A journey down the Kapuas

Making migration work

Venezuela’s magical thinking

Global cooling AUGUST 25TH–31ST 2018 Above the law?

Contents The Economist August 25th 2018 3

5 The world this week Middle East and Africa 25 Israel and the Leaders Palestinians All talk, no progress 7 Donald Trump Is he above the law? 26 Politics in Israel Netanyahu ponders a poll 8 Hyperinflation in Venezuela 26 Kofi Annan Maduro’s magic money tree The inveterate diplomat 8 In praise of air- 27 Uganda conditioning A singer rattles the regime Rebirth of the cool 28 Land in South Africa Migration The West needs better policies to avert voters’ 9 Traffic congestion Tragedy of the commons backlash against foreigners in Rules of the road their midst: leader, page 10. On the cover 10 People and borders United States Lessons from around the world, The slow drip of revelations The way forward on 29 The swamp, season two page 14. Worries about and convictions will eventually immigration Both of the president’s men immigration have boosted force America to confront a 30 Lithuanian-Americans populists and changed the simple question: leader, Letters The diaspora’s capital mainstream in Sweden, page 7. Donald Trump’s fixer page 17. Many Syrians are 12 On Catalonia, Indian coal, 32 Environmental policy alleges that the president faring better in Turkey than in Brazil, science fiction, Smokestack lightening directed him to break the Europe—for now, page 18. Two mission statements law. What happens now? 33 Festivals books explore the deep roots Page 29 With spirits kaleidoscopic of the politics of grievance in Briefing 34 Lexington the West, page 63 14 Immigration What is racism now? The Economist online Crossing continents Daily analysis and opinion to The Americas supplement the print edition, plus Europe 35 Venezuela audio and video, and a daily chart Rethinking the revolution Economist.com 17 Sweden and migration Moving in, moving right 36 Venezuela’s exodus E-mail: newsletters and The Bolivarian wave mobile edition 18 Slovenia Economist.com/email Defeat from the jaws of 38 Mexico Viktor Copying crafts Print edition: available online by 7pm London time each Thursday 18 Syrians in Turkey Economist.com/printedition Home from home Asia Audio edition: available online 19 Russia and Slovakia 39 Australian politics Venezuela The socialist to download each Friday Wolves in bikers’ clothing Poison spill regime’s plan to save the Economist.com/audioedition 20 Vaccinations in Europe 40 Indian politics economy is doomed to fail: Spotty coverage A mellower shade of saffron leader, page 8. Why it is probably not bold enough, 20 Italy 40 Indonesia’s longest river Chianti or Irn-Bru, signore? page 35. As Venezuelans flee, Ebb and flow Latin American countries shut 21 Charlemagne 42 Banyan their doors, page 36 Ireland, changed utterly Ending the conflict in Volume 428 Number 9106 Afghanistan Published since September1843 Britain to take part in "a severe contest between intelligence, which presses forward, and 22 Universities abroad... China an unworthy, timid ignorance obstructing our progress." Dreaming of new spires 43 Ethnic minorities Editorial offices in London and also: 23 ...and at home The third Korea Amsterdam, Beijing, Berlin, Brussels, Cairo, The scramble for students 44 The border with North Chicago, Johannesburg, Madrid, Mexico City, Moscow, Mumbai, New Delhi, New York, Paris, 24 Bagehot Korea San Francisco, São Paulo, Seoul, Shanghai, Leftward drift Atop a sacred volcano Singapore, Tokyo, Washington DC

Indonesia Along the Kapuas river, development conflicts with conservation, page 40

1 Contents continues overleaf 4 Contents The Economist August 25th 2018

International Science and technology 45 Air-conditioning 60 Helicopters The cost of global cooling Whirlybirds are go 61 Evolutionary biology Business Kissing cousins 47 Carmaking in America 62 Archaeology Rocky road ahead Maturing nicely 48 NAFTA 62 Controlling tsetse flies Stops and starts Fly blown 49 Saudi Aramco Commodities Global tensions, Helicopters of the future Blurred Vision? Books and arts from commerce to currencies, They will fly in new ways. Pilots rattle markets for crops, 49 Search engines 63 Populism, identity and will be optional, page 60 metals and oil, page 54 Censors and sensibility resentment 50 European sports Find out what it means Football’s leaving home to me Subscription service 64 Dirty tricks For our full range of subscription offers, 50 South Korea’s chaebol including digital only or print and digital Political capital The hand of Moscow combined, visit Economist.com/offers 51 Bartleby 65 The literature of Trieste or call the telephone number provided below: History lessons Tales of the city Telephone: +44 (0) 845 120 0983 or +44 (0) 207 576 8448 65 Mini-gangsters in Naples Subscription for 1 year (51 issues) The children of Gomorrah Philosophy brief Print only 66 Johnson Euro-zone countries €229 Denmark DKr 1,709 52 Schumpeter, Popper and Nationalism of small Hayek Hungary HUF 78,042 differences Norway NKr 1,839 The exiles fight back Poland PLN 1,011 Sweden SKr 2,089 Detroit and tariffs How the 68 Economic and financial Switzerland SFr 296 auto industry is coping with Finance and economics Turkey TL 814 indicators Other Europe (ex UK) €229 Donald Trump’s trade wars, 54 Commodities Statistics on 42 economies, Middle East – GCC US$352 page 47. Talks to update the Raw materiel plus a closer look at GDP South Africa ZAR 4,670, US$285 North American Free-Trade 55 Buttonwood and household income Middle East and Africa US$285 Agreement are progressing, Are you a stock or a bond? page 48 56 Insuring intangible risks Obituary Principal commercial offices: In search of a jelly mould 70 Aretha Franklin The Adelphi Building, 1-11John Adam Street, 57 America’s bull market London WC2N 6HT A deeper love Tel: +44 (0) 20 7830 7000 3,453 days and counting Rue de l’Athénée 32 58 Free exchange 1206 Geneva, Switzerland A question of balance Tel: +4122 566 2470 750 3rd Avenue, 5th Floor, New York, NY 10017 Tel: +1212 5410500 1301Cityplaza Four, 12 Taikoo Wan Road, Taikoo Shing, Hong Kong Tel: +852 2585 3888

Other commercial offices: Chicago, Dubai, Frankfurt, Los Angeles, Paris, San Francisco and Singapore Air-conditioning How to spread the benefits of keeping people cool—without frying the planet: leader, page 8. Air-conditioners do more good than most people realise, but also much harm. Efforts are finally under way to get one without the other, page 45

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© 2018 The Economist Newspaper Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or other- wise, without the prior permission of The Economist Newspaper Limited. Published every week, except for a year-end double issue, by The Economist Newspaper Limited. The Economist is a registered trademark of The Economist Newspaper Limited. Printed by Vogel Druck und Medienservice GmbH, Leibnizstraße 5, 97204 Höchberg, Deutschland. France, Numéro Commission Paritaire: 68832 GB. Encart d’abonnement de deux pages situé entre les folios 10 et 130. Rapp. Italia: IMD srl Via Guido da Velate 1120162 Milano Aut. Trib. MI 272 del 13/04/88 Poste Italiane SpA - Sped Abb Post DL 353/2003 (conv. L. 27/2/2004 n.46) art 1comma 1DCB Milano, Dir. Resp. Domenico Tassinari The world this week The Economist August 25th 2018 5

currency,the “sovereign Emmerson Mnangagwa. After deal being reached in time for Politics bolívar”, which has five fewer a delay in publishing the re- approval by EU leaders at a zeroes. He admitted that sults, the electoral commission summit in mid-October. The hyperinflation had been declared Mr Mnangagwa the British government published caused by printing bolívares to winner with 51% ofthe vote, its first batch oftechnical- finance a massive budget but the opposition says “mas- advice papers on what would deficit and promised a “zero sive doctoring” ofthe ballot happen ifthere is no deal. deficit”. The new currency is to has taken place. It cited identi- be pegged to the petro, a unit cal results at16 different polling A smaller circle of friends ofaccount backed by oil re- stations as part ofits evidence. El Salvador switched its serves. It began depreciating diplomatic allegiance from soon after its introduction. Public prosecutors in Saudi Ta iwa n to China. The defec- Arabia sought the death pen- tion leaves Taiwan with formal As Venezuelans flee their alty for five activists, including relations with just17 countries. country in the thousands, Israa al-Ghomgham, who has Two ofDonald Trump’sclosest Ecuador introduced restric- highlighted discrimination The Chinese Communist formeradvisers were convict- tions on Venezuelan migrants, against Shias. She is the first Party announced that it had ed in separate court cases on a saying they must hold a pass- female campaigner to face taken measures against two raft ofcharges. Michael port to enter. Around 4,000 execution in the kingdom. The senior officials in connection Cohen, the president’s erst- Venezuelans are arriving at the five are accused ofinciting with a safety scandal at a while personal lawyer, struck Ecuadorean border each day, protest, among other things. vaccine-maker. A vice-gov- a plea-bargain deal with feder- many en route to Peru and ernor in charge ofdrug safety al prosecutors and admitted Chile. In Brazil a Venezuelan No one is immune in Jilin province, where the that he had paid offtwo wom- migrant camp was attacked The World Health Organisa- firm is based, has been sacked en claiming to have had affairs and its occupants driven back tion warned ofa “dramatic and a formerdeputy head of with Mr Trump. Damningly, he over the border. increase in infections and the country’s food-and-drug said he did this “in co-ordina- extended outbreaks” ofmea- regulator will be investigated tion and at the direction of” Mr The youth have their say sles in Europe. More than forcorruption. More than 40 Trump (who was not named 41,000 children and adults government officials have also directly in the case). Paul contracted the disease in the been implicated. Manafort, Mr Trump’scam- first halfofthe year, well paign manager until August above the annual total foreach The Chinese foreign ministry 2016, was found guilty oftax year this decade. At least 37 lashed out at Andy Chan, a fraud. He also faces trial on people have died. Ukraine Hong Kong resident who has charges relating to his work for accounted forover halfof been campaigning forthe pro-Russian Ukrainians. those infected. territory’s independence. It accused Mr Chan of“colluding Duncan Hunter, a Republican Following a damning report with external forces” by calling congressman from California, into child abuse by Catholic forboth China and Hong Kong was charged with misusing priests in Pennsylvania, Pope to be expelled from the WTO campaign funds forpersonal Protests erupted in Kampala, Francis issued a letter con- because ofa “rapid deterio- use. He is the second Repub- the capital ofUganda, follow- demning the history of“atroc- ration offreedoms”. lican to face criminal charges ing the detention offive oppo- ities” in the church. The pontiff this month: Chris Collins, who sition MPs, including Bobi acknowledged that “with represents a district in upstate Wine, who is also a popular shame and repentance...we New York, has been indicted singer. Mr Wine says the gov- were not where we should forinsider trading. ernment is trying to kill him. At have been” when it came to least one protester died when supporting the victims. The Trump administration police fired tear gas and tried to ditched the Clean Power Plan, remove barricades that have Italy’s hardline interior min- which set federal guidelines been erected across the city. ister, Matteo Salvini, refused to forstates to reduce their car- allow177 refugees offan Italian bon emissions. Under the Kofi Annan, the seventh ship that had rescued them at new Affordable Clean Energy secretary-general ofthe UN, sea. In his short time in office rule, states will be allowed to died after a short illness. Mr Mr Salvini has built a rep- set less stringent standards and Annan, the first sub-Saharan utation forbeing tough on The southern Indian state of coal can once again be includ- African to lead the organisa- migrants. He said he would Kerala was hit by the worst ed in an “efficient” energy mix. tion, sparred with America give permission for the refu- monsoon floods in a century. over its war in Iraq. But many gees to disembarkonce he Over 370 people have died. Depreciating, fast will remember him fordraw- received assurances that they Venezuela’s president, ing attention to the plight of would be distributed among Malcolm Turnbull, Australia’s Nicolás Maduro, announced a the poor, the sickand the all European Union countries. prime minister, offered to series ofmeasures to shore up victims ofconflict. stand aside ifa majority of the economy, which is Britain’s Brexit secretary, MPs from his party called forit. suffering from a deep depres- Zimbabwe’s Constitutional Dominic Raab, resumed talks Three ministers are competing sion and hyperinflation. He Court heard a challenge from with the EU’s negotiator, to succeed him. Ifhe goes it devalued the currency by 95% the opposition to the recent Michel Barnier. Officials are will be Australia’s fifth change and replaced it with a new election ofPresident increasingly gloomy about a ofprime minister in a decade. 1 6 The world this week The Economist August 25th 2018

compared with the same ed users in Latin America, The Chinese smartphone- Business period last year; digital sales Britain, the Middle East and maker is expanding overseas; soared by 41%. The company the United States. international sales now has restructured its business account forover a third of Greece primary-budget and redesigned its stores, but, Getting busy with the fizzy revenues and it has overtaken balance as % of GDP like other retailers, it is also PepsiCo agreed to buy Samsung to become India’s 5 profiting from America’s SodaStream for$3.2bn, con- biggest seller ofsmartphones. * * + robust economy. tinuing its expansion into Its smart-devices business is 0 healthier soft-drinkproducts. also looking perky; sales of – Australia banned Huawei and SodaStream’s water-carbonat- smart-TVs were up by 350%. 5 ZTE, two Chinese makers of ing machines, with accompa- FIRST GREEK BAIL-OUT telecoms equipment, from nying flavours, were popular AirFrance-KLM found a new 10 2007 09 11 13 15 17 19 participating in the country’s in Britain during the 1970s and chiefexecutive. The airline roll-out of5G networks. Both 1980s. It was bought by an said that Ben Smith would take Source: IMF *Forecast companies also face severe Israeli company in 1998 and up the position, a job that has Greece exited its third and restrictions in America based branded as a wholesome been vacant since May after final bail-out programme, on concerns that their ties to alternative to sugary drinks. the sudden departure ofJean- bringing an end to eight years the Chinese government pose Marc Janaillac amid a pro- ofeconomic oversight by the a threat to national security, Slack was valued at $7.1bn tracted pay dispute with un- European Union and the IMF. concerns which the compa- following its latest round of ions. Mr Smith, a Canadian, is Other countries in the euro nies say are unfounded. fundraising, up by 40% from its the first non-Frenchman to run zone were also rescued during previous valuation nearly a Air France. French unions the debt crisis, but none com- Microsoft tookcontrol, year ago. The office messaging balked at his appointment and pared to Greece, which re- through a court order, ofsix app is used by 8m people on a threatened strike action. ceived €326bn ($378bn) in total internet domains that were daily basis. emergency assistance. To mimicking websites for the A game of rounders service its huge debt pile, American Senate and two Following criticism from The S&P 500 index chalked up Greece has to achieve primary- conservative think-tanks. The Chinese state media fornot 3,453 days without entering budget surpluses far into the domains were created by a doing enough to delete bear territory, defined as a future, which will curb state group, sometimes known as banned content, Apple pulled drop ofat least 20%. Many spending foryears to come. Fancy Bear, that is associated apps from its App Store in declared it a record fora stock- with the Russian government. China that offergambling market bull run. Others ques- Qatar’s central banksigned a One ofthe think-tanks, the services. Betting apps are tioned that, maintaining that $3bn currency-swap arrange- Hudson Institute, has often illegal in China. the market stayed just out of ment with Turkey to provide shone a spotlight on Russian bear territory in 1990—and that “liquidity and support for corruption. In a separate crack- In its first earnings report since the 4,494 days from December financial stability”. The Turk- down on political-misinfor- going public in July, Xiaomi 1987 to March 2000 constitute ish lira has taken a battering in mation campaigns, Facebook said revenue had increased by the true record-holder. recent weeks, in part because removed fake pages, groups 68% in the second quarter, to ofa political spat with and accounts originating from 45bn yuan ($6.6bn), helping it For other economic data and America that has resulted in Iran and Russia that had target- turn a net profit of14.6bn yuan. news see Indicators section sanctions on Turkish officials.

The Saudi government denied a report that the proposed IPO ofAramco, the kingdom’s state-controlled oil company, has been shelved, insisting that it would go ahead when the conditions are right. Investors are losing faith in that commitment. The govern- ment has made little progress in bringing what would be the world’s biggest-ever IPO to market ever since the plan was first revealed in early 2016 and it is looking at other ways to boost state coffers.

Aiming high Ta rge t , an American retailer that two years ago was all but written offamid a slump in revenue and customers, reported its strongest growth in quarterly sales in 13 years. Customer traffic grew by 6.4% Leaders The Economist August 25th 2018 7 Is he above the law?

The slow drip ofrevelations and convictions will eventuallyforce America to confront a simple question T WAS the kind of moment wrong, however, but of paying bribes to scotch a damaging Ithat would crown the career story. That is a far more serious offence, and one that was of a reality-TV producer. While enough to end the career of John Edwards, an aspirant Demo- the president of the United craticpresidential candidate, when he wascaughtdoing some- States was on his way to a cam- thing similar in 2008. There is no way ofknowing ifMr Trump paign rally, his formercampaign would still have won had the story come out. Even so, the pos- manager, Paul Manafort, was sibility that he might not have done raises questions about his found guilty of eight counts of legitimacy, not just his observance ofcampaign-finance laws. tax and bank fraud; and his former lawyer, Michael Cohen, What of the convention, which has been in place since the pleaded guilty to eight counts of tax evasion, fraud and break- Nixon era, that the Justice Department will not indict a sitting ing campaign-finance laws. Cable-news channels needed so president? Again, there are good reasons for this. As with many split screens to cover what was going on that they began breaches of campaign-finance law, such an indictment would to resemble a Rubik’s cube. Amid the frenzy, however, some- set up a conflict between the bureaucracy and the president’s thingimportant changed this week. Forthe first time, President democratic mandate that has no happy ending. The conven- Donald Trump faces a formal accusation that he personally tion would doubtless be void if there were credible evidence broke the law to furtherhis candidacy. that a sitting president had, say, committed murder. But the MrManafort’sconviction did notsurprise anyone who had payment ofhush money to avoid an inconvenient story about followed his trial, or his long career as a political consultant an extramarital affairfalls a long way short ofthat. available for hire by dictators and thugs. Mr Cohen’s plea was The authors of the constitution wanted to allow the presi- more striking, because he was not just Mr Trump’s lawyer; he dent to get on with his job without unnecessary distractions. was the guy who made his problems go away. This included But, fresh from a war against King George III, they were very making payments during the 2016 campaign to buy the silence clearthat the presidency should not be an elected monarchy. If oftwo women who appearto have had affairswith MrTrump. a president does it, that does not make it legal. The constitu- (The president has denied the affairs and now says he learned tional problem that America is heading towards is that the Jus- about the payments later.) But Mr Cohen told a court under tice Department’s protocol not to prosecute sitting presidents oath that the money was paid “at the direction of a candidate dates from anotherage, when a president could be expected to for federal office”. In other words, that Mr Trump told Mr Co- resign with a modicum of honour before any charges were hen to breakthe law, then lied to cover it up. drawn up, as Nixon did. That norm no longer applies. The un- NeitherMrManafort’sconviction norMrCohen’splea is di- written convention now says in effect that, if his skin is thick rectly related to the allegations of collusion with Russia that enough, a president is indeed above the law. have dogged the Trump campaign, and are being investigated by Robert Mueller, the special counsel. Yet neither case would Drip, dripping down the drain have been brought without his investigation. This week’s This means the only solution to any clash that Mr Trump sets events mean that Mr Mueller now stands on firmer ground. It up between the courts and the voters is a political one. Ulti- will be harder forthe president to dismiss him without it look- mately the decision to remove a president is a matter of poli- ing as though he is obstructing justice. And in such cases, con- tics, not law. It could hardly be otherwise, as America’s Found- victions often lead to more convictions as those found guilty ing Fathers foresaw. In “Federalist 65”, Alexander Hamilton look for ways to save themselves. The question now is wheth- explained why it was the Senate, rather than the Supreme er, and how far, Mr Manafort and Mr Cohen will turn against Court, that should sit in judgment on the president, for “who theirformerboss in return forleniency. As the slow drip ofrev- can so properly be the inquisitors for the nation as the repre- elations and convictions continues, Americans will have to sentatives themselves?” No other body, he thought, would confront a simple question: is Mr Trump above the law? have the necessary “confidence in its situation” to do so. Alas, that confidence has gone missing, leaving American Follow the money democracy in a strange place. Thus far Republicans in Con- Mr Cohen says Mr Trump asked him to make hush-money gress have stood by the president. The only thing likely to payments—something that is not illegal for ordinary citizens, change that is a performance in the mid-terms so bad that but counts as an undeclared donation when done on behalf of enough ofthem come to see the president as an electoral liabil- a political candidate, as Mr Trump was at the time. So what? ity. Although Democrats may well win a majority in the After all, America treats breaches of campaign-finance law House, a two-thirds majority in the Senate—the threshold re- much more like speeding tickets than burglary: they are often quired to remove a president—looks unachievable. the result offilling in a form wrongly, orincorrectly accounting Mr Cohen’s plea has made the president of the United for campaign spending. There are good reasons for this indul- States an unindicted co-conspirator in a pair of federal crimes. gent approach. When voters elect someone who has bent the That makes this a sad week for America. But it is a shameful rules, it sets up a conflict between the courts and the electorate one for the Republican Party, whose members remain more that is hard to resolve cleanly. dedicated to minimising Mr Trump’s malfeasance than to the Mr Trump does not stand accused of getting his paperwork ideal that nobody, noteven the president, is above the law. 7 8 Leaders The Economist August 25th 2018

Hyperinflation in Venezuela Maduro’s magic money tree

The socialist regime’s plan to save the economyis doomed to fail ICOLÁS MADURO calls it by the unbridled creation of money to finance the budget def- N“a really impressive magic icit, which will exceed 30% of GDP this year, according to the formula”. Hispaquetazo rojo (big IMF. By reducing fuel subsidies and raising taxes, he now aims red package) features a new cur- for a “zero deficit”. His paquetazo devalues the currency from rency that lops five zeroes offthe the official rate of 250,000 old bolívares to the dollar—avail- nearly worthless bolívar, a able to a favoured few—to the market rate of6m. sharp increase in the price of But Mr Maduro has set up his plan to fail. The new “sover- fuel and a rise in the minimum eign bolívar” is supposedly pegged to the petro, a new unit of wage ofmore than 3,000%. account that is ostensibly backed by oil reserves. But since no Forgetmagic. The president’sformula, even with some wel- one knowshowthe petro will workand nothingbindsthe new come new bits of realism, will almost certainly fail to rescue currency to it, this peg inspires little confidence. In practice, the Venezuelans from their economic agony. regime can still print as many bolívares as it chooses. The Venezuela has the world’s worst-performing economy pledge to eliminate the budget deficit is undermined by a re- among countries not at war. GDP fell by more than a third be- cent tax break for the oil industry and the rise in the minimum tween 2013 and 2017. Inflation could pass a million percent this wage. This will swell the public-sector wage bill, stoke even year, says the IMF. The country with the world’s largest oil re- more inflation and bankrupt firms. There is talk of tougher serves cannot import enough food and medicine. Water short- price controls, which would furtherdiscourage production. ages and blackouts plague cities. More than 2m Venezuelans have fled, unsettling neighbours (see Americas section). A hat with no rabbit Mr Maduro says this is the fault of“imperialist” powers like With somebody else in charge, Venezuela might still have a America, which are waging “economic war” on Venezuela. In chance. A competent president would keep parts of Mr Madu- fact, the catastrophe is caused by the crackpot socialism intro- ro’s therapy, such as the devaluation, and add new remedies. duced by Hugo Chávez and continued by Mr Maduro after Business would be freed from price controls and given legal se- Chávez’s death in 2013. Expropriations and price controls have curity. The bolívar would be issued by a truly independent undermined private firms, depressing production. Corruption central bank, or perhaps replaced by the dollar. Venezuela has subverted the state. Mismanagement of PDVSA, the state- would gain external credibility and financial support by nego- owned oil company, has caused oil output to drop by half tiating an adjustment agreement with the IMF. It would start since 2014. Just as the regime has asphyxiated democracy, by serious negotiations to restructure its foreign debt. rigging elections and governing without reference to the oppo- All this would need the co-operation of the opposition and sition-controlled legislature, so it has strangled the economy. of the international community. It is hard to imagine any of it Belatedly, Mr Maduro has recognised the need for change. happening while Mr Maduro is president. Venezuela needs He has admitted forthe first time that hyperinflation is caused real reform, not hocus-pocus. 7

In praise of air-conditioning Rebirth of the cool

How to spread the benefits ofair-conditioning—without frying the planet HAT is the single most Air-conditioning is one of the world’s great overlooked in- Weffective way to reduce dustries. Automobiles and air-conditioners were invented at greenhouse-gas emissions? Go roughly the same time, and both have had a huge impact on vegetarian? Replant the Ama- where people live and work. Unlike cars, though, air-condi- zon? Cycle to work? None of the tioners have drawn little criticism fortheir social impact, emis- above. The answer is: make air- sions orenergy efficiency. Most hot countries do not have rules conditionersradicallybetter. On to govern their energy use. There is not even a common Eng- one calculation, replacing refrig- lish word for “coolth” (the opposite ofwarmth). erants that damage the atmosphere would reduce total green- Yet air-conditioning has done more than most things to house gases by the equivalent of 90bn tonnes of CO2 by 2050. benefit humankind. Lee Kuan Yew, the first prime minister of Making the units more energy-efficient could double that. By Singapore, called it “perhaps one of the signal inventions of contrast, ifhalf the world’s population were to give up meat, it history”. It has transformed productivity in the tropics and would save 66bn tonnes of CO2. Replanting two-thirds of de- helped turn southern China into the workshop of the world. graded tropical forests would save 61bn tonnes. A one-third in- In Europe, itsspread haspushed down heat-related deaths bya crease in global bicycle journeys would save just 2.3bn tonnes. factor often since 2003, when 70,000 more people than usual, 1 The Economist August 25th 2018 Leaders 9

2 most ofthem elderly, died in a heatwave. For children, air-con- duced in countries that lack them altogether, to push the aver- ditioned classrooms and dormitories are associated with bet- age unit’s performance closer to the standard ofthe best. ter grades at school (see International section). Next, manufacturers should stop using damaging refriger- Environmentalists who call air-conditioning “a luxury we ants. One category of these, hydrofluorocarbons, is over 1,000 cannot afford” have half a point, however. In the next ten times worse than carbon dioxide when it comes to trapping years, as many air-conditioners will be installed around the heat in the atmosphere. An international deal to phase out world as were put in between 1902 (when air-conditioning these pollutants, called the Kigali amendment, will come into was invented) and 2005. Until energy can be produced with- force in 2019. Foot-draggers should ratify and implement it; out carbon emissions, these extra machines will warm the America is one country that has not done so. world. At the moment, therefore, air-conditioners create a vi- Last, more could be done to design offices, malls and even cious cycle. The more the Earth warms, the more people need cities so they do not need as many air-conditioners in the first them. But the more there are, the warmer the world will be. place. More buildings should be built with overhanging roofs or balconies for shade, or with natural ventilation. Simply Too cool forcomfort painting roofswhite can help keep temperatures down. Cutting the impact of cooling requires three things (beyond Bettermachines are necessary. But coolingas an overall sys- turning up the thermostat to make rooms less Arctic). First, air- tem needs to be improved if air-conditioning is to fulfil its pro- conditioners must become much more efficient. The most en- mise to make people healthier, wealthier and wiser, without ergy-efficient models on the market today consume only too high an environmental cost. Providing indoor sanctuaries about one-third as much electricity as average ones. Minimum ofair-conditioned comfortneed not come at the expense ofan energy-performance standards need to be raised, or intro- overheating world. 7

Traffic congestion Rules of the road

Capping the numberofride-hailing vehicles will do little to alleviate congestion. But road pricing would HE rise of ride-hailing firms peak hours, they create a cost for everyone else in the form of Congestion Tlike Uber and Lyft has been a increased congestion. Making drivers pay money when roads Average annual hours in heavy traffic per driver, 2017 boon for passengers. But it are busy compensates the rest of society for the inconve- hasn’t been good for everyone. nience, and discourages people from drivingduringrush hour. New York 91 Licensed cabbies lament the ex- London already has a congestion charge (New York does London 74 tra competition. Drivers for the not). But its scheme, which was introduced in 2003, falls badly

Singapore 10 new services complain about short in three ways. Most obviously, congestion charges need inadequate benefits. The latest to vary by time of day. Currently, drivers have to pay a flat fee preoccupation is the impact of ride-hailing on congestion. Be- of only £11.50 ($14.75) to enter central London, which means tween 2013 and 2016, the number of such vehicles in London they have little incentive to drive during off-peakhours. Singa- rose by 66%; rush-hour traffic in the city centre slowed by 20%. pore offers a better model. Cars there are fitted with electronic Manhattan has seen something similar. sensors; drivers are charged a fee every time they pass one of Governmentsare rightto worryaboutride-hailing’simpact the city’s gantries. By studying traffic flows, officials can set ap- on traffic congestion. INRIX, a traffic-information firm, esti- propriate congestion charges based on time and location. mates that between fuel bills, time wasted sitting around in Second, governments should charge ride-hailing vehicles traffic and increased shipping costs, congestion cost New York more than private ones. Like cabs, they can more easily absorb City and London a combined $46bn last year. But the response fees as part ofthe cost ofdoing business. They flit in and out of oflawmakers is wrong-headed. On August 8th New York’s city city centres repeatedly in the course of a day. Fix NYC, a task council voted to place a one-year moratorium on issuing new force formed by New York’s state government, has proposed licences for ride-hailing cars. Sadiq Khan, London’s mayor, that taxis and ride-hailing cars pay a congestion surcharge for now says he wants to do the same. every trip into the city centre. London does the opposite: such vehicles are, bafflingly, exempt from congestion charges. Jam today Third, cities should recognise that traffic and pollution are Acitywide cap on the numberofride-hailingvehicles will cer- different problems. One reason why London’s congestion tainly have an impact. Because drivers for firms like Uber and charge is losing its potency is because the city offers a number Lyft have high attrition rates, a moratorium on new licences of exemptions for greener vehicles. Since both low-emission could lead to a sharp drop in the total numberofsuch vehicles. cars and gas-guzzlers contribute to traffic, both should pay con- But the effect will be to hurt people living in suburban areas, gestion charges. Regulating to reduce emissions—or imposing who have fewer transport options. Between 2014 and 2017, the a separate charge on high-emissions vehicles, as London plans combined number of taxi and ride-hailing trips rose by 350% to do next year—is the better way to tackle pollution. in New York’s outer boroughs, but by only 25% in Manhattan, Congestion imposes big economic costs. But the problem where it is much easier to find a cab. cities face is not simply a surplus of ride-hailing vehicles. They A far better way for big cities to reduce traffic jams is to im- have too many cars, of all kinds, on the roads in rush hour. plement road pricing. When people drive their cars during Smart tax policy, nota crude cap on licences, is the answer. 7 10 Leaders The Economist August 25th 2018

People and borders A way forward on immigration

The Westneeds bettermigration policies to avert voters’ backlash against foreigners in theirmidst HE fear of immigration is tion. Start by regainingcontrol. Overhaul the outdated interna- Tpoisoning Western politics. tional systems for aiding refugees; at the same time, open Donald Trump owes his job to it. routes for well-regulated economic migration to the West. This Brexit would not be happening will require countries to secure borders and enforce laws: by without it. Strident nationalists preventing the hiring of illegal immigrants and deporting wield power in Italy, Hungary, those denied asylum, forexample. Where theydo notexist, the Poland and Austria, and have introduction ofID cards can help. gained influence elsewhere. Second, encourage all migrants, including refugees, to Even Sweden, long a country of refuge, has soured on mi- work, while limiting the welfare benefits that they can receive. grants. The Sweden Democrats, a thunderingly anti-immi- In America, where the safety net is skimpy, labour rules are grantparty, could win the mostvotesatan election on Septem- flexible and entry-level jobs plentiful, even migrants who ber 9th (see Europe section). Though it will not form a dropped out ofhigh school are net contributors to the public fi- government, it has already transformed Swedish politics as nances. Sweden, by contrast has a policy that seems designed mainstream parties seekto halt migrants. to stir resentment, showering refugees with benefits while The West risks a backlash of the sort that ended the previ- making it hard forthem to work. Turkey does a better job at in- ous great age of mobility, before 1914. That would be a tragedy. tegrating refugees, even if it does not recognise them as such Societies that close their doors to migrants will be poorer and (see Europe section). less tolerant. Meanwhile, those to whom the doors are closed A sensible approach would be to allow migrants to get pub- will see increased suffering, unable to escape the poverty, cli- lic education and health care immediately, but limit their ac- mate change or violence that prompts them to move. cess to welfare benefits for several years. This may seem dis- The stakes could not be higher. Yet advocates of liberal im- criminatory, butmigrantswill still be betteroffthan iftheyhad migration, such as this newspaper, are losing the debate. They stayed at home. An extreme illustration can be seen in the oil- need to find better arguments and policies. That demands rich Gulf, where migrants are ruthlessly excluded from the op- more honesty about the trade-offsimmigration involves. ulent welfare that citizens enjoy. The Gulf is not a model. Mi- grant workers receive too little protection against coercion and The walls ofnations abuse. But because they so obviously pay theirway, the native- International law categorises migrants either as refugees, who born are happy to admit them in vast numbers. Elements of are entitled to sanctuary, or as economic migrants, who have that logic are worth considering in the West. no right to go anywhere that does not want them. Yet the dis- Third, ensure that the gains from migration are more explic- tinctions are blurry. Poor countries next to war zones receive itly shared between migrants and the native-born in the host huge influxes, while rich countries try to shirk their obliga- country. One way is to tie public spending, particularly on vis- tions. And since rich countries admit virtually no economic ible services such as schools or hospitals, more directly to the migrants from poor countries unless they have exceptional number of migrants in a region. Another, more radical idea skillsorfamilyties, manyofthem trytheirluckby posingasref- might be to tax migrants themselves, either by charging foren- ugees. It does not help that states have different rules on who is try or, more plausibly, by applying a surtax on their income for a refugee. Orthattheystruggle to send home those who are de- a period afterarrival. The proceedscould be spenton public in- nied asylum, not least because many of their countries refuse frastructure, or simply divided among citizens. The more im- to take them back. migrants, the bigger the dividend. This mess feeds disaffection in the West, and it is a waste. The act of moving from a poor country to a rich one makes The needed and the needy workers dramatically more productive (see Briefing). A world Cultural objectionsto immigration are harderto assuage. New- with more migration would be substantiallyricher. The snagis comers flavour the host culture. And there will inevitably be that the biggest benefits of moving accrue to the migrants people who resist that change. History suggests that over time themselves, while the power to admit them rests with voters more pluralist countries become more tolerant of immigra- in rich countries. Fair enough: democratic accountability is tion. They do so most easily when the flow of migration is vested largely in national governments. Yet most Western smooth (to prevent the sudden surges that make host societies countries, struggling with ageing populations and shrinking feel swamped) and when newcomers are integrated into the workforces, need more migrants. So they have to find ways to local culture. Ensuring that they work and learn the local lang- make migration policy workforeveryone. uage are two powerful levers forachieving that. The first step is to recognise the causes of the backlash How much migration makes sense? The answer will vary against newcomers. Several stand out: the belief that govern- from country to country. Belgium is not Canada. Done proper- ments have lost control of their borders; the fear that migrants ly, migration brings economic dynamism. But the shortcom- drain already-strained welfare systems; the perception that ings of today’s policies mean that most Western countries are migrants are undercutting local workers; and the fear of being far more closed than they should be, and they feed the rise of swamped by alien cultures. populism. That is both a colossal wasted opportunity and an Assuaging these concerns requires toughness and imagina- unnecessary danger. 7

12 Letters The Economist August 25th 2018

Catalonia’s politics Weare willing to contribute to cient forIndia’s needs until American presidential candi- poorer regions in Europe, 2027. Also, private investors are date has a microchip implant- Yourspecial report on Spain including the Spanish ones, less interested in coal plants. ed in his brain that gives him (July 28th) claimed that some- but in a transparent and fair This does not mean that access to the response ofthose times the Catalan indepen- way.The Mediterranean corri- coal use will cease overnight in listening to his speeches, dence movement is identity- dor scheme has been blocked India. But a necessary first step enabling him instantaneously based and “borders on foryears by Madrid. Weare is to stop building new plants. to adjust his rhetoric. racism”. That is untrue. Last not even allowed to make India appears to be reaching RANDI ELDEVIK year, Europe’s biggest demon- decisions regarding Barcelo- this point fasterthan anyone Associate professor of English stration in support ofaccepting na’s commuter trains, airport thought likely a few years ago, Oklahoma State University refugees tookplace in Barcelo- or harbour. Germany’s city- and consequently will lock Stillwater, Oklahoma na, with up to 500,000 march- state ofHamburg can decide into less coal capacity. PROFESSOR NAVROZ DUBASH ers. The only far-right move- on all these issues, without Think different ments we have in Catalonia incurring the wrath ofBerlin. Centre for Policy Research are unionist and almost al- ELISENDA PALUZIE Delhi ways nostalgic forFranco. We Chair see the Catalan language as a Catalan National Assembly In defence of Bolsonaro tool ofintegration in our multi- Barcelona lingual society. We want to Jair Bolsonaro, a presidential normalise the use ofour lan- Farfrom making “things candidate in Brazil, is guage, which has been perse- worse”, as you claim, the described by you as “a threat to cuted forcenturies and still Spanish Supreme Court’s democracy” (“Brasília, we does not have official status proceedings have, forthe first have a problem”, August11th). throughout Spain. It is not even time in 40 years, given the Yet Mr Bolsonaro is aligned permitted in the Spanish par- defenders ofthe constitutional with a liberal economist, Paulo liament. In Belgium, 80,000 order in Catalonia the recogni- Guedes. His supposed radical- German-speaking inhabitants tion they deserve. This has ism only reflects the wishes of have their language fully recog- energised opposition to the the Brazilian people, who are Bartleby is right in his analysis nised, whereas10m Catalan- corrupt entourage ofCatalan tired ofso much corruption, so ofthe “verbiage” ofmission speakers continue to be treated nationalist cronies, in power much left-wing ideology and statements (August 4th). They like second-class citizens. since1978, and resulted in an so much poverty and underde- can serve well at times, but It is unfairto portray our extremely lively and enthusi- velopment. The real threat is to often are misunderstood. peaceful movement as having astic civil movement that have Luiz Inácio Lula da Silva, Some other notable gems from “an undertone ofintimidation favours continuing links with a convicted criminal, being the past include this from Otis and intolerance”, particularly the rest ofSpain. considered as a candidate. elevators: “We take people up as more than 1,000 Catalan This is a direct consequence It is not true that Mr Bolso- and down”. And this simple citizens are being prosecuted ofthe dedication, care and naro is racist, homophobic and value statement from Samuel fororganising the referendum hard workthat Spain’s top misogynist. He does want to Gompers, an American union on independence. Nine peace- magistrates have shown in the be the saviour ofthe Father- leader: “More”. ful politicians and civil-society face oftremendous political land. He wants to give Brazil a STANLEY GOLDSTEIN leaders have spent up to ten pressure. While our brand new new purpose. In Brazil the Lewes, Delaware months (and counting) in prime minister has gone on leftist press censures and per- prison without trial and seven holiday,the Supreme Court secutes conservatives. Our Bartleby should consider a have been forced into exile. By has decided to remain in post journey will be long and diffi- sequel on slogans that got lost trying to crush the referendum, throughout the traditionally cult; Mr Bolsonaro may be our in translation, such as “Impos- the Spanish state has ridden idle month ofAugust. only chance to start the march sible is Nothing”, apparently roughshod over fundamental PROFESSOR MAURICIO SUÁREZ out ofthe mud we are stuck in. an attempt by Adidas to para- constitutional liberties such as Complutense University of JOÃO CARLOS phrase a meaningful statement the freedoms ofassembly, Madrid Rio de Janeiro by Muhammad Ali. Then speech and the press. This there’s Audi’s “Truth in Engi- explains the political prosecu- Coal in India The man with two brains neering”, which sounds unfor- tion being carried out by the tunate in the fallout from the Spanish justice system, which “The blackhole ofcoal” Charlemagne mentioned that emissions scandal. Deutsche is motivated by revenge, with (August 4th) correctly argues Italy’s prime minister, Matteo Bank’s “Passion to Perform” trumped-up charges and that fossil fuels will persist in Salvini, does not use ghost- turned into “Performance that rulings based on fictitious India. But India is likely to burn writers forhis barrage of will make you suffer” when violence. farless coal in the future than social-media posts, relying translated into German. Nor is the rise ofpolitical anticipated because it is build- instead on a software ALEXANDER WESSENDORFF alternatives and the pro-in- ing fewer plants. Credible programme, The Beast, that London 7 dependence movement in estimates from just two years “monitors reaction to his Catalonia a sign of“rancour”. ago suggested India would output”, allowing him to adapt Rather it demonstrates a pro- build 243GW ofnew coal his tweeting (July 28th). Sci- Letters are welcome and should be found disagreement over how capacity. However, as your ence fiction has become reality. addressed to the Editor at GW The Economist, The Adelphi Building, Spain has been managed over article notes, in fact 48 , or In 1994 the authors known 1-11John Adam Street, the past few decades. We one-fifth the earlier projected jointly as Stephen Bury London WC2N 6HT Catalans favour a modern, capacity, is in the construction (actually Neal Stephenson and E-mail: [email protected] dynamic economy with a pipeline. Government plan- George Jewsbury) wrote More letters are available at: fairer distribution ofwealth. ners thinkthis should be suffi- “Interface”, in which an Economist.com/letters Executive Focus 13

Director, The World Health Organization (WHO) seeks a Division of External Relations Director of Communications Geneva, Switzerland Closing date for applications: 2 September 2018. (Vacancy reference: 1803530) The Office of the United Nations High Commissioner for Refugees (UNHCR) leads and supports In support of the Organization’s mandate and mission, the Director of international action to protect and deliver life-saving assistance to some 68.5 million refugees, internally displaced and stateless people. To achieve this mission, UNHCR has a highly mobile Communications develops an effective communications strategy, and creates global workforce which comprises some 16,000 women and men serving in over 460 locations innovative new channels to increase visibility and get WHO’s message across to key in 130 countries, working with close to 1,000 local and international partners. stakeholders as well as the general public. UNHCR is almost entirely funded through voluntary contributions - from governments and, to a lesser extent, individuals and the private sector. In 2017, UNHCR had an income of close More specifically, the Director of Communications will: to US$ 4 billion. The Division of External Relations is responsible for a range of diverse functions aimed at • Innovate: Identify external challenges and emerging issues and design projecting UNHCR’s external dimension: it ensures accurate and impactful communication strategies to manage them, while anticipating and incorporating appropriate on refugees to a range of diverse audiences, conducts public advocacy, builds and maintains strong partnerships with other humanitarian actors and with the private sector, and secures communications tools and channels into WHO’s work. sufficient funding for the organization’s operations, as well as preserving UNHCR’s current • Partner: Provide strategic communication advice to the Director-General and and historical records. senior WHO staff, drive internal communications, liaise with external partners The Division comprises four services and one section with a workforce of about 400 persons, and establish external networks to ensure support in driving WHO messaging mostly located in Geneva and Copenhagen, with strategic presence in locations which are and advocacy. media hubs or demonstrate significant private sector fundraising potential (Seoul, Bangkok, • Lead: Direct the development, implementation and monitoring of a new New York, Rome, etc.). WHO global communications strategy and promote WHO communications The Director will provide a strategic vision for the Division across functions, ensuring policies. coherence and collaboration among the different functional areas, and the synergistic use • Manage: Direct the organization, management, operation and performance of resources. He/she will be expected to deliver a streamlined, comprehensive and integrated communication strategy to mobilize public support, effectively advocate for refugees, and of the Department of Communications. firmly position UNHCR in an evolving humanitarian environment. Working closely with the Executive Office, the Director will be responsible for the Salary: This position is classified at the “D2” level in the United Nations mobilization of political and financial support for the work of UNHCR. He/she will oversee the common system. WHO offers an attractive expatriate package including health implementation of a corporate fundraising strategy aimed at reaching US$ 1 billion in private insurance, financial support for schooling of children and a relocation package. sector contributions by 2025. For more information and to apply online please go: The ideal candidate holds an advanced university degree in international relations, political https://goo.gl/e6JkWn or social sciences, or public administration, and has at least 17 years of progressively responsible work experience and a track record in communication/media strategies, resource Deadline for applications: 30 September 2018. mobilisation, and strategic partnership building. Understanding of humanitarian programming and financing, and demonstrated ability to effectively advocate for needs and comparative http://www.who.int/careers/en/ advantages to major public or private sector donors are required. Excellent knowledge of English with advanced verbal and written communication skills are essential for the position, as is proven ability to lead large and diverse teams in an inclusive manner. “Promote health, keep the world safe, serve the vulnerable” Interested candidates are requested to apply at https://bit.ly/2vcTWL7 by 2 September Dr Tedros Adhanom Ghebreyesus, 2018 (midnight Geneva time). We strongly encourage applications from female and diverse Director General candidates.

Career Opportunity Chief Executive Officer, Caribbean Climate-Smart Accelerator

Organization Overview The Caribbean Climate-Smart Accelerator (“the Accelerator”) is an entrepreneurial engine that catalyses and accelerates priority initiatives toward a Climate-Smart Zone, delivering resilience, social development and broad based economic growth for the Caribbean. The central objective of the Accelerator is to help transform the region’s economy through fast-tracking sound public and private investment opportunities in support of climate action and economic growth.

Role Overview The Accelerator is seeking to recruit a well-qualified and experienced Chief Executive Officer (CEO) from the Caribbean region to drive the implementation of its strategy and lead its operations.

To Learn More and Apply For more information on the Accelerator, visit www.caribbeanaccelerator.org. To view the detailed role description, visit the Career Portal at www.lci-inc.com. Please submit your application including an updated CV to [email protected], and mention “Application for the Position of CCSA CEO” in the title. The deadline for applications is September 15th, 2018.

The Economist August 25th 2018 14 Briefing Immigration The Economist August 25th 2018

shootings.” He admits, however, that Crossing continents Malmo is still nice, whatever Donald Trump says, and that he does not perso- nally feel threatened. Niels Paarup-Petersen, the leader of the liberal Centre Party in Malmo, says that ABU DHABI, MALMO AND NEW YORK Sweden mishandled the refugee crisis of Migration can make the world richer. But governments need betterways to manage 2015. Asylum claims were processed too it and convince voters slowly, he says. The state should not have T WOULD be hard to imagine an immi- about what to do with newcomers from lavished so much money on each new- Igrant more likely to succeed than Tarek. poor countries. In theory there are two comer. “We were treating refugees under He has skills (a degree in economics) and completely separate categories: refugees the age of18 the same way we would treat experience (ata bankin Damascus). He has from war or persecution, who have a right a vulnerable, homeless Swedish kid, get-up-and-go, too. When the war in Syria to safe haven, and economic migrants, spending 2,000 kronor ($220) a night on grewtoo intense, he fled bycarto Beirut, by who do not. In practice, however, many givingthem all kindsofnurturing. It wasn’t plane to Turkey, by boat to Greece, by lorry countries fail to honourtheirobligations to sustainable.” Rather than paying migrants to Denmarkand by train to Sweden. refugees, and plenty ofeconomic migrants to do nothing, Mr Paarup-Petersen thinks Yet after he applied for asylum in 2014, pose as refugees because they see no other they should have been offered job training the Swedish government strove to prevent legal way to enter a rich country. and language classes. “We have lots of va- him from contributing to society. “For one For many voters, the two issues blur cancies for plumbers and welders,” he and a halfyears I had to do nothing,” he re- into one: what they care about is the num- points out. Like the rest of Europe, Sweden calls. He was sent to a refugee centre, ber of foreigners arriving. According to has tightened its borders since 2015. Asy- where he was not allowed to work or take Gallup, 700m people—14% of the world’s lum applications have fallen by five-sixths. Swedish classes. Taxpayers gave him am- adults—would like to move permanently ple food and shelter. But he was barred to another country, usually a rich one. In Good migrations from paying his way, and not working sub-Saharan Africa the figure is 31%. The For those who like their societies homoge- made it difficult to integrate, too. “It was rich world clearly could not absorb so nous, almost any amount of migration is very hard to connect with people,” says Ta- many newcomers at once. And this is one too much. However, the economicbenefits rek (who prefers not to give his last name). reason why the politicians who complain ofallowinga steadyfloware potentially gi- From generous motives, Sweden has loudest about the huddled masses are ei- gantic. An unskilled Mexican who moves adopted policies towards refugees tailor- therwinningelections(asin Hungary, Italy, to America raises his wages by 150%; a Ni- made to provoke a backlash. It has admit- Austria and America), or forcing other par- gerian, by 1,000%. Michael Clemens of the ted huge numbers—fora while almost any- ties to rethink their open-door policies Centre for Global Development, author of one arriving from Syria could get asylum. (Denmark, Sweden, Germany, Britain). the forthcoming book “The Walls of Na- In 2015 the country let in 163,000, or1.6% of “We can’t take care of everybody,” says tions”, estimates that if everyone who the population. They received welfare Anders Olin, who is handing out leaflets wanted to move were allowed to do so, the benefits but most were not allowed to for the Sweden Democrats outside Malmo world would be twice as rich. work. This has buoyed an anti-immigrant station. “It’s a burden on the welfare state. Could some of these gains be realised party, the Sweden Democrats, who might [Refugees] become citizens after a couple without too much disruption? Are there win the most votes in an election on Sep- ofyears. Then the whole family comes.” In policies that would allow more long-term tember 9th (see Europe section). the past ten years, adds Mr Olin, “we’ve migration with the consent of native-born The rich world is gripped by a debate had many problems with violence and voters? As politicians scrabble for short-1 The Economist August 25th 2018 Briefing Immigration 15

2 term fixes—a fence here, a holding pen has not changed much in the past decade. there—few are asking these questions. No country has a perfect system. But To work or not to work 2 This article will focus on three rich four policies can help maximise the bene- Unemployment rate of foreign-born residents places—Sweden, the United Arab Emirates fits of immigration, minimise its costs and As % of labour force*, 2017 (UAE) and America—and try to draw les- boost public support for it. First, the influx 0102030 sons from their different policies and expe- should be orderly and legal as well as hu- riences. In the United States, 13% of the manely handled. This is not just because Greece population is foreign-born. In Sweden it is the rule of law matters. It is also because Spain 18.5%. In both places this is roughly three the perception of disorder fuels anti-immi- France times as high as in 1970, but in America’s grant sentiment. Public opinion in Canada Sweden case it is a reversion to a historical norm, (which borders only America) and Austra- whereas in Sweden it is a huge change fora lia (an island with ruthless bordersecurity) Germany previously monochrome society. In the is generally pro-migrant. A study by Alli- Britain UAE, nearly 90% of residents are foreign- son Harell ofthe UniversityofQuebec and United States ers—another huge change within less than others found that a strongpredictorof peo- two generations (see chart1). ple’s attitudes to migrants was whether Source: OECD *15- to 64-year-olds Sweden attracts surprisingly few highly they felt in control of their own lives, and skilled migrants from other rich countries, whether they felt their country was in con- Whereas the Gulf states have admitted thanks to its cold weather and high taxes. trol of its borders. Thus, to win voters’ con- vast numbers suddenly but temporarily, Half of its foreign-born population comes sent, any programme to let in more mi- America has done it gradually but perma- from outside Europe. Iraqis and Syrians are grants must keep trackofthem. nently. Babies born on American soil are the largest groups after Finns. Many locals The other three policies are all about in- automatically citizens. So immigrant fam- fear that culturally distant newcomers will tegration. Migrants should be encouraged ilies, even if they arrive illegally, can be- not adopt Sweden’s liberal values and will to work. They should be helped to fit in. come American in one generation. strain its generous welfare state. And they should be seen to pay their way. America’s flexible labour market Emiratis have no such fears. Foreigners Migrantsin the UAE obviouslypaytheir makes it easy formigrants to find entry-lev- cannot drain their welfare state because way. They fill 99% of private-sector jobs, el jobs, and its meagre welfare state means they have no access to it. They come to from designing skyscrapers to scraping they have to. The unemployment rate for work, and are thrown out if they stop dirty saucepans. Emirati citizens prefer to immigrants is 4% compared with 16% in working. It is virtually impossible for a for- work for the state which, flush with petro- Sweden, where benefits are fatter and un- eigner to become a citizen. And though dollars, pays fat wages for light work. ions have negotiated industry-wide pay some locals fret that aliens will sully their Asked if he has ever seen an Emirati laying scales that price unskilled migrants out of culture, few wish to do their own laundry. bricks in the scorching sun, a construction jobs (see chart 2). The National Academies America once had completely open boss replies: “Youknow the answer.” of Sciences found that even immigrants borders—back when crossing the Atlantic who drop out of high school are net con- took weeks and could be fatal. Now it lets I get around tributors to the public purse if they arrive in families of current residents, plus the Raffy Fermin moved from the Philippines in America before the age of25. skilled and those who are already rich. Un- to the UAE to fix cars. Locals love flashy ve- Migration has also made America the skilled migrants have almost no legal way hicles, but would not be seen dead under innovation hub of the world. Immigrants in, though perhaps 11m immigrants live in one. So Porsche, a German firm, sponsors a are twice as likely as natives to start a com- America illegally. school in Manila that teaches young Filipi- pany; more than 40% of the Fortune 500 America has more foreign-born resi- nos how to service its machines. When were founded either by an immigrant or dents in total than any other country they qualify, Porsche offers them jobs in the child of one. Newcomers bring skills, (43m). But as a share of the population, at the Gulf. connections and new ways ofthinking. 13%, it has fewer than Australia (28%) or MrFermin arrived in AbuDhabi in 2013, Gordana Vunjak-Novakovic, for exam- Canada (22%). America’s current level is when he was 21. He works on cool cars in a ple, moved to America in 1993, as her na- about what it was in the 19th century, but cool workshop. He earns twice what he tive Yugoslavia was falling apart. An engi- much higher than its nadir of 5% in 1970. It would at home, tax-free, sending 70% of it neer with an interest in biology, she found home to support his widowed mother and a job at the Massachusetts Institute of invest in property. He plans one day to go Technology. She got a green card in three More than a trickle 1 home and set up a car-repairbusiness. “I’m weeks. “That would be unheard of today,” Increase in proportion of international migrants happy I came,” he beams. she laments. Now at Columbia University 2000-17, percentage points Some migrants have it much worse. In in New York, she has helped to launch four 024681012 Saudi Arabia and Kuwait, they are often companies, includingEpibone, which uses tied to one employer, whose permission stem cells to grow new bones. UAE 88.4 they need to switch jobs. This gives horri- It helps, she says, that New York mixes Spain 12.8 ble bosses immense power. Some fail to so manypeople from elsewhere, with such Austria 19.0 pay wages on time, or at all. Some confis- a wide range of perspectives and experi- Sweden 17.6 cate workers’ passports, trapping them. ences. Two-thirds of the people she works Italy 10.0 Domestic workers are particularly at risk, with are immigrants or their offspring. She Australia 28.8 since they workout ofsight. worries that the flow of foreign talent Britain 13.4 Many Westerners decry the way Gulf might be under threat. Just back from a trip Germany 14.8 states treat migrants. Some think it immor- to China, she notes that many students Canada 21.5 al to offer them no chance of citizenship. wanted to know ifthey were still welcome United States Migrants 15.3 But there is a trade-off. Because migrants in America. The number of visas issued to as % of have fewer rights, Gulf citizens are willing foreign students fell by 40% between 2015 Hungary 5.2 population, and 2017, to fewer than 400,000. 2017 to admit more of them, relative to popula- France 12.2 tion, than Western countries. Most of the America’s visa system is, by rich-coun- Source: United Nations migrants benefit and want to stay. try standards, unusually biased against tal-1 16 Briefing Immigration The Economist August 25th 2018

2 ent. Ofthe 1m green cards (permanent resi- generation, only 6% do. One reason forthis care for them. Yet surprisingly little effort dence visas) issued each year, only 15% are is intermarriage—those with only one His- has been made to train foreign workers to granted because of the applicants’ skills, panic parent are much less likely to call meet this demand. The German govern- notes John Dearie of Startups USA, a pres- themselvesHispanic. Since Hispanicswho ment, anticipating a huge shortfall of geri- sure group; in Australia the figure is 68%. intermarry tend to be better educated than atric nurses, is training young Vietnamese Historically each wave of immigrants, those who don’t, surveys that rely on self- in Hanoi in both nursing and the German once settled, has worried that the next one identification (ie, most of them) probably language. But such examples are rare. will ruin America. “Our alms houses are greatly underestimate their progress. filled with foreigners,” grumbled the Ex- Most of the benefits of migration go to Wouldn’t it be nice press newspaper in 1855. Others lamented the migrants themselves. And because so The biggest worry about immigration is that the aliens were “prone to violence” many voters object to cultural disruption, that it might undermine the very thing that and “wedded to the worst forms of super- far less migration happens than would be makes it attractive. Poor countries tend to stition”. They were referring to Catholics optimal. Perhaps, then, ways should be de- have bad institutions. Rich countries have from Germany and Ireland, in language vised to share some of the material bene- good ones—that is why they are rich. Poor that echoes that used today about Muslims fits of migration with those voters, to per- people move to rich countries to enjoy the and Mexicans. German-Americans are suade them to allow more ofit. benefits ofgood institutions. But what ifso now so well assimilated that most, like Do- The simplest way would be for mi- many of them move that they swamp nald Trump, no longer identify as such. grants to pay to migrate. Several countries those institutions, replacing the norms of It is possible that recent immigrants, un- offer visas to those who invest a certain Switzerland, say, with those of Nigeria? like all previous waves, will fail to assimi- sum of money. Gary Becker, an economist, Another way of putting this is: how late. But there is scant evidence of this. suggested auctioning them to the highest many newcomers can rich countries ab- Looking at such things as jobs, schooling, bidder. The money could then be used for sorb? American history suggests: a huge English ability and intermarriage, Jacob popular causes such as shoring up public amount, over time. Its population has Vigdor of the University of Washington pensions or health care, or simply divided swollen from some 5m (including900,000 finds that recent immigrants to America equally among citizens. Suppose that black slaves) in 1800 to 320m of many col- are assimilating at least as well as those a America accepted enough migrants to in- ours today. MrClemens and Lant Pritchett century ago. A study by the OECD finds crease its population by a third, and each of Harvard devised a model to see how that the children ofimmigrants to America migrant paid $6,000 a year for the privi- much immigration would be necessary to earn as much as the native-born, and are lege. A native-born household of four make rich-country institutions start to be- more likely to attend university. would earn about $8,000 a year from such come more like those in poor countries, ex- Cultural assimilation is startlingly an arrangement, estimate Eric Posner and trapolating from what can be observed to- quick in America. Fully 60% of foreign- Glen Weyl, the authors of “Radical Mar- day. Their answer was: far more migration born Latinos speak mostly Spanish, but by kets”. Since the median income is about than is currently plausible. The cultures of the nextgeneration thishasfallen to 6%, ac- $50,000, that would give them a hefty rich countries are both strong and attrac- cording to the Pew Hispanic Center. Some stake in more open borders. The migrants tive. Migrants typically move to the West 15% of newlywed foreign-born Hispanics themselves would make similar absolute because theylike it. Byand large, they obey in 2015 were hitched to non-Hispanics; gains, even after paying the fees, and much its laws and adopt many of its customs, among US-born Hispanics it was a whop- more in percentage terms. and its institutions remain strong. ping 39%. For Asians the figures were 24% Mr Posner and Mr Weyl suggest an even In 2005 a Danish newspaper published and 46%. Five years after refugees arrive in bolder plan. What if each citizen could 12 cartoons ofthe Prophet Muhammad. Ri- Sweden, only 3% ofwomen and 4% ofmen sponsor one migrant from a poor country, ots erupted in several Muslim countries. are in a relationship with a native Swede. and take a cut of his earnings? This would Some 200 people died. It was the worst create a direct personal link between new- cultural clash between Danes and Muslim Don’t worry, baby comer and local. The migrant might stay in immigrants in recent times. Yet the country Studies probably underestimate assimila- the citizen’s spare room. He would be free has moved on. Ahmad Akkari, one of the tion. The reason iswhatdemographers call to quit and go home, but not to disappear Danish Muslim leaders who toured the “attrition”: when migrants have lived in and work in the black market. This system Middle Eaststirringup outrage, regretshav- America for a couple of generations, they would require rules against hiring illegal ingdone so. “I waspartofa movementthat often cease to identify as “Mexican-Ameri- workers to be strictly enforced. led to catastrophic events,” he says. can” or “Hispanic”. In the first generation, Nearly every rich country has an ageing Shocked by the violence, he retreated 99% use such ethnic labels; by the sixth population and a shortage of workers to and read Karl Popper’s “The Open Society and Its Enemies”, twice. He realised that he had taken Western freedoms for granted. “If I had protested over cartoons in Saudi Arabia or Iran, they would have hanged me.” He adds that many Muslims who have grown up in Denmark “don’t realise how Danish they are”. As for Tarek, the Syrian refugee in Swe- den, eventually he was granted asylum and allowed to work. He found a job as a data analyst. He has brought his family over, and is much happier. He praises the way Christians and Muslims can live peacefully side by side in Sweden—though he says he would like to go back to Syria, if the war ends, to help rebuild his country. Meanwhile, he has a modest dream. “I’d love to take up golf,” he says. 7 Europe The Economist August 25th 2018 17

Also in this section 18 Slovenia’s grumpy veteran 18 Syrians in Turkey 19 Russia’s influence in Slovakia 20 Measles returns 20 An Italian tie to Scotland 21 Charlemagne: Ireland, changed utterly

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

Sweden’s elections is not against immigrants; he is against Sweden’s failure to integrate them. He Moving in, moving right voices a common criticism, that because the country has not demanded that immi- grants assimilate, too few consider them- selves Swedish and too many rely on so- cial-welfare programmes. Yet the newcomers’ impact on Sweden GOTHENBURG is more nuanced than the Sweden Demo- Worries about immigration have boosted populists and changed the mainstream crats suggest. Astudy by a finance-ministry HEY take out the glass windscreens The numbers have fallen to about 26,000 economist in May estimated that refugees “Tso people won’t shatter them,” says per year, but the issue preoccupies many who arrived before 2014 would each cost Karl Robbjens, nodding at a bare tram stop voters. This has been bad forthe governing the state about $8,000 per year over their in Hjallbo, a poor suburb of Gothenburg. Social Democratsand good forthe Sweden lifetimes. But regular immigrants, unlike Mr Robbjens, who is of mixed Swedish Democrats, an anti-immigrant party with refugees, must have private wealth or a job and Libyan parentage, grew up on a hous- neo-Nazi roots. Though they have slid in lined up before they come. ing estate in this immigrant neighbour- recent weeks, polls put them anywhere Immigrants commit a disproportionate hood. To an outsider it looks as immacu- from first to third with at least 20% of the number of crimes, but criminologists say late as most of Sweden, with its carefully vote, or just over 70 MPs. they are not much different from Swedes tended vegetation and flagstone-paved One of those MPs will probably be Mr with comparably low incomes. Despite lu- shopping square, but Mr Robbjens paints a Robbjens. Three years ago, he left the cen- rid headlines, there is no clear upward rougher picture: “I used to get my ass tre-right Moderate party for the Sweden trend in most categories of offence, though kicked all the time.” He points out the Democrats. As a man of mixed race whose sexual assaults have risen in the past year. school where his friends broke windows, mother was deputy mayor of Tripoli, he Dan Windt, a police chief in the Gothen- and the apartment block where a friend’s seems an odd fit fora far-right party. But he burg area, says crime is somewhat lower sister was stabbed to death. this year than last. On August 13th some 20 cars were set Even the politics of immigration are on fire in Hjallbo, among nearly 100 burnt The ups and downs of populism subtler than they seem. A survey by Ipsos, in the Gothenburgarea that night. Two sus- Sweden, general-election polling, 2018, % a pollster, found that when voters were pects were arrested. Another who fled to asked to rate their top three concerns, high- 30 Social Democrats Turkey was picked up there. Swedish po- ELECTION est came health care, at 44%. Immigration lice think a Kurdish gang may be responsi- Moderate Party 25 came third (25%), barelyabove the environ- ble. Torching cars is a hobby for young ment (23%), which has won attention be- criminals in Gothenburg; police say 172 Sweden Democrats 20 cause of immense forest fires this summer, have been burnt this year, down from 237 boosting the Greens. in the same period last year. But this attack 15 But the Social Democrats split the was scarily co-ordinated, with groups of health-care vote with other parties, includ- Centre Left masked men fanningout to do the job. 10 ingthe Moderates and the LeftParty. Voters Such incidents have kept immigration who care most about immigration over- Green Liberals Christian Dem at the top ofSweden’s political agenda as it 4 whelmingly favour the Sweden Demo- prepares for elections on September 9th. Minimum needed to win seats crats. “They have total ownership of the is- During the migration crisis of 2015, 163,000 0 sue,” says Henrik Oscarsson of Gothen- asylum-seekers streamed into Sweden be- Jan Mar May Jul Sep burg University, who co-directs a study of Source: pollofpolls.eu fore the country adopted border controls. Swedish voting. 1 18 Europe The Economist August 25th 2018

Slovenia’s grumpy old man Defeat from the jaws of Viktor

LJUBLJANA Anti-immigrant populism wins a veteran politician votes, but not power ANEZ JANSA sits sullenly in Slovenia’s could happen again. “They will all be JNational Assembly, scrolling through stuckhere ifAustria and Italy close their social-media posts on his phone and borders,” says Darinka, a retired teacher occasionally sending a sarcastic tweet. who voted forMr Jansa’s party. The parliament is debating the nomina- Mr Jansa’s rightward shuffle bore fruit, tion ofMarjan Sarec as the country’s next with his share ofthe vote rising from 21% prime minister. Strangely, MrJansa, in 2014. But the SDS has been unable to leader ofthe largest opposition party, form a coalition. Many parties refused does not speakonce during the debate. even to talkto it. Instead, five smaller Stranger still is that Mr Jansa’s Slovenian centre-left parties banded together to Democratic Party (SDS) is in opposition at form a minority government with out- all: it won a quarter ofthe votes in June’s side support from the hard left. Other parliamentary election, twice as many as politicians justify their decision to ex- its nearest rival. clude the SDS by arguing that Mr Jansa is Mr Jansa, who has twice served as a divisive bully. “When someone attacks prime minister, is the only person to have us so personally and so aggressively, he sat in every Slovenian parliament since should expect to see the results during the country’s independence in 1991. negotiations,” says Vojmir Urlep, Mr During past stints in power, he governed Sarec’s economic adviser. Luka Mesec, of as a pro-market liberal. This time round Levica, a leftist party, accuses the SDS of Syrians in Turkey he chose to rebrand himselfas a populist, “scary anti-migrant discourse.” anti-immigrant outsider. Hungary’s The SDS is crying foul at the outcome Home from home populist prime minister, Viktor Orban, ofthe coalition talks. “There are interest came to his rallies. Businessmen close to groups in the deep state against democra- Mr Orban are also said to have financed cy,” says Milan Zver, the party’s vice- pro-Jansa media outlets. president. “They are afraid ofa strong GAZIANTEP Anti-immigrant sentiment seems odd government.” Tanja Staric, an analyst, ManySyrians are faring betterin in a country that received fewer than 800 says Mr Jansa is using his exclusion to Turkeythan in Europe—fornow non-European migrants last year. But gain sympathy, waiting in the wings for many Slovenians were shaken by the Mr Sarec’s fragile coalition to fall apart. ETURNING to Turkey from Germany migration crisis of2015, when halfa But Mr Jansa, whose last government fell Rwith four children in tow was not easy million people traversed the country on because ofcorruption charges against for Faisl Alakrch, a 36-year-old Syrian. He their way to Germany, and some fear it him, makes an unconvincing victim. had to use a people-smuggler to retrace, in reverse, the route he had taken the year be- fore. His younger brothers have remained 2 Spurred bythe Sweden Democrats’ suc- become prime minister. Whoever forms a in Germany and are studying at university, cess, mainstream partieshave shifted right. government will face a tough job putting buthe wanted to work, and complainsthat The Social Democrats have become more together ad hoc majorities to legislate. “I could not do anything there.” Turkey, by restrictionist—Stefan Lofven, the prime Many municipalities, like Gothenburg, contrast, has made it easy for him to oper- minister, says he wants to reduce refugee are already in this situation. The city’s 13- ate. He was able to register a company and numbers by providing aid to the regions member executive is split between right set up a café in Gaziantep, a city close to the they come from, as have the Moderates. and left; the odd seat was won by the Swe- Syrian border. He has now been invited to The Greens and the Left—Mr Lofven’s po- den Democrats in 2014. They are shunned become a Turkish citizen. His six-year-old tential coalition partners—are more wel- by other parties. Besides ideology, says Da- son speaks a mixture of German, Turkish coming, as is the Christian Democrat party. vid Lega, the city’s deputy mayor, there is a and Arabic. The Sweden Democrats, meanwhile, character issue: the Sweden Democrats’ Around 3.5m Syrians live in Turkey, the have adopted a more restrained tone in council member was expelled from his largest number of refugees anywhere in hopes of winning centrist votes. The party forallegedly bullying subordinates. the world. Turkey is not fully signed up to party’s leader, Jimmy Akesson, acknowl- Elsewhere in Scandinavia, anti-immi- the 1951 Refugee Convention so, although edges that the country will not be “blond grant parties wield power. Norway’s Pro- Syrians there get access to health care, edu- and blue-eyed” forever, and says he wants gressives and Denmark’s People’s Party cation and a small stipend, partly paid for to focus on integration, which sounds like have joined or backed governments. Few by the European Union, they do not re- Mr Lofven. But he is taking a hard line on see this happening soon with the Sweden ceive the manybenefitsthatrefugees in the asylum-seekers, demanding that Sweden Democrats. Other parties dismiss their EU get, such as accommodation and child accept only those fleeing oppression in pro-integration rhetoric. “They have benefit. Nevertheless, Turkey is proving a neighbouring countries. Norway, Finland shown no interest whatsoever in facilitat- better refuge formany than Europe. and Denmarkare not very oppressive. ing or supporting integration,” says Ann- One reason is that Turkey is close to As in previous elections, every other Sofie Hermansson, Gothenburg’s Social home for many of the refugees. Syrians partyhasvowed notto co-operate with the Democratic mayor. But as Mr Robbjens’s flooded in to Gaziantep, a town around Sweden Democrats. That probably means candidacy shows, many Swedes—includ- two hours’ drive away from Aleppo, at a minority government. Current betting is ing immigrants—think mainstream parties such a rate in 2014 that its population on Ulf Kristersson, the Moderate leader, to are guilty ofthis too. 7 reached itsprojected size for2030 thatyear,1 The Economist August 25th 2018 Europe 19

2 says Onder Yalcin, the head of the migra- tion office. Manyknewthe cityfrom before the war, and that has helped them inte- grate. Gaziantep’s old town resembles that of Aleppo. “I like Turkey because it is simi- lar to Syria; they have the same streets,” says Khaldoon Ibabede, a 19-year-old who moved back to Turkey after two and a half years in Germany, where he missed his family and wider sense ofcommunity. The Turkish government’s more infor- mal approach means most Syrians there are not in ghettos, as they are in parts ofEu- rope, nor in camps, as they are in Jordan and Lebanon. Only around 7% of those in Turkey are in camps; some 40,000 have been given Turkish citizenship. Freedom to work is the biggest benefit that Turkey offers. A tiny share of the refu- gee population—around 14,000, according to one estimate—has work permits, but al- most all Syrians workinformally, mostly in factories. According to the chairman of a garment-manufacturing company, Turkish shelves would be empty without Syrian Russia’s influence in Slovakia workers. Mr Yalcin says Syrian workers are reintroducing some skills which were be- Wolves in bikers’ clothing ing lost in Turkey, such as copper-working and stone-carving. Some refugees are en- trepreneurs. Khaled Oukab has started a factory in Gaziantep that sends women’s clothes to rebel strongholds in northern DOLNA KRUPA Syria and to Iraq. His brother has a busi- The European headquarters ofa pro-Putin bikergang causes controversy ness making denim forexport. Economic activity helps integration, yet URROUNDED by vast wheatfields, the interior-ministry spokesman, says the gov- the lack of formal schemes could pose pro- Scamouflage-painted former pig farm ernment is monitoring the Night Wolves blems in the long run. Although the num- just outside the village of Dolna Krupa and the Slovak Recruits, but cannot yet act ber of Syrian children in Turkish schools looks both incongruous and menacing. A against them because they have commit- has increased, around 38% are still not in knock on the compound’s metal gate goes ted no crime. The defence ministry has school, according to the International Cri- unanswered, but a giant guard dog snarls asked forits equipment back. sis Group, a think-tank, partly because old- back through a narrow gap. The high walls But there are suspicions that the centre- er children work to support their families. are studded with barbed wire. Small signs right Smer party, which heads the ruling And the Syrians’ informal status could warn that photographs are forbidden; a coalition, is dragging its feet. Grigorij Me- make them vulnerable. During the elec- larger one, somewhat implausibly, adver- seznikovofthe Institute forPublicAffairs, a tion campaign in June both President Re- tises the building as a “Museum”. think-tank, says that, although the party is cep Tayyip Erdogan and opposition lead- In June Russian state media announced officially pro-Western, many members are ers talked about sending them home. that this was the “European headquarters” sympathetic towards Russia. Robert Kali- Anti-immigrant feeling is growing. Last of the Night Wolves, a Russian motorcycle nak, an influential formerinteriorminister, year24 Syrians died in anti-refugee attacks. club, with whom Vladimir Putin rode in is said to be friends with Mr Hambalek. Others face low-level abuse or discrimina- 2011. The group is banned in Poland and Juraj Smatana, an anti-corruption activ- tion from those who perceive Syrians to be subject to American sanctions for its in- ist, likens the Night Wolves’ presence to the taking jobs, causing crime or increasing volvement in the war in eastern Ukraine. Russian invasion of Czechoslovakia (of prices. “We create problems for the middle Slovakian liberals were furious over re- which Slovakia was once part) in 1968. The class,” says Abdul Fatah Alhmoui, who ports that the Slovak Recruits, a right-wing 50th anniversary of that event falls this runs a sandwich and falafel shop in Gazi- paramilitary group, had conducted train- week. His implication is that the authori- antep; his Turkish brother-in-law has com- ing exercises there using old military tanks. ties are complicit in the current invasion, plained to him about higher rents. The owner of the site, Jozef Hambalek, a just as they were in the last one. “We did If there is a full-blown economic crisis politically well-connected businessman not invite you here in 1968, we do not want in Turkey, orif more refugees cross the bor- with an enthusiasm for motorcycles and you even in 2018,” reads a billboard in the der with the fall of Idlib, then tensions are nationalism, had acquired the equipment nearby town ofTrnava. likelyto increase. Yetformany Syrians, Tur- on loan from the defence ministry, claim- Dolna Krupa’s 2,000 residents are di- key remains a better bet than Europe—or ing it was fora museum at the compound. vided. A group of activists is urging au- home. Inside a Syrian grocery shop in Ga- More than 200 intellectuals, politicians thorities to enforce land-use regulations re- ziantep, Shadi Sankari, the 18-year-old son and activists have signed a letter calling on quiring that Mr Hambalek’s land be of the owner, looks nonplussed at the idea authorities to close the base and expel the exploited only for agriculture. Others do of going back. Next year he will go to uni- Night Wolves. The country’s president, An- not see what the fuss is about. “We have no versity to do a business-studies course in drej Kiska, chastised authorities for not do- problem with the Night Wolves or with Turkey. In Syria there’s “nothing for me to ing enough: “These are no ordinary motor- Russia,” saysFilip, an IT technician. “I think go back to”. 7 cycle enthusiasts.” Petar Lazarov, an the USA is worse.” 7 20 Europe The Economist August 25th 2018

Measles erupt likely two-way traffic in people, tastes and Stabbing pains ideas between this walled, medieval Tus- Spotty coverage % of respondents disagreeing with the statement: can town and farawayScotland. Particular- “Overall I think vaccines are safe” ly in summer, when emigrant families 2016 0 10203040 come to renew their links, you are as likely to hear Glaswegian-accented English in France Barga as Tuscan-inflected Italian. Blue-and- Greece white Scottish flags abound. And to meet Vaccination rates in parts ofEurope are Ukraine the needs of those who return to Barga to lowerthan in some African countries Italy retire, there is a bakery offering porridge ACH year, as the summer winds down Romania oats, shortbread from Aberdeenshire and Eacross Europe, so do measles cases— Serbia Irn-Bru, a uniquely Scottish beverage. Ear- which tend to peakin late spring. August is, United States lier this month Barga held a sagra: an event at which local people cook local delicacies therefore, a good time to take stock of the Germany measles season for the year. The tally for for visitors. Barga’s was devoted to pesce e Europe, published on August 20th by the Britain patate, or fish and chips. Source: Vaccine Confidence Project World Health Organisation, shows that The origins of the relationship go back cases in the first six months of2018 exceed- to the unification of Italy. For more than ed the annual total for each of the past five Hepatitis B vaccine. Some French doctors five centuries, Barga had been an exclave years. About half of the 41,000 cases this objected to a combined vaccine for infants, of, first, the Republic of Florence and later year were in Ukraine. Infection rates also and to the HPV vaccine, which protects the Grand DuchyofTuscany, encircled bya jumped in Serbia, Greece and Georgia. In against cervical cancer. hostile Duchy of Lucca. To enable it to sur- recent years big outbreaks have erupted in Europe’s drive to end measles by 2015 vive, the authorities in Florence granted it Italy, Romania, France and Germany. was pushed backto 2020. Some hope. 7 generous tax exemptions. When Italy was None ofthis is a surprise. In the past de- united in 1861, they were abolished, the cade, measles-vaccination rates in some economy collapsed and large-scale emi- European countries have often fallen be- Italy gration ensued. Luca Galeotti, editor ofthe low those in parts of Africa. Italy, France Giornale di Barga, says that by the 1960s, and Serbia, for example, have lower child- Chianti or Irn-Bru, more than half his newspaper’s subscrib- vaccinations rates than Burundi, Rwanda ers were living abroad. Most were in Scot- and Senegal. In some years, vaccine short- signore? land and many were making their living ages were to blame, especially in parts of frying fish. eastern Europe. Both Ukraine and Serbia One of two mysteries surrounding the BARGA have had irregular supplies of the MMR barghigiani is why so many of those who Tuscany’s mysterious Glaswegian vaccine (which protects against measles, emigrated from the citywentto Scotland to connection mumps and rubella) since 2014. Even after improve their lives and, in some cases, recentoutbreaks, theywere notable to pro- ITH an “Evening ofBagpipes and Po- achieve distinction. The Archbishop emer- cure enough doses to cover older cohorts, Wlenta” (boiled cornmeal, popular in itus of Glasgow, Mario Conti, is descended health-workers and other groups at risk of north and central Italy), the mountain from barghigiani, as is Paolo Nutini, an in- becoming infected. town of Barga will on September 3rd ternationally successful singer-songwriter But suspicion of vaccines is also partly launch one ofItaly’s more unusual cultural whose grandfather, Giovanni “Jackie” Nu- to blame. Unlike America, Europe does not festivals: its annual Scottish Week. This tini, ran a renowned fish-and-chip estab- have an organised “anti-vax” movement, year it features the presentation of a book lishment in Paisley. That points to the sec- but in many countries fears are much high- in Italian on Scottish football and another ond mystery: how come these mountain er. Two-fifths of people in France—a coun- in English on Barga cathedral (though ithas folk proved so adept at cooking fish? try whose people pop antibiotics like a population of barely10,000, Barga is offi- “Well,” ventures Barga’s mayor, Marco Bo- sweets—believe that vaccines are unsafe. A cially a city). nini, “it was certainly better than working quarter of Greeks and Ukrainians are also The weeklong festival celebrates an un- in the mines.” 7 hostile. During recent outbreaks, some countries had dozens of health-workers coming down with measles—which sug- gest that they, too, may have a dim view of vaccines. A survey of French doctors in 2014, forexample, found thatnearlya quar- ter believed that some of the officially rec- ommended vaccines were not useful. Each country has “bespoke issues of concern”, says Heidi Larson of the London School of Hygiene and Tropical Medicine. In Serbia and Ukraine mistaken beliefs thatthe MMR vaccine islinked with autism have led some doctors to delay the first dose (usually given at six months of age) in orderto be sure the child isdeveloping nor- mally. In some countries parents worry about several vaccines being given at the same time, so they space out jabs. France has a long history of vaccine rows. One re- flected wrong ideas about the effects ofthe Fantasising about fried fish The Economist August 25th 2018 Europe 21 Charlemagne Changed, changed utterly

The Ireland that awaits the pope has a greatly altered relationship to religion and to Europe as much indignation as the actual misdeeds. For people who have been blighted, the World Meeting of Families, a triennial Catholic festival which brought Francis to Dublin, sounds like a joke, even though some participants are on the faith’s liberal edge. Nor will Irish sufferers be impressed by the pope’s belated vowto meetsome ofthem, orbyhis2,000-word replyto newrev- elations of crimes by clergy in Pennsylvania. They just want Ire- land’s clerics brought to book and made to pay compensation. Given the vast transformation that has taken place in the politics ofreligion in Ireland, they feel historyis on their side.

Aeons of difference The island is still experiencing the dissolution of toxic bonds be- tween church and state that were sealed in the 1930s. Catholic zeal had political traction for an emerging nation. Catholics re- sented a small Protestant minority that controlled more than its share of land, banks and firms. Catholicism was presented as an answer to every problem in a way that students of the Muslim Brotherhood would recognise. The priesthood was a path to per- sonal advancement which attracted many dubious types. Over the past few decades, anger over clerical abuse com- HERE is quiet excitement among a dozen sisters of the Re- bined with social modernisation to create a cascade of change. Tdemptorist order as they gather for evening mass, along with When John Paul came, gay sex was illegal; in 2015, Ireland voted 30 or so other devout souls, in a plain, modern chapel with a overwhelmingly for same-sex marriage. In 1983 a ban on abor- practical, circular design. A discreet row of flags heralds Pope tion was entrenched in the constitution; last May 66% voted to Francis, due on August 25th for what promises to be a tumultu- strike out that article. Church-going is still high by Western stan- ous weekend. dards: one in three attends Mass. But in 1990 four-fifths did. In the surrounding smoky terraces of north Dublin, papal With the old church-state cronyism a fading memory, the bunting is absent. Posters celebrate other Irish rituals, like the im- question is how farthe pendulum will swing. Some expect more minent Gaelic-football final. The zeal that John Paul II’s visit in battles, especially over schools, which at primary level are still 1979 generated is nowhere to be seen. Some 2.7m people, or 80% dominated by the church. A law passed this year bars over-sub- of the population, cheered him. These days, the nuns reflect a scribed schools from favouring baptised Catholics. (Schools run small and defensive subculture, almost as far from the main- by minorities, like Anglicans and Muslims, can still discriminate.) stream as Dublin’s Sikh or Buddhist minorities. In tonier parts of Modernisers are now focusing on the content of state educa- the city, there is equally little interest in say, Catholic teaching on tion. To devout Catholics, it seems that the religious gruel served marriage, and much more chatter about the impending divorce to today’skidsisthin. Powerful bodieslike the Christian Brothers, between Britain and the European Union. at whose rough hands generations of Irish boys learned and suf- Like many a devout Hibernian over the centuries, the sisters fered, have vanished. (Those Redemptorist nuns are an unusual cherish continental links: their order began near Naples in the case of a religious order which has downsized gracefully, by sell- 18th century. In earliercenturies, the very survival ofIrish Cathol- ingoffland and handingan over-sized church to Egyptian Copts.) icism owed much to the refuge offered in France and Belgium to But the tone ofIrish primary education seems too Catholic for Irish monastics. But today’s Irish-European axis is different. Only the liking of campaigners for religious neutrality. Preparing chil- a generation ago, Spaniards came here to learn English in a Cath- dren for communion, a Catholic rite of passage, still features. Art olic ambience. Now it is Ireland’s secular hedonism that attracts and nature study have a devotional edge. Lobbying for reform is young tourists. an odd coalition: a group called Atheist Ireland, plus the low- As Dublin awaits an open-air papal mass, the biggest event in church Evangelical Alliance, and Ahmadi Muslims, who com- a packed programme, local reactions range from indifference to plain ofbullying by Irish Sunnis. hostility to dismay over the fact that users of specially laid-on In the longdrive to modernise Ireland, the equalitylaws ofthe buses may still have to walk seven kilometres. The police tell European Union, and the European Court on Human Rights people to wear stout shoes and consider whether they are well (ECHR), have been vital. Reform of Ireland’s laws on homosex- enough forthe march. Atemporarymorgue awaitsthose who are uality began in 1988 with a ruling from the ECHR that criminalisa- not. Itistrue that500,000 ticketswere snapped up. Butnotall tak- tion violated a gayman’sprivacy. And in 2014, a woman who was ers were pious. A group called “Say Nope to the Pope” urged peo- abused by a school principal won a 30-year fight when the ECHR ple to get tickets and discard them. upheld her claim that the state was responsible. This made it The nay-sayers’ rage reflectsa darkside ofIreland’sformerthe- harder for church and state to pass the buck over horrors that oc- ocracy whose horrors are still emerging. They include the back- curred at institutions which they had co-managed. breaking work imposed on “fallen” women and the neglect, All this helps explain why, caught between Brexit Britain and sometimes fatal, oftheir offspring in church-run institutions; and the EU, Irish people prefer the latter. Their forebears may have the abuse and violence endured byboysin clerical schools. In Ire- looked to the continent, and Rome, for spiritual succour. Today’s land as elsewhere, efforts by bishops to cover all this up provoke Irish see Europe as a bulwarkagainst theocracy. 7 22 Britain The Economist August 25th 2018

Also in this section 23 The scramble for students at home 24 Bagehot: The leftward drift

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

Universities abroad fostering international research links; in some cases it might even be true. Dreaming of new spires The attraction for students is clear. A British degree holds a promise of quality, explains Mark, a local undergraduate at Sunway University, a Malaysian institu- tion just outside Kuala Lumpur. Studying at home allows students to avoid Britain’s JOHOR BAHRU AND KUALA LUMPUR increasingly strict visa regime. It is also British universities are increasinglysetting up shop overseas much cheaper. A joint Lancaster-Sunway OHOR BAHRU, a sprawling, gritty city in The universities’ overseas footprint be- degree costs around 28,000 ringgit (£5,300, JMalaysia, would once have been an un- gan to grow fast in the 2000s, as they or $6,820) a year, compared with £9,250 for usual home for a British university. But rushed to meet demand in growing econo- a Lancaster degree in Britain—which just off one of the main roads out of town, mies, mostly in Asia. “Like in any other in- would also involve hefty travel and living past signs to Legoland, sits EduCity, a de- dustry, universities dipped their toes in the costs. In the past five years, Sunway’s stu- velopment which is home to three British water, then took the plunge,” says Vangelis dent numbers have trebled, to 7,500. The institutions, each a humid five-minute Tsiligiris of Nottingham Business School. offer of British qualifications has been cru- stroll from the other. The University of High-ranking universities were the most cial, says Graeme Wilkinson, its vice-chan- Reading is filled with greenery and gleams likely to set up campuses, in the hope ofat- cellor—although, he adds, having a water in the sun. Newcastle transplants the archi- tracting better staff and more students, parknext door did no harm. tecture of the university’s Tyneside home both of which would help them up the in- For countries like Malaysia, importing to Malaysia. Southampton completes the ternational rankings. In the early days, foreign universitiesoffersa wayto build in- unlikely trio. less-fancyuniversitieswere happierletting stitutional expertise quickly. Two decades These outposts are part of a broader local colleges teach their qualifications. In- ago, Malaysia began to position itself as a trend. Britain’s 136 universities now have creasingly, the more prestigious universi- hub forhigher education, seeking to attract 39 foreign campuses abroad, educating ties prefer this approach too. All universi- students from around the region, as well as 26,000 students, from Middlesex Universi- ties wax lyrical about the benefits of from farther-away Muslim countries, ex-1 ty’s site in Mauritius to Glasgow Caledo- nian’s branch in Bangladesh (see map). Only Australia, which has a much smaller Dons on tour London Kent Belgium higher-education system, can boast a simi- British universities, France Kent France Westminster Sheffield Uzbekistan Lancashire Belfast lar ratio ofhome to overseas campuses. foreign campuses, 2018 Greece Surrey Middlesex Lancashire China Liverpool Existing In development Malta Aberdeen In addition, there are many more stu- Cyprus UAE* Leeds South Korea dents taking British degrees taught by for- Salford Bahrain Glasgow Bangor Nottingham UCL Qatar Caledonian eign institutions. In these arrangements Bangladesh Manchester Hong Kong British universities provide a curriculum, Malaysia* and sometimes teaching staff, training and Lancaster Ghana Manchester support, in return for a juicy fee. In all, in Singapore 2015-16 there were 703,000 students study- ing fora British higher-education qualifica- tion overseas. Including international stu- Middlesex Manchester Mauritius dents in Britain, British universities have Brazil 1.1m foreign students on their books, a number fast catching up with the 1.9m Brit- *UAE: Heriot-Watt; Middlesex; Manchester; London Business School; Exeter; CASS; Bradford; Bolton ish students they are educating. Source: C-BERT Malaysia: Nottingham; Newcastle; Southampton; Reading; Heriot-Watt The Economist August 25th 2018 Britain 23

2 plains Sarah Deverall, head of the Malay- list on the stockmarket to promote a global tuition. From 2012 the Tory-Lib Dem co- sian branch of the British Council, which higher-education brand. alition government gradually removed promotes British culture abroad. Malaysia Last year growth in the number of stu- caps on the number of students universi- now has more students studying for a Brit- dents studying for British degrees overseas ties could recruit. This allowed universities ish qualification than any country bar Brit- slowed, to just 1%. But university officials to expand, and thus to attract more stu- ain itself. Others places have courted for- don’t expect the lull to last long. Some Brit- dents from poor backgrounds. eign universities for different reasons. ish universities are considering setting up It also forced them to compete harder Dubai, forinstance, encouraged them to set continental campuses after Brexit, in order forapplicants. The government hoped this up shop to cater to the children of its large to sidestep expected restrictions on immi- would drive up teaching standards and expat population. gration. A looming demographic dip in the lower costs. As expected, universities have Despite support from host govern- number of British 18-year-olds, and threats begun to pay more attention to student sat- ments, dealing with a foreign higher-edu- by politicians to cut tuition fees at home, isfaction and have invested heavilyin their cation system is hard work. Sam Weston, are also making universities look abroad. campuses. Students increasingly use clear- who worksforthe UniversityofReading in As demand for degrees grows around the ing to gain entry to higher-ranked institu- EduCity, admits that recruitment has been world, it is likely that British universities tions if they outperform expectations. slowerthan hoped. “It’searlydays,” she ex- will become ever more international. 7 There are even signs that universities are plains. “We’re still getting the word out.” beginning to compete on price—albeit sur- Both Wolverhampton and Aberystwyth reptitiously, by offering more scholarships, have closed campuses in Mauritius, after Universities at home rather than by cutting their tuition fees. failing to attract students. Last year War- But universities are also competing in wick scrapped plans to build a campus in The scramble for other, unexpected ways. Some are said to California, following difficulties in navi- be offering inducements such as gym gating local regulation. Others relied too students memberships and iPads. University adver- heavily on the enthusiasm of individual tisements are an increasingly common university officials in Britain, and floun- sight during the summer (including, this dered when those people moved on. year, from Exeter University, a member of Competition forapplicants is hotting Universities also have to adapt, some- the prestigious Russell Group). This season up, with unexpected side effects times uncomfortably, to local politics. In Portsmouth University is advertising on July an academic was removed from the LMOST all university applicants now the kit ofits local football team. management board of Nottingham’s Aknow where they will be going in the The sharp rise in the number of uncon- Ningbo campus—a joint venture with the autumn. As recruitment winds down, two ditional offerssuggeststhatuniversities are Chinese government—after writing an es- changes are apparent. The first is a rise in also competing by lowering their entry say critical of the 19th Party Congress, a the proportion of candidates who found a bar. “Giving out unconditional offers just meeting of government bigwigs. Restric- university via “clearing”, having already to put ‘bums on seats’ undermines the tions in Malaysia mean there are no stu- received their A-level results, which is up credibility of the university system,” dent unions on the British campuses there. to 9.2% from 7.5% at the same stage in 2013. warned Sam Gyimah, the universities Partly as a result of these difficulties, The second is a big rise in the number of minister. It is not clearwhetheruniversities most British universities selling their qual- unconditional offers, where entrydoes not are making offers to students who are un- ifications abroad prefer to get a local insti- depend on obtaining certain grades. In suited to higher education. But Mr Gyimah tution to do the teaching. But this arm’s 2013, just 1.1% of applicants received an un- nevertheless has reason to be uncomfort- length approach is not entirely trouble- conditional offer. This year 22.9% did. able. Applicants with unconditional offers free. Some worry that the quality ofeduca- Togetherthe changes indicate the grow- are 23% more likely to miss their predicted tion is not always up to scratch. The Quali- ing power of students. Most funding now A-level results by more than two grades. ty Assurance Agency, which helps regulate follows them, since they get government Schools therefore dislike unconditional of- British universities (including their over- loans of £9,250 ($12,000) a year to pay for fers, because they make it more difficult to seas empires) says that malpractice is rare. motivate their pupils. But some university officials privately The issue could turn into a test of the doubt that teaching is always equal to that new higher-education regulatory system. found in Britain, as is meant to be the case. Nicola Dandridge, chief executive of the All ofthis means universities are begin- Office for Students, the regulator, says she ning to tread more carefully. There has is concerned by the rise in unconditional been a move away from the “hands-off offers, and will issue recommendations in model”, in which universities provide cer- the next couple of months after studying tificates and little else, to more genuine their impact. The government hopes that a partnerships, says Janet Ilieva, a higher- newteachingranking, which includesdata education consultant based in Britain. on student satisfaction and graduate out- A number of governments in big mar- comes, will dissuade admissions staff kets are also growing more cautious. Two from taking applicants who are not cut out years ago, Malaysia banned any new links for university. with universities not in the top 5% of a glo- Yet competition for students will only bal ranking. At the same time, China re- increase. A dip in the birth-rate at the turn portedly halted approvals of new joint- of the millennium means that from 2017 to venture campuses. Expansion is also kept 2020 the number of18- to 20-year-olds will in check by the fact that universities are re- drop by150,000. With a review ofuniversi- luctant to do anything that might water ty funding coming up, the future for Eng- down their British character. David Wil- lish institutions is uncertain. As one uni- letts, a former higher-education minister, versity official notes, “It is not clear how has complained that he was unable to con- comfortable the public is with universities vince any university to create a vehicle to Portsmouth’s pitch to pupils acting like businesses.” 7 24 Britain The Economist August 25th 2018 Bagehot Leftward ho!

The fate ofa private prison is a reminderthat the political centre ofgravityis shifting control” rather than letting the market rip. Privatisation is increasingly regarded as a problem rather than a solution. Train fares have increased by a third since 2010, while services remain overcrowded. The private utilities are fat monop- olists or quasi-monopolists. Public dissatisfaction is partly be- cause of the passage of time—harried commuters forget how bad nationalised British Rail was—butitisalso because of administra- tive incompetence. The utility privatisations were driven by a de- sire to raise money, rather than improve services. Private compa- nies have proved adept at milking their most loyal customers. Private-sector bureaucrats have taken on the customer-be- damned role once performed by public-sector bureaucrats. At the same time the public is turning against austerity. The Conservative Party’s enthusiasm for balancing the books has dri- ven public sector net borrowing to its lowest in 11 years. But the costs of the policy are also becoming painfully visible. Rough sleeping is on the rise. Getting a doctor’s appointment is becom- ing an art form. Northamptonshire County Council—once a Tory flagship—has declared bankruptcy and another 15 councils may follow suit. Austerity and privatisation often combine to create a toxic N HIS speech to the Labour Party conference in Brighton last mixture: the governmentprivatisesthingsin orderto save money, Iyear, Jeremy Corbyn argued that British politics was moving in- but tight budgets then discredit privatisation. The debacle in Bir- exorably leftward. With the neoliberal orthodoxy that had held mingham prison was partly the result of a 30% reduction in the for decades blown up by the financial crisis, Britons were de- MinistryofJustice’sbudgetsince 2010, a cutthathasstrained pub- manding a more active role for government, in the name not just lic prisons as much as private ones. offairness but also ofefficiency. “It is often said that elections can Exhaustion with privatisation and austerity coincides with a only be won from the centre ground,” he told his adoring audi- growing feelingthat British capitalism is rigged in favour ofinsid- ence. “And in a way that’s not wrong—so long as it’s clear that the ers. The country’s chief executives are masters of boosting their political centre ofgravity isn’t fixed or unmovable, nor is it where own pay by packing their boards with yes-men and awarding the establishment pundits like to thinkit is.” themselvesgenerousshare options. Anewreportbythe High Pay Jeremy Corbyn has done a dismal job of redefining the centre Centre shows that the compensation of the average boss of a ground—dramatically worse than Margaret Thatcherdid during a FTSE 100 company increased by 11% in 2017, to £3.9m, while the similar period of upheaval in the 1970s. Thatcher devoted her pay of the average worker failed to keep up with inflation. Bank- years as opposition leader to moving the boundaries of the pos- ing in Britain is a game played by insiders who enjoy a large im- sible. Mr Corbyn, an intellectually lazy man with little interest in plicit subsidy from taxpayers, who have to bail them out if they domestic policy, is devoting his to fighting fires lit by his long- get into trouble. The same banks have little connection with the standing habit of palling around with terrorists. Labour’s sum- real economy: only about 10% of their lending is to businesses mer has been consumed by a debate over whether he laid a outside commercial property. Global companiessuch asAmazon wreath for members of the Black September group, who slaugh- and Google get away with paying little tax by the ruthless use of tered 11Israelis at the Munich Olympics in 1972. Yet the consensus tax havens and transferpricing. is being redefined, regardless ofMr Corbyn’s incompetence. Thatcherdreamed of“rollingbackthe frontiers ofthe state”, in A forkin the road a self-reinforcing programme of privatisation and cost-cutting. The Conservative Party has repeatedly shown that it recognises Today the frontiers of the state are rolling forward. This week the the need to tackle rent-seekingand insiderism, only to backdown Ministry of Justice took back control of Birmingham prison from under pressure from its friends. Look at the way the Department G4S, a private contractor, following revelations that the jail was of Business’s green paper on corporate governance, which in- plagued by violence and drugs. In January Carillion, another cluded measures like shareholder votes on remuneration, was giant contractor, collapsed, costing the taxpayer £148m ($191m). In turned into a damp squib ofa white paper by business lobbying. June the government renationalised the East Coast Mainline. The question at the heart of British politics is not whether it Britain’s leftward drift can be seen in one opinion poll after moves to the left, but what sort of left it moves to. Will it be a one another. Asurveypublished byLegatum in 2017 found that83% of nation Conservatism, committed to fixing capitalism from with- Britons favoured public ownership of water, 77% of electricity in, or the Venezuela-loving leftism long promoted by Mr Corbyn? and gas, and 76% of railways. The British Social Attitudes Survey To secure the first option, the Conservative Party needs to do shows that the public is keener on raising taxes and public spend- more than take failing prisons into public control or increase ingthan atanytime since 2006. Itcan also be seen in the changing spending on strained social services. It needs to demonstrate that dynamics of the Brexit debate. Leaving the European Union, a it can reform capitalism even in the teeth of opposition from big fantasy of Thatcherites who wanted to turn Britain into a Euro- business and Torydonors. Fluff that test and no amount of reve- pean version ofSingapore, has been redefined as a way of boost- lations about palling around with terrorists will keep Mr Corbyn ing spending on health and limiting immigration—“taking back out ofDowning Street. 7 Middle East and Africa The Economist August 25th 2018 25

Also in this section 26 Israel’s electoral scheming 26 Remembering Kofi Annan 27 Unrest in Uganda 28 Failed land reform in South Africa

For daily analysis and debate on the Middle East and Africa, visit Economist.com/world/middle-east-africa

Israel and the Palestinians provement, but hardly free movement for 2m people. Nor will Gaza’s shattered econ- Heading nowhere omy be reopened to the world (indeed, commercial traffic is down this summer). Even this narrow truce is a political li- ability forthe Israeli prime minister, Binya- min Netanyahu, who may call a snap elec- tion by spring (see next article). His CAIRO right-wing supporters are furious that Isra- Can a flurryofsummerdiplomacychange anything? el is negotiating under duress. A recent poll IPLOMATS often lament that the Israe- of rockets at Israel, and Israel has dropped found that just 28% of voters in his Likud Dlis and Palestinians are not talking. hundreds ofbombs on Gaza. Each time the party support a deal with Hamas; 41% op- You wouldn’t know it from the crowd of violence flares up diplomats scramble to pose it. The group holds the bodies of two diplomats and spies parading around the broker a ceasefire. Their luck will not hold Israeli soldiers killed during the war of region this summer. They shuttle between forever. 2014. Israel wants them back. (It also has Jerusalem, Ramallah and Gaza, and Arab So Israel and Hamas are talking indi- two living Israeli prisoners, a Bedouin and capitals from Cairo to the Gulf, for three rectly about a longer-term deal. Hamas an Ethiopian Jew, whose plight gets less at- tracks of negotiations. One is meant to will stop the pyrotechnic prophylactics in tention.) Hamas views them as leverage. avert a war between Israel and Hamas, the exchange forfreer movement ofgoods and The Palestinian president, Mahmoud militant Islamist group that runs Gaza. A people. The leader of Hamas, Ismail Hani- Abbas, is also unhappy. His aides have second aims to reconcile Hamas with its ri- yeh, told Gazans that “we are on the path been meeting Hamas officials in Cairo to val, Fatah, which governs the West Bank. to ending the blockade.” They will proba- discuss a deal that would see Hamas relin- And then there is Donald Trump’s pursuit bly be disappointed. Israel and Egypt have quish its control of Gaza. They signed a of “the ultimate deal” between the Israelis already relaxed restrictions at the borders. similar agreement in October. It was never and Palestinians. Yet when all the gabbing Since May about 33,000 Palestinians have implemented. Hamas gave up the bu- is done, the result will probably look much used the Rafah crossing with Egypt, a near- reaucracy, handing Fatah the thankless like the status quo. ly tenfold increase compared to the same task of providing public services in Gaza. The truce talks involving Israel and Ha- period last year. Traffic at the Erez border But it refused to disarm its militias. Last mas are the most urgent. The two sides are with Israel is up 58%. This is a marked im- year Mr Abbas slapped his own sanctions closer to war than at any time since their on Gaza to exert pressure on Hamas. last conflict in 2014. Tensions started to rise Strange as it may seem, Israel is now urging in March, when activists in Gaza organised What’s the alternative? him to lift the measures, fearing they will protests over the decade-long blockade of Support for two-state solution, % complicate its own efforts to make a deal the strip by Israel and Egypt. At their peak, with the group. tens of thousands of people took part. Is- 80 Ailing and 82 years old, Mr Abbas has Israelis raeli troops killed more than 50 ofthem on 70 kept the West Bank mostly quiet for a de- a single day in May. Hamas stopped en- cade. His security forces work closely with couraging the protests, fearing they would 60 their Israeli counterparts. He accepts the get out of hand. 50 two-state solution. Yet he has nothing to The crowds ebbed, but instead of the Palestinians show for it—not even the appearance of a mostly peaceful rallies there is now esca- 40 peace process, letalone an actual deal. Isra- lating violence. Young Gazans have set fire 30 el spends more time negotiating (albeit in- to thousands of acres in Israel by flying directly) with Hamas, which it considers a burning kites and balloons across the bor- 2005 07 09 11 13 15 17 18 terrorist group. der. Some used condoms as incendiary de- Sources: Palestinian Centre for Policy and Survey Mr Abbas takes little comfort from the vices. Militant groups have fired hundreds Research; Hebrew University of Jerusalem Trump administration’s fanciful efforts. 1 26 Middle East and Africa The Economist August 25th 2018

2 The president’s son-in-law, Jared Kushner, Kofi Annan and his special envoy, Jason Greenblatt, have spent 18 months touring the region. The inveterate Their long-promised peace plan is still shrouded in mystery.No one knows when diplomat (or if) it will be released. Mr Trump has al- ready moved the American embassy from Tel Aviv to Jerusalem and cut funding for Kofi Annan helped define the UN, in the United Nations Reliefand Works Agen- success and failure cy, which helps Palestinian refugees. In a speech on August 21st, Mr Trump said the HE secretary-general of the United Na- Palestinians would “get something very Ttions is sometimes described as a “sec- good” as compensation. To say they are ular pope”. The position is imbued with sceptical would be an understatement. moral authority; the holder watches over Veteran negotiators often treat the con- an enormous flock; but he has no instru- flict as a problem of communication. If the mentsofhard power. The title seemed to fit parties would only come back to the table, Kofi Annan, the seventh secretary-general, they could make a deal. But those parties Just give me another year more than most. Soft-spoken and calm, Mr have talked for decades. Any Israeli or Pal- Annan had the demeanour of a monk. estinian can recite the details ofa two-state passage of a controversial law bowing to And with popish assuredness he set about solution. Hamas and Fatah have produced Jewish nationalism as proof that he is pre- trying to establish the UN as the world’s many reconciliation agreements. The issue paring to go to the polls. moral arbiter. But he was often frustrated is not a lackoftalking. It is a lack oftrust. The main consideration governing Mr by the countries on the Security Council, A deal between Israel and Hamas Netanyahu’s decision is his own legal pre- which wield the real power. might bring quiet to the border. It will also dicament. He is the target of three investi- MrAnnan died on August18th, aged 80. leave MrAbbasweaker,and Hamasless in- gations concerning his ties to businessmen Many will remember him for drawing at- clined to a real reconciliation. Mr Trump and media owners. Investigators have tention to the plight of the poor, the sick hassquandered whatevergoodwill he had questioned him 11times. The police, armed and the victims of war. He took over the among the Palestinians. Even allied Arab with the testimony of three of his aides, UN in 1997, becoming the first sub-Saharan states like Jordan are angry with him. If he have already recommended pressing char- African to lead the organisation, and does unveil a peace plan, it will enjoy little ges against him forbribery and fraud. served two five-year terms. With his neat- support. A poll published on August 13th The last and reportedly final round of ly-trimmed goatee and well-tailored suits, found that just 43% of Palestinians and Is- questioning came on August 17th. The at- he was charming and eloquent. Many re- raeli Jews back a two-state solution, the torney-general, Avichai Mandelblit, must marked on how unflustered he always ap- lowest figure in nearly two decades (see now decide whether to indict a serving peared, despite serving during a tumultu- chart on previous page). Twenty-five years prime minister for the first time in Israel’s ous decade that saw al-Qaeda attack after the Oslo accords, which were meant history. (Ehud Olmert, a formerprime min- America, and America attack Iraq. He was to end the conflict, itisa strugglejusttostop ister, was indicted and jailed for accepting awarded the Nobel peace prize in 2001 (an things getting worse. 7 bribes after he resigned in 2008.) award he shared with the organisation) for Mr Netanyahu insists he will not resign. his work to revitalise the UN’s institutions But if an indictment is handed down, the and renew its sense of purpose. For all his Israel’s electoral timetable Supreme Courtmightweigh in on whether efforts, though, these days the UN feels all he can remain in office—that is, if his co- but marginalised in world affairs. One eye on the alition partners don’t abandon him. Mr Annan was an unlikely choice for Despite histroubles, pollsshowMr Net- secretary-general. Born in Ghana, he rose 1 clock anyahu’s coalition beating the opposition in an election. Holding the vote now might bolster his case to remain in office even if he isindicted. Moreover, itwould pre-empt When will Binyamin Netanyahu call an the attorney-general’s decision, allowing election? Mr Netanyahu to run a campaign that is HE next general election in Israel does not overshadowed by his legal affairs. Tnot need to be held until November But he has two reasons to hesitate. The 2019, but drive down the motorway in Tel first is discord within his coalition. Under Aviv and you will see campaign banners Mr Netanyahu, the Likud party has never for Moshe Kahlon, the finance minister held more than a quarter ofthe seats in the and leader of a centre-right party. On the Knesset, putting him at the mercy of his radio you can hearAvigdorLieberman, the partners. He could face a challenge from defence minister, and Naftali Bennett, the the right, which is upset by his decision to education minister—both of whom lead seek a ceasefire with Hamas, the militant right-wing parties—tearing into each other. Islamist group that controls Gaza. Plainly, members of the government co- Mr Netanyahu’s second concern is his alition sense that an election is near. legacy. Ifhe hangs on until July 2019 he will For his part, Binyamin Netanyahu, the become Israel’s longest-serving prime prime minister (pictured), has been send- minister (at 13 years and four months), ing mixed signals. In July he told his minis- breaking the record of David Ben-Gurion, ters that he wanted the government to see Israel’s founding prime minister. He is de- out its term; a month later he warned ofan termined not to let his political rivals or the imminent ballot. Some point to the rushed police deny him his place in history. 7 Kofi, calm as ever The Economist August 25th 2018 Middle East and Africa 27

2 through the ranks of the UN, whereas past troops under his command. He relied on president. Calling himself the “Ghetto leaders had been prominent national poli- America formuch ofthe UN’s budget. President”, Mr Wine rose to fame as a ticians or diplomats. His four-year stint as Mr Annan’s greatest achievement, he dreadlocked pop star who drove fast cars head of peacekeeping operations was said, was getting all UN member states to and dissed his rivals. He sang about girls, marred by bloody failures. The most agree on the Millennium Development naturally, but also about mistreated street shameful episode occurred in 1994 in Goals, a set of global targets for things such traders. He calls his songs “edutainment”, Rwanda, where a small UN force was as reducing poverty and child mortality. music with a message. In 2015 other stars stopped by Mr Annan from taking action Up until his death he continued to champi- took money to record a campaign anthem to prevent a genocide that left 800,000 on the cause ofthe downtrodden and seek for Mr Museveni. Mr Wine wrote his own people dead. Blame should be shared, said peace in places such as Libya, Myanmar hit, calling for peaceful elections and a Mr Annan later. The bloodshed would and Syria. He was a force forgood, said An- handover of power. have been difficult to stop and the world tónio Guterres, the current secretary-gen- Last year Mr Wine swept into parlia- was reluctant to intervene. “All of us must eral. But, his critics noted, not without ment as an independent and, with other bitterly regret that we did not do more to flaws. “In many ways,” said Mr Guterres, MPs, tried to stop a constitutional amend- prevent it,” he said. “Kofi Annan was the UN.” 7 ment that would let Mr Museveni extend UN peacekeepers were again criticised his rule. “We want to take power back to during the wars of the former Yugoslavia. the people,” he told The Economist at the When Bosnian Serb forces surrounded the time, his red tie wrapped like a bandanna UN-protected “safe haven” ofSrebrenica in around his head. A grenade was later 1995, peacekeepers from the Netherlands thrown at his house. Undeterred, he cam- handed it over without a fight, leading to a paigned for like-minded candidates in by- massacre of civilians. European powers elections (they won) and joined protests opposed backing the troops on the ground against a new social-media tax. with air strikes. In the end, Mr Annan side- This month Mr Museveni and Mr Wine stepped his boss, Boutros Boutros-Ghali, were in the north-western town of Arua and approved a NATO bombing campaign for another by-election. An army spokes- against the Serbs. The forceful action en- man says a crowd threw stones at Mr Mu- deared him to America, which was look- seveni’s convoy and that Mr Wine’s driver ing to replace Boutros-Ghali. was shot dead in the ensuing “fracas”. The But America would later challenge Mr police later claimed to have found guns in Annan’s view ofthe UN as “the sole source the singer’s hotel room. Nearly all of this is of legitimacy” for foreign interventions. disputed. Mr Wine, tweeting before his ar- When NATO launched a bombing cam- rest, said the bullet that hit his driver was paign in defence of ethnic Albanians in meantforhim. The charge againstMrWine Kosovo in 1999, Mr Annan said it was “trag- of unlawful possession of firearms has al- ic that diplomacy has failed”, while admit- ready been dropped. ting “there are times when the use of force In the daysafterMrWine’sarrestyoung may be legitimate in the pursuit ofpeace.” men lit fires in the streets of Kampala and A more serious test came in 2003. As demanded his release. On August 20th America confronted Iraq over its alleged protests erupted across the city. Police and possession of weapons of mass destruc- soldiers fired tear gas and bullets. Journal- tion (WMD), Mr Annan pressed Iraq’s dic- ists and bystanders were beaten. One man tator, Saddam Hussein, to give UN weap- Uganda was shot dead. The authorities forced hun- ons inspectors access to his facilities and dreds of people to kneel on the street with urged America to give them time. Any Hands up for the their hands in the air. plans formilitary action must go before the In a little over a year Mr Wine has over- Security Council, said Mr Annan (who Ghetto President thrown the conventions of Ugandan poli- knew that the council would vote against tics. For three decades the dominant fig- them). When America invaded without ures in both the government and the KAMPALA UN approval, Mr Annan said the action opposition have been veterans of the bush The arrest ofa popularsingerhas was illegal, leading to a torrent of criticism war that brought Mr Museveni to power. shaken up Ugandan politics from Republicans, who noted that the firm MrWine was a toddlerthen. He speaks in a employing his son had benefited from UN HE video forhissong“Freedom” imagi- way that appeals to the restless young contracts in Iraq before the war. Tnes Robert Kyagulanyi, better known masses—the median age in Uganda is 16. “The attacks [on Mr Annan] reflected asBobi Wine, trapped in a jail cell. Nowthe “He sings about the situation a person the US at its worst, Kofi at his bravest, and singer-turned-politician really is locked up. faces: unemployment, poor health, poor the UN at its most vulnerable, trying to On August 13th the authorities in Uganda education,” says one young man. maintain international law against a law- arrested Mr Wine, along with other MPs MrWine’s critics say he has no party, no less White House,” wrote Jeffrey Sachs, a and activists. Ten days laterhe was charged ideas and that, until now, he has not expe- formereconomic adviser to Mr Annan. No with treason. He limped into court, unable rienced state brutality—a rite ofpassage for WMDs were ever found in Iraq. The war, to walk unaided; his lawyers say he was opposition politicians. Mr Museveni con- though, also reflected the impotence of the beaten by soldiers. Opposition politicians descendingly calls him “our grandson, the UN. It was helpless in the face of Saddam’s are often arrested on boguscharges. But Mr indisciplined MP, Bobi Wine”. But the re- brutality and America’s aggression. Wine’s detention has ignited public out- gime is rattled by him. By resorting to vio- Defenders of Mr Annan would often rage and exposed the generational chasm lence, the state only accelerates his trans- note that the big powers criticised the UN in Ugandan politics. formation from weed-smokingcelebrity to for inaction, then stopped it from acting, Mr Wine has become the unofficial populist icon. “When leaders become mis- depending on their national interest. Little spokesman foryoungpeople disillusioned leaders,” he sings, “then opposition be- has changed. Mr Annan did not have with Yoweri Museveni, Uganda’s ageing comes our position.” 7 28 Middle East and Africa The Economist August 25th 2018

Land in South Africa similar share is communal land under the control oftribal leaders such as King Good- Tragedy of the commons will Zwelithini, the Zulu monarch. More than half of KwaZulu-Natal province, where he reigns, is in effect state-owned. The king’s support for the ANC helps ex- plain why Mr Ramaphosa says expropria- tion will not happen on the Zulus’ patch. ASHBURTON AND CAPE TOWN The fate of farmland understandably Land reform in South Africa has been slow and inept. It could get even worse attracts attention. But it means that other, ABALAZA MSHENGU was born on a who was elbowed aside in February. To- more consequential areas of land reform Zfarm in Ashburton, in the east of South day there are more unemployed than em- are neglected. More than 60% of South Af- Africa, on January 11th 1914. Seven months ployed people in four out of nine prov- ricans live in urban areas. Yet the country’s earlier the government had passed the Na- inces. Mr Ramaphosa is trying to quieten cities are not especially dense; there are tives Land Act, which marked out 90% of the left of the ANC and the EFF, which ad- fewer people per square kilometre in Cape the country for whites, who made up just mires Zimbabwe’s land-grab. Town than in Woking, a commutertown in 21% of the population. It was among the The ANC is haunted by its own failings. Surrey, England. Whites still predominate first of many laws to codify segregation. After taking office in 1994 Nelson Man- in the nicest parts of town. The average From 1948, under apartheid, 3.5m blacks dela’s government identified three priori- daily commute for a black South African is were forcibly moved to isolated reserva- ties for land reform: restitution for labour 88 minutes; for those living in informal set- tions called “homelands”. Mr Mshengu, tenants and those dispossessed after1913, a tlements on urban fringes it can be four however, remained. He became a “labour broader redistribution of farmland from hours. Better public transport would help. tenant”, working without pay on a white- whites to blacks, and tenure reform. It has So would living nearer work. owned farm in exchange for untitled land made scant progress in all three areas. There is plenty of dormant state land at its edge. There he grew maize and that could be used forhousingin cities. The herded goats. He buried his parents, then Broken promises armed forces and Transnet, the state tran- five ofhis seven children, on the land. Restitution has been especially slow. Man- sport utility, own prime sites in Cape After the advent of democracy in 1994 dela’s government was overwhelmed by Town. State land is often hard to sell—any the African National Congress (ANC) the tens of thousands of claims. The au- government department can claim it be- pledged restitution, usually in the form of thorities did not keep proper records of ap- fore a tender is issued. But it can be done. land, for those expelled from their homes plications and lost many of the files. Based The Western Cape government is releasing and for labour tenants. Mr Mshengu on the rate of processing so far it would the site of a former hospital, for example, lodged a claim in 2000. In 2007 the Land take 709 years to finish the job. with the proviso that developers set aside ClaimsCourtsaid he metthe relevant crite- Things got worse after Mr Zuma took halfofnew units for subsidised housing. ria. Yet deeds never arrived. Despite many power in 2009, as communal authorities Another vital yet neglected area of land petitions the authorities failed to act on his increasingly became the vehicles for re- reform is tenure. In the former homelands claim. On August 13th Mr Mshengu died, ceiving restitution. This led to corruption. and communal areas, where overa third of aged 104. “He believed he would die a Spurious claims were often given priority people live, individuals cannot own for- landowner,” says Mandla Mshengu, his over those by people like Mr Mshengu. mal property titles. This thwarts social mo- youngest surviving son. The ANC’s effortto increase the share of bility, since people may not seek out op- Cyril Ramaphosa, South Africa’s presi- land owned by blacks has also been slug- portunities in cities if they cannot raise dent, calls “the taking of land from indige- gish. It said it would give 30% of farmland funds by selling houses. nous people” the country’s “original sin”. to black South Africans by 1999, acquiring Fully 60% of South Africans have “off- The ANC has balked at Zimbabwe’s ruin- land on a “willing buyer, willing seller” ba- registertenure”, meaningtheirtitlesare not ous policy offorcibly seizing white-owned sis, in order to. It has delivered a third of lodged with the deeds office. There is a farms. But on July 31st Mr Ramaphosa said that target. Around 70% of the purchased backlog of more than 1m titles that need to the ANC would propose an amendment to land liesfallow—in partbecause newblack be processed for government-provided the constitution that clarifies when land farmers receive little help. houses. Without a title it is hard to get a could be expropriated without compensa- One way to accelerate redistribution mortgage, or a loan for home improve- tion. The ANC and the Economic Freedom would be to release state-owned land, ments. A grey property market has Fighters (EFF), a far-left party, have the which makes up about 11% of the total. A emerged, where homes without official numbers in parliament to enact a change paperwork are sold for less than their full before elections due next year. market value. This has people worried. Some are mis- Expropriate the state Apartheid deprived Mr Mshengu of a informed. On August23rd, afterwatching a South Africa, land not in private ownership wage and a chance to earn title. The ANC Fox News segment, President Donald State Ex-homelands has done too little to right those wrongs. Trump tweeted about illegal “farm sei- Tribal Protected areas But the best place to start helping poor zures”, which the ANC opposes, and the blacks is to let them secure their full rights “large scale killing” of farmers, by which Pretoria to land they already hold. Instead, the ANC he presumably does not mean the black Johannesburg is proposing a constitutional change that is farm workers most likely to be victims of KwaZulu- pointless at best and dangerous at worst. rural crime. But calmer heads are also con- Natal When your correspondent pays his re- Ashburton cerned. While Mr Ramaphosa insists that SOUTH AFRICA spects to the Mshengu family, Mandla is land would be taken without harming the Durban wearing a yellow ANC T-shirt with Mr economy, investors are spooked. They fear Zuma’s gurning face. He got the free T-shirt an incremental assault on property rights. at a rally years ago. “I no longer vote,” he So why do it? The ANC is fragile, weak- Cape says. He will, however, keep pressing his ened by nine years of misrule by Jacob Town father’s claim. Zabalaza means struggle, he 500 km Zuma, the kleptocratic former president Source: MapAble says. “It’s not over.” 7 United States The Economist August 25th 2018 29

Also in this section 30 Lithuanian-Americans 32 The Coal Protection Agency 33 Transformational festivals 34 Lexington: What is racism now?

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

Summer of scandal, continued Mr Trump has not yet reached that point: congressional Republicans continue Both of the president’s men to stand by him. After the convictions of Messrs Cohen and Manafort, Paul Ryan and Mitch McConnell, Republican leaders in the House and Senate, declined substan- tive comment. John Cornyn, a senator WASHINGTON, DC from Texas, said he did not think that the Michael Cohen, Donald Trump’s formerfixer, alleges that the president directed convictions “implicate [Mr Trump] at all, him to breakthe law. What happens now? especially on the Russia investigation”—as N THE afternoon of August 21st, Dun- lence two women who claimed to have though any crimes other than direct collu- Ocan Hunter, a Republican congress- had affairs with Mr Trump. He paid Steph- sion with Russia are not worth noticing. man from California, was indicted for fil- anie Clifford, betterknown asStormy Dan- But Mr Mueller’s mandate charges him ing false campaign reports and spending iels, $130,000 directly. He also arranged for not only with investigating any connec- $250,000 of campaign funds on personal a tabloid to buy Karen McDougal’s story tions between Mr Trump’s campaign and expenses. There were family trips to Italy for $150,000 with no intention of publish- the Russian government, but also “any and Hawaii; shots of tequila at a bachelor ing it. And under oath, in a federal court- matters that arose or may arise” from that party; and “Hawaii shorts” that his wife room, Mr Cohen says he made those pay- investigation—as the crimes committed by suggested he should buy at a golfpro shop, ments at Mr Trump’s direction “for the Messrs Cohen and Manafort did. Congres- so they could disguise the purchase as principal purpose of influencing the elec- sional Republicans are thus no longer de- “balls for the wounded warriors”. Ordina- tion”. If Mr Cohen’s charge is true—and fending an unpolished, intemperate tri- rily, juicy details such as these could occu- prosecutors would not have accepted his bune of the forgotten man; they are py cable news for a cycle or two. But they plea iftheybelieved he waslying—then the defending someone who may well have barely rated a mention on Tuesday’s president of the United States conspired to been indicted on federal conspiracy char- shows, because that was the afternoon on violate federal law. ges ifhe were not president. which Robert Mueller—the special counsel America is now in largely, but not en- Their support may soften if Mr Trump charged with investigating possible links tirely, uncharted territory. John Edwards, a leads the party to huge losses in Novem- between Russia and the Trump cam- former senator, vice-presidential nominee ber’s mid-terms. Democrats have made paign—landed his hardest punches yet. and presidential candidate, wasindicted in corruption an increasingly large part of In Virginia a jury found Paul Manafort, 2011in a similar case: he solicited $925,000 their campaign attacks. They may also ar- President Donald Trump’s former cam- from two wealthy donors and used it to gue that Mr Trump has broken faith with paign chairman, guilty on eight counts of hide his mistress and their child from vot- his voters: he came into office warning that filing false income-tax returns, failing to ers. Federal prosecutors said that because Hillary Clinton was irredeemably corrupt disclose foreign bank accounts and bank those funds were used to conceal the affair and electing her president would bog fraud. He faces up to 80 years in prison, as from voters, they amounted to illegal cam- down the country in scandal, whereas he well as a second trial on similar charges paign contributions. Mr Edwards was ac- was incorruptible (because he was rich) starting on September17th. quitted, but the trial ended his once-pro- and committed to hiring “the best people” But the bigger blow came in New York, mising political career. And, of course, and “drain[ing] the swamp”. where Michael Cohen (pictured above), Richard Nixon resigned from the presiden- In fact, he has ably restocked the Donald Trump’s former personal lawyer cy after the House Judiciary Committee swamp. As for “the best people”, his for- and longtime fixer, pleaded guilty to eight approved three articles of impeachment mer campaign chairman, deputy cam- counts of tax evasion, banking fraud and against him, and after prominent congres- paign manager, personal lawyer, former campaign-finance violations—which were sional Republicans told him he had little national-security adviser and a foreign- in fact the payment of hush money to si- support left in Congress. policy adviser to his campaign have all 1 30 United States The Economist August 25th 2018

2 pleaded guilty to or been convicted of fed- he has used them to benefit supporters from those second-generation immigrants, eral crimes. His first two congressional en- such as Joe Arpaio and Dinesh D’Souza. who were forced to leave a country they dorsers—Mr Hunter and Chris Collins— Cornered, Mr Trump could lash out in oth- adored. Mr Gylys’ family emigrated first to have both recently been indicted. Two cab- er ways, such as further security-clearance Australia and then to Chicago, because his inet members have resigned amid ethical revocations, or even firing Mr Mueller. mother, a writer, wanted to live in a place woes; scandals are nipping at the heels of Even heretofore reticent Republicans may with a large community of Lithuanian several others. Mr Trump’s base will not find sacking Mr Mueller a step too far. And speakers. At one point the Windy City was care—they chanted “Lock her up” at a rally they may not save the investigation’s tar- home to some 300,000 Lithuanians, 11 in West Virginia on Tuesday night—but gets: presidential pardons pertain only to Catholic Lithuanian parishes, several more traditional Republicans may. federal crimes and Mr Mueller’s team has schools and dozens of Lithuanian shops As for Russian collusion, Mr Cohen’s reportedly worked closely with state attor- and restaurants making kugelis (potato lawyer, Lanny Davis, said his client is eager neys-general. pudding) and chilled borscht. Draugas to tell prosecutors what he knows—includ- As for Mr Trump, on the morning after (“Friend”), the world’s oldest continuously ing whether Mr Trump had advance he did what he often does: throw a Twitter published Lithuanian newspaper, is based knowledge that Russians would hack into tantrum. He praised a convicted criminal, in Chicago, as is the Balzekas Museum of Democratic officials’ e-mails and about Mr Manafort, and derided federal prosecu- Lithuanian Culture, the biggest such muse- “the obvious possibility of a conspiracy to tors. He said Mr Cohen’s campaign-fi- um outside Lithuania. America’s only Lith- collude and corrupt the American democ- nance violations were “not a crime”, uanian-language Alcoholics Anonymous racy system in the 2016 election.” which of course they were. And he repeat- group gathers in Lemont. (According to the Mr Davis also said his client would not ed his claim that Mr Mueller’s investiga- World Health Organisation, Lithuanians accept a pardon from MrTrump(MrMana- tion was a “Witch Hunt”. If that is true, are the world’s heaviest drinkers.) fort, facing a much longer sentence, has ex- then investigatorsare gettingpretty good at Second-wave immigrants usually did pressed no such refusal). Legally, Mr finding witches—and they are inching ever not allow their children to speak English at Trump’s pardon powers are absolute, and closer to the White House. 7 home. They sent them to Lithuanian Satur- day school, Sunday mass and summer camps. They encouraged them to join Lith- Lithuanian-Americans uanian choirs, dancing troupes and Scouts—and to date Lithuanian boys and The diaspora’s capital girls. Arts, sports and the Catholic church glued the community together. But however attached their elders may be to the homeland, few if any of the youngsters dribbling basketballs on the new court at the Lithuanian World Centre LEMONT intend to return. Almost 1m Lithuanians Chicago is the second-biggest Lithuanian city have emigrated since 1990, draining the NE of the artefacts on display at the ing the Soviet occupation arrived via dis- countryoftalentand youth. Yetasper capi- OLithuanian World Centre, a vast com- placed-person (DP) camps in western Eu- ta income rises there, the trend seems to be munity centre on more than 18 acres of rope. And, following the collapse of the reversing; in 2017 more Lithuanians re- land in Lemont, a leafy village on the out- Soviet Union, a third wave of immigrants turned than left. And the diaspora was skirts of Chicago, is a wooden sculpture of were drawn to Chicago because their com- more active than ever this year, the cente- Hitler and Stalin scalping a kneeling man. patriots sponsored them to come. nary of the country’s independence. Tens The man isLithuania. The countrysuffered The unusual vibrancy of the Lithua- of thousands, many from Chicago, trav- under Soviet, Nazi and again Soviet occu- nian community, says Linas Gylys, presi- elled to Vilnius for a week-long festival of pations for 50 years, and before that under dent of the Lithuanian World Centre, who dance and song. For a few days at least, his- tsaristrule. “We used to be the largestcoun- was born in a DP camp in Germany,comes tory’s traumas were forgotten. 7 tryin Europe and then we just disappeared from the map,” says Marijus Gudynas of the Lithuanian Foreign Office, in Vilnius. These traumas have left 1.3m Lithuanians (from a country of barely 3m) living abroad. Chicago is their undisputed capi- tal. Around 100,000 residents still call themselvesLithuanian, though theyare of- ten third- or even fourth-generation immi- grants. Valdas Adamkus, twice president of newly independent Lithuania, went back after living in Chicago for decades. Lithuanian immigrants came to Chica- go in three waves. At the turn of the 20th century thousands of Litvaks (Lithuanian Jews) fled the pogroms under Russian rule, while mostly blue-collar workers came for jobs in the stockyards. (The main character in “The Jungle”, Upton Sinclair’s portrait of the horrific working conditions in Chica- go’s slaughterhouses, is Jurgis Rudkus, a Lithuanian immigrant.) After the second world war a second wave of refugees flee- The city that skips

32 United States The Economist August 25th 2018

this as a climate policy, but as a coal-subsi- disation policy,” says Joseph Goffman, ex- ecutive director of the Harvard Environ- ment and Energy Law Programme and an architect of the CPP. A leaked set of White House talking-points given to The Econo- mist confirms this. Climate change and glo- bal warming go unmentioned. “A diverse, reliable energy portfolio is essential to the president’s goal ofenergy dominance,” the document reads. “Energy dominance is good forAmerica and good forthe world.” The new proposal is no great surprise. The administration has tried its utmost to relax regulations for extractive industries. It has delayed rules limiting discharges of heavy metals, like lead, mercury and ar- senic, from power plants. The EPA has also loosened rules on the storage of coal ash, a by-product of mining which can leach tox- ic metals into streams. Rick Perry, the ener- gy secretary, has proposed out-and-out The Coal Protection Agency subsidisation ofthe coal industry; an inde- pendent regulatory commission rejected Smokestack lightening that idea. Two important officials driving environmental policy have close links to the coal industry. The Republican Party’s concern for left- behind coal miners (and coal-mine opera- tors) can give a false impression of the in- WASHINGTON, DC dustry’s importance, however. Just 53,000 The Trump administration continues to unravel Obama-era rules Americans work in coalmining, according NCE upon a time, backwhen America to the latest calculations from the Bureau Owas great, coal was king. Then came Whoo hoo of Labour Statistics—roughly 0.03% of the BarackObama. He laid the once-mighty in- United States, reductions in emissions from the labour force. The outsize importance of dustry low with onerous regulation, espe- electricity sector, 2005-30, % coalminers in the American imagination cially the hated Clean Power Plan (CPP). Affordable Clean Energy (Trump administration) has much to do with nostalgia. Republican On August 21st President Donald Trump, Clean Power Plan (Obama administration) calls for a resurgence in such tough-guy before an appreciative crowd in Charles- 25 20 15 10 5 – 0 jobs play well with a white working-class ton, West Virginia, personally slew the of- base, even ifthey are impossible to deliver. fending policy. Sulphur dioxide Tailoringclimate-change policy to indi- So the legend goes. In fact the CPP, a vidual states also makes little sense. Re- sweeping regulation issued by the Obama publican-led places like Wyoming, Texas Nitrogen oxides administration’s Environmental Protec- and Oklahoma, where much ofthe energy tion Agency (EPA), has been bogged down boom is concentrated, are unlikely to re- in legal challenges and is yet to come into Carbon dioxide strain carbon pollution. This counteracts force. The woes of coal are due less to gov- whatever sensible policies would emerge ernment interference in markets than the Mercury in Democratic states, and makes climate marketsthemselves. Natural gasisa cheap- change—which requires concerted global Source: Environmental Protection Agency er and cleaner fuel, made abundant by action—much harder to mitigate. “The fracking. Renewables, such as wind and whole purpose ofthe Clean AirAct is to es- solar energy, are now economically viable coal, a pollution-belching fuel, would tablish a federal policy so that there isn’t a alternatives. Mining itself has become shoot up by as much as 9.5%. race to the bottom,” says Ann Weeks, legal more automated. Today’s miners are three The costs, in terms of increased emis- director of the Clean Air Task Force, an ad- times as productive as miners were in 1980, sions, would be significant. Compared vocacy group. so fewer are needed. with 2005, America was emitting 14% less Finalising regulation takes time. Like All the same, the Trump administration carbon by the end of2016, thanks in part to the CPP, the Trump administration’s pro- is committed to undoing the CPP—which its move away from coal. That will contin- posal will probably face lengthy lawsuits. sought to reduce carbon-dioxide emis- ue. But whereas the CPP would have re- Its cost-benefit analysis is particularly ripe sions from power plants by 32% from their duced emissions by a further 19% by 2030, forchallenge. The proposed rule isunlikely levels in 2005 by 2030—before it comes ACE achieves only a drop of 0.7-1.5%. Coal- to go into effect within two years. This into effect. Its new proposal, the Affordable fired power plants also produce a cloud of means that Mr Trump would have to win Clean Energy (ACE) rule, is much less am- noxious gases. The CPP was expected to re-election for his environmental agenda bitious because it would let states decide cut sulphur-dioxide and nitrogen-oxide to be seen through. A greener president their emissions-reductions targets (includ- emissions by more than 20%; the new plan would probably seesaw back towards the ing having none at all). Its name is Orwell- will reduce them byonly1-2%. The EPA esti- CPP. But as Democrats and Republicans ian. The EPA’s own analysis shows that re- mates the plan could cause 1,400 addition- spend years shadow-boxing over the fu- tail electricity prices would be reduced by al premature deaths per year by 2030. ture of energy policy, climate change will a mere 0.1%-0.2% by 2035—but that use of “It’s revealing if you don’t think about continue unchecked. 7 The Economist August 25th 2018 United States 33

Transformational festivals Few at Beloved are keen to discuss Pres- ident Donald Trump. Could this be a sign With spirits kaleidoscopic that many visitors, demoralised by his rise, are increasingly choosing to retreat into the comfortofthe transformational communi- ty, rather than stick it out with activism in the broader political arena? Mr Rasenick worries that this is indeed happening and TIDEWATER AND SANTA BARBARA that it is part of the growing political polar- Sex, crystals and compost toilets make one headymix isation in America. Julian Reyes of Key- MID wafts of incense and marijuana debate how best to bring about the desired frame Entertainment, a producer of films, Asmoke, hordes of smiling folk in fairy- political change. Many, however, say it be- books and music on transformational cul- like garb or, fora few, just body paint, dance gins with ushering in an alternative con- ture based in San Francisco, reckons that in a patchwork of majestic forest glades sciousnessby“honouring” water, land, an- the number attending such festivals has near the town of Tidewater, Oregon. Oth- imals, organic food and clothing, nearly doubled in little more than three ers meditate in yoga postures. Some caress oppressed peoples, and the like. Moss years, a period that almost dovetails with crystals or each other in gently writhing Kane, a Beloved visitor who works at Two- Mr Trump’spolitical ascent. “snuggle puddles”. Colourfully painted Spirit Shamanic Healing, a practice in Por- Other factors no doubt play a bigger signs read “Redesign the Paradigm”, “Make tland, Oregon, reckons that the boom in role in swelling attendance at transforma- Love to the Mystery”, and, on pathsto com- transformational festivals has already be- tional festivals. For starters, they have ben- post toilets, “Conscious Pooping This gun to chip away at the “crumblingpower” efited from a decline in urban raves, where Way”. A speaker who replaces a DJ on the of bad capitalism through the emergence police have cracked down on the taking of main stage proclaims that humans were ofmore people with older, wiser souls. “club drugs” like ecstasy. Bybookingspeak- “born to serve the Earth” and leads the Others hope to effect political change ers, transformational festivals have attract- flock, many with raised hands, in prayers with a more traditional lefty approach. Be- ed folks keen on TED, a popularconference to the fourcardinal directions. loved hosts workshops on diversity, gen- series. Some transformational-festival en- Thus began the Beloved Festival, at der equality and using empathy to fight thusiasts have been turned off by the crass which some 2,500 people pitched tents or “divisive entitlement”. Marji Marlowe, commercialism and fashion culture associ- splurged for a luxury “glamping” yurt for who ran Beloved’s Care Circle Sanctuary ated with bigand beery music festivals like four days of “sacred” activities that ended this year, says a big part of her job is alert- Coachella and Lollapalooza. Jonah Haas, on August 13th. These included kundalini ing visitors to the privilege whites enjoy head of marketing for Lucidity, a transfor- and “galactivated” yoga, Sufi soul singing, butdid notearn. Beloved also offers educa- mational festival for roughly 5,000 camp- crystal-bowl sound healing, medicinal po- tion on the misstep of “appropriating” cul- ers near Santa Barbara, California, which etry, Thai massage, Latino storytelling, na- tures by, for example, donning feather sells out every year, points to perhaps the tive-American shamanism, gong medita- headdresses, says its community manager, biggest explanation for this flourishing. As tion inspired by NASA data from deep Dez Ramirez. Given the cultural mishmash far as religion goes, a quarter of American space, grief rituals from Burkina Faso’s of Beloved’s programme, this approach adults say that they are atheist, agnostic or Dagara tribe and rave-like takes on Orien- may perplex some, but other transforma- “nothing in particular” according to the tal ecstatic dance. Astonishingly, your cor- tional festivals do the same. Lightning in a PewResearch Centre, a proportion that has respondent saw no one snap a selfie. The Bottle, an annual California jamboree that increased sharply. This seems to have left Beloved Festival is about community, not draws some 20,000, imposes a ban on lots of people craving for the experience of ego, says its founder, Elliot Rasenick, so “cultures as costumes”, though plenty of religious worship without any of the irk- anyone who comes should be comfortable visitors dress up fancifully anyway. some beliefsassociated with worship. 7 making “deep eye contact with strangers”. Tickets started at $265.77. Beloved is just one of a booming con- stellation of “transformational” festivals spreading from its stronghold in the west- ern United States. Numbering dozens and with names like SoulPlay, Sonic Bloom, Kinnection Campout, Stilldream, Wander- lust and Symbiosis, they blend environ- mentalism with a pagan communal spiri- tuality that some visitors cultivate with psychedelic drugs. Many of these festivals, Beloved included, ban alcohol sales. Te- nets of this subculture include the exalta- tion of sexuality, participatory art and “radical self-expression”, a term popular- ised by Burning Man, the granddaddy transformational festival, which opens its annual pow-wow to some 70,000 in the Nevada deserton August26th. Butbecause in the Trump era even leisure is political, many also endow the movement with ad- ditional purpose. The idea, says Mr Rasen- ick, is to “use celebration to create change” in a world racked by misdeeds. Devotees of transformational festivals Take me to church 34 United States The Economist August 25th 2018 Lexington What is racism now?

Like obscenity, you know it when you see it. That makes the term uncomfortably subjective quired. An understanding of how that history still reverberates through American society, showing up in disparities in income, education, incarceration and welfare receipts is also necessary. Some familiarity with the copious literature on unconscious ra- cial bias is a plus. All ofwhich makesthe new definition ofracism much more subjective than the old one. One way sociologists measure racist attitudes is by asking whites polling questions about whether black Americans are lazy. The share who say whites work harder than African-Ameri- cans fell from 65% in 1990 to 35% in 2015. Mixed-race marriage did not command the support ofthe majority ofAmericans until the mid-1990s. In the years since then, support has increased to near- ly90%. In 2010 the share ofwhiteswho saytheyfeel equally close to blacks and other whites overtook the share who say they feel closer to whites. There is plenty more where this came from. Some progressives, who find the idea thatAmerica has experi- enced racial progress over the past 50 years intolerable, have ar- gued that what has really happened is that those cunning racists have just become better at concealing their prejudice. An alterna- tive view, preferred by Barack Obama among others, is that America really has seen a lot of racial progress. If that is indeed INCE the publication of Omarosa Manigault Newman’s book the case, then what defines racism now? Sabout her time in the Trump administration, the president’s At one extreme, white racism is considered to be ubiquitous political opponents have been indulging in a charmingly old- and there is nothing that even well-informed, well-intentioned fashioned debate. Ms Manigault Newman suggests she was fired white people can do about it. John McWhorter, who teaches lin- because people in the White House thought she knew the where- guistics at Columbia University, haslikened this view to a secular abouts of a recording from the president’s reality TV days in religion in which enlightened whitesare foreverseeking penance which he used the N-word. Given President Donald Trump’s forhistory. “White privilege isthe secularwhite person’sOriginal fondness for derogatory epithets, it would be mildly surprising if Sin, present at birth and ultimately ineradicable. One does one’s he had avoided this one. Yet to imagine that a tape of the utter- penance by endlessly attesting to this privilege in hope of some ance would damage him irrevocably would be to forget the past kind of forgiveness.” At the other extreme is the insouciance of three years. The president’s opponents, it seems, are condemned the 77% ofTrump voterswho saythatusingthe N-word and being to be taught the same lesson over and over again. a good president are compatible. The kind of epithets Mr Trump uses are nowhere near as shocking to many people as progressive Americans imagine. The Say it loud Economist asked YouGov to do some polling on the use of the Between these poles is a usable definition. Later on in her book, word “nigger”. The results came in this week, and they are that Ms Manigault Newman describes an exchange with Stephen 35% of those who voted for the president report having used the Bannon, then the chief strategist to the president, which helps to word themselves. Perhaps more surprisingly, 24% of those who refine it. “I had an interesting conversation with Bannon and say they voted forHillary Clinton have done so too. Subtract Afri- asked him if the rumours of him being a racist were true,” she can-Americans, who have licence to use the N-word, from the writes. “He said no. He explained, ‘The same way you are a proud Clinton numbers and the share drops, but only to 19%. African-American woman, I am a proud white man. What’s the Using the N-word is hurtful for the same reason other casual difference between my pride and your pride?’” insults are. When the president says that LeBron James, a basket- White pride is taboo in American politics: the smells of burn- ball great, and the TV anchor interviewing him (both of them ing crosses and Zyklon B cling to it still. White pride is troubling black) are stupid, or that Ms Manigualt Newman is a “dog”, or because of its association with a violent fringe movement that that Mexican migrants are “rapists”, he hints at a style of thought the FBI tracks assiduously. But it is also troubling because de- with a murderous past. Racism, said Martin Luther King, “is the mands made by political majorities on the basis of race are more arrogant assertion that one race is the centre of value and object threatening than those made by minorities. White pride is scary; ofdevotion, before which otherraces must kneel in submission.” Irish pride is celebrated with marching bands and by dyeing the Yet in MrTrump’sdefence, the words he has used fartoo often are Chicago River iridescent green. It is only when Irish-Americans hints at something rather than the thing itself. They do not reach join with otherwhites to make political demands that this way of the threshold set by King’s definition. doing politics becomes alarming, because this larger group might This does not get the president off the hook, though, for the have the power to impose its will on everyone else. meaning of racism has shifted during his lifetime. It is no longer As America becomes a more racially mixed society and the enough just to express admiration for civil-rights leaders, support pre-eminence ofwhites fades, a point which is still decades away, for racially mixed education or a past opposition to the Ku Klux that objection to white pride could one day fall away. That does Klan fora politician to prove that he is on the right side ofthe line. not mean that white Americans cannot be proud oftheir country Some proper sense of the violence perpetrated against African- or its history in the meantime. It means that organising politically and Native Americans for much of the past three centuries is re- around the idea ofwhiteness is, well, racist. 7 The Americas The Economist August 25th 2018 35

Also in this section 36 Venezuela’s exodus 38 Copying Mexican crafts Bello is away

Venezuela’s crisis package sound asiftheywere conceived in the boardroom of an international bank. Rethinking the revolution In fact, that is close to what happened. As inflation accelerated this year, a team led by TareckEl Aissami, the vice-president for the economy since June, has been consult- ing financial advisers. A group from Ecua- CARACAS dor, which adopted the dollarin 2000 after Nicolás Maduro’s plan to rescue the economyis bold bythe standards ofthe a bout of inflation, was spotted in Caracas Bolivarian regime. It is probably not bold enough last month. “We all heard [the government ICOLÁSMADURO’Saddressto hisfel- currency with five fewer zeros, the sover- was] looking for suggestions from econo- Nlow Venezuelans on August 17th be- eign bolívar, has replaced it. This is a volte mists,” says Pedro Palma, director of Eco- gan like all his other “cadena” (“chain”) ap- face by a regime that had long insisted that analítica, a Caracas-based economic con- pearances on state television. The the black-market rate was fraudulent. sultancy. “Some inside the government country’s president has made more than As significant was Mr Maduro’s unpre- realised the situation was unsustainable.” 100 such broadcasts this year, all of them cedented admission that the government Mr Maduro has suppressed the opposi- carried (by government order) by all televi- has caused hyperinflation by printing bolí- tion, and stripped the powers from a legis- sion and radio stations. Nearly half of vares to finance massive budget deficits. lature that it controls. Pressure on him is viewers switch off or ignore their televi- He promised to cut the deficit to zero (from coming increasingly from within the re- sionswhen the mustachioed authoritarian an expected 30% of GDP this year), in part gime itself. In July the congress of the rul- appears to make a pronouncement, ac- by raising value-added tax and by increas- ing United Socialist Party (PSUV), held cording to a survey published this month. ing the price of petrol, which now costs once every four years, became a forum for This one was worth staying tuned in nearly nothing, to international levels. He criticising him. Freddy Bernal, who runs a for. Wearing a business suit rather than his plans to speed up tax collection, so that the government programme that distributes usual tracksuit, and sniffling through a value of revenues is not inflated away by subsidised food, challenged the regime’s head cold, Mr Maduro made unexpected the time they reach the treasury. argument that its failings—including announcements. He appeared to jettison hyperinflation—are the result of an “eco- some of the economic practices that make Brave new bolívares nomic war” waged by subversives and for- Venezuela’s “Bolivarian revolution” a The new era began on August 20th, which eign powers. “We are 19 years into a revolu- uniquely destructive experiment in left- Mr Maduro declared a public holiday to al- tion. Only we are responsible for the good wing populism. Venezuela has suffered an low for the introduction of the sovereign and the bad,” he declared. On the meet- economic contraction of more than a third bolívar. When banks reopened on the fol- ing’s fringes, criticism of Mr Maduro was since 2013; inflation that may exceed a mil- lowing day, people queued to make their scathing, according to one delegate. lion per cent this year; shortages of food first withdrawals. Although the president On August 4th he faced worse. At a mil- and medicine; and an exodus of people to said Venezuela had ten times the cash it itary parade in Caracas, two drones laden neighbouring countries (see next story). needed, ATMs restricted withdrawals to with plastic explosives headed towards Promising an economic miracle, Mr ten new bolívares, about 17 cents. Many the podium where he was speaking. One Maduro abolished the state-controlled ex- Venezuelans regarded the exercise as a baf- exploded a fewhundred feetfrom the pres- change rate for the bolívar, introduced by fling maths test. “I had 9m old bolívares in ident, the other hit a building. Viewers of Hugo Chávez, the revolution’s founder, in my account. Can I take out 50 bolívares?” the event, which was broadcast on televi- 2003. The currency has been devalued wondered Alberto Claudino, a customer at sion, saw national-guard conscripts run from the official rate of 250,000 to the dol- a bankin eastern Caracas. away. The cameras were abruptly lar to the black-market rate of 6m. A new Some elements in Mr Maduro’s rescue switched off. Twenty-five people have 1 36 The Americas The Economist August 25th 2018

2 been arrested in connection with the ap- Venezuela’s exodus uge in neighbouring countries. The size of parent assassination attempt, including the exodus rivals those of war-ravaged Af- three senior officers ofthe paramilitary na- The Bolivarian ghanistan and South Sudan. tional guard. Unlike many rich countries, which This episode helped convince Mr Ma- wave have been closing their doors to migrants duro that he needed to present “a believ- from northern Africa and the Middle East, able proposition” for ending the economic Latin American governments have mostly BOGOTÁ AND SÃO PAULO calamity, says Colette Capriles, a political let people in. Left-wing governments in the As Venezuelans flee, Latin American scientist. He decided to add a more ambi- early 2000s relaxed immigration laws, countries shut theirdoors tious set of policies to the introduction of says Luisa Feline Freier of the Universidad the new currency, already scheduled for ACARAIMA is a speck of a town in the del Pacífico in Lima, Peru. The right-of-cen- August 20th. Just a few ministers knew the PBrazilian Amazon on the border with tre governments that succeeded them in details in advance. Venezuela. Recently, it has been the entry several countries maintained these poli- The rescue scheme mixes sensible point fortens ofthousands ofVenezuelans cies as a rebuke to Mr Maduro’s regime. ideas with Bolivarian barminess. “It’s like fleeing hunger, violence and hyperinfla- As Venezuela’s crisis has worsened, the two economies, or two worlds—the Marx- tion at home. Most continue by foot220km number of people fleeing has surged. Un- ist and the monetarist,” says Ms Capri- (135 miles) on the motorway to Boa Vista, like those in earlier waves, the newer mi- les. Ángel Alvarado, an opposition politi- the capital of the state of Roraima, where grants tend to be poor rather than middle cian, calls the scheme “impossible... they struggle to survive by unloading lor- class. The exodus has prompted some Utopian”. Mr Maduro’s promise to elimi- ries, hawking crafts and selling sex. About countries to impose restrictions on their nate the budget deficit is hard to square 2,000 ofthe pooresthave stayed in Pacarai- borders. Ms Freier fears that Latin Ameri- with the plan to increase the minimum sal- ma, pitching tents in the streets. That has can countries will soon become as wary of ary 35-fold, and to take over from small strained the town’sresourcesand the toler- immigrants as many European ones. firms the extra cost of paying it for 90 days. ance ofits12,000 inhabitants. On August 16th the government of Ec- The fiscal benefit from raising fuel prices On August17th several men, apparently uador announced that it would turn away will be reduced bya pledge to continue giv- Venezuelans, robbed and beat a shop- from its border Venezuelans not carrying ing subsidies to some 17m holders of gov- owner. At an anti-immigration march the passports, saying they posed a security ernment-issued ration cards, more than next day, hundreds of locals threw stones risk. Most of these were heading towards halfthe population. at migrants’ tents and set fire to their be- Peru, which isreceivinga record 5,000 Ven- Mr Maduro made no mention ofthe ex- longings. More than a thousand Venezue- ezuelans a day. It imposed its own passport ternal debt, on which the country is al- lans fled into the jungle or back over the requirement with effect from August 25th ready in partial default. The government border. Their makeshift homes burned to and said itwould notissue workpermits to may still exert control over the foreign-ex- the ground. Brazil’s president, Michel Venezuelans who arrive after October. change market. The stability of the new Temer, sent 60 troops to restore order. Many do not carry passports. Because of a currency is meant to come from its link to Though the Venezuelan exodus some- paper shortage and software problems, the petro, a “cryptocurrency” invented by times seems as invisible as tiny Pacaraima, getting one can take two years. A bribe to the government that is supposedly backed it is the biggest movement of people in Lat- jump the queue can cost up to $1,000. byoil reserves. One petro hasthe same val- in America’s recent history. Since Venezue- Venezuelans are not the only migrants ue as a barrel of oil (now about $60), and la’seconomybegan to slump in 2014 under provoking unease. In Costa Rica, the back- the new bolívar is pegged to the new unit Nicolás Maduro, a socialist strongman, lash is directed at Nicaraguans, who are es- ofaccount (at a rate of3,600 to one). perhaps 2.3m Venezuelans have sought ref- caping the repression by Daniel Ortega, This is supposed to bolster confidence Nicaragua’s president, of opposition prot- in the sovereign bolívar. But there is little ests. From April to July 23,000 migrants reason to thinkthat the device will end the Hypermigration sought asylum in Costa Rica, which has a expansion of the money supply that Population of Venezuelans, ’000, 2017 tradition of generosity to refugees. On Au- causes inflation. “The petro is a fake, a way gust 18th hundreds of protesters in San to get the central bank to inject money,” MEXICO José, the capital, chased Nicaraguans in a says Mr Palma. Many Venezuelans share park and set fire to their flag. The United 33 COSTA RICA 9 that scepticism. “It’s a disguise,” said Bea- PANAMA 36 Nations reprimanded the instigators. triz Piñate as she queued for bread in Cara- Chile’s strong economy makes it a mag- cas. “All I know is I’m poorer this week net for migrants. The number of foreigners VENEZUELA than I was last week.” registered there has risen almost five-fold COLOMBIA The extra income from a higher mini- 600 in a decade, to 750,000 last year (about mum wage could soon be consumed by in- 40 4.5% of the population). Perhaps 300,000 flation, causing more misery and popular ECUADOR more were living in Chile illegally. Last rage at the government. No sooner had the 26 35 year the number of Venezuelans in Chile sovereign bolívar appeared than its value PERU BRAZIL grew by about 100,000. Many had sold all began to slip. DolarToday, a popularsource Total Venezuelan their belongings to pay for the 12-day bus of information on the black-market bolí- population abroad, m trip. More than 100,000 also came from var, quoted it at 1.4 cents on August 22nd, a CHILE Haiti, the Americas’ poorestcountry. Apoll 1.5 119 furtherdevaluation of18%. 57 last year found that two-thirds of Chileans These are worrying omens for Mr Ma- 6 URUGUAY wanted to restrict immigration. 1.0 duro, whose survival in office probably de- ARGENTINA Sebastián Piñera, who became Chile’s pends on the success ofhis economic plan. president in March this year, responded by “Ifhe fails, he will own the defeat, and bear 0.5 tighteningits relaxed immigration policies. the potential consequences,” says a source He abolished a visa that immigrants could 0 familiar with the PSUV’s inner workings. If 2005 10 15 17 apply for after entering as tourists and a new president takes to the airwaves, few- Sources: International Organisation for Migration; placed restrictions on tourist visas for Hai- er Venezuelans might switch off. 7 UN Department of Economic and Social Affairs tians. Venezuelans are being treated more 1 ADVERTISEMENT

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Supported by 38 The Americas The Economist August 25th 2018

2 generously; they can get a “democratic re- Craft in Mexico from pilfering indigenous creations. sponsibility” visa allowing them to work. But the artisans have mixed feelings, The main holdout against the trend to- Copy that and are more interested in income than in wards harsher treatment ofmigrants is Co- authenticity. The off-white blouse that Zara lombia, by far the largest destination for allegedlycopied wasdesigned to be sold to Venezuelans. Around 900,000 have outsiders. The traditional version is frillier, moved there, a third of those this year harder to make and itself a cultural hybrid: AGUACATENANGO alone. Juan Manuel Santos signed a decree it uses an embroidery technique practised Indigenous artisans are trying to that “regularised” 442,000 undocumented in Europe in the 17th century. protect theirdesigns Venezuelans before he left office as presi- A bigger problem than plagiarism is dent on August 7th. For the next two years OR nine months a year, no men are to counterfeiting. In the markets of San Cris- they will be able to work, get health insur- Fbe seen in Aguacatenango. They leave tóbal, 47km (29 miles) away from Aguaca- ance and study—benefits that 1.5m other the village in the southern state ofChiapas tenango, real dresses from the village share Venezuelans living illegally in Colombia to work elsewhere in Mexico and return in shelf space with identical fakes made in and elsewhere have a hard time claiming. summer to harvest maize. It falls to the Asia. “Piracy is worse [than plagiarism by The new conservative president, Iván women to raise the children, chop fire- brands], because it kills the industry,” says Duque, has not changed Mr Santos’s poli- wood and make some extra money. On a Ms Harp. Some of the seamstresses wear cy. Colombia’s “migration director” criti- recent Saturday 18 women huddled on a knock-offs of their own traditional dresses cised the restrictions in Peru and Ecuador, porch, chatting in a mix of Spanish and while they fashion the real thing for sale to and restated Colombia’s commitment to Tzeltal, an indigenous language, as they others. helping Venezuelans. fashioned swatches of fabric into dresses A first step towards fighting fakery and In part, Colombia’s generosity is a form whose flower-and-wheat design is unique imitation would be to recognise indige- of gratitude to Venezuela, which took in to the village. The work does not pay nous designs as a form ofintellectual prop- more than 700,000 Colombians during much. An artisan can earn120 pesos ($6) in erty (IP). In July Tenango de Doria, a village the country’s half-century war with the the 36 hours it takes to make one dress. in Hidalgo, a state in central Mexico, ac- FARC guerrilla group. The war ended in Out-of-the-way Aguacatenango was in quired a collective trademark for a logo 2016. Some 250,000 Colombians have the news last year when Zara, a Spanish that marks the village’s distinctive crafts. now come back from Venezuela, adding to sellerof“fast fashion”, put on sale for1,000 Winning international recognition of the strain ofcoping with migrants. pesos a blouse strikingly like those made rights to protect the traditional designs Activists and some politicians are try- by the women of the village. In July this themselvesishard. The principlesunderly- ing to keep doors ajar. After Ecuador’s om- year Zara sold another outfit with a similar ing protection of IP, conceived in the 19th budswoman called its passport require- pattern. “It’s not fair. We were first,” says century, do not allow for the transfer of ment “cruel” and filed a complaint with Cristina Juárez, one of the artisans. Zara ownership ofideas from one generation to the supreme court, the government said it did not comment at the time. the next. Countries have been trying un- would not apply to children accompanied Impacto, an NGO, has identified ten successfully for17 years to devise a new de- by parents who have passports. The UN cases since 2012 of foreign merchants sell- finition ofIP tailored to indigenous groups. High CommissionerforRefugees(UNHCR) ing clothing based on indigenous Mexican Globalisation may help solve the prob- said in March that many Venezuelans designs without giving payment or credit. lems it causes. Mexican designers are qualify as refugees under international Almost all were based on local crafts of set- working with artisans on new indigenous law. It is urging governments to issue hu- tlements in Chiapas and Oaxaca. These in- dresses that can be sold online or in high- manitarian visas and work permits. Aid cidents sparked a debate over “cultural ap- end shops. A woman can earn 1,000 pesos from richer countries like the United States propriation”, the use by a dominant formaking a blouse that will sell for 2,000. “could make the difference between Vene- culture of ideas and practices of a down- As the designs are new, they are entitled to zuelans being supported and Venezuelans trodden one. Susana Harp, a singer from protection under copyright law. Some tra- being blocked at borders”, says Chiara Car- Oaxaca who was elected a senator in July, ditionalists might call that cultural appro- doletti-Carroll of the UNHCR. Ecuador has says she entered politics to stop brands priation, but at least it pays. 7 called a meeting of leaders from the region in September to discuss a co-ordinated re- sponse to the crisis. Butdiplomacymaynotease tensions in the host countries. In Roraima, the army has taken over responsibility for providing shelter, food and health care to the Venezu- elans. So far, though, the government’s policy of “interiorisation”—sending them to richer states with more jobs—has failed. Just 800 migrants have been moved. One reason is “institutionalised xeno- phobia”, says a Roraima official. This is sharpened by a general election due to take place on October 7th. On August 19th Roraima’s governor renewed a plea to Bra- zil’s supreme court to shut the border. That did not stop hundreds of Venezuelans from coming on August 20th. They had lit- tle choice, says Jesús López Fernández de Bobadilla, a Spanish priest who serves breakfast to 1,600 migrants. “Over here it’s purgatory, but over there it’s hell.” 7 Closing in on counterfeits Asia The Economist August 25th 2018 39

Also in this section 40 Two Indian prime ministers 40 Indonesia’s longest river 42 Banyan: Ending the conflict in Afghanistan

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

Australian politics grievances play a part. Mr Dutton’s sup- port comes from a hard-right faction with- Spill will in the Liberal caucus. Their leading light is the vengeful Mr Abbott, who thinks Mr Turnbull has dragged the party too far to the left. MrAbbottand hisallieswant more restrictions on immigration and fewer on burning coal. Given the government’s mi- Sydney nuscule majority, his small band of rebels The country is about to lose anotherprime minister has been able to stymie the prime minis- HEN it looked as if he might hold on profiting from the government they over- ter’s legislative agenda. Wto his job, Malcolm Turnbull, Austra- see. Third, Mr Turnbull said he would re- The rebelshave grown louderassucces- lia’s prime minister, insisted that for hisfel- sign from parliament if the leadership sive polls have shown that the Liberal-led low Liberal MPs, the bedrock of the go- challenge went ahead, prompting a by- coalition is likely to lose the next election, verningcoalition, “Unity is critical.” At that election in his marginal seat. Since the gov- due by May. The latest flashpoint was the point, on August 21st, he had just precipitat- ernment has a majority ofone in the lower government’s unambitious proposal to ed and survived a vote on his own leader- house (and a minority in the Senate), the trim greenhouse-gas emissions, in keeping ship. But the challenger he wrong-footed, new prime minister may not last long. with cuts that MrAbbott himselfapproved Peter Dutton, the home-affairs minister As The Economist went to press, Mr by signing the Paris agreement on climate (pictured standing), refused to give up. He Turnbull seemed clearly on the way out. change. The insurrection forced Mr Turn- began circulating a petition for another Mr Dutton may well prevail over the other bull to abandon the targets. vote within the Liberal caucus, and per- candidates, Julie Bishop, the foreign minis- Mr Turnbull has proved a disappoint- suaded a series of allies to resign as minis- ter, and Scott Morrison, the treasurer. For ing leader. He painted himself as a princi- ters. When it became clear that his support the fourth time in less than a decade, gov- pled reformer, but has spent more time ap- was crumbling, Mr Turnbull changed tone. ernment MPs are turfingout a prime minis- peasing right-wing critics than fighting for “I’ve never given in to bullies,” the ter in search ofelectoral advantage. his beliefs. By backtracking on climate prime minister declared at a press confer- The previous beneficiary of such a change, an issue about which he professes ence, while appearingto give in. He said he coup was Mr Turnbull himself, who un- to be passionate, he showed himself will- would resign ifMr Dutton produced a peti- seated Tony Abbott as prime minister and ing to jettison even his dearest policies. tion from a majority of Liberal MPs asking Liberal leader in 2015. The opposition La- for a fresh vote—something Mr Dutton bor party has also indulged in “spill mo- Good cop orbad cop? should be able to do, given all the resigna- tions”, as the leadership votes are known, Yet Mr Dutton, an ex-policeman, is an un- tionsfrom the cabinet. ButMrTurnbull laid first evicting Kevin Rudd in 2010 in favour likely alternative. As the minister most re- several traps forMr Dutton even as he con- of Julia Gillard and then reinstating him in cently responsible for incarcerating asy- ceded. First, he delayed the vote on the 2013. That did not stop Labor denouncing lum-seekers in foreign processing centres, next leaderuntil August 24th, givingpoten- the current upheaval as a shameful sham- he has positioned himself as one of his tial rivals to Mr Dutton a little time to rally blesand a betrayal ofthe people’strust. On party’s most reactionary figures. He support. Second, he asked the solicitor- past precedent, the people are likely to see blamesblackAfricansforincitinggang vio- general for an opinion about whether Mr it that way too. None of the three previous lence, and wants to offer white South Afri- Dutton might be ineligible to serve in par- changes ofprime ministerrevived the elec- can farmers a special category of humani- liament, given that his family trust has in- toral fortunesofthe ruling party. tarian visa. When the prime minister of terests in child-care centres that receive That raises the question of why Liberal the day, Kevin Rudd, apologised ten years government subsidies. That could put him MPs are so busily writing a political “sui- ago to the “stolen generation” ofaboriginal in breach of a constitutional ban on MPs cide note”, as one of them put it. Personal children forcibly removed from their fam-1 40 Asia The Economist August 25th 2018

2 ilies, Mr Dutton walked out of parliament contrasts with Mr Modi’s tenure. Mr Vaj- in disgust. payee was an accomplished poet and Australians are frustrated by stagnant maintained an air of genteel concern even wages, but they have never rallied behind during moments of communal violence right-wing populists. Polls suggest Mr Dut- which the BJP had helped to stir up. In- ton is eitherdisliked by orunknown to vot- deed, he was seen as making Hindu-na- ers. His main appeal is tribal: he hails from tionalists, previously regarded as a violent Queensland, whose swing seats could de- fringe, electorally acceptable. He appeared termine the outcome of the election. A hu- torn by the destruction of the 16th-century miliating defeat in a by-election there last Babri mosque by Hindu mobs in 1992, at month sent Liberals into a frenzy. Mr Dut- one point apologising for it, even though ton’s backers hope that his stance on immi- the BJP had led a campaign forthe mosque gration might win backsome votes. to be replaced with a Hindu temple. Yet even ifthey are right, the fad forspill Ten years later, when he was prime motions makes Australian politics look minister and Mr Modi was chief minister alarmingly unstable. Not one prime minis- of the state of Gujarat, more than 1,000 ter has completed a three-year term since people were killed in communal violence John Howard, another conservative, lost in Gujarat, most of them Muslims. Imme- power in 2007. The new one is unlikely to diately afterwards, Mr Vajpayee went to a buckthat trend. 7 BJP conference in Goa determined to sack Mr Modi, according to Vinay Sitapati of Flowers for Vajpayee Ashoka University. The RSS, which acts as Indian politics both the activist base and spiritual progen- the purchase of French fighter jets, and itor of the BJP, got its allies in the govern- with subverting democracy more broadly. A mellower shade ment to talkhim out ofit. MrModi went on But voters do not seem as bothered by to campaign for multiple re-elections as a all this as are the chattering classes of Del- of saffron strongman who could save India from a hi. Mr Vajpayee’s educated, upper-caste vague but sinister Muslim threat. bearing was not necessarily an asset Another contrast concerns economic among humbler voters. Mr Modi, in con- NEW DELHI management. Mr Modi has disappointed trast, is the BJP’s first lower-caste leader, The ruling party’s onlyprevious prime his policy-minded admirers by failing to and harps on about his time as a chai- ministerpasses away follow Mr Vajpayee’s lead in pushing wallah, selling tea at a street stall. The BJP’s HE Bharatiya Janata Party(BJP) has pro- through painful reforms. Mr Vajpayee best electoral performance under Mr Vaj- Tvided two ofIndia’s14 prime ministers: created a ministry for privatisation; the payee saw it win 182 of the 545 seats in the Narendra Modi, the incumbent since 2014; one big sale under Mr Modi, of Air India, lower house of parliament. Under Mr and Atal Bihari Vajpayee, who held office failed for lack of buyers. The man who ran Modi it won 282 seats in 2014. MrModi is as in 1996 and again in 1998-2004. Both silver- Mr Vajpayee’s ministry, Arun Shourie, has buoyant in opinion polls as Mr Vajpayee haired, silver-tongued orators, who lived become one of Mr Modi’s fiercest critics, everwas, and is the strongfavourite in next as avuncular bachelors and gave their questioning his belief in free markets. To- year’s election. Mr Modi may suffer by younger years to quasi-monastic work for gether with one of Mr Vajpayee’s finance comparison to his predecessor in various the Rashtriya Swayamsevak Sangh (RSS), a ministers, Yashwant Sinha, he has accused ways, but it is hard to argue that Mr Vajpay- Hindu “volunteer” network, they sound the current government of corruption in ee was the shrewder politician. 7 like twins. They took office promising eco- nomic progress and a resurgence in cultur- al pride for the country’s Hindu majority. Indonesia’s longest river When Mr Vajpayee died after long infirmi- ty at the age of 93 on August 16th, Mr Modi Ebb and flow said he had lost “a father figure”. Yet many Indians dispute the inheritance. “Impossible to fill the void”, the head- lines blared, paraphrasing Amit Shah, the BJP’s current number two. In fact Mr Vaj- PUTUSSIBAU payee had not been seen in public in the Along the Kapuas river,development conflicts with conservation past nine years, since suffering a stroke. Messrs Modi and Shah have felt no com- TON, the middle-aged owner of a bau, a town close to the source of the Ka- punction about filling the void. Under Sbrightly painted café on a raft, com- puas, Indonesia’s longest river. From there their watch the BJP has become the coun- plains about the river on which his estab- the river winds 800km down to Pontia- try’s largest party by membership and by lishment floats. When he was young the nak, the capital of the province of West Ka- far its best funded. They are happy, of water of the Kapuas was clear; in the dry limantan, in the Indonesian part ofBorneo course, for the public to be reminded of its season you could see to the bottom, a few (see map on next page). The river and its fond feelings for Mr Vajpayee and his hey- metres below the surface. Now it has tributaries support some 3m people, over day in office. He presided not only over In- turned a murky green. He can no longer half the province’s population. For those dia’s first nuclear test and a mini-war with drink the water, even if he boils it. None- living downstream, the deterioration in Pakistan in Kashmir, but also over growth theless, the river still has its uses. Like water quality is even more pronounced. rates that began exciting investment bank- many others, he bathes in it. It also pro- One reason that the wateris so murky is ers, after many years of disappointing eco- vides a handy washing area for pots and deforestation. Since the 1970s logging has nomic performance. pans. Rubbish, he adds, is not really a con- enriched locals while stripping away the But it is hard to dwell on Mr Vajpayee’s cern, flinging a tea bag into the water. vegetation that held the soil in place. The time as party leader without noting some Ston is lucky. His café is near Putussi- Centre for International Forestry Research1 The Economist August 25th 2018 Asia 41

2 (CIFOR) found that between 1973 and 2010 The Kapuas passes through seven dis- over 100,000 square kilometres of forest MALAYSIA tricts. Midstream ones, such as Sintang and Kuching was lost on Kalimantan, or a third of the Sanggau, earn hefty tax revenues by en- original coverage. A national moratorium Kapuas Hulu couraging palm-oil plantations. But down- that began in 2011has done little to still the Putussibau stream districts suffer from the resulting Selimbau axes. As a result, torrential tropical rains Sanggau silt, traffic and run-off without receiving wash lots ofloose earth into the Kapuas. Pontianak any of the benefits. The same problem oc- Kapuas Sintang Illegal gold-miningcompoundsthe pro- curs at a village level. Mr Hadi says that West blem. Locals tear up the riverbed with dig- Kalimantan fishing by sprinkling poisonous leaves on gers or blast the banks with high-pressure INDONESIA the water (the stricken fish float to the sur- hoses, then sieve the mud for gold. Mercu- face) is forbidden but other village heads ry, which the miners use to separate gold Borneo do not enforce the rules. from sediment, but which is poisonous to The Kapuas gradually snakes its way humans and fish alike, leaks into the river. Java Sea down to the town of Sintang, a hub for A local suspects this caused many people palm oil. Neat lines of palms line the river- in a nearby village to get sick last year. It is 100 km banks. Yellow lorries carrying palm nuts certainly putting the river’s fish at risk, says clog the only good road. The industry is Kiki Utomo, an environmentalist at Tan- river, they are often floatingcubicles with a thriving in West Kalimantan. Between jungpura University in Pontianak. hole in the floorboards. Cows and goats, 2010 and 2016 plantation coverage more Fishing is the main source of livelihood livingin wooden riverside cages, also defe- than doubled to 18,000 square kilometres, for the residents of Selimbau, a village on cate straight into the Kapuas. about a tenth of the province’s area. This is stilts, says Soptian Hadi, its head. But Managing the river is made harder by improving the lot of locals. A study by CI- catches have declined in the past few Indonesia’s many layers of government. FOR on the income of villagers living near years. Mercury is not the only problem. Silt Take the problem of silt. In some places in the Kapuas river found that the best-paid reducesthe amountoflightreachingthe al- Kapuas Hulu, says Muhammad Sukri, palm-plantation workers earned 50% gae on which some fish species feed. And head of the civil service there, deposits are more than the most successful fishermen. the opaque water makes fish hard to spot. heavy enough to impede boats, hamper- (Gold miners made three times as much— Tourism suffers, too. Bona Ventura of ingtrade and threateninglocal livelihoods. and spent more on education.) Kompakh, a local NGO which helps vil- But he cannot do anything about it be- But the environmental damage is plain lages generate income from ecotourism, cause the riveristhe jurisdiction of the pro- to see. The river here is brown, clouded by says pollution puts off potential visitors. vincial government in Pontianak. De- silt. A study published in 2016 found that Moreover, it is hard to convince locals to mands from the central government in levels of phosphates in the water, from fer- build bamboo homestays when gold min- Jakarta, meanwhile, baffle local bureau- tilisers and villagers washing themselves ing is so much more lucrative. crats. One edict obliges districts to plant with soap, are highest near urban areas There are a few other ways for ex-fisher- bamboo on river banks. Why? “I don’t and palm plantations. men to earn a living. Some have turned to know,” shrugs a frustrated official. Down in Pontianak, the river water is farming arowana, an ornamental fish sold The confusion also creates problems on darker still, occasionally brightened by oil to well-heeled Singaporeans and Chinese. land. In 2014 researchers at Lembaga Ge- slicks. Water bottles and instant-noodle The riverbank is punctuated with corru- mawan, an NGO in Pontianak, totted up packets cling together to form plastic is- gated-iron towers, which emit birdsong the amount of land in the province that of- lands. Bayou, the owner of a riverside bar, from loudspeakers. These are designed to ficials had handed out in logging and min- says that the littering got worse after a big lure swiftlets, who make their nests with ing concessions. The total was 30% bigger mall opened upstream. Yet people still use saliva. The nests are considered a delicacy than the province itself, implying a wealth the river to bathe, clean their pots and and aphrodisiac by many Chinese. Deane, of overlapping claims. That is partly be- brush their teeth. Down the road, work- a shop owner, built his tower last Decem- cause different bits ofthe government dole men are building a pipe to bring in clean ber after seeing others do the same. He out land based on different maps. water from elsewhere in the province. 7 sells the nests to a wholesaler for about 15m rupiah ($1,025) a kilogram. In Penepian Raya, another village, piles of leaves from a kratom tree are drying on stilted walkways. Women in conical hats are packing them into bags. They will be used to make a pain-reliever or mild nar- cotic. A wholesaler collects the sacks and ships them to Pontianakforprocessing. The villagers in Penepian Raya are also trying to clean up the river. Many com- plain about rubbish drifting down from upstream, butuse the Kapuasasa tip them- selves. Young men equipped with ma- chetes are building bamboo bins for public use. Unfortunately the village is too re- mote for rubbish lorries. The waste will probably be burned or buried instead. Isolation makes it hard to deliver other services. In Kapuas Hulu, an upstream dis- trict, half the population rely on the river fordrinkingwater. Aquarterhave no toilet. Even where bathrooms do exist along the Just don’t drink any 42 Asia The Economist August 25th 2018 Banyan Ice cream amid a thaw

Manyin Afghanistan are readyforan end to decades ofconflict. But is the region? problem isnotthe much reduced level ofWestern military-led as- sistance. On the contrary, the hundreds of billions of dollars America and its allies poured into the country in the name ofsta- bility and development engendered a much resented klepto- cratic state. As Theo Farrell ofWollongong University in Australia putsitin “Unwinnable”, hisbookon Britain’s warin Afghanistan: money flows upwards; every government position is bought; even promotions in the army and police depend upon patronage and purchase. So much Western money ended up (via unscrupu- lous local barons to whom logistics and other contracts were granted) helpingthe insurgents that a common myth in Helmand province in the south, where the British force was concentrated, was that Britain was working with the Taliban. These days, so low are government morale and discipline that regional commanders and other officials switch off their mobile phones at night so as not to receive calls to provide reinforce- ments. No wonder Mr Ghani has pushed for peace since he came to power in 2014 at the head ofa “national unity” government of- fering unconditional talks with insurgent leaders. By and large, the Taliban have rebuffed him—Americans are the real foe, they insist. But morale is not much better with them HIS week, to coincide with the Eid al-Adha, the Muslim feast either. The Taliban maycontrol much ofthe countryside, butthey Tcelebrating the end of the hajj, Afghanistan’s president, Ash- fail to hold provincial centres for long. For many fighters the war raf Ghani, announced a ceasefire in the government’s long, grim has gone on far too long, with too much slaughter and destruc- conflict with the insurgents of the Taliban. The Taliban appear to tion. It was another matter when they fought a foreign enemy. be open to a brief truce and talk of releasing prisoners, even if Now the sense of a holy cause is lost, and loyalty to their unpop- their sequestered leader, Haibatullah Akhunzada, has yet to give ular and ineffective emir is frayed. To many, a ceasefire appeals. the nod. A fleeting ceasefire in June marking the end of Ramadan If peace depended only on the will of government and insur- led to extraordinary scenes as the country erupted in joy. Taliban gents, it might not be that hard to achieve. Yet for a century and a fighters with Kalashnikovs over their shoulder crossed frontlines half Afghanistan’s destiny has been determined by outside pow- to fraternise with government soldiers, eat ice cream and even ersin a longGreatGame. In June a student-dominated “peace car- take selfies with women. avan” that had journeyed on foot from Helmand to the capital The steep drop in violence over those days allowed an all-too- camped out in front offoreign embassies. In particular, protesters brief sense of normality in a war-ravaged country of 35m. The blamed Pakistan, Russia and Iran for deepening Afghanistan’s truce proved, as the International Crisis Group (ICG), a think- bloodshed. The criticism is fair. In a bid for“strategic depth” in its tank, puts it, that the domestic constituency for peace runs deep. perpetual struggle against India, Pakistan’s generals have long This year is the bloodiest, in terms of civilian casualties, since maintained influence in Afghanistan by offering sanctuary to the 2001, when an American invasion in search of Osama bin Laden Taliban. Iran and Russia have increased their support of the Tali- toppled the Taliban, who were harbouring him. Civilian deaths ban not only as a means to counter a common enemy, Islamic rose sharply after a once-huge NATO presence was pared to the State, which is seeking a foothold in Afghanistan. Both countries bone between 2013 and 2015. Social gains, such as higher school also have thorny relations with America and wish to discomfit it. attendance, are in jeopardy. Indeed, thanks to geopolitical tensions—between America Right after the last truce the Taliban resumed hostilities across and China, America and Russia and Iran, and India and Paki- the southern half of Afghanistan. Typically, the guerrillas use stan—a regional consensus over Afghanistan seems to some to be night-vision goggles, sniper rifles and motorcycles to attack out- more elusive than ever. Russia, forone, appears to be trying to un- posts of the Afghan army or, more often, the less well-equipped dermine tentative American contacts with the Taliban in Qatar, police. The fighters will hold the ground fora few hours and then by holding rival peace talks ofits own. vanish. Earlier this month the Taliban put on one of their most brazen displays by attacking and briefly holding Ghazni, a city of Game weary 250,000 a mere 90 miles(150km) from Kabul, on the strategicroad And yet, as Barnett Rubin of New York University argues, all the that links the capital with the south. The Taliban have long con- region’s powers would benefit enormously from peace in Af- trolled the countryside in Ghazni province, and even openly col- ghanistan. China needs stability there if its huge investments in lected taxes in parts of the city. On August 10th fighters shot their its Belt and Road Initiative are to fulfill their potential. For India, way to the city centre. By the time the government had regained a Afghanistan is the route to Eurasia. ForIran, too, Afghanistan is an semblance ofcontrol, backed byAmerican airpower, up to 250 ci- essential linkto China and India. And Afghanistan has become a vilians were dead. source ofinstability in Pakistan as much as the otherway around. The attacks are designed to prove that the American “puppet All this argues for co-operation. And there is another reason. government” under Mr Ghani has only a tenuous hold over the America’s commitment to Afghanistan is hostage to its erratic country. Certainly, the president does not believe he can defeat president. And however bad things currently are, they would be the Taliban in battle, or even by winning hearts and minds. The worse ifDonald Trump suddenly abandoned the place. 7 China The Economist August 25th 2018 43

Also in this section 44 One volcano, several myths

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

Ethnic minorities enclaves of Yanbian and the county of Changbai, both in Jilin province (see map). The third Korea These included permission to use Korean as an official language and promote it in schools (pictured is a propaganda poster in Yanji, written in Korean and Chinese—the words mean “patriotism”). The two prefec- tures are officially designated as “autono- YANJI mous” (in practice they are not at all so). China’s ethnic-Korean enclaves are no longerso Korean Yanbian covers an area bigger than the is- ALL jars filled with rice beer await cus- ugees north—in 1932 it incorporated a large land ofTaiwan. Ttomersbythe riverside in Yanji, a cityin swathe of north-east China into a puppet During the 1960s some Korean-Chinese north-eastern China close to the border state called Manchukuo—the colonial au- moved back to communist-ruled North with North Korea. Servers in aprons fork thorities encouraged more Koreans to Korea, which for a while seemed alluring out spicy salads from rows of red plastic move into sparsely populated areas of the by comparison. Today Korean-Chinese are bowls. Atop a nearbytrestle table a butcher new dominion. among the more prosperous of the coun- has laid out three skinned dogs. The early- As it turned out, Korean militias played try’s ethnic minorities. A turning-point morning market exudes the distinctive an important role in kicking the Japanese came in 1992, when China and South Korea character of Yanbian, an ethnic-Korean en- out in 1945. Later they sided with the Chi- opened full diplomatic relations. This en- clave of which Yanji is the administrative nese CommunistPartyin China’scivil war. couraged big South Korean firms to set up heart. Youngsters chatter in Mandarin and After it seized power in 1949, the party re- operations in China. These often preferred Korean. Shop hoardings are written in cognised Korean-Chinese as an ethnic mi- to recruit Korean-speaking Chinese. A pa- both languages. nority and gave them special rights in their per by Choi Woogill of Sun Moon Univer- Yanbian is the biggest of two ethnic- sity in South Korea says that many young Korean areas on China’s side ofthe border. people from Yanbian found white-collar But its Korean-ness has faded over the past HEILONGJIANG jobs in such businesses, often in cities such JILIN three decades. A stallholder who gives his as Beijing and Shanghai, far from their surname as Piao (Park in Korean) explains hometowns. Korean Yanbian that his grown-up nieces and nephews autonomous A far greater number of Korean-Chi- regions Yanji have all moved to Japan or South Korea, Mount nese began heading abroad to seek their r Changbai/ e where he thinks they can earn three times iv fortunes. Of around 1.8m of them, about Paektu r en more money. He is sure that his young m 1m are living outside China, with as many CHINA Changbai Tu daughter, who is spending her summer as 700,000 in South Korea alone. Perhaps r e iv holiday helping at the market, will eventu- LIAONING r as few as half a million remain in China’s lu a ally choose to leave, too. The way things Y north-east, which once washome to all but

a handful ofthem. are going, he reckons, Yanbian’s Korean

community will one day disappear. NORTH KOREA The outflow proved an economic boon Koreans began moving into China in for Yanji. Money sent back by the migrants the second halfofthe 19th century. The ear- 200 km to their relatives in the city helped to make ly migrants were victims offloods and oth- Pyongyang itlivelierand more affluentthan many oth- er disasters that had made northern parts er places in China’s north-east, a centre of of the peninsula unfit for farming. Later state-owned heavy industry that in recent generations fled the Japanese occupation SOUTH Beijing years has often been described as a “rust- of Korea, which began in 1910. When the Seoul KOREA belt”. A taxi driver belonging to China’s Japanese armyeventuallyfollowed the ref- main ethnic group, the Han, says that there 1 44 China The Economist August 25th 2018

2 are now hardly any ethnic Koreans driving tory to expand its territorial claims, per- two secretive countries have reached a cabs. He guesses that they are no longer at- haps to justify the grabbing of territory in clear-cut agreement on the border line or tracted by the possible earnings. North Korea to act as a buffer zone should have simply agreed to fudge it. Nationalist But while Korean-Chinese have been the regime there fallapart. groups in South Korea argue that neither gainingin wealth, theirenclaveshave been For the moment, however, China’s North Korea’s rulers nor the Japanese colo- withering culturally. The proportion of main worry on its side of the border is nialists, who occupied the Korean penin- ethnic-Koreans in Yanbian has fallen from about the economy. Last year GDP growth sula and laternorth-eastChina before their more than three-fifths in 1949 to slightly in Yanbian was only 3.3%, less than half the defeat in the second world war, had any more than one-third today. The exodus has national rate. If North Korea could resolve standing to draw up the boundary. Some been particularly evident in the country- conflicts over its nuclear programme and South Koreans argue that, if the Koreas re- side, where—as often across China—farm- become more open to foreign business, unify, the new country should claim not ers have been abandoning the fields in fa- “every inch of soil” in Yanbian would only the whole volcano, but also Yanbian, vour of better-earning work in the cities. “turn to gold”, says Jin Qiangyi, a Korean- a traditionally ethnic-Korean region of The number of Korean-language schools Chinese academic at Yanbian University. China that extends north and east ofit. has been plummeting amid a shortage of Should this happen, plenty of far-flung It is hard to imagine such a realignment teachers and students. The departures Korean-Chinese would return to the bor- happening, especially while watching the have split families. Some 60-80% ofethnic- der area. But few people in Yanji are hold- endless stream of buses relaying Chinese Korean children in Yanbian live apart from ing their breath. An ethnic Korean relaxing tourists to and from the peak. In recent at least one parent, according to Mr Choi. in a parksaysanyreal change on the penin- years Chinese firms have invested heavily For the government, this is a mixed sula might take another 30 years or more. in tourist facilities on their side, including blessing. Officials in Yanbian want the area Such a scenario worries Mr Jin. By then, he luxury ski resorts. New hotels are still be- to maintain its Korean character, which is says, China’s globetrotting ethnic Koreans ing built and the road to the volcano from an attraction fortourists. Butthe out-migra- may have been gone too long to be tempt- Yanji, a city to the north-east, is being im- tion also helps to dilute the numbers of ed home at all. 7 proved. The North Korean side is far more ethnic Koreans along the border. In their dreary. Many of its visitors are pilgrims be- book “China on the Edge”, Carla Freeman ing taken to pay homage at the supposed and Drew Thompson describe how, in the The China-North Korea border birthplace of Kim Jong Il in a guerrilla base 2000s, some Chinese officials were wary used by his father, Kim Il Sung, the founder ofattractingSouth Korean investorsto Yan- Top of the rock of the Kim dynasty, for staging attacks bian, fearingthey were treatingit as Korean against the Japanese. A funicular railway territory. South Korean nationalists some- to the summitoften doesnotworkbecause times referto the area as the “third Korea”. ofpower cuts, travel agencies warn. The Communist Party is mindful of Yeteven though China and North Korea CHANGBAI claims by fringe nationalist groups in appear happy to coexist on the mountain, On a volcano on the borderwith North South Korea that Yanbian is Korean territo- subterranean rumblings between 2002 Korea there are political fissures rythatoughtone dayto be reclaimed. Such and 2005 hint at a risk. An eruption at people argue that border agreements OR much of the year the lake in the cra- Changbai in the year 946 was one of the signed by China in 1909 with Japanese co- Fter at the top of Mount Changbai, a dor- largest volcanic explosions in the past five lonialists and in 1962 with North Korea mant volcano that straddles the frontier millennia. Some wonder if another might should be annulled, because they were ne- between China and North Korea, is cov- be due. Volcanologists seem relieved that gotiated with illegitimate governments, as ered with ice or hidden by clouds. On a re- North Korea has for the moment stopped the nationalists see it (see next story). cent weekend its waters, through which its underground nuclear tests, which take the border runs, shone a stunning azure place in tunnels about 120km from the No dual loyalty here blue. Sightseers on the Chinese side of the mountain. A few had started to ponder These opinions do not appear to be shared peak jostled for elbow-room at a busy cliff- whether the big bangs could set it off. 7 in Yanbian itself. Few Korean-Chinese resi- top viewing point, grinning excitedly for dents there say there is any serious conflict selfies. Across the lake, in North Korea, between their Korean ethnicity and their there was not a soul to be seen. loyalty to China, ofwhich they are citizens. On such a day it is easy to see how the But the party probably worries that this mountain became not just a famous beau- view could change should Yanbian’s eth- ty spot but also a potent national symbol. nic make-up be altered by a large influx of The ethnic Manchus who founded China’s North Korean refugees—or if the bankrupt last imperial dynasty, the Qing, claimed prison-state that lurks next door were to that their progenitor was conceived on its collapse and a unified, rich and attractive alpine slopes. Koreans, who call it Mount Korea were to emerge. Paektu, have a similar myth. In their folk- China’s anxieties about Korean nation- lore, the mountain is the birthplace of the alism may explain its efforts, beginning in founder ofthe first Korean kingdom. North the early 2000s, to establish the Chinese- Korea eagerly exploits the peak’s near-sa- ness of the border area by funding new re- cred status in Korean culture. It claims that search into its history. There ensued an ar- Kim Jong Il, the late father of the country’s cane but fiery debate between Chinese dictator, Kim Jong Un, was born in its foot- and Korean experts over whether the king- hills. The farmore likely location was a ref- dom of Goguryeo, the territory of which ugee camp in Siberia. straddled northern Korea and north-east- So whose mountain is it? The debate ern China between the first and seventh has seemed mostly settled since the 1960s, centuries, wasmostlyKorean orChinese in when China and North Korea agreed on nature. Some nationalists in South Korea how to share its nearly 2,750-metre-high accused China of using its version of his- caldera. It is unclear, however, whether the It’s not so fun on the other side International The Economist August 25th 2018 45

Air-conditioning energyto run air-conditionersin 2030 than it now exports as oil. Global cooling At the moment, only 8% of the 3bn peo- ple in the tropics have air-conditioning, compared with over 90% of households in America and Japan. But eventually, it will be near universal because so many trends are converging behind its spread: ageing, Air-conditioners do more good than most people realise, but also much harm. since old people are more vulnerable to Efforts are finallyunderwayto get one without the other heat stroke; urbanisation, since fields can- IR-CONDITIONING cannot be a world’s stock—1.6bn in 2016—by two-thirds not be air-conditioned but offices and fac- “A grand success in the [American] (see chart on next page). If you include re- tories must be; and economic growth, South for the reason that the honest na- frigerators and systems that cool food, vac- since, after mobile phones, the middle tives of the region recognise the natural cinesand data, the stockcould be 6bn units class in emerging markets want fans or air- summer heat as a welcome ally, in that it in a decade. The growth in cooling will conditioners next. Even the proliferation makes the inside of houses and offices save lives, improve education and create of skyscrapers in the developing world’s agreeablyuninviting.” In the annalsofmis- wealth in the world’s hottest countries. But megacities encourages air-conditioners. taken predictions, this one—made in 1935 it brings huge environmental risks, warm- Because tall buildings have different air by Clarence Cason, author of “90° in the ing the planet even as it cools people. pressures at top and bottom, they usually Shade”—meritsan honourable mention. In Lee Kuan Yew, the first prime minister have to be sealed, and cooled in summer. fact, air-conditioning soon became univer- of Singapore, took the view that air-condi- Shopping malls, open-plan offices and sal south of the Mason-Dixon line, turning tioning “changed the nature of civilisation data-processing centres are all inconceiv- the South into an engine of prosperity and by making development possible in the able without air-conditioning. even reshapingits politics by luring Repub- tropics… The first thing I did upon becom- Environmentalists fret about this. An lican migrants to a region that had once ing prime minister was to install air-condi- article in the Washington Post excoriated been a Democratic stronghold. tioners in buildings where the civil service “the deluded world of air-conditioning”. The stifling summer of 2018 in the worked. This was key to public efficiency.” Another in the New York Times castigated northern hemisphere has been a banner buildings so cold in summer that “I could season forair-conditioners and a reminder When China became cool preserve dead bodies in the office.” Yet air- ofhow they have changed the world. Sales In 1990 few Chinese households had air- conditioning makes people, literally, in France in the first three weeks of July conditioning. Twenty years later, the coun- healthier, wealthier and wiser. A study by were 192% higher than in the same period try had just under one unit per household. Tord Kjellstrom ofAustralian National Uni- of2017. In Japan, the government is helping It now accounts for 35% of the world’s versity found that, in South-East Asia, peo- schools install coolers. In Texas, on the or- stock, compared with 23% for the United ple without cooling could not work during ders of a judge, the state government has States. India and Indonesia are seeing rates 15-20% ofworking hours. It was too darned been putting them into prisons. of increase similar to China’s in the 1990s. hot. Solomon Hsiang of the University of Atcurrentgrowth rates, according to the The population of the 800km long south- California, Berkeley calculated that, in the International Energy Agency (IEA), which ern coast of the Arabian Gulf increased Caribbean and Central America, GDP falls advisesnational governments, 1bn air-con- from 500,000 in 1950 to 20m now, thanks by 1% for each degree above 26°C. In the ditioners will be installed globally in the to air-conditioned vertical palaces. At cur- tropics, cooling boosts productivity. next ten years. That would increase the rent rates, Saudi Arabia will be using more The same goes for learning. A recent 1 46 International The Economist August 25th 2018

2 study in PLOS Medicine, a weekly journal, ofliquid vaccines are spoiled because they countries to build not just more power by Jose Guillermo Cedeño ofHarvard Uni- are not kept properly chilled. The death toll plants, but more polluting ones. versity, followed two groups ofcollege stu- from diseases that could be vaccinated Second, air-conditioners use so-called dentsin Boston duringthe summerof2016. against but aren’t, says the WHO, is 1.5m a “F gases” (such as hydrofluorocarbons, or Those living in air-conditioned rooms did year, more than die in road accidents. Bet- HFCs) as refrigerants. When—as is com- significantly better in a variety ofcognitive ter cooling would reduce all these harms. mon—the machines leak in use or on dis- tests than their peers in uncooled digs. However, as HomerSimpson, an Amer- posal, these gases escape, doing vast dam- Studiesin Denmarkshowed thatair-condi- ican philosopher, said of alcohol, air-con- age. HFCs trap between 1,000 and 9,000 tioning schools improved children’s abili- ditioning is the cause of, and solution to, times as much heat as the same amount of ty to learn mathematics and languages. many of life’s problems. In “Losing Our CO2, meaning they are much more potent Most simply, cooling also saves lives. Cool”, a book from 2010, Stan Cox, an agri- causes of global warming. On this basis, Western Europe suffered a withering heat- cultural scientist, listed some of its dam- Paul Hawken of Project Download, a wave in 2003; 11,000-17,000 more deaths ages: “emission of greenhouse gas- think-tank, calculates that improving air- than normal were attributed to it in France, es…ozone-depleting chemicals [and] a conditioners could do more than anything mainly from cardiovascular and heart dis- lever to open ecologically vulnerable parts else to reduce greenhouse gases. ease. There was a public outcry and the ofthe countryto recklessgrowth.” He even government brought in a range of reforms, blamed it for obesity caused (he said) by Hitting the fan including making air-conditioning manda- sitting around in artificially cooled refuges. Fatih Birol, the head of the IEA, calls the in- tory in old-people’s homes. This year A recent article in PLOS Medicine, by David satiable energy demands of air-condition- France has been even hotter than in 2003 Abel and colleagues at the University of ing “one of the most critical blind spots in but excess deaths so farseem to have been Wisconsin-Madison, calculated that, by today’s energy debate”. Slowly, that blind much lower: the health minister recently 2050, there will be 17,000 excess deaths in spot is being opened up. In 2017, the Law- said the number of hospitalisations this the eastern half of the United States from rence Berkeley National Laboratory in Cal- summer has been only slightly greater an increase of ozone and PM2.5 in the at- ifornia, a research centre, calculated the ex- than normal. Europe, it seems, is learning tra carbon emissions that could be saved if to cope. In Spain, according to a study by air-conditioners were better. If HFCswere Joan Ballester ofthe Barcelona Institute for Chilling times phased outand all unitswere asefficient as Global Health, heat-related deaths fell be- World, air-conditioning units, bn the best ones, the world could be spared tween 1980 and 2015, though average sum- around 1,000 average-sized (500MW ca- 1.6 mer temperatures rose almost 1°C and Residential pacity) power stations by 2030. There there were more old people. In south-west Commercial would be many more air-conditioning un- Germany, says Stefan Muthers of the Ger- 1.2 its, but each would use less energy. In In- man Weather Service, 2003 and 2015 were dia, this would save three times as much in the two warmest summers in the past 50 0.8 carbon emissions as the prime minister’s years; 1,700 people died in 2003 but the much-vaunted plan to install 100 gigawatts death toll in 2015 was almost 20% lower. of solar capacity by 2022. In China, it 0.4 Heatwaves take an even bigger toll in would save as much as eight Three Gorges poor countries that are unable to protect dams (the largest dam in the world). themselves. The World Health Organisa- 0 Such gainswill notbe easyto achieve. A tion (WHO) forecasts that, without adapta- 2000 02 04 06 08 10 12 14 16 common way to improve energy efficien- tion (which is of course happening), over a Source: International Energy Agency cy is to impose minimum energy stan- quarter of a million extra deaths could be dards or energy codes for buildings. But attributable to rising temperatures by mosphere (pollutants with a diameter of these vary from country to country (they 2050—about as many as the number of 2.5 microns or less). Air-conditioning, the are stricter in Japan and Europe than in deaths in childbirth now. authors think, will be responsible for al- America, forexample). And most poor, hot If the definition of air-conditioning is most1,000 ofthose deaths. countries do not even have them. widened to include cold chains for food, Air-conditioners produce greenhouse Getting rid of toxic refrigerant gases industrial processes or vaccines, the over- gases in two ways. First, they are responsi- also depends on regulation, in this case an all market increases—and so does its capac- ble for a share of the CO2 generated in the international agreement called the Kigali ityforgood. According to Toby Peters ofBir- power stations that produce the electricity amendment (after the Rwandan capital mingham University in Britian, cooling for they run on. At the moment, according to where it was approved). The deal sets a things such as industry, food and data stor- the IEA, it takes about 2,000 TWhs (tera- timetable for phasing down the toxic gas- age uses only a little less energy than air- watt hours) of electricity to run all the es. The trouble isthat, to win the backing of conditioning. Refrigerated transport is not world’s cooling machines for a year. This tropical countries, the agreement allows farbehind. These have as many benefits as produces 4bn tons of CO2, 12% of the total. them more than a decade to phase the gas- cooling buildings. Without drastic improvements in air-con- es out. Since air-conditioners often have a ditioners’ efficiency, the IEA reckons, they useful life of more than ten years, it could Between farm and fork will be burning up 6,000 TWhs by 2050. take until 2038 before the full effects of the In many developing countries, half the On hot days in Riyadh, air-conditioners Kigali amendment come into force—a long food crop islostto ratsand insects afterhar- account for 70% of electricity demand dur- time to wait when demand for cooling is vest. Reducingthat through refrigeration in ing peak hours, usually the early evening. growing so fast. With the deal, argues Dan storage ortransport could do more to boost Peak hours matter because countries must Hamza-Goodacre, boss of the Kigali Cool- overall food availability than a new green build enough power stations to meet the ing-Efficiency Programme, a non-govern- revolution. In the process, it would also maximum demand. But most of the time mental organisation, air-conditioners can limit the greenhouse-gas emissions from full capacity is not used, meaning firms produce better health, higher productivity wasted agricultural production. According earn nothing from it. So energy companies and more food while limiting the rise in to the WHO, 600m people fall ill at some build peak capacity as cheaply as possible, global temperatures. In its absence, people point each year—and over 400,000 die— which often means using coal or diesel. So cannot have those benefits without the en- from eating contaminated food. A quarter demand for air-conditioning is pushing vironmental costs. 7 Business The Economist August 25th 2018 47

Also in this section 48 NAFTA’s stops and starts 49 Saudi Aramco’s stalled IPO 49 Google in China 50 La Liga v the Premier League 50 Samsung’s splurge 51 Bartleby: History lessons Schumpeter is away

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Carmaking in America support for Mr Trump’s aims. The UAW, a big union, recently endorsed his stance on Rocky road ahead trade. Near the F-150 plant, a white-collar autoworker confides over a beer that she thinks Mr Trump’s policies are justified, even if they cause a bit of pain for her in- dustry, because of Chinese protectionism and theft of intellectual property. Ron Har- DETROIT, FLINT AND TRAVERSE CITY bour of Oliver Wyman, a consultancy, be- How the auto industry is coping with Donald Trump’s trade wars lieves that “the president will come out HE Ford F-150 pickup truck has been president has also threatened a 25% tariff with fairand equitable agreements.” TAmerica’s bestselling vehicle for years. on all car imports, invoking a provision of But even bosses sympathetic to Mr In Dearborn, a city near Detroit, a factory an old law which allows him to restrict Trump’s stated goals remain perplexed by that once produced Henry Ford’s Model A trade to safeguard national security. That his tactics. A survey conducted for this now cranks out one of these all-alumi- would immediately hit $208bn of car im- newspaper by the University of Michigan nium tributes to testosterone every 53 sec- ports, not counting parts, according to the found that the metals tariffsare hurting the onds. The F-150 is so profitable—informed Peterson Institute of International Eco- state’s car-parts firms. “All prices are going rumours suggest each adds nearly $13,000 nomics, a think-tank. American marques up,” says a supplier of valves. A steel-mill to Ford’s bottom line—that it is known would be hit, too: four in five Chryslers owner expects to charge customers more around town as “the bank”. and Dodges are made abroad (see chart). and urges those with cash to “carry some It is also assembled in America with America’s car industry, then, is on the inventory”. A machine builder who uses more American parts than most vehicles, frontline ofMrTrump’s trade war—ostensi- lots of steel fears that higher costs could and so about as impregnable as they come bly its beneficiary, but also its victim. A make his clients less competitive, crimping to President Donald Trump’s trade poli- tour of factories and watering holes across their production and in turn demand for cies. Even so, over 15% of each pickup Michigan’s car country reveals plenty of his product—a “downward spiral for us comes from Canada and Mexico and an- and our customers”. other15% from outside North America. “Ta- Travel up Ford’s supply chain from the riffs on Canadian aluminium hit the F-150 Not all American Dearborn plant, and the vulnerabilities be- hard,” confirms a top logistics manager. United States, new vehicle sales by brand, 2017, % come apparent. Flex-n-Gate, a large maker The tariffs in question are Mr Trump’s du- US-produced Imported of car parts, has invested $160m in gleam- ties of 10% on imported aluminium and 0 20406080100 ing plant in a depressed part ofeast Detroit 25% on imported steel, which tookeffect on Ford specifically to serve Ford trucks. “Costs June 1st. Theyare notthe onlysource of dis- have gone up dramatically,” complains its GMC* ruption to an industry responsible for boss. Get offthe Edsel Ford Freeway, mean- $522bn ofexportsand importsa year, more Honda der past boarded-up churches, burned-out than one-tenth ofAmerica’s trade. Industry average warehousesand a DollarStore, and you ar- Earlier this year Mr Trump levied tariffs Nissan rive at Goodwill Automotive, which has on $34bn of Chinese goods, including one Toyota made simple parts for Ford and others for of 25% on cars (another $16bn of goods BMW decades. Its managers confirm that prices were hit this week). China retaliated by Volkswagen for steel inputs are up and its suppliers are raising its tariff on American cars from 25% Dodge scrambling to secure stock before they rise to 40%. Partly to put pressure on Canada further. A crew leader sounds baffled by Chrysler and Mexico to renegotiate the North Amer- Mr Trump’s actions: “Why fix something ican Free-Trade Agreement (NAFTA), the Source: Cox Automotive *Owned by General Motors that’s not broken?” 1 48 Business The Economist August 25th 2018

2 Drive a fewhoursto Grand Blanc, a sub- recently that tariff-fuelled increases in make them there. urb ofFlint, and you find anotherFord sup- commoditypricesled to $300m in extra ex- The nightmare scenario for carmakers plierwith a story to tell. MacArthur Corpo- penses last quarter, compared with the is Mr Trump’s threatened blanket tariff on ration makes permanent labels “foralmost same period in 2017. Ford has reported that cars, combined with the collapse of every vehicle sold in America”. Tom Bar- tariffs cost it $145m in the second quarter NAFTA. Mexico and Canada account for rett, a former Wall Street man, returned to and forecast that trade tensions may cost roughly half of all American auto imports. his father’s firm and helped save it when $500m-600m this year. For consumers, Mr America’s trade in cars and parts with the the Lehman collapse pushed the auto in- Trump’s trade policies could inflate the two has risen fourfold under NAFTA. GM dustry to the brink a decade ago. He is price of a typical small car by between dependson importsfrom Mexico and Can- again worried. He discerns an inflationary $1,408 and $2,057, according to the Peter- ada especially for its highly profitable pressure not seen since the 1970s. Besides son Institute. trucks and sports utility vehicles (SUVs). tools and hard dyes made ofsteel, the price That is because the industry is a paean Even Ford, which is moving out of low- of polypropylene film, which is derived to globalisation. Roughly half the cars sold margin saloons often made abroad in or- from petroleum, is going up. So is the cost in America today are imported. Of those der to focus on SUVs and pickups like the of paper, adhesives and freight. The firm made at home, nearly halfare made by for- F-150, has reason to worry. Like GM, it has has been unable to pass the increases on to eign firms. All American carmakers de- started bringing manufacturing and sup- big clients. “They are in cost-cutting mode, pend on imported parts and cars. Only pliers back from Asia to North America. delaying planned investments, imposing Chinese marquescan afford to shrugabout This might help in a global trade war—but travel bans and offshoring large non- escalating tensions, ironic given Mr not in the event of NAFTA’s collapse, be- manufacturingdepartments,” he says. “It’s Trump’s China-bashing. Besides a large cause most relocated to Mexico or Canada. like the early days ofthe Great Recession.” factory in South Carolina which makes NAFTA talks have made progress (see Carmakers are indeed feeling the Volvos (owned by China’s Geely), Chinese box). Butsuccessisnotin the bag. If Mexico squeeze. General Motors (GM) confirmed firms neither export cars to America nor and Canada are slapped with the 25% ta- riff, a typical model assembled in America with 40% of its parts imported from those NAFTA two countries would see supply-chain costs leap by over $1.1bn, to $19bn, accord- Stops and starts ing to LLamasoft, an analytics firm. The ultimate cost could be higher still. WASHINGTON, DC The supply-chain boss of a global carmak- Talksto update the North American Free-Trade Agreement are progressing er says his firm has prepared for NAFTA’s UGUST is normally a sleepy month in demise. It would quickly unwind its cur- AWashington, DC. Not this year, espe- Car countries rent cross-border supply chains, which cially forpoliticians and lawyers (and United States, light-vehicle sales, 2017, % give it leverage over competing suppliers across North America. It would shift to lo- politicians’ lawyers). For trade negotia- 0 1020304050 tors, too, life is busier than ever. Talks to cal suppliers in Mexico for its Mexican NAFTA revamp the North American Free-Trade Imported Mexico Canada Japan plants, American suppliers for American Agreement (NAFTA) are in full swing. As plants and the same in Canada. Prices The Economist went to press, Mexican South Korea would inevitably go up, he says. With few- Germany and American delegations were still Other er rivals, vendors would gain pricing pow- haggling furiously,chiefly over new rules er. “My worry is oligopoly,” he says. covering trade in cars. But a breakthrough US-produced US firms Foreign firms His sense of fretfulness is shared. Every looked possible. summer industry bigwigs and their fam- Under NAFTA, cars from Mexico and Source: Centre for Automotive Research ilies gather in Traverse City, a pleasant Canada can be imported into America town on the shores of Lake Michigan. The tariff-free as long as they meet criteria set company meets two ofthe three criteria, nominal theme of this year’s gathering, or- out in the pact, known as rules oforigin. the third will be relaxed. Finer details, ganised by the Centre for Automotive Re- By tweaking these rules, negotiators can and the speed ofimplementation, were search, an industry think-tank, was the fu- shape supply chains. still to be hashed out. ture of mobility. The skunk at the garden The current agreement requires, for Convergence on cars would represent party was the trade war. example, at least 62.5% ofa car to come serious progress. It may even pave the from within the region, which nudges way fora trilateral agreement in principle What’s good forGM carmakers towards North American over the coming weeks. (A detailed final Some insiders remained upbeat. Sales, es- parts. This stage ofthe NAFTA talks has deal will take longer.) Robert Lighthizer, pecially of trucks and SUVs, are still strong centred on just how much more onerous the United States Trade Representative, in America; trade deals may yet be struck the revised deal’s conditions should be. If has floated a date ofSeptember 3rd, “if between the White House and other gov- the negotiators press too hard, they risk everybody wants to get it done”. ernments. Others worried that a senseless losing influence altogether as carmakers That they do. Mexico’s president, trade warwould tip the industryinto reces- opt to ignore the new deal in favour of Enrique Peña Neto, leaves office on No- sion and force a massive redirection of in- paying non-NAFTA tariffs. vember 30th. Both he and his successor vestment from driverless cars to a defen- As ofAugust 22nd, the outline ofthe want Mr Peña to be the one to sign. The sive rejigging of supply chains. In a rare new rules had largely been settled. Canadians just want to end the uncer- show of unity, industryassociations repre- NAFTA-compliant cars will have to con- tainty.Mr Trump’sRepublican party senting domestic and foreign carmakers, tain more North American content, made could use a win ahead ofNovember’s parts suppliers and car dealers have jointly with a minimum amount ofNorth Amer- mid-term elections. But thorny issues protested against Mr Trump’s trade poli- ican steel and aluminium. Some part of remain unresolved, notably the Ameri- cies. One insider sums up the mood in De- each car will also have to be built by can proposal forthe deal to expire every troit with characteristic midwestern un- workers earning a minimum wage. Ifa five years. There is still workto be done. derstatement: “Everyone is analysing exposure, everyone is concerned.” 7 The Economist August 25th 2018 Business 49

Saudi Aramco Its logic, however, was sound. An IPO Search engines has been the cornerstone of Prince Mu- Blurred Vision hammad’s “Vision 2030”, aimed at raising Censors and enough cash for the kingdom to invest in industries that could diversify the econ- sensibility omy beyond oil. Much preparatory work has been done, such as making Aramco a SHANGHAI joint-stock company and certifying re- A stalled IPO will dent investor Could Google search make a successful serves. Suspending the IPO, at least until confidence in Saudi Arabia return to China? Aramco has succeeded in taking over and N THE Dhahran headquarters of Saudi absorbingSabic, will make potential inves- HEN Google announced in 2010 that IAramco, the world’s largest oil company, tors more cautious about the kingdom’s Wit would no longer censor results on it is all change. The bankers working on transformation. Their confidence has al- its Chinese service, a prerequisite for oper- what was supposed to be the world’s larg- ready been dented by the detention of rich atingin the communist state, internet users est initial public offer (IPO) have not only Saudis in a hotel in Riyadh last year and a laid flowers at the search giant’s Beijing gone home forthe summer; they may nev- high-profile crackdown on dissent. headquarters to mourn its exit. People out- er come back. In their place people are pre- The tie-up with Sabic, worth $100bn, side China praised Google’s decision, as it paringfora possible takeoverofSabic, Sau- would be a second-best option. The aim is revealed attempts to spy on Chinese dissi- di Arabia’s biggest petrochemicals firm. for Aramco to deposit up to $70bn, proba- dents in Gmail, an assault on liberties that After a Reuters report on August 22nd bly raised in global debt markets, into the the company thought went too far. that listing plans had been called off, the Public Investment Fund (PIF), the king- So reports ofsecretive plans to return to kingdom issued a statement saying the dom’s official piggy bank, in exchange for China’s search market, first revealed in Au- “speculation” was untrue, and that it re- the PIF’s 70% stake in the petrochemical gust on the Intercept, a news site, outraged mained committed to the IPO “at a time of firm. The PIF would get less than the many, including Google employees. Ac- its own choosing when conditions are op- $100bn that the Aramco IPO was meant to cording to the New York Times, on learning timum”. But in reality the process is on bring in, but a tidy sum nonetheless. of the plans more than 1,000 of them hold forthe foreseeable future. The risk is that it will fritter the money signed a letter demanding more transpa- Since Muhammad bin Salman (pic- away on vanity projects that do little good rency and asking to be included in ethical tured), now the crown prince, revealed his to the kingdom’s economy. That risk also reviews of new products. Their fury is not intention to part-privatise the kingdom’s exists with the proceeds ofan Aramco IPO, the only obstacle to Google’s prospects. crown jewel to this newspaper in early but at least then, afterthe kingdom sold the Known internally as “Dragonfly”, the 2016, it has always been touch-and-go first batch of shares, it could always raise proposed mobile search app would filter whether he would succeed. He blundered more money by selling others. websites blocked by China’s “great fire- by putting a $2trn price tag on Aramco be- Yet for Aramco, buying Sabic may turn wall”, which the regime uses to wipe from fore anyone had a chance to test investor out to be a good thing. Mr Krane says that search results topics such as Taiwanese in- appetite for it. The palace could not decide for years the oil company was forced to dependence or the Tiananmen protests. whether it preferred a listing in New York, provide Sabic with subsidised feedstock, The extent of this blacklist is unknown, London orelsewhere, havingfailed before- essentially supporting a rival to its own even to local internet firms, and it is con- hand to consider the ramifications of its downstream operations. The acquisition stantly mutating. It includes social-media choice. Nor did it do a good job ofpersuad- will create a more diversified energy giant, websites, like Twitter and Facebook, and ing Saudis that the sale was in their inter- along the lines of an ExxonMobil or a Roy- newsoutlets(includingThe Economist). On ests, says Jim Krane, an energy expert at al Dutch Shell. And with 30% of Sabic’s Google’s mooted app, a search for any of Rice University. Saudi royals feared the shares possibly remaining listed on the these would prompt a notice that some re- transparencyrequired byan IPO would ex- Saudi stockexchange, could there be a back sults might have been removed. pose the monarchy’s inner workings. door, one day, to an Aramco listing? 7 SundarPichai, Google’s chiefexecutive, reportedly said in an internal meeting last week that the company was “not close” to relaunching in China. The timing, say the Intercept’s sources, depends not only on Chinese approval—but also on whether Google decides that it can compete with Baidu, China’s search behemoth. Neither is assured. Baidu carries out three in every four searches in China, ac- cording to StatCounter, a market-research firm. The second most popular engine, Shenma, attracts one in six, roughly the level that google.cn achieved before it ceased. Launched in 2001, Baidu has reeled in ever more users since Google’s depar- ture through a suite of apps, among them Baidu Baike (similar to Wikipedia), Baidu Tieba (a social network) and Baidu Maps. It has invested heavily to ensure that most are pre-installed on Chinese smartphones. In a social-media post, Robin Li, its foun- der, responded with braggadocio to the Google news. Baidu would “fight and Decisions, decisions knockit out once again”, he wrote. 1 50 Business The Economist August 25th 2018

European sports looks timid next to La Liga’s Facebookdeal. The Premier League’s home-viewer ad- Football’s leaving vantage is harder to overcome. Hence Mr Tebas’s foreign focus. Spanish clubs have home already built huge international brands on the back of conventional TV deals and pre- season jaunts abroad. The American ven- ture could deepen La Liga’s appeal to foot- La Liga challenges the PremierLeague ball-obsessed Hispanic Americans. as the world’s favourite competition The deal still requires consent from the HE most ambitious signings this sum- Spanish and American football federa- Tmer in Spanish football have been tions. FIFA, the global governingbody, hap- made not by the country’s clubs but by its pilypermitsoverseasexhibition games but top league. On August 16th La Liga an- opposed the Premier League’s plan to host nounced plans to hold a regular-season competitive matches abroad in 2008 (on match between two as-yet-unnamed the ground that it would hurt the interests Spanish teams in America, as part of a 15- of English fans). It has yet to receive an ap- year deal with Relevent, an American plication from La Liga and declined to com- sports promoter. Two days earlier it ment. The Spanish players’ union is upset emerged that it had sold the rights to show about not being consulted. But if Mr Tebas its games in South Asia to Facebook. can show that the deal is in everyone’s in- Javier Tebas, La Liga’s president, yearns terest, La Liga may even dislodge the Pre- to match the success of England’s Premier mier League in the global standings. 7 League. English teams earn more, even though Spain’s top clubs are superior on 2 Baidu’s decade-long dominance has the pitch, winning the past five Champi- South Korea’s chaebol shaped the web-surfing habits of young ons League competitions, Europe’s most Chinese. Li Jiapeng, a 25-year-old from prestigious tournament. The idea that the Political capital Shanxi province who works at an internet Premier League is more competitive is a bit café in Shanghai, says he used to visit only ofa myth: FiveThirtyEight, a statistics web- google.cn, because it was the default site, reckons Spain has 13 of the world’s 40 search engine on computers at his favour- best teams. England has six. SEOUL ite haunt. Now he shrugs at the prospect of The Premier League enjoys several ad- Samsung’s $161bn splurge may be about its return: “I’m used to Baidu now. Why vantages over La Liga. Some 58% of British more than business change?” Many Chinese who use virtual households have cable television, com- private networks to scale the firewall view pared with 32% in Spain. Unlike Spain’s AMSUNG rarely talks in public about its a censored Google as “meaningless”, as evening games, its mid-afternoon kick-offs Scorporate strategy. So when South Ko- one café customer puts it. suit Asian fans. Its managers squabble in rea’s biggest chaebol (conglomerate) an- Baidu is not invulnerable. Richard Kra- widely spoken English. Clubs were quick nounced with much fanfare in early Au- mer of Arete Research, a firm of analysts, to court foreign stars and sponsors. And gust that it would invest 180trn won says that the chief risk to Baidu is that its they joined forces to drive a harder bargain ($161bn) over the next three years, on top of paid search results look bad alongside with broadcasters. another boost in spending last year, ob- Google’s mix. Users already grumble Some of that edge is being blunted. La servers noted that it came days after a about havingto scroll through pages of ads Liga has tweaked its timings (though play- meetingbetween Lee Jae-yong, the group’s before getting to search results. Google ers may rue games in torrid Iberian after- de facto leader, and Kim Dong-yeon, South only has to take a thin slice of savvier, rich- noons). Spanish clubs feature players from Korea’sfinance minister. WasSamsung try- er users to dent Baidu’s revenue, he adds. 50 countries, not far behind the Premier ing to commend itself as a good corporate China’s800m internetusers, more than League’s 66. In 2015 they began to bargain citizen to a government that has pledged to in any other country and seven times the collectively with broadcasters. The Pre- rein in the power ofthe chaebol? number when google.cn was first mier League’s first online offering, of 20 Shovelling spare cash to research and launched in 2006, certainly look appetis- games to British viewers via Amazon, development seems sensible enough for a ing. Since taking the helm in 2015 MrPichai company facing declining sales of smart- has stepped up Google’s Chinese activi- phones, which have long been its cash ties. It is opening a centre dedicated to arti- Away games cow. Both smartphones and semiconduc- ficial intelligence in Beijing. It is also invest- Football, annual broadcast revenue tors, another important source of profits, ing $550m in JD.com, an online retailer. It Top divisions, latest contracts, €bn look vulnerable to competition from Chi- has hundreds of staff in China to sell on- International Domestic na, where rivals can count on generous line ads that are shown in other countries. 0 0.5 1.0 1.5 2.0 government support. That explains why Search would deepen Google’s presence. around 90% of the extra money will go to England If, that is, the government approves the Premier League Samsung Electronics, chiefly the chipmak- return. It may dislike the idea of a foreign Spain ing business. (Across the conglomerate, firm gaining insights into Chinese internet La Liga 25trn won has been set aside to dabble in users to which it has no access. Earlier this Italy artificial intelligence, biotechnology and year it forced Apple to transfer the iCloud Serie A other more speculative ideas.) data ofChinese users to a local data centre, Germany But investors, who have cooled on where it can access them more easily. Such Bundesliga Samsung since May because of weak chip demands may be too much for Google’s France sales, appear unconvinced that the plan Ligue 1 top brass. If not, Mr Pichai could have a will reverse a slowdown in profit growth. proper rebellion on his hands. 7 Source: Deloitte The share price haskeptslidingthis month,1 The Economist August 25th 2018 Business 51

2 to its lowest level in over a year. How much difference to the economy holder rights. But Mr Lee retains control of This has fuelled suspicions that money- Samsung’s plan will make in practice is de- the firm, despite a conviction for bribery a men may not have been the plan’s only, or batable. Of the jobs the group says it will year ago. His prison sentence was sus- even main, intended audience. Samsung’s create directly, some may already exist: pended in February; he denies the charges promise to add 40,000 new jobs over the Samsung said it would turn several thou- and has appealed against his conviction. next three years, which it claims may gen- sand subcontractors into employees. It has A month before his meeting with Mr erate a further 700,000 in the wider econ- offered no details on how its investments Kim, the finance minister, at a factory out- omy, looks like a response to calls by South would translate into the other jobs, let side Seoul, he had briefly appeared along- Korea’s president, Moon Jae-in, for busi- alone the 700,000 indirect ones. The gov- side Mr Moon at the opening ceremony of nesses to boost growth and create a fairer ernment’s own economy-wide target for a new mobile-phone factory in India. That society. Unemployment is up and growth job creation this year is180,000. was Mr Lee’s first semi-public appearance prospects have dimmed since Mr Moon’s Like other chaebol, Samsung has begun after his release from prison. Samsung’s election a year ago. His approval ratings, to unwind its opaque cross-shareholdings, splashy investment plan may make busi- buoyed to 83% in May thanks to a detente under pressure from the government to in- ness sense. It can’t hurt the rehabilitation with North Korea, have sunkto 56%. crease transparency and strengthen share- ofMr Lee or his company, either. 7 Bartleby History lessons

Three national leaders from whom managers could learn USINESS leaders often have a poor shareholdersin America tolerate a typical B opinion of politicians, preferring to chief executive today, and three times as find their heroes elsewhere—in other long as they do in Britain. Although he boardrooms or on the coaching field. But was flexible on economic policy, he was running a country is an even greater test unimpressed by ideologies such as fas- of leadership and character than running cism and communism, and remained a corporation. Those who have passed true to the core principles of the Ameri- through the fire surely have something to can enterprise. Many executives would teach modern-day managers. do well to emulate Roosevelt’s confi- Take three of the most feted national dence in hisown judgmentand hisability leaders: Otto von Bismarck, Franklin Roo- to convey it (it helped that this confidence sevelt and Winston Churchill. Many will seldom proved unjustified). object both to what they achieved and to Like Roosevelt, Churchill was su- the violence they used. But their success- premely confident. His political career es and failures hold lessons for CEOs. contained numerous mistakes and many Bismarck was an old-school Prussian episodes of poor judgment, not least aristocrat. But he proved remarkably flex- when it came to his attitude towards citi- ible and imaginative during nearly three summate turnaround artist. Like the Prus- zens of British colonies. He would not decades in office. As a manager, he had a sian, FDR showed plenty of flexibility. have lasted long as a modern chief execu- clear goal—to unite Germany under his Although he campaigned for office on the tive, given his bad temper, excessive king (who became Kaiser Wilhelm I in promise of a balanced budget, he adapted drinking and eccentric working hours. He 1871). This required him to overcome the when circumstances required it to become was never short of ideas but his subordi- suspicions of other German states, which the first Keynesian leader. Economists will nates learned to ignore most ofthem. Like he did by uniting them against a series of probably spend the rest of history debat- Steve Jobs, a similarly mercurial figure, enemies, from Denmark through Austria ing the merits of his various policy mea- the first part ofhis career ended in failure. to France—a merger strategy that allowed sures. But like an executive who rescues a But as with Apple’s founder, Chur- Germany to compete on equal footing. failing company, he showed the power of chill’s other qualities won out. His strate- Bismarck also proved flexible when it leaders to change the mood, notably with gic insight was unrivalled, whether recog- came to domestic policy. Though no so- his inaugural declaration that “the only nisingthat Hitlerwas a threat to the world cial reformer, he worried about the dan- thing we have to fear is fear itself.” in the 1930s or refusing a peace deal with ger of working-class support for social- As he took over the presidency, in 1933, Germany in the darkdays of1940. He was ism. So he pushed through a series of unemployment started to fall and GDP be- canny in using his charm to get aid from welfare measures in the 1880s, including gan to rise; the latter rose by 9.5% a year in Roosevelt before America entered the old-age pensions and health insurance. his first term of office. Although there was war—and flexible when he accepted an He understood the benefits of social re- plenty ofdoubt about the route that Roose- alliance with Stalin’s Russia, despite his sponsibility long before CSR departments velt took, there was no question about his lifelong anti-communism. His bulldog at- became a thing. desired destination, whether ending the titude and powerful speeches inspired Like many corporate empire-builders, Depression or winning the second world after a succession ofmediocre leaders. however, he overreached—in his case by war. He communicated his message clear- Clear strategic goals, flexibility in tac- annexing Alsace-Lorraine from France. ly and often—a lesson to modern bosses, tics and an ability to inspire others. Those But his less capable successors were less even if they prefer Twitter to fireside chats are three qualities that any executive or disciplined still; it was they who led Ger- on the wireless. entrepreneur might usefully acquire. many down the path to disaster. That made him popular enough with Bosses should read more history books. Where Bismarckbuilt a successful con- voters to remain at the helm for 12 years, glomerate, Roosevelt proved to be a con- until his death in 1945—twice as long as Economist.com/blogs/bartleby 52 Philosophy brief Liberal thinkers The Economist August 25th 2018

The three wartime thinkers had differ- ent backgrounds. Schumpeter was a flam- boyant adventurer born into a provincial Catholic family. Popper’s family was intel- lectual and had Jewish roots; Hayek was the son of a doctor. But they had common experiences. All three attended the Univer- sity of Vienna. Each had been tempted, and then repelled, by socialism; Schumpe- ter was finance minister in a socialist gov- ernment. He also lost his fortune in a bank collapse in 1924. He then left for Germany, and, after his wife died, emigrated to America in 1932. Hayek left Vienna for the London School of Economics in 1931. Pop- per fled Austria just in time, in 1937. Each was troubled by the Anglo-Saxon countries’ complacency that totalitarian- ism could neverhappen to them. Yet warn- ing signs abounded. The Depression in the 1930s had made government intervention seem desirable to most economists. Now the Soviet Union was a wartime ally, and criticism of its terror-based regime was frowned upon. Perhaps most worryingly, in Britain and America war had brought centralised authority and a single collec- tive purpose: victory. Who could be sure that this command-and-control machine Schumpeter, Popper and Hayek would be switched off? Hayek and Popper were friends but not The exiles fight back close to Schumpeter. The men did not co- operate. Nonetheless a division of labour emerged. Popper sought to blow up the in- tellectual foundations of totalitarianism and explain how to think freely. Hayek set out to demonstrate that, to be safe, eco- Between them, three Austrian intellectuals formulated a response to the 20th nomic and political power must be diffuse. century’s tyrannies Schumpeter provided a new metaphor for STHE second world warraged, Western describing the energy of a market econ- Aintellectuals wondered if civilisation In this series omy: creative destruction. could recover. George Orwell, the most brilliant of the pessimists, wrote “Animal 1 John Stuart Mill The hotel years Farm” and began work on “1984”, which Start with Popper. He decided to write 2 Alexis de Tocqueville saw the future as “a boot stampingon a hu- “The Open Society” after Hitler invaded man face—forever”. Among the optimists 3 John Maynard Keynes Austria and described it as “my wareffort”. were three Viennese exiles who launched Itbeginswith an attackon “historicism,” or 4 Schumpeter, Popper and Hayek a fightback against totalitarianism. Instead grand theories dressed up as laws of his- of centralisation, they advocated diffuse 5 Berlin, Rawls and Nozick tory, which make sweeping prophecies power, competition and spontaneity. In about the world and sideline individual 6 Rousseau, Marx and Nietzsche Massachusetts Joseph Schumpeter wrote volition. Plato, with his belief in a hierar- “Capitalism, Socialism and Democracy”, chical Athens ruled by an elite, gets clob- published in 1942. In New Zealand Karl wreck of a state”. “All that is dead now,” bered first. Hegel’s metaphysics and his in- Popper wrote “The Open Society and its said Hayek, ofVienna’s heyday. sistence that the state has its own spirit are Enemies” (1945). Friedrich Hayek wrote Yet the city shaped them. Between 1890 dismissed as “mystifying cant”. Popper “The Road to Serfdom” (1944) in Britain. and the 1930s it was one of the brainiest gives a sympathetic hearing to Marx’s cri- Vienna, their original home, had been places in the world. Sigmund Freud pio- tique of capitalism, but views his predic- devastated. In 1900 it was the capital of the neered psychoanalysis. The Vienna Circle tions as little better than a tribal religion. Habsburg monarchy, a polyglot, fairly lib- of philosophers debated logic. The Austri- In 1934 Popper had written about the eral empire. In short order it faced two an school of economics grappled with scientific method, in which hypotheses world wars, the empire’s collapse, political markets; Ludwig von Mises made break- are advanced and scientists seek to falsify extremism, annexation by the Nazis and throughson the role ofspeculation and the them. Any hypothesis left standing is a Allied occupation. Graham Greene visited price mechanism. Von Mises mentored kind ofknowledge. This conditional, mod- in 1948 and described the former jewel of Hayek, who was a cousin of the philoso- est concept of truth recurs in “The Open the Danube as a “smashed, dreary city”. pher Ludwig Wittgenstein, who went to Society”. “We must break with the habit of Warand violence “destroyed the world school with Adolf Hitler, who stood at the deference to great men,” Popper argues. A in which I had grown up,” said Popper. Heldenplatz in 1938 to welcome “the entry healthy society means a competition for Schumpeter viewed Austria as just a “little ofmy homeland into the German Reich”. ideas, not central direction, and critical 1 The Economist August 25th 2018 Philosophy brief 53

2 thinking that considers the facts, not who wild ride in Vienna’s banking industry. cent about the rise of Nazism; but for Pop- is presenting them. Contrary to Marx’s Taken together, in the 1940s Hayek, Pop- per and Hayek, the devastation unleashed claim, democratic politics was not a point- per and Schumpeter offered a muscular at- by fascism was self-evident. Both argued less charade. But Popper thought that tack on collectivism, totalitarianism and that Marxism and fascism had common change was only possible through experi- historicism, and a restatement of the vir- roots: the belief in a collective destiny; the mentation and piecemeal policy, notutopi- tues of liberal democracy and markets. conviction that the economy should be an dreams and large-scale schemes execut- Capitalism is not an engine for warmon- marshalled to a common goal and that a ed by an omniscient elite. gering exploitation (as Marxists believed), self-selected elite should give the orders. Hayek shared Popper’s view of human nor a static oligarchy, nora high road to cri- Another criticism is that they put too lit- knowledge as contingent and dispersed. In sis. Accompanied by the rule of law and tle emphasis on taming the savagery of the “The Road to Serfdom” he makes a narrow democracy, it is the best way for individ- market, particularly given the misery of point ruthlessly: that collectivism, or the uals to retain their liberty. unemployment in the 1930s. In fact Popper longing for a society with an overarching was deeply concerned about workers’ con- common purpose, is inherently misguided Serfdom revisited ditions; in “The Open Society” he lists ap- and dangerous to liberty. The complexity The reception of their work varied. Popper provingly the labour regulations put in of the industrial economy means it is “im- struggled to get his book published (it was place since Marxwrote about children toil- possible for any man to survey more than long and paper was still rationed). By 1947 ing in factories. He thought pragmatic poli- a limited field”. Hayekbuilt on von Mises’s Schumpeter’s was hailed as a masterpiece; cies could gradually improve the lot of all. workon the price mechanism, arguingthat his battered reputation soared. Hayek’s In the 1940s Hayek was more moderate without it socialism had no way to allocate work had little impact until it featured in than he later became, writing that “some resources and reconcile millions of indi- Reader’s Digest in America, turning him minimum of food, shelter and clothing, vidual preferences. Because it is unable to into an overnight sensation there. And, sufficient to preserve health and the capac- satisfy the vast variety of people’s wants, a ity to work, can be assured to everyone”. centrally planned economy is innately co- The economic cycle was “one of the grav- ercive. By concentrating economic power, est problems” of the time. Schumpeter it concentrates political power. Instead, showed fewersignsofcompassion yetwas Hayek argues, a competitive economy and profoundly ambivalent about the social polity is “the only system designed to min- impact ofcreative destruction. imise by decentralisation the power exer- Today the Austrians are as relevant as cised by man overman”. Democracy was a ever. Autocracy is hardening in China. De- “device forsafeguarding” freedom. mocracy is in retreat in Turkey, the Philip- Schumpeter is a puzzle. (In his history pines and elsewhere. Populists stalk the of neoliberalism, Daniel Stedman Jones Americas and Europe: in Vienna a party picks von Mises as his third Viennese with fascist roots is in the ruling coalition. thinkerinstead.) His previous book, a tome All three would have been perturbed by on the history of business cycles, flopped the decay of the public sphere in the West. in the 1930s. It is fashionable now to de- Instead ofa contest ofideas, there is the tri- scribe his follow-up, “Capitalism, Social- bal outrage of social media, leftwing zeal- ism and Democracy”, as one ofthe greatest otry on America’s campuses and fearmon- works ofthe 20th century. But it can be tur- gering and misinformation on the right. gid and long-winded; parts are dedicated Togetherthe trio shine a lighton the ten- to prophecies of the kind Popper thought sion between liberty and economic pro- nuts. Schumpeter’s contention that social- gress, now exacerbated by technology. In ism would eventually replace capitalism— the 1940s Hayek and Popper were able to because capitalism anaesthetised its own over time, the three men’s paths diverged. argue thatindividual freedom and efficien- acolytes—is sometimes thought to be ton- Popper, who moved to Britain in 1946, re- cy were bedfellows. A free, decentralised gue-in-cheek. Yet, like a gold nugget amid turned to focus on science and knowledge. society allocated resources better than sludge, the book contains a dazzling idea Schumpeter died in 1950. Hayek moved to planners, who could only guess at the abouthowcapitalism actuallyworks, root- Michigan, becominga luminaryofthe Chi- knowledge dispersed among millions of ed in the perspective of the businessman, cago School offree-market economists and individuals. Today, by contrast, the most ef- not bureaucrats or economists. a shrill critic ofall government. ficientsystem maybe a centralised one. Big Until John Maynard Keynes published But their combined stature grew. By the data could allow tech firms and govern- his “General Theory” in 1936, economists 1970s Keynesianism and nationalisation ments to “see” the entire economy and co- did not really concern themselves with the had failed, leading a new generation of ordinate it far more efficiently than Soviet economic cycle. Schumpeter emphasised economists and politicians, including Ron- bureaucrats ever could. a different sort of cycle: a longer one of in- ald Reagan and Margaret Thatcher, to em- Schumpeter thought monopolies were novation. Entrepreneurs, motivated by the phasise markets and individuals. The col- temporary castles that were blown away prospect of monopoly profits, invent and lapse of the Soviet Union in the 1990s by new competitors. Today’s digital elites commercialise products that trounce their vindicated Popper’s searing attack on the seem entrenched. Popperand Hayekmight antecedents. Then they are trounced in stupidity of grand historical schemes. And be fighting for a decentralisation of the in- turn. This “perennial gale” of birth and Silicon Valley’s continual reinventions, ternet, so that individuals owned their death, not planners’ schemes, is how tech- from the mainframe and PC to the internet own data and identities. Unless power is nological advances are made. Capitalism, and mobile phones, vindicated Schumpe- dispersed, they would have pointed out, it while unequal, isdynamic. Firmsand their ter’s faith in entrepreneurs. is always dangerous. 7 owners enjoy only limited windows of The three Austrians are vulnerable to competitive advantage. “Each class resem- common criticisms. The concentration of bles a hotel,” Schumpeter wrote earlier; their intellectual firepower on left-wing “always full, but always of different peo- ideologies (rather than Nazism) can seem Read more on classical liberal values and ple”. Perhaps he was recalling his own lopsided. Schumpeter had been compla- thinkers at Economist.com/openfuture 54 Finance and economics The Economist August 25th 2018

Also in this section 55 Buttonwood: Stocks or bonds? 56 Insuring intangible risks 57 The bull market’s milestone 58 Free exchange: External imbalances

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

Commodities into bear-market territory, down by more than 20% since June, on fears that protec- Raw materiel tionism would dampen global growth, es- pecially in China, whose efforts to crack down on financial leverage are another drag on expansion. Oil prices have dipped for seven straight weeks, also because of concerns about lacklustre demand in emerging markets and because a strong Global tensions, from commerce to currencies, rattle crops, metals and oil dollar makes it dearer for those with weak HEY make an intriguing posse: about others on the Pro Farmer Midwest Crop currencies to buy crude. Gold has devel- T160 “scouts” in jeans and muddy boots, Tour, the talk turns to darker subjects, such oped a strange habit ofsliding in sync with jumping out of cars with ropes in hand, as trade tensions, collapsing currencies the Chinese yuan. plunging deep into corn (maize) and soya- and what he calls the start ofan “economic American corn and soyabean prices, bean fields across the American Midwest. cold war” between America and China. meanwhile, continue a long streak of They are not just farmers. They include “While we’re driving the 15-25 miles from weakness caused mainly by harvests that commodity traders and hedge-fund man- field to field, we certainly have a lot to talk getmore bountiful bythe year. The Depart- agers. Theirquest: to predict this year’s har- about. Byand large the American producer ment of Agriculture is forecasting a record vest by using ropes as a measure and thinks the fight with China is just. But it’s corn yield this year and the biggest harvest counting, to the last ear of corn and soya- very much affecting the pocketbook.” ofsoyabeans ever, somethingthe crop tour bean pod, the yield in a given area. “We From the midwestern farm belt to the is likely to validate, Mr Seifried says. But have a really beautiful crop. I think this is commodity markets ofChicago, New York, that is lousy timing, given that China, going to be a record,” says Ted Seifried, a London and Shanghai, this is a tricky time which was America’s biggest buyer of1 market strategist at Zaner Group, a com- to be producing and trading commodities. modities brokerage in Chicago, during a Americans may relish their stockmarkets stop in Nebraska on August 21st. The mud soaring(see laterarticle). But a rising dollar, Back to earth 2 on his boots is a reassuring sign of ample higher American interest rates, sliding Copper moisture in the soil. emerging-market currencies and fears of a Price, $’000 per tonne But when he gets back into the car with tariff-induced blow to exports to China 7.5 have taken a toll on commodity prices in 7.0 recent months (see chart1). 6.5 Ore struck 1 In the background lurksclimate change, 6.0 Commodity prices fears of which have grown with the heat January 1st 2018=100, $ terms and drought battering Europe’s wheat crop Jan Feb Mar Apr May Jun Jul Aug 2018 120 this summer. European grain prices have Energy Futures positions* by managed money funds Agriculturals surged as a result. But those of many other 110 commodities are sagging. On August 22nd ’000 150 a pound ofarabica coffee fell below $1, less Long Short 120 100 than the cost of a takeaway brew and the lowest in 12 years. Raw sugar was also at 90 90 ten-year lows. Both have been hit by over- 60 Industrial metals supply in Brazil, as well as a slide in the val- 30 80 ue ofthe real, the Brazilian currency, which 0 Jan Feb Mar Apr May Jun Jul Aug makes it more compelling to sell crops, Jan Feb Mar Apr May Jun Jul Aug 2018 2018 priced in dollars, rather than store them. Sources: Bloomberg; Thomson Reuters The previous week, prices ofcopper fell Source: CFTC *Contracts of 25,000 pounds The Economist August 25th 2018 Finance and economics 55

2 soyabeans, raised retaliatory tariffs on the serve’s policy of raising American interest tranche of tariffs, on a further $16bn-worth crop in July. Farmers hope to sell more in rates. Progress in talks on the North Ameri- ofeach other’s goods, on August 23rd. Europe, where soyameal for animal feed is can Free-Trade Agreement would also be Analysts point to two main ways in in high demand because ofthe high cost of good news (see Business section). which these tensions hurt commodity wheat. But the slide in the real also makes But BHP, the world’s biggest miner, is- prices. The first is because of the rising im- Brazilian soyabeans more competitive. sued a blunt assessment ofthe longer-term portance of emerging markets to demand. Optimism flickers from time to time. dangersto itsproductsduringitsotherwise In a reportin June, the World Bankcalculat- Many commodities rallied in the run-up to promising year-end results on August 21st. ed that almost all the growth in the past 20 the latest trade talks between American It said protectionism was “exceedingly un- years in global metal consumption, two- and Chinese officials, which were due to helpful” for broad-based global growth, thirds of the increase in energy demand end after The Economist went to press. The adding that Sino-American trade tensions and two-fifths ofthe rise in food consump- dollar fell, bolstering some commodities, could weaken both countries’ GDP growth tion came from seven countries: Brazil, afterPresident Donald Trump said in an in- by a quarter to three-quarters of a percent- China, India, Indonesia, Mexico, Russia terview with Reuters on August 20th that age point, absent counter-measures. Both and Turkey. This group now exceeds the he was “not thrilled” with the Federal Re- America and China imposed another Group of Seven industrial nations in con-1 Buttonwood Are you a stock or a bond?

Whythe ideal portfolio depends on the business you are in MAGINE two college friends whose ca- This way of thinking comes more nat- Ireers have taken different paths. Simon urally to people who work in finance. is an investment banker. He works long There are fund managers with most of hours, especially when his bank is advis- their professional portfolio in stocks but ing on a big merger. His pastimes include all of their personal wealth in three- potholingand skydiving. Chrisworks asa month bills. Ifthe bets on stocks turn bad, senior civil servant. Early each evening they might find themselves out of a job. the lights in his office dim to remind his They do not want to put all their personal colleagues of the importance of work-life savings at riskas well. balance. His spare time is spent on long But most people do not think like this. country walks, playing golf and going to The available evidence suggests that the theatre. households do not attempt to hedge their How should they invest their money? employment income. In fact, they typical- More specifically, how much of their sav- ly “anti-hedge”, by holding a dispropor- ings should go to bonds and how much to tionate fraction of their savings in the shares? Textbook theory says it depends shares of their employer or of companies on how tolerant Simon and Chris are to- in the same industry or locality. wards risk. If either can bear the some- strong. Simon’s bankmakes pots ofmoney A paper, published in 2003, by James times violent ups-and-downs of stock- and his bonus surges. His fortunes are Poterba of the Massachusetts Institute of markets, he should hold more shares, changeable, though. When the stockmark- Technology discovered that an average of which have higher rewards to go with the et is down, the bank’s profits plunge. So his more than 40% of the value of the 20 larg- extra risk. Should such price swings keep returns are high, but also volatile—like a est company-pension plans in America him awake at night with worry, he should stock. To hedge against the stock-like re- was invested in the firm’s own shares. tiltthe mixofhisinvestmentstowards saf- turns of his occupation, Simon should The dangers ofsuch a strategy had recent- er government bonds. own bonds. In contrast, Chris enjoys a ly become apparent. When Enron failed, A risk-lover such as Simon is happy to bond-like career. His salary is lower but its employees had over 60% oftheir retire- own mostlyshares. Ifyouthinkskydiving steadier. His job is not at riskin downturns. ment savings in company stock. Another is fun, you probably will not lose sleep if So he can afford to take biggerrisks with his study based on Swedish data by Massimo the value of your portfolio goes down investments. He should own stocks. Massa, of INSEAD, and Andrei Simonov, from time to time. Bythe same logic Chris, now of Michigan State University, also who prefers a quiet life, is content to hold Your job is your down-payment found that households tend to invest in a bigger slug of bonds than Simon. Yet on This is not to say that preferences about stocks that are closely related to their em- a broader reckoning, both friends would risk do not matter to investment choices. ployment income. be better advised to go against their incli- They do. It is that wealth should be looked People stick to what they know for un- nations. Simon, the banker, should buy at in the round. A proper reckoning would derstandable reasons. Investment can mostly bonds. Chris, the bureaucrat, include not only financial assets but hu- seem like an aggressive sport, the pre- should buy mostly stocks. man capital—a person’s knowledge, skills serve of bulls and bears or Wall Street Ifthat seems paradoxical, consider the and talents. This has a big influence on wolves. Yet it would be more helpful to nature of each friend’s line of work. Si- earningsovera workinglife. Youngpeople, think of investment as self-insurance. mon’s professional fortunes are tied to with few savings and decades of employ- People save and invest to protect them- the stockmarket. When share prices are ment ahead, have most of their lifetime selves from contingencies. The best way booming, the general appetite for busi- wealth embedded in their human capital. to guard against some sorts of risks is of- ness risk is high. Investment projects are It has a payoff, just like a stock or a bond. It ten to embrace a different kind. The kind approved. Deals are done. The demand makes sense to take account of that when of insurance you will need ultimately de- for the services of investment banks is deciding what to hold as financial wealth. pends on who you are. 56 Finance and economics The Economist August 25th 2018

2 sumption ofcoal and all base and precious have fared much better because the most computer hack); or posed by them (say, metals, as well as of rice, wheat and soya- liquid steel contract is in China, which is physical damage or theft resulting from a beans. Commodity prices are therefore far much more affected by domestic supply cyberattack). However, insurance against more sensitive to these countries’ fortunes and demand factors than big global bets. A such risks has lagged behind their rise. than they used to be. Hence their wallop- steel-futures contract in Shanghai touched “The shift is tremendous and the exposure ing last week when the plunging Turkish a seven-year high on August 22nd. huge,” says Christian Reber of the Boston lira gave a shockto other fragile currencies. As ever, demand from China remains Consulting Group, “but the insurance in- The second is speculation. Ole Hansen, the biggest swing factor for commodities. dustry is only at the early stage of finding head of commodities strategy at Saxo BHP reckons China will use fiscal and solutions to close the gap.” Bank, says that fears of a trade war have monetary expansion to help offset the im- Examples of potential damage are not clobbered prices of the most globally pact to its exports from the trade conflict, hard to find. In February a tweet by Kylie traded commodities, notably copper, as which could benefit commodities. But Jenner, a celebrity with over 25m follow- short positions by speculators have surged even ifthe worst is now priced in, plenty of ers, rhetorically asking whether anyone (see chart 2). China accounts for half the volatility lies ahead. As Mr Seifried quips still used Snapchat, coincided with a drop world’sdemand forcopper,the same share from the cornfields of Nebraska, “predict- of 6% in the share price of Snap, the mes- as its consumption of steel. Yet steel prices ing the future is a son ofa bitch”. 7 saging app’s owner. NotPetya, a wide- spread ransomware attack last year, is like- ly to have cost companies more than $3bn. One ofthe first events to awaken corporate America to intangible risks, a hack in 2013 of Target, a retailer, resulted in the theft of data on 70m customers, falling sales and profits, and litigation costing millions. Companies are not oblivious. Respon- dents to a survey last year by Aon, an insur- ance broker, ranked reputation as their top risk (up from fourth in 2013) and cyber-risk as their fifth (from 18th). But there is a big difference between how risk managers perceive such risks and how boards do. And if firms do seek insurance against some of these risks, insurers have not ex- actly been inundating them with novel products. “Even when policies are labelled ‘innovative’ it’s usually to insure physical assets in the sharing economy rather than intangibles,” says Magda Ramada ofWillis Towers Watson, another broker. But in a world where Airbnb, in effect the world’s largest hotel chain, owns no hotels and Insuring intangible risks Uber, its largest taxi firm, owns no cabs, such policies are of limited use. Those that In search of a jelly mould do protect assets such as data, IP and repu- tation are often expensive and bespoke, and include strict exclusions and limits. Insurers’ caution is understandable. In- tangible risks are not only new and com- plex. “They’re a bit like not-yet-set jelly,” The value ofrich-world companies now lies mainlyin assets that are impossible to says Julia Graham of Airmic, a trade body. touch and trickyto insure “Their shape constantly changes.” Under- HE development, hundreds of years late into dollars (under international ac- writers like to look at past data on events’ Tago, of ship and cargo insurance was counting standards they are defined as frequency as well as clients’ current expo- revolutionary. It marked the start of com- “identifiable non-monetary asset[s] with- sure—which may be next to impossible mercial insurance; protection against loss out physical substance”). Yet their growth when assessing the risk and impact of a from looting, fire and the perils of the high has been undeniable. In 2015, estimates cyberattack, a sexual-harassment scandal, seas fostered global trade. But in the 21st Ocean Tomo, a merchant bank, they ac- which would have been very differently century the value of companies consists counted for 84% of the value of S&P 500 priced even a couple of years ago, or a ce- less of solid objects, such as boats and firms, up from just 17% in 1975 (see chart on lebrity’s throwaway tweet. (Snap’s share buildings, than ofweightless, intangible el- next page). This does not merely reflect the price has fallen by more than one-third in ements, such as intellectual property (IP), rise of technology giants built on algo- six months, suggesting deeper troubles data and reputation. “Today the most valu- rithms; manufacturers have evolved too, than Ms Jenner’s disapproval.) “The pro- able assets are more likely to be stored in selling services alongside jet engines and blem with intangible assets is that they the cloud than in a warehouse,” says Inga power drills, and crunching data collected have fuzzy boundaries, and for insurance Beale, chiefexecutive ofLloyd’sofLondon. by smart sensors. to work you want crispness,” says David As Western economies have shifted As the importance of intangibles has Teece, ofthe University ofCalifornia. from making things to providing informa- grown, so has companies’ need to protect But some underwriters are starting to tion and services, the composition of com- themselves against “intangible risks” of come up with more suitable policies. One panies’ assets has shifted too. Intangible two types: damage to intangible assets (eg, is parametric cover, which pays a fixed assets can be hard to define, let alone trans- reputational harm caused by a tweet or amount automatically after a defined 1 The Economist August 25th 2018 Finance and economics 57

Stockmarket rallies Can’t touch this S&P 500, market value of intangible assets % of total Nine-and-a-half years and counting 100 $trn 19.8* 80 Record ornot, America’s bull market keeps going

60 N AUGUST 22nd America’s bull the “most joyless” in history. In the boom Omarket in equities turned 3,453 days of1990-2000 the S&P 500 rose by 417%, or 40 old. Since hitting a low of666 in March by19% peryear. In the current run the 2009, the S&P 500 index has increased index has clocked up a gain of323%, or 0.59 20 more than fourfold, driven by strong 16.5% per year. What this market lacks in corporate profits, low inflation, stable vim, however, it has made up for in 0 economic growth and a boatload of steadiness. In 2017 the VIX index, a mea- 1975 85 95 2005 15 central-bankstimulus. Despite five cor- sure ofmarket volatility, recorded more Sources: Ocean Tomo; Aon *2018 rections ofat least10%, the index has days below ten than in the previous 26 never entered bear territory, defined as a years combined. 2 event, such as a hack. The advantage of drop ofat least 20%. Most commentators Some believe that shares are overval- such policies is that they can provide cash are declaring this to be the longest bull ued. The S&P 500’s price-to-earnings ratio quickly, meeting an immediate need after market in history. is 25, and on a cyclically adjusted basis is misfortune strikes. The downside is that Whether it is a record-breaker is dis- higher still. On past form, average returns these products tend to cover only a share puted. Some contend that because a fall turn negative once the ratio tops 20, ofdamages. of19.9% in 1990 did not quite reach the according to State Street Global Advisors, Some once-uninsurable risks can now technical threshold, the bull market that a money manager. Yet the warning bells be at least partly insured thanks to ad- ended in 2000 actually lasted a whop- about which investors fret most, such as vances in modelling, indemnity structures ping 4,494 days and is the true champion. widening credit spreads and bubbly asset and other areas, says Thomas Holzheu of Others note a drop of19%-plus in 2011 prices, are not sounding loudly enough to Swiss Re, a reinsurer. Examples include (and declines of20%-plus in other share- suggest that the next bear market is immi- business interruption, cyber-risks, product price indices). nent. Analysts at Goldman Sachs put the recalls, damage to reputation and energy Whatever its precise status, the bull probability ofa bubble in American prices. A study by Swiss Re points to cover market is curiously unloved by investors. shares at less than one in five. This bull for hoteliers against a drop in occupation Ken Fisher, a fund manager, has called it may yet have room to run. after widespread travel disruption or a pandemic, and a flight-cancellation policy for airlines triggered by severe events Horns v paws which do no harm to airports or aircraft S&P 500 but stop air traffic. 1941-43=10 Log scale Most ofthe action has been in cyber-in- 3,000 surance. Early policies dealt merely with Recessions the immediate costs of an attack—paying 1,000 to restore a data centre or for crisis manage- The average bull market* lasted 5.1 years ment—but insurers now also offer “holis- The average bear market† lasted 1.7 years tic” cover, which includes knock-ons such as physical damage, loss ofrevenue and lit- 100 igation costs. But at the same time, insurers have become more aware of their “silent” exposure to cyber-risksunderexisting poli- cies. Increasingly they are excluding them 10 from conventional policies, such as prop- erty cover, or selling cyber bolt-ons. A huge gap in coverage remains. Cybercrime caused around $550bn in losses last year, 1 according to Aon. Companies are covered 1918 30 40 50 6070 80 90 2000 10 18 for only 15% of potential cyber-risk losses, Selected Stockmarket WWII Korean Suez Vietnam Black Iraq Dotcom Financial against 59% for property, plant and equip- events crash, start war Canal war Oil Monday invades bubble crisis of Depression crisis shocks Kuwait bursts ment losses. Companiesalso have to do more to pro- Cyclically adjusted price-earnings ratio‡ tect themselves. Just as insurance was only 50 Recessions partofthe answerto fire and maritime risk, 40 it is only part ofthe answer to modern per- ils. “Instead of buying insurance against a 30 damaged reputation, firms should be look- 20 ing at preventing it in the first place,” says Richard Wergan of Edelman, a communi- 10 cations-marketing firm. Plenty of cyber- 0 breachescould doubtlesshave been avoid- 1918 30 40 50 6070 80 90 2000 10 18 ed if software had simply been kept up to *Dated from the lowest point after a fall of at least 20% date. Insurers need to catch up with the in- Sources: Robert Shiller; CFRA Research; †When the index closes at least 20% down from previous high S&P Dow Jones Indices; The Economist ‡Based on inflation-adjusted earnings from previous ten years tangible age; but so do their clients. 7 58 Finance and economics The Economist August 25th 2018 Free exchange A question of balance

What a rising current-account surplus means forthe euro area REECE’S third bail-out programme came to an end on August cle alone. Growth in the zone relies too much on that of its largest G20th. A lookat the causes ofthe country’s near-decade ofcri- trading partners, including America; worthy investment projects sis illustrates how external imbalances can reflect underlying at home—in German infrastructure, say—go unfulfilled. troubles. Gaps in public finances, as well as investments in prop- Surpluses also have political consequences outside the bloc. erty, were financed by borrowing from Germany and other President Donald Trump sees Europe as a “foe” because of its bi- northern European countries. Wages and costs were pushed up, lateral trade surplus with America. He has slapped tariffs on making exports less competitive—within the euro zone, there can European steel and aluminium, and threatened them on cars; the be no currency devaluation—and further widening Greece’s cur- European Union has retaliated. The two sides are negotiating, but rent-account deficit. When foreign lending seized up, the govern- trade tensions are likely to keep simmering. mentneeded bailingoutand the bankscrumbled. Portugal (chief- ly because of its public finances), Spain and Ireland (blame Internal strife private-sector housing bubbles) have similar tales to tell. The current-account deficits in the euro zone’s crisis countries As those four countries have stabilised or recovered, they were of the worrying kind. That they have shrunk or reversed is have wholly or partly reversed their current-account deficits (see comforting. This has happened largely through increases in ex- chart). But if the periphery has adjusted, the same is not true of ports, suggesting that competitiveness has improved. (Much of the euro area’s creditor countries. Surpluses in Germany and the Ireland’s huge surplus reflects multinationals domiciling their in- Netherlands have grown. As a consequence, the euro zone in to- tellectual property in the country to take advantage of its low cor- tal has a substantial current-account surplus. In the year to June it porate taxes, boosting its exports.) In Greece, where eight years of was 3.6% ofGDP (the same as the record fora calendar year, set in crisis and austerity have squeezed consumption and investment, 2016). Growth is likely to have been hurt. imports have borne a greater part of the adjustment. They are In 2017, according to the IMF’s External Sector Report, pub- more than 25% lower than in 2007. lished last month, the euro area had the world’s biggest absolute The adjustment was particularly painful because, as mem- current-account surplus, $442bn. Germany has the largest of any bers of a single-currency bloc with low inflation, crisis-hit coun- single country. China’s once-vast surplus has narrowed: in the tries had to devalue their real exchange rates by cutting wages first half of this year, indeed, China reported a deficit. America’s and domesticdemand and employment. And the zone’sgrowing deficit remains the world’s biggest, $466bn last year. Corporate- aggregate surplus points to another exacerbating factor: Ger- tax cuts, interest-rate rises and the associated dollar appreciation many’s excess of saving over investment kept rising, as it in- could widen it further. creased lending and exports to countries outside the zone. Current-account imbalances are not always a cause for con- If instead Germany had expanded domestic demand, others’ cern. Asa matterofarithmetic, theymeasure the gap between do- relative price adjustments could have been less painful. A paper mestic savings and investment. The euro area is an economy by Olivier Blanchard, Christopher Erceg and Jesper Linde, pub- with an ageing population: it should save more than it invests. As lished in 2015, finds that higherGerman inflation could make oth- a result, it should have a current-account surplus. America’s def- er countries’ goods and services relatively cheap, making it easier icit partly reflects the more attractive investment opportunities forcrisis countries to adjust. The effectis particularly strongwhen available there than elsewhere in the world. Imbalances become interest rates have to remain low to stimulate the economy. Some more worrying, however, if they are larger than economic funda- German economists, notably at the Bundesbank, have long ar- mentals might suggest or financed by short-term inflows. gued that this is irrelevant: it is up to profligate southerners, not The crises in the periphery of the euro zone were reflected in prudent Germans, to adjust; and fiscal expansion will not boost deficits caused by a surfeit of unproductive spending. But excess demand foreuro-area imports directly. surpluses, too, can have drawbacks. The IMF reckons that the Still, this uneven adjustment in the euro area could explain euro area’s aggregate current-account surplus is now stronger why both demand and inflation, once energy and food prices are than would be justified by structural factors and the business cy- excluded, have been stubbornly low. Since crisis countries still need to reduce their stocks of external liabilities (ie, the accumu- lation of past current-account deficits) and public-sector debt, Swinging into surplus that looks set to continue. Current-account balance, % of GDP 2004-07 average 2017 John Maynard Keynes recognised the risk of such asymmetry in the 1940s: “The process of adjustment is compulsory for the 10 5– 0+ 5 10 15 debtor and voluntary for the creditor. If the creditor does not Ireland choose to make, or allow, his share of the adjustment, he suffers Netherlands no inconvenience.” Keynes wanted to tax countries that hoarded Germany trade surpluses. In 2011 the European Commission set up a Euro area “macroeconomic-imbalance procedure” to tackle the problem. But the process appears to place less weight on surpluses than on Italy deficits and lacks the means to enforce its recommendations. Spain Another way ofdealing with imbalances would be to encour- Portugal age greater risk-sharing through fiscal and (deeper) banking un- France ion. The euro zone would become more like America, where in- Greece ter-state imbalances are not even recorded. But that too seems politically infeasible. The euro area’s long slog will carry on, and Source: Eurostat debtor countries will bear the burden. 7 Property 59

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http://www.lemesnildo.fr/ Contact: Guillaume +447532003972 [email protected] The Economist August 25th 2018 60 Science and technology The Economist August 25th 2018

Aerospace Also in this section Whirlybirds are go 61 Ancient humans 62 The world’s oldest cheese 62 Controlling tsetse flies

Helicopters ofthe future will fly in new ways. Pilots will be optional NLIKE a helicopter, aeroplanes are in- straightforward. Drones are also quieter, V-280 Valor (pictured above), which is a Uclined to fly, HarryReasoner, a veteran cheaper and easier to fly because they op- striking“tilt-rotor” design, is beingchampi- American newsman, wryly observed after erate largely autonomously, and can be oned by Bell, the Texas-based producer of watching choppers in action during the controlled by someone on the ground and the old Huey. Both companies aim to over- Vietnam war. He wrote: who does not need a pilot’s licence. Unsur- come one of the helicopter’s inherent prisingly, drones are already taking work shortcomings: a limited top speed. A helicopter does not want to fly. It is main- away from helicopters, in military tasks tained in the air by a variety of forces and like reconnaissance and in civilian ones Pulling on the collective controls workingin opposition to each other, such as filming, surveying and delivering A helicopter’s speed is restricted by the and ifthere is any disturbance in the delicate balance, the helicopter stops flying, immedi- goods. They are also being developed to way it flies. An aeroplane obtains lift by air ately and disastrously. carry passengers. The differences between passing over the aerofoil shape ofits wing. helicopters and drones are vanishing. The blades of a helicopter have a similar Despite their mechanical complexity For now, companies that make helicop- shape and work like a revolving wing. The and the need for piloting skills akin to rid- ters think their machines have a long life trouble is that, in forward flight, the airflow inga unicycle, a helicopter’s idiosyncrasies ahead of them. Batteries are currently un- over the blade advancing into the oncom- can quicklybe forgiven. Itdoesthings aero- able to provide electric rotorcraft with ex- ing air is greater than that over the blade planes cannot. The ability to take off and tended flight times or the ability to carry that is retreating. This produces a lopsided land vertically, and to hover, have made heavy loads. And many helicopter mis- amount of lift, which is compensated for helicopters indispensable to the military sions are still likely to require crew on by adjusting the angle ofthe blades as they since theirfirst mass deployment by Amer- board—think of winchmen for an air-sea rotate to achieve an equal amount oflift on ica in Vietnam, where the ubiquitous UH-1 rescue. Nor would most hovering drones both sides. Once the speed exceeds about “Huey” led to that conflict becoming stand a chance in the intense storms and 280kph (174mph), increasing the angle of known as “the helicopter war”. Civilian blizzards that helicopters sometimes have the retreating blade any more results in a roles are just as vital, from rescuing people to fly into. But that does not mean helicop- “stall”, which produces no lift at all. By stranded on mountains to use as air ambu- ters of the future will still fly in the same then the helicopter is likely to be vibrating lances, from putting out wildfires to carry- way, orthat they will always have a pilot. dangerously and it could flip over. ing people and presidents to and from A number of new ideas for future heli- A tilt-rotor overcomes this problem places where there are no runways. copters are whirring. Among them are the with a pair of counter-rotating rotors The helicopter, though, has a new rival. “X2” technology, which is beingdeveloped mounted on a set of wings. This arrange- Some drones also take off and land verti- by Sikorsky, a Connecticut-based firm ment effectively converts a helicopter into cally, and with rotors powered by electric founded by Igor Sikorsky, who produced an aeroplane for faster forward flight, by motors, they are mechanically more the first practical helicopter in 1939. The tilting the rotors forward, and then back 1 The Economist August 25th 2018 Science and technology 61

2 into a helicopter to land and take-off verti- main rotor. Coaxial rotors (and counter-ro- Evolutionary biology cally by pointing the rotors upwards. Bell’s tating tilt-rotors) cancel out torque. V-280 tilt-rotor can nip along at 520kph Where the design differs from previous Kissing cousins (280 knots, hence the name) and has a coaxial helicopters, is that Sikorsky fits a range of almost 1,500km, even when propeller at the rear to push the helicopter weighed down by four crew and 14 fully- along much faster. Another difference is kitted combat troops. that the fourblades on each rotor are made An older and bigger tilt-rotor called the much stiffer than is usual so that the rotors More evidence ofinterbreeding among V-22 Osprey is produced by Bell in partner- can be placed closer together without their ancient humans ship with Boeing. This too is fasterand can blades colliding. The result is that at high travel farther than a standard helicopter. It speeds retreating-blade stall is overcome ET aside romantic sentiment. Sex is a is used by the US Marines. The V-22, how- because there is always a blade advancing Sbiological insurance policy. By chaoti- ever, tilts both its rotors and engines. The in the direction of travel on either side of cally mixingtheirgenetic information, ani- V-280 simplifies this design and reduces the helicopter to provide a balanced lift. mals generate extraordinary diversity. In the amount ofweight that has to be rotated Such an arrangement makes a helicop- general, the more different the genomes of by having the engines remain in place and terfasterand more manoeuvrable. It is also the partners are, the greater the diversity in tilting only the driveshafts and rotors. quieter because the rear propeller can be their offspring and the more likely it is that The new design could be scaled up to used for most of the forward thrust, allow- some of the combinations will survive. produce much bigger craft, says Vince To- ing the rotors to run more slowly, says Early humans had no inkling of evolution- bin, Bell’s head of military business. Bell is Chris Van Buiten, head ofSikorsky innova- ary theory. But the discovery of a teenage also looking at electric flight systems for tions. The company has two versions us- girl with a Neanderthal mother and a De- sometime in the future. ing the technology. One, the S-97 Raider nisovan father shows they were happily (pictured below), carries six passengers participating in the practice. Look, no hands and can fly at more than 400kph. A bigger A team led by Viviane Slon and Svante The V-280 will be “pilot optional”. Some model being developed with Boeing, the Pääbo of the Max Planck Institute for Evo- passengers might be happier with a hu- SB-1Defiant, is due to begin test flights later lutionary Anthropology, in Leipzig, Ger- man in the cockpit, but much depends on this year. It can carry a dozen troops. Civil- many, carried out genetic analysis on a the mission. “If picking up a downed pilot ian versions ofboth are planned fragment of bone, more than 50,000 years in a hostile situation, they’ll take any ride All these new helicopters will be made old, found in a cave in Russia. It came from out, manned or unmanned,” says Mr To- easier to fly using computerised flight con- a girl, aged about13, who seemed to belong bin, a former US Army helicopter pilot. In trols. Sikorsky, forinstance, is working on a to the Denisovans, a poorly understood civilian use a tilt-rotor opens up all sorts of system in which pressing a single button is cousin ofmodern humans who evolved in travel opportunities with their speed and all that is required to take-off and hover. Eurasia around 390,000 years ago and range, he adds. That could be from roof This level of automation makes autono- then were driven into extinction some tops to heliports, saving on land occupied mous operations possible. That could be 40,000 years ago. by conventional airports. for pilotless missions or as a back-up for An analysis of a Denisovan fossil car- Sikorsky’s X2 system uses two rotors single-pilot use, allowing a helicopter to re- ried out in 2013 revealed that their genes mounted on the top of the helicopter, one turn to base if that pilot was incapacitated, differed substantially from those of mod- above the other but turning in opposite di- says Mr Van Buiten. When Sikorsky began ern-day humans. Yet what really surprised rections. This so-called coaxial arrange- experimenting with autonomous flight researchers at the time was the discovery ment has long been employed by some systems some ten years ago, the entire cab- of a little Neanderthal DNA mixed in. Ne- Russian helicopters because it makes the in of a test helicopter was filled with com- anderthals are known to have successfully tail rotor redundant, which is useful when puters. Now the required kit is the size of a mated with humans because they perma- flying in and out of tight spots. On a con- toaster. Whetherthey end up carrying peo- nently inserted some of their DNA into the ventional helicopter the tail rotor counters ple or not, the difference between drones human genome. The discovery that the ge- “torque”, a twisting force induced by the and helicopters is starting to narrow. 7 netically distinct Neanderthals and Deni- sovans had also reproduced with one an- other raised the question of whether their interbreeding had been a regular affair. The results of the new study, published this week in Nature, show that, instead of havingjusta little Neanderthal DNA mixed in with lots ofDenisovan DNA, the girl’s re- mains contain a much more balanced split: 38.6% of the DNA fragments matched ver- sions ofgenes that clearly belongto the Ne- anderthal genome, and 42.3% to the Deni- sovan one. There was no clear match for the remainder. Furthermore, the fossil had Neander- thal mitochondrial DNA. This is passed from mother to child, which meant that ei- ther the teenager was the daughter of a De- nisovan father and a Neanderthal mother or had come from a population with an ex- tensive mix of traits, and had been born to parents who were, in effect, hybrids. Biologists know that animal popula- The Raider gets a push tions of mixed ancestry who are undergo-1 62 Science and technology The Economist August 25th 2018

2 ing little evolutionary change show signs Controlling tsetse flies cal fly population down by 98%, with a of this equilibrium in their genes. Drs Slon concomitant fall in sleeping sickness. But and Paabo looked for just such markers in Fly blown projects like this require huge numbers of the genes of their Denisovan teenager and sterile males to be bred and delivered in a found none. That ruled out the idea that timely manner. And that is hard. she came from mixed ancestry. One problem, since breeding males They did, though, find that each chro- necessarily involves breeding females, too, mosome pair the girl carried had one chro- is sorting the sexes, so that only males are New York mosome that was entirely Neanderthal in irradiated and released. (Simply irradiat- Anew wayto reduce sleeping sickness origin and one thatwasalmostentirely De- ingboth sexes is problematic; a higher radi- nisovan. This signified that she had one EMALE tsetse flies mate for life. Or, to ation dose is required to sterilise females, parent from each group. Knowing that the Fput it more accurately, they mate once in for example, which risks killing or dis- mother was a Neanderthal from the girl’s a lifetime. That gives those who would abling the males.) To sortthe tsetses means mitochondrial DNA, means that her father control these pests an opportunity. A fe- waiting until the flies emerge from their must have been a Denisovan. male that mates with a sterile male will pupae, chilling them to reduce their meta- The 2013 analysis of the Denisovan fos- have no offspring. Arrange for enough bolic rates and therefore their activity, and sil also showed interbreeding, albeit of a such matingsto occurand the resultwill be then separating males from females by more distant sort. Add in this latest re- fewer tsetse flies—and, with luck, less hand, with a paint brush. Male flies can be search, and although Neanderthals and sleeping sickness, a disease spread to peo- identified by external claspers that make Denisovans may not have met very often, ple and cattle by the flies. them distinguishable from clasperless fe- sex between them is likely to have been Aprojectunderwayin Senegal suggests males. This process is effective, but time- more common than was previously real- this works. For the past five years, male consuming and labour-intensive. Zelda ised. The implication is that modern hu- tsetse flies sterilised using gamma rays Moran, of Columbia University, thinks she mans are likely to have a messier genetic have been dropped three times a week has a better way. heritage than once thought. 7 over infested areas. This has pushed the lo- In 2014 Ms Moran, who was then a re- searcher at the entomological laboratory of the International Atomic Energy Agen- Archaeology cy, in Vienna, which does a lot ofthis work, noticed that female and male tsetse pupae Maturing nicely develop differently. Adult flies emerge from their pupae 30 days after pupation. Although tsetse-fly pupal cases are A3,200-year-old cheese opaque, Dr Moran found that in certain N1885 tomb raiders in ancient Egypt lighting conditions, such as infrared, it was Idiscovered the final resting place of possible to observe that the insects’ wings Ptahmes, a powerful mayor ofMemphis, began to darken beforehand. In the case of who ruled between1290BC and 1213BC. females, this happens around 25-26 days Shifting sands buried the tomb once after pupation. In the case of males it hap- more until it was uncovered again in 2010 pens later: 27-29 days after pupation. In by a team led by researchers from Cairo principle, that gives a way to sort the flies University.The raiders seem to have before they emerge from their pupae. ignored what may be its most valuable Acting on these observations had to treasure: the world’s oldest cheese. wait until a chance meeting Ms Moran had Found in a store room among a num- with Szabolcs Márka, an astrophysicist at ber ofbroken jars, the solidified whitish Columbia. At the time, DrMárka was using mass was initially barely recognisable. It machine learning, a form ofartificial intel- appeared to be entirely composed of ligence, to find patterns in large sets of as- sodium carbonate, the basis ofsoap, trophysical data. He suggested applying a although it was covered with a bit of similar process to the sexing ofpupae. fabric that resembled a cheese cloth. First, Dr Márka and his colleagues used Enrico Greco ofthe University ofCata- an infrared scanner to create images of nia, in Italy,theorised that ifthe sub- Aged to a sort of perfection large numbers of pupae. Then, they em- stance had once been cheese, it had ployed these images to train a computer al- reacted with the exceptionally dry,salty 3,200 years old, it is the oldest solid gorithm to decide whether a pupa being and alkaline environment to turn the fats cheese to have ever been discovered. scanned is male, female or unidentifiable. it had contained into soap. But that is not the only thing that was Itcan also tell dead pupae from living ones. As he reports in Analytical Chemistry found. Hiding amid all the biochemical That done, it is a simple matterto automati- this week, Dr Greco and his colleagues remnants were peptides that belonged to cally sort the living male pupae from the dissolved samples in acid to liberate any Brucella melitensis, the bacterium respon- rest, with a machine using puffs of air or proteins and then analysed these using sible for causing brucellosis, which jets of water to blow the unwanted pupae mass spectrometry. This revealed the causes a fever that nowadays is treated away. Thusisolated, the male fliescan be ir- presence ofmore than 90 proteins that with antibiotics. Brucellosis is spread radiated and shipped offforrelease. had unquestionably come from animals. through the consumption ofinfected This should simplify the production of Further study showed these proteins dairy products that have not been pas- sterile males forprojects such as the one in closely resembled those produced in teurised. Archaeologists have long sus- Senegal. It might work on other species, goat, sheep, cow and water-buffalo milk. pected that brucellosis was rampant in too. If sex-sorting by machine learning Dr Greco suggests that the cheese was ancient Egypt; the bacterium in the could be applied to insects like mosqui- made from a mixture ofseveral milks. At cheese seems to prove the case. toes, illnesses such as malaria and dengue might also come under tighter control. 7 Books and arts The Economist August 25th 2018 63

Also in this section 64 Russian meddling, the prequel 65 Trieste, city of stories 65 The mini-gangsters of Naples 66 Johnson: Lumpers v splitters

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Identity and respect ones, because theyso often begin byclaim- ing that a group has been done down. To Find out what it means to me demand justice for one marginalised group is often to overlook the higher goals of equality and respect for all. Besides, right-wingers have learned to play the grievance game just as well as left-wingers, leading to an endless cycle of claim and self-righteous counter-claim. Two books explore the deep roots ofthe politics ofgrievance in the West Hischiefcure forthisdisease of identity NE of the most remarkable recent de- politics is the nation. Though left-wingers velopments in Anglo-American poli- Identity: The Demand for Dignity and may deride national identities, and right- O By Francis tics is the reification of the white working the Politics of Resentment. wingers twist them to racist ends, they are Fukuyama. Farrar, Straus and Giroux; 240 class. Google Trends, a website that tracks the best hope for unifying people and giv- pages; $26. To be published in Britain by how often particular words or phrases are ing them a broad sense of purpose. Mr Fu- Profile Books in October; £16.99 typed into the search engine, shows a huge kuyama favours national identities based spike in interest in that group when Do- on creed, like the American one, rather nald Trump won the presidential election The Lies That Bind: Rethinking Identity. than identities based on race or heritage. By Kwame Anthony Appiah. Liveright; 256 in 2016. Interest has never quite subsided He is keen on national service and suspi- pages; $27.95. Profile Books; £14.99 since. What is more, the white working cious of dual citizenship. Still, he does not class has gone from being mostly ignored seem entirely confident that countries can to being assumed to have a consistent set inner lives and their behaviour, the former steer away from a politics of resentment ofviews, even a political agenda. being more important. By the 18th century that has been many years in the making. Many of the books published after Brit- European and American thinkers had add- ain’s vote to leave the European Union and ed the idea that everyone not merely want- The ladder and the mountain Mr Trump’s election tried to explain why ed but deserved to be treated with dignity. Kwame Anthony Appiah shares some this group in particular had turned on the These ideas have since been stirred togeth- things with Mr Fukuyama. He lives in a lib- political establishment. For example, “Us er and spiced with resentment. eral coastal city of America. He, too, dis- vs Them” by Ian Bremmer and “WTF” by What has happened recently, Mr Fu- likes both right-wing populist nationalism Robert Peston found the answer in the tra- kuyama argues, is that many people have and identity politics at both ends of the vails offormerindustrial towns and the ar- concluded that society does not adequate- spectrum. He also suspectsthatthe present rogance and selfishness of elites. Now ly value their inner worth. That is society’s political turmoil in countries such as Brit- come two more reflective takes. “Identity” fault, not their own. So the world must ain and America is rooted in long-develop- and “The Lies That Bind” suggest that West- change and grant them more respect. Mr ing habits of mind. But whereas Mr Fu- ern countries not only have deep eco- Fukuyama spies this craving in many kuyama drives to the heart ofthe problem, nomic and social problems, but philo- groups, from the working-class whites Mr Appiah rises above it. sophical ones too. People are looking at who are drawn to populism in Europe and “The Lies That Bind” ranges even more themselves and others in the wrong ways. America to the Arabs who rebelled against widely in time and space than “Identity”, Francis Fukuyama’s account begins in their rulers in 2010. The women who and has fewer signposts for the reader. the distant past. Ancient Greek philoso- launched the #MeToo movement are im- Among other things, it takes in the Epistles phers conceived ofpeople (or, at least, priv- pelled by a similar desire for respect; so of St Paul, medieval Arab philosophy, 18th- ileged people) as having a longing for rec- even are Islamists. century English novels, Michael Young’s ognition and respect, which they called Some ofthese movements are more ad- book“The Rise ofthe Meritocracy” and Mr “thymos”. In the 16th century Martin Lu- mirable than others, Mr Fukuyama finds. Appiah’s upbringing in Ghana. It quotes ther drew a distinction between people’s But he is troubled by even the worthiest from the Bible (ashe putsit) “more orlessat1 64 Books and arts The Economist August 25th 2018

2 random”. Several pages are devoted to an noviev affair was long remembered as African, Anton Wilhelm Amo Afer, who proof that British lefties were in league was plucked from his home in 1707, aged with sinister foreigners; on the left it was five, and sent to Europe. After a top-notch recalled as a dirty trick by the establish- education, he became a philosopher. ment that strangled Britain’s first, mild ex- The point of this entertaining, mean- periment with socialism. deringjourney is that identities are less sol- In her effortto settle the matter, Ms Ben- id than is frequently thought. Religions nett and one ofthe FCO’s top Russia hands change constantly, rethinking old tradi- went to Moscow, where they were re- tions and incorporating new doctrines. ceived by senior archivists and presented Many widespread ideas about race derive with sensitive material in apparent good from 19th-century distinctions between faith. She concluded that the Zinoviev let- negroes, caucasians and orientals, which ter—an English “translation” for which no have been discredited by science (Amo original ever emerged—was probably a Aferis interesting because he was born be- forgery cooked up by anti-Bolshevik Rus- fore those racial categories had hardened). sians and then passed to the British intelli- Social class is less like a ladder than a gence service. To be precise, the English mountain, with many routes to the top. text was sent by the service’s outpost in Nobody has a single identity, Mr Ap- Latvia, where anti-Bolshevikagitation was piah adds, being only middle-class, only a seething, and received at intelligence head- woman, only British or only white. All of quarters in London on October 9th 1924. It our identities are refracted through our reflected a penchant for forgery that was other ones. Nor do people’s identities truly widespread in the revolutionary era. dictate their thoughts or behaviour. “In Dirty tricks and conspiracy theories British bigwigs, including some intelli- general”, he writes, “there isn’t some inner gence officers, put the document to oppor- essence that explains why people of a cer- The hand of tunistic use; some of those who made po- tain social identity are the way they are.” litical capital out ofit probably knew it was Identities are not inherited like genes. Moscow dodgy. In Ms Bennett’s view, the original Rather, they are worn and styled, like hair. idea of concocting the letter is unlikely to It is not clear what Mr Appiah would have come from anyone in London— change, if he had power—though, like Mr though British spooks in Riga may well The Zinoviev Letter: The Conspiracy That Fukuyama, he is keen on national identi- have been freelancing in collaboration Never Dies. By Gill Bennett. Oxford ties built on creeds. His book implies that with their White Russian associates. University Press; 368 pages; £25. To be people should study history more, and be She considers the possibility that the published in America in November; $34.95 more careful when lumping themselves letter really did originate in the Soviet lead- and others into groups. Both are splendid MID surging tension between Russia ership, and that it reflected some arcane ideas, though they resemble pea-shooters Aand the West, the balance of power in power struggle in Moscow. But she is satis- against the bombast of Donald Trump, a leading democracy is suddenly tilted by fied that the senior Reds were genuinely Hungary’s Viktor Orban and their ilk. an allegation of subterfuge dreamed up in bewildered when they received a formal What if populist nationalism and the va- Moscow. While the Russians deny all British protest over the matter. rious kinds of identity politics appeal to wrongdoing, interested parties on the people not despite their gross simplifica- Western side squabble furiously. They ar- The enemy within tions and errors, but because ofthem? gue over whether any interference really Still, despite the furore it caused, the letter There is another way of thinking about occurred, and if so at whose ultimate be- was probably not a decisive factor in Brit- Brexit, Trumpism and other political con- hest and forwhose benefit. ain’selection. The Labourvote held up fair- vulsions, which does not fill a book. It is to If all that sounds familiar, it also de- ly well; it was the collapse in the Liberal remember that history does not travel in a scribes events in 1924, when British politics share that enabled Stanley Baldwin’s Con- straight line. Nations can become divided; was upended by the publication of a letter servatives to take power. But the Anglo-So- groups of people can grow resentful; dem- seemingly dispatched by the Soviet elite. viet trade pact which Labour had negotiat- agogues can gain power; ruinous political On October25th ofthat yearthe Daily Mail ed was a genuine casualty: dropping it was decisions can be made. But the reverse can published a missive apparently sent by one of the first acts of the incoming Tory happen, too, when conditions are right Grigory Zinoviev (pictured), head ofthe in- administration. So ifthe letter was authen- and a talented politician appears. Just look ternational Marxist movement known as tic, it was a colossal Soviet own goal. at France. Liberal democrats who fear that the Comintern, to his British comrades. It Though she does not draw them her- populism is on the march, and their ideals anticipated the “revolutionising” of the self, many readers will inevitably look for will never again prevail, should recall that British proletariat, assisted by a new An- parallels between Ms Bennett’s narrative the opposite was once common wisdom. glo-Soviet trade accord. In an election four and the allegations of collusion between As it happens, that was partly thanks to days later Britain’s first socialist govern- Vladimir Putin and Donald Trump. The Mr Fukuyama. He is best-known for argu- ment fell. similarity is limited: the Zinoviev letter ing, in “The End of History and the Last In her vivid account of her bid to ascer- was a forgery, whereas it is widely accept- Man”, published in 1992, that the world tain the real origins of the Zinoviev epistle, ed that the Russians did meddle in Ameri- was heading towards liberal democracy. Gill Bennett, formerlychiefhistorian ofthe ca’selection (the bigoutstandingquestions China’s rise and democratic backsliding in British Foreign Office (FCO), provides are about how farthe Trump campaign co- Russia and elsewhere scotched that hope. many fascinating new details of this tan- operated, and how much difference the The episode does not show that Mr Fu- gled episode. In 1998 she was assigned by meddling made). If the Zinoviev farrago kuyama was foolish, just that the future is Robin Cook, then foreign secretary in a La- has modern lessons, they instead concern hard to predict. It is devoutly to be wished bour government, to investigate thorough- the way ordinary citizens react to the spec- that he will also be proved wrong about ly a matter which had left a trail of rancour tre of external machination in their poli- the ascent ofintolerant identity politics. 7 and grievance. On the political right, the Zi- tics. Once conspiracy theories take hold, 1 The Economist August 25th 2018 Books and arts 65

2 this case study suggests, they can influence author with Viennese ancestry—has camp. The “easy inter-racial jumble” ofthe the political climate for generations. joined this chorus of Trieste-smitten mav- Habsburg era (as Ms Morris puts it) faded. People find it impossible to assess such ericks with her debut novel, “A Perfect A brief phase of Yugoslav command in accusations in good faith; they excuse their Mother”. Shadowed by its past, this be- 1945 included massacres that are still dis- own side, and are easily persuaded that calmed former melting pot, with its “med- puted. Sizeable Slavic minorities continue their opponents are not just misguided but ley of histories”, begins and ends a story to live in the area. treacherous. That undermines the bedrock that subtly links the legacies of collective No single narrative can account for this trust required for democracy to function. and individual trauma. Ms Skala’s protago- past. Still, a century after the Audace Another malign effect is that conspiracy nist is Jacob, a divorcing, middle-aged jour- docked, the ideal of a free and open Trieste theories can obviate self-examination. nalist from London. He goes in search of a remains seductive. “Citizens of nowhere, Some British historians maintain that Viennese Jewish great-grandfather who unite!” Ms Morris exhorts. “Join me in the Labour Party neglected to study its vanished in the Trieste ofthe 1930s. Trieste, your capital.” As Ms Skala’s novel own mistakes because it thought dark While seeking to “excavate the wounds shrewdly shows, reality does not always forces, in the domestic establishment or of his ancestors”, Jacob meets and begins match the ideal. These days the Trieste re- beyond, had thwarted its chances in 1924. to love an alluring, troubled Englishwom- gion votes heavily for Italy’s anti-migrant That is another warning for Americans an, Charlotte. The half-buried tragedies of Northern League. Yet at a time when politi- and others to ponder. Public life suffers if her own life—an abusive childhood, a cians pour scorn on “citizens of nowhere”, the idea takes hold that wicked Russians baby lost to a cot death—are counterpoints the dreamy enclave that Joyce dubbed “Eu- (and their accomplices) are responsible for to Trieste’s city-scale combination ofglam- ropiccola”—a miniature Europe—still casts beaten politicians’ failings. 7 our and horror. Individuals, like their a melancholy spell. 7 homelands, bear imperfectly hidden scars from “the vicissitudes of power and dislo- The literature of Trieste cation”. Cities, even handsome, cultured A novel of the mafia ones, “like families, like nations, like lovers Tales of the city are never only solid surfaces”. Secrets, and The children of stories, always lie beneath. Ms Skala con- veys the shadowed charm of these story- Gomorrah haunted stones. Her Trieste is never an ab- straction, but it becomes a potent meta- phor for the mask of beauty that violence A Perfect Mother. By Katri Skala. Hikari The Piranhas: The Boy Bosses of Naples. By may wear. Press; 224 pages; £15 Roberto Saviano. Translated by Antony In her book about the place she has Shugaar. Farrar, Straus and Giroux; 368 N NOVEMBER 3rd 1918 the Audace,a cherished since a first visit in 1946, Jan Mor- pages; $27. Picador; £14.99 Owarship, moored in the harbour of ris, an illustrious travel writer, calls Trieste Trieste. It came to claim the cosmopolitan the “natural capital” of “the nation of no- HE weeks before the feast of the As- free port of the dying Austro-Hungarian where”; a haven for the wandering spirit. Tsumption of the Virgin on August 15th Empire for Italy. The fabled city, which sits “Ethnically ambivalent, historically con- are shakedown time in Naples: one of on the Adriatic coast east of Venice and be- fused”, the hybrid city had passed from three moments in the year when traders side the border with Slovenia, has long at- Austrian into Italian hands, fallen under can expect their neighbourhood mobsters tracted artists as well as conquerors. From German, Yugoslav and joint Allied control, to collect protection money. Earlier this their grandiose harbour-front HQs, ship- then reverted in 1954 to Italy. Many of its month, fourarmed gangsters walked into a ping and insurance firms once linked the Jews perished in the Holocaust: the San shop in the suburb of Monterusciello and empire to the world; generationsofliterary Sabba rice mill became Italy’s sole death demanded €5,000 ($5,800). When caught exiles and nomads have flowed in, and by police, the youngest turned out to be made Trieste their own. aged 14; the oldest was19. James Joyce, who taught English in That is the grim reality behind the first Trieste before the first world war, finished novel by Roberto Saviano—author of “Go- “A Portrait of the Artist as a Young Man” morrah”, a bestselling exposé of the Ca- there, and wrote “Dubliners” and parts of morra, the Neapolitan mafia network. “Ulysses”. His friend and pupil Italo “The Piranhas” recounts the misadven- Svevo—the Jewish director of a family tures of a fictional “baby gang”, a bunch of painting business, whose real name was unpleasant louts captained by one Nicolas Ettore Schmitz—set his rueful comic classic Fiorillo, alias Maraja. Like most of its real- “Zeno’s Conscience” in the tolerant, bour- life counterparts, the gang operates under geoishome cityhe adored. On nearbycliffs the auspices of the Camorra—a branch of in 1912, while staying with his aristocratic which has sentenced Mr Saviano to death. patron at Duino Castle, the visionary poet The author knows that readers of gang- Rainer Maria Rilke heard a voice that ster novels like to be shocked and disori- asked: “Who, if I cried, would hear me ented. A “city like Naples, or Mumbai, or among the angelic/Orders?” Kinshasa”, as he sardonically puts it, is ide- Thuswere born Rilke’s“Duino Elegies”, al for the purpose. In Mr Saviano’s Naples, which changed the course of European not even the playgrounds are safe. The verse. The great Italian poet Umberto Saba youngest member of the gang arranges for lived, wrote and ran a bookshop in the city. some Roma children to raid one: “taking Dasa Drndic, an outstandingCroatian nov- the littlest kids off the rides and the see- elist who died earlier this year, explored its saws, shoving other kids so they fell on darkest wartime chapters in her master- their faces, frightening them and making piece, “Trieste”. them cry”. He and some accomplices shoo Now Katri Skala—a British-American Written on the water out the Romas—before demanding five eu-1 66 Books and arts The Economist August 25th 2018

2 ros a head from the mothers to ensure that ruthless boss. He introduces a university The book’s biggest failing, however, is they do not return. graduate who remains wedded to the mo- that, like the TV series inspired by “Gomor- To begin with, Mr Saviano strains to be res of the Camorra because of her family’s rah”, it implies the Camorra runs Naples literary. But as he relaxes, his prose im- involvement: “you can’t exactly claw the undisturbed. The police seldom feature, proves. This is how he describes the two blood out ofyour veins, can you?” and when they do it is as victims or worse: youngest boys in the playground sting: Still, for all its insiderish details, “The Pi- some are too busy listening to a football ranhas” has flaws. The other members of match to notice, or perhaps care, that a No grown-up, since the day they were born, the gang are ciphers, distinguishable only hoodlum has brushed a stroller with his had judged any truth, fact or behaviour un- by their physical characteristics and lurid speeding scooter, sending it careering into suitable for their ears. In Naples there are no paths to growing up: you’re born straight nicknames, like Lollipop and Drone. With a wall and leavingthe child inside sobbing. into reality, into the thickofit, you don’t get a the possible exception of Nicolas’s up- This is doubly unjust. The reason “baby chance to discover it a little at a time. standing parents, there is not a single char- gangs” appeared was to fill a vacuum left acter with whom readers can sympathise. by the arrest of so many older mobsters. Mr Saviano skilfully depicts Nicolas’s Instead they wind up identifying with the And ifit were not for24-hour police protec- transformation from surly adolescent into amoral (ifnot psychopathic) anti-hero. tion, Mr Saviano might well be dead. 7 Johnson Nationalism of small differences

Classifying languages is as much about politics as it is about linguistics ROSS the boundaries of the former who focus on the differences. A lumper C Yugoslavia and you face a few has- would say that Macedonian is really Bul- sles. Heading from the mountains of Slo- garian. (Many such lumpers can be found venia to the beaches of Croatia you en- in Bulgaria.) Macedonian splitters angrily counter the Schengen border, which retort that this is an attempt to obliterate separates the European Union’s passport- their identity. free area from those EU countries which Lumper-splitter controversies can be are not members of it; in holiday season found around the world. Swedes, Danes this can mean an hour-long queue on the and Norwegians can understand each motorway. Cross from Croatia into Serbia other pretty well too, but few say that or Bosnia-Herzegovina, and you leave the theysimplyspeak“Scandinavian”. Mean- EU entirely; here you find customs checks while Swiss-German dialects and even as well as passport controls. In each new many dialects within Germany are more country you have to change your money. different from High German than Slove- The one thing you might not even no- nian is from Croatian. The same could be tice is a difference in language. In Slove- said of Italian’s many local varieties. But nia, the tourist might pick up dobrodosli, most ofthese lackany official status. dober dan and hvala, “welcome”, “hello” While lines on the map are influential, and “thank you”. In Croatia, these are do- other loyalties play a role too. Lumpers brodosli, dobar dan and hvala. Not every- once recognised a language called Hindu- thing is the same, by any means: prosim stani; its disparate speakers have no trou- for “please” becomes molim. But Cro- ble conversing. But a splitter would point atians and Slovenes can largely under- atian, Serbian, Bosnian and Montenegrin. to the two different writing systems of stand each other’s languages. This being Croats, in particular, started trying to puri- Hindi and Urdu, as well as communal the case, whyare theyconsidered two dis- fy their version of “foreign” borrowings, preferences—Muslims speak Urdu; Hin- tinct languages at all? coining new words to replace them. Last dus, Hindi—and say they are two lan- Yugoslavia was cobbled together from yearliberal intellectualsgathered in Saraje- guages. Urduisa language ofIndia aswell territories mostly populated with speak- vo to affirm that Serbs, Croats, Montene- as Pakistan; the boundary is less territori- ers of southern Slavic tongues. It was grins and Bosniaks speak a single “poly- al than religious, with the writing system dominated by a language called, at the centric” language like English (with its a visible marker (Urdu’s Arabic script con- time, Serbo-Croatian. Serbians wrote it standard British, American and other vari- nects it to Islam, Hindi’s Devanagari links with the Cyrillic alphabet, and Croats, eties). Nationalists howled. to Sanskrit and Hinduism). Muslims and Montenegrins preferred the Max Weinreich, a linguist, made fam- In other words, the messy facts of the Latin one. But a few minordialectal differ- ous the wry remarkthat “a language is a di- real world complicate the simple narra- ences aside, they all clearly spoke the alect with an army and a navy.” The usual tives some see as necessary forcommuni- same language, its varieties closer even criterion for what is a separate language, ty-building. Nationalists don’t like to talk than Slovenian and Croatian are. Mac- and not a mere dialect, is that speakers of aboutthe awful thingstheirforebears did. edonians spoke another closely related two languages should find it difficult orim- They tend to assume that their country’s language; a minority also spoke Albani- possible to understand each other. But fac- most expansive borders are the natural an, a non-Slavic language. tors that have nothing to do with language ones—though these inevitably overlap But when Yugoslavia broke up and the often supersede the linguistic ones. with their neighbours’ border claims. republics went to war, not only the state Those who try to tally up the world’s Languages are no different. A phrase be- but the language of Serbo-Croatian was languages are either “lumpers”, who loved of some journalists is even truer of dismantled. Nationalists in the successor would treat mutually comprehensible ton- nationalists: never let the facts get in the republics insist today that they speak Cro- gues as single languages, and “splitters”, way ofa good story. Courses 67

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The Economist August 25th 2018 68 Economic and financial indicators The Economist August 25th 2018

Economic data % change on year ago Budget Interest Industrial Current-account balance balance rates, % Gross domestic product production Consumer prices Unemployment latest 12 % of GDP % of GDP 10-year gov't Currency units, per $ latest qtr* 2018† latest latest 2018† rate, % months, $bn 2018† 2018† bonds, latest Aug 22nd year ago United States +2.8 Q2 +4.1 +2.9 +4.2 Jul +2.9 Jul +2.4 3.9 Jul -465.5 Q1 -2.7 -4.6 2.83 - - China +6.7 Q2 +7.4 +6.6 +6.0 Jul +2.1 Jul +2.1 3.8 Q2§ +68.3 Q2 +0.6 -3.7 3.48§§ 6.85 6.66 Japan +1.0 Q2 +1.9 +1.2 -0.9 Jun +0.7 Jun +1.0 2.4 Jun +201.8 Jun +3.7 -3.8 0.07 110 109 Britain +1.3 Q2 +1.5 +1.3 +1.2 Jun +2.5 Jul +2.4 4.0 May†† -106.3 Q1 -3.5 -1.8 1.33 0.77 0.78 Canada +2.3 Q1 +1.3 +2.3 +3.8 May +3.0 Jul +2.2 5.8 Jul -53.8 Q1 -2.6 -2.3 2.26 1.30 1.25 Euro area +2.2 Q2 +1.5 +2.1 +2.5 Jun +2.1 Jul +1.7 8.3 Jun +476.8 Jun +3.4 -0.7 0.34 0.86 0.85 Austria +3.4 Q1 +9.7 +2.9 +6.2 May +2.1 Jul +2.2 4.7 Jun +9.5 Q1 +2.3 -0.4 0.57 0.86 0.85 Belgium +1.3 Q2 +1.2 +1.6 +2.9 May +2.2 Jul +2.0 6.0 Jun +0.2 Mar nil -1.1 0.72 0.86 0.85 France +1.7 Q2 +0.6 +1.8 +1.7 Jun +2.3 Jul +1.9 9.2 Jun -10.2 Jun -0.6 -2.4 0.66 0.86 0.85 Germany +1.9 Q2 +1.8 +2.1 +2.5 Jun +2.0 Jul +1.8 3.4 Jun‡ +323.5 Jun +7.8 +1.3 0.34 0.86 0.85 Greece +2.3 Q1 +3.1 +2.0 +1.2 Jun +0.9 Jul +0.7 19.5 May -2.6 Jun -1.3 -0.3 4.22 0.86 0.85 Italy +1.1 Q2 +0.7 +1.2 +1.7 Jun +1.5 Jul +1.3 10.9 Jun +57.3 Jun +2.6 -2.0 3.06 0.86 0.85 Netherlands +2.9 Q2 +2.8 +2.7 +3.5 Jun +2.1 Jul +1.6 4.7 Jul +91.3 Q1 +9.6 +1.3 0.44 0.86 0.85 Spain +2.7 Q2 +2.3 +2.7 -2.0 Jun +2.2 Jul +1.7 15.2 Jun +20.7 May +1.4 -2.7 1.27 0.86 0.85 Czech Republic +3.4 Q1 +2.0 +3.5 +3.4 Jun +2.3 Jul +2.2 2.4 Jun‡ +0.9 Q1 +0.5 +0.9 2.17 22.2 22.2 Denmark -1.4 Q1 +1.2 +1.6 -1.8 Jun +1.1 Jul +1.0 3.9 Jun +19.5 Jun +7.4 -0.7 0.32 6.43 6.32 Norway +0.3 Q1 +2.5 +1.9 +0.6 Jun +3.0 Jul +2.3 3.8 May‡‡ +22.8 Q1 +7.4 +5.4 1.71 8.35 7.91 Poland +5.2 Q1 +3.6 +4.4 +10.3 Jul +2.0 Jul +1.8 5.9 Jul§ -0.1 Jun -0.4 -2.2 3.18 3.69 3.64 Russia +1.8 Q2 na +1.7 +3.8 Jul +2.5 Jul +3.0 4.7 Jul§ +64.6 Q2 +4.0 +0.3 8.71 67.8 59.0 Sweden +3.3 Q2 +4.2 +2.8 +5.4 Jun +2.1 Jul +1.9 7.2 Jun§ +16.8 Q1 +3.3 +1.1 0.49 9.07 8.11 Switzerland +2.2 Q1 +2.3 +2.2 +9.0 Q1 +1.2 Jul +0.8 2.6 Jul +72.9 Q1 +8.9 +0.8 -0.06 0.98 0.97 Turkey +7.4 Q1 na +4.3 +2.9 Jun +15.8 Jul +12.8 9.7 May§ -57.4 Jun -5.9 -2.8 21.98 6.04 3.50 Australia +3.1 Q1 +4.2 +2.9 +4.3 Q1 +2.1 Q2 +2.2 5.3 Jul -36.8 Q1 -2.5 -1.0 2.54 1.36 1.26 Hong Kong +3.5 Q2 -0.9 +3.4 +1.0 Q1 +2.4 Jul +2.1 2.8 Jul‡‡ +14.3 Q1 +3.9 +1.9 2.18 7.85 7.83 India +7.7 Q1 +10.1 +7.2 +7.0 Jun +4.2 Jul +4.6 5.6 Jul -48.7 Q1 -2.4 -3.6 7.83 69.8 64.1 Indonesia +5.3 Q2 na +5.3 +1.0 Jun +3.2 Jul +3.5 5.1 Q1§ -24.2 Q2 -2.4 -2.6 7.77 14,580 13,343 Malaysia +4.5 Q2 na +5.7 +1.1 Jun +0.8 Jun +0.8 3.4 Jun§ +11.2 Q2 +2.9 -3.3 4.04 4.10 4.28 Pakistan +5.4 2018** na +5.4 +0.6 Jun +5.8 Jul +5.3 5.9 2015 -18.1 Q2 -5.8 -5.4 10.00††† 124 105 Philippines +6.0 Q2 +5.3 +6.6 +17.9 Jun +5.7 Jul +5.0 5.5 Q2§ -1.9 Mar -1.3 -2.8 6.43 53.4 51.3 Singapore +3.9 Q2 +0.6 +3.2 +7.4 Jun +0.6 Jun +0.6 2.1 Q2 +64.6 Q2 +17.2 -0.7 2.40 1.37 1.36 South Korea +2.9 Q2 +2.8 +2.8 -0.4 Jun +1.5 Jul +1.7 3.7 Jul§ +72.5 Jun +4.8 +1.0 2.40 1,119 1,134 Taiwan +3.3 Q2 +1.6 +2.6 +0.5 Jun +1.7 Jul +1.6 3.7 Jul +84.5 Q2 +13.4 -0.9 0.84 30.7 30.3 Thailand +4.6 Q2 +4.1 +4.0 +4.7 Jun +1.5 Jul +1.2 1.1 Jun§ +50.3 Q1 +9.4 -2.9 2.58 32.8 33.3 Argentina +3.6 Q1 +4.7 +1.3 -2.9 Jun +30.9 Jul +24.2 9.1 Q1§ -33.8 Q1 -4.7 -5.7 9.68 30.3 17.2 Brazil +1.2 Q1 +1.8 +1.6 +3.5 Jun +4.5 Jul +3.9 12.4 Jun§ -13.9 Jun -1.0 -7.0 9.47 4.09 3.15 Chile +5.3 Q2 +2.8 +3.7 +5.0 Jun +2.7 Jul +2.4 7.2 Jun§‡‡ -3.6 Q2 -1.6 -2.0 4.46 659 641 Colombia +2.5 Q2 +2.3 +2.7 +1.3 Jun +3.1 Jul +3.3 9.1 Jun§ -9.8 Q1 -2.8 -1.9 6.82 2,964 2,986 Mexico +2.7 Q2 -0.4 +2.2 +0.2 Jun +4.8 Jul +4.6 3.4 Jun -15.9 Q1 -1.7 -2.3 7.81 18.8 17.6 Peru +3.2 Q1 +5.6 +3.7 +10.5 May +1.6 Jul +1.4 6.6 May§ -2.9 Q1 -1.5 -3.1 na 3.28 3.24 Egypt +5.4 Q2 na +5.4 +3.8 May +13.5 Jul +16.1 9.9 Q2§ -7.7 Q1 -2.4 -9.6 na 17.9 17.7 Israel +3.8 Q2 +2.0 +3.9 +1.5 Jun +1.4 Jul +1.3 3.9 Jun +9.7 Q1 +2.2 -2.4 1.92 3.63 3.62 Saudi Arabia -0.9 2017 na +1.0 na +2.1 Jun +2.6 6.1 Q1 +19.9 Q1 +7.4 -3.3 na 3.75 3.75 South Africa +0.8 Q1 -2.2 +1.5 +1.3 Jun +5.1 Jul +4.8 27.2 Q2§ -12.2 Q1 -3.2 -3.6 8.95 14.3 13.2 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist poll or Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds. The Economist August 25th 2018 Economic and financial indicators 69

Markets % change on Household income Difference between growth in GDP per person and Dec 29th 2017 Growth in GDP is the most common mea- household income per person Index in local in $ one sure of economic performance. But Real terms, percentage points Household income, Aug 22nd week currency terms Q1 2010-Q1 2018 % change, United States (DJIA) 25,733.6 +2.3 +4.1 +4.1 household income can provide a better Q1 2010-Q1 2018 China (Shanghai Comp) 2,714.6 -0.3 -17.9 -22.6 picture of people’s material well-being. 8642024– + Japan (Nikkei 225) 22,362.6 +0.7 -1.8 +0.2 That is because some of the income that United States 15.6 Britain (FTSE 100) 7,574.2 +1.0 -1.5 -7.7 counts towards GDP goes to non-resi- Canada (S&P TSX) 16,347.3 +1.2 +0.9 -4.0 dents, firms and governments. Over the Canada 10.0 Euro area (FTSE Euro 100) 1,190.3 +1.7 -1.6 -7.3 GDP past eight years growth has outpaced OECD 11.1 Euro area (EURO STOXX 50) 3,420.2 +1.8 -2.4 -8.0 OECD Austria (ATX) 3,296.5 +0.3 -3.6 -9.2 that of household income in the , a Italy -3.8 Belgium (Bel 20) 3,800.1 +1.1 -4.5 -10.0 mostly rich-country club. The gap is big France (CAC 40) 5,420.6 +2.2 +2.0 -3.9 in Britain, where household incomes fell Germany 9.6 Germany (DAX)* 12,385.7 +1.8 -4.1 -9.7 in real terms at the start of the decade, Greece (Athex Comp) 719.5 -0.1 -10.3 -15.5 even as GDP expanded. In America growth France 1.2 Italy (FTSE/MIB) 20,699.7 -1.0 -5.3 -10.8 in household income per person has Euro area 2.1 Netherlands (AEX) 559.2 +1.2 +2.7 -3.3 outpaced GDP per person by 3.4 percent- Spain (IBEX 35) 9,580.2 +2.1 -4.6 -10.1 age points since the first quarter of 2010, Britain 2.5 Czech Republic (PX) 1,073.0 +0.4 -0.5 -7.3 in part because of low household taxes. Source: OECD Denmark (OMXCB) 934.1 +2.1 +0.8 -5.2 Hungary (BUX) 36,365.9 +1.5 -7.6 -17.0 Norway (OSEAX) 1,028.2 +2.8 +13.4 +9.4 Poland (WIG) 59,546.1 +0.7 -6.6 -15.4 Other markets The Economist commodity-price index Russia (RTS, $ terms) 1,065.3 +1.0 -7.7 -7.7 2005=100 % change on % change on Sweden (OMXS30) 1,643.5 +3.1 +4.2 -7.5 Dec 29th 2017 one one Switzerland (SMI) 9,048.2 +1.4 -3.6 -5.5 Index one in local in $ Aug 14th Aug 21st* month year Turkey (BIST) 90,185.9 -0.1 -21.8 -51.0 Aug 22nd week currency terms Dollar Index Australia (All Ord.) 6,373.8 -0.7 +3.3 -4.1 United States (S&P 500) 2,861.8 +1.5 +7.0 +7.0 All Items 141.0 140.3 -1.4 -2.6 Hong Kong (Hang Seng) 27,927.6 +2.2 -6.7 -7.0 United States (NAScomp) 7,889.1 +1.5 +14.3 +14.3 Food 145.4 143.9 -0.7 -1.5 India (BSE) 38,285.8 +1.1 +12.4 +2.7 China (Shenzhen Comp) 1,454.5 -1.8 -23.4 -27.8 Indonesia (IDX) 5,944.3 +2.2 -6.5 -13.1 Japan (Topix) 1,698.4 nil -6.6 -4.7 Industrials Malaysia (KLSE) 1,798.1 +0.7 +0.1 -1.3 Europe (FTSEurofirst 300) 1,502.3 +1.1 -1.8 -7.5 All 136.4 136.6 -2.1 -3.8 Pakistan (KSE) 42,425.1 -0.1 +4.8 -6.3 World, dev'd (MSCI) 2,156.0 +1.9 +2.5 +2.5 Nfa† 133.4 135.7 -1.1 +4.1 Singapore (STI) 3,199.9 -1.1 -6.0 -9.0 Emerging markets (MSCI) 1,050.6 +2.7 -9.3 -9.3 Metals 137.7 137.1 -2.5 -6.8 South Korea (KOSPI) 2,273.3 +0.6 -7.9 -12.6 World, all (MSCI) 518.4 +2.0 +1.1 +1.1 Sterling Index Taiwan (TWI) 10,804.2 +0.8 +1.5 -2.1 World bonds (Citigroup) 937.1 +1.1 -1.4 -1.4 All items 201.1 198.4 +0.8 -2.9 Thailand (SET) 1,698.3 +1.3 -3.2 -5.3 EMBI+ (JPMorgan) 786.3 +1.1 -6.0 -6.0 Argentina (MERV) 26,844.4 -0.6 -10.7 -43.9 Hedge funds (HFRX) 1,262.3§ +0.4 -1.0 -1.0 Euro Index Brazil (BVSP) 76,902.3 -0.2 +0.7 -14.9 Volatility, US (VIX) 12.3 +14.6 +11.0 (levels) All items 154.2 151.5 +0.2 -0.5 Chile (IGPA) 26,638.5 nil -4.8 -12.2 CDSs, Eur (iTRAXX)† 66.7 -6.8 +47.8 +39.2 Gold Colombia (IGBC) 12,161.9 +1.8 +6.0 +3.6 CDSs, N Am (CDX)† 59.8 -4.5 +21.7 +21.7 $ per oz 1,197.7 1,187.9 -3.2 -7.7 Mexico (IPC) 49,880.3 +2.7 +1.1 +2.5 Carbon trading (EU ETS) € 19.8 +10.0 +143.4 +129.3 West Texas Intermediate Peru (S&P/BVL)* 19,457.1 -0.4 -2.6 -5.0 Sources: IHS Markit; Thomson Reuters. *Total return index. $ per barrel 67.0 65.8 -3.9 +38.2 Egypt (EGX 30) 15,273.4 -0.5 +1.7 +0.8 †Credit-default-swap spreads, basis points. §Aug 21st. Israel (TA-125) 1,452.2 +3.5 +6.4 +0.2 Sources: Bloomberg; CME Group; Cotlook; Darmenn & Curl; FT; ICCO; Indicators for more countries and additional ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Saudi Arabia (Tadawul) 7,867.2 nil +8.9 +8.9 Ewart; Thomson Reuters; Urner Barry; WSJ. *Provisional South Africa (JSE AS) 58,126.0 +4.5 -2.3 -17.5 series, go to: Economist.com/indicators †Non-food agriculturals. 70 Obituary Aretha Franklin The Economist August 25th 2018

as well as gospel, passed through their house. Music opened her out, drew her into some other place, and it was she, not her father, who went off to New York to seek record contracts and who told would-be producers, frankly, “I want hits.”

Covering the bruises For a while she sang almost anything, but that didn’t work. She had to bear witness to what she had been through, including her mother leaving home when she was six, havingbabies by two different men be- fore she was 15, and at 19 marrying a slick pimp from Detroit, later her manager, who beat her up. Pain and fame grew together. The golden decade of hits, fostered by her move to Atlantic Records and Jerry Wexler in 1967, graced by her face on the cover of Time, was miserable at home. But soul mu- sic, asitalwayshad, letherturn both suffer- ing and sexual yearning into one freedom cry. Between sacred and secular she moved to and fro without effort. Her big- gest-selling album, “Amazing Grace” (1972) was recorded at a church service 14 years after her first album, “Songs of Faith”, when her father was her manager. On that A deeper love record, her young voice scraped on the high notes. In the interim her rough life had taught her smooth soaring. She was proud to be “The Queen of Soul”. Rivalsto hercrown were tartly taken down. Once she had sung a song she owned it, and that was that. Yet the last Aretha Franklin, soul singer, died on August16th, aged 76 thing she wanted, offstage, was stardom. T POINTS in her concerts, which en- me. After all, it don’t take too much high IQs. Young Aretha hid behind drinking and Athralled America for 50 years, Aretha Men in general didn’t begin to give her smoking; mature Aretha retreated to her Franklin would fling her arms out wide. what she wanted, just a little respect when kitchen to find comfortin banana pudding, Sometimes it was to shrug her strong you get home…R-E-S-P-E-C-T/Find out what wrapping her ballooning body in ever shoulders out of some satiny or feathery it means to me. This, her most famous song, more satiny and sparkly gowns. She did dress, or to throw away her long fur coat, wasn’t just about a put-down woman and crochet, and refused to fly. I’ve been in the like any diva (though she was the ultimate a do-wrong man; it became the anthem of storm too long. All she thought and felt was diva) who by the end of her career had every liberation movement because ofher on display on stage. No one needed to won 18 Grammys and sold 75m records. roof-raising style. It was her personal an- climb the wall she’d built around herself. Sometimes it was to embrace America, all them, too. She wished to be called “Ms Someone, though, could see through colours, as when she sang “Precious Lord” Franklin”, to be paid cash and to be spared that wall. He knew the things about her at Martin Luther King’s funeral, or gave her air-conditioning. All I’m askin’, honey. others only kept guessing at, such as the rapturous version of “My Country ’tis of Those wide arms also showed how her multiple causes ofher sadness. He saw the Thee” in a big-bow-statement hat at Barack whole body sang. When she accompanied bruises she covered up. When she teased Obama’s inauguration. Or possibly those herselfon the piano, big rampaging chords journalists that she didn’t understand arms just demonstrated how her voice, the picked up from Oscar Peterson and Art Ta- when they said her songs were raunchy, whispering or crying height of it and drop- tum, she sang with the stomach as well as she wasn’t lying. The delivery might sound jaw depth of it, seemed to pass any limit heart and head. As a child of ten she’d un- sexy, but they weren’t about a man. In her that people might imagine. derstood that, hiding her chronic shyness music she slipped into the zone, just as she Open arms suggested love, but more of- behind the instrument while she sang “Je- had when she began atNewBethel Baptist, ten Everywoman’s frustration, black or sus be a Fence Around Me” with the voice wobbling on her little chair. When she white. For every super-sharp man she day- of an angel, or a grown woman. That was sang You make me feel like/A natural wom- dreamed of, Turns me right on when I hear the age she decided to be a singer, when an, head arched proudly back, one hand him say/Hey baby let’s get away, there she saw the great gospeller Clara Ward cast patting her hair, she was singing to God, would be ten who let her down: You’re a away her hat as she performed in church. just as when she screamed out her passion no-good heartbreaker/You’re a liar and One gesture settled it; she would do the as a sinner cleansed by the blood of the you’re a cheat/And I don’t know why/I let same. Some said her father, the nationally Lamb: When my soul was in the lost and you do these things to me. They messed famous pastor of New Bethel Baptist found/You came along to claim it. And with her mind, as she fumed in the Blues Church in Detroit, forced her into it, but it when she threw out her arms wide under Brothers film in 1980, pummelling her wasn’t so. The musical world of the time, the spotlights, it was not to thank the fans palms into her big man’s stupid chest: Just Smokey Robinson, Mahalia Jackson, Lion- who clamoured for her as much as to say, think/Thinkaboutwhatyou’re tryin’ to do to el Hampton, Marvin Gaye, blues and jazz Precious Lord, take my hand. 7 Kindling for bright sparks.

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