The message of protests in Iran

Blue-state Republicans: no right left

Education lessons from Pakistan

The world’s worst airports JANUARY 6TH–12TH 2018 The next frontier When thoughts control machines

Contents The Economist January 6th 2018 3

5 The world this week 24 High-tax states Replanning 25 Voting laws Leaders Use it or lose it 7 Neurotechnology 26 Legalising pot The next frontier California inhales 8Peru The pardoner’s tale The Americas 8 Protests in Iran The tyrants of Tehran 27 Peru The presidential hostage 9 Education reform Protests in Iran Citizens Pupil power in Pakistan 28 Emeralds in Colombia Prospectors, barons demand, and deserve, a less 10 American politics and suits oppressive regime: leader, In praise of state-ism 29 Place names in Canada page 8. The country is in On the cover Rewriting the map turmoil, but the clerics and Brain-computer interfaces Letters their allies remain as may change what it means to entrenched as ever, page 30 11 On China, Ben Carson, be human: leader, page 7. Middle East and Africa “Howard’s End”, meat, Innovations in neuro- politics 30 Protests in Iran technology sound like the When frustration boils over stuff of science fiction. 31 Qat in Yemen Sorting the reality from the Briefing The drug starving a country hype. See Technology 13 Education in Pakistan Quarterly, after page 34 31 Yemen’s war Stepping up The balance shifts 32 Egyptian politics The Economist online Asia Cometh the hour, cometh the ban Daily analysis and opinion to 15 Christianity in 33 Congo’s president supplement the print edition, plus South-East Asia Never-ending term audio and video, and a daily chart Escalators to heaven Economist.com 16 Feudalism in Pakistan 33 Gambia Italian politics As their Waiting for Jammeh country prepares to vote, E-mail: newsletters and Quail, cotton and contumacy young Italians are fed up with mobile edition 34 Liberia’s George Weah the traditional parties, page 35 Economist.com/email 17 Japan’s broadcaster A man with goals Print edition: available online by Snoringly boring 7pm London time each Thursday 18 Child abuse in the Technology Quarterly Economist.com/print Philippines Brain-computer Caught in the web Audio edition: available online interfaces to download each Friday 19 Banyan After page 34 Economist.com/audioedition Kim v Trump, round two

Europe China 35 Italy’s election 20 Internet controls Their generation Closing a loophole 36 Spain and Catalonia Volume 426 Number 9073 21 The environment Local difficulties A good day for elephants Education in Pakistan School Published since September 1843 37 Russia reforms that hold lessons for to take part in "a severe contest between Cardboard Kremlin other developing countries: intelligence, which presses forward, and an unworthy, timid ignorance obstructing United States 37 Obesity in France leader, page 9. Pakistan is our progress." 22 Congress Body positive home to the most frenetic Editorial offices in London and also: The polarising express 38 Turkey’s economy education reforms in the Beijing, Berlin, Brussels, Cairo, Chicago, Madrid, world, page 13 Mexico City, Moscow, Mumbai, Nairobi, New Delhi, 23 Life expectancy Firing on all cylinders New York, Paris, San Francisco, São Paulo, Seoul, Not great, again Shanghai, Singapore, Tokyo, Washington DC 24 Republicans Hell’s laundry list

1 Contents continues overleaf 4 Contents The Economist January 6th 2018

Britain Science and technology 40 The NHS 56 The search for MH370 A thinning front line Many scanners, very deep 41 Train travel 57 Digital assistants Off the rails Losing face 42 Bagehot 58 Space debris Drama and drift in 2018 Junk hunting

International Books and arts 43 The worst airports 59 Enrico Fermi Green regulation in China The world’s worst airports The departure gates of hell Clever calculator The anti-pollution campaign An informal survey of the most may crimp growth by less than 60 The Economists’ diet horrible places to be lost in feared, page 51. How China’s Business Quantitative eating transit, page 43 rise affects the natural world, 45 Kim Sang-jo 60 University education page 21 South Korea’s chaebol Three years and score sniper 61 Japanese taiko drumming Subscription service For our full range of subscription offers, 46 Ant Financial and The kudos of Kodo including digital only or print and digital Moneygram 61 American fiction combined visit Economist.com/offers Blocked transfer Chloe Benjamin You can subscribe or renew your subscription 47 Money-laundering 62 Johnson by mail, telephone or fax at the details below: Telephone: +65 6534 5166 in Canada Word-birth Facsimile: +65 6534 5066 Snow-washing Web: Economist.com/offers E-mail: [email protected] 48 Salesforce 64 Economic and financial Post: The Economist The tower of Benioff indicators Subscription Centre, Tanjong Pagar Post Office 49 Schumpeter Statistics on 42 economies, PO Box 671 The year of the incumbent plus a closer look at GDP Singapore 910817 forecasts for the year Subscription for 1 year (51 issues)Print only Incumbents fight back ahead Australia A$465 In 2018 conventional firms will Finance and economics China CNY 2,300 Hong Kong & Macau HK$2,300 give Silicon Valley a run for its 51 China’s environment India 10,000 Obituary Japan Yen 44,300 money: Schumpeter, page 49 Towards a greener future Korea KRW 375,000 66 Simonetta Puccini Malaysia RM 780 52 Buttonwood New Zealand NZ$530 The markets in 2018 O mio nonno caro Singapore & Brunei S$425 Taiwan NT$9,000 53 Islamic finance Thailand US$300 Sukuk and see Other countries Contact us as above 53 American banks Deferred gratification Principal commercial offices: 54 MiFID 2 The Adelphi Building, 1-11John Adam Street, London WC2N 6HT Day zero Tel: +44 (0) 20 7830 7000 55 Free exchange Rue de l’Athénée 32 Investments since 1870 1206 Geneva, Switzerland Tel: +4122 566 2470 750 3rd Avenue, 5th Floor, New York, NY 10017 Chaebol sniper South Korea’s Tel: +1212 5410500 antitrust tsar has a shot at 1301Cityplaza Four, getting the chaebol to play by 12 Taikoo Wan Road, Taikoo Shing, Hong Kong the rules, page 45 Tel: +852 2585 3888 Other commercial offices: Chicago, Dubai, Frankfurt, Los Angeles, Paris, San Francisco and Singapore

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Protesters tookto the streets in dismissed by Spain’s prime nised the incumbent Uber at $48bn, lower than the more than 70 towns and cities minister, Mariano Rajoy, after president, Juan Orlando Her- $68bn placed on it after a in Iran, some complaining it declared independence. nández, as the victor. The recent round offundraising. about the economy, others Unfortunately for Mr Rajoy, Organisation ofAmerican wishing death on the presi- Catalans returned the separat- States had said that irregular- Spotify, a music-streaming dent, Hassan Rouhani, and the ists to power again in the elec- ities cast doubt on the result firm, reportedly filed docu- supreme leader, Ayatollah Ali tion on December 21st. and called fornew elections. ments that could see it list in Khamenei. The clerical regime New Yorkthis year. organised counter-demonstra- Italy’s president dissolved The decision by Orrin Hatch tions that attracted tens of parliament and set an election to step down from his Senate It was another volatile week thousands. At least 20 people date, March 4th. seat in Utah prompted specu- fortrading in bitcoin, which have been killed, and many lation that Mitt Romney would plunged in late December from more arrested. Russia’s authorities banned run to replace him. Donald a high ofmore than $19,500 to Alexei Navalny, the country’s Trump had wanted Mr Hatch below $12,000. It recovered Ethiopia announced that it most prominent opponent to to stay on. Mr Romney, a for- ground this weekafter a report would release hundreds of President Vladimir Putin, from mer presidential candidate, that Peter Thiel, a famed Sil- political prisoners and close a standing in the presidential could become a focal point for icon Valley investor, had bet on detention centre where people election due in March, citing a Republicans who are dis- the cryptocurrency. were allegedly tortured. trumped-up graft conviction. gruntled with Mr Trump. Amnesty International said Glitches were discovered in this “could signal the end of an Thousands ofpeople in Peru India’s feuding Ambani the design ofcomputer chips era ofbloody repression”. protested against the pardon- brothers reached a deal on that could give hackers access ing ofAlberto Fujimori, a their telecoms assets. In what to passwords and encryption North Korea said it might send formerpresident who had amounts to a defeat in an keys. The flaws are industry- a team to the Winter Olympics served less than halfofa 25- aggressive price war, Anil sold wide. Intel said it was working in South Korea. The two coun- year jail sentence forcorrup- Reliance Communications to with AMD and other rivals to tries re-opened a defunct tion and human-rights abuses. Mukesh’s Reliance Jio, which resolve the problems, which hotline. Kim Jong Un boasted The current president, Pedro entered the market by offering could involve more than issu- that he had a nuclear button Pablo Kuczynski, said he had free calls and data packages. ing the usual software patch. on his deskand could strike pardoned the 79-year-old on The deal hands backfull con- anywhere in America. Donald health grounds. But he made trol ofthe telecom company to There was not a single plane Trump retorted that he, too, the decision three days after the older brother, 12 years after crash involving a passenger had a button: a “bigger and Mr Fujimori’s son and nine Anil tookcharge. jet in 2017, according to the more powerful” one. other legislators from his party Aviation Safety Network, the abstained on a vote to SoftBank secured a deal to first time that has happened Mr Trump repeated a long- impeach Mr Kuczynski. take a stake in Uber. The Japa- since 1957. The number of standing gripe that Pakistan nese technology group will deaths resulting from civilian harbours terrorists America is Salvador Nasralla conceded own 15% ofthe ride-hailing aircraft accidents was just 44. fighting in Afghanistan, adding defeat in Honduras’s presi- firm (the total holding ofthe that it did not deserve Ameri- dential election, held in No- consortium it heads is over Other economic data and news can aid. A Pakistani official vember, after America recog- 17%). The investment values can be found on pages 64-65 who clearly understood Mr Trump’scomplaint said it was “incomprehensible”.

The new year saw the imple- mentation ofnew trade mea- sures in China: a ban on all sales ofivory and on imports oflow-grade waste for recy- cling. Environmentalists may cheer, but not donkeys—China also cut tariffson imports of the animals’ skins, which is likely to fuel demand forthem as an ingredient in traditional Chinese medicine.

A court in the Chinese city of Tianjin sentenced a human- rights activist, Wu Gan, to eight years in prison, the har- shest punishment imposed during a crackdown on such activists that began in 2015.

Catalonia voted fora new parliament to replace the one

Leaders The Economist January 6th 2018 7 The next frontier

Brain-computerinterfaces may change what it means to be human ECHNOLOGIES are often can be used to play virtual-reality games or control industrial Tbilled as transformative. For robots using thought alone. But for the time being at least, the William Kochevar, the term is most ambitious applications require implants that can interact justified. Mr Kochevar is para- directly with neurons. And existing devices have lots of draw- lysed below the shoulders after backs. They involve wires that pass through the skull; they pro- a cycling accident, yet has man- voke immune responses; they communicate with only a few aged to feed himself by his own hundred of the 85bn neurons in the human brain. But that hand. This remarkable feat is could soon change. Helped by advances in miniaturisation partly thanks to electrodes, implanted in his right arm, which and increased computing power, efforts are under way to stimulate muscles. But the real magic lies higher up. Mr Koche- make safe, wireless implants that can communicate with hun- var can control his arm using the power of thought. His inten- dreds of thousands of neurons. Some of these interpret the tion to move is reflected in neural activity in his motor cortex; brain’s electrical signals; others experiment with light, magne- these signals are detected by implants in his brain and pro- tism and ultrasound. cessed into commands to activate the electrodes in his arms. Clearthe technological barrier, and anotherone looms. The An ability to decode thought in this way may sound like sci- brain is still a foreign country. Scientists know little about how ence fiction. But brain-computer interfaces (BCIs) like the exactly it works, especially when it comes to complex func- BrainGate system used by Mr Kochevar provide evidence that tions like memory formation. Research is more advanced in mind-control can work. Researchers are able to tell what animals, butexperimentson humansare hard. Yet, even today, words and images people have heard and seen from neural ac- some parts ofthe brain, like the motor cortex, are better under- tivity alone. Information can also be encoded and used to stood. Nor is complete knowledge always needed. Machine stimulate the brain. Over 300,000 people have cochlear im- learning can recognise patterns of neural activity; the brain it- plants, which help them to hearby converting sound into elec- self gets the hang of controlling BCIS with extraordinary ease. trical signals and sending them into the brain. Scientists have And neurotechnology will reveal more ofthe brain’s secrets. “injected” data into monkeys’ heads, instructing them to per- form actions via electrical pulses. Like a hole in the head As ourTechnology Quarterly in this issue explains, the pace The third obstacle comprises the practical barriers to commer- of research into BCIs and the scale of its ambition are increas- cialisation. It takes time, money and expertise to get medical ing. Both America’s armed forces and Silicon Valley are start- devices approved. And consumer applications will take off ing to focus on the brain. Facebook dreams of thought-to-text only ifthey perform a function people find useful. Some ofthe typing. Kernel, a startup, has $100m to spend on neurotechnol- applications for brain-computer interfaces are unnecessary—a ogy. Elon Musk has formed a firm called Neuralink; he thinks good voice-assistant is a simpler way to type without fingers that, if humanity is to survive the advent of artificial intelli- than a brain implant, for example. The idea of consumers gence, it needs an upgrade. Entrepreneurs envisage a world in clamouring for craniotomies also seems far-fetched. Yet brain which people can communicate telepathically, with each oth- implants are already an established treatment forsome condi- er and with machines, or acquire superhuman abilities, such tions. Around 150,000 people receive deep-brain stimulation as hearing at very high frequencies. via electrodes to help them control Parkinson’s disease. Elec- These powers, if they ever materialise, are decades away. tive surgerycan become routine, aslaser-eye procedures show. But well before then, BCIs could open the door to remarkable All of which suggests that a route to the future imagined by new applications. Imagine stimulating the visual cortex to the neurotech pioneers is arduous but achievable. When hu- help the blind, forging new neural connections in stroke vic- man ingenuity is applied to a problem, however hard, it is un- timsormonitoringthe brain forsignsofdepression. Byturning wise to bet against it. Within a few years, improved technol- the firing ofneurons into a resource to be harnessed, BCIsmay ogies may be opening up new channels of communications change the idea ofwhat it means to be human. with the brain. Many of the first applications hold out unam- biguous promise—of movement and senses restored. But as That thinking feeling uses move to the augmentation of abilities, whether for mili- Sceptics scoff. Taking medical BCIs out of the lab into clinical tary purposes or among consumers, a host of concerns will practice has proved very difficult. The BrainGate system used arise. Privacy is an obvious one: the refuge of an inner voice by Mr Kochevar was developed more than ten years ago, but may disappear. Security is another: if a brain can be reached only a handful of people have tried it out. Turning implants on the internet, it can also be hacked. Inequality is a third: ac- into consumer products is even harder to imagine. The path to cess to superhuman cognitive abilities could be beyond all ex- the mainstream is blocked by three formidable barriers—tech- cept a self-perpetuating elite. Ethicists are already starting to nological, scientific and commercial. grapple with questions ofidentity and agency that arise when Start with technology. Non-invasive techniques like an a machine is in the neural loop. electroencephalogram (EEG) struggle to pick up high-resolu- These questions are not urgent. But the bigger story is that tion brain signals through intervening layers ofskin, bone and neither are they the realm ofpure fantasy. Technology changes membrane. Some advances are being made—on EEG caps that the way people live. Beneath the skull lies the next frontier. 7 8 Leaders The Economist January 6th 2018

Peru The pardoner’s tale

Presidential powers should not be used to undermine the rule oflaw N THE evening of Decem- two elections and who was behind the (disproportionate) at- Ober 24th, as Peru was pre- tempt to impeach the president. paring for its Christmas dinner, In principle a humanitarian pardon could have been part Pedro Pablo Kuczynski, the of a coherent plan of national reconciliation. But that was not country’s president, bestowed MrKuczynski’s approach. The pardon was rushed, and backed an unexpected present on a by questionable medical evidence (there is no reason to think jailed predecessor, Alberto Fuji- that Mr Fujimori is at death’s door). The government made no mori: a pardon. This came just effort to consult the victims of Mr Fujimori’s rule, nor to seek a three days after Mr Kuczynski hung on to his job thanks to ten genuine apology from him. Alternatively, a pardon could have fujimorista legislators led by Alberto’s son, Kenji, who ab- been more Machiavellian: a bargainingchip thatMrKuczynski stained in a vote on an attempt to impeach him for links to might have traded for fujimorista support for the institutional Odebrecht, a tainted Brazilian construction firm. MrKuczynski reforms—ofthe judiciary, the civil service and the political sys- insisted that the pardon was for “humanitarian reasons”. Few tem—that Peru badly needs. There is no sign of that either. In- Peruvians believe him. More likely, it was a grubby political stead, it looks like a sordid bargain to let the president survive. deal that bodes ill for his country (see page 27). Many of his al- lies feel as conned by this pardon as people who bought fake A hostage of the Fujimoris relics from Chaucer’s pardoner in “The Canterbury Tales”. From the start, Mr Kuczynski, a businessman and economist, More than 15 years after the collapse of his decade of auto- was an accident waiting to happen. He has neither political cratic rule, Alberto Fujimori continues to divide his country. skills nor, seemingly, any awareness of his lack of them. He His supporters say he saved Peru from hyperinflation and won office only because of anti-fujimorista sentiment; in de- Maoist terrorism and set it on the path of sustained economic fending himself from impeachment he railed against a fuji- growth. For his critics, he was a dictator who shut down con- morista “coup”. Yet he has now made himself the fujimoristas’ gress, destroyed checks and balances, engaged in bribery and hostage: few of his original supporters will now defend him, was complicit in a death squad. Both are right. But what is in- especially if it transpires that his dealings with Odebrecht in- disputable is that Mr Fujimori broke the law. He was found volved more than an undeclared conflict ofinterest. He would guilty in trials that were legally impeccable. His imprisonment have done better to resign and trigger an early election. wasa landmarkforLatin America, a message thatall should be The pardoning of Mr Fujimori came days after a similar ef- equal before the law in a region where the norm has too often fortbyMichel Temer, Brazil’sstand-in president. He abused the been impunity forthe rich and powerful. traditional Christmasexercise ofpresidential indulgence to try Mr Fujimori has served more than ten years in jail (though to free political cronies jailed for corruption, but the supreme that is less than half his sentence). He is 79, has a heart condi- court stood in his way. Thanks to the effortsofprosecutors and tion and is in remission from cancer ofthe tongue. Mr Kuczyn- judges in places like Brazil and in cases like MrFujimori’s, Latin ski’s government has been dogged by the vengeful attitude of America is starting to enjoy the rule of law. Presidents should Keiko Fujimori, Alberto’s daughter, who narrowly lost the past not use the power ofpardon to undermine it. 7

Protests in Iran Berating the tyrants of Tehran

Iranians demand, and deserve, a less oppressive regime IG things often have small have been arrested. The authorities have shut down messag- B beginnings. In the case of ing apps and social-media websites. They have blamed for- the protests engulfing Iran, it eigners, absurdly, forthe unrestand theyare threatening a viol- was a steep rise in the price of ent clampdown. Protesters are now calling not only for Mr eggs. That was why hundreds of Rouhani to go, but forIran’s clerical leaders, who hold far more people first took to the streets in real power, to surrender it. They also denounce the regime’s Mashhad, Iran’s second city, on armed protectors, the Islamic Revolutionary Guards. Iranians December 28th. They demand- are fed up with rising living costs, endemic corruption, and po- ed the resignation of Hassan Rouhani, the reformist president, litical and social repression. forfailing to bring prosperity to most Iranians. Is this the start of something even bigger? It is impossible to The protests quickly spread to more than 70 towns and cit- know. But it is already clear that the protests hold three damn- ies, attracting a broader swathe of malcontents, mostly young ing messages forIran’s regime. The first concerns its aggressive (see page 30). Over20 people have been killed; hundreds more foreign policy. The Guards have spent billions of dollars in re-1 The Economist January 6th 2018 Leaders 9

2 cent years supporting armed groups in Gaza, Lebanon and Ye- charities and firms connected to them ignore the taxman and men, as well as propping up a blood-soaked dictator in Syria. refuse to open their books to government scrutiny. As Iran has filled the vacuum created by America’s unwilling- Yet the demonstrations leave Mr Rouhani in a sort of no- ness to exert hard power in the Middle East, it has extended its man’s-land. On the one hand, he istoo weakto prevail overthe influence and tormented its big Sunni rival, Saudi Arabia. Guards or to defeat his powerful conservative enemies in the To many outsiders this policy has seemed a stunning suc- regime, who may have encouraged the original marches in cess. However, the protests are a blow to Iran’s adventurism. A Mashhad. On the other, he and his failing economic policy draft budget leaked last month would increase funding for the have lost the confidence of working-class Iranians, who gave Guards, while slashing subsidies for the poor. The protesters him crucial support in last year’s election. are having none of it: “Leave Syria, remember us!” they shout. “Not Gaza, not Lebanon, my life for Iran!” The regime is not Baseejed about to pull back from its region but, increasingly, its ambi- Optimists note that complaints about corruption, unemploy- tions face limits at home. ment and the lackofprospects fuelled the “Arab spring” upris- The second blow is to the reformist faction headed by Mr ings in 2011. Unlike the Green Movement, which rocked Iran’s Rouhani—and to all those who have pinned their hopes on clerical establishment in 2009 with huge rallies in the capital him as the architect of a sort of Iranian glasnost. Optimists al- demanding the overturning ofa fishy presidential election, to- ways think that Iran is about to behave better. When the re- day’s demonstrations have sprung up in rural provinces, long gime signed a deal in 2015, under which it curbed its nuclear viewed as more conservative. And though they have been programme in exchange for a partial lifting of sanctions by smaller than in 2009, they have been more intense. “Death to America and other foreign powers, Barack Obama’s aides pre- [Ayatollah Ali] Khamenei,” chant some—risking harsh punish- dicted that this would empower Iranian reformers. Mr Rou- ment fordisrespecting the supreme leader. hani himself heralded it as a fresh start. Yet the deal was about All the same, they may well fail. The regime has all the guns curbing Iran’s illicit nuclear ambitions, not curing its oppres- and all the torture cells, and is not squeamish about using sive state (one reason President Donald Trump should even them. The Green Movement was crushed by the Revolution- now not pull America out ofthe nuclear accord). The easing of ary Guards’ brutal baseej militia and mass arrests and torture sanctions helped the Iranian economy grow, but enough of by the secret police. But the third lesson of today’s protests— them remain to make outsiders wary of dealing with it. The and the hardest forthe regime to accept—is that repression can- promised economic benefits have not trickled down. By one not quell popular anger permanently. The last crackdown was estimate, average Iranians have become 15% poorer over the only eight years ago, and already Iranians are out on the streets past decade. again. Mr Trump, who seldom seems to care much about hu- To fixthe economy Mr Rouhani would need to confront the man rights, was right to call the regime “brutal and corrupt” Revolutionary Guards, who loom over everything from car- and to suggest that Iran needs a change. Iranians are far more making to construction and who use their political power to moderate than the rulers who rob and oppress them. Some enrich their commanders and impoverish Iranians. Many day, they may get the government they deserve. 7

Education Pupil power

Pakistan’s school reforms hold lessons forotherdeveloping countries HENPakistan’sschoolsat- teaching. Yetthe spectre ofviolence mayhave obscured anoth- Pakistan Wtract global attention, it is er development: the emergence of Pakistan as perhaps the 15- to 19-year-olds who have completed each school year, 2012, % often as a backdrop to violence. world’s largest laboratory foreducation reform (see page 13). 100 In October 2012 a masked gun- Pakistan haslongbeen home to a flourishingmarket oflow- Richest quintile 50 man from the Tehreek-e-Taliban cost private schools, as parents have given up on a dysfunc- Poorest quintile Pakistan boarded a school bus tional state sector and opted instead to pay for a better alterna- 0 123456789 and shot Malala Yousafzai in the tive. In the province of Punjab alone the number of these School year head, neck and shoulder. Two schools has risen from 32,000 in 1990 to 60,000 by 2016. (Eng- years later, and six days after Ms Yousafzai received the Nobel land has just 24,000 schools, albeit much bigger ones.) peace prize, terrorists from the same umbrella group killed 141 More recently, Pakistani policymakers have begun to use people, nearly all pupils, at an army-run school in Peshawar, these private schools to provide state education. Today Paki- one ofthe deadliest attacks on a school in any country. Accord- stan has one of the largest school-voucher schemes in the ing to the Global Terrorism Database kept by the University of world. It has outsourced the running of more government- Maryland, 867 educational institutions were attacked by Is- funded schools than any other developing country. By the end lamists between 2007 and 2015, often because these places ofthis yearPunjab aims to have placed 10,000 public schools— had the temerity to teach science—or worse, educate girls. about the number in all of California—in the hands of entre- Such attacks have added to problems that schools in Paki- preneurs or charities. Although other provinces cannot match stan, the world’s sixth-most-populous country, share with the scope and pace ofreforms in Punjab, which is home to 53% those in otherpoorstates—irrelevantcurriculums, high ratesof ofPakistanis, Sindh and Khyber Pakhtunkhwa are implement- dropout as children (especially girls) get older, and woeful ing some similar changes on a smaller scale. 1 10 Leaders The Economist January 6th 2018

2 The results are promising—and they hold lessons for re- vealing recent study looked at what happened between 2003 formers in other countries. One is that “public-private partner- and 2007, when Punjab hired teachers on temporary contracts ships” can improve children’s results while costing the state at 35% less pay. It found that the lower wages had no discern- less than running schools itself. A paper published in August ible impact on how well teachers taught. by the World Bank found that a scheme to subsidise local en- Such results reflect what happens when teachers are hired trepreneurs to open schools in 199 villages increased enrol- corruptly, rather than for their teaching skills. Yet the final and ment of six- to ten-year-olds by 30 percentage points and most important lesson from Pakistan is that politicians can boosted test scores. Better schools also led parents to encour- break the link between political patronage and the classroom. age their sons to become doctors not security guards, and their Under Shahbaz Sharif, Punjab’s chief minister, the province daughters to become teachers rather than housewives. has hired new teachers on merit, not an official’s say-so. It uses Other new research suggests that policymakers can also data on enrolment and test scores to hold local officials to ac- take simple steps to fix failures in the market for low-cost priv- count at regular high-stakes meetings. ate schools. For example, providing better information forpar- ents through standardised report cards, and making it easier Must try harder forentrepreneurs to obtain loans to expand schools, have both Shifting from “the politics of patronage” to “the politics of per- been found to lead to a higher quality ofeducation. formance”, in the words of Sir Michael Barber, a former advis- Another, related lesson is that simply spendingmore public er to the British government who now works with the Punja- money is not going to transform classrooms in poor countries. bis, would transform public services in poor countries. The bulk of spending on public education goes on teachers’ Pakistan’sreformshave a longwayto go. Buttheyalready have salaries, and if they cannot teach, the money is wasted. A re- many lessons to teach the world. 7

American politics In praise of state-ism

Less centralised government promises to be bettergovernment ALIFORNIA’S new laws lib- migration enforcement, which comes close to non-compli- C eralising cannabis are a ance with the federal government, is mistaken. The federal good idea, but some oftheir pro- government does often need to step in on questions of funda- visionsread like a parodyof 21st- mental importance, such as who can vote in elections. century liberalism. To right an But in many areas, particularly in social policy, it makes injustice—that brown people sense for the states to have plenty of leeway. When mistakes were more likely than white are made, as they inevitably will be, the damage is limited to ones to be charged when the po- the state orcity that did the experimenting. When new laws do lice found marijuana on them—Los Angeles plans to help succeed, they can be copied across the country. those with marijuana convictions set up pot shops. This ex- To this classic case for American-style federalism add a sec- perimentmayturn outto be a foolish mistake (see page 26). But ond, newer benefit. On presidential polling days America re- that, in a way, is the point. Congress finds it notoriously hard to mains almost a 50-50 nation, and the two halves grow further pass meaningful laws and finds it almost as hard to undo legis- apart every year. A highly centralised government cannot leg- lation that has been on the books for a long time. Statehouses, islate for such a place happily. Presidential elections have governors and mayors are more nimble. come to resemble bipolar disorder. Half the country feels elat- Sure enough, the Golden State isgreeting2018 with a host of ed forfouror eight years; then the other lot win, and a deep de- innovations. Firms with at least 20 employees will have to of- pression sets in. Decentralisation works better, because more ferthem 12 weeks’ unpaid parental leave. Schoolsin poor areas voters get more ofwhat they want formore ofthe time. will have a legal duty to feed pupils whose parents cannot af- Yet for this idea to work calls for a sacrifice. Republicans, ford meals. Elsewhere, Tennessee has a new law protecting most ofwhom claim to favourdecentralisation when a Demo- free-speech rights on campus. Washington now requires em- crat is in the White House, often then try to use federal power ployers to provide paid sick leave. Such state-level energy is to stop Democratic cities from doing as they please. Likewise, welcome, partly because it generates useful policy innovation, Democrats often think that the federal government should partly because it mitigates the trauma ofa divided country. But force people in Republican-leaning states to submit to social to succeed it demands a change ofattitude from both parties. change. Inconsistency and self-interest abound. Plenty ofpeo- ple who hold, rightly, that California should be able to set its Take 300mg of lithium own climate-change policies simultaneously object, wrongly, State activism is often confused with an argument that sounds to the Republicans’ incoming tax changes, which limit the fed- similar but is fundamentally different. To many American eral rebates the rich in California and other states get on state ears, the notion that states should do their own thing has an and local taxes (see page 24). echo of secession, the “states’ rights” defence of slavery made State-ism has risks. Statehouses are cheaper and easier to before the civil war and the resistance to federal civil-rights lobby than Congress is. America will become more complicat- laws in the 1960s. To be clear: states do not have an innate right ed. But, at a time when voters feel that government fails them, to resist federal laws, which is why California’sposition on im- it offers an inkling ofprogress. 7 Letters The Economist January 6th 2018 11

China’s diplomatic approach December16th). We already housing market. Furthermore, The meaning of meat have an adequate and better- he has been very clear about Yourarticle on China’s “Sharp known label: “soft power”. fixing the dysfunctional nature The companies trying to ban power” (December16th) was Countries deploy soft power ofthe Department ofHousing “meat names” from plant- based on the outdated belief in the form ofcultural and Urban Development, based food are simply demon- that international relations is a attraction and familiarity in which has spent too many strating how threatened they zero-sum game. By describing the beliefthat to know us is to years allocating too much are (“I can’t believe it’s not China’s normal economic love us. That said, we should money with too few results. meat”, December 2nd). Con- co-operation and cultural not assume that soft power is Dr Carson wisely realises sumers are choosing animal- exchanges with other coun- benign by definition. that HUD needs an overhaul in free versions ofmeat that tries as “subversion, bullying Soft power can have hard how it approaches the housing provide the fat, salt, flavour, and pressure” you turned a characteristics, and this is market, but he knows better familiarity and texture with- blind eye to the abundant demonstrated most clearly in than to rush fora quick-fix out the cruelty. Shoppers opportunities brought about China’s case. Culture and solution to a complex matter. It know the difference between a by China’s pursuit ofpeaceful values can and often do create is refreshing to have a cabinet veggie version and an animal- development. This sheer preju- resentment and conflict. For a secretary who is willing to take flesh one. Words change, dice is utterly unacceptable. society that sees a Hollywood his time to get the right diagno- context matters. In the New Era ofSocialism movie or programmes that sis rather than a career poli- More than that, the etymol- with Chinese Characteristics, promote democracy as agents tician who only wants to call ogy ofthese words reveal that China has increased the ofa foreign power’s propagan- attention to himself. they have less to do with the options fordeveloping coun- da or as cultural imperialism, PHIL HALL animals than we think: schnit- tries to achieve modernisation. soft power is farfrom Managing editor zel comes from a Germanic Nevertheless, China will non-coercive and non-threat- National Mortgage Professional root, meaning “to cut, slice”; always respect other nations’ ening. In fact soft power can be Fairfield, Connecticut wurst comes from the same choice ofdevelopment model more insidious than hard Germanic, meaning “to mix and will never impose its will power precisely because it can History repeating itself up”; sausage derives from the upon others. President Xi be embedded and hidden Latin word for“salted”. Even Jinping declared solemnly in within cultural products and the original connotation of the report ofthe 19th National aims to influence thought and “meat” was “food in general”. Congress that China’s devel- behaviour. In this case, to We still use that sense today, in opment is no threat to other know us may be to hate us or sweetmeat, coconut meat, the countries and that China will fear us. meat ofa nut, and so on. never seekexpansion. China In other words, China’s COLLEEN PATRICK-GOUDREAU opposes the old concept that behaviour as described in Oakland, California strength leads to hegemony. your article is soft power. It Instead, China is committed to aims to influence, persuade, Political botany blazing a trail, building a new change opinion and behav- type ofinternational relations iour, and to do so without It could well be true, according and a community with a resorting to the instruments of to a recent book, that people shared future formankind “hard” power. We do not need working in the Trump cam- based on mutual respect, yet more terms (not so long ago Youwere right to recommend paign “wouldn’t know the equity, justice and win-win the fashionable phrase was David Goodhart’s “The Road difference between a caucus co-operation. “smart power”), but we do to Somewhere” as one ofyour and a cactus” (Lexington, Countries are increasingly need to recognise, as China books ofthe year (December December 9th). But that more interconnected and clearly does, the hard potential 9th). But I was recently struck distinction was once clearly interdependent. Peaceful ofsoft power. while reading “Howard’s End” articulated by a man who development is an irreversible GARY RAWNSLEY how well E.M. Forster captured lived among both: the late Mo trend. We wish that China- Professor of public diplomacy more than a hundred years ago Udall, a congressman from watchers would replace pre- Aberystwyth University the emerging liberal, “any- Arizona. sumptuous speculation and where” intelligences in the Upon losing a leadership arbitrary defamation with a Dr Carson is doing well form ofthe Schlegel family, vote at a caucus ofDemocratic positive, healthy and peaceful with their international, members ofCongress, he approach to China’s devel- I don’t agree with your assess- cosmopolitan outlookand stated clearly to reporters that opment, which would contrib- ment that Ben Carson has commitment to justice, gender he had indeed learned what ute to greater mutual trust and “stayed inconspicuous and equality and mobility. the difference is: on a cactus, all co-operation between China inscrutable” since taking up The contrast with the the pricks are on the outside. and Western countries. the job ofsecretary ofthe conservative Wilcox family, PROFESSOR ROBERT LOUIS ZENG RONG federal housing department with their passion for empire POWELL III Spokesperson of the Chinese (“Dr Carson’s operation”, and beliefin English superior- University of California, Davis 7 embassy December 2nd). Although Dr ity, shows that the anywhere/ London Carson has not engaged in the somewhere tensions run long headline-hogging grandstand- and deep. It was published in Letters are welcome and should be It is a mistake to accept so ing ofhis predecessor, Julian the early 20th century, but addressed to the Editor at The Economist, The Adelphi Building, readily the National Endow- Castro, he has been busy meet- “Howard’s End” offers refresh- 1-11John Adam Street, ment forDemocracy’s term ing state and municipal hous- ingly modern insights ofgreat London WC2N 6HT “sharp power”, as applied to ing leaders around the country relevance today. E-mail: [email protected] China’s approach to to get a first-hand view of the PAUL KEEN More letters are available at: diplomacy (“At the sharp end”, many problems facing the Sheffield Economist.com/letters 12 Executive Focus

DIRECTOR (D-1) Duty Station: Tokyo, Japan The United Nations University (UNU) is an international community of scholars, engaged in research, postgraduate teaching, capacity development, and dissemination of knowledge in furtherance of the purposes and principles of the Charter of the United Nations. The Institution: The UNU Institute for the Advanced Study of Sustainability (UNU-IAS) is a leading research and teaching institute dedicated to advancing efforts towards a more sustainable future. The Institute serves the international community and contributes to UN debates by offering policy-oriented research and capacity development that addresses the socioeconomic and environmental dimensions of sustainability. The Position: The Director is the chief academic and administrative offi cer of UNU-IAS. Qualifi cations: The Director should: have academic qualifi cations that lend to UNU-IAS prestige in the international scholarly community; guarantee scientifi c excellence; and provide leadership and guidance for the institute’s activities. Experience: A doctoral qualifi cation in a relevant discipline. Strong research background and publications in sustainable development. Research supervision experience. Strong and demonstrable international fundraising skills. Effective leadership in administration and research programming. Sound fi nancial and human resource management skills. Gender, cultural and political sensitivity. Commitment to the 2030 Development Agenda. Fluency in English is required. Fluency in offi cial UN languages is desirable. Application deadline: 31 January 2018 Full details of the position and how to apply: https://unu.edu/about/hr/academic/director-4.html#overview

The OPEC Fund for International Development (OFID) The OPEC Fund for International Development (OFID), based in Vienna – Austria, is the development fi nance institution established by the Member States of OPEC in 1976 as a collective channel of aid to the developing countries. OFID works in cooperation with developing country partners and the international donor community to stimulate economic growth and alleviate poverty in all disadvantaged regions of the world. To date, OFID has made fi nancial commitments of more than US$ 21.4 billion to over 3,700 operations across 134 countries worldwide. In pursuit of its Organizational Strengthening Program, OFID has openings and seeks to fi ll the following vacancies: i. Director, Human Resources Policies and Planning Unit (VA511/2018) ii. Head, Risk Management Function (VA3002/2017) iii. Public Sector Operations Offi cer (VA707/2018) iv. Private Sector and Trade Finance Operations Offi cer (VA604/2018) v. Investment Offi cer (VA106/2017) vi. Human Resources Offi cer (VA504/2018) vii. Computer System Offi cer – SAP Specialist (VA2000/2017) OFID offers an internationally competitive remuneration and benefi ts package, which includes tax- exempt salary, dependent children education grant, relocation grant, home leave allowance, medical and accident insurance schemes, dependency allowance, annual leave, staff retirement benefi t, diplomatic immunity and privileges, as applicable. Interested applicants are invited to visit OFID’s website at www.ofi d.org for detailed descriptions of duties and required qualifi cations, as well as procedure for applications. Preference is given to applicants from OFID Member Countries. The deadline for receipt of applications is January 27, 2018. Due to the expected volume of applications, OFID would only enter into further correspondence with short-listed candidates. The Economist January 6th 2018 Briefing Education in Pakistan The Economist January 6th 2018 13

seems better than the lamentable status Stepping up quo. Ifthiswholesale reform makesreal in- roads into the problems of enrolment, quality and discrimination against girls that bedevil Pakistan, it may prove a tem- plate for other countries similarly afflicted. KARACHI AND LAHORE There are many reasons for the old sys- tem’s failure. From 2007-15 there were 867 Pakistan is home to the most frenetic education reforms in the world attacks by Islamist terrorists on education- VERY three months, Shahbaz Sharif, the a dozen children aged six or seven sit be- al institutions, according to the Global Ter- Echiefminister of Punjab, gathers educa- hind desks in a cobwebbed classroom. Not rorism Database run by the University of tion officials around a large rectangular ta- one is wearing a uniform; most have no Maryland. When it controlled the Swat riv- ble. The biggest of Pakistan’s four prov- schoolbags; some have no shoes. There is er valley in the north of the country, the inces, larger in terms of population (110m) not a teacher in sight. Pakistani Taliban closed hundreds of girls’ than all but 11 countries, Punjab is reform- Most Pakistani children who start schools. When the army retook the area it ing its schools at a pace rarely seen any- school drop out by the age of nine; just 3% occupied dozens ofthem itself. where in the world. In April 2016, as part of of those starting public school graduate Poverty also holds children back. Faced its latest scheme, private providers took from 12th grade, the final year. Girls from with a choice between having a child help over the running of 1,000 of the govern- poor families are least likely to attend (see in the fields or learn nothing at school, ment’s primary schools. Today the num- chart on next page); Pakistan’s gap be- many parents rationally pick the former. beris 4,300. By the end ofthis year, Mr Sha- tween girls’ and boys’ enrolment is, after The difference in enrolment between chil- rif has decreed, it will be 10,000. The Afghanistan’s, the widest in South Asia. dren of the richest and poorest fifth of quarterly “stocktakes” are his chance to Those in school learn little. Only about householdsisgreaterin Pakistan than in all hear what progress is being made towards half of Pakistanis who complete five years but two of the 96 developing countries re- this and other targets—and whether the ofprimary school are literate. In rural Paki- cently analysed by the World Bank. radical overhaul is having any effect. stan just over two-fifths of third-grade stu- Yet poverty is not the decisive factor. For officials it can be a tough ride. Lead- dents, typically aged 8 or 9, have enough Teaching is. Research by Jishnu Das of the ers of struggling districts are called to La- grasp of arithmetic to subtract 25 from 54. World Bank and colleagues has found that hore for what Allah Bakhsh Malik, Pun- Unsurprisingly, many parents have turned the school a child in rural Pakistan attends jab’s education secretary, calls a “pep talk”. away from the system. There are roughly is many times more important in explain- Asked what that entails, he responds: 68,000 private schools in Pakistan (about ing test scores than either the parents’ in- “Four words: F-I-R-E. It is survival of the fit- one-third ofall schools), up from 49,000 in come or their level of literacy. In a paper test.” About 30% of district heads have 2007. Private money currently pays for published in 2016, Mr Das and Natalie Bau been sacked for poor results in the past more of Pakistan’s education than the gov- of the University of Toronto studied the nine months, saysMrMalik. “We are work- ernment does. performance of teachers in Punjab be- ing at Punjabi speed.” It is in part the spread ofprivate options tween 2003 and 2007 who were hired on Pakistani education has long been atro- that has spurred politicians like Mr Sharif temporary contracts. It turned out that cious. A government-run school on the into action. The outsourcing of schools to theirpupilsdid no worse than those taught outskirts of Karachi, in the province of entrepreneurs and charities is on the rise by regular ones, despite the temporary Sindh, is perhaps the bleakest your corre- across the country. It is too early to judge teachers often being comparatively inex- spondent has ever seen. A little more than the results of this massive shake up, but it perienced and paid 35% less. 1 14 Briefing Education in Pakistan The Economist January 6th 2018

2 Teachers’ salaries account for at least ger opens new schools; all growth is via 87% of the education budget in Pakistan’s Dropping out these privately operated schools. Schools provinces. A lot ofthat money is complete- Pakistan, youths* who have completed each overseen by PEF now teach more than 3m ly wasted. Pakistan’s political parties hand school year, by wealth quintile, 2012, % children (an additional 11m or so remain in out teaching jobs as a way of recruiting 100 ordinary government-run schools). election workers and rewarding allies. Richest This use of the private sector is coupled Some teachers pay for the job: 500,000 ru- 80 with the command-and-control ofMr Sha- Middle pees ($4,500) was once the going rate in 60 rif, who is backed by Britain’s Department Sindh. At the peak of the problem a few Poorest for International Development, which years ago, an estimated 40% of teachers in 40 helps pay for support from McKinsey, a the province were “ghosts”, pocketing a consultancy, and Sir Michael Barber, who 20 salary and not turning up. Girls in poorest quintile ran British prime minister Tony Blair’s “De- “Pupils’ learning outcomes are not po- 0 livery unit”. The latest stocktake claimed litically important in Pakistan,” says the 123456789 an “unprecedented” 10% increase in prim- School year leader of a large education organisation. ary-school enrolment since September Source: World Bank *Aged 15-19 Graft is not the only problem. Politicians 2016, an extra 68,000 teachers selected “on have treated schools with a mix of neglect merit”, and a steady increase in the share and capriciousness. Private schools have has used a biometric attendance register to of correct answers on a biannual test of lit- been nationalised (1972) and denational- cut 6,000 ghost teachers from the payrolls, eracy and numeracy. ised (1979); Islam has been inserted and re- and merged 4,000 sparsely attended Some are concerned about the stress on moved as the main part of the curriculum. schools into 1,350. Through the Sindh Edu- meetingtargets in this “deliverology” mod- The language of instruction has varied, cation Foundation, an arms-length gov- el. For one thing, independent assessment too; Punjab changed from Urdu to English, ernment body, it is funding “public-private of the system’s claimed success is hard. Mr only to revert to Urdu. Sindh, where teach- partnerships” covering 2,414 schools and Das argues that there is no evidence from ers who are often Sindhi speakers may 653,265 pupils. As well as the outsourcing public sources that support Punjab’s struggle to teach Urdu, announced in 2011 programme, schemes subsidise poor chil- claims of improved enrolment since 2010. that Mandarin would be compulsory in dren to attend cheap private schools and Nor is the fear provoked by Mr Sharif al- secondary schools. pay entrepreneurs to set up new ones in ways conducive to frank self-appraisal: underserved areas. some officials may fudge the numbers. Ms Getting schooled This policy was evaluated in a paper by Naviwala points out that two of the worst- It is against this background that organisa- Felipe Barrera-Osorio ofHarvard Universi- performing districts in spring 2015 some- tions like The Citizens Foundation (TCF) ty and colleagues published last August. how became the highest performers a few have developed. The charity runs perhaps The researchers found that in villages as- months later. She suggests that similar the largest network of independently run signed to the scheme, enrolment increased data-driven reforms in Khyber Pakh- schools in the world, educating 204,000 by 30% and test scores improved. Parents tunkhwa may have a better chance of suc- pupils at not-for-profit schools. It is also raised theiraspirations—they started want- cess, since they are less dependent on the Pakistan’s largest single employer of wom- ing daughters to become teachers, rather whims of a single minister. For their part en outside the public sector; in an effort to than housewives. These results were Punjab and its international backers insist make girls feel safer in class, all of TCF’s achieved at a per-pupil cost comparable to that the data are accurate, and that the oth- 12,000 teachersare female. AtitsShirin Sul- that of government schools. “Pakistan’s er publicly available data are out of date. tan Dossa branch near a slum on the out- education challenge is not underspending. No one thinks that everything is fixed. skirtsofKarachi, one girl ismore than hold- It is misspending,” says Nadia Naviwala of Around the corner from that parlous prim- ing her own. At break-time on the the Wilson Centre, a think-tank. ary school on the outskirts ofKarachi is an- makeshift cricket pitch she is knocking While Sindh has pioneered many poli- other, privately run school hand-picked for boys’ spin-bowling out ofthe playground. cies, Punjab has taken them furthest. The your correspondent’s visit by civil ser- In 2016 TCF opened its first “college” for Punjab Education Foundation (PEF), an- vants. In maths classes pupils’ workbooks 17- and 18-year-olds at this campus in an at- other quasi-independent body, oversees have no entries forthe past fortnight. What tempt to keep smart poor pupils in school some of the largest school-privatisation sums there are show no working; answers longer. Every day it buses 400 college pu- and school-voucher programmes in the were simply copied. The head teacher pils in from around the city. It builds world. It has a seat with the ministers and seems to care most about his new audio- schools using a standard template, typical- administrators at Mr Sharif’s quarterly visual room, the screen in which is not for ly raising about $250,000 for each of them meetings. The Punjab government no lon- pupils, but for him: a bootleg Panopticon, from donors; it recruits and trains teachers; with six CCTV feeds displayed on a wall- by and it writes its own curriculums. KHYBER PAKHTUNKHWA Pakistan) mounted screen. This is an effective way of Since 2015 TCF has taken over the run- 78 62 dealing with ghosts. But as the head ex- ningofmore than 250 government schools Islamabad plains how great his teachers are, one of FEDERALLY ADMINISTERED in Punjab, Sindh and Khyber Pakh- TRIBAL AREAS them strolls up to a boy in the front of her tunkhwa. It gets a subsidy of around 715 ru- AFGHANISTAN Lahore class and smacks him over the head. pees per month per child, which it tops up PUNJAB Even if there is bluster aplenty and a 73 67 with donations. So far it has increased av- INDIA long way to go, though, the fact that politi- erage enrolment at schools from 47 to 101 cians are burnishing their reputations PAKISTAN Primary pupils, and test results have improved. BALOCHISTAN education net through public services, rather than pa- The outsourcing of state schools to TCF enrolment ratio tronage alone, is a step forward. And if IRAN 67 is just one part of the Sindh government’s 67 2014-15, % there is a little Punjabi hype to go with the 42 Pakistan total recent reforms. “Three years ago we hit 54 INDIA Punjabi speed, then that may be a price 72 Male rock bottom,” says a senior bureaucrat, SINDH worth paying. For too long Pakistani chil- noting that 14,000 teaching jobs had been Arabian Karachi 62 Female dren have suffered because politicians doled out in one year to supporters of the Sea Source: Pakistan have treated schools as political tools. 300 km Bureau of Statistics ruling Pakistan Peoples Party. Since then it They deserve much better. 7 Asia The Economist January 6th 2018 15

Also in this section 16 Feudalism in Pakistan 17 Japan’s boring public broadcaster 18 Child abuse in the Philippines 19 Banyan: Kim v Trump, round two

For daily analysis and debate on Asia, visit Economist.com/asia

Religion in South-East Asia ing many Pentecostals, made up 8% of the population in 2015, up from 2% in 1970. Escalators to heaven Evangelical churches are flourishing in Malaysia and Indonesia in even less pro- mising circumstances. Roughly a tenth of the population of both countries is Chris- tian, but bureaucrats make life difficult for BANDUNG AND SINGAPORE churches, largely for fear that they will at- tempt to convert members of the Muslim The Chinese ofSouth-East Asia are turning to evangelical Christianity majority. Over1,000 churches were closed HEN Pastor Jimmy Parade took over ing among the Muslim majority is well in Indonesia between 2006 and 2014, says Wat the Indonesian Reformed Evan- nigh impossible, but where Buddhists, Andreas Harsono ofHuman Rights Watch, gelical Church in Bandung, on the island of Confucians and Christians of other de- a pressure group. Java, five years ago, around 180 people nominations, almost all ofthem ethnically Mr Parade’s church is in an outdoor came to services each week. Now the Chinese, are proving receptive. shopping complex because it doesn’t need church—in a nondescript building in an In Singapore, which is sandwiched be- a licence to operate there, and getting one outdoor shopping complex—is packed tween Indonesia and Malaysia but is elsewhere is difficult. In Malaysia, mean- with around 450 each Sunday. “People mainly Chinese, evangelicalism first took while, it is illegal fora Muslim to convert to keep coming,” Mr Parade shrugs. off in the 1980s, recalls Terence Chong of Christianity, even though the constitution Some 1,000 miles away, up several sets the ISEAS–Yusof Ishak Institute, a think- theoretically enshrines freedom of reli- of escalators at a shopping mall in Singa- tank. Mega-churchesbegan springingup in gion. Malaysia also has Islamic police to pore, thousands of people take part in a the early1990s. These grewquickly, despite make sure Muslims do not marry adher- two-hour service on a Saturday evening at the fact that the Singaporean government ents of other religions or deviate in other the City Harvest Church, which has a is wary of proselytisers potentially stirring ways. Yet even in this forbidding setting, weekly attendance of just under 16,000. up religious tensions. Evangelicals, includ- the proportion of the population that is The service involves a rock group leading evangelical has grown rapidly (see chart). the congregation in devotional songs, sev- The growth of evangelical churches in eral instances of speaking in tongues, and Hallelujah the three countries also shows how they testimony from Emily, a young Singapor- Evangelical, pentecostal are “increasingly connected”, says Max Je- ean who converted her father to Christian- and charismatic Christians Total, ganathan of the Zacharias Trust, a Chris- 2015, m ity. “My Dad has become a much happier As % of total population tian organisation based in Britain. Chris- man,” she declares, to huge applause. 10 Singapore 0.5 tians across the region support each other Evangelical and Pentecostal Christian- 8 financially, he says; several churches in Sin- ity is growing more quickly in Asia than 18.8 gapore have helped “plant” others in Ma- 6 most parts of the world, with over 200m IndMyaonesnimaa r 2.7 laysia or elsewhere. City Harvest declares adherents in 2015, up from 17m in 1970. The 1.3 that it provides training and “spiritual 4 largest congregations are in South Korea oversight” to locals keen to start their own Malaysia and the Philippines, where dazzlingly large 2 churches. It now has over three dozen affil- mega-churches hold tens of thousands of iated churches abroad. people. But Christian zeal is also increasing 0 Most evangelicals see the growth of in other parts of the continent, including 1970 2000 2015 their churches as God’s work. But it also Indonesia and Malaysia, where proselytis- Source: World Christian Database seemsto have an aspirational element to it.1 16 Asia The Economist January 6th 2018

2 “It is the de facto middle-class religion right Feudalism in Pakistan teeth are black and rotten. Families like the now,” says Mr Chong. According to a study Lalekas, and 101 others listed in one cata- he conducted in 2013, over 50% of mega- Quail, cotton and logue, still pop up frequently as villains in church-goers had a university degree, a soap operas. higher proportion than Christians of other contumacy Yet their power is wilting. By one count, sorts. That was in spite of the fact that feudal representation in parliament has mega-church Christians were more likely BAHAWALNAGAR dropped to around a quarter, drawn main- to have lived in public housing and to ly from rural areas in south Punjab and the The powerofthe landlords is fading, come from working-class backgrounds. province of Sindh. On a stroll through his but painfully slowly They were also more likely to speak Chi- family stables, Mr Laleka shakes his head nese and to come from families which ANICKED from its nest, a quail scuds at the cost ofmaintainingdozens ofbuffalo were not previously Christian. Plow across a cotton-field. The hunters and horses, on which little more than sta- Many of South-East Asia’s mega- spin round and blast away. As the bird tus rides. “You can get cheaper milk in the churches preach an American-style “pros- drops from the sky, a gang of poor boys in markets,” he sighs. “And you don’t have to perity gospel”: although there is lots of talk plastic flip-flops races through the mud, clean up their shit.” This shows how the of charity and good works, wealth is cele- fighting to pick up the kill. This vignette of economy is changing. Agriculture’s share brated as a gift from God. At City Harvest feudal life has hardly changed in a century, in GDP has dived from 53% in 1947 to 20%. one preacher tells the story of a business- except for one thing, says Ehtehsham La- Rapid urbanisation is drawing millions man who attended the church—and do- leka, a puckish 30-year-old, whose family away from areas like south Punjab. nated generously to it—whose sales went owns 7,000 acres of land in this southern Meanwhile feuding has become a pas- up by 40% in a year and whose profits dou- region ofPunjab province. “In my grandfa- time of the feudal class, as Islamic inheri- bled. Presentation is often slick: at the New ther’s day we would have had hundreds of tance laws requiring an equal split among Creation Church, another mega-church in beaters like them.” male heirs fragment estates. “Eighty per a mall in Singapore, first-time visitors are Feudalism, a curse that has lingered cent of my friends have taken out loans,” given a pop-up booktellingthe story ofthe since independence in 1947, is often seen as mourns one landowner, himselfindebted, venue. The 30,000 worshippersthere have the biggest blight on Pakistan’s develop- to keep themselves in the finery to which to book online on a Wednesday to reserve ment. In the old days the zamindars (land- they are accustomed. In 1960 farmssmaller a seat forthe Sunday service. owners), empowered by British rule, than five acres made up 19% ofthe total. By Friendly ushers and peppy slogans lorded over great tracts of land, housing 2010, that figure had soared to 65%. (“too blessed to be stressed”) make the serfs and often abusing them in return for The landlords’ power over labourers is churches appealingly accessible. They are sharecropping and other forms of menial dwindling, too. Cashisreplacingthe old in- also good spots for making business con- labour. Whereas independent India rid it- formal system of payment in kind. Erst- nections. Churches in Singapore are places self of much of that feudal class, Pakistan’s while serfs are now paid around $170 a where people network with those they feeble attempts at land reform were ruled month at harvest time. Violence against trust, says Thomas Harvey of the Oxford un-Islamic by its Supreme Court in 1990. them has become harder to get away with. Centre ofMission Studies, a British charity. The landowners turned their economic When a feudal lord threw a ten-year-old The feeling is that “these are people we power into political authority, coercing boy into a thresher in 2013, severing both know, these are people of integrity, charac- their tenants to vote for them. In 1970 feu- his arms, the outcry on social media led to ter, education,” he says. dal landlords held 42% of the seats in the his arrest, although not his conviction. Al- Integrity, alas, is sometimes lacking. In national parliament. lahdad, a landlord built like a giant, fondly 2015 Kong Hee, the founder ofCity Harvest Modern feudals like to portray them- recalls the days when he beat lorry drivers Church, and five otherchurch leaders were selves as benevolent paternalists, but this and shaved their moustaches as a punish- found guilty of misappropriating S$50m does not stretch far. Feudal areas have the ment. “If you cannot beat them, they ($37m) in church funds, partly to fund the lowest literacy in Pakistan. On the estate of steal,” he says, laughing. But a neighbour music career of Mr Kong’s wife, Ho Yeow one family, many ofwhose members were whispers that Allahdad can no longer re- Sun. (The devotional element of the song educated in the West, the village children’s tain a cook or guard, as the staff he used to 1 “China Wine”, in the video for which a scantily clad Ms Ho “grinds it up” with as- sorted rappers, is hard to fathom.) In 2009 a well-publicised spat broke out at the Cal- vary Church in Kuala Lumpur, with con- gregants demanding more transparency over church funds. At other churches pas- tors have been accused of accumulating unseemly riches. This has hurt some churches. At City Harvest the congregation is around a third smaller than it used to be, estimates Sam, a 36-year-old interiordesignerwho has been going to the church for15 years. But on the whole churches have been able to “isolate incidents”, says Mr Chong, putting the blame on the individual rather than the whole church or community. “With enough prayer,” the argument goes, he says, “the Church will be able to right it- self.” And if not, there are plenty of com- petitors to take in disenchanted members ofanother flock. 7 If you can’t beat them, pay them The Economist January 6th 2018 Asia 17

2 slap around can now use their cash wages remain, says Yasuo Onuki, who retired a to escape. few years ago after fourdecades there. Feudal politicians also have to work One reason for its cosy relations with harder for their constituents’ votes. A government is that Japan, uniquely among young politician from a landed family democracies, has been ruled by the same glumly describes his view of the job. “Poli lot, the Liberal Democratic Party, for all but means many and tics means bloodsuck- three years of the past six decades. “They ers,” he laments. When he is not glad- have tamed the media,” says Kaori Haya- handing the masses at weddings or funer- shi of Tokyo University. Chummy agree- als, he must badgerlocal administrators on ments between the government and re- behalf of his voters. Despite his help, he porters’ clubs have led to access to press says, “they may have to bribe a policeman, events being restricted to the big domestic but not as much.” media, with foreigners and freelances gen- Nonetheless, the feudal rump in parlia- erally excluded. ment has been able to prevent the exten- In theory NHK is independent. Unlike sion of the minimum wage to agricultural Britain’s BBC, it collects the reception fee it- labourers, among other things. Imran self. Its boss is appointed by its board ofgo- Khan, a leader of the opposition, blames vernors. But the prime minister appoints feudalism for the country’s “grossly unfair the board and Japan’s parliament ap- social system”, but is now wooing the feu- proves its budget. In 2013 Shinzo Abe chose dal barons in his bid for power in next a clutch of governors with distinctly con- year’s election. And even feudalism’s slow servative views of women and Japan’s death may not lead to much change. wartime history. The UN and Reporters Though the power of the landlords is Look: another mid-ranking official! Without Borders, a French-based organisa- fading, more than half the members of tion that promotes freedom of the press, Punjab’s assembly have inherited their Many people refuse to pay because they now repeatedly chastise Japan for its me- seats from relatives, more than twice the don’t watch NHK, often out of distaste for dia’s lack of independence. Officials put rate in India’s parliament. The canniest its pandering to the government. out by NHK’s coverage sometimes sum- “feudals”, says Badar Alam, editor of a cur- NHK, whose initials stand for Japan mon its staff to berate them. It is still taboo rent-affairs magazine, have long since Broadcasting Corporation, has hardly forthe organisation to question the monar- morphed or married into the rising indus- changed since Ellis Krauss, an academic, chy or Japan’s wartime deeds. trial class. These new rich familiesmay not spent years researching it in the 1990s. He As much to blame, says Ms Hayashi, is differ much from their landed predeces- described its news as “the world’s most the way Japanese journalism is practised. sors. Noting how they like to copy the old boring”. Itstill reportsfactswith scant anal- The country has a large and noisy mass feudal style, with big cars, browbeaten ser- ysis—its officious interpretation of neutral- media, but from their origin after the sec- vants and brazen tax avoidance, Mr Laleka ity—and gives dreary attention to bureau- ond world warthey have co-operated with calls them “pseudo-feudals”. 7 crats and politicians. Journalists who try to the government in promoting national de- be too independent or inventive are cold- velopment rather than acting as the fourth shouldered; those who go too far can ex- estate. Self-censorship is common. NHK’s Japan’s broadcaster pect to be sent to the archives. style book for its international TV and ra- The corporation hit a nadir in 2013 dio tells journalists to avoid certain terms Snoringly boring when Katsuto Momii was appointed as its when discussing “comfortwomen”—those head. In his first press conference he re- forced to have sex with Japanese soldiers. marked that Japan’s use of wartime sex They should refer to the Rape of Nanjing slaves in territories it conquered was not by Japanese troops in 1937 as an “incident”, NHK TOKYO unusual. He appeared to see as a pub- not a “massacre”, though the death toll ri- lic-relations agency for the authorities. valled those of the atomic bombs dropped NHK extracts a heftyfee from all “We cannot turn left when the govern- on Hiroshima and Nagasaki. viewers fordull fare many don’t watch ment says right,” he memorably opined. In that sense NHK hardly differs from RY saying you don’t live there, suggests NHK was criticised particularly for its toa- other Japanese media. All the same, the Tone website. Pretend you don’t have a dying reporting of the government’s line country would be poorer without it, says television, says another. Such is the advice after the meltdown of the Fukushima nuc- the former journalist. It makes excellent swapped online on how to avoid paying lear power plant in 2011. Anti-nuclear prot- documentaries. It had the scoop in 2016 of the “reception fee” that every home that ests were all but ignored. a video in which the emperor hinted at owns a television must pay to NHK, Ja- Then came a raft of prominent report- wishing (much to the government’s cha- pan’s public-service broadcaster. The ex- ers being removed. Kensuke Okoshi, the grin) to step down. It remains the country’s cuses may have to get more inventive: on liberal-minded anchor of the evening most trusted outlet. It is the go-to station in December 6th Japan’s highest court ruled news, left in 2015 after questioning the gov- times of natural disasters, the sole broad- that the fee is constitutional, and found ernment’s love of nuclear energy. A year caster of sumo and the source of the most against a man who had refused to pay for later Hiroko Kuniya, presenter of “Close accurate exit polls. the past11years. Up Gendai”, a popular news programme, But Japanese disapprove of the broad- Almost 80% of households paid last met a similar fate, presumably thanks to caster’s attempts to subject ever more peo- year, stumping up ¥13,990 ($125) for an or- her daringly robust questioning ofthe gov- ple to its fees. It now wants those who dinary television or ¥24,770 forone with a ernment spokesperson. watch its content online to cough up, draw- satellite dish. That is a rise of nine percent- Things have improved since Mr Mo- ing criticism even from former officials. If age points compared with a decade ago, mii’s term expired at the start of2017, but “it NHK cannot persuade people to pay vo- thanks in no small part to NHK’s army of takes a long time for wounds to heal”, says luntarily for its programmes (for example, private collectors, who are schooled in the a former NHK journalist. The underlying by making more interesting ones), why art ofstrong-arm tactics to go door-to-door. causes of NHK’s often timorous reporting should they be forced to? 7 18 Asia The Economist January 6th 2018

Child abuse in the Philippines is to allow police to use it to ensnare would-be customers in chat rooms. Mr Caught in the web Guyt says that a recent six-week pilot pro- ject conducted by the Philippine police was a big success. The Australian authori- ties and Interpol, a group through which the world’s police forces co-operate, are in- MANILA terested too. But once wrongdoers have been identified with the help of the avatar, The archipelago is a global hub forchild pornography legal complexities stemming from the in- T FIRST he was very kind, just like an can communicate easily with clients. The ternational nature of the online interac- “A angel,” says a 19-year-old ofthe man swift spread of the internet, to which 55% tions mean that the police can only issue a who recruited her into the Philippines’ cy- ofFilipinosnowhave access, up from 9% in warning message. bersex industry, “but at the end he was 2009, means cybersex dens can operate in Several countries, including America, evil.” The end took five years to come. One increasingly remote areas. Widespread Britain, Canada and Israel, as well the Phil- of a dozen siblings, she left her poor family mistrust of the police discourages both cy- ippines, are modifying their laws in re- on the island of Mindanao with a pimp bersex victims and those who suspect sponse to the jurisdictional morass of on- who had promised her an education. In- wrongdoing from asking for their help. line horrors. Indeed, lawmakers around stead, she was made to cavort in front of And a higher proportion of people in the the world are taking the problem of child web cameras. “I didn’t know that I would Philippines use methamphetamines or pornography increasingly seriously. In be a cybersex model,” she says. Six other amphetamines than in any other country 2006 just 27 countries had enacted strong children were part of the den, two of them in Asia. Those addicts are sometimes will- legislation to combat it. That number had just toddlers. Sent to schools where they ing to resort to abhorrent means to fund risen to 82 a decade later, according to the improved their English, the children re- their habit. International Centre for Missing and Ex- ceived money for beauty products and The problem is too big to be solved ploited Children, a charity. treatments, so as to present themselves through arrests alone. The police break up There is much more to do. The age of more alluringly to “customers”. big cybersex dens to much fanfare every sexual consent in the Philippines, for in- Similar stories abound in the Centre of few months, but smaller operations carry stance, is just 12. Raising it to 16 would also Hope, a clean, bright shelter for children on without being detected. Some young- allow those creating pornography involv- just outside Manila. It is adorned with lan- sters even want to enter the business inde- ing young teenagers to be punished for terns and trees for Christmas; teachers, so- pendently; there are cybercafés that will- rape rather than prostitution (which car- cial workers and psychologists are among ingly host them. Another means of ries less severe penalties). Congress is con- those who attend its festive parties. Resi- stoppingthe exploitation isto pursue those sidering just such a measure. dents, most of them teenagers, sleep in paying for horrific content. Many come Butitismore humble interventions that bunk beds in dormitories that they tidy from rich countries such as Australia and the former victims at the Centre of Hope themselves. The shelterlies hidden behind America. After online encounters ar- consider most useful. They say raising an unmarked gate. This is so that criminal ranged by her father, one woman at the awareness among young people, by visit- gangs and, in some cases, family members Centre of Hope was eventually sold ing schools and giving talks, makes a big who have made money by exploiting the abroad to a Danish man, who tortured her difference. They also set store by attempts 50 girls and one boy who live at the facility by burning her with cigarettes. to suppress demand. Some of them have cannot find it. Technology allows the authorities bet- travelled to rich countries to help draw at- Sherryl Loseno of the Visayan Forum ter ways of tracking down consumers in tention to the problem. One enjoyed a trip Foundation, the charity that runs the cen- faraway places. Terre des Hommes, for ex- to America to tell her story so much that tre, says the problem ofonline exploitation ample, has created an online avatar of a she now wants to be a flight attendant. Not is worse than everbefore. Ofthe billions of child using artificial intelligence. The idea all victims escape with such optimism. 7 online searches for pornography that oc- cur around the world each month, those involving children account for just a tiny proportion. But that still creates a lucrative business opportunity forthe immoral. Hans Guyt from Terre des Hommes, a Dutch charitywhich researchesonline sex- ual abuse, says that accurate information on the number of victims in the Philip- pines is impossible to obtain. But he be- lievesthatthe situation isgrowingmore se- rious in the country, not least because the content being made there is more de- praved than ever. Photographs, videos and live-streaming now more commonly fea- ture animals, toddlers and sometimes even babies. Experts believe the Philippines is a glo- bal hub for the production of such materi- al. Historical, technological and social fac- tors help to explain why. The high level of proficiency in English, a relic of the coun- try’s time as an American colony, means that both children and those abusing them The ones that got away The Economist January 6th 2018 Asia 19 Banyan Peninsular wars

Though sanctions may bite at last in 2018, they will not bring Kim Jong Un to heel prosperous country”. Mr Kim has long promoted a strategy of byungjin—pursuing military and economic development at the same time. Arguably, this has worked until now, with annual eco- nomic growth reckoned to be around 4%. Yet Mr Kim warned of “difficult living conditions” this year. Economic trouble seems all too likely, thanks partly to tight- ened sanctions which the UN Security Council passed, at Ameri- can urging, on December 22nd. To date, a decade’s worth ofsanc- tions imposed on North Korea have done nothing to curb its nuclear programme. Above all, sanctions have not worked be- cause China, more concerned about the prospect of instability next door than the North’s nuclear activities, has got around them. Four-fifths ofall North Korea’s trade is with China. Alarmed that the risk of conflict has risen, China may now be changing its calculations. The latest UN resolution renders most North Korean exports illegal, including the workers it sends abroad. That looks likely to cut scarce hard-currency earnings sharply. As forimports, shipments ofcrude oil have been capped, while the quota for refined oil products has been slashed. China seems to be enforcing the sanctions much more tightly than be- fore. Andrei Lankov of Kookmin University in Seoul describes T’S not a mere threat,” Kim Jong Un, North Korea’s dictator, them as a full-scale economic blockade. To add to Mr Kim’s isola- “Iannounced to the world in hisnew-yearaddress, “buta reali- tion, several countries are expelling North Korean diplomats or ty that I have a nuclear button on the desk in my office. All of the restricting the size of North Korean embassies, which act chiefly mainland United States is within the range ofour nuclear strike.” as moneymaking enterprises forthe regime. That is a terrifyingthought to most Americans—and one made no The bleaker economic outlook may have something to do less terrifying by Donald Trump’stweet in response: “I too have a with the most striking part of Mr Kim’s speech—an overture to- Nuclear Button, but it is a much bigger & more powerful one than wards South Korea, with which it has had no formal communica- his, and my Button works!” tion for nearly two years. Responding to an invitation to send The Punch-and-Judy posturing would be comical if it did not North Korean athletes to the Winter Olympics in the South next itself heighten the risk of conflict. In a febrile atmosphere, two month, Mr Kim called for “urgent” dialogue. Moon Jae-in, South thin-skinned leaders might easily misconstrue the other’s inten- Korea’s president, welcomed the idea, no doubt guessing that the tions, even if neither intended war. Or either might feel face is at North will not disrupt the games with missile antics if its athletes stake (Mr Trump, after all, vowed that the North would not be al- are competing. More broadly, MrMoon has long argued that dia- lowed to develop nuclear weapons that could hit America). logue would help ease tensions on the peninsula. MrTrump might also believe that a military strike would have As for Mr Kim, he may hope for South Korean support for limited consequences. Some of his advisers appear to think so, sanctions to be rolled back. His regime used to earn crucial for- and this is a truly dangerous idea. America has little or no good eign currency from the Kaesong industrial zone on the border human intelligence inside North Korea, so a surgical pre-emptive with the South, where South Korean companies made use of strike would probably fail in its objective, whether that was to North Korean labour. But Mr Moon’s predecessor pulled out of knockout the North’s nukes or the Kim regime itself. Such a strike Kaesong in early 2016. Many South Koreans argue for its reopen- would risk starting a nuclear war that would kill millions, and a ing. That would displease America. conventional one that would devastate South Korea. Ifever there was a time forcool heads to prevail, it is now. Wedge of tomorrow The good news, fornow, isthatMrKim appearsto view hisnu- Indeed, some Americans see Mr Kim’s overture as an attempt to clear capability as a deterrent, not a tool for aggression. “In no drive a wedge between South Korea and its protector. It probably way would the United States dare to ignite a war against me and is, but it will not work. South Korea’s president may not get along our country,” he rasped in a tobacco-inflected voice in his speech. with Mr Trump, but he is no fool. He understands that the Kim re- As forMr Trump, the linkbetween his words and deeds is always gime is the real problem, and that South Korea needs American tenuous, and he would not be the first American president to military support to deter it. His government backs UN sanctions, make threats he did not carry through. in recent weeks seizing two Chinese-linked ships suspected of il- Yet the dangers are there. Mr Kim appears confident, if not legally supplying North Korea with oil. cocky. As well as a series of increasingly successful missile The story in 2018 may be that sanctions bite harder: Mr Lan- launches last year, in September the North set offa presumed hy- kov thinks a return of famine in parts of the countryside is possi- drogen bomb underground with a good 15 times the destructive ble. But do not imagine this will bring Mr Kim to heel. He will not force ofthe one America dropped on Hiroshima. be too troubled if his people starve. And even if China enforces The confidence Mr Kim expressed in his speech about his mil- the sanctions strictly enough to endangerMrKim’s regime, that is itary capabilities seemed at times to extend to the economy. The unlikely to change his calculus on nuclear weapons. With his “great historic achievement” of building nuclear weapons, he back to the wall, nukes become more important to Mr Kim, not said, has now “opened up bright prospects for the building of a less. Expect this year to be as nerve-racking as 2017, ifnot more. 7 20 China The Economist January 6th 2018

Also in this section 21 Good news for nature?

For daily analysis and debate on China, visit Economist.com/china

Internet controls Subscribers to the best-known foreign VPN services are still able to use their ac- Virtual panic counts in China. But they were rattled in July when Bloomberg, citing anonymous sources, reported that telecoms companies had been told to block access to unautho- rised “personal” VPNs, presumably includ- BEIJING ing foreign ones, by February 1st 2018. Chi- na’s internet providers may well have the The great firewall is rising. How high will it go? ability to do so: during sensitive political EFORE he was jailed, few people had surmount. But doubts are growing about events foreign VPNs often become cum- B heard of Wu Xiangyang. But when this interpretation. For the past year the bersome or even impossible to use, appar- news of his conviction appeared in a state government has been trying to make it ently because of government-ordered ef- newspaper in late December, internet us- harder to find, and use, VPNs—the most forts to throttle them. The ministry in ers across China took note. A small trader common form of firewall-leaping tool. Mr charge of cyber affairs issued a confusing from the southern province of Guangxi, Wu’s punishment was clearly intended as rebuttal of Bloomberg’s story. Foreign dip- Mr Wu’s crime was to sell cheap and com- a harsh warning to others in China not to lomats in Beijing say they are finding it dif- monly used software that enables people try selling such services to ordinary con- ficult to get straight answers from the gov- to circumvent China’s draconian internet sumers. Speculation is growing that even ernment about how farit intends to go. controls. His five-and-a-half-year prison tougher curbs will be imposed in 2018. This is worryingnotjustforpeople who sentence is the toughest-known penalty Such fears may prove unwarranted, but want to surf the web without annoying imposed for such “illegal business”. the government has been doing little to al- obstructions. Many firms use their own in- Motivated Chinese have long found it lay them. Limitingthe sale and use ofVPNs house VPN systems orsimilartechnologies fairly easy to acquire such software, which isone aim ofa “clean-up” ofthe internet in- to enable staff to gain secure access to cor- provides access to what is known as a vir- dustry that began last yearand is supposed porate networks remotely. Officials say tual private network (VPN). Through this to be complete by the end of March. Sever- that tighter controls over VPNs will not im- kind of connection, a user in China can al popular providers based in China have pede such usage. But businesses worry reach the thousands of websites that are folded under government pressure. Those that they may be forced instead to use gov- blacklisted by the government—including that remain are aimed at business users. ernment-authorised methods, including almost all Google services, many news Mr Wu’s sentencing followed that of an- officially approved VPNs and leased lines, sites and most foreign social networks. other man accused of a similar offence that are less reliable and easier to spy on Many people use VPNs several times each who was jailed in March fornine months. than their own systems. day to jump the country’s “great firewall”, Those fears will only grow if a new law as its system of online censorship is often Piling on the bricks on encryption, presently being drafted, called in English (Chinese netizens have As well as closing down suppliers based in limits the extent to which companies are adopted the acronym GFW). Foreigners in China, the government has made it more permitted to scramble sensitive communi- China depend on VPNs to reach sites they difficult for people in China to buy foreign cations—as some observers fear it might. routinely need: everything from Gmail VPN services. In July Apple dismayed civil- Businesses have good reason to feel ner- and Dropbox to Facebookand Instagram. rights campaigners when it agreed to wipe vous. A cyber-security law that took effect Many observers believe that the great VPN products from its Chinese app store. in June allows authorities to review data, firewall’s porousness is a feature, not a The company pulled down more than 600 such as customer records, that firms wish bug—that its architects see benefit in a bar- of them. They are also disappearing from to send to headquarters abroad. rier that does not completely alienate en- Android stores, though more slowly. As China’s increasingly autocratic trepreneurs, academics and foreign resi- Meanwhile most of the public places that leader, Xi Jinping, tightens his grip on pow- dents, but which most Chinese web-users used to offer unfiltered internet—such as er, it is becoming harder to remain optimis- will not have the energy, or the finances hotels with many foreign guests—now pro- tic that he will continue to tolerate circum- (VPNs usually require subscriptions), to vide the expurgated kind. vention of the firewall. He shows little 1 The Economist January 6th 2018 China 21

2 sympathy with the complaints of foreign This is not the only case in which the businesses about the difficulties they face government has sought to moderate the in China. And he is clearly determined that environmental consequences of Chinese the internet in China be made dissent-free, tastes. A campaign led by a former basket- even if his sweeping efforts to achieve this ball star, Yao Ming, helped slash demand irk members of the middle class on which for shark’s fin soup, a delicacy. Imports of the CommunistPartydependsforsupport. dried fins fell from 4,800 tonnes in 2004 to Last year regulators shut down many ce- 20 tonnes in 2014. The government also lebrity-gossip blogs and some sites that banned shark’s fin soup from official ban- stream live events such as concerts, appar- quets and the sale of any edible product ently because they could be used as plat- from endangered species, such as pango- formsforembarrassing the party. lin, whose scales are used in traditional In part as a result of tightening censor- Chinese medicine. ship, China’s online chatter has been grad- China is far from an animal-welfare ually migrating from public microblogs to paradise. By coincidence, on the day ivory instant-messaging apps such as WeChat, sales were banned, the country cut the where userscan create private groups up to duty on imported donkey skin from 5% to 500 strong. But even in these forums, 2%, the second ofthis year’s changes. Gela- throwaway criticisms and jokes about the tine from boiled donkey hide is another in- party get people in trouble. The govern- gredient in traditional medicine (skins, ment is trying to make ordinary web users probably destined for the Chinese market, act as censors themselves. In September it are pictured in Kenya). Campaigners say said it would start holding the creators of the action threatens the world’s donkey all private chat groups jointly responsible population, though it is hard to see how, if they fail to police discussions to the au- Though they’re disapprovin’ given that there were 44m donkeys in 2016 thorities’ satisfaction. and their numbers are rising. All things be- The party is still haunted by the social- about the impact that a rising China will ing equal, more demand from China ought media-fuelled protests of the Arab spring have on the natural world. They worry not to translate into more donkeys raised. But it early this decade (recent anti-government only about carbon emissions but also that, is certainly pushingup the price ofdonkey- protests in Iran have been an unsettling re- one day, the last tigerwill be killed so its pe- hide gelatine (see chart). minder of that period: censors have or- nis can be turned into an ineffective aphro- Indeed sometimes it is China’s mod- dered media not to report on them). But of- disiac orthe lastelephant slaughtered so its ernisation that has the biggest environ- ficials may have failed to appreciate the tusks can be carved into a gift. Yet as China mental impact—as the third of the recent cost to China’s image abroad, and to the has grown richer, it has changed. Three changes shows. China is not only the party’s at home, should it deny access to pieces of news at the start of 2018 suggest world’s biggest emitter of carbon, but the services that make online life liveable be- that some of the worst environmental world’s largest recycler, treating just over hind the great firewall. Most Chinese citi- fears are not being realised. half of exported plastic waste. Recycling, zens who regularly visit forbidden web- The closure of the domestic ivory busi- for all its benefits, is a filthy business. In sites are people who have benefited from ness (the first ofthe changes) goes back to a one town that specialises in recycling used China’s growing prosperity and who have deal between Barack Obama, then Ameri- electronics, 80% of children were found to little if any desire to challenge the party’s ca’s president, and Xi Jinping, his Chinese have excesslead in theirblood. On January rule. Angering them may prove risky. 7 counterpart, in 2015. They promised a 1st China banned the import of 24 catego- “nearly complete ban” on ivory sales. riesofwaste, includinghousehold plastics. America duly banned transactions in 2016, This should improve its own environment The environment except for those of century-old antique but is a problem in countries such as Brit- pieces. China closed a third of its ivory- ain which send China rubbish for process- Tusks, skins and carving workshops in early 2017 and the ing. The head of the UK Recycling Associa- rest in the past few days. Illegal sales will tion called it “a huge blow forus”. waste recycling doubtless continue. In 2017 officials in If it is a shock, it is a pleasant one. As Hong Kong seized over seven tonnes of il- China gets richer it is taking the environ- BEIJING legal ivory, the largest haul for 30 years. ment more seriously (see page 51). On bal- Hong Kong’s ivory market, which is regu- ance, that benefits everyone. 7 The natural world may have less to fear lated separately, remains open, but it is due than expected from China’s rise to be phased out by 2022. NTIL the end of 2017, carved elephant China’s actions seem to be having the Wallets are affected, too Utusks were still sold legally in China. desired effect. A study for Save the Ele- China International trade in ivory had been phants, a charity in Kenya, found that the Wholesale price of raw ivory Donkey-hide gelatine banned by the government since 1990, but average price ofa kilogram ofgood-quality $’000 per kg yuan ’000 per kg not domestic transactions. At a shop in a elephant tusk in China had fallen from 3.0 3.0 glitzy mall in Beijing, the manager showed $2,100 in 2014 to $730 in 2017 (see chart). 2.5 2.5 off his prize exhibit: a carving the size of a The ban that has just taken effect is likely to football of 30 ivory spheres, one inside the drive prices down further. Elephants are 2.0 2.0 other, each moving separately and intri- still being slaughtered in vast numbers. It is 1.5 1.5 cately carved. It was an example of an an- even possible that the fall in the price of 1.0 1.0 cient craftsmanship, and one that has no ivory may cause poachers to slaughter 0.5 0.5 future. On January1st China banned ivory more beasts, since they need more tusks to sales. The last ivory-carving factories and make the same amount of money. But 0 0 shops (including the one in Beijing) closed. eventually, making ivory worth less 2010 11 12 13 14 15 16 17 Environmentalists have long fretted should reduce the incentive to poach. Sources: CITES; Save the Elephants; Wind Info 22 United States The Economist January 6th 2018

Also in this section 23 Life expectancy falls again 24 What Congress didn’t get round to 24 High-tax states scramble 25 The Supreme Court and voting rights 26 California’s cannabis laws Lexington is on holiday

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Congress while Republicans are not. They also showed Democrats performing strongly in The polarising express the suburbs, home to many moderate Re- publicans, particularly in liberal states. Going back to 1934, a new president’s party has lost an average of 23 House seats in the mid-terms after his election (Demo- WASHINGTON, DC crats need 24 to win back the House). The Republican gerrymanders of 2010 may Blue-state Republicans could become almost as rare as white southern Democrats make it harder for Democrats to translate OPERATE underthe principle of justi- servative, socially liberal wing, took their votes efficiently into seats, but strong “Ified optimism,” says Deep Sran, as he name from New York’s Republican gover- Democraticturnoutcould dampen the ger- shows off the school he founded—based, nor. But as the party grew more uniformly rymanders’ effect. he says, on his reading of Plato’s “Repub- conservative, its centre has moved steadily And Mr Trump is uniquely unpopular. lic”. If voters elected representatives based westward and southward. Just as Barack Around 56% of voters disapprove of his on their CVs, Mr Sran would cakewalkinto Obama’s unpopularity in the South has- performance—more by far than any presi- Congress. A lawyer with a doctorate in hu- tened, but did not cause, the near extinc- dent dating back to Harry Truman at this man development-turned teacher and en- tion of white southern Democrats, so Pres- point in their tenure. Republicans hope trepreneur, Mr Sran is the son of immi- ident Donald Trump’s unpopularity looks that a booming economy, low unemploy- grants, raised in the suburbs of likely to sharply reduce the number of Re- ment and the extra money voters will see Washington, DC. He is one of11Democrats publicans from liberal states. from tax reform will provide favourable champing at the bit to replace Barbara Before attempting to predict the out- headwinds. Butthe president’sunpopular- Comstock, a Republican who has repre- come of this year’s mid-terms, a couple of ity makes that less likely. “When you dis- sented Virginia’sdiverse, wealthy10th con- caveats apply. First, the elections are still like someone, you’re unlikely to think gressional district fortwo terms. She is one ten months away. Much can change in that they’re responsible for anything good that of 23 Republicans representing districts time. Second, the mid-terms are not a sin- happens, while you blame them forevery- that Hillary Clinton won in 2016. Demo- gle contest, but hundreds, each with its thing bad,” says Larry Sabato, a political crats thinkthey can flip them all, and more: own unique set of candidates and circum- scientist at the University ofVirginia. the Democratic Congressional Campaign stances. Challengers who lookgood on pa- Blue-state Republicans have the added Committee (DCCC) has 91 districts in its per will have feet of clay; incumbents albatross of the tax bill signed into law late sights, the lion’sshare ofthem in states that deemed all but dead will find reserves of last year. Previously, taxpayers could de- Mrs Clinton won or barely lost. strength and cunning. duct many state and local taxes (SALT) They are, of course, unlikely to win That said, Democrats are not wrong to from their federal income taxes. The new them all. But an upset election, as this feel confident. More than two dozen Re- bill caps that deduction at $10,000—much year’s midterms in November could easily publican congressmen, many from com- less than many residents of high-tax, high- be, will break first and hardest in those petitive districts, have announced their re- cost-of-living states such as California, states—which would leave the Republican tirements. Democrats hold a nearly New Yorkand New Jersey pay. Their voters congressional caucus smaller and more 13-point lead on a generic ballot. They won may conclude that Republicans weap- strident, and risks making Congress even only two of seven special federal elections onised the tax code to punish states that more dysfunctional. last year, but they outperformed expecta- did not vote forMrTrump. Some blue-state Republicans from liberal states were tions in most of them. Victories in Ala- Republicans voted against the bill; how not always on the endangered list. Rocke- bama and Virginia’s gubernatorial elec- much that will matterto voters eager forre- feller Republicans, the party’s fiscally con- tion showed that Democrats are energised, venge will be tested in November. 1 The Economist January 6th 2018 United States 23

2 Republicans counter Democratic opti- Life expectancy mism by pointing out that their members who have hung on in liberal districts have Not great, again done so for a reason: competitive districts tend to produce battle-tested candidates used to tough contests. And the time for Democratic surprises is over: “If a Republi- can incumbent is caught off-guard” after Why life expectancy is down forthe last year’s elections, says Nathan Gon- second yearin a row zales, a campaign analyst, “it’s their own foolishness.” Even comfortable Republi- UST as Americans headed home for the can incumbents—such as Rodney Freling- Jyear-end holidays, the Centres for Dis- huysen, who has represented New Jersey’s ease Control and Prevention (CDC) is- rich 11th district since 1995 and has never sued itsannual reporton mortality—which won less than 58% of the vote—have raised had no news to celebrate. According to the their campaign game. report, published on December21st, life ex- Democratic enthusiasm has a down- pectancyin America fell in 2016, forthe sec- side: big, messy primaries that either pull ond year in a row. An American baby born candidates too far to the left for swing dis- in 2016 can expect to live on average 78.6 tricts or reproduce the 2016 Republican pri- years, down from 78.9 in 2014. The last time maries, in which a bunch of indistinguish- life expectancy was lower than in the pre- able moderates split most of the vote, thus ceding year was in 1993. The last time it fell empowering an extreme candidate with a fortwo consecutive years was in 1962-63. small but devoted fan base. And even a Other statistics suggest that this alarm- Democratic thumping will not eliminate ing trend is caused by the epidemic of ad- every liberal-state Republican. Chris Smith diction to opioids, which is becoming in New Jersey, Chris Collins in New York, deadlier. Drug overdoses claimed more Long day’s journey Devin Nunes and Kevin McCarthy in Cali- than 63,000 lives in 2016. Two-thirds of fornia and Cathy McMorris Rodgers in these deaths were caused by opioids, in- which has been a chiefdriver ofthe steady Washington, for instance, all come from cluding potent synthetic drugs such as fen- increase in life expectancy—has begun to districts that Mr Trump won handily. But tanyl and tramadol, which are easier to level off. As a result, further increases in last year’s elections showed that Demo- overdo by accident and are becoming overdose deaths would probably push life crats excel at boosting turnout in Demo- more popular among illegal drug users. expectancy down again. A decline for cratic-leaning areas, which will improve According to the CDC, the leading three straight years was last seen in Ameri- their chances in swing districts. causes ofdeath in 2016 remained heart dis- ca a centuryago, when the Spanish flu pan- That is why, even with all the caveats in ease and cancer. But a category called “un- demic ravaged the world. place, a thinning out of Republican ranks intentional injuries”, which includes drug This outcome seems likely. According to in Democratic states looks likely. That overdoses, climbed to third place—from CDC officials, provisional data for the first would leave Republicans from safe seats— fourth place in 2015 and fifth place in 2012. half of 2017 suggest that overdose deaths notably the hard-right members of the Although unintentional injuries caused continued to rise. Foot-dragging by Presi- Freedom Caucus—proportionately more just 6% ofdeaths in 2016, they claim mostly dent Donald Trump’s administration has powerful. The 12 highest-scoring Republi- people in the prime of their lives. A young not helped matters. On the campaign trail cans on the Lugar Bipartisan Index—which person’sdeath cuts average life expectancy in 2016, Mr Trump promised to take on the measures how well legislators work with by more than the death ofan older person. opioid epidemic as a priority. So far, his ad- members of the opposite party—all come The steepest rise in mortality was ministration has not produced a plan or from Democratic-leaning or swing states; among25- to 34-year-olds. In thatage group appointed a “drug tsar” to oversee a strat- the top three are all New Yorkers. deaths per100,000 people from any cause egy to curb addiction. Nor has it asked If a significant number of them were to increased by 11% from 2015 to 2016. Mortal- Congress to allocate the billions of dollars lose their seats as part of a wave big ity from drug overdoses in the same age needed to treat the estimated 2m people enough to give Democrats a majority in group shot up by 50% from 2014 to 2016. hooked on opioids. The national Public the House, that would not much matter: At the same time, the decrease in mor- Health Emergency Fund has just $57,000 Democrats will presumably be as unlikely tality from heart disease and cancer— on hand, because it has not been replen- to reach across the aisle for Republican ished foryears. States and local authorities votes as Republicans have been to seek are setting up addiction-treatment ser- Democratic ones. Wrong turn vices. But without new money from feder- But if Democrats fall just short of a ma- Average life expectancy at birth, years al sources, their efforts will buckle under jority, Paul Ryan’s days as Speaker could be the weight ofthe problem. 84 numbered: a more hard-right caucus Japan A continued decline in life expectancy would want harder-right leadership. 82 would leave America trailing even farther Democrats will find it difficult to retake the 80 behind otherrich countries. Lives in Amer- Senate: they would have to successfully France ica are already two years shorter than the 78 OECD defend all 26 oftheir seats, including ten in United States average in the group of 35 rich and states that Mr Trump won, and also steal 76 soon-to-be-rich countries: life expectancy Britain is closer to Costa Rica’s and Turkey’s than two from Republicans. In that scenario, 74 finding something that could pass both the Germany to that of Britain, France and Germany. If House, with a more powerful Freedom 72 the administration cannot reverse this Caucus and less of a counterweight, and then—atleastwhen itcomesto longevity in the more moderate Senate would become 1980 85 90 95 2000 05 10 16 the Western world—its policy might be de- even harder than it is already. 7 Sources: OECD; CDC scribed as America Last. 7 24 United States The Economist January 6th 2018

Congress cans are no longer using special proce- you will get an inaccurate census, and dures to avoid filibusters, the fixes will that’s a failed census,” says Vanita Gupta, Hell’s laundry list need to be bipartisan. president ofthe Leadership Conference on To date, the worst casualty of congres- Civil and Human Rights. sional dysfunction has been the Children’s Congress must also renew a provision Health Insurance Programme, which pro- ofthe Foreign Intelligence Surveillance Act WASHINGTON, DC vides coverage for poor families that make known as Section 702, which lets spies in- too much to qualify for Medicaid. Con- tercept communications. Under current Afterignoring everything but tax, gress let funding for the scheme, which in- law intelligence agencies cannot directly Congress has much to do and little time sures 9m children, expire in September. target Americans. Privacy advocates wor- LAME it on the sand traps: President States, which administer the programme, ry that the agencies still sweep in too many B Donald Trump returned to work after were forced to resort to emergency mea- phone calls and e-mails involving citizens. seven straight days of golf enraged. Even sures. Some have already frozen enrol- This issue scrambles the usual partisan al- by his own standards, his Twitter fury on ment. An estimated 1.9m children would legiances of Congress: civil libertarians January 2nd was extraordinary. The presi- have lost coverage in January had Con- from both parties want more checks and dent boasted that he has a “much bigger” gress not, just before going on holiday, protections; national-security hawks nuclear button than North Korea’s despot- passed a short-term fix funding the pro- would like a clean reauthorisation. ic ruler, Kim Jong Un; announced a myste- gramme until March. Jumbled coalitions—and the sheer rious “MOST DISHONEST & CORRUPT ME- Operating procedure for Congress has number of unresolved matters—make DIA AWARDS” event and called, on a been to practise brinkmanship and issue grand bargains unlikely. Congressmen whim, fora political rival to be jailed. apocalyptic warnings right up to dead- may attempt horse-trading: children’s The next day excerpts from a forthcom- lines, fail to come to any agreement, and health insurance in exchange for unfet- ing book on the Trump campaign began to then pass short-term fixes that keep exist- tered surveillance; Obamacare funds for circulate. In one juicy nugget, Steve Ban- ing policy, no matter how ill-conceived, on military spending. Such efforts could well non, the chief of that victorious campaign, autopilot. But some matters, like the cen- fail, leaving Congress to pass another described a meetingthatDonald Trump ju- sus, which must be taken every ten years short-term reprieve and repeat the same niorand Jared Kushnerheld in Trump Tow- by constitutional mandate, cannot be so struggle in a month’s time. 7 er with a Russian national offering help as easily put off. The Census Bureau typically “treasonous”. Don juniorwould “cracklike increases spending in the critical years be- an egg” underthe pressure ofthe investiga- fore the 2020 count, which will determine High-tax states tion into election meddling, Mr Bannon new election boundaries and the annual supposedly said. Cue fury from the presi- distribution of $600bn in government Taxreplanning dent, who said Mr Bannon had “lost his funds. But Congress has not given the mind” and “doesn’t represent my base— agency proper funding, forcing it to cancel he’s only in it for himself.” Alawyer for Mr two of its three dress rehearsals. The bu- Trump threatened legal action. Hello 2018. reau also lacks permanent leadership, WASHINGTON, DC Meanwhile, the list of things left un- which the Trump administration appears How states may try to circumvent the done by the federal government is long to be in little hurry to fill. new taxlaw and unpleasant for Republican leaders in Civil-rights groups are worried that this Congress (one privately calls it a “shit sand- will dilute the political representation of EMOCRATS usually lament efforts by wich”). It includes funding a popular minorities, who are less likely to respond Dthe rich to avoid paying taxes. Yet the health-insurance programme for children, to census-takers. A recent request by the bill President Donald Trump signed into ensuring that the upcoming census is Department of Justice to add a citizenship law on December 22nd may spur Demo- sound, renewing a key surveillance tool question to the census, would, ifapproved, cratic-leaning states to concoct such and perhaps most important, striking a probably depress response rates among schemes. The reform capped at $10,000 spending deal to keep the government immigrants. “If you have fear and non-re- the deduction, from federally taxable in- open past January 19th. Because Republi- sponse among large swathes of the public, come, of state and local taxes (the “SALT” deduction). As a result, those who pay large local levies are likely to pay more fed- eral tax in 2018. The change is particularly bad forhigh-earners living in big houses in states like New York and California, which impose high taxes. These states—which tend to see the reform asRepublicans shak- ing down their political opponents—may yet put up some resistance. Just underone-in-three taxpayers made use of the SALT deduction in 2015. On aver- age, they knocked about $12,500 off their federally taxable income, according to the Government Finance Officers Associa- tion—only a little above the new cap. Yet the deduction has been much more valu- able than that to some. Those earning over $1m who took the SALT deduction used it to reduce their federally taxable income by about $275,000. Individuals and states alike are think- Sandwich o’clock ing about how to circumvent the new cap. 1 The Economist January 6th 2018 United States 25

2 In late December, huge queues formed at Husted in 2016, it sided with the plaintiffs tax offices in places such as Fairfax County, by a 2-1vote. Inactivity, the majority found, Virginia—the third-richest county in Amer- is an illicit basis for wiping registered vot- ica—as residents sought to prepay their ers from the rolls. According to the NVRA, property taxes for 2018. They hoped to de- no individual may be removed from state duct the early payments on their federal lists “by reason of the person’s failure to tax returns for 2017, before the cap came vote”. In their brief to the justices, lawyers into force. But the IRS mostly scuppered for the American Civil Liberties Union ex- these hopes when, on December 27th, it plained why Congress insisted on this ca- said that only taxes that had been “as- veat: “While voting is a right, people have sessed” before the end of 2017 would be an equal right not to vote,” a Senate report deductible. Those prepaying estimates of declared, “for whatever reason.” their 2018 taxes will be out ofluck. The core of Husted involves a tricky de- In any case, this avoidance strategy tail ofstatutory interpretation: how to read would only have worked for one year. a line in HAVA barring states from remov- Some, like Andrew Cuomo, the governor ing individuals from voter lists “solely by of New York, hope to find a longer term reason ofa failure to vote”. The challengers dodge. One idea is to let taxpayers make and the Sixth Circuitmajoritycontend that charitable contributions to state coffers, in Ohio de-registers voters based only on in- exchange for a one-for-one reduction in activity—and thus falls foul of the law. their state tax bills. Because charitable con- Ohio’s Republican secretary of state, Jon tributions remain deductible without lim- Husted, and the dissenting Sixth Circuit it, this would circumvent the cap. The Supreme Court and voting rights judge, counter that the erasure results from It would also invite legal challenges. that fact and another omission: the indi- Taxpayersare notmeantto receive benefits Use it or lose it vidual’s failure to confirm his address by in exchange for their deductible contribu- sending the postcard. tions. Remarkably, there is some legal un- For decades, the Department of Justice certainty over whether credits towards (DOJ) understood the lawthe waythe chal- DOJ state taxes count. Charity typically already NEW YORK lengers do. But in a rare about-face the confers tax benefits at a state level, but fed- under Donald Trump now embraces An Ohio voter-purge case with national eral authorities do not see this as invalidat- Ohio’s position. Samuel Bagenstos, a law implications comes before the justices ingthe federal deduction. Some hope, opti- professor at the University of Michigan mistically, that the courts would take this OLITICAL apathy worried Jean- who served in Barack Obama’s DOJ, la- logic to its extreme, and allow even a com- PJacques Rousseau. In a healthy republic, ments, in an amicus brief drafted for13 for- plete tax credit for contributions made to he wrote in “The Social Contract” in 1762, mer DoJ lawyers who served in Demo- the state itself. citizens “fly to the assemblies” and take an cratic and Republican administrations, Another idea is that states could raise a active role in public affairs. He would thatthe department’s“longstandingview” higher proportion of their revenues from frown on America’s voter turnout, which has been “abandoned”. payroll taxes on employers. Such levies, hovers at 40% for mid-term elections and Mr Bagenstos’s brief examines the legal which are invisible to workers, remain seldom goes much higher than 55% for a bases for voter purges. If Ohio wants to re- fully deductible for firms. The main draw- presidential race. But he might have been move people who have moved, the brief backofthis plan is that firms would proba- even more alarmed by laws that sideline notes, it is a better idea to consult post-of- bly want to respond by cutting wages. In infrequent voters from politics. fice or motor-vehicle records than to guess theory, workers should not mind, if their On January 10th a rule that has disen- from voting history. People may opt to stay state income taxes fall commensurately. In franchised hundreds of thousands of at home on election day because they dis- practice, they would probably object. Ohioans comes under the Supreme like the candidates, feel their vote won’t Some fear that if neither of these strat- Court’s microscope. Husted v Philip Ran- make a difference or are dissuaded by vot- egies works, high-earners may take a more dolph Institute concernswhatthe League of er-ID laws: inactivity is not a reliable “indi- rudimentary route to tax avoidance: relo- Women Voters and the Brennan Centre for cation that someone has moved”. cation. This worry is probably overblown. Justice calls the most restrictive approach A study by Reuters found that about A study in 2016 of the geographic mobility to winnowing voter rolls found anywhere twice as many Democrats as Republicans of workers earning more than $1m from in America. Since 1994, in addition to nix- were purged from the rolls in Ohio before 1999 to 2011 found very little migration in ing people who have died or moved— the election of 2016. This partisan context response to tax rates. This probably helps which all states do—Ohio has sent a post- may presage an ideologically split Su- explain why state taxrates vary so much in card to voters who have not voted for two preme Court ruling, but Rick Hasen, an ex- the first place. Historically, states have not years. If they fail to return the address con- pert in election law, thinks Mr Bagenstos’s structured their tax systems to maximise firmation and then miss two more federal brief has a chance of swaying the court’s the SALT deduction, notesJared Walczak of elections, they are taken offthe rolls. newest conservative, Neil Gorsuch. “I the Tax Foundation, a right-leaning think- Ohio says its “supplemental process” think if Justice Gorsuch is true to his tex- tank. For example, taxpayers must choose for trimming voter lists is authorised by tualist proclamations, his vote could well between deducting their income taxes and two laws: the National Voting Rights Act be in play,” Mr Hasen says. Elizabeth Wy- deducting their sales taxes. Yet rather than (NVRA) of 1993, which demands “accurate dra of the Constitutional Accountability specialising in one or the other, most states and current voter registration rolls”, and Centre agrees. Justice Gorsuch insists that levy both. the Help America Vote Act (HAVA) of2002. courts “must not rewrite federal laws un- Unless Democrats come to power and Challengers reply that Ohio’s procedure der the guise of interpreting them”, she restore the SALT deduction, rich people in clashes with the primary mission of the says, which bodes well for the plaintiffs. Democratic states will probably have to NVRA: protecting the “fundamental” right “States may not disenfranchise voters sim- learn to live with higher taxes. But expect of American citizens to vote. When the ply because they have failed to exercise some grumbling in the meantime. 7 Sixth Circuit Court of Appeals considered their right to vote in the past.” 7 26 United States The Economist January 6th 2018

Cannabis laws abuse. A fifth will go towards cleaning up environmental damage caused by illegal California inhales cannabis-growing. For comparison, the largest share oftaxrevenues in Oregon, an- other deeply progressive state, goes to a general education fund. Some cities in the Golden State are tak- LOS ANGELES ingthingseven further. In LosAngeles, resi- dents with past marijuana convictions The state’s new cannabis regulations are almost comically progressive will not only be allowed to buy licences to N A hazy January morning, scores of to have their records expunged. Between sell the drug, but will be given priority. Un- Ocannabis enthusiasts queued outside November 2016, when Proposition 64 was der the city’s “social-equity programme”, MedMen’s elegant West Hollywood store passed, and September 2017, 4,885 Califor- low-income Angelenos who have previ- to celebrate the first day they could legally nians petitioned to reduce or void their ous marijuana convictions or who have purchase the drug without a medical li- convictions. Donnie Anderson, chairman lived in areas with disproportionately high cence. As they took their place behind a of the California Minority Alliance, which rates of arrest for marijuana offences will man covered in piercings and dragon tat- champions people who have been be given preference when licences to open toos, two women in Spandex leggings and harmed by drug criminalisation, applauds marijuana retail businesses are granted. designer sunglasses chatted about what this initiative. “In the past, if you were Oakland, San Francisco and Sacramento they would buy. When, an hour later, they white and caught with marijuana you have introduced similar initiatives. were invited in, they picked up a shopping would be let off. If you were black or Lat- California has been widely criticised basket and sought out a “budtender” to ino, you were not,” he says. A study by the for its sloppy management of the medical help them choose between marijuana American Civil Liberties Union, an advo- marijuana industry. That raises questions flowers, THC-infused citrus soda, and can- cacy group, found that between 2001 and aboutwhetheritcan do betterwith the rec- nabis chocolate. “My dad has really bad 2010 African-Americans were more than reational stuff. John Hudak of the Centre back pain,” one explained, as the pair three times as likely to be arrested for mari- for Effective Public Management at Brook- stood in front of shelves displaying canna- juana possession as white Americans, de- ings, a think-tank, is cautiously confident. bis bath bombs, marijuana lotions and spite similar consumption rates. “California was the first state to legalise hemp-oil dog treats. “But he’s an old con- California’s law also allows those con- medical marijuana—it didn’t have the ben- servative white male. What can I buy him victed of past marijuana crimes to enter efit of experience of what works and what that won’t freakhim out?” the cannabis industry. Jolene Forman of doesn’t,” he says. “Now it does.” California pioneered the legalisation of the Drug Policy Alliance, a pressure group, Legalisation seems unlikely to create a marijuana formedical use in 1996. But until says this is ideal for two reasons. First, it al- new group of heavy potheads, as seems to this year the state’s cannabis industry has lows people who have been operating have happened in other states where pot been largely unregulated. In November black-market cannabis businesses to be- has been legalised (nationwide, about 80% 2016, following residents of other states come legal. Second, it gives people harmed of the stuff is consumed by just 20% of us- such as Colorado, Washington and Ore- by the war on drugs the chance to profit in ers). Obtaining a medical licence to use gon, Californian voters resoundingly ap- the legal cannabis industry. marijuana in California has long been as proved Proposition 64, a measure to allow With the revenue raised from recre- easy as applying online and paying the sale of recreational marijuana. After a ational marijuana sales, California hopes around $40. Getting the stuff illegally has year of planning, on January 1st it became to reduce some of the harms of criminali- not been hard, either. When a preppy man legal for licensed dispensaries to sell mari- sation. After deductions for cannabis re- in loafers waiting to enter MedMen was juana forrecreational use. search and community programmes in the asked if he had previously used a medical Besides California, seven other states areas most affected by past marijuana poli- licence to buy marijuana, he said no. and the District of Columbia have legal- cies, among other things, three-fifths oftax When asked if he used the drug regularly ised recreational marijuana. But California revenuesfrom the purchase ofrecreational he nodded. Most Californians who want is different in two ways. First is its size. With marijuana will go towards anti-addiction to consume heavily already do so. But now legalisation, California—the world’s sixth- programmes and education about drug the state can tax them forit. 7 largesteconomy—instantlybecame itslarg- est legal market for recreational marijuana. A study by the University ofCalifornia Ag- ricultural Issues Centre at the University of California, Davis predicts that sales from recreational cannabis will eventually reach $5bn a year. The state already sells marijuana worth more than $2bn a year for medical purposes. For comparison, Colorado sold $1.3bn in total, for recre- ational and medical use, in 2016. Since the federal prohibition means business can- notbe conducted acrossstate lines, Califor- nian companies will be able to reach a scale that businesses in other states lack. Second, perhaps unsurprisingly for a state seen as a Petri dish for socially liberal policy, California’s new regulations are no- tably progressive. For a start, they allow residents convicted of drug offences that would not be crimes under the new order Wake up and smell the THC The Americas The Economist January 6th 2018 27

Also in this section 28 Corporatising Colombia’s emeralds 29 Rewriting Canada’s map

Peru isters to urge the president to resign. Yet the opposition fell short of the two-thirds ma- The presidential hostage jority required, because Kenji Fujimori, Keiko’s estranged brother, led ten Popular Force deputies in abstaining. Three days later Mr Kuczynski an- nounced the pardon for Alberto Fujimori, LIMA Peru’s president from 1990 to 2000 and its most divisive figure. While many Peruvi- The way Peru’s president pardoned Alberto Fujimori has weakened him ans credit Mr Fujimori with saving Peru’s TWAS a strange video announcinga rash when he was economy minister. Another economy from hyperinflationary chaos Idecision. In a taped message President firm, First Capital, owned by Gerardo Se- and eliminating the threat from Shining Pedro Pablo Kuczynski, in a dimly lit room púlveda, a manager at Westfield, received Path, a Maoist terrorist group, he governed and with the harrowed look of a kidnap $4m from Odebrecht between 2010 and as an autocrat and presided over systemat- victim, told Peruvians that the pardon he 2013. The contracts were legal and above- ic bribery and corruption. After being ex- had issued to Alberto Fujimori, a jailed for- board, Odebrecht stated. In successive, tradited from Chile, he was convicted on merpresident, was “perhaps the most diffi- stumbling explanations Mr Kuczynski in- fourcharges ofcorruption and one of com- cult decision ofmy life”. He had taken it be- sisted that Mr Sepúlveda was in sole plicity in a death squad. He was sentenced cause Mr Fujimori should not be allowed charge of Westfield when he was in gov- to 25 years in prison. Peru’s past two presi- to “die in prison—justice is not revenge”. He ernment, though he admitted he received dential elections have been contests be- called on Peruvians to move on from “neg- “some money” in “dividends” from the tween Keiko Fujimori and anti-fujimo- ative emotions inherited from the past”. Odebrecht contract. His only link to First rismo—the country’s strongest political His unspoken hope was that, having bare- Capital was a fee it paid him for a consult- current. ly survived an attempt by congress to im- ancy job when he was not in government. peach him, the pardon would steady his This was enough for Mr Kuczynski’s Not always divine shaky presidency. But to many, it looks as if foes to pounce. Chief among them is Keiko On December 24th Mr Kuczynski sum- his presidency has been taken hostage. Fujimori, Alberto’s daughter, who lost the moned his ministers and congressmen “to The pardon on December 24th was the election in 2016 by just 41,000 votes and inform, not consult” them on the pardon, culmination of a turbulent fortnight that has seemingly never got over it. Her Popu- according to one who was there. Few be- began when a congressional committee re- lar Force party has 71ofthe 130 seats in con- lieve official claims that it was because of ceived documents from Odebrecht, a Bra- gress, whereas the president’s party won fearsforMrFujimori’shealth, and nota po- zilian construction company at the heart only 18. Having forced out several of his litical deal struck with Kenji. Mr Kuczyn- of a vast corruption scandal across Latin ministers, Popular Force backed a motion ski’s pardon extends to a pending case of America, showingthatithad awarded con- for impeachment on the grounds of “per- complicity in murder. sultancy contracts to companies linked to manent moral incapacity” (an inheritance He had trailed the possibility of the par- Mr Kuczynski. This contradicted the presi- from 19th-century constitutions intended don for months, but in a non-committal dent’s written testimony in October that to deal with dementia in a president). way. A poll by Ipsos found that 56% fa- he had no links, either direct or indirect, to Many neutral observers saw impeach- voured the pardon. But 40% did not, and Odebrecht, which received many padded ment, without thorough investigation, as many of them voted for Mr Kuczynski. public contracts in Peru and has admitted disproportionate. In defendinghimself, Mr Three ministers and three of his congress- paying $29m in bribes in the country. Kuczynski admitted he had been “insuffi- men resigned in protest, as did a number Westfield Capital, a boutique invest- ciently forthcoming” but denied he was of mid-level officials. Tens of thousands of ment bank wholly owned by Mr Kuczyn- corrupt. He accused Popular Force of Peruvians demonstrated on December ski, received $782,000 from Odebrecht for mounting a parliamentary coup. Defeat 28th and more protests are planned. While providing consultancy starting in 2004, seemed inevitable, promptingseveral min- Mr Fujimori admitted that he had “let1 28 The Americas The Economist January 6th 2018

2 down [some] compatriots” after his par- no idea of what to do when he got to the ty and size of its emeralds. Of the 20 that don and asked for their forgiveness, that presidency,” says Alfredo Barnechea, a de- have sold at auction for more than was less than the full-blown apology for feated rival in the election in 2016. $100,000 a carat, 19 were from Muzo or his crimes many would like. There are few disagreements between nearby. Guaqueros speak reverently of Starting with a reshuffle of his cabinet, Mr Kuczynski and Keiko Fujimori on mac- Fura, an 11,000-carat rock named after a the president hopes to relaunch his gov- roeconomic policy. But Peru needs much mythical philandering wife who wept em- ernment and seek a national consensus. more than a stable economy. Some of eralds. Victor Carranza, who had started Ipsos found a slight bump in his approval those who voted for the president did so outasa guaquero and became Colombia’s rating since mid-December, from 19% to because they thought he believed in the emerald tsar, found it in 1999. As faras any- 25%. But his situation now looks perilous, need for independent institutions and one knows, it has never been sold. forthree reasons. more professional public agencies. These A guaquero’s odds of making a Carran- Having forfeited much of his original are things that Alberto Fujimori destroyed. za-like fortune, never high, have become support, he has thrown himself on the un- The president is right that Peru needs to fainter. That is not because there are no certain mercies ofthe fujimoristas. Popular move on from its disagreements about Mr other $100,000-a-carat emeralds some- Force isan extension ofthe Fujimori family Fujimori. But Mr Kuczynski’s chance ofdo- where in the mountainsnearMuzo, but be- saga. Seemingly fearful of being overshad- ing anything useful by the end of his term cause the huntisbeingtaken overby multi- owed by her father, Keiko did nothing to in 2021now looks vanishingly small. 7 national companies. They offer regular speed his release. That task fell to Kenji, jobs rather than a tantalising chance of who Ipsos finds is now slightly more pop- riches. But not every guaquero can get one, ular than his sister. Whether the Fujimoris Emeralds in Colombia and some prefer the thrill of the hunt to a unite or continue to fight among them- pay cheque. selves is an open question. Alberto Fuji- Prospectors, Before corporatisation came chaos. mori expressed gratitude to Mr Kuczynski, Carranza employed his own army to fight but even the slightest attempt on his part to barons and suits rivals for control of the most productive return to political life would hurt the gov- mines in the “green wars” of the 1960s and ernment. Keiko faces two judicial investi- MUZO 1980s. Perhaps 6,000 people died. “We all gations into Popular Force’s finances lost family and friends,” says William Nán- Evil multinationals are giving miners which, unless halted, could see her jailed. dar, the flamboyantdirectorofMina Real, a steady jobs One concerns a text message on Marcelo locally owned mine. The winners man- Odebrecht’s phone in which the construc- T THE bottom of a muddy basin sur- aged to legalise their claims. Drug-traffick- tion tycoon, now under house arrest, ap- Arounded by verdant mountains, Dora ers tried to launder money through emer- peared to order an illegal $500,000 dona- Alicia Hernández combs through black ald mining, Mr Nándar recalls, “but they tion to her election campaign in 2011. sludge and rockin the fainthope offinding never made it past the private armies.” Then there is Mr Kuczynski’s own rela- an emerald valuable enough to lift her out Guaqueros found opportunities amid tionship with Odebrecht. In a new revela- of poverty. “All we need is one shiny the turmoil, sifting waste extruded by the tion, Mr Odebrecht is said to have told Pe- stone,” she says, as rainclouds smother the mines and panning for stones in the Itoco ruvian prosecutors in November that Mr mountainsoverhead. “Then we can getout river. Those who worked for the mining Kuczynski gave talks to the company’s ofhere.” barons had livelihoods that were barely board. The president, who answered ques- Alicia is seeking fortune near Muzo, a more secure: instead of wages, they were tions from an anti-corruption prosecutor mountain town north of Bogotá that has paid a cut ofwhat they found. forfourhours on December 28th, may also attracted guaqueros (prospectors) from Things calmed down after the barons be required to give evidence to a congres- across Colombia since pre-colonial times. made peace in 1990, Mr Nándar reminisces sional committee looking into Odebrecht, The region is renowned for both the quali- while sitting beside an outdoor hot tub at1 one of whose managers is due to give fur- ther testimony. In the eyes of many former supporters, the president has forfeited the benefit of the doubt. “Before, many people thought...he was an upright figure,” El Comercio, Peru’s establishment newspa- per, wrote after the impeachment vote (which it opposed) but before the pardon. Now “few people don’t believe he has lied many times to the country about his past with Odebrecht.” It added that he should “reflect on how little he has achieved”. That is his third weakness. Mr Kuczyn- ski is 79, and has far more experience in banking and business than in politics. His government has been largely aimless. Its only tangible achievements are a welcome but minorreduction in paperworkforpub- lic services and an active foreign policy. It has largely failed to get big public projects going, as it promised. It commissioned a re- port on creating a universal health, pen- sions and social-protection system only to shelve it. “I made many criticisms of Ku- czynski but I never thought he would have Better than a pay cheque The Economist January 6th 2018 The Americas 29

2 his hilltop mansion. Then came the suits. place names were added to the national Charles Burgess, an American, was the first registry in 2017, compared with 358 five to step out ofa helicopter in 2009. He went years earlier. In come cases, they are sup- into business with Carranza, set up a com- planting European-origin names. pany called MTC and brought in machin- Name-swapping is not easy. Local gov- ery to widen the mines, making them ernments, which normally make such de- more productive. After Carranza died in cisions, must consult residents, who often 2013, MTC acquired his mines. disagree with one another. Provinces also Other foreign companies hope to emu- have a say. When Ottawa, named after the late MTC. In Coscuez, 15km (ten miles) from Odawa indigenous group, merged with Muzo, a Dubai-based firm, Fura Gems, re- surrounding municipalities in 2001, it cently bought a mine from a Colombian found itself with 80 streets that shared businessman. Mina Real is seeking foreign their names with at least one other. Cana- backers. da’s capital saw that as a chance to give Miners employed by corporations more recognition to the region’s indige- work regular hours and make at least the nouspeoples. Some residents resisted. Asa minimum wage of 781,242 pesos ($270) a result, it took the city until last November month. Dina Luz Poveda earns nearly dou- to settle on Onigam Street, whose name ble that as a safety inspector in a mine that was drawn from the Algonquin word for extends 1,000 metres into the side of a “portage”, as the replacement for one of its mountain. That is a vast improvement Canada River Streets. The job is still not done. from her earlier job as an intermediary be- Adecision maynotend a dispute. Acity tween guaqueros and visiting buyers. Shaming and councillor in Edmonton, Alberta’s capital, “NowI can thinkaboutfeedingmyfamily,” objected that Maskekosihk (“people of the she says. “I don’t worry that all my money renaming land of medicine”) Trail is harder to pro- gets spent on fuel because I know how nounce than 23rd Avenue, itsformername. much money comes in.” OTTAWA Cree groups retorted that they have coped Elin Bohórquez, Muzo’s mayor, thinks with tongue twisters ever since Europeans The country is erasing European names the change is indisputably for the better. arrived. (Canada’s longest one-word place from its maps “In the old days, as soon as guaqueros name, Pekwachnamaykoskwaskwaypin- earned the money with a big find, they EFFERY AMHERST, who commanded wanik, or “the lake where wild trout are spent it on liquor, on women, and what- JBritish troops in North America during caught by fishing with hooks”, in Manito- ever else,” he says. The companies main- the Seven Years War in the mid-18th cen- ba, is a Cree confection.) The Northwest tain roads in an area largely neglected by tury, described indigenous people who Territories nearly changed its own name to the state and claim to care about safety. fought forFrance as an “execrable race”. He a much shorter one after part of it separat- “We want to really focus on the safety of called for their “total extirpation” and sug- ed to form Nunavut in 1999. The govern- our mine,” says Dev Shetty, Fura Gem’s In- gested using dogs to hunt them down. ment sought suggestions on a website for a dian-born director. Yet Amherst (pictured) was commemo- new name; “Bob” came second. But many guaqueros, still dwelling in rated in Canada (and in the United States) The Stoney Nakoda want to rename mountainside shacks perched above mainly for establishing British supremacy Calgary, the largest city in Alberta, Wi- mineshafts, are unimpressed. In part that in North America. Schools, towns and chispa Oyade, which means “elbow is because there are not enough jobs for all streets bear his name. That has started to town”. The Blackfoot prefer Mohkinstsis- of them. MTC employs 800 people; Fura change in both countries. Amherst College aka-piyosis, which means “many houses Gems says it has hired “hundreds”. But in Massachusetts no longer celebrates Lord on the Elbow river”. The province has nearly 80% ofMuzo’s workforce, including Jeff as its mascot (but is keeping its name). shown no interest in calling Calgary, guaqueros, is without formal employment. Canadians are scrubbing the names of named after Scotland’s Calgary Bay, any- Greener and cleaner than the emerald Amherst and of other colonial-era heroes thing else. The Northwest Territories dealt barons, the companies leave less behind offstreet signs, school buildings and maps, with competing names for the Mackenzie for guaqueros to sift through. “Gallery often replacing them with names drawn river by accepting all of them in 2015. It can mines” bored into mountainsides have re- from indigenous history. Montreal, the now be called the Dehcho, the Deho, the placed open-cast mines, which have been largest city in French-speaking Quebec, Kuukpak, the Nagwichoonjik or the Gran- outlawed in Muzo. Rather than leave de- plansto erase a “stain on ourhistory” byre- de Rivière, all ofwhich mean “great river”. brisforthe guaqueros, the firmssiftthrough naming Amherst Street, a 1.5km (0.9 mile) Mr Trudeau dropped the name of Hec- it themselves and pack it back into the thoroughfare, which wasgiven itsname by tor-Louis Langevin, a founder of residen- mines. “They are mosquitos, sucking our British conquerors 200 years ago. The city tial schools, which sought to sever indige- blood,” complains Henry Pamplona, an el- is looking foran indigenous substitute. nous children’s links to their families and derly guaquero, as he shovels picked-over About 30,000 of Canada’s 350,000 cultures, from the building that houses his grime into a wheelbarrow. place names have indigenous origins, in- office. That suggests the renaming trend is Guaqueros have protested sporadically. cluding that of the country itself. Canada unlikely to abate. Indigenous groups want In 2013 more than a thousand started dig- comes from the Iroquoian word for “vil- the Cornwallisriverin Nova Scotia, named ging on MTC’s land; three died when some lage”. As indigenous groups grow more as- for a colonial governor who offered a tunnels collapsed. A guaquero who calls sertive, and politicians become more sup- bounty for the scalps of Mi’kmaq people, himself Caballo (Horse) wants at least to portive of them, maps are being rewritten. to be called something else. force miningfirmsto leave some rubble be- Justin Trudeau, Canada’s Liberal prime Montreal’s city council is debating who hind. He thinksorganised protestcan bring minister, has promised to implement the should replace Amherst. One possibility is that about. “We just need a leader who UN declaration on the rights of indigenous Pontiac, an Odawa leader who rebelled says the right things,” he thinks. He is prob- peoples, which acknowledges their right against Amherst’s rule. That dig at the Brit- ably wrong. In Colombia’s emerald hills, to keep indigenous names for communi- ish might please indigenous folk and the day ofthe guaquero is over. 7 ties and places. More than 600 indigenous French speakers alike. 7 30 Middle East and Africa The Economist January 6th 2018

Also in this section 31 The drug that is starving Yemen 31 The balance shifts in Yemen’s war 32 Egypt’s absurd presidential race 33 The undemocratic Republic of Congo 33 Waiting for justice in Gambia 34 Liberia’s new captain

For daily analysis and debate on the Middle East and Africa, visit Economist.com/world/middle-east-africa

Protests in Iran detail about the spending he aimed to em- barrass the clerics. When frustration boils over It is mainly pent-up economic griev- ances, not the political sort, that are at the heart of the unrest. Even before the latest protests, factory workers had gone on strike over unpaid salaries and pensioners TEHRAN had marched againstlowpayments. Those taking to the streets have wondered aloud Iran is in turmoil, but the clerics and theirallies remain as entrenched as ever why so much of the country’s wealth has O TO high prices!”, “Down with Frustrations have been piling up since gone to support violent groups in Yemen, “Nembezzlers!”, “People are paupers Mr Rouhani’s victory in May. As a candi- Lebanon and Gaza, and a dictator in Syria, while the mullahslive like gods!” Are these date he championed an inclusive, open while their mostly rural provinces are ne- the chants of foreign-sponsored insurrec- and reformed Iran. But his new cabinet ex- glected. The unemployment rate is over tionists trying to create anarchy, insecurity cluded women and Sunnis and contained 12% and at least one in four young people, and intrigue in Iran? That is what the cleri- few non-Persian minorities. Mr Rouhani who make up the bulkofthe protesters, are cal regime would have you believe, as it ig- got out the women’s vote, but he has left without a job. nores the economic grievances voiced by most curbs on them in place, including a the thousands of Iranians who have taken ban on their presence in stadiums. Egged on to the streetsin more than 70 townsand cit- Perhaps, some surmised, the hard- The regime claims that the “sedition” is ies in the past week. liners’ brief arrest of his brother had over, butmanyIraniansstill seethe with re- Incredibly, the unrest seems to have spooked him. A draft budget, presented to sentment. Even so, a broader uprising does been started by religious hardliners, hop- parliament in December, would bloat the not appear to be in the offing. Tens of thou- ing to undermine the reformist presidency coffers of the ayatollahs’ foundations and sands of people responded to the clerics’ of Hassan Rouhani. Stoking their anger the Guards, but cut subsidies for the poor. call to counter-demonstrate on January over the rising price of eggs, clerics in The hashtag #pashimanam (we regret [our 3rd. Most of Tehran, the capital and epi- Mashhad, Iran’s second city, urged hun- vote]) went viral. Mr Rouhani’s supporters centre of past upheaval, has remained dreds of their followers to protest on De- say that by releasingan unusual amount of calm, as the police arrest potential trouble- cember 28th. Many demanded the presi- makers and patrol the streets. Hundreds of dent’s resignation and called for fresh AZERBAIJAN Recent protests students have come out, but the middle elections—though Mr Rouhani was re- Caspian Source: HRANA class, and even reformists, have so far sat elected just last year. Sea TURKMENISTAN on the sidelines. Some fear a repeat of the TURKEY They could not have known what they brutal crackdown that ended the Green started. The protests quickly spread to oth- Tehran Movement, which challenged a dubious

er cities, and the tone also changed. It was Mashhad AFGHANISTAN presidential election in 2009. Others wor- not just Mr Rouhani who should give up ry that the protests, which lack organisa- IRAQ IRAN power—so too should the ruling clerics tion, could get out of control. Indeed, they and their armed protectors in the Islamic did in a few towns, where police opened Revolutionary Guard Corps, said the new fire. Over 20 people have been killed. protesters. “No to conservatives and re- Once again, the Guards have proved KUWAIT The formers alike,” they chanted. Contrary to Gulf that they are the regime’s backbone. The the regime’s claims, no one seemed to be SAUDI ARABIA authorities switched off messaging apps, leading the rallies, some of which turned QATAR UAE such as Telegram (which has 40m Iranian 500 km violent (though most have not). Gulf of Oman subscribers and was the protesters’ main 1 The Economist January 6th 2018 Middle East and Africa 31

2 way of communicating), and VPNs, which ing Mr Khamenei. He seems stumped by seemed keen to engage Iran, is now more had offered a backdoor to the internet. The Iran’s economic problems and may try to hesitant. President Emmanuel Macron, Guards hope to exploit the discontent with buy his way back into the good graces of who was planning a visit, has called off a Mr Rouhani to secure political gains. Liv- the public with increased spending. His trip by his foreign minister. ing standards, they remind Iranians, have greatest success, the nuclear deal of 2015, Overthe pasttwo years, millions ofvot- fallen under this president, but improved has brought oil-based growth, but not the ers, who had sat out elections since 2009, when their man, Mahmoud Ahmadine- kind of broad development that he prom- returned to the ballot box and chose jad, was in office (during a time of high oil ised. Under the agreement, Iran agreed to would-be reformers. Their victories prices). When the 78-year-old supreme curb its nuclear programme in exchange seemed to make Iran the Middle East’s leader, Ayatollah Ali Khamenei, dies, they for America and other foreign powers lift- most vibrant democracy (apart from Isra- will probably have the whiphand in deter- ing most economic sanctions. But America el). But the inability of Mr Rouhani to im- mining who succeeds him. has maintained some (many relating to prove their lot has, once again, left many Mr Rouhani, by contrast, has been Iran’s missile programme), which scare feelingdisillusioned. Theyare still tryingto weakened. The unrest has tarnished his away foreign banks and investors. The un- find a way to make theirvoices heard with- image and dented his own hopes ofreplac- rest has also not helped. France, which out facing the wrath ofthe Guards. 7

Yemen Yemen’s war Qat wrenching The balance shifts

MARIB Famine in Yemen could be avoided by less chewing

EMEN is on the brinkoffamine, say unification in 1990 it spread south. Now MARIB aid agencies, which often blame the qat markets bustle all over the country. Y Yemen’s army is making gains against civil war, Saudi Arabia’s blockade of Men spend farmore feeding their the rebels, but victory is still faroff northern seaports and its bombing of addiction than their families: sometimes vital infrastructure. The government’s $800 a month. Rather than searching for AHER ALI AL-AUQAILI, the chief of refusal to pay salaries to employees in weapons and other contraband, soldiers Tstaff of Yemen’s army, has a spring in rebel-held areas and the depreciation of extort bribes at checkpoints to pay for his step. After a year of stalemate, his five Yemen’sriyal mean many cannot afford their habit, jacking up transport costs. fronts are moving again. As he darts be- the food that is available. But one ofthe And while the country runs out ofbasics, tween battlefields hundreds of kilometres biggest causes ofhunger often goes un- such as wheat, its best farmland is de- apart, he speaks of victories in Beihan, mentioned: a leafy plant called qat. voted to producing the crop, which is which have reconnected the road from his The weed is Yemen’smost popular more lucrative. Cultivation ofqat is said headquarters in Marib to southern Yemen, drug: 90% ofmen and over a third of to be increasing by12% a year. and in the Jawf region (see map). Troops women habitually chew its leaves, stor- Officials referto it as Yemen’sViagra have also advanced 60km north along the ing the masticated greenery in their and encourage its use. TaherAli al-Au- coast from Mokha towards Hodeida, the cheekuntil the narcotic seeps into their qaili, the army’s chiefofstaff, says it is main port ofthe rebels, called the Houthis. bloodstream. In the past Yemenis might “our whisky” and claims it gives his men From bases in the desert and coastal low- indulge once a weekand the practice was strength to fight (see next article). Both lands, the alliance offorces arrayed against largely confined to the north-west moun- sides feed it to their child soldiers. the rebels is edging its way into the moun- tains, where qat grows. But following When local governors in Hadramawt, tains that shelter Yemen’s capital, Sana’a, the largest province, tried to revive an old which is still in Houthi hands. ban on consumption in their offices, they A string of events has led to the ad- were summoned to Riyadh to join Ye- vance. In December the Houthis killed men’s president, Abd Rabbo Mansour their erstwhile ally, Ali Abdullah Saleh, Hadi, fora communal chew. Only al- who had been Yemen’s president from Qaeda in the Arabian Peninsula has had 1978 to 2012, so the Houthis now fight1 any success in banning it. Northern Yemen is the region most SAUDID ARABIAB under threat offamine, but the Houthi rebels who control it value their monopo- Recent ly on qat as much as Mr Hadi does his Saada military hold on the country’s oil- and gasfields. It Mazraq gains JAWF HADRAMAWT keeps roads open across enemy lines. AmranHajjah Dozens oftrucks full ofthe harvest cross Marib into Marib each day. Taxes on qat also Sana’a YEMEM N Hodeida earn both sides in the war big revenues. Beihan Red Recent data are scarce, but backin 2000 Sea the World Bankestimated that qat ac- Bayda Taiz counted for30% ofYemen’seconomy. ER Mokha ITRE Areas where Even the hungry cite an advantage: the RE al-Qaeda drug suppresses their appetite. But the A Aden operates absurdity is not lost on all. In the words DJIBOUOUTI Gulf of Aden 200 km ofa southern official, “We’re fighting Areas of control, December 2017 Houthis with our arms and funding them Houthi Saudi-led coalition Less jaw-jaw and war-war please with our mouths.” Sources: Risk Intelligence; Critical Threats Project SOMALIA 32 Middle East and Africa The Economist January 6th 2018

2 alone. Arrests, killings and houses demol- are arms bazaars that prices are 20% lower authorities arranged alternative accom- ished by tank shells in the capital have than before the war began in 2014. modation, he explained. “I was taken to stoked resentment against the rebels. Perhaps the biggest reason for the stale- one of the most distinguished hotels in the Thousands ofMr Saleh’s people have fled. mate, however, is that many Yemenis area.” It must be comfortable there, for Mr Talesofrebel atrocities have spurred on benefit from it. Warlords and soldiers at Shafiq has not been seen in public since. the government’s forces. Fleeing Yemeni checkpoints cream off humanitarian aid. Journalists who tried to meet him were journalists say the Houthis killed over 30 Cities like Marib bask in the oil wealth and chased away by plain-clothed goons. colleagues, including some who worked duties on electricity and imports that pre- Egyptians expect that their presidential for Mr Saleh’s media outlets. They say the viously enriched the capital. Once notori- election this spring will be a rerun of 2014, rebels extorted money from relatives ous as a hotspot forkidnappings on behalf when Abdel-Fattah al-Sisi won 97% of the wanting to recover tortured bodies for bu- of al-Qaeda, it may now be Yemen’ssafest vote. His only opponent finished third in rial. The Houthis, who claimed to champi- city. Banksand schoolsfunction. Wages are the two-man race (invalid ballotscame sec- on the mathlumeen, or oppressed masses, paid on time. An oft-cited Yemeni adage ond). Though Mr Sisi has not formally an- may be turning into their oppressors. holds that one people’s misfortune is an- nounced his candidacy, a suspiciously As the rebels’ following shrinks, the other’s gain. 7 well-funded “grassroots” campaign has army’smaybe growing. The conflicthas of- plastered posters of his image all over Cai- ten been depicted as a sectarian one be- ro. MPs talk of amending the constitution tween the Iranian-backed Houthis, who Egyptian politics to extend his next four-year term to six, or follow the Zaydi branch of Shiism in the to allow him a third. highlands, and Sunnis in the lowlands Cometh the hour, Nevertheless, a list of would-be chal- backed by their co-religionists in the Gulf. lengers is emerging. Start with the long But the flight of hundreds of thousands of cometh the ban shots, such as Khaled Ali, a liberal lawyer displaced Yemenis is changing the sectari- and activist, who hopes to save Egypt from an make-up in the army’s ranks. General CAIRO what he calls its “dark destiny”. Mr Ali was Auqaili is a Zaydi from Houthi-held Am- convicted of “public indecency” last year Several challengers could shake up the ran. The newsecuritychiefin Marib comes for making an obscene hand gesture. If the presidential race, ifthey are allowed to from Amran, too. Moreover, he is a sayyid, trumped-up case is not overturned on ap- one of the scions of the Prophet Muham- HE most interesting man in Egyptian peal, he is disqualified from running. The mad, a group that Houthis think should Tpolitics is trapped in a hotel. On No- candidacyofColonel Ahmed Konsawa, an rule the roost. vember 29th Ahmed Shafiq announced obscure army officer, is in similar trouble. Mr Saleh’s death has also prompted the that he would run for president. The for- He was arrested within days of announc- rancorous regional coalition assembled mer prime minister is best known for los- ing his bid for expressing political views against the Houthis to bridge its differ- ing the presidential race in 2012 to Muham- while in uniform. ences. Muhammad bin Zayed, the de facto mad Morsi of the Muslim Brotherhood, It would be harder to silence Muham- leader of the United Arab Emirates (UAE), who was himselftoppled in a coup the fol- mad Anwar Sadat, a nephew of the slain had long distrusted Yemen’s army. Many lowing year. Hours after his announce- formerpresident. Mr Sadat is a genuine lib- of its soldiers support Islah, which has ties mentMrShafiq claimed thathe wasbarred eral, a rarity in Egyptian politics. A former to the Muslim Brotherhood, an Islamist from leaving Abu Dhabi, where he lived in MP, he was booted out of the legislature movement that the UAE abhors. Prince self-imposed exile. But his hosts said he last yearforbeingtoo critical ofthe govern- Muhammad had hoped that Mr Saleh was free to go—and then kicked him out. ment. The army has tried to recruit him to would switch sides and boot the Houthis After arriving in Cairo Mr Shafiq disap- run, to give the election a sheen of legiti- from power. peared for a night. He resurfaced the next macy. But so far he has demurred. But since Mr Saleh’s death Prince Mu- evening for a bizarre televised interview. That leaves Mr Shafiq. In 2012 he cam- hammad has reconciled with Islah. He has “I’m not kidnapped or anything,” he said. paigned on public order, repeating the given army units loyal to the Islamists air His home just needed renovations and the word istiqrar (stability) at every turn. On support. Government forces are on the the stump he often seemed unstable, slur- verge of breaking out of Taiz, Yemen’s ring his way through gaffe-prone speeches. third-largest city, besieged by the Houthis During a televised debate, he offered a for almost three years. They hope to recap- memorable summary of his service in the ture all of the coastal plain, where the war against Israel in 1973: “I killed and was Houthis have little support. killed!” Still, he came within 900,000 But this would still leave the army far votes of defeating Mr Morsi. He now from total victory. The Houthis would be claims to be a champion of human hard to winkle out of the highlands. Their rights—an absurd turnabout for an ally of mines, snipersand anti-tankmissiles make Hosni Mubarak, the long-serving dictator. progressthrough the passespainfully slow, His candidacy has more to do with complains General Auqaili. Moreover, be- grumbling amongst the Egyptian elite, fore the Houthis ditched Mr Saleh, they who are concerned about Mr Sisi’s eco- tookcontrol ofan arsenal oftanks and mis- nomic management. Army officers are un- siles from his Republican Guard, much ofit happy with the struggling campaign supplied by America when it saw MrSaleh against jihadists in Sinai. as a bulwarkagainst al-Qaeda. Mr Sisi has the perks of incumbency: a By contrast, General Auqaili complains pliant parliament, a repressive police force that his pleas for heavier weapons to and an iron grip on the media. One MP match the Houthis go unanswered. The wants to strip Mr Shafiq of his citizenship morale of his men is sapped because they for “betraying his homeland”. Last month are nine months behind with their pay. three of his supporters were charged with Some get by, selling weapons or informa- harming national security. He may be in tion to the Houthis or al-Qaeda. So flush Shafiq, a killer candidate fora long stay at the Marriott. 7 The Economist January 6th 2018 Middle East and Africa 33

The undemocratic Republic of Congo ing firms and the state. According to the US Treasury, between 2010 and 2012 the losses Never-ending term to the Congolese state from the underpric- ing of mines and mining licences handled by Mr Gertler came to more than $1.36bn. By imposing sanctions on Mr Gertler, America will make it more difficult for Mr Kabila to raise money to keep his patron- An embattled president survives age machine well-oiled. anotheryearofunconstitutional rule If Mr Kabila is to stay in power, he will N THE streets of Kinshasa, the rau- need to be able to dole out something. At Ocous, ramshackle capital ofthe Demo- the end of 2016 the president narrowly cratic Republic of Congo (DRC), it is now avoided huge street protests by agreeing to difficultforforeignersto walkthrough mar- a deal with the political opposition to stay kets without being accosted by secret po- in powerforone more yearwhile elections licemen, nor to do so without also hearing were organised. That year has now passed from shoppers and market traders how and Mr Kabila is still in office, though inter- much they hate Joseph Kabila, the coun- national pressure is mounting. Nikki Ha- try’s president. As 2018 starts, Africa’s ley, Donald Trump’s ambassador to the youngest head of state (Mr Kabila is only UN, said in October after a meeting with 46, despite having ruled for17 years) is also Mr Kabila that America would withhold one ofthe continent’s most embattled. support for a UN peacekeeping mission in On NewYear’sEve atleastseven people the countryifhe did notcommitto holding Gambia were killed in protests against the govern- electionsin 2018. Since then Corneille Nan- ment. Before the demonstrations the gaa, the president of the electoral commis- Waiting for Congolese government shut down much sion, has said that voter registration is pro- of the mobile-phone network to hamper ceeding and an election will be held on Jammeh their organisers. These were the first major December 23rd. protests in Kinshasa in a year and were but In the meantime, the president has to BANJUL the latest in a string ofproblems for a presi- hold on to his territory. The attack on his The formerdictator’s victims hope for dent who did not bother to organise elec- compound in North Kivu is merely the lat- justice tionsand hascontinued to rule unconstitu- est evidence of worsening security in the tionally since his term of office ran out in east, the birthplace of his father’s Rwan- AHYA JAMMEH, who ruled Gambia December 2016. dan-sponsored rebellion against Mobutu Yfrom 1994 to 2017, claimed he could cure On December 21st the American gov- Sese Seko in 1997. Earlier in December, 15 people of HIV with his bare hands. The ernment imposed sanctions on one of his UN peacekeepers were killed in a single at- probability of such faith-healing working chums: Dan Gertler, an Israeli billionaire tack blamed on the Allied Democratic is zero. Today the law is trying to lay hands with mining and oil interests across the Forces, a brutal rebel group that has its ori- on Mr Jammeh. At first glance, the chance country. America’s Treasury Department gins in Uganda. Fighting has also intensi- ofit succeeding is only slightly higher. said Mr Gertler had “amassed his fortune fied in South Kivu. In September, a militia In January2017, two monthsafterlosing through hundreds of millions of dollars’ launched an audacious marine assault on an election, he agreed to step down, hav- worth of opaque and corrupt mining and Uvira, a large city on Lake Tanganyika. ing been warned by fellow west African oil deals”. On Christmas Day armed men In the first half of 2017, 1m people were leaders that he would be removed by force burned down one of Mr Kabila’s palaces, displaced by conflict. Hundreds of thou- if he clung to power any longer. In return in North Kivu. A police officer was killed; sands ofchildren are at riskofstarvation in for going without a fight, he was given asy- several vehicles were destroyed. Kasai because of fighting. And yet Mr Ka- lum in Equatorial Guinea, an even worse Mr Gertler, who once claimed that he bila holds on, getting ever weaker, but African dictatorship. Teodoro Obiang, its should get a Nobel prize for his work in seemingly without any exit plan or any president for the past 38 years, has never Congo, to which he commutes from Tel hope of reasserting control. His country is signed up to the International Criminal Aviv weekly, has for years acted as a at risk of falling back into civil war for the Court(ICC), which meansthatMrJammeh middleman between multinational min- third time in two decades. 7 (pictured) cannot be extradited fortrial. He passes his time farming on one of Mr Obiang’s grace-and-favour estates. For those who were beaten with metal pipes or had plastic bags put over their heads by Mr Jammeh’s goons, the only hope for justice is either to persuade Mr Obiang to hand him back, or to wait for a more human-rights-friendly government to take over in Equatorial Guinea. Neither seems likely. However, campaigners such as Amadou Scattred Janneh, who was once jailed by Mr Jammeh for printing T- shirts callingforhis downfall, argue that all is not lost. Where international justice is concerned, good things can come to those who wait. In 2016 Chad’s ex-despot, Hissène Ha- More of the same bré, was jailed for life by a court in Senegal 1 34 Middle East and Africa The Economist January 6th 2018

2 for the murder of perhaps 40,000 people Liberia Mr Weah is idolised, particularly in the 1980s. Again, the case was beset by among the young—and more than half the political obstacles, not least from the Sene- The new skipper electorate is under 33. He lost to the current galese government, which arrested Habré president, Ellen Johnson Sirleaf, in 2005. A in 2000 but then dragged its feet. Senegal’s former World Banker, she generated a then president, Abdoulaye Wade, heeded surge of enthusiasm for having neither other African politicians, who whispered blood on her hands nor loot in her pockets. that prosecuting Mr Habré would set an However, she failed to curb corruption ad- The election marks Liberia’s first unwelcome precedent that people like equately or fix Liberia’s woeful schools democratic transferofpowersince 1944 themselves could be held accountable. and clinics. Voters cried foul. However, in 2012 Mr Wade was replaced OOTBALLING superstar George Weah The incoming vice-president, Jewel by Macky Sall, who thought that setting Fhas scored again. As the only African Howard-Taylor, is a popular senator who such a precedent was an excellent idea. footballer to have been awarded both once tried to make homosexuality punish- Some of Mr Habré’s victims, who had FIFA’s World Player of the Year and able by death. She is also Mr Taylor’s ex- campaigned relentlessly to prevent the France’s Ballon d’Or, Mr Weah, a Liberian, wife, which helped attract voters who still world from forgetting about his crimes, are isused to winning. However, one prize had support the former tyrant (who is now in now advising Mr Jammeh’s victims, who evaded him—until this year. prison in Britain forwar crimes committed have formed their own campaign group On December 26th the former Chelsea, in neighbouring Sierra Leone). and are gathering evidence. “We know it’s AC Milan and Paris Saint-Germain player For Mr Boakai, incumbency was a dis- not going to be easy, but we are ready for a triumphed in the second round ofLiberia’s advantage. The 73-year-old tried to shrug long struggle,” says Mr Janneh. Mean- presidential election. Mr Weah defeated offhisassociation with MsJohnson Sirleaf. while, Gambian police have opened 35 in- the current vice-president, Joseph Boakai, He compared himself to a “race car in the vestigations into alleged killings by Mr with 62% ofthe vote. He won all but one of garage”, the potential of which was yet to Jammeh’s regime, one of which has al- Liberia’s15 counties. be realised. However, his reputation for ready reached court. Mr Weah’s victory is a big milestone for falling asleep in public earned him the Separately, a special commission into the nascent democracy. Liberia suffered nickname “Sleepy Joe”. Mr Weah darted MrJammeh’sfinancial dealingshasuncov- two brutal civil wars between 1989 and past. Tellingly, Ms Johnson Sirleaf, a win- ered further evidence that he embezzled 2003. An estimated 250,000 people died ner of the Nobel peace prize, did not cam- on a massive scale. Stafffrom the Gambian and perhaps 90% of the economy was paign with herdeputyand even inaugurat- Central Bank and the National Petroleum wiped out. In 1997, during a period of ed a road along with Mr Weah just days Corporation have told how he used the or- peace, Charles Taylor, a warlord, became before the election. ganisations as if they were his personal president, having made it clear that he Yet there are doubts about the kind of cash machines, withdrawing up to $2m at would go back to war if not elected. Sup- leader Mr Weah will be. Since his election a time. A watertight criminal case against porters chanted, “He killed my ma, he as a senator in 2014, he has rarely attended Mr Jammeh, though, will not be enough to killed my pa, but I’ll vote forhim.” parliament. Nor has he introduced or co- get him in the dock. A convincing political When Mr Weah’s term kicks offin Janu- sponsored any legislation. Mr Weah’s rela- case will have to be made, too. ary, by contrast, it will be Liberia’s first tive lack of education, though, only seems Under the new presidency of Adama peaceful transfer of power from one elect- to make him more popular. His supporters Barrow, Gambia has already rejoined the ed presidentto anothersince 1944. The run- see the former slum-dweller as one of ICC, from which his predecessor had with- offvote was delayed by a legal challenge to them—a champion from their streets. drawn. But if he were prosecuted, Mr Jam- the first round of the election (in which Mr Much will depend on the ministers and meh, like MrHabré, would probably go be- Weah came first with 38% ofthe vote to Mr advisers with whom he surrounds him- fore a specially convened local court, in Boakai’s 29%). The second round eventual- self. Liberia needs better roads and order to make justice lookAfrican. ly proceeded with no violence, though schools, more jobs and electricity, and a Setting up such a tribunal is costly. turnout was only 56%, compared with 75% thousand other things. Presidents, unlike Moreover, before it went ahead, fellow Af- in the first round in October. footballers, must aim at multiple goals. 7 rican leaders would first have to lean heavily on Mr Obiang to hand Mr Jammeh over. Right now, there is little sign ofany of them wanting to do so. Sources within the Economic Community of West African States (ECOWAS), the main regional power bloc, say that prosecuting Mr Jammeh is not a priority. Nor is it one for Mr Barrow’s government, which fears the risk of ruc- tions from Mr Jammeh’s old supporters. Still, the victims’ groups may be able to cultivate a few powerful allies. Mr Sall, Senegal’s president, is no friend of Mr Jam- meh, who sheltered armed separatists from Senegal’s Casamance region. Like- wise, Ghana is under pressure to bring jus- tice for 44 Ghanaian migrants allegedly murdered in 2005 by Mr Jammeh’s securi- ty forces (who mistook them formercenar- ies). If enough people with enough scores to settle get together, this may one day en- sure that Mr Jammeh, the dictator-turned- farmer, finally reaps what he sowed. 7 Capping this TE RTER January 6th 2018 BRI-PTER ITERE

Thought eperiments

TECHNOLOGY QUARTERLY Brain-computer interfaces

Brains and machines Thought experiments

Brain-computer interfaces sound like the stuff of science fiction. Andrew Palmer sorts the reality from the hype N THE gleaming facilities of the Wyss Centre A channel of communication of this sort requires a for Bio and Neuroengineering in Geneva, a lab brain-computer interface (BCI). Such things are al- technician takes a well plate out of an incuba- ready in use. Since 2004, 13 paralysed people have ALSO IN THIS TQ tor. Each well contains a tiny piece of brain tis- been implanted with a system called BrainGate, first Non-invasive devices sue derived from human stem cells and sitting developed at Brown University (a handful of others Headache on top of an array of electrodes. A screen dis- have been given a similar device). An array of small Iplayswhatthe electrodesare pickingup: the character- electrodes, called a Utah array, is implanted into the Implants istic peak-and-trough wave forms offiring neurons. motor cortex, a strip of the brain that governs move- Inside intelligence To see these signals emanating from disembodied ment. These electrodes detect the neurons that fire tissue is weird. The firingofa neuron is the basic build- when someone intends to move his hands and arms. Data processing ing block of intelligence. Aggregated and combined, These signals are sent through wires that poke out of Translation required such “action potentials” retrieve every memory, guide the person’sskull to a decoder, where theyare translat- every movement and marshal every thought. As you ed into a variety of outputs, from moving a cursor to Brain scan read this sentence, neurons are firing all over your controlling a limb. Eberhard Fetz brain: to make sense of the shapes of the letters on the The system has allowed a woman paralysed by a Looking for page; to turn those shapes into phonemes and those stroke to use a robotic arm to take her first sip of coffee serendipity phonemes into words; and to confer meaning on without help from a caregiver. It has also been used by Grey matter, red tape those words. a paralysed person to type ata rate ofeightwords a mi- This symphony of signals is bewilderingly com- nute. It has even reanimated useless human limbs. In a plex. There are as many as 85bn neurons in an adult study led by Bob Kirsch of Case Western Reserve Uni- human brain, and a typical neuron has10,000 connec- versity, published in the Lancet this year, BrainGate tions to othersuch cells. The job ofmappingthese con- was deployed artificially to stimulate muscles in the nections is still in its early stages. But as the brain gives arms of William Kochevar, who was paralysed in a cy- up its secrets, remarkable possibilities have opened cling accident. As a result, he was able to feed himself up: of decoding neural activity and using that code to forthe first time in eight years. control external devices. Interactions between brains and machines have 1 The Economist January 6th 2018 3 TECHNOLOGY QUARTERLY Brain-computer interfaces

2 changed lives in other ways, too. The opening ceremony of the cells in the visual cortex of macaque mon- football World Cup in Brazil in 2014 featured a paraplegic man keys encoded 50 different aspects of a per- who used a mind-controlled robotic exoskeleton to kick a ball. A son’s face, from skin colour to eye spacing. recent study by Ujwal Chaudhary of the University of Tübingen That enabled them to predict the appear- and four co-authors relied on a technique called functional near- ance of faces that monkeys were shown infrared spectroscopy (fNIRS), which beams infrared light into the from the brain signalstheydetected, with a brain, to put yes/no questions to four locked-in patients who had spooky degree of accuracy. But conducting been completely immobilised by Lou Gehrig’s disease; the pa- scientific research on human brains is tients’ mental responses showed up as identifiable patterns of harder, forregulatory reasons and because blood oxygenation. they are larger and more complex. Neural activity can be stimulated as well as recorded. Cochlear Ultimately Even when BCI breakthroughs are implants convert sound into electrical signals and send them into it may be made on humans in the lab, they are diffi- the brain. Deep-brain stimulation uses electrical pulses, delivered cult to translate into clinical practice. Wired via implanted electrodes, to help control Parkinson’s disease. The possible to magazine first reported breathlessly on the technique has also been used to treat other movement disorders then new BrainGate system back in 2005. and mental-health conditions. NeuroPace, a Silicon Valley firm, meld An early attempt to commercialise the monitors brain activity for signs of imminent epileptic seizures technology, by a company called Cyberki- and delivers electrical stimulation to stop them. together netics, foundered. It took NeuroPace 20 It is easy to see how brain-computer interfaces could be ap- years to develop its technologies and nego- plied to other sensory inputs and outputs. Researchers at the Uni- human and tiate regulatory approval, and it expects versity ofCalifornia, Berkeley, have deconstructed electrical activ- artificial that only 500 people will have its elec- ity in the temporal lobe when someone is listening to con- trodes implanted this year. versation; these patterns can be used to predict what word intelligence Current BCI technologies often require someone has heard. The brain also produces similar signals when experts to operate them. “It is not much use someone imagines hearing spoken words, which may open the if you have to have someone with a mas- door to a speech-processing device for people with conditions ters in neural engineering standing next to such as aphasia (the inability to understand or produce speech). the patient,” says Leigh Hochberg, a neu- Researchers at the same university have used changes in blood rologist and professor at Brown University, who is one of the key oxygenation in the brain to reconstruct, fuzzily, film clips that peo- figures behind BrainGate. Whenever wires pass through the skull ple were watching. Nowimagine a device thatcould work the oth- and scalp, there is an infection risk. Implants also tend to move er way, stimulating the visual cortex of blind people in order to slightly within the brain, which can harm the cells it is recording project images into their mind’s eye. from; and the brain’s immune response to foreign bodies can If the possibilities of BCIs are enormous, however, so are the create scarring around electrodes, making them less effective. problems. The most advanced science is being conducted in ani- Moreover, existing implants record only a tiny selection of the mals. Tinysilicon probescalled Neuropixelshave been developed brain’s signals. The Utah arrays used by the BrainGate consor- by researchers at the Howard Hughes Institute, the Allen Institute tium, for example, might pick up the firing of just a couple of hun- and University College London to monitor cellular-level activity dred neurons out of that 85bn total. In a paper published in 2011, in multiple brain regions in mice and rats. Scientists at the Univer- Ian Stevenson and Konrad Kording of Northwestern University sity ofCalifornia, San Diego, have built a BCI that can predict from showed thatthe numberofsimultaneouslyrecorded neurons had prior neural activity what song a zebra finch will sing. Researchers doubled every seven years since the 1950s (see chart). This falls far at the California Institute of Technology have worked out how shortofMoore’slaw, which hasseen computingpowerdouble ev-1

Let me think Brain-computer interface components Frontal lobe Parietal lobe N Signal acquisition Decoding Functional areas of the brain e u ro Movement Sensations n The action potentials of neurons are recorded. Problem-solving Language Non-invasive recording Brain signals are Concentrating, thinking Perception techniques include processed, usually with Behaviour, personality Body awareness electroencephalograms machine-learning and mood Attention and near-infrared techniques. Pattern Control of voluntary spectroscopy; invasive recognition leads to the muscles Occipital lobe techniques typically use generation of a control Vision implanted electrodes signal Temporal lobe Perception Hearing Dreams Simultaneously recorded neurons Language Log scale Application Memory Cerebellum 1,000 The control signal Smell Posture causes a change to an external device. Brain- High-level Balance visual 100 computer interfaces can processing Co-ordination also be used to (faces & scenes) of movement stimulate the brain Fear and pleasure 10 Brain stem A Consciousness 1 Breathing 1960 70 80 90 2000 10 Cursors Wheelchairs Spellers Robotic arms Other Heart rate Sources: Nature Neuroscience; Patrick Lynch; The Economist

4 The Economist January 6th 2018 TECHNOLOGY QUARTERLY Brain-computer interfaces

2 ery two years. Indeed, the Wyss Centre in Geneva exists because it is so hard to get neurotechnology out of the lab and into clinical practice. John Donoghue, who heads the centre, is another of the pioneers of the BrainGate system. He says it is designed to help promising ideas cross several “valleys of death”. One is financial: the combi- nation oflengthy paybackperiods and deep technology scares off most investors. Another is the need for multidisciplinary exper- tise to get better interfaces built and management skills to keep complex projects on track. Yet another is the state of neuroscience itself. “At its core, this is based on understanding how the brain works, and we just don’t,” says Dr Donoghue.

Me, myself and AI This odd mixture of extraordinary achievement and halting pro- gress now has a new ingredient: Silicon Valley. In October 2016 Bryan Johnson, an entrepreneur who had made a fortune by sell- ing his payments company, Braintree, announced an investment of $100m in Kernel, a firm he has founded to “read and write neu- ral code”. Mr Johnson reckons that the rise ofartificial intelligence (AI) will demand a concomitant upgrade in human capabilities. “I find it hard to imagine a world by 2050 where we have not inter- vened to improve ourselves,” he says, picturing an ability to ac- quire new skills at will orto communicate telepathically with oth- ers. Last February Kernel snapped up Kendall Research Systems, a spinoff from the Massachusetts Institute of Technology (MIT) that works on neural interfaces. Kernel is not alone in seeing BCIs as a way for humans to co-ex- ist with AI rather than be subjugated to it. In 2016 Elon Musk, the boss of SpaceX and Tesla, founded a new company called Neura- link, which is also working to create new forms of implants. He Non-invasive devices has gathered together an impressive group of co-founders and set a goal of developing a BCI for clinical use in people with disabil- ities by 2021. Devices for people without such disabilities are Headache about eight to ten years away, by Mr Musk’s reckoning. Neuralink is not saying what exactly it is doing, but Mr Musk’s thinking is outlined in a lengthy post on Wait But Why, a website. In it, he describes the need for humans to communicate far more quickly with each other, and with computers, if they are not to be AI left in the dust by . The post raises some extraordinary possibili- Can the brain be deciphered without opening up the skull? ties: beingable to access and absorb knowledge instantly from the cloud or to pump images from one person’s retina straight into the ATRICKKAIFOSH’S left hand lies flat on the table in front visual cortex of another; creating entirely new sensory abilities, of him. Occasionally his fingers twitch or his palm rises from infrared eyesight to high-frequency hearing; and ultimately, up slightly from the surface. There is nothing obvious to melding together human and artificial intelligence. connect these movements with what is happeningon the In April it was Facebook’s turn to boggle minds as it revealed tablet in front of him, where a game of asteroids is being plans to create a “silent speech” interface that would allow people played. Yet he is controllingthe spaceship on the screen as to type at100 words a minute straight from their brain. A group of Pit spins, thrusts and fires. more than 60 researchers, some inside Facebook and some out- What enables him to do so is a sweatband studded with small side, are working on the project. A separate startup, Openwater, is gold bars that sits halfway up his left forearm. Each bar contains a also working on a non-invasive neural-imaging system; its foun- handful ofelectrodes designed to pickup the signals of motor un- der, Mary Lou Jepsen, says that her technology will eventually al- its (the combination of a motor neuron, a cell that projects from low minds to be read. the spinal cord, and the muscle fibres it controls). These data are Many BCI experts react to the arrival of the Valley visionaries processed bymachine-learningalgorithmsand translated into the by rolling their eyes. Neuroscience is a work in progress, they say. actions in the game. Dr Kaifosh, a co-founder of CTRL-Labs, the An effective BCI requires the involvement of many disciplines: startup behind the device, has learned to exercise impressive con- materials science, neuroscience, machine learning, engineering, trol over these signals with hardly any obvious movement. design and others. There are no shortcuts to clinical trials and reg- Some say that the claims of Dr Kaifosh and Thomas Reardon, ulatory approval. his co-founder, that CTRL-Labs has created a brain-machine inter- In all this, the sceptics are right. Many of the ambitions being face are nonsense. The sweatband is nowhere near the brain, and aired look fantastical. Still, this is a critical moment for BCIs. Vast the signals it is picking up are generated not just by the firing of a amounts of money are pouring into the field. Researchers are try- motor neuron but by the electrical activity of muscles. “If this is a ing multiple approaches. Mr Musk in particular has a track record BCI, then the movement of my fingers when I type on a keyboard of combining grandiose aspirations (colonising Mars) and practi- is also a brain output,” sniffsone researcher. Krishna Shenoy, who cal success (recovering and relaunching rockets via SpaceX). directs the neural prosthetics systems lab at Stanford University To be clear, “The Matrix” is not imminent. But BCIsmaybe and acts as an adviserto the firm, thinks it is on the right side of the about to take a big leap forward. For that to happen, the most im- divide. “Measuring the movement of the hand is motion capture. portantthingisto find a betterwayofconnectingwith the brain. 7 They are picking up neural activity amplified by the muscles.” 1 The Economist January 6th 2018 5 TECHNOLOGY QUARTERLY Brain-computer interfaces

2 Whateverthe semantics, itisinstructive can be identified. Studies have shown strong correlations be- to hear the logic behind the firm’s decision tween people’s mental states as shown by an EEG and theirability to record the activity of the peripheral ner- to spot weapons in X-rays of luggage. vous system, rather than looking directly Yet the uses of EEGs remain limited. In a real-world environ- inside the head. The startup wantsto create ment like a cockpit, a car or an airport, muscle activity and ambi- a consumer product (its potential uses in- ent electricity are likely to confound any neural signals. As for clude being an interface for interactions in Neurable’s game, it relies not solely on brain activity but also de- virtual reality and augmented reality). It is ploys eye-tracking technology to see where a player is looking. Dr not reasonable to expect consumers to un- Alcaide says the system can workwith brain signals alone, but it is dergo brain surgery, say the founders, and It is not hard fora user to disentangle the two. current non-invasive options for reading Othernon-invasive options also have flaws. Magnetoencepha- the brain provide noisy, hard-to-read sig- reasonable lography measures magnetic fields generated by electrical activity nals. “For machine-learning folk, there is in the brain, but it requires a special room to shield the machinery no question which data set—cortical neu- to expect from Earth’s magnetic field. Functional magnetic resonance imag- ronsormotorneurons—youwould prefer,” ing(fMRI) can spotchangesin blood oxygenation, a proxyfor neu- says Dr Reardon. consumers ral activity, and can zero in on a small area of the brain. But it in- This trade-off between the degree of in- to undergo volves a large, expensive machine, and there is a lag between vasiveness and the fidelity of brain signals neural activity and blood flow. is a big problem in the search forimproved brain If any area is likely to yield a big breakthrough in non-invasive BCIs. But plenty ofpeople are trying to find recording of the brain, it is a variation on fNIRS, the infrared tech- a better way to read neural code from out- surgery nique used in the experiment to allow locked-in patients to com- side the skull. municate. In essence, light sent through the skull is either ab- The simplest way to read electrical ac- sorbed orreflected backto detectors, providinga picture ofwhat is tivity from outside is to conduct an electro- going on in the brain. This technique does not require bulky encephalogram (EEG). And it is not all that equipment, and unlike EEG it does not measure electrical activity, simple. Conventionally, it has involved wearing a cap containing so it is not confused by muscle activity. Both Facebook and Open- lots of electrodes that are pressed against the surface of the scalp. water are focusing their effortson this area. To improve the signal quality, a conductive gel is often applied. The obstacles to a breakthrough are formidable, however. Cur- That requires a hairwash afterwards. Sometimes the skin of the rent infrared techniques measure an epiphenomenon, blood oxy- scalp isroughened up to geta betterconnection. Asa consumer ex- genation (the degree ofwhich affects the absorption of light), rath- perience it beats going to the dentist, but not by much. er than the actual firing of neurons. The light usually penetrates Once on, each electrode picks up currents generated by the fir- only a few millimetres into the cortex. And because light scatters ing of thousands of neurons, but only in the area covered by that in tissue (think of how your whole fingertip glows red when you electrode. Neurons that fire deep in the brain are not detected ei- press a pen-torch against it), the precise source of reflected signals ther. The signal is distorted by the layers of skin, bone and mem- is hard to identify. brane that separate the brain from the electrode. And muscle ac- Facebook is not saying much about what it is doing. Its efforts tivity (of the sort that CTRL-Labs looks for) from eye and neck are being led by Mark Chevillet, who joined the social-media movements or clenched jaws can overwhelm the neural data. giant’s Building 8 consumer-hardware team from Johns Hopkins Even so, some EEG signals are strong enough to be picked up University. To cope with the problem oflight scattering as it passes pretty reliably. An “event-related potential”, for example, is an through the brain, the team hopes to be able to pick up on both electrical signal that the brain reliably gives off in response to an ballistic photons, which pass through tissue in a straight line, and external stimulus of some sort. One such, called an error-related what it terms “quasi-ballistic photons”, which deviate slightly but potential (Errp), occurs when a user spots a mistake. Researchers can still be traced to a specific source. The clock is ticking. Dr Che- at MIT have connected a human observer wearing an EEG cap to villet has about a year of a two-year programme left to demon- an industrial robot called Baxter as it carried out a sorting task. If strate that the firm’s goal ofbrain-controlled typing at100 words a Baxter made a mistake, an Errp signal in the observer’s brain alert- minute is achievable using current invasive cell-recording tech- ed the robot to its error; helpfully, if Baxter still did not react, the niques, and to produce a road map forreplicating that level ofper- human brain generated an even stronger Errp signal. formance non-invasively. Openwater is much less tight-lipped. Ms Jepsen says that her If the cap fits San Francisco-based startup uses holography to reconstruct how Neurable, a consumer startup, has developed an EEG headset lightscattersin the body, so itcan neutralise thiseffect. Openwater, with just seven dry electrodes which uses a signal called the P300 she suggests, has already created technology that has a billion to enable users to play a virtual-reality (VR) escape game. This sig- times the resolution of an fMRI machine, can penetrate the cortex nal is a marker of surprise or recognition. Think of the word to a depth of10cm, and can sample data in milliseconds. “brain” and then watch a series of letters flash up randomly on a Openwater has yet to demonstrate its technology, so these screen; when the letter “b” comes up, you will almost certainly be claims are impossible to verify. Most BCI experts are sceptical. But giving off a P300 signal. In Neurable’s game, all you have to do is Ms Jepsen has an impressive background in consumer electronics concentrate on an object (a ball, say) for it to come towards you or and display technologies, and breakthroughs by their nature up- be hurled at an object. Ramses Alcaide, Neurable’s boss, sees the end conventional wisdom. Developer kits are due out in 2018. potential for entertainment companies like Disney (owner of the In the meantime, other efforts to decipher the language of the Star Wars and Marvel franchises) to license the software in theme brain are under way. Some involve heading downstream into the parks and arcade games. peripheral nervous system. One example of that approach is Thorsten Zander of the Technische Universität in Berlin thinks CTRL-Labs; another is provided by Qi Wang, at Columbia Univer- that “passive” EEG signals (those that are not evoked by an exter- sity, who researches the role ofthe locus coeruleus, a nucleus deep nal stimulus) can be put to good use too. Research has shown that in the brain stem that plays a role in modulating anxiety and brainwave activity changes depending on how alert, drowsy or stress. Dr Wang is looking at ways of stimulating the vagus nerve, focused a person is. Ifan EEG can reliably pickthis up, perhaps sur- which runs from the brain into the abdomen, through the skin to geons, pilots or truckdrivers who are becoming dangerously tired see ifhe can affect the locus coeruleus. 1 6 The Economist January 6th 2018 TECHNOLOGY QUARTERLY Brain-computer interfaces

2 Others are looking at invasive approaches that do not involve ofdebate. In people who suffer from movement disorders such as drilling through the skull. One idea, from a firm called SmartStent, Parkinson’s disease, spaghetti-like leads and big electrodes are using technology partly developed with the University of Mel- used to carry out deep-brain stimulation over a fairly large area of bourne, isto use a stent-like device called a “stentrode” thatisstud- tissue. Such treatment is generally regarded as effective. Andrew ded with electrodes. It is inserted via a small incision in the neck Jackson ofthe University ofNewcastle thinks that recording activ- and then guided up through blood vessels to overlie the brain. itybyensemblesofneurons, ofthe sortthatgetspicked up byelec- Once the device is in the right location, it expands from about the trocorticography arrays, can be used to decode relatively simple size ofa matchstickto the size ofthe vessel and tissue growsinto its movement signals, like an intention to grasp something or to ex- scaffolding, keeping it in place. Human trials of the stentrode are tend the elbow. due to start next year. But to generate fine-grained control signals, such as the move- Another approach is to put electrodes under the scalp but not ment of individual fingers, more precision is needed. “These are under the skull. Maxime Baud, a neurologist attached to the Wyss very small signals, and there are many neurons packed closely to- Centre, wants to do just that in order to monitor the long-term sei- gether, all firingtogether,” saysAndrewSchwartzofthe University zure patterns of epileptics. He hopes that once these patterns are of Pittsburgh. Aggregating them inevitably means sacrificing de- revealed, they can be used to provide accurate forecasts ofwhen a tail. After all, individual cells can have very specific functions, seizure is likely to occur. from navigation to facial recognition. The 2014 Nobel prize for Yet others think they need to go directly to the source of action medicine was awarded forworkon place and grid cells, which fire potentials. And that means heading inside the brain itself. 7 when animals reach a specific location; the idea of the “Jennifer Aniston neuron” stems from research showing that single neu- rons can fire in response to pictures ofa specific celebrity. Companies like Neuralinkand Kernel are betting that the most Implants ambitious visions of BCIs, in which thoughts, images and move- ments are seamlessly encoded and decoded, will require high-res- olution implants. So, too, is America’s Defense Advanced Re- Inside intelligence search Projects Agency (DARPA), an arm of the Pentagon, which this year distributed $65m among six organisations to create a high-resolution implantable interface. BrainGate and others con- tinue to workon systems oftheir own. But the challenges that these researchers face are truly daunt- ing. The ideal implantwould be safe, small, wirelessand long-last- The hunt for smaller, safer and smarter brain implants ing. It would be capable of transmitting huge amounts of data at high speed. It would interact with many more neurons than cur- ALK to neuroscientists about brain-computer interfaces rent technology allows (the DARPA programme sets its grant recip- (BCIs) for long enough, and the stadium analogy is al- ients a target of1m neurons, along with a deadline of 2021for a pi- mostbound to come up. Thiscomparesthe neural activi- lot trial to get under way in humans). It would also have to ty ofthe brain to the noise made by a crowd at a football navigate an environment that Claude Clément ofthe Wyss Centre game. From outside the ground, you might hear back- likens to a jungle by the sea: humid, hot and salty. “The brain is not ground noise and be able to tell from the roars whether a the right place to do technology,” he says. As the chief technology Tteam has scored. In a blimp above the stadium you can tell who officer, he should know. has scored and perhaps which players were involved. Only inside it can you askthe fan in row 72 how things unfolded in detail. Da neuron, ron, ron Similarly, with the brain it is only by getting closer to the action That is not stopping people from trying. The efforts now being that you can really understand what is going on. To get high-reso- made to create betterimplants can be divided into two broad cate- lution signals, fornow there is no alternative to opening up gories. The first reimagines the current technology of small wire the skull. One option is to place electrodes onto the sur- electrodes. The second heads offin new, non-electrical directions. face of the brain in what is known as electrocorticogra- Start with ways to make electrodes smaller and better. Ken phy. Another is to push them right into the tissue ofthe Shepard is a professor of electrical and biomedical engineering at brain, for example by using a grid of microelectrodes Columbia University; his lab is a recipient of DARPA funds, and is like BrainGate’s Utah array. aiming to build a device that could eventually help Just how close you have to come to indi- blind people with an intact visual cortex to see by vidual neurons to operate BCIs is a matter stimulating precisely the right neu-

The Economist January 6th 2018 7 TECHNOLOGY QUARTERLY Brain-computer interfaces

2 rons in order to produce images inside their brains. He thinks he them as a string of zeros; and second, by concentrating on the can do so by using state-of-the-art CMOS (complementary metal- wave forms of specific action potentials rather than recording oxide semiconductor) electronics. each point alongtheircurves. Indeed, he sees data compression as Dr Shepard is aware that any kind of penetrating electrode can being the company’s big selling-point, and expects others that cause cell damage, so he wants to build “the mother of all surface want to create specific BCI applications or prostheses simply to recording devices” which will sit on top of the cortex and under plug into its feed. “We see ourselves as the neural data backbone, the membranes that surround the brain. He has already created a like a Qualcomm or Intel,” he says. prototype ofa first-generation CMOS chip, which measures about 1cm by 1cm and contains 65,000 electrodes; a slightly larger, sec- Meshy business ond-generation version will house 1m sensors. But like everyone Some researchers are trying to get away from the idea of wire im- else trying to make implants work, Dr Shepard is not just cram- plants altogether. At Brown University, for example, Arto Nur- ming sensors onto the chip. He also has to add the same number mikko is leading a multidisciplinary team to create “neurograins”, ofamplifiers, a converterto turn the analogue signals ofaction po- each the size of a grain of sugar, that could be sprinkled on top of tentials into the digital 0s and 1s of machine learning, and a wire- the cortex or implanted within it. Each grain would have to have less link to send (or receive) data to a relay station that will sit on built-in amplifiers, analogue-to-digital converters and the ability the scalp. That, in turn, will send (or receive) the data wirelessly to to send data to a relay station which could powerthe grains induc- external processors fordecoding. tively and pass the information to an external processor. Dr Nur- The device also has to be powered, another huge part of the mikko is testing elements ofthe system in rodents; he hopes even- implantables puzzle. No one in the field puts faith in batteries as a tually to put tens ofthousands ofgrains inside the head. source of power. They are too bulky, and the risk of battery fluid Meanwhile, in a lab at Harvard University, Guosong Hong is leaking into the brain is too high. Like many of his peers, Dr Shep- demonstrating another innovative interface. He dips a syringe ard uses inductive coupling, whereby currents passing through a into a beaker of water and injects into it a small, billowing and coiled wire create a magnetic field that can induce a current in a glinting mesh. It is strangely beautiful to watch. Dr Hong is a post- second coil (the way that an electric toothbrush gets recharged). doctoral fellow in the lab of Charles Lieber, a professor of chemis- That job is done by coils on the chip and on the relay station. try; theyare both workingto create a neural interface thatblursthe Over on America’s west coast, a startup called Paradromics is distinction between biology and electronics. Their solution is a also using inductive coupling to power its porous net made of a flexible polymer implantable. But Matt Angle, its boss, does called SU-8, studded with sensors and con- not think that souped-up surface record- ductive metal. ings will deliver sufficiently high resolu- The mesh isdesigned to solve a number tion. Instead, he is working on creating tiny ofproblems. One hasto do with the brain’s bundles ofglass and metal microwires that immune response to foreign bodies. By can be pushed into brain tissue, a bit like a replicating the flexibility and softness of Utah arraybutwith manymore sensors. To neural tissue, and allowing neurons and stop the wires clumping together, thereby other types of cells to grow within it, it reducing the number of neurons they en- should avoid the scarring that stiffer, solid gage with, the firm uses a sacrificial po- probes can sometimes cause. It also takes lymer to splay them apart; the polymer dis- up much less space: less than 1% of the vol- solves but the wires remain separated. ume of a Utah array. Animal trials have They are then bonded onto a high-speed gone well; the next stage will be to insert CMOS circuit. A version of the device, with the mesh into the brains of epilepsy pa- 65,000 electrodes, will be released next tients who have not responded to other year foruse in animal research. forms oftreatment and are waiting to have That still leaves lots to do before Para- bits of tissue removed. dromics can meet its DARPA-funded goal A mile away, at MIT, members ofPolina of creating a 1m wire device that can be Anikeeva’s lab are also trying to build de- used in people. Chief among them is cop- vices that match the physical properties of ing with the amount of data coming out of neural tissue. Dr Anikeeva is a materials the head. Dr Angle reckons that the initial scientist who first dived into neuroscience device produces 24 gigabits of data every at the lab of Karl Deisseroth at Stanford second (streaming an ultra-high-definition University, who pioneered the use ofopto- movie on Netflix uses up to 7GB an hour). genetics, a way of genetically engineering In animals, these data can be transmitted cells so that they turn on and off in re- through a cable to a bulky aluminium sponse to light. Her reaction upon seeing a head-mounted processor. That is a hard (mouse) brain up close for the first time look to pull off in humans; besides, such was amazement at how squishy it was. “It quantities of data would generate far too is problematic to have something with the much heat to be handled inside the skull or elastic properties of a knife inside some- transmitted wirelessly out ofit. thingwith the elastic properties ofa choco- So Paradromics, along with everyone late pudding,” she says. else trying to create a high-bandwidth sig- One way she is dealing with that is to nal into and out of the brain, has to find a borrow from the world of telecoms by cre- way to compress the data rate without ating a multichannel fibre with a width of compromising the speed and quality of in- 100 microns (one micron is a millionth ofa formation sent. Dr Angle reckons he can do metre), about the same as a human hair. this in two ways: first, by ignoring the mo- That is denser than some ofthe devices be- ments of silence in between action poten- ing worked on elsewhere, but the main tials, rather than laboriously encoding thing that distinguishes it is that it can do1 8 The Economist January 6th 2018 TECHNOLOGY QUARTERLY Brain-computer interfaces

2 multiple things. “Electronics with just cur- Data processing rent and voltage is not going to do the trick,” she says, pointing out that the brain communicates not just electrically but Translation required chemically, too. Dr Anikeeva’s sensor has one channel for recording using electrodes, but it is also able to take advantage of optogenetics. A second channel is designed to deliver Introducing channelrhodopsin, an algal protein that Once data have been extracted from the brain, how can can be smuggled into neurons to make they be used to best effect? tiny, flexible them sensitive to light, and a third to shine a light so that these modified neurons can OR those who reckon that brain-computer interfaces will materials be activated. nevercatch on, there is a simple answer: they already have. It is too early to know if optogenetics Well over 300,000 people worldwide have had cochlear into the can be used safely in humans: channelrho- implants fitted in their ears. Strictly speaking, this hearing dopsin has to be incorporated into cells us- device does not interact directly with neural tissue, but the brain ing a virus, and there are question-marks effect is not dissimilar. A processor captures sound, which about how much light can safely be shone Fis converted into electrical signals and sent to an electrode in the creates a into the brain. But human clinical trials are inner ear, stimulating the cochlear nerve so that sound is heard in “wet under way to make retinal ganglion cells the brain. Michael Merzenich, a neuroscientist who helped devel- light-sensitive in people whose photo- op them, explains that the implants provide only a crude repre- noodle” receptor cells are damaged; another of the sentation of speech, “like playing Chopin with your fist”. But giv- recipients of DARPA funds, Fondation Voir en a little time, the brain works out the signals. problem et Entendre in Paris, aims to use the tech- That offers a clue to another part of the BCI equation: what to nique to transfer images from special gog- do once you have gained access to the brain. As cochlear implants gles directly into the visual cortex of com- show, one option is to let the world’s most powerful learning pletely blind people. In principle, other machine do its stuff. In a famous mid-20th-century experiment, senses could also be restored: optogenetic two Austrian researchers showed that the brain could quickly stimulation of cells in the inner ear of mice has been used to con- adapt to a pairofglasses that turned the image theyprojected onto trol hearing. the retina upside down. More recently, researchers at Colorado Dr Anikeeva is also toying with another way ofstimulating the State University have come up with a device that converts sounds brain. She thinksthata weakmagneticfield could be used to pene- into electrical impulses. When pressed against the tongue, it pro- trate deep into neural tissue and heat up magnetic nanoparticles duces different kinds of tingle which the brain learns to associate that have been injected into the brain. If heat-sensitive capsaicin with specific sounds. receptors were triggered in modified neurons nearby, the in- The brain, then, is remarkably good at working things out. creased temperature would cause the neurons to fire. Then again, so are computers. One problem with a hearing aid, for Another candidate for recording and activating neurons, be- example, is that it amplifies every sound that is coming in; when yond voltage, light and magnets, is ultrasound. Jose Carmena and youwantto focuson one person in a noisyenvironment, such as a Michel Maharbiz at the University of California, Berkeley, are the party, that is not much help. Nima Mesgarani ofColumbia Univer- main proponentsofthisapproach, which again involvesthe inser- sity is working on a way to separate out the specific person you tion of tiny particles (which they call “neural dust”) into tissue. want to listen to. The idea is that an algorithm will distinguish be- Passing ultrasound through the body affects a crystal in these tween different voices talking at the same time, creating a spectro- motes which vibrates like a tuning fork; that produces voltage to gram, or visual representation of sound frequencies, of each per- power a transistor. Electrical activity in adjacent tissue, whether son’s speech. It then looks at neural activity in the brain as the muscles or neurons, can change the nature of the ultrasonic echo wearer of the hearing aid concentrates on a specific interlocutor. given offby the particle, so this activity can be recorded. This activity can also be reconstructed into a spectrogram, and the Many of these new efforts raise even more questions. If the ones that match up will get amplified (see diagram). ambition is to create a “whole-brain interface” that covers multi- Algorithms have done better than brain plasticity at enabling ple regions of the brain, there must be a physical limit to how paralysed people to send a cursor to a target using thought alone. much additional material, be it wires, grains or motes, can be in- In research published earlierthisyear, forexample, Dr Shenoyand1 troduced into a human brain. If such particles can be made suffi- ciently small to mitigate that problem, another uncertainty arises: would they float around in the brain, and with what effects? And The cocktail-party problem How to amplify one voice among many how can large numbers of implants be put into different parts of Each voice is compared the brain in a single procedure, particularly if the use of tiny, flex- Algorithm with the listener’s neural ible materials creates a “wet noodle” problem whereby implants separates signals. The closest match are too floppy to make their way into tissue? (Rumour has it that voices is the one that is amplified Neuralink may be pursuing the idea of an automated “sewing machine” designed to get around this issue.) All thisunderlineshowhard itwill be to engineera newneural interface that works both safely and well. But the range of efforts to create such a device also prompts optimism. “We are approach- ing an inflection-point that will enable at-scale recording and stimulation,” says Andreas Schaefer, a neuroscientist at the Crick Institute in London. Even so, being able to get the data out of the brain, or into it, is only the first step. The next thing is processing them. 7 Source: Nima Mesgarani, Columbia University The Economist January 6th 2018 9 TECHNOLOGY QUARTERLY Brain-computer interfaces

2 his collaborators at Stanford University recorded a big improve- ment in brain-controlled typing. This stemmed not from new sig- nals or whizzier interfaces but from better maths. One contribution came from Dr Shenoy’s use of data generat- ed during the testing phase of his algorithm. In the training phase a user is repeatedly told to move a cursor to a particular target; machine-learning programs identify patterns in neural activity that correlate with this movement. In the testing phase the user is shown a grid of letters and told to move the cursor wherever he wants; that tests the algorithm’s ability to predict the user’s wish- es. The user’s intention to hit a specific target also shows up in the data; by refitting the algorithm to include that information too, the cursor can be made to move to its target more quickly. But although algorithms are getting better, there is still a lot of room for improvement, not least because data remain thin on the ground. Despite claims that smart algorithms can make up for bad signals, they can do only so much. “Machine learning does nearly magical things, but it cannot do magic,” says Dr Shenoy. Consider the use of functional near-infrared spectroscopy to identify sim- ple yes/no answers given by locked-in patients to true-or-false statements; they were right 70% ofthe time, a huge advance on not hand has 27. Visual-cortex researchers often work with static im- being able to communicate at all, but nowhere near enough to ages, whereas humans in real life have to cope with continuously have confidence in their responses to an end-of-life discussion, moving images. Workon the sensory feedbackthat humans expe- say. More and cleaner data are required to build better algorithms. rience when they grip an object has barely begun. It does not help that knowledge of how the brain works is still And although computational neuroscientists can piggyback so incomplete. Even with better interfaces, the organ’s extraordi- on broader advances in the field of machine learning, from facial nary complexities will not be quickly unravelled. The movement recognition to autonomous cars, the noisiness of neural data pre- of a cursor has two degrees of freedom, for example; a human sents a particular challenge. A neuron in the motor cortex may fire1 Brain scan Eberhard Fetz

The man who helped launch brain-computer interfaces in 1969 has not finished yet BCIs have deep roots. In the 18th century tional control ofa BCI was possible, and forging entirely new ones. Luigi Galvani discovered the role of elec- that the brain was capable oflearning As an example, he points to research tricity in nerve activity when he found how to operate one without any help. in which the recording ofan action poten- that applying voltage could cause a dead Some 48 years later, Dr Fetz is still at the tial in the brain prompts not only the frog’s legs to twitch. In the 1920s Hans University ofWashington, still fizzing with normal firing ofa motor neuron in the Berger used electroencephalography to energy and still enthralled by the brain’s spinal cord but also a parallel stimulus record human brain waves. In the 1960s plasticity. He is particularly interested in from a BCI delivered to the same site. The José Delgado theatrically used a brain the possibility ofartificially strengthening idea is to take advantage ofa relationship implant to stop a charging bull in its connections between cells, and perhaps made famous in an aphorism by a Cana- tracks. One ofthe field’s father figures is dian psychologist, Donald Hebb: “Neu- still hard at workin the lab. rons that fire together, wire together.” This Eberhard Fetz was a post-doctoral reinforced stimulus strengthens the con- researcher at the University ofWashing- nection between the original action ton in Seattle when he decided to test potential and the motor neuron, which whether a monkey could control the could help recovery from spinal-cord needle ofa meter using only its mind. A injuries. Such stimulation might also paper based on that research, published encourage stronger bonds in the brain in 1969, showed that it could. Dr Fetz itself—between the speech-processing tracked down the movement ofthe need- area ofa stroke victim’s brain, say, and the le to the firing rate ofa single neuron in region that controls movements ofthe the monkey’s brain. The animal learned lips and mouth. to control the activity ofthat single cell Asked to explain the slow rate of within two minutes, and was also able to progress since his breakthrough paper, Dr switch to control a different neuron. Fetz points to the technical difficulties of Dr Fetz disclaims any great insights in recording from single cells and the high setting up the experiment. “I was just hurdle to doing this sort ofworkin peo- curious, and did not make the association ple. But he does not thinkthere is a need with potential uses ofrobotic arms or the to find out much more about the brain in like,” he says. But the effect ofhis paper order to make furtheradvances: “I have was profound. It showed both that voli- had a lot ofprogress by just jumping in.”

10 The Economist January 6th 2018 TECHNOLOGY QUARTERLY Brain-computer interfaces

2 at a rate of 100 action potentials a second when someone thinks to shake rather than slur his words. about moving his right arm on one occasion, but at a rate of115 on Giving humans more options of this sort will be essential if another. To make matters worse, neurons’ jobs overlap. So if a some of the bolder visions for brain-computer interfaces are to be neuron has an average firing rate of 100 to the right and 70 to the realised. Hannah Maslen from the UniversityofOxford is another left, what does a rate of85 signify? ethicist who works on a BCI project, in this case a neural speech At least the activities of the motor cortex have a visible output prosthesis being developed by a consortium of European re- in the form of movement, showing up correlations with neural searchers. One of her jobs is to think through the distinctions be- data from which predictions can be made. But othercognitive pro- tween innerspeech and public speech: people need a dependable cesses lack obvious outputs. Take the area that Facebook is inter- mechanism for separating out what they want to say from what ested in: silent, orimagined, speech. Itisnotcertain thatthe brain’s they think. representation of imagined speech is similar enough to actual That is only one of many ethical questions that the sci-fi ver- (spoken or heard) speech to be used as a reference point. Progress sions of brain-computer interfaces bring up. What protection will ishampered byanotherfactor: “We have a century’sworth ofdata BCIs offer against neural hacking? Who owns neural data, includ- on how movement is generated by neural activity,” says Brain- ing information that is gathered for research purposes now but Gate’s Dr Hochberg dryly. “We know less about animal speech.” may be decipherable in detail at some point in the future? Where Higher-level functions, such as decision-making, present an does accountability lie if a user does something wrong? And if even greaterchallenge. BCI algorithmsrequire a model thatexplic- brain implants are performed not for therapeutic purposes but to itly defines the relationship between neural activity and the pa- augment people’s abilities, will that make the world an even more rameter in question. “The problem begins with defining the pa- unequal place? rameter itself,” says Dr Schwartz ofPittsburgh University. “Exactly what is cognition? How do you write an equation forit?” From potential to action Such difficulties suggest two things. One is that a set of algo- For some, these sorts ofquestions cannot be asked too early: more rithms for whole-brain activity is a very long way off. Another is than any other new technology, BCIs may redefine what it means that the best route forward for signal processing in a brain-com- to be human. For others, they are premature. “The societal-justice puter interface is likely to be some combination ofmachine learn- problem of who gets access to enhanced memory or vision is a ing and brain plasticity. The trick will be to develop a system in question for the next decades, not years,” says Thomas Cochrane, which the two co-operate, not just for the sake of efficiency but a neurologist and director of neuroethics at the Centre for Bioeth- also forreasons ofethics. 7 ics at Harvard Medical School. In truth, both arguments are right. It is hard to find anyone who argues that visions of whole-brain implants and AI-human sym- biosis are impossible to realise; but harderstill to find anyone who Looking for serendipity thinks something so revolutionary will happen in the near future. This report has looked at some of the technological difficulties as- sociated with taking BCIs out of the lab and into the mainstream. Grey matter, red tape But these are not the only obstacles in the way of “brain mouses” and telekinesis. The development path to the eventual, otherworldly destina- tion envisaged by organisations like Neuralink and Kernel is ex- tremely long and uncertain. The money and patience of rich indi- How obstacles to workable brain-computer interfaces may viduals like Elon Musk and Bryan Johnson can help, but in reality be overcome each leg ofthe journey needs a commercial pathway. Companies such as CTRL-Labs and Neurable may well open EUROTECHNOLOGY has long been a favourite of sci- the door to consumer applications fairly quickly. But for invasive ence-fiction writers. In “Neuromancer”, a wildly inven- technologies, commercialisation will ini- tive bookbyWilliam Gibson written in 1984, people can tially depend on therapeutic applications. use neural implants to jack into the sensory experi- That means overcoming a host of hurdles, ences of others. The idea of a neural lace, a mesh that from managing clinical trials to changing grows into the brain, was conceived by Iain M. Banks in doctors’ attitudes. Frank Fischer, the boss Nhis “Culture” series of novels. “The Terminal Man” by Michael of NeuroPace, has successfully negotiated Crichton, published in 1972, imagines the effects ofa brain implant regulatory approval for his company’s epi- on someone who is convinced that machines are takingover from lepsy treatment, but it has been a long, humans. (Spoiler: not good.) hard road. “If we tried to raise money to- Where the sci-fi genre led, philosophers are now starting to fol- day knowing the results ahead of time, it low. In Howard Chizeck’s lab at the University of Washington, re- would have been impossible to get fund- searchersare workingon an implanted device to administer deep- ed,” he says. Brain- brain stimulation (DBS) in orderto treat a common movement dis- Start with regulation. Neural interfaces order called essential tremor. Conventionally, DBS stimulation is are not drugs but medical devices, which computer always on, wasting energy and depriving the patient of a sense of means that clinical trials can be completed control. The lab’sethicist, Tim Brown, a doctoral student of philos- with just a handful ofpatients for proof-of- interfaces ophy, says that some DBS patients suffer a sense of alienation and principle trials, and just a couple of hun- may redefine complain offeeling like a robot. dred forthe trials that come after that. Even To change that, the team at the University of Washington isus- so, ensuringa supply ofpatients for experi- what it ing neuronal activity associated with intentional movements as a ments with invasive interfaces presents trigger for turning the device on. But the researchers also want to practical difficulties. There is only one means to be enable patients to use a conscious thought process to override good supply of these human guinea pigs: these settings. Thatismore useful than itmightsound: stimulation epilepsy patients who have proved unre- human currents for essential tremor can cause side-effects like distorted sponsive to drugs and need surgery. These speech, so someone about to give a presentation, say, might wish patients have already had craniotomies 1 The Economist January 6th 2018 11 TECHNOLOGY QUARTERLY Brain-computer interfaces

gery. The precedents ofonce-rare, now-routine procedures such as laser eye and cosmetic surgery suggest that invasiveness alone need not stop brain implants from catching on. More than 150,000 people have had electrodes implanted for deep-brain stimulation to help them control Parkinson’s disease. But it is also a matter of functionality: plenty ofamputees, for example, prefersimple met- al hooks to prosthetic arms because they are more reliable.

Waiting forNeuromancer These are all good reasons to be cautious about the prospects for BCIs. But there are also reasons to thinkthat the field is poised for a great leap forward. Ed Boyden, a neuroscientist at MIT who made hisname asone ofthe people behind optogenetics, points outthat innovations are often serendipitous—from Alexander Fleming’s chance discovery of penicillin to the role of yogurt-makers in the development of CRISPR, a gene-editing technique. The trick, he says, is to engineer the chances that serendipity will occur, which means pursuing lots ofpaths at once. That is exactly what is now being done with BCIs. Scientific ef- forts to understand and map the brain are shedding ever more light on how its activity can be harnessed by a BCI and providing ever more data for algorithms to learn from. Firms like CTRL-Labs and Neurable are already listening to some of the more accessible neural signals, be it from the peripheral nervous system or from outside the skull. NeuroPace’sclosed-loop epilepsysystem creates a regulatory precedent that others can follow. Above all, researchers are working hard on a wide range of new implants for sending and receiving signals to and from the brain. That is where outfits like Kernel and Neuralink are focused in the short term. Mr Musk’s four-year schedule for creating a BCI for clinical use is too ambitious forfull clinical trials to be conclud- 2 and electrodes implanted so that doctors can monitor them and ed, butitismuch more realisticforpilottrials. This isalso the rough pinpoint the focal points oftheir seizures; while these patients are timeframe to which DARPA is working with its implantables pro- in hospital waiting for seizures to happen, researchers swoop in gramme. With these and other efforts running concurrently, ser- with requests oftheirown. But the supply ofvolunteers is limited. endipity has become more likely. Where exactly the electrodes are placed depends on clinical Once a really good, portable, patient-friendlyBCI is available, it needs, not researchers’ wishes. And because patients are often de- is not hard to think of medical conditions that affect a large num- liberately sleep-deprived in order to hasten seizures, their capaci- berofpeople and could potentiallyjustifysurgery. More than 50m ty to carry out anything but simple cognitive tasks is limited. people worldwide suffer from epilepsy, and 40% of those do not When it comes to safety, new technologies entail lengthier ap- respond to medication. Depression affects more than 300m peo- proval processes. Harvard’s Dr Lieber says that his neural mesh re- ple worldwide; many of them might benefit from a BCI that mon- quires a new sterilisation protocol to be agreed with America’s itored the brain for biomarkers of Food and Drug Administration. Researchers have to deal with the such mental disorders and deliv- question of how well devices will last in the brain over very long ered appropriate stimulation. The OFFER TO READERS periods. The Wyss Centre has an accelerated-ageing facility that quality of life of many older peo- Reprints of Technology exposes electrodes to hydrogen peroxide, in a process that mimics ple suffering from dysphagia (dif- Quarterly are available from the Rights and Syndication the brain’s immune response to foreign objects; seven days’ expo- ficulty in swallowing) could be Department. A minimum order sure in the lab is equivalent to seven years in the brain. improved by a device that helped of five copies is required. The regulators are not the only people who have to be won them swallow whenever they over. Health insurers (or other gatekeepers in single-payer sys- wanted to. “A closed-loop system CORPORATE OFFER tems) need to be persuaded that the devices offervalue formoney. for recording from a brain and re- Customisation options on The Wyss Centre, which aims to bow out of projects before de- sponding in a medically useful corporate orders of 100 or more vices are certified formanufacturing, plans with this in mind. One way is not a small market,” says are available. Please contact us ofthe applicationsitisworkingon isfortinnitus, a persistentinter- Dr Hochberg. to discuss your requirements. nal noise in the ears of sufferers which is often caused by overac- That may still bring to mind For more information on how to order special reports, reprints or tivity in the auditory cortex. The idea is to provide an implant the aphorism of Peter Thiel, a Sil- any queries you may have please which gives users feedback on their cortical activity so that they icon Valley grandee, about hav- contact: can learn to suppress any excess. Looking ahead to negotiations ing been promised flying cars and with insurers, the Wyss is trying to demonstrate the effectiveness getting 140 characters. There is a The Rights and Syndication of its implant by including a control group of people whose tinni- large gap between dreamy talk of Department tus is being treated with cognitive behavioural therapy. symbiosis with AI, or infrared The Economist That still leaves two other groups to persuade. Doctors need to eyesight, and takingyearsto build 20 Cabot Square be convinced that the risks ofopeningup the skull are justified. Mr a better brain implant formedical London E14 4QW Fischer says that educating physicians proved harder than expect- purposes. But if a device to deliv- Tel +44 (0)20 7576 8148 ed. “The neurology community does not find it natural to think er a real-time, high-resolution, Fax +44 (0)20 7576 8492 about device therapy,” he says. long-lasting picture of neural ac- e-mail: [email protected] Most important, patients will have to want the devices. This is tivity can be engineered, that gap www.economist.com/rights partly a question of whether they are prepared to have brain sur- will shrinkspectacularly. 7 12 The Economist January 6th 2018 Europe The Economist January 6th 2018 35

Also in this section 36 Catalonia votes for separatists again 37 Russia’s opposition 37 Obesity in France 38 Turkey’s economy Charlemagne is on holiday

For daily analysis and debate on Europe, visit Economist.com/europe

Italy which has neo-fascist roots, and the North- ern League, which wants less immigration Their generation and more autonomy fornorthern Italy. Young Italians resent the older genera- tions, but not their parents, says Alessan- dro Rosina, who co-ordinated a recent study for the Fondazione Bruno Visentini, FLORENCE a think-tank. They are hostile to main- stream parties, trade unions and an ill-de- As Italy prepares to vote, young people are fed up with the traditional parties fined “ruling class”, which they blame for OR the first time in its brief history, Ita- than Ms Fatichenti (the better known the vast gap between their incomes, job Fly’s maverickFive Star Movement (M5S) Beppe Grillo, M5S’s founder, is ineligible to prospects and pension pots and those of isgoinginto a general election campaign as run for parliament due to a conviction for theirelders. The Intergenerational Founda- the front-runner. On December 28th Presi- manslaughter, in a car accident). tion’s most recent “intergenerational fair- dent Sergio Mattarella dissolved parlia- Nando Pagnoncelli of Ipsos, a pollster, ness index” ranks Italy second from bot- ment, clearing the way fora vote on March says 25- to 34-year-olds are the group most tom in Europe, ahead ofonly Greece. 4th. The latestpollsgive the M5S, which ad- likely to support M5S: four points above In 2014, the last year for which compar- vocates direct, internet-based democracy the average. Young voters are also more ative data are available, what the govern- and a hotch-potch of left- and right-wing likelythan theireldersto backother radical ment spent on Italy’s past (ie, on pensions) policies, a lead of more than three points parties such as the Brothers of Italy (FdI), was more than four times what it spent on over the centre-left Democratic Party (PD), its future (ie, on education and training). the dominant partner in Paolo Gentiloni’s But then, as Mr Pagnoncelli notes, it is the coalition government. The inexperienced The Italian exception elderlywho have the electoral clout. Voters M5S, founded less than nine years ago, Population by sex and age group, 2016, % of total over 55 make up 41% ofthe electorate, com- could thus get first crack at forming a gov- Italy EU28 pared with 22% under 35—the effect of a ernment—a prospect that troubles markets MALE FEMALE steep decline in the birth rate dating back already worried by Italy’s huge public debt 42024to the 1970s (see chart). GDP (132% of at the end of2016). 85+ Many ofthe causes ofItaly’s generation Like other populist groups in Europe, 80-84 gap can be found in political choices made the M5S thrives on frustrated expectations. 75-79 in the past 20 years that have favoured the In Italy disillusion is most intense among 70-74 old over the young. Italy’s low birth rate, the young and educated. Two-and-a half 65-69 coupled with disappointing economic 60-64 yearsaftergraduating, Valentina Fatichenti 55-59 growth, has prodded successive govern- works six months in every 12 helping stu- 50-54 ments into pension reforms. But the way in dentsatan American universitycampus in 45-49 which these have been carried out has her native Florence. Otherwise, she 40-44 placed on younger, generally lower-earn- scrapes a precarious living teaching Eng- 35-39 ing, workers the burden of providing not 30-34 lish in primary schools, translating and, oc- 25-29 only for their own pensions, but also for casionally, waitressing. 20-24 those of the already retired. Labour re- She has decided to vote for the M5S. Its 15-19 forms in 1997 and 2003 made it easier for appeal? “New faces,” she says. The M5S 10-14 bosses to hire new workers on short-term chooses its candidates in online polls of its 5-9 contracts, but did little to erode the job se- 0-4 members. Its candidate for prime minister, curity of those already in permanent em- Luigi Di Maio, is 31, just three years older Source: Eurostat ployment. And since the latter, along with 1 36 Europe The Economist January 6th 2018

2 pensioners, make up the bulk of trade-un- jobs). And Italy’s EU membership lets said he would return to Catalonia if he ion membership, the unions have been them search forworkin 27 other countries. won (although he would almost certainly keener to defend the privileges of those An estimated 600,000 Italians live in Brit- face arrest as soon as he arrived). His sup- with jobs for life than to campaign for a ain; not even the prospect of Brexit has porters are now suggesting that he could more equitable distribution ofbenefits. stemmed the flow. In the 12 months to govern virtually from Brussels. That is “ab- Ms Fatichenti’s family is typical: her fa- mid-2017, whereas the number of Poles en- surd”, scoffed Mr Rajoy. “It’s as if I wanted ther toiled in the same factory for40 years, tering the British labour market dropped to be prime minister of Spain while living hermotherwas a janitor. Ms Fatichenti has by 26%, the number of Italians rose by 2%. in Lisbon.” a university education. Yet her take-home Athird factoreasingthe plight ofthe young In all, five of those elected for the sepa- pay in the six months when she is under is family support. Italian parents let their ratist parties are in self-imposed exile and contract is €300 a month less than that of children live with them farlongerthan oth- three are in jail. All except Mr Puigdemont her boyfriend, who works in a street mar- er European parents. In 2016 only a third of and Mr Junqueras may resign to allow ket. “A lot of employers don’t want gradu- 18-35s had left their parental homes, com- their replacement and thus preserve the ates because they don’t have any practical pared with 63% in France. separatist majority in parliament when it experience,” she says. That points to a Though changes to pension and em- sits. If not, Ciudadanos will press for the weakness stressed in Mr Rosina’s report: a ployment rules could go some way to- job ofparliamentary Speaker. lackofconnection between education and wards closing Italy’s generation gap, what The bigger question is what the new the labour market. Italy has the EU’s high- is really needed, reckons Mr Rosina, is a government will do. Catalan business is est proportion of under-35s not in educa- change of outlook, both among teachers, desperate for the separatists to renounce tion, employment or training: 30.7% in who should equip young Italians with life the unilateral road to independence. The 2016, compared with 12.4% in Germany. skills, and employers, who need to start events of October have prompted more A big informal economy allows young seeing them not as easily disposable cheap than 3,200 firms to move their legal domi- workers to arrangiarsi (get by, with odd labour, but as sources ofinnovation. 7 cile out of the region. Although a claim by Luis de Guindos, Spain’s economy minis- ter, of a €1bn hit to Catalonia’s economy Spain may be exaggerated, unemployment has edged up and retail sales have slowed. Local difficulties “Confidence has been lost” and the new government “will have to work very hard to recover it,” says Jordi Alberich ofthe Cer- cle d’Economia, a business group. There is palpable weariness in the inde- MADRID pendence movement. Its priority now is an amnesty for its leaders, though there is Catalonia will have a new separatist government, but what will it do? little appetite for that elsewhere in Spain. FTER his final cabinet meeting of 2017 separatist regional administration headed “It’s a moment to insist on the third way” AMariano Rajoy, Spain’sprime minister, by Carles Puigdemont. That in turn came between independence and the status admitted that it had been “an extraordi- after an unconstitutional independence quo, says Mr Alberich. narily difficult year”. The economy purred referendum, which was further marred by But there is little short-term incentive along, unemployment and the deficit are police violence. for Mr Rajoy do so. His People’s Party was falling, butthere was a shadow, he said: the The contest took place in bizarre cir- crushed in the election, outflanked by Ciu- “instability generated by politics in Catalo- cumstances, with Mr Puigdemont cam- dadanos, which is against any concessions nia”. The problem is that the outcome of paigning by video link from Brussels, to Catalan nationalism. The likelihood is last month’s snap election in Spain’s rebel- where he had fled to avoid a charge of re- that in 2018 the Catalan case will mutate lious north-eastern region suggests that bellion. With a record turnout of 79%, the from acute to chronic. 7 2018 may not be much easier. vote proved to be a qualified triumph for The election was called by Mr Rajoy in him and for the pro-independence co- October after he assumed extraordinary alition. On the one hand, in a symbolic constitutional powers to suspend self-gov- blow to their cause, Ciudadanos, a centre- ernmentin Catalonia aftera unilateral dec- right anti-separatist party, became the larg- laration of independence issued by the est political force, but with only 25% of the vote. On the other hand, the three separat- ist parties won a combined 47.6% of the Still separatist vote, down only marginally since the last Spain, parliament of Catalonia election in 2015. Because the electoral sys- Election results 2017, seats tem gives a bit of extra weight to rural ar- Pro-independence 010203040 eas, the separatists won 70 of the 135 seats Together in the Catalan parliament (down from 72, for Catalonia but still enough fora slender majority). Esquerra 70 Mr Puigdemont’s “Together for Catalo- Popular Unity nia” list narrowly outpolled Esquerra (Re- Total publican Left), the party of his jailed for- Anti-independence seats Ciudadanos mer coalition partner, Oriol Junqueras. Mr 65 Puigdemont is demanding his restoration Socialist Party to the Generalitat, the seat of the Catalan Catalonia in Common government. Yet that “is not simple”, as People’s Party Sergi Sabrià of Esquerra, which also has its eye on the presidency, said this week. Sources: Parliament of Catalonia; Agencia EFE During the campaign Mr Puigdemont Rajoy’s pain continues The Economist January 6th 2018 Europe 37

Obesity in France Body positive

PARIS A campaign against fat-shaming gets underway RANCE has only a few plump heroes, sophobie (fat-shaming), including a fash- Freal or imagined. There was King Louis ion show with larger models. (France has the Fat, who ruled from 1108 to 1137, pac- previously held several “Miss Ronde” ified unruly barons, centralised power contests.) The event was partly inspired and won several wars. Gargantua, a giant by the success ofa memoir by a trainee created by François Rabelais, drank the teacher, Gabrielle Deydier, who de- milkof17,913 cows each day. Gérard De- scribes daily humiliations she endures as pardieu (pictured), France’s best-known a fat person in France, such as being modern actor, is hefty enough to play mocked forwhat she buys at the bakery. Obelix, France’s best-known overweight The difficulty forofficial campaigns cartoon Gaulish warrior, on the screen. against grossophobie, however, is that In general, however, the French see contradictory messages are louder, glossi- themselves as gourmets, not gourmands. er and better funded. Despite pledges by Russia And indeed they are thinner than people fashion and luxury houses not to use in most other rich countries: only15.3% of skeletal-looking models when promoting Cardboard them are obese, compared with an OECD their goods, billboards and magazines average of19.5%. Worryingly, though, this remain crammed with skinny figures. Kremlin has risen from less than 6% in 1990, while Activists say this promotes both eating the share ofadults who are overweight disorders among the thin and misery has risen from 30% to over 46%. Growing among the plump. appetites forprocessed food and more sedentary lives are leading to bigger VladimirPutin bars his main challenger waistlines. WO leading politicians delivered their For policymakers, this is a problem. Tnew year’s greetings to the Russian Obesity leads to sickness—rates ofdiabe- public this week. One was the president, tes are rising, for example. The state Vladimir Putin, who has been in power for estimates that the overweight population 18 years and is planning to stay for at least already requires extra health and other another six following an election due in spending ofsome €20bn a year. Weight March. The other was Alexei Navalny (pic- is closely correlated with poverty: a tured), the only truly independent opposi- French study last year suggested that tion leader. He is also the person who children ofparents classed as “non- poses the biggest challenge to Mr Putin, professional” are fourtimes likelier to be and has consequently been barred from obese than those ofprofessionals. To standing. Both men were speaking using discourage overeating, France taxes the Kremlin as a backdrop; but in Mr Na- sugary drinks, bars junkfood in schools valny’s case, it was drawn on a board. and has rules on nutritional labelling. The latter image carried a message: the At the same time, officials want peo- upcoming election, in which only candi- ple to be kinder to their plus-sized compa- dates approved by the Kremlin will be al- triots. Anne Hidalgo, the mayor ofParis, lowed to run, isa cartoon; and genuine pol- hosted a conference last month on gros- Nothing to be ashamed of iticsare unfoldingoutside the castle’swalls and beyond its control. As part of this pro- cess Mr Navalny has called for a nation- few times by the detentions ofMr Navalny away from street politics, unless it decides wide strike on January 28th to launch a himselfand ofhis campaign chief. to arrest him yet again. Far from neutralis- boycott ofthe poll. But just as Mr Navalny refuses to recog- ing Mr Navalny as a threat, the ban and the Neither Mr Navalny’s ban, announced nise MrPutin asan irreplaceable leader, Mr ensuing boycott may have made him even on December25th, norhis call fora boycott Putin conspicuously refuses to acknowl- more dangerous. For all of Mr Putin’s au- came as much of a surprise. Ever since he edge Mr Navalny as a legitimate challeng- thoritarianism, he still relies on the con- galvanised huge street protests in Moscow er. He pretends not to notice him and sent of the public and of Russia’s various against rigging in the legislative elections avoids mentioning him by name. When elites, and derives what legitimacy he has of 2011, the Kremlin has sought to neutral- Ksenia Sobchak, a liberal-minded TV jour- from popular support. The election is ise the threat he poses by engineering nalist and presidential candidate, asked Mr meant to be a way of demonstrating to the fraud charges against him and slapping Putin why Mr Navalny was excluded from elite that the public still recognise him as him with a criminal conviction to disquali- the ballot, Mr Putin said he would not al- their only possible leader. fy him from running forthe presidency. Mr low “the figures you mentioned” to “desta- Although Mr Putin’s victory in March is Navalny has successfully appealed to the bilise our country”. assured, the success of the election is not. European Court of Human Rights, though Gleb Pavlovsky, a political analyst and a The purpose of Mr Navalny’s efforts, the court has no power to enforce its judg- former adviser to Mr Putin, says that Mr which include the boycott, agitation ment. He has also staged an election cam- Navalny has already seized the political against the election and the monitoring of paign that has drawn large crowds across initiative. Although the Kremlin can keep its results, is to present the whole proce- the country, despite being interrupted a him offthe ballot paper, it cannot keep him dure as a flop, to minimise the turnout and 1 38 Europe The Economist January 6th 2018

2 to expose any attempts to rigit. “The aim of provided 221bn lira in loans to small and our strike is to cause maximum political medium-sized businesses, Mr Taha’s in- Turkey’s bounce-back damage to Putin, hispartyand hiscronies,” cluded. Tax breaks have helped trigger an GDP, % change on a year earlier Mr Navalny told his supporters in another increase in household spending, which recent broadcast. Backed by 200,000 vol- shot up by 11.7% in the year to the third 12 unteers across Russia, he hopes to create a quarter. 10 widespread public perception that the Yet the outlook is not entirely rosy. Tur- 8 election is a fraud. key’s current-account deficit has swelled 6 Ms Sobchak, who says she is campaign- from $33.7bn at the end of 2016 to $41.9bn ing “against everyone”, dismisses Mr Na- (4.7% of GDP) now. Foreign direct invest- 4 valny’s tactics, arguing that the system is ment is roughly half what it was a decade 2 + too powerful to be tackled head on and ago. Stirred by the credit boom, the spectre 0 can only be changed from within—which of high inflation, which haunted Turkey – is what she says she is trying to achieve. Mr from the 1970s until the early 2000s, has re- 2 2010 11 12 13 14 15 16 17 Navalny’s plans, however, reflect his con- turned. Prices surged by 13% in the year to Source: Turkish Statistical Institute viction that Russia has passed the point November, the highest rate in 14 years, and when power can change as a result of an more than double the central bank’s target. orderly election. The irony is that by bar- Without fiscal and monetary restraint, a which immediately nosedived, before re- ring him, Mr Putin has tended to confirm prolonged bout of double-digit inflation covering slightly. The bank is stuck be- this analysis. 7 may be in store, says William Jackson of tween a rock and a hard place, says Murat Capital Economics, a London consultancy. Ucer, an economist. “If they do nothing Years of political turmoil, terror attacks, they risk a market backlash, and if they Turkey’s economy rows with allies, and most recently fears of move sharply they face a political one,” he American fines against Turkish banks sus- says. Mr Erdogan may pile on even more Firing on all pected of violating sanctions against Iran, pressure to keep rates low ahead of parlia- have also taken their toll on the country’s mentary and presidential elections in 2019. cylinders currency. The lira has lost about a tenth of Either way, a slowdown this year looks its value against the dollar since the start of inevitable. Turkey’s banks lack the funding 2017 and nearly 40% since early 2015. For base needed for another mass injection of KGF ISTANBUL Turkish companies, especially small ones, credit under the , analysts say. Its com- saddled with foreign-currency debt worth panies have borrowed from abroad at a But forhow long? a total of $211bn, this is bad news. In early faster rate than any emerging market save HESE have been testing times for Emin December the government announced it China’s. Global tightening will make it TTaha and his Turkish transport com- would take measures to prevent 23,000 of harder for them to keep doing so. Officials pany. The war against the so-called Islamic the weakest businesses from taking out in Ankara predict growth of about 7% for State has reduced much of Mosul, Iraq’s more foreign-currency loans. the whole of 2017, but expect a return to second city and a big market for Turkish Scared stiff by Turkey’s authoritarian more modest levels this year. Hatice Kara- goods, to rubble. Trade with Iraqi Kurdis- and growth-obsessed president, Recep han, a presidential adviser, and one of the tan ground to a halt when the federal gov- Tayyip Erdogan, the country’s central bank few voices of economic orthodoxy in Mr ernment in Baghdad reacted furiously to has done little to help, preferring to make Erdogan’s circle, says Turkey needs to kick an independence referendum in Septem- cosmetic adjustments to its byzantine sys- its addiction to debt and to invest in sus- ber. (It deployed troops to the contested tem oflendingrates, instead ofthe decisive tainable growth. That is easier said than city of Kirkuk, seized the nearby oilfields increase needed to bring inflation under done. Turkish ministers have been promis- and closed Kurdish airspace to internation- control. At its last meeting on December ing economic reforms for a decade, and al flights.) Mr Taha, whose company relies 14th, the bankraised its key rate from 12.25% have failed to deliver each time. The econ- on trade with Iraq for the bulk of its rev- to 12.75%, much lessthan marketsexpected. omy was firing on all cylinders in 2017. It is enues, refused to give up. “We told our cus- Investors reacted by dumping the lira, beginning to run out ofgas. 7 tomers not to worry, to keep selling to Iraq, and that we would stand by them,” he says. A 20m lira ($5m) loan backed by Tur- key’s credit guarantee fund (KGF) helped the company regain its footing and com- plete workon a number ofprojects, includ- ing new warehouses in Iraq. Like Mr Taha’s business, Turkey’s econ- omy is doing surprisingly well. In the third quarter of 2017 GDP surged by 11.1% year- on-year, outperforming all major coun- tries. This is partly because Turkey did so badly in the same period in 2016, when the economy shrank by 0.8% after a failed coup. But it owes more to a wave of easy credit that has washed over the country, helping thousands of companies cope with the effects of a sharp drop in tourism, the imposition of emergency law, and a government crackdown that has cost 60,000 people theirfreedom. Underthe re- cently expanded KGF, the government has On the move

40 Britain The Economist January 6th 2018

Also in this section 41 Commuters ditch the railways 42 Bagehot: Drama and drift in 2018

For daily analysis and debate on Britain, visit Economist.com/britain

The National Health Service role in providing health care in England. Their pivotal position was described in the A thinning front line novels ofAnthony Trollope and George El- iot. Today Mr Stevens calls the GP arguably the most important job in Britain. They de- cide when to refer patients for hospital SPALDING care, and provide a wider range ofservices than their peers in many countries (Polish As hospitals struggle with a wintercrisis, a longer-term problem is brewing in doctors in Lincolnshire note that back primary care home they rarely saw children or dealt N PLOIESTI, just north ofBucharest, Dan- eastern Europe, 104 of the county’s 434 po- with gynaecological cases). And their role Iiela Margaritescu had a grand house, a tential spots for GPs were vacant. The is set to become even more important: the big car and her own surgery. But when she Beechfield practice ran three recruitment government wants more patients with set eyes on the Beechfield Medical Centre rounds without finding a suitable candi- chronic conditions to be cared for outside in Spalding, Lincolnshire, it was “love at date. “People drive past [Lincolnshire] on hospital, which will require GPsto co- first sight”. The 46-year-old Romanian was the way to Scotland, and then again on the ordinate treatment. hired last year as part of a pilot scheme to way back to London,” says Kieran Shar- recruit more foreign doctors to fill chronic rock, medical director of the local body What seems to be the problem? vacancies in primary care. For Dr Margari- that represents GPs. There is no medical The shortage ofGPspartlyreflectsa change tescu it is a “perfect” deal. She learns new school in the county, depriving it of a pipe- in the workforce. In 2006, 43% of GPswere skills, her three children attend good line of talent. Doctors balk at joining re- women; a decade laterthe share was55%. It schools and her pay has roughly doubled. mote practices with lots of old patients; in issetto rise further, since male GPsare clos- For their part, the people of Lincolnshire— some Lincolnshire surgeries, half the pa- er to retirement age, on average. Because who voted heavily to leave the European tients have at least fourchronic diseases. only one-fifth of female GPs work full- Union in the referendum of 2016—are hap- Lincolnshire’s woes are particularly se- time, compared with half of male GPs, py to have new doctors at last. vere, but across the board the NHS is strug- more ofthem are needed. Arecentanalysis As people return spluttering from their gling to hire and retain GPs. It recently by Imperial College London suggests that Christmas holidays, the National Health changed how it counts them, so decipher- an additional 12,000 GPs will be required Service is entering its busiest time of the ing trends is tricky, but the number of GPs by 2020—more than twice the NHS’s target. year. On January 3rd Jeremy Hunt, the has probably been falling since at least Another reason is that the job has be- health secretary, apologised to patients 2009, during which time the number of come less attractive. GPs complain of hav- after non-essential operations were sus- hospital consultants has risen by a third. In ing to do more work for less pay—and they pended until the end of the month to ease 2016 Simon Stevens, the chief executive of have a point. The English population has the pressure on hospitals. Senior doctors NHS England, pledged to recruit 5,000 grown by 4.3m in the past decade, and pa- took to Twitter to lament the “third-world” more GPs over the next five years. But the tients are seeking help more often than conditions on wards. But although the count has fallen further, reaching the they used to. The number of consultations scenes in hospitals, where patients have equivalent of 33,302 full-time GPs in Sep- per patient increased by about 10% be- been leftwaitingon trolleysin corridors for tember, 1,290 fewer than two years earlier. tween 2007 and 2014, according to a study hours, are dramatic, a less-noticed crisis is The number of surgeries has dropped to in the Lancet, a medical journal. A survey under way on the front lines of the NHS. 7,674, from 8,451 a decade ago. Some towns of GPs in 11 countries by the Common- General practitioners (GPs), patients’ first face losing most oftheirs; last year seven of wealth Fund, a think-tank, found that 92% port of call and the gatekeepers of most the eight practices in Folkestone, on the of British GPs reported typically spending health services, are a dwindling army. south coast, said they intended to close. less than 15 minutes with a patient, com- Take Lincolnshire. Before the arrival of Even before the creation of the NHS in pared with 27% of GPs in other countries. Dr Margaritescu and 24 other doctors from 1948, family doctors played an outsized British GPs were also the most likely to say 1 The Economist January 6th 2018 Britain 41

2 they were stressed. lot to learn. Accordingly, for their first two passengers now pickup 70% ofthe rail net- One London-based GP describes a years they get twice as much time to spend work’s costs, up from 50% ten years ago. “light day”: 25-30 scheduled appoint- with patients as other GPsdo. Until now, passengers have put up with ments; five to ten emergency ones; one or Those running the pilot believe that it it. Since the industry was privatised in the two home visits; 30-50 repliesto be written will continue after Britain leaves the EU, mid-1990s, the number of rail journeys in to hospital doctors, plusa similarpile ofpa- given the need for GPs. The NHS has said it the south-east has soared by 130%, though thology reports to read; and 10-20 repeat wants the programme to be scaled up to at- fares have risen by 45% in real terms. But prescriptions to process. Some feel like sec- tract 2,000 foreign GPs. Tomasz Grela, a ge- that seems to be changing. The year to retaries, writing referrals for ungrateful pa- nial new Polish doctor in Spalding, is not April 2017 saw the first big drop in passen- tients. It is a lonely job, without the cama- too worried about Brexit. “The medical ger numbers in the south-east outside a re- raderie ofa hospital ward. system needs us,” he says. And although cession (see chart). Over the past decade GPs’ pay has fall- he readily concedes that he needs to get up Many rail executives blame a Brexit-in- en. In 2004 the Labour government agreed to speed with the British system, he is duced slowdown forfalling traffic. But that on a contract that raised the average pay of showing signs of acclimatisation. Asked doesn’t explain why the drop-off has been a partner in an English surgery to £136,665 what frustrates him most about the NHS, highest in the south-east. Indeed, since the ($185,000) in today’s prices. Since then he gives the same response as most British referendum in June 2016, output in London partners’ pay has slipped to £104,900, as doctors: “Bureaucracy.” 7 has grown faster than in any other British successive governments have made the region and employment has risen. contract less generous. Salaried GPs earn More likely it is high fares and unreli- an average of £63,000, less than hospital Train travel able service that are persuading commut- doctors with similar experience. And, un- ers to change how they work, says Stephen like those clinicians, GPs pay thousands of Off the rails Joseph of the Campaign for Better Tran- pounds a year in indemnity insurance. sport, a pressure group. In the six months In an ordinary labour market, employ- to September, journeys made on season ers could raise pay to fill vacancies. But the tickets—which save money for daily com- NHS, the world’s fifth-largest employer muters—fell by a tenth, while journeys (behind the American and Chinese armed made using single-use tickets continued to Rising fares and poorservice prompt forces, Walmart and McDonald’s) does not rise. The trend is strongest in the south- more commuters to workfrom home operate in an ordinarylabourmarket. In ef- east, where fares are highest and services fect, pay is set at a national level. The num- LONG with 3m other workers, Ea- heavily disrupted. With more part-time ber ofdoctors to be trained in each special- Amonn, a civil servant, used to com- jobs and technology that lets people work ism is determined centrally years in mute into London daily. It was once an from home, going to the office every day is advance. Since it typically takes ten years easy jaunt of 30 minutes by train from falling out of fashion. Employers, facing to train a GP, failures of planning mean Coulsdon South to Victoria. But after years high rents, are keen to encourage this. The shortages that take a decade or more to fix. of strikes and driver shortages at Southern amount of space per employee in the City The government has said it will in- Rail, the operator on that line, getting to ofLondon has fallen from 17 square metres crease the number of places at medical work became a lottery—a train running on (183 square feet) in the 1990sto just11now. schools by 25% from September. (Unlike time felt like a “luxury for special occa- The fall in passenger numbers creates a other degrees, there is a cap on places to sions only,” he groans. With Southern can- financial headache for ministers. Train op- study medicine, because the course is celling up to 350 trains a day, in one three- erating companies can claim compensa- heavily subsidised.) But that will take time week period last autumn he managed to tion if they undershoot revenue forecasts. to translate into more GPs. It will also re- getto the office on onlytwo days. Eventual- So “one way or another” the government quire universities to improve the reputa- ly he moved to Liverpool to escape his aw- will take the hit, says Gerald Khoo, a rail tion ofgeneral practice; fora certain type of ful commute. analyst at Liberium, a bank. On December thrusting medical student, only dentists Many other Londoners are changing 29th Lord Adonis resigned as chairman of are viewed with more disdain than the waytheyworkbecause ofthe railways’ the National Infrastructure Commission would-be GPs. poor, pricey service. On January 2nd rail and called forthe transport secretary, Chris With no end to the staffing problem in fares across Britain rose by an average of Grayling, to quit for “bailing out” private sight, some surgeries are adapting. They 3.4%, the largest increase since 2013. Over rail operators, which he denies. are employing more paramedics, nurses the past decade fares have risen twice as If the government ends up forking out and pharmacists to see patients. Several fast as salaries. Falling subsidies mean that more for the everyday running of the rail- surgeries are becoming mega-practices, ways, its investment plans may be dented. spreading the GPs they have across many Track-electrification schemes could be fur- sites. Others will increasingly rely on doc- Decoupling ther scaled back. Transport for London, tors from overseas. Britain already em- Britain, rail passenger journeys which runsthe Tube, hasshelved upgrades ploys a higher share of foreign doctors % change on a year earlier to the Jubilee and Northern lines, follow- (27%) than the average across the 28 mem- 12 ing falling ticket sales. bers of the OECD club (17%). Of the 12,771 The government is considering limiting doctors who registered in Britain in 2016, 8 fare increases more strictly in the future. Rest of 44% had qualified overseas. Britain That would cut train operators’ revenue According to research by Aneez Esmail 4 further. Mr Joseph suggests that moving to of the University of Manchester, and col- + a simplerfare structure, with season tickets leagues, foreign-trained GPs are more like- 0 for part-time commuters, could lure more ly than British ones to work in poor areas, – people back onto trains, as such schemes London and earn less money and work longer shifts. south-east 4 have elsewhere in Europe. Londoners may But doctors trained abroad also score low- not be willing to wait. As Eamonn notes, in er on postgraduate medical exams, and are 8 Liverpool getting to work costs only £15 2010 11 12 13 14 15 16 17 more often subject to complaints. In Lin- ($20) a week—and even on strike days the Source: Office of Rail and Road colnshire the doctors recognise they have a trains get him to workon time. 7 42 Britain The Economist January 6th 2018 Bagehot Drama and drift

Three predictions forBritish politics in 2018 Commons several times. They may even defeat the government on matters of detail. But after a display of rhetorical fireworks they will shy away from constitutional conflict. It is impossible for even the best-run unelected chamber to prevail in a struggle with an elected one. And, as the Daily Mail will no doubt point out, the House ofLords is farfrom well run. It is the second-largest legislative body in the world, after the Chinese National Con- gress, with more than 800 members, scores ofwhom avail them- selves of the £300 ($400) daily attendance allowance and free parking in central London without opening their mouths. Nothing could be more British than the House of Lords. But the second prediction is the further Americanisation of British politics. For the past 30 years American politics has been con- sumed by “culture wars”, as questions of identity have replaced questions of economics at the heart of the political divide. Do- nald Trump, a billionaire Republican, did strikingly well among “deplorable” voters in the Rust Belt, while Hillary Clinton piled up votes in wealthy New York and California. Brexit is pushing Britain in the same direction, as the Conservative Party becomes the party of Leavers, who are concentrated in poor and rural ar- eas, and Labour becomes the party ofRemainers. HIS will be a year oftwo halves in British politics. The first six The past month has already seen a heated battle in the culture Tmonths will be dominated by drift. Theresa May will hold on wars, with the Home Office’s announcement that it is planning to as prime minister despite backbench discontent. Brexit will restore Britain’s supposedly iconic “blue” passports (Bagehot has slouch ahead despite a growing sense of angst. The second half his old passport to hand and has no doubt that it is black). A great ofthe yearwill bringthe possibilityofhigh drama—of Parliament deal more can be expected, with the warsfollowingthe same pat- voting against Mrs May’s draft deal with the European Union, of tern. Leavers will seize on some icon of national identity and in- the government collapsing, and of Jeremy Corbyn entering dependence, such as the Royal Yacht Britannia; Remainers will Downing Street. This column will offer two firm predictions for denounce the icon as cheesy or irrelevant; and Leavers will de- the era ofdrift and a more tentative one forthe era of drama. nounce the Remainers as metropolitan snobs. The danger is that The first prediction is that the House of Lords will play a more these wars will shift from safe subjects like passports and yachts prominent role than it has since before the first world war, when to fraught ones such as refugees. the Lords tried to blockthe Liberal government’s reforms and Da- vid Lloyd George, the chancellor of the exchequer, mocked them Fireworks and damp squibs as “five hundred men accidentally chosen from among the ranks The more tentative prediction is that the high drama of the sec- ofthe unemployed”. The Lordshave a constitutional dutyto scru- ond halfofthe yearwon’t change very much. Parliament will not tinise the EU withdrawal bill, which is making its way through vote down the bill to leave the EU. Mrs May’s government won’t the Commons. But the scrutiny could easily flare into a political fall. MrCorbyn will not become prime minister (yet). And Britain crisis, given that a majority ofpeers strongly oppose Brexit. won’t hold a referendum on the terms of Brexit. The only real Some leading Lords are spoiling for a fight with the govern- chance of reversing Brexit is if the British people change their ment. Andrew Adonis, a Labour peer, has resigned as chairman minds, and so farthere is no sign ofthis happening. The establish- of the government’s infrastructure commission to devote him- ment is doing an even worse job of fighting to overturn Brexit self to stopping Brexit. Michael Heseltine, a Tory, has said that he than it did to resist it in the first place. An astonishing proportion regards Jeremy Corbyn’s Labour Party as less of a threat to the ofanti-Brexiteersseem to come adorned with titlesand company country than Brexit. Others worry that the withdrawal bill hands directorships. Mr Corbyn continues to equivocate. Adding to the vast powers to the executive, which will use them to water down sense of inevitability is the fact that the governing party is over- employment and other rights currently enshrined in EU law. whelmingly one of Brexiteers. A new survey by Queen Mary All this means that, oddly, the unelected House of Lords will University of London and YouGov reveals that only 14% of Tory have a more profound debate on the biggest change in Britain in party members want a second referendum and only 25% support half a century than will the elected House of Commons. The continued membership of the single market (the figures for La- Lords include articulate, experienced people on both sides: John bour members are 78% and 87%). Kerr, for instance, knows as much as anybody about Article 50 of “Darkest Hour”, a new film about Winston Churchill, is a re- the EU treaty, since he was its principal author. The Lords are also minder that the direction of history can always be changed pro- freer to speak out than MPs, since for the most part they have al- vided that politicians possess enough will and courage. The Re- ready bagged what patronage they want. Conventional opinion mainers may yet find a hero. MrCorbyn may get offthe fence. But will be turned on itshead, asliberalsrediscover the virtues ofa re- it seems much more likely that the drift that will characterise the vising chamber of experienced public servants (the meritocracy first half of the year will characterise the second half as well. “It’s incarnate!), while conservatives rant about doddery old fools always darkest before the dawn,” John McCain, an American frustrating the will ofthe people. senator and former presidential candidate, likes to point out. The Lords will probably send the withdrawal bill back to the “And then you get punched in the face.” 7 International The Economist January 6th 2018 43

The world’s worst airports Since photographing any airport in South Sudan will get you arrested, the descrip- The departure gates of hell tion of its “horrific smells and filth” is ac- companied by an artist’s impression which makesthe departure lounge look far nicer than it is. The ranking is inevitably skewed by sampling bias. It misses truly awful places that hardly anyone visits, and over-em- An informal survey ofthe most horrible places to be lost in transit phasises less egregious ones that handle IKE expensive watches that never break, obstructing them. When your correspon- more people. Juba won its “worst in the Lthe world’s best airports can be boring. dent was booked on a UN flight, he was as- world” ranking not only on demerit but You land, breeze through passport control sured by the government that his papers also because so many foreign charity and checkinto a hotel within minutes. The were in order. Yet at the airport he was told workers pass through and complain about experience ispleasant, butnotmemorable. to get a fourth permit, as well as the three it. Jeddah, in Saudi Arabia, comes second The worst airports have more character. To pricey ones he had already obtained. This not because it is really the second-worst in adapt Tolstoy, lovely airports are all alike, required a trip across town and a tedious the world but because it is swamped with but every wretched airport is wretched in haggle. Predictably, he missed his plane. haj pilgrims every year and cannot cope. its own way. Juba hasthree terminals, butonly one is Because gripes spring from disappoint- Consider Juba. The airport in South Su- in use. After South Sudan became inde- ment, expectations matter. Travellers in the dan’s capital is a sweltering tent next to a pendent in 2011, the government planned rougher parts of the world applaud wildly festering puddle. Planes are often late, so to build an airy structure ofglass, steel and when a plane lands without crashing; passengers must sweat for hours. The de- concrete. Work started in 2012, but stopped more pampered types are enraged if the parture lounge has no toilets, no food and when the bills were not paid. In 2016 the Wi-Fi is slow. It was the mismatch between no queuing system. Lucky is the traveller government decided to build a more mod- expectation and reality that doubtless pro- who finds a chair that is only half-broken. est terminal. But it, too, stands half-com- pelled three Greek hubs (Crete, Santorini Since dirty water and tropical diseases are pleted and empty, next to the tented camp and Rhodes) into the Sleeping in Airports common, so are upset stomachs. Tough that people actually have to use. Travellers worst ten. Hordes of northern Europeans luck. Travellers should have thought twice are advised to bring a good, long book. flew to Greece for a cheap holiday in 2017, before eating salad. where they encountered strikes, delays Security is haphazard. Big important All are bored and other indignities to which they were people’s flunkies carry their bags, which Workingoutwhich isthe world’sworstair- unaccustomed. Many reached for their are ostentatiously passed round, not port is not easy. The best rough-and-ready smartphones and complained. through, the scanner. Since the machine attempt is the Guide to Sleeping in Air- To illuminate some of the gaps in exist- seldom works, little people are in effect up- ports, a website that publishes an annual ing rankings ofbad airports, The Economist graded to big important status by not hav- survey based on voluntary submissions conducted an unscientific, anecdotal poll ing their bags scanned for guns and explo- from irate travellers. It ranks airports by of its globe-trotting correspondents. It at- sives, either. qualities such as discomfort, poor service, tracted more, and more passionate, re- South Sudan is at war, so many UN bad food, cumbersome immigration pro- sponsesthan nearlyanyotherinternal sur- planes take off from Juba carrying aid cedures and how hard it is to grab forty vey we have done. Here are some of our workers and emergency supplies. Aggres- winks while waiting fora connection. reflections from the departure gates of hell. sive officials in sunglasses take pleasure in Overall, Juba was rated worst in 2017. Several airports in war zones are worse 1 44 International The Economist January 6th 2018

2 than Juba. Our Africa editor cites Bangui, at and swatted by swagger-stick-wielding airports. Rich countries do not, which is in the Central African Republic: “The fence Saudi policemen. Anyone who falls asleep perhaps why travellers are particularly around it has been stolen, so when big jets risks a thrashing.” irked to find grottiness in, say, Brussels, the come in to land the pilots keep their hands Rules change at borders, and some air- heart of the European Union and a noted on the throttle so they can pull up if they port officials enforce them mindlessly. One centre of gastronomy. Our Charlemagne see people trying to run across the runway correspondent recalls that in Santiago, columnist writes of Charleroi, its second (which lies between a refugee camp and Chile: “I once got detained for two hours airport: “Itisgrim, grimyand cramped, and the city, and so has lots of crossing traf- for failing to declare an unopened, sealed has atrocious food. The planes leave and fic). On the plus side it has sandbagged bagofalmonds. I then had to write a decla- land at ungodly hours. And the only real bunkers on its roofand was designated the ration expressing my contrition for bring- way into town is a coach that runs every 30 final fallbackposition byFrench forces dur- ingthe nuts. When I failed to do so without minutes and is frequently overbooked: ing the civil war, so if you are in it you are cracking up I was threatened with arrest. more than once I’ve queued in the rain about as safe as you can be.” The lady next to me was beinginterrogated only to see it drive off as I reach the front.” Although each awful airport is unique, for smuggling in a lone banana.” Many correspondents moaned about Ber- four themes recur: danger, bullying by offi- The worst airports reflect the vices of lin, where a new, unfinished terminal issix cials, theft and delay. Sometimes, all these the governments that regulate them. years late. Another European airport that reinforce each other. For example, it takes Pyongyang hasa totalitarian vibe. A corre- elicits howls is Luton, which claims, fanci- ages to get through Lubumbashi airport spondent writes: “The plane played rous- fully, to be close to London. An intern (in the Democratic Republic of Congo) be- ing music when we flew over the border writes: “Going on holiday and returning to cause truculent security officials slow into North Korea, and we were handed Luton is like having a wonderful dream things down in the hope that passengers copies of the national newspaper and and waking up to find yourself in a puddle will give them “un cadeau” to hurry up. If asked not to fold it, since it had a photo of under a railway bridge.” you hand over $1, they let you board with- Kim Jong Il on the front page.” The only Airports all around the world have to out your bags getting checked at all. Such consolation is that the airport has a choco- cope with growing crowds. The number of transactions are often referred to as late-fondue fountain. passengers has roughly doubled since “bribes”, but are really a form of extortion Venezuela’s half-Marxist, half-gangster, 2005, to an estimated 4bn in 2017. Some with menaces. They make air travel in wholly incompetent government, which have done so brilliantly, harnessing tech- places like Congo slower, riskier, costlier has prompted much of the middle class to nology and smart design to usher more and much more unpleasant. emigrate, does not make the journey easy people swiftly through. Singapore, Seoul Air travellers make tempting targets for or pleasant. Our Bello columnist grumbles and Munich score highly on this measure. thieves. They are rich enough to afford an of Caracas: “Your hand baggage will be American airports, by and large, do not. air ticket, which in many places makes searched in detail twice (by the National This is not simply because security has them rich indeed. They carry luggage, Guard, who are drug smugglers who claim grown tighter since 2001—that is true some ofit valuable. They are often far from to be fighting drugs).” Our organised-crime everywhere. It is because security and im- home and unfamiliar with local rules. Fi- correspondent also has miserable memo- migration screening are far more hassle- nally, airports are full of choke points ries: “The departures board showed our some than they need to be. Border officials through which travellers must pass if they flight as delayed up to the moment when it are rude, and there are too few of them. are to board their planes, creating opportu- showed it as closed. I waited endless hours Surveys suggest that every year millions of nities forcrooked officials to fleece them. for the next flight in a fast-food restaurant, tourists shun the world’s greatest country The ones in Manila are especially cre- the only place with seats, and watched a because getting in is so horrible. A “trusted ative. Some have been known to plant bul- mange-ridden dog licking out the polysty- traveller” programme speeds things up a lets in luggage so they can “find” them and rene containers strewn on the floor.” bit, but only for a handful of passengers. demand bribes not to have the owners ar- Poor countries have an excuse for poor Idiotic bureaucracy abounds. Travellers rested. This scam is known in Tagalog as from Europe to Latin America who change “laglag bala” (“drop bullet”). planes in the United States must pass In Johannesburg the pilfering is covert through immigration control, thus running but rampant. Our correspondent grum- the risk of missing their connection. What bles: “Despite packing absolutely nothing is the point of asking people who do not of value in my checked bags they are regu- wish to enter the United States why they larly rifled through and were twice slashed wish to enterthe United States? Transit pas- open (they weren’t even locked). Once I sengers in Singapore or Nairobi do not found someone else’s sunglasses case in have their time wasted like this. my bag; mislaid, perhaps, by luggage han- Our overall judgment (readers are invit- dlers in a looting frenzy.” ed to visit our travel blog, Gulliver, to dis- Some travellersare harassed byofficials pute it) is that, adjusted for national in- who seem to fear that, if they do not look come per head, several busy American busy, they will be replaced by machines, as airports would be contenders for worst in many have been at modern airports. The the world. Washington Dulles has the magnificently uniformed functionary in worst-designed ground transport: travel- Delhi who demands to see your papers— lers must enter and leave a mobile pod by despite having just watched another func- the same door, so everyone crowds round tionary inspect them—falls into this catego- in the hope ofgettingofffirst, thus blocking ry. Other officials harass travellers for the it. JFK is the main gateway to the world’s sheer fun of wielding power. Our former capital of consumerism, yet scarcely any Cairo bureau chief writes, of Saudi immi- retail therapy is available to treat travellers’ gration procedures: “The queues are subtly boredom. But Miami is surely worst of all. divided by nationality and caste. If you The queues at passport control take nearly happen to be a Baloch labourer, your lot is as long to navigate as Leif Erikson took to to sit on the floor for hours, getting barked cross the Atlantic in a longboat. 7 Business The Economist January 6th 2018 45

Also in this section 46 Stymied: Ant in America 47 Money-laundering in Canada 48 Salesforce’s pitch 49 Schumpeter: The year of the incumbent

For daily coverage of business, visit Economist.com/business-finance

Business in South Korea in 1996, and embezzlementand taxevasion in 2008. In 2015 and 2016 Ms Park released Diary of a sniper from prison early the bosses of SK Group, the third-biggest conglomerate, and CJ Group, another chaebol. Most have been let offbecause oftheirfirms’ importance to the economy. The total asset value of the SEOUL five biggest chaebol, measured in April 2016, reached over half of the country’s South Korea’s antitrust tsarhas a shot at getting the chaebol to respect the law GDP forthe year (see chart). S KIM SANG-JO was preparing last May 1970s.) Both women are now behind bars Moon Jae-in, the left-of-centre president Ato make the switch from snappy share- on charges of corruption—as is the coun- who won by a landslide in a snap election holder activist to a regulatory role as South try’s most prominent business scion, Lee in May, is the first to promise an end to po- Korea’s fair-trade commissioner, he had a Jae-yong ofSamsung. litically-motivated amnesties. He has simple message for the country’s big con- Mr Lee, presumed heir to the electron- pledged, too, to abandon what he calls glomerates: “Please do not break the law.” ics-to-theme-park giant, has been Sam- South Korea’s “chaebol-focused growth Not one to make bosses quake in their sung’s de facto boss since his father fell ill strategy”. Small and medium-sized enter- brogues, exactly. And yetthe chaebol, asthe in 2014. In August he was sentenced to five prises (SMEs) feel squeezed by the national country’s family-controlled empires are years in prison, charged with bribing Ms champions, to which many say they are known, are responding to his call for re- Park in order to win support for an $8bn beholden as suppliers or by which some form. Addressing complaints about gover- merger of two affiliates, Samsung C&T and are gobbled up, often for valuable machin- nance, a few have brought far-flung busi- Cheil, which tightened his hold over the ery or technology. Innovation and entre- nesses into a simpler holding-company group. (He denies any wrongdoing and is preneurship sufferas a result. structure. Others have set up funds to pro- appealing; a first judgment is due in the Mr Moon’s resolve to help SMEsmeans vide support to suppliers, which have long coming weeks.) that Mr Kim, whom he appointed, has accused the giants of treating them badly. To many, all this marks a watershed in stronger political backing than perhaps Another group is paying out record divi- chaebol history; Mr Kim agrees. Mr Lee’s fa- any previous fair-trade commissioner. As dends to once-disregarded shareholders. ther, for instance, twice received presiden- an activist, MrKim wasonce turfed out ofa Mr Kim was preaching, if not yet to the tial pardons, after convictions for bribery meeting of Samsung shareholders for ha-1 converted, then to the disconcerted. The chaebol have had a bruising couple of years. Nine of South Korea’s most power- Too big to play fair ful bosses, some rarely seen in public, were South Korea, 31 major chaebol, 2016, won trn grilled on television by politicians in De- 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 cember2016 aspartofan investigation into collusion. All denied that they had sought Revenues* Samsung Hyundai SK LG Lotte Other 26 favours in return for the billions of won they paid into charitable foundations con- Assets† trolled by Choi Soon-sil, once a confidante of Park Geun-hye, a former president ousted in March. (Her father, Park Chung- GDP in 2016 hee, helped the chaebol flourish with state Sources: Korea Fair Trade Commission; Nikkei Asian Review; KOSIS *Year to April †At April 30th money when he ruled in the 1960s and 46 Business The Economist January 6th 2018

2 ranguing executives about rumoured ille- Mr Kim. In his first meeting with the “big in unfairtrade outweigh the benefits. gal political donations. Now that Mr Kim is four”—Samsung, Hyundai, LG and SK—in Some anti-chaebol types carp that Mr working in Mr Moon’s graft-busting gov- June, he asked their professional managers Kim nowseemsto be more chaebol sympa- ernment, the two men, says Mr Kim, are to reform supply-chain pyramids (to avoid thiser than sniper, and that a disarming ap- “totally in agreement”. any whiff of collusion, he does not meet proach will get firms to play nice only as His mandate is popular, too. Over four- the owner-families). That chain ofrelation- long as it takes for the government’s re- fifths of adults work in often unproductive shipsiswidelythoughtofasan example of formist fervour to cool. That is unfair, but it SMEs. An advocate for them says that Mr gapjil, a term forthe bullyingoffirms lower is true that obstacles to change remain in a Kim has “a real understanding of the in the hierarchy. SK Group has since an- country where the chaebol’s glittering suc- build-up of unfairness”. The Korea Fair nounced a 160bn-won fund to pay second- cesshasgiven them swayoverpolitics, me- Trade Commission regulates monopolies and third-tier subcontractors directly if a dia, the judiciary and academia. The econ- and upholds consumer rights. It found that first-tier supplier is temporarily cash- omy is strong, but future weakness would Lotte, a shopping-and-cinema empire, strapped. Mr Kim is confident he can con- put pressure on Mr Moon to release chae- broke national law on fair competition vince the chaebol that the costs ofengaging bol bosses from prison. Dozens of reform-1 most frequently in the 18 months from April 2016, on no fewerthan 33 counts. Dur- ing that time Hyundai paid the highest to- Ant Financial and MoneyGram tal fines, of85bn won ($74m). Close to two- thirds ofcases handled by the commission Blocked transfer involving the ten biggest chaebol were NEW YORK breaches ofthe fair-trade act’s provisions. Under Mr Kim, who seems wholly un- China’s Ant Financial is forced to abandon a big American acquisition afraid to live up to his public sobriquet as HE geopolitical environment has the “chaebol sniper”, penalty fees are set to “Tchanged considerably since…a double forbusinesses who breakfair-trade year ago.” That was the explanation rules. A new fine can be meted out to firms given this weekby Alex Holmes, chief thatfail to hand overdocumentsrequested executive ofMoneyGram International, a by the commission; non-compliance is Dallas-based American money-transfer now a criminal offence. firm, forAnt Financial abandoning its Lee Jae-hyung, an expert on corporate $1.2bn deal to buy his firm. Ant, the on- governance at the Korea Development In- line-payments affiliate ofAlibaba Group, stitute, a think-tank, says such measures a Chinese e-commerce giant, had outbid matter greatly, because they raise public Euronet, an American rival, in 2017 and awareness. Past leniency towards badly- secured the approval ofMoneyGram’s behaved bigwigs means South Koreans board forthe acquisition. In normal have often been oblivious to the serious- times, Ant would have secured the prize. ness of their infractions. Public pressure is But it is up against a rising tide of needed to help pass proposed laws on anti-China sentiment in Washington, DC. chaebol reform, since Mr Moon’s party Donald Trump has often argued that lacks an absolute majority. Mr Kim has China does not play fairin global com- also raised the possibility of stronger mea- merce. The sense that China and its com- sures against cross-shareholdings. panies are not to be trusted is spreading on Capitol Hill, too. Ant’s bid was It didn’t mean jack In the sights blocked by the Committee on Foreign The sniper would rather his targets surren- Investment in the United States (CFIUS), rating environment forChinese firms in der willingly and is encouraging “volun- a government body reporting to the America. The Ant deal is the most promi- tary” reform. That approach might last lon- Treasury. It reviews such deals for nation- nent transaction blocked by CFIUS re- ger than big, forced changes, observers al-security implications. Two congress- cently, but it is not the only one. In Sep- reckon. Mr Kim is also counting on the fact men claimed that approving Ant’s pur- tember Mr Trump sided with CFIUS to that the younger, third generation of chae- chase ofMoneyGram might allow stop China’s Canyon Bridge Capital bol bosses “sees change as inevitable”, as “malicious actors” to get hold offinancial Partners, a government-backed invest- Chinese competition gnaws at profits and data belonging to American soldiers and ment firm, from acquiring America’s as investors demand a bigger slice of what their families. Lattice Semiconductor, a tech firm. In is left. Fatter shareholder returns should be Alibaba seemed the least likely of November, China Oceanwide Holdings the yardstick for progress, he says. Simpli- Chinese firms to encounter a backlash in said that it would delay the deadline for fying corporate structures, often more America. Alipay, Ant’s online-payment closing its $2.7bn takeover ofGenworth complex than a semiconductor circuit, offering, has already entered into part- Financial, an American insurer, until would also help correct the “Korea dis- nerships with Verifone and First Data, April due to problems with CFIUS. count”: the low valuation of firms relative two American payments firms, and is A thaw looks unlikely. Bipartisan to developed-country peers, thought to accepted at some 175,000 locations in the efforts are now under way in Congress to stem from investors’ perceptions that they country. In January 2017 JackMa, its grant CFIUS broader powers still to block have nextto no sayin decisions. This year’s charismatic boss, met with then Presi- foreign investment in American compa- shareholder-meeting season, in March, dent-elect Trump and promised to create nies, especially by Chinese investors. will be a keytestofwhetherthe chaebol are a million American jobs through cross- Euronet, meanwhile, which hails from moving in the right direction. border e-commerce. News ofthe deal for nearby Kansas, has seen its warnings Change is undoubtedly in the air. In MoneyGram came shortly afterwards. about the dangers ofhanding American 2016 Samsung promised to start returning This week’s decision is not just a blow data to Chinese companies pay off. It half its free cashflow to investors. Not long forAlibaba. It is another sign ofa deterio- may now rebid forMoneyGram. ago this was an “unimaginable” step, says The Economist January 6th 2018 Business 47

2 ing bills languish in parliament. They because “strengthening the control of an utation for being boringly well-run, Cana- range from introducing electronic proxy individual is not banned by law”. (This rul- da is an unlikely haven for crooks and tax voting rights for shareholders (because ing does not affect the case against Mr Lee.) avoiders. Butithaslonghad a reputation as conglomerates often schedule simulta- Mr Kim has no intention of giving the a place to snow-wash money. In 2009 the neous meetings) to putting limits on the chaebol “a completely new face”, he says. national police force estimated that up to use of treasury shares in mergers, which That is “not only impossible” in his three- C$15bn ($12bn) was being laundered in the owner-familiesoften sell to allies (as in the year term, but “not worthwhile” as the country each year (an estimated annual merger of Samsung affiliates). firms are a “precious resource” for South $2trn islaundered globally). One attraction As for existing laws, loopholes abound, Korea. Samsung Electronics, that conglom- is that establishing a company is so easy— says ParkSangin ofSeoul National Univer- erate’s darling, thrived in 2017, clocking up tougher identity checks are required to get sity: although four of the ten biggest con- record profits, contributing to a surge in ex- a library card than to form a private firm, as glomerates have moved to a holding-com- portsforthe year, all while MrLee has been Jon Allen of Transparency International pany structure, dozens of their affiliates cooped up on criminal charges. Un- Canada noted before a parliamentary remain outside it. According to an estimate harmed corporate performance has in the committee in December. by Bloomberg, a financial-information pastbeen taken asa sign thatmisconduct is Not all corporate ownership is opaque. provider, tax-exempt chaebol foundations so commonplace in South Korean con- Publicly traded firms are subject to securi- hold about 13trn won in shares between glomerates that investors do not care. But ties laws which require major share- them; through these, sons and daughters with Mr Kim now minding the shop, it holders to be disclosed. The problem lies secure shares in key affiliates but dodge in- could just as well be taken as a sign of with firms that are not listed on a stock ex- heritance tax. A court ruled in October that something better: that the chaebol are be- change. An anti-money-laundering law Samsung’s $8bn merger was in fact lawful, coming more than just a family affair. 7 passed in 2000 directs banks, securities dealers, life-insurance firms and other fi- nancial entities to make “reasonable ef- Money-laundering in Canada forts” to identify the owners of firms they do business with; left to carry the load, Snow-washing they do their best to collect information on all counterparties, but it is not enough. A review in 2016 of Canada by the Fi- nancial Action Task Force, an intergovern- mental body set up in 1989 to combat mon- OTTAWA ey-laundering, concluded that only a fraction of the country’s 2.5m legal entities Loose rules on private-company formation are aiding money-launderers “had accuracy checks performed with re- HEN reports surfaced in 2016 of for- der dirty money, notes David Eby, the spect to beneficial ownership”. It also cata- Weign students with no known in- attorney-general ofBritish Columbia. logued a wide range of ways in which Ca- come buyinghomes worth millions ofdol- Other countries have taken steps to nadian front companies were being used lars in Vancouver, locals said it was yet make sure that anonymous ownership of to purchase assets, including property, or more evidence that foreigners were inflat- firms does not help criminals. In 2014 G20 to move money in and out of the country ing prices in Canada’s dearest property leaders agreed to make the ultimate own- “to layer and legitimise unexplained market. It was also evidence of a home- ership of legal entities more transparent. sources ofincome”. grown problem. The students turned out Britain, for example, set up a searchable, Political and legal authorities increas- to be figureheads for anonymous firms public database of beneficial or ultimate ingly recognise a need for change, but pro- whose ultimate owners cannot be identi- owners of all firms, limited-liability part- gress has been glacial. When finance min- fied because the information is not legally nerships and Societas Europaea (firms isters from the federal government, the ten required by the land registry. Canadian au- based and regulated in the European Un- provinces and three territories met to dis- thorities are concerned about the abuses ion as a whole). All EU states will eventual- cuss the issue last month, they went no fur- caused by such opacity. The property mar- ly have to do the same under a 2015 anti- ther than agreeing to encourage firms to ket may well be attracting foreign crimi- money-laundering directive. keep a record of their ultimate owners, nals and corrupt officials seeking to laun- With not a palm tree in sight and a rep- ready to give to authorities if they request it. Part of the problem is that jurisdiction is split between national and sub-national governments, with only a tenth of Cana- da’s companies incorporated at the nation- al level. Any agreement to change the rules has to reconcile differences in how prov- inces define beneficial ownership and col- lect such information. Canada’s existing money-laundering and terrorist-financinglegislation also con- tains a gaping hole: lawyers are not cov- ered, because they successfully argued in court that turning over such information violated solicitor-client privilege. One On- tario lawyer bragged to a police under- cover agent in 2002 that this victory meant itwas20 timessaferfora lawyerto launder money in Canada than in the United States—not the sort of contrast that the Great White North relishes. 7 48 Business The Economist January 6th 2018

Software-as-a-service es a magazine, Selling Power, calls him “a merchant of hope” but also cautions that The tower of Benioff “selling the future can attract focus away from weaknesses in the present moment”. Only around a quarter of his firm’s sales come from outside the Americas. Its busi- ness generates plenty of cash—in its 2017 SAN FRANCISCO fiscal year it produced around $2.2bn—but its operating profits have been persistently Salesforce has reached great heights. Can it keep climbing? low. That is in large part because it spends ISIBLE from nearly every corner of San tomer relationship management” soft- so lavishly on sales and marketing—a total VFrancisco and from up to 30 milesaway, ware, which helps companies keep track of$10bn between 2015 and 2017. the new skyscraper that will be the head- of their clients and manage prospective Investors reckon Salesforce’s business quarters of Salesforce, a software giant, leads, is its main product, but it also offers will keep generating lots of cash as it ex- stands1,100 feet (326 metres) tall, making it tools for customer service, marketing, ana- pandsinto newareasofsoftware. But there the highest building in America west of lytics and digital commerce. is a risk that marketing costs stay high and Chicago. On January 8th, after four years Mr Benioff is a key element of the pro- that Salesforce splurges on deals in order to ofbuilding, workers will start moving in. duct too; a mix of showman, digital guru, grow. In recent years it has diversified its Those who know Salesforce’s founder, political activist and philanthropist. Those business lines mainly through acquisi- Marc Benioff, find his firm’s new digs fit- close to him call it “marc-eting”. Seeing tions. Some purchases, such as Demand- ting. As creator ofa firm that caters to sales- firms struggling to adapt to technology ware, a cloud-based provider of e-com- people, he is himself a fiercely ambitious trends, he puts himself forward as a digital merce services that it bought for $2.9bn in salesman. In its2018 fiscal year, which ends consigliere, travelling globally to advise cash in 2016, were sensible, but others, on January 31st, Salesforce is expected to bosses. Each autumn Salesforce spends an such as Buddy Media, a social-media firm reach $10bn in annual revenue for the first estimated $30m to put on Dreamforce, it acquired for around $750m in 2012, are time. It plans to more than double that fig- drawing some 170,000 participants to San viewed as expensive mistakes. Mr Benioff ure over the next four years. Even that is Francisco with a promise of parties and also flirted with buying Twitter in 2016 but not enough. In 20 years Mr Benioff’s prominent speakers. backed off when shareholders protested. “dream” is $100bn ofrevenue, he muses. Not everyone appreciates his sales- They also worried when Salesforce bid for Can his towering expectations be met? manship. He has taken many public posi- LinkedIn, a professional social network; Founded in 1999, Salesforce claims a com- tions, often through Twitter—for example, Microsoft bought it for$26.2bn. bination oflongevityand size that few tech on gay rights and equal pay for women. As for organic growth, Salesforce was companies have achieved; its market capi- “As political leaders become weaker, chief later than Microsoft and some other firms talisation is $76bn. It is the largest tech firm executives have to become stronger,” says to invest properly in artificial intelligence with headquarters in San Francisco and Mr Benioff. To date the firm has given (AI), which is expected to make software the world’s fourth-largest software firm, $168m in philanthropic grants. Many cus- more predictive and useful. In 2016 it after Microsoft, Oracle and Germany’s tomers like to feel they are not only buying bought an AI startup, MetaMind, for SAP, which were all founded in the 1970s. software but doing good for the world, around $33m, and is using the talent it Mr Benioff was early to spot an oppor- says Keith Weiss of Morgan Stanley. But scooped up in the deal to put together an tunity in delivering software as a service, Salesforce’s annual “10-K” securities filing AI offering, called Einstein, which aims to meaning that software can be accessed re- lists its political positionsasa risk forshare- make Salesforce’s software feel more per- motely by users through the cloud, rather holders. According to former executives, sonalised and insightful. Yet some wonder than being installed on firms’ computers Mr Benioff’s fondness for setting policy by whether it can close the AI gap on rivals. on their premises. This mode of delivery tweets, such as cancelling events in states Salesforce may dominate sales-man- needs no upfront investment by compa- that have issued anti-gay laws, can some- agement software, but in newer areas of nies for software that may go unused; in- times cause organisational chaos. business, such as digital commerce and stead subscribers pay a fee for employees That is not the only drawback. Gerhard marketing, it faces stiff competition. Goo- that access it each month. Salesforce’s “cus- Gschwandtner, boss of a firm that publish- gle and Amazon, for example, have an edge in the two fields, and enormous re- sources. Nor are Salesforce’s existing com- petitors, Oracle, Microsoft and Adobe, showing any inclination to surrender in the battle over sales software. LinkedIn gives Microsoft access to valuable sales- lead data. Startups could yet beat Sales- force on price or innovation. Indeed, while Mr Benioff’s pitch is all about supersized future revenues, some people wonderifSalesforce will always re- main independent. Its market value means it is neither a giant like Microsoft or Oracle nor a nimble startup. It is not easy to be a midsized publicly listed software com- pany facing competition from tech giants. In 2015 Microsoft reportedly considered buying Salesforce, but a price could not be agreed. If a potential deal were once again to present itself, who better than a master Benioff’s guide to upselling salesman to see it through? 7 The Economist January 6th 2018 Business 49 Schumpeter The year of the incumbent

In 2018 conventional firms will give Silicon Valley a run forits money e-commerce and to build a global brand with a digital presence. Incumbents have lots going for them. They own 80% of the commercial world’s data, as Ms Rometty has noted. If AI is set to change civilisation by using data to make better decisions, most of the historical data-sets about, say, jet-engine performance or clothing supply chains belong to established firms, beyond the reach ofAmazon and Facebook. Incumbents have vast resources: among S&P 500 firms, their total cashflow is four times that of tech firms’ and 18 times what venture capitalists invest each year. Established giants also enjoy barriers to entry such as strong brands and lobbying skills, the latter being especially crucial in America’s money-driven political system. Also on December 14th, American regulators abolished “net neutrality” rules requir- ing telecoms carriers to treat all internet traffic equally—a victory for conventional telecoms and cable firms. Silicon Valley faces a global regulatory “techlash” over issues such as privacy and tax. Atypical approach by conventional firms is a blend of bolt-on acquisitions of startups and organic investment in new technol- ogies. GM has invested in Lyft, a ride-sharing firm, and developed electric engines. On December 13th, Target, which operates dis- count stores, bought Shipt, a online-delivery platform. Walmart CCORDING to Ginni Rometty, IBM’s boss, the digital revolu- has bought Jet.com, an e-commerce firm. Western banks have Ation has two phases. In the first, Silicon Valley firms make all been busy buying fintech firms, although the cleverest incum- the running as they create new markets and eviscerate weak bents in finance are Asian. Ping An, a Chinese insurance firm, has firms in sleepy industries. This has been the story until now. Tech 265m users for its app. DBS, South-East Asia’s biggest lender, has firms have captured 42% of the rise in the value of America’s set up online banks in both India and Indonesia. stockmarket since 2014 as investors forecast they will win an A few firms are opting forhuge deals. On December 3rd CVS, a ever-bigger share of corporate profits. A new, terrifying phrase drugstore and health-care benefits manager, said it would pay has entered the lexicon ofbusiness jargon: being “Amazoned”. $77bn for Aetna, a health-insurance company. The idea is to bulk The second phase favours the incumbents, Ms Rometty be- up and lock in customers before Amazon enters the business of lieves, and is starting about now. They summon the will to adapt, selling medicines. Within the tech industry, IBM is not the only innovate to create new, digital, products and increase efficiency. mature firm trying to adapt. In March Intel bought Mobileye for The schema is plainly self-serving. IBM is itselffightingforsurviv- $15bn—it specialises in chips and software fordriverless cars. al against cloud-based tech rivals and most of its clients are con- Conventional wisdom says incumbent firms are timid about ventional firms. Yet she is correct that incumbents in many indus- technological change, scared to cannibalise profitsand trapped in tries are at last getting their acts together on technology. an unimaginative mindset. In 1997 Clayton Christensen laid out Enough time has elapsed foreven the dopiest to see the threat. this view in “The Innovator’s Dilemma”. Kodak, which folded Itis11yearssince Netflixbegan streamingvideo and five since Tes- afterfailingto see that camera film would become obsolete, is the la unveiled the Model S. The evisceration by tech firms of some classic example. Yet for every Kodak there is a Marconi, that goes mid-sized businesses, such as department-store retail, has con- too far, too fast. Formerly called GEC, it was Britain’s largest indus- centrated minds. Lagging share prices have helped. In 2017 Ford trial firm in the 1990s but collapsed after wrecking its balance- fired its boss, Mark Fields, despite near-record profits. Its board sheetwith acquisitionsoffashionable butflakytech firms in 1999. concluded he was complacent about technological change. Taking a sample of America’s 20 most valuable non-tech The stakes get higher firms, 14 now have a digital dimension to their strategies. Some Afew firms have already been indisciplined. John Flannery, Gen- blue-chip firms are mixing fashionable cocktails of e-commerce, eral Electric’s new boss, has axed some digital projects after judg- big data and artificial-intelligence (AI) initiatives. But others are ingthem extravagant. Butno one isyetmakingexistential wagers. making comprehensive, multi-billion-dollar bets. General Mo- Takinga sample of eight incumbents, on average their digital ini- tors is developing a suite of electric and autonomous vehicles. tiatives are worth 14% ofthe size ofthe firm (using a range of met- Walmartisin the midst ofa massive online shoppingpush. Inves- rics, including sales, investment and market value). So for exam- tors view such initiatives as central to these firms’ prospects. ple, e-commerce eats up only a fifth of Walmart’s investment A round ofmergers and acquisitions has kicked offas firms re- budget. Even Disney-Fox’s existing initiatives are small. Hulu, a spond to the threat from Silicon Valley. On December 14th Walt streaming service that it will control, makes losses equivalent to Disney said it would spend $66bn buying most of 21st Century less than a tenth ofits parents’ annual spending on content. Fox. One motivation for the deal is to counter the menace of Conventional firms’ digital bets will only grow larger, as more streamingvideo services, mostnotablythose ofNetflix and Ama- bosses note the rising share prices of pioneers such as Walmart zon. In 2019 Disney will stop distributing new films through Net- and GM. Overall this makes sense, even if plenty of companies flix and launch its own streaming services. On December 12th make an utter hash ofthings. For large incumbents, in 2018 digital Westfield and Unibail, a pair of huge operators of shopping strategy will stop beingabout trendy experiments and start being malls, joined forceswith two main aims: to bulkup in response to a matter oflife and death. 7 GLOBAL ILLICIT TRADE SUMMIT Out of the March 22nd shadows 2018 Kuala Lumpur

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Illicit trade poses a real threat to economies and businesses, public health, the environment, innovation and tax revenues, Apply to attend* and provides funds for transnational crime networks and globalillicittrade.economist.com terrorist organisations. Determining a course of action is of +852 2585 3312 paramount importance for industries and economies to prevent [email protected] further harm - but where to start? * This event is free to attend, however places are strictly limited. All registrations are subject to availability and approval by The Economist Events.

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Environmental economics in China tion subdued. A possible explanation is that the economic impact is laggingbehind Towards a greener future the pollution controls. Anotheris that, con- trary to received wisdom, China may be able to raise its environmental standards without paying a high price. One thing is clear: China’s shift on pol- TIANJIN lution is real. True, some extreme measures are temporary, especially those aimed at China’s anti-pollution campaign may crimp growth by less than feared keeping Beijing’s sky blue this winter. But EO YAO thought he had nothing to fear thing been heavy-handed. In Hebei, a many others will be lasting. As part of a Lfrom the environment ministry. Before, northern province, a ban on coal heating “war on pollution” declared in 2014, China when its inspectors visited his cutlery fac- left thousands of residents shivering be- has detailed targets for cleaning up its air, tory, he says, they generated “loud thun- cause the replacement, a switch to natural waterand soil. On January1st it introduced der, little rain”. After warning him to clean gas, was not yet ready. an environmental-protection tax, replac- up, they would, at worst, impose a negligi- For the wider economy, the question is ing a patchwork of pollution fees. Last ble fine. Not so this time. In August dozens how steep the cost will be. A sharp tighten- month it launched a market fortrading car- of inspectors swarmed over his workshop ing of environmental rules in the world’s bon emissions, which, though scaled back in Tianjin, just east of Beijing, and ordered biggest polluter has the potential to be a from early plans, will be the world’s larg- production to be halted. His doors remain shock, both to China and the global econ- est. Most crucially, the environment minis- shut today. If he wants to go on making omy. Two worries are commonly heard: try, previously a political weakling, has knives and forks, he has been told that he that it will drag down growth; and, at the clout at last—as Mr Yao’s cutlery business must move to more modern facilities in a same time, cause inflation as production found to its chagrin. Besides fining compa- less populated area. cuts boost prices. JiangChao, an economist nies, inspectors have disciplined some Mr Yao’s company, which at its peak with Haitong Securities, a broker, says it 18,000 officials forlaxity over pollution. employed 80 people, is just one minor ca- could end up making for “classic stagfla- The tougher tactics have already made sualty in China’s sweepingcampaign to re- tion”. So far, though, these worries are un- a big dent in specific industries. Just 60% of duce pollution. For years the government founded: growth has been solid and infla- steel blast-furnaces are now in use, down has vowed to go green, yet made little pro- sharply since October and near a five-year gress. It has flinched at reining in dirty in- low. Thermal-power output is now actual- dustries, wary of the mass job losses that Green shoots ly declining year by year, evidence of seemed likely to ensue. But in the past few China, price indices, January 2015=100 weakening demand. Companies are also months it has taken a harder line and feeling the pinch. Schaeffler Group, a Ger- 160 pressed on with pollution controls, hitting Neodymium man car-parts maker, warned in Septem- (rare earth) coalminers, cement-makers, paper mills, 140 ber that pollution controls would knock chemical factories, textile firms and more. Steel out its supplierofneedle bearings. Taiwan- Tensofthousandsofcompanies—most- 120 ese chipmakers in the city of Kunshan, an ly smaller ones, like Mr Yao’s—have been Paper pulp Coal electronics hub not far from Shanghai, say forced to close, according to Chen Xing- 100 the abrupt tightening of water-quality dong, an economist with BNP Paribas. In rules may lead them to move. 80 the region around Beijing this winter, the Glyphosate Upward pressure on production costs government has ordered steel mills to run (weedkiller) has been intense. A surge in coal and steel at half-capacity and aluminium-makers to 60 prices has attracted most attention, as Chi- cut output by nearly a third. Implement- 2015 16 17 na has pushed companies to cut capacity Source: Wind Info ation, half-hearted in the past, has if any- (see chart). But similar trends affect a range 1 52 Finance and economics The Economist January 6th 2018

2 ofsmallerindustries. In JulyChina banned forecast, but it is still expanding at more ing in importance. Nearly 4m people may imports of 24 kinds of waste such as paper than 6% year on year. And yes, some com- lose jobs as a result of cuts in industrial ca- and plastic; the ban came fully into effect modity prices have shot up, but this has pacity, but strong demand forlabour in the on January1st, but demand (and prices) for had very little effect on general inflation. services sector, from restaurants to health raw pulp quickly jumped. Restrictions on Three factors suggest that this benign care, is cushioning that blow. the chemicals industry have fuelled a 50% trend may endure. First, despite the com- Second, price increases have been con- increase in the price of glyphosate, a popu- mon assumption that industries such as centrated and show little sign of spreading lar weedkiller, over the past few months. steel or coal are vast, they in fact account widely. Prices of coal and steel, the first to Prices of rare-earth metals, notably two for a small, shrinking share of the Chinese heat up, are already levelling off, making used in electric magnets, have also soared. economy. Minsheng Securities, a broker, the increases seem big one-off changes Yet the biggest economic surprise of calculates that the full complement of in- rather than the start of inflationary spirals. China’s environmental campaign so far is dustries affected by the pollution mea- For the economy as a whole, it amounts to not that it has had an impact; it is how mut- sures adds up to just 7% oftotal national in- a redistribution of resources. Companies ed that impact has been. Yes, industrial vestment. China has reached a stage of that use commodities as inputs face higher production has recently been weaker than development where manufacturing is fad- costs. But producers benefit. And since 1 Buttonwood Taking off the training wheels

Central banks are reducing support, but investors are sanguine FTER a bumper year for financial mar- monetary policy. The Federal Reserve has Akets in 2017, can 2018 be anything like Strong and stable been steadily pushing up interest rates, as good? Much will depend on the global MSCI World index, January 2nd 2017=100 and the European Central Bank is reduc- economy. The rally in stockmarkets 120 ingits monthly bond purchases. The com- stretches back almost two years, to the bination of low rates and quantitative point when worries about an era of “sec- 110 easing (QE) has been helpful for markets ular stagnation” started to diminish. 100 ever since the financial crisis. Like anx- The first pieces of economic data to be ious parents, central banks are taking the 90 published in January—the purchasing JFMAMJJASONDJ training wheels off their children’s bicy- managers’ indices (PMI) for the manufac- 2017 2018 cles and hoping they won’t crash. turing sector—were pretty upbeat. In the CBOE volatility index (Vix)* David Bowers and Ian Harnett of Ab- euro zone the index recorded its highest 16 solute Strategy Research, a consultancy, level since the survey began in 1997. Chi- 14 have a different worry. They fear that in- na’s PMI was stronger than expected, and 12 vestors may be caught out by a slowdown America’s index showed new orders at 10 in China. In 2017 Chinese interest rates their highest level in nearly14 years. 8 rose; this may start to have an economic The obvious question is whether the JFMAMJJASONDJ impact in the current year. The effect will markets have anticipated the good news 2017 2018 not be dramatic (they thinkglobal growth Source: Thomson Reuters *Long-term average=19 about growth, and pushed share prices to will slow to 3.3%) but it will be enough to a level from which returns can only be disturb the rosy consensus. disappointing. The cyclically adjusted more hopeful about equities: stronger Messrs Bowers and Harnett conduct price-earnings ratio of the American mar- growth should mean higher profits. By the their own survey of fund managers, and ket, which uses a ten-year average of pro- third quarter of this year, investors are ex- they find some inconsistencies in the out- fits, is 32.4; it has been higher only in Sep- pecting S&P 500 companies to show annu- look. Though investors expect equities to tember 1929 (just before the Wall Street al profits growth of11.9%. Another factor is perform well, they are not enthusiastic crash) and during the dotcom bubble. the American tax package just approved about high-yield bonds. Normally condi- A regular poll ofglobal fund managers by Congress; the BAML survey found that tions that are good for the former also in December by Bank of America Merrill more than 70% of fund managers thought boost the latter. And investors also expect Lynch (BAML) found that a net 45% tax cuts would cause shares to rise. the Vix to rise, an event that usually coin- thought that equities are overvalued, the What was remarkable about 2017 was cides with poor equity performance. highest level in the more-than-20 years not just that stockmarkets rose. It was that These contradictions can best be ex- the survey has been conducted. But a net they did so in such a steady manner. The plained by assuming that investors are 48% of investors still have a higher expo- MSCI World index rose in almost every making the understandable bet that the sure to stockmarkets than normal. The month, and the volatility index, or Vix, current year will lookmuch like the previ- discrepancy can be explained by their at- stayed at remarkably low levels (see chart). ous one. Extrapolating from the past is a titude to the other highly liquid asset None of the political headlines—the ten- well-known bias, and often applies to class: government bonds. A net 83% of sions between America and North Korea, economic forecasts as well. But that is to managers thinkthey are overvalued. the investigation into President Donald ignore the nagging feeling that the events Given the very low level of bond Trump’s election victory, the inconclusive of 2016 may have marked a historic turn- yields(which fall aspricesrise), itishardly German elections—seemed to bother in- ing-point, and that the new era will be surprising that investors are chary about vestors forvery long. much more turbulent than before. To mis- the asset category; a net 59% of managers Politics could still sandbag the markets quote Mr Micawber: “Something un- have a lower weighting in bonds than in 2018, particularly if another war broke pleasant will turn up.” normal. But partly because of the better out in Asia orthe Middle East. But the more news on the global economy, they are immediate concern for investors will be Economist.com/blogs/buttonwood The Economist January 6th 2018 Finance and economics 53

2 metals and mining companies are heavily ficulties, it stopped redeeming coupons (to using Islamic and local law as a “shield” indebted, the rebound in revenues is help- “distribute profits”—the sukuk equivalent the whole sukuk market might shrivel. ing to fortify their balance-sheets and, in of interest payments). In November a Brit- For now, overall demand for sukuk re- the process, easing Chinese financial risks. ish court ruled that the company had to mains strong. But appetite for non-rated or Lastly, green restrictions can them- pay. The judges said that, because the bond sub-investment-grade issuers in emerging selves generate growth and jobs. China’s was issued under English law, it had to be markets could easily weaken. In recent drive forcleanerenergysourceshasgained viewed on its merits under that law alone. months, the industry has reacted to the momentum. Estimates suggest it installed The risk of non-compliance in the UAE, Dana case bytighteningthe language of su- nearly 55 gigawatts of solar-power capaci- they argued, must fall squarely on Dana. kuk contracts, notably through clauses that ty in 2017, more than the existing capacity The Islamic-finance industry cheered waive borrowers’ rights to challenge an ar- ofany othercountry at the start ofthe year. this ruling. Since sharia forbids the receipt rangement’s sharia compliance. David China accounts for about two-fifths of glo- of interest, sukuk are backed by assets. In- Miles of Covington & Burling, a law firm, bal production of electric cars. And in vestors get paid an agreed share of profits, welcomes such provisions, but says they more established industries, companies before being returned the principal at ma- do not solve the enforcement problem. feel pressure to upgrade. To stay in busi- turity. Yet there is a host of possible ar- Nor will it be possible for all new sukuk to ness, Mr Yao says he will move his cutlery rangements, and no final authority for de- be governed solely by English law. Some factory to a new industrial park, where ciding which bonds are sharia-compliant. will be backed by tangible assets, such as waste-disposal standards are higher. Issuers instead rely on the opinions of property, located in other jurisdictions. Ifthe economic downside from China’s scholars, who do not always agree. Dana’s The Dana saga is a remindernotjust that Is- clean-up remains relatively mild, it refusal to pay had led investors to fear lamic finance still lacks shared standards, prompts an obvious question: why did it struggling issuers would start using such but also that court judgments help credi- take the government so long to get tough squabbles as an excuse to renege on dues. tors only when they are enforceable. 7 on pollution? One big reason is surely the After the ruling the industry feels “70% uneven distribution of pain. Smokestack comfortable”, says Mohammed Khnifer of industries are based in a small number of the Islamic Development Bank, a multilat- American banks and tax reform provinces such as Shandong in the east eral lender based in Saudi Arabia. and Shanxi in the north. So long as en- The victory, however, may prove pyr- Deferred forcement was in local hands, officials had rhic. To get hold of Dana’s domestic assets, little incentive to act. None wanted to creditors need a new ruling from the UAE gratification throttle companies in their own backyard. courts. The outcome is unpredictable. A But from a national perspective, the eco- first hearing on the legality of the transac- nomic trade-offs of greener growth ought tion was due to be held on December 25th Despite immediate accounting losses, to be easier to stomach. China will both itself, but adjourned until May. Seizing taxcuts should benefit banks pay a price and reap dividends. 7 Dana’s overseas assets, located in Egypt, Kurdistan and Bahrain, may be just as hard. HEN Donald Trump won America’s Egypt is locked in a legal dispute with the Wpresidential election 14 months ago, Islamic finance company. Iraq and Bahrain are not known banks’ share prices leapt. One reason for as easy places to enforce court rulings. that was the prospect of lower corporate Sukuk and see Time is on Dana’s side. The company taxes, which would both benefit banks di- has said it will appeal against the British rectly and (investors hoped) ginger up the judgment. The losing party in the UAE rul- economy. Like MrTrump’s legislative agen- ing, whenever that comes, will probably da, their shares were becalmed for much do the same. Proceedings could thus take of 2017, but they perked up late in the year years. The legal fees incurred by the credi- when the Tax Cuts and Jobs Act looked Doctrinal arguments threaten the tors, led by BlackRockand Goldman Sachs, likely to become law—as it duly did when future ofthe Islamic-bond market will soon mount. Stuart Ure of Clifford the president signed it on December 22nd. TOCKMARKETS in the Gulf do not ob- Chance, a law firm, suspects sukuk holders Yet several banks expect the act to make Sserve Christian holidays, but still had a will eventually be forced to the negotiating deep dents in fourth-quarter profits. On generally quiet day on December 25th. table. Precedent suggests they will proba- December 28th Goldman Sachs said it was Shares in Dana Gas, an exploration busi- bly have to accept some loss on the bond’s braced for a $5bn hit. A week before, Bank ness listed in Abu Dhabi, however, did face value. The fear among analysts in the of America (BofA) announced a $3bn make some noise, leaping by 13.2% on UAE is that if other delinquent issuers start write-down. Early in the month, on fairly Christmas Day, to complete a buoyant six accurate assumptions about the law’s final months for the stock (see chart). The surge form, Citigroup put the cost at a whopping may owe something to the company’s re- Bond bounce $20bn. Foreign banks are also assessing cent arbitration victory against the region- January 2nd 2017=100 the damage: £1bn ($1.4bn), says Barclays; al government of Iraqi Kurdistan, over SFr2.3bn ($2.4bn), reckons Credit Suisse. $2bn it and its consortium partners are 160 Dana Gas share price These one-off hits have two main owed in overdue payments. But it also 140 causes. First, many banks carry “deferred hints at shareholders’ beliefthat Dana will tax assets” (DTAs) on their balance-sheets, not be forced soon to satisfy its own credi- 120 largely past losses—a legacy, for many, of tors. They have been up in arms since the the financial crisis—carried forward to set 100 firm refused to honour a $700m Islamic Abu Dhabi againstfuture taxes. The higherthe tax rate, Securities Exchange bond, or sukuk, that matured in October. 80 the more these assets are worth. So the Dana says it has received legal advice new law, by cutting the federal corporate- that the security no longer complies with 60 taxrate from 35% to 21%, slashestheirvalue. sharia, the body of Koranic law, and so the JFMAMJJASONDJ Citigroup, with $43.2bn of American DTAs bond is “unlawful” in the United Arab 2017 2018 on the books, and BofA, with $7bn, accord- Emirates (UAE). In July, facing liquidity dif- Sources: Bloomberg; Thomson Reuters ing to Mike Mayo of Wells Fargo, have the 1 54 Finance and economics The Economist January 6th 2018

2 biggest piles. Reduced DTAsaccountfor the firms have billions stashed abroad. and requires investment banks to start bulk of their write-downs, as well as for Still, the short-term damage is not as charging separately for research, among those at Barclays and Credit Suisse. bad as it looks. Because supervisors largely myriad other provisions. It is perhaps the Second, cash repatriated from abroad disregard DTAs anyway, Citigroup expects biggest regulatory change to European fi- will be taxed at15.5%—below the main rate, its main regulatory measure of capital to nancial markets since the financial crisis. giving banks an incentive to bring it home. fall by only $4bn, from $162bn. And look- For all the jitters, the first hours of trad- This accounts for around two-thirds of ing ahead, the tax cut should indeed be a ing under the new regime went fairly Goldman’s $5bn; JPMorgan Chase has said boon. Mr Mayo says that American banks’ smoothly, though trading volumes were repatriation could cost up to $2bn. Foreign effective tax rate in the first halfof 2017 was lower than usual. Financial firms had col- banks face a further niggle: the law taxes 31% (including state levies); that may fall by lectivelyspent$2.1bn preparingforMiFID 2 payments from American entities to for- around eight points. Granted, some gains in 2017 alone, according to one estimate by eign affiliates—a measure called the base may be passed on to customers; and, un- Expand, part of the Boston Consulting erosion and anti-abuse tax, or BEAT. Credit der the new law, big banks’ deposit-insur- Group, and IHS Markit, a data provider. Suisse says it is “likely to be affected” by ance premiums are no longer tax-deduct- Some banks had people up all the night BEAT; Barclays thinks negative effects are ible. Even so, Mr Mayo expects earnings before the 3rd. The preparations paid off. “possible”. Neither has named a figure. per share to rise by 5-10%. But regulatory reprieves also helped. In Though banks expect the biggest blows, Regional lenders, with little business late December the European Securities they are not alone. BP and Royal Dutch abroad, should gain more than Wall Street and MarketsAuthority(ESMA), an EU regu- Shell have announced DTA write-downs firms. They also have lower DTAs, mean- lator, granted a six-month reprieve from too. (Some companies, notably Berkshire ing less pain now. But big banks, despite the requirement that every counterparty Hathaway, have deferred tax liabilities, so the chunky write-downs, should benefit to a trade must have a “legal-entity identifi- should get a fillip.) Plenty more American too. Dry those tears. 7 er”, a unique number, after many firms failed to obtain these in time. Italso lettrad- ing continue across the EU even though 17 of its members had not yet fully tran- sposed the rules into national law. And ESMA clarified that trading on non-EU ven- ues could continue while it finishes its as- sessment of which jurisdictions will be deemed “equivalent”. This avoided a worst-case scenario, in which European traders suddenly lost access to the New York Stock Exchange, say, or the Chicago Mercantile Exchange. Early on January 3rd itself, Germany’s and Britain’s regulatorsallowed three large futures exchanges—Eurex Clearing in Frankfurt, and ICE Futures Europe and the London Metal Exchange in Britain—to de- lay implementation of “open access” pro- visions until mid-2020. These rules, di- vorcing the execution of futures contracts from the clearing of them (they now occur at the same exchange), were contentious MiFID 2 when passed, with Britain reportedly a strong proponent and Germany staunchly Day zero opposed. A London lawyer thinks the long delay, to past the date in 2019 when Britain is to leave the EU, may well mean these provisions “never see the light ofday”. Significant as they may be for parts of the market, such reprieves do not amount to a delay of the overall law, says Jonathan Sprawling new European financial regulations enterinto force at last Herbst of Norton Rose Fulbright, a law FTER years of rule-drafting, industry everything from shares to bonds to deriva- firm. Nonetheless, a disaster-free imple- Alobbying and plenty of last-minute tives. It seeks to open up opaque markets mentation day does not mean the end of wrangling, Europe’smassive newfinancial byforcingbrokersand tradingvenues to re- the worries. As Enrico Bruni of Tradeweb regulation, MiFID 2, was rolled out on Jan- port prices publicly, in close to real time for points out, market participants will adjust uary3rd. Firmshad spentmonthsdreading those assets deemed liquid. It also requires their trading patterns over time, and (in some cases) or eagerly awaiting (in oth- them to report to regulators up to 65 sepa- emerging problems will need to be re- ers) the “day of the MiFID” when the law’s rate data points on every trade, with the solved. It will take even longer to see if the new reporting requirements would enter aim ofavoiding market abuse. structural changes the new framework is into force. One electronic-tradingplatform, The changes are greatest for markets, forecast to encourage—such as consolida- Tradeweb, even gave its clients a “MiFID like those in bonds and derivatives, that tion among brokers or asset managers— clock” to count down to it. are now largely conducted “over the coun- materialise. And the law may yet play a Apprehension was understandable. ter” (ie, not on exchanges). But the law also role in the Brexit negotiations. Its rules on The new EU law, the second iteration ofthe restricts share trading in “dark pools” financial-market access for third countries, Markets in Financial Instruments Directive closed to retail investors, provides for ac- after all, will apply to Britain. There are (its full, unwieldy name), affects markets in cess to European markets for non-EU firms, many more days ofthe MiFID to come. 7 The Economist January 6th 2018 Finance and economics 55 Free exchange Many happy returns

A new data trove helps reshape how the economy is understood ATA-GATHERING is the least sexy part of economics, which Dis saying something. Yet it is also among the most important. Home economics The discipline is rife with elaborate theories built on assump- Annual global rates of return* Ten-year moving average†, % tions that turned out to be false once someone took the time to By asset, 1870-2015, % pull together the relevant data. Accordingly, one ofthe most valu- Annual rate of return, 10 all asset types able papers produced in 2017 is an epic example of data-retrieval: 02468 8 a piece ofresearch that spells out the rates ofreturn on important Housing asset classes, for 16 advanced economies, from 1870 to 2015. It is 6 fascinating work, a rich seam forother economists to mine, and a Equities source ofinsight into some oftoday’s great economic debates. 4 Rates of return both influence and are influenced by the way 2 firms and households expect the future to unfold. They therefore Bonds GDP growth + 0 find their way into all sorts ofeconomic models. Yet data on asset – NBER returns are incomplete. The new research, published as an Bills 2 working paper in December 2017, fills in quite a few gaps. It is the 1870 1900 50 2010 work of five economists: Òscar Jordà of the San Francisco Fed, *16 countries unweighted † Katharina Knoll ofthe Bundesbank, Alan Taylorofthe University Source: National Bureau of Economic Research 16 countries weighted by GDP of California, Davis, and Dmitry Kuvshinov and Moritz Schular- ick, both ofthe University ofBonn. (Messrs Jordà, Schularick and economies—eg, in the 1950s and 1960s—as of the more stagnant Taylor have spent years building a massive collection of histori- ones experienced recently. cal macroeconomic and financial data.) For each of the 16 econo- More bracingstill are the data’s implications fordebates on in- mies, they craft long-term series showing annual real rates of re- equality. Karl Marx once reasoned that as capitalists piled up turn—taking into account both investment income, such as wealth, their investments would suffer diminishing returns and dividends, and capital gains, all net of inflation—for government the pay-off from them would drop towards zero, eventually pro- bonds and short-term bills, equities and housing. Theirs is the voking destructive fights between industrial countries. That first such data set to gather all of that information for so many seemsnotto be true; returnson housingand equitiesremain high countries over so long a period. even though the stock of assets as a share of GDP has doubled Assuch, the authorsestablish some newbasiceconomic facts. since 1970. Gravity-defyingreturns might reflect new and produc- They conclude, forinstance, that over the very long run it is hous- tive uses for capital: firms deploying machines instead of people, ing, rather than equities, which provides the best return (see for instance, or well-capitalised companies with relatively small chart): both asset types have yielded about 7% a year on average numbers of employees taking over growing swathes of the econ- over the 145 years, but equity returns are much more volatile. It is omy. High returns on equity capital may therefore be linked to a important to note that, though homeowners might cheer this more tenuous status forworkers and to a drop in the share ofGDP news, it is not necessarily a reason to leap into the housing mar- which is paid out as labour income. ket. Rental yields account forabout halfofthe long-run return on Similarly, long-run returns provide support for the grand the- housing, and owninga diversified portfolio ofrent-yielding prop- ory ofinequality set out in 2013 by Thomas Piketty, a French econ- erty is not the same bet as borrowing to house the family. omist, who suggested (based in part on his own data-gathering) that the rate of return on capital was typically higher than the The new old normal growth rate of the economy. As a consequence, the stock of Besides offering these baseline findings, the authors’ work helps wealth should grow over time relative to GDP. And because to answer several pressing economic questions. One example is wealth is less evenly distributed than income, this growth should the puzzle of declining interest rates. The falling rates of the past push the economy towards everhigherlevels ofinequality. MrPi- few decades distress some economists, who worry they betoken ketty summed up this contention in the pithy expression “r > g”. weak growth and complicate central bankers’ ability to manage In fact, that may understate the case, according to the newly the economy. Yet the long-run data reveal that the high rates ofre- gathered figures. In most times and places, “r”, which the authors turn on government debt seen in the 1980s were an anomaly. The calculate as the average return across all assets, both safe and real return on bonds and short-term bills is normally relatively risky, is well above “g” orGDP growth. Since 1870, theyreckon, the low—and can even be negative for long periods of time—as some average real return on wealth has been about 6% a year whereas other economists (such as Carmen Reinhart ofHarvard Universi- real GDP growth has been roughly 3% a year on average. Only ty and Belen Sbrancia of the IMF) have also found. Recent de- during the first and second world wars did rates of return drop clines therefore represent a return to more typical conditions. much below growth rates. And in recent decades, the “great com- That, in turn, suggests that central bankers who hope to “nor- pression” in incomes and wealth that followed the world wars malise” interest rates may be in for a rude surprise. But low rates has come undone, as asset returns persistently outstrip the of return also mean that government-debt burdens may prove growth ofthe economy. easier to manage than thought—and perhaps that government In such ways does the painstaking collection of data funda- borrowingcould be used more aggressively in times ofeconomic mentallyreshape understandingofthe wayeconomieswork. Itis weakness to make up for central-bank impotence. Nor do low a shame that data-gathering does not carry higher status within rates of return on government debt imply that the world is enter- the profession. It would raise the status ofeconomics itself. 7 ing a period of “secular stagnation”, or chronically weak growth. Low rates have in the past been as much a feature of rip-roaring Economist.com/blogs/freeexchange 56 Science and technology The Economist January 6th 2018

Also in this section 57 Digital assistants can be too human 58 Cleaning up space debris

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The search for MH370 (see map on next page). Fugro could infer MH370’s crash site only from its final, rath- Many scanners, very deep er shaky, satellite signals. Ocean Infinity’s efforthas been guided as well by wreckage washed ashore on the coasts of Africa and several islands in the Indian Ocean—hence Durban the more northerly starting point. Seabed Constructor will reach that starting-point, A swarm ofautonomous submarines launched from a fantastical mothership is which is about 35°S, and 2,200km off the out to find a missing airliner coast ofWestern Australia, on orabout Jan- N JANUARY 2nd, at 8pm local time, a ern tip of Sumatra, heading west-north- uary17th, hercrewhavingconducted a few Ostrange vessel cast off and sailed out west into the open ocean. Subsequent final tests and calibrations of the HUGIN of the Port of Durban, in South Africa, transmissions to a communications satel- system en route, using remote-controlled heading east. Her hull was orange. Her su- lite suggested that it crashed somewhere robots to place dummy debris on the sea perstructure bristled with antennae— along an arc between 1,500km and floor in order to see ifthe subs can find it. If some long and pointy, some sleek, white 2,700km west ofAustralia. searchingthe patch ofocean designated by and domed. Her stern sported a crane and The search that followed was the larg- the ATSB reveals nothing, then the ship also a strange gantry, known to her crew as est in aviation history. It was mounted by will head farther north, towards the 30th the “stinger”. Her bow looked so huge and Fugro, a Dutch firm, and paid forbythe Ma- parallel, which some independent experts ungainly as to be on the point of tipping laysian, Chinese and Australian govern- believe is a better bet. her, nose first, into the depths. And below ments. Over the course of three years Fu- deck, invisible to those on shore, she car- gro managed to scan 120,000 square An ocean of interest ried eight autonomous submarines called kilometres of seabed. But it found nothing. Fugro’s search used but a single autono- HUGINs, each six metres long, weighing The plan is forOcean Infinity’s search to be mous submarine, and this was unable to 1,800kg, and containing a titanium sphere paid for, on a “no find, no fee” basis, by Ma- dive below 4,000 metres, meaning it was to protect the sensitive electronics therein laysia alone. Contracts have yet to be not always close to the seabed. The HU- from the pressure ofthe ocean’s depths. signed, but Oliver Plunkett, Ocean Infin- GINs carried by Seabed Constructor can, The strange ship’s name is Seabed Con- ity’s boss, has decided to go ahead anyway, however, go as deep as 6,000 metres. That structor. She is a Norwegian research ves- to take advantage of the window of good permits them to reach most ofthe sea floor sel, built in 2014 and owned by Swire Sea- weather that opens in the southern Indian comfortably. And the fact that there are bed, a dredging and surveying firm in Ocean in January and February. eight of them means different areas can be Bergen. At the moment, though, she is Ocean Infinityaimsto cover the ground searched in parallel, and that some subma- leased to Ocean Infinity, a company based much fasterthan Fugro did. In priorcruises rines will always be at sea. 1 in Houston, Texas. And the task Ocean In- in the Atlantic, the firm has, according to finity has hired her foris a hard one: to find Josh Broussard, its technical director, man- The Richard Casement internship whatever is left of flight MH370, a Boeing aged to scan 890 square kilometres a day 777-200ER that left Kuala Lumpur on using six autonomous submarines. With We invite applications for the 2018 Richard Casement internship. We are looking for a would-be journalist to March 8th 2014 with 239 people on board eight, Mr Broussard thinks that the new spend three months of the summer working on the and vanished over the Indian Ocean. mission will be able to manage 1,200 a newspaper in London, writing about science and The disappearance of MH370 is one of day—enough to have covered the original technology. Applicants should write a letter introducing themselves and an article of about 600 words that they the great mysteries of modern civil avia- search area in just100 days. think would be suitable for publication in the Science tion. The aircraftwasbound forBeijing, but The new search area, 25,000 square ki- and Technology section. They should be prepared to changed course suddenly over the South lometres of sea floor chosen by investiga- come for an interview in London or New York. A stipend of £2,000 a month will be paid to the successful China Sea and broke off radio contact. It tors from the Australian Transport Safety candidate. Applications must reach us by January 26th. was last detected by radar near the north- Bureau (ATSB), is just north of the old one These should be sent to: [email protected] The Economist January 6th 2018 Science and technology 57

Wing those aboard it will doubtless derive relief TANZANIA flap Last civilian- INDONESIA Last radar contact from knowing where the flight ended up. military- radar MALAYSIA But merely finding the wreckage will not contact Kuala explain what happened on board the E Lumpur U R INDONESIA 15°S plane. That will require the discovery of Q A Cabin I C Réunion B S (To France) interior the aircraft’s flight recorder. M A panel A G That object is therefore Ocean Infinity’s Z Horizontal A MH370 known O stabiliser D Flaperon M A flight path AUSTRALIA AUSTRALIA ultimate target. If it is found on this mis- M SOUTH Flap track Unconfirmed sion, Mr Broussard says the firm plans to AFRICA faring debris bring it to the surface and then deliver it for 30°S Durban analysis to the Australian authorities, who INDIAN OCEAN have the technical competence to assess it. Engine cowling A follow-up trip to examine the wreckage, Approximate search area Covered Expanded and even bring it to the surface, would re- MH370 debris quire further authorisation from the Ma- 1,500 km 45°E 60°E 75°E 90°E laysian government. Seabed Constructor is the most ad- 2 The HUGINs will be launched by the will be examined by three sets of human vanced civilian surveyvessel on the planet stinger, which extends out over the ship’s eyes. Together, this survey team will come today. Ifits array oftechnology cannot find stern. Once underwater, the robot craft up with a list of possible targets, ranked MH370, then it is likely that nothing will, will communicate with the ship using an from “E” to “A” (“nothing” to “that’s it”), to and thatthe mysteryofMH370 will remain acoustic modem. The ship’s own modem, present to their bosses. If the data look unsolved. Either way, though, the advance which will receive these signals, is fixed to good, a HUGIN will be sent down fora sec- of technology may mean that it is the last the end of a long pole that extends down ond, closer look, cameras at the ready. such mystery. As the oceans are watched through her hull into the water. What happens next, if Ocean Infinity with ever closer scrutiny, from space and Each HUGIN comes with a 300kg lithi- does locate what is left of the missing air- the depths, it is increasingly difficult for um-polymer battery pack, good for a tour craft, is unclear. Friends and relatives of anything to get lost in the first place. 7 of duty lasting up to 60 hours. A down- ward-pointing sonar will map the con- tours of the seabed beneath the craft, but Digital assistants most ofthe searching will be done by side- mounted sonars scanning the bed on ei- Losing face ther side of the craft. These send out pings and measure the intensity with which they are reflected. Sand reflects less sound than metal does, meaning metal objects such as aircraft debris are easy to distin- guish. And if something apparently metal- Sometimes, computerprograms seem too human fortheirown good lic is detected, its nature can be confirmed using an on-board magnetometer. IGITAL assistants such as Siri and Cor- stantially change how intelligent you are”. The HUGINs’ search patterns are set by Dtana are increasingly common on Participants rated their responses to these people, but the craft will actually navigate phones and computers. Most are designed statements on a six-point scale, on which with little reference to their mother ship. to give their users the impression that a hu- one meant “strongly disagree” and six Every so often, the ship will send out a cor- manlike intelligence lies behind the pro- meant “strongly agree”. The reason for this rective ping to keep them on course. Most- gram’sfriendlyvoice. Itdoesnot, of course. initial test was that Dr Park knew from pre- ly, however, they will employ dead reckon- But dozens of experiments over the years vious work that, in academic settings, ing, based on data from accelerometers, to have shown that people readily build those who believe intelligence to be mal- steer themselves autonomously. They are strong bonds with computerised helpers leable are comfortable asking for assis- also capable of picking their way without which are endowed with anthropomor- tance while those who believe itto be fixed assistance oversheerunderwatercliffs and phic features, whether visual or vocal. often feel ashamed to do so. mountains, and past crevices and gullies, Developing an emotional relationship The initial test done, the researchers using on-board cameras and machine-vi- with a piece of software can, however, cut presented their volunteers with a second, sion software. both ways. As a study published in Psycho- which involved looking at 16 sets of three After its tour of duty, a HUGIN will be logical Science by Park Daeun, of Chung- words and trying to think of a fourth word lifted back on-board ship and the data it buk National University in South Korea, that linked them. For example, when of- has collected (up to two terabytes, record- and her colleagues, shows, one emotion fered “room, blood, salts” a correct answer ed on a waterproof hard drive) down- sometimes involved in machine-human would be “bath”. Sometimes the first three loaded into the ship’s data centre and interaction is embarrassment. This, Dr Park words were accompanied by an unre- turned into human-readable maps, a pro- has discovered, makes some users reluc- quested hint (in the example given, this cess that takes six hours. The HUGIN’s bat- tant to askforhelp from their artificially in- was “tub”). Sometimes they were not. tery will be replaced with a fully charged telligent pals. Apparently, they are sheep- Hints appeared as the written form of one, any necessary repairs made, and the ish about doing so. the word in question, accompanied by a craft then sent backout into the ocean. Dr Park and her team recruited 187 par- computer-shaped icon. For half of partici- Ateam ofgeologists and hydrographers ticipants into their study. To start with each pants this icon had a humanlike face, and will then pore over the maps, looking for was presented with a series of statements the hint was placed inside a speech bubble signs of the missing plane. Surprisingly, for on the malleability of intelligence. These originating from that face, thus anthropo- such a high-tech operation, this stage ofthe included, “you have a certain amount of morphising the presentation to some de- search will be entirely manual. Every intelligence, and you can’t really do much gree. For the other half the icon lacked a block of sea floor that the HUGINsmap to change it”, and “you can always sub- face and there was no speech bubble. After 1 58 Science and technology The Economist January 6th 2018

2 the final set of words had been displayed, feelings of shame and embarrassment if use a robotic manipulator to send it on its participants were asked to agree or dis- the computer icons they had seen giving way into orbit around Earth. agree with follow-up statements about the hints had had faces and speech bub- RemoveDEBRIS has been designed and their experience, such as “it was embar- bles, but only 2.7 if not. In contrast, people built by Surrey Satellite Technology, a Brit- rassingto receive help duringthe task”, and who strongly believed that intelligence ish manufacturer of small satellites spun “others might think I am incompetent be- could be changed over time (the bottom out of the University of Surrey in 1985, cause I received help during the task”. This sixth of the sample) felt the same level of which is now majority-owned by Airbus. time, they quantified their feelings on a discomfort (around 2.5) whether or not the Mission Control for the RemoveDEBRIS seven-point scale, with higher scores rep- icons had been anthropomorphised. project is the Surrey Space Centre at the resenting greater feelings ofunease. A second experiment, in which a differ- university. The plan is for RemoveDEBRIS The researchers found that participants ent set of participants were allowed to ask to carry out fourexperiments. The first two who believed intelligence to be unchange- for help rather than having it thrust upon will involve launching from it a pair of able felt more embarrassed and more in- them at random had similar results. Dr CubeSats (mini-satellites 10cm across). competent after the tests. Specifically, Park therefore concludes that some people These will play the role ofspace junk. those whose level of belief that this is true do, indeed, seem to wish to avoid losing Once launched, the first CubeSat will was more than one standard deviation face by seeking help from an icon that has, inflate a balloonlike structure a metre above the mean score on the six-point well, a face. And that in turn suggests there across, to which it will remain attached, in scale for perceptions of intelligence flexi- are circumstances when the relentless order to create a bigger target. The mother bility (in other words, the top sixth of the pseudo-humanisation of machine-human ship will then approach to a distance of sample), averaged 3.2 when measured for interactions could usefully be curbed. 7 seven metres and fire a net at the balloon. This net is designed to unfurl and warp it- selfaround the target. Once the target is en- tangled, a cable connecting the net to the mother ship will be tightened, closing the neck of the net. It will then be hauled in, like catching fish. The second CubeSat will test the sen- sors of RemoveDEBRIS. This trial will use cameras and a lidar (an optical version of radar) aboard the mothership to build up a detailed three-dimensional image of the object. If that works it will permit future clean-up vehicles to recognise what they are dealing with, and react appropriately. In the third experiment, Remove- DEBRIS will extend a 1.5-metre-long arm that holds a 10cm-square target. It will then fire a harpoon at the target. The idea is that harpoons could be used to pierce some itemsofspace debrisand, like the net in the first experiment, then haul them in. The fi- nal experiment is intended to ensure that RemoveDEBRIS and its captured items do not themselves become space junk. The mother ship will deploy a ten square-me- Space debris tre plastic membrane, supported by four carbon-fibre booms, to act as a “dragsail” Junk hunting that will employ the limited atmosphere at this altitude to pull the craft downward to the fiery death ofre-entry. If space-debris capture systems like this succeed, then future missions could start to go after some of the most worrying bits of junk. Such ventures could be commercial, A new satellite will test ways to capture detritus circling Earth according to Guglielmo Aglietti, director of HERE is an awful lot of junk in space. will be launched over the next decade, the Surrey Space Centre, if governments TThe latest data from the European many worry that large volumes of space (probably acting collectively) were willing Space Agency suggest some 7,500 tonnes near Earth will soon be rendered risky to pay to keep space clean so as not to dam- of it now orbits Earth. It ranges from de- places for satellites (especially big, expen- age their own activities and those of their funct satellites and rocket parts to nuts, sive ones) to be. citizens. There are already guidelines to try bolts, shards of metal and even flecks of What is needed, then, is a clean-up. Va- to limit the accumulation of space junk. paint. But something as small as a paint rious ideas about how to do this have been Defunct satellites should be disposed of fleck can still do serious damage if it hits a proposed, and some are about to be put to within 25 years, either by being tipped into workingsatellite ata speed ofseveral thou- the test. In February a resupply mission to re-entry or parked in an out-of-the way sand kilometres an hour. There have al- the International Space Station will also “graveyard” orbit. But the rules are not al- ready been more than 290 collisions, carry a satellite, about the size of a domes- ways followed and a lot of older debris re- break-ups and explosions in space. Given tic washing machine, called Remove- mains in orbit. A bounty on removing the the likelihood that thousands of small sat- DEBRIS. Once this has been unpacked and most threatening hulks might even see the ellites, some only a few centimetres across, prepared by the station’s crew, they will launch ofa new space business. 7 Books and arts The Economist January 6th 2018 59

Also in this section 60 Economics and dieting 60 Britain’s universities? 61 Japanese drumming 61 Chloe Benjamin’s fiction 62 Johnson: making new words

For daily analysis and debate on books, arts and culture, visit Economist.com/culture

History of physics show like a circus ringmaster, ramping up the tension by calling for lunch just as Clever calculator things literally heated up. David Schwartz, the author of“The Last Man Who Knew Everything”, is the son of another Nobel-winning physicist. His fa- ther left some intriguing correspondence on Fermi, which inspired Mr Schwartz to learn more. He interviewed many of Fer- Enrico Fermi, champion nuclearresearcher, mathematician and educator mi’s students and colleagues, shedding UST before daybreak on July 16th 1945 light also on Fermi the educator (his lec- The Last Man Who Knew Everything: The Enrico Fermi lay down in the open desert tures were so renowned that even notes J Life and Times of Enrico Fermi, Father of New Mexico. At 05:30, the world’s first taken by his assistants were a bestseller). of the Nuclear Age. By David Schwartz. nuclear explosion took place ten miles MrSchwartz deftly conveys the aesthet- Basic Books; 451 pages; $35 and £27.99 (16km) away. He counted off the seconds ic beauty of Fermi’s insights without after the flash, anticipating the arrival of getting mired in their minutiae. His book the blast-wave. With preternatural calm, tackle only a problem’s essentials, discard includes only enough scientific detail to Fermi stood up and let some strips of pa- any distracting elements and ruthlessly explain each discovery as it happened. per flutter away as the wave passed. They squeeze what remained. Such back-of-the- Fermi isdepicted asa natural leader—in the flew about eight feet. The Trinity nuclear envelope calculations, which became laboratory, on hiking trails near his work- test, he pronounced after making some known as “Fermi problems”, were such places in Rome and New Mexico, and in quick calculations, had released the equiv- good examples of critical thinking that re- the square-dances he came to love in alent ofabout10 kilotonnes ofTNT. cruiters nowadays test applicants’ mettle America. Yet for all his gregariousness Fer- Fermi was, by that stage, already a by setting them as interview questions. mi tended to reveal little ofhis emotions in celebrity among physicists. An obvious Fermi’s solutions were so often right that conversations or correspondence, even as mathematics prodigy as a child in Italy, he his colleagues in Rome called him “the he worked on the team to develop human- had devoured texts written for adults. pope”. His boss recognised that he could ity’s most terrible weapons. Laura, his Throughout his life he kept few books, help raise the reputation ofItalian science. wife, did not know until after the bombs preferring to derive conclusions from first Fermi’s discovery of how slow-moving fell just what her husband had really been principles whenever he felt the need. neutrons helped to make some atoms up to in his laboratory. Ashe tookup differentpostsin academ- radioactive won him the Nobel prize in As a result, Mr Schwartz tussles with ic research in Italy and abroad, Fermi 1938. He used the trip to Stockholm to many of the same questions that have showed himself to be not only a theorist abscond with his family from his increas- dogged previous Fermi biographers. Did with unparalleled insight but also adept as ingly fascist homeland. Once in America he stay so long in Italy, joining Benito Mus- an experimentalist (a rare combination) he became involved in the Manhattan Pro- solini’svaunted Accademia d’Italia, just for acrosseverykind ofphysics. He had an un- ject, which led to the first nuclear bomb, the funds and freedom to pursue his pre- canny knack for rough-and-ready calcula- bringing him renown well beyond the cious research? Did he participate in the tions to obtain approximate answers for physics community. Manhattan Project out ofpatriotism for his damnably difficult questions (the Trinity Fermi was an inveterate showman. In adopted country, or was he dragged along bomb, later analysis revealed, released 18 Chicago, on the day he demonstrated the because of his expertise in nuclear phys- kilotonnes of TNT, which was surprisingly world’s first controlled nuclear chain reac- ics? Orwas he just insatiably curious about close to Fermi’s desert estimation). tion—a prerequisite for the uncontrolled whether the bomb could indeed be made? He eschewed complexity, preferring to kind in a nuclear weapon—he ran the It would be easy to depict Fermi as a 1 60 Books and arts The Economist January 6th 2018

2 standard reticent genius who solved every University education and lacklustre teaching are common. problem as if he had, as one student put it, David Willetts, Britain’s higher educa- “an inside trackto God”. But Mr Schwartz’s Three years and tion minister in the Conservative-Liberal sleuthing also reveals how science works Democrat coalition and now a Tory peer, in its proper context: how each finding score argues against those who say the answer is builds on the last; how identical ideas can to turn the clock back by cutting student occur to more than one person when the numbers. “A University Education” is not intellectual conditionsare right; how an in- the mix of gossip and post hoc justification A University Education. By David Willetts. sight into nature arises not from a vacuum normallychurned outbyformerministers. Oxford University Press; 432 pages; $32.50 but from hard-won experience and, usual- Instead, Lord Willetts provides something and £25 ly, some clever calculating. more valuable: an examination ofthe state Fermi was once described by a student N 1945 there were 500 universities across of English universities, a defence of the as the last man who knew everything. He Ithe globe. Today there are more than value of a university education and an went on to make important discoveries in 10,000. As universities continue to dis- argument that the provision ofhigher edu- particle physics, geophysics and even the place apprenticeships and the armed cation should be expanded further. science of the stars. And he never stopped forces as the main path to adulthood in the This may seem curiously egalitarian calculating. Even on his deathbed, he used rich world, scrutiny of higher education stuff for a former Conservative minister. a stopwatch to determine exactly how has increased. In England critics see uni- Yet Lord Willetts views a university educa- much fluid he was receiving from his intra- versities as hotbeds of anti-Brexit provoca- tion as akin to home ownership—both are venous drip. It was a simple problem, real- tion and places where censorious students good for society and something that every ly, ifyou focused on the essentials. 7 stifle debate. Complaints about hefty fees parent hopes their child will grow up to possess. He cites evidence that graduates are healthier, happier and less inclined to a Economics and dieting life of crime. He notes that the graduate wage premium has held up even as the Quantitative eating number of students has grown. Attempts by graduates to restrict access to university, he writes, are little more than “educational Nimbyism”. The Economists’ Diet: The Surprising As a minister Lord Willetts was best Formula for Losing Weight and Keeping It known for nearly trebling tuition fees to Off. By Christopher Payne and Rob Barnett. £9,000 ($14,000) a year in 2012. Some wor- Touchstone; 288 pages; $25 ried that this would dissuade poor pupils from applying. However, thanks to gener- O YOU indulge in QE (quantitative ous government loans, their numbers con- Deating)? Do you have a high margin- tinued to grow. In policy circles, the debate al propensity to consume chocolate? has moved on to whether the new arrivals Then you might be piqued by a diet book benefit from university study, which is of- from two self-described “formerly obese ten in less research-orientated institutions, economists” on how to lose weight. or whether the money would be better To be honest, the economics within spent on other forms ofeducation. this bookis very much a side order rather Here Lord Willetts is no less trenchant. than the main course. A diet is described He argues that these institutions, which as a “self-imposed eating-austerity pro- tend to languish near the bottom of re- gramme”. There is some discussion of search-focused league tables, simply per- people’s general failure to give enough form a different role. They may produce weight to the long-term consequences of few bankers, judges or Nobel prizewin- their actions; a phenomenon known as ners, but that reflects their intake, rather hyperbolic discounting. And there is Elastic demand than poor tuition. They often add as much some neat use ofthe concept ofdiminish- value asmore prestigiousinstitutions. Are- ing returns. Eat a wide variety offoods a treat, then the other meals should be cent analysis of graduate salaries by The and you may always get pleasure from skipped altogether. Economist reached a similar conclusion. trying something different. But limit your But the authors are not too prescrip- Yet Lord Willetts is farfrom Panglossian. diet and you will soon tire ofeating more. tive. The aim is to find a diet that works He traces many flaws in England’s system But the “surprising formula” prom- foreach individual. And the best way of to the gates of its grandest universities, Ox- ised by the bookis scarcely a shocker: eat achieving that is to weigh yourself every ford and Cambridge. In a brisk history, he less. The authors thinkthis is more im- day. Only then can you see whether the tells how, even as the university flourished portant than exercise since the latter diet is working. in Europe, its spread was halted in England tends to make you hungry; it is easy to The bookis full ofperfectly sensible by protective measures put in place at the undo all the good workofa cycle ride advice, such as avoiding faddy diets, the behest ofOxbridge. It was not until the cre- with a snack. lure of“low-fat” foods and the tempta- ation of University College London in 1829 Eating less requires you to confine tion to drinkall your calories in the form that England gained its third university, six yourselfto one square meal (defined as offizzy drinks, alcohol and sugary cof- centuries after the second. some grilled meat and two side portions fees. At nearly 300 pages, however, it is Oxbridge still provides the metric by ofvegetables) a day. The other meals rather repetitive. But, as experienced which other English universities are should be very light; a non-creamy soup, economists, the authors may have real- judged. Thisleadsto excellentresearch and a salad or a bowl ofnon-sugary cereal. If ised that, when it comes to diet plans, strong protection of institutional auto- you do end up splurging on a big meal or demand is almost infinite. nomy. It also means universities draw their students from across the country, control 1 The Economist January 6th 2018 Books and arts 61

2 their own admissions procedures and meet their specialised needs. chest. Moreover, whereas Western drum- compete for the best students. Partly as a A reader may wish fora more thorough mers work with the wrist, these men and result, getting into a prestigious university investigation of potential solutions to women drum with their whole body: they just about guarantees the student a good these problems. But “A University Educa- are athletes as well as aesthetes. These job, since mere entry is proof of academic tion” is nevertheless an admirably clear days they have swapped their traditional ability. Students thus may have less incen- analysis of English higher education. To its Japanese headbands and (for the men) tive to work hard, writes Lord Willetts, credit, it is an inversion of most writing loincloths for less nationally specific garb, which allows universities to focus on about English universities, which tends to but they still move with a beauty which is research. And since universities have so be laudatory of the Oxbridge model and quintessentially Japanese. much sway over admissions, the school- unduly sceptical of others. Lord Willetts’s Taiko drummingmaybe rooted in Shin- leaving curriculum has been narrowed to bookis all the more interesting forit. 7 to and Zen, but Kodo’s often lighthearted art has no explicit connection with reli- gion, or with the fanaticism of the Den Japanese drumming years; indeed, they wince at any mention of “demon”. When drummers leave the The kudos of Kodo ensemble now, it tends to be on amicable terms. Some players eventually find the Kodo style too restricting. Some cross over into jazz and other forms, as Ryutaro Ka- neko, their former hand-cymbal virtuoso, has done. He is now a star in his own right in America. Japan’s traditional drumming ensemble sets offa mighty bang Perhaps because of its roots, there is HERE is a felicitous double meaning to into modernisation, drumming came to be something spiritual about Kodo’s art. Six- TKodo, the name of the celebrated Japa- seen once more as a symbol of continuity. ty-seven year old Yoshikazu Fujimoto, nese drummingensemble. Itswritten char- Taiko ensembles proliferated, with one who has spent his entire adult life first with actersmean “drum child”. Butan infinitesi- named Ondekoza (“demon drummers”) Ondekoza and then with Kodo, speaks mally different stressing of the second hittingthe headlines in 1975 when its mem- with profound reverence ofhisearth-shak- syllable will give you the character which bers ran the Boston marathon. At the end, ing daily encounter with the giant drum: means “heartbeat”. The company regards they picked up their drumsticks and “Before I start drumming, I pray, ‘Please let this accidental ambiguity as a symbolic launched into a thunderous riff. me play you.’ And I am told, ‘OK, you may blessing, and drumming does indeed go Based on the remote island of Sado in play me.’ We become one. And as I play, I way back. It is one of humanity’s most ele- the Sea of Japan, Ondekoza was a com- feel at peace. I become the sound.” mental forms of musical communication, mune run on ferociouslySpartan lines bya Asked about his earliest musical experi- at once both mystical and—because it can visionary named Tagayasu Den. After 12 ence, Mr Kaneko gave this mystical reply: span great distances—highly practical. years, most of his drummers rebelled “It came when I was three. I was under a The taiko (“fat drum”) tradition was im- against the constraints—no smoking or al- cherry-blossom tree, and the leaves were ported from Tang-dynasty China. It took cohol, no marrying—and set up Kodo as a fluttering in the spring wind. I know this root in the Japanese court, and in temples rival group. They stayed on the island and may not sound like music to Westerners.” and shrines, in forms which have scarcely (slightly) relaxed their regime. Players still As with other Kodo players, his dreams changed over 1,000 years. Over the course had to carve their own drumsticks and were musical: “In my best dream I was fall- of the 20th century, however, it lost its ap- each day began at 5am with a ten-kilo- ing through space in bright light, and sing- peal at home, though it was popular with metre run. Their fame grew as they issued ing very loudly.” Mr Kaneko looked at his the Japanese diaspora on the west coast of recordings and went on tour. The annual muscular forearms: “I was singing with ev- America. In the 1960s, as Japan threw itself Earth Celebration on Sado attracts ensem- ery limb. My whole body was singing.” 7 bles from all round the globe. And they teach, spreading the word through work- shops to such effect that there are now American fiction hundreds of amateur taiko groups, both in Japan and in America. Reading tea leaves Butwhatpreciselyisthat“word”? Audi- ences in Britain and across Europe will soon have a chance to find out when Kodo begins its next major tour on January 30th. Kodo programmes are sometimes inter- The Immortalists. By Chloe Benjamin. larded with Japanese folk music on flute Putnam; 346 pages; $26. Tinder Press; £16.99 and zither, but this time their show will reflect a return to basics. OME novels are portraits, some are Drumming, pure and simple, makes for Spage-turning puzzles. Still others are a memorable aural and visual experience. meditations on the mysteries of life. “The Taiko drums come in several sizes, ranging Immortalists”, a family story with a twist, from the sharply resonant little shimedaiko is a bit of all of those. The tale of four to the giant odaiko (pictured). Six feet (1.8 siblings marked in childhood by a terrible metres) high and three feet wide, it is hol- prophecy, it careers through time and trag- lowed out of a single block of wood and edy with the reader in tow, as deft and takes six men to hoist into place. Kodo’s dizzying as a high-wire act. rich sound-world ranges from woodland Chloe Benjamin, an American writer, susurrations to a thundering which makes sets out a startling premise: what if you Drum roll you feel as if you’ve been struck in the were told the date of your own death? 1 62 Books and arts The Economist January 6th 2018

2 Varya, Daniel, Klara and Simon Gold, four each new story tops the last. The four lives able. Yet, as the novel deepens, the reader siblings in a Jewish immigrant family, visit span a wide range of settings and themes. is beguiled with unexpected twists and a fortune-teller in 1969 on the Lower East The youngest, Simon, races through the stylish, crisp prose. In a novel centred on Side of New York. From the moment each sexual hedonism of San Francisco’s gay magic and mystery, Ms Benjamin uses mis- is told when his or her life will end, they scene in the late 1980s. Klara is a magician direction to frustrate as well as entertain. are irrevocably altered. Suspense mounts whose life is spent perfecting an act she Meanwhile, the mystery of the human as the reader learns each character’s fate in will perform in Las Vegas. Daniel, a doctor, mind that is the novel’s true subject lingers individual portraits, starting with the faces loss on many levels in upstate New long after the riddles are solved. Informa- youngest. What links them beyond the York, while Varya is a scientist researching tion can implantitselflike a virus, the older irrational power of the long-ago prophecy longevity in a primate lab. Gold children note. Whether true or false, is the deeper question that it raises: what Juggling so many pieces has its risks. genuine or placebo, Varya knew “stories role does belief—or luck or destiny or even The rapid-fire plotattimesfeelsrushed and did have the power to change things: the magic—play in shaping a life? contrived. The portrayal of the AIDS epi- past and the future, even the present.” Un- Ms Benjamin cannily withholds infor- demic is predictable, while some of the wittingly, this ambitious, unorthodox tale mation, leaving readers eager to see how other developments seem wildly improb- may change you too. 7 Johnson Word-birth

How words come to be used tells you a lot about different cultures HERE do new words come from? they cannot seem to stop them. WFew are purely invented, in the But the book of new Danish words sense of being coined from a string of shows an even deeper kind of influence. sounds chosen more or less at random. Even where words appear Danish, they Most tend to be existing words given new are often simply part-for-part translations meaning (“to tweet”). In other cases, a of English words: vejvrede is “road rage”, word changes its parts of speech (“to undskyld mit franske is “pardon my Photoshop”, “to Facebook”). And in some French”, and svingvaelger, “swing voter”. of the most creative instances, people This shows that globalisation is not only chop words and recombine them to make in the surface traffic of words, but in the new ones (as in “sexting”). deeper exchange ofconcepts. New words mostly become embed- This is not to say that other languages ded through use. A few countries have do not creatively coin their own words official academies that declare when a anymore. In Denmark an amagernum- word has been accepted, but they have merplade or “Amager number-plate” is a little actual influence over how people tattoo on the lower back, named after a speak. Which words make their way into once-tatty bit of Copenhagen. Svensker- a language says a lot about where phras- har and bundesligahar, “Swede hair” or ing comes from today. “Bundesliga hair”, both refer to the cut One such official regulator is the known in English asa mullet. And curling- Dansk Sprognaevn, which has the hum- foraeldre, “curling parents”, is an interest- ble task of determining official spelling in ing twist on “helicopter parents”: rather Danish. Many Danes take the body’s deci- origins in Japanese and Italian. But these than hovering over their children, they sion to include this or that word in its too, Mr Jensen writes, come via English, sweep all obstacles out of their way, as in spelling dictionaries as a sign that it is a not directly from those languages. This the eponymous sport. “real” word. “New Danish Words, With route is more common, it seems, than that So English borrowing is not entirely Origin” a book by Jorgen Norby Jensen, of “quinoa”, which was borrowed directly replacing native creativity, even if the shows how rarely new Danish forms are from Spanish (which itself took the word heavy thumbprint of English on virtually created by Danes from Danish roots for from Quechua). every language in the globalised world is specifically Danish circumstances. In- In another category are “English” increasinglyclear. Thisisnotbecause Eng- stead, the great majority come, one way words and expressions that are unknown lish is particularly supple, wonderful or or another, from English. to Anglophones. Danes have longsaid that flexible in itself; it is more to do with the The obvious examples are those that someone who isfresh and readyto go is “fit influence of innovations from the An- are borrowed wholesale. MrJensen offers for fight”. Another is “facerape”, which glosphere, from the good (blogs) to the “foodie”, “selfie”, “clickbait”, “blog”, means to hack someone’s social-media ridiculous (twerking). “Brexit” and “twerking” (a kind of bot- profile in order to fiddle with its personal- It may be that the spread of concepts tom-waggling dance). Only slightly more information settings or to post fake status from English out, rather than the other disguised are those words whose spelling updates. Such faux-anglicisms are com- way round, is in fact to the discredit ofthe has been changed, like metroseksuel. mon in other languages too: the German English-speaking world. Words spread Some are altered for Danish grammar Handy (mobile phone) orKicker (table foot- from English because people learn Eng- norms, like oute, the verb “to out some- ball), or the French tennisman and tennis- lish; cultural secrets from quinoa to hygge one as gay”. (Danish verbs mostly require woman. Linguistic experts in these coun- are more likely to be buried in other an “-e” at the end.) tries decry these words—it is bad enough to cultures where outsiders cannot find Words of more exotic origin include have to borrow English words, but even them. Perhaps the Anglophones are the “emoji” and “barista”, which have their worse to counterfeitthem, theyreckon. But real losers in this exchange. Courses 63

Tenders

The Economist January 6th 2018 64 Economic and financial indicators The Economist January 6th 2018

Economic data % change on year ago Budget Interest Industrial Current-account balance balance rates, % Economic Gross domestic data product production Consumer prices Unemployment latest 12 % of GDP % of GDP 10-year gov't Currency units, per $ latest qtr* 2017† latest latest 2017† rate, % months, $bn 2017† 2017† bonds, latest Jan 3rd year ago United StatesStatistics +2.3 Q3 on +3.242 economies,+2.2 +3.4 Nov +2.2 Nov +2.1 4.1 Nov -452.5 Q3 -2.5 -3.5 2.43 - - China plus a+6.8 closer Q3 look+7.0 at+6.8 GDP fore- +6.1 Nov +1.7 Nov +1.6 4.0 Q3§ +121.6 Q3 +1.3 -4.3 3.88§§ 6.50 6.96 Japan casts +2.1for Q3the year+2.5 ahead+1.5 +3.7 Nov +0.5 Nov +0.5 2.7 Nov +198.8 Oct +3.5 -4.4 0.04 112 118 Britain +1.7 Q3 +1.6 +1.5 +3.5 Oct +3.1 Nov +2.7 4.3 Sep†† -118.1 Q3 -4.0 -3.0 1.25 0.74 0.82 Canada +3.0 Q3 +1.7 +3.0 +4.6 Oct +2.1 Nov +1.5 5.9 Nov -45.8 Q3 -2.9 -1.8 2.05 1.25 1.34 Euro area +2.6 Q3 +2.4 +2.2 +3.7 Oct +1.5 Nov +1.5 8.8 Oct +393.8 Oct +3.1 -1.3 0.45 0.83 0.96 Austria +3.2 Q3 +1.4 +2.7 +4.4 Oct +2.3 Nov +2.1 5.4 Oct +8.5 Q3 +2.2 -1.0 0.57 0.83 0.96 Belgium +1.7 Q3 +1.0 +1.7 +6.7 Oct +2.1 Dec +2.2 6.9 Oct -3.9 Sep -0.3 -2.1 0.69 0.83 0.96 France +2.3 Q3 +2.3 +1.8 +5.5 Oct +1.2 Nov +1.1 9.4 Oct -22.5 Oct -1.5 -2.9 0.76 0.83 0.96 Germany +2.8 Q3 +3.3 +2.4 +2.7 Oct +1.7 Dec +1.7 3.6 Oct‡ +279.0 Oct +7.9 +0.6 0.45 0.83 0.96 Greece +1.3 Q3 +1.2 +1.3 +0.4 Oct +1.1 Nov +1.1 20.6 Aug -1.2 Oct -0.6 -0.8 4.08 0.83 0.96 Italy +1.7 Q3 +1.4 +1.5 +3.1 Oct +0.9 Nov +1.4 11.1 Oct +54.6 Oct +2.6 -2.3 2.07 0.83 0.96 Netherlands +3.0 Q3 +1.6 +3.2 +3.9 Oct +1.5 Nov +1.3 5.4 Nov +80.7 Q3 +9.7 +0.4 0.56 0.83 0.96 Spain +3.1 Q3 +3.1 +3.1 +7.0 Oct +1.2 Dec +2.0 16.7 Oct +23.0 Oct +1.4 -3.0 1.50 0.83 0.96 Czech Republic +4.7 Q3 +1.9 +4.5 +10.4 Oct +2.6 Nov +2.5 2.6 Oct‡ +0.9 Q3 +0.7 +0.7 1.69 21.2 26.0 Denmark +1.4 Q3 -1.9 +2.2 +0.2 Oct +1.3 Nov +1.1 4.3 Oct +27.6 Oct +8.3 -0.6 0.51 6.18 7.16 Norway +3.2 Q3 +3.0 +2.1 -4.2 Oct +1.1 Nov +1.9 4.0 Oct‡‡ +21.1 Q3 +4.9 +5.2 1.65 8.14 8.66 Poland +5.1 Q3 +4.9 +4.6 +9.0 Nov +2.0 Dec +2.0 6.5 Nov§ +1.4 Oct +0.1 -3.3 3.30 3.46 4.23 Russia +1.8 Q3 na +1.9 -3.8 Nov +2.5 Dec +3.8 5.1 Nov§ +32.7 Q3 +2.3 -2.1 8.13 57.6 60.7 Sweden +2.9 Q3 +3.1 +3.0 +6.0 Oct +1.9 Nov +1.9 5.8 Nov§ +21.1 Q3 +4.4 +1.0 0.80 8.18 9.18 Switzerland +1.2 Q3 +2.5 +0.9 +8.7 Q3 +0.8 Nov +0.5 3.0 Nov +66.4 Q3 +9.7 +0.8 -0.10 0.97 1.03 Turkey +11.1 Q3 na +5.0 +8.9 Oct +11.9 Dec +10.0 10.6 Sep§ -41.9 Oct -3.5 -2.0 11.74 3.76 3.59 Australia +2.8 Q3 +2.4 +2.4 +3.5 Q3 +1.8 Q3 +2.0 5.4 Nov -22.2 Q3 -1.4 -1.7 2.68 1.28 1.39 Hong Kong +3.6 Q3 +2.0 +3.7 +0.3 Q3 +1.5 Nov +1.6 3.0 Nov‡‡ +14.8 Q3 +6.4 +1.7 1.87 7.82 7.76 India +6.3 Q3 +8.7 +6.5 +2.2 Oct +4.9 Nov +3.4 5.0 2015 -33.6 Q3 -1.5 -3.1 7.32 63.5 68.3 Indonesia +5.1 Q3 na +5.1 +6.4 Oct +3.6 Dec +3.9 5.5 Q3§ -13.3 Q3 -1.6 -2.8 6.30 13,518 13,480 Malaysia +6.2 Q3 na +5.8 +3.4 Oct +3.4 Nov +3.9 3.4 Oct§ +9.2 Q3 +2.5 -3.0 3.92 4.02 4.49 Pakistan +5.7 2017** na +5.7 +8.7 Oct +4.6 Dec +4.1 5.9 2015 -14.5 Q3 -4.9 -5.9 7.93††† 110 105 Philippines +6.9 Q3 +5.3 +6.6 -6.6 Oct +3.3 Nov +3.2 5.0 Q4§ -0.5 Sep -0.3 -2.1 5.55 49.9 49.8 Singapore +3.1 Q4 +2.8 +3.1 +5.3 Nov +0.6 Nov +0.6 2.2 Q3 +57.4 Q3 +18.3 -1.0 2.04 1.33 1.45 South Korea +3.8 Q3 +6.3 +3.1 -1.6 Nov +1.5 Dec +2.1 3.2 Nov§ +81.9 Oct +5.5 +0.8 2.51 1,061 1,204 Taiwan +3.1 Q3 +6.8 +2.4 +0.9 Nov +0.3 Nov +0.6 3.7 Nov +74.1 Q3 +13.6 -0.1 0.93 29.6 32.2 Thailand +4.3 Q3 +4.0 +3.6 +4.2 Nov +0.8 Dec +0.7 1.1 Nov§ +47.4 Q3 +11.6 -2.4 2.27 32.6 35.8 Argentina +4.2 Q3 +3.6 +2.8 -2.5 Oct +22.3 Nov +25.2 8.3 Q3§ -26.6 Q3 -3.9 -6.1 3.72 18.5 15.9 Brazil +1.4 Q3 +0.6 +0.8 +5.2 Oct +2.8 Nov +3.4 12.0 Nov§ -11.3 Nov -0.7 -8.0 8.62 3.26 3.25 Chile +2.2 Q3 +6.0 +1.4 +2.3 Nov +1.9 Nov +2.2 6.5 Nov§‡‡ -4.6 Q3 -1.3 -2.7 4.50 607 674 Colombia +2.0 Q3 +3.2 +1.6 -0.3 Oct +4.1 Nov +4.3 8.4 Nov§ -11.1 Q3 -3.6 -3.3 6.35 2,936 2,975 Mexico +1.5 Q3 -1.2 +2.1 -1.1 Oct +6.6 Nov +5.9 3.5 Nov -16.1 Q3 -1.9 -1.9 7.52 19.5 20.8 Venezuela -8.8 Q4~ -6.2 -12.5 +0.8 Sep na +931 7.3 Apr§ -17.8 Q3~ -0.7 -19.4 8.24 9.99 10.0 Egypt nil Q3 na +4.2 +25.0 Oct +26.0 Nov +26.8 11.9 Q3§ -12.2 Q3 -6.4 -10.8 na 17.7 18.2 Israel +1.9 Q3 +3.5 +3.6 +2.5 Oct +0.3 Nov +0.3 4.3 Nov +10.5 Q3 +2.7 -1.8 1.66 3.46 3.87 Saudi Arabia -0.7 2017 na -0.7 na +0.1 Nov -0.3 5.6 2016 +12.4 Q3 +3.3 -6.6 3.68 3.75 3.75 South Africa +0.8 Q3 +2.0 +0.7 +1.1 Oct +4.6 Nov +5.3 27.7 Q3§ -7.3 Q3 -2.3 -3.9 8.61 12.5 13.8 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist poll or Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. ~2014 **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds. The Economist January 6th 2018 Economic and financial indicators 65

Markets % change on GDP forecasts Dec 30th 2016 2018, % change on a year earlier Index one in local in $ Worst-performing Best-performing Jan 3rd week currency terms Markets 12 10 8 6 4 2– 0+ 2 0246810 United States (DJIA) 24,922.7 +0.6 +26.1 +26.1 China (SSEA) 3,528.4 +2.9 +8.6 +16.0 Venezuela Dominica Japan (Nikkei 225) 22,764.9 -0.6 +19.1 +23.6 Britain (FTSE 100) 7,671.1 +0.7 +7.4 +17.4 Puerto Rico India Canada (S&P TSX) 16,371.6 +1.0 +7.1 +14.6 Equatorial Guinea Bhutan Euro area (FTSE Euro 100) 1,214.0 -0.8 +9.2 +24.4 Euro area (EURO STOXX 50) 3,509.9 -1.1 +6.7 +21.6 North Korea Anguilla Austria (ATX) 3,487.4 +1.7 +33.2 +51.8 Brunei Ethiopia Belgium (Bel 20) 4,005.6 +0.1 +11.1 +26.6 France (CAC 40) 5,331.3 -0.7 +9.6 +25.0 Suriname Guinea Germany (DAX)* 12,978.2 -0.7 +13.0 +28.9 Swaziland Cambodia Greece (Athex Comp) 817.3 +1.0 +27.0 +44.8 Italy (FTSE/MIB) 21,904.6 -1.3 +13.9 +29.8 Belarus Bangladesh Netherlands (AEX) 549.3 +0.1 +13.7 +29.6 Saudi Arabia Libya Spain (Madrid SE) 1,021.3 -0.5 +8.2 +23.4 Czech Republic (PX) 1,086.8 +0.3 +17.9 +42.4 Qatar Myanmar Denmark (OMXCB) 933.2 +0.4 +16.9 +33.0 Source: Economist Intelligence Unit Hungary (BUX) 39,604.4 +1.1 +23.8 +41.3 Norway (OSEAX) 912.4 +0.4 +19.3 +26.6 Poland (WIG) 63,896.3 nil +23.5 +49.2 Other markets The Economist commodity-price index Russia (RTS, $ terms) 1,183.1 +3.0 +2.7 +2.7 2005=100 Othermarkets % change on % change on Sweden (OMXS30) 1,587.6 -0.5 +4.6 +16.4 Dec 30th 2016 The EconomistDec 19th commodity-priceDec 26th Jan 2nd one index one Switzerland (SMI) 9,478.9 +0.5 +15.3 +20.0 Index one in local in $ 2017 2017 2018* month year Turkey (BIST) 116,052.1 +3.5 +48.5 +38.7 Jan 3rd week currency terms Dollar index Australia (All Ord.) 6,175.3 +0.1 +8.0 +17.2 United States (S&P 500) 2,713.1 +1.1 +21.2 +21.2 All items 144.9 147.7 150.9 +3.4 +6.4 Hong Kong (Hang Seng) 30,561.0 +3.3 +38.9 +37.8 United States (NAScomp) 7,065.5 +1.8 +31.3 +31.3 Food 146.7 147.6 149.6 -0.5 -3.4 India (BSE) 33,793.4 -0.3 +26.9 +35.6 China (SSEB, $ terms) 345.4 +2.1 +1.1 +1.1 Indonesia (JSX) 6,251.5 -0.4 +18.0 +18.0 Japan (Topix) 1,817.6 -0.7 +19.7 +24.2 Industrials Malaysia (KLSE) 1,792.8 +1.2 +9.2 +22.1 Europe (FTSEurofirst 300) 1,533.5 -0.1 +7.4 +22.4 All 143.1 147.9 152.3 +7.7 +18.5 Pakistan (KSE) 41,544.3 +3.5 -13.1 -17.9 World, dev'd (MSCI) 2,125.6 +1.1 +21.4 +21.4 Nfa† 134.6 136.8 138.0 +3.8 -0.1 Singapore (STI) 3,464.3 +2.1 +20.3 +30.7 Emerging markets (MSCI) 1,184.2 +3.5 +37.3 +37.3 Metals 146.7 152.6 158.4 +9.3 +27.4 South Korea (KOSPI) 2,486.4 +2.0 +22.7 +39.2 World, all (MSCI) 519.2 +1.4 +23.1 +23.1 Sterling index Taiwan (TWI) 10,801.6 +3.0 +16.7 +27.2 World bonds (Citigroup) 949.9 +0.4 +7.5 +7.5 All items 197.9 201.0 202.1 +2.5 -4.1 Thailand (SET) 1,778.5 +1.5 +15.3 +27.8 EMBI+ (JPMorgan) 836.7 +0.2 +8.4 +8.4 Argentina (MERV) 31,476.3 +7.8 +86.1 +60.0 Hedge funds (HFRX) 1,275.6§ nil +6.0 +6.0 Euro index Brazil (BVSP) 77,995.1 +2.5 +29.5 +29.6 Volatility, US (VIX) 9.2 +10.5 +14.0 (levels) All items 153.2 154.8 155.8 +1.6 -8.3 Chile (IGPA) 28,227.9 +2.0 +36.1 +50.2 CDSs, Eur (iTRAXX)† 44.3 -2.4 -38.6 -30.0 Gold Colombia (IGBC) 11,560.9 +1.7 +14.4 +18.1 CDSs, N Am (CDX)† 46.8 -5.0 -30.9 -30.9 $ per oz 1,254.7 1,282.5 1,313.1 +3.9 +13.6 Mexico (IPC) 49,782.2 +2.3 +9.1 +15.6 Carbon trading (EU ETS) € 7.8 -4.6 +18.3 +34.8 West Texas Intermediate Venezuela (IBC) 1,261.9 -0.1 -96.0 na Sources: IHS Markit; Thomson Reuters. *Total return index. $ per barrel 57.3 60.0 60.4 +4.8 +15.4 Egypt (EGX 30) 14,833.7 -0.5 +20.2 +23.0 †Credit-default-swap spreads, basis points. §Dec 29th. Israel (TA-125) 1,382.6 +1.6 +8.3 +20.7 Sources: Bloomberg; CME Group; Cotlook; Darmenn & Curl; FT; ICCO; Indicators for more countries and additional ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Saudi Arabia (Tadawul) 7,224.3 +0.3 -0.2 -0.1 Ewart; Thomson Reuters; Urner Barry; WSJ. *Provisional South Africa (JSE AS) 59,629.6 +1.3 +17.7 +30.1 series, go to: Economist.com/indicators †Non-food agriculturals. 66 Obituary Simonetta Puccini The Economist January 6th 2018

merelya monthlystipend, butat17 and ille- gitimate she had no power to object. She struggled while others revelled. When Rita died in 1979 the estate went to her bachelor brother, Count Livio dell’Anna, who blew much ofitin Monte Carlo before hisbutler- lover began to fritter away the rest. But since 1974, when she was 45, Simonetta had been on the case. For in 1973 a new family law in Italy had done away with the concept of illegitimacy, and in 1980 Italy’s highest civil court agreed that she could take the name Puccini. She did so at once; it turned herinto a force to be reckoned with.

Madame Gadfly Graduallyshe acquired a share ofthe mon- ey and, more important, control of the houses at Torre del Lago and Lucca. They were falling apart, so she raised money to repair them. As chatelaine of Torre del Lago the first thing she did was to fire Gia- como, the caretaker, who shambled round the villa drunk, prattling of the Maestro’s donne. The caretaker’s father, Claudio, claimed to be one of the by-blows, even born in the house. Now that illegitimacy no longer mattered, he demanded a DNA O mio nonno caro testto prove he wasthe rightful heir. She re- fused, of course. Such a test would mean opening Puccini’s green marble tomb in the chapel there, disturbing his sacred re- mains. The challenge withered, as did an- other DNA request in 2008 from the grand- Simonetta Puccini, the last direct heirofthe Maestro and keeperofhis flame, died daughter ofone Giulia Manfredi, said to be on December16th, aged 89 Puccini’s lover. Simonetta’s furious posters HEN visitors came to Torre del Lago, ferred to dwell on his creative, spiritual went up all round Lucca, appealing to peo- WGiacomo Puccini’s villa on the side. Time and again, however, she had to ple to protect Puccini’s memory against shores of a lake overlooking the Apuan face the fact that her nonno had left not “inventions” and “local gossip”. Alps, Simonetta Puccini would sometimes only a fortune, still estimated in 1975 at Some people never believed her own meet them at the gates. All smiles, she 24bn lire ($36m), but also illegitimate chil- claim, calling her a fortune-hunter, and would lead them through gardens thickly dren whose heirswere demandinga share. cruelly pointing out how much the Man- planted with palms, shrubs and roses, into Her own lineage was not straightfor- fredi menfolk looked like the Maestro. It the hall. There hung the Maestro’s oilskin ward. Her father was Puccini’s only legiti- was extremely annoying, too, that Rita had coat, the one he wore to go out snipe-hunt- mate child, Antonio, but her mother (an set up a Puccini Foundation to sponsor re- ing on the lake, beside his shotguns and amour before Antonio’s marriage to Rita) search and protect the sites. That was her boots. In the living room stood the black was a village girl, Giuseppina Giurumello. job, as the bearer of the Name, and in 1979 Forsteruprighton which he had composed Giuseppina bravely brought her up alone, she started the Institute of Puccini Studies “La Bohème”, “Tosca” and “Madame But- despite the shame of it. Her father did not (from 2005, the Simonetta Puccini Founda- terfly”, while ash from his continuous ciga- recognise her officially, since Rita could not tion) to do the same thing in a completely rettes fell upon the keys. His pencils and bear the very thought of her; but he paid separate way. She edited two volumes of spectacles lay on the desk; his operas for her education as faras university, came his letters and, in “The Puccini Compan- played in the background. She had ar- to see her, and wrote letters ending il tuo ion”, co-written with William Weaver, laid ranged all this, with the greatest care, as if caro babbo. He also talked to her of the out the true family history for all to see. he was still there, and would greet her Maestro: hislove ofcars, the telephone, the Sadly the operas were no longer in copy- round the corner with a grandfatherly kiss. phonograph, speedboats, and how he had right, but she kept close watch, objecting She had done it, too, to make the point worked atnight, with damperson the keys, loudly when the 1904 version of“Madame that she was his heir and no one else. It so the family could sleep. Simonetta never Butterfly”, disowned by the Maestro, was took decades, battling one counter-claim knew him, forhe died five years before she staged in 2016 at La Scala. Her beloved after another through the Italian courts. was born. But these images, and the pas- nonno would never have wanted that. She gained a reputation for being tosta, a sionate sweep ofhis music, brought her se- Several times a yearshe held masses for real piece of work. So she was, despite the curely under his spell. She grew up feeling, the dead at Torre del Lago, and kept the smiles and the pearls, and so she had to be. knowing, she was a Puccini—even though chapel full offresh flowers. Herown funer- The fundamental problem was her the name she grew up with, and later al requests were simple, but emphatic. A grandfather’s wild love-life, especially taught literature and history under, was string quartet would play “Crisantemi”, with girls from below stairs. She was an- Giurumello. her favourite Puccini piece. Then her ashes noyed when guides and books romped When her father died the Puccini estate would join him, protectively, definitively, around in this: religious herself, she pre- went to the scornful Rita. Simonetta got behind the green marble wall. 7

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