TECHNOLOGY QUARTERLY: THE FUTURE OF AGRICULTURE Britain leans towards Brexit South Korea:no place for working women Waging war on potholes Speech therapy for central bankers

JUNE 11TH–17TH 2016 Goodbye to the Greatest How to make a good teacher

Contents The Economist June 11th 2016 5

8 The world this week Asia 39 South Korea’s working Leaders women Of careers and carers 13 Education How to make a good 40 Indian diplomacy teacher Modi on the move 14 Brexit 41 Japan and money politics Jeremy Corbyn, saboteur Remembering Tanaka 14 Fund management 41 Afghanistan and Pakistan Slow-motion revolution A border tightens Brexit: leaning out 16 Agricultural technology 42 War in Afghanistan Britain’s flirtation with Brexit Feeding the ten billion American troop numbers is more complicated than an 18 The trade in albino bones 43 Banyan Migrant workers anti-globalisation vote: On the cover For the colour of their skin Bagehot, page 60. Lacklustre What matters in schools is and poorly led, the Labour teachers. Fortunately, Letters China Party is letting down the teaching can be taught: Remain campaign: leader, 20 On tuberculosis, China’s 45 Wenzhou’s economy leader, page13. Great page14. Most European Florida, Indian textiles, Lessons from a crash teaching has long been seen bosses are twitchy about Arab history, Essex, 46 China and America as an innate skill. But Brexit; a few spy an Brazil, moderation Aerial chicken reformers are showing that opportunity: Schumpeter, the best teachers are made, page 70 not born, pages 24-26 Briefing Technology Quarterly 24 Education reform The future of agriculture Teaching the teachers After page 46 The Economist online Daily analysis and opinion to United States Middle East and Africa supplement the print edition, plus audio and video, and a daily chart 27 Hillary Clinton 49 Morocco Economist.com Madam nominee The pluses and minuses of monarchy E-mail: newsletters and 28 The campaigns mobile edition Heard on the trail 50 Public spaces in the Economist.com/email 28 Paul Ryan Middle East No bed of roses Print edition: available online by Republicans and welfare 7pm London time each Thursday 31 Swimming religiously 50 Ramadan in Saudi Arabia Hillary Clinton, nominee Economist.com/print Scruples and splashes Taking it to heart The former First Lady takes a Audio edition: available online 31 Chicago’s museum wars 51 Trade in east Africa big step towards getting her to download each Friday Light against dark Worth celebrating old house back, page 27. Heard on the trail, page 28 Economist.com/audioedition 32 Cannabis in the capital 52 The killing of albinos Federal haze Murder for profit 33 Southern men Bill Luckett Europe 34 Lexington 53 Rome elects a mayor Doing Trump’s work Five stars in first place Volume 419Number 8993 54 European football Published since September1843 Paris match to take part in "a severe contest between The Americas intelligence, which presses forward, and 35 Peru’s election 55 Poland’s protests an unworthy, timid ignorance obstructing From Facebook to the our progress." The fortunate president streets Editorial offices in London and also: 36 Corruption in Guatemala Atlanta, Beijing, Berlin, Brussels, Cairo, Chicago, Bad apples everywhere 55 Iran’s Turkish connection Lima, Mexico City, Moscow, Mumbai, Nairobi, Golden squeal New Delhi, New York, Paris, San Francisco, 36 Canada’s far north Albinos Superstition is São Paulo, Seoul, Shanghai, Singapore, Tokyo, Airships in the Arctic 56 Voting and sex fuelling a grisly trade in Washington DC Why women swing left human body parts. Tanzania 38 Bello The Mexican blues 57 Charlemagne shows how it can be curbed: A party for immigrants leader, page 18. Horrific killings continue in Malawi, page 52

1 Contents continues overleaf 6 Contents The Economist June 11th 2016

Britain Science and technology 58 Consequences of Brexit 78 Cancer treatment Beyond the fringe On target 59 Brexit brief 79 Drugs A multispeed EU Priced out 60 Bagehot 80 Carbon capture The new J-curve Turning air into stone 80 Fixing potholes International The hole story 61 Foreign aid 81 Human evolution No place for working women Potholes Researchers are Misplaced charity Hobbit forming South Korea’s conservative finding new ways to prevent a workplaces are holding women 62 Where does the aid go? motoring curse, page 80 back, page 39 Size matters Books and arts 82 Palestine Business The view on the ground Subscription service For our latest subscription offers, visit 65 The internet of things 83 Literary history Economist.com/offers Where the smart is Born to be Wilde For subscription service, please contact by telephone, fax, web or mail at the details 66 Google’s other 83 Psychosomatic illness provided below: businesses Straight and crooked North America Alpha minus thinking The Economist Subscription Center P.O. Box 46978, St. Louis, MO 63146-6978 67 Advertising rebates 84 Emil Zatopek Telephone: +1 800 456 6086 Fleet foot and heart of fire Facsimile: +1 866 856 8075 Trust me E-mail: [email protected] 67 Fosun’s debts 85 Brazillionaires Latin America & Mexico Bloated but still bingeing Rich and richer The Economist Subscription Center P.O. Box 46979, St. Louis, MO 63146-6979 68 South Korean chemicals 85 Robert Rauschenberg Telephone: +1 636 449 5702 Vanguard The rise of low-cost The germ of an idea Ripe for reassessment Facsimile: +1 636 449 5703 asset managers should be E-mail: [email protected] celebrated: leader, page14. 69 Airlines in South America Subscription for 1 year (51 issues) Vanguard has radically No El Dorado 88 Economic and financial United States US $158.25 (plus tax) changed money management 70 Schumpeter indicators Canada CA $158.25 (plus tax) by being sensible, boring and Business and Brexit Statistics on 42 economies, Latin America US $289 (plus tax) cheap, page 71. A new book plus our monthly poll of argues that the finance forecasters Finance and economics Principal commercial offices: industry needs reform: 25 St James’s Street, London sw1a 1hg 71 Asset management Buttonwood, page 72 Obituary Tel: +44 20 7830 7000 Index we trust 90 Muhammad Ali Rue de l’Athénée 32 72 Buttonwood 1206 Geneva, Switzerland The greatest Reforming finance Tel: +4122 566 2470 750 3rd Avenue, 5th Floor, New York, NY 10017 74 Banks v investors Tel: +1212 5410500 Of snowballs and red ink 1301Cityplaza Four, 75 Dollar imperialism 12 Taikoo Wan Road, Taikoo Shing, Hong Kong The Fed’s tributaries Tel: +852 2585 3888 75 America’s economy Other commercial offices: Chicago, Dubai, Frankfurt, Los Angeles, When barometers fail Paris, San Francisco and Singapore 76 Corporate bonds in Europe Unyielding Cancer treatment 77 Free exchange The personalisation of cancer Central banks’ treatments is leading to better communications outcomes for patients. It will also pave the way to cures, page 78

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8 The world this week The Economist June 11th 2016

TrumpUniversity would not In Hong Kong thousands of State that Iraqi forces are try- Politics give him a fairhearing because people attended an annual ing to retake. IS has fired on he was ofMexican descent. vigil to commemorate the residents trying to flee. Paul Ryan, the Speaker ofthe crushing ofthe Tiananmen House ofRepresentatives, who Square protests in Beijing in Two Palestinian gunmen only recently and somewhat 1989. Some student groups, opened fire in a restaurant in reluctantly threw his support which had joined previous Tel Aviv, killing fourpeople. A behind Mr Trump, described it vigils, stayed away, saying they wave ofviolence against Israe- as a “textbookdefinition ofa preferred to focus on demo- lis that has lasted for over a racist comment”. cratic reform in Hong Kong. year had only recently started to abate. The government Power surge At least19 people were killed in suspended entry permits for Cabinet officials from America attacks on an army base, Palestinians from Gaza and the and China held talks in Beij- checkpoint and gun shops in West Bank. ing. China agreed to cut steel Aktobe, in north-western output, co-operate on combat- Kazakhstan. Islamic militants South Africa’s economy Hillary Clinton claimed the ing climate change and enforce were blamed. contracted by an annualised Democratic nomination for sanctions on North Korea 1.2% in the first three months of president after winning four aimed at persuading it to aban- Tax-free threshold 2016, a farsteeper fall than had more states. In California, the don its nuclear-weapons pro- Saudi Arabia’s government been forecast by economists. biggest prize ofall, she wal- gramme. Big differences re- published more details ofits The slumping economy will loped Bernie Sanders, her mained, however, not least plans to reduce the country’s add to pressure on the ruling rival, by 56% to 43%. Before the over China’s territorial ambi- budget deficit and rebalance African National Congress in primaries the Associated Press tions in the South China Sea. the economy away from oil. It local elections in August. estimated that she had secured alarmed the country’s10m enough support from Hundreds oflawyers in China expats by suggesting it might Militants in Nigeria’s superdelegates—party poli- signed a statement condemn- impose an income tax on oil-producing regions attacked ticians and bigwigs—to push ing police forallegedly attack- them, though it ruled out pipelines and oil wells, reduc- her over the finishing line. ing one oftheir peers in a court taxing its own 20m nationals. ing the country’s oil output to in the southern city ofNan- its lowest level in nearly three Donald Trump, the Repub- ning. The city’s government The UN warned that up to decades. A militant group, lican candidate, said that a denied the allegation, but 90,000 civilians could be calling itselfthe Niger Delta judge overseeing a civil-fraud ordered the court to apologise trapped inside Fallujah, a city Avengers, started the attacks case against the now defunct and pay compensation. near Baghdad held by Islamic after the government stopped 1 The Economist June 11th 2016 The world this week 9

2 paying such groups to protect was the economy. The Elector- Germany’s president, Joachim Jocelerme Privert, said he pipelines. al Commission extended the Gauck, announced that he will would stay in power until a deadline forvoter registration not run forre-election next run-offis held in January, At least18 people with after a surge in applications year because at 76 he is too old. which means he will be in albinism have been killed in caused its website to crash. His decision will make the office six months past his Malawi since the end of2014, Over halfa million people political landscape even more parliamentary mandate. according to Amnesty Inter- applied on the final day. En- complicated forAngela Mer- national. The victims are couragingly forMr Cameron kel, the chancellor, who has thought to have been mur- and the Remainers, registra- struggled to rally support for dered because ofa false belief tions among under-35-year- her open-doors refugee policy. that their body parts have olds, a group that polls show magical properties. are strongly pro-EU, accounted The EU’s popularity is in formost ofthe demand. decline, according to a survey D-Day is June 23rd from Pew.In almost all ofthe A car bomb in Istanbul, target- ten countries covered, enthusi- Disorganised or engaged? ing a police bus, killed11peo- asm for the European project Britain’s new voter registrations by age, ple, the fourth bomb attack in has waned. Despite the forth- since official start of EU campaign*, m Turkey’s largest city this year. coming Brexit vote, it is French 0 0.3 0.6 0.9 1.2 No group claimed responsibil- opinions, not British, that have Under 25 ity forthe incident, but Tur- turned most sharply.Only 38% 25-34 key’s president, Recep Tayyip ofFrench people view the EU In Peru’s presidential election, 35-44 Erdogan, suggested the out- favourably now,compared Pedro Pablo Kuczynski seemed 45-54 lawed Kurdistan Workers’ with 69% in 2004. to have defeated Keiko Fuji- 55-64 Party was to blame. mori by just 39,000 votes out 65-74 Dead voters walking ofthe18m cast. Ms Fujimori, 75 & over Swiss voters rejected a plan to Haiti’s electoral council whose father, Alberto, was Source: gov.uk *April 15th 2016 bring in a universal basic scrapped the results oflast president from1990 to 2000, Britain’s prime minister, Da- income; only 23% were in year’s first round ofvoting in had led the opinion polls for vid Cameron, and the leader favour. The bill proposed the presidential election and months. Mr Kuczynski is a ofthe anti-European UKIP, giving each adult SFr2,500 set a new date for elections on 77-year-old liberal economist Nigel Farage, represented each ($2,560) per month uncondi- October 9th. It said it had who wants to stimulate the side ofthe Brexit campaign in a tionally. Finland and the Neth- uncovered widespread fraud, economy through tax cuts and TV debate. Immigration was a erlands are considering similar including the use of“zombie investment, particularly in big issue forthe audience, as programmes. votes”. The interim president, sanitation and health care. 10 The world this week The Economist June 11th 2016

A labour tribunal in France of 0.035% and threatened to A few days after the collapse of Business ordered Société Générale to fall into negative territory. British Home Stores, a com- compensate Jérôme Kerviel, a mittee in Parliament grilled rogue trader at the French The ECB reported that none of Dominic Chappell, the retail bank, €450,000 ($512,000) the seven EU states that are chain’s formerowner, and because he was sacked with- supposed eventually to adopt Darren Topp, a formerchief out “real or serious cause”. Mr the euro—Bulgaria, the Czech executive. The committee is Kerviel lost the French bank Republic, Croatia, Hungary, investigating what led to the €4.9 billion through his dodgy Poland, Romania and Swe- bankruptcy. BHS’s debt of trades and was found guilty in den—is on trackto do so. Given more than £1billion ($1.5 bil- 2010, a conviction that was the euro zone’s problems, that lion), halfofwhich is a pen- upheld on appeal. SocGen is probably because they sion shortfall, crippled the said the tribunal’s decision would rather not join at the business. In startling revela- was “incomprehensible”. moment. tions Mr Chappell was ac- cused ofhaving “his fingers in After talks in Beijing with Needs some strong medicine the till” and threatening, on Janet Yellen, the chairman of American Treasury officials, Bogged down in federal in- more than one occasion, to kill the Federal Reserve, dropped the Chinese government vestigations into its business Mr Topp (Mr Chappell denied a strong hint that the central announced plans to make it practices, Valeant reported a this). Up to 11,000 jobs and 163 bankwon’t raise interest rates easier and cheaper for busi- quarterly loss of$374m and stores will go as a result of at its June meeting, a reversal nesses in the United States to reduced its profit forecast for BHS’s demise. ofprevious indications that it invest in China using the the year. The drugmaker also would. After figures showed yuan. The proposal gives disclosed that it is selling some The new bogeymen that only 38,000 new jobs America a quota ofup to 250 ofits products at a loss. Its In a bad PR weekfor British were created in May, Ms Yellen billion yuan ($38 billion) to share price, which has been retailing, Mike Ashley, the boss said in a speech that current invest in Chinese shares and hammered over the past year, ofSports Direct and a one- monetary policy is “generally bonds. China hopes to boost fell by a further14%. time suitor ofBHS, was also appropriate” and omitted to foreign investment in the hauled in front ofMPs. He was mention that rates will rise “in country afterlast year’s stock- A few days after its chiefexec- questioned, among other the coming months”, a phrase market meltdown dented utive quit, Noble Group, things, about an alleged cul- that Fed-watchers interpret as a confidence. Asia’s biggest commodities- ture offear at the firm’s main sure sign ofan impending trading firm, announced that warehouse. Unions told the increase. The European Central Bank Richard Elman would step committee that an employee (ECB) started adding corporate down as chairman. The com- gave birth in the toilet rather In a surprise move the Bank of bonds to the debt it is buying pany, which has been hit hard than miss a day’s workforfear Korea cut its benchmarkin- through its quantitative-easing by the slump in commodity ofbeing disciplined. Mr Ash- terest rate forthe first time in a programme, a policy change prices, also announced a new ley conceded that he wouldn’t year, to a record low of1.25%. that was announced in March. $500m rights issue, which want his family to workthere. South Korea’s export-led econ- Meanwhile, the yield on Ger- unnerved investors already omy is reeling from the slow- man ten-year government worried about its ability to tap Other economic data and news down in China. Along with the bonds dropped to a new low banks forloans. can be found on pages 88-89 government the central bank is pumping $9.5 billion into state-run development banks that have run up big losses from loans to the weakened shipbuilding industry.

A long player In a long-running legal saga Guy Hands, the founder of Terra Firma Capital Partners, went backto court to resume his fight with Citigroup over the advice its British arm gave to him in the calamitous buy- out ofEMI in 2007. Citi eventu- ally seized control ofthe record label to recoup loans it had made to finance the bid. Mr Hands claims the bank’s guid- ance on the deal was mis- leading. A jury in New York sided with Citi in 2010, but that verdict was reversed on ap- peal. The next chapter in the case is being heard by a judge in London. “We want a banker who will work with us and be part of the team.” WHOLESALE BANKING

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Leaders The Economist June 11th 2016 13 How to make a good teacher

What matters in schools is teachers. Fortunately, teaching can be taught ORGET smart uniforms and pils in real classrooms, but after that improvements tail off. Fsmall classes. The secret to This is largely because schools neglect their most important stellar grades and thriving stu- pupils: teachers themselves. Across the OECD club of mostly dents is teachers. One American rich countries, two-fifths ofteachers say they have never had a study found that in a single chance to learn by sitting in on another teacher’s lessons; nor year’s teaching the top 10% of have they been asked to give feedbackon their peers. teachers impart three times as much learning to their pupils as Those who can, learn the worst 10% do. Another suggests that, if black pupils were If this is to change, teachers need to learn how to impart taught by the best quarter of teachers, the gap between their knowledge and prepare young minds to receive and retain it. achievement and that ofwhite pupils would disappear. Good teachers set cleargoals, enforce high standards ofbehav- But efforts to ensure that every teacher can teach are hob- iour and manage their lesson time wisely. They use tried-and- bled by the tenacious myth that good teachers are born, not tested instructional techniques to ensure that all the brains are made. Classroom heroes like Robin Williams in “Dead Poets working all of the time, for example asking questions in the Society” or Michelle Pfeiffer in “Dangerous Minds” are en- classroom with “cold calling” rather than relying on the same dowed with exceptional, innate inspirational powers. Gov- eager pupils to put up their hands. ernment policies, which often start from the same assump- Instilling these techniques is easier said than done. With tion, seek to raise teaching standards by attracting high-flying teaching as with other complex skills, the route to mastery is graduates to join the profession and prodding bad teachers to not abstruse theory but intense, guided practice grounded in leave. Teachers’ unions, meanwhile, insist that if only their subject-matter knowledge and pedagogical methods. Trainees members were set free from central diktat, excellence would should spend more time in the classroom. The places where follow. pupils do best, for example Finland, Singapore and Shanghai, The premise that teaching ability is something you either put novice teachers through a demanding apprenticeship. In have or don’t is mistaken. A new breed of teacher-trainers is America high-performing charter schools teach trainees in the foundinga rigorousscience ofpedagogy. The aim isto make or- classroom and bring them on with coaching and feedback. dinary teachers great, just as sports coaches help athletes ofall Teacher-training institutions need to be more rigorous— abilities to improve their personal best (see pages 24-26). Done rather as a century ago medical schools raised the calibre of right, this will revolutionise schools and change lives. doctors by introducing systematic curriculums and providing clinical experience. It is essential that teacher-training colleges Quis docebit ipsos doctores? start to collect and publish data on how their graduates per- Education has a history of lurching from one miracle solution form in the classroom. Courses that produce teachers who go to the next. The best of them even do some good. Teach for on to do little or nothing to improve their pupils’ learning America, and the dozensoforganisationsithasinspired in oth- should not receive subsidies or see their graduates become er countries, have brought ambitious, energetic new graduates teachers. They would then have to improve to survive. into the profession. And dismissing teachers for bad perfor- Big changes are needed in schools, too, to ensure that teach- mance has boosted results in Washington, DC, and elsewhere. ers improve throughout their careers. Instructors in the best But each approach has its limits. Teaching is a mass profession: ones hone their craft through observation and coaching. They it cannot grab all the top graduates, year after year. When poor accept critical feedback—which their unions should not resist, teachers are fired, new ones are needed—and they will have but welcome as only proper for people doing such an impor- been trained in the very same system that failed to make fine tant job. The best head teachers hold novices’ hands by, say, teachers out oftheir predecessors. giving them high-quality lesson plans and arranging for more By contrast, the idea ofimprovingthe average teacher could experienced teachers to cover for them when they need time revolutionise the entire profession. Around the world, few forfurtherstudy and practice. teachers are well enough prepared before being let loose on Money is less important than you might think. Teachers in children. In poor countries many get little training of any kind. top-of-the-class Finland, for example, earn about the OECD av- A recent report found 31 countries in which more than a quar- erage. But ensuring that the best stay in the classroom will ter of primary-school teachers had not reached (minimal) na- probably, in most places, mean paying more. People who tional standards. In rich countries the problem is more subtle. thrive in front of pupils should not have to become managers Teachers qualify following a long, specialised course. This will to earn a pay rise. And more flexibility on salaries would make often involve airy discussions of theory—on ecopedagogy, it easier to attract the best teachers to the worst schools. possibly, or conscientisation (don’t ask). Some of these Improving the quality of the average teacher would raise courses, includingmasters degreesin education, have no effect the profession’s prestige, setting up a virtuous cycle in which on how well their graduates’ pupils end up being taught. more talented graduates clamoured to join it. But the biggest What teachers fail to learn in universities and teacher-train- gains will come from preparing new teachers better, and up- ing colleges they rarely pick up on the job. They become better grading the ones already in classrooms. The lesson is clear; it teachers in their first few years as theyget to grips with real pu- now just needs to be taught. 7 14 Leaders The Economist June 11th 2016

Brexit Jeremy Corbyn, saboteur

Lacklustre and poorlyled, the LabourPartyis letting down the Remain campaign N 1975 a Labour government, about the union. Voters should back Remain, he says, because Isplit on Britain’s membership the Conservatives would not negotiate the right sort of Brexit. ofthe European EconomicCom- On June 2nd he declared Treasury warnings about the conse- munity (as it then was), put the quences ofleaving as “hysterical hype” and “mythmaking”. matter to a referendum. Most of No wonderthat few Labourfigures are takingit upon them- its supporters wanted to leave, selves to speak up. The most prominent campaigners are not so it fell to the pro-European MPs at all but two big faces from the party’s past: Tony Blair Conservatives to trumpet the and Gordon Brown. And even they were absent from the case for staying. Margaret Thatcher, their leader, campaigned Loughborough list. FollowingMrCorbyn’slead, the partyis on in a hideous sweater bespangled with European flags and autopilot: in an economics briefing circulated to its MPson railed against “the parochial politics of‘mindingourown busi- June 6th, the riskofBrexit was point number16. ness’”. On the day,two-thirds ofBritons voted to remain. The intervening decades have reversed the politics. The Stand up and be counted party of David Cameron, the Tory prime minister, is now This is feckless. The choice Britain faces on June 23rd will have deeply divided on Europe, so to win the referendum on June profound consequences, not least for Labour voters poorly 23rd he needs the pro-Remain Labour Party to beat the drum. placed to weather a post-Brexit recession. Yet just 52% of La- Yet with polls narrowing—as we went to press five of the bour supporters say that they will vote, compared with 69% of most recent eight had put Leave ahead (see page 60)—it is fail- Tories. Little more than half of them even know that their ing to do so. Jeremy Corbyn, its leader, is no Thatcher. Hailing party is forstaying in the EU. from the rump of the old Eurosceptic left, he sees the EU as a The consequence could be that Britain votes to quit. Most capitalist conspiracy. He voted to leave in 1975 and probably Toryvoters want to leave, and MrCameron is ill-placed to woo would again ifLabour’s pro-EU MPs and supporters let him. young and working-class voters. Labour MPs confess shock at Mr Corbyn did not make his first pro-EU intervention until the Euroscepticism the referendum has uncovered in the mid-April, fully two months after Mr Cameron called the refer- party’s heartlands. endum. Since then he has been a bit player at best. When re- Perhaps Mr Corbyn simply cannot inspire his party and the searchers at Loughborough University ranked the ten most re- struggle to uphold the status quo does not interest him. Or per- ported-on politicians in the second half of May, he did not haps he is deliberately sabotaging the Remain campaign. If even make the list (partly by his own design: he had spent part Britain left, the Conservative Party could tear itself apart. If of the period on holiday). By refusing to campaign alongside there were a snap election, he might stand a chance of forming Tories—doing so would “discredit” the party, sniffs John Mc- a Labour government. Yet to treat the future ofthe country as a Donnell, his shadow chancellor—he has ruled himself out of question oftransient advantage would be shockingly shallow. every important Remain event and televised debate. Whether born of apathy or ambition, Mr Corbyn’s behav- When Mr Corbyn does bother to intervene, he is a study in iour does him no credit. If Britain does vote to leave, it will reluctance. His “pro-EU” speeches are litanies of complaints need a strong opposition leader. Sadly, it will not have one. 7

Fund management Slow-motion revolution

The rise oflow-cost managers like Vanguard should be celebrated N THE past few years, indus- This is no overnight success: Vanguard was founded in the Investment management fees Itries including retailing, music 1970s. That such a superior model has taken 40 years to reach Average expense ratio, % and taxishave been spectacular- today’s position is testament to two failings of finance (see 1.0 Others ly blown apart by low-cost inno- page 71). One lies in incentives in the industry. Many products

0.5 vators. Less celebrated is Van- are sold by brokers or investment advisers and, fora long time, Vanguard guard, a fund-management the salesforce was paid by commission. Vanguard does not 0 group that also fits the disrup- pay commission, so the business went elsewhere. 1980 90 2000 10 15 tive mould. It offers diversified The second failing is investors’ fault. Most of Vanguard’s portfolios for retail investors at a fraction of the cost of the in- funds are “passive”. They do nothing more than try to match dustry average, thanks in part to a mutually owned structure their benchmark (an index like the S&P 500, say). When this that means it cuts fees rather than pays dividends. It now runs idea was first mooted, people scoffed. Who would settle for more than $3.5 trillion of assets, and takes in another $1billion mediocrity? Better to pick one of the star “active” managers or so from investors every working day. with a record of beating the market. The law of averages does1 Reinvent: Healthcare The AWS Cloud helps Philips turn clinical data into actionable insights. Through a global network and deep data repository, Philips HealthSuite helps clinicians around the world draw on the wisdom of petabytes of health data to create personalized patient diagnoses and treatments. 16 Leaders The Economist June 11th 2016

2 indeed suggest that some managers outperform. But though in rooting out bad management practices at the firms they in- you can spot such titans in retrospect, it is hard in advance. vest in, as they do not have the option of selling if they are un- Otherwise, why would anyone give money to the also-rans? happy.It is true that passive funds could do more to hold com- Regulators have belatedly tackled the incentives problem panies in their portfolios to account (even if more vigilant by requiring advisers to be paid by fees, rather than commis- governance adds a small cost). But problems ofinadequate go- sions. And an era of low interest rates and low returns has vernance afflict active managers as well as passive ones. made investors more aware of the damage from charges. Too A third—somewhat contradictory—concern is that a stock- many savers have suffered the drip-drip of fees on their long- market dominated by tracker managers would lead to collu- term returns in the vain pursuit of outperformance—money sion. As such funds grow,they take big ownership positions in for old hope. A 25-year-old saver who invests in a pension for firms that compete with each other. Vanguard owns 5% of 40 years on an annual charge of1% will take a 25% hit on the av- American stocks, for example; it is among the top three share- erage dollar deposited in their pot, irrespective of returns; for holders in the four biggest banks in America. If firms share a those who pay1.5% a year, the loss is 38%. The total fees on the large shareholder, they might feel less obliged to compete. But average Vanguard tracker are 0.08% a year. trackers do not seek to attract investment by boosting their re- Moneyisgushinginto passive funds. In America they raked turns, unlike actively managed funds. As a result, they have in $400 billion in 2015; actively managed funds endured out- less reason to encourage collusion. flows. Because of economies of scale, it costs little more to run a $10 billion index fund than to manage a pot of$1billion. The trackers of my tears Are there risks from the disruption of fund management? If passive funds go from accounting for roughly 30% of global Criticsofbigtrackermanagerslike Vanguard and BlackRock ar- stockmarkets to, say, 70-80%, then some of these worries gue they make financial markets more volatile. In theory, would have more bite. But that will take a long time; despite tracker funds could lead to swings as investors pile in and out the surge of money into passive funds, the share of actively of all shares simultaneously.But the evidence that retail inves- managed stocks has only fallen from 78% to 70% in the past six tors withdraw en masse from tracker funds when the market years. For the foreseeable future any risks from tracker funds falls is thin—they did not during the financial crisis. And new are far outweighed by their ability to offer cheap, diversified types of tracker funds are emerging that invest in stocks based funds to retail investors. The real problem is not the rise ofVan- on different criteria such as dividend yield; that should reduce guard and the other tracker funds; it is the rotten deal that retail the tendency to herd. investors have received from the fund-management industry Another worry is that tracker managers will be less vigilant forfartoo long. 7

Agricultural technology Feeding the ten billion

Growing enough food forfuture generations will be a challenge. Here’s how to meet it NE of the extraordinary of the world’s 7.3 billion people do not have enough to eat. Othings about the modern Moreover, by 2050, the total population is projected to grow to world is that so much of it takes almost 10 billion. Add this to the rising demand for meat, fish, food for granted. For most of re- milk and eggs, which is born of prosperity and which requires corded history, the struggle to extra fodder to satisfy, and 70% more food will be needed in eat has been the main focus of 2050 than was produced in 2009, the year the FAO did the cal- human activity, and all but a culation. That is a tall order. But it is not impossible. handful of people were either farmers or farm workers. Starvation was an ever-present Quornucopia threat. Even the best years rarely yielded much of a surplus to Since the time of Thomas Malthus, an economist writing a lit- carry over as an insurance against leaner times. In the worst, tle over 200 years ago, people have fretted that population none but the powerful could be sure ofa full stomach. growth would outstrip food supply. So far, it has not. But neo- Now most people in rich countries never have to worry Malthusians spot worrying signs. One is that in some places about where the next meal is coming from. In 1900 two in ev- the productivity of staples such as rice and wheat has reached ery five American workers laboured on a farm; now one in 50 a plateau. Neither new strains nor fancy agrochemicals are does. Even in poor places such as India, where famine still raising yields. struck until the mid-20th century, the assumption that every- Nor is there much unfarmed land left that is suitable to be one will have something to eat is increasingly built into the brought under the plough. A source of food Malthus did not rhythm oflife. foresee was the cultivation of the American prairies. This, and That assumption, though, leads to complacency. Famine similar extensions ofagricultural land, such as the opening up has ended in much of the world, but it still stalks parts of Afri- ofthe cerrado in Brazil, helped the food supplygreatly. Butsuch ca—Ethiopia, Mozambique and Zimbabwe, to name three, de- new lands are pretty much used up. Neo-Malthusians also pend on handouts of food. And millions of people still suffer point to climate change. They suggest that, if global tempera- from famine’s lesser cousin, malnutrition. According to the tures continue to rise, some places will become unfarmable— UN’s Food and Agriculture Organisation (FAO), some 2 billion particularly poor, tropical regions. 1

18 Leaders The Economist June 11th 2016

2 These are legitimate concerns. But they can be overcome by today’s agricultural practices, in such simple matters as how two things: the application and dissemination of technology, much fertiliser to apply and when, would get humanity quite and the implementation ofsensible government policies. a long way towards a requisite 70% increase in output. So Agricultural technology is changing fast (see Technology would things like better roads, to allow for the carriage of sur- Quarterly). Much ofthischange isbroughtaboutbyrich-world pluses to markets. This would encourage productivity growth farmers and by affluent farmers in middle-income places like and reduce waste. Brazil. Techniques developed in the West—especially genome- Indeed, government policy to reduce waste more generally based breedingthatcan create cropswith special properties al- would make a huge difference. The FAO says that about a third most to order—are being adapted to make tropical crops, such of food is lost during or after harvest. In rich countries a lot of as cassava, hitherto untouched by scientific progress, both that is thrown away by consumers. In poor ones it does not more productive and more nutritious. Such smart breeding, in reach consumers in the first place. Bad harvesting practices, alliance with new,precise techniques of genetic modification, poor storage and slow transport mean that food is damaged, should break through the yield plateaus. It can also produce spoiled or lost to pests. Changing that, which is mostly a ques- crops with properties such as drought- and heat-resistance that tion of building things like better, pest-proof grain silos and will mitigate the effects of global warming. Drought-resistant monitoring their contents properly, would take another big maize created in this way is already on the market. bite out ofthe 70% increase. Technology is oflittle use, though, ifit is not adopted. In the The neo-Malthusians may throw up their hands in despair, developing world that applies as much to existing farming but consider this: despite all the apparent obstacles, from yield techniques as it does to the latest advances in genetic modifica- plateaus to climate change, in the six years following the FAO tion. Yield plateaus are a phenomenon only of the most inten- analysis cereal production rose by 11%. If growth like that con- sively farmed parts of the world. Extending to the smallhold- tinues it should not only be possible to feed the 10 billion, but ers and subsistence farmers of Africa and Asia the best of to feed them well. 7

The trade in albino bones For the colour of their skin

Superstition is fuelling a grislytrade in human bodyparts. Tanzania shows howit can be curbed O BE born with albinism is (and probably many more) have been killed since the end of Thard luck. This genetic condi- 2014, according to Amnesty International, a human-rights tion, in which people lack pig- group. The pace ofkillings seems to be escalating. In April four ments in their skin, hair and people, including a 23-month-old baby, were murdered and eyes, affects one in 20,000 dismembered. All thatwasleftofthe child when herbody was worldwide and is more com- found was a skull and a few teeth. mon in Africa. Albinos’ pale The government of Malawi has done little to prevent such skin is easily burned by the sun, horrors. Police officers who investigate killings are poorly and is vulnerable to cancer. Because their eyes are sensitive to trained and sometimes prejudiced against the victims. One harsh light, most albinos suffer from poor vision. However, man recently caught with human bones was fined less than these discomforts are trivial compared with the mistreatment $30. Murder is hard to prove, so the authorities sometimes that albinos often sufferat the hands ofothers. charge people found with human body parts with grave-rob- For centuries people have believed that albinos are cursed. bery instead. Many albinos in Malawi are now too frightened In parts of Africa babies born with albinism were once rou- to venture outdoors, let alone travel to the nearest town. tinelykilled. Thatghastlytradition hasdied out, but othersper- sist. In Swahili many people call albinos zeru (ghost) or ngu- Je suis un noir; ma peau est blanche ruwe (pig). Children with the condition are often bullied at Superstitions die hard, in any part of the world. Yet the sense- school and forced to eat separately from their peers. Many less killing ofalbinos can be curbed. Tanzania, once one ofthe drop out. Those who complete school struggle to find work most dangerous countries in Africa for people with albinism, and die younger than their neighbours, not least because has sharply reduced the number of murders by clamping many end up taking unskilled jobs in the fields where they are down on demand. It has banned unlicensed witchdoctors and exposed to the sun. Women are at higher risk of rape because increased penalties forthose caught tradingin body parts. It in- ofa myth that sex with an albino can cure HIV. vestigates albino murders energetically: in recent years it has Worst of all, many albinos are murdered by people who arrested and convicted several “albino hunters”. The police think that their bones contain gold or have magical powers have issued mobile phones to many albinos so that they can (see page 52). Some witchdoctors claim that amulets made call an emergency number if they feel unsafe. The recent ap- from albino bones can cure disease or bring great wealth to pointment of an albino lawyer to the cabinet may also have those who wear them. A gruesome trade in their body parts helped reduce the stigma attached to the condition. has spurred killings in Tanzania, Burundi, Mozambique, Zam- Stamping out this horror is not beyond hope; it requires bia and South Africa. Sometimes family members sell their al- good policing and political will. As Salif Keita, a great albino bino nephews or cousins forcash. musician, has often pointed out, people should never be In Malawi, the country worst affected, at least 18 people judged by the colour oftheir skin. 7 MILLION. TO HAVE A FEW IT’S BETTER PARTNERS. TRUSTED HAVE AFEW IT’S GOOD TO sap.com/livebusiness procurement simple. PROCUREMENT ISLIVE. Ÿ)'(-J8GJ<fiXeJ8GX]Ôc`Xk\ZfdgXep% SAP the way your business runs. that’s seamlessly integrated with partners. All ononelive network needs. With millionsof proven product orsolution your business supplier relationships, for any Secure andmanage allyour 8cci`^_kji\j\im\[% ® Ariba ® solutions make solutions make 20 Letters The Economist June 11th 2016

The threat from TB the government contributes pan-Arab identity.That is a unfashionable places that the facility and entrepreneurs 20th-century construct. It most political advisers would There is no better example of deliver the services. China is would be more productive to struggle to locate on a map: “When the drugs don’t work” one ofthe last, and most excit- acknowledge the diversity of Redditch, Telford, Peterbor- (May 21st) than tuberculosis. ing, global markets for busi- the Arab world rather than ough, Corby, and Nuneaton, Drug-resistant TB (DR-TB) takes nesses providing medical- and ignore it. Maybe then we might our very own Ohio. To up to two years to treat. TB has aged-care services. begin to understand why the Londoners, Essex probably been a global health emergen- ANDREW OKSNER government in Tunis is demo- seems remote and provincial. cy since1993, but by 2050 one Campanile LLC cratic, whereas the one in To us genuine provincials, it person could die from DR-TB Hong Kong Cairo is despotic. looks like a true-blue home every12 seconds ifwe contin- MARO SCIACCHITANO county. HARRY HOLT ue on the current trajectory. Garment fact stories Portland, Oregon The economic price is enor- Nottingham mous. Taking no action will At the very least, the powers cost $16.7 trillion by 2050, that carved up Arab nations According to the law in Brazil roughly equal to the annual after the first world war should economic output ofthe Euro- have heeded the report ofthe “Way, José” (May 28th) pean Union. American King-Crane Com- described jeitinho in Brazil as a Global stability and pro- mission, with its thorough way ofcircumventing a law, gress will be hampered. It is descriptions ofArab political and went on to say that Dilma not a case ofjust low- or mid- aspirations. The report was Rousseff’s impeachment is a dle-income countries facing ignored because it did not fit jeitinho round the constitution. deaths and economic damage: British and French colonial Ms Rousseffand her allies we will all sufferthe conse- ambitions. claim that an impeachment quences. World leaders need HENRIK CARLBORG triggered by budgetary mis- urgently to step up and form a Solna, Sweden demeanours is a coup, and that global coalition to implement Mahatma Gandhi’s cham- dodgy accounting practices by the recommendations from pioning ofhand-woven cloth Prince Muhammad’s reform formerpresidents went un- Lord O’Neill’s review in full. was not, as you suggest, be- plan for Saudi Arabia is com- checked by the budget watch- AARON OXLEY cause ofopposition to industri- mendable and long overdue. dog and Congress. But her Executive director alisation (“Southern comfort”, However, this vision to a large suspension from office is not a RESULTS UK May 28th). Rather, it was a extent overlooks women way around the law. It is the London pragmatic tool to hurt the whose contribution to Saudi opposite: a law being enforced British colonial economy.He modernisation is constrained strictly. Miami in China would have been delighted to by Wahhabismand conserva- The time when presidents see that the textiles industry, tive clerics. Weaning the coun- could benefit from reckless The island ofHainan has a which was a central part of the try offoil and modernising accounting and unimpeded rival as “China’s Florida” (May Indian economy before it was and diversifying the economy profligacy with taxpayers’ 28th): the hundreds ofmiles destroyed by cheap British are ambitious goals. The real money will certainly not cause between Shenzhen and Shan- cotton imports in the19th and challenge lies in liberating half any saudade in Brazil. tou. On that southern coast 20th centuries, is once again the population so that they too BRUNO TROCCOLI Huidong has beautiful beach- flourishing. can effectively participate and Santiago, Chile es, temperate climate and is The demise ofthe Indian contribute to the liberalisation only an hour’s drive from industry came about not only oftheir country’s economy Quiet desperation Shenzhen. The area is getting because ofbetter technology and the modernisation oftheir ready forthe increase in Chi- in Britain but also as a result of society. Yourleader about the rise of nese pensioners you wrote policies that discouraged JAROSLAV KINACH the farright in Europe called on about. One new development industrial activity in India. The Kiev, Ukraine politicians to make an “equally alone is being built to accom- British required India to be a rousing argument formoder- modate 100,000 households. producer ofraw material and a Essexis not the only way ation” (“Disaster averted—for Demand is high from Shen- market forcheap finished now”, May 28th). This under- zhen and Hong Kong, where goods, not a competitor. That is Bagehot (May 21st) suggested standable but forlorn wish 35,000 people are on a waiting what Gandhi was targeting. that upwardly mobile resi- reminds me ofthe joke about list fornursing services. The TARUN KHANNA dents ofEssex are the “land- what centrists chant at protest nursing beds in Huidong are Berlin lords ofthe political centre” in marches: “What do we want? expected to be eligible for a Britain. This analysis ofthe Gradual improvement! When Hong Kong government sub- Arab history electoral battleground is, dare I do we want it? As soon as sidy of$1,300 per person. say, a metropolitan view. Essex economic conditions allow!” Given the rapid increase in The ancient empires you men- has as many Labour members PAUL MOSS family wealth, mobility and tioned in your special report ofParliament as Surrey, Kent, London 7 the demands created by a on the Arab world (May14th) Hertfordshire, and Bucking- rapidly ageing population, a were not Arab at all, but Mus- hamshire—that is to say, zero. It huge age-care industry is de- lim, founded and run by Kurds, will be solidly Toryforat least Letters are welcome and should be addressed to the Editor at veloping in China. The growth Persians and Turks, among a generation. The Economist, 25 St James’s Street, ofretirement facilities is being others, but rarely Arabs. The The Midlands is where the London sw1A 1hg driven by the government’s empires covered vast areas magic happens. Modern E-mail: [email protected] accelerating use ofpublic- where people spoke Arabic British elections are won and More letters are available at: private partnerships, where dialects, but there was no lost in the sort ofproudly Economist.com/letters “As an entrepreneur, I want to deal with entrepreneurial people who understand my needs – First Republic does just that.”

AJAY ROYAN Co-Founder and Managing General Partner Mithril Capital Management

(855) 886-4824 or visit www.irstrepublic.com New York Stock Exchange Symbol: FRC Member FDIC and Equal Housing Lender 22 Executive Focus

The Economist June 11th 2016 Executive Focus 23

DIRECTOR OF ECONOMICS AND ENVIRONMENT

INTERNATIONAL LEAD AND ZINC STUDY GROUP (ILZSG) AND INTERNATIONAL NICKEL STUDY GROUP (INSG)

The International Lead and Zinc Study Group (ILZSG) and the International Nickel Study Group (INSG), intergovernmental organizations based in Lisbon, Portugal, are seeking a Director of Economics and Environment to work jointly for both Groups. The successful applicant will be required to apply a good understanding of international economics and extensive economic policy experience to the analysis of economic and environmental issues relating to lead, zinc and nickel, and to prepare, and present publicly, detailed reports of a high standard. Although not a prerequisite, experience in the minerals or metals industry would be valuable. The successful applicant must be able to work lexibly in a small professional team, possess tertiary qualiications in a relevant ield, and be luent in English. The starting salary will depend on the applicant’s qualiications and experience. Beneits include a Provident Fund, six weeks annual leave and a relocation allowance where applicable.

Applications with Curriculum Vitae should be forwarded by email to [email protected] by not later than 8 July 2016

The Economist June 11th 2016 24 Briefing Education reform The Economist June 11th 2016

taught by teachers at the 10th percentile Teaching the teachers learn half a year’s worth. Similar results have been found in countries from Britain to Ecuador. “No other attribute of schools comes close to having this much influence on student achievement,” he says. BOSTON, NEWARK AND NEW YORK Rich families find it easier to compen- Great teaching has long been seen as an innate skill. But reformers are showing that sate for bad teachers, so good teaching the best teachers are made, not born helps poor kids the most. Having a high- O THE 11- and 12-year-olds in his maths flight athlete. Jamey Verrilli, who runs Re- quality teacher in primary school could Tclass, Jimmy Cavanagh seems like a lay’s Newark branch (there are seven oth- “substantially offset” the influence of pov- born teacher. He is warm but firm. His ers), says the approach shows teaching for erty on school test scores, according to a voice is strong. Correct answers make him what it is: not an innate gift, nor a refuge for paper co-authored by Mr Hanushek. smile. And yet it is not his pep that explains those who, as the old saw has it, “can’t do”, Thomas Kane of Harvard University esti- why his pupils at North Star Academy in but “an incredibly intricate, complex and mates that if African-American children Newark, New Jersey, can expect to go to beautiful craft”. were all taught by the top 25% of teachers, university, despite 80% of their families the gap between blacks and whites would needing help to pay forschool meals. Hello, MrChips close within eight years. He adds that ifthe Mr Cavanagh is the product of a new There can be few crafts more necessary. average American teacher were as good as way of training teachers. Rather than Many factors shape a child’s success, but in those at the top quartile the gap in test spending their time musing on the mean- schools nothing matters as much as the scores between America and Asian coun- ing of education, he and his peers have quality of teaching. In a study updated last tries would be closed within fouryears. been drilled in the craft of the classroom. year, John Hattie of the University of Mel- Such studies emphasise the power of Their dozens of honed techniques cover bourne crunched the results of more than good teaching. But a question has dogged everything from discipline to making sure 65,000 research papers on the effects of policymakers: are great teachers born or all children are thinkinghard. Not a second hundreds of interventions on the learning made? Prejudices played out in popular is wasted. North Star teachers may seem of 250m pupils. He found that aspects of culture suggest the former. Bad teachers naturals. They are anything but. schools that parents care about a lot, such are portrayed as lazy and kid-hating. Edna Like many of his North Star colleagues as class sizes, uniforms and streaming by Krabappel of “The Simpsons” treats les- are or have been, Mr Cavanagh is enrolled ability, make little or no difference to sons as obstacles to cigarette breaks. Good at the Relay Graduate School of Education. whether children learn (see chart on next and inspiringteachers, meanwhile, such as Along with similar institutions around the page). What matters is “teacher expertise”. Michelle Pfeiffer’s marine-turned-educa- world, Relay is applying lessons from cog- All of the 20 most powerful ways to im- tor in “Dangerous Minds” (pictured), or J.K. nitive science, medical education and prove school-time learning identified by Rowling’s Minerva McGonagall, are por- sports trainingto the business ofsupplying the study depended on what a teacher did trayed as endowed with supernatural gifts better teachers. Like doctors on the wards in the classroom. (literally so, in the case of the head of Gryf- of teaching hospitals, its students often Eric Hanushek, an economist at Stan- findor). In 2011a survey of attitudes to edu- train at excellent institutions, learning ford University, has estimated that during cation found that such portrayals reflect from experienced high-calibre peers. Their an academicyearpupilstaughtbyteachers what people believe: 70% of Americans technique is calibrated, practised, coached at the 90th percentile for effectiveness thought the ability to teach was more the and relentlessly assessed like that of a top- learn 1.5 years’ worth of material. Those result ofinnate talent than training. 1 The Economist June 11th 2016 Briefing Education reform 25

2 Elizabeth Green, the author of “Build- derstand what they are learning. ing A Better Teacher”, calls this the “myth But a better awareness of how to teach of the natural-born teacher”. Such a belief will not on its own lead to great teaching. makes finding a good teacher like panning According to Marie Hamer, the head of ini- for gold: get rid of all those that don’t cut it; tial teacher training at Ark, a group of Eng- keep the shiny ones. This is in part why,for lish schools: “Too often teachers are told the past two decades, increasing the “ac- what to improve, but not given clear guid- countability” ofteachers has been a priori- ance on how to make that change.” The ty foreducational reformers. new types of training used at Relay and There is a good deal of sense in this. In elsewhere are intended to address that. cities such as Washington, DC, perfor- David Steiner of the Johns Hopkins In- mance-related pay and (more important) stitute for Education Policy, in Baltimore, dismissing the worst teachers have boost- characterises many of America’s teacher- ed test scores. But relying on hiring and fir- training institutions as “sclerotic”. It can be ing without addressing the ways that easier to earn a teaching qualification than teachers actually teach is unlikely to work. to make the grades American colleges re- Education-policy wonks have neglected quire oftheirathletes. According to Mr Hat- what one of them once called the “black tie none of Australia’s 450 education train- box of the production process” and others ing programmes has ever had to prove its might call “the classroom”. Open that impact—nor has any ever had its accredita- black box, and two important truths pop tion removed. Some countries are much out. Afairchunkofwhat teachers (and oth- more selective. Winningacceptance to take ers) believe about teaching is wrong. And an education degree in Finland is about as ways of teaching better—often much bet- competitive as gettinginto MIT. But even in ter—can be learned. Grit can become gold. Finland, teachers are not typically to be In 2014 Rob Coe of Durham University, found in the top third of graduates for in England, noted in a report on what numeracy or literacy skills. makes great teaching that many common- In America and Britain training has ly used classroom techniques do not work. been heavy on theory and light on class- Unearned praise, grouping by ability and room practice. Rod Lucero ofthe American accepting or encouraging children’s differ- Multipliciamus Association of Colleges for Teacher Educa- ent “learning styles” are widely espoused tion (AACTE), a body representing more but bad ideas. So too is the notion that pu- teaching craft. Its essence is defined by than half of the country’s teacher-training pils can discover complex ideas all by Charles Chew, one of Singapore’s “princi- providers, says that most courses have a themselves. Teachers must impart knowl- pal master teachers”, an elite group that classroom placement. Buthe concedesthat edge and critical thinking. guides the island’s schools: “I don’t teach it falls short of “clinical practice”. After fin- Those who do so embody sixaspects of physics; I teach my pupils how to learn ishing an undergraduate degree in educa- great teaching, as identified by Mr Coe. The physics.” tion “I didn’t feel I was anywhere near first and second concern their motives and ready,” says Jazmine Wheeler, now a first- how they get on with their peers. The third Branches of the learning tree year student at the Sposato Graduate and fourth involve using time well, foster- Teachers like Mr Chew ask probing ques- School of Education, a college which grew ing good behaviour and high expectations. tions of all students. They assign short out ofthe Match charter schools in Boston. Most important, though, are the fifth and writingtasks that get children thinking and This fits with a pattern Mr Kane’s re- sixth aspects, high-quality instruction and allow teachers to check for progress. Their search reveals to be “almost constant”: so-called “pedagogical content knowl- classes are planned—with a clear sense of new teachers lack classroom management edge”—a blend of subject knowledge and the goal and how to reach it—and teacher- and instruction skills. As a result they led but interactive. They anticipate errors, struggle at first before improving over the such as the tendency to mixup remainders subsequent three to five years. The new What works, at what cost and decimals. They space out and vary teaching schools believe that those skills Effectiveness and cost of education strategies ways in which children practise things, which teachers now pick up haphazardly Effect in additional Relative costliness cognitive science having shown that this can be systematically imparted in ad- months’ progress 5 x = most expensive aids long-term retention. vance. “Surgeons start on cadavers, not on These techniqueswork. In a report pub- live patients,” Mr Kane notes. Feedback to pupils 9 lished in February the OECD found a link “We have thought a lot about how to Meta-cognitive strategies* 8 between the use of such “cognitive activa- teach 22-year-olds,” saysScottMcCue, who tion” strategies and high test scores among runs Sposato. He and his colleagues have Peer tutoring 6 its club ofmostly rich countries. The use of crunched good teaching into a “taxon- Collaborative group learning 5 memorisation or pupil-led learning was omy” ofthings to do and say. “Ofthe 5,000 common among laggards. A recent study Reducing class size to <20 3 or so things that go into amazing teaching,” byDavid Reynoldscompared mathsteach- says Orin Gutlerner, Sposato’s founding Individualised instruction 2 ing in Nanjing and Southampton, where director, “we want to make sure you can do Mentoring of pupils 1 he works. It found that in China, “whole- the most important 250.” class interaction” was used 72% ofthe time, The curriculum ofthe newschools isin- Teaching assistants 1 compared with only 24% in England. Earli- fluenced by people like Doug Lemov. A for- Improving school buildings 0 er studies by James Stigler, a psychologist mer English teacher and the founder of a at UCLA, found that American classrooms school in Boston, MrLemovused test-score Streaming by ability -1 rang to the sound of “what” questions. In data to identify some of the best teachers Source: Education *Helping pupils think about their Japan teachers asked more “why” and in America. Aftervisitingthem and analys- Endowment Foundation own learning more explicitly “how” questions that check students un- ing videos of their classes to find out pre-1 26 Briefing Education reform The Economist June 11th 2016

2 cisely what they did, he created a list of 62 As well as being isolated, teachers lack improved by 38% more over a decade than techniques. Manyinvolve the basicsof get- welldefinedwaysofgettingbetter.MrGut- those in the lowest quarter. ting pupils’ attention. “Threshold” has lerner points out that teaching, alone Such environments are present in teachers meeting pupils at the door; among the professions, asks the same of schoolssuch asMatch and North Star—and “strong voice” explains that the most effec- novices as of 20-year veterans. Much of in areas such as Shanghai and Singapore. tive teachers stand still when talking, use a what passes for “professional develop- Getting the incentives right helps. In formal register, deploy an economy of lan- ment” is woeful, as are the systems for as- Shanghai teachers will not be promoted guage and do not finish their sentences un- sessing it. In 2011 a study in England found unless they can prove they are collabora- til they have their classes’ full attention. that only 1% of training courses enabled tive. Their mentors will not be promoted But most of Mr Lemov’s techniques are teachers to turn bad practice into good unless they can show that their student- meant to increase the number of pupils in teaching. The story in America is similar. teachers improve. It helps to have time. a class who are thinking and the amount This is not for want of cash. The New Teachers in Shanghai teach for only 10-12 of time that they do so. Techniques such as Teacher Project, a group that helps cities re- hours a week, less than half the American his “cold call” and “turn and talk”, where cruit teachers, estimates that in some parts average of27 hours. pupils have to explain their thoughts ofAmerica schools shell outabout$18,000 quickly to a peer, give the kinds of cogni- per teacher per year on professional devel- No dark sarcasm tive workouts common in classrooms in opment, 4-15 times as much as is spent in In manycountriesthe wayto getahead in a Shanghai and Singapore, which regularly other sectors. school is to move into management. Mr top international comparisons. The New Teacher Project suggests that Fryer says that American school districts Trainees at Sposato undertake residen- after the burst of improvement at the start “pay people in inverse proportion to the cies at Match schools. They spend 20 hours of their careers teachers rarely get a great value they add”. District superintendents per week studying and practising, and deal better. This may, in part, be because make more money than teachers although 40-50 tutoring or assisting teachers. Mr they do not know they need to get better. their impact on pupils’ lives is less. Singa- Gutlerner says that the most powerful pre- Three out of five low-performing teachers pore has a separate career track for teach- dictor of residents’ success is how well in America thinkthey are doing a great job. ers, so that the best do not leave the class- they respond to the feedback they get after Overconfidence is common elsewhere: room. Australia may soon follow suit. classes. nine out of ten teachers in the OECD say The new models of teacher training This new approach resembles in some they are well prepared. Teachers in Eng- that will start those careers have yet to be ways the more collective ethos seen in the land congratulate themselves on their use thoroughlyevaluated. Earlyevidence is en- best Asian schools. Few other profession- of cognitive-activation strategies, despite couraging, however. Relay and Sposato als are so isolated in theirwork, or get so lit- the fact that pupil surveys suggest they rely both make their trainees’ graduation de- tle feedback, as Western teachers. Today more on rote learningthan teachersalmost pendent on improved outcomes for stu- 40% of teachers in the OECD have never everywhere else. dents. Ablind evaluation that Relay under- taught alongside another teacher, ob- It need not be this way. In a vast study took of its teachers rated them as higher served another or given feedback. Simon published in March, Roland Fryer of Har- than average, especially in classroom man- Burgess of the University of Bristol says vard University found that “managed pro- agement. At Ark, in England, recent gradu- teaching is still “a closed-door profession”, fessional development”, where teachers ates are seen by the schools that have hired adding that teaching unions have made it receive precise instruction together with them as among the best cohorts that they hard for observers to take notes in classes. specific, regular feedback under the men- have received. Pupils suffer as a result, says Pasi Sahlberg, torship of a lead teacher, had large positive Mr Steiner notes, though, that it is not a former senior official at Finland’s educa- effects. Matthew Kraft and John Papay, of yet clear whether these new teachers are tion department. He attributes much of his Harvard and Brown universities, have “school-proof”: effective in schools that country’s success to Finnish teachers’ cul- found that teachers in the best quarter of lack the intense culture of feedback and ture ofcollaboration. schools ranked by their levels of support practice of places like Match. This is a big caveat: across the OECD two-thirds of teachers believe their schools to be hostile to innovation. If the new approaches can be made to work at scale, that should change. Relay will be in 12 cities by next academic year, training 2,000 teachers and 400 head teachers, including those from govern- ment-run schools. This year AACTE launched its own commission investigat- ing ways in which its colleges could move to a similar model. In England Matthew Hood, an entrepreneurial assistant head teacher, has plans fora Relay-like “Institute forAdvanced Teaching”. This way, reformers hope, they can fi- nally improve education on a large scale. Until now, the job of the teacher has been comparativelyneglected, with all the focus on structural changes. But disruptions to school systems are irrelevant ifthey do not change how and what children learn. For that, what matters is what teachers do and think. The answer, after all, was in the Mr Schneebly needs his feedback classroom. 7 United States The Economist June 11th 2016 27

Also in this section 28 On the trail, outreach edition 28 Paul Ryan’s plan for welfare 31 Swimming religiously 31 Chicago’s museum wars 32 Cannabis in the capital 33 Delta lives: Bill Luckett 34 Lexington: Doing Trump’s work

For daily analysis and debate on America, visit Economist.com/unitedstates Economist.com/blogs/democracyinamerica

Hillary Clinton propriate time”. Apparently unable to con- trol himself, he has instead levelled bigot- Madam presumptive nominee ed abuse at a federal judge presiding over allegations of fraud against one of his failed businesses, Trump University. Mr Trump accused Gonzalo Curiel ofbeing bi- ased against him on account of his tough line on illegal immigration because, he SANTA ANA, CALIFORNIA AND WASHINGTON, DC says, the judge is “Mexican” (as it happens, The formerFirst Lady takes a big step towards getting herold house back Mr Curiel is from Indiana). No exit polls S IF weary of a primary tussle in which the convention as they please—which Mr were conducted in California, where His- Athe outcome has long been obvious, Sanders has decried as an establishment panics account for over a quarter of the Democratic voters knocked it on the head stitch-up. Mrs Clinton’s aides also feared electorate, but Mrs Clinton won all the on June 7th. Bernie Sanders, whose refusal that declaring victory before the primaries most Hispanic districts there. to admit defeat defies electoral mathemat- would make her supporters complacent. At a polling station in Santa Ana, a ics, hoped to win at least fourofthe last six They worried too much. largely-Hispanic area south ofLos Angeles, states up for grabs, including the biggest, Just as the Republican primary contest most voters said they were for Mrs Clin- California. But Hillary Clinton whupped ended last month with a flurry of unex- ton—and often they mentioned Mr Trump him; she won the Golden State by a 13- pectedly big wins for Mr Trump, as resis- disparagingly in the same breath. Anita point margin, also New Jersey, New Mexi- tance to his candidacy crumbled, so Mrs Hernandez, a retired school secretary, said co and South Dakota. Clinton outperformed her polling in al- that choosing Mrs Clinton was in the end In the process, the former secretary of most every state; recent polls in California an “easy decision”, though she had once state secured a big majority ofthe 4,765 de- had suggested she was barely ahead. She been tempted by Mr Sanders: “I think he legateswho will attend the Democrats’ Na- has secured almost 400 more regular dele- should stop and let her do her thing.” An- tional Convention in July. That makes her gates, the sort awarded at primaries and other retiree, Leo Luna, voted the same the prospective nominee, the first woman caucuses than Mr Sanders, and 3.5m more way—despite personally preferring the to hold the role foreitherbigparty and, giv- votes. No wonder Mrs Clinton appeared senator from Vermont. “We have to unify en how spectacularly ill-chosen her Re- ecstatic, even tearful, at a celebratory rally ourselves behind a strong candidate,” he publican counterpart, Donald Trump, in New York, before California’s polls had said. “I think there’s a lot at stake…remem- seems, the favourite to be America’s next even closed. Movingly, she recalled that ber, we are all basically the sons and president. For a politician whose wooden- her mother was born on the day, June 4th daughters ofimmigrants.” ness as a campaigner has been as conspic- 1919, Congress voted to give women the Amazingly, on June 8th Mr Sanders reit- uous as her toughness, and for the 15.5m vote: “I wish she could see herdaughter be- erated his pledge to fight on to the conven- Democrats who have voted for her, it is an come the Democratic Party’s nominee!” tion. Perhaps he may rethink that. His reti- impressive achievement. Mr Trump probably had a hand in Mrs nue, which was never large, is thinning; on Even before these last primaries (only Clinton’s late surge, by offending, and so the same day, Jeff Merkley, Mr Sanders’s Washington, DC, on June 14th, is still to rallying, the non-white voters who are only supporter among his fellow senators, vote) the Associated Press reckoned Mrs among her main supporters. As his party’s and Raul Grijalva, one of his handful of Clinton had the 2,383 delegates required nominee, endorsed in recent weeks by backers in the House of Representatives, for the nomination. Nervously, her cam- most senior Republicans (though many of suggested he should quit. His campaign paign team tried to downplay this. The them privately despise him), the celebrity was meanwhile laying off most of its em- reckoning was based on Mrs Clinton’s big builder had been expected to tone down ployees. As The Economist went to press, lead among superdelegates—the 715-odd his signature boorishness; he himself had Mr Sanders was due to hold talks with Ba- Democraticoffice-bearerswho mayvote at sworn to be “very presidential at the ap- rack Obama, who would like him to with-1 28 United States The Economist June 11th 2016

2 draw ahead of the president’s imminent been exacerbated by Mrs Clinton’s need to Republicans and welfare endorsement of Mrs Clinton. Even before tiptoe around Mr Sanders, whose suppor- polling ended in California, a close adviser ters she covets and with whose ideas she Ryan’s ramble to Mr Sanders hinted that he might stay in sympathises—they have been longing for fortheWashington, DC, primary,then quit. her to stickit to Mr Trump. Little-known before he announced his Emotionally tough and intellectually presidential run last year, Mr Sanders has rigorous in a prosecutorial sort of way,Mrs WASHINGTON, DC fought an astonishingly effective and, for Clinton is better at winning voters’ regard The Speakerlaunches a Republican many ofhis12m supporters, inspiringcam- than their love. Even so, they might be for- anti-povertyagenda paign: it is over already. given for wondering what she stands for. Mrs Clinton in a sense signalled that on Her policy platform is built on all sorts of AUL RYAN, the Republican Speaker of June 2nd with what was billed as a speech worthy centre-left nudges and nurdles, but Pthe House of Representatives, is known about foreign policy, but was actually an no talismanic idea. Even Bill Clinton, who for his love of detailed policy. Donald excoriation of almost everything Mr claims to know her best, praises Mrs Clin- Trump, his party’s presumptive nominee Trump has said on the subject. Her rival’s ton as an incrementalist, not a visionary; forpresident, does not share this fondness. “ideas aren’t just different,” she said. “Everything she touched she made better,” So it was fitting that on June 7th, while Mr “They’re not even really ideas, just a series he says ofher early career. Trump was busy fighting—or basking in— of bizarre rants, personal feuds and out- Yet as an argument for a third Demo- the scandal over his latest remarks on race, right lies.” cratic term, not the new broom that Mr MrRyan was launchinga policy paper. The This was a response to Mr Trump’s in- Obama was in the right time and place to report, on poverty and welfare, was some- creasingly vicious attacks on her; he has promise, moderate improvement is at least what overshadowed by the Speaker using called Mrs Clinton an enabler of an adul- credible. And then, a real partisan the question-and-answer session to wade terous husband and hinted she could be a punch-up, unpredecented in its vicious- into the row about MrTrump’spronounce- murderer. It was also manna for many ness, is what many voters seem to want ments. But there is time for wonkery yet: Clinton supporters. Deeply frustrated by from this election. The Democrats have the paper is the first of six which will form her failings as a campaigner—which have picked the right woman to deliver it. 7 a new agenda for Republicans, dubbed “A Better Way”. The policies are supposed to be implemented ifthe party takes back the The campaigns White House, though how much of it Mr Trumpsupports is anyone’s guess. Heard on the trail The paper has three notable themes. The first is simplification. Mr Ryan sees the welfare system as a sprawling mess. More than 80 federal welfare programmes sit Potty humour Escape plan atop one another, with little attention paid “Atthe start, orders were foraround100 “Make dating great again. Maple Match to their compatibility,and without govern- rolls a time, but now we’re getting orders makes it easy forAmericans to find the ment agencies much co-operating in their for5,000 rolls.” ideal Canadian partner to save them administration. Each programme—be it Qingdao Wellpaper Industrial in China from the unfathomablehorror ofa food stamps, housing subsidies, or Medi- has been selling presidential-candidate Trumppresidency.” care—has its own eligibility rules. As low- toilet paper.Mr Trump is outselling Mrs Canada continues to tease Americans. earners’ incomes increase, benefits are Clinton. China Daily www.maplematch.com withdrawn in a hodgepodge fashion. As a result, the marginal taxrate, including both Viva Mexico Benghazi! taxes and withdrawn benefits, jumps1 “Donald Trumpis a brand—a big brand— “I made lot ofmoney with Qaddafi.” and when you are asking a [sponsor] to Mr Trumpexplains why he didn’t sup- invest millions ofdollars in branding a port intervention in Libya. CBS News tournament and they’re going to share that brand with a host...it’s a difficult Outreach (1) conversation.” “But we’re building a wall. He’s a Mex- The PGA is moving the World Golf Cham- ican. We’re building a wall between here pionship from a Trump-owned golf course and Mexico.” in Miami to Mexico City—not Mr Trump’s Mr Trump attacks the judge hearing a favourite place—because of problems with lawsuit against Trump University. The finding sponsorship judge, born in Indiana, is of Mexican ances- try. CNN Pop Muzak “Feel It in YourGuts.” Outreach (2) Bernie Sanders and Thurston Moore, a “I was the one that really broke the glass founder ofSonic Youth, have produced a ceiling on behalfofwomen, more than single about inequality and human anybody in the construction industry.” rights. Entertainment Weekly Mr Trump on why women should support him. Fox News The flayed woman “Donald Trumpwill peel her skin off in a Outreach (3) debate setting.” “Oh, lookat my African-American over RickPerry’s imagination has turned here—lookat him. Are you the greatest?” Titianesque. Fox News Mr Trump exploits Ali-fervour A plan with a price I am a homeowner. Protect me.

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The Economist June 11th 2016 United States 31

2 around erratically. Sometimes it exceeds who may swim in public pools. Though 100%, meaning workers are better-offearn- most municipal pools were desegregated ing less. Mr Ryan wants to consolidate the after the second world war, racial tensions programmes. Such a simplification—and a continued in the waters. Whites often reduction in marginal tax rates—would be stopped swimming once blacks were al- welcome. lowed in. New pools were built in white The second theme is value for money. neighbourhoods to, in effect, rope others The paper complains that not enough pro- out. And some cities opted to drain their grammes are rigorously evaluated, and pools forgood rather than operate them as calls forthe government to open up its data integrated facilities, a strategy that was to researchers. It also notes that states can blessed by the Supreme Court in Palmer v simply shift claimants towards federally- Thompson (1971). At private pools and funded programmes (such as disability country clubs, both blacks and Jews found benefits) rather than helping them find themselves unable to wallow well into the work. MrRyan wants to fixthis, perhaps by 1960s, prompting Groucho Marx to plead: gradually reducing the share of the bill the “My daughter’s only half Jewish—can she federal government foots for any given in- wade in up to her knees?” dividual, the longer they stay on the wel- Unlike these moves to exclude undesir- fare-rolls. ables from the water, the sex-segregated The third—and probably the most divi- Swimming religiously swimming times in Williamsburg cater to sive—idea is to ramp up work require- people whose beliefs would otherwise ments. In 1996, welfare reform under Presi- Scruples and keep them at home. A similar aim has dent Bill Clinton and the Republican moved othercities, includingSeattle and St Speaker, Newt Gingrich, required states to splashes Louis Park, Minnesota, to introduce fe- ensure that sufficient numbers of their male-only swimming times—to serve both cash welfare recipientswere in work, train- NEW YORK Jewish and Muslim women. The Times ing and the like. Mr Ryan suggests expand- may have condemned the arrangement in A battle overwomen-only bathing ing that to cover housing subsidies, too. Brooklynasreligiousintrusionintosecular hours roils a publicpool The leftwill see thisasan attempt to un- space, but a few months ago it hailed a Sat- pick yet another part of the safety net. Un- N WILLIAMSBURG, an eclectic neigh- urday-night women-only swimming pro- der the 1996 reform, one way states could Ibourhood in Brooklyn, the bathingtimes gramme in Toronto as reflecting “an ethos satisfy work requirements was by shrink- at a public swimming pool are dividing ofinclusion” forthe city’s Muslims. ing their welfare-rolls, whether or not hipsters from Hasidic Jews. For 20 years, to In these gender-bending times, agree- those who lost their benefits found a job. accommodate local Orthodox Jewish ing to reserve time for women is itself a Unsurprisingly, cash welfare became women whose religiousmodestyprevents fraught proposition. Bill de Blasio, New much harder to come by. In 1996, Tempo- them from swimming in mixed company, York’s mayor, was asked whether trans- rary Assistance for Needy Families—as the Metropolitan Recreation Centre has re- genderwomen were allowed to swim dur- cash-welfare is called—benefitted 68 fam- served time four days each week for a ingfemale-onlyhours. He had no quick an- ilies for every 100 families in poverty, ac- “women’s swim”. But an anonymous swer. That, he said, is under review. 7 cording to the Centre forBudget and Policy complaint this spring prompted New York Priorities, a left-leaning think-tank. Today, City’s human-rights commission to scuttle the figure is just 26. the arrangement, finding that the wom- Chicago’s museum wars Mr Ryan also bemoans the numbers of en’s-only times—a total of 7.25 hours out of adults without dependents who claim the pool’s 90-hour weekly schedule— Light against dark food stamps (or, more formally, “Supple- amounted to illegal discrimination. That mental Nutrition Assistance”) without decision was put on hold afterDov Hikind, working or preparing to work. This is a red an assemblyman representing another herring. The1996 reforms already bar able- Brooklyn neighbourhood with large num- CHICAGO bodied adults without children from re- bers ofHasidic Jews, complained. George Lucas is threatening to take his ceiving food stamps while unemployed “Everybody into the pool,” the New museum to anothercity for more than three months in any three- York Times editorialised, in response to Mr year period. True, this rule was mostly sus- Hikind’s successful intervention. Continu- OTH sides are stubborn in their battle pended during the recession. But work re- ing to allow women to enjoy exclusive B over the site of the planned Lucas Mu- quirements are now back in force in more hours in the pool this summer while the seum of Narrative Art. George Lucas, the than 40 states. There is little more Republi- city tries to find a compromise is “a capitu- creator of “Star Wars”, his wife, Mellody cans could do on this front. lation to a theocratic view of government Hobson, and the city government have set One part of the plan will please Demo- services”. Donna Lieberman, executive di- their heart on Chicago’s lakeshore as the crats: Mr Ryan wants to expand the Earned rector of the New York Civil Liberties Un- site for the museum’s futuristic building. Income Tax Credit, a wage top-up for low ion, said that while New Yorkers “have ev- Friends of the Parks, a non-profit organisa- earners (though he also complains about ery right to limit their swimming in tion, says Mr Lucas can build his museum high rate of erroneous payments, which accordance with their religious beliefs”, anywhere he chooses, but not east of Lake reached 27% in 2014). That is unlikely to be Orthodox Jews “have no right to impose a Shore Drive, the expressway running enough to placate the left, though: Eliza- regime of gender discrimination on a pub- along the shoreline of Lake Michigan, an beth Warren, a Democratic senator, dis- lic pool”. People whose religious scruples area of (mostly) open views that is owned missed the paper as “an agenda for creat- prevent them from splashing with mem- by the public. The battle reached fever ing poverty”. Don’t expect another bers ofthe opposite sex, the Times advised, pitch in early May when Rahm Emanuel, bipartisan welfare deal. Despite the two should “find their own private place to the mayor of Chicago, petitioned a federal men’s differences, Mr Ryan must pin all his swim when and with whom they see fit.” appeal court to throw out a long-winded hopes on Mr Trump. 7 This is far from the first dispute over lawsuit, filed in 2014 by Friends ofthe Parks1 32 United States The Economist June 11th 2016

2 in a district court, to blockuse ofthe site. In February an Illinois district-court judge re- fused to dismiss the suit. On May 10th he postponed its hearing to June 15th. The Lucas family is in no mood to wait any longer for the construction of the mu- seum, which was supposed to start in the spring. Ms Hobson says they are now look- ing at other cities, and blasts Friends of the Park for slamming the door on more than $2 billion in economic benefits for the state, as well as thousands ofjobs and edu- cational opportunities for children. “As an African-American who has spent my en- tire life in this city I love, it saddens me that young black and brown children will be denied the chance to benefit from what this museum will offer,” says Ms Hobson. That this should become another argu- ment about race is a sign of how bitter the dispute has become. The site, south of the Soldier Field football stadium, is already Cannabis in the capital heavily developed. It lies within walking distance ofthe Shedd Aquarium, the Adler Federal haze Planetarium and the Field Museum ofNat- ural History, and serves as a hardly used WASHINGTON, DC carpark. MrEmanuel mocksthe parks’ pro- The District’s odd governance makes foreven odderdrug laws tectors as “Friends ofthe Parking Lot”. The parks’ guardians argue that a man- N A street corner five blocks from legalisation ballot was passed, a congres- date—which dates back to 1836 and says OCongress, a transaction ofuncertain sional rider was attached to DC’s budget Chicago’s lakefront must remain public legality is taking place. A man in his 20s, forbidding the use offederal or local and “remain forever open, clear and free of wearing a red Stanford University hood- funds forregulating the market. any buildings, or other obstruction what- ed top, is handing your correspondent a Able to legalise cannabis but unable ever”—is at stake. They also rejected on bottle offruit juice. The cost? $55. The to tax or regulate it, DC finds itselfin a principle Mr Emanuel’s Plan B, which juice’s steep price does not reflect yet strange hinterland oflegality. And be- would involve the demolition of one of another innovation in artisanal pulping. cause nearly 30% ofthe District consists the hideous buildings of the McCormick Rather, it explains the free gift that accom- offederal land, on which cannabis is still convention centre on the lakeshore and re- panies the juice—a branded green bag classed as a Schedule 1drug (along with place it with the (much smaller) Lucas mu- containing about an eighth ofan ounce heroin and LSD), it can be legal to possess seum aswell asadditional parkland. Many (3.5 grams) ofcannabis. cannabis on one side ofa street and thinkthis is pigheaded. Since 2015it has been legal to own, illegal on the other. Few dispute the attraction of the pro- grow and use cannabis privately in Yet, despite initial threats from dis- ject. According to a recent survey, 73% ofthe Washington, DC. Generous souls are gruntled congressmen, a hazy entente city’s parents say the Lucas museum allowed to give small amounts to whom- has sprung up within the city. In April a should be built in their city and 81% say ever they like. It is illegal, however, to sell 51-foot-long inflatable joint was paraded they would probably visit it. The museum it. Small businesses have sprung up near the White House by activists seek- will focus on storytelling throughout the seeking to exploit this dichotomy.With ing to persuade BarackObama to change ages, from prehistoric times to today, names such as HighSpeed, Kush Gods the federal laws on cannabis. The parade through paintings and sculptures, photog- and 24/7 Strong Supply,their main ob- was followed by a mass “smoke-in”, but raphy, cartoons, advertising, digital tech- jective is clear. The most notorious busi- the plumes emanating from the crowd nology and cinema, explains Don Baciga- ness, Kush Gods, sends cars emblazoned did not trigger any arrests—despite the lupi, its founding boss. It will have three with cannabis leaves around the city to fact that everyone was standing on feder- film theatres, lecture halls, a vast library solicit “donations” from passers-by in al land. Across the city there have been and, no doubt, an even bigger gift shop. return forcannabis-infused edibles or regular cannabis seed-and-food give- Ms Hobson and her husband have al- pre-rolled joints. The fourstates that have aways, which have gone largely unmo- ready directed much of their philanthropy legalised cannabis for recreational use lested by local authorities. Clubs have towards the South Side, and their museum have also set up systems to tax and regu- sprung up offering in-home gardening would almost certainly be a boon for the late it. In DC, which has not, something services forthose who want to cultivate troubled neighbourhood. “You get this like a barter economy has sprung up their own plants. chance once in a couple of generations,” instead. Some ofthe thin ice under the can- says Steve Koch, deputy mayor of Chicago. Unusual though this may be, it arises nabis economy occasionally gives way. “To blow it would be such a great shame.” from a familiarpolitical tussle between Earlier this year the proprietor of Kush All depends now on the decision of the the federal government and the place it Gods pleaded guilty to marijuana dis- appellate court. Construction is estimated calls home. The city is a federal juris- tribution. Yet within days ofbeing or- to take three and a half years. “A 2020 diction; its budget must be approved by dered to shut down his company and the opening would be fine,” says a hopeful Mr the congressmen who sit on Capitol Hill, app through which he made contact with Bacigalupi. Should Chicago lose the muse- some ofwhom are not keen on creeping “donors”, the firm’s cars could again be um, Los Angeles and San Francisco already marijuana legalisation. Shortly after the seen soliciting donations across the city. have their avid eyes on it. 7 The Economist June 11th 2016 United States 33

Delta lives When a statewide row broke out about Mississippi’s flag, which includes the Con- Standin’ at the crossroads federate stars-and-bars, Mr Luckett took it down from city hall. Other challenges have ranged from the trivial—an official who, he says, expected the fire department to fill up his swimming pool, supporters who want him to “fix their [traffic] tick- CLARKSDALE, MISSISSIPPI ets”—to the critical. Clarksdale has been The mayorofthe hometown ofthe blues is a man ofmany parts flooded twice in the past six months, once ILL LUCKETT was already in his 60s Compared with much of the rest of the following a tornado. Crime remains wor- B when his acting career took off. He was Delta—a sultry plain punctuated by dis- rying; Mr Luckett was caught up in it last mooching around film sets and premières, used cotton gins and rusted petrol pumps, year, when one of his legal clients fatally and the parts began rolling in. He has where the towns are as run-down as the shot an adversary at a deposition. He says played a judge, a chef, a restaurateur and a soil and culture are rich—Clarksdale is he still jumps at unexpected bangs. Above newscaster, and has forthcoming roles as a humming. Once, says Mr Luckett, you all, the blues can’t feed everyone: 38% of pick-up driver and a homeless man. His could have fired a rifle in the evening and Clarksdale’s 17,000 residents still live in melodious southern accent may help. So not hit anyone. Now there is live blues ev- poverty. Many, says Ms Colonas, can’t af- might the fact that, as a professional trial ery night. Agricultural mechanisation ford to visit the new venues, and lack the lawyer, “I’ve been an actor a long time.” means it is still a place people leave but, skills to workin them. Mr Luckett was introduced to the film these days, some are moving in. For exam- Mr Luckett hopes to attract film produc- business by his friend Morgan Freeman. ple, Robin Colonas, a merchant mariner tions, for which Clarksdale’s time-warped They met 20-odd years ago when Mr Free- from Seattle, has salvaged an open-air con- shopfronts may be a draw. But as he rages man was building a house in the Mississip- cert venue from the husk of an old cinema againstMississippi’swoeful education sys- pi Delta, and Mr Luckett helped with both where Ike Turner was an usher (Sam tem, he knows these blights demand big- the paperwork and the construction: as Cooke was born next door). ger tools than a mayor can wield. And, in well as a lawyer, he is an army-trained civil Now, having galvanised Clarksdale’s fact, he has run for higher office. In the go- engineer (he was an officer in the Missis- development, Mr Luckett is trying to boost vernor’s election of 2011 he made it to a sippi National Guard). The poorest part of it further through his other late-blooming Democratic primary run-off, losing, he be- America’s poorest state, the Delta is a place career: as a groundbreaking politician. lieves, because of cynical Republican sup- where many people multi-task to get by; port for his less viable rival, who was then but, even here, Mr Luckett’s versatility Fell down on my knees duly walloped. He didn’t mind the mud- stands out. He is also a property developer, In 2013 he was elected Clarksdale’s mayor. slinging, but his law practice suffered and “two-bit contractor”, “frustrated architect”, One of his opponents was the scion of a he disliked all the begging phone calls. sometime housepainter, landlord, handy- black political dynasty; another was tar- “What it takes to get elected”, he concludes, man, motorcyclist and fisherman. nished by his fondnessfor a website called “is a lot ofmoney.” And nightclub-owner. He and Mr Free- sugardaddyforme.com. A third was mur- Still, he hasn’t ruled out another tilt, man opened a high-end restaurant in dered during the campaign (for non-politi- and likes to think the Democrats can still Clarksdale in 2000; it closed a few years cal reasons). In a city that is 79% black, Mr compete in Mississippi, with the right can- ago, though while it lasted,MrLuckett says, Luckett was variously assailed as “a white didate. “Why are we a red state,” he asks, they at least had somewhere good to eat honky” and, ludicrously—given his life- “when we’re the poorest state in the na- themselves. They invested in a barbecue time membership of the NAACP—as a rac- tion?” Meanwhile, he has the mayoralty business over in Arkansas, which also ist. “True or not, it doesn’t matter in poli- and his proliferating acting gigs. In a scene folded. (They co-own several planes, too, tics,” he laments. But none of it washed, he has just shot, for a film called “Kudzu and Mr Luckett flies them: he is a qualified and, impressively for a white politician in Zombies”, he plays a defeated politician in jet pilot.) But Ground Zero, the blues bar the Delta, he won in a landslide. a place then overrun by monsters. 7 they established in 2001, is still going. Back then there was nowhere reliably to hear the Delta’s world-famous art form in its spiritual hometown. They fitted out Ground Zero to look like a juke joint, of the kind sharecroppers once patronised, which required old beer signs, Christmas lights and pool tables. The rampant graffiti dates to opening night, when a young woman danced on the bar and Mr Luckett drew the outline ofher bare feet. Ground Zero is next to the Delta Blues Museum, where the prize exhibit is the for- mer slave cabin in which a young Muddy Waters lived, and close to the crossroads where, legend has it, Robert Johnson sold his soul to the devil. Mr Luckett is a gregari- ous presence. “How y’all doin’?” he asks each table oftourists as he works the room. “Where y’all from?” Fifteen years on, though, the club has yet to break even. But it has achieved another avowed aim, which was to spur Clarksdale’s revival. Bill Luckett: actor, bartender, lawyer, politician 34 United States The Economist June 11th 2016 Lexington Playground tactics

Protesters who use violence against Donald Trump’s supporters are doing his work gals” and “Go Backto Mexico” in corners ofthe school where His- panic pupils gather, while “Trump 2016” slogans appeared where whites hang out. Students began wearing Trump T-shirts to class. When the Alvarez sisters and four Hispanic peers wore “Dump Trump” T-shirts to school, the principal told them to change—offi- cially to “prevent disturbances”—but later backed down. On April 28th Ms Hernandez took her daughters to protest against a Trump rally in Costa Mesa, near their school. Angelina recognised classmates turning out for Mr Trump: “More kids than I would expect,” she says. “Youlose friends.” Alexia is proud of a home-made sign reading: “If you’re ugly and you know it, vote for Trump”. But the whimsical mood did not last. Ms Hernandez found herself in shouting matches with grown men confronting her daughters. At one point, Ms Hernandez says, a 40-something, Trump-supporting woman hit one of her daughters’ teenage friends. She accuses the police oflettingthe woman walk off, and telling the protesters to file a report the next day. In their interviews, the organisers do not deny that some prot- esters struck back. What they resist is any suggestion that anti- Trump demonstrators should share the blame if the business- man wins the election. “It is unfair to put it on us that we are en- OR those who long to see President Donald Trump in the abling Trump,” says Ms Hernandez. More to the point, she says, FWhite House, violent protests outside some recent Trump ral- Mr Trump isenabling whites to vent long-suppressed prejudices. lies, often in cities with big immigrant populations, prove that Carolyn Torres, a history teacher who also works with Chica- their hero cannot take power soon enough. For everyone else, nos Unidos, goes further. If protests hurt the Democratic Party, such violence is a cause foralarm. Not only is it wrong, as a point she says: “That is not our issue.” Ms Torres charges Mrs Clinton of principle, for protesters to sucker-punch Trump supporters on with supporting the deportation of Central American children live television. From a narrowlypolitical perspective, historysug- fleeing violence and working with her husband, Bill Clinton, to gests that demagogues gain votes when unrest grips the streets. pass crime bills that built a “prison-industrial complex”. As for Sure enough, Mr Trump hascarefully blamed trouble outside his Barack Obama, notes Ms Torres, deportations have reached re- rallies on “thugs” and “agitators…sent by the Democratic Party”. cord levels under his presidency. Asked if her cause might not Mr Trump also takes pains to point out when protesters wave the gain from wooing moderate voters, she calls that “respectability Mexican flag, a gesture that feeds his habit ofquestioning the loy- politics”. Real change, she says, is not won by “nicely asking”. alty of American Hispanics (including Gonzalo Curiel, an Indi- ana-born federal judge whom Mr Trump, disgracefully, dubs a bi- What’s in a flag? ased “Mexican” and who is hearing a lawsuit against him). Naui Huitzilopochtli, a school administrator and campaigner for Still the protests keep coming. Recent weeks have seen vio- indigenous Americans, recalls joining youths waving Mexico’s lence outside Trump rallies in such west-coast cities as Costa banner in 1994 during huge marches against Proposition 187, a Mesa and San Jose and, farther inland, in Albuquerque. Never Californian ballot initiative that sought to deny state services, in- mind that MrTrump has in his day praised violence meted out by cluding schooling, to undocumented immigrants. He waved the his backers—“I’d like to punch him in the face,” he said of a prot- flag because his family was under attack, he says. He heard warn- ester in February. Because the latest demonstrations look like a ings that this was counter-productive and calls that a double- gift to Mr Trump, a gulf of bafflement has opened between those standard. When Jewish-Americans wave Israeli flags, he says, who hope to beathim atthe ballotboxand those who seem more conservatives never say: “Why don’t you go back to Israel?” Mr eager to defeat him on the streets. To simplify, the first group Huitzilopochtli agrees that Mexican flags helped to pass Proposi- watchesthe second abandoningthe moral high ground and won- tion 187, by angering white Californians. But in the long term, he ders: What are they thinking? Being a literal-minded sort, Lexing- argues, that historic defeat galvanised non-whites to vote and to ton decided to find some of the flag-waving protesters and ask enter politics: “I see the positive.” them. No single spokesman can sum up a protest movement. Can Mrs Clinton head off more protests? Hairo Cortes, a stu- Still, pieces of the puzzle emerged from interviews with organis- dent and organiser from Orange County Immigrant Youth Un- ers and activists in southern California. ited, took several activists to the Costa Mesa rally. Meeting in the For a start, campaigners say that protesters are victims of ag- city of Santa Ana on June 7th, over cups of cinnamon-infused gression. Gabby Hernandez, an organiserwith a Mexican-Ameri- café de olla, MrCortesspelled outthe (politicallyimpossible) poli- can rights group, Chicanos Unidos de Orange County, came to an cy Mrs Clinton would have to embrace to win his group’s sup- interview on June 6th with her daughters, students at a mostly port—to stop all, oralmostall, deportations. Ultimately, MrCortes white high school in the affluent seaside city of Newport Beach. says his cause is larger than the next election. “Trump is danger- Her younger daughter, 15-year-old Alexia Alvarez, described how ous,” he says. “But being better than Trump is not good enough.” studentshave longled ratherseparate livesatschool. Butwith Mr The campaigners’ logic is clear enough: President Trump is not Trump in the news, 16-year-old Angelina describes segregation the worst that could happen. Fortheirsakes, and America’s, hope taking a nastier turn. Chalk graffiti appeared saying “Fuck Ille- the businessman never proves them wrong. 7 The Americas The Economist June 11th 2016 35

Also in this section 36 Guatemalan kleptocracy 36 Airships in the Arctic 38 Bello: The Mexican blues

Peru’s election maintaining the free-market policies that have helped turn Peru into the fastest- The fortunate president growing of Latin America’s larger econo- mies in this century. But that will not make Mr Kuczynski’s task much easier. Popular Force won 73 of the 130 seats in Peru’s con- gressional election, also in April; the new LIMA president’s party has only 18. Ms Mendo- za’s party was interested only in stopping Anti-Fujimorismo achieves an unlikely victoryforan economic liberal Ms Fujimori, not in helping Mr Kuczynski. T COULD hardly have been closer. As the date’s lackofpolitical instincts. With the mining boom of the 2000s Ifinal votes were counted in the run-off In February Mr Kuczynski’s support in fading, annual GDP growth has slowed, to ballot for Peru’s presidency, Pedro Pablo the opinion polls was 9% and falling. His 2.8% during the past two years. That is still Kuczynski, a liberal economist, seemed to chance came when the electoral authority healthy by regional standards. And growth have defeated Keiko Fujimori by just disqualified two other candidates on tech- might edge up in 2016, thanks to rising cop- 39,000 out of almost 18m votes, a margin nicalities. In the first ballot in April, he won per output from new mines. But labour-in- of 0.2%. After months in which Ms Fuji- just 21% of the vote, well behind Ms Fuji- tensive industries, such as construction mori had led opinion polls, this was a sur- mori’s 40%. A week before the run-off vote and manufacturing, are in recession. prising reversal. It shows how deeply di- on June 5th Ms Fujimori led by five points. Mr Kuczynski’s plan to stimulate the vided Peru is about the legacy of Ms In the end strong anti-Fujimori senti- economy focuseson tax cuts and public in- Fujimori’s father, Alberto, who ruled it as ment brought Mr Kuczynski his razor-thin vestment, especially in drinking water, an autocratfrom 1990 to 2000; he isserving victory. Ms Fujimori is an effective grass- sanitation and health care. His economic long prison terms for corruption and com- roots campaigner. She built on her father’s adviser, Alfredo Thorne, proposes to cut plicity in human-rights abuses. support among the poor, who remember value-added tax from 18% to 15% and grant With such a narrow mandate, Mr Kuc- his crushing of hyperinflation and terro- big companies a tax break on reinvest- zynski’s first task when he takes office on rism, and his opening of schools and ment. He says this will pay for itself by July 28th will be to show that he can gov- health clinics. But the other halfof Peru ab- curbing evasion and encouraging Peru’s ern a country facing an economic slow- hors Fujimorismo, seeing it as the legacy of vast array of informal businesses to go le- down and characterised by frequent social a corrupt dictatorship. gal. He wants to promote formal jobs by conflicts. Ithelpsthathe hasfewreal policy cutting severance pay, replacing it with un- differences with Ms Fujimori. Wind at his back employment insurance fornew hires. Fortune smiled on Mr Kuczynski Two things pushed Mr Kuczynski over the Mr Kuczynski plans to run a fiscal defi- throughout the race, with the force of the line. One was a last-minute, grudging en- cit of up to 3% of GDP; because Peru’s pub- Andean sun. He was an unlikely victor. At dorsement by Verónika Mendoza, a defeat- lic debt is low and its credit rating strong, 77, he isamongthe oldestpresidential-elec- ed left-wing candidate. Second, the dam- thiscan easilybe financed, he says. Taxrev- tion winners in Latin American history. He age done by the revelation in May that the enue would increase and the budget has alternated periods as an official in United States’ Drug Enforcement Adminis- would be in balance by 2021, he argues. Peru—manager of the Central Bank in the tration was investigating Joaquín Ramírez, Others think the plan threatens economic 1960s, mining minister in the 1980s and the general secretary of Ms Fujimori’s stability. “It’s very risky to go for such a big economy and prime minister in the early party, Popular Force, was magnified when deficit when the results of tax cuts and for- 2000s—with long stints abroad: he studied Ms Fujimori took three days to suspend malisation are very uncertain,” says Elmer at Oxford and Princeton, and worked at him. The affair seemed to bolster Mr Kuc- Cuba, Ms Fujimori’s economic adviser. the World Bank and as a businessman and zynski’s claim that, if his opponent won, Another goal is to free up some $22 bil- banker in the United States. His hired cam- Peru risked becoming a “narco-state”. lion in investment in mining and energy paign guru resigned in despairat the candi- The two candidates broadly agreed on projects stalled by local opposition. The 1 36 The Americas The Economist June 11th 2016

2 new team proposes to raise public invest- Canada’s daunting logistics ment in the affected areas. It also needs to build on the efforts ofOllanta Humala, the outgoing president, to improve education, Airships in the Arctic health and social protection. The other big OTTAWA issue is rising crime. Mr Kuczynski’s securi- Dirigibles are being floated as the future mules ofthe great white north ty adviser, Gino Costa, wants to reform the national police, boosting its intelligence ACH year around this time Craig and Arctic air freight in 2013. Airship makers branch and integrating its operations more ECathy Welsh list all the food, drink, say they could run that route forC$1.07. closely with municipal forces. clothing and furniture they need for the So why aren’t airships already a fix- MrKuczynski’s prospects turn partly on next year. They then fly 2,000 km (1,250 ture in the Arctic sky? Until recently, there whether he can strike a deal with Popular miles) south to Ottawa from their home was little need: remote towns and camps Force on issues requiring legislation, such in Iqaluit, buy the non-perishables and could safely rely on winter ice roads. But as taxes and reform of municipal water put them on a ship that will call once the climate change now means these melt companies. The price of that might be to sea ice melts around July.Estimating unpredictably.Another reason was high pardon Mr Fujimori, or at least grant him quantities can be tricky: one bulktooth- oil prices. Although expensive fuel in- house arrest. That would be controversial. paste purchase lasted more than eight creased airships’ cost advantage over Carlos Bruce, a congressman in MrKuczyn- years. Yet local prices are so high that planes, the commodities boom boosted ski’sparty,saysthenewpresidentmightof- they still save money. resource firms in the north. When it fer Ms Fujimori’s party cabinet posts. Canada’s transport network, like its burst, these companies rushed to cut For Ms Fujimori, a second narrow de- people, is squeezed along its southern costs. A final factor is politics. The previ- feat will be hard to swallow.In 2011Mr Hu- border. The Arctic depends on air freight, ous prime minister, Stephen Harper, was mala, a former army officer running on a seasonal sea shipments and ice roads. a fossil-fuel fan.His successor, Justin centre-left platform, beat her by three per- Living costs are exorbitant, but building Trudeau, vows to tax carbon. centage points. This time she took more new infrastructure is even more so: the Nonetheless, it will take time for cargo care to distance herself from her father, to latest proposal, for a 7,000-km corridor of airships to get offthe ground. The 40 or so no avail. Fujimorismo will not vanish, but roads, pipelines and railways has a non- in the world today are all used for obser- it might split. Oddly,Ms Fujimori’s brother starter price tag ofC$100 billion ($80 vation, tourism or advertising. The first Kenji, a congressman, failed to vote for her. billion). Now,soaring above such unre- mover is Britain’s Hybrid Air Vehicles, Peru is not easy to govern. Mr Humala alistic options, an old technology is being which hopes to fly its Airlander at the will leave office isolated and unpopular. touted as a new solution: airships. Farnborough Air Show in July.Lockheed Ms Fujimori’s criticism of Mr Kuczynski’s Also known as dirigibles or (without a has built a scaled prototype, and signed a team as elitist technocrats, out of touch rigid structure) blimps, their basic design letter ofintent with Straightline Aviation with Peruvian life, carried much truth. Un- hasn’t changed in150years: a bag of ofBritain to supply12 airships for$480m. less he finds some skilful political opera- lighter-than-air gas, plus a propulsion But Mr Welsh has learned to be patient. “I tors, fortune may cease to smile on him. 7 system. Airships fell out offashion after am looking out the window,”he says, the1937 Hindenburg disaster, which killed “and I still do not see any Zeppelins.” 36 people, and all but vanished in the jet Corruption in Guatemala age. Now they are getting a long-overdue makeover. Dirigibles are farslower than Bad apples planes: they max out at just110kph (70mph). But they consume much less everywhere fuel and cost about halfas much to make. They are also easier to fly in dense, cold air than in hotter, more turbulent south- ern climes, says Grant Cool, who markets An ousted president is accused of them forLockheed Martin. masterminding kleptocracy Moreover, dirigibles do not need an HEN Otto Pérez Molina resigned as airport to unload. One lighter-than-air WGuatemala’s president last Septem- model in development by LTA Aérostruc- ber and was promptly jailed on corruption tures ofMontreal would lower up to 70 charges, it was seen as the ultimate tri- tonnes ofcargo to the ground, requiring umph for the International Commission only a mooring mast. A heavier-than-air against Impunity in Guatemala (CICIG), a hybrid from Lockheed Martin can land UN-backed body of independent prosecu- on any flat land or ice. John Laitin of tors and investigators, many of them for- Sabina Gold and Silver, a mining firm, eign. Now it seems the scandal that led to says he paid C$1.90 per tonne per km for The answer to inflated prices? Mr Pérez’s downfall—a kickback scheme at the customs agency—was just the tip of the iceberg. On June 2nd CICIG and local offi- longed to a different party, most of which ed frontmen to run them, and covered its cials arrested 25 people and issued war- are now defunct. So there was nothing un- tracks with receipts for vague services like rants for 27 more as they unveiled an accu- usual about Mr Pérez, a former general, “use ofmachinery for1,000 hours”. sation of jaw-dropping scope: Mr Pérez’s founding the Patriotic Party (PP) in 2001 as After Mr Pérez won the presidential entire political party had been a mere front a vehicle for his political ambitions. election of 2011, the commission charges, for a plan to capture and run the Guatema- But according to CICIG, by 2008 the PP he delivered on his promises. His govern- lan state forpersonal enrichment. was accepting illegal campaign contribu- ment signed at least 450 contracts from Political parties have long been weak in tions as down-payments for favours if it which officials skimmed off more than Guatemala. Every president since 1985, ever took power. The party courted do- $65m as part ofthe scheme, while Mr Pérez when regular elections resumed, has be- nors, set up shell companies and appoint- and hisvice-president, Roxana Baldetti, en-1 docusign and Go

Seal the deal from 30,000 feet. With DocuSign, you can sign safely and securely from anywhere on your mobile device. So you can sign and close deals any time—even when you’re offline. www.docusign.com/go 38 The Americas The Economist June 11th 2016

2 joyed vacation homes, yachts, helicopters little hope of making such spectacular not responded—though they both said and designer clothing. The 58 named con- claims stick. But CICIG, which was set up they were innocent of the original cus- spirators (counting those already in jail) in 2007 to aid the country’s prosecutors, toms-bribery allegations. come from virtually every part of the Gua- has a formidable record of obtaining hard If CICIG, whose current mandate runs temalan elite, including the former bosses evidence such as wiretaps and bank-trans- until late 2017, can secure convictions in the of two large banks and the wife ofa media fer records. It has used these techniques case, it would be a big step towards ending magnate. An ex-football starwho served as not just to take down Mr Pérez, but also to impunity in a country where the powerful Mr Pérez’s culture minister was also de- solve murders and ferret out drug traffick- have historically been above the law. At tained. In the words of Plaza Pública, a lo- ers lurking among the police. the same time, it would also confirm Gua- cal news website: “The Patriotic Party Moreover, Guatemala’s own prosecu- temalans’ suspicions about the extent of wasn’t a political party. In reality, it was a tors have begun to absorb the foreigners’ the rot at the heart of their state. Foreigners criminal gang whose objective was to take professionalism and fearlessness. Mr Pérez have proven indispensable in bringing cor- power to rob the state.” did not deny the allegations when asked rupt politicians to book. But only Guate- In the past, investigators confronting by reporters, simply saying he would “lis- malans can find some honest ones to re- such entrenched power would have had ten to the charges”, while Ms Baldetti has place them. 7 Bello The Mexican blues

Intellectuals find fundamental flaws in the country’s democracy N JUNE 5th voters in 12 Mexican are being boosted by the structural re- It has become commonplace to say Ostates unexpectedly gave the Institu- forms—of energy, the labour market, edu- that in Mexico democracy did not bring tional Revolutionary Party (PRI) of Presi- cation, bankingand telecommunications— the rule oflaw. But why did it not? The an- dent Enrique Peña Nieto a good kicking. launched by Mr Peña. swer lies in a largely unreformed political In elections for governors, by a prelimi- Such achievements are more than can- system. Under one-party rule, it was a nary count, the PRI lost seven states to the celled out in the public mind by two, top-down affair based on an imperial conservative National Action Party(PAN). linked, failings: crime and corruption. Mr presidency. Instead of a systematic rede- In four of those states, the PRI had never Peña at first played down the battle against sign, Mr Fox’s victory brought fragmenta- before lost power. “After 86 years in organised crime, but the murder rate is ris- tion and institutional decay. Since 2000 which they governed Veracruz, we beat ingagain and extortion is an everyday mis- no president has had a majority in Con- the PRI,” exclaimed Miguel Ángel Yunes, ery. According to Latinobarómetro, a re- gress. Mr Aguilar notes that power and the PAN candidate in that state. This is gionwide poll, in 2015 57% of Mexican much federal money have passed to state how democracy is supposed to work: an- respondents said they or a relative had governors, with no oversight. The cost of gry voters get to kickthe bums out. been a victim of crime in the past year, politics has rocketed, he adds: office is For Mexico, this is still a novelty. It was compared with 44% in the region as a auctioned to the highest bidder, repaid by only in 2000 that seven decades of one- whole. Crime routinely goes unpunished: siphoning public money and bribes from party rule by the PRI finally ended when only a quarter ofmurders are solved. contractors, developers and organised Vicente Fox of the PAN won the presiden- Corruption is equally ubiquitous. It crime. Freed from the tutelage ofthe presi- cy. Yet hopes of a deep and lasting trans- costs Mexico as much as 10% of GDP, ac- dency, many local governments fail to formation that Mr Fox’s victory raised cording to a study by IMCO, a think-tank. fight crime, writes Mr Krauze. have given way to disillusion. In striking From 2000 to 2013 41 state governors were Mexicans are fed up with crime and unison, several of the country’s leading implicated in corruption scandals; only corruption; fairly or not, they blame the thinkers published jeremiads on the state two have been jailed. In a horror that still unpopularMrPeña. He acknowledged re- ofMexican democracy last month. shocks Mexico, crime and corruption cently that society is “ill-humoured”. But “The goddess who was going to cure came together in the murder in 2014 of 43 Mexico’s constitution does not provide all evils gave birth to an unrecognisable student teachers in the state of Guerrero at for a presidential run-off; PRI strategists creature which today prompts rejection the hands of local police, politicians and have calculated that they can keep power and mistrust among the majority of Mex- drug traffickers. in 2018 with just 30% or so ofthe vote. icans,” wrote HéctorAguilarCamín, a his- The gubernatorial elections should torian and novelist, in an essay in Nexos, a shake them out of their complacency. monthly journal. In Letras Libres, Enrique Some Mexicans believe that political al- Krauze, another historian, declared in a ternation at the state level is the key to similar vein: “Many ofus thought that de- progress. Others argue that the country mocracy…would bring an era of peace, needs deeper political reform. At a mini- prosperity and justice. That was naive.” mum, this should include some recentral- This intellectual gloom contains a rec- isation, with a stronger federal police ognition that many things in Mexico are force and more control over public funds; not going so badly. The economy is solid, genuine autonomy and accountability of ifnot stellar. Adozen ofMexico’s 32 states, prosecutors and the courts; and steps to mainly in the north, are growing at Asian cut the cost ofpolitics. Afragmented polit- rates. Consumption has expanded steadi- ical system needs a mechanism to pro- ly, as has home-ownership, and an open duce a majority, such as a run-off. The pro- economy has brought Mexicans cheaper, blem is that in democracies it is easier to better goods, as Luis Rubio, a political sci- kick the bums out than to devise ways to entist, points out. These improvements stop them getting in in the first place. Asia The Economist June 11th 2016 39

Also in this section 40 Modi’s world tour 41 Japan’s distilled-water politics 41 A border tightens 42 America at war, still 43 Banyan: the poetry of migrant workers

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

South Korea’s working women crept above 50% in 2000, and has risen only five percentage points in the past two Of careers and carers decades. The gap between the median earnings of men and women in full-time employment is the worst in the OECD, a group of mostly rich countries (see chart). It has shrunk by just three percentage SEOUL points in ten years. Working women are paid only 63% of what working men get. Conservative workplaces are holding South Korean women back The few female bosses in its ten biggest HEN Moon Su-jong, a web designer rean law requires that private companies chaebol are all relatives of one of their Wat a mid-sized South Korean chaebol, offerone year ofpaid maternity leave. Park main shareholding families. or conglomerate, joined a late-night com- Geun-hye, the first woman to lead an East Some South Koreans argue that men pany booze-up and declined alcohol, her Asian country when she assumed South need jobs more than women, since they bosses guessed that she was pregnant. Korea’s presidency in 2013, has vowed to are the chief breadwinners. Man of Korea, (What other reason could there be for not create 1.7m jobs for women, lift their em- a male-rights group, wants to abolish the drinking?) Far from congratulating her, ployment rate by seven percentage points, country’s Ministry of Gender and Family, they were outraged. They berated her for to 62%, and name and shame companies which it says oppresses men, for example burdening her colleagues, who would with too few female employees. by creating women-only parking spaces. have to shoulder her work in her absence, But many South Koreans are reluctant That South Korea now has men’s-rights and asked her when she would quit. to accept that women have careers, and groups is a sign that women have made ad- Ms Moon complained to the human-re- firms often fail to accommodate the needs vances—the stubblier sex no longer takes sources manager, who agreed that she was ofworking mothers. The share ofworking- its dominance for granted. As recently as harming the company by getting pregnant. age South Korean women who have jobs 1990, sex-selective abortions stemming Her boss added that the firm should hire from a Confucian preference for sons more men. She quit five months later. She meantthat117 boyswere born forevery100 lefthernextemployer, too, afterher second No-career women in Korea girls. Girls often left school and took me- baby. Her mother-in-law was no longer South Korea, 2016 or latest Female nial jobs to support their brothers’ educa- Male able to help out with the child care, so Ms tion. Now the cultural preference has re- Moon went freelance. Population aged 25-34 71.8 versed: more parents say they would with tertiary education, 63.9 Such experiences are so common in % of age group prefer daughters, and the sex ratio at birth South Korea that they are the subject of a is normal again. Three-quarters of women Labour-force 57.0 new television drama, “Working Mum, participation rate, % 78.6 go to university, compared with just two- House Daddy”. Its spunky protagonist, thirds ofmen. Seats in parliament, 16.3 83.7 Mi-so, struggles to combine long, rigid % of total But the workplace has been slow to work hours with child care. She loses out Seats on company 2.1 97.9 adapt, and huge numbers of capable fe- on a promotion to a colleague whose boards, % of total male candidates are being overlooked or mother-in-law looks after her grandchild Average time spent 227 sidelined. A survey of human-resources on unpaid work, 45 (South Koreans call this a “mum lifeline”). minutes per day teams by Saramin, a job-seeking portal, Women in South Korea find it hard to found that one-third of firms had rejected Female wages, 63.4 juggle familyand a career. In a poll of3,000 as % of male female job applicants who were at least as firms last year, over 80% of private ones well qualified as the male candidates. Sources: OECD; Inter-Parliamentary Union; MSCI said that only one-third of female employ- One-third of respondents agreed that ees returned to work after maternity leave. Interactive: Compare the best and worst countries to “only a man could do the job.” be a working woman Public policy is not the problem. South Ko- Economist.com/glassceiling Women have started to fight back. In 1 40 Asia The Economist June 11th 2016

2 January an employee at a brewery in the surveyed in 2014—said they would share scheme to build energy and transport in- conservative city of Daegu sued her boss the burden of child care if only it became frastructure through the length ofPakistan, for forcing her to resign before her mar- socially acceptable and financially possi- linking China to the sea. riage. And foreign firms in South Korea ble (by law they are paid 40% of their regu- On June 4th Mr Modi stopped in Af- have seen an opportunity.Since female tal- lar wage on leave but, as it is capped at 1m ghanistan to inaugurate a hydroelectric ent is undervalued, it is relatively cheap. A won—$860—a month, they rarely get that station. One of numerous Indian aid pro- study in 2010 found that foreign multi- much). They know their bosses mean it jects, it is intended not only to shore up Af- nationals hire lots ofSouth Korean women when they joke that their desks might be ghanistan’s Western-backed government, with degrees, and that this boosts their re- gone when they return. but also to show off India’s generous, re- turn on assets. With a fertility rate of around 1.2 babies sponsible behaviour, in contrast with that One way to make it easier for working per woman, South Korea’s labour force is of another neighbour, Pakistan, whose in- mothers would be fortheir husbands to do set to shrink dramatically. If the country telligence services have long been accused more at home. Currently South Korean fails to make use ofhalfits talent pool, stag- ofcovertly sponsoring the Taliban. women do 83% of unpaid work; American nation looms. An OECD study estimated From Afghanistan he went to Switzer- women do 62%. The law promotes a fairer that if the labour-force participation rate land, America and Mexico. His aim in division of labour: South Korean fathers for men and women was the same by these countries was to put the seal on what are entitled to 53 weeks of paid paternity 2030, GDP growth would increase by 0.9 has been a long and complicated Indian leave—more than any others in the OECD. percentage points annually. Since 2010 diplomatic effort. India has been trying for Yet barely 2% used any of it in 2014. An ar- growth has fallenfrom 6.5% to 2.6%. decades to gain international recognition chitect in Seoul (who asked not to be In one episode of “Working Mum, as a nuclear state. It will soon gain entry to named) tooka full year offworkso that his House Daddy”, the office is dumbfounded the 34-nation Missile Technology Control wife could pursue her “dream job” in one when Mi-so’s husband comes into work Regime (MTCR), whose aim is to keep irre- of the country’s biggest publishing firms, with their second baby strapped to his sponsible countries from acquiring mis- buthe isexceptional. (Athiswife’sfirm, her chest and says he will take leave in her siles with which to deliver weapons of female colleagues brag about how their place to avoid her losing her job. The boss mass destruction. contractionsstarted while theywere still at is incredulous: “Do you think this will end But despite its good record in prevent- their desks.) with you? Once you do this, others will fol- ing nuclear proliferation (unlike Pakistan), Many fathers—64% of male employees low!” Maybe they will. 7 and in the acceptance ofinternational safe- guards on civilian nuclear power, India re- mains shut out of the 48-nation Nuclear Indian diplomacy Suppliers Group (NSG). Non-membership is humiliating to a country of India’s size. It Modi on the move is also costly, denying India access both to useful civilian technology and to markets in which to sell its own. Hoping to woo India a decade ago, America broke ranks and signed a bilateral DELHI accord on civilian nuclear power. The su- perpower also wielded its clout in 2008 to Once diffident, India is beginning to join the dance coax the NSG, and particularly a recalci- ARENDRA MODI is a masterful sales- travels. Last month saw him in Iran where, trant China, to grant limited exemptions Nman. On his frequent foreign tours the between cuddly photo-sessions with simi- for nuclear-technology trade with India. Indian prime minister touts his brand not larly grizzled Iranian leaders, India Now, under Mr Modi, India is stepping up only in words but physically. The beatific pledged to develop port and rail links be- its efforts to gain full admission to the nuc- smile, the warm hugs and the trademark tween Iran and Afghanistan. It is no coinci- lear elite. It sees the two meetings of the folkloric dress project the reassuring hu- dence thatthisroute, which will ease traffic NSG that are due to be held later this mility of a big but benign country. Yet be- between Central Asia and the Arabian Sea, month as an opportunity forprogress. hind the soft-focus India that Mr Modi per- runs parallel to China’s own $46 billion Switzerland and Mexico are among the 1 sonifies, the contours of a harder-edged regional power are emerging under his leadership. FormanyIndians, itisabouttime. Tradi- tional Indian diplomacy has been “non- aligned”. In practice this has often meant disengagement from the wider world and skittish caution closer to home. Such has been the case in India’s dealings with Chi- na: its generous economic and military aid to Pakistan, India’s eternal rival, and its en- ergetic efforts to prise smaller neighbours such as Nepal and Sri Lanka from India’s orbit have until recently resulted in little more than head-scratching in the Indian capital, Delhi. C. Raja Mohan ofthe Carne- gie Endowment for International Peace, a think-tank, says there has been a shift in In- dian diplomatic thinking: “Now the word is: ‘Wewill push back.’” MrModi has signalled this on his recent India joins the clubs The Economist June 11th 2016 Asia 41

Afghanistan-Pakistan relations Japan and money politics Shameless shogun Frontier stand-off

TOKYO Japan fondly recalls a corrupt formerprime minister ISLAMABAD T WASa favourite boast ofthe late Why Pakistan has tightened controls Kakuei Tanaka, a formerleader of I along a porous border Japan, that he won his first cabinet job in 1957 by giving the then prime minister, OR more than a century, travellers, trad- Nobusuke Kishi, a small backpackfilled Fers, tribesmen and the occasional terro- with ¥3m (perhaps $70,000 in today’s rist have wandered freely across the Af- money). As Tanaka’s stature in Japanese ghanistan-Pakistan border. That came to politics grew,so did the size ofhis bribes: an abrupt end on June 1st. For the first time, eventually he needed large metal suit- Pakistan imposed full border controls at cases. Two years after he resigned as Torkham near the Khyber Pass, used by prime minister in1974, following accusa- around 15,000 people daily. This is sure to tions ofdodgy property deals, he was cause hardship for the 40m Pushtuns liv- arrested forpocketing $1.8m in bribes ingon both side ofthe border. Italso shows ($8.7m today) from America’s Lockheed howregional powerdynamicsare shifting. Corporation, a defence contractor. Despite the government’s warning, Forty years on, Japan is gripped by people were surprised—manydid noteven nostalgia for Kaku-san, as he is fondly have passports to hold their newly re- known. A slew ofrecent books and arti- quired visas. One traveller reported seeing cles lionise him. In this year’s “Genius”, a pregnantwomen lyingbythe road, desper- bestselling bookabout Tanaka written in ate to get to a hospital in Peshawar, on the the first person, as ifhe were still alive Pakistan side. Commerce will also suffer. and doling out construction contracts, Peshawar’s private hospitals rely on fees Shintaro Ishihara, a retired right-wing from a steady stream of Afghan patients. politician and formerTokyo governor, Kaku-san paid cash Afghan carpets are really Afghan-Pakistani argues that politicos nowadays just lack carpets: woven in Afghanistan, but usually his class. Others praise his common folk. Akira Nakano, an 87-year-old busi- cut, cleaned and sold in Pakistan. touch and ability to get things done: he nessman from Tokyo who recently For Afghanistan, the closure inflames was known as “the bulldozer with a bought Mr Ishihara’s book, dislikes Mr the old wound over the Durand Line, computer”. An editor at one ofthe Japa- Abe but complains that there is no viable which defines the border. The line was nese tabloids that have been churning opposition to vote for. agreed in 1893 between the then-king ofAf- out articles praising Kaku-san believes The mania also shows that Japan has ghanistan and the British Raj. It sliced his readers would vote forhim ifhe were a deep tolerance forbribery scandals, through Pushtun communities. Afghani- alive today. especially those involving popular poli- stan still refuses to recognise it, or give up What does this mania fora dead, ticians. Jitsuwa Bunka Taboo, which is claims to a big chunkofPakistani territory. corrupt politician say about contempo- better known fornude pictures and Some Afghans believe the border clo- rary Japan? Mainly it highlights the Japa- gossip about gangsters, was among the sure is intended to punish them. The good- nese public’s profound disenchantment few publications to bring up Kaku-san’s will following Ashraf Ghani’s election as with today’s careful politics and bland corruption. Ofall the greedy politicians president of Afghanistan has ebbed. His politicians. Contemporary leaders, who had a knackforlining up suppor- term began with a charm offensive: he sent writes Eiji Oshita, an author, are “taste- ters, it wrote, Tanaka was the worst. The cadetsforofficertrainingin Pakistan, called less like distilled water”. more common view is Mr Ishihara’s: that on Pakistan’s army chiefin Islamabad, and It suggests a particular distaste for the was how politics worked backthen, and dropped a longstanding request for Indian current prime minister, Shinzo Abe, who Kaku-san was an effective politician. Few military aid, including attack helicopters. is Kishi’s grandson, and unlike Kaku-san may want to live in such times, but many But after a series of Taliban attacks he has often struggles to connect with ordinary miss them, and the characters they bred. returned to the anti-Pakistan rhetoric typi- cal of Afghan politicians; he accuses Paki- stan of sponsoring and sheltering Taliban 2 smaller powers that had looked askance at growing Chinese strength, but only in re- leaders. India’s efforts. But now they, along with cent months have Indian military officials Pakistan, meanwhile, has taken um- traditionallynuclear-averse countries such begun to show eagerness for co-operation. brage at India’s rising influence in Afghani- as Japan, back Indian membership of the This month the two countries will hold stan. Minimising the old enemy’s presence NSG. Italydroppedobjectionsto Indian en- their annual naval exercises not in Indian on its western flank has long been an ob- try into the MTCR after India sent home an waters, but in the Sea of Japan, with the session for Pakistani leaders. Narendra Italian marine facing murder charges for Japanese navy, near islands claimed by Modi, India’s prime minister, opened Af- killing two Indian fishermen he mistook both Japan and China. In a wide-ranging ghanistan’s new parliament building in forpirates. speech before a joint session of Congress December. On June 4th he inaugurated a China worries about signs that Western on June 8th, Mr Modi said that America restored dam near the western city of He- countries are cosying up to its giant neigh- was India’s “indispensable partner”. An rat. India financed both structures. bour. It fears that Mr Modi will exploit bet- outright military alliance between India In May Messrs Modi and Ghani, along ter ties with America as a source of advan- and America remains unlikely, but even with Hassan Rohani, Iran’s president, tage. For years the Pentagon has pursued the remote prospect of one will concen- struck a partnership to develop Iran’s Cha- India as part of an effort to counterbalance trate Chinese minds. 7 bahar port (see previous story). The port 1 42 Asia The Economist June 11th 2016

War in Afghanistan The general’s words

BarackObama faces an unpleasant decision HIS week General John Nicholson, the frustrating for field commanders. Ameri- Tcommander of America’s forces in Af- can combat aircraft may only be used ghanistan, completed a review of what against designated terrorist groups, such as will be needed to contain the growing in- al-Qaeda and Islamic State, or when either surgent threat posed by the Taliban and its NATO troops are imperilled or “strategic allies. After reading his recommendations, collapse is imminent” (forexample, if a big Barack Obama will have to make a deci- city is about to be captured). sion he surely hoped to pass on to the next Few can see the sense of this. David Pe- president: whether to ramp up American traeus, a former commander in Afghani- troop numbers in Afghanistan again. stan, and Mr O’Hanlon recently urged Mr General Nicholson has probably asked Obama to change the rules ofengagement. Mr Obama at least to halt his planned re- They pointed out that America is dropping duction of America’s troop levels from and firing 20 times more bombs and mis- 9,800 to 5,500 by the end of the year. Mr siles in Iraq and Syria (neither especially A slower crossing Obama has often seemed to thinkhe could intense air campaigns) than in Afghani- end the war in Afghanistan simply by de- stan. Anthony Cordesman of the Centre 2 project will compete with Pakistan’s Chi- claring it over. But the enemy has not co- forStrategic and International Studies says na-backed port in Gwadar, just 170km east operated. Afghan forces have fought brave- that “US and allied air power is critical” to of Chabahar. A retired Pakistani defence ly since the end of 2014, when NATO prevent the Afghan army’s defeat. secretary reflected establishment views combat troops formally left. But they were To bolster his case, General Nicholson when he told a conference that the Chaba- not ready to cope with the sudden depar- points to “overt cooperation between the har development represented a “security ture of their allies, while the Taliban re- Taliban and designated terrorist organisa- threat to Pakistan”. mained resilient and capable. tions”. He fears that if the Taliban returned Pakistan’s building of fences and fortifi- The Afghans are suffering losses that to power in some parts of the country, cations has triggered cross-border skir- American commanders warn are unsus- “they would offer sanctuary to these mishing in the past. And it has periodically tainable (see table). Notsince 2001have the groups.” He alreadyhasthe bipartisan sup- shut the border when it wanted to express Taliban held as much territory as they now port of10 of the 26 members of the Senate annoyance at Afghanistan. On May 10th do. Civilian casualties are mounting, as Af- Armed Services Committee, who wrote to the borderwasclosed forfourdaysafter Af- ghan soldiers have been stretched thin Mr Obama on May 26th urging him to give ghan forces blocked Pakistan’s efforts to across multiple fronts. Michael O’Hanlon General Nicholson’s advice “extraordi- erect border fencing. But this time passport of the Brookings Institution, a think-tank, nary weight”. On June 3rd, 13 senior dip- controlslooksetto become permanent. Of- says that the loss of American air power lomats and retired generals, who oversaw ficials promise to extend them to the six has particularly hampered the Afghan military operations and policy in Afghani- other border crossings in due course. army’s ability to carry out attacks: units in stan under both the Bush and Obama ad- Pakistan’s army insists that tighter con- trouble can no longer call in reinforce- ministrations, sent the president an open trols are a security measure, unrelated to ments or air strikes. letter calling on him to maintain current the region’s power politics. The army be- Even current troop levels—6,954 Ameri- force levels. lieves that three terrorist attacks in and cans to train and help Afghan forces and Whatever Mr Obama decides, his suc- near Peshawar, including the gruesome 2,850 on separate counter-terrorism mis- cessor will still have to make some difficult slaughterofmore than 130 boysatthe city’s sions, with NATO contributing a further choices. It would be better if those choices Army Public School, involved terrorists 5,859 soldiers—appear inadequate. Mr were informed by sober realism rather who had freely crossed into the country at Obama’s administration understands this, than wishful thinking. 7 Torkham. Some in Pakistan have even at least tacitly. The House Armed Services started to question the “easement rights” Committee recently revealed that 26,000 granted to tribes divided by the border, militarycontractorsare in Afghanistan—an There has been blood maintaining that they were intended to let unusually high number. They do a lot of Afghanistan, conflict-related deaths, ’000 tribesmen travel short distances across the jobsthattroopswould normallydo, allow- National army* Civilians border, not have unfettered access to all of ing Mr Obama to hold the headline figure 6 Pakistan. Demands that Afghan refugees, fortroops deployed below10,000. 5 some ofwhom have lived in Pakistan since Nor is it just a question of numbers: the Soviet invasion of the 1980s, return what the White House lets its soldiers do 4 home have grown louder. also matters. American special forces go 3 The potential damage to cross-border discreetly into action with their Afghan 2 trade and diplomatic relations does not counterparts. But most troops in the “train bother Pakistan’s defence establishment, and assist” mission are not embedded 1 says Rahimullah Yousafzai, a Peshawar- with Afghan combat units, where they 0 based watcher of frontier affairs. “Pakistan would be in harm’s way but also of most 2009 10 11 12 13 14 15 is going to be much less big-hearted than practical help. Sources: Ministry of Defence; UNAMA *Years beginning March before,” he predicts. 7 Restrictions on airpowerare even more The Economist June 11th 2016 Asia 43 Banyan Foreign lives

Migrant labourbrings enormous economic benefits, and wrenching heartache kul’s first visit to Singapore in 2008 came after his father had sold land to pay the S$10,000 ($7,400) fee demanded by job agents in Bangladesh. But his employer went bust and he had to return home penniless. It is a typical story, says Jolovan Wham of HOME, a charitythatworkswith migrantworkers. Singapore lim- its agents’ fees to two months’ wages, but cannot police what happens in the home countries. So many workers toil for months to repay their debts. If they fall ill, are injured or find themselves in dispute with their employers, they have few resources, though local NGOs help—it was through one, HealthServe, that Mr Mu- kul found the cash to have his bookpublished. His bookis not full ofanger(despite one poem in which he de- clares “I want to announce war.”) Rather it is about homesick- ness, missinghisfamily—especiallyhismother—and the isolation of the migrant’s life. His own favourite is called simply “Loneli- ness”, and finishes: “Stranded immigrant, unending solitude.” In thisMrMukul isalso typical: he isfarfrom the onlymigrant work- er-poet; and that loneliness reflects the preoccupations of many others: missing spouses, and children growing up not knowing one parent; thwarted romances; lost homes. Though literature is particularly central to Bengali culture, ATING chips in a Singapore McDonald’s with his press clip- workers from many nations have taken up writing. Shivaji Das, a Epings proudly spread in front ofhim, Mohammed Mukul Hos- Singapore-based writer and management consultant, helps or- sine is revelling in his status as a published poet. The 25-year-old ganise poetry competitions in Singapore and Malaysia with en- Bangladeshi’s day job is working on the piling for a new block of tries in Chinese, Tagalog, Bahasa Indonesia, Tamil aswell as Ben- luxury flats. With a father back home undertaking the haj this gali. A winner from last year’s contest in Singapore was N. year, and one of his eight siblings still in school, he needs the Rengarajan, a 29-year-old construction worker from southern In- money. His book of poems, “Me Migrant”, which he paid to have dia, whose poem on the pluses and minuses ofmigrant life sums translated from Bengali to English, and which were then “trans- up many of the recurring themes. Translated from the Tamil, it created” byCyril Wong, a Singaporean poet, will notbe a bestsell- concludes: “Living in a foreign land/ we can buy everything that er. But it has drawn some attention to a large, often overlooked has a price/ but love and affection./ Ours is not a foreign life/ our slice ofSingapore’spopulation: its1m “workpermit” holders—mi- lives are foreign to us.” grant workers on two-year contracts. The poems suggest, unsur- In Singapore, migrant workers rarely make the news. When prisingly, that their lives are pretty miserable. they do, it is sometimes fora good deed noted by a politically cor- The International Labour Organisation estimates that the rect pro-government organ. But many in Singapore were shaken Asia-Pacific region was host in 2013 to 25.8m migrant workers. when, in December 2013, a traffic accident in the part of town They have done wonders for both their home and destination known as Little India degenerated into a riot, as South Asian mi- countries. Rapidly ageing societies such as Japan, Singapore, grants vented their frustrations. And in the past few months, an- South Korea and Taiwan are short of workers. Younger, poorer other sort of story has appeared: of the pre-emptive arrests and places such as Bangladesh, India, Nepal and the Philippines need sometimes deportation of a few “radicalised” Bangladeshis plot- the money their emigrants send home. So Cambodians work on ting terrorist attacks at home. South Korean farms; young Chinese men work in Tokyo’s conve- nience stores; and South Asians toil on Singapore’s building sites. Twenty years of schoolin’, and they put you on the day shift The World Bank estimates that of the ten countries that receive Mr Das notes that the reaction of many people to the poetry is the most in remittances from overseas workers, five are in Asia. In surprise. Migrants can write! They even have emotions! So it not the Philippines, remittances are equal to 10% ofGDP. only gives those who are interested a platform and a chance to In Singapore 1.4m workers, or 38% of the workforce, are for- share their work and their feelings. It also helps to change public eignerson time-limited passes. Mostcome withouttheir families. attitudes. Singapore is a sought-after and hence expensive desti- Many of the 326,000 construction workers live in dormitories; nation for migrants, compared with, say, the Middle East. So the 232,000 domestic workers live in their employers’ homes. some who come are well educated and even, at home, comfort- Many can repeatedly renew theirtwo-yearcontracts. But they are ably off. They are, through self-selection, adventurous and ambi- given virtually no hope of becoming “permanent residents”—as tious. Unenviable though theirlives in Singapore seem, many are other long-staying foreigners can—let alone Singaporean citizens. there through repeated choices, suggesting both the lack of op- Women who become pregnant are sent home; workers who portunity they felt at home, and that Singapore’s treatment ofmi- overstay are caned and deported (“law and order so accurate grants is seen as better than most. here,” notes one of Mr Mukul’s poems in praise of “beloved Sin- Mr Mukul, a high-school graduate who has been writing gapore”). Some politicians say that, since their stays are limited songs and poetry since he was12, found construction work hard, and they impose little burden on local infrastructure, pass-hold- fainting on the fourth day of his first job, humping sacks of ce- ers should not really be counted as part ofthe population at all. ment. Yet he keeps coming and keeps writing, and now dreams Some of course suffer exploitation and misfortune. Mr Mu- the impossible dream: ofbecoming Singaporean. 7

China The Economist June 11th 2016 45

Also in this section 46 America and China at odds

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

Wenzhou’s economy tories. By the late 1990s Wenzhou had be- come a manufacturingcentre fora dizzying It once was lost array of small products: from cigarette lighters to valves. As Wenzhounese fanned out around the country for business, their money followed. Whenever asset prices spiked, whether for holiday homes on the WENZHOU southern island ofHainan or coal mines in the industrial north, Chinese media point- A cityrenowned forits business acumen battles to recoverfrom a financial crisis ed to speculators from Wenzhou as the EBT in China can be life-threatening. covery—may suggest what lies ahead for cause. These accounts often contained a DWalking around the factory floor of the most debt-laden parts ofthe country. kernel oftruth. his father’s company, a manufacturer of Wenzhou has long stood apart from the Then came 2011. China had propelled small electrical parts, Fan Lele looks re- rest of China. It is a port city in Zhejiang its economy through the global financial laxed these days. Five years ago, he could province, separated from the interior by crisis by flooding it with cash. Regulators not come near it. After a few investments mountains, with a dialect unintelligible to were starting to rein in the excesses. Across went bad, he found himself 10m yuan most outsiders. The legacy of foreign mis- the nation, lending to small businesses ($1.5m) in arrears to his creditors, many of sionaries in the 19th century is evident in a slowed; property prices and the stock- whom were former friends. Mr Fan feared large Christian community (Wenzhou is market dipped. Companies in Wenzhou, they might hurt or even kill him, so he sometimes called the “Jerusalem of the which had been counting on a steady flow went into hiding for months, skipping East”). When China began to open up to of financing to fund their bets on stocks from city to city. Eventually, his father dug private commerce in the 1980s, Wenzhou and property, were in trouble. The dense deep to pay them off. He secured Mr Fan’s was one of the first to seize the new oppor- networks of trust that had helped propel safe return and managed, barely, to keep tunities. Its people became renowned for Wenzhou to wealth turned into liabilities. his company afloat. their aggressive brand of capitalism, and By the end of 2011 at least 40 small-busi- In this eastern city, home to some of also their golden touch. ness owners had reneged on their debts China’s boldest risk-takers, such tales are Families pooled their cash and organ- and fled the city, police said at the time. Mr almost banal. Virtually everyone in busi- ised informal lending societies, backed by Fan was one ofthem. ness in Wenzhou, which is to say almost the trust born of their tight-knit communi- Five years on, Wenzhou is still trying to everyone in Wenzhou, has a horror story ty. With that capital, they started small fac- clean up the mess. In 2012, to much fanfare, about the financial crisis that struck in the central government designated the city mid-2011. Dozens of investors, big and as a “special financial zone”. The idea was small, fled their debts. The most desperate The taming of Wenzhou to bring transparency to underground jumped off buildings. Large, unlicensed House prices, January 2007=100 banking. It set up a “registration centre” at underground banks collapsed, as did hun- Wenzhou Shanghai Shenzhen which lenders were urged to declare their dreds of firms. By official (very conserva- loans so that it would be easier to monitor 225 tive) reckoning property prices fell some WENZHOU’S FINANCIAL CRISIS them. By April, about 32 billion yuan in 25% over the next few years (see chart). 200 loans had been registered at the centre—a These days, Wenzhou is quietly getting 175 good start, but less than 5% of official bank back to work. Housing prices have started lending in Wenzhou. It is likely that many 150 to rise again. The city’s economic growth underground loans are still hidden. topped 8% last year, the fastest since 2011. 125 The city also gave private businesses But with bad loans still clogging its bank 100 the right to establish lending companies, system, many ofthe city’s scars remain un- trying to steer them into the formal finan- healed. Wenzhou is an outlier at the wild 75 cial system. These have fared poorly. One 2007 08 09 10 11 12 13 14 15 16 end of the Chinese economy. Yet its trajec- businessman says he and his partners are tory—from painful downturn to halting re- Source: Wind Info closing up shop after less than two years. 1 46 China The Economist June 11th 2016

2 He estimates that about 20% of their 200m Yet the prevailing mood is gloomier hundreds of rooftop crosses from others, yuan in loans has already gone bad. “The than before the crisis. At Mr Fan’s com- with Wenzhou a main target. At some government said it was reform,” he sighs. pany, Tietong, the concern is not loan churches, Christians have protested and “But we wonder if they were just lying to sharks but rather the problems of small scuffled with police. The chill has extend- us, getting companies to take our loans to businesses anywhere in China. A manu- ed to the city’s business atmosphere: pro- pay backstate banks.” facturer of metal wiring for light switches, vincial and central officials now watch There has been progress in other areas, Tietong is squeezed between rising wage Wenzhou more closely. That may be rea- however. One is bankruptcy, a legal pro- costs and fallingdemand amid an industri- sonable, given the turmoil of2011, but it is a cess that has been slow to catch on in Chi- al slowdown. To survive, it has been trying change nonetheless. na (hence bitter disputes when firms go to break into new markets. It has recog- There has also been a loss of trust be- bust). The central government introduced nised thatitsproductsare notgood enough tween people themselves. Zhang Xiaoyan, a new law in 2007 allowing the restructur- for rich countries, so it is focusing on devel- an adviser to the local government, says ing of troubled companies, using methods oping ones—only to find that its prices are the “spiritual damage” from the crisis is similar to Chapter11proceedings in Ameri- often too high for them. That is a common worse than the material damage. “It used ca. Businesses in other parts ofChina, fear- experience in Wenzhou, where the econ- to be that Wenzhounese would lend to ing a stigma, have been reluctant to use it. omy is dominated by small businesses like each other with no questions asked and Courts have lacked expertise to administer Mr Fan’s. not even so much as an IOU. It was like a it. ButWenzhouhasgotoveritsinhibitions. Wenzhou’s identity as a relatively inde- blood bond. This is no more,” she says. In With less than 1% of China’s GDP, it has ac- pendent, easy-going city has also started to place of the trust-based system, the city is counted for nearly a tenth of bankruptcy fade. In the past two years, officials in Zhe- trying to foster a modern economy based cases nationwide over the past three years. jiang have been waging their biggest crack- on contracts and credit records. If success- It established one of China’s first courts down on open displays of Christian belief ful, Wenzhou may well emerge more resil- dedicated to handling such cases. “Other in years. This has involved the demolition ient, though nothing like its former rum- cities hear ‘bankruptcy’ and get scared. of several churches and the removal of bustious self. 7 Here, we are tasting how sweet it can be,” says Zhou Guang, who heads the Wen- China-United States relations zhou Lawyers’ Association. In one case held up bythe cityas a mod- Aerial chicken el, Haihe, a drug firm with a history going back to 1670, was salvaged after going bust. BEIJING Its previous owners had run up unsustain- A rocky patch could get rockier able debts punting on property. Its credi- tors took control and eventually sold it to ARACK OBAMA’S “pivot” to Asia has investors. The lenders only managed to re- B been his most important foreign- cover a small portion of what they were policy shift. But the continent is causing owed but, crucially from Wenzhou’s per- him more pain than gain, at least to judge spective, Haihe is back in business. It now by the final cabinet-level meeting of his has plans to expand. presidency between China and America. State-run banks also appear to be The gathering, called the Strategic and healthier. They say that nearly 5% of their Economic Dialogue, was held in Beijing loans were bad in early 2014; at the end of on June 6th and 7th. It showed that some last year, 3.8% were. That is still more than progress is being made by the mutually double the national average and probably suspicious powers. But it has been only an understatement, since banks regularly tentative. Remaining problems are in- hide their bad loans. Part of the clean-up tractable and dangerous. also reflects an asset shift rather than a real In one friendly-sounding gesture, solution: Wenzhou is the first city in China China pledged to cut excess steel produc- to create its own “bad bank” to take over tion, which has been depressing global failed loans. But these caveats aside, the prices and upsetting steelmakers in city is justifiably proud. It is just about the America and elsewhere. But the country only city in China where banks have re- had already said it would reduce capacity What the hell ADIZ? ported an improvement in lending quality by100m-150mtonnes by 2020. China over the past two years. admits this will not eliminate the glut. the Philippines. It says it will not abide by Even the city’sunderground lenders—at China also agreed to enforce sanc- the verdict, and is reported to be plan- least those still in business—have learned tions that were imposed on North Korea ning to declare an Air Defence Identifica- lessons. Yan Yipan has transformed his by the UN in March. That would please tion Zone (ADIZ) in the South China Sea. law firm into an intermediary that con- America, which believes China is half- This would require planes to identify nects borrowers and creditors, helping to hearted about stepping up pressure on themselves, or face a military response. structure legally binding deals between the North to stop making nuclear bombs. On his way to Beijing, America’s them. From a stylish wood-clad tea room But the two countries showed little sign secretary ofstate John Kerry (pictured, in his office, he says that the city offers a ofagreeing on what to do next. America with President Xi Jinping) warned glimpse ofwhatawaitsthe restofthe coun- wants more pressure, China more talks. against the ADIZ idea. During his talks, in try as growth slows and debt-laden com- Tension at the meeting was inevitable. a reminder ofthe risks involved, Chinese panies sputter. “Wenzhou was the first to An international tribunal is preparing to fighter jets buzzed an American spy plane fall into trouble but it is also the first to get rule soon on rival claims by the Philip- in the ADIZ that China already has in the back up again,” he says. “When the econ- pines (an American ally) and China in East China Sea. The Pentagon called the omy was going well, no one thought there the South China Sea. China will be furi- interception “unsafe”. That would also could ever be problems. Now we are much ous if, as is expected, the ruling favours apply to the relationship more generally. more rational.” TECHNOLOGY QUARTERLY June 11th 2016 THE FUTURE OF AGRICULTURE

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If agriculture is to continue to feed the world, it needs to become more like manufacturing, says Geoffrey Carr. Fortunately, that is already beginning to happen OM ROGERS is an almond farmerin Madera and the other, which experience has shown encour- County, in California’s Central Valley. Al- ages water uptake. Before this system was in place, Mr monds are delicious and nutritious. They are Rogers would have irrigated his farm about once a ALSO IN THIS TQ also lucrative. Californian farmers, who be- week. With the new little-but-often technique, he uses SMART FARMS tween them grow 80% of the world’s supply 20% less waterthan he used to. That both saves money Silicon Valley meets of these nuts, earn $11 billion from doing so. and brings kudos, for California has suffered a four- Central Valley TBut almonds are thirsty. A calculation by a pair of year-long drought and there is social and political, as Dutch researchers six years ago suggested that grow- well as financial, pressure to conserve water. BUGS IN THE SYSTEM ing a single one of them consumes around a gallon of Mr Rogers’s farm, and similar ones that grow other Bacteria and fungi can water. This is merely an American gallon of 3.8 litres, high-value but thirsty crops like pistachios, walnuts help crops and soil not an imperial one of 4.5 litres, but it is still a tidy and grapes, are at the leading edge ofthis type ofpreci- BRAIN SCAN amount ofH2O. And water has to be paid for. sion agriculture, known as “smart farming”. But it is Technology, however, has come to Mr Rogers’s aid. not only fruit and nut farmers who benefit from being Caleb Harper His farm is wired up like a lab rat. Or, to be more accu- precise. So-called rowcrops—the maize and soyabeans rate, it is wirelessed up. Moisture sensors planted that cover much of America’s Midwest—are being CROPS OF THE FUTURE Tinker and tailor throughout the nut groves keep track of what is going teched up, too. Sowing, watering, fertilising and har- on in the soil. They send their results to a computer in vesting are all computer-controlled. Even the soil they FISH FARMING the cloud (the network of servers that does an increas- grow in is monitored to within an inch ofits life. Catch of the day ing amount of the world’s heavy-duty computing) to Farms, then, are becomingmore like factories: tight- be crunched. The results are passed back to the farm’s ly controlled operations for turning out reliable pro- ANIMAL HUSBANDRY irrigation system—a grid of drip tapes (hoses with ducts, immune as far as possible from the vagaries of Stock answers holes punched in them) that are filled by pumps. nature. Thanks to better understanding of DNA, the The system resembles the hydroponics used to plants and animals raised on a farm are also tightly TOWARDS 2050 grow vegetables in greenhouses. Every half-hour a controlled. Precise genetic manipulation, known as Vorsprung durch carefully calibrated pulse of water based on the “genome editing”, makes it possible to change a crop Technik cloud’s calculations, and mixed with an appropriate or stock animal’s genome down to the level of a single dose of fertiliser if scheduled, is pushed through the genetic “letter”. This technology, it is hoped, will be tapes, delivering a precise sprinkling to each tree. The more acceptable to consumers than the shifting of pulses alternate between one side of the tree trunk whole genes between species that underpinned early 1 The Economist June 11th 2016 3 TECHNOLOGY QUARTERLY The future of agriculture

genetic engineering, because it simply imi- Smart farms tates the process of mutation on which crop breeding has always depended, but in a far more controllable way. Silicon Valley meets Understanding a crop’s DNA sequence also means that breeding itself can be r l ll made more precise. You do not need to Cent a Va ey grow a plant to maturity to find out wheth- People will er it will have the characteristics you want. In various guises, information technology is taking over want to eat A quicklookat its genome beforehand will tell you. agriculture better than Such technological changes, in hard- NE way to view farming is as a branch of matrix alge- ware, software and “liveware”, are reach- bra. A farmer must constantly juggle a set of variables, they do ing beyond field, orchard and byre. Fish such asthe weather, hissoil’smoisture levelsand nutri- farming will also get a boost from them. ent content, competition to his crops from weeds, now And indoor horticulture, already the most threats to their health from pests and diseases, and the controlled and precise type of agriculture, costs of taking action to deal with these things. If he is about to become yet more so. Odoes the algebra correctly, orifit is done on his behalf, he will opti- In the short run, these improvements mise his yield and maximise his profit. will boost farmers’ profits, by cutting costs and increasing yields, The job of smart farming, then, is twofold. One is to measure and should also benefit consumers (meaning everyone who eats the variablesgoinginto the matrixasaccuratelyasis cost-effective. food) in the form of lower prices. In the longer run, though, they The other is to relieve the farmerof as much of the burden of pro- may help provide the answer to an increasingly urgent question: cessing the matrix as he is comfortable with ceding to a machine. how can the world be fed in future without putting irreparable An early example ofcost-effective precision in farming was the strain on the Earth’s soils and oceans? Between now and 2050 the decision made in 2001byJohn Deere, the world’slargestmanufac- planet’s population is likely to rise to 9.7 billion, from 7.3 billion turer of agricultural equipment, to fit its tractors and other mobile now.Those people will not only need to eat, they will want to eat machines with global-positioning-system (GPS) sensors, so that better than people do now (see chart), because by then most are they could be located to within a few centimetres anywhere on likely to have middling incomes, and many will be well off. Earth. This made it possible to stop them either covering the same The Food and Agriculture Organisation, the United Nations’ ground twice ormissingoutpatchesastheyshuttled up and down agency charged with thinking about such matters, published a re- fields, which had been a frequent problem. Dealing with this both portin 2009 which suggestedthatby2050 agricultural production reduced fuel bills and improved the uniformity and effectiveness will have to rise by 70% to meet projected demand. Since most ofthings like fertiliser, herbicide and pesticide spraying. land suitable for farming is already farmed, this growth must Since then, other techniques have been added. High-density come from higher yields. Agriculture has undergone yield-en- soil sampling, carried out every few years to track properties such hancing shifts in the past, including mechanisation before the sec- as mineral content and porosity, can predict the fertility of differ- ond world war and the introduction ofnew crop varieties and ag- ent parts of a field. Accurate contour mapping helps indicate how ricultural chemicals in the green revolution ofthe1950sand1960s. water moves around. And detectors planted in the soil can mon- Yet yields of important crops such as rice and wheat have now itor moisture levels at multiple depths. Some detectors are also stopped rising in some intensively farmed parts of the world, a able to indicate nutrient content. phenomenon called yield plateauing. The spread of existing best All of this permits variable-rate seeding, meaning the density practice can no doubt bring yields elsewhere up to these plateaus. ofplantsgrown can be tailored to local conditions. And thatdensi- But to go beyond them will require improved technology. tyitselfisunderprecise control. John Deere’sequipmentcan plant This will be a challenge. Farmers are famously and sensibly individual seeds to within an accuracy of 3cm. Moreover, when a sceptical ofchange, since the costofgettingthingswrong (messing crop is harvested, the rate at which grains or beans flow into the up an entire season’s harvest) is so high. Yet if precision farming harvester’s tank can be measured from moment to moment. That and genomics play out as many hope they will, another such information, when combined with GPS data, creates a yield map change is in the offing. 7 that shows which bits of land were more or less productive—and thus how accurate the soil and sensor-based predictions were (see chart, next page). This information can then be fed into the follow- What’s on the world’s menu ing season’s planting pattern. Daily calories per person by type of food Farmers also gather information by flying planes over their Cereals, roots Sugar Vegetable Meat Dairy Other land. Airborne instruments are able to measure the amount of and pulses oils plant cover and to distinguish between crops and weeds. Using a 0 500 1,000 1,500 2,000 2,500 3,000 technique called multispectral analysis, which looks at how 1970 strongly plants absorb or reflect different wavelengths ofsunlight, they can discover which crops are flourishing and which not. Sensors attached to moving machinery can even take mea- 1990 surements on the run. For example, multispectral sensors mount- ed on a tractor’s spraying booms can estimate the nitrogen needs 2010 of crops about to be sprayed, and adjust the dose accordingly. A modern farm, then, produces data aplenty. But they need inter-

FORECAST preting, and for that, information technology is essential. 2030 Overthe past few decades large corporations have grown up to supply the needs of commercial farming, especially in the Ameri- 2050 cas and Europe. Some are equipment-makers, such as John Deere. Others sell seeds or agricultural chemicals. These look like getting Source: FAO largerstill. Dowand DuPont, two American giants, are planning to1 4 The Economist June 11th 2016 WE HAVE AN EDUCATED, TALENTED AND DIVERSE WORKFORCE EAGER TO CHANGE THE WORLD. IMAGINE WHAT THEY’LL DO FOR YOUR BUSINESS. The only thing as impressive as our current workforce of 9.7+ million is our future one. Our colleges and universities are among the nation’s top performers of R&D and commercialization of technologies. So while we’re helping you succeed with today’s talent, we’re also preparing tomorrow’s. Discover what a future in Florida means for your business at fl oridathefutureishere.com or call 877-YES-FLORIDA. TECHNOLOGY QUARTERLY The future of agriculture

based in Montpellier, France, for example, specialises in grapes i l Do you y e d? Low Conductivity High and has built mathematical models that describe the behaviour Correlation of soil conductivity (proxy for moisture ofall the main varieties. It is now expanding into California. content) and crop yield Less Yield More Thanks to this proliferation offarm-management software, it is Soil conductivity Crop yield possible to put more and more data to good use if the sensors are available to provide them. And better, cheaper sensors, too, are on theirway. Moisture sensors, forexample, usually workby measur- ing either the conductivity or the capacitance of soil, but a firm called WaterBit, based in Santa Clara, California, is using a differ- ent technology which it says can do the job at a tenth of the price ofthe existingproducts. And a sensorsold byJohn Deere can spec- troscopically measure the nitrogen, phosphorous and potassium composition of liquid manure as it is being sprayed, permitting the spray rate to be adjusted in real time. This gets round the pro- blem that liquid manure, though a good fertiliser, is not standar- dised, so is more difficult than commercial fertiliserto apply in the right quantities. Thingsare changingin the air, too. In a recapitulation ofthe ear- ly days of manned flight, the makers of unmanned agricultural drones are testing a wide range ofdesigns to find out which is best suited to the taskofflyingmultispectral cameras over farms. Some firms, such as Agribotix in Boulder, Colorado, prefer quadcopters, Source: University of Nebraska a four-rotored modern design that has become the industry stan- dard for small drones, though it has limited range and endurance. 2 merge. Monsanto, another big American firm, is the subject of a A popular alternative, the AgDrone, built by HoneyComb of Wil- takeover bid by Bayer, a German one. And Syngenta, a Swiss com- sonville, Oregon, is a single-engine flying wing that looks as if it pany, is being bid forby ChemChina, a Chinese one. has escaped from a 1950s air show. Another, the Lancaster 5, from Business models are changing, too. These firms, no longer con- PrecisionHawk of Raleigh, North Carolina, vaguely resembles a tent merely to sell machinery, seed or chemicals, are all trying to scale model of the eponymous second-world-war bomber. And develop matrix-crunching software platforms that will act as the offering by Delair-Tech, based in Toulouse, France, sports the farm-management systems. These proprietary platforms will col- long, narrow wings ofa glider to keep it aloft forlong periods. lect data from individual farms and process them in the cloud, al- Even an endurance drone, though, may be pushed to survey a1 lowing for the farm’s history, the known behaviour of individual crops strains and the local weather forecast. They will then make recommendations to the farmer, per- Bugs in the system haps pointing him towards some of the firm’s other products. But whereas making machinery, breed- ing new crops or manufacturing agro- Bacteria and fungi can help crops and soil chemicals all have high barriers to entry, a data-based farm-management system can MICROBES, though they get a bad press Californian microbes firm. Hopeful be put together by any businessman, even as agents ofdisease, play a beneficial role startups abound. One is Boston-based without a track record in agriculture. And in agriculture. For example, they fix Indigo, whose researchers are conducting many are having a go. For example, Trim- nitrogen from the air into soluble nitrates field tests ofsome ofits library of 40,000 ble Navigation, based in Sunnyvale, at the that act as natural fertiliser. Understand- microbes to see ifthey can alleviate stress southern end ofSilicon Valley, reckons that ing and exploiting such organisms for induced by drought and salinity in cot- as an established geographical-informa- farming is a rapidly developing part of ton, maize, soyabeans and wheat. Anoth- tion company it is well placed to move into agricultural biotechnology. er is Adaptive Symbiotic Technologies, of the smart-farming market, with a system At the moment, the lead is being taken Seattle. The scientists who set up this firm called Connected Farms. It has bought in by a collaboration between Monsanto study fungi that live symbiotically within outside expertise in the shape of AGRI- and Novozymes, a Danish firm. This plants. They have found one, whose TREND, a Canadian agricultural consultan- consortium, called BioAg, began in 2013 natural partner is a grass, which confers cy, which it acquired last year. and has a dozen microbe-based products drought-, heat- and salinity-resistance By contrast, Farmobile of Overland on the market. These include fungicides, when transferred to crops such as maize, Park, Kansas, is a startup. It is aimed at insecticides and bugs that liberate nitro- rice and wheat. those who value privacy, making a feature gen, phosphorous and potassium com- The big prize, however, would be to ofnot using clients’ data to improve its pro- pounds from the soil, making them solu- persuade the roots ofcrops such as wheat ducts, as many farm-management systems ble and thus easier forcrops to take up. to form partnerships with nitrogen-fixing do. Farmers Business Network, of Daven- Last year researchers at the two firms soil bacteria, much as legumes such as port, Iowa, uses almost the opposite mod- tested a further2,000 microbes. The soyabeans do. In legumes, the plants’ el, acting as a co-operative data pool. Data top-performingstrains boosted maize roots grow special nodules where the in the pool are anonymised, but everyone and soyabean yields by about 3%. bacteria in question live. Ifwheat rhi- who joins is encouraged to add to the pool, In November 2015 Syngenta and DSM, zomes could be encouraged, by genomic and in turn gets to share what is there. The a Dutch company, formed a similarpart- breeding or genome editing, to behave idea is that all participants will benefit nership, and earlier that year, in April, likewise, the benefits foreveryone except from better solutions to the matrix. DuPont bought Taxon Biosciences, a fertiliser companies would be enormous. Some firms focus on market niches. iTK, 6 The Economist June 11th 2016 WHAT HAPPENS WHEN PROCESS meets perfect

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prove ofchemical treatments. For the less fussy, Rowbot Systems of Minneapolis is developing a bot that can travel between rowsofpartlygrown maize plants, allowing it to apply supplementary side dressings of fertiliser to the plants without crushing them. Indeed, it might be possible in future to match the dose to the plant in farms where individual plants’ needs have been assessed by airborne multispectral cameras. Robots are also of interest to growers of fruit and vegetables that are currently picked by hand. Fruit-pickingis a time-con- suming business which, even though the pickers are not well rewarded, would be a lot fasterand cheaper ifit were automated. The farmhands of tomorrow And robot pickers are starting to appear. The SW6010, made by AGROBOT, a Spanish firm, uses a camera to recognise 2 large estate in one go. For a synoptic view of their holding, there- strawberries and work out which are ripe for the plucking. Those fore, some farmers turn to satellites. Planet Labs, a firm in San that are have their stems severed by blades and are caught in bas- Francisco, provides such a service using devices called CubeSats, kets before beingpassed on by a conveyorbelt forpacking by a hu- measuring a few centimetres across. It keeps a fleet of about 30 of man operator sitting on the robot. In the Netherlands, researchers these in orbit, which it refreshes as old ones die by putting new at Wageningen University are working on a robot harvester for ones into space, piggybacking on commercial launches. Thanks to larger produce such as peppers. modern optics, even a satellite this small can be fitted with a All these devices, and others like them, still exude a whiff of multispectral camera, though it has a resolution per pixel of only the Heath Robinson. But robotics is developing rapidly, and the 3.5 metres (about ten feet). That is not bad from outerspace, but not control systems needed to run such machines are getting better nearly as good as a drone’s camera can manage. and cheaper by the day. Some thinkthat in a decade or so many Satellite coverage, though, has the advantage of being both farms in rich countries will be largely robot-operated. broad and frequent, whereasa drone can offeronlyone or the oth- Yet others wonder just how far farmers will let their farms be er of these qualities. Planet Lab’s constellation will be able to take robotised. Self-guiding agricultural machinery such as that sold a picture ofa given bitofthe Earth’ssurface atleastonce a week, so by John Deere is all but robotic already. It is like an airliner, in that areas in trouble can be identified quickly and a more detailed which the pilot usually has little to do between landing and take- examination made. offbecause computersdo the workforhim. YetDeere has no plans The best solution is to integrate aerial and satellite coverage. to hand over complete control to the cloud, because that is not That is what Mavrx, also based in San Francisco, is trying to do. In- what its customers want. stead of drones, it has an Uber-like arrangement with about 100 light-aircraft pilots around America. Each of the firm’s contracted Tunnel vision planes has been fitted with a multispectral camera and stands Iftotal control still seems some way offin outdoor farming, it is al- readyto make specificsortiesatMavrx’srequest. Mavrx’scameras ready close for crops grown in an entirely artificial environment. have a resolution of 20cm a pixel, meaning they can pretty much In a warren oftunnels beneath Clapham, in south London, Grow- take in individual plants. ing Underground is doing exactly what its name suggests. It is rear- The firm has also outsourced its satellite photography. Its raw ing around 20 types of salad plants, intended for sale to the chefs material is drawn from Landsat and other public satellite pro- and sandwich shopsofthe city, grammes. It also has access to these programmes’ libraries, some in subterranean voids that be- of which go back 30 years. It can thus check the performance of a gan life as second-world-war Wasted illumination particular field over decades, calculate how much biomass that bomb shelters. Emission/absorption by wavelength 1=max field has supported from year to year and correlate this with re- In many ways, Growing 1.0 cords of the field’s yields in those years, showing how productive Underground’s farm resem- Sunlight the plants there have been. Then, knowing the field’s biomass in bles any other indoor hydro- (at sea level) 0.8 the current season, it can predict what the yield will be. Mavrx’s ponic operation. But there is method can be scaled up to cover entire regions and even coun- one big difference. A conven- 0.6 Light absorbed tries, forecasting the size of the harvests before they are gathered. tional greenhouse, with its by chlorophyll That is powerful financial and political information. glass or polycarbonate walls, is 0.4 A truly automated, factory-like farm, however, would have to designed to admit as much cut people out of the loop altogether. That means introducing ro- sunlight as possible. Growing 0.2 bots on the ground as well as in the air, and there are plenty of Underground specifically ex- hopeful agricultural-robot makers trying to do so. cludes it. Instead, illumination 0 is provided by light-emitting 400 500600 700 At the University of Sydney, the Australian Centre for Field Ro- ◄ ► botics has developed RIPPA (Robot for Intelligent Perception and diodes (LEDs). These, in the Blue Nanometres Red Precision Application), a four-wheeled, solar-powered device that minimalist spirit of hydropon- Chlorophyll absorbs blue and identifies weeds in fields of vegetables and zaps them individual- ics, have had their spectra pre- red light. Modern LEDs can be tuned to provide only these, so ly. At the moment it does this with precise, and precisely aimed, cisely tuned so that the light that all of their output is used doses ofherbicide. But it, or something similar, could instead use a they emit is optimal for the for photosynthesis. plants’ photosynthesis. beam of microwaves, or even a laser. That would allow the crops Sources: University of Queensland; concerned to be recognised as “organic” by customers who disap- As you would expect, sen- The Economist 8 The Economist June 11th 2016 TECHNOLOGY QUARTERLY The future of agriculture

2 sorswatch everything—temperature, humidity, illumination—and Mr Dring’s come from Valoya, a Finnish firm. In Sweden, Helio- send the data directly to Cambridge University’s engineering de- spectra is in the same business. Philips, a Dutch electrical giant, partment where they are crunched, along with information on has also joined in. In conventional greenhouses such lights are the plants’ growth, to workout the best regimes forfuture crops. used to supplement the sun, but increasingly they do duty in win- For now Steven Dring, Growing Underground’s boss, is confin- dowless operations like Mr Dring’s. Though unlike sunlight they ingoutput to herbs and vegetables such as small lettuces and sam- do not come free, they are so efficient and long-lasting that their phire that can be brought to harvestable size quickly. He has re- spectral advantages seem clinching (see chart, previous page). duced the cycle for coriander from 21 to 14 days. But tests suggest This kind of farming does not have to take place underground. that the system also works for other, chunkier crops. Carrots and Operations like MrDring’s are croppingup in buildings on the sur- radishes have already been successfully grown this way, though face as well. Old meatpacking plants, factories and warehouses theymaynotcommand a sufficientpremium to make their under- the world overare beingturned into “vertical farms”. Though they ground cultivation worthwhile. But pakchoi, a Chinese vegetable are nevergoingto fill the whole world’sbellies, theyare more than popular with trendy urbanites who live in inner-London suburbs a fad. Rather, they are a modern version ofthe market gardens that like Clapham, is also amenable. At the moment growing it takes once flourished on the edge ofcities before the land they occupied five weeks from start to finish. Get that down to three, which Mr was swallowed by urban sprawl. And with theirprecise control of Dring thinks he can, and it would be profitable. inputs, and thus outputs (see Brain scan, below), they also repre- The firms that make the LEDs could also be on to a good thing. sent the ultimate in what farmingcould become. 7 Brain scan Caleb Harper

The founder of the Open Agriculture Initiative at MIT’s Media Lab is building a “catalogue of climates” to help plants grow better PLANT breeders are understandably any other aspect ofits chemistry. excited about manipulating botanical Plant phenotypes are monitored dur- genomics (see next page). But it is a crop’s ing growth by web cameras linked to phenotype—its physical instantiation— software and by sensors that can detect that people actually eat, and this is the areas ofactive photosynthesis. After product ofboth genes and environment. harvesting they are examined by lidar (the Optimising phenotypes by manipulat- optical equivalent ofradar) to record their ing the environment is the taskCaleb shape in detail, and by gas chromatogra- Harper has set himself. Dr Harper is the phy/mass spectroscopy to understand founder ofthe Open Agriculture Initiative their chemical composition. (OAI) at the Massachusetts Institute of The idea is that Personal Food Comput- Technology’s Media Lab. At first sight, that ers can be built by anyone who chooses to, seems odd. The Media Lab is an infor- and form part ofan “open science” net- mation-technology laboratory, best workthat gathers data on growing condi- known forhaving helped develop things tions and works out those conditions’ like electronic paper, wireless networks phenotypic effects. Ofparticular interest and even modern karaoke machines. It is are matters such as flavour and astringen- very much about bits and bytes, and not cy that are governed by chemicals called much hitherto about proteins and lipids. secondary metabolites. These are often However, environmental information parts ofplant-defence mechanisms, so in is still information. It informs how a plant one experiment the computers are looking grows, which is what interests Dr Harper. at the effect ofadding crushed arthropod As he once put it, “people say they like exoskeletons to the water supply, which peppers from Mexico. What they actually may mimic attackby insects or mites. The like is peppers grown in the conditions hope is that this will change flavours in that prevail in Mexico.” He reckons that if controllable ways. you can replicate the conditions in which Though Dr Harper is from a rural back- a botanical product grew, you can replicate ground, his career before the OAI was Dr Harper’s goal is to decouple climate that product. But this means you have to conventionally Media Lab-like. In partic- from geography by building a “catalogue understand those conditions properly in ular, he designed environmental-control ofclimates”. That would allow indoor the first place. systems for data centres and operating urban farms to be programmed to imitate To help with this, he and his colleagues theatres—keeping heat, humidity and so whatever climate was required in order to at the OAI have developed what they call on within the tight limits needed for opti- turn out crops forinstant local consump- the Personal Food Computer: a standar- mal function. But the jump from control- tion. This would certainly appeal to those dised tabletop device that can control ling those environments to controlling who worry about “food miles”—the cost illumination, carbon-dioxide levels, hu- miniature farms was not enormous. in terms ofcarbon dioxide ofshipping midity, airtemperature, root-zone tem- Some three dozen Personal Food Com- edible items around the world. How it will perature, and the acidity and dissolved- puters already exist and about100 more go down with farmers in places whose oxygen content ofwater delivered to the are under construction the world over. climates are being imitated in rich-country roots, as well as its nutrient content and This geographical dispersion is important. cities remains to be seen.

The Economist June 11th 2016 9 TECHNOLOGY QUARTERLY The future of agriculture

Crops of the future innovations should be a bonanza. Unfortunately, forreasons both technical and social, they have so far not been. But that should soon change. Tinker and tailor The early days of genetically engineered crops saw two huge successes and one spectacular failure. The successes were the transfer into a range of plants, particularly maize, soyabeans and cotton, of two types of gene. Both came from bacteria. One pro- tected its host from the attentions ofpesky insect larvae. The other Farms need better products. Improved genomic protected it from specific herbicides, meaning those herbicides could be used more effectivelyto keep fieldsfree from weeds. Both understanding will provide them are beloved offarmers. 4 SOUNDS like the name ofa failedelectric car from the The spectacular failure is that neither is beloved of consumers. 1970s. In fact, it is one of the most crucial concepts in Some are indifferent to them; many actively hostile. Even though plant molecular biology. Plants have inherited their over decades there has been no evidence that eating genetically photosynthetic abilities from bacteria that took up sym- modified crops is harmful to health, and little that they harm the C biotic residence in the cells oftheirancestors about a bil- environment, they have been treated as pariahs. lion years ago. Those bacteria’s descendants, called Since people do not eat cotton, and soyabeans and maize are chloroplasts, sit inside cells absorbing sunlight and using its ener- used mainly as animal fodder, the anti-GM lobby’s impact on gy to split water into hydrogen and oxygen. The hydrogen then those crops has been muted. But the idea of extending either the combines with carbon dioxide to form small intermediate mole- range of crops modified or the range of modifications available cules, which aresubsequentlyassembledintosugars. This formof has (with a few exceptions) been thought commercially too risky photosynthesis is known as C3, because these intermediates con- to try. Moreover, transgenics, as the technique of moving genes tain three carbon atoms. Since the arrival of chloroplasts, though, from one species to another is called, is haphazard. Where the evolution hasdiscovered anotherwayto photosynthesise, usinga moved gene will end up is hard to control. That matters, for genes four-carbon intermediate. C4 photosynthesis is often more effi- workbetter in some places than others. cient than the C3 sort, especially in tropical climes. Several impor- tant crops that started in the tropics use it, notably maize, millet, Spell it forme sorghum and sugar cane. The search has therefore been on fora betterway than transgenics C4 photosynthesis is so useful that it has evolved on at least 60 of doing things. And one is now emerging that, its supporters separate occasions. Unfortunately, none of these involved the an- hope, may kill both the technical and the social birds with a single cestors of rice, the second most important crop on Earth, after stone. Genome editing, as this approach is known, tweaks exist- wheat. Yet rice, pre-eminently a tropical plant, would produce ing DNA in situ by adding, subtracting or substituting a piece that yields around 50% bigger than at present if it took the C4 route. At maybe assmall asa single genetic“letter” (ornucleotide). That not the International Rice Research Institute in Los Banos, outside Ma- only makes the technique precise, it also resembles the natural nila, researchers are trying to show it how. process of mutation, which is the basis of the variety all conven- The C4 Rice Project, co-ordinated by Paul Quick, is a global en- tional plant-breeding relies on. That may raise fewer objections deavour, also involving biologists at 18 other laboratories in Asia, among consumers, and also holds out the hope that regulators Australia, Europe and North America. Their task involves adding will treat it differently from transgenics. five alien enzymes to rice, to give it an extra biochemical pathway, After a couple offalse starts, most researchers agree that a tech- and then reorganising some of the cells in the plant’s leaves to nique called CRISPR/Cas9, derived from a way that bacteria chop create special compartments in which carbon dioxide can be con- up the genes of invading viruses, is the one that will make editing centrated in ways the standard C3 mechanism does not require. crop genomes a realistic prospect. Transgenic technology has Both of these things have frequently happened naturally in other steered clear of wheat, which is eaten mainly by people. But Du-1 plants, which suggests that doing them ar- tificially is not out of the question. The team has already created strains of rice which contain genes plucked from maize plants for the extra enzymes, and are now tweaking them to improve their efficacy. The harder part, which may take another decade, will be finding out what genetic changes are needed to bring about the compartmentalisation. The C4 Rice Project thus aims to break through the yield plateaus and return the world to the sortofgrowth ratesseen in the heady days ofthe Green Revolution. Other groups, similarly motivated, are working on making many types ofcrops resistant to drought, heat, cold and salt; on inducing greater immunity to infection and infesta- tion; on improving nutritional value; on making more efficient use of resources such as water and phosphorous; and even on giving to plants that do not have it the ability to fix nitrogen, an essential ingredi- ent ofproteins, directly from the air instead Looking for better cassava of absorbing it in the form of nitrates. Such 10 The Economist June 11th 2016 ADVERTISEMENT

Kyushu Electric Power Co., Inc.’s new 300,000-kilowatt-hour NAS storage array, supplied by NGK Insulators, Ltd., helps balance supply and demand amid Kyushu’s surging growth in solar generation. (NAS photo courtesy of Kyushu Electric) NAS Batteries—Making Renewables More Renewable ulfilling the potential of renewable energy sources will depend heavily installations has since grown rapidly as on ensuring steady output. Large-capacity storage batteries hedge users have adopted the systems for diverse F needs. power grids against the output fluctuations inherent to wind and solar Interest in NAS technology is espe- generation. Thus are power industry eyes worldwide focused on a massive cially keen in California. The legislature battery installation completed this March in Japan’s Fukuoka Prefecture. there has passed legislation that calls for securing 50% of the state’s electric power The new battery installation, supplied cooperation with Tokyo Electric Power from renewables by 2030.That will result through Mitsubishi Electric Corporation, Co., Inc., in 1984 and began marketing in occasional over-generation, since wind is at Kyushu Electric’s Buzen Power the batteries, which incorporate leading- and solar generating facilities, unlike Station. Its storage capacity, at 300,000 edge NGK expertise in ceramics, com- thermal power plants, cannot modulate kilowatt-hours (kWh), is enough to serve mercially in 2002. their output. 30,000 households. At the heart of the California will require massive storage installation are sodium-sulfur (NaS) bat- Compelling Advantages capacity to keep the power generated at teries supplied by NGK Insulators. NGK is Heading the list of NAS advantages are times of excess capacity from going to the world’s only commercial supplier of long discharge time, six hours and more, waste.And the state’s three largest utilities NaS batteries, which the company mar- and long life, rated at 15 years.The batter- face a legal mandate to add 1.3 gigawatts kets under the brand name NAS®. ies’ advantages also include high energy of storage capacity by 2020. Kyushu’s NGK, established in 1919, is a leading density and high charge-discharge effi- evolving power mix is analogous to supplier of electrical insulators, ceramic ciency.NAS batteries are economical, too, California’s. So Kyushu Electric’s new stor- substrates for automotive catalytic con- since their principal materials—sodium, age installation could well be a harbinger verters, and ceramic components and sulfur, and ceramic—are plentiful and of things to come in the Golden State. equipment for the electronics indus- inexpensive. try, as well as grid-scale storage batter- NGK’s new container configura- Exciting Prospects ies. It began developing NAS batteries in tion allows for deploying NAS batteries The global market for stationary storage quickly and easily to accommodate the batteries presently centers on installa- sNAS Systems Deployed rapid growth in renewable power gen- tions for providing short-term discharge Megawatt- Sites hours (MWh) eration. That was especially important to of up to about two hours. Demand for Japan 167 2,600 Kyushu Electric, which was racing to keep long-term discharge capacity is poised to North America 10 150 ME and Africa 10 650 up with surging growth in solar genera- burgeon, however, as renewable power Field, BC Europe 6 270 tion in Kyushu. And the power utility’s generation continues to grow and as users World total 193 3,670 huge, 300,000 kWh installation was in discover in NAS batteries an economical place just six months after NGK received solution to their storage needs. Vacaville, CA Luverne, MN Churubusco, IN Bluffton, OH the order. NGK is the world leader in storage bat- San Jose, CA Milton, WV tery installations for long-term discharge. Los Alamos, NM Catalina, CA A Prototype for California It will continue to build on that leadership Presidio, TX NGK delivered the first NAS system out- by promoting its NAS batteries in their side Japan in 2006: an installation at an easy-to-assemble container configuration. NAS batteries store nearly 3,700 MWh (530 MW) American Electric Power site in West of power at more than 190 sites worldwide, Virginia for storing power during off- NAS storage solutions including 10 sites in North America. peak hours. The global array of NAS Optimizing the future of energy www.ngk.co.jp/nas/ TECHNOLOGY QUARTERLY The future of agriculture

Pont’sseed division, Pioneer,isalready try- crops oflittle interest to the bigseed companies, such as millet and ing to use CRISPR/Cas9 to stop wheat from yams, the yield-bonuses could be enormous. self-pollinating, in orderto make the devel- For the longer term, some researchers have more radical ambi- opment of hybrids easier. Similarly, re- tions. A manifesto published last year by Donald Ort, of the Un- searchers at the Chinese Academy of Sci- ited States Department of Agriculture’s Agricultural Research Ser- ences are using it to try to develop wheat vice, and his colleagues proposes not merely recapitulating plants that are resistant to powdery mil- evolution but actually redesigning the photosynthetic process in dew,a serious hazard. ways evolution has not yet discovered. Dr Ort suggests tweaking Not all current attempts at agricultural chlorophyll molecules in order to capture a wider range of fre- genome editing use CRISPR/Cas9. Cibus, quencies and deploy the resulting energy more efficiently. He is Genome in San Diego, for example, employs a pro- also looking at improving the way plants absorb carbon dioxide. editing prietary technique it calls the Rapid Trait The result, he hopes, will be faster-growing, higher-yielding crops. Development System (RTDS). This co-opts Such ideas are controversial and could take decades to come to resembles a cell’s natural DNA repair mechanism to fruition. But they are not fantastic. A combination of transgenics make single-nucleotide changes to ge- (importing new forms of chlorophyll from photosynthetic bacte- the natural nomes. RTDS has already created one com- ria), genome editing (to supercharge existing plant enzymes) and mercial product, a form of rape resistant to genomic selection (to optimise the resulting mixture) might well process of a class of herbicides that conventional be able to achieve them. transgenics cannot protect against. But at Those who see this as an unnatural, perhaps even monstrous mutation the moment CRISPR/Cas9 seems to be approach to crop improvement should recall that it is precisely sweeping most things before it—and even what happened when the ancestors ofmodern plants themselves if it stumbles for some reason, other bacte- came into existence, through the combination of a bacterium and rial antiviral mechanisms might step in. its host and their subsequent mutual adjustment to live in symbi- Whether consumers will accept genome editing remains to be osis. It was this evolutionary leap which greened the Earth in the seen. No one, however, is likely to object to a second rapidly devel- first place. That something similar might re-green it is at least oping method of crop improvement: a souped-up breeding tech- worth considering. 7 nique called genomic selection. Genomic selection is a superior version of marker-assisted se- lection, a process which has itself been replacing conventional crop-breeding techniques. Both genomic selection and marker- Fish farming assisted selection rely on recognising pieces of DNA called mark- ers found in or near places called quantitative trait loci (QTLs). A QTL ispartofa genome thathas, because ofa gene orgenes within Catch of the day it, a measurable, predictable effecton a phenotype. If the markeris present, then so is the QTL. By extension, a plant with the marker should show the QTL’s phenotypic effect. The difference between conventional marker-assisted selec- tion and the genomic version is that the former relied on a few hundred markers (such as places where the DNA stuttered and re- Farming marine fish inland will relieve pressure on the peated itself) thatcould be picked up bythe technology then avail- oceans able. Now, improved detection methods mean single-nucleotide NTHE basementofa buildingon a wharfin Baltimore’sin- polymorphisms, or SNPs (pronounced “snips”), can be used as ner harbour, a group of aquaculturists at the Institute of markers. A SNP is a place where a single genetic letter varies in an Marine and Environmental Technology is trying to create otherwise unchanging part of the genome, and there are thou- an artificial ecosystem. Yonathan Zohar and his colleagues sands ofthem. I hope to liberate the raising of ocean fish from the ocean it- Add in the enormous amounts of computing power available selfso that fish farms can be built inland. Fresh fish, served to link SNPswithQTLs—and, indeed, to analyse the interactions the day it comes out of the brine (even if the brine in question is a between QTLsthemselves—and the upshotisa system thatcan tell judicious mixture of tap water and salts), would thus become ac- a breeder which individual plants are worth raising to maturity, cessible to millions of landlubbers who must now have their fish and which should then be crossed with each other to come up shipped in from afar, deep-frozen. Equally important, marine-fish with the best results. farmers would no longerhave to find suitable coastal sites forpen- Crop strains created this way are already coming to market. ningstockwhile it grows to marketable size, exposingthe crowded AQUAmax and Artesian are drought-tolerant strains of maize de- animals to disease and polluting the marine environment. veloped, respectively, by DuPont and Syngenta. These two, in- People have raised freshwater fish in ponds since time imme- triguingly, are competitors with another drought-tolerant maize morial, butfarmingspeciessuch assalmon thatlive mainly in salt- strain, DroughtGuard, developed by Monsanto using the trans- water dates back only a few decades, as does the parallel transfor- genic approach. mation of freshwater aquaculture to operate on an industrial Genomic selection also offers opportunities for the scientific scale. Now fish farming is booming. As the chart on the next page improvement of crops that seed companies usually neglect. The shows, human consumption of farmed fish has overtaken that of NextGen Cassava Project, a pan-African group, plans to zap sus- beef. Indeed, one way ofsupplyingmankind with enough animal ceptibilityto cassava mosaicvirusthiswayand then systematical- protein in future may be through aquaculture. To keep the boom ly to improve the yield and nutritional properties of the crop. The going, though, technologistslike DrZoharmustbecome ever more project’s researchers have identified 40,000 cassava SNPs, and inventive. have now gone through three generations of genomic selection His ecosystem, which is about to undergo commercial trials, using them. Besides making cassava resistant to the virus, they constantlyrecyclesthe same supplyofbrine, purified by three sets also hope to double yieldsand to increase the proportion ofstarch of bacteria. One set turns ammonia excreted by the fish into ni- (and thus the nutritional value) of the resulting strains. If modern trate ions. A second converts these ions into nitrogen (a harmless techniques can similarly be brought to bear on other unimproved gas that makes up 78% of the air) and water. A third, working on1 12 The Economist June 11th 2016

TECHNOLOGY QUARTERLY The future of agriculture

2 the solid waste filtered from the water, transformsit into methane, which—via a special generator—provides part of the power that keeps the whole operation running. The upshot is a closed system that can be set up anywhere, generates no pollution and can be kept disease-free. It is also escape-proof. That means old-world species such as sea bream and sea bass, which cannot now be grown in America because they might get out and breed in the wild, could be delivered fresh to the table anywhere. Besides transforming the design of fish farms, Dr Zohar is also working on extending the range of species that they can grow.He has spent decades studying the hormone system that triggers spawningand can nowstimulate it on demand. He hasalso exam- ined the needs of hatchling fry, often completely different from How big was yours? those ofadult fish, that must be met ifthey are to thrive. At the mo- ment he is trying to do this forone ofthe most desirable species of all, the bluefin tuna. If he succeeds, and thus provides an alterna- applied to fish. tive to the plummeting wild populations ofthis animal, sushi lov- Researchers at SalmoBreed of Bergen, in Norway, have em- ers around the world will be forever in his debt. ployed it not to create bigger, faster-growing fish but to attack two of fish farming’s banes—infestation and infection. By tracking Gone fishin’ SNPs (single-nucleotide polymorphisms, a variation ofa single ge- Fish farmers used to dream offitting their charges with transgenes neticletterin a genome used asa marker) theyhave produced vari- to make them grow more quickly. Indeed, over the past couple of eties of salmon resistant to sea lice and also to pancreas disease, a decades researchers have treated more than 35 fish species in this viral illness. They are now looking into a third problem, amoebic way. They have often been spectacularly successful. Only one gill disease. In Japan, similar work has led to the development of firm, though, has persisted to the point of regulatory approval. flounders resistant to viral lymphocystis, trout immune to “cold- AquaBounty’s transgenic Atlantic salmon, now cleared in both water” disease, a bacterial infection, and amberjackthat evade the America and Canada, has the desirable property of rapid growth. attentions ofa group ofparasitic worms called the monogenea. Its transgene, taken from a chinook salmon, causes it to put on Altering nature, then, is crucial to the success of fish farming. weight all year round, not just in spring and summer. That halves But nurture can also give a helping hand, for example by optimis- the time the fish will take to reach marketable size. Whether peo- ingwhat is fed to the animals. As with any product, one key to suc- ple will be willing to eat the result, though, is an experiment in its cess is to get costs down. And here, environmental and commer- own right—one that all those other researchers, only too aware of cial considerations coincide. widespread public rejection of transgenic crops, have been un- A common complaint by green types is that fish farming does willing to conduct. not relieve as much pressure on the oceans as it appears to, be- That may be wise. There is so much natural variation in wild cause a lot of the feed it uses is made of fish meal. That simply fish thatconventional selective breedingcan make a big difference transfers fishing pressure from species eaten by people directly to without any high-tech intervention. Back in 2007 a report by re- those that get turned into such meal. But fish meal is expensive, so searchers at Akvaforsk, now part of the Norwegian Institute of researchers are trying to reduce the amount being used by substi- Food, Fisheries and Aquaculture Research (NOFIMA), showed tutingplant matter, such as soya. In this they have been successful. that three decades of selective breeding by the country’s salmon According to a paper published last year by researchers at NO- farmers had resulted in fish which grew twice as fast as their wild FIMA, 90% of salmon feed used in Norway in 1990 was fish meal. progenitors. Admittedly starting from a lower base, those farmers In 2013 the comparable figure was 30%. Indeed, a report published had done what AquaBounty has achieved, but without the aid of in 2014 by the European Parliament found that fish-meal con- a transgene. sumption in aquaculture peaked in 2005. If conventional selection can yield such improvements, it is tempting not to bother with anything more complicated. Tempt- It’s a gas ing, but wrong. For, as understanding of piscine DNA improves, Feeding carnivores like salmon on plants is one way to reduce the sort of genomic selection being applied to crops can also be both costs and environmental harm. Another, which at first sight seems exotic, is to make fish food out ofnatural gas. This is the pro- posed business of Calysta, a Californian firm. Calysta feeds the A fishy on a little dishy gas—or, rather, its principal component, methane—to bacteria World fish production World production called methanotrophs. These metabolise the methane, extract en- Tonnes, m Tonnes, m ergy from it and use the atoms thus liberated, along with oxygen 180 70 from waterand nitrogen from the air, to build theirbodies. Calysta then turns these bodies into protein pellets that are sold as fish 150 60 food, a process that puts no strain at all on either sea or field. Beef Even conventional fish foods, though, are low-strain compared 50 120 with feed forfarm animals. Because fish are cold-blooded, they do Farmed 40 not have to eat to stay warm. They thus convert more of their food Farmed into body mass. For conservationists, and for those who worry 90 fish 30 whether there will be enough food in future to feed the growing 60 human population, that makes fish a particularly attractive form 20 ofanimal protein. Caught 30 10 Nevertheless, demand for the legged and winged sort is grow- ing too. Novel technologies are therefore being applied to animal 0 0 husbandry as well. And some imaginative researchers are even 1950 60 70 80 90 2000 14 1950 60 70 80 90 2000 13 tryingto growmeatand otheranimal productsin factories, cutting Source: FAO the animals out ofthe loop altogether. 7 14 The Economist June 11th 2016 TECHNOLOGY QUARTERLY The future of agriculture

Animal husbandry Kemp and his colleagues are considering editing resistance to sleeping sickness, a huge killer of livestock, into African cattle. All this would make the animals healthierand hence happier as well. Stock answers Not all such work is welfare-oriented, though. Dr Fahrenkrug has also been working on a famous mutation that increases mus- cle mass. This mutation, in the gene for a protein called myostatin, is found naturally in Belgian Blue cattle. Myostatin inhibits the de- velopment of muscle cells. The Belgian-Blue mutation disrupts myostatin’s structure, and thus function. Hence the animals’ over- Technology can improve not only productivity but animal size muscles. Two years ago, in collaboration with researchers at welfare too Texas A&M University, Dr Fahrenkrug edited the myostatin gene F THE future of farming is to be more factory-like, some ofa member ofanother breed ofcattle to do likewise. might argue that the treatment of stock animals such as chickens and pigs has led the way. Those are not, though, Where’s the beef? happy precedents. Crop plants, unsentient as they are, There may,though, be an even better way to grow muscle, the ani- I cause no welfare qualms in those who worry about other mal tissue most wanted by consumers, than on animals them- aspects of modern farming. Even fish, as long as they are selves. At least two groups of researchers think it can be manufac- kept healthy,rarely raise the ire of protesters. Birds and mammals tured directly. In 2013 Mark Post of Maastricht University, in the are different. There are moral limits to how they can be treated. Netherlands,unveiled the firsthamburgermade from muscle cells They are also individually valuable in a way that crop plants and grown in laboratory cultures. In February this year a Californian fish are not. For both these reasons, they are worth monitoring firm called Memphis Meats followed suit with the first meatball. one at a time. Dr Post’s original hamburger, which weighed 140 grams, was Cattle, in particular, are getting their own private sensors. De- assembled from strips of muscle cells grown in Petri dishes. In- vices that sit inside an animal’s rumen, measuring stomach acid- cluding all the set-up costs, it was said to have cost €250,000 ity and looking for digestive problems, have been available for ($350,000), or $2.5m a kilogram. Scaling up the process will bring several years. Theyhave nowbeen joined bymovementdetectors that figure down a lot. This means growing the cells in reactor ves- such as that developed by Smartbell, a small firm in Cambridge, sels filled with nutrient broth. But, because such cells are sup- England. This sensor hangs around a cow’s neck, recording its posed to be parts ofbodies, they cannot simply float around in the wearer’s movement and transmitting that information to the broth in the way that, for example, yeast cells used in biotechnolo- cloud. An animal’s general activity level is a good indication of its gy can. To thrive, they must be attached to something, so the idea fitness, so the system can give early warningofany trouble. In par- is to grow them on small spheres floating in the vessels. Fat cells, ticular,itimmediatelyshowswhen itswearerisgoinglame—a pro- which add juiciness to meat, would be cultured separately. blem that about a fifth ofBritish cattle sufferat some point in their Do this successfully,Dr Post reckons, and the cost would fall to lives. If picked up early, lameness is easily treated. If permitted to $65 a kilogram. Add in technological improvements already un- linger, it often means the animal has to be destroyed. der way,and he hopes that Mosa Meat, the firm he has founded to Movement detectors can also show ifa cow is ready for insem- exploit his work commercially, will have hamburger mince ready ination. When she isin oestrus, herpattern ofmovement changes, forsale (albeit at the pricey end ofthe market) in five years’ time. and the detectorwill pickthisup and alertherowner. Good breed- Meanwhile researchers at Clara Foods, in San Francisco, are de- ing is crucial to animal husbandry, and marker-assisted genomic veloping synthetic egg white, using transgenic yeast to secrete the selection will ensure that the semen used for such insemination required proteins. Indeed, they hope to improve on natural egg continues to yield better and better offspring. What is less clear— white by tweaking the protein mix to make it easier to whip into and is actively debated—is whether genome editing has a role to meringues, forexample. They also hope their synthetic white will play here. Transgenics has given an even wider berth to terrestrial be acceptable to people who do not currently eat eggs, including animals than it has to fish, and forthe same reason: wary consum- vegans and some vegetarians. 7 ers. Some people hope, though, that this wariness will not apply to animals whose DNA has merely been tweaked, rather than im- ported from another species, especially if the edits in question will improve animal welfare as well as farmers’ profits. Followingthis line ofthinking, Recombinetics, a firm in St Paul, Minnesota, is trying to use genome editing of the sort now being employed on crops to create a strain of hornless Holstein cattle. Holsteins are a popular breed for milking, but their horns make them dangerous to work with, so they are normally dehorned as calves, which is messy, and painful for the animal. Scott Fahren- krug, Recombinetics’ founder, therefore had the idea of introduc- ing into Holsteins a DNA sequence that makes certain beef cattle hornless. This involved deleting a sequence of ten nucleotides and replacing it with 212 others. Bruce Whitelaw at the Roslin Institute, in Scotland, has similar- ly edited resistance to African swine fever into pigs, by altering a gene that helps regulate immune responses to this illness to make it resemble the version found in warthogs. These wild African pigs have co-evolved with the virus and are thus less susceptible to it than are non-African domesticated animals. Randall Prather at the University ofMissouri has similarly created pigsthat cannot catch porcine reproductive and respiratory syndrome, an illness that costs American farmers alone more than $600m a year. And The $350,000 hamburger at the International Livestock Research Institute in Nairobi, Steve The Economist June 11th 2016 15 TECHNOLOGY QUARTERLY The future of agriculture

Europe and those parts of South America, such as Brazil, where large arable farms predominate. And someone, perhaps in China, will work out how to apply to rice the sort of precision techniques now ap- plied to soyabeans, maize and other crops. The technological rationale for preci- sion suggests farms should continue to consolidate, though in an industry in which sentiment and family continuity have always played a big part, this may not happen as fast as it otherwise would. Still, regardless of the speed at which they ar- rive, these large holdings will come more andmoretoresemblemanufacturingoper- ations, wringing every last ounce of effi- ciency out ofland and machinery. Such large-scale farms will probably continue to be served by large-scale corpo- rations that provide seeds, stock, machines and management plans. But, in the case of Towards 2050 the managementplans, there isan openingfornewfirms with bet- ter ideas to nip in and steal at least part ofthe market. Other openings for entrepreneurs are available, too. Both in- Vorsprung durch land fish farming and urban vertical farming—though niche oper- ations compared with Midwestern soyabean cultivation or Scot- tish sea-loch salmon farms—are waves of the future in the service Technik of gustatorially sophisticated urbanites. And in these businesses, the idea offarmas factory is brought to its logical conclusion. Technology will transform farmers’ lives in both the rich It is in the poorer parts of the world, though, that the battle for full bellies will be won or lost; and in Africa, in particular, the and the poor world scope for change is both enormous and unpredictable. Though NE of the greatest unsung triumphs of human pro- the problems of African farming are by no means purely techno- gress is that most people are no longer working on the logical—better roads, better education and better governments land. That is not to demean farming. Rather, it is to would all help a greatdeal—technologyneverthelesshas a bigpart praise the monumental productivity growth in the in- to play.Organisations such as the NextGen Cassava Project, which dustry, achieved almost entirely by the application of applythe latestbreedingtechniquesto reduce the susceptibility of technology in the form of farm machinery, fertilisers crops to disease and increase their yield and nutritional value, of- Oand other agrochemicals, along with scientifically improved fer Africans an opportunity to leap into the future. Crops could crops and livestock. In 1900 around 41% of America’s labour force similarly jump from 18th- to 21st-century levels of potential in a worked on a farm; now the proportion is below 2%. The effect is matter ofyears, even ifconverting that potential into productivity less marked in poorer countries, but the direction of travel is the still requires the developments same. The share of city-dwellers in the world’s total population listed earlier. reached 50% in 2007 and isstill risingrelentlessly,yetthe shrinking Looking further into the fu- OFFER TO READERS proportion of people living in the countryside is still able to feed ture, the picture is hazier. Large- Reprints of Technology Quarterly the urban majority. scale genetic engineering of the are available at US$7.00 each, C with a minimum of 5 copies, plus No crystal ball can predict whether that will continue, but on sort needed to create 4 rice, or 10% postage in the United past form it seems perfectly plausible that by 2050 the planet will nitrogen-fixing wheat, or en- States, 15% postage in Mexico grow 70% more food than it did in 2009, as the Food and Agricul- hanced photosynthetic path- and Canada. Add tax CA, DC, IL, ture Organisation (FAO) says it needs to. Even though some crops ways, will certainly cause NY, VA; GST in Canada. in some parts of the world have reached a productivity plateau, qualms, and maybe not just FAO For orders to NY, please add tax cereal production increased by 11% in the six years after the among the neo-Luddites. And based on cost of reprints plus made that prediction. The Malthusian fear that population they may not be needed. It is a postage.For classroom use or growth will outstrip food supply, now 218 years old, has not yet general technological truth that quantities over 50, please come true. there are more ideas than appli- telephone for discount Yet just as Thomas Malthus has his modern-day apologists, so cations, and perfectly decent information. does his mythical contemporary, Ned Ludd. Neo-Luddism is an ones fall by the wayside because Please send your order with ever-presentthreatthatcan certainlyslowdown the development others have got there first. But it is payment by cheque or money of new technologies—as has indeed happened with transgenics. good to know that the big ideas order to: But while it is fine for the well-fed to be prissy about not eating are there, available to be drawn food containing genetically modified ingredients, their fears have on in case other yield plateaus Jill Kaletha of Foster Printing Service cast a shadow over the development of transgenic crops that threaten the required rise in the might help those whose bellies are not so full. That is unconscion- food supply. It means that the Telephone: 866 879 9144, able. With luck, the new generation of genome-edited plants, and people of 2050, whether they extension 168, or e-mail: maybe even animals, will not provoke such a reaction. live in Los Angeles, Lucknow or [email protected] Regardless ofwhether it does, though, some other trends seem Lusaka, will at least be able to (American Express, Visa and near-certain to continue into the future. Precision agriculture will face whatever other problems MasterCard accepted) spread from its North American heartland to become routine in befallthem on a full stomach. 7 16 The Economist June 11th 2016 WHEN WE HAVE THE TOOLS TO PREDICT IT’S AMAZING WHAT WE CAN PREVENT

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Also in this section 50 Public spaces in the Middle East 50 A hot Ramadan in Saudi Arabia 51 Trade booms in east Africa 52 The killing of albinos

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Morocco City, a public-private initiative, helps local and international firms that want to use The pluses and minuses of monarchy the countryasa base fortheiroperations in Africa. It is building fancy new office space on the site ofan old airport in the city. As it upgrades its roads and infrastruc- ture, Morocco is bound to experience GDP CASABLANCA catch-up growth— grew 4.5% in 2015. But its government has also been clever. Morocco is doing well, but its king still needs to adapt Tighter fiscal policy, including cuts to ener- N THE night of February 19th 2011, he is popular. His granting ofmore rights to gy subsidies, has helped Morocco reduce OAbouamar Tafnout, an activist from women and efforts to tackle poverty have its current-account and budget deficits. A Casablanca, suddenly grew nervous. He gone down well. Critics say he is a cunning drought may slow growth this year, but an- had just watched a documentary on the politician. Most Moroccans credit him for alysts are still bullish. “We think Morocco civil war in Algeria. We don’t want that, he the country’s stability. And he has capital- could record GDP growth of 5-6% over the thought. Thousands of Moroccans were ised on the calm bypositioningMorocco as next five to ten years,” writes Jason Tuvey preparing to hit the streets the next day to a hub for European manufacturers. Tax ofCapital Economics, a consultancy. challenge King Mohammed VI and the rul- breaks and good logistics lure business. But not everything is rosy. The monar- ing elite, known to locals by the nickname Car production, led by Renault, a big chy can certainly get things done: big pro- makhzen (“the storehouse”), which con- French producer, has more than doubled jects, such as the largest solar plant in the trols much of the economy. Mr Tafnout, since 2011. The aeronautics industry has world and 1,500km ofhigh-speed rail lines just 20 years old at the time, had helped to also taken off. are moving ahead; but the average Moroc- organise the protests. “I was afraid—afraid Renault’s factory has a direct train line can must deal with a stifling bureaucracy. forthe country,” he says. to the commercial port of Tanger-Med, “The further you get away from the king, But most of Morocco’s protesters, like 40km (25 miles) eastofTangier, which isex- the harder things become,” says Merouan Mr Tafnout, did not want a messy revolu- panding. By the time construction is com- Mekouar of York University in Canada. tion. Rather, they pushed for a more con- pleted, in 2018, it is expected to be the busi- Members of the royal court use their prox- strained monarchy. When the king in- est port on the Mediterranean. Morocco is imity to advance their own projects and creased wages and pensions, and looking south, too. Casablanca Finance win contracts. Morocco ranks a woeful promised to relinquish some power, many 88th in the world in Transparency Interna- were satisfied. A revision to the constitu- tional’s corruption perceptions index. tion, strengthening parliament, was Still spring-like The problem is compounded by a lack Morocco passed by referendum in July 2011. Elec- % of GDP of accountability. Take the high-speed rail tions were held that November. Some GDP Current-account balance lines, which should more than halve travel blood was shed, but Morocco’s version of % increase on a year earlier Government budget deficit time between Morocco’s big cities. Some 6 5 the Arab spring went rather smoothly. have questioned whether the billions of Five years on, Morocco is stable, rela- + dollars might be better used to help the tively free and increasingly prosperous. 4 0 poor, given that Morocco is in the bottom Compare that with the rest of the region third of the UN’s human development in- and it is little wonder that Moroccans are – dex. Others wonder if a slowdown in glo- loth to upset the status quo. “Gradualism” 2 5 bal maritime trade makes the Tanger-Med is a popular word, even among those who expansion unwise, or askwhy an initiative would like to see their country become to boost tourism, Plan Azur, has failed to more like Spain, where the monarchy is 0 10 produce many results. No one in the royal 2011 12 13 14 15 16* largely ceremonial. palace seems to be checking. Source: IMF *Forecast The king still dominates the state, but Don’t expect parliament to provide an-1 50 Middle East and Africa The Economist June 11th 2016

2 swers, either. Although the revised consti- Public spaces in the Middle East tution gives the government more power over policy and appointments, the king is No bed of roses still firmly in charge. Moreover, “the re- gime has largely succeeded in taming op- position forces,” says Mohamed Daadaoui of Oklahoma City University. It has co- opted the Justice and Development Party BEIRUT (PJD), a mildly Islamist group that won the Parks are disappearing throughout the Arab world election in 2011. The PJD has not pushed for substantial democratic reforms. Yet it still HE city has adorned herself with splendours as well as of a host of other faces a challenge from the Party ofAuthen- “Tflowers of sweet scented herbs,” such leafy delights as drinking excursions ticity and Modernity, which is even more waxed the great Arab traveller, Ibn Jubayr, on the banks of the Barrada River that supportive of the king, at parliamentary when he visited 12th-century Damascus. flows through Syria’s capital. The Prophet elections scheduled for October. “It is encircled by gardens as the moon by Muhammad is even said to have shied Journalists and activists criticise the its halo.” LaterEuropean travellers were no from entering Damascus, otherwise called monarchy, which puts them at risk. News less entranced by the dazzling turquoise al-Fayha, “the fragrant”, forfear ofentering outlets have been forced to close and jour- square—Naqsh e-Jahan, “the image of the Paradise twice. nalists jailed in recent years. Reporters world”—that Abbas I built in Isfahan in the He would have no need for hesitation Without Borders, a pressure group, consid- 17th century, leaving behind accounts of its today. Amid the bloodshed, car fumes and 1 ers Morocco less free even than Algeria or Afghanistan. Consider the case of Ali Anouzla, a critic of the king, who has been Ramadan in Saudi Arabia accused of“inciting” terrorism. His alleged crime was to linkto a video by al-Qaeda in Taking it to heart the Islamic Maghreb, which he criticised. RIYADH In general, freedom ofexpression is cur- tailed by three red lines. Critical discussion The kingdom treats the holy month more seriously than anywhere else ofIslam, the monarchy or the disputed ter- IYADH,the drab Saudi capital, looks caught drinking or eating in public is ritory of Western Sahara is banned. Even Runcharacteristically festive. The punished; foreigners lose their jobs and so, protests are common in Morocco, over endless sprawl ofugly concrete buildings are deported. such things as employment and pay. But with light-reflecting glass is decked out in Most Saudis are religious, and appear they are often broken up by police, who fairylights and brightly coloured materi- to revel in the holy month. “It’s not hard tend to use heavy-handed tactics. When al. This is, afterall, Ramadan in the coun- to fastbecause I love Ramadan,” says a protesters questioned the enormous royal try where the strictest form ofSunni female bankclerk. “Fasting is easy—and budget in 2012 they were beaten. Islam prevails. good for you,” says an economist, al- Many Moroccans are ill-equipped to But the Islamic month for fasting, though he adds that he drinks water on question their king. Almost a third of the reflection and celebration is also far more the sly during the day. population is illiterate. Others protest in a austere here than anywhere else. In most Foreigners, who are about a third of different way. About 1,500 Moroccans are places going without food and drink the country’s population of30m, must thought to have joined Islamic State (IS) in from sunrise to sunset is a matter of find ways to cope in the 40°C heat. Many Iraq and Syria. Hundreds more are training personal conscience, and no laws enforce aren’t Muslim. Unlike Saudi citizens, in Libya, leading to fears that they may re- its observance. Not so in Saudi Arabia, many workon sweaty building sites, so turn to launch attacks in Morocco. Youth in where the Koran is considered a constitu- going without water is a bit ofa problem. rural areas, where poverty is widespread, tional document. They eat at home or sneakwater and are seen as particularly vulnerable to the Restaurants and cafés are forced to food during trips to the bathroom. Some terrorists’ message. So the king—who also shut their doors until iftar, the daily hotels discreetly put on room service for holds the title, “commander of the faith- breaking ofthe fast at sunset. The lobby “non-Muslim guests”. ful”—has created a new religious training ofAl Faisaliah, a posh hotel in Riyadh, is Come iftar time Saudi Arabia cheers institute in Rabat, the capital, to promote usually bustling with meetings over up. Lavish buffets abound; people lounge his moderate brand ofIslam. coffee; now it is deathly quiet. Anyone about long into the night. This is the time The threat of terrorism has also been for family and friends, food and televi- used as an excuse to silence critics, while sion—and often, the pious grumble, for the turbulence of the region is cited to dim overindulgence. the ardour of reformists. But by comparing Other countries in the region are more itself with the Arab world, Morocco is set- relaxed. Lebanon, with its large Christian ting a low bar. Many of its citizens speak population, continues more or less as French and Spanish, and would rather normal during the holy month. No one lookto Europe for inspiration. frowns on non-Muslims (or indeed non- The king has encouraged such thoughts fasting Muslims) taking refreshment in on economic matters. But he is thwarting public. In Egypt, restaurants are open Morocco’s political progress. Little effort during the day, but quieter than usual. has been put into building the institutions, Some Muslims preferthe Saudi ap- like an independent judiciary, that would proach to Ramadan. This year Dar al-Ifta, be needed in a constitutional monarchy. an Egyptian government body, suggested Still, Moroccans are hopeful. “Sometime in that fasting should be compulsory. Few the near future, Morocco will be a demo- who have experienced a Saudi Ramadan cratic state,” says Mr Tafnout. “The monar- would agree. chy is smart enough to know that.” 7 The Economist June 11th 2016 Middle East and Africa 51

Trade in east Africa Worth celebrating

Regional co-operation has been good forat least part ofthe continent HEN the first East African Communi- Wty (EAC) collapsed in 1977, some in the Kenyan government celebrated with champagne. Since its resurrection in 2000, officials are more often found toasting its success. A regional club of six countries, the EAC is now the most integrated trading bloc on the continent. Its members agreed How things used to be on a customs union in 2005, and a com- mon market in 2010. The region is richer 2 noise, residents are hard-placed to find Nicer cities might attract more tour- and more peaceful asa result, argues a new anything fragrant in the sprawling cities of ists—a huge boon forcountries that need to paper* from the International Growth the Arab world. The number of places diversify their economies as oil revenues Centre, a research organisation. where people can mingle, picnic on cool plummet. But since the 2011 Arab spring, Many things boost trade, from growth watermelon by the rivers and fly kites has when the people tookoversquaresto stage to international deals. The researchers use shrunk while their populations have protests, security concerns have trumped some fancy modelling to pickout the effect soared. Per person, the amount of land de- any other. Egypt’s generals have ringed the of the EAC. They find that bilateral trade voted to parks, squares and other public roundabout in Cairo’s Tahrir Square with between member countries was a whop- spaces in Riyadh, forinstance, has fallen by iron grating. Bahrain’sKingHamad haslev- ping 213% higher in 2011 than it would oth- 80% in half a century. Public spaces now elled the Pearl roundabout where his sub- erwise have been. Trade gains from other comprise just 2% ofthe area ofMiddle East- jects protested, and turned it into a traffic regional blocs in the continent are smaller: ern citiescompared with 12% in the average junction. “The ruling class across the Arab around 110% in the Southern African De- European city, according to UN Habitat, an world are very much aware of potential of velopment Community (SADC), and 80% agency that monitors urban development public space for people to gather, share in the Common Market for Eastern and in part through satellite imagery. They their grievances and ultimately protest,” Southern Africa (COMESA). make up just 0.5% ofBeirut. says Mr Rabbat. Those numbers for the EAC are all the “Historicallyparkswere placesfor poet- Municipal officials point to the plethora more impressive because the available ry, debates and tales of debauchery on the ofprivate malls as safe, clean spaces where data stop before the EAC’scommon market edge of the city, but the cities swallowed families can mix and consume. But the en- had properly come into effect. Progress on them as they grew,” says Nasser Rabbat, an vironment there is as regulated as the air- that front has sometimes stuttered. A 2014 expert on Islamic architecture at the Mas- conditioning. Security guards in Riyadh “scorecard” identified 51 non-tariff barri- sachusetts Institute ofTechnology, who co- prevent the entry of single men, and stand ers. Full implementation could double the wrote a new bookon Islamic gardens. ready to evict anyone who might even con- income gains seen so far, say the research- Greed is partly to blame, says Jala sider causing a disturbance. “Urban values ers. Not surprisingly, it is landlocked Rwan- Makhzoumi, an Iraqi urban planner who of civil participation are almost absent in da which would see the biggest benefits. has drafted plans for re-greening capitals the Arab urban context,” sighs Rami Nas- Tanzania, which has dragged its feet on in- across the Arab world. Unaccountable ty- rullah, a Palestinian city planner who re- tegration, would profit the least. coons find ways to turn public spaces priv- searches Arab urban growth. The researchers are warier of the EAC’s ate. Local governments are often unwilling Some Arabs hope things will change. other grand project: creating a common or unable to stop them. Developers, for in- Over the past year, tens of thousands of currency by 2024. The impact on trade stance, have recently fenced off one of Bei- people have repeatedly thronged to Bagh- would be small, they say, and not worth rut’s last stretches of natural waterfront to dad’s Freedom Square, next to the Green the risks. A study last year by the IMF 1 build more gated high-rises. Its prime Zone, the vast enclave where the govern- beach is now earmarked fora luxury hotel. mentrules. The Aga Khan hasturned a Cai- Warlords-cum-politicians have appropri- ro rubbish dump into the city’s largest park Ever-closer union ated Baghdad’s finest palm groves, and (though you need a ticket to enter). In an at- Intra-East African Community* trade in goods, $bn carved its plushest neighbourhoods into tempt to greenify a square in Gaza, one of walled enclaves. the world’s most densely populated areas, 2.5 Carelessness is another culprit. Half of foritsrallies, the Palestinian Islamist move- 2.0 the Arab world’s modern cities are, in ef- ment, Hamas, dragged tons of turf through fect, unplanned, says Eduardo Moreno, the its tunnels under the border with Egypt. 1.5 UN research directorat Habitat. Palestinian Environmentalists in Lebanon have, at 1.0 refugees have turned much ofBeirut’s larg- least, stopped the construction of a high- est green space, the once-forested Horsh way through Ashrafiya, Beirut’s Maronite 0.5 Beirut, into a camp; Israel set fire to the rest core. But when last summer they began to 0 in its invasion of 1982. Closed for decades, mass in the city’s Martyrs’ Square to prot- 1995 2000 05 10 15 the Horsh reopened last year, butonly on a est at a pile-up ofrubbish, riot police quick- *Kenya, Uganda, Tanzania, Burundi, Rwanda. Saturday, and only if you get a ticket from ly dispersed them. For now, the Arabs’ best Not including South Sudan, which the local government in advance. open place is cyberspace. 7 Source: IMF acceded to the treaty in 2016 52 Middle East and Africa The Economist June 11th 2016

2 found that east African economies move the researchers argue. Regional trade blocs murderers are opportunists acting on ru- out of sync with each other, using ex- make sense forAfrica. National economies mours of payments. But there is plenty of change rates to absorb shocks. Greater con- are small: at market exchange rates, the evidence to suggest that there is indeed an vergence might make a common currency combined GDP of the EAC, home to 170m organised trade: many of those arrested in viable; without it, a single currency would people, is less than New Zealand’s. Region- Malawi in possession of bones have said mean that wages might have to do the al groupings have more clout, and could they were to be sold to buyers in neigh- workofadjustment, as Greece has become one day form a continental free-trade area bouring countries. painfully aware. The euro crisis should (a planned link-up between the EAC, CO- People with albinism, for their part, live give policymakers pause forthought. MESA and SADC is a start). Then the cham- in fear. Many do not go out at night and are Political convergence matters too. Re- pagne corks would really start popping. 7 wary about whom they meet. In January cent squabbles over railways and an oil ...... two women offered Ms Phiri 1m kwacha pipeline show the difficulty of coaxing ($1,450) for Esther so they could extract the *‘Regional Trade Agreements and the pacification of headstrong leaders to cooperate. But inter- Eastern Africa’, Thierry Mayer and Mathias Thoenig, gold they believed was in her bones. Es- dependence has reduced the risk of war, International Growth Centre Working Paper, April 2016 ther now rarely leaves the house. “I’m scared. What if I’m next?” says Clement Gweza, 24, a teacher living in a re- The killing of albinos mote village in Dedza district, where two of the murders have taken place. “I can’t Murder for profit live like I used to.” In a new report Amnesty International, a human-rights group, says the Malawian government has failed to protect albinos. It criticises the government for, among other LILONGWE things, not trying hard to investigate why Malawi has seen a rise in attacks orto work A horrifictrade in body parts fuelsa spate ofkillings out where demand is coming from. Peter AM desperate to save my child,” says and has established safe houses for chil- Mutharika, Malawi’s president, says he is “IMartha Phiri, lookingat hernine-year- dren at riskofattack. “ashamed” by the attacks; but he seems to old daughter Esther. The child, who has The Malawian government suggests have done little about them. albinism, scribbles away in a book, obli- that foreign witchdoctors from Tanzania Thanks to corruption, public funds do vious to her mother’s concerns. People and elsewhere are behind the attacks on its not go as far as they should. In 2013 the with the genetic disorder, which is charac- soil. In Malawi people with albinism are country’s main donors—who provided terised by an absence of pigment in the not monitored, crimes go uninvestigated more than a third of government spend- skin, hairand eyes, have longsuffered from and penalties are mild. It is typically not ing—stopped writing cheques after they discrimination in Malawi, where supersti- the witchdoctors themselves who abduct found that officials had been looting the tion about the condition runs deep. and kill. More commonly, it is locals who treasury. Meanwhile incompetent police But in the past two years taunts have are swayed by promises of large sums of investigations and lenient sentences do turned into deadly attacks. On May 23rd, money. In many cases relatives are in- very little to deter continued attacks. In 38-year-old Fletcher Masina became at volved. “Some parents or relatives don’t 2015 a man was fined 20,000 kwacha, or least the 18th person with albinism to be really value a child with albinism. They get $29, forpossessinghuman bones. Police as- murdered in Malawi since the end of 2014 tempted by the offer of money,” says Bon- sumed he had dug up a grave, rather than (others have disappeared and probably face Massah, head of the Association of investigating a potential murder. been killed). The killings are barbaric. Bo- People with Albinism in Malawi. There has yet to be a murder conviction dies are abandoned with limbs cut off and As for the source of demand for albino for any of the killings, most of which re- organs ripped out. More than 60 related body parts, speculation abounds. Dr Mary main unsolved. “We are talking about 18 cases have been recorded. These range Shawa of the Ministry of Gender, Disabili- lives lost,” says Mr Massah. “That is tragic from murders to the theft of bones from ty and Social Welfare in Malawi denies for a small country. How much longer the gravesofpeople with albinism. Attacks that there is a market and insists that the must we wait forhelp?” 7 are driven by the belief that albino body parts can be used in witchcraft to bring wealth and cure disease. The UN warns that Malawi’s estimated 10,000 albinos face “extinction” ifthe killings continue. A relatively peaceful country, Malawi has never seen such violence before. It is Malawi’s neighbourTanzania that had pre- viously been associated with attacks on al- binos. But the Tanzanian government has in recent years done something about it. It has arrested unlicensed traditional healers and imposed stiffer penalties on “albino hunters” and those who trade in body parts. Thanks to the crackdown and to a campaign by a Canadian charity to teach Tanzanians that their albino neighbours have no magic powers, attacks against Tan- zanian albinos have fallen. The govern- ment has registered people with the condi- tion, so that it can monitor and track them, No magical powers Europe The Economist June 11th 2016 53

Also in this section 54 European football championships 55 Poland’s anti-government rallies 55 Turkey’s Iran connection 56 How men and women vote 57 Charlemagne: Why ethnic parties are a bad idea

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

Rome elects a mayor percentage point behind the PD. Wherever the parties ran separate candidates, how- Five-star surprise ever, they paid dearly for it. On election night Mr Berlusconi suffered a heart pro- blem, which was blamed on the stress of the campaign; two days later he checked himselfinto a hospital for tests. ROME Mr Renzi, whose default mode is boundless optimism, admitted he was dis- Italy’s populists are getting serious. That is bad news forMatteo Renzi appointed with the PD’s results. The go- HIS isn’t populism,” said Alessan- won through to the second round in Turin verning party’s candidate failed to make “Tdro Di Battista of the Five Star Move- against a formidable rival: the PD’s ex- the run-off in Naples, whose radical left ment (M5S) as the first-round results of Ita- leader, Piero Fassino. mayor, a formermagistrate, Luigi de Magis- ly’s local elections on June 5th came in. “It In Rome Ms Raggi, a 37-year-old lawyer tris, looks certain to be re-elected. The PD isn’t a protest. It’s good politics.” The M5S and consumeractivist,projected a modera- could yet lose Milan and possibly even Tu- candidate for mayor of Rome, Virginia tion that would reassure the most conven- rin, one ofits strongholds. Raggi (pictured), had taken 35% of the tional of voters. But Mr Di Battista was Most governments suffer mid-term set- votes. Mr Di Battista, one of the party’s wrong to claim her win was not a protest backs, but this one is peculiarly ill-timed leaders, was relishing its biggest break- vote: the city is seething with discontent. forMrRenzi. He has introduced some valu- through since the general election of 2013, Rome is plagued by overflowing rubbish able reforms, including an overhaul of Ita- when it won a quarter ofthe ballot. bins, untended parks and gardens, inade- ly’s labour laws. But his overriding aim has The race now moves to a run-off on quate public transport and roads dotted been to change Italy’s constitution and its June 19th. But with a ten-point lead in the with potholes. City politicians from the electoral law to give himself a second five- first round over the candidate of the go- mainstream parties are on trial along with year term, undisturbed by party revolts, in verning Democratic Party (PD), Ms Raggi is organised criminals, accused of jointly which to impose a more comprehensive well placed to become Rome’sfirstwoman skimming municipal contracts. Romans programme of change. His critics, includ-1 mayor. It was a good showing in M5S’s first are not accustomed to being ashamed of electoral test without its co-founders: their city. Yet for the past seven months it Beppe Grillo, who has resumed his career has been subject to the sort of direct, cen- Narrow margin as a comedian, and Gianroberto Casaleg- tral-government administration normally If there were an election now, how would you vote? gio, an internet entrepreneur who died in reserved for Mafia-ridden villages in the Italy, % polled, June 2016 100 April. Running the movement is now the rural Mezzogiorno. Ms Raggi’s very lack of Others job of a five-person directorate that in- experience in office was an asset. cludes Mr Di Battista. Elsewhere, M5S’s results were anything Forza Italia 80 The face ofM5S that voters saw in these but spectacular. In Milan, it got 10%; in Na- Northern League elections was a new one. The populist Mr ples, less. If anything, the elections were a 60 Grillo and his amusing (and sometimes setback for the mainstream parties more Five Star Movement disquieting) rants, his mistrust of the euro than a victory for their maverick rival. The 40 and ambiguity on immigration, were all Italian right, made up ofthe strident, popu- 20 pushed to the sidelines. In his place were list Northern League and Silvio Berlus- Democratic Party candidates like Chiara Appendino, a com- coni’smore moderate Forza Italia party, did pany executive and graduate of Milan’s well where they united to back one candi- 0 Source: EMG Acqua business-oriented Bocconi university. She date: in Milan, the right finished less than a 54 Europe The Economist June 11th 2016

2 ing some in his own party, see that as dis- He had been giving too much attention to said excluding Mr Benzema sent a poor turbingly akin to one-man rule. his government and not enough to his message to kids in the banlieues, or outer- The electoral law has already been al- party, he said. That would now change. In city estates, who have “none of our repre- tered in parliament. But the constitutional particular, he said, he would “take a flame- sentatives (ie, players of Arab descent) on reform has to be approved by a referen- thrower” to the PD in the south, where the French team”. In fact one player, Adil dum in the autumn. To win it, Mr Renzi some activists have been shown to have Rami, has Moroccan parents. needs momentum. And the local election unsavoury connections. Support poured in, however, for Mr results have broken his stride. They have He did not attribute the PD’s setbacks to Deschamps, a popular manager and cap- also stripped him ofa reputation for invin- anger at Italy’s lethargic recovery from re- tain of the victorious 1998 team. He had cibility acquired at the European elections cession. On June 6th the Bank of Italy re- originally suspended Mr Benzema due to a in 2014, when his party took more than duced its expectations for GDP growth this police investigation into the player’s role in 40% of the vote in a ballot that saw other year to a modest 1.1%, the latest in a stream blackmailing a fellow player (over a video centre-left parties routed. of downward revisions by forecasters. In known as “la sextape”). The claims of rac- Mr Renzi’s explanation for the PD’s April unemployment rose to 11.7%. Mr ism were “nonsense”, said Kingsley Co- poor showing, given after a meeting of the Renzi’s chief response has been a barrage man, a young black player. A livid Guy Sté- party leadership, focused entirely on poli- of optimistic rhetoric. His reaction to the phan, Mr Deschamps’s deputy, conceded tics and on himself personally, and not at local elections suggests he will stick with that France had “problems with integra- all on whether his policies were working. that approach. 7 tion”, but said the football team could not take on responsibility for all such ills. Mr Debbouze apologised. Even Manuel Valls, the prime minister, got involved, declaring that “players are not selected according to their skin colour or origin”. “Football in France has the powerto un- ite, but also reflects social tensions,” says Darren Tulett, a football presenter in France. Although big tournaments inspire national passion, and victory would im- prove the national mood, the Paris elite tends to prefer rugby to football. Some French clubs reflect the country’s industri- al working-class history. Sochaux, for ex- ample, in eastern France, was founded in the 1920s by the Peugeot family to provide sport forthe carmaker’s workers. But football’s great base ofsupport, and talent, is today found in the multi-racial banlieues, where many French-born youngsters of North African and African descent grow up playing for local after- school clubs. Young players can be pro- pelled rapidly into a world of fabulous riches, embodied today by the Qatari- owned club, Paris Saint-Germain. This in- spires some jealousy and antipathy to- European football championships wards the players in certain parts of soci- ety, says Pascal Boniface, director of the Paris match Institute of International and Strategic Re- lations and a writer on football. While the French prepare to fall back in love with their national team, which their bookmakers have as favourite to win, PARIS more immediate worries concern security. The memory of the November attacks in Amidst racial tension and terrorwarnings, France hosts a tournament Paris, which killed 130 people, has not yet LMOST all French aspirations, and ship with football, which has become a faded. (Those attacks began with a bomb- Aanxieties, seem to crowd into the game touchstone for wider unease about ing at the Stade de France; sports events are of football. Ever since the country won the wealth, capitalism, foreigners and race. easy targets for terrorists.) The country re- world cup in 1998, with a multi-racial team The latest controversy was prompted mains under a state of emergency for the made up of black, blanc, beur (“black, by allegations of racism over the selection duration of the tournament. The govern- white and Arab”), the French have yearned of the French tournament squad. Karim ment has put 90,000 police, gendarmes to recapture that moment of post-colonial Benzema, a French striker of Algerian ori- and security agents on the streets. Just days conviviality and national euphoria. On gin, charged that he was left out because before the opening match, Bernard Caze- June 10th, when Europe’s biggest football the manager, Didier Deschamps, bowed to neuve, the interior minister, unveiled a tournament kicks offat the Stade de France racist pressure (a claim undercut by the fact smartphone app that can alert people in outside Paris, the hosts once again hope to that half of those who made the team are case of a terrorist attack. France, in short, is find unity as a nation through victory on black). Eric Cantona, a former French play- steelingitselfforthe best, and the worst. As the pitch. The tricolour flags are ready. Yet er, made the same allegation. Jamel Deb- Mr Cazeneuve put it: “100% precaution the French have an ambiguous relation- bouze, a French actor of Moroccan origin, does not mean 0% risk.” 7 The Economist June 11th 2016 Europe 55

Poland’s anti-government rallies From Facebook to the streets

WARSAW A new mass movement is proving more effective than the official opposition T THE head ofa march ofthousands against a government that breaks the Ain Warsaw on June 4th, Mateusz constitution.” Kijowski cut a striking figure. The red KOD was born when Mr Kijowski jeans, ponytail and earrings ofthe leader shared an article on Facebookby Krzysz- ofa new Polish mass movement contrast- tofLozinski, a journalist, calling for a new ed with the sober suits ofthe two former political movement to fight the govern- presidents who flanked him. Since De- ment. The enormous response prompted cember, when he founded it, the Com- him to form a group, never dreaming that mittee forthe Defence ofDemocracy it would move offline and grow into a (KOD) has turned the formerly obscure mass movement. 47-year-old IT specialist into one ofthe “I thought we might get 50 to 100 most powerful figures in Polish politics. people when we started,” he says. KOD KOD is now in the vanguard ofresistance now has around 230,000 Facebookfol- to Poland’s ruling Law and Justice party lowers, and the number continues to rise. (PiS), filling a void left by a weakand A survey by TNS, a pollster, found that divided political opposition. 1.5m Poles, about 5% ofthe population, Iran’s Turkish connection KOD has brought large numbers of have taken part in KOD events, and that Poles onto the streets in nationwide 40% approve ofits actions. Before found- Golden squeal demonstrations; exact figures are fiercely ing KOD, Mr Kijowski says, he had attend- disputed. It has drawn international ed only two political-party meetings. As attention, piled pressure on the govern- a blogger and activist he had focused on ment and made Mr Kijowski reviled by non-partisan issues such as fathers’ rights P S i supporters. And it has become a and combating rape. ISTANBUL conduit foranger at abuse ofthe rule of KOD’s success has made Mr Kijowski Did officials help evade sanctions? law. Since taking power last year, PiS has a target. When it emerged that he had tried to reorganise Poland’s constitution- fallen behind on alimony payments to ARLIER this year, FBI agents detained al court, seized direct control ofthe state his first wife, critics argued he was unfit to EReza Zarrab (pictured), a Turkish gold broadcasting channels and the security take the moral high ground. Some gov- trader, atMiami’sinternational airport. His services, and purged the bosses ofstate- ernment sympathisers claim KOD must lawyer said he was on a family trip to Dis- owned companies. The European Union have received support and funding from ney World. Turkey’s president, Recep Tay- is reviewing whether its moves violate unnamed outside sources in order to yip Erdogan, batted away questions about EU statutes. “We want to have a govern- grow so fast. (They have, however, pro- the arrest. “This issue is of no concern to ment that respects the law,” says Mr vided no evidence.) Other criticism has our country,” he said. Kijowski. “We are not fighting against the come from his own side. Earlier this year It now appears otherwise. The investi- result ofthe election, we are fighting a senior member ofKOD quit, saying Mr gation into Mr Zarrab, who is accused of Kijowski ran it autocratically,at odds using his gold business to help Iran’s gov- with its stated ideals, and had treated her ernment skirt American sanctions, has “like a slave”. dredged up embarrassing details about the The attacks have made life difficult at young businessman’s relationship with times, Mr Kijowski concedes. Yet so farhe senior Turkish officials. In their bid to stop has managed to defy those who thought the court accepting Mr Zarrab’s offer of a KOD would run out ofsteam. Many Poles $50m bail package, American prosecutors are genuinely infuriated by the govern- alleged that he had paid three Turkish min- ment’s actions. And the organisation’s isters and the head of Halkbank, a state name recalls an earlier era when the lender, tens of millions of dollars in bribes people defied their rulers: KOR was the to keep his business running and hobble Polish acronym forthe Workers’ Defence competitors. They also pointed to more Committee, Poland’s first big anti-com- than $4.5m in donations by Mr Zarrab to a munist group, established in 1976. charity founded by Mr Erdogan’s wife. “If But Mr Kijowski has also played a the defendant were able to reach Turkish shrewd political game. He has helped soil, he could cause the highest levels of broker a loose coalition between opposi- Turkish government to block his return to tion parties which has put its weight the United States,” they concluded. behind KOD. The renunciation ofplans Similar allegations against Mr Zarrab to turn KOD into a party has helped to and others, including the cabinet ministers defray suspicions that its founderaspires named in the court document, surfaced to power. Its goals, says Mr Kijowski, lie during a sweeping corruption investiga- beyond its dispute with the government: tion that rocked Mr Erdogan’s government “Our job is to create and support civic in 2013. After the Turkish president (then society, and this is a job that will never the prime minister) called the investiga- Kijowski: much Liked finish.” tion a coup attempt, the charges against Mr Zarrab and the otherswere dropped. Many1 56 Europe The Economist June 11th 2016

2 of the prosecutors and police officers in- An exception is France, where Marine volved were reassigned or themselves ar- Women’s lefts Le Pen has closed most of the gap between rested, on conspiracy and terror charges. In Lead for Norbert Hofer over Alexander Van der Bellen the sexes’ willingness to vote for her far- 2015 Turkish officials presented Mr Zarrab By sex and age in presidential election second round, right National Front. She has done so by percentage points, May 22nd 2016 with a “top exporter” award. cultivating a more mainstream image and After combing through Mr Zarrab’s e- Under 29 30-59 60 and over shedding some of the party’s thuggish as- mail account and smartphone, American 4030 20 10– 0+ 10 20 30 sociations. When her irascible father, Jean- investigators say they have found evi- Marie, led the party, its vote was heavily dence that supports the claims made dur- Women male. But in 2012 Ms Le Pen scored almost ing the 2013 probe. They may end up with as highly among women (17%) as among much more ifMrZarrab, who faces up to 75 Men men (19%). years behind bars, cracks and agrees to a Women are not monolithic. The young Source: Frankfurter Allgemeine Zeitung plea bargain. and the old often differ: Austrian women The investigation has already sent Turk- under 29 favoured Mr Van der Bellen by ish stocks tumbling. Shares in Halkbank male voters in 2012, but lost men to Mitt more than 30 percentage points, while have fallenby 20% since Mr Zarrab’s arrest. Romney by eight. This year 60% ofwomen those aged over 60 preferred him by only Butitisunlikelyto putmuch ofa dent in Mr view Donald Trump unfavourably; only ten. In the 2015 British election, the Labour Erdogan’s reputation at home. He emerged 48% feel that way about Hillary Clinton. Party enjoyed a plurality in every female almost unscathed from the 2013 scandal. It was not always thus. In Europe, wom- age group under 55. In the 18-24 age range, Many of his voters felt corruption was a en were long seen as bastions of conserva- women backed Labour over Conserva- small price to pay for a government that tism. In particular,Christian Democrat and tives by 44% to 24%. But women aged over delivered prosperity. “The original investi- Catholic parties benefited from the sup- 55 (a much bigger group) backed the Tories gation had limited impact,” says Naz Mas- port of devout female voters. (Women are over Labour, by 45% to 27%. When the fig- raff of Eurasia Group, a consultancy. “This slightly more likely to be religious than ures were aggregated, the Conservatives one would have even less.” men.) In 1968 the Christian Democrats had a four-point lead among women and Abroad, however, the case may turn won more than 50% of the female vote in an eight-point lead among men. into a major headache. If found to have Italy but less than 30% of the men. Re- Mr Inglehart and Ms Norris expect that flouted American sanctions, Turkish banks search shows that in six European coun- in the long term women’s leftward politi- may be barred from doing international tries—Belgium, Britain, France, Italy, the cal skew will only increase, as conserva- business, says Atilla Yesilada of Global Netherlands and West Germany—female tive older voters die and are replaced by Source Partners, a firm of analysts. “Any- voters skewed conservative in the early more progressive young ones. But will it? thing that implicates them would blow up 1970s by between two and 14 percentage Both men and women tend to become like dynamite.” points. more conservative as they grow older. This And if the American lawyer in charge This began to reverse in the 1980s and could be for economic reasons: as people of the case, Preet Bharara, delivers strong 1990s, according to a paper published in become richer they are more likely to re- evidence that senior Turkish officials took 2000 by Ronald Inglehart and Pippa Nor- sent high taxes. Or it could be for psycho- kickbacks from Mr Zarrab to help Iran ris, two political scientists. In Austria, Ire- logical or cultural reasons: as they age, peo- evade sanctions, American courts would land, Switzerland and most of Scandina- ple grow more set in their ways and be able to try them. As the investigation via, female voters moved to the left. This resistant to social change. proceeds, Mr Zarrab’s suspected accom- may have been the result of a decline in re- But that is an issue for the long term. In plices might want to give Disney World a ligious belief; the shift of women into the the meantime, women may be Europe’s wide berth. 7 workforce, where they found themselves best defence against the farright. 7 in low-paid jobs; and the rise offeministis- sues such as abortion. Women were also How men and women vote less hawkish than men on defence, and more concerned about social equality and The lefter sex the environment. European women have not swung all the way to the far left; they have mostly drifted to the centre. Mattia Forni of Ipsos Mori, a polling group, says that female vot- ers tend to vote for reassuring politicians, Europe’s farright is not such a hit with rather than disruptive or insurgent leaders. the ladies In Italy the 2013 election saw the surge of F WOMEN’S votes had not counted (as the left-wing Five Star Movement, led by Iwas the case until 1918), Norbert Hofer, Beppe Grillo, a fiery and unpredictable the far-right candidate, would have won a eurosceptic comedian. He got more votes landslide victory in Austria’s presidential from men (29%) than from women (22%). election on May 22nd. According to exit By contrast, the more mainstream Matteo polls, 60% of men supported him. But fe- Renzi of the centre-left Democratic Party male voters favoured the Green Party can- did somewhat better with the ladies. didate, Alexander Van der Bellen, by a sim- Women’s moderation shows up on the ilar margin. The ladies’ affections proved right, too. In a recent German opinion poll more valuable than the men’s: Mr Van der for Ipsos Mori, 35% of female voters fa- Bellen won by a sliver, 50.3% to 49.7%. voured the centre-right Christian Demo- In many countries women are more crat party of that model of motherly reas- likely than men to lean left, and the gap surance, Angela Merkel; male support was may be widening. In America, Barack 31%. Only 12% of German women backed Obama had a 12-point margin among fe- the far-right AfD party,against16% ofmen. Leans left, puts ballot in centre The Economist June 11th 2016 Europe 57 Charlemagne The politics of alienation

Even well-meaning parties based on ethnicityare a terrible idea But minorities often feel that centre-left parties take them for granted and offerlittle in return. The Muslims who turned out for Mr Hollande in 2012 stayed home during municipal elections in 2014. (Many blamed the Socialists’ legalisation of gay marriage.) In France and elsewhere, when centre-left parties try to look tough on immigration or terrorism, minorities feel betrayed. That was how Denk got its start. In 2014 the Netherlands’ La- bour deputy prime minister, Lodewijk Asscher, approved extra scrutiny of Turkish-Dutch civic groups to make sure they were not fomenting radical Islam. Soon after, Dutch media reported a poll claiming that 87% ofyoung Turkish-Dutch sympathised with Islamic State. The poll was rubbish—a later study found inter- viewees had not understood the questions—but rather than dis- miss the results, Mr Asscher called them “troubling”. Many Turkish-Dutch Labour stalwarts were infuriated. Party leaders seemed to know nothing about their constituency. “Any- one could see that poll was a mess,” says Munire Manisa, a dis- trict council memberin Amsterdam. Hersolution was to meet Mr Asscher and, among other things, get him to commission the study which debunked the poll. But two ambitious Turkish- Dutch Labour MPs, Tunahan Kuzu and Selcuk Ozturk, seized the O CITY in the Netherlands is so quintessentially Dutch as occasion to breakwith the party and form a new one. NThe Hague. The Binnenhof, the seat of government, is a Denk has now signed up candidates from the Netherlands’ quaint Gothic fortress straight out of a Brothers Grimm fairytale. other two big minority groups: Moroccan-Dutch and Afro-Carib- A mile to the west stands the beaux-arts Peace Palace, headquar- bean. In April it enlisted Farid Azarkan, a former top civil servant ters of the World Court; to the north is the glass-walled finance who heads the country’s main Moroccan-Dutch civil-society ministry, a temple of Calvinist fiscal transparency. But walk—or, group. Then in May it recruited Sylvana Simons, a Surinamese- rather, bicycle—just a mile eastwards, and a less traditional Neth- born television host who has campaigned against the racially in- erlandscomesinto view, one ofGhanaian barbershopsand Turk- sensitive Dutch custom of Zwarte Piet, a black-faced figure who ish tea houses. Women wear headscarves; men in djellabas duck distributes cookies during the children’s holiday of St Nicholas’ into a storefront mosque forevening prayers. Day. Ms Simons called for the “decolonisation” of education and Across from the mosque is Amin’s Moroccan butcher’s shop, language. Dutch traditionalistsresponded with floodsof racistin- where on a recent afternoon, behind a refrigerated counter full of vective on Facebook, and Denkscored a publicity coup. shawarma, Jamal, the owner’s 31-year-old son, was installing a Denkcharges that the condescension ofparties like Labour to- computer. Jamal is just the sort of person who could bridge the wards Dutch minorities is leading to their growing alienation. gap between the country’s traditional identity and its new immi- “People don’t feel recognised, and they don’t feel safe,” says Mr grant communities. He came to the Netherlands with his family Azarkan. A long-running study of Amsterdam municipal elec- at age two, earned a business degree from Erasmus University, tions shows that from the mid-1990s until 2006, when Mr Wild- and worked in data analysis forseveral mid-sized companies. But ers’s party appeared, Turkish-Dutch voter turnout was about last year he gave up on the corporate world and went back to his 50%. By the 2014 elections it had fallen to 34%. Among Moroccan- father’sshop. In Dutch society“racial profilingiseverywhere,” he Dutch voters it fell from 37% in 2006 to just 24% in 2014. “They says; at his last company, he watched in dismay as white col- don’t feel represented by the Labour Party,” says Floris Vermeu- leagues invented reasons to reject ethnic job applicants. len ofthe UniversityofAmsterdam, who co-headsthe study, “but Like most Dutch with immigrant backgrounds, Jamal has in they have nowhere else to go.” the past voted for the centre-left Labour Party. But now he is con- sidering switching to Denk (“Think”), a new party that pitches it- Ethnic politicians need enemies, too selfexplicitly to Muslims and ethnic minorities. After a decade of The danger, however, is that Denk’s approach of representing relentless insults from the anti-Muslim, anti-immigrant politician only ethnic minorities will widen the divisions in Dutch society. Geert Wilders (currently leading in the polls), many of his targets “(The DenkMPs’) speech is drenched with ‘us-against-them’ rhet- feel that neither Labour nor any other mainstream party is stick- oric,” says Ahmed Marcouch, a Moroccan-Dutch Labour MP. ing up for them. Denk will not win more than a few seats in next When the Dutch parliament recently considered a resolution to year’s general election, but it is posinga crucial question: at a time recognise the Armenian genocide, Denktookthe unusual step of of rising xenophobia, can Europe’s minorities rely on the broad forcing individual voting, so that they could use video ofTurkish- centre-left parties for which they usually vote? Should they start Dutch MPs from other parties voting for the motion as campaign their own parties? Or would that only make polarisation worse? material with their constituents. Throughout Europe, Muslims and non-whites tend to vote for This sort ofdivisive politics seems inevitable ifparties are eth- the centre-left. In Austria 68% of ethnic-minority voters picked nically defined. And that is perhaps why Jamal, in the end, will the Social Democrats in the recent general election, against 32% of hesitate to vote for Denk. “The question is, does Denk think of it- whites. One study in France found that 93% of Muslims voted for selfas a party that’s only forthe immigrants?” he asks. “Apolitical the Socialist, François Hollande, in the 2012 presidential election. party is supposed to bring people together.” 7 58 Britain The Economist June 11th 2016

Also in this section 59 Brexit brief: the multispeed EU 60 Bagehot: The new J-curve

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

Consequences of Brexit tated policy in 2008-09, as it did for the euro zone. Politicians like Benedikt Johan- Beyond the fringe nesson, who has just founded a new politi- cal party, are calling for a referendum on the resumption of EU membership talks. Critics highlight three other awkward facts EEA REYKJAVIK aboutthe . First, itsmembers(and Swit- zerland) are obliged to accept free move- Brexiteers are deliberately vague about the alternatives to European Union ment of people—indeed, unlike Britain, all membership. That is because most models, such as Iceland’s, are unsatisfactory are in the Schengen passport-free travel S THE referendum on June 23rd draws unemployment than the EU. If they can zone (see table, next page). Second, all have Anear, the campaign is becoming in- have the heaven of free trade without the to make large payments into the EU bud- creasingly bitter. David Cameron has ac- hell ofEU membership, why can’t Britain? get: in Norway’s case, some 80-90% what cused fellow Tories like Michael Gove, the Iceland may help offer an answer. The Britain pays per head, in Iceland’s only justice secretary, and Boris Johnson, the reason it has stood aside from the EU is fish, slightly less and in Switzerland’s about former mayor of London, of “resorting to which still make up one-third of exports halfas much. total untruths”. The Brexiteers retort that (though tourism has just overtaken it in its Third and most contentious, EEA mem- the prime minister is panicking after polls share of GDP). Icelanders know that the bers (and Switzerland) must observe al- put the Leave side narrowly ahead. EU’s common fisheries policy was a disas- most all the EU’s rules and regulations if The economy is still the Leavers’ weak- ter, whereas they have managed their fish they are to keep access to the single market. est point. They are especially vulnerable to stocks well. Moreover, their highly protect- Norway implements almost 75% of EU leg- the charge of not setting out a preferred al- ed farmers do not want European competi- islation, despite having no say in any of it. ternative trading relationship with the EU. tion. The solution is the EEA, which ex- A big Norwegian report in 2012 concluded Mr Gove has talked airily of a free-trade cludes fisheries and farming but allows mildly that “this raises democratic pro- area from Iceland to Turkey, implying thata them to sell freely to the European market. blems.” Baldur Thorhallsson, a political post-Brexit Britain would automatically be Even so, after its banking meltdown in scientist at the University of Iceland, is in it. Yet this is overly simplistic. The EU’s 2008, Iceland applied to join the EU, be- more emphatic: he says EEA countries suf- single market is fardeeper than a free-trade cause it needed financial stability. Many fera double democratic deficit, part arising area, and most trade deals with the EU are Icelanders wanted to dump the unreliable from the EU’s own failings, the rest from incomplete and come with costs. krona for the euro. But the euro crisis and a the fact that they are not even at the table to The Leave campaign’s reticence may change ofgovernment scuppered the idea. discuss legislative proposals. seem odd, as there are obvious examples Iceland is no longer formally a candidate. Ms Lilja Alfredsdottir responds that a of European countries outside the EU. Ice- Lilja Alfredsdottir, the foreign minister, small country like Iceland would have lit- land, Liechtenstein and Norway are in the says the country has recovered from its fi- tle influence even if it were in the EU. But European Economic Area (EEA). This gives nancial crash and is now happy to remain OlafurStephensen ofthe Icelandic Federa- them access to the single market, although in the EEA. Indeed, she argues that it has tion of Trade says this is not the real point. exports are subject to checks for rules of done better than euro-crisis countries be- What EEA countries lack, he says, is de- origin that Open Europe, a think-tank, says cause it was able to devalue and kept great- tailed knowledge of what is going on as would, if applied to Britain, cost it almost er control over the policy response than, well as contacts with the Brussels institu- 1% of GDP. Switzerland has two bilateral say, Greece or Ireland. By retaining pre- tions and with other EU countries. This deals with the EU that achieve broadly the cious sovereignty, she says, Iceland has the works to their disadvantage. Businesses in same result (though, crucially, they do not best ofboth worlds. Iceland often criticise the government for include most financial services). These Yet many Icelanders disagree, and not its tardiness in implementing EU rules it four countries are richer and have lower just because it was really the IMF that dic- has onlyjustheard about, which can create1 The Economist June 11th 2016 Britain 59

It may have chosen to opt out of the single Interlocking interlocutors currency, but it was more serious than oth- Relationship of European nations to European organisations Euro currency ers about security and foreign policy. Schengen visa The 1997 Amsterdam treaty set up a sys- Britain Ireland Cyprus Turkey free travel tem of “enhanced co-operation”, whereby Denmark Austria Belgium Estonia Finland Switzerland European Union a minimum number of countries (now France Germany Greece Italy Iceland European fixed at nine ofthe 28) may adopt common Latvia Lithuania Luxembourg Malta Liechtenstein Economic Area policies so long as they remain open to NetherlandsPortugal Slovakia Slovenia Norway Justice and new members and do not discriminate in- Spain Home Affairs side the single market. Yet in practice it has opt outs Czech Republic Hungary Poland Sweden barelybeen used. Adivorce reform and the BulgariaCroatia Romania Italics = countries European patent are rare examples. But the notinNATO latest attempt by a group of euro-zone Source: HM Government countries to agree to impose a financial transactions tax is close to collapse. 2 problems forsellers into the single market. So Brexiteers may hope instead for a be- Britain has more opt-outs than any oth- What about the ability ofEEA countries spoke deal for Britain that gives access to er country—from the Schengen passport- and Switzerland to strike trade deals with the single market without EU rules, free free zone, the euro and most EU policies in other countries? Brexiteers point to deals movement of people or budget contribu- justice and home affairs (see table). Partly that Iceland and Switzerland (but not the tions. But this is a delusion. The EU cannot as a result, it has been hostile to anything EU)havemanagedtodowithChina.Yet be generous to a post-Brexit Britain for fear thatsmacksoffirst- and second-class mem- these are shallow and one-sided. Switzer- that others (including the EEA) might de- berships. Its worry focuses on the single land has promised to cut tariffson Chinese mand the same. As evidence, consider currency, a key subgroup of the wider EU. goods immediately, while China has what happened when the Swiss voted in As more countries join (there are now 19 in promised to reciprocate only over the next early 2014 to restrict migration from the EU. the euro and only nine out), the British 5-15 years. European countries outside the The EU has refused even to discuss it: if the have resisted efforts to formalise this divi- EU will also be excluded from the EU-Can- Swissimpose restrictions, theywill lose ac- sion, objecting to any plans to set up new ada free-trade agreement, and from a puta- cess to the single market immediately. euro-zone institutions or to give legal sta- tive Transatlantic Trade and Investment Finally, some Brexiteers suggest giving tus to meetings ofeuro finance ministers or Partnership with America. up the single market and falling back on heads ofgovernment. Ifthese countries offera poor model for World Trade Organisation rules, and uni- Yet the present government has also Brexiteers, are others better? Turkey is in a laterally abolishing tariffs. Yet as the subtly shifted its position. As one former customs union with the EU, but only for WTO’s director-general says, this is not a minister puts it, the old policy was to drive some goods, and not for services; it, too, simple or cost-free option. It would mean in the fast lane but as slowly as possible, falls outside EU trade deals with other tariffs on British exports to the EU,andno holdingeverybodyelse back. Nowthe gov- countries. Balkan countries (Mr Gove has directaccessforfinancial services. Itwould ernment is happy to pull over and let the cited Albania) have association agree- require Britain to renegotiate access to the others accelerate away, especially if that is ments that give access to the single market, 53 countries that have free-trade deals with deemed necessary to shore up the euro. but these are part of the process of acces- the EU. And farmers, manufacturers and This explains why, in his February renego- sion, and they too exclude services. A Ca- others would fight unilateral scrapping of tiation with the EU, David Cameron prom- nadian-style free-trade deal is more pro- tariffs, which would also mean a loss of le- ised not to block future treaty changes that mising as it excludes free movement of verage to open other markets. euro-zone countries might want to make labour, EU rules or payments into the EU It is hard not to conclude that, even ifEU forthe single currency. budget. But it does not include all goods membership has unsatisfactory aspects, it In exchange the prime minister won (car exports are subject to tariffs, for exam- beats all plausible alternatives. No wonder two concessions. The first is a formal recog- ple), nor does it include financial services. the marketsare nervousaboutthe result.7 nition that the goal of ever closer union does not apply to every country. The sec- ond is a legally binding mechanism to al- Brexit brief low nations that are not in the euro to chal- lenge decisions by the euro group (which The charms of variable now makes up on its own a big enough majority to pass EU legislation) that they geometry judge to be against their interests, if neces- sarybytakingthe issue to a full EU summit. These concessions may seem esoteric, but Charles Grant of the Centre for Euro- pean Reform, a think-tank in London, Ourfinal Brexit briefargues that a multispeed Europe suits Britain—and others thinks they are important—and not just for HE original idea of the European Un- tian Democrats (one ofthem the present fi- Britain. What the EU has conceded is, in ef- Tion was that all members should move nance minister, Wolfgang Schaüble) sug- fect, that its members are now moving not atthe same speed towardsthe goal of “ever gested a “hard core” of the original six just at different speeds but towards differ- closer union”. But as the club expanded, it (minus Italy) that would integrate further ent ultimate destinations. This is why true became clear that not everybody either and faster than the laggards. Jacques Chir- believers in a federal Europe hated the deal wanted or would be able to proceed as ac, France’s president, spoke of pioneer given to Mr Cameron. But some other non- quicklyastheirfellows. Thisled to a rash of groups. Others floated the notion of a Eu- euro countries, like Sweden, Poland and plans to allow those who wanted to go rope of flexibility, concentric circles or Hungary, liked it. Indeed, if Brexit prevails fasternot to be held backby the slowest. moving at two speeds. Britain preferred to on June 23rd, they may try to secure the The labels for these ideas have differed talk of variable geometry, to signify differ- same deal for themselves. In the EU, it substantially. In 1994 two German Chris- ent groupings within the same broad club. seems, variable geometry is here to stay. 7 60 Britain The Economist June 11th 2016 Bagehot The new J-curve

Britain’s flirtation with Brexit is more complicated than an anti-globalisation vote the Netherlands and provincial Germany. It is in such prosperous parts, rather than the truly struggling and unemployment-strick- en ones like Greece and Spain, where the politics of national identity and right-populism are most obviously on the rise. What is going on? In Rushden part of the explanation is that David Cameron, like mainstream leaders elsewhere, has played his hand badly in the past: too often panderingto populists rather than confronting them. Yet that is insufficient. Two other ingredients are necessary for populist politics to thrive. First, a catalyst: nationalist Euroscepti- cism is an expression of fury at an establishment that, in strait- ened times, appears to do too much for spendthrift southern Europeans and migrants, and too little for local strivers. But sec- ond, it helps when the strivers in question have a cushion of eco- nomic security that is large enough for them to decide that na- tional identity and sovereignty matter more than greater growth. The Leave campaign has acknowledged this. One of its recent posters reads: “It’s not just the economy, stupid.” “We need to val- ue people’s quality of life and standards of living and not just na- tional GDP figures,” argued MrFarage in his debate with MrCam- eron, to loud cheers from the crowd in Rushden. USHDEN is deepest England. Mock-Tudorestates mingle with To be sure, the dissatisfaction is real. But it may be less revolu- Rpubs and meadows. In the Windmill social club pro-Brexit ac- tionary than it seems at first glance. When they gave examples of tivists gather and are joined by poker players and country-music the evils ofthe union, speakers at the event in Northamptonshire buffs from the room next door. Bolts of lightning over the North- cited damage to local roadscaused byheavyEuropean trucks, an- amptonshire hills light up the hall as Brexiteers slate the status noying regulations and new housing on the green belt. For all the quo. “You’re not living in a democracy any more, ladies and gen- anger (some even talked of civil unrest if the Leave campaign tlemen!” burrs Derek Clark, a former member of the European loses on June 23rd), these were not the complaints of a society Parliament for the UK Independence Party, ahead of a televised that is on the brink. debate between Nigel Farage, UKIP leader, and David Cameron. This is insurgent Britain: the segment of the country that mis- Driven round the bend trusts the power ofBrussels and the IMF. One bank, an old buffer Ian Bremmer of the Eurasia Group, a political consultancy, has tells Bagehot, is at the heart ofit all. “MarkCarney?” he says ofthe talked ofthe “J-curve”. His point is that as countries open up they Bank of England governor: “Even he is Goldman Sachs.” Then he become more volatile before they become more stable. Perhaps turns to the Bilderberg Group. This gathering of influential West- Britain’sdebate on Brexitrevealsa second J-curve towardsthe top ern public figures, he insists, decided in 1953 to form the EU and of the development path: where folk feel safe enough to chal- has indoctrinated every British prime minister since. lenge the globalised establishment but not rich enough to be part Whipping a six-inch-thick wad of European Parliament com- of it. Hence it is the lower-middle class of wealthy and sophisti- mittee papers from a suitcase and flinging the bag to the floor, Mr cated societies, rather than citizens of poorer ones, who seem to Clarklamentshowcomplicated itall isand decriesthe role of“so- be the vanguard ofpopulist politics. It is notable that in Britain, as called experts” in public life. Watchingthis scene, Bagehot cannot in other northern European countries, this is storming ahead a but ruminate on the much-cited observation that Western elec- few years after the economic crisis, once some growth has re- torates are losing faith in globalisation. He is reminded ofa quote turned and unemployment has fallen. It takes a dab ofsecurity to by Antonio Gramsci, the Italian political theorist: “In this inter- rebel against the system. regnum a great variety of morbid symptoms appear.” If Britain is But, as with developing countries on the J-curve, the country living through a political transition, what is on the other side? will one day emerge from its limbo. In Mr Bremmer’s scheme, After all, for a place fed up with globalisation, Rushden seems growing openness powers countries through the bend. For this to have benefited handsomely from the outside world. Cheap new J-curve it is growing economic and cultural confidence consumer goods fill its shops. Fancy technology is de rigueur in about globalisation among the majority. Increasing numbers of its new-build homes. Thanks to the local proliferation of finan- Britain’s young people are going to university. Its immigrant pop- cial-services and logistics firms (many of them providing back- ulation is growing and integrating successfully. The prevailing office functions to big London companies), unemployment here conception of nationality is becoming more civic (a function of in east Northamptonshire is only 3.4%. It is hard to see the insur- values, not background) and less nativist. With each generation, gent sentiment in these parts as a product ofdeprivation. the world’s integration is becoming steadily less controversial. In this sense Rushden is like the other Eurosceptic parts of Eu- Robert Ford of the University of Manchester claims that if the rope. Where right-wing populism—like the Brexit campaign—is EU referendum were being held in ten or 20 years it would be gainingground on the continent, itisoften in the most developed, much less close. Remain would win comfortably. In Gramsci’s economically globalised regions. Places whose residents live a terms: “The crisis consists precisely in the fact that the old is dying longer, more internationally interdependent and more material- and the new cannot be born.” Like all such periods, this will pass. ly wealthy life than almost anywhere else: Denmark, Sweden, But in the meantime: watch out forthose morbid symptoms. International The Economist June 11th 2016 61

Foreign aid watchers, who row bitterly over whether the world needs more foreign aid or less, Misplaced charity mostly agree with them. They tend to add that aid should go to relatively free, well- governed countries. By almost all ofthese measures, foreign aid isfailing. Itisasco-ordinated asa demo- lition derby. Much goes neither to poor people nor to well-run countries, and on Aid is best spent in poor, well-governed countries. That isn’t where it goes some measures the targeting is getting OT long ago Malawi was a donor dar- the places where it will do the most good. worse. Donors try to reward decent re- Nling. Being dirt poor and ravaged by How are they doing? gimes and punish bad ones, but their ef- AIDS, it was needy; with just 17m inhabit- A decade ago governments rich and forts are undermined by other countries ants, a dollop of aid might visibly improve poor set out to define good aid. They de- and by their own impatience. It is extraor- it. Better still, it was more-or-less democrat- clared that aid should be forimproving the dinary that so many clever, well-inten- ic and its leader, Joyce Banda, was wel- lot of poor people—and not, implicitly, for tioned people have made such a mess. come at Westminster and the White propping up friendly dictators or winning Official development aid, which in- House. In 2012 Western countries show- businessforexporters. Itshould be co-ordi- cludes grants, loans, technical advice and ered $1.17 billion on it, and foreign aid ac- nated; otherwise, says William Easterly of debt forgiveness, is worth about $130 bil- counted for28% ofgross national income. New York University, “the poor health lion a year. The channelsoriginating in Ber- The following year corrupt officials, minister is dealing with dozens ofdifferent lin, London, Paris, Tokyo and Washington businessmen and politicians pinched at donors and dozens of different forms to fill are deep and fast-flowing; others are rivu- least $30m from the Malawian treasury. A out.” It should be transparent. Where pos- lets, though the Nordic countries are gener- bureaucrat investigating the thefts was sible, it should flow through governments. ous for their size. More than two-fifths shot three times (he survived, somehow). These are high-minded ideals, reflect- flows through multilateral outfits such as Germany said it would help pay for an in- ing the time they were laid down: the cold the World Bank, the UN and the Global vestigation; later, burglars raided the home war was over and the West had plenty of Fund. Last year 9% was spent on refugees of a German official and stole documents money. They are nonetheless sound. Aid- in donor countries, reflecting the surge of1 relating to the scandal. Malawi is no longer a donor darling. It now resembles a clingy lover, which would be dumped were it not so needy. It still gets a lot of foreign aid Kyrgyzstan ($930m in 2014), but donors try to keep the Turkey $3,954 $6,645 cash out ofthe government’s hands. Vietnam Foreign aid can work wonders. It set $1,658 India South Korea and Taiwan on the path to $17 riches, helped extinguish smallpox in the Nigeria Ethiopia Thailand 1970s and has almost eliminated polio. Un- $27 $92 $7,985 fortunately, asMalawi shows, it is liable to Congo be snaffled by crooks. Aid can also burden $30 Aid* per person living on less Malawi than $1.90 a day, 2014, $ $76 weak bureaucracies, distort markets, prop Chile 1-30 31-60 61-100 up dictators and help prolong civil wars. $1,325 101-150 151-500 501-1,000 Taxpayers in rich countries dislike their 1,000+ no data cash being spent on Mercedes-Benzes. So *Country programmable aid Sources: OECD; World Bank donors strive to send the right sort of aid to 62 International The Economist June 11th 2016

2 migrants to Europe. Even if Western countries sent clear, by concentrating on a few projects in a few As the aid river twists and braids, it in- consistent signals, they might struggle to countries. But they strive to achieve the op- undates some places and not others. India be heard. Aid hasbecome lessimportant to posite. To them, and to the politicians who contains some 275m people living on less many poor countries than foreign invest- control the purse strings, plastering the than $1.90 a day. It got $4.8 billion in “coun- ment or remittances. And donors have be- world with flags is a sign of success. Erik try programmable aid” (the most routine come far more diverse. Several countries Solheim, chairman of the OECD’s Devel- kind) in 2014, which is $17 perpoor person. that used to receive aid now hand it out; a opment Assistance Committee, remem- Vietnam also got $4.8 billion; but, because few, including India and Turkey, do both. bers trying to persuade his own country, it is much smaller and rather better off, that China distributed roughly $3.4 billion last Norway, to focus on what it really knows works out to $1,658 per poor person (see year, according to the OECD. Although that about (managing an oil boom) rather than map on previous page). By this measure is puny next to America or Britain, China is on things like tropical agriculture. He did South-EastAsia and South America fare es- important because it can act as a shock ab- not succeed. pecially well. sorber, movinginto a country when others A decade ago the approved cure for Western countries have mostly been are pullingout. Lastmonth itpromised Ma- fragmentation wasfordonorsto payaid di- shamed out of the cold war-era habit of lawi more food aid and 100 police cars. rectly to poor countries to use as they funnelling aid to friendly regimes and for- For corrupt dictators, Chinese aid is please. This has become deeply unfashion- mer colonies. But aid is still used more-or- even better than the Western kind. China able. A donor who funds a government less explicitly as a tool of foreign policy— tends not to fuss overdemocracy, and it sel- feels responsible for every dismal thing and increasingly so, says Owen Barder of dom objects to loans being spent on point- that government does, whether it is pass- the Centre for Global Development, a lessgrand projects: afterall, itbuilds a lot of ing anti-gay laws or stealing the cash. Once think-tank. Today’s enemy is not commu- those at home. The money is easier to snaf- lost, trust is hard to recover. Donors seem nism but radical Islam. Afghanistan, Egypt, fle. One study found that Chinese aid is disinclined to resume direct budget sup- Jordan, Syria and Turkey each got more net highly likely to flow to the districts where port to Malawi: one describes it as “in the aid than Bangladesh in 2014, although African leaders were born. past”. Britain’s department forinternation- none contains nearly as many poor peo- In one big way, though, the prolifera- al development, which used to proselytise ple. Thisweekthe EU promised more aid to tion of donors harms poor countries. Aid about the virtues of budget support, said African and Middle Eastern countries that now comes from ever more directions, in last yearthat it would stop doingit. Increas- clamp down on migrants. ever smaller packages: according to Aid- ingly, donors also earmark the funds they Data, the average project was worth $1.9m provide to multilateral outfits. Rewarding failure in 2013, down from $5.3m in 2000. Mozam- The situation is a mess in almost every A better reason not to give much aid to the bique has 27 substantial donors in the field way. Which is why it is good news that a poorest countries is that many are badly of health alone, not counting most non- great deal of progress has been made on run. But that is not why they get so little. Western or private givers. Belgium, France, one of the ideals agreed on in Paris a de- Claudia Williamson of Mississippi State Italy, Japan and Sweden each supplied less cade ago. Donors have become far more University has created a yardstick that than $1m. Such fragmentation strains poor open about where their aid goes and how measures both poverty and the quality of countries, both because of the endless re- it is spent. It is because of the advances in government. On hermeasure, the targeting port-writing and because civil servants are transparency that we know just how badly of aid worsened between 2004 and 2012. hired away to manage donors’ projects. things are going. But knowledge and the “Aid goes to middle-income countries that Donors would probably do more good willingness to change are not the same. 7 are also poorly governed,” she says. Donors often reward democratic re- forms; they also try to punish corruption Where does the aid go? and backsliding, as in Malawi. Between 2009 and 2014, 12 countries improved by at Why do donors lavish money on some countries and not others? Being well-governed least two points on a 14-point scale pro- (represented by the dark circles) seems to make no difference; nor, strangely, does duced by Freedom House, a think-tank, being poor (the smallest circles). What helps is to be small. Among 56 low- and middle- suggesting they became notably more income countries, the top ten aid recipients per person include seven of the ten least democratic and liberal. Ten of them re- populous. The ten receiving the least aid include the six biggest. In 2014 Samoa re- ceived more net aid in 2014 than five years ceived $458 per person; India made do with $3.69. Smaller countries tend to have less earlier. Of the nine aid-receiving countries bureaucracy, so aid can be put to use more quickly. But the main reason is probably that that worsened by two points or more on a little cash can have a more visible effect in a small country. Jesus told his followers to the same scale, six got less. do good secretly, and be rewarded in heaven. Some donors, it seems, cannot wait. But such inducements tend to be subtle, whereas the surge of aid into strategically Population and aid per person, 2014 Freedom House score GDP per 5.0 important states is often huge. Net foreign 100=best person 1.5 1,000 81 6 $’000 0.5 aid to Turkey, an increasingly autocratic Samoa Kosovo country that is not poor, rose more than Bhutan tenfold between 2004 and 2014, to $3.4 bil- Vanuatu lion. Besides, donors often have short at- 100 tention spans. Two academics, Darren São Tomé and Príncipe Bangladesh Hawkins and Jay Goodliffe, have shown Pakistan Indonesia that donors tend to reward countries that 10 per person, $, log scale are becoming more like them. Once coun- * Philippines India tries have joined the democratic club, aid Aid Nigeria drops. American aid to Peru followed that pattern. “You get penalised for achieving 1 0.1 1 10 100 1,000 too high a level of democratic gover- Population, m, log scale nance,” says Brad Parks of AidData, anoth- er think-tank. Sources: OECD; IMF; World Bank; Freedom House; The Economist *Country programmable aid Hear from the experts on the future of work rate with code ECONMAG. 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The internet of things cewaterhouseCoopers, a consulting firm, found that 72% of people have no plans to Where the smart is adopt smart-home technology in the next two to five years and that they are unwill- ing to pay for it. Last year consumers glob- ally spent around $60 billion on hardware and services forthe smart home, a fraction SAN FRANCISCO ofthe total outlay on domestic gadgets. There are several reasons for muted en- Connected homes will take longerto materialise than expected thusiasm. Businesses have an incentive to HE fanfare has gone on for years. An- embrace the internet of things: there are Talysts have repeatedly predicted that Smartening up cost savings to be had from embedding the “internet of things”, which adds sen- American households with a smart-home device sensors in equipment and factories, ana- sors and internet capability to everyday %oftotal lysing the data thus produced and improv- physical objects, could transform the lives ing efficiency.A lot of smart devices forthe 20 of individuals as dramatically as the FORECAST home, in contrast, remain “fun but not es- spread of the mobile internet. Providers sential”, says Adam Segar of Canary, a have focused on the home, touting pro- 15 startupthatmakescamerasthatletspeople ducts such as coffeepots that turn on when monitor what is happening in their house. the alarm clock rings, lighting and blinds 10 Many smart gadgets are still too expen- that adjust to the time of day, and fridges sive. One of Samsung’s smart fridges, with that send an alert when the milk runs out. 5 cameras within that check for rotting food But so far consumers have been largely re- and enable consumersto see whatthey are sistant to making their homes “smart”. 0 short of while shopping (through an app That’s not for want of trying by tech 2015 16 17 18 19 20 21 on theirphone), sells fora cool $5,000. Peo- firms,whichhavepouredcashintotheiref- Source: Forrester ple who can afford that probably don’t do forts to connect everyday objects to the in- their own shopping. Appliances such as ternet. In 2014 Google made the biggest der and boss, stepped down on June 3rd to fridges are also ones that households re- statement ofintent so far, spending$3.2 bil- take an advisory role at Google’s parent place infrequently: that slows the take-up lion to acquire Nest, a smart thermostat- company, Alphabet (see next article). Mr ofnew devices. maker, and $550m to buy Dropcam, which Fadell, a former executive at Apple and de- The technology is not perfect yet, either. makes home-security cameras. Nest ab- signer of the iPod, failed to bring his magic The smartphone, the linkbetween the cus- sorbed Dropcam; it is now one of the best- touch to the smart home. tomer and smart-home device, has raised known smart-home brands. But it is also a Nest’sproblemsare symptomatic. Only consumers’ expectations, explains Jamie warning about how long it will take for 6% of American households have a smart- Siminoff, the boss of Ring, a startup that1 such gadgets to enter the mainstream. home device, including internet-connect- Job opening: The Economist is looking for an Nest has undoubtedly disappointed ed appliances, home-monitoring systems, investigative reporter to work at its headquarters in Google. It sold just 1.3m smart thermostats speakers orlighting, accordingto Frank Gil- London. Research and analytical skills, an ability to in 2015, and only 2.5m in total over the past lett of Forrester, a research firm. Breakneck write informatively, succinctly and wittily, and insatiable curiosity are essential. Prior investigative experience few years, according to Strategy Analytics, growth is not expected; by 2021 the num- would be an advantage. Applicants should send a CV, a a research firm. For a couple of years the berwill be just over15%(see chart). Too few brief letter introducing themselves and an article of firm has mainly tweaked existing products consumers are convinced that the internet about 600 words that they think would be suitable for publication in the business section to rather than introducing new ones. That has a role to play in every corner of their [email protected]. The closing date for may explain why Tony Fadell, Nest’s foun- lives. A survey conducted in Britain by Pri- applications is July 1st 2016. 66 Business The Economist June 11th 2016

2 makes a doorbell that can be answered re- vertising, also wants to draw from a fresh model for the smart home will be,” says motely.Smartphones have trained users to well ofdata; by learning as much about us- AndyHobsbawm ofEvrythng, an internet- expect a level ofquality and seamless ease ers as possible, it can target them with ap- of-things platform. Some firms will try to of use that smart-home devices struggle to propriate ads. Apple, with a track record of make enough profit just from hardware. replicate. And a lack of standardisation simplifying and creating ecosystems Others will try to sell services, such as ar- means that gadgets from different firms where others before it could not, wants its chiving security videos, as well as devices, cannot communicate with each other. devices to be the gateway through which and charge a fee. The products that fill There are exceptions. Devices that are people go to organise their lives. houses are diverse, personal and durable. easy to install and offer obvious benefits If the tech giants retain their ambition That should give plenty of companies a are gaining in popularity, such as motion to sit at the centre of the smart home, un- shot at lodging themselves in the home— sensors that send alerts when windows certainty prevails over where the profits but only when consumers decide to put and doors are opened and cameras to lie. “It remains unclear what the economic out the welcome mat. 7 monitor activity. Some devices, such as smart smoke detectors, are in homes be- cause insurance companies offer financial Google’s other businesses incentives forusingthem. The smart-home sector is vibrant with startups and big Alpha minus firms betting that the hesitancy is tempo- rary.But consumer apathy has forced firms to rethinkhow they might woo customers. Perhaps the biggest surprise is that Am- azon, which failed miserably in its ambi- tion to develop a smartphone, is showing Alphabet is still working out how to treat its internal startups the way. Amazon Echo is a smart speaker that can recognise and respond to voice MPOWERING great entrepreneurs because of Nest’s disappointing results commands. It shares information about “Eand [allowing] companies to flour- and his abrasive management style, but the weather and sports scores, plays music ish.” This was one of the reasons Larry the fact that he no longer got along with Mr and turns lights on and off. The device, Page, the co-founder of Google, gave when Page. Even before Alphabet was launched, which costs around $180, is not yet a big he announced almost a year ago that the Andy Rubin, who ran the company’s ro- seller. Amazon does not release sales fig- firm would restructure itself. Google, botics business, also stepped down, appar- ures, but Strategy Analytics estimates that which comprises the internet-search and ently because he was bored (he now runs fewer than 1m Echos have been sold since advertising business, now sits as a subsid- an incubator of hardware startups called it was released in November 2014. Yet the iary in a holding company called Alpha- Playground). One of the firms he persuad- Echo is the talkofSilicon Valley. bet, alongside the “other bets”, a dozen ed Google to buy is Boston Dynamics, a startup businesses that range from fibre maker of artificial dogs and other scary- Talk to your appliance networks and smart cities to robotics and looking mechanical beasts (see picture). Its An interface that relies on voice com- life sciences. Yet for now at least, the flour- founder, Marc Raibert, is known to cherish mands could overcome one of the draw- ishing is limited and the entrepreneurs his autonomy. backs of the piecemeal approach to the seem somewhat less than empowered. That may help explain why Boston Dy- smart home, by becoming the standard in- When Tony Fadell, the boss of Nest, namics is now up for sale. An uncertain tegrator of all the other bits of smart kit. which makes wireless thermostats and path to profitability may also play its part Echo is open to outside developers, who other “smart home” devices (see previous in that decision. The firm’s automatons are can come up with all manner of devices article), resigned last week, it was not only a hit on YouTube, but internally Alphabet1 and services that hook up with it. Echo’s success may have come as a surprise, but competitors have cottoned on that it may be a crucial piece of equipment. Google has announced plans to build a stand- alone hub like Echo, called Google Home, which will also rely on voice commands. Apple is also expected to announce new smart-home capabilities: there are ru- mours it could launch a stand-alone hub in the Echo vein atitsannual developers’ con- ference on June 13th. Its smart-home plat- form, called HomeKit, has been a failure so far. That Apple, despite its large base of af- fluent acolytes, has not yet cracked the smart home is a sign of its difficulty,points out Geoff Blaber at CCS Insight, which tracks mobile-industry trends. Each tech giant has a different reason for trying to overcome the indifference of consumers, and to embed itself more deeply in the home. The Echo can help Amazon learn how people spend their time, and make it easier for them to spend money too by suggesting things they might buy. Google, whose main business is ad- Who’s the Terminator now? The Economist June 11th 2016 Business 67

2 thinks it will take another decade before Fosun they can be put to commercial use. Herding entrepreneurs is hard. And bets on new technologies are risky. Yet Al- Bloated but still bingeing phabet is grappling with a problem that SHANGHAI has already troubled many other big tech China’s leading industrial conglomerate needs to shed debt firms: how much freedom, money and time to give internal startups. As much as it UO GUANGCHANG made head- is designed to give entrepreneurs their Glines around the world in December head, the holdingstructure is also meant to when the billionaire industrialist sud- create more clarity about how much is in- denly disappeared, supposedly to co- vested in riskier bets. As such, it marks the operate “voluntarily” with Chinese beginning of what Mr Fadell has called a anti-corruption investigators at a secret “fiscal discipline era”. location. Shares in his company,Fosun, The core Google business is growing China’s biggest private-sector conglomer- nicely and is highly profitable, but the oth- ate, tumbled. Potential takeovers abroad er “moonshot” businesses keep losing began to unravel. He was released with- money. How much exactly is hard to say out accusation ofwrongdoing, but the because Alphabet only publishes consoli- incident served as a warning about politi- dated numbers for these ventures. In 2015 cal riskin China. Mr Guo recently down- the combined losses for the non-Google played the incident: “Halfa year has businesses hit $3.6 billion on revenue of already passed…we are backto normal.” just $448m. That is a drop in the bucket for That is not the good news it seems, Alphabet: it generated $75 billion in rev- because “normal” involves an even enues and $16.3 billion in profits last year. bigger risk. Fosun has vast debts after an Aiming high But a structure that focuses investors’ at- orgy offoreign acquisitions that has cost, tention on how these other bets are going by one estimate, around $30 billion. In has not quite come off, yet. may limit flexibility as much as enable it. 7 recent years, it has acquired France’s Club Mr Guo is understandably keen to Med, a resort operator, and bought stakes reassure investors. In his most recent in Britain’s Thomas Cook, a travel agent, letter to shareholders, he vowed the firm Marketing rebates and in Canada’s Cirque du Soleil, an would “optimise the debt structure so as entertainment troupe. to reduce financing cost”. He also claimed Trust me Fosun has also been buying insurance recently that he has a “clear plan” to firms worldwide. That is not going entire- upgrade his firm’s debt to investment- ly smoothly. It confirmed on June 4th that grade “as soon as possible”. This too is one recent acquisition, ofBermuda- not the good news it seems. His plan based Ironshore, is being reviewed by an involves lots ofnew acquisitions. American agency that handles national- The Chinese tycoon says he plans to Advertising agencies are accused of security matters. Inspired by Warren shift his focus to deals in big emerging serving themselves Buffett’s business model, Mr Guo is buy- markets. On June 6th reports emerged UNE is usually a cheerful month for ad- ing insurers to use the “float”, money that Fosun’s offerof$1.3 billion to acquire Jmen: they are scheduled to celebrate held to pay future claims, to invest in India’s Gland Pharma is the highest bid their feats at the humbly titled Cannes other businesses in the meantime. from the firm’s suitors. But it continues to Lions International Festival of Creativity, This binge led Standard & Poor’s to expand in the rich world, too. News which starts on June 18th. Yet the get-to- downgrade Fosun’s debt to negative on surfaced this weekthat it is bidding fora gether this year may be abuzz with darker June 4th. The ratings agency pointed to stake in Compagnie des Alpes, another talk. On June 7th America’s Association of the rise in the firm’s ratio ofdebt to European tourism firm. National Advertisers (ANA), a trade group EBITDA (a measure ofprofitability) for its Despite the mountain ofdebt, Mr Guo for marketers, published a report accusing industrial operations from 9.1in 2014 to vows to turn his firm into “the world’s advertising agencies of accepting rebates, 16.8 last year. It also noted that industrial leading service provider…ofhealth, or kickbacks, from media companies. A operations still accounted forover four- wealth and happiness” within a decade. group representing American ad agencies fifths ofFosun’s consolidated revenues at Ifhe means it, investors in Fosun may slammed the report as “anonymous, in- the end of2015, suggesting that a transfor- end up less worried about the disappear- conclusive, and one-sided”. The brawl is mation into China’s Berkshire Hathaway ance ofMr Guo than that oftheir money. sure to continue. The ANA’s report is the culmination of years of conjecture about such rebates, declared rebates to be widespread. In Oc- theirs. Ora clientmightfind itself spending whereby media companies reward agen- tober the ANA hired an independent com- moneyon a certain ad, notbecause it fitsits cies for buying chunks of ad space by giv- pany, K2, to investigate. marketing strategy but because it allowed ing them cash, fees or other benefits. In Its report has fanned advertisers’ fears. the agency to gain a rebate. some countries advertisers know of such Based on interviews with 150 anonymous Such findings would stretch even the rebates and plan for them. In America the sources, K2 found that rebates are deliv- strongest bond between advertiser and practice has haunted the industry. ered both in cash and in subtler forms. For agency. But the relationship is already Big advertising holding companies example, media firms pay fees to agencies frayed. Advertisers have long squeezed such as WPP, which owns several big ad forservices, such as research, that are often fees to agencies and remain wary of wast- agencies, deny the existence of rebates. nominal or not provided at all. This is wor- ingmoney. The complexityofthe digital ad Others in the industry say rebates are a risome for clients for at least two reasons. industry is partly to blame. It is hard to shadowy practice, underminingclients’ in- Unbeknown to them, agencies might track which fees are paid to which ven- terests. Last year a former WPP executive pocket rebates that should presumably be dors. Too often ads are fraudulently fun-1 68 Business The Economist June 11th 2016

2 neled to robots rather than people. ity as fraudulent in its study.Agencies may the riskofsevere lung damage by116 times. There is broader concern, too, over con- not even have violated the terms of their Prosecutors charged three executives at flictsofinterest.K2pointedtoholdingcom- contracts. Oxy in May with shirking toxicity tests on panies directing advertisers’ spending to Nevertheless, the relationship between the disinfectant. On June 7th John Lee, for- firms in which they had invested, as well advertiser and ad agency may become in- merly head of the local unit of Reckitt as buying media space and reselling it to creasingly hostile. Advertisers are likely to Benckiser and now boss of Google Korea, clients at a 90% mark-up. K2’s report rein- become stingier with their budgets, reck- was summoned again by prosecutors for forces the fear that an agency’s remit to ons Brian Wieser of Pivotal Research anotherround ofquestionsaboutthe toxic serve clients might clash with a holding Group, a research firm. They may also seek steriliser. South Koreans are incensed that company’s duty to shareholders. “There stricter terms. In April a British advertisers’ it has taken so long for the government to maybe lotsoftransactionsthatare not nec- trade group published a new template for act, despite their protest campaigns. In the essarily done with the best interest of the contracts, including broad rights to audit decade after 2001 South Koreans bought marketer in mind,” argues Bob Liodice, agencies. The ANA is now developing its over 4.5m ofOxy’s suspect products. president ofthe ANA. own scheme, to be finalised by the end of In quick succession in late April, two Whether the report will lead to legal ac- June. Advertisers are likely to think much South Korean retailers who sold the disin- tion remains unclear. K2 did not condemn longer and harder before signing on the fectants under their own brands—Lotte anycompanybyname, norlabel anyactiv- dotted line. 7 Mart and Homeplus—issued apologies and promised compensation, followed by Oxy itself, which, for the first time, accept- Household chemicals in South Korea ed the “fullest responsibility”. Retailers have stopped ordering Reckitt Benckiser The germ of an idea products altogether. The government re- cently said that it had reviewed 15,000 pro- ducts, from deodorisers to detergents, and had banned seven biocides, the com- pounds that kill germs, for containing pro- SEOUL hibited chemicals. Nevertheless, the scandal is starting to A probe into deadly disinfectants spurs South Koreans to go green change the way South Koreans shop. Con- ARMLESS to humans”, assured the munication at Sogang University in Seoul, sumers are shunning laundry liquids, wet “Hslogan on humidifier disinfectants became the “single most important topic wipes and air fresheners. E-Mart, another sold to South Koreans in the early 2000s by of daily discussions” in the 1980s. Since retailer, says sales of bleach fell by 38% in Oxy, a local unit of Reckitt Benckiser, an then, everything from baby soap to wash- the three weeks following Lotte’s apology; Anglo-Dutch consumer-goods company.A ing machines has claimed to act as a steril- dehumidifying detergents dropped by al- widening criminal investigation by South iser—something Mr Lee decries as “phobia most half. Long-standing customers of Korea’sgovernmentinto dozensofcases of marketing”. So it is a particular blow when Dure Co-op, a network of organic shops in lung disease, some of them fatal, suggests it turns out that products which should im- the Seoul region, say even they use chemi- the opposite. It is now examining compen- prove cleanliness might do harm. cal detergents because they are more effec- sation claims by another 750 victims, on The government suspended sales of tive at killing germs. But since the scandal top ofthe 530 lodged since 2011. the disinfectants sold by Oxy and three they have dumped their Oxy products in a Chemical sanitisation in homes and of- other local companies in 2011, after an in- dedicated box at the entrance to the store. fices is prized as a sign of the country’s rap- vestigation into the deaths that year offour Those who do can buy Dure’s alternative id progress since its economic take-off in pregnant women suggested poisonous cleaning products at half-price, among the 1980s lifted millions from squalor and chemicals in theirproducts were the cause. them an airfreshenermade from citric acid disease. Killing germs, says Lee Duck- A government study recently revealed that and plant-derived anti-microbials. hwan, a professor of chemistry and com- exposure to the sterilisers had multiplied The manager of the co-operative says that more have been buying up “green” household products, especially since the “no-poo” movement, which renounces shampoo, caught on in South Korea last year. South Korean newspapers now refer to this new group as the “no-chemi clan”. Some even make their own products: Bae In-suk is one of ten mothers who meet up regularly in Seoul to make facial soaps since the Oxy scandal has mushroomed. Mr Lee says the government’s recent promise to catalogue the level oftoxicity of every household biocide is impractical. So too, he says, is the no-chemi movement—it is better to educate consumers about how to use products safely. Hwahae, a cosmet- ics-reviewing app launched in 2013 (by three men who wanted to know what ex- actly was in their facial products) has al- ready clocked up 2.5m downloads. It lets consumers read up on 1.9m ingredients in 62,000 items. It is always good to know what you are rubbing on your face. 7 No more soft-soaping The Economist June 11th 2016 Business 69

means of domestic air travel. Appointing cronies has ensured inept management. The standard ofservice on state airlines is often woeful. Aerolíneas cancels three times more flights than the industry aver- age, and loses roughly twice as many bags. Venezuelan travellers have the added pro- blem that foreign airlines are leaving the country in a dispute over how to repatriate money from sales because the govern- ment cannot find the dollars to pay them fortickets issued in the country. Elsewhere publicly listed airlines pro- vide much better service but are just as hard to dislodge. LAN Chile set up subsid- iaries in Peru, Argentina, Ecuador and Co- lombia before merging with TAM, Brazil’s biggest airline, in 2012. LATAM is now the largest airline across swathes of the conti- nent. In smaller markets such as Peru, Chile, and Ecuador LATAM and Avianca, a Airlines in South America Colombian carrier, already have big net- works that leave little space for LCCsto op- No El Dorado erate domestically. Barriers to entry are high: dealing with a slew of differing regu- lations makes setting up new cross-border routes expensive. Why then are the incumbents not mak- ing more money? LATAM lost $219m in 2015; Avianca lost $140m. As passenger Why the continent’s airlines are losing so much money numbers grew during the commodities HEN phone footage came to light last their impact has been limited. As a result, boom, most airlines ordered lots of expen- Wyearofa stripperopeningthe throttle the continent’s growing middle-classes sive new planes. But just as they arrive on during the take-off of a commercial jet op- have not taken to the skies as enthusiasti- the tarmac, demand for air travel is stum- erated by Aerolíneas Argentina, the public cally as in the rest ofthe world. bling. South America is still reeling from outcry was predictably fierce. Argentina’s This is partly attributable to a lack of in- the bursting of the commodities bubble. state-owned flag carrier swiftly sacked the frastructure. There are few secondary air- This has hit domestic and cross-border air pilots who had invited her into the cockpit ports of the sort frequented by LCCs in Eu- travel alike. Worries about the spread of and the lady herself was banned from the rope or specialist low-cost terminals at the Zika virus have also deterred visitors to airline for five years. Endangering the safe- bigger airports that are common in Asia. the continent. In 2016 growth in passenger ty of passengers is a serious concern. Yet That lands LCCs with the same high air- traffic in Latin America is likely to lag every the company’s assault on the public fi- port feesas bigcarriers. Gol, the largest Bra- other region, according to IATA. nances is almost as reckless: Argentines zilian LCC, made a loss of 4.29 billion reais Some of the continent’s politicians have tolerated vast subsidies and huge ($1.3 billion) in 2015. have woken up to the industry’s structural losses at their national airline. In some countries, budget carriers have problems. In Argentina, Mauricio Macri, Even without the drag of state owner- been kept at bay by state-run incumbents. the victor in November’s presidential elec- ship, other South American airlines have Cash-rich left-wing governments in the re- tion, has announced plans to withdraw a recently either lost money or made only gion set up or revived flag carriers as mon- $500m subsidy from Aerolíneas. The air- meagre profits (see chart). Airlines in Latin ey poured in when commodity prices line’s new management plans to cut capac- America as a whole (whose performance were high. In Bolivia and Venezuela state- ity and return to profit by 2020. Brazil is ne- is flattered by the inclusion of Mexico’s owned airlines are virtually the only gotiating with the EU for an “open-skies” mostlyprofitable flyers) even surpassed Af- deal that would boost competition by al- rica’s beleaguered carriers in their ability lowing airlines from those countries to to lose moneyin 2015, accordingto IATA, an Low flying serve any airport in Brazil. Before her im- industry body. That marks them out at a Net profit/loss of commercial airlines, $bn peachment the country’s president, Dilma time when the tailwinds of growing pas- Latin America* Rousseff, was said to be consideringraising Total 40 senger numbers and cheap fuel have car- Magnified the share foreigners can own in local air- of which: ried many other airlines to unusual Latin America* 2 lines from 20% to 100%, allowing better- heights ofprofitability. 20 run foreign carriers to buy domestic ones. The region’s airlines don’t lose money + 1 Michel Temer, Brazil’s interim presi- because flights are cheap. Air fares are eye- dent, is also said to be considering a relax- 0 + wateringly pricey—an internal flight in Bra- ation of foreign-ownership rules. And in- 0 zil can cost as much as one to Europe. Trav- – trepid budget carriers will doubtless try to – ellershave notbenefited from the ascent of 20 overcome the difficulties and set up routes 1 low-cost carriers (LCCs) because budget in more countries. But unless more politi- airlines are thin on the ground. Outside cians in the region turn their attention to Brazil’s domestic market, where Azul and 40 2 aviation, South America will continue to 2003 08 13 16 2003 08 13 16 Gol carry passengers between the coun- be the continent of sky-high fares and lim- Source: IATA *Includes Mexico try’s far-flung cities, there are few LCCsand ited choice. 7 70 Business The Economist June 11th 2016 Schumpeter Their eyes on Albion

Most European bosses are twitchy about Brexit; a few spy an opportunity professor at ESADE, a business school in Barcelona. A second and larger camp sees Britain’s departure as realistic and a serious threat, for a variety of reasons. Jacob and Marcus Wallenberg, two Swedish industrialists, voiced their fears a year ago that without London as a counterweight to Paris and Berlin the EU would gradually become unfriendlier to business. Others worry about the direct impact on investments in Britain. Both BMW and Nissan have said Brexit would hurt their operations in the country. Arepresentative ofone big multinational firm says it has been weighing up contingencies for months, as 80% of pro- duction at its British car plants goes to the EU. Given thin profit margins and the risk of tariffs, currency swings or other barriers to trade, it would shift new investment to the continent. The first secession since Greenland quit the European Eco- nomic Community in 1985 might do even broader damage, by some reckonings. The Paris-based boss of a big car-parts supplier says the main riskis the triggeringofwiderinstability, the “unrav- elling” of continental institutions and talk of exit by others. Con- findustria, Italy’s bosses’ association, says that it does not know ofa single CEO in favour ofBrexit but that some fret about an “av- alanche effect” of turbulence in capital markets and uncertainty OU do not have to be British to take a view on Britain’s place in trade negotiations that could cost businesses dearly. Yin Europe. Almost every global economic institution has pre- There is a third group, however. This camp, the least outspo- dicted damage if Britain leaves the European Union. Barack ken, is contrarian. Some spy short-term opportunities: a few Obama pooh-poohed Brexiteers’ hopes of striking a quick bilat- hedge funds are commissioning private exit polls on the day of eral trade deal with America, deflating those who claim export- the referendum in orderto make betsin the currencymarkets. But ers would flourish outside the EU. Jamie Dimon, the boss of others thinkthat Brexit will yield bigger, long-term payoffs. JPMorgan Chase, a big American bank, has called Brexit a “terri- Many in this third group serve the finance industry. Brexit ble deal for the British economy”. Those with European accents would weaken London, as jobs and business drift to Paris or are no more impressed. Angela Merkel, Germany’s chancellor, Frankfurt. HSBC has said it might shift 1,000 investment bankers has warned Britons that trading with the EU itself might prove from London to Paris, if Britain goes it alone. JPMorgan Chase hard from outside the fold. On May 31st Europe’s biggest busi- reckons 4,000 staff might be moved to the continent. Property nesses chimed in: leaders of 51 large firms—claiming collectively will be needed and IT systems procured from local firms. French to have created jobs for some 7m people—said a split would di- lawyersand accountantsmightreplace British ones. And asbank- minish both Britain and Europe as a whole. ers arrive everyone from estate agents with palatial homes on These big firms, convened as a “European Round Table of In- their books to bar owners can expect a boost to their business. dustrialists”, are led by Benoît Potier, a knight of the French Le- Other businesses also see advantages from Brexit. Some firms gion of Honour and the boss of Air Liquide, an industrial giant. in Switzerland like the idea of another economy becoming semi- Lectures from a titled Frenchman who knows about gases are un- detached, believing it could be easier for the Swiss to negotiate likely to win over wavering voters in the referendum on June with the EU ifBritain were in a similar position. A poll of185 com- 23rd. Those tempted by Brexit are swayed by emotions: fears of panies in March by the British-Swiss Chamber of Commerce foreigners; romantic ideas of sovereignty; Trumpian calls to re- found 13.5% believed Brexit would improve their fortunes. Uni- verse globalisation. Rational comments from moderate business versities on the continent, especially those that teach in English, folk, let alone French ones, pluckfew heartstrings. could profit if EU students turn away from Britain. “No way will I Nor is it clear that this group of bosses speaks for everyone on send my daughterto study in London afterBrexit,” says the moth- the continent. Schumpeter has spent the past six months asking er of one teenager in Paris, predicting that fees in Britain would owners, CEOs, bankers and others in European business what soar without EU caps. Jean-Christophe Babin, boss of Bulgari, a they make of Brexit. They fall into three groups. One lot, a minor- luxury-goods firm, says he would be untroubled by Brexit fordif- ity, assumesit is not—and never was—a serious prospect, despite ferent reasons: if the pound slumped, tourists would boost sales some polls in Britain now suggesting the Leave camp is ahead. A at his new flagship shop in London. phlegmatic Swedish banker, paid to assess political risk and how currencies might move, says he and colleagues rate the chance of Lose an island, seize an opportunity rupture at almost zero. Consumer-research and polling compa- Polls suggest that public opinion in Europe expects and favours nies across Europe recently concluded that few of the businesses Britain voting to remain in the EU. Even the traditionally snooty they workforexpect any change. French want their neighbours to stay, despite resenting Britain’s Those who rely on British custom—French property agents exemption on EU financial regulation, and its absence from the selling holiday homes, for example—count Brexit as only one Schengen area for passport-free travel and the single currency. worry of many, along with falling bank bonuses in London, Most businesses on the continent are in the Remain camp, too. strikes, floods and terrorism. “Spaniards are more worried about They see Brexit as, at best, a pain; and at worst, a threat. But the the Euro 2016 soccer tournament,” says José Maria de Areilza, a few that stand to gain would happily wave farewell to the Brits. 7 Finance and economics The Economist June 11th 2016 71

Also in this section 72 Buttonwood: Reforming finance 74 Banks v investors in court 75 Emerging markets and the Fed 75 America’s resilient economy 76 The ECB buys corporate bonds 77 Free exchange: Central banks’ communications

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Asset management ate), unlike the listed BlackRock or Fidelity, a privately owned rival. Instead of paying Index we trust dividends, it cuts fees. Mr Bogle’s rationale forthis set-up is simple: “No man can serve two masters.” The incentives of the firm and its customers are completely aligned, he says. Competitors implicitly agree. “How are we supposed to compete when there’s a non-profit disrupting the game?” Vanguard has radically changed money management by being boring and cheap complains one. HEN John Bogle set up Vanguard other asset manager. Bill McNabb, Vanguard’s current CEO, WGroup 40 years ago, there was no Impressive as they are, however, these says the ownership structure permits a vir- shortage of scepticism. The firm was statistics still understate Vanguard’s influ- tuous cycle, whereby its low fees improve launching the first retail investment fund ence. By inventing index-tracking, and pro- the net performance of its funds, which in that aimed simply to mimic the perfor- viding it at very low cost, the firm has turn attractsmore investorsto them, which mance ofa stockindex (the S&P 500, in this forced change on an industry known for its increases economies ofscale, allowing fur- case), rather than to identify individual high margins and overcomplicated pro- ther cuts in fees. Even as the assets Van- companies that seemed likely to outper- ducts. Delighted investors and disgruntled guard manages grew from $2 trillion to $3 form. Posters on Wall Street warned that money managers speak of “the Vanguard trillion, its staff of 14,000 or so barely in- index-tracking was “un-American”; the effect”, the pressure that the giant’s meagre creased. Meanwhile, fees as a percentage chairman of Fidelity, a rival, said investors fees put on others to cut costs. Some rivals of assets under management have would neverbe satisfied with “justaverage now sell passive products priced specifi- dropped from 0.68% in 1983 to 0.12% today returns”; and the Securities and Exchange cally to match or undercut it. (see chart). This compares with an indus- Commission (SEC), Wall Street’s main reg- Ask any employee forthe secret of Van- tryaverage of0.61% (or0.77%, when exclud- ulator, opposed the firm’s unusual owner- guard’s success, and they will point to its ingVanguard itself). Feeson its passive pro- ship structure. The fund attracted just $11m ownership structure. The firm is entirely ducts, at 0.08% a year, are less than half the of the $150m Vanguard had been hoping owned by the investors in its funds. It has average for the industry of 0.18%. Its active- for, and suffered net outflows for its first 83 no shareholders to please (and remuner- lymanaged productsare even more keenly months. “We were conceived in hell and priced, at 0.17% compared with an average born in strife,” Mr Bogle recalls. of0.78%. Vanguard now manages over $3.5 tril- Crowd-pleaser The index-trackers account forover 70% lion on behalf of some 20m investors. Ev- Vanguard’s: of Vanguard’s assets and over 90% of last ery working day its coffers swell by anoth- average expense ratio* assets under year’s growth. Investors are gradually ab- er billion dollars or so. One dollar in every % management, $trn sorbing the idea that, in the long run, beat- five invested in mutual or exchange-traded 1.2 3.0 ing the market consistently is impossible, funds (ETFs) in America now goes to Van- 1.0 2.5 Mr McNabb says. That makes being cheap guard, as does one in every two invested in more important than being astute. Last 0.8 2.0 passive, index-tracking funds, according to year investors in America withdrew $145 Morningstar, a data provider. Vanguard’s 0.6 1.5 billion from active funds of different kinds investors own around 5% of every public 0.4 1.0 and put $398 billion into passive ones. company in America and about1% in near- “In an industry with serious trust is- 0.2 0.5 ly every public company abroad. Al- sues, Vanguard has proven an exception to though BlackRock, a rival, manages even 0 0 the rule,” says Ben Johnson of Morning- more money, Vanguard had net retail in- 1980 85 90 95 2000 05 10 15 star. Its investors stay with it roughly twice flows of$252 billion in 2015, more than any Source: Vanguard *Asset-weighted aslongasthe industryaverage. The firm ac-1 72 Finance and economics The Economist June 11th 2016

2 tively shuns short-term “hot money” be- be a weakness. It has been slow to expand fintech startup, or a tech giant like Apple, cause it brings extra trading costs. Mr abroad: its customer base is 95% American. might create a cheaper or simpler way for McNabb tells the tale of the CEO of a foun- It was slow to get into ETFs as well, allow- individuals to invest, luring away some of dation who wanted to park $40m with a ing BlackRock to become the biggest pro- Vanguard’s customers. As it is, it is getting Vanguard fund for a few months. When vider, although Vanguard is catching up. harder forVanguard to keep cutting fees: to the fund turned him away,he “went ballis- BlackRock is also a one-stop shop for all shave its average fee by a hundredth of a tic”, complaining to the SEC, but Vanguard manner of investments, including alterna- percentage point, it needs to attract an ex- did not budge. tives such as private equity and hedge tra $560 billion in assets under manage- Vanguard also insists on keeping things funds, whereas Vanguard caters only to the ment. And heavier regulation is always a simple. Itoffersonly70 differentETFs, com- mainstream. This may be one of the rea- risk. Last year the industry’s giants won an pared with 383 at BlackRock. It steers clear sons why it does less well with the biggest important battle when they convinced reg- of voguish products, such as funds of dis- institutional investors, which want lots of ulators that, unlike banks, fund managers tressed energy firms. It refused, presciently, investment options and the kind of be- should not be subject to more onerous to set up an internet fund in the late1990s. spoke service that Vanguard does not offer. rules simply because they are big. But talk But Vanguard’s conservatism can also There is always a chance that a clever of rules intended to stem panic in collaps-1 Buttonwood Secret agents

A new bookargues that the finance industryneeds reform HAT is the purpose of the finance pension for 25 years). Annual charges of Windustry? Everyone knows that it The rip-off of the century 1.5% will result in a 38% cut. In a world providesa verygood livingformany ofits Annual cost of financial intermediation where many people have defined-contri- employees and that it is prone to occa- United States, % of assets bution pensions, and there is no pledge sional crises that can disrupt the global 3.0 from the employer to provide a decent in- economy. But what good does it do the Raw measure come in retirement, such charges are very 2.5 rest ofhumanity? important. But employees may not be A new book* by Stephen Davis, Jon 2.0 fully aware of the “price” they are paying Lukomnik and David Pitt-Watson lists 1.5 forthe management oftheir savings. four main roles for the industry: provid- Why hasn’t regulation eliminated ing safe custody for assets, a payments 1.0 these problems? The authors think regu- Adjusted for credit quality system, intermediation between savers 0.5 lators have pursued a policy of “whack-a- and borrowers, and risk reduction (insur- mole”: identifying specific problems after ance). Its performance should be judged 0 they surface and then producing elabo- by its success or failure in providing those 18861900 20 40 60 80 2000 14 rate rules in response. The result is too services. Source: Thomas Philippon, Stern School of Business much detail: new American credit cards The financial crisis in 2007-08, when come with 31 pages of legalese. Instead many banks had to be rescued by govern- theirchampagne atMrPhilippon’sfinding, regulators should adopt a more systemic ments, shows that finance does not al- and point to the reduction in trading approach, focusing on the “fiduciary ways do a bang-up job of providing safe spreads or even the rise of firms like Van- duty” intermediaries owe to their clients custody. Banks were allowed to gear up guard. But it is the cost to the end-user that and making sure that clients are aware of their balance-sheets in pursuit of short- is the key. Mr Philippon’s data suggest that all the costs that are loaded onto them. term profits—not a good deal from soci- money saved in one area has been offset In the authors’ ideal world, banks ety’spointofview.There hasalso been an by new charges elsewhere. should hold more capital to ensure the explosion in the volume of securities In particular, Messrs Davis, Lukomnik safety of deposits; stock exchanges tradingin recentdecades. Butitis notclear and Pitt-Watson point to the multiple lay- should be prevented from giving high-fre- how that helps the economy: liquid mar- ers of intermediaries that take a chunk out quency traders faster access to market kets are a virtue, but do deals really need of a saver’s money. Invest your pension in prices; and executives should be paid bo- to be executed in milliseconds? a mutual fund and you may pay a record- nuses linked to the long-term growth of Another important issue is how effi- keeper to check your savings are going to the business rather than the share price. ciently the finance industry provides the right place; the mutual-fund manager; Above all, they argue, the interests of the those services. The authors refer to a re- the third-party research firms that fund underlying clients of the finance indus- cent paper** by Thomas Philippon of managers pay to help them select stocks; try—the depositors, the workers and the New York University which tried to mea- the platform on which the mutual fund is pensioners—should come first. Everyone sure the unit cost of financial services listed; the broker who handles the fund’s is a capitalist these days. That means over time. This is a tricky business given orders to buy and sell when it trades shares keeping a much closer eye on those who the complexity of the industry; Mr Philip- and bonds; a custodian to look after those manage that capital. pon divides the income of the sector by securities; and an agent to price them for ...... the quantity ofthe assets it intermediates. reporting purposes. *“What They doWith Your Money: How the Financial On that reckoning, the costs of intermedi- Those charges add up, and make an System Fails Us and How to Fix It”, Yale University Press ation have stayed roughly constant at be- enormous difference. If a 25-year-old saves ** “Has theUSFinance Industry Become Less Efficient? tween1.5-2% (see chart). In other words, fi- for40 years fora pension, paying fees of1% On the Theoryand Measurementof Financial Intermediation” http://pages.stern.nyu.edu/ nance is no more efficient than it was at a year, the accumulated charges will re- ~tphilipp/papers/Finance_Efficiency.pdf the end ofthe19th century. duce his or her retirement pot by a quarter Financial titans might splutter into (based on the average dollar being in the Economist.com/blogs/buttonwood LET THE MARKET TRACK YOU FOR A CHANGE.

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2 ing markets has not gone away. Asthe move from defined-benefitto de- farious youths fleecing aged relatives. Nonetheless, there is plenty ofroom for fined-contribution pensions continues, In a witness statement, Catherine Vanguard to keep growing. Only a third of and as Asia sets up its retirement systems, McDougall, who was seconded to the LIA American equities are held by index-track- there will be growing demand for the sort at the time from Allen & Overy, a law firm, ing funds, and a smaller share elsewhere. of “DIY” investing that has underpinned says it was “readily apparent” that Gold- Regulators in America and beyond are dis- Vanguard’s success. With interest rates and man “had unfairly taken advantage of the couraging or barring financial advisers investment returns expected to be low for LIA’s lack of financial sophistication”. She from receiving commissions from firms years to come, keeping fees down will be was “particularly shocked” when she saw whose productstheyrecommend—a move more important than ever. As Tim Buckley, a Goldman banker “explaining the basics thatshould push even more moneyto Van- the firm’s chief investment officer, puts it: ofa put and call” to Mustafa Zarti, the LIA’s guard as advisers lose the incentive to offer “The biggest advantage Vanguard has, deputy chief, “when he had just sold $1bil- expensive products (Vanguard refuses to aside from its structure, is the greed of our lion worth of complex derivatives” to the pay commissions). competitors.” 7 authority. (On discovering the toxicity of the trades, Mr Zarti would later lose his cool, shouting at the Goldman team “cur- Banks v investors ses…along the lines of ‘Fuck your mother, fuck you and get out of my country’”, Ms Of snowballs and red ink McDougall recalls.) Goldman is girding for battle in court, though with some of the internal e-mails that are set to be aired said to be unedify- ing, not to say culturally insensitive, the bankmay not be relishing the prospect ofa public face-off. Goldman vigorously de- Investors are going to court to reclaim losses from ill-advised derivatives deals nies the LIA’s claims that it improperly en- T HAS been called “the worst trade ever”. tions trades that the bank arranged for it in couraged or influenced the fund or abused IShortly before the financial meltdown of 2008. Goldman, meanwhile, made an esti- a position of trust. It says their relationship 2008, Metro do Porto and three other Por- mated profit ofwell over $200m. was at all times an arm’s length one. It calls tuguese public-transport companies en- Having watched several mis-selling the case “a paradigm ofbuyer’s remorse”. tered into a series of interest-rate swaps cases bite the dust, the LIA is taking a novel As for the internship, Goldman insists it with Santander, a Spanish bank, in hopes legal approach. It argues that Goldman ex- was a normal part of training programmes of reducing interest payments on their ercised “undue influence” to coerce its it offered to the LIA and did not breach debts. But they soon discovered why these managers—whose financial expertise at Goldman’s compliance rules. Internships particular derivatives were dubbed the time was “extremely limited”—into “in- have become touchy issues for banks since “snowball swaps”. herently unsuitable” trades, and that the regulators, led by America’s SEC, began a The firms’ losses exploded to several deal was therefore an “unconscionable couple of years ago to look into whether times the underlying debts, and by all ac- bargain”. In part, the undue influence hiring relatives of government officials or counts continue to swell today. They sued came from Goldman arranging an intern- senior corporate managers might consti- Santander, but in March an English court ship for the brother of an LIA executive at tute bribery. ruled the bank’s way. Though some docu- around the time of the trades, and offering The LIA’s other big battle, against So- ments “do the bank no credit”, the judge “lavish and exotic” hospitality in Morocco, ciété Générale, a French bank, involves al- concluded, the transport companies could the LIA claims. Though undue influence leged bribery of a more blatant sort. The have been in no doubt about the scale of can be argued in commercial settings, it is Libyans are suing for $1.5 billion over five riskthey were taking on. Santander did not typically reserved for cases involving ne- disputed trades, some of them heavily 1 coax them into signing contracts it thought would be contrary to their interests. The companies were not its clients, owed a fi- duciary duty,but its counterparties, on the opposite side ofthe trades. In the go-go years before the crisis pub- lic-sector entities were sold plenty of com- plex derivatives that subsequently went badly wrong. Were they stupid? Were the banks that flogged the swaps and options evil? Or was it a bit of both? The snowballs case shows how difficult it can be for the likes of Metro do Porto to claim they were hoodwinked. They may be not be as finan- cially sophisticated as theircounterparties, but nor are they widows and orphans; they have plenty of money to hire experts to scrutinise term sheets. That hasn’t stopped others from look- ing for ways to bring cases. Barring a last- minute settlement, on June 13th the Libyan Investment Authority, a sovereign-wealth fund, will face off against Goldman Sachs in London’s High Court. The LIA sued after losing more than $1billion in a series ofop- It was the trades that went off the rails The Economist June 11th 2016 Finance and economics 75

2 loss-making, in a case set fortrial early next corrupt scheme”. America’s economy year. The transaction at the heart of the The French bank firmly denies the alle- case is a payment of $58m by the bank to a gations. It has said the payment was for le- When barometers Panamanian company called Leinada that gitimate services, “including introductory, wasowned byWalid al-Giahmi, a friend of market intelligence and follow-up ser- go wrong one of the sons of Muammar Qaddafi, Lib- vices, which made it easier for Société Gé- ya’s then dictator. The LIA claims this was a nérale to navigate the unfamiliar and diffi- WASHINGTON, DC bribe, intended to help sway the fund’s de- cult Libyan market”. The bank says it is A weakjobs report belies the resilience cisions, and that SocGen knew or suspect- co-operating with the American probe. A ofAmerica’s economy ed the payment was dodgy. America’s De- lawyer for Mr Giahmi, a co-defendant, did partment ofJustice is investigating. not respond to a request forcomment. MERICA’s labour market has become a Here the Libyans’ legal tack is different These cases may establish new legal av- Areliable source of comfort when other again. They are not arguing mis-selling or enues for investors who claim to have economic indicators dismay. When undue influence, but that the payment to been duped by unscrupulous bankers. growth slowed to just 0.8% in the first quar- Leinada rendered the trades invalid be- And, as one lawyer puts it, there will be ter ofthe year, economists were mostly un- cause they were “part of a fraudulent and “plenty ofpyrotechnics” along the way. 7 perturbed, because payrolls were growing by over 150,000 workers a month. Wage growth was picking up. Even labour-force Dollar imperialism participation wasrising, aftera long period ofdecline. The Fed’s tributaries So the news on June 3rd that the econ- omy created a mere 38,000 new jobs in HONG KONG May—the lowest total since 2010—was a Which emerging markets are most in thrall to America’s central bank? nasty shock. Three days later Janet Yellen, UTSIDE the Federal Reserve’s im- the Fed’s chairman, hinted that she no lon- Oposing building in Washington, DC, Serfs up ger favours raising interest rates this sum- water cascades from two fountains Ten-year government bond yields, decrease on mer. This abrupt change of direction fol- shaped like chalices. Inside, the Fed’s previous day, basis points lowed weeks of warnings from Fed decision-making generates equally prodi- First trading day after June 2016 US payrolls release officials that a rate rise was coming, per- gious spillovers, channelling the flow of 25 20 15 10 5– 0 haps as soon as the conclusion of the Fed’s capital around the world. The conse- Turkey next meeting on June 15th. That now looks quences, especially foremerging econo- Brazil all but impossible. mies, can be monumental but they are Russia The consensus forecast was for about rarely elegant. 160,000 new jobs in May. Even accounting South Africa Until last weekmany emerging econ- for 35,000 striking workers at Verizon, a te- omies had been bracing themselves for Thailand lecoms firm, the shortfall was substantial an imminent rise in the Fed’s benchmark Mexico (though the estimate, which has a wide interest rate, perhaps as early as this Malaysia margin of error, may yet be revised up). A month. Higher rates could draw more Poland labour-market slowdown that had money into America from emerging India seemed gentle now looks pronounced: be- markets, weakening their currencies and tween March and May, the economy China nil raising their bond yields. Even the expec- created on average 116,000 jobs per month, tation oftighter money can be enough to Source: Bloomberg compared with 222,000 in the year to Feb- cause trouble. In such circumstances, ruary. The fizzing labour market had been central banks farfrom the Fed often feel gained over 2%; and the South African tempting Americans who had given up on compelled to raise rates too, even if eco- rand climbed by over 3%. The impact was workbackinto the labourforce. But partici- nomic conditions at home do not entirely surprisingly weak, by contrast, on Mexi- pation has now handed backtwo-thirds of warrant it. In 2014 Arvind Subramanian, co’s peso and India’s rupee. Nor was its gains since September. now the chiefeconomic adviser to In- there much effect on China’s currency, The report, taken alone, wasdire. Buton dia’s government, complained of“dollar which does not float freely,although the whole, there is much less cause for imperialism”. China may yet benefit from a slower flow gloom. The American economy may have On June 3rd, however, the emperor ofcapital out ofthe country. slowed, but remains fundamentally granted a reprieve. Surprisingly bad jobs The ranking ofemerging-market strong, as it is buttressed by a healthy con- figures released that day ended all talkof thraldom was broadly similar forgovern- sumer. Personal consumption, adjusted a Fed rate hike this month (see next ment-bond yields (see chart). Yields fell for inflation, is up by 3% in the past year, story). American bond yields duly fell by about 0.2 percentage points on June having surged in April. The University of and the dollar weakened; emerging 3rd in Brazil and Turkey.They narrowed Michigan’s consumer-confidence index, markets rallied. The numbers provided a by about halfthat in Russia and South which wasdue to be updated asThe Econo- useful test ofthe Fed’s sway.Normally, Africa, as well as in Thailand when its mist went to press, grew strongly in May. this is hard to measure, since expecta- markets opened on June 6th. China again Even before that, confidence exceeded its tions ofa rate rise cannot be observed remained in splendid isolation. And average during the 2003-07 boom. Accord- directly and tend to evolve only gradual- India was strangely unmoved. Its central- ing to a recent Fed survey, 69% of Ameri- ly. The shift on June 3rd, however, was bankchief, Raghuram Rajan, is among cans say they are “doing okay” or “living unusually stark. the most prominent critics ofthe Fed’s comfortably”, up from 62% in 2013. What is Which emerging markets benefited unilateral monetary power, along with more, the rise has been most pronounced the most? The Turkish lira and Brazilian his compatriot, Mr Subramanian. Yet among those with only a high-school edu- real ended June 3rd over1.5% stronger India, on the basis ofthis small experi- cation. than the day before; the Russian rouble ment, seems newly immune to it. Rising wage growth helps explain con- sumers’ cheer. Since early 2015 growth in 1 76 Finance and economics The Economist June 11th 2016

2 average hourly earnings has perked up The ECB buys corporate bonds from about 2% to around 2.5%. Admittedly, Ripe for revival 2 this is sluggish compared with wage US private investment, contribution to growth Unyielding growthbeforethefinancialcrisis,whichof- By sector, percentage points annualised ten exceeded 3%. And wage growth has Housing Oil, gas, minerals Other plateaued as the labour market has slowed 10 TOTAL* (see chart1). But demographic change is keeping av- Quantitative easing in the euro area erage wage growth artificially low. The fi- 5 enters a new phase nancial crisis struck when the oldest baby- + boomers were nearing retirement age. As 0 RY and try again. On June 8th the Euro- well-paid boomers retire, average wages Tpean Central Bank(ECB) started buying fall. In addition, many low-wage workers, – corporate bonds, in its latest effort to gin up who were disproportionately likely to lose 5 inflation in the euro area. Prices declined their jobs during the recession, are now re- 2013 14 15 16 slightly in May compared with the same turning to work, which also pulls average Source: Bureau of *% change from previous month a yearbefore; the ECB’sinflation tar- Economic Analysis quarter annualised wages down. get is just under 2%. The scheme has al- Recent work by researchers at the San ready helped boost the zone’s corporate- Francisco Fed suggests that, as ofthe end of much longer, as it has already fallenso far. bond market. Doing the same to its econ- 2015, these biases in entries and exits from Other business investment has disap- omy looks a tall order. the workforce were reducing growth in pointed, too. But rising house-building has The purchases form part of the ECB’s median weeklyearningsbyabouttwo per- picked up some of the slack (see chart 2). quantitative-easing programme, under centage points. Those in steady employ- Adjusted for inflation, residential invest- which it is already buying €80 billion- ment are faring well: the Atlanta Fed’s ment is up by 11% on a year ago. Govern- worth ($91 billion) of public-sector bonds, wage index, which tracks the same indi- ment spending is also rising, after four covered bonds and asset-backed securities viduals over time, thereby ignoring retire- years of pulling down growth as politi- monthly. (Government debt, of which the ments and new workers, shows wage cians trimmed budgets. An investment ECB has amassed more than €800 billion, growth of3.4% over the past year. spree by state and local governments has accounts for most.) To qualify, corporate At the same time, Americans have been contributed to the turnaround. bonds must be investment-grade and is- leaving petrol stations with fatter wallets, sued by euro-area firms other than banks. thanks to cheaper oil. Consumers did save A dangerous world Analysts reckon that €600 billion-plus more of the petrol-price windfall than ex- Threats remain. The world economy is a of bonds fit these criteria. The bank hasn’t pected. But that means that now oil prices worry.Europe hasnotyetsecured its recov- yet said whose debt, or how much, it will are firming—on June 7th Brent crude sur- ery (see next story), Brexit is a growing con- buy; from mid-July it will report holdings passed $50 a barrel for the first time since cern, and the Chinese economy remains weekly. According to Bloomberg, first-day October—consumers will not have to rein fragile. Financial markets, which tanked purchases included bonds issued by in spending much in response, argues An- early in the year on account of the world Anheuser-Busch InBev, the world’s biggest drew Hunter of Capital Economics, a con- economic outlook, are sturdy for now— brewer; Generali, an Italian insurer; sultancy. Indeed, savings tumbled in April after Ms Yellen’s dovish comments, the Siemens, a German engineering giant; and as consumption rose. S&P 500 rose close to a record high. But the Telefónica, a Spanish telecoms firm. Somewhat higher oil prices should also world economy could yet shake markets The ECB is likely to be a hefty buyer. It help put an end to another drag on the again. can acquire bonds in the primary or sec- economy: pallid investment, which was Even if it doesn’t, the contrast between ondary market, and can hold up to 70% of partly responsible for the first quarter’s American vigour and torpor abroad will an issue. Some analysts guess it might snap slow growth. Investment in oil rigs and the delay interest-rate rises, argues Mark Mc- up €5 billion-10 billion a month. That may like has fallen by almost 70% over the past Clellan of the Bank Credit Analyst, a news- be a stretch. Even if it bought a quarter of two years, adjusted for inflation, as inves- letter, because the Fed cannot tighten mon- the likely total of this year’s eligible issues, tors have mothballed shale-oil and -gas etary policy without sending the dollar on calculates Suki Mann of CreditMarket- projects. But in the weekto June 3rd, the rig a tear. That could itself cause renewed fi- Daily.com, a website, that would still only count rose for the first time since August. nancial-market wobbles, particularly in workout at €4 billion a month. Even if oil prices were to fall again, energy emerging markets with dollar-denomi- Yields tumbled in anticipation of the investment cannot drag down growth for nated debts (see previous story). It would ECB’s entry. According to Bank of America also dampen inflation, which remains be- Merrill Lynch, yields on investment-grade low the Fed’s 2% target, as the dollar’s bonds have slid under1%, their lowest for a Better than it looks 1 strength made imports cheaper. year; those on high-yield (junk) bonds United States Wages* Where next, then, for Ms Yellen? She have fallen, too. Non-farm payrolls % increase on a rightly says that raising interest rates is not That suggests the ECB is achieving its Increase on previous month,’000 year earlier a goal in itself, and describes today’s near- objective: directly reducing companies’ fi- 400 2.6 zero rates as only “modestly” accommoda- nancing costs. But if it buys less than ex- tive—a reminder that the so-called “natu- pected, the rally could go into reverse. And 300 2.3 ral” rate of interest, the rate which neither whether cheaper borrowing will spark in- 200 2.0 stimulates nor dampens the economy, is vestment and inflation is questionable: in probably much lower than it used to be. March, when the ECB unveiled its plan, in- 100 1.7 The Fed will probably need convincing vestment-grade yields were a less-than- that the latest labour-market report was an prohibitive 1.3%. The ECB is also funnelling 0 aberration before tightening policy. The cash into banks as fast as it can: another 2014 15 16 nextfewmonthsshould provide such reas- lending-incentive scheme starts this Source: Bureau of *Average hourly earnings, surance. Come what may,expect Ms Yellen month. But it is lack of demand, not of Labour Statistics three-month moving average to take only baby-steps. 7 funds, that is holding Europe back. 7 The Economist June 11th 2016 Finance and economics 77 Free exchange Sibyl faulty

Central banks have got betterat telling markets what they are up to. They must get better still nications in three critical ways. First, they often obscure their message with lots ofunhelpful noise. More information is better, butonlyto the extentthatitmakesfuture policyactions more pre- dictable. Between meetings, Fed officials barnstorm around the country giving speeches. But their individual assessments of the economy are often a poor guide to the thinking of the monetary- policy committee as a whole. When the Fed concludes its next meeting on June 15th, it will assault markets with a barrage ofinformation: a statement about economic conditions, a summary of members’ economic projec- tions (including an anonymised “dot plot”, showing where each member thinks interest rates ought to go over the next three years), and a press conference with the chairman, Janet Yellen. But these snippets often conflict: the dots suggest rates will rise steadilyin comingyears, keepinginflation consistently below2%, even though Ms Yellen insists that the Fed is just as willing to overshoot its 2% target as undershoot it. This sort ofambiguity re- duces both the power and the precision of Fed policy. (Despite that, the Bank of Japan announced a plan in 2015 to adopt many ofthe Fed’s communication strategies, including the dots.) In a paper published in 2012, economists at the Federal Re- TTIMESmarketsand central banksresemble nothingso much serveBankofChicago described a second common flawwith for- Aas a quarrelsome couple. They pout at each other. They re- ward guidance that can be even more damaging than cacophony. monstrate. Above all, they struggle to communicate. Officials at They distinguish between “Delphic” guidance—economic fore- the Federal Reserve and traders in financial markets have been casts—and the “Odyssean” sort—a pledge to behave in a certain talking past each other for much of the year—most recently in way (so named because one example might be promising to re- May,when the Fed sought to convince traders that a summer rate sist the siren song of rate increases even if inflation picks up). rise might be on the cards. The miscommunication is not entirely Some forward guidance could be read either way: the statement thefaultofthecentralbank;ashakyworldeconomymakesconfi- that rates are likely to remain low fora long time could mean that dent and clear messaging difficult. But that fragility also leaves the central bank expects growth to be too weak to justify rate central banks with less room forerror. They should do better. rises, in which case investors have good reason to stay pessimis- Not long ago, central bankers thought their job was best done tic. But it could also represent a commitment not to raise rates in secrecy. A few reckoned the public could not be trusted to un- even as growth accelerates, lifting expectations offuture inflation derstand the finer points of monetary policy; others felt that and providingan incentive to borrow and invest in the present. A catching markets unawares maximised the impact ofa change in failure to distinguish between the two risks steering markets in policy. In the 1980s central bankers rarely saw fit to inform the the wrong direction. public of their near-term goals or even about past interventions. When called upon to speakin public, they did so with a practised Not so crystal clear opacity.Alan Greenspan, chairman of the Fed from 1987 to 2006, Now that the Fed has started tightening, it risks making a third was an expert in “mumbling with great incoherence”. mistake: being vague about how many times it intends to raise In the 1990s, however, economists came to see transparency rates in order to avoid upsetting markets. Recent research by Je- as a way to amplify rather than diminish the power of monetary remy Stein (a former Fed governor) and Adi Sunderam, both of policy. A better understanding of what a central bank is up to, Harvard University, suggests that markets see through attempts they reasoned, should help investors anticipate its actions, there- to serve bigrate rises in small doses and begin reacting strongly to by avoiding destabilising lurches in markets. That, in turn, should small rate shifts (thereby inducing still more caution in central help central banks keep the economy running smoothly. bankers and more market overreaction). That does not mean that As a first step, central banks clarified their policy goals by set- central bankers should raise rates steeply in one go, or commit to ting explicit targets for inflation. The Reserve Bank of New Zea- a particular path for hikes, when they are unsure how the econ- land adopted one in 1990—an innovation many have followed. omy as a whole will react. Rather, they should combine guidance Next central bankers began revealing more about their assump- abouttheirpreferred trajectoryforinterestrateswith a clearstate- tions and deliberations. A reform of the Bank of England in 1998 ment about what would and would not trigger deviations from required it to explain its decisions, via the publication ofminutes that plan. of its meetings and a detailed inflation report. In1999 the Bank of It is only natural forcentral banks to be a little tentative in their Japan pioneered the tactic of “forward guidance”, when it prom- initial experiments with a relatively new technique such as for- ised to leave its interest rate at zero “until deflationary concerns ward guidance. But in general things would work better if they subside” (they neverdid). Clearcommunication can be extraordi- were more coherent and more forthright. Indeed, the effort to narily powerful. When Mario Draghi, president of the European speak more clearly might help monetary-policy committees to Central Bank, declared in 2012 that he would do “whatever it thinkmore clearly. 7 takes” to save the euro, market sentiment abruptly reversed. Unfortunately, central bankers tend to muck up their commu- Economist.com/blogs/freeexchange 78 Science and technology The Economist June 11th 2016

Also in this section 79 The price of cancer drugs 80 Burying carbon dioxide 80 High-tech pothole fixing 81 Hobbits: the latest

For daily analysis and debate on science and technology, visit Economist.com/science

Cancer treatment an average shrinkage ofonly 5%. Work published in the New England On target Journal of Medicine, to coincide with the ASCO meeting, also showed the value of the molecular approach. Elli Papaemma- nuil of Memorial Sloan Kettering Cancer CHICAGO Centre in New York, and her colleagues, have produced a molecular classification The personalisation ofcancertreatments is leading to betteroutcomes forpatients. of acute myeloid leukaemia. They have di- It will also pave the way to cures vided this disease into 11classes, each with URE” is not a word much used by molecular mechanisms caused by the mu- distinct diagnostic features and clinical “C oncologists. The besttheynormally tation of specific genes. The implication of outcomes, based on which mutated genes talkofis“remission”. Butthe pastfive years this change of viewpoint is that the best seem to be driving the cancer’s develop- have begun to change that. More than 70 treatment for, say, colorectal cancer may ment. While this work has not yet led to new drugs have come to market, and de- turn out to be somethingalready approved better treatments, it seems almost bound scribing the consequences of some of for use against tumours in an entirely dif- to in the future. them as revolutionary is not hyperbole—at ferent part of the body, such as the breast ASCO itself sees so much value in the least for those patients lucky enough to re- (pictured above, in a magnetic-resonance- personalised, molecular approach to diag- spond positively to them. Being given a di- imaging, or MRI, scan; the tumour is in the nosis and treatment that, despite its beinga agnosis of advanced melanoma, for exam- right-hand breast, from the reader’s point professional body fordoctors rather than a ple, was once tantamount to being handed of view). One study presented at ASCO research organisation in its own right, it a death warrant. Median life expectancy found that 29 of 129 patients responded to has decided to run a clinical trial (its first after such news was six to nine months. drugs that had originally been approved ever) to look at this approach’s potential. But recently developed “immuno-oncolo- for use on cancers found in parts of the TAPUR, as the trial is called, will offer pa- gy” drugs, which co-opt the immune sys- body different from where those patients’ tients a genetic test and then select drugs tem to fight tumours, are so effective that, own tumours were. Therapies designed that look to be good matches, but which in around a fifth of cases, there is talk for breast and gastric cancers involving a are not approved for the specific cancer a among experts that the patients involved gene called HER2 were particularly useful. patient is suffering from. have actually been cured. These HER2 drugs act on a growth-promot- The National Cancer Institute, an This sort of upbeat news is reinvigorat- ing protein that is overproduced in HER2- American government agency, is trying ing the study of cancer. At this year’s meet- positive tumours. Seven of 20 patients something similar with a trial it calls ingofthe American Society ofClinical On- with colorectal cancer, three of eight with MATCH. This involves sending tumour bi- cology (ASCO), held this week in Chicago, bladder cancer and three of six with bile- opsies to gene-testing laboratories that doctors had a spring in their step. Not only duct cancer responded well to these drugs. then scan them for more than 4,000 possi- do they have new drugs to deploy, they are ble variants of143 pertinent genes. Indeed, also developing better ways of using exist- Metaphysicians personalised treatment is becoming so ing ones. They are getting better at diagno- Anotherstudy, a “meta-analysis” ofalmost fashionable that even America’s vice-pres- sis, too, finding methods to study the weak 350 early-stage drug trials which gathered ident has got involved. On June 6th Joe Bi- spots of cancers in parts of the body con- the results of these small experiments to- den announced a project intended to set ventional biopsies cannot reach, and also gether in a statistically meaningful way, up a way of sharing genomic and clinical to pin down tumours that were previously tried to work out how much benefit there data between cancer researchers, in order unlocatable. The upshot is that they are be- wasin matchingthe molecularcharacteris- to help advance the field. ginning to be able to tailor treatments to tics of the tumour of a patient with his Takingbiopsies such as those that form the needs of individual patients, an ap- treatment. Such matching proved worth- part of the MATCH trial is a routine part of proach called personalised medicine. while. Using it caused tumours to shrink cancer therapy. It, too, though, is ripe for These days cancer is seen less as a dis- by an average of 31%. Established treat- improvement. Some tissues (blood, lymph ease of specific organs, and more as one of ments without such matching resulted in and skin, forexample) are easyto get at, but1 The Economist June 11th 2016 Science and technology 79

2 many tumours are deep in the body, or in The international pharmaceutical market vital organs, or both. Sampling these is in- vasive and potentially dangerous. Re- Priced out searchers have therefore wondered for a long time whether something as simple as Chicago a blood test might replace such a biopsy. Cancerdrugs cost more in America than elsewhere, but that may be just This hope is based on the knowledge that tumours shed pieces of genetic material, ANY Americans thinkthey pay over Herceptin, and $654 forgeneric drugs like known as circulating tumour DNA Mthe odds fordrugs—particularly for docetaxel and paclitaxel. Ofthe countries (ctDNA), into the bloodstream. cancer drugs. Some go so far as to suggest looked at, India paid the least for its Until recently scientific instruments that other countries free-ride on their patented drugs ($1,515a month), and have not been sensitive enough to detect largesse, and that Americans are thus South Africa the least forgenerics (a ctDNA routinely and reliably. That is now subsidising drug development, a situa- tiddly $120). changing. “Liquid biopsies”, which will tion which, they say,needs to be fixed by The story,though, does not end there. not only diagnose hard-to-get-at solid tu- changing trade agreements. Dr Goldstein went on to lookat how the mours but also monitor the progress of A study unveiled at the American prices ofthese drugs measured up in their treatment, are on the verge of reality. Society ofClinical Oncology’s meeting in terms ofaffordability.Toexpress this he At the ASCO meeting researchers spon- Chicago this week looked into the matter. calculated the monthly price as a percent- sored by Guardant Health, a diagnostics Daniel Goldstein ofthe Rabin Medical age ofgross domestic product per person company, announced the results of one of Centre, in Israel, and his colleagues exam- at purchasing-power parity (GDPcapPPP). the largest liquid-biopsy studies so far. ined the prices of15generic and eight On this measure (see chart), America patented cancer drugs in six countries did middlingly well. India and China Liquid asset (America, Australia, Britain, China, India were the least able to afford cancer medi- This study looked for the ctDNA of six rele- and South Africa). They found that the cations. Generic drugs were least afford- vant genes in 15,000 patients suffering highest prices were, indeed, paid by able in China, where they cost 48% of from one of 50 types of tumour. The test Americans. The median monthly retail GDPcapPPP, and patented drugs were was not perfect. Only 83% of patients had price in the United States was $8,694 for least affordable in India, where they were sufficient ctDNA for it to show up. But in patented drugs like Avastin, Gleevec and 313%. Americans, by contrast, paid192% of those cases where ctDNA was detected the GDPcapPPP fortheir patented drugs and mutations indicated were also present in a titchy14% forgenerics. But Australia, conventional biopsies between 94% and Who pays the piper? Britain and South Africa all did as well or 100% ofthe time. The test, in otherwords, is Median monthly drug prices better than that. reliable. Moreover, in almost two-thirds of As % of GDP per person at PPP*, latest available The morals ofthis story seem twofold. the cases where ctDNA was detected, the Patented Generic First, just because drugs are cheaper results led to suggestions about how the 0 100 200 300 elsewhere does not mean that people patients involved should be treated. India 1,515 who live there can afford to pay for them, If liquid biopsy can be made routine, let alone pay more than they already do. 3,173 the clinical consequences will be vast. China Were prices higher in China and India, Conventional biopsies can be both costly United States 8,694 sales might well be lower. Drug compa- and slow to process. Also, the heterogene- nies know that, and set their prices ac- ity of many tumours, caused by progres- South Africa 1,708 cordingly.Second, it helps to have nation- sive mutation over the course of time, is al purchasing arrangements, as Australia, 2,587 hard to sample by nipping out one bit of Britain Median Britain and South Africa all do. If Ameri- DNA patented the tumour. If ct is shed by all parts of Australia monthly 2,741 cans truly want lower drug prices, they a tumour, though, a liquid biopsy will be price, $ should stop grumbling and become able to capture these differences. It will, as Source: “Global differences in cancer *Purchasing-power better negotiators, not blame those for- drug prices”, D Goldstein et al,2016 parity well, be able to follow them as they pro- eigners who are. gress because, unlike conventional biopsy, it can be done frequently without harming the patient. That is important. What consti- mina, based in San Diego, has said that it Research which suggests that a souped-up tutes the best treatment can change as the will form an offshoot, Grail, to develop just form of MRI might become the standard tumour itselfchanges. such a test. The proposed test will use “ul- method for prostate-cancer screening. His Many researchers therefore feel it is tra-deep sequencing”, a technique that research indicates that such MRI can differ- onlya matteroftime before liquid biopsies reads the DNA in a sample tens of thou- entiate between benign and malignant become a standard part of therapy. They sands oftimes over, in order to pick up rare growths, and can distinguish among the are already coming to market. Foundation signals such as that from ctDNA. latter between those that just need to be Medicine, of Cambridge, Massachusetts, Yet one of the flaws of ctDNA is that it monitored, and the “aggressive” ones that launched a commercial liquid biopsy in does not reveal where in the body a cancer need to be treated. May. Qiagen, a German firm, followed suit is. Some argue that MRI is now sophisticat- Personalised cancer treatment, long on June 1st. Genomic Health, of Redwood ed enough to screen individuals for the talked of, is thus now becoming real. By de- City, California, says it will offer a test later presence of most cancers. The Health Nu- tecting problems earlier and getting thera- this year. And Myriad Genetics, based in cleus, a firm based in San Diego, is offering pies right first time, it will save lives that Salt Lake City, is also developing such tests. full-body scans using it for just this pur- might otherwise be lost. Better knowledge Such is the excitement over liquid biop- pose. David Karow, a clinical radiologist of the underlying processes of cancer, sies that some wonder if they might be who works both there and at the nearby meanwhile, will extend the range of lives used to catch cancers even before symp- San Diego campusofthe Universityof Cal- that medicine can aspire to save. There is toms are apparent. The earlier a tumour is ifornia, is optimistic about the potential of still a long way to go. But gradually and in- spotted, the easier it is to cure. The biggest the technique for wider use. He has been exorably the appeals court of oncology is maker of DNA-sequencing machines, Illu- part ofa study published in Clinical Cancer tearing up cancer’s death warrants. 7 80 Science and technology The Economist June 11th 2016

Carbon capture and storage the power-station exhaust before it is re- power stations remains to be seen. In leased, and the researchers worked with these, the main additional pollutant is sul- Turning air into remainder, almost pure carbon dioxide. phurdioxide, which hasdifferentchemical They collected 175 tonnes of it, mixed it characteristics from hydrogen sulphide. stone with a mildly radioactive tracker chemical, Scrubbing may therefore still be needed. dissolved the mixture in water and Another constraint is the supply of basalt. pumped it into a layer of basalt half a kilo- Though this rock is common, it is found metre belowthe surface. Theythen kept an predominantly on the ocean floor. Indeed, How to keep waste carbon dioxide in eye on what was happening via a series of geologically speaking, Iceland itself is a the ground monitoring wells. In the event, it took a bit piece of ocean floor; it just happens to be HIS year the world’s power stations, less than two years for 95% of the injected above sea level. There are some large ba- Tfarms, cars and the like will generate CO2 to be mineralised. saltic regions on dry land, but they are not the equivalent of nearly 37 billion tonnes They followed this success by burying necessarily in convenient places. of waste carbon dioxide. All of it will be unscrubbed exhaust gas. After a few teeth- Nevertheless, if the will were there, dumped into the atmosphere, where it will ing troubles, that worked too. The H2S re- pipelines from industrial areas could be trap infra-red radiation and warm the acted with iron in the basalt to make py- built to carry exhaust gases to this basalt. It planet. Earth is already about 0.85°C rites, so if exhaust gas were sequestered has not, after all, proved hard to do the re- warmer than last century’s average tem- routinely, scrubbing might not be needed. verse—carrying natural gas by pipeline perature. Thanks to the combined influ- This was enough to persuade Reykjavik whence it is found to where it is used. It is ence of greenhouse-gas emissions and El Energy, the power station’s owners, to run just a question of devising suitable sticks Niño, a heat-releasing oceanic phenome- a larger test that is going on at the moment and carrots to assist the process. How non, 2016 looks set to be the warmest year and isburyingnearly10,000 tonnesofCO2 much those sticks and carrots would cost is on record, and by a long way. and around 7,300 tonnes ofH2S. crucial. But Dr Matter’s proof of the princi- It would be better, then, to find some Whether CarbFix-like schemes will ple of chemical sequestration in rock sug- method ofdisposing ofCO2. One idea, car- work at the scale required for fossil-fuel gests it would be worth finding out. 7 bon capture and storage (CCS), involves collecting the gas from power stations and factories and burying it underground Fixing potholes where it can do no harm. But CCS is expen- sive and mostly untried. One worry is The hole story whether the buried gas will stay put. Even small fissures in the rocks that confine it could let it leak out over the course of time, undoing much of the benefit. And even if cracks are not there to begin with, the very drilling necessary to bury the gas might Researchers are inventing new ways to prevent a motoring curse create them. A paper just published in Science offers OTHOLES are a scourge of rich and people a yearare killed in accidents involv- a possible solution. By burying CO2 in the Ppoor countries alike. The American ing them. Yet cash-strapped governments right sort of rock, a team of alchemists led Automobile Association recently calculat- often ignore the problem, letting roads de- by Juerg Matter, a geologist at Southamp- ed that16m drivers in the United States suf- teriorate. In Britain, for example, some £12 ton University,in Britain, was able to trans- fered pothole damage to their vehicles in billion ($17 billion) would be needed to mute it into stone. Specifically, the re- the past five years. That damage ranged make all roads pothole-free. Ways of re- searchersturned itintocarbonate minerals from punctures, via bent wheels, to broken pairing potholes more cheaply and endur- such as calcite and magnesite. Since these suspensions. The bill to fix it was about $3 ingly would thus be welcome. And several minerals are stable, the carbon they con- billion a year. In India, meanwhile, the cost groups ofresearchers are working on it. tain should stay locked away indefinitely. of potholes is often paid in a harsher cur- The most common cause of potholes is Dr Matter’s project, called CarbFix, is rency than dollars. There, more than 3,000 water penetrating cracks in a road’s surface 1 based in Iceland, a country well-endowed with both environmentalism and basalt. That last, a volcanic rock, is vital to the pro- cess, for it is full of elements which will readily react with carbon dioxide. Indeed, this is just what happens in nature. Over geological timescales (ie, millions of years) carbon dioxide is removed from the air by exactly this sort of weathering. Dr Matter’s scheme, which has been running since 2009, simply speeds things up. Between January and March 2012 he and his team worked at the Hellisheidi geothermal power station, near Reykjavik. Despite its green reputation, geothermal energy—which uses hot groundwater to drive steam turbines—is not entirely emis- sions-free. Underground gases, especially CO2 and hydrogen sulphide (H2S), often hitch a ride to the surface, too. The H2S, a noxious pollutant, must be scrubbed from Instant duck pond The Economist June 11th 2016 Science and technology 81

2 and weakening its foundation. This is a Human evolution particular problem with asphalt surfaces. These are made from an aggregate ofmate- rials bound together by sticky bitumen. Hobbit forming The constant pounding of traffic disinte- grates the road surface above the weak- More on the diminutive ancient inhabitants ofFlores ened area. In cold climates the destruction is aggravated by water in the cracks freez- HE folklores ofmany places speak of teeth from a second site on Flores. One of ing and thawing. The shattered asphalt T“little people”—human-like but not the adult teeth, they believe, shows that then peels away, leaving a pothole. truly human creatures who live on the Homo floresiensis descended from Homo To make matters worse, any repairs that edge ofhumanity’s ken. They seemed erectus, a tall species widespread in East do happen are usually a lash-up. To save mere legends, but in 2003 scientists and South-East Asia, and not, as some money, the material used for the patch is found some (or, rather, their fossil re- have suggested, from a smaller type, frequently “worked cold”. This means it is mains) on Flores, an island in Indonesia. Homo habilis, at the moment known not heated with specialist equipment to These remains, ofindividuals just over a only from Africa. make the bitumen in it soft enough to flow metre tall, date from 60,000-100,000 Such scant remains riskoverinterpre- into the shape required and meld properly years ago. They were called Homo flo- tation. But they do confirm Homo flo- with the edges of the pothole. Instead the resiensis by their finders and “hobbits” by resiensis as a real species (some experts stuff is simply shovelled off the back of a the press, after the fictional hominids thought the first set ofspecimens might lorry and pounded down. That can work invented by J.R.R. Tolkien.Now,some have been dwarfed by disease rather as a temporary fix until the road can be re- more, older, fossils have turned up. than by evolution), and one with a long surfaced properly, but often as not this job The latest discoveries, published in history.That history,indeed, overlapped gets delayed almost indefinitely, which re- this week’s Nature by Gerrit van den with the spread out ofAfrica ofHomo sults in more cracks appearing around the Bergh ofthe University ofWollongong, in sapiens, which began about 70,000 years fill and yet more potholes. Australia, and Yousuke Kaifu ofJapan’s ago, via southern Arabia, and which What is needed is a material that can be National Museum ofNature and Science, reached Australia (presumably by way of used as readily as a cold patch, but which go back700,000 years. Dr van den Bergh Flores) around 50,000 years ago. For works as well as a hot one. Larry Zanko and Dr Kaifu have recovered part of a jaw those proto-Australians, then, tales ofthe and his colleagues at the University of bone (pictured), six isolated adult teeth little people in the forests would not have Minnesota Duluth, think they know what (five ofwhich are pictured) and two milk been mere legends. it is. They are mixing asphalt with ground iron ore that contains magnetite—an iron oxide which, as its name suggests, is mag- netic. A phenomenon called ferromagnet- icresonance meansthatwhen magnetite is zapped with microwaves of an appropri- ate frequency it gets hot. Dr Zanko and his colleagues built an ex- perimental repair vehicle equipped with a microwave generator on the end of a hy- draulic arm. Using this on asphalt that con- tained between 1% and 2% magnetite, he found he could heat the material in a patch to 100°C in about ten minutes. At that tem- perature it could be tamped down to pro- duce a more effective repair. The heat also drives out moisture, further improving ad- hesion, says Dr Zanko. He and his team are now trying to raise the money needed to develop the technology into a commercial The memory of bones pothole-fixing system. An even better approach, however, would be to stop potholes forming in the onds to heat pieces of nanoparticle-con- As part ofa widerproject ofautomating first place, by sealing the cracks that cause taining bitumen this way. Thus softened, the inspection and maintenance of infra- them before any damage is done. Etienne the bitumen seeps into incipient cracks, structure, Dr Purnell and his colleagues are Jeoffroy of ETH Zurich, a Swiss university, sealing them up. looking at automatic systems which might has been attempting to do just that. He also Maintenance of roads containing such be fitted to vehicles that ply regular routes, mixes iron oxide into the asphalt, but in nanoparticles might therefore require no such as buses, to examine roads routinely this case it does not start off magnetic. more than driving over them once a year for signs of damage. In one version of the Rather, he uses a magnetic field to heat it. with a special vehicle which generates an future such a system would then activate a The process he employs is one also appropriate magnetic field. That would, robotic repair vehicle when it came across used to treat certain tumours. The tumour though, require building roads this way in a crack that needed fixing. This robot in question is injected with iron-oxide na- the first place—or, at least, resurfacing them would come to the crack and fill it with a noparticles, which are less than 100 nano- with nanoparticle-containing asphalt fast-setting bonding material (asphalt metres (billionths of a metre) across. These when such maintenance falls due. Stop- would not be needed, since no hole would are then subjected to an alternating mag- ping potholes growing in existing surfaces, yet have formed). That is not quite as neat netic field, which heats them up and cooks by contrast, means eternal vigilance. And as using nanoparticles and magnetic fields the diseased tissue. In his experiments, Dr that is what Phil Purnell of the University to create a self-healing highway. But if it Jeoffroy found that it takes just a few sec- ofLeeds, in Britain, hopes to automate. does the job, who cares? 7 82 Books and arts The Economist June 11th 2016

Also in this section 83 Oscar Wilde and his family 83 Alternative medicine 84 Emil Zatopek, hero and hare 85 Brazillionaires 85 Robert Rauschenberg reassessed

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Palestine some media attention, and they drew ac- tivists and observers not just from Israel The view on the ground but from around the world. They have been, as Bassem Tamimi says, “a way to tell the world that we have the right to work ourland…the springis the face ofthe occu- pation, the occupation is illegal and we have the right to struggle against it.” An elegant and moving account ofthe trials ofthe Tamimifamily,a tale that is It is in the author’s descriptions of the symbolicofthe daily lives ofmany Palestinians Tamimis that the hope, and the love, are to N THIS book of many stories, few of be found; the dedication day after day to themhappy,itfallstooneyoungPalestin- The Way to the Spring: Life and Death an effort that yields only failure, some- I By Ben Ehrenreich. Penguin ian to get the measure of things. A man in Palestine. times arrest and injury, and even death; Press; 428 pages; $28. To be published in puts out a sweet one day, he says. An ant and the concern that the Tamimis share for Britain by Granta in August; £14.99 comes to investigate, but finds it too heavy each other, waiting outside detention cen- to carry home. So it leaves and returns tres and hospitals for news ofa relative. with many ants; but meanwhile the man most of them confusingly from the same This is also a cause for rage. As Mr Eh- takes the sweet away. The ants lookaround extended Tamimi family. renreich documents, the clan is divided a bit, and finding nothing, file off. The man The spring of the title is a real, not a over tactics. And there are much deeper then replaces the sweet, and the same ant metaphorical Arab spring; a water source divisions in Palestinian society as a whole. finds it again. It races off to get the others, used by the Tamimis and others in Nabi The governmentofMahmoud Abbas, who but before they can return, the man hides it Saleh for many decades until, in 1976, the succeeded Yasser Arafat as leader of the again. Deceived a second time, the ants first Israeli settlers arrived and established Fatah movement after the latter’s death in turn on the first ant and kill it. This is how, a community they later called Halamish. 2004, draws the hatred of many Palestin- in Palestine, hopes can be crushed only so Slowly Halamish expanded, as more and ians for dealing with the Israelis, and for many times before they turn to despair more of the land was taken, often for “mil- accepting that his Palestinian Authority and then rage. itary needs”, until in 2008 the spring gets to control only a fraction of the West That anger is never far from the surface itselfwas seized. Bank, even if the result is that the political- in “The Way to the Spring”, a new memoir In 2009 the villagers of Nabi Saleh be- ly favoured of Ramallah get jobs and mon- by Ben Ehrenreich, an American writer. It gan what became a long series of marches ey. “It doesn’t matter if it’s a gold cage or an draws on the many months he spent in the to their spring; they were opposed by iron cage,” says Bassem. “It’s a cage.” occupied West Bank, off and on, from the armed settlers, and then by the Israeli And of course, many have it far worse time of the Arab spring in 2011 to Israel’s army as well, which, the author recounts, than in Nabi Saleh. There is Sa’adat Sabri, bloody incursion into Gaza in 2014. Yet he fired tear-gas grenades, often directly at the as the bookdescribes, who lives in a house also calls it a tale oflove, and even ofhope. protesters at face or chest height, and rub- completely fenced in by Israeli security Mr Ehrenreich is the author of two well- ber-coated bullets. The Tamimis, and Mr barriers, with a gate he could go in and out received novels(“Ether” and “The Suitors”) Ehrenreich, make a point of always calling of only when the authorities let him. And and he brings a novelist’s eye to his subject, them that, not “rubber bullets”. Consisting there is Hebron, the only city in the West framing the bulk of his book around one ofa thin layerofrubberaround a steel core, Bankwhere Israelisstill live, and where the village, Nabi Saleh, 30 miles (48km) north- a rubber-coated bullet can break a jaw- Palestinian Arabs run a daily gauntlet of west of Ramallah, the seat of the Palestin- bone. It can penetrate the flesh. checks, searches and barriers. ian Authority in the West Bank, and The Nabi Saleh marches, of course, Many Israelis hate what their govern- around a group of a few dozen protesters, achieved nothing. But they generated ment does in the West Bank. But many, too, 1 The Economist June 11th 2016 Books and arts 83

2 condone or support it for reasons ranging terracial coupling, arguing that it encour- Readers may finish the booklonging for from fear of terrorism to mistrust of neigh- aged diversity of thought and the progres- more detail on Jane Wilde, who is repeat- bouring Arab states and the conviction sion of society. His wife Jane wrote poems edly lauded as a literary force in her own that the land from the river to the sea is raging with republican spirit, felt passion- right (though with little textual support). It theirs by right. They may well hate this ately about the “bondage of women” and is her fate that is the most disquieting. Osc- book; there is little wider context in it, no translated a deeply unpopular work on ar achieved his aim to be remembered by attempt to investigate, or even to acknowl- temptation. Oscar inherited this sense of history—his grave in Paris is a site of pil- edge, the other side. (One ofthe exceptions intellectual daring and the need to push grimage. Jane, however, paid the price of comes from an Israeli in Hebron, who says boundaries. In one ofhis first pieces ofpro- his fame. Once voted the greatest living that “when someone wants to kill, we’ll fessional writing, he praises the patent ho- Irishwoman by her contemporaries, Jane kill him first…we’re not the religion that moeroticism of paintings by Spencer Stan- Wilde was buried in poverty “without gives the second cheekto anyone.”) hope. Other reviewers, likely fearful of fanfare—without name or record…in soil Mr Ehrenreich did not set out to write social condemnation, turned a blind eye. to which she did not belong”. 7 an objective book; he does not even think Yet Ms O’Sullivan often strains to make it is possible. This is simply a description, parallels that aren’t there. Much is made, detailed and sometimes too much so, of for example, of Oscar’s affair with Robbie Alternative medicine what the facts on the ground look like if Ross, two years into his marriage with you are one of a particular group of Pales- Lloyd. This is the exact time, Ms O’Sullivan Straight and tinians in the West Bank. It should be read notes, at which a patient of William’s by friends and foesofIsrael alike. 7 called Mary Travers aroused suspicion crooked thinking from Jane. According to Ms O’Sullivan, this may be an echo of the memory or signifi- Literary history cant “of an order underlying the chaos of It’s All in Your Head: True Stories of human relationships”. That father and son Imaginary Illness. By Suzanne O’Sullivan. shared a wandering eye does not warrant Born to be Wilde Chatto & Windus; 336 pages; £16.99. To be such sweeping statements. published in America by Other Press in At the same time, obvious parallels are January ignored or suffer from a lack of informa- tion. Jane’s lifelong interest in women’s Cure: A Journey into the Science of Mind rights and the undervalued intellects of Over Body. By Jo Marchant. Crown; 320 The Fall of the House of Wilde. By Emer wives surely influenced Oscar’s decision pages; $26. Canongate; £16.99 O’Sullivan. Bloomsbury; 495 pages; £25. To to edit Woman’s World, a magazine which be published in America in October; $35 provided more varied reading material for BOUT a third of the patients seen by S A child, Oscar Wilde announced that an emerging class of educated women. Ageneral practitioners in Britain have Ahe would like to be remembered as the How his family responded to Oscar’s trial physical symptomsforwhich no cause can hero of a “cause célèbre and to go down to and imprisonment—the climax of any bio- be found, including unrelenting pain, posterity as the defendant in such a case as graphy of the writer—readers can only blindness, seizures and paralysis, accord- ‘Regina Versus Wilde’”. He succeeded, of guess: “what Jane or Willie [Oscar’s broth- ing to the Royal College of Psychiatrists. course, and his notoriety poses a problem er] thought about Oscar’s pending trial is Those who are latertold thattheirsuffering for biographers unlikely to discover any- nowhere recorded.” Similarly, the impact is due purely to psychological reasons of- thing new about the great aesthete. They of the trial upon Oscar’s children—who ten react with anger and denial; many re- increasingly turn to the lesser-canonised dropped the surname “Wilde” as a result fuse to see a psychiatrist; few ever recover. figures in his sphere; in 2011 came Franny ofthe scandal—is barely mentioned. “It’s All in YourHead”, which won this Moyle’s account of Wilde’s wife, Con- year’s Wellcome Book Prize, is an illumi- stance Lloyd. Then “Wilde’s Women” by nating account of psychosomatic disease Eleanor Fitzsimons. Now Emer O’Sullivan, by Suzanne O’Sullivan, a neurologist. Psy- the author of a new book “The Fall of the chosomatic illness is not fully understood, House of Wilde”, places Oscar in the con- but stress and traumatic events, such as text ofhis immediate family, stating that “it rape and domestic violence, are suspected is to No.1 Merrion Square we need to look to be a cause. That may be why it is more forthe formation ofOscar’s mind.” common in women than men. Ms O’Sulli- This approach can reap rewards. Some van unravels her patients’ past to explain familial ties are plain to see; Oscar’s re- how memories lodged in the subcon- nowned style and turn of phrase finds its scious—from a child’s death to a broken origins in his mother, Jane; she deplores bone—can command debilitating physical those who “paraphrase a Poet into the illness, in some cases many years later. prose of everyday life” and rebukes the Psychosomatic diseases are ubiquitous subtitle of “Lady Windermere’s Fan” on and cost health systems a fortune (twice the grounds that “no one cares for a good the cost of treating diabetes in America in woman.” Jane’s salons attracted intellectu- 2002, for example), yet medical textbooks al figures, with attendants seeking to dis- relegate them to footnotes. Patients reject play their wit and conversational skill. the diagnosis as laden with stigma. Ms Oscar emulated these events—notably in O’Sullivan’s book is a plea for change. his drawing-room dramas, where style Huge suffering could be averted ifpatients, was paramount—but also in his salons, doctors and everyone else stopped view- named “Tea and Beauties”, in London. ing them as diseases that are not “real”. The Wildes prized independent think- Ms O’Sullivan’s book says almost noth- ing. Sir William, a renowned polymath ing about what cures exist, mentioning and doctor, controversially advocated in- Fine and dandy specific treatments such as meditation 1 84 Books and arts The Economist June 11th 2016

his medals to an athlete he thought more deserving. Beyond running, he was known for welcoming travellers into his modest home in Prague, and publicly criti- cising the Russian invasion of Czechoslo- vakia in 1968 atgreat personal risk. This was not, as Richard Askwith re- veals in a new biography, “Today We Die a Little!”, the first time that he had resisted. Remarkably, Zatopek threatened to with- draw from the Helsinki games after the Communist Party had prevented the son of a political dissident from competing. Eventually, the party backed down, such was his importance to Czechoslovak pro- paganda. Mr Askwith says he can think of only one other world-famous athlete who risked the best years of his career by resist- 2 only in passing. Where she leaves off, Jo Two things hold back this new field. ing a government: when Muhammad Ali, Marchant picks up in “Cure”, a thought- The first is a pervasive view in medical sci- the great American boxer who died on provoking exploration of how the mind ence that it is all outlandish. A recurring June 3rd, refused to serve in the Vietnam can affect the body and can be harnessed confession from the researchers Ms Mar- war (see page 90). Ali was barred from to help treat physical illness. chant meets is that they fear for their aca- competing; Zatopekwas more fortunate. People’s brains are wired to signal pain demic reputation if they study alternative Strangely, given the myths surrounding and exhaustion as a warning to the body treatments (one describes the experience Zatopek, his defiance before Helsinki has when a physical cause exists, but some- as coming “out of the closet”; “Everyone been largely forgotten. It is one of many il- times also when there is none. Altitude looked at me sort offunny,” says another). luminating episodes that Mr Askwith has sickness, for example, can strike even Connected to that, probably, is lack of rescued from obscurity, while scrutinising when blood oxygen isnormal, triggered by funding for research. Pharmaceutical com- popular tales. Yes, as a factory worker and an expectation ofbecoming sick. The brain panies shun such treatments because they then a soldier Zatopek used to train in may also be able to control the immune are not moneymakers. Only 0.2% of the army boots in the snow or on the spot, system, causing the body to reject a trans- $30 billion annual budgetofAmerica’sNa- sprinting up to 32km (20 miles) a day. But plant or to turn on itself (as it does with tional Institutes ofHealth goes toward test- probably not, as rumour had it, with his autoimmune disorders such as Crohn’s ing mind-body therapies. Ms Marchant’s wife Dana, an Olympic javelin champion, disease). book makes a convincing case why that is on his back. He did indeed work in a ura- Many patients forwhom no other treat- short-sighted. 7 nium mine after his dismissal from the ments work are helped out of their misery army in 1968. But as a labourer in exile, not by a placebo—be it a sugar pill or a mock a concentration-camp inmate. procedure that mimics surgery. Strikingly, Emil Zatopek Mr Askwith, who has written two oth- that is the case even when they know that er books about running, is best when de- a placebo is all they are given. It can pro- Feet of fire scribing Zatopek on the track: chatting vide relief for conditions considered to be with his rivals in various languages while purely physical, including chronic, degen- jostling for the front, scrunching his face erative and terminal ones, as well as some and flailing his arms (“like a man wrestling that may be psychosomatic, such as irrita- with an octopus”, according to a contem- ble-bowel and chronic-fatigue syndromes. porary sportswriter) while accelerating for Today We Die a Little! The Inimitable Emil That argues for a change to the current ap- the finish. He isthorough, too, with hissub- Zatopek, the Greatest Olympic Runner of proach, which rejects everything that is ject’s political life. Zatopek was not a hard- All Time. By Richard Askwith. Nation; 457 “no better than a placebo” as useless. core dissident. He benefited from his work- pages; $26.99. Yellow Jersey; £16.99 Ms Marchant talks to sufferers and sci- ing-class background, believed in entists, and tries out some of the treat- EW athletes are good enough to win an communism, fulfilled his propagandist du- ments that promise to trick the mind into FOlympic gold medal. Few people are ties and added his name to public letters curative action, including meditation, tak- brave enough to stand up to a tyrannical re- condemning political prisoners. He recant- ing a mail-order placebo for a headache gime. Emil Zatopek did both. The “Czech ed his criticism of the regime in 1971 as a and floating through a virtual-reality ice Locomotive” was the greatest long-dis- broken man, unable to find respectable canyon (which can relieve the excruciating tance runner of his era, and arguably of all employment. pain suffered by burn victims by distract- time. He won four golds and a silver at the Mr Askwith devotes much effort to de- ing them while their wounds are 1948 and1952 games in London and Helsin- fending his subject’s concessions to au- scrubbed). The evidence so far, she cau- ki, including the treble ofthe 5,000 metres, thority. A general willingness to yield to tions, is often from a few small studies. 10,000 metres and marathon at the lat- ruthless tyranny does not make Zatopek’s These treatments, if proven to work in ter—an achievement that has never been occasional acts of defiance any less coura- more and larger trials, would not help matched. The Helsinki marathon was his geous, he argues. Yet the author struggles everyone. Some would be effective in com- first ever race at that distance; he broke the to accept the fallibility of an Olympian bination with existing drugs that tackle the Olympic record by six minutes. hero, ultimately arguing that “it matters lit- physical symptoms: a placebo can help But equally famous were Zatopek’s tle how much ofthe Emil legend was real”. people with arthritis cope with lower generosity and courage. In sport, that It is an odd conclusion to an otherwise rig- doses of pain medication, for example, meant sharing training tips with whoever orousaccountofsomeone who wasnot, as and stress-relieving meditation can boost asked, pushing himself harder than any- some believed, a saint—but, like Muham- the effect ofblood-pressure drugs. body had before, and giving away one of mad Ali, a great athlete and a good man. 7 The Economist June 11th 2016 Books and arts 85

Robert Rauschenberg porary art and director of UCCA. “He Brazil pushed these hidebound artisans to do Ripe for something radical and new.” Rich upon rich He also amassed a huge amount of reassessment photographyand newideasduringthe vis- it, which found their way into “The Quar- ter Mile”. “He often said it was autobio- Brazillionaires: The Godfathers of Modern graphical,” said David White, who started A yearofRobert Rauschenberg Brazil. By Alex Cuadros. Spiegel & Grau; 368 working with the artist in 1980 and is now exhibitions begins in Beijing next week pages; $28. Profile; £10.99 a senior curator for the Robert Rauschen- HEN Robert Rauschenberg’s work bergFoundation. “Butit’sa seriesofexperi- NE evening in 2012 Wanderson Wwas shown at the National Art Muse- ments too.” Rauschenberg continued to OPereira dos Santos, a poor, black um of China in Beijing in 1985, it attracted workon the piece for17 years, until 1998. labourer, was cycling home in Rio de 300,000 visitors in just 18 days. Young art If crossing boundaries across different Janeiro. Thor Batista, a rich, white social- students travelled from all over the coun- media is now commonplace, Rauschen- ite, was driving his SLR McLaren along try to marvel at the art of the American berg was there at the start. In 1950s New the same road. Mr Batista says he was master, and its effect was electric. It inspi- York, when Abstract Expressionism ruled driving with due care; Mr Pereira dos red a generation of avant-garde Chinese and the (male) painterwasking, he was rei- Santos is not around to give his version of artists, who until 1979 had almost never magining the day-to-day, defying the re- events. A collision between the two left seen Western art, to find their own way to strictions of canvas and the very tenets of his body scattered across the highway. challenge orthodoxy. sculpture and painting. Even more than When Alex Cuadros, an American One was Song Dong, just 19 and study- Andy Warhol, it was he who prefigured journalist, moved to São Paulo in 2010, ing oil painting which he quickly aban- pop with a famous collage incorporating Mr Batista’s father, Eike, was worth $27 doned. Now he is known for his perfor- the face of John Kennedy. From there he billion, making him Brazil’s richest man. mances and his ephemeral—sometimes went on to work freely in performance Father and son were staples ofMr Cua- edible—installations. Another was Huang with the masters of the avant-garde— dros’s job writing about the richest peo- Yong Ping, now 62 and a French citizen, Merce Cunningham in dance and John ple in South America’s largest economy who set up a group known as the Xiamen Cage in music—first creating scenery, and forBloomberg news agency. His explora- Dada, thrilled by the Dadaist provocations then the lighting to do it justice. He forged tions ofvast fortunes, and the access his he had seen in Rauschenberg’s juxtaposi- links between art and science setting up beat gave him to their owners, provided tions offound objects and imagery. Ai Wei- E.A.T. (Experiments in Art and Technology) the material for this book. wei, Xu Bing and Cai Guo-Qiang, three of and delved deeply into lithography, then As the collision on that Rio road il- China’s best known artists, all cite Rausch- creating series of works on metal sheets. lustrates, the lives ofbillionaires allow enberg as an influence. He worked right up until he died in 2008. Mr Cuadros to explore Brazil’s vertigi- Just over 30 years later, Rauschenberg’s Those unable to get to Beijing in the nous social and financial inequality, greatest piece, “The Quarter Mile”, also next two months will still be able to reas- much ofit closely aligned with race. And known as “Two-Furlong Piece”, a master- sess for themselves where Rauschenberg the story ofMr Batista senior mirrors work made up of 190 parts stretching 305 stands in the canon. The first retrospective another aspect ofBrazil: its tendency to metreslong, will be exhibited in its entirety since the artist’s death will open at Tate boom and bust. His fortune rested on oil, for the first time. Again, the showcase is in Modern in December, before travelling to mining and logistics companies he set up Beijing, this time at the Ullens Centre for the Museum of Art in New York (MoMA) during the commodity boom; when his Contemporary Art (UCCA). And it will be and later to San Francisco. The show will oil wells turned out dry and investor interesting to see how the work will affect demonstrate not just the range of Rausch- sentiment towards Brazil soured, his a new generation whose global vision enberg’s practice, but also his consistency empire collapsed. By 2015, when Brazil’s is less restricted than that ofits forebears. as an artist. “The youth culture of the 1950s best lawyers managed to get Thor’s con- Rauschenberg first visited China in 1982 and 1960s, civil rights, Janis Joplin, Reagan viction forkilling Mr Pereira overturned, to work with the world’s oldest paper mill. and on, thiswasan artistwho continued to his father’s cars, yachts and planes had “He wanted to make paperofan incredible respond to the present,” says the exhibi- been repossessed. thickness,” explains Philip Tinari, a 37- tion’s co-curator, Achim Borchardt-Hume. Among the other larger-than-life year-old Mandarin-speaking American “Younger artists, East and West, are still characters in the bookis Paulo Maluf, a who isan experton 1990sChinese contem- fascinated by that.” 7 formermayor ofSão Paulo so notorious forcorruption that malufar has come to mean “to steal from the public purse”. Roberto Marinho, a media mogul who died in 2003, helped make and break governments—and shaped popular taste with his television channel’s wildly popular telenovelas. Edir Macedo, a tele- vangelist, built a vast fortune on dona- tions from the poor adherents ofhis prosperity gospel. Initially, MrCuadros writes, he was not enthusiastic about the billionaires beat. Poor people seemed more interesting. In this excellent book he has managed to use billionaires to illuminate the lives ofboth rich and poor Brazilians, and all those in between. Sum of its parts 86 Courses

Scholarships Appointments Chief Executive Offi cer London-based

The Cherie Blair Foundation for Women supports women entrepreneurs in developing and emerging economies to build and expand their businesses, and in doing so, benefi t not only themselves but also their families and communities.

The Foundation has reached more than 136,000 women in over 90 countries to date. It has built creative, impactful and large scale partnerships with the private sector and works closely with international development actors on entrepreneurship, gender and technology. Since its establishment in 2008, the Foundation has raised over £14 million for women’s economic empowerment. The organisation has a strong culture of learning and emphasises the importance of results-oriented partnerships.

The Foundation is seeking a new Chief Executive who will build on its accomplishments, drive change and take the organisation to its next stage of growth. We are seeking a passionate, energetic change leader and people manager who has substantial experience in international development, entrepreneurship, gender and technology. Applicants should demonstrate a thorough commitment to the Cherie Blair Foundation for Women’s mission and values of empowerment, inclusiveness and accountability.

We value diversity and welcome applications from people from all sections of the community. The role will be based in London, with international travel. Salary is competitive and will be commensurate with experience.

For the full job description, please visit: www.cherieblairfoundation.org/vacancies

To apply, please send a full curriculum vitae and a cover letter addressing the role and person specifi cation to Helen Hayes at hhayes@ cherieblairfoundation.org by 17:00 BST on 24 June 2016. The Economist June 11th 2016 Tenders 87

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Economic data % change on year ago Budget Interest Industrial Current-account balance balance rates, % Gross domestic product production Consumer prices Unemployment latest 12 % of GDP % of GDP 10-year gov't Currency units, per $ latest qtr* 2016† latest latest 2016† rate, % months, $bn 2016† 2016† bonds, latest Jun 8th year ago United States +2.0 Q1 +0.8 +1.8 -1.1 Apr +1.1 Apr +1.4 4.7 May -484.1 Q4 -2.5 -2.5 1.71 - - China +6.7 Q1 +4.5 +6.6 +6.0 Apr +2.0 May +1.9 4.0 Q1§ +293.5 Q1 +2.7 -3.1 2.78§§ 6.57 6.21 Japan +0.1 Q1 +1.9 +0.6 -3.5 Apr -0.3 Apr nil 3.2 Apr +157.2 Apr +3.4 -6.2 -0.13 107 125 Britain +2.0 Q1 +1.4 +1.8 +1.6 Apr +0.3 Apr +0.7 5.1 Feb†† -146.9 Q4 -4.8 -3.6 1.40 0.69 0.65 Canada +1.1 Q1 +2.4 +1.5 -0.2 Mar +1.7 Apr +1.6 7.1 Apr -47.6 Q1 -2.7 -1.6 1.20 1.27 1.24 Euro area +1.7 Q1 +2.2 +1.5 +0.2 Mar -0.1 May +0.3 10.2 Apr +357.1 Mar +3.0 -1.9 0.06 0.88 0.89 Austria +1.6 Q1 -0.7 +1.3 +2.5 Mar +0.5 Apr +1.1 5.8 Apr +9.6 Q4 +2.2 -1.9 0.43 0.88 0.89 Belgium +1.5 Q1 +0.9 +1.3 +1.2 Mar +2.2 May +1.5 8.7 Apr -0.1 Dec +1.2 -2.4 0.45 0.88 0.89 France +1.4 Q1 +2.6 +1.4 -0.8 Mar -0.1 May +0.2 9.9 Apr -21.9 Apr‡ -0.5 -3.5 0.42 0.88 0.89 Germany +1.6 Q1 +2.7 +1.6 +1.2 Apr +0.1 May +0.4 6.1 May +292.3 Mar +8.0 +0.4 0.06 0.88 0.89 Greece -1.3 Q1 -1.9 +1.2 -4.0 Mar -1.3 Apr +0.5 24.2 Feb +1.1 Mar +2.1 -3.9 7.41 0.88 0.89 Italy +1.0 Q1 +1.0 +1.0 +0.5 Mar -0.3 May +0.2 11.7 Apr +41.4 Mar +1.9 -2.5 1.31 0.88 0.89 Netherlands +1.4 Q1 +1.9 +1.7 +0.3 Mar nil Apr +0.5 7.8 Apr +68.8 Q4 +9.7 -1.6 0.28 0.88 0.89 Spain +3.4 Q1 +3.1 +2.8 +8.9 Apr -0.9 May -0.4 20.1 Apr +17.1 Mar +1.2 -3.5 1.46 0.88 0.89 Czech Republic +2.6 Q1 +1.4 +2.7 +4.2 Apr +0.6 Apr +1.3 5.4 May§ +1.5 Q4 -0.1 -1.5 0.51 23.7 24.5 Denmark +0.1 Q1 +2.2 +1.2 +2.0 Apr nil Apr +0.7 4.3 Apr +18.8 Mar +6.0 -2.8 0.35 6.53 6.66 Norway +0.7 Q1 +4.0 +1.5 +6.0 Apr +3.2 Apr +2.5 4.7 Mar‡‡ +29.3 Q1 +11.2 +6.8 1.29 8.11 7.90 Poland +2.5 Q1 -0.4 +3.5 +6.0 Apr -1.0 May +1.2 9.2 May§ -2.0 Mar -1.9 -2.1 3.10 3.79 3.72 Russia -1.2 Q1 na -0.9 +0.6 Apr +7.3 May +7.5 5.9 Apr§ +51.3 Q1 +3.3 -2.5 8.74 63.8 56.2 Sweden +4.2 Q1 +2.0 +3.5 +3.5 Apr +0.8 Apr +1.0 7.3 Apr§ +28.2 Q1 +5.6 -0.5 0.62 8.11 8.36 Switzerland +0.7 Q1 +0.4 +1.2 +1.0 Q1 -0.4 May -0.6 3.5 Apr +75.9 Q4 +9.6 +0.3 -0.38 0.96 0.94 Turkey +5.7 Q4 na +3.3 +0.6 Apr +6.6 May +7.7 10.9 Feb§ -29.5 Mar -4.6 -1.8 9.54 2.88 2.77 Australia +3.1 Q1 +4.3 +2.6 +4.8 Q1 +1.3 Q1 +1.6 5.7 Apr -62.3 Q1 -4.0 -2.0 2.19 1.34 1.31 Hong Kong +0.8 Q1 -1.8 +2.0 -1.3 Q4 +2.7 Apr +2.6 3.4 Apr‡‡ +9.6 Q4 +2.7 -0.4 1.20 7.76 7.75 India +7.9 Q1 +9.6 +7.5 +0.1 Mar +5.4 Apr +5.1 4.9 2013 -22.6 Q4 -1.1 -3.7 7.49 66.7 64.1 Indonesia +4.9 Q1 na +5.1 +3.4 Mar +3.3 May +4.3 5.5 Q1§ -18.2 Q1 -2.4 -1.9 7.52 13,265 13,380 Malaysia +4.2 Q1 na +5.5 +2.8 Mar +2.1 Apr +2.8 3.5 Mar§ +7.0 Q1 +2.6 -3.7 3.88 4.06 3.77 Pakistan +5.5 2015** na +4.8 +6.7 Mar +3.2 May +5.1 5.9 2015 -2.4 Q1 -0.9 -4.6 8.03††† 104 102 Philippines +6.9 Q1 +4.5 +6.2 +7.8 Mar +1.6 May +2.6 6.1 Q2§ +8.4 Dec +3.5 -1.9 4.44 46.0 45.0 Singapore +1.8 Q1 +0.2 +2.5 +2.9 Apr -0.5 Apr +1.1 1.9 Q1 +54.8 Q1 +20.6 +0.9 2.05 1.35 1.36 South Korea +2.8 Q1 +2.1 +2.6 -2.8 Apr +0.8 May +1.3 3.9 Apr§ +103.1 Apr +7.0 +0.4 1.70 1,157 1,123 Taiwan -0.7 Q1 +3.1 +2.1 -4.1 Apr +1.2 May +1.0 4.0 Apr +74.8 Q1 +12.4 -0.9 0.79 32.2 31.1 Thailand +3.2 Q1 +3.8 +3.5 +1.5 Apr +0.5 May +2.4 1.0 Apr§ +39.6 Q1 +3.0 -2.2 2.16 35.2 33.8 Argentina +2.3 Q2 +2.0 -0.7 -2.5 Oct — *** — 5.9 Q3§ -15.9 Q4 -2.6 -2.8 na 13.9 9.02 Brazil -5.4 Q1 -1.1 -3.7 -7.2 Apr +9.3 May +8.3 11.2 Apr§ -34.1 Apr -1.4 -5.7 12.41 3.40 3.13 Chile +2.0 Q1 +5.3 +3.1 -3.4 Apr +4.2 May +3.6 6.4 Apr§‡‡ -4.7 Q1 -1.4 -1.8 4.55 673 635 Colombia +2.5 Q1 +0.6 +3.3 +1.3 Mar +8.2 May +4.4 9.0 Apr§ -18.9 Q4 -5.2 -1.9 7.92 2,903 2,618 Mexico +2.6 Q1 +3.3 +2.3 -2.0 Mar +2.5 Apr +3.0 3.9 Apr -30.5 Q1 -2.9 -3.0 6.07 18.2 15.7 Venezuela -8.8 Q4~ -8.4 -7.0 na na +181 7.3 Apr§ -17.8 Q3~ -1.5 -14.4 11.17 9.99 6.30 Egypt +4.0 Q4 na +3.8 -10.9 Mar +10.3 Apr +9.8 12.7 Q1§ -16.8 Q4 -2.7 -9.8 na 8.88 7.63 Israel +1.7 Q1 +0.8 +3.5 -0.5 Mar -0.9 Apr +1.2 4.9 Apr +13.8 Q4 +4.2 -2.5 1.71 3.83 3.84 Saudi Arabia +3.5 2015 na +2.8 na +4.2 Apr +3.8 5.7 2014 -53.5 Q4 -1.8 -9.3 na 3.75 3.75 South Africa -0.2 Q1 -1.2 +0.7 -1.5 Mar +6.2 Apr +6.4 26.7 Q1§ -13.6 Q4 -4.2 -3.3 9.05 14.7 12.6 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist poll or Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. ~2014 **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. ***Official number not yet proved to be reliable; The State Street PriceStats Inflation Index, March 34.88%; year ago 27.1% †††Dollar-denominated bonds. The Economist June 11th 2016 Economic and financial indicators 89

Markets % change on The Economist poll of forecasters, June averages (previous month’s, if changed) Dec 31st 2015 Real GDP, % change Consumer prices Current account Index one in local in $ Low/high range average % change % of GDP Jun 8th week currency terms 2016 2017 2016 2017 2016 2017 2016 2017 United States (DJIA) 18,005.1 +1.2 +3.3 +3.3 Australia 1.9 / 3.0 2.1 / 3.5 2.6 (2.5) 2.8 1.6 (1.7) 2.3 (2.4) -4.0 (-4.1) -3.4 (-3.5) China (SSEA) 3,063.8 +0.5 -17.3 -18.3 Brazil -4.2 / -3.1 -0.8 / 2.0 -3.7 0.8 (0.6) 8.3 6.0 (6.5) -1.4 (-1.6) -1.2 (-1.3) Japan (Nikkei 225) 16,830.9 -0.7 -11.6 -0.3 Britain 1.5 / 2.1 1.5 / 2.6 1.8 (1.9) 2.0 (2.1) 0.7 (0.6) 1.7 (1.8) -4.8 (-4.7) -4.1 (-4.2) Britain (FTSE 100) 6,301.5 +1.8 +0.9 -0.3 Canada 1.0 / 2.0 1.2 / 2.6 1.5 (1.6) 2.0 1.6 (1.5) 2.0 (1.9) -2.7 (-2.8) -2.4 (-2.3) Canada (S&P TSX) 14,313.1 +1.8 +10.0 +20.5 China 6.3 / 6.9 5.8 / 6.7 6.6 (6.5) 6.3 (5.9) 1.9 (1.8) 1.9 (1.7) 2.7 (2.8) 2.6 Euro area (FTSE Euro 100) 1,023.4 -0.4 -6.5 -1.9 France 1.1 / 1.8 1.2 / 1.9 1.4 (1.3) 1.5 (1.4) 0.2 1.2 (1.1) -0.5 (-0.3) -0.5 Euro area (EURO STOXX 50) 3,019.8 -0.6 -7.6 -3.1 Germany 1.4 / 2.0 1.2 / 2.3 1.6 (1.5) 1.6 0.4 (0.3) 1.5 8.0 (7.6) 7.6 (7.2) Austria (ATX) 2,245.2 +1.0 -6.3 -1.8 India 6.1 / 8.5 6.1 / 8.3 7.5 7.5 (7.1) 5.1 (5.2) 5.1 (4.8) -1.1 (-1.0) -1.4 (-1.3) Belgium (Bel 20) 3,543.5 +1.1 -4.2 +0.4 Italy 0.7 / 1.2 0.7 / 1.7 1.0 1.2 0.2 1.2 (1.1) 1.9 1.8 (1.7) France (CAC 40) 4,448.7 -0.6 -4.1 +0.6 Japan 0.2 / 0.8 0.1 / 1.9 0.6 (0.5) 0.8 (0.6) nil (0.2) 1.2 (1.6) 3.4 (3.8) 3.2 (3.3) Germany (DAX)* 10,217.0 +0.1 -4.9 -0.3 -2.7 / 0.5 -0.7 / 3.0 -0.9 (-1.3) 1.3 (1.2) 7.5 (8.2) 6.1 (6.4) 3.3 (3.7) 3.4 (4.1) Greece (Athex Comp) 652.4 +1.1 +3.3 +8.4 Russia Italy (FTSE/MIB) 17,909.7 +0.6 -16.4 -12.3 Spain 2.5 / 3.1 1.7 / 2.9 2.8 2.2 (2.3) -0.4 (-0.5) 1.2 1.2 (1.0) 1.0 (0.9) Netherlands (AEX) 450.2 +0.8 +1.9 +6.9 United States 1.0 / 2.3 1.3 / 2.9 1.8 2.1 1.4 (1.2) 2.2 -2.5 (-2.7) -2.8 Spain (Madrid SE) 889.7 -1.0 -7.8 -3.3 Euro area 1.3 / 1.8 1.3 / 2.1 1.5 1.6 0.3 (0.2) 1.4 (1.3) 3.0 (2.8) 2.8 (2.5) Czech Republic (PX) 874.1 -1.6 -8.6 -4.1 Sources: Bank of America, Barclays, BNP Paribas, Citigroup, Commerzbank, Credit Suisse, Decision Economics, Deutsche Bank, Denmark (OMXCB) 889.4 -0.8 -1.9 +3.3 EIU, Goldman Sachs, HSBC Securities, ING, Itaú BBA, JPMorgan, Morgan Stanley, Nomura, RBS, Royal Bank of Canada, Schroders, Scotiabank, Société Générale, Standard Chartered, UBS. For more countries, go to: Economist.com/markets Hungary (BUX) 27,396.9 +1.5 +14.5 +22.2 Norway (OSEAX) 681.4 +2.4 +5.0 +14.6 Poland (WIG) 46,551.5 +4.1 +0.2 +4.3 Other markets The Economist commodity-price index Russia (RTS, $ terms) 965.4 +8.4 +11.5 +27.5 2005=100 % change on % change on Sweden (OMXS30) 1,361.5 +0.3 -5.9 -2.2 Dec 31st 2015 one one Switzerland (SMI) 8,143.8 -0.5 -7.6 -3.7 Index one in local in $ May 31st Jun 7th* month year Turkey (BIST) 78,832.6 +2.3 +9.9 +11.2 Jun 8th week currency terms Dollar Index Australia (All Ord.) 5,441.1 +0.9 +1.8 +4.3 United States (S&P 500) 2,119.1 +0.9 +3.7 +3.7 All Items 137.3 140.9 +3.6 -1.8 Hong Kong (Hang Seng) 21,297.9 +2.6 -2.8 -3.0 United States (NAScomp) 4,974.6 +0.5 -0.7 -0.7 Food 164.4 171.2 +6.4 +7.1 India (BSE) 27,020.7 +1.1 +3.5 +2.7 China (SSEB, $ terms) 351.5 +0.8 -16.6 -17.6 Indonesia (JSX) 4,916.1 +1.6 +7.0 +11.2 Japan (Topix) 1,351.0 -0.8 -12.7 -1.5 Industrials Malaysia (KLSE) 1,657.9 +1.9 -2.0 +3.5 Europe (FTSEurofirst 300) 1,352.9 +0.2 -5.9 -1.3 All 109.1 109.5 -0.5 -13.5 Pakistan (KSE) 37,426.4 +2.5 +14.0 +14.3 World, dev'd (MSCI) 1,694.3 +1.3 +1.9 +1.9 Nfa† 117.9 119.6 -0.6 -5.6 Singapore (STI) 2,862.4 +2.6 -0.7 +4.6 Emerging markets (MSCI) 835.9 +3.6 +5.3 +5.3 Metals 105.4 105.2 -0.5 -16.9 South Korea (KOSPI) 2,027.1 +2.2 +3.4 +4.8 World, all (MSCI) 408.3 +1.5 +2.2 +2.2 Sterling Index Taiwan (TWI) 8,715.5 +1.4 +4.5 +6.7 World bonds (Citigroup) 949.1 +1.8 +9.1 +9.1 All items 171.6 176.1 +3.0 +3.3 Thailand (SET) 1,445.5 +2.1 +12.2 +14.6 EMBI+ (JPMorgan) 771.3 +1.8 +9.5 +9.5 Argentina (MERV) 13,624.9 +7.9 +16.7 +9.0 Hedge funds (HFRX) 1,167.5§ +0.4 -0.6 -0.6 Euro Index Brazil (BVSP) 51,629.3 +5.3 +19.1 +38.7 Volatility, US (VIX) 14.1 +14.2 +18.2 (levels) All items 153.3 154.3 +4.0 -2.8 Chile (IGPA) 19,806.0 +2.3 +9.1 +14.8 CDSs, Eur (iTRAXX)† 73.2 -1.5 -5.1 -0.4 Gold Colombia (IGBC) 9,964.4 +3.1 +16.6 +27.5 CDSs, N Am (CDX)† 73.8 -4.7 -16.5 -16.5 $ per oz 1,214.3 1,241.4 -1.6 +5.5 Mexico (IPC) 46,263.8 +1.6 +7.6 +2.3 Carbon trading (EU ETS) € 6.1 +2.3 -26.3 -22.7 West Texas Intermediate Venezuela (IBC) 15,466.2 -0.6 +6.0 na Sources: Markit; Thomson Reuters. *Total return index. $ per barrel 48.9 50.5 +12.9 -15.8 Egypt (Case 30) 7,780.1 +2.7 +11.0 -2.1 †Credit-default-swap spreads, basis points. §June 6th. Israel (TA-100) 1,251.8 nil -4.8 -3.3 Sources: Bloomberg; CME Group; Cotlook; Darmenn & Curl; FT; ICCO; Indicators for more countries and additional ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Saudi Arabia (Tadawul) 6,605.0 +2.3 -4.4 -4.3 Ewart; Thomson Reuters; Urner Barry; WSJ. *Provisional South Africa (JSE AS) 53,960.2 +0.8 +6.4 +12.1 series, go to: Economist.com/indicators †Non-food agriculturals. 90 Obituary Muhammad Ali The Economist June 11th 2016

lites, pound them flat to hearthrugs, hit them so hard they’d wonder where Octo- ber and November went. And what about him? He was king of all kings, young, brash, full of dash, shaker-up of the world, the greatest! No ring could contain him. Butthiswasnothischiefimportance. In one person, he displayed every aspect of the struggles of blacks in mid-20th century America. Because he was a star but not a saint, as Martin Luther King was, he drew attention to their cause as no one else could: the frustrations of it, the tempta- tions, the contradictions and the wrong turnings. In the end there came a kind of calm, when his gloves were hung up in the office ofthe first blackpresident. How long a slog and punishment it had taken to get there.

A black God Start with his childhood, in the separate worlds of the segregated South. That nice middle-class home on Grand Avenue which counted for nothing, because in Louisville, Kentucky black middle-class was nothing like white. His mother’s lowly job, cleaning bathrooms for white folks. The different water fountains and lunch counters, the seats at the back of the bus, The greatest the sense of being a dog to be kicked around. When he learned to box at 12— skinny in satin trunks, his defensive pose already good—it was mostly to whip the thief who had stolen his brand-new bike, and also because it seemed the fastestway, almost the only way, for a black youth to Muhammad Ali, heavyweight boxer,died on June 3rd, aged 74 make it in America. URE skill was much ofit. The brutal del- One against Cleveland Williams that was Yet boxing, of all sports, still carried the Picacy of the ring-craft, so rare in the watched by the biggest indoor crowd yet stain of slavery on it: of the days when a heavyweight division. Amongthe lumber- seen in boxing, 35,460 people. The Rumble whole crowd of white plantation-owners ing sloggers he dodged and danced, float- in the Jungle in Kinshasa in 1974, at which would sitaround watchingtheirtwo stron- inglike a butterfly,stinginglike a bee. Faced 60,000 Congolese cried “Ali, boumayé! gest slaves grapple and bloody each other. with a solid, flat-footed opponent, as all Ali, kill him!” The Thrilla in Manila against (His own first promoters in Louisville were seemed to be compared with him, he Joe Frazier the next year, fought in 100-de- all white men, several of them racehorse- would circle, torment and mesmerise, gree heat, to retain his title when he was 33 breeders. They assessed him like blood- throwing short punches at speed. All that years old. Boxing had never been so enter- stock.) The blackchampions who emerged weaving, skipping, leaning leisurely away, taining or so global. In the whole bruised were meant to be noble, patient, heroic before coming in for the kill. Flooring Son- and bloody history of the sport, there had specimens of their race, making no trouble ny Liston once with a punch so fast that no never been such a star. and playing no part in any political contro- one quite saw it (see above). Taunting He was handsome, and knew it. “Ain’tI versy. An uppity, lippy black like him, jab- George Foreman to exhaustion by sinking pretty?” he would pout and shout, daring bering from six months old and always the into the slack ropes, just letting him punch anyone to think him effeminate also. Per- orator at the centre of a crowd of boys, be- himself out while his own fine, hard body fectmusculature, longlegs, regularfeatures came an instant threat both to white men absorbed the blows. He always knew and not a mark on his face, just to prove and, worse, white women. when his rivals would topple. He would how agile he was. Most heavyweights, But he wasn’t likely to keep quiet about mimic their shuffling desperation and his black or white, wore their damage as a that. Denied entry to diners on a southern own artistry,pummelling the air with fast, ruined mask. His looks lasted for most of tour, he made one of his raps of it: “Man, it precise, furious fists. Let the old guard com- his career, though as he got older and slow- was really a letdown drag, For all those plain thathe ducked and dipped too much, er the beauty thickened. miles I had to eat out of a bag.” Told in a held his hands too low and his chin cocked And in the face, that motor-mouth. His Louisville hamburger joint, when he went too high; he won fights. comic bragging made him the darling of in wearing his Olympic gold medal, that And what fights. Fifty-six of them in his sports reporters, irresistible copy. How did they still didn’t serve niggers, he said that career, and only five defeats. One against he train? Why, he handcuffed lightning, was fine; he didn’t eat them. But under the Liston in 1964, when he was 22 and the threw thunder in jail, murdered a rock, joshinglay depth upon depth offurious re- odds were 7-1 against him, that left the wrestled alligators, tussled with a whale. sentment. Fury that made him throw that world heavyweight champion too beat up How would he despatch his opponents? gold medal into the Ohio river, because it after six rounds to come out of his corner. Launch them into space like human satel- had earned him no more respect from1 The Economist June 11th 2016 Obituary 91

2 whites than he had had before. Fury that called him nigger, or lynched him, or put image of all black men being celebrated made him shout, at the peak of his career, the dogs on him: “The real enemy of my and respected in one man, whom the that he was the part of America whites re- people is here.” His punishment for saying world adored. When the games ended he fused to recognise: “But get used to me: so, the loss of his title and three and a half was given a gold medal, to replace the one black, confident, cocky; my name, not years out of boxing at his peak, was crush- he had thrown in the Ohio river. yours; my religion, not yours; my goals, my ing, but he accepted it calmly, as the sort of Yet change was also forced upon him. own. Get used to me.” thing a fresh Negro had always had to ac- In Atlanta his hand shook as he lit the Anger, defiance and pride, all rolled up, cept for speaking out, for 400 years; and flame and his mouth trembled as he re- led him to convert to the Nation of Islam. went on saying the same thing in mosques peatedly kissed the medal, the unavoid- As a teenager, already the greatest that ever and on college campuses, wherever they able signs of Parkinson’s disease. Its rigid, lived, barely literate but fanatically build- would listen to him. Barely able to read, he numbing cloak was his vesture for 30 ing up his lean, muscled body with raw- had to memorise everything he wanted to years. Like so many before him, he had egg milkshakes and exercise, he couldn’t say, but it was in his mouth already: some gone on fighting long after he should have resist the teaching that man was originally peace-talk, some race-talk, and a lot about hungup his gloves. He had taken too many created black, by a black God, and that himselfas the greatest fighter in the world. hard punches to that handsome, taunting blacks were the finest people on Earth. As head. His doctor told him to stop, but he ig- time went on, he also agreed with Mal- Carrying the torch nored him. Bythe late 1970s, the dayswhen colm X that non-violent protest would get There was no way out of this self-imposed he had to book50 hotel rooms forhis away blacks nowhere. It took a coward to sit but exile, this sharp turn towards confronta- matches were over. The hangers-on had it tooka man to stand, as when, battered al- tion and even segregation, unless America slunk away, though not before he had giv- most to death, a boxer came out of his cor- changed. As it gradually happened, with en them, as well as Black Muslim charities, ner. Violence called forviolence, jab to jab, war-weariness spreading and racial injus- much of his fortune. By the mid-1990s, punch to punch; segregation demanded tice eroding, so he changed too. He slowed when he was signing boxing memorabilia counter-segregation. Blacks and whites asa fighter: allowed backin the ring in 1970, for money, his wife had to spell out the let- had no business marrying or living togeth- his status as a conscientious objector now ters for him one by one. He said simply: “I er. For a decade he railed against immoral- established, his reflexes were duller and sign my name, we eat.” ity like a true-dyed Muslim fanatic, though his body forced to absorb blows he could In old age, though, he was neither mad many, seeing him disappear into the tour have evaded in his prime; Frazier’s defeat nor broke, as some boxers were. He was van with yet another girl, wondered how ofhim over15 rounds the next year was the placid, serene and, in the face of his relent- deep it really went. worst battering of his life. He wasn’t going less illness, brave. That, too, became an im- His brand-new identity was the vital to cry. Instead, it was America’s turn to re- age of the centuries-long endurance of thing. By casting off his “slave name” of gret the fights that might have been, the en- blacks and their spiritual patience. He Cassius Clay, something he had never cho- counters that—to listen to him—would spent much of his time in contemplation, sen and never wanted, he became a new send his rivals flying out of the ring until rising at dawn and kneeling to face Mecca sort of black man, his proper self: Muham- even radar couldn’t trackthem. to pray so long as his body was up to it. mad Ali, “worthy of all praise, most high”. His radicalism, too, grew softer, until in Conquering the world, as he had done When the press ignored it, thinking it a 1975 he abandoned the Nation of Islam for time after time with pure punching skill, stunt, he was incensed. If boxing rivals the more orthodox, peaceful sort. Kind- did not now seem the source oftrue happi- called him “Cassius” or “Clay” he would ness, friendship and peace were his man- ness. Nonetheless, he still loved to watch beat them within an inch oftheirlives, cry- tras now, with complimentary poems film of his old bouts —“Soooh fast! Soooh ing “What’s my name?” “What’s my written even to the boxers he had scorned. pretty!”—and thinkwhat they had done for name?” Blackheavyweights who were not More amenable, even extravagantly em- the self-esteem of his people. And his new men like him, still managed by white braced, he could be invited to the White words, being now so few rather than so mobsters and dutifully silent about poli- House, offered missions to Africa and many, carried all the more conviction. He tics, he called Uncle Toms and “great white asked in 1996 to carry the Olympic torch to hoped to be remembered “as a man who hopes” and mimicked their grunts and open the games in Atlanta before a global never looked down on those who looked shuffles, ouf, ouf, ouf, like bears or apes. It audience of perhaps 3 billion people, the up to him.” 7 became a habit, turned most viciously against Frazier and Foreman, funny and appalling both at once. In his own incarnation the threatening black fighter became a different being. He was tall, lithe, graceful, effortlessly elo- quent—but also perilously loud, defiant, empowered. He was just as dangerous. Older boxers like Joe Louis, his closest rival for title of “best-ever”, wanted to be cham- pions of all Americans, smothering their blackfrustrations to make everyone accept them. He was the undefeatable champion of his people, 30m oppressed blacks, and he was smothering nothing. This was the spirit in which he refused in 1967 to be drafted for the Vietnam war. Why should he go 10,000 miles to shoot “some darker people”, some poor hungry folk in the mud who wanted only their own freedom, theirown justice? He had no quarrel with the Vietcong; they had never