the House of only a handful of times. La material had burned up before owned company, it will be Representatives ousted Liz bour’s leader, Sir Keir Starmer, reaching the Earth’s surface. added to the covaxpro Cheney from her senior lead came under more pressure Nevertheless, nasa accused gramme providing doses to ership role. The eldest daugh when the party lost many seats China of failing to “meet poor countries. ter of Dick Cheney, George W. in council elections. Labour’s responsible standards” Bush’s vicepresident, Ms candidate in Hartlepool said because of its failure to plan a Hailed for its comparatively Cheney has bona fide conser voters did not know what the “targeted reentry” of the low number of infections and vative credentials; her sin was party now stood for. debris. deaths, Taiwan tightened to reject the lie that last restrictions because of a small November’s election was At a summit meeting in Portu China finally released details outbreak of locally transmit stolen. A defiant Ms Cheney gal, eu leaders rejected propos of its census, which showed ted cases. The country’s stock urged her party to stand up to als by Joe Biden to waive that its population reached market swooned. Donald Trump, warning that covid19 vaccine patents as a 1.41bn last year, up by 5.4% “remaining silent, and ignor way to increase the supply of from a decade ago. The results ing the lie, emboldens the liar.” the drugs. They argued that it contradicted media reports →For our latest coverage of the would be more helpful if that suggested China’s pop virus please visit economist.com/ An attempt by the National America were to relax its ulation had fallen below 1.4bn, coronavirus or download the Rifle Association to declare restrictions on the export of which would have marked the Economist app. bankruptcy and move its legal vaccines. first decline in six decades.

012 6 The world this week Business The Economist May 15th 2021

Markets were also rattled by Elon Musk, a vocal backer of payouts for executives dished Consumer prices weak data on the American digital currencies, reversed his out during the pandemic. The United States, % increase on a year earlier jobs market. Employers added threemonthold policy and pay policy—which increases 4 266,000 people to their pay said that Tesla would not now the potential bonus and stock 3 rolls in April, well below the accept bitcoin as payment for awards for Pascal Soriot—was 2 numbers for February and its cars because of the environ approved by just 60% of share March. And job vacancies hit mental effects from the elec holders at the meeting. 1 8.1m at the end of March, the tricity used to power the cur 0 most since records were first rency on computers. There were more signs of a 2019 20 21 compiled in 2000. That led to a recovery in the tourism eu tui Source: US Bureau of Labour Statistics lot of headscratching by econ The ’s General Court, the industry. , the world’s omists trying to explain a lack second highest in the bloc, largest tour company, said America’s annual inflation of hiring when the economy is ruled that the European Com there had been a clear pickup rate soared to 4.2% in April, taking off. mission was wrong to order in demand. Although it doesn’t higher than expected and Amazon to pay €250m expect its business in 2021 to fuelling concerns that rising ($300m) in taxes to Luxem reach prepandemic levels, consumer prices may become Just warming up bourg, finding that the com bookings for holidays next a problem for the American The British economy shrank mission had not proved the year from Britain, one of its economy. Inflation hawks by 1.5% in the first quarter firm received special tax treat biggest customer markets, are blame the huge amounts of compared with the previous ment. The same court made a exceeding bookings at this stimulus injected into the three months. The postChrist similar decision last year in point in 2019. economy and a boom in con mas lockdown hit output hard the case of Apple; the commis sumer demand (prices for used in January, but by March it was sion is appealing that ruling to cars were up by a fifth, year on expanding again as businesses the European Court of Justice. Choose your words carefully year). Global supply bottle adapted to the restrictions. The share price of Meituan necks are also pushing up gdp was still 6% smaller than America’s Department of plunged, after the Chinese costs for manufacturers. The before the start of the pandem Defence agreed to remove shopping platform’s chief Biden administration, how ic in February 2020. Xiaomi from its ban on Amer executive posted an ancient ever, thinks inflationary pres ican investment in companies poem on social media that was sures are temporary and will SoftBank reported net income that are said to have ties to the taken as a swipe against the ease later this year. of ¥5trn ($46bn) for the year Chinese army. The maker of government. Like Alibaba, ending March 31st, a record smartphones and other Meituan is in the government’s Commodity prices are also annual profit for a Japanese devices had already won a crosshairs for being too big going up, with the prices of company. Much of that came suspension of the ban in court. and influential, and is under iron ore and copper reaching from gains in its visionfund investigation for alleged anti record highs, in part because investments, particularly Almost 40% of the shareholder competitive practices. Wang China’s factories are sucking Coupang, a South Korean vote at AstraZeneca’s annual Xing posted a poem written up supplies. Oil prices are on ecommerce company that meeting rejected the salary during the Tang dynasty over the ascent again, approaching went public in March. It re package for its ceo, the latest 1,000 years ago, which crit $70 for a barrel of Brent crude. ported a deep quarterly loss in a wave of rebellions by icised the emperor’s attempt to this week, despite rising sales. investors against generous crush dissent. The fbi launched an investiga tion into a cyberattack that forced the closure of the Colonial Pipeline, which stretches from Texas to New Jersey, providing half the transport fuel for America’s east coast. A criminal gang called DarkSide claimed re sponsibility. It describes itself as apolitical. There was some panicbuying of petrol (gas) as pump prices soared.

With the outlook for inﬂation uncertain, stockmarkets bounced around as investors pondered whether the Federal Reserve would change direc tion and raise interest rates. The share prices of high growth big tech companies have fallen in recent weeks because higher bond yields lower the value of their fore cast earnings.

012 eaders 7L

Vaccinating the world

Our model reveals the true course of the pandemic. Here is what to do next his week we publish our estimate of the true death toll from plied by July would be worth hundreds of billions of dollars. Less Tcovid19. It tells the real story of the pandemic. But it also circulating virus means less mutation, and so a lower chance of contains an urgent warning. Unless vaccine supplies reach a new variant that reinfects the vaccinated. poorer countries, the tragic scenes now unfolding in India risk Supplies of vaccines are already growing. By the end of April, being repeated elsewhere. Millions more will die. according to Airfinity, an analytics firm, vaccinemakers pro Using known data on 121 variables, from recorded deaths to duced 1.7bn doses, 700m more than the end of March and ten demography, we have built a pattern of correlations that lets us times more than January. Before the pandemic, annual global fill in gaps where numbers are lacking. Our model suggests that vaccine capacity was roughly 3.5bn doses. The latest estimates covid19 has already claimed 7.1m12.7m lives. Our central esti are that total output in 2021 will be almost 11bn. Some in the in mate is that 10m people have died who would otherwise be liv dustry predict a global surplus in 2022. ing. This tally of “excess deaths” is over three times the official And yet the world is right to strive to get more doses in more count, which nevertheless is the basis for most statistics on the arms sooner. Hence President Joe Biden has proposed waiving disease, including fatality rates and crosscountry comparisons. intellectualproperty claims on covid19 vaccines. Many experts The most important insight from our work is that covid19 argue that, because some manufacturing capacity is going beg has been harder on the poor than anyone knew (see Briefing). Of ging, millions more doses might become available if patent ficial figures suggest that the pandemic has struck in waves, and owners shared their secrets, including in countries that today that the United States and Europe have been hit hard. Although are at the back of the queue. Worldtrade rules allow for a waiver. South America has been ravaged (see Americas section), the rest When invoke them if not in the throes of a pandemic? of the developing world seemed to get off lightly. We believe that Mr Biden is wrong. A waiver may signal that Our modelling tells another story. When you count all the his administration cares about the world, but it is at best an bodies, you see that the pandemic has spread remorselessly empty gesture and at worst a cynical one. from the rich, connected world to poorer, more isolated places. A waiver will do nothing to fill the urgent shortfall of doses in As it has done so, the global daily death rate has climbed steeply. 2021. The head of the World Trade Organisation, the forum Death rates have been very high in some rich where it will be thrashed out, warns there may countries, but the overwhelming majority of Global mortality be no vote until December. Technology transfer the 6.7m or so deaths that nobody counted were Cumulative, m would take six months or so to complete even if 10 in poor and middleincome ones. In Romania it started today. With the new mrna vaccines Estimated excess deaths and Iran excess deaths are more than double the 5 made by Pfizer and Moderna, it may take longer. Reported deaths number officially put down to covid19. In from covid-19 Supposing the tech transfer was faster than Egypt they are 13 times as big. In America the 0 that, experienced vaccinemakers would be un difference is 7.1%. 2020 2021 available for hire and makers could not obtain India, where about 20,000 are dying every inputs from suppliers whose order books are al day, is not an outlier. Our figures suggest that, in terms of deaths ready bursting. Pfizer’s vaccine requires 280 inputs from suppli as a share of population, Peru’s pandemic has been 2.5 times ers in 19 countries. No firm can recreate that in a hurry. worse than India’s. The disease is working its way through Nepal In any case, vaccinemakers do not appear to be hoarding and Pakistan. Infectious variants spread faster and, because of their technology—otherwise output would not be increasing so the tyranny of exponential growth, overwhelm healthcare sys fast. They have struck 214 technologytransfer agreements, an tems and fill mortuaries even if the virus is no more lethal. unprecedented number. They are not pricegouging: money is Ultimately the way to stop this is vaccination. As an example not the constraint on vaccination. Poor countries are not being of collaboration and pioneering science, covid19 vaccines rank priced out of the market: their vaccines are coming through co- with the Apollo space programme. Within just a year of the virus vax, a global distribution scheme funded by donors. being discovered, people could be protected from severe disease In the longer term, the effect of a waiver is unpredictable. Per and death. Hundreds of millions of them have benefited. haps it will indeed lead to technology being transferred to poor However, in the short run vaccines will fuel the divide be countries; more likely, though, it will cause harm by disrupting tween rich and poor. Soon, the only people to die from covid19 supply chains, wasting resources and, ultimately, deterring in in rich countries will be exceptionally frail or exceptionally un novation (see Business section). Whatever the case, if vaccines lucky, as well as those who have spurned the chance to be vacci are nearing a surplus in 2022, the cavalry will arrive too late. nated. In poorer countries, by contrast, most people will have no choice. They will remain unprotected for many months or years. A needle in time The world cannot rest while people perish for want of a jab If Mr Biden really wants to make a difference, he can donate vac costing as little as $4 for a twodose course. It is hard to think of a cine right now through covax. Rich countries overordered be better use of resources than vaccination. Economists’ central es cause they did not know which vaccines would work. Britain has timate for the direct value of a course is $2,900—if you include ordered more than nine doses for each adult, Canada more than factors like long covid and the effect of impaired education, the 13. These will be urgently needed elsewhere. It is wrong to put total is much bigger. The benefit from an extra 1bn doses sup teenagers, who have a minuscule risk of dying from covid19, be

012 8 Leaders The Economist May 15th 2021

fore the elderly and healthcare workers in poor countries. The needs to be made of finished vaccine. In some poor countries, rich world should not stockpile boosters to cover the population vaccine languishes unused because of hesitancy and chaotic or many times over on the offchance that they may be needed. In ganisation. It makes sense to prioritise getting one shot into ev the next six months, this could yield billions of doses of vaccine. ery vulnerable arm, before setting about the second. Countries can also improve supply chains. The Serum Insti Our model is not predictive. However it does suggest that tute, an Indian vaccinemaker, has struggled to get parts such as some parts of the world are particularly vulnerable—one exam filters from America because exports were gummed up by the ple is SouthEast Asia, home to over 650m people, which has so Defence Production Act (dpa), which puts suppliers on a war far been spared mass fatalities for no obvious reason. Covid19 footing. Mr Biden authorised a oneoff release, but he should be has not yet run its course. But vaccines have created the chance focusing the dpaon supplying the world instead. And better use to save millions of lives. The world must not squander it. n

Israel and the Palestinians Stopping the cycle

Only negotiations will bring lasting peace t was a confrontation waiting to happen, in a conflict the court is reviewing a judgment to evict Palestinian families from Iworld would rather ignore. Israelis and Palestinians have once the Sheikh Jarrah neighbourhood of East Jerusalem. Their again goaded each other to the brink of war in the Holy Land. homes sit on land that was owned by Jews before Jordan occu Hundreds of rockets, fired by Palestinian militants, have been pied the eastern part of Jerusalem in 1948. Israeli law allows the aimed at Jerusalem, Tel Aviv and southern Israel. Gaza, the Pales heirs of the original owners to reclaim property in East Jerusa tinian territory run by Hamas, a violent Islamist movement, has lem. Yet Palestinians cannot claim their former homes in West been hit even harder by Israeli air strikes. Arabs and Jews have Jerusalem (or anywhere else in Israel). No wonder Palestinian clashed in the streets of Israeli cities. Dozens of people, most of residents of the city are always ready to protest. them Palestinian, have been killed. The injustices elsewhere are worse. Palestinians in the wider The worst fighting between Israelis and Palestinians in years West Bank, like those in Jerusalem, have watched Israel confis has Jerusalem at its heart, as so often (see Middle East & Africa cate land and build settlements on occupied territory, which is section). In April, at the start of the Muslim holy month of Rama illegal under international law. They must also deal with Israeli dan, Israel’s police chief fenced off the plaza around the Damas checkpoints and an onerous permit regime. In Gaza more than cus Gate, one of the entrances to Jerusalem’s old walled city and 2m Palestinians have been cut off from the world by Israeli and a gathering spot for Palestinians. The move, made for “security Egyptian blockades since 2007, when Hamas grabbed control. reasons”, led to clashes between Palestinians and Israeli police. The territory struggles to keep the lights on; the tap water is Hundreds were injured. Then the rockets started flying. filthy. Despair at such conditions led to violence in 2018 and The violence, as ever, is counterproductive. 2019, and is feeding the current spasm. Turning Israeli cities “into hell”, as Hamas Yet Israeli politicians ignore the conflict. threatens, will not help the Palestinians who The Palestinian issue did not feature in any of suffer grievously in Gaza—just the opposite, in the four elections Israel has recently held. Most fact. Every rocket that Hamas fires makes it eas Israelis are comfortable with the “antisol ier for Israel to claim that it has “no partner for utionism” of Binyamin Netanyahu, the prime peace” and to intensify its siege of Gaza. But Is minister, who shows little interest in pursuing rael, too, must reconsider its strategy. Its lead a permanent settlement with the Palestinians. ers view the broader conflict as something to be His domestic rivals are edging closer to a deal managed, not solved. Yet its unjust treatment of the Palestinians that would push him out of power. But, before the recent vio stores up trouble. Today’s crisis was predictable—even if the lence, they said little about how they would handle the conflict. spark that ignited it was not. Palestinian leaders have made it easy for Israel to give up on Jerusalem epitomises the problem. Israel claims the city as peace. Hamas is more interested in firing rockets than improv its “eternal and undivided capital”. But its inhabitants are irrevo ing the lives of Gazans. Its rival, Fatah, has not done much better cably split. The eastern part of the city, although captured by Is in the West Bank. The party’s leader, Mahmoud Abbas, is in the rael in 1967, remains largely Palestinian. The Oslo accords of 1993 17th year of a fouryear term as Palestine’s president. He seems left the city’s status to be settled in a permanent peace deal be concerned mainly with preserving his own power. On April tween Israel and the Palestinians. But Israel has built a wall sep 29th, blaming Israel for restricting voting in East Jerusalem, he arating Jerusalem from the Palestinian hinterland. It seeks to indefinitely postponed elections that Fatah was likely to lose. strengthen its claim to the whole city by ringing it with new Jew With little hope of a better future, a good number of young ish homes and squeezing Palestinians out. Though they make Palestinians favour confronting Israel. That makes repeated fits up 38% of Jerusalem’s population, most local Palestinians are of deadly violence inevitable. Only negotiations will bring last not citizens but mere “residents”, granted access to health care ing peace. Western and regional powers should press for them to and social security, but not the same rights as Jews. resume; Israeli and Palestinian leaders should come to the table. This disparity in the law is at the heart of a case before Israel’s Solving the conflict will be even harder than managing it. But Supreme Court that is making the atmosphere more febrile. The talking is the one permanent way out. n

012 The Economist May 15th 2021 Leaders 9

Supply shortages The bottleneck economy

America’s boom is increasing worries about an inflation scare he global economy is entering unfamiliar territory. After a year on year, up from 2.6% in March (see Finance section). This Tdecade of worries about inadequate demand and spending partly reflects “base effects”: oil prices are only as high asthey power in the aftermath of the global financial crisis, signs of in were in 2019, but 272% higher than in April 2020. It also reflects a sufficient supply are now emerging. A lack of goods, services genuine underlying rise in global prices. China’s factorygate and people means that redhot demand is increasingly met prices are rising at the fastest rate in over three years. slowly or not at all. There are already signs that supply bottle Central banks insist that their maximal stimulus must con necks may lead to nasty surprises which could upset the post tinue for fear of jeopardising the nascent recovery (see Charle pandemic recovery. Nowhere are shortages more acute than in magne). Lael Brainard, a governor of the Federal Reserve, has America, where a boom is under way. Consumer spending is said that the inflation spike as the economy reopens will be growing by over 10% at an annual rate, as people put to work the “largely transitory”.Jerome Powell, the chairman, sees little rea $2trnplus of extra savings accumulated in the past year. More son to worry. The Fed will tolerate somewhat abovetarget infla stimulus is still being doled out. tion for a bit, in part because it expects prices The boom is creating two kinds of bottle Container-freight costs soon to fall back. So do many forecasters. neck. The first relates to supply chains. There China to west coast of America Yet this approach carries dangers. One is that are shortages of everything from timber to $’000 per 40-foot container inflation fades slowly. The supply bottlenecks 5.0 semiconductors. The cost of shipping goods of the early phase of the pandemic in 2020 from China to America has tripled. Companies 2.5 cleared fast, but there is no guarantee this will have not reported supplier delays this severe in 0 happen now. Inflation expectations may also decades. In the past year many firms have cut 18172016 212019 rise if people come to believe that central banks their investment in logistics. Lockdowns have will act slowly and too late. Many companies left some container ships stranded. Companies are trying to go are now discussing inflation with their investors. Bondmarket from 0 to 60 and it shows. traders think the Fed will be forced to act sooner than it wants. The second kind of bottleneck is in labour markets. In April Bill Dudley, a former governor, worries that the Fed will have to America created only 266,000 jobs, many fewer than the 1m or raise interest rates to as high as 4.5% to cool the economy. more that had been expected. Yet job vacancies are at alltime This points to the danger that sharp rate rises rock markets. highs, and so firms are struggling to fill positions. Economists So far the main event has been a selloff in tech stocks, which is argue over whether generous unemployment benefits are giving manageable. Banks are well capitalised. Yet the recent implo people a reason not to look for work. It also takes time for people sions of Archegos, a hedge fund, and Greensill Capital, a finance to move from dying industries to growing ones. firm, are a reminder of the hidden leverage in a financial system As booming demand runs up against tight supply, inflation is that has come to depend on low interest rates. The postpan in the spotlight. In April American consumer prices rose by 4.2% demic boom may not always be exciting for the right reasons. n

British politics The wrong sort of conservatism

Boris Johnson wants a big state that crimps civil liberties onservatism, as practised by the British Conservative Par pandemic was lethally slipshod, and there was much grumbling Cty, is a capacious creed, open to a wide range of interpreta about his leadership. However, on May 6th the Conservatives tions. For Margaret Thatcher, it meant the moral and economic thumped the Labour Party in a byelection and in a series of local discipline of the free market; for David Cameron, liberal cen polls (see Britain section). trism and the embrace of globalisation. Mr Johnson’s popularity springs from several sources. One is Boris Johnson’s interpretation has been hard to decipher, a successful vaccine rollout, and consequent liberation of the partly because it has been obscured by the chaos of covid19 and population from lockdown. Another is Mr Johnson himself. His partly because he has never shown any commitment to a set of boisterous willingness to outrage liberal sensibilities goes down political ideas. So the Queen’s Speech, delivered on May 11th, in well outside the cities, and his ﬁnely tuned political instincts which the government presents its programme for the next ses have led him to espouse a combination of cultural conservatism sion of parliament, was of particular interest. It was the clearest and statist economics that has more in common with Gaullism expression so far of what might one day be called Johnsonism. or Eisenhower’s “modern Republicanism” than it has with That Mr Johnson is now thought quite likely to be in power Thatcherism or Cameronstyle conservatism. for long enough to have his own “ism” would have surprised Some of the intervention that the government promises is many just a year ago. His management of the early stages of the welcome. It plans to boost investment in r&d and to “level up”

012 10 Leaders The Economist May 15th 2021

the country by splashing out on infrastructure and on vocation to further its levellingup agenda. Both should send shivers al education, which both need money and attention. It promises down taxpayers’ spines. to reform the planning system, which allows homeowners to The programme also includes a constitutional powergrab. veto development and thus condemns Britons to live in expen Mr Johnson has had his sights set on the judiciary ever since the sive rabbithutches. Supreme Court prevented him from proroguing Parliament over Mr Johnson’s solution to the problem of nimbyism is to limit Brexit in 2019. That explains plans to limit the judges’ power to local authorities’ say on planning, giving central government challenge the executive, as well as to restore the executive’s dis more control over development. Whether or not he will really cretion over when to call an election, which Mr Cameron’s co face down angry suburbanites in the Home Counties over new alition government had renounced. houses—he has already bottled out of a previous attempt—this And as state power extends, so civil liberties will be crimped. approach derives from the fundamental problem with Johnson The government has entertained new restraints on protest, limi ism: his tendency to grab power. If local authorities do not want tations on asylum and voterid requirements. It looks set on development, Mr Johnson’s answer is not to give them more say meddling in culture and universities. These measures are all de over taxation and thus an incentive to grow, but to force them to signed to press culturally conservative voters’ hotbuttons. accept it. If parts of the country are poor, his answer is not to al low them to develop their own growth strategies, but to create a Johnsonism unbound central fund to give them money. For a prime minister who hopes to use his newly recovered man The government is extending its control over the economy, date to call an early election and wants to be seen to be doing too. Its plan for freeports is an attempt to direct investment to stuﬀ, the extension of centralgovernment power has a clear ap particular parts of the country. It is taking the opportunity that peal. For this newspaper, which puts a high price on civil liber Brexit oﬀers to give itself more discretion over handing out ties and believes that smaller states and freer markets make for money to private companies and over using public procurement more prosperous countries, it does not. n

Corporate-tax dodging End the contortions

Corporate-tax gymnastics have reached Olympic gold-medal levels. Time for new rules ax companies too much, and growth will shrivel. Tax them oecd reckons. Taxpayers in America or France are right to feel Ttoo little, and resentment will soar. The public and politi aggrieved when the income a tech firm generates there is mag cians in Western countries have long thought the treatment of icked away to Ireland or a shell company in the Caribbean. multinationals falls too close to that second extreme. Now the A globally coordinated minimum tax would blunt the incen system is reaching breakingpoint (see Finance section). Over 40 tive to engage in shenanigans (see Free exchange). Some countries are squabbling over how to impose levies on Silicon 330,000 people list “transfer pricing” on their LinkedIn profile. Valley firms. Meanwhile the pandemic is forcing governments Treating companies as a whole, rather than relying on transfer to find ways to plug their fiscal deficits, not least the Biden ad pricing, could reduce the army of advisers running circles ministration, which wants to increase multinationals’ tax rate. around tax authorities. Allocating taxing rights according to The best hope for an amicable outcome lies in a forum run by where firms really operate would be harder to game, as consum the oecd, a club of mainly rich countries, where this summer139 ers and staff are less mobile than algorithms. countries hope to agree on new tax principles. Talks at the oecd are at least moving in the Success would represent the most important US multinationals right direction, with both a minimum tax and a overhaul to the international architecture in a Allocation of foreign activities reallocation of taxing rights under discussion. century. It would also help avoid chaos. By geography, 2018, % of total The Biden administration wants a minimum 250 7550 100 In theory, globetrotting companies pay tax global rate of 21%, but squeals from havens es based on where they have their headquarters, Pre-tax profits Tax havens mean that1015% is more probable. Some global and where they do the work that produces their profits are likely to be freed from the broken Other countries profits. An individual firm’s legal affiliates are Employees “arm’s length” transferpricing approach, but typically taxed separately, with transfers be only a small slice of them. tween them recorded as if on the open market. In practice, firms Bolder reform would be better. Tax authorities should do cut their tax bills by divorcing their reported profits from where away with the fiction that intangible capital can be priced accu they conduct business. rately through transfer pricing and instead try to reflect where This has become easier because of the rise of intangible as activity takes place, by looking at sales and where employees are. sets such as brands. The share of American multinationals’ for This would benefit not only shortchanged advanced economies eign profits booked in tax havens has doubled since 2000, to but also poorer countries, which often lose out too. 63% in 2018. We estimate they had only 5% of their staff in these Time is of the essence. Without reform, the distortion and places. They booked more profit in Bermuda than in China. disorder will worsen. Corporate taxdepartments will arbitrage Tax havens insist that rockbottom tax rates are an expres mismatches between different countries’ tax laws. And coun sion of their sovereignty. But around the world exchequers are tries that are shortchanged will take action on their own, lead robbed of up to $240bn a year by firms rerouting profits, the ing to an acrimonious tangle of tax grabs and tariff spats. n

012 Executive focus 11

012 12 Executive focus

Chief Executive Officer Malta Financial Services Authority

About the Malta Financial Services Authority How to apply or query for The Malta Financial Services Authority (MFSA) is the single prudential and conduct regulator of financial services in further information Malta. The MFSA regulates banking, financial institutions, payment institutions, insurance companies and insurance intermediaries, investment services companies and collective investment schemes, securities markets, recognised Candidates are to forward a investment exchanges, trust management companies, company services providers, VFAs and pension schemes. copy of their Curriculum Vitae The Role (C.V.) and an accompanying You will be articulating the vision and strategy for financial services regulation and enhancing the reputation and standing of Malta’s financial services sector. You will also be responsible for the overall performance of the Authority covering letter providing the and the implementation of its objectives, strategy, and of policies as set by the Board of Governors. Furthermore, you motivation for the application will help define and establish the jurisdiction’s and MFSA’s risk appetite, through formal definition and categorisations of risk, at gatekeeping, as well as at supervisory and enforcement levels. to [email protected].

Your main responsibilities will focus on ensuring that supervisory and operational activities are undertaken in alignment with the MFSA’s values and the established ethical principles. In addition, you will work closely with the Board of Governors to help translate the strategy and policies into their operational elements and oversee the running of the MFSA Executive Committee. One of your key tasks will be identifying mechanisms for establishing networks and For additional information on relationships with other local and international regulatory authorities. the MFSA and the current opportunity, visit The Candidate You are to hold prior experience working in a regulatory environment ideally with exposure to multiple areas within www.mfsa.mt/vacancies financial services regulation. You should possess excellent communication skills and a proven track record of engaging across segments within and outside organisations and the ability to make good decisions which are based upon sound judgements and analysis, evidence-based and well-documented case scenarios. You should be able to demonstrate the ability to manage and lead in a complex, corporate environment, featuring multiple stakeholders, and layers of analyses. You should possess a solid academic background in Financial Services, Management, Closing date for applications: Accountancy, Law and/or in other finance-related areas. 23 May 2021

Jobsplus Permit No: 144/2021

012 Letters The Economist May 15th 2021 13

and suicide rates have fallen as of overwork, their success Complacent Taiwan The church in Spain a consequence. making everybody else feel Though the risk of escalation It is true that Spain’s constitu nick airey that they have failed. between Taiwan and China is tion of 1978 “separated church Psychiatrist christopher voisey increasing, the Taiwanese and state, but acknowledged Sheldon, Devon Singapore public remain nonchalant Spaniards’ religious faith” about the possible outbreak of (“Empty pews, big pulpit”,May war (“The most dangerous 1st). But it went further than Patent law A Dickens of a story place on Earth”, May 1st). The that. Article 16 declares: “the “Ruling the world” (April 24th) Pyramid schemes of the type chief reason is the global public authorities shall take made the point that British described in your obituary of demand for semiconductor the religious beliefs of Spanish lawyers have lost the right to Bernard Madoff (April 24th) chips. Mark Liu, chairman of society into account and shall practise in Europe, potentially form important components Taiwan Semiconductor Manu in consequence maintain undermining the reach of in two novels by Charles facturing Company, has said appropriate cooperation with British courts and practition Dickens, “Martin Chuzzlewit” that his firm is the silicon the Catholic church and the ers. One important area where and “Little Dorrit”. The modus shield preventing Taiwan from other confessions.” No other the links remain is patents. operandi in both cases is an attack by mainland China. religious group is mentioned The European Patent Conven remarkably similar to your This view is widely shared by by name. The left at the time tion (and its associated Euro account. Decades before the the Taiwanese public. Su viewed this as introducing pean Patent Office) is an infamous Ponzi scheme, I’d Tsengchang, the prime min covert confessionalism. international treaty organisa like to know whether they ister, thinks that “as long as the Furthermore, the church is tion independent of the eu, came purely from the fertile world needs Taiwan, the island the only one that benefits from and so Britishbased patent imagination of the great will be safe.” the system that allows taxpay attorneys can still prosecute author, or whether such con This mentality, based on ers to donate 0.7% of their European patent filings in tricks existed in England at the the belief that the internation annual tax income to it, with Munich and The Hague. Brit time. It seems safe to assume al community will protect out increasing their total tax ain is a member of its board. that Madoff’s victims did not Taiwan because of its econom bill. Yet there are a significant British patent courts are have the benefit of reading ic importance, is illfounded. number of Muslims in Spain as often used to clear the way for either book in their youth. Even though the discussion well as Jews and Protestants. new innovators faced by john douglas hey centres on the disruption of According to the 1979 agree threats of injunctions or costly Calgary the supply chain for chips, ment between Spain and the licences. That’s an important Taiwan’s strategic importance Vatican, the church was meant service the British legal system does not guarantee its safety. to work towards selffinanc can still provide to the world. Too many Cs at work Ignoring these perils can only ing, but this has not happened. tony clayton I laughed out loud at Bartleby’s put the island in a more dan Spain remains far from being a Former chief economist at the satire of chief impact officers gerous position. Frenchstyle secular state. Intellectual Property Office (April 10th). Each one I have c.y. huang william chislett Sevenoaks, Kent met struggled to articulate President Elcano Royal Institute what good or service they fcc Partners Asia Madrid practically made available. The Taipei Not every worker gets a lift expansion of the Csuite has Tearing down barriers to occu been mindboggling in my Covid and community pations through meritocratic own organisation. When I Scots who want to stay Graphic detail looked at the access to education and asked our chief information The possible preference of the economic impact of covid19 retraining will not create more security officer for policy Scottish counties that lie on on suicide rates (April 24th). opportunities for lowskilled advice on the medical data of the border with England not to The reported decrease in sui workers hoping to “climb the our staff, he asked the chief join a Scottish separation from cide, perhaps surprising given ladder” to highskilled jobs people officer, chief informa the United Kingdom should be many people’s financial hard (“Riding high”, April 10th). This tion officer and chief tech considered seriously (“Border ship, could be explained by the assumes talent and ability are nology officer to refer the ing on nervous”, May 1st). work of Emile Durkheim. In evenly distributed and that query I had raised to my own These counties have voted “Suicide”, the late19thcentury some people will work harder office, on the advice of the against the Scottish National French sociologist studied to jump on a waiting empty chief medical officer. Party in elections for the Scot people who took their own life elevator, pushing the button to Fortunately I get on well tish and Westminster parlia and how they interacted with reach a higher socioeconomic with our chief mental health ments, and, by nearly two to society. He described four position. officer. Perhaps he can allevi one, against devolution in 1979 types of suicide, one of which Mobility is upward and ate these challenges to my and independence in 2014. is egoistic suicide, when an downward. The higher floors sanity. This is the same margin by individual does not feel a have a finite space. The eleva jack seabrook which Scots voted to remain in sense of belonging. tors are also full of people on Auckland, New Zealand the European Union, prompt It is well known that in the way down. Anne Case and ing Nicola Sturgeon to claim times of war suicide rates drop. Angus Deaton call this the dark that Scotland was being This is generally ascribed to a side of democracy in “Deaths Letters are welcome and should be dragged out of the bloc “we’re all in it together” senti of Despair and the Future of addressed to the Editor at The Economist, The Adelphi Building, “against our will”. ment in a unified fight against Capitalism”. Those left behind 1-11 John Adam Street, London wc2n 6ht Sauce for the goose? a common foe. It is plausible are devalued and disrespected Email: [email protected] jack ponton that the war on covid has as “losers”. The meritocratic More letters are available at: Economist.com/letters Earlston, Scottish Borders united societies in this way elite contribute to the culture

012 14 Brieﬁng The covid-19 pandemic The Economist May 15th 2021

Global estimated daily excess deaths* v confirmed covid-19 deaths, ’000 Europe, United States, Canada & Oceania

60 10

0 2020 2021

Latin America & Caribbean Daily estimated 10 excess deaths* 40 0 2020 2021 50% 95% Conﬁdence intervals

Africa 30 10

0 2020 2021

20 Asia 40

Asia (excl. India) Africa & Oceania 30 10 Daily confirmed covid-19 deaths 20 Americas (excl. US) Europe 10

US India 0 0 J M AMJ JASONDJ FMA 2020 2021 2020 2021

*Deaths relative to expected deaths in normal years Sources: Johns Hopkins University CSSE; The Economist excess-deaths model (see economist.com/ExcessDeathsModel for full sources)

and midApril 2021. Counting the dead Studies of such mismatches have proved illuminating in some countries. For example, Britain saw excess deaths higher than official covid19 deaths during its first wave, but lower than the official co vid death rates in the second—an effect taken to show that measures to stop the Covid-19 has led to between 7m and 13m excess deaths worldwide, according to a spread of covid had saved lives which in model built by The Economist another year would have been lost to other fficial figures say there have been died from the disease. Although South Af diseases, such as seasonal flu, perhaps. O55,000 covid deaths in South Africa rica does a lot of testing compared with Something similar was seen in France. since March 27th last year. That puts the neighbouring countries, its overall rate is But the excessmortality method has country’s death rate at 92.7 per 100,000 still low. And the cause of death is uneven failed to provide useful or robust global fig people, the highest in subSaharan Africa. ly recorded for those who die at home. ures for the simple reason that most coun It is also a significant underestimate—as, it South Africa is not particularly unusual tries, and in particular most poor coun seems safe to infer, are all the other African in its levels of testing or in missing deaths tries, do not provide excessmortality sta data on the disease. outside the medical system. Excess mor tistics in a timely fashion. Global estimates Over the year to May 8th the country re tality has outstripped deaths officially re have used the official numbers, despite corded 158,499 excess deaths—that is, ported as due to covid19, at least at some knowing that the figure—currently 3.3m— deaths above the number that would be ex points in the course of the epidemic, in surely falls well short of the true total. pected on past trends, given demographic most if not all of the world. According to To try to put numbers on how much of changes. Publichealth officials feel confi the most recent data, America’s excess an underestimate it is—and thus on how dent that 8595% of those deaths were deaths were 7.1% higher than its official co great the true burden has been—The Econo- caused by sarscov2, the covid19 virus, vid19 deaths between early March 2020 mist has attempted to model the level of ex almost three times the official number. cess mortality over the course of the pan The discrepancy is the result of the fact demic in countries that do not report it. that, for a death to be registered as caused → Also in this section This work gives a 95% probability that the by covid19, the deceased needs to have had death toll to date is between 7.1m and 16 Producing more vaccines a covid test and been recorded as having 12.7m, with a central estimate of 10.2m. The

012 The Economist May 15th 2021 Brieﬁng The covid-19 pandemic 15

official numbers represent, at best, a bit was a 95% probability that the pandemic more reliable picture than official tallies. less than half the true toll, and at worst on had brought about between 2.4m and 7.1m The 50% probability ranges narrow con ly about a quarter of it. excess deaths in Asia (official covid19 siderably: 3.3m5.2m for Asia, 0.8m1.6m As well as providing a new estimate of deaths: 0.6m), 1.5m1.8m deaths in Latin for Africa, 8.2m10.5m for the world. the overall size of the pandemic, the mod America and the Caribbean (v 0.6m), 0 During 2020 deaths per day rose for 33 elling sheds light on the distribution of its 2.1m deaths in Africa (v 0.1m), 1.5m1.6m of 52 weeks. After a brief lull at the begin effects and on its overall course. deaths in Europe (v 1.0m) and 0.6m0.7m ning of 2021, they shot up to new highs, dri Unsurprisingly, most of the deaths deaths in America and Canada (v 0.6m). In ven in large part by the tragedy currently caused by covid19 but not attributed to it Oceania, with only 1,218 official deaths, the unfolding in India. Our model suggests the are found in low and middleincome model predicted somewhere between country is seeing between 6,000 and countries. Our figures give a death rate for 12,000 and 13,000, the lower bound re 31,000 excess deaths a day, well in excess of the mostly rich countries which belong to flecting the possibility that precautions official figures around the 4,000 mark. the oecd of 1.17 times the official number. against covid19 had reduced deaths from This fits with independent epidemiologi The estimated death rate for subSaharan other causes. Readers can explore the mod cal estimates of between 8,000 and 32,000 Africa is 14 times the official number. And el country by country using interactive a day. On the basis of the model it would the firstandsecondwave structure seen graphics on our website. appear that around 1m people may have in Europe and the United States is much The ranges for Africa and Asia are spec died of covid19 in India so far this year. less visible in the model’s figures for the tacularly wide. So they should be. The data Again, this does not seem out of line with world as a whole. Overall, the pandemic is from which to make strong predictions are other estimates. increasingly concentrated in developing not available, and in some places do not ex The Indian catastrophe will eventually economies and continuing to grow. ist. Yet, wide as they are, they provide a abate, as lesser spikes have elsewhere. But To create these global estimates of total excess deaths during the pandemic, we → Two data sets and a model drew on a wide range of data. Official counts of covid19 deaths, however imper Confirmed covid-1 deaths Per 100,000 people, May 10th 01 fect they may be, are available for most Official covid-19 deaths. Likely to undercount deaths due to lack of reporting and testing. countries; they are shown in the top map 0 25 50 00 50 250 350 on this page. So, frequently, are data on the number of covid cases and the share of co Total vid tests that are positive. In general, if lots of tests are coming back positive, it is a fair Hun ary 294 per 00k bet that many more infections are being missed by a testing regime that is looking only at those seeking medical treatment 3.3m and those near them. 2020 202 Boosting the gradient In some places there have been seropreva lence surveys which show how many peo ple have detectable sars-cov-2antibodies, Reported excess deaths Deaths relative to expected deaths in normal years. Not reported No data a sign of earlier infection. Other factors we by all countries, and often reported well after the fact. thought might matter included the steps governments have taken to curb the spread Total of disease—such as closing schools—and Covid-1 deaths the extent to which people moved around. if excess deaths are unknown Demography matters a lot: more youn Russia 329 ger people typically means lower death 4.5m rates. So, we inferred, do less obvious fac tors such as systems of government and the degree of media freedom. To take a spe 2020 202 cific example, excess deaths in Russia are Peru 500 5.1 times greater than official covid deaths. All told we collected data on 121 indica tors for more than 200 countries and terri Estimated excess deaths tories. We next trained a machinelearning Deaths based on combination of data on excess deaths model which used a process called gradi where available, and a statistical model where unknown. ent boosting to find relationships between these indicators and data on excess deaths 13m in places where they were available (those Total data are on the second map). The finished 10m model used those relationships to provide India 207 7m estimates of excess deaths in times and places for which there were no data avail able. A description of our methodology and the ways in which we tested it, as well as links to replication code and data, are at 2020 202

economist.com/ExcessDeathsModel. Sources: Johns Hopkins University CSSE; We estimate that, by May 10th, there The Economist excess-deaths model

012 16 Brieﬁng The covid-19 pandemic The Economist May 15th 2021

that does not mean that the global picture fer the total number of deaths due to co Covid-19, demography-adjusted* expected will improve. Though the disease rises and fatality rate, % v GDP per person, 2020 vid19. On May 6th the Institute for Health falls in waves in any given place—a first 1.5 Metrics and Evaluation (ihme) at the Uni wave takes some of the most vulnerable versity of Washington published the re No excess-mortality data and leads to responses that lower spread, a Japan sults of a simpler model which applies second wave builds up when those re Size=Share of fixed multipliers, mostly based on test population over 65 Italy sponses are loosened—the waves are not 1.0 positivity rates, to official covid19 death all in sync. That is why, to date, the number tolls in different countries and territories. of daily deaths worldwide has increased in Britain This methodology often provides numbers ten out of 15 months, including some, such US which fail to match reported excess deaths. as June and July last year, when much of 0.5 For example, ihme estimates that there the rich world was between waves. have been 100,000 covid19 deaths in Ja Peru It is worth noting, though, that despite India pan, far more than have been reported, but S. Africa hitting the poorer parts of the world harder the excessdeath figure for the year to than indicated by data on covidrelated Nigeria 0 March 2021 was 11,000. deaths, on a perperson basis covid19 real However they are made, estimates are ly has been worse in richer countries. For 1 10 100 no substitute for data, notes Ariel Karlin Asia and Africa, the average estimated GDP per person, $’000 at purchasing- sky, a statistician at the Kohelet Economic power parity, log scale deaths per million people are about half Forum, an Israeli thinktank, who as leader *Average for country’s population based on age and sex, those of Europe (including Russia). India is assuming rich-world medical treatment of the World Mortality Dataset project has comparable to Britain, at least for now. Sources: World Bank; UN; Brazeau et al. (2020); The Economist collected many of the excessmortality da This might sound surprising to Euro ta on which The Economist’s model relies. peans, who have been in lockdown for the benefit from “crossimmunities”—a level Only by better tracking of mortality in poor better part of a year. How did people in of protection against sars-cov-2conferred countries can estimates of the death rate be these mostly poor countries see less death by past infection by other viruses circulat improved. Resources should be put into despite frequently lacking interventions to ing in the region. Unfortunately, though, such measures not just to honour the dead curb the spread of the virus and having less there are signs that the figures are now and the truth, but also because, without wellfunded health care? It seems likely mounting (see Asia section). such basic numbers, estimates of other im that much of the answer comes down to The Economist’s global excessdeathtoll pacts—economic, educational, cultural or age. If two populations have the same level estimates are, as far as we know, the first of in the health of survivors—are hard to un of health care, the one with more elderly their kind. They are not the only way to in derstand, or to compare. n people will see more deaths. If demogra phy were the only difference, estimates of the way that the risk of dying from covid19 Producing more vaccines infection varies with age suggest the dis ease would be 13 times more deadly in Ja The insufficient miracle pan (median age 48) than Uganda (median age 17). Reliable excessmortality data tend to come from countries with older, more vulnerable populations (see chart). Low as they are in absolute terms, though, the death rates among poor young How can the world increase its vaccine supply? populations are much higher than they would be for populations in the rich world iomedicine has never seen anything most vulnerable unvaccinated people look with similar age profiles. And for the elder Blike it. This time last year, no company unlikely to be vaccinated soon. This is both ly in poor countries the outlook is clearly had ever made a vaccine against sars- inequitable and inefficient; it will increase grim. South Africa has seen 120,000 excess cov-2, the virus that causes covid 19, on an the death toll and prolong the pandemic, deaths among those over 60. industrial scale. By the middle of this April increasing both economic losses and the The fact that a relative lack of deaths in a billion doses had been delivered. Accord odds of new variants of concern. developing countries seems to be due to ing to Airfinity, a data provider, a second A recent report from the oecd, a club of age, rather than anything else, has various billion doses are expected by June 1st. On mostly rich countries, made the case for implications. One is that the virus is current estimates the world’s pharmaceu continued government investment in vac spreading easily among younger people—a tical companies look set to provide 10.9bn cineproduction capacity, putting the idea finding backed by seroprevalence surveys, doses over the course of 2021. into the context of longterm strategies which find far higher rates of past infec So far this effort has increased the such as “coordinated approaches to the tion in Afghanistan, India and elsewhere world’s capacity for producing vaccines of sharing of intellectual property and tech than they do in Europe or America. This all sorts by a factor of three to four. “It’s in nology transfer”. suggests lots of nonfatal cases of disease, sane,” says Tim Gardner, the boss of Riffyn, It is the sharing of intellectual property, something which suggests that the pro a biotechnology startup focused on speed not increased investment, which has blem of “long covid” will be worse in these ing up drugproduction processes. “It’s an drawn the most attention. Since last Octo countries. It also means that the virus is incredible success.” ber, South Africa and India have been argu getting plenty of opportunities to mutate. At the same time many parts of the ing for an arrangement whereby the World There is an exception to this story. In world have no smoothrunning avenues of Trade Organisation no longer obliges some countries in SouthEast Asia, deaths supply. The Covid19 Vaccines Global Ac countries to protect patents, industrial de seem remarkably low, at least so far. This is cess Facility (covax), a vaccinesharing signs, copyright and trade secrets which not an artefact of the model: excessdeath scheme designed to provide supplies to apply to covid19 vaccines, therapeutics data for Malaysia and Thailand have hardly low and middleincome countries, has so and diagnostics. America, Britain, the risen at all. It is possible that people there far distributed only 59m doses. Most of the European Union and Switzerland—home,

012 The Economist May 15th 2021 Brieﬁng The covid-19 pandemic 17

between them, to most of the world’s big → Earlier is better, but later still helps drugmakers—opposed the waiver. But on May 5th President Joe Biden broke ranks. us Global estimated value of vaccine capacity Time to vaccinate 7% of global population Katherine Tai, the trade representative, $trn Months said that the administration would sup As calculated for Jan 202 22 30 port proposals to waive intellectual prop erty protections for covid19 vaccines, win Current global capacity 24 ning the administration plaudits from ov Capacity increase 20 er 100 countries which support the waiver begins: May 202 18 as well as from people at home who think 18 drug companies inherently villainous. Jul 202 12 If such a waiver is agreed on, it will not Current global capacity be soon. Proponents take that in their 16 6 stride: better to arrive at the end of the year with a waiver agreement close to hand and 400 500 600 700 800 900 1,2001,1001,000 1,2001,1001,000900800700600500400 no need to use it, goes one argument, than Vaccine production per month, doses m Vaccine production per month, doses m still to be facing a global crisis of unman Sources: “Market design to accelerate COVID-19 vaccine supply”, by Juan Camilo Castillo et al.; Eric Budish et al. ageable proportions but with a diplomatic mountain to climb. That may be so. But the activated sars-cov-2 particles—have been boss of Moderna, says that it takes six to world’s need to create new production fa widely authorised for use, if in most cases nine months at a minimum to add signifi cilities, and ideally to work the various ca and places only on an emergency basis. cant capacity, which means there is no way pabilities it has already developed even Companies that play a role in relevant sup to increase capacity this year beyond what harder, will not wait. And intellectual ply chains are able to invest with an as is already planned. Even when a company property rights are far from the most press suredness about what is to come that they has a site ready to take mrna manufactur ing, or most restrictive, constraint. could not have had last year. Thermo Fish ing equipment, machines have to be or er, an American firm which sells a range of dered, built, shipped and installed, a reli Billion wise, trillion foolish scientific and pharmaceutical supplies, able supply of raw materials has to be ar The increase in capacity seen over the past having seen “mrna confidence increase ranged and people have to be hired, trained year was brought about in large part be on the demand side”, is spending $60m on and brought up to speed on the processes cause of government interventions, most a facility in Texas that will produce more of involved. notably Operation Warp Speed in America the nucleotide building blocks from which and the activities of the Vaccine Taskforce mrna vaccines are assembled. Pollyanna, meet Polanyi in Britain, which guaranteed payments The mrna vaccines made by Pfizer/ Building up the requisite knowledge in the and drove the expansion of supply chains. BioNTech and Moderna are, in general, new teams is the hardest task. The pro These efforts splashed around a lot of those which Western customers are most blem, says Rob Carlson, a veteran biotech money which, if none of the vaccines had excited about seeing scaled up. Moderna is nology investor, is that that knowledge is worked, would have been lost. But with the ramping up production around the world; not stored in a format that is easy to copy benefit of hindsight it is now hard not to it recently announced that it will make 3bn between facilities. Each vaccine is pro wish they had been more generous still. In doses next year. On May 10th BioNTech duced according to a “recipe” which lists March Science, a journal, published esti said it plans to create a factory with an an the settings for all of the things in a pro mates from a group of economists of the nual capacity of several hundred million duction facility that can be changed from total global economic loss that would have doses in Singapore. The firm is in discus job to job: every dial on every machine, been avoided if enough money to produce sion with other countries about further timings, temperatures, masses, volumes vaccines for the entire world had been pro production sites. A joint venture with Fo and concentrations. Such a recipe may run vided up front, rather than enough for sun Pharma, a Chinese firm, could make to hundreds of pages. And it will still typi most of the rich world. They calculated up to 1bn doses a year. A number of African cally be incomplete; tacit knowledge mat that if the world had put in place a vaccine countries are known to be keen on bring ters, too, and it is for the most part lodged production infrastructure capable of ing the technology to the continent. in the minds of very busy people. pumping out some 1.2bn doses per month Unfortunately for the vulnerable peo Under pandemic conditions accessing by January 2021, it would have saved the ple at growing risk around the world none what those people know will be complicat global economy almost $5trn(see chart). of this will be quick. Stéphane Bancel, the ed by the fact that they may well be on the Eric Budish of the Chicago Booth School edge of burnout. Mr Bancel says his team of Business, one of the model’s authors, ex Global vaccine doses administered, 2021, bn “has been working hard for a year, seven plains the situation using a plumbing met 1.25 days a week…we are not even finished do aphor: it is faster to lay down a widerbore ing all the tech transfer to deliver the bil United States pipe at the start of a project than to expand lion for this year.”Every day he worries that EU and Britain 1.00 a narrow one later. The rich world succeed China he is pushing them too close to their break ed in producing effective vaccines remark Other ing point. ably quickly in quantities broadly suffi 0.75 The nonmrna Western firms have cient to its needs: an extraordinary been working just as hard at transferring achievement. But the capacity of the sys 0.50 their technology. AstraZeneca made global tem it built in order to do so created con production of its adenovirus vaccine a par straints that the rest of the world must now 0.25 ticular focus; the tech transfer of Oxford live with. That was a choice, not destiny. University vaccine taken forward by Astra But if the best time to invest was last Zeneca to one British production site took year, the second best is now. Three distinct 0 about seven months, says Sandy Douglas, types of vaccine—based on mrna, on dna JF M AM the Oxford professor who managed the packaged inside an adenovirus, and on in Source: Our World in Data transfer. Novavax has taken the better part

012 18 Brieﬁng The covid-19 pandemic The Economist May 15th 2021

of a year to transfer the insectcellbased rials from America were putting an Astra by June but “who knows, it is at risk for a manufacturing system for its notyet ap Zeneca line at risk, as well as the Novavax million reasons so maybe June, maybe Ju proved proteinsubunit vaccine to the Se one; between them they have a capacity of ly, maybe August”. Of the 40m doses that rum Institute of India (sii), a huge and very 160m170m doses a month. On April 26th Pfizer has promised, he says, it has deli experienced vaccinemaker. Stan Erck, the Tim Manning, the White House’s supply vered only 960,000. There was, though, company’s ceo, says it is repeating the pro coordinator for covid19, defended the use some good news for covax on May 7th, cess in the Czech Republic, Korea, Japan of the dpa, saying it is not a “de facto ban” when Sinopharm’s vaccine was given and America. on export and does not create supply short emergencyuse authorisation by the who. All told, pharma firms have made 280 ages. But Biovac, a South African vaccine This means that the vaccine, one of two in partnership contracts covering the pro maker, told Reuters that its American sup activatedvirus formulations being made duction of covid19 vaccines, says Thomas plier of biobags was explicitly blaming the in bulk by China, can now be distributed Cueni, head of the International Federa dpa for a14 month backlog on biobag deliv through covax. tion of Pharmaceutical Manufacturers and eries. Last year a number of big pharma Some countries have promised to do Associations, a trade group. About three firms started recreating supply chains nate doses to covax, but the volumes are quarters of those deals involve technology outside America to serve international small. Spain and New Zealand, the most transfer. He adds that the firms that are do customers. The sii Novavax line is still generous, have pledged1.6m and 7.5m dos ing well in terms of meeting production running at a fraction of its full capacity. es respectively. The organisation has so far targets tend to have relatively few produc Disruptions to supply chains, whether dealt with just100,000 donated doses, pro tion sites, pointing to the benefits central down to the dpa or other factors, are a vided by France and dispatched to Maurita isation offers attempts to scale up. source of deep frustration. “Why on earth nia, says Dr Aylward. Rasmus Bech Han is production at the Serum Institute being sen, boss of Airfinity, says he hears that the Biobags and bottlenecks delayed because it can’t get enough culture large purchase orders made by some gov Despite all this activity, though, some media?” asks Dr Douglas. “It’s madness! Is ernments may be resold rather than donat companies which could be making vac it because the company that makes culture ed. The possibility of donations could be cines are not. Teva Pharmaceutical Indus media has a shortage of its own? If so let’s further dampened by a perceived need for tries, an established Israeli genericmedi fix that.” Such problems have a worrying booster shots as new variants spread. cine maker, has failed to reach a copro tendency to amplify themselves; when duction deal with any covid19vaccine companies have concerns about supply Fail better maker. At the end of April it said it had chains they stockpile supplies, stressing Bottlenecks in supply and holdups in dis stopped trying. Incepta, a Bangladeshi firm the chains even more. The fact that some of tribution have led to calls for a fresh round with the capacity to fill and finish hun the equipment needed for vaccinemaking of state investment. Public Citizen, an dreds of millions of vaccine vials a year, also plays a part in the production of con American consumeradvocacy group, says has also complained that it has been un siderably highermargin products such as that with $25bn the Biomedical Advanced able to interest producers in its services. cancer treatments further complicates the Research and Development Authority, a Given the constraints on expansion, it situation, breeding suspicion. part of America’s Department of Health is vital that the supply chains on which Despite the supply difficulties, Airfinity which comes up with solutions to health current production rests be kept in fine fet says that current rollout forecasts suggest emergencies, could scale up vaccine pro tle. “The number one priority today must that the America, Britain, Canada, the eu duction enough to cut years off the tail of be to do everything that we can to ramp up and Japan will have enough doses for their the pandemic. The money would be spent raw materials and get them to the produc entire adult populations between the sum on stimulating production all the way tion centres,” says the European Federa mer of 2021 and January 2022. But middle along the supply chain, on technology tion of Pharmaceutical Industries and As and lowincome countries are at risk. Do transfer and on the construction of new fa sociations, a trade group. Unfortunately, nors have committed money to covax, but cilities around the world. All of those peo production has been slowed at various fa it has not been getting the vaccines it is ple that The Economist spoke to who work cilities by insufficient supplies of biobags meant to buy. Bruce Aylward, senior advis in the existing vaccinesupply chain (the containers in which vaccines are often er to the director general at the World agreed that this was one surefire way to made), tubing, filters and growth media for Health Organisation (who), says covax boost vaccine output yet further. The sec cells. Novavax’s lines in both Britain and hopes to have the j&j adenovirus vaccine ondbest time will always be now. n India have been hit by shortages, at times coming to a halt; the company’s produc → A global effort from which much of the globe is excluded tion plans have been set back significantly. On April 16th the trouble with the Indi Total vaccinations by country, May 9th 202, m Total doses by manufacturer, May th 202, bn an line led to a remarkable tweet. Adar Poo Asia Americas Europe Middle East & Africa Committed sales*, of which: delivered used nawalla, the head of sii, begged President Biden—“Respected @potus”—“to lift the 0 2.52.01.51.00.5 embargo of raw material exports out of the China 319 India 16 Britain Ger. Sinovac 52 U.S. so that vaccine production can ramp Novavax up”. At issue was America’s Defence Pro Sinopharm duction Act (dpa), which grants the presi Fra. Tur. Italy dent broad industrialmobilisation pow Pfizer/BioNTech ers. The government is using the dpa to Indo- Other nesia Rus. Spa. Pol. AstraZeneca prioritise domestic firms’ orders for mate Moderna United States 257 Brazil Mex. rial and equipment used in vaccine pro Other duction over those flooding in from other 7 Gamaleya countries. Overseas producers who de CureVac pend on American equipment or materials Canada Other UAE Saudi are feeling the pinch. Chile Israel Mor. Oth. J&J The sii said difficulties in getting mate Sources: Our World in Data; Airfinity *Includes planned donations

012 Asia The Economist May 15th 2021 19

→ Also in this section 20 Inoculation in Indonesia 21 Taiwan’s endangered hunters 21 The cost of covid-19 in India 22 Stalemate on the Korean peninsula 23 Banyan: Islamism in the Maldives

The pandemic in Asia at around 5,000 a day (though actual num bers may be higher; see Briefing), is prepar Next in line ing for a sharp rise after hundreds of thou sands of citydwellers defied a travel ban to return to their home villages for Eid alFitr, a Muslim holiday, in the first half of May. And as India has shown, the pandemic can shift from an apparent retreat to an un SINGAPORE stoppable onslaught in a matter of weeks. After India, a worrying new wave of covid-19 is hitting South-East Asia The reasons each country lost control of n april 25th Bloomberg ranked Singa tripled in the past month, hitting 4,765 on its outbreak vary, but in most, festivals, Opore as the world’s best country in May 12th. Thailand’s daily tally has jumped foreigners or fornication played a part. In which to weather the pandemic, in part be from 50 in early April to more than 2,000 a Vietnam, Malaysia and Thailand, experts cause it had almost no local transmis month later. Of Cambodia’s 20,000odd re blame travel and mass intermingling dur sion. Two days later a 46yearold nurse at corded infections, nearly 90% have oc ing festive periods, in addition to compla Tan Tock Seng Hospital tested positive for curred since the start of April. At least eight cency. Malaysia’s Muslim majority has for the virus, revealing a cluster of dozens of hospitals in Vietnam have locked down be the past month been celebrating Ramadan, infections. Within a week the government cause of the virus since May 5th. Indone when people pray and socialise in the eve identified other new clusters, including at sia, where detected cases have levelled off nings. A cluster of cases in Bangkok’s the airport and port. “We are now on the nightclub district accelerated after the

knife’s edge,” Lawrence Wong, a minister CHINA 1,000 km Songkran holiday in midApril. In Laos, MYAN- on Singapore’s covid19 task force, warned MAR too, the festival resulted in a rash of cases. on May 11th. “Our community cases can go LAOS On April 29th, on the eve of “Reunification either way in the next few weeks.” THAILAND Day”, a national holiday, more passengers Much of SouthEast Asia is similarly passed through the airport in Ho Chi Minh poised. Across the region, clusters have CAM. PHILIPPINES city, Vietnam’s largest, than on any other been found in places where defences are VIETNAM day since it opened decades ago. weakest: hospitals, quarantine facilities Laos, Vietnam and Cambodia, none of A L A Y S and border crossings. Lapses in those plac M I A which has previously faced an outbreak on es allowed infections to spread more wide the scale they are currently experiencing, ly. Moreover, the virus has mutated over SINGAPORE also point the finger at outsiders. Laos the past year, and the variants spreading blames infected visitors from Thailand. INDONESIA now are more transmissible. That includes Vietnam ascribes its cases to lax observa b.1.617, first identified in India, which has Change in number of covid-19 cases per day tion of quarantine by people arriving from appeared in Cambodia, Indonesia, Malay Apr 1st-May 12th 221, seven-day moving average China, India and Japan. In Cambodia two sia, Singapore and Thailand. 1,0002500-250 Source: Johns Hopkins prostitutes infected with the more infec New cases in Malaysia have more than University CSSE tious British variant of covid19, known as

012 20 Asia The Economist May 15th 2021

b.1.1.7, arrived on a private jet from Dubai in population, by the end of the year. The In early February and promptly broke quaran Plodding towards protection donesian Chamber of Commerce and In tine to visit clients, nightclubs and other Covid-19 vaccinations, doses administered* dustry, known as Kadin, suggested that places. By midMay the outbreak they % of adult population private companies could help move things seeded had infected thousands of people along by paying for vaccines procured by 403020100 and killed more than 100. The Institut Pas the government and inoculating their em teur, a French medicalresearch institu Singapore ployees and their families. The idea is to tion, is sequencing 1% of all positive sam Cambodia reduce the amount of time it takes for In ples in the country. With the exception of Indonesia donesia to achieve herd immunity and de b newly imported cases, “It’s all .1.1.7” from Malaysia fray the cost of the government’s free vacci the same source, says Laurence Baril, di nation programme. “We have to appreciate rector of the Cambodian branch. Laos that the government is trying its best,” says The strain is beginning to show. Bang Thailand Shinta Kamdani of Kadin. “But I think they kok’s hospitals are filling up. “Our health Philippines cannot do it alone.” Two doses care, with the increase in numbers, is be The government gave Kadin the green Vietnam One dose coming a bit overwhelmed,” says Subrama light in February. Given that just 7.6% of In Source: Our World in Data *May 12th 221 or latest available niam Muniandy, president of the Malay donesian adults have had their first dose so sian Medical Association. “Frontliners are far, bosses are eagerly enrolling their busi tired, exhausted.” The Laotian healthcare sia, which has not yet seen a second wave, nesses in the private scheme. More than system could very quickly be overrun if the has worrying parallels with India, says 17,000 companies have signed up on behalf number of severe cases shoots up, says an Dicky Budiman, an epidemiologist at Grif of 8.7m employees and their relatives. Ka expert in Vientiane, the capital. Dr Baril fith University in Australia: the virus has din expects that it will eventually inocu says it took her institute weeks to charter a been circulating for well over a year, the late 20m Indonesians. plane, despite the Cambodian govern healthcare system is already stretched, Yet the private effort may not turn out ment’s support, to import 2.7 tonnes of the the messaging from the government is to be quite as mutually beneficial as adver chemicals needed to conduct the most reli muddled and a religious holiday has drawn tised. The biggest hurdle for government able test for the virus. millions of people into celebrations in procurers is not cost but supply, as the fi The rise is particularly worrying for groups. Officials are expecting the worst. nance minister herself admits. Indonesia countries that had avoided big outbreaks, The Philippines suffered a surge in faces an acute shortage of vaccines. In and so have a wholly vulnerable popula March, when new cases reached 10,000 a deed, vgr may in fact slow down the over tion. Exactly how they escaped is a mys day. A strict lockdown brought that down all vaccination drive. Perhaps to avoid cre tery. One commonly cited explanation is by half. Yet the proportion of tests coming ating the perception that the private sector that they acted early to close borders, im back positive, while falling, is still 15%, is siphoning off vaccines from the national pose quarantine measures and trace the suggesting that many cases are escaping stockpile, the government requires vgr to contacts of infected people, having learnt detection. “We don’t want to end up with a obtain its jabs from manufacturers who from the sars epidemic of 200304. It surge like India,” says Drew Camposano, a are not already supplying the public pro helped that citizens complied when au pediatric infectiousdisease specialist in gramme. But the government controls pro thorities instructed them to wear masks. Iloilo City, in central Philippines. “It is a curement, so an already frazzled bureauc Other factors beyond the control of cautionary tale.” n racy must find and approve alternative vac policymakers probably contributed, too. cines for vgr. Honesti Basyir, the head of Most Cambodians, Laotians and Vietnam pt Bio Farma, the state company in charge ese live in rural areas, many in homes they Indonesian inoculation of vaccine procurement, rejects the idea cool by keeping windows open. This natu that vgr is overburdening his firm. Before rally dispersed, wellventilated way of life Join the (other) the pandemic, his employees’ productivity may have slowed the spread of the virus. had not been “maximised”, he says. Now SouthEast Asians may also have had an queue they have just enough work to keep them immunity acquired through previous ex busy. Other government departments may posure to coronaviruses circulating in the not be so lucky. SINGAPORE region, but that hypothesis is unproven. A corporate vaccination effort Perceptions of unfairness are another Countries are scrambling to contain the spreads discontent worry. The salaried types who will benefit virus by reimposing restrictions. Vietnam tend to be richer and fitter than informal and Singapore have extended quarantine n times of hardship, Indonesians turn workers, who constitute 55% of the labour for incoming travellers from two to three Ito each other for help. That is the idea be force. Just 13% of the elderly have had their weeks, and closed some recreational facil hind gotong royong, or mutual assistance, first dose. If the scheme mostly vaccinates ities. On May 10th Malaysia imposed a the Javanese name for a custom in which younger, healthier and wealthier Indone fourweek national lockdown. Laos shut villagers help build each other’s houses or sians, it is likely to cause resentment down the capital in April and sealed its clean up after a natural disaster. It is there among the rest. borders. Vaccination rates are rising but, fore unfortunate that the organisers of a There is already grumbling. Erni Subek with the exception of Singapore and Cam private vaccination scheme have borrowed ti, a 49yearold food vendor from Jakarta, bodia, less than 10% of the adult popula the name. When it launches on May 17th, the capital, thinks that Indonesia will tion in each country has received a single “Vaksinasi Gotong Royong” (vgr) will in achieve herd immunity more quickly with dose (see chart). oculate millions of people against co vgr, which pleases her. But the idea that A huge question mark lingers over the vid19. But rather than encouraging Indo the wealthy will get vaccinated before peo two countries where infections are stable nesians to help each other, it encourages ple like her rankles. Like many informal or falling, Indonesia and the Philippines, the richer ones to help themselves. workers, Ms Erni cannot work from home. between them home to more than half the When the government kicked off its She contracted covid19 in October. “We are region’s population and seemingly out of vaccination drive in January, it pledged to at higher risk,” she says. “Shouldn’t we be step with the trend in the region. Indone jab 181.5m people, about twothirds of the prioritised as well?” n

012 The Economist May 15th 2021 Asia 21

Covid-19 in India Let them eat dark chocolate

DELHI India’s crisis is devastating its most desperate people ye dogs and circling scavengers gave Pthe first clue. When villagers ap proached the riverbank, the stench con firmed the horror. By the time authorities collected and buried all the bodies on May 11th, the count had risen to 71. And this was at just one bend in the sacred Ganges, by the village of Chausa on the border be tween Bihar and Uttar Pradesh, India’s poorest, most underdeveloped states. In Tradition and the law the same week at least three other grisly human logjams were reported upstream. Endangered hunters These sad scenes reveal two things. One is the scale of the tragedy now sweeping In dia’s vast interior. Far away from city labs, Taiwan’s indigenous tribes have their day in court (and lose) no one gets tested, so no cases are record here are many unwritten rules for started to receive official recognition in ed, so no deaths are captured in the official Thunting in Taiwan. For members of 2001. They are more closely related eth national toll, which at 258,000 is a small the Bunun tribe, a community of indige nically to Filipinos than to the island’s fraction of the real tally (see Briefing). nous people who live among the island’s Chinese majority, who are descended The second thing the bodies in the mountains, flatulence and sneezing are from settlers who began arriving in large Ganges reveal is how India’s second wave is bad omens (in addition to scaring off numbers in the 17th century. Today the 16 worsening the already harsh lot of its poor. prey). Male deer are fair game, but fe officially recognised tribes make up 2.5% “People borrow money to pay for medi males, who might be pregnant, are left in of the population. Around half of indige cines, or for oxygen, or for an ambulance peace. Talum Suqluman followed these nous people live in the countryside, driver who has charged them extra covid strictures in the summer of 2013, when where hunting is central to their way of rates,” explains Utpal Pathak, a local jour he climbed into the hills of Taitung life. The conservation law, which states nalist. “Then they can’t afford the funeral.” County, on the southeast coast, and shot that hunting can be done only on certain In recent weeks, say residents of Chausa, two deer, a Formosan serow and a Reeve’s days and that hunters must apply for a the cost of a cremation has tripled. It is tell muntjac. They would provide a good permit indicating which animals they ing that the authorities, despite denying store of meat for his ageing mother, with are planning to kill, is routinely ignored. that poverty has anything to do with the plenty left over to share with his village. Indigenous hunters also complain about scandal, have started supplying free wood There are some written rules, too. Mr the rule that they must use only tradi to the funeral ghats of Chausa. Bihar has al Suqluman was arrested and charged with tional, homemade guns. These require so capped the price of ambulances. possession of an illegal firearm and for gunpowder and ammunition to be load After the first covid19 wave swept India violating the Wildlife Conservation Act. ed from the front end of the barrel, like a last year, numerous reports tried to tally He was sentenced to more than three musket, making them more dangerous the cost to the poor. Pew, a research insti years in jail (although appeals have en than modern weapons. tute, estimates that whereas just 4.3% of sured that he has yet to spend any time Just like the guns they are forced to Indians were earning less than $2 a day in behind bars). Indigenous communities use, many indigenous people feel they January 2020, a year later this had risen to were outraged at the sentence, which themselves are viewed as primitive. they viewed as unduly harsh. Moreover, Savungaz Valincinan, from the Bunun they were angry that their traditional tribe, complains that ethnicChinese Wealth is health hunting practices are prohibited at all. people ask her things like, “Can you ride Out-of-pocket spending* In early May Taiwan’s highest court a mountain pig?” It is not just bad atti As % of total health spending ruled that while some of the rules around tudes that people are upset about. Ab 80 hunting are unconstitutional, because original life expectancy is 8.6 years lower they breach indigenous people’s rights to than that of the general population. 60 practice their culture freely, animals also In 2016 Tsai Ingwen, Taiwan’s presi Nigeria India need to be protected. Hunting restric dent, promised to improve the lot of 40 tions will mostly remain in place. The indigenous people and apologised for Indonesia verdict is “far from satisfactory”, says Awi centuries of “pain and unfair treatment”. 20 Mona of National Dong Hwa University, But prohibiting hunting will “wipe out” World the first indigenous person in Taiwan to their culture, said Mr Suqluman, in a obtain a doctorate in law. statement after last week’s verdict. Re 0 Taiwan’s tribes have lived on the gardless of the law, he says that “of 2000 05 10 1815 island for some 6,000 years, but only course” he will continue to hunt. Source: *Direct payments by individuals to World Bank health-care providers at the time of service use

012 22 Asia The Economist May 15th 2021

9.7%, or 134m people. An indepth study by The Korean peninsula ship between the two Koreas has changed Azim Premji University in Bangalore sug remarkably little in the past 70 years. On gests that in the wake of last year’s nation Silent sigh paper, they are still at war, each consider wide lockdown, some 230m Indians ing itself the legitimate government of the slipped below a poverty threshold tied to other’s people and territory. Short of one the national minimum wage (around $45 a side invading—a strategy that North Korea month). Its researchers found that, during attempted with disappointing results in SEOUL the lockdown, 90% of the poor consumed 1950—or North Korea collapsing, a fate that The stalemate between the two Koreas less food. Six months later, their diets had pundits have been predicting with a simi is unlikely to break without new talks not returned to normal. Over the course of lar lack of success for decades, talking is the year the earnings of Indian workers, in o the casual reader, the biggest dan still the only viable way improve things. cluding the lucky 10% who hold salaried Tger in perusing “With the Century” may Precious little of that has been happen jobs, declined by a third. be the book’s propensity to induce a deep ing of late. The latest round of diplomacy, Shocked by the pain it caused last year, sleep. Its author, Kim Il Sung, North Korea’s intended to persuade the North to abandon the central government has left state and founding dictator, takes eight volumes and its nuclear weapons, fell apart at a summit local governments to impose their own nearly 3,500 pages to recount his heroic between Kim Jong Un, the North’s dictator, lockdowns during this wave. But though revolutionary exploits. Whether the topic and Donald Trump, then America’s presi the economy has not come to a complete is glorious campaigns against the Japa dent, more than two years ago in Vietnam. standstill, the sheer scale of the outbreak nese, earnest conversations with brave Last summer North Korea blew up the means lots of families have suffered just as peasants, or longwinded meditations on South’s de facto embassy in the border city much. For many, the biggest blow has been the true meaning of juche (selfreliance), of Kaesong, laying waste to a symbol of the the loss of breadwinners. Indian Railways, the message is, “You had to be there”. detente that began in early 2018. The North which employs 1.2m people, says covid has But that is not how Do Taewoo, a law has since resumed testing missiles and has killed 1,952 of its staff. The state of Uttar yer for various rightwing groups, saw it increased the ferocity of its denunciations Pradesh in April put 1.2m civil servants to when he filed an injunction last month of South Korea and America. work running local elections and counting against a South Korean publisher who pro Moon Jaein, the South’s president, ballots. The vote was a superspreader and duced a new edition of the memoir in the who is nearing the end of his term, lament an estimated 2,000 of these workers sub South. Publishing the book, Mr Do argued, ed this on May 10th and vowed to make a sequently died, including 800 school was “the ultimate act of treason”. lastditch effort to improve things. “It is teachers. Each of those deaths represented South Korean law agrees. Under the na the aspiration of 80m Koreans to end the weeks of trauma and expense for the fam tional security act, enforced with minor era of confrontation and conflict on the ilies seeking treatment and, for every per changes since 1948, distributing material Korean peninsula and usher in an era of son that died, perhaps another 20 were favourable to the regime in the North is peace and prosperity,” he said. He prom seriously ill. punishable with up to seven years in pri ised to try in his last year in office to move With government spending on health son. The South’s government blocks access from “an incomplete peace” to “an ir stuck at a meagre 1.2% of gdp, in ordinary to North Korean state media (except on the reversible one”. times Indians pay out of their own pockets website of its own semiofficial news agen Improving relations with the North has for some 60% of healthcare costs (see cy, which publishes daily excerpts). When been at the centre of Mr Moon’s presiden chart on previous page). And in an ordin Mr Do sued, police began investigating the cy. But that goal remains elusive. The fail ary year one in every 20 families is pushed publisher that put out the memoir. Book ure of the summit meeting with Mr Trump into poverty by medical expenses. The past shops stopped selling it. in Vietnam humiliated Mr Kim, who two months have been anything but ordin Though the law is no longer enforced sacked most of his negotiators afterwards. ary. Millions of desperate Indian families with the same enthusiasm as in South Ko He has made clear he has little interest in have been forced to sell gold, to pawn pos rea’s undemocratic past, its longevity is a talking to the South without new conces sessions or to borrow at usurious rates, all reminder that the fundamental relation sions from America, which Mr Kim sees as too often in order to pay for unnecessary his main adversary and negotiating partn treatments prescribed by harried doctors, er. When the covid19 pandemic began, he or to provide basic items lacking in govern closed the border, cutting the North off ment hospitals, from oxygen tanks to sy even from China, its main trading partner. ringes. The variety of traps they have fallen The lockdown appears to have hurt the into seems endless: medical staff demand North’s economy more than the interna ing bribes to secure hospital admission, tional sanctions that were intended to per suppliers of fake medicines, and even, in suade Mr Kim to abandon his nukes. The several states, conmen who have painted North still harangues the South about its over fire extinguishers to sell as oxygen failure to rein in defectors who send leaf cylinders. lets and money across the border. The rhe In Delhi, India’s capital, police have set toric of Mr Kim’s regime is ever more para up a special unit to fight such scams. Most noid. Its people are warned that “flying ob ly, however, the government is notable by jects” (such as leaflets), packaging or even its absence. Harsh Vardhan, the health snow may carry the virus. minister, who has promoted herbal covid Mr Moon is meeting Joe Biden, his “cures”, last week advised Indiansto eat ex American counterpart, on May 21st. He tradark chocolate with “more than 70% hopes to persuade him to join a fresh at cocoa” in order to beat covidrelated stress. tempt to break the impasse. Last month the Perhaps he should read a recent World Biden administration announced a new Bank report, which shows that 86% of Indi “calibrated, practical approach” to diplo an families cannot afford a basic balanced macy with the North, without giving de diet, let alone fancy chocolate. n The #1 Pyongyang Times bestseller tails. But it said nothing to irritate Mr Kim,

012 The Economist May 15th 2021 Asia 23

who may have been pleased that America the North indeed wants to talk. Unless it is North Korean defector who sent leaflets embraced the North’s talk of “the denu fleshed out in the next few weeks, Ameri northwards last month, defying a new law. clearisation of the Korean peninsula” rath ca’s new policy will be hard to distinguish He could face up to three years in prison. In er than referring only to North Korea. Ru from Barack Obama’s “strategic patience”, the same speech in which Mr Moon prom mours this week in Seoul, the South’s cap says Sung Kiyoung of the Institute for Na ised a push for peace, he also alluded to Mr ital, hinted that the North may have res tional Security Studies, a governmentaf Park’s case, stressing that his government ponded positively to the possibility of filiated thinktank in Seoul. had “no choice” but to enforce the law. Mr further talks with America. Other stumbling blocks may also im Biden’s people say they intend to pay more But the Koreas are probably quite low pede talks. South Korean officials say they attention to human rights when talking to on Mr Biden’s agenda, as he faces foreign were happy to have been consulted on North Korea, presumably including those policy crises on a variety of other fronts. He America’s new policy. But some of their at of Northerners in the South. Mr Moon will has yet to appoint a successor to Stephen tempts to mollify the North sit awkwardly be hoping that when he goes to Washing Biegun, Mr Trump’s point man on North with Mr Biden’s priorities. Police in Seoul ton next week, Mr Park’s fate gets less air Korea, leaving no obvious interlocutor if this week interrogated Park Sanghak, a time than the exploits of Mr Kim. n Banyan Malé malaise

In the Maldives, an ominous rise in intolerant Islam he indian ocean’s most exquisite recent years. Money from Saudi Arabia has Islam is the state religion. Only Sunni Tbuilding must be the Old Friday made its way to Maldivian mosques, and Muslims may be citizens. Maldivians’ Mosque in Malé, the capital of the Mal with it a fundamentalist Salafist doctrine. behaviour, says Mr Zahir, may appear to dives. It was built in the 17th century More alarmingly, both alQaeda and Is be modern and liberal, but the national from interlocking coral blocks. Inside, lamic State have been recruiting. In 2019 a identity is fused with religion. That the carvedwood panelling and lacquer presidential commission concluded that makes it a lot easier for radical Islam to work represent ravishing embellish alQaeda was behind the disappearance of subvert the existing version. ments by master craftsmen who happily a liberal journalist five years earlier. Do Besides, to blame only outside forces borrowed from Arabia, Persia and South zens of jihadists fighting in Syria with is to ignore the social and political con Asia to make an art that was their own. Islamic State have since sneaked home to text of the growing fundamentalism. The Maldivians today are proud of their Malé or the outlying atolls. Maldives promotes itself to the outside history as a maritime crossroads of The Maldives has a population of less world as an island paradise of honey culture and commerce. They say it in than 540,000. It does not take many trou mooners’ resorts. In reality, the resorts forms their tiny atoll nation’s open blemakers to cause mayhem. The attack have immense defects. Their owners mindedness. So the recent smashing of on Mr Nasheed, who has long been a critic form part of web of businessmen, poli some of the ornate tombs outside the of fundamentalism, seemed intended to ticians, judges and officials grown fat on mosque carried an ominous note—as if show what Islamists are capable of. Un political favours and lucrative deals. some people want to shatter the toler derresourced, the government has called A huge scandal at the tourism board ance for which the Maldives is known in Australian police to help investigate. under Mr Yameen involved the pilfering and replace it with something more For many Maldivians, radical Islam is of tens of millions of dollars. Mr Solih puritanical and austere. an alien toxin poisoning the domestic promised to get to the bottom of it. Yet A brutal realisation of that omen was well. Yet that, argues Azim Zahir of the though Mr Yameen and his tourism the detonation of a bomb on May 6th that University of Western Australia, is to minister have been convicted of money rocked the densely packed capital. Its ignore homegrown sources of extrem laundering and other charges, few others target was the country’s bestknown ism. For one, the identity of the Maldives implicated in the scandal have faced figure, Mohamed Nasheed. A political as a nationstate (it gained independence justice. Even members of Mr Solih’s own prisoner under the former dictator, in 1965) is bound up with Islam. Sunni government appear tainted. Maumoon Abdul Gayoom, he became the The resorts also trash coral reefs and Maldives’ first democratically elected generate seas of garbage. Above all, they president in 2008 before being ousted in epitomise a rentier economy which fails a coup. In 2018 he returned from self to address the needs of ordinary people. exile after his ally, Ibrahim “Ibu” Mo Schools are underfunded and youth hamed Solih, won a presidential election unemployment stands at nearly a fifth. that the authoritarian incumbent, That may explain why disillusion is Gayoom’s halfbrother, Abdulla Yameen, high, says Asiath Rilweena of Transpa tried but failed to rig. Mr Nasheed is now rency Maldives, an ngo, and so the speaker of parliament. ground fertile for radicalisation. Drug Mr Nasheed was rushed to hospital use and dealing only makes things and flown to Germany for further treat worse, with radicalised Maldivians often ment (bodyguards and bystanders were having been members of gangs. The only also injured). Three alleged assailants occasion many politicians think about have been arrested. They are said by the these disaffected groups is when em authorities to be tied to jihadist groups. ploying them to put up campaign posters Strands of the Maldives’ traditional at election time. After the attack on Mr Sunni Islam have certainly hardened in Nasheed, they must think harder.

012 24 China The Economist May 15th 2021

Football title, Jiangsu Suning disbanded in Febru ary, tripped up by slowing growth and a Own goal more conservative political environment. The team’s owner, Suning, an electronics retailer, has been trying to pay down its debts, like other overstretched Chinese firms. Not long ago a football champion would have attracted buyers, even if bleed SHANGHAI ing cash. These days, though, few tycoons The sport’s troubles reflect broader issues within the economy dare to acquire trophy assets. In all, more t was a hot and sticky night for football. nel money to favoured industries, a potent than 20 teams have left China’s profession IBecause of covid19 restrictions, the recipe when combined with talented, dri al leagues in the past two years. match was played at a neutral site, nearly ven people. Football shows a less flattering The economics of football in China are three hours from Shanghai by car. Adding side of its system: how the topdown ap atrocious. Average annual salaries for play to the inconvenience, kickoff was at 6pm proach that has worked well to build bullet ers of $1.2m in 2019 put the csl roughly in on a Monday. Yet a few thousand suppor trains can fail in less predictable domains. line with Ligue 1, France’s top division. But ters still made the trek on May 10th to The government has high ambitions for revenues in China are piddling, with tick watch their beloved local side, Shenhua, football, encapsulated by President Xi ets regularly costing as little as 50 yuan battle the club from Hebei, a northern Jinping’s stated dream for China to win the ($8). Guangzhou Evergrande, a club re province. “It’s a kind of faith for us,” said World Cup some day. That day remains dis nowned for its profligacy, took in only a A.G. Wan, a middleaged businessman. tant. The national team is ranked 77th in third of the 2.9bn yuan ($450m) that it Cries of sha bi, a phrase not translatable the world, behind tiny Curaçao. And do spent in 2019. in a family newspaper, rang out whenever mestic leagues, a crucial building block, Moreover, most wages go to a few ex the referee missed fouls that, for the fans, are mired in mediocrity. tremely expensive players, often imported were plain to see. Cheers erupted when a To understand what has gone wrong, from abroad, sometimes well past their Shenhua midfielder scored the equaliser look at the Chinese Super League (csl), the prime. Carlos Tevez, a faded Argentinian with a perfectly struck lastminute penalty country’s main football contest. Three star, described his spell with Shenhua in kick. The crowd’s passion would have been months after winning its firstever csl 2017 as a “vacation for seven months”, de familiar to football fans anywhere. But the spite reportedly earning $40m. In the canvas on which it was painted—a league 1990s foreign clubs rarely gave their Chi → Also in this section beset by financial chicanery and political nese counterparts the time of day, says Jo meddling—was unmistakably Chinese. 25 Humiliation at ice hockey seph Lee, a powerful agent. Now, he says, China can seem like an economic jug they view China as “stupid” money. 26 Chaguan: The bureaucracy’s allure gernaut. Leaders set lofty targets and fun Why have teams burnt cash with such

012 The Economist May 15th 2021 China 25

gusto? Partly it is about branding. Xu Jia has made the senior national team. dent Xi Jinping has shown for the sport. yin, the billionaire behind Evergrande, a The football association has also tried In 2014 Mr Xi told an interviewer in So property developer, once said that owning to identify promising players early in life, chi, Russia, that ice hockey was his “fa a football club ensured that his company placing them in development pro vourite” winter sport to watch. Ice hockey made the evening news at a fraction of the grammes—an approach that works for ta also features most prominently in an offi cost of advertisements. But China’s ty ble tennis and diving but does not translate cial video about Mr Xi and the 2022 games. coons are not just targeting consumers. so well to team sports. “You don’t need an At one point he tells a group of young ice They see Mr Xi’s professed love for football under15 national team. You need thou hockey players that China’s “hopes are as a way to connect with him. After he rose sands of under15s playing,” says Joan Oli pinned on your generation”. to power in 2012, Chinese money poured ver, former boss of Barcelona, who now Efforts to boost the current generation into starry European clubs, from Inter Mi owns Beijing Institute of Technology Foot of contenders have not gone well. Kunlun lan to Manchester City. ball Club in China’s second tier. Red Star, a Chineseowned club competing The past year has made clear that, far With qualifying matches for the 2022 in Russia’s icehockey league, was meant from appreciating their investments in World Cup coming up, the government to help. Mr Xi and Russia’s president, Vlad football, Mr Xi and his advisers see them as wants short cuts. Over the past three years imir Putin, attended the opening cere a red flag. Companies including Fosun, China has started naturalising foreign mony at the team’s formation in 2016 (they Wanda, cefc, teda and Guangzhou r&f footballers. On May 10th it named five, in also attended a youth icehockey event to were among the big spenders, and all have cluding three Brazilianborn forwards, to gether in 2018, pictured). Red Star set out to had their finances come under scrutiny. its squad. Mr Xi has called for greater self solve Mr Xi’s problem by recruiting for There is talk that some entrepreneurs over reliance in China’s quest for global power. eigners of Chinese descent, including vet paid for players or for clubs in order to skirt Football is a stark reminder that it still erans of America’s National Hockey China’s stringent capital controls (the sug needs foreign imports. n League, to move to China and become eligi gestion was that they had kickbacks paid ble to represent the country in 2022. into their accounts abroad). But Red Star and the state sports bu So the government has introduced Winter Olympics reaucracy appear to have had a fallingout, tough new rules, a crackdown that paral and responsibility for the national team lels Mr Xi’s efforts to reassert control over The puck stops has been passed like an errant puck be the broader economy. Politically, there has tween the club and Chinese officials. The been a push to induct more footballers into here relationship grew frostier still in 2019 the Communist Party, much as private when a squad made up of Red Star’s weaker companies are pressed to set up party players annihilated the Chinese national branches. And the Chinese Football Asso team, 100. China’s icehockey team could be in for ciation has capped salaries at 5m yuan for The International Ice Hockey Federa a difficult Olympic games Chinese players and €3m for foreigners. It tion in Zurich, which granted China its also ordered clubs to drop corporate titles n 2018 the Chinese men’s icehockey spot in the Olympics, wants to avoid even from their names. Guangzhou Evergrande Iteam qualified for the first time for the more lopsided results in February. On May has become Guangzhou. Olympic games, to be held in 2022 in Bei 8th René Fasel, head of the federation, held Ma Dexing, a football columnist, sees jing, under a special dispensation for the a call with icehockey officials in China, a the restraints as progress. “Over the past 30 host country. The cold reality of what this spokesman says, to discuss “how best to years professional football in China has would mean was brought home last year prepare the Chinese team” for the games. been chaotic,” he says. Mr Lee thinks the when China was drawn in the same group The only realistic solution is for China changes have been rash. “It’s like half the in the competition as two powerhouses of to bring in the ethnicChinese players Red building was good and the other half rot the sport, Canada and America. A “slaugh Star has already recruited. They are waiting ten, but they demolished it all,” he says. ter” is likely, says China Sports Insider, a in cities from Vancouver to Boston for the The new rules also display officials’ website. That would be a propaganda call to play. China would still be expected penchant for micromanagement. In 2017, nightmare for the Communist Party, espe to lose at the Olympics, but avoiding hu to boost youth development, the football cially given the notable enthusiasm Presi miliation would feel like victory. n association required clubs to field an un der23 player for every match. Managers gamed that rule, substituting youngsters after as little as a minute. So the football tsars mandated that they must play for the whole match. “The narrative every year ends up being ‘How have the rules changed?’,” sighs Cameron Wilson, foun der of Wild East Football, a website devoted to the Chinese game. For China’s national football team, the fundamental problem is not at the elite level but at the grassroots. In big cities there is little space for children to kick a ball around. A hypercompetitive educa tion system, in any case, leaves them little time for play. Officials had hoped that glit tering football academies would help. The world’s largest was opened by Evergrande in 2012 with 50 fullsized pitches. So far, though, none of its thousands of graduates The iceman cometh

012 26 China The Economist May 15th 2021

Chaguan Landing ashore

Disillusioned with foreign firms and domestic tech giants, more Chinese want to be officials her parents would not have wanted her to join the public sector, she thinks. They distrusted officials, who routinely shook them down for bribes. Back then they would also have worried about her prospects as someone with no family guanxi, or connections: her grandfather was a farmer and her parents run a small business. She credits an anticorruption drive that began in 2012 with changing their views of officialdom. Miss Zhu’s blend of ambition and idealism is a good fit with the times. Qiushi, a theoretical journal, recently published a speech that President Xi Jinping made in January to national and provin cial leaders. He described “chaos” in the outside world, celebrated China’s new strength and declared that “time and momentum are on our side”. Mr Xi also identified risks for China, ranging from de pendence on foreign technologies to political turmoil should “an insurmountable gap between the rich and the poor” appear. He told officials to study the Soviet Union’s collapse, after its ruling Communist Party became “a privileged bureaucracy that defended only its own interests”. Aware of public anger about inequality, Chinese propaganda has taken a populist turn, presenting the party as an ally against rapacious capitalism. In April authorities launched an antitrust probe into Meituan, a fooddelivery giant. Two days later Beijing hen zhu ling graduated last year from a highly competitive Television showed a city official spending a day undercover, rid Wmaster’s programme at one of China’s best universities, ing an electric scooter for Meituan. The exhausted bureaucrat told prestigious, wellpaid jobs were hers for the taking. Instead she viewers that the work is “too difficult”, earning praise for his car chose to become a civil servant for the central government, earn ing ways from the People’s Daily, a flagship party newspaper. Offi ing 6,000 yuan ($930) a month, or less than some Beijing profes cial media did not mention Chen Guojiang, a reallife Beijing de sionals spend on gym membership. livery rider detained after posting videos of grim working condi A decade ago, Miss Zhu (not her real name) might have joined a tions. He was charged on April 2nd with “picking quarrels and pro multinational firm. They pay well, and it was “cool to work for for voking trouble”, a catchall crime used against activists who eign companies, because that shows your international horizons, challenge the party’s monopoly over questions of social justice. and you can travel all over the world”, she says over cappuccino at Miss Zhu admits that idealism is not the only reason to join the an outdoor cafe in Beijing. Five years ago, top graduates vied to public sector. A brilliant classmate might have become a universi join homegrown technology giants like Alibaba, Tencent or Hua ty lecturer, but instead took a post at a highly selective high wei. In addition to high salaries, such firms had freethinking cul school. She became a teacher because, years from now, she will be tures and seemed to respect young people, she explains. entitled to a school place for her (as yet unborn) child. To millions Today, the trends are changing again. China still wants foreign of hardpressed parents who see education as their children’s only businesses for their knowhow and dynamism, but their status “is hope of getting ahead, such planning makes perfect sense. definitely going down”, says Miss Zhu. Geopolitical distrust is bleeding into work relations. Chinese employed by foreigners If you can’t beat ‘em… have noticed that they never advance beyond middle management Other civil servants accept a low salary because of the heavily sub and are the first to be laid off in bad times, she claims. As for do sidised housing, health insurance and pension that go with it. mestic technology firms, their high salaries continue to attract the Some smalltown or provincial Chinese take on boring govern young. But they also face vocal criticism in Chinese media for ment jobs that come with hardtosecure residence papers for domineering business practices and the “996” work schedules of such megacities as Beijing or Shanghai. A sense of filial duty their staff, toiling from at least 9am to 9pm, six days a week. In all, prompted Wu Hong, an only child who graduated in 2008, to leave a third of Miss Zhu’s classmates took civilservice examinations. his software business in the boomtown of Shenzhen and return to Some were hired by stateowned banks. Three joined technology his home province of Jiangxi. Mr Wu (not his real name) is now a companies. None joined a foreign firm. poorly paid local bureaucrat. “My parents are getting old, and in Chinese refer to securing an official position as shang an, or my small town there is no better place to find a stable job,” he says. “landing ashore”, reflecting the security such jobs offer. In 2020, Offcn, an adulteducation business, prepares millions of stu 1.6m people passed background checks to take national civilser dents each year for publicsector exams. It grew fast during the vice exams, 140,000 more than the year before. Almost a million pandemic. “Training centres rose like bamboo shoots after rain,” candidates eventually sat the exam, chasing 25,700 jobs. Still more says an Offcn manager in Beijing. He once looked down on civil took tests to become provincial and local officials. Many were flee service jobs. Now he regrets missing the age limit—typically 35— ing a bleak market for new graduates, as covid19 hit private firms. for joining many government departments. Miss Zhu says she joined an elite government ministry in Ordinary Chinese are often cynical about officials as a class, search of meaningful work. She will soon spend two years as an of deeming them slow to help and quick to conceal mistakes. But for ficial in a remote rural area, saying: “If you want to become a good many in the private economy, just keeping heads above water is an policymaker, you have to go to the grassroots level.” A decade ago exhausting slog. Small wonder some dream of heading ashore. n

012 United States The Economist May 15th 2021 27

New York’s mayoral race fronting the hazards of shrinkage. Reliable numbers are hard to come by, but even be- Uncertainty and the city fore the epidemic the population was declining very slightly. Last year it shrank by perhaps 300,000 people (an estimate from cbs, a broadcaster, based on postal changes of address). Perhaps more worrying, the NEW YORK Partnership for New York City, an industry Next month’s primary is the first in a generation to be run while the city seems to group, surveyed the city’s big employers be shrinking and found that only 10% of Manhattan’s of- imes square is the only neighbour- the one with the most name recognition, fice workers had returned to their desks by Thood in New York City where regula- Andrew Yang, who competed for the 2020 March. Employers expect only 46% of their tions require a minimum amount of dis- Democratic nomination for president, and people back at their desks by September, play lighting. Before the pandemic, tour- who is positioning himself as the field’s and they expect 56% will work remotely at ists flocked there to gawk at the dazzling tech-savvy moderate. He was quick to con- least part of the time after that. lights or to take selfies with someone demn the shooting, saying “everything is With so many commuters vanishing, dressed as Elmo or Spiderman, or maybe contingent upon whether our streets and thousands of small businesses have closed with the guitar-strumming Naked Cowboy our subways are safe”. The Democratic their doors, taking one out of every eight (who in fact wears y-fronts). But for de- primary is on June 22nd, and it is likely to jobs with them. On once-busy commercial cades until the mid-1990s, New Yorkers be decisive. There are two Republican can- streets, storefronts are empty and dark. and visitors alike avoided this “Crossroads didates running, but Democrats outnum- Though Broadway is set to reopen in Sep- of the World” because of its reputation for ber Republicans in the city seven to one. tember, the hospitality industry has taken crime and drugs. On May 8th, when a gun- Typically mayoral candidates find a beating during the pandemic: more than fight erupted in Times Square and a toddler themselves arguing about how to manage seven in ten of those working in the sector and two visitors were wounded, New York- New York’s growth. This is the first election lost work last year. Across the city, employers feared, not the first time, that their city for a generation in which they are con- ment is not expected to recover its pre- was sliding back into its old ways. pandemic levels before 2024. On promises to make New York’s lights Crime is still much lower than it was at shine brighter than ever, about a dozen → Also in this section its height three decades ago, but New York- Democrats are running for mayor, known ers list it among their top three priorities 28 The Colonial Pipeline hack as the second-toughest job in America. for the next mayor, along with stopping the They are elbowing one another for atten- 29 Clearing Skid Row spread of covid-19 and kick-starting the tion from the city’s diminished media. economy. Eric Adams, Brooklyn’s borough 30 Lessons from the evictions pause New Yorkers are still struggling to keep president and a former policeman, is sec- track of their names, much less the fine 30 The other epidemic ond in most polls and has made combating points of policy that (sort of) distinguish crime a focus. He compared gun violence 32 Lexington: Liz Cheney and Trumpism them. The candidate leading in the polls is to a virus. “If we do not inoculate against it

012 28 United States The Economist May 15th 2021

now, it will spread and spread and it will Hacking and ransoms the southeast on May 11th. Some stations mean the death of countless New Yorkers limited purchases; others ran out of fuel. and the city we have built.” Fearmonger Post-Colonial The White House said it had established ing, perhaps, but also a sign of how fearful “an interagency response group” to “en many constituents are. When Mr Adams studies sure a continuing flow of fuel”. recently strolled down Brooklyn’s Metro Even if supplies are restored quickly, politan Avenue, which he once patrolled, however, America faces a more stubborn NEW YORK many passersby shared their concerns problem. Despite more than a decade of at A cyber-attack exposes growing risks to about violence with him. “I’m afraid to tention to cybersecurity, the country’s en America’s energy infrastructure walk to work,” said one FedEx worker. ergy infrastructure—the pipelines, power Crime is again confronting many Amer ipelines, like cables and substations, generators and grids on which the econ ican cities. But the next mayor will also Pare the type of dull, critical infrastruc omy depends—remains exposed to hack face problems that are peculiar to New ture that Americans don’t think about un ers. Indeed the energy system may yet be York. One is how to raise taxes enough to fi til, suddenly, they must. On May 7th a cyb come more vulnerable, not less. nance more spending without prompting erattack prompted Colonial Pipeline, a Securing oil and electricity assets used more Wall Street firms to leave town. Sev firm headquartered in Georgia, to shut to mean guarding against physical attacks: eral, including Blackstone, a privateequity down a tube stretching from Texas to New a bombing of a refinery, for instance. Those giant, have already opened offices in Flori Jersey that supplies about 45% of the petrol risks remain, but hackers can also inflict da, where taxes are far lower. and diesel used on the east coast. Federal grave damage. In 2010 the Stuxnet worm, Another NewYorkspecific problem is officials confirmed that DarkSide, a ran generally believed to have been deployed the subway, beset before the pandemic by somware gang believed to be based in the by Israel and America, targeted a nuclear delays caused by an ageing signal system former Soviet Union, was responsible. facility in Iran. In 2015 and 2016 Russian and now seeing a decline of twothirds in “We’re not talking about some small pipe hackers caused blackouts in Ukraine. daily riders, which was 5.6m before co line,” explains Amy Myers Jaffe, author of Aware of such risks, American execu vid19 struck. New York’s governor actually “Energy’s Digital Future”, a new book. tives and politicians have tried to mitigate has more control over the subway, which “We’re talking about the jugular.” them. The American Petroleum Institute, only makes the next mayor’s task harder: On May 12th Colonial Pipeline said it the country’s main oil lobby, has held an the city will not rebound if the subway had “initiated the restart of pipeline opera annual conference on cybersecurity since doesn’t. Not only the virus but fear of crime tions”, a carefully worded statement that 2006. The Department of Energy dutifully is keeping New Yorkers from going down conveys both the difficulty of returning to developed “The Energy Sector Specific into the tunnels. The current mayor, Bill de normal and a desire to contain panic. That Plan” for cyberthreats, in 2015, “The Multi Blasio, has felt it necessary to create a tra day average petrol prices topped $3 a gallon year Plan for Energy Sector Cybersecurity”, velbuddy scheme for city employees. for the first time since 2014. Much depends in 2018 and “The 2020 Cybersecurity Multi New Yorkers have more reason than on whether more drivers rush to buy pet year Program Plan”, to name but a few. usual to master fine distinctions among all rol, as they did in the oil shocks of the Yet weaknesses remain. The shutdown the candidates because this is the first big 1970s. If 30m carowners with half a tank of the Colonial Pipeline exposes gaps in city election to be decided by ranked decide to fill up, reckons s&p Global Platts companies’ cyberarmour. It also reveals choice voting. Voters will be able to express Analytics, a data group, they would guzzle the idea that shale oil might guarantee en their preference, in order, for up to five over 4m barrels, more than the recent daily ergy security to be a fallacy. Oil may be fun candidates. But whom to rank where? demand of the entire eastern seaboard. gible but oil infrastructure is not, notes Mi Each candidate has a plan for the city’s Many are already buying while they can. chael Tran of rbc Capital Markets. Ameri recovery. Ray McGuire, a former Citigroup Long queues formed at petrol stations in ca’s northeast is particularly exposed to executive, says through measures like sala attack, Mr Tran says. A dearth of local refin ry subsidies to small businesses he will eries makes the region dependent on pipe bring back 500,000 jobs. He ticks a lot of lines and tankers for oil products. boxes. He had a modest upbringing by a The federal government’s cyberde single mother, but at Citi he advised on fences are imperfect, too. The Government transactions even bigger than the city’s Accountability Office (gao), the agency $99bn budget. Several progressive candi charged with criticising other agencies, dates, including Dianne Morales, a former has found cybersecurity a particularly nonprofit executive, are calling for new rich subject. The Transportation Security programmes and higher taxes on the Administration (tsa) is supposed to help wealthy. But the city cannot raise taxes safeguard oil and gas pipelines; in 2019 the without the state government’s approval, gao identified “factors that limit the use and New York City already faces the high fulness of tsa’s risk assessment”. In March est incometax rate in the country. the gao reported that the Department of Mr Yang has some intriguing ideas, and Energy’s plans for cyber protection “do not New York’s mayors are supposed to do fully address risks to the grid’s distribution things that other cities copy. But he stands systems”, leaving big cities vulnerable. apart mainly because the city likes a star: Worryingly, cyberattacks may increase Ed Koch, Rudy Giuliani and Michael in number and ambition. Hackers are us Bloomberg were all wellknown before ing ransomware to infiltrate larger compa they became mayors. Mr Yang has said he nies and seek higher payments. Their aver would hire Kathryn Garcia, an experienced age ransom payment has roughly doubled problemsolver in city government, to help over the past year, according to Coveware, a him run the place. Like a true New Yorker, tracking firm. Furthermore, changes to the Ms Garcia, who is also a candidate, shot electricity system may, without sufficient back that Mr Yang could work for her. n Jam today planning, make it more vulnerable. As

012 The Economist May 15th 2021 United States 29

more devices are connected to the inter average of 207 people exit homelessness people died in Los Angeles per day. The net, hackers have a larger number of tar every day, while an average of 227 become first units made possible by Proposition gets. As more cars run on electricity rather homeless. Around 5,000 people are con hhh, which passed in 2016, did not open than combustion, a blackout can wreak centrated on Skid Row, a little over half of until 2020. A third of the homes in the broader damage. And as transmission lines whom are in shelters or other temporary pipeline will cost more than $500,000 connect distant power systems, helping to housing; the rest sleep rough. More than a each to build. And the city has dragged its balance intermittent wind and solar pow third suffer from a substance use disorder feet: although Los Angeles is eligible for er, a problem in one grid can have an im and many are mentally ill or physically dis federal reimbursement for homeless ser pact on another. abled. The area is squalid. vices, it has not even applied for the mon These challenges are not unique to This concentration of misery is a result ey; city officials plead a lack of staff. America. But they pose a particular head of both historical accident and deliberate In his order, Judge Carter takes the city ache for President Joe Biden, who is trying policy. Beginning in the 1880s, the proxim to task for this “embarrassing perfor to win support for climate proposals in his ity of downtown Los Angeles to a rail ter mance”, arguing that it has long failed to $2trn infrastructure bill. Limiting climate minal made it a locus for poor transient la achieve its stated goals. In addition to its change and fighting cyberthreats are hard bourers. Charitable organisations and requirement that the city shelter the resi ly mutually exclusive endeavours. Mr Bi public agencies soon appeared to serve this dents of Skid Row, the order also imposes den must make a credible case that he can population. In the 1960s, urbanrenewal accountability requirements: the city must make America’s energy system both green efforts reduced the area’s housing stock, explain how funds intended to help with er and more secure. n and displaced residents flooded the homelessness are being spent. streets. A deliberate policy of “contain Some homelessness experts are scepti ment” beginning in the mid1970s led the cal. Suzanne Wenzel of the University of Homelessness city to concentrate services for the indi Southern California acknowledges that gent within the 50block area. Homeless longterm solutions take time but worries The Row row people from across the region now gravi that money for permanent fixes could now tate there. be siphoned off to temporary ones. And The city and county argue that Judge she fears unintended consequences. If the Carter’s ruling is an instance of judicial city is forced to rapidly clear Skid Row, she overreach and that its timeline is unrea says, “they will be forced to make some de LOS ANGELES Skid Row has been decades in the sonable. Mayor Eric Garcetti has suggested cisions that are ultimately not going to be making. A judge wants it closed now that it will complicate longterm planning in the best interests of those now on the around homelessness. Existing efforts in streets.” Gary Blasi, a law professor who anya mcnichols moved to Los Ange clude two ballot initiatives: Proposition works on homeless issues, agrees. “The Tles from Cincinnati when Eartha Kitt hhh, which set aside more than $1bn to way this city would comply with such an died. She says she is on a mission from Je build up to 10,000 housing units for the order”, he says, “would be to build shelters hovah. Asked how she spends her days, she homeless, and Measure h, which raised that people living in encampments find in fires off four words: “Shower, wash, read, county sales taxes by a small amount to ferior to where they are now.” pray.” Ms McNichols lives surrounded by pay for improved services. What would be better? Experts recom her possessions on the street in front of the The problem with these efforts, charges mend permanent supportive housing for Union Rescue Mission, a nonprofit that Reverend Bales, is that they have proved those who may be struggling with mental serves the homeless of Los Angeles’s Skid expensive and slow. While the city dallies, illness or drug addiction, something Pro Row. Reverend Andrew Bales, who runs the he says, people are dying on the street. He position hhh was supposed to do. The city Mission, sees Skid Row as a humanitarian has a point. In 2020 nearly four homeless also needs to find a way to bring down as disaster. “It couldn’t be a worse situation”, tronomical construction prices. And a bet he says, “unless it was hell itself.” He has ter safety net would help: thousands of An experienced this hell firsthand. While de gelenos spend nearly all they earn on rent, livering water in the area, Reverend Bales teetering on the edge of homelessness. Mr contracted a painful infection that resulted Blasi points out that la County’s general in the partial amputation of both legs. relief programme pays out a paltry $221 per On April 20 a federal judge ordered the month to indigent Angelenos. city and county to clean up Skid Row. In a On April 25, Judge Carter stayed some flowery 110page injunction, Judge David provisions of his initial order and agreed to Carter chronicled the centuryplus of his give the city 60 days to spell out how its tory that culminated in Los Angeles’s con homelessness funds will be spent. He has temporary homelessness crisis. In its final invited the parties to discuss a settlement. pages, he made his decree. Los Angeles Such a settlement might look like an earli must set aside $1bn to tackle homeless er case Judge Carter presided over in near ness. By midJuly, the city and county must by Orange County. In that one, the city offer shelter to all unaccompanied women could be required to create enough shelter and children on Skid Row. By October 18, for 60% of the homeless people in each ci the county must offer shelter to all of the tycouncil district. Council members homeless people in the area. The city and would then be free to have remaining county are appealing against the order. homeless people cleared from the area. Mr Los Angeles has long fought a losing Blasi thinks this is a bad idea. “It does give battle against homelessness. The county individual citycouncil members power to provides around 50,000 shelter beds for a clear encampments that are bothering steadily increasing homeless population their most powerful constituents,” he says. of more than 60,000. According to the Los “But at the end of the day many of those Angeles Homeless Services Authority, an From despair to where? people would still be homeless.” n

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Evictions paused Some are being forced to sell off properties to cut their losses. These sales could re Shelter in place duce the availability of lowcost housing, pushing up the cost of housing and, even tually, resulting in more evictions. What, then, are the lessons of the evic tions pause? One is that the policy needs to NEW JERSEY Lessons from the federal government’s be paired with help for tenants and land moratorium on evicting tenants lords, in the form of rental assistance or vouchers. Billions of federal dollars have efore covid-19, evictions were a hot been provided for pandemicrelated emer Btopic, thanks to the publication of gency rental assistance ($25bn under the “Evicted”, a rare wonkbestseller by Mat Trump administration and $22bn under thew Desmond of Princeton University. the Biden administration). But the Urban The book follows eight families turfed out Institute, a thinktank, estimates that at of their homes in Milwaukee, their posses least $50bn is needed to cover rent owed. sions unceremoniously dumped on the And according to the Eviction Lab, many pavement. Mr Desmond estimates that tenants are being evicted before the funds there are 1m evictions a year in America, a are being disbursed. In Texas, only 250 staggering number given the relatively households received assistance out of small number of people affected (about 70,000 applicants by the end of March. 2.3m adults and children). Then, when co Back to the beginning Increasing the stock of affordable hous vid19 hit, an experiment took place. The ing would also help. In 1999 the Faircloth Trump administration issued an edict vented at least 1.6m eviction filings in Amendment, an amendment to the Hous pausing evictions, a policy continued by 2020. This reduced filings by 35% com ing Act of 1937, capped the amount of hous the Biden White House. On May 5th a judge pared with the historical average, a notable ing that could be owned by the Public struck down the federal moratorium, ap achievement during an economic slump. Housing Authority. So for any public hous parently ending the experiment. What By contrast, during the twoweek pause be ing unit to be built, one must be taken were the results? tween the cares Act ending in August away. Finally, unlike the procedure in The federal moratorium actually con 2020 and the cdc eviction moratorium be criminal cases, renters facing eviction are sisted of several policies spanning the ginning in September, evictions rose back not guaranteed a lawyer. So whereas 90% Trump and Biden administrations. From to prepandemic levels. of landlords have legal counsel, only 10% March to August 2020 it was part of the The cost of this policy fell mostly on of tenants do. And lawyers make a differ cares Act. From September it took the landlords. And in many poor postindus ence. In New York City, 84% of renters rep form of a directive from the Centres for trial cities, the kind of place featured in resented by counsel avoided eviction after Disease Control and Prevention (cdc), “Evicted”, much affordable housing is sup the city made lawyers more widely avail which was extended three times to end on plied by small landlords. Many of them are able. That would also slow evictions down, June 30th this year. The cdc claimed au struggling to make ends meet themselves. without penalising landlords unfairly. n thority on the ground that evicting people in the middle of an epidemic was a public health risk. That seems to be true. From Opioids May to September 2020, 27 states lifted their eviction moratoriums. Comparing The other epidemic the trend before the pandemic to the trend in infection and deaths once the moratori ums were lifted, researchers estimate that states without moratoriums experienced DENVER covid19 infection rates twice as high as Changes to drug markets explain why more people in San Francisco died of states with them. overdoses in 2020 than were killed by covid-19 As this suggests, state and local govern ments have interpreted the moratoriums he first time Jean was offered heroin, cans died by drug overdose in the 12 differently. New Hampshire required land Tshe declined. One night, though, when months to October 2020, a 30% increase on lords to file affidavits stating compliance she was 18 or 19, she decided to give it a try. the previous year. That is more than the with the cdc before proceeding with an Over the next few years, heroin led to meth, number of people who were killed last year eviction. Some have paused removals but and meth led to fentanyl. It wasn’t until by car crashes (42,000) and guns (44,000) not court hearings, filings and eviction no she got pregnant in 2017 that she decided to combined. Roughly 55,000 of those who tices. Other places have refused outright to seek help. “I was at a point in my life where overdosed died from synthetic opioids comply, for example Jackson County, Mis I kept consistently hitting rock bottom and such as fentanyl, a 57% jump yearonyear. souri, which included half of Kansas City. I was ok with that,” says the 29yearold The pandemic seems partly to blame This patchwork of policies has confused from Denver. “But when I found out that I for the increase. Dr Chris Thurstone, the di millions of Americans, with several hun was pregnant with my daughter, I wanted rector of behavioural health services at dred faced eviction despite federal policies better for her.” Denver Health, says the isolation wrought that seemingly banned it. Not everyone has such a realisation. by lockdowns can worsen depression and Fortythree states issued some form of While covid19 rampaged across the coun anxiety, and substance abuse often in an eviction moratorium during the epi try, America’s other epidemic has quietly creases during economic downturns, demic. The Eviction Lab, a research group boiled over. Provisional data from the Cen when people have lost their jobs or are headed by Mr Desmond at Princeton, esti tres for Disease Control and Prevention worried about their finances. More people mates that the federal moratorium pre (cdc) suggest that just over 90,000 Ameri may have used drugs alone, or been unable

012 The Economist May 15th 2021 United States 31

to seek medical help when clinics closed or overdose death rate among black Ameri stopped accepting new patients. But there The other epidemic cans more than tripled in the five years to is more to the story. America’s opioid epi United States, drug overdose deaths, ’000 2019 as fentanyl infiltrated the supply of il demic has entered a dangerous new phase 60 licit drugs. Young people in their 20s and thanks in large part to shifting—and mo 30s are also dying in greater numbers. Fentanyl and synthetic opioids dernising—drug markets. 50 Higher death rates among younger The roots of the epidemic can be traced Americans reflects a shift to online drug back to prescription painkillers, such as 40 markets. The dark web, an obscure corner OxyContin, which was introduced in 1996 0 of the internet, has long been a source for (see Books & Arts). In the 15 or so years it illicit drugs. Now, counterfeit pills are Heroin took for the prescription opioid crisis to Cocaine 20 readily available on gaming and socialme turn into an illicit opioid crisis, the geogra Prescription opioids dia platforms such as Instagram or TikTok. phy of the epidemic remained relatively 10 The pandemic has accelerated the trend: Methadone stable. Many hoped fentanyl, which is up 0 Americans turned more frequently to the to 100 times more potent than morphine internet for drugs just as they did for toilet 2000 05 10 15 20* per gram, would not spread beyond the paper and groceries. Source: CDC *12 months ending Oct 2020, estimate East Coast and Appalachia, where it has All this paints a bleak picture. Officials wreaked the most havoc. Users in Western warn that the other epidemic, which has states have historically preferred blacktar pressed into counterfeit pills made to re steadily worsened for decades, will get heroin, which does not mix as well with semble painkillers like OxyContin or hy deadlier still before it gets better. President fentanyl, to the whitepowder heroin drocodone. Just two milligrams of fentanyl Joe Biden’s American Rescue Plan, which found in the east. “Opiate users generally can be fatal, so a pure fentanyl pill—or one was passed in March, included nearly $4bn have their drug of choice,” says Bill Bodner, pressed with another drug such as heroin for mental health and substanceabuse who runs the Los Angeles division of or cocaine—can be deadly many times ov services. Mr Biden has also made it easier America’s Drug Enforcement Administra er. When the dea tested sample pills from to prescribe buprenorphine, a drug used to tion (dea). Older westerners addicted to drug seizures between January and March treat opioid addiction. opioids, “were tar heroin users, they are tar of 2019, 27% contained a lethal dose of fen That is welcome, but 90,000 people heroin users, and they are going to contin tanyl. John Pelletier, who runs the narcot dead suggests the need for a more muscu ue to be tar heroin users.” ics division of the Las Vegas Metropolitan lar response. It would help if the dozen Yet recent tallies show that the scourge Police, said his team responded to a fatal states that declined to expand Medicaid has now found purchase in the West too. In overdose call where the two victims had under the Affordable Care Act would San Francisco, more than twice as many their phones open to check the sideeffects change their stance, as that could provide people died from an accidental drug over of OxyContin, not realising they had in methadone for addicts. Congress could al dose last year as from covid19. The city’s gested a fentanyl pill. so restart Medicaid—the government chief medical examiner estimates that fen Counterfeit pills are great business for healthinsurance programme for poor tanyl was detected in the bloodstream in the cartels. Fentanyl can be produced at people—for prisoners in the weeks before nearly 73% of overdose deaths. In Las Ve onehundredth the cost of heroin, says they are released. A study in 2018 found gas, overdose deaths from fentanyl in Keith Humphreys of Stanford University. that the risk of opioid overdose for former creased from just 16 in 2015 to 219 in 2020. The cartels “don’t need a field of poppy inmates in North Carolina was up to 40 Fentanyl’s spread is as much about geo plants,” says Mr Donahue, “they just need a times higher than for the state’s general politics and organised crime as it is about basement, house or small warehouse.” population. It would be great to think that local drug markets. China is the biggest The spread of fentanyl has changed the the problem could be fixed by choking off supplier of the chemicals used to make demographics of who is dying from supply. But one constant of border policy fentanyl, and until recently the drug was opioids. In 2014, opioids killed whites at in this and the previous administration is often mailed directly to the United States twice the rate as AfricanAmericans. The that fentanyl can always find a way in. n in small parcels. In 2019 the Trump admin istration successfully lobbied the Chinese government to ban the illicit production and sale of fentanyl and similar substanc es. Afterwards, says Matthew Donahue, deputy chief of operations for the dea, di rect shipments “virtually stopped”. Fentanyl did not disappear, however. Chinese producers simply took the long way round, shipping the chemicals to Mex ico for drug cartels—which were already trafficking heroin, meth and cocaine—to then move across the border. The amount of fentanyl seized by Mexican security forces nearly quintupled between 2019 and 2020. Once across the border, the cartels, Sinaloa and Jalisco New Generation chief among them, use their established net works to distribute the drug throughout the United States. It is not just the route that fentanyl tra vels that has changed. The drug is also shapeshifting. In Mexico, fentanyl is The pill and the damage done

012 32 United States The Economist May 15th 2021

Lexington The kraken is unleashed

Liz Cheney’s demotion is a death rattle for principled conservatism Tedra Cobb, as “Taxin’ Tedra” (which was maybe what the former president had in mind when he called her a “gifted communica tor”). Perpetuating his riggedelection lie was the next step. Ms Stefanik joined the Republican vote—just hours after the insurrection—to reject the election results. In an interviewcum hustings with Steve Bannon, she dived further off the edge by backing a Republican audit of the vote in Arizona’s biggest county that is to election security what Mr Trump’s view on disinfectant infusions was to covid19 medicine. The auditors are examining ballot papers for traces of bamboo, in response to an online ru mour that thousands were fraudulently smuggled in from Asia. There is little chance that the capable Ms Stefanik believes such nonsense. According to Representative Adam Kinzinger of Illi nois, only around five Republicans in Congress do. Indeed Ms Ste fanik’s careful choice of words gives her away. While dignifying all manner of debunked Trumpian election falsehood, in what might sound like an admirably restrained way (“…I do not take this action lightly. I am acting to protect our democratic process…”), she re fuses to say outright that the vote was stolen. The troubling reality of American politics is not that she and other ambitious young Re publican liepeddlers, such as Josh Hawley and Matt Gaetz, are de ceived, but that they are incentivised to behave in this menda ot long ago the prospect of House Republicans replacing a cious, antidemocratic way. And, further, that they see no impedi Nmiddleaged security hawk as their number three with the 30 ment to doing so. something representative of a district that voted for Barack Obama Currying favour with Mr Trump, though rewarding, is only part twice might have suggested something important about the par of the explanation for that. The former president’s loss of office ty’s ideological direction. Yet only the most credulous commenta and media platforms presented his party with an opportunity to tors are treating the impending replacement of Liz Cheney, a Re distance itself from his falsehoods that it has simply shown no in publican blueblood and scourge of progressivism from Wyo terest in taking. Beyond their fear of the former president, Repub ming, with Elise Stefanik in those terms. In reality it indicates a licans have become hooked on his method, which in essence in party abandoning conservative ideology altogether. volves firing up the party’s relatively small and fearful base, while There are few more trenchant conservatives than Ms Cheney, trying to compensate for the Democrats’ greater numbers by sup who was sacked from the Republican leadership this week. The pressing their vote. Kevin McCarthy, the Republican leader in the daughter of a vicepresident renowned for those qualities, she vot House, exemplified the first in a letter announcing his intention ed for Donald Trump’s bills 93% of the time and has rarely come to knife Ms Cheney. Her truthtelling, he claimed, was impeding across a centreleft proposal she did not view as deviant socialism. Republicans’ efforts to stop Democrats “destroying the country”. Ms Stefanik, by contrast, is a 36yearold Harvard graduate who Republican state legislatures—independently of Mr Trump—are opposed Mr Trump’s tax cut, was once known for advocating gay pursuing the second course, through some 400 legislative efforts rights and has been called a “liberal” by the Club for Growth. But to tighten voting rules. In several states, Joe Biden’s winning mar that explains neither her rise nor Ms Cheney’s fall; intellectual ar gin was smaller than the number of votes cast by methods, such as gument is yesterday’s Republican politics. emergency postal ballots, that have since been banned. Ms Cheney’s offence against the new conservative orthodoxy is In totality, this Republican campaign is less a new course than her refusal to accept that last year’s presidential election was sto an escalation of grubby tactics that predated Mr Trump; and which len. She further claims, accurately, that those who promulgate this Democrats, in the form of gerrymandering, also dabbled in. The lie, including the former president and most of her Republican sliding descent into skulduggery this represents (rationalised by colleagues, are responsible for deceiving millions of voters with an increasingly feverish view of the other side) explains why so potentially calamitous consequences, of which the ransacking of few House Republicans have resisted it. Ms Cheney and Mr Kinz the Capitol by a proTrump mob on January 6th was but a foretaste. inger have done so, in effect, by seeing a distinction between seiz “I will not sit back and watch in silence while others lead our party ing dubious advantages in the democratic system and assaulting it down a path that abandons the rule of law and joins the former for partisan gain. It is no coincidence that they are motivated more president’s crusade to undermine our democracy,” she said before by ideology than power for its own sake. Ms Stefanik and her peers her removal. Ms Stefanik is one of those others. see no such distinction. They, also not coincidentally, mostly en The 36yearold’s rapid rise from the ranks owes everything to tered Republican politics after the party had started jettisoning her warm embrace of Mr Trump’s lawlessness. A former critic of ideas for scaremongering and the pursuit of power by any means. his Muslim ban, border wall and ill behaviour, she made an unex pected lurch to Trumpism during the former president’s first im Working on the Cheney gang peachment trial, which she inaccurately called “baseless and ille Ms Cheney’s demotion leaves this group in control of a caucus that gal”. Richly praised by the former president, she began aping him. has a good chance of taking the House at next year’s midterms. To She jettisoned her commitments to bipartisanship, gay rights and her credit, she vows to continue fighting to bring her party “back tax realism. She caricatured her Democratic electoral opponent, to substance and principle”. She has her work cut out. n

012 The Americas The Economist May 15th 2021 33

Post-covid economies In Brazil, where the populist president, Jair Bolsonaro, has refused to wear a face mask A long way down or be vaccinated, the official daily death toll at one point exceeded 4,000 a day (it is now about 2,000). Even countries that had previously done a good job of controlling the pandemic, such as Uruguay, are strug gling with soaring case numbers. BOGOTÁ The spread of the disease spurred some Why Latin America has been so badly hurt by covid-19 governments across the region to imple efore the pandemic hit, Jaime Alirio hours, almost twice the loss globally. Sev ment the world’s toughest lockdowns. A BPinilla, a 45yearold in Bogotá, the cap eral countries in the region have done ex quantitative measure produced by Gold ital of Colombia, was employed as a con traordinarily badly: Peru’s gdp, for in man Sachs, a bank, assigns a score from ze struction worker. “But because of this shit I stance, fell by 11% last year. And whereas ro to 100 to assess the severity of a coun lost my job and now work on the streets,” some economies are now roaring back as try’s rules on lockdown, the degree of ad he says, standing behind a steel cart from restrictions are lifted, in Latin America the herence to such strictures and any volun which he sells orange juice, sweets, ciga mood is if anything darkening. tary social distancing (see chart on next rettes and coffee. Colombia has already The simplest explanation for the re page). No region has had a more home had one of the longest lockdowns in the gion’s terrible performance relates to pub bound year than Latin America, with world; now it also faces daily clashes be lic health. The Economist’s excess death movement 70% more constrained than in tween protesters and security forces, as ri model estimates that Latin America and North America. ots over the economic situation continue the Caribbean has the highest number Argentina and Chile have been the for a third week. “We've been locked up for of excess deaths in the pandemic, rela world’s second and fourthmost restricted more than a year, and we can’t bear this any tive to population, of the world’s regions. countries, respectively. Peru tops the list. longer,” says Mr Pinilla. “The economy is As vaccinations in other parts of the world There the initial lockdown felt like living ruined, we’re surviving, not living.” reduce the spread of the disease and the through the darkest days of the war against The covid19 pandemic provoked the damage it causes, in many parts of Latin Maoist insurgents in the early 1990s. No deepest global recession since the second America the coronavirus rages unchecked. one was allowed to leave home except to world war. But one region has fared worse buy groceries. Police officers and soldiers economically than any other—and by a strictly enforced a curfew. Lockdowns this stretch. Global gdp contracted by 3% last → Also in this section tough make much economic activity im year, but in Latin America and the Caribbe possible, even if many of the region’s poor 34 Hunger returns to Brazil an output fell by 7%, the worst of any re est people have little choice but to defy gion tracked by the imf(although India, al 35 Getting lost in Costa Rica stayathome orders in an attempt to make most a region in itself, did worse). In 2020 ends meet. people in Latin America worked 16% fewer — Bello is away In addition to the severity of Latin

012 34 The Americas The Economist May 15th 2021

America’s outbreak and the associated the adequacy of pandemicinduced stimu response to covid19, which has allowed lockdowns, two other factors have contrib lus for 193 countries. Many governments 2.8m people to fall into extreme poverty. uted to the region’s painful economic con around the world have, for every dollar of The economic carnage will not last for traction: the structure of local economies, lost output, boosted their spending by a ever. But the annual growth in gdp of 34% and the scale and design of fiscal stimulus. dollar. A few, such as those of the United that Latin America and the Caribbean can Take economic structure first. A range of States and Australia, have been substan expect, once restrictions are safely lifted, evidence suggests that the region is espe tially more generous. Latin America, al remains some way below the rates that the cially vulnerable to lockdowns. Many though implementing more generous fis United States and some other countries are countries in Latin America and the Carib cal stimulus than in past recessions, has about to see. A recent surge in commodity bean are highly dependent on receipts been stingy even relative to other emerg prices will help less than many think: an from international tourists. Aruba, a Dutch ing markets, with the median country add index of world commodity prices remains island in the Caribbean especially reliant ing just 28 cents of extra deficit spending below where it was for much of the period on visitors, saw gdp fall by 25% in 2020. for every dollar of lost output. since the global financial crisis. And be Recent research from the imf finds that The design of the stimulus also has cause of feeble stimulus households have employment in what it calls “contactin shortcomings. Countries with the most not accumulated big chunks of savings, as tensive sectors”—the kind where it is im successful plans have sent vast amounts of they have in many richer countries, so possible to do a job without being in phys money directly to people. That has helped there will be no postlockdown spending ical proximity to others—is especially im break the link between job losses and cuts binge. As the riots in Colombia show, the portant in Latin America and the Caribbe in households’ spending, supporting the region hardest hit by the pandemic faces an. Jobs in industries such as restaurants, economy. Latin America, by contrast, has yet more trouble. n shops or public transport account for 43% mostly focused its resources elsewhere, in of total employment, compared with 30% cluding on building up underfunded in emerging markets as a whole. healthcare systems. Hunger in Brazil A region with high inequality, Latin Not all Latin American countries have America has an unusually large share of taken this route. In Brazil, spending by Mr An old scourge people working as domestic staff for richer Bolsonaro’s government has made up for folk, which inherently involves the mixing lost output almost completely. This helped returns of households. For a recent paper, Louisa reduce the incidence of extreme poverty Acciari of University College London and even as the pandemic gripped the country, SÃO PAULO colleagues surveyed domestic workers in although the level of emergency aid to poor Many poorer Brazilians cannot afford multiple countries, and found stories of households has recently declined, and enough food inadequate personalprotective equip hunger and other forms of deprivation are ment and violations of their rights. Indeed on the rise again (see next story). enize xavier de carvalho, a 40year the first official covid19 death in Rio deJa Yet some governments have been puz Dold single mother, scoops rice onto the neiro last March was a maid who had been zlingly austere. Nowhere is this truer than four plates in front of her. She adds a small infected by her employer, according to in Mexico, led by the selfproclaimed left spoonful of beans to each one as she turns state officials; the woman had been to Italy winger Andrés Manuel López Obrador. off the stove. The pressure cooker sitting and, they allege, did not bother to send her Mexico’s puny stimulus programme (of 17 on the burner hisses as it cools, with a few maid home once she became sick. cents per dollar of lost spending) stems chicken feet inside to feed her and her The final factor behind the region’s from Mr López Obrador’s monastic and au three children. This is the first time the dreadful economic performance is fiscal tarkic sensibilities, which make him in family, who live in a slum in Rio de Janeiro, policy. One way of measuring whether a stinctively leery of debt but especially so have eaten meat in months. Ms Carvalho, country’s fiscal response to the pandemic when it is funded by foreign financiers. In who lost her job as a waitress at the begin has been large enough involves comparing Colombia the protests were sparked by the ning of the pandemic, often can only feed two things: the change in a country’s over attempt on April 28th by Iván Duque’s gov her children bread and margarine. “It’s all budget deficit, and its lost output dur ernment to push through a tax reform, but really hard,” she says, “to hear your chil ing the pandemic. Borrowing a method have grown into something far larger. dren crying for a piece of bread and some ology developed in a research paper by Much of the discontent stems from the times not having anything to give them.” Goldman Sachs, The Economist calculated perception of an inadequate or misguided For decades malnutrition was a pro blem in Brazil, as the country struggled to lift millions of families out of extreme pov The confined continent erty. In the mid1990s a series of pro grammes, starting with the creation of a Lockdown severity*, 100=most locked down Weekly GDP, % dierence relative to National Council for Food and Nutritional Seven-day moving average pre-pandemic forecast Security (consea), began to curb poverty 80 5 rates, and with it rates of hunger. Thanks to Big economies in the commodity boom in the 2000s, and a Western 0 Latin 60 Latin America‡ push under the government of Luiz Inácio America Europe -5 Lula da Silva, who was president from 2003 Asia- 40 Big economies until 2011, Brazil was removed from the list Pacific† -10 elsewhere§ of undernourished countries in the World 20 -15 Food Programme’s Hunger Map in 2014. North This was achieved by a mix of policies, in America China 0 -20 cluding the introduction of a national AMFJDNOSAJJMAMFJ AMFJDNOSAJJMAM schoolmeals programme, an increase in 2020 202 2020 202 the minimum wage and the Bolsa Família Sources: Goldman Sachs; Nicolas Woloszko; *Measures strictness of rules and adherence to them †Excluding China (family grant), which provided stipends to OECD; World Bank; The Economist ‡Argentina, Brazil, Chile, Colombia, Mexico §Other OECD and G20 countries people who kept their children in school.

012 The Economist May 15th 2021 The Americas 35

But the improvements in nutrition ap At first, federal emergency aid was fair pear to be reversing. Food insecurity—a ly generous. In April last year Mr Bolsona Vague addresses lack of consistent access to enough food— ro’s government announced that poor fam affected over half of homes, or 117m Brazil ilies would receive 600 reais a month, and Off the grid ians, during the first year of the pandemic. those headed by single mothers twice as SAN JOSÉ According to a study by the Brazilian Re much, to help them weather the pandemic. It is easy to get lost in Costa Rica search Network on Food Sovereignty and But five months later, the amount was Security (penssan), an ngo, some 19m Bra halved. According to Vilma Pinto, an econ eople refer to a corner shop, a zilians, or 9% of the population, suffered omist at the Fundação Getulio Vargas, a “Pbar, a tree—even a tree!” exclaims from severe food insecurity in 2020. university in São Paulo, the government Rolando Granja Enríquez, a postman. As in most countries, hunger afflicts had underestimated how much this would For a place with welldeveloped public some groups more than others. Single cost, thinking that only those already en services, Costa Rica’s addresses are a black mothers, such as Ms Carvalho, tend rolled in government assistance pro conundrum. Nearly everyone uses to be the worst affected. According to the grammes would need it. In the end the gov vague places, distances and compass study by penssan, those in the north and ernment spent 293bn reais, almost treble directions, rather than streetnames northeast were most likely to go hungry what it first announced. The government and postcodes: 200 metres west of last year. Rural people also have a higher had not realised just how many people suchandsuch juice bar, 100 metres rate of severe food insecurity. were living in a state of precarity, explains north of the house with the pink fence, The numbers of hungry Brazilians start Ms Pinto. and so on. Worse, sometimes the land ed creeping back up after the recession in Last month the budget for emergency marks used as reference points have 201416, when millions of workers lost aid was reduced further, to 44bn reais a long gone, says Mr Enríquez. their jobs and most programmes to fight year. Eligibility for payments was restrict This archaic method may be quaint hunger suffered drastic budget cuts. When ed to those who already receive food aid or and infused with local history—indeed Jair Bolsonaro, the president, took office in families with incomes below 550 reais per neighbouring Nicaragua has a similar 2019, he scrapped consea, too. According person per month. As a result some 22m system. But it has a high economic cost, to Elisabetta Recine, coordinator of the people who received emergency aid last says Geovanny Campos, the head of Observatory of Food Security and Nutrition year will not do so again this year. Similar logistics at Correos de Costa Rica, the Policies at the University of Brasília (and ly, some statelevel programmes which postal service. Exactly how much is formerly the head of consea) this meant provided aid in lieu of free school meals unknown: the last study, over a decade that the country was already in a bad way have become slightly less generous ago, estimated a toll of $720m annually. before the pandemic. (though some schemes, such as Rio de Ja The lack of clear addresses obstructs But covid19 has made everything neiro’s, are now offered to all public the smooth delivery not only of letters, worse. For a start, rising consumer prices, school students, not just those who receive but of other public and private services, caused by a tumble in the the real, have hit Bolsa Família benefits). too. Police, for example, may be slow to the poorest hardest. During the first year of For Ms Carvalho the emergency aid is a respond to calls for help if they cannot the pandemic food prices rose by 15%, al boon, but she claims that it cannot be re find the caller. Food takes longer to most three times the overall inflation rate lied upon entirely, and that there are deliver, resulting in lukewarm chifrijo of 5.2%, according to the Brazilian Institute months when nothing is deposited onto (pork and beans). The past year has of Geography and Statistics. The price of the card she was given to receive the meal been particularly troublesome, as many rice jumped by 70%, that of soya oil by benefit, possibly because of an error. Ticos (as people from Costa Rica are 88%, potatoes by 48% and milk by 21%. Ms “Sometimes I go to the supermarket and known) have stayed at home and or Carvalho complains that a bag of rice that when I go to pay with the card there’s noth dered goods online. once cost 10 reais ($1.90) is now three times ing on it,” she says. “Then I have to put In 2002 the post office came up with as expensive. everything back and leave with nothing.”n a plan for naming the streets, which became a government decree in 2005. Since then just 30% of Costa Rica’s 82 municipalities have worked with the post office to name their streets. Overall the initiative has been a failure, admits Mr Campos. Other institutions do not seem terribly interested in change. Even in towns where streets and houses have numbers, all too often locals keep using the old way of specifying places. Despite this the postal system in Costa Rica is fairly efficient. Only around one in 20 letters is returned to the sender because it cannot be deli vered. Many companies that will not ship to Mexico, which has a decent address system but tricky customs, deliver to Costa Rica. That is thanks to old hands like Mr Enríquez, who spend years in the same neighbourhood and come to know it and its residents. But what will happen when Mr Enríquez and his colleagues retire? He deserves some more

012 36 Middle East & Africa The Economist May 15th 2021

Israel and Palestine fence off the area, a gathering spot for Pal estinians. That led to clashes. The move The fire this time was later reversed, but street battles be tween young Palestinians and Israeli po lice culminated in two big incidents in which police entered the area around the alAqsa mosque, Islam’s thirdholiest site, firing stungrenades and rubber bullets. JERUSALEM Hundreds of people were injured. Another cycle of violence leaves scores of people dead. How will it end? On May 10th thousands of Jewish na hat began last month as a dispute state of emergency in the city of Lod fol tionalists added to the febrile atmosphere Wover metal barricades in Jerusalem lowing riots by Israeli Arabs and the killing by marching, as they do every year, on “Je has now, in the surreal logic of the Holy of an Arab man by a Jewish resident. The rusalem Day”—a holiday marking Israel’s Land, brought Israel and Gaza to the brink United Nations envoy to the Middle East, capture of East Jerusalem, the West Bank of war. Since May 10th Palestinian mili Tor Wennesland, warned that fighting was and Gaza in the sixday war in 1967. This tants in the territory have fired more than “escalating towards a fullscale war”. year, at least, Binyamin Netanyahu, Israel’s 1,600 rockets at Israel, which in turn has The trouble started, as it so often does, prime minister, ordered a lastminute carried out hundreds of air strikes. It is by with clashes over a small bit of land, inten change to the route, away from the Damas far the most intense round of warfare since sified by the religious power of Jerusalem. cus Gate. That angered the marchers, but 2014. Israeli bombs have destroyed three In this case it was the sunken plaza around just as they were gathering at the roadblock tower blocks in Gaza, in operations report the Damascus Gate, one of the ancient en preventing their progress to the gate, Ha edly aimed at offices of Hamas, the mili trances to the old walled city (see map on mas launched its rockets, setting off air tant Islamist group that controls the terri next page). In April, at the start of the Mus raid sirens and forcing them to disperse. tory. Hamas and its allies have fired huge lim holy month of Ramadan, Israel’s police Israel’s Iron Dome missiledefence sys barrages of rockets at Tel Aviv and southern chief decided “for security reasons” to tem has shot down most of the rockets; on Israel. Scores of people, mostly Palestin ly a handful have got through to hit built ians, have been killed. up areas. Israeli deaths remain in single → Also in this section Both sides have threatened more vio digits. Avoiding further escalation de lence, despite calls for the opposite from 37 Prince Charming bin Salman pends partly on the system’s success. America, the European Union and Arab “What you’re seeing in the sky is the algo 38 The reinvention of Africa’s biggest lake countries. Israel moved troops to the bor rithm,” explains an engineer involved in der with Gaza and told residents to stay in 39 Selling camels in Somaliland tweaking the system the better to identify bomb shelters. Clashes between Arabs and and intercept the most threatening rock 40 Nigeria’s economic slump Jews spread across Israel, which imposed a ets. “We’ve been constantly improving the

012 The Economist May 15th 2021 Middle East & Africa 37

algorithm so it can face a barrage like this.” Palestinian families from the Sheikh Jarrah Israel is also trying to stop the attacks at neighbourhood of East Jerusalem, which is source. It has bombed about 200 launching largely Palestinian. The land on which sites, but there are still many more. Sepa their homes sit was owned by Jews before rately, it is trying to inflict pain on the mil Jordan occupied the eastern part of Jerusa itant groups by killing their leaders. lem in 1948. Under Israeli law the heirs of “The main strategic advantage of Iron the original owners can reclaim the prop Dome is that by significantly reducing Is erty because it is in East Jerusalem. Pales raeli civilian casualties, it allows the politi tinian families have no such rights over cal leadership to pause before committing their former homes in West Jerusalem. In to allout war,” says an Israeli general. fact, all property once owned by “absentee” “There’s no perfect weapon to prevent all Palestinians was expropriated by Israel. casualties,” he adds. “For that you need The frustration this causes is fodder for peace.” But for now, peace does not seem Hamas. It expected to make big gains in either side’s favoured option. Israeli lead Palestinian legislative elections on May ers have rejected a ceasefire and vowed to 22nd (the first such ballot in15 years). Mah strike Hamas hard. The government re moud Abbas, the Palestinian president and mains anxious about an invasion of Gaza, leader of Fatah, a rival party, decided last though. Closequarters fighting would fa month to postpone the elections. Ostensi vour the militants, and would involve ma bly he did so because Israel would not let ny more casualties on all sides. some Palestinians vote at post offices in Whether Israel can defeat Hamas with East Jerusalem. In fact, his main concern out shedding much blood may affect how was that he might lose. By latching onto Saudi foreign policy Israelis think about Mr Netanyahu’s long the protests in Jerusalem, Hamas hopes to running policy of managing, rather than boost its political standing, never mind the Prince Charming trying to solve, the conflict with the Pales consequences for Gaza. Mr Abbas, mean tinians. He has not seriously pursued a set while, has prevented Palestinians in the tlement, wagering that Palestinians have West Bank from organising protests in sol become resigned to the occupation or, if idarity with their kin in Jerusalem. not, that he can suppress their anger. In Je On the Israeli side, Mr Netanyahu is Muhammad bin Salman is playing the rusalem 38% of the population are Pales tired and distracted. He has fought four diplomat. How long will it last? tinians, most of whom have “residency” elections in two years; none produced a rights, which gives them access to Israeli conclusive result. His rivals have been edg s a young buck, Muhammad bin Sal social security and health care. They are ing closer to a deal that will remove him Aman, the Saudi crown prince, thought not treated as equals to Israelis, though, from power. Were he in a stronger posi he could take on the world. He charged into and face a variety of pressures to move out. tion, he might have done more to rein in Yemen, detained Lebanon’s prime minis A case before Israel’s Supreme Court— the police and his farright supporters. But ter and had his people chop up a mild now postponed, in light of the violence—is now that fighting has started, he hasa mannered dissident, Jamal Khashoggi, in indicative. It concerns the eviction of some chance to portray himself as a trusted war the Turkish city of Istanbul. When Western time leader. He insists that Hamas should countries, such as Canada and Germany, "pay a very heavy price". criticised his humanrights record, he re East Jerusalem Med. Sea Foreign powers have been little help. called his ambassadors. When President Damascus Gate Four months after President Joe Biden was Barack Obama made overtures to Iran, a ISRAEL West Jerusalem inaugurated, there is still no American am Saudi rival, Prince Muhammad threatened OLD CITY bassador in Jerusalem. His administration to sell the kingdom’s American assets. To Tel Aviv West Dome of Christian Muslim the Rock Bank seems torn about how to respond. The the prince, Iran’s supreme leader, Ayatol Lod Quarter Quarter Jerusalem al-Aqsa State Department blamed both sides for lah Ali Khamenei, was akin to Hitler. He mosque Gaza City stoking tensions, but America later stalled even tried to marshal an array of Arab and Armenian Jewish Gaza Strip a similar statement by the un Security Sunni countries against Iran. “Green Quarter Quarter line” Council. The previous un envoy, Nickolay Six years after his father, Salman bin Temple Mount/ Mladenov, was adept at dampening occa Abdelaziz, became king, the prince, now in 50 km 0.2 km Haram al-Sharif sional spasms of violence before they esca his mid30s, may be changing, switching West Bank, 202 lated to war. Mr Wennesland, his successor tactics from maximum pressure to maxi Palestinian Jerusalem (municipal boundary) and a veteran diplomat in the region, has mum diplomacy, cutting his losses and built-up areas inherited that challenge. trying to defuse conflicts. Facing resis Israeli settlements Sources: Peace Now; B’Tselem Mr Netanyahu has spent much of his tance in the region and disapproval from career insisting that Israel need not make President Joe Biden, he may have decided Eastast Jerusalem peace with the Palestinians. On his watch that the cost of his foreign ventures is un Pre-1967 Sheikh the occupied territories have been relative sustainable. Saudi foreign policy has be border “Green line” Jarrah West ly quiet, at least compared to the violence gun to look much less aggressive. Jerusalem West intifadas Bank of past Palestinian , or uprisings. So far this year he has held two rounds OLD CITY Yet the events of the past month, the unrest of talks with Iran in Baghdad, the Iraqi cap that has spread from Jerusalem to every ital, and spoken of his hope for “a good and US embassy ISRAEL corner of the land, are a reminder that Pal special relationship”. His officials have estinian grievances will not disappear. If met his Yemeni foes, the Iranianbacked Mr Netanyahu does leave office in the com Houthi rebels, in the Omani capital, Mus ing weeks, it is perhaps a fitting coda to his cat. The Saudis offered to lift the kingdom’s 5 km long rule. n siege of Yemen and to help rebuild the

012 38 Middle East & Africa The Economist May 15th 2021

country his jets have bombed. He has also threehour interview. He has cut aid to Arabia should move their regional head stopped funding the rebellion against Syr Pakistan, failed to prop up Lebanon, and quarters to the kingdom has upset Mu ia’s ruler, Bashar alAssad; earlier this slashed mosquebuilding projects that hammad bin Zayed of Abu Dhabi, the de month he sent his intelligence chief to Da used to spread the kingdom’s religious facto ruler of the United Arab Emirates, the mascus to discuss restoring ties. conservatism across the world. Defying region’s trading hub. And he can still be Prince Muhammad is mending fences puritanical clerics who consider Shias her impulsive. Though he lifted his blockade with Turkey and Qatar as well. Both had ir etics, he has played host to some from Iraq. of Qatar, he recently slapped bans on im ritated him by backing Islamist groups that Prince Muhammad can still, however, ports from Jordan, Lebanon and Turkey he dislikes, such as Egypt’s Muslim Broth annoy his Arab neighbours. His demand after their governments displeased him. erhood. But the prince has lifted a three that companies doing business with Saudi Prince Charming can still bare his teeth. n year blockade of Qatar and bought arms from Turkey. On May 10th he hosted Tur key’s foreign minister, Mevlut Cavusoglu, Lake Victoria and Qatar’s emir, Tamim bin Hamad al Thani. “He’s dispensed with polarisation,” Finny business says Oraib Rantawi, a Jordanian analyst. “A new wind is blowing.” Friends say Prince Muhammad has ma tured. Others say he is a bully who has been chastened by those he knows to be more MUKONO powerful. He promised to take Yemen’s Commercial fishing has brought profits—and violence—to Africa’s biggest lake capital, Sana’a, quickly. Instead, the Houthis have made incursions into Saudi he old fishermen at Cape landing site species of small, brightly coloured haplo Arabia. Iran and its regional proxies have Tin central Uganda can remember when chromine cichlids, which nurture their flung missiles at Saudi airports, palaces they first came, in the 1990s, to this sliver young in their mouths. Colonial officials and oil installations. Ships in the king of rock that lies between a forest and the considered them to be “trash fish” of little dom’s Red Sea ports have come under re lake they call Nnalubaale. There were nine economic value. In the 1950s a rogue fish peated attack. In 2019, after drones struck settlers then. Now there are more than eries officer dropped Nile perch into the the kingdom’s oilprocessing hub at Ab 600: sinewy boathands, gleeful children lake, hoping to create a commercial fish qaiq, halving Saudi oil output, no one came and stiffbacked women drying silver fish ery. The newcomers “accepted the terms” to his rescue, not even President Donald in the sun. Yet the drinking dens and tim of their employment, says Anthony Taabu Trump. The prince’s allies in the Gulf have bered houses retain an air of imperma Munyaho of the Lake Victoria Fisheries Or abandoned his campaign in Yemen. nence. A fisherman is a wanderer, they say, ganisation, an intergovernmental body. In During his election campaign President like a herder always seeking fresh pasture. the 1980s an increase of Nile perch and al Joe Biden called the kingdom a pariah, ac These waters are never still. Lake Victo gal blooms killed off more than half the ha cusing it of murdering children in Yemen, ria, as Englishspeakers know it, is Africa’s plochromine species. One team of ecolo and vowed to end American sales of arms. largest freshwater lake, roughly the size of gists described it as possibly “the largest He has since toned down his disapproval Ireland. In 1960, about 9m people lived in extinction event among vertebrates” in the but is still calling for an end to the war. its catchment, mostly in the riparian coun 20th century. Soon after Mr Biden took office, the prince tries of Uganda, Tanzania and Kenya; to The old lake had been ecologically di dropped his refusal to talk to Iran and freed day, more than 60m do. The twin intru verse and economically unproductive. The Loujain alHathloul, the kingdom’s most sions of market and state are transforming new one is the dominion of the Nile perch, prominent rights activist. the fish in its waters and life on its shores, which are packed in styrofoam and ice and The prince has also been held back by a bringing export revenues, violence and an flown to distant corners of the world. Pro stalling economy. The pandemic and low ecological crisis. cessing factories, owned by Indians and oil prices have hurt, while the conflict in The lake was once home to around 500 Europeans, clean and fillet the fish for ex Yemen has drained his war chest. And his unpredictability has deterred foreigners from investing in Vision 2030, his grandi ose reform programme. Tension with Iran in the Strait of Hor muz, the conduit for most Saudi oil ex ports, and the difficulty of building a post oil economy have altered the prince’s plans. In search of alternative trade routes, he is expanding ports on the Red Sea and building a highspeed rail link from west to east. He is also forging a Red Sea council to spur development in all the littoral states and to open a gateway into Africa. His “smart” megacity, Neom, and a vast tourist complex in the kingdom’s northwest are meant to bolster economic links with Egypt, Jordan and, perhaps one day, Israel. Meanwhile, he has trimmed the king dom’s bankrolling of an array of Arab and Muslim causes, such as the Palestinians, whom he recently failed to mention in a Twilight of a fishery

012 The Economist May 15th 2021 Middle East & Africa 39

port. The law forbids them to operate traw lers, so they buy through middlemen from The camel trade artisanal fisherfolk. There are perhaps 77,000 vessels on the Cloak-and-finger deals lake, most of them open wooden boats HARGEISA with two or threeman crews. They catch In Somaliland traditional ways of selling camels are under threat Nile perch, tilapia and tiny silver cypri nids, lured by kerosene lamps on moon n 1906 lorenz hagenbeck received a determines the bid. If it is too low the less nights. A lucrative sidetrade exists in Irequest from the German government seller manoeuvres the hold. On and on fish maw, the swim bladder of the Nile to supply its colonial army in SouthWest they go, hands like human abacuses, perch, valued in China for its supposed Africa (modernday Namibia) with 1,000 until a deal is done. medicinal properties. Chinese traders will camels. The animal trader sought out the Hassan Ahmed Hersi, a livestock pay more for the maw than for a whole fish main force in the industry: Somalis. But broker, is not familiar with the economic fillet. Fishermen call it “lake gold”. upon seeing how they haggled, Hagen term “asymmetric information”. It is a In the early 2000s commercial fishing back was confounded, “for I had not situation in which some participants boomed. Then the Nile perch started to die mastered the secret fingerlanguage used have access to data or details that others out. Fishermen used smallmesh nets to in that trade”. do not, which can lead to market failures. catch immature specimens, which they More than a century later clandestine, “When brokers are negotiating, I don’t traded across east Africa. Such practices tactile negotiating can still be seen in want others standing around to know the were illegal, but the elected management Hargeisa, the capital of Somaliland. The price,” he says. Brokers, who sell on committees at the landing sites were often city’s livestock market is a bustling and behalf of rural herders, control much of led by the least scrupulous fishermen. noisy place: goats bleat, camels bellow the supply of humps. By using the cloak Overfishing was bad news for Uganda, and sellers extol their animals’ constitu they hoard information about prices, too, on the northern shores of the lake, where tions. When it comes to reaching a price, giving them an edge. If the next buyer fish products had become the secondlarg however, all is silent. The parties on each does not know the previous price, he can est export. Sujal Goswami, a factoryowner side of the trade slip an arm under a end up paying more. who chairs the exporters’ association, shawl. The buyer makes an offer by Yet “change is coming”, says Warsame blames “the greediness and insensitive grabbing the sellers’ fingers. The number Ahmed of the University of Hargeisa. ness of the fisherfolk” for a collapse in of fingers gripped and knuckles pressed Herders like Mr Hersi grumble that using stocks. By 2017 only five fish factories were the cloak is becoming less common. One left in Uganda, where once there were reason is that others in the market more than 20. The president, Yoweri Muse increasingly insist on bargaining in the veni, had seen enough. He decided to call open. “People think we’re hiding some in the army. thing,” he says, with his arm under a Military patrols helped fish stocks re cloak. Meanwhile, mobile phones and cover and six factories reopened. But fish messaging apps make it easier for buyers ermen were arrested, beaten and drowned to ask fellow clan members in rural areas in encounters with the army. Ziyad Nsere for the latest prices. That way they know ko had been fishing for only a few months if they are being stiffed. when he and a friend drowned in March. A Female traders are another big relative says they fell into the water after change. “There are becoming more and soldiers rammed their boat; the army says more of us,” says Hadan Yasin. Perhaps they jumped in while trying to escape. At half of the market is staffed by women. his former landing site in Kalungu district Since imams say that Islamic law forbids the locals count nine deaths in similar in men and women who are not related cidents. When soldiers catch you, “they from touching, their deals are done beat you until they see blood,” says a fish verbally. By entering the market they are erman. A trader, hobbling and holding a boosting competition and price transpa crutch, says he was beaten for selling un rency. And they are giving the likes of Mr dersized fish. What did you sell for? Hersi the hump. The commander who took over the ar my operation in December, Lieutenant Colonel Dick Kirya Kaija, admits that it banned boats shorter than 28 feet, al weather more likely, and the destruction of used “a lot of force” at first. He paints a pic though larger ones, with bigger engines, lakeside wetlands makes its impact more ture of the lake as “a harbour for criminals” require capital and credit. Aishar Nakama dramatic. Last year the lake rose to its high who operate “like a network of drug deal nya used to employ two workers to fish est level since records began, inundating ers”, bending rules to import contraband from her canoe, until the army burned it homes. This year dead Nile perch washed nets. It is true that some businessmen own and seized her gear. Now she is reimburs up on the shoreline, a mysterious phe fleets of 100 boats or more. “They are damn ing the owner of the outboard motor she nomenon thought to be caused by low oxy rich,” complains Colonel Kaija, “and they had hired, rather than paying the fees that gen levels. have befriended security personnel, they would keep her children in school. Fisheries officials want to tame this tur have befriended ministers.” Some kind of enforcement is necessary, bulence. They are talking up fishfarming But punishment falls mainly on their as even many fishermen acknowledge. In and plan to establish a paramilitary lake crews and those who fish for their own Uganda alone, fish factories employ 5,600 unit, similar to the rangers which fight supper. “The government doesn’t help people directly. Perhaps 1m in all, from poaching in national parks. They envisage when those poor people are knocked into hauliers to boatbuilders, depend on the a lake that is policed and profitable. That the water,” says a fisherman. “It’s like they industry. Those livelihoods face multiple might create jobs, but would be utterly un are working for the rich.” Uganda has threats. Climate change makes extreme like the Nnalubaale of the past. n

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Nigeria’s economy problem for business in Nigeria,” says Ba shir Abdulrahman of Credent Capital and Stuck in a rut Advisory, an investment bank. Electricity blackouts are maddeningly frequent. Roads are often poor and ports clogged up. Moving a container 20km from the port of Lagos to the city can cost $4,000, almost as much as shipping it LAGOS Rising oil prices will bring short-term relief, but may delay essential reforms 12,000km from China. Nigeria ranks 131st out of 190 countries on the World Bank’s alk that everything is expensive fills easeofdoingbusiness index. Although Tthe air at a market in Lagos, Nigeria’s Slow-motion crash some industries, such as information commercial capital. Since February the GDP per person at PPP*, 2017 prices technology, are growing, this is “in spite of minibus fare from home to the market has 2010=100 the government”,says Tayo Oviosu of Paga, doubled, says Emmanuel Mokwe, who 180 a mobilepayments company. sells kitchen utensils. So has the price of Ethiopia The government has tried to give the food, he adds grimly. “It’s just chaos,” says 160 poor more aid to get them through the pan Dotun Babande, who runs a juice shop Rwanda demic. It also promises to improve infra across town. Inflation is running at 18%. Ghana 140 structure. But spending on salaries and For food it is 23%, the highest in two de Kenya other annual costs chews up 75% of the cades. More than half of Nigerians are un Senegal 120 federal budget, leaving little money to in deremployed or unemployed. Before co vest in roads or railways. With a view to Nigeria 100 vid19 about 80m of Nigeria’s 200m people freeing funds for infrastructure, the gov lived on less than the equivalent of $1.90 a 80 ernment last year promised to cut costly day. The pandemic and population growth fuel subsidies. Yet that has been halted in 1918171615141312112010 could see that figure rise to almost 100m by the face of opposition. Source: World Bank *Purchasing-power parity 2023, says the World Bank. The stalled reform is typical of Nigeria’s Nigeria’s economic woes also help ex troubles. For decades cash from oil has plain a vertiginous rise in crime. More peo which he sees as a measure of Nigeria’s been used to subsidise things like fuel and ple were kidnapped in the first four strength. In an attempt to conserve dollars, electricity. The easy revenue also allowed months of this year than all of last year, ac the central bank has banned those intend the federal and state governments to get cording to Jose LuengoCabrera of the ing to import almost 50 items from buying away with abysmal tax collection. Worse, it World Bank. This has added to worsening foreign currency. Last month wheat and fostered corruption. violence around three flashpoints: the ji sugar were added to the list. In 2019 Mr Bu Many Nigerians have had enough. Be hadists of Boko Haram in the northeast; a hari closed Nigeria’s land borders to goods tween 2014 and 2018 the percentage who longstanding conflict between farmers to stop smugglers undermining local pro want to emigrate rose from 36% to 52%, and cattleherders across central Nigeria; ducers. Both moves have fuelled food one of the highest levels in Africa. Rising and fighting between government forces price inflation. oil prices this year will ease the shortages and Igbo separatists in the southeast. They have also hobbled manufacturing and boost government finances. Yet that Covid19 has slammed economies firms by making it hard for them to obtain may reduce the pressure to fix deeper eco everywhere, but Nigeria’s economic mal inputs. Manufacturers would be lucky if nomic problems, admits Kayode Fayemi, a aise predates the pandemic. gdp per per they get 20% of the forex they request, says state governor. Nonetheless, he believes son has fallen every year since 2015, when Muda Yusuf of the Lagos Chamber of Com there is an “almost overwhelming consen oil prices slumped (see chart). The World merce and Industry. Ajibade Oluwabukun sus” on the need to restructure the econ Bank reckons that by the end of the year mi imports medical equipment and uses omy. “If we don’t do it,” he warns, “we run real income per person in Nigeria, home to the volatile black market, where dollars the risk of disintegration.” n one in six of subSaharan Africa’s people, cost almost 30% more than the official rate. will be at the same level as it was in the “Nigeria is in a shambles,” he laments. De 1980s. Reform is desperately needed, but spite all its unorthodox controls, the cen fiendishly difficult to enact. tral bank was forced to devalue the naira Although oil makes up about 9% of Ni twice last year. Businesses are getting nei geria’s gdp, it accounts for 80% of export ther a stable currency nor access to dollars. earnings and about half of government The government may slowly be chang revenues. A long slump in its price—from ing its tune. Bismarck Rewane, an econo over $100 a barrel in 2014 to less than half mist who is also on the president’s council that for most of last year—has squeezed the of economic advisers, says that “the futility supply of foreign exchange. Normally of a Robinson Crusoe economy became ve economies would adjust by letting their ry clear for everybody”. The government is exchange rates fall, making imports more starting to pay more attention to exporters, expensive. This can be painful in the short he claims, pointing to the partial reopen term since it fuels inflation. But usually it ing of land borders for goods in December helps boost exports by making them more and Nigeria’s signing of the African Conti competitive. If Nigeria could make, grow nental Free Trade Agreement in 2019. or mine more for export, it would be less Yet sustained growth in exports re vulnerable to swings in the oil price. quires more than just opening the border. Instead, the government of President Many firms are uncompetitive because Muhammadu Buhari has restricted im they are hampered by red tape and govern ports in an effort to prop up the currency, ment failures. “Government is the biggest Gridlock at the port

012 Europe The Economist May 15th 2021 41

→ Also in this section 42 Scandal in Bulgaria 42 Green steel in Sweden 43 Tourism without Turks in Turkey 44 Europe’s welfare states 45 Charlemagne: The coming boom

France tial candidates on the right is even a mem ber of the Republicans any more. Xavier A revolution and a rematch Bertrand, head of the HautsdeFrance re gion in the north, and Valérie Pécresse, head of the Paris region, have both quit. A bitter internal row centres on how, and whether, to fight the far right. When he PARIS Four decades after François Mitterrand’s victory, France’s left, and its mainstream walked out, Mr Estrosi declared that a right, are both in trouble rightwing faction with an ambiguous atti tude to the rn had “taken the party hos orty years ago on May 10th François left remains divided. The greens (Europe tage”. The Republicans, he said, needed to FMitterrand made history, becoming Écologie Les Verts) captured some big town state publicly that their priority is to keep France’s first Socialist president of the halls last year. But nationally they struggle the rn out of power, at all times. Fifth Republic. Next year, the party the wily and squabble. Polls say that Yannick Jadot, What to make of this volatility? First, leader carried triumphantly to power in who will probably be their presidential parties in France, which lack tribal loyalty, 1981 could make history again, but for rath candidate, would also lose to Ms Le Pen in a are no longer a determining factor in elec er a different reason. The Socialist Party runoff. Last month he called a meeting in toral politics. Michel Barnier, the European runs the risk of failing to make it to the Paris with other parties of the left to try to Commission’s former Brexit negotiator, presidential runoff twice in a row. chart a way to a common candidate. The ef may hope to run for the presidency as a Re A year ahead of any election, polls fort failed, not least because JeanLuc Mé publican. But “over the past five years,” should be treated with caution. French his lenchon, leader of the leftwing Unsub says Emmanuel Rivière of Kantar, a polling tory is littered with early favourites—Alain missive France, was absent, defying lock group, “the party that most of the French Juppé, Dominique StraussKahn—who down with a jaunt to Latin America to feel the closest to is ‘no party’.” Mr Macron never made it to the Elysée. In May 2016, a check on Bolivian socialism. exploited the tworound election system year before the most recent presidential Matters look little better on the right. to run for president without (much of) one. vote, not one poll tested the appeal of Em The Republicans are again bleeding talent. Mr Bertrand, who has declared his candi manuel Macron, the eventual winner. Still, Mr Macron poached many of their moder dacy, is now trying to do the same. If a can an average of firstround polls this year, ates to serve in his government, including didate emerges who consistently polls bet which assume that Anne Hidalgo, the two prime ministers (Edouard Philippe ter than Mr Macron against Ms Le Pen, mayor of Paris, will be the Socialists’ candi and Jean Castex) and a finance minister, this—rather than party backing—could be date, gives her just 8%, not enough to get Bruno Le Maire. Last week, amid high local the basis of a serious presidential bid. her into the runoff. Worse, were she to drama, Christian Estrosi, the mayor of Second, there has been a “droitisation”, make it through and face Marine Le Pen, Nice, quit the Republicans too. Ahead of re or rightward shift, of the French electorate. the leader of the farright National Rally gional elections next month he was furi Since 2017 the share of voters who say they (rn), polls say Ms Le Pen would win. ous that the party had refused an electoral are on the right has risen by five points, to Four years after Mr Macron upended deal with Mr Macron’s La République en 38%, according to the Fondation pour l’In French politics, the country’s oncedomi Marche (lrem) in Provence, to thwart Ms novation Politique, a thinktank; that on nant parties—on the left and the right— Le Pen’s candidate. the left has dropped by a point, to 24%. have never looked so weak or unstable. The Neither of the two strongest presiden This too has blurred voting patterns. In his

012 42 Europe The Economist May 15th 2021

time Mitterrand relied on the votes of the Svetoslav Ilchovsky, who owns an agricul Communist Party, then rooted in industri tural business. He was testifying on May al and mining areas, to win in the runoff. 5th and 7th to a parliamentary committee Today the main beneficiary of the working examining the behaviour of Mr Borisov class vote is Ms Le Pen. Fully 48% of blue and his party, which has dominated poli collar workers told a poll they would back tics since 2009. A general election on April her next year in the first round, next to 2% 4th was inconclusive: no party was able to for Ms Hidalgo and 4% for Mr Jadot. form a government. A new poll has been Third, Republican and rn supporters called for July 11th. Meanwhile the presi increasingly share cultural values. Accord dent, a political foe of Mr Borisov, appoint ing to a study by the Fondation Jean Jaurès, ed a caretaker government on May 11th. a thinktank, there is now little gap be Mr Ilchovsky’s allegations could hardly tween the two electorates on security, law be more damning. The economy is con and order, and attitudes to Islam. When a trolled by men close to Mr Borisov and group of (mostly) retired military officers ministers are just “puppets”, he said. He linked to the far right signed a petition last claimed that the biggest power in agricul month in favour of the army stepping in to ture was Ivan “the chicken” Angelov, and restore order, 71% of Republican voters ap that he had been forced to sell chicken feed proved. Ms Le Pen hopes to use this conver to Mr Angelov’s company at low prices. Mr gence to split the Republican party. Ilchovsky submitted false invoices to in The collapse of traditional parties could flate the turnover of the company Mr Ange help Mr Macron. Polls suggest that in 2022 lov owns with his brother in order to boost he is again likely to face Ms Le Pen in a run its value when it was launched on the stock off. Yet where the candidate in 2017 embod exchange in 2018. Every agricultural pro ied a balance of left and right, the president ducer or importer who did not do what was Sweden has in office followed the electorate’s right demanded of them was persecuted by the ward shift, appointing Gérald Darmanin, a foodstandards agency, which held up im Green steel hardliner, as interior minister. ports on the border or paralysed business This carries a risk: that disillusioned es with exacting health inspections. voters on the left refuse to back Mr Macron Mr Borisov has denied all the claims in the runoff, even against Ms Le Pen. For and says he has never even met Mr Ilchov this reason, polls predict a slimmer victory sky. Mr Angelov says that 95% of what Mr Plentiful renewable energy is opening for Mr Macron than he managed in 2017. Ilchovsky says is untrue. On May 10th, up a new industrial frontier “He’s really got to reach out to the left,” says however, Pavel Stoimenov, another busi an lrem deputy. For all the other parties’ nessman, made more, similarly damning orrland is the largest of Sweden’s disarray, Mr Macron remains vulnerable. allegations to the committee. He said he Nthree historical “lands”. It spans the And, as France remembered Mitterrand’s had “delivered” 1,000 votes to Mr Borisov’s top half of the country and is sparsely pop first election, one feature of it was doubt party, but when he had tried to resist Mr ulated, the more so the farther north you less on Ms Le Pen’s mind. She is on her Angelov’s demands, buildings belonging go. The few people who live there have long third election campaign—just as Mitter to his company had been set on fire. relied for work on mining, the army and rand was when he triumphed in 1981. n Mr Ilchovsky said he complied because forestry. Most of Sweden’s industry is far to it was a “survival strategy”. “There is not a the south. But Norrland abounds in hydro single eu-funded project in the agricultur power. Power that is cheap and—crucial Bulgaria al sector where prices have not been jacked ly—green, along with bargain land and up or some fraud has not happened,” he proximity to iron ore, is sparking an im Battling Borisov added. The allegations are being sent to the probable industrial revolution, based on eu public prosecutor’s office, not just Bul hydrogen, “green” steel and batteries. garia’s, which is widely believed to be sub ssab, a steelmaker, is poised to deliver ject to political influence. its first consignment of “ecosteel” from a Everything the two witnesses claim, hydrogenfuelled pilot plant in Lulea, a northern city. Volvo, an industrialvehicle Parliament hears explosive allegations says Ognyan Georgiev, the economics edi Kapital firm these days, will use the steel to build about the outgoing prime minister tor of , a leading business daily, has long been rumoured, and Mr Borisov has lorries. Of the six or seven tonnes that its t a party the boss is playing cards with survived scandals before. But public re typical lorry weighs, around five consist of Ahis friends. One of them shows a video marks by a former insider are “a very heavy steel. And for each tonne of steel produced about what happened to a businessman blow. He was basically describing in omi using fossil fuels, around two tonnes of who did not do what they wanted; he was nous detail how our captured state works.” planetcooking carbon dioxide get belched filmed being sexually abused in custody. Atanas Tchobanov, a founder of Bivol, into the atmosphere. Another member of the group, known as an investigative news site, says Mr Bori To make steel, iron ore must be melted “the chicken”, has paid €2,500 ($3,025) to a sov’s fall will take time, since his party is at high temperatures and reduced from glamorous woman to “take care” of the embedded in all institutions, including the iron oxide to iron, a process that typically boss. Others give the big man gold bars as prosecution service. But now, he says, a involves burning fossil fuels, releasing gifts. It sounds like something out of a window of opportunity has opened. Mr huge amounts of carbon dioxide. Replac gangster movie. But the “boss” is allegedly Tchobanov is optimistic that the caretaker ing them with hydrogen as a reducing Boyko Borisov, Bulgaria’s prime minister government will approve freedomofin agent eliminates more than 98% of the car until this week. formation requests he is about to submit bon dioxide normally released. The hydro The description of the party and other about all sorts of sensitive questions. “It gen is made by electrolysing water, using allegations of misconduct were made by might be the tipping point,” he grins. n electricity produced by hydropower. This

012 The Economist May 15th 2021 Europe 43

approach involves almost no carbondiox Pandemic tourism in Turkey more than the monthly minimum wage. ide emissions at all. Locals cannot buy alcohol during the lock Scania, another automotive firm, is also Where did down, the result of a government ban. For hoping to exploit Norrland’s cheap hydro eigners can drink freely at hotels. power. It plans to make 15,000 batterypo everyone go? Things are about to get even more inter wered trucks a year by 2025, around 15% of esting. As of May 15th, travellers from more its annual production. To that end it has in than a dozen countries, including Britain, BODRUM vested in Northvolt, a new batterymaking will no longer be required to produce a Turks are stuck indoors. Foreigners enterprise powered by Norrland’s hydro negative covid19 test on arrival in Turkey. have the country to themselves electricity. Northvolt’s main facility is in The foreign minister, meanwhile, has Skelleftea, 130km southwest of Lulea. It is ourists in turkey are already spoiled. pledged to vaccinate “anyone a tourist is also building a batteryrecycling plant TThe food is excellent, the locals wel likely to see”, meaning hotel staff and the there (see Science section). By the end of coming and the range of holiday options, like, by the end of the month. Turks who 2021 the company hopes to have churned from mountain hikes on the Black Sea are still waiting for their first shot, and out enough batteries to store 16 gigawatt coast to boat cruises on the Aegean and who are unlikely to end up within eyeshot hours. CarlErik Lagercrantz, Northvolt’s hotair balloon rides over Cappadocia, are of a visiting foreigner, bristled. The vaccine chairman, wants to scale that up eventual enough to last several summers. A pro rollout has slowed. Of the 100m doses of ly to 150 gigawatthours a year. If he does so longed currency crisis has seen the dollar the Sinovac vaccine China promised to by 2030, he will be supplying a sizeable strengthen against the lira by nearly 60% send to Turkey, only 27m have arrived. amount of the European Union’s expected in just over two years, meaning that vaca Turkey badly needs the income from annual demand of some 450 gigawatt tions in Turkey come cheap. A room in a tourism. A couple of years ago, the indus hours of electricvehicle battery capacity luxury hotel can easily cost less than a try generated $34.5bn. That dwindled to by 2030. cramped offering from Airbnb in a Euro $12.6bn last year because of the pandemic, Mr Lagercrantz also wants to get into pean capital. If they can only resist tweet swelling the country’s already unhealthy the greensteel business. Taking inspira ing their thoughts about Recep Tayyip Er currentaccount deficit. This year may be tion from ssab’spilot project, he decided to dogan (at least 36,000 people have been in even worse. Tourism revenue between Jan have a go at hydrogenbased steelmaking vestigated for insulting Turkey’s thin uary and March was down by 40% com too, and founded h2 Green Steel. Produc skinned president in a single year), for pared with the same period last year. This tion will be based in Boden, an old army eigners will be in for a treat. week Britain placed Turkey on its “red list” town 30km northwest of Lulea. The new These days, they will also be in for a sur for travel, banning visits for pleasure and plant will make 5m tonnes of flat steel a prise, though whether it is a welcome one imposing stringent quarantine rules. That year by 2030, a small but meaningful per depends on one’s idea of a rewarding vaca decision forced uefa, Europe’s football as centage of the 90m tonnes that is currently tion. To resuscitate tourism, Turkey has sociation, to move a Champions League fi consumed annually in the eu. declared holidaymakers exempt from co nal between two English clubs, Manches Northern Sweden’s steelmaking leaps vid19 lockdowns. With locals ordered to ter City and Chelsea, from Istanbul to Por are being emulated elsewhere in Europe, stay home from late April until at least un to, in Portugal. Russia, which sent more in response to similar environmental pres til May17th, following a surge in infections tourists than any other country to Turkey sures which will only increase if, as looks and deaths, tourists have had the country last year, has suspended nearly all flights very likely, Germany’s Greens enter gov almost to themselves. Foreigners in Istan to the country until June. This came after ernment after the election in September. bul walk down empty streets and board Mr Erdogan criticised Russia’s annexation Europe produces a still significant 16% of empty ferries. On the Mediterranean coast, of Crimea and offered to support Ukraine’s the world’s steel. Big producers in Germa they laze on empty beaches and go for long, plans to join nato. ny and Poland, where the industry is most lonely swims. Turks caught doing the The new lockdown has brought down ly coalbased and very dirty, are nervy. same have been plucked out of the water by covid19 infections, which had soared to Even neighbouring Norway is in danger of gendarmes and fined 3,180 lira ($380), over 60,000 a day in April, offering some losing out. It too has the gift of rich renew hope that tourism may rebound during the ableenergy resources, but underinvest summer. But closing down the country to ment means there may soon not be enough locals while rolling out the red carpet for of this green electricity to meet the de foreigners has not gone down particularly mands of both households and industry. well. “Turkey unlimited,” read a mock tou Meanwhile, all the greentinged invest rism advertisement making the rounds on ments have knockon effects for the rest of the internet, accompanied by a picture of a the economy of northern Sweden. Claes nearly deserted beach. “Now available Nordmark, the mayor of Boden, says house without Turks.” prices are rising and contractors are queu “This is ridiculous,” says Kaan Alpan, a ing up to build apartment blocks in antici banker in Bodrum, a popular vacation spot pation of h2 Green Steel’s new facility. Oth on the Aegean coast. “If we had closed er companies are vying to supply the steel down correctly at the right time, we would maker, or to take advantage of its products. have been able to open by now.” Were he a Expecting a jump in population, Mr Nord foreigner, Mr Alpan would be free to cool mark and his colleagues in the region are off in the sea. As a Turk, the most he can building schools and sporting facilities. look forward to is a quick trip to the grocer. Your correspondent encouraged him to Even some tourists are uneasy. Anara, vis abandon Swedish reticence and brag. iting from Kazakhstan, says she does not “Those in the south think there is nothing plan to go swimming while her Turkish here. But now we can offer the green jobs neighbours are stuck indoors. “I wouldn’t that people dream of—and an amazing want to do that to them,” she says. “That lifestyle,” he beams. n Wish you were here would be unfair.” n

012 44 Europe The Economist May 15th 2021

Welfare states Yet perhaps the most successful new eu social programme is not part of the social Protection racket pillar. The €100bn sure programme, launched at the start of the pandemic, helps poorer countries pay their unem ployment bills by letting the commission borrow money on their behalf, taking ad vantage of the eu’s strong collective credit. AMSTERDAM AND BUCHAREST sure The eu trumpets its social safeguards, but its member states must deliver them But making permanent is not under discussion. Nicolas Schmidt, the eu com urope is to the welfare state what Can missioner for jobs and social rights, says Eada is to ice hockey: the birthplace and Uneven support that with the economy recovering from co the summit of the art. The European Union Unemployment or minimum income benefits vid19, it is time to focus on employment boasts a “unique social market economy” % of previous income, by time after first payment, 2020 rather than joblessness. eu that “protects us against the great risks of Two months Six months Five years One measure being discussed is an life”, Ursula von der Leyen, president of the wide socialsecurity number or id card. European Commission, told a summit of 100806040200 This would help ensure that companies eu leaders on May 7th. They had met in Denmark that send workers across borders pay so Porto, Portugal’s second city, to approve a cialinsurance premiums to the countries Italy plan for turning the union into a bulwark they work in. It would also help workers of social protection, with targets for rais Netherlands get the benefits they are entitled to, says ing employment, improving job training France Agnes Jongerius, a Dutch member of the and reducing poverty, as well as looser European Parliament. goals such as fighting gender inequality Greece Another candidate for European regula and regulating the gig economy. Romania tion is the platform economy. Drivers for Yet Europe’s welfare states are adminis Uber and programmers on Fiverr tend to Source: OECD tered by national governments, not by the fall into a regulatory gap between employ eu. The European Commission’s powerful ees and contractors, and lose out on labour regulatory authority rarely extends to so Leiden University. A summit in Gothen rights. Different national approaches have cial policy. As for euspending, even with a burg in 2017 adopted a “European social created confusion, and the European Court new €750bn ($910bn) covid19 recovery pillar” with 20 loftysounding rights, from of Justice has been forced to step in. The fund added to its regular €1.1tn sevenyear lifelong training to worklife balance. The commission aims to come up with a legis budget, it amounts to less than 2% of the Porto summit was supposed to start lative proposal by the end of the year. bloc’s gdp over the period. That pales in achieving them. Defining platform workers’ socialse comparison to members’ social spending Portugal’s Socialist government, which curity status would be just the sort of con alone, which runs from 13% of gdp (Ire convened the summit as the current hold crete benefit European officials hope to land) to 31% (France). Pensions, unemploy er of the eu’s rotating presidency, is a fan of bring about. But in most areas of social in ment, health care, minimum wages and the social pillar. But other countries are surance the eu finds it hard to step in, says collective bargaining are national affairs. less enthusiastic. Before the summit, 11 Bo Rothstein, a Swedish expert on the wel That is why the level of social protec members issued a statement warning the fare state. Countries have dramatically dif tion varies so much. In Romania, Emil Iliu commission not to interfere in social poli ferent systems with deep local roots. No ta, an unemployed 63yearold locksmith, cy. They included fiscal hawks such as the one thinks they will harmonise them. Ms has been drawing benefits since December. Netherlands as well as the Nordic coun Von der Leyen is right that Europeans want He gets 140 lei ($35) a month, along with tries, who think eu rules might undercut protection from economic hazards. But the occasional food donations. In exchange he their own standards. eu may not be their mightiest defender. n performs 11 hours a month of community The new action plan does not promise labour such as digging graves. to equalise benefits. But it does aim by In the Netherlands, meanwhile, Sascha 2030 to raise the eu’s overall employment Blokzijl has been drawing benefits since level to 78% of the population aged 2064, a January after losing her job at a dataana level now met only by countries like Ger lytics company. She gets €2,135 per month many, and to reduce the number of citizens after taxes; the minimum for an adult liv in poverty by at least 15m. It also pledges ing alone is €1,233. Rather than digging annual skills training for 60% of all adults. graves, Ms Blokzijl was initially required to This may be feasible for countries like Den report just one worksearch activity per mark, which pioneered such training and week. Having decided to start a business jobsearch efforts, known as “active labour herself, she must now simply get her plan market programmes”. For Romania and It approved by the employment office. aly it will be harder. The eu’s new social emphasis marks a Backers hope the social pillar will reversal from the financial and euro crises nudge weaker member states to mimic the between 2007 and 2011, when it required success of others. “The strength of Europe members to enact tough austerity mea is in sharing best practices,” says Sofia Fer sures. After Britain’s vote to leave in 2016, nandes of the Delors Institute, a thinktank policymakers concluded that they needed in Paris. The targets will become part of the to offer citizens more tangible benefits to European Commission’s system of scold stop antieu populism. “The whole idea of ing members to improve their economies. ‘a Europe that protects’ is linked to that And money from the €750bn recovery fund wakeup call,” says Luuk van Middelaar of can be used for socialpillar goals.

012 The Economist May 15th 2021 Europe 45

Charlemagne Whatever it took?

A gathering economic recovery shows the European Union can (eventually) learn from mistakes missed by the likes of Angela Merkel, Germany’s chancellor. Mrs Merkel reversed course last May. After a year of haggling, the com mission will begin to issue up to €750bn of the stuff, which will be dished out to countries in the form of cheap loans and grants. True, on a continental level, the scheme is tiny. But for some of the individual countries most in need of the cash it is significant. In Germany, it is a piddling 1% of its gdp. For Italy, though, the figure is about 11% of gdp. Greece, meanwhile, is due €32bn of loans and grants—a useful sum for an economy of roughly €170bn. For rich countries, eu funds are a fiscal aperitif. It is up to na tional governments to pump up their economies in the postcrisis era. Here, again, attitudes have changed, though not yet enough. In contrast to a decade ago, spending is now more likely to be seen as a solution than a sin. Countries such as Greece endured eco nomic vivisection, forced to slash spending rather than stimulate their economies. This approach failed either to reduce Greek debt or to produce faster growth. These days, advocates of a return to austerity are thinner on the ground. With luck, political circumstance could embed this new atti tude permanently in the eu’s own rules on government spending. Although temporarily suspended during the pandemic, eu coun tries are obliged to keep deficits below 3% and national debt below mericans can always be counted on to do the right thing,” 60% of gdp. In an age when the national debt of Italy, the third “AWinston Churchill is supposed to have quipped, “after they largest eu economy, stands at about 160% of gdp, these rules can have exhausted all other possibilities.” There are two problems seem quaint. Europe’s struggling southern economies have called with the quotation. First, there is no evidence Churchill ever said for an overhaul ever since the previous crisis. Now they may get it. Second, today the phrase applies better to Europe’s leadership their wish. France’s president, Emmanuel Macron, has long advo than to their friends across the Atlantic. cated more forgiving fiscal rules. So has Mr Draghi, now the prime Take the European Union’s recovery from the pandemic. For minister of Italy. Meanwhile the rise of the Green Party means that the first time since last spring, economic optimism is in the air. the next German government will probably be the most profligate Across Europe, vaccines are going into arms, summer holidays are in a generation. It is a rare alignment which could, just possibly, being booked and bars are opening up. The European Commission lead to a more permanent shift. has just jacked up its growth forecasts for 2021 and 2022, citing the bloc’s €750bn ($910bn) recovery fund as one of the reasons why. Here comes the boom! This cash should start appearing in European treasuries later this Boommongers have not yet routed the doommongers. There is year. As a whole, the eu’s gdpwill be back at its prepandemic level plenty of opportunity to muck things up. Inflation still haunts by the end of 2021. This is slightly faster than expected and is due European politics. While the noises coming from the ecb suggest to happen only a few months behind America, which has had the that a modest rise in inflation this year will be brushed off, this benefit of Donald Trump and Joe Biden’s blockbuster stimulus claim will only be properly tested when German politicians start packages. In the tenyear gap between their initially bungling re screaming. (The upcoming election will give plenty of excuses for sponse to the eurozone crisis and the pandemic, European lead such hysterics.) An improved economic outlook may lessen the ers seem to have learned some lessons, even if they still have not pressure on countries to overhaul the eu’s spending rules. Rather learned them thoroughly enough. than turning the recovery fund into a permanent scheme, ready to Where the European Central Bank was actively making things issue more debt if needed, some governments will try to keep it a worse a decade ago, it is now helping governments out of their temporary one, setting up a needless drama about rebuilding it in hole. In the spring of 2011 the bank was raising rates and worrying the next crisis. The tyranny of low expectations hangs over the eu. about a brief flurry of inflation, rather than stagnant growth. It In the previous crisis, mere survival was enough, never mind was not treated as a lender of last resort until a year later, when prosperity. Now waddling only slightly behind America’s econ Mario Draghi finally pledged to do “whatever it takes” to save the omy—never mind China’s—is being held up as an achievement. euro. Then began Mr Draghi’s long, slow crusade to make the ecb For a bloc with designs on being a superpower, that is not enough. adopt unorthodox measures, such as quantitative easing. As a re Yet the eu is stronger than its critics allow. It can correct its er sult the bank is able today to print money, (largely) ignore infla rors, albeit slowly. It took a decade to unpick the mistakes of the tion hawks and keep interest rates at historic lows. Its official previous crisis. So long as the eu is not a state, it will not have the mandate of price stability has been replaced by an unofficial creed speed, power or flexibility of one. Across the Atlantic Mr Biden can of supporting economic growth, reducing unemployment and do launch a plan to spend trillions, knowing he has the power to do ing “whatever it takes”. so. By contrast, eu politics is kaleidoscopic. Consensus must be If the technocrats have changed their tune, so, to some extent, cooked up among a rotating cast of ministers and amid ever have the politicians. Longheld political certainties have been re changing alliances. Reluctant countries have to be slowly cajoled. visited. During the previous crisis common debt was suggested as A stronger, more coherent eu is coming, but not for a while. It a necessary step to guarantee the future of the euro, only to be dis could still take a lot longer to exhaust the other options. n

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012 Britain The Economist May 15th 2021 47

→ Also in this section 48 Voter id 48 Political realignment 49 Slaughter in Ballymurphy 50 Bagehot: Labour’s big divide

Read more from this week’s Britain section: Economist.com/Britain

The government tough. The passport office warns of delays from a glut of renewals. Justice is under Winning the peace strain, with a record 58,000 Crown Court cases delayed. Nearly 400,000 people have been waiting more than a year for hospital treatment, up from fewer than 2,000 be fore the pandemic. This is stuff that loses elections, and solving it is only partly a matter of funding. Doctors and nurses take Boris Johnson promises a muscular, interventionist state. Now he must deliver it time to train, for instance. “You can end up ichael barber helped Tony Blair to of a wartime state. Some £303bn ($430bn) putting a lot more money into these things Mget stuff done. In 2001 he established went on combating the pandemic in the and not end up getting more sausages,” a “delivery unit” that translated lofty ambi year to March, driving public debt from warns a senior Tory. tions into measurable goals—regarding 84% of gdpto nearly 100%, its highest ratio Mr Johnson’s flagship policy, of “level children’s literacy, say, or hospital waiting since the 1960s. A government quite un ling up” Britain’s provinces, aims to ad times—and pursued them relentlessly. prepared for the crisis scrambled to build dress weak productivity, and correct a This was not always popular. Reflecting a field hospitals, buy protective equipment sense of loss and cultural neglect, by creat common gripe, one Daily Telegraphcolum for medics and devise a vast logistical op ing proper jobs, done by proud people in nist raged against the “grinding and dehu eration to deliver vaccines. The civil ser purposeful towns. Large sums of money manising imposition” of targets reminis vice, pared back under David Cameron, has will be used to smarten up high streets, cent of Soviet central planning. grown to its largest since 2011. bandstands and libraries—all intended to That columnist, now prime minister, The success of the vaccine programme act as a downpayment to show the Tories’ has come round to targets. Following a re helped propel the Conservative Party to new voters they are serious. quest from Boris Johnson, Sir Michael has victory in a byelection in the oncesafe La But while the vision is clear, much of since Christmas been hard at work recreat bour seat of Hartlepool on May 6th. It has the agenda is still hazy. It lacks a theory of ing the delivery unit. Brexit and covid19 also changed ministerial thinking about how towns get richer, and measures of pro are starting to take up less time, and Mr state capacity. “Six months ago, everyone gress. As well as Sir Michael, Mr Johnson Johnson wishes to reshape the country to was taking the piss because we were talk has drafted in Neil O’Brien, an mp who ar the tastes of his new electorate: northern, ing about moonshots,” says a cabinet min gues that decline of manufacturing in such nongraduate and Brexitleaning. In the ister. “Now we're actually doing it.” towns can and should be reversed, to im Queen’s Speech on May 11th, the prime Mr Johnson’s manifesto in the 2019 pose discipline on the programme. Folk minister promised more housebuilding, election promised to improve public ser close to the process expect a “gradual sub more technical education, new train lines, vices, and to do so in a manner the elector stantiation” of what the agenda means. new free ports and a new postBrexit subsi ate would notice. The government would Sir Michael’s delivery unit will help dy regime—brought into being by a more build 40 new hospitals, hire 50,000 nurses both with longstanding agendas such as interventionist government. and fix social care. Now just getting back to levelling up and with the covid19 backlog. Covid19 has left Mr Johnson in charge prepandemic performance levels will be It will employ 30 or so officials under the

012 48 Britain The Economist May 15th 2021

Political geography Voter identification The end of innocence The Chipping Norton reset New rules to root out electoral fraud may discourage voting oting in mainland Britain is aston threat to the democratic process suffi CHIPPING NORTON ishingly easy. You turn up at a polling cient to warrant a big change to electoral V The Brexit realignment continues station and state your name and address. rules. On May 11th it announced that it An official finds your name on a list, will legislate to require inperson voters ost of his supporters, admits Geoff draws a line through it, then hands you to show photo id. This is trickier in MSaul, are fairly middleclass types: your ballot. The question must have Britain, which does not require people to liberal professionals, publicsector work occurred to many people: couldn’t some carry id cards, than in countries which ers and students. Those on the old council body else pretend to be me? do. Driving licences and passports will be estates, “when not politically apathetic, Many Britons believe that happens a acceptable; so will pensioners’ bus used to lean ukip [uk Independence Party] lot. In early 2019 Ipsos mori, a pollster, passes and the “blue badges” held by and now tend towards Boris Johnson”. Mr found that 58% thought personation— disabled people. Anyone without ap Saul is the newlyelected Labour county pretending to be somebody else—was a proved photo idwill be allowed to apply councillor for the Oxfordshire market serious problem nationally. Asked why for a free card. town of Chipping Norton, which bustles they thought that, some said they had Such a change would not block many with yoga studios and pet spas. Its deep heard about fraud in the media while people from voting. Seven local authori blue constituency of Witney, with a Tory others cited local rumours. A few said it ties asked voters for various forms of majority of over 15,000, was once repre was simply human nature. identification in May 2019, after warning sented by David Cameron, whose circle be Personation was indeed once wide that they would be doing so. On average, came known as the “Chipping Norton set”. spread in Northern Ireland, which is why 0.4% of wouldbe voters who were asked As well as being defeated in a byelec the province has required identification for id failed to show it, were turned away, tion in Hartlepool, in the northeast, La since 1985. Elsewhere in Britain it is and did not return to the polling station. bour lost ground in proBrexit small towns extremely rare. If somebody turns up at a But many more might conclude that across the North and the Midlands in this polling station and finds that their name voting has become too much of a hassle, month’s local elections. But it also racked is already crossed off, they are given a and not bother. “Not everyone gets as up some smaller victories in what had “tendered” ballot. Just 1,359 of those were excited about elections as we do,” says been Tory turf. It won the mayoralties of handed out in the December 2019 general Jess Garland of the Electoral Reform the West of England, and of Cambridge election, out of an electorate of 47.5m, Society, which opposes the change. Any shire and Peterborough, from the Tories. and tendered ballots are issued for other effect is likely to be uneven. A poll for the Greens and Liberal Democrats also made reasons too. Personation fraud was al government found that 10% of non inroads into Tory areas like Suffolk and leged 33 times that year, resulting in one white people would be less likely to vote Cambridgeshire respectively. The Tories conviction and one caution. in person if they were required to show lost control of the council of Tunbridge Still, the government judges the photo id, compared with 5% of whites. Wells, the Kent town which serves as a syn onym for southern English affluence. In 2019 the Conservatives won parlia command of Emily Lawson, the former dably broad agenda, cutting across depart mentary seats across northern England head of the National Health Service vac ments; something which may cause pro and the Midlands, mostly by converting cine programme, and will report directly to blems. In his book “How to Run a Govern Labour’s workingclass voters. Mr Johnson the prime minister, providing him with a ment”, Sir Michael admits the original de has now consolidated those gains. More line of sight into departments. Mr John livery unit initially struggled under the former Brexit Party and ukip voters have son’s broad goals (such as achieving net weight of too many targets, too broadly set. come onside, giving the Tories control of zero emissions) will be split into measur It was also aided by hefty budget in the councils of Leaveleaning Cannock able chunks (such as keeping tabs on elec creases for the public services under its triccar chargingpoints), and will be pur glare; the tradeoff, implicitly, being great sued using his authority to overcome ob er accountability and higher standards in Hard lessons stacles. Along with netzero, levellingup return for more money. Given rocketing England, by ward and political party and the covid19 backlog, the unit will also public debt, the Treasury may be unwilling Conservative Labour Liberal Democrat focus on jobs and skills. to splash more cash. But Mr Johnson does Other The original delivery unit succeeded in not hanker for tight public finances, and Labour to Conservative swing*, % cutting hospital waiting times and raising voters oppose cutting spending on public 40 school standards, and has since been cop services by a margin of more than twoto ied by governments across the world, from one, according to Ipsos mori, a pollster. 20 Canada to Sierra Leone. But it drew opposi As the Institute for Government think tion from critics like Mr Johnson who saw tank points out, the prime minister is a 0 it as an example of Labour’s topdown yearandahalf into his term and has so far management style, and others who fo made slow progress on his trickiest mani -20 cused on the potential for poorly designed festo promises. He has an increasingly co -40 targets to lead people astray—as when gps herent vision of the state after Brexit and responded to a 48hour treatment target by the pandemic, fewer distractions and, if 706050403020100 denying patients the ability to book ap Hartlepool is a sign of things to come, a Graduates, 20, % pointments further ahead. chance to shape Britain’s future. If he does *2021, compared with corresponding Source: Sky News election in 2016-17 Mr Johnson’s unit will be given a formi not make progress now, he never will. n

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Chase, and Nuneaton and Bedworth. Yet Northern Ireland the great Brexit realignment means that Labour, Liberal Democrats and Greens are Slaughter in Ballymurphy now making inroads in traditional Tory ar eas that had leaned Remain. Voters with degrees and those who work in management are gravitating to BELFAST wards Labour, while Tories have made in A coroner concludes that ten people killed in Ballymurphy 50 years ago were roads among manual workers and adults “entirely innocent”; at least nine of them were shot by soldiers without university qualifications (see chart on previous page), according to Will t 4am on August 7th 1971, the raids be dier, had lost a hand in the second world Jennings, a professor of political science Agan across Northern Ireland. In a last, war. He was killed while standing outside a and public policy at Southampton Univer desperate attempt to quell bloody violence Catholic church where he had been work sity. While the trend can be traced back de from the Irish Republican Army and loyal ing as a joiner. cades, the fight over Brexit helped acceler ist paramilitaries, the unionist govern The inquests were the longest in North ate it. In 2017 the Conservatives already had ment in Belfast ordered a mass roundup ern Irish history, running to more than 100 a 17point lead over Labour among those of suspected gunmen. Hundreds of sus days of oral evidence, and were ordered be with no qualifications; by 2019 this had pects were imprisoned without trial. But cause the deaths had not been adequately more than doubled, to 36 points. no loyalists were lifted, making the policy investigated at the time. More than 50 his Unlike many of Mr Johnson’s northern seem onesided, and the intelligence was toric inquests are to be held, at an expected gains, Chipping Norton is thriving. It has a poor, meaning that many of those arrested cost of £55m ($77m). new retail park, and 1,200 new homes are were innocent. Nationalist anger boiled Unlike David Cameron, who immedi planned. Its very success presents Tories over into serious rioting and gun battles. In ately made a public apology for Bloody with a Catch22. Homeowners have been a Ballymurphy, a nationalist area where west Sunday after an inquiry in 2010 said the bedrock of Tory support since Thatcher’s Belfast merges into the wildness of Black deaths were “unjustifiable”, Boris Johnson days, but in the Tory heartlands of south Mountain, ten people were killed within a did not apologise for more than 24 hours ern England affordable homes are in short radius of about 400 yards over three days. and when he did, it was in a private phone supply. The government plans to liberalise Half a century after the deaths, joint in call with Northern Ireland’s first and depu planning laws, which risks angering quests found on May 11th that at least nine ty first ministers. He has infuriated vic homeowners. In Chipping Norton Labour of the victims were shot by soldiers. The tims’ relatives by promising to legislate to artfully drew support from both from rent coroner ruled that all the dead were “en make it harder to prosecute soldiers for ers frustrated by high house prices and tirely innocent of any wrongdoing”, con killings during the “Troubles”, but is under their wealthier neighbours, unhappy trary to smears from the army at the time pressure from the other side. A month ago about new development. In nearby Witney that they had been firing on soldiers or the minister for veterans was sacked for worries about big housing developments throwing petrol bombs. The same regi protesting that not enough was being done were also key in the victory of a local Green ment—the Parachute Regiment—shot to prevent prosecutions. Theresa May, Mr candidate for the district council. dead 13 unarmed civilians five months lat Johnson’s predecessor, has warned that Culture matters too. Mr Johnson has of er on Bloody Sunday. such legislation would mean a general am fended the sensibilities of the liberal pro One of the slain was Father Hugh Mul nesty: “We cannot legislate simply to pro fessionals whom Mr Cameron wooed. A lan, a Catholic priest. He had just given the tect British soldiers from prosecution. Any hard Brexit, tougher migration rules that last rites to another victim, Bobby Clarke, legislation to protect British soldiers will restrict the supply of European au pairs who survived, and decades later recalled cover terrorists as well.” and restaurant staff, and cuts to foreign aid the priest's anguished cries as he took 15 Northern Ireland's divided politicians all run against the grain of these areas. minutes to die. Joan Connolly, a mother of are largely united in their opposition to an But gains in these areas alone would eight, had gone out to look for her daugh amnesty. Mr Johnson is going to struggle to not provide Labour with a viable path to ters when she was gunned down. Another keep his party united without inflaming power. The party needs to gain 128 seats at victim, John McKerr, a former British sol tensions in Ulster. n the next election to get a majority. The graduate vote is concentrated in urban ar eas, giving it big margins in cities but not elsewhere. Analysis by Onward, a think tank close to the Conservatives, suggests that changes in electoral geography mean the Tories could gain another 50 seats at the next election, while simultaneously losing 37 mostly in their southern heart lands. Much will depend on whether disaf fected Tory voters consolidate around sin gle parties, or whether they split among La bour, Liberal Democrats and Greens. Mr Johnson’s seat of Uxbridge and South Ruislip in graduaterich London could be within Labour’s grasp at the next election. But it will probably be some time before Mr Cameron’s former seat goes the same way as Sedgefield, the former con stituency of Tony Blair, and ends up in ene my hands. n Vindicated, after half a century

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Bagehot Uneasy rider

The Labour Party is being pulled in different directions by its two main constituencies the attitude of middleclass activists trying to get out the working class vote to Ryanair passengers “having to stomach a couple of hours’ flight with people they shared little in common with: it could be uncomfortable but it got you where you needed to go.” Now the two groups can no longer agree on the destination. In their recent book “Brexit Land” two academics at the University of Manchester, Maria Sobolewska and Robert Ford, argue that today’s political divide is cultural rather than economic. The university educated classes define themselves by their cosmopolitan val ues—their enthusiasm for immigration and fierce hostility to ra cial and genderbased prejudice. Voters from the old working class define themselves by their fealty to “traditional values” of flag, family and fireside. And a large new Labour block—immi grants and the children of immigrants—usually sides with the first group despite being more culturally conservative. Originat ing in longterm changes such as the expansion of the universities and the rise of a multicultural society, the division has been super charged by Brexit. What is a leader riding these two diverging steeds to do? Sir Keir’s decision to appoint Deborah Mattinson, the author of “Be yond the Red Wall”, as his chief strategist suggests that he wants to focus on the old working class. But the strategy isn’t working. The arold wilson once said that “if you can’t ride two horses at progressive vote in the south is fragmenting among Greens and Honce you shouldn’t be in the ruddy circus.” To judge from his Liberal Democrats while the Conservatives are continuing to make recent performance, Sir Keir Starmer, the Labour Party’s leader, gains in the North. can’t ride a pet donkey, let alone two horses. He declared that he Many people in the party, from Blairites to young progressives, took full responsibility for the May 6th massacre in local elections favour a different approach. They want to embrace the “coalition and a byelection, only to turn on the party’s popular deputy lead of the ascendant” in the form of universityeducated profession er, Angela Rayner. The resulting outcry united the squabbling par als, young people and ethnic minorities. Tony Blair did exactly ty against him and forced him to give her several new roles. this to bring about the longest winning streak in Labour history. With Labour’s two driving forces parting company, equestrian Joe Biden defeated Donald Trump by mobilising the same co skill is increasingly important in Sir Keir’s job. The Labour Party alition, stretching from Black Lives Matter activists to suburban has always depended on a “progressive alliance” between two very mothers. The rise of the Greens in Germany suggests that the old different groups—what were once called “workers by hand” and progressive coalition is capable of reorganising itself around new “workers by brain”. The first provided the numbers and the second problems and new values. the intellectual élan. The party’s founding commitment to nation But this strategy is also risky. Mr Blair’s politics had a down alisation, Clause Four, was drafted by two professional scribblers, side: about 5m mainly workingclass voters gave up voting during Sidney and Beatrice Webb. Labour’s most radical prime minister, his long period in power, and many of them are now voting Tory. It Clement Attlee, was educated at a public school, Haileybury; his is doubtful whether he could win in today’s circumstances. La cabinet included four old Etonians. bour has lost its votevault in Scotland and the culture wars are far These two groups didn’t always get on. Beatrice Webb con more divisive than they used to be. Mr Biden won only narrowly, fessed to her diary that “we have little faith in the ‘average sensual even though he was up against an opponent who had suggested, man’. We do not believe that he can do much more than describe among other idiocies, that people should fight covid19 by inject his grievances, we do not think that he can prescribe his reme ing themselves with bleach. Britain’s constituencybased electoral dies.” Hugh Dalton, Labour’s postwar EtonandCambridgeedu system also makes it more difficult to pursue a broad realignment cated chancellor of the exchequer, once told G.D.H. Cole, the par because the left’s votes tend to pile up in the cities. Labour already ty’s leading intellectual, that Labour needed to do more to appeal has 20 of the 25 largest majorities in the country while the party’s to “the football crowds”. Cole “shuddered and turned away”. But internal analysis of its 125 “must win” seats shows that more than the two groups agreed on the essential things: building the welfare half of them are in largely workingclass areas. state and expanding opportunities. There is a long tradition of predictions that Labour’s internal The relationship is now in ruins. One reason is the shift in the contradictions will lead to its demise. Plenty of people pro balance of power. The “workers by hand” feel that they have had nounced the party dead in the ThatcherMajor era only to see Mr their party—and indeed their country—stolen from them. In 1951, Blair ride it to three election victories. But Labour’s internal con 70% of voters were manual workers. Today that figure is less than tradictions have grown since then. The “coalition of the ascen 40%. In 1945 only a few thousand school leavers went to universi dant” is too small to win on its own but too preoccupied by cultur ty. Today more than half do. The proportion of Labour mps who al politics to make its peace with the old working class. Perhaps have done a workingclass job at some point has declined from the “coalition of the ascendant” will one day be big enough to can 33% in 1983 to less than 10% today. Almost 80% of Labour Party ter to victory alone. Perhaps the culture wars will eventually cool members fall into the official definition of middleclass. down. But for the time being the problem is not just Sir Keir’s Suzy Stride, who stood for the party and lost in 2015, compares horsemanship but the configuration of the whole ruddy circus. n

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clearly at the wounds of the past”. While in Algiers during his election campaign, he raised eyebrows by calling colonisation a “crime against humanity”. In 2018 Mr Mac ron recognised that in 1957 the French state had tortured and executed Maurice Audin, a young communist and nationalist; none of his predecessors had done so. “France”, he declared last year, has “still not resolved the traumas” of its colonial past. Mr Stora, author of an official report this year into memories of the war, will run the commission, starting this month. De tails are still being worked out. Many of the protagonists and witnesses are dead. Mr Stora says it will involve testimony from descendants, historical work and memori als. Mr Macron has ordered the opening of classified archives relating to the time. Over the past halfcentury more than 50 truth commissions have been set up worldwide. They have become a tool for countries emerging from traumatic peri ods of history to confront that past, try to break cycles of violence and move on. One of the first, in Argentina in 1983, looked into “disappearances” under the military dictatorship. It took evidence from witnesses and produced a bestselling report (“Nunca Más”, or “Never Again”). In 1990 Chile established a commission to look into disappearances and killings un der Augusto Pinochet. A second, in 2003, examined torture under his regime. The experience has been mixed, partly because of a fundamental tension between truth and criminal justice, and between the in terests of individuals and of a country as a whole. Yet they have not lost favour. Truth commissions are under way in various countries, including Colombia and the Gambia. Britain is considering one to look Truth commissions at the “Troubles” in Northern Ireland. Their purpose, according to Priscilla The agony of silence Hayner, author of a global study of them, is primarily “to investigate and report on a pattern of past humanrights abuses”. The template involves a temporary body, set up with a mandate from a government or an JOHANNESBURG AND PARIS France is confronting its history in Algeria. As other countries’ experiences international institution, to gather testi show, dealing with the past is a complex undertaking mony and look at past abuse over a defined period. They aim to establish what hap n march, beneath the chandeliers of Benjamin Stora, a historian who was pre pened at a time when official histories may Ithe Elysée palace, four adult cousins met sent. The cousins’ discomfort, he says, fo have silenced rival accounts, or those who Emmanuel Macron, France’s president. cused on a question: “How can we live in could tell them. A commission generally What really happened, they wanted to the country that assassinated our grandfa ends with a report and recommendations. know, to their grandfather, Ali Boumend ther?” Although a French general had con Yet a truth commission is also a form of jel, a lawyer and nationalist, who died in fessed 20 years ago to ordering the murder reckoning. It officially recognises past colonial Algeria after his arrest by French of Boumendjel, the government had never atrocities. It may also seek to reconcile for troops in 1957? Officially he committed sui admitted the crime. Algeria’s eightyear mer adversaries. Some lead to prosecu cide. In fact, Mr Macron acknowledged, war for independence ended in 1962. But tions. In Chile and Argentina judges used Boumendjel was tortured and killed by the such questions trouble a younger genera the reports to unpick previous amnesties. French army. His body was thrown from a tion, who feel that France should fully ac In 2017 a court in Argentina sentenced 29 window to disguise the cause of death. knowledge the atrocities it committed. former military officials to life for, among The president and the lawyer’s grand Earlier this year Mr Macron decided to other crimes, kidnapping and drugging ci children—all of the same generation—en launch a “Memories and Truth” commis vilians, loading them onto planes and gaged in an “extraordinary dialogue”, says sion on France’s role in Algeria, to “look dumping them, alive, in the ocean.

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Others are an alternative to retributive only to those who disclosed full details of ments, not the trc, that some apartheid justice. South Africa’s Truth and Reconcili crimes deemed politically motivated. era criminals got off scotfree, and that ation Commission (trc), set up in 1995, a Yet South Africa also reveals the short South Africa is not better run today. year after democracy replaced apartheid, comings of such exercises. The trc ended Besides, the trc made it impossible for could grant amnesty to those who con with rancour. Both former president F.W. white South Africans to say, “I didn’t fessed to certain crimes. Dirk Coetzee, a de Klerk and Mr Mandela’s African Nation know.” They heard four white policemen paramilitary commander who confessed al Congress (anc) tried to obstruct the final confess, for example, to beating Steve Biko, to drugging, shooting and burning victims, report. Mr Mandela had to insist on its leader of the Black Consciousness Move got it for some of his crimes. “The burning publication. Mary Burton, a commissioner ment, chaining him up and leaving his in of a body on an open fire takes seven and antiapartheid activist, worried that juries untreated. Biko died after being tran hours,” he told the commission; “Whilst the trc had facilitated the transition of sported—naked, handcuffed and uncons that happened we were drinking and braai- power rather than helped the victims. cious—to a prison hospital halfway across ing [barbecuing] next to the fire.” Moreover, no body was set up to enforce the country. The apartheid state said he the commission’s recommendations. It died of a hunger strike. The trc also gave And you will know the truth took five years for the government to pay some, if not all, victims, closure. In 2019 a The French commission comes too late to reparations to the victims who testified. poll found that 66% of South Africans be about amnesty or criminal justice. Yet, Some received about a fifth of the money agreed that it “provided a good foundation even 60 years on, the thirst for answers is the report recommended. Some 130,000 for South Africa to achieve reconciliation”. surprisingly strong. “It’s absolutely neces people entitled to reparations fell foul of a Such commissions entail profound sary, indispensable,” says Nora Hamadi, a cutoff date for claims. Subsequent anc tradeoffs. Argentina, Chile and Guatemala French journalist of Algerian origin. She governments have done little to prosecute showed that they can be compatible with describes “a form of trauma” among the perpetrators who did not seek amnesty. prosecutions. But this can be controver children and grandchildren of victims, and Under President Thabo Mbeki 20 people sial. In El Salvador the promise of a com an “anger against France for the lack of rec denied amnesty by the trcwere pardoned. mission helped end civil war. It ran under ognition and of respect”. “Our experience in South Africa is that un auspices in 199293 and documented Algeria was ruled as part of France from truth does not always lead to reconcilia 22,000 complaints in a hardhitting re 1830 until its independence. Today, some tion,” says Annah MoyoKupeta of the Cen port, whose impact was blunted by an im 7m French residents are linked to this his tre for the Study of Violence and Reconcili mediate amnesty. Usually a choice has to tory, as immigrants, former white settlers ation. “People felt they were being forced be made upfront. Without amnesty, many (pieds-noirs), soldiers (including Algerian to forgive.” The trc also served to “decon South Africans would not have learned harkis, who fought for France) or their fam textualise” apartheid, argues Mahmood what happened to their families. Public ex ilies. Faïza Guène, a French novelist of Al Mamdani, a Ugandan academic. Apartheid posure itself can be a form of punishment. gerian descent, deplores “the transmission was not just about death squads; it was a le of silence”. “If we don’t talk about this”, she gal and economic system, built on colonial Painful choices says, “we’ve got no chance of resolving the foundations. For Mr Mamdani, the trc’s The interests of those who suffered and problem of belonging in France.” narrow framing made it easier for white society’s must also be balanced. For some The subject was long taboo. Not until South Africans who benefited from apart individuals, the process revives old trau 1999 did the French government recognise heid, but were outside the security state, to mas. Nomfundo Walaza, who counselled the conflict as a war. Since 2001 political deny their complicity. victims during the trc, points out that, if leaders have taken further steps. Nicolas Yet for all its flaws the trchas been un national reconciliation is the aim, “then Sarkozy provided Algeria with a map of 11m fairly maligned, argues Mikhail Moosa of we have to face the unfortunate reality of a landmines laid by the French army. Fran the Institute for Justice and Reconciliation conflict between the interests of victims çois Hollande recognised as a “bloody re in South Africa. He points out that the re on one hand and those of the nation as a pression” the massacre of Algerian nation port’s recommendations were radical—in whole on the other.” alists in Paris on October 17th 1961. cluding, for instance, wealth and windfall “Nobody expects a single truth com Yet many questions remain. “France taxes to tackle the economic legacy of mission to tie up all the issues with a bow,” has been in denial for a very long time,” apartheid. It is the fault of anc govern says Ms Hayner, now a consultant on tran says Mr Stora. “So it’s complicated. But we sitional justice. What matters, she says, is need to find a way to hold a conversation, whether it changes “a country’s ability to between all the different parties. Every talk about something”. This is missing in body is shut away in their own suffering.” France, where Algeria is the silence under “Time in itself is not a barrier,” argues lying so many tensions. “To calm compet Anna Myriam Roccatello of the Interna ing memories”, says Rachid Benzine, a tional Centre for Transitional Justice in French researcher, “France needs to ac New York. Some form of reckoning, even knowledge it is the inheritor of both the belated, can be helpful. Belgium last year Enlightenment and colonialism.” opened a “special commission” into its co Whatever France does is bound to be lonial past in Congo, Rwanda and Burundi. criticised, on both sides. The Algerian gov More important, suggests Ms Roccatel ernment may not be satisfied unless lo, is legitimacy and participation. Many France apologises. The French presidency point to South Africa’s commission. says that will not be necessary. Political ex Chaired by Archbishop Desmond Tutu and pediency may trump historical rigour. Ri endorsed by President Nelson Mandela, val memories may be irreconcilable. But to the trc began amid great hope. Unlike ma listen to a younger generation in France is ny commissions in Latin America in the to hear a yearning for answers and ac 1980s, victims told their own stories, most knowledgment. “Remembering is not ea ly in public hearings. In two years the trc sy,” writes Ms Hayner; “but forgetting may heard 21,298 witnesses. Amnesty was given be impossible.” n

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→ Also in this section 56 Bartleby: How working mothers cope 57 Kick-starting Harley-Davidson 57 Europe’s lobbying swamp 58 Musical plagiarism 59 Pharma patents under ﬁre 60 Schumpeter: Bosses’ ballooning pay

The space business the launchpad. Its craft are unusual in that they are reusable, rather than disposable. Elon Musk’s other company After launch, the first stage of its Falcon 9 can fly itself back to Earth; and after a re- furbishment lasting a few weeks, it can fly again. Along with a focus on cost-cutting and a willingness to experiment and take risks, that has allowed SpaceX to undercut its competitors drastically. After revolutionising the rocket business, what next for SpaceX? As with Tesla, complacent incumbents hat goes up must come down. That Musk wants to use its cheap rockets to have been trying to respond. United Wwas certainly true of bitcoin, a cryp- make humanity a “multi-planetary space- Launch Alliance, a joint venture between tocurrency enthusiastically endorsed by faring civilisation” by establishing a colo- Boeing and Lockheed Martin, two aero- Elon Musk which surged in value in Febru- ny on Mars. And like Tesla, SpaceX’s valua- space giants, has cut jobs and trimmed ary after Tesla added $1.5bn-worth to its tion has soared. According to PitchBook, a costs. In November Tory Bruno, its boss, balance sheet. It plunged on May 12th after data-analysis firm, SpaceX’s latest funding said prices for its Atlas V rocket were down the carmaker stopped customers using bit- round, completed in April, valued it at from $225m per launch to just over $100m. coin to buy its vehicles. Mr Musk worries $74bn, up from $46bn in August 2020. cb Arianespace, a European firm, has also cut about the use of fossil fuels to “mine” the Insights, a firm of analysts, ranks SpaceX prices for its Ariane 5, which is thought to cryptocurrency. More gracefully, on May the third-most-valuable startup in the cost around €175m ($213m) per flight. It 5th a prototype version of SpaceX’s massive world (see chart on next page). hopes the Ariane 6, due to make its first “Starship” rocket—designed to be the big- flight next year, will be 40% cheaper than gest since the Saturn V that took the Apollo Big rocket man its predecessor. SpaceX charges $62m for a astronauts to the moon—rose 10km above It may seem odd to describe a 19-year-old fresh rocket, or $50m for a used one. Boca Chica in Texas, before flying itself firm as a “startup”. But most of SpaceX’s Low prices, a focus on cost control, and back to its launchpad and landing gently swelling valuation comes not from the a willingness to take risks and iterate rap- on the ground. It was not Starship’s first business it already does but, again like Tes- idly (another signature Musk trait) have high-altitude test flight. But it was the first la, its investors’ hopes for its future. To pay helped SpaceX win contracts with every- that had ended without a fireball. for its Martian ambitions, SpaceX plans to one from Iridium and Intelsat, established It was the latest piece of good news for transform itself into a globe-straddling te- satellite firms, to startups such as Planet SpaceX, a rocketry firm founded in 2002 by lecoms giant. It hopes to repeat Mr Musk’s and governments, including those of Mr Musk, who is perhaps better known as signature trick of making big improve- America, Germany and South Korea. On the founder of Tesla, an electric-car pio- ments to existing technologies. Its Starlink April 16th nasa awarded SpaceX $2.9bn to neer. Like Tesla, SpaceX has taken an un- service, currently open to testers in coun- develop a lunar lander as part of America’s loved technology and made drastic im- tries including America, Britain and Ger- plan to return astronauts to the Moon by provements, shaking up a complacent in- many, is building the biggest satellite net- 2024 (though the contract was suspended dustry. While Tesla’s mission—“accelerate work ever, in order to beam fast internet on April 30th, while a government agency the world’s transition to sustainable ener- access to every corner of the planet. reviews rival firms’ complaints). On Sep- gy”—is grand, SpaceX’s is even grander. Mr SpaceX’s advances in rocketry provide tember 15th it plans to fly four tourists on a

012 54 Business The Economist May 15th 2021

threeday orbital jolly. Morgan Stanley, a paper. The International Telecommunica every other rocket operator combined, says bank, describes SpaceX as “mission con tion Union, a un agency, reckons 48% of Mr Potter. Starlink’s 1,500odd existing sat trol” for the fastgrowing “emerging space” the world’s population was offline in 2019. ellites already account for around a quarter sector—which, estimates Seraphim Capi Gwynne Shotwell, SpaceX’s chief operating of all those in orbit. SpaceX has firm plans tal, a venturecapital company, attracted officer, said in 2019 that the worldwide in for over 10,000 more, and has filed paper $8.7bn of venture investment in the year to ternetaccess market was worth perhaps work for up to 42,000—more than four March, up by 95% from the year before. $1trn a year. SpaceX, Mr Musk has said, times as many satellites as have been And it is not standing still. Starship has might aim to capture around 3% of that. launched since the start of the space age. a carrying capacity more than six times Even that sliver would have brought in The prototype service is undergoing that of the Falcon 9. Despite its vast size, it $30bn two years ago. testing by thousands of people. Most seem is fully reusable, and is intended to be far pleased, reporting fast and responsive con cheaper than SpaceX’s current rockets. Mr Tomorrow the stars nections. But the satelliteinternet busi Musk hopes Starship could end up costing Satellite internet is not a new idea. But it is ness has a poor record. Iridium went bank less than $2m per launch. another technology that Mr Musk thinks rupt in1999, the year after its launch (it was However nifty SpaceX’s technology he can improve. Existing internet satellites eventually bailed out by the American gov gets, the launch market, at around $6bn in fly at high altitude, to maximise coverage. ernment). Intelsat and Speedcast, two es 2019, is relatively small, says Simon Potter The drawback is that many customers tablished companies, filed for bankruptcy of BryceTech, a firm of analysts and engi must share a single satellite, limiting ca last year, as did OneWeb, a startup with a neers. Many players are shielded from full pacity. And the time taken for radio signals similar business model to Starlink’s. Intel competition by governments worried to travel to highflying satellites adds un sat is currently restructuring and Speed about national security. That will limit avoidable, and irritating, delays. At the mo cast is doing business again under new SpaceX’s market share. Instead, says Adam ment satellite internet is usually a lastre owners. But the fragility of the business Jonas, an analyst at Morgan Stanley, Spa sort option when nothing better is avail makes assigning a future value to SpaceX ceX sees launch as an “enabling technolo able—in remote rural areas or on ships at tricky. Morgan Stanley’s attempt spans two gy” for its other plans. The firm’s next tar sea, for instance. orders of magnitude, from $5bn to $200bn, get is the telecoms business. Starlink aims Starlink hopes to fix those problems by with different assumptions about the via to provide internet access worldwide, in using its cheap rockets to put thousands of bility of Starlink accounting for almost all cluding places where other forms of con small, cheap satellites in low orbits. In the the difference. nectivity are poor or nonexistent. first quarter of 2021, SpaceX launched more Even with low launch costs, at least two This is a much bigger market, at least on objects, measured by mass, into orbit than big challenges remain, says Rasmus Flyt kjaer of London Economics, a consultancy. One is that most of Starlink’s potential cus Taking up space tomers are people illserved by terrestrial internet firms. They tend to live in relative SpaceX valuation, $bn Space launches†, by provider ly poor rural areas. Starlink’s price of $99 per month is not cheap even for richcoun Funding rounds and grants Mass carried, tonnes try users. The other is the cost of the high SpaceX (US) CASC (China) tech satellite dishes needed to make the 80 Roscosmos (Russia) Arianespace (Europe) First crewed mission to ISS* system work: 23inch antennas that attach ULA (US) Others First batch of Starlink satellites launched 600 to roofs or walls. Since Starlink’s satellites Falcon Heavy first launch 60 are in low orbits, they zip quickly across First successful landing the sky. The aerials must be able to track of Falcon 9 first stage 400 satellites as they move, and switch seam 40 Cargo flights to ISS* begin lessly from one to the next as they disap pear below the horizon. First orbital flight of Falcon 200 Ms Shotwell said in April that the dish 20 es, which SpaceX sells for $499, cost First NASA development around $1,500 to produce, down from contract 0 0 about $3,000 two years ago. SpaceX hopes that economies of scale will eventually 052002 10 15 21 2017 1918 20 21‡ drive manufacturing costs down to “a few hundred dollars”. Part of Iridium’s pro Biggest startups by valuation, $bn Satellites in orbit by primary use, ’ blem, says Mr Flytkjaer, was meeting the May 12th 2021 January 2021 capital cost of building up its network be 140120100806040200 0 1 2 3 fore it could attract paying customers. Mr ByteDance Musk’s deep pockets, he says, should mean Other Stripe SpaceX§ commercial Military SpaceX is less likely to run out of cash than its predecessor two decades ago. SpaceX Government/civil Didi Chuxing Such challenges may explain Mr Musk’s Instacart uncharacteristic lack of bombast when SpaceX satellites, ’ Klarna talking about Starlink. Tesla sells cars with features like “Ludicrous Mode” and “Bio Epic Games 0 10 20 30 40 weapon Defence Mode”. Starlink, by con Databricks Planned Potential trast, calls its publictest programme the Rivian “Better Than Nothing Beta Test”. At a space Nubank In orbit** conference last year Mr Musk said Star Sources: PitchBook; BryceTech; CB Insights; Union of *International Space Station †Includes unsuccessful launches link’s goal, for now, was simply not to go Concerned Scientists; company reports; The Economist ‡To April 30th §Commercial **January 2021 bankrupt. He has repeatedly tried to assure

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012 56 Business The Economist May 15th 2021

Bartleby Mothers of invention

The parallels and differences between two generations of female executives etsy holden was vicepresident of mothers are more likely to hold superviso Mothers who are employed fulltime Bstrategy and new products at Kraft, a ry responsibility and earn higher incomes spend nearly twothirds more of their giant food company, when she became while sons are likely to spend more time day feeding, bathing and caring for their pregnant for the second time. “No one caring for family members. And compa children (under six) than their employed has ever done the job with two children,” nies are now much more willing to pro husbands do. They still struggle with her male boss worried. “How many mote women, who make up more than a guilt. One executive was on the phone children do you have?” Ms Holden asked. fifth of senior executive positions in with an important client in her locked “Two,” he replied. American firms, compared with just 10% office, only for an impatient toddler to This double standard is only one of in 1996. A few are exceptionally accommo bang on the door and repeatedly scream, the barriers that female executives face, dating, for example providing rooms “You don’t love me.” Unsurprisingly, a as recounted in “Power Moms”, a new where mothers can express milk, sinks to study found that chronic stress levels are book by Joann Lublin, a former Wall wash the breast pump and even courier 40% higher in women who are employed Street Journal columnist. The author services to deliver the milk when they are and bringing up two children than in focuses on two waves of female leaders. away on a business trip. childless working women. Worse still, The first group were the babyboomers, But there is still a long way to go. Only female employees routinely toiling more born between 1946 and 1964. These were 27% of American employers offered paid than 60 hours a week were more than often the only women in upper manage parental leave in 2019. That may be up three times as likely to develop heart ment at their firms. They faced a lot of from 17% in 2016, but still leaves a lot of disease, cancer or diabetes than those on pressure to be handson mothers, had mothers uncovered. Even where leave is a conventional 40hour schedule. little support from their husbands and available, many women don’t take full Despite the advances made by female were reluctant to ask for reduced sched advantage. A survey of female techin executives, things are even more difficult ules for fear of not seeming committed to dustry employees in 2018 found that 44% for the vast majority of working mothers. their jobs. The stress for these women of women who had taken maternity leave Many work in smaller businesses, where was immense, especially as they felt had taken off less time than their enti maternity benefits and flexible hours are unable to discuss their parenting pro tlement because they thought a longer less likely to be available. Many are in blems with male colleagues. break would damage their careers. lowpaid jobs, or in sectors like health The second wave of women, born Working mothers are still overloaded. care and retailing, where it has been between 1974 and 1985, had female col impossible to work remotely during the leagues in upper management, expected pandemic. The author writes that “noth (and usually received) support from their ing is more essential to an employed spouses, and benefited from employer mother’s professional success than perks, such as maternity leave and flex reliable highquality child care”, and for ible working. They were able to be more many women who are not executives, open with colleagues about their paren this is a constant headache. tal duties. This later generation has It is good news that many more wom mastered the “worklife sway” in which en have climbed the corporate ladder, not they move back and forth between their just in terms of fairness, but because an personal and professional lives in the economy should take advantage of all its course of a day, conducting a meeting potential talent. There needs to be a lot before taking their children for a check more progress made in helping the vast up and then returning to the office. majority of women to juggle their home The earlier generation, by blazing the and work lives, not least by providing trail, made it easier for those behind affordable child care. There are many them. A Harvard Business School study more cleaners, cooks and carers than shows that adult daughters of employed there are chief executives.

existing telecoms firms that Starlink is not modating, since the internet access offered time has come, despite its unpromising a threat, pointing out that the service is ill by Starlink could prove tricky for the au history. After its bankruptcy OneWeb was suited to serving large numbers of custom thorities to censor. rescued by the British government and ers in densely populated cities. In poorer countries, says Mr Flytkjaer, Bharti Enterprises, an Indian conglomer Starlink’s test programme is currently Starlink’s satellites could connect rural ate whose founder, Sunil Mittal, is one of available in only a handful of rich coun mobilephone masts to the internet, India’s wealthiest men. Jeff Bezos, Ama tries. Yet the firm said on May 5th that it spreading the cost among many users. Spa zon’s founder, is every bit as rich as Mr had collected half a million preorders. It ceX is running tests with America’s armed Musk—and just as much of a space cadet, has requested regulatory permission for forces, which like the idea of having inter bankrolling Blue Origin, his own private up to 5m users in America alone. In Decem net connectivity on any battlefield. In 2019 rocket firm. Amazon itself is planning a ber SpaceX won $886m from America’s the firm showed its ability to provide high lowflying satelliteinternet similar to government to provide broadband in rural speed, inflight internet to a military jet. Starlink, called Kuiper. The car industry areas; it is said to be in similar talks in Brit Mr Musk is not the only billionaire who increasingly dances to Mr Musk’s tune. The ain. Not all governments will be as accom thinks satellite internet is an idea whose space industry is going the same way. n

012 The Economist May 15th 2021 Business 57

Harley-Davidson Uneasy rider

BERLIN A German wants to kick-start a motorbiking legend he large dealership with the distinc Ttive orange logo in Berlin’s Hutten strasse displays a range of HarleyDavid sons from a spectacular custom machine, “Der Texaner”, to the brandnew LiveWire, an electric bike. Yet the Midwestern motor cyclemaker’s only shop in the German capital is deserted owing to covid19 rules mandating a time slot and a negative test result, which deters most bikers. The shop is usually busy at this time of the year, says a sales assistant. But custom Revving up for a revival ers will not return, warns Jochen Zeitz, HarleyDavidson’s newish German chief the future, electric power. The early signs the first quarter compared with a year ago executive, if the European Union goes are encouraging. In April Harley re because of lockdowns, shipping delays ahead with the imposition of a 56% tariff ported betterthanexpected profits for the and the discontinuation of sales of two on all imported Harley products from June first quarter thanks in part to a revival of older models. The launch of the Pan Amer 1st, which is part of the eu’s retaliation demand at home. ica, a rival to bmw’s legendary gs model, against tariffs on steel and aluminium im Even without looming tariffs the Euro may help to revive sales but piling tariffs posed by the American government. The pean market is probably Mr Zeitz’s biggest onto its $20,000 price tag will deter even tariffs will make it impossible for Harley worry. European deliveries fell by 36% in dedicated fans of the Harley brand. n Davidson to compete with rivals in Europe, says Mr Zeitz, who lodged a legal com plaint against the decision as soon as the Lobbying in Europe plan was made public last month. Prohibitive tariffs will make Mr Zeitz’s Making money and influencing people challenging job even more difficult. Ger many is his firm’s biggest market outside America. Around 260,000 Harleys roar down the country’s Autobahnen. In spite of the pandemic 11,000 new Hogs were regis BERLIN tered in Germany last year. As lobbying grows, politics in the old continent is getting more swampy A Harley board member since 2007, Mr Zeitz took over as interim chief executive uropeans have long assumed that ex rency International (ti), a watchdog. In in February 2020 when Matthew Levatich, Ecessive lobbying is only an American Brussels 25,000 lobbyists with a combined his predecessor, quit after five years, hav problem. But over the past 15 years Brussels annual budget conservatively estimated at ing failed to revive the quintessentially has become the world’s second capital of more than €3bn ($3.6bn) seek to influence American brand. Under Mr Levatich sales the dark arts after Washington, dc, with eu policy. Approximately 7,500 of them are in America, where 70% of new Harleys are Berlin not far behind. Both cities have be accredited with the European Parliament, bought, declined for 12 quarters and the come infested with new arrivals who are which means they are regularly able to company’s shares lost 46% of their value. pushier and use more sophisticated tech meet with parliamentarians. Berlin is now In May 2020 the bike enthusiast signed on niques than oldfashioned associations reckoned to host up to 7,000 lobbyists with permanently for the firm’s top job. such as the Federation of German Industry over €1bn to throw around every year. This is not Mr Zeitz’s first rescue mis or BusinessEurope. Weak rules in both This does not necessarily translate into sion. As chief executive of Puma, he trans places are not designed to cope with the ex political clout. “Deep pockets do not equal formed the maker of sports kit from an ail plosion of activity. effective lobbying,” says Nick Aiossa of ti. ing parochial business in Franconia into a As international publicrelations firms Some companies throw money at inhouse hipster brand. Yet fixing Puma may seem have moved in, big companies have also lobbyists, consultancies and marketing easy compared with a company that is bat beefed up their inhouse lobbying activi campaigns without much result. But good tling declining motorcycle ridership, age ties (see chart on next page). Google and lobbyists try to be part of the debate they ing customers and stiff competition from Facebook have opened offices in the gov wish to sway as early as possible, so they the likes of Triumph, Polaris and Ducati. ernment district of Berlin, near the Bun can try to shape the agenda. As power at the Mr Zeitz has cut costs and slashed 700 destag, Germany’s parliament, and in the eu is diffuse and decisions are the result of jobs as well as cutting the number of mod Quartier Léopold of Brussels, close to the deals at the commission, the council els by almost a third and quitting dozens of European Commission, the executive body (made up of the 27 heads of government) countries. A strategic plan presented in of the European Union. and the parliament, good lobbyists who February includes a focus on more profit That adds up to plenty of lobbyists’ can navigate the decision cycle of these able heavyweight bikes and, with an eye on boots on the ground, according to Transpa three institutions can be invaluable.

012 58 Business The Economist May 15th 2021

Though the effectiveness of lobbyists is ing to George Washington University’s law still debatable, a series of scandals in Brus Peddling influence school. The past six years have seen an av sels and Berlin convinced policymakers to European Union, biggest corporate erage of 16, against the likes of Taylor Swift, strengthen rules. In 2011 journalists from in-house lobby organisations, 2020 or latest Katy Perry and Drake. Britain’s Sunday Times posing as lobbyists One reason is a precedent set in 2015, secretly filmed four members of the Euro Lobby Industry Budget, €m when a jury found that “Blurred Lines”, by pean Parliament (meps) negotiating a deal Google (US) Technology 5.75 Robin Thicke and Pharrell Williams, had to propose amendments to legislation in Facebook* (US) Technology 5.50 copied Marvin Gaye’s hit of 1977, “Got to eu exchange for €100,000 a year. The sub Microsoft (US) Technology 5.25 Give it Up”. The Gaye family’s argument sequently introduced a register for lobby that a “constellation of similarities”, most ists, but it is voluntary. And since 2015 eu Shell (Netherlands) Oil & gas 4.25 ly not individually protected, amounted to commissioners and their cabinet are re Bayer (Germany) Pharmaceuticals 4.25 copyright infringement was criticised by quired to make public their meetings with Apple (US) Technology .50 legal scholars and musicians, 200 of whom registered lobbyists, as are senior mem BP (Britain) Oil & gas .50 filed an amicus brief warning that it would bers of the parliament. That leaves half of ExxonMobil* Oil & gas, .25 leave artists “with one foot in the recording 705 meps who do not reveal their dealings (US) chemicals studio and one foot in the courtroom”. with lobbyists. Huawei (China) Technology .00 Technology has also encouraged more Germany remained a regulation laggard complaints. Now that every track is online, Volkswagen Automobiles .00 compared with other European countries (Germany) it is harder for artists to use the defence until last year, when Der Spiegel, a weekly that they had not heard the song they are newspaper, revealed that Philipp Amthor, Source: Transparency *Through European accused of copying. Similarities are more International EU subsidiary the youngest mp in the Bundestag and a likely to surface with armies of fans scour rising star of Angela Merkel’s Christian ing YouTube. Digitisation has encouraged Democratic Union, was on the board of Au disburse billions of euros in pandemicre sampling, leading to more works of “musi gustus Intelligence, an American startup, covery funds. Suggestions include requir cal collage”, says Judith Finell, an expert and lobbied vigorously for the company at ing policymakers to meet only registered witness in the “Blurred Lines” case. And the ministry of economics. Mr Amthor ini lobbyists, for example, and listing those the sheer volume of new work means the tially denied receiving any compensation meetings on a centralised platform rather chance of overlap is higher. As a court ob from the firm, but subsequently admitted than, as now, on 88 different websites. An served in 1940, there are many combina getting share options that he did not dis independent ethics body should be set up tions of musical notes, but “only a few are close. The resulting furore reignited the to monitor potential conflicts of interests pleasing; and much fewer still suit the in debate about lobbying regulation. and the “revolving door” of eu officials fantile demands of the popular ear”. A law passed in March will require who join the private sector. Composers are protecting themselves members of the Bundestag to declare regu Lobbyists making more of a mark in Eu by hiring “forensic musicologists” to vet lar lobbying work. After further recent rope’s capitals is not necessarily the route their songs before release. Joe Bennett of scandals involving mps pocketing substan to a swamp. Most lobbying is a legitimate, Berklee College of Music says he is doing tial commissions from companies making even necessary, part of the democratic pro more such work since “Blurred Lines”. This face masks, or receiving money from lob cess of balancing competing interests in month, for instance, he advised one record byists for Azerbaijan in return for voting in policymaking. But more transparency will label to tweak a bar of a dance track that re favour of proAzerbaijani motions, the do wonders to the reputation of a profes sembled the melody of another. government has also drafted a bill with sion that is often in the mire. n Despite the rash of legal cases, music is stricter ethics rules for parliamentarians evolving in ways that may make it harder that is winding its way through the Bun for complaints to succeed. “These days destag. The bill bans mps from any lobby Musical plagiarism music is less and less about melody…[wh ing work, accepting cash donations or ma ich was] traditionally the bedrock of why king paid speeches. Writ parade two songs were judged to be impermissibly These are steps in the right direction similar,” says James Janowitz, a lawyer at but it is not enough. “The next scandal is Pryor Cashman, who in 1976 organised a just waiting to happen,” says HansMartin courtroom piano rendition to show that Tillack, author of “Die Lobby Republik”, a George Harrison had copied “My Sweet book sounding the alarm about the growth A case against a famous rapper is the Lord” from another work. Today, he says, of corporate lobbying in Germany. “The latest in a run of copyright claims melody takes a back seat to elements such payments are the problem,” he says. Cor as beat and subject matter, which are hard porate donations to political parties re ou motherfuckers owe me!” raps er to claim as original. main untouched by the new legislation. “YDonald Glover, better known as The complaint against Mr Glover holds Fabio De Masi, a parliamentarian for the Childish Gambino, in his charttopper of that “This is America” uses the same rhyth Left party, argues for a complete ban on 2018, “This is America”. Yet according to a mic “flow” as “Made in America” and cov corporate donations to political parties complaint filed in a New York court on May ers the same themes, which include gun and an upper limit for party donations 6th, it is Mr Glover who is indebted. Eme violence and racism. The effect on the lis from private individuals. Timo Lange of like Nwosuocha, a Florida rapper known as tener may be that they seem similar. But LobbyControl, a watchdog in Berlin, also Kidd Wes, says “This is America” borrows the “triplet” flow that both employ is not notes that lobbyists will not have to report from his own work of 2016, “Made in Amer unique. And, as Mr Janowitz points out, meetings with members of the govern ica”. Mr Glover has not commented. “thematic similarity does nothing in terms ment who are not also mps. The complaint, which experts consider of copyright infringement”. The eu should consider tightening its thin, is the latest in an outbreak of musical If more cases stumble, it may be no bad rules further, says Mr Aiossa. Policymakers copyright claims. Between 1844 and 2014 thing for musical creativity. “Some degree in Brussels will play a bigger role than ever no more than eight such cases a year were of influence should be encouraged,” says in European business when they come to heard in American federal courts, accord Mr Bennett. “That’s how art evolves.”n

012 The Economist May 15th 2021 Business 59

Pharmaceuticals and innovation insurers and pharmacybenefit managers (big middlemen) who pay for drugs gave Less buck for the bang them more power to negotiate price cuts. It has got harder to mint cash from block buster drugs. Deloitte, a consultancy, reck ons that the internal rate of return on in house r&d at a dozen big drugs firms fell from 10% a decade ago to 2% in 2019—be NEW YORK low their weightedaverage cost of capital Some politicians want pharma patents to be weakened. Is that a good idea? of 7%. The average cost to bring a drug to ne of the first rules of American poli price gouging to patent manipulation—de market has increased by twothirds since Otics is not to pick a fight with Big Phar clining? Third, what might happen if pat 2010, to some $2bn. And the forecast for ma. Its army of lobbyists in Washington, ent rules were watered down? peak sales for each new drug has also fallen dc, has ensured that presidents from both Start with innovation. In the 2000s by half over that period. Often big firms parties, from Ronald Reagan to Barack Oba pharma investment fell out of fashion. But prefer to buy smaller innovative rivals. Ac ma, have upheld the industry’s stout de since 2010 America’s industry has raised cording to ey, a consultancy, American fence of intellectualproperty (ip) rights, spending on research and development drugs firms spent $185bn in the past five including in international treaties. Donald (r&d) sharply as a share of revenues, to ov years on biotech acquisitions. Roughly a Trump threatened to impose drug price er 25% (see chart). Venture funding into third of revenues at big drugs firms are the controls, which won bipartisan support in life sciences in America is booming, hit result of ip arising from acquisitions. Congress, but intense lobbying ensured ting a record high of $36bn in 2020, double What would happen if patent rules that his initiative flopped. That effort to the level in 2017. The number of new drugs were weakened? Rentseeking would fall, rein in Big Pharma chimed with the indus approved by America’s Food and Drug Ad but innovation might, too. One way of get try’s global image as arrogant and greedy. ministration has more than doubled in the ting a sense of this is to look at how much President Joe Biden is throwing his past decade. None of these measures is an innovation happens outside America, weight behind a proposal at the World ideal proxy for future innovation, but they where ip rights are often weaker or less Trade Organisation to waive patent protec suggest the mood has changed. well enforced. In most industries innova tions for covid19 vaccines. If Mr Biden is On rentseeking, too, the picture is less tion is now happening globally, not just in willing to rethink ip rights for covid vac dire that it was. Drug prices in America are America, but in pharma it still has a power cines abroad, he might also have the au still the world’s highest on average, but the ful American skew. Twothirds of world dacity to take on patent protection for new rate of increase has slowed. According to wide biotech venturecapital investment drugs at home. To judge whether America’s iqvia, a data firm, once secret rebates of takes place there. Despite China’s advances industry deserves such treatment, it is fered to big customers are discounted, net on other fronts, in life sciences it still ac worth asking three questions. First, how drug prices rose more slowly than inflation counts for only about 15% of the global to much innovation is happening? Second, is in 2018 and 2019. Political pressure is only tal of venturecapital funding. Similarly, rentseeking behaviour—ranging from one reason. Consolidation among health even as American multinational pharma firms have become more global (earning roughly half their revenues abroad), their Medical records preference for domestic r&d has risen, with 88% of it done in America. United States, R&D* investment United States, patented drug prices This suggests that America’s govern By industry, % of revenue % increase on a year earlier ment will eschew wholesale changes that damage innovation. But it still might loos Pharmaceuticals 25 10 Gross price en the patent regime to reduce rentseek Semiconductors 20 8 ing from old drugs. In 2019 the Federal 15 6 Trade Commission, a regulator, found that Software the industry is relying less than it used to 10 4 on egregious “pay for delay” agreements, Tech hardware S&P total market index Net price 5 Consumer prices 2 through which it paid generics firms to hold off on launching lowcost rivals to 0 0 pricey drugs coming off patent. However, 2000 05 10 1915 2015 16 17 18 19 Big Pharma is still using other wheezes, such as “evergreening” IP protection be United States, returns on R&D* spending, % Costs as % of revenue, 22 yond the initial 20year period by filing a Pharmaceutical companies† Pharmaceutical companies thicket of patents on minor modifications. 12 Sales, general and administrative R&D* More can be done to rein in such abuses. The s&p index of big drugs firms has ris 10 50403020100 AstraZeneca en by roughly 20% over the past five years 8 while the broader equity market has dou Weighted-average cost of capital Pfizer Novartis bled. Despite miraculous covid19 treat 6 GlaxoSmithKline ments, this year the pharma index has de 4 Eli Lilly clined by nearly a tenth. It is clear that even Johnson & Johnson as spending on innovation rises, presum 2 Amgen ably reflecting confidence that important Merck ip 0 rights in America will remain intact, in Roche vestors think the opportunity to print easy 1918171615141312112010 Sanofi money is not as good as it was. That seems Sources: Congressional Budget Office; Morgan Stanley; Deloitte; Bloomberg *Research & development †Average of 1 majorcompanies about right. n

012 60 Business The Economist May 15th 2021

Schumpeter Pay and the pandemic

For some American ceos, it was as if covid-19 did not happen To be fair, it’s a tricky issue. There is a widely held view in America that executive pay, like the stockmarket, always rises. That’s not strictly accurate. During the second world war pay fell, and for 30 years after barely budged. But since then, ceopay infla tion has been a fairly reliable assumption: the average level has risen about tenfold since the mid1970s, vastly outpacing the in come of average workers. It is a phenomenon that extends well beyond chief executives. Superstars from J.K. Rowling, an author, to Cristiano Ronaldo, a footballer, also earn spectacularly more than their counterparts would have done in ages past, notes Alex Edmans of the London Business School. In such a competitive global market, high pay may be justified to recruit and keep the best people. Yet its merits are undermined when bosses reap the windfalls from extraordi narily good times, such as a stockmarket boom, but are spared the consequences of misfortune, such as a pandemic. As Mr Edmans puts it: “If you’re letting ceos benefit from the upside, they have to feel the pain on the downside.” Boards tend to ignore that. Perhaps they, too, gain from perpetuating a system that keeps their own salaries high. For whatever reason, they threw around the pain killers last year like smarties. Pliant boards are not the only problem. Pusillanimous inves ast year was a terrible one for travel of any sort. You would not tors are part of it, too. Until the pandemic, the average vote sup Lknow it from the way some American chief executives trou porting management on sayonpay proposals was 90% or more, sered pay. Annual filings show that Larry Culp, boss of ge, whose says Semler Brossy, a pay consultancy. That’s a whopping approval jetengine business stalled as aviation nosedived, earned $73m, rate. By contrast, Calpers, America’s most outspoken publicpen almost triple his total pay in 2019. Christopher Nassetta, ceo of sion fund, in 2019 and 2020 voted against more than half of them, Hilton, a hotel chain, enjoyed a 161% pay boost, receiving $55.9m. usually because the rises were not justified by mediocre market Norwegian Cruise Line, which described 2020 as the hardest year performance. Things appear to be changing. MyLogiqsays that the in its history, more than doubled the compensation of its ceo, share of companies in the s&p 500 that have failed sayonpay Frank Del Rio, to $36.4m. All three were among the corporate ti votes so far this year is running at 6.1%, almost three times the lev tans who grandly took cuts in their basic pay and/or bonuses dur el for the whole of 2019. Institutions claim that the issue has be ing the pandemic. They pocketed far more than they gave up. come more pressing because the “headsIwin, tailsyoulose” ap They did so thanks to a nifty conjuring trick performed in proach to pay screams inequality. Yet their protest votes on pay re boardrooms across America last year. In effect, many boards air main relatively few, they are nonbinding, and the number of pay brushed away the impact of covid19 on performancebased pay recalibrations last year were unusually high, suggesting their fury either by removing a quarter or two of bad numbers in order to on the issue may yet cool. Sayonpay censure alone will not end meet bonus targets, changing the metrics midcourse, or—as with America’s fatcat era. Messrs Culp, Nassetta and Del Rio—by issuing new share grants It is hard to imagine what will. Many shareholders instinctive after the pandemic gutted the previous ones. (Mr Culp and Mr Del ly cringe at the thought of taxation and pay caps, an option floated Rio also got contract extensions.) by leftwing Democrats. Yet their own collective efforts to modify The result was a continuation of the inexorable rise of ceo pay the system are also feeble. Calls to lengthen the period executives in America during a year that, for mere mortals, was one of mas hold shares to, say, five or ten years have so far gone nowhere. Ef sive job losses, furloughing and government support. According forts to stop boards benchmarking ceos against lavishly paid to MyLogiq, a data gatherer, the median pay of nearly 450 ceos members of peergroup companies have also flopped. running firms in the s&p500 that have reported so far was $13.2m last year, an increase for the fifth year running. It said Mr Nassetta Doing well by doing good and Mr Del Rio were among two dozen bosses in that group who It is quite likely, in fact, that shareholders will focus less on pay in got a pay rise even though their firms lost money. coming years as they prioritise even more emotive issues, such as So now comes the backlash from investors, right? So far this gender and racial diversity among firms they invest in, as well as year, shareholders have used “sayonpay” votes at annual general climate change. By 2022 environmental, social and governance meetings to censure an unusually large number of America’s big (esg) goals are expected to be part of many more ceopay schemes, gest firms for gerrymandering pay policies, including ge, at&t, a especially as the credo grows of maximising value not just for telecoms giant, ibm, a tech firm, and Walgreens Boots Alliance, a shareholders, but for stakeholders. In the long term, these may pharmacy business. Pay consultants report that those ceos yet to help improve stockmarket returns. But in the short run the risk is face combative shareholder meetings are “sweating it”. That is no that, while oversight is lax, some boards will use esg criteria to bad thing if it suggests that institutions are so fed up with the distract attention from poor financial performance. One day the stratospheric rewards on offer that they convince boards to put an world may have cause to cheer the impact of a greater focus on end to them. But don’t bet on it. Shareholders remain in as much sustainability. But in the meantime someceos will no doubt use it of a muddle over high pay as company directors. as a new way of feathering their own nests. n

012 Finance & economics The Economist May 15th 2021 61

→ Also in this section 62 Buttonwood: The British bull case 63 Is China’s population peaking? 63 The Swensen model 64 Taxing multinationals 66 Free exchange: When the Inc runs

Inflation a successful vaccination campaign is al lowing them to get out and spend and re Jump scare? strictions to loosen. According to a tracker compiled by JPMorgan Chase, a bank, cred itcard spending rose from a tenth below its prepandemic trend in the six months to March to only just below it by May. The speed and nature of the postlock down bounceback seems to have caught What an inflation surprise tells you about America’s reopening many firms off guard. Not since the s america’s economy bounces back tile food and energy prices, was 0.9%, the mid1970s have companies been so likely Afrom the pandemic, aided by trillions strongest since the 1980s. Data for a single to report delays in supplier deliveries, ac of dollars of fiscal stimulus, the main month cannot tell you whether runaway cording to research published in March by question on investors’ minds is if and inflation is around the corner. But the re Goldman Sachs, a bank. American retail when inflation will take off. The Federal lease says something about the realities of ers’ inventories, relative to revenues, have Reserve has vowed to tolerate a period of economic reopening. plunged to alltime lows, suggesting that abovetarget price rises so that the econ Consumer demand in the world’s larg shops are running out of things to sell. Ma omy can get back on its feet; Jerome Pow est economy is roaring back. Stimulus ny firms, especially smaller ones, had or ell, its chairman, has said it is “not even cheques worth up to $1,400 were doled out dered insufficient supplies and are now thinking about thinking” about raising in to many Americans earlier in the year. Now frantically catching up. (By contrast, the terest rates. Yet with many asset prices un inventories of large listed firms have not derpinned by rockbottom rates, investors declined, either because they were better have been jumpy, fretting that high infla Spring surprise able to forecast the coming spending tion could force the central bank’s hand. United States, consumer prices binge, or because their supply chains are Then came a big inflation surprise. Fig % change on a year earlier more diversified.) ures published on May 12th showed that 4 Yet surges in demand cannot immedi America’s consumerprice index rose by ately be fulfilled. Take imported supplies, Headline 4.2% yearonyear in April, a rate not seen 3 for instance. Even at the best of times extra since 2008, and considerably higher than Core* demand for international deliveries takes the 3.6% that had been expected by fore 2 a while to sate; a ship can take a few weeks casters. The s&p 500, America’s main to sail from China to America. The added stockmarket index, fell by 2% that day. 1 complication in 2021 is that firms must al By far the biggest factor behind the ac so contend with shortages of containers in 0 celeration relates to the past, rather than some ports. Some were stuck in the wrong the price pressures of today, as last year’s -1 place during the first wave of lockdowns. oilprice falls depressed the base used to Moreover, workers cannot be hired 2120191817161514132012 calculate the annual rate. Yet even the overnight. Firms are struggling to recruit Source: US Bureau of Labour Statistics *Excl. food and energy monthly increase, stripped of more vola enough staff to fill open positions—per

012 62 Finance & economics The Economist May 15th 2021

haps a big reason why the jobs report for tives in other parts of the country, or to get to keep repeating, pushing up wages in April, published on May 7th, showed that to work. But a global shortage of computer turn. But the present phase could reason America had added just 266,000 jobs, well chips has also constrained the supply of ably be regarded as temporary, as suppliers below the 1m or so that many economists new vehicles. adjust to shifting consumer tastes. Even as had expected. The number of unfilled posi Assured of sustained demand, other economies locked down in 2020, for in tions is running at an alltime high. companies may also begin to pass on high stance, firms quickly found new ways to Take the surge in demand and strained er costs to customers. The cost of shipping source material and bottlenecks eased. The supply together, and you get to higher pric items from China to America is now three current spike would then prove transitory. es. Used cars and trucks are a good exam times as expensive as it was before the pan Yet as the recovery proceeds, other sur ple. Their prices rose by a staggering 10% in demic, and input prices have picked up in prises will come. The combination of a April, contributing to the headlineinfla the spring. generous Treasury, a tolerant Fed and a re tion surprise. With people nervous of fly What, if anything, can these pressures opening economy puts America in un ing and public transport, more may want tell you about inflation to come? In order charted territory. Brace yourself for more to get behind the wheel instead to see rela for it to stay high, such price rises will need inflation scares in the coming months. n ButtonwoodOversold over here

The bull case for beaten-up Britain ne of the vices of Britons is a pen ing. Brexit is done. The world has kept labour laws are a pain. London can be an Ochant for mourning the country’s turning. And politics is more stable. Even easier place for the footloose entrepre decline. To be cured of this, Britain if a fight over Scottish, and possibly neur to settle—though a lot rests on how would probably need a different history. Northern Irish, independence still looms, postBrexit visa schemes work. It was the first industrial nation. From the ruling Conservatives enjoy a hand Where Britain has fallen down is in that startingpoint, its influence could some majority in parliament. turning fledgling companies into listed only ever go in one direction: down The ftse AllShare index is heavy with worldbeaters. Promising startups reach wards. There is a large literature blaming the kind of cyclical stocks that have been a certain stage of maturity only to hit a longterm decline on sloth, complacency in favour recently. But, lamentably, it is brick wall in terms of funding. They are and amateurism. Brexit is just another light on the digital champions of tomor still too small to be listed, so need private opportunity to lament lost relevance. row. This is not for lack of innovation. funds to grow. But by and large the bigger This sense of decline is felt keenly in Britain is rather good at fostering startups. cheques are written by American ven capital markets. Sterling was once the There are various tax breaks to help fledg turecapital firms. Once the board is global currency but it now accounts for ling companies raise seed capital. Univer packed with Americans, it is natural for less than 5% of foreignexchange re sities have grasped that business spinoffs them to seek an American exit from their serves. Britain’s money markets used to are to be encouraged, says Anne Glover of investment—either a sale to a bigger stand out in Europe for their high in Amadeus Capital Partners, a venture company or a listing on the Nasdaq. terest rates; but no longer. And Britain’s capital firm. Britain has four in the top Many British entrepreneurs are resigned stockmarket is a shadow of its former ranks: Oxford, Cambridge, Imperial Col to selling to a foreign buyer. self. Big ipos are as rare as rockinghorse lege and University College, London. A recent governmentbacked review, dung. This scarcity along with years of The country still attracts more venture led by Ron Kalifa, a fintech entrepreneur, share underperformance has seen Brit capital than any other in Europe. London proposes a series of reforms to encourage ain’s share of global market capitalisa is an asset in this regard. If your ambition British listings. They include changing tion shrink markedly (see chart). is to build a globally relevant technology London’s listing rules to allow for dual So accepted has the narrative of de company, it helps to start it in a global city. classes of shares and smaller freefloats cline become, that it is probably time to Berlin is cool and cheap, but lacks a world of stock—terms that are offered by New bet the other way. The economy is poised class university. Paris is pretty, but French York and Hong Kong. There is also a for a sharp recovery. London’s bourse is proposal for a specialist growthcapital stuffed with the shares of companies— fund for preipo businesses, backed by miners, banks and energy firms—that Poised for a rebound British asset managers. The goal is to ought to do well in an environment of FTSE All-Share index, market capitalisation turn a vicious cycle into a virtuous one, rising inflation. And though fixing the % of global total says Ms Glover. The more tech firms list structural deficiencies of Britain’s capital 10 in Britain, the more local analysts and markets is a big task, it is not impossible. asset managers will take an interest in On cyclical grounds, there is a strong 8 them, encouraging further listings. case for Britain. The immediate outlook When Britain says it is “open for for the economy is rosier than almost 6 business”,it is taken to mean that its anywhere. That in part reflects the most promising firms are available to be ground lost to covid19. The Bank of 4 gobbled up by foreign bidders. If there England reckons that, even after a surge were local alternatives to such deals, its in activity this quarter, gdpwill still be 2 public markets might begin to look more around 5% below its prepandemic level. attractive. Decline might even be re But it is also because the vaccine rollout 0 versed. In any event, though, the gloom has been impressively quick. There is a 2119171513110907052003 has gone far enough. The case against sense, too, that uncertainty is diminish Source: Bloomberg sterling assets is oversold.

012 The Economist May 15th 2021 Finance & economics 63

China’s census David Swensen Coming of age Older and wiser China The holly and

Population by age group, bn the ivy 1.5

SHANGHAI 65+ 1.2 China is still the world’s biggest 15-64 -14 country—for now 0.9 The legacy of an influential investor arely does tarting in the a census attract attention 0.6 1980s, the endowments Rand controversy—unless the country Sof a handful of big American universi counting its people is both the world’s larg 0.3 ties began to divert their investments away est and on the brink of decline, and its stat from publicly traded equities and bonds isticians are notorious for fiddling their 0 towards “alternative” assets, such as ven figures. So the results of China’s seventh 201020009082641953 ture capital and private equity. David census, conducted last year and released Swensen, who died on May 5th aged 67, on May 11th, were big news. According to perfected the approach. Referred to vari Number of births, m the data, the population reached 1.41bn last 30 ously as the endowment, Yale or Swensen year, up by 5.4% from a decade ago. That model, it has since been copied—by family ran contrary to a report last month in the offices, sovereignwealth funds and, more Financial Times saying that China’s popula 20 recently, by big pension funds. tion fell below 1.4bn, which would have In 1985 Mr Swensen was persuaded by marked the first decline in six decades. 10 James Tobin, a Nobelprizewinning Yale Adding to the intrigue around the cen economist, to give up a lucrative career on sus was its delay. The National Bureau of 0 Wall Street to return to his former univer Statistics had originally promised to pub 20102000908070601949 sity to run its investment office. Yale’s en lish the figures in the first half of April. As Source: Wind dowment was then worth around $1bn. By ever with Chinese data, there were so the middle of last year the figure had risen me oddities. Taken at face value, the popu to $31bn. Even this astonishing growth un lation increase in 2020 when compared still growing but will peak in the next few derstates Mr Swensen’s influence. He was with annual birth figures suggested that, years—nearly a decade earlier than some responsible for developing a stream of tal miraculously, no one died last year. government advisers had expected. ented asset managers at Yale. And in two For those willing to grant Chinese offi Rapid ageing will change the state’s role bestselling books, he set down his invest cials a modicum of trust, the controversies in society and add to fiscal pressures. For ment philosophy for a wider audience. can be explained away. It is misleading to decades, benefiting from a bulge of young Three pillars of this thinking stand out. compare China’s annually reported popu workers, officials could focus their spend The first concerns time horizon. Because lation figures, extrapolations based on tiny ing on infrastructure. Now they will have endowments have obligations stretching samples, with its onceadecade census, in to spend more on health and social care, far into the future, they can take a long which boffins try to tot up everyone in the and threadbare pension plans. All this rais term view. They can sacrifice the ease of country. Demographers said the covid19 es questions about whether China will trading in public markets for the better re pandemic, during which tens of millions grow old before it grows rich. turns promised in private equity. By doing of migrant workers returned to their rural But the census also showed how demo so, they can earn an illiquidity premi homes, caused delays to the count. And graphic changes are making China a more um—a reward for giving up the ability to upward revisions to past population data potent economic force. In 2020 it was sell out easily. help resolve the deathfree miracle (mil home to 218m university graduates, nearly The second pillar concerns informa lions did in fact pass away last year). double the number in 2010. Even if the tion. It is hard to find mispriced stocks in Beyond the controversies, the census workingage population is declining, the the public markets, because news about shone a light on the demographic trends dramatic increase in skills makes for a listed companies travels fast and is quickly reshaping China. For a start, the country is more formidable workforce. Moreover, mi incorporated into prices. But investors in ageing rapidly. The number of people aged gration from farms to cities, long a driver private markets who do their homework 60 and older hit 264m last year, up by more of economic growth, has continued. Near are more likely to be rewarded. That is be than 80m over the past decade, as China ly 64% of the population lived in urban ar cause reliable data and analysis are much added roughly a Germany’sworth of old eas last year, up from less than 50% in 2010. harder to come by. folk. Longer lifespans are a marker of de As people move in search of opportuni The third pillar is the importance of a velopment success. ties, they are redrawing China’s map. The contrarian mindset. Mr Swensen had a More worrying, though, is the plunge in rustbelt provinces in the northeast lost chance early on to demonstrate his. Fol fertility. Births last year fell to 12m, down millions of younger residents over the past lowing the stockmarket crash in October by nearly 20% from 2019. When China end decade, while prosperous coastal areas, 1987, he had loaded up on company shares, ed its onechild policy in 2015, the govern notably Guangdong and Zhejiang, gained which had become much cheaper, by sell ment expected a baby boom. Instead, soar millions. As a whole, China is getting older, ing bonds, which had risen in price. This ing housing and education costs and other more educated and more urban. But that rebalancing was in line with the fund’s realities of modern life led more women to change is not evenly spread. The outside agreed policy. But set against the prevail choose not to marry. China’s fertility rate of world is understandably focused on the ing market gloom, it looked rash. His in 1.3 children per woman is about the same question of when China’s population will vestment committee was worried. One as Japan’s, and well below the 2.1 needed to peak. Within China, the widening gap be member warned that there would be “hell keep a population stable. If China’s offi tween haves and havenots is just as press to pay” if Yale got it wrong. But Mr Swensen cials are to be believed, its population is ing a concern. n stuck to his guns. The decision stood—and

012 64 Finance & economics The Economist May 15th 2021

paid off handsomely. Mr Swensen is given too much credit in shift in America and a global push to raise These days, the Swensen model is often one regard. Endowments had a history of more tax revenue to pay for the pandemic reduced to an assetallocation decision: innovation before his return to Yale. Har means a degree of optimism is in the air. hold alternatives. But as money has flood vard’s was already changing. And endow The proposals under discussion may ini ed into privateequity funds, average re ments had previously been pioneers in as tially raise only a modest amount of rev turns have converged on the returns in set allocation: the Ivy League funds shifted enue, but they still represent a big break public markets. There is no longer an obvi markedly from bonds into equities from with the past. ous illiquidity premium. But Mr Swensen’s the 1930s. In other respects Mr Swensen The foundations of the global cor point about information remains relevant. gets too little credit. Star investors are gen poratetax system were laid a century ago. The dispersion of returns—the gap be erally not good at mentoring others. But It recognises that overlapping taxes on the tween the best and worst funds—is far Swensen alumni have regularly turned up same slice of profits can curb trade and higher in private than in public equity. Se in senior jobs at other endowments. “He growth. As a result, taxing rights are allo lecting the right privateequity manager was a smart player but also an incredibly cated first to wherever profits are produced takes expertise. Yale has some advantages: good coach,” says a colleague. In this, as in (the “source”) and then to wherever the it can, say, tap into its alumni network for other matters of investment practice, Da parent company is headquartered (or “resi access to the betterrun funds. vid Swensen was a true outlier. n dent”). A multinational based in America but with an affiliate in Ireland, for exam ple, typically pays taxes in both places. Where the company makes its sales is irrel evant. Payments between an individual firm’s various legal affiliates are recorded using the “arm’slength” principle, sup posedly on terms equivalent to those found on the open market. These principles, now baked into thou sands of bilateral tax treaties, have had two unintended consequences. First, they have encouraged governments to compete for investment and revenue by offering tanta lisingly low tax rates (see chart 1 on next page). In 1985 the global average statutory corporationtax rate was 49%; in 2018 it was 24%. Ireland boasts a statutory rate of just 12.5%; Bermuda, 0%. Second, tax com petition has encouraged companies to shuffle their reported profits to lowtax places. In 2016 around $1trn of global pro fits were booked in socalled “investment hubs”. These include the Cayman Islands, Ireland and Singapore, which apply an av erage effective tax rate of 5% on the profits of nonresident companies. There is a huge mismatch between where tax is paid and where real activity takes place. Analysis by the oecd suggests that multinationals report 25% of their profits in investment hubs, although only Corporate tax 11% of their tangible assets and less than 5% of their workers are based there. Par ents can allocate paper profits to affiliates The big carve-up in tax havens by having them hold intellec tual property that is then licensed to other affiliates in hightax places. The problem seems to have worsened over time, per haps because more firms make money WASHINGTON, DC from intangible services, from software to The global system for taxing multinationals is broken. What might replace it? streaming videos. The share of American or years governments have grumbled, America, where President Joe Biden plans multinationals’ foreign profits booked in Fsimmered and raged as multinational to raise taxes on corporate profits, includ tax havens has risen from 30% two decades companies have shifted profits out of tax ing foreign income. ago to about 60% today. Most investors and collectors’ grasp and into lowtax havens. Mr Biden’s proposals will grind their bosses view firms’ tax bills as a black box The oecd, a club of mostly rich countries, way through Congress. Finance ministers that only a few lawyers and tax experts tru estimated in 2015 that avoidance robs pub from the g7 group of countries are likely to ly understand. lic coffers of $100bn240bn, or 410% of discuss global tax reform when they meet One way of capturing the scale of ma global corporationtax revenues a year. in London on June 4th5th. And later in the nipulation is to examine what would hap Now the fiscal fallout from covid19 is add summer 139 countries will discuss chang pen if there were a single common tax rate. ing urgency to governments’ efforts to ing the system for taxing multinational A recent study by Thomas Torslov of Kraka, claw some money back—most notably in companies. The confluence of a political a Danish thinktank, and Ludvig Wier and

012 The Economist May 15th 2021 Finance & economics 65

As a result any deal will involve com Seeking savings in the havens 1 promises. The amount of profit that is real located in order to resemble economic re Headline corporate-income-tax rate*, % Share of multinational enterprises’ foreign ality more closely could be capped. For ex activities by location, 201, % ample, the oecd’s blueprint does take the radical step of considering companies as a 50 Low-income countries Middle-income whole, rather than separated into affiliates. Germany France High-income Investment hubs† 40 Still, most profits would remain taxed as 403020100 Tax they are. The right to tax, say, 20% of pro 0.16 30 fits above a routine rate of 10% of revenues Profit‡ would be reallocated according to a formu Britain US 0.0 20 la that could be based on sales. Meanwhile Total Switzerland America’s preferred minimum rate of 21% revenues 0.06 10 is unlikely to be agreed on more widely, as Ireland Tangible assets 0.14 countries sniff about tax sovereignty. A 0 0.21 rate of 1015% is much more realistic. Employees How much difference would changes of 2000 05 10 15 21 *Includes central and sub-central rates †Countries with inward investment this magnitude make? The reallocation Source: OECD exceeding 150% of annual GDP ‡Profits could double-count intracompany dividends plan, as it stands, aims to raise a puny $5bn12bn in annual revenues. The oecd Gabriel Zucman of the University of Cali panies worldwide; in return, the Biden ad reckons that a minimum rate of 12.5% fornia, Berkeley, tried to quantify this. A ministration wants all the digitalservices would raise $23bn42bn directly through staggering $670bn in paper profits, which taxes to be dropped. The second element the higher rate, and another $19bn28bn by are unconnected to things like factories, would apply a minimum rate of corpora reducing profitshifting. These figures are would have moved in 2016—almost 40% of tion tax, putting a floor on the race to the not particularly impressive, although they multinationals’ foreign earnings. Big bottom. The Biden administration is gun might let governments crank up domestic Western countries are losers from the cur ning for a global minimum tax rate on for tax rates without worrying as much about rent system: profits in America and France, eign earnings of 21%, applied to profits the danger of capital flight. for instance, are depressed by around a within each jurisdiction separately. Still, an agreement on new principles fifth (see chart 2). By comparison, havens could leave the door open to bolder chang collect more revenue, as a share of gdp, de You say you want a revolution es later. Carlos Protto, one of Argentina’s spite their rockbottom effective rates. Could these ideas form the basis for an representatives in the oecd talks, says that Hong Kong collects a third of its corporate eventual deal? The proposal for profit real focusing only on the biggest multination tax receipts by attracting profits from high location has been broadly welcomed by als helps build consensus now, but also tax countries; Ireland, over half. other big rich economies. Yet there is still notes that many countries expect the The rise of Silicon Valley has added fuel plenty of scope for disagreement on the de scope of any reforms to be broadened to the fire. Some governments gripe at tails. Assessing the location of sales made eventually. giant firms serving customers without any by one business to another, if it then goes What if countries cannot agree? Ameri physical presence in their country and on to make sales in a different country, is ca will forge ahead with reforms to its do while paying no tax. The problems posed tricky. Some governments also still want to mestic taxes, including provisions that by the tech firms are not in fact new: phar turn the screws on Amazon, Apple, Face could unilaterally increase the tax load of maceutical companies have long held mo book, Google and the like: the European American subsidiaries of foreign compa bile and hardtovalue intellectual proper Union seems to be preparing to go ahead nies that pay skimpy tax bills globally. ty; exporters do not incur tax liabilities with a digital levy regardless of the out Meanwhile digitalservices taxes could where they sell. Still, digital services have come at the oecd. That in turn could cause spread like wildfire—potentially incurring become a target. More than 40 govern some American lawmakers to eschew glo American tariffs in retaliation. On May ments, from France to India, are either bal cooperation. Meanwhile, many tax ha 10th the United States Trade Representa levying or planning to levy digitalservices vens may resist higher minimum tax rates tive held a fourth day of hearings on retali taxes on the revenue of firms such as Ama that eliminate the advantage for compa ating against foreign digitalservices taxes. zon, Google and Facebook. nies of booking profits there. Overhaul or not, tax bills will rise. n The growing sense of anarchy over how to tax Silicon Valley, the global desire to raise more tax revenues and a more concil The givers and the takers 2 iatory White House all mean the scene is oecd’ set for a global deal. The s forthcom Corporate-tax revenue lost/gained Corporate-income-tax revenue, ing summit is not the first time it has tried from profit-shifting, 2017, % 201, % of GDP to orchestrate reforms—it helped pass changes to the transferpricing regime in 7550250-25 6543210 2015. But this time two more ambitious Ireland Luxembourg proposals are under discussion. Luxembourg Netherlands The first would reallocate taxing rights Netherlands Switzerland so that a slice of profits could be levied ac Switzerland Ireland cording to, say, the location of a company’s United States Britain sales. That right could be incurred even if France France the company had no physical presence in Britain Germany the country. Mr Biden’s negotiators have Germany United States proposed a reallocation that would apply Sources: Torslov, Wier and Zucman (2019); OECD to the 100 biggest and most profitable com

012 66 Finance & economics The Economist May 15th 2021

Free exchange When the Inc runs

Corporate taxes are likely to rise in America. Who will shoulder the costs? absorbed by wages rather than just profits) or consumers (who may face higher prices). Perhaps most important, Mr Harberger assumed that the economy in question was closed. In practice, capital is relatively mobile across national borders—and intangi ble forms, like intellectual property, extremely so—while other factors of production like labour are not. Increasing corporate tax in one country might then encourage owners of capital to move activity abroad, diminishing the amount of capital per worker at home, and potentially reducing workers’ productivity and pay. In deed, research by Laurence Kotlikoff of Boston University and Lawrence Summers of Harvard University showed that in very small, very open economies the burden of a rise in corporatein come tax could fall almost entirely on labour. The size of an economy and its openness to capital flows are just two of the five factors that most influence an economic mod el’s conclusions regarding the incidence of corporatetax changes, argued Jennifer Gravelle Stratton, then of the Congressional Bud get Office, in a paper published in 2013. (Size matters because changes in the capital stock of larger economies have a greater in fluence on the worldwide return on capital.) Another factor is how seamlessly production may be moved abroad in response to tax changes. Similarly, the ease with which labour may be substituted oe biden wants to rebuild America, and he reckons that Amer for capital determines how badly workers’ economic prospects are Jican firms can help foot the bill. Central to the president’s grand affected when capital flees the country (or threatens to). Last, who infrastructureinvestment push is a plan to raise the tax rate on pays most depends critically on how capitalintensive the cor corporate income from 21% to 28% (though he has hinted he may porate sector is: the greater the level of capital per worker, the settle for less). Although the administration pitches its tax pro more each worker suffers if a corporatetax rise affects where posals as a way to redress the problem that “those at the top are not firms choose to deploy their capital. doing their part”, opponents warn that corporatetax rises do not Sorting out the likely effects of a corporatetax change, in other simply fall on wealthy shareholders, but also shrink the pay pack words, is complicated and messy. Empirical studies demonstrate ets of the working people the president claims to champion. In exactly that. A paper published in 2015 by Kevin Hassett, later a fact, workers often do bear some of the burden of increases in cor chairman of President Donald Trump’s Council of Economic Ad porate taxes—though understanding just how much is a question visers, and Aparna Mathur of the American Enterprise Institute, a that continues to vex economists. Nonetheless, the details of Mr thinktank, concluded that a 1% rise in the corporatetax rate is as Biden’s tax plans suggest that they may prove more workerfriend sociated with a 0.5% drop in wages: a result that implies that more ly than the usual effort to squeeze juice fromApple. than 100% of the burden of corporate tax lands on workers. At the Other things being equal, a tax on corporate profits should hit other end of the scale, a study of economies in the oecd, a club of shareholders—a group wealthier than the population as a whole— mostly rich countries, by Kimberly Clausing, an economist at by shrinking the money available for dividend payments or reduc Reed College who is now a deputy assistant secretary at America’s ing share values. But other things are never equal. Firms invari Treasury Department, found no clear relationship between cor ably respond to new taxes in order to minimise their costs. De porate tax and wages. pending on precisely how they seek to escape the tax, some of its burden may be passed on to others. A seminal paper published in Passing the buck 1962 by Arnold Harberger, an economist, reckoned that such wrig Other studies suggest the burden is shared. An analysis of the Ger gling by owners of capital was unlikely to shift the cost of a cor man economy published in 2017, which used variations in local porate tax onto other inputs to production. He imagined an econ businesstax rates to assess how their costs were distributed, con omy with just two sectors, corporate and noncorporate, and then cluded that more than half the burden is borne by workers. Econo supposed that a tax was placed on the income of the former. Cap mists who summarise the literature often note that labour bears ital, he reasoned, should shift from the corporate sector to the some but not all of the burden of corporate tax—perhaps about noncorporate (consisting of partnerships and other sorts of busi 40%—while occasionally allowing that the true figure depends ness). As a consequence, the average rate of return on capital in heavily on the context of a given tax measure. noncorporate firms should fall, reflecting the flow of resources to Context, however, is subject to change. Reducing differences in loweryielding sorts of production made attractive only because corporatetax rates across countries gives companies less scope to of the sector’s comparatively favourable tax status. Corporations pass the tax burden on to workers by shifting production abroad. could shift some of the burden of corporate tax to owners of cap The Biden administration’s proposal for a global minimum rate is ital in other parts of the economy, but not pass it on to workers. in large part targeted at firms that use accounting tricks to book Mr Harberger’s model made a number of simplifying assump profits in tax havens. Yet it should also deter governments’ efforts tions, however. He assumed, for instance, that markets were per to lure production by undercutting other countries’ tax rates. That fectly competitive. In practice, firms may enjoy market power over would ensure that more of the burden of corporate tax falls where either workers (in which case some of the cost of the tax may be it is meant to. n

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012 68 Science & technology The Economist May 15th 2021

Recycling will triple by the end of the decade. Cobalt, meanwhile, comes mainly from Congo, a The metals in the car go round country that is often wartorn and has a dreadful humanrights record. and round Generally speaking, electrical waste is shredded in bulk before it is sorted and re processed. But lithiumion batteries, the type used in evs, are inflammable, so need Old electric vehicles are a raw material of the future careful handling. They are shredded sepa rately in special machines filled with liq ar sales have, generally speaking, of readily recyclable ferrous metals. evs, by uids or gases that suppress combustion. Cplunged during the coronavirus epi contrast, contain a far greater variety of The result, called “black mass”, is then pro demic. But there has been one bright spot. materials (see chart on next page). Separat cessed to extract its valuable components. Electric vehicles (evs) continue to grow in ing and sorting these is tricky, especially as There are two ways of doing so. The popularity. According to ihs Markit, a re many of them are locked up inside com more common at the moment is pyromet search firm, almost 2.5m batteryelectric plex electrical components. allurgy. This treats black mass as an ore, by and pluginhybrid cars were sold around smelting it in a furnace to liberate a metal the world in 2020—and the company ex Flat batteries lic mixture from which pure metals, par pects that number to grow by 70% this For those who can manage to do so, ticularly the cobalt, can be separated. That, year. Bloombergnef, another researcher, though, there is good business to be had though, requires a lot of energy. It also de reckons that by 2030 some 8% of the 1.4bn here. evs contain lots of valuable stuff. The stroys valuable nonmetallic components cars on the road will be electric, rising to magnets in their motors are full of rare such as the graphite in batteries’ anodes. more than 30% by 2040. It is not, more earth metals (see box on next page), and And it fails to liberate the lithium, which over, just a matter of cars. There will also be their batteries of lithium and cobalt. Rys ends up in compounds in the slag that is electric lorries, buses, motorbikes, bicy tad Energy, a Norwegian research compa generated alongside the liquid metal, and cles, scooters, ships and maybe even air ny, forecasts that as the number of electric must then be extracted separately. craft. And, when all of these machines vehicles being made rises, lithium prices The other approach, hydrometallurgy, come to the ends of their useful lives, they works more subtly. It leaches metals, lithi will need to be recycled. um included, out of the shredded material → Also in this section This coming avalanche of ewaste will by dissolving them in acids or other sol be hard to deal with. When a petrol or die 69 Recycling rare-earth metals vents. That requires less energy and also sel car is dismantled and crushed, as much permits the recovery of nonmetallic ma 70 Gender dysphoria in children as 95% of it is likely to be used again. Ways terials such as graphite. Hydrometallurgy to do that are welldeveloped, straightfor 71 Charismatic megaflora is more complex than pyrometallurgy, and ward and helped by the fact that, on aver comes with the added expense of treating 71 A new fuel for hypersonic flight age, almost 70% of such a vehicle consists the waste water it generates, to prevent

012 The Economist May 15th 2021 Science & technology 69

pollution. But its overall advantages sug gest it is the wave of the future. Electric motors LiCycle, a Canadian company founded in 2016 that is already the biggest recycler Hydrogen de-bonding of lithiumion batteries in North America, is one outfit betting on hydrometallurgy. Researchers find a way to recycle rare earths from magnets To improve the gathering of its raw materi al LiCycle is testing what it calls spoke he motors driving today’s electric components containing neodymium andhub systems. These collect incoming Tcars use powerful magnets made based magnets destined for recycling are batteries of all sorts, not just those from from rareearth metals. Not all rare tipped into a vessel that is then pumped evs, at geographically dispersed receiving earths are actually that rare. Neodymi full of hydrogen. A reaction between the stations (the spokes), shred them, and then um, for instance, is about as abundant as hydrogen and the neodymium causes the sort the debris, using automatic separation tin. But good, workable deposits are material of the magnets to expand until and sieving systems, into three types of scarce, and many are in China, which it shatters. The result is a demagnetised mixture: plastic, copper and aluminium, has, in the past, imposed export quotas. powder. Once the vessel’s contents have and black mass. The plastic and the cop This, combined with an absence of sub been tumbled and sieved, and the hydro peraluminium mix are sold to other recy stitutes, make rare earths pricey enough gen removed, the extracted powder is of a clers. The black mass is sent to the system’s to constitute more than half of such a quality good enough for it to be pro hub, a hydrometallurgical processing motor’s cost. Yet virtually none is recy cessed straight back into magnets. plant that serves many spokes. cled—a deficiency that extends also to To recycle neodymium in this way, Dr Kunal Phalpher, LiCycle’s chief com the motors in computer hard drives, Walton and his team have set up a firm mercial officer, says experience with ade cordless tools and domestic appliances, called Hypromag. They say the resulting monstration hub at the firm’s base in and to the generators (essentially, elec magnets need 88% less energy to make Kingston, Ontario, suggests this approach tric motors in reverse) in wind turbines. than equivalents produced from scratch. can recover cobalt, lithium and also nickel The problem, says Allan Walton, who To help commercialise the process, (an important ingredient of some non leads the Magnetic Materials Group at Hypromag has teamed up with Bentley, a lithiumion batteries) in a form pure the University of Birmingham, in Britain, British subsidiary of Volkswagen well enough for those metals to be used directly is that the process of shredding and known for its luxury cars, which is now to make new batteries. In all, Mr Phalpher separating usually applied to electronic developing a range of electric models. claims, the process recycles 95% of a bat waste makes the recovery of rare earths Even petroldriven Bentleys, however, tery’s materials. LiCycle will soon com hard. Rareearth magnets are brittle, and contain lots of electric motors. Some plete its first properly commercial hub, in break into particles which oxidise readily operate features found routinely in other Rochester, New York, and has plans for in air. The result is a residue which is of vehicles—power steering, selfwinding three more around the world by 2025. little, if any, commercial value. windows and the multiple loudspeakers LiCycle is not alone, though, in its hy Dr Walton and his colleagues hope to in the audio system. Less common in drometallurgical ambitions. One rival is change this, using a process developed other marques are the motors that pam Redwood Materials of Carson City, Nevada, by Rex Harris, now an emeritus professor per the occupants by massaging their which was founded in 2017 by Jeffrey Strau at Birmingham, to recycle neodymium, backs through the seat covers. All of bel, formerly chief technology officer of the rare earth most widely employed in these, though, will eventually be grist to Tesla, a big maker of evs. Redwood uses a electric motors. In Dr Harris’s process, Dr Walton’s mill. combination of pyro and hydrometallur gy in its process, with some of the reco vered materials providing energy to drive officer), makes lithiumion batteries for also formed a partnership with Hydro, a the pyro side of the equation. It already re European carmakers. It is adding a recy Norwegian aluminium producer, to recov cycles rejects from the American evbat cling plant to its factory in Sweden, to pro er that metal as well. The firm hopes that, tery factories of two Japanese firms, Pana cess the batteries it produces there when by 2030, half the materials it uses to make sonic and Nissan, and is now setting up an they reach the ends of their lives. Their new batteries will have been recycled. operation that will take used batteries steel and plastic casings, and copper wir Similar “closedloop” systems are being from general consumer goods. ing, are removed manually before they are developed in other parts of the battery sup Northvolt, another firm started by ex crushed in an inert environment. Nickel, ply chain. For example, American Battery Teslaites (Peter Carlsson, its chief execu manganese, cobalt and lithium are then re Technology, a firm in Nevada that mines tive, and Paolo Cerruti, its chief operating moved by hydrometallurgy. Northvolt has and processes lithium, is adding a recy cling plant intended to recover lithium and other metals from expired batteries. It will Pick’n’mix use the lithium in its own production pro Car materials at end of life, % of total by weight, 2021 cesses and sell the other materials on. The biggest batteryrecycling opera Electric vehicle tions of all, though, are not Western, but 0 25 50 Electrical parts 75 Tyres 100 Chinese—not surprising, perhaps, given Other metals Battery Glass Other materials that China is the world’s largest market for evs, and the country’s government has Iron and steel Electric motor been promoting the recycling of lithium ion batteries for some time. Brunp Rey Internal-combustion-engine vehicle Battery Glass Other cling, a subsidiary of catl, the world’s big Iron and steel Polymers gest evbatterymaker, has halfadozen Other metals Tyres hydrometallurgical recycling operations Source: University of Birmingham, “Securing Technology-Critical Metals for Britain” around the country. Brunp says it can recy cle 120,000 tonnes of old batteries a year,

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which it claims represents about half of vered. But a team led by Anand Bhatt and Many are treated with drugs to block the China’s current annual batteryrecycling Thomas Ruether at csiro, Australia’s na onset of puberty. These are often followed capacity. Meanwhile, American Battery tional science organisation, think they by hormones to promote development of Technology’s approach of integrating recy have come up with a way to recover pf6 in physical characteristics of the opposite cling with primary production of lithium tact. They use a special solvent to extract it sex, as part of an approach called affirma echoes that of Gangfeng Lithium, one of from black mass before any further metal tion therapy. the world’s largest producers of lithium for lurgical process is applied to it. The pf6 ob Last June, though, Finland revised its batteries. Gangfeng, which has already in tained in this way is, they say, good enough guidelines to prefer psychological treat stalled a heavily automated recycling plant to be used to make new batteries without ment to drugs. In September Britain at its base in Jiangxi province, plans to further processing. launched a topdown review of the field. In build another as part of its mining opera Also in Australia, a firm called EcoGraf December the High Court of England and tion in Sonora state, in Mexico. has developed a process that can extract Wales ruled that under16s were unlikely to Tesla itself also has transPacific ambi graphite from black mass with a purity that be able to consent meaningfully to taking tions. It is setting up a batteryrecycling fa allows it be reused for making anodes. puberty blockers, leading gids to suspend cility at its ev factory in Shanghai, to com SungEel HiTech, a scrapmerchant that is new referrals, though a subsequent ruling plement one it is developing at its battery South Korea’s biggest battery recycler, is held that parents could consent on their factory in Nevada. Nor is Tesla the only ve now setting up a plant at its factory in Gu children's behalf. On April 6th Arkansas hiclemaker involving itself in the indus san to do just that. passed laws that make prescribing puberty try. In January, Volkswagen opened a pilot Scrap merchants have to be flexible. blockers and crosssex hormones to chil batteryrecycling plant in Salzgitter, near SungEel’s previous main business was re dren illegal. Also in April the Astrid Lind Hanover, to recover materials from batter cycling plasmatelevision screens, which gren Children's Hospital in Stockholm, a ies used in evs made by its various brands. have, these days, largely, been superseded part of the Karolinska Institute, an Salzgitter is close to the company’s bat by led versions. Plasma televisions turned nounced that it would stop prescribing pu tery factory in Braunschweig, which is be out to be a passing fad. evs, though, are berty blockers and crosssex hormones to ing expanded to produce more than likely to run and run. n those under 18, except in clinical trials. 600,000 ev battery packs a year. The idea, Those sceptical of affirmation therapy says Frank Blome, head of batteries for point out two problems. Evidence is lack Volkswagen Group Components, is that Gender medicine ing, and what exists is not reassuring. A re the firm’s battery experts will work with its view by Sweden's health authorities in 2019 recyclers to make battery packs easier to Second thoughts found little research, mostly of poor quali dismantle. As Mr Blome observes, “anyone ty. Britain’s National Institute for Health who takes something apart first needs to and Care Excellence found that puberty know how it was put together.” blockers did little to dispel gender dyspho Designing recyclability in from the be ria or improve patients' mental health ginning will, in the long run, be crucial to (though they do not make such feelings Doubts are growing about therapy for the effective recycling of electric vehi worse). Moreover, existing studies suggest gender-dysphoric children cles—and especially their batteries. Shred that, without intervention, most children ding lots of different types of ewaste at the ender medicine was once an obscure with gender dysphoria end up reconciled same time inevitably results in contami Gspecialty. Patients with gender dyspho to their natal sex as adults. nation. Separating components before do ria were typically middleaged men wish There is also evidence that the drugs ing so would yield greater levels of purity. ing to live as women. Things are different may cause serious harm. One example is Some components, such as cathodes, now. First, there are many more patients. described by Michael Biggs of Oxford Uni might even be reused in their entirety. Referrals to a specialist clinic attached to versity in a letter published on April 26th the Free University of Amsterdam rose 20 in the Journal of Paediatric Endocrinology Deconstructing reality fold between 1980 and 2015. The Gender and Metabolism. Bonemineral density Easing disassembly is also an important Identity Development Service (gids), Eng (bmd) usually rises sharply in puberty. But goal for Volkswagen’s domestic rival, bmw. land and Wales's only paediatric gender of 24 gids patients who had been pre According to Frank Weber, a member of the clinic, sees 30 times more people than a de scribed puberty blockers, a third had bmd firm’s board, bmw will, from the start, be cade ago. The patients have changed, too. scores in the bottom 2% of their age groups designing its electric vehicles with mass Most are now female and in their teens. (more that two standard deviations below recycling in mind. This will include the the mean, see chart). handling of the solidstate lithiumion One patient, who began puberty block batteries which bmwhopes to make in vol Poor treatment ers aged 12, suffered four fractures by the ume by the end of the decade. Solidstate Spine, bone-mineral apparent density age of 16. That medical history, says Dr After 24 months of puberty suppression Number of batteries, which are able to store more children Biggs, would usually be enough to diag charge than those using existing gelbased 10 nose osteoporosis—normally a disease of electrolytes, could double the range of evs. Normal the elderly. Animal studies suggest puber They will also be safer to use for, unlike distribution 8 ty blockers may cause cognitive damage, those containing gel electrolytes, they will in untreated too. Crosssex hormones have been linked children 6 not be inflammable. to heart disease, strokes and sterility. While gel electrolytes continue to per 4 The combination of rising prescrip sist, however, it would be best if they too tions and flimsy evidence leads some doc could be recycled. In the case of the most 2 tors to fear a medical scandal is brewing. common of them, lithium hexafluoro 0 Others think that the only scandal would phosphate (known as pf6), that does not be to change course. A bill before Canada’s 43210-1-2-3-4 yet happen. Instead, this valuable chemi parliament, for instance, would leave affir Standard deviations from the mean cal is destroyed during processing and has mation as the only legal treatment for gen Source: Journal of Paediatric Endocrinology and Metabolism to be resynthesised from any lithium reco der dysphoria. The argument continues. n

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Botany longneglected element. Boron, atomic number five on the per Charismatic iodic table, is chemically a “metalloid”— meaning that it inhabits the debatable megaflora marcher lands between the empires of the metals proper, on the table’s lefthand side, and the nonmetals, on its right. Com pounds of boron feature in washing pow Botanists prefer studying pretty plants ders and cleaning products (“borax”), anti to dull ones septics and water softeners, and also as ad ho was responsible for inventing the ditives in fibreglass, but such roles are Wterm “charismatic megafauna” is lost humdrum. Boron does, though, burn like in the mists of time. The words do, though, billyo, generating a bright, green flame describe a real phenomenon, which is that and releasing about 40% more energy per big, showy animals tend to get a dispropor kilogram than conventional aviation fuel. tionate amount of attention from biolo In light of this, and of reports by spies of gists. Whether this reflects the prejudices green flames emerging from the exhaust of of the researchers themselves or is a conse an experimental Soviet rocket, America’s quence of a wider public interest in pre air force experimented in the 1950s with serving showy species, and of the concom Which would you rather work on? stuff nicknamed zip fuel, which was laced itant funding which accompanies that in with compounds of boron called boranes. terest, is not clear. Probably a bit of both. pictured), were heavily overrepresented. The project was abandoned in 1959, for two But what is true for the animal kingdom is, Whiteflowered plants did well, too. And good reasons. First, boranes proved ex it now turns out, true for the plant one as so did those which display their flowers tremely dangerous. They are toxic, mean well, as Martino Adamo of the University prominently, on long stems. ing those working with them need special of Turin, in Italy, describes this week in The other cause of greaterthanexpect gas masks. They also ignite spontaneously Nature Plants. ed scientific attention was a plant’s range in air, and may even explode. At least eight While conducting research in the size—the larger the better. That, presum people involved in the zipfuel project died mountains near Turin on Tephroseris balbi- ably, is a consequence of ease of study. But in boranerelated accidents. siana, a scruffy yellowflowered ragwort in the matter of charisma it seems that, like The second reason for zip fuel’s aban (pictured), Dr Adamo noticed it was easier the insects which flowers have evolved to donment was that the stuff itself proved to track down information about other, attract, botanists are lured by the showy, disappointing. In jets, instead of burning more beautiful, species found in the re and are therefore just as susceptible as completely, it produced a sticky residue gion than it was to discover things about their zoological colleagues to aesthetic which clung to turbine blades. Boron addi the object of his own research. That led bias in their choice of topic. n tives in rocket fuels also failed. The com him to wonder if the wellattested prefer bustion process involved proved unex ences of zoologists for the showy also ex pectedly complex, and the promised addi tends to botanists. To find out, he recruited Hypersonic flight tional energy was not forthcoming. a team of fellow researchers to help him The navy’s notice suggests, though, that analyse the literature on the matter. The rockets’ boron is back. The boffins behind it think To keep the project within bounds, the that new physical forms of the element, team restricted their attention to Dr Ada green glare known as allotropes, may offer ways mo’s original area of investigation, the around both the partialcombustion and southwestern Alps. Surveys suggest this is the toxicity problems. Allotropes of an ele inhabited by 113 endemic plants—a num ment can have very different properties A new fuel for jets and missiles ber large enough to be statistically mean from each other (graphite and diamond, is on the cards ingful but small enough to be tractable. for example, are both allotropes of carbon). First, the team compiled, for each of he latest buzzword in the world’s The organisers suggest a novel boron allo these species, a set of data that recorded Taerospace skunk works is “hypersonic”. trope, perhaps interlaced at the molecular three types of trait: ecological (preferred Speed and surprise have always been es level with a suitable oxidising agent, might elevation, soil acidity, light levels and sential to warfare, and what better way to yield a completely combustible, nontoxic moisture); rarity (geographicalrange size, wrongfoot an enemy than by arriving un fuel, and they are asking the country’s and also conservation status as described expectedly on his doorstep in the form of chemists to bring them one. by the International Union for Conserva an aircraft or missile travelling at Mach 5? Whether such allotropes exist remains tion of Nature); and aesthetic (flower col In that context, a notice posted at the to be seen. But America is not the only our, stem height and flower diameter). beginning of the year by America’s navy, place working on the idea of boronpo They then searched a database called the soliciting proposals for a new research wered jets and rockets. China is interested, Web of Science for papers published since project, is intriguing. The project’s objec too. A project involving gelled fuel that has 1975 that included the names of any of the tive is to “determine a form of boron or a particles of boron suspended in it is under species in question. boronbased chemical pathway that leads way at the National University of Defence They found 280 such papers, statistical to implementation of boron in energetic Technology, in Changsha. The objective is analysis of which revealed that certain compounds, especially fuels (solid and liq to develop fuel for ramjets, a type of engine plants were not only more studied than uid)”. The navy’s engineers, it seems, are that operates efficiently only above Mach 3. others, but also shared particular traits trying to revive an idea that might make So far, the researchers involved have man more often than would be expected by hypersonic flight easier to achieve, but aged to produce one that is 40% boron and chance. Foremost of these was flower col which was tested and then abandoned yet burns more or less completely. One way our. Plants with blue flowers, such as Gen- more than half a century ago. They hope to or another, then, it looks plausible that bo tiana ligustica, the trumpet gentian (also spice up aviation and rocket fuel with a ronbased fuels may get the green light. n

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Politics and fiction creating the world you want to see.” It is a lesson Ms Abrams learned early from her The character arc of justice parents, growing up among the “genteel poor” of Mississippi. “They wanted us to imagine that justice was real,” she remem bers. However deficient it seemed in prac tice, “that never stopped them from doing the work to make it so.” Her mother was a college librarian, her For Stacey Abrams, the business of politics and the craft of storytelling overlap father a dockworker, before both became tacey abrams wrote her first novel at fears and overcome dastardly villains, with Methodist ministers. Ms Abrams and her S14. It was a soulsearching tale called the requisite heaving bosoms—or, in this five siblings were immersed in books and “My Diary of Angst”. “I was very tortured as first thriller, and the first of Ms Abrams’s their father’s bedtime stories. Family life a teenager,” she recalls with a laugh. There novels published under her real name, a was infused with volunteering and a sense is nothing tortured about Ms Abrams now. single modest kiss. She started writing fic of service: “I tease them that you had these At 47, she is a champion of voting rights tion because she wanted to see characters two black people and their six black chil and a household name across America. She who looked like her achieving remarkable dren trying to fix Mississippi.” Nowadays is widely credited with swinging the state things, she says in an interview from her her siblings serve as first readers and ad of Georgia to the Democrats, helping to home in Atlanta. Making black lives visi visers on her fiction. One is a districtcourt send Joe Biden to the White House and two ble—making them count, in every sense— judge, another an anthropologist, a third a Democratic newcomers—one black, one is the overarching plotline of both her lit biologist; she drew on each for “While Jewish—to the Senate. Even among her ad erary and political endeavours. Justice Sleeps”. mirers, few may have realised that, in her “The more you see of possibility, the Writing and publishing fiction takes spare time, she was still writing novels. more you internalise that it could be true grit. False starts and dead ends are routine. The secret is out with the publication of for you,” she explains. Imagining alterna Ms Abrams learned that early, too. She “While Justice Sleeps”, a political thriller tive realities is, she says, as much a part of wanted her first book to be an espionage about a Supreme Court justice in a coma public as literary life: “Politics is about tale, but was told no one would publish an and his mixedrace clerk, Avery Keene, unknown female writer. She tossed in a hot who must save both him and the world. It love affair, and was off. Her romances have → Also in this section follows eight romance novels written un sold over 100,000 copies; the first three der the penname Selena Montgomery, 73 Murder and martyrdom will soon be rereleased. She applied the which Ms Abrams began at Yale Law School lesson to her political career: “You may 74 Opioids in America and continued in the early years of her ca want to do something one way, but it may reer as a lawyer and legislator in Atlanta. 75 Napoleon’s art theft not work out the way you planned—so you All these star young, brilliant African just have to find a different way.” 75 Heist fiction American women, forced to confront their As an 18yearold freshman at Spelman

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College, Ms Abrams made a spreadsheet influence behaviour if you dismiss the hint (or challenge) seem to cast long shad plan for her life. She aimed to be a bestsell core ideology that people hold”; and you ows on the walls; monks chant dolefully in ing spy novelist by 24 and mayor of Atlanta cannot understand that “unless you inhab Latin; a bell tolls. And the blood of the by 35. She was elected to Georgia’s House of it” their point of view. king’s erstwhile friend and lord chancellor Representatives in 2006, leading the mi At this fraught time, with Americans splatters the wall like poppy petals. nority Democratic caucus from 2011 to 2017. locked into two opposing narratives about As the many eyewitness accounts at Then she decided to run for governor, be last year’s elections, do the tools of fiction test, the reality was far ghastlier—heavy coming America’s first black and female offer hope? Ms Abrams doubts that today’s medieval armour clanging against the cold gubernatorial candidate from a major par chasm can be completely bridged. But she flagstones of Canterbury Cathedral as the ty. But even the most carefully plotted lives believes in the power of stories, told one crowd shrank back, the shouts of a cor have unexpected twists. In 2018 she lost a toone across the divide. “Our obligation”, nered man, a swordswipe that sliced off tight race marred by credible accusations she says, “is to get as close as we can, as of the top of Becket’s head as if it were a boiled that her opponent suppressed tens of ten as we can.” n egg. Later, when the monks finally un thousands of mostly minority votes. dressed the corpse, beneath his fine vest It was then, Ms Abrams says, “that my ments he was found to have worn a hair story really started”. Rather than continu Thomas Becket at the British Museum shirt crawling with vermin. After spending ing to seek office, she focused on the sys six years in exile in France Becket had re temic problem of access to voting, found Murder in the turned to England, not just to speak truth ing two nonprofit groups and becoming a to power and defend the church’s privi national political star. Faced with another cathedral leges against the monarchy’s encroach obstacle, she swerved round it. ments, but to offer his life up to God. Her novels are stuffed with both action “It’s no overstatement to say that Beck and arcane expertise, diving into special An infamous medieval assassination et’s murder was the crime of the century, ised subjects from bioethics to cognitive echoes down the centuries and one of the most notorious events of science to competitive poker. In “While the entire medieval period,” says Naomi Justice Sleeps” Avery must unravel an in t could have been a scene from “The Speakman, one of the curators. Recognis ternational conspiracy involving a corrupt ISopranos”, only the irascible capo was ing his martyrdom, onlookers dipped their president, genetic warfare, an obscure dis King Henry II of England. The irksome up cloaks in the blood. News of his death ease and an equally abstruse chess strat start who had to be neutralised was Thom quickly reached the king—and the pope. egy. The byzantine plot is sometimes hard as Becket, Archbishop of Canterbury. “Will Becket had been “a real mover and shaker to follow; a voracious consumer of culture, no one rid me of this troublesome priest?” across Europe”, says Ms Speakman, and his from “Star Trek” to classic literature, Ms Henry snapped in 1170, or words to that ef bones were carried across the continent in Abrams throws everything into the mix. fect. His oblique command was to become jewelled reliquaries, examples of which She fits her writing into her schedule a proverbial case of gangsterism dressed in are on display in the show. It brings home where she can, finishing the book last year plausible deniability. how enmeshed medieval England was in the heat of the election drama. The shocking murder that resulted is at with the European mainland. Like Becket, the heart of a new exhibition at the British Henry had French ancestry; he ruled more The lives of others Museum, its first to open since the pan French territory than the French king did. Storytelling skills inform everything she demic struck last year. A replica altar occu Eagerly repeated stories of people being does, she says. The challenge may be stop pies an otherwise empty space. Menacing cured after drinking “Thomas’s water”, an ping a shadowy network wrecking a com music accompanies an audiovisual reen essence of blood so diluted it was hardly munity (as in some of her previous books); actment. Four knights who take up Henry’s pink, led quickly to calls for Becket’s cano or, in real life, “how do you make sure that we get climate action or criminaljustice reform?” Either way, “the architecture is al ways the same”. Every problem can be analysed using the tripartite structure of a fictional protagonist’s journey: what a character (or citizen) wants, why they want it, and how they will get there. Most impor tant, she reckons, is helping people see themselves as active agents in their own narratives. “I try to tell a story of where we are and where we can go.” Her most helpful writerly tool may be a knack for putting herself in someone else’s shoes, and encouraging others to do the same. In the statehouse she presented her self as a “pragmatic progressive” who could work with opponents. She describes a friendship with one that developed as they swapped life stories early in the morning in an empty chamber. That helped her convince the ardently prolife Republican to vote against an abortion bill he was expected to support. “I used my storytelling, but also my listening to the stories of others,” she says. “You cannot A man without fear

012 74 Books & arts The Economist May 15th 2021

nisation and the birth of a cult. Three years after his murder, he was made a saint. For Henry, amid all that, there was no forgive ness—however much he insisted that he had not intended Becket’s death. A 12th century baptismal font, still in use in a small church in southern Sweden, shows Becket kneeling in prayer as the knights fall upon him. A crowned man encourag ing the violence is labelled REX.HRICVS. If the king’s offhand thuggery became an archetype, so did his belated fear: fear of the man who will not be cowed. Three and a half centuries after Becket’s demise, Hen ry VIII was so wary of his cult’s power that he had it suppressed by Thomas Crom well—like Becket, a commoner elevated by a monarch’s caprice, then destroyed by it. In Martin Luther King, Archbishop Óscar Romero (killed as he celebrated mass in Memento mori San Salvador in 1980) and perhaps, today, Alexei Navalny, Becket’s steadfastness in after aggressively marketing the sedatives manufacturers soon followed Purdue’s the face of death found modern avatars too. Librium and Valium to doctors, without a lead. When OxyContin was reformulated That dual legacy makes the story recount serious study of the addiction risks. A fas in 2010 to make it more difficult to abuse, ed in this show enduringly gripping. n cination with Chinese artefacts led him to many Americans who were already addict ...... bequeath huge sums to prestigious muse ed switched to heroin and, eventually, fen ums. For decades the Sackler name would tanyl. In 2019 a team of economists rigor “Thomas Becket: Murder and the Making of a Saint” is at the British Museum from May 20th primarily be associated with that largesse. ously evaluating OxyContin’s impact con until August 22nd Arthur died in 1987, almost a decade be cluded that its introduction and marketing fore Purdue, which the brothers had ac “explain a substantial share of overdose quired in 1952, began selling OxyContin. By deaths” over 20 years. Opioids in America the time that happened, his branch of the Purdue is now the subject of many law family no longer held a stake—facts that its suits brought by state and city govern Bitter pills members hope will exonerate them from ments. Sifting through the reams of the taint of the “OxySacklers”. But after a evidence unearthed by court proceedings, gripping if lengthy account of the patri Mr Keefe shows how callous some of the arch’s career in the first third of his book, remaining Sacklers have been over the de Mr Keefe’s view is less forgiving. “So many struction wrought around them—blaming of the antecedents of the saga of OxyContin the problem on immoral addicts rather could be found in the life of Arthur Sack than the drug, and regarding themselves as Empire of Pain. By Patrick Radden Keefe. ler,” he concludes. victims of a media witchhunt. Shiftless Doubleday; 560 pages; $32.50. Picador; £20 For the other two brothers and their de thirdgeneration types are rendered with scendants, Purdue yielded money beyond evident loathing, skilfully skewered by t 50,000 overdose deaths a year and even Arthur’s imaginings. “The prescrip their own words in court or by Mr Keefe’s Arising, America’s opioid crisis has nev tion blizzard will be so deep, dense and (anonymous) sources. One aspiring fash er been worse. What began in the late 1990s white,” Richard Sackler, son of Raymond, ionista wishes an obstreperous journalist as an epidemic of prescription painpill promised at the launch party for OxyCon would focus less on her last name and abuse morphed into a worse one of illicit tin. His words proved all too prophetic. more on the hoodies she designs. heroin and, later, fentanyl. Prosecutors The plan for massmarket opioids was The company pleaded guilty to assorted and the public have zeroed in on Purdue abetted by misleading advertising, which federal charges over its handling of Oxy Pharma, which introduced the blockbuster claimed that less than 1% of patients would Contin in November 2020. No Sacklers, drug OxyContin in 1996. Of the colossal become addicted, and a vast salesforce in and no executives, were obliged to ac revenues it generated, some $13bn was centivised by lucrative commissions. knowledge guilt personally, however, “as if paid to the company’s previously lowpro The company peddled theories of the corporation had acted autonomously, file owners, members of the Sackler family, “pseudoaddiction” (for which the cure like a driverless car”, Mr Keefe observes. who have recently sunk from honoured was said to be more opioids) and of “opio Still, the Sackler name is mud. Museums arts patrons to society pariahs. phobia” among sceptical doctors. The and universities refuse their money. The Patrick Radden Keefe’s excellent new guardrails against harm buckled in the face Sackler wing of the Metropolitan Museum book tells the story of this nowinfamous of Purdue’s wealth and the lawyers and of Art, which houses an ancient Egyptian clan. He traces the empire of the title to lobbyists it could buy. Regulators endorsed temple, was targeted by protesters chant Brooklyn in 1920, and a trio of brothers ludicrous claims about the drug’s safety. A ing “Temple of greed! Temple of Oxy!” Pur born to Jewish immigrants: Arthur (the el serious case brought by federal prosecu due is bankrupt (and may not pay the re dest and, in Mr Keefe’s telling, the “patri tors in Virginia in the early 2000s was wa tirement benefits of its salespeople). arch”), Raymond and Mortimer. Arthur tered down by the Department of Justice. Yet ongoing legal efforts to claw back Sackler’s business acumen and question Thousands of doctors were given allex the fortunes extracted by the owners ap able ethical judgment proved lucrative. He pensespaid trips. Altogether, OxyContin pear unlikely to succeed. The implosion of in effect invented the field of medical ad took in $35bn in sales. the empire of pain, it seems, comes with a vertising, creating the first family fortune The results were brutal. Other drug golden parachute. n

012 The Economist May 15th 2021 Books & arts 75

Conflict and culture surrendered. According to a treaty drawn Heist fiction up by Napoleon, the city promised to hand Booty haul over 3m francs, five warships, 500 manu Acid tests scripts and 20 paintings. A French art com mittee selected the works. Even amid the somewhat excessive de tail of battle campaigns and negotiations, the book keeps sight of the rich personal ities linked by the painting. Veronese was a Plunder. By Cynthia Saltzman. Farrar, “firstdraft”, speedy painter, rarely making How to Kidnap the Rich. By Rahul Raina. Straus and Giroux; 336 pages; $30. Published mistakes or alterations (Titian, by contrast, Harper Perennial; 336 pages; $17.00. Little, in Britain as “Napoleon’s Plunder and the was a ponderous reviser). After meeting Brown; £14.99 Theft of Veronese’s Feast”; Thames & Napoleon in 1796, a Venetian governor de Hudson; £25 scribed him as “a vain man who believes he he first kidnapping wasn’t my is superhuman”. An envoy saw him as “Tfault,” pleads the narrator, Ramesh n september 1797 Napoleon Bonaparte’s “anything but goodlooking”. Napoleon’s Kumar, at the start of this debut novel. “The Itroops stripped a huge 16thcentury own claims to intellectual prowess—“a others—those were definitely me.” He re painting by Paolo Veronese from the wall singular thing about me is my memory”— counts waking up on a floor next to the co of a Venetian monastery. Rolled around a are put in perspective; he ranked 42nd out matose, vomitstreaked teenager in his wooden cylinder and packed into a crate of 58 in his final military exam. Jacques care, Rudi Saxena. A man wielding a cosh smothered with tar, “The Wedding Feast at Louis David’s portrait of 1805 obsequiously bursts in and takes the pair away. Ramesh Cana” was shipped to the Louvre. Plunder shows him charging across the Alps on a loses a finger, Rudi is ransomed for $6m, ing art was designed “to rattle foes” and virile white horse. Ms Saltzman says he and the abduction inspires them to turn “leave a wound close to their hearts”,writes rode a donkey on the steepest parts. from “kidnappees” into kidnappers. Cynthia Saltzman. Her perceptive book She is very good on Napoleon’s justifi Having snared readers with this gritty traces Napoleon’s systematic gathering of cations for theft. The French, he said, were opening, Rahul Raina, a KashmiriBritish artistic treasures as he conquered Italy, fo doing Europe a favour by rescuing these writer, traces the events that led to his cusing on Veronese’s masterpiece. Italian masterpieces from neglect and ob characters’ desperate circumstances. Ra “The Wedding Feast” depicts Jesus turn scurity. Previously only a few could see mesh is an “educational consultant” who ing water into wine at a party in Galilee. them; at the Louvre they would be on sits tests on behalf of the offspring of New Veronese sets his version in aristocratic display to everyone. “Spoils of war” be Delhi’s elite. Rudi’s parents request the Venice. Marble columns and balustrades came “a public good”, Ms Saltzman writes. premium package for their dimwitted, frame a boisterous cast of 130 lifesize fig Meanwhile Napoleon and his wife, José spoiltbrat son, covering exams that are ures in sumptuous brocade and pearls. Ser phine de Beauharnais, dipped into the “the gateway to the best universities, the vants swarm around the guests; onlookers hoard to decorate their properties. brightest futures, the whitest lives”. Ra throw flowers into the air. At the centre of After his defeat in 1815, France returned mesh comes top in the whole country. the dining table sits Jesus, his head encir only half the artworks stolen from Italy. Overnight, Rudi is transformed into a cled by a halo of golden light. For this vast “The Wedding Feast” was not among them, national celebrity with his own game work—a “wonder of the world”,as Giacomo the Louvre’s boss claiming it would not show; Ramesh assumes the role of his Barri put it in 1671—Veronese was paid a survive the journey. Ms Saltzman ends manager and extorts a tenpercent cut. The third more than Tintoretto was for his with the painting’s life thereafter, includ affection of Priya, an assistant producer on “Crucifixion” a couple of years later. ing its influence on Vincent van Gogh and the show, is an added bonus. But gradually Napoleon engineered his quarrel with John Ruskin, and its concealment from the his luck changes. Rudi spirals out of con Venice. When a French ship tried to sail Nazis in assorted chateaux. Recently it has trol on drink and drugs, an investigator unauthorised into the lagoon in April 1797 hung opposite, and in the shadow of, the trawls through his poor school results and the Venetians opened fire. Several soldiers “Mona Lisa”—a poignant end to an absorb smells a rat—and a slighted rival and a were killed; war was declared. Venice soon ing story of conflict and culture. n vengeful enemy swoop in to settle scores. Like Mohsin Hamid’s “How to Get Filthy Rich in Rising Asia”, “How to Kidnap the Rich” purports to be a howto manual but is in fact a rollicking urban adventure and a biting satire of inequality. Mr Raina adds a fastpaced crime caper and a stream of caustic humour. “I know a lie the size of ‘the British are only setting up a trading post’ when I see one,” remarks Ramesh. A man turning pale is “whiter than a Western panel on racial diversity”; a woman is “busier than our civil servants are in Janu ary editing government websites to re move any mention of last year’s targets”. Some of the jokes fall flat. Ramesh’s moving backstory, and a farcical sequence in which he and his partner in crime dis guise themselves in saris, belong in differ ent books. Despite its overexuberance, though, this is a highly entertaining first Ghosts at the feast novel from a writer to watch. n

012 76 Economic & ﬁnancial indicators The Economist May 15th 2021

Economic data

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units % change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change latest quarter* 2021† latest 2021† % % of GDP, 2021† % of GDP, 2021† latest,% year ago, bp May 12th on year ago United States 0.4 Q1 6.4 5.5 4.2 Apr 2.1 6.1 Apr -2.7 -13.5 1.7 100 - China 18.3 Q1 2.4 8.5 0.9 Apr 1.6 5.3 Mar‡§ 2.7 -4.7 2.9 §§ 94.0 6.44 10.1 Japan -1.4 Q4 11.7 2.2 -0.1 Mar 0.1 2.6 Mar 3.0 -9.4 nil -8.0 109 -2.0 Britain -6.1 Q1 -5.9 5.3 0.7 Mar 1.5 4.9 Jan†† -4.2 -12.1 0.9 54.0 0.71 14.1 Canada -3.2 Q4 9.6 4.8 2.2 Mar 2.1 8.1 Apr -2.0 -9.2 1.5 95.0 1.21 15.7 Euro area -1.8 Q1 -2.5 4.2 1.6 Apr 1.3 8.1 Mar 3.1 -6.6 -0.1 39.0 0.83 10.8 Austria -5.7 Q4 -5.6 3.4 1.9 Apr 1.7 5.6 Mar 3.4 -7.1 0.1 22.0 0.83 10.8 Belgium -1.0 Q1 2.4 3.8 1.2 Apr 1.0 5.8 Mar nil -7.0 0.1 7.0 0.83 10.8 France 1.5 Q1 1.8 5.4 1.2 Apr 1.3 7.9 Mar -1.8 -9.0 0.2 20.0 0.83 10.8 Germany -3.0 Q1 -6.6 3.5 2.0 Apr 1.9 4.5 Mar 6.8 -3.6 -0.1 39.0 0.83 10.8 Greece -5.9 Q4 11.1 2.5 -0.3 Apr nil 15.8 Dec -5.8 -5.9 1.0 -112 0.83 1 Italy -1.4 Q1 -1.6 3.4 1.1 Apr 0.7 10.1 Mar 3.0 -10.5 1.0 -93.0 0.83 1 Netherlands -2.8 Q4 -0.5 3.1 1.9 Apr 1.9 3.5 Mar 9.0 -4.2 -0.2 13.0 0.83 1 Spain -4.3 Q1 -2.1 5.8 2.2 Apr 0.8 15.3 Mar 1.5 -8.7 0.5 -32.0 0.83 1 Czech Republic -4.8 Q4 -1.2 3.8 3.1 Apr 2.2 3.4 Mar‡ 1.7 -5.5 1.8 80.0 21.2 1 Denmark -1.4 Q4 2.7 3.0 1.5 Apr 0.7 4.5 Mar 7.4 -1.3 0.2 45.0 6.16 1 Norway -1.4 Q1 -2.5 2.6 3.0 Apr 1.6 5.0 Nov‡‡ 2.4 -1.7 1.5 106 8.32 22.0 Poland -2.7 Q4 -2.0 4.1 4.3 Apr 3.2 6.4 Mar§ 2.0 -6.9 1.8 40.0 3.76 11.4 Russia -1.8 Q4 na 2.7 5.5 Apr 4.6 5.4 Mar§ 4.0 -1.7 7.3 125 74.4 -1.8 Sweden -0.8 Q1 4.5 2.4 2.2 Apr 1.4 10.0 Mar§ 4.0 -2.3 0.4 48.0 8.41 15.6 Switzerland -1.6 Q4 1.3 2.6 0.3 Apr 0.3 3.1 Apr 7.0 -2.3 -0.1 33.0 0.91 6 Turkey 5.9 Q4 na 3.9 17.1 Apr 11.9 13.1 Mar§ -2.3 -3.1 17.4 469 8.44 2 Australia -1.1 Q4 13.1 3.4 1.1 Q1 2.1 5.6 Mar 1.9 -7.3 1.6 66.0 1.29 6 Hong Kong -3.0 Q4 0.7 3.5 0.5 Mar 1.8 6.8 Mar‡‡ 3.7 -3.8 1.2 57.0 7.77 3 India 0.4 Q4 42.7 10.4 4.3 Apr 5.2 8.0 Apr -1.0 -7.0 6.0 -15.0 73.4 9 Indonesia -0.7 Q1 na 3.3 1.4 Apr 2.8 6.3 Q1§ -0.3 -6.4 6.4 -151 14,198 0 Malaysia -0.5 Q1 na 4.4 1.7 Mar 2.4 4.7 Mar§ 4.6 -6.0 3.1 29.0 4.13 4.8 Pakistan 0.5 2020** na 1.7 11.1 Apr 8.8 5.8 2018 -1.9 -6.9 9.5 ††† 120 152 5.3 Philippines -4.2 Q1 1.2 6.6 4.5 Apr 4.0 8.7 Q1§ -1.0 -7.4 4.0 62.0 47.8 5.2 Singapore 0.2 Q1 8.3 4.8 1.3 Mar 1.8 2.9 Q1 16.7 -4.1 1.6 68.0 1.33 6.8 South Korea 1.7 Q1 6.6 3.2 2.3 Apr 1.5 4.0 Apr§ 4.3 -4.7 2.1 71.0 1,125 8.9 Taiwan 8.2 Q1 12.9 4.5 2.1 Apr 1.6 3.7 Mar 15.1 -0.5 0.4 -8.0 27.9 7.0 Thailand -4.2 Q4 5.4 3.3 3.4 Apr 0.8 1.5 Dec§ 4.0 -6.0 1.7 67.0 31.2 2.9 Argentina -4.3 Q4 19.4 6.2 42.6 Mar‡ 45.9 11.0 Q4§ 2.4 -6.0 na na 94.0 -28.2 Brazil -1.1 Q4 13.3 3.2 6.8 Apr 6.7 14.4 Feb§‡‡ 0.5 -7.9 9.3 154 5.24 10.3 Chile nil Q4 30.1 6.3 3.3 Apr 3.5 10.4 Mar§‡‡ -0.3 -7.2 3.5 86.0 708 16.0 Colombia -3.5 Q4 26.5 4.8 1.9 Apr 2.6 14.2 Mar§ -3.3 -8.9 7.4 136 3,732 4.0 Mexico -3.8 Q1 1.6 5.7 6.1 Apr 4.5 4.4 Mar 2.0 -2.8 7.0 100 20.1 19.9 Peru -1.7 Q4 37.9 8.0 2.4 Apr 3.2 13.9 Mar§ -0.7 -7.3 4.9 96.0 3.74 -8.6 Egypt 2.0 Q4 na 2.9 4.1 Apr 5.7 7.2 Q4§ -3.3 -8.1 na na 15.7 0.5 Israel -1.5 Q4 6.5 4.0 0.2 Mar 1.3 5.4 Mar 3.4 -8.8 1.3 50.0 3.29 6.7 Saudi Arabia -4.1 2020 na 2.9 5.0 Mar 2.4 7.4 Q4 2.8 -3.2 na na 3.75 0.3 South Africa -4.1 Q4 6.2 2.0 3.2 Mar 3.7 32.5 Q4§ -1.6 -9.2 9.1 -25.0 14.0 29.9 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds.

Markets Commodities % change on: % change on: The Economist commodity-price index Index one Dec 31st index one Dec 31st % change on In local currency May 12th week 2020 May 12th week 2020 2015=100 May 4th May 11th* month year United States S&P 500 4,063.0 -2.5 8.2 Pakistan KSE 45,174.7 0.5 3.2 Dollar Index United States NAScomp 13,031.7 -4.1 1.1 Singapore STI 3,123.3 -1.0 9.8 All Items 184.9 200.9 19.7 90.7 China Shanghai Comp 3,462.8 0.5 -0.3 South Korea KOSPI 3,161.7 0.5 10.0 Food 141.2 145.5 14.3 54.7 China Shenzhen Comp 2,271.8 -1.2 -2.5 Taiwan TWI 15,902.4 -5.6 7.9 Industrials Japan Nikkei 225 28,147.5 -2.3 2.6 Thailand SET 1,571.9 1.5 8.5 All 225.6 252.6 22.9 118.1 Japan Topix 1,878.0 -1.1 4.1 Argentina MERV 51,020.2 3.8 -0.4 Non-food agriculturals 179.6 179.1 12.8 109.4 Britain FTSE 100 7,004.6 -0.5 8.4 Brazil BVSP 119,710.0 0.1 0.6 Metals 239.3 274.5 25.1 119.8 Canada Mexico IPC 48,748.4 0.7 10.6 S&P TSX 19,107.8 -1.1 9.6 Sterling Index Euro area Egypt EGX 30 10,767.8 2.4 -0.7 EURO STOXX 50 3,947.4 -1.4 11.1 All items 203.3 216.8 16.2 66.3 France CAC 40 6,279.4 -0.9 13.1 Israel TA-125 1,697.2 -1.8 8.2 Germany DAX* 15,150.2 -0.1 10.4 Saudi Arabia Tadawul 10,322.7 0.7 18.8 Euro Index Italy FTSE/MIB 24,452.9 nil 10.0 South Africa JSE AS 67,424.3 0.1 13.5 All items 170.4 183.2 17.4 70.6 Netherlands AEX 694.8 -2.7 11.2 World, dev'd MSCI 2,876.8 -1.9 6.9 Gold Spain IBEX 35 9,007.7 0.4 11.6 Emerging markets MSCI 1,315.2 -1.3 1.9 $ per oz 1,777.6 1,829.7 5.0 7.1 Poland WIG 62,214.1 2.1 9.1 Brent Russia RTS, $ terms 1,548.0 0.8 11.6 $ per barrel 69.0 68.7 7.6 128.3 Switzerland SMI 11,033.9 -0.7 3.1 US corporate bonds, spread over Treasuries Sources: Bloomberg; CME Group; Cotlook; Reﬁnitiv Datastream; Turkey BIST 1,441.3 1.5 -2.4 Dec 31st Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Australia All Ord. 7,281.1 -0.9 6.3 Basis points latest 2020 Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Hong Kong Hang Seng 28,231.0 -0.7 3.7 Investment grade 120 136 India BSE 48,690.8 nil 2.0 High-yield 358 429 Indonesia IDX 5,938.4 -0.6 -0.7 Sources: Reﬁnitiv Datastream; Standard & Poor's Global Fixed Income For more countries and additional data, visit Malaysia KLSE 1,582.5 0.4 -2.7 Research. *Total return index. Economist.com/indicators

012 Graphic detail Fertility The Economist May 15th 2021 77 Parks and → Fertility fell far below expectations nine months after covid-1’s first wave Births per 1,000 people, difference from 2009-19 average* for given month procreation % points, average of 21 countries with available data

January of year Monthly, 2020-21 5.0 5.0 A curiously strong predictor of changes Global financial Pandemic First wave Nine months in birth rates during the pandemic crisis 2.5 after first wave 2.5 s lockdowns forced couples to “Net 0 0 Aflix and chill” every night, it seemed plausible that covid19 might lead to a baby -2.5 -2.5 boom. Instead, it has caused a bust. The 21 countries that have published data for Jan -5.0 -5.0 uary—the first full month in which babies conceived during the first wave were due— -7.5 -7.5 report, on average, 11% less births per 1,000 -10.0 -10.0 people than in January 2020, and 12% less than you would expect based on each -12.5 -12.5 country’s fertility trend in 200919. 2009111315171921 JFMAMJJASONDJ Data are not yet available for poor coun tries, where most births occur. And rich world fertility rates may rise soon, as preg → Visits to parks predicted changes in birth rates remarkably well nancies that began in the mid2020 lull in covid19 cases come to term. But it would Impact of one-standard-deviation increase in variable on year-on-year take only a 7% drop in global fertility for a change in births per 1,000 people in January 2021, 21 countries year—just over half the decline in the data from January—for the pandemic to have Change in park visits resulted in 10m fewer births. Such a reduc from usual†, April 2020 tion would equal our estimate of excess Statistically significant deaths caused by covid19 (see Briefing). Average annual change After accounting for all There are lots of ways the pandemic in fertility, 2009-19 other variables’ impact could have cut fertility. Birth rates tend to Stringency of lockdown 9% confidence track economic growth. Lockdowns have restrictions, April 2020 made dating difficult. And couples may have delayed having children to avoid hos Year-on-year change pitals or clinics that treat covid19 patients. in real GDP,Q2 2020 Not statistically significant Disentangling these factors’ impact is After accounting for all other tricky. Some places, such as Chile and Isra Estimated covid-19 variables’ impact el, saw stark declines in fertility; others, infection rate in April 2020‡ like Switzerland and Finland, eked out -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 gains. In general, the worse a country’s co Births per ,000 people, year-on-year change in January 202 vid19 infection rate was, the more its birth rate fell. The same was true of lockdown stringency and of economic contraction. However, one measure tracked fertility Change in park visits in April 2020 from usual† v change in unusually well: the change in attendance births per 1,000 people from January 2020-January 2021 at parks in JanuaryApril 2020, as reported 0.05 by Google. This link is hard to interpret. Rather than park traffic itself raising birth Population in 2020, m Switzerland Finland rates, something else must be influencing 0 00 20 5 South Korea both park visits and conceptions. Yet once Slovenia you account for footfall at parks, neither Netherlands infection rates nor gdp nor other mobility -0.05 data improve predictions significantly. Croatia Sweden Belgium One theory is that park visits reflect dat Russia Lithuania Hungary -0.10 ing, because parks were the main places Latvia people could go during lockdowns. How France Taiwan ever, only babies conceived within weeks Romania Spain Ukraine of a first date would appear in January data. Portugal Estonia -0.15 Another explanation is that park traffic Israel measures fear. In places where people were Chile too afraid even to go to parks, or where -0.20 parks were closed, couples may also have -80 -60 -40 -20 0 20 40 60 been likely to be too scared to have chil Change in park visits, % points dren. But more data are needed to identify *Adjusted to account for long-run pre-pandemic trend †Median by day of week from January 3rd-February 6th 2020 the means by which covid19 has shrunk ‡Using statistical model based on serosurveys Sources: Federal Reserve Bank of St Louis; Google; humanfertility.org; future as well as present generations.n OECD; Our World in Data; Statista; Trading Economics; World Bank; national statistics; The Economist

012 78 Obituary T.S. Shanbhag The Economist May 15th 2021

His own little den was just inside the door, behind a desk stacked so high with books and invoices that only his head was visible. From there, with his quiet smile, he greeted the customers in English or Kannada and fetched what they could not find. Some liked to stand and read for hours, leaving without buying, but that was fine. Others rifled through the stacks, pulling them out of all order (for there was a system, in his mind at least), knowing that you could turn up older and cheaper editions under the newer ones, and special treasures, Borges or Fellini perhaps, from the lower righthand stack near the window. He placidly wiped and sorted after them. Children were parked in the shop while their parents went off somewhere, and that was fine too; there was a lit tle stool in a corner where they could sit, and a pile of abridged Penguin Classics. When his child visitors flowered into writers, poets and historians, he took a modest pride in that. His grownup customers were treated with the same care. His shop was intellectually serious: few novels, thrillers, or that best selling kind of thing, but instead a feast of new books in English on history, biography, science, economics and world literature (his own favourite author was Camus). He provided food for minds, as Koshy’s provided it for bodies. And every book was at a discount, the first at a bookshop in Bangalore, of 10% off every thing. If he saw an impoverished student sighing over a volume, then putting it back, he would let them borrow it instead. When orders were needed urgently, he would drive across the city to de liver them in person. No action gave him so much joy as putting a book that was wanted into someone’s hand. The bookseller of Bangalore He also knew what his regulars wanted before they knew them selves. He kept a psychological track of their purchases, not on any computer (since he disliked all that, filling out his invoices by hand or on a sturdy ancient typewriter), but in his brain, as good exercise. That brain already contained all the titles of a crowd of authors, as well as the whereabouts of any book in the shop; it also T. Sarvotham Shanbhag, proprietor of Premier Book Shop, contained the comics customers had bought, years ago, with their died of coronavirus on May 4th, aged 84 first pocket money, and their shifting interests since. Armed with n days when he was working, T.S. Shanbhag kept to the same this he would softly approach, in his leather slippers, and say to a Oroutine. He would drive in from the west of the city and park browser, “Why don’t you try....?” Customers often complained of near M. Chinnaswamy stadium by 8.30am. From there he would leaving with many more books than they had meant to buy; or walk to the centre, to Koshy’s restaurant on St Mark’s Road, where coming in for a book on cricket, and leaving with one on Marx. he had his morning coffee: the best in Bangalore, proper south In In return, the customers cared about him. They nagged him, dian, milky yet strong. It was hard to resist the breakfasts on offer, though kindly, to take credit cards, which he did with great reluc appam with vegetable stew, potato smileys and the rest, served by tance, and to expand his business when the restaurant closed next waiters who glided about with the deference of English butlers. door, though he had no ambitions that way. He saw himself as a But he preferred just to banter with his old friend Prem Koshy, who friendly local librarian, rather than a businessman. When a huge would greet him with a hearty “How are you, my dear Sir?” and lat increase in rents around Church Street threatened the shop, it er, repaying the favour, might well drop in to buy books. seemed that most of Bangalore helped him with donations. Those Premier Book Shop stood diagonally opposite, on Church kept him going for two years, but in 2009 he had to shut it down. Street, a modest place shaded by a honge tree. His place and Kosh He was perfectly sanguine about it. He had been at Premier for y’s were relics of the sleepy Bangalore of the past, before it became 38 years, and was getting old. His eyes, with all that reading, were tech city and the malls and multiplexes moved in. Increasingly not so good. Besides, change was part of life; there was no need to now the corner swarmed with traffic, hooting motorbikes and get emotional. He sold the books at 60% discount, and gave the swerving autorickshaws, but he dodged neatly between them. He rest to libraries all over the city. Even the nameboard was recy was limber from all his crouching and stretching to retrieve this or cled, and the shop became a fancy bar. His walks now took him to that book, daily acrobatics in the service of good reading. the other bookshops in the city, where he was just one more cus The shop was about 15 feet wide and 25 feet long, fine for his tomer browsing. purposes when he moved in in 1971. He had been working at his The passing of Premier was much mourned; but his own death uncle’s Strand Book Stall in Mumbai, the best job he could find as a seemed to affect the city more. At first sight, this seemed strange. village boy from near Kundapur, but for various reasons it was best On that day, 161 Bangaloreans died of the virus. He was probably after a while to start up on his own. This place had been a clothing among the most unassuming of them. But what had also died with store, but had been burned out; he paid 900 rupees to rent it, and him, many felt, was a rare part of old Bangalore, an unhurried gradually filled it with five lakh (500,000) books. They not only place far distant from the slick and booming version, together lined every wall but were piled in an eightstorey mountain in the with an oldfashioned style of quiet fullhearted service. In that middle. If you dug to the bottom of it, you would discover the read small corner of the city he had made a sanctuary, along with Prem ing habits of Bangaloreans three decades before. He had made the Koshy, whose coffee had kept him and the browsers going. Koshy’s mountain carefully, placing each volume in a slanting position, so was open as usual; the metal blinds came down only for lock that by an apparent miracle it did not fall down. Round it his cus downs or personal bereavements. But inside Mr Koshy sighed for tomers moved clockwise and sideways, as if in a temple of words. “the angel of my books”. n

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As the one-year anniversary of George Floyd’s Jon Fasman murder approaches, The Economist will discuss the impact of his death on national US digital editor conversations about race. Topics will include police reform, covid-19 disparities, and whether race-conscious or race-neutral policies are more Tamara Gilkes Borr likely to bring success. Subscribers are welcome US policy correspondent to ask questions during the live event.

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