How Clean Energy Will Remake Geopolitics DOWNLOAD CSS Notes, Books, Mcqs, Magazines

Home , Amapiano, Azonto, Gqom

The 90% economy, revisited African pop culture goes global In praise of citizens’ assemblies TikTok and the rise of Frankenfirms

SEPTEMBER 19TH–25TH 2020 21st century power How clean energy will remake geopolitics DOWNLOAD CSS Notes, Books, MCQs, Magazines

www.thecsspoint.com

 Download CSS Notes  Download CSS Books  Download CSS Magazines  Download CSS MCQs  Download CSS Past Papers

The CSS Point, Pakistan’s The Best Online FREE Web source for All CSS Aspirants.

Email: [email protected] BUY CSS / PMS / NTS & GENERAL KNOWLEDGE BOOKS ONLINE CASH ON DELIVERY ALL OVER PAKISTAN Visit Now: WWW.CSSBOOKS.NET For Oder & Inquiry Call/SMS/WhatsApp 0333 6042057 – 0726 540141

WWW.NOKRIWALA.NET CSS Solved Compulsory MCQs From 2000 to 2020 Latest & Updated

Order Now Call/SMS 03336042057 - 0726540141 Politics Among Nations: The Struggle for Power & Peace By Hans Morgenthau

We know our children’s future is being rewritten.What will change in years to come? We cannot say, norcan we be sure that traditional ideas will do for today anddo for tomorrow. Is sustainable investing the solution forthem?

For some of life’s questions, you’re not alone. Together we can find an answer.

ubs.com/lifegoals

As a firm providing wealth management services to clients, UBS Financial Services Inc. offers investment advisory services in its capacity as an SEC- registered investment adviser and brokerage services in its capacity as an SEC-registered broker-dealer. Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that clients understand the ways in which we conduct business, that they carefully read the agreements and disclosures that we provide to them about the products or services we offer. For more information, please review the PDF document at ubs.com/relationshipsummary. © UBS 2020. All rights reserved. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC. Contents The Economist September 19th 2020 3

The world this week United States 7 A summary of political 27 Donald Trump’s record: and business news Homeland Security 28 Historically black colleges Leaders 29 Escaping the virus 13 Energy geopolitics 30 Campaign finance Power in the 21st century 31 Abortion by pill 14 Inflation Off target 32 Lexington Global warming and the election 14 Protectionism Birth of the Frankenfirm The Americas 15 Deliberative democracy 33 Colombia’s police Amateurs to the rescue 34 The Republic of Barbados On the cover 16 Abortion Pills by post 35 Bello The return of the Efforts to rein in climate Monroe doctrine change will up-end the Letters geopolitics of power: leader, page 13. What it means to 18 On dementia, the Beatles, scientific management dominate the world of energy Asia is changing—to China’s 36 Japan’s new chief advantage: briefing, page 23. Briefing Tesla is no longer the only 23 Energy’s new world order 37 Afghan peace talks electric game in town, page 59. The changing nature of 38 A Singaporean surprise Climate change is about to domination 38 Koalition politics strike the corporate world. in Australia Firms must react fast, says Guy Special report: Business 38 Pacific plebiscites Scriven: special report, after and climate change page 44. Daniel Yergin’s new 40 Banyan Asia’s migrant The great disrupter workers survey of the world of energy, After page 44 page 81 41 China woos Bangladesh • The 90% economy, revisited 41 Tragedy and farce in India A recovery is taking shape—but it is extraordinarily uneven China across industries and countries, 42 The Wuhan showcase page 67 43 Enduring privilege • African pop culture goes 44 Chaguan Teaching the global The continent’s poor to thank the party entertainers are wowing audiences around the world, page 79 • In praise of citizens’ Middle East & Africa assemblies Why politicians 45 Ethiopia’s transition should take them seriously: 46 Politics v policy leader, page 15 and analysis, page 57 47 Uganda’s ruling party 47 Lifting bans on names Buttonwood Is the Big Mac index a good guide 48 Israel and the Arab world for currency speculators? We are working hard to Page 71 ensure that there is no disruption to print copies of The Economist as a result of the coronavirus. But if you have digital access as part of your subscription, then acti- vating it will ensure that you can always read the digital version of the newspaper as well as all of our daily jour- nalism. To do so, visit economist.com/activate 1 Contents continues overleaf 4 Contents The Economist September 19th 2020

Europe Finance & economics 49 Russia’s local elections 67 The 90% economy, 50 Spanish history revisited 50 Greece’s rusty navy 68 China’s bounceback 51 Germany recovers 69 Joe Biden’s trade policy 52 Charlemagne A plan 69 Women on Wall Street for asylum 70 What are green bonds for? 70 European stock exchanges Britain 71 Buttonwood The Big Mac 53 State aid after Brexit strategy 54 Earlier abortions 72 Free exchange Tech and 55 Bagehot Boris v the Tories the economy

Science & technology 75 Life on Venus? 77 Fires and biodiversity loss International 78 Underwater data-centres 57 The rise of citizens’ 78 Ranking cyber-power assemblies

Books & arts 79 African pop culture rises 80 “Cuties” and QAnon Business 81 The trouble with Wagner 59 The Teslaverse 81 Energy and politics 60 Electric controversies 82 Johnson New York 61 A less oily BP English 61 Arm’s dealers 62 Oracle’s Trump card Economic & ﬁnancial indicators 63 Bartleby De-frauding 84 Statistics on 42 economies ﬁrms 64 The database business Graphic detail 65 Schumpeter 85 Value investors are underperforming the markets Stakeholderism’s perils Obituary 86 Joan Feynman, tracker of auroras

Volume 436 Number 9212 Published since September 1843 Subscription service to take part in “a severe contest between For our full range of subscription offers, including The best way to contact our Customer Service Please intelligence, which presses forward, digital only or print and digital bundled, visit: team is via phone or live chat. You can contact us and an unworthy, timid ignorance Economist.com/offers on the below numbers; please check our website obstructing our progress.” for up to date opening hours. If you are experiencing problems when trying to Editorial offices in London and also: subscribe, please visit our Help pages at: PEFC certiﬁed Amsterdam, Beijing, Berlin, Brussels, Cairo, www.economist.com/help for troubleshooting North America: +1 800 456 6086 This copy of The Economist Chicago, Johannesburg, Madrid, Mexico City, advice. Latin America & Mexico: +1 636 449 5702 is printed on paper sourced Moscow, Mumbai, New Delhi, New York, Paris, from sustainably managed San Francisco, São Paulo, Seoul, Shanghai, forests certiﬁed to PEFC Singapore, Tokyo, Washington DC PEFC/29-31-58 www.pefc.org

© 2020 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 otherwise, without the prior permission of The Economist Newspaper Limited. The Economist (ISSN 0013-0613) is published every week, except for a year-end double issue, by The Economist Newspaper Limited, 750 3rd Avenue, 5th Floor New York, NY 10017. The Economist is a registered trademark of The Economist Newspaper Limited. Periodicals postage paid at New York, NY and additional mailing offices.Postmaster : Send address changes to The Economist, P.O. Box 46978, St. Louis, MO 63146-6978, USA. Canada Post publications mail (Canadian distribution) sales agreement no. 40012331. Return undeliverable Canadian addresses to The Economist, PO Box 7258 STN A, Toronto, ON M5W 1X9. GST R123236267. Printed by Quad/Graphics, Hartford, WI. 53027 ©Photograph: Laurent Ballesta/Gombessa Project www.blancpain-ocean-commitment.com HELP PROTECT THEOCEAN TRANSMIT OURPASSION, RAISE AWARENESS,

MANAMA · MADRID · MACAU · MOSCOW LONDON · VEGAS LAS · · LUMPUR KUALA · MUNICH KONG HONG GENEVA· · DUBAI · · BEIJING NEW YORK · PARIS · SEOUL · SHANGHAI · SINGAPORE · TAIPEI · TOKYO · ZURICH Fifty Fathoms COLLECTION

The world this week Politics The Economist September 19th 2020 7

well, denying the pro-Kremlin The killing of a taxi driver, United Russia party majorities Javier Ordóñez, by police in Coronavirus briefs in Novosibirsk and Tomsk. But Bogotá, Colombia’s capital, To 6am GMT September 17th 2020 the inroads Mr Navalny can triggered violent protests in Weekly confirmed cases by area, ’000 make are limited, not least several cities. Mr Ordóñez had 600 because he is still suffering been drinking alcohol on the Latin America India from the effects of Novichok street. At least 13 people died in US 400 poisoning last month. He is the protests and 400 were Other now breathing without a venti- injured, half of them police. 200 lator, and has vowed to return Europe to Russia from Germany where The government of Barbados 0 he is being treated. announced that it will become Suga Yoshihide became a republic. A “throne speech” AJJMAM S Japan’s 99th prime minister. Belarus’s embattled president, delivered by the governor- Confirmed deaths* He won the leadership of the Alexander Lukashenko, met general but written by the Per 100k Total This week Liberal Democratic Party with Vladimir Putin in the Russian prime minister, Mia Mottley, Peru 94 30,927 804 377 votes of a possible 535, resort of Sochi. He got the announced that the country Belgium 86 9,935 18 following Abe Shinzo’s promise of a €1.5bn ($1.78bn) will remove Queen Elizabeth II Spain 65 30,243 615 resignation due to ill health in loan, but what strings were as its head of state by Bolivia 64 7,478 332 August. Mr Suga, who served as attached was unclear. November next year. Brazil 63 134,106 5,567 Chile 63 12,058 356 Mr Abe’s chief cabinet secre- Ecuador 62 10,996 295 tary, has promised continuity. Boris Johnson reached a deal Toots Hibbert, widely regard- Britain 61 41,684 90 But his background and stated with rebels in his own party ed as the founding father of United States 59 196,146 5,825 priorities suggest a narrower over the internal-market bill, reggae music, died aged 77. He Italy 59 35,645 68 focus on the economy. which if passed would give the was the lead singer of Toots Sources: Johns Hopkins University CSSE; UN; British government the power and the Maytals. “Do the Reg- The Economist *Definitions differ by country Thailand became the first to break parts of its Brexit gay”, a song he wrote that was South-East Asian country to withdrawal treaty. Mr Johnson released in 1968, gave the genre Israel imposed a new lock- loosen tourism restrictions agreed to give mps the final say its name. down. It will overlap with introduced during the pan- over any changes to the agree- Jewish holidays, such as Rosh demic. Visitors who agree to a ment. As well as Conservative Coup leaders in Mali refused to Hashanah and Yom Kippur. An 14-day quarantine and a mini- mps, the bill was criticised by hand power to an interim ultra-Orthodox government mum stay will be allowed to Democrats in Washington, dc, civilian administration by a minister resigned in protest. enter. Malaysia’s prime min- putting a future trade deal with deadline of September 15th set ister, by contrast, said he America at risk. by ecowas, the west African India’s accumulated cases would tighten controls at regional bloc. ecowas had passed 5m, less than two weeks borders. Singapore will give all Democratic leaders rejected a previously said it would after they reached 4m. adult residents vouchers worth $1.5trn covid-19 relief plan put tighten sanctions if the S$100 ($73) to spend on local forward by a group of 50 bipar- deadline was not met. France jumped past 10,000 hotels and sights. tisan legislators. The proposal cases a day. Jean Castex, the is less ambitious than Paul Rusesabagina, a critic of prime minister, warned that European Union leaders held America’s last stimulus round, Rwanda’s government known there had been a “clear deterio- an online meeting with passed in May. Negotiations for saving more than 1,200 ration” of the situation. China’s president, Xi Jinping. between congressional people during the genocide in They urged Mr Xi to open Democrats and administration 1994, appeared in court in Boris Johnson’s government China’s markets and end re- officials over new stimulus are Kigali, the capital, on charges promised to speed up the pression in Xinjiang and Hong yet to bear fruit. of terrorism. Human Rights processing of covid-19 tests in Kong. Mr Xi rejected interfer- Watch said his arrest amount- England after it emerged there ence in China’s affairs. Wildfires devastated parts of ed to “enforced disappearance”, was a backlog of 185,000. America’s west coast. More a breach of international law, Police in Ningxia, in north- than 5m acres have burned since it was not done through AstraZeneca and the University west China, detained three across California, Oregon and lawful extradition. of Oxford resumed their clini- wildlife-conservation activists Washington state. This year is cal trial of a vaccine following for “picking quarrels and pro- already California’s most- Donald Trump hosted delega- a short postponement when a voking troubles”—charges destructive fire season to date. tions from Israel, Bahrain and volunteer fell ill. Eli Lilly, often levelled against prot- the United Arab Emirates at another pharmaceutical com- esters. One, Li Genshan, has The Atlantic Ocean was graced the White House to sign pany, said that an experi- been a prominent campaigner by five named tropical agreements that normalise mental drug it has produced against pollution in the cyclones, which has only relations between Israel and has an antiviral effect. Tengger, one of the country’s happened once before. Paulette the two Gulf states. According largest deserts. hit Bermuda on Monday and to Mr Trump the deals would Sally hit America as a hurri- “serve as the foundation for a For our latest coverage of the Regional and municipal elec- cane on Wednesday, bringing comprehensive peace across virus and its consequences tions were held in parts of floods to Alabama, Louisiana the entire region”. Palestinian please visit economist.com/ Russia. Candidates backed by and Florida. Teddy seems militants in Gaza fired rockets coronavirus or download the the country’s de facto opposi- headed for Newfoundland; at Israel shortly after the Economist app. tion leader, Alexei Navalny, did Rene and Vicky petered out. ceremony took place. 8 The world this week Business The Economist September 19th 2020

Bayer, a German chemicals The Trump administration to a company culture that is in firm, settled 15,000 lawsuits announced restrictions on serious need of a safety reset”, relating to Roundup, a weed- imports suspected of being the report said. killer alleged to cause cancer, made using forced labour in as part of an $11bn settlement. China’s Xinjiang region. Shares in Hennes & Mauritz Bayer has estimated it faces a Goods subject to sanctions surged by 11% on the day it total of 125,000 filed and un- include cotton and clothes; revealed better-than-expected filed claims over Roundup. Xinjiang accounts for the vast third-quarter results. The majority of the country’s cot- world’s second-largest fashion President Donald Trump ton production. China stands retailer, which has its head- threatened to “do something” accused of human-rights quarters in Sweden, said pro- about the World Trade Organi- abuses, such as interning an fits in the three months to the The Federal Reserve an- sation after it deemed that estimated1m ethnic Uighurs in end of August were around SKr nounced it will keep interest tariffs imposed by America on gulags, which it calls “re-edu- 2bn ($222m), more than ten rates pinned near zero. In a China in 2018 broke its rules. cation centres”. times higher than the average policy statement, the central The wto rejected America’s analyst forecast of just SKr bank also said it would keep argument that the measures 191m. them there until inflation is on were justified by Chinese Seattle, we have a problem track to “moderately exceed” business practices, such as the SoftBank, a Japanese tech its target of 2% “for some time”. theft of intellectual property, firm, agreed to sell Arm to Jay Powell, the chairman of the questioning whether the Chi- Nvidia, an American chipmak- Fed, commented that Ameri- nese products in question had er. The takeover values the ca’s economic recovery is really benefited from them. British chip designer, whose expected to slow and that the microprocessor blueprints are economy will require contin- Oracle confirmed that it is used in most of the world’s ued support from the central ByteDance’s preferred Ameri- smartphones, at up to $40bn. bank as well as from extra can partner for TikTok. The Four years ago SoftBank government spending. impending deal comes after Mr bought Arm for $32bn. Nvidia Trump insisted that TikTok’s has also promised to protect American retail-sales growth American arm be divested by jobs at Arm and keep its head- slowed to just 0.6% month-on- ByteDance, the Chinese owner The transportation committee quarters in Cambridge. month in August, a lower of the short-video platform, of America’s House of Repre- figure than what economists citing worries about national sentatives published a critical had forecast. The unexpected security. News reports suggest report into the failures that led Not such a snowflake softening in consumer de- the firms hope that a proposal to two Boeing 737 max jets The value of shares in Snow- mand followed the expiration for Tiktok’s global operations crashing in just five months, flake leapt by more than 110% of extra emergency jobless to become an American-based killing 346 people. Design on its first day on the New York benefits worth $600 a week at company, with Oracle taking errors, lax government over- Stock Exchange. The flotation the end of July. just a minority stake, will be sight of Boeing and a lack of of the fast-growing cloud- enough to satisfy the White transparency at the plane- computing firm is the world’s Worries that Britain is at risk House. maker and its regulators “point largest-ever software ipo. of deflation grew after the annual rate of inflation fell to 0.2% in August, down from1% the previous month. The effect of the government’s discount scheme for restaurants in August may have contributed up to 0.5 percentage points of the drop.

In the recovery ward In its quarterly economic forecast, following its most recent one in May, the Organi- sation for Economic Co-operation and Development revised up growth forecasts for most countries it tracks. The intergovernmental think-tank said public spending was needed to support the economic recovery from the covid-19 lockdowns into 2021, albeit in a more targeted way, and that tax increases should be delayed. Socially Responsible Investing Put new energy in your portfolio.

Do you want your investments to align with your values? Our Socially Responsible Personal Strategy® is a way for you to support and invest in companies that proactively manage ESG-related issues. Studies show that investing in higher-rated ESG companies could also lead to better portfolio returns over time.1 Ready to start? Talk to an advisor to build a personalized plan you can feel good about.2

Get started with our free tools or talk to an advisor today at: FREE FINANCIAL TOOLS AVAILABLEON WEB & MOBILE personalcapital.com/econ

1-"Corporate Sustainability: First Evidence on Materiality,” Harvard Business School, 2015, https://dash.harvard.edu 2-Advisory services are o ered for a fee by PCAC, a wholly owned subsidiary of Personal Capital Corporation, an Empower company. Personal Capital Advisors Corporation (“PCAC”) is a registered investment adviser with the Securities and Exchange Commission (“SEC”). SEC registration does not imply a certain level of skill or training. Investing involves risk. Past performance is not a guarantee nor indicative of future returns. The value of your investment will ﬂuctuate, and you may lose money. All charts, ﬁgures, and graphs are for illustrative purposes only and do not represent an actual client experience. Featured individuals are actors and not clients of PCAC. Personal Capital Corporation is a wholly owned subsidiary of Empower Holdings, LLC. © 2020 Personal Capital Corporation, an Empower Company. All rights reserved. Helping local businesses adapt to a new way of working

August 9, 10:00 AM

Join with Google Meet

Join us for an author-led reading! Dea and Marc Lavoie of Second Star to the Right Bookstore in Denver have always been passionate about reading. They love hosting weekly in-store events, but aft er Colorado’s stay-at- home order, they had to think of new ways of doing business. They quickly turned to Google Meet, hosting free virt ual storytimes for kids, giving Dea and Marc a new avenue for sharing their love of books—and a new way to be a community bookstore.

Find free resources for your small business at google.com/grow #ModernMBA

It’s Time for the Business School of the Future. Network Driven. Mobile First. Innovative Tuition Model. Educating the next generation of business leaders. Do you have what it takes? Apply now at quantic.edu

Selective Admission / Accredited / MBA and Executive MBA Leaders Leaders 13 Power in the 21st century

Efforts to rein in climate change will up-end the geopolitics of energy il fuelled the 20th century—its cars, its wars, its economy ersified, geographically and technologically. Petrostates will Oand its geopolitics. Now the world is in the midst of an ener- have to attempt to reform themselves and, as their governments gy shock that is speeding up the shift to a new order. As covid-19 start to depend on taxing their own citizens, some will become struck the global economy earlier this year, demand for oil more representative. Consuming countries, which once sought dropped by more than a fifth and prices collapsed. Since then energy security by meddling in the politics of the oil producers, there has been a jittery recovery, but a return to the old world is will instead look to sensible regulation of their own power in- unlikely. Fossil-fuel producers are being forced to confront their dustry. The 21st-century system should also be less economically vulnerabilities. ExxonMobil has been ejected from the Dow volatile. Electricity prices will be determined not by a few big ac- Jones Industrial Average, having been a member since 1928. Pet- tors but by competition and gradual efficiency gains. rostates such as Saudi Arabia need an oil price of $70-80 a barrel Yet even as a better energy system emerges, the threat of a to balance their budgets. Today it is scraping along at just $40. poorly managed transition looms. Two risks stand out. Autocrat- There have been oil slumps before, but this one is different. ic China could temporarily gain clout over the global power sys- As the public, governments and investors wake up to climate tem because of its dominance in making key components and change, the clean-energy industry is gaining momentum. Capi- developing new technologies. Today Chinese firms produce 72% tal markets have shifted: clean-power stocks are up by 45% this of the world’s solar modules, 69% of its lithium-ion batteries and year. With interest rates near zero, politicians are backing green- 45% of its wind turbines. They also control much of the refining infrastructure plans. America’s Democratic presidential con- of minerals critical to clean energy, such as cobalt and lithium. tender, Joe Biden, wants to spend $2trn decarbonising America’s Instead of a petrostate, the People’s Republic may become an economy. The European Union has earmarked 30% of its $880bn “electrostate”. In the past six months it has announced invest- covid-19 recovery plan for climate measures, and its president, ments in electric-car infrastructure and transmission, tested a Ursula von der Leyen, used her state-of-the-union address this nuclear plant in Pakistan and considered stockpiling cobalt. week to confirm that she wants the eu to cut greenhouse-gas China’s leverage depends on how fast other economies move emissions by 55% over 1990 levels in the next decade. (see briefing). Europe is home to giant developers of wind and The 21st-century energy system promises to solar farms—Orsted, Enel and Iberdrola are be better than the oil age—better for human building such projects around the world. Euro- health, more politically stable and less econom- pean firms are leading the race to cut their own ically volatile. The shift involves big risks. If dis- emissions, too. America’s trajectory has been af- orderly, it could add to political and economic fected by the rise of shale oil and gas, which has instability in petrostates and concentrate con- made it the world’s largest oil producer, and by trol of the green-supply chain in China. Even Republican resistance to decarbonisation mea- more dangerous, it could happen too slowly. sures. If America were to act on climate Today fossil fuels are the ultimate source of change—with, say, a carbon tax and new infra- 85% of energy. But this system is dirty. Energy accounts for two- structure—its capital markets, national energy laboratories and thirds of greenhouse-gas emissions; the pollution from burning universities would make it a formidable green power. fossil fuels kills over 4m people a year, mostly in the emerging The other big risk is the transition of petrostates, which ac- world’s mega-cities. Oil has also created political instability. For count for 8% of world gdp and nearly 900m citizens. As oil de- decades petrostates such as Venezuela and Saudi Arabia, with lit- mand dwindles, they will face a vicious fight for market share tle incentive to develop their economies, have been mired in the which will be won by the countries with the cheapest and clean- politics of handouts and cronyism. In an effort to ensure secure est crude. Even as they grapple with the growing urgency of eco- supplies, the world’s big powers have vied to influence these nomic and political reform, the public resources to pay for it may states, not least in the Middle East, where America has roughly dwindle. This year Saudi Arabia’s government revenue fell by 60,000 troops. Fossil fuels cause economic volatility, too. Oil 49% in the second quarter. A perilous few decades lie ahead. markets are buffeted by an erratic cartel. Concentration of the Faced with these dangers, the temptation will be to ease the world’s oil reserves makes supply vulnerable to geopolitical adjustment, by taking the transition more slowly. However, that shocks. Little wonder that the price has swung by over 30% in a would bring about a different, even more destabilising set of cli- sixth-month period 62 times since 1970. mate-related consequences. Instead, as our special report in this A picture of the new energy system is emerging. With bold ac- issue explains, the investments being contemplated fall drasti- tion, renewable electricity such as solar and wind power could cally short of what is needed to keep temperatures within 2°C of rise from 5% of supply today to 25% in 2035, and nearly 50% by pre-industrial levels, let alone the 1.5°C required to limit the en- 2050. Oil and coal use will drop, although cleaner natural gas will vironmental, economic and political turmoil of climate change. remain central. This architecture will ultimately bring huge For example, annual investment in wind and solar capacity benefits. Most important, decarbonising energy will avoid the needs to be about $750bn, triple recent levels. And if the shift to- chaos of unchecked climate change, including devastating wards fossil-fuel-free renewable energy accelerates, as it must, it droughts, famine, floods and mass dislocation. Once mature, it will cause even more geopolitical turbulence. The move to a new should be more politically stable, too, because supply will be div- energy order is vital, but it will be messy. 7 14 Leaders The Economist September 19th 2020

Inﬂation Oﬀ target

The ECB’s lack of credibility on inflation is pushing up the euro. It could harm Europe’s recovery t points in the past decade the European Central Bank (ecb) erages 2% over the long term. Awas the only institution standing between the euro zone and The ecb, by comparison, seems unperturbed. Instead of in- financial oblivion. Europe’s problem was budgetary inhibition jecting new stimulus last week, it held back. The problem is not a and insufficient risk-sharing. Monetary policymakers were the lack of means. It insists that it could cut interest rates below to- only game in town. No longer. Earlier this year the European Un- day’s level of -0.5%, offer funding to banks on looser terms or ex- ion agreed to issue joint debt to fund a fiscal response to the pan- pand its purchases of government debt. But it has done none of demic, sending confidence in the currency union surging. Now these things. After last week’s meeting Christine Lagarde, the the most pressing problem in euro-zone economic policy stems bank’s president, said that increased asset purchases had not from Frankfurt. It is that hardly anyone believes the ecb is seri- even been discussed. That pushed the euro up further, showing ous about hitting its inflation target of “below, but close to, 2%”. that the bank’s insouciance is adding to the currency’s strength Covid-19 continues to leave most of the world with a 90% and making expectations of low inflation self-fulfilling. Perhaps economy in which activity is depressed (see Finance section). Ms Lagarde, not for the first time, gave too hawkish an impres- Disinflation is the natural consequence. In August euro-zone sion. In a seemingly corrective blog post the next day, Philip prices fell for the first time in four years. But it is Lane, the bank’s chief economist, struck a more the job of policymakers to ensure that shocks do Dollars per euro doveish tone. The ecb will probably act in De- not become prolonged disinflationary slumps. 2020 cember. But it remains an institution that ap- 1.20 ecb’s The own forecasts, released after its mon- 1.15 pears to view inflation shortfalls as a minor an- etary-policy meeting on September 10th, show 1.10 noyance, not a test of its mettle. that it is failing. Inflation will rise over the next 1.05 Some would have it that the problem re- three years—but only to1.3%. Financial markets mains fiscal. Europe’s budgetary stimulus is expect it will stay around that level for most of SAJJMAMFJ smaller than America’s, and the ecb has already the next decade. Professional forecasters are played an enormous role in markets this year. only a little more optimistic. The latest force holding down But the view that looser purse strings are needed to “ease the bur- prices is a strong euro. The single currency has appreciated by den” on monetary policy is dangerous. If the practical effect of 5.4% against the dollar this year. budgetary loosening is to let the central bank take a breather, the A central bank that took its target seriously would fight tooth chances are that the exchange rate will appreciate, offsetting and nail to improve this outlook. Depressed inflation expecta- some or all of the stimulus. The monetary taps must stay fully tions are a dangerous malady. They keep real interest rates—that open for the extra fiscal stimulus to have the desired effect. That is, rates minus expected inflation—higher than they otherwise is what is happening in America. would be. This is a problem when, as today, nominal rates cannot There is nothing inherently wrong with a strong euro. Many fall much further. And central banking is a confidence game: the models, including our Big Mac index, suggest that it is warrant- more a target loses credibility, the harder it is to hit. So con- ed. But at present it partly reflects a suspicion that the ecb is will- cerned is America’s Federal Reserve about inflation expectations ing to live with a lower rate of inflation than its official target de- that it has promised to allow inflation to overshoot its target mands. That risks damaging both the central bank’s credibility temporarily to make up for shortfalls, ensuring that inflation av- and also the euro zone’s recovery. 7

Multinational business and protectionism Birth of the Frankenﬁrm

Corporate contortions at TikTok and Arm are an unfortunate sign of things to come n august 6th, when the White House told TikTok that it had America’s trade war. Far from being oddities, the two episodes O45 days to shut down or find an American buyer, there was a offer a preview of how the new age of nationalism will change risk that the Chinese-owned video app would disappear from the way multinational firms are run—for the worse. America, infuriating its 100m users there and destroying billions Both companies straddle geopolitical divides and are at the of dollars of investors’ wealth. Now a last-minute fudge seems to heart of the digital economy (see Business section). TikTok is have been found. TikTok has said it will enter a complex partner- owned by ByteDance, a Chinese tech star. The White House says ship with Oracle, an American tech giant, that is designed to it fears that users’ data are being sent to China, where Big Brother show it is more under American sway. The day before Nvidia, an can spy on them, and that the algorithm which selects videos is American semiconductor company, bid $40bn for Arm Hold- vulnerable to Chinese manipulation. Arm’s designs are used ings, a British-based chip-design firm, triggering a storm in Brit- worldwide, not least in America and China, its two largest mar- ain about how to stop its tech champion from being dragged into kets. Britain’s government worries that a takeover will see key ac-1 The Economist September 19th 2020 Leaders 15

2 tivity shifted abroad (in 2016 Arm was bought by SoftBank, a Jap- The British government, for example, may demand further legal anese firm, which promised to keep the firm’s base in Britain guarantees that it is run autonomously in Britain. That would be until 2021). A further concern is that, under American owner- part of a push to bolster the country’s industrial base, which has ship, Arm will no longer be a “neutral” supplier, instead becom- triggered a row with the European Union (see Britain section). ing an instrument of Uncle Sam’s expanding sanctions regime. These corporate contortions have glaring limitations. Politi- Throughout history companies have adapted to geopolitics. cians get to play God: President Donald Trump seems to favour In the freewheeling era of globalisation that began in the 1980s, Oracle—whose chairman, Larry Ellison, is a Trump supporter— the idea took hold around the world that all firms should be rather than a bid by Microsoft, which made slightly more com- treated equally, regardless of their nationality. That made it effi- mercial sense. Mr Trump may now demand more concessions, cient to operate as a global firm with a unitary management, cap- and any deal will also need approval from the newly beefed up ital structure and system of production. By contrast the 1930s investment-screening regimes in America and China. Subdivid- and 1940s were plagued by wars and protectionism. Businesses ing businesses into national silos duplicates costs, and complex such as General Motors responded by allowing their foreign op- structures can leave it unclear where control lies. Arm is locked erations to become semi-autonomous. Rather than merge, many in a bitter dispute with a Chinese executive over who is really in firms co-operated across borders through alliances and cartels. charge of its Chinese joint venture. The proposed TikTok deal shows how business is heading in a Despite this, expect more multinational manoeuvres as glo- 1930s direction. Although the details are not yet public, the firm’s balisation unwinds. Australia’s government is asking for Rio ownership will probably change, with American shareholders, Tinto, a scandal-prone global mining firm, to be run by an Aus- including Oracle, and possibly Walmart, holding a large minor- tralian. European tech firms may bifurcate, with one production ity stake, perhaps with rights to veto some decisions. The loca- line serving Chinese clients and another American ones. Chi- tion of key assets will shift, with the headquarters moving to nese companies may have to make do with buying minority America and Oracle managing the data-storage there (and mon- stakes abroad, not full control. Firms crippled by sanctions— itoring the algorithm). Arm, meanwhile, has already contorted Huawei, say—may dissolve, with their intellectual property and its structure once to deal with geopolitics: in 2018 it sold a 51% best people migrating to competitors that do not face such con- stake in its China operation to mainly Chinese investors, includ- straints. Geopolitics is twisting global business into a form that ing state-backed funds. Now it may face a new metamorphosis. is less efficient and less free. That is to be lamented. 7

Deliberative democracy Amateurs to the rescue

Politicians should take citizens’ assemblies seriously n 403bc Athens decided to overhaul its institutions. A disas- the decline in trust in democracy, which has been precipitous in Itrous war with Sparta had shown that direct democracy, most of the developed world over the past decade or so. Last year whereby adult male citizens voted on laws, was not enough to the majority of people polled in America, Britain, France and stop eloquent demagogues from getting what they wanted, and Australia—along with many other rich countries—felt that, re- indeed from subverting democracy altogether. So a new body, gardless of which party wins an election, nothing really changes. chosen by lot, was set up to scrutinise the decisions of voters. It Politicians, a common complaint runs, have no understanding was called the nomothetai or “layers down of law” and it would be of, or interest in, the lives and concerns of ordinary people. given the time to ponder difficult decisions, unmolested by sil- Citizens’ assemblies can help remedy that. They are not a sub- ver-tongued orators and the schemes of ambitious politicians. stitute for the everyday business of legislating, but a way to break This ancient idea is back in vogue, and not the deadlock when politicians have tried to deal before time. Around the world “citizens’ assem- with important issues and failed. Ordinary peo- blies” and other deliberative groups are being ple, it turns out, are quite reasonable. A large created to consider questions that politicians four-day deliberative experiment in America have struggled to answer (see International sec- softened Republicans’ views on immigration; tion). Over weeks or months, 100 or so citizens— Democrats became less eager to raise the mini- picked at random, but with a view to creating a mum wage. Even more strikingly, two 18- body reflective of the population as a whole in month-long citizens’ assemblies in Ireland terms of gender, age, income and education— showed that the country, despite its deep Catho- meet to discuss a divisive topic in a considered, careful way. Of- lic roots, was far more socially liberal than politicians had real- ten they are paid for their time, to ensure that it is not just politi- ised. Assemblies overwhelmingly recommended the legalisa- cal wonks who sign up. At the end they present their recommen- tion of both same-sex marriage and abortion. dations to politicians. Before covid-19 these citizens met in Perhaps because citizens’ assemblies reflect the population, conference centres in large cities where, by mingling over lunch- their conclusions seem to appeal to it, too. Same-sex marriage breaks, they discovered that the monsters who disagree with and abortion were both legalised in Ireland when whopping ma- them turned out to be human after all. Now, as a result of the pan- jorities in referendums demonstrated that the country had demic, they mostly gather on Zoom. reached a new consensus after years of fighting. And assemblies Citizens’ assemblies are often promoted as a way to reverse are not just for engaged middle-class types. One European study 1 16 Leaders The Economist September 19th 2020

2 found that people with less education, as well as those who are build?”—inviting an equally thumb-sucking answer. most mistrustful of politicians, are keenest on the idea. Lastly, the politicians who set up citizens’ assemblies must Citizens’ assemblies are good, in short, at coming up with sol- genuinely be open to their conclusions. They cannot simply be utions to thorny or polarising issues in which politicians have looking for an endorsement of their own preconceptions. Nicola been captured by their party’s extremes. But they work best if Sturgeon, Scotland’s ﬁrst minister, dented the integrity of the as- they follow some rules. To start with, national politicians must sembly there by launching it at the same time as she renewed her embrace them. So far, most have been at the local or state level. A party’s goal of independence, making the whole process suspect recent Climate Assembly in Britain was set up by a series of par- in the eyes of those who do not share her beliefs. The assemblies liamentary committees; the government had no part in it. should instead be set up in the spirit of open debate, experiment, Assemblies must also have a clear question to debate. Should and a willingness to listen to other points of view. gay marriage be legalised? How can our city live within its And politicians should promise to put the recommendations means? The current citizens’ assembly in Scotland is an example of a citizens’ assembly to a vote in parliament or, when appropri- of what to avoid. It has a series of thumb-sucking questions to ate, a referendum, whatever the outcome. If they claim to repre- ponder, including, “What kind of country are we seeking to sent the people, they should take the people seriously. 7

Abortion Pills by post

The pandemic shows a better way to handle terminations or most women deciding how or when to give birth, covid-19 asked the Supreme Court to overturn it. A decision is expected Fhas been a nightmare. Fertility treatments have paused, sexu- soon (see United States section). In Britain the government has al-health clinics closed and partners been banned from delivery said that it will launch a public consultation on whether to keep rooms. Yet the pandemic has brought one silver lining. It has the new approach. Ireland and France are also uncertain about shown a better way to carry out early-stage abortions. whether to make the changes permanent. Abortion is legal in most of the world, and relatively straight- Some people take a principled position that abortion at any forward in most rich countries. But obstacles remain. They in- time during pregnancy is wrong. For everyone else, however, the clude compulsory waiting times and mandatory counselling. decision turns on two questions. Will removing medical super- Perhaps the most common obstacle is that the first step in medi- vision endanger women’s health? And will it lead to many more cal abortions (which involve drugs rather than surgery) must abortions? Take each in turn. take place in clinics. Yet temporary measures set up during the There is no evidence that at-home terminations are danger- pandemic suggest this is often unnecessary. These temporary ous, and plenty to suggest that they are not. The World Health Or- measures should now become permanent. ganisation has said that early-term abortions can be carried out At-home procedures are available only to women in the first safely outside a clinic. In Britain the British Medical Association trimester of pregnancy—which includes most of those who have and Royal College of Obstetricians and Gynaecologists have both abortions today. Two medicines are needed: mi- called for the changes to be made permanent. fepristone (which blocks the effects of the preg- Recent data there show that they have resulted nancy-enabling hormone progesterone) and in women having abortions earlier, and thus misoprostol (which induces contractions). more safely. From January to June, 25% more They are taken a couple of days apart, and the than in the previous year were carried out at less pregnancy normally ends four to six hours after than seven weeks’ gestation. the second one is administered. In most of Brit- This increase is explained by a surge in early ain, before the pandemic, the drugs were hand- abortions not in the overall total. Britain has ed out after an ultrasound and an in-person con- seen only a 4% rise in terminations carried out sultation at a clinic. The mifepristone had to be administered by in the first half of the year. That could reflect a straitened econ- a doctor; the misoprostol was taken at home. omy, say, or stressed relationships in lockdown and less access Covid-19 has changed that. In March Britain’s health secretary to contraception as well as easier abortion. The Guttmacher In- approved a rule change which, in effect, gave a woman’s home stitute, a pro-choice research group, finds no link between abor- the same status as an abortion clinic. Instead of visiting a doctor, tion restrictions in American states and changes in their abor- women could arrange an abortion by phone and have the pills tion rate—whether the states make abortion easier or harder. delivered by post. Ireland introduced similar rules. France ex- More important, if there ends up being an increase in the tended the limit for an at-home abortion from the seventh to the number of terminations that may be for a good reason. Some ninth week of pregnancy, though the pills must still be collected women are poor, live in regions with few clinics, or have a spouse from a doctor or pharmacy. In July a federal judge in America lift- or parent from whom they need to hide their abortion. For them ed regulations that required women to collect abortion pills the new rules have removed barriers that they might otherwise from a surgery, clinic or hospital, ruling that this was a “substan- have found insurmountable. The changes to the abortion regime tial obstacle in the path of women” during a pandemic. introduced as a result of the pandemic do not create new rights; None of these countries have yet decided if these kinds of ap- they give a woman access to her existing rights more safely and proaches will last. In America, the Trump administration has efficiently. As with any citizen, that is welcome. 7 Changemakers, do your thing

Visit ingwb.com/doyourthing

Every business has its own vision of success and its own challenges in achieving it. We are here for those who believe progress is always possible. For those on a mission who have the courage and perseverance to build for the future, even in uncertain times. We are here for you, applying our deep sector knowledge and ﬁnancial expertise to help you look to the future. 18 Letters The Economist September 19th 2020

words and a preference for have forgotten that death used line of the song is completely The challenge of dementia partial phrases. Accompanying to come when one’s body ungrammatical on its own, but Your excellent leader and neuromuscular disease can failed. It was meant to be a makes grammatical sense special report on dementia lead to weakness in the arms release, both for the loved one when the object of the first line (August 29th) were most time- and legs, and tremor. dying and their loving relatives (“I can’t forget”) becomes the ly. The idea that dementia can richard waugaman and friends, who suffer watch- subject for the second line. Mr be prevented is fairly new. At a Clinical professor of psychiatry ing them. McCartney seems to have been g8 meeting organised by David Georgetown University jill mccallum the first lyricist to perform Cameron in 2013, a letter from Washington, dc Olney, Buckinghamshire such legerdemain, and the 111scientists in 36 countries performance is so seamless as stated that dementia (includ- Without question, the “rising So signs of Alzheimer’s were to be almost unnoticeable: ing Alzheimer’s disease) can be prevalence of dementia is a detected in Ronald Reagan’s “I’ve just seen a face/I can’t prevented, and urged the g8 to global emergency” (“The mem- speech patterns long before his forget the time or place/Where devote resources to this quest. ory hole”, August 29th). But to diagnosis. An interesting we just met.” The only other As you pointed out, we now say that “smoking less, exercis- footnote to this is provided by song that I know that con- believe that up to 40% of de- ing more and losing weight in Oliver Sacks in “The Man Who sciously does the same sort of mentia is preventable mainly middle age has reduced the Mistook His Wife for a Hat” thing is Love’s “Between Clark by public-health measures, risk of dementia” completely published in1985. Sacks re- and Hilldale”. and yet the sums spent on misses the problem: we are layed the story of a ward of jordan moar these measures are tiny com- outliving the evolutionary aphasia patients who were Waterloo, Canada pared with the billions of lifespan of our brains. moved by a speech made by dollars spent by drug compa- To think America is on the Reagan “apparently, mainly to nies looking for a cure. verge of licensing a drug “to laughter”. He attributed this, Not Taylor made There will not be a cure for stem cognitive decline in not to syntax, but to something Bagehot reported that the term this disease since the brain is Alzheimer’s patients” is like wrong in Reagan’s “tones and “scientific management” was far too damaged at the time of buying the magic beans of cadences”. Sacks concluded coined by Frederick Taylor, an diagnosis. But there is already Donepezil, which may do that his aphasic patients were American management guru evidence that certain interven- wonders for recuperating “undeceived and undeceivable (August 22nd). Taylor is rightly tions, like those you men- pharmaceutical losses in drug by words”. associated with the term, since tioned and in addition the development, but in the end paul kinzie he popularised it. However, it consumption of certain nutri- just gives a lot of old folks Bossier City, Louisiana was actually coined by Louis D. ents, can slow down the dis- diarrhoea. Most disheartening Brandeis, the “people’s lawyer”, ease process. There is an ur- is your perverse conclusion who gained fame as a champ- gent need for governments to that it would be a good idea to Influences on the Beatles ion of consumers against fund research into prevention require “everyone aged 40-65 Although I’m far from wea- monopolists. He first used the since this is our only chance of to pay a premium…as it avoids rying of “Rubber Soul”, I agree expression “scientific manage- averting the huge problems in penalising the young”. Let that “Help!” gets insufficient ment” in 1910, in testimony the future that you identified. those who want to live out a love from snootier Beatles before the Interstate a. david smith decade of dementia in a nurs- fans, a group in which I must Commerce Commission, when Emeritus professor of ing home buy what insurance include myself (“Send for it was considering requests by pharmacology they wish. I think I’ll spend my ‘Help!’”, August 29th). If the the railroads for rate increases. University of Oxford savings enjoying a life I can former was their departure Taylor then picked up on the still appreciate. album, they were already expression. Brandeis went on Some 12% of ostensible cases of clayton wiley packed and ready to board with to a long and distinguished dementia are due to cognitive Director of neuropathology the latter. I’m surprised, service on the Supreme Court. side-effects of medication, upmc Presbyterian Hospital though, that your article failed stephen neff which is reversible. Others are Pittsburgh to point out that the title track School of Law due to depression, causing highlights what was to become University of Edinburgh reversible pseudodementia. I am 89. No one considered the a defining characteristic of An often overlooked type of effects of medical advances. I John Lennon and Paul McCart- That “scientific management” dementia is frontotemporal take my blood-pressure pills ney’s work with George Martin: bungled the algorithm for dementia (ftd), constituting obediently. I do not want to their liberal use of eclectic children’s exam results, 10% or more of cases. It often have a stroke, but can honestly musical references. “When I verifies a maxim attributed to begins earlier in life than say an efficient fatal heart was younger, so much younger J.R. Searle, an American Alzheimer’s. Half of patients attack would be welcome. I than today” is sung to a tune philosopher: if you have to with ftd have the behavioural have the right to refuse life- from the intermezzo of the add “scientific” to a field, it variant. Memory loss is not a extending drugs when I am “Karelia Suite” by Jean Sibelius. probably ain’t. prominent early symptom; presumably deemed to be Even Lennon’s grandfather was a.d. pellegrini instead, patients may exhibit mortally ill. It seems I do not young when that was written. Bloomington, Minnesota decreased judgment, poor have that freedom any earlier. dave morris problem-solving skills, im- I am not the only old person London pulsivity, hypersexuality, lack unafraid of dying. Most of my Letters are welcome and should be of empathy, binge-eating, life has been great, but I have Another overlooked aspect of addressed to the Editor at The Economist, The Adelphi Building, decreased attention span, been here long enough and am this album is Paul McCartney’s 1-11John Adam Street, London WC2N 6HT mental rigidity, perseveration scared of becoming demented. rather interesting lyrical Email: [email protected] and language problems such as A lot of people are bound to get sleight of hand in “I’ve Just More letters are available at: Economist.com/letters impaired syntax, leaving out dementia—God help us. We Seen a Face”. Here the second

20 Executive focus

International Institute for Strategic Studies Executive Director, IISS-Asia (Singapore)

The International Institute for Strategic Studies (IISS) is the world’s leading independent authority on global security issues, providing information and analysis on a wide range of international security and geopolitical risk questions. The Institute conducts research on the problems of conflict, however caused, that may have a significant military dimension, and analyses international trends, including economic developments, which may have strategic implications. The Institute convenes high-level conferences and events that bring together government officials, recognised experts, opinion-formers and business leaders at the most senior level, in order to enhance diplomatic exchanges and to enable the crafting of more effective policy on strategic matters. The IISS is headquartered in London and has international offices in Singapore, Bahrain and Washington DC. The International Institute for Strategic Studies (Asia) Ltd [IISS-Asia] in Singapore is seeking to appoint an energetic, senior figure as its new Executive Director. The post will be available from 1 April 2021. As Executive Director, the successful candidate will be responsible for leading and further developing the well- established IISS-Asia office that plays a central role in organising the annual IISS Shangri-La Dialogue; it also convenes the IISS Fullerton Forum: SLD Sherpa Meeting and the IISS Fullerton Lecture series. Research staff at IISS-Asia conduct high-level work on Asia-Pacific security; Southeast Asian political change and foreign policy; cyber, space and future conflict; and urban security and hybrid warfare. In January 2021, IISS-Asia will move into larger premises in order to accommodate its growing staff and widening activities. Candidates for the post of Executive Director should have substantial working experience relevant to Asian security affairs in the expert community, government, the media or business. They should ideally have a strong record of policy-relevant publication, as well as diplomatic skills, experience of institutional leadership and success in fundraising. They should be able confidently to conduct discussions with the highest levels of government and business, while at the same time leading and working closely with the diverse, international team of research and operational staff at IISS-Asia. Candidates must be fully competent in spoken and written English, and will preferably possess a working knowledge of at least one Asian language. The successful candidate should hold a postgraduate degree and, ideally, will already have experience of living and working in Singapore or elsewhere in Asia. Candidates should submit their applications by email to [email protected] by 9 October 2020, providing the following documents: • A cover letter • A full Curriculum Vitae (résumé) • The names and contact details (email and telephone) of two potential referees This appointment will be for a fixed term of four years and may be considered for renewal at the end of the contract. The salary offered will be competitive and will be accompanied by benefits including health insurance, life insurance and contributory pension arrangements.

The IISS is an equal opportunities employer. Executive focus 21 22 Executive focus

CERN Pension Fund Investment Committee: vacancy for an external professional expert

The CERN Pension Fund is the pension fund of the European Organization for Nuclear Research (CERN). The purpose of the Fund is to provide pension and social security benefits to over 7,000 members and beneficiaries employed at CERN and at the European Southern Observatory (ESO). Operating as a funded defined benefit scheme the CERN Pension Fund’s assets currently exceed CHF 4.4 billion.

Do you have deep and extensive experience of overseeing the assets and liabilities of large pension funds, or similar long-term institutional investors, such as endowments, foundations, and sovereign wealth funds?

Contribute your skills and knowledge as an external professional expert of the CERN Pension Fund: apply now to join the CERN Pension Fund Investment Committee.

Full details on the position and how to apply can be found on https://careers.cern/PFIC

Deadline: 15th November 2020. Brieﬁng Energy’s new world order The Economist September 19th 2020 23

acknowledgment by most countries that, Petrostate v electrostate for the sake of the climate, reliance on fossil fuels needs to come to an end. And that leads to the third shift: electrification. Fos- sil fuels provide heat that is mostly used to move things, be they vehicles or electric generators. Solar panels and wind turbines NEW YORK provide energy as electricity straight off. What it means to dominate the world of energy is changing—to China’s Maximising their emissions-free benefits advantage means processes and devices that now rely he united states of america is both on the economy and on geopolitics, on combustion must in future use currents “Tnow the number-one energy super- driving much of America’s subsequent in- and batteries instead. The bp analysis ar- power anywhere in the world,” President volvement in the Middle East. The surge in gues that in a world going all out for decar- Donald Trump told oilmen in Midland, domestic supply in the 2010s both boosted bonisation the share of energy used in the Texas this summer, from a stage decorated the economy and opened up new geopoliti- form of electricity would rise from about a with gleaming black barrels. The sheer vol- cal opportunities. America can apply sanc- fifth in 2018 to just over half in 2050. ume of hydrocarbons that such American tions to petrostates such as Iran, Venezuela Falling demand for fossil fuels will tilt oilmen have released from the shale be- and Russia with relative impunity. the balance of power away from producers neath Midland and previously unforth- But what it might mean to be an energy and towards consumers—though there coming geology elsewhere gives substance superpower is changing, thanks to three will doubtless be reversals now and then to his boast (see chart 1 on next page). Over linked global shifts. First, fears about fos- along the way. And in a world which needs the past decade America’s oil output has sil-fuel scarcity have given way to an ac- to generate much more fossil-free electric- more than doubled and its gas production knowledgment of their abundance. Not ity, mass production of the means whereby increased by over 50%. America is now the least because of what has been achieved in to do so will become crucial, as will govern- world’s top producer of both fuels. America, the energy industry now knows ment backing and know-how in deploy- Had they heard Mr Trump say that “We that it will be lack of demand, not lack of ment. Being a mighty pumper of oil will do will never again be reliant on hostile for- supply, which will cause production of oil, a lot less for America under such condi- eign suppliers,” presidents from Franklin coal and, later, gas to dwindle. In its latest tions than once it might have done. But Roosevelt on might have nodded in envi- “World Energy Outlook”, published on Sep- China, the world’s biggest fossil-fuel im- ous approval. After the second world war tember 14th, bp, an oil company which has porter as well as its leading exponent of re- America’s unmatched ability to consume recently said it plans to go carbon neutral, newable energy at gigawatt scales, will oil outstripped its unmatched ability to argues that demand for oil may already have the wind, as it were, at its back. produce it. Ensuring supplies from else- have peaked, and could go into steep de- The covid-19 pandemic has provided a where became an overriding priority. The cline (see chart 2 on next page). dramatic preview of a world in which de- oil shock of the 1970s had a profound effect This is because of the second shift: an mand for oil falls instead of rising. When 1 24 Briefing Energy’s new world order The Economist September 19th 2020

2 the globe stopped spinning in March, its on shipments bound for China. The coun- 2 thirst for oil suddenly subsided. Petro- try’s biggest refiners are mulling a plan for Changing tastes states dependent on pricey oil for their a buying consortium to strengthen their Global, based on three projected scenarios spending now face gaping deficits. Inves- negotiating power with the Organisation of tors have fallen out of love with oil compa- the Petroleum Exporting Countries. China Oil demand nies. For all Mr Trump’s grateful booster- will probably also flex its financial muscle Barrels per day, m ism, the value of America’s shale sector has as petrostates buckle under debt. It has is- 120 fallen by more than 50% since January. Ex- sued oil-backed loans to crude-rich coun- xonMobil, an oil company included in the tries such as Angola and Brazil for more Business-as-usual* 100 Dow Jones Industrial Average since 1928, than a decade. has been kicked off it. With a market capi- China’s position as a buyer also allows it Rapid† 80 talisation of $155bn it is worth considerably to undercut America’s attempts to squeeze less than Nike, a shoemaker with a swoosh. oil exporters. Chinese buyers long contin- 60 Net zero‡ In the face of this turmoil China’s de- ued to import Iranian and Venezuelan 40 mand for oil imports, already the largest in crude. Its energy alliance with Russia is the world, continues to grow—providing particularly important. 20 some welcome stability. The country’s in- FORECAST dependent refiners—the “teapots”—have A different strength 0 become large enough that they help set As energy expert Daniel Yergin points out 50403020102000 oil’s price floor. “They are essentially the in “The New Map” (see Books and arts sec- vacuum cleaner of the crude market,” says tion) Vladimir Putin realised the signifi- Electricity demand Per Magnus Nysveen of Rystad Energy, a cance of energy relations with China early Share of total energy consumption, % consultancy. Michal Meidan, who leads on; but the pivot to China became more ur- 60 China energy studies at Oxford University, gent after the financial crisis of 2007-09. In Net zero‡ points out that the trading arms of state- 2009 the China Development Bank lent two Rapid† 40 owned oil giants sinopec and China Na- state-controlled Russian companies, Ros- tional Petroleum Corporation are now two neft, an oil producer, and Transneft, a pipe- Business-as-usual* 20 of the three largest traders of crude cargoes line builder and operator, $25bn in ex- FORECAST priced on the Platts Dubai futures contract, change for developing new fields and 0 which means they influence the price of building a pipeline which would supply 50403020102000 crude bound for Asia. Low prices also allow China with 300,000 barrels of oil a day. Source: BP Energy By 2050, carbon emissions reduced by: China to build up its strategic reserves. In 2014 Western sanctions over Crimea Outlook *less than 10% †70% ‡over 95% Big finds off the coasts of Brazil and inspired Gazprom, another Russian energy Guyana and the development of Australia’s giant, to commit to a long-haggled-over gas nies have invested in mines from the liquefied natural gas (lng) capacity, along pipeline, the Power of Siberia, which Democratic Republic of Congo (drc) to with America’s shale boom, add to China’s opened last December. Tying in Chinese Chile and Australia, securing access to the opportunities; a buyers’ market is a good custom gives Russia a large market un- minerals needed for solar panels, electric place to be the biggest buyer, notes Kevin moved by calls for sanctions at a time when vehicles and the like. Unable to be a petro- Tu of Columbia and Beijing Normal Uni- European demand is faltering. But as Erica state, it is becoming what one might call an versities. There are plenty of bullish oil- Downs of Columbia University points out, electrostate, investing strategically all men who think that, bp to the contrary, “As soon as a pipeline is built, the balance along the chain from mine to meter. peak demand has yet to be reached. But of power shifts from supplier to buyer.” This is not in itself anything like a tri- even they recognise that the supply of oil After the first oil pipeline was built, China umph for climate action. China has more below ground outstrips the thirst above it, refused to pay the agreed price. than 1,000 gigawatts (gw) of coal-fired gen- and that competition for customers is like- All this power in the market, though, erating capacity. This installed base, with ly to heat up. cannot mask the geopolitical downside of which it generates 49% of the world’s coal- In some instances competition for Chi- relying on imports. Being a large importer fired electricity, makes it the world’s big- nese demand may be straightforward. may give you more power than being a gest carbon-dioxide emitter. And its coal When it embarked on a price war with Rus- smaller one; but it still leaves you vulner- use is set to expand in the years to come. sia this spring, Saudi Arabia slashed prices able. China is acutely aware that much of Its wind and solar capacity of 445gw, its oil comes through the straits of Hormuz vast though it is by most standards, is less and Malacca, which could be closed by than half coal’s total, and those renewables 1 Shazam! third-party conflicts or, in extremis, the us typically run at a much smaller fraction of United States, crude oil Navy. In recent months China’s concern their capacity than coal plants do. But Chi- Barrels per day, m about energy security has risen as relations na also has 356gw of hydropower capacity, 12 with America have declined, notes Ms Mei- more than the next four countries com- dan—for all the current talk of decoupling, bined. It has been building nuclear power 10 China has been buying lots of lng from plants faster than any other country—the Production 8 America, as well as crude for its stockpiles. average age of the 48 reactors in its fleet is Communist Party documents for China’s less than a decade—and intends to go on 6 new five-year plan emphasise the need for doing so; nuclear, which now produces less 4 a more flexible, reliable energy system. than 5% of the country’s electricity, is set to Net imports What China lacks in oil and gas supplies produce more than 15% by 2050. 2 it makes up for with industrial policy, The evolution of China’s nuclear, wind, Exports 0 which it has long been using to support do- solar and battery sectors varies somewhat, mestic coal production and nuclear power but the basic formula remains the same: 19102000908070601950 as well as what is now by far the world’s learn from foreigners and then use massive Source: EIA largest renewables sector. Chinese compa- investment and authoritarian dictat to 1 The Economist September 19th 2020 Briefing Energy’s new world order 25

2 support deployment on a very large scale. ment Finance Corporation is, for the first Siemens Gamesa, which has its headquar- Subsidies at home and abroad have helped. time, taking equity stakes in mining com- ters in Spain, and Vestas of Denmark. Support for renewables in Europe in the panies. One beneficiary is TechMet, which And Europe’s green ambitions are grow- 2000s created a demand for solar panels is betting that some investors will prefer ing. In her state-of-the-eu address on Sep- only Chinese firms, liberally aided by the mines independent of Chinese control. tember 16th, Ursula van der Leyen said that state, could meet. Chinese battery giants, “It’s a very significant strategic issue for the the European Commission, of which she is led by catl, benefited from a policy that United States and the West,” says Admiral president, will be pressing for carbon subsidised electric vehicles only if they Mike Mullen, a former chairman of Ameri- emissions 55% below those of 1990 by used batteries from domestic suppliers. ca’s Joint Chiefs of Staff and now the head 2030. This means European utilities are ex- Fossil-fuel free as they are, these tech- of TechMet’s advisory board. “I almost lik- pected to provide both a large increase in nologies still require raw materials. Wind en it to Huawei. We wake up and they’re in capacity and a near-zero-emissions future. and solar power need a lot more of some control of the world.” To do so they will have to buy yet more non-ferrous metals—notably, if unsurpris- hardware from China. But Europe’s aggres- ingly, copper—than systems which burn Here comes everyone sive strategy gives them an opportunity to fossil fuels; batteries require niche materi- China now produces more than 70% of the take the lead in developing the systems als in ways that fuel tanks do not. General- world’s solar modules. It is home to nearly which put that kit to work, both at home ly, the world has plenty of these necessary half its manufacturing capacity for wind and abroad, as well as in technologies Chi- commodities—but less capacity to get turbines. It dominates the supply chain for na has yet to master. them to market than rapid decarbonisation lithium-ion batteries, according to Bloom- Visit a wind farm in America’s heart- requires. As Andy Leyland of Benchmark bergnef, controlling 77% of cell capacity land and you may well find an office of Minerals Intelligence, a research firm, puts and 60% of component manufacturing. Electricité de France (edf) nestled among it, “There’s no geological shortage. It’s a fi- With its industries at such a scale, and sup- the corn. Enel, a utility which has its head- nancing shortage.” Mines which frequently port costs ballooning, subsidies for them quarters in Italy, is the single largest inves- go over budget and are too often delayed, have been cut. Last year China eased re- tor in wind and solar projects in developing sited in countries prone to instability, are strictions on foreign battery-makers, too countries, according to Bloombergnef, not overwhelmingly alluring to most West- The rest of the world has benefited—the with France’s Engie and Spain’s Iberdrola ern investors. costs of solar panels and batteries have not far behind. Orsted, a Danish firm, is the Chinese companies have helped fill the dropped by more than 85% in the past de- world’s top developer of offshore wind. gap. Some of this is through domestic in- cade. “We will invest continuously in re- China’s national champions have investment. China produces 60% of the search to make sure we retain our leader- vested ambitiously in power projects world’s “rare earths”, which have proper- ship—in research and in mass production,” abroad, too. Of the roughly $575bn invested ties that make them useful in electric mo- says Li Zhenguo, president of longi, a giant or promised under China’s Belt and Road tors, among other things. They are not, producer of solar modules. China is keen to Initiative as of 2019, nearly half has gone to generally, rare in a geological sense, but set technical standards across a range of in- energy projects, according to the World they can be in short supply. (They are also dustries, hoping to shape the playing field Bank. But most of this has been on coal often mined in ways that do great damage for further innovation. For clean-energy plants, nuclear reactors and dams. And na- to the local environment.) technologies in particular, says Mr Tu, it tions wary of China’s influence and mo- For other metals China mostly has to has an edge. tives treat its advances with suspicion. Ef- look further afield. Tianqi, a private com- Though it has successful and influen- forts by State Grid, the world’s biggest pany, has a minority stake in sqm, Chile’s tial innovators such as Tesla (see Business utility, to buy stakes in European electric- biggest miner of the lithium on which bat- section), in this part of the energy world Mr ity companies have been rebuffed. In Brit- teries depend. Tsingshan has invested in Trump’s superpower looks like an also-ran. ain, state-owned China General Nuclear battery-grade-nickel projects in Indonesia. His rival in this November’s election, Joe Power Group (cgn) has minority stakes in The drc’s copper and cobalt have attracted Biden, promises to get back in the race. De- two nuclear plants being built by edf, but a Chinese investors for over a decade, and veloped countries elsewhere are further plant to be built by cgn itself is years away mines owned by others often send their along. Panasonic in Japan and lg Chem in from approval which may not come at all. output to China anyway. China refines South Korea are both making innovations Nevertheless Chinese companies are more than twice as much lithium and eight in battery technology. Europe’s generous starting to invest more in wind and solar times as much cobalt as any other country, support has provided a big market for the power abroad. China Three Gorges, a big according to Bloombergnef, a research world’s top wind turbine manufacturers, power company, said in August that it outfit (see chart 3). would buy half a gigawatt of Spanish solar Ivanhoe Mines, led by Robert Friedland, capacity from X-Elio, a developer based in 3 a veteran American miner, has had backing Purifying power Madrid. Last year cgn bought more than from two Chinese companies, citic and Zi- Capacity of mineral refineries by country 1gw of wind and solar farms in Brazil. jin Mining, to build the world’s largest new 2020, % of world total To maximise its electrostate power Chi- copper mine in the drc. Mr Friedland ar- 100 na needs to combine its renewable, and Other gues that Chinese investors look further Other Other possibly nuclear, manufacturing muscle into the fewer-fossil-fuels future than 80 with deals that let its companies supply Chile Finland Norway Western ones. “What do the batteries look Australia electricity in a large number of countries. 60 like? Where is the supply chain?” These are Canada The International Renewable Energy Agen- questions, Mr Friedland says, where the cy has suggested that such “infrastructure Japan 40 Chinese “are probably ten years ahead”. China diplomacy” might prove as important to Politicians in America, Europe and Aus- China China Chinese power in the 21st century as the 20 tralia have expressed concern at Chinese protection of sea lanes was to American Russia control of minerals critical to not just ener- 0 power in the 20th. If it uses it deftly, the en- gy but defence. A company backed by Bill ergy transition could bring it advantages Lithium Cobalt Nickel Gates and other billionaires plans to search beyond any achievable with rigs, derricks Source: BloombergNEF for cobalt in Quebec. America’s Develop- and pipelines. 7 At other firms satisfaction is uncertain. At Schwab it’s guaranteed.

At Schwab, we offer a Satisfaction Guarantee because we believe that accountability is just a word if we don’t stand by it. It’s time to change to a modern approach to wealth management.

Learn more at Schwab.com

If you are not completely satisfied for any reason, at your request Charles Schwab & Co., Inc. (“Schwab”), Charles Schwab Bank (“Schwab Bank”), or another Schwab affiliate, as applicable, will refund any eligible fee related to your concern within the required time frames. Schwab reserves the right to change or terminate the guarantee at any time. Go to schwab.com/satisfaction to learn what’s included and how it works. 2020 Charles Schwab & Co., Inc. All rights reserved. Member SIPC. (0920-0ZDU) ADP112281-00 United States The Economist September 19th 2020 27

Donald Trump’s record Security Administration and the Secret Ser- vice, making it America’s largest federal The master’s bidding law-enforcement agency, with more than 60,000 officers and agents. Presidents stamp their priorities on it as they do on any other cabinet department. The first mission listed in the act of Con- gress creating the department was to “pre- WASHINGTON, DC vent terrorist attacks within the United Assessing the president’s use of the Homeland Security department States”. Paul Rosenzweig, a former deputy eorge w. bush and Barack Obama each pursued his political goals as flexibly and assistant secretary for policy at the dhs and Ghad three secretaries of the Department relentlessly as the dhs. now a senior fellow at the r Street Institute, of Homeland Security (dhs) in their eight Created in the wake of the September a think-tank, recalls that Mr Bush held years in office—two Senate-confirmed, 11th attacks, the dhs is the youngest of “Terrorism Tuesdays”, at which senior offi- and an acting secretary between. In less America’s 15 executive departments; it cials would brief him on threats. That than four years, Donald Trump has had opened its doors in 2003. Unlike other deposed by al-Qaeda receded during Mr five. The last Senate-confirmed secretary, partments, it does not have a long-estab- Obama’s presidency, leaving him free to fo- Kirstjen Nielsen, resigned in April 2019. Mr lished institutional culture. Designed to cus more on cyber-security and immigra- Trump reportedly told her she was “not bolster America’s defence against terrorist tion. As Carrie Cordero of the Centre for a tough enough” and did not “look the part”. attacks, disasters and other large-scale New American Security puts it, the dhs She had been chief of staff for the other threats, it now includes Customs and Bor- really is “an all-hazards department”. Senate-confirmed secretary, John Kelly, der Protection, the Federal Emergency It particularly interests Mr Trump be- who became Mr Trump’s chief of staff, and Management Agency, Immigration and cause of its role in immigration enforce- whom Mr Trump now describes as “totally Customs Enforcement, the Transportation ment. It has carried out several of his most exhausted” and “unable to function”. Chad controversial policies, including building Wolf, a former lobbyist, has been acting bits of the border wall, separating migrant head for more than the 300 days allowed by Also in this section parents from children, implementing federal law, having replaced another acting sweeping travel bans and deploying para- 28 Historically black colleges secretary, Kevin McAleenan, who resigned military forces against protesters in Por- after complaining about the “tone [and] 29 Resort towns tland, Oregon and Washington, dc. None message” of the president’s immigration of these uses clearly exceeds Mr Trump’s 30 Campaign finance and strategy policy. Mr Trump does not seem minded to statutory authority; presidents have broad remove Mr Wolf. Acting secretaries, the 31 Abortion by pill powers and discretion to define and re- president has said, give him “more flexibil- spond to matters of national security. 32 Lexington: Fire and ice ity”, and few cabinet departments have But, Mr Rosenzweig argues, “this presi-1 28 United States The Economist September 19th 2020

2 dent has taken his discretionary authori- HBCUs ties and used them in distorted ways that were never reasonably within the contem- Historically back plation of those who created those authorities in the first place”. For instance, presidents can deploy bortac, the border agency’s paramilitary troops, to help the Federal Protective Service guard federal property, as Mr Trump did by executive or- CHICAGO What lies behind a surge of interest in black colleges and universities? der on June 26th. But none has previously deployed paramilitary forces against the ix months ago prospects looked dire for fees at her private college, she watched en- wishes of a state governor—as Mr Trump Smany historically black colleges and rolment crash by 14% this year. “Benedict did in Oregon, where, wearing uniforms universities (hbcus): around 100 institu- won’t get bailed out,” she says. If she has to without names or identification, they ap- tions, mostly in the South, which together cut her $50m budget more, then subsidies peared to arrest people far from the build- boast 290,000 students. A few stars in the for poorer students may go, hurting “the ings they were ostensibly guarding—nor sector dazzled, such as Howard University ones we were built to serve”. sent them to “sanctuary cities”, from Bos- in Washington (where both Kamala Harris That is not unusual. Jarrett Carter, who ton to Los Angeles, in a show of force. and the actor Chadwick Boseman studied) runs hbcu Digest, a website, estimates that Presidents worry about border security or Morehouse in Georgia. But expectations nearly half the colleges are under stress, and deterring illegal immigration. But for many were low. and many (especially private ones) might Miles Taylor, a lifelong Republican and for- Most have a distinguished history, “not be here in one to three years”. Most mer dhs chief of staff, says that Mr Trump founded after the civil war to educate freed squeezed are the smallest, with trifling or “deliberately told us, on multiple occa- slaves who were denied entry to white- no endowments and no rich alumni to tap. sions, to implement policies that would only colleges. They trained the bulk of State funding for public ones has tumbled maim, tear-gas and injure innocent, un- black doctors, lawyers and teachers and so in the past two decades. A government re- armed civilians” trying to cross the border. helped create the African-American mid- port two years ago noted that nearly half Mr Taylor told a podcast hosted by the Bul- dle class. They still turn out over a tenth of their buildings need serious repair or re- wark, a right-leaning website, that Mr all black graduates, but they are struggling. placing. “These institutions have been Trump wanted the border wall topped with Overwhelmingly, their students are poor struggling for many years,” says Jourdan spikes that would “go through their hands and new to higher education. Harry Wil- Sutton of ey Parthenon, a consultancy. He and their arms and pierce human flesh”. liams, head of the Thurgood Marshall says too few find new ways, like luring for- Fund, which helps the 47 public hbcus eign students, to plug funding gaps. A long way from 9/11 (containing the bulk of students), says 73% The pandemic has caused upheaval. Under Mr Trump, the dhs has also been the qualify for Pell Grants, aid for the poorest. William Harvey, president of Hampton subject of complaints by whistle-blowers. Many colleges face worsening finances. University in Virginia, says he cut $43m Brian Murphy, who ran the intelligence of- Roslyn Artis, president of 150-year-old from his $200m annual budget this year, as fice, alleged that Mr Wolf told him to down- Benedict College in South Carolina, says the entire college moved online. Another play reports of Russian electoral interfer- enrolment there has slumped over the past president says he trimmed 11% from his. ence because they “made the president seven years, partly for a welcome reason: Yet some colleges that expected students to look bad”, (a dhs spokesman denies the al- predominantly white colleges have be- abandon campus, and braced for less rev- legation). Dawn Wooten, a nurse at an im- come much nimbler at recruiting black enue, then found that young people from migration-detention centre in Georgia, al- students. Even after she slashed tuition poorer or unstable families were desperate leged that doctors underreported covid-19 to return as covid-19 hit African-American cases and refused to test detainees with homes especially hard. symptoms. She says one doctor performed Ruth Simmons, the president of Prairie hysterectomies on detained immigrants View a&m in Houston, says she braced for without their full consent (the doctor ac- enrolment falling by 5% this year, but it has cused denies the allegation). risen “as people wait out the economic Mr Trump’s use of the department has downturn”. She met students who slept in led some on the left to press for its aboli- cars nearby, anxious to get back early. tion—an outcome this is both politically Quinton Ross, president of Alabama State unlikely and, in the amount of structural University, says he budgeted for 400 fewer reorganisation it would require, unwise. students; instead numbers rose by 1,000. Should Mr Trump lose in November, Not all are back on campus, but as 15% of Democrats may suggest consolidating con- his students—notably in rural Alabama— gressional oversight (more than 100 con- have no internet at home, they demanded gressional committees have some home- to get back. “hbcus have been shelters in a land-security purview), press for more storm for years,” he says. transparent operational guidelines and try A tumultuous summer has also stirred to reduce the number of political appoin- interest. More debate on racial justice may tees, rather than getting rid of it. be spurring some students to choose black And what if Mr Trump wins? The dhs colleges over mostly white ones. National would remain dedicated to his political politicians from both parties are paying goals, meaning more federal officers facing hbcus more attention. The cares Act, off against protesters and more immigra- passed by Congress in March, set aside tion enforcement designed to terrify. The $960m for the colleges to pay for laptops, president would find more inventive uses covid tests, protective gear and other stuff. for this malleable bureaucracy. 7 An Oval ovation That probably saved some from closure. 1 The Economist September 19th 2020 United States 29

2 “We’ve never had that type of engagement, that intensity before,” says Mr Williams, of politicians’ interest. He is working with leaders of both parties in Congress to ob- tain another round of federal help. President Donald Trump brags that he “saved” the hbcus. Such talk annoys some presidents, but they also praise him. He has “been beating the drum on hbcus as a cor- nerstone of his education platform from month one of his time in office”, says M. Christopher Brown, president of Kentucky State University. “The action and the money don’t lie,” says Mr Williams. Many like the fact that Mr Trump met and spoke thoughtfully to hbcu leaders, and that he forgave loans to some hard-hit colleges. “These seeds have been sprinkled under him,” says Mr Brown. He may be reviled, says Mr Carter, but “he did some substan- tive things”. Just as striking is a surge of interest from companies and donors, especially since the killing of George Floyd in May. Mr Resort towns Williams says this year will easily see the largest-ever number of donations to The virus in paradise hbcus, perhaps well over $500m. Many colleges have seen “the largest single gift they have ever received” in recent months, says Mr Sutton. Hampton, for example, will get $30m from MacKenzie Scott, Jeff Be- zos’s ex-wife. Tony Allen, president of Dela- WASHINGTON, DC Signs of growing inequality as a result of covid-19 ware State University, says he has held 20 meetings with companies and chambers of un valley, the remote and idyllic high rents. United Way, a charity, reckons commerce this summer to manage a surge Sswathe of land sandwiched among the that half of the residents of Blaine County, of requests to go into partnership with mountains of central Idaho, is one of the which includes Sun Valley, are on the edge hbcus, as firms seek ways to show interest better places to see out a pandemic. Ameri- of being unable to afford basic necessi- in racial matters. ca’s first ski resort, as the place styles itself, ties—a statistic driven largely by the exor- has drawn those seeking an alpine retreat bitant rents. As the usual “shoulder sea- Paid a call to see Dubois since Ernest Hemingway, an author and son” of low demand sets in during autumn, One challenge is to brush off token efforts, outdoorsman, first decamped to the town the level of need could grow even more. says a college president. Firms must show of Ketchum in the 1930s. Now that office Nationwide, the effect of covid-19 on long-term plans to support hbcus, not of- work is increasingly remote and cramped economic inequality will remain unclear fer a small, one-off gift for the sake of pub- city living looks less appealing, the Elysian for some time. But now that most Ameri- lic relations. Some heads of smaller col- country life beckons. “We’re seeing almost can stockmarkets have completely recov- leges also quietly grumble that the a fourfold increase in vacant land sales ered—even as the cash provisions of the best-known ones always get the lion’s over the last two to three months,” says federal stimulus have expired—it may share, as when this month Michael Bloom- Harry Griffith, the executive director of Sun eventually prove to have drifted upwards. berg gave $100m to four historically black Valley Economic Development. The high- Most who consider growing inequality medical colleges. Howard University alone end property market boomed throughout think first of cities, where rich and poor will get one-third of the pot. That is hard to lockdown. A 14,000-square-foot mansion live close together. avoid: it looks inevitable that bigger gaps, was recently sold for $18m—the most ex- These places were hit first and hard, dis- in enrolment, corporate partnership, en- pensive residential-property transaction proportionately affecting the disadvan- dowments and other measures, will grow in the region’s history. Local developers taged. The Centres for Disease Control and between thriving hbcus and the rest. have booked enough renovation and con- Prevention estimates that African-Ameri- In the long run companies, eager to hire struction gigs to last for months. cans, Hispanics and Native Americans non-white staff, could help most by turn- At the same time as the well-to-do are were three times likelier to be infected and ing to the colleges for recruitment. Mr Al- able to flock to their second homes, the re- five times likelier to be hospitalised than len says Delaware State is now part of a gion’s less fortunate have rarely looked whites. Office workers with university de- scheme in which JPMorgan Chase plans to more in need. “Our numbers exploded. We grees were largely spared the unemploy- sign up 4,000 paid interns from the col- saw our need more than double,” says ment that low-paid service-sector workers leges. ey plans to recruit accountants from Jeanne Liston, executive director of The endured. Disruption to schools is likelier four hbcus. Mr Brown says a “huge pharma Hunger Coalition, which operates a food- to permanently damage the educational company” plans a programme of paid in- distribution programme and community outcomes for the children of the poor than ternships, leading to full-time jobs, for his garden in the area. There has always been for the children of the rich. Eviction invari- Kentucky graduates. Such pathways to need in resort towns—the workers who ably conjures up images of apartment eventual jobs could be the biggest spur for staff restaurants, lodges and ski lifts often buildings, not cabins in the woods. students to enroll and stay on. 7 do not earn sufficient wages to cover the Those natural associations obscure 1 30 United States The Economist September 19th 2020

2 what has happened outside cities. This is of undecided voters in the states that mat- both because the virus has hit some already ter most: Arizona, Florida, Michigan, down-and-out places especially hard— North Carolina, Pennsylvania and Wiscon- those living on the Navajo Nation reserva- sin. The president’s campaign raised tion, for example—but also because of its $210m in August—a vast sum by any mea- second-order effects on the places that are sure except Mr Biden’s haul. thriving in spite of the pandemic. In Vail, Beyond establishing name recognition, Colorado, another ski resort, the number of there is little evidence that the political ads homes sold for more than $1m between campaigns splurge on have much effect on July and September of this year was double voter choice. Most Americans, accustomed those of the same period last year. There, to a deluge of pre-election ads, tune them the development is welcome. If prices can out. That helps explain why Mr Trump beat be contained for the lower end of the mar- Hillary Clinton despite his campaign hav- ket, “we have a huge opportunity to being spent about half as much as hers. come a hub for location-neutral workers”, Presidential campaign finance has in says Chris Romer, the president of the Vail this way become a case-study in diminish- Valley Partnership. ing returns. The more hyper-partisan and Here, too, food-bank usage is up even as tightly contested elections become, the high-end properties are snapped up. “The bigger the sums donors are prepared to flipside of that is there could be some dis- throw at them, and the less impact they placement of traditional long-term rentals have. The same pattern is apparent even in and workforce housing,” says Mr Romer. congressional races. The rivals in Mon- “What that is going to require is political Diminishing returns tana’s current Senate contest, Steve Daines, will from our elected officials to encourage the Republican incumbent, and Steve Bull- inclusionary zoning.” As so often with Mr Trump, it is easy to ock, the state’s Democratic governor, had Prosperous resort towns may have the be distracted by the outrageousness of his raised a record $25m between them by the political will to do something. The town of affairs. In May the Trump campaign’s larg- beginning of July. That represented around Vail has set up a rent-relief programme for er-than-life manager, Brad Parscale, an- $35 per registered voter in the state— businesses hurt by the pandemic. Private nounced that he had spent nearly three though both candidates were already well- citizens in Sun Valley raised enough mon- years constructing a political “Death Star” known there. Given Montana’s low adver- ey to allow every pupil to get access to re- and was about to “start pressing fire for tising costs, it is unclear how they will even mote schooling, says Sally Gillespie, the ex- the first time”. Two months later, with Mr dispose of their cash piles. ecutive director of the Spur Community Trump trailing by 10 points and the Death At this juncture, the main significance Foundation, a local organisation. Effective Star leaking allegations of mismanage- of Mr Trump’s and Mr Biden’s rival cash op- action elsewhere would require federal in- ment and extravagance, Mr Parscale was erations is two-fold. First, because small- volvement, which hardly looks forthcom- out on his ear. dollar donors (who give $200 or less) are ing. The lapsed stimulus has triggered an He was reported to have issued con- extremely likely to vote, the number that a apparent increase in poverty nationwide. tracts worth almost $40m to companies he campaign attracts is a useful proxy for vot- And the prospects for a second package owned. The wife and girlfriend of the presi- er enthusiasm. And here there is better that Democrats and Republicans can agree dent’s two adult sons were collecting news for the president. According to the on, which is badly needed, appear dismal. $180,000 a year for cheerleading services. Centre for Responsive Politics, a research Instead, managing the fallout will be a local The Death Star had spent almost $60m on outfit, Mr Trump has raised almost $100m affair, decided town by town. 7 legal fees, much of which related to Trump more than Mr Biden from such voters, an scandals—such as the president’s battle to indication of greater fervour in his base. keep his tax records secret—only tenuous- Second, where the candidates spend The 2020 campaigns ly related to his campaign. The net sum of their money points to where their strat- such expenditure—after Mr Biden out- egists think the race stands. And, sure Following the raised the president by over $150m in Au- enough, 85% of the campaigns’ tv advertis- gust—is that the former vice-president ing spending has been spent in the afore- money may now have as much cash on hand as Mr mentioned swing states. Mr Biden’s disci- Trump. That would be a big turnaround— plined campaign, that suggests, is not yet probably electorally insignificant. giving much thought to a possible blowout WASHINGTON, DC No modern presidential election has by splurging on Iowa, Georgia or other Reports of an impending crisis in the been decided by campaign spending. That Democratic fantasies. It is focused on a president’s campaign are exaggerated is because both candidates always have narrower, but likelier, path to victory. centing blood, Donald Trump’s de- enough cash to achieve the single main Mr Trump’s campaign is spending a bit Stractors have leapt on the news that his point of it: near-universal name recogni- more widely. It is trying to shore up its cus- campaign has run down its huge cash re- tion among voters in the dozen or fewer tomary, yet perhaps vulnerable, advantage serves with gusto. After the New York Times swing states that determine the outcome. in Iowa and the rest, while also pushing reported last week that the campaign had This is even more obvious than usual tentatively into a couple of Democratic ripped through $800m in the 18 months to this year. The extraordinary stability of the states, including Minnesota and New July, headline-writers jostled to predict the polls (Mr Biden led Mr Trump by roughly Hampshire. The overall picture is of a tight serially indebted president was headed for seven points last October and the same race, in which Mr Biden’s campaign is hold- yet another “cash crunch”. That seemed to amount today) suggests most voters long ing a steady course, while Mr Trump’s is be confirmed by reports this week that his ago made up their minds about them. And probing nervously for possible alternative campaign has recently been outspent by if Mr Trump’s campaign is now husband- paths. That fits with the picture painted by Joe Biden’s in most swing states. Yet how ing its resources a bit, so what? It has ample the polls. It suggests Mr Trump’s campaign much does this actually matter? cash to hammer away at the tiny minority is lagging—but not in crisis. 7 The Economist September 19th 2020 United States 31

Abortion by pill demic, demand surged. In Texas, after all abortions were cancelled for several weeks, No scrubs demand nearly doubled. TelAbortion, an fda-approved programme run by Gynuity Health Projects, which operates in 13 states, has also seen growing demand. Most of the women Aid Access helps are poor. An increasing number have been un- WASHINGTON, DC able to afford the $95 it asks (but does not Medical technology is once again changing America’s original culture war require) for its services. Doctors say they hen women used to tell Susan Long the right to abortion established in Roe v have prescribed for many women who W(not her real name), a doctor in Wash- Wade. In July, a federal judge ordered the could not afford to travel to a clinic or cover ington state, that they wanted to terminate rule to be lifted during the covid-19 epi- the cost when they got there. Since 1976 the a pregnancy, she would refer them to an demic because it posed a “substantial ob- Hyde Amendment has forbidden the use of abortion clinic. Today, they need not even stacle” to women seeking an abortion. The federal funds for abortion. walk into her office: after an online consul- Trump administration has asked the Su- For the majority of Americans, who be- tation, she prescribes two pills, which she preme Court to intervene. lieve that abortions should be legal in the posts, along with instructions on how to It is difficult to argue against the judge’s first trimester but not thereafter, the take them several hours apart. logic for ditching this rule. During the epi- growth of abortion medication is good It is difficult to exaggerate the benefit demic, women in many places have had to news. Research suggests that access to for “innumerable” women of being able to wait longer than usual for an abortion. A medication using telemedicine leads to have an abortion at home, without having delay of a week or two can be distressing; fewer second-trimester abortions. Just as to arrange a trip to a clinic, she says, de- worse, it can mean the difference between ultrasound images of fetuses in the womb scribing some of them. The university stu- a legal abortion and an illegal one. The pro- foster pro-life views in some, this is a tech- dent living with her conservative parents, blem is particularly acute in America be- nology likely to shift views in the opposite hundreds of miles from the nearest abor- cause abortion access has already been so direction. Anti-abortionists will be keen to tion clinic. The woman whose violent hus- curtailed. Anti-abortion regulations have downplay this as they move their focus band is vehemently pro-life. Single moth- forced hundreds of clinics to close. Six from physical clinics to abortion by pill. In ers, strapped for cash and child care. Those states have only one left. February congressional Republicans intro- whose frail health prevents them risking Yet barriers to abortion by post remain. duced a bill banning “teleabortion”. This exposure to covid-19 at a doctor’s office. The biggest is that the court ruling in July month, 20 Republican senators wrote a let- Dr Long does this work for Aid Access, a has made little difference in the 15 states ter to the fda urging it to take mifepristone non-profit that prescribes and posts abor- that require a doctor’s presence when a off the market because it was “dangerous”. tion pills, mostly from overseas, to women woman collects abortion medication. In It will be more difficult to campaign in America. Many live in states that have re- those states, and wherever else women are against mail-order abortions than it has stricted access to abortion. The fda has or- unable to find doctors prepared to post the been against those done in clinics. A wom- dered Aid Access to stop doing this, saying drug to them, demand for Aid Access and an taking tablets at home inspires less in- it breaks the law. But it is only since July other such services will continue to rise. cendiary rhetoric than a doctor in scrubs this year that Dr Long has also been able to Research into the non-profit, which performing a dilation and evacuation. It is legally mail the pills to patients in her own was established in 2018, highlights the role later abortions, when the fetus is recognis- general practice, although she lives in a that abortion pills by mail can play when ably a baby, that provide the gruesome pic- state which has few abortion restrictions. health services are stretched. Abigail Aiken tures protesters wave outside clinics. They Previously that was impossible. of the University of Texas at Austin says seem unlikely to start waving them outside That is because although the Food and that within the first few weeks of the pan- women’s homes. 7 Drug Administration (fda) has approved the drugs—mifepristone, which blocks the effects of the pregnancy-enabling hormone progesterone; and misoprostol, which induces contractions—to abort pregnancies of less than ten weeks’ gestation since 2000, it has also imposed more stringent regulations than those that apply to most drugs in America. As a result, despite its relatively low cost, abortion by pill is less prevalent in America than it is elsewhere. In most northern European countries, abortion by this method accounts for more than two thirds of all terminations (see Britain section). In America, the figure is around 40%. Abortion-rights campaigners and the American College of Obstetricians and Gy- naecologists have lobbied the fda to drop its most burdensome requirement: that women collect one of the drugs, mifepristone, from a doctor’s office or clinic. They argue this is both unnecessary—research suggests the drug is safe—and a barrier to Just a click away 32 United States The Economist September 19th 2020 Lexington Fire and ice

Joe Biden is on course to make fighting global warming his signature issue main concern. And Mr Biden, a master at hewing to his party’s shifting currents, has further hardened this environmental consensus by using it to bridge the rifts exposed by his nomination. His appointment of John Kerry and Alexandria Ocasio-Cortez— emblems of the centre-left and activist left—to co-chair his climate-policy shop was evidence of that. So is the heterodox nature of his proposals. For example, though he dispensed with the socialism-by-stealth of the left’s Green New Deal—which included guaranteed jobs and Medicare-for-All—he has mollified Ms Oca- sio-Cortez’s faction by emphasising environmental justice, as well as with the scale of his ambition. Labour unions are reassured by his stress on job creation in low-carbon industries. Centrists are thrilled that he has bucked the left by remaining open to nuclear power and to the possibility of making fossil fuels safe by captur- ing the gases they emit when burned. In a sign of how the climate-policy debate often scrambles ideological positions, moderate Democrats are also largely responsible for limiting the scope of market mechanisms—either a cap-and-trade scheme or a carbon tax—in Mr Biden’s plan. Demo- cratic leaders in Congress consider them desirable but unsellable. Hence the more regulatory approach laid out in a 547-page climate plan released by House Democrats in June. While allowing for the his week America’s oldest magazine offered its first-ever pres- possibility of a nationwide carbon tax—as Mr Biden’s plan does—it Tidential endorsement. “We do not do this lightly,” said Scientific lays more emphasis on the sector-by-sector low-carbon standards American, in explaining its decision to come out for Joe Biden. But adopted in California—including zero-emissions from cars, as what choice did it have? The country is gripped by two science-re- well as power stations, by 2035. Mr Biden’s plan follows suit. lated catastrophes, a global pandemic and global warming. Donald Implicit in the way it is designed to have maximum Democratic Trump downplays the first on a good day (as America’s death- appeal is an assumption that a Biden administration could count count approaches 200,000, he predicts it will soon “go away”) and on no Republican support. That is a reasonable precaution. While denies that humans are causing the second. During a visit to Sacra- Democrats and independents have become more concerned about mento this week, to acknowledge the wildfires that have so far in- climate change, opinion on the right has hardly moved. Like Mr cinerated over 5m acres of forest and thousands of homes and Trump, half of moderate and 75% of conservative Republicans killed at least 35 people, he assured a roomful of silent, serious Cal- deny the link between human activity and global warming. At the ifornians that global warming was about to go into reverse. same time, any Republican tempted to break with his or her party In a speech delivered in Delaware the same day, Mr Biden should not find Mr Biden’s proposals off-putting. His emphases on meanwhile underlined his determination to introduce at a nation- growth and technology are hard to argue with. The recent rise of real level the policies to combat climate change that America, almost newables industries—which employ a lot of people in Republican uniquely among Western democracies, still lacks. Where Barack states—has also made them less divisive. And the fact that Mr Bi- Obama made the issue secondary to health-care coverage, and Hil- den would probably jam much of his promised $2trn splurge into a lary Clinton put it behind immigration and other promised re- broad, post-virus stimulus package would provide moderate Re- forms, Mr Biden promises to make tackling climate change his pri- publicans with additional cover on their right flanks. ority. His proposals, with an important caveat, reflect that degree The politics and economics of climate change may thus, for of urgency. There is no starker contrast between the Republican once, be coming into alignment. The issue has already gone some president and his Democratic challenger than on this issue. way to making sense of Mr Biden’s unexciting candidacy. One of its The climate plan Mr Biden released in July includes faster, overarching promises is to salvage Mr Obama’s legacy, then im- deeper cuts to America’s carbon emissions than either of his prove upon it; the former president’s climate record is in dire need Democratic predecessors envisaged. Mr Biden promises a com- of both services. Another is to rebuild America’s economy at home mitment to decarbonising the electricity grid by 2035. To that end, and reputation abroad; Mr Biden’s climate plan could help do both. he pledges among other things to invest $2trn in renewable energy and other technologies over four years. He would also commit But there’s no escaping the flames America to cutting its emissions to net zero by 2050. Mr Obama’s The lurking caveat to this upbeat prospect is that the regulatory ap- failure to enshrine a much more modest commitment—an 80% proach he is pushing will almost certainly deliver much slower, emissions reduction by 2050—indicates how bold that would be. more partial and more inefficient progress than he predicts. Amer- Yet, if backed by a Democratic-controlled Congress, Mr Biden ica is not California. A Biden administration’s sector-by-sector would probably have a much better chance of making progress on carbon standards would draw a storm of legal challenges, stalling the issue than Mr Obama had. them and making them vulnerable to partisan judges and hostile That is chiefly because his party is desperate for him to do so. successors. That is not to knock Mr Biden’s plans unduly; they may Before covid-19 hit, the combination of Mr Trump’s denials with well be as bold as is politically feasible. But what is feasible in ever-worsening wildfires, hurricanes and floods had made Demo- America’s dysfunctional politics is likely to be much less than the cratic voters increasingly likely to cite climate change as their country—and in this instance the world—requires. 7 The Americas The Economist September 19th 2020 33

Colombia dent, Gustavo Rojas Pinilla, a former army general, put the defence ministry in charge Fight crime, not war of the police. Their paramilitary status made some sense during Colombia’s war against the farc, a Marxist guerrilla group, which began in 1964, and its fight against drug lords like Pablo Escobar. Under Plan Colombia the United States gave the gov- BOGOTÁ ernment billions of dollars over 30 years to A citizen’s killing by militarised police shows the need for reform combat drug-trafficking, much of which arly on september 9th police in Bo- different. The United States has nearly went to the police. Today the force is Egotá, Colombia’s capital, arrested Javier 18,000 police forces, most under local con- 159,000-strong, more than double what it Ordóñez, a taxi driver and father of two, for trol. Colombia, with a sixth of the United was in the 1990s. drinking alcohol in the street. A video that States’ population, has just one. It is the The threats that justified outfitting it in went viral shows two officers pinning him only democracy in which all the police are military green have lessened, but not dis- down. One pressed his knee against Mr Or- controlled by the defence ministry. Their appeared. Escobar was killed in 1993. The dóñez’s back and tasered his hips. The offi- duties range from flying Black Hawk heli- farc laid down their arms in 2017. Today’s cers stopped the filming, but witnesses say copters to search for coca bushes in the menaces include smaller drug-dealing that Mr Ordóñez was unconscious when jungle, to cracking down on public booz- gangs that have the command structures of they took him to the nearest police station. ing. They wear military green, are grouped guerrilla groups but not their ideologies. He died hours later. into military ranks and often carry rifles, These include farc guerrillas who refused In the protests that followed, people in whether patrolling city streets or remote to disarm and the Clan del Golfo, which is Bogotá and other cities burnt buses and po- rural areas. As long as the police remain composed of demobilised right-wing para- lice stations. Police fired gunshots and tear part of the defence ministry, they cannot be militaries. This year across Colombia ille- gas and beat up bystanders; protesters reformed, says a retired police general. gal groups have murdered more than 100 hurled back stones. By the time the tumult This blending of soldiery and constabu- community leaders for such affronts as died down, 13 people had died and hun- lary began in the 1950s. In response to polit- pushing for the restitution of land to peas- dreds of policemen and protesters had ical violence, in which mayors used police ants. They carried out 15 massacres in Au- been injured. Colombia has never before forces against their foes, the then-presi- gust alone, mainly of people they suspect- seen such a display of rage against the po- ed of sympathising with rivals. In parts of lice, says David Gómez, a security analyst. the northern department of Córdoba Also in this section The protests echo those that followed armed groups extort monthly payments the killing by police in Minneapolis in May 34 Barbados dumps the queen from businesses. They, not the police, have of George Floyd, a black man. But the police imposed lockdown rules and fined those 35 Bello: The Monroe doctrine is back force against which they are aimed is very who break them. 1 34 The Americas The Economist September 19th 2020

2 Colombian cities, where four-fifths of to increase their funding. Currently, they people live, have the sorts of crime that compete for resources with the army, plague others in Latin America. Three cit- which wields more power in the defence ies are among the 50 with the highest mur- ministry. The police receive 27% of the der rates in the world. “Micro-trafficking” ministry’s budget, about what they did at drug gangs dominate poor neighbour- the height of the war with the farc. The hoods and profit from other crimes, such ministry buys equipment for the armed as prostitution. Reported robberies, from forces, but leaves it to governors and may- pickpocketing to muggings, have risen ors, most of whom have little cash to spare, fivefold over the past decade. Reports of to equip the police. domestic violence have risen by at least Police officers make the same low sala- 165% during the pandemic. Recorded rape ries as soldiers, which discourages educat- of women and children is the highest it has ed people from joining the force. Nearly a ever been. More than four-fifths of bogota- tenth of police are conscripts. The system nos feel unsafe, according to surveys. of military ranks encourages obedience Colombia’s police do not make people rather than independent thought, believes feel safer. They glorify combat, says Santia- Liliana Mesías of the Ideas for Peace Foun- go Tobón, a researcher at eafit University dation, a think-tank. in Medellín. Preventing crime is “not so After Colombia ended its war with the sexy”, says Andrés Villamizar, who until farc, reformers hoped the police would 2019 was head of security in Cali, once the become a conventional constabulary, sepa- headquarters of the “Cali cartel”, now a hot- rate from the defence ministry. Juan Ma- bed of small-scale dealing of drugs and nuel Santos, the president who signed the Current monarch, with future president? bootleg alcohol. It has Colombia’s highest peace deal, set up a commission to propose murder rate and ranks 26th in the world. reforms, but then lost interest. Zealand and three Pacific islands. Like oth- Urban policing is based on “quadrants”, The current president, Iván Duque, is er Caribbean people, many Bajans, as Bar- designated patrol zones which vary in size hostile. His conservative supporters see badians are also known, find it odd that depending on how rife crime is in the area. police reform as an attack on the security their ceremonial leader is a white woman A two-officer team is supposed to be on pa- forces, which they have historically de- who lives an ocean away, however much trol in each quadrant at all times. But there fended. While apologising for Mr Ordó- they like her. Some of the monarchy’s sym- are too few police to meet that goal, says Al- ñez’s death, the defence minister blamed bols make them queasy. The governor-gen- berto Sánchez, a security analyst in Bogotá. the burning of police stations on guerrillas. eral is Dame Grand Cross of the Order of St A team patrols three or four quadrants, of- Some defenders of the status quo say Michael and St George, whose badge de- ten working overtime. Officers are ex- that a militarised police force is still need- picts a white-skinned angel stomping on a hausted. That is one reason for slow re- ed to deal with militias such as Clan del prostrate black-skinned Satan. sponses to reports of crime and the city’s Golfo. That makes sense, but does not justi- Dame Sandra pronounced the words high number of thefts, says Mr Sánchez. fy green uniforms on city streets. Crime but their author was Barbados’s prime min- Police do a bad job of investigating, bring- has changed since Colombia ended its war ister, Mia Mottley. Her Barbados Labour ing charges in just a quarter of murder with the farc and the likes of Escobar. The Party has all but one of the 30 elected seats cases. In Europe the rate is four-fifths. tragedy of Mr Ordóñez suggests it is time in the lower house of Parliament. Ms Mot- The problem may get worse. In 2018 a for policing to change, too. 7 tley will have no problem mustering the court ruled that many officers could retire two-thirds majority in both houses needed after 20 years of service rather than 25. to dump the monarchy. She has not yet Since then 10,000 have left the force; 15,000 Barbados made clear how Barbados will choose its could soon follow. The defence ministry future head of state. says it plans to recruit 8,500 officers a year. Bajan bye-bye Many former British colonies have con- Abuse by police is widespread. Surveys templated the republican idea, only to dis- suggest that most victims do not report it. cover that it is hard to execute. Barbados Nonetheless, from January to August Bo- dithered for nearly a quarter of a century. A gotá’s mayor’s office received 137 com- constitutional commission proposed in plaints of excessive use of force, many 1998 that the country become a republic. A Caribbean island dumps the House from street workers and gay people. The Successive governments promised refer- of Windsor police inspector’s office is supposed to in- endums to confirm public support for the vestigate them, but it is not independent hen sandra mason gave her annual idea, but never held one. Ms Mottley does and reports to the national police director. W“throne speech” to open Barbados’s not think she needs a referendum to get her Killings like that of Mr Ordóñez are rela- Parliament on September 15th, she pro- republic, and is not constitutionally re- tively rare. Last year police killed 90 people, posed the abolition of her own job. As the quired to hold one. according to the National Institute of Legal country’s governor-general she represents Other Caribbean monarchies have flirt- Medicine. That is probably an underesti- Queen Elizabeth II, its head of state. From ed with republicanism without embracing mate. Brazilian police killed more than November next year, in time for the 55th it. Jamaica’s prime minister, Andrew Hol- 5,800 in 2019. But Mr Ordóñez’s death has anniversary of independence from Britain, ness, proposed a referendum before his made police reform a big issue. Bogotá’s Barbados will be a republic, Dame Sandra election in 2016. He won a second term this mayor, Claudia López, has called for the declared. “The time has come to fully leave month, campaigning on a manifesto that force to be transferred to civilian control, our colonial past behind,” she said. “Barba- merely promises “consultations” on the is- and for wayward police to be tried in ordin- dians want a Barbadian head of state.” sue. Ralph Gonsalves, of St Vincent & the ary courts rather than military tribunals. Barbados is one of nine Caribbean Grenadines, is the only Caribbean prime Such changes might help not just to countries in which the queen fills that role. minister to have held a referendum on change the mindset of the police, but also She also does in Australia, Canada, New adopting a republican form of govern-1 The Economist September 19th 2020 The Americas 35

2 ment. He campaigned for the change in which became a republic in 1976, is elected On rare occasions governors-general 2009, and lost. by Parliament, and has real powers. In 1997 can be political players. Paul Scoon, who The many u-turns on republicanism are the prime minister of the day, Basdeo Pan- represented the queen in Grenada in the due to the fact that replacing the monarch day, backed a former one, Arthur Robinson, 1980s, cohabited for four years with a pro- with a president involves unpicking a who became president. In an election four Cuban “people’s revolutionary govern- country’s constitution. Governors-general years later both parties won the same num- ment”. After the prime minister, Maurice are formally appointed in London, but are ber of seats. It fell to Robinson to pick the Bishop, was deposed (and killed) in 1983 by in fact chosen by the prime minister. But a winner. He chose Mr Panday’s opponent, someone still more radical, Scoon asked prime minister can’t simply choose a head Patrick Manning, for his “moral and spiri- the United States, then governed by Ronald of state. A more democratic way must be tual values”. Furious, Mr Panday and his Reagan, to invade. The Americans booted found, but that risks giving legitimacy to supporters blocked parliamentary pro- out the Marxists and freed Scoon from someone who could become a rival. Few ceedings. Fears of a similar confrontation house arrest. Dame Sandra’s remaining 14 prime ministers want that. may have led some Caribbean leaders to re- months as the queen’s woman in Barbados The president of Trinidad & Tobago, consider their support for republicanism. are unlikely to be so eventful. 7 Bello The return of the Monroe doctrine

A defeat for a weak and divided Latin America nly a decade ago Latin America reforming president, and one who re- few governments—and many of the Oseemed to be making a mark in the spects the views of the board of governors. region’s most distinguished former world. Enriched by a commodity boom Ojalá (if only), as Latin Americans say. leaders—opposed Mr Claver-Carone. Yet and with democracy contributing to It is reasonable to assume that if Mr they failed to unite behind a better qual- social progress, many of the region’s Trump wins a second term in November ified candidate; 23 of the region’s 28 governments felt part of “the rise of the the idb will become a tool of United States governments, including Brazil and Co- south” in a multipolar world. John Kerry, foreign policy. Mr Claver-Carone shares lombia, bowed to Mr Trump’s will. Barack Obama’s secretary of state, said in the obsessions of his political sponsor, That it can no longer lead one of its 2013 that the United States saw its newly Senator Marco Rubio of Florida. One is to flagship international institutions self-confident neighbours as equals. overthrow Cuban communism as well as marks a nadir for Latin America. The “The era of the Monroe doctrine is over,” the Venezuelan regime. The other is to region is dis-integrating. For that, the he declared, referring to an early Ameri- drive China out of Latin America. Mr Cla- hubris of the Latin American left when in can president’s warning to European ver-Carone talks of hiring more staff from power a decade ago is partly to blame. monarchies to keep out of the western small countries in Central America and the Hugo Chávez in Venezuela and Luiz hemisphere, which gradually evolved Caribbean, where China and Venezuela are Inácio Lula da Silva in Brazil forged in- into the belief that the United States was influential. More lending to those coun- tegration schemes based on political the hegemon of the Americas. tries may follow. alignment (and more or less explicit Under President Donald Trump, the Many Latin Americans would like to see anti-Americanism) rather than abiding Monroe doctrine seems to be back. In democracy come to Cuba and Venezuela, national interest. Leftist excess contrib- 2019 John Bolton, then Mr Trump’s na- and worry about Chinese influence. But it uted to polarisation and the advent of its tional security adviser, proclaimed it to is hardly in the region’s interest to let these opposite. Jair Bolsonaro, Brazil’s hard- be “alive and well” in a speech in which concerns overwhelm others or to divert right president, used Mr Trump’s victory he pledged to topple the dictatorships of development money away from needs as a template for his own in 2018. His Venezuela and Cuba. The United States made even more pressing by the pandem- government has slavishly aligned with has so far failed in that, but its neo- ic, such as strengthening health care and his idol’s, out of ideological conviction. Monrovianism has now produced a education in the countries where most That seems to be the case, too, with Iván victory. It will take over the presidency of Latin Americans live. For these reasons a Duque, Colombia’s president, who de- the Inter-American Development Bank scribes himself as a moderate but on (idb), a big regional lender which, foreign policy is not. though based in Washington, dc, has Another factor is weakness. The been in Latin American hands since its pandemic has struck the region hard founding in 1959. On September 12th a after years of economic stagnation. Many virtual meeting of the board of governors presidents are in no mood to take risks. chose Mauricio Claver-Carone, the Mexico’s Andrés Manuel López Obrador, Trump administration’s top official for a bully at home but a coward abroad, first Latin America, as the bank’s president. backed and then scotched an Argentine He is a controversial choice, and not plan to prevent a quorum at the go- just because his election breaks with vernors’ meeting to stop Mr Claver- precedent. Until 2017 he was a lobbyist Carone. Mr López Obrador mistrusts against Cuba’s communist regime. A international financial institutions. conservative Republican with limited Other governments reckoned Mr Claver- experience of economic development, he Carone was best placed to increase the is the chief architect of the sanctions the idb’s capital and thus its loans. Few want administration has imposed on Venezu- a fight with Mr Trump. They prefer to ela. He insists that he will be both a hide in the wings of the world stage. 36 Asia The Economist September 19th 2020

After Abe power could not be more divergent. Mr Abe is a princeling, the son of a foreign minister Searching for Suga-san and the grandson and great-nephew of prime ministers. Mr Suga is the son of a farmer and a schoolteacher from Akita prefecture, a rural backwater in the north of Ja- pan. He is the first ldp leader since the party’s founding in 1955 who does not be- TOKYO long to any faction. He is also the first in Japan’s new prime minister promises continuity. But he also represents change nearly 30 years who did not inherit his seat istorical role models say a lot about days later he was sworn in as Japan’s 99th in parliament from a relative. Hpolitical leaders. Suga Yoshihide’s is prime minister. Promising continuity and After leaving home for Tokyo, Mr Suga Toyotomi Hidenaga, the younger brother stability amid the covid-19 pandemic, he first worked in a cardboard factory. He en- and right-hand man of Toyotomi Hide- secured the support of party heavyweights. tered politics as a secretary to a politician yoshi, the better-known warlord who un- More than half of his cabinet are holdovers in Yokohama, and eventually rose through ited Japan in the 16th century. As Abe from the Abe administration; the newcom- the city council to the national Diet. Shinzo’s loyal chief cabinet secretary for ers include Mr Abe’s brother, Kishi Nobuo, Those backgrounds also shaped the two nearly eight years, Mr Suga played a similar as defence minister. leaders’ priorities. Mr Abe’s mission was behind-the-scenes part, excelling at mobi- Although Mr Suga and Mr Abe’s fates reviving Japan’s standing on the world lising Japan’s sprawling bureaucracy. De- have long been intertwined, their paths to stage and revising Japan’s constitution to spite his powerful position, he was unrec- legalise its armed forces. He saw his plans ognisable to many voters until last year for economic revival as a means to those when he revealed the name of Japan’s new Also in this section greater ends. For Mr Suga, economic reviv- imperial era, earning the moniker “Reiwa al is a goal unto itself. As chief cabinet sec- 37 Desultory Afghan peace talks Ojisan”, or Uncle Reiwa. retary, he pushed for more competition in Following Mr Abe’s resignation due to 38 Migrant labour in Singapore agriculture and telecoms, advocated free- ill health on August 28th, Mr Suga has taken trade agreements and worked to stimulate 38 Koalas and politics in Australia centre stage. “Now I am aiming for Hide- inbound tourism. He also championed yoshi,” he told a chapter of the ruling Liber- 38 A run of Pacific plebiscites measures to admit more foreign workers. al Democratic Party (ldp) during the brief “His passion is on the domestic side,” says 40 Banyan: Asia’s stranded workers campaign to replace Mr Abe as party leader. Gerald Curtis of Columbia University. On September 14th he won a resounding 41 Bangladesh and China Mr Suga will need all the passion he can victory in the ldp’s internal contest, col- muster. Mr Abe imbued Japan’s economy 41 A distracting media frenzy in India lecting 377 of the 535 possible votes. Two with dynamism after decades in the dol-1 The Economist September 19th 2020 Asia 37

2 drums. But covid-19 has set it back and de- side world. Mr Suga has shown little inter- hail from the same tribe and province. flationary fears have returned. Mr Suga est in foreign affairs, an area where Mr Abe The sessions began gently, setting promises to stick with “Abenomics”, in- shone. Second is his own party. Not belong- ground rules and an agenda. Both sides cluding expansionary monetary policy and ing to a faction may afford Mr Suga some called for patience and warned against fiscal stimulus. Yet the Bank of Japan has flexibility. But it may also leave him vulner- spoilers trying to sabotage the talks. The little room for manoeuver left. So the “third able to intraparty machinations if he stum- government’s priority is a ceasefire. Scores arrow” of structural reform will become bles, especially as next year’s ldp election of civilians are being killed and wounded ever more essential, says Muguruma Na- draws closer. Third is the public. Mr Suga every week. Hopes that violence would omi of Mitsubishi ufj Morgan Stanley Se- lacks charisma and has a combative rela- subside after America’s deal with the Tali- curities, a financial joint venture. tionship with the media. ban were dampened in the summer. A Along with curbing the pandemic, that Mr Suga has sought to shape a new im- study by the Afghanistan Analysts Net- will be Mr Suga’s mission as prime minis- age, emphasising his hardscrabble life work, a research group, found that both ter. “I don’t think he will use the expression story and his fondness for pancakes. “As sides have become more restrained in pro- ‘third arrow’,” says Niinami Takeshi, ceo of the eldest son born on an Akita farm, I want claiming offensives; more attacks are oc- Suntory Holdings, a giant drinks company, to cherish rural regions,” he declared in his curring without claims of responsibility. and an adviser to the government. “But he first press conference as prime minister. The killing, however, has been largely un- will work on deregulation and structural His chance to forge a new compact with diminished. Violence is the Taliban’s big- reforms.” The mix might include measures voters may come sooner rather than later. gest bargaining chip, so they will be loth to to boost workers’ productivity, digitise The Diet’s mandate lasts until next au- give it up. They know that force of arms is government services and improve co-ordi- tumn, but talk of an early election is ram- what has won them a seat at the negotiat- nation between ministries. pant. It would be a perilous move amid the ing table. Such changes will face fierce resistance. pandemic. But it would also be a statement At some point the thorniest issues must Success will depend on Mr Suga’s ability to that Mr Suga is ready to leave the shadows be tackled. How should the country be gov- manage three challenges. First is the out- and embrace the limelight. 7 erned? How to allocate power? What rights will be enshrined in a constitution? These issues may take months, if not years, to re- The Afghan peace negotiations solve. The Taliban have given little detail of what they want. Mullah Abdul Ghani Bara- Clearing their throats dar, their deputy leader, merely declared in the opening ceremony that his side wanted “a free, independent, united and developed country...with an Islamic system in which all tribes and ethnicities find themselves without any discrimination and live their ISLAMABAD lives in love and brotherhood.” The two sides are talking, but have yet to tackle the main issues Pressed on women’s rights, the Taliban fter six months of intransigence and mander of nato forces in Afghanistan and have previously said only that they will be Adelay, the Taliban and Afghan govern- a past target of Taliban assassins, ex- protected under Islam. Such vagueness has ment leaders at last sat down together on changed pleasantries with his foes. Some not reassured many Afghan women. After September 12th in Doha, the capital of Qa- saw hints of a less fractured country, as Ma- all, the Taliban claimed to protect them in tar, to seek an agreement on how to run soom Stanekzai, leading the government the 1990s while forbidding them to work or their country. An accord in February be- team, and Sher Muhammad Abbas Stanek- go to school. Now they must spell out how tween America and the Taliban mainly zai, the Taliban’s deputy chief negotiator, far they have shifted from their fundamen- concerned the promised withdrawal of talism. Rifts may emerge between moder- American troops by next May, as long as the ate factions and doctrinaire stalwarts who Taliban guarantees not to harbour terro- want to restore their former “emirate”. Nor rists like al-Qaeda. has the Afghan government submitted The Afghan government was not part of many details. Ashraf Ghani, the president, that deal. The talks that have just begun has merely called for “a sovereign, demo- will focus on the shape of the country once cratic and united republic”. the Americans have gone. Grievance and The talks are behind closed doors, with- bloodshed have mounted over the four de- out foreign officials. America, as the Af- cades since a coup overthrew the monar- ghan government’s main backer, still chy in 1978. Millions have been displaced looms large, but its influence is waning and hundreds of thousands killed. The and changing. The delays in getting the meddling of foreign powers has made mat- talks going plus intelligence that the Tali- ters much worse. “The current conflict has ban are still chummy with al-Qaeda could no winner through war and military have given President Donald Trump an ex- means,” said Abdullah Abdullah (pictured), cuse to slow his troop withdrawal. But the the head, in effect, of the government’s ne- number fell from 13,000 in February to gotiating team. “But there will be no loser if 8,600 in June—and is expected to fall to this crisis is resolved politically and peace- 4,500 before the American presidential fully through submission to the will of the election in November, letting Mr Trump people.” tell voters he has kept his promise to end Both sides were on their best behaviour the war. His opponent, Joe Biden, is not as the talks opened in a plush hotel ball- keen on America’s Afghan venture either. room. Opponents greeted each other like The gis are clearly on their way out—but it old friends. General Austin Miller, com- Peace in our time is not clear what they are leaving behind. 7 38 Asia The Economist September 19th 2020

Labour in Singapore proper” and reminded the lower-court cording to Justice Chan. He ruled that the judge “that an accused person is presumed prosecution “failed to dispel the reason- Aggrieved Parti innocent” until proven otherwise. able doubt raised by the defence”, who ar- The ordeal began in 2016, when Ms Li- gued that the Liews framed Ms Liyani to yani was summarily sacked by Karl Liew, stop her from reporting them to the mom. the son of Liew Mun Leong, her employer The police, the mom and the attorney- and a powerful figure in business who, general’s chambers are reviewing their among other things, was chairman of the handling of the case. On September 10th SINGAPORE state-owned Changi Airport Group. Ms Li- the elder Mr Liew resigned from his public A rare victory for a domestic worker yani threatened to inform the Ministry of posts. That will be small comfort to the he case should have been thrown out. Manpower (mom) that the Liew family had 260,000 foreign domestic workers in Sin- TThe police investigation was botched. broken the terms of her contract by having gapore. A quarter of those assisted over the The accuser’s testimony was riddled with her regularly clean Karl’s home and office. past three years by home, a charity, say inconsistencies. But on March 20th last She was escorted from the premises before they have been illegally deployed. But most year Parti Liyani, an Indonesian maid ac- she could finish packing. The next day the do not know their rights, rely on the good- cused by her Singaporean employer of at- Liews claimed that they found $50,000- will of their employers to remain in the tempted theft, was convicted and sen- worth of their stuff in Ms Liyani’s boxes. country and cannot afford legal fees. Those tenced to 26 months in jail. That is where The police issued a warrant for Ms Li- who do complain sometimes face retribu- she would be now, were it not for her suc- yani’s arrest, but did not visit the scene of tion. It is “a known defensive measure”, Ms cessful appeal to the High Court—a rare the crime for over a month and did not Liyani’s lawyer said in court, for employers feat for a foreign domestic worker. On Sep- seize the evidence for more than a year. The to try to silence aggrieved maids with false tember 4th she was acquitted by Justice trial judge disregarded such irregularities accusations. Ms Liyani knows that all too Chan Seng Onn, whose ruling declared her and imposed a greater burden of proof on well. She has been out of work since she employer’s motive for filing charges “im- the defendant than on the plaintiffs, ac- was fired by the Liews. 7

Liberals, Nationals, marsupials Paciﬁc plebiscites Koalition politics No island is an

SYDNEY island Koalas nearly bring down the government of New South Wales veryone likes koalas. Lots of people worry about their dwindling num- WELLINGTON E A series of referendums is attracting bers. When fires tore along Australia’s attention in faraway countries east coast last summer, some humans risked their lives to rescue them. Strange, esting the popular will does not come then, that a dispute about their conserva- Tnaturally to Melanesian governments. tion almost blew up a harmonious co- Policy decisions are normally taken behind alition government in New South Wales. closed doors, away from the prying eyes of Its two contingents, the Liberals and the general public. That may now be chang- the Nationals, have governed in a conser- ing. New Caledonia, still a French posses- vative partnership for generations. This sion, and Bougainville, an island at the falling out was triggered by an obscure eastern end of Papua New Guinea (png), policy which makes it somewhat harder held referendums on independence in 2018 for landowners to cut down trees in and 2019. New Caledonia will hold a second which koalas might live. The rules came such vote on October 4th. Enthusiasm for into force months ago and greens view direct democracy is becoming infectious. them as far too weak. But to the Nation- No right to bear harm The premier of tiny Malaita, the most pop- als, who represent farmers, they are “the ulous province in the Solomon Islands, epitome of overbearing bureaucracy”. rivers. Many supporters feel ignored. now wants to hold his own referendum on On September 10th their leader in the Populists have exploited these frustra- secession in protest against his national state, John Barilaro, announced that his tions for years. The latest threat comes government’s overtures to China. mps would stop voting with the state from the prosaically named Shooters, Bougainville’s 250,000 people are in the government until the policy was pared Fishers and Farmers Party. midst of their first election since the refer- back. That would have left the Liberals in Mr Barilaro’s answer is to shout more endum of 2019, when 97.7% voted for inde- the minority in the state assembly. The loudly that “we cannot allow city-centric pendence. But that vote was non-binding, mutiny crumbled when the premier, politics to dictate our way of life in the requiring only that the png government Gladys Berejiklian, threatened to strip bush”. Rural Australians have never liked open negotiations on the island’s future the Nationals of their ministries. But the being preached to about the evils of status. png’s prime minister, James Ma- underlying problems persist. felling trees and the like. But concerns rape, is adamant that Bougainville lacks As a pair, the Liberals and Nationals about such things are growing in more the economic clout to survive as an inde- win more elections than the opposition populated, suburban Liberal-voting pendent state. Bougainville once boasted Labor party. But support for the Nationals areas. Neither side can win elections one of the world’s largest copper mines, but is waning. Their rural strongholds are alone. But it is getting harder, says Paul it was closed down in the civil war of scorched by drought and compete with Williams of Griffith University, “to main- 1988-97, leaving the island devoid of profit- one another for water from near-dry tain the façade of a happy marriage”. able exports. The front-runner in the contest to lead its autonomous government,1 Only a big thinker could turn steel into oxygen.

Architects have discovered how steel facades with rainscreens can improve the air quality inside a building. BHP is proud to help these big thinkers by supplying the steel they need. And we’re committed to doing it sustainably. Because we want to improve the air inside buildings, not just outside of them. For details, visit bhp.com/BigThinkers. 40 Asia The Economist September 19th 2020

2 Ishmael Toroama, once commanded the French tricolour on the campaign trail. On rying Chinese workers hired to prepare fa- Bougainville Revolutionary Army, which a visit to the territory in 2018, President Em- cilities for the Pacific Games in 2023. “We fought bloodily for independence from manuel Macron waxed lyrical about the will be closing access to Malaita,” Mr Sui- png in the early 1990s. vast stretches of the Pacific that remain a dani declared angrily, promising at the Whereas Bougainvilleans opted em- part of France. same time to shut down stores run by eth- phatically for independence, New Caledo- Geostrategic rivalries are shaping Ocea- nic Chinese on the island. nians voted against it in 2018, by 57% to nia’s local struggles. The Solomon Islands Taiwanese diplomats stirred the pot by 43%. That was the first of three scheduled shifted diplomatic recognition from Tai- meeting Malaitan officials in Australia in referendums on whether to split from wan to China last year. Malaita’s premier, March. Since then Taiwan has sent con- France, the territory’s colonial ruler since Daniel Suidani, rejected that switch, con- signments of surgical masks, bags of rice 1853. Since then, fervent French loyalists demning China for its communism and and thermal-imaging equipment. Whether have regrouped, taking control of the local atheism. Despite the border being closed or not they are independent, the islands of government. The French government is against covid-19, a direct flight from the Pacific will not be insulated from big- not neutral. It has let loyalists hoist the Guangzhou arrived on September 2nd, car- power rivalry. 7 Banyan No pay, no rights, no recourse

Asia’s border-crossing workers are having an especially rough time under covid-19 he 200-odd Bangladeshi and Indian Most Asian states like their foreign workers, refugees and potential asylum- Tmen engaged to build a new resort on workers to be out of sight when they are seekers who had found work there. Con- Baa atoll in the Maldives were becoming not doing something useful. In Singapore ditions in Malaysia remain appalling, increasingly desperate. Since covid-19 323,000 labourers, most from South Asia, with many migrants sleeping in shifts in closed the island nation to tourists in are housed in dormitories on the edge of plywood shanties. The government has March, migrant workers had been forced town. Early in the pandemic the govern- given little aid to migrants, a bedrock of to work without pay. They were living in ment soaked up praise for its deft handling the economy. Nor have cash-strapped cramped, squalid conditions and were of covid-19. But it had a blind spot: the embassies been much help. “In Singa- short of food, clean water, medical atten- crowded dorms. Soon, the virus was pore,” says Alex Ong, of Migrant Care, an tion and even soap. In May they aired spreading fast among foreign workers, ngo, “at least they have beds.” their grievances in a silent protest. In a who now account for 94% of nearly 58,000 As economies open up, conditions are confused event a while later, they briefly cases in the city-state. improving. At the peak, Migrant Care was took a few locals hostage—apparently At least the authorities were quick to distributing food to 2,300 migrants. Now believing they were mobsters sent to test foreign workers and to improve their it is feeding fewer than 100, mainly threaten them. In July they took their conditions. Workers have been given mothers and small children. Work is protests to the capital, Malé. The authori- Wi-Fi, extra food and medical attention. In returning: for instance, global demand ties’ response? To brand the workers a neighbouring Malaysia the picture is for Malaysian-made rubber gloves is threat to national security and deport bleaker. The country has 4m-6m regular booming. But returning, too, is labour dozens of them. They were at least able to and irregular migrant workers, notably abuse. Factory bosses are forcing for- return home. from Indonesia, Myanmar and Bangla- eigners to work excessive hours without The Maldives has perhaps 230,000 desh. Huge numbers lost their jobs as breaks. Meanwhile, millions of migrant legal and illegal foreign workers, or malls, factories and construction sites workers remain in Kafkaesque limbo. nearly one for every two Maldivians. closed. Under Malaysia’s “movement Many who are still unable to find work Many have their passports confiscated by control order” the army barricaded a vast also struggle to return home, because of employers, have to pay exorbitant fees to area around the Selayang wholesale mar- closed borders, an absence of transport employment agencies or are, in effect, ket on the edge of the capital, Kuala Lum- routes or a lack of money. That puts trafficked, with no clear knowledge of pur, locking in thousands of migrant them, unwittingly, on the wrong side of whom they are working for. Now, thanks the law as residency permits expire. to the pandemic, they have lost their jobs Back in the Maldives, there is perhaps or are denied pay. a bright spot. The police have accused the Across the Asia-Pacific region, which company that recruited the protesting is the world’s biggest supplier and user of workers, which is owned by a local mp, of foreign migrant labour, the details vary, trafficking and other labour abuses. In but the general picture is depressingly Malaysia Mr Ong says the recovery pro- familiar. Asia’s 33m-plus migrants— vides a “golden opportunity” to overhaul those who build the gleaming cities and the system of recruitment of migrant resorts, clean and cook for the growing workers, and especially to do away with middle classes, and keep a billion toilets politically connected operators. These clean—lead lives that were hard before grow fat securing government quotas for the pandemic. (One Filipina domestic workers whom they, in effect, sell on to helper in Hong Kong whom Banyan employers in need of them. One of the knows was forbidden a day off for a worst abuses of the colonial era in Asia month because she shrank her boss’s was the coolie system of labour. But designer t-shirt in the dryer.) They have contemporary Asian governments pre- become only more precarious. side over something eerily similar. The Economist September 19th 2020 Asia 41

Bangladesh and China fame as the hero of a biopic about a revered More buck for your Bang cricket captain was itself a filmi tale. His ap- Two-timing Bangladesh, FDI net inflows, $bn parent slide into depression raised just the kind of questions about the underside of 1.2 the film industry that India’s raucous chat China 1.0 shows and gossipy social media love to India 0.8 chew over. Yet when an ambitious actress and As relations with India are strained, 0.6 members of Mr Rajput’s family began to air ties with China grow stronger 0.4 charges that the actor had been corrupted ylhet, a city in north-eastern Bangla- by an entourage of drug pushers, fleeced of Sdesh, is some 50km from the border 0.2 his earnings and perhaps even driven to with India. But when the government 0 kill himself, the story took on a sinister awarded a $250m contract in April to build hue. The more sensationalist news chan- 19181716152014 a new airport terminal in the city, the Indi- nels trained their sights on Rhea Chakra- Fiscal years ending June 30th an bidder lost out to a Chinese firm, the borty, a 28-year-old actress and Mr Rajput’s Source: Bangladesh Bank Beijing Urban Construction Group. In June girlfriend, turning her into the villain of China granted duty-free access to 97% of the piece. Politicians, too, swiftly spotted Bangladesh’s exports. And this month Ban- soon as covid-19 arrived in Bangladesh, so opportunities. gladesh, seemingly despairing of a decade- did a team of Chinese doctors sent to help State elections in Bihar, to be held belong negotiation with India on a water- fight the epidemic. fore December, represent the biggest polit- sharing pact for the Teesta river, asked Chi- The wooing is working. The Chinese ical test for Narendra Modi, the prime min- na to finance a $1bn water-management government bullies its Muslims far more ister, and his Bharatiya Janata Party (bjp) project instead. systematically than India’s does. It was also since this year’s multiple crises began. The Bangladesh came into being thanks in slower to grant duty-free access to Bangla- state is India’s third most populous, and is part to India: in 1971its army intervened on deshi goods. Yet China is the target of much famed for the caste-infected complexity of the side of separatists battling the Paki- less criticism in the Bangladeshi media. its politics. The party’s strategists appear to stani army in what was then East Pakistan. Bangladesh’s government is a little have seen the actor’s suicide as a chance to Ever since, ties between the two countries more circumspect. It is wary of becoming pose as upholders of rustic Bihari virtue in have been close. But many Bangladeshis too indebted to China, and is careful not to contrast to the wickedness of Mumbai. have come to see India as a patronising and snub India. Narendra Modi, India’s prime There are political stakes in the big city presumptuous ally. “They don’t really be- minister, had been due to visit in March, too. Promoting Kangana Ranaut, the ac- lieve that we are independent,” says a Bang- until the coronavirus scuppered his trip. tress who spoke out about celebrity drug ladeshi journalist. “They interfere in every- Having such a huge and powerful neigh- culture, as a paragon of virtue, the bjp and thing. They think our bureaucrats work for bour nonetheless rankles. “India’s policy- its media toadies raised a ruckus about the them.” The various anti-Muslim policies of makers and its press cannot stop inces- supposed ineptitude of the city’s police. the current Indian government have exac- santly reminding Bangladesh that it is The subtext is that, since elections last erbated misgivings in Bangladesh, which smaller and less important,” says Mr Riaz. year, Mumbai and its surrounding state of is 90% Muslim. “China does not do that.” 7 Maharashtra have been controlled by a co- Cue a Chinese charm offensive. China alition that includes former ideological al- has built seven “friendship bridges” in lies and now bitter opponents of the bjp. Bangladesh in recent years. In 2018 it sup- Indian politics and media The Supreme Court waded into the af- planted India as the country’s biggest fair, ordering the Central Bureau of Investi- source of foreign investment (see chart). It Covid? What covid? gation, a national agency, to take over the is also Bangladesh’s biggest trading Rajput case. Two more federal bodies, the partner. On a state visit in 2016 Xi Jinping, Enforcement Directorate, which combats China’s president, promised to spend more financial crimes, and the Narcotics Control than $20bn on 27 infrastructure projects. Bureau (ncb), have launched their own in- “Chinese businesses are all over infrastruc- vestigations. The drug enforcers have been A real-life Bollywood tragedy becomes ture development, power and telecoms,” the fastest to concoct a case, arresting some a political farce says Zahid Hussain, a former lead econo- 18 people, including Ms Chakraborty. She mist with the World Bank in Bangladesh. hat story should top the news? That and her brother, also arrested, have been As well as deep pockets, China has few- Wcovid-19 cases are rising by nearly denied bail. er scruples than most Western benefactors, 100,000 a day? That the economy shrank by Mr Rajput’s relations have cheered the notes Ali Riaz of Illinois State University. In a shocking 23.9% last quarter? Or perhaps swift action. Yet to many, the campaign 2013 Bangladesh rejected a $1.2bn loan that an increasingly bellicose China is smacks of mob justice. And, just as Biharis from the World Bank to finance a bridge massing troops on the border? No! Even are being told to take umbrage over Mr Raj- spanning the Padma river, after the bank with the darkest prospects in decades put’s demise, many people in Ms Chakro- started investigating accusations of cor- looming over India’s 1.3bn people, the spot- borty’s home state of West Bengal have ruption. China stepped in. lights of its main tv news channels have in been disgusted by her persecution. The bjp The number of Bangladeshis studying recent weeks focused instead on the priv- is determined to wrest that state from opin China has grown exponentially in the ate lives of a clutch of Bollywood stars. position control in an election next year. past few years, says Mr Riaz. The media, This great distraction began on June Its strategy in the Rajput affair has certainly too, is being courted. “Seventy percent of 14th, when the body of Sushant Singh Raj- diverted public attention from the real and the journalists at my paper have been to put, a 34-year-old actor, was found in his numerous problems facing India. But Mr China,” says a reporter at a financial news- flat in Mumbai. The suicide provoked a me- Modi may come to regret its impact on Ben- paper, who himself spent ten months in dia frenzy. Mr Rajput’s rise from the obscu- gali voters. The drama, as Bollywood fans China on a fellowship in 2018. Almost as rity of Bihar, India’s poorest state, to screen like to say, is not over yet. 7 42 China The Economist September 19th 2020

Wuhan’s recovery up from eighth before the virus hit. All this is propaganda manna for Chi- Washing away the tears na’s government, which early in the pandemic was widely criticised even within China for silencing doctors in Wuhan who had warned of a new virus, and for bun- gling its initial response. When images spread last month of thousands of people WUHAN at a music festival at a water park in Wu- A bruised city becomes a showcase for the state han—cheek-by-jowl and maskless—Global n a candid online diary of life under example of China’s mass-campaign ap- Times, a state mouthpiece, crowed that it Iquarantine, Fang Fang, a celebrated au- proach to the epidemic that has proved ef- was “never too late to learn from Wuhan”. thor living in Wuhan, recorded her worry fective, even if harsh. This month the Chinese People’s Asso- that residents’ memories of the agony The testing helped boost confidence. ciation for Friendship with Foreign Coun- would fade too quickly. “We can’t let the Revellers now throng shopping streets and tries, a state-linked body, hosted the bosses sadness of the situation consume us,” she spill out of karaoke joints. The carefree doff of 20 multinational firms on a highly cho- wrote on day 12 of the city’s lockdown. But, their masks in the open air. Swimmers take reographed, three-day tour of the city. The she added, “I just hope we can remember- dips in the Yangzi river, which bisects Wu- trip’s aim, in the words of Lin Songtian, the ...those who suffered a wrongful death, re- han (in July residents were in terror of an- association’s president, was to “witness member these grief-stricken days and sor- other disaster: widespread floods). Visitors the full recovery of Wuhan”. rowful nights, remember just what it was pack the city’s famous Yellow Crane Tower. The itinerary included a makeshift hos- that interrupted our lives...” “They all think Wuhan is a city of heroes pital—now emptied of beds and equip- Less than six months after Wuhan and want to come and see us,” beams Zhang ment—a fancy supermarket (billed as a emerged from a gruelling 76-day lock- Hanye, a tourism worker. A survey by an of- “wet-market 3.0”) and an elite primary down, only the heartless would deny its ficial think-tank in late April—soon after school. Those interviewed gushed with people the chance to celebrate and relax. the lockdown was lifted—found that Wu- praise for the Communist Party. Liu The central city, where covid-19 was first han was China’s most popular destination, Tiezhu, a district official, showed off a mo- detected and 3,869 died with the coronavi- bile hospital that was converted from a rus—four-fifths of the country’s total co- wedding venue. He said covid-19 had made Also in this section vid-related death toll—has recorded no everyone realise that “the people cannot cases since mid-May. That month a tiny 43 Social class pull through without the party”. flare-up led to a vast drive to screen Wu- Such cheer is shared by many ordinary 44 Chaguan: The politics of poverty han’s 11m residents within two weeks—an citizens. A 50-year-old driver, who served 1 The Economist September 19th 2020 China 43

2 in a fleet that ferried doctors, food and Social class medicine during quarantine, described the decision-making of Xi Jinping, China’s leader, as “remarkable”. Young volunteers The landlords are back at a lakeside jog arranged for the visitors said they were “chill” about the risk of a BEIJING How the pre-Communist elite has regained its privileges second wave. As they pressed colourful “Wuhan, we can” tattoos onto the arms of hese days the Chinese Communist But in a working paper titled “Persis- passers-by, they repeated a new catch- TParty prefers to play down the horrors tence through Revolutions”, a group of phrase: “Wuhan is the safest place now.” unleashed by Mao Zedong’s Cultural scholars based in America, Britain and Philippe Klein, a French doctor who stayed Revolution of the 1960s and 1970s. But a China find that Mao’s social re-engineer- in Wuhan during lockdown, says many rare chronicle of the period by a writer ing had a less lasting impact than might people in the city want to “forget that we based in China, “The World Turned be supposed. The grandchildren of the were at the origin of the disaster”. A young Upside Down”, describes the chairman’s pre-Communist elite have largely re- father sums up a commonly held feeling: harsh campaign to reorder Chinese gained the status their families once “Why think of the unpleasant?” society in vivid detail. (An English ver- enjoyed. They are a lot more educated The instinct to move on has been sion will be published in January; like the and wealthy than other households. shrewdly exploited by the state’s relentless Chinese original, it will be banned in Their values and attitudes also differ spin doctors. In the officially sanctioned mainland China.) The title of Yang Ji- from the descendants of those who had narrative Li Wenliang, a doctor who was sheng’s book well conveys the experi- lower social standing before 1949. They harassed by police for sounding the alarm ence of those who enjoyed privilege in are less bothered by inequality, more about covid-19 before dying of it, is now a the pre-Communist era, who were bru- entrepreneurial, more pro-market, and fallen patriot. The party’s belated and tally persecuted under Mao. more inclined toward individualism and grudging embrace of him has defused The old elite began to suffer almost as a belief in success through hard work. much of the public anger that once sur- soon as the Communist Party won the Led by Alberto Alesina of Harvard rounded his demise. Zhang Hai, a local Chinese civil war in 1949. China’s new University (who died in May), the aca- whose father died of covid-19, has aban- rulers quickly set about seizing land demics mined data from household doned a crowdfunded project to build a from people in the countryside, redis- surveys, census reports and land records. memorial to Wuhan’s victims—calling it tributing it among the landless, con- They found that by 2010 the incomes of “too difficult” (police had questioned him). fiscating private businesses and execut- descendants of the pre-Communist elite Amid America’s fumbling of the pan- ing many rural landlords and people who were 16-17% higher than those born into demic, Chinese are readier to accept the had worked for the overthrown Nation- families that were underprivileged be- party line. Fang Fang, the 65-year-old on- alist regime. The Cultural Revolution fore 1949. They were also more likely to line diarist (her real name is Wang Fang), appeared to be the nail in the coffin of an have completed secondary and tertiary was soon vilified by state media for expos- entire social class. education. They performed significantly ing only the “dark side”. Despite her mil- better in maths tests. lions of online followers, readers turned The scholars offer several possible against her in startling numbers. One critic explanations for the relatively swift is a 28-year-old student counsellor at one restoration of advantage to the old elite. of Wuhan’s universities, who says that Hidden wealth—hoarded by relatives Fang Fang’s “negative information” does outside mainland China—may have not “do much good to the public psyche”. helped. But more important was the The mood of Wuhan’s citizens was a enduring strength of family networks topic that Fang Fang turned to repeatedly in inside the country. The rebound of her diary. She wrote of a “strange, unspeak- wealth among descendants of the former able stress” in the city during lockdown. On elite, the scholars write, has been found day 40, in early March, she wrote that resi- almost exclusively in villages with a dents were “reaching their psychological strong clan-based social structure (there breaking point”. Elsewhere she noted that are many such in China). The researchers everyone had been “traumatised” by the suggest that despite the upheavals of the outbreak. “Looking back, none of us feel Mao era, parents were still able to trans- lucky, we just feel like survivors.” mit their high-status mindsets to their She is right that the city was scarred. offspring. Less than 45 years after Mao’s One destination for the bosses was Tongji death, the toppled elite have managed to hospital, which has set up a recovery unit seize society’s summit again. for covid-19 survivors with mental-health conditions and other after-effects. The hospital’s director confirmed that some tism. In one painting, a smiling Mr Xi looks hard to overlook still-darkened shops with who had avoided covid-19 were also com- down on Wuhan, with the line: “In the bat- for-sale signs. Daily metro trips are still ing in with signs of depression. He would tle against the epidemic, Grandpa Xi is with only three-quarters what they were last not give numbers. The visitors were shown us.” There are numerous portraits of Zhong September. An engineer in his mid-30s, liv- only the entrance hall and were stopped Nanshan, a lung doctor picked by the party ing in one of the districts that was hardest from speaking to staff or patients. to deliver the news that the virus was hit, says he has stockpiled masks at his At Changchun primary school the group spreading between people. There is also home. “You have to be prepared,” he says was shown how pupils were being encour- one of the whistleblower, Li Wenliang. quietly. In public, this is a city raring to go. aged to draw as a way of coping with Amid the elation, there are signs of fear Privately, many in Wuhan may recall Fang trauma. A display of their artwork evinces a and suffering. Few people are willing to Fang’s words of warning: “We still have strong preference for catharsis-by-patrio- give their names to foreign journalists. It is many more tears left to cry.” 7 44 China The Economist September 19th 2020 Chaguan The politics of poverty

A propaganda tour reveals the ideological side of a giant poverty-alleviation campaign the party and Mr Xi. The party secretary of Sichuan province, Peng Qinghua, told reporters that encouraging thankfulness was part of poverty-alleviation work. “Conservative and outdated thinking is the root cause of poverty,” he explained. In his telling, the party’s focus on moral education is a unique advantage of socialism with Chinese characteristics. In particular, he charged that the Yi, of whom about 2.5m live in Sichuan, needed to be led away from such “undesirable habits” as paying lavish dowries for brides, or holding extravagant funerals despite “not caring for their elderly parents while they are still alive”. Mr Peng praised party members who lead by example. He paid tribute to officials killed in mountain car- crashes, and told of a party secretary who, rather than quit a rural posting and return to her home city to look after a newly widowed mother, brought her mother to live in the country. That vision of party members as self-sacrificing, secular mis- sionaries, leading the masses towards more productive lives, comes from the top. State media never tire of showing Mr Xi tour- ing rural areas to inspect the latest cash-generating crops and industries, like an austere but benevolent monarch. Almost four decades ago the countryside was freed from misery by the abolition of collective farms, as Deng Xiaoping, the then paramount leader, allowed peasants to choose which crops to grow and to start their triving to obey an order from President Xi Jinping—namely, own businesses. In the Xi era officials seem confident, once more, Sthat extreme poverty must be eliminated in China by the end of that the government knows best. Technocrats interviewed in 2020—officials have given many things to Jizi Arimo, a 47-year-old Liangshan prefecture, where Ms Jizi lives, deny that they are re- widow and mother of four. Chaguan met Ms Jizi last week in a new- turning to central planning. They describe a hybrid model har- ly built apartment block in Yuexi, a once-remote rural county in nessing both state resources and market discipline. In many the south-western province of Sichuan. places, villagers are encouraged to rent their small plots of land to One way to tell Ms Jizi’s story is with economic statistics. In her agricultural co-operatives, creating larger, more efficient farms old home, high in the mountains, she was officially deemed im- which may then employ some of them as herdsmen or to pick poverished. The poverty line varies a bit by region, but is set at crops. Government bodies and state-owned enterprises in the around 2,300 yuan ($340) a year. As this year began, roughly 5m prosperous east are urged to buy Liangshan-grown apples, wal- Chinese still needed to cross that line for Mr Xi’s promise to be nuts or buckwheat tea, as a patriotic duty. kept. Officials in Sichuan paid the lion’s share of the costs of Ms In part, poverty alleviation is an urbanisation scheme. In the Jizi’s relocation, and now employ her as a cleaner at her housing past two years alone, nearly 10m Chinese have been physically re- complex, paying her 550 yuan a month. located from rural homes deemed “inhospitable”. Officials say that Yet poverty alleviation is about more than numbers. Like much all choose to move, with only a few older folk struggling to adjust. else in Mr Xi’s China, it is also a strikingly political endeavour. Ms Some families move to cement-walled houses a short walk from Jizi’s home was one stop on a recent government tour of poverty- their former homes of wood and mud. Others leave for apartments related work, organised for foreign and domestic journalists. This many miles away. Lots of youngsters head farther afield to work as was not a trip for verifying government claims independently, or migrants. The Yi are strong and unafraid of heights, enthuses an for probing reports that some rural folk have been kept off poverty official. That makes them sought-after workers when electricity registers by bureaucrats anxious to hit targets. Officials stood over lines need stringing between pylons. Ms Jizi as she answered questions. Throughout the visit, minders followed journalists who tried to break from the pack. Coming down from the mountains A frail figure in a checked overcoat and hat, Ms Jizi spoke Young children learn Mandarin as well as the Yi language in the perched on a sofa, beneath a colour poster of Mr Xi with the cap- kindergartens now found in each village, readying them for the tion: “Be grateful to the party. Listen to the party. Follow the party”. workforce. In Liangshan the government is building new boarding A member of the Yi minority, she is hesitant in Mandarin Chinese. schools, some with subsidised books and accommodation. Lin To approving nods from officials, she declared: “If it weren’t for Shucheng, Liangshan’s party chief, is proud of outdoor “night General Secretary Xi, I wouldn’t have such a lovely home.” Every schools” that teach farmers modern agricultural techniques, and flat visited by the press was decorated with the same photograph of village women embroidery and other handicrafts. If the poor are Mr Xi. A second poster on display in each apartment featured pho- not educated and given incentives to work, he says, they will “sit in tographs of residents’ old and new homes, and slogans like “Relo- the sunshine in a corner, waiting for a government cheque”. cation warms our hearts and we are forever grateful to the party” The past should not be romanticised. Not long ago, farmers in and “Welcoming a new life with a smiling face”. The whole hous- Liangshan lived harsh, isolated lives. For all that, poverty allevia- ing estate is hung with party slogans and banners. Home to 6,660 tion is not an act of disinterested charity. China’s poorest are being relocated villagers, its name is “Gratitude Community”. integrated into the national economy and trained to thank the Ms Jizi’s new home is not exceptional. Other model communi- party for it. Putting money in people’s pockets is one measure of ties visited on the tour were also plastered with posters praising success. The greater prize is putting ideas in people’s heads. 7 The great SPECIAL REPORT: Business and climate change disrupter → September 19th 2020 3 Upending companies 4 The physical impact 6 Regulation costs 8 Carbon offsets 9 Legal risks 10 Technological fixes 12 The future What if food packaging were carbon-neutral?

Go nature. Go carton.

Food packaging plays a critical role in getting food safely to consumers around the world. But it can also cause problems for the planet. What if all food packaging came from plant-based materials and didn’t impact the climate? At Tetra Pak, we already have paper-based carton packages with reduced climate impact. But we won’t stop there. Our aim is to create cartons made solely from plant-based materials that are fully renewable, fully recyclable and carbon-neutral. It’s all part of our journey to deliver the world’s most sustainable food package.

Learn more at gonature.tetrapak.com Special report Business and climate change The Economist September 19th 2020 3

The great disrupter

Climate change is about to upend the corporate world. Firms must react fast, says Guy Scriven or most of the world, this year will be remembered mainly for the world economy, which still generates over four-fifths of its en- Fcovid-19. Starting in Asia, then spreading across Europe and ergy consumption from fossil fuels, must change dramatically. America before taking hold in the emerging world, the pandemic In 2018, before the pandemic struck, the world emitted green- has infected millions and killed hundreds of thousands. And it has house gases with warming potential equivalent to about 55 giga- devastated economies even more severely than did the global fi- tonnes. Roughly a fifth of that comes from changes to land use and nancial crisis which erupted in 2008. agriculture. The rest is largely made up of emissions from energy But the impact of covid-19 has also given a sense of just how consumption and industrial processes. hard it will be to deal with climate change. As economic activity Data from the World Resources Institute, a think-tank, show has stalled, energy-related CO2 emissions have fallen sharply. This how these emissions are divided. Buildings (about17% of the total) year the drop will be between 4% and 7%. But to have a decent and road transport (12%) are the biggest contributors. Other forms chance of keeping Earth’s mean temperature less than 2°C above of transport also matter, with shipping and flights accounting for pre-industrial levels, net emissions of CO2 and other greenhouse 2% apiece. Within industry, iron and steel (8%), chemicals and gases must fall to more or less zero by mid-century. And such a petrochemicals (6%) and cement (3%) make up big slices of the pie. drop needs to be achieved not by halting the world economy in its On a national level, China is the biggest polluter, belching out tracks, but by rewiring it. roughly a quarter of the world’s emissions. America is next, with Ever since the Industrial Revolution 200 years ago, mankind 12%. The European Union and India produce about 7% each. All has become increasingly dependent on fossil fuels. Carbon-diox- told, the world’s 20 most-polluting countries produce roughly ide emissions from their combustion have grown more or less 80% of global emissions. continuously ever since. As they have accumulated in the atmo- The transition away from fossil fuels is a massive challenge. sphere, the planet has heated up. In 2015 more than 190 countries The International Energy Agency (iea), an intergovernmental or- signed the Paris agreement committing them to try to limit this ganisation, says $1.2trn of extra annual investment will be needed warming to well below 2°C over pre-industrial levels. Net emis- in the power system alone. Energy use must get smarter, saving sions have grown by 40% over the past 30 years. Meeting the Paris both money and emissions. By making the economy greener and goals will necessitate a 90% fall from the current covid-struck lev- more efficient, the hope is to keep below that 2°C threshold. Yet on els over the next 30 years. Yet during that time world population is current trends, a rise of 3°-4°C is looking more likely. And that expected to rise by 2bn and gross product may triple. It follows that would make the weather much worse. Weather-related losses are1 4 Special report Business and climate change The Economist September 19th 2020

2 already soaring: between 2017 and 2019 their annual costs averaged Physical impact $210bn, twice as high as ten years previously, according to Swiss Re, a reinsurer. The covid-19 pandemic now offers an opportunity to accelerate the reduction of greenhouse-gas emissions. Some governments, A grim outlook particularly in Europe, have been attaching green strings to corporate bail-out packages and are promising to invest more in the low-carbon economy. The virus has also shown that many trips, whether daily commutes or business flights, may not be really How worse weather will disrupt businesses and their supply chains necessary. Falls in oil prices mean that cutting fossil-fuel subsidies should become politically easier. n 2012, when post-tropical storm Sandy devastated New York, Carbon pricing, which charges a levy on each tonne of CO2, will Ithe city was left in darkness. Among the few buildings still lit up soon cover a fifth of the world’s emissions. Only complete cover- was the headquarters of Goldman Sachs, which had a 25,000-sand- age coupled with a high price can put the world on a low-carbon bag wall and a backup generator. Gary Cohn, then the bank’s presi- path. Even so, the patchwork of carbon pricing creates risks for dent, said one problem was how to get staff into the office in a firms with large emissions. Trillions of dollars of assets could be- shut-down city. In 2018, after a storm battered Vancouver Island, come worthless or “stranded” if fossil fuels are squeezed out of the falling trees toppled electricity poles. The resulting power cut led energy system. Carbon-efficient firms can gain an edge over com- to the closure of a water-treatment plant. And last January, when petitors. Engineers, scientists and entrepreneurs are dreaming up wildfires ravaged Australia’s outback, the toxic air hampered pro- clever ways to help. duction at a coalmine owned by bhp, a commodity giant. From a low base, capital is starting to move. Climate-related in- Businesses have always had to adapt to a changing environ- vesting grew by 70% to $579bn between 2013 and 2018, according to ment. But climate change is making this far harder. As weather the Climate Policy Initiative, a lobby group. Returns on renewables conditions worsen, some companies are responding. But it is im- projects are making them ever more competitive with fossil-fuel possible to mitigate all the risks. For many firms, the physical im- ones. Yet more is needed. Decarbonising the economy is an enor- pact of climate change will affect them more through disaster- mous task and will be hugely disruptive, but failing to do it will re- struck suppliers or inundated transport routes than in their own sult in a harsher climate and even greater risks for companies. One operations. lesson from the pandemic is that scientists’ warnings about seem- That indirect impact makes physical risks trickier both to as- ingly distant disasters should be heeded. sess and to manage. One result may be shorter supply chains, with Why should businesses care about all of this? This special re- more products made close to home. Firms that rely on foreign support offers four broad answers. First, companies should worry pliers may have to spend more to make their imports resilient to about the immediate impact of climate change on their opera- the climate. The move towards shorter supply chains is already un- tions. Next, they must expect ever more intense regulation, driven der way, thanks to trade wars and covid-19. But whereas the pan- both by governments and by the demands of customers and con- demic will eventually subside and trade wars should abate, the cli- sumers. Third comes the growing risk of litigation over climate mate is shifting from stable to less so. “Things will just keep on change. And fourth is technological change that will create oppor- changing,” says Hauke Engel of McKinsey, a consultancy. tunities as well as costs—opportunities that their competitors Climate change is clearly making the weather more extreme. may be the first to exploit. Scientists say super-powerful storms have become more com- For now, though, too few firms are taking climate change seri- mon, and there are more days of heavy rainfall or extreme heat. No ously. As Rich Sorkin, head of Jupiter Intelligence, a consultancy, matter what mankind does, this trend will continue for decades. argues: “In ten years there won’t be a large entity anywhere on the Global temperatures respond only slowly to changes in the con- planet that does not have a handle on its climate risk. Consumers, centration of greenhouse gases in the atmosphere. Deteriorating shareholders and employees won’t stand for it.” A good place to conditions are locked in for some time. start is with the most obvious physical impact of climate change: Even if the goals of the Paris agreement were met and warming that the weather is deteriorating. 7 limited to below 2°C, the weather would keep getting worse. This may mean, among other things, a 40-80cm rise in sea levels, a 25% increase in dangerously hot days and a 36% jump in the quantity of rainfall over land. And each additional degree of warming in- More hot air creases the impact. Between 1981 and 2010, the average likelihood CO2 emissions, gigatonnes, by country/region of a big heatwave (defined as at least four days with maximum tem- 30 peratures above the 99th percentile of a normal warm season) was China 5%. With global temperatures up by 1.5°C over pre-industrial levels that probability rises to 28%. At 2°C it is 49%, and by 4°C 92%. Like- United wise, floods that in the past might have happened only once in 50 States 20 years become more frequent as temperatures rise. One would happen every 42 years with 1.5°C of warming, every 34 years with 2°C Asia Pacific and every 19 years with 4°C. Middle East The physical effects of such changes will hurt the world econ- 10 India omy, though precisely how much is hard to predict. Most esti- Americas mates have hefty error margins and forecasts that stretch vaguely Africa to the end of the century. Some analysis of the costs to businesses Europe are more convincing than others, partly because time horizons are 0 shorter. Most assets last for only 10-20 years, so forecasting to the 1850 1900 50 172000 end of the century is unnecessary. And facility-level data give re- Sources: Global Carbon Project; Carbon Dioxide Information Analysis Centre searchers a more accurate grasp of a firm’s climate exposure. The 1 The Economist September 19th 2020 Special report Business and climate change 5

world’s biggest asset manager, and Fidelity, one of its rivals. Con- sumers and customers, especially younger ones, are calling for tougher and faster action on climate change. More businesses now carry out risk assessments. But they may not be revealing the true extent of their exposure. Disclosures are self-reported, so it is easy for companies to downplay their risks, says Emilie Mazzacurati, of Four Twenty Seven. Firms may also talk up opportunities, such as selling new products to green- minded consumers. Last year the cdp, an environmental charity promoting emissions disclosure, surveyed the self-reported climate risks of 200-odd big firms. Total risks added up to roughly $1trn (5-7% of the firms’ value). But, somewhat suspiciously, the offsetting opportunities were put at more than twice as high.

Policing themselves Companies will not always get to mark their own homework. Third-party analysis is improving fast. Climate-risk consultancies are combining asset-level data with climate and econometric models to generate estimates of values at risk. “We now know many firms’ climate risk better than they do,” claims Rohan Ham- den, the boss of the Cross Dependency Initiative, a Sydney-based climate-risk firm. Investors are doing similar analysis or hiring consultants. Many say they use analytics to exclude vulnerable firms from specialised climate funds. A small minority of climate-conscious companies are making their operations more resilient. In every one of the 60-odd geographic regions in which Microsoft operates, it has built two data centres, in case one is struck by an extreme weather event. Kurita Water Industries, a Japanese company, spent $22m moving its offices to a place less exposed to cyclones. Some companies want more sophisticated analysis. A year ago it was acceptable just to model the exposure of a building, says James McMahon, of The Cli- mate Service, a consultancy. Now property companies want to know how flooding will affect rents or their assets’ resale value in ten years’ time. Defending an office or factory is reasonably straightforward. A thornier problem is supply chains. The world economy promotes efficiency in suppliers and transporters, not resilience. The risk to 2 pain will certainly be greater in poorer countries, which have less trading networks from climate change is often overlooked. Tran- capacity to adapt and tend to be closer to the equator, where the sport hubs are key. Airports and seaports process huge quantities weather is already harsher. of goods. A disaster that downs one can have an outsized impact, Two particular pieces of analysis illuminate the threat both by says Andrew Coburn of Cambridge University’s Centre for Risk sector and by natural event. Both demonstrate how climate risk is Studies, an academic group. Along with colleagues, he has ana- unevenly spread. The first comes from Schroders, an asset manag- lysed maritime trade and identified 21pinch points. These include er. Its analysts looked at the physical risks posed to 11,000 publicly the Suez canal (which carries 8% of global trade) and the Panama listed companies and concluded that climate change could reduce canal (4%), where falling water levels are forcing ships to shed car- the firms’ value by 2-3% on average. But the numbers vary greatly go. Similar pinch points exist for air freight. by industry. Energy and utility sectors stand to lose 4% and 8%, re- Another problem is critical infrastructure, such as electricity or spectively. Property firms could lose up to 9%. For services firms telecoms. When power is cut, other services go down as well. Most with few physical assets, such as tech and finance, the impact is telecoms towers have backup batteries that last for only four smaller: less than 0.5% of their value. hours. Smartphones run out of power after about ten. After Super- In a separate piece of number-crunching, Four Twenty Seven, a storm Sandy, two-thirds of New York’s petrol stations were unable climate consultancy, looked at the events that most threaten facil- to dispense fuel because of power cuts. ities owned by publicly listed firms. Water stress was the most The more complex a good, the greater the risk of disruption. In- prominent, affecting 30% of assets. Another 10% were at risk from dustries that rely on many suppliers and heat stress and roughly 20% were vulnerable to floods, hurricanes layers of manufacturing between the raw and typhoons. Sea-level rise was the least concerning for business- materials and the finished product tend to es, affecting only 3% of assets in the data set. As its impact have more supply-chain risk than opera- As its impact becomes clearer, companies have to take climate becomes clearer, tional risk, explains Milan Simic of air change more seriously. Partly that reflects growing pressure from companies have Worldwide, a climate-modelling firm. regulators, who want them to disclose their climate risks. Doing Three particularly exposed industries are this is already mandatory for some firms in France. The European to take climate automotive (a single vehicle has approxi- Union, Britain and Canada will follow suit. Institutional investors change more mately 30,000 parts, including the fasten- are also pressing for fuller disclosure, a key demand of the Climate seriously ers and screws), consumer electronics and Action 100+, a group of investors that includes BlackRock, the semiconductors. 1 6 Special report Business and climate change The Economist September 19th 2020

Deteriorating Regulation Worldwide weather-related losses, $bn, 2019 prices 400 Costs of carbon Insured Uninsured 300

200 Rising regulation will force more firms to decarbonise upport for solar panels in Georgia came from a surprising 100 Spoint on the American political spectrum. In 2013 Georgia Pow- er, the local electricity monopoly, was reluctant to increase the use of solar panels. That irked Debbie Dooley, a preacher’s daughter 0 and co-founder of Atlanta’s Tea Party, a hard-right Republican fac- 19151005200095908580751970 tion. She wanted more energy independence, and rooftop solar Source: Swiss Re was one answer. Forming an alliance with the Sierra Club, a green lobby group, she established the Green Tea Party coalition. It helped defeat a bid by Georgia Power to hit rooftop-solar custom- 2 The risks are amplified when suppliers cluster in specialised ers with high fees. Since 2013 Georgia’s solar capacity has jumped regions. About 70% of the world’s smartphones are assembled in more than 13-fold. one region of China. Another sub-region accounts for half of glo- Politicians of all stripes are introducing green regulations. The bal laptop production. That was a problem when covid-19 struck, Grantham Research Institute at the London School of Economics because many laptop vendors hold just two weeks’ supply, says Ra- counts over 1,900 pieces of climate legislation around the world. zat Gaurav, the boss of Llamasoft, a supply-chain analytics firm. Almost two-thirds were enacted in the past ten years. That may be The risk of these regions being disrupted is rising. Today a one- good news for the planet, if perhaps not for many firms. By one es- in-100-year hurricane could bring semiconductor manufacturing timate transition-related regulation, particularly carbon pricing, to a standstill. By 2040 such an event will become two or even four and technological disruption could reduce the market capitalisa- times more frequent, according to McKinsey. tion of 1,400 of the world’s biggest companies by 3%, or $1.6trn. For companies trying to cope with climate risk in their supply And the costs are not evenly spread. For some the figure will be as chains, the simplest option is a contingency plan. So far many of big as 60%. In anticipation of carbon pricing, a small minority of these are inadequate, says Mr Gaurav. Backup suppliers are often companies are decarbonising—but too few to save the planet. from the same region, so the risk is not properly spread. Smart More rules are likely. Urged on by voters, policymakers are set- management of inventories helps by allowing goods to be sold ting ever tougher green targets. Over 70 countries have committed even if the weather is disruptive. Pharmaceutical companies with to reaching net-zero by at least 2050. The eu proposed a net-zero bases in Puerto Rico track storms and move their products off the target in law in March. All but one of the g7 countries have made island ahead of hurricane season, says Katherine Klosowski of fm similar commitments. America is the odd one out. Donald Trump, Global, an engineer-cum-insurer. For small products, storage can its president, has dubbed climate change a “hoax”. His administra- be cheap. McKinsey estimates that warehousing for semiconduc- tion has rolled-back 68 environmental regulations, according to tors adds only 1% to the total price. the New York Times. His scepticism has emboldened other world Another idea is to help suppliers become more resilient. Mak- leaders such as Brazil’s Jair Bolsonaro to pursue environmentally ing factories in South-East Asia sturdier would add roughly 2% to destructive policies. And Mr Trump has begun the process of with- building costs. Unilever owns tea in plantations near Kenya’s Mau drawing from the Paris agreement. forest. It has planted around 1.4m trees nearby to sustain the for- Yet many American states and cities have pushed back. Some 1 est’s natural water supply for the plantations. Even so, there is only so much a company can do in advance. “About 20% of our supply chain resilience is proactive; 80% is reactive,’’ says Marc Engel, the firm’s head of supply chains. Some do better than others There will inevitably be political pressure on governments to Companies, climate-change-related actions* do more, if only because taxpayers often foot the bill for climate By industry, 2018, % responding damage through disaster recovery schemes. Around two-thirds of No or partial disclosure of carbon emissions weather-related losses are uninsured. In 2017 America’s Congress Disclosure of carbon emissions… …and targets… …and emissions reductions appropriated $136bn in emergency funds for climate-related di- 0 20 40 60 80 100 sasters. That amounts to $1,000 for every American taxpayer, Finance notes Paul Bodnar, of the Rocky Mountain Institute, a think-tank. Energy City governments like Miami’s have introduced taxes to pay for cli- Consumer and retail mate defences. Over the next decade Mr Sorkin expects regions to Health compete over which can best protect its citizens. “People want to Industrial goods Tech, media and hi-tech work in safe places, and capital will follow.” Transport Governments must play an even bigger part in how businesses Construction and infrastructure respond to climate change in future. New climate-friendly rules Services will determine how quickly companies decarbonise—and how Agrifood and Forestry Light manufacturing costly it will be for those that fail to do so. For many firms, the regulatory risks associated with climate change may be larger even Total than the physical ones from more storms and floods. 7 Source: Boston Consulting Group *Of 6,973 companies worldwide disclosing data to CDP The Economist September 19th 2020 Special report Business and climate change 7

2 have sought to challenge Mr Trump’s roll- cause a company is taking steps to reduce backs in court. Others have introduced Rising global warming. Over a quarter say they their own green rules. Thirty of the 50 Carbon-pricing initiatives* have avoided products sold by firms op- states have renewable-power portfolios; % of annual global greenhouse-gas emissions covered† posed to such steps. Company boycotts, more than ten have low-carbon fuel stan- 20 supercharged by social media, pose rising dards for cars. Moreover, the polls suggest reputational risk. Some big firms, includ- Emissions-trading system that Mr Trump’s days in office are num- 15 ing Amazon and Nestlé, have changed en- bered. His Democratic opponent, Joe Bi- Carbon tax vironmental policies following the threat Other den, is promising to make fighting climate 10 of mass consumer action. change a centrepiece of his presidency. He Sweden may offer a glimpse of the fu- plans to spend $2trn in four years on low- 5 ture. Shoppers seem to be turning away carbon infrastructure and energy. He from polluting products. Even before co- wants to join others by going for net-zero vid-19, flygskam (flightshaming) appears 0 by 2050 and emissions-free electric power to have cut demand in 2019 for European by 2035. Mr Biden was part of the team that 1510052000951990 21‡ flights from Sweden on sas and Braathens, *Regional, national and subnational helped negotiate the Paris agreement, †Emissions are given as a share of global two Scandinavian airlines, by 4% and 12%, which he plans to rejoin. Source: World Bank GHG emissions in 2012 ‡Forecast respectively. If he is elected, an early test of Mr Bi- Shrewd firms are preparing for the den’s ambitions may be America’s “na- transition by decarbonising now. Broadly tionally determined contribution” (ndc). These are decarbonisa- speaking, four approaches have been followed. The first is to sell tion plans that countries promised to devise under the Paris dirty assets or buy clean ones. Royal dsm, a Dutch chemicals com- agreement. Their cumulative impact is not currently sufficient to pany, cut its carbon emissions by 90% from 2006 to 2019. About meet the Paris goals. But the signatories also agreed to “ratchet up” half came from selling carbon-intensive business units such as their ndc ambitions every five years. The first round of updates petrochemicals, says Feike Sijbesma, its former boss. Earlier this were due this year. If Mr Biden wins, he could announce a new ndc month the oil major bp bought stakes in two offshore wind pro- in early 2021. Climate warriors will hope for national carbon pric- jects in America from Equinor, Norway’s state-owned oil giant. ing, which Mr Biden supported as vice-president. Such a move would be a huge boost for carbon pricing every- Or just buy cleaner where. About half of current ndcs mention the idea. In 2010 about A second tactic, used especially by firms with high vehicle or pow- 5% of the world’s emissions were covered by a carbon price. Today, er emissions, is to buy cleaner energy, thus not having to alter that figure is over 15%. Next year China is expected to roll out the business models. The more clean power that firms buy the further world’s biggest scheme. The eu currently has the next-largest, and costs fall, notes Nigel Topping, an adviser to the British govern- plans an expansion. Yet the price of carbon varies enormously. In ment. Around 260 companies have pledged to use only renewable most cases, it is far below $75 a tonne of CO2, the level the imf says energy from 2050 or earlier. Since 2008 companies have bought would be needed to meet the 2°C target. In some places, the price more renewable power than the annual electricity capacity of Viet- has started to climb. It hit record highs in California and Oregon in nam. Green cars are in vogue too. Over 80 firms, including Ama- late 2019 due to tougher fuel-emissions standards. Having cor- zon, have vowed to add many more electric vehicles to their fleets. rected an oversupply problem, the eu price also rose to €24 a tonne A third method is to invest in new low-carbon products. Cor- in January, up from €8 in 2018. porate spending on climate-related investments crept up from How might an upsurge in climate regulation affect business? $135bn in 2013 to $172bn in 2018, according to the Climate Policy An analysis by Vivid Economics, a consultancy, and the Principles Initiative, an advisory group. Some of this is in-house. Take for Responsible Investment, a un-backed group of investors, of- Maersk, a giant in shipping, an industry that accounts for about fers some answers. The researchers looked at the exposure of 2-3% of global emissions. If Maersk wants its ships to stop all emis- 1,400-odd publicly listed companies to “transition risks”—tech- sions by 2050, it needs the new technology by 2030. It is examining nological and regulatory threats from decarbonisation. Some new fuels, from ammonia-based ones to alcohol. “This is a com- $1.6trn, or 3.1%, of market capitalisation, would be wiped off the pletely new game for us,” says Simon Christopher Bergulf, the value of the msci All Country World Index, a gauge of global stock- firm’s head of regulatory affairs. markets. This assumes regulations are enacted from 2020. If Other firms are investing in startups. jbs and Tyson, two meat- policymakers delay five years, even faster decarbonisation will be sellers, have invested in plant-based protein. Zunum Aero, a Seat- needed, meaning stricter rules and a sharper revaluation of assets. tle-based outfit, plans to bring a small hybrid-electric aircraft to In such a case, values may fall by 4.5%. The longer policymakers market. Its backers include Boeing and JetBlue, an airline. Oil ma- delay, the greater the shock, warns Jason Eis of Vivid Economics. jors’ venture-capital arms routinely invest in clean-energy firms. Whenever it occurs, the shock will be concentrated. In the Chevron, Occidental Petroleum and ExxonMobil have all bought least-damaging scenario, four-fifths of companies would see their into startups trying to suck CO2 from the air. value move up or down by less than 10%. But the impact on the re- The final idea is to decarbonise supply maining fifth is bigger. The worst-performing 100 firms would lose chains. Andrew Howard, of Schroders, says 43% of their value; the best performers would gain 33%. Energy is that on average 60% of a company’s carbon the hardest-hit sector, followed by other high-emitting industries Joe Biden is risk lies in its supply chain, not least be- such as utilities and mining. Within sectors there are winners and promising to cause tax-hit suppliers may pass costs back losers too. Companies that embrace low-carbon strategies will do up the chain. But cutting carbon out of sup- best; heavy polluters will suffer most. make fighting ply chains is fiendishly tricky. The first pro- Pressure to cut CO2 emissions comes also from the bottom up. climate change blem is data. Most companies have armies Climate-conscious bosses say consumers are demanding greener a centrepiece of suppliers, few of which monitor envi- products, especially in Europe. A survey by Yale University found of his presidency ronmental metrics. Next is the difficulty of that almost a third of Americans claim to have bought products be- persuading suppliers to take action. Ikea 1 8 Special report Business and climate change The Economist September 19th 2020

Cheap cheats

Why are carbon offsets so cheap? arbon offsetting is in vogue. The large emitters announced offset buying One answer is that big companies are Cpractice involves giving money to a schemes. These are usually for firms going able to buy in bulk, lowering the price. green charity that takes action, such as carbon-neutral (offset all emissions) or EasyJet says that, had passengers bought planting trees or building solar panels, to working to a net-zero emissions target offsets individually, the cost would have stop emissions entering the atmosphere (reduce emissions, then offset the rest). been about four times higher. For their or to remove them from it. In 2018 around From 2021an industry-wide scheme will part, offset suppliers like the certainty of $296m was spent buying the equivalent of mean that airlines start offsetting some of sales, which helps finance long-term 98m tonnes of CO2 offsets in the “volun- the growth in emissions from flights. projects. But another reason is that many tary” market (ie, outside government- But offsets are oddly cheap. The average offset projects are ineffective, especially mandated schemes). That is roughly twice price in 2018 was $3 per tonne of CO2. The those that offer “avoided emissions” (ie, the volume and value from the year before, eu’s cap-and-trade scheme charges about those that would have happened without and a seven-year high, according to Forrest eight times that. EasyJet wangled a below- the project). It is hard to prove that an Trends, a lobby group. average price, costing £25m, or 6% of offset-financed wind farm would not The boom has been aided by corporate pre-tax profits, to offset all its flights. What have found cash elsewhere. (EasyJet says demand. In 2019 EasyJet, Shell and other explains such low prices? the effectiveness of its offsets is verified by a third party.) A study published by the European Commission in 2016 into one big programme found that 85% of the offsets had no environmental benefits. The offsets with the hardest-to-measure impacts are also the most popular. Forestry schemes make up half the vo- luntary market. Yet many claiming to avoid deforestation cannot guarantee that loggers do not just cut down trees somewhere else. Some projects protect trees on unthreatened lands, such as national parks, says Gilles Dufrasne, of Carbon Market Watch, another lobby group. And the trees must remain standing for many years before the CO2 reduction is absorbed. Often that period is 100 years—plenty of time for corporate promises to be forgotten.

2 has a €100m fund to help suppliers buy renewable energy. Scania, a transport firms with big carbon footprints. Just 18% are on course Swedish lorry-maker, trains suppliers on decarbonisation and to cut their emissions enough to help meet the 2°C target. A study conducts sustainability audits. Those who continue to fail will by the Climate Action 100+ found a similar result. lose Scania’s business, says Henrik Henriksson, its boss. Carbon taxes are not bad news for all firms. Carbon-efficient Badgering suppliers is important for two reasons. First, some ones in high-emitting industries will gain an edge. They would pay emissions are outside companies’ control. The Economist esti- a small levy under carbon taxes, while large costs would hinder mates that emissions from publicly listed, investor-owned com- competitors. Take the aluminium industry. Producing one tonne panies account for some ten gigatonnes of greenhouse gases, a of the metal typically generates about 13 tonnes of CO2. But that fig- fifth of the world’s total. Much of the rest comes from farming, ure varies greatly depending on the power source. It can be cut to households, governments and state-owned firms. Second, the four tonnes using low-carbon energy to power smelters. All the share of firms shrinking their carbon footprint is small. A report by largest non-Chinese producers now offer low-carbon products. Boston Consulting Group, a consultancy, and the World Economic For firms where change is the hardest, lobbying against climate Forum says that fewer than 3,000 of the millions of companies regulations is quietly taking place. InfluenceMap, a research firm, around the world reveal their full carbon footprints to the cdp’s says that since 2015 lobbying efforts among oil companies have emissions-disclosure programme. Around 1,600 of these have set slowed. But the American Petroleum Institute (api), a powerful emissions-reduction targets but fewer than 1,000 have actually cut trade group, increased its lobbying after Mr Trump’s election to en- emissions in the past year. The firms that abate are typically those courage regulatory rollbacks. Some oil firms, such as bp and Equi- for which it is easiest. Financial firms lowered emissions by 34% nor, have publicly distanced themselves from the api even while in the past year, compared with just 9% in the transport sector. retaining membership. Among the biggest polluters, decarbonisation efforts are dis- A further explanation may lie in another rising fear: the threat mal. A report by the Transition Pathway Initiative, a research proof litigation. Lawsuits have long battered the tobacco industry. ject set up by asset owners, looked at 238 energy, industrial and Could climate-change prosecutions be next? 7 The Economist September 19th 2020 Special report Business and climate change 9

which were previously largely separate. Thus it will make further Legal risks litigation more likely, argues Joana Setzer of the Grantham Re- search Institute in London. Then there are cases brought against individual executives. Guilty by emission Such actions are common outside the climate-change arena: in- solvencies are sometimes followed by shareholder claims against board members. Nigel Brook of Clyde, a law firm, expects this form of climate litigation to grow. Bosses’ duty-of-care obligations will increase as more information about the impact of climate change Courtrooms are the new battleground for climate activism comes to light. And activist green investors will see this as yet an- an has a time window of five to ten years before the need other weapon to use in the fight. “Mfor hard decisions regarding changes in energy strategies Investor activism has already produced some results. In 2018 might become critical.” That is a summary of James Black’s re- ClientEarth, a group of environmentally minded lawyers, bought search on climate change. He was a scientist at ExxonMobil and shares in Enea, a Polish utility, and challenged the economic argu- shared his findings with his bosses in 1978, while underscoring the ment for building a new coal-fired power plant. The lawyers ar- scientific consensus on global warming. The warnings were ig- gued that the €1.2bn investment would destroy shareholder value. nored. Over the following three decades the oil firm’s bosses cast Last August a judge ruled in their favour. doubt on the consensus and lobbied vigorously against climate- friendly policies. Sue and be damned In 2015 the archive notes were uncovered by InsideClimate It is not always bosses in the dock. Across the world, activists are News, a website. They formed part of the evidence in a case also using the courts against their governments. In December the brought against ExxonMobil by New York’s attorney-general. The Dutch supreme court ordered the government to cut the country’s accusation was that the company had misled investors about the greenhouse-gas emissions by a quarter from 1990 levels by the end risks to its business from climate-related regulations. On this nar- of 2020, the first time a court has forced a government to take di- row charge, the judge was not convinced, ruling in ExxonMobil’s rect climate action. Two months later a court in London said that favour in December 2019. However he hinted that other allegations the British government’s decision to expand Heathrow airport was could yet stick, concluding that “nothing in this opinion is intend- unlawful because it had not taken national climate commitments ed to absolve ExxonMobil from responsibility for contributing to into account. Both cases could have broader implications for busi- climate change”. nesses, especially utilities and airlines. Climate litigation is a growing risk for businesses and bosses The legal risks will only grow over time. One reason is that the alike. Data from the Sabin Centre for Climate Change Law at Co- science that demonstrates the links between weather events and lumbia University show that in the 1990s a mere handful of cases climate change is likely to improve. More were brought against companies. The following decade saw about scientists are publishing “attribution” 20. But since 2010 there have been over 110. The cases mainly target studies, in which experts model the world fossil-fuel producers and come in three varieties. If cases follow with and without greenhouse-gas emis- The most ambitious are those brought by American states and the same route sions. Another is that activists will start cities against such oil majors as ExxonMobil and Chevron. A typ- as those against targeting firms outside the fossil-fuel in- ical claim is that an oil company has extracted fossil fuels and then dustry. In November a trial will begin in sold them for profit. The fuels’ combustion has made a weather Big Tobacco, Australia that asks whether a pension fund event more likely—and the extra damage needs to be paid for. The the costs could ought to do more to protect savers’ money big legal challenge is to establish a clear chain of causation. The be high from climate risks. A victory for the claim- scientific link between emissions and climate change is solid ant, a 24-year-old saver, could set a prece- enough, but to connect a single firm’s actions to a specific disaster dent for how pension funds manage cli- is far harder than it was for tobacco. It could take a decade for any of mate risk. Many think that the risk will spread to fossil-fuel these lawsuits to secure a conviction, sighs one lawyer who is consumers, such as carmakers. Sophie Marjanac of ClientEarth working on them. likes to claim that no one is safe. Yet environmentalists take heart from the success of lawsuits A third catalyst is the changing attitudes of judges. In a speech against Big Tobacco since the 1970s. Both industries knew about in August, Lord Sales, an English high-court judge, argued that “the the problem for many years. Both used similar tactics to spread old dichotomy between a company’s financial success and its en- doubt about causation. Some of the same think-tanks even pro- vironmental profile is collapsing”. Australian judges have exhibit- duced water-muddying research for both Big Tobacco and Big Oil. ed similar sentiments. As judges retire and younger ones take their And some of the same scientists and publicists were used too, ac- place, the judiciary may yet become more concerned about saving cording to the Center for International Environmental Law, a the planet. Washington-based lobby group. The great hope for businesses harassed by consumers, regula- If cases follow a similar route as those against Big Tobacco, the tors and lawyers may be technological change. Even lobby groups costs could be high. In a forthcoming report, the 2° Investing Ini- such as America’s Chamber of Commerce support this. “Innova- tiative, a think-tank, looked at 17 energy companies and, based on tion is one area everyone can get behind,” says Marty Durbin, head the settlements that were made by tobacco firms, estimated that of the chamber’s energy arm. He points to American shale gas, they could be hit with liabilities of $58bn to $107bn annually. On which took off in the 2000s after a technological breakthrough. average that amounts to between 5% and 20% of the companies’ The price of gas plummeted and its share of American power gen- pre-tax earnings. eration rose from 20% in 2006 to 38% in 2019, overtaking coal. A Another type of litigation is cases that look at climate change booming new industry was created that helped America cut emis- through the prism of human rights. In December 2019 the Philip- sions. Today tumbling oil prices mean that many frackers are go- pines commission on human rights ruled that oil majors could be ing bust. But for the next wave of climate-minded entrepreneurs, sued on human-rights grounds. That links two strands of law the technology boom is only just beginning. 7 10 Special report Business and climate change The Economist September 19th 2020

prices have been tumbling. And the fourth, carbon removal, is na- Technology scent. It is still too expensive to remove a tonne of CO2 from the air and store it safely; the industry must have a high carbon price if it is to be competitive. Green machines Start with adaptation. Even with a sharp, sustained fall in emissions, the weather is certain to keep getting worse. So governments and companies alike will have to spend more on adaptive measures, such as seawalls. The Global Commission on Adapta- tion, an intergovernmental body, reckons that to avoid the worst A wave of innovation may help tackle climate change consequences of climate change, $180bn of annual investment is e looked for big industries that exist on inertia,” recalls needed for a decade. “WKathy Hannun. She used to work at Google X, the tech Infrastructure firms have seen climate-related work pick up giant’s moon-shot division. Heating with fossil fuels was an exam- since the Paris agreement in 2015. aecom, an engineering firm, is ple of an industry ripe for disruption. The distribution system is designing measures to stop floods engulfing Route 37, a coastal convoluted, argues Ms Hannun. Natural gas or fuel oil is taken road in California, including raising it 150cm (five feet) off the from the ground, shipped across the world and piped into houses. ground. The payback for such measures is high. Often a dollar in- But a huge amount of latent energy exists around us. In 2017 she vested in adaptation yields ten dollars in avoided damage, says Da- founded Dandelion Energy, an attempt to harness that power by vid Viner of Mott MacDonald, another engineering firm. selling heat pumps, refrigerator-sized boxes that take heat from Farming is adapting too. Bayer and Syngenta, two agricultural the air or the ground to warm a building. Orders grew fourfold in firms, are developing more resilient crops. A strain of shorter, stur- 2018 and 2019. Further expansion is likely. Last year 20m house- dier corn is being tested by Bayer in Mexico. It needs less water and holds purchased heat pumps. To stop the planet from overheating, is less likely to be flattened by a storm. Worse weather will call for the iea reckons that number has to triple by 2030. more varieties of new seeds. Bayer has spent $100m on a high-tech Yet that rate of growth may be optimistic without a push from greenhouse in Arizona. In an automated process, a laser slices off a regulators. Heat pumps face similar obstacles to other emissions- tiny fragment from an individual seed. The slice’s dna is analysed reducing measures. The upfront costs are large: some heat pumps while the rest is planted and grows normally. That allows research- cost over $15,000. And installation is disruptive, often taking days ers to track the genetic make-up of plants and find out which genes or weeks. Heat pumps are just the start: across the world entrepre- improve the likelihood of storm-survival. Along with other inno- neurs are busily inventing new technologies and tinkering with vations, the process cuts the time when new seed varieties must be old ones. The opportunity is vast. The $1.2trn that the iea says is tested from two or three years to one. needed for energy-system investment represents a 60% increase Next come improvements in energy efficiency. In a scenario on current spending. But precisely which technologies and which where the 2°C goal is met, greater efficiency could cut emissions by firms flourish will depend to a large degree on getting the right pat- seven gigatonnes by 2040, about the same amount as renewables, tern of regulation, subsidy and pricing. according to the iea. Up to a point, it makes economic sense as This is best seen by considering four different places where well. Analysts reckon that most companies can cut their emis- greenery meets technological change. First comes the adaptation sions by 10-20% through greater energy efficiency and, in doing so, industry, which will thrive regardless, because of the physical bring down their costs. That should be a boon for firms that pursue risks linked to climate change. For the second, greater energy effi- such goals—and those that sell them advice. ciency, to take off, something of a nudge from regulators will be re- Schneider Electric, a French firm, is in the second group. Jean- quired. The third, renewables, may need even more help, although Pascal Tricoire, its boss, says 70% of its revenue comes from green 1 The Economist September 19th 2020 Special report Business and climate change 11

“Electric cars for us are batteries with wheels,” says Eliano Russo, Falling of Enel X. Electricity generation, global weighted-average cost Hydrogen is another form of storage. A recent report by Bloom- $ per kWh, 2018 prices bergnef, a consultancy, finds that renewable hydrogen could cut up to 34% of global greenhouse-gas emissions from fossil fuels Renewables 2010 2018 Lithium-ion batteries and industry. To do this would require $150bn in subsidies by 2030. 1,200 That would bring prices down to a level competitive with natural 0.20.10 0.40.3 gas in most of the world. Today most of the commercially pro- Solar photovoltaic 900 duced stuff creates CO2 as a by-product. However “green” hydrogen Concentrating solar power can be made by splitting water into hydrogen and oxygen with Offshore wind 600 clean power. It could then be pumped into existing pipelines and Onshore wind power natural-gas boilers. It could be used to cut emissions from 300 Bioenergy many industrial processes, such as making ammonia. Or it could be stored in fuel cells and used to power vehicles. China is pursu- Geothermal 0 ing this idea. It spent a reported $12bn on fuel-cell subsidies in Hydro 2010 1815 2018. The share price of PowerCell, a Swedish outfit that makes hy- Sources: International Renewable Energy Agency; BloombergNEF drogen fuel cells, has doubled in the past year. In the same period Canada’s Ballard Power has seen its share price triple, while that of America’s Plug Power has risen fivefold. 2 projects or energy-efficiency ones. Recently it ramped up a distri- The fourth idea is carbon removal. Between 100bn and 1trn bution centre for Lidl, a supermarket chain, in Finland. Rooftop tonnes of CO2 will have to be taken out of the atmosphere by 2100 if solar panels, a microgrid and a smart energy-monitoring system the 2°C goal is to be reached, according to a range of scenarios ex- were installed. Sensors cut wasted energy by switching off idle amined by the un’s Intergovernmental Panel on Climate Change. lights and machines. Excess heating from air-conditioning is The median value was 730bn tonnes. If carbon removal costs stored for use when the weather cools. The system is so efficient around $100 per tonne of CO2, an optimistic estimate for the fore- that the surplus heat provides hot water for 500-odd homes near- seeable future, then annual global spending on carbon removals by. Energy costs fell by 70%; carbon emissions by 40%. could easily reach $900bn in decades to come. Because decarbonising transport is so pricey, the potential effi- Many startups are trying to harness nature’s own carbon se- ciency gains are big. The Energy Transitions Commission (etc), a questration. One is Indigo Ag. Last June it launched a platform to global body, estimates that 35-40% of energy use in transport pay farmers for absorbing more CO2 in their land. Soil is a natural could be profitably saved. Digitisation is one way forward. Scania store of carbon: the organic carbon into which plants transform says the average lorry is only 60% full. One study found that 45 the atmospheric CO2 is stored there in abundance. Changes in agri- trucks visited a single department store in Copenhagen every day, cultural techniques, such as reduced deep-ploughing, help keep whereas four fully laden ones could have delivered the same load. carbon in the soil. Indigo Ag’s first step is to measure the carbon The firm is now planning to use gps-trackers to cut unnecessary content of soil. It uses an algorithm to crunch reams of data, from journeys. Similar gains can be made at sea. Ships often sail full- satellite imagery to information from tractor-based sensors, and steam to get to port, then queue for hours or days before they can generate estimates with 85% accuracy. Farmers who successfully moor. PortXchange, a data company, cuts fuel use by alerting boats use carbon-absorbing approaches will be paid for each additional to port queues in real time. tonne of CO2 sequestered. The firm sells the offset, at around $15-20 per tonne, with a mark-up for its trouble. A renewable boom That may sound cheap, but it comes with risks. One is how se- The third area is renewables. In much of the world they are now curely the carbon is stored. A heavy storm could release some of it. cheaper than natural gas thanks to plummeting prices. More pro- An alternative source of negative emissions is machines or “di- gress can be expected. Heliatek, a German firm, makes ultra-thin rect-air capture” (dac). Climeworks, a company based in Zurich, panels that can be printed onto flexible plastic. ge Renewable En- makes smart-car sized dac machines which contain a fan drawing ergy, an engineering firm, is testing wind turbines as big as the Eif- air through a filter, a bit like a sponge. Once saturated, the filter is fel Tower. That is good news because a vast increase in renewable heated and carbon is captured. Today it costs $600-800 per tonne electricity will be needed. Adair Turner, chairman of the etc, says of CO2 removed. Two other firms pioneering dac technology, Car- decarbonising the economy will involve a threefold jump from 25 bon Engineering and Global Thermostat, also have price points terawatt-hours today to 90 or so by 2050. firms deem too high to be commercially viable. And the scale is Because sunshine and wind are intermittent, better ways of still too small. But a new facility that Climeworks is planning will storing energy are needed. Hydrogen and batteries are the front- suck 4,000 tonnes of CO2 out of the air each year, equivalent to the runners. Both have drawbacks. For a given volume, they store less annual footprint of 600 Europeans. energy than fossil fuels. Building the infrastructure to support That plant will be built with Carbfix, an Icelandic startup. Its re- them is a huge task, which requires much co-ordination (what searchers are trying to accelerate mineralisation, a natural process low-carbon fuels should be available at petrol stations?). And even whereby CO2 is transformed into rock, over hundreds of years. though the prices of both are falling, costs remain high. Captured from a geothermal power plant or through dac, CO2 is One way to boost the amount of battery storage is through elec- dissolved in water and injected into rock formations 500 metres tric vehicles, which seem sure to spread. Because cars are parked underground. After two years, the carbon becomes rock and is 95% of the time, at any one moment a hefty amount of battery pow- stored in a stable form. Storage costs about $25 per tonne. The next er is sitting idle. Enel X, the Italian utility’s innovation arm, is ex- step is to take the process offshore, storing carbon under the perimenting at its headquarters in Rome. Electric vehicles belong- ocean. Seabeds are often made of deposits of basalt, the type of ing to a dozen or so employees are hooked up to the grid using rock required. A pilot project will start in the next few years. If suc- special two-way charging points. They provide about one mega- cessful, it will create almost “limitless storage”, says Edda Sif Ara- watt of electricity, which is enough to serve hundreds of homes. dottir, Carbfix’s boss. The world may need it. 7 12 Special report Business and climate change The Economist September 19th 2020

other incentive to decarbonise. However, there are also reasons to be sceptical about the effect of such direct action. Many previous carbon-labelling schemes have failed to gain traction. Persuading firms to adopt them is hard. And consumers are confused by the dizzying array: Ecolabel Index, a green-label directory, counts 457 such labels. In any case, consumer action on its own can do only so much. One study, led by Daniel Moran of the Norwegian University of Sci- ence and Technology, examined the effect on Europe’s carbon footprint of 90 behavioural changes, such as buying low-carbon products and eating less meat. Researchers found that the maximum reduction was 24%. That is an important chunk, but not enough to defeat global warming. The conclusion is that policymakers are needed even more than consumers to push companies towards serious decarbonisation.

Vote early, vote green Electorates can, however, make a big difference. If hordes of green voters start turning up at polling stations, they could accelerate the trends set out in this report. They will press political leaders to impose more environmentally friendly regulations and laws. And when the younger generation starts to save and invest, it could press financial firms to back green companies faster than many expect. A recent report by BlackRock estimates that, by around 2035, the wealth held by American millennials (those who were born between 1981 and 1997) will exceed that of baby boomers (born between 1946 and 1964). This only strengthens the case for every firm to do more now to The future tackle climate change. The underlying reason for early action lies in two inescapable facts. The world of commerce is deeply inter- connected because of international trade. And climate change is a Directing the disruption systemic problem. Greenhouse gases are emitted by every firm in the world, either through its own operations or in its supply chain. Its effects will hit every firm directly or indirectly. For different companies this will translate into different costs. But none will be entirely untouched. Companies that fail to tackle climate change face a backlash Energy transitions are slow, so firms need to act soon. For those he principal message of this special report is that companies business sectors in which mitigation is hardest, such as steel or Teverywhere urgently need to step up their action against cli- shipping, coming up with a viable, low-carbon alternative could mate change. Its physical impact is already causing many of them take many years. Moreover, some carbon-producing assets last a serious damage. Pushed by voters, especially younger ones, gov- long time. A steel mill built today will probably be pumping out ernments around the world are introducing ever tougher regula- CO2 in 20 years’ time. If companies are to decarbonise by mid- tions. Lawsuits could yet make firms’ lives harder still. And, al- century, many newly built assets will need to be carbon-free by the though new technology can be expected to help with the problem end of the present decade. in time, it will not do enough on its own to meet the enormous And there is another, more enticing reason to move swiftly. De- challenge of climate change. carbonising the economy holds many risks but it also offers plenty One place to start is with better carbon-emissions data. Today of opportunities. They lie in developing new technology, becom- few companies even know how much greenhouse-gases suppliers ing more carbon efficient than competitors or selling genuinely belch out. That means they will struggle to calculate the full envi- green products to consumers. Firms that get ahead of their rivals ronmental impact of their products. Where data do exist, they are and seize such opportunities will reap the biggest benefits. They often self-reported, inconsistent or too out of date to be useful. But may just help save the planet as well. 7 work is under way to fix this. Along with some other firms, Microsoft plans to launch an emissions reporting standard for suppliers later this year, backed acknowledgments A list of acknowledgments and sources is included in the online version up by sustainability audits. “Science tells us where we need to be, of this special report but the data tell us where we are now,” says Brad Smith, Microsoft’s offer to readers Reprints of this special report are available, with a minimum order president. In January the Rocky Mountain Institute and other re- of five copies. For academic institutions the minimum order is 50 and for companies 100. search groups started to standardise greenhouse-gas metrics for We also offer a customisation service. To order, contact Foster Printing Service: Tel: +1 866 879 9144; email: [email protected] mining and industrial supply chains. With help from Google, WattTime and CarbonTracker, two lobby groups, are estimating For information on reusing the articles featured in this special report, or for copyright queries, emissions from coal-fired power plants in real time using satellite contact The Economist Rights and Syndication Department: Tel: +44 (0)20 7576 8000; imagery and whizzy algorithms. email: [email protected] The hope is that better numbers could unleash market forces more special reports Previous special reports can be found at and consumer choice. Carbon labels, much like food labels, could Economist.com/specialreports guide consumers towards greener products, giving firms yet an- Middle East & Africa The Economist September 19th 2020 45

Ethnic tensions and state violence ing violence. In August protests calling for his release resulted in yet more deaths. Ethiopia’s transition is in peril Tensions had been building for months before the latest unrest. The government’s decision to postpone elections because of covid-19 spurred talk of a constitutional crisis. Opponents including the Tigrayan People’s Liberation Front (tplf), which ADDIS ABABA runs the northern region of Tigray and Abiy Ahmed has so far delivered neither democracy nor peace dominated the federal government for reedom is not a gift doled out to peo- This year alone at least 147 fatal clashes nearly three decades, accused Abiy of try- “Fple by a government,” Abiy Ahmed have left several hundred dead, according ing to extend his time in office. said in his inaugural address as Ethiopia’s to figures compiled by the Armed Conflict Abiy and his allies, in turn, blame the prime minister in 2018. “Rather [it is] a gift Location & Event Data project (see map). In tplf and militant ethnic nationalists for of nature to everyone that emanates from July riots took place across Addis Ababa, inciting violence. In an opinion piece pub- our human dignity.” His words marked a the capital, and the Oromia region, after lished online by The Economist this week remarkable turn for a country that over the the assassination of Hachalu Hundessa, a (see Economist.com/abiy), the prime min- past five decades had seen an absolute musician and activist from Abiy’s own ister warns that Ethiopia’s journey to de- monarchy, revolutions, civil war and au- Oromo ethnic group. By one count 239 peo- mocracy risks being derailed by those “who thoritarian rule, but not freedom or de- ple were killed, some by mobs, others by are accustomed to undue past privileges” mocracy. After coming to power on the security forces. Thousands have since been and those trying “to assume power through back of anti-government protests, Abiy arrested, including Jawar Mohammed, an violence”, allusions to both the tplf and freed political prisoners and journalists, Oromo opposition leader considered parts of the previously outlawed Oromo welcomed opposition parties back from Abiy’s main rival, who is accused of incit- Liberation Front (olf). exile and encouraged rebels to disarm. He Abiy’s comments are his most explicit made peace with Eritrea, for which he was admission yet of the difficulties of holding Also in this section awarded the Nobel prize last year, and together a fractious federation in which pledged to hold the first free elections in 46 Public spending in Ghana ethnicity is arguably more powerful than Africa’s second-most-populous country. national identity. Moreover, he is trying to 47 Inside Uganda’s ruling party Yet Abiy has been unable to patch the do so with fast-dissipating legitimacy. deep ethnic fissures that threaten to tear 47 Why some countries ban names Next month the constitutional term limit Ethiopia apart, and has not altered the of this parliament and government will ex- 48 Israel and the Arab world state’s instinct for violence and repression. pire. This is adding to tension between the 1 46 Middle East & Africa The Economist September 19th 2020

2 federal government and some of the nine the fiscal deficit has jumped sharply as the Red ethnically constituted states, each of ERITREA Sea government of the day splurged to grab SUDAN imf which has the right to secede. This month Tigray votes. bail-outs and adjustment pro- the tplf defied the centre and held region- grammes have tended to follow. Last year al elections, which some saw as a first step Ghana completed its 16th. towards Tigray breaking away. ETHIOPIA DJIBOUTI Ghana’s National Development Plan- Yet Abiy insists that his government’s ning Commission (ndpc) and the Copen- actions do not mark a reversal of its demo- hagen Consensus, an international think- cratic reforms. “What we learn from the Addis Ababa tank, have teamed up to create a new initia- fledgling democracies of Europe of the tive called the Ghana Priorities. It hopes to 1920s and 1930s is that democracy has to be SOUTH steer the government away from pork bar- defended from violent demagogues and SUDAN rels by using solid evidence to assess which Oromia mobs,” he told The Economist in a written SOMALIA projects give the most bang for each buck. response to questions. Tacitly acknowledg- More than 400 ideas have been nar- KENYA ing brutality, he says, “Given the institu- UGANDA 300 km rowed down to 79. The costs and benefits of tions we have inherited, we realise that each have been analysed in peer-reviewed law-enforcement activities entail a risk of Fatal clashes, Jan 1st-Sep 10th 2020 Fatalities research papers and given a ratio. The best, human-rights violations and abuse.” Involving State forces Militias* Both 1 10 such as ones for improving tb diagnostics Indeed many of those arrested or killed Source: ACLED *Communal/political & rioters and for universal malaria testing, have in clashes were perpetrators or instigators benefits worth over 100 times the costs of violence. But Abiy himself is responsible ethnic versus individual rights. And al- (health schemes tend to score well). A land- for more of the current mess than he ad- though Abiy says he is committed to talks, title programme to clarify property rights mits. Since taking office he has focused on he is wary of the opposition’s calls for a promises benefits more than 90 times amassing power by sidelining rivals, lock- comprehensive “national dialogue”. greater than the investment required. ing up opponents and monopolising deci- Abiy’s vision of a multi-ethnic country Many fairly simple interventions have sion-making instead of working with the whose “destiny lies in our togetherness” is benefits that are reckoned to be a good 30 or opposition to lessen tension peacefully. more hopeful than the one offered by mil- so times higher than their costs. One com- Although Abiy’s rhetoric differs from itant ethnic nationalist whose break-up of munity health-care programme included his predecessors’, his administration’s the country would lead to ethnic cleansing extra training for front-line staff, simpli- conduct looks increasingly familiar. For and fighting between the regions. But after fied health surveys so data can be used more than a year security forces have more than a century of trying to use force to more easily and a flexible budget for local waged a harsh campaign against armed forge a united state, now may be the time to health clinics. These cut the deaths of new- Oromo separatists. A report by Amnesty In- try doing so through consent. 7 born babies by half, according to a study ternational alleged torture and summary published in 2019. executions. Instead of promising to inves- Cost-benefit analysis does not capture tigate, Abiy dismissed the allegations as Public spending in Ghana everything. It does not always identify pre- “fiction”. Responding to The Economist, he cisely who benefits and who pays. The admits there may be “isolated incidents High noon for quality of the data and the number-crunch- where law-enforcement agencies have ing varies. The indirect effects of long-term used disproportionate force”. But he adds half-bridges national development projects are tough to that allegations are “taken out of context”. analyse. But other methods are worryingly Meanwhile, opposition figures say po- subjective. The team running the initiative litical freedoms are being withdrawn. asked a panel of economists and Ghana’s Ghana has long struggled to spend “Time and again they close our offices and ministers for finance and planning to rank sensibly. A new initiative may help detain our members,” says Merera Gudina, the proposals. They promoted r&d spend- an Oromo leader. Even after judges have or- uberculosis is a terrible disease. It de- ing, which is superficially attractive but dered certain prisoners’ release, the police Tstroys lungs from the inside out, leav- has a low benefit-cost ratio of only 1.5, from have rearrested them. Eskinder Nega, an ing sufferers coughing up the bloody re- 62nd to 15th place. opposition leader blamed by the govern- mains. In Ghana too few people are The real test is what happens next. The ment for the rioting in the capital in July, diagnosed in time: the disease kills over nominally apolitical ndpc says the find- was charged with terrorism on September 15,000 people a year, about 5% of all deaths. ings are already influencing how the gov- 10th. Eskinder previously spent seven But a recent pilot scheme shows that diag- ernment spends in response to covid-19. It years in prison on trumped-up charges. nosis can be faster and more accurate sim- also hopes that the research will shape The government has repeatedly cut off ply by whisking samples from clinics that Ghana’s medium-term development plan. the internet. Journalists were barred from lack the latest testing technology to the But James Dzansi of the International travelling to Tigray to cover its election. A nearest well-equipped testing centre. This Growth Centre, a think-tank, says that new law criminalising “hate speech” in- could save more than 3,000 lives in six party manifestos often knock aside such cludes provisions which can be used to years if plans to scale up were followed plans. An election beckons in December. lock up peaceful dissidents. At least three through. Since the benefits are estimated at Similar initiatives in the past have faltered broadcasters linked to the opposition, only 166 times the costs over 20 years, the when governments changed, says Mr one of which had aired calls for violence, scheme is patently a fine idea. Dzansi. The Ghana Priorities has better evi- were closed in July. Ghana is not famous for spending pub- dence underpinning it, he says. “Will this A lasting solution to Ethiopia’s crisis is lic money wisely. A study in 2015 found also lose momentum when a new govern- likely to require negotiations with opposi- that, once under construction, a third of ment comes to power?” No matter who is in tion groups and a broader discussion of municipal infrastructure projects are nev- charge, though, wonks themselves may er finished: half-built bridges litter the need to keep promoting evidence-based Read the full commentary by Abiy Ahmed country. Spending is also highly political. policies over political ones, says Koku at: Economist.com/Abiy In every election year bar one since 2000 Awoonor-Williams, one such wonk. 7 The Economist September 19th 2020 Middle East & Africa 47

Politics in Uganda Banning names Divided we stand Sorry, you’re not on the list

Why no one is called Linda in Saudi Arabia SHEEMA bdelmadjid labadi, who lives in registrars were obliged to ensure that The ruling party is fractious and Algeria, could have chosen an Arabic names were “Algerian-sounding”; Mo- disorganised, yet very hard to beat A name for his daughter. But he wanted rocco said they must sound Moroccan. icksons kateshumbwa is shaking up one that reflected his Berber ethnicity. But this form of nationalism has been Dpolitics in Sheema, a district in west- His choices were limited: Algeria keeps a receding in much of the region. Officials ern Uganda. In his bid for parliament he list of around 300 approved Berber who guarded against “cultural separat- has repaired boreholes, doled out maize names, a way of holding the minority in ism” now celebrate diversity. Take Tuni- flour and flaunted the wealth he made as a check. Mr Labadi wanted none of them. sia, which ended its ban on foreign customs official. Fans speed ahead of him So for almost four years he left his daugh- names in July. “What people drink or on motorbikes, garlanded with leaves; in ter officially nameless, as he fought in name their children is their private villages, crowds cheer his name. He says court for the name he preferred. In July affair,” said Lotfi Zitoun, the minister that people have been left poor by “bad he finally won and his daughter formally who took the decision. Turkey officially leadership”, a reference to the cabinet min- became Tanila, Berber for dove. ditched its policy of Turkifying names in ister who holds the seat. Regimes in the Middle East and north 2003. The constitution passed by Iraq in But Mr Kateshumbwa is no opposition Africa long restricted names as a way of 2005 ended the Arabisation of minority firebrand. He and his rival are both in the encouraging national unity—usually names. Israel dispensed with Hebraisa- National Resistance Movement (nrm), the centred on the majority ethnic group or tion in the1990s, when a wave of Jews ruling party. On September 4th it held pri- religion. For example, Turkey banned from the former Soviet Union arrived. maries to select parliamentary candidates Kurdish names and non-Turkish suffix- Even today, though, official tolerance for next year’s general election. Mr Katesh- es, such as the Armenian “-ian”. Post- is limited. Algerian registrars still gri- umbwa won, as did many other upstarts: revolution Iran banned Western names mace at names such as Kahina, a Jewish voters kicked out about 120 incumbents, and balked at pre-Islamic Persian ones. Berber queen who battled the conquer- including 15 ministers. For Yoweri Muse- Israeli bureaucrats gave Jewish immi- ing armies of Islam. A Kurd in Turkey can veni, president since 1986, that is not quite grants from Europe and Muslim coun- call his child Serwav, which means war- the setback it seems. Regular, disorderly tries Hebrew names on arrival. Algeria’s rior, but it is likely to invite government voting is central to his rule. He commands scrutiny. Iran’s ayatollahs have grown a party in which there is tumultuous com- more comfortable with ancient Persian petition for every position except his own. names, but they frown upon those of old Mr Museveni blames political parties shahs and kings, which might betray a for fomenting regional and religious strife parent’s monarchist leanings. Not long in the first decades of independence. After ago Saudi Arabia banned 51names. Many fighting his way to power he established a were favoured by Shia Muslims, who are system where candidates stood without af- a minority in the kingdom. But Linda was filiation. Even after multiparty politics was on the list, too. restored in 2005, the party saw itself as a Other parts of the world are also vehicle “where everybody gets on board”, restrictive in this way. China bans “ex- says David Mafabi, a presidential adviser. treme” names, such as Muhammad or The party and the state are in “a symbi- Islam, in its Xinjiang-region. Until 2017 otic relationship”, says Richard Todwong, California prohibited the use of accents the nrm’s deputy secretary-general. Lines in names. An Egyptian parliamentarian between the two are blurred. Mr Muse- once tried to make things simple by veni’s rebel force is now the national army. banning all foreign names. But he back- Resistance councils created in the bush be- tracked after being reminded that the came the basis for village assemblies. widow of Egypt’s longest-serving presi- The nrm won two-thirds of seats at the dent, Hosni Mubarak, is called Suzanne. previous election, so its endorsement of candidates is prized. At least six people were killed in the primaries and a minister ent asks for help with school fees and hos- rule, especially in the swelling cities, and was charged with attempted murder after pital bills, grumbles Gordon Arinda Kaku- dissent is violently repressed. But many in allegedly shooting at his rival’s campaign uma, another ousted incumbent. his rural base still believe, as one voter puts manager. The Citizens’ Coalition for Elec- Such gripes reflect popular understand- it, that the problem is neither Mr Museveni toral Democracy in Uganda, a civic alliance, ings of a politician’s role. “It is all about nor the nrm, merely the rogues within it. found bribery and organised gangs at half lobbying for your area,” explains Rosemary The party’s internal churn is also bring- the polling stations it observed. Nyakikongoro, a candidate in Sheema. “If I ing a younger generation of leaders to the For voters, the primaries are a chance to must lobby anything from government, top. Some are ambitious, and Mr Museveni kick out incumbents who have not deliv- then I have to be in the ruling party,” ex- promotes those who protect his power. He ered. “They will expect you to bring elec- plains Abel Kahara, the mayor. is happy to ease out bush-war veterans who tricity to every home,” says Mary Karooro The tussles within the nrm create a have “the character to ask questions”, says Okurut, a vanquished minister, “and of vent for popular frustration, leaving Mr Sabiti Makara of Makerere University. In- course you will not be able to do that, so Museveni to float above the fray. True, creasingly the only thing holding the nrm then they throw it at you.” Every constitu- many voters are tired of his authoritarian together is Mr Museveni himself. 7 48 Middle East & Africa The Economist September 19th 2020

Israel and the Arab world Bahrain and the uae settled for much less. The Emiratis did extract a promise End of the illusion that Israel would shelve plans to annex parts of the occupied West Bank. In their telling, they now have more leverage to push for a two-state solution. “The policy of the empty chair has not served the Pales- BEIRUT tinians well, and indeed has not served the The Arab-Israeli conflict is fading, but that will not resolve the one between Arabs well,” says Anwar Gargash, the uae’s Israel and the Palestinians minister of state for foreign affairs. even decades of official ostracism end- Israel’s diplomatic ties History suggests such leverage will Sed with a few strokes of a pen. On Sep- SYRIA with Arab countries* count for little, though. Egypt and Jordan LEB. tember 15th, at a ceremony in Washington Official Unofficial signed peace treaties with Israel decades (pictured), Bahrain and the United Arab ISRAEL IRAQ ago but have not brought the Palestinians Emirates (uae) established formal dip- JORDAN IRAN any closer to statehood. The treaties that Is- lomatic relations with Israel. They are the KUWAIT rael signed with Bahrain and the uae did first Gulf states to do so. The documents not even include a nod to a two-state sol- BAHRAIN The they signed were thin: details of flights, Gulf ution, only vague talk of a “just” resolution. EGYPT commerce and the exchange of ambassa- QATAR UAE The autocrats who gather at Arab League dors must be worked out. Still, in one after- gabfests still recite paeans to the Palestin- noon, Israel doubled the number of Arab SAUDI ARABIA ian cause. Out in the real world, though, the countries with which it has official ties. It SUDAN Red OMAN Arab-Israeli conflict has long since ebbed. Sea also has informal relations with at least Almost four decades have passed since a YEMEN *Morocco also five others, from Oman to Morocco. 500 km regular Arab army fought Israel. It is hard to It was a genuine achievement for Presi- has unofficial ties say precisely how the Arab public feels, as dent Donald Trump, whose attempts at dictatorships do not lend themselves to high-stakes diplomacy have been marked malisation with Israel have more room to credible polling. Most Arabs no doubt re- more often by stalemate than success. For express dissent in Bahrain, although the main sympathetic to the Palestinians. But Binyamin Netanyahu, Israel’s prime minis- most strident critics risk arrest. There was there has been a gradual softening of opin- ter, it validated a long-held belief that his an outpouring of discontent on social me- ion. Most Arab states are suffering from po- country would not have to make peace with dia in the days before the ceremony. litical and economic crises, exacerbated by the Palestinians to enjoy better regional The reaction will be watched closely in a power struggle between Iran, Turkey and ties. (It was also a welcome excuse to get Saudi Arabia. Bahrain relies on its larger the Gulf states; the Palestinian cause no out of Israel, where covid-19 cases are surg- neighbour for political and economic sup- longer arouses the passions it once did. ing and the public is furious about a newly port. It would not have made such a conse- Mr Trump thinks there will be more dip- imposed three-week lockdown over Juda- quential decision without the kingdom’s lomatic announcements to come. “We’ll ism’s holiest festivals.) blessing. It may serve as a test run. Mr have at least five or six countries coming There was much talk of peace, as if a Trump has hinted that Saudi Arabia could along very quickly,” he said. A bit of Trum- long, vicious war had finally ended. “It’s be next. The crown prince, Muhammad bin pian exaggeration, perhaps, although oth- been blood all over the sand for decades Salman, may see a way to polish his reputa- ers will surely follow and the Palestinians and decades,” Mr Trump said. “That’s all tion in Washington, which has been black- will find themselves ever more isolated. they do is they fight and kill people.” In fact, ened by the war in Yemen and the murder Yet the loss of Arab support will not compel Israel never fought Bahrain or the uae; nei- of Jamal Khashoggi, a Saudi journalist. For them to abandon their demands. Strip ther was even a sovereign state until more now, though, King Salman sits on the away the façade of an Arab-Israeli conflict, than two decades after Israel’s founding. throne. He hews to the old Arab orthodoxy and the problem remains what it always They have been quiet partners for years, of offering Israel full relations only if it has been: a territorial dispute between two brought together by a mutual fear of Iran. withdraws from Palestinian lands. peoples that only they can resolve. 7 The Emiratis moved first to make that partnership public, but Bahrain’s decision to follow suit may be the more interesting one. The uae did not have to worry about whether normalisation would be popular. It is strong enough to brush off criticism from countries such as Iran and Turkey (which itself recognised Israel in 1949). At home there is little space for dissent. One prominent Emirati academic, known for past criticism of Israel, tweeted a tearful emoji when the uae announced its decision last month. He has since reaffirmed his support for the country’s leadership. Bahrain, by contrast, has a history of protest. The Shia majority has long com- plained of discrimination by the Sunni royal family. Unrest peaked in 2011 during protests inspired by the Arab spring, which were crushed with the help of troops from other Gulf countries. Opponents of nor- Smiley are the peacemakers Europe The Economist September 19th 2020 49

Russia’s local elections his team, and ran not on local issues but on a clear anti-Kremlin message. Winning from death’s door Their victories hardly break United Rus- sia’s grip on power. Its candidates won the gubernatorial elections in all 18 of the regions that held them, and retained control of the vast majority of local legislatures too. But the victories of Mr Navalny’s two main candidates in Siberia, which contrib- Despite being poisoned, Alexei Navalny has hurt the Kremlin in local elections uted to United Russia losing its majorities ast month Alexei Navalny, Russia’s around a third of Russia on September 13th. on those two councils, set a precedent for Lmain opposition leader, stood in the “They have always defeated us. Twenty the elections to the Duma, Russia’s parlia- middle of Novosibirsk, the capital of Sibe- years in a row. But we need to rise and go ment, next year. They showed that Mr Na- ria and the country’s third-biggest city, ex- into battle again,” he said. valny’s appeal extends well beyond Mos- plaining how to liberate it from occupation By the time his video was posted on cow and that the grip of the pro-Kremlin by crooks and thieves. For thus has he fam- YouTube at the end of August, quickly gain- parties can sometimes be overcome. ously dubbed the United Russia party. The ing millions of views, Mr Navalny was in They also demonstrate that Mr Na- party is the country’s largest, and the vehi- intensive care in Berlin, poisoned by a valny’s organisation has become a formi- cle through which President Vladimir Pu- nerve agent. His team carried on working dable political force, even though he was tin exercises legislative control. “The basis undeterred and, on September 13th, two of not allowed to run in the election and his of Putin’s power is not the State Duma as is Mr Navalny’s closest allies, who head party does not officially exist. To overcome commonly believed,” said Mr Navalny. branches of his organisation in Novosi- these obstacles, Mr Navalny has come up “The main strength lies in the fact that the birsk and Tomsk, were elected to their re- with the idea of “smart voting”, where his Kremlin’s United Russia has a majority in spective city councils. Unlike United Rus- team identifies the candidate most likely to every legislative assembly in every region sia candidates, who often tried to conceal beat United Russia. In the election on Sep- and in every major city’s council.” their party affiliation, Mr Navalny’s candi- tember 13th this deprived United Russia of All these councillors, mayors and go- dates made no secret of being members of about a tenth of its seats, despite unprece- vernors keep Mr Putin in power and in re- dented levels of pressure and dodgy tricks. turn are allowed to extract money from the Public-sector workers, who are dependent Also in this section people who live in their territory through a on the state, were ordered to vote, for in- web of corruption that enwraps the entire 50 The politics of Spanish history stance, and the procedure was stretched country, Mr Navalny argues. “If United out over three days, which made the task of 50 The eastern Mediterranean Russia loses this majority, the power of controlling the outcome easier. these villains will instantly melt away,” he 51 Germany’s economic recovery The Kremlin’s ability to manipulate explained in a sleek video aimed at mobi- elections and maintain control depends on 52 Charlemagne: Asylum in Europe lising voters in local elections across low voter turnout. It reduces the number of 1 50 Europe The Economist September 19th 2020

2 people authorities need to mobilise and Ever since Mr Putin came to power 20 says Alexei Mazur, a democracy activist in makes rigging simpler. In Novosibirsk, a years ago, the Kremlin has cultivated cyni- Novosibirsk. city of 1.6m people, the turnout was indeed cism and a sense of helplessness in Rus- Yet as Leonid Volkov, Mr Navalny’s chief well below 20%. “People don’t believe that sia’s people. In 2006 it abolished an option of staff, explains, a low turnout is a two- they can change anything and don’t bother on ballot papers for voters to reject all can- edged sword. It only takes a few thousand to vote,” admits Sergei Boiko, the head of didates, thus preventing protest voting. inspired and motivated voters to change Mr Navalny’s organisation in Novosibirsk, Unsurprisingly, those who opposed the the outcome. Nonetheless, if this election who managed to form a coalition of oppo- Kremlin simply did not turn up to vote at is anything to go by, however unpopular sition candidates as well as to get elected to all. “People need to see a success story, to United Russia may be, mobilising people to the city council himself. start believing they can change things,” vote against it is a mammoth task. This is why Mr Navalny has directed all his energy and charisma into trying to pro- Spanish history ject a sense of hope—and why he was poisoned. His biggest victory has been to sur- A law to fight Franco vive that assassination attempt. On September 15th he published his first Insta- MADRID gram post since coming out of a coma. It The government seeks to dig up the past. Will it bring harmony to the present? shows him sitting in bed smiling, sur- hen democracy came to Spain in ment hopes to find up to 25,000 skele- rounded by his happy family. “Hi, this is Wthe late 1970s, it arrived through tons in five years or so. The law would Navalny,” the post read. “I have been miss- agreements between moderate suppor- also annul the verdicts of Franco’s sum- ing you…Yesterday I managed to breathe on ters of the long dictatorship of Francisco mary trials and withdraw titles and my own for the entire day…not even a valve Franco, the victor in the Spanish civil medals awarded by the dictatorship. The in my throat. I liked it very much. It’s a re- war, and a realistic democratic opposi- Valley of the Fallen, the grandiose basili- markable process that is underestimated tion. At their heart was an amnesty law ca from which Franco’s remains were by many. Strongly recommended,” he and a broad understanding not to use the removed by the government last year, wrote, pledging to return to Russia as soon past as a political weapon—arrange- will be redesignated as a civilian cem- as possible. Within a few hours his post ments often misleadingly dubbed a “pact etery (rather than a church) and run by had gathered more than a million “likes”. of forgetting”. This largely seamless the state (rather than the Benedictine All he needs to do now is find a way of turn- transition was widely hailed as a success. monks on whom Franco bestowed it). ing those “likes” into votes. 7 But younger generations, mainly on the More questionable are powers to shut left, now worry that Spain never ac- down groups that “exalt” or “apologise knowledged the crimes of its past. for” the dictatorship, such as the Francis- The eastern Mediterranean A first attempt to redress this came co Franco Foundation, a private archive with a law of “historical memory” in for nostalgics run from an obscure Ma- Anchors awry 2007, which aimed to remove fascist drid flat. The foundation says this is an symbols from public buildings and “attack on freedom of thought” and recognise the mistreatment of Franco’s threatens to move to the United States. victims, but was only partly implement- The law would also require schools to ed. Now the minority left-wing coalition incorporate “democratic memory” into government of Pedro Sánchez has un- the history curriculum. Whether that ATHENS Greece’s navy is in need of a refit veiled a draft law of “democratic memo- will lead to good history or official propa- ry” that would go further. ganda is unclear. e gave the Turks a lesson in sea- The draft is a mixed bag. Many wel- Most troubling is that the bill sets up a “Wmanship,” boasts Andreas Stefano- come a plan to recover the remains of special prosecutor to investigate human- poulos, a reservist in Greece’s navy. The jin- victims of the civil war and the repres- rights abuses from 1936 to 1978. This is goistic mood that swept Athens after a sion that followed its end. The govern- largely futile, since most perpetrators are collision in the eastern Mediterranean on dead. It also comes close to overturning August 12th, in which a newish Turkish the amnesty law, out of a conviction that frigate suffered visible damage while a 40- justice and truth should retroactively year-old Greek one was apparently un- outweigh peace and reconciliation. harmed, is yet to fade. Morale in the armed The conservative opposition claims forces is “the highest I’ve ever seen”, a for- the bill is a smokescreen to hide govern- mer Greek defence minister declares. “The ment mismanagement of the pandemic. navy and air force are both raring to take on It objects, too, to the likelihood that it the Turks.” will be approved with the parliamentary Greece has pockets of naval excellence. votes of Basque and Catalan separatists, Its German-designed submarines are “al- who reject the current constitution. most undetectable by Turkish sonar”, says The bill’s defenders contrast Spain’s Emmanuel Karagiannis of King’s College tolerance of Franco with Germany and London, and its nippy corvettes are armed Italy. But Spain’s history is different. If with French Exocet missiles of the sort that the government really wants to resolve wounded the Royal Navy in the Falklands unfinished business from the past, it war. Greece’s navy would have “consider- should have tried to agree on the bill with able firepower” in the confines of the Aege- the opposition. For all its virtues, the bill an, says Mr Karagiannis. But it “lacks the uses the past as a political weapon. And means to project power in the deep waters Part of history too that is bad for Spanish democracy. of the eastern Mediterranean,” he warns. Between 1970 and 2020 Greece commis-1 The Economist September 19th 2020 Europe 51

debted companies to declare bankruptcy. Such blanket measures, fear some, could spawn vast numbers of “zombie” firms kept alive by a drip-feed of state aid, hindering the redeployment of capital and labour to more productive uses. “Kurz- arbeitergeldcould tie workers to companies that have no future,” said Jens Weidmann, head of the Bundesbank, on September 2nd. Christian Sewing, the ceo of Deutsche Bank, warned that one in every six German firms risked zombification. The oecd raised similar concerns this week. In fact there are two dangers. One is that the state props up firms that would have struggled even without the pandemic. The decision to extend Kurzarbeitergeld was not necessarily wrong but taken too early, reckons Andreas Peichl, an economist at the Ifo All dressed up and nowhere to go institute in Munich. He would have preferred changing tax rules to allow compa- 2 sioned 30 attack submarines, frigates and kos Mitsotakis, announced plans to buy 18 nies to offset current losses against pre- corvettes that are still operational, to Tur- French Rafale fighter jets, most of them pandemic profits. (Olaf Scholz, the finance key’s 38, according to figures collected by “slightly used”, plus four helicopters and minister, says fears of zombification are the International Institute for Strategic advanced weapons to go with them. He also “bloodless textbook speculation”.) Studies (iiss), a think-tank in London. The promised to buy four new frigates and to The second risk is that covid-19 causes Greek fleet is also ageing, whereas Turkey refurbish old ones. But the first planes will structural change in economies. A travel is churning out modern warships. Cash- not turn up until next year, and the ships agency or music-promotion company that strapped Greece has largely given up on probably later still. Greece will be out- was thriving before the pandemic and now buying high-end French frigates or de- gunned for a while yet. 7 surviving on state support may struggle af- stroyers, opting for smaller and cheaper terwards if consumer habits shift perman- British corvettes instead. ently. But it is too early to know. Greece is especially concerned about Germany’s economic recovery A related issue is that state help may en- the security of Kastellorizo, a small island courage some companies—especially in far from the Greek mainland and just a mile Zombie dawn Germany’s crucial car industry, which has off the Turkish coast. It lies at the heart of disproportionately relied on Kurzarbeiter- the current crisis. Though Turkey does not geld—to postpone some hard choices about formally lay claim to the island, it objects their business models. Germany is unusu- to the idea that such a paltry territory al among rich countries in having focused should have its own exclusive economic BERLIN solely on short-term emergency measures, Worries are growing about the zone, and complains that Greece has vio- notes Ludovic Subran, chief economist at long-term effects of the bail-out lated agreements on the demilitarisation Allianz, an insurer, rather than long-term of this and other islands. ermany’s famed Kurzarbeitergeld pro- recovery measures like retraining, tax re- Kastellorizo, which Greece’s president Ggramme, which funnels government form or investment. Germany’s well-capi- visited on September 13th, is not easy to de- cash to workers whose hours are cut by em- talised firms may actually be at less risk of fend. Turkey’s procurement of a helicop- ployers, is the “gold standard” of furlough zombification than their counterparts ter-carrier will also bolster its ability to schemes, reckons the imf. It has been elsewhere in Europe. But they have not yet mount amphibious operations, including widely imitated across Europe by govern- been offered much of a guide to the future. the seizure of islands, says Hugo Decis of ments seeking to protect jobs and incomes One reason for that may be next year’s the iiss. from the full ravages of covid-19 lock- election, at which Mrs Merkel will stand Mindful of this vulnerability, Greece’s downs. In Germany, under relaxed criteria down after 16 years in office. Even before top general has warned that any local con- introduced in March that were extended to the virus struck, some economists had be- flict would swiftly lead to a full-scale war. A nearly 7m workers, it has limited the rise in gun to chafe against Germany’s low-deficit, Greek riposte, says Mr Karagiannis, would unemployment to around 600,000 and low-investment orthodoxy, especially the probably come on more favourable ground, kept consumer spending buoyant. currently suspended “debt brake”, which such as the Evros river region that marks The extraordinary rescue package as- constrains borrowing. Mr Scholz, who is the land border between the two countries. sembled by Angela Merkel’s government, running to succeed Mrs Merkel, says the But Greek tanks are in bad shape and the which also included bridging loans to debt brake should return in 2022, but oth- border is heavily mined. It is “not really a firms and a suspension of fiscal rules to al- ers in his Social Democratic Party disagree. feasible proposition these days”, says a low stimulus spending, was broadly en- The Greens, likely to join the next govern- Western military attaché. dorsed by Germany’s economic establish- ment, will hope to exploit the state’s sud- Greece is scrambling to redress the gap. ment. It has fuelled a more robust recovery den conversion to activism to press their In August the finance minister promised to than elsewhere in Europe. But two recent case for long-term public investment. Con- boost defence spending, which fell precipi- decisions have seen that consensus start to versely, whoever leads Mrs Merkel’s con- tously after the financial crisis. Greece fray. The first was an extension of Kurz- servatives into the election may push for a spends less than $5bn on defence each arbeitergeld payments to 24 months. The return to fiscal restraint and smaller gov- year, a third of what Turkey spends. On second was a further moratorium on Ger- ernment. Germany’s short-term measures September 12th its prime minsiter, Kyria- many’s strict requirement for overly in- may have long-term consequences. 7 52 Europe The Economist September 19th 2020 Charlemagne Europe’s asylum compromise

Let the humanitarians sound humane and the hardliners sound hard willbe diverted for rapid deportation. After that, rather than stay in the first port of call, refugees will be distributed across the eu. The hitch with this plan is that countries such as Hungary have refused point-blank to accept any such scheme. Forced compas- sion is a recipe for misery. Arrivals do not want to go to Hungary; Hungarians do not want them to come. Wealthy western European countries which have six decades of (often chequered) experience of immigration are tone-deaf when they lecture eastern European voters. Forcing countries with little history of immigration to get used to it in a few years rather than decades is clumsy and unrea- sonable and will win few converts. The eu is, however, a commons in which freeloaders should not be accepted. The commission is trying to come up with other ways to share out the burden. One idea being considered by eu officials is for hardline countries to take the lead in removing people without the right to asylum. Deportation—“returns” in the euphemistic jargon—is difficult. It is expensive, legally complicated and requires strong diplomacy. Taking responsibility for deportations would be a serious job. At the moment, only 40% of failed asylum-seekers are actually sent back. Without an effective system of deportation, a dangerous trip to the eu becomes a calculated risk, even for someone from a country such as Nigeria or Senegal, whose citizens’ asy- t takes a lot of misery to jolt European politicians into action on lum applications are rejected 90% of the time. Imigration. Only when bodies started piling up on Lampedusa, Leaving the hardliners as Europe’s bouncers, in the phrase of an Italian island near Tunisia, did European leaders in 2013 first one migration wonk, would partially solve the solidarity issue. But properly acknowledge the refugee crisis at its border. At its peak in it would scar the eu’s self-image as a beacon of liberal values. Bru- 2015, when 1m people entered the eu, only the very worst stories tal as it may seem, the eu can either have an asylum system that cut through. In one incident, 71people—including four children— lives up to humanitarian ideals but fails in practice, or it can have a suffocated inside a meat lorry. Their bodies were discovered be- system that actually works. Some European countries are happy to side an Austrian motorway when a policeman noticed their lique- be humanitarian; others are happy to be hard-headed. A successful fied remains seeping out. Compared with those horrors, the long- Europe-wide migration strategy would make use of both. running misery of Moria, an overcrowded, squalid refugee camp on the Greek island of Lesbos was a side-story. Compromise without crisis Until it burnt down on September 9th. Moria and other camps Even this approach may flounder. The last crisis still poisons the like it dotted across Greece were supposed to be the fulcrum of the debate, even though things are different now. Between 2015 and eu’s asylum policy. For hosting them, Greece had received €2bn of 2016, 1.4m jumped the border. Now only around 140,000 people ar- eu funding. Yet in mid-September the fire left 13,000 people—in- rive every year in an “irregular” manner. Calmer heads should pre- cluding about 4,000 children—searching for shelter. Moria has vail. After all, most migration is legal and well organised, points provided a deeply inauspicious backdrop for the European Com- out Ylva Johansson, the commissioner for home affairs, who over- mission’s latest efforts to tackle the issue. It is due to unveil a “mi- sees the reforms. About 2.5m people move to the eu each year, gration pact” on September 23rd, with a host of policies designed while 1m leave—just the ticket for an ageing bloc fond of welfare to overhaul the bloc’s asylum and migration rules. spending. “De-dramatising” the situation is the commission’s Brussels has a thankless task ahead of it. Migration sits at an main aim, says Ms Johansson. But when it comes to refugees, eu unhappy apex of complexity and controversy. Leaders are united leaders swiftly become drama queens. only by paranoia. “Every single government can go down because Fights over money or industrial policy are comparatively sim- of this,” says one eu ambassador. Populists have long made hay of ple to settle. Cash can be shuffled around on a spreadsheet. Regu- the topic. On the other side of things, green and leftist parties ham- latory leeway for cherished industries can be haggled over. No mer their mainstream rivals when they become too stern. Old divi- such easy fixes exist when it comes to migration. Taking in refu- sions have already emerged from Moria’s ashes. Germany, the de gees is a decades-long commitment, which requires political con- facto head of the eu’s humanitarians, swiftly promised to take in sent. Integration is difficult to do well, even when a government is 2,750 asylum-seekers from Greek camps. Austria, the leader of the willing, never mind if people are being foisted upon their hosts. anti-migration hardliners, insisted it would take none. If a deal is not possible in a time of relative calm, then waiting Coming up with a compromise between the humanitarians, for a crisis becomes the only option. Although it was a hoary old the hardliners and the front-line states, such as Greece, is the com- solution to European deadlock, a similar approach on economic mission’s job. As part of the package, the front-line states must be matters worked this summer. eu leaders took a political leap of stricter in registering arrivals. Despite rules to the contrary, asy- faith by issuing mutual debt for the first time. The trouble is that lum-seekers and migrants who arrive in, say, Italy have a habit of the eu had to suffer its worst-ever economic slump to get there. A ending up in the eu’s north. Under the proposals, an initial sift will big enough crisis may do something similar when it comes to asy- see arrivals sorted into categories, with those likely to receive asylum, creating the political space for compromise. But a break- lum put on one track, whereas those from relatively safe countries through will come only at an unconscionably high price. 7 Britain The Economist September 19th 2020 53

Also in this section 54 Earlier abortions 55 Bagehot: Boris v the blue blob

Britain after Brexit mayors and local councils embarking on wasteful subsidy races to lure investors, as Opening the taps happens between American states. They impose transparency and reduce cronyism. Britain’s newfound aversion is a “Shakespearean description of how passion can trump reason,” says Pascal Lamy, a former director-general of the wto. “If you look at the long-term economic thinking of Why the Tories changed their mind on state aid the British, it is more distant from state in- or years only left-wingers like Jeremy getting hit for infringements. Whereas tervention in the economy than the conti- FCorbyn, the former Labour leader, and they despised her plans for a close relation- nent in general.” Bob Crow, a trade-union honcho, were ship with the single market and customs Above all, without a strong regime there bothered by Europe’s state-aid regime. For union, Tory mps did not mind Theresa will be no eu trade deal. The risk of Britain Conservative Eurosceptics, it was the best May’s proposal to keep Britain in lock-step undercutting the single market with subsi- thing about Brussels. Rules prohibiting with Europe’s state-aid regime, and to up- dised goods has been eu leaders’ greatest distortive subsidies to businesses were hold the rules even if it left without a deal. concern since the Brexit vote. Its proximity cast in the European Union’s founding Boris Johnson has abandoned this lega- and level of economic integration makes treaty, but it was Margaret Thatcher who cy, to the dismay of Thatcher’s disciples tough measures necessary, they say. With- gave them teeth. For her they were a means and the eu’s Brexit negotiators. On Septem- out an agreement, Brussels would have to of rolling back the state at home and ber 9th the government said it would fol- rely on the anti-subsidy tariffs that it de- abroad. She made common cause with low much looser World Trade Organisation ploys against China and Russia, says Mr Jacques Delors, the architect of the single (wto) rules after Brexit. Although it may in- Lamy. “I would hate the uk-eu relationship market. Europe’s ailing economies could troduce a tougher system of regulation lat- to be based on instruments of this kind.” only integrate and become competitive, er on, that will be none of the bloc’s busi- Ministers say they don’t want a return the logic ran, if their governments stopped ness, it says. David Frost, Britain’s to a “1970s approach” of support for unsus- doping companies on public money. negotiator, sees Brexit as a simple matter of tainable companies. But leaving the single Control over state aid has since become “sovereignty”, and says he cannot accept market and customs union will badly harm one of Brussels’ strongest tools, granting state-aid provisions stricter than those in the competitiveness of many manufactur- the European Commission power to over- the eu’s trade agreement with Canada. ers, who will demand the government rule finance ministries and claw back huge This seems unwise, particularly when saves jobs. The Treasury prepared a bail- payments. Yet Conservative politicians the government wants to increase public out fund, known as “Operation Kingfisher”, mostly ignored it after the Brexit referen- spending. The eu’s rules are designed to in case of a no-deal Brexit last autumn. dum of 2016. Britain doles out little aid channel subsidies to productive things like And crucially, some Tories have woken compared with other European countries, research, decarbonisation and training for to the fact that state-aid rules are an obsta- and has navigated the rules nimbly, rarely workers. They stop devolved governments, cle not only to a return to a pre-Thatcherite1 54 Britain The Economist September 19th 2020

2 past, but also to the so-called “Singapore Abortion model” of aggressive tax competition. The commission has used state-aid rules to Call to action overturn sweetheart tax deals granted to firms such as Amazon and Ikea by Ireland, Luxembourg and the Netherlands. Govern- ment support for infrastructure and regulatory holidays can be caught, too, both of which will be tempting to a country trying Why women are having earlier abortions during the pandemic to attract investment after Brexit. “The government is right to worry that copying eu ithin a week of discovering she was Abortion is usually a safe procedure, but rules will hamper its ability to move fast Wpregnant in late April, Sylvie (not her there is a direct correlation between the and experiment,” says James Webber of real name) knew she wanted an abortion. risk of complication and weeks of gesta- Shearman & Sterling, a law firm. The pandemic had made her the sole tion, says Sam Rowlands, a doctor at the Dominic Cummings, Mr Johnson’s aide, breadwinner, and she had a young daugh- British Society of Abortion Care Providers, wants Britain to create tech giants to rival ter to look after. She called Marie Stopes, a a representative group. That means easing China, and to mimic cold-war America by charity, which arranged a phone consulta- access to early terminations has increased pouring billions into high-risk, high-re- tion with someone at her local hospital. the safety of abortion care, says Edward ward science. What British tech firms real- Four days later a packet of medicine arrived Morris of the Royal College of Obstetricians ly want is to keep cross-border flows of data through the letterbox, and she terminated and Gynaecologists. Both groups have and people after Brexit, which means gether pregnancy at home with the support of called for the changes to be made perma- ting a deal. State-aid rules do not prevent her partner. Abortion is a “horrible thing,” nent. The government has said it will the government funding research, stresses she says. But “in terms of how it was han- launch a public consultation on the matter. Alexander Rose, a lawyer at dwf. But they dled, it couldn’t have gone better”. The picture is gloomier in those parts of do impose terms and conditions, and Mr Sylvie is one of 23,000 women in Eng- Europe where politicians did not do much Cummings sees bureaucracy as a “cancer”. land and Wales who had an abortion at to ease access to abortion. Recent research A compromise is possible. Michel Bar- home between April and June. That this by Abigail Aiken of the University of Texas nier, Europe’s negotiator, originally want- was possible was due to a temporary at Austin looked at enquiries to Women on ed Britain to keep in “dynamic alignment” change in the rules introduced as the coun- Web, a Canadian charity that provides pills with the eu’s state-aid rules. Now he sug- try went into lockdown. In normal times, to women in countries where at-home gests that a robust but distinct British re- the first of the two pills required for a medi- abortions are illegal. She found that during gime, coupled with a way of fixing dis- cal abortion must be taken at a hospital or the pandemic they shot up in Italy (by 68%) putes, could suffice. Under such a regime, clinic. But emergency measures, intro- and Portugal (by 139%). In Britain they fell Britain could innovate. A national regula- duced on March 30th to avoid unnecessary to negligible levels. tor and appeals court could handle cases hospital visits, designated women’s homes Sylvie says the new way of doing things faster than Brussels. Outside the deeply in- as another place where the pills could be also reduced the psychological toll of the tegrated European market, it could argue taken, at least until ten weeks of gestation. procedure. In 2011 she had to wait five for a looser regime, since aid to, say, a small As a result of the change, abortions are weeks for an abortion, by which point she bus company would not undermine rival now happening earlier. Data published on was nearing her second trimester. She lives operators on the continent. Ministers September 10th show that between January in rural Cornwall, an area she says is “lack- could increase the threshold for aid given and June this year, there were 109,836 abor- ing in health care [providers] and forward without approval, simplify the rule book tions in England and Wales. Some 50% of thinking”. She remembers being passed for research and, in contrast to the eu, re- these, including Sylvie’s, were performed “from pillar to post” while attempting to quire the regulator to provide evidence that before seven weeks, compared with fewer get an abortion. The experience was so bad a subsidy has an effect on trade. Rules on than 40% during the same period in 2019. she made a formal complaint. This time, aid for poor parts of the country could be The proportion performed before ten however, she says the process was “re- fine-tuned to support Mr Johnson’s fuzzy weeks rose from 81% to 86%. There was also spectful”, “compassionate” and, crucially “levelling up” agenda. a small uptick in the overall number. for her, “private”. 7 Mr Johnson’s real state-aid problems lie in Britain, not Europe. One is Northern Ire- land. Under the divorce treaty, Mr Johnson agreed that trade between the province and the eu falls under European rules. Mr John- son seems to have belatedly realised this could also catch subsidies or tax breaks granted in the rest of the United Kingdom, and has threatened to break the treaty. The other is Scotland. The Scottish government, which opposed Brexit and seeks independence from Britain, says London has no right to impose a state-aid policy on Ed- inburgh. The sight of Whitehall bureaucrats vetoing bail-outs to steelworks and shipyards north of the border, after a messy divorce from Europe, would be powerful ammunition for separatists. For the question of whose hand is on the spending tap is not one of dry regulation, but power. 7 The Economist September 19th 2020 Britain 55 Bagehot Boris v the blue blob

The list of institutions Boris Johnson is at war with includes the Conservative Party with a bomb-proof majority worrying about defeat over a vital bill? Rebellion is habit-forming—and the Conservative Party has acquired a serious habit during the Brexit years. These years taught the lethal lesson that disloyalty rather than loyalty can be the path to success. Mr Johnson was himself a serial rebel who resigned as foreign secretary over the withdrawal bill. The cabinet is stuffed with Lazarus-like figures who have either resigned or been sacked or both. And big majorities are double-edged swords: they reduce the pressure to conform (because your vote is unlikely to be crucial) and bring in eccentrics and no-hopers (who will never have a sniff at high office). The party has also been in power for a decade. This means that there are plenty of people who have nothing to lose from rebelling, either because they have had their turn in office (Damian Hinds), or because they have been chucked out by the current leadership (Sajid Javid) or because they have grown tired of the bridle and whip (Sir Roger Gale). In parliamentary politics, time is the opposite of a healer. It foments resentment, breaks friendships and nurtures revolts. Mr Johnson’s misfortune is that he comes at the end of a long and fractious period of Conservative power. Messrs Johnson and Cummings have also done their bit to sour relations. Mr Johnson owes his position at the top to his star pow- n a zoom call with 250 Conservative mps on September 11th Boris er, rather than to his record as a party man. But his star power is IJohnson pleaded with his party not to return to “miserable waning under the pressure of high office. His performance in Par- squabbling over Europe”. The government handily won the divi- liament has been consistently poor. This week he crumbled before sion over the second reading of its controversial internal-market a fusillade from Ed Miliband, Labour’s shadow business secretary. bill, but the squabbling continued regardless. Senior Conserva- Mr Cummings makes no secret of his belief that most mps are me- tives fulminated against the legislation. More than 20 Tory mps re- diocrities. Sir Charles Walker summed up many mps’ feelings fused to back the government on the issue. Even loyal Brexiteers about Downing Street this week: “If you keep whacking a dog, such as Michael Howard and Norman Lamont were indignant don’t be surprised when it bites you back.” As The Economist went to press, it looked as if the government had backed down. Mr Johnson promised “an extra layer of Parlia- Who’s a good boy? mentary oversight”—in other words mps, rather than the govern- The government’s decision to stroke the parliamentary dog may ment, would have the final say on whether Britain violates inter- help in the short term. But the deeper problem is not parliamenta- national law by overriding the withdrawal bill it agreed with the ry management. It is the nature of Brexit itself. Previous revolu- European Union in January. It is not clear whether this will placate tions of this scale have been carefully prepared. The post-war La- Parliament. It will certainly not placate the eu. bour government could draw on decades of cross-party thinking. What is clear is that Mr Johnson’s relations with Conservative “When Labour swept to victory in 1945”, the historian Paul Addison mps are dismal. The list of senior Tories who spoke out against the wrote in his study of the subject, “the new consensus fell, like a internal-market bill includes five former Tory leaders, two former branch of ripe plums, onto the lap of Mr Attlee.” The Thatcher gov- chancellors, two former attorneys-general, two former Northern ernment could draw on detailed free-market policies prepared by Ireland secretaries and the government’s law officer for Scotland, think-tanks like the Centre for Policy Studies, as well as the wis- who resigned despite the government’s last-minute climb-down. dom of Friedrich Hayek and Milton Friedman. The Brexiteers, by Tories with legal training are particularly worried because, as well contrast, were united by what they were against rather than what as naturally revering the law, they are bound by their professional they were for. The Brexit army contains protectionists and free- oath to uphold it. marketers, fishermen and financiers, single-issue fanatics and The tensions are not confined to the current bill. Several cabi- philosophical radicals. The government’s troubles stem from its net members have expressed doubts about the “rule of six” (which attempt to impose a governing philosophy on this rag-tag army; a prevents groups of more than six people gathering). Many heads of philosophy, moreover, that is an eccentric mixture of state inter- select committees are critical of the government. Some 50 back- ventionism, grands projets and traditional Thatcherism. bench mps publicly called for Dominic Cummings, Mr Johnson’s Brexit is an inherently revolutionary project that keeps push- right-hand man, to resign after he broke lockdown rules; many ing its supporters in unexpected directions. Who would have others expressed the sentiment in private. Everybody is worried thought four years ago that Brexit would mean leaving both the about the government’s lacklustre handling of the pandemic. single market and the customs union? Who would have thought a This is quite some turnaround. It is only nine months since Mr couple of months ago that Britain would be locked in a fight with Johnson led his party to an extraordinary election victory, which the eu over state aid? The strange sight of Brexit pioneers such as increased his working majority to 87, shifted the balance of power Lords Howard and Lamont denouncing the government is the sta- in his party to Brexiteers, sealed his reputation as a political mir- ple of revolutions down the ages: the eating of children. There will acle-worker and supposedly launched a new era in British politics. be plenty more Tory children eaten before this revolution has Why has the conquering hero lost his shine? And why is a party reached its conclusion. 7

International The Economist September 19th 2020 57

Deliberative democracy liberative process in Chile to debate pension reform and health care, has been post- Some assembly required poned to December and will be online only. Although citizens’ assemblies had been tried in Canada and the Netherlands in the early 2000s, the recent craze started in Ire- land. Two citizens’ assemblies have taken place there to discuss a variety of topics. GLASGOW, PARIS AND ZOOM The original impetus was the financial Citizens’ assemblies are increasingly popular. Do they work? crash of 2007-09, which left many in the hirley islam has little faith in politics. These involve a group of around 100 peo- country feeling disillusioned with politics SElected representatives “are either bick- ple, broadly representative of the popula- and made politicians more willing to ex- ering on tv, or wasting taxpayer money, or tion (by gender, age and socioeconomic periment, recalls David Farrell of Universi- trying to sell something,” says the 48-year- status, say), meeting over several weeks or ty College Dublin (ucd), who advised the old care worker from West Lothian, in Scot- months to debate tricky topics, such as Irish government on the projects. A similar land. “They are all saying the same thing,” whether to legalise abortion or how to re- sense of crisis informed the citizens’ con- she sighs. But she has felt a little more spond to climate change. In the course of vention in France, which was set up in re- hopeful of late. Her optimism is a result of the best-organised assemblies participants sponse to the gilets jaunes protests. her involvement in a “citizens’ assembly” hear from experts on all sides and produce The Irish assemblies led to two referen- in Scotland to debate the country’s future— recommendations to which their govern- dums, on same-sex marriage and on abor- held first in a conference centre in Glasgow ments have promised to respond. tion, topics long considered too divisive and since September 5th on Zoom. Politics, Several big citizens’ assemblies are un- for politicians even to broach in a country she thinks, “needs to be in touch with peo- der way or have recently concluded. Last where three-quarters of the population ple.” “This is the way forward,” she contin- year President Emmanuel Macron created still describe themselves as Catholic. The ues. “It has to be.” a “citizens’ convention on climate” to come results were striking. In 2015 same-sex Over the past decade democratic insti- up with measures that will enable France to marriage was approved by 62% of the pop- tutions have taken a battering. According reduce greenhouse gas emissions by at ulation; 66% voted in 2018 in favour of to Pew Research Centre, an average of 64% least 40% by 2030. The proceedings, which making abortion available in the first 12 of people across 34 countries do not believe were disrupted first by national strikes and weeks of pregnancy. The citizens’ groups that elected officials care what ordinary then by the covid-19 lockdown, concluded foreshadowed these results. folk think. Fully 69% of Britons are dissat- in June. The 150 participants called for two “Ireland is the Rolls-Royce of citizens’ isfied with the way democracy is working changes to the constitution to help pre- assemblies,” says Iain Walker of the at home, as are 59% of Americans. serve the environment and biodiversity, newDemocracy Foundation in Australia, One solution, long favoured by political and a law to criminalise “ecocide”. A “cli- which has run similar pow-wows in that scientists, is to include more deliberation mate assembly” in Britain issued its final country. Mr Farrell is more circumspect. within democracy. Citizens’ assemblies are report, completed via Zoom, on September Ireland’s convocations were not perfect: at an increasingly popular way of doing so. 10th. “Deliberación País”, a large-scale de- one the supposedly randomly selected citi-1 58 International The Economist September 19th 2020

2 zens, rustled up by a market-research firm, broader population. According to research and has been reading up before the discus- included a couple. At another seven partic- by Mr Farrell, Jane Suiter of Dublin City sions to keep engaged. As more assemblies, ipants turned out to be friends with one of University and others, those who voted in such as the one in Chile, are held entirely the recruiters. Nonetheless, the fact that the referendum to liberalise abortion in online, it will become clearer how well they the assemblies helped pave the way for sig- Ireland were more likely to have heard of work at a distance. nificant reforms makes Ireland something the assembly, suggesting a possible causal What is clear is that citizens’ assemblies of a “beacon”, he thinks. relation between the two. are most successful when politicians actu- Ideally the gatherings should resemble To work well, these assemblies need a ally listen to them. For a long time, that the public at large. France selected the clear subject to discuss. Alan Renwick, a looked improbable. Matthew Taylor recalls members of its assembly at random by tele- specialist in deliberative democracy at that when he was the head of the prime phone. Some 255,000 people were contact- University College London, thinks that minister’s policy unit in Britain, he tried to ed. To the organisers’ surprise 70% said they are best suited to grappling with large, get the two prime ministers he worked for, they were willing to take part. Of those, 150 seemingly intractable problems, such as Tony Blair and Gordon Brown, interested in French citizens who reflected the country’s climate change. But it is also helpful if that the idea of assemblies. “On both occasions make-up in terms of gender, age, income topic can be framed as a choice: the subject both the politicians and officials loved the and place of residence were invited to paris fraught, but debating whether abortion idea, up to the point at which I said, ‘You ticipate. The minimum age was set at 16 to should be legalised is more straightfor- can’t control the outcome and you will enable high-school pupils to be involved. ward than trying to paint a picture of Scot- have to respond to it positively. Not to im- Each person was paid €86 ($97 then) a day land’s future, as the citizens’ assembly plement it, but to respond to it positively.’” (the same sum paid in France to those on there is supposed to do. In Australia, Mr By contrast, the French government jury duty). Child-care costs were reim- Walker notes, deliberative groups are typi- went out of its way to demonstrate its sup- bursed, and the assembly paid directly for cally given a question of no more than ten port for the citizens’ assembly. Mr Macron hotels and train fares. The budget was over words to discuss. Anything longer than dropped by for an evening sitting in Janu- €5m. In order to drum up 120 people for that, the thinking goes, and it becomes ary, and stayed to answer questions for Scotland’s meeting, the teams organising it harder for people to understand, and easier over two-and-a-half hours. In June, he in- knocked on some 10,000 doors across the for politicians to ignore any solutions that vited the participants to his official resi- country. Each participant is paid £200 for might be proposed. dence and gave a speech in the garden in every weekend they attend; the assembly Some worry that the shift online will which he promised to put either into legis- costs £1.4m ($1.8m). undermine the value of these meetings— lation, or to a referendum, all but three of even though, as with many aspects of life, the 149 proposals put forward by the as- The machinery for change many participants feel it has worked sur- sembly. (That pledge was looking shaky on Participants seem to enjoy the process. Isa- prisingly well. Most of the assemblies that at least one count this week after the presi- belle, a finance director from western have moved online this year had an advan- dent vowed to press ahead with the roll-out France, said she initially thought the invi- tage: the members had met in real life be- of 5g networks, despite the assembly’s pro- tation to take part in the convention there fore. It is hard to see the process of a “group posal for a moratorium.) He also prom- was “a joke”. It turned out to be anything forming and becoming committed” hap- ised €15bn towards the implementation of but. The experience, she says, has been “en- pening in an online-only forum, says Mr the proposals. riching” but also “shocking”, as it has Renwick, without the ability to hobnob In Scotland the assembly was set up by opened her eyes to the climate crisis. over lunches or tea. Ms Islam was nervous Nicola Sturgeon, the first minister. Several But can deliberation change people’s about the change. She had to remind her- participants felt confident that their pro- views? In America James Fishkin, a profes- self of how committed she felt to the as- posals would be acted on in Holyrood. “I sor at Stanford and the director of the Cen- sembly to gee herself up for the sessions, really feel they are going to listen,” said tre for Deliberative Democracy, has run a Lynsay Walton, a 61-year-old cleaner. series of “deliberative polls”—similar to “That’s why I keep coming.” Others were citizens’ assemblies but much larger, with more dubious. “If it is not responded to, it’s 500 or so people involved, totally randomly a waste of time,” said David Farrell, a joiner. selected—to see if the process can bridge Not everyone is entirely convinced of the partisan divide. the virtues of this kind of deliberative de- One of Mr Fishkin’s gatherings, in Sep- mocracy. According to Kevin Elliott of Mur- tember 2019, demonstrated that Americans ray State University in America, however could indeed change their opinions. After these groups are chosen, there will always four days hearing from experts and dis- be an element of self-selection, as it is not a cussing with their peers five policy areas compulsory process. “You are always ex- (immigration, health care, the economy, tending an invitation that can be refused,” the environment and foreign policy) those he points out. He worries that citizens’ as- involved concluded that democracy was in semblies are an attempt “to solve the pro- fact working rather better than they had blem of distrust [in democracy] with a thought. On particularly divisive topics, technocratic fix”. Samuel Bagg of Oxford people tiptoed to the centre ground: sup- University wonders whether, if assemblies port for reducing the number of refugees are given more power, they will be subject allowed to resettle in America dropped by to more influence from lobby groups: a cli- 15 percentage points, to 22%. Among Re- mate assembly lobbied by a fossil-fuel publicans it fell by 32 percentage points, to company, and so on. 34%. Meanwhile support for increasing the It is inevitable that, as assemblies pro- federal minimum wage fell by 23 percent- liferate, some will be considered flops. But age points among Democrats, to 59%. when they work well, these groups provide A larger question is whether these pro- elected representatives with a mind-clear- cesses can change opinions among the ing idea of what voters really want. 7 Business The Economist September 19th 2020 59

Also in this section 60 Electric controversies 61 A less oily BP 61 Arm’s dealers 62 Oracle’s Trump card 63 Bartleby: The only way is ethics 64 The database business 65 Schumpeter: The perils of stakeholderism

The future of carmaking ceeds $400bn. Add producers of batteries that go into them, and the ev-industrial Journeys in the Teslaverse complex, which makes fewer than 400,000 vehicles annually, is worth at least $670bn (not counting miners of lithium and other battery minerals). That is nearly three-fifths as much as traditional carmakers, which churn out 86m cars a year, nearly all of them petrol-powered (see chart 1). Tesla used to be the only electric game in town. No longer Call it the Teslaverse. recent video of Elon Musk taking a for less than two hours if plugged into the As that moniker suggests, Mr Musk’s Aspin in a new all-electric Volkswagen grid, to 1,400 gigawatt-hours in 2025. Es- firm sits at its centre. In July it overtook with Herbert Diess, the German carmaker’s tablished carmakers are pondering how to Toyota as the world’s most valuable car- boss, set tongues wagging. vw was forced loosen the grip of big tech on software. maker, and kept accelerating—never mind to deny that a deal with Tesla was in the off- The total market capitalisation of listed that it made 370,000 cars against Toyota’s ing. A deeper bromance between Mr Musk’s makers of exclusively electric cars now ex- 10m and a fraction of the Japanese firm’s firm and his main rival in the market for revenues (see chart 2 on subsequent page). electric vehicles (evs) looks unlikely. But By August Tesla was worth over $450bn. A the meeting highlights how the car indus- EV is for eventually 1 market correction lopped a third off its try is at last taking the impending ev revo- Worldwide market capitalisation, $trn share price but it has since rebounded. lution seriously. 1.5 What would it mean to take it seriously, as Giant new businesses are gearing up to investors appear to be? support the switch from petrol to electric- Other vehicle Car sales could fall by 25% in 2020 ow- makers ity. Besides changing the way cars are pro- ing to pandemic disruption. But the share 1.0 pelled, this requires batteries, software to of evs on the road will continue to grow as ensure these work in harmony with mo- emissions regulations tighten, the price of tors, and data harvested from cars that may Battery makers* batteries falls and the choice of models ex- Other pure 0.5 one day allow them to drive themselves. electric-vehicle pands. Next year three in every 100 cars Over 250 firms are manufacturing electric makers sold will be pure electric or a plug-in hy- motors. Forty-seven battery factories are Tesla brid. The share may rise to 20-25% by 2030, under construction. Anjan Kumar of Frost 0 equal to 20m new evs a year. & Sullivan, a consultancy, expects total 20†1918172016 At the moment Tesla is the “apex preda- new ev-battery capacity to go from 88 giga- Sources: Bloomberg; *Companies also produce tor”, says Adam Jonas of Morgan Stanley, a Datastream from Refinitiv non-EV batteries †At Sep 15th watt-hours in 2019, enough to power Texas bank. It has been manufacturing evs at 1 60 Business The Economist September 19th 2020

2 scale longer than any other carmaker and Electric altercations sells more of them. Its elevated share price translates into the lowest cost of capital in the business. A growing offering, with a Short circuit lorry and pickup soon to hit the road, will widen its appeal. It attracts the best engi- A short-seller lays into a lorry startup neers and possesses in Mr Musk, love him or loathe him, a leader with messianic zeal. ne way to try to emulate Tesla’s unveiled the Nikola One, a hydrogen- Mr Kumar puts Tesla two to three years Osuccess is to name your firm after the electric lorry. Mr Milton, Hindenburg ahead of rivals in battery technology. Its same person. Nikola, founded in 2014 to said, suggested a demo vehicle was batteries have a higher energy density, make electric and hydrogen-powered driveable when it was not. A Nikola One which means better range and lower costs. lorries, is, like Elon Musk’s carmaker, shown travelling along a road in a sep- On September 22nd Mr Musk is expected to named after Nikola Tesla, a Serbian- arate video, Hindenburg claimed, was in present plans for new production capacity American pioneer of electricity. Nikola’s fact rolling down a hill unpowered. The and fresh battery technology. Together, this market value nudged $30bn after it went investment firm also gave short shrift to would extend Tesla’s cost advantage. public in June. Some investors were Nikola’s claims of revolutionary hydro- The firm’s edge is even more pro- puzzled that a firm not yet selling vehi- gen and battery technologies, and cast nounced in software. Rainer Mehl of Cap- cles could be worth more than Ford, doubt on the expertise of Nikola’s staff. gemini, a consultancy, calls Tesla cars a which sold 5.4m last year. Nikola’s share Nikola described Hindenburg’s report “shell around the software and applica- price fell back over the next two months. as “a hit job…driven by greed”. It pointed tions inside”. Thanks to vertically integrat- It jumped again on September 8th, after out that Hindenburg had a short position ed manufacturing, systems have been in- General Motors said it would take an 11% in Nikola’s stock, so it stood to profit if terlinked from day one. As Olaf Sakkers of stake in the firm. the price of Nikola’s shares fell (as Hin- Maniv Mobility, an Israeli fund, explains, This time the euphoria was even more denburg acknowledged in its report). On big carmakers have outsourced almost all short-lived. On September 10th Hinden- September 14th Nikola published a state- their technology apart from internal-com- burg Research, an investment firm ment accusing Hindenburg of “false and bustion engines to suppliers, and focused (named after the airship disaster from defamatory” claims designed to “manip- on assembly and marketing. This makes 1937) released a report calling Nikola an ulate the market”. It also appeared to for a “bird’s nest of complexity”, says Mr “intricate fraud” that had told an “ocean concede that the Nikola One unveiled by Sakkers. Tesla’s software and mechanics of lies”. Nikola’s shares shed 36% of their Mr Milton had not been driveable and are seamless by comparison. value over the next couple of days. confirmed that the vehicle in the video All this software means Teslas improve Among other things, Hindenburg had indeed been unpowered. But the with age, thanks to regular “over-the-air” alleges that Trevor Milton, Nikola’s boss, firm notes that a later model, the Nikola updates with new features, bug fixes and made misleading statements when he Two, has driven under its own power even performance upgrades. This makes several times. It characterised itself as an up for a sometimes shabby finish and ques- “early-stage” company trying to “prove tionable reliability. Other big carmakers its concepts”. are five years behind, says Luke Gear of id- On September 11th Mr Milton tweeted Techex, a consulting firm. a statement that Nikola “intends to bring Tesla also seems to have mostly put the actions of the activist short-seller, what Mr Musk has called “production hell” together with evidence and documenta- behind it. As Philippe Houchois of Jeffer- tion, to the attention of the us Securities ies, an investment bank, notes, a reputa- and Exchange Commission”. On Septem- tion for delivering models late and over ber 15th the Wall Street Journal reported budget has become one for being ahead of that the Department of Justice had taken time and on budget. A rapidly built new an interest in the case. General Motors factory in Shanghai began shipping in De- says it is “fully confident in the value we cember and “gigafactories” are under con- will create by working together” with struction in Berlin and Texas that will Nikola. Nikola itself says that all its other boost capacity from 700,000 units to 1.3m partners are sticking with it. Investors in 18 months, says Credit Suisse, a bank. appear more jittery. Nikola’s share price Tesla cheerleaders talk of 3m-5m new Tes- is down 27% from the day before Hin- las annually by 2025, out of a global total of Riding the controversy denburg’s report. around 85m cars. Mr Musk eventually wants to make 20m a year. Mr Jonas says that Tesla’s current share plying they ought to give up trying to make tiv, have spun off legacy operations to con- price implies it will end up with 30-50% of the transition to evs and quietly fade away. centrate on evs and self-driving technol- the car market. This overlooks other But even firms with the heftiest petrol- ogy, most remain bound to the internal sources of revenue: from selling batteries, driven legacies should not be written off. combustion engine. And lots of car firms, its operating system or an ev “skateboard” Chinese carmakers show why. The govern- in particular the German premium ones, of battery pack and running gear to which ment prodded them to go electric with must contend with powerful unions fear- others can add a body (and in time more fu- tough mandates in the hope of dominating ful of job losses resulting from the move to turistic data and self-driving systems). the future market. Around half the world’s evs’ less complex—and thus less labour- Even the most wildly optimistic scenarios evs are currently sold in China. The likes of intensive—mechanics. for Mr Musk’s company, then, leave room Geely and byd (which also makes batteries) Despite the difficulties, the industry is in the Teslaverse for others. want to expand overseas. desperate to make the ev side work. Mr Ku- Start with the established carmakers. There, big Western carmakers face a mar estimates that 60% of big car firms’ Their lowly valuations may be read as im- slog. Though some suppliers, such as Ap- research-and-development spending now 1 The Economist September 19th 2020 Business 61

state battery technology, such as Quantum- Chipmaking 2 A long road ahead Scape, backed by vw and Bill Gates, plan to Revenues, $bn go public soon. Integrating Selected vehicle manufacturers Several Chinese Tesla wannabes, such as Nio, Xpeng and Li Auto, are already listed Volkswagen Toyota circuits in New York. They enjoy the benefit of General Motors Tesla 300 cheap domestic labour, a huge local market and proximity of battery-makers such as The semiconductor industry’s biggest byd and catl, the world’s biggest such merger may not be smooth sailing 200 firm. Nio, which teetered on the brink of collapse in February before a bail-out by hen softbank, a Japanese technol- 100 the city government of Hefei, where it has a Wogy group, paid $32bn for Arm in big factory, is now valued at around $24bn. 2016, it was the biggest deal in chipmaking 0 Carmaking remains a tough business to history. That record held until September crack. Assembling bodywork or brakes at 13th, when Nvidia, a big American chip- 2016 1817 19 20* scale is different to making gadgets or writ- maker, announced its intention to buy the Source: Bloomberg *January-June ing code. Dyson, a British maker of high- Britain-based chip-designer for $40bn. tech vacuum cleaners and hand-driers, Although they share an industry, Arm 2 goes on evs, up from 5-10% in 2012. Morgan sunk £500m ($640m) into developing an and its prospective owner are very differ- Stanley reckons big carmakers will invest ev before scrapping the idea. Apple aban- ent. Nvidia makes gpus: pricey, specialised up to $500bn in evs over the next five years. doned plans to make a car in 2016, though it accelerator chips for gamers and artificial- According to Bernstein, a research firm, is still investing in self-driving systems. intelligence number-crunching in data they have been “terrible deployers of capi- Other tech giants are opting instead to in- centres. Arm licenses blueprints for gen- tal” but they are “waking up”. Potential big vest in startups. In China Baidu, Tencent eral-purpose chips used in everything sellers on sale this year include vw’s id.3 and Alibaba have backed wm Motor, Nio from smartphones to cars and computer- and Ford’s Mustang Mach-e. and Xpeng, respectively. Amazon has put ised gizmos that make up the “Internet of money into Rivian and ordered 100,000 of Things” (iot). Customers ship more than Electric power to the people’s car its electric lorries (in part to show it is seri- 20bn Arm-designed chips every year. vw is leading the charge. It will spend ous about reducing its carbon footprint). Arm’s keystone position was SoftBank’s €60bn ($71bn) by 2025 on evs and digitisa- To survive in the Teslaverse, companies rationale for buying the firm. But it has lan- tion. Carmakers typically develop 2-5% of have to demonstrate they have valuable in- guished under Japanese ownership. Rev- software in-house. In an effort to reinvent tellectual property that sets them apart, as enues have stagnated, and the firm has itself as a software company, vw wants to many of the upstarts claim. But they must made a small but persistent loss (see chart boost its share to 60% by 2025. Other car- also prove they can sell and maintain their on next page). Geoff Blaber at ccs Insight, a makers and suppliers harbour similar am- cars, where legacy carmakers have a long firm of analysts, blames a slowdown in the bitions. Daimler’s recent tie-up with Nvi- track-record. It is too early to divine the smartphone market, and low margins on dia, a giant chipmaker, should allow winners and losers. Even Mr Musk’s firm iot gear. Arm’s $40bn valuation is only remote updates by 2024. Aptiv already of- could falter. But his vision of an electric fu- 25% higher than when SoftBank bought fers integrated software. ture is already emerging victorious. 7 it—and just 5% higher if you deduct the 1 Big firms could create distinct units to lure outside capital and talent, and take risks, suggests Morgan Stanley’s Mr Jonas. Belatedly prudent gm Some already are. General Motors ( ) has BP the Cruise self-driving arm, bmw has iVen- tures and Toyota has its Mobility Founda- tion. Another tactic is to invest in startups. Hydrocarbon production, barrels of oil equivalent per day, m Developed renewables, GW On September 8th gm said it would buy an Gas 1.5 Liquids 1.5 11% stake in Nikola, a controversial elec- 20 Domestic 1.2 1.2 tric-lorry firm, for $2bn (see box on previ- Other 15 ous page). Ford has backed Rivian, which International 0.9 0.9 hopes to crack the lucrative pickup market. liquefied AGT* 10 The likes of Nikola and Rivian are exam- natural gas 0.6 BPX Energy 0.6 Angola ples of another part of the Teslaverse. Al- 0.3 0.3 5 Hub North Sea though they face some big barriers, notably Gulf of Mexico in manufacturing and distribution, raising 0 0 0 money is not one of them. Capital is pour- 2019 2025 2019 2025 2019 2025 forecast forecast forecast ing in, helping cars move off the drawing board and into production. Chinese Tesla Source: Company reports *Azerbaijan-Georgia-Turkey copycats have sprung up. In America Lucid Not quite beyond petroleum Motors unveiled its first car at its headquarters near San Francisco on September All eyes of the oil world were on bp this week for the British energy giant’s annual 9th, with a Tesla-beating 800km range. One three-day investor jamboree. Bernard Looney, who became chief executive this year, of its biggest backers is Saudi Arabia’s wants bp at last to make good on its old slogan, "Beyond Petroleum". Annual capital sovereign-wealth fund. Lordstown, Fisker spending on oil, gas and refining projects will fall from around $13bn in 2019 to an and Canoo are aiming to follow Nikola, average of $9bn in 2021-25. Gas and oil production will remain relatively steady in the which went public in June through a re- short term, before falling as bp ramps up its investments in renewable power. bp’s plan is verse merger and is now worth $13bn. more ambitious than under Mr Looney’s predecessor, Bob Dudley. It is also by far the Firms working on next-generation solid- most aggressive of any supermajor. That is admittedly a low bar. 62 Business The Economist September 19th 2020

curity: the risk of TikTok handing Ameri- Nvidia arms up cans’ data over to China’s Communist Party Company financials, $bn and of running disinformation campaigns on behalf of China. (TikTok insisted it Revenues Operating profit/loss would never hand users’ data to China and that it has no propaganda role.) Nvidia 4 Arm 4 Nvidia 1.5 Arm 1.5 The deal leaves both the president’s 1.2 1.2 supporters and critics of his strong-arming 3 3 0.9 0.9 of TikTok scratching their heads. Josh Haw- ley, a Republican senator from Missouri, 2 2 0.6 0.6 called the deal “flatly inconsistent” with 0.3 0.3 Mr Trump’s original executive order, which 1 1 0 0 promised to ban the app unless its owner- 0 0 -0.3 * -0.3 ship changed by September 15th. Perhaps to help make up for the absence 20182016 20182016 20182016 20182016 of a clean sale, ByteDance is giving Oracle Sources: Bloomberg; The Economist *Excluding one-off gain of $1.5bn from conversion of Chinese subsidiary to joint venture sway over all of TikTok globally rather than just America, Canada, Australia and New 2 $1.5bn Nvidia has offered Arm employees keeping Arm’s headquarters in the country. Zealand. Microsoft and Oracle were offer- to stop them from leaving and a mysterious China may also object. It is already upset ing around $25bn-30bn to acquire these $5bn cash or stock payout that SoftBank over American attempts to strangle its four markets. The revised plan is for Byte- may qualify for under some conditions. technology firms (see next article). A take- Dance to place global TikTok into a separate Meanwhile, Nvidia’s market capitalisation, over by Nvidia would bring Arm—a crucial company with headquarters in America. four years ago not much bigger than what supplier—firmly under American control. ByteDance would remain the majority SoftBank paid for Arm, now stands at Even in normal times, says Mr Blaber, Chi- shareholder. Its American vc investors are $309bn. Its sales have surged. na might balk at such a prospect. It will be expected to come in as minority share- One motive for Nvidia’s purchase is a even less keen in the middle of a techno- holders alongside Oracle—an arrangement desire to expand beyond its existing mar- logical cold war. 7 that suits them better than TikTok’s sale to kets. Arm’s technology could help it build Microsoft, which would have deprived its own versions of the general-purpose them of meaningful influence over the processors that power the data-centre Sino-American tech tussles world’s hottest social-media property. computers into which Nvidia’s accelera- The Committee on Foreign Investment tors are installed, a lucrative market Trump card in the United States (cfius), a federal over- dominated by Intel, the world’s biggest sight body which has been examining Tik- chipmaker by revenue. Nvidia, for its part, Tok for months, will assess the transaction hopes that baking its gpu expertise into by September 20th. It then falls to Mr Arm’s designs will make them more attrac- Trump to give it the formal go-ahead. Peo- tive to the firm’s customers. ple close to ByteDance worry that China The race for TikTok enters the Those customers, which include Apple, hawks around him could still derail it. final stretch Qualcomm and Samsung, have kept a stony Chinese majority ownership still ran- silence. Arm’s business model relies on be- resident donald trump’s demand in kles. Oracle and ByteDance also have no ing what Hermann Hauser, one of its foun- PAugust that ByteDance sell TikTok to an clear answer to worries about disinforma- ders, has described as “the Switzerland of American firm set off a race for the Chinese tion. And though Oracle will host and pro- the semiconductor industry”—ie, not com- firm’s trophy asset. Jockeying for the popu- cess all American data in its computing peting with its customers by selling chips lar short-video app’s American business, cloud, and possibly that of TikTok users or gadgets itself. Nvidia’s purchase will with 100m users, was fierce. Microsoft globally, the deal does not sever TikTok’s threaten that neutrality if it tweaks Arm’s seemed ahead, and got a late fillip when links with its Chinese parent. ByteDance 1 products to favour its own goals, or gives it- Walmart joined its bid. But the software- self preferential access to Arm designs. and-grocery duo was pipped to the post. On Nvidia has vowed to keep Arm’s busi- September 14th Oracle, a database firm, sig- ness model intact. Having given such pub- nalled it had brokered a deal. lic assurances, says Patrick Moorhead, a Oracle’s clinching argument in its fa- chip-industry analyst, Jensen Huang, Nvi- vour seems to have been its rapport with dia’s boss, is unlikely to risk the opprobri- the White House. Larry Ellison, Oracle’s um—or possible lawsuits from aggrieved founder and chairman, hosted a fund-rais- licensees—that could arise from breaking er for Mr Trump. The firm’s boss, Safra Catz, them. But other analysts point out that served on his transition team in 2016. “She Arm’s licensing revenues are, by Nvidia’s lobbied a lot in Washington and she did a standards, small beer. If the Arm deal can great job,” says a ByteDance investor. Oracle be used to vault Nvidia into new markets, also enlisted the firm’s powerful American then cold commercial logic may encourage venture-capital backers, including Sequoia Mr Huang to push his luck. Custodians of Capital and General Atlantic. risc-v, a set of freely available designs, lost Details of the planned transaction are no time in noting that it remains indepen- still being ironed out. But it looks like a dent and free of such conflicts. u-turn for Mr Trump, who for months Regulatory problems loom, too. Brit- seemed hellbent on a full sale of TikTok by ain’s government is in an interventionist ByteDance—which the Oracle deal is not. mood and is likely to attach strings, such as His stated reasons concerned national se- Will leisure suit Larry? The Economist September 19th 2020 Business 63

2 will keep supplying, running and updating algorithm to foreigners. It seemed to dare The most obvious winner from the far- the algorithm that powers TikTok’s “for the president to go for a ban, the legal basis rago is China’s government. Its bureaucrats you” page. Microsoft argues it would have for which has always looked shaky. Accord- played the political chess game to perfec- made a better TikTok steward, for example ing to an American diplomat, the executive tion, notes a ByteDance investor. The Chi- by continually vetting the algorithm. In an orders on TikTok were drafted by Peter Na- nese firm gets to keep some of its prize as- acerbic concession note, the software giant varro, the president’s China-bashing eco- set rather than sell it on the cheap. Oracle said it will monitor TikTok’s future pro- nomic adviser. They did not go through the will benefit, especially if it manages to gress in the areas of “security, privacy, on- usual vetting process by lawyers and bu- wrest TikTok’s cloud contract from Goo- line safety and combating disinformation”. reaucrats and could contain holes; Byte- gle—though the internet giant may chal- The fudge may suit Mr Trump fine. Dance has already filed a lawsuit. Mr lenge such a move in court. Microsoft, Risks associated with banning TikTok have Trump’s other advisers also cautioned which also has a big cloud platform, looks risen. On August 28th China’s commerce against a ban that could irk millions of Tik- the loser. But given the chaos and uncer- ministry invoked its own national-security Tokers in battleground states like Texas tainty of dealing with Mr Trump, the run- concerns to block the sale of ByteDance’s and Florida. ner-up might in time come out ahead. 7 Bartleby The only way is ethics

Finding ways for managers to reduce cheating orporate scandals occur with academics at Columbia and Harvard busi- goals more broadly and by setting goals Cdepressing regularity, from the ac- ness schools looked at how, in the light of at levels that are perceived as fair and counting misstatements at Enron in 2001 this problem, companies might reduce relatively attainable by employees.” to fake bank accounts at Wells Fargo, cheating within their ranks. Another tactic is for managers to signal uncovered in 2016. In June Wirecard, a Their first finding was that individuals clearly that ethical issues may arise, so German payments processor, revealed are more likely to lie, or commit fraud, that people take them into account when that €1.9bn ($2.3bn) was missing from its when they are set excessively difficult and making decisions. In one study, drivers accounts. What was remarkable about specific goals. Bounded ethicality, the were found to be more honest in report- the affair was that the company’s book- authors argue, can also operate at an un- ing their car mileage when they signed keeping had been the subject of sceptical conscious level. Under pressure, peo- an ethics code of conduct at the top of a articles in the Financial Times. Yet the ple often do not efficiently analyse infor- mileage form (before they entered the initial reaction of BaFin, the German mation that could otherwise keep them on distance on the form) than at the bottom regulator, was to launch an investigation the straight and narrow. (after the figure had been recorded). into the newspaper, not the firm. The problem is exacerbated by confir- The Columbia and Harvard research- It is clearly difficult for people to mation bias, a human tendency to seek out ers conducted a test asking people to act recognise when a business is heading off facts that back up their pre-existing prefer- as financial advisers and pick from a the rails. That can be just as true for ences. Research has found that people range of funds. One part of it used the managers within a business as for people given a specific performance target (to raw data from funds operated by Bernie outside it. Executives can be sideswiped reach a12% annual return over the in- Madoff, convicted in 2009 for defrauding by an unnoticed problem in an individ- vestment horizon, for example) were more investors. The participants did not know ual division or a subsidiary; not all scan- likely to overlook important information the data came from a fraudulent fund. dals make it on to the front pages. about the future performance of invest- But they did see its high returns and the Outright malice is not always the ment funds and excessively focus on past opaque way it operated. One group was cause. Ethical choices are rarely black or performance data. simply asked to recommend a fund; white and individuals are not very good As a result, the authors suggest, “Orga- another group was asked to consider at assessing the purity of their own moti- nisations might decrease intentional which fund made them most suspicious vations. In a new book about behavioural unethical behaviour by defining their before making their recommendation. biases, “You’re About To Make A Terrible The result of this intervention was to Mistake”, Olivier Sibony of hec business decrease the proportion of individuals school in Paris writes that “as soon as recommending Mr Madoff’s funds to there is any ambiguity about a judg- their clients from 68% to 51%. ment…we reason in a way that is selective This figure is still staggeringly high, enough to serve our interests and yet of course. It might have been reduced plausible enough to convince others (and further, the academics suggest, if partici- ourselves) that we are not intentionally pants could have asked more questions distorting the facts.” Individuals’ choices and got more information. Too often, are also governed by how others behave; people rush to judgment, which leads people are more likely to break the speed them to play down the risks they are limit if everyone else is doing so. taking and the corners they are cutting. Philosophers call morally ambiguous And that means scandals are inevitable. decision-making within such internal and external constraints “bounded ethi- ...... cality”. Inside companies, it can easily * “Reducing bounded ethicality: How to help individuals notice and avoid unethical behaviour,” mean that a culture of cheating can by Ting Zhang, Pinar Fletcher, Francesca Gino and spread quickly. A seminal paper* by Max Bazerman 64 Business The Economist September 19th 2020

The database business flake could be the next Oracle. The firm is certainly on a roll. Although it has yet to Steam engine in the cloud make money, its losses, of $171m in the six months to July, have declined as revenue has more than doubled year on year, to $242m. On current trends sales could reach nearly $1bn in the next 12 months. Despite these promising numbers, and SAN FRANCISCO the market’s blessing, Snowflake has its Snowflake has raised $3.5bn in a record software listing. Now what? work cut out. The company’s uniqueness atching snowflakes is fun. It has be- will not last much longer, says Donald Ccome lucrative, too. Investors scram- Rolling in IT Feinberg of Gartner, a research firm. Rival bled for shares in Snowflake, a maker of Worldwide software revenues for firms, in particular the big cloud providers, database programs, as it went public on the database-management systems, $bn have been beefing up competing products New York Stock Exchange on September 60 and have even dabbled with the multi- 16th. The eight-year-old firm more than cloud. A few startups are already offering doubled its valuation the first day of trad- 50 cheaper and more flexible “open source” ing, from $33bn to over $70bn, making its Other 40 alternatives such as ClickHouse, a particu- initial public offering the largest ever for a larly zippy data-management system sold Amazon software firm. Even Warren Buffett, aban- 30 by a startup called Altinity. doning his customary tech-shyness, got in Microsoft 20 Other challengers are building more on the action. The legendary investor’s specialised digital repositories. Data gen- conglomerate, Berkshire Hathaway, put 10 erated by websites, for instance, are often $735m into the firm, through a separate Oracle 0 stored on “document-oriented” databases private placement and by purchasing 19181716151413122011 that, in the garage analogy, keep cars intact db shares from a former chief executive—a Source: Gartner rather than strip them for parts. Mongo stake that is now worth $1.56bn. is the market leader in this segment. Con- The excitement shines a light on an ob- fluent, another startup, is big in “stream- scure corner of information technology: was one of the first firms to lift database ing” databases that garner information software for managing corporate data. This systems from companies’ in-house data from sources like sensors. These are more database market already generates $55bn a centres and into the computing clouds, the akin to a motorway service station: data are year in sales (see chart). It is expected to ex- biggest of which are operated by Amazon, quickly checked to see if action is needed. pand rapidly as data become, if not the new Google and Microsoft, a trio of tech giants. Much as today’s assembly lines are dri- oil, then at least an input for most compa- Snowflake’s customers can add capacity as ven by dispersed electric motors rather nies. And it is changing in intriguing needed—and pay depending on their use than a single steam engine, then, corporate ways—not all of them good for Snowflake. rather than a fixed price for a software li- it systems will increasingly rely on sundry A database used to be best understood cence, as was typical for relational data- specialised databases, predicts Zane as a digital steam engine. Before electricity bases. Better yet, its “multi-cloud” service Chrane of Bernstein, a broker. That—and came along, a factory’s machines sat near a works across the three big computing the fact that data will increasingly be ana- single power source. Similarly, corporate clouds, so customers need not get locked lysed in real time, rather than saved in a applications—programs that keep track of into any one of them. Recently Snowflake conventional database—will limit the a firm’s finances or its supply chain, say— has also added features that let customers power and profits of any single supplier. So were built around databases housing all of share and sell data, setting itself up as a Snowflake is unlikely ever to become as a firm’s important information. Hard disks data exchange of sorts. dominant as Oracle. Snowflakes fly high in were pricey and had limited capacity so the This has convinced many that Snow- a flurry. They also melt. 7 best way to store it was in lean “relational” databases. Max Schireson, who used to run Mongodb, a database-maker, and now works for Battery Ventures, an investment firm, likens these to “a parking garage where, to save space, you put all the seats in one place, the tyres in another and so on”. The industry became dominated by a few firms, with Oracle leading the pack. As storage got cheaper and data vol- umes exploded, though, startups erecting new kinds of digital car park proliferated. Many focus not on tracking specific tran- sactions but on analysing all manner of data to glean relevant knowledge about a business, such as where certain products sell best. These more cluttered “data ware- houses”, as they are known, were pioneered in the late 1970s by a firm called Tera- data. Their latest iterations are “data lakes”, which take in all sorts of unstructured information, including text and pictures. Snowflake has gone a step further. It Snowflake stands out, for now The Economist September 19th 2020 Business 65 Schumpeter The perils of stakeholderism

Beware a new world of near-impossible trade-offs (what Friedman called the all-in-one “legislator, executive and ju- rist”). Usefully, some provided data to support their arguments. Start with Walmart’s ammunition bans—a firecracker lobbed into one of America’s most divisive issues. The retailer portrayed them as mere safety measures, but the National Rifle Association, a lobby group, said they pandered to “anti-gun elites” and predicted customers would boycott Walmart. Indeed some did. Marcus Painter of Saint Louis University has crunched smartphone data measuring foot traffic before and after the restrictions. He found that on average monthly store visits to Walmart in heavily Repub- lican districts fell by up to 10% compared with rival stores; in strongly Democratic areas they rose by as much as 3.4%. Moreover, the apparent Republican boycott continued for months. (Walmart did not respond to requests for comment.) It is possible that the retailer’s stance helped win over new (perhaps wealthier) consumers. It may even have benefited Walmart’s bottom line—and shareholders. Yet it also showed that amid increasingly polarised politics, what is good for one set of stakeholders may be anathema to another. Whether it is Hobby Lobby, a Christian chain of craft stores from Oklahoma, denying staff con- traceptive insurance on religious grounds, or Nike supporting an American football player’s decision to protest against police bru- hen did Walmart grow a conscience?” The question, tality, some stakeholders will always object to what is done on be- “Wasked approvingly in a Boston Globe headline last year, half of others. There are more quotidian trade-offs. A General Mo- would have made Milton Friedman turn in his grave. In a landmark tors shareholder who is also an employee may want higher salaries New York Times Magazine essay, whose 50th anniversary fell on rather than higher profits; a dollar spent on pollution control may September 13th, the Nobel-prizewinning economist sought from be a dollar less spent on worker retraining. But weighing up the the first paragraph to tear to shreds any notion that businesses costs and benefits to different groups is fraught with difficulty. should have social responsibilities. Employment? Discrimina- Some bosses claim they can do this, keen to win public praise tion? Pollution? Mere “catchwords”, he declared. Only business- and placate politicians. But they are insincere stewards, according men could have responsibilities. And their sole one as managers, to Lucian Bebchuk, Kobi Kastiel and Roberto Tallarita, of Harvard as he saw it, was to a firm’s owners, whose desires “generally will Law School. Their analysis of so-called constituency statutes in be to make as much money as possible while conforming to the ba- more than 30 states, which give bosses the right to consider stake- sic rules of the society”. It is hard to find a punchier opening set of holder interests when considering the sale of their company, is so- paragraphs anywhere in the annals of business. bering. It found that between 2000 and 2019 bosses did not negoti- It is also hard to find a better example of their embodiment than ate for any restrictions on the freedom of the buyer to fire Walmart. Listed on the stockmarket the year Friedman’s article employees in 95% of sales of public firms to private-equity groups. was published, it morphed from Sam Walton’s hometown grocery Executives feathered the nests of shareholders—and themselves. store into the “beast of Bentonville”, with a reputation for low prices as well as beating up suppliers and bossing staff. Its share- Talk is cheap holders made out like bandits; since the early 1970s, its share price Such hypocrisy is rife. Aneesh Raghunandan of the London School has ballooned by a factor of more than 2,000, compared with 31for of Economics and Shiva Rajgopal of Columbia Business School ar- the s&p 500 index of large firms. Yet in recent years the company gued earlier this year that many of the 183 firms that signed the has mellowed. It now champions green energy and gay rights. The Business Roundtable statement on corporate purpose had failed to Globe’s tribute appeared shortly after Doug McMillon, its chief ex- “walk the talk” in the preceding four years. They had higher envi- ecutive, reacted to savage shootings in Walmart stores by ending ronmental and labour compliance violations than peers and spent the sale of some ammunition and lobbying the government for more on lobbying, for instance. Mr Bebchuk and others argue that more gun control. This year he became chairman of the Business the “illusory hope” of stakeholderism could make things worse for Roundtable, a coven of American business leaders who profess stakeholders by impeding policies, such as tax reform, antitrust they want to abandon Friedman’s doctrine of shareholder primacy regulation and carbon taxes, if it encourages the government in favour of customers, employees and others. blithely to give executives freedom to regulate their own activities. In partisan America, riven by gender, race and income inequal- To be sure, trade-offs are an inevitable part of shareholder capi- ity, such “stakeholderism” is all the rage. But there is pushback. To talism, too: between short- and long-term investors, for instance. celebrate the half-centenary of Friedman’s essay, the University of But stakeholders outnumber shareholders, making for more dis- Chicago, his alma mater, held an online forum at its Booth School parate interests to balance. Moreover, by investing in funds linked of Business in which advocates of his creed argued that giving to corporate values, or by directly influencing boards, share- bosses too much latitude may make things worse for stakeholders, holders can show that their goals increasingly extend beyond pro- not better. The crux of the problem, they pointed out, was the near- fit maximisation to broader societal welfare. Shareholders retain impossibility of balancing the competing interests of stakehold- primacy, as they should, but they are free to push for different ers in any way that does not give God-like powers to executives trade-offs if they prefer. 7 How covid-19 is changing the sustainability agenda

The Economist’s Sustainability Virtual Week will explore how companies can move further and faster towards a greener future—and why the time to act is now.

ANN TRACY DOUGLAS LAMONT HOESUNG LEE Chief sustainability officer Chief executive Chair Colgate-Palmolive Innocent Drinks Intergovernmental Panel on Climate Change

ANGEL GURRÍA VIRGINIE HELIAS ALAN JOPE Secretary-general Chief sustainability officer Chief executive OECD Procter & Gamble Unilever

Compelling content Virtual networking Influential speakers

Supported by Diamond sponsor Platinum sponsors

Supporting sponsor Silver sponsors Airline sponsor Supporter Finance & economics The Economist September 19th 2020 67

Also in this section 68 The bounceback in China 69 Joe Biden’s Trumpian trade policy 69 Women on Wall Street 70 What are green bonds for? 70 Borsa Italiana on the block 71 Buttonwood: The Big Mac strategy 72 Free exchange: Tech and the economy

The world economy goods and services. Goods have bounced back fast. Global retail sales had recovered The 90% economy, revisited their pre-pandemic level by July, according to research by JPMorgan Chase, another bank. Armed with $2trn-worth of cash handouts from governments since the virus struck, consumers across the world have stocked up on things to make it bear- A recovery is taking shape—but it is extraordinarily uneven across both able to be at home more often, from laptops industries and countries to dumbbells, which partly explains why he worst day of the covid-19 pandem- roughly in line with what The Economist ar- world trade has held up better than econo- Tic, at least from an economic perspec- gued in April, when we coined the term mists had expected. Global factory output tive, was Good Friday. On April 10th lock- “90% economy” to describe what would has made up nearly all the ground it lost downs in many countries were at their happen once lockdowns began to be lifted. during the lockdowns. most severe, confining people to their Yet although the global economy is operat- Services activity is a lot further below its homes and crushing activity. Global gdp ing at about nine-tenths capacity, there is a pre-pandemic level, largely because such that day was 20% lower than it would oth- lot of variation between industries and industries are vulnerable to people avoid- erwise have been (see chart 1). Since then countries. Some are doing relatively—and ing crowds. The number of diners in res- governments have lifted lockdowns. Econ- surprisingly—well, others dreadfully. taurants remains 30-40% lower than nor- omies have begun to recover. Analysts are Take the respective performance of mal worldwide, according to data from pencilling in global gdp growth of 7% or OpenTable, a booking platform. The num- more in the third quarter of this year, com- ber of scheduled flights is about half what pared with the second. Not feeling 100% 1 it was just before the pandemic struck. That may all sound remarkably v- Impact of lockdown measures* on global GDP The variation in economic performance shaped, but the world is still a long way 2020, % of GDP between countries is even more striking. It North America from normal. Governments continue to 0 is common for growth rates to diverge in enforce social-distancing measures to downturns. But the size of this year’s col- keep the virus at bay. These reduce out- China lapse in output means that the differences -5 put—by allowing fewer diners in restau- between countries’ growth rates are enor- rants at a time, say, or banning spectators Western mous. On September 16th the oecd, a club -10 from sports arenas. People remain nervous Europe Asia-Pacific† of mostly rich countries, issued fresh eco- about being infected. Economic uncertain- Latin America nomic forecasts. Like other forecasters— ty among both consumers and firms is near -15 such as the Federal Reserve, which on the record highs—and this very probably ex- Rest of world same day published new projections for plains companies’ reluctance to invest. -20 the American economy—it has become Calculations by Goldman Sachs, a bank, Feb Mar Apr May JulJun Aug Sep less gloomy in recent months. suggest that social-distancing measures Source: *Derived from official restrictions and Still, the growth gap between best and Goldman Sachs social-distancing data †Excl. China continue to reduce global gdp by 7-8%— worst performers in the g7 group of coun-1 68 Finance & economics The Economist September 19th 2020

2 tries in 2020 is expected to be 6.7 percent- cine, if it could be rolled out widely contrast, levelled off at about a tenth below age points, far wider than that during the enough, would quickly restore normality. normal, indicating that some people are last global downturn a decade ago. Of the But there will be scars. Firms’ reluctance to still wary of venturing into crowded places big economies, only China is set to expand invest today will mean less productive cap- (see chart). Some analysts worry that these in 2020 (see next story). Some countries, ital in the future. A growing number of imbalances are spilling into the global such as America and South Korea, face a American workers believe they will not be economy as excess production ends up downturn but hardly a catastrophic one returning to their old jobs. Reallocating re- abroad. China’s share of world merchan- (see chart 2). Britain, by contrast, looks to dundant resources towards more produc- dise exports hit a record high of more than be in line for its deepest recession since the tive firms will take time. The Fed’s rate-set- 13% in the second quarter, according to Great Frost of 1709. ters reckon unemployment will not return data from cpb World Trade Monitor. Some economists contend that the to its pre-pandemic rate of 4% until 2023; A key question is thus whether the un- huge gap between countries is a statistical analysts at Goldman Sachs think it will do even growth is simply the ephemera of the mirage, reflecting different methods of so only in 2025, even though they are opti- covid-19 economy or whether it points to a computing gdp figures. In Britain, for in- mistic that a vaccine will soon be widely more fundamental problem. The answer is stance, the way statisticians tot up govern- distributed. Much as the disease itself has probably a bit of both. Weak consumer ment spending means that school closures long-lasting effects, the covid-induced spending has long been a feature of China’s and cancelled hospital appointments have downturn will leave the world economy economy. Household consumption was a bigger impact on gdp than elsewhere. But feeling subpar for some time to come. 7 just 39% of gdp last year, well below the this effect is small—the bulk of the fall in global average of 63%. The pandemic has output has come from the private sector. shone a harsh light on one explanation: a Instead, performance comes down to China’s recovery threadbare social safety-net. During the three factors. The first is industrial compo- depths of China’s lockdown, just 3% of the sition. Countries such as Greece and Italy, One-armed fighter roughly 80m people without jobs collected which rely on retail and hospitality, always unemployment insurance. As low-income looked more vulnerable than, say, Ger- earners have a higher propensity to spend, many. Its large manufacturing sector has the lack of support weighs on consump- benefited from the global goods recovery. tion more generally. Second is confidence, which appears to SHANGHAI Some of the extreme unevenness of the China is almost back to its be determined by a country’s experience recovery will not last, however. The gov- pre-pandemic growth trajectory under lockdown. Britain’s poor economic ernment prioritised reopening factories performance is likely to be related to the he eight hundred” is an unusual over restarting the rest of the economy be- government’s poor handling of the pan- “TChinese film for its depiction of cause of its calculations about how to con- demic. Britons seem more nervous than Nationalist soldiers as heroes in a grinding trol the pandemic. That was the right call. It other Europeans about venturing outside. battle against Japanese invaders in 1937. is easier to maintain strict health protocols The third factor is stimulus. America’s The Nationalists, or Kuomintang, fought a in factories, which can be managed as lawmakers may be unable to agree on a long on-off civil war against the Commu- semi-closed environments, than in shop- top-up, but they have already enacted the nist Party and so are typically portrayed as ping malls, where people come and go. world’s largest rescue package, relative to villains and stooges on Chinese screens. Encouragingly, a closer look at the data the size of its economy. The oecd thinks it From a global perspective, the film is un- for August suggests that China’s consum- will be one of the better-performing rich usual for a different reason. It is that rarest ers may be starting to close the gap with its countries this year. of things in these covid-clouded times: a producers. In month-on-month terms, re- What next for the 90% economy? Some box-office hit. Released a month ago, it has tail sales grew a little more quickly than in- authorities have been forced to order fur- pulled in nearly 3bn yuan ($440m), propel- dustrial output—the first such outperfor- ther lockdowns. But others may be able to ling Chinese cinemas to their best showing mance in half a year. The demand rebound calibrate social-distancing measures bet- by far since January, when the country would be even stronger except for the so- ter without jeopardising output. That went into near-total lockdown. cial-distancing rules still in place. Cine- might bring the world closer to, say, a 95% Many of China’s factories reopened as mas, for example, can sell tickets for only economy. Indeed, the oecd expects global early as February, but it is only now, nearly half their seats. “The Eight Hundred” is gdp to recover further this year. eight months on, that the broader econ- climbing the box-office charts with one It may be tempting to think that a vac- omy is approaching its normal trajectory. arm tied behind its back. 7 Based on a batch of activity data published on September 15th, China is on track to ex- 2 Leaders and laggards pand by roughly 5% in the third quarter Subway subzero GDP, 2020 forecast compared with a year earlier, a smidgen be- China, % change on a year earlier % change on a year earlier low the 6% growth rate that it reported in 20 -9-12 -6 -3 30 the second half of 2019, before covid-19 Power generation erupted. That puts it well ahead of all other 0 China big economies in the scale of its recovery. -20 South Korea But the shape of China’s recovery is un- balanced. The supply side of the economy -40 United States Metro passenger volume* had a head start over the demand side, and -60 has maintained a big lead. Industrial out- World put rose by 5.6% year-on-year in August, -80 while retail sales rose by just 0.5%. A range Euro area -100 of alternative measures underline this gap. 2019 2020 Britain Power generation rose strongly in August thanks in part to resilient factory activity. *Shanghai, Guangzhou Source: OECD Sources: Wind; The Economist and Chengdu average The number of underground journeys, by The Economist September 19th 2020 Finance & economics 69

International trade Continuity candidate

WASHINGTON, DC How much would Joe Biden change trade policy? Less than you think n the subject of trade policy, Ameri- Oca’s Democratic presidential nominee, Joe Biden, has been sounding rather like President Donald Trump. He claims that “economic security is national security”, promises to create millions of manufacturing jobs and pledges to reduce America’s dependence on China. On September 9th he published his “Made in America” plan, only for the White House to tell Fox News Joe’s true trade colours that it would host its own “Made in Ameri- ca” day on October 5th. America’s trading than Mr Trump’s tariffs. He plans to spend Organisation (wto), which the Trump ad- partners hoping for change may dismiss $300bn of public funds to support research ministration has hobbled by breaking its Mr Biden’s tough talk as campaign chatter. into artificial intelligence, electric vehicles system of solving trade disputes. (A wto That would be unwise. and 5g. A “clawback” provision would judgment on September 15th that American Mr Biden would bring some changes, of make companies shipping jobs overseas tariffs on Chinese imports broke its rules course. Policy would be more consistent. hand back the subsidy. Some governments will not whet the administration’s appetite Trade officials in Mexico and the European will see this as unfair: foreign companies for a fix.) The eu, which sees dispute settle- Union (eu) could stop following presiden- facing subsidised competitors will find it ment as integral to the rules-based trading tial tweets so avidly. Having slammed Mr as difficult to break into the American mar- system, wants to repair the mechanism. Mr Trump’s “empty” agreement with China, ket as if they were facing tariffs. Others will Biden has not yet said if he will join in. Mr Biden seems unlikely to strike shallow, take it as permission to hand out subsidies The other matter is what Mr Biden will transactional deals. In fact, despite his rep- of their own. Either approach will breed do with the tariffs imposed by Mr Trump. utation for liking them, he may not agree to tension. Mr Biden has pledged to fight back He has criticised them without pledging to any at all. They can wait, he has said, until against countries undercutting American remove them. Strategy might play a role: a after “we have invested in Americans”. manufacturing using “unfair subsidies”. Biden administration may want to dangle Trading partners may hope that Ameri- Mr Biden’s silence on two matters has tariff reductions in return for concessions ca stops applying new tariffs. They should led to foreign suspicions of yet more con- abroad. To America’s trading partners, that manage their expectations. Mr Biden is no tinuity. The first relates to the World Trade would feel rather familiar. 7 “Tariff Man”, as Mr Trump once proclaimed himself to be. But he has pledged to restrict imports from China that are deemed to be a A boardroom of one’s own national-security threat. Countries that do not live up to their environmental obliga- United States tions could face a carbon-adjustment fee in the form of tariffs or quotas. Female CEOs Female employees in Company Mr Biden sees as big a role for the gov- Fortune 500 firms* industry as % of total (Fortune 500 rank‡) Female CEO Tenure ernment in supporting American manu- 80 General Motors (18) Mary Barra 2014- facturing as Mr Trump does, perhaps a re- Size=market cap 200 Anthem (29) Gail Boudreaux 2017- Sep 2020, $bn 50 flection of the fact that industrial policy is 60 Citigroup (31) Jane Fraser 2021- now in favour across the political spec- Indra Nooyi IBM (38) Virginia Rometty 2012-20 trum. Mr Biden’s plans to strengthen “Buy PepsiCo UPS (43) Carol Tomé 2020- Katharine Graham 40 American” rules would make it harder for WWashingtonashington Post Co† PepsiCo (51) Indra Nooyi 2006-18 the government to buy foreign cement, Archer Daniels Patricia Woertz 2006-14 Jane Fraser 20 Midland (54) steel and equipment. Peter Navarro, Mr Citigroup Trump’s trade adviser, would be proud. Lockheed Marilyn Hewson 2013-20 MaryMary Barra Martin (57) Robert Lighthizer, America’s chief trade General Motors 0 negotiator, reportedly expressed his un- Lucent/Alcatel- Patricia Russo 1999-2000; 1970 80 90 2000 10 20 Lucent (74) 2002-08 happiness with the Agreement on Govern- First year as CEO Best Buy (75) Corie Barry 2019- ment Procurement, an international deal designed to prevent governments from im- Sources: Catalyst; Fortune; US Department of Labour; Yahoo Finance; press reports *Where data available †Sale price of firm in 2013 ‡In 2020 posing restrictions on how public funds One-woman show are spent. Mr Biden promises to rewrite the rules, so that America and its allies can On September 10th it was announced that Jane Fraser would succeed Michael Corbat as “use their own taxpayer dollars to spur in- chief executive of Citigroup, a bank, in February 2021. Ms Fraser will be the first woman vestment in their own countries”. at the helm of a top-ten American lender. She joins an elite group: just 37 of the Fortune Moreover, Mr Biden has committed 500 companies are headed by women. Things have at least got better. When Ms Fraser himself to using a broader range of tools began her first banking job in 1988, only three big American firms were run by women. 70 Finance & economics The Economist September 19th 2020

Climate ﬁnance The meaning of A grey area Change in the carbon intensity of ﬁrms that issue Green bonds, yield spread on comparable green green bonds*, tonnes of CO2 per $m of revenue conventional bonds†, percentage points 30 Public Industrial Supranational Average 20 0.5

10 0 What is the point of green bonds? Median 0 -0.5 reen bonds are the stars of climate fi- Gnance. These instruments, which -10 -1.0 channel funds raised towards environ- -20 -1.5 mentally friendly projects, raised $271bn in nef 3210-1-2-3 1918171615142013 2019, according to Bloomberg , a con- Years before/after first green bond issued sultancy. That is only about 4% of total *Operational emissions and indirect emissions Sources: Bank for International Settlements; IMF that occur in a firm’s value chain †At issuance bond issuance worldwide, but it easily makes green bonds the most popular form of eco-friendly debt. Covid-19 has only for institutional investors pressed by cli- €500m note to reduce leakages from its slightly slowed the rise. On September 2nd ents to become more climate-conscious. pipeline, among other things. “Sustaina- Germany issued green paper for the first They could invest directly in green pro- bility-linked” bonds tie interest payments time. The European Commission is mull- jects, which often take the form of infra- to the achievement of a target. The first of ing using them to fund just under a third of structure. But a failed project may default these was issued by Enel, an Italian elec- its €750bn ($888bn) stimulus package. on its repayments to direct investors. tricity firm, last year, and is linked to in- Yet a new study by the Bank for Interna- Green-bondholders face less risk; the issu- creasing the share of renewables in its gen- tional Settlements, a club of central banks, er must pay even if the project fails. Issuers eration capacity. raises questions about the purpose of also typically disclose the details of pro- So far there have only been a handful of green bonds. Researchers looked at 200- jects, such as their size and location. Such issuances of these newer sorts of bonds. odd large firms that issued them in 2015-18. morsels are otherwise hard to come by. Expanding the market will take time, as in- They found that firms that issue the most Investors seeking to encourage decar- vestors become familiar with them. For tend to be cleaner in the first place—ie, they bonisation could turn to newer instru- now, climate-conscious investors may produce the least carbon for a given ments. Big polluters can use the proceeds have to stick with green bonds—and doing amount of revenue. Over 70% of issuers of “transition” bonds to decarbonise. In less good for the planet than they may have have a carbon intensity equivalent to a con- March Cadent Gas, a British firm, raised a claimed to their clients. 7 sumer-staples firm, such as Procter & Gam- ble, or lower. Large polluters rarely issue such bonds for fear of being accused of European stock exchanges greenwashing, and because the bonds would be excluded from green funds. Shotgun wedding Another finding was that green-bond issuance did not seem to lead to decarbonisation. In the years after issuance, the average carbon intensity oscillates wildly, but the changes are not statistically significant. Moreover, though some issuers claim BERLIN The political machinations behind the sale of an Italian stock exchange that tapping the green-bond market lowers their cost of borrowing, data from the imf n an auction, the highest bidder usually Borsa Italiana on September 11th. Euronext suggest a discount is rare (see chart). Iwalks away with the asset on sale. Yet followed suit with its offer on September If green bonds cut neither costs nor car- considerations that are not purely com- 14th. The Paris-based exchange, which has bon directly, then what are they for? Propo- mercial are likely to determine who wins already hoovered up bourses in Amster- nents still see benefits. Some green bonds the London Stock Exchange’s auction of dam, Brussels, Dublin, Lisbon and Oslo, fund worthy projects that do not reduce Borsa Italiana. The lse is selling the Italian has teamed up with Cassa Depositi e Pres- carbon footprints, such as improving water stock exchange in order to ensure regula- titi Equity (cdp), a bank controlled by the management. This is the case for at least a tory approval of its takeover of Refinitiv, a Italian state that invests the country’s post- fifth of the stock of green bonds by value, financial-data provider that it agreed to al savings, and Intesa Sanpaolo, Italy’s big- reckons hsbc, a bank. Moreover, many buy last year for $27bn. The bidder least gest bank, to buy Borsa. bonds are used to refinance genuinely likely to upset European politicians and The lse has owned both the Milan- green projects. So the reduction in carbon regulators seems likely to prevail, rather based exchange and mts, the Borsa group’s dioxide may have happened before issu- than the one offering the most dosh. bond-trading platform, since 2007. It had ance, argues Sean Kidney of the Climate There are three suitors on the scene. The no plans to sell until the European Com- Bond Initiative, a non-profit group. highest bidder is reportedly Switzerland’s mission in June began sniffing around its For issuers, one advantage is reputa- six, a Zürich-based stock exchange which planned takeover of Refinitiv. Brussels tional. Issuing a green bond sends virtuous brings a big war chest and a strong credit frets that a combined firm could wield sig- signals to regulators. Chris Kaminker of rating to the party. (A spokesman for six nificant market power in the electronic Lombard Odier, a bank, argues that the did not confirm the offer.) The mooted trading of European sovereign bonds and green label may also attract a wider pool of price is €3.4bn ($4bn)—and could go high- derivatives. The commission’s investiga- lenders than conventional bonds. er. Deutsche Börse, Germany’s main stock tions have wrecked many a European Green bonds can also make life easier exchange, made a non-binding offer to buy merger. So, in order to satisfy regulators, 1 The Economist September 19th 2020 Finance & economics 71

Buttonwood McJobbers and brokers

Is the Big Mac index a good guide for currency speculators? his week Hong Kong’s monetary Not well, is the short answer. Imagine price more than made up for the fall in Tofficials stepped into the foreign- that our hypothetical punter invested $10 the rupee, leaving India less under- exchange markets after dusk to defend each time. Of the past 15 completed bets, valued. The same is true in four of the the city’s long-standing peg to the dollar. ten would have lost money (ignoring other nine losing currency bets. Given everything the financial hub has interest and inflation). The investor would Believers in ppp also accept that rich faced in recent months—protests, a have bought the Indian rupee in January countries tend to be more expensive pandemic and punitive American sanc- 2013 only to see it fall by 13% against the than poor ones, because their wages are tions—you might assume it is battling to dollar over the next two years. Ukraine’s higher even in parts of the economy that prop its currency up. You would be hryvnia was the most undervalued curren- are not terribly productive. So The Econo- wrong. The city’s monetary authority has cy in July 2014, after which it proceeded to mist also calculates an adjusted Big Mac been forced to sell Hong Kong dollars halve in value. For a total outlay of $150, index, which shows whether a burger is repeatedly since April to stop the curren- our punter would have ended up with less cheaper or dearer than you would expect cy strengthening too much. than $138 (although they could have made given a country’s level of gdp per person. This resilience must be a little un- another $20 or so in interest on their Is this adjusted index a better guide to comfortable for prominent speculators, currency deposits, over and above the cost currency speculators? A similar strategy like Kyle Bass of Hayman Capital Man- of borrowing in dollars). of buying the cheapest currency in the agement, a hedge fund, who have pre- Although not great for an investor’s index and selling it two years later would dicted a catastrophic devaluation. But it wealth, these results are not quite as da- have paid off on 12 out of 15 occasions will be no surprise to followers of our Big maging to the idea of ppp as they first since July 2011. In all but one case (buying Mac index. The tongue-in-cheek guide to appear. Deviations from ppp can narrow in Russia’s rouble in January 2016), though, the fair value of currencies showed that two ways: through fluctuations in the gains would have been small. That is the Hong Kong dollar was undervalued exchange rate or via movements in prices. because the most undervalued economy by almost 54% in July. That suggests no In India, for example, the price of a Maha- in this version of the index is, more often urgent need for it to fall. raja Mac (which McDonald’s serves in than not, Hong Kong. And despite hedge- The Big Mac index is a simple illustra- place of a beefy Big Mac) rose much faster fund histrionics, betting on its currency tion of purchasing-power parity (ppp), than that of an American Big Mac from against the dollar typically poses little the notion that the fair value of a curren- January 2013 to January 2015. That rise in risk—and offers little reward. cy should reflect its power to buy goods This Big Mac back-test is mostly a bit and services. It took HK$20.50 to buy a of fun. But the results are broadly in line Big Mac in Hong Kong in July and $5.71to with more sophisticated research. In 2011 buy one in America. The exchange rate Gianfranco Forte of the University of that would equalise their burger-buying Milano-Bicocca, Jacopo Mattei of the power was therefore HK$3.59 to the University of Ferrara and Edmondo dollar. That is substantially stronger than Tudini of Bocconi University showed the actual exchange rate of HK$7.75. that simple ppp-based trading strategies What practical guidance, then, can yielded respectable, if unspectacular, the Big Mac index offer to currency spec- returns (although their test did not in- ulators? Economists reckon that modest clude currencies as edgy as the hryvnia). deviations from fair value halve every “Few empirically literate economists one to three years or so. Suppose that an take ppp seriously as a short-term propo- investor had bought the most under- sition,” Ken Rogoff of Harvard University valued currency in our index, which we once pointed out, but most believe it has publish each January and July, and then some anchoring power over the long run. sold it two years later. How would they It gives investors something to chew on. have fared? But it’s not fast food.

2 the lse has put the Borsa group, which in- after the sale. As Euronext owns 11% of lch, such as financial infrastructure. cludes mts, on the block. And with the the odds are it would keep doing so. Deut- Politicians have made their intentions commission due to conclude its antitrust sche Börse, by contrast, would probably di- clear. The populist Five Star movement, review by December 16th, lse wants to vert clearing business from lch to Eurex, which is part of the ruling coalition, wants agree on a sale quickly. its subsidiary. For its part, Euronext has Borsa to be brought back under Italian in- Euronext is the most likely victor, ac- been an active buyer of European ex- fluence. The Northern League, a right-wing cording to Ian White at Autonomous, a fi- changes in recent years. Mr Werner thinks party, warns against a sale to foreigners. nancial-research firm. Michael Werner, an it can make the most of any synergies. Consob, the financial regulator, is headed analyst at ubs, a bank, agrees, and adds that Euronext’s trump card, though, is its de- by Paolo Savona, a Eurosceptic notorious Deutsche Börse is the least likely to win. cision to partner with the Italian state: cdp for his aversion to Germany. Binding offers mts provides lch, a clearing-house owned would own 8% of Borsa. Earlier this year It- are expected next month, but insiders say by lse, with around €45m of revenue a aly’s government extended its “golden- lse could make a decision even sooner. year. lse will therefore be keen to ensure power” law, which entitles it to intervene With Rome on its side, the deal is Euro- mts continues to use the clearing-house in deals in strategically important sectors, next’s to lose. 7 72 Finance & economics The Economist September 19th 2020 Free exchange Altered vistas

Tech stocks are reliving the heady days of the 1990s. The productivity picture looks wildly different and labour are used, often treated as a proxy for technological progress) rose by about 2% a year from 1995 to 2004, according to Rob- ert Gordon of Northwestern University. That was a sharp pickup from the average pace of 0.5% in 1973-95, and nearly matched the rate achieved during the heady growth years of 1947-73. Productivity in the 2010s, by contrast, looks pitiful. Annual growth in labour productivity has not risen above 2% since 2010. Growth in total factor productivity, according to data gathered by John Fernald of the Federal Reserve Bank of San Francisco, has been more dismal than ever: just 0.3% on average from 2004 to 2019. If you take the 2010s alone, the average falls to just 0.1%. Strong labour productivity growth in the 1990s enabled wages to rise without squeezing corporate profits. While the dotcom boom is often remembered for the enormous valuations achieved by profitless upstarts with no clear path into the black, after-tax corporate profits during the decade rose from 4.7% of gdp in 1990 to 6.7% in 1997, before closing the decade at 5.6%. Corporate profits actually declined as a share of gdp during the 2010s, albeit from a much higher level than that prevailing in the 1990s: from 10.4% in 2010 to 9.0% in 2019. More telling, however, is the way in which firms responded to profit opportunities during the two decades. Investment in computer equipment, software and r&d leapt dur- n troubled times people take comfort in the familiar. Covid-19 ing the 1990s, by 1.5 percentage points of gdp over the decade. In Ihas upended many things, but tech-stock prices have proved im- the 2010s, despite the much higher level of profits, investment pressively invulnerable. The Nasdaq, a tech-heavy stock index, has rose by just 0.7 percentage points of gdp. leapt by 25% since the beginning of 2020, taking its total rise over The exuberance that powered soaring stock prices in the late the past decade to over 400%. Were it not for a handful of tech 1990s, if in some cases irrational, occurred alongside tech-pow- giants like Apple and Microsoft, the s&p 500, another share-price ered structural change. The uptick in productivity was at first dri- index, would be down so far this year. Not since the boom of the ven by advances in computer-making. As prices tumbled and ca- late 1990s have technology firms inspired such exuberant trading. pabilities soared, other firms began investing in new equipment. For punters the comparison should be a sobering one; after a peak Productivity gains began to spread across the economy, helping in March 2000 the Nasdaq crashed, eventually losing 73% of its firms streamline manufacturing and transforming critical indus- value. But the economic differences between the two eras should tries. These persisted, and even accelerated, for some years after be more unsettling than any market similarities. the market crashed. Though many dotcom darlings disappeared, The two booms do share features beyond their stock-price tra- the digital infrastructure built during the boom remained. So did a jectories. Both were sustained by inflows of new money. In the late number of firms that came in time to dominate the corporate land- 1990s discount brokerages and online-trading platforms drew in scape. In March 2001 The Economist grimly assessed the prospects amateur punters looking to profit off the seemingly one-way mar- of Amazon, a struggling retailer that had lost 90% of its market val- ket. Today, an army of small-timers trade shares and derivatives on ue in the crash, noting that “even if such companies survive, they new platforms like Robinhood. In the 1990s raging bulls justified are unlikely to resemble the businesses they once were.” (Holding high prices by declaring the dawn of a new economy, built on more Amazon through the crash proved a smart bet; its stock now trades powerful computers, fancy software and the internet. Today’s op- at about $3,100, up a tad from under $10 in 2001.) timists cite the potential of everything from cloud computing and artificial intelligence to electric vehicles and blockchain. At first Only nineties kids will remember productivity glance the economic performance seems similar too. In the late Some of today’s high-flyers will in time prove to be good invest- 1990s the unemployment rate fell to 4% and pay soared. On the eve ments. Optimism about the real economy requires a bit more faith. of the pandemic, America’s jobless rate stood at a half-century low There are grounds for hope. Some economists reckon that hard-to- and wage growth, after a dismal decade, had accelerated to its best measure “intangible” investment—such as time spent re-engi- pace since 2008. According to figures published by the Census Bur- neering business processes—takes up a growing share of firms’ eau on September 15th, real median household income grew by a energies. If so, both investment figures and future economic pros- very healthy 6.8% in 2019. pects could be undersold. Yet in critical ways the two episodes look profoundly different. Both output per hour and total factor productivity accelerated As the 1990s dawned economists were hunting in vain for the effi- in 2019. Though it remained well short of the 1990s, this uptick ciency-enhancing effects of new technology. Robert Solow, a No- might presage an economic transformation in the making. And bel prize-winning economist, quipped in 1987 that “you can see the the covid-19 pandemic has imposed constraints on business activ- computer age everywhere but in the productivity statistics.” By ity, which might in turn accelerate tech-driven restructuring. The mid-decade that was no longer the case. Output per hour worked possibility has probably contributed to the surge in tech stock in America rose by more than 3% a year in 1998-2000, a feat the prices since March. For now, technology valuations are based, to a economy had not pulled off since the early 1970s. Growth in total far greater degree than in the 1990s, on what could be rather than factor productivity (a measure of the efficiency with which capital what is. Invest accordingly. 7 Property 73 invest in the innovators of the Nasdaq-100

100 of today’s most ground-breaking companies, all in a single fund. invesco.com/qqqetf

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE There are risks involved with investing in ETFs, including possible loss of money. ETFs are subject to risks similar to those of stocks. Investments focused in a particular sector, such as technology, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments. The Nasdaq-100 Index comprises the 100 largest non-financial companies traded on the Nasdaq. Before investing, consider the Fund’s investment objectives, risks, charges and expenses. Visit invesco.com/fundprospectus for a prospectus containing this information. Read it carefully before investing. Invesco Distributors, Inc. Science & technology The Economist September 19th 2020 75

Planetary science product of badly run meth labs) and microbes. That means it has strong potential A sniff of life? as a biomarker. The discovery in the 1960s that the surface of Venus was far hotter than the ovens used to sterilise surgical instruments seemed to rule out any chance of life there. Still, a few scientists wondered if there The discovery of a gas called phosphine in the atmosphere of Venus could redirect might be life above the searing surface. The the search for life beyond Earth water droplets in Earth’s clouds contain f earth’s two planetary neighbours, absorbing. A team of scientists now report living bacteria; though Venus’s clouds are OMars and Venus, it is Venus which in Nature Astronomy that one of the mole- incredibly acidic, might they too be inhab- shines brighter in the sky, comes closer in cules appears to be phosphine (PH3), com- ited by some sort of super-hardy bug? space, and is more similar in size and phys- posed of phosphorous and hydrogen. ical structure—almost Earth’s twin. But This is a striking anomaly. In an atmo- From the farthest planets to the nearest over the past 60 years it has been Mars that sphere composed mostly of carbon diox- The idea of detecting life through an other- has held most attention. There are cur- ide, like Venus’s, phosphine should be able wise inexplicable anomaly in a planet’s rently six operational spacecraft in orbit to survive only briefly before chemistry de- spectrum dates back to the 1960s, when it around it and two others are on its surface; stroys it. For it to be persistent—the ob- was given voice by James Lovelock, a Brit- more are on their way. Venus is observed by servers reckon it makes up perhaps 20 ish chemist and inventor. After astrono- a single, small, ageing satellite. Yet follow- parts per billion of the atmosphere—some- mers started discovering exoplanets (plan- ing a new discovery made with telescopes thing must be producing it. ets that orbit other stars) in the late 1990s, on Earth, it is Venus which arguably now On Earth, where there are on average a they also began hypothesising what anom- looks more likely to harbour the thing that few parts per trillion of phosphine in the alous gases they could look out for as po- planetary science cares most about: life. atmosphere, its presence seems to be al- tential signs of life. The telescopes—the James Clerk Max- most entirely because of chemists (among A few years ago, astrobiologists led by well Telescope (jcmt) in Hawaii and alma other things, it is a potentially deadly by- Sara Seager of mit got interested in phos- in Chile—work not in visible light, but radi- phine. Though it is not clear how microbes ation that lies in between infrared and ra- make it, or something which decomposes dio waves. The hot depths of Venus’s atmo- Also in this section into it, its association with life is pretty sphere give off a fair bit of radiation at these clear (penguin guano seems rich in the 77 Fires and biodiversity loss wavelengths. The molecules in the cooler stuff, for example). There seem to be no ap- air above absorb some of it as it passes out 78 Computing underwater preciable mechanisms for making it abiot- into space; the specific wavelengths ab- ically either in the depths of the Earth or 78 Ranking cyber-power sorbed depend on the molecules doing the through the photochemical reactions dri-1 76 Science & technology The Economist September 19th 2020

2 ven by sunlight which create other short- On the issue of independent observa- tually triggered what atmospheric scien- lived gases in the atmosphere. tions, the history of methane on Mars pro- tists call a “runaway greenhouse effect”, In 2017 Jane Greaves of the University of vides a cautionary tale. In 2004 scientists boiling away its seas. If there had been mi- Cardiff, thinking along similar lines, used using three Earth-based telescopes and a crobes in the surface waters of Venus be- the jcmt to look for phosphine lines in the spacecraft orbiting Mars all thought they fore this catastrophe, evolution would atmosphere of Venus—not an exoplanet, had detected what appeared to be the spec- have urged them not into the depths, as it but much easier to study. She and her col- tral signature of methane in the planet’s at- did on Mars, but into the skies, where even leagues saw something in the appropriate mosphere. It was a classic Lovelock anoma- today the temperature remains bearable part of the spectrum; but the signal was ly. Chemical models insist that methane and water remains liquid, though admit- weak. Dr Greaves decided to pursue the does not last all that long in the Martian at- tedly in droplets not oceans. idea further using the more powerful mosphere, so these observations suggested It is a beguiling story of life finding a alma, an array of 66 antennae in the Ataca- there had to be a continuous source of the way, first suggested as a possible explana- ma desert. Those observations, made last gas. And on Earth most, though not all, tion for some oddities in the way the year, provided a significantly better signal- methane is produced by microbes. What clouds absorb ultraviolet which could, to-noise ratio. was more, there was an increasingly wide- with a significant exercise of the imagina- After the first observations, Dr Greaves’s spread belief that, although there is now tion, be taken to imply microbes. The way team and Dr Seager’s heard about each oth- only a smidgen of water on the surface of to find out for sure would be to go and take er and pooled their resources. Dr Seager’s Mars, there might be plenty more below it, a closer look. nasa has not launched a mis- team has worked out that any microbial perhaps in deep aquifers. On Earth mi- sion to Venus since the 1980s, though two metabolism producing phosphine would crobes are found many kilometres below are being considered: veritas would be an probably work best in a very acidic envi- the surface. Maybe Mars had a similar orbiter intended to map the surface; da- ronment—rather like that of Venus, where “deep biosphere”? vinci+ would have a chemistry lab that much of the cloud deck is almost pure sul- Maybe. But if so, there is currently no would descend through the atmosphere. phuric acid. Dr Seager, Dr Greaves and persuasive evidence that it is producing The next confirmed mission to Venus is some of their colleagues developed a new methane. In 2018 the European Space Agen- the Indian Shukrayaan-1 orbiter, pencilled model for how such life might function, cy’s Trace Gas Orbiter started to examine in for launch in 2023, which should leave with cells reproducing in the cloud dro- Mars’s atmosphere with much more sensi- enough time to put on a phosphine-opti- plets and turning into desiccated spores as tive instruments than had been used be- mised instrument. Meanwhile, Dr Seager the droplets fall towards the surface. Rising fore. It has seen no evidence of methane at has secured a grant from Breakthrough Ini- winds then bring some of these spores anything like the level previously claimed. tiatives, a research programme funded by back up to the clouds, where they get ab- Yuri Milner, a Russian billionaire, to inves- sorbed into—or possibly catalyse the cre- If you can make it here... tigate the scientific case for life on Venus ation of—new droplets in which to repro- The chain of reasoning which made a deep and the technical challenges of a potential duce once again. This hypothesis is being Martian biosphere plausible applies to the- exploratory mission. published in Astrobiology, a journal. ories about life above Venus, too. In the dis- Carl Sagan, who wrote a rather remark- This speculation is fascinating, but also tant past, when it had a thicker atmo- able article about the possibility of bal- of a sort which might raise alarm bells. The sphere, Mars clearly had running and loon-like creatures in the clouds of Venus team did not look at the whole spectrum standing water at its surface, at least spo- in the 1960s, is well remembered in astrobi- dispassionately to see what was there; it radically. As Mars lost its atmosphere its ological circles for the dictum that “ex- sought out a feature that could be ex- surface became ever more arid and frigid. traordinary claims require extraordinary plained by phosphine, a molecule in which That put evolutionary pressure on any mi- evidence”. Planetary observations are full at least some of the scientists were already crobes previously living in those surface of anomalies: you cannot invoke extra- invested, and found what they were look- waters to migrate deeper and deeper into terrestrials willy nilly to explain them, cre- ing for. What is more, as they say in their the still warm and moist subsurface. ating what David Grinspoon, an astrobiolo- paper, “we emphasise that the detection of The surface of Venus, too, has dried out gist, calls “aliens of the gaps”. No one is yet PH3 is not robust evidence for life, only for over its history—but through heating, not saying life exists on Venus, and the current anomalous and unexplained chemistry.” cooling. For billions of years the Sun has claim can command attention simply by Two things need to happen before been growing brighter. On Venus this even- being intriguing, which it definitely is. things get truly exciting. Other teams need But it may be that the first half of Sagan’s to make their own observations, ideally at dictum needs re-examining, as far as the other wavelengths. And a really thorough hunt for life is concerned. Not long ago sci- search for ways of making phosphine with- entists had almost given up on finding life out biology under the conditions seen on anywhere in the solar system beyond and above Venus needs to draw a blank. Earth. Now astrobiologists are investigat- The team behind the latest detection ing the possibility of life on, in or above has done some of this latter work, arguing Saturn’s moon Titan, or in the ice-covered that the phosphine cannot come up from ocean of one of the planet’s other moons, volcanoes, drift down from comets, or be Enceladus. Jupiter’s moon Europa is also a made in mid-air through photochemistry. possibility. And there is always Mars. But the chemistry that happens on surfaces If science finds life on or in any of those can be very different from what happens in bodies, the idea that its presence is in itself mid air, and Venus’s atmosphere, as well as extraordinary will take a knock. If they find offering extremes of temperature, pressure it over hellish Venus, life will come to look and acidity, has surfaces to spare, both in yet less like an odd exception. Indeed, at its cloud decks and in the hazes that float the microbial level at least, life may turn above and below them. Imaginative chem- out to be quite ordinary. But that will make ists should have a field day working it no less wonderful. In some ways, it may through ever more abstruse possibilities. Should Mars have Venus envy? make it more so. 7 The Economist September 19th 2020 Science & technology 77

species of birds, mammals and other verte- brates, almost 3,500 species of plants, and more than 9,000 species of insects and other invertebrates. It is not known how they will recover from the ﬁres, but there are likely to be long-term impacts. Fire- adapted grasses will regrow much faster than tree species. Trees that are scorched, but which nonetheless survive, are less likely to make fruit next year, which will have knock-on eﬀects on the remaining animals that rely on them for food.

Losses, tracked This is the ugly face of biodiversity loss. Earlier this week the un Convention on Biological Diversity released its fifth report on biodiversity, an assessment of progress made towards a set of international goals intended to halt the global loss of species. The 20 targets were adopted by the 196 nations that are party to the Convention in 2010, and were due to be met by 2020. Yet none have been. Metrics for many of the targets have stagnated or worsened. Biodiversity There are some bright spots. In the 2010s the global rate of deforestation de- We started the fire clined by a third compared with the previous decade and protected areas grew. Where good fisheries-management policies have been introduced, such as Chile, South Africa and Indonesia, the biomass of marine fish stocks has rebounded. The rate of extinction in birds and mammals is esti- Natural disasters quicken an already precipitous global loss of species mated to have been halved compared with ropical wetlands should be soggy tanal, but warmer temperatures and de- a scenario without action. Tand green, not lands of flaming vegeta- creased rainfall in the region is consistent But these efforts are still thin on the tion. Yet the world’s largest tropical wet- with some model results. Brazil’s National ground, as shown by the Living Planet Re- land, Brazil’s Pantanal, has been burning Institute for Space Research reports that port, published last week by the wwf, an for weeks, in the largest blazes to take hold there have been at least 15,000 fires in the environmental group. The biennial assess- in the region since records there began in wetlands since January, triple the number ment of the state of global biodiversity 1998. The consequences for one of the plan- recorded over the same period in 2019 and a tracked data from 20,811 populations of et’s most diverse ecosystems are haunting. whopping 12-fold increase over the same 4,392 animal species. It found that animal Blackened, starving jaguars wander amid period in 2018. A separate analysis by re- populations worldwide shrank by an aver- the ashes, paws burnt through to the bone. searchers from the Federal University of age of two-thirds between 1970 and 2016. They are the lucky ones. The charred re- Rio de Janeiro suggests that, by September The falls were greatest in the tropics. In Lat- mains of dead caimans, tapirs and mon- 6th, the fires had burned through a record in America and the Caribbean animal pop- keys bear testament to the less fortunate. 23,490 square kilometres—17% of the Pan- ulations fell by 94%, on average, during the Farther north in the Amazon, more than tanal’s total area. period (see chart). 20,000 fires were detected in the first two This region is home to more than 1,000 Humans destroying wild ecosystems in weeks of September, more than burned in favour of mining, urbanisation or, as in the the whole of September 2019. deforestation in Brazil, agriculture, are a In both regions, fires are set by farmers Going, going… primary culprit. Invasive species are an- seeking to clear wild land for agriculture, Living Planet Index, species populations other factor. But undoubtedly the most im- encouraged by lax government policies. 1970=100 portant emerging threat to species is the Deforestation in the Amazon is drying out Latin America & the Caribbean destabilisation wrought by climate the entire region, making the fires worse, Europe & Central Asia North America change. Around the world it is altering eco- and stymying “flying rivers” that carry Asia Pacific Africa systems, changing mating seasons and af- moisture evaporated off the Amazon’s tree- 125 fecting food supplies. tops downwind to the Pantanal. 100 Before humanity hit pause on its priori- 75 ties to deal with a global pandemic, ecolo- Blazing anomaly gists and politicians were due for another Rainfall over the Pantanal this year has 50 un biodiversity summit in October in Kun- been at its lowest since 1973. Last year’s wet 25 ming, China. Covid-19 has delayed that season was delayed, adding to the drought. 0 meeting until May 2021. Parties to the un On top of all this are the impacts of climate 1970 80 90 2000 1610 Convention on Biological Diversity would change. These are difficult to tease apart Source: WWF/ZSL do well to look to Brazil and take note of from natural climate variations in the Pan- what is at stake. 7 78 Science & technology The Economist September 19th 2020

Cyber-power sider, who points out that this is handy both for spotting attacks and mounting Digital dominance them. The cybercrime team of the Dutch police has proved adept at apprehending online criminals. And in 2014 the small but world-class group of hackers working for Dutch intelligence managed to penetrate a computer network used by the svr, Rus- A new ranking of cyber-power throws sia’s foreign intelligence service—includ- up some surprises ing cctv cameras in the building—allow- hina has the world’s largest army. Rus- ing them to watch as the Russians hacked Csia wields the most tanks. America America’s State Department. owns the fanciest satellites. But who has Measuring cyber-power is fraught with the most cyber-power? A new National difficulty, warns Marcus Willett, a former Cyber Power Index by the Belfer Centre at deputy director of gchq, Britain’s sigint Harvard University ranks 30 countries on agency. Many experts are puzzled by Isra- their level of ambition and capability. Of- el’s relatively low ranking on the Belfer in- fensive cyber-power—the ability to do dex, despite its hacking prowess; its secre- harm in or through computer networks—is cy may be one reason for this. “Warships in Cloud computing one measure. But so too are the strength of the Antarctic can easily be seen,” says Mr a country’s defences, the sophistication of Willett, “yet a piece of code inserted into a Better down where its cyber-security industry and its ability to power plant is hard to detect.” Though spread and counter propaganda (see chart). some states acknowledge their offensive it’s wetter That America stands at the top of the list capabilities—America and Britain boast of is not surprising. Its cyber-security budget smashing Islamic State networks in Iraq for fiscal year 2020 stood at over $17bn and and Syria, partly as a signal to Russia and the National Security Agency (nsa), its sig- China—most shy away from doing so. nals-intelligence (sigint) agency, proba- Many countries outsource the dirtiest How to build a data-centre underwater bly gets well over $10bn. The awesome work to deniable proxies, like “hacktivists” arlier this year a ship hauled a large, scale of America’s digital espionage was and criminals. And whereas procuring a Ebarnacle-covered cylinder sporting a laid bare in leaks by Edward Snowden, a warship or missile is expensive and time- Microsoft logo from the seas off the Orkney former nsa contractor, in 2013, which consuming, potent malware can be stolen islands. Inside were a dozen server racks, showed the agency hoovering up vast or bought online. WannaCry, a ransom- of the sort found in data-centres around amounts of the world’s internet traffic and ware attack mounted by North Korea in the world. Sunk in 2018, and connected to trying to weaken encryption standards. 2017, used a hacking tool, EternalBlue, the shore by cable, the computers had China, in second place, has demon- which had leaked out of the nsa. spent the past couple of years humming strated a voracious appetite for commer- A forthcoming study of cyber-power by away, part of an experiment into the feasi- cial cyber-espionage abroad and an iron Mr Willett and his colleagues at the Inter- bility of building data-centres underwater. grip on the internet at home. Britain, national Institute for Strategic Studies On September 14th Microsoft revealed whose National Cyber Security Centre has (iiss), a think-tank, concludes that, al- some results. The aquatic data-centre suf- parried over 1,800 cyber-attacks since its though stealing things and disrupting net- fered equipment failures at just one-eighth creation in 2016, is third. Britain is cur- works is important, what matters most the rate of those built on land. Being inac- rently setting up an offensive National over the longer term is control of digital in- cessible to humans, the firm could fill it Cyber Force staffed jointly by spies and sol- frastructure, such as the hardware that with nitrogen instead of air, cutting down diers. Russia, whose spies interfered with runs mobile telecommunications and key corrosion. The lack of human visitors also America’s last election, is in fourth place. apps. Dominance there will be crucial to meant none of the bumping and jostling The big surprise is the Netherlands in economic strength and national security, that can cause faults on land. fifth place, ahead of France, Germany and says the iiss. On that measure, “only China Microsoft hopes some of the lessons Canada. Dutch expertise in analysing mal- is currently positioned to be able to make can be applied to existing, land-based data- ware is particularly sharp, says a Dutch in- the jump to join the us in the first rank.” 7 centres. In the longer term, though, it notes that building underwater offers advantages beyond just reliability. Immersion in Hack attack seawater helps with cooling, a big expense Belfer National Cyber Power Index, top 10, scored out of 100 on land. Data-centres work best when placed close to customers. Land in New Overall score Offence Defence York or London is expensive, but nearby 6040200 6040200 6040200 sea-floor is cheap. More than half the United States United States China world’s population lives within 120 miles China Britain France (192km) of the sea. Ben Cutler, the engineer Britain Russia Netherlands in charge of the project, says submarine Russia China United States data-centres could be co-located with off- Netherlands Spain Canada shore wind farms as “anchor” customers. France Israel Japan The cylinder fits in a standard shipping Germany Germany Sweden container, so could be deployed to remote Canada Iran Britain places like islands, or even disaster areas to Japan Netherlands Switzerland Australia France Germany support relief efforts. Water and electron- Source: Belfer Centre, Harvard University ics, it seems, do sometimes mix. 7 Books & arts The Economist September 19th 2020 79

Africa goes pop N’Dour and Hugh Masekela sold records far beyond, respectively, Nigeria, Senegal and From Nollywood to Netflix South Africa. In the 1970s Senegalese films such as “Touki Bouki” (1973) wowed overseas audiences. But never before have so many African artists burst into the global mainstream together. The momentum extends to literature: this week Tsitsi Danga- JOHANNESBURG rembga, a Zimbabwean writer, and Maaza African entertainers are wowing global audiences Mengiste, who was born in Ethiopia, were swear to make sure you never forget perhero smash-hit set in a fictional African shortlisted for the Booker prize for fiction. “Iabout me,” sings Burna Boy on the kingdom, African film and television are Africa has long been seen as an import- opening track of “Twice as Tall”, which was also drawing a broader audience. Nolly- er of culture, say Matthias Krings and Tom released last month. These days there is lit- wood, as Nigeria’s film industry is known, Simmert, two academics, in a recent paper. tle chance of that. The Nigerian musician’s is increasingly renowned for the quality of The battered minibuses on the streets of fifth album, an evocative blend of contem- its output as much as its quantity. Netflix capital cities attest to that, emblazoned as porary sounds, score-settling and social recently bought the rights to Nigeria’s two they are with the names of English Premier commentary, topped the streaming charts highest-grossing films, “The Wedding League footballers or American hip-hop in dozens of countries. It was streamed 5m Party” (2016) and its sequel (2017), as well as stars. But increasingly there are posters of times in the hour after it came out. the much-praised “Lionheart” (2018). This African pop stars on the walls of American, Burna Boy is one of the biggest stars as- year it released its first original African- British or French teenagers’ bedrooms, too. sociated with Afrobeats (also known as made show, “Queen Sono”, a spy drama set African countries are exporting more of Afropop): an umbrella term for what is less mostly in Johannesburg, created by Kagiso their cultural output. As Davido says of a genre than a movement, encompassing Lediga, a South African writer-director. Afrobeats, “It’s our new oil.” influences such as Caribbean soca and Next came “Blood & Water”, set in Cape The moment has been a long time com- dancehall, electro hip-hop, jùjú music Town, which became one of Netflix’s ten ing. In the 1980s and 1990s it was harder for (based on Yoruba rhythmic percussion) most popular shows in over 50 countries. African artists to win attention. Making and auto-tune heavy pop. Other prominent Previous African entertainers have en- music, films and tv was expensive; at artists include Davido, WizKid, Mr Eazi and joyed global success. Fela Kuti, Youssou home, widespread piracy made it difficult Tiwa Savage. All have record deals with ma- to earn money. Abroad, African music was jor Western labels, clock up tens of mil- often relegated to catch-all “world music” Also in this section lions of listens on streaming sites and at- shelves in record shops, next to Peruvian tract thousands of fans to concerts. 80 “Cuties” and QAnon pan pipes. The only references to the conti- Afrobeats artists have collaborated with nent on mainstream Western radio shows 81 The trouble with Wagner the likes of Drake, Stormzy and Beyoncé, may have been “Africa” by Toto, a weird if who last year curated an album featuring a 81 Energy and politics catchy song, or the members of Band Aid host of African talent. bellowing inaccurately about its lack of 82 Johnson: New York English Boosted by “Black Panther” (2018), a su- snow in “Do They Know It’s Christmas?” 1 80 Books & arts The Economist September 19th 2020

2 From the 2000s changes in technology Banlieue cinema began to level the global playing field. Cheap kit let Afrobeats producers make high-quality recordings; software meant The dancer and the dance sounds could be more easily mashed together. Blogs such as notjustok.com helped PARIS A bold French film stirs controversy in America broadcast music and generate followings. The market for song excerpts as ring tones ike any11-year-old girl starting at a teens. Inspired by much-“liked” video provided a new source of income. For their Lnew school, Amy (Fathia Youssouf) clips on social media, the pre-adolescent part, film-makers benefited from fans just wants to fit in. The conservative Amy naively urges the girls into ever- uploading segments to YouTube. Then Muslim teachings of her Senegalese more explicit choreography. The Franco- came streaming services such as Spotify mother’s world impose a creed of pudeur, Senegalese director, Maïmouna Dou- and Apple Music, as well as Netflix and or modesty. Passing the laundry room of couré, who won a Sundance award for irokotv, which hosts Nollywood films. her high-rise block in a banlieue of Paris, the film, says she wanted to explore Two other powerful trends have en- Amy is dazzled by a different universe. “dangerous” social pressures through the couraged the spread of African pop culture: She glimpses Angelica (Médina El Aidi- eyes of girls, but not to “judge” them. demography and diasporas. The median Azouni), dressed in a crop top and prac- Others have decided to judge, how- age on the continent is under 20. Like the tising hip-swivelling dance moves as her ever. A low-grossing independent movie post-war baby-boomers, such a large co- washing spins. in French would ordinarily go unnoticed hort of young people may have been bound “Mignonnes” (“Cuties”) is about in America. But Netflix, which acquired to sway global tastes. Meanwhile first- and Amy’s painful quest to join Angelica’s the American distribution rights, has second-generation African populations in dance gang. It is a powerful, disturbing provoked a backlash. Ted Cruz, a Repub- the West have sharply expanded. story of belonging, female liberty, hyster- lican senator, wrote to the attorney- The number of immigrants from sub- ical giggling and conflicting cultures, but general asking him to determine wheth- Saharan Africa in America shot from also of the hyper-sexualisation of pre- er the film “violated any federal laws 265,000 in 1990 to 2m in 2018 (375,000 are against the production and distribution Nigerians, the largest single group). Be- of child pornography”. A “cancel Netflix” tween 2001 and 2011 the African-born pop- petition, backed by QAnon conspiracists, ulation of England and Wales rose from is circulating online. 800,000 to 1.3m (the Nigerian contingent Netflix has apologised for the “inap- more than doubled). “Once you blow in Ni- propriate artwork” it initially used. It was geria you almost automatically blow in far from the film’s French publicity shot, London,” says Joey Akan, founder of Afro- which showed the girls in a carefree beats Intelligence, a newsletter. Since it re- moment of sorority. Yet the row raises a mains hard to make money in Nigeria, he thorny question: when does a film about adds, its artists must reach the diaspora. a troubling phenomenon become com- plicit in what it seeks to condemn? Dur- Home thoughts from abroad ing dance scenes, the camera lingers African migrants and their children are far uncomfortably on the children’s bodies from just passive consumers, especially in ways that shock and haunt the viewer. when it comes to music. A London-born dj The political hijacking of the debate, of Ghanaian parentage, dj Abrantee, is though, leaves little space for subtlety. credited with popularising the term Afro- Which for a strong debut feature film by a beats in 2011. Several well-known Afrobeats Eyes of the beholders young black female director is a shame. artists come from the diaspora, for example the British-born acts J Hus, Fuse odg and nsg. Davido was born in Atlanta. in the original music. High-profile festi- aired in March 2018. It found that just 14% The clout of Nigerians, both on the con- vals and playlists may be dominated by Ni- of references to Africa were positive; in tinent and in the West, has led to some gerians but they increasingly showcase 44% of cases, no particular country was grumbling. Ghanaian artists sometimes others, such as Nasty C from South Africa, specified. And even if the Netflix shows are say Nigerians play down the influence of Navy Kenzo, a Tanzanian duo, or Innoss’B, bland, they contain telling details and their genres, such as hiplife and azonto, on a Congolese singer-songwriter. asides. The first episode of “Blood & Water” Afrobeats. In 2015 Kenyan artists took to the A more piercing critique, at least of the makes a brief mention of the horrors of Bel- streets to demand local radio stations play African-made shows on Netflix, is that gian Congo—not something found in “Gos- more of their music. Beyoncé’s album in- consumers in the rest of the world are not sip Girl”. The films Netflix has bought are cluded few east Africans, noted musicians getting an authentic sense of African lives. generally better than the tv shows. “Cook from the region. Western packaging can “Queen Sono” is “a Hollywood spy drama Off”, a Zimbabwean romcom, deliciously add to the impression that there is little copy-pasted into Johannesburg with a captures the country’s gallows humour. happening outside Lagos. Popular “Afro- black female protagonist”, argues Tsogo If African artists still have work to do, so beats” streams heavily feature Nigerians. Kupa, a South African writer and film-mak- do cultural gatekeepers in the West. The Such worries about “Nigerianisation” er. “Blood & Water” comfortingly mimics Grammy awards still consign Afrobeats to in part reflect the sheer number of Nigeri- the tropes of American teen dramas. “world music”. The application of “Lion- ans (over 200m) and the role of Lagos as a Yet their creators should be cut some heart” for an Oscar for best international creative hub. But other sounds are attract- slack. Many Westerners remain deeply ig- film was turned down because most of the ing more attention, too, for example South norant about Africa. Last year the Africa dialogue is in English (with a smattering of African house styles, gqom and amapiano. Narrative, an initiative based at the Univer- Igbo). In response, Genevieve Nnaji, who Even if these are quickly adapted by enter- sity of Southern California, published a directed and stars in it, observed: “We did prising Nigerians, that stimulates interest study of 700,000 hours of American tv not choose who colonised us.” 7 The Economist September 19th 2020 Books & arts 81

Richard Wagner Energy and politics A hateful beauty Maps about chaps

Wagnerism: Art and Politics in the The New Map: Energy, Climate and the Shadow of Music. By Alex Ross. Farrar, Clash of Nations. By Daniel Yergin. Straus and Giroux; 784 pages; $40. Fourth Penguin; 512 pages; $38. Allen Lane; £25 Estate; £30 n its publication in 1991 Daniel Yer- itler casts as long a shadow over Ogin’s “The Prize: The Epic Quest for Oil, HRichard Wagner as Wagner casts over Money and Power” quickly attained the art. So argues Alex Ross, the music critic of status of a classic. A massive narrative his- the New Yorker, in his gigantic new book, tory, it wove the story of oil through the “Wagnerism”. Fifty years after the German previous century’s economic, political and composer’s death in 1883, his operas be- military events deftly and exhaustively. It came “the chief cultural ornament of the was also well timed. The fall of the Soviet most destructive political regime in his- Union, a clear punctuation point, made it a tory”. Yet, says Mr Ross, the Nazis made use good moment at which to take the measure of Wagner “only when he was shorn of his of one of modern history’s most important ambiguities, and even then his presence in Accompanist to murder threads. And with the first report of the In- mainstream Nazi culture was less pro- tergovernmental Panel on Climate Change nounced than many accounts let on”. than insightful. The Führer seemed to just a year old, and the signing of the un The author is no apologist. He probes overlook Wagner’s preoccupation with Framework Convention on Climate Wagner’s anti-Semitism, which included a love. The “Ring” critiques power; for all its Change just a year in the future, the great vile essay of 1850 called “Jewishness in Mu- Aryan overtones, “Parsifal” elevates com- issue of the 21st century was only just be- sic” as well as caricatures such as the passion. Wagner’s heroes struggle with re- ginning to make itself felt. dwarves in the “Ring” cycle. In Wagner’s morse—hardly a Nazi virtue. Missing all Mr Yergin’s new book is not in the same lifetime, “Parsifal” was perceived by the this, Hitler blathered about hearing “the league; nor does it pretend to be. As the use writer Paul Lindau as “Christianity in Mu- rhythms of the primeval world”. of the word “map” in the title gives notice, sic”—the Christianity, that is, “of the Span- Beyond his unyielding anti-Semitism, it is a much more schematic undertaking. ish Inquisitor, which burns heretics while Wagner himself was politically incoherent. Less than half the length of “The Prize”, it the pure voices of children praise God’s He flirted with anarchism, socialism, has a larger number of chapters, each pick- mercy”. By the end of the 19th century, Mr communism, pacifism and Utopianism, ing off a particular topic. A place, an event Ross recounts, scholars were arguing that drifting left as he grew older (the funeral or a man is normally evoked to introduce or as well as containing anti-Semitic stereo- music from “Siegfried” was played at a con- situate the subject; the relevant issues are types, the operas embody what one critic cert commemorating Lenin’s death). Nazi judiciously explained; a conclusion is has called an “aesthetics of anti-Semitism”. leaders had to be seen at the theatre in Bay- reached, often buttressed by the words of Through the Meister’s family and va- reuth, but opera’s narrow appeal, as well as an apposite ceo, minister, admiral or who- rious unsavoury boosters, Mr Ross traces Wagner’s mixed-up views, limited his mu- ever. Thus the book breezily takes the read- the links between the Third Reich and Bay- sic’s value in Nazi propaganda. er through the developments of the past reuth, Wagner’s eventual home and the Still, Wagner provided the soundtrack few decades in the oil business and energy spiritual abode of his music. But the book and iconography of the Nazi war mach- more generally, with an eye to political re- is more than either a prosecutor’s brief or a ine—and eventually of warfare itself. In a percussions. With sections on America, case for the defence. Instead Mr Ross offers fascinating passage on “Apocalypse Now”, Russia, China, the Middle East, the car in- a “passionate ambivalence” as he charts Francis Ford Coppola’s film of 1979, Mr Ross dustry and climate politics and policy, at its Wagner’s vexed legacy, which loomed over describes the famous role of “Ride of the best it is both brisk and authoritative, an Modernism and fin de siècle Europe. Valkyries” in a sequence depicting a heli- impressive combination. The use of heroic characters, massive copter attack on a Vietnamese village. “A But it is also rather limited. The mostly scale, Nordic myth and leitmotifs appealed grand indictment of American hubris is in- geographic structure keeps out some im- to contemporaries like Nietzsche and Bau- tended”, he writes, “yet the visceral impact portant stories: Australia, which over the delaire, novelists such as J.R.R. Tolkien, of the film-making saps its capacity for cri- past two decades has become the world’s and generations of film-makers. Not every- tique.” A later film, “Jarhead”, shows young biggest exporter of both coal (in terms of one applauded: Tolstoy described “Sieg- troops revelling in the scene. Real-life value) and liquefied natural gas, turns up fried” as a “stupid puppet show not even American vehicles blared the music during almost entirely as “and Australia”, conclud- good enough for children”. But, love him or missions in Grenada and Iraq. ing lists of other countries. Europe, which hate him, Wagner has been unavoidable. How far art and artist can be separated is as a user of energy and a driver of policy Mr Ross ranges widely over his impact— an age-old question. In Wagner’s case, the matters a great deal, is handled better, but sometimes too widely. A plunge into “Fin- art can itself be racist and bombastic. His only in its relations with fossil-fuel pro- negans Wake” by way of opera is soporific. avowed prejudice taints it further—for ducers, who remain, as in “The Prize”, Mr Hitler admired Wagner as a musician some, unforgivably. For others, the power Yergin’s main concern. His interest in Eu- first and a thinker second. In the early of his operas overrides such objections. By rope’s attempts to conquer the “green com- 1920s he kept a stack of the composer’s re- presenting an honest assessment of the manding heights” of a post-fossil-fuel cords in his flat in Munich. Yet, says Mr problem, “Wagnerism” supplies, if not an- world—an ambition phrased as a play on Ross, his enthusiasm was more intoxicated swers, then at least the right questions. 7 the title of another book by Mr Yergin,1 82 Books & arts The Economist September 19th 2020

2 which tackled free markets and globalisa- book has no room for economists of cli- in front of immutable scenery. As Mr Chak- tion—is limited. mate change such as William Nordhaus or rabarty’s second thesis has it: “The idea of It is greater, though, than his interest in the late Martin Weitzman). The question of the Anthropocene...severely qualiﬁes hu- climate change per se. Mr Yergin treats this what the Earth will actually be like in manist histories of modernity/globalisa- overwhelming geophysical disruption al- 2050—when Mr Yergin expects half of all tion”. The need to meld narratives of the most entirely in terms of the way it is medi- cars sold still to be powered by fossil fu- human and no-longer-natural worlds ated through politics and policies, Euro- els—is not addressed. would seem to apply in spades to an author pean and otherwise. In his outlook it acts In his essay “The Climate of History: writing about fossil fuels. That Mr Yergin purely through prices, regulations and Four Theses”, the historian Dipesh Chakra- has neither met nor, really, engaged with subsidies, not through changed land- barty argued that a world in which the envi- the challenge does not render his work scapes, displaced populations or rising ronment as a whole is increasingly a hu- worthless; limited perspectives have their seas. The idea that, as an externality of fos- man construction requires a new form of place. But it is to be hoped that more ambi- sil-fuel use, it is already and always a part of history, transcending the kind in which tious treatments of the subject for the gen- the economy does not get a look in (the people and nations play out their dramas eral reader will soon follow. 7 Johnson Cawfee break

Pride, prejudice and the story of New York English he most effective form of birth con- was once an aristocratic New York speech Captain America, though brought up in Ttrol known to man, said Lewis Griz- which it echoed. Like the working-class Brooklyn in the 1930s, speaks General zard, is a Bronx accent. The late newspa- kind, this was r-less: think of upper-class American. Clowns and villains tawk like per columnist from small-town Georgia Franklin Roosevelt’s “the only thing we Brooklyn; superheroes, never. enjoyed teasing northerners. But it is have to feah…” It shared the round vowel of William Labov, a linguist, pioneered hardly just American southerners who “toity-toid’ (“thirty-third”); Teddy Roose- the field of sociolinguistics by rigorously take digs at New Yorkers’ English. “Coffee velt, Franklin’s distant cousin, said “burn” studying the New York accent, not least Talk”, a venerable sketch on “Saturday a bit like “boin”. But high-class New York- in an experiment he conducted in 1962. Night Live”, a long-running comedy ers also shared traits with British speakers, He went to a high-class department store show filmed in the city, featured few such as keeping the t-sound in “butter” (Saks), a middle-class one (Macy’s) and a memorable jokes per se, instead leaning (“buddah” in Cawfee Tawk). working-class one (S. Klein, now de- heavily on exaggerated vowels like those In elocution classes in the mid-20th funct). In each he asked where to find an in “cawfee” and “tawk”. The accent itself century, many Americans were still taught item he knew was on the “fourth floor”. was the punchline. a version of English that in some ways Sure enough, the “r” in both words There are, in fact, many New York mimicked upper-class New Yorkers. But was least often pronounced in S. Klein, accents: African-American and Puerto then, Ms White argues, people elsewhere and most in Saks, even though the em- Rican New Yorkers do not talk like began to see the city as an alien immigrant ployees all came from the same social Woody Allen. The city has been replen- entrepôt. This dragged down the image of milieu. New Yorkers know how their ished by a constant stream of immigra- the city’s accent; Teddy Roosevelt’s “boin” accent is perceived; those working in tion (foreign and domestic) since its became associated with the poor. The Saks buttoned up their English. So did founding. When Nicolas Heller, a film- locus of “true” American speech, in the many participants when Mr Labov asked maker, recently held a competition on popular mind, became the Midwest, with them to repeat themselves, pronouncing Instagram to find the best New York its hardy northern European Protestants the “r” the second time around as his accent, hundreds of entries were sub- and their r-laden speech. This is why “Excuse me?” made them self-conscious. mitted, reflecting that whole rich spec- today’s “General American” sounds more A recent recreation of Mr Labov’s experi- trum. As an account of the contest in the like Nebraska than New York. Ms White ment looked at episodes of “Say Yes to New York Times put it, New York English notes that in the recent “Avengers” films, the Dress”, a television show that fol- is not a single accent but rather “a base- lowed shoppers at a New York bridal line indignation…as if the speaker can’t store. Sure enough, assistants empha- quite believe there’s even a need to have sised their “r”s when serving customers the conversation”. with bigger budgets. In her new book, “You Talkin’ to Me?”, In many countries, the speech of the E.J. White of Stony Brook University grandest or most powerful city is the celebrates the disputatious, never-let- most prestigious—think of Parisian them-call-you-a-sucker language that is French. Yet many Americans despise the New York English. Ms White reckons a accent of their country’s biggest city. New conversational manner that might be Yorkers don’t care. Mr Labov introduced called “assertive” by, say, polite Britons, the idea of “covert prestige”: that even is, for New Yorkers, not rude but the derided accents and dialects have a value opposite: a sign of engagement, and to their speakers, as a key to their identity therefore of warmth. Patient, slow-paced and a store of values and connections. styles can, to the New Yorker, seem aloof. New Yorkers may sometimes sound as if In New York, as in Britain, accent they hate each other. Deep down they signals class. The Cawfee Tawk accent, in know they live not in the capital of the particular, is working-class, but there United States, but of the world. Tenders 83

A CALL FOR EXPRESSION OF INTEREST A Multinational Corporation active in the Telecoms Sector in Africa intends to conduct an Audit / Review of all its existing contracts with an Entity which currently manages its passive infrastructure (Towers). This assignment would involve a combination of Legal, Financial and Technical Knowledge of the construction, maintenance and management of Telecom Towers. Interested Bidders who may associate with other entities and/or Consultants with the relevant experience are expected to forward their expression of interest to the following address: [email protected] on or before 30th of September 2020. Following receipt of the expression of interest, Bidders would be required to sign a Non- disclosure Agreement before the necessary documentation and/or information is provided for the preparation and submission of their proposals. David ETAH AKOH Managing Partner ETAH-NAN & C° (Attorneys). 556, rue Koumassi Bali Douala Cameroon Tel: (237) 233.42.56.09 233.42.91.65 Fax: (237) 233.42.32.89 Mobile: (237) 677.71.05.28 Email: [email protected]

Announcements Courses

Want to help save the To advertise within the classified section, contact: UK/Europe Agne Zurauskaite world? Tel: +44 20 7576 8152 [email protected] Drink Bird Friendly North America Coffee at: Richard Dexter Tel: +1 212 554 0662 UK/Europe: [email protected]

www.birdandwild.co.uk Asia Connie Tsui Tel: +852 2585 3211 20% Off [email protected] Code: EC20 Middle East & Africa We also supply Philip Wrigley Corporate Ofﬁ ces. Tel: +44 20 7576 8091 [email protected]

Readers are recommended to make appropriate enquiries and take appropriate advice before sending money, incurring any expense or entering into a binding commitment in relation to an advertisement. The Economist Newspaper Limited shall not be liable to any person for loss or damage incurred or suffered as a result of his/her accepting or offering to accept an invitation contained in any advertisement published in The Economist. 84 Economic & ﬁnancial indicators The Economist September 19th 2020

Economic data

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units % change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change latest quarter* 2020† latest 2020† % % of GDP, 2020† % of GDP, 2020† latest,% year ago, bp Sep 16th on year ago United States -9.1 Q2 -31.7 -5.3 1.3 Aug 0.7 8.4 Aug -1.8 -15.3 0.7 -115 - China 3.2 Q2 54.6 1.7 2.4 Aug 3.5 3.8 Q2§ 1.8 -5.6 3.0 §§ 3.0 6.76 4.4 Japan -9.9 Q2 -28.1 -6.4 0.3 Jul nil 2.9 Jul 2.4 -11.3 nil -8.0 105 3.0 Britain -21.7 Q2 -59.8 -9.5 0.2 Aug 0.8 4.1 Jun†† -1.7 -18.2 0.3 -50.0 0.77 5.2 Canada -13.0 Q2 -38.7 -5.8 0.1 Aug 0.7 10.2 Aug -2.3 -12.6 0.6 -91.0 1.32 0.8 Euro area -14.7 Q2 -39.4 -8.6 -0.2 Aug 0.5 7.9 Jul 2.3 -9.5 -0.5 nil 0.85 7.1 Austria -12.5 Q2 -34.5 -7.0 1.7 Jul 1.4 5.2 Jul 0.3 -7.5 -0.3 -9.0 0.85 7.1 Belgium -14.4 Q2 -40.2 -8.1 0.8 Aug 0.4 5.5 Jul -1.5 -9.5 -0.3 -11.0 0.85 7.1 France -18.9 Q2 -44.8 -10.2 0.2 Aug 0.7 6.9 Jul -1.0 -11.3 -0.2 -1.0 0.85 7.1 Germany -11.3 Q2 -33.5 -5.9 nil Aug 0.5 4.4 Jul 5.9 -7.2 -0.5 nil 0.85 7.1 Greece -15.3 Q2 -45.4 -8.5 -1.9 Aug -1.0 18.3 Jun -2.9 -7.5 1.1 -45.0 0.85 7.1 Italy -17.7 Q2 -42.2 -10.4 -0.5 Aug nil 9.7 Jul 2.6 -11.6 1.0 13.0 0.85 7.1 Netherlands -9.3 Q2 -29.9 -6.0 0.7 Aug 0.9 3.8 Mar 5.3 -5.4 -0.4 -13.0 0.85 7.1 Spain -22.1 Q2 -55.8 -12.6 -0.5 Aug -0.1 15.8 Jul 1.5 -12.3 0.3 3.0 0.85 7.1 Czech Republic -10.9 Q2 -30.6 -6.7 3.3 Aug 2.8 2.7 Jul‡ -0.9 -6.6 1.1 -38.0 22.6 4.3 Denmark -8.1 Q2 -25.0 -4.0 0.5 Aug 0.4 5.2 Jul 9.1 -6.3 -0.4 9.0 6.29 8.0 Norway -4.7 Q2 -19.0 -3.5 1.7 Aug 1.2 5.2 Jun‡‡ 1.8 -0.9 0.7 -67.0 9.02 -0.6 Poland -8.0 Q2 -31.1 -4.0 2.9 Aug 3.0 6.1 Aug§ -0.6 -9.4 1.4 -76.0 3.76 4.5 Russia -8.0 Q2 na -5.7 3.6 Aug 3.4 6.3 Jul§ 1.8 -4.3 6.3 -80.0 75.0 -14.7 Sweden -7.7 Q2 -29.3 -3.8 0.8 Aug 0.4 8.8 Aug§ 4.7 -4.1 -0.1 3.0 8.79 10.0 Switzerland -9.3 Q2 -29.1 -4.6 -0.9 Aug -1.1 3.4 Aug 9.8 -4.9 -0.5 16.0 0.91 8.8 Turkey -9.9 Q2 na -4.9 11.8 Aug 11.9 13.4 Jun§ -3.2 -5.6 13.1 -194 7.50 -23.9 Australia -6.3 Q2 -25.2 -4.5 -0.3 Q2 0.5 6.8 Aug 1.3 -7.6 0.9 -27.0 1.36 7.3 Hong Kong -9.0 Q2 -0.5 -4.2 -2.3 Jul 0.9 6.1 Jul‡‡ 3.1 -5.6 0.6 -79.0 7.75 0.9 India -23.9 Q2 -69.4 -8.5 6.7 Aug 5.2 8.4 Aug 0.9 -7.9 6.0 -72.0 73.5 -2.6 Indonesia -5.3 Q2 na -1.6 1.3 Aug 2.2 5.0 Q1§ -1.1 -7.0 6.9 -34.0 14,835 -5.4 Malaysia -17.1 Q2 na -8.0 -1.3 Jul -1.1 4.7 Jul§ 0.8 -8.0 2.7 -65.0 4.13 0.7 Pakistan 0.5 2020** na -2.8 8.2 Aug 9.0 5.8 2018 -1.3 -8.0 9.5 ††† -370 166 -6.2 Philippines -16.5 Q2 -48.3 -6.1 2.4 Aug 2.4 10.0 Q3§ 1.1 -7.9 2.9 -192 48.4 8.1 Singapore -13.2 Q2 -42.9 -6.0 -0.4 Jul -0.2 2.8 Q2 18.9 -13.6 0.9 -90.0 1.36 1.5 South Korea -2.8 Q2 -12.0 -1.8 0.7 Aug 0.5 3.1 Aug§ 2.8 -6.0 1.5 -5.0 1,176 0.6 Taiwan -0.6 Q2 -5.5 -0.3 -0.3 Aug -0.3 3.9 Jul 11.5 -2.7 0.4 -30.0 29.1 6.2 Thailand -12.2 Q2 -33.4 -5.9 -0.5 Aug -0.7 1.0 Mar§ 3.1 -6.3 1.1 -39.0 31.1 -1.9 Argentina -5.4 Q1 -18.0 -11.0 40.7 Aug‡ 41.7 10.4 Q1§ 2.2 -10.0 na -464 75.2 -25.2 Brazil -11.4 Q2 -33.5 -5.5 2.4 Aug 2.8 13.3 Jun§‡‡ -0.8 -15.7 1.9 -339 5.25 -22.3 Chile -14.1 Q2 -43.3 -6.5 2.4 Aug 2.5 13.1 Jul§‡‡ 0.4 -9.5 2.6 -15.0 760 -6.8 Colombia -15.5 Q2 -47.6 -7.7 1.9 Aug 2.6 20.2 Jul§ -4.6 -8.8 4.8 -98.0 3,711 -9.4 Mexico -18.7 Q2 -52.7 -9.7 4.0 Aug 3.4 3.3 Mar nil -4.5 5.6 -158 21.0 -7.6 Peru -30.2 Q2 -72.1 -13.0 1.7 Aug 1.8 7.6 Mar§ -1.0 -8.5 3.4 -78.0 3.54 -5.9 Egypt 5.0 Q1 na 3.8 3.4 Aug 5.6 9.6 Q2§ -4.3 -9.3 na nil 15.8 3.7 Israel -6.8 Q2 -29.0 -5.0 -0.8 Aug -1.1 4.6 Jul 4.5 -10.2 0.7 -37.0 3.42 3.8 Saudi Arabia 0.3 2019 na -5.2 6.1 Aug 3.3 5.7 Q1 -4.9 -10.0 na nil 3.75 nil South Africa -17.1 Q2 -51.0 -8.0 3.2 Jul 3.3 30.1 Q1§ -2.3 -16.0 9.2 101 16.3 -10.4 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds.

Markets Commodities % change on: % change on: The Economist commodity-price index Index one Dec 31st index one Dec 31st % change on In local currency Sep 16th week 2019 Sep 16th week 2019 2015=100 Sep 8th Sep 15th* month year United States S&P 500 3,385.5 -0.4 4.8 Pakistan KSE 42,282.3 0.6 3.8 Dollar Index United States NAScomp 11,050.5 -0.8 23.2 Singapore STI 2,505.2 0.2 -22.3 All Items 129.4 130.1 3.4 17.5 China Shanghai Comp 3,283.9 0.9 7.7 South Korea KOSPI 2,435.9 2.5 10.8 Food 99.6 101.0 6.5 10.2 China Shenzhen Comp 2,185.2 0.4 26.8 Taiwan TWI 12,976.8 2.9 8.2 Industrials Japan Nikkei 225 23,475.5 1.9 -0.8 Thailand SET 1,293.5 nil -18.1 All 157.2 157.2 1.6 22.3 Japan Topix 1,644.4 2.4 -4.5 Argentina MERV 42,167.9 -9.4 1.2 Non-food agriculturals 112.3 111.2 5.2 16.6 Britain FTSE 100 6,078.5 1.1 -19.4 Brazil BVSP 99,675.7 -1.6 -13.8 Metals 170.5 170.9 1.0 23.4 Canada S&P TSX 16,295.7 -0.5 -4.5 Mexico IPC 36,729.2 1.6 -15.6 Sterling Index Euro area EURO STOXX 50 3,338.8 0.4 -10.8 Egypt EGX 30 11,088.2 1.4 -20.6 All items 151.6 154.5 6.3 13.7 France CAC 40 5,074.4 0.6 -15.1 Israel TA-125 1,365.1 0.9 -15.6 Germany DAX* 13,255.4 0.1 nil Saudi Arabia Tadawul 8,311.2 2.9 -0.9 Euro Index Italy FTSE/MIB 19,964.0 1.0 -15.1 South Africa JSE AS 55,960.7 1.4 -2.0 All items 121.7 121.7 4.0 9.5 Netherlands AEX 558.4 1.2 -7.6 World, dev'd MSCI 2,403.5 0.4 1.9 Gold Spain IBEX 35 7,110.8 1.3 -25.5 Emerging markets MSCI 1,117.0 2.9 0.2 $ per oz 1,926.7 1,953.2 -2.1 29.9 Poland WIG 49,882.7 -1.7 -13.7 Brent Russia RTS, $ terms 1,251.9 4.2 -19.2 $ per barrel 39.9 40.6 -10.8 -38.0 Switzerland SMI 10,552.0 1.4 -0.6 US corporate bonds, spread over Treasuries Turkey BIST 1,107.1 0.7 -3.2 Dec 31st Sources: Bloomberg; CME Group; Cotlook; Datastream from Reﬁnitiv; Australia All Ord. 6,146.9 1.5 -9.6 Basis points latest 2019 Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Hong Kong Hang Seng 24,725.6 1.0 -12.3 Investment grade 175 141 India BSE 39,302.9 2.9 -4.7 High-yield 569 449 Indonesia IDX 5,058.5 -1.8 -19.7 Sources: Datastream from Reﬁnitiv; Standard & Poor's Global Fixed For more countries and additional data, visit Malaysia KLSE 1,531.3 2.3 -3.6 Income Research. *Total return index. Economist.com/indicators Graphic detail Investing The Economist September 19th 2020 85

→ Growth indices, which bet on future earnings, are outperforming value indices, which invest in cheaper stocks

Russell 1000 American stock index Russell 1000 American stock index in 2020 April 27th 1995=100 January 1st 2020=100 1,000 140 Covid-19 pandemic Pre-covid-19 Growth index Value index stockmarket peak 120 900 Stocks which are expected to Stocks that appear cheap* but Growth grow quickly but are pricey* are expected to grow slowly 100

800 All 80 Value ↘ Growth stocks have increased by 700 ↑ The overall market is at 60 278% over the past decade while an all-time high but value value stocks have risen by just 87% stocks have yet to recover ↓ Value stocks underperformed 40 600 growth stocks during the dotcom JFMAMJ JAS bubble, and outperformed after

500 American stocks, price-to-book ratio of September 11th Lehman Brothers expensive stocks relative to cheap ones† 2001 attacks bankruptcy 400 12 Without tech stocks 300 9 With tech stocks 6 200

Covid-19 ↑ Housing bubble pandemic 3 Dotcom bubble 100 Expensive stocks have become pricier, even 1996 98 2000 02 04 06 08 10 12 14 16 18 20 excluding tech ﬁrms 0 Growth outperforms Value outperforms 1970 80 90 2000 10 20

Sources: Reﬁnitiv; AQR *Given their current book value †Price-to-book ratio of top-third most-expensive stocks divided by price-to-book ratio of least-expensive third

has risen by just 87%, compared with 171% ble assets, such as the strength of their Value judgment for the market overall. Rather than falling brands or the value of their intellectual back down to earth as value investors property. Moreover, unlike value firms, big might have predicted, shares in the priciest tech companies tend to form natural mo- American companies in 2010 have for the nopolies which protect them from compe- most part kept soaring. tition, boosting their prospects. According to aqr Capital Management, Yet the tech theory crumbles under The age-old strategy of buying cheap an investment firm, the price-to-book ratio careful scrutiny. aqr’s data show that pric- shares is faltering of the most expensive third of American ey stocks have outperformed, even when or more than a century scores of inves- stocks was around five times that of the excluding tech firms or the biggest 5% of Ftors have prospered through “value in- cheapest third in 1967. That ratio has companies by market capitalisation. Nor vesting”, or buying shares in firms which climbed steadily ever since 2015, and hit a can the inadequacy of book value be appear cheap given their “fundamentals”. record high of 12 times in March, when blamed, since investors also appear to be Warren Buffett, an eminently quotable val- their analysis ended. willing to bid up shares in companies with ue investor, summarised the approach suc- The pandemic has only widened the gap high price-to-earnings ratios. cinctly: “Whether we’re talking about between the most and least expensive It is possible that investors are simply socks or stocks, I like buying quality mer- stocks. Much to the surprise of many finan- overvaluing glitzy growth firms. Value chandise when it is marked down.” cial commentators, shares in big American stocks have been trampled before. They Although many value investors, includ- firms are actually up on the year. A closer also severely underperformed growth ing Mr Buffett, have done well in the long inspection reveals a bifurcation in the mar- stocks in the late 1990s and early 2000s, run, they have had a rougher time over the ket. While shares in fast-growing compa- during the dotcom boom. Established past decade. You can gauge just how pricey nies with high price-to-book ratios have firms simply did not hold the same allure a stock is by looking at its price-to-book ra- risen by around 20% since early January, as up-and-comers like Yahoo and Cisco, tio, which measures how much the market shares in value firms are down by over 10%. which seemed destined to take over the thinks a company is worth relative to the One obvious explanation for all this is world, until they didn’t. Tech stocks gyrat- net assets on its balance-sheet. Since 2010 the rise of tech firms, which are difficult to ed wildly earlier this month, suggesting the Russell 1000 value index, which tracks analyse using standard valuation tools. For that investors are getting antsy about their American stocks with low price-to-book instance, measures like book value may high valuations. Redemption for the value- ratios and low expected earnings growth, not accurately capture companies’ intangi- investing faithful may yet come. 7 86 Obituary Joan Feynman The Economist September 19th 2020

troughs of activity. Most usefully for the Space Age, she found that coronal mass ejections could be detected by the presence of heli- um in the solar wind. They also came in groups. If these storms could to some extent be predicted, spacecraft could be designed to resist them better. In short, that night walk in childhood had led her to a lifetime of considering the interplay between the Earth and its giant, vital, fluctuating star: a star it faced with its magnetosphere flattened on the day-side like a shield, while on the night- side of Earth the magnetosphere relaxed, with a wide, long, open tail. That shape, too, she had discovered. Yet she might never have done any of this work. At every turn people tried to put her off science as a career. Women couldn’t do it, her mother said. Their brains were too feeble. At Syracuse Uni- versity, where her thesis was on absorption of infra-red radiation in crystals, she was told to write one on cobwebs, more useful for cleaning her house. When she tried, after graduating, to place an ad in the New York Times for a research job, she was told only men could do so, in the men’s section. Marriage and children therefore seemed inevitable as well as desirable, but full-time housewifery drove her to misery and then depression. Science was her life. Now it seemed mostly confined to her kitchen, observing how long it took to heat the baby food, or showing her elder son, as she baked, how to mix an acid with a base in a bottle to get an explosion. There were shades of her upbringing here, in a family jumping with curiosity, where everything—a nap- kin rolling across the table, a bug on a leaf, the wonder that the heavy waffle-iron was made of atoms—had been investigated. The Getting to know the Sun how and why of everyday science still delighted her, but even part- time research was hard to fit in. And all the while the shining Sun reminded her what she should be working on. The one person who had always encouraged her was Richard. Though she constantly doubted herself, ready to shrink into some background role, he told her to aim for the top. As soon as she could talk he had challenged her with sums and made her his assistant in Joan Feynman, astrophysicist, died on July 22nd, aged 93 his bedroom-lab, to throw switches and hold her finger in a spark- n the dusty Spanish town of Tordesillas in 1494, Spain and Por- gap to feel the little shock. Bringing her water at night, he would Itugal divided the unclaimed world between them. The moment whirl the glass around to show the magic of centrifugal force. On is famous. Less well known is that around 1963, she at Columbia, he her 14th birthday, feeding her fascination with the night sky, he at Caltech, Joan Feynman and her brother Richard divvied up the gave her a college textbook on astronomy. It was hard going, but on universe. She took auroras, the Northern and Southern Lights that page 407 came a revelation as good as the aurora, or almost. Below shimmer through the night sky in the highest latitudes. He, nine a figure of a spectrum was a reference to a work by Cecilia Payne- years older and fast becoming a world star in physics, took all the Gaposchkin on stellar atmospheres—a woman, a married woman rest, which was fine with her. at that, doing science. So the world was not closed to her. It could The arrangement was serious. When, many years later, Richard open. She just had to persist and, over 60 years, she did. was asked to look into auroras, he said he would have to ask Joan’s Increasingly she was interested not simply in the science of permission. She said no. They were hers, and besides, he had start- Earth-Sun relations, but in their history. From 1985, working at the ed the fascination. One night when she was small he dragged her Jet Propulsion Laboratory in Pasadena, California, she studied ob- out of bed, made her get dressed and took her to the golf course in servations of auroras from ancient China and medieval Europe, Far Rockaway, near their house. Auroras did not normally come when people feared they portended war, famine, the return of spir- down to lower latitudes, but here was one. As she stared at a sky its or the work of devils. She consulted records, kept methodically that was dancing with red, gold and green lights, he told her that no for centuries, of water levels in the Nile, to trace the impact of the one knew how they happened, which was true back then. The mys- Sun on the climate of north Africa. Though the Sun was in a histori- tery, with the lights, lodged in her head for good. cally stable phase, and had been for billions of years, to her eye it After years of looking into it, she found the answer. Auroras still showed considerable, often strange, variation—variation happened when particles from the solar wind, the stream of free which, she thought, might explain the relative tardiness of Homo electrons and heavy ions flowing out of the Sun, penetrated the sapiens to take up agriculture, waiting until, round 10,000bc, the magnetosphere that protected the Earth. The magnetic fields of climate stabilised. the Earth and the solar wind, bound in different directions, inter- To those who asked why, in her late 80s, she went on research- sected, and the colours were caused by solar particles colliding ing, her answer was partly that she still had plenty of questions. with oxygen and nitrogen in the Earth’s upper atmosphere. During How, for example, did the Sun end up with a cycle of 88 years? And coronal mass ejections, when huge flares of material were flung why did it act in the unexpected ways it did? The beauty of auroras out of the Sun at speeds of up to 1,500km a second, auroras in- was beguiling. But with one extra-high-speed ejection, as it had creased in frequency and range on the Earth. The faster the speed, shown from time to time, the Sun could disable Earth’s communi- the greater the geomagnetic disturbance. cations. And it was also possible, with only a small bout of laziness, Her studies expanded, fuelled by data sent back by Explorer 33 in that it could turn the golf course in Far Rockaway—that golf course 1966, to cover as much as possible of the Sun’s behaviour: its 11-year where Richard had told her, “Nobody knows”—back into the ice sunspot cycles, its 88-year Gleissberg cycles, its strange peaks and rink it had been 12,000 years before. 7