Lebanon after the blast The trouble with Trumpian TikTok How much to spend on a vaccine? Economics briefs: rethinking the basics

AUGUST 8TH–14TH 2020 The absent student How covid-19 will change college ©Photograph: Laurent Ballesta/Gombessa Project www.blancpain-ocean-commitment.com HELP PROTECT THEOCEAN TRANSMIT OURPASSION, RAISE AWARENESS,

MANAMA · MOSCOW · MUNICH · NEW YORK · PARISBEIJING · · CANNES SEOUL · · DUBAI · SHANGHAI GENEVA· SINGAPORE · HONG · KONG TAIPEI· KUALA · LUMPUR TOKYO · · LAS ZURICH VEGAS · LONDON · MACAU · MADRID Fifty Fathoms COLLECTION Contents The Economist August 8th 2020 3

The world this week Asia 5 A summary of political 17 Sectarianism in India and business news 18 Australia’s internal borders Leaders 19 Corruption in Uzbekistan 7 Universities 19 Schools v hair in Thailand The absent student 20 Banyan Lee Teng-hui, 8 Tech wars Taiwan’s Trojan horse Trumpian TikTok 8 Lebanon China No way to run a country 21 Hunan’s cultural rise 9 Vaccine economics 22 Debate about divorce A bigger dose On the cover 10 Gay rights The world comes out Covid-19 will be painful for 11 Economics universities, but it will also When the facts change bring long-needed change: leader, page 7. Higher United States Letters education was already in 23 Electing a president trouble. The pandemic could 12 On reopening schools, 24 The postal service push some institutions over oil, French accents, the brink: briefing, page 14 Amazon, sports teams 25 Hyperloops 25 Covid-19 and pro sports • Lebanon after the blast Briefing A massive explosion caused by 26 Washington history spectacular negligence shatters 14 Covid-19 and college 27 UBI and cities Uncanny University an already-reeling Lebanese 28 Lexington One America capital, page 33. It should lead to News Network big change: leader, page 8 • The trouble with Trumpian The Americas TikTok The forced sale of the 29 Argentina’s debt deal app is the wrong way to deal 30 Democracy wins in with Chinese tech: leader, Guyana and Suriname page 8. What does a middle-aged tech giant want 32 Bello Joe Biden and Latin with a teen sensation? Page 50 America • How much to spend on a vaccine? The economics of Middle East & Africa vaccination: leader, page 9. As scientists race to develop 33 An explosion ruins Beirut covid-19 vaccines, governments 34 The mess in Mali must work out how best to 35 Prohibition in a pandemic distribute the goods, page 55 36 Covid-19 nears 1m in Africa

Bagehot Boris Johnson’s new list of peers reveals a dangerous contempt for governing institutions, We are working hard to page 43 ensure that there is no dis- ruption to print copies of The Economist as a result of the coronavirus. But if you have digital access as part of your subscription, then acti- vating it will ensure that you can always read the digital version of the newspaper as well as all of our daily jour- nalism. To do so, visit economist.com/activate 1 Contents continues overleaf 4 Contents The Economist August 8th 2020

Europe Economics brief 37 Racism in Europe 53 New thinking on 38 Turkey v social media competition 38 Genoa reopens its bridge 39 Covid-19 in the Balkans 39 Spain’s pricey fast trains 40 Charlemagne On staycation Finance & economics Britain 55 Paying for vaccines 41 Is Caledonia Catalonia? 56 China’s payments duopoly 42 Covid-19 and Scotland 57 Bad loans in Europe 43 Bagehot The smell of rot 58 “Pre-docs” in economics 59 The costs of rosy forecasts 60 Free exchange Dislodging the dollar

International Science & technology 44 How coming out is 63 AI and language changing 64 Better covid-19 testing 65 Marine insects 65 High-tech barbecuing

Business Books & arts 47 America Inc’s earnings 66 Museums and restitution 48 Joining the S&P 500 67 Johnson Donald Trump 49 Nvidia woos Arm 68 Climate change in Iceland 50 Microsoft’s TikTok gamble 69 Class and privilege 50 Sverige AB outshines 69 Home Entertainment Deutschland AG Playing the saxophone 51 Bartleby Gripes 52 Schumpeter The future Economic & financial indicators of trucking 72 Statistics on 42 economies

Graphic detail 73 How lockdown fads have become long-term pursuits

Obituary 74 Olivia de Havilland, a legacy of Hollywood’s Golden Age

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Colombia’s Supreme Court By contrast, Chicago joined a ordered that Álvaro Uribe, a growing list of American cities Coronavirus briefs conservative former president, that will keep schools closed in To 6am GMT Aug 6th 2020 be placed under house arrest. It September and continue with Weekly confirmed cases by area, ’000 is examining whether Mr Uribe remote learning. had tried to tamper with wit- 800 Other nesses in an investigation that Black Lives Matter activists 600 he instigated against a left- scored their biggest upset in Latin America wing senator. Mr Uribe, the the Democratic primaries so 400 US mentor of Colombia’s current far when Cori Bush defeated 200 president, Iván Duque, is the William Lacy Clay, the in- first sitting or former president cumbent congressman in St Europe 0 A state of emergency was since the 1950s to be detained. Louis. Mr Clay, who is black, Mar Apr May JulJun Aug declared in Lebanon, after a has served the district since Confirmed deaths* huge explosion at Beirut’s Five months after the vote, a 2001; his father held the seat Per 100k Total This week port. The blast was felt in final result was declared in before that for 32 years. Belgium 85 9,859 23 Cyprus, 240km away. It killed Guyana’s presidential elec- Britain 68 46,210 249 at least 135 people, injured tion, allowing Irfaan Ali, of the The former king of Spain, Juan Peru 61 20,228 1,412 5,000 and left 300,000 home- mainly Indo-Guyanese Peo- Carlos, went into voluntary Spain 61 28,499 58 less. The cause was a fire in a ple’s Progressive Party, to be exile, two months after Spain’s Italy 58 35,181 52 Sweden 57 5,760 30 warehouse holding 2,750 sworn into office. The new supreme court opened an Chile 51 9,792 514 tonnes of ammonium nitrate, a president will be able to decide investigation into his alleged United States 48 157,991 7,343 chemical used in fertiliser and how to spend the country’s involvement in a high-speed France 46 30,174 70 bombs. This highly explosive new-found oil income, which rail contract in Saudi Arabia. Brazil 46 97,256 7,122 stockpile had lain neglected for began flowing in February. He said he would assist prose- Sources: Johns Hopkins University CSSE; UN; six years. Lebanon’s prime cutors as required. The Economist *Definitions differ by country minister, Hassan Diab, vowed Sri Lankans voted in parlia- that those responsible would mentary elections. Early Hong Kong’s leader, Carrie Manila was put back into “pay the price”. Lebanon was in returns suggest the Sri Lanka Lam, postponed elections to lockdown. The 13m people in an economic and political People’s Front of President the legislature that had been the Philippine capital will crisis even before the blast. Gotabaya Rajapaksa will win a due in September. They will be endure fewer restrictions than clear majority. held a year later, she said, under an earlier lockdown, but Israeli aircraft struck military because of covid-19. Pro-de- mass transit is shut. targets in southern Syria, in Jihadists loyal to Islamic State mocracy candidates had been retaliation for an alleged at- attacked a prison in the city of expected to do well. The Australian state of Victoria tempt by militants to plant Jalalabad in eastern Afghani- declared an emergency and explosives near the Israeli- stan. Some 29 people were America imposed sanctions on imposed a night-time curfew occupied Golan Heights area, killed during a day-long gun the Xinjiang Production and in Melbourne, its capital. The which is also claimed by Syria. battle, including guards, Construction Corps, and two city’s residents can only shop assailants and inmates. Several Communist Party officials and exercise within 5km of The United Arab Emirates hundred prisoners escaped, linked to it, for their alleged their home. began operating the Arab including fighters from is and role in human-rights abuses. world’s first nuclear power the Taliban. Xinjiang is a vast Chinese The Democratic convention plant. The oil-rich uae hopes it region where many ethnic- in Milwaukee will now be will meet a quarter of its elec- Narendra Modi, India’s prime Uighurs have been locked up entirely virtual. Some party tricity needs once it is fully minister, laid the foundation for their devotion to Islam and officials will still go to the city, operational. Qatar, a rival, has stone of a temple to the Hindu their Turkic culture. but Joe Biden is to broadcast described the plant as a “fla- god Ram in the city of Ayodhya. his big speech from Delaware. grant threat to regional peace The temple is being built on China’s leader, Xi Jinping, and environment”. the site of a mosque that was declared the official comple- Deborah Birx, who heads the torn down by an organised tion of the country’s BeiDou White House’s task force on A report by the bbc Persian Hindu mob in 1992, sparking satellite-navigation system, covid-19, warned that the service accused Iran of cov- riots in which 2,000 people intended as a rival to America’s disease is more widespread in ering up deaths from covid-19. died. Its construction has been Global Positioning System, or America now than in April. Leaked official data showed the a goal of Mr Modi’s Bharatiya gps. A Chinese general said it That earned her a rebuke from number of Iranians who have Janata Party since the 1980s. marked an “important mile- Donald Trump, who tweeted died with covid-19 symptoms stone” on China’s path towards that she was “Pathetic!” for to be nearly three times higher The children’s commissioner becoming a “space power”. repeating what he said was a than the government admits. for England said that schools Democratic argument. Known infections were almost should be opened ahead of The SpaceX capsule that trans- double the public figures. pubs, restaurants and shops, ported two astronauts to the and only shut when essential: International Space Station For our latest coverage of the Armed men thought to belong “first to open, last to close”. She came safely back to Earth, virus and its consequences to Boko Haram, a Nigerian listed various ways in which touching down in the sea near please visit economist.com/ jihadist group, attacked a missing out on education Florida’s Gulf coast. This was coronavirus or download the refugee camp in Cameroon, harms children, especially the nasa’s first spacecraft splash- Economist app. killing 17 people. poorest ones. down since 1975. 6 The world this week Business The Economist August 8th 2020

In an extraordinary turn of Elizabeth Warren, an American economy running, saw gdp “healthy” and it has increased events, Donald Trump said he senator, wrote to the Securities shrink by 8.6%. its planned passenger capacity would now give his blessing to and Exchange Commission this quarter to 40%. Faced with Microsoft’s recent proposal to asking it to investigate “poten- Two big takeovers involving a cash crunch, iag, the owner acquire the American oper- tial incidents of insider trad- health-tech companies were of British Airways, said it ations of TikTok, after the ing” before the announcement announced. Siemens Healthi- would issue new shares to raise software giant said it had that Kodak was to receive a neers, a group listed separately up to €2.75bn ($3.3bn). addressed the president’s government loan to make to Siemens, its parent com- concerns. Mr Trump had generic drugs. Kodak’s share pany, said it would buy Varian James Murdoch resigned from threatened to shut down the price soared by over 2,000% Medical Systems, best known the board of News Corporation, video app in the United States following the announcement, for its use of artificial intelli- because of “certain editorial because of worries that its but has fallen by more than gence and machine learning in content”. He is Rupert Mur- Chinese owner might collect half since then. cancer treatments, for $16.4bn. doch’s youngest son and was user data for the Chinese And Teladoc Health, which once seen as an heir to his government. Warning that he operates a telemedicine plat- father’s media empire, but he might intervene further, Mr GDP form, struck a deal to acquire has drifted away from the Q2 2020, % decrease on previous quarter Trump suggested that the us Livongo, a rival, for $18.5bn. business to take up liberal 0-3-6-9-12-15 Treasury should get a cut from causes. That empire is much any deal. Portugal Ford announced that Jim smaller now anyway, after the Belgium Hackett is to step down as chief sale of film and television Euro zone executive. Jim Farley, the chief assets to Disney in 2019. Environmental crusader Germany operating officer, will take over bp said it aimed to reduce United States in October. Mr Hackett has held production in oil and gas by Sweden the position for three years, a Live from your living room 40% before 2030 and hugely Lithuania time of lacklustre profits that With cinemas under restric- increase investment in renew- drove many investors to de- tions on social distancing and Sources: Eurostat; national statistics able energy as part of its project spair. Ford did report a second- facing the prospect of more to achieve net zero carbon- A raft of data for the second quarter net profit of $1.1bn, but lockdowns, Disney decided to dioxide emissions by 2050. It is quarter revealed the extent of that was mostly down to gains release “Mulan”, the live ver- the most ambitious plan put the damage that the pandemic from an investment; without sion of its animated hit, on forward by an oil company yet is doing to economies. The the gains it slipped to a loss. Disney+ in September. Its in the switch to green energy. euro zone’s economy was General Motors and Fiat Chrys- streaming service has attracted bp reported a headline loss of 12.1% smaller than in the previ- ler reported losses, but they over 60m subscribers since $6.7bn for the second quarter, ous three months. Spain’s gdp were smaller than expected. launching late last year, mostly because it wrote down contracted by 18.5%, France’s though it has yet to cover its assets in light of lower oil by 13.8% and Italy’s by 12.4%. EasyJet operated just 709 costs. Overall, Disney reported prices. It also reduced the size Earlier figures showed flights for the three months a net loss of $4.7bn from April of its shareholder dividend for America’s economy shrinking ending June, in contrast with to June, its first since 2001, the first time in a decade. by 9.5% in the quarter. 165,656 in the same quarter last mostly because it had to close Sweden, which controversially year. However, the European its theme parks at the start of bp was not alone among the oil avoided a lockdown to keep its airline says demand is now the pandemic. giants in revealing a painful quarter. Chevron reported a loss of $8.3bn and ExxonMobil $1.1bn. Shell recently wrote down its assets by $16.8bn.

Bolstering its balance-sheet, Marathon Petroleum, an oil- refining company, agreed to sell its Speedway petrol stations to Seven & i Holdings, the Japanese owner of 7-Eleven convenience stores, for $21bn.

Anthony Levandowski, who helped found Google’s driver- less-car project, was sentenced to 18 months in prison for stealing the company’s tech- nology before going to work on a rival scheme for Uber. Mr Levandowski, once one of Silicon Valley’s brightest stars, will not go to jail yet because of covid-19. He was also ordered to pay $756,000 in restitution. Leaders Leaders 7 The absent student

Covid-19 will be painful for universities, but it will also bring long-needed change n the normal run of things, late summer sees airports in the Institute for Fiscal Studies (ifs) has calculated that a fifth of grad- Iemerging world fill with nervous 18-year-olds, jetting off to be- uates would be better off if they had never gone to university. In gin a new life in the rich world’s universities. The annual trek of America four in ten students still do not graduate six years after more than 5m students is a triumph of globalisation. Students starting their degree—and, for those who do, the wage premium see the world; universities get a fresh batch of high-paying cus- is shrinking. Across the world as a whole, student enrolment tomers. Yet with flights grounded and borders closed, this mi- continues to grow, but in America it declined by 8% in 2010-18. gration is about to become the pandemic’s latest victim. Then came covid-19. Although recessions tend to boost de- For students, covid-19 is making life difficult. Many must mand for higher education, as poor job prospects spur people to choose between inconveniently timed seminars streamed into seek qualifications, revenues may nevertheless fall. Govern- their parents’ living rooms and inconveniently deferring their ment rules will combine with student nerves to keep numbers studies until life is more normal. For universities, it is disas- down. Last month the Trump administration said new foreign trous. They will not only lose huge chunks of revenue from for- students would not be allowed to enter the country if their class- eign students but, because campus life spreads infection, they es had moved online. Sydney, Melbourne, unsw and Monash, will have to transform the way they operate (see Briefing). four of Australia’s leading universities, rely on foreign students Yet the disaster may have an upside. For many years govern- for a third of their income. The ifs expects losses at English uni- ment subsidies and booming demand have allowed universities versities to amount to over a quarter of one year’s revenues. to resist changes that could benefit both students and society. The damage from covid-19 means that, in the short term at They may not be able to do so for much longer. least, universities will be more dependent on governments than Higher education has been thriving. Since 1995, as the notion ever. The ifs reckons that 13 universities in Britain risk going spread from the rich world to the emerging one that a degree bust. Governments ought to help colleges, but should favour in- from a good institution was essential, the number of young peo- stitutions that provide good teaching and research or benefit ple enrolling in higher education rose from 16% of the relevant their community. Those that satisfy none of those criteria age group to 38%. The results have been visible on swanky cam- should be allowed to go to the wall. puses throughout the Anglosphere, whose bet- Those that survive must learn from the pan- ter universities have been the principal benefi- demic. Until now most of them, especially the ciaries of the emerging world’s aspirations. ones at the top of the market, have resisted put- Yet troubles are piling up. China has been a ting undergraduate courses online. That is not source of high-paying foreign students for because remote teaching is necessarily bad—a Western universities, but relations between the third of graduate students were studying fully West and China are souring. Students with ties online last year—but because a three- or four- to the army are to be banned from America. year degree on campus was universities’ and Governments have been turning against uni- students’ idea of what an undergraduate educa- versities, too. In an age when politics divides along educational tion should look like. Demand for the services of universities lines, universities struggle to persuade some politicians of their was so intense that they had no need to change. merit. President Donald Trump attacks them for “Radical Left In- Now change is being forced upon them. The College Crisis doctrination, not Education”. Some 59% of Republican voters Initiative at Davidson College says that less than a quarter of have a negative view of colleges; just 18% of Democrats do. In American universities are likely to teach mostly or wholly in per- Britain universities’ noisy opposition to Brexit has not helped. son next term. If that persists, it will reduce the demand. Many Given that the state pays for between a quarter and a half of ter- students buy the university experience not just to boost their tiary education in America, Australia and Britain, through stu- earning capacity, but also to get away from their parents, make dent loans and grants, the government’s enthusiasm matters. friends and find partners. But it should also cut costs, by giving Scepticism among politicians is not born only of spite. Gov- students the option of living at home while studying. ernments invest in higher education to boost productivity by in- creasing human capital. But even as universities have boomed, Back to the mortarboard productivity growth in the rich-country economies has fallen. Covid-19 is catalysing innovation, too. The Big Ten Academic Al- Many politicians suspect that universities are not teaching the liance, a group of midwestern universities is offering many of its right subjects, and are producing more graduates than labour 600,000 students the opportunity to take online courses at other markets need. Small wonder that the state is beginning to pull universities in the group. There is huge scope for using digital back. In America government spending on universities has been technology to improve education. Poor in-person lectures could flat in recent years; in Australia, even as the price of humanities be replaced by online ones from the best in the world, freeing up degrees doubles, so it will fall for subjects the government time for the small-group teaching which students value most. deems good for growth. Universities are rightly proud of their centuries-old tradi- There are questions about the benefits to students, too. The tions, but their ancient pedigrees have too often been used as an graduate premium is healthy enough, on average, for a degree to excuse for resisting change. If covid-19 shakes them out of their be financially worthwhile, but not for everybody. In Britain the complacency, some good may yet come from this disaster. 7 8 Leaders The Economist August 8th 2020

Tech wars Trumpian TikTok

The forced sale of the app is the wrong approach to Chinese tech n december 2017 a Chinese technology firm called ByteDance also Tencent’s WeChat app and “countless more” Chinese firms Ibought Musical.ly, an app which let its young users dance and “feeding data directly to...their national security apparatus”. lip-sync to music videos. This did not, at the time, look like a rec- The data threat from China is real. But nationalist whack-a- ipe for geopolitical strife. ByteDance merged Musical.ly with a mole, backed up with knee-jerk threats of expropriation, is no similar app called TikTok, which started growing at a blistering way to respond. The apparent detachment from any rules or pro- pace. Today TikTok has 100m users in America, and competes cedure undermines investor confidence in America and heaps with Facebook and Snap. With growing popularity has come political pressure on technocratic bodies like cfius, which growing scrutiny, as Sino-American tensions spread from trade ought to consider cases based on their merits. to tech, and a barrage of invective from President Donald Trump. America would do better to strengthen the process of vetting This looks set to culminate in a forced sale of TikTok’s American foreign tech investments, and to get its own data privacy in or- business to a domestic buyer. Touted as vital to protect Ameri- der. cfius probes need to conclude more promptly; taking two cans’ data, the crackdown is in fact a depressing example of jin- years to start investigating the Musical.ly deal practically guar- goistic opportunism, more likely to chill investment in America anteed a chaotic unwinding. And the committee’s political inde- and stoke Chinese nationalism. pendence also needs bolstering. Mr Trump is The legal basis for TikTok’s divestment Monthly app downloads watching over TikTok’s talks with Microsoft as if comes from the Committee on Foreign Invest- United States, m he were a feudal lord. He has even suggested ment in the United States (cfius), which this 10 that the Treasury should get a cut for making the TikTok week ruled that the Musical.ly deal was against deal possible, a demand with no precedent. Instagram 5 America’s national-security interests. Having The Trump administration should tighten flirted with banning TikTok altogether, Mr Snapchat 0 privacy law. America has until recently been re- Trump now seems willing to accept a fire-sale. 2018 19 20 laxed about protecting its citizens’ data, and Microsoft, an American software giant, is in hostile to cyber-security concepts like encryp- talks to buy TikTok’s American operations, as well as those in tion. A new federal data-privacy and cyber-security law would New Zealand, Australia and Canada (see Business section). create transparent standards for handling Americans’ data and ByteDance is the latest in a series of Chinese firms, among stymie foreign hackers. The government must also find a way to them Huawei, a telecoms-equipment provider, to be targeted by assure the quality of digital products containing opaque algo- the Trump administration amid fears of cyber-spying and propa- rithms, which should apply to all firms, wherever they are based. ganda-peddling. It claims—without providing evidence—that Bills that do so have long been languishing in Congress. The the firms are, or could be, used to pass Americans’ personal data Trump White House has made little effort to revive them. to the Chinese government. ByteDance will not be the last in the The tension between maintaining global trade and rightful crosshairs. Lenovo, a partly state-owned Chinese firm, sells lots mistrust of the Chinese government is inevitable. Digital tech- of computers in America. Tencent, a social-media giant, owns nologies, whose connected nature opens up all kinds of hypo- large stakes in video-game studios with millions of American thetical meddling, are particularly tricky. But rushed asset sales users. On August 2nd Mike Pompeo, the secretary of state, sug- at the barrel of a gun are not the answer. America needs a re- gested that America may take action against not only TikTok but sponse that is less arbitrary and counter-productive. 7

Lebanon No way to run a country

A big blast should lead to big change o powerful was the explosion that rocked Beirut on August repeated requests were met with silence. So the material sat in a S4th that people in Cyprus, 240km (150 miles) away, thought warehouse at the port. they had suffered an earthquake. Scores of people died and thou- What kind of government leaves a mountain of explosive sands were injured in the blast, which left the port in ruins. The chemicals lying around unsafely for the better part of a decade? Lebanese government says it was caused by 2,750 tonnes of am- The same kind that cannot agree on a budget for 11years and that monium nitrate, which can be used as fertiliser or as an explo- let its central bank run a Ponzi scheme to defend its unrealistic sive (see Middle East & Africa section). This appears to have been currency peg. The kind which is so deluded that it relies on aid, confiscated years ago from an abandoned Russian-owned cargo loans and remittances, spending far more than it collects in tax- ship heading to Mozambique. Customs officials proposed ex- es. The kind that is controlled by an out-of-touch elite who fiddle porting the stuff, giving it to the army or selling it to an explo- and extort while the economy burns. In short, it is the govern- sives company—but they needed the judiciary’s approval. Their ment of Lebanon—and it is in desperate need of reform. 1 The Economist August 8th 2020 Leaders 9

2 That much was clear even before the explosion showered Bei- World Bank. Corruption is rife. Residents of Beirut note that the rut with broken glass and pieces of rubble. For months Lebanon explosion occurred in the city’s port, known locally as the “cave has been mired in a debilitating economic crisis, because of a of Ali Baba and the 40 thieves”, owing to allegations of theft, brib- rotten banking sector and a collapsing currency (see Middle East ery and embezzlement at the government-owned facility. & Africa section). The Lebanese pound has lost about 80% of its Most Lebanese want to ditch the power-sharing system. Ever value on the black market against the dollar. Because Lebanon fewer feel defined by their religion. (A growing number are not imports so much, inflation has spiked. The government de- devout at all.) Big protests in October forced out the previous faulted on its debts months ago. The economy was weak before government, which was also incompetent. The current one en- covid-19 forced politicians to lock down the country for two tered office promising change, but has accomplished little. months earlier this year. Now it is in a coma. The poverty rate is That is, in part, because interests stand in the way. The war- expected to rise from 45% in 2019 to more than 75% by the end of lords who wrecked Lebanon in the civil war are now the politi- this year. Many businesses have gone bust. Those that reopened cians who steal from it. Groups such as Hizbullah, a Shia militia- had to close again recently because of a new surge of infections. cum-political party, face few constraints. Foreign powers, such Without answers, the government asked the as Iran, which backs Hizbullah, and Saudi Ara- imf for help. The fund wants a modest show of bia, which backs the Sunni elite, would surely good faith, such as a new law on capital controls try to scuttle reforms that diminished their cli- or a reform of the loss-making electricity indus- ents or benefited their rivals. try. But Lebanese officials cannot even agree on They all play on fears of a sectarian power- the severity of the crisis. They have spent weeks struggle that might leave some groups worse bickering over how to estimate the losses racked off—or sink the country back into violence. The up by the central bank. imf officials have looked magnitude of the explosion at the port called to on with dismay. Even some in the government mind the massive car-bomb that killed the have had enough. On August 3rd the foreign minister quit, say- prime minister, Rafik Hariri, a Sunni, in 2005. A un-backed court ing that Lebanon risks becoming a failed state. “I participated in is due to deliver a verdict later this month in the case of four Hiz- this government on the basis that I have one employer named bullah members accused of his assassination. Lebanon,” Nassif Hitti wrote in his resignation letter, “and I There was a time when such fears seemed like a good reason found in my country many employers and conflicting interests.” to move slowly in unpicking the power-sharing system. But It is a new way of describing an old problem. For decades Leb- those in power are using the crisis to hook more of their follow- anon has carved up political power among its religions and sects ers on the handouts they provide. And the cost of moving slowly as a device for keeping the peace between them. Though de- is increasingly clear. It was not fighting or foreign occupation signed to ensure that all Lebanese have a say in government, the that led to the destruction of a large part of Beirut. It was incom- system has been captured by an entrenched elite. This elite petence by a corrupt and broken state. Only bold action will fix it. hands out government jobs based on sect. With power guaran- The government should do away with the power-sharing system teed, it can plunder ministries. The waste associated with its pa- sooner rather than later, and replace it with something more tronage schemes costs Lebanon 9% of gdp each year, says the democratic and meritocratic. 7

Vaccine economics A bigger dose

The world is not spending anywhere near enough on a coronavirus vaccine onsider the following thought experiment. If you fail to eat so has been devoted to the cause—the equivalent of ordering one Ca pizza within an hour, you will die from hunger. What do pizza, rather than the several that are needed. you do? Most people would immediately order a pizza—and not The figures are murky, but on a rough estimate the world has just one Margherita, but lots of them, from several different par- bought about 4bn doses of covid-19 vaccines for delivery by the lours. In order to maximise the chances that at least one pizzeria end of next year, which is in theory enough to give half the planet got you what you needed in time, you would not care that some one dose. In practice, however, far fewer people will secure pro- of the pizza would be sure to go to waste. tection from the disease. Some of the vaccines in production will The world is hungry for a vaccine against covid-19. So far fail to get regulatory approval, and a potential candidate that about 700,000 deaths have been recorded from the disease, and reaches a large-scale clinical trial—as several have—still has a the total is increasing at a rate of roughly 40,000 a week. If you 20% chance of failure. Others will be approved but may not pro- also include unrecorded deaths, the actual numbers are much vide full protection. They may not be suited to the elderly, for in- higher. Meanwhile, the global economy is experiencing its stance, or they may stop people dying from covid-19 but not from sharpest contraction since the Great Depression, of perhaps 8% passing it to others. Other vaccines will require more than one of gdp in the first half of 2020. dose in order to be effective. Because of these contingencies, In the face of this catastrophe, scientists look likely to pro- even those countries, such as Britain and America, that have duce a vaccine much faster than almost anyone could have pre- bought more than two doses for each of their citizens have still dicted at the start of the pandemic. Yet global efforts to manufac- not bought enough. ture and distribute vaccines do not measure up. A mere $10bn or Instead of seeing unproven vaccines as an extravagance, the 1 10 Leaders The Economist August 8th 2020

2 world needs to think of them as an insurance policy. Research For some, the prospect of such a heavy investment raises fears suggests that if ten or more vaccines are in development, there is of “vaccine nationalism”, in which rich countries outspend poor a 90% chance of finding one which works. Once one of these can- ones in an attempt to corner the market for their citizens. The didates proves to be effective, billions of doses will need to be world as a whole can wring the most benefit out of limited sup- distributed quickly. But it is impossible to know in advance plies of vaccine by pooling resources and allocating doses on the which candidate will succeed. Governments should therefore basis of need—health-care workers first, vulnerable people next, help pharmaceutical firms produce vast quantities of a range of and so forth. Around 80 countries are interested in such a deal. different vaccines—ideally, numbering tens of Unfortunately, however, politicians in some billions of doses in all—long before regulatory countries with manufacturing capacity are like- approval is or is not granted. The winning vac- ly to put their own people first. One way to min- cine could thus start to get to people quickly, imise the international scramble over who gets even as doses of failed vaccines might be thrown vaccines and when is to maximise supplies up away unused. front and to spread manufacturing capacity. That may seem deliberately and needlessly Vaccines for the poorest countries would need lavish. Yet even boosting vaccine funding ten- to be subsidised, perhaps through gavi, the alli- fold to $100bn or more, in line with the most ance that already pays for other vaccines there. ambitious proposals, pales in comparison with the $7trn which The idea of deliberately overproducing something does not governments across the world have spent or pledged since the sit easily with politicians, especially in a world where there are pandemic began in order to preserve incomes and jobs. The real so many claims on public funds. Faced with a large manufactur- extravagance would be to wait until a successful vaccine candi- ing capacity that turns out to be useless, politicians risk being ac- date emerges before rushing to boost production. In terms of the cused of having wasted money—as the British government was economic output that is saved, to say nothing of lives, it would when the emergency hospitals it had built early in the pandemic make sense for the world to spend as much as $200bn on bring- were not needed. Yet politicians must be rational. You buy insur- ing forward an effective covid-19 vaccine by just one week. ance before you know what will happen, not after. 7

Gay rights The world comes out

People are growing more tolerant. But in some countries coming out is still too risky hilip larkin was only half-wrong. Sex didn’t begin in 1963, people to come out where to do so is to court injury or death. In Pas the poet joked; for a hefty minority of Britons it was four all but the most repressive places, though, people are opening years later—legally, at least—when Parliament nixed the law up. The International Lesbian, Gay, Bisexual, Trans and Intersex prohibiting gay sex. In this age of rainbow flags and pride pa- Association, a lobby group, has members in 164 countries. Pride rades, it is easy to forget how few lesbians and gays could be open parades march in China, Paraguay and the Faroe Islands. about their sexuality until relatively recently. One who was, the Urbanisation helps. In big cities, every tribe has its place. You journalist Peter Wildeblood, was “no more proud of my condi- can play bingo with drag queens in Moscow, dance in gay bars in tion than I would be of having a glass eye or a hare lip”. Two years Nairobi (where gay sex is still illegal) and use gay hook-up apps after decriminalisation in England and Wales, the Stonewall ri- in Beijing (where until1997 gay people were jailed for “hooligan- ots in New York popularised a term for this: coming out. ism”). Even in remote places, smartphones help teenagers dis- Since then, the closet has burst open. Actors cover that they are not alone. And that know- and the characters they play are openly gay. Leo ledge gives more of them the courage to come Varadkar, prime minister of Ireland until June, out. In 1985 barely a fifth of Americans had an has a male partner; Serbia’s prime minister is a openly gay relative, friend or colleague. Now lesbian, as are the mayors of Chicago and Bo- 87% say they know someone gay or lesbian. gotá, the Colombian capital. Yet coming out re- lgbt people coming out brings the extra ad- mains a pivotal moment of self-recognition for vantage of spreading tolerance. Not always, of gay teenagers. Thanks to the internet, they are course. But sceptics and bigots are likeliest to finding the means and the confidence to do so in change their minds when they realise that more places than ever before, and at a younger age than in previ- someone they know is gay. Familiarity reveals that homosexuals ous generations (see International section). are just as human—and humdrum—as heterosexuals. It is easy Yet there are plenty of places where being gay remains taboo. to demonise the imaginary gay people depicted in a brimstone Even in liberal countries, gay members of some religious and sermon; but much harder to fear the lesbian actuaries next door, ethnic minorities have a tough time. Gay sex is still illegal in 68 or the gay dads cheering their daughter’s softball team. Pride pa- countries, and punishable by death in a dozen. Lesbian, gay, bi- rades, with their loud floats and copious flesh, are lots of fun. But sexual and transgender (lgbt) folk are subject to extra-judicial learning that a sober-suited colleague happens to be gay is more violence in many places, from beatings in bars to the gang-rape likely to win over a conservative. One of the founders of Stone- of lesbians by men who imagine that this might, as they see it, wall, a British gay-rights charity, said the name initially helped “cure” their sinful orientation. It would be reckless to encourage secure meetings with government ministers. To gays, it meant a1 The Economist August 8th 2020 Leaders 11

2 riot; to the uninformed, it sounded like a firm of architects. From Iran to Uganda, autocrats often caricature homosexual- In 2002 about half of Americans said they tolerated homosex- ity as a foreign vice. Some even claim that there are no gay people uality; now nearly three-quarters do. One study found that sup- in their country. In such places the most effective campaigners port for same-sex marriage increased rapidly in 2006-10 among are, therefore, local gay people. The best thing liberals elsewhere Americans with a gay or lesbian friend, but fell among those with can do is to provide financial and legal support to gay-rights none. Even in countries where a majority remains hostile, groups and grant asylum to those who flee persecution. change is coming. The proportion of Indians who said that gay people should be accepted rose from 15% in 2013 to 37% last year. Got to let it show Though an attempt to overturn Kenya’s gay-sex ban failed last Mr Wildeblood’s motivation for writing a book in 1955 in which year, the publicity it generated persuaded more locals to come he baldly stated “I am a homosexual” was, he said, “to turn on out. That helps explain why over the same period the share of more lights, revealing, in place of the blurred and shadowy fig- Kenyans who tolerate homosexuality nearly doubled, to 14%. In ure of the newspaper photographs, a man differing from other most places the young are more gay-friendly than the old, so dis- men only in one respect.” The rest of those lights are coming on, crimination will surely dwindle as the prejudiced pass away. one by one. 7

The dismal yet flexible science When the facts change

Economics sometimes changes its mind

conomics is a “disgrace”, according to Claudia Sahm, a for- tipping into a recession) provided the natural experiment re- Emer Federal Reserve researcher, who has chosen to “no lon- quired to change economists’ minds about minimum wages. ger identify” as an economist. Among several flaws, the profes- New facts, then, are more persuasive than new ideas. But al- sion fails to nurture the young, she argues, or listen to outsiders. though an alternative theory is not a sufficient condition for a A survey by the American Economic Association (aea) found change of heart, it is often necessary. It takes a model to beat a that only 31% of economists under the age of 44 felt valued with- model, as economists like to say. They sometimes cling to pro- in the discipline. positions in defiance of the facts simply because they have noth- All this must be off-putting to youngsters beginning the long ing better to replace them with. (and lengthening) journey into the profession (see Finance sec- That raises a third condition for persuasiveness. To convert tion). They may wonder if there is room for their ideas in a dis- economists to your cause, it is not enough to give them some- cipline that can seem hidebound, hierarchical and homogenous. thing new to believe. You must also offer them something fruit- Will they invigorate economics or will it indoctrinate them? ful to do. Appeal to their hands as well as their heads. Economists Budding economists can draw comfort from our series of six will jump on a revolution that gives them new toys or techniques economics briefs that begins this week. Each looks at an issue to play with. This may explain why they have become more en- (competition policy, minimum wages, inflation, the dollar, cul- thusiastic about institutional explanations of the wealth and ture and public debt) that has prompted econo- poverty of nations. They cannot rerun history or mists to revisit their field’s presumptions. Over sprinkle institutions randomly across countries the past decade or two, the profession has be- to test their long-term effects. But they have come more relaxed about minimum wages, in- found ingenious proxies for this kind of random flation and public debt; less relaxed about mo- variation. Economists, like many others, relish nopoly power; less enamoured of flexible the chance to display their cleverness. exchange rates; and more open to deep, institu- New facts and clever techniques help shift tional explanations of wealth and poverty. economic opinion. Does this also require new What does it take to change economists’ economists? Not necessarily. Some big names minds? New ideas are not enough. The theory of monopsony, have changed their minds, or at least their tone. Olivier Blan- which explains why a minimum wage may help employment, chard is less fiscally cautious today than he was ten years ago as not hurt it, had been around for at least 60 years before main- imf chief economist, and Narayana Kocherlakota is much more stream economics accepted its use in many low-wage labour doveish about monetary policy than when he was first appointed markets. Recent nonchalance about high levels of public debt to head a Federal Reserve bank. The heretical tribes on the may seem new and mould-breaking. But the fresh thinking rests fringes of economics yearn to sack Rome. But it is more efficient on theories set out in the 1950s and 1960s. to convert the emperor. New facts are more compelling. The persistence of low inter- It is nonetheless striking that, in several of the areas covered est rates despite high public debt has left an impression, as has by our series, vital work was done by economists who were in the pre-pandemic combination of low inflation and low unem- their 30s at the time (although all of them were already at elite in- ployment. The dollar’s rally in the global financial crisis show- stitutions). According to the aea’s survey, only 5% of economists cased its peculiar role in the international financial system, as aged under 44 feel they have a great deal of power within the dis- have various emerging-market tantrums since. Fresh evidence cipline. But the young may have one power denied to their el- also matters in microeconomics. New Jersey’s decision to raise ders: the freedom to imagine a future economics, unencum- its wage floor in 1992 by more than neighbouring states (despite bered by too heavy an intellectual stake in its past. 7 12 Letters The Economist August 8th 2020

two decades ago, which antici- Gascon region, argued that the factories, the Distributional School’s out for autumn? pated that new advances in French elite is raised with the Revolution is causing workers Your leader calling for schools technology such as hydrogen social capital necessary to who would have been em- to reopen presented a straw- fuel cells and bioethanol exert power, and that language ployed in local stores to move man argument when it would help wean the world off is central to this endeavour. to warehouses to pick orders. described teachers as “obstruc- oil (“The end of the Oil Age”, French speakers who do not In both cases, the economic tive” (“Let them learn”, July October 25th 2003). Seventeen have such linguistic capital are advantages are not without 18th). I am a high-school teach- years later, bioethanol is long reminded of their position in their social ramifications. er just north of New York City. forgotten and hydrogen fuel the social hierarchy whenever steve cullen All my colleagues desperately cells can only be found in some they turn on the television. Medfield, Massachusetts want to be in school full-time cities’ buses. You suggested that a come September. But the feder- If I were an Arab leader popular backlash against I would not describe the logo al government has offered not sitting in my $300m yacht globalising elites might mean a on Amazon’s brown packages one scintilla of advice or assis- looking at my da Vinci paint- bright future for non-Parisian left at our homes as “smiling”. I tance on how to go about open- ing, you would forgive me if I types. Regrettably this isn’t would suggest “smirking”. ing schools safely. took your conjectures with a supported by the evidence. margaret cating You also made an insulting grain of salt and did not put my jonathan kasstan Londonderry, Vermont insinuation about teachers precious painting up for sale Lecturer in French and being paid whether they work just yet. I would however not linguistics or not. That is silly. There is stop reading The Economist. University of Westminster Leagues apart on team names nothing I would want more Your prognosis regarding the London Johnson’s musings about the professionally than to be in decreasing clout of opec has media’s reluctance to mention school. Teaching online is certainly come true. unmentionable words (July difficult, time-consuming and yasin mand Amazon in Europe 11th) reminded me of a recent largely unrewarding, com- London An important underlying radio news item from cbc, pared with teaching children assumption in your briefing on Canada’s national broadcaster, in person. I don’t know anyone Amazon is that it is doing well on the pressure put on football who prefers the former. Elocution lessons in Europe (“And on the second teams in Washington and However, we simply do not Parisians might overcome day ...”, June 20th). Where is the Edmonton to change their want to rush back at the risk of their snobbery against regional evidence? Amazon, as far as I names. The report never men- our own health as well as the accents following the appoint- am aware, has never included tioned the offensive names in public’s. The evidence about ment of Jean Castex as prime any profit or sales figures for question, the Redskins and young people and covid-19 is minister, you say (“Accent its European retail operations Eskimos, leaving listeners by no means clear. It seems grave”, July18th). That is overly in its statutory filings in Amer- wondering what the names that young adults have a much optimistic. Paris has form ica. It merely aggregates all were, and marvelling at a news lower chance of getting seri- when it comes to the margin- revenue, including Amazon piece that managed not to ously ill if they catch the virus. alisation of speakers whose Web Services, from Europe. broach the core of its subject. It is not at all certain that they French is far removed from an Audited profit data is open- bob martin cannot spread the disease, idealised standard norm. ly filed in London for Amazon Halifax, Canada particularly high-school-aged In1635 the founding eu sarl, based in Luxembourg, students. Younger people members of the Académie which appears to be more or Regarding the name of Cleve- contracted the virus at higher Française, France’s central less retail only, and is land’s baseball team (“Skin in levels during the recent spike language authority, declared published only about eight the name”, July 18th), the term in America than earlier in the that its principle function was months after Amazon’s annual “Indians” was proposed in 1915 outbreak. Put hundreds of to impose the language of the accounts in the United States to honour Louis Sockalexis, a these young adults in closed royal court on the rest of are filed. The latest numbers Native American of the classrooms with older teachers France. Today, examples are for 2018 and show a loss of Penobscot nation, who was a who then go home to their abound of public figures still €259m ($300m), admittedly a star player for the Cleveland families and you may have a validating this bias. Look no significant improvement on Spiders in the late 19th century. recipe for disaster. further than footage of Jean- the €876m it lost in 2017. The interim team name “Naps” larry fata Luc Mélenchon mocking a This is crucial. The claim honoured Napoleon Lajoie, a New York southern French-speaking that “No firm bestrides the star player a few years later. It journalist rather than answer physical and digital worlds in had nothing to do with sleep, her awkward questions, or the way Amazon does” is diffi- though the team’s performance Oil futures television presenters deriding cult to make if it turns out, as I during the ensuing century has I was intrigued by your leader Marie-Arlette Carlotti, a former believe is the case, that after 25 unfortunately often been a about the future of Arab minister, for shifting between years, Amazon has never man- cause of somnolence. petrostates, and how they will southerly accented speech for aged to make money from john jay soon no longer be able to her local audience, and a more retailing outside its home Venice, Florida “afford to buy loyalty with standard accented speech for a country. And possibly Canada. do-nothing public-sector jobs national one. mike flanagan and free services” as the price In each case, there is adher- Charlbury, Oxfordshire Letters are welcome and should be of oil presumably falls and ence to the reproduction of a addressed to the Editor at The Economist, The Adelphi Building, demand fails to recover standard-language ideology. Where the Industrial Revolu- 1-11John Adam Street, London WC2N 6HT (“There will be pain”, July 18th). Pierre Bourdieu, who, like Mr tion saw people leaving the Email: [email protected] Might I remind you of a Castex, was also from an manual looms in their cottages More letters are available at: similar prediction you made Occitan-speaking family in the to operate power looms in Economist.com/letters Executive focus 13 14 Briefing Covid-19 and college The Economist August 8th 2020

excellent breeding ground for the virus, Uncanny University and students travelling across the world are a good way to spread it. A study by re- searchers at Cornell found that, although the average student at the university shares classes with just 4% of their peers, they share a class with someone who shares a class with 87%. The potential for the rapid Higher education was in trouble before the pandemic. Covid-19 could push spread of the disease was shown by the ar- some institutions over the brink rival of recruits at Fort Benning, an Ameri- ue to be completed in 2022, Boston all universities. But the problems are about can army base. When 640 arrived in spring, DUniversity’s $141m data-sciences cen- to get particularly severe for those in Amer- just four tested positive. A few weeks later, tre will tower over the city like an uneven ica, Australia, Canada and Britain that have more than a hundred did. According to the Jenga tower, providing 350,000 square feet come to rely on international students to New York Times, some 6,600 covid-19 cases of space. The University of Reading in Brit- fill their coffers. There are now more than can be linked to American colleges. ain has nearly finished a £50m ($65m) life- 5m such students, up from 2m in 2000. In sciences building, designed to make more Australia foreign students provide a quar- Welcome to the virtual freshers’ week space for subjects that are attracting lots of ter of universities’ income (see chart 1 on Many lecturers are understandably reluc- students. The University of New South next page). In Canada the tuition fees for a tant to get close to students. In July a letter Wales (unsw) in Australia has pumped science degree at McGill, one of the coun- from the provost of the University of Colo- more than A$500m ($360m) into new facil- try’s top universities, cost C$45,656 rado Boulder, seen by The Economist, put ities, as part of a project intended to push it ($34,000) a year for an overseas student, pressure on staff to teach in person, warn- into the top 50 of global rankings. compared with C$2,623 for a local. ing that not doing so “simply deflects the If these plans made sense in a world Even before the pandemic, many such burden of this vital mode of instruction where students were crossing borders in universities worried about worsening rela- onto fellow faculty members”. Indeed, at droves, today they seem barmy. All three tions with China, the biggest source of the end of the 2019-20 academic year most institutions are now considering cuts. Bos- international students. And higher educa- American colleges planned to open for in- ton has said that it is likely some staff will tion in America, Australia and Britain has person teaching. Now they are not so sure. have to be laid off or furloughed. Reading also faced increasing scepticism from con- According to data collected by the College has announced that 15% of full-time jobs at servative-leaning governments about the Crisis Initiative at Davidson College, less the university are on the line. unsw has al- value of a university degree. Academics, than a quarter of universities will teach ready cut 8% of its staff and closed two of used to tricky questions, now face an exis- fully or mostly in person next term (anoth- its eight faculties. At Reading and Boston tential one: how will universities survive er quarter have yet to decide what to do). plans for new facilities are on hold. with many fewer students in them? Even if professors turn up in person, Covid-19 has put immense pressure on The problem is that campuses make an many students will not. Harshita Bhatia, a 1 The Economist August 8th 2020 Briefing Covid-19 and college 15

2 24-year-old from Mumbai, was supposed perience—either wholly virtual or wholly 1 to start a masters in economics at the Aus- A golden education surreal. Despite this, they will face little tralian National University in July. She has Australia, higher-education Total funding prospect of lower fees. The University of deferred it until February, not wanting to funding by source, 2008=100 2018, A$bn Adelaide is one of the few universities to miss out on the full experience of universi- 250 have cut prices, offering students a 20% ty life in another country. Polling by qs, a “Covid-19 Offshore Study Fee Rebate” so Fees paid by foreign students 8.8 consultancy, suggests that four in ten stu- 200 long as they confirm their place. Privately, dents may cancel or defer their plans to administrators at British universities ex- study overseas. More will do so if tuition pect to make more use of discounts (sorry, 150 goes online. In Australia visa applications “scholarships”) to entice foreign students, from students are down by a third this year. 25.6 but they will try not to publicise that. Many Strict regimes are emerging at the Other 100 universities argue that the education stu- (including domestic places which are welcoming students. At students and subsidies) dents receive will be just as good as it was Harvard, where 13% of last year’s intake 50 before the pandemic. It remains to be seen came from overseas, only 40% of under- 18161412102008 how many students (and parents) will buy graduates will return for the first term of Source: “Australian investment in education: higher education”, this. As a college counsellor working at a by Hurley et al., 2020 the new year, with the rest continuing to school in Xi’an in China asks: “Without the learn from afar. Those on campus will be whole experience, why pay $50-60k for on- tested for the virus every three days and courses in topics that are judged to be “na- line courses you can get on Coursera?” sign contracts promising not to have tional priorities” like teaching and engi- For those students not put off by these guests in their dorms. The University of neering that would run for six months, changes, other problems loom. The col- Bolton, in northern England, is aiming to with fees ranging from A$1,250 to A$2,500. lapse of air travel means there may not be create a “covid-secure” campus, so that it “We want to enable people, rather than enough flights. Bolton is one of a number can open in September. To get to classes bingeing on Netflix, to binge on studying,” of British universities which is contem- students will have to pass through a body- he said. unsw has announced plans to of- plating bringing students directly over temperature scanner, where they will be fer more remote courses. Tyler Cowen, an from China and India. “We can charter a provided with masks and hand sanitiser. economist at George Mason University plane that will seat 300 people for around The university has bought 1,000 bikes to who runs his own education website, pre- £300,000,” explains George Holmes, the lend to students, so they do not have to take dicts a big increase in online learning. vice-chancellor. Representatives would public transport. Many students, however, prefer in-per- meet students in Delhi; on arrival, they son teaching. Last year just one in seven would be whisked off to a hotel or halls to Viruses like company American undergraduates pursued a de- quarantine. The university would heavily The risk is that, beyond the lecture hall, gree online, estimates Richard Garrett of subsidise the costs. youngsters will ignore many restrictions. Eduventures, a consultancy. International Indeed, entry restrictions currently pre- In July the University of California, Berke- students also tend to want “the cultural im- vent students from getting to lots of coun- ley reported an outbreak involving 47 co- mersion” of another country, he says. Lots tries. Since February all Chinese visitors vid-19 cases, with most traced to parties in gravitate to big cities: in America, New York have been banned from entering Australia. the fraternities and sororities. At the time, University is home to the most interna- Pilot programmes to fly in groups of a few administrators urged students to keep tional students with 19,605; in Britain, Uni- hundred students were abandoned when gatherings to below 12 people, to hold them versity College London is, with 19,635. The the local case count rose. Currently Canada outside, to stay at least six feet apart and to experience of either city—with all the pos- will not let in students who did not get a cover their faces; they have since an- sibilities of exploration and romance visa before March. Some Indian students nounced that all classes will be online and which urban life brings, even under semi- are allowed into America, but Chinese ones only 3,200 of the university’s 40,000 stu- lockdown—cannot be replicated through are not. Both would be welcome in Britain, dents will be allowed to live on campus. video calls in a parental living room. so long as they quarantined for a fortnight. Even for students who do move into The prospect now for international stu- In July the Trump administration gave their dorms, a lot of teaching will be online. dents is a far less appealing university ex- up on plans to rescind the visas of interna- A video from Johns Hopkins University tional students at universities that had touts its new “on-campus studios” for lec- moved to solely online teaching, after legal 2 tures, the idea being that students can take Either way, it will hurt challenges from a number of universities, part in lectures from the safety of their Britain, projected losses of the higher-education including Harvard and mit. But later that rooms. Such Zoom lectures may accelerate sector by source, 2020, £bn month it announced first-year students a long-running trend. Online-education International fees will not be able to enter the country if they providers, such as Coursera, have not revo- Accommodation, conferences and catering do not have in-person courses. Embassies lutionised higher-education, as was rou- UK and EU fees Pensions Other financial and consulates have begun opening, but it tinely forecast at the start of the 2010s. But is unclear whether they will be able to get they have carved out a niche in the market, Scenario* -20 -15 -10 -5 0 through the visa backlog. mostly offering business-focused classes Pessimistic All this spells trouble. A report by the In- to older students. Over the past five years or stitute for Fiscal Studies (ifs), a British so a growing number of universities have Central think-tank, predicts that universities in begun to offer degrees online, sometimes that country will lose the equivalent of a in partnership with “online-programme Optimistic quarter of their annual income, with high- managers”. In America an estimated one ranking institutions suffering the greatest *Along with assumptions over falling income from various postgraduate in three was studying fully sources and depreciation of long-term investments, these losses (see chart 2). Four leading Australian online last year, up from one in five in 2012. three scenarios assume that new EU and international universities—unsw, Sydney, Melbourne This number now looks set to rise. In student numbers will either fall by 25% (optimistic), and Monash—receive more than a third of 50% (central) or 75% (pessimistic) May Dan Tehan, the Australian education their income from foreign students. Across Sources: IFS; HESA minister, offered funding for short online the world, it is prestigious universities that1 16 Briefing Covid-19 and college The Economist August 8th 2020

2 recruit the most globetrotters. educational lines—between the have-de- Because students don’t pay up front for Some of these institutions are indeed in grees and the have-nots—universities ap- their degrees, instead receiving generous a risky situation. And yet, for the most part, pear to have little sway over politicians government loans, many suspect that al- elite universities are well placed to make it who see themselves as tribunes of the lat- tering the amount they pay for subjects through the crisis thanks to hefty cash re- ter group. American universities are un- won’t have much effect. The same would be serves and the ability to borrow on more likely to receive much support from Do- true in England. generous terms. The very top tier are un- nald Trump’s administration. President On top of this, all three governments likely to struggle for students for long. “If Trump has complained that colleges are fo- have taken more hawkish stances towards you’re a prestigious institution, people are cused on “Radical Left Indoctrination, not China. Deteriorating relations between not going to turn down a hard-won oppor- Education”, and has asked the Treasury to America and China over the past four years tunity to earn a diploma that has a lot of re-examine their tax-exempt status. have contributed to a slowdown in the brand value, even if earning it turns out to In other parts of the Anglosphere, gov- number of international students crossing be less fun and more inconvenient than ernments want to make universities more the Pacific. Australian and British universi- they thought it would be,” thinks Kevin Ca- focused on employment. As universities ties now worry they face the same fate. In rey of New America, a think-tank. have grown, so too have doubts about the June China’s Ministry of Education urged “return on investment”, says Peter Hurley students to “exercise caution” before Socially distant study buddies of the Mitchell Institute at Victoria Univer- studying in Australia due to discrimina- Instead it is likely to be mid- and low-rank- sity. In Britain ministers are worried by re- tion against those of Asian descent during ing universities that are most at risk, par- search from the ifs which finds that a fifth the pandemic; something widely seen as a ticularly those institutions with less pres- of graduates would be better off had they response to the Australian government’s tigious brands that have nevertheless not gone to university. decision to call for an inquiry into the ori- managed to attract lots of international In both Australia and Britain govern- gin of covid-19. Britain’s opposition to a students (or, in America, out-of-state ones, ments have funded the expansion of high- new national-security law in Hong Kong who also pay higher fees). The ifs reckons er education by passing more of the cost to has infuriated Beijing. that the British universities most at risk of students, via higher fees. But, since they insolvency—of which it says there are 13, also offer income-contingent loans, the Virtual versus vocational responsible for teaching 5% of British stu- state ends up footing a large part of the bill. Universities have a few reasons for hope. dents—are those that entered the pan- In Britain the government has said that One is that prospective students do not demic with weak finances. Of Australia’s universities that get covid loans will need have much else to do. “The gap year doesn’t top-ranking universities, only Monash is to focus more on subjects that either deliv- look terribly attractive, the job market among the seven at “high risk” according to er high wages (such as engineering) or are doesn’t look terribly enticing,” notes Matt the Centre for the Study of Higher Educa- judged to be particularly important to the Durnin of the British Council, which pro- tion at the University of Melbourne. country (such as teaching). Boris Johnson, motes the country’s education abroad. The The unequal effects of covid on univer- the British prime minister, has also floated other is that in a recession there is normal- sity finances can be seen in the behaviour the possibility of introducing differential ly an uptick in the number of students. of American colleges. Over the past few fees—at the moment the cost of all subjects Even so the next few months are likely months middling state universities and is capped at £9,250—and has promised re- to transform the fortunes of many institu- liberal-arts colleges have been far slower to forms to boost vocational education. tions. Some will shut entirely. If the pan- announce reduced access to campuses so Mr Johnson has said he may follow Aus- demic drags on, if a vaccine is not forth- as not to put off potential students. Even tralia, where the government plans to more coming or if the economic climate before the crisis, a demographic dip in the than double the cost of humanities courses becomes particularly bad, then things will number of 18-year-olds had caused around while lowering fees for subjects it reckons get bleaker still. Politicians will have bigger 50 colleges to close or merge. That is a small are in areas of future employment growth things to think about than protecting uni- portion of America’s 4,000-odd higher- or are otherwise important, including clin- versities. The first two decades of the 21st education institutions, but the trend is ical psychology and agriculture. Yet some century were ones of extraordinary growth now likely to accelerate, as colleges lose out Australian higher-education experts doubt for universities in many countries. That on money from accommodation and fund- that the reforms will achieve their aims. golden age is over. 7 ing from state capitals. Lobby groups everywhere have sought bail-outs. Universities Australia estimated that its members’ revenue would drop by A$3bn to A$4.6bn. British universities asked for a package of measures that would have come to £3.2bn; American colleges for around $50bn. Yet in all countries money has been limited. Congress gave American colleges around $14bn in March. In Britain some funding has been brought forward and loans will be on offer to cover 80% of lost income from international students, but only at research-focused universities. In Australia the government will stump up for income lost from domestic students, but not those from abroad. Part of the reason for such reluctant bail-outs is that governments are waiting to see just how bad things get. But in an era when politics is increasingly divided along Asia The Economist August 8th 2020 17

Hindu nationalism since for putting Muslims in their place. On August 5th Mr Modi, now prime India shrining minister, returned to Ayodhya—for the first time since 1991, according to some re- ports. He was there to lay the foundation stone of the temple for which he and his party have campaigned for his entire ca- DELHI reer, and for which the Supreme Court had The ruling party fulfils a decades-long campaign by building a Hindu temple at last cleared a path in November. Mr Modi where a mosque once stood (pictured) prayed and chanted in religious hirty years ago a thrusting activist tion sparked nationwide violence that garb and a medical facemask alongside Tcalled Narendra Modi helped to organ- claimed over 2,000 lives only helped the Yogi Adityanath, a firebrand Hindu cleric ise a month-long political procession bjp, by heightening sectarian tensions. whom he elevated to chief minister of Uttar across northern India. The Ram Rath Yatra The episode also accelerated the career Pradesh, and Mohan Bhagwat, the head of began at the city of Somnath, in his home of Mr Modi, whose efficiency and drive the Rashtriya Swayamsevak Sangh, a state of Gujarat, and snaked up and down earned the admiration of the bjp’s top lead- goose-stepping Hindu paramilitary group the country on its way to a mosque in the ers. He received a further boost when a fire with perhaps 5m members. Then he helped city of Ayodhya in the state of Uttar Pra- aboard a train in his home state of Gujarat manoeuvre a 40kg silver brick into place desh, at the spot where many Hindus be- killed 59 Hindu pilgrims returning from before declaring, “The wait of centuries is lieve the god Ram was born. Mr Modi had Ayodhya. Local Muslims were accused of ending.” He did not mention, much less la- recently joined the national campaign arson, and in the ensuing pogrom at least ment, the vandalism that had cleared the team of the Hindu-chauvinist Bharatiya Ja- 1,000 people, the vast majority of them way for the temple’s construction. nata Party (bjp), which was agitating for the Muslim, died. Although the courts have Although India is officially a secular re- demolition of the mosque and the con- cleared Mr Modi, Gujarat’s chief minister at public, the barrier between faith and state struction of a temple in its stead. the time, of complicity in the violence, he has never been absolute. The state has even The cavalcade vaulted the bjp into the has been lauded by Hindu extremists ever abetted the construction of a Hindu temple top ranks of Indian politics. At the next on a site occupied by a mosque before—in election its share of the vote nearly dou- the 1950s, at Somnath, the starting point of Also in this section bled, making it the biggest opposition the Ram Rath Yatra. But previous govern- party. And even though the mosque was de- 18 Australia’s self-isolating states ments concentrated on reforming Hindu- stroyed in 1992 after a bjp rally at its gates ism, weeding out practices deemed back- 19 Corruption in Uzbekistan descended into a riot, the courts dithered ward, such as discrimination on the basis for decades about what should become of 19 Hair and freedom in Thailand of caste. In that vein, in 2018, the Supreme the ruins, leaving the party with a perenni- Court ruled that women must be allowed to 20 Banyan: Lee Teng-hui and Taiwan al campaign issue. The fact that the demoli- enter the Sabarimala temple in the south-1 18 Asia The Economist August 8th 2020

2 ern state of Kerala. Australia and covid-19 use of its natural fortifications in March, The bjp, in contrast, has propagated the imposing two weeks’ quarantine on all ar- notion that Hindus, who make up about Borderline cases rivals from other parts of Australia. It had 80% of the population, are hard done by in planned to launch a travel “bubble” with modern India, and that Muslims, who ac- other covid-free states on August 7th, but count for just 14%, get too good a deal. delayed at the last minute. Its borders will Since winning a thumping election victory be closed until at least the end of the last year, it has reversed, at least in part, the SYDNEY month, and probably longer. Barriers to domestic travel are being three supposed injustices on which it has Western Australia, already separated tested in the courts campaigned longest and most insistently: from the rest of the country by a vast desert, the failure to honour Ram at his birthplace, oo many roads cross the southern bor- shut out all other Australians in April, and the special constitutional status granted Tder of the state of Queensland for police has no plans to open back up. Its govern- Jammu & Kashmir, India’s only state with a to patrol them all. Instead, the authorities ment makes exceptions only for miners Muslim majority, and the distinct laws on have been setting up waist-high plastic and other “essential” workers. marriage and inheritance that apply only barricades to block small streets that lead Australians seem happy to tolerate to Muslims. On August 5th last year the to neighbouring New South Wales near the these fetters to keep the virus at bay. West- government not only revoked Jammu & sprawling city of Gold Coast. The intention ern Australia’s premier, Mark McGowan, Kashmir’s modest autonomy, but down- is to prevent people entering Queensland who faces an election next year, hit an ap- graded it from a state to a territory and split from avoiding police checkpoints. The proval rating of 89% in a poll conducted it in two for good measure. A week before it state, which has only a few active cases of shortly after he closed the border. His had rescinded Muslim men’s right to di- covid-19, is closing itself off to the 15m resi- counterpart in Tasmania fares nearly as vorce their wives instantly and at whim dents of Victoria, New South Wales and the well. Annastacia Palaszczuk, Queensland’s and had made it a crime to attempt to do so. Australian Capital Territory, in an effort to leader, who is also approaching an elec- These moves in part reflect the bjp’s po- prevent more from being imported. tion, boasts that locals stop her in the street litical dominance. For the first time, it en- Walls of a less visible variety have been “telling me they support our stance when it joys a majority in both chambers of parlia- erected all over Australia since the pan- comes to the borders.” ment and no longer has to rely on less demic began. All bar one of its eight main But the controls have scuppered plans sectarian allies to pass legislation. But the states and territories have imposed border to revive domestic tourism and irritated sudden rush to advance the Hindu controls, either banning certain domestic some businesses. Clive Palmer, a mining nationalist items on its agenda also reflects travellers or forcing them to quarantine in magnate from Queensland, was incensed the diminished chance of making good on hotels on arrival. by Western Australia’s refusal to grant him its other main campaign promise: to accel- Victoria accounts for the vast majority special permission to fly in for business. erate economic growth and spread oppor- of Australia’s 7,500-odd active cases. Syd- Mr McGowan, complains Mr Palmer, “has tunity. The growth rate was already slowing ney, the capital of New South Wales, has far great admiration for countries which have before covid-19 arrived; the imf now pre- fewer cases—just a dozen or so each day. heads of state…with dictatorial powers, but dicts that the economy will contract by But the twitchy governments of other that is not Australia.” 4.5% this year. Millions are being pitched states are nonetheless banning Sydneysid- Mr Palmer has sued the government of into poverty. ers as well as Victorians (see map). Western Australia, arguing that the consti- What is more, the bjp has not yet hit on a This has helped to stop the coronavirus tution declares that “trade, commerce and fresh cause with the appeal of the Ram tem- spreading to less populated parts of the intercourse among the states… shall be ab- ple. When it amended the laws on citizen- country. Several states and territories have solutely free.” The courts have previously ship to favour Hindus at the end of last technically eliminated the disease, mean- ruled that there can be limited exceptions. year, it was met with surprisingly big and ing that they have no local transmission at Mr McGowan believes that a pandemic persistent protests in favour of secularism. all. But imported cases continue to pop up, qualifies. In times like these, he asserts, The government itself, meanwhile, seems spurring constant tightening of restric- “constitutional niceties should…go out the wary of stoking confrontation with China, tions on interstate travel. window.” But Mr Palmer argues that the despite recent Chinese border encroach- Tasmania, an island, started making state’s sweeping border closure is not pro- ments that have aroused public indigna- portionate to the threat. tion. After Chinese troops beat 20 Indian Australia border restrictions*, at Aug 5th 2020 The federal government initially argued soldiers to death high in the Himalayas in Closed Closed to Victoria for looser restrictions, too. It sent officials June, it took Mr Modi’s government two Open but travellers from Open but state to testify in support of Mr Palmer at a hear- weeks to retaliate, and then only with a de- hotspots must quarantine in lockdown ing late last month. Western Australia’s ap- cree banning an assortment of Chinese- proach was “indiscriminate” and “uncom- owned smartphone apps. promising”, argued Scott Morrison, the In the Ramayana, the epic poem that prime minister. A more reasonable policy tells the story of Ram, the god is exiled from would be to open “in a staged, sensible, ju- Ayodhya by his father, the king, and passed Northern risdiction-by-jurisdiction way”, suggested over as heir to the throne. Although it takes Territory the attorney-general, Christian Porter. him many years and titanic struggles to do Queensland† But the federal government has since so, Ram eventually returns in triumph to Western withdrawn its support for Mr Palmer. The Ayodhya, where he takes his rightful place Australia South prime minister explained that the com- Australia† as king and ushers in a golden era. Mr Modi New South monwealth had “taken into account the is deliberately echoing the story with his Wales changed state of the pandemic” and the own triumphant return to Ayodhya. He ACT “high level of concern” about covid-19 in Sydney would doubtless like Indians to imagine Victoria Western Australia. In other words, with in- bjp *Unless exempt or essential †Also restricts that a golden era lies ahead. But the ’s visitors from Sydney or NSW §Also restricts fections rising and voters feeling scared, current political ascendancy is made of visitors from other hotspots. Tasmanian Tasmania§ Mr Morrison’s Liberal Party is not planning baser stuff. 7 residents from affected areas must quarantine to go to bat for liberal principles. 7 The Economist August 8th 2020 Asia 19

have been arrested. Journalists looking Personal freedom in Thailand into the dam’s collapse, meanwhile, have been harassed and fired. And the composi- Cold cuts tion of the task force has raised eyebrows: it includes Abdugani Sanginov, a senator who, as head of a government agency, awarded contracts for the construction of the dam. Media reports also claim that his family has ties to some of the firms that Pupils fight for the right to be hirsute won the contracts. Mr Sanginov has brushed aside suggestions of any conflict t a busy intersection in Bangkok 15- of interest. Ayear-old Benjamaporn Nivas sits in her That an investigation is even being con- school uniform with her hands bound be- ducted is testament to the spirit of reform hind her and her mouth taped shut. A sign instituted by Mr Mirziyoyev after he came hanging from her neck reads “This pupil vi- to power in 2016. His late predecessor, the olates school rules by wearing her hair dictatorial Islam Karimov, would have sim- long, past her ears and with a fringe. Please ply brushed the whole episode under the punish her.” On Ms Benjamaporn’s lap lies carpet. But the disaster is especially awk- a large pair of scissors to help passers-by ward for Mr Mirziyoyev, since he presided fulfil the request by administering a more over the dam’s construction as prime min- suitable hair-do. ister and became president shortly before When Ms Benjamaporn (pictured) ap- it started operating. peared in this way in late June, she was not Corruption in Uzbekistan Moreover, Mr Sanginov is not the only actually being punished by her school, but member of Mr Mirziyoyev’s government to rather was trying to draw attention to the Weirs and have had to fend off accusations of a con- humiliating hair-related discipline teach- flict of interest. Jakhongir Artikkhodjaev, ers in Thailand often inflict on students. recriminations the mayor of the capital, Tashkent, has ac- She was, predictably, punished for doing knowledged ties to firms building Tash- so, by the police, who forced her to aban- kent City, a flagship office, housing and lei- don her protest within hours. A week later TASHKENT sure complex intended to signal that she and other members of a campaign The failure of a dam highlights a lack Uzbekistan is open for business again after group called “Bad Student” had submitted of transparency in public spending decades as a largely closed dictatorship. more than 300 complaints to the ministry hen a dam burst in Uzbekistan in Municipal officials say the contracts were of education on behalf of pupils who had WMay, Shavkat Mirziyoyev, the presi- awarded with appropriate oversight, and been given haircuts by their teachers over dent, was quick to promise justice for the Mr Artikkhodjaev insists the firms won the previous four months alone. victims. Those responsible for the disaster, them fair and square. Indeed, he implies The enforcement of uniform hair- which killed six people and displaced over they are participating in the project largely styles—crew-cuts for boys and fringeless 100,000, would answer before the law “re- out of a sense of civic duty. bobs for girls—dates to a dress code intro- gardless of who they are”, he pledged. On Under Mr Karimov, Uzbekistan became duced in 1972 by Thanom Kittikachorn, a social media, ordinary Uzbeks aired their a byword for crony capitalism. An Ameri- military dictator who was later toppled in a suspicions that negligence or corruption can diplomat described Gulnara Karimova, student-led uprising. The dress code was must have contributed to the collapse, the ex-president’s disgraced daughter, as a subsequently relaxed, and as recently as since the Sardoba dam had only been com- “robber baron” in a cable that was later May the education ministry reiterated that 1 pleted three years before. The structure leaked. Last year Ms Karimova was indicted should surely have been built to withstand in America for allegedly soliciting $865m the storms that officials initially blamed in bribes from foreign firms hoping to do for the tragedy, they argued. Days after the business in Uzbekistan. She is now in jail devastating flood—which washed away in Uzbekistan on corruption charges, al- crops as well as homes in both Uzbekistan though the judicial proceedings against and neighbouring Kazakhstan, causing her have been far from transparent. over $1bn of damage—the president The current authorities insist that Uz- formed a task force to investigate. He gave bekistan has changed beyond recognition it a month to report back. since Ms Karimova held sway. But many Three months on, the report has still close connections between business and not arrived—and the task force now says it government remain. Most notably, Oybek will take another five months to complete. Tursunov, Mr Mirziyoyev’s son-in-law and But its preliminary findings do seem to a senior member of his staff, owns stakes in bear out ordinary Uzbeks’ fears: nine peo- several financial firms, including a big ple, including government officials and bank and a payments network. Mr Mirzi- employees of firms that helped build the yoyev positions himself as a champion of dam, have been arrested and face charges transparency and has pushed through an of embezzlement, fraud, negligence and vi- impressive array of reforms to improve the olation of health-and-safety rules. investment climate and reduce corruption. Just how far the rot goes is hard to say. But ordinary Uzbeks still need to be con- The authorities have released the name of vinced that it is the public good, not private just one of the nine suspects, but no senior interests, that dictate how the government bureaucrats or businessmen appear to spends its money. 7 Hair-dos and don’ts 20 Asia The Economist August 8th 2020

2 rules on hair and attire are up to schools, fashion. “It is about having rights over our the ruling class that young Thais learn a but many remain extremely strict. bodies and reforming an ossified educa- rigid system from an early age.” Teachers often shear pupils ineptly on tion system. If you do not prostrate your- Yukti Mukdawijitra of Thammasat Uni- purpose. Photos and videos of haphazard self or obey the ‘elders’ you are deemed versity believes that public punishments or lopsided cuts administered by zealous bad,” explains Ms Benjamaporn. Netiwit are a way to embed a culture of unquestion- educators abound on social media. A stu- Chotiphatphaisal, a university student ing obedience to authority. Social media, dent in Yasothon province in north-east who caused a stir in 2016 by refusing to however, have given pupils a way to fight Thailand had a T shaved into his hair as prostrate himself before the statue of a for- back. The generals who run Thailand have punishment for refusing to cut it shorter. mer king, describes such practices as “op- in recent years been clamping down on dis- Another in Sisaket had half her locks pression resulting from decades under the sent, banning nettlesome political parties trimmed in front of the whole school. “One military disguised as traditions”. In 2018 an and tightening restrictions on online criti- side was long, while the other was short. I official at the education ministry told local cism. But young Thais do not seem to like was embarrassed,” she told local reporters. papers: “It is to the benefit of the military being told what to do—and some, at least, Pupils argue that the issue goes beyond government and conservative members of are not afraid to say so. 7 Banyan Trojan democrat

Even in death, Lee Teng-hui is helping shape Taiwan’s identity s taiwanese contemplated the Chiang Kai-shek. The kmt existed to re- even filling it with titbits from kmt Amomentous occasion, in March 1996, claim the mainland from the Communists informers at Cornell University, where of being able to choose their president (even today, Taiwan’s official name is the he received a phd. His appointment in for the first time, China’s Communist Republic of China). It brooked no dissent. 1972 to a ministerial portfolio under Party launched a campaign of intimida- Anti-government protests on February Chiang Ching-kuo was an extraordinary tion. Its leaders snarled on television. 28th 1947 led to more than 20,000 Taiwan- turn. Given mounting popular anger at The armed forces simulated an invasion ese—students, artists, doctors, lawyers rule by mainlanders, Chiang turned to of Taiwan with beach-landing drills. And and intellectuals—being rounded up and Taiwan-born politicians to lend the missiles landed in the seas around the shot. It was the start of a decades-long regime legitimacy. Sometimes, Mr Lee island, in effect blockading it. The object “White Terror”. It was only in 1987 that later said, of his decision to join the kmt, of China’s fury: the incumbent president, Chiang’s son, Chiang Ching-kuo, finally the safest place “is the most dangerous”. Lee Teng-hui, whom they accused of lifted martial law. Mr Lee, in the words of Richard Ka- wanting to split the motherland by for- A young Mr Lee dabbled with commu- gan, his biographer, was the “ultimate mally declaring Taiwan’s independence. nism. A more enduring inspiration was Trojan horse”. By 1978 he was mayor of China’s actions backfired. Taiwanese Zen Buddhism. It taught that there is no Taipei and by 1984 Chiang’s vice-presi- refused to be intimidated. Election ral- shame in bending like a reed, nor any dent. When Chiang died four years later, lies were huge. Children rode on parents’ wisdom in hurrying. In 1961Mr Lee was Mr Lee assumed the presidency, despite shoulders, air horns lent a carnival air baptised a Christian, and if his evangelism efforts by kmt hardliners to thwart him. and taxis raced around the capital, Tai- hinted at a messianic streak, it was also After students began calling for full- pei, flying candidates’ flags out of their rooted in grassroots activism. As an agri- blown democracy in 1990, he promised to windows. Never has Banyan witnessed cultural economist, he was at the heart of institute it, dispensing with the farcical such a boisterous election. Mr Lee’s Taiwan’s development. A leap in the out- notion that Taiwan ruled China in the stump speeches drew crowds to flatter a put of the island’s farms kick-started an process (China did not reciprocate). rock star. Tall and with a near-permanent economic transformation which later led When he stepped down in 2000, his toothy grin, he was the first leader of the to calls for political freedom. informal support helped propel the Kuomintang (kmt, or Nationalist) party For years Mr Lee kept his head down. independence-minded Chen Shui-bian to address people in their native Taiwan- Still, state goons kept a dossier on him, to victory. Soon after, the kmt kicked the ese rather than in Mandarin, the lan- Trojan horse out. guage that kmt carpetbaggers had China’s communists loathed Mr Lee, a brought with them when they fled the “deformed test-tube baby cultivated in mainland, defeated by the Communists the political laboratory of hostile anti- in 1949. Taiwanese, he said, should not China forces”, especially for promoting a fear China’s “state terrorism”. His victory distinct Taiwanese identity, separate was emphatic, with more votes than the from that of China. But he, not they, won three other candidates combined. Taxis the battle for hearts and minds: two- were still beeping the following day. thirds of the island’s citizens identify as Mr Lee died on July 30th, aged 97. The Taiwanese first; only 3% as Chinese first. arc of his remarkable life traced Taiwan’s He also helped resist China’s efforts to own modern history. He was born under isolate Taiwan diplomatically. America’s Japanese colonial rule, to a farming health secretary, Alex Azar, who will this family. He studied in Kyoto and joined month become the most senior Ameri- the Japanese imperial army, though he can official to visit Taiwan in decades, never saw action. may attend his funeral. Even on the way To Mr Lee, Japanese rule seemed mild to his grave, Mr Lee has a knack for nee- compared with that of the kmt under dling the bullies in Beijing. China The Economist August 8th 2020 21

Entertainment tion twice as high as their contribution to national output. At their heart in Hunan is Heady Hunan a broadcaster with a knack for cranking out programmes that are watched throughout China. In 2018 hbs’s affiliates produced six of China’s best-liked costume dramas and eight of its most popular songs. Changsha’s standing has turned its bi- CHANGSHA ennial “Golden Eagle” awards into one of How Mao Zedong’s home province has become a font of popular culture China’s three most prestigious prize-giv- mong this summer’s television hits in its ratings. That is striking for an outfit run ing ceremonies for tv stars. By gdp per per- AChina has been “Sisters Who Make by the government of a province that is bet- son, Hunan ranks 16th among China’s 31 Waves”. The show involves 30 female celeb- ter known as China’s largest producer of provincial-level regions. But its 67m peo- rities over the age of 30 competing for a rice and the birthplace of Mao Zedong— ple are the country’s fifth-biggest spenders spot in a five-member band. Viewers watch “red tourism” centred on Mao’s formative on culture, education and entertainment. them train, perform and live together haunts draws devotees of the chairman Hunan’s journey to national pop-cul- (some of the contestants are pictured). Five from around the country. ture prominence began in the 1990s when hundred women, picked at random, get to But Changsha, the provincial capital, the provincial broadcasting authorities vote for their favourite. Within three days has become a font of China’s popular cul- created a satellite tv station with licence to of its airing in June, over 300m had ture. It is home to over 12,000 companies try something new. It produced lively news watched the first episode on Mango tv, a involved in creating it. They employ one in reports, a celebrity-led variety show called streaming app owned by the state televi- eight of the city’s workers. By one official “Happy Camp” and even a matchmaking sion network of Hunan, a central province. calculation, no other sector contributes programme. By 2000 hotels in Beijing were Social-media sites brim with praise from more to Changsha’s wealth. In 2017 (the luring guests with placards boasting, “We young feminists for these somewhat older most recent year for which figures are have Hunan Satellite tv”, the New York role models: at last, a break from the de- available) creative and cultural industries Times observed at the time. voted mothers and dewy-faced ingénues generated 9% of the city’s gdp—a propor- Much of that early success was the work beloved of official broadcasters. of a Hunanese bureaucrat, Wei Wenbin. Making waves is what Hunan Broad- When he took over as director of the Hunan Also in this section casting System (hbs) does best. It is the Radio and Television Department, Mr Wei most-watched television network after 22 Debating divorce read up about America’s entertainment in- China Central Television (cctv), the state dustry. On land once used by a state-run broadcaster—and occasionally surpasses — Chaguan is away rose farm, he built a vast park for television 1 22 China The Economist August 8th 2020

2 and film production and moved the new industry than counterparts in richer Chi- laws before they are passed. But the pas- satellite tv station there. The area, Malan- nese cities. Well before Hunan’s “Sisters” sions this new requirement has aroused, shan, has since grown into a cultural filled smartphone screens, a Hunanese and their persistence well beyond the law’s powerhouse, drawing media giants such as woman was making them: Zhou Qunfei, adoption by the country’s rubber-stamp iQiyi and Tencent. In 2017 eight of the ten the founder of Lens Technology. Born to a parliament, have been unusual. The hash- most-streamed variety shows on the Chi- poor, rural family, she was named the tag “oppose cooling-off” has been viewed nese internet were hatched there. world’s richest self-made woman in 2018. over 40.6m times on Weibo, a Twitter-like Hunan tv was the first network in Chi- People in China like to point to charac- service. “I am 22 years old this year. I am na to try broadcasting for profit. That led it ter traits which they believe are shared by afraid of getting married after reading the to focus on entertainment, a priority which natives of a particular province. The execu- new marriage law,” was one comment. helped it avoid political mistakes, as Wu tive at Mango tv detects “a cultural gene to The government’s motive is clear. It Changchang of East China Normal Univer- break the rules” among Hunanese. For evi- sees happy families as the bedrock of social sity has noted. According to Mr Wu, Hunan dence, he points to Mao and Liu Shaoqi, stability. The country’s soaring divorce rate tv struck a delicate balance between win- who was born in Changsha and served as must therefore be a threat, in its view. ning the love of viewers and approval from Mao’s prime minister. Hunan’s broadcast- Around 5% of divorces are done “rashly”, the Communist Party, which is a “prerequi- ers certainly have an interest in cultivating Sun Xianzhong, a legislator, told state me- site” of commercial success in China. the stereotype: an edgy feel is crucial to the dia. A cooling-off period would give The government has occasionally success of their brand. 7 spouses a chance to “calm down”, he said. winced. In 2011it took “Happy Girls”, a fan- It was not until after the Communist tastically popular singing contest, off air. Party seized control of China in 1949 that The official explanation was that the show The civil code women across the country gained the right was too racy for its prime-time slot, but to divorce their husbands. But divorce did many wondered whether its huge excitable Thirty more days not become common until after 2003, fan base worried the party. In 2004 a fore- when a month-long delay to allow “exami- runner of the show, “Super Girls”, had let of hell nation” of a divorcing couple’s motives by spectators vote for contestants by text mes- local officials was no longer required. sage—a first in China. That smacked too Thereafter, straightforward uncouplings much of democracy for the government. could be processed in a single day. Between Weeks after a change in divorce law, After a few years Hunan tv limited voting 2003 and 2018, divorces per 1,000 people debate about it still rages mainly to a studio audience. These days the rose from just over one to 3.2, a similar rate network strives even harder to please the nder china’s new civil code, adopted to America’s. party. In 2017 it launched a series about ide- Uin May, couples will have to wait 30 Couples who genuinely want to divorce ology called “Socialism is Kind of Cool”. It days between registering their intent to will not be dissuaded by a month of delay. included a quiz show on the life and works split for good and actually doing so. Noth- Rather, the cooling-off period will endan- of Xi Jinping, China’s leader. ing wrong with that, some might argue— ger victims of violence, says Lu Pin, a femi- Yet Hunan’s stations still have “political many other countries have similar “cool- nist activist who moved to New York after space to explore new things”, in the view of ing-off” requirements. On matters related the arrest of fellow campaigners in China a manager at Mango tv. The government to marriage, Chinese law is still remarkably in 2015. It is mainly women who will be af- wants to get “closer to its audience”, he liberal. Yet weeks after the restriction was fected by the new law—they initiate three- says, in particular to the young who spend introduced (it will take effect in January), quarters of divorces in China. hours glued to their smartphones. Internet many netizens remain furious. It will, they The legislation says no cooling off will broadcasters such as Mango tv, with 18m say, imperil the lives of women. be needed if a spouse suffers abuse. But will subscribers, help it to do so. The Communist Party sometimes al- officials accept allegations of it? A study in Hunan tv’s ability to experiment mat- lows, or even encourages, debate about 2017 by academics at Queen Mary Universi- ters for the development of Chinese broad- ty of London and Sichuan University found casting. Li Shuwan, a former presenter at that, while men in China were overall less the station, says the province is a training likely than those in Britain to get into fights ground for much of the country’s televi- or beat up other people, they were twice as sion talent. Industry insiders call Chang- likely to assault their partners. However, in sha the “West Point” of China’s cultural-en- divorce cases that go to court, judges often tertainment industry, a reference to the ignore accusations of abuse, especially American army’s elite academy. when raised by female plaintiffs. It is just as competitive. In 2013 Ms Li Debate about the new law has been fu- was one of only two students from Hunan elled by news in July of a woman in Henan University who were admitted to Hunan province who jumped from a building to tv’s graduate programme. This year some escape her violent husband. She is now 30,000 people applied for 100 spots on paraplegic. She had filed for divorce, but Mango tv’s trainee scheme. Mango tv en- was required to attend mediation. State courages young recruits to speak up and media said her plight was no reason to wor- suggest fresh ideas. They can receive fund- ry about the cooling-off period—she had ing to implement their proposals. simply failed to report the abuse quickly Yang Tianhao, a co-founder of Erka Me- enough. If she had not “put up with it”, per- dia, which manages 600 social-media in- haps the “pain and hurt she endured” could fluencers from its offices in China (includ- have been reduced, said Southern Metropo- ing Changsha) and Los Angeles, says that lis Daily. The cooling-off period may not be young people in Hunan’s capital are risk- a radical change. But, says Ms Lu, “if we had takers, with parents who are more willing other measures protecting women’s rights, to let their children try their luck in a fickle people might not be so angry.” 7 United States The Economist August 8th 2020 23

Electing a president that “2020 will be the most inaccurate and fraudulent Election in history” is Jarring different in style and motivation, but not in substance, from past claims. There is al- most no evidence for this either. Mr Trump’s own commission on election in- tegrity, which was seemingly set up to ex- WASHINGTON, DC plain how the greatest candidate in history Americans should worry less about foreigners and fraud and worry more about could possibly have lost the popular vote in creaky election infrastructure 2016 (and which was run by Kris Kobach, an ith less than three months to go un- ing lists of eligible voters. But this is not enthusiastic peddler of the myth), dis- Wtil polling day, a president talking up what happened in 2016. The Russian inter- banded without finding evidence of voting the threat of fraud and a virus keeping peo- ference that became such a big post-elec- fraud. Still, polls last time around suggest- ple at home, Americans are understand- tion story was an influence campaign rath- ed that about half of voters believe that ably worried about this year’s presidential er than a technologically sophisticated plot electoral fraud is a real problem. election. Even in more normal times, to mess with voting returns. The third group of “bad actors” are Re- America’s system of casting and counting The second group is fraudulent voters. publicans. Democrats maintain that, by ballots is more complicated and inconve- These have long preoccupied Republican manipulating laws on what identification nient than it should be. In Georgia’s prim- politicians. Donald Trump’s insistence is acceptable at a polling station and where ary elections in mid-July some voters those stations are sited, and by purging in- queued for five hours to make their voices active voters from the state lists of eligible Also in this section heard. In New York, tens of thousands of voters, Republicans engage in a systematic mail-in ballots have been disqualified or 24 The postal service kind of cheating, or voter suppression. are being disputed six weeks after the There is evidence that this goes on. Repub- 25 Hyperloops primary election there. lican operatives will sometimes admit to it To simplify a bit, at election time Amer- 25 Baseball returns in unguarded moments. But there is little icans now worry about three groups of bad evidence that voter suppression is deci- 26 How the District got its shape actors. The first is foreigners, who might sive, perhaps because the main effect may meddle with the results. “Russian election 27 Cities and UBI be to disenfranchise people who would not interference” conjures-up images of hack- have voted anyway (even in presidential 28 Lexington: One America News ers ensconced in St Petersburg breaking elections, about 45% of eligible voters do Network into vote-counting machines, or corrupt- not bother to cast a ballot). 1 24 United States The Economist August 8th 2020

2 After the 2016 election, activists aligned America. Big cities often have too few poll- with the Democrats claimed that laws re- ing places with too few workers and cum- quiring voters to present photo id before bersome voting machines. All this waiting they could vote cost Hillary Clinton the can dissuade people from voting, an effect state of Wisconsin and maybe the entire seen disproportionately among non-white election. But academics have poured a lot Americans. One poll taken after the 2016 of cold water on these theories; there is no election revealed that 73% of non-whites compelling evidence that voter-id laws said they had to wait in line to cast their changed the result of the 2016 election. votes, compared with 60% of whites. The Likewise, in 2018 the Democratic candidate longer someone has to wait, the more the for governor of Georgia alleged that her op- disparity grows; non-whites were 40% ponent, now-governor Brian Kemp, used likelier than whites to report waiting lon- his power as the secretary of state (a posi- ger than half an hour to vote (see chart). tion that is responsible for administering The failure of the New York Board of elections) to disenfranchise voters and Elections to prepare for an influx of mail-in deny her the election. One investigation ballots this year has raised renewed con- into the contest found that a programme cerns about the capacity of postal voting designed to verify the information voters systems (see next story). Covid-19 means submit with their applications for registra- more voters than ever will attempt to cast tion could have disenfranchised up to their votes by post in November. The us Sorting the US out 50,000 Georgians. Yet Mr Kemp’s margin Election Assistance Commission, an agen- was 55,000 votes—even if every single vot- cy charged with helping election adminis- 630,000 employees have been quaran- er who was disenfranchised voted for his trators, reckons that in 2016 41% of ballots tined. Although package volume and rev- opponent, he would still have won. were cast before election day. If that share enue has grown along with online shop- increased it would lessen waiting times at ping, the volume of first-class and The right to queue polling stations. But the postal service and marketing mail have both declined. If worries about these three groups of bad ballot-counters would be inundated with Chronic problem number one is the de- actors can be overblown, Americans are far envelopes sent by voters who are new to cline in first-class mail, the postal service’s too relaxed about less exotic kinds of trou- the process and may have their ballot dis- most profitable offering. In a digital age ble on election day—the kind caused by in- carded because of some minor technical people send fewer letters and postcards. competent administration, weird laws, glitch. More postal voting could also make Chronic problem two is the Postal Account- lack of funding and too few volunteers at counting much slower on election night, ability and Enhancement Act (paea), a law polling places. creating doubt about who has really won passed with bipartisan support in 2006 America’s constitution, unlike those of that could last for days or even, in the case that requires usps to prepay a large share of other Western democracies, does not guar- of a tighter election, months. 7 future retirees’ health benefits—a burden antee all its eligible citizens the right to imposed on no other federal agency. vote. Instead, it leaves election administra- On current trends, the postal service es- tion up to the states. Polling-place closures The postal service timates that it could run out of money and long queues caused by a lack of volun- sometime between April and October 2021, teers, as well as failures of new electronic Law of the letter unless there is relief or reform. House machines (which happened in Georgia this Democrats included money for the postal year) are routine. The whole system is a bit service in their version of the cares Act en- creaky: an analysis by researchers at the acted in March, but after Steven Mnuchin, Brennan Centre for Justice, a law and vot- the Treasury secretary, said Mr Trump ing-rights group, found that the vast major- WASHINGTON, DC would veto any legislation that included The most popular government service ity of states are using voting machines that funding for the postal service, it was cut. is mired in avoidable dysfunction are no longer manufactured. The only relief the usps has so far been of- Though a visit to a polling place lasts he postal service”, said Donald fered is a $10bn line of credit from the Trea- minutes in many other Western democra- “TTrump, as he signed covid-19 relief sury that lets Mr Mnuchin see the terms of cies, it can take hours from start to finish in legislation in the spring, “is a joke.” He con- its ten biggest contracts, which includes tended that the United States Postal Service the one with Amazon (the usps does a lot of (usps) is losing money by “handing out “last mile” delivery for Amazon). Wait (and wait and wait) for it packages for Amazon and other internet To put the service on firmer financial United States, self-reported time spent waiting companies”, and needed to quadruple its footing—or, some believe, to undermine to vote, 2016, % replying, by race package rates. Far from being a joke, the it—Louis DeJoy, who became Postmaster usps is the nation’s favourite government General in May, implemented operational Whites Non-whites agency, viewed favourably by 91% of Amer- changes last month. Instead of setting as a 403020100 icans. But it is losing money: $4.5bn from paramount goal delivering to customers all No wait January to March, more than double its mail received by a post office on a given Less than losses for the same period last year. Neither morning, the new rules forbid carriers ten minutes the reasons nor the solution are quite so from leaving late or making extra trips back 10-30 minutes simple—and many see ulterior motives be- to the station, as often happens if more hind Mr Trump’s contempt. mail arrives than a single truck can hold. 30-60 minutes The usps’s financial woes have three Many question why Mr DeJoy opted to More than main causes, one acute and two chronic. implement those changes just before a an hour The acute one is covid-19. At least 2,400 presidential election that will be unusually Source: Alexander Agadjanian, 2016 Cooperative postal workers have caught the virus and reliant on mailed ballots. Mr DeJoy, unlike Congressional Election Study 60 have died. More than 17,000 of its the previous four postmasters general, has 1 The Economist August 8th 2020 United States 25

2 never worked for usps; he ran a logistics Baseball returns company and has been a generous donor to Republicans. Gerry Connolly, a Democratic congressman who chairs the subcommit- Strike two tee that oversees usps, calls Mr DeJoy’s ra- tionale “a smokescreen...Under the guise NEW YORK America’s favourite pastime, like America itself, is struggling to contain covid-19 of ‘We can’t afford it and we’re making effi- ciencies’, it’s directly affecting the delivery he crack of the bat made an abnor- at home right now is because players’ of mail on the eve of an election.” Tmal baseball season feel fleetingly health wasn’t being put first. I can see Others posit different motives. Two familiar. On August 2nd Aaron Judge, the that hasn’t changed.” years ago the Office of Management and Yankee right-fielder, hit his second Perhaps mlb should have followed Budget released a report mulling the sale home-run of the game, his sixth in five the professional basketball and hockey and privatisation of the usps, a position straight games. The eight-inning moon leagues’ bubble model. The National long advocated by some market-friendly shot broke a 7-7 tie against the Boston Basketball Association’s teams are living wonks. Mr Trump has a long-standing Red Sox, the Yankees’ bitter rival. As the and playing their games, without fans, in grudge against Jeff Bezos, who owns both ball soared 468 feet into the stand, the Disney World in Florida, while the Na- Amazon and the Washington Post. Some be- commentators went wild. Your corre- tional Hockey League’s teams are playing lieve the president sees raising package spondent leapt from her sofa. It was in two bubble sites in Canada, which has rates as a way to exact revenge. The latest exciting, but weird. No scrum of fans managed to flatten its curve, unlike its stimulus bill passed by the House contains chased the ball in the bleachers, which neighbour. Neither league has had a $25bn for usps, and removes any condi- were devoid of Bleacher Creatures. There coronavirus case since the bubbles were tionality—such as letting Treasury see con- were no fans. The crowd cheering was a put in place. tractual terms—from its $10bn line of cred- recording. The National Football League, which it. This may not survive negotiations, or Baseball’s season began on July 23rd, begins its season in September, is keep- the threat of Mr Trump’s veto. four months late because of the pandem- ing an eye on the mlb’s performance. The Mr Connolly is defiant. “We have a pan- ic. After just three games, the Miami nature of football, with its large rosters, demic spreading; it’s more virulent than Marlins’ games were temporarily sus- contact on every play and huddles, puts ever, the unemployment numbers are go- pended after 18 players—more than half its players at risk of covid-19. The time of ing up, gdp shrank by the largest number the roster—and some backroom staff year it is played, in the autumn and ever recorded, and you want to veto a bill tested positive for covid-19. Five games winter, when there might be a second over the fact you have your nose in a snit into its season the St Louis Cardinals wave, may also prove challenging. The about Jeff Bezos and Amazon? Good luck on were hit by an unrelated outbreak. Seven nfl gets a disproportionate amount of selling that.” The postal service too will be players and six team staffers tested posi- its income from television, so it is espe- on the ballot in November—if the ballot pa- tive. Rob Manfred, Major League Base- cially keen for the season to last to the pers can be delivered by usps. 7 ball’s (mlb) commissioner, threatened to end of the playoffs and the Super Bowl. shut down the season unless the sport improved its handling of the virus, but Hyperloops he later backtracked. It is hard to imagine the season continuing if a third team has Pipes of fancy an outbreak. “It’s a little bit of three strikes and you’re out,” says Zachary Binney, an epidemiologist who focuses on sports at Oxford College at Emory University in Atlanta. CHICAGO mlb has a113-page protocol manual Could long-dawdling America lead the designed to keep teams virus-free, yet world in a new form of transport? players and staff are still spitting and or decades not much has changed in giving high-fives and fist-bumps. Bob Fhow Americans shift themselves and Geren, a Los Angeles Dodgers’ coach, was their goods about. They mostly still rely on caught on camera pulling down his mask cars, lorries, trains and planes that would to cough. Protocols are being tightened look familiar to someone visiting from the and each team must have a compliance mid-20th century. Now, various compa- officer. Many players and around a dozen nies are pushing for the regulation of (and umpires are opting out of the season. public support for) schemes to create pub- David Price, a pitcher with the Dodgers, lic intercity transport within depressur- recently tweeted, “Part of the reason I’m Testing and tracing ised pipes. A mention of the method, in a House infrastructure bill passed last month, has spurred excitement that these 40 minutes”, he says, so covering the 460 ing down can be tricky. “We’ve shown it can pipe-dreams could become reality. miles many hours quicker than by driving work,” he says. He hopes next to build a A hyperloop system involves passen- and at a cost (and overall carbon impact) 15km pipe to test the higher speeds, possi- gers or freight transported by pods elevated that he says would be lower than flying. bly near Columbus, Ohio, though Missouri by magnets, which travel within raised His firm runs an experimental centre and parts of some western states are also pipes. The pods can be propelled at near Las Vegas, where engineers—includ- interested. Requirements include flat to- 620mph (1,000kph), says Jay Walder, boss ing some who worked on the Mars Rover pography, empty space and no corners. of Virgin Hyperloop One, one of the firms programme—have run over 400 tests using These schemes are sufficiently ad- pushing the idea. At that pace “you could a 500-metre-long pipe. So far they have vanced for some state and local-govern- move between Columbus and Chicago in sent pods flying at 240mph, though slow- ment officials to take them seriously. Thea 1 26 United States The Economist August 8th 2020

2 Ewing, of Ohio’s transport commission, In reality, though, such schemes would cans pay it little attention. Polling suggests says a recent feasibility study showed it only be viable if they were useful for tran- that those who have are split; statehood for could be done. The population is booming sporting goods, too. “Mostly this would be Puerto Rico has greater support than state- in Columbus, which lost all its rail services for freight,” says Mark Patton, who over- hood for the Swamp. in 1979, so there is plenty of demand for sees transport plans for the Columbus re- Democratic activists are an exception. new transport—for example, to Chicago gion. Paul Judge, who runs a thriving plas- They have embraced the issue not only for and Pittsburgh. She says the pipes could tics manufacturer, Axium, in the city, says the sake of residents’ voting rights, but also come up on state-owned land beside mo- he would welcome it if it meant he could for the two additional Democratic senators torways or (where they exist) railways. An- run a big factory, cheaply, in one spot and the District, which is almost half black, other route being considered would link ship his billions of units of shampoo bot- would undoubtedly send to Capitol Hill if it Kansas City and St Louis, both in Missouri. tles, hand-sanitisers and the like to mar- became a state. In “It’s Time to Fight Dirty: Why do it? “We see it as something to kets in the region. How Democrats Can Build a Lasting Major- help convert the region,” she says. Looking Who would pay for it? Both private and ity in American Politics”, David Faris, a po- ahead to projects that would not be com- public funds would be needed. Some pub- litical scientist, cites statehood for dc as pleted until mid-century is common prac- lic help would come from providing the one of several “dirty” tricks Democrats tice for transport planners. A hyperloop land, but investors hope for more. Mr Wal- could pull to tilt the electoral system— could allow spouses to work in different der says he expects America will eventually which confers advantages to Republicans cities while still living together, or Ohioans see a $2trn national infrastructure plan to who represent sparsely populated, rural to pop to Chicago’s fancy restaurants or help restart the economy. Part of that might states—back towards equality. In June a concert venues for an evening. throw the Midwest a loop. 7 majority of members of the Democrat-con- trolled House of Representatives voted to admit dc into the union as the 51st state. Of DC history the 25 candidates who ran for the Demo- cratic presidential nomination this year, 18 Without representation supported statehood. The political implications of granting statehood to dc have caused an uproar on the right. Just before the House vote, Tom Cotton, a Republican senator from Arkan- WASHINGTON, DC sas, told the Senate that granting statehood Residents of the nation’s capital could once vote for Congress and for state to the district and conferring voting rights legislatures. Perhaps they will again on its citizens constituted a “power-grab” ashington, dc was not always a living in the newly converted district could by Democratic politicians to “rig the rules Wfunky trapezoid shape. It took on that vote for both the House of Representatives of our democracy and try to give [them] form in 1847, when residents of Alexandria and the state legislatures of Virginia and permanent power”. That, of course, is part City (now in Virginia) spearheaded an ef- Maryland, depending on which side of the of the appeal for some of the idea’s suppor- fort to leave the capital and be reincorpo- Potomac they lived. That is because the ters. How could it happen? rated into Old Dominion state. Years of ne- District of Columbia was not officially in- Stahsha Rhodes, campaign manager of glect from Congress and Washington’s corporated until the turn of the century; an advocacy group called “51 for 51,” says various governing committees had left its until then, de facto residents still enjoyed that “bypassing the filibuster and getting 51 infrastructure crumbling. Many slavehold- all the de jure rights of a citizen living in the votes is the most straightforward path to ing residents also believed that the capital surrounding state. In 1801 Congress passed statehood.” If Democrats did manage to would soon outlaw slavery, and cast an eye the Organic Act, a law officially establish- win control of the Senate and White House to friendlier territory next door. Following ing Washington as a district separate from in November, admitting dc as a state could votes in favour from Alexandria residents its adjacent states. Residents were to be be on their agenda. Though some legal ex- and Congress in 1846, the Virginia state leg- governed by Congress, and were no longer perts argue that Congress has the power to islature met the next year to approve the counted as residents of Maryland or Vir- restore the voting rights they rescinded retrocession of all District lands south of ginia. Their right to vote was stripped away. from District residents in 1801, others be- the Potomac river. That history is becom- This history is little-known outside the lieve that the Constitution grants congres- ing newly relevant as the campaign for dc capital city. Although its lack of voting sional representation only to residents of statehood has gained momentum. rights is a live issue among the 700,000 states. If that is so, advocates would need to Before the retrocession, the District was people who live there, most other Ameri- turn to a constitutional amendment to get ten square miles of land that included both proper representation in Congress. present-day Alexandria City and Arlington 51 for 51 maintains that the fight for County, Virginia, in addition to its current Maryland statehood is about rights. America’s foun- DC territory north of the Potomac. This was its Pot ders believed that proper representation in om a original design as set out in 1790, when c government was key to a modern social northern political leaders met their south- District of contract. Accordingly, many adopted “no ern opponents to establish a capital on the Virginia Columbia taxation without representation” as a rally- Potomac in exchange for a powerful na- ing cry during the war of independence. tional bank and an expanded role for the Washington The same demand for voting rights is now Arlington federal Treasury. The story of this “dinner- County the District’s unofficial slogan. Proponents table bargain” has now been popularised point out that, thanks to laws about voting by a song in the musical “Hamilton”. overseas, there is nowhere—apart from The original capital district was not just Alexandria City Maryland prison—an American citizen can move to geographically different from the one that and be deprived of their right to vote for DC land ceded back exists today. Its residents also enjoyed dif- to Virginia in 1847 5 km congressional representation. Nowhere, ferent rights. Between 1790 and 1801, people except the District of Columbia. 7 The Economist August 8th 2020 United States 27

Taxing and spending payment to 20 people. In Newark, New Jer- sey, Ras Baraka, the mayor, is hoping to get From unthinkable to universal a pilot programme up and running. A third of Newark’s residents live in poverty and have to make tough decisions, Mr Baraka says, like “heat or eat.” Nearly 60% of New- ark households carry delinquent debt. But NEW YORK to introduce a proper ubi in Newark, he Guaranteed-income schemes gain momentum, thanks to Andrew Yang, covid-19 says, would require federal funding. and America’s mayors For all the enthusiasm about ubi ex- olette smith and her husband are will not quickly be reversed. In June Jack periments, they remain problematic. It is Cboth out of work. They had exhausted Dorsey, Twitter’s boss, gave Mr Yang’s orga- hard to fully evaluate their effect because their savings, when she received a one- nisation $5m to build the case for ubi. they are not universal (in the sense of re- time $1,000 cash infusion as part of a Funding a generous ubi has always ceived by everyone). Most take the form of scheme run by Neighbourhood Trust, a fi- seemed impossible. But many seemingly occasional cash payments to poorer Amer- nancial coaching non-profit, and Human- impossible economic policies have been icans. Nor are they generous enough to live ity Forward, an organisation devoted to enacted recently, opening the door to on, which is what true ubi believers advo- building support for universal basic in- wackier ideas. Under America’s economic- cate. Finally, because they tend to be fund- come (ubi) founded by Andrew Yang. ubi stimulus plan to deal with the fallout from ed by philanthropy, the experiments do not was the centrepiece of Mr Yang’s run for the the pandemic, for example, Congress sent factor in the substantial tax rises that Democratic presidential nomination, in $1,200 to every adult. The scheme was so would be needed to pay for them. which he advocated a guaranteed income generous that, combined with extended The proposal Mr Yang ran on would of $1,000 a month, a “Freedom Dividend”, unemployment benefits, aggregate house- have cost $2.8trn annually, which is about as he called it, for every American adult, re- hold income is forecast to rise this year. what the federal government spends each gardless of their financial circumstances. In May more than dozen cities, includ- year on Social Security (pensions), Medi- There are two big hurdles to introduc- ing Atlanta, Los Angeles, Newark and St care (health care for the elderly) and Medic- ing ubi in America. One is building sup- Paul, along with the Economic Security aid (health care for the poor) combined. port for something that sounds, to many, Project, launched Mayors for a Guaranteed Even then it would provide adults with no alarmingly socialist. The other is working Income, a network of mayors experiment- more than $12,000 a year—not enough to out how to pay for it. Mr Yang’s campaign ing with ubi-like schemes. Mr Dorsey has lift a workless family with two adults and for the Democratic nomination may have also given money to this group. In February two children above the federal poverty line. failed. But on one of these points he has 2019 Stockton, California, began an 18- A more targeted effort that did not aim been wildly successful. A recent Stanford month experiment to give $500 to 125 ran- to be universal could do much more on that study showed that people are warming to domly selected people. This is being ex- score. Ms Smith, along with 1,000 other the ubi idea. In April 88% of liberals backed tended for another six months to help par- residents of the Bronx, received a one-off it, while support among conservatives rose ticipants weather the slump. $1,000 grant from Mr Yang’s outfit. This al- from 28% before covid-19 to 45%. Universal In Jackson, Mississippi, the Magnolia lowed her to buy food and to restore the in- benefits can be easier for politicians to sell, Mothers’ Trust provides poor African- ternet, which her 14-year-old son needed because they are less vulnerable to the ra- American mothers with $1,000 in cash for remote learning. This helped a great cial politics that have undermined support monthly, no strings attached, for a year. It deal. But ubi advocates still have to explain for welfare spending in the past. recently began a larger experiment with 75 why it would not be better to give families Dreams of a ubi have a peculiar history more participants. Hudson, a small city in such as hers larger sums rather than a in America. In1967 a coalition of welfare re- upstate New York, recently announced a smaller payment that also goes to those cipients, led by African-American women, five-year scheme to give a monthly $500 who do not need it. 7 demanded “decent income as a right”. Mar- tin Luther King wrote about it in his final book. At the other end of the political spec- trum, Donald Rumsfeld and Dick Cheney drew up a guaranteed minimum-income proposal for President Richard Nixon. Mil- ton Friedman and Friedrich Hayek, be- loved of libertarians, were enthusiasts too. More recently, ubi has been taken up by technologists who believe that software will leave a large number of Americans job- less, leading to social unrest. It has also been promoted by some of the organisa- tions which make up the Black Lives Matter movement, who see it as a way to mend ra- cial disparities in wealth. Mr Yang points out that the approval rating for ubi was only about 25% when he began his presidential run, but by the time he ended it, in February, it was 66%. “The energy around universal basic income has skyrocketed, and it’s going to remain ele- vated until a bill passes,” says Mr Yang, who believes the job losses caused by covid-19 Radical policies for radical times 28 United States The Economist August 8th 2020 Lexington Channel-hopping

The president’s new favourite network reveals more about America than it intends Thrillingly angry talk-shows are not new to the American air- waves. They became a fixture on radio after the abolition in 1987 of the Fairness Doctrine, which had required broadcasters to give equal treatment to competing points of view. As America was criss-crossed with cable and audiences got access to hundreds of channels, television networks found that they, too, could get high- er ratings by zeroing in on one group—conservatives, say—than by trying to cater to everyone. As a bonus, it turned out that opining was cheaper than reporting. Advertisers preferred the more opin- ionated channels too, within reason, as they were able to tailor their ads to more specific audiences. Commercials on oann fit the content perfectly: after watching an apocalyptic report about prot- ests in Portland, viewers might be shown a commercial for a dy- namo-powered emergency radio (“Your life may depend on it!”). After bulletins that question the validity of mainstream science, they see ads for alternative supplements, such as crystals that pro- mise to unlock the power of beetroot. This has helped cable news remain profitable—and influen- tial—even as other forms of journalism have withered. While American newspapers have shed about half their newsroom staff in the past ten years, as readers and advertisers have fled online, the cable-news industry employs about as many people as it did a hortly after touching down in Texas on July 29th, Donald decade ago, according to the Pew Research Centre. Ratings have STrump gave a review of the in-flight entertainment on board Air held steady, helped in recent years by a White House that generates Force One. “It is amazing watching @FoxNews how different they extraordinary amounts of news. are from four years ago. Not even watchable. They totally forgot oann is only a small fish in a big swamp. It is not carried by who got them where they are!” he tweeted. The president’s rela- some of the large cable and satellite companies (despite a cam- tionship with his once-favourite cable-news network has publicly paign that has included a billboard ad encouraging people to call soured. With its “phony polls, done by the same group of haters the mobile-phone number of an executive at Dish, a satellite firm). that got it even more wrong in 2016”, Fox is “doing nothing to help It claims to make money, though it declines to say how much. The Republicans, and me, get re-elected on November 3rd”, Mr Trump network appears to be run on a shoestring, making free use of li- has complained. “Watching @FoxNews on weekend afternoons is brary footage, suffering from occasionally dodgy sound and mis- a total waste of time,” he tweeted in April. Fortunately, however, spelled captions, and employing just 50 journalists, who are most- “We now have some great alternatives, like @oann.” ly confined to studios or stationed outside the White House. Great or not, the One America News Network is certainly alter- native. Launched on Independence Day in 2013 by Robert Herring, Square-eyed, swivel-eyed a circuit-board millionaire who decided to cash in his chips and Still, it would be foolish to switch off to the dangers represented by spend them on running a television network, the cable channel oann. It is the fourth-rated cable-news network, after Fox, cnn serves up news from another dimension. Its reports suggest that and msnbc (and ahead of the likes of bbc America, cnbc, Fox Busi- the coronavirus, whose seriousness it considers exaggerated, may ness and Bloomberg). Mr Trump, who well knows that a joke can have been developed in a North Carolina laboratory. Hydroxychlo- turn into something serious, promotes its stories to his 85m Twit- roquine is a miracle drug—not that you are likely to hear about it, ter followers with a relentlessness that makes some wonder if he is because of a massive disinformation campaign orchestrated by planning a career at the channel after his presidency. For those Big Tech and the Chinese-controlled World Health Organisation. who swallow oann’s stories, whether by tuning in directly or hear- Another thing you won’t know is that Martin Gugino, the 75-year- ing them second-hand, it is an unhealthy addition to their news old who fractured his skull when he was pushed to the ground by diet. The pandemic has shown how misinformation can kill. two police officers in Buffalo in June, was using an antifa-inspired The bigger reason to worry about oann, however, is that tv is a police-tracking device on his phone when he was tackled. lagging indicator of opinion. Talk-shows are less about persuasion This is the regular-strength, daytime stuff. oann’s evening than about affirmation: of views formed online, on social media talk-shows are still more eye-opening. Graham Ledger usually and in forwarded emails and WhatsApp messages. Viewers don’t kicks off his hour-long slot by announcing: “The doors to the tune in to Ms Wheeler to learn about the world, but to experience newsroom are locked, and the pc police are not getting in!” Mr Led- an expression and celebration of the opinions and the identity ger, who considers wearing a face mask to be an act of submission, they have already been introduced to on the fringes of the internet. recently filmed himself going out for a clandestine haircut, in “There are tens of millions of Americans who have developed a breach of California’s lockdown rules. “This is not unlike, of taste for these sorts of conspiracy theories, and for whom Fox may course, what they had to live through during Hitler’s time,” he ob- be too tame,” believes Charlie Sykes, a former conservative talk-ra- served, from behind dark glasses, on his way to the salon. Mr Led- dio host who quit his show in 2016 after opposing Mr Trump. Even ger’s show is followed by “Tipping Point”, presented by Liz if Mr Trump loses in November, fake news will thrive. Like oann, Wheeler, who denounces the “trained Marxists” of Black Lives he amplifies harmful nonsense. But the act only works because so Matter with a glare that could turn liberals to stone. many cannot distinguish politics from entertainment. 7 The Americas The Economist August 8th 2020 29

Argentina ing it harder for Argentina to make a sepa- rate peace with a subset of creditors, then Fighting on fewer fronts turn on the rest. Argentina will now have to renegotiate its $44bn debt to the imf. The agreement with creditors is “great news”, says Federico Sturzenegger, a for- mer head of the Central Bank who has been BUENOS AIRES a critic of Mr Fernández. Most Argentines A deal with foreign creditors is good news. Overcoming the economic and health are less enthusiastic. “I can’t pay my taxes, crises will require much more so how can I celebrate us paying debts?” t alberto fernández’s official resi- creditors, which would have weakened the asks Ricardo as he opens his small grocery Adence in a suburb of Buenos Aires, the peso, quickened inflation and prolonged store in downtown Buenos Aires. His first mood mixed relief and caution. “We’ve its exile from international credit markets. client, Marta, a cleaner, scoffs: “People are dodged a bullet,” said an adviser to Argenti- The government’s agreement with the starving. We need the money, not the for- na’s president after the government had main holders of the debt has probably eign banks.” Mr Fernández’s approval rat- reached a deal with creditors on August averted that danger. It is offering new ing has recently dropped, from 61% to 51%. 4th. The news came just as the country re- bonds worth almost 55% of the face value What comes next “is the hard part”, says corded 166 covid-19 deaths, a daily record. of the ones they own, up from an original an imf official: the intertwined tasks of “The challenge is a path out of pandemic proposal of 38%. It will start to pay a bit ear- suppressing the pandemic and restoring and deep recession,” said the adviser. lier than it had first proposed (interest due growth. That is what will improve the The summing-up is accurate. Mr Fer- every March and September will instead be mood of people like Ricardo and Marta. nández, a Peronist who became president paid every January and July). It has also The Fernández government acted early in December, had appeared to be on a colli- agreed to make collective-action clauses, in response to covid-19. It imposed a na- sion course with holders of $65bn-worth of which allow a supermajority of creditors to tionwide lockdown in mid-March and has foreign-law bonds. That is about 40% of force others to agree to a debt restructur- maintained it in the most densely populat- the government’s foreign debt and equiva- ing, more favourable to investors by mak- ed areas. That has kept Argentina out of the lent to 16% of this year’s gdp. The economy ranks of the worst affected countries. De- minister, Martín Guzmán, initially de- spite the lockdown, though, the number of Also in this section manded big cuts in interest payments and cases and deaths has jumped in the capital a delay until 2023 in resuming them. Ar- 30 Democracy in Guyana and Suriname and the surrounding province of Buenos gentina, now on its ninth debt default, Aires, home to 45% of Argentines. 32 Bello: Beyond the troika of tyranny looked set for yet another legal battle with The cost has been high. The imf expects 1 30 The Americas The Economist August 8th 2020

2 the economy to contract by 10% this year, Guyana and Suriname worsening a crisis that began under Mr Fer- nández’s predecessor, Mauricio Macri, in Oil futures 2018. Annual inflation is nearly 43%. The official poverty rate, 35% at the end of last year, now probably exceeds 40%. Although the government will now be spending less to service its debt than origi- Democracy won in the South American neighbours. Their new presidents have nally planned, it has little cash to fight re- contrasting challenges cession and poverty. The budget deficit this year is projected to be 8% of gdp. It is being or five months Guyana has waited to ppp’s 22 years in power before 2015 are re- financed directly by the Central Bank, one Fsee if the stand-off between its presi- membered for corruption (as are the 28 reason inflation is so high. If the govern- dent, David Granger, and the opposition years of rule before that by the People’s Na- ment is to restore growth, attract invest- would end in violence, a coup or a peaceful tional Congress, now Mr Granger’s party). ment, curb inflation and pay creditors as transfer of power. On August 2nd peace Bharrat Jagdeo, the president from 1999 to promised it will need another plan. prevailed. The Elections Commission de- 2011, still calls the shots in the ppp and is One precondition is reducing the bud- clared that Irfaan Ali, the opposition’s can- the new vice-president. He chose Mr Ali, a get deficit. That will require a cut in public didate, had won the election held on March former housing and water minister, as the spending as soon as the pandemic allows. 2nd. He took office the same day. party’s candidate because he could not run. The government should de-index the pen- Mr Ali had a minuscule lead on election Guyana’s Special Organised Crime Unit has sion system, use tax incentives to boost ex- day, but a disputed tally by the chief elec- charged Mr Ali with conspiracy and fraud. ports and liberalise labour laws to encour- tions officer gave victory to Mr Granger. A He denies the allegations, and promises age investment, especially in agri-business drawn-out recount and legal battles fol- honest management of the oil money. and energy, argues Aldo Abram, director of lowed. It looked as if Mr Granger, a former The ppp has said it will dissolve the Nat- Libertad y Progreso, a conservative think- army brigadier, was determined to remain ural Resource Fund, set up by Mr Granger’s tank. “Do we know what we have to do, eco- in office. He relented under pressure from government to receive oil revenue. It is nomically, to get out of this hole?” Mr other countries such as the United States supposed to release the money into the Abrams asks. “Yes. Do I see a president and Britain, the former colonial power, economy at a rate that does not drive the ready to confront these issues? No.” plus regional organisations such as the Ca- value of the currency to levels that would One reason may be the influence of the ribbean Community. Independent media make other enterprises uncompetitive or vice-president, Cristina Fernández de and Guyana’s private sector lobbied for Mr overwhelm the capacity of Guyana’s weak Kirchner. A populist, she was president Granger to go. His supporters plan a court institutions to spend it well. But it is not herself from 2007 to 2015 and chose Mr Fer- fight, but have little prospect of success. clear what the new government will re- nández to be the Peronist movement’s The transfer of power comes just as place it with, or when. presidential candidate. Guyana begins to cash in on massive off- More than $90m, about 2% of last year’s Ms Fernández (no relation to the presi- shore oil deposits (see chart). Thanks to gdp, is sitting in a bank account at the New dent) has used her clout most in non-eco- them, the imf expects the economy to grow York Federal Reserve. An early test of Mr Ali nomic areas. Her supporters lead the min- by 53% this year. In a few years, South will be whether he bows to pressure to istries of interior, security and defence. America’s third-poorest country, which spend much of that money to bail out Guy- Under indictment for corruption (and with has one of the world’s highest rates of emi- SuCo, the state-owned sugar producer, her two children being investigated), she is gration, will probably be one of its richest. which is having trouble paying its wage pushing for sweeping changes to the judi- The chance to control the bonanza raised bill. Mr Granger’s government had sought ciary, including an expansion of the Su- the stakes in the bitter rivalry between Mr to reduce the firm’s losses by shutting preme Court. Her critics say that is to make Granger’s mainly Afro-Guyanese coalition down some money-losing estates, which room for judges loyal to her. and Mr Ali’s mainly Indo-Guyanese Peo- contributed to his election loss. Mr Ali may She has a say on economic matters, too. ple’s Progressive Party (ppp), which began be tempted to preserve unproductive jobs, She lobbied the president to issue a decree before independence in 1966. The winner mostly held by Indo-Guyanese workers. expropriating Vicentin, a big cereal pro- could hope to stay in power for decades. There are wiser ways to spend the money: ducer. President Fernández eventually It is hard to trust that the new govern- on boosting infrastructure and education withdrew it, saying the courts would not ment will spend the oil money wisely. The and on measures to protect the country co-operate. Though she fought foreign from covid-19, which is spreading alarm- bankers during her presidency, she fa- ingly, and from climate change. That might voured this month’s settlement, and made Democratic duo win over the half of Guyanese who did not sure she got some of the credit. During the Guyana Suriname vote for him. frantic negotiations on August 3rd, Mr Guz- Suriname’s new president, Chan San- 0.20 0.80.60.4 mán visited her at home to explain his tokhi, also wondered whether he would Population strategy. Her influence, though in favour of take office after winning an election. His 2019, m a sensible policy in this case, “is not a good period of suspense was shorter. The vote narrative to sell investors”, says a longtime 86420 took place on May 25th, and he was sworn adviser to the president. GDP per person in on July 16th. The doubt was whether With the debt deal, Mr Fernández has 2019, $’000 President Desi Bouterse, who has domin- made his impossible-seeming job a bit eas- ated Suriname’s politics for more than 40 ier. Now he must overcome a recession, 6420 810 years and was convicted last year by a mil- tame a disruptive vice-president and, Proven oil itary court of murdering 15 political oppo- reserves*, 2020, above all, contain the pandemic, which is 92.5m nents in 1982, would yield power. ravaging poor villas around Buenos Aires. barrels bn He did, but has left Mr Santokhi with a He has handled Argentina’s creditors with Sources: World Bank; IMF; *Excludes recently announced ExxonMobil; Staatsolie offshore discoveries mess. Before leaving office Mr Bouterse finesse. Covid-19 is more implacable. 7 gave public servants a 50% pay rise, which 1

32 The Americas The Economist August 8th 2020

2 the government cannot afford. The budget is a former police commissioner and jus- this year, reckons the imf. Gold may help deficit last year exceeded 10% of gdp. Mr tice minister but the new vice-president, before the oil money arrives. It accounted Santokhi persuaded public-sector unions Ronnie Brunswijk, seems less strait-laced. for more than three-quarters of exports last to wait for the pay rise. He has begged He began his career as Mr Bouterse’s body- year. Investors’ mistrust of the dollar has banks for cash, raised income-tax rates and guard, fought a guerrilla war against his pushed its global price to a record high. deferred payment of a loan taken out last former boss in the 1980s, and has been con- Dutch-speaking Suriname’s largest eth- year to buy a hydroelectric dam. victed by a Dutch court for cocaine smug- nic groups, like Guyana’s, are of African Suriname, like Guyana, is an emerging gling. He owns a football club and a gold- and Indian origin. But its political divide petro-power. Apache, an American oil mining business. reflects attitudes to Mr Bouterse rather company, and its French partner, Total, an- The oil will not flow for perhaps five than ethnic identity. He has now left the nounced this year three big oil finds off- years, which means that Mr Santokhi, scene. The fight over how to spend Suri- shore. Others are about to drill. Surinamese whose term ends in 2025, may reap as little name’s new riches, when they come, may may share Guyanese worries over how well political benefit from it as the unlucky Mr be less bitter than Guyana’s. That, perhaps, the windfall will be managed. Mr Santokhi Granger. The economy will shrink by 5% is Suriname’s real gold. 7 Bello Beyond the troika of tyranny

A Biden presidency might seem reassuringly familiar to Latin Americans or the first time in history, you can presidents. In Barack Obama’s second “Ftruly envision a western hemi- term Vice-President Biden took on re- sphere that is secure, democratic and sponsibility for the Americas. “He dedi- middle-class, from northern Canada to cated time to it, set out to learn about it southern Chile, and everywhere in be- and talked to a lot of people in the re- tween.” So said Joe Biden in a speech at gion,” says the Latin American official. Harvard University in 2014. Much has Juan Gonzalez, who advised Mr Biden changed since then, not least the de- on Latin America back then, stresses that struction of lives and livelihoods the region and the world are not as they wrought by the pandemic. Even so, were were in 2016. “The challenges are much Mr Biden to be elected president of the greater,” he says. But he thinks there are United States in November, for many opportunities for the United States in the Latin Americans he would offer a vision region, not just threats to be managed. that is reassuring and familiar compared American firms that bring supply chains with the unpredictable sound and fury of back from China could benefit Mexico Donald Trump. and Central America. Mr Biden has long Mr Trump won in 2016 in part because supported immigration reform. As presi- he promised to build a wall to keep out dent, he would be likely to resume his Latin American immigrants, declaring Research Centre. previous policy in Central America, with that Mexico was “not our friend”. Nev- Mr Trump’s Latin American policy has an aid programme aimed at fighting ertheless, he has developed relatively centred on a (so far) failed bid to overthrow corruption and deterring migration good relations with the most important what John Bolton, his former national through economic development. governments in the region. Jair Bolso- security adviser, called “the troika of ty- On Venezuela, Mr Gonzalez says that naro, Brazil’s president, used Mr Trump’s ranny”—the leftist dictatorships in Vene- sanctions should be part of a broader success as a template for his own cam- zuela, Cuba and Nicaragua. In his recent policy that would include seeking nego- paign in 2018. He has closely aligned memoir Mr Bolton blamed the failure to tiations for free elections. A Biden presi- Brazil’s foreign policy, normally in- oust Nicolás Maduro in Venezuela, despite dency would revert to Mr Obama’s Cuba dependent, with the Trump administra- swingeing sanctions, on Mr Trump’s lack policy, which saw engagement as more tion’s views. Andrés Manuel López Obra- of constancy and foot-dragging inside the likely to weaken the communist regime dor, on his only foreign trip in 21months administration. As important, the admin- than Mr Trump’s intensification of sanc- as Mexico’s leader, last month went to istration underestimated the difficulty of tions. It would press Mr Bolsonaro on his Washington and praised Mr Trump’s prising the army away from Mr Maduro. Its failure to protect the Amazon. “kindness and respect”. To keep the critics say its Latin American policies are An immediate issue concerns leader- border open for trade, Mexico’s govern- based on the president’s need to win Flori- ship of the Inter-American Development ment has collaborated in shutting it to da, home to large Cuban and Venezuelan Bank. Breaking with a 60-year under- asylum-seekers. diasporas, in November. “Domestic poli- standing that its president is a Latin Wary of Mr Trump’s threats of tariffs tics always figures in policy towards Latin American, the Trump administration and sanctions, many governments have America, but never before to this degree,” wants the job for Mauricio Claver-Ca- fallen into line “out of necessity and says Michael Shifter of Inter-American rone, an official at the National Security especially out of fear”, says a Latin Amer- Dialogue, a think-tank in Washington. Council and an architect of its Venezuela ican official. Ordinary Latin Americans Were Mr Biden to win, his priorities policy. He may get it at a meeting of the are not impressed: the percentage who would be the American economy and bank’s governors next month. A Biden express a favourable view of the United dealing with China. But Latin America administration would probably force States fell from the high 60s in 2015 to might not be at the bottom of his to-do list. him out in favour of a less polarising around 45 in 2017, according to the Pew He knows the region far better than recent figure. To do that, Mr Biden must win. Middle East & Africa The Economist August 8th 2020 33

Lebanon Some officials warned of the danger of keeping a giant bomb next to a population City in ruins centre. Their pleas were ignored. It is still unclear what ignited the stock- pile. Local media suggest that workers were welding nearby. Whatever the cause, it sent forth a towering fireball and a shock wave BEIRUT that slammed across half of Beirut. A sickly A massive explosion caused by spectacular negligence shatters an already-reeling plume of reddish smoke lingered over the Lebanese capital city long into the night. Scientists inter- he clock had just struck 6pm when the 5,000 people were injured. The financial viewed on television warned residents to Tworld shook. From Sassine Square, one cost will run into the billions, in a country shut their windows and wear masks be- mile (1.6km) from the blast, it seemed like a that can ill afford to pay. cause of toxic fumes laced with nitric acid. car bomb or a gas explosion—a disaster, but The cause seems to be negligence, a The country’s intensive-care wards a localised one. Only on the drive down to- mind-boggling degree of it, even by the de- were already near capacity because of a re- wards the Mediterranean did the scale of based standards of Lebanon’s government. cent spike in covid-19 cases. None was pre- the devastation become clear. Streets were In 2013 Lebanon seized a cargo of ammoni- pared for the influx of thousands of urgent blanketed with broken glass that rained um nitrate, used in fertiliser and in explo- cases in a single night. At Saint George hos- down from battered buildings. At a busy sives for mining and quarrying, from the pital, a kilometre from the port, the dam- intersection three women sat in the medi- mv Rhosus, a Russian-owned vessel plying age was so severe that doctors had to halt an holding scraps of fabric to bloodied the seas from Georgia to Mozambique. The surgeries and evacuate the building. Four heads. Beirut was an assault on the senses: chemicals, all 2,750 tonnes of them, were nurses were killed by the blast and 15 pa- the crunch of glass under tyres, the wail of stored in a warehouse at the port. (The tients on respirators died when their ma- sirens, the acrid smell of smoke. Oklahoma City bombers in 1995 used just chines shut down. Other patients, clad in The explosion at Beirut’s port on August two tonnes of the stuff to kill 168 people.) their hospital gowns, some with iv lines 4th was gigantic. Residents of Cyprus felt still attached to their arms, sat bleeding it, 150 miles (240km) away. Seismological and stunned in a car park across the street. monitors in Jordan registered it as the Also in this section “It’s apocalyptic. There’s no other word for equivalent of a minor earthquake. The it,” said a neurosurgeon at the hospital. 34 The mess in Mali shock wave left much of Beirut’s city centre In a nearby apartment building the in ruins. By the next evening the death toll 35 Tea-total in South Africa stairs were slick with blood left by resi- was 135, a number that will surely rise as dents fleeing their ruined flats. Inside, 36 Covid-19 closes on 1m in Africa rescuers dig through the rubble. Another doors were blown off their hinges; furni-1 34 Middle East & Africa The Economist August 8th 2020

2 ture took flight. An estimated 300,000 peo- towards a deal—because Lebanon is still Mali ple, nearly 5% of the country’s population, negotiating with itself. were left homeless by the blast. Some The cabinet and the parliament are Fear and loathing found shelter with family or friends. Oth- bickering about the size of the financial ers had nowhere to go. They swept broken sector’s losses. In an economic plan re- in the Sahel glass off their furniture and bedded down leased in April, the government estimated for the night in flats without windows or a net loss of154trn pounds between the bdl doors or electricity. The city looked no bet- and commercial banks. (The plan optimis- BAMAKO Regional leaders are struggling to ter the next morning. Workers with brooms tically envisions an exchange rate of 3,500 mediate in Mali swept up glass until it overflowed dump- pounds to the dollar.) That was the starting sters and piled in heaps on the kerb. Pedes- point for talks with the imf. But the coun- e are protesting for Mali,” says trians looked up nervously as they walked, try’s bankers are furious about the govern- “WCheick Oumar Kanté on the streets lest falling debris land on their heads. ment plan, which would clean up balance- of Bamako, the capital, “because Mali is on Repairing the damage would be a tall or- sheets by wiping out shareholders and the the road to extinction.” Since June 5th tens der in good times. These are not good times largest depositors. They released their own of thousands have taken part in demon- in Lebanon. The economy has all but col- accounting that estimates losses at less strations organised by a group of opposi- lapsed since October. Its currency, the than half the official figure, largely thanks tion leaders called the m5-rfp and bol- pound, had been pegged for decades at to an even more unrealistic estimate of stered by the moral authority of a 1,500 to the dollar. But the country has run Lebanon’s future exchange rate. “It’s the charismatic imam, Mahmoud Dicko. The short of dollars to maintain the peg and fi- same kind of financial wizardry that got us protesters have been complaining angrily nance its yawning trade deficit. It can no into this mess,” says Henri Chaoul, a for- about the growing jihadist insurgency, longer sustain a years-long Ponzi scheme mer financial adviser to the government. Mali’s dire economy and recent dodgy elec- that saw the central bank (Banque du Li- Mr Chaoul resigned in June in protest tions. “Nothing works in this country any ban, or bdl) borrow dollars from commer- over the impasse. The imf is still talking more,” says Ousmane Dembele, a demon- cial banks in exchange for above-market with the cabinet: they held a meeting on strator. Their main demand is for President interest payments. The pound now trades July 10th focused on the electricity sector. Ibrahim Boubacar Keïta to resign. at more than 8,000 on the black market, an But the fund has warned that negotiations The government’s response has lurched 80% devaluation from the official rate. The can progress only if Lebanon agrees on one between concessions and violence. The government defaulted on its debts in set of numbers, or if the cabinet pushes protests had been largely peaceful until the March for the first time in history. through a few meaningful reforms as a weekend of July 10th, when security forces For most Lebanese life has become a show of good faith. Neither has happened. fired on the crowds, killing at least 11people seemingly endless succession of crises. “It’s criminal,” says Alain Bifani, a former and wounding 85. Protesters lit fires in the Consumer prices are rising by 90% a year director-general of the finance ministry, National Assembly building and occupied and by 246% for food. A 500-gram jar of who also quit his job in protest. the state television premises. After a truce Nescafé can cost 10% of the monthly mini- Add to this, now, the devastation of the for the Muslim holiday of Eid al-Adha, mum wage; a kilo of beef goes for 15%. The Lebanese capital. Damage at the port alone protests have been starting up again. army stopped serving meat to soldiers to will cost hundreds of millions of dollars to Western governments are nervous too, cut costs. On June 30th the government fix. Among the buildings destroyed was since Mali is at the core of Europe’s fight raised bread prices by a third, the first in- Lebanon’s main grain silo, leaving the against jihadists in the Sahel. France has crease in a decade. Half the country now country with less than a month’s supply of 5,100 troops in this fragile region; in 2012 it lives below the poverty line, and three- wheat. Homeowners wonder how they will intervened when jihadists almost toppled quarters may need aid by year’s end. find the cash to pay for new glass or for alu- Mali’s government. France’s allies, includ- Fuel shortages have led to interminable minium window frames. Business owners, ing America, Britain and Germany, have midsummer blackouts: power cuts in Bei- barely eking out a profit before the disaster, also sent forces, some in a contingent of 1 rut, normally three hours a day, stretched say they will call it quits rather than re- up to 20 hours in July. Back-up generators build. The government pledged to investi- ran out of diesel or broke down from over- gate, and to find the culprits within five use, leaving many Lebanese in hot, dark days—enough time to name a scapegoat, apartments. Ogero, the state telecoms mo- but not to conduct a serious inquiry. nopoly, has warned of internet outages if it There is rage in the streets, but also res- cannot power its infrastructure. The main ignation. Lebanon has endured much in its public hospital treating covid-19 patients modern history: a civil war from 1975 to had to shut wards and turn off air-condi- 1990, occupations by Israel and Syria, a ru- tioners because of the black-outs. Petty inous war with Israel in 2006, and myriad crime was already on the rise, even before other conflicts and attacks. The Lebanese the explosion that left thousands of apart- prided themselves on their ability to pick ments open to intruders. One man held up themselves up and rebuild their society. a pharmacy at gunpoint—for nappies. An- This moment feels different. The eco- other robbed a pedestrian, then came back nomic model has failed; so too the power- to apologise, saying he needed the cash to sharing system that kept the peace be- feed his family. tween the country’s religions after the civil The government, installed in January, war. As the country sinks, its venal political was meant to be a technocratic one that class seems oblivious. Gone is the opti- would tackle the economic crisis. It has ac- mism of October, when hundreds of thou- complished almost nothing. After the de- sands of Lebanese took to the streets to de- fault it asked the imf for a financial agree- mand the overthrow of an entrenched ment worth up to $10bn. Several months regime. Now their thoughts are turning in- and 20 meetings later there is no progress creasingly to emigration. 7 Anger in Bamako The Economist August 8th 2020 Middle East & Africa 35

2 15,000 un peacekeepers. eu troops are also Prohibition in a pandemic training local soldiers. Yet if Mali’s govern- ment is shown to lack legitimacy, Western efforts are more likely to fail. Tea-total Dodgy legislative elections in March and April triggered the protests. The poll, JOHANNESBURG which had been delayed for 17 months, was Tea sales are booming in Johannesburg restaurants. At least that’s the story… rushed through as the covid-19 pandemic pon arrival at an expensive restau- began to spread. Turnout was only 35%. Urant near Sandton, Johannesburg’s When the results were first announced, the financial district, nothing feels unusual, ruling party got 41 of 147 seats, and lost al- at least in this age of covid-19. The most all its seats in Bamako. A week later maître-d’ zaps a temperature gun at the constitutional court awarded it another patrons’ masked faces and spritzes their ten seats, smoothing the path to a ruling hands with sanitiser. Only when ushered coalition and reinstating close allies of Mr into the dining room does something Keïta, one of whom has now been elected seem odd: every table has a pot of tea. president of the national assembly. South Africans like their rooibos, but Though the questionable election provid- the liquid in many tea-cups is a darker ed the spark, it was “neither the principal red—claret, even. On other tables there cause nor the motor of the protests”, says are cans of tonic next to teapots. Reality Ibrahim Maïga, who is based in Bamako for dawns when two young women are given the Institute for Security Studies. shot glasses of Jägermeister inside their Much of the anger stems from the gov- tea-cups. ernment’s inability to stop the violence. In South Africa banned alcohol sales for the first six months of this year more than the second time this year on July12th, so 1,800 people were killed in fights involving as to prevent drunks from taking up jihadist groups and ethnic militias, about precious space in hospitals. But restau- as many as were killed in the whole of last rants, which are struggling to stay afloat, shows little respect for propriety. year. On March 25th the main leader of the are open and customers are thirsty. “Are In recent weeks local journalists have opposition, Soumaïla Cissé, was seized by you serving special teas?” your corre- revealed how members of the African gunmen, probably jihadists. He has not spondent hesitantly asks a waiter. “Yes”, National Congress and their families been seen since. To make matters worse, he replies, the ripple of a smile just vis- have won juicy contracts for supplying the French intervention itself is unpopu- ible from the edges of his mask. personal protective equipment, despite lar. One survey found that almost 60% of An unscientific sample of local estab- having little experience in medical kit. Malians think that the French forces are in lishments suggests the patchiness of Cronyism has been rife for years, but the cahoots with the insurgents. prohibition. A steak house in an affluent sight of “tenderpreneurs” coining it is Malians are fed up with corruption, suburb also uses teapots for red wine, especially galling when thousands are while the economy goes from bad to worse. and puts cans of fizzy apple juice next to dying. On August 3rd President Cyril Karim Keïta, the president’s son, who glasses of beer. Other joints are more Ramaphosa compared such people to heads parliament’s defence committee, is a brazen. At a café popular with families, hyenas circling wounded prey. particular target of derision. He resigned parents keep one eye on their children Yet he has done too little to stop the from his post after videos circulated on so- ricocheting inside a bouncy castle and scavengers. More than two years after he cial media showing him cavorting in Spain the other on their ice bucket. took office, South Africans are waiting with scantily clad women. The willingness of South Africans to for prosecutions to be brought against Yet President Keïta does not fit the flout the booze rules is a sign that bans those accused of wrongdoing during the mould of those ousted by protests in other rarely work. It shows that the police are reign of his predecessor, Jacob Zuma. parts of the region. He did not come to unwilling or unable to enforce them—at Meanwhile the former president contin- power through the barrel of a gun. He has least in rich areas. But it also reflects how ues to stall his own trial over an arms been president since 2013 and is not expect- many South Africans are reluctant to deal cut more than 20 years ago. It is ed to run for a third term in 2023. The main obey laws set by a ruling party that itself enough to make one order a cup of tea. charge against him is that he is out of touch and incompetent. In normal circum- stances he would be voted out. and new elections for 31seats in parliament based in Dakar for the International Crisis Some now worry that Mr Dicko will use that are still disputed. But the mps who Group, a conflict-prevention ngo. Yet if Mr his growing power to push Mali in a more would have to run again rejected the idea. Keïta were to stay on, violence in the streets Islamist direction. In 2009 he campaigned So has the m5-rfp. might worsen, he adds. successfully against amending a law that The gap between the parties is still wide. The truce is over. Some protests re- compels married women to obey their hus- Mr Dicko has suggested there may be a way sumed on August 3rd. Mr Keïta could still bands. He has inveighed against racy Mex- out without the president having to step seek to forge a compromise with the prot- ican telenovelas broadcast during Ramadan down. But the m5-rfp still demands he est leaders by sacking his prime minister, and against sex education in schools. leaves. There are few good options. Most Boubou Cissé. After all, he is already on his Other leaders in the Sahel may be more Malian institutions are in trouble. The con- sixth prime minister in seven years. Yet if worried that the crisis could spill over into stitutional court was dissolved in July. The he merely plays musical chairs among the their countries. In late July five presidents prime minister’s cabinet has only six min- elite and ignores deeper problems, says Mr from the region flew to Bamako to mediate. isters. The composition of the national as- Maïga, “it will only delay the next bomb, They proposed a reform of the constitu- sembly is disputed. If the president were to the next explosion.” And next time the tional court, a government of national un- resign, it would mark “a big jump into the protests could be led by firebrands far more ity, an inquiry into the deaths of protesters, void”, says Ibrahim Yahaya Ibrahim, who is radical than Mr Dicko. 7 36 Middle East & Africa The Economist August 8th 2020

The pandemic in Africa the who Africa region, “the virus has spilled out of major cities and spread into One million and not counting distant hinterlands.” The continent’s youthfulness is more of an obvious boon. Most Africans were born in the 21st century. Africa has a lower share of people over the age of 65 than any other continent. A recent paper published by the JOHANNESBURG American Journal of Tropical Medicine and Africa nears 1m reported cases of covid-19. The true number is much higher Hygiene argued that Uganda’s age structure t’s been hectic,” says Thabo Nko, an former president, Pierre Nkurunziza, prob- will keep death rates lower than in other “Iundertaker in Soweto, a township on ably died of it. So too did Perrance Shiri, parts of the world. (Other pan-African the outskirts of Johannesburg. Before the Zimbabwe’s agriculture minister (who was models suggest that such advantages are pandemic he would do two or three burials better known for organising mass killings outweighed by poor health systems.) in a week. These days he is doing about 20. in Matabeleland in the 1980s). Unlike most About 2% of Africans diagnosed with The nearest public cemeteries are full, so of the country’s doctors, his pallbearers covid-19 have died. That is only half the glo- he has to bury some corpses 50km away. had protective gear. bal average. But such numbers should be Surprisingly, all the death is not good Patchy data make it hard to assess many treated with great caution. There is a delay for business. Overwhelmed authorities are African countries’ responses. Mauritius, between diagnosis and death, so the rate behind on issuing the death certificates an island that quickly closed its borders, can be misleading when infections are ris- families need to claim on their funeral in- has largely suppressed the virus. Rwanda’s ing rapidly. Also, only a few African coun- surance policies. For the first time since track-and-trace system, which includes tries keep good cause-of-death records. opening in 2007, Mr Nko is laying people to random testing, has slowed transmission. The who says it is trying to improve this, rest before he is paid. “I had to drop that Cases seem to be growing quickly in but the work is not happening fast enough. rule,” he says. “There is too much to do.” most countries as they loosen lockdowns And politicians may not see it as in their in- South Africa has the world’s fifth-high- to try to revive their economies. States that terest to reveal how many people have died est number of reported cases. It accounts appeared to have the virus under control, on their watch. for 53% of the confirmed cases and 43% of such as Ethiopia, Kenya and Zambia, are all Even in South Africa, which has reliable deaths from covid-19 in Africa. But that experiencing daily growth rates above the records, the toll is probably far higher than does not mean the rest of the continent is regional average. Ghana’s widely praised the official tally of 9,298. On August 5th the being spared. Instead it reflects a lack of testing strategy, involving a “pooled meth- country’s Medical Research Council noted data in most other countries—and how od” in which multiple samples are tested at that from May 6th to July 28th there were their peaks may be yet to come. once, is becoming less effective as cases 28,329 more deaths from natural causes As of August 5th the Africa Centres for rise. In Nigeria, home to nearly one-sixth than forecast by historical trends. The vast Disease Control and Prevention, a public- of Africans, testing is held back by short- bulk of these will probably have been relat- health body, had recorded 992,710 cases in ages of reagents and kits. It is using less ed to covid-19. Africa. It took about five months for the than half of its testing capacity, according Such data chime with Mr Nko’s experi- continent to reach 500,000 cases and an- to a survey by the Tony Blair Institute. ence. South Africa has an older population other month to reach close to1m. The com- Two supposed advantages for African than other African states. But many covid- pound daily growth rate of new cases over countries are geography and demography. watchers fear that what is happening at the the past two weeks was higher in sub-Saha- The relative isolation of rural areas was southern tip of the continent may be re- ran Africa than in other regions. In reality meant to slow transmission. It still might. peated elsewhere. Whether it will be re- the millionth African contracted covid-19 But, notes Matshidiso Moeti, the head of corded is another question. 7 many weeks ago. The full extent of the undercount is un- known. The share of tests that come up positive is below 5% in only a few coun- tries, suggesting widespread underreport- ing elsewhere. Low test-positivity-rates are found in states with relatively efficient governments, such as Botswana; countries with feared security forces, like Uganda; and those that have both, such as Rwanda. Elsewhere the shares are much higher. In most of the countries where the Interna- tional Rescue Committee works the rates are in double digits—for instance Somalia (17%, as of July 30th), Congo (20%), South Sudan (19%), Ivory Coast (16%) and the Cen- tral African Republic (16%). Relative to its population, Britain has done 600 times more tests than have the African countries where the irc works. Another hint of underreporting is found in the number of cases among Afri- ca’s elites, who are more likely to get tests. At least three of South Sudan’s five vice- presidents have had covid-19. Burundi’s Each mound, a loss Europe The Economist August 8th 2020 37

Racism in Europe bray, a French centre-left thinker, calls the “Americanisation of Europe”. Some argue See no evil that the focus on anti-black racism diverts attention from bigotry against Muslim mi- norities, who are more numerous in Eu- rope. Paul Scheffer, a Dutch immigration scholar, thinks applying an American con- ception of race gets it wrong: “African- American ideas about race and politics are coming to countries that don’t collect Americans’ history is one of slavery and ethnic statistics forced segregation, but the history of black rom the1940s-60s, philosophical ideas movement spread internationally, some communities in Europe is one of migra- Fabout racism tended to flow westward Europeans felt that the tide had turned: the tion,” with more social mobility and fluid across the Atlantic. Writers of the Franco- latest American ideas about racism were status. The question is whether the new phone négritude school such as Léopold now flowing into Europe. Academics—es- American-influenced vocabulary fits. Senghor and Aimé Césaire foreshadowed pecially those who have studied in Ameri- One tug-of-war is over the term institu- America’s “black is beautiful” movement, ca—have embraced concepts like institu- tional racism, meant to convey that sys- as did Jean-Paul Sartre’s essay “Black Or- tional racism and white privilege, eagerly tems can produce racist outcomes even if pheus”. Frantz Fanon’s polemics against translated by local news media (“weisse Pri- no one in them is racist. French and Ger- French colonialism influenced American vilegien”, “le privilège blanc”). Activist jour- man government bodies accept the term; debates on violence in the civil-rights nalists like Rokhaya Diallo in France, Alice but deny it describes them. However, they movement. African-American writers and Hasters in Germany and Clarice Gargard in generally do not gather data on ethnicity, musicians like Richard Wright, Miles Davis the Netherlands are elated that anti-black an ostensibly anti-racist measure that and Nina Simone went to Europe to escape racism is being taken so seriously. So are makes it almost impossible to detect insti- America’s colour bar. Analyses of Nazi rac- many Europeans, black and otherwise. tutional racism. Last month Germany’s in- ism by the philosophers of Germany’s Yet others see it as part of what Régis De- terior minister cancelled an inquiry into Frankfurt School crossed the Atlantic with institutional racism in the police. France’s Hannah Arendt and Herbert Marcuse. Mar- interior minister resists calls to probe the cuse’s student Angela Davis earned her Also in this section police. Yet in 2015 a study found that 22 out doctorate in Berlin; after she joined the of 26 recent victims of French police kill- 38 Turkey polices social media Black Panthers, ending up on the run from ings were “visible minorities”. Some Dutch the fbi, James Baldwin wrote in support of 38 Genoa re-opens its bridge cops cheerfully admit racial profiling, no- her from his home in France. Segregation- tably in the case of Typhoon, one of the 39 Covid-19 in the Balkans ists made the most of all this, disparaging country’s top rappers, whose car they the civil-rights movement as a conspiracy 39 Spain’s pricey fast trains stopped in 2016 because it was posh and he of European socialist eggheads. is black. In June Mark Rutte, the Dutch 40 Charlemagne: On staycation This summer, as the Black Lives Matter prime minister, said the Netherlands suf-1 38 Europe The Economist August 8th 2020

2 fers from systemic but not institutional Turkey try to delete the past.” racism. No one knew what he meant. Others are worried about provisions re- There is more to institutional racism Sultan of quiring user data to be stored locally. “The than policing. In most European countries law says the government can access these some groups with immigrant backgrounds censorship data only when they concern a crime or a do worse in school than white natives. Ex- national-security issue or similar reasons,” ams relying heavily on language proficien- says Ahmet Sabanci, a tech writer, “but in cy often split students into university- or ISTANBUL Turkey these kinds of laws are bent easily.” President Recep Tayyip Erdogan goes vocational-track education by the age of12. With most of the mainstream press in after social media Residential segregation occurs partly be- Turkey now in the hands of Mr Erdogan’s cause immigrants are steered into public urkey’s president, Recep Tayyip Er- allies or businessmen who depend on his housing and partly because of discrimina- Tdogan, has already neutered the tradi- government for large contracts, social me- tion. In one study 95% of callers with na- tional media, putting critical journalists dia have been a sanctuary for dissent. Po- tive German accents got appointments to out of work or behind bars and using lice are now bursting into that sanctuary. view houses in a wealthy neighbourhood friendly tycoons to take over the country’s Over the past three years, hundreds of peo- of Bremen, whereas only 24% of callers top newspapers and news channels. Now ple have been detained for criticising Turk- with Turkish accents did. he has taken aim at the internet. ish military offensives against Kurdish in- Then there is employment discrimina- His latest assault came on July 29th surgents in Syria. Dozens have been tion. A Dutch study in 2018 that responded when parliament adopted a law designed investigated on charges of attempting to to job listings with imaginary résumés, va- to force social-media giants to comply with “destabilise the economy” with their rying only their ethnicity, found that ficti- Turkish requests to remove content. tweets. Where targeted bans do not suffice, tious applicants with non-Western immi- Henceforth, companies such as Twitter the government uses blanket ones. Wiki- grant backgrounds got 30% fewer and Facebook will have to appoint local pedia was banned between 2017 and this invitations to interviews than native representatives to process such requests January. “I’m a lot more nervous,” says a whites. Depressingly, a similar study in within 48 hours. Those who do not comply popular Twitter commentator, preferring 1977 got about the same result. In the same will face bans on advertising, fines of up to not to be named. “I feel like the frog in the vein, in 2019 the Dutch tax authority was $6m, and eventually bandwidth cuts of up pan when the water is starting to boil.” found to have withheld child benefits to 90%, which would make them unusable. For the thin-skinned Mr Erdogan, the wrongfully from some11,000 parents, most The government says the law will pro- motivation seems to be at least partly per- with non-Western immigrant back- tect social-media users from abuse and dis- sonal. Tens of thousands of cases have grounds, over baseless suspicions of fraud. information. Critics say it will become a been opened against people accused of “in- Many were financially ruined and the gov- powerful censorship tool. Turkey already sulting” Turkey’s leader, mostly on social ernment will pay them €500m ($590m), blocks at least 400,000 websites, says a re- media. (These include a user who com- but the authority was exonerated of racism port by the Freedom of Expression Associa- pared Mr Erdogan to Gollum, a power-wor- because it had selected them on the basis of tion, a rights group, and churns out more shipping imp.) At least 11 were detained on dual nationality. Twitter and Reddit content-removal re- July 1st for posting crude comments about Those who think terms like institution- quests than any other country. Armed with the president’s daughter and his son-in- al racism fit America but not Europe make the new rules and a pliant court system, the law, Turkey’s finance minister, after the some good points. Of the 1.5m convicts in government will lean even harder on such birth of their new child. “This is why we American prisons in 2018, a third were companies to take down politically incon- should bring this to our parliament,” a furi- black, nearly treble the black share of the venient material, including old posts, says ous Mr Erdogan said, “to remove these so- population. It is uncertain how skewed Yaman Akdeniz, a lawyer. “Articles will cial-media networks completely, to control French and German law enforcement are vanish from archives,” he warns. “They will them.” He seems to mean it. 7 (since ethnic data are scarce), but overall they shoot and jail people at less than a fifth America’s rate, so the damage is less grave. Even in segregated European cities like Paris, no group approaches the degree of segregation of blacks in American cities. Europe’s generous welfare states also help to smooth out racial disparities. More sub- tly, “Black Lives Matter” takes on a different flavour in countries where African and Ca- ribbean minorities (often former colonial subjects) are part of a fluid hierarchy of groups of colour. Whereas the income gap between black and white Americans has grown since 2000, all Dutch minority groups are catching up, if slowly. None of that erases the reality of dis- crimination in Europe. Indeed, Ms Gargard says, to belittle the new vocabulary of rac- ism as an ill-fitting American import is to Genoa bridge reopens dodge responsibility: “It’s been difficult to Just two years after its famous bridge suddenly collapsed, killing 43 people, the Italian talk about racism in European countries city of Genoa inaugurated a sleek new replacement in the presence of the country’s because we like to pretend we are tolerant, president and prime minister, as well as an air-force flypast. The feat of engineering was and that racism is something that happens impressive. But many of the victims’ relatives stayed away, objecting that the tragedy in the United States.” 7 had been turned into a carnival. The Economist August 8th 2020 Europe 39

Covid-19 in the Balkans As for Bosnia, Adi Cerimagic, an ana- Slow starters lyst, says that although hospitals have been Not as stated Confirmed covid-19 cases, 2020, ’000 coping well, scandals in covid-related pro- curement have led many to believe that Romania Serbia Bosnia “while they locked us down, they were Kosovo Montenegro Croatia making money with it.” In May Silver Rasp- 60 berry, a well-connected fruit-and-vegeta- ble firm, bagged a $5.8m contract to supply Governments said they had the virus 50 ventilators. In June Novak Djokovic, Ser- under control. They hadn’t 40 bia’s tennis star, ignored advice and went or a few months it seemed that the Bal- 30 ahead with a regional tournament he had Fkans were having a good pandemic. In- organised. He hugged and partied with his fection and death rates were low. In March, 20 Croatian and Bulgarian tennis buddies, as covid-19 began to spread fast across Eu- several of whom were infected. rope, most Balkan countries locked down 10 Large minorities believe covid conspir- quickly and strictly. In May the Monte- 0 acy theories, which are often promoted by negrin prime minister crowed that his was prominent people, including a former Ser- Feb Mar Apr May JulJun Aug the first covid-free country on the conti- bian minister of health. Clerics have also Source: Johns Hopkins University CSSE nent. But by the end of July Montenegro played a role. In Montenegro infections had the second-highest infection rate in have shot up as holidays begin, and also Europe. Now, eight of the ten European minister announced that he had tested after huge anti-government demonstra- countries with the fastest-rising infection positive for the virus. Unchecked, families tions led by the Orthodox church. Across rates are in the Balkans. If it were ever true wander in and out of hospital to buy food the region the pandemic has coincided that early firm action had worked, that ad- and medicine for their infected relatives. with Orthodox, Catholic and Muslim festi- vantage was lost with rapid reopenings. Or Thousands are now flocking to Albania, vals which have brought families and perhaps the early numbers were wrong, where they are packing the beaches in flocks together. Worse, says Mr Cerimagic, thanks to poor measurement or a cover-up; scenes similar to those on the Romanian in this poor part of Europe the pressure to maybe the picture was never as good as it Black Sea coast; the number of infections return to work is immense, and that had seemed to be. in Romania is also rising fast. pushes up infection rates further. 7 Until the beginning of June, according to Serbian statistics, only 244 people had Spain died from the disease. Then an investiga- tive report claimed the true figure was 632. The president and government, at the time The signal turns to red engaged in an election campaign, denied that it was trying to suppress the real num- MADRID Spain’s high-speed trains are poor value bers. But Gorica Djokic, a leader of Serbia’s doctors’ union, said the higher figures tocha station in Madrid is a daily Seville and to Barcelona. But there are matched those the union received from Amarvel. From its platforms a phalanx plans for a further 5,654km of high-speed colleagues across the country. of sleek white high-speed trains, known lines, at a cost of at least €73bn. Far bet- Today, says Dr Djokic, and under pres- as aves, streak across Spain. Punctual ter, says airef, to invest in neglected sure from 2,870 angry doctors who have and comfortable, they have slashed commuter networks, which carry 89% of signed a letter of protest, the authorities journey times in a large and mountain- rail users. It urges the setting up of an seem to be publishing more accurate fig- ous country long notorious for poor independent agency to set transport ures. She reckons that one reason for the transport. For Spaniards, they are an icon priorities and evaluate projects. low infection numbers in the early months of modernity. But many are not worth the The Socialist-led government broadly was that there was hardly any testing. To- money spent on them, says a new report welcomed the report. It may find it hard day there is more. But even Serbian doctors by the independent fiscal authority to implement. One problem is that some who, like her, work in covid hospitals are (airef from its Spanish initials). of the pending lines are half-built, such still not being tested. She thinks the au- Over the past three decades Spain has as those to Galicia and in the Basque thorities fear the health system would be poured money into transport infrastruc- Country. It may make sense to finish crippled if all the doctors carrying the virus ture, including motorways and airports them. “The important thing is to stop took weeks off work. as well as aves. It now has 3,086km (1,929 new lines starting,” says Ángel de la As in much of the rest of Europe, official miles) of high-speed rail lines (over Fuente of Fedea, a think-tank. Since they messages have been confusing. In the Bal- 250km per hour), second only to China. would serve less-populated areas, they kans this confusion has been compounded Passenger numbers have almost doubled would have even fewer passengers. by low levels of trust in government. Many in the past decade, as the aves have Places that lack high-speed trains people believe the government is lying grabbed business from domestic flights. understandably feel left out. Take about there even being a virus, says Brikena Even so, per kilometre of track, there are Extremadura, the poorest region of Hoxha of the Kosovar Stability Initiative, a less than a third as many as in France. mainland Spain: ancient diesels take six think-tank; and that it is paying families to The network has cost €61bn ($72bn) so hours to cover the 400km between Ma- claim relations died from covid-19 as part far. airef has now done the first thor- drid and Badajoz. The covid-19 crisis of a scam to procure foreign aid. ough cost-benefit study of the trains. It means that money will be especially In March Kosovo’s president, then em- finds that the benefits, including to the tight. But Spain’s Congress is more frag- broiled in a political dispute with the environment, are less than the total cost, mented than ever. That means that the prime minister and his government, told though it thinks that could eventually price of a vital vote is sometimes the citizens they could ignore its instructions change for the lines from Madrid to promise of yet another high-speed track. to stay at home. On August 2nd the prime 40 Europe The Economist August 8th 2020 Charlemagne Strandkörbe in place of sangria

Thanks to covid-19, the traditional German holiday looks very different this summer rope’s most generous holiday allowances: by 1968 half the West German population went abroad at least once a year. The ritual of the sun-soaked southern-Europe sojourn, traceable to Goethe’s ro- mantic journeying in Italy, was later immortalised in Schlager songs like Udo Jürgens’s “Urlaub im Süden” (“Holiday in the South”). In 1993, when a politician said that Germany might as well buy Majorca for 50m marks, not everyone was sure he was joking. Yet in truth Germans were starting to warm to the wonders of their own land even before covid-19, notes Hasso Spode at Berlin’s Technical University. They may travel abroad more than other folk, but trips in Germany far outnumber those to anywhere else: a quarter of Germans’ holidays last year were spent at home. The se- cret of Rügen, at least among Germans (foreigners, bar the odd Scandinavian, are as rare as hens’ teeth), is long out. Mile-long traf- fic jams and overcrowded beaches are features of every high sea- son. Despite patchy infrastructure, and its distance from most of Germany’s big population centres, Mecklenburg-West Pomerania, the state through which most of Germany’s Baltic littoral runs, has been the country’s most popular holiday destination for years. And why not? The virtues of the domestic holiday are much underrated, in Germany and other northern European destina- tions. True, Germany may not carry the languid allure of the Medi- ermans have long dreaded the prospect of a European “trans- terranean, and even the geniuses that staff its tourist agencies can Gfer union” that would hand their hard-earned money to poorer do nothing about its climate (mild sunburn testifies to Charle- southerners. Yet every summer they are happy to do the job them- magne’s luck in Rügen). Stepping off the train in Stralsund, this selves, travelling in their millions, and spending in their billions, columnist admits his heart sank to see the same döner stands and to Spain, Italy, Greece and Portugal. Germans account for roughly strawberry kiosks he had left behind three hours earlier in Berlin. one in every four euros dished out by European tourists. More than But such trifles are surely outweighed by the advantages. More anyone else, it is their absence that the deserted hotels, bars and often than not the hunt for authenticity abroad results in differ- restaurants of Europe’s south have felt most acutely this summer. ence-splitting compromise or, worse, surrender to tourist traps. At Such were the thoughts that came idly to Charlemagne as he home the scams are easier to spot. For people-watchers the daily bobbed gently in the Baltic Sea this week. (Not quite as cold as you human comedy is enriched when conducted in a language one un- might imagine, although he didn’t linger.) A brief stay in Rügen, a derstands. Sightseeing becomes an investigation of one’s own na- resort island off Germany’s north-east coast, was enough to wit- tional story. Just north of the beach that hosted Charlemagne’s in- ness the other side of the devastation that the coronavirus has vis- quiries sits a vast strength-through-joy holiday complex left ited upon the tourist industries of southern Europe. For Germany’s unfinished by the Nazis, a jarring contrast to the innocent plea- holiday hotspots—the coasts, Bavaria’s mountain hideaways, the sures of the seaside resorts. And even changeable weather con- Black Forest—are booming, happily lapping up much of the dis- ceals a thrill: how much more enticing the warmth of the sun when placed German tourist spend. The influx has been “extreme”, says one knows it might disappear at any moment. Mario Jacobs, who runs a fish restaurant in Stralsund, a handsome town near Rügen, and can’t quite seem to decide whether the extra From one transfer union to another business is worth the extra work. Hordes of day-trippers to the Creatures of habit at the best of times, Germans have struggled to North Sea coast have forced officials to impose temporary mask- adapt to the disruption. Tourist officials in Rügen describe first- wearing orders and beach closures. time visitors used to all-in-one package trips unfamiliar with the In fact a good summer and, with luck, a strong autumn will idea of following a map or booking a restaurant. But the island is hardly make up for a spring in which, like almost every other part practised at diversifying its offerings, retaining a nostalgic appeal of the economy, Germany’s resorts shuttered and furloughed their to older east Germans who recall the communist beach holidays of workers. Even now second-tier sites, like the Eifel region or the their youth while reaching out to richer greenhorns. Local offi- Harz mountains in central Germany, are struggling to attract cials, of course, welcome the custom. “Normally you spend a lot on enough locals to replace the lost foreign trade. One-third of the marketing, and this year it came for free!” exclaims one. country plans to take no holiday at all. This is no small disruption Yet the shift is unlikely to be permanent, reckons Ms Fabian. for a place that takes its pleasure as seriously as Germany. Previous catastrophes have not bucked long-term trends in travel For many Italians, Spaniards, French folk and Greeks, holiday- habits. A good thing for southern Europeans, for whom corona- ing anywhere other than in their home country seems perverse. By virus has delivered a vicious one-two: domestic lockdown fol- contrast, young Germans who choose to do so “might come across lowed by evaporating tourism. Indeed, it was hair-raising fore- as a little bit backward,” says Sina Fabian, a historian at Humboldt casts of economic collapse in Italy and Spain that recently University. “We can also do GERMANY!” is the slightly desperate convinced Rügen’s mp, one Angela Merkel, to consent to large- motto adopted by one travel agency. If Germans took to foreign tra- scale common eu borrowing and redistribution for the first time. vel a little later than the British, they eventually did so with the zeal Precisely because Germany’s tourists are not spending in Europe’s of the convert, aided by the mighty Deutschmark and some of Eu- south this summer, its taxpayers are preparing to do just that. 7 Britain The Economist August 8th 2020 41

Also in this section 42 Covid-19 in Scotland 43 Bagehot: The smell of rot

Scottish independence a part-time football referee. Mr Cameron thought the best way to Is Caledonia Catalonia? contain separatism was an “agenda of re- spect” towards the Edinburgh administra- tion. Mr Johnson, in contrast, wants to re- assert Whitehall’s role in governing Scotland, and splash some Treasury cash. “There will be a little less about pleasing the devolved administration and more The battle for Scottish independence will become an ugly stalemate about pleasing the people,” says an official. he independence marches which oc- entist at the University of Strathclyde. One But even if Ms Sturgeon triumphs, Scot- Tcasionally wind through grey Scottish factor, he says, is Brexit, which has pushed land will not be on a rapid trajectory to in- cities are colourful affairs. The blue and Remainers into the hands of Nationalists. dependence. Instead, there will be a long white of the Saltire jostle with the red and While Brexit has degraded the British gov- stalemate between London and Edinburgh. yellow of the Estelada, the banner of Cata- ernment’s reputation for competence and The Nationalists may have support, but, lonia’s separatist movement. sound judgment, managing coronavirus like the Catalan separatists, they lack a road The struggle for Catalan independence has built up the Scottish government’s (see map to an independence referendum that 1 from Spain has been an inspiration not just box overleaf). Mr Johnson is unpopular. for Scotland’s nationalists: it also influ- The Scottish National Party is projected to enced David Cameron, the Conservative take 55% of the vote in the elections to the A turn-up for Sturgeon prime minister who permitted and then Scottish Parliament in May 2021, according Scotland, support for independence, % won the referendum on independence in to recent polls, which would give Nicola 60 2014. If he had not, he wrote in his mem- Sturgeon, Scotland’s first minister, an out- oirs, the question of Scotland’s future right majority, and allow her to demand a 55 would have festered and the case for inde- second referendum on independence. No pendence grown stronger. Catalonia held The Conservative Party is spooked. Bo- 50 an illegal referendum in 2017, which was ris Johnson made a flying visit to Orkney on followed by arrests and riots. It was, wrote July 23rd, where he said the “sheer might of 45 Mr Cameron, a lesson in the perils of mis- our union” had seen Scotland through co- handling separatists. ronavirus. On July 30th Jackson Carlaw, Yes 40 Those boasts do not look so clever to- leader of the Scottish Conservatives, was 35 day. Recent polls show Scots favouring in- ousted after only six months in the job. He dependence—the first time that a sus- admitted that he was not up to the job of de- 20191817162015 tained lead for independence has been fending the union. His replacement, Dou- Source: National polls seen, says Sir John Curtice, a political sci- glas Ross, is the pugilistic mp for Moray and 42 Britain The Economist August 8th 2020

2 is recognised by the British government Covid-19 in Scotland and triggers exit negotiations. The government is not constitutionally obliged to permit the Scottish Parliament Independence fever to organise a referendum. In the 2019 gen- eral election, Mr Johnson promised to “re- How coronavirus strengthened Scottish independence turn to sender” any request for a referen- dum. He has happily ignored the Scottish icola sturgeon recoils from the wee bit better’.” That perception is de- Parliament on Brexit. And the Scottish Nsuggestion that coronavirus could be tached from reality. Scotland’s outbreak Conservatives have done well out of the di- politically advantageous. It has, after all, has followed a distinctly British course. vision of the country over independence. been linked to more than 4,200 Scottish In early March Scotland’s chief medical They displaced Labour as the second party deaths. Even so, the pandemic has left officer said the outbreak would mean by scooping up the votes of scunnered Scotland’s first minister in rude political “business as usual” for Scots, mirroring unionists with the mantra “No to Indyref2”. health. Some 74% of Scots think her English scientific officials’ optimism. As “Polarisation suits the poles,” says James handling of the pandemic has been good in England, hundreds of elderly Scots Mitchell, a professor of public policy at Ed- or very good, according to Panelbase, a were discharged into care homes to free inburgh University. “You can appeal to that pollster. In contrast, Boris Johnson, who up hospital beds, which may have has- substratum of the electorate, even if it’s a spent three nights in intensive care and tened the spread of the virus. Ms Stur- minority.” scores just 21%, has been stricken by the geon’s administration is accused of Mr Johnson’s refusal would also threat- virus personally and professionally. covering up an outbreak at a conference en the unity of the ultra-disciplined snp. In the 2014 referendum, the National- in February. She was censured by Scot- Ms Sturgeon says the Westminster govern- ists struggled to get Scots to imagine land’s chief statistician for claiming that ment’s consent and international recogni- what an independent government might the virus was a fifth as prevalent in Scot- tion are essential if a referendum is to lead look like. The pandemic was just what land as in England. Scotland’s excess to independence. Catalonia’s illegal ballot the doctor ordered. Health is devolved mortality rate, a measure that accounts now serves as a warning, not an inspira- under Britain’s constitution, so Ms Stur- for different reporting methods in differ- tion. Spain dismissed the result and public geon’s administration has the trappings ent states, is high (see chart). support has slipped. “The Russians might of a state-in-waiting. Unlike the rum- Westminster has helped Scotland be cool with it but that’s not what we’re pled, details-light Mr Johnson, she has through the crisis. The Treasury has aiming for,” says a Sturgeon supporter. given poised daily televised press confer- funded the furlough scheme which pays If Mr Johnson won’t give way, there will ences packed with useful information. the wages of Scottish workers. The cen- be pressure on her to produce a Plan b for Pointing to rising support for in- tral government also runs a network of independence. A group of activists is ask- dependence, Sir John Curtice, of the mobile-testing centres in Scotland and ing Scotland’s highest court to rule that the University of Strathclyde, says that Scottish scientists sit on British expert Westminster Parliament’s consent for a “some people may, in the wake of corona- committees. referendum is unnecessary. Pete Wishart, virus, have bought into the argument The government has thus fulfilled the an snp lawmaker, says the European Union that, ‘You know what, maybe an in- unionists’ promise in the 2014 referen- should be asked to recognise a poll if Mr dependent Scotland could govern itself a dum that Britain would be Scotland’s Johnson doesn’t. Some even say Ms Stur- protector in hard times. Yet the appetite geon could simply declare independence for separation has rarely been so high. after an election. Tory strategists like it Not much for Holyrood to boast about The threat of a hard border between when hotheads sound off in this way be- Excess deaths per 100,000 people* England and Scotland after divorce has cause it frightens the middle classes. Selected countries, since 50th official covid-19 death been the unionists’ trump card. But 37% Then there’s Labour. Ms Sturgeon’s best 100806040200 of Scots polled in early July said border hope of breaking the stalemate is a deal controls to stop covid “should already be England with Labour in 2024, in which she supports happening”, while a further 36% said a minority Labour administration in ex- Spain they may be necessary in the future. Scotland change for a referendum. But Sir Keir Fewer than one in five opposed them. Starmer, the party’s new leader, says he op- Italy Scottish Conservatives are worried. It poses such an agreement. Mr Johnson told Netherlands was bad enough when nationalists had to voters in 2019’s general election that a vote United States build their case on solid foundations. for Labour is a vote to break up Britain, and Sweden Now they seem to be able to win the Mr Starmer will want to avoid that happen- France argument on soggy territory, too. Says ing next time round. Germany one despairing Tory: “How are we losing Both sides think they can win a war of Sources: National *Latest data at August 5th 2020, compared ground when the Union is working as it attrition. Mr Ross says voters are exhausted statistics; The Economist with historical averages since 2015 never has before?” by constitutional wrangling and want their schools and hospitals fixed. The national- ists hope that obstinacy on Mr Johnson’s pushed aside,” says Professor Mitchell. And Scottish people, and another which says it part will fuel their cause. the devolution settlement lacks friends. lies with the Westminster Parliament that The price of stalemate is deteriorating The snp thinks it no substitute for state- legislated for devolution. They need not governance. Scotland is caught in a rolling hood, whereas growing numbers of Tories clash. But if the snp triumphs in the Scot- referendum campaign, which encourages think sending ever-more powers to Edin- tish election next May, the question of freebies such as the abolition of prescrip- burgh has failed to stop separatism. “They whether Scotland can vote a second time tion charges, and discourages unpopular fed the crocodile,” says one. will force them into conflict. Mr Johnson but necessary reforms. “Any difficult issue Devolution accommodates two funda- and Ms Sturgeon will both claim mandates. which would be at least immediately un- mental ideas about the constitution: one Mr Cameron will not have saved Scotland popular but might be the right thing to do is which says that sovereignty lies with the from Catalonia’s limbo. 7 The Economist August 8th 2020 Britain 43 Bagehot The smell of rot

Boris Johnson’s new list of peers reveals a dangerous contempt for governing institutions treating government, if not quite with contempt, then as nothing more than a means to personal or ideological ends. The sense of high seriousness that the Victorians attached to government is be- ing eroded before the public’s gaze, as insiders cash in on their knowledge and experience, ideologues bend the rules to push nar- row agendas, and the likes of Evgeny (now Lord) Lebedev dole out jobs and party invitations to members of the political class. The erosion of standards is encouraged by structural changes in political life. The collapse of party membership is forcing par- ties to take desperate measures to raise money. This is particularly true of the Conservatives who, with only 150,000 members, have resorted to auctioning places next to senior ministers at fund-rais- ing dinners. One such dinner recently resulted in scandal: Richard Desmond, a property developer and former pornographer, took the opportunity to show his dining companion, Robert Jenrick, the housing secretary, a video of his £1bn property development in East London. He eventually persuaded Mr Jenrick to overrule his own department to grant permission for it. The shortening of political careers means that young stars are always thinking of their next move. George Osborne, only 45 when he ceased to be chancellor, quickly built a new career by persuad- ing Blackrock to pay him more than £650,000 to offer advice one alter bagehot, a Victorian editor of The Economist, cele- day a week and Mr Lebdevev to make him editor of the Evening Wbrated the House of Lords as the more dignified of the two Standard. At the same time, the internet has blown apart funding Parliamentary chambers. “Dignified” is hardly the word for the rules. A new book by Peter Geoghegan, “Democracy for Sale”, docu- bumper bucket of new peers—36 in all—that Boris Johnson has ments the ways in which politics is being transformed by invisible just created. The list includes the son of a Russian kgb-agent- donors who try to influence it through “dark money”, internet wiz- turned-oligarch who owns a couple of newspapers in Britain and a ards who delight in exploiting legal loopholes and spies who use party castle in Italy; an ageing, irascible cricketer who supported bots and shell organisations to muddy the waters. Brexit; a former Revolutionary Communist Party activist and ira Still, Brexit acclerated the decline, eroding the legitimacy of the apologist who also supported Brexit (the balm that washes away all state and reducing its competence. Brexiteers launched a fusillade sins); the prime minister’s brother; and sundry party donors, bag- against any institution that got in their way, including the Su- carriers and hangers-on. This from a government that acknowl- preme Court and the Lords. Political entrepreneurs could exploit edges the Lords is absurdly bloated, now with over 800 peers. the confusion to insert themselves into the heart of policy-mak- The few people who have defended Mr Johnson’s list have done ing. Shanker Singham, the “brains of Brexit”, became the country’s so on the grounds that it was ever thus. Every prime minister most influential adviser on trade despite having no formal qualifi- comes into office promising to reform the Lords only to end up cations in economics and spending most of his career as a lawyer- treating it as a patronage pissoir. In 2007, in what was dubbed the lobbyist in America. Finally, Mr Johnson and his coterie of hard- “cash for honours” scandal, the Parliamentary Standards Author- liners seized control of the Conservative Party. ity rejected seven of Tony Blair’s nominees. Harold Wilson’s resig- Mr Johnson is a specialist in not taking anything too seriously. nation honours list in 1976, drawn up on lavender-coloured note- In her new book, “The Twilight of Democracy”, Anne Applebaum paper by Marcia Falkender, his private secretary and special friend, describes the atmosphere at the Spectator magazine in the contained the name of several fraudsters. mid-1990s, when she worked there alongside Mr Johnson (who lat- Leave aside that this argument belongs in a banana republic. er edited it): “the tone of every conversation, every editorial meet- Leave aside, too, that the Lords has lighter financial disclosure ing, was arch, every professional conversation amusing; there was rules than the Commons because peers are supposed paragons of no moment when the joke ended or the irony ceased.” Mr Johnson probity. The argument ignores the context in which the list ap- is surrounded (some would say captured) by revolutionaries who pears. Mr Johnson’s degradation of the Upper House is happening believe in tearing down the current order. Dominic Cummings, Mr as the rules of public life are under unprecedented strain. Johnson’s most important adviser, is a libertarian revolutionary In the 18th and early 19th centuries the British political system who reveres technology and creative destruction. Michael Gove, was known as “Old Corruption”. The rich treated the state as their the cabinet-office minister, has a neuralgic dislike of the “clerisy” private property, appointing their cronies to “pocket boroughs”, that runs the establishment. securing jobs in the civil service for the fool of the family and buy- The combination of languid indifference to “boring institu- ing great offices of state for themselves. The Victorians dismantled tions” and revolutionary fervour would be dangerous at any time. this system in the name of open competition and public duty, con- It is poisonous when public standards are being eroded by new scious that Britain couldn’t succeed as a great industrial power if it technology and changing norms. The Victorians knew that Old was hampered by an inefficient state. Corruption would inevitably return unless you waged a relentless Mr Johnson’s list suggests that the country is reverting to old war on behalf of clean government and public probity. There is no habits. This is not about money changing hands in brown paper sign that Britain’s current masters have either the firmness of pur- bags—British politics is still cleaner than in France or Italy—but pose or philosophical conviction to wage such a war. 7 44 International The Economist August 8th 2020

eo has been viewed more than 12m times. Mr Daley is now married to that “guy”, Dus- tin Lance Black, a screenwriter. They have a two-year-old son, Robbie. Some lesbian, gay, bisexual or transgen- der (lgbt) people never tell their friends and families about this aspect of their identities. A few don’t feel the need. In 2013 interviewers from the Pew Research Cen- tre, a think-tank, spoke to a 54-year-old American woman about her bisexuality. “This is not a subject to discuss or tell any- one about,” she said. “It is an activity—like bowling, or gardening.” But most want to open up. The same Pew study found that more than three- quarters of American gay men had confid- ed in all or most of the important people in their lives. So universal is that first mo- ment of disclosure that several languages use variations on the same phrase. Kore- ans, Japanese, French and Spanish people all talk of “coming out”. The Chinese and Russians also borrow the English meta- phor of “the closet”, the dark and constrain- ing place from which lgbt people are said to emerge. “Boys Like Us”, a compendium of coming-out experiences published in 1996, argued that this was “the central event of a gay man’s life”. For many, it still is. A sixth of calls to Switchboard, a British lgbt helpline, concern coming out. It is the sin- gle biggest category. Yet though the metaphor remains con- stant, the process is changing rapidly, thanks to the internet. Two big shifts are under way. People are coming out earlier than ever before. And the closet door is opening in an increasingly broad range of countries. Stark disparities remain: in lib- eral countries, such declarations are ac- cepted or even—as in Mr Daley’s case—cel- ebrated. But gay sex remains illegal in 68 countries, and openly lgbt people often face stigma or violence even where it is not. Coming out Transgender people often experience even greater prejudice, and so need extra cour- Queer, there and everywhere age to tell others how they feel. Nonetheless, the International Lesbian, Gay, Bisexual, Trans and Intersex Associa- tion (ilga), a lobby group, has members in 164 countries (up from eight in 1978). “That means there are people in those countries BOGOTÁ, NAIROBI AND NEW YORK The internet is reshaping a milestone for gay teenagers who are coming out,” says André du Ples- sis, its executive director. “We are every- ropped up by his Union flag pillows, he confided. “And everything just feels where. It’s been a joyful and sometimes PTom Daley was at last ready to unburden great, and well that someone”—long pause, painful unmasking of who we are.” himself. As the camera wobbled about, the looking everywhere but at the camera—“is That unmasking happens at different then 19-year-old British diver—who the a guy.” times. About four in ten American gay men year before had won a bronze medal at the He told that camera in his bedroom, and first begin to question their sexuality be- Olympics in London—told his fans he was YouTube told everyone else. There were fore they leave elementary school, reports ready to talk about his private life, though some nasty comments, but thousands of Pew. Others only realise later in life. A his darting eyes seemed to belie that asser- strangers chipped in to offer congratula- handful come out in their 70s. But on aver- tion. After two minutes of build-up, he got tions, support and, sometimes, slightly age Americans are coming out earlier than to the point. “Come spring this year my life odd queries. “Is it just me or are all of the in previous generations, mostly in their changed—massively—when I met some- gay guys really handsome and attractive?” teenage years. In 2018 the Williams Insti- one and it made me feel so happy, so safe,” one viewer wondered. Six years on, the vid- tute at the University of California, Los An-1 The Economist August 8th 2020 International 45

2 geles (ucla), found that whereas inter- school despite typically realising they were 1 viewees in their 50s had tended to reveal Somebody to love attracted to someone of the same sex at their sexuality at about the age of 26, those United States, mean age of first experience about the age of 12, roughly the same time currently in their late teens and early 20s By age group, 2016-17 as their American counterparts. The inter- had already done so before their 17th birth- net gives such teenagers the chance to form Aged 18-25 Aged 34-41 Aged 52-59 day (see chart 1). Stonewall, a British chari- digital support networks and online com- ty, found an even starker divide. According 3025201510 munities where they feel comfortable ex- lgbt Sexually attracted to a poll it commissioned in 2010, to same sex pressing their developing identities. youngsters typically came out at 17, 20 Sex with same- Take Emmanuel, a 19-year-old trans- years earlier than the oldest cohort. sex partner gender man from Bogotá. After watching a This shift can partly be attributed to a Identified self documentary with his parents about trans- dramatic softening of public attitudes to- as LGB gender children, he told them he felt the wards same-sex relationships. In 1987, Came out as LGB same way. “I said ‘mum, dad—I’m trans’ to a family member more than half of Americans thought gay and they got angry,” he says. “They told me Source: The Williams Institute sex should be illegal, according to Gallup; ‘no, that’s wrong, you should not think nearly three-quarters now approve that it is that.’” He still lives with his parents. At col- legal. Gay characters frequently pop up in Instagram. A study in 2014 by Stefanie Du- lege, he “tests the waters” with new friends movies and on television; same-sex wed- guay, then of Queensland University of by starting conversations about the 2018 dings are growing ever more common. All Technology, found that more than a third winner of the Miss Universe Spain beauty of this helps teenagers work up the confi- of a sample of 27 young lgbt Britons dis- pageant, a trans woman. “Depending on dence to come out to parents or friends, closed their interest in others of the same their reaction, it can be like ‘you get to since those they confide in are more likely sex on their Facebook profiles. Three wrote know, you don’t get to know’.” He reckons than ever to support them. posts that explicitly announced their sexu- he tells about one in five of them. But before teenagers begin to tell others al orientation. Online, it is a different story. He began about their sexuality, they have to come out The internet is particularly helpful in confiding his feelings in strangers he met to themselves. That is where the spread of parts of the world that are less gay-friendly. on Tumblr and Twitter, another social net- the internet makes a big difference. Chil- A good example is Colombia. At first blush, work, five years ago. He has messaged doz- dren who begin to wonder about their sex- it appears pretty tolerant. Gay sex was de- ens of trans people and chats regularly to uality or gender can quickly educate them- criminalised in 1981, 22 years before Ameri- seven friends, who mainly live in America selves—and each other—on their ca’s Supreme Court ordered states such as and Britain. “It is kind of a support group,” smartphones. They can access this infor- Texas to stop banning it. Gay Colombians he says. Even though he largely shields his mation at any time and anonymously (un- can get married and adopt children. Clau- identity in public, he can be open online. like, say, checking out a library book). You- dia Lopez Hernandez, the mayor of its capi- “At least I know maybe I’ll come back home Tube hosts a vast archive of self-help tal, Bogotá, is a lesbian. and turn on my computer and see my videos made by others farther along the But social attitudes have not kept pace friends. They are the people who will call same path; social networks can connect with the law. Most Colombians are Catho- me by my name, who will give me tips on teenagers to peers with similar feelings. lic; many are socially conservative. Polls how to deal with situations. It helps a lot.” This helps to explain that whereas it took suggest they largely disapprove of gays Covid-19 makes the internet more cru- the oldest cohort in the ucla study six adopting children, though they are coming cial. It has been the only source of like- years after first feeling attracted to some- around to same-sex marriage. A survey of minded company for many lgbt people one of the same sex to identify as gay, lesbi- about 5,000 lgbt Colombians, published stuck in lockdown. Eleanor Tiernan, an an or bisexual, the youngest sample made earlier this year by ucla, found that three- Irish comedian, joked: “I came out just be- the jump in less than half that time. quarters were bullied as children. Several fore lockdown. Suddenly I was free to be hundred report being attacked or sexually who I really was… but only as long as I I want to break free assaulted. stayed in my room.” Since the pandemic Consider the experience of a 14-year-old Unsurprisingly, then, Colombians are began to spread in Colombia, Emmanuel girl in Manhattan. When she began to won- nervous about coming out. Roughly nine has been shut up in his parents’ small der about her sexuality, she turned to the in ten lesbians and gay men have confided apartment most of the time. Because he has internet for answers. She spent a lot of time in at least some family members and more time for domestic chores, his mother, on Tumblr, a blogging platform, before fig- friends. But most told nobody at high who still treats him as a woman, tells him: uring out that she is asexual (ie, she feels “you’re getting like me, preparing to be a no sexual attraction to others). “Tumblr is housewife.” His friends offer much-needed 2 where I found out about most of the stuff,” Another one bites the dust solace, chatting about the effects of the she says. “There’s a fricking ton of lgbt ac- Homosexuality should be accepted by society pandemic in their countries and playing tivism all over Tumblr.” Not long after hav- % responding yes online games. ing her suspicions confirmed, she decided 100 Such networks are even more impor- to tell her mother. “I told her I’d looked it up tant in countries where gay sex is illegal, Britain and it all sounds like me.” A fellow student 80 like Kenya. Last year the country’s High at her school, a 16-year-old transgender Court upheld a colonial-era law that threat- boy, saw his feelings echoed in videos post- Mexico 60 ens a maximum penalty of 14 years in jail ed by Jazz Jennings, a trans teenager who for “carnal knowledge against the order of has 680,000 subscribers on YouTube. He United States 40 nature”. Ministers claim it is an effective told his parents a few years later, once he South Africa way to curb the country’s hiv epidemic. Al- 20 was sure. though arrests under this law are rare, gay Kenya Some teenagers use the internet to try 0 Kenyans are often intimidated or harassed out their newfound identities. A few, like by cops. Films depicting gay characters are 052002 10 15 19 Mr Daley, upload coming-out videos. Oth- censored; lesbians are raped by gangs of Source: Pew Research Centre ers share the news on social networks like men, supposedly to “correct” their sexual-1 46 International The Economist August 8th 2020

2 ity. Repression is popular. In 2019 only 14% fell pregnant, her mother forced her out of ple’s lives. Studies frequently find that gay of Kenyans believed homosexuality is ac- the family home. Three years on, she is in a people suffer higher rates of depression ceptable, compared with 72% of Americans long-term relationship with another wom- and anxiety than heterosexuals. “Trying to and 86% of Britons (see chart 2). an. They are raising her son together. She hold conflicting identities or lying to your- The closet is sometimes the safest op- finds inspiration for the future on You- self causes incredible mental strain,” says tion. Becky Odhiambo Mududa, who helps Tube, which she scours for videos of gay Mr du Plessis. Enabling more people to be to run Nyarwek, a gay-rights ngo in rural wedding ceremonies in other countries. honest with themselves and others at an Kenya, reckons only 50-100 of its 1,500 “People applaud it,” she says, incredulous- early age ought to reduce this strain. Great- members have come out to everyone they ly. She probably watches two weddings a er openness will improve sexual health, know. Another 300 or 400 are comfortable day, and shares the couples’ joy. “We hope too, enabling better targeting of preventive telling only fellow lgbt people, she esti- some day when our country allows it, we’ll measures and treatment for hiv and other mates. Those who are open benefit from get married,” she says. “We talk of growing sexually transmitted infections. up-to-date information about homo- old together.” The shift towards transparency will also phobic violence and police crackdowns, raise awareness. In some countries, popu- which members share with each other via Don’t stop me now list politicians caricature homosexuality an online messaging service. The internet’s increasingly pivotal role has as a western import. J.M. Kariuki, a Kenyan Since Kenyan teenagers are unlikely to its downsides. Natasha Jones, who runs a nationalist, was fond of calling it “that vice encounter peers or role models who are youth engagement programme at the Gay for which we Africans have no name”. Oth- open about their homosexuality, the inter- Centre in Manhattan, has seen good and ers deny its existence. Ramzan Kadyrov, net plays a greater role in education. Rose bad. Plenty of teenagers only find out about the head of the Chechen Republic, has re- Ambasa, 21, grew up in a slum in the capi- her programme online, then come to ask portedly presided over the routine abduc- tal, Nairobi. She did not understand her questions and meet other teenagers before tion, torture and killing of gay men. He de- feelings for other girls until she borrowed coming out to their parents. But, she says, nies that, instead claiming: “we don’t have her brother’s smartphone one day and goo- the internet can be a source of misinforma- any gays. If there are any, take them to Can- gled “Who is a lesbian? What do they do?” “I tion during this formative time. The cen- ada.” By shining a spotlight on domestic came to accept myself,” she says. “It helped tre’s sexual-health classes often need to gay populations, the internet will make me so much that I came out of depression.” counter misconceptions young people such claims even more risible. “In our ad- Some wait years to discover they are not have picked up online, such as that lesbi- vocacy work, one question that comes up is alone. Purity, now 24, grew up in a village ans cannot get sexually transmitted infec- ‘where are these queer people, do these with no internet access. When she felt at- tions or that losing your virginity is meant queer people exist?’” says Caroline Mwo- tracted to a female classmate at 14, she had to be painful. “We have young people com- chi, also of Nyarwek. “Coming out actually no way of knowing whether others had ing here with the wildest ideas,” she says. puts a face on it.” such feelings. “I was scared,” she says. “I “YouTube has taught them and that’s fact.” And being visible is the surest way to was trying to get it out of me, just praying to It also gives a space for homophobes change social attitudes. The rapid rise in God to figure out what it is. I just wanted to and trolls to direct abuse at youngsters who support for gay rights in America between be a normal girl.” As soon as she got a raise their heads above the parapet. Worse, 1980 and 2000 followed a steep increase in smartphone, on her first night at college it provides a forum for involuntary “out- the number of Americans who said they five years later, she searched whether it was ings”. In Kenya, rumours about someone’s knew a gay family member, friend or col- possible to fall in love with another girl. “I sexuality spread rapidly on social media. league. In 1985 only a little more than a fifth then discovered it’s normal.” The next day Several of the people supported by Nyar- did; now 87% do. “We’ve seen over the de- she confided in a classmate, who was sym- wek were “thrown out of the closet” in this cades that this is how change can take place pathetic. Soon afterwards, she began dat- way, by former partners or friends with in the hearts and minds of people,” says Mr ing another student. grievances. du Plessis. “People often have a knee-jerk The internet can also provide hope, But bigots and dodgy information exist- reaction. But when you take it down to a even to those in the bleakest situations. ed long before the internet. That it makes personal level, it becomes real: this is your Delphine, 21, was raped by local men when such things more visible does not negate daughter, your aunt, your minister, your they found out she is a lesbian. When she the largely positive role it plays in gay peo- colleague.” As coming out spreads around the world, tolerance probably will, too. Purity, for one, isn’t going to wait. Now that she has come out, she regularly mes- sages friends online to arrange to meet at a gay-friendly bar in central Nairobi. At an outing before the pandemic took hold, a flashing neon sign marked the entrance, on a bustling street packed with battered minibuses belching foul-smelling fumes. Inside, two young women moved closer to- gether on the dance floor, just as one of the buses honked its horn. Another woman flicked a rainbow braid in her cornrows. Purity and her friends shared beer and gos- sip. She has no regrets about coming out. Though she has faced discrimination look- ing for a job, her mother surprised her by being “quite cool with it”. She is certain that one day she will meet another woman and they will marry. In the meantime, she says, “I feel good being who I am.” 7 Business The Economist August 8th 2020 47

Also in this section 48 Joys of joining the S&P 500 49 Nvidia woos Arm 50 Microsoft’s TikTok gamble 50 Sverige AB v Deutschland AG 51 Bartleby: Called to account 52 Schumpeter: The future of trucking

Corporate America yet, with interest rates—and thus returns on safe assets like Treasury bonds—close The trouble with TINA to zero, money has poured into equities. American share prices have risen by more than 40% from their trough in March. The s&p 500 index of big firms is near an all- time high; the tech-heavy Nasdaq market reached it on August 4th. The feeling NEW YORK among investors that “there is no alterna- Lessons for America Inc from the weirdest earnings in living memory tive” to stocks is so pervasive that they have ob chapek, Disney’s boss, sounded a Disney’s experience sums up that of dusted off an old acronym: tina. Bcheerful note as he announced the en- America Inc more broadly. Investors have In one way, the latest quarterly results tertainment giant’s quarterly results on been casting about for any signs of a re- justify a degree of optimism. Three months August 4th. Its newish streaming service, bound from the pandemic-induced reces- ago the situation was so uncertain that Disney+, has acquired over 60m subscrib- sion. Real gdp shrank at an annualised rate many firms, not just in America, refused to ers in less than a year, one-tenth the time it of nearly 33% in the second quarter. And offer their habitual guidance about future took Netflix to amass such an audience. earnings—in some cases for the first time “Mulan”, an upcoming blockbuster, will be ever. Bereft of milestones, analysts slashed released on Disney+ in September. “De- Rates of infection 1 profit forecasts. Now it seems they may spite the ongoing challenges of the pan- S&P 500 non-financial revenues, by sector have erred on the side of gloom. Jonathan demic, we have continued to build on the Q2 2020*, % change on a year earlier Golub of Credit Suisse, a bank, calculates incredible success of Disney+ as we grow,” that for those firms which have already re- -40-50 -30 -10-20 100 Mr Chapek intoned. The company’s share ported their results for the most recent Property price jumped by 5%. quarter—a group representing 84% of the Health care S&P 500 s p If you tuned out the first part of Mr Cha- Information technology total & 500’s market capitalisation—earnings pek’s statement—and six months’ worth of Consumer staples have beaten hyper-bearish estimates by a covid-19 news—you might conclude that Utilities total of 24%. Disney just had a bumper quarter. In fact, Communication services Bulls see other hopeful signs. After a as its theme parks shut down, cinemas Materials plunge earlier this year, capital spending emptied and battered advertisers stinted Industrials grew at its fastest monthly pace since Mor- on commercials on its television networks, Consumer discretionary gan Stanley, an investment bank, began the company lost $4.7bn. The reason for Energy tracking it in 2004. New orders for factory the market chirpiness is that things could *At July 31st; 50% goods rose by 6.2% in June. JPMorgan have been far worse. Source: JPMorgan Chase of companies reporting Chase, a bank, believes that a global “syn-1 48 Business The Economist August 8th 2020

payers financed between $50bn and $75bn 2 The bigger, the better of firms’ labour costs associated with fur- loughed workers. If such support is with- S&P stockmarket indices, December 2019=100 Share prices drawn in the second half of the year, he 12-month forward earnings by market capitalisation January 1st 2020=100 warns, “we must worry that the upside 100 140 earnings surprises are not repeatable.” FAMAA (Facebook, Apple, For the time being the market thinks Large 80 Microsoft, Amazon & Alphabet) 120 they are. ceos themselves are partly re- sponsible for this, by tirelessly spinning S&P 500 Mid 60 100 investors a positive yarn. s&p 500 firms which forecast higher future earnings now 40 80 Small S&P 500 outnumber those offering lower or no (excl. FAMAA) 20 60 guidance by two to one (see chart 3). In the previous quarter the coy and pessimistic Dec Jan Feb Mar Apr May Jun Jan Feb Mar Apr May JulJun Aug were 15 times as numerous as the sunny. 2019 2020 2020 Yet when the Conference Board, a re- Sources: Morgan Stanley; Datastream from Refinitiv search group, recently surveyed hundreds of American bosses anonymously, it en- 2 chronised cyclical recovery from the co- staples, and by nearly as much at industrial countered much more pessimism about vid-19 crash has started”, with manufactur- firms (see chart 1 on previous page). Over- the timing and robustness of economic re- ing leading the way. “Recovery is happen- all, earnings per share contracted faster at covery than among ceos in Europe and ing,” echoes Michael Wilson of Morgan American firms, by a third year on year, Asia. Whereas 40% of chief executives in Stanley, pointing to promising advances in than those at historically less profitable China see sales returning to pre-pandemic treatments and vaccines for covid-19. European ones, whose profits fell by less levels by the end of 2020, only 12% of Amer- Hang on a minute. The green shoots of- than a quarter. ican bosses do. The Conference Board con- fer hope and earnings may have beaten ex- The crunch is worse at smaller firms. Mr cludes that a return to pre-coronavirus rev- pectations. But, as David Kostin of Gold- Kostin calculates that, as of August 3rd, enues is “at least a year or more down the man Sachs, another bank, notes, the bar quarterly earnings for s&p 500 companies road” and that “risk and volatility will re- was very low. By his reckoning, in a typical were down by about 35% year on year. For main high for the foreseeable future.” quarter about 5% of firms produce earn- those in the Russell 2000 index of smaller Sooner or later investors seduced by ceos’ ings per share above forecasts. That this firms, they had nearly evaporated entirely. public sweet talk—and by tina—will come quarter’s figure may be closer to 25% is The collective headline numbers for big to their senses. Won’t they? 7 merely “kabuki theatre” of expectation companies are also flattered by the success management, he says. If the bottom fell out of America’s technology giants (see chart of the economy in the second quarter, as of- 2). Facebook, Apple, Microsoft, Amazon Stockmarket indices ficial statistics imply, then the private sec- and Alphabet are thriving, by making life tor must be dragging it down. possible for remote workers, online shop- Inclusive growth Quarterly sales fell by an average of 10%, pers and anyone who seeks solace online. year on year, at s&p 500 companies which The quintet, which together represent 22% reported by the end of July. Some indus- of the s&p 500’s market value, up from 16% tries suffered a bigger hit. Revenues a year ago, has generated stockmarket re- plunged by half at energy firms, a third for turns of 35% so far this year, against -5% for Joining the s&p 500 may not be as big a producers of durable goods and other non- the other 495 firms in the index. boon as traditionally assumed This dominance has boosted the mar- ket—and investor confidence. But it poses ast month Tesla reported second-quar- 3 Sentiment analysis a risk for the unwary. Mr Golub says that Lter net income of $104m. This came as a unlike the flaky internet firms that col- surprise; the pandemic has pushed many S&P 500, % of companies changing earnings guidance lapsed when the dotcom bubble burst two carmakers into the red as cash-strapped 80 decades ago, the five tech titans have solid consumers put off purchases. It also had Higher Lower/withdrawn business models, little debt and strong rev- Tesla’s investors aflutter, for it marked the 60 enue growth. But should a speedy recovery firm’s fourth consecutive quarter of pro- 40 materialise, money could flow out of tech fits. At last, thanks to that milestone, the and into currently unloved sectors such as maker of snazzy electric vehicles—which 20 heavy industry. in July overtook Toyota was the world’s 0 Another underappreciated threat to most valuable car firm—met the formal cri- * share prices comes from government. To- teria for inclusion in the s&p 500. 2018 19 20 bias Levkovich of Citigroup, a bank, points As covid-19 has boosted pandemic-re- out that the “womb to tomb” safety net in silient businesses such as technology United States, senior executives’ expectations Europe provides more generous and lon- firms while walloping industries such as of restoring revenues to pre-pandemic levels ger-lived relief in a downturn than Ameri- travel, more companies than usual may June 2020, % of executives surveyed ca’s more threadbare benefits. Congress drop out of or enter that coveted club this No decline/already restored Before end of 2020 seems poised to reduce stimulus spending year. Membership of Wall Street’s flagship During 2021 After 2021 that has supported firms keeping fur- share index is seen as a boon, because “pas- 200 40 60 80 100 loughed workers on their payrolls and paid sive” investors, who do not actively pick unusually plush unemployment benefits, winning stocks but merely track the broad- which recipients could spend not just on er stockmarket, must buy the shares of any rent and bills but also on other, less vital new member (and sell those of the firm it Sources: JPMorgan Chase; The Conference Board *At July 31st things. Mr Levkovich calculates that tax- displaces). This should drive up the en-1 The Economist August 8th 2020 Business 49

Semiconductors ductor industry, Arm makes relatively little Standard deviation money. In 2019 it pulled in less than $2bn in S&P 500, cumulative abnormal returns* Worth an arm and revenue. Nvidia, which faces plenty of related to index inclusion, percentage points competition, generated $2.8bn in net pro- 6 a leg fit, mostly by selling powerful specialised 1997-2007 chips used to play video games, or bolted 4 onto existing machines in data-centres run 2 by Google, Microsoft and other cloud-com- Nvidia tries to get its hands on a puting providers, where they are used to 0 critical chip designer -2 train artificial intelligence. 95% confidence or weeks rumours have swirled that Chipmakers that currently rely on un- interval 2008-17 -4 FNvidia, an American company which fettered access to cutting-edge chip de- 151050-5 21 designs and sells computer chips, wants to signs worry about losing it once Nvidia gets Days before/after inclusion buy Arm, a firm which produces the funda- hold of Arm. Under SoftBank, which is not *Difference between actual and predicted return mental blueprints on which most such a chip company, none of this was an issue. Source: “Does Joining the S&P 500 Index Hurt Firms?”, by chips are built. Arm, which is based in Brit- But if Nvidia, which is one, owned Arm, it B. Bennett, R. Stulz & Z. Wang, NBER working paper, July 2020 ain, has since 2016 been owned by Soft- would exercise a degree of control over po- Bank, a Japanese technology conglomer- tential rivals. Chinese chipmakers in par- 2 trant’s share price. Thereafter, one theory ate, which bought it for an extraordinary ticular may fret that the American firm, goes, increased common ownership of $32bn—the highest price ever paid for a whose operations are located almost en- companies by large index funds, which European technology company. On August tirely in its domestic market, will give the hold stakes in listed rivals, reduces com- 3rd news reports said that Nvidia was close federal government power to block Arm’s petitive pressure and leads to juicier share- to a deal. It may splurge as much, or more. designs from getting to China, as long as holder returns all around. That is because Arm is not a normal America’s tech standoff with its Asian rival However, as passive ownership of as- company. The firm’s core products are a set continues. Nvidia declined to comment. sets in mutual and exchange-traded funds of fundamental designs for computer Nvidia remains tight-lipped about what has swelled—from around 3% of their port- chips called instruction-set architectures exactly its intentions are. It has not con- folios in 1995 to more than 40% at the start (isas). Arm sells access to isas to the likes firmed it is in talks with SoftBank. One pos- of 2020—the fillip from inclusion in the in- of Apple, Qualcomm and Huawei, giving sibility is that it wants to combine its scale dex appears to have weakened. It may even those firms freedom to design and manu- and Arm’s designs to create general-pur- have become a burden. facture Arm chips however they want. The pose chips that keep data-centres hum- That, at least, is the conclusion of a new powerful chips in Apple’s iPhones are the ming. At the moment this lucrative busi- paper by Benjamin Bennett of Tulane Uni- product of this process, as are those in just ness is dominated by Intel, another versity, René Stulz of Ohio State University about every smartphone in the world. Arm American firm (Arm servers exist, but they and Zexi Wang of Lancaster University. also creates its own chip designs, which it are mostly designed by firms like Tesla and They looked at freshly minted s&p 500 calls “cores”, and licenses them to compa- Amazon for their own purposes). firms between 1997 and 2017, five days be- nies that need a cookie-cutter starting- Nvidia could in principle compete with fore their ascension, then up to a year later. point for chips to put in their devices, as Intel by licensing Arm’s designs without In the first decade of the sample, index in- well as cars, connected fridges or anything buying the firm. Acquiring Arm would clusion increased “abnormal” stockmarket else hooked up to the internet. As a result, hand it control over the technology road- returns—ie, those relative to pre-inclusion Arm is everywhere. maps of countless high-tech firms. Many expectations—by up to 4.9% in a firm’s first Oddly for the sole supplier of technol- companies would pay an arm and a leg for week in the index. This outperformance ogy that undergirds the global semicon- that sort of power. 7 then gradually disappeared over 12 months. In the second decade, by contrast, the initial pop was negligible. Worse, ab- normal returns turned negative within three weeks, and stayed there. The researchers suggest two possible reasons. First, unlike active stockpickers, passive investors are indifferent to the price of a firm’s shares—if it is in an index, they must hold them. What they pay thus conveys less information about their view of a firm’s strengths and weaknesses than an active stockpicker would. Distorted market signals may make managers over- confident, warp investment decisions and lead to shabbier long-term earnings— which share prices in principle reflect. Sec- ond, an increase in passive holdings as a proportion of a firm’s shares dilutes the power of active (and activist) shareholders. Since they hold managers to account, cor- porate governance can slip after joining an index, also hurting long-term prospects. Tesla, and other s&p 500 wannabes, had better take note. 7 50 Business The Economist August 8th 2020

Microsoft and TikTok European business Unproductivity Sverige AB v puzzle Deutschland AG

BERLIN What does a middle-aged tech giant Swedish firms have outshone German want with a teen sensation? ones in the pandemic n july 29th the bosses of Alphabet, ince the Middle Ages, when the Hanse- OAmazon, Apple and Facebook endured Satic League of merchant guilds domin- a five-hour videoconference with a con- ated trade in northern Europe, the German gressional subcommittee on antitrust. Sa- and Swedish business worlds have been tya Nadella, chief executive of Microsoft, close. This remains the case. Both econo- America’s other technology titan, spent the mies depend on exports, manufacturing day talking to investors, recruiting new and retail. Germany is the biggest market hires and reviewing the latest quarterly for many Swedish firms. Nearly a fifth of numbers. His presence was not required— Sweden’s imports come from across the Microsoft no longer attracts the controver- Baltic. The two countries’ stockmarkets sies that bring politicians running. also tend to move in lockstep (see chart). Or does it? On August 2nd the firm said You would, then, expect covid-19 to it was in talks to buy the American, Canadi- I’ll pay this much for half the globe have affected Sverige ab and Deutschland an, Australian and New Zealand operations ag in similar ways. Not quite. The 18 mem- of TikTok, a wildly popular but problematic trove of data on young people, putting it on bers of the dax 30 index of Germany’s big- Chinese-owned video-sharing app. Presi- a par with the likes of Snapchat and Face- gest firms that have already reported dent Donald Trump had mused about ban- book’s Instagram. swung from a healthy profit in the second ning it over fears that it could hand data on At the same time, TikTok is a departure quarter of 2019 to a loss almost as big this Americans to China’s Communist authori- from Microsoft’s core competence of busi- year. For many companies, including ties, despite protestations by its parent ness-productivity tools. The app is unpro- Volkswagen, a giant carmaker, and basf, company, ByteDance, that it would never ductivity software par excellence. Micro- the world’s biggest chemicals concern, re- do such a thing. After some unusual steps soft’s gaming business, including the Xbox sults were even worse than analysts had ex- to mollify Mr Trump—including a state- console, brought in only 8% of its $143bn in pected. The income of the 27 Swedish firms ment in which it thanked him effusively revenues in the 12 months to June. The firm in Stockholm’s omx 30 that have reported for his “personal involvement”—Microsoft has a mixed record with consumer tech- so far fell by 49%, bad but much better than has until September 15th to hash out a deal. nology. In July it shut Mixer, a live-stream- the dax. If you include adjusted earnings of Other suitors may cut in. ByteDance’s ing service for gamers that had failed to two opaque investment vehicles in the venture-capital backers, most of whom are gain traction. And with TikTok Mr Nadella omx, income actually rose. American, will try to flush out rival bid- may expect an invitation to Big Tech’s next From makers of kitchen appliances ders. They are disappointed that ByteDance roasting on Capitol Hill. Controversies (Electrolux) and telecoms equipment (Er- failed to head off TikTok’s political travails. around TikTok’s content moderation and icsson) to finance (Svenska Handelsban- The Chinese group should have spun off data protection will keep cropping up. ken) and pharmaceuticals (AstraZeneca, the American unit this spring, keeping a The next 40 days will be busy. Microsoft which is listed in Stockholm, London and big minority stake, says an investor close to may try to buy more of TikTok than just the New York), big Swedish firms trounced ex- the firm. But the ambition of its founder, four English-speaking markets. But Byte- pectations. “I have never seen so many Zhang Yiming, led ByteDance mistakenly Dance will want to keep as much of its glo- companies come in with better than ex- to calculate that it could muscle through bal presence as possible, especially with Mr pected results,” marvels Esbjörn Lundevall geopolitical tensions, the investor says. Zhang under fire in China for selling out to of seb, a Swedish bank. TikTok’s price could rise if more bidders the Yankees. The world may end up with Mr Lundevall points to three main rea- emerge, but it will still go for far less than two TikToks, one American-run, one con- sons for the surprise. Sweden’s pandemic-1 ByteDance’s estimation of its value. Byte- trolled by ByteDance. Dance believes TikTok us would have been How an American TikTok would work is worth $200bn within a few years. Now it unclear. Microsoft would need to replace Northern exposures may have to sell the business for between the app’s Chinese infrastructure, presum- Stockmarket indices Market capitalisation $15bn and $40bn. That would be one of the ably by copying ByteDance’s code and au- January 2010=100 August 5th 2020, $bn us year’s biggest deals. But once TikTok , diting it. If it wants American teenagers to 300 with its 100m or so users in America alone, be able to view videos uploaded by Japa- OMX Stockholm 30 turns profitable—which it is widely ex- nese or even British ones, it would have to 714 250 pected to soon—it may look like a bargain. license them from ByteDance, which may TikTok would propel Microsoft into the run afoul of Mr Trump. TikTok’s current ap- 200 1,490 social-media big league. That may be Mr peal rests in part on its global assortment. DAX 30 Nadella’s strategic aim. Google, the main Both versions of the app will be diminished 150 division of Alphabet, is challenging Micro- by a split. Instagram’s Reels, a TikTok look- 100 soft in cloud computing and office soft- alike launched on August 5th, will try to ware. Nabbing TikTok would be a counter- woo disenchanted TikTokers. For the 45- 50 strike against Google’s YouTube, notes year-old Microsoft, navigating the Sino- 20181614122010 Mark Moerdler of Bernstein, a research American tech tussle may be the easy part Sources: Datastream from Refinitiv; Bloomberg firm. The app would also give Microsoft a next to keeping teenagers’ attention. 7 The Economist August 8th 2020 Business 51

2 relief effort, from cheap loans to furlough which they vocally backed, to avoid the to- cised it for lacking an exit strategy. schemes, was more generous than predict- tal lockdowns imposed across much of Eu- Such calls may intensify if recent spikes ed. Firms cut costs more radically than was rope. This allowed consumers to go about in covid-19 cases turn into a new wave of in- thought possible. And, critically, demand their lives and workers to send their chil- fections. “A second lockdown would have recovered faster than forecast in June. As a dren to schools, which remained open. cruel consequences,” says Hans-Jürgen result, Sweden’s gdp contracted by 8.2% in In public, ceos of big German compa- Völz of the bvmw. Investors seem ambiva- the second quarter, year on year, compared nies generally praised their government’s lent about which country’s strategy is pref- with a drop of 11.7% in Germany. Capital tougher policies. Privately, though, some erable for the long-term health of the econ- Economics, a consultancy, now expects shared the fears expressed openly by the omy. After falling more steeply than the Sweden’s economy to shrink by a relatively bvmw, the association of Mittelstand firms omx in March, the dax has rebounded at a modest 2.5% in 2020. The country, it says, that represents 3.5m businesses with up to faster pace, too. In the past two months the is the “best of a bad bunch in Europe”. 250 employees. In an open letter in May the fortunes of the Hanseatic peers have once Many Swedish bosses put this down to bvmw called on the government to lift the again mirrored one another—trans-Baltic their government’s controversial decision, lockdown “before it is too late” and criti- earnings disparities notwithstanding. 7 Bartleby Called to account

Dealing with customer complaints othing is more likely to sabotage a passenger off a plane to make way for a pressure to get companies to offer re- Nbrand’s reputation than a customer member of its own staff. The airline’s funds, and even then it may take several complaint that goes viral. Social media initial apology was viewed as ham-fisted, months for them to pay out,” says Adam often blow the problem out of propor- sympathising more with its own employ- French of Which?, a British consumer tion, leading television programmes and ees than with the unfortunate passenger, magazine. Customers have also faced newspapers to pick up the story, which is prompting Forbes magazine to dub United long delays on the phone, in part because invariably one that pits plucky members “the world’s most hated airline”. the pandemic has reduced staffing levels of the public against some heartless Managers must thus be eternally vigi- at call centres. corporate Goliath. Consumer gripes— lant when trying to protect their com- Oddly enough, the poor reputation of and stories about them—have multiplied pany’s good name. That can be expensive. some airlines may have cushioned the during the pandemic as many services Compensating customers costs money, as blow. “Ryanair has always marketed were cancelled because of lockdowns. does having call centres that can respond itself as cheap,” says Mr French, so cus- Rupert Younger of Saïd Business quickly to queries and complaints. tomers don’t expect a high standard of School at the University of Oxford says There is a difference, however, between service. The biggest reputational hit was that views of companies are centred on one-off complaints, which can usually be to companies that had marketed them- the issues of capability and character. handled by common sense and a willing- selves as treating customers better. Firms’ capability is expressed in the ness to apologise, and a crisis that affects a Airlines get away with more than quality of their products. The way that wide range of customers, where solutions other companies because they often have firms handle customer disputes, mean- require extra costs on top of the complaint a monopoly on certain routes. But travel while, speaks to their character. If that infrastructure. And costly crises can in companies that want to behave well still quality is undermined, it can take time to turn be subdivided into those caused by a have a problem. Repaying customers rebuild public confidence. Research company’s own failings and those, like the quickly puts a tremendous strain on suggests that people and organisations pandemic, that are not its fault. cashflow at a time when they are generat- alike tend to be judged by the worst thing Airlines and travel companies have ing a fraction of usual revenues. they do. been the focus of a lot of customer com- Specialist Leisure, a British travel One of the best-known pieces of plaints in 2020, thanks to all those can- group, went into administration earlier brand damage occurred in 2008. Dave celled holidays. “It took a hell of a lot of this year; one of its main brands was Carroll was travelling with United Air- Shearings, a coach-holiday operator. Mr lines when he heard another passenger French says the problem for Shearings say that baggage handlers were carelessly was that, when it received customer tossing around guitars. When he arrived deposits, it paid them to hotels where the at his destination, Mr Carroll found his tourists would stay. That created a cash guitar had been damaged. After months squeeze when money had to be repaid. In of fruitless complaints, the musician short, it is all very well to have a good made a video about his experience called reputation as a prompt repayer. But that “United Breaks Guitars”. Within a few won’t help if the firm goes bust. weeks the video had received 5m views The pandemic has been an exercise in on YouTube and United contacted Mr crisis management for thousands of Carroll to apologise and offer restitution. firms. Dealing with angry customers is The airline even pledged to use the only one element. The rule of thumb for video for internal training. But the cor- more normal times, Mr Younger says, is porate culture did not change sufficient- for companies to be clear about what ly. In 2017 United suffered another pub- they are offering and then to hold them- lic-relations disaster when a video selves to their promises. That means, at emerged of security guards dragging a the very least, not breaking guitars. 52 Business The Economist August 8th 2020 Schumpeter Dangerous curves ahead

The trucking industry is in the midst of upheaval—and hype America road-freight revenues are almost $800bn, about the same size as the world’s airline industry. In America and Europe there are 3.5m and about 3m lorry drivers, respectively, making trucking a jobs juggernaut. Yet it is so splintered that it is easy to overlook. China, for instance, has an estimated 8m trucking firms, most of which are one-man shops. America has almost 900,000, 96% of which own fewer than 20 lorries, according to the American Truck- ing Associations (ata). In long-haul especially, this fragmentation comes at a high economic cost. The biggest 25 full-trailer (or “truckload”) freight firms in America, led by companies such as J.B. Hunt, account for less than a tenth of industry revenue. They are the most efficient, pay decent wages and are trundling through the pandemic with tolerable results. But the small fry producing the remaining 90% of revenues are in the slow lane. For about a third of the time they are on the road cargo-less—and drivers make no money. The pandemic is making their fortunes even worse. Change is clearest in the short-haul segment, most recognis- able in the fleets of delivery vehicles operated by logistics giants such as ups, which have benefited from surging demand from locked-down shoppers, and increased profits despite the extra cost of door-to-door deliveries. Digitisation is helping improve ef- ficiency, too. Uber Freight, the ride-hailing giant’s shipping arm, is ife on the road has become a lot tougher since the 1980s, when developing a brokerage app to match carriers with shippers. In LSchumpeter spent a year driving a battered old lorry with sever- China, Full Truck Alliance, a startup backed by SoftBank, a Japa- al tonnes of four-hooved cargo around the western United States. nese technology group, is said to have a similar business model. E- The cab was too cramped to sleep in. The radio only played am. And trucks are on the horizon, albeit bedecked with bubblelike hoopla. sweat would drench his shirt as he swerved down roads like the The wild stockmarket debut of Nikola, a startup that plans to lease “Grapevine”, north of Los Angeles, with the smell of burning brake vehicles powered by hydrogen fuel cells, makes Tesla (which pads in his nose. Yet it was as close to the idyllic, free-wheelin’ life wants to start making a massive “semi” e-truck in Texas) look like a as a young Brit could hope for. boring investment. At some times recently Nikola, which has yet Not so for the genuine American trucker. Until that decade of to produce, let alone sell, a single vehicle, has been worth more deregulatory zeal, truckers were the best-paid members of Ameri- than Fiat Chrysler. At least the histrionics have drawn attention to ca’s working class. Their union, the International Brotherhood of plans by more sober American truck- and engine-makers like pac- Teamsters, was revered and feared. And the romance of the road car and Cummins to manufacture e-vehicles. Amazon has a $5bn was celebrated in 1970s films like “Convoy”. Then came the Motor order with Rivian, a startup, for 100,000 electric vans. Carrier Act of 1980, which swept away restrictions on the number The biggest force of disruption is autonomous driving, which of haulage firms, as well as price controls. Union membership some fear could hit trucking like a neutron bomb, killing jobs that plunged and truckers’ livelihoods took a turn for the worse. Their account for as much as 40% of freight costs. “Driver-assist” tech- sacrifice benefited the American consumer, though. As Steve Vis- nology such as adaptive cruise control, which adjusts a lorry’s celli, a sociologist and author of “The Big Rig”, says, cheaper haul- speed to keep a safe distance from vehicles in front, is already a re- age on the back of lower wages for drivers supported a boom in big- ality. Bob Costello of the ata says that the use of autopilot with a box retailing that has transformed commerce ever since. driver on board could be common within five years. TuSimple, a Today trucking is once again caught in an epochal upheaval startup based in California and China, last month announced a that is also reshaping the retail industry. The main cause is online partnership with Navistar, a truckmaker, to build semi-articulated shopping, which is reducing long-haul delivery of containers from robot trucks by 2024. port to Main Street, and speeding up that of smaller packages from warehouses operated by retailers like Amazon and Walmart in Right lane exits America to consumers’ doorsteps. In addition, the experience of The spectre of platoons of driverless lorries barrelling down high- covid-19 is leading to a rethink of supply chains, which McKinsey, ways is probably some way off. Regulation for self-driving trucks is a consultancy, says may bring manufacturing closer to home and non-existent. The powerful rail industry will fight tooth and nail increase demand for road haulage. And as one of the world’s most against a technology that imperils its future. Truckers, too, will fragmented industries, trucking is under pressure to become raise a stink if they feel they have no prospects. Driverless cabs will leaner, cleaner and more automated. The tech world is abuzz with not be here for decades, says Mr Costello. efforts to disrupt it. Truckers, enjoying a rare moment of acclaim One day they will come, though. The benefits of autonomous for their front-line work in the pandemic, are also on the front line and electric trucking may be too powerful to resist, says John Mur- of forces such as electrification and autonomous driving which, nane of McKinsey. In the meantime expect a further split in the though overloaded with hype, could reshape their business. trucking industry, with the best-capitalised firms in the fast lane This upheaval has only just begun to attract attention, despite and the also-rans headed for the off-ramp. For truckers, even less the industry’s size and the fact almost every product travels by lor- of the romance of the open road will remain. But as journeys short- ry. It often gets short shrift. Few would guess, for instance, that in en, at least they will sleep in the cab less often. 7 Economics brief Competition The Economist August 8th 2020 53

sonable strategies for improving corporate efficiency. They also claimed that in some cases even things which couldn’t be justi- fied that way could safely be left to the mar- ket to sort out without recourse to law. Take “predatory pricing”. Regulators thought that selling goods below cost so as to bankrupt competitors was malfeasance that had to be stopped. The Chicago school argued that it was a poor business strategy which would fail. Even if the predator crushed its competition, it would not re- main a monopoly long enough to recoup its earlier losses. Instead, its high profits would attract new competitors. Perhaps because, in the 1970s, American business had started to look more in need of help than hindrance, such arguments found favour with the American courts. And though the Chicago school’s influence was more limited elsewhere, many juris- dictions, including the European Union, adopted one of Bork’s central ideas: that the sole purpose of competition law should be to protect consumers. It is a view which forbids regulators from considerations of the broad public interest, limiting them to the busting of cartels and the prevention of mergers that create monopolies. Under this “consumer-welfare standard”, compe- tition cases turn on forensic analysis of “upward pricing pressure”—ie, of the de- gree to which a merger or strategy will leave consumers out of pocket. A healthy dose of competition But has this approach led regulators to miss the wood for the trees? In 2016 The From hospitality to hipsterism Economist pointed to America’s high cor- porate profits and the rising market shares enjoyed by big firms as evidence that com- petition across the economy had waned. Later that year economists at the White House released a report making similar ob- In the first of a series on subjects where economists are rethinking the basics, we servations. A version of the trend can also look at arguments against letting businesses grow as large as they would like be found in Europe. Research by the oecd, a onald turner, America’s top trust- ly online. Some scholars go further, argu- club of mostly rich countries, finds that be- Dbuster in the mid-1960s, saw antitrust ing that the Chicago school’s sense of what tween 2000 and 2014 the share of sales ac- law as benefiting from an “inhospitable” is good for consumers is not serving their counted for by the top eight firms in a given tradition: on many matters its default re- broader interests. industry rose by four percentage points in sponse was to say no. Government lawyers The Chicago school, built on the work of Europe and eight percentage points in routinely blocked mergers merely on the Aaron Director, an economist from the North America (see chart on next page). grounds that the resulting company would mid-20th century, reached its zenith in the Many antitrust experts are uncon- be too big. The companies’ counterargu- writing of the legal scholars Robert Bork cerned: industrial concentration, they ar- ment that being bigger would make them and Richard Posner. Its proponents argued gue, does not tell you how competitive the better was rarely entertained by the courts. that many activities which were assumed market for a particular good is. But some In the 1970s the “Chicago school” of to be anti-competitive were entirely rea- economists have blamed falling levels of antitrust law successfully harnessed eco- competition for far-reaching economic nomics to argue for a much more hospita- ills, such as stagnant labour markets and ble approach. Over the following decades In this series growing inequality. In a paper published in America’s regulators became so welcom- 1 Competition and concentration 2019 the late Emmanuel Farhi of Harvard ing that critics painted them as doormats. and François Gourio of the Federal Reserve 2 Setting minimum wages In many industries the largest firms have Bank of Chicago argued that the rising mar- consistently gained market share without 3 Explaining inflation’s absence ket power of big companies was linked to any official concern; the most successful low interest rates and weak investment, 4 The dollar’s role in trade technology companies have grown into factors shaping the whole economy. veritable titans. Many economists study- 5 The importance of culture As in the days of the Chicago school, ing the subject now worry that a lack of other economists see these critiques as ig- 6 Embracing government debt competition is an economic drag, especial- noring the role of efficiency. A recently 1 54 Economics brief The Economist August 8th 2020

2 published paper by David Autor and John more attractive it becomes to those yet to ics and antitrust enforcement in response Van Reenen of mit, David Dorn of the Uni- sign up. A firm that attains critical mass be- to these worries. Adherents of the more versity of Zurich, Lawrence Katz of Harvard comes overwhelmingly dominant: winner radical call themselves “neo-Brandeisians” and Christina Patterson of the University of takes all. after Louis Brandeis, an early-20th-century Chicago argues that globalisation and tech- Does it matter if the winning platforms American Supreme Court justice who nological advances have concentrated eco- dominate the digital economy? In terms of thought the overarching purpose of gov- nomic activity in a small number of “super- consumer welfare it seems, on the face of ernment antitrust action should be to pre- star firms”. Because these firms are more it, a sweet deal: users get stuff which is of vent any one firm from exerting too much productive, the industries which have seen real value to them at a price—zero—to power over the economy. Neo-Brandeis- the most of this concentration have also which no one can object. But on the other ians such as Lina Khan of Columbia Law seen the fastest productivity growth. side of the platforms things look more wor- School and Matt Stoller of the American It is when they are applied to technol- rying. A recent investigation by Britain’s Economic Liberties Project, a think-tank, ogy giants that these arguments get most Competition and Markets Authority found want to broaden the purpose of antitrust heated. In America the Department of Jus- that the cost of digital advertising for firms investigations beyond promoting consum- tice, the Federal Trade Commission, Con- was worth £500 ($650) per household per er welfare. Governments, they argue, gress and many states are investigating year. Were the market less concentrated, should not fear breaking up the tech giants; whether Amazon’s dominant position in those costs might fall—and some of the they should fear leaving them be. In this online shopping, Apple’s immense profit- savings would be passed on to consumers view the companies’ size and power are a ability or the duopoly that Facebook and in the form of lower prices. threat not just to consumers and workers Google enjoy in online advertising can be Another potential worry is that there but to democracy itself. seen as involving the abuse of the giants’ are conflicts of interest in many big-tech market power. Google has been the subject business models, such as when Apple sells Each time I roam... of three separate competition investiga- through its app-store software which com- To its Chicago-school critics, Neo-Brandei- tions by the eu and fined €8.2bn ($9.7bn). petes with its own, or when Amazon col- sianism is “hipster antitrust”, replacing a lects data about the sales of third-party transparent and rigorous methodology Competition in, or competition for? products with which it competes. with an ill-defined set of social goals. It Businesses built on “platforms”, as Ama- Perhaps concentration would be tolera- might disempower technology firms, but it zon, Facebook and Google are, raise partic- ble if the big firms lived in fear of usurpa- would empower regulators. If concentra- ular issues when it comes to competition tion by a hot new entrant. But startup plat- tions of market power should be viewed because they have two separate sets of cus- forms face growing barriers to entry. One is with suspicion, so should concentrations tomers. Amazon deals with both retailers amassing the reams of data which enable of regulatory power: they bring the risk of and consumers, Facebook and Google with firms to tailor their services to individual arbitrary and unaccountable decision- both users and advertisers. In the 2000s users. Another is that in the digital econ- making. In America, its home territory, this Jean Tirole and Jean-Charles Rochet, two omy it is relatively easy for an incumbent debate is predictably partisan: neo-Bran- French economists, laid out an economic to see what it is that users like about what a deisians are listened to only by Democrats. framework for looking at such platform startup offers, provide something similar The second set of ideas for reform is businesses which showed that their opti- and push it out to millions (if not billions) more incremental. It seeks not to abolish mal strategy will often be to provide cheap of existing users. That reduces the incen- the consumer-welfare standard but to re- access to one side of the platform and tive to innovate in the first place. A final interpret it. Carl Shapiro of the University charge steeply on the other. Consumers en- worry is that wealthy incumbents can close of California, Berkeley, has suggested call- joy free Google searching and Facebook so- off the possibility of competition by buying ing it the “protecting competition stan- cialising; advertisers pay through the nose new entrants before they pose a real threat, dard” to make clear that it takes into ac- to reach them as they do so. as when Facebook bought Instagram in count all the harm that anti-competitive Platforms existed before big technology 2012 and WhatsApp in 2014. In the decade practices might do to consumer welfare, firms: television, newspapers and credit to 2019 the five largest technology firms including that which is indirect or diffuse. cards are all platforms of sorts. But the in- made over 400 acquisitions with scant in- Applying this interpretation of the con- ternet has provided vast scale and reach. tervention by competition authorities. sumer-welfare standard to digital plat- Adding users is cheap, and it is often the There are, broadly speaking, two sets of forms means accepting that in some situa- case that the more users a platform has the ideas for reforming competition econom- tions firms will naturally grow large, meaning that at any point in time there will be little “competition in the market”. But Bigger market shares, bigger superstars there can still be “competition for the mar- ket” if a new, better product has a chance to Big firms’ share of total sales*, % Share prices, May 18th 2012=100 disrupt the status quo. That might mean 40 1,500 blocking more of the sort of early acquisi- North America, top eight Amazon tions which snuff out potential competi- 35 EU, top eight 1,200 tors, or reversing the burden of proof in 30 such cases, so that the merging companies 900 have to show that their plans will benefit 25 Microsoft consumers. It also might mean forcing in- 600 EU, top four Facebook cumbents to share some of their data, or at 20 Apple least making it easier for users to switch North America, top four Alphabet 300 easily between platforms. 15 S&P 500 100 This agenda might not do much to satis- fy neo-Brandeisian complaints about the 2000 02 04 06 08 10 12 14 201816142012 political power of tech titans today. But it Sources: OECD and Economist estimates; “Industry concentration in Europe and North America”, could succeed at making life at the top by M. Bajgar, G. Berlingieri, S. Calligaris, C. Criscuolo, J. Timmis; Datastream from Refinitiv *Average of all industries slightly more precarious. 7 Finance & economics The Economist August 8th 2020 55

Also in this section 56 China’s payments duopoly 57 Bracing for bad loans in Europe 58 “Pre-docs” in economics 59 The costs of rosy growth forecasts 60 Free exchange: Change for the dollar — Buttonwood is away

Vaccine economics emerging markets have secured enough to cover less than a third of their citizens. More hard questions gavi, an alliance that funds vaccines for poor countries, has set up covax, a pur- chasing pool for several late-stage vaccine candidates. It promises participants doses of an effective vaccine for up to 20% of their population by the end of 2021, with As scientists race to develop covid-19 vaccines, governments must work out how rich countries paying for their supplies and much to spend on them, and how best to distribute the goods funding a kitty for poor ones. About 80 lowly but surely the economic costs of are distributed fairly. high- and middle-income countries have Sthe covid-19 pandemic are becoming Governments so far have invested more said they want to join. But it remains to be clear. On July 30th America’s statisticians than $10bn in covid-19 vaccines, and made seen how many put money on the table: revealed that the economy shrank by 9.5%, forward purchases of about 4bn doses they must pay for the first 15% of their vac- year on year, in the second quarter. Output (though data on deals are murky). As the cines by the end of the month. in the euro zone fell even farther. Even vaccines may require a course of two doses, Even meeting the commitments they South Korea, which has managed the virus in theory this amount could inoculate the have already made will be a stretch for better than almost any other country, has world’s most vulnerable people. In fact, ef- pharma companies, much less producing not escaped a deep recession. fectiveness is far from assured, so a large enough for the world. Existing manufac- A vaccine would help end the economic share of purchases could turn out to be turing facilities can be repurposed for chaos. Scientists and pharmaceutical com- duds. A typical vaccine in final trials has a some types of jabs. For others, however, panies have stepped up to the task. More 20% chance of failure. Some of the candi- new ones must be built. These can cost than 150 vaccines are being developed date covid-19 vaccines involve novel tech- about half a billion dollars apiece, and typi- worldwide, with six in final, large-scale nologies, so the risk of failure could be cally take three years to get up and running. clinical trials. It took the vaccination effort higher. That explains why rich countries A company normally sets up produc- against hepatitis b—the disease for which are backing several efforts, with deals be- tion once a vaccine wins regulatory ap- the most candidate vaccines were devel- ing signed every few days (see chart 1 on proval. But these are not normal times. To oped—decades to make the progress that next page). speed things up, some firms have started the attempts against covid-19 have made in Despite the scramble in America and mass-producing vaccines that are still in months. The public-health and economic Europe to get to the front of the queue, clinical trials. Companies may have prom- costs of the pandemic are such that, even as countries elsewhere are likely to be under- ised 4bn doses, but some of their vaccines scientists beaver away, policymakers must supplied, and for some time. Japan has ar- may not pass trials and will have to be grapple with two questions: how much to ranged to buy enough for just one dose per poured away. Many experts think supply spend on vaccines, in order to ensure person, according to Goldman Sachs, a will also be constrained by global shortages enough are made, and how to ensure they bank (see chart 2 on next page). On average, of things like vials and syringes. They put a 1 56 Finance & economics The Economist August 8th 2020

Chinese finance Vial statistics 1 Covid-19 vaccines, number of doses ordered (and payment)*, to August 5th 2020 A dynamic duopoly Country/ Number of doses Company organisation

United States 710m doses SHANGHAI ($9.3bn) AstraZeneca Do Alipay and Tenpay misuse their 1.2bn doses ordered dominance in mobile payments? et the users decide who wins the European Union “Lgame, not monopoly and power.” So 700m (>$843m) said Jack Ma in 2014 when Alipay, the slick Sanofi/ payment service he created, came under at- GlaxoSmithKline tack from China’s lumbering state-owned 460m COVAX banks. Six years on, the users have decided, 300m ($750m) Pfizer/BioNTech 250m and Alipay and its rival, Tenpay, known Britain mainly for WeChat Pay, have won. There is Novavax 110m 250m (>$699m) little question that they constitute a duo- Japan 120m (na) Johnson & Johnson 100m poly. Alipay has a 54% share and Tenpay Valneva 60m Brazil 100m (na) Moderna† 39% of the Chinese mobile-payments mar- ket by value, according to Analysys, a re- Sources: Press reports; The Economist *Selected deals, where details have been disclosed †Number of doses not publicly available search firm. And mobile today accounts for more than half of all non-cash retail pay- 2 more realistic estimate of global supply by their bilateral deals with drug companies, ments in China (see chart on next page). the end of next year at nearer 2bn. rather than act in narrow self-interest. Not surprisingly, then, the former up- As that is nowhere near enough to cover There are slim hopes that America, Chi- starts now face questions about their own the world, it is easy to imagine fights break- na or Russia, among others, will allow ex- power. According to Reuters, the central ing out once effective vaccines become ports of a vaccine made on their territory bank accuses them of misusing their domi- available. The experience of past pandem- before enough is available for all of their nance to limit competition. It reported on ics is hardly encouraging on this front. citizens. But vaccine manufacturing and July 31st that the government’s antitrust During the h1n1 (swine flu) pandemic in distribution involves a complicated global committee is considering whether to in- 2009-10 rich countries cornered supplies supply chain of raw ingredients, adjuvants vestigate them, though has yet to make a fi- of the vaccine to fight the disease. Only (chemicals commonly used to boost poten- nal decision. when they had more than they needed did cy), vials and so on. In the worst case, coun- Alipay and Tenpay are sure to feel ag- they offer some of it to poor countries. By tries denied a share of the vaccines could grieved about such scrutiny. In their view, then, the disease had swept across the ban exports of such inputs to the hoarding their path to success was paved not with planet and the pandemic was over. country. Everyone loses. anti-competitive behaviour but with con- Early in the covid-19 pandemic, too, glo- A global free-for-all, then, seems inev- venience and performance. Alipay began bal co-operation quickly broke down. By itable. One way to mitigate this would be to as a service for shoppers on Alibaba, Chi- late April, 80 jurisdictions had restricted spend more. Some economists argue that na’s biggest e-commerce platform. WeChat exports, with governments especially keen governments could do more to hurry along Pay is an outgrowth of WeChat, the coun- to hoard supplies of disinfectants, perso- vaccine manufacture and distribution. try’s main messaging app. They migrated nal protective equipment and thermom- Separate groups of researchers reckon that offline by enabling people to pay in shops eters. Some countries even seized ship- the world needs to invest around $100bn in by scanning qr codes with their phones. ments passing through their territory. order to make several vaccines early and in Seen as safe and reliable, they have Fearful of a repeat of such marauding, sufficient quantities. That would be a ten- earned the trust of merchants and shop- the Coalition for Epidemic Preparedness fold increase in what has been spent. But pers. And as with much in the world of the Innovations, an alliance of charities and set against the output lost and the $7trn in internet, they have benefited from network governments that has funded the early de- stimulus injected into the global economy effects: anyone who wants to make or take velopment of some of the most promising so far, it is peanuts. 7 digital payments has little choice but to use covid-19 vaccines, has organised manufac- Alipay or WeChat, or typically both, be- turing on several continents. So have some cause just about everyone else does. 2 pharma companies. A jamboree of jabs Given this dominance, there is poten- The World Health Organisation (who) Forward purchases of selected covid-19 vaccines tial for misuse. A rough parallel exists in is also trying to avert vaccine politics. It has To August 3rd 2020, doses per person rich countries, where Visa and Mastercard drawn up guidelines for how early supplies are the main platforms for processing card should be distributed in order to save the 43210 payments. These have faced antitrust law- most lives, protect fragile health systems Britain suits in America, Britain and Europe. and hasten the end of the pandemic. The United States* Alipay and Tenpay have acted in some first doses would go to health and social- ways that look anti-competitive, though care workers, and the next batch to the 20% European Union typically by taking aim at each other. With- of people in each country who are most Japan in WeChat, for instance, it is impossible to likely to die from covid-19 if infected. The Emerging markets open hyperlinks for products on Alibaba’s rest would then go to places with the high- (excl. China) main shopping site. And on Alibaba you est risk of outbreaks. covax has signed up China cannot make payments with Tenpay. to these principles, but there is no indica- Sources: Goldman Sachs; *Excludes the option to buy an Yet for the financial system as a whole, extra 500m doses from Pfizer tion that countries would respect them in The Economist Alipay and Tenpay have enhanced compe-1 The Economist August 8th 2020 Finance & economics 57

Banks’ earnings Power couple China, non-cash retail payments, yuan trn Dud light 350 Credit card 300

250 Other mobile 200 Mobile European banks expect fewer bad loans than American peers. Who is right? 150 Tenpay nalysts had expected a blistering there has surged; Coface, a credit insurer, 100 Aearnings season for European banks, expects bankruptcies over the next year or 50 which reported their second-quarter re- so to rise by more than in Europe. A larger Debit card Alipay 0 sults in late July and early August. And portion of American bank lending, includ- painfully hot it was, with profits melting ing consumer and high-yield credit, is risk- 1918171615142013 away as lenders made provisions for future ier and unsecured. European banks prefer Sources: Analysys; People’s Bank of China; The Economist loan losses. On August 3rd hsbc, Europe’s to lend against collateral, for example largest bank by assets, said that its post-tax through mortgages. That implies fewer and 2 tition, not stifled it. As recently as a decade profits had fallen by 88% on the year, to slower defaults, as well as higher recovery ago banking in China was a tortuous busi- $617m. Loss-making lenders included rates, when the cycle turns. ness, requiring heaps of paperwork and Deutsche Bank in Germany, Santander in But the economic outlook is not the full long queues. The digital duo dragged banks Spain and Société Générale in France. explanation. America’s accounting rules into the online era. They also offered users Much like Wall Street titans, albeit on a require its lenders to make provisions easy access to money-market products that smaller scale, European lenders with in- against losses they expect on all loans over allowed them to get better returns than vestment-banking arms saw losses tem- their lifetime. European rivals are required available from banks. pered by a boost in trading revenue. As the to account for lifetime losses only on loans More narrowly, they have improved the coronavirus spread and markets turned vo- that are closest to default (for performing landscape for payments. Their underlying latile, investors rushed to reposition their assets they need to care only about the next technology is simple, requiring just a portfolios. Many governments and compa- 12 months). That makes them mechanical- smartphone. Even the humblest of fruit nies took advantage of central-bank sup- ly more myopic. In March the European vendors can now accept non-cash pay- port and ultra-low interest rates to issue Central Bank (ecb) encouraged more opti- ments. They have also lowered costs. They debt, allowing banks to pocket fat fees. bnp mism by telling them to “avoid excessively charge merchants fees of about 0.6% on Paribas, France’s largest bank, saw trading pro-cyclical assumptions” when making transactions, down from the previous revenue jump by 154%. provisions—in other words, to ensure that norm of roughly 1% on debit-card swipes. Such frenetic activity seems unsustain- lending does not seize up in bad times. Regulators have already put roadblocks able. Indeed, says Stuart Graham of Auton- Cultural differences compound pru- in front of Alipay and Tenpay. The central omous, a research firm, debt issuance ap- dential ones. American businesses, fans of bank limited the size of payments they can pears to have slowed in July. So the fate of transparency, tend to shoulder more pain handle. It required that they hold customer banks will primarily be decided by the ex- upfront. European ones prefer to wait and funds in a zero-interest reserve account, tent to which they are prepared for loan see. Disclosure is not helped by the fact that denting their profitability. And it created a losses. Lenders on either side of the Atlan- fewer banks are listed. Only half of the 84 centralised clearing platform, NetsUnion, tic have taken different approaches to the euro-zone lenders deemed “significant” by which Alipay and Tenpay must use, depriv- matter, with European banks booking the ecb are publicly traded, says Nicolas ing them of exclusive transaction data. smaller provisions, as a share of total Véron of Bruegel, a think-tank. By contrast, Some in the payments industry see an- loans. American banks have generally been all America’s big banks are listed. other possible explanation for an antitrust more cautious in the past, only for Euro- European banks’ smaller provisions investigation. UnionPay, a state-owned pean rivals to play catch-up (see chart). So could also be an admission of weakness. firm, used to be the only show in town for who is right this time? Most entered the crisis with a pre-existing handling card payments in China. As the There is reason to think America’s condition: low profitability. Patrick Hunt market has evolved it has struggled to keep banks may suffer more. Unemployment of Oliver Wyman, a consultancy, says their 1 up with Alipay and Tenpay, and remains a bit player in mobile. Many in UnionPay’s upper ranks, including its departing chief Rise and fall executive, are former central-bank offi- cials. This raises questions about the cen- Stockmarket index, % change Jan 1st-Aug 3rd 2020 Provisions for losses, % of loans tral bank’s impartiality when regulating 4 UnionPay’s competitors. Aggregate Banks 100-10-20-30-40-50 US banks The timing of the mooted investigation 3 is also curious. The report came less than two weeks after Ant Group, which controls S&P 500 Alipay, announced plans for a long-await- 2 ed initial public offering, which could raise European banks as much as $30bn, making it the world’s STOXX Europe 600 1 biggest-ever share sale. Perhaps someone wanted to spoil the party. If nothing else, a 0 probe would serve as a reminder that Chi- FTSE 350 20*1510052000951990 na’s government keeps its tech champions Sources: Datastream from Refinitiv; Autonomous Research *Forecast on a short leash. 7 58 Finance & economics The Economist August 8th 2020

2 return on tangible equity averaged 6% at of the papers they work on, and, most less freedom than that implied. Another the start of the year, half that of their Amer- prized of all, a letter of recommendation to complains of not being given enough time ican peers. That has left them with wafer- a top phd programme. to take classes. thin cushions with which to absorb provi- In part pre-docs show how economic Others tell of a hyper-competitive work sions before they eat into core capital. The research has changed. “Economics has be- environment, fuelled by some professors vast uncertainty about the economy trans- come more like the sciences in terms of ranking pre-docs in their letters of recom- lates into equally uncertain projections for both the methods and the production pro- mendation. More than one tells of being defaults—and may have given banks the cess,” says Raj Chetty of Harvard, who di- asked to game a statistical test until it leeway to book provisions they can bear. rects the Opportunity Insights team, a showed the results the professor wanted, Investors are not fooled. European group with a reputation for working its pre- and of struggling to push back. banks’ share prices have still fallen by as docs hard. When analysing tax records that Fortunately such experiences do not much as those in America, if not more. gave access only to a certain number of seem to be common enough to deter many They have not been helped by the fact that people, he switched away from using part- pre-docs from doing phds. According to a the ecb, in an effort to preserve capital, has time research assistants to a lab-like team, new survey of around 200 pre-docs by Zong forbidden banks to distribute cash to inspired by his own family of scientists. As Huang and Pauline Liang of Stanford and shareholders until at least the end of the bigger data sets, new techniques and gen- Dominic Russel of New York University, year. (In America regulators have banned erous funding made such collaboration only 12% say their current position has share buybacks, but only capped divi- worthwhile, others followed. dulled their interest in further study. dends.) Investors usually covet European Done well, pre-docs enrich both econo- It is less clear, though, that pre-docs are bank shares for their stable dividends, mists and economics. They help produce helping diversify the profession. The evi- which they then funnel into high-growth good research and open up the profession. dence on the question is mixed. Those at technology or pharmaceutical stocks. The Peter Henry of New York University started the top seven institutions who responded ban, says Ronit Ghose of Citigroup, a bank, his programme in 2014 to increase the rep- to the survey were roughly balanced in is “another nail in the coffin”. 7 resentation of minorities. Camille Gard- terms of gender, but just 2% were black. ner, one of his pre-docs, says the experi- Compared with recent phd graduates, they ence has persuaded her to pursue a phd, were less likely to have attended a top-ten Pre-doctoral programmes and taught her skills important for gradu- university. But they were more likely to ate study, such as how to write a good pa- come from a top-ten liberal-arts college— Selection effects per. She thinks of Mr Henry as her mentor, not quite the diversity the profession may “not just my boss”. have been striving for. There are some concerns, though, that Programme managers like Yale’s Rebec- pre-docs leave junior researchers open to ca Toseland are working to alert a diverse exploitation. Academic economists are set of students to their schemes; some say WASHINGTON, DC neither rewarded for good management they review all applications from minor- What it takes to become an academic nor punished for being bullies. Michael ities. Others are considering whether to economist is changing Greenstone of the University of Chicago ar- make sure undergraduates know which abbing a top academic job in America gues that “if you misbehave, it is going to be maths courses to take. But a few, like Mr Nrequires obtaining a phd, preferably hard to get people to work for you”. But aca- Henry, are more sceptical, worrying that from a good university. That, in turn, re- demic economists, as the profession’s pre-docs could come to represent another quires stellar undergraduate marks, the gatekeepers, still hold plenty of power. stage in the credentials arms race. Indeed, right maths courses and a glowing letter of Programmes vary widely. Sometimes it nearly a quarter of pre-docs at top institu- recommendation. Increasingly, pre-doc- is unclear whether pre-docs are students or tions who were surveyed had been full- toral programmes, or pre-docs, are serving employees. One pre-doc tells of tensions time research assistants before starting in as a new rung on the professional ladder. over the timing of holidays. Another says their position. In other words, as pre-docs These schemes, which typically involve they were told they would be collaborating have gained prominence, so too have pre- two years of research at a university, are with professors, but were then given much pre-docs. 7 both the cause and consequence of changes in the profession. Economists have long sought work ex- perience before embarking on a phd, whether in consultancy, the public sector or finance. But over the past decade or so the nature of the experience has changed. A study by Kevin Bryan of the University of Toronto examined the cvs of sought-after economists, and found that none of those applying for academic jobs in 2013-14 had been research assistants before they began their phds, but around a fifth of those grad- uating in 2017-18 had. Formal pre-doc programmes have bur- geoned, especially in elite universities such as Harvard, Stanford, the University of Chicago and Yale. Participants clean and analyse data, write papers and do adminis- trative tasks. In exchange they may receive free or subsidised classes, a salary in the re- gion of $50,000, potential co-authorship The Economist August 8th 2020 Finance & economics 59

The IMF and the World Bank rate. Although oil and mineral discoveries do not boost growth immediately, imf Abandoning hope forecasters consistently predict that they will, according to research in 2017 by James Cust of the World Bank and David Mihalyi of the Natural Resource Governance Insti- tute, a think-tank. The fund’s lack of consistency attracts The Bretton Woods institutions’ economic forecasts for poor countries are criticism, too. Since the coronavirus pan- influential but too optimistic. That can be costly demic began it has revised down growth in ost people, when presented with bad rich countries in 2020 by three percentage Mnews, tend to play it down. Even pro- points more than that in developing ones. fessional economic forecasters are not im- That is odd, argued Justin Sandefur of the mune to the temptations of hope. In Febru- Centre for Global Development, another ary more than 500m people in China were think-tank, and Arvind Subramanian of experiencing some form of lockdown, and Ashoka University, in June. Lockdowns and covid-19 had spread to Italy. Yet the imf said social distancing are at least as severe in that in its base-case forecast global gdp poor countries as in rich ones. But fiscal re- growth this year would be only 0.1percent- sponses have been much weaker, and, as age points lower than previously expected. the fund itself has argued, capital outflows By April it had cut its forecast by 6.2 per- and currency pressure are bigger threats. centage points, to -3%. By June it had sawn Perhaps, the authors speculate, the fund off another 1.9 percentage points. Just a has been rosier about poorer countries this week later an informal poll of about 40 imf time in order to avoid having to provide staff found that two-thirds expected anoth- support. The imf says that China’s success er downward revision in October. in containing the virus explains why its By and large, economic forecasters are a forecasts are more positive for developing sunny bunch. They rarely predict a down- countries and strongly denies lending in- turn. Human nature, incentives and politi- fluences its growth forecasts. cal pressure get in the way. Yet rosy fore- The other big official forecaster in poor casts by the imf and the World Bank can countries is the World Bank. (Private firms, have serious consequences. That is espe- including The Economist’s sister organisa- cially the case in poor countries today, Looking on the bright side tion, the Economist Intelligence Unit, also where covid-19 is ravaging economies, and publish forecasts.) Over the past decade, governments, international organisations the time, reduces growth three years later the bank has produced more accurate fore- and investors are using forecasts to guide by a full percentage point. Governments casts for Africa and the Middle East than their decisions. and firms seem to celebrate good forecasts the fund, but done a worse job for Latin imf and World Bank projections can be by racking up debt. Trouble sets in. America (though differences are small). very influential in some countries. They Predicting growth, and especially Overall, a comparison of the forecasts pub- can affect governments’ spending and bor- downturns, is fiendishly hard. Getting it lished by both institutions every January rowing plans. Investors may lend more right is not helped by forecasters having lit- by Prakash Loungani of the ieo suggests cheaply to countries expected to grow rap- tle incentive to spot clouds on the horizon. that the fund is still better than the bank at idly. And the forecasts determine whether Analysts fear that gloom could become predicting downturns in poor countries. the fund and the bank think a country’s self-fulfilling. Standing out from the crowd Perhaps people should simply expect debt is sustainable, which in turn deter- and wrongly calling a recession damages a less of forecasts, says Mr Obstfeld. They mines whether it qualifies for a bail-out. forecaster’s reputation more than failing to may represent an expectation of the most The fund tends to be optimistic. Its one- predict one along with everyone else. Then likely outcome, but the chance of them be- year-ahead growth forecasts for develop- there is “pushback from governments”, ing bang-on is slim. “You are getting some- ing countries in 1990-2016 were, on aver- says Maurice Obstfeld, who was the fund’s thing that is useful,” he argues, but “in gen- age, 0.42 percentage points above subse- chief economist in 2015-18. eral, you are not getting high accuracy.” 7 quently published gdp figures. Most of the Internal pressure to nudge up forecasts optimism comes from failing to predict in order to justify a lending package is also downturns. Even once a recession has be- “definitely an issue ”, says Mr Obstfeld. A Springing eternal gun, forecasters are still slow to accept the paper by Giang Ho and Paolo Mauro of the Average IMF forecast for GDP in poor countries news (see chart). fund in 2014 found that forecasts were es- in recession years*, % change on a year earlier Such errors can drastically change debt pecially optimistic when countries were 4 dynamics. Take a country expected to have just about to enter a programme. The fund’s 2 gdp ieo public debt of 50% of in 20 years’ time. Independent Evaluation Office ( ) ac- 0 If annual economic growth is 0.5 percent- knowledges that forecasts tend to be rosy -2 age points less than predicted, and nothing in high-profile bail-outs, but notes that else changes, then the debt ratio could in- these are usually corrected at the pro- -4 stead be 90% of gdp. In a recent study Paul gramme’s first review three months later. -6 Forecast made in: Beaudry of the University of British Colum- (By then, of course, the agreement has al- -8 bia and Tim Willems of the imf even link ready been signed.) Apr Oct Apr Oct Actual over-optimism to future fiscal crises. They Some economists at the fund are more year before year of find that overestimating average annual optimistic than others, find Messrs Beau- recession recession growth by a percentage point for the next dry and Willems. In poor countries, less ex- Source: *Emerging markets and developing countries. IEO of the IMF Average of 360 recessions, 1990-2016 three years, as the imf does about 40% of perienced economists tend to be less accu- 60 Finance & economics The Economist August 8th 2020 Free exchange Change for the dollar

The greenback’s status is as secure as American global leadership inate until enshrined in the Bretton Woods economic institutions more than 60 years later, seemed to prove that dominant curren- cies are not easily dislodged. But accumulating evidence suggests a revision of these views may be warranted. In practice, leading currencies often share a reserve role with others. Sterling ruled the roost before the first world war, but still accounted for no more than two-thirds of global currency reserves at the end of the 19th century (German marks and French francs made up most of the rest). Furthermore, the dollar overtook sterling much earlier than once thought. By the early 1920s it already accounted for at least 50% of major economies’ foreign-currency reserves. Reserve-cur- rency status may not be so unassailable after all. Even so, challengers have for decades failed to knock the green- back from its perch. Part of the explanation is surely that America is not as weak relative to its rivals as often assumed. American pol- itics are dysfunctional, but an often-fractious euro area and au- thoritarian China inspire still less confidence. The euro’s mem- bers and China are saddled with their own debt problems and potential crisis points. The euro has faced several existential crises in its short life, and China’s financial system is far more closed and opaque than the rich-world norm. Dollar dominance also reflects factors that conventional eco- t has been an ugly summer for America and the dollar. The nomic analyses sometimes omit: geopolitics. Sterling ruled dur- Igreenback fell by more than 4% against a basket of other major ing a long period of increasing global integration to which Brit- currencies in July, the largest monthly decline in a decade, as the ain—as a financial, industrial and military powerhouse—was value of euros, gold and even bitcoin soared. In a year packed with central. The first world war brought an end to that era, and sterling extreme market movements, the dollar’s wobbles might seem un- soon lost its position. It shared reserve-currency status with the impressive. As they played out against a backdrop of American tur- dollar into the 1940s, but under very different circumstances than moil, though, they have fed fears that a reckoning looms for the prevailed in pre-war times; global trade and cross-border invest- world’s economic hegemon. An abysmal response to the pandem- ment did not return to the levels of 1913 until the final third of the ic, a stuttering economic recovery and soaring debt understand- 20th century. It was not just American economic superiority that ably contribute to concern about America’s economic wherewith- put the dollar at the centre of the post-war order, but its unrivalled al. But if there is reason to question the dollar’s dominance, it is geopolitical might as well, which it used to reforge an integrated not that America is becoming less economically mighty, but that global economy. Work published by Barry Eichengreen of the Uni- the world order it built looks increasingly vulnerable. versity of California, Berkeley, and Arnaud Mehl and Livia Chitu of Reserve-currency status is often cast as a matter of economic the European Central Bank highlights the role of power politics in fundamentals. A reserve-currency issuer should play an outsize currency choice. Analysing reserve holdings before the first world role in global trade, which encourages partners to draw up con- war, the authors find that military alliances influenced the compo- tracts in its currency. A historical role as a global creditor helps to sition of reserves. A pact, they reckon, boosted a currency’s share expand use of the currency and encourage its accumulation in re- in an ally’s reserve holdings by 30 percentage points. serves. A history of monetary stability matters, too, as do deep and open financial markets. America exhibits these attributes less Get the buck out of here than it used to. Its share of global output and trade has fallen, and So the global role of the dollar does not depend on America’s export today China is the world’s leading exporter. America long ago prowess and creditworthiness alone, but is bound up in the geopo- ceased to be a net creditor to the rest of the world—its net interna- litical order it has built. Its greatest threat is not the appeal of the tional investment position is deeply negative. Soaring public debt euro or yuan, but America’s flagging commitment to the alliances and dysfunctional government sow doubt in corners of the finan- and institutions that fostered peace and globalisation for more cial world that the dollar is a smart long-run bet. And whispers, than 70 years. Though still unlikely, a collapse in this order looks suggesting that the day of the dollar’s eclipse by the euro or the ever less far-fetched. Even before the pandemic, President Donald yuan looms, grow louder from time to time. Trump’s economic nationalism had undercut openness and alien- Debates about a changing of the guard are hampered by a dearth ated allies. Covid-19 has further strained global co-operation. The of historical comparisons. The replacement of one currency by an- imf thinks world trade could fall by 12% this year. Supply chains other as the modern world’s monetary bulwark has occurred pre- that sprawl across national borders may retreat amid concerns cisely once—when the dollar overtook sterling. That makes identi- about economic conflict and national security. America and China fying its critical causal factors nearly impossible. Economists once seem to be sliding into a new cold war. thought that network effects made reserve-currency status a win- Though America’s economic role in the world has diminished a ner-take-all affair. It is more attractive to conduct trade or hold little, it is still exceptional. An American-led reconstruction of glo- savings in a currency that is widely used by others, giving reserve bal trade could secure the dollar’s dominance for years to come. A currencies an edge over challengers. That America’s output over- more fractious and hostile world, instead, could spell the end of took Britain’s as early as 1880, while the dollar did not clearly dom- the dollar’s privileged position—and of much else besides. 7 Property 61 subscriber exclusive Inside The Economist

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Artificial intelligence by trial and error from millions of attempts at text prediction, a computer can crunch Bit-lit through the laborious task of mapping out those statistical relationships. The more text to which an algorithm can be exposed, and the more complex you can make the algorithm, the better it per- forms. And what sets gpt-3 apart is its un- precedented scale. The model that under- A new language-generating ai can be eerily human-like—for better and for worse pins gpt-3 boasts 175bn parameters, each of The sec said, “Musk,/your tweets are a The software is built on the idea of a which can be individually tweaked—an or- blight./They really could cost you your “language model”. This aims to represent a der of magnitude larger than any of its pre- job,/if you don’t stop/all this tweeting language statistically, mapping the proba- decessors. It was trained on the biggest set at night.”/…Then Musk cried, “Why?/The bility with which words follow other of text ever amassed, a mixture of books, tweets I wrote are not mean,/I don’t use all- words—for instance, how often “red” is fol- Wikipedia and Common Crawl, a set of bil- caps/and I’m sure that my tweets are clean.”/ “But your tweets can move markets/and lowed by “rose”. The same sort of analysis lions of pages of text scraped from every that’s why we’re sore./You may be a genius/ can be performed on sentences, or even en- corner of the internet. and a billionaire,/but that doesn’t give you tire paragraphs. Such a model can then be the right to be a bore!” given a prompt—“a poem about red roses Statistically speaking in the style of Sylvia Plath”, say—and it will The results can be impressive. In mid-July he preceding lines—describing Tesla dig through its set of statistical relation- Openai gave an early version of the soft- Tand SpaceX founder Elon Musk’s run- ships to come up with some text that ware to selected individuals, to allow them ins with the Securities and Exchange Com- matches the description. to explore what it could do. Arram Sabeti, mission, an American financial regula- Actually building such a language mod- an artist, demonstrated gpt-3’s ability to tor—are not the product of some aspiring el, though, is a big job. This is where ai—or write short stories, including a hard-boiled 21st-century Dr Seuss. They come from a machine learning, a particular subfield of detective story starring Harry Potter (“Har- poem written by a computer running a ai—comes in. By trawling through enor- ry Potter, in ratty tweed suit, unpressed piece of software called Generative Pre- mous volumes of written text, and learning shirt and unshined shoes, sits behind the Trained Transformer 3. gpt-3, as it is more desk looking haggard, rumpled and embit- commonly known, was developed by tered…”), comedy sketches, and even poet- Openai, an artificial-intelligence (ai) lab- Also in this section ry (including the poem with which this ar- oratory based in San Francisco, and which ticle opens, titled “Elon Musk by Dr Seuss”). 64 More efficient covid-19 testing Mr Musk helped found. It represents the Elliot Turner, an ai researcher and entre- latest advance in one of the most studied 65 Ocean-going insects preneur, demonstrated how the model areas of ai: giving computers the ability to could be used to translate rude messages 65 Building a better barbecue generate sophisticated, human-like text. into politer ones, something that might be 1 64 Science & technology The Economist August 8th 2020

2 useful in many of the more bad-tempered America carries out roughly 800,000 corners of the internet. Human readers Look who’s writing tests a day. A study published by Harvard struggled to distinguish between news ar- People identifying AI-generated news articles, % University, however, reckons that the ticles written by the machine and those GPT-3 text generator, with varying number of parameters country would need to carry out 5m a day in written by people (see chart). 80 order to reopen safely. Quest Diagnostics Given that Openai wants eventually to and LabCorp, two of the largest test-makers gpt sell -3, these results are promising. But 70 in America, have reported that over- the program is not perfect. Sometimes it ↓ Better at whelmed laboratories mean that results seems to regurgitate snippets of memo- fooling people 60 are taking a week, sometimes two, to come rised text rather than generating fresh text through, instead of a couple of days. from scratch. More fundamentally, statis- Equivalent to guessing at random 50 A technique developed in the 1940s by tical word-matching is not a substitute for Robert Dorfman, an American economist, a coherent understanding of the world. 100m 1bn 10bn 100bn may help resolve the problem. Dorfman gpt-3 often generates grammatically cor- Number of parameters, log scale proposed it as a way of testing soldiers en rect text that is nonetheless unmoored Largest* AI text generators masse for syphilis. It is, in fact, quite obvi- from reality, claiming, for instance, that “it By release date ous: pool together samples taken from sev- takes two rainbows to jump from Hawaii to GPT-3 eral individuals and test the pool. If it is Jun Feb Aug Feb 2020 May 17”. “It doesn’t have any internal model of Feb Oct Jan 2019 clear, none of its members is infected, and the world—or any world—and so it can’t do 2018 only one test has been used. Only if the reasoning that requires such a model,” says 1bn 10bn 100bn pool comes up positive is individual test- Melanie Mitchell, a computer scientist at Sources: HuggingFace; Microsoft; OpenAI *Most parameters ing required. the Santa Fe Institute. Pool-sampling has been used in Ameri- Getting the model to answer questions Here, at least, little progress seems to ca, Germany and Israel and has been intro- is a good way to dispel the smoke and mir- have been made. gpt-3 was released with- duced into China, India, Pakistan and Sin- rors and lay bare its lack of understanding. out a filter, though it seemed just as ready gapore. Sandra Ciesek at the University Michael Nielsen, a researcher with a back- to reproduce unpleasant prejudices as its Hospital, Frankfurt, in Germany, says that ground in both ai and quantum comput- predecessor (Openai added a filter to the if it were to do only individual testing, her ing, posted a conversation with gpt-3 in newer model after that fact became obvi- hospital could process about 2,000 people which the program confidently asserted ous). It is unclear exactly how much quality a week. Now it can test ten times that num- the answer to an important open question control Openai applied to gpt-3’s training ber, which means tests can be given to ev- to do with the potential power of quantum data, but the huge quantity of text involved ery patient that is admitted, for any reason. computers. When Dr Nielsen pressed it to would have made any attempt daunting. Testing pooled samples has its difficul- explain its apparent breakthrough, things It will only get harder in future. Lan- ties. For now, samples must be labelled by got worse. With no real understanding of guage has overtaken vision as the branch of hand, which is slow. There are also con- what it was being asked to do, gpt-3 retreat- ai with the biggest appetite for data and cerns about loss of sensitivity that may re- ed into generic evasiveness, repeating four computing power, and the returns to scale sult from dilution if too many samples are times the stock phrase “I’m sorry, but I show no signs of slowing. gpt-3 may well mixed. A group of researchers from Tech- don’t have time to explain the underlying be dethroned by an even more monstrous- nion, Israel’s oldest university, and Ram- reason why not.” ly complex and data-hungry model before bam Health Care Campus, in Haifa, have There are also things that gpt-3 has long. As the real Dr Seuss once said: “The said that up to 64 samples could be mixed, learned from the internet that Openai more that you read, the more things you but they acknowledge that a pool this large must wish it had not. Prompts such as will know.” That lesson, it seems, applies to would be difficult to manage and could “black”, “Jew”, “woman” and “gay” often machines as well as toddlers. 7 have a higher risk of a false-negative result. generate racism, anti-Semitism, misogyny Peter Iwen, director of Nebraska’s Pub- and homophobia. That, too, is down to lic Health Laboratory, is using tests with gpt-3’s statistical approach, and its funda- Covid-19 testing high sensitivity, and in pools of no more mental lack of understanding. Having been than five samples. “No test is 100%,” he trained partly on text scraped from the in- Dive in says. “We feel very confident we can pick ternet, it has noted that words like “wom- up at least 97% or better.” His was one of the an” are often associated with misogynistic first laboratories in America to use pool- writing, and will mindlessly reproduce sampling, after getting permission from that correlation when asked. Nebraska’s governor in March. On July 18th This problem is a hot topic in ai re- America’s Food and Drug Administration Testing laboratories are overwhelmed. search. Facial-recognition systems, for in- issued its first emergency authorisation for Pool-sampling may be the solution stance, notoriously do better with white the whole country to follow suit. faces than black ones, since white faces are ince the beginning of the coronavirus Besides requiring high sensitivity, pool- more common in their training sets. ai re- Spandemic, many places have struggled sampling works best when the incidence searchers are trying to tackle the problem. with overwhelmed laboratories and a rate is low. The more likely a positive re- Last year ibm released a set of training im- shortage of testing kits. In March, Germany sult, the less efficient it is—since positive ages that contained a more diverse mix of was carrying out half the tests it needed. In batches then have to be tested individually. faces. Openai itself was founded to exam- Britain testing was limited until May to It is best used, therefore, on the asymptom- ine ways to mitigate the risk posed by ai health-care workers, hospital patients and atic, since those with symptoms are more systems, which makes gpt-3’s lapses all the key workers. In America shortages of va- likely to test positive. But at the beginnings more noteworthy. gpt-2, its predecessor, rious components required for testing and ends of outbreaks, when most candi- was released in 2019 with a filter that tried have been a cause of constant frustration. dates for testing are, indeed, people with- to disguise the problem of regurgitated big- Now, as countries emerge from their lock- out symptoms, it looks like a valuable otry by limiting the model’s ability to talk downs and case numbers begin to rise, the time- and money-saving tool that might about sensitive subjects. strain is being felt once more. become standard procedure. 7 The Economist August 8th 2020 Science & technology 65

Entomology Cookery Parasites under A good grilling pressure Indoor barbecues are popular but polluting. A fix may be on the way s they reopen after lockdown, nitrogen oxides, carbon monoxide and An exception to the rule that there are many restaurants are firing up their particulate matter, they also discovered no marine insects A barbecues. Diners appreciate food grilled polycyclic aromatic hydrocarbons. These nsects dominate dry land. About 1m over glowing charcoal embers, but the cancer-causing chemicals are mainly Ispecies have been described, more than neighbours often do not. Pollution levels produced by the incomplete combustion twice as many as all other multicellular an- near restaurants can be notably higher of fats and oil-based marinades. imal species, terrestrial and marine, put to- than average, largely because of emis- The researchers estimated that if their gether. Several times that number are reck- sions from kitchens. With the increasing half-a-square-metre grill was used for oned to await discovery. The oceans, popularity of indoor barbecuing, it is a nine hours a day, it would release be- though, are mostly insect-free. A few skate problem that is set to get worse. tween 400 and 500 kilograms of fine and over the surface, but none dive willingly Faced with complaints from residents ultrafine particulate matter into the air, below the waves. about fumes and lingering smells, the along with 1.5 tonnes of hydrocarbons, At least, that was the consensus until re- German Environment Agency asked every year. With many restaurants using cently. But Soledad Leonardi at conicet- Mohammad Aleysa, an expert in com- 2.5-square-metre grills 16 hours a day, the cenpat in Argentina and Claudio Lazzari at bustion technology at the Fraunhofer level of pollution from most commercial the University of Tours, in France, have Institute for Building Physics in Stutt- operations would be much higher. found an exception: the 13 species of lice gart, to investigate. The results of his The researchers are investigating that latch onto seals. That seals have lice is experiments were so shocking they which extraction systems best protect not news. But Dr Leonardi and Dr Lazzari drove Dr Aleysa and his research team to neighbours and restaurant employees. have shown that, contrary to previous be- invent a cleaner system for indoor char- Taller chimneys are one option. But Dr lief, these passengers do not abandon ship, coal grilling. Aleysa suspects they would just shift the as it were, and remain on dry land when the The researchers tested a commercial pollution elsewhere. The results of these seals go swimming. Instead, they cling on grill, complete with the sort of multi- tests will be published next year. and brave not only the hostile, saline stage filtering system used in many— Meanwhile, Dr Aleysa’s team have chemistry of seawater, but also the tremen- though by no means all—restaurants. come up with their own solution: a new dous pressures imposed when their hosts Apart from typical pollutants such as kind of grill, which they reckon can cut dive to depths of several hundred metres in pollutants by 90%. Dr Aleysa is reluctant search of prey. to go into specifics. But the basic idea is Dr Leonardi and Dr Lazzari disposed of that before being vented to the outside, the salinity question in 2014 by the simple the fumes are sucked back down through procedure of dunking seal lice in seawater the embers and into a “combustion for prolonged periods, and discovering zone”, where hydrocarbons and odour that they did not die. Now, as they report in compounds are fully burnt. That lessens the Journal of Experimental Biology, they the need for expensive extraction sys- have dealt with the question of pressure. tems and fiddly filters that must be regu- To do so, they collected representatives larly cleaned. of the louse species that dwells upon the An industrial partner is keen to put deepest-diving pinniped of them all, the the grill into production. It could go on South Atlantic elephant seal, which can sale by the middle of next year. It will dive as far as 2,000 metres. Using tweezers, cost a bit more than a standard grill, says they prised 75 lice from the flippers of 15 Dr Aleysa. But he believes that would be weaned seal pups that were sitting by offset by lower maintenance costs. Better themselves on the beach. They then put air quality around restaurants would be their trophies into a bronze compression welcome. But the big test will be whether chamber, filled with salt water, and ex- chefs believe the new grill can produce posed the insects to pressures ranging All of the flavour; none of the fumes that same barbecue flavour. from a mild 30kg/cm2 (much like swim- ming 300 metres below the surface) to 200kg/cm2 (the full two kilometres). whopping 450kg/cm2 for several minutes face to breathe until they evolved gills. But That 69 of the lice survived this treat- before the system could be shut down. The some freshwater insects (dragonfly ment suggests that, far from abandoning bug survived the ordeal intact. nymphs, for example) have gills, so that their hosts when they go for a swim (which Assuming lice are typical of the wider does not seem an unimaginable step. Pos- always sounded a slightly desperate ap- class of insects, it seems that neither chem- sibly, the explanation is that all the oceanic proach, given that it meant surviving on istry nor pressure prevent insect colonisa- niches which insects might inhabit are al- the beach until another host came along), tion of the oceans. As parasites, lice of all ready taken by their close relatives the the lice almost certainly stay on board for sorts lead fairly pampered lives compared crustaceans. But some crustaceans (woo- the ride. Indeed, an accidental extension of with their free-living insect cousins. Per- dlice and coconut crabs, for example) have the experiment caused by an equipment haps that is the difference. Or maybe respi- managed the journey in the opposite direc- malfunction suggests 200kg/cm2 is pea- ration is the obstacle—for insects, like tion, in the face of insect competition. So nuts for an elephant-seal louse. The mal- seals, are air-breathing creatures, and what is actually keeping free-living insects function caused one louse to suffer a would need, as seals do, to come to the sur- out of the sea remains a mystery. 7 66 Books & arts The Economist August 8th 2020

Museums and restitution time had come for a “new relational ethics” in the discussion about the return of Afri- Legacies of violence ca’s cultural heritage. Since then, the Black Lives Matter and Rhodes Must Fall move- ments have only made these curators more determined. “Conversations about monu- ments outside are being applied to monu- ments inside,” says Dan Hicks, who over- The battle lines between retainers and returners are being redrawn from inside sees world archaeology at Oxford’s museums by a new generation of activist curators treasure-laden Pitt Rivers Museum. “Espe- n june mwazulu diyabanza marched out about the colonial past of Western mu- cially where they have a common history in Iinto the Musée du Quai Branly in Paris seums. Many of them became curators in terms of racism.” with four friends. “I’ve come to recover the early 2000s when the idea of institu- Some of the most eloquent activist cu- goods that were stolen from Africa,” he tions as “world museums”, where visitors rators include Nanette Snoep, a Dutch an- said, seizing a funerary statue from South could compare cultures from all over the thropologist who runs the ethnological Sudan. With 70,000 objects, the Quai globe, was fashionable. But underpinning collections in Cologne; Chip Colwell, until Branly has France’s biggest stash of African this viewpoint, one Western museum di- recently a curator of Native American cul- artefacts. Three years ago President Em- rector says, was a selfish attitude of “what’s ture at the Denver Museum of Nature and manuel Macron promised they would start mine is mine and what’s yours is mine.” Science; and Wayne Modest, the head of to be returned. “I cannot accept that a large These curators were emboldened by the the Research Centre for Material Culture in share of several African countries’ cultural report Mr Macron commissioned soon Leiden, whose research focuses on slavery heritage be kept in France,” he said during a after his return from west Africa, which in the Caribbean. Mr Hicks may be about to speech in Burkina Faso. was published in 2018. In it, Felwine Sarr, a become the best-known among them. Yet progress has been slow; Mr Diya- Senegalese economist, and Bénédicte Sa- After working for nearly a decade as a banza and his associates have lost pa- voy, a French art historian, argued that the digger on archaeological sites, Mr Hicks tience. “We have the right to remove what went to Oxford University in 1994 to read belongs to us because it’s our patrimony,” archaeology and anthropology. For his Also in this section the activist announced on YouTube, “and postgraduate work, he transferred to Bris- we’re going to take it home.” Instead, the 67 Johnson: Donald Trump’s language tol, where he learned about the city’s role in friends were arrested, charged with theft the transatlantic slave trade—a past that 68 Climate change in Iceland and are awaiting trial. was dragged into the present when protes- Away from the spotlight, another group 69 A tale of class and privilege ters against racism toppled a statue of Ed- is also trying to sharpen the debate on res- ward Colston, a profiteer from that trade, in Home Entertainment titution, this time from the inside. In June. Fieldwork in the Caribbean for his 69 Saxophone dreams America and Europe curators are speaking phd pitched him deeper into debates about 1 The Economist August 8th 2020 Books & arts 67

2 the history and legacy of empire. nomical with the truth, Mr Hicks extended ebony in exchange for metal coinage, In 2007 Mr Hicks joined the Pitt Rivers his research. He joined the Benin Dialogue blades and guns. Britain was determined to Museum. His first task was to study its col- Group, a salon of European museums and seize control of this trade. When it learned lection, a mishmash of 500,000 objects. By authorities in Benin City, but felt their that a small party approaching Edo, the 2015 Mr Hicks had a good idea where most ideas were too timid. In November Mr capital of the kingdom of Benin, in January of the items came from, but a social-media Hicks will publish his manifesto, “The 1897 had been attacked, and seven British post by Rhodes Must Fall made him recon- Brutish Museums: The Benin Bronzes, Co- delegates killed, it quickly retaliated with a sider a wooden display case containing lonial Violence and Cultural Restitution” punitive expedition. Over 5,000 men from “Court Art of Benin”. The items had been (Pluto Press). Using military and trade re- the British Royal Marines and the Niger “brought” to Britain, the label said, after a cords, it shows how closely the Benin Coast Protectorate, armed with 38 Maxim military skirmish. The tweet was pointed: Bronzes, brutal expansionism and muse- machineguns and 2m rounds of ammuni- “The Pitt Rivers Museum is one of the most ums are linked. tion, razed the oba’s palace and the city, but violent spaces in Oxford #BeninBronzes”. By the late 1800s the Oba of Benin over- not before they had packed up its vast col- Knowing that object labels can be eco- saw an empire that sold slaves, ivory and lection of ivory and brass objects. 1 Johnson The Greatest Phrases!

Donald Trump’s linguistic quirks reveal the salesmanship that has made his career veryone knows how to do a Donald about? His language constantly indicates trast, is to lean into them. Take a recent ETrump impersonation. In speech, self-belief. Consider Mr Trump’s predeces- interview with Fox News, in which he adopt his raspy timbre, bellowing vol- sor. Barack Obama was known for long talked about governors’ differing atti- ume and start-stop rhythm. In writing, pauses, often filled with a languid “uh…” tudes towards masks. Some are keener throw in “bigly”, capitalise Emotional He gives the impression of a man thinking than others about requiring people to Noun Phrases and end everything with hard about what to say next. But Mr Trump wear them to slow the spread of the an exclamation mark. Such quirks of rarely hesitates and hardly ever says “um” coronavirus. Or, as Mr Trump put it, enunciation and spelling make Mr or “uh”. When he needs to plan his next “they’re more mask into”. Trump easy to mimic, but they do not sentence—as everyone must—he often What is remarkable is not the mis- easily explain his political success. The buys time by repeating himself. This rein- take. It is easy for anyone to go down a way he constructs sentences, however, forces the impression that he is supremely syntactic blind alley. Many people will does offer some insight into how he confident and that what he’s saying is say something like “they’re more mask” captured the presidency. self-evident. and then realise there is nowhere to go. Underpinning Mr Trump’s distinctive Perhaps the most striking element of The sentence, in linguists’ terms, re- language is an extreme confidence in his Mr Trump’s uncompromising belief in his quires “repair”, which usually involves own knowledge. Like Steve Jobs—who sales technique can be glimpsed in an backtracking. Unless, that is, you are Mr inspired his colleagues at Apple by mak- unusual place: his mistakes. Mr Trump is Trump, in which case you confidently ing the impossible seem possible—Mr often presented as a linguistic klutz, say- intone “into” and move on, giving no Trump creates his own “reality distortion ing things that make so little sense that his hint of trouble. field”. One of his signature tropes is “not detractors present them as proof of major This refusal to concede blunders a lot of people know…” He has introduced cognitive decline. shows up in more serious ways, of the complicated nature of health care, or All people make some slips and stum- course, such as the president’s unwill- the fact that Abraham Lincoln was the bles when they speak: not just those ingness to take responsibility for his first Republican president, as truths that known for them (say, George W. Bush) but administration’s missteps during the are familiar only to a few. A related those known for eloquence (Mr Obama, for pandemic. It also helps explain two sound-bite is “nobody knows more example). Mr Trump regularly makes mysteries. The first is the odd disjunct about...than I do”. The fields of expertise errors but his signature quality, by con- between words that seem nonsensical on Mr Trump has touted this way include the page and a stage presence that enrap- campaign finance, technology, poli- tures audiences—it is Mr Trump’s as- ticians, taxes, debt, infrastructure, the sertive persona that convinces more than environment and the economy. his words. His critics have often attributed this The second is how this works on his to narcissism, but a complementary fans. In a recent survey conducted by explanation is that it is also one of his Pew, Americans were asked to rank Mr strengths—salesmanship. In Mr Trump’s Trump and Joe Biden, the presumptive framing, he is in possession of rare infor- Democratic nominee, on a number of mation. He is therefore able to cut a characteristics. The trait for which Amer- customer a special deal “not a lot of icans give Mr Trump the highest mark is people know” about. Should you be telling. Despite a notably light schedule tempted to take your business to a com- and a stated disdain for exercise, the petitor, he will remind you that “nobody president’s incessant speaking style is knows more about” what is on offer than almost certainly the reason he received a he does. good score on one quality in particular: And how does he convince listeners 56% of voters, and 93% of his supporters, he really does know what he’s talking describe him as “energetic”. 68 Books & arts The Economist August 8th 2020

2 The small trading party was bait, Mr vestment create some real binding connec- Along with the date, the memorial carries Hicks believes, a means to justify the dis- tive tissue between academics, activists, the words “415ppm CO2”: last summer, at- memberment of the Benin empire. British artists, civil-society actors and govern- mospheric carbon dioxide was measured soldiers seized and sold over 5,000 bronze mental actors,” says Patrick Gaspard, presi- at 415 parts per million, higher than at any objects (no one is quite sure precisely how dent of the osf. point since humans have lived on Earth. many). They are now dispersed among There are still hearts and minds to win The text was written by Andri Snaer more than 160 institutions, including the over within institutions. In 2019 Mr Hicks Magnason, an Icelandic author. As he notes British Museum which, with around 900 launched #BeninDisplays, a Twitter cam- in his haunting new book, “On Time and pieces, has the single biggest hoard. There paign which urges museums with Benin Water”, the amount of carbon dioxide in are also many private collectors, some of collections to provide honest contextual the Earth’s atmosphere has soared at them descendants of soldiers who took information. He hopes that the efforts of shocking speed. At the beginning of the In- part in the sacking. curators, as well as activists, will cause a dustrial Revolution, the ratio was about “To the people of Benin and to Nigerians reckoning over restitution that many be- 280ppm; by 1958 it stood at 315ppm. It is generally the Benin Bronzes represent a lieve should have happened long ago. 7 now rising by about two to three parts per great artistic and spiritual loss,” says Ben million every year. Okri, a Nigerian poet and novelist. They The author’s aim is to give readers a “are a constant reminder of the Western Climate change proper sense of geological time, so that disrespect fortheir traditionsandtheir his- they grasp, at a visceral level, how human tory.” Museums that fail to acknowledge A glacier’s pace activity is damaging the planet. He calls the this loss, and the destruction associated current transformation “mythological”, af- with it, collude in that violence, Mr Hicks fecting “the roots of everything we think, argues. “The arrival of loot into the hands choose, produce and believe. It affects of Western curators, its continued display everyone we know, everyone we love.” in our museums and its hiding away in These high-speed changes, including private collections, was not some art-his- the rise of the world’s waters, will alter life On Time and Water. By Andri Snaer torical incident,” he says, “but an enduring irrevocably within a more familiar time Magnason. Translated by Lytton Smith. brutality that is refreshed every day that a frame: “All this will happen during the life- Serpent’s Tail; 352 pages; £16.99. To be museum...opens its doors.” time of a child who is born today and lives published in America by Open Letter in The title of his book, “The Brutish Muse- to be my grandmother’s age, 95.” March 2021; $26 ums”, is spelled out in the same font that There are plenty of books about the cli- the British Museum uses, and the cover’s n august 2019 an extraordinary plaque mate crisis. But Mr Andri Snaer Magna- hue matches the museum’s stone-clad Iwas unveiled at Borgarfjordur, in western son’s perspective on his country’s environ- walls. It is a clear challenge to the 267-year- Iceland. It commemorates Okjökull, the ment is unique and compelling. His earlier old institution, which mostly refuses to first of the country’s glaciers to be com- book, “Dreamland: A Self-Help Manual for hand back artworks to the countries that pletely lost to climate change. Okjökull was a Frightened Nation”, was a hymn to Ice- produced them. “I think it’s misleading to declared “dead” in 2014, when it was no land’s highlands and a critique of the gov- call the British Museum the brutish muse- longer thick enough to flow across the ernment’s decision to build dams to pro- um,” says Hartwig Fischer, its director, who landscape, as it had done for centuries. vide power for aluminium smelting. Now has not read the book. “The museum is en- Framed as “A letter to the future”, the he traces his family’s links to the land- gaged with the partners in Benin City in a plaque reads (in Icelandic and English): scape, notably those of his grandparents long-term, comprehensive collaboration In the next 200 years all our glaciers are ex- Hulda and Arni. They were early stalwarts that aims at a sustainable development of pected to follow the same path. This monu- of the Icelandic Glaciological Society, and cultural heritage.” ment is to acknowledge that we know what spent their honeymoon in 1956 investigat- The royal court in Benin City plans to is happening and what needs to be done. ing the frozen world of Vatnajökull, an ice build a museum of its own, though work Only you know if we did it. cap of 8,000 square kilometres—for now, has not begun and it has yet to make a for- at least—which was almost entirely unex- mal request to the Pitt Rivers or the British plored in the mid-20th century. In old age Museum. “But how many times do they Hulda recalls the indescribable smell of the really have to ask?” Mr Hicks says. “We glacier. “When you’re up on Vatnajökull,” shouldn’t have anything in that’s nicked. she tells her grandson, “everything disap- It’s as simple as that.” Last month Oxford pears; you forget everything. An infinite University, which oversees the Pitt Rivers, vastness. An absolute dream.” published its formal procedures for deal- “On Time and Water” is part family ing with restitution claims for objects tak- memoir, part scientific analysis, part med- en under duress. itation on subjects as wide-ranging as the Beyond his own museum, Mr Hicks has “Poetic Edda”—Iceland’s medieval literary joined forces with Ms Savoy, the co-author treasury—and the role of the Dalai Lama in of the French report, on a £700,000 21st-century climate politics. The author ($915,000) research project into the origins tries to understand, and tries to make the of collections in Britain and Germany. The reader understand, why the climate crisis Open Society Foundations (osf) has also is not widely perceived as a distinct, trans- pledged $15m to help African organisations formative event in the manner of, say, the reclaim artefacts. Using $1m of that grant, fall of the Berlin Wall or the attacks of Sep- Mr Hicks is establishing a museum net- tember 11th 2001. The fundamental pro- work called Action for Restitution to Afri- blem, as this book elucidates, is time. Cli- ca, working with curators in Europe as well mate change is a disaster in slow motion, as in Egypt, Ghana and South Africa. “We and yet “slow” is a great deal faster than understood...that we could with our in- A slippery slope many people seem able to comprehend. 7 The Economist August 8th 2020 Books & arts 69

As well as time for practice, the pan- New American fiction home entertainment demic has bestowed another bonanza: teachers of all sorts of instruments. For in- The girl next door stance, Chris Caldwell is a British saxo- phonist of the highest calibre, a member of the world-class Delta Saxophone Quartet and in normal times in demand from Lon- The Party Upstairs. By Lee Conell. don to Pyongyang. As with so many free- Penguin; 320 pages; $26 lance performers, these months have been brutal. But he now has time for lessons efore the pandemic pushed mil- Saxophone dreams beamed anywhere via Zoom. Blennials to seek shelter with their They are a revelation. Teacher and stu- parents, student debt, wage stagnation In the woodshed dent are going back to first principles: turn- and unaffordable housing had already ing air into breath into sound. A saxophone driven many in the “boomerang” gener- is a sinuously complex bundle of harmonic ation home. For Ruby, one of the main compromises—intonation varies not just characters in Lee Conell’s debut novel, in different octaves, but from one note to being part of that trend is humiliating. the next. Think not about taming the in- The benefits of learning an instrument Having graduated from college after the strument, Mr Caldwell urges, but rather of in lockdown financial crisis of 2008, Ruby tells her living with the wilder acoustics that em- mother and father: “It turns out you hen this correspondent formed a body the saxophone sound. Amateurs may birthed a living, breathing think-piece. Wband in his early 20s with four other aim to reach the high notes of a soprano sax The failure to launch millennial blah- jazz maniacs, little did its members think it by belting them out. The approach, Mr dee-blah.” would still be going decades later. But then Caldwell says, should be more like “walk- “The Party Upstairs” takes place over Night In Tunisia’s business model worked ing on eggshells”. the course of a single day, not long after impeccably until the pandemic. Rather Happily, today’s music students are also Ruby’s return to the basement apart- than charge money, the band bribed listen- locked down with history’s masters. Every ment on Manhattan’s Upper West Side ers with food and drink. Alas, that ap- jazz great learned from those who went be- where she grew up. Her mother Debra is proach, now defunct, made this saxophon- fore, painstakingly copying solos from re- a librarian; Martin, her father, is the ist lazy. His sound lacks control, cords—probably the most critical part of building superintendent and the nov- squawking involuntarily like a duck being “woodshedding”, that is, practising by el’s other focus. In alternating chapters, taken to the plucking shed. Fingers refuse yourself. How much easier, technically, is father and daughter reckon with their the brain’s bidding. Ears cannot tell the the task today. Spotify provides a bound- past and present interactions with the phrygian mode from the aeolian. less library of recordings. Transcription building’s wealthy tenants. Recording himself on a smartphone apps let you slow down solos to commit ev- Martin has recently taken up med- brought a brutal reckoning: intonation and ery scoop and grace note to memory. itating and bird-watching in an attempt technique were woeful. But then a strange Other programmes provide a backing to lower his blood pressure and anxiety. thing happened—instead of dismay came band to help you learn the “changes”—ie, Being a super means accommodating mounting anticipation. Improving your the chord progressions in jazz tunes. Char- the tenants (and their complaints) playing can be a more pleasant prospect for lie Parker said that the secret to improvisa- while scheduling maintenance work. an adult than for a young music student tion was to learn the changes and then for- The tasks haven’t changed much in hectored by tiger parents. You are not aim- get them. To judge by this student’s Martin’s 25 years on the job, but the ing for the sky, yet gratifying progress can progress, Night In Tunisia should not ditch building has, and the fancier it has be swift. Even a few minutes’ focus on a its business model yet. But his homebound become, the wider the gap between him study brings audible improvement. musical journey is its own reward. 7 and the residents. “And every year,” he observes, “the tenants behaved worse, it seemed.” Ever since Martin found Lily, the last occupant of a rent-con- trolled apartment, dead on her toilet, his patience for his spoiled neighbours has worn thin. For her part, Ruby grew up between her father’s world and theirs. As a child, she spent many hours playing with Caroline, who lived in the penthouse and had more expensive toys and a stranger imagination for games; one involved role-playing “Holocaust- orphans-sisters-survivors”. Martin worries that his daughter’s education has alienated her from him. Yet over the course of this page-turning story, which culminates in the party of the title, Ruby realises that Caroline and her trust-fund cronies will never understand what her life is like. 70 Tenders

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Economic data

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units % change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change latest quarter* 2020† latest 2020† % % of GDP, 2020† % of GDP, 2020† latest,% year ago, bp Aug 5th on year ago United States -9.5 Q2 -32.9 -5.3 0.6 Jun 0.7 11.1 Jun -1.7 -15.9 0.6 -120 - China 3.2 Q2 54.6 1.4 2.5 Jun 3.7 3.8 Q2§ 0.7 -6.0 2.7 §§ -17.0 6.95 1.3 Japan -1.7 Q1 -2.2 -5.4 0.1 Jun -0.2 2.8 Jun 2.3 -11.4 nil -8.0 106 0.5 Britain -1.7 Q1 -8.5 -9.4 0.6 Jun 0.6 3.9 Apr†† -2.2 -18.1 0.1 -53.0 0.76 7.9 Canada -0.9 Q1 -8.2 -5.6 0.7 Jun 0.5 12.3 Jun -3.1 -11.0 0.5 -88.0 1.32 nil Euro area -15.0 Q2 -40.3 -8.4 0.4 Jul 0.4 7.8 Jun 2.1 -9.3 -0.5 1.0 0.84 6.0 Austria -2.9 Q1 -11.6 -6.3 1.1 Jun 0.7 5.7 Jun 0.1 -7.6 -0.3 -1.0 0.84 6.0 Belgium -14.5 Q2 -40.6 -8.1 0.7 Jul 0.5 5.5 Jun -1.5 -8.7 -0.2 -6.0 0.84 6.0 France -19.0 Q2 -44.8 -10.4 0.8 Jul 0.4 7.7 Jun -0.8 -11.5 -0.2 3.0 0.84 6.0 Germany -11.6 Q2 -34.7 -5.9 -0.1 Jul 0.8 4.2 Jun 5.9 -7.2 -0.5 1.0 0.84 6.0 Greece -1.2 Q1 -6.2 -7.5 -1.6 Jun -0.5 15.5 Apr -3.0 -6.5 1.1 -97.0 0.84 6.0 Italy -17.3 Q2 -41.0 -10.8 -0.3 Jul 0.1 8.8 Jun 2.0 -12.0 1.0 -53.0 0.84 6.0 Netherlands -0.2 Q1 -5.8 -6.0 1.6 Jun 1.3 3.8 Mar 4.3 -5.4 -0.5 -11.0 0.84 6.0 Spain -22.1 Q2 -55.8 -12.6 -0.6 Jul -0.1 15.6 Jun 1.5 -12.3 0.3 7.0 0.84 6.0 Czech Republic -1.7 Q1 -29.6 -7.5 3.3 Jun 2.8 2.6 Jun‡ -1.4 -7.0 0.8 -24.0 22.0 5.0 Denmark -0.3 Q1 -7.7 -4.0 0.3 Jun 0.3 5.5 Jun 5.2 -6.3 -0.4 12.0 6.27 6.4 Norway 1.1 Q1 -6.0 -5.5 1.4 Jun 0.8 4.6 May‡‡ 1.4 -0.9 0.5 -72.0 8.96 -0.3 Poland 1.7 Q1 -1.6 -4.0 3.1 Jul 3.1 6.1 Jun§ -0.5 -9.4 1.3 -74.0 3.70 4.3 Russia 1.6 Q1 na -6.1 3.2 Jun 3.5 6.2 Jun§ 1.5 -4.3 6.0 -147 72.9 -10.5 Sweden -8.3 Q2 -30.2 -5.1 0.7 Jun 0.5 9.8 Jun§ 2.9 -4.4 -0.1 8.0 8.66 11.2 Switzerland -1.3 Q1 -10.0 -6.0 -0.9 Jul -1.1 3.3 Jun 9.8 -6.3 -0.5 31.0 0.91 6.6 Turkey 4.5 Q1 na -5.2 11.8 Jul 11.6 12.8 Apr§ -2.4 -6.2 13.2 -225 7.03 -20.9 Australia 1.4 Q1 -1.2 -4.4 -0.3 Q2 1.7 7.4 Jun -1.3 -7.6 0.8 -20.0 1.39 6.5 Hong Kong -9.0 Q2 -0.4 -4.2 0.7 Jun 1.4 6.2 Jun‡‡ 3.1 -5.6 0.4 -103 7.75 1.2 India 3.1 Q1 1.2 -8.5 6.1 Jun 5.1 7.4 Jul 0.9 -7.8 5.8 -56.0 74.9 -5.6 Indonesia -5.3 Q2 na 0.2 1.5 Jul 2.2 5.0 Q1§ -1.6 -6.6 6.8 -89.0 14,550 -2.0 Malaysia 0.7 Q1 na -5.1 -1.9 Jun -1.1 5.3 May§ 2.1 -7.6 2.5 -104 4.19 -0.2 Pakistan 0.5 2020** na -3.6 9.3 Jul 7.9 5.8 2018 -1.6 -10.2 9.3 ††† -444 168 -5.5 Philippines -16.5 Q2 -18.9 -3.7 2.7 Jul 2.2 17.7 Q2§ 1.3 -7.7 2.7 -178 49.1 5.5 Singapore -12.6 Q2 -41.2 -6.0 -0.5 Jun -0.2 2.9 Q2 19.0 -13.5 0.8 -93.0 1.37 0.7 South Korea -3.0 Q2 -12.7 -1.8 0.3 Jul 0.4 4.3 Jun§ 2.4 -5.6 1.3 4.0 1,189 2.2 Taiwan -0.7 Q2 -8.8 -2.0 -0.8 Jun -0.7 4.0 Jun 11.9 -5.1 0.4 -26.0 29.4 7.8 Thailand -1.8 Q1 -8.5 -5.3 -1.6 Jun -0.2 1.0 Mar§ 3.4 -6.4 1.0 -44.0 31.0 -0.7 Argentina -5.4 Q1 -18.0 -12.0 42.8 Jun‡ 41.9 10.4 Q1§ 2.1 -8.4 na -464 72.6 -37.4 Brazil -0.3 Q1 -6.0 -5.5 2.1 Jun 2.7 12.9 May§‡‡ -2.0 -14.0 1.9 -366 5.28 -25.4 Chile 0.4 Q1 12.7 -6.1 2.6 Jun 2.4 12.2 Jun§‡‡ -2.6 -14.0 2.3 -45.0 777 -7.0 Colombia 0.4 Q1 -9.2 -7.7 2.0 Jul 2.3 19.8 Jun§ -4.9 -7.8 5.0 -90.0 3,783 -8.4 Mexico -18.9 Q2 -53.2 -9.7 3.3 Jun 3.1 3.3 Mar -1.4 -4.5 5.7 -172 22.4 -12.6 Peru -3.4 Q1 -19.5 -13.0 1.9 Jul 1.6 7.6 Mar§ -2.1 -11.5 3.2 -124 3.55 -4.8 Egypt 5.0 Q1 na 0.6 5.7 Jun 6.2 7.7 Q1§ -4.1 -10.6 na nil 16.0 3.5 Israel 0.4 Q1 -6.9 -5.4 -1.1 Jun -1.1 4.5 Jun 3.9 -11.8 0.6 -39.0 3.40 2.6 Saudi Arabia 0.3 2019 na -5.2 0.5 Jun 1.2 5.7 Q1 -5.6 -10.5 na nil 3.75 nil South Africa -0.1 Q1 -2.0 -8.0 2.1 Jun 3.6 30.1 Q1§ -2.6 -16.0 9.3 89.0 17.3 -13.8 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds.

Markets Commodities % change on: % change on: The Economist commodity-price index Index one Dec 31st index one Dec 31st % change on In local currency Aug 5th week 2019 Aug 5th week 2019 2015=100 Jul 28th Aug 4th* month year United States S&P 500 3,327.8 2.1 3.0 Pakistan KSE 39,882.8 2.7 -2.1 Dollar Index United States NAScomp 10,998.4 4.3 22.6 Singapore STI 2,532.7 -1.6 -21.4 All Items 115.5 120.2 8.1 9.3 China Shanghai Comp 3,377.6 2.5 10.7 South Korea KOSPI 2,311.9 2.2 5.2 Food 92.8 93.1 1.9 1.5 China Shenzhen Comp 2,318.9 3.7 34.6 Taiwan TWI 12,802.3 2.1 6.7 Industrials Japan Nikkei 225 22,514.9 0.5 -4.8 Thailand SET 1,337.4 -0.1 -15.3 All 136.8 145.5 12.2 14.6 Japan Topix 1,554.7 0.4 -9.7 Argentina MERV 50,994.4 4.3 22.4 Non-food agriculturals 96.9 100.3 8.0 6.1 Britain FTSE 100 6,104.7 -0.4 -19.1 Brazil BVSP 102,801.8 -2.7 -11.1 Metals 148.6 158.9 13.0 16.4 Canada S&P TSX 16,501.6 1.3 -3.3 Mexico IPC 37,902.0 0.5 -13.0 Sterling Index Euro area EURO STOXX 50 3,268.4 -1.0 -12.7 Egypt EGX 30 10,704.3 1.0 -23.3 All items 136.2 140.7 4.2 2.0 France CAC 40 4,933.3 -0.5 -17.5 Israel TA-125 1,418.8 2.7 -12.2 Germany DAX* 12,660.3 -1.3 -4.4 Saudi Arabia Tadawul 7,470.3 0.1 -11.0 Euro Index Italy FTSE/MIB 19,740.2 -0.7 -16.0 South Africa JSE AS 57,629.4 1.6 1.0 All items 109.2 113.4 3.8 4.1 Netherlands AEX 563.1 -0.2 -6.9 World, dev'd MSCI 2,355.9 1.6 -0.1 Gold Spain IBEX 35 7,039.7 -2.3 -26.3 Emerging markets MSCI 1,103.0 1.5 -1.0 $ per oz 1,950.0 1,994.1 11.2 35.3 Poland WIG 52,289.7 0.5 -9.6 Brent Russia RTS, $ terms 1,295.3 2.3 -16.4 $ per barrel 43.3 44.5 3.0 -25.7 Switzerland SMI 10,098.0 -1.7 -4.9 US corporate bonds, spread over Treasuries Turkey BIST 1,091.8 -3.9 -99.0 Dec 31st Sources: Bloomberg; CME Group; Cotlook; Datastream from Refinitiv; Australia All Ord. 6,135.9 0.1 -9.8 Basis points latest 2019 Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Hong Kong Hang Seng 25,102.5 0.9 -11.0 Investment grade 180 141 India BSE 37,663.3 -1.1 -8.7 High-yield 596 449 Indonesia IDX 5,127.1 0.3 -18.6 Sources: Datastream from Refinitiv; Standard & Poor's Global Fixed For more countries and additional data, visit Malaysia KLSE 1,568.1 -2.7 -1.3 Income Research. *Total return index. Economist.com/indicators Graphic detail Life in the time of corona The Economist August 8th 2020 73

→ For many home activities, Google search traffic remains higher than usual

Global change in mobility and Google searches, compared with normal level* Weekly average January 5th–July 27th 2020, highest week in 2020=100

Out on the town Normal level Change in mobility† “Ticket” “Hangover” “Restaurant” 100 -3% -17% 50 -58% Actual search interest 0 Jan Jul Jan Jul Jan Jul Jan Jul Gastronomy “Yeast” “Recipe” “Blender” “Takeout” 100 ↓ Searches for “yeast” are still 19% above normal +32% 50 +22% +85% +19% 0 Jan Jul Jan Jul Jan Jul Jan Jul Healthy living “Dumbbell” “Strava” (workout app) “Standing desk” “Electric bicycle” 100 +129% +103% +42%

+64% 50

0 Jan Jul Jan Jul Jan Jul Jan Jul Home entertainment “Painting by numbers” “Hair clippers” “Tie-dye” “Netflix” 100 +235%

+23% 50 +112% +58% 0 Jan Jul Jan Jul Jan Jul Jan Jul *Predicted using weekly data from January 3rd 2016-March 7th 2020 †Average for retail, grocery, transport and workplaces Sources: Google; The Economist

taurant” (or similar words in other lan- 60% above the usual level, despite gyms re- 90% economy, guages) is currently 17% lower than we opening. The continued interest in “elec- would usually expect for this time of year. tric bicycles” and “standing desks” (espe- 120% gastronomy Booze stores may be doing better, since cially in America) shows that workers are searches for “hangover” have rebounded to making their transport and home offices a normal level for raucous July, after dwin- healthier too. dling by 40% in March. But enquiries for Likewise, arts and crafts adopted in Some lockdown-inspired fads seem to “tickets” are still down by 58%. This news- April have made a lasting mark. Aspiring have become full-fledged hobbies paper has called the result of such an un- Picassos have kept searches for “painting ovid-19 has altered life as we know it. even recovery “the 90% economy”. by numbers” at more than double their CWhen governments imposed lock- Even as people are less comfortable go- normal rate. “Hair clippers” remain fash- downs in March, people transformed their ing out and about, Google’s data show that ionable among amateur barbers, as does homes into makeshift offices, gyms and they are persisting with home activities “tie-dye” with people willing to spatter pubs. For many, crammed commutes and they picked up months ago. Take baking, their clothes (particularly Germans, who bustling nightlife became a distant memo- for example. “Yeast” quickly became a fad, seem to be channelling their inner Jil Sand- ry. Now that countries have eased restric- with searches rising by 280% in April—and er). As with cooking, however, there are tions, residents are venturing outside by 1,300% in peckish Italy. Global interest plenty of slouches who lack inspiration for again—but not as much as before. Globally, has flattened since, but is still 19% above such artistry. Netflix can thank them for a they made perhaps 25% fewer trips per day normal. Other gastronomic words show a rate of searches that was 23% higher than in July than they did in early March, accord- similar pattern. The increase for “takeout”, usual in late July, long after March’s mania ing to The Economist’s analysis of Google’s however, has been even greater. Kneading for “Tiger King” wore off. phone-tracking data. and proofing is not for everybody. The Google trends for many of these Consumer caution has hit some indus- Though people are feasting at home, fit- home entertainments suggest that their tries harder than others. By training a sta- ness has also become a priority during new popularity may outlast the pandemic. tistical model on Google’s global search quarantine. Searches for “dumbbell” and If so, the world could end up poorer in data since 2016, we find that traffic for “res- “Strava”, a workout app, remain more than earnings—but richer in experiences. 7 74 Obituary Olivia de Havilland The Economist August 8th 2020

Warner, after she pleaded with Warner’s wife) she went for Melanie Hamilton, dignified, loving and forgiving, rather than the flighty Scarlett O’Hara. There were deeply feminine qualities in her she wanted to explore. She did so largely by herself, after a good read of Stanislavsky’s “An Actor’s Work”; in costume as Melanie, she would keep going back to commune with her in the dressing-room mir- ror. One day, still struggling, she asked Jimmy Cagney for advice. “Whatever you say, mean it,” he snapped. She made sure she did. And she always had. To act had been her dream from the age of five, when she found her actress-mother’s make-up box and smeared her cheeks with rouge that would not come off. It grew steadily through the childhood elocution lessons, the Shake- speare-reading sessions and a local production of “Alice in Won- derland” in which she seemed to move in an enchanted world. (Her younger sister Joan, treading annoyingly on her heels, wanted just the same career and, as Joan Fontaine, got much of it, until their mutual snubbing became legendary.) Yet even after her big break, playing Hermia in Max Reinhardt’s “A Midsummer-Night’s Dream” at the Hollywood Bowl in 1934, to sign at once with a studio was terrifying. She was 18, and felt she was jumping off an Olympic diving board with no idea how to dive. That was before she found that pretty little women were hardly required to act. Almost as fast as Warner Bros kept offering her brainless work, she declined it. After all, her favourite pursuit was to do cryptic crosswords. But the studio had a hold on her. Each time she turned down a role her contract was suspended, and the days not worked were added as time owed. Infuriated, she took the studio to court The ingénue who roared in 1943 and won, as she was pretty sure she would. Henceforth, un- der the De Havilland Law of 1945, actors were employed for proper calendar terms and the studio stranglehold was ended. It was no coincidence that she did her best work after that. In “To Each His Own”, she played a mother trying over decades to re- trieve the child she had given up, carefully changing her perfume Dame Olivia de Havilland, the last great star of Hollywood’s to fix the character as she aged. In “The Heiress” she portrayed a Golden Age, died on July 26th, aged 104 woman who was shy and plain; scorned by her father and betrayed n the first day of rehearsals for “Captain Blood”, in 1935, Oli- by her fortune-seeking lover, she took a calm, cold revenge on both Ovia de Havilland and Errol Flynn returned their lunch trays to- of them. For “The Snake Pit” (1948) she became a wife sent by her gether to the canteen. Already she had thought “Oh!” at the sight of husband to a mental asylum, striving to keep her dignity while as- him; but, being sensible, she had eaten alone at a distant table. sailed by inner demons. To research the role she consulted psy- Now they sat together on the stage ramp, by the huge doors that chiatrists and visited a mental hospital to watch electric-shock opened onto the street, and his first words were: “What do you treatment, with the horror of the body rising and forcibly held want out of all this?” She answered, in her clear young English down. She knew just a little of constraint like that. tones: “I would like respect for difficult work well done.” She was alert to other curbs on her freedom, too. She avoided That sounded more modest than his aim, which was simply marrying her leading men, preferring to carry on discreetly with “success”. But it meant hard fights on several fronts. When she re- several, including Errol (unconsummated, she insisted, despite viewed her proudest achievements later, they were not just her eight films together), Jimmy Stewart and John Huston. Instead she major role in “Gone With the Wind” in 1939 and her two Academy married writers, promptly divorcing them when mutual interest Awards for Best Actress, in 1947 for “To Each His Own” and in 1950 faded. In the mid-1940s, though ardently liberal, she resigned from for “The Heiress”—still less her 49 feature films altogether. She the liberal Citizens’ Committee to protest against the leadership’s had also broken the hold of Hollywood studios over their actors, pro-Soviet line, and even informed the fbi secretly about them. No leaving them freer to choose the roles they were best suited for. other voice or group should dare to speak for her, or use her. To some extent no one was free at Warner Bros in the Golden Her strongest bid for independence came in mid-life, when she Age. She worked six-day weeks there, dressed, up on her lines and left Hollywood behind. In 1955, having married a Frenchman, she on the set by 6.30am, shooting until 6pm and until midnight on went to live in Paris for the next 60 years. In her 19th-century man- Saturdays. She once got a cameraman to blacken her eyes to show sion she would float about magnificently in Chinese silk and Jack Warner she was tired. That was hardly the worst of it, though. pearls, with a glass of Veuve Clicquot in her hand. Her screen work Because she was small and flawlessly beautiful she was inevitably became rarer; she did not keep company with actors and directors, an ingénue: the lovely and mindless girl, her pleading eyes hark- but with Voltaire and Monet. Real as she had made her characters, ing back to silent-cinema days, who would lead the hero windingly what she most loved now was actual authenticity: houses and but inevitably to the marriage bed. Warner Bros had one great dra- churches made of stone, not canvas, and real princes to meet. On a matic actress, Bette Davis, and two ingénues, one blonde and one visit to Beverly Hills in 1957 she bumped into Errol again, at a chari- brunette. She was the brunette. And with a burst of menthol in her ty ball, and was surprised by the deadness of his eyes. eyes, she could weep real tears. California stayed in her mind, however. She mused to Vanity From the start, this rankled with her. She wanted to play wom- Fair that if she could not come back to Earth as herself, a role she en who were complex and thoughtful, when the best she could found perfectly satisfactory, she would like to be a redwood tree. hope for was spirited, wimpled Maid Marian in “The Adventures of Strong, deep-rooted, benevolent, tall— and reaching in unimped- Robin Hood” (1938). In “Gone With the Wind” (made for mgm, not ed splendour for the sun, the moon and the stars. 7 8th Annual World Ocean Summit & Expo Accelerating a sustainable ocean economy March 2nd-4th 2021, Lisbon

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