Reflections on Armistice Day Gene Drives: Don't Ban, Don't Rush

Reﬂections on Armistice Day Gene drives: don’t ban, don’t rush Bangladesh’s grotesque politics Tencent at 20

NOVEMBER 10TH–16TH 201 Where next?

Contents The Economist November 10th 2018 3

The world this week Britain 6 A round-up of political 25 Universities’ iffy finances and business news 26 Did Leave cheat? 28 Military recruitment Leaders 28 Jeremy Heywood, master 11 America after the servant mid-terms Where next? 30 Profitable care homes 30 Knife crime spikes 12 European defence EU and whose army? 31 Parties pinch policies 12 Bangladesh 31 Cryptic crosswords Electoral troll 32 Bagehot Peterloo v 14 Gene drives Waterloo On the extinction of On the cover species Europe Divided government for a 16 Video games 33 NATO revs up divided country: leader, page 11. The price of free 34 French labour-market Democrats end unified reform Republican government and Letters will provide a check on the 35 Germany’s next leader? president, page 38. As 20 On gender identity, New 35 Greece’s licensed Democrats improve in the Zealand, California, anarchists Brexit, “In Our Time” suburbs, they grow even 36 Rostov-on-Don weaker in rural states, page 39 Briefing 37 Charlemagne Reflections • Reflections on Armistice Day on the Armistice 22 Gene drives No continent, even one as old as Extinction on demand Europe, can truly master its United States history: Charlemagne, page 37. 38 The House turns Partially democratic countries Democratic fight in wars most often: Graphic The Senate detail, page 89 39 40 Ballot initiatives • Gene drives: Don’t ban, don’t rush Research into gene drives 41 Governors’ races should continue. But the worries 41 Sessions sacked they raise must be addressed: 42 Organising elections leader, page 14. The promise and 43 Lexington Immigration peril of a new genetic- and the Democrats engineering technology, page 22 • Bangladesh’s grotesque The Americas politics A poster-child for 48 The Latinobarómetro development is disfigured by its survey politics: leader, page 12. The 49 The tequilisation of ruling party appears to be easing Schumpeter The world’s mezcal up ahead of an impending second-most-populous election, page 55 50 Bello Judges turn country has been flirting political • Tencent at 20 A Chinese with a Lehman moment, internet titan shakes things up page 70 Middle East & Africa after a singularly bruising year, page 65. The rush to extract 51 Africa’s urban opposition money from video-game players 52 Repression in Tanzania risks a regulatory backlash: 53 Elections in Madagascar leader, page 16 53 Chinese medicine in Africa 53 Libya’s peace process 54 Films about jihadists

1 Contents continues overleaf 4 Contents The Economist November 10th 2018

Asia Finance & economics 55 Election season in 71 American farmers’ woes Bangladesh 72 Buttonwood Housing in 56 Banyan Pakistan’s global cities indecisive authorities 73 Hester Peirce at the SEC 57 Robots in Japan 74 1MDB and Goldman 57 China and New Zealand Sachs 58 Forced labour in 74 Naughty banks and IPOs Uzbekistan 75 Non-wage compensation 59 Ageing Vietnam 75 Topping the diaspora 76 Free exchange The China Italian budget showdown 60 Mapping Xi Thought 61 Language in Macau Science & technology 62 Chaguan Japan’s soft 79 Deep-sea mining power in China 80 Reopening flooded mines 81 Spiders and streetlights 82 How to join art’s elite International 63 Pope Francis on the ropes Books & arts 83 A critique of atheism 84 The new genetic revolution 85 A novel of American turmoil Business 85 Chopin’s life and times 65 Tencent’s annus horribilis 86 The puppet-mistress of 66 Amazon’s headquarters Mali 67 Booming billboards 67 The rise of biosimilars Economic & financial indicators 68 European firms and Iran 88 Statistics on 42 economies 69 The growth of microbrands Graphic detail 70 Schumpeter India’s 89 Partially democratic countries fight in wars most often shadow-banking crisis Obituary 90 Whitey Bulger, South Boston’s mobster-in-chief

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6 The world this week Politics The Economist November 10th 2018

Donald Trump sacked Jeff un investigators found more Australia’s government bowed Sessions as attorney-general. than 200 mass graves in Iraq to criticism from human- Mr Sessions had attracted the containing between 6,000 and rights groups and said it would president’s ire for recusing 12,000 bodies. The graves date move refugee children and himself from overseeing the from 2014 to 2017, when the their families from a detention special counsel’s investigation jihadists of Islamic State ran centre it operates in Nauru to into Russian meddling in the territory that is under Australia itself. But it also said elections. Mr Trump replaced investigation. it would not allow them to him on an interim basis with remain permanently. Matt Whitaker, a critic of that investigation. From judge to politician Myanmar’s ruling party, the Sérgio Moro, a Brazilian judge National League for Democra- In America’s mid-term elec- who has been leading the Lava cy, lost by-elections in several tions, the Democrats won the Penalty kicks Jato (Car Wash) investigations districts inhabited mainly by House of Representatives for After pulling out of a nuclear of corruption among poli- ethnic minorities that it had the first time in a decade. They deal with Iran earlier in the ticians, accepted an offer from won at the most recent nation- gained a firm majority, helped year, America’s most punish- the country’s rightist presi- al election, in 2015. by a surge in support from ing sanctions on the country dent-elect, Jair Bolsonaro, to white women and from voters came into effect, aiming to lead a new “super-ministry” of China’s president, Xi Jinping, aged under 30. Just under a cripple its already struggling justice and public security. Mr and his American counterpart, quarter of the new House will economy. Hassan Rouhani, the Moro had ordered the jailing of Donald Trump, held their first be female. Two Muslim women Iranian president, called it an Luiz Inácio Lula da Silva, a publicly disclosed telephone and two Native American act of “economic war”. France left-wing former president. conversation in six months. Mr women won seats, a first for vowed to help European firms Trump described it as “long both groups. Nancy Pelosi said defy the sanctions. A jury was selected for the trial and very good”, and said it had she would stand for Speaker, in New York of Joaquín Guz- covered the two countries’ again, but has said she would Saudi members of a team mán, also known as El Chapo trade conflict as well as North be a “transitional” figure. assisting the Turkish authori- (Shorty), the former leader of Korea. China’s foreign ministry ties investigate the killing of Mexico’s Sinaloa drug gang. said the call was “positive”. A good night for the Democrats Jamal Khashoggi inside the Mr Guzmán escaped twice in the House wasn’t replicated Saudi consulate in Istanbul last from prison, most recently in in the Senate, where the month were accused of trying 2015, when he tunnelled out of Army dreamers Republicans increased their to remove evidence. a maximum-security jail. He majority by picking up Indi- was recaptured and extradited ana, Missouri, North Dakota Despite America’s call for to the United States. and probably Florida. Mitt peace talks, the war in Yemen Romney will embark on a new escalated, as forces backed by a Ecuador’s supreme court career after winning a Senate Saudi-led coalition advanced ordered the country’s former seat in Utah. Beto O’Rourke, on rebel positions in the port president, Rafael Correa, to the darling of the Democrats, city of Hodeida. More than 150 stand trial on charges that he narrowly failed to unseat Ted people are reported to have participated in a failed plot to Cruz in Texas. been killed in the past week. kidnap an opposition con- Hodeida’s port is critical for gressman in 2012. Mr Correa The Democrats also won seven feeding millions of Yemenis at has been living in Belgium governorships, which includ- risk of famine. since he left office in 2017. He Emmanuel Macron used a ed the defeat of Scott Walker, denies wrongdoing. speech at Verdun, part of the public-sector unions’ bête extensive commemorative noire, in Wisconsin. Andrew events surrounding the 100th Gillum fell just short in his bid Caving in to violence anniversary of the armistice to become the first black The government of Pakistan that ended the first world war, governor in Florida. Stacey gave in to mass protests by to call for the creation of a Abrams was reluctant to con- Islamist agitators and barred “true European army”. Com- cede in a tight race in Georgia Asia Bibi, a Christian woman mentators scrambled to deci- in which she hoped to become recently acquitted of blasphe- pher exactly what the French that state’s first black governor. my, from leaving the country. A president meant by that. Colorado elected the country’s few days later, however, it first openly gay governor. ordered her release from A former Nazi concentration- prison. Her precise where- camp guard went on trial in Among the many ballot Dozens of schoolchildren abouts are unknown. Germany at the age of 94. initiatives in the states, kidnapped in north-west Florida’s voters passed a law Cameroon were freed. The Voters in New Caledonia chose A 69-year-old Dutchman that restores voting rights to school’s headmaster and a for the Pacific island to remain launched a legal case to change former prisoners. Colorado teacher are still being held. The part of France, rather than his age to 49, arguing that the and Michigan approved in- government blamed Anglo- become independent. But the law already allows him to dependent commissions that phone separatists in the Eng- margin was narrower than change his name and gender. will be responsible for drawing lish-speaking region, which expected; there may be another He apparently wants to im- congressional districts. the separatists denied. referendum in two years. prove his dating prospects. 1 This advertisement has been approved for issue by Pictet Asset Management Limited, authorised and regulated by the Financial Conduct Authority. The value of an investment can go down as well as up, and investors may not get back the full amount invested.

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Robyn Denholm was named as American prosecutors brought in October 2017, when wages the new chairman of Tesla,as criminal charges against two On the other hand were unusually depressed part of a deal with regulators former bankers at Goldman A remark by the governor of the following a big hurricane. under which Elon Musk is Sachs and a Malaysian Bank of Japan, Haruhiko relinquishing the role at the financier in connection with Kuroda, that it was no longer Buoyed by higher oil prices, electric-car manufacturer. Ms the alleged misappropriation appropriate to implement “a Rosneft reported a 150% rise in Denholm is the chief financial of funds from Malaysia’s 1mdb large-scale policy to overcome net profit for the third quarter officer at Telstra, an Australian development fund (one of the deflation” was taken as the compared with the same three telecoms firm. She will be the bankers has pleaded guilty). clearest indication yet that he months last year, to 142bn first person at Tesla other than Goldman said it was co-operat- is minded to move on from the roubles ($2.2bn). Russia’s Mr Musk, who remains chief ing with the Department of central bank’s enormous stim- biggest oil company also bene- executive, to sit at the apex of Justice’s continuing investiga- ulus programme and start fited from being able to the company since its very tion and acknowledged that tightening monetary policy. Mr increase production, owing to earliest days. the proceedings could result in Kuroda hedged his comments, an agreement between opec significant fines or sanctions however, and said he would and Russia in June that eased Citigroup also appointed a against the bank. keep interest rates extremely restrictions on output. new chairman. John Dugan, low for the foreseeable future. who takes over from Mike Berkshire Hathaway revealed O’Neill in the new year, is a that it had repurchased $928m- Quality, not quantity former banking regulator. worth of its shares in August, United States Apple’s share price struggled Unemployment rate, % its first buy-back in six years. to recover from the drubbing it Warren Buffett’s investment 12 received after it downgraded Active consumers company has not completed a 9 its outlook for the all-impor- As it prepares for Singles’ Day, takeover in nearly three years. tant final three months of the 6 the world’s biggest shopping Spotify, a music-streaming year, which includes the event, on November 11th, service, announced a $1bn 3 Christmas shopping season.

Alibaba posted a solid rise in buy-back of its own. 0 The company also said it would quarterly net profit, to 20bn 1969 80 90 2000 10 18 stop reporting the number of yuan ($2.9bn). The Chinese The share prices of Italian iPhones, iPads and Mac Source: Bureau of Labour Statistics e-commerce company now banks came under renewed computers it sells, unsettling boasts 601m “active consum- pressure, ahead of a deadline American employers added investors who have come to ers”. Amazon reported a much for the Italian government to 250,000 people to the payrolls rely on those figures as a gauge lower customer base the last submit a revised budget that in October, the 97th consec- of Apple’s health. It says unit time it released such figures. meets eu rules. Italy’s big utive month of jobs growth. sales are less relevant. In the banks did better than many of The unemployment rate held latest quarter, for example, SoftBank reported a big jump their European counterparts in steady at 3.7%, the lowest it has Apple sold 47m iPhones. in quarterly net profit, to the recent stress tests conduct- been since the late 1960s. Pay Although that was similar to ¥526.4bn ($4.6bn). That was ed by the European Banking grew at the fastest pace, year on the same period last year, mostly due to returns from Authority. But questions year, since April 2009, though revenue from iPhone sales technology investments in its remain about how tough those that was in part because it soared by 29% because it was Vision Fund. The Japanese tests really are. bounced back from a low base shifting dearer devices. conglomerate has had to face some awkward questions about the Saudi money that is backing the fund since the murder of Jamal Khashoggi. Its share price has fallen by a fifth following the killing of the Saudi journalist, allegedly by Saudi government operatives.

The political manoeuvring continued in the trade war between America and China. Wang Qishan, a senior Chinese oﬃcial, indicated that Beijing was ready for a discussion about “mutual concerns” with Washington. That came after President Xi Jinping lashed out at what he described as international trade’s “law of the jungle”. Mr Xi and Donald Trump are expected to discuss how they might end their stand-oﬀ when they meet at the g20 summit this month.

Leaders Leaders 11 Where next?

Divided government for a divided country or once, the outcome that was predicted actually occurred. agencies, and investigate possible presidential abuses of power FDemocrats took the House of Representatives in America’s or misuse of the office for personal aggrandisement. But Demo- mid-term elections on November 6th, and will provide some crats should resist the urge to use their majority in the House to welcome oversight of the White House when members of the take revenge, hounding the president in the way that Newt Ging- new Congress take their seats in January. Republicans held the rich and his Republican colleagues once hounded Bill Clinton. Senate—with a bigger majority, which will make presidential ap- Prosecution should be left to prosecutors. It is not obvious, for pointments easier to confirm. Both sides declared victory. A instance, that there would be much to gain by investigating the starkly divided country now has a divided government. Under- circumstances of Justice Brett Kavanaugh’s confirmation to the pinning the results, though, is the deepening of a structural shift Supreme Court. There is certainly no ground to impeach him, as in American politics that will make the country harder to govern some Democrats want. for the foreseeable future. Democrats represent a majority of A second Democratic priority should be to show that they America’s voters, but Republicans dominate geographically. have the ideas and capacity for governing that can appeal to a Democrats won the popular vote for the House of Representa- broader swathe of voters. One way to do so is to make a good- tives by a comfortable margin. Their position as the party that faith effort to work with the president and the Republicans. enjoys most support among Americans, thanks to its strength in There are deals to be done on infrastructure and on drug prices. urban centres, was reinforced by a surge in support from the sub- They also need to make immigration less toxic (see Lexington). urbs, where revulsion with President Donald Trump was evi- In 2010, when Republicans won the House during Barack dent. Meanwhile Republicans tightened their grip on less popu- Obama’s presidency and proceeded to block everything Demo- lous, more rural states, easily beating Democratic senators in crats wanted to do, the White House argued that it was unjust for Indiana, Missouri and North Dakota. In a country where one half of one branch of the federal government to stand in the way chamber of the legislature is based on population and the other of everything else. That was right then and it is right now. House on territory, this division is a recipe for gridlock, poor gover- Democrats should not declare, as Mitch McConnell once did, nance and, eventually, disenchantment with the political sys- that they will oppose everything the president does. There tem itself. should be no repeat of the hostage-taking that The breadth of the divide is striking. Ten saw the Republican House flirt with a sovereign years ago there were 17 states with one Republi- default during Mr Obama’s second term. can senator and one Democratic one. From Jan- Plenty of Democrats will counsel against uary 2019 there will be just seven. In federal elec- holding back, arguing that the scorched-earth tions hardly any candidates seem able to survive strategy that the Republicans used when they in opposition-party territory. Only six Demo- had a majority in the House worked perfectly cratic senators won their elections in states car- well for them. Why, they will ask, should Demo- ried by Mr Trump in 2016. The picture is less crats be the party of compromise in the name of stark for governors, but in statehouses the pattern reasserts it- better government, when their opponents have so often refused self. From January Minnesota will be the only state where one to give an inch? chamber is controlled by Democrats and the other by Republi- For two reasons. First, it might just yield results. Admittedly, cans. The last time that was the case was back in 1914. Mr Trump’s recent behaviour does not bode well. Accusing This equilibrium may be stable, but it is damaging for the Democrats of facilitating the murder of policemen, as he did in country and for both parties. For the Republicans, the danger is a the closing stages of the campaign, is not the best way to foster long-term one. For now, they hold the White House and have an bipartisan spirits. Mr Trump could give up on the idea of signing increased majority in the Senate. But in a two-party system, a any legislation in the next two years, preferring to rule by exec- party that prevails while consistently failing to capture a major- utive order, while ranting against the opposition. ity of votes will one day find it is no longer seen as exercising But he may also surprise, proving more willing to deal with power legitimately by a majority of voters. For the Democrats, Democrats than other Republican presidents have been. The the challenge is immediate. They may rail against a system that Trump motivating principle is self-interest rather than party loy- disadvantages them in structural ways, but cannot change that alty. He has proved willing to discard some long-standing party system until they can work out how to win within it. Running up positions, for good and ill. The role of dealmaker-in-chief could vast vote shares in New York and California is all very well, but on rather suit his ego. its own will not deliver a governing majority. Second, even if bipartisan efforts fail, behaving responsibly is What is the way out of this impasse? The main onus is now on in Democrats’ long-term interests. By and large, Democrats want the Democrats. For their own good, not to mention the country’s, the federal government to work well. Republicans, by contrast, they have to find ways to appeal in America’s heartland. still consider the words “I’m from the government and I’m here That starts with exercising restraint. Yes, they should use to help” to be a micro-aggression. Gridlock does nothing for con- their majority in the House to scrutinise a president who shows fidence in government, which is something Democrats need if contempt for the norms that have constrained past presidents. they are to win more voters’ confidence. Like it or not, they have They should look carefully at what has been going on in federal more to lose from dysfunction than Republicans do. 7 12 Leaders The Economist November 10th 2018

European defence EU and whose army?

Emmanuel Macron’s call for a European army is misguided orway’s countryside teemed with European soldiers in with fanfare last year, to bind big and small European countries Nthe past two weeks. A Montenegrin platoon drilled within a closer together. Mr Macron, irked that this gives priority to poli- Slovenian company, which was wrapped in a Spanish battalion, tics over firepower, proposed a European Intervention Initiative: which in turn was inside an Italian brigade. All were part of a smaller club of more ambitious powers, open to non-eu mem- nato’s biggest exercise since the cold war (see Europe section). bers, who would jointly plan future expeditionary campaigns. Yet this is not quite what President Emmanuel Macron had in Germany saw this as an attempt to drag others into France’s Afri- mind when he called for a “true European army” on November can wars, but grudgingly signed up anyway. 6th. Striking a Gaullist pose, Mr Macron urged Europe to free it- For all these plans, Europeans would struggle to wage even self from military dependence on America. medium-sized wars without extensive help from America, as Mr Macron did not say precisely what he meant. Even so, his they discovered during their air campaign in Libya in 2011. loose talk of a Euro-army is confused, quixotic—and reckless at a Though their defence spending is growing, there are still large time of growing transatlantic uncertainty. gaps in their arsenals. In Norway, Europeans flaunted their ar- European federalists have long dreamed of moured vehicles, air-refuelling tankers and defence integration, but they have had little to transport aircraft. But data collected by the Ger- show for it beyond some joint equipment pro- man Council on Foreign Relations, a think-tank, jects and anti-piracy operations. The most am- shows that their stock of equipment in all these bitious plan for a common army collapsed in the areas has been shrinking. The eu will be weaker 1950s because of French opposition. Since then, still when Britain leaves. however, France has pushed lesser schemes to So what if some fantasise about Euro-forces? develop autonomous European forces. These If that pushes them to equip their armies prop- were mostly blocked by Britain, which feared erly, and stop duplicating capabilities, so much splitting nato (whose integrated military command France left the better.The merging ofDutch, Romanianand Czech units into in1966 and then rejoined in 2009). the German army is promising. The danger is that little new European defence has returned to the fore for three reasons: fighting strength will be created, giving America yet more rea- Brexit will remove its most dogged opponent within the Euro- sons to feel exasperated with its allies. European leaders rebuked pean Union; Donald Trump has shaken European faith in the America for pulling out of the inf treaty, a cold-war nuclear pact, nato alliance; and France and Germany have been desperate to but until recently kept silent about Russia’s brazen violation of find common cause. But European leaders cannot agree on its the accord. Mr Macron was crass in talking of the need to “protect aims: should it be a symbol of ever-closer union, a roving gen- ourselves” from America, in effect comparing Europe’s awkward darmerie to police the continent’s periphery or, as Mr Macron but indispensable ally to Russia and China. implied this week, a force that could beat off the very biggest Europeans must do more to defend themselves, but the only powers, such as Russia and China? effective European “army”—or armies—are forces that plug Germany is keen on using eu defence schemes, like Perma- firmly into nato. Anything else would be good only for ceremo- nent Structured Co-operation, a cluster of eu projects launched nial parades, not real wars. 7

Bangladesh Electoral troll

A poster-child for development is disﬁgured by grotesque politics n many ways, Bangladesh is a role model for South Asia. Its the Bangladesh Nationalist Party (bnp). Disputes are most com- Ieconomy grew by an average of 6.3% a year over the past de- monly settled not in parliamentary debate or at the ballot box, cade. Last year it expanded by 7.3%—faster than India’s or Paki- but through paralysing hartals—strikes-cum-blockades en- stan’s. Once the region’s poorest big country, its gdp per head is forced by partisan thugs. At the most recent election, in 2014, now higher than Pakistan’s, when measured at market exchange clashes claimed 18 lives on election day alone. More than 100 rates. Better yet, it boasts lower infant mortality, higher school polling stations were set ablaze. enrolment and longer life expectancy than its peers. With 165m This week the Election Commission is expected to set a date citizens, it is the world’s eighth-most-populous country. But its for the next parliamentary vote, probably in late December. fertility rate is lower than that of the region’s other giants. Things look calmer this time around. There have been no hartals; No one, however, would envy Bangladesh’s politics. They are instead, the government has met with an alliance of opposition characterised by an all-or-nothing, no-holds-barred aggression parties to discuss ways to improve the political climate. Even so, between two parties, the ruling Awami League and its main rival, there is little hope the election will be fair (see Asia section). The 1

14 Leaders The Economist November 10th 2018

2 Awami League has spent its ten years in power systematically co- the Awami League—to no avail.) In a leaked internal memo, an opting state institutions and hobbling the opposition. It has American diplomat described Tarique Rahman, Mrs Zia’s son locked up hundreds of opposition activists, including Khaleda and now the bnp’s acting leader, as “a symbol of kleptocratic gov- Zia, the leader of the bnp. Others have been executed, in the ernment and violent politics” who is “notorious for flagrantly name of righting the wrongs of Bangladesh’s war of indepen- and frequently demanding bribes”. (His defenders say wayward dence from Pakistan in 1971. Jamaat-e-Islami, a religious opposi- hangers-on were responsible for misdeeds blamed on him.) tion party allied to the bnp, has been banned altogether. There is no easy way out of this mess. In an ideal world, The press has been cowed with a barrage of lawsuits. Critics of Sheikh Hasina would call off politically motivated prosecutions, the government on social media are hounded. Unco-operative stop meddling in institutions that are supposed to be indepen- judges have landed in legal trouble. In 2011 the Awami League dent and reinstate the system of caretaker governments before abolished the system whereby a neutral caretaker government elections—things she shows no sign of doing. But there is scope presided over elections—one of the causes of the furious prot- for both sides to back away from their maximalist positions. ests at the subsequent ballot. The fact that the opposition has Sheikh Hasina could appoint a few bnp leaders as ministers been relatively quiet in the run-up to the coming vote is not a rein a multi-party government in the lead-up to the vote, giving the flection of greater harmony, but of the government’s iron grip. opposition some purchase on the process of voting and counting. That would also give the bnp a reason not to boycott the elec- Pick your poison tion, as it did last time and threatens to do again. The boycott was Even if the opposition were to have a chance in the vote, it would self-defeating: it left the bnp with no voice in parliament, and be unlikely to govern better than the Awami League. The army gave the government unfettered power to legislate as it liked. But was so appalled by the corruption of the bnp’s last stint in gov- it also left Sheikh Hasina’s government looking illegitimate. ernment, which ended in 2006, that it briefly seized power in an There would be advantages to both sides, in other words, in al- attempt to weed out crooked politicians before allowing an elec- lowing the opposition to function. Bangladesh deserves better tion to go ahead in 2008. (It tried to shunt aside both Mrs Zia and politics. That would be the best way of preserving its admirable Sheikh Hasina Wajed, the current prime minister and leader of economic progress. 7

Gene drives On the extinction of species

Research into gene drives should continue. But the worries they raise must be addressed xtinctions are seldom cause for celebration. Humans are ing reproduction. Gene drives tilt the evolutionary scales. One Ewiping out species at a frightening rate, whether hunting area of research focuses on genes that can copy themselves to the them into history or, far more threateningly, damaging the habi- second in a pair of chromosomes, ensuring that they will be in- tats on which they depend. But occasionally, the destruction is herited by all offspring. Biasing inheritance in this way is what warranted. Smallpox was officially eradicated in 1980, and no makes it possible to push a desired mutation, whether harmful one laments the fate of the virus that caused it; campaigns to or beneficial, through a population—controlling its level, and save the virus that causes polio are thin on the ground. How, potentially wiping it out altogether (see Briefing). then, to think about a new technology that will make driving a Like many technologies, however, gene drives may lead to species to extinction far easier? bad outcomes as well as good. Opponents think the technology That technology is known as a gene drive, so called because it is simply too dangerous to contemplate using. Some worry about uses genetic engineering to drive certain traits playing God—though discarding an opportuni- through a population. Those characteristics ty to save millions of lives in order to defend a need not be deleterious: they might include principle is itself unethical. Others warn that greater resilience to disease among crops or, the technology could entrench the power of big perhaps, greater tolerance to warming waters on agritech firms. But that is an argument for en- the part of corals. But if the desired trait were suring competition, not for ending research. harmful, gene drives could in theory make a spe- Three other concerns are less easily handled. cies extinct. And if the species in question were One is practical: removing a species from the the three types of mosquito responsible for food chain could have unintended conse- transmitting malaria, proponents reckon it could save close to quences, particularly if gene drives can move to a closely related half a million lives a year, many of them children. The same ap- species. Another relates to governance. Genetically modified proach could be used against other vector-borne diseases such crops can be kept relatively contained; animals carrying gene as Lyme disease, Zika and dengue fever. Gene drives also offer drives could be mobile and respect no borders. One country’s de- conservationists a potential weapon against invasive species cision to use gene drives will have consequences for its neigh- such as foxes, mice, rabbits and rats, whose proliferation threat- bours. A third worry concerns nefarious uses of the technology, ens native species in some parts of the world. (Humans are un- and not only by states. A mosquito, engineered to inject toxins, suited to gene drives, which work best in species that reproduce could be used as a weapon. quickly, with many offspring.) Faced with such risks, some want simply to call a halt. An at- Normally genes have a 50:50 chance of being passed on dur- tempt to impose a moratorium on gene drives was rejected by 1

16 Leaders The Economist November 10th 2018

2 governments in 2016 at a United Nations meeting on biodiver- try that wanted to use gene drives; and on agreed criteria for the sity. Another such meeting, which takes place this month, will approval of any release, such as the existence of an unmodified debate proposals that could hinder field trials. But putting the population in captivity. brakes on research may impose real costs: not just the annual toll Rules or not, rogue states and other malevolent actors may taken by malaria and other killers before an answer is found, but still want to use gene drives for malicious purposes. And, like also slower progress towards making gene drives safer. Since the many new technologies, gene drives do not require big organisa- decision in 2016 researchers have made advances on drives that tions in order to be made to work. Prudent countries ought to die out over time, for example. That sort of approach could go plan accordingly. America’s government, rightly, justifies some some way to solving the practical concerns. Given that it will be of its gene-drive research as a way to develop better defences eight years or so before a gene drive is expected to be ready for against harmful uses. In the future, improved gene-sequencing field trials, more can be done in the interim to minimise its po- technologies should make it easier to spot species carrying ma- tential to cause harm. levolent drives. That will require a more robust approach to governance, too. These risks underline why gene drives must be managed The ideal would be a set of norms for states and funders to adhere carefully. They ought not, however, to obscure the prize on offer to. These might include rules on the mandatory registration of if the technology can be made to work well. Humans are already gene-drive trials; on stringent sequencing of gene-drive tests, as radically and heedlessly reshaping the planet. Gene drives would they progress from laboratory environments to field trials; on further enhance humanity’s ability to shape nature—but with ways for neighbouring states to monitor standards in any coun- the potential to do so precisely, efficiently and for the better. 7

Video games The price of free

The rush to extract money from players risks a regulatory backlash oral panics over new media are old hat. The social effects but might prove valuable enough to resell to other players. Since Mof novels, films, comic books and pop music were con- the marginal cost of creating virtual items is zero, they are very demned by the grumpy reactionaries of the time. In recent years profitable for developers. That has given rise to a “freemium” video games have been a popular villain. Exasperated parents business model, of which Tencent was a pioneer, whereby games and opportunistic politicians have long fretted that they make are given away cheaply or free but players are constantly nagged players lazy and listless, or else unpredictable and violent. Those to spend money on in-game items. All this has been super- concerns turned out to be largely misplaced. But new worries charged by smartphones, which mean people can keep playing— about the addictiveness of games, and the danger that poses to and paying—at all hours of the day. children in particular, have more substance to them and are al- The result is an unhealthy loop. Firms strive to keep players ready prompting a regulatory crackdown. The industry would be hooked, because the more time they spend in a game, the more wise to get ahead of the problem. money they will spend on baubles within it. Whizzy data analyt- China, the world’s biggest video-game market, is leading the ics let developers tweak their products to do just that, using psy- charge. The government clamped down on the approval of new chological tricks and nudges familiar from social-networking games earlier this year, and stopped approvals sites and the gambling industry. All this can be altogether in October. Shares in Tencent, which Freemium gaming revenues extremely lucrative. Sensor Tower, an analysis built its business on video games and is one of Estimated, $bn firm, reckons that “Candy Crush Saga”, a popular the world’s largest internet companies, have 0 20406080game in the West, made $930m last year. The fallen by 28% since the start of the year (see Busi- 2016 keenest gamers, known as “whales” (a term ness section). China is an authoritarian state coined by casinos to describe high-rolling cus- prone to overreaction. But it is not the only 201 Asia tomers), can spend thousands of dollars a year. country that is worried. Japan and South Korea, North America Europe Tencent is trying to placate the Chinese gov- both liberal democracies, have passed laws de- ernment. It is expanding its age-verification signed to regulate a video-gaming industry whose products are scheme and limiting screen time for children. Its counterparts increasingly seen as addictive and harmful. And as business in other countries should take note. This newspaper does not models refined in Asia have come to the West, lawmakers in Eu- generally believe governments should tell adults how to spend rope and America are becoming more concerned, too. their money. But the industry could do more to protect children Such concerns feel more credible than prior panics, for two and addicts from its increasingly sophisticated products. reasons. The first is that much gaming now happens online, and It is in its own long-term interests to do so. Video games now generates reams of behavioural data. This allows publishers to rival the film industry for clout. Gaming is thought to be worth monitor exactly how customers are playing games, and fine- around $140bn annually worldwide, and is growing at 13% a year. tune them to make them as compelling as possible. But society’s attitude towards technology is hardening. In a The second is the realisation that players will happily pay real world of fake news and hyper-targeted advertising, voters and money for virtual goods. These can be upgrades, costumes or politicians have awoken to the danger that devices and data may weapons for their in-game characters, or (more cynically) a lot- be manipulating people in harmful ways. A little voluntary for- tery-style “loot box” whose contents are unknown in advance, bearance now could save a lot of regulatory pain later. 7

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This fear can only possibly quantifying what else could be or Italy. They cannot be kicked The gender agenda exist in the complete igno- done if assets were managed out, hence they have more I was disappointed by your rance of what transgender more effectively limits the freedom to misbehave. If Brit- arguments against the case for means, and is often based on impetus for action in this area. ain leaves, it will find itself in a gender self-identification, and confusions with cross-dress- The public may also need similar position. That is not was particularly baffled why ing or drag. If anyone has reminding that there is no necessarily bad. We get to such a staunch defender of actually met a transgender such thing as a free lunch. For implement all these eu rules classic liberalism would sup- woman, they would clearly see example, New Zealand has and regulations, and we save port such a heavy, and vaguely that forcing them into men’s been reasonably successful in all the costs of making them. defined, state role in such a spaces would be awkward for implementing market forces in einar overbye personal matter (“Who decides everyone. In fact, many women the electricity industry, but Professor in political science your gender?” October 27th). have probably already shared a there are complaints that Oslo Metropolitan University You are concerned about the safe space with a transgender prices are higher than when it potential threat from males woman, and not noticed. was under government own- Sour grapes were not staples of self-identifying as females in chris hoyt ership. Although it is possible The Economist’s diet before order to prey on women and Westfield, Indiana that private electricity-provid- 2016, but have become a com- children in restrooms and ers are fleecing customers, it is mon dish since the Brexit other gender-segregated I am a 70-year-old gay man. In more likely that the industry referendum went against its spaces (the absence of evi- the1950s I might have been was previously subsidised wishes. Your sourness has dence of trans people attacking considered gender dysphoric. I through higher taxes or un- stretched in recent articles to people in such spaces notwith- cried easily. I asked my parents counted environmental costs. accusing Brexiteers of vanity, standing). However, the law to buy me a style of shoes worn It is also worth pointing out rage and being fantasists. already covers such eventual- only by girls, and I preferred that dividends received from As a recent arrival to Brit- ities; it is already illegal to cooking to rough-and-tumble state-owned enterprises are ain, this isn’t my observation at assault people in those places. play. In my 30s I reacted against essentially a regressive tax. all. One encounters far more The policies you are push- many of my early inclinations. justin stevenson eye-rolling and grumpiness ing essentially criminalise the I learned martial arts and Christchurch, New Zealand from Remainers than Leavers. ability of trans people to use a worked in masculine profes- Attacks on Brexit theories public bathroom that matches sions. I recently retired from a follow a familiar pattern: their identity until they jump career as a therapist where I The not-so-golden state ignore the more difficult-to- some state-imposed hurdle. spent much of my time work- There is another factor that refute arguments and attack Until then, trans people who ing with gang members. accounts for California’s only specific statements by the seek to work, shop, or basically If some well-meaning alarming poverty rate (“Amid three or four Tory politicians do anything outside their person had convinced me as a plenty, want”,October 27th). who are most disliked by the home face a cruel and danger- child that I was female it would Access to affordable housing is Remain masses. Isn’t this just ous dilemma: break the law, or have short-circuited a life-long impeded by Proposition13. another form of the kind of face ridicule, threats, and process of discovery and self- Passed by the state’s voters in politics that The Economist violence when using a bath- transformation. Early gender 1978, it freezes the property tax dislikes, namely populism? room that does not match their identifications are often based at1%. This has distorted the nicolas groffman gender identity. on partial information. Basing housing market as the owners London diana maurer life-long identities on these of expensive homes pay less Alexandria, Virginia early traits is a serious mistake. tax than they should on their john dury property. An enormous proper- Thought for the day As the parent of a transgender San Rafael, California ty-, income- and sales-tax I suspect there is another child, I want to offer only a few burden has been shifted onto reason why bbc Radio 4’s “In clarifications. You are quite the shoulders of new property Our Time” is such a success: its correct that making gender a A learning curve in economics owners and those who rent. value to frequent flyers matter of pure self-identifica- Although New Zealand Only 55% of Californians can (Bagehot, October 13th). It tion, with no processes or deserves praise for the way it afford to own a home. works like this. Either Melvyn guidelines, hinders trans- monitors the financial perfor- shruti sridhar Bragg and his guests make you gender acceptance. The per- mance of state assets, it is Sunnyvale, California brainier, or they send you to ception that people just “de- worth pointing out that this sleep. On a long-haul flight, cide” to change genders is does not automatically lead to you win either way. After seven wrong. Establishing medical sensible decisions (“How to Outside in attempts, I still haven’t and legal processes that sup- spend it”, October 20th). A few Permit a Norwegian to reflect consciously reached the end of port and confirm transgender more economic principles may on Britain’s Brexit negotiations the episode on the Pauli individuals would help them need to be incorporated into (“Out of reach”, October 20th). Exclusion Principle. gain validation. Moreover, the toolkit for this to happen. No country adheres more mark jones until we can separate gender In particular, the public faithfully to the eu’s many Hong Kong stereotypes from gender iden- would benefit from lessons on rules and regulations than tity, we will keep pushing “opportunity costs”. Attempts Norway, despite having an people into corners they are at asset reallocation inevitably amount of wriggle room in our Letters are welcome and should be ultimately uncomfortable in. lead to accusations that the European Economic Area addressed to the Editor at The Economist, The Adelphi Building, Most of all, however, I have government in New Zealand is agreement. That is because the 1-11John Adam Street, London WC2N 6HT to say that the fears of losing selling the family silver, with eu might not renew our agree- E-mail: [email protected] safe spaces for women is the very little thought to the ment if we do not behave. More letters are available at: most absurd of all concerns. quality of that silver. Not Compare that with Hungary Economist.com/letters Executive focus 21

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Closing date for applications is 26 November 2018. 22 Brieﬁng Gene drives The Economist November 10th 2018

as rats and stoats to native ecosystems in Extinction on demand New Zealand and Hawaii. Needless to say, the enthusiasm is not universal. Other environmental groups worry that it will not prove possible to contain gene drives to a single place, and that species seen as invasive in one place might end up decimated in other places where they are blameless, or even beneficial. If The promise and peril of a new genetic-engineering technology drives are engineered into species that play think i got it,” says Alekos Simoni the wild. That marked the eradication of a a pivotal but previously unappreciated “I with a grin, returning an electronic fly disease which, from 1900 to 1980, killed ecological role, or if they spread from a spe- zapper called “The Executioner” to a near- around 300m people. If gene drives like cies of little ecological consequence to a by metal shelf. With a deft flick of his wrist those being worked on at Imperial and close relative that matters more, they could he has done away with a genetically modi- elsewhere were to condemn to a similar have damaging and perhaps irreversible ef- fied mosquito that was making a bid for fate the mosquitoes that spread malaria, a fects on ecosystems. freedom. There are many levels of contain- second of humankind’s great scourges Such critics fear that the laudable aim of ment to ensure such creatures do not leave might be consigned to history. vastly reducing deaths from malaria— this basement laboratory at Imperial Col- It need not stop with malaria. Gene which the World Health Organisation puts lege, London. But none, perhaps, quite so drives can in principle be used against any at 445,000 a year, most of them children— satisfying as The Executioner. creatures which reproduce sexually with will open the door to the use of gene drives The extermination that the creatures in short generations and aren’t too rooted to a for far less clear-cut benefits in ways that Mr Simoni’s lab are designed to take part in single spot. The insects that spread leish- will entrench some interests, such as those is less viscerally gratifying—but far more maniasis, Chagas disease, dengue fever, of industrial farmers, at the expense of oth- consequential. The mosquitoes are being chikungunya, trypanosomiasis and Zika ers. They also point to possible military ap- fitted with a piece of dna called a gene could all be potential targets. So could crea- plications: gene drives could in principle drive. Unlike the genes introduced into tures which harm only humankind’s domi- make creatures that used not to spread dis- run-of-the-mill genetically modified or- nion, not people themselves. Biologists at ease more dangerous. ganisms, gene drives do not just sit still the University of California, San Diego, once inserted into a chromosome. They ac- have developed a gene-drive system for Thinking nothing’s wrong tively spread themselves, thereby reaching Drosophila suzukii, an Asian fruitfly which, Although allegations of playing God are more and more of the population with each as an invasive species, damages berry and two a penny in debates about breakthrough generation. If their effect is damaging, they fruit crops in America and Europe. Island technologies, with gene drives they do feel could in principle wipe out whole species. Conservation, an international environ- better-founded than usual. The ability to To engineer an extinction is quite a step. mental ngo, thinks gene drives could offer remove species by fiat—in effect, to get But it is not unprecedented. In 1980 Variola, a humane and effective way of reversing them to remove themselves—is, like the the smallpox virus, was exterminated from the damage done by invasive species such prospect of making new species from 1 The Economist November 10th 2018 Briefing Gene drives 23

2 scratch, a power that goes beyond the past ambit of humankind. Drive-by killing Gene drives are, at heart, a particularly How gene drives can quickly change whole populations Mosquito with selfish sort of gene. Most animals have two gene drive copies of most of their genes, one on the set Normal genetic modification Gene drive of chromosomes they got from their moth- A gene added to only one chromosome A gene drive gets into half of ofspring inserted into Cut er, one on those from their father. But they one chromosome put only one version of each gene—either Mosquito with copies itself the maternal one or the paternal one, at modified gene into the other Repair random—into each of their own gametes Wild-type Wild-type (sperm or eggs). Some genes, though, seek mosquito mosquito to subvert this randomising in order to get Ofspring have a 50% chance of inheriting Nearly 100% of ofspring inherit into more than 50% of the gametes, and the modified gene the modified gene thus more than 50% of the next generation. In 1960 George Craig, an American ento- mologist, suggested that such subversive genes might be a way of controlling the populations of disease-carrying mosquitoes, for example by making them more Source: Nature likely to have male offspring than female ones. In 2003 Austin Burt, at Imperial Col- lege, described how a gene drive that could cleverness of the Imperial scheme lies in other species. Tilly Collins at the Centre for cut a place for itself in a chromosome and choosing doublesex as its target. Without a Environmental Policy at Imperial says that copy itself into the resulting gap could, in functional copy of doublesex, mosquitoes published ecological studies of A. gam- the right circumstances, drive a species to cannot reproduce. Mutations which stop biae—one of three mosquito species that extinction. the gene drive from targeting it are also carry malaria, and by far the most impor- A fascinating idea, but one hard to put likely to stop the gene working properly—it tant vector for the disease in Africa—have into practice—until, in 2012, a powerful is unusually sensitive to change. So a mos- turned up nothing that preys on them to new gene-editing tool called crispr-Cas9 quito in which doublesex is sufficiently the exclusion of other foods. There is a became available. Gene drives based on messed up by random mutation that the vampire spider that lives around the shores crispr-Cas9 could easily be engineered to gene drive no longer has a target will be un- of Lake Victoria that has a fondness for the target specific bits of the chromosome and able to reproduce anyway. females when full of human blood, but it insert themselves seamlessly into the gap, The scientists at Imperial are part of will readily eat other mosquito species. thus ensuring that every gamete gets a copy Target Malaria, a research alliance sup- Work is under way to validate these (see diagram). By 2016, gene drives had ported by the Bill & Melinda Gates Founda- findings in the field, and to discover been created in yeast, fruitflies and two tion and the Open Philanthropy Project whether the mosquito’s larvae are similarly species of mosquito. In work published in Fund to the tune of around $5m a year since dispensable. At present, it looks unlikely the journal Nature Biotechnology in Sep- it started in 2005. Target Malaria is already that removing one or two of over 3,000 tember, Andrea Crisanti, Mr Burt and col- working in Burkina Faso, Mali and Uganda mosquito species will have any significant leagues at Imperial showed that one of to prepare the way for a release of a gene effect on the ecosystems in which they live. their gene drives could drive a small, caged drive. It would be introduced on top of a re- What, though, of the risk that a drive population of the mosquito Anopheles gime that includes bed nets, insecticide might spread beyond its target species? In gambiae to extinction—the first time a sprays and drugs for those infected (which theory, because gene drives require their gene drive had shown itself capable of do- kill the malaria parasites in the blood and bearers to have offspring if they are to ing this. The next step is to try this in a larg- thus stop them from hitching a lift in the spread, they should stay in a single species; er caged population. next mosquito to stop by for a drink). With distinct species cannot, in general, repro- This drive disrupts a gene called double- that amount of back-up, even a gene drive duce through sex. However in the case of sex that controls the differentiation of the to which resistance evolves could break the doublesex the target gene sequence is found sexes. Mosquitoes with one copy of the cycle of malaria transmission definitively, across all 16 species of Anopheles analysed drive pass it on to all of their offspring. Fe- wiping it out in the trial area. If that so far—this is the flipside of it being so re- males with two copies—which crop up worked, the rest of Africa—home to 90% of sistant to mutation. And there is a small more and more often as the gene spreads the world’s malaria cases—could soon fol- but measurable rate of hybridisation be- through the population—are sterile. Using low suit. tween some of those species. That probably sterile insects to control disease is not, in would not allow a lot of spread: but the pos- itself, a novel technique. Swamping a pop- Pay attention to your dreams sibility needs examining. ulation of disease-spreading insects with The Imperial team thinks that, scientifical- The New Partnership for Africa’s Devel- individuals that cannot reproduce can be ly, they might have drives able to make a opment, an organ of the African Union, has an effective way to limit numbers; lots of difference in about three years. But the recommended that the Union’s member the fertile wild ones breed fruitlessly with Gates Foundation is talking about 2026 as a states support studies to verify the technol- the sterile interlopers. What is new here is possible date for trials that involve a re- ogy in African settings—including con- that a gene drive can actively spread steril- lease in the wild. Margret Engelhard, a bio- ducting a thorough investigation of the ity through a population. safety expert at the German federal agency risks and looking for measures that may Evolution can be expected to take a dim for nature conservation, points out some mitigate any negative impacts. Target Ma- view of such an affront. Mutants which of the challenges ahead. These include laria is trying to get locals used to the idea lack the dna sequence that the drive tar- evaluating the gene drives before release, of working with, and releasing, mosqui- gets, and which can thus escape its distort- predicting how the modified mosquitoes toes that have been genetically engineered ing effects, will be hugely favoured in the will behave in the wild and working out by scientists. The next step will be the re- population that the drive is attacking. The whether there will be knock-on effects on lease, in Burkina Faso, of male mosquitoes 1 24 Briefing Gene drives The Economist November 10th 2018

2 genetically engineered to be sterile. That more objectionable or pathogenic. The These developments make it easier to will help the scientists understand popula- need to find ways to guard against such at- imagine gene drives being used with mini- tion dynamics, but with no gene drive to tacks is one of the reasons that the Penta- mal risk. But it is still the case that without push the sterility into the population it will gon’s Defence Advanced Research Projects care some gene drives might have the po- have no effect on malaria per se. Agency (darpa) gives for its work on gene tential to trigger irreversible ecological The Target Malaria gene-drive project drives. Renee Wegrzyn, programme man- shifts before countermeasures could be de- carries the prospect of huge humanitarian ager for darpa’s “Safe Genes” project, says ployed. That is clear from decades of work gains. It is carefully designed, supported by the work is to prevent “technological sur- on invasive species that are released either deep-pocketed philanthropists and being prise”, whether in the form of an unintend- deliberately or accidentally. And because carried out under a fair level of interna- ed consequence or nefarious use. One of the effects of each drive will be unique, de- tional scrutiny. It is gaining political sup- the academic teams she funds has made pending on the design of the drive, the gene port and inspiring a generation of re- progress in developing anti-crispr en- or genes that it targets, the population it is searchers. It is hard to see it grinding to a zyme systems that one day might be able to introduced into and the ecosystem in halt in the absence of massive opposition, inhibit a drive’s operation. which that population sits, the technology a currently unheralded alternative or pro- Many groups are working on ways of calls for a sort of joined-up regulation that found technical failure. As Jim Thomas of making gene drives more controllable and does not yet exist. In 2014 Kenneth Oye of the etc Group, an ngo that opposes gene less risky. One option is to create “immu- mit and his colleagues pointed out in the drives, says, malaria is the “best possible nising” drives that could spread resistance journal Science the many gaps in America’s use-case scenario” for the technology. to a drive gone rogue. Another is to limit patchwork of regulatory frameworks rele- The worry of the etc Group and its fel- the drive’s power to spread. Current gene vant to gene drives. low travellers is that the use of gene drives drives are self-driving: the cutting mecha- Oversight needs not just to bring to- against malaria will open the door to more nism and the thing that gets spread are one gether a range of government agencies; it troubling, slipshod and exploitative appli- and the same. But that is not the way things requires co-operation between govern- cations. Many may sound good: some of have to be. In the “daisy chain” drive de- ments, too. The Cartagena Protocol on Bio- the $70m that Tata Trusts of Mumbai, a phi- signed by Kevin Esvelt of the Massachu- safety, which entered into force under the lanthropy group, has given to the Universi- setts Institute of Technology, gene drives un Convention on Biological Diversity ty of California, San Diego, is for exploring are linked up in sequence, with the first (cbd) in 2003, provides controls on the ways of using gene drives to make crops creating the space for the second to copy it- transfer of genetically modified organ- more resistant to drought. If the technol- self into, the second creating the space for isms. But how it applies to gene drives is ogy were predictable, controllable and the third, and so on, until you finally get to unclear—and besides, America has never well-regulated, the potential for raised the gene that you want to drive through the ratified the convention. An attempt to ban crop yields in the face of climate change, population. Because the upstream drives gene-drive research through the cbd, and perhaps reduced use of pesticides and do not copy and spread themselves, they which was backed by the etc Group and herbicides, might be huge. But experience drop away, generation by generation, until other ngos, failed at the convention’s bien- shows that few technologies make it into only the last gene remains. nial meeting in Cancún in 2016. the world in a predictable, controllable and Think of it like the stages of a rocket A less ambitious call for restraint in well-regulated form. Mr Thomas sees a launching a satellite—or warhead. Each field tests is likely to suffer the same fate raising of the stakes from a world in which stage gets the gene of interest further into later this month in Egypt. At present there businesses modify seeds crop by crop to the population before falling away. But is no consensus on what level and distribu- one where they modify whole populations, once the last stage has burned out, the pay- tion of risk humankind is willing to accept indeed all of nature. “It is a pretty auda- load just goes where gravity takes it, power- from such technologies, nor what loss of cious switch,” he says. less to push itself further. Such a self-limit- wildness it is willing to accept. Like the re- In a report published in 2016, America’s ing system might have a big effect over the introduction of vanished species advocat- National Academies of Science highlighted short term, but vanish in the long term. ed by the rewilding movement, gene-drive the possibility of drives introduced for ag- technology will provide new arenas for the ricultural reasons damaging people’s wel- fight between those who wish to defend fare. Excoriated as “pigweed” in the United nature and those who wish to tame it. States, related species of the plant are culti- There is still time for such debate. The vated for food in Mexico, South America, Gates Foundation does not expect to be India and China. American farmers might ready for field trials for at least eight years. like a gene drive to eradicate pigweed, And the debate may be more fruitful if re- which has become resistant to the herbi- search continues to open up new options cide glyphosate, which is widely used in for better-designed interventions. If gene- conjunction with today’s genetically mod- drive research had been banned under the ified crops. But they would not necessarily cbd two years ago, various self-limiting ex- bear the risks, or liability, of a release that otica currently under development might went on to do damage to food crops in oth- not have been dreamt up. er countries. For malaria, at least so far, the case for There are also worries about how gene moving towards tests in the field is a strong drives might be used to create a weapon. one. That does not mean that other uses Humans are an unlikely target; a weapon will be as compelling down the line, or that that acts over generations seems ill-suited there is no need for vigilance. And none of to war or terror, and the idea that future this will, in practice, be as neat as a swipe generations will not have their genomes with an electronic tennis racquet. But for sequenced in a way that shows up such at- millions of Africans living with the burden tacks feels far-fetched. But they might con- of malaria, the idea of never needing to fear ceivably be used to make small and rapidly the bite of another mosquito could change reproducing insect and rodent species the world. 7 Britain The Economist November 10th 2018 25

Universities’ finances mit. Since they now rely on students’ fees for much of their income, universities are After the boom, the bust keen to attract them. And since there are no longer restrictions on admissions, the most attractive universities can suck students away from the rest. This explains why borrowing has mostly been spent on sprucing up campuses. On an open day, “how do you judge whether a university is Britain may soon have a bankrupt university. Will the government let it go under? good or bad?” asks one university official. nglish universities have long been in 2010-15, which aimed to get more people “You can’t judge course content, so you use Edefined by their architecture, from the into higher education while pushing uni- lecture halls or sports facilities as proxies.” dreaming spires of Oxford, to the red-brick versities to pay more attention to teaching. Since the financial crisis, bank lending universities built after the Industrial Revo- The headline reform was to nearly triple has dried up. So universities have turned to lution, to the concrete polytechnics that the fees that universities were allowed to capital markets. The universities of Leeds, sprouted everywhere after the 1960s. Those charge students, to £9,000 a year. One rea- Liverpool, Cardiff, Manchester, Cambridge who visit a campus today are likely to see son for lifting the cap was to provide in- and Oxford have all taken advantage of low another big round of building in progress. come for universities to borrow against. interest rates by issuing public bonds, rais- This time glass and steel are the main me- David Willetts, the universities minister at ing £250m-750m each. Less prestigious dia, sometimes accompanied by cladding the time, has written that “financiers al- universities have looked to private inves- in garish colours. ways used to advise us that university bal- tors, such as insurers and pension funds, The rush to build reflects a battle to at- ance sheets were very conservative.” in deals with shorter maturities. tract students, which is putting a growing A less noticed but more important The lowest-ranked universities struggle strain on universities’ finances. Universi- change was to remove limits on the num- to find any lenders. It is also they who are ties receive twice as much money per stu- ber of students that universities could ad- running the biggest deficits (see table on dent as they did two decades ago. But an in- next page). Some institutions acknowledge crease in spending means that they are that conditions are difficult: higher educa- Also in this section nonetheless racking up debt. Britain’s 130- tion “has become market-driven and in- odd universities owe nearly £12bn ($16bn), 26 Did Leave cheat? creasingly competitive,” says the Universi- up from less than £5bn in 2012, according ty of Bradford. Others point to particular 28 Military recruitment to estimates collated by Reuters. In 2016-17, circumstances. St Mary’s University, for in- the most recent year for which data are 28 Jeremy Heywood, 1961-2018 stance, says its deficit “was planned and fo- available, 19 universities ran deficits, com- cused on investment in areas of growth 30 Profitable care homes pared with six the year before. A few are and student experience.” said to be near bankruptcy. Some in better 30 Knife crime spikes The squeeze is about to tighten. An un- health are considering whether they would explained fall in the birth rate at the turn of 31 Parties pinch policies take over a neighbour if the option arose. the millennium means that between 2017 The competition for students is the in- 31 Cryptic crosswords and 2020 the number of 18- to 20-year-olds tended consequence of a series of reforms will drop by 150,000, meaning fewer poten- 32 Bagehot: Peterloo v Waterloo introduced by the Tory-Lib Dem coalition tial customers. The government’s efforts to 1 26 Britain The Economist November 10th 2018

2 cut migration will make it hard to recruit versities out when they make reckless fi- turbing disregard for voters’ personal pri- students from overseas to make up the nancial decisions.” vacy. Insurance clients and Brexit shortfall. A forthcoming review of higher- He is surely right. But will the govern- supporters were bombarded with mes- education funding may recommend re- ment have the stomach to let a university sages pushing each other’s interests. There ducing tuition fees. On top of this, univer- go under? It would face accusations that it are also claims that Eldon employees sities expect to have to increase their con- had allowed mis-selling to students. Some worked for Leave.eu. Yet Mr Banks’s re- tributions to pension schemes. Some will of the most vulnerable universities are in sponse to the fines imposed for misuse of “reach a point where it is difficult to make parts of the country where good jobs are data was to tweet “so what?” more efficiency savings,” says Steven West, scarce. Nevertheless, one of the require- This sorry tale raises concerns over vice-chancellor of the University of the ments imposed by the ofs is that universi- electoral laws besides the perennial worry West of England. “A shock is about to hit.” ties make plans for what would happen to of regulators with too few powers. Social Most universities will ride it out. Jason their students in the event of the universi- media and targeted campaigns have be- Rothenburg of MetLife Investment Man- ty’s bankruptcy. So far, too many have come newly significant in politics. The il- agement, part of an American pension viewed it as a bureaucratic exercise, says licit harvesting of personal data during the fund, says one attraction of lending to Eng- Sir Michael. In fact, he warns, “it is an es- Brexit campaign by the likes of Cambridge lish universities is good government over- sential element of the system.” 7 Analytica, a defunct data firm that the In- sight from a new regulator, the Office for formation Commissioner’s Office says it Students (ofs). It ought to be aware of any may yet prosecute, was huge and sophisti- difficulties before they emerge, since it Brexit and electoral law cated. Many countries now fear foreign in- checks on the finances of all institutions trusion, especially from Russia. Inter- that register with it. University boards are Arron’s golden calf viewed on television, Mr Banks oddly also meant to monitor the finances of their denied that Russian money was involved institution. But some in the sector admit even before being asked. He has a Russian that small, undistinguished universities wife and business interests and has admit- may struggle to attract board members of ted to extensive contacts with Russian offi- sufficient calibre to do the job. cials during the referendum. Evidence of Leavers’ rule-breaking The assumption among some universi- Remainers are up in arms over what boosts calls for a second referendum ties and lenders has been that if a universi- many claim was a stolen vote. But it is hard ty gets into trouble, the government will ith less than five months before to assess the effects of careful selection of bail it out. On November 6th Sir Michael WBrexit is due, debate over possible social-media targets for pro-Brexit propa- Barber, the chairman of the ofs, said it deals is hotting up. Revelations of law- ganda. Vote Leave, not Leave.eu, was the of- would not. “This kind of thinking, not un- breaking by Leave campaigns in 2016 are ficially designated campaign organisation. like the ‘too big to fail’ idea among the now adding fuel to the fire. The focus is on Although it too was fined for overspend- banks, will lead to poor decision-making Arron Banks, an ebullient insurer who ing, the two groups hated each other. The and a lack of financial discipline, is incon- dubs himself the “bad boy of Brexit”. Mr 52%-48% Leave victory in 2016 was narrow sistent with the principle of university au- Banks, whose gift of £8m ($12m) to Lea- but clear-cut. And the government itself tonomy and is not in students’ longer-term ve.eu, an unofficial Brexit campaign, was spent £9m on a leaflet promoting Remain. interests,” he cautioned. The regulator’s Britain’s biggest-ever political donation, The Banks affair has strengthened those aim will be to protect students, not the uni- has been having a busy time with official calling for a fresh vote on a Brexit deal. versity, perhaps by moving them to anoth- watchdogs. He has been referred by the Ironically, Mr Banks himself now says it er institution or by arranging a takeover of Electoral Commission to the police. His in- might have been better to back Remain. their existing one. Sam Gyimah, the uni- surance firm, Eldon, and Leave.eu have This week a Survation poll for Channel 4 versities minister, said this week that it been fined £135,000 by the Information found a 54%-46% majority agreeing. Brexit was not the government’s job “to bail uni- Commissioner’s Office for misuse of perso- may not be done yet. 7 nal data. And the Financial Conduct Au- thority is looking into Eldon’s practices. Finance lessons Mr Banks denies any wrongdoing. He England, universities with largest deficits claims to be a victim of hardcore Remain- Academic year ending 2017 ers bent on overturning the Brexit vote. Yet the evidence is against him. The Electoral Deficit Commission declares baldly that it has rea- as % of No. of Teaching University income students quality* son to believe that the source of the £8m was impermissible because it was foreign. St Mary’s 8.8 5,535 Silver Mr Banks says the money came from a Brit- East London 8.2 13,215 Bronze ish-based firm, Rock Services. But this Cumbria 7.3 8,635 Bronze small service group is owned by Rock Hold- ings, registered in the foreign jurisdiction Kingston 7.1 19,470 Bronze of the Isle of Man. And the £8m was record- Plymouth Marjon 5.4 2,415 Silver ed in the accounts of Rock Holdings, not Sunderland 4.9 13,020 Silver Rock Services. The Electoral Commission has called in London Metropolitan 3.9 12,145 Bronze the cops partly because it has few resources Bradford 3.0 10,960 Silver and no foreign jurisdiction. But it is also Buckinghamshire New 2.3 8,870 Silver because its maximum fine is just £20,000, a trivial amount for potentially criminal of- Bolton 1.8 6,425 Silver fences. The Information Commissioner’s Sources: HESA; Oice for *Teaching Excellence Office also has few resources and insuffi- Students; The Economist Framework ranking, 2017 cient powers to deal with what it calls a dis- Prophet of exodus

28 Britain The Economist November 10th 2018

Military recruitment Jeremy Heywood, 1961-2018 Your country Whitehall’s mover and shaker needs… someone The deftest operator of the government machine died on November 4th eremy heywood was “in the room The armed forces call on women and Jwhere it happens”, to borrow a phrase foreigners to ease troop shortages from “Hamilton”, for the most important ritain is at peace and unemployment decisions of Britain’s past quarter-cen- Bis down. Good news for most, but not tury. He was at the Treasury on Black for its armed forces. They are struggling to Wednesday in 1992, when the pound was attract recruits, owing to fierce competi- forced out of the European exchange-rate tion for workers and a lack of exciting over- mechanism, and in Downing Street in seas action. Mid-career squaddies are leav- 2001when the aeroplanes hit the twin ing, lured by juicier wages and better towers and the decision was taken to prospects for promotion in the private sec- invade Iraq. After a spell in banking he tor, particularly for those with skills in ar- returned to the civil service in time to see eas like cyber-security or engineering. Sal- the global financial system collapse. aries in the ranks start at just £15,230 When he was given a peerage last month ($20,030). As a result, the forces are losing he fittingly chose the title of Lord Hey- troops faster than they can replace them. wood of Whitehall. The Ministry of Defence (mod) fell 24% In all his many roles Lord Heywood short of its recruitment target last year. (whose wife, Suzanne, is on the board of To plug this gap, it is widening the pool The Economist Group) was a model of from which it recruits. Last month all roles calm efficiency. He quelled a panic dur- were opened to women, who were previ- ing the Maastricht negotiations when he ously barred from positions involving found John Major’s talking points lost close combat. This week the mod said it among a stash of papers. He kept lines of Lord Heywood, master servant would start accepting applications from communication open between 10 and 11 citizens of all 53 countries of the Common- Downing Street during Tony Blair’s pre- spoken that it was difficult to hear him, wealth. That decision waived a require- miership, holding secret powwows with and so boyish-looking that it was pos- ment imposed in 2013 that such recruits Gordon Brown’s team in a greasy-spoon sible to mistake him for an intern. He must have lived in Britain for five years be- café. He helped to form the Tory-Lib Dem hovered rather than dominated. But he fore they could join up. It is hoped that the coalition in 2010. It is Britain’s ill fortune had a genius for making himself indis- Commonwealth will provide 1,350 new that cancer has deprived the country of pensable; one colleague likened him to a troops a year, equivalent to more than 10% his skills in the past year of Brexit talks. drug that people get addicted to quickly. of the number currently recruited. His detractors accused him of cross- The result was that he kept accumulating Recruiting foreign folk who have never ing the line that divides administration jobs, adding the roles of cabinet secretary lived within the country’s borders is un- from politics, particularly when he failed (2012) and head of the civil service (2014) usual, says Jack Watling of rusi, a defence to produce sensitive letters on prep- to his position as chief adviser to the think-tank. Other European countries arations for the Iraq war (“Sir Cover-Up”, prime minister. seeking to bolster their ranks are turning to the Daily Mail dubbed him). Some He had a surprisingly raffish side. At conscription, which has been reintro- thought his view of his job was summed Oxford he socialised with anarchists and duced in Sweden and Lithuania amid up when he put on a blue tie when David punk rockers, rather than the Bullingdon heightening tensions with Russia. Some Cameron became prime minister in 2010. set. He formed a radical discussion group countries recruit foreigners directly from Yet nobody impugned his neutrality. He called the Apostates. Both as a rising civil overseas, but they are usually put in segre- worked equally ferociously for Tory and servant and an establishment grandee he gated units like France’s Foreign Legion. In Labour prime ministers, implementing was a great party-giver, and was extreme- Britain they will join mainstream ones, the government’s agenda rather than ly charming. Politicians of all persua- with squaddies from Scunthorpe fighting insinuating one of his own. sions have gone out of their way to praise alongside farmhands fresh from Fiji. Lord Heywood’s adamantine commit- him. Indeed, the most surprising thing The idea may yet catch on elsewhere. ment to getting things done was not about the tributes is not the admiration, Facing similar shortages, Germany is always obvious at first. He was so quietly but the affection. weighing up whether to offer citizenship in return for military service to people from elsewhere in the European Union. But it foreign troops are no less likely to defect to course to meet just 50% of this year’s quota. could also arouse post-colonial prickli- the private sector than the current lot. The firm will be responsible for recruiting ness. Commonwealth governments may The branch facing the worst shortfall is most of the new Commonwealth troops, resent their citizens joining a foreign army, the army. In 2012 it handed its recruitment who will be harder to vet than locals. especially if they start seeing their best sol- operation to Capita, an outsourcing firm. The promise of action is the best re- diers leave to seek better pay, says Paul By subcontracting tasks such as security cruiting sergeant, says Mr Schulte. Without Schulte, a former official at the mod. vetting, the company has created a bureau- war, soldiering involves a lot of sitting Women and foreigners alone are un- cratic tangle, with some recruits waiting 18 around in tents. Unless it is forced to spend likely to fill the recruitment gap. Many spe- months to get onto a training course. Many blood overseas, the government may have cialist roles with shortages are already drop out. Capita insists that the worst to spend treasure on higher pay at home if open to female troops. And once trained, kinks are being ironed out, but it is on it wants to keep the numbers up. 7 Mix business with pleasure. 30 Britain The Economist November 10th 2018

Care homes eye of American investors, primarily real- ger. In the six days from October 31st, there estate investment trusts (reits). The big- were five fatal stabbings in the capital. The Growing old gest in Britain is Welltower, which has 107 hosts of “Good Morning Britain”, a televi- care homes with 7,500 beds, worth £2.2bn. sion programme, berated Sadiq Khan, the profitably Only a few of its homes take council-fund- mayor of London. “Sort it out, Mr Mayor!” ed residents, as the firm prefers to “avoid one said. the risks of dealing with the government This narrow focus is partly justified. HORSHAM pay sector,”says Justin Skiver, an executive. Stabbings are far more common in London A troubled industry is an unlikely hit Other reits buying homes include Target than anywhere else in the country, and not with investors Healthcare and Impact Healthcare. only because it is so much bigger: it sees n november 6th the Care Quality The care-homes market is still frag- more violence per person than less popu- OCommission (cqc), which regulates mented, with about 5,500 operators. The lous areas. In 2017-18 it accounted for 22% health and social care, took the unusual five biggest have just 15% of the market be- of all murders and 36% of knife crime in step of warning local authorities that a care tween them. Some see scope to grow by ac- England and Wales, though Londoners company was at risk of collapse. Allied quisition, gaining economies of scale. make up 15% of the population. Attacks in Healthcare, which provides services such The investments will increase capacity the capital also appear to be more ferocious as washing and meals to 9,300 elderly peo- and may spur innovation. But the price is a than those elsewhere. Its murder count has ple in their own homes, insists there is bigger divide between those who can pay risen more sharply than the country’s. nothing to worry about. Yet councils are and those who cannot. And there may be a Yet the biggest increases in knife crime preparing for the worst. hidden cost to the taxpayer. As providers have been outside London (see chart). Allied’s difficulties are a reminder of the focus on self-funders and council-funded Since 2010-11 it has risen by a tenth in the pressure on the care sector. A higher mini- beds dry up, hospitals could find them- capital, and by a third in the rest of England mum wage and tighter regulations have selves taking up the slack. 7 and Wales. During the same period, knife added to care providers’ costs. At the same crime leapt more sharply than the national time their main customers, local authori- average in the patches around Sheffield, ties, are facing funding cuts and are reluc- Violent crime Leeds and Liverpool. The number of stab- tant to pay more for services. bings began to tick up in North Wales, Nor- This disjuncture is most evident in care Capital offences folk and Essex well before they did in Lon- homes, a business worth about £16bn don. Jacqueline Sebire, assistant chief ($21bn) a year, with over 400,000 resi- constable of Bedfordshire Police, recently dents. The number of people over 85 is ex- dealt with four stabbings in 24 hours. “It’s pected to increase by 36% by 2025. Yet care wrong that people are placing the sole fo- homes have been closing, unable to make cus on London,” she says. London’s knife-crime spike has hit the ends meet. By one estimate England has Some think the capital dominates cov- headlines, but the big rise is elsewhere lost 3,700 beds since 2012. erage because of its concentration of jour- It hardly looks like a promising market. cross the country, some children are nalists and politicians. They are “seeing it But one corner of the industry has attracted Abecoming victims, others perpetrators. more visibly than the trends outside Lon- the attention of investors, including for- On November 3rd a 15-year-old was stabbed don,” says Harvey Redgrave of Crest Advi- eign funds, which have been snapping up in the chest in Swindon. Two days later, an sory, a consultancy. Mr Khan and Cressida British care homes. By changing the way 18-year-old was knifed in the leg outside a Dick, commissioner of the Metropolitan such homes operate, and rethinking who school in Bedford. On November 6th two Police, are well known and so more likely to their customers are, investors see a way to teenagers suspected of stabbing a younger be held to account than a provincial police make a good return. But with this change boy in Manchester were arrested. The boy chief or politician. Others suspect politics. comes a widening gap between north and was struck several times in front of other Tory-supporting newspapers have been south, as well as between rich and poor. children out for Halloween. quick to criticise Mr Khan, a Labour mayor Take Skylark House in Horsham, Sus- But the media has focused on London, who will have to fight an election campaign sex. The spotless, two-year-old facility has where there have been 119 murders this in a little over a year. 82 bedrooms, each with an en-suite we- year, about the same as the number killed The best explanations for the surge are troom and most with a balcony. It is owned in the whole of 2017, excluding terrorist at- national. Labour blames spending cuts: the by Care uk, the fourth-largest provider in tacks. Four in ten victims were 24 or youn- number of policemen has fallen by 15% the country, which has built 40 homes since 2010. Meanwhile new demands on since 2011and has 33 more in the pipeline. officers, such as a recent run of accusations Care uk’s boss, Andrew Knight, argues Cutting, rising of decades-old sex abuse, take up their that the only way to provide this sort of care Police-recorded crimes involving a knife, ’000 time. Another plausible explanation is a is to take more residents who pay their own 40 shift in the drugs market. A boom in the way. Councils in England are obliged to pay supply of crack cocaine has encouraged for anyone with assets of under £14,250. city gangsters to expand into towns once But often the council’s contribution does 30 dominated by small-time dealers. Compe- not cover the full cost. In Care uk’s homes, tition has sparked violent turf wars. councils pay about £650 a week, whereas 20 Misdiagnosing the spread of the pro- “self-funders” pay £900. Care uk used to England and Wales blem could frustrate attempts to tackle it. work mostly for local authorities. Now half excluding London “A lot of police forces just want to deal with its residents are self-funders. Mr Knight 10 problems on their own patch,” says Rick says he will no longer provide beds at be- Muir of the Police Foundation, a think- London low cost. That will rule out most local-au- 0 tank. “You need to look at it as a national thority customers, but means the company problem.” Mr Khan might be feeling the 2010 11 12 13 14 15 16 17 can operate with margins of about 10%. heat, but responsibility ultimately rests Source: ONS The self-funding market has caught the with the Home Office. 7 The Economist November 10th 2018 Britain 31

The politics of theft Crosswords Full-fat politics Hip to be square

Technology arrests the decline of a great British pastime ou have the most peculiar ideas of from paper to digital platforms, says Does offering a “lite” version of an relaxation,” Laura Jesson tells her David Parfitt, the Times’s puzzles editor. opponent’s policies actually work? “Y aloof husband in the film “Brief Encoun- His newspaper has introduced a “quin- ritain’s pop-guzzlers are a surpris- ter”, when he suggests that she unwind tagram”, tailored to smartphones, which Bingly health-conscious lot. Earlier this with a cryptic crossword. Some of the has no grid and just five clues, making it year the country became the first where contestants at the annual Times Cross- quicker to complete and easier to navi- sugar-free versions of Coca-Cola outsold word Championship, held on November gate on a morning commute. the real thing. Whether Britons follow sim- 3rd, might agree that crosswording can Technology can also help the unini- ilar principles when it comes to imbibing be anything but relaxing. Neil Talbott, a tiated, via “hint” buttons and the option their politics will dictate the fortunes of La- programmer, was among many to fall by to check answers. (We ran a cryptic cross- bour and the Conservatives. misspelling iguanodon (the clue: “Old word in 2016’s Christmas issue, with “Diet” policies have become the norm in animal droppings gathered by a single online explanations of the clues.) Crack- British politics, with both main parties lecturer”). “It can be savage,” he says. ing a cryptic puzzle requires awareness promising a healthier version of the other’s Cryptic crosswording was developed of various conventions. For example, the platform. In last month’s budget the Con- in Britain in the 1920s. It has become a word “regularly” signals using every servative chancellor, Philip Hammond, an- staple of British culture, celebrating the other letter of the word it accompanies: nounced that austerity was “coming to an messy ambiguities of English with its “Part of foot, regularly stroked” is toe. end”, in what amounted to a toned-down complex riddles and wordplay. Agatha Though the best competitive cross- version of Labour’s promise to open the Christie was a fan. Crosswords were used worders are a greying lot, moving the spending taps. Meanwhile his opposite to recruit codebreakers in the second crossword online gives newcomers a number, John McDonnell, surprised many world war. But some fear for the puzzle’s chance. And for the first time since 2008, in his party by saying that Labour would survival. Newspapers, where most cross- the Times competition has a new cham- support the Tories’ plan to give a tax break words are printed, are in decline. And a pion. Mark Goodliffe, the 11-time victor, to the well-off, by raising the threshold at younger audience is put off by the puz- was disqualified after a late error, so which the higher rate of income tax is lev- zle’s impenetrable rules. Roger Crabtree, a former pensions clerk, ied. The Tories have previously stolen La- Yet technology is offering solutions to took the trophy. Congratulating Mr Crab- bour ideas such as a cap on energy prices, both of these brain-teasers. The cross- tree, a woman was heard to mutter, while Labour has adopted a law-and-order word has transitioned remarkably well “You’ve given us all hope.” policy that would fit snugly into the Con- servatives’ manifesto, with its call for more police and border guards. Whether parties benefit from aping their opponents depends on the policy area, argues Margit Tavits of Washington University in St Louis. She examined voters’ behaviour in 23 countries over 40 years. On issues that are seen as pragmatic, such as the economy, voters are happy for a party to change its tune. But when it comes to so-called principled policies, including immigration, voters will punish a party that strays from its beliefs. This is the case even when the party is shifting towards the median voter’s views. Both Labour and the Conservatives lost ground to the uk Inde- pendence Party when they mimicked its hard line on immigration, offering stiff rhetoric but few policy changes. This pattern repeated itself across Europe. Article, once moist, ruined the newspaper (3, 9) But what works on the pages of an academic journal is messier in real life, argues Tim Bale of Queen Mary University of Lon- supporting the Tories’ tax break. Some some subjects pales in comparison to La- don. Deciding whether a policy area is Conservative mps complain that Theresa bour’s promise to abolish them (as well as pragmatic or principled is more art than May spends too much time talking about smacking of hypocrisy, since the Tories in- science. The National Health Service, for what they see as Labour issues, like nhs troduced the higher fees only six years example, bestrides both. And nabbing too funding, and not enough on traditionally ago). Conservative wonks insist that voters many of an opponent’s policies may annoy Tory concerns, such as lower taxes. do not care where a policy came from. The a party’s core supporters, whatever the is- Labour aides are confident that the To- next election will depend on whether vot- sues in question. Mr McDonnell faced ries’ “Diet Corbynism” is no match for the ers find Labour’s full-fat politics more grumbles from Labour mps (including real thing. After all, the government’s tempting than the Tories’ offering of Cor- those usually well to the right of him) for mooted plan to reduce tuition fees for bynism without calories. 7 32 Britain The Economist November 10th 2018 Bagehot Peterloo v Waterloo

British politicians are divided by two very different views of history the workers enjoy, they have as the result of heroic struggles led by a vanguard of activists who must fight against both the ruling class, who try to suppress them, and class traitors, who don’t understand the true meaning of history. Mr Corbyn is much happier talking about history than economics. His favourite historical figure is John Lilburne, a 17th-century Leveller who devoted his life to agitation. (“If the world was emptied of all but John Lilburne, Lil- burne would quarrel with John and John with Lilburne,” one con- temporary said.) He is fond of Marxist historians like Christopher Hill, author of “The World Turned Upside Down”, and E.P. Thomp- son, who wrote “The Making of the English Working Class”. The Waterloo interpretation of history is the opposite. It cele- brates our island story rather than lamenting it (and frequently slips into calling that island England). This school reveres the role of great men, particularly great military commanders, rather than agonising about the labouring masses. It also focuses on constitutional innovations rather than economic struggles. For Water- looists, England’s unique achievement was to limit the power of the over-mighty state through constitutional reforms such as Magna Carta, the establishment of Parliament and the common law. These innovations made British history fundamentally different from continental history. Whereas the continent had absolut- he centenary of the armistice on November 11th is a welcome ist rule, the Napoleonic code and endless internecine wars, Britain Treminder that historical memories can unite the country. It is had peaceful constitutional evolution, protection of individual an unfortunately rare one. These days history is more commonly rights and a globalised economy. used to divide and inflame. The right of the Conservative Party and A striking number of the leading Brexiteers are either history the left of the Labour Party—the ideologically ascendant factions graduates or history buffs. Sir William Cash, Jacob Rees-Mogg and in their respective worlds—are wedded to sharply contrasting in- Daniel Hannan all read history at Oxford. Mr Rees-Mogg has ar- terpretations of British history, which focus on very different gued that Britain’s vote to leave the European Union is “as worthy events and freight them with very different emotions. Let us call for celebration as victory at Waterloo or the Glorious Revolution”, them the Waterloo and the Peterloo interpretations. and defined Brexit as “a victory of British liberty over Bonapartist Waterloo was one of Britain’s greatest victories over the French. autocracy, and for free nations over foreign tyranny”. Mr Hannan In 1815 the Duke of Wellington ended Napoleon’s career for good has written a book called “How We Invented Freedom and Why It and inaugurated a long period in which Britain could play Europe’s Matters”. Michael Gove, the environment secretary, is an omnivo- leading powers off against each other, to make sure that no new rous reader of history books who, in an earlier role as education Napoleons could emerge. Peterloo, in 1819, was one of the worst secretary, tried to refocus the history syllabus on teaching facts peacetime massacres in British history. Troops charged into about British history. 100,000 peaceful protesters, who had gathered to demand more These polarised views leave a lot to be desired on the scholarly political rights in St Peter’s Field, near Manchester. Fifteen people front. The Peterloo interpretation ignores the role of judicious re- were killed and hundreds injured. form. The British ruling class did terrible things but it was re- The Labour left is obsessed with Peterloo. Jeremy Corbyn, the strained compared with its continental counterparts. “Only in party’s leader, highlighted the massacre in his speech to Labour’s England do they call that a massacre,” sneered one French dip- annual conference in September. The demonstrators were killed lomat. The Waterloo view downplays the role of imperialism and by “troops sent in by the Tories to suppress the struggle for demo- plunder in the making of Britain. (It also downplays the fact that cratic rights,” he noted, adding that Labour’s slogan, “For the many Waterloo was “the nearest-run thing you ever saw in your life”, as not the few”, was coined by Percy Shelley in a poem commemorat- Wellington put it, and would not have been won without the help ing the massacre. Mike Leigh, one of Britain’s leading film direc- of the Prussian army.) Both views ignore the importance of entre- tors, has recently released a film about the massacre called “Peter- preneurial innovation and free trade in raising living standards. loo”. The two-and-a-half-hour epic is not up to the standards of The starvation that Mr Leigh decries in “Peterloo” was eventually “Life is Sweet” and “Topsy-Turvy”. But, partly because it is so cari- alleviated by the repeal of the Corn Laws and the import of grain. catured, it provides a good view of the Corbynite historical imagination. The established rich guzzle food and drink, the new rich Couldn’t escape if they wanted to grind the poor with the help of dark Satanic mills and job-destroy- The clash of historical visions will remain at the heart of politics ing machines, the poor try to improve their dismal lot through for some time. During the Blair-Cameron years, when policymak- peaceful protest, and the establishment responds by crushing ers all accepted the virtues of market liberalisation and quarrelled them. Maxine Peake, one of the leading actresses, has driven the about means rather than ends, economics had a good claim to be film’s message home by comparing Peterloo to the more recent di- the queen of the sciences. Today the crown has been passed to his- sasters at Hillsborough stadium and Grenfell Tower. tory. Economics has lost much of its lustre since the financial cri- The Peterloo interpretation sees British history as a story of sis. History, by contrast, appeals to people’s quest for meaning and ruthless exploitation and intermittent resistance. What few rights identity in a world that too often deprives them of both. 7 Europe The Economist November 10th 2018 33

Also in this section 34 French labour-market reform 35 The rise of Germany’s Friedrich Merz 35 Greek anarchists 36 Russia’s tenth city, Rostov-on-Don 37 Charlemagne: Reﬂections on Armistice Day

NATO have to spell out whom he had in mind. A second message lay in the exercise’s War in a cold climate scope, stretching from Iceland in the west to the airspace of non-nato Finland in the east. The last big war game was held three years ago in Spain, thousands of kilometres from Russian soil. Norway, by contrast, is not only a front-line ally, sharing a OPPDAL 200km border with Russia, but has also nato holds its biggest exercises since the cold war watched nervously as Russia’s Northern he spanish armoured vehicles were bling between political leaders. Fleet, headquartered across the Barents Sea Tdug into the side of the road into Opp- The very premise of the exercise—an in- on the Kola Peninsula, has piled up new dal, a mountain village some 300km north vasion of Norway, causing the alliance to ships and increased submarine patrols of Oslo, cannons pointed across the snowy invoke its Article 5 mutual-defence tenfold. That has forced nato to reacquaint valley. Their task was to defend the local clause—was a signal that, after decades of itself with cold-war concepts like the “giuk airport from the might of the “North fighting ragtag Balkan armies and Afghan gap”, a maritime choke-point between Force”, played mostly by American ma- guerrillas, nato is back in the business of Greenland, Iceland and Britain that is Rus- rines, whose fleet of tanks assembled at a defending its home territory. The exercise, sia’s principal outlet to the Atlantic. Russia nearby petrol station. Rifle-wielding ma- officials coyly insisted, was “not directed has also reoccupied seven former Soviet rines decked in snow camouflage prepared against any country”. But Lieutenant Boyd bases in the Arctic region and launched its for battle with cups of hot chocolate, the at- was clear that his marines were preparing first military icebreaker in 40 years. In tendant unfazed by the firepower massing to fight a “near peer” adversary. He did not turn, America has doubled the number of on her forecourt. Yellow-jacketed umpires marines based in Norway, and on October followed the war games, decreeing wheth- 19th sent an aircraft-carrier into the Arctic er a tank had strayed into a notional mine- Greenland Barents Circle for the first time in almost 30 years. field or been struck by hypothetical artil- Sea A third distinctive element of Trident Severomorsk lery. “It’s pretty much like battleships,” said Kola Juncture was its size: 65 ships, 250 aircraft, Pen. Second-Lieutenant Larry Boyd. A r Y 10,000 vehicles and 50,000 personnel. c t i A F c C I i rc l N e W The mock combat was part of Trident L This was a test of nato’s ability to pump re- ICELAND R N A E N O Juncture 2018, nato’s biggest military exer- D D inforcements over the oceans, teeming N E cise since the cold war, lasting from Octo- W with Russian submarines, and then across Oppdal S RUSSIA ber 25th to November 7th. The alliance is ATLANTIC EST. the continent. This has proven tricky. Lieu- flourishing on the ground, building up OCEAN Oslo LAT. tenant-General Ben Hodges, who retired as LITH. forces, transforming its institutions and 750 km commander of American forces in Europe squaring up to Russia with confidence. The POLAND in December 2017, recalls his surprise at BRITAIN NATO UKRAINE question is whether this progress can be GERMANY learning that Europe’s Schengen area, quarantined from the transatlantic squab- members which has abolished border controls, did 1 34 Europe The Economist November 10th 2018

2 not extend to the free movement of arms. France vamp of vocational-training schemes on Others point to problems with infrastruc- which France spends €32bn ($37bn, or 1.4% ture, such as incompatible railway gauges Bearing fruit? of gdp) a year—has only just gone into ef- and weak bridges. fect. This is designed to improve results by nato’s response to the new threats has handing choice to employees in the form of been the biggest overhaul of its command training credits they can choose how to structure in a generation. Two new head- spend. A further €15bn over five years is go- quarters, one focused on the Atlantic, PARIS ing into training for the unemployed. It Tentative signs that Emmanuel based in America, and another on logistics, will take much longer for such measures to Macron’s labour reforms are working in Germany, will be established over the improve skills and job prospects. next three years, adding 1,200 personnel. hen gerhard schröder launched a The third and final part—a reform of so- Generals are also getting chummy with Eu- Wseries of German labour-market re- cial protection—will be unveiled only next rocrats. eu-nato relations were once forms in 2003, his country’s unemploy- year. Whereas Mr Schröder began with ben- “trench warfare”, says Sir Adam Thomson, ment rate stood at just under 10%. This was efit reform, Mr Macron has left this until Britain’s envoy to nato from 2014 to 2016. also the rate inherited by Emmanuel Mac- last. During his campaign, he promised to Now there is “unprecedented practical col- ron, who signed his own labour-market re- extend unemployment benefit to all (cur- laboration”. The eu published its own ac- form into law in September 2017. The rently it depends on accumulated insur- tion plan on military mobility in March French president’s version is more modest ance rights), in order to adapt the French and sent the head of its military staff on a than the Schröder package, not least be- welfare state to a world in which work is joint tour of Washington with his nato cause the bits already enacted touch only less regular and people change jobs more counterpart last week. the labour code and not yet the unemploy- often. Such ambitions may now be scaled nato’s renaissance should cheer fans of ment-benefit and vocational-training sys- back, because of their cost. Plans to clamp the beleaguered liberal order. In recent tems. But Mr Macron’s hopes to curb un- down on those who refuse job offers re- years the alliance has deployed four battle- employment are no less ambitious. A year main on the table. groups (up to 1,400 troops each) to Poland on, has the French reform had any effect? Nonetheless there are some indications and the Baltic states as tripwire forces; At first glance, not much. The number that French employers are starting to re- created a rapid-response brigade (about of jobseekers edged up again slightly in the spond to the labour reforms. One seems to 5,000-strong) that can mobilise within two third quarter, by 0.5%, after a tiny rise in be an improvement in the quality of jobs days; and committed to having 30 battal- the second quarter, according to Pôle Em- created. For example, in the third quarter of ions, 30 warships and 30 air squadrons ploi, the unemployment agency. There has 2018 the number of firms reporting an in- ready to fight at 30 days’ notice. America is been a steep increase, of 8%, in the number tention to hire on permanent (rather than spending $6bn a year on its European De- of people out of work for between one and temporary) contracts was 10% higher than terrence Initiative, lavished on everything two years. France’s overall unemployment a year earlier, according to Acoss, the so- from Hungarian air bases to exercises such rate in the second quarter stood at 9.1%, cial-security agency. Figures also show a as Trident Juncture. Russia’s spree of inva- still well above the 7% he has promised to rise in the overall share of those aged 15-64 sion, intimidation and assassination has achieve by 2022. employed on permanent contracts over the roused the alliance from its slumber. Part of this is unsurprising. Labour re- past three quarters and a recent drop in Yet this military revival is accompanied forms obviously take time to feed through those on short-term contracts (see chart). by political malaise. For one thing, no one into durable job creation. It was not until Another measure is how many cases for these days is quite sure whether the alli- 2008, five years after its reforms, that Ger- unfair dismissal end up in the labour ance’s principal member would actually many’s unemployment rate fell to 7%, and courts. French courts have until recently show up to fight in a crisis. The platoon of a further four years before it reached 5%, been free to award damages without limit, Montenegrin infantrymen at Trident Junc- thanks in part to the creation of low-wage and these varied wildly. Mr Macron’s la- ture, part of the Spanish battalion defend- “mini-jobs”, which the French government bour law capped such awards, thereby ing Oppdal, might reasonably have recalled does not seek to copy. “France will not be a minimising the financial risk of lay-offs President Donald Trump’s scorn for their country of low-cost work,” declared Muriel (and so of hiring) to firms. In 2017 the num- “very aggressive” country during this year’s Pénicaud, the labour minister, last year. ber of such cases going to court fell by 15% nato summit, and asked how it squared Moreover, the second element of Mr on the previous year. One director of a ser- with the transatlantic spirit on display in Macron’s three-part labour reform—a re- vices firm, which employs 40 people in its the Norwegian hills. call centre, says that he usually hires On November 6th France’s president, around five people each month, and used Emmanuel Macron, lamented the absence Green shoots to put them all on short-term contracts. of a “true European army” to “protect our- France, % of workforce* Now at least two of those will be permanent selves against China, Russia and even the By employment contract type job offers. “It’s better to have motivated em- United States”. Yet despite the eu’s new de- ployees, but in the past it was a risk,” he fence schemes, which cover everything Permanent Temporary says. “Now I feel it’s a gamble I can take.” from joint arms production to co-opera- 50 10 Such trends are new, and yet to be con- tion on military radios, its ambition is far firmed. Much will depend on the economic lower than Mr Macron’s language would outlook beyond France. But, says Ludovic suggest. Far from supplanting America’s 49 9 Subran, chief economist at Euler Hermes, a military capabilities, Europe’s national ar- French credit insurer, “the trajectory is mies are only just getting around to re- 48 8 right, and we should see results by 2020.” building their own, hollowed out after the Mr Macron has urged people to be patient. cold war. The eu’s central and eastern Euro- 47 7 The trouble, of course, is that politicians pean allies, like Poland and Estonia, are who introduce reforms are often not those horrified by Mr Macron’s talk of protection who benefit from them. Just as his last la- 2015 16 17 18 2015 16 17 18 against America. For all its troubles, nato bour reforms came into force, in 2005, Mr Source: Insee *15- to 64-year-olds remains the only game in town. 7 Schröder lost his job, to Angela Merkel. 7 The Economist November 10th 2018 Europe 35

Greece Licensed anarchy?

ATHENS A group of troublemakers seem to operate with impunity he down-at-heel neighbourhood of who broke into parliament last year, TExarchia in central Athens, known for Nikos Voutsis, the Speaker, called up the its lively bars and tavernas, has long been citizens’ protection minister and ordered home to a small but disruptive commu- their immediate release on the grounds nity of self-described anarchists. Violent that “it was a simple act of protest”. street battles take place at weekends: Counter-terrorism experts worry, extremists throw Molotov cocktails at however, that the group is becoming a police, who respond with tear gas. Long- training school for extremists. Some suffering residents say their complaints members of Rouvikonas have connec- are routinely ignored by the authorities. tions with the Conspiracy of Fire Cells, a One anarchist group, Rouvikonas group that in 2010 sent a clutch of letter- German politics (Rubicon), uses more sophisticated bombs addressed to European poli- tactics to make its presence felt. Based in ticians, among them Angela Merkel, the Back from the dead a cinema-cum-bar close to Exarchia’s German chancellor. Its leaders are now central square, populated with drug serving long jail terms, but another pushers and sellers of bootleg cigarettes, alleged member is awaiting trial on Rouvikonas stages nuisance attacks charges of sending a booby-trapped against embassies, government build- parcel in 2017 to Lucas Papademos, a BERLIN ings and the offices of multinational technocrat who was also briefly prime Friedrich Merz stakes out his claim to companies. Its members are not usually minister during the euro crisis. Mr Papa- succeed Angela Merkel arrested. Prosecutors dismiss their demos was seriously wounded while riedrich the great” roared one actions as “too insignificant” to justify opening the package in his car. “Fheadline. The hype that attended the full-fledged investigation. surprise declaration by Friedrich Merz, a Rouvikonas’s victims would disagree. politician-turned-businessman, that he In recent months, its activists have fired would run for the leadership of Germany’s paintballs at the Turkish, French and Christian Democratic Union (cdu) may Austrian embassies; destroyed newly have been a trifle overdone. But as Angela installed electronic ticket barriers at Merkel’s long reign as chancellor draws to a Athens metro stations; and smashed close, Mr Merz’s gambit has exposed the glass doors at the offices of Novartis, a party’s thirst for political novelty. Mrs Mer- Swiss pharmaceuticals firm. Many ob- kel’s decision on October 29th to vacate the servers believe the Syriza government of cdu leadership, a position she has held for prime minister Alexis Tsipras tolerates 18 years, has unleashed passions that some Rouvikonas’s activities, hoping to reas- Germans had forgotten they had. “The cdu sure left-wing voters that despite car- lives!” gushed a party vice-chairman. rying out harsh austerity policies pre- At first blush, the 62-year-old Mr Merz scribed by Greece’s international seems a curious agent of renewal. A long- creditors, the party is still at heart a time cdu man from a small town near Dort- radical movement. When police officers mund, in Germany’s west, he earned his arrested several Rouvikonas members spurs as a fearsome parliamentarian in the 1990s. But in 2002 he was felled as floor leader of the parliamentary party by Mrs once claimed Germany’s tax code should be tators.) At a press conference announcing Merkel, whose ambition he had underesti- simple enough to fit on a beer mat. His his candidacy, Mr Merz seemed more inter- mated. He left the Bundestag in 2009 for a comment, in 2000, that immigrants ested in attacking the fringes of German lucrative career in law and finance, al- should adapt to German Leitkultur (leading politics than in bolstering his conservative though he kept one foot in politics, notably culture), is fondly recalled by conserva- bona fides. as chairman of Atlantic Bridge, a body that tives who have not forgiven Mrs Merkel for Mr Merz also raised eyebrows by sug- fosters links between Europe and America. letting in over 1m migrants in 2015-16. Some gesting that Germany should have provid- Over the years, as frustration with Mrs Mer- of the 1,001 delegates who will gather in ed a more constructive response to the kel spread inside the cdu, Mr Merz grew Hamburg to elect Mrs Merkel’s successor European reforms proposed by Emmanuel used to batting away questions on his po- next month may even secretly feel that 18 Macron, France’s president. That followed litical ambitions. years of being led by a woman is enough. his decision to sign an open letter by a Yet for many in the party’s conservative Yet for all that, Mr Merz is unlikely to group of German dignitaries urging such base, says Ruprecht Polenz, a former cdu present himself as the candidate of rup- European reforms as a common army and general secretary, he remained a “projec- ture. Despite the sense of torpor under Mrs an unemployment-insurance fund. Some tion screen”. Where Mrs Merkel was cau- Merkel, it remains a minority view in the of these ideas may alienate precisely those tious and consensual, he is spiky and com- cdu that renewal demands a sharp right- party members who have supported Mr bative. Her gestures to the left won votes ward turn. (Jens Spahn, a young rival to Mr Merz’s candidacy most vocally. from Germany’s Social Democrats (spd) but Merz who best represents that camp, has His cv presents a second potential diffi- irritated many in her own camp; Mr Merz already been written off by many commen- culty, notes one cdu deputy. Unlike Mr 1 36 Europe The Economist November 10th 2018

2 Spahn, who has served in the finance and Papa”, a name from its days as a criminal Russian economy, helped along by govern- health ministries, or Annegret Kramp-Kar- capital), “people bustle about and try to ment subsidies and counter-sanctions that renbauer, the other leading candidate, who make things happen, which is a very big banned food imports from the West. In has run one of Germany’s states, Mr Merz difference” from other similarly sized cit- 2016 Russia became the world’s largest has no administrative experience to speak ies, says Natalia Zubarevich, an expert on wheat exporter. Rostselmash now sells to of. That counts against him. Few observers Russia’s regions. more than 35 countries and opened its first believe Mrs Merkel’s stated wish to serve The combination of geography, tradi- office in Germany last year. When Vladimir out her term as chancellor until 2021will be tion and mild weather makes Rostov Putin gathered his advisers for a meeting granted should Mr Merz become party among Russia’s most entrepreneurial cit- on the development of regional industry leader. If she goes early, the fraying co- ies. As Yuri Bogdanov, Center-Invest’s di- earlier this year, they met at Rostselmash. alition could collapse, leaving Mr Merz rector of innovation, says: “Cities devel- Beyond the old industry, a younger scrambling to form a new government or oped around these southern markets.” post-Soviet generation hopes to reorient holding an early election. Even 70 years of Soviet life could not snuff Rostov. The c52 creative cluster, an aban- The three leading candidates, plus a out the instinct: when Mikhail Gorbachev doned factory transformed into a hip smattering of also-rans, will make their legalised co-operatives as part of peres- multi-use space, offers a glimpse of the vi- case to the cdu rank-and-file at eight re- troika, Gloria Jeans, Russia’s first producer sion. Now streetwear shops and a yoga stu- gional gatherings over the next month. of blue jeans and one of its largest clothing dio fill the first-floor retail space. A central Plenty could happen in that time. In a firms to this day, opened in Rostov. In Ros- hall for events and film screenings features country that retains an instinctive streak of tov, 44% of the workforce is employed in a “third-wave brew bar”, where a drea- suspicion towards finance, Mr Merz’s small and medium-sized businesses, com- dlocked barista pontificates on the particu- moneymaking past could throw up diffi- pared with a dismal 25% nationally. larities of Ethiopian and Guatemalan cof- culties, for instance. But he is probably The regional governor, Vasily Golubev, fee blends. Young programmers and more likely to be concerned with how to also has a business-friendly message. designers sit hunched over laptops in the lead a party that wants continuity while “We’re open for investors, including for- upper-floor offices. Alexander Kuleshov, pretending that it doesn’t. 7 eigners,” he declares, a statement that c52’s owner, has been shifting towards it might seem discordant in an era of sanc- and design firms with global client bases: tions and with a war simmering just across following the devaluation of the Russian Russia the border in eastern Ukraine. It helps that rouble in 2014, such outsourcing became Rostov’s main industries largely lie outside good business. Like many of his tenants, The tenth city: the purview of Western sanctions, which Mr Kuleshov is determined to stick around have focused on energy, finance and the town. “I’m proud that I’m not leaving, that Rostov-on-Don arms trade. A further boost comes from a I’m doing something here,” he says. gleaming new international airport and a Ultimately Rostov remains subject to network of refurbished roads, built ahead the same challenges that plague Russia at ROSTOV-ON-DON of last summer’s World Cup, when Rostov large. Overzealous inspectors squeeze The second in an occasional series on was one of 11host cities. business. Mr Kuleshov laments a fine he re- Europe’s second-tier cities Rostov’s pitch includes a mix of old and ceived for painting his residents’ logos on a pungent odour of dried fish and the new. Rather than dying, some Soviet giants wall facing the street, which the police Acries of merchants fill the cavernous here retooled. Industrial production in the claimed was illegal graffiti. Exporters gripe central market, which locals in this south- region was up by 7% last year. Ms Zubarev- about the chilling effect of sanctions on ern Russian city still lovingly refer to as ich calls it “a new post-Soviet re-industrial- business relationships. At the central mar- “the old bazaar”. Commerce is in the blood isation”. Take Rostselmash, a hulking agri- ket, Galya grumbles about rising petrol here. “If a man doesn’t want to earn money, cultural-equipment producer founded by prices. Inna rues that in recent years her then what is he doing on this earth?” guf- the Bolsheviks in the 1920s. On the brink of customers have been buying fewer cray- faws Galya, who hawks pork. Rows of sell- failure in the 1990s, these days Rostsel- fish, the local delicacy. “Times are tough ers reflect a multicultural history: Arme- mash has been enjoying a revival. Agricul- and people are in debt,” she says. “In the nians, Georgians, Greeks, and even Korean ture is one of the rare bright spots in the end we all live in one country.” 7 women peddling kimchi. Down the hill from the market, the river Don beckons; on the city’s left bank, barges with piles of grain await their departure for foreign shores. “The south is more alive,” says Inna, a fishmonger. “It’s like the fish: when she swims in clean water, her eyes sparkle.” A city with roots as a trading hub, Ros- tov-on-Don has preserved its entrepreneurial spirit. “The Russian south is the model of a future Russia,” argues Sergei Smirnov, ceo of Center-Invest, the largest regional bank. “We don’t have oil, but we do have agriculture, tourism, transport and small business.” Although Russia’s gdp growth is slow at around 1.5% a year, the Rostov region is humming along at twice that pace, powered by booming farming, retooled manufacturing and an active citi- zenry. In Rostov-on-Don, the regional capital known simply as “Rostov” (or “Rostov Old habits die hard The Economist November 10th 2018 Europe 37 Charlemagne Between the tracks

No continent, even one as old as Europe, can truly master its history room where the carriage stands they will pass under a quote by Winston Churchill: “Those who do not learn from history are con- demned to repeat it.” Pondering the exhibits, that apophthegm seems at once true and yet hopelessly hubristic. The first world war happened because a generation of Victorian leaders took for granted the stable order that had prevailed in most of Europe for decades. They should have read their history books. Yet the war was also a tale of forces beyond the power of any leader, however well-read; of nations and continents not as trains on history’s railway lines, run by drivers and switchmen, but as rafts tossed about on history’s ocean, dipping at most an occasional oar into the waves. Fate was the real grand homme of the “Great War”. The assassination of Arch- duke Franz Ferdinand in 1914 would not have happened had his driver not taken a wrong turning in Sarajevo. The German army’s initial advance was halted at Nieuwpoort by a Belgian lock-keeper who flooded the surrounding marshlands. Political twists in Ber- lin, not crushing defeat on the battlefield, pushed Germany to sue for peace in 1918. The raftsmen also lacked maps. Across the continent, the armistice was greeted with relief. Newspapers announced it with a retrospectively stomach-churning sense of finality. “The war is hortly after 2am on November 11th 1918 a train came to a halt over” cried Londoners as ceremonial gunfire broke the news. The Sin a wood in Compiègne, near Paris. A second train pulled up on nightmare seemed to have passed, but it had not. The armistice a nearby track. After four years of fighting, delegates of the German and the peace treaties that followed in 1919 and 1920 reshaped the government sought an armistice from Ferdinand Foch, the com- maps of Europe and the Middle East, and imposed vengeance on mander of the French forces. Rare photos of the scene, hazy as a the defeated, seeding future conflicts. Millions returned from the memory, show engine smoke twisting between the twiggy trees, front angry, traumatised, wounded, resentful or all four. Gueules makeshift boardwalks across the leaf-strewn ground and clusters cassées (broken faces) the French called them. One such, an Austri- of soldiers by the rails. At 5.15am the Germans signed the peace in an-born lance-corporal, would take Germany to war again two de- the light of brass lamps in a teak-lined dining car. At 11am the guns cades later, and in 1940 would have the French sign their own sur- fell silent along the 400km (250 mile) front, their thunder replaced render in the same railway carriage at Compiègne. by the pealing of church bells. This peace ended a collective nightmare of hitherto unrivalled The power of nightmares intensity and volume. The first world war was not just a grand trag- Memories are everywhere. Two plaques in Compiègne’s station edy. For the 67m who fought, it was a sordid hellscape. Few of the list the 23 locals killed in the first world war and the 20 killed in the 10m killed in combat died from a “bullet, straight to the heart”, as second. Engraved brass cobblestones glint from German streets pro forma telegrams to relatives put it. Many more bled to death in marking the addresses where Holocaust victims once lived. Recol- no-man’s land, their wails lingering for days like “moist fingers be- lections live on in diaries or passed through families orally. The ing dragged down an enormous windowpane”, as a British lieuten- past summer’s hot weather exposed shells and bullets in dried-up ant wrote of the Battle of the Somme. Traumatised survivors some- rivers. Other artefacts remain hidden: the original French version times slept in open sewers, and begged for their mothers as of the Treaty of Versailles went missing and probably rests, forgot- superiors ordered them over the top. ten, in some German attic or cellar. “Europe is a continent in which They guarded what slivers of humanity and dignity they could. one can easily travel back and forth through time,” writes Mr Mak. At Compiègne today visitors can view silver rings from the trench- The eu, forged from the rubble of the two wars, knits the continent es bearing initials (LV, MJ, SH or G) or four-leaf clovers; pipes with together in the spirit of lessons learned: peace, fraternity, unity in marks worn where teeth once clenched; a tube of insect-bite diversity. The pedagogical value of the past is to today’s European cream; letter-openers fashioned from shell casings, the names of establishment what the uninhibited pursuit of freedom is to the yearned-for correspondents etched into their blades (“Margue- American one, a foundational story, an essence. rite”, “Mlle Rose-Marie”). A certain stoic humour also played its Long may that learning continue. Yet modesty is also due, part. “I was hit. I looked round and saw that my leg had shot out about forces greater than the wits and power of even historically and hit the fellow behind me (who got rather annoyed about [it])” aware societies are able to contain. National chauvinisms live on wrote Charlemagne’s great-grandfather in his diary in 1915, just despite the Somme. Anti-Semitism lives on despite the Holocaust. outside Ypres. Societies’ capacity to imagine collapse and barbarism in visceral The memorial at Compiègne focuses on the leaders, the terms fades with time. All Europeans can do is be vigilant and “switchmen of history” as Geert Mak, a Dutch historian, calls humble before these forces, dip their oars into the waves of history them. A replica carriage is the star artefact, name cards marking when possible, hold tight to their humanity and be grateful that where the German and French delegates sat. Outside, a statue of their continent’s past and present are now broadly in harmony, the Foch keeps vigil over the clearing. On November 10th Emmanuel former educating and civilising the latter, for now at least. Like Macron and Angela Merkel will visit the site. As they enter the train lines running together in a wood. 7 38 United States The Economist November 10th 2018

The House of Representatives backed Mrs Clinton in 2016 but also voted for a Republican congressman. Most of Long division these were in wealthy, suburban areas where Mr Trump has grown unpopular. Barbara Comstock, a two-term Republican representative in a suburban Virginia district abutting Washington, was thwacked COLUMBUS, OHIO AND WASHINGTON, DC by her Democratic challenger by 12 points. With a strong showing in the suburbs, Democrats end unified Republican Compared with the previous mid-terms government and will provide a check on the president in 2014, Democrats gained most votes in ucked away on a side street, in a strip tion, but well over the 83m who turned out whiter areas that had backed Mr Trump— Tmall between a barber and a couple of for the last mid-terms, in 2014. perhaps because they campaigned primar- empty storefronts, Panadería Oaxaqueña, a In some House districts, turnout ap- ily on health care. They now hold three of modest bakery that smells of yeast and cin- proached presidential-year levels. The Iowa’s four congressional seats. Steve King, namon, is a hub for Columbus’s growing Democratic Party did especially well in a white nationalist, fended off a tough Latino population. For 20 years, the Cruz- swing districts. Twenty such places backed challenge in the state’s rural west. Depend- Santos family has been baking conchas, bo- Barack Obama in 2012 and Donald Trump in ing on the outcome in Maine, where the in- lillos, and pan de yema; some of their cus- 2016; the Democrats won 13 of these. Thir- troduction of ranked-choice voting makes tomers, says Alfa Cruz-Santos, the 22-year- teen districts went from backing Mitt Rom- results slow to count, Bruce Poliquin could old daughter of the owners, stop in twice a ney, Mr Obama’s opponent in 2012, to Hilla- wind up as the sole Republican congress- day, every day. But after the 2016 election, ry Clinton in 2016. The Democrats won ten. man from New England. their customers began calling them to ask They flipped 17 of the 24 districts that Among the new entrants in January will if they would deliver bread instead. “People be the first Muslim women to serve in Con- were asking if it was safe to go out,” says Ms gress—Rashida Tlaib from Michigan and Also in this section Cruz-Santos. Over the course of those anx- Ilhan Omar from Minnesota—and the first ious conversations, the Cruz-Santos family 39 The Senate Native American women: Sharice Davids began encouraging their customers, many from Kansas and Deb Haaland from New 40 Ballot initiatives of them first-generation Americans, to do Mexico. A majority of voters were women. something that they had not previously 41 Governors’ races At least 100 will serve in the next House of done: vote. Precise turnout figures will not Representatives, exceeding the previous 41 Farewell, Jef Sessions be known for weeks, but the New York record of 84. Times estimates that more than 114m peo- 42 Running elections How will this change the way the federal ple cast ballots—fewer than the 138m peo- government operates? Democrats are un- 43 Lexington: Immigration politics ple who voted in the 2016 presidential elec- likely to obstruct everything. Nancy Pelosi, 1 The Economist November 10th 2018 United States 39

2 who will probably return as Speaker, has man, Jerry Nadler, a New Yorker who has The election also revealed much about expressed interest in co-operating with Mr crossed swords with Mr Trump over real- the state of politics. Far more voters cast Trump in three areas: infrastructure, re- estate disputes, will also be assertive. He ballots for Democrats than for Mr Trump’s ducing the price of prescription drugs and and fellow Democratic committee-mem- party. Yet Democrats saw a reversal in the cleaning up Washington. “It was Candidate bers have shown an interest in probing Senate, and captured only a narrow major- Trump’s plan to address all three of these controversial policies such as the separat- ity in the House. Mr Trump rallied his things, but he’s failed to deliver on them,” ing of migrant families. troops by sowing fear of a few thousand be- says Cheri Bustos, a congresswoman from How hard Adam Schiff, next chairman draggled Central Americans hundreds of Illinois who co-chairs the House Demo- of the intelligence committee, presses the miles from America’s border. That rally did cratic Policy and Communications Com- administration on Russian election-hack- not extend much beyond his existing sup- mittee, which refines the party’s message. ing and the Trump campaign team’s al- porters. But arguably it did not need to. The Infrastructure seems the likeliest to leged co-operation with it, may depend on odds of the Republicans holding the Senate come to something. The White House and what happens to Robert Mueller. If the spe- in 2020 have now shortened considerably. Senate Democrats have already released cial counsel’s grander investigation into “You can’t win a country by being preju- competing infrastructure proposals. Mr Mr Trump’s dealings with Russia is diced,” said Cassandra Thomas, voting at a Trump likes putting his name on big curtailed, as the president’s decision on Columbus precinct a few miles from Pana- things, and his base is less doctrinaire November 7th to force out his attorney- dería Oaxaqueña. “You can’t keep people about bridges than about birthright citi- general, Jeff Sessions, suggests it could be, down who helped build the country.” That zenship. Yet the scale of the Republican re- Mr Schiff will play a more important role. is one reading of the mid-term results. An- versal in the House may make this ap- He might become the last hope that the other is that fear and loathing are powerful proach harder. The Republican truth of Mr Trump and Russia will emerge. campaign tools. 7 congressmen who lost were mainly moder- ates from swing districts who might have backed bipartisan legislation. The Senate And though Mr Trump may have entered office as a dealmaker, as president he Where the wave breaks has shown little interest in working with the other side. He considers base-rallying more important. House Democrats could try to match him. They believe health care, more than any other issue, won them a majority. They might propose bills shoring up COLUMBUS AND YOUNGSTOWN, OHIO Republicans grow even stronger in rural states the Affordable Care Act, and challenge Mr Trump to block them. They could revive the herrod brown stood before a lectern ity and highlighting Democratic weakness- dream Act, a broadly popular measure to Sin downtown Columbus, as gravelly- es in rural America. protect illegal immigrants brought to voiced and rumpled as ever, and celebrat- In their defence, Democrats faced a dif- America as children from deportation, ed. He had just handily dispatched his op- ficult map this year. They had to defend 24 again forcing Republicans to respond in a ponent, the perpetually befuddled Jim Re- seats, including ten in states that Mr way that is unpopular with their base or a nacci, to win a third term representing Trump won. And their candidate in Texas, majority of the public. Legislation to pro- Ohio in the Senate. “You showed the coun- Beto O’Rourke, came closer to winning a tect voting rights or raise the federal mini- try”, he told the cheering crowd, “that pro- Senate seat than any Democrat in decades. mum wage might be tempting. gressives can win, and win decisively in He waged a tireless, positive campaign that But the real prize of a majority is con- the heartland…We carried a state that Do- could become a model for Democrats run- trolling congressional committees and the nald Trump won by almost double digits.” ning in Republican states. But he still lost, investigatory and subpoena powers that go Mr Brown’s victory was one of the few against a candidate many Texan Republi- with it. Republicans have shown little in- clouds amid generally sunny news for Re- cans regard as weak. terest in overseeing the administration. publicans in the upper chamber. On No- On January 3rd 2019 Senate Democrats Democrats will launch a salvo of probes. vember 6th Republicans flipped at least will go to work in a chamber controlled, The House Ways and Means Committee three seats, expanding their Senate major- once again, by Mitch McConnell of Ken-1 will want to see the president’s tax returns. Democrats hope this may shed light on aspects of the president’s murky affairs rele- How it went down vant to national security. It might also re- Mid-term elections results, 201* Democrats Republicans veal potentially embarrassing things— such as whether Mr Trump is as rich as he Senate, winning party House of Representatives Ind. claims to be. If so, they would soon leak. Changed hands Share of popular vote, % No election AK Special ME 54 Three other committees will play a election more conventional oversight role: the WI VT NH 52 House oversight and government reform, WA IDMT ND MN IL MI NY MA 50 judiciary, and intelligence committees. 48 Elijah Cummings, prospective chairman of OR NVWY SD IA IN OH PA NJ CT RI the oversight committee, says he wants to CA UT CONEMO KY WV VA MD DE 46 investigate weighty issues, such as the sup- AZ† NM KSAR TN NC SC DC 44 pression of minority voting rights and high 42 cost of prescription drugs. He will also look OK LA MS AL GA at scandal-plagued Trump officials, such as HI TX Special FL† election 2008 10 12 14 16 18* Ryan Zinke, secretary of the interior. The judiciary committee’s likely chair- Sources: Brookings Institution; Press reports *At November 8th, 0900 GMT †Republicans lead 40 United States The Economist November 10th 2018

2 tucky, in which they will hold a deficit of at sonation and fraud are so rare, Democrats least six seats. That will leave them unable see the laws as thinly-veiled attempts to to block Mr Trump’s appointees. The presi- suppress their voters. dent will also be able to continue, unim- Voting rights of a different sort were on peded, his transformation of the federal ju- the ballot in Florida. There, 65% of voters diciary. He has already appointed more approved a ballot initiative automatically federal appellate judges than any other restoring voting rights for felons once they president in his first two years, as well as have served their sentences, provided they two Supreme Court judges. He may further were not convicted of murder or sex transform the bench: two of the court’s lib- crimes. Though Andrew Gillum, a progres- eral justices are in their 80s. Republican sive darling running for governor, narrow- gains in the Senate will insulate the party ly fell short, the move could benefit Demo- against losses in 2020, a presidential elec- cratic candidates in future. Nearly 9% of tion year in which the map will be favour- Floridians and a remarkable 18% of black able to Democrats. voters have been disenfranchised because Some of the seats that Democrats lost of past felony convictions. Campaigners were held by near-perfect candidates for aiming to restore rights to “returning citi- those states. Heidi Heitkamp was so popu- zens” emphasised Christian ideals of re- lar in North Dakota that her opponent, Ke- demption and the notion that punishment vin Cramer, admitted in his final campaign should not continue after a person had ad, “We all like Heidi.” Claire McCaskill is a served his or her time. The message ap- moderate pragmatist who won tough state- pears to have worked. wide races in 2006 and 2012. But during her Perhaps the most astonishing ballot re- 12 years in the Senate, Missouri grew sults came from the heart of Trump coun- steadily more Republican. So did Indiana, try, where three deeply conservative states, where Joe Donnelly, a rare pro-gun, anti- Idaho, Utah and Nebraska, all voted to ex- abortion Democrat, lost to Mike Braun, a pand Medicaid, the government health-in- hard-edged Trumpist who stoked fear of il- Ballot initiatives surance programme for the very poor. This legal immigrants in his campaign ads. The was surprising because Medicaid expan- Republican candidate, Martha McSally, Referenda-rama sion is a pillar of Obamacare, which is not won a seat in Arizona that the Democrats the most highly regarded law in any of thought was there for the taking. And in these states. A Supreme Court decision left Florida, Rick Scott looks to have edged out the decision on expansion to the states, the Democratic incumbent. and half of Republican-governed states de- It was not all gloom and doom for WASHINGTON, DC clined, leading to higher shares of resi- When representative democracy flops, Democrats. They flipped a seat in Nevada. dents without health insurance. In Idaho, there is always the direct kind Pennsylvania, which Mr Trump won, of- where voters went for Donald Trump by 32 fered perhaps the purest contest of Trum- emocracy is the art of running the percentage points in 2016, voters over- pism versus a standard Democrat: Lou Bar- “Dcircus from the monkey cage,” the whelmingly approved the measure. For letta, an ur-Trump anti-immigration American satirist H.L. Mencken once Democrats, the success is a sign that health hardliner, faced off against Bob Casey, a quipped. Usually this is done by delegating care, more than any other issue, wins votes competent but unremarkable incumbent responsibility, but occasionally the frus- in white, rural America. Democrat. Mr Casey won easily. And Demo- trated monkeys decide matters for them- For the second time in two years, citi- crats showed renewed strength across the selves. In this mid-term election, they zens in Washington state rejected a tax on Midwest. Not only did they hold Ohio, but opted for electoral reform, expanded medi- carbon dioxide emissions by a decisive Minnesota and Wisconsin re-elected their cal programmes and once again reached for margin. The measure would have been the Democratic senators, one of whom, the marijuana. first of its kind for a state (though nearby Tammy Baldwin from Wisconsin, is as pro- Start with the election tweaking. In California may now take that up as a chal- gressive as Mr Brown. Michigan 61% of voters chose to end parti- lenge). By 2023, the tax would have raised The difference between these states and san gerrymandering. Instead—in a touch- $1bn annually. For that reason, it attracted Indiana, North Dakota and Missouri, ing show of everyman populism—the lines the deep-pocketed opposition of the oil in- where Republicans did even better than ex- will have to be approved by a 13-member dustry, which spent a record $31m oppos- pected, may be the existence of strong tra- commission of randomly selected voters. ing the referendum. Even in boom eco- ditions of organised labour. Mr Trump did Citizens in Utah, Missouri and Colorado nomic times and in a fairly Democratic anomalously well, for a Republican candi- also decided to divest elected officials of state, concerted opposition and the unpop- date, among union households. Strong the power to draw their own election ularity of energy taxes make carbon tax- showings from Senate candidates have left lines—moves that will be hard to undo in ation a tough sell. Democrats convinced they can win back the future. Michigan and Maryland also ap- Instead, voters opted to go green in an- some of these Trump voters in 2020. proved same-day registration for voters other way: by decriminalising marijuana Rocco DiGennaro, who heads the La- (rather than requiring it weeks ahead of use in three states. That now makes 33 bourers International Union Local 125 in time), which will remove one barrier to states where the stuff is legal to some de- Youngstown, Ohio, says that many of his voting, and Nevada opted to register voters gree, and ten where devotees can go the members who voted for Mr Trump also vot- automatically when they turn 18. Conserva- whole hog. Utah and Missouri approved ed for Mr Brown. “Everyone knows Sherrod tive voters in Arkansas and North Carolina the drug for medicinal use. Michiganders Brown,” he explains. “Everyone knows he’s went in the other direction—approving opted to go fully recreational. Which could a fighter.” But they supported Mr Trump in ballot measures that would require photo result in some interesting map-making 2016 because they saw him as a fighter, identification before votes could be cast. from the 13 regular Joes who will be drafted too—and they could do so again. 7 Because actual incidents of voter imper- to scrutinise the state’s election lines. 7 The Economist November 10th 2018 United States 41

Governors’ races did not backfire. Many voters, in Florida at least, warm to a conservative. Waking up behind the wheel Last, the new crop of governors will influence how future elections are run. In Georgia, Kansas, North Dakota and elsewhere, state governments were accused of trying to suppress minority votes. That should now be less likely, at least in Kan- CHICAGO sas. And after the census in 2020 state leg- Democrats gain several governorships, perhaps shaping future elections islatures will draw up plans for redrawing unky music blared as balloons and sil- ships, for a total of 23 states. congressional districts. Governors, who Fver ticker-tape tumbled over a ballroom That matters for three reasons. First, behave veto powers, in theory could insist on of gyrating Democrats. J.B. Pritzker, Illi- cause governors shape policy. Some new fairer voting. More probably they will nois’s new governor, declined to strut as he ones will now roll out expanded Medicaid, prove partisan, making Florida redder and greeted members of a noisy crowd. He had adding to the 33 states that already took ex- Illinois more resolutely blue. 7 the air of a jovial, portly uncle presiding tra federal money under the Affordable over a family gathering. Had his party out- Care Act (aka Obamacare). Tony Evers, who done expectations? “We’ve had an excel- squeaked to victory in Wisconsin, Janet The rule of law lent night,” he said. “I’m happy.” Mills in Maine, and Laura Kelly, who deliv- He toppled an unpopular, one-term Re- ered a shock win in usually Republican Magoo to a goose publican governor, Bruce Rauner, thanks, Kansas, have all vowed to do so. in part, to dropping over $170m of his own The effects of this will be far-reaching. money on the race. That is a remarkable Figures from the Kaiser Family Foundation (and record) sum even for an heir to the Hy- suggest that in these three states, plus Ida- att hotel fortune whose assets exceed $3bn. ho, Nebraska and Utah (where voters WASHINGTON, DC The president removes his Mr Pritzker’s largesse helped Democrats backed referendums on expanding health attorney-general reach beyond urban strongholds to com- care) an extra 424,000 people will become muter suburbs such as Naperville, an eligible for insurance. If all were to sign up, efore Donald Trump became presi- hour’s drive from Chicago. Democrats won the average (non-elderly) adult population Bdent, Democrats would have struggled a super-majority in the Illinois legislature. without insurance would fall in those to name a Republican they disliked more His efforts are emblematic of a wider, states to just 6.5%, from over 11% today. than Jeff Sessions. The then senator from and belated, push by Democrats. For much Democrat-run states are also likely to re- Alabama is an ultra-restrictionist on immi- of the past decade the party neglected races think prison policies and boost education gration and opposes changes to sentencing for state legislatures and governors’ man- spending, not least where new governors that would lock fewer people up. As Mr sions (see charts). “We were asleep at the like Mr Evers, or Tim Walz in Minnesota, Trump’s attorney-general, he championed wheel,” concedes an activist. In contrast, are ex-teachers. separating migrant children from their Republicans grasped the strategic impor- Second, the governors’ races point to parents, among other terrible ideas. Yet his tance of state legislatures, which in many which figures might prosper in future, na- removal on November 7th, after the presi- places have the power to gerrymander. Re- tional elections. Rich, moderate and fe- dent demanded his resignation, has publican candidates ground out state-level male candidates did well for Democrats. In caused a rare spasm of bipartisan concern. victories in Wisconsin, Ohio and Michigan Colorado, Jared Polis became the first That is because Mr Sessions, despite his that prefigured Republican national gains openly gay governor. Andrew Gillum, the flaws, believes in the rule of law. He was in such places in 2016. African-American mayor of Tallahassee, also willing to defy Mr Trump to defend it. The Democrats’ neglect is over, judging ran a strong, left-leaning campaign in Flor- His decision to recuse himself from the by spending on state-level races this year. ida focused on young, urban and minority Justice Department’s probe into allega- Local parties reportedly devoted over voters. But he lost to Ron DeSantis, who tions of collusion between the Trump cam- $2.2bn to such races, not far off the $2.4bn called him a radical socialist. The Republi- paign and Russian election-hackers was for congressional campaigns. Democrats can’s crude comments, such as warning forced upon him by his own lying about won solid returns: seven new governor- that his opponent would “monkey this up”, Russian contacts. But after Mr Trump turned on Mr Sessions, apparently in fear of the investigation under Robert Mueller State of the states that his recusal unleashed, he stood firm. United States, party control of governorships and state legislative chambers post-201 election Mr Trump calls Mr Mueller’s investigation, which has so far indicted or secured Chambers Governors convictions against four members of his 80 40 campaign team and 26 Russians, a “witch- Republicans hunt”. He blames it on Mr Sessions, and of- Republicans ten demanded he close it down. He also 60 30 urged him to launch diversionary probes into his political rivals, including Hillary Clinton. Mr Sessions refused to be “im- 40 20 properly influenced by political consider- ations.” That was more spine than other se- Democrats Democrats 20 10 nior Republicans have shown Mr Trump. The charitable view of his removal—the day after the mid-terms, apparently be- 2002 05 10 15 18 200205 10 15 18 cause Mr Trump feared it might have cost Source: National Conference of State Legislatures him votes—is that the president wanted a1 42 United States The Economist November 10th 2018

Voting Stand and eventually deliver

Some states are really bad at running elections he unsung hero of election night changed people’s votes. Precincts ran out Tmay have been a two-word website: of ballots and were unprepared for the polls.pizza. As the name suggests, it relatively high turnout. In Phoenix one sends pizzas to polling places with long polling place was foreclosed on the night queues. On November 6th it dispatched before the vote, leaving ballots and vot- 10,000 pizzas to 576 polling places in 43 ing machines locked inside. states. And queues were indeed long. In Some see a dark purpose behind the New York people waited more than two chaos. In Georgia the Republican nomi- hours; in metropolitan Atlanta the aver- nee for governor was also secretary of age voter waited around three. If the first state, charged with overseeing elections, reaction to such news is gratitude for the in which capacity he faced multiple generosity of strangers, the second lawsuits and allegations of attempted should be bafflement. Why, in one of the voter suppression. On election night the world’s richest, oldest democracies, longest queues were said to be in the part should it take that long to vote? of the state friendliest to his opponent. One reason, says Lawrence Norden, a Voter suppression need not entail, as it voting-technology expert at the Brennan once did in the South, naked intimida- Centre at New York University Law tion. Capricious enforcement of oth- Sessions, rule-of-lawman School, is that most states are using erwise pointless rules leading up to a voting machines at least a decade old. chaotic election day can do the trick, too. 2 more pliant attorney-general. He simply “These are computers,” explains Mr Attempted voter suppression can also refuses to accept that, as the boss of law en- Norden, “and after ten years, you should backfire. North Dakota passed a law forcement agencies such as the fbi that op- be looking to get new machines.” Forty- requiring voters to present a street ad- erate at a remove from the executive, the at- three states are using machines so old dress, which many of the state’s many torney-general is more than the president’s that spare parts are no longer made. Native Americans do not have. Critics legal fixer. His model for the job, according Across the country, equipment mal- said it was intended to keep them from to a former Trump confidant, is Roy Cohn, functioned. Scanners failed. Alarmingly, the polls. On November 6th they turned the late mob lawyer who advised him in his some electronic voting machines out in record numbers. early real-estate days. His appointee to replace Mr Sessions on an acting basis, Matt Whitaker, the former attorney-general’s chief of staff, should please him. He is a highly partisan Republican who has insisted that judges take a “biblical view of justice”. His own view appears mainly to track Mr Trump’s. Mr Whitaker has attacked the fbi for failing to indict Mrs Clinton. He has been a fierce public critic of Mr Mueller’s investigation, which he seems to think is a “lynch mob”. He has said, falsely, that the former fbi director has no mandate to investigate Mr Trump’s business interests—something the president had described, with no authority, as a “red line”. Mr Whitaker has also suggested the investigation could be killed by cutting its budget. He is now in charge of it. A darker view of Mr Sessions’ removal is that it is a means of bringing about what Mr A ruf day Trump and Mr Whitaker both want, the end of the Mueller investigation. This would represent by far the biggest rule-of-law cri- losi, the likely next Speaker, called it “an- moval. Last year Senator Lindsey Graham sis of Mr Trump’s presidency—perhaps other blatant attempt” by Mr Trump to end of South Carolina, once known as a princi- since Watergate. A sitting president would the Mueller probe. Democratic-led com- pled conservative, said there would be have shut down a counter-espionage in- mittees would investigate him if he did. “holy hell to pay” if Mr Trump sacked his vestigation into a hostile state’s attack, be- But there is a limit to what they could do former Senate colleague. Shortly after he in cause it threatened to implicate himself or without fulsome backup from Republi- effect did so, Mr Graham tweeted that he his children. Would he get away with it? cans, and there is little sign of that. looked “forward to working with President The incoming Democratic leaders of the Republican Senate leaders have refused [Trump] to find a confirmable, worthy suc- House of Representatives were swift to de- to vote on a bill to protect Mr Mueller. Only cessor so that we can start a new chapter at nounce Mr Sessions’ removal. Nancy Pe- a few expressed concern at Mr Sessions’ re- the Department of Justice.” 7 The Economist November 10th 2018 United States 43 Lexington The artifice of immigration

Donald Trump sees immigration as a campaign issue, not a policy. Democrats should view it similarly to small states in the Senate means Democrats need to win more conservative places than Republicans need to win progressive ones. And they cannot win there on scrapping ice. The harder line taken by Democratic senators running in such states illustrated that. In Indiana Joe Donnelly declared himself a fan of the wall; in Missouri Claire McCaskill said she liked the sound of “Operation Faithful Patriot”, as Mr Trump’s fatuous troop deployment was called. Yet both lost, because in the end voters reckoned they were Democrats—the party, according to Mr Trump, of open borders. It is not possible to say this was the reason for their defeat. But it is likely, because of another sort of immigration-related asymme- try. Only a handful of voters understand the details of immigration policy. Why otherwise do voters in West Virginia, where immigrants are rarer than millionaires, worry about them so much? Rather, as that example suggests, the issue is a repository for broader anxieties and allegiances. Even conservatives who think Mr Trump’s promised wall is nuts are keen on the sense of security, nationalism and contempt for liberal feelings it is meant to im- part. Democratic opposition to Mr Trump’s draconian measures, which conservatives hear as the bleating of a party weak on security and captured by Hispanic activists, makes them even more ap- pealing. In the hands of a skilled opportunist like Mr Trump, im- hen opposing political parties both think they are winning, migration is scarcely a policy problem at all. It is a means to rally Wone of them is usually wrong. This is the quandary America nativist sentiment to win power. finds itself in, after the Democrats won the House of Representa- Republicans maintain that, to the contrary, it is the Democrats tives in the suburbs, while the Republicans tightened their grip on who have commandeered the issue for political purposes. They are the Senate in the sticks. It also describes the attitudes of both par- right to a degree. As the Democrats have become more dependent ties towards the most divisive issue of the Trump era: immigra- on Hispanic voters, they have become much keener to discuss mi- tion. Whipped up by a frenzied nativist intervention by President grant rights than border enforcement. Hillary Clinton barely men- Donald Trump, including a closing tv ad so racist that even Fox tioned it in 2016. And the fact that few Democratic mid-term candi- News would not air it, most Republicans ran on the issue in the dates would say how many Hondurans should be allowed, or mid-terms. Democrats mostly tried to ignore it. Who was right? denied, entry revealed the same failing. Yet the conspiracy theory The picture, again, looks mixed. The most virulent nativists this has fuelled on the right—that Democrats are trying to boost il- lost, including a trio of Trump wannabes, Lou Barletta and Corey legal immigration to swell their electorate—is a fantasy. Stewart, Senate candidates in Pennsylvania and Virginia, and Kris Recent Democratic administrations have built as much border Kobach, the Republican running for governor in Kansas. So did fortification as Republican ones. Barack Obama, the symbol of his prominent Democrats who took the opposite tack—including An- party’s non-white coalition, deported more illegal immigrants drew Gillum and Beto O’Rourke, liberal darlings in Florida and Tex- than his predecessors. Last year Chuck Schumer, the Democratic as, both of whom wanted to rearrange the Immigration and Cus- leader in the Senate, offered to secure $25bn for Mr Trump’s border toms Enforcement (ice) agency. But all had tough races. The wall in return for protection for the dreamers. The Democrats’ broader conclusion from the mid-terms is that, on immigration main error on immigration is not to have been too political about and otherwise, both parties turned out their voters, extending it, but the opposite. They have primarily viewed immigration as a their territory a bit, without taking from the other. It is tempting to policy problem, to be unpicked through bipartisan compromise. see this as a validation of both their immigration strategies. Mr Trump’s response to Mr Schumer, which was to demand more Exit polls, which suggested about half of voters liked Mr draconian restrictions, including a cut in legal immigration and Trump’s immigration policies or wanted tougher ones, also sup- no more “shithole” Africans, should have disabused them of that. port that. So do interviews with Democratic strategists. None The president does not want a big bipartisan deal on immigration. thought Mr Trump’s late onslaught, which also included dispatch- He wants to keep it as a campaign issue. ing a small army to defend America against a weary column of Honduran asylum-seekers, had hurt their party. Several noted that Sandbagged by unreality his immigration policies, including his putative border wall, cag- By ignoring immigration, the Democrats will let him have it—and ing of migrant children and threat to deport 800,000 immigrants, when his name is on the ballot, in 2020, the onslaught will be fierc- known as dreamers, who were brought to America illegally as er. They need to redefine the issue, to draw some of its poison. That children, are all unpopular. Such complacency, on the issue that should start with a realisation that a party unwilling to speak of fuelled Mr Trump’s rise, on which Democrats remain most vulner- immigration as a security issue, as well as a humanitarian one, is able to him and, for that matter, on which liberals are falling across unacceptable in much of America. A statement of zero tolerance the Western world, feels like a death-wish. for illegal immigration and a willingness to accelerate the process- It ignores how asymmetrically the two parties are affected by ing of asylum claims could help relay that. Democrats need to take partisanship, in which attitudes towards immigration, the most the politics of immigration more seriously. Mr Trump has sand- polarising issue, play a big part. The bumper representation given bagged them with it once—and could easily do so again. 7 ADVERTISEMENT

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48 The Americas The Economist November 10th 2018

Also in this section 49 Messing with mezcal 50 Bello: Blurring the lines between judges and politics

The Latinobarómetro survey election in Honduras last November was widely seen as flawed. Cuba simply trans- Dejected about democracy ferred power from one dictator to another in April. Most Latin Americans, though, live in countries where their votes are counted accurately. That does not mean they are happy, as Latinobarómetro’s 20,000 interviews, conducted from mid- Latin Americans are increasingly dissatisfied with politics in their countries. That June to early August this year, make clear. is cause for worry Voters have many reasons to grumble. emocracy in latin america is in widely considered too radical to lead their Growth in gdp per person has dropped Dtrouble. That is the message of this countries. If disillusionment deepens, fu- sharply since the global financial crisis in year’s survey of opinion in 18 countries by ture elections could bring presidents who 2009. Venezuela’s economy has imploded Latinobarómetro, a pollster based in Santi- test the region’s democratic norms. and Brazil’s suffered its worst-ever reces- ago, Chile. The proportion of people who Since last November nine countries sion from 2014 to 2016. The perception that are dissatisfied with how democracy works have either re-elected presidents or chosen income is distributed justly has plunged has jumped from 51% in 2009 to 71%. The new ones. Most of these elections were free from 25% in 2013 to 16%. That belief may be share that is content has dropped from and fair but there were notable exceptions. wrong; the Gini coefficient, a measure of 44% to 24%, its lowest level since the sur- Venezuela’s president, Nicolás Maduro, inequality, has been dropping in the big- vey began more than two decades ago (see had his term in office extended in a rigged gest countries. But, at an individual level, a chart 1and chart 2 on next page). vote in May. Juan Orlando Hernández’s re- person’s perception of inequality is among That does not mean most Latin Ameri- the strongest predictors of his or her dis- cans are ready to dump democracy, which satisfaction with democracy. has become the norm across the region Broken promise 1 Economic worries are at the top of citi- only since the 1980s. More than half say Latin America, share of respondents agreeing, % zens’ concerns in most countries. Only in that it is better than any other system, Venezuela do more than half the people say 70 though that has dropped by 13 percentage Democracy is preferred they do not have enough to eat. The region- points over the past eight years. Disillu- form of government 60 al average, though, is a still startling 27%. sioned democrats lean towards indiffer- 50 Crime is the second main gripe, leading the ence. The share who are neutral has risen list of worries even in some relatively safe from 16% in 2010 to 28%, while support for 40 countries, such as Chile and Uruguay. Cor- authoritarian government is steady, at 30 ruption is another big complaint. Eighteen about 15%. “People don’t like the democra- former presidents and vice-presidents 20 cy they are experiencing,” says Marta La- Satisfied with have been implicated in corruption scan- gos, the head of Latinobarómetro. democracy 10 dals, including in Argentina, Brazil, Ecua- In Latin America’s two biggest coun- 0 dor and Peru. The share of Latin Americans tries, Brazil and Mexico, that sentiment has who think their countries are going in the 1995 2000 05 10 15 18 resulted in the election of presidents this wrong direction exceeds the proportion Source: Latinobarómetro year who until recently would have been who think they are progressing by eight 1 The Economist November 10th 2018 The Americas 49

more sceptical than the old, which bodes ill magic wands. Several have recently taken You can’t always get what you want 2 for democracy’s future. Some 200m Latin office. They include Lenín Moreno in Ecua- Share of respondents agreeing, 201, % Americans with low levels of education, dor and Martín Vizcarra in Peru, who have Democracy is preferred form of government about 30% of the total, are the voters most embarked on campaigns against corrup- Satisfied with democracy prone to lash out at established politicians tion. Sebastián Piñera, Chile’s centre-right and parties, and to choose leaders who pro- president since March, is trying to reform 0255075mise to solve problems with a “magic the economy and social programmes. The Uruguay wand”, writes Latinobarómetro in an ana- centre-left president of Costa Rica, Carlos Costa Rica lytical note accompanying the results. The Alvarado, defeated a fundamentalist Chris- Chile survey, which has a margin of error of 3% tian and is trying to fix the tax system. Iván Ecuador per country, is published exclusively by Duque, Colombia’s conservative president, Argentina The Economist. is just getting started. If they are success- Honduras In Brazil, where satisfaction with de- ful, they will boost democracy’s approval 7 Bolivia mocracy is lowest among the 18 countries, ratings as well as their own. Colombia disillusionment opened the way for Jair Bolsonaro, a former paratrooper who ex- Paraguay Messing with mezcal tols the dictatorship of 1964-85, to win the Dom. Rep. presidency last month. He had strong sup- Panama port from well-educated Brazilians. The worm turns Nicaragua In July Mexico elected Andrés Manuel Guatemala López Obrador, a populist of the left whose Mexico Morena party fought its first election in Venezuela 2015. No fan of dictatorship, he proposes to change the way democracy works by hand- EJUTLA, OAXACA Peru The world’s fastest-growing spirit risks ing more decisions to voters through refer- El Salvador losing its mystique endums. Ms Lagos worries that democracy Brazil in Argentina is vulnerable. Its economy is ne’s eyes are drawn to the agave plant Source: Latinobarómetro heading into recession and the share of Otowering over the man who grew it, people who call themselves middle class Juan Pacheco, but the secret to its flavour is 2 points, the largest negative gap since 1995. dropped by 14 points from 2013 to 2018, the in the ground. For eight years the plant has This has battered the credibility of insti- biggest such decline in the region. absorbed minerals from the soil of Oaxaca, tutions. Only the armed forces and the In countries whose leaders are disman- a mountainous state in southern Mexico. church, powerful institutions before the tling democracy, citizens appreciate it Mr Pacheco alternates agaves with maize to advent of mass democracy, retain much re- more. Although just 12% of Venezuelans enhance the taste that the soil imparts to spect (see chart 3). Half of Latin Americans are happy with how their “democracy” them. His father taught him how to make believe that all or almost all presidents and functions, 75% prefer democracy to any mezcal, the smoky spirit made from aga- legislators are involved in corruption. The other system. In Nicaragua, where the inves, a type of succulent. Mr Pacheco’s share of people who think the elites govern creasingly dictatorial regime of Daniel Or- grandfather and great-grandfather were for their own benefit has risen steadily over tega has been repressing protests since mezcaleros, too. But his children are thou- the past decade; nowhere does it fall below April, satisfaction with democracy sands of miles away, studying medicine in 60%. Increasingly, voters are disengaged plunged from 52% last year to 20%, but the United States. Mezcal’s growing global from politics. For the third year running, more than half of the people still support popularity helps him pay for that. the number who say they will vote for no the system. Encouragingly, good gover- Such prosperity is new for practitioners political party is bigger than the number nance also bolsters support for democracy. of a painstaking craft. Mezcaleros toss ma- who say they will vote for one. Prosperous Uruguay, Costa Rica and Chile, ture agave hearts weighing 50kg (110 Poor people are more alienated than the where the rule of law is relatively well es- pounds) apiece into pits of fire, where they rich and middle class. People who are badly tablished, are the countries most satisfied burn for days. A donkey then walks around off lag behind prosperous folk by more with how democracy works in a circle, pulling a large stone wheel that than ten percentage points in their level of The best hope for shoring it up rests crushes the burnt plant, readying it for fer- support for democracy. The young are with leaders who do not claim to possess mentation, which takes ten days. These artisanal techniques have brought glamour to a drink once sold in In God they trust 3 plastic bottles, sometimes containing a Latin America worm-like moth larva. Now bartenders from Los Angeles to Berlin expound on the “How much confidence do you have in your “How many members of the following groups do terroir of the nine mezcal-producing states country’s institutions?”, % responding “a lot” or “some” you think are involved in acts of corruption?” in Mexico and the subtleties of flavour that 80 2018, % responding None or few All or most come from various types of agave. In Church 0 102030405060 2017 some 5m litres of mezcal were sold in 60 Parliament Mexico and abroad, a fivefold rise from Armed forces 2011. 40 President/oicials With popularity comes anxiety. In Au- Local government gust the Mexican Institute of Industrial 20 Police Property, a government body, expand- Political Justice parties system Judges/magistrates ed mezcal’s “denomination of origin”, the 0 area in which makers of a product are al- 1996 2000 05 10 15 18 Religious leaders lowed to give it a certain name, which was Source: Latinobarómetro already the world’s largest. It now includes 1 50 The Americas The Economist November 10th 2018

2 three more states: Morelos, Aguascalientes ing the spirit is an industrial process. the production process. A third of the mez- and the State of Mexico. Alejandro Murat, Drones hover above agave ﬁelds, checking cal sold in Mexico is no longer deemed “ar- the governor of Oaxaca, where 87% of mez- which plants are ripe. Agave hearts roll on tisanal” by the Mezcal Regulatory Council. cal is made, joined protests by mezcale- conveyor belts into electric ovens. Chemi- The price of espadín agave, the most com- ros in Mexico City. His government says cals speed up fermentation. mon source of mezcal, has quadrupled be- that “poor-quality” mezcal from “distant The origins of this factory approach are cause of rising demand. Some makers have places, devoid of tradition” could sully the in the mid-19th century, when a few rich resorted to plucking wild agaves, which are drink’s handcrafted image. families acquired vast estates in Jalisco, on not then replaced, from Oaxaca’s yellow Connoisseurs fret about the “tequilisa- which they grew agave. In Oaxaca, by con- hills. The growth of supply is slowing, even tion” of mezcal. Mexico produces trast, land ownership is mainly communal as demand for mezcal continues to in- 50 times more tequila, a type of mezcal and individuals work small plots. Today crease. The squeeze will last for a while. made only from blue agaves, than it does there are thought to be 57 makers of mezcal Agaves planted today will ripen by the end mezcal, which can use any kind of agave. In for every tequila distillery. of 2026. That may protect mezcal’s mys- Jalisco, the source of 90% of tequila, mak- The mezcal boom is already changing tique for a little while longer. 7 Bello Battles in and out of court

Blurring the line between judges and politics rom the viewpoint of Jair Bolsonaro, the minds of many Peruvians because her his extradition from the United States. FBrazil’s president-elect, it was an father ruled as an autocrat, Ms Fujimori As for Mr Moro, some of his judicial inspired appointment. On November 1st has played a destructive role in the coun- acts now look questionable. Lula was he announced that Sérgio Moro, the most try’s politics, organising the censure by leading the opinion polls when he was prominent judge in the long-running congress of competent ministers. jailed. The sentence—of more than nine corruption investigation known as Lava Yet there are risks. José Domingo Pérez, years for receiving a flat worth Jato (Car Wash), had agreed to serve as his the prosecutor in Ms Fujimori’s case, $600,000—looked disproportionate. justice and security minister. “His anti- claims that she headed a “criminal organi- Days before the election, Mr Moro re- corruption, anti-organised-crime agen- sation” within Popular Force (fp), her leased plea-bargaining testimony from da, as well as his respect for the constitu- party, which “laundered” the Odebrecht Antonio Palocci, a former pt minister, tion and the laws, will set our course,” Mr money by registering fake donations. If which incriminated the party. It now Bolsonaro tweeted. But there is a snag in true, this was a breach of political financ- transpires that Mr Moro was already Mr Moro’s appointment. It appears to ing rules. But was it a crime? There is no talking to Mr Bolsonaro’s people. All this confirm the claims of the left-wing evidence that Ms Fujimori, who lost in 2011 undermines trust. Workers’ Party (pt) that the judge’s mo- and 2016, offered padded contracts to Mr Moro said his appointment tive earlier this year for jailing its leader Odebrecht. Mr Pérez claimed that if free “means consolidating the progress and putative presidential candidate, Luiz she might destroy evidence (though she against crime and corruption of recent Inácio Lula da Silva, was more political had not done so previously). years and preventing risks of backslid- than judicial. When Miguel Torres, an fp congress- ing”. That is possible. He may also re- Whether or not that is true, Mr Moro’s man, complained that “they have taken strain Mr Bolsonaro in his policy of new job (which he will take up on Janu- away [Ms Fujimori’s] right to an impartial egging on police to shoot criminals. ary 1st) is only the most dramatic ex- judge, due process and the presumption of But Mr Moro had insisted that he ample of an increasingly activist judicia- innocence”, he had a point. Happiest about would never enter politics. How his ry playing a more political role in Latin all this will be Alejandro Toledo, a former breaking of that pledge comes to be America. In Peru on October 31st, Judge Peruvian president, who is accused of viewed depends not just on how success- Richard Concepción sent Keiko Fujimori, taking $20m in bribes (which he denies). ful he is in his new role, but also on the leader of the opposition, to jail for His lawyers have new arguments to resist whether judges and prosecutors pursue three years without charge while he wrongdoers in parties allied with the investigates claims that she received $1m government as vigorously as he did Lula. for her presidential campaign in 2011 Whereas corruption remains largely from Odebrecht, a Brazilian construction unpunished in places like Mexico and company. Her supporters say the judge is Argentina, Brazil and Peru have gone in cahoots with the government. furthest in investigating the sprawling Many see such cases as an overdue Odebrecht scandal. There are some clean-up of Latin American political life safeguards in both countries. Lula’s by newly emboldened judges and prose- conviction was upheld by an appeal cutors. The powerful, be they politicians court (which increased his sentence), or businessmen, historically had little to and his case will reach the supreme fear from a biddable judiciary. Citizens court. Peru’s constitutional tribunal this now know much more about corruption year freed Ollanta Humala, yet another and are much less tolerant of it. Anger at former president, and his wife from what the pt and its attempt to game the politi- it said were “arbitrary detentions” with- cal system through graft was a big factor out charge by Mr Concepción. Holding in the unlikely victory of Mr Bolsonaro, a the powerful to account is a step forward, far-right former army captain. Tarred in but justice must be seen to be fair. Middle East & Africa The Economist November 10th 2018 51

The politics of urbanisation Today the share is 38%. By 2030 it will sur- pass 50%. Africa’s urban population is ex- Vexed in the city panding at a rate of 4% per year, twice the global average. Yet urbanisation is not bringing Africa the prosperity it brought to other continents. In Europe and East Asia the growth of cities was driven by migration from the countryside, as workers HARARE AND KAMPALA swapped fields for factories. African ur- Africa’s growing cities are inspiring protest and opposition parties banisation is mostly a result of natural ree bobi wine!” say the graffiti out- spread protests by city folk. Witness the population growth. For example, in Ma- “Fside his recording studio in Kamwo- “Black Friday” demonstrations in Lusaka puto, Mozambique’s capital, just 12% of the kya, a poor district of Kampala, Uganda’s (Zambia’s capital) in 2013 and “Red Friday” population rise is accounted for by migra- capital. On August 13th the pop star-turned- marches in Accra (Ghana’s) in 2014, or the tion from rural areas. Since there are few politician (pictured above) was arrested post-election riots in Kenya last year. manufacturing jobs, most of the growing and, he says, beaten and tortured by sol- The rise of urban discontent and young urban labour force is absorbed by the infor- diers. Though he was released after two opposition leaders partly reflects a youth mal economy. That is one reason why ur- weeks, treason charges still hang over him. bulge. The median age in Africa is 19.5, banisation in Africa does not reduce pover- His real crime is being popular. Born whereas its leaders’ average age is 62. It also ty as much as it does in other continents. Robert Kyagulanyi, Mr Wine speaks for arises from Africa’s idiosyncratic urbanisa- Another reason is the woeful way cities many of Kampala’s roughly 1.5m slum tion, whereby cities are growing fast but are organised. More than 50% of urbanites dwellers. “If parliament cannot come to the opportunities in them are not. live in slums. Fully 40% lack flushing toi- ghetto,” he said after his election as an mp, In 1960, 15% of Africans lived in cities, lets. Many capitals still rely on out-of-date “the ghetto will come to the parliament.” about the same as in Europe in the 1600s. planning laws, leading to haphazard build- Mr Wine is part of a broader trend in ing and needlessly expensive rent. which upstart politicians with support The neglect, paradoxically, is rooted in among the urban poor are rattling govern- Also in this section democracy. From the end of colonial rule ments. They include Kenya’s main opposi- until 1991 no incumbent government was 52 Repression in Tanzania tion leader, Raila Odinga, and Nelson Cha- replaced via a peaceful election. Policy- misa of Zimbabwe’s Movement for 53 Elections in Madagascar making had an “urban bias”. Since the Democratic Change (mdc). In South Africa greatest threat to autocrats was a coup, and 53 Needling Africans Julius Malema of the Economic Freedom most coups started in cities, leaders tried to Fighters has been gaining ground by pro- 53 Libya’s peace process buy off urbanites. This meant, for example, mising to seize white-owned land. favouring (urban) consumers of food over 54 Films about jihadists The past few years have also seen wide- (rural) producers by keeping prices low. 1 52 Middle East & Africa The Economist November 10th 2018

2 Much changed as democracy flowered cently worsened. Today Tanzania is on the in the 1990s, and rulers switched to win- Slickers in a twist descent from patchy democracy towards ning support in the populous countryside. Likelihood that urban residents are more slapdash dictatorship. In a study of 27 countries, Robin Harding of satisfied with democracy than rural residents Barely a week passes without brazen the University of Oxford found that the ad- Sub-Saharan Africa, selected countries, displays of arbitrary power. On November vent of democratic elections is associated percentage points, 200 5-15 1st Mr Magufuli appeared at what was billed 10 with increased access to primary school as a “public debate” on his record after and healthier children, but only in rural ar- Urbanites more satisfied three years in office. It was no such thing. eas. Other studies show skewed spending 0 The president sat on a stately chair in the on rural roads and on farm subsidies. audience at the University of Dar es Salaam Urbanites have many reasons for being while sycophantic academics praised his less likely than rural voters to back those in -10 tenure. Conveniently for Mr Magufuli, an power. They have better access to news and Niger opposition mp, Zitto Kabwe Ruyagwa, was Urbanites less satisfied can be organised more easily by activists. -20 arrested the night before and charged with Using polls taken in 28 countries Mr Har- sedition, so could not attend. ding has found that city dwellers are on av- Burundi Other foes have met similar fates. Oppo- erage five percentage points more likely to -30 sition members of parliament who refuse oppose the government than rural voters 10 20 30 40 50 60 to accept bribes (the going rate is 60m shil- are. This is true even after controlling for Urban population, % of total lings, or $26,200) to cross the aisle and join age, gender, education and whether voters Source: “Rural democracy: Elections and Chama Cha Mapinduzi (ccm), the ruling share the ethnicity of the country’s leader. development in Africa”, by Robin Harding party, are arrested. According to a lawyer Politicians mindful of urban unhappi- who has represented opponents of the re- ness perhaps stand a better chance of suc- less satisfied with democracy than rural gime, every opposition mp who has reject- cess. Mr Wine’s music evokes slum life. In voters are (see chart), suggesting that poli- ed a bung has a charge against them. Last one song he protests against the heavy- ticians do eventually take more notice of year Tundu Lissu, an mp, was shot and in- handed arrest of street traders. In another city dwellers’ interests. But for now, in jured outside his home. This makes people he sings about kikomando, a humble snack countries such as Uganda, where three- scared to hold the president to account. of chapati and beans eaten by the poor. He quarters of people still live in rural areas, So too does legislation that outlaws the slips naturally into Luyaaye, a street slang. politicians will make mainly half-hearted dissemination of any “statistical informa- By contrast, Yoweri Museveni, the 74-year- attempts to please those in cities. tion” that may “invalidate, distort, or dis- old Ugandan president who won just 31% of In October Mr Museveni toured down- credit official statistics”. The change fol- the vote in Kampala in 2016, sprinkles his town Kampala, promising to shower trad- lows the publication of an annual survey speech with rustic idioms. Young urba- ers’ associations with cash. Mechanics at into political attitudes by Twaweza, a local nites call him “Bosco”, after a character in Kisekka market, an unruly hub for spare research group. In 2016 it found that 96% of an advert, a country bumpkin who comes parts, waved dutifully. “He’s the best presi- Tanzanians approved of Mr Magufuli. In to the city and stumbles down escalators dent in the world,” gushed one man in a 2017 the share was 71%; in July it was 55%. with his bicycle. ruling-party t-shirt. Then he leaned closer, That is a poor showing in a country where Such politicians hope to emulate Mi- whispering: “Actually we hate Museveni. ccm has never lost an election. Aidan Eya- chael Sata, perhaps the most successful Af- We love Bobi Wine.” 7 kuze, the group’s director, has yet to get rican populist. Sata, who was Zambia’s back his passport, which was confiscated president from 2011until his death in 2014, days after publication of the survey. coupled an appeal to his ethnic Bemba Repression in Tanzania Another reason for the law concerns group in the countryside with a pro-poor economic data. Tanzania’s gdp grew on av- message in cities. During electioneering he The big squeeze erage by about 6.5% per year over the past spoke in the vernacular. He launched cam- decade. But under Mr Magufuli the private paigns from informal markets, not plush sector has been subject to relentless shake- hotels. One of the first things he did in of- downs by tax collectors. Several prominent fice was to order town clerks to stop harass- businessmen have been arrested on DAR ES SALAAM ing street vendors. trumped-up charges of money-launder- Under John Magufuli fear is enveloping Elsewhere vendors have been less lucky. ing, which is ineligible for bail. Though the the country Some of the most violent incidents have government insists the economy is still ex- taken place in Zimbabwe, where thousands aul makonda seems a lot more like a panding at its former pace, other economic of street traders in mdc strongholds have Pflailing moral crusader than the region- data, such as slowing credit growth and ris- been arrested in operations co-ordinated al commissioner of Dar es Salaam, Tanza- ing bad debts, suggest otherwise. by the ruling party, Zanu-pf. nia’s commercial capital. The 36-year-old Some worry that a slowing economy Incumbents are also trying more subtle has come up with a variety of schemes to may lead to further repression and obfus- ways to quell urban unrest. In Mozam- catch the eye of his patron, President John cation of data, causing yet more economic bique cities run by opposition parties are Magufuli. One is clamping down on sup- harm. Though the eu has raised an alarm, starved of public funds. In Botswana the posed vices such as smoking shisha and other international institutions, such as ruling party has appointed extra unelected sleeping in past 8am. His latest pledge, to the World Bank, are staying quiet. Tanza- councillors to cities where the opposition set up a homophobic “surveillance squad” nia, the third-largest aid recipient in sub- has polled well. In Uganda Mr Museveni to track down those guilty of homosexual- Saharan Africa, has been a darling of do- has transferred many powers from the op- ity, which is illegal, is by far his nastiest. nors since the 1990s, when it seemed to be position-led city council to his appointees. It has also alarmed the West. On No- consolidating its democracy and also re- Yet at some point the size of the urban vember 5th, the eu recalled its ambassador, ducing poverty. Now, after a decade or so voting bloc will become too big to ignore. citing a deterioration in human rights and during which freedoms began to flourish, In countries where more than half the peo- the rule of law. The rot began soon after Mr Tanzanians are facing both economic ple live in cities, urbanites are only a little Magufuli was elected in 2015 and has re- hardship and repression. 7 The Economist November 10th 2018 Middle East & Africa 53

Elections in Madagascar lacks the popular appeal of his rivals and has been criticised for failing to revive the Many candidates, economy since he took elected office in 2014. Almost all the other candidates, nick- little choice named les zéros virgule, or “nought point”, after the results they are likely to get, ran with no prospect of winning. They hoped MORONDAVA instead to negotiate plum positions in the Voters hoping for a fresh start may be next administration. sorely disappointed The outcome of the second round is f the health of a democracy were mea- harder to predict. Mr Rajoelina, who is 44 Isured only by the number of candidates and once worked as a disc jockey, is popular contesting a presidential election, Mada- with the young and with women. “I’m go- gascar’s would be flourishing: a total of 36 ing to vote for Rajoelina because he is were on the island state’s ballot on Novem- handsome, cute and young,” says an enthu- ber 7th. Yet politics in Madagascar, beset by siastic female voter. But many urbanites corruption, is far from healthy. Voters hop- deride his madcap schemes, complete with ing for a change from the old elite may be glossy artists’ impressions, to rebuild the sorely disappointed by the outcome of a country. One proposes making Tamatave, race that has been completely dominated the second-largest city, a new “Miami”. by two former presidents. Mr Ravalomanana may lack some of the The most visible contender is Andry Ra- Ravalomanana, a safe pair of hands? appeal of his main rival, not to mention his joelina, who led a coup in 2009 and ruled lavish campaign budget, but he is seen as a until 2014. Morondava, a big city in south- nomic growth and investment. The years safer pair of hands. One voter from Tsima- west Madagascar, is a sea of posters and t- that followed the coup, by contrast, were fana, a village north of Morondava plagued shirts emblazoned with Mr Rajoelina’s face catastrophic: the economy dived and pov- by cattle rustlers and illegal deforestation, and sporting his signature bright orange erty shot up. About three-quarters of the says he will vote for “Dada” (Mr Ravaloma- colours. Lorries blaring out his campaign population live on less than $1.90 a day. nana’s affectionate nickname) because the messages are ubiquitous. The results of the first round will not be country felt safer during his term in office. Even with such a well-funded cam- announced until later this month. But Yet few will feel safe until the run-off is paign, Mr Rajoelina faces stiff competition Messrs Rajoelina and Ravalomanana seem over and the count is done. Madagascar has from Marc Ravalomanana, the president he likely to face each other in a run-off on De- rarely enjoyed a smooth political transi- overthrew in 2009 and who is fondly re- cember 19th. Hery Rajaonarimampianina, tion. Many of its people fear that trouble is membered for a tenure marked by eco- the incumbent, does not worry them. He once again around the corner. 7

Needling Africans Libya’s peace process La Clinique Chinoise Too many cooks

DAKAR Chinese medicine is on the rise in Africa n a house in central Dakar three Chi- growing soft power in Africa. In 2000 CAIRO nese men stand behind a glass screen. when China held its first-ever Forum on I Italy’s conference on Libya is mostly The wall is stacked high with pills, teas China-Africa Co-operation, a summit about France and powders covered with Chinese held every three years, traditional reme- symbols and pictures of healthy models. dies were on the agenda. Two years later or once Italy’s populist government There is something for everyone. Teas for it hosted a conference in Beijing to dis- Fwill be pleased to see a group of Africans kidney problems, creams for aches, pills cuss the topic. Many of China’s 48 Confu- cross the Mediterranean. On November for infertility and four claiming to help cius Institutes in Africa teach courses in 12th the leaders of Libya’s warring factions men with impotence. traditional medicine. will gather in Palermo, the capital of Sicily, “It’s a revolution,” proclaims Aliou Moreover, as many as 50,000 young for a two-day peace conference. Ndiaye, who started working at the Chi- Africans are studying in China, many on Italy has an interest in bringing order to nese medicine shop three years ago. It scholarships provided by the host gov- its former colony. Libya is an important now has four branches in Dakar. Sene- ernment. Although only a small share are source of fossil fuels. Its Greenstream pipe- gal’s capital also has several smaller at medical school, many students return line carries gas from western Libya to Sici- outlets and practitioners. “Many people with a taste for acupuncture and herbs. ly. Less welcome are the 647,000 migrants are curious but I’m still sceptical,” says Demand is also buoyed by China’s large who are thought to have crossed the Medi- Ibrahim Sy, a taxi driver, who says his diaspora in Africa, which some reckon terranean to Italy since 2014. Most set off mother was cured of leg pain with tea. has grown to 1m people. from Libya. Their numbers have recently Senegal’s experience is part of a wider One practitioner, Mame Awa Diop, plummeted—just 22,000 arrived in the trend of traditional Chinese health cen- studied traditional medicine in China first ten months of this year, an 80% drop tres opening across Africa. Clusters can before the Confucius Institute in Dakar from last year. But they still rile Matteo Sal- be found in Nairobi and Dar es Salaam. asked her to set up a clinic. Business vini, Italy’s de facto leader. Others have opened in Uganda, Ivory started slowly, she says. But outside her Mr Salvini will have his work cut out. Coast and Congo. room several people sit in an orderly The situation in Libya is bleak, with the Their spread underlines China’s queue. “Oh, they’re coming,” she says. country split between rival militias and un-led peace talks bogged down. One of 1 54 Middle East & Africa The Economist November 10th 2018

2 the dignitaries in Palermo will be Fayez al- Libya, areas of control Tunisia Serraj, head of the un-backed government. FRANCE November 7th 2018 Despite his lofty title, in practice he is little ITALY Source: Liveuamap.com more than the mayor of Tripoli, the capital, Radical film-making which he controls only with the help of al- Palermo GREECE TURKEY lied militias. One of them, from the nearby TUNIS TUNISIA Greenstream A cinematic look at jihadism town of Tarhouna, attacked Tripoli in Au- pipeline Med. Sea gust over an economic dispute. More than UN-backed Tripoli unisia is perhaps best known as government Tobruk 100 people were killed before the un nego- Sirte Tthe lone Arab-spring success story, a tiated a ceasefire. Tarhouna Benghazi democracy in a region full of autocrats. Sirte Cairo Things are little better in the east, ruled Tuareg/ basin But it is also one of the world’s biggest Toubou EGYPT by a general-turned-warlord called Khalifa LIBYA exporters of jihadists. Some 6,000 Haftar. Islamist militants still carry out Libyan National Tunisians are thought to have joined ALGERIA car-bombings and assassinations, while Army (Haftar) Islamic State at its height. Hundreds of General Haftar undermines state institu- NIGER these men are now coming home. tions in Tripoli. He controls the strip of CHAD SUDAN “I wanted to look at the emotional coast near Sirte, where Libya’s main oil ter- consequences of that,” says Meryam S L 750 km minals are located (see map). They are A H E Joobeur, the director of a short film meant to be operated by the Tripoli-based called “Brotherhood”. She is not alone. National Oil Corporation. In June, how- country that it sees as in its sphere of influ- This year’s Carthage Film Festival, ever, the general’s men seized them and an- ence. Italian politicians accuse Mr Macron which runs from November 3rd to nounced that revenues would be sent to a of helping General Haftar for Total’s sake. November 10th in Tunis, features sever- rival oil corporation in the east. They with- Other foreign powers are pushing their al Tunisian films that tackle radical- drew only after America threatened to im- interests in Libya, too. Egypt and the Un- isation. In “Brotherhood”, a young pose sanctions. In the south, meanwhile, ited Arab Emirates have given military sup- Tunisian man returns from Syria to his ethnic Tuareg and Toubou militias are bat- port to General Haftar, whom they view as parents’ farm with a fully veiled Syrian tling for control, and criminal gangs from an ally in their fight against political Islam. wife. His mother is happy to see him, neighbouring Chad prey on civilians. Russia, eager to expand its influence, has but his father is suspicious. After a few So, to put it mildly, things in Libya are hosted the general in Moscow, treating him days he reports his son to the police not conducive to a peace conference—but like a head of state. Now Mr Macron and Mr (though he later regrets his decision). Italy is more concerned with the situation Salvini are using Libya as part of their own The Tunisian government’s policy is in France. Both countries are jockeying for competition for leadership in Europe. The to arrest returning jihadists immedi- influence. Italy’s interests lie in western un-led process has been agonisingly slow. ately. “There is no rehabilitation at all,” Libya, where both the gas pipeline and the But it remains the closest thing Libya has to says Messaoud Romdhani of the Tuni- migrant boats enter the Mediterranean. It a way forward. 7 sian Forum for Economic and Social sees Mr Serraj as an ally and has reportedly Rights, an ngo. More than 1,500 Tuni- paid western warlords to stop migrant sians have been jailed on terrorism boats from setting sail. France is happier to charges, according to his group. “Prison work with General Haftar, whom it sees as is a very good place to become more more likely to stabilise the country. The radicalised,” he says. French army has deployed thousands of its But so is the neighbourhood. Anoth- troops to fight jihadists in five former colo- er film, “Fatwa”, follows a father’s ef- nies in the adjacent Sahel region. forts to figure out how his recently In May France’s president, Emmanuel deceased son fell in with radical Islam- Macron, hosted the Libyan rivals for his ists. He discovers that the area of Tunis own summit. They agreed to hold elections where his son lived has been trans- by December 10th. That deadline was al- formed by Salafism, a puritanical ver- ways delusional—even ignoring the vio- sion of Islam. The old imam, a devotee lence, Libya lacks an electoral law. It also of Sufi mysticism, has been replaced by undermined the un envoy, Ghassan Sa- a more conservative preacher; the lamé, who wants Libyans to hold a national cinema has closed. “It’s the type of conference and draft a new constitution conversation we’ve been having in before holding elections. private for years,” says Zakia Hamda, an Both Italy and France have commercial activist and filmgoer from Tunis. “Our motives as well. Libyan oil is cheap to ex- traditional values were snatched away tract and easy to export to Europe. Eni and by fundamentalists. It was traumatic.” Total, the Italian and French energy giants, On October 29th a woman, who may have long competed to produce it. Eni is the have been radicalised online, blew largest foreign producer in Libya, but Total herself up not far from cinemas taking is starting to catch up. In March it acquired part in the festival. That did not scare a 16% stake in the Waha concession in the away audiences. At a screening of Sirte basin. If the deal goes through, it “Fatwa” cheers rang out when the could produce 400,000 barrels per day in father pinned an extremist against the two or three years. Eni’s ceo, Claudio Des- wall. “We work for Allah to promote calzi, says he welcomes the “healthy” com- virtue and eliminate vice,” says the petition. “[Libya] benefits from this,” he radical. “Go get yourself a job and Allah says. The Italian government is less san- will look after himself,” says the father. guine. It resents French involvement in a Serraj and Haftar do Paris Asia The Economist November 10th 2018 55

Also in this section 56 Banyan: Pakistan’s indecisive rulers 57 The slow spread of robots in Japan 57 Chinese inﬂuence in New Zealand 58 Ending forced labour in Uzbekistan 59 Vietnam’s premature ageing

Politics in Bangladesh Awami League thugs stopped ripping down every rival election poster, Sheikh Hasina Eddy or current? herself invited the new front’s leaders for talks, promising to consider their demands for guaranteeing fair elections. With both big parties scrambling to lure smaller players, and the contest shaping into a rivalry between big coalitions, two DHAKA rounds of these talks have been held, the The ruling party appears to be easing up ahead of an impending election most recent on November 7th. Although ike the great, restless rivers that snake League, which came in on a landslide in signalling graciousness, Sheikh Hasina Lacross Bangladesh, the country’s de- 2008 but has grown fat and bossy after so shows little inclination to meet Oikya’s democracy seems to change shape with every long in power, seemed determined to se- mands. These include ending the trials and season. Its people have voted in ten nation- cure a third consecutive five-year term by imprisonment of her political opponents, al elections since independence in 1971, but hook or by crook. All of a sudden, however, among them Ms Zia (pictured), who was on each occasion the political landscape the mood has changed. The country’s 165m jailed in February and is serving a ten-year has looked radically different. There have people might just get a competitive—al- sentence on charges of embezzling from an been times of single-party dominance, of though certainly not fair—election. orphanage; dissolving parliament and army rule, of fiery protest and boycott, and forming a neutral caretaker government also times when, after millions of voters Changing tide during the election period; and ensuring have peacefully cast their ballots, parties October brought not one, but two big sur- security for and oversight of the voting. have politely alternated in power. prises. In mid-month the bnp, which had The Awami League has suggested that it One constant, since the 1990s, has been appeared to be on the ropes, dropped its may consider releasing prisoners and that the bitter rivalry between two powerful long-standing alliance with far-right Is- it intends to shrink its own government to women, Sheikh Hasina Wajed, the leader of lamists and instead joined a coalition of an election-period skeleton administra- the Awami League and current prime min- smaller, secular parties to form a broad option. But it says it will not bend the consti- ister, and Khaleda Zia, a two-time former position group. Known as the Jatiya Oikya tution to suit opposition demands—de- prime minister and head of the Bangladesh Front, its figurehead is 82-year-old Kamal spite the fact that, from 1996 until 2011, Nationalist Party (bnp), who is now in pri- Hossain, a widely respected constitutional when the Awami League itself changed the son. Another constant is that when the lawyer. More surprising still was that the rules, the constitution required caretaker electoral game has appeared to be fair, vot- increasingly authoritarian Awami League, governments to oversee elections. er turnout has been strong. When it has which has relentlessly hounded the bnp, The Oikya Front has hinted that it may looked tilted, voters have stayed at home. turned suddenly sweet. The police (who, call for street protests if there is no accom- Only weeks ago it seemed a safe bet that like the country’s army and courts, are be- modation, yet it is clearly also hesitant to the 11th election to the 350-seat parliament, holden to the government) took a pause provoke a clampdown or declare a boycott. which is due to be held some time in the from arresting bnp activists by the van- The bnp still has a strong grass-roots fol- next three months, would be of the low- load, and instead granted permission for lowing, and by all accounts the relentless turnout, low-credibility sort. The Awami Oikya rallies, even in the capital, Dhaka. As persecution of recent months has stirred a 1 56 Asia The Economist November 10th 2018

2 surge of sympathy for it. Moreover, aggres- than 90,000 lawsuits against it, entangling mer president, the Awami League’s boss is a sive tactics backfired on it in the election of some 2.5m party workers in endless litiga- survivor of tragedy. Her father, Sheikh Mu- 2014 when, angered by the Awami League’s tion. During the month of September jibur Rahman, who led the country to inde- rule changes, it first sponsored violent alone, the party reckons that more than pendence from Pakistan, was murdered street protests, then boycotted the polls. 4,500 of its members were arrested on along with most of his family in 1975. In The experience of being excluded from trumped-up charges. Ms Zia herself is power, Sheikh Hasina has appeared in- parliament has been a bitter one for Ms Zia fighting 34 separate cases; her son Tarique, creasingly vindictive not just towards po- and her followers. Their absence allowed the party’s acting chairman, lives in exile in litical rivals, but towards a growing range the Awami League not just to extend tenta- London. He is sentenced to life imprison- of perceived enemies. “She has lost her cles of influence throughout the state and ment at home. moral compass,” whispers a middle-aged to threaten the business interests of But for all Sheikh Hasina’s polite talk, writer in a noisy café, reflecting fears felt wealthy bnp loyalists, but also to clobber the Awami League may be less inclined to broadly across Bangladeshi society. the bnp rank and file. By the bnp’s count, compromise than the bnp. Like the bnp Four decades after Bangladesh’s libera- the Awami League has instigated no fewer leader, who is the widow of a murdered for- tion war, the Awami League pushed 1 Banyan Part-time spine

Is the Pakistani state capable of standing up to blackmail? hen a panel of three judges on with blockades of burning tyres and shut- while a review of the judges’ ruling takes WPakistan’s Supreme Court over- ting down the motorway between Islam- place. It said arrested tlp agitators would turned a poor Christian woman’s convic- abad, the capital, and Lahore, the country’s be freed. And it conspicuously refused to tion for blasphemy, which carries a second-biggest city. criticise Mr Qadri and his toxic fellow- mandatory death sentence, it was, as one It was enough for Ms Asia’s defence leader, Khadim Hussain Rizvi, a preach- commentator, Zahid Hussain, put it, as if lawyer to flee the country. Yet the judges’ er. Ms Asia, meanwhile, remained in they had at last broken the country’s courage, for one gripping moment, was prison. As well as the judges’ murder, the “ring of fear”. Nine years ago in the fields, backed up in an unlikely quarter—by the tlp has called for the army to mutiny. Yet Asia Bibi, a mother of five, had taken a sip prime minister himself. Campaigning for the umpteenth time, the state was of water before passing the jug on to before the election in July that brought appeasing extremists, supposedly in the fellow (Muslim) fruit-pickers. They said him to power, Imran Khan and his party, name of avoiding bloodshed. they could not share a drinking vessel Pakistan Tehreek-e-Insaf, had voiced The capitulation won not just Mr with an “unclean” Christian, and de- support for the blasphemy laws. Yet on Khan but the army, under General Qamar manded she convert to Islam. She re- state television, Mr Khan, while on a beg- Javed Bajwa, a barrage of brickbats. The fused, and soon a mob was accusing her ging trip to China, warned the protesters failure to prevent mayhem made them of insulting the Prophet Muhammad. that “the government will not stand aside look weak. Back in 2014 the army at last Pakistan’s main blasphemy law is and see property and livelihoods being turned on armed extremists whom it had breathtakingly sweeping. Anyone who destroyed. Do not force us to take action.” once fostered as a useful tool foreign- defiles Muhammad’s name, even if “by It was assumed that Mr Khan, whose rise policy tool, after a horrific attack by the imputation, innuendo or insinuation”, to power came with the army’s support, Pakistani Taliban on an army school. But faces death. Since its introduction in had the generals’ backing to take on groups the army has been reluctant to confront 1986, several hundred people have been that hold the country hostage. the (unarmed) tlp. Its roots are in the charged, with a disproportionate num- Alas, the resolve seemed to disappear Barelvi movement of Islam, which the ber either non-Muslims or Ahmadis, a almost as soon as it was broadcast. To get generals cultivate as a counterbalance to persecuted sect who revere both Muham- the tlp off the streets, the government the even more doctrinaire Deobandis of mad and a 19th-century prophet—some- promised to put Ms Asia on the list of the Pakistani Taliban. Besides, General thing many other Muslims consider people forbidden to leave the country Bajwa is on the defensive after Mr Qadri abominable. No one has yet been execut- accused him of being a closet Ahmadi. ed. But more than 50 people accused of Apparently stung by the criticism, the blasphemy have been murdered. Two authorities may now be acting. As The politicians were assassinated just for Economist went to press, Ms Asia had speaking up for Ms Asia. One of them, been freed. Her whereabouts are un- Salman Taseer, the governor of Punjab known, although the government insist- province, was shot by his bodyguard. ed she was still in the country. Mean- So the judges’ decision was brave. The while, the authorities warned the tlp’s charges against Ms Asia, they said, were leaders that they would be put under “concoction incarnate”. The reaction of house arrest if they called out the mob. hard-core Islamists, meanwhile, was For now, Mullah Rizvi has merely said he predictable. Muhammad Afzal Qadri, a will “consult” his followers on what next. founder of Tehreek-e-Labbaik Pakistan Most Pakistanis are fed up with zealots (tlp), a fast-expanding political party blocking roads and burning cars. Even an formed in response to the hanging of Mr inexperienced government appears to Taseer’s bodyguard, called for the three realise this. If the state is at last finding judges to be killed. Supporters poured some backbone, it will be a triumph of onto the streets, bringing cities to a halt hope over experience. The Economist November 10th 2018 Asia 57

2 through constitutional changes allowing legal immigrants was a hit. for the trial and execution of old men who The shortage of workers, local and for- had fought against Sheikh Hasina’s father. eign, may at last force companies to auto- Since May police have been licensed to mate, says Ken Ogata, president of Kou- shoot suspected drug dealers on sight. The reisha, a dispatch company whose tally of extra-judicial killings so far stands employees are all over 60. Insurance firms at 264. When students in Dhaka protested have begun replacing clerks with software. in August against lawless driving, the party A driverless taxi service is planned for To- sent club-wielding thugs to quell them. kyo in time for the Olympics in 2020. Last When a prominent photojournalist docu- year Japan’s three biggest banks an- mented the attacks live on Facebook he was nounced that they will close hundreds of dragged from his house by an anti-terror branches and eliminate 32,000 jobs in the squad. Now in prison, he was derided by coming decade. A report published in 2015 Sheikh Hasina in an interview as “mentally by Nomura Research Institute, another sick”. Besides, she noted, his great-uncle think-tank, says half of Japan’s workers had been a pro-Pakistan minister. “Some- could be replaced by robots within 20 times blood speaks, you understand that,” years. The most vulnerable professions, it she said, as if in explanation. says, are those dominated by systematic, But the Awami League does not have to repetitive tasks, such as train drivers and rely on ruthlessness. Under its rule the Jurassic clerk security guards. economy has enjoyed unprecedented By 2030, as robots and ai eliminate such growth. Last year gdp expanded by 7.3%, roboticist at Osaka University. Robots will jobs, Ms Takeda forecasts, Japan will have a faster than India or Pakistan. Opinion polls look after the elderly, teach children and surplus of lowlier workers. She still be- show broad satisfaction with the govern- read the evening news. Television anchors lieves immigrants will be needed, but only ment. A decade of assiduous pampering of resemble androids anyway, he jokes. in certain skilled professions. Hotel recep- police and army officers has bought loyalty, Yet the future has been slow to arrive. tionists, a colleague predicts, will have and put paid to fears of coups. The coun- Japanese hotels and banks are, by global gone the way of the dinosaur. 7 try’s most powerful neighbour, India, standards, heavily overstaffed despite the tends to support the Awami League. And country’s demographic crunch. Most su- despite her 71years Sheikh Hasina is clearly permarkets have not embraced the auto- China and New Zealand capable of change: ignoring her party’s mated checkouts common elsewhere, nor staunchly secular roots, she has lately out- airlines self-service check-ins. The offices Party to party flanked the bnp by winning over the Hefa- of Japan’s small and medium-sized enter- jat-e-Islam, an organisation of arch-con- prises are among the most inefficient in servative clerics. Will these advantages the developed world, chides McKinsey, a persuade her to let democracy run its natu- management consultancy. ral course, or will she instead keep trying to Japan has an elaborate service culture, Hints that the Chinese government is tame the current? 7 which machines struggle to replicate. Japa- meddling in politics cause a stir nese customers, especially the elderly, strongly prefer people to machines, says e are free from political interfer- Automation in Japan Yoko Takeda of Mitsubishi Research Insti- “Wence,” protests New Zealand’s tute, a think-tank. Employment practices prime minister, Jacinda Ardern. A scandal Human endurance make it difficult to replace workers. And in the National Party, the main opposition, while gimmicky robots abound, Japan suggests otherwise. Last month an embit- struggles to develop the software and artifi- tered National mp, Jami-Lee Ross, accused cial intelligence needed to enable them to the party’s leader, Simon Bridges, of break- perform useful tasks, says a report by the ing campaign-finance laws. He claims Mr TOKYO Ministry of Economy, Trade and Industry Bridges deliberately disguised a donation A country obsessed with robots is also (meti), the cockpit of Japan’s post-war mir- of NZ$100,000 ($67,000) orchestrated by a oddly resistant to them acle. So while the reception at the robot ho- businessman with links to the Chinese otel receptionists are rarely this intel is automated, seven human employees government. In a phone conversation that Htimidating. Yellow eyes glare as the lurk out of sight to watch over customers Mr Ross taped of him and Mr Bridges dis- room number is snarled through razor- and avoid glitches. Robots still cannot cussing the donation, neither makes any sharp teeth. The mechanical T-Rex behind make beds, cook breakfast or deal with a explicit reference to concealment. Mr the counter is one of nine types of robot drunken guest who will not pay his bill. Bridges calls Mr Ross’s allegations “base- whirring and clicking through the build- Ever fretful about declining competi- less”. But whether the law was broken or ing, from the silicon fish that swim around tiveness, meti is calling for ideas for robots not, the saga has stoked concerns about a tank in the lobby to the egg-shaped con- to help run “department stores, beauty sa- Chinese meddling. cierge that controls the lights and heating lons, hotels and restaurants.” There is Zhang Yikun, the man behind the dona- in each of the 100 rooms. There is not a hu- some urgency. At 2.3%, the unemployment tion, is a resident of New Zealand, but has man in sight. rate is at its lowest since 1993; in some in- held positions in several official Chinese Machines already do much of the dan- dustries there are seven vacant jobs for ev- organisations, according to Chen Weijian, gerous and repetitive work in Japanese fac- ery applicant. Shinzo Abe, the prime minis- a dissident journalist from China who also tories, which have one of the highest densi- ter, wants to admit 500,000 guest workers lives in New Zealand. Mr Ross’s recording ties of industrial robots in the world: 303 by 2025. But it is a hard sell. Conservative suggests the money was divided into per 10,000 employees. As the population newspapers rail against the prospect of a smaller parcels, which meant it did not declines, Japan’s vast service industry will Chinese immigrant on every street; a re- have to be declared. (Donations of less than also automate, predicts Hiroshi Ishiguro, a cent tv show about police hunting down il- NZ$15,000 can be kept anonymous, pro-1 58 Asia The Economist November 10th 2018

2 vided the benefactor lives in the country.) Human rights in Uzbekistan The scandal broke at an awkward time But on the call Mr Ross also presented the for Mr Mirziyoyev, who wants to shed Uz- donation as an amalgam of smaller gifts Boll and chain bekistan’s pariah status. Central to his “Uz- from associates of Mr Zhang. Police are in- bek spring” is a campaign to eliminate vestigating whether the donation was forced labour. Under Mr Karimov the gov- properly disclosed. Mr Ross, meanwhile, ernment required many adults (and some has been expelled from his party. Whatever children) to help harvest cotton. The state the outcome, the row suggests munifi- enjoys a monopoly over the crop, which is A reforming government tries to end cence can win influence. In the call, Mr so lucrative that Uzbeks dub it “white gold”. forced labour in the cotton fields Ross and Mr Bridges discuss whether the But some big Western retailers are boycott- party should respond by adding a business n some ways, there is nothing surprising ing cotton from Uzbekistan because of the associate of Mr Zhang’s to the list of mps ap- Iabout the videos that have been doing the government’s taste for slave labour. pointed by the party under New Zealand’s rounds on social media in Uzbekistan. In The authorities do seem to have suc- system of proportional representation. one, farmers and local officials in a district ceeded in stamping out child labour. As a This is not the first controversy sur- near Tashkent, the capital, were made to result, America has removed Uzbekistan rounding Chinese interference. Last year it stand in a watery ditch, heads bowed, to from a blacklist it keeps on the subject. Last emerged that another conservative politi- show contrition for failing to irrigate year the government recalled students, cian, Jian Yang, had worked for 15 years in wheat fields properly. In another, officials teachers, doctors and nurses from the cot- Chinese military academies and been a were made to heave heavy clods of clay into ton fields. This year it hopes to go further. member of the Communist Party before the air repeatedly as punishment for allow- Wages paid to pickers have risen by a third emigrating to New Zealand. He did not dis- ing such impediments to farming to accu- or more to encourage voluntary workers to close this on his residency application, but mulate on land they are in charge of. Such replace forced labourers. denies being a spy and remains a member ritual humiliation is rife in Uzbekistan, The government has invited both the of parliament. China-born mps belonging where nearly three decades of dictatorship International Labour Organisation and lo- to the governing Labour Party and the under Islam Karimov, the strongman who cal activists—who used to be arrested for right-wing act have also been linked to or- died in 2016, bred a culture of bullying and documenting misdeeds in the cotton ganisations peddling China’s agenda. subservience. fields—to monitor the harvest, alongside It is impossible to work out how many What was unusual was the govern- 300 of its inspectors. It has also set up tele- donations come with Chinese strings at- ment’s response to these abuses. Shavkat phone hotlines and social-media channels tached, because so many are made anony- Mirziyoyev, Mr Karimov’s reforming suc- for reporting abuses. These have received mously. Simon Chapple of Victoria Univer- cessor, fired Zoyir Mirzayev, the deputy 1,700 complaints; 120 punishments, from sity of Wellington calculates that the prime minister responsible for both inci- fines to dismissal, have been meted out. National Party received handouts worth dents. Upholding the rule of law and pro- Some observers argue that it will be im- NZ$4.5m in 2017. Three-quarters came tecting human rights are Mr Mirziyoyev’s possible to root out coercion without abol- from unnamed sources. At a fundraising priorities, his office huffed, as a criminal ishing the state’s monopoly on cotton and auction in 2016 for Labour’s Phil Goff, now investigation was opened. doing away with production quotas on the mayor of Auckland, New Zealand’s big- Under Mr Karimov, netizens would which officials are judged. All parties agree gest city, an anonymous bidder in China have faced reprisals for discussing such a that forced labour will not disappear over- paid NZ$150,000 for a book written and sensitive topic. But in the current, more night. Last year some 336,000 of the 2.6m signed by Xi Jinping, China’s president. forgiving climate they rushed to post pho- people involved in the harvest, in a country Several former politicians have taken tos of themselves in soggy locations strik- of 33m, were involuntary workers, the ilo jobs with Chinese firms. The Chinese gov- ing the same poses the farmers were forced estimates. Mr Mirziyoyev is clearly hoping ernment keeps tabs on Chinese students at to adopt—at the beach, in the bath and so to reduce that number this year. But if local universities and has co-opted most on. A wag quipped that the sacked official things do not improve, he will presumably Chinese-language media. Last year Anne- would soon get another job, as coach of the resist the urge to punish those responsible Marie Brady of the University of Canter- national synchronised-swimming team. by forcing them to stand in a ditch. 7 bury alleged that a Chinese-owned dairy had been used to launch a scientific device that could help China develop long-range missiles. A report published recently by Canada’s intelligence agency complains that New Zealand is a “soft underbelly” through which China might gain access to intelligence shared by America, Australia, Britain and Canada. In Australia, similar scandals have prompted the passage of new laws aimed at crimping foreign influence. The Greens, part of New Zealand’s ruling coalition, want to lower the threshold for anonymous donations to NZ$1,000 and outlaw gifts from foreigners. A petition calling for an inquiry on foreign influence has been lodged in parliament. Publicly, Ms Ardern maintains that New Zealand’s laws are fine as they are. But her government does seem to be considering how to respond—without jeopardising trade with China. 7 Cotton shift The Economist November 10th 2018 Asia 59

ernment spending as a share of gdp by eight percentage points by 2050. That is faster than in any of the other 12 Asian countries it examined. The problem is worse in the countryside, where most old folk live. Previously the young cared for their parents in old age. Today they tend to abandon village life to seek their fortune in the city. Surveys suggest that the share of old people living alone is rising, especially in villages. Many work until they die. Around 40% of rural men are still toiling at 75, twice the rate of city-dwellers. In Britain that figure is 3%. Often they do gruelling manual jobs, such as rice farming or fishing. Providing health care for millions more old people is another worry. Alzheimer’s, heart disease and age-related disability are growing. In the botanical garden Toau, a 78- year-old in a white sports t-shirt, says he is The demography of Vietnam there on doctor’s orders, before taking a pill for his bad heart and joining an exercise Destitute dotage group. About a third of over-60s do not have health insurance, which is costly. Many provinces still have no proper geriat- ric departments in hospitals. Informal health-insurance groups have popped up to fill the gaps. For a fee, members get exer- HANOI cise classes and free check-ups. But few The country is ill-prepared to look after its rapidly greying population doctors are trained or equipped to treat s dawn breaks in Hanoi the botanical spectively. Even China managed to reach more serious conditions. Agardens start to fill up. Hundreds of old $9,526. In Vietnam, which hit the same The government is starting to imple- people come every morning to exercise be- peak in 2013, incomes averaged a mere ment policies to reduce the fiscal burden fore the tropical heat makes sport unbear- $5,024. Indonesia and the Philippines are and improve the lot of the elderly. Last year able. Groups of fitness enthusiasts prolif- expected to reach the turning-point in the it relaxed the one-child policy. In May it erate. Elderly ladies in floral silks do tai chi next few decades, with an income level sev- said it would increase the retirement age in a courtyard. In the shade of a tall tree, eral times higher than Vietnam’s. from 55 to 60 for men and 60 to 62 for wom- dozens of ballroom dancers sway to samba This shift brings headaches. First, will en, and reform the pension scheme to pro- music. Others work up a sweat on an out- the government be able to support millions vide wider coverage. Next year it plans to door exercise-machine. Tho, an 83-year- more Vietnamese in old age? Only the ex- begin revamping the health-insurance and old with a neat white moustache, says he tremely poor and people over 80 (together social-assistance systems. comes to walk round the lake every day, around 30% of the elderly) get a state pen- But none of that will change the struc- rain or shine. sion, which can be as little as a few dollars a ture of the economy. Usually as countries In the next few decades the gardens will week. The most recent survey of the old, in climb the income ladder they shift from become busier still. Vietnam has a median 2011, found that 90% of them had no sav- farming to more productive sectors, like age of only 26. But it is greying fast. ings worth the name. Debt was common. services. By this yardstick, Vietnam is lag- Over-60s make up 12% of the population, a Supporting them will become ever more ging behind its neighbours. When the share that is forecast to jump to 21% by expensive. The imf predicts that pension working-age population peaked in 2013, ag- 2040, one of the quickest increases in the costs, at the present rate, could raise gov- riculture accounted for 18% of the econ- world (see chart). That is partly because life omy. At the same juncture in China, agri- expectancy has increased from 60 years in culture was just 10% of gdp. Worse, 1970 to 76 today, thanks to rising incomes. Old before its time farmers’ output tends to decline with age, Growing prosperity has also helped bring Old-age dependency ratio, forecast unlike, say, that of managers. This over-re- down the fertility rate in the same period People over 64 per 100 people aged 15-64 liance on agriculture partly explains why from about seven children per woman to 60 three-quarters of Vietnam’s workers are in less than two. In the 1980s the ruling Com- Vietnam jobs where they become less productive as munist Party started to enforce a one-child 50 they get older. In Malaysia that is the case policy. Though less strict than China’s, it 40 for only about half the labour force. has hastened the decline. Boosting productivity will be tricky. The China Demography is changing in similar 30 government is still wedded to statism. World ways in many Asian countries. But in Viet- 20 State-owned enterprises dominate many nam it is happening while the country is industries. Most university students, still poor. When the share of the popula- Malaysia 10 meanwhile, waste at least a year learning tion of working age climbed to its highest Indonesia 0 Marxist and Leninist theory. Many coun- in South Korea and Japan, annual gdp per tries in Asia are ageing fast. But growing old 2015 20 25 30 35 40 45 50 55 60 person (in real terms, adjusted for purchas- before it becomes rich makes Vietnam’s Source: UN Population Division ing power) stood at $32,585 and $31,718 re- problems all the greater. 7 60 China The Economist November 10th 2018

Also in this section 61 Language in Macau 62 Chaguan: Respecting their elders

Ideology year high schools have been supplied with new materials to help them teach it, too. Mind-boggling The indoctrination effort extends well beyond academia. In May the party’s pro- paganda department published a 355-page, 30-chapter book which it said provided an “in-depth” understanding of Xi Thought. It said every party cell must study the work. BEIJING Last month the party’s mouthpiece, the The Communist Party is trying to explain Xi Jinping Thought People’s Daily, published on social media a he institute of Xi Jinping Thought on and outlined how the party should manage labyrinthine mind-map based on the book TSocialism with Chinese Characteristics this. The congress gave its rubber-stamp (see next page). It is so packed with ideas for a New Era occupies several rooms in the approval and revised the party’s charter to and quotations that much image-expand- Marxism department of Renmin Universi- enshrine Mr Xi’s thinking on the topic as ing effort, as users complained, is required ty in north Beijing. Qin Xuan, the institute’s one of its guiding ideologies (he and Mao to make it legible. The map’s complexity director, says it is one of ten similar centres are the only ones named in the document conveys the ordeal that those trying to for the study of the philosophy that is at- as having Thought with a capital T—a mere master the Thought are facing. tributed to China’s president. The institute Theory is ascribed to Deng Xiaoping). To help them, some big firms have set has only a small administrative staff but Since Mr Xi took power six years ago, his up Xi Thought “study rooms”. So too have about 70 affiliated academics. It produces aim has been fairly clear: to boost the libraries and community centres. In July research, offers advice to policymakers and party’s control over China’s fast-changing Global Times, a tabloid owned by the Peo- organises seminars. society while enhancing the country’s in- ple’s Daily, crowed that the Thought was be- Mr Qin says that part of his team’s job is fluence globally. But his Thought is woolly: ing “studied in all corners of society, from to explain Xi Thought to journalists, for- a hodgepodge of Dengist and Maoist ter- local governments to media outlets, from eign diplomats and Chinese youngsters. In minology combined with mostly vague university students to street cleaners”. October he and researchers at other such ideas on topics ranging from the environ- One purpose appears to be to enhance institutes, all founded in the past year, ap- ment (making China “beautiful”) to build- Mr Xi’s stature as a leader comparable in peared as judges and commentators on a ing a “world-class” army. power to Mao. Deng Theory is less often youth-targeted game-show called “Study- mentioned these days. Last month Mr Xi ing the New Era”. It involved students who Cartographic contortions made his first publicised trip in six years to stood on the bridge of a starship and an- Xi Thought is now being “hammered home Guangdong, the southern province where swered questions, posed by an animated harder” than any set of ideas since Deng many of Deng’s reforms first took hold. robot, about Mr Xi’s speeches and biogra- launched his “reform and opening” policy During his tour Mr Xi did not even mention phy. The show was part of an unusually nearly 40 years ago, says Kerry Brown of the architect of those reforms—a striking lively series of programmes about ideology King’s College, London. Most universities omission given that next month China will called “Socialism is Kind of Cool”, pro- have incorporated lectures on the topic mark the 40th anniversary of their launch. duced by a provincial television station. into the basic-level ideology courses which In April Qian Xian, a party journal, said A year has passed since Mr Xi, at a five- all Chinese students are required to take. there had been continual debate over the yearly Communist Party congress, de- Some have created additional elective meaning of “socialism with Chinese char- clared that China had entered a “new era” courses for undergraduates. This academic acteristics”, the concept at the heart of 1 The Economist November 10th 2018 China 61

2 Deng Theory. In an apparent dig at a weak- number of students taking courses in it at ness of the Theory, the article said “some Instituto Português do Oriente, a Macau- people” thought the phrase was another based cultural centre backed by the Portu- way of saying “capitalism with Chinese guese government, was around 5,000 last characteristics”. This, it said, had created year, more than double the figure in 2012. “theoretical chaos”. Mr Xi stresses that so- Many are officials who want to “reach the cialism with Chinese characteristics is in top” of Macau’s government, says Joaquim fact about “socialism and not any other Ramos, the centre’s director. In its eco- kind of –ism” (point two, subsection three nomic plan for 2016-20, Macau’s govern- on the mind-map). ment pledged to “give priority to guaran- Deep understanding is not required. teeing employment” for “talented people The party has a long history of requiring who are bilingual in Chinese and Portu- people to mouth leaders’ slogans as a way guese”. It promised to boost subsidies for of showing loyalty. Research on Xi Thought those studying Portuguese at university. is mostly banal. Kevin Carrico of Macquar- At present most civil servants can ie University in Australia studied the speak good English, but few have even Thought through a distance-learning passable Portuguese. That is partly because course run by Tsinghua, one of China’s best Portuguese was never a compulsory sub- universities. He wrote in Foreign Policy that ject in most schools. So why the growth of the video lectures repeated platitudes that interest in it? The answer lies in China’s would be “familiar to anyone who has burgeoning trade with the Lusophone spent time in Beijing in the last 40 years”. world, about three-quarters of which is They offered, he said, “an unprecedented with Brazil. In 2003 the central government opportunity to observe the poverty of Chi- founded an organisation called Forum Ma- na’s state-enforced ideology”. cau to boost such commerce. Every three or Xi Thought is formally described as a four years government ministers from summary of the “collective wisdom” of the member countries gather in the epony- party, and to some degree it is. In addition A slog, but it’s the thought that counts mous city, which like nearby Hong Kong—a to borrowing from his predecessors, it is former British colony—is now a “special likely that Mr Xi relied heavily on the work is linked to China’s “new era” the harder it administrative region” of China. Last year of Wang Huning, a former academic who will be for him to deflect criticism for any- China traded goods worth $118bn with the has played an important behind-the- thing that goes wrong. A speech late last forum’s foreign participants (eight of scenes role in devising party-think since month by Deng Pufang, one of Deng’s sons, them, since the African state of São Tomé early this century, including Mr Xi’s notion gave a hint of dissent within the elite. In it and Príncipe joined in 2017, having severed of a “Chinese dream” (number three on the Mr Deng appeared to criticise Mr Xi’s asser- its ties with Taiwan). This amount was still mind-map, with numerous subordinate tive foreign policy. China, he said, should relatively small—only 3% of China’s total points). Last year Mr Wang joined the sev- “keep a sober mind and know our own trade in goods. But it was nearly 30% higher en-member Politburo Standing Commit- place”.That idea is not on the map. 7 than in the previous year. tee, the pinnacle of party power...... A young native of Macau who prefers to Yet promoting Mr Xi as China’s thinker- For a high-resolution image of this map, see be identified by his surname, Ho, says he in-chief could put him at risk. The more he economist.com/xismind wants to be an interpreter for a Chinese company with interests in Portugal or Lu- sophone Africa, such as Mozambique or Identity in Macau Angola. Perhaps anticipating the needs of people like him, the University of Macau The other official language recently opened, to much fanfare, a “bilingual teaching and training centre”. It offers Portuguese-language workshops tailored for professionals. For Mr Ho, the decision to take up Por- tuguese is also a personal matter. The lan- MACAU guage is “part of Macau’s identity”, he In the former Portuguese enclave, the colonial tongue is back in vogue notes. Since around 2011residents have rat- hese days Manuel Machado has a handed Macau back to China, it had nearly ed their identity as citizens of Macau as be- Tspring in his step. The school of which twice as many students (and there were at ing stronger than their Chinese identity, he is headmaster, Escola Portuguesa de Ma- least three other such schools through according to annual surveys by the Univer- cau, is the only one in the southern Chi- much of the 1990s). The vast majority of pu- sity of Hong Kong (the year 2015 was an ex- nese city that still follows the curriculum pils were children of Portuguese expatri- ception). Native-born youngsters, who taught in Portugal, which until 1999 had ates, who then dominated the senior ranks have no memory of Portuguese rule, are es- held sway in Macau, more or less, for nearly of Macau’s public sector. Today the school’s pecially proud of Macau’s Portuguese heri- four-and-a-half centuries. What gives Mr fastest-growing ethnic group is Chinese. tage, Mr Ho says. A similar kind of “local- Machado cheer is that enrolment has been Only 2.3% of the city’s 660,000 people ism”, as it is often described, is also on the rising for the past three years. The school claim fluency in Portuguese (about 1.8% of rise in Hong Kong. There, however, it is in- now has more than 600 pupils. He predicts them are wholly or partly ethnic Portu- termingled with demands for greater de- the trend will continue. guese). But the language is still in official mocracy or even outright secession from There is certainly plenty of room for use, along with Chinese, of which the local China. Happily for the government in Bei- catch-up growth. When the school was spoken form is Cantonese. In recent years jing, the people of Macau show little inter- founded in 1998, a year before Portugal interest in Portuguese has surged. The est in pushing the case for either. 7 62 China The Economist November 10th 2018 Chaguan Respecting their elders

Japan’s expertise in old-age care becomes a source of soft power in China zens over 65, China is at the point on the ageing curve that Japan hit in 1987. It has a lot to learn from its Asian rival’s experience. Chinese old folk and Japanese care-home operators have discovered revealing things about each other. mcs was full of confidence when it opened its 106-bed home in Nantong. Half a year later, just six beds were filled. For Asian neighbours that revere the old, China and Japan turn out to differ—a lot. Notably, China is an exceptionally low-trust society. But bonds of family duty are stronger than in Japan, say mcs’s bosses, noting the frequency of visits and the solicitude of residents’ children. In orderly Japan, entering a home is straightforward, says Mr Wate. An older person shows signs of dementia, facilities are recommended, their child might visit one, admission follows. In Chi- na, suspicion is the starting-point, with the domestic news full of stories of fatal fires or bullying at nursing homes. Unprompted, Ms Li relates how her daughter, a banker, warned her against taking private firms’ promises at face value. Chinese customers worry constantly about being ripped off. When it entered China, mcs set its prices high and built single-bed rooms to Japanese standards, offering the privacy and calm that pensioners in Japan demand. But Chinese clients wanted company and the lively din known as renao, relates Grace Meng, mcs’s mid the stress and sadness of choosing an old-age home for boss in China. They questioned the emphasis on doing things for Aher husband, it took Li Wangke, a retired academic, a while to themselves, grumbling that, “I paid money, so you have to do realise why one facility was so good at reawakening his playful, everything for me,” Ms Meng says. Her firm changed its model, chatty side. She had visited other homes that had fine food and lav- building shared rooms, lowering prices and offering day rates to ish amenities, reflecting the affluence of the couple’s southern demonstrate its methods. The home in Nantong is now profitable. Chinese home town, Guangzhou. But one newly opened home Historical distrust of Japan has not been a big problem. mcs stood out for easing—at least somewhat—the symptoms of the dis- neither boasts of nor hides its origins. As well as a Chinese schol- ease ravaging his brain. Rather than pampering her 83-year-old ar’s study and mahjong tables, its home in Guangzhou has a Japa- husband, its staff assessed his rare neuro-degenerative illness, nese roof garden with benches, stone lanterns and an artfully then with warmth and firmness pushed him to do as much for trained pine. A few residents refuse to speak to visiting Japanese himself as possible. They cajoled him to talk, exercise and even executives, admits Mr Wate, who is of mixed Chinese and Japanese play ping-pong. He seems a “different person”, says Ms Li. ancestry. Most are pragmatic, associating Japan with good service. After several visits she discovered that the home’s methods had Family dynamics cause more headaches than nationalism. In been imported from Japan, a former wartime foe that older Chi- Japan, generous government insurance covers most care-home nese are commonly thought to detest. Her husband, also a retired costs, giving old folk much autonomy. In China many in need of academic, moved in full-time in late October. “It’s from here that I care must either sell property or ask children for help. Average learned that Japan takes really good care of its elderly,” she says. monthly fees at mcs’s home in Guangzhou are 14,000 yuan The home is a joint venture between a Chinese state-owned in- ($2,224)—more than a typical pension. That makes entering a vestor and Medical Care Service (mcs), Japan’s largest operator of home a collective decision by as many as four or five family mem- dementia-care homes. mcs opened its first Chinese facility in bers. The elderly also need convincing. Many want to preserve Nantong, a city near Shanghai, in 2014. A third opened in the their savings to help the young. Because trying to stay at home is northern port of Tianjin last month. It has plans for more in Bei- the norm, the average age of mcs’s residents in China is 85, about a jing, Xi’an and even in Nanjing, the site of a Japanese wartime mas- decade older than at its dementia-related facilities in Japan. sacre, memories of which plague the relationship to this day. China’s needs are vast. Degenerative brain diseases are too of- The best sort of technology transfer ten confused with mental illness. Sufferers are shut away in family Still, China is quicker to embrace change than outsiders might homes with unskilled helpers, typically migrant women from the suppose. Ms Li recalls the traditional line: “Raise children to care countryside. Some families share guilty tales of sending relatives for you when you get old.” But her children have demanding jobs, to psychiatric wards, where they are strapped to beds and fed pills. and she hates asking them to take too much time off. Nor are hired More than 10m Chinese are estimated to have some form of de- helpers the solution. When her husband loses control of his bow- mentia. “That is a big, almost frightening number,” says Akira els, no hired helper will clean him, she says matter-of-factly. Such Wate, the general manager of mcs’s home in Guangzhou. helpers are “very impatient”. The Chinese once believed that only By 2030 China is projected to have 23m dementia sufferers—al- bad children send their parents to care homes, she concedes. “We most the population of Australia. During a visit to China last don’t think that way anymore.” month by Shinzo Abe, Japan’s prime minister, the two govern- Rather few Chinese will ever be able to afford Japanese-style ments named old-age care as an area for co-operation. China and homes, it is true. That does not make their expertise irrelevant. If Japan are trying to edge closer in these stormy, Trumpian times. China’s old enemy can raise the profile of kindly, attentive demen- One bond involves demographics. With almost one in nine citi- tia care, that alone would be a historic, neighbourly act. 7 International The Economist November 10th 2018 63

The Catholic church papal nuncio (ambassador) in America, accused some of the church’s most powerful A pope on the ropes men of ignoring repeated warnings that Theodore McCarrick, a former cardinal, was a serial seducer of seminarians when he was archbishop of Newark. Archbishop Viganò said the previous VATICAN CITY pope, Benedict XVI, had imposed restric- Launched in optimism, Francis’s papacy is bogged down in infighting and clerical tions on Cardinal McCarrick, but that Pope sexual-abuse scandals Francis, despite knowing of the cardinal’s s an fbi agent for 29 years, Philip Scala a year ago. But in the Catholic world much behaviour, eased them and made him a Aled the operation that jailed John Gotti that was once inconceivable is now tran- trusted adviser. He implied this was be- of Cosa Nostra and raided an al-Qaeda spiring. The Red Hat Report is a sign of how cause the cardinal had helped Francis be- bomb factory. Mr Scala, now a private in- much many Catholics have come to mis- come pope in 2013. In an appeal unpreced- vestigator, took on Hells Angels, rioting trust their leaders and how far some will go ented in modern times, he called on the prisoners and Russian mobsters. Next on to hold them accountable. pope, whom Catholics believe is chosen his list? The cardinals of the Roman Catho- The loss of confidence stems from an with God’s aid and whose pronouncements lic church. enduring scandal over the molestation, on some issues are infallible, to quit. A new lay group, Better Church Gover- and sometimes rape, of children by priests. nance (bcg), has hired Mr Scala to probe the It is unstoppable, since most of the revela- Betrayal of the innocents lives of the 224 men who advise Pope Fran- tions concern wrongdoing years or even Also in August, a grand jury in Pennsylva- cis (including their sex lives, if any). His decades ago. And it is seemingly inexora- nia accused some 300 priests of molesting particular focus will be the 124 who, were ble: after the first disclosures in Ireland in more than 1,000 children over seven de- the pontiff to die tomorrow, would elect his the 1990s, the scandal spread through west- cades. “Priests were raping little boys and successor. Mr Scala’s team of up to ten in- ern Europe and North America; it has since girls, and the men of God who were respon- vestigators will publish their findings on a reached South America and eastern Europe sible for them not only did nothing; they website, alongside carefully screened in- to assail erstwhile bastions of the faith hid it all,” the grand jury wrote. formation from the public. Philip Nielsen, such as Poland and Chile. In the ten years to In September the archbishop of San bcg’s executive director, hopes the web- 2010, the Vatican sifted through around Francisco, Salvatore Cordileone, told an site, dubbed the Red Hat Report after the 3,000 cases dating back to the middle of the Italian newspaper, La Verità, there was “al- scarlet zucchetti (skullcaps) worn by cardi- previous century. Increasingly, however, most a sense of panic” in the American nals, will be online within a month. attention has shifted to the role of bishops church. A Pew Research poll in September Though apparently well funded, the in covering up for clerics, often by posting found that 62% of American Catholics dis- bcg is a tiny fragment of Christianity’s big- them to other dioceses where they contin- approved of the pope’s handling of the cri- gest church. Catholicism claims 1.3bn fol- ued to abuse minors. sis, up from just 46% in January. American lowers and wields vast, global influence. Its The bcg’s founding was inspired by the Catholics make up a bit more than 5% of report would have seemed unthinkably publication in August of a document in the global total. But their church, the disrespectful—almost sacrilegious—even which Archbishop Carlo Viganò, a former fourth-biggest, matters far more than its 1 64 International The Economist November 10th 2018

2 size suggests. The Vatican needs its dollars, faith under communism, and in Africa, Has Francis finally got it? Cardinal Blase and its media-savvy cardinals often lead where they are nose-to-nose with funda- Cupich, the archbishop of Chicago, says he Catholic debate and innovation. mentalist Islam, crave clarity—a religion believes so, and that the turning-point for After initially refusing to comment on offering straightforward, immutable guid- the pope was an encounter in the Vatican in Archbishop Viganò’s claims, Francis has ance on what is right and wrong. In western April with three Chilean victims. “When since agreed to convene a global meeting of Europe and Latin America, priests and you sit across from a victim you can’t help bishops in February to discuss clerical sex bishops are instead contending with grow- but be affected unless you have a heart of abuse. The Argentine pontiff, who had en- ing secularism. They are more ready to ac- stone,” says the cardinal. deared himself to Catholics and non-Cath- cept accompaniment, ie, compromise with olics alike with his benign informality and the realities of the 21st century. This means On the defensive ascetic lifestyle, is on the defensive. “It’s accepting that many Catholics live with Not everyone is so confident that Francis about as serious as it can get,” says Austen their partners before marrying, use artifi- has turned a corner. Anne Barrett Doyle of Ivereigh, one of Francis’s biographers. cial contraception, form same-sex rela- BishopAccountability.org, a campaigning Archbishop Viganò was a controversial tionships and get divorced. website, notes the pope “still spends a lot of figure even before his J’accuse appeared. Francis has never responded to the du- time talking about calumny”. She points to The so-called Vatileaks scandal in 2012 cen- bia. For his conservative detractors, that a homily in September, describing Satan as tred on letters he wrote to Pope Benedict proves he cannot give plausible answers. the Great Accuser, who “has been un- complaining of financial corruption, when For Francis’s supporters, it is a way of re- chained and is attacking bishops”. It was he was a high-ranking official in the Vati- minding the traditionalists that, however the latest of many instances when Francis can City’s government. Theologically con- vociferous, they remain a minority. That is has taken the side of his fellow prelates. servative, he spectacularly wrong-footed probably also still true of the second group That may be because he finds it hard to be- Francis on his visit to America in 2015 by of his critics: those appalled by his inept re- lieve them capable of covering up for getting him to meet Kim Davis, a clerk in sponse to clerical sex abuse. But this group priests who preyed on the young. Or per- Kentucky jailed for refusing to issue maris growing fast. Again, there is a geographi- haps he feels a duty to afford his bishops riage licences to gay couples. cal division. Few allegations of Catholic the presumption of innocence. Or it may priests abusing the young have surfaced in reflect unease over his own record: a docu- A two-pronged attack Africa or Asia (though history suggests it is mentary by a French filmmaker, Martin Vatican officials say the archbishop was only a matter of time before they do). Boudot, claims that as archbishop of Bue- called to Rome and rebuked for that. Critics Francis’s shortcomings were exposed nos Aires, Francis defended a priest who depict him as a man with a grudge because when he visited Chile in January. A local was later imprisoned for 15 years for sexu- he was not made a cardinal. But his docu- bishop, Juan Barros, had been accused of ally abusing children. ment poses a unique threat to the pope. It covering up for a predatory priest in the The meeting in February is expected to embodies the concerns of two groups 1980s. The pope called the claims slander- discuss possible reforms. Much could be alarmed at his stewardship: traditionalists ous. After Cardinal Sean O’Malley, the head done. Francis could overturn a veto on a of various stripes who resent his reformist of his own commission for the protection planned Vatican tribunal to try bishops ac- agenda; and Catholics dismayed by his of minors, publicly disagreed, the pope cused of shielding predatory priests. He handling of clerical sex abuse. apologised. But on his flight home he re- could set up an inquiry into the use of the First, the traditionalists. Some of the la- peated the charge of slander. In April, after “pontifical secret”. A decree issued in 1922 ity, notably in America, are appalled by a Vatican investigation into Bishop Barros, still obliges bishops not to report certain Francis’s economic and political ideas, set the pope admitted he had made “grave er- offences, including child sex abuse, to the out in 2013 in his apostolic exhortation, rors”. But rather than have the bishop tried civil authorities unless they are in jurisdic- Evangelii Gaudium. After the papacy’s long in an ecclesiastical court, he allowed him tions where reporting is mandatory. years of hostility to communism, many to resign. He has since accepted the resig- Particularly among conservatives, how- forgot that Catholic social doctrine op- nation of seven more Chilean bishops and ever, there is a growing feeling that Cathol- poses capitalism too. They were left aghast defrocked a number of priests. icism most needs, in the words of John by a pope who could write that “an econ- Meyer of the Napa Institute, a lay group, “a omy of exclusion and inequality…kills”. renewal of holiness”. Mr Meyer argues that In many (but not all) cases Francis’s it is not only the priests and bishops who neo-conservative foes line up with his doc- must examine their consciences, but lay trinal critics, whose wrath was kindled by believers who have grown used to flouting another papal document, Amoris Laetitia, the church’s teaching on, for example, arti- from 2016. In it Francis tackled the hotly de- ficial contraception. “We have fallen into bated issue of a ban preventing divorced the traps of the sexual revolution,” he says. Catholics from receiving communion. His “We need to take seriously our sins and re- critics were incensed not just that he realise our faults rather than just be angry at laxed a ban they thought central to the our bishops.” church’s teaching on marriage, but that he Such talk, however, is anathema to lib- did so in what seemed an underhand way, eral Catholics disgusted by the clergy’s rein a footnote. In the first open sign of muti- cord, but with no sympathy for the conser- nous sentiments in parts of the hierarchy, vatives’ wider agenda. Cardinal Cupich, four cardinals put their names to a list of from the church’s liberal wing, argues that dubia or doubts, challenging Francis to the clergy’s abuse of its power is more seri- deny that he was twisting settled doctrine. ous. He sees a parallel with the #MeToo The affair highlighted a fundamental movement. If, he says, the unending scan- division among Catholics, which centres dal “frees victims of abuse of all kinds to on the buzzwords “clarity” and “accompa- come forward, then I think we should be niment”. Many, particularly in eastern Eu- willing to pay the price. Maybe it is in God’s rope, where believers suffered for their Pondering the cardinal sins own providence for us to suffer.” 7 Business The Economist November 10th 2018 65

Also in this section 66 Amazon’s choice of headquarters 67 Outdoor advertising 67 The rise of biosimilar drugs 68 Doing business with Iran 69 The growth of microbrands 70 Schumpeter: India’s banking crisis — Bartleby is away

Tencent at 20 been expected to ease in the autumn. An- alysts now assume that Tencent will need WeFlat to tough it out until the second half of 2019. Even once game approvals start up again, the government has said that their number will be limited. To allay Communist Party concerns about the mental and physical health of young gamers, Tencent is also SHANGHAI having to curb gaming time and set up a A Chinese internet titan shakes things up after a singularly bruising year system of user-identity checks. ho is killing Tencent?” was the charging for new video games was the chief Capricious regulators may not be whol- “Wheadline of an article on a Chinese culprit, it explained. Although it has ly to blame for the slowdown in online business news site this autumn. Those sprawled into all sorts of areas, from online games, says Steve Chow of Agricultural sharing the link on WeChat, a social-media lending (WeBank) and insurance (WeSure) Bank of China International (abci), a Chi- and payments service that is the crown to offline medical clinics (Tencent Doctor- nese investment bank. Users may simply jewel of the Chinese technology giant, see work), the company still derives over two- be spending less time on Tencent’s online something else: “This title contains exag- fifths of its revenue from gaming. Its latest entertainment, as other players eat into its gerated and misleading information”. The big bet in mobile games, “PlayerUn- market share. For its flagship game, “Hon- swap is ostensibly the result of a move by known’s Battlegrounds”, has accrued a our of Kings”, for example, the average Tencent in April to sanitise content, after a huge audience of some 50m Chinese gam- number of daily active users has dropped crackdown on popular online platforms by ers who play daily, but because of the mo- by a fifth in the past year or so, to 54m in government regulators, but is also self- netisation freeze, Tencent cannot cash in. September. serving. Scoffing WeChat users circulated The government suspension, which be- For skittish investors, all this has con- the article just to highlight the switch. gan in March without explanation, had centrated minds on whether the giant can It would be no surprise if Tencent were maintain its momentum as it enters its feeling touchy as it approaches its 20th an- third decade. Most agree that gaming will niversary on November 11th. Its shares, Not so happy returns remain an important part of the company, traded in Hong Kong since 2004, have fall- Share prices, January 1st 201=100, $ terms but not its chief driver of revenue growth. en by 28% in 2018 (see chart). This time last Two concerns are particularly acute. Be- year it was the first Asian company to be 120 cause its games have done so well, Tencent worth half-a-trillion dollars, hitting a re- 110 has been lackadaisical in monetising other cord valuation in January of $573bn. It has Alibaba parts of its business. It has rightly been ner- since shed $218bn, roughly equivalent in 100 vous about expanding advertising within value to losing Boeing or Intel. Other Chi- Baidu 90 WeChat, though the service sees unrivalled nese internet stocks have fared worse than Chinese mobile traffic of over 1bn monthly 80 Tencent, among them NetEase, a gaming active users. Last year Tencent took about rival, and jd.com, an e-commerce firm. But Tencent 70 one-tenth of total third-party spending on even so, the drop stands out. digital ads in China. But Baidu, China’s 60 The company posted its first quarterly leading search engine, took 19% and Ali- profit decline for nearly 13 years in the Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov baba, a giant in e-commerce, drew in al- three-month period ending in June. A regu- 2018 most a third. latory hold-up that was blocking it from Source: Datastream from Refinitiv A second worry is that crimped profits 1 66 Business The Economist November 10th 2018

2 will make it harder for the firm to keep in- peal to youngsters, Tencent in April revived that they feel more like foreign startups. vesting heavily in areas outside its core a short-video app it had shut down, called Tencent’s outsize influence in China’s business. Tencent has been backing pro- Weishi, and made it a near-copy of Byte- online world is ballast that should steady it mising startups in a race with Alibaba to dance’s wildly popular Douyin app. as it targets business customers. For sheer find new users and sources of growth, bat- Pan Luan, a former tech journalist who scale, WeChat seems likely to hold its own. tling indirectly in areas as varied as food published a widely-read essay in May con- It has given Tencent a powerful distribu- delivery and online education. In some, tending that Tencent had “no dream”, says tion channel for its own games, and has al- such as cloud computing, the pair compete the giant looks lumbering at times because lowed it to stymie new rival products, indirectly. Although Tencent’s investors are “its whole structure is ageing”. Young staff cluding Douyin, by blocking them from its supportive of this approach, Jerry Liu of say they have few channels for promotion platform. But the giant is under pressure, ubs, a bank, says the wider tech sell-off to decision-making positions, says Mr Pan, and seems to know it. “We have to stay stems from a recognition that China’s ma- and few opportunities to build sparky pro- awake,” urged its president, Martin Lau, turing internet sector is becoming “a zero- ducts, as Tencent spends on stakes in other last month. Such introspection is neces- sum game”: dominant platforms are hav- companies. A young Tencent employee sary. Mr Chow says it was thought until this ing to invest more to stay ahead and so who left to work for a newer tech firm says year that “Tencent could win every battle”. their margins are shrinking. that pay at firms like Bytedance and With more formidable competitors on the Tencent’s first internal-restructuring Kuaishou, a short-video app (in which Ten- scene, the company will need to pick its plan since 2012, announced in September, cent has a stake), is “in another band”, and fights more carefully. 7 offers a clue to the company’s thinking. In it Tencent set out a long-term shift away Amazon from the consumer internet towards business services, marking “a new beginning for the company’s next 20 years”. It has set HQ2 times 2 up a new unit for cloud and “smart” industries, combining all its on-demand soft- NEW YORK Amazon’s “second headquarters” may be no such thing ware and online services for firms that seek to go digital. Pony Ma, Tencent’s boss, said ot for the first time, The Onion,a ary, 20 were chosen as finalists. Chicago the “main battlefield” for mobile internet Nsatirical website, got it right. “‘You reportedly offered $2bn in incentives is moving from consumers to companies. are all inside Amazon’s second head- ranging from tax breaks to subsidies for Alibaba, born to bring businesses on- quarters,’ Jeff Bezos announces to horri- worker training. Andrew Cuomo, re- line through its virtual emporia, has a fied Americans as massive dome envel- elected New York’s governor this week, strong lead in this arena. Last year it took ops nation.” That headline captured both promised to change his name to Amazon 45% of China’s fledgling cloud-computing the American e-commerce goliath’s Cuomo “if that’s what it takes”. market, worth 69bn yuan ($10bn), com- endless expansion in recent years and It now appears that Amazon played pared with 10% for Tencent, according to the stratospheric level of hype around its cities like so many fiddles. According to idc, a research firm. Still, Tencent doubled quest to find a second headquarters. multiple reports this week (Amazon has revenue in cloud services in the second Fourteen months ago Mr Bezos, Ama- not confirmed its plans), it intends to quarter compared with the same period zon’s boss, announced that he was look- split its investment between two bases. last year. Earnings from “other businesses” ing for a city in North America in which One is Long Island City (lic) in New York (ie, payments and cloud) overtook those to invest over $5bn building a campus City’s Queens and the other is likely to be from its social networks for the first time. that would create 50,000 high-quality Crystal City, a part of Virginia next to Mr Chow reckons that Alibaba and Ten- jobs. The firm vowed that this new loca- Washington, dc. Amazon does lots of cent can both create large businesses in tion, “hq2”, would be no mere satellite, work for the federal government, so cloud computing since the market has lots but a “full equal” to its Seattle campus. being close should help. And a base in of room to grow. And Tencent boasts pow- A beauty pageant among cities en- lic, just across the East River from Man- erful assets. WeChat is on over four in every sued. Over 200 made proposals; in Janu- hattan, means it would be able to tap the five Chinese smartphones, so offers a mas- latter’s big tech and media workforce. sive market for firms. Last year it intro- Workers in the two locations focused duced a cloud-based platform that allows on the effect on their commute. Adding companies to offer services to users in We- even 25,000 workers would further Chat via “mini programs” (ie, tiny apps). choke the subway system, complains an There are more than 1m mini programs, employee at an education-tech firm in used by over 200m people every day. lic. If logistics are a priority for Amazon, For now, however, its revenue from Dallas may still be a contender given its such mini programs and other built-in ser- central location in North America. vices is still “close to zero”, notes David Dai Critics of Amazon accuse it of a bait- of Sanford C. Bernstein, a research firm. and-switch; cities were promised a true Meanwhile rivals have introduced their headquarters on a par with Seattle, but if own offerings of mini programs. Among the split of hq2 is confirmed, it will them is Bytedance, a newish giant that has create much smaller offices. Another young Chinese hooked on its flawlessly ad- objection is that the firm will have col- dictive video and news offerings, curated lected a boatload of local data it can use with artificial-intelligence technology. It is in future business decisions. Yet the a thorn in Tencent’s side. winners are unlikely to complain, and In particular, the way in which Byte- cities would probably have surrendered dance is capturing very young users, as their data even for a biggish Amazon well as young talent, makes Tencent look Prime property satellite office. The dome is taking over. increasingly grizzled. To increase its ap- The Economist November 10th 2018 Business 67

Outdoor advertising Sign of the times

NEW YORK Innovations from online advertisers are being adapted to billboards edestrians strolling down 8th Ave- Pnue in Manhattan’s Hell’s Kitchen neighbourhood will be struck by the cast- limestone façade of the Hearst Magazine Building. Commissioned by William Ran- dolph Hearst in 1926, the 40,000-square- foot (3,716-square-metre) art deco building is adorned with fluted columns and statues and topped by a 600-foot (183-metre) glass and steel skyscraper. Another conspicuous feature is a vast digital screen transmitting advertisements from BuzzFeed, espn and Vice. This blend of history and modernity is emblematic of the outdoor-advertising Times Square pre-neon business itself, which, despite being one of the world’s oldest forms of marketing is when it is cold and fizzy drinks when it is data raises privacy concerns. And criti- embracing digital technologies. warm. Billboards can be programmed to cisms of the online-ad business for being Most forms of conventional advertis- show ads for allergy medication when the opaque, and occasionally fraudulent, may ing—print, radio and broadcast televi- air is full of pollen. also be lobbed at the ooh business as it be- sion—have been losing ground to online Such targeting works particularly well comes bigger and more complex. The in- ads for years; only billboards, dating back when it is accompanied by “programmat- dustry is ready to address such concerns, to the 1800s, and tv ads are holding their ic” advertising methods, a term that de- says Jean-Christophe Conti, chief execu- own (see chart). Such out-of-home (ooh) scribes the use of data to automate and im- tive of viooh, a media-buying platform. advertising, as it is known, is expected to prove ads. In the past year billboard owners One of the benefits of following the on- grow by 3.4% in 2018, and digital out-of- such as Clear Channel and jcDecaux have line-ad trailblazers, he notes, is learning home (dooh) advertising, which includes launched programmatic platforms which from their blunders. 7 the lcd screens found in airports and allow brands and media buyers to select, shopping malls, by 16%. Such ads draw purchase and place ads in minutes, rather viewers’ attention from phones and cannot than days or weeks. Industry boosters say Pharmaceuticals be skipped or blocked, unlike ads online. outdoor ads will increasingly be bought Billboard owners are also making hay like online ones, based on audience and Pill bills from the location data that are pouring off views as well as location. people’s smartphones. Information about That is possible because billboard own- their owners’ whereabouts and online ers claim to be able to measure how well browsing gets aggregated and anonymised their ads are working, even though no by carriers and data vendors and sold to “click-through” rates are involved. Data NEW YORK Biosimilar drugs promise to cut media owners. They then use these data to firms can tell advertisers how many people health-care costs in rich countries work out when different demographic walk past individual advertisements at groups—“business travellers”, say—walk particular times of the day. Advertisers can t’s the prices, stupid.” That simple as- by their ads. That knowledge is added to in- estimate how many individuals exposed to “Isessment of America’s wildly expen- sights into traffic, weather and other exter- an ad for a Louis Vuitton handbag then go sive health-care system was made 15 years nal data to produce highly relevant ads. on to visit a nearby shop (or website) and ago by Uwe Reinhardt, a health economist dooh providers can deliver ads for coffee buy the product. Such metrics make out- who died last year. Health costs as a propor- door ads more data-driven, automated and tion of America’s economic output have measurable, argues Michael Provenzano, soared since, from 14.5% in 2003 to over The great outdoors co-founder of Vistar Media, an ad-tech firm 17% in 2017, with drug-price inflation a big United States, advertising revenues* in New York. culprit. Less than 2% of Americans are 1995-2016, annual average % change As the outdoor-ad industry becomes treated with specialty biotech drugs, but these account for as much as 35% of total -6 -4 -2 0 2 more data-driven, tech giants are among those to see more value in it. Netflix recent- drug spending. Outdoor ly acquired a string of billboards along Hol- The good news is that cheaper biotech Television lywood’s Sunset Strip, where it will start drugs are coming. Known as biosimilars, tv these complex copycat drugs (which are a Radio advertising its films and shows. Tech firms, among them Apple and Google, are bit like generics) have been allowed in Eu- Magazines heavy buyers of ooh ads, accounting for 25 rope since 2004 and in America since 2010. Newspapers of the top 100 ooh ad spenders in America. At first, owing to policy roadblocks and The outdoor-ad revolution is not pro- anti-competitive tactics by incumbents, Source: Credit Suisse *Excluding the internet blem-free. The collection of mobile-phone only a few came to market. But the firms1 68 Business The Economist November 10th 2018

2 that make them, which range from biotech bnp Paribas, a French bank, was fined near- giants to scrappy upstarts, are turning the ly $9bn in 2015 for doing business with em- trickle into a torrent. bargoed countries, including Iran. Consider Humira, a biotech drug made European policymakers think this un- by America’s AbbVie that treats rheumatoid fair. They have alighted on two potential arthritis, psoriasis, Crohn’s disease and solutions. The first is to threaten European other maladies. It is the world’s top-selling firms with being liable for any costs in- drug; annual sales of $20bn are more than curred by other companies as a result of double that of the next two top sellers com- their compliance with the sanctions. But bined. The annual cost (after rebates) of this seems, by all accounts, to be a political Humira in America has shot up from about statement, not a genuine policy: in practice $19,000 a patient in 2012 to some $38,000 a no firm pulling out of Iran is going to get patient. David Maris of Wells Fargo, a bank, punished, officials admit. calculates that a 9.7% price increase im- The second is a mechanism that would posed earlier this year by AbbVie on Hu- act as a state-owned buffer between Irani- mira could add $1.2bn to America’s health- an firms and European ones. The finance care costs in 2018. ministries of Britain, France and Ger- Such sums explain why the launch of many—the European parties to the Iran nu- several biosimilar rivals to Humira in Eu- clear trade deal that America is pulling out rope in October is being watched closely. of—want to set up a “special purpose vehi- Five copycats, which regulators have veri- cle” (spv) to intermediate trade. The idea is fied are safe and effective, have been ap- that European companies buying from and proved and three have launched. One of selling to Iranian counterparts would not them is Amjevita, which is made by Am- have to send or receive money from Iran, gen, a giant American biotech firm with Trade with Iran but would pay each other instead. pricey branded drugs of its own to defend. Under the mechanism an Italian im- AbbVie confirmed in an earnings call on Risky business porter of Iranian pistachios, for example, November 2nd that rivals are undercutting would settle the tab of an Iranian firm buy- Humira’s list price by up to 80% in some ing German machinery through a ledger European countries. This has forced Abb- organised by European governments Vie to cut prices steeply. (these payments would be mirrored in In America a similar battle is brewing PARIS Iran). No money would enter or leave Iran, Europe is struggling to find ways for over Neulasta, a biotech cancer drug made many of whose banks are being cut off from firms to defy America on Iran by Amgen with global sales of some $3.7bn the international financial system (on No- this year. On November 2nd America’s hatever you do if you are a Euro- vember 5th swift, the Brussels-based in- Food and Drug Administration approved a Wpean company pulling out of Iran, do ternational financial messaging system, biosimilar rival to Neulasta developed by not mention the sanctions. On November said it would comply with American sanc- Coherus BioSciences, a biotech firm based 5th America re-imposed an embargo on tions and suspend some Iranian banks’ ac- in California. Its pricing is unknown but Iran, aimed at blocking its supposed nuc- cess). Firms from third countries might be this time it seems likely to be Amgen that lear ambitions. Its restrictions to trade do able to participate in the spv, too. has to lower prices. not apply directly to European companies As a plan it has two big flaws. One is Makers of biosimilars do face hurdles. but bosses fear being banned from the that, despite America announcing sanc- The owners of branded biologic drugs have American market if they keep doing busi- tions six months ago, the spv is still on the been known to put out misleading adver- ness in Iran. Yet obeying America’s sanc- drawing board. No country has volun- tising that casts doubt on the copycats’ tions is itself illegal under rules devised by teered to host it. Officials vaguely recall a safety. Denny Lanfear, boss of Coherus, be- Europe, whose leaders want to keep Iran in similar system of formalised barter allow- moans the fact that firms typically file doz- the global trade fold. ing access to the Soviet Union, but can offer ens of patents on old drugs to extend their Firms opting to bow to America have no firmer blueprint for now. monopolies. He notes that AbbVie’s “pat- thus devised a ruse: blame unspecified is- The second defect is that the proposed ent thicket” means Humira will not face sues of “commercial viability” for their de- spv only resolves the issue of payments. biosimilar competition for years to come cision to leave Iran. This is what British Air- Companies trading with Iran could still be in America. Also, nobody knows whether ways and Air France both did when they designated as societas non grata by Ameri- President Donald Trump will follow up on recently stopped flying to Tehran. Most big ca. “At the end of the day, you are still en- his recent praise for biosimilars with prac- firms have announced that they are leav- gaging in trade with Iran,” points out Maya tical policies on reimbursement for them ing, including Total, a French energy Lester, a sanctions expert at Brick Court in the Medicare system. group, and Siemens, a German engineering Chambers in London, and so still poten- Yet overall the future looks bright. giant. (American firms were banned even tially liable for secondary sanctions. McKinsey, a consultancy, estimates that before, though with occasional exemp- Michael Tockuss, head of the German- the global market for biosimilars could tri- tions, such as Boeing selling Iran aircraft.) Iranian Chamber of Commerce, says that ple, to $15bn, by 2020. That is tiny com- The exodus is perhaps inevitable. “Any- some smaller German firms will continue pared with overall health spending. But be- one doing business with Iran will NOT be exporting to Iran if they have no business cause the new drugs lead to price-cutting doing business with the United States,” in America. Workarounds of sanctions de- by incumbents, the systemic benefits President Donald Trump blasted on Twitter vised for an embargo imposed by Europe could be far bigger. The rand Corporation, when the sanctions were further ratcheted and the United Nations in 2012-2015 are a think-tank, says that biosimilars could up in August. Few think America will act on still fresh in the minds of compliance de- reduce American health-care spending by the threat of imposing “secondary sanc- partments. Some big firms might find ways $54bn over the next decade. Biosimilars tions” on defiant firms, but even fewer care of keeping a presence there, he suggests, could prove to be the mouse that roars. 7 to find out whether Mr Trump is bluffing. but in a far more discreet manner. 7 The Economist November 10th 2018 Business 69

Retailing keeping their spending flat or reducing it in view of pressure on margins. A handmade tale Consumer-goods behemoths are well aware of the threat posed by microbrand ankle-biters. One response is to buy them. Unilever bought Dollar Shave Club, a subscription service for razor blades and now- canonical microbrand, for $1bn in 2016, grabbing the market share the upstart had The growth of microbrands is challenging the business of consumer goods itself snatched from Gillette. The biggest ompanies such as Casper, which sells ten consumer-goods firms have all recent- Cmattresses, Warby Parker, a spectacles Small is beautiful ly invested in direct-to-consumer startups. brand, and Glossier, a cosmetics firm, were United States, food and beverage manufacturers Nestlé’s acquisition in 2017 of Blue Bottle, a once seen as interesting curiosities. Tout- Revenue, 2011-15 annual average % increase hip Californian coffee brand, bought it ex- ing their products online, luring custom- posure to new market segments. ers with digital advertising and eschewing 6 Competition is fierce to buy the best mi- conventional retailers and marketers, they crobrands so big firms may overpay for were anomalies shaking up small seg- 4 their acquisition, says Mr Hottovy. Ex- ments of retail. In fact, the growth of mi- Small plaining its purchase last year of Native, a crobrands—or direct-to-consumer (dtc) manufacturers small deodorant brand, Marc Pritchard, the brands—represents a profound shift in the 2 chief brand officer of Procter & Gamble, ex- Mid-tier Private consumer-goods sector. Large plicitly referred to its dtc model, saying it label* Industry giants took time to begin wor- 0 is “where things are going”. Other big firms rying about the arrival of game-changing are trying to grow their own brands. Earlier 0 20406080100 newcomers; barriers to entry in their busi- this year Kraft Heinz launched Spring- Share of industry revenue increase, % ness are high. But by now the incumbents board, an incubator for small, disruptive Source: Nielsen *Retailers’ own brand are stagnating. According to Nielsen, a con- food and drink brands. sultancy, the biggest 25 food-and-beverage In the long term some small brands will companies, for example, generated 45% of Shopify handles the back-end infrastruc- be swallowed up but others will be encour- sales in the category in America but drove ture that would have cost hundreds of aged, argues Sonali De Rycker of Accel, a only 3% of the total growth in the industry thousands of dollars to build, says Steven venture-capital firm. More will want to re- between 2011 and 2015 (see chart). A long Mazur, one of the founders of Ash & Erie, a main independent for longer, or entirely, tail of 20,000 companies below the top 100 brand of clothing for short men. Assem- which will mean larger deals or ipos. produced half of all growth. bled Brands provides funding specifically To flourish, incumbents will not only Imagine, 25 years ago, coming up with to microbrands. It will invest in any kind of have to acquire these new brands or start the idea for a radically better toothpaste, manufactured consumer-goods product as their own; they will have to learn from suggests Randall Rothenberg, the boss of long as the company has started trading. them. And instead of having a discrete set the Interactive Advertising Bureau (iab), a Microbrands can also sell their pro- of multi-billion-dollar brands, sold trade organisation for digital advertisers, ducts through Amazon. The costs are high through third-party retailers, they will who studies microbrands. Raw materials but it gives them access to the online have to come up with larger portfolios of would only be available by the tonne. No giant’s shipping services and huge user smaller, more transitory ones, argues Mr factory would produce toothpaste for a tiny base. Many of the big firms have, by con- Rothenberg. Scale still matters, but it will new player. Ads would be hopelessly ex- trast, been reluctant to sell on the giant’s have to be used more shrewdly. 7 pensive so driving demand would be im- website, so feature low in search rankings. possible. No large retailer would stock it. More of them have started selling on Ama- That is no longer true, thanks to shifts zon in recent years, says R.J. Hottovy of in supply chains and data. The growth of Morningstar, a research firm, but it still “just-in-time” manufacturing means start- represents a small slice of their sales. ups no longer need to splurge on inventory. Selling directly to consumers means The surge in food startups meant factories that microbrands boast a wealth of data. Mr had confidence to let him start with a small Sorensen launched his business online in order, on the condition that future ones January 2018. He sold $50,000 of snacks would be bigger, says Blake Sorensen, and then, on the basis of data gleaned, founder of Blake’s Seed Based, which Blake’s Seed Based changed its recipe and makes allergy-friendly snacks. relaunched in September. m Gemi, an on- Other service providers can pass on line seller of posh shoes, offers new de- economies of scale once available only to signs weekly so can respond precisely to consumer-goods giants. Lumi, a packaging consumer demands. Their giant rivals, by firm, uses a network of factories to design contrast, use data filtered by retailers. and produce packaging for small brands. It Online advertising, using platforms represents thousands of brands so can get such as Facebook, allows brands to target better prices. customers with great accuracy. The vast Businesses such as ShipBob, a Chicago majority of growth in advertising is com- startup, do something similar with ship- ing from the digital kind, and a large pro- ping, allowing small brands to offer faster, portion of this is from small advertisers, cheaper deliveries. E-commerce compa- says Jonathan Barnard of Zenith, a media nies such as Shopify provide turnkey on- agency. Meanwhile many big companies, line shops from as little as $29 a month. especially the consumer-goods firms, are Warby Parker had vision 70 Business The Economist November 10th 2018 Schumpeter India’s shadow-banking crisis

The world’s second-most-populous country has been flirting with a Lehman moment bile-payments firm. Overall, the system straddles the 19th and 21st centuries, featuring subsiding bank branches protected from the monsoon by tarpaulins, but also virtual mobile chatbots. The present troubles have their roots in 2005-12, when state banks went on a lending bender, extending credit to dubious ty- coons and to infrastructure projects. Net bad debts are 9% of state banks’ loan books. The government has not properly recapitalised these zombies and the flow of credit from them has slowed. Acci- dents keep happening. In February pnb, the second-biggest state lender, disclosed a $2bn fraud involving diamond merchants. A second phase began after 2012. Between 2012 and 2017 more capital flowed into India than flowed out. In 2015 interest rates began to fall and in November 2016 the government replaced the stock of bank notes overnight, leading savers to switch from physical money into deposits with banks, and into debt mutual funds. Flush with cash, and with rates low, they looked for ways to lend the money out again and part of the answer was to fund the shadow banks, which went on a binge—the top 50 have doubled their debts and assets in the past five years. Perhaps as much as $50bn-100bn of their debts comes due within 12 months. Borrowing short and lending long is a high-stakes game. After the il&fs collapse, confidence has evaporated. The group has 348 hen narendra modi was elected prime minister of India in opaque subsidiaries, including India’s longest tunnel. It has now W2014, his plan was to revive its gdp growth rate back to the been taken over by the government, which indirectly owned 40% near-double-digit figures seen in the mid-2000s. Few would have of it. Mutual funds and banks are reluctant to lend to other shadow guessed that the biggest threat to that goal was the financial indus- banks—most report solid capital ratios, but can anyone be sure try. For several years state-run banks have failed to get to grips with they do not have time-bombs buried in their balance-sheets? For a $100bn mountain of dud loans. Now panic has seized parts of the weeks the shadow banks have faced a liquidity crunch. privately run system. One bank boss says the situation is as bad as They are big enough to damage India’s entire financial system. the Asian crisis of 1998 or the global crash of 2008. Mutual funds, which are sold to the public, have $55bn of exposure In September il&fs, a financial firm that owns and finances to them, or 11% of total assets under management. Conventional roads and power plants, defaulted on some of its $13bn of debt. The banks have loaned $70bn to shadow banks, the equivalent of two- contagion has struck India’s shadow banks, which rely on fifths of the former’s core capital. Among private lenders the mood $250bn-300bn of borrowing to fund themselves. Their market val- is already jittery: icici’s boss has just departed after claims of con- ue has collapsed by a median of 40% this year. A bitter row about flicts of interest (which she denies). Yes Bank is replacing its boss how to respond has erupted between the government and the Re- after the rbi refused to approve an extension of his term. Even if a serve Bank of India (rbi), the largely independent central bank. full crisis does not erupt shadow banks may be forced to shrink. Over a billion people depend on an emergency being avoided. When combined with the rotten state banks, that would mean that India’s financial system has both Chinese and American char- 75% of India’s financial system is on crutches. acteristics; it faces a blend of a slow-motion banking crisis at government-run lenders, plus a high-speed liquidity run of the kind Bazooka time that hit Wall Street in 2008. That the industry has taken on a hybrid A sell-off in global markets could easily trigger a new wave of pan- character over time reflects the conflicting aims of the forces that ic. The government, facing a general election next year, wants the shaped it. The state wants pliant banks, ready to lend to the rural central bank to lend more freely to the shadow banks. But the rbi poor and to infrastructure projects, and that will buy government does not want to reward failure and has so far injected liquidity bonds. The rbi emphasises stability, so is paranoid about wheeler- only indirectly, by buying government bonds and allowing banks dealers taking risks or ripping off the vulnerable. Entrepreneurs to guarantee some new bonds issued by shadow banks. It blames want capital and to start financial-services firms themselves. And the government for its endless meddling in state-run lenders and consumers want loans and whizzy new banking technologies. for its failure to recapitalise them, despite years of warning signs. About half the system, measured by loans, consists of state-run In the short term the government is right—unless the liquidity banks. They are usually listed but the government appoints their squeeze abates soon, the central bank will need to set aside its nat- top brass and often influences them to disastrous effect. Another ural reluctance and act boldly. In the long term the rbi is right. A 25% comes from private banks; some of which are among Asia’s “big bang” reform is needed to privatise the state banks and extract best-run lenders—hdfc Bank and Kotak trade on about four times them from the government’s tight grip. India also must end the their book value, compared with below one times for the zombie regulatory arbitrage that allows shadow banks to raise most of state banks. The other quarter is from a motley crew of 50-odd their funds from retail investors and deposit-taking banks. Either shadow banks that have expanded quickly. They are less heavily shadow lenders should come out of the dark and be turned into regulated and lend in particular areas such as housing. They are banks, or a firewall will have to be erected around them to protect usually prohibited from taking deposits so fund themselves with the rest of banking. And if India does not get its financial system debt. Last, there are innovative digital firms, such as Paytm, a mo- back on its feet, the economy will not grow fast. It is that simple. 7 Finance & economics The Economist November 10th 2018 71

Also in this section 72 Buttonwood: Where the hurt is 73 Hester Peirce at the SEC 74 1MDB and Goldman Sachs 74 Banks behaving badly 75 Non-wage compensation 75 Crowdfunding development 76 Free exchange: Rome alone

Farming in America ageable. But much depends on how long tariffs persist. By the time the trade war ends, Tough row to hoe they may have caused enduring harm. American farmers are titans of international commerce. From 2000 to 2017 the value of agricultural exports nearly tripled. Exports comprise more than a fifth of farm LIBERTY, ILLINOIS output. Grain gushes abroad in the highest Donald Trump’s trade war will make American agriculture less competitive and volumes. As the world eats more meat, live- more distorted stock producers need more animal feed, calm usually descends on America’s farm debt to assets is forecast to rise to its raising demand for soyabeans. Exports last Afarm belt in November. Combines have highest level since 2009. year reached $21.6bn, more than double the mostly finished churning across fields; It is all reminiscent of the 1980s, when value of corn, the next largest export. trucks have hauled crops to grain elevators; America suspended grain sales to the Sovi- These successes are due in part to gov- and farmers retreat to their living rooms to et Union, interest rates rose, incomes sank ernment subsidies that incentivise pro- rest. This year, at least by one measure, they and many farmers left the business. For duction, such as farm payments that rise should feel particularly content. Randy now debt levels are climbing but still man- when commodity prices fall. These mainly Sims, a hog-and-grain farmer in western Il- support big operations: farms with in- linois, produced 75 bushels of soyabeans comes of $167,000 or more received nearly per acre, a third more than in the past. In- Reaping what you sow 70% of commodity payments in 2016, ac- deed American soyabean production in United States, 201, $m cording to the Heritage Foundation, a 2018 is expected to reach 4.69bn bushels, a think-tank. record. But it is unclear who will buy them. Soyabean exports to: Productivity-boosting measures have America’s farmers are at the centre of 1,200 helped, too. Mr Sims, for instance, now President Donald Trump’s trade war. More 900 uses data on yields to fine-tune the appli- than a fifth of agricultural exports face new China cation of fertiliser. He flies drones to in- tariffs. From January to September pork ex- 600 spect crops for insect damage. Farmers of- Japan 300 ports to Mexico and China fell by 31% and Mexico ten coat seeds before planting to fend off 36%, respectively. Sales of soyabeans, 0 rot and pests. Environmentalists worry America’s biggest farm export, to China Jan Feb Mar Apr May Jun Jul Aug Sep about the impact on water and bio- have plunged by 98% since January (see diversity. But production has boomed. chart). “It’s a big concern,” says David Wil- Pork exports to: This has helped depress prices for corn liams, who farms 3,800 acres in Michigan. Japan 150 and soyabeans in recent years, even as He flew to Shanghai for a conference in ear- 100 land, fertiliser and seed have remained rel- ly November with a group of soyabean Mexico atively expensive. So a trade war is particu- growers keen to maintain ties with Chinese 50 larly ill-timed. Mr Trump announced ta- China importers, in the hope that the trade stand- 0 riffs on steel and aluminium imports in off ends soon. In the meantime America’s March, and extended them to Mexico, Can- Jan Feb Mar Apr May Jun Jul Aug Sep agriculture department expects farm in- ada and Europe in May. In retaliation Mexi- Source: United States Department of Agriculture comes to drop by 13% this year. The ratio of co, the second-largest importer of Ameri-1 72 Finance & economics The Economist November 10th 2018

2 can pork by value, raised tariffs to 20%. new deal, according to analysis from Pur- which require less soya than pork does. China’s tariffs of up to 70% on pork, and due University, leading to a $1.8bn net loss What demand remains may increasingly 25% on soyabeans, hurt even more. in farm exports. be met by Brazil and Argentina. Wallace Mr Trump is due to meet Xi Jinping, Chi- When one export market shuts, it can be Tyner of Purdue University estimates that na’s president, at the g20 summit later this hard to divert goods elsewhere. Pork, for Brazil has another 9m acres of farmland month, but neither man may concede instance, can be transported to Mexico in that it could convert to soyabeans relative- much. In September Mr Trump agreed on a refrigerated trucks. It is more expensive to ly quickly. “The market loss that we face in new deal to replace the North American freeze and ship it across an ocean. the short run really opens the door to com- Free Trade Agreement with Canada and Soyabean farmers fear that demand and petitors,” says Jim Sutter of the United Mexico. But it does not affect America’s ta- trade flows will shift permanently. China’s States Soybean Export Council. riffs on steel and aluminium, so Mexico’s appetite for imports would wane if produc- The price of American soyabeans is now pork tariffs remain in place. Indeed Cana- ers lower the soya protein in pig feed or if, depressed, compared with that of Brazilian dian and Mexican retaliatory tariffs wipe as some traders fear, the government urges beans. Many farmers must accept an even out the modest gain in exports from the consumers to switch to chicken or beef, lower price than that published on the 1 Buttonwood Where the hurt is

Why house prices in global cities are falling entre point, a tower that looms over London, New York, Toronto and Sydney. It Foreign demand has spillovers. If an Ccentral London, was empty for so has extended into smaller European cities, oligarch buys a house, it drives up the long in the 1970s that it lent its name to a such as Amsterdam. prices of smaller properties nearby. A homelessness charity. Recently it was Demand from emerging markets such paper by Dragana Cvijanovic of the Uni- converted from offices to flats. Half are as China and Russia has been growing. versity of North Carolina and Christophe yet to find buyers. So the developer has Buyers are willing to pay steeply to secure Spaenjers of hec Paris finds similar taken them off the market pending a a safe place for their savings—or a bolthole effects in Paris’s property market. For- clearing of the political fog over Britain. for themselves. Cristian Badarinza of the eign buyers, mostly from China, have Its boss complained to Estates Gazette, a National University of Singapore and been a force behind booms in the big trade paper, of bids that were “detached Tarun Ramadorai of Imperial College cities of Australia and Canada. from reality”. One-bedroom flats were on London have shown that political trouble But the tide has changed. Global cities sale for £1.8m ($2.4m). in Russia, parts of Africa and the Middle look awfully dear. The rental yield on Even flats with less hefty price tags East predicts a rise in the price of prime investment homes worldwide fell below have been hard to shift lately. Property London property. The same sort of influ- 5% for the first time ever in 2016, accord- prices in London are falling. Sellers are ence is also found in less ritzy neigh- ing to msci ipd, a financial-information waiting for better prices. It is tempting to bourhoods, says Mr Ramadorai. For in- firm. House prices relative to incomes put all the blame on Brexit, but that stance, property prices in Hounslow and are well above their long-run average in would ignore the broader picture. House Southall, which have lots of settlers from Amsterdam, Auckland, London, Paris, prices in big global cities increasingly South Asia, picked up in the early 2000s, a Sydney and Toronto (see chart). move together. What happens in London period of political tensions in India. And prices are falling in some of the has a growing influence on what hap- dearer cities, in response to a variety of pens in New York, Toronto and Sydney— forces. The yield on Treasury bonds, the and vice versa. And trouble is brewing in Prime suspects world’s benchmark safe asset, is rising. A some of these other markets, too. Cities house-price index Overvalued against tightening of credit standards on mort- Property used to be thought of as an Real terms, Q1 2012=100 income*, % gages in Australia and Canada has inflation hedge. But in recent years it has 200 200 squeezed housing in cities there. Uncer- become a substitute for low-yielding Hong Kong+94.1 Auckland +73.8 tainty about Brexit has made London a Treasury bonds—a safe asset in which place of political risk rather than a refuge the globally mobile can store their 100 100 from it. Meanwhile, capital is moving wealth. After years of rapid price rises, 2012 2018 2012 2018 less freely. Governments are charier of houses in the most favoured markets are Russian money. China is shaking down overvalued. Rising bond yields, tighter Toronto+49.0 Sydney +47.1 its super-rich for taxes and is zealous in mortgage credit and shifting politics are its policing of capital outflows. now combining to push prices down. A corollary of stronger links between The value of homes in the posher global cities is a kind of “waterbed” parts of global cities move in sync be- London+61.4 Amsterdam +60.6 effect. For instance, when taxes were cause they have become a distinct asset levied on foreign homebuyers in Van- class. Private-equity firms and invest- couver in 2016, the market cooled, but ment trusts, not just individuals, own Toronto took off. There are buyers who them. Prices in such cities are explained will compare prices in, say, Mayfair in more by global factors, such as the yields New York+2.7 Paris +75.3 London and Park Avenue, New York. on the safest government bonds, than by They look for value. But it is vanishingly local conditions. This global influence is scarce. The market is turning. Those who Sources: Economist Intelligence Unit; particularly marked in financial centres Thomson Reuters; Zillow; national *Relative to long-run median bought at the peak, or are hoping to sell, that are open to capital flows, such as statistics; The Economist disposable household income will slowly adjust to a new reality. The Economist November 10th 2018 Finance & economics 73

2 Chicago Board of Trade, as elevators strug- 31% in 1991. The trade dispute may speed dent Barack Obama and structural aspects gle to store and transport grain for which consolidation. Bigger farms have more of equity markets which date from Repub- there are few buyers. Mr Williams has had cash to invest in yield-boosting technology lican administrations. A common theme is to sell his soyabeans at a discount. In North and the scale to win better terms from buy- the harms of over-regulation. She cites No- Dakota, which usually sends soyabeans to ers. Mr Sims is one of many large farmers to buchika Mori, until recently Japan’s top fi- ships in the Pacific Northwest, some eleva- invest in bigger silos, in order to store crops nancial regulator, on the proliferation of tors have stopped buying them altogether. while waiting for better prices. international financial overseers. Survey- Economists at the University of Illinois The government may also become even ing 140 projects by the Basel Committee on expect the average farm in central Illinois more involved in agriculture, to muddled Banking Supervision, the International Or- to make an overall loss of $70,000 next effect. Mr Trump, having disrupted global ganisation of Securities Regulators, the Fi- year. A recent survey from the Kansas City trade flows, is now using $12bn of taxpay- nancial Stability Board and the Interna- Federal Reserve found that farm lending ers’ money to offset some of farmers’ tional Association of Insurance Super- from July to September was a third higher losses. Concern for their welfare may buoy visors, Mr Mori warned that “too much than in the same period last year. Most of support for a new farm bill—but the ver- medicine might make the patient sick”. the increase was not to buy new machinery sion favoured by Republicans in the House Her first speech, in March, concerned but to support the basic business of farm- of Representatives would make even richer the impact of a rule drafted by the Financial ing. Farmers may plant more corn next farmers eligible for payments. Mr Sims is Stability Oversight Council, which was set year, rather than soyabeans, but that is not hopeful that Mr Trump will win better up in 2009. Its aim was to improve mutual a permanent solution. Continuously trade terms for farmers. “I am willing to funds’ liquidity; in reality, she says, it has planting corn, rather than rotating crops, weather the storm,”he says. But by the time increased providers’ costs and requires lowers yields. the president strikes a deal, whatever it is, them to produce numbers that are useless, In 2015, 51% of output came from farms American farming is likely to have become even misleading. She is similarly critical of with sales of at least $1m, compared with less competitive and more distorted. 7 the “fiduciary” rule, another Obama-era regulation intended to ensure that financial advisers act in their clients’ interests. The SEC The reams of legalese required to produce an operable definition, she says, are “won- Peircing remarks derful for marketing purposes but potentially misleading for investors”, and provide “a false sense of reassurance”. In May she took issue with the Obama administration’s conception of the sec as primarily an enforcement agency. That en- WASHINGTON, DC couraged it to bring as many cases as possi- A new commissioner at America’s main securities regulator causes a buzz ble—indeed to inflate their number by or all the talk about deregulation un- and blunt message about the downsides of double-counting. The increasingly opaque Fder President Donald Trump, when it government intervention. structure of America’s equity markets, with comes to the financial industry the word Though she has yet to gain a large fol- their stew of dark pools and bilateral trad- used by many is “tailoring”—meaning lowing, her words have not gone unre- ing platforms, has also drawn her atten- trimming the loose threads of tangled marked. Her “arrival at the sec is genuinely tion. In another speech she noted “the rules, rather than unpicking them. An ex- exciting”, writes Steven Lofchie, a securi- strange role that the commission plays in ception is Hester Peirce, who in January be- ties lawyer who runs a popular (within the directing—and often determining” this came one of the five commissioners at the small world of regulation) blog. It is proba- structure, and asked if it had “lost its way”. Securities and Exchange Commission bly the first time the word has been used in In September she took issue with the (sec), America’s most important financial connection with the sec in years. notion that governments should mandate regulator. Since her appointment she has Ms Peirce is not partisan, criticising representation of certain groups, such as given a series of speeches with a polite tone both the centralising trend under Presi- women, on company boards. “Policymak- ers might be tempted to get this or that favoured group included,” she said, thus in- troducing “uncertainty and political influence into corporate operations”. And in a talk to law students at the University of Michigan, she challenged them to include in their concept of the “public interest” helping companies in the “hunt for profit”, which drives them to “meet people’s needs using as few resources as possible”. Such positions may seem radical. In fact they would mean the sec refocusing on its main historical role, says Mr Lofchie, namely to ensure disclosure of material facts and then to step aside. When Mr Trump took office, the sec had only two commissioners. It now has a full comple- ment and a mixture of views is starting to emerge. A debate about its purpose—and that of financial regulation more broad- Not your regular regulator ly—is overdue. 7 74 Finance & economics The Economist November 10th 2018

1MDB Banks behaving badly Start casting the When vice is virtue movie Naughty investment banks win more IPO business NEW YORK AND SINGAPORE ublic opprobrium ought to be some- built a list of 204 terms of reproach, Criminal charges for Goldman thing to avoid. It has laid low mighty signifying greed (eg, “avarice”), violence employees and a Malaysian financier P men in Hollywood accused of sexual (“rapacity”), extreme risk-taking (“gam- n 2010 goldman sachs created a “busi- misdeeds and sporting heroes caught bling”) or opacity (“manipulation”). He Iness standards” committee to try to re- pumping drugs. But it is not bad for then searched the whole of those news- pair the reputational damage the financial everyone: for some populist politicians it papers for uses of the words applying to crisis had done. Clients and transactions can be fuel to their supporters’ fire. And a 28 investment banks. During the period were to be screened for ethical shortcom- new study* suggests that Wall Street’s banks were roundly chastised, for ex- ings. Charges of money-laundering and sins have a surprising side-effect: press ample in reports by Andrew Cuomo, New bribery filed by federal prosecutors in a reports of bad behaviour by investment York’s attorney-general, in 2009, and by Brooklyn court on November 1st suggest banks during and after the financial the Senate in 2011. that the investment bank had diagnosed a crisis were good for business. Mr Roulet found that the more disap- real problem, if not found the solution. Thomas Roulet, of Cambridge Univer- proval a bank earned—measured by the The allegations relate to work done by sity’s Judge Business School, sifted all the density of reproachful words in articles Goldman for 1Malaysia Development Ber- editorial and opinion articles about the about it—the more fees it earned too. had (1mdb), a sovereign-wealth fund set up financial industry in the New York Times, Specifically, it was likelier to oversee in 2009, shortly after Najib Razak became Wall Street Journal and Washington Post initial public offerings of American Malaysia’s prime minister. Since 2015 in- published between 2006 and 2011. He companies’ shares between 2007 and vestigators in various countries, including 2011. Of course, bigger banks attract more America, Singapore, Switzerland and lat- coverage; Mr Roulet controls for that, terly Malaysia itself, have been trying to partly by using the density of critical trace the money it raised and channelled words, not the total. And other factors through a maze of financial institutions also matter: the more shares a bank had and shell companies. According to the fil- placed in the past year, say, or the more ing in New York, funds were misappropri- “bookrunners” an ipo had, the better its ated to buy paintings, luxury properties chances of being hired. and jewellery (including a necklace costing A finer analysis shows that adverse $27m), and to pay for parties attended by reports in the Journal gave a bank by far musicians, actors and models, and even a the biggest boost. What the media, and movie, “The Wolf of Wall Street” (fittingly, hence the public, found disreputable, Mr about financial sleaze). Roulet concludes, potential clients saw Goldman’s role was to underwrite three as evidence of professional prowess. bond offerings together worth $6.5bn, Banks don’t revel in being cast as villains. from which it earned $600m. That juicy cut It may help them just the same. drew accolades from the firm’s senior management, even as those who expressed ...... doubts about why the client was willing to * “Sins for some, virtues for others: banks’ misconduct and adherence to professional norms pay so much were overruled. According to during the financial crisis”, by Thomas Roulet. the indictment, $2.7bn of the money raised Forthcoming in Human Resources. went astray. According to the filings, Goldman’s former chairman for South-East Asia, Tim ticularly in South-East Asia, was “highly fo- with designer handbags, jewellery and Leissner, has pleaded guilty to bribery and cused on consummating deals, at times cash were recovered from his residences. money-laundering. He is due to be sen- prioritising this goal ahead of the proper The publisher of the Edge, a newspaper tenced in December, though that may be operation of its compliance functions”. which gave 1mdb heavy coverage, was ar- delayed. One of his associates at Goldman, Some of the diverted money was alleg- rested under Mr Najib. He has now been Roger Ng, was indicted on similar charges edly used to support Mr Najib’s re-election knighted. No one in Malaysia will work and arrested on an American warrant in in 2013. Until this year’s election, which he with Goldman again for a “long, long time”, Malaysia shortly before the documents lost, the Malaysian authorities continued says a prominent official. were filed. Also indicted was Jho Low, a Ma- to insist that there was nothing to investi- Mr Low has vanished. He is thought to laysian who allegedly masterminded the gate—even as America’s justice depart- be in China, though Chinese officials deny plot. Goldman has beefed up its legal team, ment sought to recover what it regarded as it. If he is, he may be hard to get back, since hiring a former deputy us attorney-gen- ill-gotten gains. But the new administra- Chinese state firms may have been used to eral, as it seeks to persuade prosecutors not tion, which campaigned against kleptok- launder money from 1mdb. But there is to bring criminal charges against the firm. rasi, is bent on prosecutions. Malaysian speculation that Chinese authorities may The indictment acknowledges that regulators are working with American in- hand him over if Malaysia agrees to honour Goldman’s compliance department had vestigators to locate and recover assets. big contracts that Mr Najib signed with blocked Mr Low from doing direct business Mr Najib, who faces more than 30 char- Chinese companies, some of which the with itand that its controls were “knowing- ges, including of money-laundering and new government has already suspended. ly and wilfully” circumvented. But it also abuse of power, will go on trial next year. In Mr Low could turn out to be more valuable says that the firm’s “business culture”, par- the weeks after he lost power, boxes stuffed as a fugitive than he was as a financier. 7 The Economist November 10th 2018 Finance & economics 75

Non-wage compensation in America expected to soar from $468bn in 2010 to Fringe on top $667bn in 2019. They are among the top two Time to perk up United States, real earnings foreign-currency sources in several coun- March 2009-March 2018, % change tries, including Kenya and the Philippines. Wages Benefits Yet hardly any of the money is invested. -5 0 5 10 15 20 In part, this is because recipients use three-quarters of the money for basics Low earners* such as food and housing. But it is also be- The benefits gap between high and low cause emigrants who want to invest back earners is widening Median home have few options. New investment see patients every day who are going channels could attract lots of extra cash— “Ito have babies because they work at High earners† about $73bn a year in Commonwealth Facebook,” says Peter Klatsky of Spring Fer- countries alone, according to research by tility clinic in Silicon Valley. Tech giants Source: Bureau of *10th percentile the 53-country grouping. now include egg-freezing and in vitro fertil- Labour Statistics †90th percentile Crowdfunding platforms would enable isation in their employees’ health cover- investors to put modest sums directly into age. But even as high-earning Americans intangible benefits are included. The share smaller businesses in developing coun- have the cost of making a baby covered by of Fortune 1,000 companies with shorter tries, which are often cash-starved. Yet of their companies, many low earners cannot hours on “summer Fridays” has doubled, to the emerging world’s 85 debt- and equity- get paid leave to look after theirs. 42%, since 2015. Salesforce, a software crowdfunding ventures, only a handful Since the end of the first world war, giant, gives employees several paid days off raise money abroad. Several platforms set American workers have seen a steady rise per year for volunteering, and $1,000 to do- up in rich countries over the past decade to in benefits. According to the Bureau of Eco- nate to a cause of their choice. Since such invest in developing countries, including nomic Analysis, “supplements” to wages, perks are more common at tech firms and Emerging Crowd, Homestrings and Enable which include most of today’s benefits but in offices, low-paid workers often miss out. Impact, quickly folded. exclude performance bonuses, rose from Unionised workers, who have more lever- A big problem is that few developing 1.4% of total compensation in 1917 to 17.5% age with employers, choose to receive a no- countries have rules about crowdfunding. in 2000. Using a broader measure that in- tably larger share of their compensation as Many have allowed activity so far chiefly cludes performance bonuses as well as benefits than non-unionised ones. In a because the industry is so small, says An- paid leave, overtime, health insurance and survey of American workers by fractl,a ton Root of Allied Crowds, a consultancy. contributions to retirement plans, that content-marketing firm, 88% said they Cross-border transfers using such plat- share has risen further since: from 27% of would sacrifice a higher wage for better forms easily fall foul of rich countries’ compensation in 2000 to 32% now. health insurance and more flexible hours. rules intended to stop money-laundering When growth in wages slowed after the The hope for low earners lies in the fact and the financing of terrorism. financial crisis, so did growth in benefits. that they are often the last to gain from ex- Some developing countries have real- Another trend also became apparent: a pansions. As the labour market has tight- ised that they need to act. Thailand, Malay- widening gap between rich and poor. ened, their wage growth has accelerated sia, Singapore and Indonesia have all re- Workers at the tenth percentile for wages sharply. They may soon start to feel the cently passed regulations on equity saw benefits fall by around 2% in real terms benefit beyond their pay cheques, too. 7 crowdfunding or peer-to-peer lending. But between 2009 and 2018. Those at the 90th from a cross-border perspective, Africa percentile saw a rise of 17% (see chart). seems most inventive, owing to active en- Wage growth has picked up recently as Crowdfunding development trepreneurs and Western help. the labour market has tightened. Figures Last month the British government ap- released on November 2nd showed that It’s coming home proved a grant of £230,000 ($300,000) to 250,000 jobs were added across America the African Crowdfunding Association to during October, and that average wages help it craft model accreditation and inves- grew at an annual rate of 3.1%, the fastest tor-protection rules. Elizabeth Howard of since the financial crisis. By the end of the LelapaFund, a platform focused on east Af- summer, there were over a million more rica, is part of an effort to see such rules Investment platforms are vying to unfilled positions than jobless Americans. adopted across the continent. That would capture a share of global remittances But growth in benefits for lower earners help reassure sending countries that trans- has remained sluggish. One reason is that n 2016 ayo adewunmi, a Nigerian-born fers do not end up in the wrong hands, she few get employer-provided health insur- Iagricultural trader living in London, says. She hopes to enlist the support of the ance, which has accounted for about a third bought a five-hectare farm in his home- Central Bank of West African States, which of the increasing cost of employers’ bene- land. It has produced little since. “I am not oversees eight Francophone countries, at a fits since 2000. Just one in four of those in in the country, so I have to rely on third par- gathering of crowdfunders and regulators the bottom 25% by earnings are covered, ties. It’s just not good enough,” he says. sponsored by the French government in compared with three in four in the top 25%. Mr Adewunmi has since discovered an- Dakar, in Senegal, this month. Those working in the gig economy lose out other, potentially more satisfactory way to Thameur Hemdane of Afrikwity, a plat- on conventional benefits such as pension make such investments: through Farm- form targeting Francophone Africa, says contributions. Meanwhile, at the top end of Crowdy, a crowdfunding platform that the industry will also study whether pros- the labour market, bonuses are increasing- lends to Nigerian farms and provides tech- pective laws could be expanded to the Cen- ly being used to retain the most prized nical assistance to their owners. The two- tral African Economic and Monetary Com- workers. Aon Hewitt, a human-resources year-old startup, which is considering ex- munity, a grouping of six countries. consultancy, finds that over four decades panding into Ghana, places high hopes in Harmonised rules will not guarantee bonuses have grown to a record high, the African diaspora as a source of funds. crowdfunders’ success, but would be a use- reaching 12.8% of payroll in 2014. The case for such platforms goes be- ful step towards raising the amount of dias- The gap is likely to be wider still when yond agriculture. Global remittances are pora capital that is put to productive use. 7 76 Finance & economics The Economist November 10th 2018 Free exchange Rome alone

An Italian budget showdown underlines the need for the euro area to reform he fate of the euro was always going to depend on Italy. With litical moment to be defused at little economic cost. Tannual gdp of more than €1.6trn ($1.9trn), about 15% of euro- Yet it is hard to fault the eu for its wariness. Italy’s slow growth area output and debt of nearly €2.3trn, it poses a challenge to the reflects serious structural problems. The European Commission single currency that Europe seems unable to manage but cannot estimates that the country’s natural unemployment rate has risen avoid. Matters are now coming to a head, as Italy’s new coalition from about 8% in 2007 to 10% now, suggesting that boosting em- government instigates a showdown over the European Union’s fis- ployment is a matter more of reform than stimulus. The oecd esti- cal rules. The disagreement might well become disastrous. But it is mates that Italy’s output gap, the shortfall between an economy’s also an opportunity for the euro zone to begin building a better, actual and potential output, will have closed by next year. Potential more durable approach to fiscal policy. output—ie, what an economy can sustain without inflation accel- Trouble began earlier this year when the populist Five Star erating—is easy to underestimate. But some variables suggest that movement, led by Luigi Di Maio, formed a government with the labour-market slack is disappearing. For example, after a long per- right-wing Northern League, led by Matteo Salvini. Both promised iod of decline year-on-year wage growth roughly doubled over the budget goodies: Mr Salvini a hefty tax cut and Mr Di Maio a basic summer, to 2%. Nor have Italians been deeply mired in austerity in minimum income. Such largesse may test the deficit limit of 3% recent years. Italy’s structural budget deficit has nearly doubled set by the eu’s stability and growth pact. And it seems certain to since 2015. Its pensions remain among the euro area’s most gener- break other fiscal rules set by the bloc: the government’s initial ous, a perversity given the disproportionate economic pain borne budget plan is forecast to raise borrowing to 2.4% of gdp in 2019, by young Italians over the past decade. above the 0.8% target to which Italy previously committed itself Tight budget rules were, moreover, the price of the extraordi- and enough to reverse recent, modest declines in its debt burden. nary measures that saw the euro area through its crisis earlier this The eu did not take the news well. On November 5th other decade. A bail-out programme for Italy could well prove fatal to the countries’ finance ministers warned that failure to revise the bud- currency bloc; a showdown might be worth provoking to keep Ita- get would lead to an “excessive deficit procedure”, and possible ly’s debt manageable and the euro area viable. Each side has its rea- sanctions. But Italians are unbowed. Mr Di Maio, now deputy sons for fighting all the way. prime minister, argued in comments to the Financial Times that It- aly’s fiscal expansion will prove so successful that other European Ciao time leaders will clamour to follow, citing, somewhat dubiously, faster There is a path through this impasse. The euro zone shares a mone- growth in America after a budget-busting Republican tax cut. tary policy but lacks a correspondingly coherent fiscal approach. Both sides have their points. Italians are frustrated. Real in- The Italian dispute offers a timely opportunity to address that. comes in Italy have fallen since joining the euro area; inequality Across the euro area as a whole, fiscal policy is arguably too tight. and poverty have risen. Economic growth briefly rose to almost 2% The ratio of debt to gdp is a relatively modest 86.3% and falling in mid-2017 but has since slipped back to close to zero. At 10.1%, the fast, by three percentage points in the past year alone. In countries unemployment rate is well above the pre-crisis low of 5.8%. Eco- with big budget surpluses, such as Germany and the Netherlands, nomic weakness is re-emerging even as the European Central higher spending on growth-boosting investments would slow the Bank reduces its stimulative asset purchases and prepares for shrinking of debt burdens, but not stop it altogether. Some of the eventual interest-rate rises. Recent indicators of service-sector resulting fiscal boost would spill over into Italy through increased and manufacturing activity suggest that the economy is at risk of tourism and consumption of its exports, boosting demand with- falling back into contraction. A return to recession would prove out straining the Italian public purse. In exchange, the eu could disastrous for Italy’s politics and its long-run budget position. And ask Italy to moderate its fiscal plans. a bit more spending now would probably not spark a bond-market Though it would be anathema to northern Europeans, a further panic, since the government’s debt has an average maturity of sweetener, in the form of limited debt mutualisation, should also nearly seven years and most is held domestically. A little forbear- be considered. Italy’s debt is an old problem. It reached 100% of ance on the part of the eu might therefore enable a dangerous po- gdp almost three decades ago; but the country has run a primary surplus every year for the past quarter-century, except for the two years immediately after the financial crisis. Taking a hard line with Tragedia all’italiana Italy today does nothing to discipline the governments of the 1980s but adds to the bitterness felt by young people, who have fared GDP General government debt worst under the euro and must accept towering budget surpluses Q1 2007=100 % of GDP 115 150 in perpetuity or face ejection from the single currency. A plan to Germany Italy swap some national bonds for Eurobonds backed by all euro-area 110 120 governments might be pie-in-the-sky, politically. Yet that policy France would acknowledge that euro-area countries share a fiscal fate, re- 105 90 lieve young Italians of doing penance for their forebears’ sins and France Euro area make fiscal probity for Italy a less Sisyphean task—and, perhaps, 100 60 more politically tolerable. Germany Euro area European integration is meant to build a whole greater than the Spain 95 Spain 30 sum of its parts. The euro area could wield its combined fiscal ca- Italy 90 0 pacity to deal with the Italian threat while building a sense of shared fiscal responsibility. Instead, Europe and Italy are heading 2007 10 15 18 2007 10 15 18 towards confrontation. The euro zone’s greatest weakness is not Source: Haver Analytics its spending, but its politics. 7 Property 77 78 Property Science & technology The Economist November 10th 2018 79

Also in this section 80 Underwater mining on land 81 Spiders and streetlights 82 How to join art’s elite

Conservation and deep-ocean mining nautical-mile exclusive economic zones of littoral countries. They thus fall under the The seas are lovely, dark and deep purview of the International Seabed Au- thority (isa), which has issued 17 exploration licences for such resources. All but one of these licences pertain to the ccz, an area of about 6m square kilometres east-south- east of Hawaii. Soon, human machinery will open Davy Jones’s locker and begin extracting the The licensees include Belgium, Britain, mineral riches therein. What will that mean for existing denizens of the abyss? China, France, Germany, India, Japan, Rus- iva amon, a researcher at the Natural Moreover, these metals seldom co-occur in sia, Singapore and South Korea, as well as DHistory Museum in London, spotted terrestrial mines. So, as Kris Van Nijen, several small Pacific island states. Ameri- her first whale skull in 2013, during an ex- who runs deep-sea mining operations at ca, which is not party to the United Nations pedition to the Clarion Clipperton Zone Global Sea Mineral Resources (gsr), a com- Convention on the Law of the Sea that es- (ccz) in the tropical Pacific. It sat on beige pany interested in exploiting the nodules, tablished the isa, is not involved directly, silt, some 4,000 metres beneath the sea’s observes: “For the same amount of effort, but at least one American firm, Lockheed surface, and was entirely covered in a black you get the same metals as two or three Martin, has an interest in the matter coating. Her find was twice notable. First, mines on land.” through a British subsidiary, uk Seabed Re- the skull’s coating meant it was millions of sources. And people are getting busy. Sur- years old, for it was made of the same slow- Hades’ hall veying expeditions have already visited the ly accumulating metallic oxides as the po- Though their location several kilometres concessions. On land, the required mining tato-like ore nodules that are drawing min- beneath the ocean surface makes the nod- machines are being built and tested. What ers to the area. Second, the discovery ules hard to get at in one sense, in another worries biologists is that if all this busy- highlighted how little is known about the they are easily accessible, because they sit ness does lead to mining, it will wreck hab- deep ocean. Dr Amon’s whale skull, and invitingly on the seabed, almost begging to itats before they can be properly cata- others like it, raise questions about the be collected. Most are found on parts of the logued, let alone understood. trade-offs between the economic gains of ocean floor like the ccz, outside the 200- The first task, therefore, is to establish mining the seabed and that mining’s envi- what exactly lives down there. At first ronmental consequences. glance, the ccz’s abyssal plain does not UNITED STATES Those involved in deep-sea mining look of much interest. It is a vast expanse of PACIFIC OCEAN hope it will turn into a multi-billion dollar mud, albeit littered with nodules. But, industry. Seabed nodules are dominated by Hawaii MEXICO though life here may not be abundant, it is compounds of iron (which is common- diverse. Craig Smith, an oceanographer at place) and manganese (which is rarer, but British the University of Hawaii, Manoa, who not in short supply from mines on dry concession studies the ocean’s abyssal plain, says that land). However, the nodules also contain Clarion Clipperton Zone the ccz contains a greater variety of species Galapagos copper, nickel and cobalt, and sometimes Islands than the deep seas off the coasts of Califor- other metals such as molybdenum and va- PERU nia and Hawaii. Exploration areas Peru nadium. These are in sufficient demand Areas of particular Basin Some of the ccz’s creatures stretch the that visiting the bottom of the ocean to ac- environmental interest imagination. There is the bizarre, gelati- 2,000 km quire them looks a worthwhile enterprise. Source: International Seabed Authority nous, yellow “gummy squirrel” (pictured), 1 80 Science & technology The Economist November 10th 2018

2 a 50cm-long sea cucumber with a tall, wide of fossils, Dr Amon says the ccz may be a the (equally old) nodules at the surface of tail that may operate like a sail. There are previously undiscovered, and rare, subma- the silt. Indeed, why the nodules are ex- galloping sea urchins that can scurry rine fossil bed. posed is one of the great mysteries of the across the sea floor on long spines, at Why whale fossils would accumulate in region. Regardless, Dr Smith, Dr Amon and speeds of several centimetres a second. this particular spot is unknown. Possibly, others hope the bones’ presence will be tak- There are giant red shrimps, measuring up those elsewhere are simply buried. The ccz en into account as the isa drafts the rules to 40cm long. And there are “Dumbo” octo- sits beneath the ocean’s clearest waters, so and regulations for exploitation of the ccz. puses, which have earlike fins above their its sediments accumulate extremely slow- Whale fossils, sea cucumbers and eyes, giving them an eerie resemblance to a ly. But it may be that some as-yet-unknown shrimps are just the stuff that is visible to well-known cartoon elephant. physical process is keeping the fossils and the naked eye. Adrian Glover, one of Dr 1 Every expedition brings up species that are new to science, many of them belonging to biological families that are also novel. At a conference in Monterey, California, in September, Dr Smith presented results of a biodiversity survey carried out in the British concession, which sits at the eastern end of the ccz. Of 154 species of bristle worms the surveyors found, 70% were previously unknown. Dr Smith says the concession may be part of a biodiversity hot- spot, one which would not be represented in the nine protected areas of environmental interest that have been set aside in the ccz. He therefore argues for the establishment of a tenth such area, on the margins of the concession.

A whale of a tale The ocean’s largest inhabitants may also be visitors to the ccz. This summer Leigh Marsh of Britain’s National Oceanography Centre, in Southampton, described more Underwater mining on land than 3,000 large depressions in the mud there. These formed a series of curved tracks. Similar tracks elsewhere have been Waste not, want not linked to whales scraping themselves SILVERMINES against the seafloor. Dr Marsh and her col- A new robot system will reopen abandoned, flooded mineral workings leagues suggest that deep-diving whales may be foraging on the ccz seafloor, using he idea of underwater mining is not The larger vehicle is a 25-tonne it as a giant loofah to scrape parasites from Trestricted to the ocean floor (see tracked robot (pictured) with a powerful their skins or even ingesting the nodules as previous piece). High water tables sub- rock-cutting head at one end and, at the ballast. If true, this would significantly ex- merge many terrestrial deposits, too. At other, a hydraulic gantry that can carry tend the depth to which whales are known minimum, this means doing a lot of tools such as drills and grabs. Crushed to dive. pumping to make them workable. Some- ore-bearing rock is pumped to the sur- The only direct evidence of whales in times, it makes those deposits altogether face through a flexible pipe, and a cable the ccz, though, comes in fossil form. In inaccessible. Flooding also adds to the carries power and data between the robot Monterey, Dr Amon set the audience buzz- cost of re-opening closed mines. The and an onshore control centre. ing when she presented preliminary data team behind vamos hopes to do some- The smaller vehicle is called eva. It suggesting that the region contains large thing about this. has neutral buoyancy and swims around deposits of fossil whale bones. Such fossils The Viable Alternative Mine Operat- the mining site. It was designed at the were first noted by the Challenger expedi- ing System, to give its full name, is being Institute for Systems and Computer tion, a world-spanning investigation of the developed by a consortium of 16 Euro- Engineering, Technology and Science, in deep ocean conducted in the 1870s by a Brit- pean firms and research institutes. It is Portugal. eva first makes, and then ish naval research vessel. Dr Amon’s find currently on trial at Silvermines, Ire- continually updates, a 3d map of the back in 2013 prompted her and her col- land—which, as its name suggests, was area—transmitting this cartography to leagues to go through tens of thousands of once home to workings for silver and the main vehicle, to assist navigation. images gathered by various exploration other metals. They are now closed and Both vehicles use sonar, cameras and submarines. These recorded 548 cetacean flooded. But one of them, a source of laser rangefinders to work out where fossils from a range of species. Among the baryte, the principal ore of barium, has they are. They send these data to a pilot oldest was Choneziphius, an extinct animal been repurposed as vamos’s test bed. in the control centre, who sees them that lived more than 10m years ago. The core of vamos is a pair of remote- displayed on a multi-screen console of Although this work was a study of pho- ly controlled vehicles. These are floated the sort gamers can only fantasise about. tographs, rather than of the remains di- on-board a special platform into place A future version may also be able to rectly, which could cast doubt over some of over the site to be mined, and then analyse the ore spectroscopically as it is the identifications, the metallic-oxide dropped through the water (to a depth of mined, enabling rich seams to be pur- coating of many of the bones gives a sense 57 metres in this case) by a crane. sued and poor ones abandoned. of how old they are. Because of the density The Economist November 10th 2018 Science & technology 81

2 Amon’s colleagues at the Natural History everything along the way, especially filter- April, when gsr will lower Patania II, an Museum, and his collaborators spent feeding animals such as sponges and krill, enormous green tractor, to the bed of the weeks peering down microscopes, inspect- which make their livings by extracting ccz. Patania II is a prototype nodule collec- ing every nook and cranny of the surfaces small particles of food floating in the water. tor. It will clear areas roughly 300 by 100 of some of the nodules themselves. They The effect both in the water column and on metres, leaving them nodule-free, so that discovered a miniature ecosystem com- the sea floor might not be so great in other future expeditions can return and study re- posed of things that look, at first sight, like parts of the oceans, say biologists, but life colonisation rates. An array of sensors sus- flecks of colour—but are, in fact, tiny cor- in the crystalline ccz is wholly unadapted pended in the nearby water will monitor als, sponges, fan-like worms and bryozo- to murky waters. the resultant silt plume, which the com- ans, all just millimetres tall. In total, the All of this needs to be balanced against pany’s models suggest could travel up to team logged 77 species of such creatures, the impacts of mining the equivalent 5km—not the hundreds of kilometres that probably an underestimate. amounts of minerals on land, however. some have suggested. The ccz covers about 2% of the deep ocean. To scrutinise this trial independently, Out of sight. Out of mind? A 20-year operation within it would affect jpi Oceans, an intergovernmental research Inevitably, much of this life will be dam- of the order of 10,000 square kilometres— body, has paid for the Sonne, a German re- aged by nodule mining. The impacts are about a six-hundredth of its area—accord- search vessel, to sail alongside gsr’s. As Mr likely be long-lasting. Deep-sea mining ing to Mr Van Nijen. And, unlike mining Van Nijen puts it, “We need to validate our technology is still in development, but the developments in virgin areas of dry land, equipment, but from an environmental general idea is that submersible craft which tend to bring other forms of devel- perspective, the world’s first mining test at equipped with giant vacuum cleaners will opment in their wake by creating transport depth is a unique opportunity for scien- suck nodules from the seafloor. Those nod- links that encourage human settlement, no tists to study the impacts. If we don’t do ules will be carried up several kilometres of one is going to follow the nodule-hoovers this in a transparent manner, it will go no- pipes back to the operations’ mother ships, and actually live on the abyssal plain. where.” That sounds like a promising start. to be washed and sent on their way. In the end, the only way to measure how But however careful the miners are, life for The size and power of the submersibles mining would change the bottom of the the inhabitants of the ccz is about to get a means that they will leave large tracks in ocean may be to conduct small-scale pilot lot less peaceful than it has been for mil- their wake. These are likely to persist for a operations. The first will take place next lions of years. 7 long time. Evidence for this comes from various decades-old disturbance experi- ments. In 2015 an exploratory expedition Evolution by ifremer, a French government agency responsible for oceanography, noted that Underneath the lamplight even mobile animals like sea urchins were 70% less abundant within 37-year-old ex- perimental tracks than outside them. The largest disturbance experiment so far was carried out in 1989 in the Peru Basin, a nodule field to the south of the Galapagos Town-dwelling spiders prefer their parlours illuminated Islands. An eight-metre-wide metal frame fitted with ploughs and harrows was ost spiders avoid light because, be- had lost their photophobia, so that they dragged back and forth repeatedly across Msides being predators, they are also could more easily set up shop beside such the seabed, scouring it and wafting a plume potential prey. But there is a set of circum- lights. And an experiment by Tomer of sediment into the water. In 2015 a re- stances in which living beside a powerful Czaczkes of the University of Regensburg, search vessel returned to the site. Down light is an advantage. This is when you are a in Germany, suggests that for at least one went the robots, samplers and submarines web-weaving spider. Moths and other in- species this has happened. with their scanners and cameras. The big sects are attracted to sources of illumina- Dr Czaczkes’s interest in whether city question was, 26 years after the event, tion such as streetlights. Those are found life shapes spiders’ behaviour began when would the sea floor have recovered? The an- predominantly in cities. It would therefore he saw lots of fat, happy arachnids building swer was a resounding “no”. The robots make sense if urban web-spinning spiders webs near Regensburg’s streetlamps. Delv- brought back images of plough tracks that ing into the academic literature, he discov- looked fresh, and of wildlife that had not ered that urban moth populations have recovered from the decades-old intrusion. been shown to be less attracted to lights Another concern, in the wake of the than are their rural relatives. Presumably, Peru Basin experiment, is sediment. This this is because, besides any webs involved, will be both stirred up during collection, as the whole business of flying round and the robots crawl across the sea floor and round such lights is a fitness-reducing hoover it, and washed off the nodules at the waste of time and energy. He reasoned that surface when they are cleaned. Ideally, a a similar but reverse sort of logic—result- second pipe would deliver those washings ing in their being more attracted to lights, directly back to the seabed, in order to keep or at least less afraid of them—should ap- disruption in the water column to a mini- ply to town spiders versus country ones. mum. In practice, dumping silt overboard And, as he reports this week in the Science will be much easier. Decades of failure to of Nature, it does. police overfishing demonstrate how hard it He and his colleagues collected egg is to regulate activity on the high seas. sacks laid by their chosen animal, Steatoda If silt were dumped in this way it could triangulosa (the triangulate cobweb spi- be disastrous. A steady stream of the stuff der—selected because it is common raining down from the surface would affect Lover of the light throughout Europe and thrives in both ur-1 82 Science & technology The Economist November 10th 2018

2 ban and rural environments), from two the dark at the start of their time there, and Their mapping exercise also permitted sites in the Italian countryside, and also then monitored to find out where they Dr Barabási and Dr Fraiberger to follow in- from Milan, Munich and Nice. The result- built their first web. dividual artists’ careers. They were able to ing 783 spiderlings were placed individual- Almost two-thirds of rural spiderlings create an early-success score for each artist ly into boxes that had a dividing board built their webs in the dark part of the box, by averaging the prestige ratings of the mu- through the centre. One side of each box but only half of their urban cousins did so. seums or galleries which showed that art- was lit by a lamp that shed no heat. The oth- That suggests rural spiders are indeed pho- ist’s first five exhibitions. Remarkably, this er side was left dark. Two tiny gaps in the tophobic while urban spiders, though not simple early-career score gave the two re- dividing boards permitted the spiderlings actually attracted to the light, have ceased searchers all they needed to predict an art- easy access to both sides of the box. Spider- to be afraid of it—not so much Steatoda ist’s future success. lings were placed at random in the light or triangulosa, then, as Steatoda luminosa. 7 Elite artists—those whose score at the start of their careers was in the top 20%— had only a 0.2% chance of ending their ca- Success in art reers in the bottom 20%. Almost 60% maintained their elite status throughout. Only connect At the other end of the scale it seems extremely hard to join the elite if you did not begin there. Of those artists who started by exhibiting in the bottom 20% of institutions, only 10% eventually made it into the elite group—and around 16% stayed at the bottom. These figures actually under-rep- To get to the top of the art world, it helps to start there in the first place resent the scale of the struggle that such ell begun, half done. That proverb, The algorithm showed, to nobody’s sur- artists face, since most in this initial group Wascribed to Aristotle, seems an apt prise, that the art world’s biggest nodes are did not stick it out for long. Of those who description of the art market—at least it is a group of European and North American started at the bottom of the success scale, if a study of artistic careers, published this powerhouses that include the Museum of only 14% remained in the industry ten week in Science, is to be believed. In this Modern Art, the Gagosian Gallery and the years after their fifth exhibit. For the elite study Albert-László Barabási, a physicist at Guggenheim in New York, the Tate Gallery group that figure was almost three times Northeastern University in Boston, and in London, and the Pompidou Centre in higher, 39%. Samuel Fraiberger, a data scientist at the Paris. These places had the highest prestige The financial consequence of all this is Harvard Institute for Quantitative Social ratings, and most of the world’s most suc- that elite artists’ work sells 4.7 times more Sciences, deconstruct almost half a million cessful art had, at some point, ended up be- often at auctions than that of those at the artistic careers. They conclude that for art- ing exhibited in one or more of them. bottom end, with maximum prices 5.2 ists, professional success seems often to Just below the top tier, and less well- times higher. Which could, of course, be depend on an early endorsement by the known outside the art world, were a set of evidence of a meritocratic system working right set of galleries. institutions that also acted as important perfectly. After all, for a young artist to beat Dr Barabási and Dr Fraiberger used data paths to artistic success—being those that the competition for wall space in a top gal- from Magnus, a firm that collects informa- most frequently feed works into the top lery suggests he or she is producing work of tion about the art market, such as auction tier. They include the Leo Castelli and Paula great quality. Cynics might be forgiven, sales and exhibitions, to build a picture of Cooper galleries in New York, Galerie however, for wondering whether talent is how works of art flow around the world’s Krinzinger in Vienna, Galerie Thaddaeus the only factor involved in getting those thousands of galleries and museums. The Ropac in Paris and London, and Galerie crucial early shows. A topic, perhaps, for researchers’ thinking was that the more Max Hetzler in Berlin. further research. 7 places an artwork has been exhibited, the more demand there is for it—and the more successful that artwork (and its creator) might reasonably be thought to be. This, in turn, by a process of feedback, permits a map to be made showing which are the most prestigious and important art institutions in the world. The feedback mechanism Dr Barabási and Dr Fraiberger used was inspired by PageRank, the algorithm at the heart of Google’s search engine. PageRank deter- mines a web page’s importance not by looking at the contents of the page itself but rather by counting how many other pages on the web link to it, and how important those other pages are themselves deemed, by the same iterative process, to be. Dr Ba- rabási and Dr Fraiberger arrived similarly at a prestige rating for each gallery or museum, by counting how many other museums and galleries sent artworks to it, and then giving due account to how prestigious those places were themselves. Books & arts The Economist November 10th 2018 83

Also in this section 84 The genetic revolution, continued 85 Barbara Kingsolver’s new novel 85 Chopin’s life and times 86 Art, gender and conﬂict in Mali

Atheism ism of Hume, Kant and Voltaire, for instance. Many of the saints of modern liber- The valley of the shadow alism were not as secular as they might seem, he suggests. John Locke’s liberalism is indebted to Christianity at every point; John Stuart Mill’s insistence that morals did not depend on religion “invoked an idea of morality that was borrowed from A philosopher subjects the atheist creed to the sort of scrutiny normally reserved Christianity”. The new orthodoxy Mill for religion founded was deeply rooted in Christianity, ver since the Enlightenment, Chris- Mr Gray says: “the belief in improvement Etianity has been exposed to rigorous ex- Seven Types of Atheism. By John Gray. that is the unthinking faith of people who amination that has contributed to the de- Farrar, Straus and Giroux; 176 pages; $25. think they have no religion.” cline of organised faith. Though Christian Allen Lane; £17.99 He is as exasperated with knee-jerk un- teaching is at the heart of the Western aca- belief as he is with unthinking devotion, demic tradition, atheism has long been the no different from other creatures. Chris- and has no time for several of the types of new gospel for many intellectuals. Some tianity’s “cardinal error” is to say that they atheism he enumerates. All of them look to authors have tried to subject it to the same are. Yet dispensing with the teachings of replace God with some form of secular hu- scrutiny that religion has received. But, as monotheism leaves no coherent concept of manism, science or politics. Their high polytheistic Romans found in the fourth humanity, nor of human dignity. Mr Gray priests tend to be just as blinkered as the century, challenging rampant orthodoxies uses this observation as a launch-pad to ecclesiastics they abjure, Mr Gray com- can be tough. criticise “New Atheists” such as Richard plains: “While atheists may call them- Alister McGrath’s “The Twilight of Athe- Dawkins, and to point out that most mod- selves freethinkers, for many today atheism” and Nick Spencer’s “Atheists: The Ori- ern atheists do not follow their reasoning ism is a closed system of thought.” He gin of the Species” are excellent critiques; to its logical conclusion. They may have re- decries a rising intolerance in academia, but both writers are Christians, so they jected monotheist beliefs, but they have where free expression is jeopardised by “a have been relatively easy for unbelievers to not shaken off a monotheistic way of frenzy of righteousness” that recalls the dismiss. It has taken a prophet seated firm- thinking, and “regurgitate some secular iconoclasm of Christianity when it came to ly in an atheist pew to publicise the creed’s version of Christian morality”. Mr Gray has power in Rome. “If monotheism gave birth contradictions more widely. That prophet a much bleaker view of atheism’s implica- to liberal values,” he says of today’s illiberal is John Gray, a retired professor of philoso- tions: “A truly naturalistic view of the world liberalism, “a militant secular version of phy at the London School of Economics. In leaves no room for secular hope.” the faith may usher in their end.” several books published over 15 years, Mr In “Seven Types of Atheism” Mr Gray Instead, he is drawn to the more bracing Gray has reasserted his belief that there is neatly recapitulates his arguments, com- denominations of the new church, such as no God, while also attacking the liberal hu- bining them with a whistle-stop tour of those espoused by Spinoza and Schopen- manism that has emerged in God’s stead— modern unbelief from the Marquis de Sade hauer, “atheisms that are happy to live with which, he thinks, is as flaky as the religion through to Friedrich Nietzsche and Joseph a godless world or an unnameable God”. it has replaced. Conrad. He gives Christianity its due, con- These varieties reject the idea of a creator At the centre of his argument, in books ceding that not all enlightenment began at and dispense with all pieties regarding hu- such as “Straw Dogs” and “The Silence of the Enlightenment and pointing out the man nature. They have truly emerged from Animals”, is the assertion that humans are imperfections of that era’s heroes—the rac- the shadow of Christianity: “Not looking 1 84 Books & arts The Economist November 10th 2018

2 for cosmic meaning, they were content The new genetic revolution contrary, behavioural differences are with the world as they found it.” strongly influenced by genetics. Studies of Mr Gray’s provocative, frank approach Destiny’s child adopted children indicate that in disposi- has three main drawbacks. The first is that tion they more closely resemble their ge- the God he says does not exist cannot be re- netic parents than their adoptive ones. cognised as the Christian God. He suggests Even when they are reared apart, identical that it was the apostle Paul and Augustine twins are more alike than the non-identi- of Hippo who invented Christianity, turn- cal kind (who are as genetically different as ing a local Jewish movement into a univer- any brother or sister). sal one that Jesus never intended, and turn- Blueprint: How DNA Makes Us Who We Such research shows that, on average, ing Jesus himself from a prophet into “God Are. By Robert Plomin. The MIT Press; 280 dna accounts for about half of the psycho- on earth”. Naturally this disregards the Bi- pages; $27.95. Allen Lane; £20 logical differences between people, with ble’s account of Christ’s teaching about his ubris winds through the history of the remainder due to environmental fac- identity and purpose. But it also contra- Hgenetics like a double helix. “We used tors; the actual proportion varies with the dicts recent scholarship that sees Paul less to think our fate was in our stars,” James characteristic in question. More recently as a Roman who created a new faith than as Watson, one of the scientists behind the scientists have combed through human ge- a Jew who thought he was witnessing the discovery of dna, declared in 1989. “Now nomes to identify thousands of genetic long-expected fulfilment of Judaism. It is we know, in large measure, our fate is in variants associated with particular traits, ironic that, having spent his career de- our genes.” The implications were clear. from height and weight to educational at- nouncing outmoded orthodoxies, Mr Gray Unravelling the genetic code would bring tainment and neuroticism. Tests costing rests his critique of Christianity on outdat- an exquisite understanding of bodies and less than £50 ($65) can measure genetic ed perceptions. their afflictions but also of minds. After the propensity to different outcomes—to be completion of the human genome project, overweight, or to go to university. The forsaken which Watson initially led, such hopes fad- For those who imagine all that leaves The second weakness lies in his view that ed. Individuals’ physical or mental charac- enough wriggle room for benevolent par- progress is an illusion: “you will find it teristics, and their susceptibility to dis- ents or teachers to exert an influence, Mr hard”, he contends, “to detect any continu- eases, turned out to be extraordinarily Plomin has bad news: these environmental ing strand of improvement” in human complex. Some of the swagger went out of factors are themselves substantially influ- society. You don’t have to be Pangloss (or genetics. Now it is back. enced by genes. For example, his work Steven Pinker) to demur; a glance at the In “Blueprint” Robert Plomin, a psy- shows that genes account for about a third history of medicine is ample evidence to chologist and geneticist, explains the ad- of the differences between the television the contrary. But the biggest problem is the vances behind this resurgent optimism— viewing habits of children. Worse, the re- void to which his skilful demolitions lead. and their consequences for the science of maining tranche of environmental influ- What ought to be the basis for Western civi- human behaviour and psychiatric illness. ence appears to be mostly attributable to lisation after the decline of religious faith? He is well placed to do so: for more than 30 unpredictable events rather than, say, be- Mr Gray never proposes nihilism, hedo- years he has studied the interplay of genes ing brought up in a house full of books. nism or suicide, and seems (like Mr Daw- and the environment and their effects on These findings, says Mr Plomin, imply kins) to believe that peace, prosperity, hon- personality. But Mr Plomin’s enthusiasm that “parents don’t make much of a differ- esty and common decency are good things. for his subject—he calls himself a “cheer- ence in their children’s outcomes beyond He ended “Straw Dogs” by asking, “Can leader”—means the ramifications are not the genes they provide”; dna is a “fortune we not think of the aim of life as being sim- explored even-handedly. “Blueprint” is ab- teller” that “makes us who we are”. Envi- ply to see?” This might sound profound sorbing. For those with a disposition less ronmental effects are “important”, but over port at high table, but may be less per- sunny than Mr Plomin’s, it is also alarming. “there’s not much we can do about them”. suasive to people mired in abject poverty. It For much of the 20th century, psycholo- Mr Plomin insists that, armed with is not a premise on which to build a society. gy was dominated by the idea that human their genetic test scores, individuals can His new book is similarly lacking in con- nature is a blank slate embellished by up- take action to counter or augment their in- structive proposals. bringing and environment. “Blueprint” be- nate proclivities; but they are hardly likely Yet its reflections on the future are in- gins by describing how Mr Plomin and oth- to succeed if their psychology is as delim- sightful. Looking beyond the squabbles ers have demonstrated that, on the ited by genes as he suggests. An equally over science and God, Mr Gray sees the plausible possibility is that these scores challenges implicit in abandoning the will be used to stigmatise genetic “have- metaphysical and moral order that Chris- nots” or to justify discrimination. This is tianity once provided. Like Nietzsche, he the high road to eugenics, about which Mr says the West cannot ditch the faith and ex- Plomin is largely silent. pect to retain congenial Christian ethics. It Instead he advocates the use of such will be difficult, he predicts, for modern scores when choosing between candidates liberalism to ground a universal moral law for a job. Yet a person with high scores for on non-theistic foundations. traits associated with coding skills is not Relieved as they are by the weakening of necessarily a good programmer—they the church’s oppressive aspects, many sec- merely have a higher likelihood of being ularists have missed the flipside of Chris- one. A candidate who had demonstrated tianity’s decline. In the absence of a single their aptitude for the job would feel rightly moral code mandated by God, says Mr Gray, miffed to be passed over in favour of a ge- people must accept a spectrum of moral- netically gifted incompetent. Likewise, ities, palatable or otherwise: “Anyone who though doctors may find it useful to know wants their morality secured by something that a patient is genetically predisposed to beyond the fickle human world had better be obese, the best way to establish their join an old-fashioned religion.” 7 Nature not nurture weight is to ask them to step on the scales. 1 The Economist November 10th 2018 Books & arts 85

Lives of the composers American ﬁction What goes around Piano forte

Unsheltered. By Barbara Kingsolver. Harper; 480 pages; $29.99. Faber & Faber; Fryderyk Chopin: A Life and Times. By £15.99 Alan Walker. Farrar, Straus and Giroux; 768 pages; $40. Faber & Faber; £30 nly a novelist, it might seem, could Oconjure up a figure like Mary Treat. A he lineaments of Chopin’s short, dra- stalwart19th-century scientist, she Tmatic life are familiar to most classical- tramps the Pine Barrens of New Jersey in music enthusiasts. Born in 1810 in Warsaw search of wax myrtle, swamp pinks and to a middle-class family, he was a child pro- Venus flytraps. Her husband has left her digy and became a noted pianist and com- for Victoria Woodhull, a suffragist who poser of small-scale but exquisite Roman- ran for president in1872. Her intellect tic pieces of music, such as ballades, makes her the valued correspondent of études, impromptus, mazurkas, nocturnes Charles Darwin and his Harvard-based and polonaises. He was mostly based in champion, Asa Gray. France, mingling with the cream of Pari- Treat plays a central role in Barbara sian society and the arts and playing for Kingsolver’s engrossing new novel “Un- aristocrats and royalty. The German poet sheltered”,but she is no more an in- Heinrich Heine reverentially called him vention than are Woodhull, Darwin and “the Raphael of the piano”. Gray. She made her home in Vineland, In 1838 he absconded to Majorca with New Jersey, a place that became a classic tives together masterfully. The final the feminist novelist George Sand, who American manufacturing town but words of each chapter become the title scandalised French society by wearing originated in the Utopian vision of a man for the next, a pattern expressed in the trousers and smoking cigars, and subse- called Charles Landis. He envisioned an lives of the characters too. A Vineland quently carried on a long and stormy affair agrarian community of homeowners house is crumbling in storylines nearly with her. Having suffered since adoles- whose lives would be untainted by the 150 years apart; relationships in both cence from a wasting disease, probably tu- evils of alcohol. Half of “Unsheltered” is time-frames are unsettled by change; berculosis, he died tragically young, aged given over to Treat and her friendship in-laws prove awkward. The novelist’s 39. By then he was, as he remains, one of with Thatcher Greenwood, a fictional stitching is never visible, only the beauti- Poland’s best-known sons. His music is teacher struggling to spread Darwin’s ful cloth that results. still played and enjoyed all over the world. new doctrine. What1871and 2016 have in common is Since his life was almost a Romantic Their story alternates with that of a mood of revolutionary change. Willa work of art in itself, he has had no shortage Willa Knox and her family, who wash up becomes fascinated by Treat, her era and of biographers, starting immediately after in Vineland in 2016. When the university how frightening Darwin’s work seemed his death with his fellow composer and at which her husband taught went bank- to many: “Agreat shift was dawning, with friend of sorts, Franz Liszt, and continuing rupt, he and Willa lost not only a salary the human masters’ place in the king- in a steady trickle ever since. So was there a but their home. By lucky chance they dom much reduced from its former need for another one? Having previously inherit a house in Vineland from Willa’s glory.” In the present, Willa and her produced a magisterial three-volume bio- aunt; unfortunately, the place is a wreck. family must learn to make new lives in a graphy of Liszt, Alan Walker has searched And in the novel’s first chapter the joyous world of warming seas and melting ice. for new primary sources from Warsaw to arrival of a grandchild turns to tragedy “We can’t afford to stop doing the shit Washington, shed new light on many as- when the baby’s mother commits sui- that’s screwing up the weather, and can’t pects of Chopin’s life and cleared away a cide. The easeful middle age the couple afford to pick up the pieces after we do thicket of myths. He has much to say, too, imagined for themselves is upended. our shit,” she reflects. about the political, military and social as- Meanwhile an unnamed, blustering If that sounds gloomy, “Unsheltered” pects of the age, including two revolutions, candidate seems alarmingly likely to win never is. We got through this once before, various wars, epidemics and natural disas- the highest office in the land. Ms Kingsolver’s echoes seem to say; we’ll ters; he vividly brings to life the delights of Ms Kingsolver knits these two narra- get through it again, somehow. Paris salons and French country-house living, as well as the discomforts of 19th-century long-distance travel and the horrors of 2 These are problems of emphasis rather fects. That trend seems, worryingly, to have the era’s medicine. than accuracy. But in a field as ethically reversed in America in the 21st century. The How far studying a composer’s life elu- fraught as genetics, even that can be trou- irony is that the heritability of many traits cidates the music is an old and vexed ques- bling. For instance, as Mr Plomin notes, the rises if states do more to provide for all tion. Mr Walker identifies two schools of size of the genetic component of a particu- their citizens equally. thought. One is that the music could not lar trait—its “heritability”—varies between You might conclude that without broad have existed without the life, “with all its different populations. The heritability of measures to tamp down inequalities of op- joys and sorrows”, so they are inextricably educational attainment in Norway has in- portunity, genes have fewer opportunities entwined. The other is that art must always creased since the second world war as the to shine. “Blueprint” instead touts the im- be assessed in “splendid isolation”. country widened access to health care and portance of dna in shaping the individual. In Chopin’s case, the issue seems moot, schools, flattening out environmental ef- Hubris indeed. 7 because the life and the music are quite un-1 86 Books & arts The Economist November 10th 2018

2 related. At times when his experiences he was able to maintain long and strong them,” she says. “The marionette itself were dark, he might write a brilliantly friendships, many with fellow Poles. He couldn’t do anything, but the men around sunny piece, and vice versa. Chopin had no proved surprisingly adept, almost without it could do very bad things.” truck with programme music (the sort that trying, at attracting the financial and prac- She grew up in Koulikoro, about an hour tries to conjure up images or tell stories), in tical support he needed to keep on compos- from Bamako on the banks of the Niger riv- which other Romantic composers de- ing even as his health failed. er, a town known for its marionettes, lighted. He laughed at some of his contem- And even though he was lionised for masks and unique, sacred statuettes that poraries’ attempts to ascribe non-musical most of his life, he never took his gift for represent the dead. She was born into a no- meanings to his pieces. Mr Walker’s book granted, agonising over each composition, ble family in Mali’s complex caste system, contains plenty of analysis of specific crossing out, reinstating and crossing out rather than an artistic one, and her parents works, but he is careful not to suggest any again. However long it took, he laboured did not support her ambitions. “It was diffi- link between music and events. until each piece was exactly right. Because cult for my family to accept,” she says. Of 12 Scrupulous as it is, this monumental of this perfectionism, and the brevity of his siblings, she is the only artist, and the only biography is deeply engaging and enjoy- life, his oeuvre is relatively small. Before he daughter who chose not to have children, able. Chopin mostly comes out of it well, died, he asked for all his unpublished believing they would hamper her career. and on closer examination seems a less ex- manuscripts to be destroyed. His sister, Coming of age in the early decades of in- otic figure than his reputation suggests. He who oversaw his estate, demurred, thus dependence, she was a beneficiary of the was a kindly man with a good sense of hu- saving a few dozen extra works for posteri- investment in the arts made by Modibo mour. Despite being something of a loner, ty. The world should be grateful to her. 7 Keïta, Mali’s first president (from 1960-68). His government “understood that the arts were a very important part of creating a na- Art, gender and conflict tional identity and bringing people together,” says Mary Jo Arnoldi, a curator at the The puppet-mistress of Mali National Museum of Natural History in Washington and an expert on marionette culture. Ms Koné was educated at the Na- tional Institute of the Arts (ina), a cutting- edge college that, says Ms Arnoldi, “broke down gender and caste boundaries” and BAMAKO produced some of Mali’s finest artists. The struggles of the only female practitioner of a venerable art form Ms Koné has broken many taboos her- ach morning, Maoua Koné (pictured) nettist, male initiates determine whether a self. She made sculptures of torn vaginas to Ewakes beneath the black-eyed gaze of puppet’s spirit will be benevolent. Women illustrate the harm of genital cutting, stat- masks and marionettes on the walls of her are barred, Mr Camara maintains, because ues depicting domestic violence and satiri- cramped one-room flat in Bamako. When they have not been initiated, and because cal figurines of women wearing full Ms Koné, Mali’s only female marionettist, they are gossips. “Women talk too much,” veils—a burgeoning practice in Mali, of manipulates the shiny forms, her male he says. “They don’t keep secrets.” which she disapproves. For all his scepti- counterparts tremble. “The men are scared Ms Koné, a tall 60-year-old with cism, Mr Camara performed with her in the of me because they think I have a lot of cropped greying hair, says the men have national marionette troupe in the 1990s, magical powers,” she says. “They think it is nothing to worry about. Her marionettes when urban companies educated Malians not possible for a woman to be a marionet- do not have spirits or powers because they on subjects such as hiv and child labour. tist.” Her career has overcome chauvinism, are “modern”, made of clay and papier- This artistic progress has been violently only to be stifled by another stubborn ob- mâché rather than wood. She abjures the interrupted. After a partial jihadist occupa- stacle: violent conflict. old-fashioned kind. “I would never touch tion in 2012, followed by a coup d’état, for- Mali’s marionette theatre originated eigners no longer attend Ms Koné’s perfor- centuries ago in the villages of Bozo fisher- mances and workshops. Invitations from men and Bambara hunters in southern and European festivals and schools have dried central regions. The custom co-existed up. Donors have diverted funds to the secu- with Islam, the main religion, which has rity services. (Around 14,000 un peace- historically forbidden figurative represen- keepers remain in Mali; ethnic strife still tation of human beings. Performances ex- bubbles.) “Europeans are frightened to in- plore communities’ histories, tell morality vite us,” Ms Koné says; and “because there tales and limn the roles of men and wom- are explosions and people are being killed en. They celebrate the coming of the rains here, they won’t come.” and of the harvest. Masks and puppets Fodé Sidibé, director of Mali’s annual stand in for people and animals, but also marionette festival, thinks the current gov- character traits, spirits and ancestors. ernment and donors should sponsor the The country’s rich cultural life has al- arts to promote peace in a divided country. ways been segregated by gender. In the re- “The political establishment don’t under- nowned music scene, for example, women stand the value of culture,” Mr Sidibé says. rarely play the djembe, a kind of drum, or “The security problem will not be solved the kora, a lute-like instrument. Women with arms, but with arts.” have traditionally been forbidden from op- These days, though, Ms Koné’s avant- erating marionettes, or even making them, garde troupe—named “Torch of Liberty”— a craft that entails complex rituals, con- rarely have a chance to perform. But they ducted under cover of night and involving still meet every evening in the ina’s court- kola nuts and roosters. In these ceremo- yard, where they mould marionettes for a nies, says Broulaye Camara, a fellow mario- The show must go on show they may never stage. 7 Courses 87 88 Economic & financial indicators The Economist November 10th 2018

Economic data

Gross domestic product Consumer prices Unemployment Current-account Interest rates Currency units % change on year ago % change on year ago rate balance 10-yr gov't bonds change on per $ % change latest quarter* 2018† latest 2018† % % of GDP, 2018† latest,% year ago, bp Nov 7th on year ago United States 3.0 Q3 3.5 2.9 2.3 Sep 2.5 3.7 Oct -2.6 3.10 78.0 - China 6.5 Q3 6.6 6.6 2.5 Sep 2.1 3.8 Q3§ 0.5 3.35§§ -62.0 6.93 -4.3 Japan 1.3 Q2 3.0 1.1 1.2 Sep 0.9 2.3 Sep 3.8 0.13 11.0 113 0.6 Britain 1.2 Q2 1.6 1.3 2.4 Sep 2.4 4.0 Jul†† -3.4 1.49 18.0 0.76 nil Canada 1.9 Q2 2.9 2.3 2.2 Sep 2.3 5.8 Oct -2.6 2.54 65.0 1.31 -2.3 Euro area 1.7 Q3 0.6 2.1 2.2 Oct 1.7 8.1 Sep 3.4 0.45 12.0 0.87 -1.1 Austria 2.3 Q2 -4.0 2.9 2.0 Sep 2.1 4.9 Sep 2.2 0.57 -5.0 0.87 -1.1 Belgium 1.7 Q3 1.6 1.5 2.8 Oct 2.2 6.3 Sep -0.3 0.89 28.0 0.87 -1.1 France 1.5 Q3 1.7 1.7 2.2 Oct 2.1 9.3 Sep -0.9 0.79 4.0 0.87 -1.1 Germany 1.9 Q2 1.8 1.9 2.5 Oct 1.8 3.4 Sep‡ 7.9 0.45 12.0 0.87 -1.1 Greece 1.8 Q2 0.9 2.0 1.1 Sep 0.8 19.0 Jul -1.3 4.30 -78.0 0.87 -1.1 Italy 0.8 Q3 0.1 1.1 1.6 Oct 1.4 10.1 Sep 2.4 3.35 165 0.87 -1.1 Netherlands 3.1 Q2 3.3 2.8 2.1 Oct 1.7 4.7 Sep 10.1 0.55 10.0 0.87 -1.1 Spain 2.5 Q3 2.4 2.7 2.2 Oct 1.8 14.9 Sep 1.1 1.45 -2.0 0.87 -1.1 Czech Republic 2.7 Q2 2.9 3.0 2.3 Sep 2.3 2.2 Sep‡ 0.8 2.12 52.0 22.6 -2.1 Denmark 1.5 Q2 1.0 1.3 0.6 Sep 1.1 3.9 Sep 7.2 0.40 -2.0 6.50 -1.1 Norway 3.3 Q2 1.5 1.6 3.4 Sep 2.9 4.0 Aug‡‡ 8.5 2.00 41.0 8.32 -1.6 Poland 5.1 Q2 4.1 4.6 1.7 Oct 1.8 5.7 Sep§ -0.6 3.21 -20.0 3.74 -1.9 Russia 1.9 Q2 na 1.6 3.6 Oct 2.9 4.5 Sep§ 5.1 8.80 117 66.2 -10.6 Sweden 2.4 Q2 3.1 2.7 2.3 Sep 2.0 6.0 Sep§ 3.8 0.66 -12.0 9.00 -6.4 Switzerland 3.4 Q2 2.9 2.7 1.1 Oct 1.0 2.5 Sep 9.9 0.09 15.0 1.00 nil Turkey 5.2 Q2 na 3.8 25.2 Oct 15.3 10.8 Jul§ -5.7 16.7 448 5.40 -28.0 Australia 3.4 Q2 3.5 3.2 1.9 Q3 2.1 5.0 Sep -2.6 2.73 15.0 1.37 -4.4 Hong Kong 3.5 Q2 -0.9 3.4 2.7 Sep 2.2 2.8 Sep‡‡ 3.7 2.44 61.0 7.83 -0.4 India 8.2 Q2 7.8 7.4 3.8 Sep 4.6 6.9 Oct -2.4 7.80 91.0 73.1 -11.0 Indonesia 5.2 Q3 na 5.2 3.2 Oct 3.4 5.3 Q3§ -2.6 8.60 194 14,580 -7.3 Malaysia 4.5 Q2 na 5.0 0.3 Sep 0.9 3.4 Aug§ 2.6 4.15 14.0 4.16 1.7 Pakistan 5.4 2018** na 5.4 7.0 Oct 5.4 5.9 2015 -5.8 12.0††† 380 132 -20.4 Philippines 6.1 Q3 5.7 6.2 6.7 Oct 5.2 5.4 Q3§ -1.5 7.87 254 53.0 -3.1 Singapore 2.6 Q3 4.7 3.5 0.7 Sep 0.6 2.1 Q3 17.4 2.52 39.0 1.37 -0.7 South Korea 2.0 Q3 2.3 2.8 2.0 Oct 1.6 3.6 Sep§ 4.5 2.27 -27.0 1,123 -1.0 Taiwan 2.3 Q3 1.9 2.6 1.2 Oct 1.7 3.7 Sep 12.9 0.91 -10.0 30.8 -1.9 Thailand 4.6 Q2 4.1 4.1 1.2 Oct 1.2 1.0 Sep§ 9.6 2.57 25.0 32.8 1.1 Argentina -4.2 Q2 -15.2 -2.3 40.3 Sep 33.6 9.6 Q2§ -4.3 11.3 562 35.9 -50.7 Brazil 1.0 Q2 0.7 1.5 4.6 Oct 3.8 11.9 Sep§ -1.0 8.14 -100 3.76 -12.8 Chile 5.3 Q2 2.8 3.9 3.1 Sep 2.5 7.1 Sep§‡‡ -2.0 4.50 5.0 677 -6.3 Colombia 2.5 Q2 2.3 2.7 3.3 Oct 3.3 9.5 Sep§ -2.7 7.05 33.0 3,141 -3.3 Mexico 2.6 Q3 3.6 2.1 5.0 Sep 4.8 3.3 Sep -1.8 8.67 146 19.8 -3.4 Peru 5.4 Q2 12.5 4.1 1.8 Oct 1.4 6.1 Sep§ -1.8 5.81 79.0 3.36 -3.6 Egypt 5.4 Q2 na 5.3 16.0 Sep 17.0 9.9 Q2§ -2.0 na nil 17.9 -1.5 Israel 3.9 Q2 1.8 3.6 1.2 Sep 0.8 4.0 Sep 1.7 2.45 77.0 3.67 -4.1 Saudi Arabia -0.9 2017 na 1.5 2.1 Sep 2.6 6.0 Q2 8.0 na nil 3.75 nil South Africa 0.4 Q2 -0.7 0.7 4.9 Sep 4.8 27.5 Q3§ -3.5 9.08 -15.0 14.0 1.9 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist poll or 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: Index one Dec 29th index one Dec 29th The Economist commodity-price index % change on Nov 7th week 2017 Nov 7th week 2017 2005=100 Oct 30th Nov 6th* month year United States DJIA 26,180.3 4.2 5.9 Pakistan KSE 41,544.0 -0.3 2.7 Dollar Index United States NAScomp 7,570.8 3.6 9.7 Singapore STI 3,065.4 1.5 -9.9 All Items 137.4 134.9 -3.5 -8.0 China Shanghai Comp 2,641.3 1.5 -20.1 South Korea KOSPI 2,078.7 2.4 -15.8 Food 142.7 137.7 -4.7 -9.1 China Shenzhen Comp 1,340.4 3.6 -29.4 Taiwan TWI 9,908.4 1.1 -6.9 Industrials Japan Nikkei 225 22,085.8 0.8 -3.0 Thailand SET 1,675.3 0.4 -4.5 All 131.9 132.1 -2.1 -6.7 Japan Topix 1,652.4 0.4 -9.1 Argentina MERV 31,404.7 6.5 4.5 Non-food agriculturals 120.5 122.6 -2.2 -7.4 Britain FTSE 100 7,117.3 -0.2 -7.4 Brazil BVSP 87,714.3 0.3 14.8 Metals 136.7 136.2 -2.1 -6.4 Canada S&P TSX 15,369.4 2.3 -5.2 Mexico IPC 46,917.4 6.8 -4.9 Sterling Index Euro area EURO STOXX 50 3,246.2 1.5 -7.4 Egypt EGX 30 13,615.9 2.8 -9.3 All items 196.3 187.6 -3.4 -7.6 France CAC 40 5,137.9 0.9 -3.3 Israel TA-125 1,488.1 3.6 9.1 Germany DAX* 11,579.1 1.1 -10.4 Saudi Arabia Tadawul 7,792.6 -1.4 7.8 Euro Index Italy FTSE/MIB 19,540.9 2.6 -10.6 South Africa JSE AS 54,700.6 4.4 -8.1 All items 150.3 147.0 -3.0 -6.7 Netherlands AEX 528.6 1.9 -2.9 World, dev'd MSCI 2,084.4 3.1 -0.9 Gold Spain IBEX 35 9,167.9 3.1 -8.7 Emerging markets MSCI 997.9 4.4 -13.9 $ per oz 1,224.4 1,228.0 3.3 -3.6 Poland WIG 57,818.4 4.5 -9.3 West Texas Intermediate Russia RTS, $ terms 1,164.3 3.4 0.9 $ per barrel 66.2 62.2 -17.0 8.8 Switzerland SMI 9,050.5 0.3 -3.5 US corporate bonds, spread over Treasuries Turkey BIST 95,493.3 5.9 -17.2 Dec 29th Sources: CME Group; Cotlook; Darmenn & Curl; Datastream from Australia All Ord. 5,982.0 1.2 -3.0 Basis points latest 2017 Reﬁnitiv; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Hong Kong Hang Seng 26,147.7 4.7 -12.6 Investment grade 154 137 India BSE 35,237.7 2.3 3.5 High-yield 413 404 Indonesia IDX 5,939.9 1.9 -6.5 Sources: Datastream from Reﬁnitiv; Standard & Poor's Global Fixed For more countries and additional data, visit Malaysia KLSE 1,714.9 0.3 -4.6 Income Research. *Total return index. Economist.com/indicators Graphic detail The Economist November 10th 2018 89

Combat deaths per 100,000 peopleworldwide Chance of ﬁghting in a conﬂict By nationality, grouped by region Share of years in which a country sufered at least 100 combat deaths, 1900-2017

Europe Americas Asia By GDP per person By regime type $’000, 2011 prices Polity scale Africa Middle East 12% 20%

Colonies 9 (no regime 15 score) 150 6 10

3 5

0 0 125 0 0.5 1 2 4 8 16 32 64 -10 10 Poorer Richer Autocratic Democratic

100 Countries with a GDP per person of $4,000- Partially democratic countries have 8,000 have fought in conflicts in 12% of years fought in conflicts in 18% of years Examples: Britain in 1914, Russia in 1941, Examples: Germany in 1914, Japan in Algeria in 1954, Iran in 1980, Syria in 2011 1941, Uganda in 1980, Yemen in 2015

→ These three charts count the deaths of soldiers and civilians caused by weapons, in 50 conﬂicts involving at least one state army and 100 fatalities. The data include interstate and civil wars. They exclude deaths from genocide, terrorism, starvation and disease, First world war Second world war such as the 500,000-800,000 people who died in the Rwandan genocide of 1994 and the 1m-5m who died in the Congo war of 1998-200 . Korea Sino-Japanese war 25 Mexican revolution US-Vietnam war Iraq-Iran war Chinese civil war Algeria Soviet-Afghan war Europe Asia Syria 0

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2017 Sources: Peace Research Institute Oslo; Uppsala Conﬂict Data Program; Centre for Systemic Peace; Maddison Project Database; iCasualties.org; World Bank; The Economist

Conflict and development too. Another reason might be the spread of cies nor full democracies, but rather coun- democracy and global norms. Bruce Rus- tries in between. A similar finding applies No man’s land sett and John Oneal, two academics, have to prosperity. Middle-income countries are found that countries that are democratic, more warlike than very poor or rich ones. trade heavily and belong to lots of interna- What causes such states’ belligerence? tional bodies fight each other less often Warfare is expensive, and citizens in tyran- than authoritarian, isolationist states do. nies struggle to organise uprisings. Some The Economist has analysed all interna- studies find that civil wars are more com- Partially democratic countries fight in tional and civil wars since 1900, along with mon after sudden regime changes, which wars most often the belligerents’ wealth and degree of de- cause instability. Perhaps a little political hen the first world war ended on mocratisation (assigning colonies to their competition or wealth make it easier to WNovember 11th 1918, David Lloyd own category). We counted all conflicts in- take up arms. All this might explain why George, Britain’s prime minister, told Par- volving national armies in which at least the bloodiest battles since 1900 have shift- liament: “I hope we may say that thus, this 100 people per year were killed, excluding ed from Europe, to Asia, to the Middle East fateful morning, came to an end all wars.” deaths from terrorism, massacres of civil- and Africa. If partial democracy is linked to History proved him wrong. But 100 years ians outside combat, starvation or disease. conflict, recent backsliding in countries on, the world is far more peaceful. Fewer The data show a strong correlation be- like Turkey looks even more worrying. than one in 100,000 people have died in tween democracy and peace, with a few ex- Even a bit of democracy, however, saves combat per year since 2000—one-sixth the ceptions. (The United States has been quite lives overall—because empires and dicta- rate between 1950 and 2000, and one-fifti- bellicose, and its advanced democracy did tors are more likely to starve and slaughter eth of that between 1900 and 1950. Why? not prevent a civil war in 1861 that claimed their subjects. Counting man-made fam- The simplest explanation is the advent more American lives than any conflict ines and genocides, colonial and undemo- of nuclear weapons, which deter major since.) Moreover, the relationship does not cratic powers have caused 250m premature powers from fighting each other. But wars seem to be linear. The countries most deaths since 1900—five times the death toll have declined among non-nuclear states, prone to wars appear to be neither autocra- from combat in all wars combined. 7 90 Obituary Whitey Bulger The Economist November 10th 2018

mack housing project who would sort out local bullies with threats, or lightning fists, to help the weak. The rockiness happened outside home. Some of the money he made went on weapons for the ira, a good cause, as many in Southie saw it. As he told some federal drug agents once, as they were frisking him and strip- ping his car, they were the good-good guys, and he was bad-good. “Crime” and “business” were another slippery pair of words. He despised stimulants of any kind: seldom sipped wine, never smoked. But for more than a decade, as boss of the Winter Hill Gang, he controlled the drug trade in the city and, to a large extent, horses, dogs, loan-sharking and the liquor trade. All the vices. Power was wrested from other mobsters, especially from Italian- American gangs, as any enterprises might outdo each other. If liquor retailers got successful they soon fell foul of his protection rackets, as did the owner of the store that became the South Boston Liquor Mart, the favourite hangout of his political allies. If drug distributors wanted to operate on his territory, he shook them down, making $30m at it by one estimate. This criminal behaviour was obviously business, too. And there were rules. Heroin was banned in South Boston because it was a dirty drug, stuck in your arm with a needle that gave you aids. Instead, he dealt with a dozen big cocaine distributors all over the state. Cocaine was taken so- cially and cleanly. Dirty, clean—a thin line, again. The word that bugged him most was “informant”. A snitch, a rat. While he was “in retirement” in California the story got out that he had been recruited by John Connolly of the fbi, in 1975, to in- form on the Patriarca crime family and on rival Irish gangs. He helped the agency well into the 1990s, getting in exchange free rein for his business activities and immunity from arrest. Since his brother Billy, who always looked out for him, was at the time president of the state Senate, the most powerful politician in Massachu- setts and a fount of patronage, it was a cosy arrangement both for local fbi field officers and for him. The agents even bought their Christmas wine at the South Boston Liquor Mart. Nonetheless he denied it passionately. Among the Irish in Southie there was nothing worse you could be called, than a rat. He insisted he had never been one. As a thief from the age of 13 he’d had The business of crime many a beating in police stations, but had not cracked. In prison he had been put in solitary for months, but told them nothing. He would go to hell before he did. The way he saw it, Connolly, who was a rogue agent anyway, had given him useful business information and he had paid him for it; it was that way round. He insisted from the very start, sitting in Connolly’s car that night, that his role James “Whitey” Bulger, South Boston’s mobster-in-chief, and title would be “strategist”. Any ratting had been done by others, was beaten to death on October 30th, aged 89 including his chief associate, Steve Flemmi, not by him. That word hen the manhunt was on for Whitey Bulger, on the lam for “associate”, too, had a business ring to it. And it preserved the dis- W16 years and the fbi’s second-most-wanted after Osama bin tance he liked to keep from almost everyone, in case they were no Laden, officers would often check bookshops. He liked books. In longer his friend and, with eyes cold as marble and that hair-trig- his shabby apartment in Santa Monica, California, where he ger violence he was famous for, he had to kill them. turned up living as Charlie Gasko behind thick black curtains, he That last was a word he avoided altogether. At his trial in 2011on had 200 books. True, they hid the holes in the walls where he 32 counts of racketeering, extortion and weapons possession he stashed guns and $800,000 in cash. But he read them, too. was also charged with complicity in 19 killings, and was convicted Words entertained him, and they plagued him in a way. Like two years later of 11of them. He said he was not guilty, though the people calling him “Whitey” from his blond hair, which infuriated evidence was heard in court, clearly enough. How he had chained him, when he should have been “Jimmy”, or “Boots”, from the cow- Bucky Barrett and tortured him into handing over the proceeds boy boots he wore. Or like the words “good” and “bad”. Clearly he from a bank robbery, then shot him in the head anyway. How he was bad, because he was a racketeer, an extortionist (though “rent had stabbed Louie Litif with an ice pick, and gunned down Eddie collector” was the term he preferred), an arms trafficker and a Connors in a phone booth; how he had joked about his victims, as mobster. His first spree of robberies in 1955 was bad in the classic he drove past the spots where he had buried them. Hollywood style, bursting into banks with a pistol in each hand When he first killed a man, shooting him point-blank between and fleeing with his girlfriend in a getaway car. James Cagney was the eyes, he picked the wrong, innocent brother of a pair of twins. in his mind then. Later he wore with pride his belt buckle from Al- His then-boss told him not to worry; the man smoked too much, catraz. As crime became his fixed career, from the 1970s to the and would die soon anyway. It was a lesson in callousness he did 1990s, no one in eastern Massachusetts dared cross him. not forget. He occasionally regretted the shame he had brought on Yet in Southie, home turf, he bought turkeys for the poor at his family, but for his victims and their relatives he felt nothing. Thanksgiving and held open doors for women. By day at least, he Most, as he saw it, had been informants. And if you silenced an in- was still that neat well-mannered boy from the Mary Ellen McCor- formant, was that not good? 7