Can Afghanistan be saved? Time to lift travel restrictions The IPCC’s methane fix Our German election model

AUGUST 14TH–20TH 2021

China’s attack on tech

012 012 Contents The Economist August 14th 2021 3

The world this week Asia 5 A summary of political 17 Afghanistan’s anxious and business news neighbours 18 The mood in Kabul Leaders 19 Badminton in Indonesia 7 Industrial policy China’s attack on tech 19 South Korean justice Banyan Democratic decay 8 The war in Afghanistan 20 Last chance China 8 Covid-19 and borders Open up 21 Factory-workers’ inner lives 9 Climate change It is not all about the co2 10 Germany On the cover After Merkel, muddle Xi Jinping’s assault on his country’s tech titans is likely to Letters prove self-defeating: leader, 13 On risk and vaccines, United States page 7, and analysis, page 47. science fiction, climate 23 Function in Washington Can the government boost change, lending, beer, 24 Oye, Cuomo va productivity? Briefing, page 14. rainfall How the delisting of Chinese 25 Tech and crimefighting companies on American Briefing 25 Back to school in Texas exchanges might play out: 14 Growth in China 26 Vaccine mandates spread Buttonwood, page 56 Pinning hope on 27 Lexington The armed productivity forces and race Can Afghanistan be saved? Yes, if America tries: leader, page 8. Regional powers are The Americas preparing for an Afghanistan run 29 Police violence in Brazil by jihadists, page 17. Big­city 31 Cuba liberalises a little Afghans are defiant, page 18

Time to lift travel restrictions They are illiberal and often ineffective: leader, page 8. The disruptive effects of covid­19 on travel will long outlast this Middle East & Africa chaotic summer, page 45 32 Mozambique’s war 33 Ghana’s oil buy-back The ipcc’s methane fix Carbon 33 Niger’s cry for help dioxide is by far the most important driver of climate 34 Nigeria’s supercop change. But methane matters, 35 Tunisian jabfest too: leader, page 9. The ipcc’s latest report is starker and more certain, page 61 Europe 37 Germany’s big election Our German election 38 Why the French panic model The race to replace Lexington America’s Poland’s tv takeover Angela Merkel is wide open, armed forces face their 39 page 37. Voters deserve a more biggest racial reckoning 39 The shy rich of Sardinia serious election campaign: since the 1940s, page 27 40 Covid-19 in Bulgaria leader, page 10 40 Balkan eu hopefuls 41 Charlemagne A tale of two flights → Activating the digital element of your subscription means that you can search our archive, read all of our daily journalism and listen to audio versions of our stories. Just visit economist.com/activate Contents continues overleaf

012 4 Contents The Economist August 14th 2021

Britain Biology brief 43 The crumbling courts 59 Organisms’ organisation 44 Park wars

International Science & technology 45 Travel during covid-19 61 The ipcc's sobering climate report 62 Solar geoengineering

Business Books & arts 47 The tech China wants 64 Fifty years of “Fear and 49 America’s biotech boom Loathing” 50 Bartleby Flexibility is key 65 Art, mental illness and the Nazis 51 tv’s Olympic enigma 66 Billie Jean King 51 French bankruptcies 66 Tricksy fiction 52 Schumpeter The grocer wars Economic & financial indicators Finance & economics 68 Statistics on 42 economies 53 The rich world’s jobs gap Graphic detail 54 Inflation in America 69 Lionel Messi, Europe's greatest-ever footballer 55 India’s retroactive tax spac 55 s and the City Obituary 56 Buttonwood Delisting 70 Graham Vick, bringer of opera to the people Chinese stocks 57 Japan’s clout 58 Free exchange Explaining asset prices

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012 The world this week Politics The Economist August 14th 2021 5

The Taliban continued their At least 65 people were killed onslaught, capturing ten of in wildfires that swept through Coronavirus briefs Afghanistan’s 34 provincial forests and villages near To 6am GMT Aug 12th 221 capitals in less than a week. Algiers, the capital of Algeria. They have murdered civil The dead included 25 soldiers Weekly confirmed cases by area, m 3 servants and ordered single who were evacuating resi­ India women to “marry” their dents. More than a dozen Other 2 troops. America, Britain and countries sent firefighters and Western Europe India have asked their citizens equipment to help contain 1 to leave immediately. The fires that have ravaged Greece. US Afghan army chief has been 0 sacked. Joe Biden, whose Brazil’s populist president, 2020 2021 The Intergovernmental Panel abrupt withdrawal of Amer­ Jair Bolsonaro, ordered the Vaccination doses on Climate Change released ican forces has emboldened military to parade tanks % of over-11s with the first part of its latest the jihadists, said Afghans through the streets of Brasília, Total ’000 1st dose nd assessment report. The Earth must “fight for themselves”. the capital, where congress Malta 779 >99 >99 is warming. Even with a drastic was voting on a proposal to Iceland 477 95 88 reduction in greenhouse­gas Protesters and police clashed add paper receipts to the elec­ UAE 17,197 92 82 emissions temperatures will in Bangkok, as anger mounted tronic voting system. Mr Seychelles 141 92 86 probably be 1.5oC above their over the Thaigovernment’s Bolsonaro claims, without Mongolia 4,211 91 83 Uruguay 4,934 89 80 late­19th century levels by mishandling of a worsening proof, that electronic voting is Israel 11,880 87 81 2050. Climate change is under covid­19 outbreak. rife with fraud and has threat­ Chile 26,285 87 79 way, the report laments, with ened to suspend the presi­ Bhutan 1,010 86 77 all the environmental conse­ Indonesia’s army said it would dential election in 2022 should Denmark 7,790 85 70 quences that brings. The no longer force female recruits paper receipts be rejected by Sources: Johns Hopkins University CSSE; extent of the damage depends to undergo “virginity tests”. congress, which they were. Our World in Data; United Nations on the cumulative build­up of The tests had been intended to emissions and can be limited ensure that women in uniform Poland agreed to alter a body Vaccine mandates spread if the world strives for net­zero were “moral”. Critics pointed that disciplines judges after rapidly across America. The carbon emissions. out that they were invasive, the eu’s highest court said it Pentagon laid out plans to humiliating and deterred clashed with the bloc’s prohi­ make vaccination mandatory Andrew Cuomo said he would women from serving. They bition on political control of for all American troops by resign as governor of New also conveyed no information the judiciary. Separately, the mid­September. California York, after his Democratic about a question the army ruling Law and Justice party said all teachers and schools’ colleagues in the state assem­ should not have been asking in moved ahead with a bill to bar staff would have to be either bly prepared to impeach him the first place. foreign ownership of broad­ jabbed or tested regularly. over allegations from 11 women cast media. The European of sexual harassment. Mr Zambians voted in a presi­ Commission called it a threat Despite having one of the Cuomo insists his actions did dential election on August to media freedom. highest vaccination rates in not amount to misconduct and 12th. Polls suggest that the the world, infections in Israel said he was forced out by a incumbent, Edgar Lungu, A British security guard at the surged to their highest levels political system “driven by the would lose in a fair contest. British embassy in Berlin was since February. extremes”. But he has abused state arrested for passing docu­ resources to tilt the balance. ments to Russia in exchange More than 75% of adults in Republicans in the state legis­ for cash. Relations between Britain have now received lature in Texasissued arrest Ethiopia’s government called the United Kingdom and Rus­ both doses of a vaccine. warrants for Democratic law­ on all capable citizens to join sia were already dire. makers who have left the state the war against rebel troops A ban was lifted on foreign so that a quorum can’t be from Tigray after they forced A court in Chinasentenced pilgrims in Saudi Arabia. reached to pass a bill on elec­ the Ethiopian army to retreat Michael Spavor, a Canadian Vaccinated travellers will be toral procedures (the Demo­ from the northern state. Mean­ businessman, to 11 years’ allowed to visit the holy sites crats say the bill is racist). This while the Tigrayan rebels imprisonment for supposed in Mecca, which attract mil­ came after the state Supreme announced an alliance with espionage. His supporters say lions of the faithful each year. Court lifted a stay on the legis­ the Oromo Liberation Army, he is, in effect, a hostage. lature from making the arrests. which the Ethiopian govern­ China’s ruling party would like Support for the government ment has also branded as a Canada to release Meng led by Suga Yoshihide in The Senate passed a $1trn terrorist group. Wanzhou, a well­connected Japan has dropped to a new infrastructure bill. The legis­ Chinese businesswoman, who low after new infections lation was supported by 19 Guinea confirmed west Afri­ faces extradition to America surged during the Tokyo Republicans. It now goes to the ca’s first case of Marburg virus, on charges of fraud. Olympics. House, where there is little which kills between a quarter sign of a similar blossoming of and nine­tenths of those it China announced new rules bipartisanship, especially over infects. The case was detected for karaoke parlours, to come →For our latest coverage of the a budget plan that increases near the borders of Liberia and into effect on October 1st. virus please visit economist.com/ spending on programmes for Sierra Leone, roughly where an Songs that applaud violence, coronavirus or download the the poor and raises taxes on outbreak of Ebola in 2014 killed obscenity or crime, or threaten Economist app. the rich. almost 12,000 people. national unity, will be banned.

012 6 The world this week Business The Economist August 14th 2021

Son Masayoshi, the boss of American employers created called on opec to boost output home has now become routine SoftBank, said he was curbing 943,000 jobs in July, the most in order to curb oil prices. for customers who acquired his conglomerate’s enthusi­ since last August. Employment the taste during the pandemic. asm to invest in Chinese start­ is yet to reach its pre­pandem­ The bidding war intensified for ups until the extent of the ic level, however, and is not Kansas City Southern, a rail­ Chinese government’s crack­ expected to do so for at least way company that transports Jab or job? down on the tech industry another six months. America’s freight in America and Mexico. The chief executives of Amer­ becomes clearer in the coming annual rate of inflation, Canadian Pacific raised its ican Airlines and Delta Air years. The Japanese company meanwhile, remained at 5.4% offer to $31bn in an attempt to Lines said they would not is a big investor in Alibaba and in July. derail a proposal from Canadi­ impose a requirement on Didi Global, two targets of the an National that the board at existing staff to have the ire of regulators in Beijing. Britain’s gdp expanded by kcs has accepted. covid­19 vaccine, but they will 4.8% in the second quarter encourage them to do so. This Uncertainty about the future of over the previous three came after United Airlines internet firms in China was months, boosted by the end of Deliveroo’s share price instructed all its workers based Pence, 2021 one factor behind the poorly pandemic restrictions on in America to get vaccinated by received ipo of Krafton, a restaurants and pubs (just in 400 October 25th at the latest. South Korean video­games time for the Euros football 350 developer that produces the tournament). The economy is 300 Virgin Atlantic is reportedly “PlayerUnknown’s Battle­ now 4.4% smaller than it was 250 planning to list shares on the grounds” series. Krafton is at the end of 2019, before London stockmarket for the 200 backed by Tencent, which covid­19 struck; it is on course first time since its founding in distributes its games in China. to return to its pre­pandemic 1984. The airline is owned by Mar Apr May JulJun Aug However, Krafton also had to level by the end of this year. Virgin Group and Delta. During Source: Refinitiv Datastream reduce the listing price for its the pandemic it has cut costs shares when the Korean Deliveroo reported earnings by slashing jobs. It is expecting regulator questioned how it All that carbon for the first half. The food­ a surge in transatlantic travel was calculated. Saudi Aramco reported a net delivery company, which as restrictions ease. profit of $25.5bn for the second floated on the London stock­ The American government’s quarter. That was an increase market in March in a dismal A least $611m­worth of crypto- ban on Chinese tech firms with of almost 300% on the same ipo, took almost 149m orders currencies vanished from Poly suspected military ties three months last year and in the January­to­June period, Network, a decentralised obtaining American tech­ more than the combined quar­ twice as many as during the finance platform, in one of the nology hit Huawei hard in the terly profits of bp, Chevron, same six months last year. It largest cyber­heists targeting first half of the year. Revenue ExxonMobil, Shell and Total. has expanded even more into the digital­asset industry. fell by almost 30% compared Like its rivals, the Saudi com­ grocery deliveries and restau­ Within hours, however, crypto with the first six months of pany has gained from a rant fare. The lifting of lock­ sleuths tracked down the 2020, and by almost 50% in its buoyant oil market as econo­ down measures in Britain, its unnamed hacker, who started consumer­electronics busi­ mies reopen. Troubled by the prime market, has not had a returning the funds after ness, which relies on Amer­ hot topic of high petrol prices, material impact on its busi­ declaring “he was not so ican chips for smartphones. the White House has publicly ness; ordering meals from interested in money.”

Bukalapak raised $1.5bn when it listed its shares on the Jakarta stockmarket, making it Indonesia’s biggest­ever ipo. The e­commerce group has the backing of big foreign investors, including Microsoft and Jack Ma’s Ant Group, and is the first unicorn startup to go public in the country.

America’s Securities and Ex­ change Commission approved a controversial requirement by the Nasdaq for companies that list on its markets to disclose statistics on the diversityof their boards and to have at least two “diverse directors”, or explain why they do not. One director must be a woman and the other from a racial or sexu­ al minority; all must “identify” with their diverse group. Firms have a few years to comply.

012 eaders 7L

China’s attack on tech

Xi Jinping’s assault on his country’s tech titans is likely to prove self-defeating f all china’s achievements in the past two decades, one of such misconduct. It is an ambition that many investors support. Othe most impressive is the rise of its technology industry. The question is how? China is about to become a policy lab­ Alibaba hosts twice as much e­commerce activity as Amazon oratory in which an unaccountable state wrestles with the does. Tencent runs the world’s most popular super­app, with world’s biggest firms for control of the 21st century’s essential 1.2bn users. China’s tech revolution has also helped transform infrastructure. Some data, which the government says is a “fac­ its long­run economic prospects at home, by allowing it to leap tor of production”, like land or labour, may pass into public ow­ beyond manufacturing into new fields such as digital health nership. The state may enforce interoperability between plat­ care and artificial intelligence (ai). As well as propelling China’s forms (so that, say, WeChat cannot continue to block rivals). Ad­ prosperity, a dazzling tech industry could also be the foundation dictive algorithms may be more rigorously policed. All this for a challenge to American supremacy. would hurt profits, but might make markets work better. That is why President Xi Jinping’s assault on his country’s But make no mistake, the crackdown on China’s unruly tech $4trn tech industry is so startling. There have been over 50 reg­ is also a demonstration of the party’s untrammelled power. In ulatory actions against scores of firms for a dizzying array of al­ the past its priorities often fell victim to vested interests, includ­ leged offences, from antitrust abuses to data violations. The ing corrupt insiders, and it was constrained by its need to court threat of government bans and fines has weighed on share pric­ foreign capital and create employment. Now the party feels em­ es, costing investors around $1trn. boldened, issuing new rules at a furious pace and enforcing Mr Xi’s immediate goal may be to humble tycoons and give them with fresh zeal. China’s regulatory immaturity is on full regulators more sway over unruly digital markets. But as we ex­ display. Just 50 or so people staff its main anti­monopoly agency plain (see Business section), the Communist Party’s deeper am­ but they can destroy business models at the stroke of a pen. De­ bition is to redesign the industry according to its blueprint. Chi­ nied due process, companies must grin and bear it. na’s autocrats hope this will sharpen their country’s technologi­ China’s leaders have spent decades successfully defying cal edge while boosting competition and benefiting consumers. Western lectures on liberal economics. They may see their Geopolitics may be spurring them on, too. Restrictions on ac­ clampdown on the technology industry as a refinement of their cess to components made with American tech­ policy of state capitalism—a blueprint for com­ nology have persuaded China that it needs to be bining prosperity and control in order to keep more self­reliant in critical areas like semicon­ China stable and the party in power. Indeed, as ductors. Such “hard tech” may benefit if the China’s population starts to decline, the party crackdown on social media, gaming firms and wants to raise productivity through state direc­ the like steers talented engineers and program­ tion, including by automating factories and mers its way. However the assault is also a giant forming urban mega­clusters (see Briefing). gamble that may end up doing long­term dam­ Yet the attempt to reshape Chinese tech age to enterprise and economic growth. could easily go wrong. It is likely to raise suspi­ Twenty years ago China hardly seemed on the threshold of a cion abroad, hampering the country’s ambitions to sell services technological miracle. Silicon Valley dismissed pioneers such as and set global tech standards worldwide in the 21st century, as Alibaba as copycats, until they leapt ahead of it in e­commerce America did in the 20th. Any drag on growth would be felt far be­ and digital payments. Today 73 Chinese digital firms are worth yond China’s borders. over $10bn. Most have Western investors and foreign­educated A bigger risk is that the crackdown will dull the entrepreneur­ executives. A dynamic venture­capital ecosystem keeps churn­ ial spirit within China. As the economy shifts from making ing out new stars. Of China’s 160 “unicorns” (startups worth over things towards services, spontaneous risk­taking, backed by so­ $1bn), half are in fields such as ai, big data and robotics. phisticated capital markets, will become more important. Sever­ In contrast to Vladimir Putin’s war on Russia’s oligarchs in al of China’s leading tech tycoons have pulled back from their the 2000s, China’s crackdown is not about insiders fighting over companies and public life. Wannabes will think twice before try­ the spoils. Indeed, it echoes concerns that motivate regulators ing to emulate them, not least because the crackdown has jacked and politicians in the West: that digital markets tend towards up the cost of capital. monopolies and that tech firms hoard data, abuse suppliers, ex­ ploit workers and undermine public morality. Startup slowdown Stronger policing was overdue. When China opened up, the China’s biggest tech firms now trade at an average discount of party kept a stifling grip on finance, telecoms and energy but al­ 26% per dollar of sales relative to American firms. Startups, such lowed tech to let rip. Its digital pioneers used this near absence as the minnows taking ride­hailing business from Didi with of regulation to grow astonishingly fast. Didi, which provides mapping apps, have been nibbling at the government’s main tar­ transport, has more users than America has people. gets. Far from being emboldened by the crackdown, they are However, the big digital platforms also exploited their free­ likely to feel exposed. Economic development is largely about dom to trample smaller firms. They stop merchants from selling creative destruction. China’s autocratic leaders have shown that on more than one platform. They deny food­delivery drivers and they can manage the destruction. Whether this tech tumult will other gig workers basic benefits. The party wants to put an end to also foster creativity remains much in doubt. n

012 8 Leaders The Economist August 14th 2021

The war in Afghanistan Last chance

America might still be able to save the Afghan government if it tried negative outcome, a Taliban automatic military take­ That has led to a rout which, if it continues, will be a disaster. “Aover, is not a foregone conclusion,” Mark Milley, America’s When the Taliban last ran the country, in the 1990s, they kept most senior soldier, intoned last month while reiterating Amer­ girls out of school, confined women to their homes and beat ica’s support for the embattled Afghan government. General Mil­ anyone who listened to music or wore the wrong clothes. They ley is right: such a takeover is not quite inevitable, despite the have not changed much since then. In areas they now control, departure of American troops. But it is growing more likely by they are murdering civil servants and ngo workers, and order­ the day—in large part because America, whatever its generals ing families to hand over single women to “marry” their troops. say, is doing too little to help. A revived Taliban emirate will not just abuse Afghans; it will Ideally, America would not be withdrawing its forces at all. spread misery around the region. Afghanistan is already the For several years, with only a few thousand troops who sus­ world’s biggest producer of heroin, a business the Taliban happi­ tained few casualties, it had managed to maintain a stalemate ly tax. It also exports millions of refugees, especially to neigh­ between the Afghan government and the Taliban, thanks largely bouring Pakistan and Iran. Extremist violence is another export. to air power. Yet last year, when Donald Trump was president, An offshoot of the Taliban killed tens of thousands of Pakistanis America struck a deal with the Taliban. In ex­ during a bloody terrorist campaign that took change for a promise from the militants not to years to quell. America’s humiliation may be harbour international terrorists, it undertook pleasing to some in the region, but the pleasure to withdraw from Afghanistan completely. Nev­ will be short­lived. er mind that the insurgents refused any kind of Yet instead of joining forces to curb the Tali­ ceasefire; never mind that they offered nothing ban, regional powers are bickering and jostling more than indirect negotiations with the Amer­ for advantage. And instead of finding ways to ican­backed government in Kabul; Mr Trump help the Afghan government, America is back­ wanted a quick end to the 20­year deployment, ing away fast. On August 10th Mr Biden declared and President Joe Biden has stuck by that callous decision. that, in effect, it was up to the Afghan army to fight for itself. America’s rush for the exit has allowed the Taliban to drop the If it is really left to cope on its own, the government will in­ pretence of negotiations and redouble their campaign to remove deed collapse. But America might yet be able to stave that off the government by force (see Asia section). The insurgents did without reinstating a permanent garrison. It could deploy spe­ not control any of the 34 provincial capitals last week. They have cial forces on brief sorties to bolster the Afghan army, for in­ since seized ten. Three of the country’s biggest cities, Herat, stance. It could expand the use of carriers to provide air support, Kandahar and Mazar­i­Sharif, are under attack. America no lon­ or lean on neighbouring countries to allow at least temporary ac­ ger has any military aircraft based in Afghanistan able to repel cess to American aircraft. Above all, Mr Biden could signal that such assaults. Instead, it is dispatching them from distant bases he does not intend to abandon Afghanistan to its fate—an im­ in the Gulf and carriers in the Arabian Sea—a much less effective pression that is doing more than anything else to hasten the Ta­ arrangement. And many of the mechanics who were helping liban’s advance. Over the past 20 years America has not managed maintain the Afghan air force’s planes have left with the Ameri­ to turn Afghanistan into a flourishing democracy, but it can still cans, further reducing the government’s firepower. stop it from reverting to a violent theocracy. n

Covid-19 and borders Open up

International travel restrictions are illiberal and often ineffective or a lucky few, the mid­20th century was a golden age of air Before the pandemic, travel accounted for 4.4% of gdp and Ftravel: there was plenty of room and the cabin crew were at­ nearly 7% of employment in rich countries. In tourist hotspots tentive. Back then foreign trips were glamorous and mass tou­ such as Thailand and the Caribbean the share was much higher. rism was unknown. Sound familiar? Business travellers helped their employers conquer new mar­ Because of covid­19, foreign travel is once again the preserve kets, while simultaneously creating jobs for concierges and cab­ of a happy few. International tourist arrivals are down by 85% bies. Foreign students subsidised their native­born classmates, from pre­pandemic days (see International section). Nearly a brought a different perspective to campus and took new ideas third of the world’s borders remain closed. Many of the remain­ back to their homelands. Last year some 280m people lived out­ der are open only to those who have been vaccinated or can af­ side the country of their birth. Border closures often made it im­ ford tests. For those who dream of a return to the old days, this possible for them to visit their loved ones. Some bade farewell to might sound appealing. For the rest of humanity, it is a scourge. dying parents over WhatsApp.

012 The Economist August 14th 2021 Leaders 9

Today’s travel restrictions are supposed to protect natives It has donated doses to other countries but will not exempt peo­ from imported covid. Yet they do a poor job of it. A few countries, ple jabbed with them. For a while, China allowed entry only to mostly islands and dictatorships, have managed to keep out the those dosed with Chinese­made shots. virus through truly draconian restrictions. Even this has come at There is a better way of regulating global travel. The first prin­ a cost in terms of reducing pressure to be vaccinated quickly. ciple is to default to open borders. This does not mean a free­for­ Only 21% of New Zealanders over 12 are fully vaccinated, for ex­ all, but any restrictions should be limited, temporary and aimed ample, compared with 68% of Britons. Countries that put their at slowing the import of new variants—rather than the impossi­ faith in isolation are thus finding it hard to reopen. ble mission of stopping it altogether. Once such variants are es­ Most countries have land borders and voters. For them isola­ tablished in the destination country, as Delta is pretty much tion was never feasible. Instead, they have adopted a confusing, everywhere, restrictions are redundant and should be scrapped. illogical mess of rules. America bars travellers from Britain and The second is for all countries to accept vaccines approved by the European Union, its closest allies and trade partners, and al­ the World Health Organisation. Few people have a choice about so two of the most vaccinated big places in the world, while ad­ which vaccine they receive; banning only those Filipinos who mitting those from South­East Asia, where the Delta variant is received the Russian Sputnik V jab while accepting those with rampant. Thailand bans entry from some countries and requires Pfizer in their arms turns travel into a lottery. Discriminating all other travellers to submit to a two­week quarantine. Yet of against people on the basis of something over which they have 21,038 cases identified on August 10th, only 19 were imported. no choice is unfair. It also undermines the global vaccination ef­ Once a variant of the virus has started to spread in the local pop­ fort by making some vaccines seem second­class. ulation, infections double every couple of weeks. Entry bans The third is to ensure that rules are transparent and univer­ make very little difference to the total caseload. sal. Too often, political expediency trumps science. If Western Many countries are starting to ease entry for vaccinated trav­ countries are seen to favour each other while keeping out the ellers. This is a good idea, but it has been incompetently execut­ rest of the world, the rest of the world will notice and remember. ed. Some countries are needlessly fussy about the jabs they re­ The right to move around is one of the most precious of all cognise. Britain, which has injected its citizens with some 5m freedoms. It should be curtailed only when limits will clearly doses of the AstraZeneca vaccine made in India, refuses to ex­ save lives. It should be restored as soon as it is safe. In most cases empt from quarantine Indians inoculated with the same potion. that means now. n

Climate change It is not all about the CO2

Carbon dioxide is by far the most important driver of climate change. But methane matters, too he headline of the latest pronouncement from the Inter­ prove air quality, and thereby save lives, sulphur is now removed Tgovernmental Panel on Climate Change (ipcc) on the physi­ from almost all liquid fuels at the refining stage and increasingly cal science of climate change is the finding that, even if the scrubbed from the flues of coal­fired power stations, evenin world cuts emissions by more than governments are promising, China. This clearing of the air is stripping away some of the nox­ it is still “more likely than not” that Earth will be 1.5°C warmer by ious cooling. Speedy reduction in fossil­fuel use will remove the around 2050 than it was in the late 19th century. rest of it—thus, ironically, allowing the effects of the carbon di­ That is important, and frightening, but hardly shocking. The oxide already in the atmosphere to be felt all the more keenly. aim of letting the world warm no more than 1.5°C, agreed on in In 2006 Paul Crutzen, a pre­eminent atmospheric chemist, Paris six years ago, is one to which many countries, notably the suggested that there might be a way to save people’s lungs while small­island states for which sea­level rise is an still keeping them cool. In the lower atmo­ existential threat, are deeply committed. But Contribution to warming, °C sphere, where industry dumps them, sulphate many observers believe it stringent almost to 2010-19, relative to contribution particles are short­lived. In the stratosphere in 1850-1900 the point of impossibility. 0-0.5-1.0 1.51.00.5 they last much longer. Putting a relatively Another conclusion in the ipcc report, Carbon dioxide sparse layer of sulphates into the stratosphere though, may come as news to many. If carbon­ could thus provide the same amount of cooling Sulphur dioxide dioxide emissions were the only means by Uncertainty as today’s lower­atmosphere smogs while do­ which humans were changing the climate, 1.5°C Methane ing almost no direct harm. of warming would have already come about. As Crutzen’s intervention spurred renewed in­ it is, other human emissions matter, too. Among the most im­ terest in the idea of intentionally interfering with incoming portant are sulphate aerosols: tiny particles produced by the sunlight, a possibility known as “solar geoengineering”. It is an combustion of coal and some sorts of oil that float in the air, sul­ interest of which the ipcc is wary. Solar geoengineering has no ly the lungs, kill millions—and also, by reflecting away incom­ role in the scenarios the panel uses to talk about future climates. ing sunlight, cool Earth. As a result its new report, like its predecessors, discusses the The ipcc reckons that sulphates have provided a net cooling idea only in broad terms. In doing so it notes, correctly, that the of 0.4­0.5°C since the late 19th century, and that this is a large idea has significant drawbacks. But it also allows that solar part of the reason why that period has seen only 1.1°C of warm­ geoengineering might, in principle, be used to create significant ing. But the sulphates’ influence is on the wane. In order to im­ global cooling much more promptly than reducing carbon­diox­

012 10 Leaders The Economist August 14th 2021

ide emissions ever could (see Science & technology section). methane levels and you reduce global warming. Both the drawbacks and the potential provide good reason for Its rising atmospheric concentration shows that today’s ef­ researching geoengineering more thoroughly and systematical­ forts to abate methane emissions are not up to the job. Happily, ly. But it would be wrong to think it a quick, easy or necessarily there is much more that can be done. Emissions from the energy desirable response. Perhaps the biggest worry is that its seeming industry could be more tightly regulated almost everywhere. Be­ promise would be used as an excuse for inaction on carbon­di­ cause methane is valuable, some would pay for themselves. Re­ oxide emissions. A world where geoengineering was used sim­ ducing emissions from landfill sites is not terribly difficult ei­ ply to cover up, increasingly imperfectly, the effects of ever high­ ther. Livestock would burp less with the right feed supplements. er greenhouse­gas levels would be a fearsomely unstable one. Eliminating emissions would be hard; but quite steep reduc­ A more palatable approach to offsetting the diminishing ef­ tions are entirely possible. fects of sulphate pollution, enthusiastically endorsed by the Carbon dioxide remains the heart of the climate problem. Ex­ ipcc, is to redouble efforts to reduce emissions of another cli­ ploring the possibilities, practicalities and dangers of solar mate­changing by­product of human civilisation. Methane is a geoengineering remains a good idea. But it is on methane emis­ more powerful greenhouse gas than carbon dioxide, but one sions that progress can be made most quickly. And the world is which lasts in the atmosphere for only about a decade. Reduce getting ever hotter. Methane should be given priority on the methane emissions and you soon reduce methane levels; reduce agenda at the cop26climate summit this November. n

Germany After Merkel, muddle

Voters deserve a more serious election campaign ermany’s election on September 26th will herald a new tion in April, but handled a plagiarism scandal poorly and has Gera. Angela Merkel, chancellor for 16 years, is stepping down. since grown timid. The least unpopular, Olaf Scholz, the spd Who will succeed her is uncertain. Parliamentary elections em­ candidate and current finance minister, rates more highly ploy a mix of proportional representation (with a 5% threshold among voters than his party does. But that is largely because the for parties to make it in to the Bundestag) and single­district spd has fallen so far, after spending eight years as junior partner constituencies. The traditional big parties, Mrs Merkel’s centre­ in a grand coalition with Mrs Merkel. right Christian Democrats along with their Bavarian counter­ Yet on a host of issues, Germany’s parties should be making it parts (cdu/csu) and the centre­left Social Democrats (spd), are crystal clear where they stand. The floods in July drove home the winning fewer votes, and coalitions often bridge the right­left urgency of stronger policies to curb climate change, an area divide. That makes it hard to predict the next government even if where Germany—with its huge motor industry and humming polls are accurate, which often they are not. coal­fired power plants—faces big challenges. Germany will find The Economist has developed a model that aggregates polls it hard to sustain its chummy economic relationship with Chi­ and other predictive data, runs thousands of simulated elec­ na, which the rest of the West has come to see as a strategic com­ tions and assesses the most probable results and the chances of petitor. Relations with Russia vacillate between the firmness various coalitions to form a majority (see Eu­ Mrs Merkel displayed after the invasion of Cri­ rope section). Our model shows that three com­ mea and the conciliatory Ostpolitik she has binations, each with a popular nickname based pursued on the Nord Stream 2 gas pipeline. Ger­ on its party colours, have a plausible chance of many’s assent to the European Union’s covid­19 winning more than half the seats in the Bun­ recovery plan masks deep divisions over collec­ destag. These are a “Jamaica” coalition of the tive European spending and debt. cdu/csu, the Greens and the liberal Free Demo­ On all of these issues, the parties have real crats (fdp); a “traffic­light” combination of the differences. The Greens want a state­led transi­ Greens, the fdp and the spd; and, the least like­ tion to net­zero carbon emissions, a tougher ly, “black­green” coalition of the cdu/csuand the Greens. stance towards China and Russia and greater European unity. Our results demonstrate just how uncertain the election re­ The cdu/csu want to give business time to adjust to a low­car­ mains. Voters are not only unsure who will win; many are also bon economy and balance foreign­policy independence from unsure what the parties really stand for. The campaign has been China with economic co­operation. The spdwant to redistribute dispiritingly superficial, avoiding serious policy debate and fo­ more income and avoid foreign spats. cusing instead on the peccadillos and gaffes of party leaders. At a Voters are hearing precious little about these differences. The critical moment in their history, German citizens are not being danger is that the coalition that emerges as Germany’s next gov­ given a clear choice of direction. The parties need to do better. ernment will have no mandate for the vital policy decisions it Strategically, their caution is understandable. None of the big needs to take. Keeping mum does not even seem to be popular: parties’ candidates is well­liked. The cdu/csu’s Armin Laschet two new polls that came out this week showed perfectly dismal secured his party's backing for the chancellery by positioning results for the diffident Mr Laschet and his cdu/csu. German himself as the blandest contender, and the campaign has con­ party leaders may think that, by not calling attention to their po­ firmed his reputation for dithering. Annalena Baerbock, the sitions on divisive issues, they are playing it safe. But that strat­ Green candidate, had a brief burst of approval after her nomina­ egy is not safe at all, today or in the long run.n

012 Executive focus 11

012 12 Executive focus

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012 Letters The Economist August 14th 2021 13

“The Moon is a Harsh scope and nature of adapta­ non­alcoholic beer grew. Adam Dealing with risk Mistress”.The novel describes tion, create opportunities for Firestone, Brooks’s son, and Your attempt to shed light on how a sentient computer international co­operation, David Walker used the Fire­ who refuses vaccines gave a develops the military tactics and pave the way towards stone equipment to produce dismissive conclusion that needed for a lunar colony to lasting global resilience. the first of their alcohol craft one way to increase take up of secure independence. richard klein brews under the Firestone­ the jab is to focus on “informa­ robert checchio Stockholm Environment Walker label, which is celebrat­ tion­dissemination for the Dunellen, New Jersey Institute ing 25 years of success. uneducated” (“Hesitancy in Bonn, Germany peter naylor numbers”,July 31st). Research Santa Barbara on the psychology of risk A global challenge perception by Paul Slovic and The erroneous assumption Giving credit What on earth is the point of others has revealed that how that adaptation to climate “The funding frenzy” (July an alcohol­free pub (“Filling in we perceive and respond to change is mostly a domestic 17th) touched on how fintech the craics”, July 31st)? Why potential danger is far more a affair serving domestic firms are “rebundling” by spend an evening drinking matter of how we feel about interests was repeated in your adding new products as a key there? If you are teetotal then the facts than the facts alone. recent leader (“No safe place”, feature of their investment. It sitting in a place that resem­ So the first step in dealing with July 24th). Just like a virus, is certainly clear that despite bles an establishment where vaccine refusal is not merely climate risk can easily cross amassing huge user bases, people drink alcohol seems to knowing who is refusing vacci­ borders through international many fintech startups have me to be nothing but unneces­ nation based on shallow trade and supply chains, cap­ found it a challenge to turn a sarily perverse. demographics, but why. ital flows, human mobility and profit and are turning to stefan badham Ever since the modern era natural resources shared be­ rebundling to solve this pro­ Portsmouth of vaccines there has always tween countries, both region­ blem. With these added servic­ been either vaccine hesitancy, ally and globally. Likewise, es come greater engagement a more mild form of concern actions to adapt to climate and stronger customer loyalty. How to count the rain about vaccines, or outright change can have effects far Lending is going to be A Belgian reader, commenting stubborn anti­vaccine refusal. beyond the jurisdiction of the important in this rebundling on the undoubted attractions Some refuse because humans country implementing them. activity, given its potential of his country, unfortunately are generally more wary about A recent study led by profit pool for fintechs as they perpetuated a long­standing risks when we don’t trust the infras, a Swiss consultancy mature. Despite the success but inaccurate myth about the source of the threat. Many firm, for the German Environ­ stories from Western markets, rainy climate in Ireland refuse because in the main we ment Agency valued the eco­ the true innovation here will (Letters, July 17th). He said that are more wary of anything nomic risk of climate­induced be in places like India and Ireland has 225 rain days a artificial than natural. And disruptions in German trade Latin America. Access to credit year, in contrast to 199 in Belgi­ germane to the political trends alone as greater than the com­ is often disparate, leaving um. However, the 225­day you identified, the most ada­ bined economic risk of all many consumers underserved figure only applies to the damp mant vaccine resistance has direct climate­change impacts and markets ripe for innova­ Atlantic­facing west coast of always come from those who, within Germany’s national tion and opportunity. Ireland. The overall figure for like most of us to some degree, borders. In Senegal in 2008, Investors would do well to the rest of the country is much are more wary of a risk when it the price of rice tripled follow­ remember this when consider­ lower and in Dublin it is only is imposed on us. ing a chain reaction that began ing where they place their next 155 days a year (in Berlin it is Wisely designed risk­com­ when India halted its exports big bet. 167). Rainfall in Ireland also munication campaigns crafted of the grain in response to poor fady abdel-nou tends to be what we call soft; it to build trust by demonstrat­ harvest forecasts during a Global head of m&a and might be wet all day but the ing an understanding of and drought. It led to rioting on the investments total rainfall amount is quite respect for people’s feelings streets of Dakar. PayU small. have been shown to moderate Cross­border connections Hong Kong Among some of the many vaccine hesitancy in many such as these show that adap­ Belgians who have been cases. But only social and legal tation is in fact a global chal­ attracted to the sometimes sanctions against the most lenge. Current approaches to Sober drinking chaotic but uniquely easy­ adamant vaccine refusers, adaptation planning, based on Regarding innovations in going, albeit drizzly, lifestyle invoked in the name of the local or national risk assess­ non­alcoholic beer (“Buzzkill”, in Ireland was a chef from common good, have had any ments, fall short of what is July 10th), in 1988 Brooks Ypres called Zenon Geldof. You real effect on that group. needed to effectively manage Firestone and Hale Fletcher might have heard of his grand­ david ropeik climate risk in our inter­ brought an alcohol­free beer to son, Bob, whose middle name Retired instructor in risk connected world. Worse, one market. It was brewed without is also Zenon. communication at Harvard country’s adaptation efforts alcohol, hence there was no denis murphy Concord, Massachusetts could all too easily redistribute need to remove it and with it Abergavenny, Monmouthshire climate risk to another coun­ the taste. It was a hit. Un­ try, rather than reduce the risk fortunately, the big brewers, The future of war outright. seeking a prhalo effect by Letters are welcome and should be For an interesting take on the Governments and compa­ encouraging responsible addressed to the Editor at The Economist, The Adelphi Building, ability of an artificial intelli­ nies should therefore adopt a drinking, used their dominant 1-11 John Adam Street, London wc2n 6ht gence to develop war strategy trans­boundary rather than a power to squeeze them out of Email: [email protected] (“Computer says go”, July 3rd), I domestic perspective on the market, but the cat was out More letters are available at: Economist.com/letters recommend Robert Heinlein’s climate risk to address the full of bag, and the market for tasty

012 14 Briefing China’s growth prospects The Economist August 14th 2021

tors coming together at full pelt. Automatic for the people The urban workforce soared from 100m in 1980 to about 500m today. The increase in the capital stock was even more dramat- ic. In 1980 China had fewer than 15,000 ki- lometres of modern road; today it has more than 700,000km, not to mention high- CHANGXING speed trains, too many airports to shake a China’s future economic potential hinges on its productivity. stick at, power grids and all the other ac- Can the government boost it? coutrements of industry. And at the same oblelift, based in Changxing, a town mation (see chart 1 on next page). Almost time China experienced a productivity Non the banks of Tai Lake, provides ro- overnight, Chinese industry has gone from boom thanks, in large part, to the steady botic tools for warehouse management: being labour-intensive to robot-intensive. dismantlement of central planning. Com- self-driving pallet jacks and sorting sys- Companies are always in pursuit of petition shook up the economy. Business- tems that make picking and fetching such ways to increase productivity. Coun- es became better run and workers went quicker and less dependent on humans. tries in search of economic growth like wherever wages were highest. The factories in which it builds its wares them, too. Xi Jinping, China’s president, From 1980 to 2010 China’s annual gdp are themselves a blur of robot arms. has made productivity a priority. growth averaged 10%. In the past decade, “There’s no comparison with the way In some respects, the ambitions of Mr though, things slowed down. The central things used to be,” says Ding Yi, Noblelift’s Yi and Mr Xi seem well aligned. But many bank now thinks potential growth is about founder. The company’s main factory has observers believe that Mr Xi is relying too 5.5% a year. The working-age population is only 350 workers. He says that in the old little on the market forces which have no longer expanding; the latest national days it would have needed nearly four shaped Mr Yi’s investments and too much census, published in May, revealed a total times as many. on state power. As a result he risks steering population on the brink of decline. The ap- In 2010 China was home to fewer than the country away from the high-productiv- petite for infrastructure is increasingly sat- 50,000 industrial robots. Today it has ity future he wants to bring about. The ed, if not glutted; spending on the built en- 800,000—nearly one in three of the robots shape of tomorrow’s global economy vironment has reached the per-person lev- in the world. This is in part because robots hangs on whether those critics are right or els of much wealthier countries. are cheaper than they used to be, and more whether, armed with numerous detailed That leaves productivity paramount. capable. But it is also because, as China has plans and burdened with glorious purpose, But the improvements which came from grown wealthier and older, wages have in- China’s leaders can achieve their goal. loosened state control have not been main- creased a lot. Economic growth depends on just three tained. The World Bank calculates that, Factory workers who earned about basic factors: how many people are work- since 2008, China’s total-factor productivi- 8,000 yuan a year in 2000 ($1,000, at the ing; how much capital they have at their ty (tfp)—the amount of gdp growth that time) may now make almost ten times disposal; and how productive they are. cannot be explained by capital or labour— that. For bosses like Mr Yi that has dramat- China’s turbocharged growth over the past has grown by just 1.1% per year, less than a ically tipped the balance in favour of auto- four decades was the result of all three fac- third the rate of the previous three de-

012 The Economist August 14th 2021 Briefing China’s growth prospects 15

cades. That is still double the level in Harbin push is better urbanisation: bigger ag­ America over the same decade. But the rel­ RUS. glomerations to which workers have better City cluster evant comparator for Mr Xi and his col­ MONGOLIA access. China has capped the size of its big­ leagues is China’s recent past. Changchun gest cities, fearful that they might become Some of this slowdown simply reflects unmanageable. At the same time, it knows Hohhot Beijing the move from catch­up to caught­up. De­ Baotou that bigger urban agglomerations, which Tianjin Xiong’an veloped countries have lower potential Ordos Jingjinji allow for specialised labour and interwo­ Baoding productivity growth. But many analysts al­ Xining Population, ven supply chains, tend to be more produc­ Lanzhou Zhengzhou 22: 11m so think that China’s economic model is Kaifeng tive. So it is developing giant city clusters particularly wasteful, a failing evidenced in which big hubs are linked to smaller sat­ Luoyang Nanjing by its surging debts. Nowadays it adds Baoji Xi’an Shanghai ellites. The idea is to generate the benefits Hefei Yangzi about four yuan of new debt for every addi­ Chengdu Wuhan of agglomeration without horrifically con­ Hangzhou River Delta tional yuan of gdp; a decade ago it needed 165m gested traffic, overburdened schools and just two yuan of debt to get the same result. Chongqing Nanchang other very­big­city blues. Changsha CHINA China has approved plans for 11 mega­ Speed it up a notch TAIWAN clusters in all (see map). The average popu­ Guangzhou It was in 2017 that Mr Xi, better known for Nanning Shenzhen lation of the five biggest is about 110m, quoting Mao and Marx, started to talk of Pearl River nearly three times bigger than the 40m in Delta 78m tfp and the need to increase it. In March VIETNAM Zhuhai Greater Tokyo, the world’s biggest existing Haikou last year, just as China emerged from its co­ 500 km cluster. Having discussed the idea for sev­ vid­19 lockdown, the central committee of Source: 2020 census eral years the government is beginning to the Communist Party and the State Council invest in making it real. Over the next three released a 32­point vision for boosting pro­ “Made in China 2025” policy, requires im­ years it has committed to double the ductivity. In the five­year plan for the econ­ proving its factories, raising its ambitions length of intercity commuter rail lines. omy which was finalised this March, the and conquering new industries. Even deep in China’s interior, city­ government specified that it wants labour The other goal reflects economic phi­ scapes are changing. In the west, Xi’an, the productivity to grow quicker than gdp. losophy. China believes that sustaining capital of Shaanxi province, has been fused If there is to be real progress, it will be high productivity depends on retaining a to Xianyang, a separate city 30km away, driven by companies and individuals, not large manufacturing base. Schooled in creating a metropolitan area with 15m resi­ top­down diktats. But the state’s moves are Marxist doctrine, China’s leaders have long dents. An hour’s drive north of the cities shaping the landscape in which those pro­ regarded industry as more economically fields of grain have been replaced by logis­ cesses will play out. With all due respect to valuable and more strategically useful tics zones and industrial parks. “This place the government’s 32 points, it is possible to than services. Whether the services in used to be far out of the way. No one would batch them into three broad categories: in­ question consist of waiting tables or creat­ come here,” says Ma Yu, a middle­aged mi­ dustrial modernisation; further urbanisa­ ing financial derivatives hardly matters. grant from the countryside. Now a bullet tion along new lines; and what might be That is a debatable proposition: service­ train carries her to Xi’an in 13 minutes. called catch­up reforms. sector work can be highly productive. Ne­ The first element, as Noblelift illus­ vertheless, the government has cemented The ladder starts to clatter trates, is the upgrading of industry. For it as policy. It will fight to prevent a decline As well as joining cities together, it is also companies the calculations are simple: in manufacturing’s share of gdp, which at blanketing them in 5g mobile networks, modernising their factories stops them about 25% is higher than that of Germany planting sensors galore in their highways from becoming uncompetitive. The gov­ or Japan, the industrial heavyweights of and sewers to monitor performance, and ernment, though, has two grander goals. the rich world. studding their lampposts with surveil­ The one which has received most atten­ Plans to achieve this go well beyond lance cameras. The party believes all this tion outside China is a perceived geopoliti­ automating assembly lines. The govern­ will allow the distributed mega­cities to be cal imperative. Faced with rising American ment is giving companies advice and sub­ managed with a precision and efficiency enmity, China wants to cultivate greater sidies to get information technology deep­ which makes them paragons of hyper­pro­ self­reliance in making essential products ly embedded into all their operations. Lo­ ductive modernity. This may betray a lack from semiconductors to agricultural ma­ cal developers are designing software tai­ of insight into what it is that really makes chinery. That goal, encapsulated in the lored to helping them manage their cities hives of innovative oomph. processes more efficiently. Making the most of what cities offer al­ Until a few years ago factory bosses reg­ so requires reform of the hukou, or residen­ Not one of Asimov’s laws  ularly kept track of inventories and orders cy permit, system which makes most mi­ China on paper, says Zhou Yuxiang, founder of grants second­class citizens in the cities Black Lake, one such developer. The desk­ where they work. Without a local hukou Annual robot Average manufacturing sap installations, ’ wages, yuan ’ top­based systems of and Oracle never they cannot collect unemployment insur­ 180 120 translated well to China. Now, manufac­ ance, and their children struggle to get into 150 100 turers are using applications on their mo­ local schools. bile phones, letting them collect, analyse Along with being profoundly unfair, 120 80 and act on data in real time. “They are be­ discriminating against some 200m citi­ 90 60 coming the most flexible companies in the zens this way is also costly. When workers 60 40 world,” he says. The country hopes that it hit their 40s and worry about access to 30 20 can enjoy a late­starter advantage in dig­ health care and pensions, they tend to go itising industry, in the same way that it back to their natal towns. In doing so they 0 0 leapfrogged from being a cash­dominated willingly opt for lower­paid, lower­pro­ 20181614122010 economy to being the world leader in mo­ ductivity jobs, says Cai Fang, an adviser to Sources: Qianzhan Research; International bile payments. Federation of Robotics; national statistics the central bank. The government has The second part of the productivity talked about hukou reform for years and

012 16 Briefing China’s growth prospects The Economist August 14th 2021

done little. Recently, though, it has actual­ Officials have come to believe that in­ 2 ly eased the pathway to hukou in most cit­ Cruel to be kind dustrial policy of the “Made in China 2025” ies (just not its very biggest). It has also China sort is, to an increasing extent, the only op­ made social benefits more portable within tion available for some types of techno­ the urban mega­clusters. Accepted bankruptcy cases, ’ logical improvement. Li Daokui, a former The last of the three categories of pro­ 30 adviser to the central bank, is confident ductivity enhancement is what might be that it will eventually succeed: “We are not termed catch­up reform: a series of chang­ 20 the Soviet Union. We have the world’s larg­ es to bring the country closer to the stan­ est contingent of young engineers. If dards of richer countries, albeit in a dra­ 10 pushed, we will develop our own technolo­ matically different political context. The gy.” Perhaps. But it will be expensive, both higher­education system is testament to 0 in terms of the direct cost and other spend­ the potential gains. It is easy to point to 2010 20*18161412 ing priorities forgone. problems that still bedevil China’s schools, Less funding for pension systems, for from too much emphasis on test prepara­ Corporate bond defaults, by ownership example, will hold back consumption, tion to too little investment in rural stu­ Principal amount, yuan bn 150 thus holding back investment and produc­ dents. Yet the increasing number of uni­ Others tivity in the services sector. According to 100 s&p versity graduates—46m in 2000, 218m this State-owned , a credit­rating agency, a full­bore pur­ year—is a good proxy for large, continuous enterprises suit of self­reliance could lop as much as improvements in workers’ skills. 50 one­third off China’s growth this decade. Another critical area of reform is allow­ But Mr Xi is unlikely to be swayed. He 0. 0 ing failure. One of the main ways to ensure seems to believe that truly ambitious tech­ that capital is allocated well is to let bad 21†2019181716152014 nology investment, though it may often firms go bust; Mr Cai has cited evidence *To November 22nd †To August 9th fail, offers the possibility of world­beating Sources: The Supreme People’s Court of China; Wind that firms going under drives as much as breakthroughs that will bring his country 50% of productivity growth in rich coun­ both power and productivity. tries. In corporate China this form of cre­ transition which, in retrospect, seems to The biggest reason to believe that ative destruction has often been sup­ have been essential for governing their things might turn out better for China’s pressed. Over the past few years, though, increasingly complex economies. economy than these trends would suggest bankruptcies have soared. In China the party will remain the law. is that it has consistently shown an ability The courts accepted nearly 30,000 in­ And the way that Mr Xi is using that power to correct mistakes. In the 1990s the gov­ solvency applications in 2020, a record is making investors increasingly pessimis­ ernment cut down bloated state­owned (see chart 2). Investors are currently fixat­ tic. The government’s crackdown on tech firms. Over the past five years it went from ed on the saga of whether regulators will darlings, from Ant, a fintech dynamo, to dismissing concerns about its debts to let Evergrande, the country’s biggest prop­ Tencent, a social­media giant, has served launching a deleveraging campaign, erty developer, go bust—something which up a reminder of just how capricious its though those efforts are far from complete. would previously have been unthinkable. regulations can be (see Business section). “Leaders are willing to change when the And state­owned firms accounted for Chinese officials say they are limiting pressure is there,” says Liu Shengjun of the roughly half of last year’s bond defaults, the power of big tech platforms in order to China Financial Reform Institute. That giving the lie to expectations that the gov­ to make the economy more competitive they have become obsessed with how to ernment would always save them. and thus more productive. Few investors boost productivity is a good starting­point. buy that. Instead, the realisation has Achieving their aim, though, will take Trying to keep up with you seeped in that Mr Xi’s references to com­ much more than robots—and maybe more Better education and more bankruptcies munist ideology are, at some level, sincere. change than they can stomach. n are just a couple of the paths forward. The He appears to be uncomfortable with busi­ 32­point productivity plan vows to make it ness leaders getting too rich. And he has easier for companies to issue bonds in the made it his mission to reinforce the party’s first place, to co­operate more with other grip on power. When he says “Govern­ countries on scientific research, to better ment, the military, society and schools, protect intellectual property, and on and north, south, east and west—the party on. The plan received little attention at the leads them all,” he means it. This is not a time; many observers have grown tired of basis for improving productivity you will such promises by China. Yet the fact that find in many economic textbooks. there is still so much unfinished business, Deepening distrust between China and and that the government acknowledges much of the world is another problem. this, may signal that such cynicism is be­ Plugging itself into the global trading sys­ ing overdone, at least a bit. tem did not boost Chinese growth just by Will China’s productivity policies actu­ opening up new export markets. Interna­ ally work? History offers little by way of tional competition pushed its companies precedent. Autocracies have become suc­ to be more efficient; access to cutting­edge cessful industrial nations before, if never technology allowed them to become more on such a huge scale. But it is not obvious sophisticated. Now countries from Israel that they can move beyond that. China is to the Netherlands are subjecting Chinese currently at roughly the same income level investments to closer review and limiting that its two closest Asian forerunners, exports of some key inputs. A lengthening South Korea and Taiwan, were when they list of companies have chosen to scrap ac­ became democratic and strengthened quisition plans in America because they their independent legal institutions—a would have been impossible to complete.

012 Asia The Economist August 14th 2021 17

The return of the Taliban Pakistan is the most significant. It has not only the longest border and deepest There goes the neighbourhood links with Afghanistan, but also close ties to the Taliban. Its powerful security estab­ lishment has long played a double game, publicly aiding America in its “war on ter­ ror” even as it secretly harboured Osama bin Laden and quietly sustained Afghani­ DELHI AND ISLAMABAD stan’s Islamist radicals. Concerned more Regional powers are preparing for an Afghanistan run by jihadists by rivalry with a much­bigger India than wo decades after Western forces points against each other. Others found Af­ with any danger from ragtag jihadists, Thelped sweep the Taliban from power, ghanistan a convenient place to kick sand Pakistan’s generals view Afghanistan as and four months after President Joe Biden in America’s face. But now, as the spectre their own “strategic depth”. Their main announced his intention to end America’s looms of either a full takeover by a radical goal has been to deny the space to anyone permanent military presence in Afghani­ Islamist group with a well­earned reputa­ else, even if that meant using the Taliban stan, the government in Kabul is losing tion for nastiness, or a descent into all­out as a cat’s paw, and even at the risk of blow­ control. Having captured swathes of the civil war, it is dawning upon regional play­ back to Pakistan. countryside since the spring, the Taliban ers that they may have to step in. That risk is not a small one, as attested have in the past week overrun ten of the “All of Afghanistan’s neighbours have by the death of over 20,000 Pakistani civil­ country’s 34 provincial capitals (see next already, in a soft manner, accepted that ians in a wave of Islamist terror between story). Significantly, most are in the north there will be a Taliban takeover,” says Umer 2002 and 2016, much of it perpetrated by (see map on next page), a region historical­ Karim of the Royal United Services Insti­ Afghan­linked groups. Even so, many in ly hostile to the insurgents. With govern­ tute, a think­tank in London. The trouble is the Pakistani establishment are privately ment forces surrendering en masse and that while few in the region relish having touting the Taliban’s imminent takeover as the army chief sacked, the group’s fighters the Taliban move in next door, they cannot a victory for Islam, a defeat for America have seized weapons and lucrative border agree what to do about it. Instead, each of and a finger in the eye to India, which has crossings. Afghanistan’s four biggest cit­ the neighbours is gingerly positioning for given substantial economic and military ies, including Kabul, the capital, are now its own advantage. aid to the Kabul government and this week swamped with refugees and effectively un­ evacuated its consulate in Mazar­i­Sharif. der siege. American intelligence officials Publicly, Pakistani officials say they → Also in this section hint it may be only weeks before they fall. have been blindsided by the speed of For much of the past 20 years of sim­ 18 The mood in Kabul America’s departure and the disintegration mering internal conflict and natomilitary of the Afghan government. They insist that 19 Indonesia’s love for badminton involvement, Afghanistan’s neighbours ei­ they wished for a negotiated peace, not a ther shunned the country or meddled in 19 Politico-business ties in South Korea military takeover by the Taliban. They also pursuit of their own interests. Some en­ maintain that Pakistan has little influence 20 Banyan: Asia’s democratic decay couraged Afghan proxies as a way to score over the Islamists. A Western diplomat in

012 18 Asia The Economist August 14th 2021

the region scoffs at Pakistani disingenu­ not inevitable, but the mood is grim. “We ousness, suggesting that its generals will UZBEKISTAN will overcome this. We will come out Provincial capitals TAJIKISTAN again burn their fingers playing with Is­ captured by the Taliban* stronger and wiser... We will come out like lamist matches. Mazar-i-Sharif Faizabad a phoenix,” the vice­president, Amrullah Iran, which shares another long border TURKMENISTAN Saleh, said on August 6th, trying to exhort Taloqan Sheberghan Aibak with Afghanistan, has a more tortured re­ Kunduz his nation to defiance. Yet morale is low, lationship with the Taliban. Its leaders are Sar-e-Pol Pul-e-Khumri and the Taliban’s slick propaganda mach­ certainly delighted to see the Great Satan, Wakhan ine is in overdrive. Herat Kabul Corridor America, abandon its bases next door. But AFGHANISTAN Many Afghans, however, have respond­ as Shia Muslims who view their own Is­ ed with defiance. In recent days thousands Ghazni lamic revolution as a modernising move­ Farah of people have gathered in the streets and ment—women can study, work and hold Kandahar on the rooftops of big cities, including Ka­ office in Iran, so long as they veil—they Zaranj bul, to wave the nation’s black, red and IRAN Lashkar PAKISTAN look askance at the Taliban’s hidebound Gah green tricolour, chanting “God is Greatest!” Sunni fanaticism. Swamped for decades The displays began in the western city of 300 km with destitute refugees and cheap heroin Herat, close to the border with Iran. What from Afghanistan, Iran is also worried Areas of control, by number of districts Government started as a suggestion on social media was about a new influx, particularly of Hazaras, taken up by Ismail Khan, a local warlord Taliban 22 Contested 110 65 a Shia ethnic minority that the Taliban who has remobilised his militia to defend have viciously persecuted in the past. With Source: FDD’s Long War Journal *At Aug 12th 221 the city. Kabul followed Herat’s example little leverage over the Taliban and no lik­ the following evening. Similar displays ing for the tottering government in Kabul, Whatever their shared interest in pre­ have followed since in many cities. Iran is likely instead to lend support to lo­ venting a full­blown catastrophe, Afghani­ The chants are both a direct challenge cal Afghan militias in the border region, stan’s neighbours have not, so far, proved to the Taliban and a vow of support for the which recently beat off a Taliban assault on helpful. At a un Security Council meeting Afghan forces, says Saddaf Yarmal, a 20­ the city of Herat. last week, India as chair kept out Pakistan, year­old student who took part. “We have A long, remote finger of Afghanistan, because Pakistan has in the past lobbied to to support our own country,” says Mahja­ the Wakhan Corridor, abuts China. Asia’s exclude India from other meetings on Af­ bin Siddiqi, a 23­year­old student, adding, rising superpower has largely kept aloof ghanistan. A series of parleys that brought “For 20 years the Americans have been from its unruliest neighbour, contenting regional players to Doha, the Qatari capital, here, but we haven’t seen good results. It itself with moralising about the failings of on August 10th looked only slightly more has to be us.” Western intervention. As a close ally of positive. American negotiators attempted The choice of the phrase “Allahu akbar!” Pakistan, however, Beijing has drawn wari­ to press the Taliban to slow their offensive, as a rallying cry is pointed. Not only did the ly closer to the Taliban, hosting a senior threatening diplomatic isolation if they same shout form the soundtrack to the re­ delegation from the group in July with the took over Kabul by force. Accustomed to sistance to Soviet occupation in the 1980s, pomp afforded to visiting foreign minis­ drone strikes and cluster bombs, the Tali­ but it also directly challenges the Taliban’s ters. Its main concern is that Afghanistan ban delegates may have looked around the claim of a religious mandate to rule. The ji­ should not become a rear base for ethnic room and decided that this was a price hadists assert a direct link to the insurgen­ Uyghur separatists. worth paying. n cy that forced out the Russians, portraying With a diplomatic savvy that belies their struggle as the latest battle against an their supposed commitment to a shared un­Islamic regime in Kabul. Muslim faith, the Taliban did indeed pro­ The mood in Kabul A spokesman for the Taliban therefore mise that their territory would not be used reacted angrily online to the use of the slo­ “against the security of any country”. The Pro-God, gan, claiming ownership of it even though Chinese, however, will be aware of reports the phrase appears on the flag of Afghani­ that Uyghurs count among thousands of anti-Taliban stan. He said that the militants had waged foreign jihadists active in Afghanistan, jihad with those words for 20 years and mostly enlisted in Taliban ranks—and also that they should not be used by “American KABUL that America was given a similar promise slaves and secularists”. Big-city Afghans are defiant in the face about al Qaeda, shortly before the attacks The defiance on display in Afghani­ of advancing Taliban insurgents of September 11th 2001. stan’s big cities is directed not only at the Having thrown a million Uyghurs into aranj, in nimruz province, was the Taliban, but also at neighbouring Pakistan, prison camps, China is probably pretty Zfirst to fall, on August 6th. Sheberghan, where much of the Taliban’s leadership safe. This cannot be said of Afghanistan’s capital of Jawzjan province, followed a day lives and where their fighters have at times three smaller Central Asian neighbours, later. Kunduz, Sar­e­Pol and Taloqan went found havens. As the security situation has Tajikistan, Uzbekistan and Turkmenistan. on August 8th. Aibak was taken on the 9th. worsened, anti­Pakistan feeling has Islamist radicals from all three former So­ Farah and Pul­e­Khumri collapsed on the grown. “Day by day it’s getting more clear viet republics have taken refuge in Afghan­ 10th, Faizabad on the 11th and Ghazni on that Pakistan is interfering in our internal istan. With the entire border now in Tali­ the 12th. In just one week, the Taliban have issues,” says Javid Safi, a lawmaker from ban hands they understandably fear that captured nearly a third of Afghanistan’s 34 Kunar province, which borders Pakistan. some militants will infiltrate back. All provincial capitals. Both Afghan and withdrawing Western three countries have embraced closer mili­ The Taliban’s gains had previously been military commanders maintain that the tary ties with Russia. To underscore re­ confined mostly to rural districts. The gov­ Taliban are not an unstoppable juggernaut. newed regional influence and send a warn­ ernment in Kabul believed that the insur­ A couple of government victories, or even ing shot to the Taliban, Russian forces have gents lacked the firepower or numbers to battles that end in stalemate, could change in the past week undertaken large­scale seize towns. That proved optimistic. The the dynamic. But the insurgents are on the joint manoeuvres with Tajik and Uzbek fall of the Afghanistan’s biggest cities—Ka­ front foot. The ten towns just lost to them troops along their Afghan borders. bul, Kandahar, Herat, Mazar­i­Sharif—is are unlikely to be the last.n

012 The Economist August 14th 2021 Asia 19

South Korea’s power players Indonesia’s favourite game The ties that bind A pretty good racquet

SINGAPORE How Indonesia became the home of badminton hen the Chinese players whacked Indonesian Olympics Committee, “with­ The release from prison of Samsung’s the shuttlecock out of bounds on in a second you can find people playing W de facto boss raises some eyebrows August 2nd, giving Indonesia its only badminton.” It is simple to get a game gold medal at the Tokyo Olympics, the going. Racquets and shuttlecocks can hen the office of Moon Jae­in re­ winning team of Greysia Polii and Apri­ easily be bought or made (just stick some Wleases the names of people the South yani Rahayu collapsed onto the floor and feathers into a cork), and once a clothes­ Korean president will pardon on National sobbed with relief. Some 3,500 miles line and an opponent have been located, Liberation Day on August 15th, as is cus­ away, the Indonesian archipelago erupt­ the match is on. tomary, Lee Jae­yong, the de facto boss of ed with joy. Fans bursting with pride It is little wonder then that badmin­ Samsung, will not be on the list. That is in celebrated online, filling each others’ ton is Indonesia’s favourite sport. It is keeping with the president’s promise not phones with tweets and memes. The also the country’s most developed, and to use his powers to pardon prominent president declared their triumph in the boasts the only national team for which white­collar criminals “for the good of the women’s doubles game an early “birth­ the government runs a training centre. economy”, as is also customary. day gift” to the nation (its independence Scouts scour the country’s 3,500 bad­ The absence from the list of Mr Lee’s day is on August 17th). The badminton minton clubs for fresh talent. Parents name should not, however, be seen as evi­ champs have been promised, among encourage their children to take it up. dence that the president has been true to other things, prize money of 5bn rupiah The rewards for skill and hard work are the spirit of his promise. That is because ($347,000) each, houses, meatball kiosks handsome—not always a given in a Mr Lee no longer needs the pardon. On Au­ and five cows. country where corruption and nepotism gust 9th the justice minister said that the In England, where the modern ver­ are rife. Broto Happy, the Indonesian erring Samsung boss would be released on sion of the sport originated, badminton Badminton Association’s spokesman, parole on August 13th. The decision, he is a lawn game, played by people drunk estimates that new recruits to the na­ said, took into account the formal require­ on Pimm’s and sunshine. In Asia it is a tional squad earn about 30m rupiah ments for granting parole as well as—what serious business. At the Badminton ($2,087) a month, ten times the average else—the difficult economic situation in World Championships in 2019, Asian income. Those in the top tier can earn the country. countries won 19 of 20 medals. In recent billions of rupiah through sponsorship Mr Lee was sent to prison for bribing decades China has emerged as a heavy­ deals. Ignatius Sunito, a sports journal­ Park Geun­hye, the previous president, to weight. But Indonesia is the sport’s jug­ ist, noted two decades ago that bad­ obtain her government’s support for a gernaut. It has won more titles at the minton “eliminates suffering, poverty, merger in 2015 that solidified his control Thomas Cup, the most prestigious tour­ powerlessness and injustice”. over Samsung. Other leaders of South Ko­ nament, than any other country. Bad­ Perhaps most importantly, badmin­ rea’s chaebol, or conglomerates, had been minton is the only sport in which it has ton is a source of national pride. It is the lobbying Mr Moon to pardon Mr Lee so he ever won gold at the Olympics—and it only sport to produce a string of heroes; could return to the helm of Samsung and has done so at all but one since the sport Rudy Hartono, for instance, has won steer the company through intensifying was introduced in 1992. Indonesia is the eight titles at the All­England men’s competition with rival chipmakers. They “home of badminton”, Kompas, a news­ singles, more than any other player. welcomed the decision. So did the conser­ paper, boasted after the match. Many of its champions come from ethnic vative opposition, which said it showed Wherever one travels in the archipela­ minorities. As Mr Raja says, the sport that the government cared about fixing the go, says Raja Oktohari, president of the “cannot be separated from Indonesia”. pandemic­pummelled economy. By contrast, corporate­governance ac­ tivists and critics from Mr Moon’s own camp were incensed. pspd, a group that is close to the governing Minjoo party and played an important role in protests that brought down Ms Park in 2017, called the decision a “death sentence” for justice. It said it would encourage business leaders to continue to commit crimes in the expec­ tation that they would get off lightly. Se­ nior Minjoo members said the decision showed the government had betrayed its principles and cared little for fairness. They have reason to gripe. Formally, Mr Lee has fulfilled the conditions for parole, because the justice ministry changed them in April. Inmates are now required to have served at least 60% of their sentence to be­ come eligible, rather than 80%, as used to be the case. Zany badminton demos Unlike the formal requirements, softer criteria for parole, such as admitting the

012 20 Asia The Economist August 14th 2021

crimes and showing remorse for them, are whether it will grant Mr Lee an exemption cians, some of whom have in the past been less obviously fulfilled in Mr Lee’s case. from the employment ban imposed on pardoned for their misdeeds by their suc­ Park Sang­in, an economist at Seoul Na­ those convicted of economic crimes and cessors. The majority of respondents in tional University who studies the power of allow him to return to his day job at Sam­ both polls thought Ms Park, who is in pri­ the chaebol, considers freeing Mr Lee ex­ sung. But he is widely expected to do so son for taking Mr Lee’s bribes and abusing tremely unusual given the serious nature eventually, even though it is unclear her power, or Lee Myung­bak, her prede­ of his crimes, let alone the fact that he is whether his absence has actually had any cessor, who is there after being convicted still on trial for charges related to the ones negative impact on the company’s day­to­ in a separate corruption case, should re­ for which he was sent to prison in the first day business. main locked up. Neither is therefore likely place (Mr Lee denies the charges in the case Most South Koreans apparently do not to appear on Mr Moon’s list this time that is still pending). “This is just a way for mind much. In two polls conducted in late around, reckons Mr Park. As yet ineligible Moon to let him out without explicitly July, around two­thirds said they were in for parole, the pair will probably have to breaking his election promise,“ he says. favour of releasing Mr Lee. They were feel­ celebrate Liberation Day in their cells—un­ The justice ministry has yet to say ing less generous about crooked politi­ like the boss of Samsung. n Banyan Autocratic for the people

Democracy is decaying in a growing number of Asian polities ost democracies would struggle to commanded the monsoon session’s lon­ have long ensured the dominance of Mmatch the productivity of India’s gest deliberation—a full 39 minutes. parties pandering to the ethnic­Malay, Parliament. During its “monsoon” ses­ This is no way to run a country. The Muslim majority, at the expense of sec­ sion, which ended on August 11th, a score v­Dem Institute at the University of Goth­ ular or multiracial representation. Re­ of bills covering everything from coco­ enburg, which produces an annual report cent rot has been occasioned by grabs at nuts to bankruptcy have passed the on the state of democracy around the power by shifting groupings of the Malay upper or lower house, or both. world, declared this year that India has elite. The current prime minister, Muh­ Alas, the reason why laws pass so gone from “electoral democracy” to “elec­ yiddin Yassin, came to office last year in easily is far from benign. Under Na­ toral autocracy”, as autocratic as Pakistan a backdoor putsch. His power now hangs rendra Modi, the prime minister since and worse than Bangladesh or Nepal. It is by a thread, with supporters offering to 2014, the ruling Bharatiya Janata Party not the only Asian state where democracy buy opposition mps’ support. None of (bjp) has eroded many of the checks and is under assault. this helps ordinary Malaysians cope with balances that underpin true democracy. Like unhappy families, every decaying the pandemic or the accompanying Elections themselves are largely free and democracy is unique. Myanmar has re­ economic crisis. fair. But defamation laws are abused to verted to full­blown military dictatorship. Though countries or territories are all hound critics. Political opponents are Sri Lanka has fallen under a family dynas­ unhappy in their own way, certain intimidated and even imprisoned. Over ty. Four Rajapaksa brothers run the place, shared attributes signal a lurch for the 7,000 Indians have been charged with including the president and prime min­ worse. One is the use of investigative sedition under the bjp, casting a chill on ister, and a younger Rajapaksa generation authorities to go after domestic foes. In civil society. In a scandal that would is on the make. India, after Dainik Bhaskar, a media topple any accountable government, a In Indonesia, elections are free and group, highlighted the government’s global investigation by a group of news­ fair. But President Joko Widodo, or Jokowi, bungling of covid­19, tax inspectors papers and ngos suggests that Mr Modi’s has hollowed out democracy by gutting launched a raid. Hong Kong was never a government has slipped Israeli eaves­ the anti­corruption commission and democracy, but until last year’s promul­ dropping software called Pegasus into co­opting the opposition, thus fostering gation of a draconian security law at least the mobile phones of hundreds of Indi­ cronyism and ministerial ineptitude. limited elections gave voice to an opposi­ ans, including opposition leaders, jour­ Malaysia’s gerrymandered constituencies tion. Since then Hong Kong’s most crit­ nalists, a former top election official and ical newspaper has been closed and senior civil servants. As yet, it has faced national­security cops now vet political no serious consequences for an act candidates. Aspiring to win is, for a Hong which, if proven, would no doubt be Kong democrat, seditious. illegal as well as illiberal. Can the rot be stopped? Indian de­ As for Parliament, Mr Modi and his mocracy survived Indira Gandhi’s dicta­ sidekicks think of it not as a deliberative torial Emergency from 1975 to 1977. Today body but as a rubber stamp. They can do some see the opposition’s coming­to­ this because the opposition are dis­ gether over Pegasus as the beginning of organised and lethargic. Granted, oppo­ its revival, while a new chief justice is sition mps are now demanding a debate showing welcome independence. In Sri and investigation into Pegasus, and Lanka voters have a record of turfing boycotting Parliament to press their governments out, and have done so once demands. Alas, the boycott plays into the already with the Rajapaksas. Yet each prime minister’s hands, at least for now, burst of autocracy leaves democratic as he bulldozes through his bills. One norms a little more battered. Once they was discussed for just a single minute. A are broken, it is hard to put them back bankruptcy code of national significance together, whoever is in office.

012 China The Economist August 14th 2021 21

Proletarian culture grant workers as patriotic and self­sacrific­ ing. A museum dedicated to them in Production-line poets Guangzhou, the capital of Guangdong, lauds their contribution to China’s eco­ nomic ascent. Exhibits extol the Commu­ nist Party’s efforts to improve workers’ livelihoods and applaud their diligence. A sign at the entry reads: “Guangdong lets GUANGZHOU migrant workers create proud glories and Factory-workers find creative ways to express their disillusionment legends again and again!” The hardship of s trendsetters go, Luo Fuxing was roller­skating rinks and online groups, factory work is glossed over, as are com­ Aan implausible one. A school drop­out, where they shared not just sartorial cues mon injustices such as withheld wages. Mr Luo spent his days catching fish and but gripes about migrant life, from low pay Elsewhere, workers are often treated as herding goats in a village in southern and poor conditions to divorcing parents. country bumpkins. A “migrant­workers” Guangdong province. Eating pork was a China has developed a distinct work­ version of the annual Spring Festival Gala, once­weekly treat. At the age of 14, he left ing­class culture in recent years, of which a big television show broadcast on the eve home to earn a wage in the province’s shamate fashion is only the most garish ex­ of the lunar new year, airs on a channel sweatshops. He hated the tedium of the ample. In mainstream media assembly­ about agricultural news. Workers who be­ work. He read that American criminals had line workers are commonly shown in ser­ gan to stage their own unofficial gala some tattoos of spiders’ webs inked onto their el­ ried ranks and drab uniforms, with no hint years ago were condescendingly described bows to show time spent behind bars. Mr as to how they spend their time outside by state news outlets as offering “a little Luo got one too, because “the factory was factory walls. The stereotype is that work­ song, a little dance and a lot of passion”. just a bigger prison.” ers who migrate to boomtowns and big cit­ Small wonder that a coruscating mem­ He quit for a job in a hair salon. Inspired ies—as 300m have done over the past four oir by Fan Yusu, a domestic worker living by Japanese manga and punk fashion, he decades—are there only to earn a living. in Beijing, was a national sensation when dyed his hair and styled it into dramatic, They are still commonly referred to as “mi­ it was published online in 2017. Ms Fan is gravity­defying spikes. Dark lipstick and grant workers”, on the assumption that now the editor­in­chief of New Workers’ eyeliner completed the look. He posted sel­ they are outsiders who will return to their Literature, an unofficial bimonthly journal fies to qq, a messaging service—and soon rural hometowns. Many once did. But to­ of working­class writing, launched in 2019. hundreds of thousands of factory­town day’s working­class youth have no interest One genre winning admiration from the youth were copying his style. Mr Luo called in going back to the land; many have lived literati is called dagong shigeor “labour po­ its adopters the shamate, from a Chinese in the city from a young age. They want to etry”. Its most famous practitioner was Xu rendering of “smart”. It was “a wild­grow­ put down roots. Although marginalised in Lizhi, who worked on an assembly line for ing art form among workers”, he says. The mass culture, workers are expressing Foxconn, a Taiwanese firm that makes trend, which peaked around a decade ago, themselves, in forms as varied as poetry most of Apple’s iPhones. Before he com­ helped newly arrived migrants from the and short videos shared online. mitted suicide in 2014, at the age of 24, he countryside to bond. They met in parks, The government tends to portray mi­ had written almost 200 poems about the

012 22 China The Economist August 14th 2021

drudgery of factory work. Among the best spect. In the visitors’ book at the museum forced to cut their hair. For men and wom­ known is “I Swallowed An Iron Moon”: in Guangzhou, a visiting labourer has writ­ en alike, it was a way of seeming tougher in ten: “Migrant workers, working souls, a disorienting new city where many were I swallowed an iron moon we’re the finest of them all.” cheated: “We felt we weren’t safe out there. they called it a screw I swallowed industrial wastewater and un­ Yet workers’ writing is not fundamen­ That we were too honest, and were afraid of employment forms tally about political resistance, says Mr van being messed with.” The hair, tattoos and bent over machines, our youth died young Crevel, who studies labour poetry. Few clan mentality all helped. I swallowed labour, I swallowed poverty blue­collar youths today feel they belong As the fashion spread, its adherents be­ swallowed pedestrian bridges, swallowed to a cohesive working class. That is partly gan to be ridiculed by prim, middle­class this rusted­out life because officials and state media avoid us­ netizens. A sustained online attack against I can’t swallow any more ing the word “class”, or jieji, owing to its an­ shamate around 2010 led thousands to lop everything I’ve swallowed roils up in my tagonistic overtones. (“Social stratum”, or off their hair and drop out of the group. Po­ throat jieceng, is preferred.) Many young workers lice began to round up anyone with the I spread across my country a poem of shame call themselves dagong ren, a word for la­ telltale style, to check their papers; anyone bourer that connotes temporary and low­ without a temporary residence permit Many workers’ poems refer to home­ status work. Its most extreme display is a would be detained. sickness, alienation, injuries and power­ subculture in Shenzhen whose members Shamate fans still congregate in parts of lessness. A few deliberately evoke beauty, style themselves “Sanhe gods”. These Guangdong. But the fashion has lost its in jarring contrast to their bleak surround­ young migrant workers hang around the edge as factory youth have found a new ings. In “Sundress”, Wu Xia—a rare female city’s Sanhe job market to find day work, way to express themselves: video­sharing worker­poet, hired by a textile factory at often as builders or delivery drivers. They apps. Lorry drivers, construction workers the age of 14—writes of her love for the “un­ reject the grind of the factory; their slogan and farmers have built followings and known girl” with the means to buy the gar­ is: “Work for a day, party for three.” Some sometimes found stardom—not despite ment she sews. She also thus lays bare the even sell their national­identity cards. being blue­collar workers, but because of elusive promise of social mobility that Becoming a shamate was also a form of it. In manufacturing hubs, where phones drives so many to the assembly line: Ms rebellion against the monotony of factory are often banned inside factories, assem­ Wu, now 40 and a published poet, still life. In a Chinese documentary released in bly­line workers document their lives out­ works at a clothing factory. 2019, “We Were Smart”, 70 former and cur­ side them. Widely used hashtags include rent shamate shared their views on what it #FactoryLife and #LiftTheBucket. The last The packing area is flooded with light the iron I’m holding meant to be one. Their exuberant hair­ refers, often ironically, to quitting a job in collects all the warmth of my hands styles turned heads. “People paid atten­ search of a better one, with nothing but a I want to press the straps flat tion. It wasn’t positive attention. But they bucket of belongings. so they won’t dig into your shoulders when saw you. And the point was to be seen,” Through the videos, workers cheer each you wear it says one interviewee. Many felt they were other on. They trade information: which and then press up from the waist part of a select group, and that cutting their factory has higher wages or fairer bosses, a lovely waist hair would have meant going back to being say. That is especially useful in a “hostile where someone can lay a fine hand “just another unknown line worker”. For environment where there is no trade union and on the tree­shaded lane some, the punk identity became more im­ to tell them about working benefits”, says caress a quiet kind of love... portant than earning a better wage at a big Aidan Chau of China Labour Bulletin, an Some literature is defiant, including to­ factory, where they would have been ngo in Hong Kong. Some speak of injuries wards government policies that make it ex­ or sexual harassment. Others parody the tremely hard for factory­workers born in trendy life of urban middle­class youth. rural areas to make use of schools and hos­ “Their aspiration to live in a city and be­ pitals in the cities. In “Who Can Forbid My come an urban citizen grows, even as they Love”, Ms Wu writes of her adoptive city of realise it is implausible—even impossi­ Shenzhen: “This kind of love seeps into the ble,” says Mr Chau. pores, skin, cells, blood, bone / Even Whether expressed in poems or though there’s no residence permit with through video­sharing apps, a sense of dis­ my name on it.” Chen Nianxi, a worker in a illusionment seems to be growing. There private mine, speaks of fellow miners who, was once pride in being a worker, says Mr employed by state­run firms, toil less yet Luo. “Now it’s embarrassing to say you’re earn more while he must blast “the rocks one.” Young people working in factories layer by layer / to put my life back togeth­ see short videos as an escape: a way to kill er”. (English translations of these and other time, but also to be part of a wider world poems were published in 2016 in “Iron beyond their gritty boomtowns. Yet even Moon”, an anthology of labour poetry.) online, they struggle to gain acceptance. Such writing is tolerated by the govern­ Zhang Yurong is among a handful who ment partly because journals like New have built a wide following by recording Workers’ Literature are written for limited life as a worker at Foxconn. Some com­ circulation and may not be sold in book­ ments on her videos say factory workers shops. Many poets publish online where, are “people abandoned by society”. That to avoid censorship, they steer clear of “un­ angered her, she says, not because it was filtered representations of the horrors” in­ wrong but because it was right. side unregistered workshops known as A fellow worker­poet and friend of Xu “black factories”, notes Maghiel van Crevel wrote in tribute after his death: “Another of Leiden University. Some poems are screw comes loose / Another migrant­ proud or patriotic; many of those who worker brother jumps / You die in place of write are motivated by a desire to earn re­ Not much space for self-expression me / And I keep writing in place of you.” n

012 United States The Economist August 14th 2021 23

→ Also in this section 24 Oye, Cuomo va 25 Technology and crimefighting 25 Back to school in Texas 26 Vaccine mandates spread 27 Lexington: The armed forces and race

Congress sion. If all this works, it will probably be­ come the defining accomplishment of the Function in Washington Biden presidency. Securing both bills will be hard. To pass their other policy aspirations without any Republican votes, Democrats will now em­ ploy a procedure known as budgetary rec­ WASHINGTON, DC onciliation, which sidesteps a filibuster if Joe Biden’s plans to splurge on infrastructure, climate-change mitigation and the certain conditions are met. Shepherding social safety-net move a step closer such a package through Congress requires he iceman cometh” is a play about months to come. co­ordinating efforts from a score of com­ “Tthe downtrodden patrons of Harry The White House has made greater mittees. That task can now begin: in the Hope’s saloon, who exchange reveries for headway than many expected. Yet turning early hours of August 11th Democrats one another’s pipe dreams. For a while this into actual spending will require still passed a budget resolution, a skeletal President Joe Biden’s aspirations for a gar­ more effort. To mollify antsy progressives, framing document that gives each com­ gantuan infrastructure and social­services neither bill is expected to arrive on the mittee instructions on how much it can package—spending $4trn in order to president’s desk without the other. Nancy spend. This marks the true start of the hard “build back better”—resembled those of a Pelosi, the Democratic speaker of the work: drafting legislative text, collating it misbegotten Eugene O’Neill character. The House of Representatives, has pledged as into one mega­package and passing it weeks dragged on and negotiations ap­ much and is not known for bluffing. without any Democratic defections—for peared fruitless. Yet in the usually soporif­ So success for Mr Biden continues to anything less, in the face of unified Repub­ ic month of August, Mr Biden finds that his depend on an odd­couple strategy: yoking lican opposition, would spell defeat. pipe dream might in fact yield some actual the bipartisan bits of his agenda (tradition­ Reconciliation is not pretty. Since its pipes, plus extra sending on the safety net al spending on roads, bridges, broadband use is limited to budgetary matters, it can­ and climate change too. and waterways, largely unmatched by tax not be resorted to often. And since Demo­ On August 10th the Senate passed a bi­ increases) to the purely Democratic wish­ crats fear that they will lose their slim ma­ partisan infrastructure package spanning list (enormous spending on climate­ jorities in the coming mid­term elections, 2,700 pages, which contains plans to spend change mitigation and a safety­net expan­ they have an incentive to hitch any parti­ $550bn, or 2.5% of gdp, most of it on bridg­ sion, along with much higher taxes on san priority that they want to become law es, roads and railway lines. And then in the wealthy people and corporations). This ap­ onto this omnibus bill. early hours of August 11th, the Senate fired proach withstood early defections by Re­ This bill will be stuffed therefore. Com­ the starting gun for the drafting of a budget publicans who feared they had been had. mittees will draw up plans to spend hun­ resolution—a $3.5trn package stuffed with Now it must prove itself capable of deliver­ dreds of billions on climate­change re­ all of Mr Biden’s other partisan aims, the ing the remaining legislation, which will search, electric­vehicle charging stations details of which will be negotiated in the be mostly an exercise in Democratic cohe­ and a Civilian Climate Corps; more than

012 24 United States The Economist August 14th 2021

$1trn on various safety­net enhancements Andrew Cuomo like extended child­tax credits, subsidised child care and family leave; and education­ Oye, Cuomo va al benefits from pre­kindergarten to com­ munity college. There will be a parallel ef­ fort to pay for this by raising the taxes on corporate profits, especially of the over­ NEW YORK seas variety, and high personal incomes. The governor of New York left before These legislative schemes would al­ he was pushed most certainly increase American deficits and debts beyond their already eye­pop­ am a New Yorker, born and bred. I am a ping levels. The Congressional Budget Of­ “Ifighter, and my instinct is to fight fice (cbo), a non­partisan scorekeeper, es­ through this controversy because I truly timates that America will run a $3trn defi­ believe it is politically motivated,” said An­ cit in Mr Biden’s first year—much of that is drew Cuomo, New York’s governor, on Au­ the result of the $1.9trn stimulus measure gust 10th, before switching gears—and re­ that the president signed into law soon signing. In his typical fashion, Mr Cuomo after assuming office. At 13.4% of gdp, the tried to wrest control of his story, control deficit will be the highest in the first yearof that he lost earlier this year when nearly a any modern president (see chart). dozen women, including former and cur­ Me too? The proposed spending on infrastruc­ rent staffers, accused him of groping, kiss­ ture and the safety­net would be spread ov­ ing and making sexually charged remarks. in which 20 six­ and seven­year­olds and er ten years, not concentrated in just one. Even as his political career died, he tried to six adults were killed, he persuaded the Still, it is remarkable that, if Mr Biden gets frame his resignation as an act of public state’s Republicans to support one of the his way, he could sign legislation authoris­ service: “It’s not about me, it’s about we.” strictest gun­safety laws in the country. He ing the spending of just under $6trn, al­ A week earlier, though, “we” (in the spent billions of dollars to improve infra­ most 30% of gdp, in his first year in office. form of Letitia James, the state’s attorney­ structure, building new bridges and im­ More of the infrastructure spending will be general) published a 165­page report that proving the subway. covered by revenue than was the case for corroborated the women’s claims. In the On the other side of the ledger, he the covid­19 relief measure, but a substan­ following days he lost what little political abruptly disbanded the state commission tial portion will not be. support he had left. The entire New York to investigate public corruption when it re­ The cbo‘s assessment of the bipartisan Democratic delegation to Congress called portedly began to look at groups close to package passed by the Senate found that it on him to resign, as did President Joe Bi­ him and his office. Preet Bharara, once a would add $256bn to the federal debt. The den. The state Assembly scheduled im­ federal attorney (and these days a political budget resolution recently passed by peachment hearings. A vote to impeach podcaster), brought charges against one of Democrats would allow $1.75trn to be add­ him would have come within weeks, with a his former aides for taking bribes. He also ed to the tab—suggesting that only half of trial before state senators and senior judg­ brought charges against people involved in their proposal could be paid for (and bely­ es to follow in short order. His top strat­ Mr Cuomo’s pet project, the Buffalo Billion, ing the White House’s repeated insistence egist announced her resignation. a plan to boost investment in that city. that it would be fully funded). Already, Ja­ Yet Mr Cuomo hung on. Were he the go­ Like a man caught on the wrong side of net Yellen, the treasury secretary, warns vernor of a conservative state, suspicious sliding doors on the subway, in response to that the debt ceiling will need to be raised of the MeToo movement, perhaps he could the sexual­harassment claims Mr Cuomo by October 1st to accommodate the current have weathered the allegations against insisted that he never “crossed the line pace of spending. him, which his lawyers continue to deny. with anyone” and that he did not “realise Almost none of the legislating over the His legal team held two briefings, in which the extent to which the line had been re­ next few months will appeal to Republi­ they tried to undermine the credibility of drawn.” He blamed generational and cul­ cans. But that is the point of the segmenta­ some of his accusers. The governor report­ tural differences. Resignation is not the tion strategy that Mr Biden has chosen. He edly had hoped that the Assembly would end of Mr Cuomo’s troubles, however. has pulled off a surprising victory in the bi­ not pursue impeachment if he said he Earlier this year Ms James released an­ partisan campaign. The partisan battle would not seek re­election. Carl Heastie, other critical report, saying his adminis­ promises to be every bit as arduous. n the Assembly’s Speaker, made clear on Au­ tration understated the number of co­ gust 9th that he was not interested in a vid­19­related deaths in state nursing deal. That may have been the moment Mr homes by as much as 50%. She is also look­ Big spender Cuomo realised he had no option but to go. ing into accusations that Mr Cuomo im­ United States, first-year-in-office budget deficit His fall has been swift. Just a year ago properly used state staff to help write his Selected presidents, % of GDP his daily covid­19 briefings were watched book on leadership, which now seems use­ by thousands of Americans, who found the ful mainly for lining the cages of New -14 -12 -10 -8 -4-6 -2 0 notion that someone in charge might actu­ York’s hamsters. Four district attorneys are Roosevelt, 1933 ally be listening to public­health experts looking into whether Mr Cuomo commit­ Johnson, 193 soothing. Mr Cuomo was talked about as a ted any crimes, underlining how cut­ possible presidential candidate; some throat Democrat­on­Democrat fights can Clinton, 1993 wished he had run last year. be in a one­party state. Obama, 2009 Though his career ends in scandal, Mr Mr Cuomo will step down before the Trump, 2017 Cuomo could point to accomplishments end of the month and the lieutenant­go­ during nearly 11 years in office. In 2011 he vernor, Kathy Hochul, step in, opening up Biden*, 2021 signed into law a bill legalising same­sex next year’s gubernatorial race. Ms James, *Forecast. Excluding proposed marriage, which he had pushed to pass. In architect of the two reports which ended Sources: OMB; CBO infrastructure spending the wake of the Sandy Hook mass shooting, his career, could well succeed him.n

012 The Economist August 14th 2021 United States 25

Finding abused children scans on users’ own phones and laptops. Yet the government could not easily Hashing force ncmec or Apple to tweak this phone­ scanning capability to look for other ambiguous things. That is because any evidence thrown up by those compelled searches would be inadmissible in court for violat­ ing the Fourth Amendment. Crucially, A 38­year­old charity will be integrated none of the technology companies scan­ into Apple’s newest operating system ning for csam, nor ncmec’s storage of it, he national Centre for Missing & Ex­ does so, because the scans are done on a Tploited Children was established voluntary basis. The Fourth Amendment through an act of Congress in 1983, but it is only protects against unreasonable search­ not part of the American government. es by the government—ones that are car­ ncmec (pronounced “nic­mic”) is a chari­ ried out without a warrant. Arrests can be ty, one funded almost entirely by the De­ made only because of the voluntary nature partment of Justice, and which operates as of the csamscanning. a clearing house for information about ab­ Most of the attention has focused on ducted children. For the first few decades the technical details of Apple’s new csam of its existence ncmec’s focus was on ab­ scanning system. It will be released along Wedge issues ductions in America, helping investiga­ with ios15, the next update to its iPhone tions run across state lines. But as the use operating system, in September. Those On August 10th Dallas Independent of the internet grew it started to turn its at­ technical details are important. Experts School District (disd), which serves more tention to the harm caused through online are poring over every available detail of the than 150,000 students, became the first in activity, specifically the trade of imagery new software to determine whether it has the state to announce that it will require depicting the sexual abuse of children. introduced a security weakness to both students and teachers to wear masks. ncmec’s role as an information clearing iPhones. But Apple’s ability to make this (Several more, including Austin, have fol­ house has become far more technical as a change also rests on the social norms that lowed.) “I fully expect to hear from the at­ result. In 1998 it started building a database have underpinned the fight against child torney­general’s office,” says Michael Hi­ of imagery known to depict sexual abuse of abuse in America for decades. The willing nojosa, disd’s superintendent. On August children based on the tips it had received. co­operation of third parties has long been 11th Dallas’s county judge, Clay Jenkins, is­ The technical term for this kind of data is all that makes it possible for law enforce­ sued his own order to require masking at csam (Child Sexual Abuse Material), most­ ment to track down child abusers in priv­ public schools, child­care centres and ly images or videos. Only ncmec is shield­ ate spaces. Apple is now testing whether some businesses, all but guaranteeing a le­ ed from liability to the extent that it can this willingness extends into the phones in gal standoff with the state. store csam and share it with law enforce­ Americans’ pockets. n Masks are not school officials’ only pro­ ment, but in 2006 the organisation began blem. Another is vaccines, which Mr Ab­ to think of ways that it might use the data­ bott has forbidden school districts and base to catch other csam trafficking. It Texas and covid-19 others from requiring. disd has offered came up with the idea of generating a long, free vaccines to employees, but only unique string of letters and numbers Getting schooled around half of teaching staff have been known as a hash for each image in its data­ vaccinated, says Mr Hinojosa. (The vacci­ base, then sharing those hashes with com­ nation rate in the state is less than 46% and panies that wanted to scan their services is barely budging upward.) for csam. By reversing the hashing pro­ Enrollment is another difficulty. DALLAS cess, companies could scan images on Schools have struggled to predict the num­ Texas offers an early case study on their services just for known csam, and re­ ber of students who will return this au­ getting children back to school port anything they found back to ncmec. tumn. “We probably have more unknowns This has led to an expansion of the ack to school” is not an autumnal right this minute than ever,” says Todd number of tips that are sent to ncmec, as “Bphenomenon in Texas. Students be­ Fouche of Frisco Independent School Dis­ technology companies scan automatically gin their summer holiday in May but re­ trict, which lies to the north of Dallas. and voluntarily for csam. In 2010 ncmec turn to class in mid­August. The country’s School districts’ funding hinges on the received 220,000 tips. By 2020 that num­ largest Republican state offers a cautionary number of students attending. Normal at­ ber had grown to 21.7 million. And it is set tale about the struggles that the country tendance in Dallas is 95%, but some of the to get bigger. On August 5th Apple an­ will face with children returning to class­ schools that opened early saw only 60% of nounced that the next generation of its rooms amid a rising number of covid­19 students return, before rising to 80%. phone and laptop software would come cases and a more contagious variant. “Even if we get 80%, we’re still going to with ncmec’s hash database pre­installed, Already a standoff is escalating be­ lose 15% of our revenue,” says Mr Hinojosa. and would scan its users’ devices for csam tween public­school officials and Republi­ Virtual­learning courses could offer a automatically. Apple’s plans have stimu­ can state politicians. In May and again in salve, but to the unwelcome surprise of lated fierce debate about whether the new July, Greg Abbott, the governor, issued ex­ school officials, the legislature did not pro­ system will provide an avenue for govern­ ecutive orders banning government enti­ vide funding for online learning. The latest ments to expand their capacity to scan ties, including schools, from requiring special legislative session called by the go­ private devices for other illicit content. masks. But with a rising number of co­ vernor could take up the issue again, but Many technology companies already used vid­19 cases and hospitalisations coincid­ Democrats have fled to Washington, dc to ncmec’s hashes to scan their own cloud ing with the start of the academic year, stop a voting bill, and the state House has servers for csam, but Apple is taking this some public­school officials are choosing struggled to reach a quorum to start con­ further with an encrypted system that runs to flout the governor’s orders. ducting business.

012 26 United States The Economist August 14th 2021

Some school officials have calculated and Hong Kong have implemented man­ dents get jabbed before returning to cam­ that it is worth it to foot the bill for virtual dates for work and social activities. pus in the autumn. The three­judge pan­ learning temporarily, in the hope that stu­ Some private employers are doing the el—comprising one appointed by Ronald dents will physically return to school when same. All of the top 25 public and private Reagan and two by Donald Trump—dis­ they deem it safe. Frisco, for example, is of­ universities, as ranked by us News and patched the unvaccinated students’ com­ fering a temporary online option. But if all World Report, will require students to get plaint in four crisp pages. The court relied 8,200 Frisco students who have signed up themselves vaccinated. Walmart, the on a Supreme Court decision from 1905 up­ for it were to continue virtually for the country’s largest private employer, with holding a requirement that adults be vacci­ whole autumn semester and the state not nearly 1.6m workers, announced that vac­ nated against smallpox. Since the univer­ change its stance on funding virtual stu­ cination would be obligatory for corporate sity allowed religious and medical excep­ dents, that would translate into $30m in employees and regional managers. Walt tions, the court reasoned, and since people lost revenue for the district alone. Mean­ Disney Company, Uber, Lyft, Google, and “may go elsewhere” for their education, while, more parents are splurging to send Tyson Foods now require some employees the students had no constitutional claim. their children to private schools, which to be vaccinated. cnn, a cable news net­ Although most vaccine mandates are can impose masks and other health re­ work, fired three workers who came to the probably legal, some might be politically quirements, says Bob Sanborn of Children office without the jab. unwise, warns Mr Olson. Only one in ten at Risk, a non­profit. Vaccination mandates are nothing new American vaccine holdouts say they would Children are already struggling aca­ in America. The army has required inocu­ get the jab based on a work or travel man­ demically owing to the disruption wrought lation for several diseases for more than date, according to a survey by The Econo- by covid­19. In the spring, only 30% of Tex­ 200 years. All 50 states require schoolchil­ mist and YouGov. Dissenters warn of a po­ as third­graders (ages 8­9) tested at or dren to be vaccinated against childhood ill­ tential backlash. Among Germans, support above grade level in maths, down from nesses like measles and mumps, and about for a hypothetical vaccine mandate 48% in 2019. These recent results may ac­ 95% of pupils have had the required jabs, dropped by 16 percentage points from 44% tually overstate the number of students according to the Centres for Disease Con­ between spring and autumn 2020. France, testing at grade level, according to one edu­ trol and Prevention. Most states allow ex­ meanwhile, has seen an increase in vacci­ cation expert, since some struggling stu­ emptions for religious and personal be­ nation rates since announcing the covid­19 dents did not show up for the exams. n liefs, but not all. California revoked perso­ vaccine mandate. nal and religious exemptions in 2015. New Vaccination rates are increasing in the York removed their religious exemption in hardest­hit regions, including some of Compulsory vaccination 2019 after a measles outbreak. In California those least likely, for reasons of politics, vaccination rates increased for childhood ever to embrace mandates. Louisiana had Spreading diseases once the non­medical exemp­ 810 new covid­19 cases per 100,000 resi­ tions were removed. dents over the past week; only about 38% of The law gives states and employers the population there are fully vaccinated. wide discretion to require vaccines, says But on August 6th the state reported the Walter Olson, a legal scholar at the Cato In­ highest number of administered vaccine WASHINGTON, DC Mandates are becoming common in stitute, a libertarian think­tank, though he doses (20,737) since April 29th. public and private institutions expects a challenge to reach the Supreme Florida, with 50% of people fully vacci­ Court and reinstate the religious exemp­ nated, had 653 new covid­19 cases per surge in covid­19 infections, along tion prohibited by some states. Many of the 100,000 residents over the past week. The Awith stagnant vaccination rates, has covid­19 mandates do include exceptions. Sunshine State reached a vaccination peak prompted something else to spread across Those in California, Virginia and New York on July 30th: 76,185 doses were adminis­ America: vaccine mandates. For months City allow regular testing as an alternative. tered, the most since June 11th. Other hard­ the country had seemed to be moving in A recent legal challenge to a vaccination hit states are seeing similar results. In the opposite direction. Several states, in­ mandate failed. On August 2nd the Seventh places that will continue to resist man­ cluding some of those where covid­19 cas­ Circuit Court of Appeals declined to block dates, this wave is therefore boosting vac­ es are soaring, banned vaccination re­ Indiana University’s requirement that stu­ cination rates anyway. n quirements in the spring. But as the Delta variant spread in late July, California and New York City required public employees to be vaccinated or else submit to regular testing. Days later New York’s mayor said that, as of August 16th, customers and workers at indoor restau­ rants, bars and gyms will have to present proof of vaccination. The governor of Vir­ ginia is requiring state employees to get the vaccine or be tested weekly. President Joe Biden announced a simi­ lar mandate for federal employees on July 29th, leaving room for them to resort to a mix of testing, masking and social distanc­ ing. Meanwhile the Department of Veter­ ans Affairs (va), a federal agency, is insist­ ing that its medical employees have the jab, and the secretary of defence has an­ nounced that troops will need to do the same. America is not alone. France, Italy An awfully big microchip

012 The Economist August 14th 2021 United States 27

Lexington Green and black

America’s armed forces face their biggest racial reckoning since the 1940s where else in American society has racial integration gone as far or has black achievement been so pronounced,” wrote Charles Mos­ kos, a sociologist, in 1995. “Indeed, the Army is the only institution in America where whites are routinely bossed around by blacks.” This, says Jason Dempsey, a former infantry officer who once taught at West Point, is “part of a fairy tale that we tell ourselves”. In fact, the army resisted Harry Truman’s order to integrate. In Ko­ rea, 90% of black units were commanded by white officers. Though rank can upend the racial hierarchies of civilian life, it is generally still whites who do the bossing around: just 8% of the officer corps is black, compared with 14% of the population. And despite General Powell’s trailblazing career, the top brass is aston­ ishingly pale. Only two black officers are to be found among the country’s 43 four­star officers, equivalent to full general. Professions of race blindness—“I only see green” is a frequent refrain—are common; so too is stereotyping. General Brown re­ calls “wearing the same flight suit with the same wings on my chest as my peers and then being questioned by another military member: are you a pilot?” A survey conducted in 2019 by the Mili- tary Times, a newspaper, found that over half of minority person­ nel had personally witnessed examples of white nationalism or other racism within the ranks. eneral mark milley, the chairman of America’s joint chiefs Such disparities have deep roots. “Our screening programmes Gof staff, and thus the country’s top military officer, provoked a have some level of unconscious bias,” acknowledges General furore in June when he defended West Point’s teaching of critical Brown. “I did not know until three or four years ago that we have race theory, a set of ideas about structural racism. “I want to under­ private pilot time that you can use to boost your score to get to pi­ stand white rage,” he told an audience of bewildered congress­ lot training. I’ll just say that when I was in high school or college, men. “I’ve read Mao Zedong. I’ve read Karl Marx. I’ve read Lenin. my parents would not have had money for me to do that.” That doesn’t make me a communist. So what is wrong with under­ He points out that black airmen, like black soldiers, have often standing…the country which we are here to defend?” joined supporting arms, like logistics and maintenance, rather Plenty, according to Republicans. Such ideas were “very dan­ than the operational ones which breed senior officers. One reason gerous to unit cohesion and morale”, argued Tom Cotton, a sena­ for that is that black recruits see support skills as more transfera­ tor. Donald Trump, who picked General Milley for the job, seeing ble into the civilian world. Only 2% of air­force pilots are black, him as a kindred spirit, demanded that he resign, accusing him of unchanged from 30 years ago. appeasing a “woke mob”. Mr Trump’s eldest son posted a doctored The mechanics of promotion are also stacked against minor­ photo of the general with pink hair and a rainbow medal. ities in subtler ways. In each service, older mentors can boost the Yet General Milley is not the only one to have had a racial awak­ careers of favoured younger officers at key junctures in their ca­ ening. When General Charles “cq” Brown became the chief of the reers. That often benefits graduates of elite colleges, like West us Air Force in June 2020, the first black American to lead any of its Point, at the expense of those who entered through less presti­ military services, he asked airmen to express their views as part of gious routes. It is to redress this imbalance that General Brown a review of racial disparities in the force. More than 123,000 of meets weekly with his staff to examine promotions to colonel and them responded, in 27,000 pages of text. “Those from the majori­ above, to identify diverse candidates down to the level of majors, ty, when you talk to them, their eyes have opened up,” says General who may have spent only a decade in service. “You can’t do it by Brown. “They have a different perspective now.” luck,” he says. “You have to purposely manage it.” Like other American institutions, the country’s armed forces are reckoning with the intellectual and political currents un­ Was blind but now I see leashed by last year’s murder of George Floyd in Minneapolis and Transforming the demography and culture of a sprawling institu­ the protests that followed; it was that turmoil which prompted tion is the work of years. America’s armed forces have over 1.3m General Brown, then the head of Pacific Air Forces, to record an im­ personnel. Many quietly share Mr Trump’s concern that fractious passioned video in which he recounted the discrimination he had debates over identity politics will erode the professionalism of the faced over his career. armed forces. The backlash to the integration of gay servicemen in It was an uncomfortable moment for an organisation that had the 1990s shows how fraught such change can be. told itself a story of unbroken progress. After all, the armed forces Nevertheless, it is coming. The share of nonwhite cadets at were desegregated in 1948, long before other institutions. After the West Point rose from 23% in 2007­09 to 36% in 2019. And whereas end of the draft in 1973, black representation soared, rising to a the first black officers to reach the top were wary of speaking out third of the army by 1976—thrice the black share of the population. on divisive matters, eager to be defined by role, rather than race, The meteoric rise of Colin Powell, who joined the army as a their successors have more latitude. “Knowing that there’s very young soldier six years before the Civil Rights Act was signed into few African­American fighter pilots…I hope I can open the doors law, and became the first black chairman of the joint chiefs of staff for others behind me,” says General Brown, “not just in uniform in 1989, seemed to furnish proof of a post­racial military. “No­ but in other parts of our society as well.”n

012 012 The Americas The Economist August 14th 2021 29

Race in Brazil Brazil was the last country in the Americas to outlaw slavery. Though former slaves One city, two worlds did not suffer formal segregation of the kind imposed by South Africa or the Amer­ ican South, poverty and laws criminalising vagrancy and African religions had a simi­ lar effect. Rio “civilised and modernised it­ self by expelling second­class citizens to JACAREZINHO the morros”, writes Zuenir Ventura in “Ci­ Rio de Janeiro asks why its cops kill so many black people dade Partida” (Divided City, 1994). t dawn on May 6th residents of Jacare­ ty. But a growing chorus from Ms de Paula’s Black people too poor to live elsewhere Azinho, a favela in Rio de Janeiro, woke Rio, the mostly black peripheries and fave­ built shantytowns (see map on next page). to the sound of police helicopters and gun­ las, suggests there is more to it than that. Their residents became cheap labour for fire. Ten hours later, 28 people were dead, Black Brazilians are increasingly argu­ factories in Zona Norte and white families nearly all of them black men. Mariana de ing not only that the police are too trigger­ in Zona Sul. Today black Brazilians are 56% Paula, a 27­year­old accountant and activ­ happy but also that their violence is some­ of Brazil’s population but 70% of the poor. ist who lives on the morro (“hill”, as steep times racially motivated. In 2019 Brazilian Unemployment is 17% for blacks versus favelas like Jacarezinho are called), told her cops killed 6,357 people. In the state of Rio 12% for whites. White Brazilians earn al­ boss that it was too dangerous to travel to they killed 1,814: nearly twice as many peo­ most twice as much as black ones do. the office. Her boss, who is white, suggest­ ple as cops killed in the United States, Jacarezinho, which sits between a de­ ed she use a ride­hailing app. “She didn’t which has a population 19 times as large. funct General Electric plant and two train get it,” says Ms de Paula, who is black. The Eight out of ten Brazilians killed by police lines, has 40,000 residents. Its past as a ha­ shooting sounded like popcorn. The vic­ are negros, a grouping that combines the ven for former slaves earned it the nick­ tims included one police officer, shot by official racial categories of preto, “black”, name “Rio’s blackest favela”. Over the drug traffickers, and 27 residents killed by and pardo, “brown” or “mixed”. (Through­ years, poverty has bred resourcefulness. the police. Some were unarmed. It was the out this article, “black” refers to the unoffi­ Residents add one floor after another to deadliest police raid in the state’s history. cial category of negros.) Police killings tri­ homes packed like Lego bricks. Shops sell When the shooting stopped, Ms de Pau­ pled between 2013 and 2020 and now rep­ everything from birthday cakes to beard­ la began her commute down alleyways that resent around a third of all homicides in trimmers. But there is no proper sewerage zigzag to the bottom of the morro, through some states. system. Nor are there many formal jobs. a tunnel from Rio’s poor Zona Norte to the Part of the explanation lies in history. Open­air drug markets are manned by rich Zona Sul, and finally to Barra da Tijuca, teens with ak­47s, despite a huge police a beachside strip that is 72% white. In station at the bottom of the favela. → Also in this section mostly white neighbourhoods in Rio flats In 2008 a police commander in Rio can cost 2,000 reais ($400) per square foot. 31 Cuba liberalises a little called the force “the best social insecti­ Their inhabitants blame poverty and cor­ cide” after a raid that killed nine people. ruption for the violence that plagues the ci­ — Bello is away Rio’s civil police is responsible for investi­

012 30 The Americas The Economist August 14th 2021

gating crimes, but like the military police, 10 km its encounters with favelas consist mostly Still a divided city of operations with heavy weapons and Rio de Janeiro, distribution of inhabitants based on 21 census hundreds of men. Decades of iron­fist pol­ icing have failed to curb violence. A recent By race Branco Pardo Preto Guanabara Bay study by the state prosecutor’s office showed that in the month after lethal raids, BRAZIL Zona Norte crime in the vicinity tends to tick up, not down. And raids claim innocent lives. In  dot =  person the past five years, eight children under the Jacarezinho age of 12 were killed during police opera­ tions in Rio. At least 24 were injured. Dur­ ing the Jacarezinho raid a nine­year­old Green saw police kill a man in her bedroom, soak­ space ing her mattress with his blood. The Department for the Protection of Zona Sul Children and Adolescents says it spent Ipanema months planning the raid in May, which was meant to arrest 21 people suspected of Barra da Tijuca

recruiting minors to drug gangs. But evi­ ATLANTIC OCEAN dence appears to be scant—consisting mainly of photos from Twitter. Officers made only six arrests. Of the 27 people Location of favelas Share of population by race, Q 2020, % killed, some were minors and most were Other 0.5* not on the suspect list (police say they were Rio de Janeiro Preto 13.5 wanted on other charges). It looked like a Branco 45.6 Pardo 40.4 “revenge operation”, says Daniel Hirata of Brazil 0.9* the Federal Fluminense University in Rio. 42.7 47.2 9.2 When an officer dies in a raid, civilian *Asian, indigenous and no response Sources: IBGE; Instituto Pereira Passos deaths are twice as likely. Despite the levels of violence—which police argue is needed to counter crime— to be attributed to class, not race. Even left­ went viral. An ongoing survey of news sto­ most citizens are indifferent to the plight wing types “used to say racism is just a fruit ries about police operations in Brazil found of favela residents, says Silvia Ramos of the of economic inequality”, says Luiz Eduardo the word “black” only once in 7,000 stories Centre for Security and Citizenship Stud­ Soares, who as an adviser to Rio’s security between June 2019 and May 2020 but six ies, a think­tank. Brazilians see police kill­ secretary in 1999­2000 tried to reduce times since the death of Mr Floyd. ings as a natural response to overall vio­ crime by filling favelas with projects, such Michael França, an economist, thinks lence. They express more fear than citizens as a snazzy cultural centre. that Brazil is starting to talk more openly of any of the 163 countries surveyed by the But such schemes are often underfund­ about race. This year he and his colleagues Institute for Economics and Peace, an Aus­ ed. Killings by police fell 86% between from Insper, a business school in São Pau­ tralian think­tank. Some 95% are some­ 2008 and 2014 in “police pacification unit” lo, created a “racial­equality index” to mea­ what or very worried about being the vic­ areas, built in the lead­up to the 2016 Olym­ sure disparities in different regions. The tims of violence. Another poll found that pics. These community policing units situation is becoming better in some ways 57% agreed with the phrase “a good crimi­ were disbanded in 2019, after their budget and worse in others. nal is a dead criminal.” was cut from 5m reais to just 10,000. At­ Public universities now have as many “You can’t go into a favela with roses,” tempts to reform the police cost reformers black students as white ones, but while argues Carlos Monjardim, the head of the like Mr Soares their jobs. 36% of white 18­ to 24­year­olds have com­ residents’ association in Ipanema, a rich pleted university or are studying for a de­ neighbourhood in the south of the city. It The revolution is now televised gree, the share drops to 18% for black 18­ to has 42 community police officers, whom Attitudes have started to change, however. 24­year­olds. Mr França’s index estimates locals “adore”. Mr Monjardim’s biggest This is partly due to pressure from activ­ that it will take 27 years to reach racial concern is an “invasion” of people selling ists, academics and a small but growing equality. And a black Brazilian is nearly knick­knacks on the pavements. contingent of black politicians. More re­ three times as likely as a white one to be a He refers to the idea, first mooted in the cently Black Lives Matter protests in the victim of homicide. (Most perpetrators are 1930s, that a lack of laws against interracial United States and the rise of mobile also black.) In the United States a black per­ romance and greater mixing have made phones and social media have also raised son is seven times as likely to be killed as a Brazil a “racial democracy”. “Racism awareness of racism. white one. But in Brazil deaths of black doesn’t exist here,” he says, pointing to his Thiago Amparo, a human­rights lawyer, people at the hands of cops are a larger love of samba and his adopted sister, who provided live commentary on Brazil’s big­ share of homicides. is black. He supports the populist presi­ gest tvchannel for six hours in the wake of These numbers are finally starting to dent, Jair Bolsonaro, who has called resi­ George Floyd’s death. In November 2020 dawn on people, says Irapuã Santana of dents of quilombos (communities founded protests swept Brazil after white security Educafro, a civil­rights group. In 2017 the by escaped slaves) “fat and lazy” and says guards at a Carrefour supermarket beat a group joined a class­action lawsuit oppos­ that activists are “importing…tensions black man to death. The supermarket ing police raids which resulted in orders alien to our history”. chain agreed to pay 115m reais to civil­ that Rio’s police take steps to prevent loss Indeed segregation in Brazil, including rights groups, a record sum. In June a video of life, such as having ambulances on call the existence of favelas and separate “ser­ of a white couple falsely accusing a black and not using schools as bases from which vice” elevators for maids and cooks, tends surfing instructor of stealing their bicycle to shoot. After the Supreme Court banned

012 The Economist August 14th 2021 The Americas 31

raids during the pandemic, killings by Cuba Rio’s police dropped by a third in 2020, sav­ ing nearly 600 lives. The ban was still in A small step away from socialism place when officers entered Jacarezinho. They called the raid “Operation Exceptis”. But authorities in Rio stubbornly stick to their methods. In 2019 the governor said police should “shoot criminals in their lit­ tle heads”. He abolished the security secre­ The government approves small and medium-sized enterprises at last tariat, which had provided a layer of over­ sight, and weakened the internal­affairs n august 6th the Cuban council of tapropistas is ill­defined. Applying for the departments (he was later impeached for Ostate approved a long­awaited law au­ necessary permits is a slog that can take ag­ financial irregularities). When activists ar­ thorising the creation of small and medi­ es. The rules are designed to keep cuenta- gued that officers should be held account­ um­sized enterprises. The announcement propistas small (and therefore no threat to able for the deaths in Jacarezinho, the po­ came less than a month after thousands of state­owned firms). They can only hire rel­ lice sealed the internal investigation for Cubans took to the streets calling for free­ atives or other self­employed subcontrac­ five years. A study in 2008 found that 99% dom and an end to the Communist dicta­ tors. They cannot incorporate, so there is of cases against Rio police officers were torship. After a brutal crackdown, around no legal difference between their personal dismissed without charges, often without 380 protesters are now in prison awaiting capital and their business capital—if the a serious investigation. trial on charges such as “delinquency”. business goes bust, so do they. This is in contrast to São Paulo, where The announcement could be designed Despite these shackles, enterprising police lethality has dropped since some partly to distract attention from the state’s Cubans have flocked to start their own mi­ units began wearing body cameras (after suppression of dissent. On an island with cro­businesses. Since 2010 the share of the the raid in Jacarezinho, Rio’s state assem­ the fourth­highest official covid­19 infec­ workforce who are self­employed has bly ordered police to implement a 2009 law tion rate in the world it will be tricky for soared from 3% to 13%, or more than that mandates their use). São Paulo is in­ people to forget that there was enough pet­ 600,000 people. Just over a third are wom­ troducing anti­racism training, though rol to power motorcycles, trucks and buses en; a third are under 30. They are concen­ this has had mixed results in other coun­ filled with boinas negras (a special­forces trated in the largest cities, and are most tries. The black lieutenant­colonel who is unit of the Cuban military) who were sent likely to work as taxi­drivers or run restau­ leading the effort, Evanilson Corrêa de out to rough up the protesters in July, but rants and food kiosks. Souza, is unwilling to blame racism for not enough for ambulances or incinerators The new law, which still needs to be deaths in “terrains where criminals are to cremate the dead. published in Cuba’s official gazette, is ex­ armed to the teeth”. Police “go into favelas Nonetheless, it is a welcome reform. It pected to allow small and even medium­ with the mentality that they will kill or be is part of what the government calls the sized private businesses to incorporate. killed,” he says, pointing out that black of­ “perfeccionamiento”, or perfection, of so­ This could mean that private firms will be ficers make up a third of the police force cialism. Everyone else recognises it as al­ allowed to hire staff (rather than just neph­ but two­thirds of officers killed. “We’re lowing a bit of free enterprise to compen­ ews or independent contractors). It could killing each other.” Racism isn’t a policing sate for socialism’s failures. In February also mean that multiple investors will be problem, it’s a societal problem, he says. Cuba’s council of ministers increased the able to put money into a private firm with In the meantime activists will keep number of trades open to cuentapropistas, limited liability. That would make Cuba pushing for change. Last year Ms de Paula or self­employed people. Some 124 sectors much more attractive to foreign investors. and Thiago Nascimento, a law student are reserved for the state, but everything Incorporation would also make paying tax­ from Jacarezinho, helped found LabJaca, a else is open to entrepreneurs. Even with es simpler and borrowing less daunting. think­tank geared towards favela resi­ the recent changes, the legal status of cuen- But not all industries will be treated equal­ dents, to track covid­19 cases and urge peo­ ly. Architects, journalists, lawyers, vets, ple to take the virus more seriously. After translators and interpreters, among oth­ the raid they changed their focus, organis­ ers, are not allowed to work in the private ing a protest and releasing a wonky video sector, or to incorporate. showing how many school uniforms could Cuba’s state firms are pampered, ineffi­ be purchased for the cost of weapons used cient and the main reason why the island is by the police. But few businesses were will­ so short of basic goods. This, in turn, is one ing to support LabJaca’s new campaign. reason why Cubans have been protesting. A month after the raid, a friend of Ms de Last year gdp shrank by 11%. New official Paula’s was killed by a stray bullet. Kathlen statistics show that imports and exports of Romeu was 24 years old and 14 weeks preg­ goods have been declining since 2018, well nant, with a degree from interior­design before the pandemic scuppered tourism school and a new flat in a safer part of Rio. and starved Cuba of hard currency. Hoping She had returned to a favela to visit her to boost morale, the government has dis­ grandmother when she was shot by the po­ tributed some food, donated from Mexico lice, witnesses say. Ms de Paula went on na­ and elsewhere, in the areas where the larg­ tional news to denounce the killing. The est protests occurred. next day her co­workers swarmed her. “We Oniel Díaz of Auge, a consultancy, has saw you on tv,” they said. “You’re famous!” called for reforms to unleash the private Tens of thousands of strangers followed sector since 2017. He is excited by the new Ms Romeu on Instagram, liking photos of law, but cautious too. Opening a business her baby bump. “You can say all 27 killed in is likely to continue to be much slower Jacarezinho were criminals,” says Ms de than elsewhere in the world. “At the end of Paula. “But an unborn baby?” n Abuzz with opportunity the day, this is still Cuba.” n

012 32 Middle East & Africa The Economist August 14th 2021

Cabo Delgado more purposeful. In April he visited Paul Kagame, Rwanda’s president, in Kigali. A Rwanda’s new fight Rwandan army reconnaissance team visit­ ed Mozambique the next month. A 1,000­ strong rdf force arrived in July. Opponents of Messrs Nyusi and Ka­ game speculate that France is footing the bill. They note that Emmanuel Macron vis­ JOHANNESBURG ited Mr Kagame a month after Mr Nyusi. Foreign troops are helping Mozambique battle Islamist insurgents The French president also received the two ocímboa da praia has been at the when, on August 8th, Mocímboa da Praia African leaders in Paris, where the Mozam­ Mcentre of Mozambique’s war against was reclaimed. Whether this marks the be­ bican leader met the boss of Total, the jihadists. For years the town in the north­ ginning of the end for the group known lo­ French energy firm in charge of the lng eastern province of Cabo Delgado has been cally as al­Shabab (like the unrelated So­ project. Nonsense, say the French. “We are home to aggrieved Muslims from the Mwa­ mali group) is unclear. What is certain is covering all our own costs,” says Ronald ni ethnic group, angry at how the mostly that the operation led by the Rwanda De­ Rwivanga, an rdfspokesman. Catholic Makonde elite dominate politics fence Force (rdf) reflects how a locally Rwanda is in some ways an attractive and business. The port was also a hub for rooted conflict is internationalising. ally for Mr Nyusi. He had been reluctant to people, ideas and goods—Islamists from Filipe Nyusi, Mozambique’s president, invite soldiers from the Southern African across east Africa, fundamentalism and, has been criticised for a slow and weak re­ Development Community (sadc), which later, money and guns. In October 2017, sponse to the insurgents. But since the worries about insecurity spreading across when an Islamic sect turned violent, it was golden goose that is the liquefied natural the region. sadc troops were deployed on­ the site of the first battle of a conflict that gas (lng) project waddled off, he has been ly on August 9th. He does not want to be be­ has cost at least 3,200 lives and displaced holden to South Africa, the regional big 800,000 people. The insurgency then power and provider of most of the mis­ → Also in this section grew. Jihadists seized Mocímboa da Praia sion’s manpower (it has authorised the use in August last year. From there they plotted 33 Ghana’s oil buyback of 1,495 personnel). The rdfis battle­hard­ an attack in March on Palma, 80km along ened and highly disciplined. South Africa’s 33 A cry for help from Niger the coast, which led to the shelving of a army has faced years of austerity. nearby gas project that the government 34 The scammer and the supercop For Mr Kagame the mission has several had hoped would transform the economy. aims. Kigali and Maputo are roughly the 35 Vaccine diplomacy in Tunisia Many Mozambicans therefore cheered same distance (1,700km) from Pemba, the

012 The Economist August 14th 2021 Middle East & Africa 33

provincial capital of Cabo Delgado. Rwan­ 100 km Niger’s cry for help da is worried that jihadism in eastern Con­ Gas fields go and northern Mozambique could meta­ TANZANIA Jihadists on all stasise. Rwanda is also short of friends, a Palma Maputo result of hunting down enemies in other sides countries and backing rebels in its neigh­ Mocímboa bourhood. Helping Mozambique gains da Praia Cabo Rwanda a new ally. And it pleases America, Niassa Delgado President Mohamed Bazoum appeals Britain and France. The presence of Rwan­ for help dan dissidents in Mozambique may have MOZAMBIQUE Mozambique ince a wave played a small role in the decision, too. On Channel of anti­French protests May 23rd Cassien Ntamuhanga, a Rwandan Sbroke out last year across parts of the Sa­ journalist and asylum­seeker, was arrested hel, few leaders in the region have wanted in Mozambique, reportedly in the presence Violent events involving jihadists to appear to be too chummy with the for­ of someone speaking Rwanda’s main lan­ 202*, number of deaths 5 1 Pemba mer colonial power, or for that matter any guage. He has not been seen since. (Rwan­ Source: ACLED *To Aug 11th of the Western countries which have sent da denies any knowledge of the incident.) troops to help fight jihadists. Mohamed It is unclear how Rwandans and Mo­ velopment of local natural resources, and Bazoum, who was sworn in as president of zambicans will work with a sadc contin­ see a state unable to provide health care, Niger in April in its first democratic trans­ gent that also includes Angolans, Botswa­ education, jobs and security, grievances fer of power, is less standoffish. He not on­ nans and Zimbabweans. Mozambique says will fester. Last year Mr Nyusi announced a ly welcomes the French military presence it is in charge, yet the rdf has taken the new northern development agency. But in his country, but thinks other Western lead, much to the delight of propagandists some worry it is just a sop to donors. powers should be doing far more to help accompanying it. “Covering rdfin combat Across Africa attempts to crush extrem­ roll back the insurgent groups that have is like going to a Mike Tyson fight, in his ism through military means alone have of­ overrun parts of Mali and are causing hav­ prime,” tweeted one sycophant. ten failed. The international response may oc in Burkina Faso, Niger and Nigeria. Tanzania, whose main city, Dar es Sa­ bring back the gas companies. But will it “We are not satisfied with the inter­ laam, is just 700km from Pemba, has been help the people? n national community as a whole in its way wary of involvement. In the past it had close links with its southern neighbour. But during the presidency of John Magufu­ Ghana’s oil buy-back li, who died in March, the insurgency Crude business strained relations. Mozambicans com­ plain that Tanzania fuels the violence (funding and some fighters come over the Ghana moves to buy back oil licences no one else wants border). Tanzanians accuse the Mozambi­ cans of a botched response. Frosty rela­ t was not meant to be this way. Ghana or get involved in the production game. tions make it harder to fight an insurgency Imade its first big oil discovery only in The deal will create jobs, he says, and that takes advantage of a fluid frontier. 2007, a generation after its corruption­ return a handsome profit. Tanzania’s new president, Samia Suluhu addled and environmentally damaged It is also a great deal for Norwegian Hassan, may prove more co­operative. regional peers. But the expected bonanza shipping billionaire Kjell Inge Røkke, Western countries are keen on upgrad­ of investment and revenue has failed to who controls Aker Energy and agm, two ing Mozambican forces. America will soon materialise. ExxonMobil, an oil compa­ oil firms with stakes in the blocks. Mr conduct its second training mission. The ny, quit this year without drilling a well. Røkke’s firms acquired a 50% stake in eu is finalising its plan, led by Portugal. Total decided to pass altogether. Chinese dwt­ctp in 2018 for just $100m. A year Britain has offered similar help. France has firms have gone elsewhere. Now the later, he persuaded the government to proposed maritime co­operation. The nominally centre­right and pro­market relinquish a 14% stake in sdwt, arguing West may be asked to fund some of the Af­ government plans to step in and buy it would make the licences more attrac­ ricans’ military response. back the oilfields no one else wants. tive to the potential partners that never Should that happen, they ought to press On August 6th Parliament voted to materialised. Last September, Mr Røkke Mr Nyusi on his strategy. The insurgents support plans by Matthew Prempeh, the himself said it was time to “move focus” have not been vanquished. The ease with energy minister, to pay up to $1.1bn to to renewables, and in May hinted at which the rdf marched on Mocímboa da acquire large stakes in Deepwater Tano­ withdrawing from Ghana. Praia suggests they retreated to the bush Cape Three Points (dwt­ctp) and South Bright Simons, an activist, says the rather than fight. Analysts reckon that the Deepwater Tano (sdwt). The two oil government has overvalued the blocks group may change its plans, spreading out blocks are more than 100km offshore and and is buying licences that might other­ across northern Mozambique and adopt­ in deep water. Both have discoveries of wise have been relinquished anyhow. ing guerrilla tactics. oil, but neither is in development, still Industry sources say the biggest benefi­ The way the offensive has unfolded in­ less production. ciaries may be the well­connected local dicates that Mr Nyusi’s priority is to resus­ Mr Prempeh says the fields could firms that will expect to win contracts if citate the lng project. The rdf has retaken produce 200,000 barrels per day within exploration takes off. The Energy Com­ key towns and secured roads to the gas in­ four years, more than double Ghana’s mittee took just a day to consider the frastructure. Mozambique hopes that Total dwindling output. “Oil majors are shift­ minister’s request, and Parliament barely will return in 2022. ing from fossil fuels to renewable ener­ two hours to rubber stamp the minister’s The danger is that a narrow focus on the gy,” he complains. Without new foreign request to negotiate the purchase. Per­ gas project does not address the root caus­ investment, Ghana had two choices. It haps it ought to take more time when the es of the conflict. So long as the people of could leave the oil and gas in the ground deal comes back for ratification. Cabo Delgado see few benefits from the de­

012 34 Middle East & Africa The Economist August 14th 2021

and has its headquarters in Chad. Yet im­ rari and sporting a red Chanel handbag or proving Niger’s security will depend on lounging in a private jet (pictured below). whether its neighbours restore stability. “If Nowhere on Hushpuppi’s feed is there a Malian territory is at the mercy of terrorist picture showing him in handcuffs being groups, as is the case today...our situation led away by police in Dubai. Nor of the will remain difficult,” he says. $40m in cash that they seized in raids on Within Niger Mr Bazoum is not just re­ several apartments there before handing lying on force. He hopes to deal with the him over to America’s Federal Bureau of In­ discontent that leads some to join the in­ vestigation (fbi) to face charges of money­ surgents. To win people over he is trying to laundering and cybercrimes. provide services such as clinics, clean wa­ Few were surprised when they learned ter and schools in remote villages, and to that Hushpuppi had pleaded guilty in attract investment by curbing corruption. April. But Nigerians were stunned on July Investments in infrastructure and solar 28th when court documents were unsealed energy are aimed at boosting growth and implicating their most famous cop, Abba output, particularly on farms. Mr Bazoum Kyari, who is known for tracking down and is also aiming to slow the world’s fastest locking up kidnappers, of whom Nigeria rate of population growth by building has far too many. Mr Kyari is now himself boarding schools for girls, with the aim of wanted by the law, oddly enough for lock­ keeping them in education until they are18 ing up one of Hushpuppi’s accomplices. In years old. Currently, many leave school at this case, though, it was not sleuthing that Against a sea of troubles 13 and are married within a year. By18 many got Mr Kyari his man. The indictment al­ will already have two babies, he says, con­ leges that Hushpuppi promised to pay him of fighting terrorism in this area,” Mr Ba­ tributing to a “crazy” fertility rate of almost for the arrest. zoum (pictured) tells The Economist. seven births per woman. The plot began, according to the indict­ “Against the same adversary, Daesh [Islam­ Improving governance and education ment, with a wheeze to swindle $1.1m out ic State], in Iraq we saw a great internation­ will take time. Yet if Niger is left unaided, of a businessman who wanted a loan to al coalition. But today, we are not seeing time may not be on its side. n build a school in Qatar, by impersonating the same mobilisation through the un, in bankers and setting up a fake bank website. particular.” The region has enough troops, Of the money raked in, $230,000 was spent and these are being trained and advised by Nigeria on a watch that was hand­delivered to French and allied forces. But it lacks air Hushpuppi in Dubai. power and the money to pay its men, Crime and But then the thieves fell out over the which the uncould provide, he says. size of the cut going to Kelly Chibuzo Vin­ Niger, which is ranked as the world’s government cent, whose job it had been to set up the poorest country across a range of measures fake bank website. Feeling cheated, Mr by the un Development Programme, is Vincent called the businessman and told ABUJA caught between two jihadist insurgencies. him of the scam. Hushpuppi, furious, al­ A fraudster’s confession rebounds Along its western borders with Mali and legedly offered the Nigerian detective on a respected cop Burkina Faso it faces groups such as the Is­ money to arrest Mr Vincent and give him lamic State in the Greater Sahara (isgs) and t is an Instagram account to inspire en­ the “beating of his life”. Job done, Mr Kyari, Jama’at Nasr al­Islam wal Muslimin Ivy. In one picture Ramon Abbas, a Nigeri­ a deputy commissioner of police, took (jnim), which is linked to al­Qaeda. The an who calls himself “Hushpuppi”, is lean­ photos of the arrested man and sent them number of attacks mounted by these and ing against a white Rolls­Royce. In another as proof—along with details of a bank ac­ allied groups will increase by a third this the Roller is purple. Lest his 2.5m followers count into which payment could be made. year, predicts the Africa Centre for Strate­ think he is partial only to palatial British Mr Kyari insists he is innocent and said gic Studies, part of America’s Department cars, other posts show him with a red Fer­ he arrested Mr Vincent only because he of Defence. On current trends the conflict will lead to more than 2,400 deaths in the Sahel this year. In Niger’s east, meanwhile, the gov­ ernment is battling the jihadists of Boko Haram who attack across the border from safe areas in Nigeria or from the marshes of Lake Chad. Roughly 500,000 people are living in camps in Niger because of vio­ lence in the country or its neighbours. Mr Bazoum’s response has been to host the headquarters of a French­led counter­ terrorism operation, known as the Takuba Task Force, which will include comman­ dos from nine European countries and will focus on training and advising local forces. This is meant to become the leading West­ ern effort in the Sahel as France winds down its own counter­terrorism force, Op­ eration Barkhane, which currently has about 5,000 troops deployed in the Sahel Hushpuppi’s Instagram snaps once inspired envy

012 The Economist August 14th 2021 Middle East & Africa 35

had threatened to kill members of Hush­ naira ($120m), several houses and a “jeep nels in the uae, for example, devote ample puppi’s family in Nigeria. He denies ac­ farm” with hundreds of pricey cars. Shortly airtime to Abir Moussi, a demagogue who cepting money. But an affidavit submitted after the seizures the recovered loot van­ rails against Islamists (she ran for presi­ by the fbi, backed up by messages between ished and the houses and cars were auc­ dent in 2019 but won just 4% of the vote). cop and fraudster, showed that Mr Kyari tioned off for peanuts to cronies, prompt­ Neither country has much influence in was told to hold Vincent until the scam was ing parliamentarians to demand that Mike far­off Tunisia, which has limited ties to completed and that he had asked for a cut Okiro, Mr Balogun’s successor, account for the Gulf. But both see an opportunity to of the profits. Mr Kyari allegedly received the looted loot. gain some thanks to the pandemic and the some $20,000 for his role. Mr Kyari’s indictment may not be the resulting economic crisis. Since Mr Saied Unusually for an organisation that of­ biggest scandal to hit the police. But it is sidelined parliament both the Saudi for­ ten overlooks wrongdoing by its officers, demoralising for the public. His heroics in eign minister and an adviser to the uae’s Nigeria’s police force has suspended Mr battling kidnappers had earned him a pres­ president have visited him to show their Kyari and opened an investigation. Nigeri­ idential medal of courage and made him support. Many Tunisians believe they dan­ ans gripe that cops are more likely to try to unusually popular for a policeman. His fall gled the prospect of further aid. extort money from them than to respond would be a blow to the many who saw him Western countries worry Mr Saied will to distress calls. In 2005 a former police as proof that a cop can rise to the top by weaken Tunisia’s democracy, but seem un­ chief, Tafa Balogun, pleaded guilty to mon­ working hard and staying clean. Perhaps sure how to react. Since 2011 the euhas sent ey­laundering and was made to forfeit 16bn he may have been too good to be true. n Tunisia more than €2bn in grants. America has given more than $1bn, and in June pledged $499m over five years for infra­ Democratic immunity structure. Compared with what other Arab countries receive, these are sizeable sums: Of coups and covid jabs annual aid from rich countries to Tunisia amounted to almost 3% of gdp last year, against less than 1% for Egypt or Morocco. Compared with the size of Tunisia’s problems, though, these amounts are pu­ ny. The country’s debt­to­gdp ratio has DUBAI A flood of vaccines for Tunisia hints at a battle for foreign influence more than doubled over the past decade, to an estimated 95%. The cost of servicing hat a difference a month makes. tem. The glut of vaccines and the political those loans equals 7% of gdp. There has WIn July, during the Eid al­Adha holi­ upheaval are related: both are reflections been some talk in Washington of using day, Tunisia’s health minister opened co­ of a struggle for influence in the only coun­ American aid as leverage over Mr Saied. vid­19 vaccine centres to all adults. The try where democracy took root after the But it is probably too small to sway him— centres were blindsided by his announce­ Arab spring. particularly if Gulf states can match any­ ment. Large crowds queued for hours, only Many Tunisians, fed up with their mor­ thing withheld by the West. to be turned away when doses ran out. ibund economy, have greeted the presi­ The inscrutable Mr Saied, a political The shambles was emblematic of the dent’s self­coup with cheers or shrugs. gdp outsider elected as a protest against Tuni­ government’s failure to deal with the pan­ shrank by 8.6% last year. Unemployment is sia’s incapable parties, has offered few demic. By August 7th just 17% of Tunisia’s 18%—and 30% for graduates. Parliament hints of where he will take the country. He 12m people had received at least one dose. was paralysed by petty squabbles. will have to juggle the competing demands Though case numbers have fallen from Saudi Arabia and the uae, for their part, of civil­society activists and politicians their peak in July, the death rate, more than are enthusiastic. They have long been un­ wary of his plans; a weak economy that 10 per 1m people, ranks among the world’s happy about the influence of Ennahda, a cannot cope with instability; and foreign worst. Hospitals are full. moderate Islamist party with the largest powers with very different visions of Tuni­ On August 8th, though, the government bloc of seats in parliament, and have sia’s future. The vaccine drive bought him a called Tunisians back for another drive. sought to undermine it. Television chan­ moment of goodwill. It may not last. n This time workers jabbed more than 551,000 arms—almost 5% of the popula­ tion—in a single day. Two things had changed since the botched earlier attempt. First was the arrival of millions of doses from abroad. Saudi Arabia sent 1m last month and the United Arab Emirates (uae) 500,000 more. America delivered 1m doses of the Moderna jab. France, Tunisia’s for­ mer colonial ruler, sent 1m as well. All told Tunisia has received 6m doses, says the president, Kais Saied, enough to fully vac­ cinate a quarter of its people. Second was Mr Saied’s decision to as­ sume emergency powers on July 25th, when he sacked the prime minister and suspended parliament. It is unclear if he will return power to parliament, call for talks with politicians, unions and other groups or take further steps, such as calling a referendum to change the political sys­ Winning friends by jabbing people

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012 Europe The Economist August 14th 2021 37

Germany’s election rectly for their chancellor, but insa Con­ sulere, a pollster, found last week that Jamaica, traffic­light or when respondents were asked whom they would pick if they could, Mr Scholz got 27% black and green? of the votes. Annalena Baerbock, the Green Party’s candidate, drew just 13% and Mr Laschet 14%. Fully 36% said that they do not want to vote for any of the three. BERLIN With Mr Scholz doing well (or at least Our new model forecasts a wide-open race to replace Angela Merkel not blundering), a genuine alternative to n america presidential campaigns start ty, the Christian Social Union (csu). But Mr the conservative party’s long rule has be­ Isoon after the mid­term elections and Laschet is also the state premier of nrw, come plausible. The Economist’s election last nearly two arduous years. In Germany, and his response to the floods has been in­ model, our first for Germany (which can be in contrast, for most of this year it was hard ept. As The Economist launched its elec­ found at www.economist.com/german­ to tell that one of the most important elec­ tion­forecast model online on August 10th, election­2021), blends the latest polls with tions in post­war history will take place on the once soporific election campaign was other indicators, such as data on parties’ September 26th. It was only in the first becoming more interesting. The gaffe­ past performance, to come up with an edu­ week of August that posters sprouted on prone Mr Laschet cancelled all campaign cated guess at how many votes and seats lampposts across Berlin, featuring the events last week and some tv appearances each might win. It also measures the con­ three high­profile contenders for the chan­ in September, ostensibly to focus on the af­ siderable uncertainty of the contest. The cellorship as well as obscure local politi­ termath of the flood disaster. model’s projections will be updated daily. cians running for parliament. Political ad­ Meanwhile Olaf Scholz, the candidate Germany’s election system is unusual. vertisements are at last running on televi­ of the Social Democratic Party (spd), is Voters get two votes. The first is used to sion. The Social Democrats even broke a ta­ gaining ground. Germans do not vote di­ elect a local mp—roughly one for every boo this month by running a negative one, 250,000 people—using a first­past­the­ attacking the religious beliefs of a close post system; every winning candidate is → Also in this section aide of Armin Laschet, the conservative guaranteed a seat. The second vote is for a candidate who is the narrow front­runner 38 French rhetorical hysteria party rather than a candidate. It is more to succeed Angela Merkel, who is retiring important than the first because it deter­ 39 Free media in Poland after 16 years as chancellor. mines the overall proportion of seats that Until devastating floods inundated 39 Sardinia’s shy rich each party holds in the Bundestag, the low­ parts of North­Rhine Westphalia (nrw) er house of parliament. Candidates’ pros­ 40 Covid in Bulgaria and Rhineland­Palatinate in mid­July, pects for the chancellorship depend not on conventional wisdom suggested a win for 40 The Balkans and the eu their personal popularity but on how well Mr Laschet, the candidate of the Christian their parties do on the second vote. Most 41 Charlemagne: A tale of two flights Democratic Union (cdu) and its sister par­ polls (as well as our online poll­tracker)

012 38 Europe The Economist August 14th 2021

predict that the spdwill come in third after the cdu and the Greens, or tie with the The Economist’s German election model Greens for second. Forecast share of seats after election, August 11th 2021, % Median 9% confidence interval Once seats are allocated, coalition talks get under way. As of August 12th our model By party By possible coalitions Majority shows that the combination most likely to 403020100 cdu/csu 40 50 7060 have a majority would be the , the CDU/CSU Jamaica Greens and the free­market Free Demo­ CDU/CSU Greens FDP cratic Party (fdp). This is known as a Jamai­ Greens ca coalition, after the colours of that coun­ SPD try’s flag. The Greens and Christian Demo­ Trac Light SPD Greens FDP crats might also go it alone in a black­green FDP combo, if their vote share is high enough. AfD Our model also spies a potential upset with Black-Green an Ampel (traffic­light) coalition of the The Left CDU/CSU Greens spd fdp Greens, and . This would give Mr Sources: Wahlrecht.de; The Economist Scholz his best chance at the chancellor­ ship, though Ms Baerbock would probably claim it if the Greens beat the spd.It would vote­share threshold required to get into youthful boss of the fdp, whose party is exclude the cdu from government for the parliament. But it would be part of two of benefiting from Mr Laschet’s weakness, fa­ first time since 2005, when Mrs Merkel the three most likely coalitions. “It’s look­ vours Jamaica but has not ruled out Ampel. first took charge. ing good for the fdp,” says Ursula Münch, Hence he risks losing some of the majority The fdp has not been in government head of the Academy for Political Educa­ of fdp voters who prefer Mr Laschet to Mr since 2013, when it failed to cross the 5% tion in Tutzing. Christian Lindner, the Scholz. Mr Lindner is already discussing ministerial portfolios. He says he would like to be finance minister—and assumes French rhetorical hysteria that the Greens would claim the planned 1789 and all that environment and climate ministry. Many pundits think the Greens and cdu/csu chose the wrong candidates. Did PARIS they? “Jain (yes and no)”, says Olaf Böhnke Why so many French people fear dictatorship and civil war of Rasmussen Global, a political consul­ enture into the chat rooms of Why is France so often convinced it is tancy in Berlin. The cdu/csu should have VFrench cyberspace or onto the streets on the brink, and so prone to rhetorical picked Markus Söder, the csu’s head and of Paris, and the impression this summer hysteria? The country’s disjointed and state premier of Bavaria, who has better po­ is of a country on the brink of totalitarian rebellious history is one answer. “Are we litical instincts and is more dynamic than rule or civil collapse, or both. In July the in 1789?” is still a periodic headline in the Mr Laschet. But Ms Baerbock ticks lots of word dictature (dictatorship) surged press. And indeed, the prospect of dis­ boxes, says Mr Böhnke, who adds that all tenfold on Google, in anticipation of a order is not wholly fanciful. A culture of women in German politics face extra grill­ new “health pass” introduced on August mass protest is deeper­rooted in France ing. In his view Ms Baerbock’s missteps, in­ 9th by President Emmanuel Macron. than in any other European country, and cluding alleged plagiarism in her book and This makes full vaccination (or a nega­ reasoned debate often gives way to fac­ embellishment of her cv, have been exag­ tive covid­19 test) a condition of access to tional theatrics and sabotage. Fifty years gerated by the centre­right press. restaurants, bars, trains and other places. after the May ‘68 student uprising, gilets With a month and a half to go, the out­ Nicolas Dupont­Aignan, a right­wing jaunes (yellow jackets) ransacked Paris. come is highly uncertain. Since 2005 the deputy, called the new pass sanitairea In July anti­vaxxers invaded a town hall number of undecided voters has increased “sanitary coup d’état”. Michèle Rivasi, a in Chambéry, in the Alps, and vandalised drastically, says Thorsten Faas, a professor Green politician, called it “apartheid”. vaccination centres. of political science at the Free University in Protesters clutched placards with slo­ Inflating fears of violence or totalitar­ Berlin. The last weeks of election cam­ gans such as “False pandemic, real dicta­ ianism may also suit some politicians. paigns have become more important than torship” and “Pass Nazitaire”, or photos Many a French election campaign has ever, which makes both our online poll­ of Mr Macron with a Hitler­style mous­ been won on the promise of calm after tracker and our election­forecast model es­ tache. A few wore yellow stars on which chaos. Over four­fifths of the French say pecially relevant. Particularly with new was written “non­vaccinated”, eliciting that feelings of “insecurity” will influ­ candidates for the chancellorship, old loy­ widespread indignation. Joseph Szwarc, ence their vote at the presidential elec­ alties may no longer hold, says Mr Faas. a 94­year­old Holocaust survivor, called tion next year, even though violent crime Faithful followers of Mrs Merkel will not the comparison “odious” and said he (sexual and domestic violence aside) has automatically vote for Mr Laschet. shed tears at the sight: “I wore the yellow been falling for years and the murder rate On August 10th Mr Laschet met his fel­ star; I know what it was.” is stable. Some 200,000 people grabbed low state premiers to discuss covid­19 and In April and May the phrase guerre headlines on August 7th by marching recovery from the floods. Such gatherings civile (civil war) spiked on Twitter, after against the new health rules. Yet, after are important for the Rhinelander: to over­ retired right­wing generals wrote an they were announced, over 8.5m quietly come accusations of lassitude, he must open letter offering to step in to save the got vaccinated for the first time. As for show resolve in helping flood victims and country should it slide into chaos. A poll allegations of dictatorship, Mr Macron a clear strategy to fight the pandemic’s suggested that 58% of the French backed put it this way: “If we empty words of fourth wave. Otherwise the allure of Mr the officers, and nearly half thought the their meaning, the risk is that we threat­ Scholz, who as finance minister has prom­ army should step in on its own initiative. en our democracy itself.” ised hundreds of millions of euros in flood remediation, will grow even more. n

012 The Economist August 14th 2021 Europe 39

Free media in Poland ernment on August10th. He had wanted an wear and bronzed middle­aged men in amendment to the media law that would two­seater convertibles. More stylish than Unwelcome allow ownership by companies in the tacky, the Costa Smeralda gives its wealthi­ oecd, a group of rich countries including est holidaymakers, who in the Caribbean Discovery America. He also opposed government­ might worry about burglary or kidnapping, backed tax reforms. a reassuring degree of security—or did, un­ The media­nobbling law must still pass til the advent of covid­19. WARSAW the Senate, where Law and Justice lacks a After a disastrous 2020, the luxury ho­ The ruling party turns its sights on a majority. With the next parliamentary tels are full again. There is “not a suite to be foreign-owned broadcaster elections due in 2023, the party continues had anywhere”, says Paolo Manca, presi­ aw and justice (pis), the party that to lead in the polls, ahead of the centrist dent of the island’s hoteliers’ association. Lrules Poland, dislikes critics. Soon after opposition. It has shrugged off criticism, At the local airport, outside Olbia, the vol­ coming to power in 2015, it took control of including from the European Commis­ ume of private flights is 10% higher than in tvp, the public television broadcaster, and sion, which also complains about its sub­ 2019. On the last Sunday in July there were purged its management. Since then, Po­ version of the judiciary. Making Discovery 174. Among them was a private Airbus 340 land has slipped from 18th place in a World sell tvn will harm relations with America. carrying Ilham Aliyev, the president of Press Freedom Index compiled by Report­ But Mr Kaczynski clearly values control ov­ Azerbaijan. His wife and first vice­presi­ ers Without Borders, a non­profit group, to er Polish media more. n dent, Mehriban Aliyeva, flew in on an 64th, its lowest­ever ranking. Now pis has equally private Boeing 767. turned its attention to tvn, a television At the marina in Porto Cervo, among the station owned by Discovery, an American few in the Mediterranean that can handle media giant. A bill limiting foreign owner­ the biggest yachts, Carmine Sanna, the ship of media companies adopted on Au­ general manager, has seen a notable in­ gust 11th by the Sejm, the lower chamber of crease in chartered vessels more than 90 parliament, could force Discovery to sell. metres in length, mostly booked by Amer­ Liberals fear that Poland’s independent icans. The bays south to Porto Rotondo are media are in jeopardy. sprinkled with gleaming super­, mega­ “The Polish media should be Polish,” and giga­yachts (usually defined as having says Jaroslaw Kaczynski, the ruling party’s lengths of more than 24, 50 and 80 metres chairman and the country’s de facto leader. respectively). Yet the traces of their owners “Repolonisation” has become a buzzword and charterers are scant. in all sorts of industries. In March pkn Or­ “They don’t want to go out and about, len, a state­owned oil refiner, bought Pol­ because they fear infection,” says Silvio ska Press, the country’s leading newspaper Pippobello, the airport’s boss. As the Delta publisher, from its German owner. Senior variant seeped through Italy, Sardinia ex­ editors were subsequently replaced. perienced a particularly steep rise in the Law and Justice’s latest target is tvn24, incidence of new cases. In the week to Au­ a news channel. Unlike tvp, it is critical of gust 5th it was 138 per 100,000, the highest the government. It is also influential: its of any Italian region. evening news was the most­watched news Partying during a pandemic can lead to programme in Poland in the first half of Italy’s coast some bizarre juxtapositions. An event 2021, with an audience share of almost staged by Marco Fava, a hairdresser from 22%, just ahead of tvp’s rival offering. The megayachts Rome with a celebrity clientele, was in full The amendment to the broadcasting swing at Poltu Quatu, a luxury hotel, when law proposes to bar entities from outside are back a group of paramedics escorting a doctor in the European Economic Area (eea) from head­to­toe protective overalls barged owning more than a 49% stake in any Pol­ through the crowd of guests. ish media firm. The party is defending Some of the wealthiest visitors have SMERALDA “Polish interests”, says Marek Suski, the But their owners are not to be seen been using a testing centre at Olbia airport Law and Justice mp behind the proposed to have their entourages checked, some­ amendment. Critics warn that it is aimed ranco bloisi is puzzled. Mr Bloisi is times three times a week. But fear of co­ at tvn24, whose licence expires in Septem­ Fthe chef of Assunta Madre, a restaurant vid­19 may not be the only reason why the ber and has not yet been renewed. If the attached to Billionaire, a nightclub on the moguls are missing from their usual amendment is adopted, Discovery may Costa Smeralda. With its turquoise waters haunts. Someone who makes a living from have to divest the channel. and hidden coves, this region of north­ catering to their whims, and who prefers to The “tvn law” could spell trouble for eastern Sardinia has long been a summer remain anonymous, says wealthy Rus­ the ruling party, though. American offi­ playground for Arab potentates, Russian sians had begun to withdraw even before cials, who have leapt to tvn’s defence in plutocrats and Silicon Valley tech czars. the pandemic struck: they no longer felt a the past, are concerned. “Unfettered press “We’ve got the stylish Italians this year,” need to win acceptance in western Euro­ is crucial for democracy,” tweeted Bix Aliu, says Mr Bloisi. But he has seen no trace of pean society, and the wine selection at America’s chargé d’affaires in Warsaw, in the super­rich foreigners. “Their yachts are most Costa Smeralda restaurants is be­ response to the draft legislation. It also here. But they’re not going out.” neath their standards. “They prefer to or­ added to the tensions that brought down The absent billionaires are the talk of ganise dinners aboard their yachts and in the ruling coalition this week. Jaroslaw Go­ the Costa Smeralda. This is a land of end­ their villas,” he says. There they can serve win, a deputy prime minister and leader of less villas and dry­stone walls draped with whatever they like. At Olbia airport’s termi­ Agreement, a pro­business party that was oleander, of five­star hotels with heart­ nal for private flights, a Romanée­Saint­Vi­ one of Law and Justice’s two junior co­ stopping vistas and heart­stopping prices; vant 2016 is on sale in the duty­free shop at alition partners, was ejected from the gov­ a land of poodles, helipads, bespoke swim­ €5,140 ($6,020) a bottle. n

012 40 Europe The Economist August 14th 2021

Covid in Bulgaria Mr Dimitrov helped negotiate a deal to Not bulging enough change the name to North Macedonia. Bottom of the heap Covid-19, % of population fully vaccinated Now, by failing to stand up to Bulgaria, eu eu 60 leaders are reneging. As for Kosovo, the made a number of demands in exchange Italy 50 for allowing its citizens visa­free travel. The Kosovars delivered in 2018; the eu‘s SOFIA EU 40 member states have not. With just 15% fully jabbed, Bulgaria is Poland Miroslav Lajcak, the eu’s special repre­ giving away vaccine 30 Romania sentative, admits the bloc’s image has been n the morning of August 10th the 20 “damaged” but notes that 68% of the West­ Ohead of public health for Sofia, Bulgar­ France ern Balkan Six’s trade is with the eu, which 10 ia’s capital, announced various restric­ Bulgaria is also giving the region €9bn ($10bn) in aid tions on restaurants and entertainment 0 over the next seven years. Others see venues to curb a surge of covid­19. A few grounds for gloom. One reason eu­moder­ Apr May Jun Jul Aug hours later the national ministry of health ated talks between Serbia and its former 202 said no such thing would happen, calling province of Kosovo are deadlocked, says a Source: Our World in Data the announcement a bureaucratic mistake. diplomatic source, is that the bloc becomes Chaotic messaging is just one reason why “powerless in the dialogue” if it breaks its Bulgaria has seen so much death during 60% of nurses are unvaccinated. promises. Among eu member states, many the pandemic, and is bracing for more. Dr Kunchev says this is partly because suspect that champions of enlargement, Among 84 countries tracked by The infectious diseases and immunology are like Hungary, want to bring in autocratic Economist, Bulgaria ranks second (after Pe­ barely covered in medical­school curricu­ Serbia to expand their “illiberal bloc”. ru) on excess deaths per 100,000 people lums. As hospital admissions for covid­19 Outside powers are encroaching on the since the start of the pandemic, meaning climb again, demand for vaccinations region. On July 10th Serbia’s free­trade deaths above the usual rate. After a sum­ seems to be picking up. But, as with most agreement with the Russian­led Eurasian mer lull, cases are rising again as the high­ of Bulgaria’s handling of the pandemic, the Economic Union came into force. That is ly contagious Delta variant spreads. Hospi­ uptick is too little and too late. n incompatible with eu membership. In the tals are preparing for yet another on­ meantime plans abound for what the Six slaught. Only 15% of Bulgarians are fully should do next. Last year they agreed to vaccinated, the lowest rate in the eu, where The Balkans form a common regional market. On July the overall share is 52%. 29th Serbia, North Macedonia and Albania Bulgarians who want to can easily get Knocking on the signed an agreement to implement some any of the four covid­19 vaccines approved of its provisions, but Kosovo, Bosnia and in the eu. But demand has been so low that 27’s door Montenegro will not sign that deal. authorities are trying to sell or donate hun­ Mr Rama chides his colleagues to stop dreds of thousands of doses that will ex­ using growing Russian, Chinese and Turk­ OHRID pire soon to other countries. The eu is losing credibility with states ish investments in the region as a tool to Historically, Bulgarians have had little eu that want to join it put pressure on the (or as he put it, “If trust in official advice. Circumventing you don’t take me, there are some bitches rules of all sorts is a national pastime. Ma­ n the macedonian shore of Lake Oh­ that will”). He thinks that, rather than let­ ny people are suspicious of the jabs be­ Orid in July, a choir was practising Ab­ ting the eu’s paralysis slow the six down, cause they are new; some think the virus ba’s “Dancing Queen”, forever “looking out they should get on with their own regional does not exist, and that measures against for a place to go”. In a hotel next door, the integration. But Kristof Bender of the Euro­ the pandemic are a conspiracy. Only a leaders of the six western Balkan countries pean Stability Initiative, a think­tank in handful of prominent politicians have had that want to join the eu were also singing Berlin, is sceptical: “You want to be in a themselves vaccinated on television, or are familiar tunes. It has been 18 years since common market with larger, richer econo­ urging people to get a jab. the eu pledged to let them in once they ful­ mies, not a few neighbours who are as poor That is partly because of political turbu­ fil its criteria. The process is alive, says Edi and underdeveloped as you are.” n lence. Two rounds of elections this year Rama, Albania’s prime minister, but “mov­ have failed to produce a government. Nei­ ing—not so much”. EU members AUSTRIA ther Boyko Borisov, who served as prime Two years ago France and the Nether­ HUNGARY Negotiating accession minister for most of the past 12 years, nor lands temporarily stalled accession for all SLOVENIA Recommended to the caretaker cabinet that replaced him of the so­called Western Balkan Six: Serbia, open negotiations after his government fell in April have Kosovo, Bosnia­Herzegovina, Montene­ CROATIA Potential candidates mounted a serious public­information gro, Albania and North Macedonia. Now ROMANIA campaign to combat fake news about the Bulgaria is blocking talks for North Mac­ BOSNIA Belgrade Sarajevo vaccines. “Anyone who reads three articles edonia and Albania. It demands Macedo­ A d SERBIA on social media thinks he is an expert,” nian concessions on interpretations of r

i BULGARIA a says Angel Kunchev, the country’s chief history and language that have nothing to t i c Pristina health inspector. do with the eu‘s requirements. Albania is S Podgorica e a KOSOVO Watching Bulgarian television can collateral damage because its negotiations MONTE- Skopje leave you confused. A few covid­sceptical are paired with its neighbour’s. NEGRO NORTH ITALY Tirana MACEDONIA doctors are regularly invited on talk shows. “We have perfected patience,” says Ni­ Lake Ohrid Some advise people with medical condi­ kola Dimitrov, deputy prime minister of ALBANIA tions that would place them in priority vac­ North Macedonia. For 27 years his country GREECE cination groups in most countries against was dogged by a row with Greece, which 150 km getting jabbed. About 30% of doctors and objected to its former name of Macedonia.

012 The Economist August 14th 2021 Europe 41

Charlemagne A tale of two flights

IA271 to Minsk, OS52 to Vienna and Europe’s asylum dilemma but a stiff glare from Lithuanian border guards and an unexpect­ edly long stay in Belarus. The migrant crisis of 2015 convinced the eu to create a hard border at its edges in order to maintain easy movement within the club. Now the euis also exerting pressure to block travel to adjacent countries that do not police their borders. When neighbours use people as weapons, such hardline tactics may be necessary. Mr Lukashenko is only the latest to try it on. Last year Recep Tayyip Erdogan, Turkey’s president, bused thousands of would­be migrants to the border in an attempt to overwhelm Greek guards. Rough treatment from the Greeks has kept them out, though it violates international law. A similar formula is used on the Lithuanian frontier. Ugly tactics elicit an ugly response. Squeezing the flow at the source, by cajoling countries to limit flights like ia271, is preferable to beating people up. Austrian Airlines flight os52 from Tokyo to Vienna reveals the other side of the eu’s asylum policy. Rather than fly in a straight arc across Siberia and Belarus to Austria, it skirted round Belarus, avoiding Mr Lukashenko’s airspace like a geopolitical Bermuda triangle. The caution was understandable. In May Belarus sent up a fighter jet to hijack a Lithuania­bound Ryanair flight in order to kidnap a Belarusian dissident on board. os52 had a similarly con­ troversial cargo: Krystina Timanovskaya, a Belarusian athlete on raqi airways flight ia271 from Baghdad to Minsk was a surpris­ her way to claim asylum in Poland. Iingly popular service. The four­hour trip from Iraq, an unstable In one sense, Ms Timanovskaya’s red­carpet treatment repre­ country in the Middle East, to Belarus, a dictatorship on the edge sents the hypocrisy of the eu‘s approach to asylum. Those at­ of Europe, became busy this summer. At the start of the year the tempting to hop into Lithuania are met with grumpy border flight ran once a week; in July it was going four times as often. guards, while the Belarusian athlete is welcomed as the platonic Lucky passengers were decanted at Minsk airport and whisked ideal of an applicant for asylum. The threat against her is obvious: to Belarus’s border with Lithuania, in the hope of a new life in the state television labelled her a traitor. As a world­class athlete, she eu. In 2020 just 74 people crossed from Belarus to Lithuania ille­ would be an asset to any country. The fact that she is a white wom­ gally. This year more than 4,000 people have tried. All this was an rather than dark­skinned or male helps soothe the anxieties of overseen by Alexander Lukashenko, the Belarusian president, xenophobes. And there is only one of her. A warm welcome for Ms whose government had encouraged the arrivals. “We will not hold Timanovskaya enforces the dangerous idea that asylum should be anyone back,” said Mr Lukashenko. “They are headed to enlight­ limited and based on character rather than circumstance—that ened, warm, cosy Europe.” one must be personally worthy of protection, rather than guaran­ The fate of Flight ia271 reveals a few things about the state of teed it by law. asylum in the eu. For starters, the topic is still neuralgic for Eu­ rope’s politicians. Lithuanian officials label Mr Lukashenko’s ap­ Leaving, on a jet plane proach “hybrid war”, with migration used as a weapon. Whereas In another sense, Ms Timanovskaya’s Austrian Airlines flight rep­ 4,000 migrants is quite a lot for a country of 3m people, it is a resents a solution. More direct resettlement of refugees from trou­ rounding error for a club of 450m. Yet it triggered a state of emer­ bled countries into the eu is one of the few ways the club can se­ gency in Lithuania and abundant media coverage elsewhere. Im­ cure its border and maintain any sense of moral leadership. After ages of people walking into Europe recalledthe migration crisis in all, European countries take more refugees than most rich coun­ 2015, when about 1m entered the bloc, causing a continental politi­ tries. Japan, where Ms Timanovskaya boarded, took 47 refugees in cal seizure. Mr Lukashenko is trying to cause another. 2020. By contrast, the eugave refugee status to 23,000 people and Unfortunately for Mr Lukashenko, the eu is less naive than it offered protection to another 22,000 in the first quarter of this was in 2015. Whereas the European Commission once chided its year alone. If the eu takes in bigger numbers of people who need governments for building fences on the eu’s external borders, it shelter directly, rather than just causes célèbres such as Ms Tima­ now helps provide the resources to man them. Glossy photos of novskaya, it could justifiably claim to be doing its part. Lithuanian soldiers rolling out barbed wire were met with none of Leavening brutality and cynicism with humanity is the best the criticism that Viktor Orban, the Hungarian leader, faced when that advocates of asylum can hope for. European governments— he did the same in the previous crisis. The eu’s ideological war ov­ and voters—are set on stiff borders. Chancers will not be tolerated, er asylum between humanitarians and hardliners is over. The be they cynical governments or simply people who want to im­ hardliners won. prove their lives but are not victims of persecution. When neigh­ The new approach of the eu and its governments verges on bours use migration as a weapon, fences and flight bans are cynicism. Iraq was reminded that the euis a big aid donor; its gov­ among the few available responses. Yet such tactics will scar Eu­ ernment was no doubt aware that the eu limits visas from coun­ rope’s conscience unless it increases its efforts elsewhere, by set­ tries it fears might generate lots of refugees. Iraq swiftly stopped tling large but controlled numbers of refugees in the bloc. If the eu allowing its citizens onto the flights. It was, after all, the Iraqis is going to crack down on flights like ia271, the least it can do is of­ who were being ripped off, paying thousands of euros for nothing fer a lot more flights like os52. n

012 European forests, which provide wood for making paper, paper packaging and many other products, have been growing by 1,500 football pitches every day!

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012 Britain The Economist August 14th 2021 43

The legal system taken to resolve a private dispute involving children is a third greater than a year ago, In trouble with the law at 40 weeks. Financial disputes are barely seen at all. “Lots of warring couples are in a state of flux”, says Aysen Soyer, a solicitor in north London. The courts service reck­ ons it could take until 2023 for the backlog to return to pre­pandemic levels. Britain’s courts were in a mess before covid-19. They are in a worse state Some of the blame lies with covid­19. now—and the government’s fixes do not look up to the job Many hearings, particularly in civil cases, t snaresbrook crown court, in sub­ outstanding cases at crown courts, which were moved online. But in England and Aurban east London, a trial is coming to deal with the most serious cases. That is Wales, jury trials were not conducted re­ an end. The barristers, replete in gowns 45% more than a year previously, and the motely (in Scotland, which has its own sys­ and wigs, have presented their cases; the highest level ever recorded. At Snares­ tem, a few were). So while some justice was jury watches as the judge sums up the evi­ brook, even the grand Victorian building is able to continue—cases with a guilty plea, dence. The defendant, a young man ac­ a wreck. The outside is covered in scaffold­ for example—a backlog quickly built up. cused of raping a child, sits impassively in ing; the air conditioning frequently fails, The bigger problem is that the virus the dock, his face covered by a mask. leaving everyone sweltering. burdened a system that was already under Justice is being done. But it has been a The family courts are in a similar state. serious strain. “There was nowhere to long time coming. The alleged offences Divorces where there is no dispute over hide,” says Max Hardy, a criminal barrister. happened several years ago. The case took money or custody of children are being re­ In 2019 spending on the courts was 18% over a year to investigate and the trial was solved online, often faster than before. lower than it was in 2011; spending on the then delayed five months more by Eng­ Tougher cases are not. The average time Crown Prosecution Service (cps) was 32% land’s covid­19 lockdown. It has only now lower. There is now little capacity to undo reached a court. When the jury leaves, the the backlog. judge calls in a different set of barristers. → Also in this section Legal aid, which pays most defence law­ They must decide whether a man accused yers, is a particular pinch point. Rates were 44 Park wars of burglary can be kept in prison for longer last increased last century, and were cut by than would normally be legal, because of a — Bagehot is away nearly 10% in 2014. “Maybe in the 1980s failure to find a slot for a trial in time. barristers were living the life of Riley” says — Read more at: Economist.com/Britain Britain prides itself on its legal system. one at Snaresbrook. “Now, not so much.” Its commercial courts are favoured by He complains about being stiffed for his firms all over the world for their efficiency work on a drugs trial, where a “lorryload” and impartiality. But the routine adminis­ of cannabis went unweighed, depriving tration of justice has not been in such a him of a higher rate for a more serious of­ dire state for decades. At the end of the first fence. The number of legal­aid firms has quarter of 2021, there were nearly 60,000 nearly halved since 2010. With trials mov­

012 44 Britain The Economist August 14th 2021

ing again, there are simply not enough More sitting days are not much help if courts will not rise enough to cope with the lawyers to do the work. there are not enough lawyers and judges. extra demand, let alone to crunch through According to Lucy Welsh, an academic Nor do barristers see it as their job to help the backlog. who counts herself among the number of ministers out of a hole. They are fiercely If this concerns ministers, they show former criminal lawyers, the result is opposed to working longer days, arguing little sign of it. On July 28th Boris Johnson, weaker cases. The longer one takes to come they need evenings to prepare cases and the prime minister, attacked “left­wing to trial, the fuzzier the memories of wit­ travel long distances to court. criminal­justice lawyers”, who he accused nesses and victims become. That is if they The government is also piling pressure of working alongside the opposition La­ make it to court at all. Since 2015 the pro­ on the system. It is in the process of hiring bour Party to stifle his plans to tackle portion of cases that fold because the vic­ 20,000 more police officers. If they make crime, which involve tougher sentencing. tim withdraws has risen from 9% to 26%. more arrests, as is presumably the inten­ But in reality, it is his government’s stingi­ Dame Vera Baird, the government’s victims tion, that will mean more charges and ness that is wrecking them. A tougher sen­ commissioner, has said that rape is effec­ more trials. The Institute for Government, tence is not much good if the case collaps­ tively “decriminalised”: the number of cas­ a think­tank, reckons spending on the es in the meantime. n es that are completed has fallen from more than 5,000 in 2016 to just 1,500 last year. Delays are not fair on the accused either. Public spaces The number of people in prison awaiting Parks and recriminations trial has increased by 40% since June 2019, even as the overall prison population fell. In the family courts, delays mean chil­ Youngsters take over London’s fanciest parks, to the displeasure of locals dren can wait years to find out how they will split their time between parents. Dis­ ampstead heath is home to many putes about money leave people unable to Hfine creatures. Purse web spiders, move on with their lives. Ms Soyer says a green woodpeckers, brimstone but­ recent case of hers took almost two years terflies and kestrels have all found peace and burned through most of the couple’s in the oddity that is London’s 790­acre shared assets. Having hearings online moorland. They roam happily alongside made agreement all the harder. “The judge a near­mythical tribe: north London’s really does need to see people,” she says. metropolitan elite. But the current chief­ The government plans to improve tain, Marc Hutchinson, a solicitor and things. In April it announced it would lift chair of the Heath & Hampstead Society, one of its austerity measures in England is unhappy with the heath’s most recent and Wales: a cap on the number of “sitting arrivals: drunken young people. days”, which limits how many courtrooms When covid struck last spring, open can operate. It has increased spending on spaces across Britain were flooded with the cps, though not on legal aid. youngsters looking for somewhere to It also hopes to make courts more effi­ socialise. The habit has stuck, much to cient. More hearings will be held online, the annoyance of regular parkgoers. and more crimes will be prosecuted using Local newspapers are filled with com­ so­called “single justice procedures”, in plaints about anti­social behaviour which defendants who admit guilt do not spoiling beauty spots. In most places, need to come to court (these have previ­ locals are powerless. Not so in London’s ously been limited to motoring offences most expensive neighbourhoods. up from roughly 9m in 2019 to 17m in the and, more recently, lockdown breaking). Battle lines were first drawn in Prim­ past year. Commercial dog walkers will The government has also proposed extend­ rose Hill, where residents say they were soon be limited by licenses, of which ing court hours from 10am­4pm to besieged by raves, fireworks, knife crime there will be 40, and the number of dogs 9am­6pm, which would allow two trials to and “drug cars”. Their solution was to they will be able to walk at once will be be seen in one day. lock the park at night. Sir Keir Starmer, capped at four. Yet these proposals will not be enough. Labour leader and a local mp, offered Amy McKeown, a mental­health support. The Royal Parks, a charity, strategist campaigning to remove the forked out for nine­foot aluminium gates in Primrose Hill, says claims of Wait up gates, which locals now want to make unpleasant behaviour are overstated. England and Wales, crown-court permanent. That is not an option in Official data show knife­crime injuries in cases outstanding, ’ Hampstead Heath, where enclosure has the area fell from 16 in 2019 to 7 in 2020. 60 been banned since 1871. Instead, council­ Martin Fisher, a psychotherapist who lors want to cut the number of nearby lives in the area, says an online residents’ 50 alcohol licenses. Not all local firms are forum has become filled with accusa­ More than six months 40 opposed. “Less businesses means more tions that partygoers are “knife­wielding customers,” reckons a newsagent. yobs”, “scum” and “poor people coming 30 Oliver Cooper, the leader of the Tories from undesirable areas.” He argues that 20 on Camden council, supports the mea­ phrases such as “those awful people, in sures, arguing that party animals put off their awful cars, playing their awful Less than six months 10 other park­goers. Mr Hutchinson now music” are racist euphemisms. Recrim­ 0 has new targets in his sights. Ancient inations show little sign of ending soon. tree roots are being damaged by an in­ “It’s like Brexit,” sighs Mr Fisher. “It has 212019181716152014 crease in visitors, he says, with numbers polarised the community.” Source: Ministry of Justice

012 International The Economist August 14th 2021 45

Covid-19 and travel governments struggle to co­ordinate poli­ cy. Travellers must scour myriad ministry Getting off the ground and airport websites to piece together the rules. Even as the eu begins to reopen, the average member state has 330 restrictions on international travel, according to ubs, a Swiss bank, up from five in March 2020. Ti­ matic, a database of visa and entry regula­ tions compiled by the International Air The disruptive effects of covid­19 on travel will long outlast this chaotic summer Transport Association (iata), a trade body, om maples spent five days and almost Governments have succeeded in taking was updated 200 times in one day last year. T$7,000 getting home to London from the joy out of travel this summer (see chart The confusion is made worse by gov­ Tanzania in May. Many African countries on next page). Britain has introduced rules ernments taking very different approaches are on the English “red list”, meaning any­ of tooth­grinding complexity. In theory its to travel. East Asia and Australasia are one who has visited one in the previous ten traffic­light system rates countries by co­ largely locked down. The poorest regions, days must quarantine in an expensive air­ vid­19 risk and sets travel rules accordingly. such as sub­Saharan Africa, are largely port hotel before entering England. Eager In practice it is arbitrary, unpredictable open. America and Europe are somewhere to avoid that bill, Mr Maples bought a ticket and constantly changing. Facing pressure in between. via New York, where he could crash with from the travel industry and voters keen to The most hermetically sealed coun­ friends for a few weeks. venture beyond Britain’s sodden beaches, tries, which are typically either islands or Officials squabbling over paperwork Boris Johnson, the country’s prime minis­ dictatorships, have kept cases under con­ barred him from his first flight. He booked ter, has advocated a “balanced policy”. He trol by shutting borders and aggressively a second but was stopped on his layover in did not explain what that meant. stamping on outbreaks at home. Austra­ Germany. America’s borders were open to Policies in America are equally baffling. lia’s government recently halved its cap on non­Americans travelling from Tanzania, The Biden administration has failed to overseas arrivals to 3,000 people a week, he was told, but not to those coming from adapt restrictions in line with vaccination even though 38,000 Australian citizens Europe. After hours of pleading and and infection rates overseas. All around wish to return home. Tough rules can searching for alternatives, he resigned the world, a jumble of rules causes confu­ work. In the first week of August, in the himself to flying straight home. But he had sion, chokes tourism and leaves business­ midst of its latest surge, the country had another setback: officials demanded he es struggling to work out who can do what just 1,800 new cases. Britain had 100 times pay the $2,400 quarantine bill before being and go where. that figure. According to a survey by the allowed on board. By then he had maxed All of this means travel will remain out Australian Broadcasting Corporation, 80% out his credit card and had to ask a relative of reach for many and messy for all for of Australians agree the border should re­ to lend him money. The experience left some time. The chaos is unlikely to sub­ main closed until the pandemic is “under him “emotionally devastated”, he says. side soon, as new outbreaks emerge and control globally”.

012 46 International The Economist August 14th 2021

With only 18% of people fully vaccinat­ here in Africa,” says Itunu Kuku, a Nigerian their borders. Australia has had to extend ed, Australia relies on the bluntest of poli­ living in Senegal. local lockdowns and deploy the army to cy instruments: locking people up to quar­ Overseas trips will continue to be a has­ enforce stay­at­home orders. China has antine in government­approved facilities. sle well beyond the northern summer. If launched mass­testing drives and intro­ Pete McGregor, who flew in from London air travel returns to 75% of pre­pandemic duced new curbs on domestic travel. to visit his ailing father in February, felt levels and airline staff have to continue to Many of the safety measures that ac­ lucky to be placed in former labourers’ digs cross­check a spaghetti­spill of apps and company partial reopening are flawed. outside Darwin rather than an airless ho­ forms, passengers will spend an average Asking someone to isolate at home cuts tel. Residents held virtual quiz nights and 5.5 hours waiting to be processed at air­ their contact with the outside world by celebrated a fellow inmate’s birthday. Mr ports, estimates Nick Careen of iata, up 75%, compared with 90% for hotel quaran­ McGregor still describes the trip as “hell”. from 1.5 hours before the pandemic. tines, reports the Lancet. Another study For such countries, the only way to reopen suggests that a costly polymerase­chain­ safely is to vaccinate most people first and Get your motor runnin’ reaction (pcr) test before a flight is worse then experiment, as Singapore is consider­ International travel could come to feel ex­ than a cheaper alternative. It is more accu­ ing. New Zealand had to scrap that plan clusive, much as it used to in the middle of rate than an antigen test, but slower. So this week when a labour shortage prompt­ the 20th century. Those worried about travellers have more time to get infected ed the government to say it would reopen tough checks at airports or catching the vi­ between clinic and boarding gate. A nega­ borders a bit despite a low vaccination rate. rus on a packed flight are already choosing tive antigen test taken on the day of a trip, A second group of governments is ask­ to travel by road or rail. Some will fly again as many eu states accept, reduces the ing people to live with the virus. By June as rules are streamlined and fear of germs number of infected people who make it ov­ only 13% of countries in Europe remained fades. But expensive tests and rising air­ er a border to 24% of levels without any closed to international travellers, com­ fares mean two­day bachelor parties in Bu­ testing compared with 33% for a pcr test pared with 70% in the Asia­Pacific region, dapest could become less common (to the taken two days before a flight. according to the un’s World Tourism Orga­ relief of some) whereas once­in­a­lifetime Temperature scanners are also unreli­ nisation. Widespread vaccination makes safaris in Zambia will still appeal to those able. During the sars outbreak in 2003, opening easier. Pent­up demand for travel who can afford one. George Kipouros, edi­ Canada spent millions on them, yet failed makes it popular. Back in February search­ tor of Wanderlust, a travel magazine, says it to detect a single case. Initial research sug­ es for international flights by people in would be a good thing if people began to gested about half of travellers infected France were just 30% of what they had see travel as something special again, and with covid­19 would be caught; recent been two years earlier; now they are at 76% so appreciated it more. analysis found the young in particular slip of pre­pandemic levels, according to But for most would­be travellers, a less through, as most never develop a fever. Kayak, an online travel agency. Meanwhile open world means less freedom. The loss is in China flight browsing remains stuck at made more galling by rules that often Head out on the highway around a fifth of pre­pandemic levels. make no sense. A year and a half into the At this stage of the pandemic governments’ Rich countries that are trying to open pandemic, policymakers finally acknow­ wishes for a balanced approach to travel up are devising systems to reduce the risks. ledge what epidemiologists have long are understandable. But evidence of the Last month the eulaunched a Digital Covid known: there is no straight line between benefits of many restrictions is murky, Certificate, which people can use to prove curbing travel and curbing infections. Be­ whereas the costs are clear. In America on­ they have been vaccinated, tested or re­ cause the virus spreads exponentially, ten ly 6% of the workforce were in the travel cently recovered from covid­19. But poli­ imported cases and a hundred lead to a business in 2020, but they suffered a third cies are often inconsistent. America re­ similar­sized outbreak after just a few of total job losses. Globally, nearly one in mains closed to visitors from Austria and weeks, notes Adam Kucharski, an epidemi­ five jobs supported by tourism was lostin Germany but not Colombia or Thailand, ologist. “Anything but very strict travel re­ 2020. Poor countries, especially, rely on it where vaccination rates are lower and co­ strictions will just delay things,” he adds. for work. The World Travel and Tourism vid­19 infections more widespread. And Border rules cannot prevent outbreaks Council estimates that the size of the inter­ airline crews struggle with the different unless they are paired with strict domestic national travel and tourism industry forms and passes, often giving a cursory rules. People moving within a country halved from 10.4% of global gdp in 2019 to glance and waving people through rather spread the virus, too. The highly conta­ 5.5% in 2020, a $4.5trn loss. than scanning qr codes. Lufthansa, a Ger­ gious Delta variant is now spurring fresh Only when the world is adequately vac­ man carrier, says staff will be able to scan outbreaks even in countries that closed cinated will travel start to feel as it did be­ documents only if test and vaccine certifi­ fore the pandemic. That may not be until cation is standardised globally. 2024, by some estimates. Even then, daft Careful planning and reams of paper­ Don’t fly with me rules could stick. America’s ban on travel­ work are distant concerns for globetrotters Global airline passenger bookings lers with hiv was introduced in the 1980s from a third group of countries: the poor­ January 7th 2020=100, seven-day moving average and abolished only in 2010. Likewise, air­ est. Most such places are struggling to get 140 lines could be asking for covid­19 papers jabs in arms, yet cannot afford to shut their 120 for years to come. Britain’s transport min­ borders. They remain cut off. Because rich ister, Grant Shapps, says Britons who ven­ 100 countries impose some of the toughest ture abroad will need to be fully vaccinated quarantine and testing requirements on 80 against covid­19 “for evermore”. Domestic poor countries, travel has become unaf­ 60 Vaccine certification may well make fordable for an emerging middle class that 40 sense in the long run. But bans on visitors was just getting a taste for it. Even those 20 from certain countries or caps on interna­ who have been jabbed often received 0 tional arrivals do not. The risk is that these vaccines made in India or China, which International -20 rules and regulations may outlive their may not be recognised by rich­world au­ purpose not because governments cannot 2020 2021 thorities. “It seems like they have found undo them, but because no politician Source: IATA DDS another way to discriminate against us wants to be the first to try. n

012 Business The Economist August 14th 2021 47

Chinese capitalism Chinese investors are anxious. Indices tracking Chinese tech stocks in Hong Kong What tech does Xi want? and Chinese groups more broadly in New York are down by 40­45% since mid­Febru­ ary. No matter. Indeed, it may be part of the plan. Consumer­internet companies make up at least 40% of big Chinese stocks in the HONG KONG msci China Index. Like their American The contours of the Communist Party’s masterplan for its technology peers—Apple, Alphabet, Amazon, Face­ industry are emerging book, Netflix—these firms have made he vision is becoming clear. In a de­ peg. In the past nine months China’s regu­ tonnes of money for their shareholders. Tcade or so China will, if the Communist lators have cracked down on the country’s But, the party seems to think, at the ex­ Party has its way, become a techno­utopia effervescent tech scene, which, though it pense of abusing their market power, ex­ with Chinese characteristics, replete with has generated world­beating innovations ploiting workers and polluting minds. “deep tech” such as cloud­computing, arti­ and astounding shareholder value, is no The list of casualties is a Who’s Who of ficial intelligence (ai), self­driving cars longer seen as fit for purpose. On August Chinese tech: Ant Group, an Alibaba affili­ and home­made cutting­edge chips. In­ 11th the authorities indicated that regula­ ate whose $37bn initial public offering cumbent technology giants such as Aliba­ tions over all manner of tech businesses (ipo) was suspended with days to go; Didi ba in e­commerce or Tencent in payments will be strengthened in the next five years. Global, whose ride­hailing app was ex­ and entertainment will be around but less As a consequence of all this, the country’s pelled from Chinese app stores days after overweening—and less lucrative. Policies hottest tech groups have lost at least $1trn its own $4.4bn ipo in New York; Tencent, to curb their market power will redistrib­ in combined market capitalisation since fined by regulators for sexually explicit ute some of their profits to smaller mer­ February (see chart 1 on next page). content and unfair practices, and told to chants and app developers, and to their Foreign investors who have backed Chi­ end exclusive music­licensing deals; the workers. Second­tier cities will boast their nese online firms are retreating. Domestic online­tutoring industry, largely barred own tech industries with localised servic­ last month from making a profit. es, competing with the less­mighty titans. And the list is getting longer. Trustbust­ Data will pulse through the system, avail­ → Also in this section ers are reportedly getting ready to slap a able to firms of all sizes, under the watch­ $1bn fine on Meituan, a super­app that de­ 49 America’s biotech boom ful eye of the government in Beijing. Chi­ livers meals. On August 9th the Financial na’s internet will strengthen its authoritar­ 50 Bartleby: Flexibility is key Times reported that NetEase, an online­en­ ian design. tertainment group, decided to shelve the 51 TV’s Olympic enigma Clearer, too, is the way in which Presi­ planned ipo in Hong Kong of its music­ dent Xi Jinping wants to make this vision a 51 French bankruptcies streaming business owing to investors’ reality. Besides talking up deep tech, this worries about the regulatory crackdown. 52 Schumpeter: The grocer wars involves taking the shallower sort down a The ranks of potential winners are less

012 48 Business The Economist August 14th 2021

well­defined. As a guiding principle, the ple. Local officials lowered taxes and gave vice­premier, Liu He, recently stated that The trillion-dollar question 1 away land in order to attract the online China is moving into a new phase of devel­ CSI Global China Internet Index giants to their cities and provinces. opment that prioritises social fairness and Market capitalisation, $trn Now the government wants to use such national security, not the growth­at­all­ 3.0 carrots, as well as its anti­tech sticks, to costs mentality of the past 30 years. The create a less unruly and more hardware­fo­ government will guide the “orderly devel­ 2.5 cused technology sector to help it surpass opment of capital”, he noted, the better to 2.0 America and the rest of the West in eco­ suit the “construction of a new develop­ nomic might, writes Rush Doshi, an advis­ ment pattern”. Barry Naughton of the Uni­ 1.5 er to President Joe Biden, in “The Long versity of California, San Diego, calls this 1.0 Game: China’s Grand Strategy to Displace the “grand steerage”. Dexter Roberts of the American Order”. Mr Xi has referred to Atlantic Council, a think­tank in Washing­ 0.5 “great changes unseen in a century” in dc ai ton, , discerns an echo of Mao Zedong’s 0 areas such as and quantum computing “politics­in­command” economy. Either (which would harness the weirdness of 2020 202 way, it is a break with the old pro­growth subatomic physics to drastically speed up Source: Bloomberg model and the beginning of “real state cap­ certain types of calculations). These, he italism”, as one investment banker puts it. has suggested, will usher in a new global Start with data. Europe and some Amer­ to more open models where payments and economic order that revolves around Chi­ ican states, such as California, have de­ shopping activity are no longer exclusive na. Senior officials believe that if China can vised laws that seek to protect consumers to one platform, allowing merchants to re­ get a first­mover advantage on the cutting from the misuse of their personal informa­ gain some control over the prices of their edge of technology, it will become not just tion by large companies. China has put wares. Analysts believe that the changes an economic superpower but a geopoliti­ similar rules in place; in some cases they will lead to higher margins for sellers and cal and military one, too, writes Mr Roberts are more severe than in the West. But Chi­ lower prices for consumers but slower of the Atlantic Council. nese regulators are going further. In a growth for the tech titans. Alibaba warned Many politicians in America and Eu­ largely ignored, jargon­filled policy paper investors in early August that long­run­ rope would love to fashion their tech in­ from the State Council, China’s cabinet, in ning tax benefits could soon come toan dustry into something like Mr Xi’s vision: April last year, data were named as a “factor end, adding billions of dollars in costs. less social media and other “spiritual opi­ of production” alongside capital, labour, Workers will benefit from the wealth um”,as Chinese state news outlets recently land and technology. This hinted at the im­ transfer, too. Companies like Didi and Mei­ dubbed video­gaming; more strategic de­ portance assigned to information by the tuan, which use armies of low­paid drivers velopment of the techno­infrastructure of Chinese state, notes Kendra Schaefer of and warehouse staff, are on the hook. The the 21st century. This includes computer Trivium, a consultancy. authorities are already going after Meituan chips, clean energy and much besides, China’s new data policy remains a work for not providing adequate care to such partly to counteract an effort by America in progress. The Data Security Law will employees. It will be forced to raise wages and its allies to restrict exports to China of come into force on September 1st and the and give drivers better insurance. Mei­ semiconductors and other critical technol­ Personal Information Protection Law is tuan’s market value has fallen by a fifth, or ogies. When launching a new business, en­ due to be adopted by China’s rubber­stamp $42bn, since the measures were an­ trepreneurs and investors must therefore parliament soon. It is unclear how they nounced in late July. ask, “How does this solve China’s pro­ will be enforced, though data specialists The final facet of China’s campaign isa blems?” sums up Liu Jing of Cheung Kong intuit that many types of data currently transfer of resources from internet compa­ Graduate School of Business in Beijing. held by internet giants could eventually be nies to firms that can create tangible ad­ traded on government­backed and private vances in technologies that the party Move fast and regulate things exchanges. Ant, for example, is already be­ deems less frivolous. This would represent Yet the way China’s regime is going about ing prodded by authorities to open up its a striking shift in Chinese economic gover­ the transition is far from guaranteed to vast stores of personal financial data to nance, which since the 1990s has put rapid work. One problem stems from who is do­ state­owned companies and smaller tech development and attracting foreign direct ing the regulating. The Communist Party rivals. No specific rules for financial­tech­ investment over all else. Under­regulated presents an image of a unified force with a nology firms have been issued but every­ internet firms have been the prime exam­ single set of objectives. In fact, like any one is waiting for them, says Deng Zhisong large bureaucracy, Chinese authorities are of Dentons, a law firm. fragmented, and can act at cross­purposes. Another prong of the state’s strategy is Startups and downs 2 The policies behind the techlash are to redistribute the wealth and power large Startup funding, $bn born of sweeping goals for society from the tech platforms have accrued over the past 80 highest reaches of central government, an decade. E­commerce groups such as Aliba­ echelon of engineers and economists who ba, jd.com and Pinduoduo have been tar­ United States lack expertise in most of the sectors being geted by the State Administration for Mar­ 60 targeted. But it is up to specialists in bodies ket Regulation (samr), China’s newish such as samr and the Cyberspace Adminis­ cac antitrust regulator, which accuses them of 40 tration of China ( ) to enact these objec­ monopolistic behaviour. Merchants on tives. And as regulators’ remits expand, the these platforms often indeed pay high fees odds of a clash shorten. and must choose between selling on one or 20 Some run­ins have already happened. A the other. Payment systems run by Tencent China recent policy from the central bank aimed and Alibaba have prevented exchange of 0 at breaking up powerful fintech groups information between them, which led to a spilled into antitrust territory covered by 21201918172016 bifurcation of the market. samr, notes Angela Zhang of the Universi­ Source: CB Insights The giants are now being forced to shift ty of Hong Kong. Following the bans of

012 The Economist August 14th 2021 Business 49

Didi’s app and online tutors’ profits, in raked in ever more capital (see chart 2 on attention to America’s biotechnology in­ both of which the cac played a part, the previous page). The bulk of last year’s litter dustry, a lot of it centred on Cambridge. China Securities Regulatory Commission of new deep­tech companies probably pre­ Home to Harvard University and the Mas­ (csrc), which has spent years convincing dates the clampdown. Their prospects and sachusetts Institute of Technology, it is the global investors that Chinese markets are easy access to capital remain uncertain. closest that the biotech business currently stable, had to contact bankers and invest­ Apparently without irony, Chinese me­ has to a Silicon Valley. ment funds to assure them that other in­ dia have likened the government’s push to And the industry is booming. Since dustries would not be treated so harshly. spur domestic chipmaking to the Great 2010 an index of biotech firms listed on the The csrc’s move was interpreted by some Leap Forward. In 1958 Mao decreed that Nasdaq exchange has quintupled in value as a sign that regulators were rethinking farmers set up furnaces in their backyards (see chart), and the number of companies their scorched­earth tactics. Instead, the in order to help China surpass British in it has more than doubled, to 269. Be­ situation highlights how unco­ordinated steelmakers. What the media have omitted tween 2011 and 2020 the money that bio­ the campaign has been at times. to mention is that the resulting steel was tech startups raised in American initial Another worry is that the crackdown mostly unusable pig­iron. Meanwhile, public offerings (ipos) ballooned from has spooked entrepreneurs and venture millions of Chinese starved as fields went $4bn to $65bn. So far this year venture cap­ capitalists. It is true that some smaller unploughed. Mr Xi’s techno­leap towards italists have poured more than $20bn into firms view the tech giants as bullies that cutting­edge chips and other deep tech will pharmaceutical and biotech firms, not far have strong­armed rivals and snuffed out not be as calamitous—China is too prospe­ from last year’s record tally of $27bn. competition. China’s most innovative rous for that. But it is not immune to the Cambridge is filled with cranes and new startups have had the choice of selling out law of unintended consequences. n buildings, dull on the outside but bursting to big tech or facing a quick and brutal de­ with exciting science within. In next­door mise, says Mr Liu. The recent dismantling Boston new laboratories are going up of online monopolies has been a godsend Biotechnology around the revamped Seaport. Prices for for many promising young executives who lab space reportedly reach $160 a square have long struggled under the thumb of big Just what the foot, perhaps the costliest commercial real tech, he observes. And entrepreneurs have estate in America not at street level. flocked to the approved deep­tech fields: doctor ordered The pace of the industry’s expansion last year alone Chinese founded 22,000 would have been inconceivable 10­15 years chip firms, 35,000 cloud­computing com­ ago, marvels Jean­François Formela of At­ CAMBRIDGE, MASSACHUSETTS panies and 172,000 aistartups. las Venture, a venture­capital (vc) firm. The promise of clever new drugs—and But the online giants’ founders, such as Businesses are popping up everywhere, in­ the firms developing them Jack Ma of Alibaba, are still held in high re­ cluding down the hall from Mr Formela’s gard by other tech bosses. Many industry n 1908 ashton valve company built a office. Flagship Pioneering, a vc firm executives fear that years of hard work and Ifactory on the corner of Binney Street which guides entrepreneurs from a pro­ sacrifice have gone unnoticed by their reg­ and First Street in Cambridge, Massachu­ mising idea to a business that can attract ulatory overlords. The party has communi­ setts. In what was a high­tech industry of outside investors, has spun out 26 compa­ cated its intentions and goals poorly to a the day, it made gauges, valves, whistles, nies since 2013. Its founder, Noubar Afeyan generation of talented businesspeople, clocks and other gadgets that helped make (who is also Moderna’s chairman), hopes says an executive at a small startup. If the steam boilers less susceptible to blowing to spin out up to ten a year from now on. current turmoil persists, China may end up and killing people. Just over 100 years The boom has several causes. Tim up with an open field for free and fair com­ later, in 2010, another purveyor of a life­ Haines, chairman of Abingworth, a Lon­ petition “but no one to run the companies”, saving technology moved into Ashton’s don­based asset manager focused on life says another executive. long­abandoned premises: Moderna. sciences, notes that many investors have Investors face similar considerations. A In the past year the biotech darling has been swept up in the notion of “philan­ prominent private­equity financier fully become synonymous with the fight thropic capitalism”: making money from agrees with the goals of the regulation against covid­19. Its ingenious mrna vac­ products that could benefit society. Other campaign. If carried out correctly, it could cine has, like a similar one developed by reasons are more hard­headed. According reduce inequality while becoming a global Pfizer, an American drug giant, and BioN­ to Mr Haines’s estimates, 64% of drugs in model for regulating big tech. But, he adds, Tech, a German startup, saved millions of late­stage development are being concoct­ the tactics have not been thought out. lives. Moderna’s success has also brought ed by youngish biotech companies built Pointing to China’s world­beating fintech sector, he warns that “harming China tech is harming China as a nation.” A more level Medical advances playing field could let smaller tech compa­ nies flourish. But “who would invest in Stockmarket indices United States, biotechnology and these right now?” asks Chen Long of Ple­ January 1st 21=1 pharmaceutical venture-capital funding, $bn num, a Beijing­based research group. 600 30 A big test of investor sentiment will Nasdaq Biotechnology 500 25 come with the rumoured ipoof ByteDance, a $180bn unlisted giant which owns TikTok 400 20 and its Chinese sister short­video app. But 300 15 venture capitalists are already getting cold feet. Fundraising for privately held tech 200 10 firms peaked at $28bn in the last quarter of S&P 500 100 5 2020, when the techlash began, according 0 0 to cb Insights, a data provider. In the sec­ 2120181614122010 21*20181614122010 ond quarter of this year Chinese startups Sources: Refinitiv Datastream; PitchBook *To July 1st raised just $23bn, even as those in America

012 50 Business The Economist August 14th 2021

around a novel technology rather than by Moderna, whose market capitalisation has Democrats and Republicans in Congress big pharma firms such as Pfizer (which jumped from $5bn when it went public in and has led to calls for price controls. often team up with smaller biotechs like late 2018 to $156bn. Many are hoping to em­ The greatest danger is a common one BioNTech, or acquire them, to juice up de­ ulate it by expanding from developing for startups: can they make money? Only velopment pipelines). therapies to manufacturing them. one in six firms in the Nasdaq biotech in­ Many of these technologies are them­ Walking past Moderna’s headquarters dex did so in 2020. The remaining five­ selves the result of recent advances in cell just off bustling Binney Street it is easy to sixths lost a combined $33bn. Vertex, a star and gene therapies, in ways of delivering overlook the risks. People with both a phd graduate of Binney Street that has relocat­ them, and in identifying which patients in life sciences and managerial nous are a ed to Seaport, lost money from its found­ they are likely to benefit most. New money rare breed. Unlike brainstorming the next ing in 1989 until 2017. Moderna turned a is flowing into firms developing treat­ app, life science cannot be done on Zoom. profit last quarter for the first time in a de­ ments for cancer, illnesses of the immune Many clever ideas never come to fruition. cade and its share price has slid. Still, its system or the brain, and even infectious Those that do become therapies often cost wannabe imitators can take comfort that diseases. Everyone is vying to be the next a lot, which increasingly angers both biotech investors are a patient lot. n Bartleby Get flexible or get going

Our Bartleby columnist bows out here is an old joke that the key to humour” is now rightly deemed to be Tsuccess in life is sincerity. If you can demeaning to female colleagues. Boozy fake that, the saying goes, then you have lunchtimes were once common, but are got it made. On reflection, however, the now frowned upon. Some middle­aged essential quality for surviving at work is workers have been slow to accept this not sincerity, but flexibility. shift but employers have become steadi­ When Bartleby started his career in ly less tolerant of such behaviour. 1980, personal computers were the pre­ During the pandemic, workers have serve of hobbyists and sending a letter had to show even more flexibility, keep­ required the passing of a handwritten ing in touch with their colleagues and draft to the typing pool. Phone calls came maintaining their productivity while through the switchboard. Office life was juggling child care and the need to avoid so dependent on shuffling paper that infection. Not everyone has enjoyed it, staplers, paper clips and Tipp­Ex were but the ability to conquer the tyranny of essential. No one had a mobile phone so the 9­to­5 routine is a very positive devel­ swift contact was impossible; this corre­ opment. Monday mornings no longer spondent once sat for 45 minutes in a seem quite such a dreadful prospect if restaurant waiting for a guest who had they don’t involve a stressful commute. been shown to another table and was between work and home life. The advent It is actually a great tribute to modern miffed about his non­appearance. of email and the smartphone means that workers that they have adjusted splen­ Now office workers must grapple with workers can be contacted at any time of didly to all these changes. But it gets a host of technologies. They need to the day or night. If the phone rings at more difficult as you grow older. Atti­ know how to raise their hand (and mute 10pm, it’s probably not your mother, it’s tudes harden; habits become ingrained. themselves) on Zoom, track changes in a your boss. There are many things which Bartleby Google doc and make financial calcula­ Employees have to adjust to many finds puzzling about modern life. Once, tions on a spreadsheet. They must switch corporate cultures over the course of their talking loudly on the street was a sign of between applications, and back again, careers. Only a minority of workers ever madness; now people are happy to dis­ several times an hour. They must learn to spend their working lives at a single orga­ close intimate details of their personal use (or at least understand) new jargon nisation. The median job tenure for work­ lives while bellowing on their mobile even when it seems fatuous or irritating. ers aged 25 and over in America is around phones. Electric scooters seem to offer The need to adapt to change has not five years and has changed little in recent all of the dangers of bicycling (and a lot been confined to office work, of course. decades. Public­sector workers stay longer more risk for pedestrians sharing the Those employed in manufacturing have in their jobs than those in the private pavement) without any of the health had to cope with new techniques and sector, who last around four years. In a benefits. And most perplexing of all is new machines. Many of them have had 40­year career, that implies the average that a man with the character and record to change sectors in order to find work. private­sector employee might work for of Boris Johnson has become his coun­ Manufacturing employment has fallen ten different firms. On top of that, global­ try’s prime minister. from 30.2% of the workforce in 1991 to isation has meant that workers have had This puzzlement is a hint that this 22.6% in 2019 across the oecd,a club of to get used to dealing with foreign cus­ columnist is insufficiently flexible to mostly rich countries.Retail workers tomers and suppliers, colleagues working cover the modern world and needs to have grappled with bar codes, automated across different time zones, and some­ retire. The danger is that one becomes a checkouts, contactless payments and times foreign owners. caricature of a grumpy old man and, like click­and­collect. But office workers have Over the years, employees—particular­ his fictional namesake, Bartleby would also had to adjust to one hugely signif­ ly men—have had to adapt to new social “prefer not to”. Many thanks for reading icant change: a breakdown of the barriers norms. What used to be known as “laddish the column over the past three years.

012 The Economist August 14th 2021 Business 51

The Olympics and advertising which zoomed up the app­store charts. The games exemplify a broader trend. Entrepreneurship Loser takes all This year the average American will watch 172 minutes of broadcast and cable televi­ Wiping the slate sion a day, 100 minutes less than ten years PARIS ago, estimates eMarketer, a research firm. French managers get a second chance Among the so­called “money demograph­ ic” of 18­ to 49­year­olds, viewership has n silicon valley, running one or two Why a television-ratings flop is still fallen by half as audiences have gone on­ startups into the ground is an essen­ marketing gold I line. Even so, spending on tv ads is re­ tial step on an entrepreneur’s journey mong the records broken at the Tokyo markably stable. In 2021 brands will blow to success. For their European counter­ AOlympics, one went uncelebrated: the $66bn on American commercials, about parts a single bankruptcy can derail a games were the least­watched in decades. the same as every year for the past decade. career. Being branded a failure once is In America just 15.5m people tuned in each tv remains “the worst form of advertis­ all banks and other investors need to night, the fewest since nbcUniversal, now ing, except for all the others”, says Brian steer clear for ever. A new study shows part of Comcast’s cable empire, began co­ Wieser of Groupm, the world’s biggest ad­ the extent of the stigma a past failure vering the event in 1988. Viewership was buyer. The big streamers, such as Netflix can have on potential business­build­ 42% lower than at the Rio games in 2016. and Disney+, are ad­free zones. Brands are ers—and how it can be remedied. Broadcasters in Europe recorded similar wary of YouTube’s user­generated content. In the past, French public authori­ falls. Brands that had paid to advertise And ad­supported streamers like Peacock ties often “flagged” top managers of alongside the jamboree complained. nbc and Disney’s Hulu still lack enough ad firms that had gone bust for all to see. scrambled to offer them free spots to make space to move big marketing budgets. As a The blot featured prominently on re­ up for the ratings shortfall. Yet the Olym­ result, advertisers keep ploughing money cords for three years and was readily pics illustrated a puzzle of advertising. into television, even as returns diminish. available to banks, which used it to Even as audiences desert tv, brands are Perhaps not for long. YouTube is mak­ avoid once­failed managers. In 2013 the paying as much as ever for commercials. ing inroads into brand advertising as its policy was changed: the flagging system Tokyo was an uneven playing field. content mix becomes more professional. was abolished, and the 143,000 erst­ Many events took place while Americans Amazon is expected to run ads in its Na­ while entrepreneurs informed of their and Europeans were asleep. Stars such as tional Football League coverage next year. newly cleaned slate. The overnight shift Simone Biles and Naomi Osaka left some By combining premium content with tar­ gave researchers a chance to see what events early. Covid­19 meant no spectators, geted commercials, the e­empire is going impact the flagging system had had. and face­masks all round. But the collapse to unlock “huge buckets” of ad dollars, pre­ Christophe Cahn and Mattia Girotti in viewership wasn’t a one­off. Tokyo’s dicts Andrew Lipsman of eMarketer. In of the Banque de France, which ran the opening ceremony was watched by 36% 2019 advertising on streaming services in bankruptcy database, along with Au­ fewer Americans on the day than watched America was worth only 9% as much as ad­ gustin Landier of hecParis, a business Rio get under way in 2016. Rio’s audience in verts on cable and broadcast tv, eMarketer school, tracked the fortunes of the turn was 35% lower than London’s in 2012. says. In 2023 that figure will be 32%. deflagged. In a paper in the Journal of While viewers have disappeared, adver­ Where will this leave events like the Financial Economics they write that tisers have stuck around. nbc sold more Olympics? Probably still on the podium. Ad removing the stain of insolvency in­ than $1.2bn in ads for Tokyo, about the money will drain out of daytime and some creased the probability of once­failed same as in Rio. Even after dishing out the primetime tv, thinks Mr Lipsman. But big, managers setting up a new business by compensatory ads, it expects to make a live spectacles will be as desirable as ever. at least 19%. Banks extended more profit on the $1bn or so it paid for the rights “There is nothing more powerful in media credit and reduced the interest on some to televise the games. It has also managed, than the 17 straight days of Olympics domi­ loans by nearly 0.5 percentage points. in the words of Jeff Shell, its boss, to use nance,” summed up nbc’s sports chief, The impact was largest for young them “as a firehose to promote everything Pete Bevacqua. As in sport, it doesn’t mat­ founders with short records. More else that we’re doing at the company”— ter that you aren’t as good as you used to surprising, bankers seemed to be mak­ above all its streaming service, Peacock, be, as long as you beat the competition. n ing decisions based on the information that was put in front of them by reg­ ulators. It is still possible—albeit a touch less convenient—for lenders to pull up details of a borrower’s past ventures. Once the information was out of immediate sight, few seemed to care. The outcome is a vindication for French policymakers, who expressly wanted to encourage failed entrepre­ neurs to try again. About one in 40 managers were flagged at any one time, plenty of whom waited the three years until the stigma passed to have another go. Bankers, meanwhile, may want to dig into their borrowers’ histories: the study finds that a firm set up by a man­ ager who had previously gone bust is nearly twice as likely to itself go under. Third time lucky? An ever-harder lift

012 52 Business The Economist August 14th 2021

Schumpeter Joan of Instacart

Can a raid on Facebook reconfigure America’s grocery wars? economics of delivery platforms, from ride­sharing to meals, are tough, those of hauling baskets of produce are even more so. Supermarket margins, already thin, are falling, according to Bain, a consultancy, leaving little left over for the costs of dropping stuff on doorsteps. Shoppers are increasingly price­sensitive; hence the rise of discounters such as Aldi and Lidl. At the height of the pandemic stay­at­home orders gave people little choice but to pay extra for delivery. But as conditions return to normal, so will cost­ consciousness. In the three months to June, says Bloomberg Sec­ ond Measure, a data company, year­on­year grocery­delivery sales fell, after stratospheric rises in most of the previous 12 months. Ms Simo acknowledges that after a breathless year, Instacart is at a “new resting heart rate”. As the online share of groceries in America rises from a modest 8% of total sales, she sees plenty of growth ahead. But competition is heating up. Walmart, America’s biggest grocer, may have regained the upper hand in delivery. Am­ azon Fresh is a force to be reckoned with. Rival upstarts, such as DoorDash and Uber Eats, are expanding from meals to everyday goods (and, according to the Information, a tech newsletter, have rejected Instacart’s offers to merge or team up, respectively). Meanwhile, as the ipo approaches, investors will want to as­ sess Instacart’s path to profitability. Its most recent valuation of idji simo has a back story unusual even by the standards of Sil­ $39bn is already higher than that of Kroger, America’s second­big­ Ficon Valley’s immigrant elite. Born in the port of Sète, in the gest supermarket chain, though Kroger’s revenues, at $132bn last Languedoc region of southern France, she was raised in a family of year, dwarf those of Instacart, at $1.5bn. The implication is that in­ fishermen. With her father always at sea, she barely travelled. Yet vestors believe either that Instacart will displace its supermarket she had style—her first name comes from a Guy Laroche per­ partners in the years ahead, or that it will become a high­margin fume—and she had ambition. At a young age she vaulted from the digital­ads business. Ms Simo insists it will be the latter. Mediterranean, via the prestigious hec business school in Paris, She is losing no time. Already, she says, ad sales (reportedly to the coastline in northern California better known for the inter­ $300m last year, or a fifth of revenues) are growing at triple­digit net than fishing nets. There she made her name at Facebook’s so­ rates. But that’s just for starters. Within days of taking over the cial­media empire. As she puts it, “I jumped into the rocket ship.” company, she raided Facebook for its top marketing executive, On August 2nd, at 35 years old, she became chief executive of Carolyn Everson, naming her Instacart’s president. Ms Simo sees Instacart, an equally rocket­like online­grocery platform. The San huge potential. Groceries, as she points out, are the largest seg­ Francisco­based firm has become a household name in America ment in the retail sector. Until recently the $1.5trn consumer­ and Canada during the covid­19 pandemic for its app giving digital goods industry was unable to target shoppers directly as they put access to the shelves of 600 retailers, big and small, as well as its groceries into their trolleys. They now can via internet shopping, 500,000­strong army of gig­economy workers who pick and pack and all the more effectively on the small screen of a mobile phone. goods from supermarkets and deliver them to customers. Targeted ads give them even more bang for their buck. The job thrusts the Frenchwoman, like a modern­day Joan of Further supporting growth will be automation. Instacart, Ms Arc, into a pivotal position in the ongoing trolley wars. She has Simo says, will continue to expand its numbers of packers and de­ dark forces to fight: Instacart, she claims, provides supermarkets liverers. But it recently signed a deal with Fabric, an Israeli firm, to with the technology to battle Amazon’s expanding e­realm. She build small­scale robotic warehouses attached to its partners’ su­ has revolutionary (some say heretical) ideas: she hopes to bring permarkets, which will make picking and packing quicker, en­ Facebook­like targeted advertising to the grocery­shopping expe­ abling Instacart to cut delivery costs. The firm will also ramp up ef­ rience. And she is on a mission: most of her top executives, 70% of forts to win hearts and minds of customers and staff. One ap­ her contract workers and four­fifths of her customers are women. proach, clearly, is to pay more attention to the female perspective, The executive tilt is “absolutely strategic”, she says. not least because women do most of the grocery shopping. Anoth­ Yet she is also expected soon to lead Instacart to an initial pub­ er will be to make online shopping more entertaining. lic offering that will probably value it higher than most American supermarkets. (The firm declines to discuss a listing.) To underpin Checking out such a valuation, she needs to find ways of making it profitable— How much shoppers will welcome a blizzard of ads as they peruse without alienating the supermarkets that Instacart considers its virtual aisles remains to be seen. For supermarkets, the big ques­ partners. The higher the valuation Instacart achieves, the more it tions are how much they will sacrifice direct relationships with suggests that supermarkets will get the short end of the stick. As customers who access them via Instacart, and who will reap most some of Instacart’s exclusive arrangements with them reportedly rewards from the ad bonanza. Ms Simo insists the benefits will be begin to expire, the big grocers may be realising this. shared between Instacart and its partners. But, says Steve Caine of Far from the digital throne room of Facebook, Ms Simo has now Bain, many of America’s big supermarkets are building their own thrust herself into one of the gnarliest corners of the real world, online platforms to rely less on Instacart. The fightback has be­ grocery, in one of the most cut­throat businesses, delivery. If the gun. It may not be a Hundred Years’ War. But it will be a long one.n

012 Finance & economics The Economist August 14th 2021 53

→ Also in this section 54 Inflation in America—less menacing 55 India retires a tax time-machine 55 SPACs and the City 56 Buttonwood: Delisting Chinese stocks 57 Japan’s understated financial heft 58 Free exchange: Explaining asset prices

Job markets number of unfilled vacancies (see chart 2 on next page). Even in America, with its Coming up short roaring economy, this gauge has yet to ful­ ly recover: despite record high vacancies, it is 2% below its pre­crisis level. Some firms, such as those in manufacturing, have healthy­ish demand for workers, but in lei­ sure and hospitality demand is still 6% be­ LONDON AND NEW YORK low its pre­pandemic level. Have people across the rich world lost their taste for work? Covid­19 restrictions, such as travel merica’s latest jobs report was both is 3% below its pre­pandemic high (see bans, surely play a role in explaining weak Aencouraging and sobering. The world’s chart 1). That points to a deficit of about demand. In Paris plenty of hotels remain largest economy added 943,000 jobs in Ju­ 18m people—a huge waste of talent, not to closed. Your correspondent recently suf­ ly. That is the best tally in nearly a year— mention a hit to tax revenues. fered the indignity of having to board a but even at this pace employment will not What explains the gap? One potential red­eye from jfk airport entirely sober be­ catch up with its pre­crisis level until early explanation is that there is too little de­ cause all the airport bars were still shut. 2022, six months after output regained its mand for labour. A rough measure of the Some economists see insufficient peak. Jobs in the rest of the rich world, too, need for workers involves adding the total spending as a cause of subdued labour de­ are likely to take a while to return to pre­ number of people already employed to the mand. In three­quarters of rich countries pandemic highs. Demand for workers is the “fiscal impulse”, a measure of the still lower than it was before covid­19 oomph government spending gives the 1 struck; and, more important, people have Melted into thin air economy, is expected to turn negative this withdrawn from the world of work. Selected OECD countries*, employment, m year. Yet it seems unlikely that govern­ Before the pandemic the rich world en­ Aged 15 and over ments can close the worker deficit simply joyed an extraordinary jobs boom. In 2019 a 390 by spending more. Compare America and higher share of people over the age of 15 the eu. In the spring of 2020 aggregate 380 was in the labour force—ie, either in work working hours in both economies tanked. or looking for it—than at any point since at 370 America then passed gargantuan stimulus least 1990. The working­age employment 360 packages, while European governments rate (the share of 16­ to 64­year­olds in a 350 chose more modest measures. The recov­ job) was at an all­time high in over half of 340 ery in working hours since then has been rich countries. only marginally better in America—not Now labour markets are surprising in 2019 20 21 much extra labour for a lot of extra cash. the opposite direction. Harmonised statis­ *Australia, Britain, Canada, Colombia, Germany, This suggests that the worker deficit is tics are published with a long lag, but our Japan, South Korea and United States not just about demand. The supply of best guess, based on data from eight coun­ Sources: OECD; German Federal Statistical Oce; workers may have fallen by more, limiting ONS; The Economist tries, is that employment in the rich world the jobs recovery. The share of people in

012 54 Finance & economics The Economist August 14th 2021

ing migrants on net for the first time since Inflation in America In recovery 2 records began in the 1950s. United States, labour demand*, by sector Fear of the virus may also have disrupt­ Beatable prices July 2019=100 ed labour supply. Even in highly vaccinat­ 110 ed countries a large share of people worry Private about contracting covid­19 (see chart 3). 100 This surely puts some people off working BETHESDA, MARYLAND 90 in high­contact sectors such as hospitality. Manufacturing The inflation scare becomes less Lower labour supply might also reflect 80 menacing the impact of welfare policies such as 70 handouts and pensions—our second cate­ he used-car salesman occupies a dis­ Leisure and 60 gory of reasons. Frothy stockmarkets may Ttinctive, if rather unflattering, place in hospitality have boosted the value of some pension American culture. In “The Grapes of 50 pots, prompting people to start their golf­ Wrath”, John Steinbeck’s classic novel set 2018 19 20 21 club membership earlier than expected. in the Depression, sleazy salesmen prey on Sources: Bureau of Labour *Employment and That seems to have been the case in Amer­ miserable farmers. “Cadillac Man”, a film Statistics; The Economist unfilled vacancies ica: recent research by Goldman Sachs, a from 1990, features a fast­talking merchant bank, finds that “excess retirees” account with a bevy of mistresses. These depic­ the workforce in the rich world has fallen for about a quarter of the decline in the tions, and many others, are unfair to most sharply since the pandemic began and, we country’s participation rate. of the hard­working types on car lots. But estimate, is about 1.5 percentage points be­ In other places, however, the share of in recent months such salesmen have oc­ low its peak. Other indicators also point to 55­ to 64­year­olds in the workforce has cupied a distinctive and unflattering place a scarcity of workers. Wages, for instance, gone up. Research by the oecd, a rich­ in America’s economy, as avatars of worry­ are growing fairly strongly. country think­tank, has shown that in ma­ ingly rapid inflation. To understand whether the worker def­ ny countries pension­fund returns were When consumer prices rose by 5.4% in icit will ease, then, you must consider why meagre in 2020, perhaps because some June compared with a year earlier, the fast­ labour supply has fallen. Three broad ex­ fund managers sold at the bottom of the est pace since 2008, used cars accounted planations stand out: disruption owing to market in the spring. Canadian funds’ real for a third of the pickup. So analysts are the spread of covid­19; the impact of wel­ returns, at 1.9%, were one­third of Ameri­ paying unusually close attention to the fare policy and pensions; and changes to ca’s; in Australia they were negative. Small market for used cars (or, as those selling attitudes wrought by the pandemic. wonder that in both places the participa­ them prefer to say, “pre­owned” vehicles). Take disruption first. It is commonly tion of older workers has risen. On August 11th the Bureau of Labour Statis­ believed that school closures have made it For younger people, meanwhile, gener­ tics reported that annual headline infla­ impossible for parents, particularly moth­ ous benefit payments introduced in 2020, tion in July again hit 5.4%. But when you ers, to take a job. The evidence for this is an element of bonanza stimulus packages, look under the hood, the gauge for used mixed, though. Analysis by Jason Furman, may have blunted the need to find work. cars offers reassurance: prices levelled off, Melissa Kearney and Wilson Powell III con­ Although many of these are now being suggesting that the inflation scare may cludes that extra joblessness among moth­ withdrawn, people might have used past prove transitory. ers of young children accounts for a “negli­ handouts to accumulate savings, which The price surge in used cars has been gible” share of America’s employment def­ might delay their return to work. Accord­ indicative of the pressures building as icit. Despite talk of a “shecession” early in ing to our analysis households in the rich businesses roar back from the depths of the pandemic, in most rich countries the world have built up additional funds worth the pandemic, only to run headlong into worker deficit for men remains larger. a tenth of annual consumer spending. shortages of everything from critical parts Disruption to migration may be a more The third broad reason for lower labour to staff. A dearth of semiconductors in the plausible cause of the shortfall. Before the supply relates to shifting attitudes. One in­ vehicle industry, itself a product of pandemic immigration drove workforce triguing possibility is that the pandemic bunged­up supply chains, has had ripple growth. Then countries slammed borders has made people value work less. Many re­ effects. Without the microchips needed for shut to contain cases. Today lower visa is­ port to surveys that they treasure family electronic systems, carmakers have cut suance in America accounts for about a time more than they did. A shift in work back production. Given the lack of new ve­ fifth of its worker deficit. Australia islos­ preferences would be a seismic event; but hicles, would­be buyers have turned to the it is frustratingly hard to measure whether used market, leading to a spike in demand. it is actually happening. A clue, however, But there has been a shortfall in supply at 3 The fear factor comes from Britain, which tracks people the same time, because existing owners People who say they are “very” or “somewhat” who say they want to work fewer hours, have held on to their cars for longer than scared of catching covid-1, % replying even if their pay falls. Normally economic normal amid all the pandemic disruptions. 80 downturns prompt reported “overemploy­ The result: a 30% increase in used­car pric­ United States Italy ment” to collapse. But not in this one. es between April and June. 60 Bring all this together, and the extent to Similar dynamics have pushed up pric­ which the worker deficit endures seems es for home furniture, airline tickets and 40 likely to depend in part on how long the clothing. Alarming as that might sound, disruption and the fear caused by the pan­ the fact that these increases were all tied to Germany Britain 20 demic last. Rising wages might lure some the lopsided recovery from the pandemic of those who left the workforce back into was taken as evidence by many analysts 0 jobs. But the longer the pandemic goes on, the harder it becomes for those who left to Sign up to our weekly newsletter, JJMAMFJDNOSAJJMAM return, and the more likely it is that new Money Talks, for more analysis of the biggest 2020 202 habits stick. The worker deficit might be stories in economics, business and finance Source: YouGov here for some time. n www.economist.com/moneytalks

012 The Economist August 14th 2021 Finance & economics 55

that the jump in inflation may be a passing Foreign investors and India that limited the rights of foreign investors phenomenon. Sure enough, the data from to pursue international settlements, in the July lent credence to that view. Airline Bygones are hope that existing agreements could be re­ fares fell slightly, as did the cost of furni­ negotiated along the same lines. But the re­ ture. Prices for clothing and used cars were bygones negotiations have not borne much fruit. basically unchanged. The overall consum­ According to the un Conference on Trade er­price index rose by 0.5% month­on­ and Development, India has signed 86 bi­ month in July, down from 0.9% in June. A tax time-machine is consigned lateral investment treaties since the The slowdown in core inflation, stripping to the past mid­1990s; 74 have been terminated, al­ out food and energy, was even sharper (al­ most all within the past five years. That in­ though, in annualised terms, it was still hen india introduced a retroactive cludes the treaties with Britain and the well above the Federal Reserve’s 2% target). Wtax on the sale of shares in foreign Netherlands, under which Cairn and Voda­ The ebbing of inflation is, for now, a companies with domestic assets in 2012, fone, respectively, won their awards. vindication for the Fed. Although it has the measure was reviled by foreign busi­ A lack of access to international dispute hinted that it may begin to wind down its nesses and decried by the Bharatiya Janata resolution leaves foreign investors at the ultra­loose monetary policy this year (by Party (bjp), then in opposition, as “tax ter­ mercy of a slow­moving domestic legal reducing its monthly bond purchases), rorism”. So foreign investors had reason to system, and may well have made them most Fed officials think it will only start cheer on August 5th, when the bjp govern­ more reluctant to plough capital into the raising interest rates in 2023—a patience ment said it would repeal the law. The re­ country. (One corporate lawsuit, for in­ potentially at odds with high inflation. The versal illustrates the tug­of­war the coun­ stance, has been pending since 1983.) Fed, to be sure, is hardly alone. A decline in try has long faced—between wanting to in­ India’s approach might also hinder its Treasury yields in recent months in part re­ vite foreign investment into the country trade policy. A reluctance to embrace dis­ flects investors’ falling inflation expecta­ and resenting the legal tussles it brings. pute­resolution systems was not the main tions, in addition to concerns over the con­ The immediate reason for the repeal re­ reason why it decided against signing tinued economic drag from the pandemic. flects the government’s desire to save itself Asia’s recent big trade pacts, the Compre­ Nevertheless, it is too soon to sound the from embarrassment overseas, rather than hensive and Progressive Trans­Pacific Part­ all­clear. Unlike cars or couches, which are a dramatic conversion to an open approach nership and the Regional Comprehensive not exactly everyday purchases, some re­ to foreign investment. The tax law has led Economic Partnership. But it will probably curring expenditures look a little headier. to legal headaches at home and abroad. frustrate any attempt to join large blocs in The price of shelter, which includes rents Two big companies have successfully dis­ future. Until India resolves the tension be­ paid by tenants and “imputed” rents for puted their retrospective bills in interna­ tween its desire for investment and its de­ home­owners, rose by 0.4% in July from tional courts, but the government has not sire for sovereignty, a law change might do June, and could rise further as universities complied with the rulings, leading one of little to entice foreign investors. n and offices open up. Economists at Citi­ them to take some drastic steps. group, a bank, pointed to yet another big In July Cairn Energy, a British oil and increase in restaurant prices. This, they gas firm, obtained a French court order to Capital markets in Europe said, was a clear sign that a tight labour freeze several Indian government proper­ market is pushing up wages and feeding ties in Paris, in pursuit of an arbitration SPACs and the City through to higher prices. award of $1.2bn plus interest and costs, Moreover, used cars may yet drive back made in The Hague last year. The relevant into the spotlight. At a showroom in Be­ transactions date to a reorganisation of thesda, Carlos Correa, an affable salesman, Cairn’s Indian assets made in 2006, and the explains that his company normally has sale of a majority stake to a mining firm in London’s attempts to lure spacs may be three lots full of cars. Now, though, they 2011. Cairn is also chasing Air India, the too little, too late are down to two, which are still mostly country’s state­owned flag­carrier, in empty. The levelling­off in prices is, he American courts, in pursuit of its award. ondon so far has missed out on the thinks, explained by tepid summer de­ The government also found itself Ldizzying investment boom in special­ mand. “It’s usually quiet this time of year,” wrong­footed in a long­running dispute purpose acquisition companies (spacs) he says. Autumn could turn up the heat on with Vodafone, a mobile­phone company, centred on America. Those that have come prices again. n which won an arbitration award in The to Europe have conspicuously swerved the Hague last year. The disputed transaction City, choosing Amsterdam, Frankfurt, Par­ relates to its purchase in 2007 of Hutchi­ is or Stockholm instead. On August 10th, in Hitting the brakes son Essar, an Indian phone network (the an attempt to change that, Britain’s Finan­ United States, consumer prices row over which led India to introduce the cial Conduct Authority (fca) loosened its retroactive­tax law in the first place). The listing rules. spac % change on % change on repeal of the tax offers the government a s provide an unconventional a year earlier previous month way to end such legal tussles without fac­ means of taking private companies public. 50 12 ing the indignity of a company repossess­ A dealmaker incorporates a shell company ing its assets around the world. and lists it on a stock exchange, raising Used cars 40 9 The change in law throws a light on the money from shareholders in order to find a and trucks 30 6 government’s strained relationship with private company worth buying. After find­ 20 3 foreign investors’ rights more broadly. A ing one, agreeing a price and passing a 10 mistrust of international courts as a means shareholder vote, the two companies All items 0 0 of solving disputes over tax, over which the merge. The private company is now public, -10 -3 country asserts sovereign rights, has run and the dealmaker is rewarded with a slice 2120192018 2120192018 through successive Indian governments. of ownership in the merged entity. In 2015 the country adopted a new tem­ Until now, Britain’s rules around merg­ Source: US Bureau of Labour Statistics plate for its bilateral investment treaties ers put investors off. These prevented

012 56 Finance & economics The Economist August 14th 2021

shareholders from selling their spac list in Britain rather than the Netherlands. regime the sponsor of a British spacwill be shares once a merger target had been It is not alone. Advisers to the vehicles that forced to abstain from the merger vote. found but before a full prospectus had applied to list in early 2021 describe the That puts them at the mercy of other share­ been produced. That deprived them of the strain it put on Amsterdam’s financial in­ holders and at a disadvantage compared chance to make an early exit if they object­ frastructure. “There were times when the with much of the rest of Europe, including ed to the dealmaker’s choice of target. In­ Dutch regulator literally didn’t have Amsterdam. Meanwhile, raising capital in stead Amsterdam, which has no such pro­ enough people to read all the documents in sterling to fund pan­European acquisi­ hibitions, became Europe’s spac hub. Ac­ front of them,” says a partner at an Ameri­ tions introduces currency risk. Avoiding cording to Refinitiv, a data provider, spacs can law firm. “At a certain point investors that would restrict the universe to British have raised $3bn there this year, compared get sick of being kept in a queue that might companies, which seem keener on leaving with a minuscule $6m in London. (Both mess up their market timing.” public markets than joining them. More­ are dwarfed by New York’s $110bn.) Still, the City cannot count on a spac over, many observers suspect the spac The fca hopes that removing the ban frenzy. Jason Manketo of Linklaters, a Brit­ craze is already petering out. The fca’s aim on share sales will tempt spac sponsors to ish law firm, notes that even under the new is laudable, but its market timing is off. n Buttonwood Cease and delist

How the delisting of Chinese companies on American exchanges might play out hese days politicians in Beijing and are called. As a wave of accounting scan­ The situation looks bleaker for share­ TWashington seem to agree on very dals at New York­listed Chinese firms holders in other firms. Stock prices will little. Yet on the subject of ending the began to wash over markets in 2011, Amer­ be dragged down by the potential for listing of Chinese firms on American ican regulators started insisting on gain­ instability. (The Nasdaq Golden Dragon exchanges they are in uncommon har­ ing access to certain accounting docu­ China Index, which tracks Chinese firms mony. The collapse last year of Luckin ments. Chinese officials have dug their listed in New York, is down by 45% since Coffee, a Chinese beverage­delivery heels in, refusing the requests and even February.) This will give managers and group listed on the Nasdaq that was making sharing the materials a crime. other company insiders a chance to buy caught inflating its sales, reignited polit­ There are some stocks for which de­ out American shareholders’ stock on the ical grievances in America. The result listing need not involve much pain. Many cheap, says Jesse Fried of Harvard Law was the Holding Foreign Companies adr contracts say that investors can con­ School. The companies could eventually Accountable Act, which requires compa­ vert those shares into corresponding relist in China or Hong Kong at much nies traded on American exchanges to securities listed on other exchanges, notes higher valuations, but the original in­ submit to audits or face delisting within Wei Shang­Jin of Columbia Business vestors in the adrs will not see a cent three years. The precise rules are still School. Some of the biggest Chinese com­ from the relisting. And shareholders are being drawn up, but will probably even­ panies have been prepared, pursuing unlikely to have the right to review the tually involve a great shedding of shares. secondary listings in Hong Kong to which valuation at which companies are taken China, for its part, seems happy for its shares can be transferred. This started private, notes Shaswat Das of King & companies to leave American markets. with BeiGene, a biotech group, when it Spalding, a law firm. Its regulators seemed unbothered when launched a secondary listing in Hong There is an even worse case. Some their actions demolished the share price Kong in 2018. Alibaba, which raised $25bn companies may simply “go dark”, mean­ of Didi Global, a Chinese ride­hailing in New York in 2014, held a second listing ing they stop reporting to American company, just days after it listed in New in Hong Kong in 2019 to raise another regulators and are delisted with no York. New rules from the country’s cy­ $11bn. Of the 236 Chinese companies listed buyout at all. This might sound far­ berspace watchdog will make it harder in New York, 16 have secondary listings in fetched—but it has happened before. In for some firms to list outside of China. A Hong Kong, with a combined market the aftermath of the accounting scandals sudden rule change in late July made capitalisation of $980bn. of a decade ago, more than 100 Chinese online­tutoring firms serving school­ companies vanished from New York’s aged children ineligible for overseas exchanges, destroying some $40bn in listings, wiping billions of dollars from market value. Many did not compensate several New York­traded Chinese stocks. investors. And shareholders in general Rare as this moment of Sino­Amer­ stand little chance of recouping losses: ican agreement is, it hardly spells good because most Chinese groups have few news for investors. The American market assets in America, an angry shareholder has come to host $1.5trn­worth of Chi­ seeking legal recourse would have to go nese companies. That sort of market to a Chinese court, says Joel Greenberg of value has not been cast off by exchanges Arnold & Porter, another law firm. before. So what kind of damage might The smart move, then, is not to be delisting do to shareholders? caught holding these shares when de­ That Chinese companies still trade in listing draws near. But here’s the catch. New York at all is remarkable. For a de­ Ten years ago experts also called time on cade now Beijing and Washington have cross­border listings for Chinese groups. sparred over the fate of China’s American The market capitalisation of Chinese Depositary Receipts (adrs), as the shares firms listed on American exchanges has of foreign companies trading in America risen ten­fold since.

012 The Economist August 14th 2021 Finance & economics 57

overseas investment: in the year to March 2020 only 11% of the bank’s commitments were export loans, while 82% were over­ seas investment loans. Japan has some distinct advantages compared with most Western economies, each of which goes some way to explaining the country’s relatively discreet financial heft. Simple proximity is one of them: Ja­ pan’s largest companies are deeply famil­ iar with other Asian markets, which have made up a significant share of their inter­ national sales for decades. Japan exported more to the Association of South­East Asian Nations than American firms did in 2019, even though the American economy is more than four times the size of Japan’s. Although the country cannot deploy private investment through large state­ owned enterprises, as China does, rela­ tionships between the private sector and the government are much closer than in other capitalist economies, greasing the South-East Asia wheels of co­operation. Saori Katada of the University of Southern California notes A quiet giant that, in competing with China for regional infrastructure, Japan has reverted a little to its “Old Japan” strategy of the post­war boom, in which the private and public sec­ tors worked seamlessly together. The part­ nership is far less heavy­handed than it Japan’s understated financial heft in the region was in the heyday of the “iron triangle”— the politically dominant Liberal Democrat­ ietnam’s first two rapid­transit rail ing private­sector conglomerate, won the ic Party, the apparatus of the state and the Vlines are inching closer to completion, construction contract as part of a consorti­ country’s business scions. But the legacy of after years of delays. The projects, one in um, Tokyo Metro has provided technical a mercantilist attitude to foreign trade and each of the country’s two largest cities, assistance, and Hitachi’s trains have been investment is clear. have become symbols not just of Vietnam’s delivered to run on the line. That blending and blurring of state and modernisation, but of the duelling inter­ While America under President Joe Bi­ private investment objectives might once ests of Asia’s two biggest sources of infra­ den has been forthright about its ambition have produced consternation from West­ structure investment. Hanoi’s line has to challenge China’s Belt and Road Initia­ ern governments, particularly when Japan been funded by Chinese development as­ tive (bri), Japan has been reluctant to was seen as Asia’s ascendant economic sistance; Ho Chi Minh City’s was launched frame its pursuit of large infrastructure power. But the advent of the bri and con­ with help from the Japanese government. projects as a contest with China. Still, it is cerns about China’s economic influence in Although China’s financial reach over­ not hard to spot the change in strategy, par­ the region have changed priorities. As the seas attracts enormous attention, when it ticularly during former prime minister only serious competitor to Beijing’s finan­ comes to infrastructure in South­East Asia, Abe Shinzo’s period in office. In 2015 the cial clout in the region, Japan’s overseas in­ Japan is still very much the leader (see government launched the “Partnership for frastructure heft is likely to be welcomed chart). In total, it has $259bn invested in Quality Infrastructure” (pqi) with the across much of the world—even if Tokyo unfinished projects in Indonesia, Malay­ Asian Development Bank and other inves­ doesn’t shout too loudly about it. n sia, the Philippines, Thailand and Viet­ tors, which promised to provide public and nam, according to Fitch Solutions, a data private capital worth $110bn for infrastruc­ provider, compared with China’s $157bn. ture projects in the region over the next Project power Both figures have declined since 2019, as five years (though progress in reaching this Stock of investment in infrastructure projects* the covid­19 pandemic has deterred green­ goal has not been closely tracked). Despite July 2021, $bn field infrastructure investment, but Ja­ not calling out the bri in public, the mes­ 9060300 120 pan’s lead has widened a bit. sage behind Japan’s repeated emphasis on The construction of Ho Chi Minh City’s quality has not gone unheard in the region. Vietnam Urban Railway Line 1 is a microcosm of the The pqi was explicitly made part of the Japanese infrastructure offering abroad. country’s “Free and Open Indo­Pacific” Indonesia Government and quasi­governmental strategy, launched in 2016, linking its for­ agencies laid the groundwork for the coun­ eign­policy objectives with its financial Philippines try’s mammoth business groups. The pro­ priorities. That same year, the Japan Bank Japan Thailand ject began almost nine years ago with early for International Co­operation, which be­ China nil support from the Japan International Co­ gan life in 1950 as an export­promotion Malaysia operation Agency, which facilitates most bank, saw its role amended to allow for of the country’s overseas development as­ greater financial risk­taking. In recent *Excludes completed Source: Fitch Solutions and cancelled projects sistance. Sumitomo Corporation, a sprawl­ years it has pivoted towards financing

012 58 Finance & economics The Economist August 14th 2021

Free exchange The fundamentals of finance

A new theory suggests that day­to­day trading has lasting effects on asset prices buy funds that hold at least some equities. The higher the share devoted to equities, the larger the “flow”. The amount of securities in existence does not change—for every buyer, there is a seller— but their price is forced up until the value of the market is suffi­ cient to satisfy each fund’s mandate to hold the target fraction of its portfolio in stocks. Using statistical wizardry the authors isolate flows into stocks that appear unexplained (by, for example, gdp growth) over the period from 1993 to 2019. They find that markets respond in a man­ ner contrary to that set out in the textbooks: they magnify, rather than dampen, the impact of flows. A dollar of inflows into equities increases the aggregate value of the market by $3­8. Markets are not “elastic”, as textbooks say they should be. Messrs Gabaix and Koijen therefore call their idea the “inelastic markets hypothesis”. Does inelastic mean inefficient? A trader who could see flows coming would get rich quickly. (It has long been known that the so­called “front­running” of big trades, which is usually banned, is profitable.) But flows are hard to predict, says Mr Koijen. A true believer in markets might argue that unforeseeable flows are the mechanism by which the right price is reached, and reflect new in­ formation coming to the fore. Even if flows are ill­informed, though, the opportunity to pro­ conomics is about supply and demand—just not in financial fit from them is small once they have already moved the price, says Emarkets. A building block of asset­pricing theory is that the Mr Gabaix. And the arbitrageurs who are meant to keep the whole value of stocks and bonds is determined by their expected future market anchored to fundamentals do not seem to exist. The au­ payoffs rather than by ignorant trades. If an investor unthinkingly thors note that at the onset of the global financial crisis hedge throws money at, say, shares in Apple, opportunistic short­sellers funds owned less than 4% of the stockmarket, and that their are supposed to line up to take the other side of the bet, keeping trades tended to amplify market movements, not dampen them. the share price anchored to where it ought to be, given Apple’s Funds are constrained by limits on leverage and by the fact that likely profits. Free money gets picked up and dumb money gets they must cope with the investments and redemptions of underly­ picked off. Markets are efficient, in that prices come to reflect gen­ ing investors. Different parts of the market do not trade much with uine information about the future. each other, as would be necessary for markets to be elastic. At this point your columnist may be in danger of provoking The paper will surprise the typical economist, who, according guffaws. It has been a bad year for the textbooks. Retail investors to the authors’ surveys, believes that flows do not affect prices. It have driven up the prices of meme stocks such as GameStop and also threatens associated financial theories. One is the Modiglia­ amc. Cryptocurrencies, the fundamentals of which cannot easily ni­Miller theorem, which says that it does not matter whether a be analysed, have soared too. Even America’s bond market is a company finances itself with equity or with debt. In inelastic mar­ puzzle: the ten­year Treasury yield is only 1.4% even though annu­ kets, by contrast, a firm that issues debt to buy back its stock will al consumer­price inflation has reached 5.4%. So­called “techni­ find that it drives up both its own share price and the broader mar­ cal” explanations for market movements—“where you put things ket. The authors look only at stocks, but other research suggests that you can’t quite explain”, according to Jerome Powell, the that bond markets are inelastic (albeit to a lesser degree). As a re­ chairman of the Federal Reserve—are in fashion. So it is apt that an sult, central banks’ quantitative­easing policies, under which they emerging theory of how markets work says that even random fi­ buy bonds, will affect bond yields—something that many traders nancial flows may matter a great deal to asset prices. take as given but that purists say should not happen. In a recent working paper Xavier Gabaix of Harvard University Messrs Gabaix and Koijen hope to inspire research that ex­ and Ralph Koijen of the University of Chicago study how the ag­ plains market movements using the granular, observable choices gregate value of America’s stockmarket responds to buying and of investors, rather than attributing gyrations in markets to unob­ selling. Researchers have studied flows before, typically finding servable changes in beliefs. And portfolio managers who typically noticeable effects as investors sell one stock and buy another. try to forecast future business conditions might find it productive Messrs Gabaix and Koijen are interested in whether this finding to try to predict flows into and out of investment funds instead. scales up to move the market as a whole—a thesis that is consis­ tent with the smaller­scale findings, but more provocative. Keynesian beauty The first challenge is getting definitions straight. The financial There may be an irony here. The authors do not study whether press often writes about money flowing into stocks, but for a secu­ markets have become less elastic over time, but in recent decades rity to be bought, it also has to be sold. The authors’ definition of funds that passively allocate fixed percentages to indices have inflows relies on the fact that investment funds often promise to grown in popularity, making their theory more plausible. The maintain a fraction of their portfolio in equities (a retirement trend is a vote of confidence in markets’ efficiency, which should fund offered by Vanguard, say, might offer investors 80% expo­ make the returns to active stock­picking low. Yet passivity may sure to stocks and 20% to bonds). A flow into stocks is defined as breed inelasticity—and therefore create opportunities for a canny an investor using fresh cash, or the proceeds of selling bonds, to investor who is ahead of the crowd. n

012 Biology brief Organs The Economist August 14th 2021 59

come into their own as a plethora of so­ phisticated, functional entities. How large that plethora is in a given animal species lies, to some extent, in the eye of the biolo­ gist doing the beholding. As in many other areas of science, some are lumpers and some are splitters. A lumper may see a mammalian ear as an organ. A splitter may want to differentiate all sorts of compo­ nents, such as the structure in the inner ear called “the organ of Corti”, after the anato­ mist who first described it. Lists of human organs thus vary in length, but 78 is a num­ ber that often pops up in medical texts. What is more, animals tend to have a standard complement of each type of or­ gan. A healthy oak tree may have 100,000 leaves or 300,000 leaves. There is no prop­ er number of blossoms for a cherry. But a complex animal comes with a fixed num­ ber of almost all of its organs: one ear if it is a praying mantis, two wings if it is a bird, three hearts if it is an octopus, four stom­ achs if it is a cow, five arms if it is a starfish, six eyes if it is a recluse spider, 32 brains if it is a leech, and so on. These organs will be arranged according to a specific body plan. Oaks can grow branches and roots in what­ ever pattern seems best. Animals cannot. This is because animals and plants have different relationships with time and space. These different ways of life require different sorts of flexibility. Animals move through space but, once adult, change Making organs shape comparatively little over time. Plants stay still in space but change shape a Leaves, limbs and lights lot as they grow. Most animals seek the en­ ergy they need by hunting or foraging. Plants’ energy­seeking behaviour is a mat­ ter of growing roots to take in water and minerals, and flat, green surfaces to absorb the sunshine and carbon dioxide that It is not enough, in a multicellular creature, for labour to be divided make up the preponderance of their food. between the cells. Those cells must also be organised In most plants, those surfaces are em­ ll life is made of cells. But to build a ties of different types of cells are co­ordi­ bodied in one of the loveliest and most Acomplex, multicelled organism from nated in order to perform a specific func­ straightforward of organs: the leaf. In the those cells almost always requires them to tion or functions. Sponges do not have or­ heart of a leaf are chloroplast­rich meso­ come in more than one type. This means gans; they just have voids through which phyll cells responsible for the bulk of the that as cells multiply in a growing organ­ they pump water from which single­celled photosynthesis. On the leaf’s sunnier side ism they need to differentiate, which they prey can be plucked. This does not require these cells are packed closely together, like do by expressing different subsets of genes lots of different sorts of cells. Plants have a palisade. On the shadier side they are ar­ from within the genome they all share. Dif­ some organs, but not that many: stems and ranged like a sponge, so that air can circu­ ferent patterns of gene expression produce roots; petals, stamens and pistils by means late through, bringing with it the carbon different types of cell. of which to reproduce; and a few more. dioxide which photosynthesis requires. These complex patterns of gene expres­ It is in complex animals that organs Photosynthesis also needs water. This sion appear to be the preserve of eukary­ is drawn up from the roots through tubes otes—creatures built of cells that have called xylem and evaporates within a leaf, → In this series on the levels of life their primary genomes wrapped up in a moistening the air that the mesophyll cells complex compartment called a nucleus. 1 Biology’s big molecules make use of. Other tubes, called phloem, Sponges, descended from some of the ear­ carry away the sugars created through pho­ 2 Cells and how to power them liest multicellular creatures, have a hand­ tosynthesis. Air moves in and out through ful of cell types. Plants have dozens. Ani­ 3 Making organs openings in the leaf’s cuticle, called stoma­ mals have hundreds. ta. If water is plentiful the stomata dilate, 4 The story of a life The number of cell types is, broadly allowing lots of carbon dioxide in. If water speaking, a function of the degree to which 5 What is a species, anyway? is in short supply they clamp down, reduc­ these creatures have bodies made up of or­ ing the rate of photosynthesis but stopping 6 Finding living planets gans—arrangements in which the activi­ the plant from drying out.

012 60 Biology brief Organs The Economist August 14th 2021

Stomata aside, plant behaviour is large­ and lungs, have back ups. Some can be lost cells. Loss of this myelin has bad effects, ly a matter of growth to permit greater ac­ with little consequence—the spleen, for such as multiple sclerosis. cess to water and minerals from below, and example—and most can be sacrificed with­ Most cells in all organs have ways of sunlight and carbon dioxide from above. out making life impossible. One, the pla­ talking to their neighbours. But no others Stuck as plants are, where they sprouted, centa, is temporary and may be regrown as do so as much and as clearly as neurons do. that is best achieved through plasticity and required. They cover a wide range of sizes Their axons, and the shorter protuberances building on the results of the last growing and complexity. A submandibular gland called dendrites which come off both the season. A preordained body plan—three weighs about ten grams; the gut weighs a axon and the main cell body, mean they branches at 120° to each other here, 42 couple of kilograms. The simplest organ in have far more neighbours than any other leaves per twig there—would be ludicrous. the human body is probably the bladder, a sort of cell. A single neuron may easily be Animals’ active lifestyles, by contrast, distensible sac that has a handful of cell connected to 10,000 others. Some are con­ need nerves and muscles. These require far types. The most complicated is the brain, nected to 100,000. And they have over 100 more energy to do their work than any which has about 86bn nerve cells, or neu­ types of chemical neurotransmitter with plant tissue does. This also means a body rons (there are 133 types of these in its cor­ which to send and/or receive messages at plan optimised for the sorts of behaviours tex alone), supported by a slightly smaller these points of connection. that the animal bases its life on. Muscles, number of so­called glial cells. Neurons also need a way to send signals nerves and bones need to grow to a pre­ar­ The nervous system as a whole is more rapidly between their distant parts. They ranged design much more than branches, complex yet, finding its way into pretty do this via electrical impulses called action twigs and leaves do. much all of the other organs the body has potentials that run along their cell mem­ Most of these organs are physically co­ to offer. It is the zenith of the twin process­ branes, assisted by the myelin sheaths. The herent. The co­ordination of their cells is es of differentiation (many different types result is a network with trillions of connec­ achieved by structural linkage between of cell) and integration (a highly functional tions, which is in communication with all them. In some cases you can say where structure) which is at the heart of what parts of the body, and which can also carry they begin and end well enough that it is makes organs tick. out, in ways not yet understood, the com­ possible to cut one out of one person and In the main, the various types of neuron putational processes needed to analyse the put it into another. Some, though, are dis­ have nuclei which are, together with their inputs it receives, and act appropriately. tributed—most notably the immune sys­ immediately surrounding cytoplasm, lo­ tem, which has outposts throughout the cated in the brain or the spinal cord. But When organs go bad body and a range of single­celled compo­ they also have protuberances called axons, For organs to work, their cells need to be nents coursing through the blood. The ac­ which reach out from them, in some cases disciplined. They must know their place tivities of its different types of cells are still into the rest of the body, and so may stretch and must divide only when necessary. Un­ co­ordinated, but through passing interac­ for a metre or more. These axons are fortunately, but inevitably, this discipline tions as much as lasting structures. wrapped in sheaths of a fatty material is always at risk of breaking down. Some human organs, such as kidneys called myelin, secreted by specialised glial When multicellular creatures evolved, so did various forms of cellular self­sacri­ → The structure of a leaf and a neuron fice. A fundamental aspect of cellular dif­ Front ferentiation is that it requires the majority of cells to give up the strongest Darwinian Leaf imperative of the lot: their posterity. Evo­ lution configured the nuclear operating Palisade system so that cells could be required to mesophyll grow only within certain constraints, to stop reproducing when told to or even to Chloroplasts die on command if the rest of the body re­ quired it. It is only through the application of such rules, programmed into the way in Spongy In the vein, xylem mesophyll transports water which the cells express their genes, that CO and nutrients while multicellular life is possible. phloem carries Mutations sometimes break down the products of these controls, freeing cells to replicate. Epidermis photosynthesis Some of these mutations pass down the Cuticle generations, predisposing an individual’s Stomata Bottom cells to the freebooting life. Some are Oxygen, water vapour picked up along the way. Once a cell begins to replicate unbidden, it and its descen­ Neuron dants acquire further mutations. The im­ mune system will try to stop such uncon­ Dendrites receive a message The message travels The axon terminal transmits from another cell and relay it down the axon the message to another cell trolled growth—but mutations which to the cell body via chemical neurotransmitters cause it to turn a blind eye often crop up too. This is how cancers arise and flourish. Myelin sheath created Cancer can be life­threatening. And by specialised glial cells even if it doesn’t get you, something else

Cell body will. Individual bodies are merely expend­ able links in the great chain of being. They have their exits and their entrances, and one body in its time plays many parts. The Action potentials nature of these individual lives is the topic of the next Biology brief. n

012 Science & technology The Economist August 14th 2021 61

Climate change dead ahead. Over the past decade the Earth has been between 0.95°C and 1.2°C (1.7­ A new reality 2.2°F) hotter than it was in the second half of the 19th century; the best estimate is 1.1°C. That is more than 0.2°C higher than the change that ar5 found when it made the same comparison in the previous de­ cade. Though some of the difference is now The ipcc’s latest report is starker, more certain—and underlines how climate put down to ar5 having underestimated change is already making its effects felt the then current temperatures, most is t a key moment in the film “Jaws”, po­ those that offer only “medium confi­ seen as being due to continued heating. Alice chief Martin Brody, having known dence”. Last time around the two catego­ The total amount by which the planet that a shark attack was possible, witnesses ries were roughly level pegging. will heat up depends pretty closely on one actually happen. The director, Steven Part of that higher confidence is down cumulative greenhouse­gas emissions. Spielberg, underlines the transformative to better science, which is welcome. An­ That allows the “carbon budgets” associat­ nature of Brody’s shock with a shot which other part is down to bitter experience, ed with various levels of worldwide tem­ makes inspired use of a camera technique which is not. The report stresses that the perature rise to be calculated. For ar6 this called a “dolly zoom”. Nothing on screen world is living through climate change, not exercise in climate accounting has been actually moves. But Brody’s guilty face watching it draw near. Its 234 authors base gone through all over again. seems to rush towards the audience, taking their conclusions, in a phrase that acts as Worldwide greenhouse­gas emissions up more and more of the frame. At the something of a refrain, on “multiple lines since 1850 are now put at 2,400bn tonnes same time his surroundings, rather than of evidence”. Some of that evidence comes of carbon dioxide, give or take 10%. Every being displaced, are revealed more fully. from computer models, and some from subsequent 1,000bn tonnes is likely to The report released on August 9th by improved physical understanding of va­ cause between 0.27°C and 0.63°C more the Intergovernmental Panel on Climate rious planetary processes. Crucially, an in­ warming. If that seems quite imprecise, it Change, the first part of the ipcc’s sixth as­ creasing proportion comes from direct ob­ is a much tighter estimate than was previ­ sessment report (ar6), presents the specta­ servations of the way in which the world ously possible. Such calculations rely ulti­ cle of the possible becoming real in a simi­ has changed so far. mately on how sensitive global tempera­ larly unnerving way, mixing close­up Start with the predictions of what lies tures are to rising carbon­dioxide levels. alarm with wide­angle context. It is a stark­ That crucial number is one of those things er and blunter document than its prede­ which is easier to estimate now that there cessor in ar5, which was published in 2013. → Also in this section is more experience to go on. The error The statements in the summary express­ range is notably smaller now than it was in 62 Solar geoengineering ing “high confidence” handily outnumber ar5 (see chart 1 on next page).

012 62 Science & technology The Economist August 14th 2021

The budget associated with a 50% estry plantations. And it has nothing to say already affecting every inhabited region of chance of keeping warming below 1.5°C— about how those systems might operate or the planet, with human influence contrib­ the more ambitious of the two goals laid how much they would cost—that work is uting to many observed changes in weath­ out in the Paris agreement of 2015—allows left to the reports on impacts and on miti­ er and climate extremes. just 500bn more tonnes to be emitted. That gation, which are due out next year. The current trend towards more fre­ is about 15 years of industrial emissions at quent and intense heavy rainfall will con­ current rates. To avoid busting that budget You’re going to need a cleaner boat tinue, but not monotonically; rain and would require the whole world, not just Meanwhile, in wide­angle, the predicted snowfall will become more variable within rich countries, to get net emissions of car­ consequences of a warming world are be­ seasons and, probably, from year to year. bon dioxide down to zero before 2050. That coming clearer and more fine­grained. The authors are thus fairly certain that is a tall order, to put it mildly. Even the Again, this is partly the product of better flooding will be more frequent and intense most ambitious of the various emissions scientific understanding, and partly the in most of Asia and Africa if the world scenarios modelled by the ipcc‘s experts product of direct experience. In 2013 ar5 warms by 1.5°C, and pretty sure the same offers less than a 50% chance of staying be­ referred to just three studies linking ex­ changes will be seen in North America and low 1.5°C of heating. treme weather events to rising tempera­ Europe. Earlier melting of mountain snow­ The very­low­emission scenarios do of­ tures. The authors of the latest report were packs will add to the flood risk in some ar­ fer a fighting chance of keeping warming able to assess hundreds of such event­at­ eas; in others, higher sea levels will raise below 2°C. But the emission cuts they re­ tribution papers. Those allow it to make the risk, as will the greater frequency of the quire go far beyond what the nations of the the clear statement that climate change is most intense tropical cyclones. world have currently promised. What is more, those scenarios mandate not just he­ roic emission cuts but also “negative emis­ Solar geoengineering sions”—techniques that actively remove It that cannot be named carbon dioxide from the atmosphere, thus paying back some of the carbon budget spent previously. It is just about conceiv­ Geoengineering is a hot topic—and was underplayed in the ipcc’s report able that, if emissions fall very quickly and carbon­dioxide removal scales up really nowing what is going on in the 4,000 pages. What is more, the second well, warming may exceed 1.5°C during the Kclimate requires observations taken and third parts of the assessment, which coming decades but fall back below that from high orbit, the ocean depths and all deal with impacts, adaptation and miti­ level by the end of the century. sorts of places in between, as well as gation, will also look at the question Happily, the report confirms that re­ models which stretch the powers of the when they are released next year. Only moving carbon dioxide from the atmo­ most super supercomputers. Knowing after they are published will it be pos­ sphere might be a plausible way of reduc­ what is going on as scientists and gov­ sible to take a view in the round. ing temperatures. Since such removals ernment representatives fine­tune the But it is also true that a lot of climate now offer the only way of reconciling the bit of an ipcc report on which govern­ scientists and others believe that talk of modest near­term cuts currently en­ ments officially sign off—the “summary solar geoengineering is a siren call that shrined in national policies with the much for policymakers” (spm)—is more akin to could lure policymakers away from the more dramatic long­term ambitions those reading tea leaves. Was the removal of course of greenhouse­gas cuts while not, same countries proclaim, this is just as “fossil fuels” from one of its chart cap­ in the end, doing any good—and possibly well. If the ipcc had found large­scale car­ tions a pernicious, if petty, piece of pe­ dashing the whole planet on to the rocks. bon­dioxide removal untenable that trostate obfuscation? Or just a way to Whether achieved through particles in would have put the kibosh on the whole make the technical definition involved the stratosphere, brightened maritime idea of reaching net­zero emissions. sufficiently broad? It is hard to say ifyou clouds or some other means, solar geo­ But the report also notes that such re­ were not in the room. engineering would not be a simple re­ movals could affect more than just tem­ And what to make of things that versal of greenhouse warming; it is a peratures. They could also have an impact didn’t make it to the summary in the first form of deliberate climate change with on food production, biodiversity and water place—such as solar geoengineering, its own potentially dangerous side­ availability and quality, especially if they which the ipcc refers to as “solar­radia­ effects. Its impacts on atmospheric are carried out through the use of huge for­ tion modification”? In the spm of the chemistry and circulation are not well previous report, in 2013, this approach to understood. An approach which suited climate change, which involves modify­ one country might be bad for another. A sensitive subject 1 ing the atmosphere to boost the amount The decision to include it in the spm Expected warming per doubling of sunlight reflected back to space, was in 2013 was controversial at the time and of atmospheric carbon dioxide, °C deemed to “have the potential to sub­ criticised afterwards. But Janos Pasztor, stantially offset a global temperature head of the Carnegie Climate Governance Best estimate Ranges: likely very likely rise”.The body of the new report agrees, Initiative (c2g), regrets that it was not 0 2 4 6 finding that research has consistently included this time, too. Neither he nor 2009 Fourth assessment report shown such methods “could offset some c2g advocate solar geoengineering. But Models only of the effects of increasing greenhouse he thinks that “when the world can go in gases on global and regional climate, many different ways, you need to prepare 201 Fifth assessment report* including the carbon and water cycles”. for that.” If the possibility is not discuss­ Models and palæoclimate data But this time round there is no discus­ ed, it does not go away; it is just less sion in the spm. scrutinised, and the world less well 2021 Sixth assessment report Asked why, the authors say, reason­ prepared. Uncomfortable as such diffi­ Models, palæoclimate data and modern evidence ably, that there is not room for every­ cult discussions may be, says Mr Pasztor, thing: the draft report stretches to almost “We can’t just keep our head in the sand.” Source: IPCC sixth assessment report *No best estimate

012 The Economist August 14th 2021 Science & technology 63

Heatwaves will climb in number and The problem is that sulphates are dead­ severity. Extreme “wet­bulb” tempera­ Bringing the heat 2 ly.Over the past few decades they have con­ tures—a measure which includes the de­ Contributions to 2010-19 warming tributed a great deal to the particulate air gree to which humidity makes it harder for relative to 1850-1900, °C pollution that has killed tens of millions. the human body to shed heat—will be­ Clean­air laws have seen them increas­ come more common more quickly than Overall ← Cooler Warmer → ingly scrubbed out of fuels and smoke unadjusted high temperatures do. Tem­ stacks. The ipcc report finds that continu­ 0-0.5-1.0 1.51.00.5 peratures on the hottest days in some mid­ Human influences ing this good work on air pollution would latitude regions, including parts of Europe, Solar/volcanic contribute to global warming in all the will rise 1.5 to 2 times as fast as global Uncertainty emission scenarios it studied. That is an­ Internal variation warming more generally. other reason, it says, to promote quick and The oceans will heat up more slowly lasting cuts in methane emissions. With­ Human influences than the land. But as they do so they will out increased ambition on methane, clean­ expand and rise, a trend exacerbated by the 0-0.5-1.0 1.51.00.5 er, clearer air will add to the challenge of melting of glaciers and ice caps. The warm­ Carbon dioxide rising temperatures. ing will not be even. The Arctic will heat up Methane Mr Spielberg’s coup de cinema in “Jaws” more than other seas; in every one of the Nitrous oxide marks the moment when the police chief ipcc‘s scenarios there will be sea­ice­free realises that the opportunity to avert ca­ days in the Arctic by the middle of the cen­ Hydrogenated gases lamity is gone; his inaction has led to a co­ tury. There will be local aberrations, too. Nitrogen oxides vert threat becoming a blood­in­the­water Marine heatwaves—short­lived bursts of Volatile organics and CO* reality. As a result the chief is seized by a hot water which have only recently be­ Sulphur dioxide new fervour for action—one which brings come a topic of concern—are expected to him into direct conflict with the mayor, Organic carbon continue to become more common, espe­ who prefers to minimise the risks so as not Ammonia Green- cially in the tropics and the Arctic. house to scare off the tourists. Ocean warming will also suppress the Black carbon gases When it comes to climate change the re­ tendency of waters from different depths Land use and irrigation Aerosols alisation has hardly been instantaneous; it to mix. Both the heatwaves and the in­ Aviation contrails Other has been dawning for at least a decade or creased stratification will have ecological so. But coming as it does in a summer of effects that may be profound, both in the Source: IPCC sixth assessment report *Carbon monoxide shattered temperature records and terrify­ Arctic and beyond. ing fires and floods, an ipcc report in Generally speaking, what is wet be­ As the report points out, this is particu­ which predictions of future global warm­ comes wetter, what is dry, drier, and what larly important because of the effects of ing are, more than ever before, backed up is uncommon more common. The rarer another pollutant. Sulphates are given off with observations should offer a similar the event, the higher the likelihood that it mostly by coal plants and the sorts of heavy punctuation. Deciding how much action to will become more frequent. Even at 1.5°C of fuel oils that power big ships. They have take on climate change is politically hard, heating the report warns there will be the opposite effect to methane and carbon because it means imposing high costs to­ some events—heatwaves, droughts and dioxide: by reflecting sunlight back into day for largely hidden benefits tomorrow. such—that are more severe than any that space, they cool the planet. The ipcc reck­ But when, in November, the world’s gov­ have been observed before. This is true at a ons sulphate pollution keeps the world ernments get together in Glasgow to dis­ global level as well as a regional one. “Low­ about 0.5°C cooler than it would otherwise cuss how they can improve on the insuffi­ likelihood, high­impact” events are, by be. Without it, the world would probably cient action they have taken to date, they their nature, hard to be specific about. It is have already breached the Paris aspiration need to think like people who have seen a good bet they become more likely with of limiting temperature rises to 1.5°C. the blood in the water. n higher temperatures. But even at compara­ tively modest levels of warming such ca­ lamities as widespread forest dieback or a collapsing Antarctic ice sheet are hard to completely rule out. Recommendations about what to do are not part of this report’s remit. But never­ theless it pushes hard for more and stron­ ger action on methane. In terms of its con­ tribution to warming so far, methane is second only to carbon dioxide (see chart 2). Atmospheric levels of the stuff, like those of carbon dioxide, are higher than at any other point in human history. But unlike carbon dioxide, atmospheric methane is transient—it has an atmospheric half­life of less than a decade. This means that cuts in methane emissions pay off much faster than cuts in carbon dioxide. If the world is really serious about trying to keep below 2°C of warming, let alone 1.5°C, doubling down on attempts to cut methane emis­ sions, both from industry and agriculture, should be a high priority. Methane, and sulphates

012 64 Books & arts The Economist August 14th 2021

“Fear and Loathing in Las Vegas” decadence of Vegas casinos, destroying their hotel room and running up a huge bill Buy the ticket, take the ride they have no intention of paying. They flee the city before the damage is discovered, but return almost immediately to cover the National District Attorneys’ Conference on Narcotics and Dangerous Drugs. Grasping that the many cops in attendance don’t have a clue what they are talking about, Fifty years ago Hunter S. Thompson turned a drug-fuelled bender into a cult novel they again abandon their assignment and hen hunter s. thompson left Los narrator—and Dr Gonzo, his lawyer, hallu­ spend a few days in the grip of “amphet­ WAngeles for Las Vegas in 1971, in the cinating on the highway as they speed to­ amine psychosis”, trawling late­night din­ company of Oscar Acosta, a Mexican­ wards Las Vegas. Driving a rented Chevy ers and taco stands in search of the Ameri­ American lawyer and Chicano activist, he convertible that they call the Great Red can dream, “burning the locals, abusing did not mean to write a cult novel. Thomp­ Shark, they are armed with “two bags of the tourists, terrifying the help”. son was working on a piece about Ruben grass, 75 pellets of mescaline, five sheets of Reviews were mixed when the novel Salazar, a Mexican­American journalist high­powered blotter acid, a salt shaker appeared as a single volume in 1972 (“more killed the previous year by a tear­gas canis­ half full of cocaine and a whole galaxy of hype than book”, sniffed the New Republic). ter fired by police during a march against multicoloured uppers, downers, scream­ But it subsequently achieved cult status, the Vietnam war. Acosta, his main source, ers, laughers”; also “a quart of tequila, a boosted by a film adaptation in 1998. Its ap­ was worried about being seen with a white quart of rum, a case of Budweiser, a pint of peal rests less on the depraved antics of the writer—but agreed to go with Thompson to raw ether and two dozen amyls”. main characters than on their encounters Las Vegas, where he was due to produce the On the surface, the novel is about the with other people, and its bleakly humor­ captions for a series of photographs of the consumption of this arsenal of mind­alter­ ous dissection of the American psyche. Mint 400 off­road desert race. The roman à ing substances and the visions and para­ Thompson uses Vegas, a city “so grossly clef that arose from the trip, published in noia, vomiting and violence that ensue. atavistic that a really massive crime often two parts in Rolling Stonethat autumn, was The duo attend the Mint 400 but soon em­ slips by unrecognised”, as a symbol of a an elusive blend of fact and fiction, obser­ bark on a two­day bender amid the glitzy country in the midst of political and ideo­ vation and exaggeration. logical change. The counterculture of the “Fear and Loathing in Las Vegas: A Sav­ 1960s is in its death throes; with Richard age Journey to the Heart of the American → Also in this section Nixon in the White House, America is slid­ Dream” turns 50 this year. Its vitriol has ing towards something darker and meaner. 65 Art, mental illness and the Nazis lost none of its satirical bite. The story be­ Most of the cameos are as repellent as the gins with Raoul Duke—the pseudonym 66 The ballad of Billie Jean King narrator—cruel, ignorant, greedy, preju­ that Thompson, who died in 2005, as­ diced and occasionally violent. Illustra­ 66 Tricksy fiction signed himself as the deeply unreliable tions by Ralph Steadman, a British artist,

012 The Economist August 14th 2021 Books & arts 65

depict them as twisted and deformed, Art and the Nazis offer fresh, unfiltered depictions of the more animal than human. human condition. The patients used what­ Half a century on, Thompson’s themes The mind’s eye ever materials they could find, including of capitalism and greed, racial tension and menus, nursing rosters and toilet paper. the inadequacies of traditional journalism Their subjects ranged from fantastical still resonate. Nixon is long gone but in the machines and erotic bicycles to royalty, bumpy wake of Donald Trump’s presiden­ murder and religion. cy—a period of government­led anti­im­ The work embodied psychotic realities migrant and anti­media sentiment, Black and relayed messages from isolation, ex­ Lives Matter protests triggered by police The Gallery of Miracles and Madness. By plains Mr English. Prinzhorn’s achieve­ brutality, white­supremacist riots and the Charlie English. Random House; 336 pages; ment was to declare that it was art, and to shadow of impeachment—Thompson’s $28. William Collins; £20 liberate it “from the psychiatric clinics and “gross, physical salute to the fantastic nursing institutions where it had been possibilities of life in this country” feels ow to appraise art by people with made, and release it into the wider world”. unsettlingly contemporary. Hsevere mental illnesses has long exer­ He was remarkably well­connected in cul­ To protect the identity of Acosta (who cised critics. For a tragic period in Germany tural circles and his collection was enthu­ was to disappear in Mexico in 1974), he is in the middle of the 20th century, the opin­ siastically received by a contemporary art characterised as a 300­pound Samoan. But, ion of a single arbiter—who decreed that scene itself traumatised by the recent war. at a time when Thompson was reporting such work could not count as art, and that Early supporters included the painter Paul on Mexican­American activism—and what those who made it should be exterminat­ Klee and the architect Walter Gropius. But he deemed an attempted cover­up of Sala­ ed—was the only one that mattered. Adolf it was the Surrealists who were most avid zar’s murder—the narrator repeatedly Hitler’s failure as a watercolourist did in their embrace, particularly Max Ernst draws attention to Dr Gonzo’s race. “You not undermine his belief that in and André Breton, and later Salvador Dalí Samoans are all the same…You have no essence he was an artist, and that his guid­ who, preposterously then and offensively faith in the essential decency of the white ing principles were somehow artistic in today, is said to have spent most of the man’s culture,” he opines, before telling a character. “The Gallery of Miracles and 1920s trying to go insane so as to achieve terrified hitchhiker they pick up in the des­ Madness”, Charlie English’s engrossing the same primal insights. ert that “in spite of his race, this man is ex­ new book, charts the catastrophic clash The rise of Nazism made this renown, tremely valuable to me”. At the narcotics between Hitler’s aesthetic views and the and the association with mental illness, fa­ conference, a disturbance in the crowd is efforts of his contemporaries to expand the tally dangerous. Hitler’s antipathy to mod­ presumed to be “a racial conflict of some notion of what art might be. ern art had long been fused with ideas of kind, something that couldn’t be helped”. The Prinzhorn collection at the Univer­ racial purity, “degeneracy” and judgments Besides race, the novel’s main preoccu­ sity of Heidelberg’s psychiatric clinic was as to what—and who—deserved to exist. pation is the failure of journalism in an era established after the first world war by Some vulnerable artists escaped from Ger­ when the president openly loathed the Hans Prinzhorn, a young doctor who also many, but Prinzhorn’s incarcerated pa­ press. “Objective journalism is one of the held a phd in art history and was a profes­ tients were subjected to persecution that main reasons American politics has been sionally trained baritone; later he would quickly escalated from forced sterilisation allowed to be so corrupt for so long. You translate D.H. Lawrence’s fiction and be­ to systematic murder by gassing, in a pat­ can’t be objective about Nixon,” Thompson come a champion of Navajo rights. He be­ tern that would soon extend to millions of once told theAtlantic. In his most paranoid gan to reconsider work by patients that other victims. and introspective moments, the narrator had previously been used purely for clini­ Mr English is a fluent storyteller and pa­ of “Fear and Loathing” turns to news sto­ cal observation. The paintings, collages, tiently exhumes the lives of artists such as ries so grim that they render his own sins poems, sculptures, music and embroidery Franz Karl Bühler, a metal­worker who had “pale and meaningless” in comparison. He were vividly original and often disturbing, represented Germany at the Chicago reads about the police attacking anti­war full of torment and ecstasy and seeming to World’s Fair in 1893, later producing paint­ demonstrators, torture by the armed forc­ ings that were compared to the work of es, mass murder and drug deaths; he Matthias Grünewald and Albrecht Dürer watches “Pentagon generals babbling in­ (see picture). August Natterer was an elec­ sane lies” on television. trical engineer and a favourite of the Surre­ Every depredation is reported without alists; they admired his attempt at scrupu­ context, every suggestion of responsibility lous accuracy in conveying the hallucina­ rebuffed by officials with a mantra of“No tions that followed a breakdown brought comment”. Even the sensational is heart­ on by sexual trauma. Wilhelm Werner sinkingly superficial. Towards the end, the drew cartoons of his own sterilisation. narrator spells out his disillusionment. Altogether more than two dozen of Prinz­ “Why bother with newspapers, if this is all horn’s artists were murdered by the Nazis; they offer?” he rages. “Journalism is not a “The Gallery of Miracles and Madness” profession or a trade. It is a cheap catch­all affords them a respectful appreciation. for fuckoffs and misfits.” In his last days in his bunker, Hitler Thompson claimed that “gonzo” jour­ retreated from the cataclysm around him nalism—a personal, scabrous, avowedly into artistic delusions of remodelling his subjective style which he pioneered—was hometown of Linz into a great cultural cen­ inspired by William Faulkner’s view that tre. His creative ambitions once again “the best fiction is far more true than any came to nothing. Yet the work of these art­ kind of journalism”. Fifty years after its ists, much of which miraculously survived publication, and despite its many distor­ the war, lives on as testament to the variety tions, “Fear and Loathing” retains its own of human experience, and of ways to com­ twisted kind of truth. n Self-portrait in torment municate what it feels like to be alive. n

012 66 Books & arts The Economist August 14th 2021

Psychological fiction The devil inside

Mrs March. By Virginia Feito. Liveright; also has a series of disturbing, distorted 304 pages; $26. Fourth Estate; £14.99 visions involving cockroaches, spiders, a dead pigeon and a blood­soaked neigh­ t first, as the protagonist finalises bour. A long­suppressed memory of a Apreparations for a party, Virginia childhood incident in Spain (where the Feito’s debut novel seems set to become a author was born) wreaks more havoc in retelling of Virginia Woolf’s “Mrs Dallo­ her warped mind: “The devil had gotten way”. When the author has conveyed Mrs inside her that night in Cádiz, she decid­ March’s prim personality, stifled emo­ ed with surprising aplomb, and some­ tions and conservative lifestyle, the book how he was working his way into her starts to resemble “Mrs Bridge”, Evan S. home, like the cockroaches, through Connell’s wry depiction of American some imperceptible gap.” suburbia. As the tension builds, though, Ms Feito is a teasing storyteller. it becomes clear that this is neither a Events unfold at an unspecified time in homage to a modernist masterpiece nor the past; the heroine’s first name is with­ Women in sport a comedy of manners but an original, held until the book’s last line. Periodical­ darkly funny psychological drama. ly the narrative becomes an elaborate Championship Mrs March lives in an “agreeable” guessing game, throwing out situations apartment on the Upper East Side with which may be real or figments of Mrs points her writer husband George and their March’s imagination. Matters come to a eight­year­old son. Everyone in Manhat­ head when she learns that a young wom­ tan is reading George’s latest novel, an has been found murdered in a small including the woman behind the counter town in Maine—the same town her of Mrs March’s favourite pastry shop, husband visited on a hunting trip. When All In. By Billie Jean King. Knopf; 496 pages; who one morning asks if this is the first she goes to investigate, the reader finds $30. To be published in Britain by Viking in time he has based a character on her. Mrs out if there is method in her madness. September; £20 March is appalled: Johanna, the character Occasionally the story flags and the in question, is a sex worker, “a weak, language is sometimes overwrought t the age of 15, Billie Jean King antici­ plain, detestable, pathetic, unloved, (snow falls “thoughtfully”; an apartment Apated the trajectory of her life in a unlovable wretch”. is “salivating and alert in its stillness”). school essay. A tennis prodigy, she thought This seemingly innocuous question But the atmosphere of queasy foreboding she would soon make it to Wimbledon but tips Mrs March into a feverish state of is compelling, as is the portrayal of a lose in the quarter­finals. On the flight to paranoia and self­doubt. She hears the flawed, troubled and complex individual London she would meet a heart­throb and name Johanna everywhere and feels she trying to keep it together while coming fall in love. In time she would be happily is being watched and gossiped about. She apart at the seams. married, “sitting with my four wonderful children” and grateful to have an educa­ tion and a husband, “instead of turning out champion and $600 to the women’s. the “Battle of the Sexes” in 1973. Bobby to be a tennis bum”. Other indignities followed. Journalists Riggs, a loudmouth with hidebound views Luckily for fans at the All England club, focused on female athletes’ looks, not their and a knack for publicity, challenged her to Ms King proved better at slicing backhands achievements. Ms King refused to play to a friendly exhibition. She recognised the than at prophesy. Between 1961 and 1979 type and faced snide criticism. Her outspo­ stakes and took care not to underestimate she won six Wimbledon singles titles and kenness was derided. Male stars offered no her opponent, studying his game and de­ 14 in doubles in one of the 20th century’s support, laughing off the notion that fans veloping a plan to make the older man run. great sporting careers. She never had chil­ came for ladies’ matches. And run him she did, under the carnival dren, and defended abortion rights with She pursued equal pay relentlessly. A lights of the Houston Astrodome, with the example of her own terminated preg­ pragmatist, she arrived at a meeting with 30,000 people cheering and 90m more nancy. She did marry a man, but later the us Open’s tournament director in 1972 tuning in at home. Countless admirers lat­ emerged as a figurehead for gay rights. with corporate funds in hand to bridge the er told her what her win meant to them, In “All In”, a perceptive autobiography prize gap. She vowed that most of the top she writes, including Barack Obama, who written with Johnette Howard and Mary­ women would not participate the follow­ saw her practise in Hawaii in the 1970s. anne Vollers, Ms King notes that her youth­ ing year if he refused. (He agreed.) She or­ True to its title, “All In” is bracingly can­ ful prediction reflected the stifling bound­ ganised the Women’s Tennis Association did. Alongside the sporting and political aries that hemmed in American girls in the in 1973 and became its first president. Later battles it tells of the eating disorder from 1950s. Few women had careers; profession­ that summer she won Wimbledon in sin­ which Ms King suffered, a sexual assault al women’s sports barely existed. When gles, doubles and mixed doubles. Today she experienced as a teenager and the she began winning tennis trophies, first women compete for equal prize money in whirlwind of being outed as a lesbian by a near home in California, then in Europe, all four Grand Slam competitions. The former lover in 1981. Ms King does nothing she encountered shocking pay disparities. world’s best­paid female athlete is routine­ by half­measures—so much the better for To her disgust, for instance, in 1970 the Ital­ ly a tennis player. readers, sport and the many women she ian Open offered $3,500 to the men’s Ms King’s highest­profile match was encouraged and empowered. n

012 Property 67

Tenders

012 68 Economic & financial indicators The Economist August 14th 2021

Economic data

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units % change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change latest quarter* 2021† latest 2021† % % of GDP, 2021† % of GDP, 2021† latest,% year ago, bp Aug 11th on year ago United States 12.2 Q2 6.5 6.0 5.4 Jul 3.6 5.4 Jul -2.7 -12.7 1.4 71.0 - China 7.9 Q2 5.3 8.5 1.0 Jul 1.3 5.0 Jun‡§ 2.8 -4.9 2.7 §§ -9.0 6.49 7.1 Japan -1.6 Q1 -3.9 2.2 0.2 Jun 0.1 2.9 Jun 3.8 -9.0 nil -8.0 110 -3.6 Britain -6.1 Q1 -6.2 5.8 2.5 Jun 2.9 4.8 Apr†† -4.5 -10.9 0.7 42.0 0.72 5.6 Canada 0.3 Q1 5.6 5.4 3.1 Jun 2.6 7.5 Jul -2.0 -8.8 1.3 68.0 1.25 6.4 Euro area 13.7 Q2 8.3 4.4 2.2 Jul 1.8 7.7 Jun 3.3 -7.1 -0.5 2.0 0.85 nil Austria -5.5 Q1 -12.6 3.5 2.7 Jul 2.7 6.4 Jun 3.4 -8.0 -0.2 7.0 0.85 nil Belgium 14.5 Q2 5.7 4.8 2.3 Jul 2.2 6.2 Jun -0.7 -7.5 -0.1 8.0 0.85 nil France 18.7 Q2 3.8 5.5 1.2 Jul 1.6 7.3 Jun -1.3 -8.7 -0.1 9.0 0.85 nil Germany 9.2 Q2 6.1 3.5 3.8 Jul 2.5 3.7 Jun 6.8 -5.4 -0.5 2.0 0.85 nil Greece -1.4 Q1 18.9 5.4 1.4 Jul 0.1 15.1 Jun -3.7 -5.7 0.6 -52.0 0.85 Italy 17.3 Q2 11.1 5.0 1.9 Jul 1.3 9.7 Jun 3.4 -11.8 0.6 -45.0 0.85 Netherlands -2.4 Q1 -3.1 3.4 1.4 Jul 2.1 3.2 Jun 10.3 -1.7 -0.5 -1.0 0.85 Spain 19.8 Q2 11.5 6.1 2.9 Jul 2.0 15.1 Jun 0.9 -8.6 0.2 -3.0 0.85 Czech Republic -2.6 Q1 2.4 3.5 3.4 Jul 2.7 2.9 Jun‡ 3.2 -8.5 1.8 97.0 21.6 Denmark -0.9 Q1 -3.9 2.8 1.6 Jul 1.4 3.8 Jun 7.8 -0.5 -0.1 22.0 6.34 - Norway -1.4 Q1 -2.5 2.6 3.0 Jul 2.9 4.9 May‡‡ 2.5 -1.0 1.4 76.0 8.87 1.4 Poland -1.3 Q1 4.5 4.5 5.0 Jul 4.1 5.8 Jul§ 2.4 -6.9 1.8 48.0 3.90 -4.1 Russia -0.7 Q1 na 3.5 6.5 Jul 5.8 4.8 Jun§ 4.4 -1.8 7.1 106 73.8 -1.1 Sweden 9.3 Q2 3.6 3.9 1.3 Jun 1.9 10.3 Jun§ 4.8 -2.2 0.1 19.0 8.69 0.8 Switzerland -0.5 Q1 -2.0 3.4 0.7 Jul 0.3 3.0 Jul 7.1 -3.8 -0.4 13.0 0.92 il Turkey 7.0 Q1 na 5.6 19.0 Jul 16.6 10.4 Jun§ -2.7 -2.8 17.0 327 8.66 3 Australia 1.1 Q1 7.3 4.3 3.8 Q2 2.6 4.9 Jun 1.9 -6.1 1.2 31.0 1.36 9 Hong Kong 7.5 Q2 -3.9 5.4 0.7 Jun 1.6 5.5 Jun‡‡ 2.0 -4.2 1.1 68.0 7.78 4 India 1.6 Q1 6.0 10.4 6.3 Jun 5.2 7.0 Jul -0.9 -7.2 6.2 34.0 74.4 5 Indonesia 7.1 Q2 na 3.9 1.5 Jul 2.4 6.3 Q1§ -0.1 -5.7 6.3 -41.0 14,383 0 Malaysia -0.5 Q1 na 4.4 3.4 Jun 2.4 4.8 Jun§ 4.4 -5.8 3.3 66.0 4.24 -1.2 Pakistan 4.7 2021** na 3.8 8.4 Jul 9.2 5.8 2018 -1.8 -7.2 9.8 ††† 41.0 164 2.7 Philippines 11.8 Q2 -5.1 5.1 4.0 Jul 4.2 8.7 Q2§ -1.1 -7.5 3.9 118 50.4 -2.9 Singapore 14.7 Q2 -7.2 5.4 2.4 Jun 1.8 2.7 Q2 17.3 -4.4 1.5 61.0 1.36 0.7 South Korea 5.9 Q2 2.7 3.8 2.6 Jul 2.0 3.2 Jul§ 4.6 -3.2 1.9 58.0 1,156 2.5 Taiwan 7.5 Q2 -7.9 5.9 2.0 Jul 1.7 4.8 Jun 15.6 -0.7 0.4 2.0 27.8 5.7 Thailand -2.6 Q1 0.7 2.8 0.5 Jul 1.5 1.5 Dec§ 3.7 -6.5 1.4 27.0 33.4 -6.9 Argentina 2.5 Q1 11.0 7.0 50.2 Jun 47.3 10.2 Q1§ 1.6 -5.9 na na 97.1 -24.8 Brazil 1.0 Q1 4.9 5.5 9.0 Jul 7.2 14.6 May§‡‡ nil -5.9 9.6 301 5.22 3.6 Chile 0.3 Q1 13.4 7.5 4.5 Jul 3.6 9.5 Jun§‡‡ -0.4 -7.1 4.7 228 772 2.4 Colombia 2.0 Q1 11.9 7.8 4.0 Jul 3.1 14.4 Jun§ -3.6 -8.9 7.1 197 3,955 -5.0 Mexico 19.7 Q2 6.1 6.4 5.8 Jul 5.1 4.0 Jun 1.6 -2.8 7.0 128 19.9 12.2 Peru 3.8 Q1 8.3 10.8 3.8 Jul 3.5 8.8 Jun§ -0.5 -5.7 6.4 303 4.09 -13.0 Egypt 2.9 Q1 na 3.3 5.5 Jul 5.6 7.4 Q1§ -3.8 -8.0 na na 15.7 1.8 Israel -1.0 Q1 -5.8 4.2 1.7 Jun 1.8 5.2 Jun 3.9 -7.6 1.0 37.0 3.23 5.6 Saudi Arabia -4.1 2020 na 2.2 6.2 Jun 3.2 6.5 Q1 4.3 -2.0 na na 3.75 nil South Africa -3.2 Q1 4.6 3.0 5.1 Jun 4.0 32.6 Q1§ 1.2 -9.4 9.0 -31.0 14.7 19.4 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds.

Markets Commodities % change on: % change on: The Economist Index one Dec 31st index one Dec 31st commodity-price index % change on In local currency Aug 11th week 2020 Aug 11th week 2020 2015=100 Aug 3rd Aug 10th* month year United States S&P 500 4,447.7 1.0 18.4 Pakistan KSE 47,377.4 -0.9 8.3 Dollar Index United States NAScomp 14,765.1 -0.1 14.6 Singapore STI 3,180.0 -0.1 11.8 All Items 173.5 166.3 -9.8 37.3 China Shanghai Comp 3,532.6 1.6 1.7 South Korea KOSPI 3,220.6 -1.8 12.1 Food 128.7 129.9 -0.7 41.0 China Shenzhen Comp 2,487.0 0.9 6.8 Taiwan TWI 17,227.2 -2.3 16.9 Industrials Japan Nikkei 225 28,070.5 1.8 2.3 Thailand SET 1,532.7 -0.9 5.8 All 215.3 200.2 -14.5 35.2 Japan Topix 1,954.1 1.7 8.3 Argentina MERV 69,475.2 6.7 35.6 Non-food agriculturals 143.5 142.8 -2.7 39.8 Britain FTSE 100 7,220.1 1.4 11.8 Brazil BVSP 122,056.3 0.2 2.6 Metals 236.6 217.2 -16.5 34.3 Canada S&P TSX 20,554.0 1.1 17.9 Mexico IPC 51,311.6 0.2 16.4 Sterling Index Egypt EGX 30 10,884.5 1.5 0.4 Euro area EURO STOXX 50 4,206.3 1.5 18.4 All items 190.6 183.2 -9.8 29.8 France CAC 40 6,858.0 1.7 23.5 Israel TA-125 1,756.8 -0.1 12.0 Germany DAX* 15,826.1 0.9 15.4 Saudi Arabia Tadawul 11,325.1 1.5 30.3 Euro Index Italy FTSE/MIB 26,457.1 3.8 19.0 South Africa JSE AS 69,617.2 1.0 17.2 All items 162.2 157.3 -9.0 37.9 Netherlands AEX 775.8 1.3 24.2 World, dev'd MSCI 3,110.0 0.8 15.6 Gold Spain IBEX 35 8,975.8 2.1 11.2 Emerging markets MSCI 1,297.6 -0.5 0.5 $ per oz 1,808.9 1,727.6 -4.7 -11.4 Poland WIG 68,813.6 0.9 20.7 Brent Russia RTS, $ terms 1,656.2 1.0 19.4 $ per barrel 72.5 70.8 -7.6 58.5 Switzerland SMI 12,387.9 1.7 15.7 US corporate bonds, spread over Treasuries Sources: Bloomberg; CME Group; Cotlook; Refinitiv Datastream; Turkey BIST 1,410.9 -0.2 -4.5 Dec 31st Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Australia All Ord. 7,854.6 1.0 14.7 Basis points latest 2020 Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Hong Kong Hang Seng 26,660.2 0.9 -2.1 Investment grade 117 136 India BSE 54,525.9 0.3 14.2 High-yield 350 429 Indonesia IDX 6,088.4 -1.1 1.8 Sources: Refinitiv Datastream; Standard & Poor's Global Fixed Income For more countries and additional data, visit Malaysia KLSE 1,504.4 0.9 -7.5 Research. *Total return index. Economist.com/indicators

012 Graphic detail Football The Economist August 14th 2021 69

→ Lionel Messi’s goals make up only half of his value. Yet they were still more impactful than those of other greats

MESSI-adjusted goals* per 90 minutes, selected players in major European leagues† Goals added§ per 90 minutes, 202-20 Selected players in European leagues, by change in probability of scoring for average team before Lionel Messi 2004-21 Cristiano Ronaldo 2002-21 Ronaldo 1994-2008 1.5 and after each action Scored 1.4 Messi Minutes 3,000 goals per played 500 From shooting actions From other actions game in 1.0 2012-1 0.50 2.01.51.0 L. Messi 0.5 Trendline C. Ronaldo Neymar 0 K. Mbappé Diego Maradona 1982-93 Gerd Müller 1965- 9 Johan Cruyff 1964-84 1.5 Z. Ibrahimovic R. Lewandowski 1.0 L. Suárez S. Agüero 0.5 M. Salah E. Haaland 0 E. Cavani Eusébio 1960- Ferenc Puskas‡ 1958-66 Alfredo Di Stéfano 1953-66 1.5 A. Robben L. Jovic 1.0 P.-E.Aubameyang A. Fati 0.5 H. Kane G. Bale 0 Á. Di María 403530252015 403530252015 403530252015 Player’s age E. Hazard *Using the Modern-Equivalent Soccer Scoring Index (MESSI), an exchange rate for historic goals into the equivalent for La Liga 2004-21, excluding penalties †England, France, Germany, Italy, Netherlands, Portugal, Spain ‡Played in Hungary until he was 29 § According to the Valuing Actions by Estimating Probabilities system Sources: PlaymakerStats.com; ClubElo.com; KU Leuven; SciSports; The Economist

day, the location and result of every shot, goals are worth 37% less than those in La Simply the best dribble, pass and tackle are tracked. ku Liga in 2004­21. By contrast, Diego Marado­ Leuven, a university, and SciSports, an an­ na faced stout Italian defences, making his alytics firm, have built a system to measure goals worth 5% more than the modern how each action affects a team’s odds of baseline. (We excluded penalties, which scoring, by comparing where the ball was pad some strikers’ stats more than others’.) before and after a player touched it. After these tweaks, the diminutive Mr By the numbers, Lionel Messi is In 2012­20, their model reckons that Mr Messi stands head and shoulders above the European football’s greatest scorer ever Messi would have boosted an average competition. At his best, he averaged one ootball’s most fruitful partnership has team’s scoring margin by 1.77 goals per goal per 90 minutes. Mr Ronaldo reached Fended in tears. On August 8th a weeping match. Cristiano Ronaldo, his old rival at 0.9; greats from earlier eras were below 0.8. Lionel Messi said he was leaving Barcelo­ Real Madrid, came a distant second at 1.43. These rankings are far from perfect. na, the club he joined when he was just 13. Comparing Mr Messi with past greats is They underrate players like Maradona and The Argentine forward has scored a record harder. The only data available for all Euro­ Johan Cruyff, who were as much creators 474 goals in La Liga, Spain’s top league. His pean leagues before 2000 are goals scored as finishers. And they cannot capture the teams have won ten La Liga titles and four and match results. And not all goals are value of defenders like Franz Beckenbauer. Europe­wide Champions League trophies. created equal: scoring rates fell sharply Even among strikers, important data Mr Messi offered to slash his salary in from 1950 to 1970, and goals are easier to are missing. Ferenc Puskas’s latter years order to stay. But Barcelona is deep in debt, come by in weaker leagues. roughly match Mr Messi’s recent seasons. and pays 95% of its revenue in wages. La Li­ To level the playing field, we devised an Unfortunately, Elo ratings do not exist for ga has set a ceiling of 70%, forcing the club exchange rate called the Modern­Equiva­ the post­war Hungarian leagues that the to let him go. On August 10th he joined Par­ lent Soccer Scoring Index (messi). For each young Puskas dominated. Nor are they is Saint­Germain (psg), a rich French team. season in each league, it uses the average available for Brazil or America, where Pelé, Now 34, Mr Messi may not even be psg’s number of goals per match and team widely seen as the greatest player of the top scorer next season. But the only ques­ strength—as measured by the Elo system, 20th century, played club football. tion about his peak in 2009­19 is whether it which rates clubs based on their results What is certain, based on modern ana­ was the greatest ever. Although historical and the quality of their opponents—to esti­ lytics, is that only half of Mr Messi’s value comparisons are tricky in football, the best mate how many goals players would have comes from shots at goal. He is also an ex­ available data suggest that it was. scored under different conditions. For ex­ traordinary dribbler and passer. This sug­ Mr Messi’s standing relative to his con­ ample, in the 1960s Eusébio played in a gests that even the prolific Puskas and Pelé temporaries can be analysed reliably. To­ weak, high­scoring Portuguese league. His may not have been his equal.n

012 70 Obituary Graham Vick The Economist August 14th 2021

black holes, institutions where opera became a largely commer­ cial enterprise and the repertoire static and sedate. He wanted to be questioning, finding new things, tearing down barriers and bringing in the young, uneducated and ignored—like the teen­ agers he had seen once in Italy, listening entranced, when he threw the doors of an airless opera house open to the street. Fortunately, he was good at finding antidotes to deadness. At Scottish Opera in the 1980s he founded Opera Go Round, which toured the Highlands and islands in a minibus with five singers and a piano. They went to schools and halls; in factory canteens, his ideal place, he gave burly men and women in headscarves Puc­ cini with their lunch­trays. He hoped to share the wonder he had felt as a boy, when he watched Tito Gobbi on television turn into the villain Scarpia in “Tosca”, or when Peter Pan at the Liverpool Empire flew through the window into a limitless new world. His own new world was Birmingham. That was where he found himself and did his best work, in a city better known for manufac­ turing, tangled motorways and the nasal twang of the natives. By 2000, though, he had built a smaller touring troupe into the Bir­ mingham Opera Company, and he put on a production there every year until covid­19 struck. The company was the city in miniature, old and young, every race and colour, and everyone could join in. (The same diversity­rule applied to the professional principals: he was the first director in Britain to cast a black tenor, Ronald Samm, as the lead in Verdi’s “Otello”.) Anyone could sing in the chorus, join in the dancing or work offstage; there were no auditions. Everything was sung in English, done in modern dress and per­ Puccini with lunch-trays formed in derelict or abandoned buildings. Ordinary people had to know that opera was about them. The characters’ problems were theirs. Opera was no longer some red­and­gold sanctum they did not dare to enter. It was their world, and they were in it. Many of the works he did were difficult and rarely staged, but the volunteers’ enthusiasm knew no bounds. They were happy to take on Stockhausen’s “Wednesday from Light”, where a camel de­ Sir Graham Vick, opera director, died on July 17th, aged 67 fecated planets and a string quartet relayed sounds to the stage n a warm summer evening the Long Interval at Glyndebourne from helicopters; or Shostakovich’s “Lady Macbeth of Mtsensk”, Ois an idyll of Englishness. Evening light turns gold across the where they had to play rats, policemen and drunks; or Tippett’s lake and the brooding shoulder of Firle Beacon; and across the “The Ice Break”, where they were rioting mobs. The music chal­ lawns stroll the opera­goers, in black tie or bright designer dress­ lenged them but, as Stockhausen said, it was only a matter of tun­ es, bound for the picnic tables they have set up under the trees. ing in to find a truly spiritual experience. There follows a gentle universal popping of corks out of bottles. To all this he brought the same care as to anything he did for the Almost everyone is of a certain age and a certain income bracket, temples. He began (as Gobbi had advised) by poring over the words for whom this is a pleasure well­earned. of a work and getting to the heart of its ideas. Only then would he Graham Vick was director of productions at Glyndebourne turn to the music. On set and generally he was a bundle of anxiety, from 1994 to 2000. He was a scruffy figure, still with tones of his obsessed with detail, never satisfied even with his successes. “As native Merseyside, who had come to the Sussex country house be­ ye sow, so shall ye reap,” was the mantra that echoed in his ears: cause he felt it was a good place to grow. His career there was cer­ the moral of “Don Giovanni”, in fact. tainly unpredictable. He gave them a terrifying version of Tchai­ In the temples there were sizeable egos to contend with. At Bir­ kovsky’s “Queen of Spades”, full of skeletons and blood, but also a mingham, by contrast, it was always a two­way process. He took ravishingly austere “Eugene Onegin”; a “Pélleas et Mélisande” of ideas from the volunteers as readily as he gave them. No one in the appropriately haunting strangeness, but a “Don Giovanni” that company, or in the audience, was more important than anyone featured sado­masochism and a pile of manure. Audiences went else. He refused to have vip receptions, and all the tickets were for their suppers then with rather less appetite than usual. cheap—which made sense, as there were seldom seats in the cav­ For him, it was a bit odd that he was there at all. As a firm social­ ernous spaces where players and spectators met each other. ist, he was sickened by the ever­widening gap between rich and Changing that audience, though, was harder. In 1990, when he poor. And he believed with a passion that opera, like all music, be­ had put on his pocket “Ring” (ten hours over two evenings, with 12 longed to everyone. The stories it told had been humanity’s for singers and 18 orchestral players) in a leisure centre in bleak Er­ millennia—tales of love, hate, greed, courage, betrayal. In Mozart’s dington, he had been sad to see the car park full of pricey German day, errand­boys had whistled his tunes in the street. Operas then cars. The people of Erdington itself had not come. And indeed, were performed with the house lights up and players close to the three decades later, ordinary folk had still not exactly crowded in­ audience. He blamed Wagner for starting the rot, hiding the or­ to Glyndebourne. If anything, as he reviewed his years of cam­ chestra and audience in darkness at Bayreuth. The people were paigning, opera seemed to be getting more exclusive and more separated from their stories then, passive observers. privatised. He had left Glyndebourne because it no longer offered He worked hard in the grandest places. At the New York Met he him the feeling he could change the world. It could probably satis­ directed “Il Trovatore”, and at Covent Garden in 1990 his “Falstaff” fy him only when he saw mass­breakdancing on the hallowed opened the refurbished house. They were glamorous, fabulous, lawns and heard, on the Downs nearby, some shepherd on a quad seductive, these “temples”, as he called them. But they were also bike whistling a snatch of Verdi. n

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