Joe Biden and the 100-day obsession The true cost of long covid A history of post-pandemic booms How to tax capital
MAY 1ST–7TH 2021
The most dangerous place on Earth
Contents The Economist May 1st 2021 3
The world this week Asia 5 A summary of political 19 Japan’s China lobby and business news 20 South Korea’s economy Isolationist Australia Leaders 21 India’s covid-19-fighters 7 Superpower politics 21 The Taiwan Strait 22 Banyan Deforestation in South-East Asia 8 Long covid The aftershock China 8 American taxes Biden’s taxing problem 23 Is China shrinking? 9 Hungary’s universities 24 America’s China-watchers Viktor Orban’s grab 25 Chloé Zhao gets blocked 10 Hybrid diplomacy On the cover The virtue of virtual How to avoid war over the future of Taiwan: leader, Letters page 7, and briefing, page 14. 12 On money-laundering, United States Disillusionment with voting in Georgia, 27 Joe Biden’s fast start engagement has caused a shift tv European , Ebenezer 30 Students and speech in China analysis, page 24. Howard, simplifying Taiwan’s top chipmaker has a 30 Classics at Howard strategy for Sino-American Briefing 31 Bossing around firms ructions, page 52 14 China and Taiwan 32 Lexington In praise of The risks of war the Mormon right Joe Biden and the 100-day obsession He has gone from The Americas boring candidate to drawing amlo comparisons to Franklin 33 ’s military muscle Roosevelt. Are they justified? 34 Venezuelan quack cures Page 27. What an infrastructure 35 Bello The covid-19 bill bonanza could mean for America’s economy: Free exchange, page 64
The true cost of long covid Middle East & Africa Evidence is mounting that long covid is a real threat to global 37 A mess in the Holy Land health: leader, page 8, and 38 Strange bedfellows in Iraq analysis, page 65 39 Somalia’s crisis 40 Unfinished buildings A history of post-pandemic booms It looks as if things are about to get interesting, page 59
Schumpeter The magical realism of Tesla, page 58 → We are working hard to ensure that there is no dis- ruption to print copies of The Economist as a result of the coronavirus. But if you have digital access as part of your subscription, then acti- vating it will ensure that you can always read the digital version of the newspaper as well as all of our daily jour- nalism. To do so, visit economist.com/activate Contents continues overleaf 4 Contents The Economist May 1st 2021
Europe Finance & economics 41 Turkey and Armenia 59 Post-pandemic booms 42 Poland’s opposition 60 Biden’s capital taxes 42 The church in Spain 61 Buttonwood Private 43 Geeks v bureaucrats credit 44 Charlemagne Integration 62 India’s economy by stealth 62 Labour shortages in America Britain 63 Defending the lira 45 Upcoming elections 64 Free exchange 46 Sewage and covid-19 Infrastructure economics 47 The snp’s poor record Science & technology 48 Bagehot Sleaze and sofas 65 New evidence about long covid
International 49 The growth of digital diplomacy
Books & arts 68 Orhan Pamuk’s plagues 69 Resistance women 70 Jhumpa Lahiri’s new novel Business 70 Humans and animals 52 tsmc and geopolitics 71 The art of food 53 Privacy v digital ads 54 Indian steelmaking Economic & financial indicators 55 The warehousing boom 72 Statistics on 42 economies 56 Money from trees 56 vw’s works-council king Graphic detail 57 ceo Bartleby Lingering s 73 The true extent of China's military spending 58 Schumpeter Tesla’s magical realism Obituary 74 LaDonna Brave Bull Allard, fighter for a sacred place
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The Census Bureau reported her Democratic Unionist Party. that America’s population Its members have become Coronavirus briefs stood at 331.4m on April 1st increasingly agitated by the To 6am GMT April 29th 202 2020. That was an increase of postBrexit deal for Northern 7.4% since 2010, the slowest Ireland, which in effect creates Weekly confirmed cases by area, m 2.5 rate of decennial growth since a border for goods crossing India the Depression. Texas gained from mainland Britain. 2.0 4m people, the most of any Western Europe 1.5 state; Utah’s population grew Somalia’s president promised 1.0 the most in percentage terms: to reverse legislation that Other 0.5 18%. California remains the would extend his term in office US 0 most populous state, but it will by two years, after fighting 2020 2021 India’s second wave of lose a congressional seat for broke out in the capital, Vaccination doses covid19 gained strength. The the first time ever. Mogadishu. Mohamed % of adults with number of infections detected Abdullahi Mohamed was Total ’000 1st dose nd hit new records, with some California’s governor, Gavin supposed to have stepped Israel 10,468 97 91 380,000 on April 28th alone. Newsom, will probably face an down in February. Bhutan 480 94 0 The official death toll election to recall him from UAE 10,336 79 50 surpassed 200,000, though office later this year, after a More than 80 people were Maldives 382 72 22 evidence grew that many more conservativedriven petition killed when a fire, caused by an Britain 47,045 65 25 Malta 319 60 29 fatalities are going unrecord to remove him gathered oxygen cylinder, erupted at a United States 232,408 57 36 ed. Shortages of beds and enough signatures to qualify hospital treating covid19 Chile 14,324 56 45 oxygen afflicted many hospi for the ballot. patients in Baghdad. Bahrain 1,207 52 41 tals. The government ordered Hungary 5,548 49 23 Twitter to remove posts critical Joe Biden used the 106th anni In a leaked audio tape Muham Sources: Johns Hopkins University CSSE; of its handling of the epidem versary of atrocities commit mad Javad Zarif, Iran’sforeign Our World in Data; United Nations ic, sparking widespread out ted by Turkeyagainst Arme- minister, said that the Revolu rage. India now accounts for nians during the first world tionary Guard dictates foreign Japan declared a state of around 40% of the world’s new war to define them as geno policy and took Iran into emergency in Tokyo and three recorded infections. cide, the first time an Amer Syria’s civil war at the urging of other prefectures. Unlike ican president has formally Russia. He also said that Russia previous restrictions, bars An Indonesian general died in done so. More than 1m Arme tried to stop Iran from agreeing selling alcohol and shopping a shootout with separatists in nians were deported or died at to a nuclear deal in 2015. Talks malls were told to close. Papua province, in Indone- the hands of the Ottomans. to revive the deal, which Amer sia's half of the island of New Turkey protested, but its ica ditched in 2018, resumed in Chile will keep its borders Guinea. Gusti Putu Danny reaction was less intense than Vienna. closed for another month, Karya Nugraha was the first some had feared. even though the number of Indonesian general ever to be In Israel Benny Gantz, the new covid19 cases is easing. killed in action. Mario Draghi, the prime min leader of the Blue and White ister of Italy, laid out his gov party, was appointed justice America’s Centres for Disease Fighters from the Karen ernment’s plans for rebuilding minister after Binyamin Net Control revised its advice on National Liberation Army, an the economy after covid in the anyahu, the prime minister, wearing masks. Fully vacci insurgent group, captured an form of a €248bn ($300bn) tried to slide a member of his nated people do not need to outpost on the Thai border spending package. Almost all own party, Likud, into the wear one outside, it said, from the Burmese army. Sever the money will come from the position. Mr Netanyahu’s except in crowded venues, al rebel groups have taken eu, which has imposed some move was deemed illegal by like sports stadiums. advantage of the chaos in tough reform conditions. the attorneygeneral, as it Myanmar to seize territory. Fulfilling them will be tricky. violated the coalition agree Americans were allowed to ment with Mr Gantz. The receive the oneshot Johnson China began construction of Hungary passed a law to hand appointment is a sensitive & Johnson jab again after an orbiting space station with control of state universities to issue: Mr Netanyahu is on trial regulators ended their sus the launch of Tianhe(“harmo foundations. These are likely for corruption. pension of the vaccine. They ny of the heavens”), the first of to be run by rulingparty sup had been investigating claims three planned modules. When porters, who can appoint their Israel recorded no new daily that it caused blood clots. finished in 2022, the station successors. This arrangement covid-19 deaths for the first will be a fifth the size of the cannot be changed without a time in ten months. America said it would donate existing International Space twothirds majority in parlia up to 60m doses of the Astra- Station. ment. Critics griped that the Thousands of people took to Zeneca jab to other countries. ruling party had in effect given the streets in Colombia, to The vaccine has not been Leaks from last year’s census itself permanent control of protest against a controversial approved for use in the us. suggested that China’s pop- higher education. tax reform. In the city of Cali a ulation has started to shrink, 1pm curfew was put in place earlier than the Communist Arlene Foster said she would after several buses were →For our latest coverage of the Party had hoped or expected. step down as Northern burned. Trade union leaders, virus please visit economist.com/ Official media denied the Ireland’s first minister (or who have been organising the coronavirus or download the leaks, but added details that premier) in June following a protests, called for another Economist app. appeared to support them. revolt against her leadership in gathering in May. 6 The world this week Business The Economist May 1st 2021
Apple had a bumper first selfdrivingcars unit to Toyo assets in Archegos before it quarter. Revenues soared to ta. It will be integrated into the imploded, avoiding any associ $89.6bn, as did net profit, to Japanese carmaker’s Woven ated damage to its balance $23.6bn. That is more than Planet division, which is “on a sheet. The German bank made Amazon’s profit for all of last mission of mobility to love”. a net profit of €908m ($1.1bn) year. The tech company re in the first quarter, its best corded big increases in sales of Tesla’s sales revved up in the since the start of 2014. iPhones, iPads and other de first three months of 2021, vices, confounding the market increasing by 74% over the In one of the firmest commit narrative that it is increasingly same quarter last year, despite ments to getting workers back reliant on services (apps, tv problems in obtaining semi into the office, JPMorgan and the like) for growth. conductors for its electric cars. Chase told staff that it wants In a speech to a joint session of The company reported net them to return to their place of Congress, Joe Biden laid out Huawei’s revenues fell by income of $438m, its best employment by early July, his American Families Plan, 16.5% in the first quarter, year quarterly profit to date. albeit on a rotational basis to the most ambitious attempt to on year, the second consec comply with a 50% cap on expand social programmes utive quarter in which it has Panasonic made its biggest office occupancy. The bank since the 1960s. The plan in registered a hefty drop. The ever foreign acquisition when recognised that for some peo cludes universal child care for Chinese maker of telecoms it agreed to buy the 80% of ple, returning to the office “is a three and fouryearolds, a equipment was banned from Blue Yonder it doesn’t already change you’ll need to manage”. familyleave initiative and having access to some Amer own in a deal valued at $7.1bn. It also encouraged staff to get tuitionfree community col ican technology under the Blue Yonder specialises in vaccinated, but said this would lege. The $1.8trn price tag will Trump administration, which software for supplychain not be a requirement for be paid in part by increasing is putting its business under management. entering the office. the top rate of income tax to immense pressure. 39.6%. And for those earning More banks disclosed losses over $1m, taxes on capital China’s competition regulator from their exposure to the Snappy fashion gains and dividends will soar. launched an investigation into collapse of Archegos, an in Loved and loathed in equal Meituan, a shopping platform vestment fund. Nomuratook a measure, sales of Crocsfoot for food, entertainment and hit of over $2.9bn, more than it wear have rebounded, growing Fortune tallying other lifestyle services. It is the had estimated previously, by 64% in the first quarter year The family of Lee Kunhee, latest antitrust action taken dragging the Japanese bank to on year and producing a com Samsung’s late chairman, are against a tech giant in China, its worst quarterly perfor fortable profit for the compa to pay almost $11bn in taxes on coming soon after Alibaba was mance since 2008. ubsrecord ny. The shoes, a cross between his estate, one of the world’s fined $2.8bn for abusing its ed a $774m loss in operating a foam clog and a hospital biggestever inheritancetax market power. income related to Archegos, sandal, have benefited from bills. His art collection, which overshadowing the Swiss the trend towards cosywear includes works by Salvador Lyft has followed Uber in bank’s solid quarterly profit. during the pandemic. Affirm Dalí, Claude Monet and Pablo giving up the development of ing that it’s okto go out in your Picasso, will be donated to the autonomous vehicles. The By contrast, Deutsche Bank slippers, they were also seen National Museum of Korea and ridehailing company sold its said it had managed to sell its on the Oscars red carpet. other institutions.
The Ethiopian government’s auction of two licences to operate telecoms was deemed a failure, when only two bid ders submitted offers. The sale of the licences was supposed to be the jewel in the privatisa tion drive under Abiy Ahmed, the reformminded prime minister. Potential buyers were put off by some of the restrictions, such as excluding foreign telecoms from provid ing mobilemoney services.
Total, a French oil and gas company, suspended work indefinitely on a $20bn lique fied natural gas project in Mozambique, Africa’s largest energy investment, because of attacks by jihadists. Total evacuated its staff from the town of Palma in March. eaders 7L
The most dangerous place on Earth
How to avoid war over the future of Taiwan
he test of a firstrate intelligence, wrote F. Scott Fitzgerald, pan, South Korea and Guam. In the war games that simulate a Tis the ability to hold two opposing ideas in mind at the same Chinese attack on Taiwan, America has started to lose. time and still retain the ability to function. For decades just such Some American analysts conclude that military superiority an exercise of highcalibre ambiguity has kept the peace be will sooner or later tempt China into using force against Taiwan, tween America and China over Taiwan, an island of 24m people, not as a last resort but because it can. China has talked itself into 100 miles (160km) off China’s coast. Leaders in Beijing say there believing that America wants to keep the Taiwan crisis boiling is only one China, which they run, and that Taiwan is a rebel and may even want a war to contain China’s rise. It has trampled lious part of it. America nods to the one China idea, but has the idea that Hong Kong has a separate system of government, spent 70 years ensuring there are two. devaluing a similar offer designed to win over the people of Tai Today, however, this strategic ambiguity is breaking down. wan to peaceful unification. In the South China Sea it has been The United States is coming to fear that it may no longer be able converting barren reefs into military bases. to deter China from seizing Taiwan by force (see Briefing). Ad Although China has clearly become more authoritarian and miral Phil Davidson, who heads the IndoPacific Command, told nationalistic, this analysis is too pessimistic—perhaps because Congress in March that he worried about China attacking Tai hostility to China is becoming the default in America (see China wan as soon as 2027. section). Xi Jinping, China’s president, has not even begun to War would be a catastrophe, and not only because of the prepare his people for a war likely to inflict mass casualties and bloodshed in Taiwan and the risk of escalation between two nu economic pain on all sides. In its 100th year the Communist Par clear powers. One reason is economic. The island lies at the ty is building its claim to power on prosperity, stability and Chi heart of the semiconductor industry. tsmc, the world’s most na’s status in its region and growing role in the world. All that valuable chipmaker, etches 84% of the most advanced chips (see would be jeopardised by an attack whose result, whatever the us Business section). Were production at tsmcto stop, so would the Navy says, comes with lots of uncertainty attached, not least ov global electronics industry, at incalculable cost. The firm’s tech er how to govern a rebellious Taiwan. Why would Mr Xi risk it all nology and knowhow are perhaps a decade ahead of its rivals’, now, when China could wait until the odds are even better? and it will take many years of work before either Yet that brings only some comfort. Nobody America or China can hope to catch up. in America can really know what Mr Xi intends The bigger reason is that Taiwan is an arena today, let alone what he or his successor may for the rivalry between China and America. Al want in the future. China’s impatience is likely though the United States is not treatybound to to grow. Mr Xi’s appetite for risk may sharpen, defend Taiwan, a Chinese assault would be a especially if he wants unification with Taiwan test of America’s military might and its dip to crown his legacy. lomatic and political resolve. If the Seventh If they are to ensure that war remains too Fleet failed to turn up, China would overnight much of a gamble for China, America and Tai become the dominant power in Asia. America’s allies around the wan need to think ahead. Work to reestablish an equilibrium world would know that they could not count on it. Pax America across the Taiwan Strait will take years. Taiwan must start to de na would collapse. vote fewer resources to big, expensive weapons systems that are To understand how to avoid conflict in the Taiwan Strait, start vulnerable to Chinese missiles and more to tactics and technol with the contradictions that have kept the peace during the past ogies that would frustrate an invasion. few decades. The government in Beijing insists it has a duty to America requires weapons to deter China from launching an bring about unification—even, as a last resort, by means of inva amphibious invasion; it must prepare its allies, including Japan sion. The Taiwanese, who used to agree that their island was part and South Korea; and it needs to communicate to China that its of China (albeit a nonCommunist one), have taken to electing battle plans are credible. This will be a tricky balance to strike. governments that stress its separateness, while stopping short Deterrence usually strives to be crystalclear about retaliation. of declaring independence. And America has protected Taiwan The message here is more subtle. China must be discouraged from Chinese aggression, even though it recognises the govern from trying to change Taiwan’s status by force even as it is reas ment in Beijing. These opposing ideas are bundled into what sured that America will not support a dash for formal indepen Fitzgerald’s diplomatic inheritors blithely call the “status quo”. dence by Taiwan. The risk of a superpower arms race is high. In fact, it is a roiling, seething source of neurosis and doubt. Be under no illusions how hard it is to sustain ambiguity. What has changed of late is America’s perception of a tipping Hawks in Washington and Beijing will always be able to portray point in China’s crossstrait military buildup, 25 years in the it as weakness. And yet, seemingly useful shows of support for making (see Graphic detail). The Chinese navy has launched 90 Taiwan, such as American warships making port calls on the is major ships and submarines in the past five years, four to five land, could be misread as a dangerous shift in intentions. times as many as America has in the western Pacific. China Most disputes are best put to rest. Those that can be resolved builds over 100 advanced fighter planes each year; it has de only in war can often be put off and, as China’s late leader Deng ployed space weapons and is bristling with precision missiles Xiaoping said, left to wiser generations. Nowhere presents such that can hit Taiwan, us Navy vessels and American bases in Ja a test of statesmanship as the most dangerous place on Earth. n 8 Leaders The Economist May 1st 2021
Long covid And now for the aftershock
Evidence is mounting that long covid is a real threat to global health s the world enters the second year of the pandemic, two As yet, long covid has no cure. What scientists know so far Acrises are unfolding. The more urgent and visible one is in about the disease points to it being a combination of a persistent poor countries like India, where a surge of covid19 cases is viral infection (for which a drug may be found at some point), a threatening to overwhelm the state. India is recording more chronic autoimmune disorder (which would need expensive, than 350,000 cases a day, and many more than that are thought complex care like that for rheumatoid arthritis or multiple scle to be going undetected (see Asia section). The suffering is griev rosis) and lingering damage to some tissues caused by the ori ous. Oxygen supplies at Indian hospitals are running far short of ginal covid19 infection. Medicines for the first two of these what is needed, and crematoriums are overwhelmed. causes may ultimately be found. America alone has put $1.15bn The other crisis is more subtle. This is long covid, which is into research. At the moment, though, sufferers need months of becoming apparent in rich countries like America, Britain and rehabilitation to help them cope. Israel that have largely vaccinated their way out of the pandem Healthcare systems and employers must prepare to assist ic, but which will affect poor ones, too (see Science section). longcovid sufferers, including those who have no proof of past Postcovid syndrome, to give it its formal name, is a set of symp infection because they were not able to be tested. Prompt rehab toms affecting any part of the body that persist ilitative care can prevent a downward spiral in for at least three months after a bout of covid19. personal health and finances. Dedicated long Three stand out: breathlessness, fatigue and covid clinics will speed things up. As things “brain fog”. In Britain three in every five people now stand, patients often bounce from one spe with long covid say their usual activities are cialist to another in search of a diagnosis. somewhat limited, and one in five says they are Employers, for their part, must rethink how limited “a lot”—which often means being un to accommodate workers with a disability that able to do even a parttime, deskbased job. flares up in unpredictable bouts. Governments The numbers are chilling. Half a million can help, with incentives that encourage suffer people in Britain have had long covid for more than six months. ers to stay in work and employers to cater to their condition. If Their chances of full recovery are probably slim. The vast major governments miss the boat, millions of young and midcareer ity are in their workingage prime. At the last count (which does workers could permanently drop out of the labour force. One ap not fully take in the country’s second wave) 1.1% of Britain’s pop proach could draw on a scheme for disability benefits that is ulation had had long covid for at least three months—a group used in the Netherlands. Dutch employers and employees who that includes 1.5% of those of working age. About 15% of Britain’s are too unwell to work as normal are required to come up jointly population had been infected by then. Applying this rate to glo with a plan on how the sick employee can return to work under bal covid19 cases, numbering an estimated 1.2bn so far, suggests new conditions. Remote working and flexible schedules would that more than 80m people may already have long covid. make it easier for longcovid sufferers to work at least parttime. The costs of the condition have yet to be tallied, but they will Many of them will improve, though even that can take months. be huge. Britain’s National Institute for Health Research found Lots of mistakes were made in the pandemic’s acute phase. that, in 80% of sufferers, the illness affected the ability to work. But that came out of the blue. There is no excuse for failing to re Over a third said it had weighed on their finances. spond to long covid. And there is no time to waste. n
America’s economy Biden’s taxing problem
How to tax capital without hurting investment overnments raise most of their money by taxing wages, of the population but a large proportion of shareholders. Gbut President Joe Biden has his eyes fixed on the rich, big Many investors, from Wall Street to Silicon Valley, are up in business and Wall Street. He proposes to fund his $2.7trn infra arms, claiming that Mr Biden will crush economic growth. That structure plan in part by raising the corporatetax rate from 21% is an exaggeration; America can bear higher rates of capital tax to 28%. And to help pay for more spending on child care and sup ation (see Finance section). Yet levies on capital can have unin port for parents, he wants to roughly double the top rate of feder tended economic consequences. If he is to avoid them, Mr Biden al tax on capital gains and dividends. For Americans earning should improve the design of his plans. more than $1m per year, he would bring levies on capital income Taxing savings and investment income can seem like unfair into line with the top rate on wage income, which he wants to and inefficient double taxation. Those who earn today to spend put up from 37% to 39.6%. That is about double the rate that is today must pay only income and consumption taxes; why currently levied on rich investors, who are only a small fraction should someone who prefers to gain by deferring their gratifica The Economist May 1st 2021 Leaders 9 tion face extra levies? Discouraging saving and investment hurts ital gains, and a 3.8% levy on investment income introduced as the economy in the long run, which is why a review in 2010 by part of Obamacare. They could, in theory, keep less than a third the oecd, a club of mostly rich countries, ranked corporate taxes of their nominal returns under the Biden plan—and even less of as the most harmful of four common taxes to economic growth. their real returns given that some of those taxes would be paid Economic models predict that Mr Biden’s businesstax plans on the illusory capital gains generated by inflation. In reality it is would cut the size of America’s economy by around1% by 2050. not as simple as compounding rates, because the corporate tax is Set against this is the scourge of tax avoidance. Tax capital leaky and the current system, egregiously, waives capitalgains lightly and it pays to disguise wages as capital income—a partic taxes when assets are inherited. Still, after taking into account ularly lucrative pastime for the rich. One problem is the “carried the revenues raised from closing loopholes, Mr Biden should en interest” loophole. It lets privateequity and hedgefund manag sure that taxes on capital do not rise above taxes on labour. ers class their fees as capital gains rather than income. Another The second principle is to reduce inefficiency with allow issue is the explosive growth in “pass through” ances for investment. Exempting from capital firms, for example partnerships, which ac Federal capital-gains tax rate taxation modest “normal” returns, which are counted for more than half of American busi US, top rate incl. 3.8% Obamacare levy, % usually measured by the interest rate on low 45 ness income by 2011, up from about a fifth in Proposed risk bonds, cuts distortions, as the normal re 1980. Many capitallight, labourintensive busi 30 turn is in theory the minimum needed to make nesses such as law firms, consultancies and 15 privatesector projects worthwhile. The idea is medical offices are organised this way. Nearly 0 baked into America’s tax code for many types of half of the earnings that passthrough investors 1960 70 80 902000 10 22 investment but only until the end of 2022—and receive are classified as dividends and capital Mr Biden plans a new minimum tax on firms’ gains. Mr Biden is right that bringing taxes on wages and capital accounting profits which would interfere with the carveout for into line would make tax avoidance harder. the largest companies. Individual investors should also receive The tradeoff between inefficiency and tax avoidance is pain exemptions for the normal rate of return—which already hap ful, but two principles can help chart a sensible course. The first pens in Norway and has been suggested in Britain by the Insti is to realise that taxes on capital stack up. Before they can return tute for Fiscal Studies. As Mr Biden proposes, inheritances their profits to investors in the form of dividends and capital should not be exempt from capitalgains tax. gains, firms pay corporate taxes. Whack up every capital levy to Genuine parity between capital and labour taxation, tem rates resembling income taxes and you will take a larger bite out pered by investment incentives, might not raise as much money of investment income than out of wages. Shareholders in Cali as Mr Biden’s current plans. But such a reform would still help fornia, for example, face Mr Biden’s proposed 28% corporatetax pay for his spending and reduce tax avoidance—without making rate, his 39.6% federal capitalgains rate, a 13.3% state tax on cap the American tax system needlessly inefficient. n
Hungary Viktor Orban’s university challenge
The ruling party seizes control of Hungary’s ivory towers good university prizes original thought. And Viktor Or could reorganise the foundations. But with its twothirds super Aban, Hungary’s prime minister, is certainly an original majority in parliament, Fidesz has already written their gover thinker. Since 2010, when his Fidesz party won twothirds of the nance rules into Hungary’s constitution. Even if the opposition seats in parliament, he has been dreaming up innovative ways to were to win next year’s election, which is conceivable since the turn Hungary back into an autocracy, while maintaining a fractious parties have at last started to join forces, they would al democratic façade. On April 27th his government passed a law most certainly lack enough seats to alter the constitution. In ef transferring control of the country’s 11 main state universities to fect, Fidesz may just have granted itself control over Hungary’s a series of foundations that are likely to be run by his allies. The universities in virtual perpetuity. party has already asserted its grip over institutions such as the The government says the new system will let universities electoral system, the media, the courts and much of the econ manage their own buildings and give them stable multiyear fi omy. Now it wants total power over the ivory towers. nancing in place of annual state budgets. That is deceptive. Such Like most of Mr Orban’s illiberal reforms, the plan is compli administrative reorganisations were under discussion for years cated, brilliant and likely to be copied by aspiring strongmen in at several universities. The new law usurps those reforms, giv other countries. The universities have been placed under the ing the new boards unlimited authority over the schools, the control of public foundations, along with billions of euros foundations and their vast assets. worth of assets (including a palace, a harbour and shares in The fear is that Fidesz will use this control as it has used con stateowned companies) which are supposed to help finance trol of the media: to stifle dissenting voices and to churn out them. The foundations’ boards are initially appointed by Mr Or propaganda. Its hobby horses include the evils of immigration, ban’s government, and those appointed so far consist mainly of liberalism and gay and trans rights. It also spreads loopy con Fidesz members or sympathisers. Subsequent vacancies will be spiracy theories about the European Union, and the financier filled by candidates chosen by the boards themselves. George Soros’s supposed plan to flood Hungary with Muslim im You might think that if Fidesz loses power, a new government migrants. The government has already forced state universities 10 Leaders The Economist May 1st 2021
to drop genderstudies programmes. It used legal harassment to where. But being in the eu also provides means of resistance. force the Central European University, a formerly Budapest After years of debate, the eu has adopted a “rule of law mechan based institution founded by Mr Soros that was a source of crit ism”. In principle, countries that trample legal principles can icism of Mr Orban, to (mostly) decamp to Austria. Freedom have their aid restricted. Compared with the size of its economy, House, a watchdog, rated Hungary as a fully free democracy in Hungary was the biggest net beneficiary of eu funding in 2014 2010. Its most recent report, published this week, lists it for the 20, according to Bruegel, a thinktank. True, cutting aid would be second year running as a “hybrid regime” (one step up from “au hard. The European Commission has been dragging its feet on thoritarian”). Hungary now scores worse than Serbia. establishing guidelines for doing so, and Hungary’s allies, par What happens in Budapest does not stay in Budapest. Mr Or ticularly Poland, will try to veto any such move. ban’s institutionnobbling ideas tend to spread. Poland’s Nonetheless, it is long past time to act. For years, the eu has nationalist government has already mimicked Fidesz’s take wearily accepted Hungary’s ever more corrupt autocracy as if it overs of the media and of the courts. Populists in Croatia, the were inevitable, and bankrolled it lavishly. Instead, it should Czech Republic and Slovenia have attempted similar tricks. heed the words of a Hungarian academic, Geza Teleki, who France’s Marine Le Pen is a fan of Mr Orban, too. One reason why warned that illiberal regimes want “to abolish the autonomy of democracy is in decline around the world is that its enemies the universities” because “every autonomous group is naturally keep swapping tips on how to undermine it. something they must get rid of”. Teleki was testifying to Ameri If a political takeover of academia can happen in Hungary, a ca’s Congress in 1954 about how Hungary’s old communist party member of a club of rich, liberal democracies, it can happen any used to operate. Hungarians deserve better. n
Hybrid diplomacy The virtue of virtual
Diplomats have tried new tools during the pandemic. They should use them after it efore the pandemic, it might have been mistaken for an gather in Cornwall, and a physical nato summit will follow in Belaborate April Fool. The State Department announced that Brussels. The trip to Europe is pencilled in as President Joe Bi Antony Blinken would “embark” on his first “virtual trip” to Afri den’s first foreign foray as president. ca and “engage with young people from across the continent”. It would be wrong to assume that diplomacy will simply re On April 27th the secretary of state would “travel virtually” to Ni turn to business as usual, however. For one thing, virtual diplo geria, meeting President Muhammadu Buhari, before calling on macy has proved that it can be highly efficient. Mr Biden, for ex President Uhuru Kenyatta to reaffirm America’s strategic part ample, has been able to zip around the world without leaving the nership with Kenya; he would then “visit” a few local renewable White House, joining European leaders on screen in Munich and energy companies. What next: summitry by hologram? Asian leaders in a cybersummit of the IndoPacific “Quad”. He But virtual diplomacy is no joke. It has kept international re was able to bring together dozens of world leaders for a deep lations ticking over during the past year, as travel became harder green climate gathering on Earth Day. The unGeneral Assembly and facetoface meetings often impossible (see International and other big diplomatic jamborees could happily be scaled section). In the process, it has enlarged the diplomatic toolkit. back in future, as much of their routine business can be done Diplomats can make ample use of this in the perfectly well online. postpandemic future, too. Sometimes—for tricky negotiations, say—it Many can’t wait to get back to meeting in will make sense to conduct business in person. person, and rightly so. Over Zoom, even if the Sometimes virtual meetings will be more prac “mute” button doesn’t play up, it is harder to tical and productive. Diplomacy will go hybrid. build trust, the currency of diplomacy. It is easy That could allow it to be more inclusive. The to miss the subtle signs of body language—the pandemic has intensified experiments in twitch of an eyebrow, the curl of a lip, the un bringing a wider range of voices to conflict res easy shuffle—that can be as eloquent as words. olution. In the physical world, arranging for Proximity often makes all the difference. Having a seat next groups of women or young people from a troubled country to to Russia on the unSecurity Council offers an excellent channel meet in a safe place is a logistical nightmare. Using a digital plat for conveying a message to President Vladimir Putin (such as: form, as the un discovered in Libya and Yemen, it is relatively don’t invade Ukraine). The hardest agreements tend to be simple. Broad participation in “digital dialogues” can counter thrashed out in long sessions behind closed doors, helped by the criticism that a peace process is a topdown stitchup and ideas floated in a corridor or a walk in the woods. With the best lend greater legitimacy to any agreement reached, giving it a bet of intentions, Mr Blinken’s virtual trip to Africa cannot have the ter chance of working. Even old hands are excited about the pro same impact as an actual visit by a statesman taking the trouble mise of “industrial levels of inclusion”. This should become a to travel and pay respects to faraway countries. standard part of peace formulas. Gradually, physical diplomacy will come back. In London on In the 19th century the telegraph shrank the time needed to May 3rd5th g7 foreign ministers are due to meet in person for contact envoys. In the 20th century the jet plane shrank dis the first time in more than two years, with the help of daily covid tance. Now digital platforms are supplanting physical presence. testing and suitable social distancing. In June g7leaders plan to Used wisely, diplomacy will be the better for it. n ADVERTISEMENT
New Foundations A podcast about innovation and social impact from The Economist Intelligence Unit
Technological breakthroughs, bold turbo-urbanisation impact our climate? ideas and rapid social, environmental And, in turn, how will increasingly and economic change are reshaping the intense and frequent climate disasters world as we know it. disrupt city life? What nascent notions will become For cities to achieve carbon neutrality, tomorrow’s reality? And how will they radical action will be required. What affect both individuals and society at role will new technologies play in large? Discover New Foundations, a solving the tough problems facing forward-thinking podcast from The increasingly populated urban hubs? Economist Intelligence Unit, supported And how soon can we move away from by Pictet Wealth Management. Across the “take-make-waste” industrial model eight episodes, we focus on the forces and towards a circular economy? accelerating, shaping or obstructing Soon, climate-proofing our cities will no societal change across the globe. longer be optional: it will be essential. Our latest episode, Climate-Resilient But how do we get there? Cities, explores the future of cities Tune in to New Foundations today, and the next frontiers in urban wherever you get your podcasts. sustainability. How will the pace of
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Cuba, Vanuatu and Yemen. change in how votes were Looking at Europe’s public Fight the good fight Many have exchange controls. counted, localelection offi broadcasters alone, annual The war against moneylaun Some don't even have an in cials were trained and voters investment in content is just dering is not lost; it continues, ternational bank. These are the verified. shy of €20bn (24bn) a year. and we should not wave the last places you will find big Although the system was vanessa o’connor white flag just when its most moneylaunderers. They are tested locally, no statewide Director of member relations promising strategies are gain blacklisted and do not have the election had occurred before and communications ing ground (“Losing the war”, political influence to get off. the pandemic in 2020. Last European Broadcasting Union April 17th). One such strategy is The politicisation of aml year’s publichealth orders Geneva enforcement. The fact that last lists is dangerously creating a highlighted significant cracks year banks had to pay $10.4bn safe tunnel for such criminals, in its implementation, staff in antimoneylaundering who are good at getting around training and voter verification. Ebenezer good (aml) fines could be seen as a prescriptive processes. Switch The system didn’t anticipate Your piece on Welwyn Garden failure to stop illicit flows, but ing the focus to heavy sanc millions of people voting at a City described Sir Ebenezer it also reflects a greater will tions for actual moneylaun distance, demonstrating the Howard as “a farmer turned ingness to crack down on dering instead of tickbox unreliability of signature urban visionary” (“Paved para violations outside the United exercises on applied process matching technology. Boxes to dise”, April 17th). A visionary States. And although forming would harness the private drop ballots in, popular among indeed but not really a farmer. aml teams has indeed been a sector's ingenuity to win this Republicans and Democrats Howard spent a few months as Herculean task, imposing big important war. alike, were not even legal. They a young man farming in regulatory changes on firms avinash persaud only existed because of Nebraska, but then trained as a across the world is no easy Emeritus professor of Gresham gubernatorial fiat. stenographer in Chicago and feat. Such investments are not College None of this is to suggest spent his entire professional aimed at the problems of the London that nefarious activities took life thereafter in London as a past, but at the future. Techno place. As a Republican, I chal parliamentary reporter with logical advances, such as artifi As your article noted, out lenge anyone to prove elec phenomenally fast shorthand, cial intelligence, are only now sourcing policing functions to tions were “stolen”.Democrats in essence a forerunner of beginning to fortify the com the private sector may be performed meekly in state today’s Hansard reporters. pliance controls developed problematic. Instead, enhanc level offices when they Maybe there is something over previous decades. ing the powers of financial thought they’d win the state about listening intently to More work is needed, intelligence units to monitor house. They didn’t even come parliamentarians that encour including by governments. For and even postpone suspicious close. Their cries of voter ages visionary thinking. one, financial supervisors transactions may be a more suppression are naked parti david natzler should rethink punitive poli efficient measure and would san gimmicks designed to rile Clerk of the House of cies that largely leave institu be fully compliant with coun their base for a competitive Commons, 201519 tions in the defensive posture tries’ legal obligations. The election in 2022. London of meeting technical obliga Parliamentary Assembly of the robert lee tions, rather than focusing Council of Europe recently Dallas, Georgia solely on rooting out illicit passed a resolution urging Clear your mind funds. Efforts to bring together governments in Europe and The article on people’s ten investigators, supervisors and beyond to do just that. Europe’s tv beats the invaders dency to add things when compliance officers in jan kleijssen How appropriate that Charle improving something rather missiondriven taskforces are Director magne should choose “Barbar than simplifying them (“Less is now starting to bear fruit. Information Society and ians” to illustrate his notion often more”, April 17th) scott liles Action against Crime that Netflix is creating a com reminded me of Lao Tzu, an President Council of Europe mon European culture (April ancient Chinese philosopher. Association of Certified Anti Strasbourg 3rd). That show, made in Ger He observed that “To attain Money Laundering Specialists many, portrays the efforts of knowledge, add things every Columbus, Ohio Rome as a supposedly superior day. To attain wisdom, remove Georgia’s election laws and sophisticated imperial things every day.” Big companies and big coun As a professional engaged in invader to impose its laws and jason gart tries prefer to be judged on the industry of electioneering manners on apparently uncivi Rockville, Maryland process over results. The lead in Georgia, I wanted to provide lised barbarians (the Greeks ing centres of moneylaunder some context to the reforms in termed barbaroi for anyone When it comes to solving ing are London, New York, the Election Integrity Act (“Not who did not speak Greek). problems, creating a “subpar Shanghai and other big so peachy”, April 3rd). Of nota Memories are short. It has result” is surely an improve financial centres. These hubs ble importance is the environ been only a few years since ment for a golf course. and their regulators tick the ment in which those reforms series like “The Bridge” hit john allan-smith right boxes on processes and took place. After the governor’s screens through European tv New York never appear on official mon election of 2018 (which Stacey networks, creating a huge eylaundering blacklists that Abrams wrongly claimed was internal market of European trigger sanctions. stolen from her), Georgia programmes, subtitled or Letters are welcome and should be Professional moneylaun replaced an election system dubbed. In addition to that addressed to the Editor at The Economist, The Adelphi Building, derers want to hide in a crowd that was dated, susceptible to Nordic triumph, some of 1-11 John Adam Street, London wc2n 6ht of similar transactions. Yet security breaches and lacking a Europe’s leading networks are Email: [email protected] countries that are labelled as paper trail. The overhaul of collaborating on highend More letters are available at: Economist.com/letters threats include the likes of equipment brought significant drama, such as “Leonardo”. Executive focus 13
Chief Executive Officer Malta Financial Services Authority
About the Malta Financial Services Authority How to apply or query for The Malta Financial Services Authority (MFSA) is the single prudential and conduct regulator of financial services in further information Malta. The MFSA regulates banking, financial institutions, payment institutions, insurance companies and insurance intermediaries, investment services companies and collective investment schemes, securities markets, recognised Candidates are to forward a investment exchanges, trust management companies, company services providers, VFAs and pension schemes. copy of their Curriculum Vitae The Role (C.V.) and an accompanying You will be articulating the vision and strategy for financial services regulation and enhancing the reputation and standing of Malta’s financial services sector. You will also be responsible for the overall performance of the Authority covering letter providing the and the implementation of its objectives, strategy, and of policies as set by the Board of Governors. Furthermore, you motivation for the application will help define and establish the jurisdiction’s and MFSA’s risk appetite, through formal definition and categorisations of risk, at gatekeeping, as well as at supervisory and enforcement levels. to [email protected].
Your main responsibilities will focus on ensuring that supervisory and operational activities are undertaken in alignment with the MFSA’s values and the established ethical principles. In addition, you will work closely with the Board of Governors to help translate the strategy and policies into their operational elements and oversee the running of the MFSA Executive Committee. One of your key tasks will be identifying mechanisms for establishing networks and For additional information on relationships with other local and international regulatory authorities. the MFSA and the current opportunity, visit The Candidate You are to hold prior experience working in a regulatory environment ideally with exposure to multiple areas within www.mfsa.mt/vacancies financial services regulation. You should possess excellent communication skills and a proven track record of engaging across segments within and outside organisations and the ability to make good decisions which are based upon sound judgements and analysis, evidence-based and well-documented case scenarios. You should be able to demonstrate the ability to manage and lead in a complex, corporate environment, featuring multiple stakeholders, and layers of analyses. You should possess a solid academic background in Financial Services, Management, Closing date for applications: Accountancy, Law and/or in other finance-related areas. 23 May 2021
Jobsplus Permit No: 144/2021 14 Briefing China and Taiwan The Economist May 1st 2021
saw traditions and social codes destroyed Something wicked this way comes by Maoist fanaticism, Taiwan has a rich re ligious and cultural life. It has come to en joy raucous free speech and a marked liber al streak: it was the first Asian country to legalise gay marriage. A generation ago, it could matter greatly BEIJING whether someone’s grandparents had ar America is increasingly concerned about the possibility of war in the Taiwan rived from the mainland in 1949 or had Strait. It has good reason deeper roots on the island. That has now n june 29th 1950 the uss Valley Forge, nounced a new Taiwan policy: America changed, especially among the young. In Oflagship of America’s Seventh Fleet, would defend the island from attack; the 2020 a poll by the Pew Research Centre, a passed through the Taiwan Strait. A battle Nationalists must, for their part, cease air Washingtonbased research outfit, found group defended her flanks, America’s first and sea operations against the mainland. that about twothirds of adults on the is naval jets sat in her hangar, and a new vi “The Seventh Fleet will see that this is land now identified as purely Taiwanese. sion of Americandominated Asian securi done,” the president declared, with nicely About three in ten called themselves both ty unfurled in her wake. laconic menace. Hence the Valley Forge’s Taiwanese and Chinese. Just 4% called Only a few months before, America’s show of strength. themselves simply Chinese. secretary of state, Dean Acheson, had de From that week on, to the relief of some Leaders in Beijing differ; they consider clared that “The Asian peoples are on their and the frustration of others, Asian peo them all Chinese. They tell their own peo own, and know it.” But on June 25th Stalin ples were no longer on their own. The Ko ple that most citizens of Taiwan agree, and ist North Korea launched an invasion of its rean war transformed the region into a the that the historical necessity of national southern neighbour, and a country con atre of ideological struggle just as fraught unification is being thwarted by secession fronting communism could no longer as divided coldwar Europe. For nearly ist troublemakers egged on by America. leave Asia alone. America would fight with three decades the Taiwan Strait saw ships Once, Taiwan was a point of compro South Korea. It was to join in that defence of the Seventh Fleet acting as a tripwire be mise between the two powers. On January that the Valley Forge was steaming north tween the two Chinas. There were early 1st 1979, the day that America recognised from Subic Bay. battles over outlying islands, including a the People’s Republic of China, the eco Her route had added purpose. Contain crisis in 1958 in which Mao’s brinkmanship nomic reformers running the mainland ing Asian communism meant more than nearly started a nuclear war. But over time changed their Taiwan policy from armed fighting North Korea. It also required mak the rivals to the west and east of the strait liberation to “peaceful reunification”, soon ing sure that Mao Zedong—mainland Chi settled into an uneasy halfpeace, both ad afterwards adding a promise of considera na’s ruler since the previous year—did not amant that they were the one true China, ble autonomy: “one country, two systems”. take the island of Taiwan from the neither able to act on the conviction. But for the past 25 years that conciliatory Nationalist regime led by Chiang Kaishek, Over time Taiwan became the prosper offer has been accompanied by an unprec who had been forced to retreat there. On ous, proWestern democracy of 24m peo edented military build up. June 27th President Harry Truman an ple which it is today. While the mainland In recent years China’s rhetoric towards The Economist May 1st 2021 Briefing China and Taiwan 15
Taiwan has sounded new notes of impa along China’s coast as the “centre of gravi tience. And the crushing abnegation of its Disequilibrium ty” of any war over Taiwan (see map on fol promise to observe “one country, two sys Military balance across the Taiwan Strait lowing page). Unless those defences are tems” in Hong Kong over the past two years 2020 destroyed, American forces would be lim has deepened Taiwanese distrust. Last year ited to longrange weapons or attacks by the issue helped Tsai Ingwen of the Demo China Taiwan the stealthiest warplanes, Mr Henley told a cratic Progressive Party (dpp) to be reelect Defence spending, $bn 252.3 12.2 congressional panel in February. But de ed president. as % of GDP 1.7 1.9 stroying those defences would mean one In principle the dpp favours the cre Ground-force personnel 1,030,000 88,000 nuclear power launching direct attacks on ation of a Taiwan that is formally its own Tanks 6,300 800 the territory of another. nation; but to declare independence in Submarines 52 2 And the Chinese buildup continues that way would trigger massive Chinese re apace. History is an imperfect guide, but prisals. To keep that crisis at bay, Ms Tsai, a Aircraft-carriers 2 nil offers precedents to ponder, says a senior moderate, catloving academic, relies on Warships 131 26 American defence official. “The world has an artful diplomatic dodge: that she gov Military aircraft 2,500 60 never seen a military expansion of this erns a country which, while proudly Tai scale not associated with conflict.” Sources: US Department of Defence; SIPRI wanese, uses the legal name of the Repub It is not just a matter of numbers. China lic of China which it inherited from the Na has carefully focused its efforts on the abil tionalists who arrived in 1949. China’s America has swung in China’s direction. A ity to defeat American forces that might leaders detest her. 25year campaign of shipbuilding and trouble it. It has missiles designed express The passage of time poses a dilemma weapons procurement, begun in direct re ly for killing carriers, and others that for China. Every year, China’s ability to co sponse to the humiliation of 1996, has pro would allow precision strikes on the Amer erce Taiwan economically and militarily vided the People’s Liberation Army Navy ican base on Guam. The defence official grows greater. And every year it loses more (plan) a fleet of 360 ships, according to lists other fields in which China has hearts and minds on Taiwan. Should rulers American naval intelligence, compared worked to neutralise areas of American in Beijing ever conclude that peaceful uni with America’s 297. On April 23rd state me strength, whether that means investment fication is a hopeless cause, Chinese law dia hailed the symbolism of a ceremony in in antisubmarine weapons and sensors or instructs them to use force. which China’s supreme leader, President systems to jam or destroy the satellites on Xi Jinping, commissioned three large war which American forces rely. Copying an Present fears ships on the same day: a destroyer, a heli American method, China has set up a This dynamic alarms the heirs to Acheson. coptercarrier and a ballisticmissile sub training centre with a professional oppos Though the accord of 1979 cast Taiwan into marine. The second of these is ideal for air ing force that mimics enemy (in this case nonstate limbo, the island’s security re lifting troops to a mountainous island, the American) doctrines and tactics. mained—as a matter of American law—a media noted with glee. The third is a way of question of “grave concern”. When in 1996 deterring superpowers. Horrible imaginings China sought to intimidate the Taiwanese, America still boasts more, better carri The head of IndoPacific Command, Admi about to vote in their first free presidential ers and nuclear submarines. It has much ral Phil Davidson, told a Senate hearing in election, by means of missile tests, Presi more experience of farflung operations, March that China’s fielding of new war dent Bill Clinton ordered the uss Nimitz, a and it has allies, too. But America’s forces ships, planes and rockets, when consi nuclearpowered aircraftcarrier, and her have global duties. China would be fight dered alongside the regime’s unblushing attendant battle group to pass through the ing close to home and thus enjoying the readiness to crush dissent from Hong Kong strait. The missile tests stopped. benefit of the pla’s landbased aircraft and to Tibet, makes him worry that China is ac American military commanders are missiles. Lonnie Henley, who was until celerating its apparent ambitions to sup increasingly open about their concerns 2019 the chief Pentagon intelligence ana plant America and its allies from their po that, in the context of Taiwan, the balance lyst for East Asia, sees the radars and mis sition atop what he called the rulesbased of military power between China and siles of the integrated airdefence system international order—a phrase that China sees as code for Western hegemony. Pon dering the specific risks of a Chinese attack on Taiwan, the admiral told senators that “the threat is manifest during this decade, in fact in the next six years.” Admiral John Aquilino, nominated to be Admiral Davidson’s successor as head of IndoPacific Command, told a confirma tion hearing in March that work to shore up America’s ability to deter a Chinese at tack on Taiwan is urgent. While he stopped short of endorsing his predecessor’s time line of six years, he called the prospect of a Chinese use of force “much closer to us than most think”. Anxiety has been raised further by war games involving Taiwan scenarios, both secret and unclassified, that were won by officers, spooks or schol ars playing the role of China. The admirals’ worries mix judgments about China’s capabilities with hunches A man with a plan about its intent. Bonnie Glaser of the Ger 16 Briefing China and Taiwan The Economist May 1st 2021
can hardly expect to be succeeded by an Naval ports other member of his generation. Following Beijing NORTH Chinese US KOREA his own logic, it thus falls to him to make *Air Defence sure that the task is not passed on. In an Surface-to-air-missile system SOUTH Identification Zone Illustrative deployment location KOREA JAPAN Sources: CSBA; October 2019 meeting in Beijing, Chinese Department of scholars and military experts shared with Anti-aircraft missile Defence; press reports CHINA Range 400km Oriana Skylar Mastro of Stanford Universi ty their understanding that it is imperative PACIFIC for Taiwan to be recovered during Mr Xi’s Cruise-missile system Anti-ship cruise missile Illustrative deployment Range 400km OCEAN time as leader. location Though some semiofficial Chinese Okinawa commentators already say that they see no Hong TAIWAN Kong hope for unification without some use of MYAN H-6K bomber Taiwan’s ADIZ* Range ,00km violence, there is no agreement among for MAR LAOS Hainan Taiwan DF-21D anti-ship eign governments as to whether that is the Strait Philippine ballistic missile settled view of China’s rulers. China con Sea Range 1,500km THAILAND tinues to try to shape Taiwanese opinion South China Subic Bay DF-2 anti- with a mix of sticks and carrots, which sug CAMBODIA Sea Guam ship ballistic missile gests that negotiation has not been aban VIETNAM Spratly Range up to doned. The biggest carrot, access to its vast Islands 4,000km markets, continues to be dangled in front PHILIPPINES of Taiwanese business interests. Ms Glaser notes that Mr Xi sounded a patient note in man Marshall Fund, a publicpolicy outfit, missiles on mobile launchers to sink Chi March when he visited Fujian, the coastal notes that their mission is to make plans, nese troop ships, rather than continuing to province nearest to Taiwan, urging offi in this case to win a war over Taiwan. Once splurge on tanks and f-16 fighters. Randall cials to explore new paths of crossstrait they realise that victory may elude them, or Schriver, the assistant secretary of defence integration and economic development. may only be possible at great cost, panic is for IndoPacific Security Affairs in 201819, understandable. That does not mean they promoted efforts to help Taiwan disable To the sticking place are correctly assessing China’s incentives Chinese radar and other sensors: “If we are But China’s carrots and sticks can clash. To to act soon. Strikingly, some of the intelli able to just blind the pla, that would be a punish the Taiwanese for electing a dpp gence officers paid to analyse the world for huge contribution to the fight.” government China has reduced official and admirals and generals are noticeably cal If a Chinese amphibious invasion of semiofficial crossstrait contacts to “near mer. “The trends are not ideal from a Chi Taiwan were to fail, or military conflict to ly zero”, says Andrew NienDzu Yang, a for nese perspective,” says Mr Henley. “But are reach a stalemate, would it fight on? Out mer Taiwanese deputy defence minister, they intolerable? I just don’t see them be siders offer no consensus. Mr Henley sug now at the Chinese Council of Advanced ing in that grim a mindset.” gests that a failed invasion might evolve Policy Studies, a thinktank in Taipei. That into a longterm blockade—a strategy to raises the danger of misunderstandings. When the battle’s lost and won which Western defence planners are pay So does China’s increased military ac A broader American angst is driven by the ing increasing attention. There is a much tivity around the island. Psychological op knowledge of what defeat would mean. heard view that once China starts fighting erations and “greyzone” warfare have Niall Ferguson, a historian, recently wrote anything short of victory would mean re been intensifying. In 2020, according to that the fall of Taiwan to China would be gimetoppling humiliation. But Mr Schriv Taiwan’s government, Chinese warplanes seen around Asia as the end of American er is sceptical. “This is part of Beijing’s win made 380 sorties into Taiwan’s Air Defence predominance and even as “America’s withoutfighting strategy. To make every Identification Zone (adiz), a buffer zone of Suez”, a reference to the humbling of Brit one believe that they climb the escalation international airspace where foreign ain when it overreached during the Suez ladder all the way to nukes if they have to.” planes face questioning by controllers and crisis of 1956. Asked about this idea in early The risks and costs of war, even a suc potential interception by Taiwanese fight April Matt Pottinger, who was head of Asia cessful one, bring home the point that ca ers. Such a tempo of operations has not policy in the Trump White House, agreed pabilities in themselves are never the de been seen since 1996. On April 5th the Chi and added another reason for Asian allies termining factor. Intentions matter too, nese navy promised patrols by its aircraft to fear such a public loss of American cred and are far more opaque—especially when, carriers around Taiwan on a regular basis. ibility. When Britain stumbled at Suez, as in China, they reside largely in the mind On April 12th 25 Chinese planes entered the America had already taken its place as the of one man. It is common to hear Western adiz, a record for a single day. leader of the Western world, Mr Pottinger analysts state that Mr Xi has staked his leg This may be a test of the new Biden ad told a Hoover Institution podcast. Today, acy and legitimacy on Taiwan’s return. ministration, says a senior Taiwanese dip he observed, “There's not another United Hard evidence for this alarming belief is in lomat, or a bid to create a “new normal” in States waiting in the wings.” short supply. The most cited is that, in a which Chinese forces are routinely present For all its newfound strength China fac newyear speech in 2019, he linked union in a zone formerly controlled by Taiwan. es daunting odds. A fullscale amphibious with Taiwan to the ambition that he has China knows that Taiwan will not fire first, invasion of Taiwan, a mountainous island placed at the core of his leadership, namely so “the Chinese will continue to push,” the that lies across at least 130km of water, the “great rejuvenation of the Chinese na diplomat says. The constant incursions would be the most ambitious such venture tion”. He also repeated what he had said to wear down Taiwanese defences, raise the since the second world war. America has a Taiwanese envoy in 2013: that crossstrait chances of accidental collisions and would spent years nagging its Taiwanese allies to differences should not be passed from gen make it harder to spot a rush to real war. capitalise on their natural insular advan eration to generation. Beyond the constant drumbeat of military tages, for instance by buying lots of naval Having abolished the term limit on his pressure, China is “trying to divide society, mines, drones and coastaldefence cruise role as president in 2018, 67yearold Mr Xi trying to sow the seeds of chaos,” says the The Economist May 1st 2021 Briefing China and Taiwan 17 diplomat. “They also conduct cyberactivi the importance of stability in the Taiwan by Taiwan’s “playhouse politics” but by ties and disinformation campaigns.” Strait in a joint statement with Mr Biden. geopolitical power struggles, Zhu Feng of Wang Zaixi, a former deputy head of the Japan fears Taiwan becoming a Chinese Nanjing University told an annual forum Association for Relations Across the Tai bastion just to its south, explains Michish run by the Global Times, a jingoistic party wan Straits, a semiofficial Chinese body, ita Narushige of the National Graduate In newspaper. advocates a “third way” between allout stitute for Policy Studies in Tokyo. But it al Ni Lexiong, a Taiwan expert at Shanghai war and political negotiations, one in so has much to lose if America is chased University of Political Science and Law, which a massive display of firepower cows out of the Pacific: “If the fall of Taiwan says that bellicose commentaries in the Taiwan into submission. In Chinese media means the disengagement of the us from state media must, in some limited sense, interviews he has cited the (not wholly re this region, that would be a vital interest.” enjoy official sanction. Such commenta assuring) precedent of Red Army troops Some in America want to make clear tors “would be too scared to write about surrounding Beijing in 1949 in such intimi that maintaining its Asian role is central to such things without approval”, he says. But dating numbers that the city fell with rath America’s interests, too. Senator Chris he scoffs at Westerners who worry that er few casualties, an approach he calls “us Coons of Delaware, a Democrat close to Mr Chinese leaders may feel compelled by the ing war to force peace”. Biden, is cosponsor of the Strategic Com nationalism which such screeds stoke in In some polls less than half of Taiwan petition Act, a bill with strong bipartisan the public. The views of the masses will not ese say they would fight in a war with Chi support that would deepen ties with Tai decide what happens, he says: “The key is na, or want relatives to do so (compulsory wan—whether by offering the island trade military power.” military service was sharply reduced in deals, weapons sales, expanded contacts There is much to be said for America’s 2013, by a government keen on closer ties with American officials or support in its at decadeslong policy of strategic ambiguity. with China). If the island loses more than tempts to take part in international fo Though some American scholars believe it half of its defences in the first waves of an rums—as one of several measures to push would usefully deter China to hear the Bi attack, the public’s will to fight might col back against what he calls China’s growing den administration say it would join any lapse, frets Mr Yang. A swift collapse would global aggression. To explain the island’s war over Taiwan, it could also provoke Chi make America’s position yet harder. If importance to voters he talks of how de na to rash acts or embolden some future American reinforcements arrive to find pendent modern life is on the chips it leader on Taiwan to declare independence. China’s troops already on the island, asks makes. He also cites the importance of Logic also supports the Pentagon’s desire Ms Skylar Mastro, can they start firing if no America being seen to keep its word and to spend the next ten years arming Taiwan, Chinese unit has shot at Americans? “I linking arms with allies to counter China, buying new weapons and thus increasing think that would be a very hard call for a us rather than trying to lead the world the uncertainty of Chinese commanders president to make.” through “bluster”. and their political masters. If the Taiwanese appetite for a fight is The challenge of such an approach is to unclear, so too is America’s. Taiwan’s gov The seeds of time generate enough anxiety to stay China’s ernment is painfully aware that preserving It may sound a bit narcissistic for Ameri hand, but not so much that Mr Xi sees Tai their friendly, successful democracy is not cans to assume that China’s plans for Tai wan slipping permanently from his grasp. in itself a vital national interest for anyone wan turn on how strong America looks to For all the alarm in Washington, China else. Instead, Taiwanese officials stress the China. But Chinese experts and officials does not feel like a country on a war foot extraordinary importance of the island’s are sincerely convinced that America is de ing, or particularly close to one. Several semiconductor industry to global supply lighted to be Taiwan’s security guarantor sources briefed on a recent meeting in chains (see Business section). They also and thus gain a chance to meddle in Chi Alaska between China’s top foreignpolicy emphasise how grim and frightening the na’s internal affairs. Without America to officials, Yang Jiechi and Wang Yi, and the AsiaPacific would feel if America ever help, Taiwan will surrender in an instant, secretary of state, Antony Blinken, and na broke its commitments and ducked a fight they argue, rather as Mr Yang fears. Their tional security adviser, Jake Sullivan, re with China. Japan’s prime minister, Suga disdain for the idea that China might try to port that the Chinese delivered shrill and Yoshihide, recently went further than any win over Taiwanese hearts and minds can inflexible talking points on Taiwan, but recent predecessor, when he mentioned be chilling. Unification will not be decided used no new language that showed un precedented urgency. China’s public stance involves much sa brerattling, to be sure. Viewers of state television are never far from their next sight of an aircraftcarrier, or gleaming jets screaming through azure skies. But calls for sacrifice to prepare the public for full on hostilities are missing. The party’s claims to legitimacy in this, its centenary year, are overwhelmingly domestic and based on order and material prosperity: they are buttressed by images of gorge spanning bridges and highspeed trains, villagers raised from poverty and heroic doctors beating back covid19 even as it rages around the outside world. Nevertheless, China’s visible capabili ties and veiled intent are grounds for alarm. Its scorn for Western opinion, as ov er Hong Kong, is a bad sign. War over Tai wan may not appear imminent in Beijing. The fangs of history But nor, shockingly, is it unthinkable.n ADVERTISEMENT
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Japan’s foreign relations Mr Nikai tends to echo such senti- ments. Born in 1939 in Gobo, a small city in Panda power Wakayama prefecture, he came of age in an era when backroom dealmaking was the norm in Japan. He is a skilled practitioner of “ryotei politics”, says Nakabayashi Mieko of Waseda University, referring to the posh restaurants where Japanese powerbrokers TOKYO gather in private rooms to resolve matters A powerful faction in Japan’s ruling circle strives to keep China sweet of business and state out of the public eye. here are no fewer than seven pandas mering disputes, over everything from Ja- Whereas younger politicians focus on Tat the Adventure World zoo in Wakaya- pan’s half-hearted contrition for its atroc- public relations, Mr Nikai concentrates on ma, a mountainous region in central Ja- ities during the second world war to a terri- human relationships, says Iio Jun of the pan. After the latest cub was born in No- torial dispute over some tiny specks in the National Graduate Institute for Policy vember, Zhao Lijian, a spokesman for Chi- East China Sea. But plenty of powerful Jap- Studies in Tokyo. He used to run the po- na’s foreign ministry known for his pugna- anese, especially among business people, werful Ministry of Economy, Trade and In- cious tweets, went all gooey: “It will be a would prefer to be on better terms. China dustry, which helped him not only to build witness of the friendship between China buys some 22% of Japan’s exports, more ties with big business, but also to gather a and Japan.” That may be wishful thinking. than America’s 18%. Hong Kong absorbs loyal following within the ldp. In 2016 the But the prevalence of the rare bears in Wa- another 5%. Japan needs “a more harmoni- prime minister of the day, Abe Shinzo, kayama certainly bears witness to the clout ous relationship with China”, says Nakani- tapped him to become its secretary-gener- of Nikai Toshihiro, one of the prefecture’s shi Hiroaki, the head of Keidanren, Japan’s al, in part to keep him from throwing his representatives in the Diet and one of Chi- biggest business lobby. As Seguchi Kiyoyu- weight behind a rival candidate for leader- na’s best friends in Japan. ki, a former head of the central bank’s of- ship of the party. Mr Nikai is the secretary-general of the fice in Beijing, argues, “The us is father and That perch helped make Mr Nikai a ruling Liberal Democratic Party (ldp), sec- China is mother—we cannot choose.” kingmaker when Mr Abe unexpectedly re- ond in rank only to its leader, Suga Yoshi- signed owing to ill health last year. Mr Suga hide, who is also the prime minister. He → was not seen as a successor, but Mr Nikai wields immense influence over the party’s Also in this section marshalled support for him. “He feels that candidates, legislative agenda and budget. 20 South Korea’s two-speed economy he made the Suga administration, so he He has held the job for longer than anyone feels perhaps equal to Suga, or even higher in the party’s 65-year history. 21 Australia’s enthusiastic isolationism than him,” says Shinohara Fumiya, a com- Mr Nikai is also Japan’s most prominent 21 Heroic covid-fighters in India mentator close to Mr Nikai. His continued advocate of friendlier ties with China. The backing is essential to Mr Suga’s survival, two neighbours have a series of long-sim- 22 Banyan: South-East Asia’s forests though deference to Mr Nikai has also 20 Asia The Economist May 1st 2021
damaged Mr Suga’s standing. Mr Nikai pro South Korea’s economy around the industrial park in Pyeongtaek moted an illconsidered subsidy for do is testament to the area’s dynamism. At mestic tourism that helped spread the pan Chips and blocks lunchtime cars are doubleparked outside demic. In an embarrassing reversal, Mr Su the rows of new restaurants. ga had to scrap the idea. A barista in a coffee shop reports busi Among Mr Nikai’s causes, none counts ness as usual, except for a few weeks in the for more than relations with China. For winter when she was allowed to serve only PYEONGTAEK many Japanese of his generation, a sense of takeaway. Two young men at an outside The pandemic has deepened a stark guilt about the war bred an eagerness to table who work for semiconductor firms economic divide help China develop. Ancient cultural ties say the pandemic has made little differ serve as another impetus to get along. “It’s wo enormous grey buildings decorat ence to their lives over the past year. “It’s China’s cultural power that first bought Ni Ted with blue, red and yellow rectangles factory work, not something you can do kai,” reckons Miura Lully, a political scien meant to resemble a painting by Piet Mon from home, so we’ve been going to work tist in Tokyo. drian dominate an industrial park south of and taking our breaks here the whole Yet it is China’s economic power that Seoul. Inside, the world’s largest produc time,” says one. has kept Mr Nikai enthralled. He began tak tion lines for semiconductors churn out Near Ewha University in northwestern ing big delegations of businessmen to Chi chips for Samsung Electronics 24 hours a Seoul, however, the picture is strikingly na as early as 2000. His longterm relation day. Robots zip along rails on the ceiling, different. The grid of small streets which ships with Chinese leaders make him a carting stacks of silicon wafers from one used to bustle with local and international “rarity” these days, says Yu Tiejun of Pe step in the process to the next. Few hu students and Chinese tourists is mostly de king University. “Diplomacy depends on mans are allowed anywhere near the ma serted. As university seminars have moved human relationships to a great extent; chinery, and only in protective suits, to to Zoom and quarantine rules have kept trust is the most important thing. We can prevent stray hairs or specks of dust from foreigners away, the bulk of the area’s ca not find many people like him who could contaminating their output. fés, restaurants and cosmetics shops have be trusted by this side.” These buildings and others like them closed down. The few that remain open are Those ties proved useful when Sino have been at the heart of the South Korean struggling. “I’ve been here for 30 years and Japanese relations hit a nadir in the early economy’s resilience throughout the pan this is the worst it’s ever been,” says the 2010s. As tension over the disputed islands demic. It shrank by just 1% in 2020, as glo owner of a shop selling cutprice clothes. threatened to flare into open conflict, Chi bal output fell by 3.5% and many rich coun She expects that she can hang on for a few na banned exports of important industrial tries suffered much deeper recessions. It is more months, but she has had to fire her materials to Japan and angry mobs ran projected to grow by about 3.5% this year— parttime sales assistant. A restaurant sacked Japanese car showrooms in China. its best pace in a decade. It has already re around the corner stayed in business by But Mr Nikai kept talking and travelling. gained its prepandemic size. That is a making deliveries but has had to lay off “We need to be able to talk to the Chinese, function mainly of exports, which are most of its staff. and Mr Nikai is an asset,” says Miyake Ku dominated by semiconductors and other Unemployment, which hit a 22year nihiko, a former diplomat and special ad manufactured goods, and were up by 16.6% high of 5.4% in January, was back to pre viser to Mr Suga. When Mr Abe moved to yearonyear in March. Samsung made pandemic levels by March. But the number calm relations in 2017, Mr Nikai delivered a more money in 2020 than the year before, of people employed in retail, food or enter letter from him to Xi Jinping, China’s presi despite the pandemic. tainment was still 6.6% below the level of dent. “He played a role as the bridge be Combined with South Korea’s success 2020, suggesting that many had dropped tween Abe and Xi,” says Kawashima Shin of in limiting infections, this has meant that out of the labour force altogether rather the University of Tokyo. In the trip’s wake, parts of the economy have hardly noticed than registering as unemployed. Whereas bilateral trade flourished and the number the pandemic. Employment in manufac exportfocused businesses are benefiting of Chinese tourists visiting Japan leapt. Mr turing in South Korea stayed roughly con from the recovery in global demand, these Abe made plans to receive Mr Xi on a state stant between January 2020 and March of industries will suffer for longer, says Park visit to Tokyo. this year. Frantic construction of gleaming Seokgil of J.P. Morgan, an investment But tensions between the two countries shopping malls and apartment blocks bank. The slow pace of vaccinations, he ar are rising again, testing the limits of Mr Ni gues, will act as a drag on services in the kai’s influence. China’s recent abuses in middle of the year. Hong Kong and Xinjiang and its growing Some economists worry that the pro hostility to Taiwan have made moderation longed slump may exacerbate the already harder to sell. Separating business from se gaping divide between hightech manu curity is becoming trickier, too, as the line facturing and lowproductivity services. between them becomes more blurred. “If the crisis is prolonged, it will leave scars Calls are growing in Japan for Mr Xi’s visit on fragile sectors and poorer, less well (which was postponed because of covid19) educated workers,” says Park Changhyun, to be cancelled and for Japan to adopt an economist at the Bank of Korea, the cen Western sanctions on China. tral bank. Some small service firms may After a recent summit, President Joe Bi not rehire everyone they have laid off, so den and Mr Suga issued a joint statement some of those who lost their jobs in the supporting Taiwan, which the two coun pandemic may find only badly paid, pre tries have never before done. Mr Zhao has carious parttime jobs. If they find no work complained that Japan is acting as a “vas at all, the pandemicrelated shrinkage of sal” of America. “Nikai has hot lines to the the labour force may become permanent, Chinese side, but even such hot lines can reckons Mr Park. Youth unemployment is a not solve territorial issues,” says Mr Ka particular concern: it has continued to washima. The pandas in Wakayama are not grow even as overall employment has be gifts, he notes, but merely on loan. n Hunting dust the old-fashioned way gun to recover, reaching 10% in March. The Economist May 1st 2021 Asia 21
To cushion the blow, the government tion centre on Christmas Island, an Austra Covid-19 in India has doled out about1% of gdp in relief pay lian territory in the Indian Ocean. Queens ments to small businesses since Septem land hopes to build a quarantine facility in Heartening heroics ber. It has also announced massive invest the small city of Toowoomba. Victoria en ments in digital infrastructure and “green” visages a “villagestyle environment” out technologies with the aim of creating more side Melbourne. wellpaid jobs. But that will take a while. Another suggestion is to clamp down DELHI Businessowners say that the payments even harder on travel. Border controls ban Volunteers are filling the many gaps in have barely made a dent in their losses. residents from leaving as well as outsiders the fight against covid-19 They want the government to compensate from coming in. Aussies can escape only them for lost earnings and to expand low for a handful of reasons, such as a family any indians are up in arms about the interest loans to tide them over the re funeral. Mr McGowan, however, thinks Mgovernment’s handling of their coun mainder of the pandemic. Meanwhile, they are swanning off too easily. “If people try’s allengulfing second wave of covid19. South Korea continues to record hundreds want to go overseas to covidinfected Hospitals, testing facilities, even cremato of cases of covid19 every day. The rollout countries in the middle of a pandemic, ria are overwhelmed. Vaccines are in short of vaccinations is progressing sluggishly, then why should they come home and risk supply. The government squandered a lull and restrictions on socialising and dining the rest of us?” he asks. in infections over the winter, a common out remain in place. It will be a while be The federal government, for its part, is criticism runs, and is now flailing in the fore the usual bustle returns to the streets asking for a sense of proportion. The quar face of the inevitable resurgence. But while around Ewha. n antine hotels are “99.99% effective”, says there is no shortage of hapless officials, the prime minister, Scott Morrison. Half a there is also an impressive supply of ordin million people have passed through them, ary citizens, charities, private companies Australia and covid-19 notes the health minister, Greg Hunt. He and even the odd public servant taking calls it “one of, if not the, most successful their own initiatives to mitigate the crisis. Isolation nation systems in the world”. Devendra, a 38yearold teacher in the But voters back the fiercest isolation rural state of Jharkhand, became a tabloid ists. Mr McGowan declared Western Aus hero when, after receiving a distress call tralia “an island within an island” when from a friend in Delhi, 1,400km away, he the pandemic started, and cut it off from scoured his state to find an oxygen cylin SYDNEY der and then drove for 24 hours straight to Clamping down fiercely on travel is the rest of the continent for most of last deliver the lifesaving gift. On socialme proving politically popular year. He is so popular that his opponent conceded a recent state election weeks be dia services such as Twitter and WhatsApp, t took two cases of covid19 to plunge fore the first vote was cast. Annastacia Pa untold thousands of people respond to IPerth, the capital of Western Australia, laszczuk, a strict guardian of Queensland’s even greater numbers of pleas for help to into lockdown on April 24th. The state gov borders, won a third term in October. find a hospital bed or oxygen or simply ernment announced a threeday “circuit So when will Australia reopen to the money to pay medical bills. Numerous vol breaker” just as locals were gearing up for a rest of the world? The federal government unteers have aggregated such requests and long weekend. “We can’t take any chances,” had planned to vaccinate the adult popula offers, allowing browsers to match needs declared the premier, Mark McGowan. tion of 20m by October, but the rollout is with whatever help is available by subject Australian states keep ordering snap months behind schedule. Even when and location. lockdowns because they are nervous about everyone is fully jabbed, officials say that Sometimes the efforts are very local. more contagious strains of covid19. Some travellers may still need some form of After seeing how hard it was to get his own of the world’s strictest border controls quarantine. A poll in February found that 80yearold father admitted to hospital, have generally held the virus at bay. Most 71% of Aussies want to keep the interna Vishal Singh, who owns a chain of private foreigners are barred from entering the tional border closed until the “public schools, set up a free, fully equipped co country, and returning citizens must quar health crisis has passed”. On that basis, vid19 care centre for other residents of his antine for two weeks in guarded hotels. they will be cut off for some time. n own posh gated community. Pascal and When a case of the virus slips through, Rozy Saldanha, a middleclass couple in state premiers throw up defences. Mumbai, sold their jewellery to buy oxygen A single infected quarantine guard cylinders to give to needy neighbours. Res closed Perth for five days in February. The idents of south Delhi speak of a mystery state of Victoria, home to 6.7m Australians, Food Man who roams the streets, stopping went into a short lockdown after a cluster hungrylooking people and feeding them. of 13 cases leaked from a hotel in Mel Other initiatives are more organised. bourne. Brisbane, capital of Queensland, Khaana Chahiye was formed last year to has been shut down twice since January. help migrant workers who were forced to And that is just this year. flee Mumbai when a national lockdown The latest breach in Perth started with a cost them their jobs. The group started by man who fell ill after his isolation had end setting up soup kitchens on roads, to offer ed. He caught the virus in quarantine, from a square meal to those who were so desti an infected traveller in another room, rais tute that they were trying to walk to their ing fears about airborne transmission home villages, hundreds or even thou within hotels. State leaders are hollering sands of kilometres away. Over the past for an even tougher system. Most quaran year it has served some 4.6m meals, thanks tine hotels are in big cities, so one idea is to to a team of more than 200 volunteers, and send travellers to betterventilated sites in expanded to slums in the city. quieter spots. Mr McGowan wants the fed Older charities have also redirected ef eral government to use air bases or a deten Too easy forts to the struggle against covid19. Near 22 Asia The Economist May 1st 2021
ly every Sikh temple, from smallest to rectly or through his companies, $150m of authorities in Mumbai run an efficient, grandest, operates a regular langar or soup it for covid research and relief. Other entre centralised triage system to allocate beds kitchen. Numerous charities that had been preneurs raised some $10m almost over to patients. In Nandurbar, a tribal district supplying a huge sitin on the borders of night for Mission Oxygen, which aims to of northern Maharashtra, one of India’s Delhi by farmers, many of them Sikhs, buy as many oxygen concentrators as pos hardesthit states, the top local bureaucrat have now refocused on covid19. One of sible abroad and ship them to Indian hos took note of what was happening else these, Hemkunt Foundation, now operates pitals. Within a single week the group was where in the world, and poured all his a 24hour drivein centre outside Delhi able to import the first machines, and has meagre resources into preparing for a sec that provides free oxygen to those in des placed orders for 1,300 more. ond wave. His team focused particularly on perate need. There have been moments of hearten fitting local hospitals with small plants to Indian tycoons have also stepped into ing bureaucratic efficiency, too. Whereas supply their own oxygen, as well as on the act. Azim Premji, a tech mogul and In in Delhi desperate patients have been training medical staff. Had such efforts dia’s biggest philanthropist, gave an esti forced to wander from hospital to over been replicated across India, they would mated $1bn to charity last year, either di spilling hospital to plead for admission, have saved tens of thousands of lives. n Banyan A real treeforall
There is a ray of hope for South-East Asia’s beleaguered tropical forests o ecosystem is more important in donesian government issued a temporary tiative to that end, called redd+, was Nmitigating the effects of climate moratorium on new licences for palmoil launched a decade ago, with Indonesia change than tropical rainforest. And plantations and made permanent one on notably due for help. It never achieved its SouthEast Asia is home to the world’s clearing primary forests and peatlands. potential. Projects for conservation must thirdbiggest patch of it, behind the Though often honoured in the breach, jump through many hoops before ap Amazon and Congo basins. they are clearly having some effect. In 2019 proval. The risk is often that a patch of Even though humans release carbon Malaysia imposed a fiveyear cap on the forest here may be preserved at the ex from these forests through logging, area under plantations. It also increased pense of another patch there. Projects are clearfelling for agriculture and other penalties for illegal logging. hard to monitor. The price set for carbon disruptions, some are so vast and fecund The second piece of news is an initia under the scheme, $5 a tonne, has been that the growth of the plants within them tive unveiled during President Joe Biden’s too low to overcome these hurdles. absorbs even more from the atmosphere. recent climate summit. It is intended to The new initiative, argues one of its The Congo basin, for instance, locks up make forests more valuable standing than architects, Frances Seymour of wri, 600m tonnes of carbon a year more than cut down. The leafCoalition, backed by builds on redd+while being mindful of it releases, according to the World Re America, Britain and Norway, along with its shortfalls. leafwill at least double sources Institute (wri), an international such corporate giants as Amazon, Airbnb, the price of carbon, making conservation ngo. That is equivalent to about a third and Unilever, aims to create an interna more attractive. Whereas buyers of car of emissions from all American trans tional marketplace in which carbon cred bon credits under redd+pocketed pro port. The Amazon, too, remains a net its can be sold for deforestation avoided. fits from a rise in carbon prices, wind absorber (though four years of massive An initial $1bn has been pledged to reward falls will now go to the country that sold fires and clearing for cattle have brought countries for protecting forests. South the credits. Standards of monitoring, it to a tippingpoint). In contrast, such is East Asia could be a big beneficiary: what says Ms Seymour, are much improved. the extent of clearing for plantations in multinational would pass up the kudos of Crucially, the scheme will involve SouthEast Asia’s rainforests, which run saving baby orangutans? bigger units of land than previous ef from Myanmar to Indonesia, that over Admittedly, curbing deforestation has forts, the socalled jurisdictional ap the past 20 years they have turned from a been a cherished but elusive goal of cli proach. That reduces the risk of defor growing carbon sink to a significant mate campaigners for ages. A big unini estation simply being displaced from a source of emissions—nearly 500m protected patch to an unprotected one. tonnes a year. Indonesia and Malaysia, Besides, says Gita Syahrani, of ltkl, home to the biggest expanses of pristine which assists districtlevel leaders in forest, have lost more than a third of it Indonesia keen to protect forests, it this century. Cambodia, Laos and Myan allows for best practice to be shared and mar, relative newcomers to deforesta for local leaders to understand the politi tion, are making up for lost time. cal advantage that conservation and the If that is the sombre backdrop, a money that backs it can confer. couple of pieces of good news help leaf comes at a time when big firms brighten it. First, according to Global have grown more serious about escaping Forest Watch, which uses satellite data to association with deforestation, and track tree cover, loss of virgin forest in when international will is building to cut Indonesia and Malaysia has slowed for emissions. Sceptics are right to point out the fourth year in row—a contrast with that unscrupulous loggers and planta other parts of the world. For the first time tion owners still have plenty of scope to Indonesia is not one of the world’s three game the system. But it is possible to worst countries in this respect. Follow think that the prognosis for SouthEast ing devastating fires in 2015, the In Asia’s forests is no longer quite so grim. China The Economist May 1st 2021 23
Demography the population was half its present size. A trickle of recent provincial data on Is China’s population shrinking? birth numbers points in the same direc tion. Local figures on new birth registra tions (separate from the census) offer a preview of what the census figures will probably show. For the first three quarters of 2020 the southwestern city of Guiyang BEIJING reported a 32% fall in births compared with Leaks from the census say yes. Official media give mixed messages the previous year. In the eastern city of he communist party has long known indicate shrinkage starting last year. Odd Weifang births were down by 26% in the Tthat, partly as the result of its brutal ly, it said a result showing a lower popula first half of the year. Hefty declines were birthcontrol policies, China’s population tion in 2020 than in 2019 is likely to be “a reported elsewhere, unrelated to the would soon peak and start to shrink. It has statistical error”. The paper also acknowl coronavirus pandemic. been startled, however, by how rapidly that edged that a decline is likely to occur by There are also indications that China’s moment has drawn near. Now, it looks as if next year. On April 29th, in a oneline total fertility rate (the number of children a it might have arrived. statement, the National Bureau of Statis woman is expected to have in her lifetime) In November the country completed its tics said the population continued to grow has dropped faster and further than previ tenyearly census, and said it would an in 2020. Either way, China’s demography is ously thought. Chinese planners have as nounce the results in early April. As May raising difficult questions for the party. sumed a rate of 1.8, but some Chinese arrives with no announcement, leaks sug In 2015 the government relaxed the one scholars (and the World Bank) say it is be gest that the results have not been pub child policy, allowing most people to have tween 1.6 and 1.7. A working paper released lished because they are so shocking, and a second child. The birth rate briefly rose, in March by China’s central bank suggests the party is in a flap about how to break the but soon fell again. In 2019 the number of the rate is no more than 1.5. news. The Financial Times reported on new sprogs was the lowest since 1961, when Such numbers make grim reading for April 27th that the census will show that a Maomade famine killed millions and the party. China’s workingage population, the population has fallen below 1.4bn, still defined as those between 15 and 59 years higher than the 1.34bn in the 2010 census, old, has been falling since 2011. Meanwhile but lower than it was a year before. → Also in this section the share of people aged over 60 has risen Leaks are sometimes wrong, or reflect from 10.4% in 2000 to 17.9% in 2018. The 24 America’s China-watchers early estimates which are revised upwards. latest guess is that by 2050 onethird of Global Times, a party newspaper, denied 25 Chloé Zhao gets blocked Chinese will be in their 60s or older. Sup the report in the Financial Times, saying porting them will put a huge burden on the — Chaguan is away census results are “extremely unlikely” to young, unless the oldies can be persuaded 24 China The Economist May 1st 2021
to work longer. In a report published in In 2005 almost half of those who got 2019 the Chinese Academy of Social Sci hitched did so between the age of 20 and ences warned that China’s main pension 24; in 2019 only about onefifth did so. fund could run out of money by 2035. Officials are keen on policies such as A second demographic worry is the cash payments to encourage parents to continued imbalance between men and have a second child. But evidence from the women. Since the 1980s birth restrictions, 50 countries trying to boost birth rates sug combined with a preference for boys and gests that this is hard. Providing cheap easy access to prenatal scans, led to the child care is perhaps the most effective widespread abortion of girls. In 2019 there policy. But that is much more costly and were 30m more Chinese men than women complex to deliver than handouts. and the disparity in the number of mar James Liang, an economist at Peking riageable age will only grow. The govern University, believes that China’s distorted ment worries that young men who cannot demographics will limit the size of its mar find a mate may become a source of unrest. ket and talent pool and thus hinder its rise. Low birth rates will put more pressure China will never accept significant num on the party to abandon all its coercive bers of immigrants, he says, so America birthcontrol policies. Fines still apply for will have a big advantage. In the next ten or having more than two babies, though en 20 years, China will continue to do well, forcement varies. Lately the loudest calls but then America “will retake leadership for this have come from officials in the and China will never catch up”. three provinces that comprise China’s The falling birth rate will bring forward northeastern rustbelt. Birth rates in Hei another battle. A new fiveyear plan in several presidents on China. He and many longjiang, Jilin and Liaoning are only cludes vague proposals to increase China’s others see a desire for a new cold war in about half the national average. retirement ages, which in cities is current Washington. President Joe Biden’s offi In February China’s National Health ly 60 for men and 55 or 50 for women, well cials, like President Donald Trump’s, talk Commission said those three provinces below the richcountry average of 64. That of “strategic competition” with China, could start allowing people to decide for will be deeply unpopular. And lengthening rather than cooperation. themselves how many children to have. working lives also risks driving fertility Both parties on Capitol Hill strike a sim That is a right people in other countries down further, because many families rely ilar tone. A bill called the Strategic Compe take for granted. But it is unlikely to boost on grandparents for child care. There are tition Act passed the Senate Foreign Rela the region’s overall birth rate, or its flag no easy ways out. n tions Committee on April 21st, promising ging economy. A sociologist notes that lo to “counter the malign influence of the cal youngsters are fleeing to parts of China Chinese Communist Party globally”. An with better weather and more jobs. Analysing China alysts at thinktanks and in the media have “Most people want no baby or at most written stratagems for containment and one baby, so even if you remove all the lim Doves become elegies for engagement. its right now, it won’t have much effect,” Expertise about China is not necessary. says Zhang Xiaochen of Duke Kunshan hawks Within government, analysts who once fo University. Chinese have grown accus cused on war zones have pivoted to China. tomed to the idea of a small family. High Those who preach moderation towards the costs for housing, health and education Chinese government risk being tarred by NEW YORK further discourage fecundity. the most strident hawks as apologists, A big shift among China-watchers Childrearing out of wedlock is both so their motives called into question. Es cially unacceptable and officially discour hen richard nixon made his his teemed China specialists who were previ aged, even as young Chinese are delaying Wtoric visit to Beijing in February 1972, ously called on by the White House for ad getting married or shunning it entirely. he reassured Mao Zedong that neither of vice have fallen out of favour. Last year the number of nuptials fell by12% their countries had plans for global hege China’s own actions have prompted the to a little over 8m, the lowest since 2003 mony, meaning that they could work to pushback. In the past decade the Commu and well down on the peak of13.5m in 2013. gether and “find common ground, despite nist Party has intensified repression at our differences”. home, ramped up military activity in its Nixon’s trip marked a shift not just in near seas and, with its newfound econom Neck and neck America’s relations with China but also in ic heft, pursued an increasingly aggressive the centre of gravity for analysis of the foreign policy. Meanwhile Xi Jinping, Chi Population, average Population country in America. Chinawatchers na’s president, warned that China was en annual % increase bn moved towards a more doveish presump gaged in an ideological struggle with the Five years ending tion that China did not pose a threat and a West, and that he would not tolerate dis 3 1.5 hope that engagement would mean it grad sent or unrest. His removal of term limits China ually becoming more like America. Nearly on his rule, the crushing of civil liberties in 1.2 India half a century on, the balance has shifted Hong Kong and the mass internment of 2 0.9 once again, towards a hawkish posture Uyghurs in Xinjiang shocked many previ 0.6 that, as in the cold war, stresses ideological ously doveish analysts into hawkishness. 1 competition. The relationship is as con Former proponents of engagement are India 0.3 frontational now as at any point in the 50 often now the loudest cheerleaders for the China 0 0 years since Nixon went to China. change in tone. “It was an illusion that Chi “It doesn’t take any bravery to be a Chi na would change if we just sent more ballet 1955 202000 1950 202000 na hawk today. It takes bravery to not be troupes, more foundations, more academ Source: United Nations one,” says a former official who advised ic exchanges, more journalists, more The Economist May 1st 2021 China 25 trade,” says Orville Schell of the Asia Soci The movie business diary throughout Wuhan’s lockdown, was ety. “The message, and this is what the aca read by tens of millions across the country. demic community is starting to under Dissing Oscar But once it was announced that an Ameri stand, is that Leninism, if you have had can publisher was translating her diary in many decades of it, is deep.” to English, she was labelled unpatriotic Under Mr Trump, America’s national and faced an online onslaught. Her writing security policy became focused on chal has been shunned by Chinese publishers HONG KONG lenging China, by improving deterrence, and media outlets. “This is the trolls win Chloé Zhao discovers that trolls are especially in the South China Sea and the ning,” says Michael Berry, who translated shaping policy Taiwan Strait; by trying to stop Huawei, a Ms Fang’s work. “These attacks can esca Chinese telecoms giant, from building 5g hen chloé zhao won Best Director late to the point they result in actual politi networks around the world; and by rooting Wfor her film “Nomadland” at the cal decisions.” out Communist Party influence and Golden Globes in February, film buffs in China also has a broader agenda: to pro espionage in America, subjecting an un China, the land of her birth, were ecstatic. mote homegrown movies and weaken known number of academics and re State media proclaimed she was the pride American cultural dominance. The era of searchers with China links to scrutiny of China. “Congratulations,” gushed Zhang seeking validation from Hollywood may be from the fbi. Ziyi, star of “Crouching Tiger, Hidden Dra over, says Ying Zhu of the City University of Mr Trump appeared personally inclined gon”,on social media. “Look forward to the New York. And an increasingly rocky rela to court Mr Xi and overlook or even ap Oscars.” Two months on, however, as Ms tionship with America is causing the Com plaud his repressive impulses. Yet the Zhao became the first woman of colour to munist Party to be less obsessed with inter Trump administration was the first in the win an Oscar for Best Director, and national awards. Nine out of China’s ten world to impose sanctions on Chinese offi “Nomadland” scooped Best Picture, her topgrossing films this year were Chinese. cials and companies for their complicity in name was nowhere to be seen. The Oscars, argued a recent newspaper edi humanrights abuses in Xinjiang (the Bi What happened? The answer is a form torial, are “still dictated by Western tastes den administration would later coordi of nationalist backlash that is increasingly and standards”. China, it said, should have nate further sanctions with its allies). common. Soon after Ms Zhao won the its own awards ceremony. Dozens of American dissenters, includ Golden Globe, internetusers dug up com That may already be under way. Since ing some prominent China scholars, ments she had made in 2013, saying China 2019, China has banned all mainland film pushed back in 2019 in an article in the is “a place where there are lies everywhere”. makers from attending the Golden Horse Washington Post entitled “China is not an Censors pounced, removing any mention Awards in Taiwan, formerly the leading enemy”. They argued that America was ex of her from the Chinese internet. Chineselanguage festival, after one award aggerating the threat from China as an “ex Nationalist trolls have long been intol winner called for Taiwanese indepen istential” one, and that its confrontational erant of speech they deem critical of China. dence. It even scheduled its own version, policy would weaken the hands of moder The government is now endorsing these the Golden Rooster awards, on the same ates within the Chinese government. On attacks, perhaps for fear of looking weak if night, forcing filmmakers to choose. both counts their arguments were dis it doesn’t. It has intervened to cancel the The party’s treatment of Ms Zhao is a missed by critics as a rehash of engage distribution of “Nomadland” in China. missed opportunity for the country to pro mentera tropes, in particular the notion Ms Zhao is not the first to be dealt with mote its soft power. As the relationship be that there exists a meaningful proreform in this way. In June last year Hao Haidong, tween America and China has worsened, faction within Mr Xi’s Communist Party. a Chinese footballer who is the country’s bicultural, bilingual artists such as Ms The conversation about China in Washing top scorer and now lives abroad, said that Zhao could be providing an important ton remained unchanged. the Communist Party’s rule “has caused bridge. In her acceptance speech, she In the summer of 2020 four Trump offi horrific atrocities against humanity”. Chi spoke warmly about memorising Chinese cials gave a series of speeches describing nese websites swiftly deleted his name. poetry with her father as a child, and she the Communist Party as a threat to free In 2020 Fang Fang, a writer who kept a switched into Mandarin to quote a famous dom and democracy globally. And in Janu line from classical Chinese. ary the Trump administration became the But the authorities have a long history first government to declare that the atroc of censoring Chinese artists, including ities committed against Uyghurs in Xin “Fifth Generation” filmmakers, such as jiang constituted genocide, a view the Bi Zhang Yimou and Chen Kaige. Mr Zhang’s den administration has repeated but other latest film, “One Second”, was withdrawn countries have generally not. Mr Biden has at the last minute from the Berlin Film Fes adopted the Trump hard line, with less tival in 2019 for “technical reasons”. firebreathing rhetoric, about the contest In the end, as with all good movies, between authoritarianism and democracy. there may be room for redemption. After Public sentiment against China runs the Oscars, Global Times, a nationalistic high, too, in America and among its demo newspaper, published an Englishlan cratic allies. Being tough on China will guage commentary praising Ms Zhao for continue to be popular. What worries the her warmth towards her Chinese roots and moderates, and even some of the hawks, is saying she could have a “mediating role”. how China will respond if it decides the Bi Ms Zhao’s next film as director is “The den administration is, like the Trump ad Eternals”, a superhero movie from the Mar ministration appeared to be, locked in an vel franchise. Its producers will be hoping adversarial struggle. The strategic ratio the film also does well in China, now the nale of Nixon’s opening to China was that biggest market in the world. The fact that they had an adversary in common, the So Ms Zhao is Chinese may have been part of viet Union. Now America and China are her attraction to them. She is now looking left only with each other. n Chloé Zhao, on the road more like a liability. n
United States The Economist May 1st 2021 27
Biden’s beginning start of his term. The postcovid19 econ omy is forecast to grow by 6.5% in 2021. 100 days of aptitude Both of these would probably have oc curred no matter who won the election in 2020. But the confluence of crises at his in auguration, plus a competent cabinet cribbed from the Obama years, has carried WASHINGTON, DC along ambitious plans. Mr Biden has alrea Joe Biden has gone from boring candidate to drawing breathless comparisons to dy signed a $1.9trn covid19 rescue package Franklin Roosevelt. Are they justified? into law, spending that dwarfs even Roose m sick and tired of reading how we’re you’ll have the best 100 days,” Johnson velt’s initial outpouring of cash (see chart 1 “Iplanning another ‘hundred days’ of boasted. “Better than [FDR] did!” Joe Bi on next page). Unlike past crisis presi miracles,” griped John F. Kennedy before den’s administration is no different. dents, Mr Biden does not start with vast assuming the presidency. The sentiment One year ago, when enthusiasm was majorities in Congress; a lukewarm man made its way into his inaugural address, al difficult to detect from even his keenest date gave Democrats only the barest major beit in a more stirring manner: “All this supporters, the comparisons with Roose ities. Yet he has wielded the tools at his dis will not be finished in the first 100 days. velt would have seemed absurd. And yet posal—a budget measure known as recon Nor will it be finished in the first 1,000 here they are. “Biden is off to an excellent ciliation to surmount the threat of a fili days, nor in the life of this administration.” start—arguably, one of the best since Roo buster—to pass laws all the same. A recurrent trope of American politics sevelt,” writes David Gergen, a former ad Transformational presidents often ar is to scour the actions of the first 100 days viser to four presidents of both parties. rive as curious avatars. Johnson, who as of a new president’s administration and Mr Biden assumed power at an awful cended to the presidency by the historical compare it, usually unfavourably, with the time, with crises in democracy, public accident of Kennedy’s assassination, was a productivity of the first 100 days of Frank health and racial grievance to address. Yet creature of the Texas political machine. lin Roosevelt’s presidency (in which he crises can be auspicious. More than 230m Walter Lippmann, a renowned American managed to pass 76 pieces of legislation, 15 Americans have been partially vaccinat commentator, wrote dismissively of fdr of them countrychanging). The exercise is ed—more than the 100m he set out at the during his first presidential campaign: “He both arbitrary and imperfect: presidents is no tribune of the people. He is no enemy with early legislative successes tend to of entrenched privilege. He is a pleasant → Also in this section have more later on in their term, but it is man who, without any important qualifi hardly a guarantee. Nonetheless, it is still a 30 Students and free speech cations for the office, would very much like test that White Houses past and present to be president.” Many Democrats would 30 Classics at Howard torture themselves over. Lyndon Johnson have cribbed those words a year ago to de ordered his congressional liaison to “jerk 31 Escaping from the epidemic scribe their party’s nominee. Yet apathy out every damn little bill you can and get now seems an asset. Mr Biden does not stir 32 Lexington: The Mormon right them down here by the 12th”. “On the 12th the same ire that Mr Obama did within the 28 United States The Economist May 1st 2021
conservative media, which sometimes left his healthcare plan. Mr Biden’s best seems to dwell more on his supposed Big spenders 1 chance of entering this pantheon would be aphasia and diminished mental faculties United States, first-year-in-office budget deficit to start the decarbonisation of America. than his objectionable policies. “Boring Selected presidents, % of GDP Before he assumed office, Mr Biden but radical,” is how Senator Ted Cruz tried pledged that America would decarbonise -8-10 -6 -4 -2 0 to put it. All the same, Mr Biden is pursuing its economy (meaning no net carbon emis a muscular policy of state intervention in Roosevelt, 1933 sions) by 2050. To get there, he aims to the economy and race relations that Johnson, 193 make power generation entirely carbon should delight progressives. He is far to the Clinton, 1993 free by 2035. He aims too to reclaim the left of Mr Obama on both counts. mantle of global climate leadership tossed This method comes with risks. In the Obama, 2009 away by Mr Trump and his administra absence of a reliable negotiating partner, Trump, 2017 tion’s knownothingism. At a summit of with the Republican Party still unable to world leaders held (virtually) in late April, Biden*, 2021 exorcise itself of Trumpism and its anti Mr Biden announced that America would democratic fantasies, Mr Biden has no re *Forecast. Excluding proposed aim to reduce its emissions by about 50% Sources: OMB; CBO infrastructure spending sponsible opposition to save his adminis from 2005 levels by 2030. If the country re tration from bad ideas and excess. Secur alises these ambitious targets sometime ing bipartisan legislation with the filibus the Tennessee Valley Authority, besides after Mr Biden has left office, he could lay ter in place requires ten Republican Senate passing other publicworks and relief leg claim to the title of most consequential votes—which look so far out of reach that islation. Mr Biden would clearly like to ef president of the century—remarkable giv the White House barely goes through the fect a transformation on the Rooseveltian en his slim margin of victory, lacklustre or motions of trying to attract them. The bad or Johnsonian scale. But that cannot sim atory, and the tepid enthusiasm he in Democratic habit of throwing mountains ply be bought. spires even in his own party. of money at malfunctioning sectors of the Instead, the great transformation, Were he to get his way, hundreds of bil economy and hoping for the best—like a should it ever arrive, will come in the next lions of dollars would be spent putting largely unexplained proposal for $400bn 100 days. Throughout his presidential Americans to work (preferably within un of eldercare spending, or the $225bn to be campaign, Mr Biden promised that after ions): not just in green jobs, but in building spent on subsidising childcare centres immediate relief, which he has provided roads and bridges, repairing sewers and and their poorly paid workers—thus goes perhaps overgenerously, he would “build power lines, and laying down broadband unchecked. back better”. That promise will arrive only fibre cables. There is even a Civilian Cli The theory of the Biden presidency thus with Democratic unanimity in Congress— mate Corps—deliberately recalling Roose far is that extraordinary levels of spending, which will be even harder to achieve than velt’s Civilian Conservation Corps, which only partially matched by raising taxes on for the American Rescue Plan. The next employed 3m men who, among other corporations and the rich, can enrich plan aims to spend more than $4trn on things, planted 3bn trees. Other expan America indefinitely without triggering mobilising all of government to fund infra sions to the welfare state, like permanent inflation. And that direct government in structure of various kinds and arrest the child allowances, paid family leave, extra tervention, not creative destruction, is a progress of climate change. subsidies for childcare centres and ex powerful force to spur innovation. This is a Presidents, at least Democratic ones, panded healthinsurance programmes, remarkable gamble. measure their success by the number of were revealed on April 28th at an estimated landmark acts and enduring governmental cost of $1.8trn. Mr Biden aims to raise these Try something programmes left behind. Social Security, immense sums from much higher taxes on What spurs most of the Roosevelt compari food stamps and modern unemployment corporations and the wealthy, who did well sons is the American Rescue Plan, the insurance are among Roosevelt’s innumer under Mr Trump’s tax reform (see Finance $1.9trn behemoth of legislation that Demo able contributions. Beyond sweeping and economics section). crats managed to pass in Congress without healthcare and povertyreduction pro These plans have been sketched by the Republican votes and with few edits. It grammes, Johnson’s include major civil White House. Making them happen would spends a huge amount of money rather dif rights legislation on antidiscrimination, require all Mr Biden’s skill at armtwisting fusely: cheques for $1,400 distributed to voting rights and fair housing. Mr Obama and backslapping in the Senate, given that most Americans (at a cost of $400bn), and Democrats hold the chamber by the thin $350bn in aid for states and communities nest margin possible. So far, he has pro whose budgets did not appear to be in dire The tightrope 2 posed starting a cleanenergy revolution need of it. Though double the size of the United States, first-year Congressional majorities by spending close to $1trn over the next de stimulus measure that Mr Obama was able Selected presidents, number of seats cade on basic research, subsidies for re to pass in the aftermath of the financial cri newable energy and a jobs programme for House Senate sis, it does not signify a permanent trans “millions” put to work building new infra formation of the welfare state just yet. 200150100500-50 structure, such as 500,000 electricvehicle Even child tax allowances, the most signif Roosevelt, 1933 charging stations (there are only 115,000 icant measure, which are expected to halve Johnson, 19 3 petrol stations in the whole country) and child poverty, are only temporary. retrofitting and weatherising existing in Reagan, 1981 That means that although Mr Biden has frastructure. outdone his hero (fdr’s portrait now hangs Clinton, 1993 But enacting change so quickly cannot over the fireplace in the Oval Office) in size, W. Bush, 2001 be accomplished through subsidies and di he has not yet done so in scope. Roosevelt rect employment. Mr Biden would need to managed to stabilise the careening bank Obama, 2009 rapidly shake up a cocktail of regulations ing sector, pass the GlassSteagall Act, es Trump, 2017 that would force such a transition. More tablish a federal system of deposit insur Biden, 2021 executive orders are among the ingredi ance, take the dollar off the gold standard, ents, but legislation would be required, Sources: House of Representatives; Senate create the Civilian Conservation Corps and too. The tradeoff between good policy and The Economist May 1st 2021 United States 29 winning elections is clear here. A clean contrast, are avowedly antiracist. So far electricity standard is politically palatable, Look busy 3 the racialequity agenda of the first “woke” but limited compared with the scale of the United States, presidential executive orders issued administration has been pursued in ways problem. The bolder, more effective option 2001-21 that look a bit like reparations. The co of a carbon tax is going nowhere. 40 vid19 relief bill included a $5bn relief fund Senate rules mean that the budgetary Biden for minority farmers alone. The infrastruc portions of the Biden agenda—like ex 30 ture package maintains that, somehow, panded social safetynet spending—stand Trump 40% of the benefits of cleanenergy invest a good chance of passage because they can 20 ments will go to previously disadvantaged avoid the risk of a filibuster, a minoritarian Obama communities. stalling tactic that holds up legislation un 10 This too may perhaps be a quirk of the less 60 senators agree to move forward. reconciliation procedure used to circum W. Bush Many of Mr Biden’s plans, like green 0 vent the filibuster. Spending targeted to spending, the trillions in safetynet expan wards minorities alone can pass through 1 20 40 60 80 100 sion and the raising of taxes on businesses the Senate more easily than consequential Days in oce and rich Americans, are engineered to get legislation that would reform policing, pri Sources: The American Presidency Project; whitehouse.gov around this threat through reconciliation, sons, immigration and voting rights. For which only requires a simple majority. mal reparations (an issue which Mr Biden Other sweeping reforms contemplated Trump on immigration, like building a supports the study of by another commis by the administration, which principally wall on the Mexican border, or climate sion) are deeply unpopular; policymaking change regulation rather than government change, by reentering the Paris accord to that resembles reparations may not be spending, will be casualties of the filibus reduce emissions. Because Mr Trump was much more warmly received. The politics ter for as long as Democrats keep it. This singularly unsuccessful at passing major of this racialequity agenda is worse for the applies to immigration reform, a boosted legislation (his only one, a tax cut in 2017, White House than the politics of big federal minimum wage, or greater voting also stands a good chance of rollback), spending, which is broadly popular. rights and civilrights protections. Even if these revocations signal the end of a per Should progressives grow discontented the filibuster were to be ditched, which manent Trump policy agenda in Washing with the signalling on racial equity, and in seems unlikely now, the time limit on such ton. Others sketch the beginnings of caus stead demand that Mr Biden pushes hard reforms is also shorter than a fouryear es Mr Biden aims to pursue through legis er, his party’s showing in the 2022 elec term would suggest. Even small losses dur lation: defining racial equity, relaxing im tions could suffer. ing the midterm elections in 2022, which migration enforcement, mandating “buy firstterm presidents often suffer, would American” rules, even forming a commis Government is ourselves flip Democratic control of one chamber of sion to study possible expansion of the Su The Trump administration suffered from a Congress and therefore probably doom fu preme Court. This all implies a muscular severe form of attentiondeficit disorder. ture legislation (as Mr Biden will remem executive branch that will unilaterally seek Under Mr Biden, Washington has merci ber from his vicepresidential days). Per to rewrite environmental, immigration fully receded from global headlines. “Bor haps that is why the focus has been square and civilrights rules to the maximum per ing but radical” gets fewer clicks than “fas ly on economic policy. mitted by the courts. cinating but incompetent”. This has led Politics is not the only constraint on Mr Mr Biden may have plainly modelled many to underestimate the scale of change Biden. The White House seems to relish himself on Roosevelt at the start of his currently under way in the relationship be eyepopping spending proposals. That is a presidency, but on race he aims to differ tween the people and their government. departure from the Clintonera Democrats, from the New Deal. Local administrators of Mr Biden is a Rooseveltian revanchist, who cared about fiscal rectitude. Even Roo Roosevelt’s innovations explicitly exclud who seeks to reclaim the trust Americans sevelt began his presidency with the inten ed AfricanAmericans. Mr Biden’s plans, by once placed in government. His proposals tion of balancing the budget, and only later for muscular industrial policy, autarkic turned Keynesian. The Congressional Bud supply chains and massive publiclyfund get Office estimates that the budget deficit ed employment will be inefficient. But of 2021 will be 10.3%, after a covidinduced economic rationality is not their point. shortfall of 14.9% in the previous year. The They are the results of a complicated bal national debt is on track to be 102% of gdp ancing act between idealist leftliberal by 2021 and 202% of it in 30 years’ time. Yet policy, centrist caution and what Congress Mr Biden is blasé about the problem and can pass through reconciliation. The first keen to spend trillions more, which may 100 days of the Biden presidency have only partly be covered by rising taxes. shown that he will pursue that philosophy While interest rates are low, the spending in surprisingly maximalist fashion for a may be sustained. But they will not stay supposed moderate, even with such slim low indefinitely. Already, inflation expec margins of Democratic control in Con tations have risen; if they do so quickly and gress. The daunting tasks he has laid out unexpectedly, and Mr Biden’s economic for himself—averting climate change and experiment comes undone, it would badly rectifying racial injustice—will, in Kenne damage the Democratic Party at a time dy’s words, not be finished in the first 1,000 when the other lot are unfit to govern. days or even in Mr Biden’s lifetime. But he If dealing with Congress and the bond has already done more than seemed possi market may be a headache, Mr Biden can at ble when he was sworn in. n least issue directives. He has already taken some 60 important executive actions— For more on what America makes of Joe more than any president since Roosevelt. Biden's start, go to www.economist.com/ Many of these revoke the actions of Mr What AmericaThinks 30 United States The Economist May 1st 2021
SCOTUS and free speech Classics at Howard Sidelined Finis
The only classics department at a historically black college is closing NEW YORK ad you lived in America in the late ty classics department is being dissolved. The justices ask whether schools can 1700s and been fond of a rhyming Staff with tenure will be absorbed into punish students for social-media posts H couplet, you may well have read Phyllis other departments. Thus vanishes the t has been a halfcentury since the Su Wheatley, the literary sensation of her last classics department at a historically Ipreme Court came to the defence of Mary day. Her status made her work more black college, which has existed since the Beth Tinker, a 13yearold student who had remarkable: she was a slave, named after university's founding and numbered been suspended for wearing a black arm the ship that had transported her from Toni Morrison among its students. band to school as a protest against Ameri West Africa as a child. And she wrote the Eric Hairston, a classicist and profes ca’s role in the Vietnam war. Neither teach first book published by an AfricanAmer sor of humanities at Wake Forest Univer ers nor students “shed their constitutional ican. Many dismissed her authorship sity in North Carolina, calls the decision rights...at the schoolhouse gate”, the justic because the poems were so dense with “appalling”. He blames the unRoman es ruled then, but speech that could cause a classical references. “She uses these texts notion that AfricanAmerican students “material and substantial” disruption falls as a way to express her pain about being need more vocational subjects, an “in outside the umbrella. The question in Ma- enslaved, to express her desire to over dustrial education” instead of a liberal hanoy Area School District v. B.L., which the come her oppression, and her desire to one. Classics “is something I fell into and justices struggled with for nearly two be free,” says Anika Prather, who teaches fell in love with”, says Alexandria Frank, hours on April 28th, is whether schools can the course “Blacks in Classical Studies” at a 21yearold Howard student. “People punish uncouth expression made on the Howard University. assume that if you know Latin you’ve got other side of the school gates, too. Many other names crop up during the some like genius brain going on,” she Many of America’s wrangles over what course, from Frederick Douglass, the says, “but it really is just an interesting can be said involve students asking admin abolitionist who read Cicero's speeches puzzlesolving language.” Ms Frank’s istrators to curtail speech. Mahanoy is the in secret, to Huey Newton, a Black Panth petition to save the department has over other way around. In 2017 Brandi Levy er with a liking for Platonic imagery. Yet 5,000 signatures. sought solace in Snapchat when she after a long review, the Howard Universi Classics departments have long re learned she hadn’t made the top cheerlead cognised, and agonised over, their dis ing team. Over the weekend, she posted an cipline’s decline. Student numbers are image of her upturned middle finger cap falling (as has been the case for all the tioned with the message “fuck school fuck humanities since the financial crisis), softball fuck cheer fuck everything”. This and a number of American universities did not amuse the coaches: they booted her and colleges have closed their depart from the squad for a year. The jilted teen ments. Classics has an image problem: sued and two courts ruled that the punish fusty, elitist and too white. In 2019 Danel ment violated her freedom of speech. Padilla Peralta, an associate professor at Schools may discipline students for dis Princeton, suggested the subject might ruptive or vulgar speech during class, in be too racist to be taught. the hallway or on school trips, the Third Howard has always offered a counter Circuit Court of Appeals held. But they can point to that view. One of its renowned not discipline students for intemperate ex professors, Frank Snowden junior, spe pression outside the schoolhouse gate. cialised in the representation of black The oral argument was a clash of two people in the classical world. He found highly skilled lawyers. David Cole, nation many, and also found they were free of al legal director of the American Civil Lib modern racialised hierarchies. There erties Union, spoke up for Ms Levy’s right were warriors, emperors and comedy to vent on Snapchat without having to an writers. Even so, his universitashas given swer to school administrators. If purport Eheu! classics the thumbs down. edly disruptive offcampus speech could get students in trouble, kids “would be car rying the schoolhouse with them wherever Breyer’s sentiment that the court was ill school in the country would be doing noth they go”, he told the justices. That would equipped to “write a treatise on the First ing but punishing.” leave no “breathing space” for students to Amendment” concerning the boundaries That hesitancy may favour the school’s exchange ideas and hamper discussions of of student speech in the internet age. Per position, argued by Lisa Blatt, owner of a matters related to their schools. Chief Jus haps the best the justices can do, he sug fearsome 373 record in her Supreme Court tice John Roberts seemed to share this wor gested, is to erase the bright line between appearances. There is no “talismanic sig ry, wondering whether offcampus criti oncampus and offcampus speech and nificance to students’ location” when cism of teachers or school policy should be send the matter back to the lower court to schools confront disruptive student subject to regulation. ask whether Ms Levy’s rant amounted to a speech, she wrote in a filing. And Ms Blatt Justice Brett Kavanaugh showed empa substantial disruption worthy of punish countered Mr Cole’s cautions with warn thy with Ms Levy, noting that even Michael ment. Justice Breyer said that he was ings of her own. If schools cannot address Jordan was sore about being cut from his “frightened to death of writing a standard”, student speech uttered just across the varsity basketball team as a highschool but noted that if offcampus swearing street, or posted on social media, they will sophomore. But he echoed Justice Stephen counts as a material disruption, “every be unable to fulfil their role of in loco paren- The Economist May 1st 2021 United States 31 tis guardians of students’ wellbeing. leader from the Foundation for Individual propriate, says Lawrence Gostin of George Mr Cole countered that schools are free Rights in Education cites the “pervasive town University. Albert Fox Cahn, head of to address threats, harassment, bullying form of administrative scrutiny” govern the Surveillance Technology Oversight and cheating when they happen off cam ing college students’ everyday online Project, a New York group that campaigns pus. But he said it would be a “dangerous speech. Satirical Instagram posts and Face to regulate surveillance technology, likens proposition” if schools could punish any book criticism of administrators have the policy to receiving tsaPreCheck, a cre thing posted over the weekend that they landed university students in hot water. dential provided by the Customs and Bor deem disruptive. Ms Blatt says worries That may change if the Supreme Court der Protection agency that allows people about such “schoolhouse tyranny” are a gives three cheers to freer expression for who have voluntarily provided informa red herring: principals cannot punish stu student speech online. But given the reti tion to keep their shoes on and bypass oth dents just because they are offended by cence emanating from the bench, such an er annoying procedures while going what they have to say. expansion of youngsters’ free speech through security at some airports. The Supreme Court’s ruling, expected seems unlikely. Ms Blatt’s closing warning State bans that affect private businesses in June, could affect not only public may stay with the justices: circumscribing could face legal challenges, however. One schools and their 50m students but the school authority over student expression, state, New York, has implemented a volun contours of free speech at public universi she said, would bring “madness, confu tary passport system for entrance into ven ties. An amicus brief siding with the cheer sion and chaos”. n ues. Called Excelsior Pass, this provides proof of vaccination or a negative covid19 test for entry to basketball games and other Escaping from the epidemic large gatherings. But Montana, Texas and Florida have tried to prevent private busi Overproof nesses from requiring vaccine passports, via executive orders from the governor. This goes too far, says Mr Gostin. “It’s un lawful for a governor of a state to ban vac cine passports,” he says, speaking specifi cally about the orders by Texas and Florida NEWARK Republicans want to ban businesses from requiring proof of vaccination for private businesses. Florida’s policy seems particularly sha s cases of covid19 in America are fall licly announced a covid19 vaccination re ky. As written, the order aims to prevent Aing and the fourth wave subsides, quirement for travel, between islands. Go private businesses from requiring proof of states are again wondering how and when vernor David Ige, a Democrat, announced vaccination, but it does not explain which to loosen the remaining rules on travel be on Twitter that, fromf May 11th, fully vacci laws give Florida’s governor this authority. tween them. Six states, all led by Republi nated people will be able to bypass current “If he had good authority, why didn't he put can governors, have banned covid19 vac state requirements to provide proof of a it in [the executive order]?” asks Walter Ol cine passports. Three (Florida, Texas, and negative covid19 test or quarantine for 10 son, a legal scholar at the Cato Institute, a Montana) even prevent private businesses days. While other states have been lax with libertarian thinktank. Mr Olson says that from requiring proof of vaccination. These covid entry requirements, Hawaii has rig Florida’s executive order is written like a bans may be politically advantageous for orously enforced its policies, even arrest statement intended to be read by the pub Republicans catering to a base angered by ing people who break quarantine rules. lic, not a legal document meant to be de mask mandates (which changed this week Its new rule is probably legal. States fended before a judge. According to Mr after new guidance from the Centres for cannot prohibit citizens from travelling Cahn, Texas’s order is similarly vague. Disease Control and Prevention). Only one between them. But Hawaii’s policy allows Other states have enacted more suc state, Democraticled Hawaii, is publicly for reasonable alternatives for those with cessful bans. Utah’s legislation, which pre planning to use vaccination credentials for out vaccination proof, so it is probably ap vents only the state government and its inbound travel. public universities from requiring a vacci Vaccine passports come in three col nation passport, is probably legal, says Mr ours. The first and least controversial form Gostin. “[The law is] basically telling the is a vaccine passport for international tra governor that the governor is not permit vel, similar to the Yellow Card implement ted to launch a governmental vaccine pass ed by the World Health Organisation to port system. That’s not the same as saying prove inoculation for diseases like yellow that no business can do it.” Arizona’s and fever and childhood illnesses like rubella. Idaho’s executive orders prevent state and The second form is a onetime proof, such local governments from requiring vaccine as those currently required by some passports, so they also seem legally sound. schools for childhood vaccinations. The Florida, Texas, Montana and several third is a transactional pass required for other states have bills banning vaccine entrance into establishments. Denmark, passports currently moving within their Estonia and Israel have launched passports legislatures. Several states are just weeks that grant vaccinated individuals access to away from legally forbidding vaccine pass restaurants, salons, large events, and ports. Jeffrey Singer, a doctor and a fellow more. The European Union plans to roll at the Cato Institute, thinks these legisla out a vaccine passport in June. The Repub tive bans should exempt private business lican state bans address the last two types es. “Private entities have a right…to request of passes. proof of vaccination,” Dr Singer explains. Utah, Arizona, Idaho, Montana, Texas, “They have a right to be concerned about and Florida all currently ban vaccine pass their safety and the safety of their employ ports. Hawaii is the only state that has pub The promised land ees and customers.” n 32 United States The Economist May 1st 2021
Lexington In praise of the Mormon right
Utah offers a lesson in pragmatic conservatism that the Republicans badly need main explanation for it is signified by the needlelike spires that pierce the Salt Lake City skyline. Over 60% of Utahns, and a bigger majority of Utah Republicans, are Mormons. This makes them members of a church imbued with little of the pessimism evident elsewhere on the religious right. To the contrary, where white evangelicals—the Republicans’ biggest constituency—harbour the wounded sense of entitlement of a group hurtling from cultur al primacy to the margins, Mormons exude the confidence of a once reviled but now thriving minority. Founded in upstate New York in 1830, by a 24yearold visionary called Joseph Smith, their religion is one of the world’s richest and fastestgrowing. It claims to have almost 17m members in 160 countries. The church, to which most Utah Republicans belong, is deeply conservative yet sometimes adaptable. It was behind the Utah compromise, a concession that ended up reaffirming some of its architects’ Mormon faith. “If you’re a true Christian, you want to love your neighbour.” concluded the leader of Utah’s Senate, Stuart Adams, who had previously opposed gay rights. Sadly, a comparison between the Mormon and evangelical churches also suggests how hard it will be for evangelicals to fol low the Latterday Saints’ lead. The big difference between the two is psychological and rooted in their divergent histories. “My great ne of the few uplifting notes of last year’s election season greatgreatgrandparents’ home was burned to the ground by a Owas struck by the candidates for Utah’s governorship. “Win or mob in Illinois,” said Mr Cox. “You don’t forget stuff like that.” That lose, in Utah, we work together,” said Christopher Peterson, the past not only explains Utah’s openness to immigration. It repre Democrat, in a humorous ad featuring him and his Republican op sents for Mormons a parable of existence as a sacred struggle, de ponent. “So let’s show the country that there’s a better way,” said manding humility and accommodation with a hostile world. Un that rival, Spencer Cox. like aggrieved evangelicals, says Richard Mouw, a leading evan Now Utah’s governor, Mr Cox seems to be keeping his pledge. gelical theologian, “Mormons are not angry, they don’t want to The upbeat 45yearold is winning plaudits for his pragmatism win, they just want a place at the American table.” and evenhandedness. After Utah’s Republican legislature de Mormons’ and evangelicals’ distinct perspectives are also a manded an early end to its mask mandate, he negotiated a month product of their churches’ organisation. The decentralised nature long extension, with exceptions for schools and businesses. He is of evangelical America has allowed worshippers to sort them sued his first veto of a bill sponsored by his brotherinlaw (it was selves into racially and otherwise homogeneous congregations. an attack on socialmedia firms and probably unconstitutional). This has in turn led them to elevate cultural over spiritual con He is popular with Democrats as well as Republicans—as cerns. By contrast, Mormons’ centralised institutions underpin Utah’s governors tend to be. Gary Herbert and Jon Huntsman had their greater pragmatism and openness to diversity. similar records. Though Utah is one of the most conservative They must worship at their local church and are urged to pro states, the relative moderation of its Republican leaders has vide alms and other support to poorer neighbours. This helps ex helped make it one of the less polarised. “We have a history here of plain why Utah has the lowest wealth inequality of any state. It al wanting to bring the other side to the table,” says Mr Cox. so promotes empathy over righteousness; the church’s mission An illustration of that was a deal between gayrights and reli ary tradition does the same. To that end, Mr Cox did a stint in Mex giousliberties activists known as the Utah compromise. A text ico; Mitt Romney in France. And this structure is overseen by one book legislative tradeoff, which recognised the rights of gays in of America’s tightest, and more enlightened, church hierarchies. employment and housing while permitting churches not to marry Senior Mormons are considered to be “prophets, seers and rev them, it has been cited approvingly by both sides in a budding row elators”. The current ruling trio were formerly a pioneering surge over Joe Biden’s support for new lgbtprotections. on, a justice of Utah’s Supreme Court and a Stanford business pro Another sign that Utah conservatives are different is their aver fessor. Their example in getting promptly inoculated against co sion to Donald Trump. The former president did better in the state vid19 helps explain why Mormons, who tend to be more obser last year than he did in 2016; but worse than any other Republican vant than white evangelicals, are also likelier to get vaccinated. candidate in a twohorse race since Barry Goldwater in 1964. Though some leading Utah conservatives have warmed to Saints alive him—including Senator Mike Lee—Mr Cox is among the many For the literary critic Harold Bloom, a fan of Mormonism, it was who remain opposed to Mr Trump and his grievance politics. the “authentic version of the American religion … [which] yet may “We’ve created something that we used to criticise, the victim cul prove decisive for the nation”. Something similar could be said for ture that now exists on the right,” said the governor, more in sad the pragmatic politics the church endorses. ness than anger. Utah conservatism is a reminder to the American right of its The results of Utah’s functional conservatism are impressive. more expansive, optimistic past. It also offers a warning of where The state is as welcoming to immigrants as it is to investors—and Republicans’ current pessimistic course may lead. Almost half of one of the fastestgrowing in both population and output. The Mormons under the age of 40 voted for Joe Biden. n The Americas The Economist May 1st 2021 33
AMLO’s military ambitions some 20,000 troops across the country. What started as a temporary measure in Sergeant López Obrador tended to restore order continued under Enrique Peña Nieto, amlo’s predecessor. Similarly, the armed forces have long had a hand in some big infrastructure projects. But according to Javier Oliva of the Nation al Autonomous University of Mexico, un MEXICO CITY der amlo “a very quick evolution” has tak Mexico’s president is giving the armed forces new powers en place, and the armed forces now have an he maya train, a 1,500kmlong railway as the Maya train and the new internation unprecedented level of involvement in na Tthat is due to run through the Yucatán al airport in Mexico City, the armed forces tional affairs. peninsula, is one of Andrés Manuel López fight drug gangs, control migration, guard For a start, the president has rendered Obrador’s pet projects. But rather than en fuel pipelines, administer ports and run civilian policing all but obsolete by dis trust the job to worldclass architects or hospitals—all tasks previously carried out mantling the federal police and creating a engineers, Mexico’s president has given it mostly by government agencies or the po new National Guard. In theory this is a ci to military men. Last year he said the lice. Before amlo, the army controlled vilian organisation. In practice that is “a armed forces would build several sections some parts of the border with the United very big pretence”, says Eduardo Guerrero, of track, later adding that they would also States; it now controls all of it. The navy a security analyst. Neither the former fed operate part of the line. In March it was re used to monitor ports; from this year it ad eral police nor new recruits wanted to join vealed that the army would not only con ministers them. Last year amlo also hand it in large enough numbers, so members of struct and run the railway, but also keep all ed customs, previously run by a govern the army and navy were drafted in. Of the the profits from it, too. ment agency, to the armed forces. 100,000 or so National Guard members as The story of the Maya train hints at the They have always played some role in of February, threequarters are from the ar rising influence of the armed forces under public security in Mexico. Shortly after Fel my or navy. It is commanded by a recently amlo, as he is known. During his cam ipe Calderón, the president from 2006 to retired general. paign in 2017 he promised to remove sol 2012, was inaugurated he launched a cam Moreover, amlo has put the militarisa diers from the streets and criticised the ar paign against drug traffickers, dispatching tion of public security on a firmer legal my for humanrights abuses. But since be footing, says Catheryn Camacho Bolaños coming president he has given them more of the Mexico Autonomous Institute of → Also in this section and more power. They have not held such Technology (itam). In May last year he is sway since the end of Mexico’s militaryled 34 Venezuela’s covid-19 chaos sued an executive decree expanding and government in the 1940s. formalising the role of the armed forces in 35 Bello: Tricky fiscal decisions As well as building shiny projects, such public security, including the authority to 34 The Americas The Economist May 1st 2021
detain suspects and secure crime scenes. The pandemic in Venezuela And whereas other ministries face funding AMLO’s military muscle cuts, the army is flush with cash (see Mexico, defence spending, $bn Thyme, the great chart). The ministry of defence, which cov 2015 constant prices ers the army and air force but not the navy, Army and air force Navy Other healer received $5.6bn in 2021, a 40% increase on 7 2018 in nominal terms. 6 CARACAS The president’s increasing tendency to Another despot touts a herbal quack lean on the armed forces appears to stem 5 cure for covid-19 from a desire for quick results. Mexico’s ci 4 vilian bodies are weak. amlo distrusts 3 he black market in Venezuela has tak them, along with the private sector, and 2 Ten a dark turn in recent weeks. In on has alienated or weakened both further. 1 line chat groups, where weary Caracas resi Mexicans rate the armed forces more high 0 dents trade everything from detergent to ly than any other state institution, seeing us dollars, covid19 is the dominant theme. 2120191817162015 them as comparatively professional and Emotional pleas for medicine are com Source: IISS free of corruption. The military has around monplace. The price of oxygen tanks and 216,000 active personnel who obey the or masks is soaring. So too is rental space for ders of the president as commanderin 22 people by soldiers in Tlatlaya in 2014 the large refrigerators needed to preserve chief, without the buffer of a Pentagon was not properly investigated by the feder bodies in the tropical heat, as waiting lists style civilian bureaucracy. al attorney’s office. So far the National for burials and cremations grow. By promising speedy action—whether Guard has not behaved terribly badly, as Switch on state television and it is an through building infrastructure or doling some feared it might. Even so, some of its other world. Every Sunday Nicolás Madu out covid19 vaccines, as they have done members have been accused of extorting ro, the dictator, addresses the nation. this year—the armed forces are likely to money from an alleged drug trafficker in Wards of pristine unused hospital beds are boost amlo’s support base. At 63%, he has Sonora, while others allegedly transported displayed. Venezuela’s relatively low offi one of the highest approval ratings for a marijuana and amphetamines from the cial death count is contrasted with carnage president at this point in his term of office. state of Mexico on its way to Quintana Roo. elsewhere. Mr Maduro labels the p.1 variant But with important state, local and legisla An investigation by Animal Político, a local that is spreading across South America the tive elections in June he is keen for it to be outlet, in March found that 90% of already “Bolsonaro mutation”, blaming an uptick even higher. deployed members had not passed the in cases on Brazil’s populist president. evaluations to prove that they are qualified Mr Maduro’s hubris is misplaced. For With a little help from his friends for the job. the first year of covid19 Venezuela was This desire for efficiency could have unin Paulino Jiménez, a retired general who largely spared. But this was mostly luck. tended consequences. There is a tacit un is now at itam, says that concerns about With the economy tanking and sanctions derstanding between the government and potential corruption in the armed forces from the United States biting, the number the armed forces that they are not to get in are exaggerated, and points to the army’s of foreign visitors had already started tum volved in politics. That is potentially under strong internal justice system. Others say bling. Before the pandemic, at least a dozen threat, thinks Jorge Castañeda, a former the idea that the army is cleaner than any big airlines stopped flying there. But since foreign minister. The armed forces, now other institution is at best wishful think March cases have been rising. Even by the emboldened, “may start to get opinions on ing. At worst it is “bullshit”, says Marco Fer government’s improbably low figures, things, and temptation lies down that nández of Tec de Monterrey university. there were around 1,000 new infections road”, he warns. Indeed, from data that are publicly nearly every day in April, a record. The case of Salvador Cienfuegos, a re available, it appears that the army’s record The country is illprepared. In 2019 fully tired general and a former defence minis on openness is chequered. Some 41% of the 70% of public hospitals did not have reli ter, is seen by some as a worrying example money spent by the defence ministry in able running water, according to Doctors of the armed forces meddling in politics. In 2020 was through contracts awarded with for Health, a nationwide medical network. October 2020 the United States arrested Mr out tender. In other areas they do not fare Morgues are now full, says Douglas Leon Cienfuegos in Los Angeles on charges of much better. Military involvement in pol Natera, president of the Venezuelan Medi working with the h2 criminal group to traf icing has also not brought a reduction in cal Federation. Health workers who give fic drugs. The Mexican government was violence. Instead criminal groups have out detailed statistics which contradict the angry it was not informed in advance. A splintered, resulting in more conflicts. government’s claims risk imprisonment, month later the us prosecutors dropped Crime has plateaued at horribly high lev he warns. the charges, allowing Mr Cienfuegos to re els: there were 27 murders per 100,000 Instead of introducing clear lockdowns, turn to Mexico. The circumstances around Mexicans in 2020, 6.3 times the rate in the Mr Maduro has imposed a bizarre one his release are murky. Some think the pros United States. weekon, oneweekoff procedure, where ecutors made a mistake, or decided that Mr Meanwhile the infrastructure drive by by nonessential shops are closed for a Cienfuegos was not worth the diplomatic the armed forces has hit potholes. Parts of week and then allowed to reopen. “He fallout. But for others, Mr Cienfuegos’s re the Maya train have been suspended while seems to think the virus disappears every patriation, and his lack of a subsequent local courts decide if the consultation pro other week,” quips one sardonic carequeño. trial in Mexico, was a sign of the army’s cess excluded the local indigenous com Mr Maduro has also touted a “miracle” cure new clout. munity. The defence ministry is running for covid19, which he claims was devel Some observers also worry that greater behind on building bank branches, accord oped by Venezuelan scientists. The quack militarisation will bring more human ing to Expansión, a magazine. Mr Guerrero concoction appears to be made from an ex rights abuses. The armed forces are says that the army can build an airport in tract of thyme. His claims prompted Face thought to be responsible for some disap Mexico City that will “not be a disaster”. book to freeze his page for a month. pearances of Mexicans. According to Am But, he says, “it will be an airport of the Vaccines are a long way off. Mr Maduro nesty International, an ngo, the killing of Third World.” n received his first jab on March 6th. But al The Economist May 1st 2021 The Americas 35 most everyone else could be waiting qualify for free shots, but absurdly it still Zeneca jab had undesirable sideeffects. months. Less than 2% of the country’s 18m ranks as a “wealthier nation”, because Mr Weeks later, however, the government adults have had their first dose, by far the Maduro’s government has refused, since joined covax on more expensive terms. In worst rollout in South America. The vac 2014, to provide accurate economic data to April it said it had made two downpay cines that are available (around 880,000 the World Bank. ments for 11m vaccines, understood to total from Russia and China) are politicised. In March Juan Guaidó, the leader of the around $120m. It is refusing to specify the They have been restricted to those with a opposition and recognised by many demo origin of the funds. But assuming the gov state loyalty card known as the carnet de la cratic governments as the legitimate presi ernment continues to refuse AstraZeneca’s patria, which is mostly held by people who dent, was working on a deal whereby $30m jab, the vaccines may not arrive in the get state aid and so back the government. of Venezuelan government funds frozen in country until July. “You get the sense that In January up to 2.4m AstraZeneca jabs the United States would be released to pay there’s no rush,” says Miguel Pizarro, a pol were reserved for Venezuela as part of the for them. Mr Maduro appears to have scup itician representing Mr Guaidó at the un. who’s covax scheme. The catch is paying pered the arrangement, claiming that local “Everyone is scared, and that is what a dic for them. Venezuela is poor enough to “technical reports” found that the Astra tatorship wants.” n Bello How will the covid19 bill be paid?
Colombia is a test case of the fiscal decisions Latin American governments face he timing could hardly be more of gdp. With revenues falling because of If recovery turns out to be slower, tax Tawkward. Colombia is suffering a the recession, fiscal deficits ballooned and rises could be postponed. third peak of covid19, even more deadly public debt rose last year from an average This is the path Colombia’s govern than its predecessors. Almost all in of 64% of gdpto 72%. ment wants to follow. Its bill raises tensivecare beds in the main cities are That would once have been seen as a around 2% of gdpin additional revenue, full, and oxygen tanks are running short. dangerously high figure. But low inter mainly by widening the net of income Bogotá, the capital, is under a red alert, national interest rates make it more af tax and removing exemptions in vat. Mr with the working week cut to four days fordable. Nonetheless, several govern Duque says that would allow the govern and a curfew at 8pm. Yet in April the ments are scaling back aid even as the ment to continue to make emergency government of President Iván Duque pandemic continues. Many economists payments of $44 per month to over 3m sent a bill to Congress proposing stiff tax think that is a mistake. Investors will poorer households, compensate them rises. Although the increases would be tolerate deficits and debts provided gov for levying vaton basic goods and con phased in, the government thinks it ernments set out—and preferably ap tinue a furlough scheme. It would also must signal now its intention to raise prove—credible measures to curb them safeguard Colombia’s investmentgrade more revenue, particularly if it is to once economies have recovered. credit rating, which makes borrowing provide emergency aid to its people until “It’s right to spend during the pan cheaper for firms and the government. the pandemic is over. Many of the coun demic,” argues Alejandro Werner, the The bill is praised by tax specialists try’s politicians disagree, and the bill was imf’s outgoing director for Latin America. but, with a general election due next the target of a large national protest on “But it’s also right to start thinking about year, it has prompted political uproar. April 28th. tax and spending reforms.” In a typical Woundingly for Mr Duque the critics Colombia is an early example of the Latin American country, paying for the include Álvaro Uribe, a conservative fiscal dilemmas Latin American govern better health care and social assistance former president who is his political ments will soon face. The region has citizens are demanding while at the same sponsor. Mr Uribe has submitted an suffered grievously in the pandemic. Its time servicing higher debt requires a rise alternative bill that would cut the rev economy shrank by 7% last year, more in government revenue of between 1.5% enue gains in half. than double the average contraction and 3% of gdp.(Some countries would Other countries will soon face similar around the world. As lockdowns eased a need instead to trim ineffective spending.) decisions. The region is not facing a debt couple of months ago, there was opti crisis—or at least not yet. But the credit mism that recovery might exceed the 5% rating agencies are flashing an amber growth of most forecasts. But then the p.1 light. Joydeep Mukherji of Standard & variant of the virus, first detected in Poor’s, one agency, notes that with 13 Brazil, began to run wild. Like Colombia, downgrades since the pandemic began other South American countries have and nine “negative outlooks”, Latin been forced to restrict movement yet America’s credit score has been hit hard again. Meanwhile vaccination is happen er than that of any other region. ing slowly. The result is that 2021 is shap If Colombia’s tax reform is thwarted ing up to be another difficult year. by shortterm political considerations, Matters would be even worse had that sends the wrong message to other governments not been able to soften the governments. The risk is that “we’ll end blow with aid to poorer households and up with not enough stimulus and pro to firms. Though not on the generous blems with the financial markets,” says scale of many rich countries, this fiscal Mauricio Cárdenas, a former finance stimulus was much more than the region minister in Colombia. That would mean managed in past slumps. According to a Latin America would have to say adiósto study by the imf,it averaged about 4.5% a robust economic recovery. The Extraordinary Story Introducing our new weekly newsletter. Long reads and life from 1843 magazine
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Israel and Palestine ty holds many more seats than Yamina, is willing to let Mr Bennett serve as prime Past their sell-by date minister first if they form a government. With his leadership on the line, Mr Net anyahu is flailing. He has called for a direct election of the prime minister, while his supporters attack Mr Bennett. On April 27th Mr Netanyahu tried to appoint a mem DUBAI AND JERUSALEM ber of Likud as justice minister, a move Two long-serving leaders desperately try to hold on to power that was deemed illegal by the attorney inyamin netanyahu and Mahmoud been Naftali Bennett, the leader of Yamina, general as it violated the agreement that BAbbas (pictured, right and left) have a nationalist party that is similar to Likud. created the current government. After Isra ruled for so long that it is hard to imagine Mr Bennett, who was once Mr Netanyahu’s el’s Supreme Court suspended the appoint other people in their places. Yet neither is chief of staff, says “the door to a rightwing ment, Mr Netanyahu backed down and looking very secure at the moment. Mr government is open.” gave the post to Benny Gantz. Netanyahu, the prime minister of Israel But Mr Bennett has also begun negotiat As leader of the centrist Blue and White since 2009, is struggling to form a new gov ing with parties opposed to Mr Netanyahu. party, Mr Gantz agreed to team up with Mr ernment, as the opposition inches closer They, too, lack a majority—and they have Netanyahu after the last election, in 2020. to a deal that would unseat him. Mr Abbas, little in common, apart from their con Their deal gave Blue and White control of the Palestinian president since 2005, is tempt for the prime minister. In order to the justice ministry. It would also make Mr increasingly unpopular. Were he to hold a form a government they would need the Gantz prime minister later this year if no free and fair election, as he promised to do support of at least one ArabIsraeli party. new government is formed and no new this year, he would probably lose. Could Mr Bennett doesn’t like that. He is being election is held. Mr Gantz now wants to get both men soon be out of a job? wooed by Yair Lapid, leader of the centrist rid of Mr Netanyahu one way or another. Neither is giving up. Consider Mr Net Yesh Atid party and architect of the anti Mr Netanyahu had two big reasons for anyahu, whose party, Likud, won the most Netanyahu coalition. Mr Lapid, whose par seeking control of the justice ministry. seats in an election on March 23rd, but First, he is on trial for corruption, charges whose rightwing coalition lacks a majori he would like to see go away. Second, by ty in the Knesset, Israel’s parliament. For → Also in this section provoking a showdown Mr Netanyahu was the past three weeks he has tried—and able to renew his criticism of the Supreme failed—to convince other parties to sup 38 Former foes move closer in Iraq Court. It acts like an unelected “supergov port his bloc. Mr Netanyahu even reached 39 Somalia’s political crisis ernment”, he says. He may have thought out (via intermediaries) to Ra’am, an Is this would make it more difficult for Mr lamist party. His main target, though, has 40 Africa’s unfinished buildings Bennett, a critic of the court, to work with 38 Middle East & Africa The Economist May 1st 2021
parties that support it. But the move seems parties and Hamas. The numbers look vote is cancelled, though, that grip is weak to have spurred those trying to unseat the equally grim for Mr Abbas in a presidential ening. He is 85 and recently flew to Germa prime minister. “Israel has reached the ballot: he would lose in a landslide against ny for unspecified medical tests. The run edge of anarchy” and “needs a functioning Mr Barghouti, should the latter run from up to the elections exposed fractures with and stable government,” said Mr Bennett, prison, and it would be a tossup against in his ruling party; cancelling them would without singling out Mr Netanyahu. Ismail Haniyeh, the leader of Hamas. validate criticism of his selfinterested au As for the Palestinians, stability is not a Israel has no desire to see Hamas win thoritarian style. Both he and Mr Netanya problem: they have held fewer elections in another election (they have fought three hu have come to seem permanent fixtures the past three decades than Israel has in small wars since 2009). Its interests align of politics in the Holy Land. Their desper the past two years. Mr Abbas was elected to with those of Mr Abbas, who sees the group ate eleventhhour stunts are a reminder a fouryear term in 2005 and has since fid as a threat to his grip on power. Even if the that they are not. n dled the maths. A parliamentary vote in 2006 saw Hamas, a militant Islamist group, gain a majority of seats. It subse Iraq quently took control of Gaza and remains estranged from Mr Abbas’s Fatah, the The enemy of my enemy nationalist party that rules the West Bank. There have been no elections since. This long democratic drought was meant to end on May 22nd, when Palestin ians would finally choose a new legisla NAJAF ture. Presidential elections would follow Former foes find their interests converging. For how long? in July. To no one’s great surprise, though, those elections now seem likely to be raq’s health ministry did not think to pent”, but America “is the big serpent”, said shelved. As The Economistwent to press, Mr Iinstall smoke detectors or a sprinkler Mr Sadr not long after America toppled Abbas was preparing to cancel the ballot. system when it renovated the Ibn alKhatib Iraq’s most homicidal dictator in 2003. He will blame Israel. The Oslo accords hospital in Baghdad last year. So when oxy During the ensuing years Mr Sadr’s militia obligate it to let Palestinians vote at post gen tanks for covid19 patients exploded on men attacked the American troops who oc offices in East Jerusalem, the Arab part of April 24th, the fire spread fast, killing at cupied Iraq, killing hundreds of them. But the city Israel captured in 1967. Less than a least 82 people. The blaze also singed the today, as America draws down its forces month before the vote, Israel has not con reputation of Muqtada alSadr (pictured), (only 2,500 remain), Iran poses a bigger firmed it will allow this. On April 17th po the volatile Shia cleric whose political par challenge to Iraq’s independence. It wields lice arrested three Palestinian candidates ty, Sairoun, controls the ministry. Rivals influence through local militias and the who tried to hold a news conference in East accuse him of siphoning funds that should politicians it backs. America sees Iran as a Jerusalem. Tensions are also running high have gone to the hospital. threat and, increasingly, so does Mr Sadr. between the city’s Jewish and Palestinian Mr Sadr’s evolution from warlord to The cleric’s relationship with Iran is residents. Israeli police and young Pales protest leader to pillar of the establish complicated. He has spent years of his life tinian protesters clashed on April 22nd ment has been remarkable. Having once in Qom, Iran’s holiest city, studying and after a march of Jewish supremacists or led demonstrations against corruption, he seeking protection from armed rivals in ganised by farright groups aligned with is now the target of them. And his relation Iraq. Iran has at times seen him as a useful Mr Netanyahu’s coalition. ship with the public is not the only one ally. But he has also championed Iraqi na Mr Abbas declares Jerusalem a “red transformed. As his power has grown, his tionalism. When protests against corrup line”: if there cannot be elections in the ci interests have changed. Lately that has tion and Iranian influence broke out in ty, there will be no elections at all. If this is moved him closer to America, a former foe. Iraq in 2019, Mr Sadr’s forces backed a legitimate grievance, it is also a conven Saddam Hussein was “the little ser them—at least at first. When it seemed as if ient pretext. Proposals have been made to hold elections in Jerusalem without Isra el’s help. Mr Abbas does not wish to hear them. He is grateful for an excuse to cancel a ballot he may lose. The president once said he would shoot anyone from Fatah who broke away to join a new party. He will need lots of ammuni tion. Two splinter factions have emerged in the runup to the election. One of them, the Freedom party, is led by Nasser alQud wa, a nephew of the late Yasser Arafat, a re vered Palestinian leader. Mr Qudwa joined forces with Marwan Barghouti, a veteran Fatah leader serving five life sentences in an Israeli prison. A second splinter group, the Future party, is affiliated with Muham mad Dahlan, a former Palestinian security boss now living in exile in Abu Dhabi. A survey in March by Palestine’s leading pollster found that Fatah would win no more than 32% of the vote for parliament. It could be eclipsed by both the breakaway Pious cleric seeks fruitful relationship with big serpent The Economist May 1st 2021 Middle East & Africa 39 the protesters sought to sweep him aside Crisis in Somalia Areas of control, April 202 as well, his forces helped violently to 2 km quash the protests. Some Iraqi officials Villa-squatting Autonomous armed forces (unionist) hold Iran responsible for a drone attack on DJIBOUTI Gulf of Aden Mr Sadr’s home in 2019. Mr Sadr seems to view Iranian influ ETHIOPIA Somaliland d ence in Iraq as a threat to his own power. Hargeisa n NAIROBI a l That helps explain why he recently wel Somaliland t Somalia’s power-hungry president has n comed a statement by the American and administration u taken his country to the brink Claimed by P Iraqi governments reaffirming the pres Somaliland ence of American forces in Iraq. He also de ohamed abdullahi mohamed, bet and Puntland INDIAN nounced rocket attacks by Iranianbacked Mter known to his people as Farmaajo, Mixed or local control militias on America’s embassy in Baghdad was once a popular figure. Residents in OCEAN and on an airfield in the north used by Mogadishu, the capital of Somalia, wel SOMALIA American forces. He has even offered to de comed him to the presidency in 2017 with ploy his own militia, the Peace Companies, celebratory gunfire. They saw him as a re Government to guard Western embassies. Iraq’s ties former who would fight corruption. There with Saudi Arabia and the United Arab were indeed some reforms, enough to se Mogadishu Emirates, America’s allies and Iran’s ene cure promises of debt relief from the World Al-Shabab mies, should be strengthened, he says. Bank and imf. But Mr Mohamed’s chief in KENYA Mr Sadr rejects direct talks with Ameri terest seemed to be the accumulation of ca, but they share many interests. Both power, so much so that, when his term ex Source: Polgeonow.com backed Daewoo, a South Korean conglom pired in February, he refused to give it up. erate, in its bid for a multibilliondollar Setting off a political crisis is always a Mr Mohamed’s choices appear to be contract to develop the port of Faw in the risky business. Unleashing one in a coun narrowing. His power grab has cost him southeast. It beat a Chinese firm support try that has known little peace for 30 years, most of his remaining political capital ed by a rival Shia militia leader. Mr Sadr is and where your opponents are at least as abroad. Western powers, the un and the also mulling an electoral pact with Sunni well armed as you are, seems doubly fool African Union, guilty of dithering and Arab and Kurdish politicians who are close hardy. On the evening of April 25th vio sending mixed messages in the past, all to America. He already lends his support to lence duly broke out in Mogadishu. This opposed his attempts to extend his presi Mustafa alKadhimi, the prime minister, time there was nothing celebratory about dency. He is struggling financially, too. His who is backed by America and who has the gunfire. Somalis were shooting not in finance minister recently called on Soma tried to limit Iranian influence. Mr Kadhi to the air but at each other. lis living abroad to help pay the country’s mi has faced opposition from Iranian A ceasefire has since restored calm, but publicsector wage bill by depositing mon backed parties. But Sairoun, which is the Somalia remains in a more precarious po ey in government bank accounts. largest party in parliament, protects him sition than it has been for years. Mr Moha Mr Mohamed could yet opt to settle from a vote of no confidence. med’s opponents have retreated to their things on the battlefield. Officially he still “Iraq is in chaos, Iran is filling the vacu strongholds in the north of the capital, commands the loyalty of foreigntrained um and Sadr’s is the only strong force that where they are protected by armed clans specialforces brigades, as well as units can resist,” says an Iraqi official. Some in men. Many of these fighters are army de within national intelligence and the army. the West agree. Mr Sadr was spared when fectors. Fragmented to begin with, Soma Yet even here clan loyalties are straining America placed sanctions on Iraqi militia lia’s security forces look close to disinte cohesion, says Matt Bryden, director of Sa leaders with ties to Iran in 2019. Under grating along clan lines. Mr Mohamed, a han Research, a Somaliaoriented think President Donald Trump, American offi Darod clansman in a city dominated by the tank. Diplomats hope Mr Mohamed will be cials tried to engage the Sadrists through rival Hawiye, is thought to have full control sensible and capitulate rather than risk a Iraq’s ambassador in Britain, who is Mr of just five of Mogadishu’s 16 districts. So civil war he may well lose. Sadr’s brotherinlaw. President Joe Biden malis talk gloomily of civil war. If he goes, his departure may not be the is still formulating his Iraq policy and may Whether such a disaster can be averted end of the story—indeed, it could be the ea seek to ease tensions with Iran. But some depends in large part on how Mr Mohamed sy part. His opponents are presently united in the administration are encouraging responds. In a bid to defuse tension he has by their loathing for Mr Mohamed. His ab America’s political allies in Iraq to align promised to ditch a law, forced through sence could cause them to turn on each with Mr Sadr before an election in October. parliament in April, extending his term by other, as happened in 1991, when the dicta “Ride Sadr while you destroy the Iranian two years. He has also agreed to return to tor Siad Barre was ousted, only to unleash a backed elements, and then in eight years talks on how to hold elections. civil war fought along clan lines. Lessons think again,” says a Western analyst. Neither offer is likely to placate his op have since been learned and more recent Others think that would be a mistake. ponents in the National Salvation Council, elections have passed off peacefully “You can’t trust him,” says one of the prot an alliance between Mr Mohamed’s main enough, but they were not contested in so esters whom Mr Sadr turned against. The challengers for the presidency and the febrile an atmosphere. loudest warnings come from Mr Sadr’s for leaders of the two federal regions most As Somalia’s latest crisis worsens, only mer confidants. Sheikh Assad alNassiri, a hostile to him. The council regards Mr Mo one faction is enjoying the show: alSha cleric now in hiding, thinks Mr Sadr’s aim hamed not as president but as a squatter in bab, the alQaeda affiliate that controls is to capture the state. Ghaith alTamimi, a the Villa Somalia, the official presidential much of the countryside (see map). The cleric who was defrocked for disobedience home. As a condition for returning to ne lust for power and the tawdry squabbling to Mr Sadr, says Western backing for him gotiations, it is likely to demand the resig that presently grip Somalia’s politicians would be “a monumental strategic blun nation of Mr Mohamed, or at the very least play into the jihadists’ hands. Only the es der”. He worries that “it will end democra that he should be reduced to the nominal tablishment of a rulesbased system that cy in Iraq and surrender the country to a head of a caretaker government until an brings genuine benefit to the people will dictator worse than Saddam Hussein.” n election is held. thwart them: a sadly distant prospect. n 40 Middle East & Africa The Economist May 1st 2021
Africa’s unfinished buildings Weak property rights also matter. In Kampala, Uganda’s capital, the predomi A room without a roof nant landtenure system often gives both the occupant and the owner rights to the land. That can gum up land markets, ham pering new developments. But it can also spur people to pour concrete to try to DAKAR Capital is scarce in many countries in Africa. So why is so much cash tied strengthen their claims. Similarly, in the up in unfinished buildings? suburbs of Dar es Salaam, Tanzania’s com mercial capital, formal land titles are rare, ike an enormous grey skeleton, a six so people start building to try to secure Lstorey apartment building looms over a Stack up your troubles their rights. quiet street in Dakar, the capital of Senegal. Sub-Saharan Africa, top ten obstacles to firms Bigger building projects tend to stall for Concrete balconies and bedrooms are dis 2020 or latest available, % responding other reasons. Many developers are caught cernible. But there are no windows, doors short by the fluctuating prices of materials 2520151050 or lights. And the only painting is of the or by flaky contractors who spend the bud Access to finance scatological variety from the sole resi get but don’t finish the job. Still, some want dents: crows. How long has it been like Electricity to turn cash hastily into concrete, regard that? “Five or six years,” says the guard. Political instability less of whether they can finish the build Property in Senegal has been booming, but Informal-sector practices ing—because they are laundering money. concrete is frequently poured into build Tax rates In Dakar property is a “target”,says Kha ings only for construction suddenly to Corruption dy Dia Sarr, who advises the mayor. “Alot of stop, often for many years. Customs & trade regulations people are investing behind [fake] names.” Halfmade buildings are everywhere in Access to land In a recent case a Guadeloupean drugtraf African cities. In Abuja, Nigeria’s capital, Tax administration ficker with multiple aliases is accused of the government last year said it would take stashing cash in edifices. Many other Afri Crime, theft & disorder over 600 of them because they had been can countries are affected, too. In 2019 Lei Source: World Bank unfinished for so long. Dakar’s skeletal lani Farha, then the un’s special rapporteur structures illustrate many of the reasons on housing, fretted that in Nigeria the why unfinished buildings are so com rather than being put into a business or thousands of buildings that stood empty mon—and the costs of this problem. bank where it could earn a return which were used to launder money. Putting up walls is not cheap. The con could allow wouldbe homeowners to More money in the financial system crete and materials for a fivestorey apart build more rapidly later. The lack of liquid and less idling in unfinished buildings ment building cost hundreds of thousands ity in the financial system then further would help business and aspiring home of dollars. Senegal is desperately short of limits what banks can lend to builders. owners alike. That would require improve finance. Around 40% of firms say access to Only 33% of subSaharan Africans had a ments to taxes and regulations, expanded cash is their biggest obstacle, compared bank account in 2017. Many are suspicious access to banking services, and clearer with 14% in the rest of the world. Across of financial instruments. “Here it is mine, property rights. In Senegal the government subSaharan Africa it is businesses’ largest it is more secure,” says Mansour, a resident is starting by trying to make borrowing problem (see chart). Savings are low and of Dakar, pointing to the house he is build more affordable by giving banks guaran bank lending is limited. Yet money is still ing. In countries with high inflation, sav tees on home mortgages. Meanwhile, few poured into buildings which earn nothing ing in concrete is particularly appealing. Senegalese can predict when their homes for years. Whatever the pop star Pharrell And investments in buildings often escape will be finished. “That depends on God,” Williams says, few prospective tenants feel the notice of African tax collectors, since says Mansour, as he places one more cin like a room without a roof. enforcement is weak. der block in the wall. n What is going on? Start with the lack of Pouring concrete makes sense for other finance. Many Senegalese developers reasons, too. When you start building the struggle to obtain loans without hefty col neighbourhood respects you, says Cheikh lateral. Instead, some start building, hop Abdoul Faty, who has been trying to finish ing to tempt buyers to put down deposits the second floor of his home in Dakar fora on flats and then use that to help finance decade. “If you have millions in the bank, the rest of the building. But buyers are wary people do not see it,” points out Mamadou of making a commitment based on a con Diagne, a consultant. If you just start build struction site. These unfinished projects ing they “appreciate you more”. Relatives often tie up prime land, too. are also more likely to pitch in to help you For Senegalese hoping to build their finish, once construction has started. own homes, mortgages are rare. In all they Halfbuilt walls also offer protection cover only about 20% of the need. Across from grasping cousins. In much of Africa, many African countries even the cheapest social pressure to help even distant kin is newly built house is unaffordable for most high. Mr Faty sends money to his mother people. Instead, people break ground every month. However, by putting the rest knowing they do not yet have the funds to of his spare cash into plaster and tiles he finish. When they earn a little more money sidesteps some requests from other rela they add more bricks. tives. “If you have money in your pocket, The shortage of finance makes a vicious under your bed or in the bank you have to circle. Many Africans, in effect, save in go and take it and help them,” explains Mr concrete. Thus money gets tied up for years Diagne. “But if you put it in your concrete,” in unfinished buildings earning nothing, he says, “you can say you have no money.” When you grow up, son, this may be done Europe The Economist May 1st 2021 41
Turkey and Armenia Karabakh war removed obstacles to recon ciliation. (Turkey backed Azerbaijan’s ter Caucasian knot ritorial claims, and now deems them more or less settled.) However, he says, “if Arme nians continue to antagonise Turkey, forc ing the Americans to recognise genocide, then this is not going to go anywhere.” Turkey closed its border with Armenia BAKU, ISTANBUL AND YEREVAN in 1993, out of solidarity with Azerbaijan. The genocide a century ago is just one reason the two countries cannot reconcile Reopening it would relieve tensions with oth past and present haunt relations 24th, when President Joe Biden formally Armenia “in a dramatic way”, Nikol Pashi Bbetween Turkey and Armenia. A centu declared the killings and deportations of nyan, Armenia’s prime minister, told The ry ago, Ottoman troops carried out a geno over a million Armenians by Ottoman forc Economist in March. Armenia, he also said, cide of Armenians. A few months ago, Tur es in 191517 to have been a genocide. Most would be ready to establish relations with key helped Azerbaijan defeat Armenia in a historians agree with Mr Biden, but previ Turkey “without preconditions”. Mr Pashi war. For decades, the border between Tur ous American presidents have usually nyan, who was pilloried for losing the war, key and Armenia has been closed. avoided saying so to avoid upsetting Tur resigned on April 25th in order to trigger Yet in December Turkey’s president, Re key, which furiously denies that the kill early elections. cep Tayyip Erdogan, held out hope of “a ings were as widespread or systematic as If there were a broad regional settle new era” in TurkishArmenian relations. the evidence suggests they were. Turkey’s ment, “everybody would win”, says Ahmet The unlikely setting was a military parade foreign ministry called Mr Biden’s state Davutoglu, a Turkish former prime minis in Azerbaijan celebrating victory over Ar ment “a vulgar distortion of history”. ter. Opening borders would help stabilise menia. Using Turkish arms, Azeri forces Turkey’s ties with America may not suf the entire Caucasus, offer Armenia, the re had just recaptured parts of NagornoKara fer much. With its shaky currency, Turkey gion’s poorest country, access to markets bakh, an enclave populated and controlled cannot afford another crisis with its nato in Turkey and beyond, and connect Turkey by ethnic Armenians, and some adjacent ally. But Turkish officials suggest their to the energyrich Caspian Sea and Central districts that had been occupied by Arme country’s offer of detente with Armenia Asia. Mr Davutoglu, who now heads a small nia for three decades. Army convoys rolled may be a casualty. Ilnur Cevik, an adviser to opposition party, was foreign minister past Mr Erdogan and the Azeri president, Mr Erdogan, says the end of the Nagorno when Turkey and Armenia came close to Ilham Aliyev, displaying the wreckage of normalising diplomatic ties in 2009. The Armenian tanks, as well as the Turkish process foundered after a backlash from → Also in this section drones that had pounded them into the nationalists in both countries. Those in ground. Mr Erdogan hinted that Armenia 42 Poland’s fragmented opposition Turkey blocked any deal unless Armenia might have learned a lesson from its de withdrew from NagornoKarabakh. Those 42 The church in secular Spain feat, and later suggested that Turkey could in Armenia demanded that Turkey recog open its border with Armenia. 43 French geeks v bureaucrats nise the bloodshed of 1915 as genocide. Nothing of the sort has happened. On Western diplomats have long believed 44 Charlemagne: Integration by stealth the contrary, tempers flared again on April that a settlement between Turkey, a nato 42 Europe The Economist May 1st 2021
Poland Partly, this may be because Civic Plat RUSSIA form is split. The recent focus on abortion The rule of Law has exposed deep divisions. Some of its Black Sea Caspian politicians want to return to the previous GEORGIA Tbilisi Sea and Justice ban on abortion that was slightly less dra ARMENIA AZERBAIJAN conian; others want to loosen the rules Ankara Yerevan Baku much more. WARSAW TURKEY Nagorno- Still, Law and Justice faces challenges of AZER. A divided opposition lets the governing Karabakh its own, not limited to the pandemic. Rela party dominate tions with the ruling party’s coalition part IRAN SYRIA wenty years ago, in January 2001, Do ners, the even more socially conservative IRAQ Tehran 300 km Damascus Baghdad Tnald Tusk cofounded the centrist Civic United Poland and the economically liber Platform party. It governed Poland reason al Agreement, remain strained, prompting ably well for eight years from 2007, with Mr speculation about early elections. Jaroslaw power, and Armenia would diminish Rus Tusk as prime minister for seven of them. Kaczynski, Law and Justice’s veteran lead sia’s influence in the Caucasus. Today the Its winning streak ended in 2015 with the er, says he is determined to keep a coalition opposite may be true. Instead of pulling victory of the populist Law and Justice par going until the end of the current parlia Armenia into the West’s orbit, normalisa ty, which was also founded in 2001. Since mentary term, though he “does not rule tion could draw Turkey deeper into Rus coming to power, Law and Justice has out” early elections. If the coalition sur sia’s. “Russia’s plan is to have an open bor tightened its hold on Poland’s institutions. vives, the main parties still have time to get der between the Eurasian Economic Union It now controls the presidency and the their house in order before the next general and Turkey,” says an Armenian rulingpar lower chamber of parliament (the opposi election, which is due in 2023. Will they?n ty mp, referring to a Russianled trade bloc tion has a slim lead in the upper chamber) Armenia joined a few years ago. Turkey it and has taken over the public media and self, having learned to cut deals with the key courts, provoking a conflict with the Religion in Spain Kremlin, does not look keen nowadays to European Commission over the rule of law. help Western interests in the Caucasus. It has also imposed a socially conserva Empty pews, Russia may have as big a say in the con tive agenda. In October the constitutional ciliation process as Turkey and Armenia tribunal dominated by Law and Justice big pulpit themselves. Russian troops have patrolled ruled that women could no longer cite se the Armenian side of the border with Tur vere fetal defects as a reason for an abor MADRID key ever since the fall of the Soviet Union; tion. Massive protests erupted. Yet, to lib The church’s influence lingers but a Armenia would doubtless insist that they erals’ dismay, the opposition keeps losing. changing society is weakening it continue to do so. “Armenia is more locked Mr Tusk appealed to Poles by offering in Russia’s orbit than ever before,” says what he called the policy of “warm water in espite pandemic restrictions and Richard Giragosian, an analyst. “Normal the tap”, a focus on gradually raising living Ddamp weather, on Good Friday evening isation with Turkey will only deepen this.” standards with the help of eu funds, of several hundred people queued to enter As good as it may look on paper, a re which Poland has been the largest net ben the Basilica of Jesús de Medinaceli in the gional settlement seems as elusive as ever. eficiary, rather than on grand ideological centre of Madrid to pay their respects to a Some Armenian officials cautiously wel projects. Yet its appeal wore thin. Law and 17thcentury image of Christ. Most of the come the prospect of direct trade with Tur Justice won the parliamentary elections in worshippers were over 40, but there were key. But much of the political class and 2015 by courting voters, especially those some younger couples. The Christ of Medi society at large seem unready for any kind outside cities, who felt left behind by the naceli is “very important for madrileños”, of engagement. Some also fear that detente social and economic changes since the col said Magdalena, a regular worshipper. She with its powerful neighbour would force lapse of communism in 1989. added: “They say Spain is not a Catholic Armenia to relinquish its claims to Nagor Since Mr Tusk left Poland in 2014, ini country any more, but it’s a lie.” noKarabakh. In a country of barely 3m tially to head the European Council in people, which remains shaken by the war, Brussels, his party has failed to find a lead fear of Turkey is greater than in recent er capable of delivering similar victories. memory. “This was a war that was triggered Eyes have been on Warsaw’s liberal mayor, by Turkey, instigated by Turkey and man Rafal Trzaskowski, one of Civic Platform’s aged by Turkey,” says an Armenian official. deputy leaders, who narrowly lost last “There is no confidence.” year’s presidential election to Andrzej Du Turkey and Azerbaijan have not exactly da, the incumbent. Liberal mayors of cities sounded reassuring. During that victory across Poland have rallied around an parade in Azerbaijan, Mr Erdogan praised emerging movement headed by Mr Trzas Enver Pasha, one of the architects of the kowski called Shared Poland. genocide. Mr Aliyev recently presided over Yet Civic Platform faces a new rival for the opening of a ghoulish “Spoils of War” centrist votes: Szymon Holownia, a former theme park, featuring mannequins of televisionshow host who came third in wounded Armenian soldiers with hooked last year’s presidential election with 14% of noses and grotesque faces, along with the vote. A Roman Catholic, Mr Holownia neatly arranged helmets of Armenians is courting Poles frustrated with the killed in the war. How to square such dis church’s ties to politics. His movement, plays with Azerbaijan’s offers of peace is a Poland 2050, proposes to separate the puzzle. What Mr Erdogan and Mr Aliyev are church from the state. In April it was for offering Armenia looks less like an olive mally registered as a party. Recent polls branch than the short end of the stick. n suggest it has overtaken Civic Platform. Still with us The Economist May 1st 2021 Europe 43
Certainly it is a paradox. In the past four decades of democracy Spain has become a France and covid-19 secular society with astonishing speed, Geeks v bureaucrats perhaps faster than anywhere else in Eu rope. But the Roman Catholic Church re PARIS tains considerable influence in some areas France’s data scientists upstage its administration of national life. In fact, that is unsurpris ing. In no country in Europe was the hen the pandemic broke out, a Other new sites, such as Covidliste or church as powerful for many centuries as it W23yearold French data scientist Covid Anti Gaspi, match unused vaccine was in Spain. Its power provoked militant was working in his bedroom at his par doses in fridges to willing takers nearby. anticlericalism in a cultural conflict that ents’ house in a Savoyard valley. Guil “How”,an astonished talkshow host was one of the roots of the Spanish civil laume Rozier began to plot, and tweet, asked Mr Rozier, “have you managed to war. Not coincidentally, the dictatorship of cases of covid19 in Italy against those in create this system that the French ad Francisco Franco embraced “national Ca France. His data analysis swiftly became ministration hasn’t?” tholicism” as its official ideology. But after a popular covid19tracking site. This Mr Rozier, whose site is nonprofit, the Second Vatican Council of 196265, sec April it spawned “ViteMaDose” (Quick says he saw the need when struggling in tions of the church began to oppose the MyJab), a website that in two clicks scans March to get an appointment for a rela dictatorship. Agreements linked to the disparate French health sites for scarce tive. France’s health system is fragment constitution of 1978 separated church and vaccination slots. It now draws 2m3m ed, with no centralised booking; vaccine state, but acknowledged Spaniards’ reli views each day. deliveries are patchy. He crowdsourced gious faith. France’s geeks are taking on its help to refine the algorithm and design. Since then, public attitudes have mighty bureaucrats. Armed with sim “Lots of people contact us to say thanks changed fast. Religious observance has de plicity, clarity and algorithms, they are for helping find appointments,” he says. clined steeply, especially among the defeating the administration’s fondness “That’s really cool.” young. Surveys find that although 82% of for complexity, confusion and rules. France’s 5m bureaucrats are masters respondents identified as Catholic in 2001, of the art of convolution. When the only half do now. Only around a fifth of government started a new lockdown in Spaniards go to mass regularly—though March, they devised a twopage permis that still amounts to almost 10m people. sion form to leave home, with 15 different Not only has the number of marriages each justifications, before shelving it in the year declined in the past decade, despite a face of ridicule. Current rules mix preci growing population, but in 2019 only a fifth sion with farce. The French can buy of weddings were in a church. alcohol, for instance, but not underwear. The church has lost its grip over public President Emmanuel Macron is trying morality, too. Divorce was legalised in 1981. to overhaul the administration. He is Thereafter, Socialist governments legal abolishing the elite École Nationale ised abortion, gay marriage and stemcell d’Administration. Cédric O, his digital research. In March Spain became only the minister, is piloting the European Un fifth country in the world to legalise eutha ion’s first digital health certificate, for nasia, by a parliamentary vote of 202 to 141. travel to Corsica. But bureaucrats are Although conservative parties opposed generally better at devising rules and these steps, many of their voters do not, collecting information than making notes Julia MartínezAriño, a sociologist. either comprehensible. Allez les geeks. And yet in some ways Catholicism re mains woven into the fabric of Spanish life. Although there is no longer a Catholic but one that is sometimes questioned. some cases without legal title. In France party, “it is what feeds Spanish political “The church invades the public space, and Portugal church buildings are owned culture”, says Pablo Hispan, an mp for the laws, budgets and education,” says Juanjo by the state. “There’s an entente cordiale” conservative People’s Party (pp). Almost Picó of Europa Laica, a pressure group. between church and state, says Mr Picó. every Spanish town has its religious pro Education is the most neuralgic issue. “We have to move to a real separation.” cessions, and an annual “patronal festival” Campaigners on the left want religious in The scandal of paedophile abuse by with an official mass in which the mayor struction dropped as a curriculum subject; priests has had less impact in Spain than it joins the priest. It is not rare to find cruci it is optional, but around half of children in has in some other countries. El País, a fixes in public buildings. The church state schools take it. Conservative parents newspaper, has tracked down 364 cases in wields particular influence in social wel are alarmed at “gender ideology”, sex edu volving 872 victims. The bishops have car fare, education and the management of cation which they think encourages homo ried out no official investigation. heritage. Caritas, a Catholic charity, has sexuality, transgenderism and feminism, Some in the church fear a new anticler helped to feed hundreds of thousands dur although not much of this actually takes ical assault. Its critics “don’t see the church ing the pandemic. Churchrun (but public place. A law that was approved by Pedro as a religious entity but as a political enti ly subsidised) schools still educate around Sánchez’s leftwing coalition government ty”, says José Francisco Serrano, a Catholic a quarter of Spanish children. And the last year makes it harder to set up new journalist and historian. That may be so, church manages thousands of historic churchrun schools. That prompted de but appetite for the battle is restrained. A buildings. All this may be why a third of monstrations. The pp defends “freedom of new generation of bishops is seeking a less taxpayers choose to donate 0.7% of their choice” in schooling. public profile, concentrating on strength income tax to the church, without increas Campaigners for a lay state say the place ening ties with the faithful. And the go ing their total tax bill. The church’s haul for religion is church, not school. They verning Socialists show little desire for an from this was €284m ($318m) in 2019. complain that the church has registered its open confrontation with the church. “The It is an apparently stable compromise, ownership of some 20,000 buildings, in road is a long one,” sighs Mr Picó. n 44 Europe The Economist May 1st 2021
Charlemagne Shh! A silent centralisation
The European Commission is becoming more powerful, albeit quietly Even where the commission messes up, it manages to emerge more powerful. The commission took the lead in ensuring that the supply of vaccines did not descend into an undignified brawl among eu countries. Although it avoided a fight, it was less suc cessful in securing supplies. When vaccines did arrive, Europeans watched as America—whose health system is seen in Europe as barbaric—jabbed its citizens more quickly. Diplomats fault the ex ecution, but not the idea of having the commission in charge of such a situation. Angela Merkel, still the most influential leader even as she leaves the stage, wants the eu and by proxy the com mission to have a bigger role in health care. Health crises—by their nature, lifeanddeath issues—are now dealt with at the European level, in a shift that may well continue. Longerterm plans will see more power handed to Brussels. It is easy to dismiss the eu’s “green deal” as a gimmick. In fact it is a threedecade project that will upend the continent, in much the same way that the single market did from the 1980s. To make Eu rope climateneutral by 2050, the commission will overhaul en tire markets and industries. This shift is already happening. Deci sions such as whether nuclear or gas technology will qualify as “green” will be taken by the commission, sometimes with only a supermajority of member states able to overrule it. Whether russels is at its noisiest when things are at their worst. Ursula France can splash out on another generation of nuclearpower Bvon der Leyen, president of the European Commission, clangs plants will be settled in Brussels as much as Paris. Environmental from crisis to crisis. The year began with a botched ban on vaccine policy was shunted to the eu level in the 1970s and 1980s when it exports that triggered a row over Northern Ireland and scotched was a fringe issue; now it is an existential problem facing every the eu’s freetrading reputation. Her office sent a bizarrely dismis government. But it is Brussels rather than the 27 national capitals sive message to the president of Ukraine after he invited Mrs von that will lead the continent’s response for the next 30 years. der Leyen to an independence day celebration while Russian troops massed on the country’s border. Those with kind words Slapstick integration about the president’s leadership keep quiet; those who think she is A powerful centre has emerged under ostensibly weak leadership not up to the job are loud. Beneath the brouhaha, a change is afoot. before. When Jacques Delors was the commission’s president, he Under the maligned Mrs von der Leyen, the commission is becom oversaw the introduction of the single market and set the path to ing more powerful. the euro between 198595. Little was expected of the Frenchman Some new powers stem from crisis. A plan to dish out cash to when he took office. The then European Economic Community struggling governments has left the commission as a prototrea (eec) was stuck in a rut. (A few years before, The Economist had sury, signing off economic policy and handing out money. In ex published a front cover with a gravestone marked “eec Born change for a share of €750bn ($895bn) in grants and loans, eugov March 25th 1957/ Moribund March 25th 1982.”) Like Mrs von der ernments must overhaul their economies in line with Brussels Leyen, he had not run a government before. And like Mrs von der approved plans. It is a familiar scheme. During the eurozone cri Leyen, Mr Delors was shunted to Brussels only after his domestic sis, the commission demanded wrenching reforms from stricken political career had been written off by a powerful ally: François countries in exchange for bailout cash. Except that now all coun Mitterrand in the case of Mr Delors and Mrs Merkel in the case of tries are in the same boat. In a development that would make the Mrs von der Leyen, who had once been tipped as a possible future psychological conditioners in “A Clockwork Orange” cheer, those chancellor. Mrs von der Leyen was chided for being too close to countries that had experienced such a programme knew exactly Paris; Mr Delors, to Berlin. what to do. Efforts from Spain and Greece, both bailout veterans, After ten years of Mr Delors, a radically different eu had were highly praised. Draft proposals suggested by the German emerged. Luck rather than leadership has always been more help government, which is more accustomed to prescribing economic ful in running the European Union. Mr Delors benefited from na medicine than taking it, were initially knocked back. tional leaders willing to cede power to the burgeoning centre. Brussels has long begged countries to reform. Yet outside a Likewise, circumstance rather than political skill has led to Mrs bailout programme, it has never had the clout. Each year, the von der Leyen’s commission taking more power. National leaders commission comes up with wellmeaning suggestions for nation are, once more, happy to hand over sovereignty to Brussels, if it al governments, which are almost always ignored. Now the com means prosperity and health. Mr Delors was loud and proud about mission can in theory turn the cash taps off if planned reforms are his plans for a deeper eu. Indeed, he was often too noisy, giving not done. Although the €750bn recovery fund is a oneoff, com speeches about his dreams of a federal Europe that made Mitter missioners such as Paolo Gentiloni, the Italian overseeing the rand splutter, never mind Margaret Thatcher. Today, eu leaders— scheme, suggest that the mechanism could be used again. Tem whether in Brussels or in national capitals—are altogether more porary measures can easily become permanent, as anyone who shy about the realities of European integration. Yet it is still hap pays income tax will appreciate. At that point, the prototreasury pening, sotto voce. Integration by stealth is never healthy. Better, it becomes a real one. seems, to shout about it. n Britain The Economist May 1st 2021 45
→ Also in this section 46 Testing sewage for covid-19 47 The SNP’s poor record 48 Bagehot: Sleaze and sofas
Read more from this week’s Britain section: Economist.com/Britain
Upcoming elections the polls in the next election could pro duce big gains or losses. It’s all happening in Hartlepool Hartlepool will offer a clue as to wheth er Mr Johnson’s revolution has stalled, or still has further to run. For 12 years the town was represented by Peter Mandelson, an architect of New Labour. Its loss would mean more than half the constituencies HARTLEPOOL represented by members of Tony Blair’s Brexit is done, covid is jabbed, and the pubs are open. Sleaze is not an issue cabinet of 1998 are now in opposition hey’ve been more or less locked up hardest. “I’d be astonished if Labour don’t hands. Sir Keir Starmer’s leadership of the “Tfor nearly six months, so they’re just win it,” says Robert Hayward, a Tory peer Labour Party would be thrown into crisis; going daft,” says Tim Fleming, 68, the land and psephologist, who notes that govern supporters of Jeremy Corbyn, his predeces lord of The Cosmopolitan, up on the head ments rarely gain seats in byelections. sor, itch to declare him a failure. land overlooking the North Sea. The beer There are plenty of reasons for voters to Tory campaigners think the result will garden has been busy since England’s lock shun the Conservatives and elect a Labour be close, although it’s hard to judge the ter down was relaxed on April 12th to a spell of mp, as the town has at every election since rain precisely, as lockdowns have prevent fine weather, and weekday takings look 1964. The covid19 pandemic has killed ed parties everywhere from canvassing more like those of a weekend. 127,000 Britons, including 252 in Hartle their voters for the past year. Brexit re Mr Fleming used to be a town council pool, a town with a population of 94,000 mains an asset. Hartlepool voted 70% in fa lor for the uk Independence Party, and in which has high levels of obesity and lung vour of leaving the eu, and in 2019 Nigel recent years has sat with a small indepen disease. It has created the deepest down Farage’s Brexit Party secured 10,603 votes— dent group. On May 6th Hartlepool will turn for 300 years. Mr Johnson, in an ugly three times Labour’s lead over the Tories. hold a byelection for a new mp, and he feud with Dominic Cummings, his former The question is whether those voters will plans to vote Conservative for the first time aide, is accused of saying he was prepared turn up again; if they do, polls suggest they in his life. “The vaccine was a master to “let the bodies pile high” to avoid a lock will mostly go to the Conservatives. Tory stroke. It’s pulling us out, when the rest of down, and of a secret deal with party do leaflets warn that Paul Williams—the La Europe is still in the mire.” nors to refurbish his flat to the tastes of bour candidate, a family doctor and a for It will be an unusually busy polling day, Carrie Symonds, his girlfriend. mer mp for a nearby seat—worked against as last year’s scheduled elections were In the 2019 general election Mr Johnson Brexit, and cannot be trusted. postponed because of covid19. Depending flipped around four dozen Leaveleaning Europe carries risks for Mr Johnson na on where they live, Britons may vote for seats in northern England, the Midlands tionally. If he talks too little about it, the new councillors, a regional mayor, and a and Wales, including Hartlepool’s near Tories’ new Brexiteer voters may drift police and crime commissioner. Scotland neighbours of Redcar, Darlington and Sed away. If he bangs on too much, those who and Wales will elect new devolved parlia gefield. More lie still in Labour’s hands, on simply wanted the divorce “done” after ments. For the Tories, Hartlepool is the shrunken majorities. The Conservative years of discord become aggrieved. The To most glittering prize, and perhaps the vote is spread thinly too, so a small shift in ries risk reenacting Leonid Brezhnev’s Red 46 Britain The Economist May 1st 2021
Square parades, imploring exhausted Mr Johnson’s most remarkable feat is workers to defend the October revolution emerging from a pandemic, in midterm, long after the last tsarist is dead. For now, with his polling in the low 40s—a little shy Mr Johnson is getting the balance right: of where it stood at the general election. He polls suggest he has largely held on to his is enjoying a long and deep bounce from Brexiteers, while winning over a handful the vaccine, says Lord Hayward: 72% of of Remainers. “He’s in the sweet spot,” says voters, and 82% of Brexiteers, approve of Chris Curtis of Opinium, a pollster. Voters’ the government’s handling of the pro identities as members of Brexit tribes have gramme. Dr Williams says credit belongs markedly softened since the political con to the nhs, and finds the government’s vulsions of 2019, but they are still stronger plaudits a little galling after so many mis than party allegiances. Only one in ten takes. “I had to make my own ppe,” he says. think Britain’s relationship with Europe is Ms Symonds isn’t the only one picking now fully settled. out curtains. “Consumers are champing at Mr Johnson has managed to persuade the bit to spend,” says Oxford Economics, a the public that, although the Conservative consultancy. Clothes sales have jumped. Party has been power for 11 years, under The consensus forecast is that the econ three prime ministers, he leads an energet omy will grow by 5.7% in 2021, the fastest ic new administration. That feat eluded Sir annual pace in decades. Hartlepool’s de John Major and Gordon Brown after simi cayed high street is mostly shuttered, but A rich resource lar tenures. In Hartlepool, the Tories cast the big retail park is busy, and there’s a themselves as insurgents taking on a ne stream of Deliveroo drivers at McDonald’s. pening on a large scale in Britain. When glectful Labour establishment. Money Mr Johnson has been predictably illsuited the pandemic began, it was not clear helps. Locals rave about Ben Houchen, the to a crisis, but as a goodtimes prime min whether coronavirus particles would ei Tory mayor of Tees Valley, whom they cred ister, who splashes a little cash and opens ther be shed in faeces or survive in sewage. it with bringing jobs to the port to the the pubs, he excels. “He’s a positive guy try It was therefore not clear whether it could south of the constituency. ing to get things done,” says Mr Fleming. be mapped in this way. A preliminary trial Mr Johnson’s “levelling up” agenda “You don’t get any positive vibes off Starm begun in March 2020 at six wastewater shows little by way of methodology, be er. It’s like he’s fighting for his life.” n treatment plants in Wales and northwest yond pushing cash to his new seats. Tory England showed that it was frequently leaflets say Jill Mortimer, their candidate, shed—and that it could be mapped. (Simi is the best person to negotiate with minis Sewage lar trials on sewage have taken place across ters for investment, and Mr Fleming has the world, and routine wastewater analysis taken the hint. “If there’s a Conservative Pond dipping is now being carried out in a few coun government, and a Conservative mayor, tries.) Now over 4,000 samples are pro we’re not going to get any money if we’ve cessed each week in Britain. got a Labour mp,” he says. Dr Williams, who Testing sewage has many advantages. has promised to reopen a closed criminal For one thing, it is easier to handle than BANGOR court, says his challenge is convincing vot people, who require expensive testing cen Sewage offers a quick and cheap way to ers that blame for cuts to local services lies tres, staff to perform the tests and the incli map a nation’s infections with the government, and not Labour, nation to turn up for them. Stools are much which has controlled the council on and he sound is that of an Alpine stream. less demanding: to get a sample from a off since the 1970s. TThe smell is not. On a bright spring day, sewer you merely need a bucket and a Labour hopes sleaze and infighting ages Davey Jones, professor of environmental stick. It is cheap, quick—and pleasingly in Mr Johnson as it did Sir John. Certainly science at Bangor University, stands above clusive. Not everyone will go to a testing polls suggest that voters think him more a surging torrent of sewage. He holds a centre. Everyone goes to the toilet. corrupt than Sir Keir. But drinkers at The bucket on a stick which he lowers into the Wastewater analysis could, says Sally Cosmopolitan are unmoved, and think Mr torrent then, as rich gusts of smell drift Davies, uk Special Envoy on Antimicrobial Johnson a character, and more reliable past, gingerly lifts it out. He holds the Resistance and an advocate of the art, “be than “bitchy” Mr Cummings. bucket up to the light and examines his gamechanging”. It has already changed catch, as a child might when ponddip things. If you know where to look, then ev ping. “Some identifiable bits of object in ery day across Britain you can spot people Tories soaring there.” He peers closer. “Looks like some with buckets on sticks and a purposeful Britain, voting intention, % sweetcorn floating around.” air, ponddipping in the nation’s excreta. Boris Johnson becomes prime minister 60 Civilisation, it has been said, is the dis In Nottingham and in Newcastle, in Liver General election tance humanity has placed between itself pool and in Manchester, scores of manhole 50 Conservative and its faeces. But civilisation now needs covers are being lifted; hundreds of buck to get a lot closer to its faeces. Because as ets dipped; thousands of samples re 40 well as sweetcorn, sewage also contains moved. (More expensive automatic sam Labour 30 coronavirus. In every litre of wastewater plers are also widely used.) that flows through Britain there are cur These samples, their colour ranging 20 rently around 1,000 coronavirus particles. from a discreet eau de Nil to rat’sback Liberal Democrat 10 At the peak of the January wave, each litre dark, are then bottled. The colour depends contained between 100,000 and 10m. Take on many factors, from contamination with 0 data like these, plot them on a map, and industrial effluent, to rain (which dilutes 2019 20 21 you have a snapshot of a nation’s infection. samples), to the time of day. Samples taken Sources: BMG; Deltapoll; Ipsos MORI; Kantar; NCP; Opinium; Sewage mapping—or to give it its grand at lunch—which reflect the postbreakfast Redfield and Wilton; Savanta ComRes; Survation; YouGov name, “wastewater analysis”—is now hap rush filtering through the system—are The Economist May 1st 2021 Britain 47
some of the richest. All samples are ana scriptions,’” he reports. The downside of lysed in labs, including one which Dr Jones putting the universalist principle into runs in Bangor, to produce a map of the na practice is that the state ends up spending tion’s infection. If a surge in infection is a lot of money on rich Scots. spotted, surge testing can then be conduct The snp hints at radicalism after inde ed in the area. Wastewater analysis is not pendence. Its manifesto supports a univer sufficient in itself. But it is, says Dr Davies, sal basic income and commits to study a “a cheap way of raising a flag and saying fourday week. But when it comes to things ‘There might be something going on here, in the party’s gift, it is less willing to sweep let’s have a look’.” away the old order. Over the past decade, Tracing diseases along water systems is spending on most public services has risen not new. Epidemiology was spawned in the relative to England. This generosity has, sewer when in 1854 John Snow, a London though, been funded by slower growth in doctor, plotted cholera cases on a map and spending on the health service, rather than realised that the disease was being caused taxation. The Institute for Fiscal Studies, a not by airborne “miasma” but by a water thinktank, finds tweaks to income tax will pump contaminated with sewage. Nor will raise just £117m more in 202021, equiva it end with this pandemic: before 2020 lent to 1% of the additional covid19 fund wastewater analysis was already being ing Holyrood received. used to monitor illegal drugs and polio. Sturgeon gets some love in Dumbarton Higher funding means there are more Now, it is hoped it will expand to include teachers and doctors north of the border, not just coronavirus but everything from Still, he says from behind a saltire face but selfgovernment has not led to great the next potential pandemic to antimicro mask, he will vote for the Scottish National improvements in standards. Before the bial resistance. Party (snp) in elections on May 6th. last election, Ms Sturgeon asked to be Given how long the power of sewage The snp has long married the fight for judged on whether she had improved has been understood, it feels surprising independence with the promise of effec schools. She promised legislation to trans that this rich datastream was, until re tive, socialdemocratic government. Dum fer power from local councils to head cently, merely being flushed down the toi barton, the country’s most marginal con teachers—only to shelve it in the face of let. Partly the problem was size. Dr Snow stituency, could tip the balance between opposition. She has pulled Scotland out of was counting corpses, which are at least success (the most seats in the Scottish Par two big international tests, citing “teacher easy to spot. Modern analysts are counting liament) and triumph (a majority). Either workload”. Having dropped considerably, coronavirus particles, which are tiny: it way, the party will head an administration performance in pisa tests, in which it re would require at least 2,500 coronaviruses responsible for public services, and with mains, shows little sign of improvement. to span the full stop printed at the end of sway over taxation, as it has for the past 14 On waiting times, nhs Scotland per this sentence. The other problem is inertia. years. It is a perch from which to sketch a forms a bit better than England’s version. The knowledge to run a national pro vision of an independent Scotland—or as But patient satisfaction is similar, health gramme of analysis might have been there Ms Sturgeon, Scotland’s first minister, has outcomes are worse and the government before, but the money to roll such things put it, invoking Alasdair Gray, a local writ has been slow to respond to a drugdeath out can rarely be found. “Until,” says Dr er, “to work as if we are indeed living in the rate higher than anywhere in Europe, and Jones, “literally the shit hits the fan.” n early days of a better nation.” even than America’s. Throughout the pan Part of this is about exhibiting the sort demic, Ms Sturgeon has sought to draw at of good governance not always found in tention to differences between London Scotland Westminster, as when the snp tweaked and Edinburgh when, for instance, keep universal credit to ease its introduction in ing restaurants closed for longer in the Peely-wally Scotland. Yet the party hopes to offer more summer. Polling shows this has worked for than mere competence. The idea, Ms Stur her. On the big calls, though, such as when geon has said, is of a Scotland “where we to lock down, the two administrations took look out for one another in a spirit of sol similar decisions. Scotland’s death rates idarity” (the unspoken contrast is with a are lower than England’s, but higher than DUMBARTON more redintoothandclaw England). snp Enthusiasm for the snp does not Northern Ireland’s. politicians criti One way the snphas done this is by making reflect its performance in government cised Westminster’s decision to skip the tax and benefits a bit more progressive. Its eu’s vaccineprocurement scheme. n the bright afternoon sun, local resi trademark, though, is the provision of uni In another age, the snp might suffer Idents trickle out of Dumbarton’s Con versal services. The Barnett formula dis from what Jane Green and Will Jennings, cord Centre. The ramshackle exterior be tributes funding to Scotland’s advantage, two political scientists, call “the costs of lies a smooth operation inside. Each has allowing Ms Sturgeon’s government to government”—the gap between campaign received a second covid19 jab (or “jag” as it spend £7,612 ($10,579) per person each year. promises and perceptions of achieve is known locally). Who deserves the credit? That is 27% more than in England— ments—but there is little sign of that now. In truth, the government in London, enough for free university, adult personal In Dumbarton Jackie Baillie, Labour’s msp, but that is not how many locals see it. As care, prescriptions and, soon, primary says that it is hard to draw voters’ attention Billy, a justvaccinated pensioner, puts it, school meals and dentistry. to the state of public services. One reason referring to Scotland’s first minister: “Ni Such universalism is popular on the is covid19. “Anything that happened be cola Sturgeon has done a fantastic job.” Ip doorstep, says Toni Giugliano, the snp’s fore March…is being scrubbed out of the sos mori, a pollster, finds that while 27% of candidate in Dumbarton. “People who reckoning,” suspects Sir John Curtice of the Scots think Westminster has managed the have made Scotland their home from south University of Strathclyde. The other is in pandemic well, 64% think the Scottish of the border…are more likely to say to me, dependence. When elections become ref government has. Rare dissent comes from ‘Gosh, we don’t have to pay £9,000 for tu erendums on the future of a country, vot a man angry that his pub remains closed. ition fees. We don’t have to pay £10 for pre ers do not pay attention to much else. n 48 Britain The Economist May 1st 2021
Bagehot Domestic politics
The best way to avoid Downing Street sleaze may be to pamper the prime minister a bit more ain’s greatest liberal prime minister, prided himself on “saving cheese parings and candle wax in the cause of the country”. British prime ministers have no need to embody the majesty of state: that’s the queen’s job. Whether the prime minister really needed to spend £58,000 on redecorating his Downing Street flat is doubtful. He is entitled to an annual allowance of £30,000 for refurbishment, but the work was carried out by Lulu Lytle, one of Britain’s most fashionable de signers. (The previous decor is said to have smacked of John Lewis, a department store popular with the British middle classes but not, apparently, with the prime minister’s household.) How close ly he was involved in browsing the rich colours and Moghulin spired fabrics in which Ms Lytle specialises has not been revealed; though since he does not have the look of a man who spends a lot of time thinking about sofas and sidelamps, his girlfriend, Carrie Symonds, is assumed to have taken charge. The prime minister seems to have managed the financing of the redecorations with his usual cavalier shiftiness. They were paid for last year by the Conservative Party, which had been given money for the purpose by a donor, Lord Brownlow. There was talk of setting up a trust for the purpose, but Simon Case, the cabinet secretary, told Parliament that “a charitable trust can’t cover priv ensible countries recognise that a leader’s time is a precious ate areas of Downing Street”. Mr Johnson is now said to have paid Snational resource. American presidents have everything laid for the work himself. Mr Case is reviewing the matter, and the on: expansive living quarters, Air Force One, a personal doctor, Electoral Commission conducting an investigation, which could cooks galore, along with a themepark’sworth of entertainment, end up with a criminal prosecution. including a swimming pool, a tennis court, a bowling alley and a Mr Johnson has already wasted a lot of his valuable time cinema. French presidents have the Elysée Palace, an ample do dreaming up financial schemes to pay for a redecoration which, by mestic staff, a personal doctor and chef—and, back in François the standards of most leaders’ makeovers, is rather modest. When Mitterrand’s time, a conveniently located flat paid for out of the Barack Obama and Donald Trump were in office $1.5m and $1.75m, public purse to house the presidential mistress and lovechild. respectively, was splashed out on the White House. He is now go Britain is equally sensible when it comes to the prime minis ing to be wasting even more time answering questions about ter’s public role: from the moment he wakes up he is surrounded these schemes. Given the importance of keeping the prime minis by officials to help him conduct the business of state. But when it ter’s attention on the job in hand—which, as anybody who has ev comes to his private life the taps are turned off. The accommoda er worked with him will attest, is a challenge at the best of times— tion is cramped. The domestic staff consists of not much more none of this is doing the country much good. than a cleaner. The most powerful person in the country has to queue up for lunch in a tiny cafeteria or else go upstairs to make a Game of sofas sandwich in his kitchen. After a day running the country he closes Britain’s prejudice against looking after its leaders properly also the door of his flat only to be faced with all the domestic duties— has a dark side, for it is of a piece with the enjoyment the nation laundry, cooking and personal admin—that fall to those unbur derives from pillorying those with the temerity to succeed. There dened with the cares of state. are times when the British public bears a worrying resemblance to Should the prime minister wish to lighten his domestic load, the citizens of Westeros, who pelt their queen, Cersei Lannister, he must do so at his own expense, which is particularly hard on with excrement when she is forced to walk the streets of the town the current occupant of Downing Street. Not only has he had more naked. This is hardly a recipe for encouraging the nation’s best to deal with of late than most—the split with his wife, a new baby people to go into politics, let alone for allowing them to focus on with his girlfriend, his neardeath from covid and a long convales the business of statecraft. cence alone in his flat—but he is also probably less flush than Britain’s system of government has become increasingly presi most. He has had to finance an expensive divorce (his second) and dential: exhaust or distract the prime minister and the whole six children (probably) on the relatively modest prime ministerial thing freezes. But it still bears the imprint of the old days when the salary of £160,000 ($220,000), while having lost his sizeable in prime minister was no more than primus inter pares and work come as a writer and speaker. ceased when he closed the door of his flat at night. The country Britain’s wariness about spending money on the prime minis needs to pay less attention to the arcane details of Mr Johnson’s ter’s personal needs stems from an admirable instinct: that politi furnishings and more to the challenge of modernising the system cians should be treated as normal citizens rather than as a privi that supports him: to create a blind trust to look after Downing leged caste. The country is right to rejoice in the fact that Mr John Street, to staff his residence so that he can focus on the state of the son was treated for covid19 in a National Health Service hospital nation rather than that of his shirts, and to raise his salary so that rather than in the presidential suite of a military hospital, as Do he does not need to worry about money. All this would provoke nald Trump was. Wariness also stems from the reasonable belief jeers and fury, but the country will benefit if it does a better job of that frugality should start from the top. William Gladstone, Brit looking after the man who is supposed to look after it.n International The Economist May 1st 2021 49
Diplomacy disrupted “Diplomacy has not stopped; it’s accel erated in some respects,” says Nicholas The Zoom where it happens Burns, a former ambassador, now at Har vard University. Communiqués have been agreed upon, resolutions passed, relation ships nurtured. In some respects dip lomats have probably never been busier. Hurdles have had to be overcome. At the Even more than most people, diplomats have had to adjust the way they work un, Russia has refused to accept anything during the pandemic. And as in other areas, this is accelerating change other than physical presence for the Secu hile assorted g20 “Sherpas”, offi foreign ministers for “covidsecure” talks rity Council, depriving virtual meetings of Wcials who do the donkey work on in London on May 3rd5th, it will be the formal status. That has slowed things summits, gathered in Dhahran in Saudi first time the group has met in the same down. Since the seats in the council are not Arabia in March last year, lockdowns were room since they did so in SaintMalo in sufficiently socially distanced, a system starting and international travel was stop France in April 2019. Current plans envis had to be worked out for voting by emailed ping. A scramble to get home began. But age that the full g7 summit in Cornwall in letters. With receptions and other forms of within weeks, after some teething troubles June, and a nato one in Brussels immedi entertainment ruled out, diplomats have with videoconference technology, the ately afterwards, will be inperson too. had to adapt. Instead of the usual dinner to Sherpas were conducting talks over Zoom In the meantime, a great experiment in mark their stint as president of the Securi and Webex, and their bosses were holding virtual diplomacy has been under way. In ty Council in February, for example, the a leaders’ summit by video. Diplomacy had February, for example, Joe Biden held his British distributed picnic baskets to other gone virtual. first summit meeting as president, with missions—placing an unusual amount of “For a long time we’ve been talking Justin Trudeau of Canada, by videoconfe diplomatic weight on Branston pickle and about the advent of digital diplomacy,” rence. Without leaving the White House, Fortnum & Mason tea. says Jonathan Black, Britain’s sherpa. “It he has since joined a virtual meeting of fel The main workarounds, however, have has really now arrived.” Over the past year low g7 leaders hosted in London in Febru involved not tea but technology. Zoom, Mi diplomats have all but abandoned big ary—cyberhopping across to Germany on crosoft Teams and other platforms have multilateral meetings in the flesh. The Un the same day to speak at the Munich Secu both enabled diplomacy to continue and ited Nations General Assembly (unga), rity Conference—as well as the inaugural opened new possibilities for efficiency and which normally clogs up New York for two summit of the “Quad” (America, Australia, reach. “We’re a lot better off now because weeks in September as thousands of dele India and Japan) in March. In April he of covid, in terms of diplomacy and media gates jet into the city, became a more mod brought together 40 world leaders on tion, because we’ve been forced to think est affair with leaders joining via screens. screen for a climate summit. Diplomats more carefully about how to do our job,” In the parts of the world that have se everywhere, accustomed to ceaseless fly says Martin Griffiths, the un’s special en cured vaccines “inperson” diplomacy is ing around the world, have spared the na voy for Yemen. “It’s a huge seismic change slowly restarting. When Dominic Raab, tional coffers and done their bit to save the to the way we do business.” Britain’s foreign secretary, hosts fellow g7 planet by cutting out travel. It is not the first time that technology 50 International The Economist May 1st 2021
has transformed the world of diplomats. constantly in an airport or on the road,” Ambassadors used to be “the equivalent of says Rosemary DiCarlo, the un’s undersec ship captains”, says Charles Freeman, a retarygeneral for political affairs. Thanks former American ambassador, now at the to Zoom and other platforms, it has be Watson Institute for International and come possible for diplomats and political Public Affairs at Brown University. “They leaders to show up for speeches and meet were far away and not subject to control.” ings that they would almost certainly not At the Congress of Vienna in 181415, the have attended had their physical presence British foreign secretary, Lord Castlereagh, been required. enjoyed great autonomy, since letters to For example, 12 foreign ministers and a London might take four to six weeks to ar prime minister might not have flown to rive. “I did not wait for instructions at Vi New York in February to discuss global vac enna,” he later told Parliament. “I took cine access, but they did all take part in a upon myself the responsibility of acting.” virtual Security Council meeting on the The telegraph changed all that. News subject. Scott Morrison, Australia’s prime and instructions travelled instantly, to minister, would hardly have travelled from generals in battle and diplomats in embas Canberra to the Rocky Mountains just to sies. Envoys bemoaned their loss of auton address the Aspen Security Forum, as he omy (one British diplomat lamented the did last August. It takes months of plan “telegraphic demoralisation of those who ning to assemble all the people necessary formerly had to act for themselves”). Dip for a g20 or asean gathering, but you can lomatic power became more centralised. and other means of direct communication, bring presidents and prime ministers to The pace could still be leisurely. Win especially via WhatsApp and (for greater gether on a video screen with relative ease. ston Churchill fished with Franklin Roose security) Signal, have been used more For peace talks, too, virtual platforms make velt and painted with Dwight Eisenhower. widely. Foreign services’ investment in se it possible to bring in people who probably Leaders invested time “tending the dip cure video technology is expected to grow. wouldn’t find the time to get on a plane and lomatic garden”, as George Shultz, Ameri Martin Waehlisch, who leads an “inno spend several days cloistered in Stockholm ca’s secretary of state under Ronald Rea vation cell” at the un in New York, says the or Geneva. gan, put it. In his final year in office, in pandemic has boosted adoption of virtual Virtual meetings also cut out a lot of the 1988, Shultz undertook an eightcountry, reality (vr) technology to give decision formalities and pomposity of traditional threeweek tour of Asia, “unthinkably long makers in New York a sense of what it is diplomacy. They are “a great leveller”, says by today’s standards”, recalls Mr Burns, like to be on the ground in conflict zones. a diplomat from a un Security Council who accompanied him. He sees this as “the future of briefings”, re member: “They’re in their bedroom and placing the traditional reports in “Times you’re in your bedroom.” In the bigger Cables and wireless New Roman, singlespace, blackand gatherings, officials feel less need tobe Since then, air travel and the demands of white block text”. “Iraq 360”, a vr experi loquacious than when they have the floor the news cycle back home have led to shor ence to help mobilise donors, showed the after travelling for a day to deliver a mes ter summits and a general acceleration of possibilities in 2019. Now the restrictions sage. As a result, they can sometimes diplomacy. Email and social media have on travel have led to an investment in other achieve much the same outcome, insiders further speeded things up, often bypassing immersive storytelling projects as an extra say, only faster. careful drafting and clearance procedures format for briefing the Security Council. developed to avoid mistakes. Under the Such projects are under way for Yemen, Su Blessed are the peacemakers presidency of Donald Trump, an impulsive dan and Colombia. Mr Waehlisch hopes The third change may be the most impor tweet could shortcircuit the bestlaid dip this will become standard practice. tant: the pandemic has accelerated experi lomatic plans. Modern diplomats have had The second change is improved pro ments in ways to include a wider range of to adjust to “the annihilation of distance ductivity, thanks to videoconferencing. voices in peace efforts. For some time “in and the compression of time”, as Mr Free Interacting with people around the world clusivity” has been a buzzword in the man puts it. has become a lot simpler. “I’ve been able to world of conflict resolution. Diplomats Now covid19 has shaken things up still reach out to more people because I’m not know that peace processes are often per more. For one thing, it has played havoc ceived as being imposed from above, or with foreign services’ plans and personnel. from outside, and that any such deals may At the top, foreign trips have been scaled Home and away not enjoy widespread support. A number right back (see chart). Down the ranks, ma Foreign stops by US secretaries of state of privatediplomacy outfits, such as the ny diplomats have been withdrawn from In first three months of office Centre for Humanitarian Dialogue (hd), their posts because of health precautions, Republican Democrat based in Geneva, have worked to facilitate or find themselves on extended tours with the involvement of grassroots representa out their families. The pandemic itself has 2520151050 tives, including women and young people. also become a core element in diplomacy, Colin Powell But the logistics can be hard. Getting a whether as part of softpower manoeu Condoleezza Rice handful of women from a conflict zone to vring between America, China and Russia, Switzerland for a few days of discussion is or among allies in tensions stoked by vac Hillary Clinton a challenge at the best of times. During a cine nationalism. But its longerterm im John Kerry pandemic it can be an impossibility. pact will probably be on how diplomacy is So mediators turned to technology— Rex Tillerson conducted, changing practices in three and found relatively quick and easy ways important ways. Michael Pompeo to bring in people who are not normally First, in the often staid world of dip Antony Blinken* consulted on a political or peace process. lomats, it has accelerated the adoption of Diplomats are now excited about the po Source: US Department of State *During the pandemic technological tools. Videoconferencing tential. “This should become a standard The Economist May 1st 2021 International 51 part of how we operate,” says Ms DiCarlo. deemed the process fair and transparent. ments—such as Britain’s Brexit deal with Her innovation cell in New York repur Sooner or later these tools would have the eu—and the hardest conversations will posed a commercial tool normally used for been put to use in diplomacy. But the con still have to be worked out in person. It is market research to develop the ability to straints of covid19 had the effect of has one thing for the White House to convene conduct what it calls “largescale synchro tening their adoption, in Libya saving valu world leaders to make worthy onscreen nous dialogues”. These digital focus able time. “I don’t think that we would statements about tackling climate change, groups feel like a texting chat, but have the have considered things like the digital dia as happened on Earth Day in April. It is an scale of an opinion poll. logues had it not been for the pandemic,” other to cajole and corral countries into a The first experiment was in Yemen. A Ms Williams says. difficult agreement, as happened in the ne regular poll with 2030 questions in that Even enthusiasts for the new possibili gotiating rooms at cop21, the Paris climate country would cost €250,000 ($300,000) ties of digital diplomacy, however, are summit in 2015. Hence the hope that cop26 and take a month to get the answers, ac keenly aware of its limits. Building a rap in Glasgow later this year can be held in cording to Mr Waehlisch of the innovation port is harder on Zoom than in person. Sa person too. cell; the digital dialogue cost only a modest mantha Power, when appointed by Barack So physical summitry will not end. Nei consultancy fee for the question design, Obama to be America’s ambassador at the ther is the role of the resident ambassador and produced results instantly. “It’s quite un, went to the trouble of paying a visit to under serious threat, despite the ease of di extraordinary for the un to be in the fore each of her 192 fellow mission heads (with rect digital communication between gov front of this stuff,” says Mr Griffiths, the the sole exception of North Korea’s), an in ernments. Diplomats insist there is still no envoy for Yemen. “It’s terrific, it’s 21stcen vestment in relationships that could no substitute for that man or woman sitting tury diplomacy, because of course it gets doubt be done far more easily today by in the foreign capital, soaking up the cul away from men in rooms.” Zoom, but with much less impact. ture, the politics, the media, the argu Part of what is missing are the signals ments, and being the acknowledged inter The absence of alternatives you can pick up about an interlocutor in a preter of that culture back home. Libya shows the impact this can have. Last physical meeting: the visible reaction. year the pandemic pushed negotiations “When you ask a tough question, do they Diplomatic immunity between the country’s rival forces onto vid blanch or do they back up, do they lean into But any complacency about a simple rever eo platforms—Zoom for the political dia it?” says Mr Burns of Harvard. “You’re not sion to prepandemic habits of diplomacy logue, Teams for the military track. In the going to get that on Zoom.” would be misplaced, just as it was after summer, with the help of hd’s mediators, a And the really hard part of a negotiation previous disruptions such as the telegraph physical meeting in Montreux led to a road is best done in person. If things aren’t go and the jet plane. The big diplomatic jam map for reconciliation, the Libyan Political ing well, a chat at the bar, or a stroll in the borees of the past, such as unga, may nev Dialogue Forum (lpdf). Stephanie Wil grounds, may help create a breakthrough. er return in quite the same way. Digital liams, at the time the un’s acting special The plus side of virtual meetings, the effi tools, from virtual meetings to inclusive representative for Libya, realised she need ciency gains, are also their minus side: you focus groups, have proved their worth. The ed to expand the numbers in the dialogue lose the time spent on the margins, the diplomatic handbook is ready for a rewrite. for it to be more representative. space for informal conversation that helps Covid19 has hastened the arrival of hy In September she started doing big to establish trust. Difficult messages, often brid diplomacy, a blend of the physical and Zoom sessions with mayors, women’s the stuff of diplomacy, can be delivered digital. Quite what the ideal mix turns out groups and youth activists; representa with more nuance, and less lasting damage to be has yet to be worked out, but it is tives of each group reported back to the to a relationship, face to face than when something international negotiators and lpdf, giving their suggestions. In all, Ms struggling with a poor connection. At a dis foreign services are starting to think Williams says, some 200 women took part, tance, diplomats say, it is easier to camp on through. In America Mr Biden and his sec as well as 100150 young people and the a red line than when you are in the same retary of state, Antony Blinken, want to re majority of Libya’s 130 municipalities. And room. Confidentiality is another concern: invest in a State Department that had been then, between November and January, she “The most delicate issues aren’t amenable badly neglected. The money and training held five digital dialogues, averaging over to virtual,” says Mr Griffiths. should go on preparing for tomorrow’s di 1,000 people for each one, typing back and For all these reasons the toughest agree plomacy, not yesterday’s. n forth in Arabic. “It really took off with the Libyans,” says Ms Williams. “And it turned out to be a great tool.” The dialogues included spot polls, which confirmed a lot of what she knew Libyans wanted from the political process, “but we were also able to use it to push the political class, to say, hey, it’s not just the un mission that’s saying what Libyans want.” In particular the dialogues were useful in pressing the need for unified in stitutions before elections, which are planned for December. In giving Libyans a voice, the un’s diplomats reckon, the Zoom calls and dialogues not only boosted confidence in the peace process but im proved the prospects for it lasting. An opinion poll (of the traditional sort) in Feb ruary by Diwan Research found that 71% of Libyans were satisfied with the lpdf pro cess to select a new government, and 68% 52 Business The Economist May 1st 2021
→ Also in this section 53 Digital ads’ privacy quandary 54 India’s steelmaking surprise 55 The warehousing boom 56 Money from trees 56 VW’s works-council king abdicates 57 Bartleby: The lingering CEO 58 Schumpeter: Tesla’s magical realism
Taiwan Semiconductor Manufacturing Company America offers military support. In 2020, 62% of tsmc’s revenue came from custom Living on the edge ers with headquarters in North America and 17% from those domiciled in China. It has managed the geopolitical divide by making itself indispensable to the techno logical ambitions of both superpowers. tsmc was founded in 1987, and for the The world’s biggest chipmaker is learning how to thrive amid the Sino-American first quartercentury it made mostly un tech war: make yourself indispensable remarkable microprocessors. That began hipmakers’ craft can seem magical. of vlsiresearch, a firm of analysts, “the to change in 2012, with its first contract to CThey use light to stamp complex pat Hope Diamond of the semiconductor in make powerful chips for the iPhone. Apple terns on a dinnerplatesized disc of crys dustry”—and, with a resplendent market wanted tsmc to push its manufacturing tal silicon, forming arrays of electric cir capitalisation of $560bn, the world’s 11th technology as far and as fast as it could, to cuits. Once cut out of the disc, each array is mostvaluable company. It is also an astute gain an edge over rival gadgetmakers. The called a chip. The chip’s job is to shuttle geopolitical actor, navigating the rising notoriously secretive American firm liked electrons in a mathematical shimmer pre SinoAmerican tensions, including over the way Morris Chang, tsmc’s founder, scribed by computer code. They do the the fate of its home country, which China made tradesecret protection one of his maths which runs the digital world, from claims as part of its territory and to which priorities; guests to tsmc premises would Twitter and TikTok to electronics in tanks. have their laptops’ usb ports sealed even if Without them, whole industries cannot they only visited a conference room. function properly, as carmakers forced to Edge cases 1 Two years later the Taiwanese firm’s pause production because of microproces Global revenue market share chips were powering the iPhone 6, the sor shortages are discovering. by leading-edge node*, % bestselling smartphone of all time. Rev The most important firm in this critical enue from the 220m units sold kickstart TSMC Intel Samsung business is Taiwan Semiconductor Manu ed tsmc’s ascent. Some of Apple’s compet facturing Company (tsmc). It controls 84% 2009 itors also used tsmc as a supplier, and of the market for chips with the smallest, 100806040200 wanted the same thing. All paid hand most efficient circuits on which the pro 45nm somely for the chipmaker’s efforts. ducts and services of the world’s biggest This windfall set tsmc steaming ahead. technology brands, from Apple in America It overtook Intel, the American giant which 201 to Alibaba in China, rely. As demand for the 100806040200 once enjoyed a monopoly on the leading most sophisticated chips surges thanks to edge, then left it in the dust (see chart1). Its the expansion of fast communication net 14-1nm remaining rival in topflight chips, Sam works and cloud computing, tsmcis pour sung of South Korea, is barely able to keep ing vast additional sums of money into ex 2021† up. Such is tsmc’s manufacturing prowess panding its dominance of the cutting edge. 100806040200 that Peter Hanbury of Bain, a consultancy, This has proved to be a successful busi 5nm reckons it has given Moore’s Law, the ness model. Last year tsmc made an oper industry’s predictioncumbenchmark of ating profit of $20bn on revenues of *Non-memory integrated circuit, doubling processing power every two years Source: VLSIresearch by size in nanometres †Forecast $48bn. It is, in the words of Dan Hutcheson or so, at least another 810 years of life. The Economist May 1st 2021 Business 53
Its lead over rivals is growing. It is pour more chips to Huawei than to any other ing cash into cuttingedge chip factories Processing speed 2 customer bar Apple. Most of these were (known as fabs) at an unprecedented rate. TSMC, share of revenues from processors destined for smartphones, and other Chi In January it said it would raise its capital By size in nanometres and launch date, % nese handsetmakers such as Oppo happi expenditure to $25bn28bn in 2021, up 25 ly snapped up what Huawei (which on from $17bn in 2020. In April tsmc raised nm 7nm 28nm 40-4nm April 28th reported its second yearonyear (Q 2020) (Q2 2018) (Q4 2011) (Q1 2009) the figure again, to $30bn; 80% will go on 20 decline in quarterly revenues in a row) advanced technologies. It plans to spend could not. 15 $100bn over the next three years. Further American attempts to prevent It has also stopped cutting prices— 10 tsmc from doing business with China which in chipmaking, where processing could invite meddling by the regime in power has only got cheaper, is tantamount 5 Beijing, which refuses to rule out taking to raising them. Its chief executive, C.C. 0 back Taiwan by force (see Briefing). Presi Wei, has said it will skip a planned price dent Joe Biden’s administration has also 87654321 cut in December 2021 and keep things that announced a $50bn government plan to Quarters since launch way for a year. ic Insights, a research firm, revive chipmaking at home: it is doubtful Source: IC Insights calculates that tsmc can charge between whether subsidies will restore Intel’s su twice and three times as much per silicon premacy, but the initiative could involve wafer made using its most advanced pro form of protection against foreign med putting more pressure on tsmc to put cut cesses, compared with what the next dling. Taiwanese contract manufacturers tingedge production in America, a strate mostadvanced technology will fetch. account for twothirds of global chip sales. gic trap the firm has been keen to resist. This creates a positive feedback loop. Reflecting this, 97% of tsmc’s $57bn The rival powers have so far refrained Developing the latest technology before worth of longterm assets reside in Taiwan from interfering with tsmc directly, per anyone else allows tsmc to charge higher (see chart 3). That includes every one of its haps concluding that this is the most reli prices and earn more profit, which is most advanced fabs. Some 90% of its able way of achieving their technological ploughed back into the next generation of 56,800 staff, of whom half have doctorates objectives. If the chipmaker’s importance technology—and so on. The cycle is spin or masters degrees, are based in Taiwan. keeps growing, one of them may decide ning ever faster. Four technological gener The firm has made soothing noises to that it is too valuable to be left alone. n ations ago it took tsmc two years for those America and China, offering to invest more cuttingedge chips to make up 20% of rev in production lines based in both coun enues; the latest generation needed just six tries. But it is hard not to see this as dip Digital advertising months to reach the same level (see chart lomatic theatre. Its Chinese factory in 2). Operating income, which grew at an av Nanjing, opened in 2018, produces chips Flying blind erage rate of 8% year in the decade to 2012, that are two or three generations behind has since risen by 15% on average. Com the cutting edge. By the time its first Amer bined with revenues that chipdesigners ican fab, designed to be more advanced make from semiconductors ultimately that the one in Nanjing, is up and running forged by tsmc, the company and its cus tsmc in 2024, will be churning out even Apple’s privacy rules force marketers to tomers account for 39% of the global mar fancier circuits at home. By our estimates, find new ways to target ads ket for microprocessors, according to vlsi- based on disclosed investment plans, the research, up from 9% in 2000 and a third net value of tsmc’s fabs and associated nline shoppers often feel they are be more than oncedominant Intel. equipment will roughly double by 2025, Oing watched. Put an item in your bas This is an enviable position to be in. But but 86% will still be in Taiwan. ket but fail to buy it, and it may follow you it is not an unassailable one. The experi In the past three years the American plaintively around the internet for days. ence of Intel, which has fallen behind in government has begun to disrupt the deli Announce your engagement on social me the last two generations of chips because cate balance. It has tightened export con dia and you will be hit with adverts for the of technological missteps, shows that even trols that prohibit any foreign company honeymoon. As you turn 40, expect the at the most masterful manufacturers can trip from using American tools to make chips tention of elasticatedtrouser merchants. up. Chipmaking is also notoriously cycli for Huawei, a Chinese technology giant. On April 26th Apple, which supplies cal. Booms lead to overcapacity, and to That applies to tsmc, which in 2019 sold onefifth of the world’s smartphones and busts. Demand may slacken as the rich around half of America’s, introduced a world emerges from the pandemic, when software update that will end much of this 3 purchases of gadgets that made it possible The silicon isle snooping. Its latest mobile operating sys to work and relax at home were brought TSMC, long-term assets by location, $bn tem forces apps to ask users if they want to forward. That would hit tsmc’s bottom line be tracked. Many will decline. It is the lat and strain its balancesheet. The company Total of which: US and Asia est privacy move forcing marketers to re has $13bn of net cash, a modest rainyday 50 2.0 think how they target online ads. fund for a big tech firm. To help finance its Taiwan US By microprofiling audiences and mon US and 40 Asia* most advanced fabs, it has issued $6.5bn 1.5 itoring their behaviour, digitalad plat worth of bonds in the past six months. Asia* forms claim to solve advertisers’ ageold tsmc 30 The most serious danger to comes 1.0 quandary of not knowing which half of from the SinoAmerican ructions. The 20 their budget is being wasted. In the past de company’s position at the cutting edge of 0.5 cade digital ads have gone from less than fers a buffer against geopolitical turmoil. 10 20% of the global ad market to more than m Chipindustry insiders say that the Tai 0 0 60%, according to Group , the world’s wanese government encourages all its largest media buyer. Even last year, amid 20152010 20152010 chipmakers, including tsmc, to keep their the pandemic, the business grew by 9%. As Source: Company reports *Excluding Taiwan cuttingedge production on the island as a lockdowns ease it is going gangbusters. On 54 Business The Economist May 1st 2021
April 27th Alphabet, Google’s parent com Not every ad platform will be able to Daily Mail readers, and so on—much as pany and the world’s biggest digitalad adapt as easily. Smaller publishers with they did in the preinternet age. It’s “back platform, reported firstquarter advertis fewer data and resources will suffer, be to the future”,says Mr Wieser. ing revenues up by 34%, year on year. The lieves Nicole Perrin of eMarketer, a re Stripped of accurate ways of measuring next day Facebook, the secondlargest, search firm. Publishers that rely on third their impact, “directresponse ads” that re said its own ad sales had grown by 46%. party cookies will be hit hardest. The day quire consumers to take an action (like Stronger privacy protections may make Apple launched its new policy, a group of clicking) lose their appeal. Advertisers will their ads less effective. In 2018 the eu im German publishing companies lodged a le again have to gauge ads’ effectiveness by posed its General Data Protection Regula gal complaint with Germany’s antitrust looking for a rise in sales in a region where tion (gdpr) and America’s mostpopulous authorities. Small platforms may also find an ad ran but not elsewhere. Because cam state introduced the California Consumer it harder to persuade phone users to trust paigns that promote general awareness of Privacy Act. Both made it harder to harvest them with their data. AppsFlyer, an adtech a brand never benefited as much from users’ data. Since 2020 Apple’s Safari web company, found that iPhone users agreed tracking, platforms which mostly attract browser has blocked the “cookies” that ad to tracking from shopping and finance brand advertising will not feel much dif vertisers use to see what people get up to apps more than 40% of the time, but12% of ference. Snap, whose social network, pop online. Google has similar plans for its the time with casual gaming apps. ular with teenagers, belongs to that group, more popular Chrome browser. The inability to share data is forcing ad posted a yearonyear rise in revenues of Apple’s latest change makes explicit an vertisers to come up with new ruses. One is 66% in the first quarter. option that was previously hidden deep in to bypass rules banning data transfers be The less advertisers know about their its phones’ settings. Users can forbid apps tween adtech companies by consolidat audience, the costlier advertising will be to access their “identifier for advertisers” ing. In February AppLovin, a mobilesoft come. Facebook has argued this will hurt (idfa) code, which singles out their device, ware firm, acquired Adjust, which pro small businesses. It is probably right, and from tracking their activity across vides mobilead attribution, reportedly for thinks William Merchan of Pathmatics, a other firms’ apps and websites. It amounts $1bn. Another is to ask users to “sign in”, data company. Digital ads promise to cut to a “seismic shift” in inapp advertising, which lets an app monitor their behaviour waste in media buys, he says. Now that ad says Jon Mew, head of the Internet Adver with no need for idfas. And instead of tar vertisers are again in the dark about which tising Bureau, an industry body. geting individuals, marketers can target half of their budget is wasted, they are “go The platforms bestplaced to survive broader interest groups—coffee lovers, ing to have to just spend more”. n the shakeout are those with lots of con sumer data of their own. Google’s $147bn ad business gets most of the information it The steel industry in India needs from the terms users type into its search bar. Amazon, whose digitalad busi White hot ness is the thirdlargest and growing fast, has the advantage of being able to track what people buy after seeing ads on its site—a “closed loop”, as marketers call it. Apple knows where iPhoneusers go, what time they wake up and much besides. It has The covid-ravaged economy’s surprising bright spot a small but growing ad business, selling prominence in its app store, for instance. teelmakers have for decades embod disastrous acquisition in 2007 of Corus, a For Facebook, which knows more about Sied India’s failed plans for prosperity. troubled European rival. Demand subse its users’ interests than about their shop Postindependence socialism produced quently declined at home and aggressive ping needs, Apple’s changes are more wor many mills but little steel. A partial privati Chinese rivals expanded abroad. rying. In August it warned they might re sation in the 1990s created capacity, but al Then came covid19. In March 2020 In duce revenues at its Audience Network, so large firms fed by feckless statebacked dia imposed the strictest lockdown of any through which it sells ads to other apps, by lending. Many were subsequently exposed large economy. For an industry reliant on as much as 50%. But the Audience Network as bankrupt. Even wellrun private produc mills not designed to sit idle, and on the represents less than a tenth of its business. ers stumbled, as Tata Steel did with its physical shipment of bulky slabs and coils, Thanks to its intimate knowledge of users, this spelled disaster. jsw, a rare success, it will still be better at targeting than al filled its blast furnaces with coking coal to most anyone else. “In a world with a lot less Metal mania preserve heat, but not with ore; 14,000 data, who has relatively more?” asks Brian Average* share price of big steelmakers workers completing an expansion of its Wieser of Groupm. The effect of gdpr was, Selected countries, January 1st 2020=100, $ terms mill in Maharashtra state dispersed to their if anything, to increase Facebook’s and 250 villages. “There was no market,” recalls Saj Google’s market shares, he adds. India jan Jindal, jsw’s chairman. To improve its tracking of purchases, 200 The market has since come back with a Facebook is moving to create a closed loop vengeance. In the past year steel prices Global average steel price of its own. Last year it introduced Facebook 150 have nearly doubled in India, doubled in Shops on its flagship social network and China Europe and China, and more than trebled Instagram Shops and its sister photoshar 100 in America. Surveys by Edelweiss, a Mum ing app. Mark Zuckerberg, Facebook’s boss, Japan baibased broker, show them heading up. speculated in March that “we may even be 50 Even Tata’s European business is now prof in a stronger position if Apple’s changes South Korea itable. With efficient plants running at 0 encourage more businesses to conduct nearfull capacity, the share prices of big more commerce on our platforms, by mak 2020 2021 Indian steelmakers have outperformed ing it harder for them to use their da Sources: Refinitiv Datastream; *Weighted by those of rivals elsewhere (see chart). S&P Global Platts market capitalisation ta…outside of our platforms”. To understand how they pulled it off, The Economist May 1st 2021 Business 55
Commercial property Seeking fulfilment Safe as warehouses Logistics property, net additional space leased Square metres, m 25 20 Europe* 15 Developers struggle to meet demand 10 for storage space 5 ander through central and east Asia-Pacific 0 WLondon, and you find traces of the -5 East India Company. In its 274year history, United States -10 the rapacious colonialera trader tore -15 down poor houses, replacing them with 2000 05 10 15 20 sprawling depots to store tea, silk, spices Source: JLL *Gross additional space and other exotic wares. Today those same On a roll, despite everything sites are occupied by offices, restaurants and flats. Soon, they could once again be across America and Europe a decade ago to look at jsw. Despite the uncertainty of the stacked with merchandise. A large plot just 5% now. In some places, like Toronto early pandemic, Mr Jindal took a gamble near the historic East India Docks, which and Tokyo, they are below 2%. and immediately began planning for a re once processed goods from India and Chi The value of existing assets is balloon opening: “I was eager to restart, so we did.” na, is being converted to a mix of flats and ing as a result. The gross assets of Prologis, The firm lengthened shifts to reduce the warehouse space dubbed Orchard Wharf. a leading warehouse developer, are worth flow of people in and out, and transformed The pandemic ecommerce boom has $10bn more than six months ago. This in schools and clinics it runs into dormito fuelled demand for warehouses. In 2020 turn is luring more investment. jll calcu ries and covid19 treatment centres. The firms in Europe leased 16% more new lo lates that purchases of logistics assets firm tapped out its credit lines, increasing gistics space than the year before, accord went from a tenth of global property in debt from $6bn to $7bn. But after a three ing to jll, a property consultancy. In Amer vestments in 2015 to a fifth last year. In week lull, jswwas up and running again. ica and Asia the rise was 21% and 32%, re 2020 Amazon increased square footage Its Indian rivals followed a similar spectively (see chart). Some firms, like su across its fulfilment and logistics network script. Those in Japan, South Korea and permarkets or medicalsupplies makers, by an unprecedented 50%. Russia were slower to get back in business. needed more storage to meet offline de This building frenzy is now starting to Tight supply propped up prices, even as mand. But one in four new leases signed run up against obstacles. The first is scarci pockets of high demand persisted in places last year in Western countries was linked ty of space, especially in densely populated spared the worst of covid19, such as China, to online shopping, reckons jll, up from cities. Half of San Francisco’s industrial Vietnam and parts of Africa. By July do 12% in 2019. In China it was one in three. land was converted to residential and of mestic demand in India had begun to re cbre, a realestate firm, estimates that fice space between 1990 and 2008. Between cover, as good harvests prompted farmers a 5% increase in retailers’ inventories in 2006 and 2015 London lost 11% of its indus to buy new tractors. Construction, which America requires up to 46m square metres trial land. The problem has grown so acute uses steel and heavy machinery made from of additional warehouse space—enough to in parts of Germany that delivery lorries it, took off after the first viral wave subsid cover roughly threequarters of Manhat operate from sites across the border in Po ed. Enough of jsw’s workers returned to tan. And those inventories are growing fast land and France. High costs, restrictive complete the expansion in Maharashtra. as retailers go digital. Online retail typical zoning rules and current tenants make it Things may be about to get harder. For ly needs three times as much space as the difficult to convert existing properties, eign competitors are back in operation. In physical sort, because internet shoppers such as struggling shopping malls, into dia is in the throes of a new, deadlier wave expect a wider variety of goods. Vacancy distribution centres. Prologis forecasts of covid19 that may prompt another rates have therefore plummeted, from 10% that retail conversions will make up just nationwide lockdown. In the long term, many countries are getting more serious about climate change, threatening tariffs on carbonintensive goods such as steel. Yet prices of both steel and Indian steel makers’ shares remain stubbornly high. China seems keen to close its most envi ronmentally toxic plants, which could crimp Chinese production. Jefferies, an in vestment bank, expects China to import more steel than it exports in 2022—some of it doubtless from India. America’s gov ernment, and others, are planning big in frastructure splurges. With tensions be tween China and the West mounting, the world’s industrial giants may seek alterna tive suppliers in friendlier places. For those Indian steelmakers that withstand covid19’s resurgence, the future has not looked this bright for years. n White space 56 Business The Economist May 1st 2021
0.75% of theoverall logistics stock over the next decade. Public hostility to new sites is also growing. Large warehouses are noisy and operate around the clock. Suburban home owners across America and Europe worry about pollution from lorries. Even where developers pledge thousands of jobs, poli ticians grumble that these will be low skilled, or soon replaced by robots. Five Conservative mps have called on Britain’s government, run by their own party, to stop a huge warehouse from being built in southeast England. Warehouse owners are getting more creative. segro, a big British one, is rede veloping unused space beneath a Parisian railway station. Amazon is flipping former golf courses in America into distribution centres. The online giant is also converting Trees for the wood an empty car park in central London into a delivery hub. Hybrid developments like American giant is now worth $30bn. in Germany—the first of its kind any Orchard Wharf are proliferating. Mark Wilde of the Bank of Montreal ex where—next year. It is already making Less creatively, developers are raising pects more saw mills to come online in re wound dressings and a cellculture medi rents. Prologis expects them to go up by 6% sponse. They will be different to those of um from wood nanofibres to rival agar jel globally this year. That may dismay emer the past, for the industry is also under ly. There is talk of climbing higher up the chants. Not investors, though: the share going rootandbranch changes. value chain to planning and design. All prices of Prologis and segro have nearly The first is the collapse in demand for this will prove a handy scaffold when lum doubled since the start of 2019. n commercial printing over the past 1520 ber prices come back down to earth. n years. This has led to consolidation in paper production. Many paper mills have Wood products been converted to manufacture packaging, Labour relations in Germany preferred by consumers who worry about Forest bump plastic’s environmental impact. Some big The king of European wood firms, such as Metsa of Finland, have abandoned print paper (it Wolfsburg still makes cardboard and tissues). After shutting two mills this year, Stora Enso, BERLIN which is also Finnish, will derive 10% of OSLO The nemesis of Volkswagen’s boss revenue from print paper, down from 70% Ever more money grows on trees abdicates a decade ago. The rest will come mainly n the bucolic lowrise surroundings of from pulp, packaging and fibre products. he most powerful man at Volks INorway’s biggest lake, Mjostarnet stands The second, related change is technolo “Twagen.” Ferdinand Dudenhöffer of out. At 85 metres tall, this building of flats, gyenabled diversification. Most mills al the Centre for Automotive Research, an in offices and a hotel, completed in 2019, is ready manufacture wood products on top fluential thinktank, was not referring to Norway’s thirdtallest. It is the highest in of selling lumber. In modern ones, saws Herbert Diess, the German company’s the world built of wood. Similar structures slice threequarters of a tree into planks, boss. Rather, he reserved that title for have sprung up in other countries. So, in and chop the rest into chips that can be Bernd Osterloh. In his 16 years as head of many more places, have wooden additions turned into woodbased composites. Be the carmaking group’s works council, to existing buildings, which weigh around cause the forest business reflects the de which represents workers, Mr Osterloh or a fifth of what an equivalent steeland cadeslong sylvan lifecycle, this 40year ganised his own roadshows and travelled concrete one would, and therefore risk less old “chipnsaw” technique is only now with his own entourage (including a trans damage to the building below. enjoying widespread adoption. It works lator). His press team was bigger than Mr Mjostarnet stands as a proud example best on trees with a diameter of 25cm, com Diess’s. Some investors mistook him for of wood’s comeback after a century of pared with 40cm for traditional bandsaws, the giant firm’s chief executive and won steel, concrete and plastic. Global exports and so lets forest owners sell or, if they are dered why he did not speak any English. of forest products, including sawn wood, vertically integrated with mills, use their Then, on April 23rd, Mr Osterloh an pulp and paper, grew by 68% between 2000 trees 2030 years earlier than in the past. nounced he was resigning. He was widely and 2019, to $244bn. Demand is reaching Greater harvesting efficiency is now expected to stay until the next works redwoodlike heights, fertilised by a pan combining with newer techniques to ex council election in March 2022—and then demic diy boom. Having ranged between pand the range of wood products. Metsa is for another threeyear term. Instead, on $200 and $400 for much of the past de turning waste lignin, a natural polymer May 1st he will take over as personnel chief cade, the price of 1,000 square feet of one which gives trees their rigidity, into tex at Traton, a lorrymaker that is part of inchthick timber has exceeded $1,400— tiles for clothing and furnishings. upm, an Volkswagen. Daniela Cavallo, his 46year and hoisted the share prices of wood pro other Finnish company, has worked out old deputy, will assume his old post. ducers up with it. The stockmarket value of how to turn “black liquor”, a gloop left over Works councils play a big role in all Ger many big ones such as Weyerhaeuser has from paper manufacturing, into biofuels man companies with more than 2,000 em roughly doubled in the past year; the and other chemicals. It will open a refinery ployees. Workers can nominate half the The Economist May 1st 2021 Business 57
Bartleby When the boss is behind you
The costs of officeless executives outweigh the benefits t is a tradition of corporate architec desks will be a lot hotter than others. Once tions or problems for them to solve. Iture. A company’s top executives get the chief financial officer has picked a Many people resort to headphones to offices on the top floor, often dubbed the desk on day one, deferential underlings shut out the background noise (and to csuite after the “chiefs” who occupy it. will steer clear of that particular spot on signal their unavailability). But if manag The ceo resides in the “corner office”, subsequent days. In contrast, anyone who ers do that, they run the risk of seeming with the biggest windows and best views. works closely with a particular executive shut off from their colleagues. Junior staff suffer a few moments of will be tempted to pick a desk close by. The Studies of openplan offices have trepidation when summoned upstairs. risk is of a “beach towels on sunbeds” shown that they do not create the hoped Some heterodox bosses shun this syndrome where employees compete to for collaborative effects. One study found tradition. Reed Hastings of Netflix has no get the desks nearest to (or farthest from) that at firms that switched to openplan office, corner or otherwise, and huddles particular managers. design facetoface interactions fell by at random desks, for example. Now more Of course, the executive may be absent 70%. Like an animal caught on open staid firms are following suit. Executives from the open floor for extended periods. ground without cover, many people do in the London offices of hsbc, a banking Any meeting that involves confidential not like being constantly observed. In the giant, will no longer be based on the information, such as a future business absence of a physical barrier, they create 42nd floor of the group’s Canary Wharf plan or a career review, will have to be held a “fourth wall”, indicating their desire for tower. Instead the floor will be converted in private. So the meeting rooms that hsbc solitude by facial expressions or curt into meeting rooms. Senior executives is creating on the executive floor may end replies to questions. will “hotdesk” with everyone else. up being blockbooked by the managers Where people do need to communi A plausible argument for such a shift for much of the day. cate, it is usually with members of their can be made. Staff morale would suffer if Even so, the lingering boss presents own team. So using a hotdesking system the rankandfile are crammed in open other problems. Anyone who has worked to mix up different teams, in the hope of plan offices while the executives cling to in an openplan office will acknowledge creating collaboration, is unlikely to cushy digs with panoramic vistas. When that the babble of others talking can make work either. People will avoid contact the top brass sit alongside their teams, it hard to concentrate at times. Managers with their immediate neighbours and they will be more in touch with how may find themselves constantly being will message their other team members projects are going, and how staff are approached by team members with ques electronically. feeling. In theory, if the executives are In practice, the main benefit for com visible, employees are more likely to panies of adopting an openplan design approach them with problems. is to save money by cramming more But lingering bosses may equally hurt employees in the same space. This ex morale. One of the joys of office life is the plains the willingness of some compa freedom to enjoy a bit of banter with nies to allow working from home. Re colleagues. This may include the odd cently, hsbc revealed that more than crack about the management. In the 1,200 staff, mainly in call centres, would presence of their boss staff will be con be doing so permanently. Indeed, the strained in what they talk about and the hsbc executiveoffice shift is part of a tone of their comments. They may feel plan that aims to save 40% of headoffice the need to sound serious at all times, costs. As Noel Quinn, the bank’s chief lest the quality of their commitment to executive, told the Financial Times, the their work come into doubt—after all, executive offices were empty half the the manager may be right behind them. time because the managers were travel You also have to wonder whether ling. As reporters are often told, the best executives will really spend every morn way to understand what is really going ing searching for a place to sit. Some hot on is to “follow the money”. members of the supervisory board, which had tried to topple Mr Diess, who wants to The group derives 60% of net profit from oversees the management board under the push Volkswagen into the electric age. That two premium marques, Audi and Porsche. country’s twotier structure. At Volks means retraining many of its 665,000 vw and the other nine mostly massmarket wagen they wield even more influence workers or getting them to retire—ana brands make little money outside China, thanks to the 20% voting share that Lower thema to the works council if it results in which accounts for another 20% of profits Saxony, home to its headquarters in Wolfs job cuts. In December the supervisory (excluding Audi and Porsche). To change burg, has in the group. To protect invest board gave the ceoits full backing. A move this Mr Diess must get along with Ms Ca ment and jobs in the Land, it backed Mr Os to a cushy job with a reported annual salary vallo. A trained economist, she is calmer terloh and the board’s other nine labour of €2m ($2.4m) could be seen as a facesav than her irascible mentor, who started on representatives. They in turn listened to ig ing way for Mr Osterloh to lick his wounds. the shop floor 44 years ago. She may be less Metall, the metalworkers’ union to which Testy corporate governance has made averse to the sale of peripheral brands such nearly all Volkswagen workers belong. Volkswagen’s flagship vw brand the as Ducati, a motorcyclemaker, which Mr The main reason for Mr Osterloh’s sud world’s leastcompetitive big one, thinks Osterloh blocked. Convincing her to accept den exit was a rare boardroom defeat. He Arndt Ellinghorst of Bernstein, a broker. deeper changes will be tougher. n 58 Business The Economist May 1st 2021
Schumpeter The magical realism of Tesla
And the blunt reality of geopolitics akin to a “Modelt moment”—provided he can, like Henry Ford, crack mass manufacturing to make Teslas more affordable. Both compare Tesla to Apple, the American technology giant, to illus trate how Mr Musk could create a moneyspinning ecosystem of gadgets and services that reinforce each other. For Tesla bulls, the maker of evs indeed has more in common with that of iPhones than it does with established car firms. Its boosters get excited about Silicon Valleylike innovation, not car sales. On Wall Street the value ascribed to Tesla’s relatively low margin ev business is being eclipsed by the promise of more neb ulous but potentially more lucrative ones, mostly involving soft ware: the sort of connected services, such as maps, entertainment, ridesharing, semiautonomous driving and overtheair up grades that make Teslas a geek’s dream. Few assume, as Mr Musk does, that fully autonomous “robotaxis” are imminent. But some, such as Mr Jonas, think Tesla ridesharing fleets, probably with someone at the wheel, will soon be rolling through city streets. The magical realism may go beyond that. Besides ai and soft ware, Mr Musk is also doubling down on Tesla’s original plan to build, alongside an affordable car, a zeroemission energy busi ness. He has said his intention is to produce three terawatthours of battery capacity within a decade, more than 12 times as much as ou have to hand it to the “technoking”. For all his impish self the goal of Volkswagen, its nearest ev competitor. Besides bring Yaggrandisement, mockery of deadlines, baiting of regulators ing the cost of cars down to $25,000 each, the batteries will also go and soontobe sideline as a “Saturday Night Live” comedy host, towards Tesla’s homeenergystorage business. That would create Elon Musk is deadly serious about technology. So serious, in fact, what he calls a “giant distributed utility” that can cope with in that as he was discussing the nittygritty of neural networks on an creased electricity demand as more people use evs, as well as pro earnings call on April 26th, Tesla’s boss did not miss a beat when vide grid stability at times of bad weather. Mr Dorsheimer, who is what sounded like his infant son let out a wail in the background. particularly bullish on Tesla’s solar and storage business, thinks The electriccar maker’s record net profit of $438m in the first its energy brand could become “Appleesque”. quarter, the seventh straight in the black, came as an afterthought. Such is the allure of Tesla’s whirring money machine that Thinking different many now give the benefit of the doubt to Mr Musk’s more eccen Apple, worth more than three times as much as Tesla, is a flatter tric claims. His latest involves artificial intelligence (ai). In the fu ing firm to be compared to. It is also the prime example of how ture Tesla will be remembered not just as an electricvehicle (ev) deftly an American company can handle the ebb and flow of and renewableenergy pioneer, he says, but also as an ai and ro superpower rivalry. Yet when it comes to geopolitics, Tesla may be botics company. He bases this on a belief that it is close to cracking at a disadvantage. It is just as global as Apple: last year it made half the challenge of selfdriving cars using just eight cameras, mach its sales outside America; 21% came from China. But the $2trn glo ine learning and a computerised brain in the car that reacts with bal car market is more than four times the size of the one for mo superhuman speed. He calls full selfdriving “one of the hardest bile phones. With many more firms involved, cars are more politi technical problems…that’s maybe ever existed”. cally sensitive than smartphones. Initially countries like China Amid the technooptimism, though, Tesla also faces the dreary and Germany threw down the welcome mat for Tesla’s gigafacto reality of everyday life. Though it expects to deliver about 50% ries, partly to goad local firms into producing better evs. Now that more vehicles this year than in 2020, or around 750,000, like other this is happening, the pressure to keep Tesla down is increasing. carmakers it is struggling with a shortage of computer chips. The If Mr Musk is right that selfdriving is the future of getting fiery crash of a Model s in Texas, killing two, has raised concerns around, concerns about datagathering and national security are about its selfdriving technology (reports that its Autopilot func bound to rise. China has already hinted it is sensitive to them. This tion was involved are “completely false”, Mr Musk said). A pan year the government restricted the use of Tesla vehicles by mili demicrelated shortage of engineers hit its output in China, tary personnel and employees of some stateowned firms because source of much of its recent growth. And the Chinese authorities, of datasecurity concerns. Mr Jonas, for one, thinks Tesla’s posi which used to shower love on the American firm, are showing tion in China will be “substantially diluted” during the coming de signs of Tesla fatigue. Mr Musk may one day find the boundaries of cade, as the car market morphs into a transportation utility run his kingdom constrained not by physics but by geopolitics. and regulated by the state in concert with local champions. He is no longer alone in talking in grandiose terms about Tesla. Cyberparanoia may, of course, make it as hard to sell a Chinese These days sober sorts vie to justify the firm’s valuation of $700bn car in America as an American car in China. And compared with or so, which puts all other carmakers in the shade. When describ the “insanely hard” problems Tesla is trying to crack, even super ing its potential, Jed Dorsheimer of Canaccord Genuity, a Canadi power politics must seem like a minor irritation. But although Mr an asset manager, starts with the invention of the printing press in Musk can claim to rule over the realm of physics, politicians, bu 15thcentury Europe. Adam Jonas of Morgan Stanley, an invest reaucrats and spooks run much of the real world. That is a source ment bank, believes Mr Musk’s evs are in the midst of something of power that even the technoking cannot disrupt. n Finance & economics The Economist May 1st 2021 59
→ Also in this section 60 Joe Biden’s capital-tax plans 61 Buttonwood: Private credit 62 Covid-19 in India—the economic toll 62 Why help is getting harder to find 63 The lira’s failed defence 64 Free exchange: Building a boom
The economic recovery ing the first world war. In 191920, as the Spanish flu raged, Americans stashed away Money, machines and mayhem more cash than in any subsequent year un til the second world war. When that war hit, savings rose again, with households accumulating additional balances in 1941 45 worth some 40% of gdp. History also offers a guide to what peo A post-pandemic boom is beginning in the rich world. History suggests that ple do once life gets back to normal. Spend things are about to get interesting ing rises, prompting employment to recov he cholera pandemic of the early economies going back to 1820 suggests that er, but there is not much evidence of ex T1830s hit France hard. It wiped out near such a synchronised acceleration relative cess. The notion that people celebrated the ly 3% of Parisians in a month, and hospi to trend is rare. It has not happened since end of the Black Death by “wild fornica tals were overwhelmed by patients whose the postwar boom of the 1950s. tion” and “hysterical gaiety”, as some his ailments doctors could not explain. The The situation is so unfamiliar that torians suppose, is (probably) apocryphal. end of the plague prompted an economic economists are turning to history for a The 1920s were far from roaring, at least at revival, with France following Britain into sense of what to expect. The record sug first. On New Year’s Eve 1920, after the an industrial revolution. But as anyone gests that, after periods of massive nonfi threat of Spanish flu had decisively passed, who has read “Les Misérables” knows, the nancial disruption such as wars and pan “Broadway and Times Square looked more pandemic also contributed to another sort demics, gdp does bounce back. It offers of revolution. The city’s poor, hit hardest three further lessons. First, while people by the disease, fulminated against the rich, are keen to go out and spend, uncertainty Step on it 1 who had fled to their country homes to lingers. Second, crises encourage people GDP, % increase on a year earlier avoid contagion. France saw political in and businesses to try new ways of doing stability for years afterwards. things, upending the structure of the econ 2016-1 annual average 2021 forecast Today, even as covid19 rages across omy. Third, as “Les Misérables” shows, po 76543210 poorer countries, the rich world is on the litical upheaval often follows, with unpre United States verge of a postpandemic boom. Govern dictable economic consequences. France ments are lifting stayathome orders as Take consumer spending first. Evi vaccinations reduce hospitalisations and dence from earlier pandemics suggests Britain deaths from the virus. Many forecasters that during the acute phase people behave Canada reckon that America’s economy will grow as they have during the past year of co Italy by more than 6% this year, at least four per vid19, accumulating savings as spending centage points faster than its prepandem opportunities vanish. In the first half of the Germany ic trend. Other countries are also in for 1870s, during an outbreak of smallpox, Japan unusually fast growth (see chart 1). The Britain’s householdsaving rate doubled. Source: IMF Economist’s analysis of gdp data for the g7 Japan’s saving rate more than doubled dur 60 Finance & economics The Economist May 1st 2021
ed with a significant economic downturn.” makers across the world are less interested A flattened curve The1920s were also an era of rapid automa in reducing public debt or warding off in Consumer prices*, % change on a year earlier tion in America, especially in telephone flation than they are in getting unemploy World’s 12 largest wars and pandemics†, 1300s-2018 operation, one of the most common jobs ment down. A new paper from three aca 8 for young American women in the early demics at the London School of Economics 1900s. Others have drawn a link between also finds that covid19 has made people Wars 6 the Black Death and Johannes Gutenberg’s across Europe more averse to inequality. 4 printing press. There is as yet little hard ev Such pressures have, in some instanc 2 idence of a surge in automation because of es, exploded into political disorder. Pan covid19, though anecdotes abound. demics expose and accentuate preexisting 0 Whether automation deprives people inequalities, leading those on the wrong Pandemics -2 of jobs, however, is another matter. Some side of the bargain to look for redress. Ebo 201510505101520 research suggests that workers in fact do la, in 201316, increased civil violence in Years before/after better in the aftermath of pandemics. A pa West Africa by 40%, according to one stu imf *Median. In Britain, France, Germany, Italy, the Netherlands, per published last year by the Federal Re dy. Recent research from the considers Spain, United States and Japan †Measured by deaths, serve Bank of San Francisco finds that real the effect of five pandemics, including excluding regional wars and pandemics without economic data wages tend to rise. In some cases this is Ebola, sars and Zika, in 133 countries since Source: Goldman Sachs through a macabre mechanism: the dis 2001. It finds that they led to a significant ease culls workers, leaving survivors in a increase in social unrest. “It is reasonable like the old days”, according to one study, stronger bargaining position. to expect that, as the pandemic fades, un but America nonetheless felt like “a sick In other cases, however, rising wages rest may reemerge in locations where it and tired nation”. A recent paper by Gold are the product of political changes—the previously existed,” researchers write in man Sachs, a bank, estimates that in 1946 third big lesson of historical booms. When another imf paper. Social unrest seems to 49 American consumers spent only about people have suffered in large numbers, at peak two years after the pandemic ends. 20% of their excess savings. That extra titudes may shift towards workers. That Enjoy the coming boom while it lasts. Be spending certainly aided the postwar seems to be happening this time: policy fore long, there may be a twist in the tale. n boom, though the government’s monthly “business situation” reports in the late 1940s were nonetheless filled with worry Taxing capital of an impending slowdown (and indeed the economy went into recession in 1948 Benchmarking Biden 49). Beer consumption actually fell. Con sumers’ caution may be one reason why there is little evidence of pandemicin duced surges in inflation (see chart 2). The second big lesson from postpan demic booms relates to the “supply side” of Will Joe Biden’s proposed taxes on capital make America an outlier? the economy—how and where goods and services are produced. Though, in aggre f president joe biden succeeds in rais gains and dividends, tricky. The oecd, a gate, people appear to be less keen on fri Iing America’s top rate of federal capital club of mostly rich countries, does not volity following a pandemic, some may be gains and dividend tax to 39.6%, as he publicly track members’ capitalgainstax more willing to try new ways of making pledged to Congress on April 28th, it would rates because exemptions and carveouts money. Historians believe the Black Death be twice the average top rate in Europe. But make them so hard to compare. made Europeans more adventurous. Piling it would apply only to the highestearning Fortunately comparing how much on to a ship and setting sail for new lands 0.3% of taxpayers: those earning more money countries raise is easier. America’s seemed less risky when so many people than $1m. The fact that countries cast their total taxes on capital brought in revenues were dying at home. “Apollo’s Arrow”, a re nets differently makes comparing taxes on worth about 5% of gdp in 2018, according cent book by Nicholas Christakis of Yale capital, which include levies on compa to analysis by Spencer Bastani of the Insti University, shows that the Spanish flu pan nies and property as well as on capital tute for Evaluation of Labour Market and demic gave way to “increased expressions of risktaking”. Indeed a study for Ameri ca’s National Bureau of Economic Re A bevy of levies search, published in 1948, found that the Selected countries, 2018 number of startups boomed from 1919. To day new business formation is once again Total tax revenues, % of GDP Capital-tax revenues, % of GDP surging across the rich world, as entrepre neurs seek to fill gaps in the market. Capital Labour Consumption Corporate Capital gains Property Other† Other economists have drawn a link be 50403020100 86420 tween pandemics and another change to Australia* Australia* the supply side of the economy: the use of France France laboursaving technology. Bosses may Britain Britain want to limit the spread of disease, and ro Norway Norway bots do not fall ill. A paper by researchers at Italy Italy the imf looks at a number of recent out Denmark Denmark United States United States breaks of diseases, including Ebola and Ireland Ireland sars, and finds that “pandemic events ac Germany Germany celerate robot adoption, especially when Sources: Bastani and Waldenström (2020); OECD *Data from 201 †Wealth and inheritance the health impact is severe and is associat The Economist May 1st 2021 Finance & economics 61
Education Policy and Daniel Waldenstrom By how much would Mr Biden’s plans gains tax. American budget wonks usually of the Research Institute of Industrial Eco change this picture? Working out the an calculate a revenuemaximising rate of nomics, two Swedish thinktanks. That swer is just as tricky as conducting cross capitalgains tax of about 28%. But that is compares with an average of 5.8% for a country comparisons. The headline pro under existing rules, which in effect waive panel of 16 oecd countries. What is distinc posals are straightforward. Corporate taxes the tax on estates when heirs inherit them. tive about America is its mix of capital tax would rise from 21% to 28%. And the rate Mr Biden wants to close that loophole, so es. Its corporate tax raises relatively mea on capital gains and dividends would near postponing capital gains indefinitely gre revenues (see chart on previous page), ly double from 20% for top earners (who might no longer be so attractive, drawing whereas propertytax revenues are unusu own a disproportionate share of wealth). more of them into the tax net. Taking this ally high. Overall, America collects less tax But assessing how saving and investment change into account, the PennWharton than most rich countries, so as a share of respond to capital taxes is one of the most budget model finds that Mr Biden’s capital total revenues, capital taxes are a hefty hotly debated topics in economics. gains proposal would raise $113bn over ten 20%, fifth among the 16 countries in the re Investors can choose when to sell as years. That is still relatively modest com searchers’ sample. sets, and therefore when to pay capital pared with the $1trn that Mr Biden’s pro ButtonwoodUp to speed
Why private-credit markets are due a growth spurt here are many ways to tell the story like a bank loan in that it is tailored to the lose out to a bid from a rival. Having Tof the turnaround in America’s cap borrower and does not usually change done the homework, the losing firm ital markets since last spring. The focus hands in markets. It is like a publicly might call up the winner and offer to buy has been on public markets, notably the traded bond in that the endinvestors are the debt. wondrous surge in share prices. Yet the pension and insurance funds looking for This nexus with peis one reason to change in fortunes of private equity (pe) regular fixed income. The border between expect a spurt in private credit. For pe is perhaps more remarkable. A year ago private and public credit is blurry. The sponsors, the attraction of private credit Blackstone, a pegiant, reported a first defining factor is how widely a loan is is speed. There are no lengthy discus quarter loss of more than $1bn. A reckon distributed. The highestprofile part of sions with regulators, rating agencies or ing seemed overdue. Widespread de private credit is the market for leveraged underwriting banks. And speed matters faults on overborrowed peowned busi loans, which are fixedincome instru more than ever. Buyout funds have $1trn nesses were expected. A year on, Black ments sold to syndicates of investors. The or more of “dry powder”, capital that has stone has reported record profits of more widely a loan is distributed the more been raised but not yet deployed. “Equity $1.75bn. So much for comeuppance. liquid it is. A broadly syndicated loan markets have rallied, so corporate buyers Its rude health owes a lot to the speed, might be sold to 100 or more lenders. By are competitive,” say Mark Attanasio and as much as the extent, of recovery in contrast, the number of parties to a truly JeanMarc Chapus of Crescent Capital, a asset prices. Buyout shops barely had private deal is often in the single digits. privatecredit firm. The upshot is that time to mark down their portfolio com The bigger pe firms have privatecredit every potential target has many bidders. panies in line with a falling stockmarket arms. The set of skills required is similar, The other reason to expect growth in before share prices suddenly recovered. says Mike Arougheti of Ares, a private private credit is its appeal to investors. Dealmaking has picked up to a frantic asset manager. Both types of investor need Yields are higher than on widely traded pace. Competition from corporate buyers to make sound judgments about the corporate bonds. Moreover, the interest means that buyout firms must move growth of cashflows, and the hazards charged on private loans is usually tied quickly. Where they have an edge is in around it, for companies that are not to shortterm interest rates. That protects raising debt. In fact the premium on widely researched. There are obvious investors from sudden changes in Feder speed in peis why you should expect to synergies. Say a pefirm has carried out al Reserve policy, which fixedrate cor see a sharp pickup in a related corner of due diligence on a buyout target only to porate bonds are vulnerable to. Private capital markets—private credit. credit specialists typically demand great Private credit mainly serves mid er control over the terms of lending. That sized companies that are acquiring way they can mitigate the risks of a bor something or undergoing change of rower getting into trouble. They are also some kind—buying out a family mem better placed to recover more of their ber’s stake; refinancing their bank debts; money in the event of a default. In a and so on. More often than not, this lightly syndicated deal, there are fewer change will be carried out under the people to indulge in wasteful squabbling auspices of a pesponsor and require a lot over the remains. of borrowing. Banks used to finance this Everything is happening more quick sort of thing, but not anymore. To access ly in capital markets. Even though priv the public markets, a company must ate markets do not trade minuteby meet the demands of regulators. It must minute, there is little time to lose. It be biggish and profitable, with a history seems only yesterday that regulators of pristine financial statements. A lot of were fretting publicly about the un companies do not tick the boxes. checked growth of opaque privatecredit Private credit has elements of both markets. Things then went quiet. But the bank and capitalmarket finance. It is noise levels may go up again soon. 62 Finance & economics The Economist May 1st 2021
posed increase to the corporate tax is ex pear. Hence the keen interest in less con (57) or even Britain (74). By comparison, pected to bring in. The combined revenues ventional indicators of economic activity, the latest restrictions warranted a score of would come to about 0.4% of projected such as electricity consumption, mobile only 47 on April 23rd. gdp over the decade, which would still phone data and views from space. Analysts at Goldman reckon lockdowns leave America in the middle of the oecd Just as satellite images can see the in today disrupt the economy less than did pack for overall capital taxes. creased intensity of India’s pyres during similar lockdowns a year ago, as business Might the scorekeepers be underesti the day, they can capture the reduced lumi es and consumers have adapted. If India’s mating the revenues from changing capi nosity of its cities at night. In March last restrictions remain only around their cur talgains taxes? That is what a recent paper year, when Narendra Modi, India’s prime rent level for the three months from April by Natasha Sarin of the University of Penn minister, introduced a strict nationwide to June, economic activity will be 2.9% sylvania, Larry Summers of Harvard Uni lockdown, India’s nighttime lights dark smaller than it was in the previous three versity, Owen Zidar of Princeton University ened by 5.6% compared with a year earlier, months, they predict. If the pandemic then and Eric Zwick of the University of Chicago according to Robert Beyer, Sebastian relents, gdp could still be much bigger this argues, for a variety of technical reasons. FrancoBedoya and Virgilio Galdo of the year than it was last. But that says as much Earlier work by Mr Zidar and Ole Agersnap, World Bank. By May 2020, India was 10% about the awfulness of 2020 as it does also of Princeton, finds a rate of 3847% dimmer. The country as a whole has about the prospects for the rest of 2021. n could maximise revenue. Still, the uncer brightened since. But 31of Maharashtra’s 36 tainty around these analyses is high—the districts (including Mumbai) and all but a second paper relies on an extrapolation handful of those in Madhya Pradesh and Labour shortages in America from statelevel taxes. And in any case the Uttar Pradesh shone even less brightly in revenuemaximising rate is not necessar March 2021 than a year earlier. Help wanted ily the same as the most desirable rate for Mr Beyer and his colleagues have also society, notes James Poterba of the Massa taken advantage of India’s daily statistics chusetts Institute of Technology. on electricity consumption, which they Economic policy should consider both have “scraped” from the website of the grid the revenue raised and the downsides of operator. During April 2020, consumption Why workers are hard to find, even the tax—and Congress will no doubt soon fell by almost 27% below the amount that though unemployment is high be debating just that. n past patterns would predict, given the tem perature and the underlying upward trend he pandemic has led to all sorts of in India’s power usage. Consumption fi Tweird economic outcomes. The latest India’s economy nally surpassed its expected level in March oddity is the growing chorus of complaints 2021. That recovery, however, has retreated in America about a shortage of labour, even Lights, power, in recent weeks (see chart). though 8m fewer people are in work today The economy’s prospects for the rest of than before covid19 struck. In early April inaction the year depend on how the pandemic Bloomberg reported that Delta Air Lines evolves and the government responds. Mr had cancelled 100 flights for lack of staff. Modi has left it up to the states to decide People are so hard to find that one café in how and when to reimpose restrictions on Florida has turned to robots to greet cus How to track the economic impact of gathering. The country therefore faces a tomers and deliver food. A branch of Mc India’s second covid-19 wave patchwork of impediments to moving and Donald’s is paying potential burgerflip ivers change course, forests catch mingling. One way to measure their strin pers $50 just to turn up for a job interview. Rflame, glaciers melt: Raj Bhagat Palani gency is to tally up the different types of re The data back up the anecdotes. Total chamy of the World Resources Institute In strictions, such as school closures or event vacancies are running at their highest level dia, a research centre, has tracked all of cancellations. Another is to use smart for at least two decades (see chart on next these injuries to India’s landscape through phone data tracking the drop in users’ mo page), indicating that firms have plenty of satellite images. In the past year, he has bility. Goldman Sachs, a bank, has com unfilled positions. Furthermore, job open been trying to map a different kind of bined both approaches into a single lock ings are leading to fewer hires than you harm, identifying infection hotspots, pin down index. It gave India a score of 87 out would expect based on the historical rela pointing hospital beds and crosschecking of 100 at the worst point last year, far more tionship between the two. And even ac official fatality numbers by examining severe than the peaks recorded in America counting for changes in the composition infrared images of the fires at crematoria. of the workforce, wage growth, at about The murderous toll of India’s second 3%, has been surprisingly robust, suggest wave of covid19 infections is impossible Power cut ing that firms are offering bigger pay pack to miss but hard to measure. The same is India, deviations from predicted ets to tempt workers. If they persist job true of its toll on the economy. gdpdata for electricity consumption*, % shortages could eventually fuel inflation, April to June will not be released until the 0 threatening the economic recovery. end of August. Figures for industrial pro There are three potential explanations duction in April will not appear until mid for the puzzling shortages: overgenerous -10 June and will anyway miss the service sec benefits; fearful workers; and a realloca tor, which is likely to be hardest hit. India’s tion of labour between industries. Start government publishes a “periodic” survey -20 with America’s huge fiscal handouts. The of the labour force. But Himalayan glaciers latest stimulus cheques, posted in the could shrink in the time it takes for it to ap -30 spring, were for up to $1,400 per person. MFJDNOSAJJMAMFJ A† Seemingly every American knows of a 2020 2021 neighbour’s cousin’s boyfriend who re Correction In our piece on Amundi last week (“Alpha plus”) we wrote that the European asset Source: R.C.M. Beyer, *Based on a model of ceived a “stimmy” cheque, then quit his job manager’s net income was €962bn in 2020. It was in S. Franco-Bedoya, V. Galdo, pre-pandemic trends in order to sit on the sofa. A federal supple World Development 2021 †April 1st-24th average fact €962m. Sorry. ment to unemployment insurance (ui), The Economist May 1st 2021 Finance & economics 63
Taking up the slack The Turkish lira United States Money for nothing
Job openings*, % Unemployment rate, % ISTANBUL 5 15 Counting the costs of the currency’s failed defence 4 12 redawn police operations in Turkey did they start such a silly process, why 3 9 Pare nothing new, but some still raise wasn’t it transparent, and who ordered eyebrows. Under the cover of darkness the banks to sell foreign currency and at 2 6 on April 13th, police officers across the what rates?” The government has not 1 3 country took down giant banners hang provided compelling answers. RECESSIONS ing from offices of Turkey’s main opposi With its reserves eroded, the central 0 0 tion party, the Republican People’s Party bank might not be able to defend the lira 21102001 21102001 (chp). “Where is the $128bn?” the offend for much longer. And the currency is Source: Bureau of *Job openings in relation to ing signs read. under pressure again. After a strong start Labour Statistics total non-farm employment The $128bn is the amount of foreign to the year, the lira resumed its descent currency reserves bankers and analysts after Mr Erdogan sacked the former currently $300 a week, ensures that four in reckon has been squandered by Turkey’s centralbank governor, a respected policy ten unemployed people earn more from central bank in its attempt to prop up the hawk, and replaced him with Sahap benefits than they did in their previous job. lira over the past couple of years. (Com Kavcioglu, a critic of high interest rates. Economic research has long concluded prehensive official figures are not pub The former governor reportedly got that more generous benefits blunt incen lished.) The government, headed by under Mr Erdogan’s skin after ordering tives to look for work. Recep Tayyip Erdogan, has little to show an internal probe into the central bank’s Yet this relationship appears to have for the policy, thought to be spearheaded dollar sales. His successor has defended weakened during the pandemic. The fact by Mr Erdogan’s soninlaw, a former the policy, saying it prevented further that increases in ui payments have been finance minister. Since the start of 2019, lira depreciation. Mr Kavcioglu was timelimited may make workers reluctant when the interventions began, the lira already expected to slash rates in the to turn down a job with longerlasting re has lost over 35% against the dollar, the second half of the year. Mr Erdogan may wards. In the early part of the pandemic the result of inflation, low real interest rates lean on him to do so even earlier to offset ui supplement was even more generous, at and a string of political crises. the damage to the economy from the $600, but its expiry in the summer had “lit Prosecutors ordered the banners be pandemic. After a record spike in cases, tle effect on overall employment”, accord taken down, claiming they insulted the the government announced a threeweek ing to a paper published in February by president, a crime punishable by up to lockdown starting on April 29th. Arindrajit Dube of the University of Massa four years in prison. One official said The lira’s decline has eaten away at chusettsAmherst. Likewise, in the areas they violated covid19 restrictions. But all Turks’ purchasing power, forcing many where the current $300 is a relatively larger this only heightened the controversy. to turn to the greenback. (Turkish resi boost to income, employment growth has “Where is the $128bn?” lit up social me dents keep more of their savings in dol not weakened since January, when that up dia. On April 21st Mr Erdogan conceded lars than in lira.) But the lack of confi lift was introduced. that the central bank had used its re dence in the management of the coun This suggests that the second factor, serves to defend the lira, that it might do try’s finances has had other effects, in fear, may be important in explaining so again if needed and that the amount cluding a boom in cryptocurrency America’s shortage of staff. Nearly 4m peo spent, including some other items, was trading. Between the start of February ple are not looking for work “because of the in fact $165bn. Markets shuddered. and March 24th trading volumes in coronavirus pandemic”, according to offi The money has not vanished. To Turkey reached 218bn lira, up by 3,000% cial data. And consider which industries relieve the pressure on the currency, the on the same period last year, according to are experiencing the most acute worker central bank exchanged some of its Reuters. Holders have suffered a double shortages. Jobs in health care, recreation dollars for lira through state banks. But shock. The first came when the central and hospitality report the highest level of this incurred staggering costs. Given the bank banned the use of cryptocurrencies job openings, relative to employment. Ma lira’s depreciation over time, the trades as payment. The second was the collapse ny of these involve plenty of personto have generated losses of about 250bn lira of two Turkish cryptoexchanges in a person contact, making their workers es ($30bn), equivalent to 4% of gdp, calcu single week. One of their founders is pecially vulnerable to infection (a study lates Kerim Rota, a former banker and thought to have fled to Albania with $2bn from California earlier this year found that member of a new opposition party. That in investors’ assets. They too will be cooks were most at risk from dying of co raises several questions, he says: “why asking where their money has gone. vid19). By contrast, in industries where maintaining social distancing or being outside is often easier, labour shortages decline, reflecting changing consumer de a position as a delivery driver in farther are less of an issue. The number of job mands. Analysis by The Economist of over out Westchester. openings per employee in the construc 400 local areas also finds a wide variation As vaccinations continue to reduce tion industry is lower today than it was be in job churn across geographies: the gap hospitalisations and deaths from covid19, fore the pandemic. between jobs growth in the most buoyant and limit the spread of the disease, Ameri The final reason for worker shortages areas and that in struggling ones is twice as cans’ fears about taking highcontact jobs relates to the extraordinary reallocation of wide as it was before the pandemic. Work should fade too. But if shortages are to dis resources under way in the economy. The ers may take time to catch up with this cre sipate fully, and the threat of inflation is to headline growth in vacancies represents ative destruction. A former bartender look be contained, some of the unemployed the rise in opportunities in some indus ing for work in downtown Manhattan, for will also have to take up work in sectors tries—say, clerks in diy stores—as others instance, may not quickly spot and secure and areas that are new to them. n 64 Finance & economics The Economist May 1st 2021
Free exchange Building a boom
What an infrastructure bonanza could mean for America’s economy roadbuilding was both a good investment and a boon to growth; it contributed about one percentage point more to productivity growth across the economy before 1973 than it did thereafter. More recent work by Valerie Ramey of the University of California, San Diego, arrives at a similar conclusion. She estimates that a 1% in crease in the stock of public capital is associated with a rise in out put of 0.33%: a figure slightly below but very close to past esti mates, including Aschauer’s. What impact then would an infrastructure bonanza have, if it makes it through Congress? As both Mr Fernald and Ms Ramey note, the value of new investment depends upon the state of the infrastructure already in place. The second highspeed transport link between two cities is unlikely to have the same positive eco nomic impact as the first. How much America stands to benefit from new spending will depend in part on its needs. A burst of investment does seem overdue. While spending on most sorts of infrastructure, adjusted for inflation, has continued to climb in recent decades, net investment—taking account of de preciation of an ageing capital stock—has not. Growth in the real net stock of transport capital per person, which rose above 2% in the 1960s, subsequently dropped below 1%; in the aftermath of the financial crisis it sank to nearly zero. Spending on most other oe biden’s plan to lavish spending on infrastructure is a crucial sorts of infrastructure has followed similar trends (with the ex Jpart of his bid for a transformative presidency. Much of the first ception of digital capital). Mr Biden’s proposal also allocates large tranche of around $2.7trn, now entering the meatgrinder of con sums to measures intended to reduce and protect against climate gressional politics, will be spent on greening the American econ change, like electricvehicle infrastructure and retrofitting homes omy and tackling inequalities. About a quarter will be directed to and buildings, which could raise output in the future by reducing wards overhauling transport, water and other basic infrastruc the economic cost of climate change. ture—a vast sum, by recent standards. Bridges to nowhere and Money alone will not solve all problems, though: infrastruc white elephants are not the stuff of which proud legacies are ture spending does not, for instance, reduce congestion. Studies made, and history’s view of the bill will depend on its specifics, consistently show that new transport capacity does not reduce which are still to be determined. Yet economic research suggests gridlock over the long run, because freeflowing traffic attracts that, in the right circumstances, basic infrastructure spending has new users until roads and railways fill up once more. Breaking up significant, positive effects in the long run. jams, economists reckon, requires charging users for access to A clear understanding of infrastructure’s contribution to transport capacity, through tolls or other fees. Such a policy could growth has been a long time coming. In 1944 Leland Jenks, an eco both raise money and improve the efficiency with which transport nomic historian, extolled America’s railways as a transformative is used, but it has proved politically difficult to implement. force, noting that “the conviction that the railroad would run any where at a profit put fresh spurs to American ingenuity and Roadway Joe opened closed paddocks of potential enterprise.” Yet Robert Fogel, Yet new transport investments could subtly reshape America’s a Nobelprizewinning economist, argued in 1964 that the “social economic geography. Past spending has had profound effects on savings” generated by railways—the contribution to economic the location of activity. America’s interstate highways drove the growth relative to alternatives, like canals—was in fact rather country’s socially transformative suburbanisation, for example. modest: worth perhaps at most 3% of annual output in 1890. Work by Nathaniel BaumSnow of the University of Toronto con Economists’ attempts to grapple with the effects of infrastruc cludes that but for the construction of the interstate highway sys ture spending intensified around 1990. David Aschauer, then of tem, the populations of American cities would have grown by 8% the Federal Reserve Bank of Chicago, argued that the size of the between 1950 and 1990; instead they shrank by 17%. A reassess public capital stock contributed substantially to productivity and ment of Fogel’s estimates of the impact of railways by Richard that the end of America’s postwar infrastructurespending spree Hornbeck of the University of Chicago and Martin Rotemberg of was an important cause of the slowdown in productivity growth New York University, which considers their wider impact on the in the 1970s. Assessing this claim was not easy. Untangling causa economy, suggests that without the railways America’s gdp in tion presented problems, for instance: does infrastructure invest 1890 would have been around a quarter smaller. The massive shift ment cause fast growth, do fastgrowing economies demand lots in population they brought about altered not only the American of investment, or are both things caused by some other factor? economy but the very idea of what America was and could be. Subsequent research suggested that infrastructure spending A new era of largescale infrastructure investment would nec does indeed lift growth in output and productivity. John Fernald of essarily be less revolutionary than the railways and roads of the the Federal Reserve Bank of San Francisco tackled the causation is past. Yet it might nonetheless prove surprisingly transformative sue by studying whether new spending on roads subsequently in its direct economic impact, its knockon effects on private in raised productivity in industries that use roads intensively, rela dustry—and in the psychological spur it provides to a country that tive to others that do not. His analysis determined that postwar could do with a bit of reinvigoration and renewal. n Science & technology The Economist May 1st 2021 65
Post-covid syndrome people in Britain reported they had had long covid for more than six months—and The sting in the tail this will not include any of those infected towards the end of 2020 in the country’s second wave. At the time when the ons collected those data, at least 1.1% of Britain’s popula tion, including 1.5% of workingage adults, reported symptoms dragging on for three Researchers are closing in on long covid. The results are alarming months or longer. Multiply that by the n the 1890s one of the biggest pandem even the official definition of its symp hundreds of millions around the world Iics in history, known at the time as “Rus toms is fluid, because knowledge of its de who have been infected at some point by sian flu”, swept the world. It left 1m people tails is still evolving. Britain’s National In sarscov2 , the virus that causes covid19, dead. Russian flu is now thought to have stitute for Health and Care Excellence, for and a publichealth catastrophe may be in been misnamed. It was probably not influ example, defines pcs as “signs and symp the making. In the short term, it was only enza, but rather a coronavirus ancestral to toms that develop during or after an infec right that effort focused on dealing with one that now just causes symptoms de tion consistent with covid19, continue for the acute disease. Today covid19’s chronic scribed by sufferers as “a cold”. When it more than 12 weeks and are not explained aftereffects also need to be considered. was new, however, few people had immu by an alternative diagnosis”. It does not, nity to it, so it was often lethal. And not on though, specify a list of such symptoms. It ain’t over ’til it’s over ly that. For, as the pandemic receded, it left There are, indeed, many of them. A sur Not all of the suffering badged as long co in its wake a wave of nervous disorders. A vey of almost 3,800 people around the vid is actually caused by sarscov2. Even similar wave followed the next big pan world reported 205. A sufferer typically has before the virus came along lots of young demic, the “Spanish” flu of 1918 (which, several at a time, with the most debilitating and healthy people would develop similar though nothing much to do with Spain, usually being one of three: severe breath ly debilitating symptoms for medically un really was influenza). One common symp lessness, fatigue or “brain fog”. explained reasons. The classic example of tom was lethargy so bad that in Tanganyika Britain’s Office for National Statistics such a mystery illness is chronicfatigue (modernday Tanzania) it helped cause a (ons) estimates that 14% of people who syndrome (cfs), which often seems to fol famine because so many people were too have tested positive for covid19 have low a viral or bacterial infection. Chronic debilitated to pick the harvest. symptoms which subsequently linger for migraines and other symptoms often seen Something similar is happening now, more than three months (see chart 1 on in long covid would, in normal years, also with the covid19 pandemic. A wave of next page). In more than 90% of those cas strike lots of people out of the blue. The da what has become known as “long covid” is es the original symptoms were not severe ta do, nevertheless, suggest that the effects emerging in countries where acute cases enough to warrant admission to hospital. of long covid are swamping this symptom have been falling. Formally, the condition According to the ons, in the four weeks atic background. Researchers in Britain is called “postcovid syndrome” (pcs). But from February 6th nearly half a million compared the persistence of a dozen typi 66 Science & technology The Economist May 1st 2021
cal longcovid symptoms in nearly 22,000 sort of thing is known to occur with other people who had tested positive for sars The long run 1 viruses, including measles, dengue and cov2 with the rates of these symptoms in a Britain, share of people testing positive for Ebola. rna viruses, of which sarscov2 is similar group with no record or likelihood covid-19 with symptoms after 12 weeks, % an example, are particularly prone to this of having been infected. In both, many Self-reported phenomenon, says Dr Nath. people got better as time passed (see chart 25 Proof of this hypothesis is lacking, but 95% confidence interval 2). But after 12 weeks the rate of symptoms 20 there are pertinent clues. Researchers are in the covid19 group was eight times high looking for sarscov2 or its products in er than in the uninfected group. 15 all sorts of fluids and tissues from people pcs Who should be diagnosed with is 10 with prior infection. There is already evi still being worked out. Many of those with dence that the virus can persist in the body, longcovid symptoms have tested positive 5 though the data are predominantly from sars c v neither for o 2 nor for antibodies 0 those who did not develop long covid. A against it—perhaps because tests were not study published recently in Nature showed 2- 2- 6 7-24 25-34 35-49 50-69 70+ available when they were ill or those tests that some people had traces of sarscov2 By age group were not sensitive enough to pick up the proteins in their intestines four months Source: ONS Coronavirus Infection Survey relevant antibodies before they disap after they had recovered from acute co peared (a problem with several of the first vid19. Viral products from sarscov2 generation of antibody tests). Studies com ing longcovid patients with neurological have also been found in people’s urine sev paring symptomatic individuals with and symptoms, says there has been a marked eral months after their recovery. Dr Putrino without a positive viral or antibody test increase in dysautonomia since the pan says viral material has been detected in generally find the same patterns of symp demic began. David Putrino, director of re stool samples from some patients in his toms in both. Yet many doctors are brush habilitation innovation at Mount Sinai longcovid clinic, but not all. ing off individuals with no laboratory Hospital, in New York, says that roughly The second hypothesised mechanism proof of past infection. 80% of people who show up at his longco for long covid, that it is an autoimmune Those showing up at longcovid clinics vid clinic have symptoms that are “dysau disease, holds that the virus, though gone, in America and Europe are predomi tonomialike”, regardless of the underly has caused something to go awry with the nantly middleaged and mostly women. ing cause. “And by far these symptoms are immune system—which now attacks some Ethnic minorities are underrepresented, the most debilitating, so if we rehabilitate of the body’s own tissues. A growing body even though they have higher acute infec them we can often make the biggest impact of evidence backs this idea, too. tion rates. Many doctors suspect this is be in people’s lives.” cause white people in these parts of the Based on these patterns of symptoms, Bad reactions world are often in a better position than and various laboratory tests of longcovid The immune system is a complex mach others to seek care, and are more demand patients, doctors are focusing on three ine, with many cellular and molecular ing about doing so. Some see parallels with possible biological explanations. One is components, any of which might break cfs, known sceptically in the past as “yup that long covid is a persistent viral infec and cause symptoms. Some of those suf pie flu” because of the demographic profile tion. A second is that it is an autoimmune fering from long covid have badly behaving of those who spoke out about it. disorder. The third is that it is a conse macrophages, the cells responsible for de A study by King’s College London found quence of tissue damage caused by inflam tecting and engulfing harmful invaders. the median age of those with selfreported mation during the initial, acute infection. Others exhibit abnormal activation of their long covid to be 45, echoing the message of According to the first of these hypothe bcells—white blood cells which churn out the clinicattendance data. But the ons ses, some patients never clear the virus custommade antibodies to gum up specif found, contrary to what those data seem to completely. They are not infectious, says ic pathogens. In these cases, their bcells suggest, that women were only slightly Dr Nath, so it could be that they harbour seem to make an unusual quantity and more likely than men to develop the condi some altered form of the pathogen which variety of “autoantibodies”, which attack tion—though it is unclear whether the is not replicating and is thus undetectable the body’s own cells instead of invaders. types of symptoms experienced by women by the standard test for sarscov2, but is Others still have low levels of interferons, a may be more debilitating. nevertheless making some viral product group of molecules involved in fighting off Broadly speaking, there are three types that their bodies are trying to fight off. This viral infections. And some have problems of longcovid patients, says Avindra Nath with their tcells, which are parts of the of America’s National Institutes of Health. immune system that have the jobs of de The first are characterised by “exercise in A slow path to recovery 2 stroying infected cells and alerting bcells tolerance”, meaning they feel out of breath Britain, prevalence of symptoms among people to the presence of pathogens, so that ap and exhausted from even small tasks in testing positive for covid-1, % propriate antibodies can be made. volving physical activity. The second are Several studies have found reduced t After weeks After 12 weeks characterised by cognitive complaints in cell counts in people who have had acute the form of brain fog and memory pro 129630 covid19, and also that their surviving t blems. The third are characterised by pro Fatigue cells are “exhausted”—meaning they Cough blems with the autonomic nervous sys Headache mount only a weak response to infections. tem, a set of nerves that control things like Muscle pain Laboratory studies by Dr Koralnik’s team heartbeat, breathing and digestion. Pa Loss of taste have found that longcovid patients with tients in this group suffer from symptoms Loss of smell brain fog have different tcell responses such as heart palpitations and dizziness. Sore throat from those of people who were once infect Impairments of the autonomic nervous Shortness of breath ed but are now asymptomatic. system are known as dysautonomia, an Nausea/vomiting All of this suggests that some individ Diarrhoea umbrella term for a variety of syndromes. Abdominal pain uals cannot fight the virus off completely, Igor Koralnik of Northwestern Memorial or that parts of their immune systems act Source: ONS Coronavirus Infection Survey Hospital, in Chicago, who has been treat in ways that may be detrimental to their The Economist May 1st 2021 Science & technology 67 bodies. Some doctors think people who are they move about, and feel dizzy—another already vulnerable to developing an auto hallmark of dysautonomia. Simply wear immune condition are pushed further in ing compressive stockings prevent that direction by the stress which covid19 blood pooling in their legs ca lp these puts on their bodies. Such disorders are people a lot. So can avoidin ing out typically diagnosed in middle age, which is doors in hot and humid we . Those consistent with the agepeak found by with extreme fatigue are ta how to King’s College, and are more common in watch for “energy windows”,in which to do women—as is, albeit to a lesser extent, the most important tasks of the day. long covid. Dr Putrino’s team have identified an The third hypothesis about the cause of other common problem. They tested 25 of long covid, inflammation, holds that the their longcovid patients and found that all fight put up by the body against the acute had carbondioxide levels which were too illness causes irreparable collateral dam low. This may sound surprising, given that age. This often happens during a viral in CO2 is a waste product derived from respi fection, but it could be particularly likely ration, and is harmful if present in too high with covid19. Outofcontrol inflamma a concentration. But it also helps regulate tion, caused by cytokines (molecules that acidity, and incorrect acidity can disrupt drum up inflammation) is a hallmark of all sorts of metabolic processes. Low CO2 the illness. levels are also often seen in dysautonomia One guess is that the inflammation and cfs. The solution is breathing exercis which happens when people are ill some covid. “As soon as we define the immune es to help with CO2 retention. (Elsewhere, how damages parts of their autonomic abnormality in these patients, then it will opera singers are teaching longcovid pa nervous systems. Another suggestion, become very clear how to treat them,” says tients helpful breathing techniques.) made by Dr Koralnik, is that in some pa Dr Nath. “It is quite possible that we may At Dr Koralnik’s neurology clinic, the tients sarscov2 may damage the cells need multiple treatments for different approach is similar. Longcovid patients that line blood vessels, either by infecting types of immune response—and we are first assessed to see whether their spe them directly or via inflammation. This should be able to figure that out as well.” cific problem is memory, attention, fluen would change the way blood flows to the Some of those with long covid have felt cy in word finding, “or whatever they may brain, and may thus explain the brain fog. dramatically better after a covid19 vacci have that could be different than someone nation. But the relief tends to be tempor else who also has brain fog”. Cognitive re Whys and wherefores ary. Doctors have seen this before. People habilitation is then tailored to their needs. Studies intended to investigate each of with cfs, for example, sometimes feel tem It is painstaking work. After an average these possibilities are under way. But the porarily better after a flu shot or other vac of 150 days of rehab, which includes two three theories are not mutually exclusive. cination. Nobody knows why. One pos halfhour sessions each week with a thera Indeed, most researchers agree that long sibility is that the revvedup immune sys pist, plus remote followup, Dr Putrino’s covid is probably a term which embraces tem alleviates their symptoms for a time. A patients report a 3040% improvement in several conditions with different causes. placebo effect may also be involved. Akiko fatigue levels. Such improvement was not Determining these will help both with Iwasaki, an immunologist at Yale Univer seen in comparable patients who were not the development of treatments and with sity, has proposed clinical trials of covid19 undergoing rehab, so his team are confi their prescription. If persistent viral infec vaccines for long covid. She argues that dent that the effect is real. But out of about tion turns out to be a cause, the search will seeing which work, even if only for a short 100 patients whose outcomes are being be on for suitable antiviral drugs. Treat time, may unmask the specific immune monitored for research purposes, only ment would consist either of a defined abnormality involved—and show what three say they have recovered fully. course of medication that clears the virus sorts of drugs could work as well. This means that even with appropriate completely (as is now possible for hepati At the moment, the only treatment is health care, many of those who have long tis c, for example) or of drugs that people rehabilitation. To design protocols for long covid will continue to struggle in their dai take routinely to keep the virus at bay, the covid, Dr Putrino’s team have been work ly lives. A survey in Britain, albeit of a self approach taken with hiv/aids. ing with experts on disorders with similar selected group of people who responded, Treatments for immune disorders al symptoms, including dysautonomia, cfs found that the illness affected the ability to ready exist, and some may work for long and Lyme disease. “We’ve tried to be ex work of 80% of those suffering from it, and tremely symptomcentric,” he says. “We about 40% said it affected their ability to try to dig through a person’s life and under care for others (see chart 3). 3 Post-viral load stand what is causing the biggest triggers All this suggests that, even when the Britain, share of people with long covid [of symptoms] that interfere most with pandemic of acute covid19 has been dealt reporting the condition has affected their: their daily life.” with, a big problem will remain. Postviral % He describes some typical examples. syndromes on this scale affect not only 806040200 Many patients come in having lost a lot of those who are experiencing them directly. weight because if they have a full meal They also have serious consequences for Ability to work “their symptoms just wash over them and everyone else. n that’s it for the day.” That is common in Family life dysautonomia, whereby stretching of the Our new weekly newsletter, stomach causes an autonomicnervous “Simply Science”, showcases the Ability to care The Economist’s for dependents system reaction. These patients are ad best of report- vised by nutritionists on how to eat small ing and analysis on science— Finances er, nutritious meals and to find out what from vaccine manufacturing to foods are easiest on them. Some patients the hunt for ET. Sign up at Source: National Institute for Health Research experience a drop in blood pressure when economist.com/simplyscience 68 Books & arts The Economist May 1st 2021
→ Also in this section 69 Women of the Jewish resistance 70 Impressionistic fiction 70 Humans and animals 71 The art of food
Fiction and politics in Turkey In 2005, a year before he was awarded the Nobel prize for literature, Mr Pamuk Orhan Pamuk’s plagues had his own brush with prison when pros ecutors charged him with “insulting Turk ishness”. His offence was to have spoken a few words to a Swiss newspaper about the slaughter and forced deportation of over a million Armenians by Ottoman forces dur ISTANBUL ing the first world war (see Europe). He A Nobel-prizewinning author reflects on his country’s past and present blights faced up to three years behind bars, but the rhan pamuk has had two pandemics his characters had to endure. He rewrote charges were eventually dropped. Even Oto worry about. One confined him and swathes of the book. (Given the magnetic now he periodically receives death threats millions of other Turks to their homes for view from his desk, of the ferries and con because of those and later remarks. He still long stretches of the past year. The other tainer ships crisscrossing the Bosporus has a police bodyguard. struck over a century ago, germinated in and the rolling Istanbul skyline beyond, it his mind for years, and eventually spread is a wonder that he manages to get any The rest is silence through the pages of his new novel, work done at all.) “I was always in trouble because of my in “Nights of Plague”. “Nights of Plague” has just been pub terviews, not because of my novels,” he Mr Pamuk, Turkey’s most celebrated lished in Turkish and comes out in English says. With his latest book, that might author, says he began writing the book five next year. Mr Pamuk is intent on discuss change. Already he has had to deny a popu years ago. (At his home in Istanbul, he sits a ing it—but cannot help talking about the lar columnist’s claim that he has mocked good 20 feet from your correspondent; he state of Turkey. A chat between two Turks Kemal Ataturk, the founder of modern Tur turns 70 next year and takes social distanc about music or literature no longer seems key, in the person of a character. He may ing seriously.) He set the novel on a fiction possible without politics elbowing in; the face more heckling for his treatment of al Ottoman island in the Aegean in the ear stench of repression is everywhere. His Abdulhamid II, a sultan who sought to pre ly 1900s, amid an outbreak of bubonic next appointment, says Mr Pamuk, is with vent the Ottoman Empire’s collapse by plague. Just as he began to wrap it up, co Murat Sabuncu, a journalist who recently mixing autocracy with panIslamism. vid19 hit Turkey. Reality intruded on fic spent over a year in prison on bogus terror Modern Turkish Islamists—including tion. “Suddenly my private world was and coup charges. Days earlier, one of Mr the president, Recep Tayyip Erdogan— gone; everyone was using my words,” he Sabuncu’s guests on an opposition televi have reinvented Abdulhamid as a hero of says. “Everyone was talking about quaran sion channel stumbled into the studio the late Ottoman era. A period drama about tine, like they were researching this book.” with his fingers broken. A critic of the gov the sultan’s final years in power, aired on The resulting writer’s block lasted two ernment, he had just been attacked by state tv, goes further, depicting him as an weeks. Then the disease raging around nationalist thugs. “They put everyone in archetype for Mr Erdogan and a victim of him, plus anxieties about his own health, jail, but this is not enough, so they beat European and Zionist intrigues. Words made the author reimagine the pestilence [people] up,” says Mr Pamuk, shaken. spoken by Mr Erdogan one week regularly The Economist May 1st 2021 Books & arts 69 come out of Abdulhamid’s mouth in the Women of the resistance next week’s episode. His portrayal in “Nights of Plague” is less charitable. “Ab Righteous furies dulhamid closed parliament, did not care about free speech, and made Ottoman Is tanbul a police state,” says Mr Pamuk. He is a famously meticulous writer, re calling the Ottoman miniaturists in one of his earlier books, “My Name is Red”,a mur There were armed resistance move der mystery set in 16thcentury Istanbul. The Light of Days. By Judy Batalion. ments in more than 90 ghettos, Ms Bata Though such forensic attention to detail William Morrow; 576 pages; $28.99. lion says, but she mainly focuses on War can lead to impenetrable prose, for the Virago; £20 saw, Vilnius, Bedzin and Krakow. She viv most part Mr Pamuk’s shimmers. He pores idly recounts the formation of the fighting over old maps, photos and manuscripts, he great chronicler of the Warsaw organisations in these cities—and the op drawing sketches and painting waterco Tghetto, Emanuel Ringelblum, wrote of position they often faced from some fellow lours of his characters. After writing “The the female Jewish couriers who travelled Jews and the Judenrats, or Jewish Councils. Museum of Innocence”, a novel about a across Nazioccupied Poland: “Without a Many Judenrats still believed the best way lovesick hoarder, he assembled the every murmur, without a second’s hesitation, to save lives was by working with the Nazis day objects described in the book and en they accept and carry out the most danger to keep order; they deployed Jewish police shrined them in a small, remarkable muse ous missions…The story of the Jewish officers to help in roundups. um. For “Nights of Plague” he devoured all woman will be a glorious page in the histo The story is told through the eyes of a the pandemic literature he could find. He ry of Jewry during the present war.” group of young women fighters. Renia Ku studied cholera’s progress from China and Except it was not. Many such tales were kielka was, typically, “neither an idealist India to Ottoman lands, aboard steamships recounted in “Freuen in di Ghettos” nor a revolutionary but a savvy, middle packed with Muslim pilgrims heading to (“Women in the Ghettos”), an obscure Yid class girl who happened to find herself in a Mecca and Medina, and the resistance to dish book published in New York in 1946, sudden and unrelenting nightmare”. She quarantine measures across the empire. then largely forgotten. That is, until 2007, and her comrades procured weapons and But it took the mounting toll of today’s when Judy Batalion, a Jewish Canadian, ammunition, learned how to use them, pandemic—the way heads turned when found a copy in the British Library. Here made Molotov cocktails, faced down the someone coughed or sneezed on the metro was page after page of jawdropping cour Gestapo with false papers and did not con or at a nearby table—for him to realise that age—of “ghetto girls” who smuggled weap fess under torture. As Chajka Klinger, a re something was missing. He sensed that ons, flirted with Nazis then killed them, sistance leader in Bedzin, recalled: “No omission again when Istanbul, a city of blew up trains, sabotaged Vilnius’s elec revolutionary movement, let alone [one 15m people, sank into morbid silence dur tricity supply, rescued children and dug es of] the young, had ever faced problems ing its lockdowns, and when he prowled its cape tunnels. She speaks for many when similar to ours—the single, naked fact of empty streets at night with his bodyguard she writes: “Despite years of Jewish educa annihilation, of death.” and his camera, flanked by stray cats and tion, I’d never read accounts like these…I Their heroism was astounding. Bela dogs. “I had imagined my world, but the had no idea how many Jewish women were Hazan worked in a Gestapo office under a one thing I couldn’t imagine”,he says, “was involved in the resistance effort.” pseudonym. Frumka Plotnicka, a key resis fear. My characters in the book were more In “The Light of Days” Ms Batalion, her tance organiser (second from right in the fearless before the coronavirus.” self the granddaughter of Polish Holocaust picture), fought in the Bedzin ghetto upris Mr Pamuk likes to joke that he used to survivors, fills the gap. Built on years of ing, shooting at the Nazis till her last few have three bodyguards and now has only further research, her powerful study is an moments. She was dragged halfburnt one, which means that Turkey must be im important addition to the Holocaust from a bunker and shot. proving. A more plausible reason is that he canon—and to the understanding of the re Pacey as the narrative is (it has been op is no longer at the centre of the country’s sponse of eastern Europe’s Jewish commu tioned by Steven Spielberg), the large cast political storms. That, he says, is because nities to the Nazi extermination. and jumps in time and geography demand the centre has vanished. Liberals in Turkey have generally been a lonely, endangered species. But a decade or two ago they could at least hope to be heard. Now they have been muzzled. In 2017 Mr Pamuk gave a long interview to what was once Turkey’s newspaper of re cord, in which he said he opposed consti tutional changes that granted Mr Erdogan sweeping new powers. Fearing the govern ment’s wrath, the paper killed the story. Mr Pamuk has since stopped speaking to the big Turkish news outlets. They have stopped asking him. Now, he says, there is no room for truly free speech. “A unique thing that I haven’t seen in this country before is these silenc es when the name of our president comes up,” he observes. “Before, you could say something nasty in a taxi or a supermarket. Now it’s silence.” n Half-forgotten heroism 70 Books & arts The Economist May 1st 2021
Interspecies relations Impressionistic fiction Home, alone Creature discomforts
Whereabouts. By Jhumpa Lahiri. Knopf; 176 pages; $24. Bloomsbury; £14.99 How to Love Animals. By Henry Mance. woman walks alone through an Jonathan Cape; 400 pages; £20. To be AItalian city. She sits in the piazza and published in America by Viking in July; $27 basks in the sun. Gradually, the reader comes to know this lonely flâneuse—her at videos are the definition of click troubled past, hidden neuroses and Cbait, dogs are prized for their compan conflicting urges. In “Whereabouts”, ionable qualities, and the most popular Jhumpa Lahiri’s latest book, she and her cartoons feature bears, rabbits, ducks and nameless narrator explore the inevitabil pigs. But in an age when so many people ity of movement and change, uncomfort profess to be animallovers, a remarkable able truths and unexpected joys. number behave in ways that suggest the In Ms Lahiri’s brief chapters—some opposite—eating meat of dubious prove only a page long, with equally laconic nance or fish that suffocated on the decks headings such as “In the office”, “On the of trawlers, controlling pets with chasten street” and “In the hotel”—the narrator, a ing strictness and gawping at wretchedly writer and teacher, advances through the constrained elephants in zoos. seasons, working, eating, swimming, As Henry Mance, a British journalist, travelling, visiting her mother and peo Where the streets have no name observes, “animals have worse prospects plewatching. She craves familiarity but in the very time that we have supposedly feels compelled to “push past the barrier ri’s vignettes distil the complexities and been looking out for them.” His lively first of my life”. This restlessness leads to a costs of family. The reader sees how a book argues for a profound reassessment startling perception: “I’m me and also child can sink into the gulf between of humans’ relationships with other spe someone else.” parents (in this case, a hectoring mother cies. It is a polemic framed as a personal Her contradictions make the charac and disengaged father), and grasps the quest. He takes a job at a slaughterhouse ter wholly believable. She is moody and narrator’s desire, but inability, to turn and graphically reports his efforts to rip compassionate, irritated yet comforted away from her upbringing: “I think a the wool off freshly killed sheep. He learns by strangers; she craves solitude but is great deal about my parents, and I ask to fish, goes on a fruitless deer hunt and plagued by it. Ms Lahiri—who won a myself, in this sheltered place, why visits a lab where drugs are tested on mice Pulitzer in 2000 for her first book, “Inter they’re still nipping at my heels.” and frogs. He observes at close quarters the preter of Maladies”—evokes fleeting but The other key relationship in “Where effects of both deforestation and rewild resonant encounters with Chekhovian abouts” is with the narrator’s home city ing; he attends a Californian dogfanciers’ efficiency, making ordinary memories (unnamed, like her). The emphasis on convention where corgis are dressed as seem profound. Sparse sentences carry a place and movement reflects the author’s sharks while their owners dress as corgis. quiet rage. The first mention of the narra own peripatetic life. Born in London to Some of Mr Mance’s conclusions are tor’s father is tersely devastating: “In Bengali parents, she moved to Rhode unsurprising. Covid19 has been a sharp stead of going to see a play with him, I sat Island as a young child and later to Rome. education in the cost of disrupting ecosys at his wake.” Spring reminds her of “loss, She sought out new linguistic territory tems. Animals widely regarded as expend of betrayal, of disappointment”. by writing this book in Italian, then able, such as wolves, turn out to play vital Nothing much happens—a flirtation translating it into English herself. Ms roles in keeping other species in check. that might become an affair instead Lahiri has taken risks for her craft, and Though as a child the author adored zoos, fizzles out—but, cumulatively, Ms Lahi they have paid off, beautifully. marvelling at the tigers and pandas, he now has misgivings about these “soulless, motionless” places, which strike him as close attention. More of the Nazi perspec killers. A journalist with the American ar “the conservation equivalent of a police tive on the fighters would have made a use my warned Fruma and Motke Berger, part lineup”. He is an advocate of veganism, ful counterpoint. To them, the Jews were of the Bielski group made famous in the but worries that it may be a “niche pursuit” passive untermenschen, yet here they were, film “Defiance”, not to talk, because “peo and “a sign of society fragmenting, rather a legion of furies, gunning them down, ple would think they were liars, or insane”. than animal interests winning”. hurling grenades and homemade bombs. Kukielka made a new life in Israel; Klinger Yet elsewhere the arguments in “How to Jürgen Stroop, thess commander in charge committed suicide there in 1958. Love Animals” are arresting. After ponder of liquidating the Warsaw ghetto, wrote a “They were not human, perhaps devils ing which sea creatures feel pain, Mr Man detailed report of the operation (before be or goddesses,” wrote Stroop. “Calm. As ce rules that mussels, clams and oysters ing executed as a war criminal). Ms Bata nimble as circus performers. They often can be eaten in good conscience. He argues lion quotes him only fleetingly. fired simultaneously with pistols in both that cows raised for beef have better lives But she is penetrating on the women’s hands. Fierce in combat, right to the end.” overall than those on dairy farms. It is usu legacy and postwar lives. The handful Some died in battle, others in Gestapo pri al to condemn trophyhunters who cross who survived were often wracked with sons or death camps. Their stories, half continents to shoot lions, but “if anyone guilt. Some “selfsilenced”. Jewish women buried for so long, are superbly told in this wants to stop wasteful killing for pleasure, were meant to be warm and loving, not gripping, haunting book. n they should focus on farming.” The Economist May 1st 2021 Books & arts 71
As Mr Mance travels from the fishing No shortage of evangelists insist that its collections as tipples and other offer ports of northern Spain to a Polish hunting technology will improve the lives of ani ings. For its part, the Museum of Fine Arts, lodge, he encounters plenty of strange mals. Mr Mance is sceptical, concluding Houston translated a moody yellow self ideas. Some activists believe seats in par that restraint will achieve more than inge portrait by Frantisek Kupka, a Czech artist, liament should be reserved for people rep nuity. Even if his best line is borrowed into a tropical drink. In the Frick Collec resenting the interests of domesticated from Martin Luther King—“The arc of the tion’s weekly “Cocktails with a Curator” animals. Others recommend editing wild moral universe is long, but it bends toward films, experts at the museum in New York species’ genes so that they no longer harm justice”—he is a skilful writer who never match a liquid concoction to the theme or other creatures with which they share hab shies away from painful stories, and leav region of an artwork under discussion. itats. There is apparently a case for letting ens even the grimmest episodes with hu The art world’s food fad began before captive elephants communicate with their mour. He also has a rare ability to couch covid19. Released last year, for instance, counterparts in other zoos, through a de strenuous ethical arguments in terms that the documentary “Ottolenghi and the vice nicknamed the “Elephone”. are warmly familiar. n Cakes of Versailles” focused on a reinter pretation of 18thcentury French cuisine at a pricey banquet at the Metropolitan Muse The art of food um of Art. But recent online programming makes the artfood mashup digestible for Making a meal of it broader audiences. And the trend is set to outlast the lockdown. At a time when broadening access is an imperative, food can help museums entice firsttime visi tors and cooperate with new partners. It “can be a really nice entry point for people LOS ANGELES who are less comfortable with art”, says Food has always been a subject of art. Increasingly, the reverse is the case too Elee Wood of the Huntington. ra arte e cucina”—“Between art and the worlds of art and cuisine. Most important, as Ms GomezRejón “Tcuisine”—is how the Uffizi Galleries Last year the Los Angeles County Muse says, “Cooking itself is an art.” Like the vi describe their recently launched cooking um of Art began a quarterly series, “Cook sual kind, it illuminates the culture that show, “Uffizi da mangiare” (“Uffizi on a ing with lacma”, which features chefs, cu produced it—an understanding enriched plate”). In the videos, Italian chefs share linary historians and recipes based on by juxtaposing the two forms of creativity. recipes based on pieces in the collection in works in the museum. In the first video At their best, both food and painting are Florence, discussing both the artworks and Maite GomezRejón of ArtBites, which transporting experiences, introducing the dishes. Dario Cecchini created costata aims to combine culinary and art history, new worlds and possibilities, whether on a alla fiorentina from a gamefilled pantry made a mezcal margarita that was inspired wall, a plate or in the imagination. depicted by Jacopo Chimenti; Marco Sta by the output of Rufino Tamayo, a Mexican Take the use of blancmange by Debora bile turned Giorgio de Chirico’s “Still Life artist. An instalment this month will in Massari, a pastry chef, in the Uffizi’s series with Peppers and Grapes” into a risotto volve a Japanese dish drawn from the work (pictured). Through a dish that has roots in that aims to capture the painting’s ingredi of Nara Yoshitomo, a painter. Vivian Lin of Arab cuisine, which appeared on the tables ents and sensations on a plate. lacma hopes viewers will be moved to of the Medicis, she pays homage to Rapha Food has always been a subject of art. “share recipes and new insights about art el’s marriage portraits of Agnolo and Mad But increasingly the roles are being re with one another”. dalena Doni. A ring of pastry and blanc versed, as paintings are interpreted in ed Cocktails have been an especially popu mange covered in dark chocolate (repre ible ways and shared online in new, bite lar form of crossover during the pandemic, senting Agnolo) is entwined with a ring of size formats. As part of their bid to attract notes Ms GomezRejón, who collaborated white chocolate and lemon (Maddalena). digital audiences to replace inperson with the Huntington, a museum in Califor The recipe draws on art and history to ones, enterprising museums are melding nia, on a video series reimagining works in make something deliciously new. n 72 Economic & financial indicators The Economist May 1st 2021
Economic data
Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units % change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change latest quarter* 2021† latest 2021† % % of GDP, 2021† % of GDP, 2021† latest,% year ago, bp Apr 28th on year ago United States -2.4 Q4 4.3 5.5 2.6 Mar 2.1 6.0 Mar -2.7 -13.5 1.6 101 - China 18.3 Q1 2.4 8.5 0.4 Mar 1.6 5.3 Mar‡§ 2.6 -4.8 3.0 §§ 117 6.48 9.3 Japan -1.4 Q4 11.7 2.7 -0.1 Mar 0.2 2.9 Feb 3.2 -9.0 nil -8.0 109 -1.8 Britain -7.3 Q4 5.2 5.1 0.7 Mar 1.5 4.9 Jan†† -4.2 -12.3 0.8 51.0 0.72 11.1 Canada -3.2 Q4 9.6 4.8 2.2 Mar 2.1 7.5 Mar -2.0 -9.2 1.5 95.0 1.24 12.9 Euro area -4.9 Q4 -2.7 4.1 1.3 Mar 1.2 8.3 Feb 3.3 -6.3 -0.2 24.0 0.83 10.8 Austria -5.7 Q4 -5.6 3.8 2.0 Mar 1.7 5.7 Feb 3.0 -6.1 nil 3.0 0.83 10.8 Belgium -4.9 Q4 -0.3 3.8 0.9 Mar 1.0 5.7 Feb nil -7.0 nil -4.0 0.83 10.8 France -4.9 Q4 -5.7 5.3 1.1 Mar 1.1 8.0 Feb -1.7 -7.2 nil -4.0 0.83 10.8 Germany -3.6 Q4 1.4 3.5 1.7 Mar 1.9 4.5 Feb 6.8 -3.6 -0.2 24.0 0.83 10.8 Greece -5.9 Q4 11.1 2.5 -1.6 Mar 0.1 15.8 Dec -5.8 -5.7 0.9 -122 0.83 1 Italy -6.6 Q4 -7.5 3.4 0.8 Mar 0.7 10.2 Feb 3.0 -10.5 0.8 -93.0 0.83 1 Netherlands -2.8 Q4 -0.5 3.1 1.9 Mar 1.9 3.5 Mar 9.0 -4.2 -0.3 -3.0 0.83 1 Spain -8.9 Q4 0.1 5.8 1.3 Mar 0.8 16.1 Feb 1.5 -8.7 0.4 -58.0 0.83 1 Czech Republic -4.8 Q4 2.5 3.8 2.3 Mar 2.2 3.3 Feb‡ 1.7 -5.5 1.8 47.0 21.4 1 Denmark -1.4 Q4 2.7 3.0 1.0 Mar 0.7 4.6 Feb 7.4 -1.3 nil 25.0 6.15 1 Norway -0.6 Q4 2.6 2.6 3.1 Mar 1.6 5.0 Nov‡‡ 2.4 -1.7 1.4 65.0 8.23 26.4 Poland -2.7 Q4 -2.0 4.0 3.2 Mar 2.4 6.4 Mar§ 2.1 -4.9 1.6 15.0 3.79 10.8 Russia -1.8 Q4 na 2.7 5.8 Mar 4.6 5.4 Mar§ 4.0 -1.7 7.2 105 74.8 -0.6 Sweden -2.1 Q4 -1.0 2.4 1.7 Mar 1.4 10.0 Mar§ 4.0 -2.3 0.4 45.0 8.37 18.2 Switzerland -1.6 Q4 1.3 2.6 -0.2 Mar 0.3 3.3 Mar 7.0 -2.3 -0.2 22.0 0.91 7 Turkey 5.9 Q4 na 3.9 16.2 Mar 11.9 14.1 Feb§ -2.3 -3.1 17.8 639 8.23 9 Australia -1.1 Q4 13.1 3.1 1.1 Q1 2.0 5.6 Mar 2.2 -7.6 1.6 70.0 1.29 4 Hong Kong -3.0 Q4 0.7 3.5 0.5 Mar 1.8 6.8 Mar‡‡ 3.7 -3.8 1.3 64.0 7.76 1 India 0.4 Q4 42.7 10.4 5.5 Mar 5.2 6.5 Mar -1.0 -7.0 6.0 -9.0 74.4 5 Indonesia -2.2 Q4 na 3.3 1.4 Mar 2.8 7.1 Q3§ -0.3 -6.4 6.5 -161 14,500 5 Malaysia -3.4 Q4 na 4.4 1.7 Mar 2.4 4.8 Feb§ 3.5 -6.0 3.2 28.0 4.10 6.3 Pakistan 0.5 2020** na 1.7 9.1 Mar 8.8 5.8 2018 -1.9 -6.9 9.8 ††† 159 154 4.9 Philippines -8.3 Q4 24.4 6.6 4.5 Mar 4.0 8.7 Q1§ -0.9 -7.4 4.0 55.0 48.5 4.5 Singapore 0.2 Q1 8.3 4.8 1.3 Mar 1.8 2.9 Q1 16.5 -4.1 1.6 62.0 1.33 6.8 South Korea 1.7 Q1 6.6 3.2 1.5 Mar 1.5 4.3 Mar§ 4.3 -4.7 2.1 52.0 1,113 10.1 Taiwan 5.1 Q4 5.8 4.5 1.3 Mar 1.6 3.7 Mar 15.1 -0.5 0.4 -8.0 27.9 7.4 Thailand -4.2 Q4 5.4 3.3 -0.1 Mar 0.8 1.5 Dec§ 4.0 -6.0 1.7 61.0 31.4 3.4 Argentina -4.3 Q4 19.4 6.2 42.6 Mar‡ 41.9 11.0 Q4§ 2.1 -6.0 na na 93.4 -28.7 Brazil -1.1 Q4 13.3 3.2 6.1 Mar 6.7 14.2 Jan§‡‡ 0.5 -7.9 9.1 99.0 5.41 3.3 Chile nil Q4 30.1 6.0 2.9 Mar 3.5 10.3 Feb§‡‡ -0.2 -6.9 3.8 112 702 21.4 Colombia -3.5 Q4 26.5 4.8 1.5 Mar 2.6 15.9 Feb§ -3.3 -8.9 6.4 -48.0 3,707 9.4 Mexico -4.3 Q4 13.7 5.1 4.7 Mar 3.8 4.4 Mar 2.4 -2.8 6.6 -29.0 20.0 22.5 Peru -1.7 Q4 37.9 8.0 2.6 Mar 3.2 13.9 Mar§ -0.7 -7.3 5.6 151 3.82 -11.5 Egypt 2.0 Q4 na 2.9 4.4 Mar 6.2 7.2 Q4§ -3.1 -8.1 na na 15.7 0.5 Israel -1.5 Q4 6.5 4.0 0.2 Mar 1.3 5.4 Mar 3.4 -8.8 1.1 30.0 3.25 7.7 Saudi Arabia -4.1 2020 na 2.9 5.0 Mar 2.4 7.4 Q4 2.8 -3.2 na na 3.75 0.3 South Africa -4.1 Q4 6.2 2.0 3.2 Mar 3.7 32.5 Q4§ -1.6 -9.2 9.2 -156 14.3 30.7 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds.
Markets Commodities % change on: % change on: The Economist Index one Dec 31st index one Dec 31st commodity-price index % change on In local currency Apr 28th week 2020 Apr 28th week 2020 2015=100 Apr 20th Apr 27th* month year United States S&P 500 4,183.2 0.2 11.4 Pakistan KSE 45,059.1 -0.5 3.0 Dollar Index United States NAScomp 14,051.0 0.7 9.0 Singapore STI 3,219.6 2.0 13.2 All Items 176.7 185.0 14.3 84.4 China Shanghai Comp 3,457.1 -0.5 -0.5 South Korea KOSPI 3,181.5 0.3 10.7 Food 131.7 140.0 13.7 55.0 China Shenzhen Comp 2,300.9 1.0 -1.2 Taiwan TWI 17,567.5 2.1 19.2 Industrials Japan Nikkei 225 29,054.0 1.9 5.9 Thailand SET 1,576.8 -0.2 8.8 All 218.8 227.1 14.7 107.1 Japan Topix 1,909.1 1.1 5.8 Argentina MERV 50,043.8 5.1 -2.3 Non-food agriculturals 164.2 174.0 17.2 105.2 Britain FTSE 100 6,963.7 1.0 7.8 Brazil BVSP 121,052.5 0.8 1.7 Metals 235.0 242.9 14.1 107.5 Canada S&P TSX 19,357.0 1.1 11.0 Mexico IPC 48,487.9 -0.8 10.0 Sterling Index Egypt EGX 30 10,475.3 -1.6 -3.4 Euro area EURO STOXX 50 4,015.0 1.0 13.0 All items 193.4 203.0 12.6 64.8 France CAC 40 6,307.0 1.6 13.6 Israel TA-125 1,705.4 0.7 8.8 Germany DAX* 15,292.2 0.6 11.5 Saudi Arabia Tadawul 10,531.2 4.3 21.2 Euro Index Italy FTSE/MIB 24,459.6 1.2 10.0 South Africa JSE AS 67,740.1 0.9 14.0 All items 162.7 169.8 10.9 65.4 Netherlands AEX 711.8 0.3 14.0 World, dev'd MSCI 2,951.9 0.6 9.7 Gold Spain IBEX 35 8,799.6 3.3 9.0 Emerging markets MSCI 1,365.0 2.1 5.7 $ per oz 1,776.0 1,779.8 5.6 4.6 Poland WIG 60,462.4 2.3 6.0 Brent Russia RTS, $ terms 1,509.1 3.1 8.8 $ per barrel 66.7 66.6 3.5 223.8 Switzerland SMI 11,103.5 -0.9 3.7 US corporate bonds, spread over Treasuries Sources: Bloomberg; CME Group; Cotlook; Refinitiv Datastream; Turkey BIST 1,385.9 4.2 -6.1 Dec 31st Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Australia All Ord. 7,320.0 0.8 6.9 Basis points latest 2020 Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Hong Kong Hang Seng 29,071.3 1.6 6.8 Investment grade 120 136 India BSE 49,733.8 4.3 4.2 High-yield 357 429 Indonesia IDX 5,974.5 -0.3 -0.1 Sources: Refinitiv Datastream; Standard & Poor's Global Fixed Income For more countries and additional data, visit Malaysia KLSE 1,608.5 0.7 -1.1 Research. *Total return index. Economist.com/indicators Graphic detail Military spending The Economist May 1st 2021 73
→ Adjusted for local costs, China’s current military outlays match America’s during the Iraq war
Military spending, $bn, nominal v adjusted for military purchasing-power parity (PPP)
United States China India Russia Saudi Arabia* South Korea NATO excluding US 800 800 Iraq war Xi Jinping assumes oce 600 600 Adjusted Military intervention Launches military Russia annexes in Syria begins intervention in Yemen Crimea 400 400
Nominal 200 200
0 0 2000 10 20 2000 10 20 2000 10 20 2000 10 20 2000 10 20 2000 10 20 2000 10 20
Military spending, % of GDP Global military spending, $trn, adjusted for military PPP 14 3.5
Saudi Arabia Rest of world* 12 3.0 South Korea 10 Saudi Arabia* 2.5 Russia 8 2.0 Israel 6 1.5
India United States Russia 4 1.0 India China 2 0.5 South Korea China United States 0 0 2000 08060402 10 12 14161820 2000 02 04 06 08 1210 14 16 18 20 *Estimate based on known military PPP adjustments Sources: IMF; SIPRI; Peter Robertson; The Economist
as The Economist calculates currencies’ because they have superior skills. Similar Buck for the bang purchasingpower parity (ppp) in terms of ly, America’s bases might be sturdier than Big Macs, Peter Robertson, a professor at Chinese ones, and its bestinclass equip the University of Western Australia, has ment may not be available elsewhere. And devised a “military ppp”. It adjusts defence even if China does close the gap on current budgets based on how they are allocated spending, America’s past capital invest among wages, operating costs and equip ments still give it an edge: aircraftcarriers Nominal spending figures understate ment, and how local prices vary in each of can remain in service for 50 years. China’s military might these areas. The greatest differences are in Nonetheless, the ppp numbers make hat’s not going to happen on my countries that dedicate relatively small clear that China is catching up quickly. So “Twatch,” Joe Biden said last month, re shares of their budgets to sophisticated far, this mostly reflects China’s faster eco garding China’s “goal to become...the most weapons, since spending on missiles and nomic growth. Since 2000 its defence powerful country in the world.” In the mar fighter jets generally yields a similar mili spending has held steady at just under 2% tial realm, militaryexpenditure estimates tary return on investment everywhere. of gdp, roughly half the share in America. released this week by the Stockholm Inter The ppp figures make America look far However, China’s military ambitions national Peace Research Institute (sipri) less dominant. At market exchange rates, are growing and its alliances are weaker seem to back up his prediction. America sipri’s estimate of China’s spending is than America’s. The United States is pre spent $778bn on defence in 2020, 39% of $252bn, just onethird of America’s; at ppp, paring to withdraw from Afghanistan. By the global total and more than the rest of it jumps to twothirds. (The official Chi contrast, China has established control ov the top ten countries put together. nese figure is just $184bn in nominal dol er much of the South China Sea, parts of However, nominal spending totals may lars, but is seen as unrealistically low.) Pro which are claimed by Vietnam, Indonesia overstate America’s advantage. A dollar— portionally, the effect is even greater for and the Philippines. It has raised tensions or a few hundred billion of them—goes Russia, whose $62bn outlay buys $177bn of with Japan over a disputed group of is further in some places than in others. Wag military value, and bigger still for India, lands. And it recently fought a border skir es in China are relatively low. Army pay whose $318bnworth of spending is more mish with India. Most worrying, it is in there starts at $10 per month, compared than four times its $73bn budget. creasing air and naval pressure on Taiwan with $1,733 in America. Construction and Mr Biden’s generals might retort that (see Briefing). If China raises the share of maintenance are cheaper as well. quality is a quantity all of its own. Perhaps its economy devoted to defence, Mr Biden Any fair comparison of military might American grunts’ salaries are 16 times might have to oversee a new arms race to needs to account for such differences. Just higher than their Chinese counterparts’ maintain America’s military supremacy. n 74 Obituary LaDonna Brave Bull Allard The Economist May 1st 2021
oil from the North Dakota shaleoil fields to Illinois. On the way it threatened 380 archaeological sites; 26 were in the 40mile stretch round the meeting of the Missouri and Cannonball rivers, where roots had first grown out of her feet. This was her father’s land. As a child she had noted every fea ture which later, as historian of the Standing Rock Sioux, it be came her job to catalogue and preserve. The low rolling hills car ried the remains of Arikara villages, with effigies arranged in stones and prayers laid for years on the ground. On the peak above her camp her father was buried, along with one of her sons. At the confluence of the rivers was a whirlpool that carved the sand into great spheres strewn along the banks, the sacred stones. Here be side the Cannonball river her grandfather had sun dances with Wise Spirit, her uncle climbed trees for honeycombs and the fam ily hauled up water every day, to drink and live. Soon afterwards that history was partdestroyed by the damming of the Missouri, which left the water unsafe to drink, the whirlpool flat and bleached trees, skeletons of spirits, poking from the water. The pipeline map provided by the company showed nothing there; her people’s footprints had been taken out of the earth. It was up to them to crush the snake. She was no activist: her loves were genealogy and archaeology, pursued through universi ty and now for her tribe. Her way was to invoke the past like a man tra, as she did when she quickly, firmly gave her real identity to any white interviewer: Tamakawastewin, “Her Good Earth Woman”, Sissintonwan Dakota from her mother, Oglala Lakota from her fa ther. Yet she also had land, and in April 2016 she set up the Sacred Black snake, sacred water Stone camp at Standing Rock as a spiritual centre of protest. Only a few came at first; locals brought them coffee, firewood and sleep ing bags. But a socialmedia appeal drew hundreds, then thou sands, eventually in two camps, in tents and yurts and maplepole tipis. The seven bands of the Sioux met there for the first time in 140 years. The camps overflowed with horses, dogs, children, sing LaDonna Brave Bull Allard, historian and campaigner for ing, storytelling and the smell of frybread. Tribal flags from al Native-American rights, died on April 10th, aged 64 most every state lined either side of the route down to the pipeline he first time they drove up to Whitestone Hill, in south North site, where young men riding bareback would line up to block the TDakota, LaDonna Brave Bull Allard had to ask her husband to road. She spread the word by travelling and speaking; the young stop. She could hear grief coming out of the ground, crying and spread it on their phones. screaming. She had to lay down food and water there, as well as In this deliberately leaderless gathering, she kept the focus sa prayerties of sweet willowbark tobacco that could soothe and cred. The ancestors had put medicine into this ground. Now it had heal the spirits of the dead. to be applied again, to heal the body of Mother Earth and especial Whitestone Hill in 1863 had seen a terrible massacre, when ly to heal Water, their first medicine. Indigenous spiritual leaders hundreds of men, women and children had been herded into a ra from all over America, as well as beyond it, brought water from vine and shot by the United States Army. They had been members their own rivers to fortify the Cannonball against future leaks of of a large camp of tribes, mainly Sioux, who had been meeting to oil. The protesters were “water protectors”, and their rallying cry prepare for winter by hunting buffalo and arranging marriages. was “Mni Wiconi”, “Water is Life.” Among them was her great great grandmother Mary Big Mocassin, It lasted the best part of a year. At first the Obama administra then nine years old, who felt the sudden heat of a bullet tear into tion had allowed the pipeline, then paused it; the Trump adminis her hip. She survived, but had shivered in a field for hours crying tration, citing the national interest, ordered it to resume, but was for her mother. Her voice, too, called from the place. found in violation of federal law. Violence broke out as the pipe On the very date of that massacre, September 3rd, but in 2016, line company (which had not been stopped from operating) con LaDonna herself was in a field, frozen and immobile. Again, white tinued to dig towards the last remaining stretch, where her heart men in heavy fighting gear—this time company security guards— was. The leaderless movement began to fall apart. Meanwhile the were breaking up a camp, one she had made to obstruct the build tribal council of the Standing Rock Sioux, as well as the local po ing of the Dakota Access Pipeline beneath the sacred lands of her lice, became disenchanted with the camps, their mess, cost and tribe. Hundreds of protesters were being teargassed and pepper trouble, and joined federal agencies to drive them out. By March sprayed. Dogs were set on them, and now she was facing one with 2017 they were cleared, and through the miles of 30inch light blood on its dark grey jaws. Yet the only thought in her head was a green pipes the black snake oozed its way. historian’s: how could this be happening again, on the anniversa This looked like defeat, but not entirely. President Biden might ry of so much killing? yet shut this pipeline down, as he had cancelled Keystone xl; the It happened because they were living in prophecy, the sort the signs were hopeful. She had plans to build a new camp, fully self old women liked to discuss round the kitchen table while she, and sufficient, in the hills nearby. Echoes of the old camp, too, still the other young, pretended not to hear. One was of Zuzeca Sapa, a sounded. The names “Sacred Stone” and “Standing Rock” were black snake that would destroy the world unless her people stood now famous, and fresh prayers had been laid on the ground. In up to defeat it. Back then the snake was taken to be the new Inter this corner of North Dakota, at least, her people were no longer state highway, surfaced with black tar. Now it was clearly the pipe erased from history. If you walked there, you could hear their re line, 1,170 miles long and costing $3.8bn, intended to carry black sistance rather than their grief. n designed for clearer thinking Discover our app
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