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The world this week

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KAL’s cartoon
This week’s cover
The world this week

Politics
Apr 4th 2024

An Israeli strike killed seven aid workers in Gaza. A drone fired missiles at
the car convoy of World Central Kitchen, a charity that has worked closely
with Israel in recent months. Its route had been cleared with the Israeli army.
Six of the seven were foreign aid-workers, thought to be the first to die in
the Gaza war (around 200 aid workers have been killed). Their deaths
provoked a furious international response. Joe Biden said that Israel “has not
done enough to protect aid workers”. Binyamin Netanyahu acknowledged
the “tragic event” in Gaza but said “this happens in war.” WCK said it was
pausing its operations in Gaza, as have other NGOs.

In Syria a suspected Israeli air strike hit the Iranian embassy compound in
Damascus. Seven people were killed, including General Mohammad Reza
Zahedi, a commander of the Quds Force, the expeditionary wing of Iran’s
Revolutionary Guards. He was the highest-ranking Iranian commander to be
assassinated since America killed Qassem Suleimani with a drone strike in
January 2020.
Benny Gantz, a member of the Israeli war cabinet, called for an early
election to be held in September to “renew trust” in the government. Earlier,
tens of thousands of people marched in Jerusalem calling for the removal of
Mr Netanyahu as prime minister.

The Israeli parliament approved a law that would allow the government to
ban broadcasts of particular televisions channels. Mr Netanyahu said that he
would immediately act to close the local office of Al Jazeera, the Qatari
network which has been extremely critical of Israel.

Japan said it would resume its funding for the UN Relief and Works
Agency for Palestine Refugees. Like other countries Japan suspended its
aid to UNWRA after it emerged that some of its staff had taken part in the
October 7th terrorist attack on Israel. Japan is UNWRA’s sixth-largest donor.

Amnesty International reported that Iran executed 853 people last year, an
eight-year high. More than half were for drug-related offences. Amnesty
noted that the regime has stepped up its use of the death penalty “to instil
fear among the population” after the protests in 2022. It executed at least 95
people by March 20th this year. Amnesty thinks its figures may well be an
undercount.

Uganda’s Constitutional Court upheld a law that imposes long prison

sentences for “promoting homosexuality” and the death penalty for
“aggravated homosexuality”. It struck down some sections of the law, such
as a duty to report gay people to the police.

Human-rights groups accused Russia’s Wagner mercenaries of assisting

government forces in drone strikes and attacks that have killed large
numbers of civilians in Mali. The country’s political parties and NGOs have
called on the military government running the country to draw up a
timetable for a return to democracy, after missing a deadline in 2022 and
then breaching a promise to hand over to civilian rule by the end of March
this year.

Rolexgate
Police raided the home of Peru’s president, Dina Boluarte, in their search
for evidence relating to the origin of her Rolex watches. Ms Boluarte is
being investigated for allegedly enriching herself while in office. She denies
wrongdoing and described the raid as “abusive”. But six ministers abruptly
resigned, throwing her government into crisis.

President Joe Biden and his Chinese counterpart, Xi Jinping, held what
both sides described as a “candid and constructive” phone call. The leaders
discussed areas of co-operation, such as counter-narcotics and climate
change. But they disagreed on Taiwan and trade, among other things.

China stirred up tensions with India again by designating Chinese names to

30 places in the Indian state of Arunachal Pradesh, which lies in the foothills
of the Himalayas. China claims the area is part of South Tibet. America said
it opposed any attempt by China “to advance territorial claims” on the
region.

Thailand’s reformist Move Forward party came a step closer to being

outlawed, after the Constitutional Court decided to hear a case that seeks to
ban it. The court has already ruled that the party’s policy of reforming the
law to allow criticism of the monarchy is unconstitutional. Move Forward
won a general election last year, but it was blocked from taking power by the
royalist-army establishment.

Taiwan was hit by an earthquake of magnitude 7.4, the country’s strongest

in 25 years. Most of the damage was in Hualien county, on the east coast. At
least nine people were killed and a thousand injured.
Less than a year after it lost heavily in a general election, Turkey’s
opposition came roaring back to life in local elections. The Republican
People’s Party (CHP), which is on the centre-left, received 38% of the total
vote compared with 36% for the ruling Justice and Development (AK) party.
The vote is seen as a rebuke to Recep Tayyip Erdogan for his handling of the
economy. Since his re-election as president last May, annual inflation has
soared to 68.5%.

Meanwhile, at least 29 people died in a fire at a nightclub in Istanbul. The

casualties were mostly workers who were renovating the building during the
day.

In Germany new laws that relax the use of cannabis came into force. People
can carry up to 25 grams of the weed and grow three plants at home. But
they can’t smoke it near schools or in pedestrian zones.

Ukraine carried out a drone attack on an oil refinery in the Russian republic
of Tatarstan, which also houses factories that produce drones for Russia to
attack Ukraine. The target was around 1,300km (800 miles) inside Russian
territory, the farthest strike that Ukraine has made across the border.
Meanwhile a new law was signed in Ukraine that lowers the mobilisation
age from 27 to 25, allowing the armed forces to expand the draft.
Mike Johnson, the speaker of America’s House of Representatives,
suggested that a vote on a bill that provides military aid to Ukraine and
Israel would be held soon. The bill passed the Senate but has stalled in the
House because of opposition from Republicans. Mr Johnson wants to tie his
party’s support for the aid to concessions from Democrats on things like
lifting a moratorium on new liquefied natural-gas facilities, and hinted that
some of the aid will be a loan.

Florida’s Supreme Court ruled that a state ban on abortion six weeks after
conception could come into force next month. But it also sent the matter to
voters by approving a ballot measure for November’s general election that
would restore the right to an abortion up to 23-24 weeks into a pregnancy.
The issue will resonate throughout the South. Women from Georgia, Texas
and elsewhere have travelled to Florida for the procedure after their states
banned it.

The Democratic governor of Oregon, Tina Kotek, signed a law that re-
criminalises drugs, three years after voters approved a measure to
decriminalise possession. That measure provided more public money for
addiction services, but the experiment has been deemed a failure.

Big Brother is listening

Scotland’s controversial hate-crime law came into effect, making it illegal
to use “threatening or abusive” behaviour to stir up hatred against people on
the basis of certain characteristics, such as being transgender. The law is
opposed by many, including J.K. Rowling and Elon Musk, for curtailing free
speech. The head of the Scottish Police Federation says it is unworkable
because people won’t understand it. Police Scotland was criticised for a
bizarre “hate monster” awareness campaign. Within the first few days 4,000
complaints of hate were reportedly registered under the law online.
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The world this week

Business
Apr 4th 2024

Disney saw off an epic proxy challenge from Nelson Peltz at its annual
general meeting. Through Trian, his hedge fund, Mr Peltz was seeking two
seats on the company’s board to “restore the magic”, claiming that poor
management and box-office failures have contributed to the
underperformance of Disney’s share price. But Bob Iger, the chief executive,
fought an extensive campaign defending his turnaround strategy, which won
the support of BlackRock, the Disney family and George Lucas, a film
producer. Mr Peltz reportedly received just 31% of the vote for his claim to a
seat.
Tesla delivered 386,810 vehicles worldwide in the first quarter of 2024, a
decrease of 8.5% year on year and its first quarterly decline on that basis
since 2020. Investors, already rattled by slowing growth in the electric-
vehicle industry, punished Tesla’s stock. Figures from other carmakers were
mixed. Ford and Hyundai reported a big rise in EV sales in America, and
General Motors announced a sharp decline.

Despite the fall in deliveries, Tesla reclaimed its crown as the world’s
biggest seller of EVs, after BYD sold just 300,000 pure-electric vehicles in
the first quarter. That is far below the more than 526,000 that BYD shifted in
the last three months of 2023, when it overtook Tesla in sales.

Xiaomi entered China’s fiercely competitive EV market when it started

selling its new SU7 four-door sedan, which has a lower-than-expected
starting price of $30,000. The Chinese tech company is better known for its
smartphones. It took nearly 90,000 orders for the car over 24 hours, though
customers may have to wait up to seven months for a delivery.

A meeting of minds
America and Britain signed an accord to “build a common approach” on
ensuring the safety of artificial intelligence, the first agreement of its kind
in the world. Although America has far more AI startups, Britain is home to
DeepMind, a developer of neural networks that is owned by Google. Britain
opened its AI Safety Institute last November. America’s parallel institute is
still being organised.

Microsoft decided to sell its Teams chat application separately from its
Office 365 suites around the world. It unbundled the products in Europe last
year to avert an antitrust fine from the European Commission.

Sam Bankman-Fried insisted that “I never thought that what I was doing
was illegal,” after he was sentenced to 25 years in prison for fraud at FTX, a
cryptocurrency exchange he founded that collapsed in 2022. The sentencing
judge said that Mr Bankman-Fried had committed perjury during his
testimony to the court, and shown no remorse for his actions.

SLB, the world’s biggest provider of oilfield services, agreed to buy

Champion X, which specialises in production chemicals and artificial lift
solutions, such as jet pumps. It is the biggest acquisition by SLB, formerly
known as Schlumberger, since 2016.

The price of natural gas in Europe fell, after it was reported that gas-storage
in the EU was around 60% full, a record high for this time of year. That will
rise in the coming warmer months as gas supplies are replenished. Two
years ago Europe faced soaring gas prices amid Russia’s invasion of Ukraine
and low storage levels. The price of TFF, Europe’s benchmark gas contract,
now trades around €25 ($27) per megawatt hour compared with €56 a year
ago.

Oil prices reached five-month highs, amid concerns about conflict in the
Middle East and attacks on Russian refineries. Brent crude traded close to
$90 a barrel.

The euro zone’s annual inflation rate fell to 2.4% in March, closer to the
European Central Bank’s target of 2%.

“Today we begin again,” said General Electric, as it completed its

transition to three stand-alone companies, each listed separately on the
stockmarket. GE Aerospace houses jet engines and aviation services, GE
Vernova is the energy business, focusing on wind and gas turbines, and GE
HealthCare supplies imaging, ultrasound and IT systems to hospitals.
Founded in 1892, GE no longer exists as a conglomerate. Larry Culp, GE’s
boss, is now CEO of GE Aerospace.

Mr Trump’s business model

The share price of Trump Media, Donald Trump’s social-media platform,
slumped after it revealed a huge drop in quarterly revenue and a yearly net
loss. Trump Media only recently went public on the stockmarket. In a
regulatory filing the company’s auditors noted that there is “substantial
doubt about its ability to continue as a going concern”. Meanwhile Mr
Trump is embroiled in a legal fight with two founders of the business,
claiming they shouldn’t receive shares in it.
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The world this week

KAL’s cartoon
Apr 4th 2024

Dig deeper into the subject of this week’s cartoon:

France uncovers a vast Russian disinformation campaign in Europe

How worried should you be about AI disrupting elections?
By invitation: An AI-risk expert thinks governments should act to combat
disinformation

KAL’s cartoon appears weekly in The Economist. You can see last week’s
here.
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The Economist

This week’s cover

How we saw the world
Apr 4th 2024

IN OUR COVER this week we consider China’s economic stagnation.

Thanks to a shrinking workforce, a property boom that has turned to bust
and the disintegration of the global system of free trade, the pillars of
China’s decades-long miracle are wobbling. President Xi Jinping’s response
is to double down on an audacious plan to remake the country’s economy.
But the plan’s contradictions mean it will disappoint China’s people and
anger the rest of the world.

Leaders: Xi Jinping’s misguided plan to escape economic stagnation

Finance and economics: How Xi Jinping plans to overtake America
Business: The mind-bending new rules for doing business in China
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Leaders

Xi Jinping’s misguided plan to escape economic stagnation

Central banks have spent down their credibility
Beware a world without American power
A chilling near-miss shows how today’s digital
infrastructure is vulnerable
What Boeing, Disney and others can learn from General
Electric
China and the world economy

Xi Jinping’s misguided plan to escape economic

stagnation
It will disappoint China’s people and anger the rest of the world
Apr 4th 2024

IT IS CHINA’S gravest economic test since the most far-reaching of Deng

Xiaoping’s reforms began in the 1990s. Last year the country achieved
growth of 5%, but the pillars of its decades-long miracle are wobbling. Its
famously industrious workforce is shrinking, history’s wildest property
boom has turned to bust and the global system of free trade that China used
to get richer is disintegrating. As our reporting explains, President Xi
Jinping’s response is to double down on an audacious plan to remake
China’s economy. Blending techno-utopianism, central planning and an
obsession with security, this sets out China’s ambition to dominate the
industries of tomorrow. But its contradictions mean it will disappoint
China’s people and anger the rest of the world.

Compared with 12 months ago, let alone the go-go years, the mood in China
is dour. Although industrial production perked up in March, consumers are
depressed, deflation lurks and many entrepreneurs are disillusioned. Behind
the angst lie deeper fears about China’s vulnerabilities. It is forecast to lose
20% of its workforce by 2050. A crisis in the property industry, which drives
a fifth of GDP, will take years to fix. It will hurt cash-strapped local
governments that relied on land sales for revenues and flourishing real estate
for growth. Relations with America are steadier, as a phone call between Mr
Xi and President Joe Biden this week attested. But they remain fragile.
Chinese officials are convinced that America will restrict more Chinese
imports and penalise more Chinese firms, whoever wins the White House in
November.

China’s response is a strategy built around what officials call “new

productive forces”. This eschews the conventional path of a big consumer
stimulus to reflate the economy (that’s the kind of ruse the decadent West
resorts to). Instead Mr Xi wants state power to accelerate advanced
manufacturing industries, which will in turn create high-productivity jobs,
make China self-sufficient and secure it against American aggression. China
will leapfrog steel and skyscrapers to a golden era of mass production of
electric cars, batteries, biomanufacturing and the drone-based “low-altitude
economy”.

The scope of this plan is breathtaking. We estimate annual investment in

“new productive forces” has reached $1.6trn—a fifth of all investment and
double what it was five years ago in nominal terms. This is equivalent to
43% of all business investment in America in 2023. Factory capacity in
some industries could rise by over 75% by 2030. Some of this will be made
by world-class firms keen to create value, but much will be prompted by
subsidies and implicit or explicit state direction. Foreign companies are
welcome, even though many have been burned in China before. Mr Xi’s
ultimate aim is to invert the balance of power in the global economy. Not
only will China escape dependence on Western technology, but it will
control much of the key intellectual property in new industries and charge
rents accordingly. Multinationals will come to China to learn, not teach.

However, Mr Xi’s plan is fundamentally misguided. One flaw is that it

neglects consumers. Although their spending dwarfs property and the new
productive forces, it accounts for just 37% of GDP, much lower than global
norms. To restore confidence amid the property slump and thereby boost
consumer spending requires stimulus. To induce consumers to save less
requires better social security and health care, and reforms that open up
public services to all urban migrants. Mr Xi’s reluctance to embrace this
reflects his austere mindset. He detests the idea of bailing out speculative
property firms or giving handouts to citizens. Young people should be less
pampered and willing to “eat bitterness”, he said last year.

Another flaw is that weak domestic demand means some new production
will have to be exported. The world has, regrettably, moved on from the
free-trading 2000s—partly because of China’s own mercantilism. America
will surely block advanced imports from China, or those made by Chinese
firms elsewhere. Europe is in a panic about fleets of Chinese vehicles wiping
out its carmakers. Chinese officials say they can redirect exports to the
global south. But if emerging countries’ industrial development is
undermined by a new “China shock”, they, too, will grow wary. China
accounts for 31% of global manufacturing. In a protectionist age, how much
higher can that figure go?

The last flaw is Mr Xi’s unrealistic view of entrepreneurs, the dynamos of

the past 30 years. Investment in politically favoured industries is soaring, but
the underlying mechanism of capitalist risk-taking has been damaged. Many
bosses complain of Mr Xi’s unpredictable rule-making and fear purges or
even arrest. Relative stockmarket valuations are at a 25-year low; foreign
firms are wary; there are signs of capital flight and tycoons emigrating.
Unless entrepreneurs are unshackled, innovation will suffer and resources
will be wasted.

China could become like Japan in the 1990s, trapped by deflation and a
property crash. Worse, its lopsided growth model could wreck international
trade. If so, that could ratchet geopolitical tensions even higher. America and
its allies should not cheer that scenario. If China was stagnating and
discontented, it could be even more bellicose than if it were thriving.

Old reductive forces

If these flaws are obvious, why doesn’t China change course? One reason is
that Mr Xi is not listening. For much of the past 30 years, China has been
open to outside views on economic reform. Its technocrats studied global
best practice and welcomed vigorous technical debates. Under Mr Xi’s
centralising rule, economic experts have been marginalised and the feedback
leaders used to receive has turned into flattery. The other reason Mr Xi
charges on is that national security now takes precedence over prosperity.
China must be prepared for the struggle ahead with America, even if there is
a price to pay. It is a profound change from the 1990s and its ill-effects will
be felt in China and around the world.■

For subscribers only: to see how we design each week’s cover, sign up to our
weekly Cover Story newsletter.
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economic-stagnation
Fool me once

Central banks have spent down their credibility

That will make inflation trickier to handle in future
Apr 3rd 2024

NOT LONG ago the rich world was braced for a costly battle with inflation.
Today it can seem as if the war has been won bloodlessly. In most rich
countries annual core inflation, which excludes volatile food and energy
prices, has fallen from peaks of 5-8% to a more tolerable 3-5%. In defiance
of pessimistic economists, there has been no accompanying economic
slump. Growth varies from booming (America) to respectable (Australia,
Canada, Japan) to tepid (Britain, the euro area), but nowhere has it
collapsed. In contrast to the disinflation of the 1980s, unemployment has
stayed low. Has the world economy enjoyed salvation without sacrifice?
Sadly, the answer is no; high inflation has left scars.

Before the covid-19 pandemic, the rich world enjoyed decades without any
serious inflation problems. After ruthless monetary tightening in the 1980s,
followed by a movement towards independent central banks targeting
inflation, price surges seemed as outdated as shoulder pads. As firms and
workers came to assume that inflation would stay low, they kept prices and
wages in check. Their expectations thereby proved self-fulfilling.

Unfortunately the idea that inflation was dead also lodged in the minds of
central bankers. When prices started to rise in 2021 they were horribly slow
to respond. Eventually they lifted interest rates much higher than they had
initially thought necessary. Today faster-than-expected disinflation has
allowed them a sigh of relief. Last month Jerome Powell, the chairman of
the Federal Reserve, said that interest-rate cuts were not far away—although
he seemed more guarded in a speech on April 3rd. Andrew Bailey, governor
of the Bank of England, has celebrated an “increasingly positive story”.

But central bankers’ problems are not over. Inflation remains above their
targets. In Europe it is likely to fall further, but only because the economy is
weak. In America getting inflation down to the Fed’s 2% goal probably
cannot be achieved at the current rate of economic growth, which is fuelled
in part by an unsustainable government deficit.

Most important, the public is more attuned to the danger of inflation than it
was before the pandemic. Some surveys show an uptick in long-run inflation
expectations. Financial markets in America and Britain are charging a bit
more for long-term inflation protection than they did. Predictions for future
inflation have become more dispersed, meaning more people doubt whether
inflation targets will be hit. In other words, now that high inflation is no
longer a distant memory, the credibility of central banks looks fragile.

It could shatter if another shock like the pandemic strikes. Inflation

expectations rising definitively would cause inflation to persist until central
banks brought about a painful slowdown. That was just about avoided this
time, but further testing episodes are likely. Geopolitical tensions, trade
wars, climate change and governments’ fondness for fiscal stimulus will all
make inflation more volatile than it was in the sleepy decades after the
1980s. The risk is two-sided: Europe, especially, still faces the danger of
inflation falling below the 2% target, owing to a weak economy.

The combination of volatile inflation and diminished credibility means that

the rich world’s policymakers must be agile. They will need to adjust
interest rates more quickly and to a greater extent when inflation fluctuates
—and tolerate the resulting economic volatility. In so doing they will come
to look a bit like their colleagues in emerging markets. Without as long a
record of low inflation behind them, central banks in Brazil, Chile and
Poland all raised interest rates sharply in 2021; all have since cut them as
inflation has fallen. Move fast and forcefully: this is the rule book that the
likes of Mr Powell and Mr Bailey will have to follow. ■
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credibility
Nuclear deterrence

Beware a world without American power

Donald Trump’s threat to dump allies would risk a nuclear free-for-all
Apr 4th 2024

NUCLEAR DETERRENCE works—or at least it has so far. To understand

how, look at the war in Ukraine. America and Europe arm their ally but dare
not deploy combat troops against Russia. In turn, Russia dares not strike at
the West. Mutual terror ensures that nuclear powers do not attack each other
overtly, just as it stopped the cold war from turning hot, even though plenty
of proxy conflicts raged. A sign of success is that only nine countries have
nuclear arms—fewer than once feared, and fewer than the number of states
able to make them.

As NATO this week marks the 75th anniversary of the signing of the North
Atlantic Treaty, thank the generosity of“extended deterrence”, by which
America has sheltered European and Asian allies under its nuclear umbrella.
It has done so in part to contain foes and in part to dissuade friends like
Germany, Japan and South Korea from going nuclear themselves.

A return of Donald Trump as president threatens to sow chaos at a time

when the world’s nuclear balance is more unstable. His threat to let Russia
“do whatever the hell they want” to NATO allies that spend too little on
defence risks destroying the trust that makes extended deterrence possible.
That could produce the nightmarish nuclear free-for-all that America has
always sought to avert.

As the world’s first atomic power, America has long tried to stop others
from going nuclear. Wonks call it the “nth-country problem”: the more
countries have nukes, the more others will want them, the likelier the risk of
uncontrolled crises, the greater the constraints on American power and the
higher the danger that America itself will be nuked. Deterrence with two
superpowers during the cold war was scary enough; with ever more nuclear
powers, it may become impossibly complex.

America thus attempted to prevent nuclear proliferation by an often

undeclared but far-reaching “strategy of inhibition” based on three pillars:
norms and treaties such as the Nuclear Non-Proliferation Treaty of 1968;
coercion of friends and foes by diplomacy, sanctions and threats of military
action; and reassurance through military alliances and security guarantees.

Extended deterrence is counter-intuitive, in that America risks the homeland

for the sake of allies. The promise, firm enough to deter the Kremlin, has
always been plagued by some doubt. To strengthen it, America has deployed
troops and nuclear weapons in Europe, and has given allies a role in nuclear
missions. Winston Churchill is said to have quipped that all he needed to
defend Europe was one American soldier, “preferably dead”.

Mr Trump, neck-and-neck with President Joe Biden in the polls according to

our tracker, sees allies as a burden, not an asset. His contempt mattered less
in his first term, when the world was quiet (for which he likes to take credit).
Now America is deeply involved in wars in Ukraine and Gaza, and clouds
are gathering over Taiwan. A nuclear race looms as Russia issues threats and
China builds up its nuclear arsenal.

Nobody knows quite what Mr Trump would do; even he may not be sure,
despite his bluster about ending the war in Ukraine in a day. But his
comments, former advisers’ accounts of his desire to leave NATO and hare-
brained proposals by putative future ones all point to a reduction or
abandonment of American security guarantees to NATO, and so to allies
generally. Congressional Republicans’ months-long blocking of a bill to
provide aid to Ukraine, Israel and Taiwan is a bad omen.

Allies will hope that, as in Mr Trump’s first term, conventionally minded

members of his administration will somehow help limit the damage. But
some Trump-world figures say that NATO countries which do not spend 2%
of GDP on defence should not be protected by the pledge that an attack on
one ally is an attack on all. Others propose a “dormant” NATO, in which
America withdraws ground forces from Europe while preserving the nuclear
umbrella. Such ideas are nonsense. America cannot defend the martial east
of Europe without protecting supply lines through the laggardly west. And
would Mr Trump risk a nuclear attack on American cities to help Europeans
whom he would not defend conventionally?

European governments are thinking the unthinkable. Poland’s foreign

minister, Radoslaw Sikorski, warns that a failure to keep arming Ukraine
could push allies into “their own nuclear-weapons programmes”. Politicians
from Germany to South Korea have said similar things. Others talk of
“Europeanising” NATO and substituting Britain’s and France’s nuclear
weapons for American ones, though their combined stockpiles are less than
a tenth of Russia’s and their doctrines for protecting the rest of Europe still
embryonic. European allies are preparing to take up more of the burden of
helping Ukraine, hoping to “Trump-proof” themselves.

None of this can substitute for credible American deterrence. A world

without American power endangers America for two reasons: because foes
like Russia and China will feel emboldened, and because friends will lose
faith in their old ally. “America First” isolationism, far from insulating the
country, will only magnify the nuclear risks America faces. ■
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Beware malware

A chilling near-miss shows how today’s digital

infrastructure is vulnerable
This is how to protect the internet from malicious attacks
Apr 4th 2024

FEW INVENTIONS in history have been as important for human

civilisation and as poorly understood as the internet. It developed not as a
centrally planned system, but as a patchwork of devices and networks
connected by makeshift interfaces. Decentralisation makes it possible to run
such a complex system. But every so often comes a chilling reminder that
the whole edifice is uncomfortably precarious.

On March 29th a lone security researcher announced that he had discovered,

largely by chance, a secret backdoor in XZ Utils. This obscure but vital
piece of software is incorporated into the Linux operating systems that
control the world’s internet servers. Had the backdoor not been spotted in
time, everything from critical national infrastructure to the website hosting
your cat pictures would have been vulnerable.
The backdoor was implanted by an anonymous contributor who had won the
trust of other coders by making helpful contributions for over two years.
That patience and diligence bears the fingerprints of a state intelligence
agency. Such large-scale “supply chain” attacks—which target not
individual devices or networks, but the underlying software and hardware
that they rely on—are becoming more frequent. In 2019-20 the SVR,
Russia’s foreign-intelligence agency, penetrated American-government
networks by compromising a network-management platform called
SolarWinds Orion. More recently Chinese state hackers modified the
firmware of Cisco routers to gain access to economic, commercial and
military targets in America and Japan.

The internet is inherently vulnerable to schemes like the XZ Utils backdoor.

Like so much else that it relies on, this program is open-source—which
means that its code is publicly available; rather like Wikipedia, changes to it
can be suggested by anyone. The people who maintain open-source code
often do so in their spare time. A headline from 2014, after the uncovering
of a catastrophic vulnerability in OpenSSL, a tool widely used for secure
communication, and which had a budget of just $2,000, captured the
absurdity of the situation: “The Internet Is Being Protected By Two Guys
Named Steve.”

It is tempting to assume that the solution lies in establishing central control,

either by states or companies. In fact, history suggests that closed-source
software is no more secure than is the open-source type. Only this week
America’s Cyber Safety Review Board, a federal body, rebuked Microsoft
for woeful security standards that allowed Russia to steal a signing key
—“the cryptographic equivalent of crown jewels for any cloud service
provider”. This gave it sweeping access to data. By comparison, open-source
software holds many advantages because it allows for collective scrutiny and
accountability.

The way forward therefore is to make the most of open-source, while easing
the huge burden it places on a small number of unpaid, often harried
individuals. Technology can help, too. Let’s Encrypt, a non-profit, has made
the internet safer over the past decade by using clever software to make it
simple to encrypt users’ connections to websites. More advanced artificial
intelligence might eventually be able to spot anomalies in millions of lines
of code at a stroke. Other fixes are regulatory. America’s cyber strategy,
published last year, makes clear that the responsibility for failures should lie
not with open-source developers but “the stakeholders most capable of
taking action to prevent bad outcomes”.

In practice that means governments and tech giants, both of which benefit
enormously from free software libraries. Both should expand funding for
and co-operation with non-profit institutions, like the Open Source Initiative
and the Linux Foundation, which support the open-source ecosystem. The
New Responsibility Foundation, a German think-tank, suggests that
governments might, for example, allow employees to contribute to open-
source software in their spare time and ease laws that criminalise “white hat”
or ethical hacking.

They should act quickly. The XZ Utils backdoor is thought to be the first
publicly discovered supply-chain attack against a crucial piece of open-
source software. But that does not mean it was the first attempt. Nor is it
likely to be the last. ■
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digital-infrastructure-is-vulnerable
Culp able

What Boeing, Disney and others can learn from

General Electric
Lessons from the tenure of Larry Culp
Apr 4th 2024

ONLY RARELY are chief executives appointed with a mandate for

dismemberment. Yet when Larry Culp assumed the top job at General
Electric (GE) in October 2018, he was expected to sell parts of the 130-year-
old conglomerate at a pace even faster than his empire-building predecessors
had assembled them. In November 2021 he announced a radical finale:
splitting the firm in three. GE’s health-care business became a separate
company last year. On April 2nd its power division went the same way,
leaving behind GE Aerospace, the firm’s engine-making operation.

Investors are reaping the rewards. After dithering during the first four years
of Mr Culp’s tenure, GE’s shares have been on a jet-fuelled tear. The
cumulative stockmarket value of GE’s three successor firms is $237bn.
Although that is well below the firm’s peak of $594bn in 2000, it is more
than double what Mr Culp inherited. Business-school students have spent
decades dissecting the hubristic acquisitions that defined GE’s life. Now
they must heed the lessons from its final act.

The fact that the wind is at GE’s back has undoubtedly helped. Demand for
jet engines has picked up since the covid-19 pandemic ended and clean-
energy projects are benefiting from government handouts in America. The
bullish mood of America’s stockmarket has surely eased the separation
process, too. But Mr Culp also deserves praise. His tenure reflects not just a
victory of focus over sprawl, but also of operational excellence at a firm that
long suffered the effects of excessive financial engineering.

One advantage was that Mr Culp was an outsider—the first ever to take the
helm at GE. The turnaround probably could not have been pulled off by a
lifer. GE insiders had ossified. Nothing had replaced Six Sigma, a system
used to reduce manufacturing errors that was championed by Jack Welch,
the firm’s acquisitive boss who retired as long ago as 2001. Mr Culp brought
his own Japanese-style management philosophy. The fresh but fanatical
approach to continuous operational improvement helped usher in cultural
change. So did getting executives onto the factory floor.

The new thinking meant that GE’s assets did not languish on the chopping
block, but improved on Mr Culp’s watch and stopped the break-up becoming
a fire sale. The programme has a familiar taste for fanciful names—the
power business has been christened GE Vernova. But the markets are
cheering on GE’s heirs, which is striking given that spin-offs often
disappoint investors. IBM’s infrastructure-services business (Kyndryl) and
Johnson & Johnson’s consumer health-care operation (Kenvue) have both
failed to shine in the public markets.

Mr Culp’s success, then, is vindication for smooth operators, not firms

looking to ditch problem assets or activist hedge funds in search of
conglomerate discounts. Bosses preparing to lop off divisions of their own
firms, including those at Unilever, will study him closely. But there are
broader lessons, too. Disney, which recently prevailed in a proxy fight
against Nelson Peltz, a noisy shareholder who once lobbied for change at
GE, is just one American blue-chip firm that might benefit from fresh
thinking.

The lessons may be most apt for Boeing, a case study for rotten corporate
culture. In March its boss resigned, two months after the blowout of a
fuselage panel from one of its 737 MAX planes. Some have suggested Mr
Culp for the job, which would be a severe test of his operational prowess. In
March Boeing confirmed that it was in discussions to acquire Spirit
AeroSystems, an unsatisfactory supplier it had previously spun off. Mr Culp
says he is happy running GE Aerospace, one of Boeing’s suppliers. But if he
can manage a business well while pulling it apart, perhaps he could also
thrive at putting one back together again. ■
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learn-from-general-electric
Letters

Letters to the editor

On carbon pricing, handbags, museum collections, Starship, AI and
music, British immigrants, how to describe X

Letters to the editor

A selection of correspondence
Apr 4th 2024

Letters are welcome via email to letters@economist.com

Carbon pricing
I was surprised by the lack of any analysis of economic instruments to price
carbon-dioxide emissions in your excellent special report on the oil industry
(March 16th). Many economists regard such carbon-pricing mechanisms as
critical to achieving climate goals. European companies such as Shell have
promoted these tools since around 2000.

Indeed, at a meeting convened in the Vatican in 2019, at which I was

present, the chief executives of all the big American and European oil
companies, together with important investors, signed a declaration calling
for governments to establish “reliable and economically meaningful carbon-
pricing regimes, whether based on tax, trading mechanisms or other market-
based measures…at a level that incentivises business practices, consumer
behaviour, research, and investment to significantly advance the energy
transition while minimising the costs to vulnerable communities and
supporting economic growth”.

Although carbon pricing is spreading around the world it would be

interesting to see an analysis of its successes and failures, explaining why
this important economic tool has not been more enthusiastically embraced.
Is it suspicion of the support by industry, reluctance of state-owned
companies, focus on supply-side restrictions by environmental groups, or
fear of a consumer backlash?

I look forward to an article in The Economist on this issue. We need as many

tools as possible to accelerate the energy transition.

MARK MOODY-STUART
Former chairman of Shell
Hassocks, Sussex

All handbags are useful

Free Exchange (March 9th) drew a false parallel between cars and handbags.
A car that is a lemon is not fully functional, reducing its utility and value.
But a knock-off handbag that looks authentic even to people who actually
care about these things has the same utility as a genuine one. The interesting
question is why this has such a big effect on its value.

DAVID CHRISTMAS
London

A fight at the museum

“What’s in store” (March 9th), which described the vast collections held by
many museums as a “hoarding problem”, was amusing but also a mixed bag
of facts. Unlike some art museums, natural-history museums don’t sell
specimens, not even herrings (which are “pickled” in something no one
should ingest).

The article implied that natural-history collections are mausoleums, when in

fact the specimens from any one big museum are being studied by hundreds
of scientists around the world every year. They are a profoundly dynamic
source of original discovery, especially in the Natural History Museum in
London.

If anything, natural-history museums aren’t exploring and surveying the

world enough. We know there are hundreds of thousands of new species out
there, maybe millions, based on what we find in museums. What are they?
Where are they? What will happen to them? Without museums we will
never know. In that respect you pointed to a critical problem. The staff who
look after collections have become skeletal in number.

DR DAVID GRIMALDI
Curator
Division of Invertebrate Zoology
American Museum of Natural History
New York

When new species are discovered, often similar to previously named

species, these name-bearing specimens are the standard to determine which
name belongs to which form and which deserves a new name. Specimens
collected 200 years ago remain pertinent today. Without this foundational
reference system the names of organisms would be chaotic and with it much
of biology. Furthermore, because of a lack of data, scientists argue about
whether there are two or ten million species of insects, let alone other life
forms yet undiscovered. We are in the middle of the sixth major extinction,
so it is imperative that museums gather more material before the remaining
species are gone forever. This is not a hoarding problem but an investment in
the future of science and society.

DR ART BORKENT
Salmon Arm, Canada
My guitar gently weeps
What’s missing from every discussion about generative artificial intelligence
and music is the question of who’s going to listen to any of it (“Algorithm
and blues”, March 23rd). AI does indeed make it easier for amateurs and
professionals alike to generate more and more recorded music, just as four-
track cassette did in the 1980s, digital audio workstations did in the 1990s,
and so on. There is already an enormous glut of recorded music. According
to Luminate, a music-data firm, 184m tracks are available on streaming
services, of which 43% had ten or fewer streams last year and 25% had none
at all. Generative AI will only accelerate this pace. Meanwhile, actual
demand for recorded music is barely growing.

No one in the music industry wants to talk about this, because businesses
want to maintain the illusion that anyone can be the next Taylor Swift or
Beyoncé. But this phenomenon will surely disrupt the industry as
profoundly as all the other ways your article suggests.

BILL ROSENBLATT
Adjunct professor of music and performing arts professions
New York University
Algorithmic music dates back much further than the 1950s. In 1757 Johann
Philipp Kirnberger published a musical dice game that allowed the novice to
generate a minuet or a polonaise by assembling bars of music chosen by
throwing a pair of dice. Later musical dice games were attributed to Haydn
and Mozart, but probably borrowed their names without permission.

SAMUEL SMITH
Philadelphia

Starship troopers
Your coverage of Starship’s third test flight was refreshingly balanced
(“Third time lucky—ish”, March 23rd). The orbital mechanic in me must
point out that the Starship purposefully did not reach orbit to ensure the its
safe disposal. This safeguard paid off since SpaceX lost control of Starship
resulting in a destructive tail first (instead of controlled belly first) re-entry.
Starship did however reach orbital height (234km) and velocity making it
the largest single object to reach space at orbital speed.

You also said that the Starship’s development is taking longer than expected,
and is slower than NASA needs. This overlooks NASA’s Artemis
programme, which is $6bn over budget, and six years behind schedule. The
Orion spacecraft is the major cause for the delayed lunar landing (not
Starship) since it has experienced heat shield, life support, and launch abort
system issues.

Most damningly, the cost of NASA’s Space Launch System to 2022 was
$27.5bn over 11 years. Starship has spent $5bn over 5 years. SLS has flown
once, while Starship has flown three times for much less cost and half the
development time.

Finally, although NIMBY’s abound in Bocca Chicca, Cape Canaveral Space

Force Station is a very effective wildlife refuge, with 46 endangered species
under its aegis. It turns out frequent rocket launches are just what the
conservationist ordered for keeping people out and wildlife thriving.

ANDREW DOBSON
Bengaluru, India

What it means to be British

As an immigrant I couldn’t agree more with your positive assessment of
immigration in Britain (“Britain’s superpower”, March 23rd). An
underappreciated part of British assimilation is the use of the term “British”.
It is a national term, unique in Europe, that connotes a national identity
separate from an ethnicity.

So although many immigrants probably never feel they can comfortably call
themselves French, German or Italian, or indeed English or Welsh, we can
always feel a sense of belonging through Britishness.

MARK KELLER
London

Berlin seemed woefully provincial to me after I moved to London to study

for a master’s degree in 2011. In London I rented from a British Indian
family, opened my bank account with a clerk who, judging by his name,
came from a Muslim family, and at university many of the teaching staff and
students I came into contact with were from other countries, or their families
once were. Unthinkable in Germany, and not just back then. I agree with
your assessment that Germany has a lot to learn from Britain about
integrating immigrants.

Perhaps in return we could teach Britain a thing or two about proportional

representation or a non-hereditary upper house of Parliament?

ARNDT LEININGER
Assistant professor for political science research methods
Chemnitz University of Technology
Chemnitz, Germany

X factor, the final

A reader’s plea that The Economist stops using the phrase “formerly known
as Twitter” is timely and welcome (Letters, March 16th). You only recently
repeated George Orwell’s sage advice that “if you can cut a word out,
always cut it out” (“Shock! Horror! The Economist has updated its guide to
good writing”, January 25th).

Since Twitter’s name change came into effect there have been 1,575,910
uses of the phrase “formerly known as Twitter” in English-language news
media, according to my quick search using a media-monitoring tool. That’s
6,303,640 words. There are fewer than 800,000 words in the King James
Bible. Ernest Hemingway took only 27,000 words to win the Pulitzer prize
for “The Old Man and the Sea”, and the bold ambitions of the UN Charter
required a mere 9,000.

At a time when words matter so much, can we agree to omit these four
words and devote the considerable space this will leave to something,
anything, else?

JAMES TATE
Henley-on-Thames, Oxfordshire

I agree that you should stop using the phrase “formerly known as Twitter”.
Much better would be “X, known as Twitter to everyone but its capricious
owner”.

CHRISTOPHER LEPOCK
Edmonton, Canada
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By Invitation

Yu Hua on why young Chinese no longer want to work for

private firms
As the world changes, so should America’s nuclear strategy,
says Frank Miller
Chinese aspirations

Yu Hua on why young Chinese no longer want to

work for private firms
In today’s China stability trumps enterprise, argues the novelist
Apr 2nd 2024

WHAT LIES at the far reaches of the universe? This is a question that
science has yet to answer, but most young people in China today already
have an answer. According to them, at the end of the universe is not the
Milky Way, the Andromeda Galaxy or the Canes Venatici Constellation, but
a government job.

Observing changing attitudes about government jobs among young people in

China over the course of the past four decades of the reform era can reveal
the deep-seated changes that have taken place in the structure of Chinese
society.

During the early days of the reform era in the 1980s, there were three
categories of government jobs for urban residents: the collective positions
(jiti bianzhi), the general positions (quanmin bianzhi) and the cadre positions
(ganbu bianzhi). The cadre positions were equivalent to the civil-service
system of today. At the time, all young people craved an opportunity to enter
that system. But by the 1990s that was no longer something they desired.

If we were to describe the pace of economic development in the 1980s as

walking, by the 1990s it was akin to a horse galloping. College graduates in
particular turned their backs on the bureaucratic system in favour of seeking
employment with foreign firms or joint ventures, or founding their own
firms. The incentive was obvious: they could earn more, possibly a lot more,
in the private sector.

In 1992 alone, more than 120,000 cadre-level bureaucrats—the backbone of

various government departments at the time—resigned from their positions
to work in the private sector. Seeing the tremendous opportunities of the
market economy, some sought employment with foreign firms or joint
ventures. Others drew on their savings and borrowed money from friends
and family to start their own businesses. The most outstanding of them
would later become China’s best-known entrepreneurs. Those taking the
private-sector plunge described it as “diving into the sea”, as the market
economy was metaphorically referred to as a great sea.

But as the Chinese economy slowed, young people began to rekindle their
desire for jobs within the government system—and this time their desire was
even more fervent. It was referred to as “coming ashore”.

For the past decade the number of Chinese college graduates applying for
jobs in the civil service has surged. In 2023 some 2.8m applicants qualified
for the civil-service examinations, chasing an estimated 39,000 available
positions. The media described this as “an army of soldiers and horses
attempting to cross a single-plank bridge”.

What’s more, having a bachelor’s degree is no longer an advantage; one

needs to have at least a master’s degree. And for an application to be truly
competitive, one needs a doctorate.

The fierce competition in the labour market has deprived young job-seekers
of the ability to be selective when it comes to employment; as long as there
is a secure government bureaucratic job available, no matter where or what
the nature of the job, there are always large numbers of applicants. In 2020 a
small subdistrict office in Hangzhou made the news when people with PhDs
from some of China’s most prestigious universities were among those
applying for an open position. In the remote Ali region of Tibet, where
living conditions are extremely difficult, a job advertised in 2021 for a clerk
at the local post office drew a staggering 20,813 applications.

Shutdowns, layoffs, unemployment and bankruptcy have all become key

words to describe the economy of today. For young Chinese, high-paying
jobs are no longer the be-all and end-all; what they want are stable jobs
within the state bureaucratic system. After living through three years of
pandemic lockdowns, it is not only the young who have realised the
importance of these bureaucratic jobs. Everyone has.

No matter how long you might end up quarantined at home, government

jobs are the only form of employment you can count on to continue paying
you a full salary. Without a government job, the second the next lockdown
comes along, your source of income may well be cut off. That is why “At
the far reaches of the universe lies a government job” has become a popular
phrase online in China today.

The Chinese people have always loved palm-reading, which is the simplest
and most straightforward form of fortune-telling. In the past, palm-readers
would base someone’s fortune on three lines which represented one’s
longevity, career and love life. When young people get their fortunes told
today, they care only about the career line, and all they want to know is: will
there be a government job in their future.

I don’t know how these young people invented this new form of divination,
but I can only marvel at the awe-inspiring power of government jobs, as they
have now even entered into the long tradition of Chinese fortune-telling. ■

Yu Hua is a novelist and essayist, known primarily for his avant-garde

fiction. His novels include “To Live” (1993), “Brothers” (2005) and “The
Seventh Day” (2015)

This article was translated by Michael Berry.

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longer-want-to-work-for-private-firms
Nuclear weapons

As the world changes, so should America’s nuclear

strategy, says Frank Miller
Arms-control efforts can’t ignore the threat from Russia and China
Apr 4th 2024

THE DEBATE about America’s nuclear deterrent breaks along two lines.
One views the discussion through the lens of arms control. The other focuses
on the level of deterrence required in a world in which America will soon
face two potential adversaries with nuclear forces as big as its own: Russia
and China.

Arms-controllers are concerned with remaining within the limits of New

START, an arms-reduction treaty between America and Russia which took
effect in 2011, and with negotiating further reductions in warheads. For
those more concerned with deterrence, that approach misses the key
questions: “Why do we have nuclear weapons?” and “How has the
international security environment changed since New START entered into
force?”.
In order to be fit for purpose, America’s nuclear arsenal needs to be
sufficiently large and diverse—with both shorter- and longer-range missiles
and bombs that can be launched from land, sea or air—to deter hostile
leaders from attacking America or its allies. Just as the level of hostility
changes over time, so should the size of this arsenal, shrinking or growing to
match the threat posed.

As the cold war ended, America reduced its strategic nuclear arsenal by 80%
and its shorter-range nuclear forces by over 90%—cuts justified by the belief
that the demise of the Soviet Union had all but eliminated the threat from
Moscow. In 2011 China did not even figure in considerations of American
and allied security, and America’s relationship with Russia remained
relatively benign: competitive but not hostile.

The world no longer looks like the one that gave birth to New START.
Vladimir Putin seized Crimea in 2014 and in 2022 invaded Ukraine,
unleashing the largest war in Europe since the second world war. He
modernised and expanded Russia’s nuclear forces, including short- and
medium-range weapons, which he regularly threatens to use against Ukraine
and NATO. Since assuming power he has violated nine separate arms-
control pacts signed by his predecessors. Meanwhile, Xi Jinping has
overseen the world’s largest build-up of nuclear forces in decades. The
Chinese leader skilfully wields this capability to back up his campaign of
intimidating China’s neighbours while laying claim to their territory, their
supposedly exclusive economic zones and much of the South China Sea.

An effective deterrent requires the capability to target what potential enemy

leaders value most. As autocrats, Mr Putin’s and Mr Xi’s priorities are
essentially the same: to stay in power, to preserve their regime, to intimidate
their neighbours and to support their war machines.

The most effective way to deter them from behaving aggressively is to

threaten to destroy what they would need to dominate a post-war world,
including the bureaucratic and other support structures that enable them to
administer their states, key elements of their nuclear and conventional forces
and their war-supporting industries. For deterrence to work, America does
not need to match the combined firepower of Russia and China; it needs
only to have forces demonstrably capable of covering the targets Mr Putin
and Mr Xi value.

Because of the significant growth in Russian and Chinese nuclear

capabilities over the past decade, the deterrent believed necessary when New
START took effect in 2011 is no longer sufficient. It cannot credibly threaten
all that Mr Putin and Mr Xi value. And it is not powerful enough to deter
Russia and China simultaneously—a deficiency made all the more critical
by the return of the Russia-China axis in recent years.

The New START treaty—the last of the accords which emerged from cold-
war logic—is set to expire in February 2026. Its flaws in today’s
environment are clear. It limits American and Russian intercontinental
nuclear deployed warheads to 1,550 per side, but it ignores the shorter-range
ones which Mr Putin is most likely to use first. Russia has close to 2,000
shorter-range weapons; America has only a couple of hundred.

What’s needed is a treaty which captures all American and Russian nuclear
weapons, including shorter-range ones; permits each side to adjust its
balance between short- and long-range weapons as desired within an overall
limit; allows America a force big enough to deter intimidation and
aggression; and mandates intrusive verification to thwart attempts at
cheating or evasion. At current force levels, with no reduction in the number
of Russian shorter-range warheads, such a treaty would set a cap of around
3,500 deployed weapons (New START’s 1,550 plus some 2,000 shorter-
range weapons). Reductions in shorter-range Russian forces would lower
that ceiling.

As for arms control with China, there is little to be done until the
government in Beijing changes its view that transparency and verification
are to be avoided and that limits on its forces do not serve China’s national
security, and abandons its hegemonic policies in Asia. Should China alter its
stance, it could join a future US-Russian accord at equivalent force levels.

Arms control and deterrence need to be seen as intertwined. Arms control

should not be a goal in itself; limits on the type and number of warheads
must grow out of deterrence policy. As the Congressional Commission on
the Strategic Posture of the United States, a bipartisan committee set up to
analyse America’s national-security strategy, put it baldly in a report
released last October: “The United States cannot properly evaluate a future
nuclear arms-control proposal…without knowing what the US nuclear force
requirements will be.” The Biden administration needs to move quickly to
determine those requirements.■

Franklin Miller is a senior adviser at the Centre for Strategic and

International Studies. He was in charge of American nuclear deterrence and
targeting policy from 1985 to 2001 and chaired NATO’s nuclear-policy
committee, the High-Level Group, from 1997 to 2001. He was a member of
the Congressional Commission on the Strategic Posture of the United States.
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americas-nuclear-strategy-says-frank-miller
Briefing

America and its allies are entering a period of nuclear

uncertainty
Nuclear weapons

America and its allies are entering a period of

nuclear uncertainty
And it means the balancing act is getting harder
Apr 4th 2024

IS DETERRENCE EASY or hard? That simple question has been at the

heart of nuclear strategy for almost 80 years. For Bernard Brodie, an early
nuclear theorist, the bomb had created a stable balance of terror. The precise
number and variety of weapons was less important than the fact that they
existed. His colleagues Herman Kahn and Albert Wohlstetter disagreed. The
balance was “precarious”, they retorted, and required careful and continuous
attention to metrics such as the relative damage that each side would suffer
in a nuclear exchange and thus to the relative size and quality of their
respective arsenals.

In America that debate is returning to the fore. A growing number of

influential American thinkers believe that deterrence is becoming harder and
could become precarious. Great-power rivalry has grown, making an
intensification of nuclear competition more likely. Arms-control agreements
have frayed. Amid the rising tensions, which have helped bring renewed
attention to the world-changing impact of nuclear weapons, the spectre of
Donald Trump looms large. His return to office could see a disruption to
American alliances that prompts allies in Asia and Europe to look afresh at
their own nuclear options.

Whichever candidate wins November’s election will preside over a nuclear

complex in the midst of a 30-year, $1.5trn makeover. That involves projects
as varied as designing a new warhead and cruise missile, making new
plutonium pits (the fissile cores inside warheads) and building new
submarines, bombers and intercontinental ballistic missiles (ICBMs).

These programmes enjoy bipartisan support but were finalised in the 2010s
during a different geopolitical era. One shift came with Russia’s invasion of
Ukraine and Vladimir Putin’s use of nuclear threats to deter Western
involvement there. Another was the growth of China’s arsenal from fewer
than 300 warheads in 2019 to 500 today, and as many as 1,000 by the end of
the decade, according to the Pentagon. As a result, America increasingly
worries about facing two big nuclear rivals at once.

Nuclear planners now contemplate problems that would have seemed

irrelevant and ghoulish just a decade ago. “How much strategic value to the
United States is there in having the capacity to conduct a counter-nuclear
attack against a second nuclear power after conducting and suffering a large
nuclear strike by the first?” asks a recent paper by the Lawrence Livermore
National Laboratory, one of the labs involved in nuclear modernisation. If
America were to wage a nuclear war with China, say, might Russia “cross…
the nuclear threshold in order to strike a decisive blow to defeat a hated
enemy and gain a dominant position”?

Nuclear sceptics argue that these challenges have been exaggerated.

America’s arsenal remains ten times larger than that of China. Nor does the
war in Ukraine offer unalloyed support for more nukes. “The strategic
nuclear balance has not appeared to play a significant role in this crisis,”
points out Francis Gavin, a nuclear historian at Johns Hopkins University.
“It is notable how little discussion there has been over the state, readiness
and size of the two largest nuclear powers’ forces.” That might suggest
America would cope just fine even if Russia and China were to outnumber
it.
Yet sceptics are on the back foot. In October a bipartisan congressional
commission, which included officials who had served in both the Obama
and Trump administrations, warned that “nuclear force sizing and
composition must account for the possibility of combined aggression from
Russia and China.” America would need to be capable of “simultaneously
deterring both countries”. In short, it required a larger and more diverse
arsenal.

That appetite is already influencing American policy. The Trump

administration initiated work on a new submarine-launched nuclear-armed
cruise missile, known by the acronym SLCM-N, arguing that it would
provide more flexible nuclear options. The Biden administration sought to
cancel the project, arguing that it was expensive and unnecessary. Congress
cast aside those objections to establish SLCM-N as a “programme of
record”—the slate of established projects, like the new ICBM—last year. In
March the Senate approved spending a further $130m on the programme.
Not bad for an unwanted nuke.

Don’t you understand…

For advocates of a more muscular nuclear posture, that is just the start. In a
recent report, Robert Peters and Ryan Tully of the Heritage Foundation, a
pro-Trump think-tank, lay out a menu of options. America, they argue,
should accelerate the production of plutonium pits. Existing ICBMs, which
carry only one warhead, should be modified to carry more. Their
replacement, the Sentinel, should not just sit in silos but potentially be
designed to scoot around on roads—something that would represent a huge
(and expensive) change in America’s nuclear posture. Frank Miller, a
veteran of American nuclear policy, argues that the country needs around
3,500 deployed weapons, compared with the 1,670 it has today within the
constraints of the New START treaty, which limits the number of missiles,
bombers and total warheads deployed by America and Russia.

If Mr Biden is re-elected, most of these ideas will surely languish. Even

under Mr Trump there are obstacles to a nuclear spree. “Four years is a very
short time in the nuclear-modernisation arena,” says Rose Gottemoeller, a
former diplomat who served as America’s top arms-control official. She says
that Mr Trump would struggle to reopen the programme of record without
worsening the existing cost overruns and delays. The Pentagon would also
resist cutting funds for conventional military forces to expand nuclear ones.

Still, Mr Trump would have considerable latitude in other respects. America

does not have the ability to produce vast numbers of new warheads. But it
has around 1,900 nuclear weapons in reserve (see chart). It could roughly
double its deployed arsenal by “uploading” these to current missiles and
other delivery systems. Russia could surge by 57%, adding just under 1,000.
Today this is constrained by New START. Last year Russia withdrew from
the treaty’s inspection regime, in a sign that its days are numbered. The
bipartisan commission is urging the air force and navy to practise uploading
warheads from now to 2026, when the treaty expires. If it does indeed lapse,
both countries can then do it for real.

Another option, favoured by some of Mr Trump’s advisers in private, would

be to resume explosive nuclear testing. America, Russia and China have not
conducted such tests since the 1990s, relying instead on computer
modelling. Mr Trump, in his first term, accused China and Russia of
covertly carrying out “low yield” tests and considered a change in policy. In
recent years there have been signs of tunnelling, new facilities and
heightened traffic at test sites in America, Russia and China. That probably
reflects each country hedging against a potential shift by another.
None of this is a foregone conclusion. Mr Trump “might very well pursue
arms control with Russia and China to show he’s a dealmaker”, suggests
Jeffrey Lewis of the Middlebury Institute of International Studies at
Monterey, pointing to the former president’s theatrical meetings with Kim
Jong Un, North Korea’s dictator, in 2018 and 2019. “The big question”, says
Mr Lewis (who is also the author of a chilling novel on a nuclear conflict
with North Korea), “is whether Trump would buck the Republican Party on
missile defence.”

China and Russia operate limited national missile-defence systems. They

have long argued that America’s more ambitious efforts, which expanded
after George W. Bush withdrew from a 1972 US-Soviet treaty, undermine
deterrence by allowing America to conduct a first strike and then block any
retaliation. That has probably encouraged Russia and China to build larger
and, in Russia’s case, more diverse, nuclear arsenals.

America has pressed on regardless. In exchange for curbing the development

of missile defences, it could perhaps ask Russia to include its large arsenal
of tactical or “non-strategic” nukes as part of any future arms-control deal
and demand that China sign on too. But in January Mr Trump publicly
endorsed missile defences, invoking the success of Israel’s (completely
unrelated) Iron Dome system. And putting these on the negotiating table
would cause internal tension in a future administration, warns Mr Lewis: “It
tugs at two parts of Trump’s self-image: his view of himself as a
consummate dealmaker and his enthusiasm for high-tech weapons.”

…what I’m trying to say

If Mr Trump were to embrace the hawks’ agenda, it would send ripples
through Moscow and Beijing. Russia is probably already preparing for the
collapse of New START, says Kristin Ven Bruusgaard of the Norwegian
Intelligence School, and would use any new American plans or weapons for
“propaganda bluster”. However, Russia has its own financial and material
constraints. The war in Ukraine could cost it $132bn by the end of this year,
estimates the RAND Corporation, an American think-tank. The country is
not short of warheads. But new delivery systems are overdue and over
budget. “In capability terms,” says Professor Ven Bruusgaard, “my
impression is that the Russians are more or less racing as fast as they can.”
China has more fiscal headroom, but a shortage of plutonium might
constrain its arsenal over the next decade or so. And the rush to build
weapons might also have led to “cutting corners”, suggests Tong Zhao, an
expert at the Carnegie Endowment for International Peace, another think-
tank, alluding to reports of faulty silo doors and water-filled missiles. Its
build-up was also initiated before its economy began to slow down last year.
“China’s current nuclear expansion might be pushing its limits,” concludes
Mr Zhao. The upshot of all this is that any arms race is likely to be slow and
halting, rather than fast and furious.

For America’s allies, the calculation is rather different. European members

of NATO and several Asian countries, including Japan and South Korea, are
protected by America’s nuclear weapons, under “extended deterrence”.
Many would welcome Mr Trump building more nuclear weapons or newer
ones. The SLCM-N, for instance, has many supporters in Europe and Asia
because some allies believe it would help America respond to low-level
nuclear use by Russia or China in kind without resorting to strategic
weapons like ICBMs, which would trigger a larger nuclear exchange and
thus lack credibility as a deterrent in such circumstances.

But a nuclear build-up would be little consolation to allies if it were

accompanied by a dramatic change in the nature of their alliances. Though
Mr Trump recently said he intended to remain in NATO (provided
America’s partners paid their “fair share”), European and Asian allies alike
wonder whether he would come to their aid. Moreover, North Korea’s
acquisition of ICBMs makes American cities vulnerable in a way they
previously were not, while the growth of China’s arsenal means that
America would suffer more damage in any nuclear exchange than in the
past. That would worry even an ally-hugging president, let alone Mr Trump.

Can’t you feel the fears…

Mr Biden’s solution to this problem has been to double down on
reassurance. He has deepened consultation with Japan and South Korea on
nuclear issues and in July 2023 sent a nuclear-armed submarine to make a
public port call in South Korea for the first time since the 1980s. Even so,
Japan has stockpiled plenty of plutonium and would have the necessary
technical expertise to build a nuclear device. South Korea’s hedging is much
starker: it is the only non-nuclear-armed country in the world to have
developed submarine-launched ballistic missiles, which could serve as a
delivery platform for any future bomb.

During Mr Trump’s first term South Korea’s nuclear debate played out under
the presidency of Moon Jae-in, a dove who took North Korea at its word on
disarmament, points out Jennifer Ahn of the Council on Foreign Relations, a
think-tank in New York. Mr Moon’s administration gave short shrift to the
idea of bringing back American tactical nuclear weapons, withdrawn in
1991, let alone developing indigenous ones. His successor, the “conservative
and deterrence-focused” Yoon Suk-yeol, she notes, is a different matter.

“It’s possible that the problem gets worse and our country will introduce
tactical nuclear weapons or build them on our own,” mooted Mr Yoon in
January 2023. “It would not take long,” he added, “given our scientific and
technological capabilities.” Mr Yoon later backtracked, saying in February
that the result would be heavy sanctions. Yet more than 70% of South
Koreans remain in favour of acquiring nuclear weapons. If Mr Trump were
to renew his quixotic effort to strike a deal with Mr Kim by reversing
America’s policy of “denuclearisation”, legitimating North Korea as a
nuclear power, or if Mr Kim were to resume nuclear tests—he has not
conducted one in seven years—that could also intensify South Korean
nuclear ambitions.

Europe’s predicament is different. Unlike Asia, it has two local nuclear

powers, Britain and France. Britain’s deterrent is “assigned” to NATO,
which means that it is available to the Supreme Allied Commander Europe,
while France is more ambiguous, saying only that its vital interests have a
“European dimension”. On paper, their combined arsenal of 500 warheads,
though a tenth of Russia’s, is sufficient to wipe out Moscow and St
Petersburg, and more. Yet a closer look at the British arsenal is useful to
understand why an American umbrella is difficult to replace.
Consider a scenario in which Russia uses a tactical nuclear weapon against a
European ally. One problem, say some officials, is that Britain’s deterrent is
vested entirely in the Trident D5 missiles aboard a lone submarine. Firing
even one could give away the position of the sub, says a former British
official. That would risk the survival of the remaining missiles, which serve
as a deterrent against subsequent strikes on Britain itself. One option would
be to maintain two boats on patrol, but that would require a total fleet of five
rather than four. An alternative would be to build an air-launched cruise
missile of the sort operated by France. Either option would be expensive and
would not yield fruit until long after Mr Trump was off the scene.

These debates, in Asia as well as in Europe, are likely to percolate regardless

of whether Mr Trump defeats Mr Biden in November, and even if he keeps
alliances intact. They reflect concerns about a deteriorating security
environment in which wars of conquest are imaginable again, nuclear
weapons are growing more important to a stronger China and a weaker
Russia, and America’s political system seems more frail than ever and its
armed forces increasingly overstretched.

In February Radoslaw Sikorski, Poland’s foreign minister, suggested that if

Ukraine cannot drive Russia back “allies will look for other ways to
guarantee their safety. They’ll start hedging. Some of them will aim for the
ultimate weapon, starting off a new nuclear race.” Mr Sikorski quickly
insisted that he was talking of Japan or South Korea, not his own country.
But Poland, he remarked at the same event, would “eat grass rather than
become a Russian colony again”—a phrase that to many unmistakably
evoked Pakistan’s commitment in the 1970s to develop a bomb at any cost,
even if that required it to “eat grass”, as Zulfikar Ali Bhutto, the country’s
prime minister at the time, put it.

…I’m feeling today?

Ultimately, the anxiety over Mr Trump reflects a reckoning with the inherent
oddity of America’s nuclear alliances. Deterrence is intuitive: don’t nuke
me, because if you do I will nuke you back. Extended deterrence is perverse:
attack my ally and I might nuke you, exposing myself to nuclear retaliation
that I would not otherwise have faced. To extend a nuclear umbrella over
allies is thus not only to build a larger and more varied arsenal than would
otherwise be needed, but also to accept, voluntarily, an extraordinary
vulnerability.

That is strange enough. But it is “bizarre” for an American state that, thanks
to its geography, would otherwise face no existential threats, says Professor
Gavin. “It’s not really in America’s DNA.” America took on the burden in
the 1950s nonetheless, exposing its cities to annihilation, because it did not
want allies developing nuclear bombs of their own—a pursuit that in the
case of West Germany might have provoked a third world war, he adds.
Extended deterrence and non-proliferation were intimately connected. The
question is whether that coupling might one day snap.

“In many ways”, mused Donald Trump, months before being elected
president in 2016, “the world is changing. Right now, you have Pakistan and
you have North Korea and you have China and you have Russia and you
have India and you have the United States and many other countries have
nukes.” Perhaps Japan would be “better off” with nuclear weapons, he
suggested. As so often with Mr Trump, the problem lies in knowing when to
take him literally and when merely seriously. “The level of power of nuclear
weapons is incredible,” he told an interviewer last December. “Whether it’s
Israel or major countries, nuclear weapons are the biggest problems we
have.” ■
This article was downloaded by zlibrary from https://www.economist.com/briefing/2024/04/04/america-and-its-allies-are-entering-
a-period-of-nuclear-uncertainty
Asia

Why India’s elite loves Narendra Modi

Japan is still reeling 100 days after the Noto earthquake
The end of cricket’s Indian monopoly
Asian “nepo babies” are dominating its politics
For a glimpse at Japan’s future, look at its convenience
stores
The Modi paradox

Why India’s elite loves Narendra Modi

Educated voters usually disdain populists. Three factors explain why
India’s leader is different
Mar 29th 2024 | Mumbai

NARENDRA MODI, India’s prime minister, is often lumped together with

right-wing populists such as Donald Trump or Viktor Orban. On the surface,
the comparison is plausible. In 2019 Mr Modi told the Indian Express, a
newspaper, that his electoral success was not due to “the Khan Market gang
or Lutyens Delhi”, monikers for India’s old establishment. Rather, said Mr
Modi, he pulled himself up through “45 years of toil”. But the prime
minister, who is expected to win a third term after India goes to the polls
later this month, is no ordinary strongman.
In most places support for anti-establishment populists, such as Mr Trump,
and policies such as Brexit tends to be inversely correlated with university
education. Not in India. Call it the Modi paradox. It helps explain why he is
the most popular leader of any major democracy today.

A study in 2020 of Britain, Turkey, eight countries in the European Union

and five in Latin America by Cristóbal Rovira and Steven van Hauwaert,
two political scientists, confirmed the inverse relationship between higher
education and support for populist leaders. It is not universal: Jair
Bolsonaro, Brazil’s president from 2019 to 2022, was backed by some of the
best-educated elites. But in America it is strong. In December 2023 Gallup,
a pollster, found that just 26% of respondents with a university education
approved of Mr Trump, compared with 50% of those without.

Mr Modi bucks this trend altogether (see chart). In 2017, 66% of Indians
who had no more than a primary-school education told Pew Research that
they had a “very favourable” view of Mr Modi. The number rose to 80%
among Indians with at least some higher education. After the previous
general election, in 2019, Lokniti-CSDS, a pollster, found that around 42%
of Indians with a degree supported Mr Modi’s Bharatiya Janata Party (BJP),
while around 35% of those with only a primary-school education did. Polls
conducted after state elections in 2023, such as in Karnataka, confirm the
trend. Similarly Pew’s latest survey, from last year, shows that 60% of
university-educated Indians have a very favourable opinion of Mr Modi,
compared with 55% of those who do not have a degree.

A psephological puzzle
Mr Modi’s success among the well-educated does not come at the expense
of support among other groups. Indeed, like other populist leaders, his
biggest inroads have been made among lower-class voters, says Neelanjan
Sircar, a political scientist at the Centre for Policy Research, a think-tank in
Delhi. In 2020 Sanjay Kumar of the Centre for the Study of Developing
Societies found that between 2014 and 2019 support for the BJP increased
among rural, lower-caste, young and poor voters. It grew especially quickly
among “other backward classes”, which make up nearly half of the
population. Among them, the BJP’s support rose from 34% to 44%,
compared with an increase of 31% to 38% among all voters.

This pattern of support for the BJP is comparable to other countries in which
less-educated or rural people have shifted right. But unlike many of his
counterparts abroad, Mr Modi has also been able to increase his support
among the educated. Three factors—class politics, economics, and elite
admiration for strongman rule—help explain why.

In India, class is intertwined with the caste system. The BJP, like many
conservative parties, is known to be business-friendly. A core constituency
includes much of the “Bania” trader community, a traditionally business-
oriented group concentrated in states such as Gujarat and Rajasthan.
Tycoons such as Mukesh Ambani and Gautam Adani, India’s richest men,
fall into this group. Upper-caste Hindus, including Kshatriyas and Brahmins,
are also part of the core support base. Some regional parties, such as the
DMK in Tamil Nadu, have positioned themselves against such upper-caste
groups. Congress, the main national opposition party, has championed
preferential access to education and government jobs for lower castes.

Bigger, better...strongman?
Mr Modi, himself from a relatively low caste, has marketed the BJP as a
caste-agnostic “pan-Hindu” party. This means he retains support from high-
caste groups while extending the party’s reach to others. Mr Sircar notes that
the well-educated professional class across India broadly does not identify
with the bureaucrats and media types in Delhi. So Mr Modi’s antipathy to
the capital’s elite has not cost him support among others elsewhere.

The second factor is economic. Annual GDP growth was 8.4% in the last
quarter of 2023 (though because of quirks in how India measures its GDP,
the underlying figure is closer to 6.5%). That growth, albeit unequally
distributed, is driving a rapid increase in the size and wealth of the Indian
upper-middle class. Goldman Sachs, a bank, has called this phenomenon the
rise of “affluent India”. It calculates that the number of Indians with an
annual income of $10,000 or more grew from 20m in 2011 to 60m in 2023,
and will hit 100m by 2027.

It is not surprising that Mr Modi has retained the support of those who have
become richer. The Congress party enjoyed strong support among the upper-
middle class during the fast-growing late 2000s. It took a slowdown and a
series of corruption scandals in the 2010s to change things.

But Mr Modi’s tenure has increased India’s economic and geopolitical

standing in the world, too. One fund manager in Mumbai says that her
friends worried about perceptions of India when Mr Modi was elected prime
minister. He was chief minister of Gujarat during a bloody riot against
Muslims there in 2002, an incident that saw him denied a visa to America
for nine years. She thought Mr Modi might become a global pariah. In fact,
the opposite happened. Because of India’s economic heft, and its importance
as a counterweight to China, Mr Modi has been embraced by leaders
worldwide.

Many university-educated Indians say they dislike Mr Modi’s weaponisation

of law enforcement against opposition parties and his government’s
treatment of Muslims as second-class citizens. The arrest on March 21st of
Arvind Kejriwal, the chief minister of Delhi, amplified these concerns. Still,
as a banker in Mumbai notes, there is a widespread sense that the good parts
of Mr Modi outweigh the bad. Indeed, some think a dose of strongman rule
is exactly what India needs.
This is the third reason for the prime minister’s popularity among elites.
They point to China and the East Asian tigers, which they believe show that
muscular governance can tear down barriers to economic growth. One
industrialist in south India says that the country is “probably too
democratic”, given its level of income. Mr Modi, he adds, can “get shit
done”.

India’s elites see Mr Modi’s foreign policy as nationalist yet pragmatic. They
like the way he thumbs his nose at liberal Western institutions and the
media, in a similar fashion to other anti-globalist strongmen, while
promoting Indian interests. Mr Modi has negotiated four new trade deals
since 2021, most recently with a grouping of four non-EU European
countries on March 10th. In February, at the Raisina Dialogue in Delhi—
India’s version of the Munich Security Conference—his ministers lamented
the UN’s antiquated structure, while also positioning India as the leader of
the global south.

Admiration for leaders perceived as decisive is not new among India’s elite.
In the 1970s J.R.D. Tata, one of the country’s most prominent industrialists,
is said to have appreciated Indira Gandhi’s imposition of “the Emergency”, a
two-year-long suspension of normal democratic processes in response to a
perceived threat to her power. A survey by Pew published in February found
that 67% of Indians thought that “a system in which a strong leader can
make decisions without interference from parliament or courts would be a
good way of governing their country”. That figure, up from 55% in 2017,
was the highest among the 24 countries surveyed. Many internationally
minded Indians say Mr Trump is too autocratic for America, but that Mr
Modi is the right man for their country.

Making India great again

So what could shake Mr Modi’s elite fan base? Continued weaponisation of
the state, as in the case of Mr Kejriwal, could come back to bite him; most
elites still say they believe in democracy. And many of the people who say
they like the prime minister also fear him, including those in business who
know their survival depends on remaining in his good graces. Some have
tempered their support. Pew’s survey in 2023 found that 17% of college-
educated respondents had an unfavourable view of Mr Modi, up from 5% in
2017.

Others are voting with their feet: according to Henley and Partners, a
consultancy, India had a net outflow of 14,000 millionaires in 2022 and
2023, more than any country among those measured bar China, including
Russia. By contrast Australia, Singapore and the UAE, and eight other
countries, attracted over 1,000 millionaires each in net inflows—reflecting,
perhaps, their more predictable rule of law.

But for those who stay, even intensified autocracy may not be enough to lose
Mr Modi many votes. In 2019 India’s economy, reeling from a mini-
financial crisis, slowed to a growth rate of 4%. While this weakness was not
entirely Mr Modi’s fault, his impulsive decision to swiftly demonetise large
banknotes in 2016 had not helped. Elites complained, but apparently felt that
Mr Modi was better for their wallets than the opposition, and voted for him.

This is why many say that support for Mr Modi will continue until a credible
alternative appears. Most elites have lost faith in Congress and its leader,
Rahul Gandhi, who is seen as dynastic and out of touch. One senior
Congress official even admits that Mr Modi “has taken our best ideas”, such
as distributing welfare payments digitally, and “executed them better” than
his party could have done. A stronger opposition is probably the only thing
that will cause India’s elites to abandon Mr Modi. For now, however, that is
nowhere in sight. ■

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Building back stronger

Japan is still reeling 100 days after the Noto

earthquake
The recovery will take years, and holds lessons for future disasters
Apr 1st 2024 | Suzu and Wajima

FISHING BOOTS. Their son’s beloved fishing boots—that is what

Hamazuka Hiroyuki and Chiaki most hope to find under the rubble of their
garage. The Hamazukas’ place in Suzu, on the northern tip of Japan’s Noto
peninsula, is one of nearly 100,000 buildings that were damaged or
destroyed when a massive earthquake struck on January 1st. As of late
March the death toll had reached 244 people. The Hamazukas and their
children survived, but like most of their neighbours, nearly 100 days after
the tremor, the family is only beginning to piece its life back together.

The peninsula will take years to recover, says Fujino Tatsuo, a disaster-relief
volunteer. The lessons it offers are pertinent for the earthquake-prone area
around the Pacific Ocean known as the “ring of fire”—as seen on March
3rd, when Taiwan was hit by an earthquake of magnitude 7.4, its strongest in
over two decades.
In Noto, the shaking began around 4pm on New Year’s Day. “The sea
looked black, and it was swirling,” Mr Hamazuka recalls. With a magnitude
of 7.6 the quake was the strongest to hit the country since the Great East
Japan earthquake of 2011, which triggered a massive tsunami and
precipitated the nuclear meltdown at Fukushima. The seismic activity in
Noto initiated a process known as “liquefaction”, wherein normally solid
ground turns into a liquid-like substance. In Wajima, the peninsula’s main
city, a fire broke out at a market, leaving a wasteland behind.

Across Noto, the wreckage is widespread. Although newer structures

survived, many traditional wooden houses were flattened. Nearly 10,000
people are still displaced. Residents strive to maintain their dignity. At one
evacuation centre in Wajima a group of women whisk green tea and arrange
sweets on lacquer trays, the town’s signature craft. Yet grief and shock are
never far below the surface.

The damage in Noto might have been worse, had it not been for Japan’s
attention to disaster risk and a bit of good luck. The quake struck a peninsula
that is home to a small fraction of the country’s population and accounts for
a minor share of its GDP. The government estimates that the damage will
amount to around ¥2.6trn ($17bn), a manageable amount compared even
with the cost of another big quake in 2016 in Kumamoto, a mid-sized
southern city, which did ¥5trn worth of damage. (Feared tremors in Tokyo or
central Japan would cause far more.) Though the government issued a major
tsunami warning, the waves turned out to be smaller than expected.
Residents largely heeded calls to evacuate.

Yet each earthquake in Japan is a lesson for future disasters. The remoteness
of the Noto peninsula has complicated rescue and recovery efforts. Roads
leading to Kanazawa, the regional capital, were destroyed, and for weeks
after the quake a drive that had normally taken two hours took up to nine.
Ports were damaged, while bad winter weather grounded helicopters.

The Noto peninsula is also at the edge of Japan’s demographic transition.

The region is one of the oldest, with nearly half of the population older than
65, compared with around 30% nationally. Elderly residents are especially
vulnerable during disasters. But it is not only Japan’s population that is
ageing—its infrastructure is, too. Water pipes laid during Japan’s post-war
boom are reaching the end of their useful lives, but utilities lack funds to
invest in upgrades. Depopulation is eating into their profits. In Noto as many
as 135,000 households were left without water. Flush toilets are still hard to
come by. Volunteers set up makeshift facilities. “People cried when they
took baths for the first time,” recalls Kamikawa Tetsuya of VNet, a non-
profit.

New technology may be able to help. At evacuation centres across the

peninsula residents can wash using special sink and bath units that self-
recycle water, courtesy of Wota, a Japanese startup that produces
decentralised water-treatment infrastructure. Drones were deployed to help
ferry supplies to hard-to-reach coastal communities. Digital ID cards have
made it easier to track those in need—officials hope the disaster will
encourage their use. “We want to make the region more resilient, not just lay
more concrete,” says Nishigaki Atsuko, vice-governor of Ishikawa
prefecture, which includes the Noto peninsula.

Yet the recovery is sure to be protracted. “It feels almost endless,” one
official in Wajima says. Merely clearing away debris is projected to take
until early 2026; the disaster waste is expected to amount to some 2.4m
tonnes, equivalent to roughly seven years of the prefecture’s rubbish.
Officials hope to have displaced people back at home within four years, but
in reality it may take much longer, or not happen at all.

The main long-term risk is accelerated population decline, reckons

Karashima Yukari of the Peace Boat Disaster Relief Volunteer Centre, a non-
profit: “How many people will actually come back?” As Japan knows all too
well, disasters continue long after the shaking stops. ■
This article was downloaded by zlibrary from https://www.economist.com/asia/2024/04/01/japan-is-still-reeling-100-days-after-
the-noto-earthquake
In a different league

The end of cricket’s Indian monopoly

The Indian Premier League is a model for other tournaments
Apr 4th 2024 | MUMBAI

WALK INTO any room in India with a screen from now until the end of
May and you will find yourself watching the Indian Premier League (IPL), a
wildly popular cricket tournament that is by some measures the world’s most
lucrative sports league after America’s National Football League. Until a
few days before it started, late last month, the same screens would have been
showing the Women’s Premier League (WPL), IPL’s women’s counterpart.
Early March also saw the inaugural season of the Indian Street Premier
League—cricket played with a yellow tennis ball.

It is a truism that Indians are obsessed with cricket. Yet the success of IPL
has had the unlikely effect of spurring an efflorescence of domestic leagues
in other sports, too. Over the past decade leagues modelled on IPL have
emerged in hockey, tennis, badminton, football and handball, along with
indigenous games such as kho kho and kabaddi. Some, notably kabaddi,
have even been commercially successful. A cricket-mad country is
diversifying.
Cricket took 87% of every rupee spent on sports advertising, sponsorship
and endorsements last year, according to GroupM ESP, a marketing agency.
But that was down—a smidge—from 88% in 2021 (see chart). “The pie for
non-cricket sport is going to grow,” says Divyanshu Singh of JSW Sports,
which owns teams in IPL, WPL, Pro Kabaddi League and the Indian Super
League, a football tournament.

As in any other boom, not all ventures will succeed. Some leagues have
already folded. Yet the culprit is not the dominance of cricket but a range of
internal factors. For a new league to attract viewers it must offer the very
best talent in that particular sport, says Sanjeev Tripathi of the Indian
Institute of Management in Indore. With global sports available on television
and streaming, the difference in quality between, for example, Indian and
American basketball leagues is apparent. Kabaddi’s success can in part be
attributed to the league offering the highest quality of play available in that
sport.

Moreover, leagues tend to succeed only in team sports. It is hard to build up

loyalty for artificial teams in player-driven sports such as tennis and
badminton. Any new league must also be well governed and offer its backers
a decent chance of recouping their investment. That means setting sensible
caps on player salaries, keeping costs down and investing in high production
standards, says Anupam Goswami, commissioner of the Pro Kabaddi
League. As with the quality of play, viewers accustomed to global sports are
turned off by amateurish production. Another crucial reason for non-cricket
sports to succeed in India, says Mr Singh, is success itself: “As a TV-
viewing audience, we are not such fans of sport. We are fans of superstars.”

Yet the most important factor in sustaining the sports boom is one where
progress remains slow. Though Indian viewers are happy to watch sports,
rates of physical activity are low. A recent survey by YouGov, a pollster,
found that while 57% of respondents described themselves as fans of cricket,
only 31% had actually played the game in the previous year. Rates for other
sports are even lower. Three-quarters of Indian adolescents are physically
inactive, according to the UN’s World Health Organisation. “The younger
generation has never played these sports,” says Jinisha Sharma of Capri
Sports, which owns cricket, kabaddi and kho kho teams. “How do you keep
finding newer talent?”■

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Damaging dynasties

Asian “nepo babies” are dominating its politics

They are stunting growth, too
Apr 4th 2024 | Manila and Singapore

IF POLITICS IN Asia shows anything, it is that family matters. In the

Philippines three of the four most recent presidents were the children of past
ones. In Cambodia Hun Sen, the strongman who has ruled since 1985,
recently passed on the prime ministership to his son, Hun Manet. North
Korea has only ever known three generations of the same ruling family.
Most families are bent on staying in power.

Political dynasties are not new. Nor can Asia claim a monopoly on them.
They have shaped nearly every continent. Yet it is hard to think of an Asian
country unsullied by them. Nowhere else is the case so assiduously
cultivated by dynasts and their fans that power passed down by families is
the best guarantor of social peace and spreading prosperity. This profoundly
mistaken claim has egregious effects on the region’s economies and their
ability to grow.

Indeed, “nepo babies” are consolidating power. In January Sheikh Hasina,

daughter of Bangladesh’s founding father, Sheikh Mujibur Rahman, secured
her re-election as prime minister, in part by hounding the opposition—her
long-time enemy, Khaleda Zia, head of a rival clan, languishes under house
arrest. (She insists the vote was free and fair.) In Pakistan in February the
Sharifs and the Bhutto-Zardaris, two rival political dynasties who have
historically alternated in power, in effect joined forces, with the powerful
army’s backing, to keep out a non-dynast, Imran Khan, in the election.

Indonesia’s presidential election, also in February, saw a family alliance

triumph. Prabowo Subianto, a general under the late Suharto’s dictatorship
and the former husband of Suharto’s daughter, won the presidency. He chose
the son of Jokowi, the popular outgoing president, as his running-mate. (In
2014 Jokowi insisted that becoming president “does not mean channelling
power to my own children”.)

Alliances, of course, can also fracture. President Ferdinand “Bongbong”

Marcos is the son of a former president, also Ferdinand, who turned dictator
before being deposed in a popular revolution in 1986. His vice-president,
Sara Duterte, is the daughter of the previous president. The uneasy alliance
that brought them to power in 2022 has since turned to open feuding.

History plays its part in making Asia prone to dynastic rule. In the
Philippines many political families date back to colonialism. Upon
independence rich families snapped up land that poor Filipinos could not
afford. Clans, the Marcoses among them, developed vast haciendas. Four
presidents since 2001 have come from these landowning classes. Ronald
Mendoza of Ateneo de Manila University calculates that 78% of the
country’s governors, 73% of congressmen and 57% of mayors are from
families boasting more than one member holding an elected position.

Land ownership also plays a part in the prominence of political families in

Pakistan and Bangladesh. In India, by contrast, dynasties are products of
post-independence democratic elites. This is especially the case with the
Nehru-Gandhi family, which has produced three prime ministers, starting
with the first, Jawaharlal Nehru. His great-grandson, Rahul Gandhi, runs
Congress, the main opposition party (though he looks likely to be thrashed
in India’s upcoming election).
The effects of nepotism can be profound, as seen in crushingly poor North
Korea. In the Philippines work by Mr Mendoza and others shows that in the
country’s more prosperous regions, such as Luzon in the north, political
families encourage economic development, but also expand their wealth and
clout. The limits of reform are reached when their interests and those of their
cronies are at risk. Mr Mendoza’s paper calls these dynastic politicians
“stationary bandits”.

As for Pakistan, a paper by Ayesha Ali of the Lahore University of

Management Sciences highlights how, after disastrous national floods in
2010, development spending was over a tenth lower than the average in
those constituencies run by political dynasts. In India, dynastic rule lowers
the growth in light visible at night—a proxy for economic activity—by 6.6
percentage points per year, according to a paper by Siddhart Eapen George
and Dominic Ponattu. In order to shine, Asia needs to dump its dynasts. ■
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politics
Banyan

For a glimpse at Japan’s future, look at its

convenience stores
The country’s 7-Eleven shops show the importance of immigration
Apr 4th 2024

TO UNDERSTAND HOW Japan is changing, consider the 7-Eleven

convenience store in Minami-Azabu 1-chome, in central Tokyo. At first
glance, it appears to be like any other konbini, as such shops are known
locally—a paragon of impeccable Japanese service culture. Clerks shout
“Irasshaimase”, a greeting to customers, each time the doors open. Rows of
neatly arranged seasonal snacks fill the shelves and the scent of freshly fried
chicken wafts through the air. Yet all the staff are Burmese, including the
owner, May Zin Chit, the first person from Myanmar to own a Japanese 7-
Eleven franchise.

Konbini are the lifeblood of modern Japan. Since emerging in 1969, they
have outgrown their American antecedents, becoming an essential part of
the country’s social infrastructure—and a $77bn-a-year industry. The four
main chains—7-Eleven, FamilyMart, Lawson and MiniStop—boast a total
of 55,700 branches, dotted across every city and town; last year they served
a combined 16bn customers. Japanese rely on them as places to buy fresh
food, pay bills, pick up sumo tickets, send parcels, and much more, 24 hours
a day. Foreign tourists marvel at the range of their offerings; famous
international chefs praise their egg sandwiches.

Yet there are ever fewer Japanese to make the konbini magic happen. Japan’s
working-age population peaked at 87m in 1995 and is projected to fall to
55m by 2050. Bringing more women and elderly Japanese into the
workforce can help counteract the trend, but only to a limited extent.
Japanese politicians are loth to say it out loud, but immigration is also part
of the answer—as Ms May’s journey up the konbini ladder demonstrates.

Ms May first came to Japan as an exchange student. When she began

working at 7-Eleven in 2008, there were just 500,000 foreign workers in
Japan. People would stare at her. Customers often asked to speak with
Japanese staff.

While avoiding talk of an official “immigration policy”, the Japanese

government has quietly opened the door for more foreigners to enter the
country in recent years. The number of foreign workers has quadrupled since
2008, reaching the 2m mark for the first time last year. (Another 1.2m
foreigners live in Japan, but do not officially work.) On March 29th the
government expanded the list of fields eligible for skilled-worker visas.

The number will have to rise faster. Japan needs 4.2m foreign workers by
2030 to sustain even its modest GDP growth targets. Though wariness about
large-scale immigration is still widespread, the labour crunch has convinced
many business leaders and officials of the necessity of a more multicultural
Japan. Foreigners make up roughly 2.5% of Japan’s population today, but
according to the government’s own projections, the ratio will exceed 10% by
2070, similar to current levels in France. As Yasui Makoto, who leads efforts
on multicultural coexistence at 7-Eleven, notes, that era falls within the
lifetime of today’s children.

Inside Japan’s konbini that era has already arrived. Some 80,000 foreigners
work in the industry, accounting for 9% of the workforce; in many big cities,
half of 7-Eleven staff are foreigners. (Many of them are students.) At Ms
May’s shop, she seeks to “provide a Japanese level of service”, stressing to
staff the importance of the “little details”, such as how to bag products and
not squish them.

At 7-Eleven, Ms May is held up as a model the company hopes to replicate.

Yet too many roadblocks remain for others to follow in her path. Many of
the students who work at konbini struggle to get visas to continue working
there after graduation. Relatively few rise to the level of store manager,
much less an owner. Ms May had to secure permanent residence, an arduous
process, and a line of credit in order to achieve her dream of owning a shop.
For all the government’s tweaks to the migration rules, it is still far too
difficult for prospective migrants to put down roots in Japan.

Ms May, for her part, hopes to stay in the country for good. She is raising
two young children, who speak Burmese at home and Japanese at school.
“Now that I have a family here, Japan feels like home,” she says. Like many
native-born Japanese, she enjoys travelling to onsen (hot springs) and has a
favourite konbini snack of her own: gyu meshi, a rice bowl topped with
stewed beef. Becoming a store manager gave her confidence. “It made me
think that it doesn’t matter if I’m a foreigner, as long as I work hard,” she
says. Japan, slowly but surely, may be learning the same lesson. ■

Read more from Banyan, our columnist on Asia:

Vietnam’s head of state leaves under a cloud (Mar 27th)
A string of setbacks for the junta in Myanmar presents an opportunity (Mar
21st)
Pakistan’s generals look increasingly desperate (Mar 14th)

Also: How the Banyan column got its name

This article was downloaded by zlibrary from https://www.economist.com/asia/2024/04/04/for-a-glimpse-at-japans-future-look-at-
its-convenience-stores
China

How China’s political clans might determine its future

China’s tin-eared approach to the world
The power of princelings

How China’s political clans might determine its

future
The descendants of those who fought with Mao will help choose the
country’s next ruler
Apr 4th 2024

CHINA’S PROPAGANDA chiefs are eager to show that Xi Jinping, the

country’s leader, belongs to the red aristocracy. They pump out books and
documentaries about his late father, Xi Zhongxun (pictured, left), who was a
comrade-in-arms of Mao Zedong. Once a year, when state television shows
Mr Xi delivering new year’s greetings from what purports to be his desk, his
father’s picture is clearly visible on a bookshelf behind him. The message is
clear: Mr Xi’s bloodline is impeccable.

When Mr Xi came to power in 2012, many observers described it as a

symbol of the rise of “princelings”, a term often applied to descendants of
the most senior revolutionaries who fought with Mao, as well as the
offspring (and their spouses) of those who served as senior officials in
Beijing after the Communists came to power in 1949. Mr Xi became one of
four members of the party’s most powerful body, the seven-member
Politburo Standing Committee, who could be described as princelings.
Never had it been so stacked with them.

At the highest levels of politics, things look very different today. After a
reshuffle in 2022, Mr Xi became the only princeling in the Standing
Committee. He appears not to want to share power with others whose
pedigrees could challenge his own.

But princelings might yet determine China’s future. They still permeate the
management of state-owned enterprises (SOEs) and financial firms, as well
as the armed forces’ officer class. In these institutions, family connections
matter. Power is transmitted through formal mechanisms, yet its origins are
often hazier, involving networks tied to bloodlines. This has big
implications. When Mr Xi leaves the political scene, red families will have
the wealth, prestige and military ties that could enable them to shape what
comes after. The next ruler may not be a princeling, but the clans may be
kingmakers.

To understand all this, one must look at the way politics evolved following
Mao’s death in 1976. After Deng Xiaoping introduced market reforms in the
late 1970s, many princelings went into business. Having experienced the
vicious politics of the Mao era, they saw this as a safer option. But Deng and
his colleagues wanted to keep the party in the hands of people like
themselves, so they picked a few of their offspring to groom as potential
leaders. Mr Xi was one of them. He began a long and unremarkable career in
the provinces.

When the opportunity eventually came for a handover of power to

princelings, Mr Xi faced little competition from others of his pedigree. The
most notable exception was Bo Xilai, the suave and charismatic party chief
of the south-western region of Chongqing. Mr Bo is the son of Bo Yibo, one
of several revolutionary veterans who, along with Deng, wielded enormous
influence from the late 1970s and whose clans today are foremost among the
red families. (Most, including Deng, had died by the late 1990s, though Mr
Xi’s father lived until 2002 and Mr Bo’s until 2007.) In Chongqing Mr Bo
deviated from the low-profile norm of provincial leaders by waging a
sweeping campaign against corruption and whipping up nostalgia for the
egalitarian Mao years. His populist style attracted many supporters.
But Mr Bo’s political ambitions were scuppered by the flight of his police
chief to an American consulate, where he revealed that Mr Bo’s wife had
murdered a British businessman. Mr Bo was arrested a few months before
Mr Xi took over. Mr Xi eventually had him jailed for life for bribe-taking
and other misdeeds. He later accused Mr Bo of planning to “seize power”.
Mr Bo is now thought to be in Qincheng prison on Beijing’s northern
outskirts, the usual place of incarceration for casualties of high-level
struggles. He enjoys special treatment there. According to the South China
Morning Post, a newspaper in Hong Kong, he is allowed to wear a Western
suit.

To consolidate his power, Mr Xi leant heavily on one of his fellow

princelings on the Standing Committee: Wang Qishan, the son-in-law of Yao
Yilin (Yao was on the Standing Committee during Deng’s rule). On Mr Xi’s
behalf, Mr Wang masterminded a war on corruption that toppled hundreds of
senior officials and military commanders, thereby crushing any potential
opposition to the new ruler.

Mr Wang stepped down from the Standing Committee in 2017, but the
purges continue. One of those felled last year was a red aristocrat: General
Li Shangfu was sacked as defence minister a few months after taking up the
job. General Li’s father was a revolutionary who became a high-ranking
officer under Mao. His alleged offences have not been revealed.

Stick to business
For now, General Li remains on the Central Committee, a body comprising
about 370 members of the party elite, from ministers and provincial leaders
to SOE bosses and military brass. But he is likely to be booted out when it
next meets, probably this year. That would leave only nine members of the
group who are princelings, reckons Cheng Li of the University of Hong
Kong. When Mr Xi became the party’s boss the Central Committee had 41
of them (see chart).
In business it is a different story. In the build-up to Mr Xi’s accession,
Western media uncovered sensational details of the riches accumulated by
family members of some of China’s most powerful people. Investigations by
the New York Times revealed that relatives of current and former senior
officials had “amassed vast wealth, often playing central roles in businesses
closely entwined with the state, including those involved in finance, energy,
domestic security, telecommunications and entertainment”. Bloomberg, an
American news service, focused on Mr Xi’s relatives, linking them to
hundreds of millions of dollars in assets (it said none was traced to Mr Xi,
adding that it had found no indication of any wrongdoing by Mr Xi or his
family).

Officials reacted furiously to the reports. They retaliated by blocking visa

applications from these news organisations. In 2019 the Chinese foreign
ministry refused to renew the press credentials of a Singaporean reporter for
the Wall Street Journal, Chun Han Wong, forcing him to leave the country.
Mr Wong had written about an organised-crime investigation by Australia’s
authorities that touched on the activities of a businessman who is a cousin of
Mr Xi and has become a naturalised Australian citizen. (The article said
there was no evidence that Mr Xi knew about the man’s business and
gambling affairs.) According to the paper, ministry officials urged it not to
publish the article, warning of unspecified consequences.
In 2014 the New York Times reported that Mr Xi had been pushing family
members to sell hundreds of millions of dollars in investments. They
included stakes in mining and property firms held by his sister, Qi Qiaoqiao,
and brother-in-law, Deng Jiagui. But Mr Xi’s anti-corruption campaign has
had little impact on the dealings of political families, says Desmond Shum, a
Chinese businessman who moved to Britain in 2015. “Maybe it’s more
subtle than it used to be. It’s not so in-your-face,” he says. But he calls
cashing in on the family name “a baked-in feature” of princeling life.

Mr Shum is rare as someone who is both a close-up witness of how these

dealings work and who is willing to talk openly about them. He is the ex-
husband of Whitney Duan, also known as Duan Weihong, who became a
close friend of Zhang Beili, a businesswoman and jewellery expert who is
the wife of Wen Jiabao, the former prime minister. Mr Shum and Ms Duan
helped to arrange some of Ms Zhang’s deals. (In an exposé of this, “Red
Roulette”, published in 2021, Mr Shum wrote that they had always been
careful “to stay within the boundaries of the law”.)

Few princelings have been arrested in the anti-corruption drive. Mr Shum

says one reason is Mr Xi’s feeling of kinship with them: “It’s a web,” he
says. “They are people who worked with your father, they are the children of
your father’s colleagues, your father’s underlings. They grew up with you.”
For Mr Xi to send princelings to prison, other than those who pose a
political threat, would “almost go against his upbringing”, Mr Shum
believes. Mr Xi’s rise “was really with the support of that group”.

Mr Xi has made it much harder to trace the princelings’ business

connections. As Shanghai correspondent of the New York Times between
2004 and 2015, David Barboza played a big role in exposing these networks.
He later co-founded The Wire Digital, a China-focused news and data
platform based in New York. Mr Barboza doesn’t think any journalist could
obtain the kind of detailed company records that he could get access to when
working in China, with owners’ signatures, addresses, ID-card details and
phone numbers. These records were on paper, and the authorities have
clamped down on access to them. “Even companies have a hard time getting
the paper records,” Mr Barboza says.
Details of Chinese company ownership are still available from online
databases (Mr Barboza’s firm maintains one, called WireScreen, that flags
people known to be politically connected). But those provided by Chinese
firms contain far fewer of the clues that Mr Barboza was able to glean from
the records he used. He believes that the princelings are still doing big deals,
however. “I don’t think it’s changed dramatically, except in this sense:
everyone is afraid of Xi Jinping. And people are either trying to figure out
how to hide their money better, or move it offshore.”

Comrades up in arms
Mr Xi does not reject the idea that bloodlines matter. Far from it. He has
dedicated his rule to revitalising the party and reviving its “revolutionary
spirit”. This has involved playing up the heroism and idealism of its
founding fathers. At the party’s celebrations in 2019 of 70 years of
Communist rule, some of their descendants joined a massive parade through
Tiananmen Square, sitting on open-top buses painted red and gold, waving
portraits of their powerful ancestors (see picture). Prominent among them
was Mao’s grandson, Major General Mao Xinyu.

But Mr Xi’s high-handed ways have angered at least some of the princelings
who once backed him. Joseph Torigian, who is writing a book about Mr Xi’s
father, believes that many princelings are extremely dissatisfied with him.
“They think that he has just completely shut them out,” he says. Olivia
Cheung of the School of Oriental and African Studies in London believes
Mr Xi is mindful that the collapse of authoritarian regimes is often caused
by fighting within the elite, rather than public protests. “I think Xi Jinping is
quite alert to that. So keeping the princelings under control has to be a
political priority.”

To Mr Xi, it clearly is. The sentencing of Mr Bo was a dramatic example.

But Mr Xi has also tried to stifle more liberal types. Such princelings were
among backers of Yanhuang Chunqiu, a journal that explored the dark side
of the Mao era and suggested greater political freedom. Its deputy publisher
was Hu Dehua (pictured, right), a son of the former party chief, Hu
Yaobang, whose death in 1989 triggered nationwide pro-democracy
upheaval. At closed-door meetings organised by the publication, the
princelings aired their views on the need for political reform—until officials
purged the journal’s leadership in 2016 (including Mr Hu) and replaced it
with a new team in tune with Mr Xi’s thinking.

Among the few to have defied Mr Xi openly is the retired chairman of a

state-owned property company, Ren Zhiqiang (pictured, left). Mr Ren is the
son of Ren Quansheng, who served under Mao. In 2020 he was sentenced to
18 years in prison for corruption and abuse of power. The real, unstated,
reason was his tirades against Mr Xi. He was detained after calling him “a
clown with no clothes on who is still determined to play emperor”.

Other princelings support Mr Xi’s efforts to stiffen the party’s sinews, but
they point to Mao’s days as a time when China was supposedly fairer and
more in tune with the needs of the working class (they are denialists of
Maoist horrors). A clutch of neo-Maoist websites fawningly report on the
activities of princelings sympathetic to their cause, such as their staging of
events last year to mark the 130th anniversary of Mao’s birth. Attendees
included several of his descendants (among the political clans, Mao’s is
relatively marginal).

Just because Mr Xi has sidelined them, it would be a mistake to declare that

princelings have no political future. There are three good reasons for
keeping an eye on them. First, revolutionary families have been important
since the beginning of Communist rule. Mao and Deng were both giants of
the revolutionary era. Deng’s immediate successors, Jiang Zemin and Hu
Jintao, were not, but they were selected by him. Mr Xi’s rule is seen by
princelings as a resumption of the norm: rule by the red aristocracy after
years of caretaker administration. If Mr Xi steps down, his successor is
likely to be a puppet. When he dies, the aristocracy will expect a say in
designing China’s next political phase.

The second reason is that clans, unlike individual rivals, are impossible to
wipe out. The princelings may have been pushed aside by Mr Xi, but their
wealth gives them much potential influence.

To be sure, each new generation sees the world differently from their elders:
the hongsandai, or third-generation reds, include some whose embrace of
Western lifestyles would appal their ancestors. Check the Instagram account
of @baobaowan. Its owner is a grand-daughter of the late Wan Li, a veteran
of the revolution. “Delighted to receive the first Aston Martin DBX in
China, in the very unique satin solar bronze color that I always loved,” went
a post in 2020. But Victor Shih of the University of California, San Diego,
believes these families’ views may still affect the outcome of a succession
struggle. “They can play a very pivotal role,” he says.
The third reason why princelings may prove important is simply their
numbers. The system is “infested” with them, says Mr Shum. When
succession looms, party structures will be involved in deciding the outcome.
But, if the past is a guide, the new line-up will be decided by a broader
swathe of the elite, with retired officials, especially those of good
revolutionary genes, having a say. To protect their interests, these ex-leaders
may feel safer with someone of their own blood in charge.

Indeed, that was the case in 2012, when they preferred Mr Xi (even if many
came to resent him). China’s leader has since worked hard to prevent the
emergence of coalitions that might threaten his power. Officials are rotated
more frequently. Efforts are made to keep them employed away from their
home provinces. But clan links are harder to smash. One princeling currently
towers above the others. He may not be the last of his kind. ■

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determine-its-future
Chaguan

China’s tin-eared approach to the world

It wanted countries to focus on interests, not values. Careful what you
wish for
Apr 4th 2024

FOR CHINA’S finest barbarian-handlers—an elite corps of diplomats,

technocrats, trade envoys and foreign-policy scholars—this is a told-you-so
moment. Such Chinese voices have spent years urging foreign governments,
especially those with deep ties to America, to fuss less about democratic
values and other fuzzy notions, and to focus on cold, hard national interests.
Now, they argue, the times are proving them right.

In China’s telling, America stands exposed as a hypocrite, quick to accuse

China or Russia of breaking international law and abusing human rights,
while supplying bombs used to kill civilians in Gaza. In Beijing it is said
that Russia’s invasion of Ukraine united the West, but Israel’s conflict with
Hamas is dividing it again. It is predicted that if Donald Trump is re-elected
his allies will learn, once again, that this is a friendless world and that
“America First” means what it says. In such a moment, wise foreign
governments will stop pointing fingers at the flaws of other political systems
or regimes, and concentrate on making their own citizens safe and
prosperous. This advice is applied most particularly to relations with China.
According to Chinese officials and scholars, shrewd foreign leaders should
spurn American calls to join ideological blocs or defence alliances that are
meant to contain China’s rise. Instead, states should concentrate on striking
bilateral, “win-win” deals with Chinese economic partners.

A mood of grim vindication suffuses many gatherings of China’s foreign-

policy establishment. Today, the logic of power guides international
relations, it is said. There is evidence that others share that outlook, to
China’s benefit. A newly published poll of South-East Asian political,
business and academic bigwigs, conducted by the ISEAS-Yusof Ishak
Institute, a think-tank in Singapore, makes gloomy reading for American
diplomats. Since the poll was last taken a year ago, respondents from
ASEAN countries are less confident that America is a reliable partner and
more sceptical of the international rules-based order. The conflict in Gaza
plays a role: it is the most-cited geopolitical concern, especially in such
majority-Muslim countries as Indonesia or Malaysia. It comes ahead of
“aggressive behaviour in the South China Sea” (meaning, Chinese bullying
of the Philippines and other neighbours). When asked to choose between
America and China, should the region have to pick one of those rivals, 61%
of respondents chose America in 2023. Now they are divided 50-50. This
year’s survey shows growing wariness of China’s political and military
clout. But its economic power is seen as unrivalled.

In Beijing’s tree-lined embassy districts, a mood of pragmatism prevails.

Western governments challenge China’s human-rights record at faraway UN
meetings, raising concerns about repression in Xinjiang or Tibet, or the
crushing of political rights in Hong Kong. But foreign envoys admit to an
overwhelming focus on interests. The world is too messy for noisily
confronting China over values. Then there is America’s presidential contest,
which a diplomat calls “the Armageddon election”.

In short, China has what it all along said it wanted: a world guided by
interests, not values and ideology. Alas, it is responding clumsily. In some
cases, it is too cynical about the motives of others. China has a bad habit of
telling countries that they are America’s pawns. Chinese officials accuse the
Dutch and Japanese governments of bowing to America when they control
exports of semiconductors and other high-tech tools, urging them to think of
their interests and shun America’s “cold war bloc mentality”. In truth, such
allies are following an overwhelming interest: maintaining relations with
their strongest security partner. China is comfortable in a might-makes-right
world. But fears of such a world are pushing Japan, South Korea, Australia
and other neighbours to upgrade their armed forces and alliances.

A visit to Beijing this month by France’s foreign minister, Stéphane

Séjourné, was revealing. China’s prime minister, Li Qiang, told his visitor
that “our two countries have a long history and splendid civilisations” and a
shared “spirit of independence”—a coded appeal to resist America together.
Only last year France’s president, Emmanuel Macron, pleased China by
saying that Europe should not be a “follower” of America in the event of
war over Taiwan. For all that, France and other European powers have
serious disputes with China, based on calculations of their national interests.
Some involve geopolitics. Mr Séjourné called on China to pass “clear
messages” to Russia that peace cannot be imposed on Ukraine, adding that
“there will be no security for Europeans if there is no peace in accordance
with international law.”

Trade disagreements
The sharpest rows involve economics. With domestic demand weak and the
property sector slumping, China is betting on an export-led manufacturing
boom. As America walls itself off, Europe fears being the last large market
open to a wave of Chinese goods. Mr Séjourné told his Chinese counterpart,
Wang Yi, that Europe’s growing trade deficit with China is “not
sustainable”.

China is indignant about an EU trade probe into subsidies for electric-

vehicle makers in China. In Beijing this is called a bid to blackmail Chinese
firms into opening EV factories in Europe, and perhaps it is. Often, though,
Chinese arguments sound dismissive or tin-eared. The official Xinhua news
agency attacked the notion that Chinese overcapacity threatens other
countries, calling it “basic economics that surplus products naturally seek
out markets elsewhere once domestic demand is met”. That ignores some
basic politics: China has chosen to seek growth overseas, rather than
stimulate demand at home. It yearned for interests-dominated relations with
the world. Now it has them. Time to start treating foreigners’ interests with
more respect. ■

Read more from Chaguan, our columnist on China:

China’s low-fertility trap (Mar 21st)
Why China’s confidence crisis goes unfixed (Mar 7th)
China tells bankers to be more patriotic (Feb 29th)

Also: How the Chaguan column got its name

This article was downloaded by zlibrary from https://www.economist.com/china/2024/04/04/chinas-tin-eared-approach-to-the-world
United States

The Biden campaign in Michigan has a tremendous

ground-game advantage
An abortion ruling has Democrats hoping Florida is in play
The rise of the remote husband
Joe Biden’s assault on the $900 child-eczema cream
Are American progressives making themselves sad?
Like a dream to me now

The Biden campaign in Michigan has a

tremendous ground-game advantage
But does the Democratic Party have a sufficiently unified message?
Apr 4th 2024 | YPSILANTI, MICHIGAN

STANDING IN FRONT of a few dozen Democratic Party members in a

shopfront in Ypsilanti, a town just south-east of Ann Arbor, Debbie Dingell,
a congresswoman from Michigan, delivers the bad news. “None of you
believed me in 2016 when I said that Donald Trump could win,” she says.
“Too many people don’t know why we gotta elect Joe Biden. We aren’t
talking about what he’s gotten done the last four years.” She then goes on to
list half a dozen reasons why Mr Biden’s re-election is crucial, starting with
the environment, women’s reproductive rights, the economy, health care and
then finally, how Donald Trump is “splitting Americans apart” with his
violent rhetoric. “It’s more important now than it’s ever been to turn out the
votes,” she concludes. “Ground Zero is right here right now.”

Ms Dingell was speaking at the opening of one of 30 campaign offices that

Mr Biden’s campaign will soon have operating across the Wolverine State, a
decisive swing state during the past two presidential elections. In 2016 Mr
Trump won Michigan with a margin of just 0.3%. In 2020 Mr Biden took it
back for the Democrats by 2.8%. State Democratic officials are confident
that they can repeat the trick this year, and they cite a remarkable
campaigning machine built since 2017 as evidence. “We are organising and
talking to voters all the time,” says Lavora Barnes, the Democratic
chairwoman. But Ms Dingell’s warning rings true too. Michigan is thus a
good place to take the pulse of Mr Biden’s campaign. The president is
running a traditional playbook, while Mr Trump’s approach to electioneering
is as unconventional as ever.

Ms Barnes is right that Democrats have a significant organisational

advantage over their opponents. Nationwide Mr Biden’s campaign
committee has raised $129m to $96m raised by Mr Trump, and the cash is
flowing into Michigan. As well as opening offices, the party is hiring
staffers at pace. Phenomenally peppy 20-somethings are moving from all
over the country to take up campaign jobs. An army of pensioners with lots
of free time is already equipped with yard signs and bumper stickers to
distribute to their neighbours.

By contrast, Mr Trump’s campaign is far less visible. On April 2nd the

former president held a modest rally in Grand Rapids, attended mostly by
journalists and local Republican officials. But the campaign is only now
“putting in place the building blocks” of its organisation, says Pete Hoekstra,
the party chairman. “We are not counting offices,” he says, when asked if
any have opened yet. For much of the past year, Michigan Republicans have
been in disarray. In January members voted to oust their chair, Kristina
Karamo, a vocal proponent of the theory that the 2020 election was rigged,
over complaints that she was mismanaging the party and its finances. In the
end it took a lawsuit to get her to step down. At one point last year a dispute
between two party officials ended in a physical fight, with a county
chairman apparently complaining that a fellow activist had “kicked me in
my balls”.

Yet a ground-game advantage does not guarantee that Mr Biden will win the
state. Most evidence from political science suggests that door-knocking has
at most a marginal effect, generally by boosting turnout. It certainly cannot
replace a persuasive message. The early campaign suggests that Democrats
may have too many points to make and have yet to craft a unified argument.
Take for example the talking points of Gretchen Whitmer, Michigan’s
popular Democratic governor. Asked at another office opening, this one in
Livingston County, a Republican-leaning suburb north-west of Detroit, what
she expects the message of the election to be, at first she replies frankly:
“Everything’s about the economy.” But then she adds: “Our ability to make
our own decisions about our body, when and whether or not to bear a child,
that is the most important economic decision a woman will make over the
course of her lifetime.” In addition, she continues, education and climate
change matter, as does “onshoring supply chains”. These things, she says,
are “all going to be absolutely central to what’s on voters’ minds.”

The breadth of the message reflects the challenge Democrats face in

Michigan, particularly at presidential level. To beat Mr Trump, the party
needs to make sure that committed Democrats turn out in large numbers,
particularly in the state’s urban strongholds in Detroit and Ann Arbor.
Already that base is rather divided. It includes college students, black blue-
collar workers, white professionals, the liberal elderly and the more
unionised of the white working class. A few older activists in Livingston
mentioned unprompted their disdain for digital campaigning, arguing that it
doesn’t persuade anyone new. By contrast, young voters are deeply online.
“I really think that a lot more people now get their beliefs based off of, like,
Instagram and TikTok,” says Jacob Welch, the president of Michigan’s
College Democrats organisation. He worries that Mr Biden’s support for
Israel in Gaza is putting young voters off.

What unites the base most is, as Mr Welch puts it, that they all “despise
Donald Trump”. But the party also needs to win over at least a few people
who might be tempted to vote for him. Ms Barnes says that one of the
reasons Hillary Clinton lost the state in 2016 was that she prioritised making
sure solid Democrats turned out to vote, and neglected trying to persuade
people on the fence. “There was a lot of focus on just turnout,” particularly
in big cities, she says. Now they are trying to reach areas Democrats don’t
usually touch—hence the opening of offices in places like Livingston. “I
think that there are a lot of fair-minded, thoughtful folks who have voted
Republican in the past,” she says.

The tricky thing is that those voters may require different messages, and
sometimes they pull across each other. The voters Mr Biden needs to tempt
away are also a diverse mix. They include wealthier, more socially liberal
suburban Republicans but also blue-collar workers. Jacob Hilliker, the
Michigan representative for LiUNA, a large trade union that represents
mostly workers in the construction trade, and which has endorsed Mr Biden,
says the case for Mr Biden for his union members is that “he’s done nothing
but make it rain jobs like nobody has before”. When asked about the appeal
of culture-war issues, such as abortion or IVF, he demurs. “I have my
personal views on abortion rights, guns, the right to hunt in Michigan,” he
says, without specifying what they are. “We are here to fight for jobs.”

Mr Trump’s message, by contrast, is crude but simple. “You’re under an

invasion,” he told his audience in Grand Rapids. Flanked by a gaggle of
sheriffs, and two television screens showing a chart of border crossings, he
argued that Joe Biden is letting criminal “illegal aliens” and useless Chinese
electric cars flood into Michigan. (He said the crime rate in Venezuela has
fallen, which is true, and suggested it is because so many wrong-uns have
been sent to America, which is not.) To fix this, he proposes to whack
monstrous trade tariffs on Mexico, to stop Chinese firms building cars there,
and to “begin the largest domestic deportation operation in the history of our
country”. For good measure he also added that he would give police officers
accused of wrongdoing complete immunity from litigation.

Shawn Fain, the leader of the United Auto Workers union, says Mr Trump
“is like the third-grader running for class president, you know, he wants to
give a free candy machine to everybody in the class.” He points out that
when the union went on strike last year, Mr Biden visited them, whereas Mr
Trump, as president, shunned a strike in 2019. But even Mr Fain admits he
sometimes has to work to persuade his members. “You can claim you love
Trump or whatever the hell your reasoning is. And if you do that, so be it. I
feel for you. But at the end of the day, facts are facts,” he says. “He’s just
flat-out a con man.”

Mr Biden’s best hope is to pull all these strands together over the next seven
months. In Livingston County, Dan Luria, the county party vice-chairman,
adds his own ideas. Mr Biden, he says, ought to “reappropriate the concept
of freedom”. Freedom, he says, ties everything together—from reproductive
rights to the economy. Also, he adds, you can put out a lot of American
flags. That is one bit of advice the Biden campaign is sure to follow. ■
Stay on top of American politics with The US in brief, our daily newsletter
with fast analysis of the most important electoral stories, and Checks and
Balance, a weekly note from our Lexington columnist that examines the state
of American democracy and the issues that matter to voters.
This article was downloaded by zlibrary from https://www.economist.com/united-states/2024/04/04/the-biden-campaign-in-michigan-
has-a-tremendous-ground-game-advantage
Florida woman

An abortion ruling has Democrats hoping Florida

is in play
But for now it will end access to the procedure for millions of women in
the South
Apr 3rd 2024 | WASHINGTON, DC

TWO DECISIONS by Florida’s Supreme Court shook up the Sunshine State

this week. The first, which paves the way for a six-week abortion ban to start
on May 1st, will have immediate consequences for millions of women in the
South. The second, which approved a ballot initiative that would amend
Florida’s constitution to protect abortion, could prove even more significant.
A referendum in November will allow Floridians to have a decisive say on
the state’s abortion policy.

The court’s first decision in effect upholds a six-week ban passed by the
state legislature and signed by Florida’s Republican governor, Ron DeSantis,
last year. Only limited exceptions beyond that period are allowed, making
Florida one of the most restrictive states in the land. The decision to allow
abortion onto the ballot follows an energetic grassroots campaign that
collected over 1m signatures (reportedly 150,000 of them registered
Republicans). The two rulings have left Democrats believing that they now
may have a shot at winning the state in November’s presidential election.

The implications of the six-week ban are serious. Florida accounted for
about one in 12 abortions in America in 2023—a total of more than 86,000.
And because the state has become a destination for women from
neighbouring states with stricter rules, the ruling will hurt them too. Florida
was one of the states that saw the greatest increase in abortions following the
Dobbs ruling that overturned Roe v Wade. The state’s ban will cut off nearly
all access to abortion in the South.

Those women will need to go elsewhere for terminations beyond six weeks,
a point at which many do not even know they are pregnant. Some will try to
get their hands on abortion pills by post. Although unlawful under Florida’s
ban, such pills are increasingly available. Other women will have to travel
long distances for an abortion. No single state is big enough to make up the
difference.

Yet in the longer term, the extremity of the ban could, perversely, help
women who are seeking abortions. This is because of the court’s decision to
allow Floridians to vote on a constitutional right to abortion until viability
(typically 23-24 weeks). If over 60% of voters support the amendment, the
six-week ban would be overturned.

Such ballot initiatives have sprung up around America since the Dobbs
decision. In all six referendums held so far, voters have chosen to protect
abortion. Abortion-rights advocates in a dozen states are now trying to place
the issue on the ballot in November. Democrats across the country hope
these referendums will mobilise voters who otherwise may not have felt
inspired to get out and vote for Joe Biden.

In Florida, that looks like a decent bet. Most Floridians, including 60% of
Republicans, oppose a six-week abortion ban, and will now have an
opportunity to stop it. (A second referendum, also allowed on to the ballot
by the state court, on the recreational use of marijuana, is also bound to
mobilise some voters.)
Whether this potential mobilisation of otherwise stay-at-home voters will
prove sufficient to swing the state for Mr Biden is another matter. Nikki
Fried, chair of the Florida Democratic Party, thinks that the state is back in
play. “Everything is on the line,” she says. She predicts “a ground game that
we really haven’t seen in the state of Florida since Obama.”

The polls are certainly on Democrats’ side: 81% of Americans recently told
an Ipsos/Axios poll that abortion should be managed between a woman and
her doctor, not the government. And yet pollsters and political scientists
warn that the Democrats may need a reality check. The party has
haemorrhaged registered voters in Florida in recent years, a shift that helped
Mr DeSantis win by a 20-point landslide in 2022.

“This is not just about whether Biden can win Florida,” says Aubrey Jewett,
a political scientist at the University of Central Florida. Even with the
abortion-rights referendum, that will be very hard, he reckons. But the race
looks more competitive than it was a week ago. ■

Stay on top of American politics with The US in brief, our daily newsletter
with fast analysis of the most important electoral stories, and Checks and
Balance, a weekly note from our Lexington columnist that examines the state
of American democracy and the issues that matter to voters.
This article was downloaded by zlibrary from https://www.economist.com/united-states/2024/04/03/an-abortion-ruling-has-
democrats-hoping-florida-is-in-play
Marriage

The rise of the remote husband

She goes out to work, he stays at home (and logs on)
Apr 4th 2024 | NEW YORK

IN COSTA MESA, a city in California’s wealthy, beachy Orange County,

she is working her way up to becoming a partner in the local office of a
major law firm; he is an executive at a tech startup based in the Bay Area,
more than 400 miles away. In Cambridge, Massachusetts, he is writing code
from their apartment just off-campus, while she attends her classes at
Harvard Law School. She is an obstetrician, he works remotely for a tech
company; she is an academic at an Ivy League university, he works for a
crypto company. All over the country, among the well-heeled and well-
educated, a new trend appears to be emerging. When the wives head out in
the morning, to their offices, classrooms or hospitals, they are waving
goodbye to their husbands, who remain at home.

This is hardly a gender-swapped 1950s revival. The men are still working,
after all, not predominantly cooking, cleaning and caring for children. But it
does reflect an underappreciated effect of the rise of remote work: the rise of
the remote husband.
Men and women still specialise in different kinds of work. Jobs in industries
like computer science and engineering are disproportionately performed by
men. Teaching and nursing jobs are dominated by women. Professions like
law and medicine may still employ more men than women, but the scales are
tipping: more women than men are enrolled in law school and medical
school. As such, among young couples, she is probably more likely to be
going to be a lawyer or a doctor than he is.

Different occupations have also had to take different approaches to remote

working. A minority of medical professionals may be able to work remotely,
by taking telehealth jobs, but the vast majority have to treat their patients in
person. Lawyers may be tied to a specific state or area by their licence and
speciality. Meanwhile, the industries which reported the highest level of
remote-work flexibility are coding and technology, architecture, engineering
and business jobs. About half of people working in computer or
mathematical jobs work remotely full-time.

The upshot is that, in aggregate, it is easier for men to work from wherever
they please. A survey carried out by McKinsey, a consultancy, found that
38% of working men had the option to work remotely full-time, compared
with 30% of women. Roughly half of women report being unable to work
remotely at all, compared with 39% of men.

This may sound like yet another way in which women have ended up with
the short end of the stick. But that view is myopic. Couples compromise in
all kinds of ways for their lives to work together. If she is offered a big
promotion, conditional on moving to Chicago, she may have to turn it down
if his job is tied to New York. The geographical liberation of either partner
makes it possible for the other to ascend the corporate ladder. The Costa
Mesa couple picked that area because it was convenient for her job—and for
access to their children’s grandparents, who now regularly entertain the little
ones.

Claudia Goldin, a Nobel laureate, has written about how remote work may
be a boon for women. Over the past 200 years women’s participation in the
labour force has been highest when it has been possible to perform paid
work from home. She has also found that gender wage gaps are tightest in
fields where flexible working is the norm. But it is not only flexibility in the
work that women do that may be to their advantage. ■

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with fast analysis of the most important electoral stories, and Checks and
Balance, a weekly note from our Lexington columnist that examines the state
of American democracy and the issues that matter to voters.
This article was downloaded by zlibrary from https://www.economist.com/united-states/2024/04/04/the-rise-of-the-remote-husband
Drug-dependent

Joe Biden’s assault on the $900 child-eczema

cream
What the Inflation Reduction Act means for the cost of health care
Apr 2nd 2024 | WASHINGTON, DC

BUYING PRESCRIPTION drugs in America can feel a bit like being a

tourist haggling at a street market. First, a ludicrous “retail price” is
mentioned (for your correspondent recently, $902 for eczema cream for a
child). Then insurance is applied, followed by a layering-on of coupons
(often printed by the pharmacist and then handed to themselves), discount
cards and rebate claims. And yet even after all that, the amount of cash you
pay out of pocket is still steep by international standards (the cream ended
up costing $273).

Americans agree on few things, but lowering the price they pay for
medication is the most popular policy position in American politics, tied
with support for Social Security. Nine in ten say this should be an important
or top priority for Congress. In his state-of-the-union message Joe Biden
spent a full three minutes on the topic. Yet only one in four say they are
aware of his attempts through the Inflation Reduction Act (IRA) of 2022 to
reduce prices. This is something he needs to rectify.

At least as interesting as the direct impact of the law is the question of what
the indirect ones might be. Americans spend twice as much on prescription
medication per person as comparable countries, according to Peterson-KFF,
a health-research group. This spending is skewed by branded drugs with no
competitors, so-called non-generic drugs. These make up 10% of
prescription drugs but 80% of spending. Adjusted for inflation, spending on
prescription drugs has increased from $101 per person in 1960 to $1,147 in
2021.

The IRA, which was mainly a climate-change and industrial-policy law, did
actually have some provisions designed to bring down prices (although not
in the short term). One politically important one relates to Medicare, the
public-health insurer for the elderly which covers prescription drugs for 50m
people. The IRA empowered Medicare administrators to negotiate with (or
maybe dictate to) drugmakers, which they had long been forbidden to do.

A gentle, circling motion

This should eventually reduce the price consumers pay. In the near term, the
IRA also capped some out-of-pocket drug costs. The first to feel the effects
of these measures are people with diabetes who need insulin, a drug for
which Americans pay several times what Europeans pay. A national out-of-
pocket cap of $35 per insulin prescription per month has meant that, since
January 2023, millions enrolled in Medicare now pay less.

Another tangible result is an annual cap on out-of-pocket spending. Doug

Hart, a 77-year-old from Arizona with heart disease, previously spent about
$7,000 per year on prescription medication. Under the new cap, which is
being phased in, he will be on the hook for only the first $3,300 this year,
before Medicare foots the rest of the bill. From next year, the cap will be
lowered to $2,000. “The way I see it, Biden is saving me $5,000 in out-of-
pocket drug costs [and] I can go and see my grandkids in Chicago instead,”
he says.
These measures have been relatively easy to implement because, if anything,
the pharma industry welcomes them: they make drugs cheaper for
consumers while the government picks up the difference. But Mr Biden’s
law also gives Medicare a mandate to negotiate drug prices directly with
manufacturers and penalises those that raise prices above inflation. This has
met with more hostility from the industry, which argues that it will crimp
innovation. Yet it is this part that will make a difference for taxpayers:
without it, the price caps for consumers will just push high drug bills on to
the government. Mr Biden’s claim that he has already saved American
taxpayers $160bn thanks to these negotiations is misleading, because it
relies on projections of future government savings.

Negotiations between the government and Big Pharma are under way behind
closed doors. Drug companies are keen to reassure shareholders that the
government’s proposals are not as outlandish as feared. Yet at the same time
they have filed several lawsuits challenging the legislation. One way or
another, the federal agency that administers Medicare will publish a list of
the “maximum fair price” for each of the first ten negotiated drugs by this
September, with the intention of introducing these discounts by 2026.
Medicare spending on these ten drugs more than doubled between 2018 and
2022.

There is also the question of what the knock-on effects of the IRA will be.
Mr Biden has said he will try both to increase the number of drugs subject to
negotiation and expand the $2,000 out-of-pocket cap to people with private
insurance. Once the prices that Medicare pays for expensive drugs are
published, this might increase the bargaining power of private insurers too.
“Now that the government has these new tools, there are huge opportunities
to go beyond [the IRA],” says Richard Frank of the Brookings Institution, a
think-tank. “If you can suddenly negotiate more drug prices, earlier in their
life cycle, or these prices apply to the entire private market, then suddenly
this is not an incremental change—this is a sea change,” says Benedic
Ippolito at AEI, another think-tank.

The president’s campaign team will be hoping that enough people notice the
new, reduced Medicare drug prices in September—just in time for the
election. But another scenario is just as likely: Mr Trump wins and claims
credit for Mr Biden’s achievement, because the price reductions would not
actually come into force until 2026. That would be the Trumpiest move.
Either way, patients should benefit. ■

Stay on top of American politics with The US in brief, our daily newsletter
with fast analysis of the most important electoral stories, and Checks and
Balance, a weekly note from our Lexington columnist that examines the state
of American democracy and the issues that matter to voters.
This article was downloaded by zlibrary from https://www.economist.com/united-states/2024/04/02/joe-bidens-assault-on-the-900-
child-eczema-cream
Lexington

Are American progressives making themselves

sad?
Conservatives seem more excited about change
Apr 4th 2024

SURELY FEW developments could be less surprising than the recent news
that America has slipped down the global happiness rankings. Gallup
reported in mid-March that America had dropped out of the top 20 for the
first time since it started taking its survey in 2012, falling in a year from 15th
place to 23rd. (Yes, annoyingly, Finland came out on top, for the seventh
straight year.)

Their economy and technology may be the envy of the world, but Americans
are becoming a dyspeptic bunch, anxious about the future and uneasy about
foundational institutions, from the armed forces to the press to organised
religion. Yet all are not equally sad. Numerous studies and surveys—
Americans are obsessed with this subject—show that some groups tend to
lag behind others in the pursuit of happiness: bankers are said to be sadder
than lumberjacks, the unmarried sadder than the married, teenage girls
sadder than teenage boys.
One distinction that holds true today has persisted for decades: liberals are
sadder than conservatives. This is a global symptom of political difference,
but it is particularly strong in America. Of whatever age group or whichever
sex, liberals are also far more likely than conservatives to report having been
diagnosed with a mental illness.

In the new Gallup survey self-reported happiness fell for every age group,
but most precipitously for those 30 and younger. Older Americans ranked
tenth globally in happiness, whereas younger Americans ranked 62nd. That
is a change from a decade ago, when the two groups reported similar levels
of happiness. The trend is consistent with data from the Centres for Disease
Control and Prevention, which surveys 17,000 high-school students every
two years. Rates of mental-health problems have increased with every
survey since 2011, and last year the CDC reported the highest rates of
sadness found in a decade, particularly among girls.

In a study in 2021 called “The Politics of Depression”, a group of scholars

zeroed in on the possible link between political ideology and unhappiness
among teenagers. They found an alarming rise in depression among young
people starting in 2012, and, like the CDC, a particular increase among girls.
But ideological difference mattered more than gender difference. Liberal
boys reported higher rates of depression than conservative boys or girls, and
liberal girls reported the highest rates of all.

Disentangling correlation from cause to explain the happiness gap between

conservatives and liberals has long vexed social psychologists and political
commentators. So, no doubt, has the task of disentangling one’s own politics
from one’s hypotheses. The authors of the study connected the rise of
depression with the spread of social media. They also argued that
conservative ideology may help protect mental health, for reasons that did
not flatter conservatives: “This group presumably benefits from the
American cultural myth of an equal playing field in which exceptional social
positions are thought to be earned through hard work and talent rather than
inherited through codified privilege.” Liberal adolescents, they wrote, may
feel alienated in contrast to conservative peers “whose hegemonic views
were flourishing”.
A possible flaw in this theory is that, in the first four years that young
liberals’ mental health declined, Barack Obama was president and
conservative views were not so successfully hegemonic. Even before 2012,
when teenagers reported relatively stable mental health, young liberals, like
older liberals, reported higher rates of depression. Sceptics of the authors’
hypothesis have noted that being conservative could confer psychological
benefits for less cynical reasons. Conservatives tend to be healthier, more
patriotic and more religious, and to report finding higher levels of meaning
in their lives. These characteristics correlate with happiness.

It is possible that liberalism does not just correlate with sadness but may
exacerbate it. Musa al-Gharbi, a sociologist at Stony Brook University, has
noted that educated, affluent white liberals have come to endorse the idea
that America is systemically racist, leading them to view other racial and
ethnic groups more warmly than their own. “This tension—being part of a
group that one hates—creates strong dissociative pressures on many white
liberals,” he wrote in the journal American Affairs. Another hypothesis,
advanced by Jonathan Haidt, a social psychologist, and Greg Lukianoff, a
lawyer, is that liberals are performing a reverse cognitive behavioural
therapy on themselves: promoting not resilience and optimism about
incrementally improving the world but catastrophic rumination about
problems such as climate change and fearfulness of disagreement even on
university campuses. Such habits of mind can deepen depression.

Mopes and change

Research has found liberals to be more empathetic than conservatives, so in
a troubled world one might expect them to be sadder. But a profound shift
appears to be under way when it comes to excitement about change. “One of
the fundamental traits of the conservative attitude is a fear of change, a timid
distrust of the new as such,” wrote Friedrich Hayek in “The Constitution of
Liberty” in 1960, “while the liberal position is based on courage and
confidence, on a preparedness to let change run its course.”

Mr Obama, whose summons to “hope and change” rhymed with his own
biography, may have marked high water for this idea of American
liberalism, as opposed to today’s progressivism. President Joe Biden has
negotiated potentially transformative legislation, but he presents himself as
guarding against radical change. Donald Trump has robbed liberalism of its
transgressive glamour and made conservatism mean its opposite: disruption,
subversion, challenge to fuddy-duddies and the status quo—all that cool
stuff. It’s kind of depressing. ■

Read more from Lexington, our columnist on American politics:

The case of Stormy Daniels echoes past scandals (Mar 27th)
Binyamin Netanyahu is alienating Israel’s best friends (Mar 18th)
“Dune” is a warning about political heroes and their tribes (Mar 14th)

Also: How the Lexington column got its name

This article was downloaded by zlibrary from https://www.economist.com/united-states/2024/04/04/are-american-progressives-
making-themselves-sad
Middle East & Africa

Israel is ratcheting up its shadow war with Iran

What Israel’s killing of aid workers means for Gaza
Protests have erupted against another Syrian dictator
Ugandan judges uphold a draconian anti-gay law
Recent heatwaves are a harbinger of Africa’s future
Israel’s shadow war with Iran

Israel is ratcheting up its shadow war with Iran

That is partly because it is deadlocked in its conflicts in Gaza and on its
northern border
Apr 4th 2024 | DUBAI, GAZA CITY AND JERUSALEM

IT IS NOT the first time Israel has struck Iranian targets, but it marked a
serious escalation in its long shadow war with Iran. On April 1st a suspected
Israeli air strike flattened a building in the Iranian embassy compound in
Damascus. The blast killed seven people, including General Mohammad
Reza Zahedi, a commander of the Quds Force, the expeditionary wing of
Iran’s Islamic Revolutionary Guard Corps (IRGC). He had served for years
as the group’s head of operations in Syria and Lebanon, and was close to
Hassan Nasrallah, the leader of Hizbullah, the Lebanese Shia militia and
political party. His deputy and five other IRGC officers were also killed in
the blast. The general was the highest-ranking Iranian commander to be
assassinated since America killed Qassem Suleimani with a drone strike in
2020.

Israeli officials did not publicly claim responsibility for the attack. In
private, however, they left little doubt about their role. Such attacks aim to
exact a price from the Iranian regime for supporting Israel’s enemies. But
their point is also to confront the Iranians directly, instead of allowing them
to hide behind their proxies. The Israelis admit that this could provoke a
vengeful response, but believe that the Iranians are risk-averse, at least when
it comes to putting their own people in danger, and will back off. And as
Israel looks stuck in both its war with Hamas in Gaza and its standoff with
Hizbullah, it seems increasingly willing to take such risks.

Consider Gaza. The Israel Defence Forces’ (IDF) recent assault on al-Shifa,
the largest hospital in the strip, highlights the problems it faces in its main
war. In November last year Israel encircled the hospital, claiming it was a
major hub of Hamas activity. On March 17th the IDF launched another big
attack on the compound in response to intelligence reports that Hamas
fighters were gathering there once again. It lasted two weeks. Some of the
hospital’s main buildings were destroyed in the fighting. The IDF says it
killed around 200 members of Hamas and Palestinian Islamic Jihad, a
smaller militant group, and captured over 500 more. And yet its officers say
they may attack al-Shifa a third time. On April 1st, when your correspondent
visited the scene embedded with Israeli forces on the last day of the
operation, Hamas snipers were still holding out in the ruins.

Six months on, Israel has exacted terrible retribution for the October 7th
massacre. Palestinian deaths (civilians and fighters) exceed 33,000
according to the Hamas-controlled health ministry. But Israel faces a power
vacuum and growing anarchy in the enclave. It has destroyed much of
Hamas’ military and governing structure there, but the group still has plenty
of members. There is no prospect of the IDF withdrawing from Gaza soon.
It has reduced its forces there, but is also fortifying the corridor which cuts
off Gaza city in the north from the rest of the strip, where most of the
uprooted 2.2m people now huddle. Within Gaza’s border Israel has cleared a
kilometre-wide buffer zone which occupies 16% of the territory. On Gaza’s
coast it is building a new military base.
Meanwhile, it is only now starting to take any kind of responsibility for the
humanitarian disaster in Gaza, which according to international aid
organisations is rapidly becoming a famine. It is struggling to secure supply
convoys into the war zone, mostly because its own forces fire at anything
that moves in “kill zones” (areas deemed to be clear of civilians). On April
2nd an Israeli drone repeatedly bombed a small convoy from World Central
Kitchen, one of the very few aid organisations with which Israel had a good
working relationship, killing seven of its volunteers.

In private, IDF officers blame their government for a lack of strategy on all
fronts. Binyamin Netanyahu, the prime minister, has refused to identify any
Palestinian force that could take responsibility for Gaza’s security and
civilian needs, as the IDF scales down its presence.

Under increasing international pressure for a ceasefire, Mr Netanyahu is

sticking to his promise of “total victory” in Gaza, insisting that it can only be
achieved by Israel invading the last major Hamas stronghold in Rafah on the
Egyptian border. But around 1.5m Palestinian civilians are also now
sheltering there and would have to be moved out first. That would take many
weeks, if it is possible at all. And America, Israel’s closest ally, is
vehemently opposed to any such operation. With no clear strategy or
timetable in Rafah or any arrangements for Gaza for the day after the war,
Israel is stuck.

Head 220km (140 miles) north and Israel looks just as deadlocked. The
small neat villas of Metula, the northernmost town in Israel, seem peaceful
in the spring drizzle. Look closer, however, and many show damage from
fires caused by missile strikes launched by Hizbullah fighters hiding in the
foothills of southern Lebanon. In normal times Metula is a popular holiday
destination. Its 2,200 residents should be preparing for an influx of visitors
for Passover. Instead they were all evacuated for fear of an October 7th-style
attack by Hizbullah. Since then Israel and Hizbullah have exchanged rocket
fire on a daily basis. The governments of Israel and Lebanon have each
moved around 80,000 of their citizens away from the border because of the
fear of escalation, with no idea when they will be allowed to return.

The Biden administration’s effort to broker a diplomatic solution, which

would include both a ceasefire and a withdrawal of Hizbullah’s fighters from
the border, have so far failed. “We can’t allow Hizbullah to keep this up
indefinitely,” says an Israeli security official. “If there’s no deal, the only
alternative will be a pre-emptive strike,” agrees David Azoulay, head of
Metula’s council. “Most of our residents will refuse to return home if
Hizbullah isn’t pushed away from the border. If only a war can achieve that,
then so be it.”

And so Israel, stuck in Gaza and the north, is ratcheting up its shadow war
with Iran, the backer of both Hamas and Hizbullah. It thinks it has a rare
opportunity to hurt Iran’s proxies in the region and punish the Islamic
Republic for its interference, while Iran, nervous of a broader war, is wary of
any big retaliation. So far that gamble has paid off. But past performance is
no guarantee of future results. If Israel pushes too far, the region could find
itself in a far messier conflict.

Six months since October 7th, Israel can claim tactical gains on all three
fronts—Gaza, Lebanon and Syria. It says it has killed, wounded or taken
prisoner at least a third of Hamas’ fighters, as well as hundreds of Hizbullah
operatives and key members of the IRGC leadership. But Israel has failed to
find a way out of a war on two fronts which has emptied swathes of the
country. And on a third front it seems closer to escalation than resolution. ■
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up-its-shadow-war-with-iran
World Central Kitchen

What Israel’s killing of aid workers means for

Gaza
It will make it even harder to feed desperate people
Apr 3rd 2024 | DUBAI

THE ROAD was dangerous, but they took precautions. On April 1st a group
of aid workers left a warehouse in Deir al-Balah, in central Gaza. The
vehicles in their three-car convoy were clearly marked with the frying-pan
logo of World Central Kitchen (WCK), a charity that has worked closely
with Israel. Their route along the coastal road had been cleared with the
Israeli army. But the precautions did not help: an Israeli drone loitering
overhead fired three missiles at the cars, one after another, killing all seven
people inside.

They are thought to be the first foreign aid-workers to die in the six-month
Gaza war (around 200 of their Palestinian colleagues have been killed).
Beyond the human tragedy, their deaths will have bigger consequences for
Israel’s diplomatic standing—and for hungry Gazans.
Most of the victims come from Western countries that support Israel. All are
now furious. Britain summoned the Israeli ambassador for a rare démarche,
and Rishi Sunak, the prime minister, told Binyamin Netanyahu he was
“appalled”. The United Arab Emirates, the main funder of WCK’s work in
Gaza, accused “Israeli occupation forces” of “targeting” the aid workers—
unusually strong language from Israel’s closest Arab ally. Joe Biden, who
calls José Andrés, the chef who founded WCK, a friend, said he was
outraged by the killings. “Israel has not done enough to protect aid workers,”
he said. The deaths will almost certainly lead to greater domestic pressure on
such governments when it comes to arms sales to Israel. Whether they lead
to a shift, in a way that 33,000 Palestinian deaths have not, is less clear.

Sorry not sorry

Isaac Herzog, the Israeli president, called Mr Andrés and expressed “deep
sorrow”. The army chief pledged a thorough investigation (though Israel has
a poor track record of those). Israel’s prime minister was less contrite: in a
bizarre videotaped statement, a smiling Mr Netanyahu said that he was
recovering well from hernia surgery and then acknowledged the “tragic
event” in Gaza. “This happens in war,” he said.

The UN says that half of Gaza’s 2.2m people face “catastrophic food
insecurity” and that hundreds of thousands of people in northern Gaza are on
the brink of famine. Yet Israel has tried to sideline the UN Relief and Works
Agency (UNRWA), the main aid distributor in Gaza.

Instead, Israel has sought to work through NGOs. It was enthusiastic about
WCK. Last month it allowed the group to start shipping aid to Gaza by sea,
the first time in two decades it has loosened its maritime embargo of the
territory. After the drone strike, though, WCK said it was pausing its
operations in Gaza and turned back ships en route from Cyprus. Other
NGOs followed suit. Aid workers are willing to accept risk: that is part of
the job. But the risks seem too high in Gaza. Parts of the enclave have fallen
into anarchy and Israeli commanders show scant regard for protecting
civilians.

The effort to bring enough food into Gaza has been haphazard and deadly.
Pallets air-dropped by Western and Arab forces have struck and killed
civilians. Hungry Gazans have attacked lorries and been crushed in
stampedes at food deliveries. America is trying to build a pier to receive
bigger shipments of aid, but the project is still weeks away from completion
and there are big questions around who will secure the pier and deliver the
supplies.

For months Mr Netanyahu has refused to order the Israeli army to distribute
aid in Gaza itself. But if Israel does not want UNRWA involved, and if other
groups do not feel safe, it will have no choice. ■
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of-aid-workers-means-for-gaza
Jihadist blues

Protests have erupted against another Syrian

dictator
The jihadists’ last redoubt in the Syrian province of Idlib is in trouble
Apr 4th 2024

IDLIB USED to be Syria’s poorest province. But under the rule of Abu
Muhammad al-Jolani, a former al-Qaeda jihadist, the north-west has become
the country’s fastest-growing. It sports new luxury shopping malls, fancy
housing estates that survived last year’s earthquake (unlike those in Turkey)
and round-the-clock electricity, better than the capital, Damascus, with its
perennial blackouts. Mr Jolani’s fief of 3m people has a university with
18,000 (segregated) students, two zoos, a funfair and a revamped football
stadium. His jihadists are as likely to be found in cafés as plush as Dubai’s
as they are on Syria’s front lines.

Since Russia diverted some of its forces to Ukraine, the war feels farther
away, too. Air strikes against the rebels are fewer. Bashar al-Assad, the
dictator in Damascus, still vows to reconquer the breakaway north, but his
regime looks too spent to pose a serious challenge.
All that, though, could now be at risk. For over a month, hundreds and
sometimes thousands of protesters have marched through Idlib’s cities and
towns chanting “Isqat al-Jolani” (“Down with Jolani”), adapting a slogan
once used against the Assad regime. Thirteen years after the rebels launched
Syria’s “Arab spring” against the Assads, the rebels’ last redoubt is facing an
uprising of its own.

The protests’ biggest cause is Mr Jolani’s brutality. His prisons hold

thousands of critics. Torture is rife and death in custody is common. Mr
Jolani sees plots against him everywhere. Last summer he purged the ranks
of his movement, Hayat Tahrir al-Sham (HTS), the Front for the Liberation
of Greater Syria, arresting people he claimed were spies for America and
Russia. He jailed his deputy, Abu Maria al-Qahtani, along with 300
henchmen. He has hobbled other jihadist movements that had moved to Idlib
for refuge. When a rebel fled to a neighbouring province, he sent his thugs to
grab him back.

High taxes and a recent economic downturn are also fuelling the unrest. Mr
Jolani has cut a road through the mountains to Turkey. Uniquely in Syria, his
street lamps stay on all night. Though his big infrastructure projects wow
visitors, they anger those who have to pay for them. Customs officials tax
goods entering from Turkey. His checkpoints fleece drivers smuggling tax-
free fuel and cigarettes from elsewhere in the north. The collapse of the
Turkish lira, the main currency used in the north, has sent prices spiralling.
Many complain they can no longer afford the lavish breakfasts that are
customarily eaten in the fasting month of Ramadan.

Another cause is Mr Jolani’s deviation from jihadist beliefs. His credentials

look impeccable. He left his well-to-do life in Damascus, some 300km to the
south, to wage jihad against America in Iraq. Islamic State, the movement
that set up a caliphate across a swathe of Iraq, sent him back to Syria as the
emir of a jihadist force there. He captured the province of Idlib and turned it
into a haven for rebels and the many ordinary Syrians displaced by Mr
Assad’s forces. Idlib’s population tripled.

Though he is from the south, Mr Jolani has given preferential treatment to

northerners. He married into an influential Idlib family and put locals in
charge of security. He cut ties with al-Qaeda and made war against Islamic
State. He swapped the jihadists’ Afghan dress for a suit and replaced the
jihadists’ black-and-white flag with Syria’s tricolour. Worse, say aggrieved
jihadists, he has opened his prisons to allow Western intelligence agencies to
question suspects and pinpointed jihadist sites for American drone attacks.
Some argue that America turned him in the mid-2000s when it captured and
jailed him in Iraq.

Turkey has also grown wary of Mr Jolani. It helped him stabilise the
province in order to stanch the flow of refugees. It connected his fief to
Turkey’s electricity grid and let building materials enter freely. But
increasingly it worries about Mr Jolani’s ambition. As his stature grows, he
has largely dropped his claim that his is a technocratic “government of
salvation”, preferring bluntly direct rule.

He has twice tried to take over other bits of northern Syria that are under
Turkey’s thumb, says a foreign observer. Though rebuffed, his supporters
there are still said to act as his agents, running checkpoints to collar cash. To
cut him down to size, Turkey has reduced trade through its crossings into
Idlib, shrinking Mr Jolani’s takings.

Few observers think the latest unrest will unseat him yet. But his
concessions suggest he is on the defensive. He recently appeared once again
in jihadist garb to shore up his old credentials. He has put the morality police
back on the streets. And he has freed hundreds of people he detained last
summer, Mr Qahtani included. He recently promised local elections and
more jobs for the displaced. And he warns protesters against treachery.

But something of the revolutionary spirit that sparked the Arab spring in
2011 still flows in Idlib. Many oppose one-man rule, whatever its hue. The
demand for no taxation without representation excites the crowds. As a self-
publicising arriviste and former student of media studies at Damascus
University, he should listen. ■
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against-another-syrian-dictator
A cruel law

Ugandan judges uphold a draconian anti-gay law

The decision will send ripples across Africa
Apr 4th 2024 | KAMPALA

THE MEN came for Kwagala at the beer joint she runs in eastern Uganda,
shouting that she was teaching homosexuality to their children. They kicked
and punched her. “I ran as fast as I could, thinking to myself, ‘This is my
day, this is how I die’,” recalls Kwagala, a trans woman whose name we
have changed for her safety. When the police arrived they locked her up for
three days and charged her under Uganda’s Anti-Homosexuality Act, which
became law last May. Her attackers went free; she faces life in prison if
convicted.

On April 3rd the country’s constitutional court upheld the core provisions of
the law. Those include long prison sentences for “promoting homosexuality”
and the death penalty for “aggravated homosexuality”, including for anyone
deemed a serial offender. The judges did strike down some sections, such as
a duty to report gay people to the police. But they argued that the law
reflects Uganda’s history, traditions and culture, likening their reasoning to
that of America’s Supreme Court when it overturned abortion rights in 2022.
The judges leant on “public sentiments and vague cultural-values
arguments” rather than upholding human rights, says Nicholas Opiyo, lead
counsel for the petitioners.

Ten years ago the same Ugandan court struck down an anti-gay law on
procedural grounds. This time activists had challenged the act on both
process and substance, and lost. The decision contrasts with court rulings in
Botswana in 2019 and Mauritius in 2023, where judges decriminalised gay
sex. It will send ripples across Africa, including in Ghana, where President
Nana Akufo-Addo is under pressure to sign into law a recent anti-gay bill.

Africa’s anti-gay reforms are not driven by presidents, who are wary of the
diplomatic fallout, but by ambitious lawmakers and religious leaders,
sometimes with friends in right-wing American groups. Although Uganda’s
president, Yoweri Museveni, makes homophobic remarks in public and has
done nothing to stop the law, allies of his have privately told Western
diplomats of their reservations. That could be because America has imposed
visa restrictions on Ugandan officials, warned business of the reputational
risks of operating in Uganda, and removed duty-free access for its exports.
The World Bank has suspended new loans.

For LGBT people in Uganda, where 94% of citizens say they would not
want a gay neighbour, the law has made a bad situation worse. They have
been evicted, sacked, outed, threatened, assaulted, arrested and subjected to
forced anal examinations. Rights groups recorded 300-plus cases of abuse in
the first eight months of last year alone. Much of the hostility comes from
ordinary Ugandans who have been “radicalised into hatred”, says Frank
Mugisha, a gay-rights activist who was a petitioner in the court case.

Kwagala just wants to live in peace. After she was charged, her father
disowned her. She is barred from family funerals. Her landlord has closed
her beer joint. “My whole life has changed because of this law,” she says.
“I’ve lost everything.” ■
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a-draconian-anti-gay-law
Cool it

Recent heatwaves are a harbinger of Africa’s

future
Housing, work and health care in the continent are ill-adapted for a hotter
planet
Apr 4th 2024 | ADDIS ABABA

SOUTH SUDAN’S children returned to school on April 2nd, not from a

holiday but a heatwave in which thermometers reached 45°C. Teachers had
been finding it just as difficult to concentrate as students, says Chol Guran
Mayuot, who teaches in Juba, the capital. “You get up in the morning and
you feel exhausted already.”

This February was the world’s hottest ever recorded, the ninth record-
breaking month in succession. Africa sweltered. Its southern cone was 4-5°C
above the seasonal average. In some parts of west Africa the combination of
heat and humidity made it feel hotter than 60°C. In recent weeks it has been
the east’s turn to fry. The Horn of Africa “risks being uninhabitable” because
of heatwaves, warned Ismail Omar Guelleh, the president of Djibouti.
Temperatures have been boosted by El Niño, the warm phase of a semi-
regular oscillation in the world’s climate. But that is just an upward bump on
a remorselessly rising trend. West Africa’s humid heat was made ten times
more likely by climate change, estimates World Weather Attribution, a
network of climate modellers.

As Africa cooks, inequality is baked in. A study in Nairobi found that it was
several degrees hotter in dense slums than in the leafy surroundings of the
meteorological department, where official readings are taken. It is even more
stifling indoors. While the rich slumber in air-conditioned rooms, the poor
toss and turn beneath tin roofs. In the South African summer, temperatures
recorded inside shacks swing by 14°C over the course of the day.

The workplace brings no relief. Many Africans toil outside, in jobs from
farming to roadside carpentry. In Swahili, east Africa’s lingua franca,
informal work is known as jua kali (hot sun). The sapping effects of heat
drain the equivalent of 161 labour hours from the average African worker a
year, reckons the Lancet Countdown, an international group of researchers.
That reduces potential earnings of formally employed workers by 4% (data
for informal or unpaid work are sparse).
Hot weather also threatens health. Heat exposure is associated with a higher
risk of pre-term births, stillbirths and hypertension in pregnancy, among
other problems, says Gloria Maimela of the University of the Witwatersrand.
A study in Burkina Faso found that with each extra degree of heat mothers
breastfeed for two fewer minutes a day. Health clinics in many countries are
poorly ventilated and are hotter than the air outside.

Better buildings, greener cities and shadier workplaces would all make
Africa cooler. “This is an emergency,” says Eugenia Kargbo, the chief heat
officer in Freetown, the capital of Sierra Leone. She reels off a string of
measures that the city has taken, from planting a million trees to installing
sunshades in outdoor markets. It is also testing out a reflective film applied
to iron roofing. MEER, an American non-profit behind that idea, says the
mirrors can reduce indoor temperatures by 6°C.

On March 28th the mayor of Freetown, the president of Djibouti and other
leaders took part in the first global summit on extreme heat, hosted by
America’s aid agency and the International Federation of Red Cross and Red
Crescent Societies. They discussed strengthening early-warning systems and
drafting heat action plans. But 330m Americans alone emit nearly six times
as much carbon dioxide as all 1.2bn sub-Saharan Africans. It is good to help
other countries adapt to climate change—and to stop fuelling it. ■

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harbinger-of-africas-future
The Americas

Latin America’s new hard right: Bukele, Milei, Kast and

Bolsonaro
South American vineyards brace for another scorching
summer
Justin Trudeau is beset by a divided party and an angry
electorate
The Anti-communist International

Latin America’s new hard right: Bukele, Milei,

Kast and Bolsonaro
Crime, abortion and socialism, not immigration, are the issues that rile
them
Apr 1st 2024 | SANTIAGO

“MR PRESIDENT!” Javier Milei could barely contain himself when he met
Donald Trump at the Conservative Political Action Conference (CPAC) near
Washington in February. The pair embraced and exchanged slogans, with Mr
Trump intoning “Make Argentina Great Again” several times and
Argentina’s new president yipping “Viva la libertad, carajo” (“Long live
freedom, dammit”) in response.

Nayib Bukele, El Salvador’s popular autocratic president, had already

addressed the conference. “They say globalism comes to die at CPAC,” he
told enraptured Republicans. “I’m here to tell you that in El Salvador, it’s
already dead.” Jair Bolsonaro, Brazil’s hard-right former president, was a
star guest in 2023. He, like Mr Trump, claimed without evidence that his bid
for a second term was thwarted by fraud. His supporters also attempted an
insurrection.
These scenes suggest a seamless international alliance between Mr Trump
and the leaders of Latin America’s hard right. Its members also include José
Antonio Kast of Chile, who has spoken at CPAC in the past too. This new
right basks in Mr Trump’s influence. It has turned away from a more
consensual form of conservative politics in favour of an aggressive pursuit
of culture war.

Its ascent began with the surprise victory of Mr Bolsonaro in Brazil in 2018,
followed by that of Mr Bukele in 2019. In Chile Mr Kast, the founder of a
new hard-right Republican Party, got 44% of the vote in a presidential run-
off in 2021 and his party won an election for a constitutional council in
2023. Mr Milei won his own surprise victory in November. Would-be
leaders of the radical right jostle in the politics of Peru and Colombia.

Unlike its older European and North American equivalents, the Latin
American hard right does not have roots in the fertile soil of public anxiety
about uncontrolled immigration (although this has become an issue recently
because of the arrival of millions of Venezuelans fleeing their country’s
rotten dictatorship).

The new group shares three hallmarks. The first is fierce opposition to
abortion, and gay and women’s rights. “What unites them is an affirmation
of traditional social hierarchies,” as Lindsay Mayka and Amy Erica Smith,
two academics, put it. The second hallmark is a tough line on crime and
citizens’ security. And the third is uncompromising opposition to social
democracy, let alone communism, which leads some to want a smaller state.

There were common factors in their ascents, too. They were helped by a
sense of crisis—about corruption and economic stagnation in Brazil and
Argentina, gang violence in El Salvador and the sometimes violent “social
explosion” in Chile.

Cousins in arms
But each leader has adopted a different mix of these ideological elements.
The hard right in Latin America are “cousins, not brothers”, says Cristóbal
Rovira of the Catholic University of Chile. “They are similar but not
identical.”
Mr Bolsonaro’s constituencies were evangelicals, to whom he appealed with
his defence of the traditional family, and the authoritarian right in the form
of the army, the police and farmers worried about land invasions and rural
crime. But he was lukewarm about the free market and fiscal rigour. Mr
Bukele made security the cornerstone of his first presidential term,
overcoming criminal gangs by locking up more than 74,000 of El Salvador’s
6.4m citizens. His economic policy is less clear and, despite his claim at
CPAC, is not self-evidently “anti-globalist”.

Mr Milei was elected for his pledge to pull Argentina out of prolonged
stagflation and to cut down what he brands as a corrupt political “caste”. A
self-described “anarcho-capitalist”, he is a fan of the Austrian school of free-
market economics. Unlike Mr Trump, he is neither an economic nationalist
nor protectionist on trade. He has only recently adopted his peers’ stance on
moral issues. His government supports a bill to overturn Argentina’s
abortion law, and says it will eliminate gender-conscious language from
public administration. Mr Bukele followed suit.

Mr Kast attempted to put conservative morality in the constitutional draft his

party championed, which was one reason why it was rejected in a plebiscite.
He wants tough policies on security and against immigration. “We should
close the borders and build a trench,” he says. He wants to “shrink the state
and lower the tax burden”. Whereas Mr Bolsonaro is a climate-change
sceptic and anti-vaxxer, Mr Kast is not.

Democracy for thee, not for me

Right-wing populists also have differing attitudes to democracy. With his
attempt to subvert the election result, for which he is under police
investigation, Mr Bolsonaro showed that he was not a democrat. Mr Bukele
is contemptuous of checks and balances. His success at slashing the murder
rate made him hugely popular, allowing him to brush aside constitutional
term limits and win a second term in February.

Mr Milei’s “disdain for democratic institutions is clear”, says Carlos

Malamud, an Argentine historian, citing Mr Milei’s break with convention
by giving his inauguration speech to a crowd of supporters, rather than to
Congress. But, Mr Malamud adds, Mr Milei may yet learn that he needs to
include the parliament in government.

“I’m a democrat,” insists Mr Kast, and his opponents agree. “On security
and shrinking the state, we share views with Bolsonaro,” he says. “But that
doesn’t mean that we are the same as Milei or Bolsonaro or Bukele.” As Mr
Kast notes, policy choices are shaped in each country by very different
circumstances.

So are the prospects of the various leaders. Mr Bukele is by far the most
successful, with would-be imitators across the region and no obvious
obstacles to his remaining in power indefinitely. In contrast, Mr Bolsonaro’s
active political career may well be over. The electoral court has barred him
as a candidate until 2030 (when he will be 75) for disparaging the voting
system at a meeting with foreign ambassadors. He may be jailed for his
apparent attempt to organise a military coup against his electoral defeat; he
denies this and claims he is a victim of political persecution.

Mr Milei’s future is up for grabs. Succeed in taming inflation, and he could

emerge strengthened from a midterm election in 2025. But if he refuses to
compromise with Congress and provincial governors, he may be in trouble
before then. In Chile, Mr Kast seemed to overplay his hand with the
constitutional draft. The election in 2025 could see the centre-right take
power. One influential figure of that persuasion argues that Mr Kast is
unable to represent the diversity of modern Chile.

Ultimately, the group is bound by an international network built around

common political discourse and cultural references. Mr Kast chairs the
Political Network for Values, an outfit previously led by an ally of Viktor
Orban, Hungary’s populist leader. Vox, Spain’s hard-right party, organises
the Foro de Madrid, a network of like-minded politicians mainly from what
it calls the “Iberosphere” in Latin America.

These gatherings offer a chance to share experiences and sometimes a bit

more. Mr Bukele has advisers from Venezuela’s exiled opposition. Mr
Trump’s activists have shown up at Latin American elections. Recently, Mr
Bolsonaro took refuge in the Hungarian embassy in Brasília for two nights
when he feared arrest.
But there are no signs of central direction or co-ordination. The right in
Latin America has long claimed that the Foro de São Paulo, a get-together of
Latin American left-wingers, is a highly organised conspiracy. All the
evidence is that it is a loose friendship network. That seems to be true of its
right-wing peer, too. ■

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bukele-milei-kast-and-bolsonaro
Feeling the heat

South American vineyards brace for another

scorching summer
Climate change is hurting the wine regions of Chile and Argentina
Apr 4th 2024

CHILEAN SUMMERS are getting hotter. That is bad news for vineyards.
Irrigation relies on snowmelt from the Andes, which is becoming less
reliable, while excessive heat itself harms the grapes. Wine production in
Chile has fallen in four of the last five years. The picture is similar
elsewhere in Latin America. The drop in wine output from the region
accounted for one-third of the total decline in global production in 2023.
Moving higher into the Andes cuts the risk of heat-related damage, but
exposes vines to other perils, including hail, landslides and flash floods. It
takes a brave investor, with deep pockets, to stump up the cash for such a
move. Outside Latin America, new vineyards are often funded by venture
capital. But such sources of finance are comparatively scarce in the region.
Most producers will probably end up staying put, and suffering the heat.■

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understand the forces shaping a fascinating and complex region.

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A house divided

Justin Trudeau is beset by a divided party and an

angry electorate
After almost a decade in power, Canada’s prime minister looks
beleaguered
Apr 4th 2024 | Ottawa

“MY JOB IS not to be popular.” Justin Trudeau, Canada’s prime minister

(pictured), spent much of March explaining himself as he fought a revolt
against an increase to the country’s carbon tax. On his own terms, and few
others, Mr Trudeau is succeeding. Both his Liberal Party and the tax—which
increased from C$65 to C$80 ($59) per tonne of CO2 equivalent on April 1st
—are unloved. Mr Trudeau survived a no-confidence vote ahead of the
increase, but the debate it sparked has added to the burdens of a prime
minister who is staggering through his ninth year in power.

The cost of housing is rising fast. Canadians, in particular young ones, are
increasingly unhappy relative to the rest of the world. The left of Mr
Trudeau’s coalition is rebelling against his government’s stance on the
conflict in Gaza. The popularity of his rival, Pierre Poilievre, is growing—
the Conservative Party has enjoyed a double-digit lead in voter intention
surveys for several months (see chart).

Canadians used to be among the most contented citizens on the planet. The
most recent World Happiness Report, based on data gathered by Gallup, a
polling firm, suggests they are now the world’s 15th-happiest people, having
been the 6th-happiest before Mr Trudeau took office.

A closer look reveals a gap between satisfied seniors and those under 30,
who are wretched. Young Canadians are the world’s 58th-happiest, just
ahead of youth in Ecuador, a country racked by gang violence. The divide is
between those who own housing and those who can only dream of doing so.
Younger voters, who helped Mr Trudeau leapfrog to power in 2015, vote on
issues now, not leader image, says David Coletto, a pollster. Affordable
housing is the issue that preoccupies them.

When Mr Trudeau took office, a household earning the median income

could cover the costs of owning an average home by spending 39% of their
pay, according to RBC, a bank. Now that figure is 64%. Soaring interest
rates and decades of sluggish housing construction are to blame. Mr Trudeau
has promised a sop to renters in the forthcoming April 16th budget, a
package of measures called a “renters’ bill of rights” to be agreed with the
provinces. It is designed to stem the flow of younger voters to Mr Poilievre’s
Conservatives.

Mr Trudeau has to contend with divisions within his own caucus, too. A
former adviser, who was involved in developing the carbon tax, believes half
of the Liberal cabinet did not support the recent increase. Liberal leaders in
Newfoundland and Ontario joined those of Canada’s other provinces in
demanding that Mr Trudeau cancel the increase. The levy is scheduled to
rise by $15 per tonne annually, until it reaches $170 a tonne in 2030.

Canada produces less than 2% of the world’s greenhouse-gas emissions, but

emits more carbon per person than any large country except the United
States and Australia. It has struggled to meet its emissions-reduction targets
for years. Mr Trudeau has called the tax a necessary step in changing
consumer behaviour to help save the planet. And besides, he says, the tax
has been part of his platform for the past three elections, each of which he
has won. “Well, he shouldn’t be afraid to have one more,” Mr Poilievre shot
back.

Eventually he will have to. An election isn’t expected until October 2025.
But with polls putting the opposition to increasing the tax at close to 80%,
more time seems unlikely to benefit Mr Trudeau.

And if division on matters domestic weren’t enough, the prime minister is

barely managing to bridge a different schism, over the war in Gaza. He has
had to quell several angry exchanges among his Liberal MPs over Canada’s
role in the conflict. The New Democratic Party—a small leftist ally that has
agreed to support Mr Trudeau’s minority liberals until October 2025—
submitted a motion calling for a ceasefire and the recognition of a
Palestinian state. Had it gone ahead, it would have laid bare a split among
Liberal MPs.

More than half of Mr Trudeau’s caucus supported the motion before it was
watered down and passed without reference to a Palestinian state, according
to the Globe and Mail, a newspaper. That avoided an embarrassing display
of foreign-policy incoherence. But three Liberals broke with the party to
vote against the motion, and many didn’t show up for the vote at all.
Most democratic leaders administer bitter medicine early in their mandates.
They hope that positive results during their time in office will allow spent
political capital to be replenished. Mr Trudeau is finding out how difficult it
is to rally a divided country while doling out bitter pills with little popular
support—as the moment at which he must seek a fourth mandate draws
nearer. ■

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Europe

The new geography of Paris

An electoral bruising for Recep Tayyip Erdogan in Turkey
Poles and Ukrainians are at loggerheads. That’s good news
for Putin
The mafiosi of Naples turn white-collar
The secret behind the world’s happiest country
Germany’s Free Democrats have become desperate spoilers
The Olympics and urban planning

The new geography of Paris

Reshaping the French capital and its banlieues
Mar 31st 2024 | SAINT-DENIS AND SAINT-OUEN

ON THE SITE of a former piano factory in the northern Paris suburb of

Saint-Denis, a 40-storey tower is being converted into a gleaming luxury
hotel with a rooftop bar. A short walk away, beside the river Seine, builders
are finishing off a vast new “eco-neighbourhood” of flats, lined with
saplings and lamp posts made from recycled scaffolding. These will briefly
lodge 10,500 athletes during the Paris Olympic games, which take place
from July 26th-August 11th. Across the railway tracks, on land that formerly
housed a gasworks, workers are completing a brand-new aquatics centre,
under a gently curved timber frame of French and Finnish pine.

These developments are part of an attempt by French urban planners to use

the Olympics to revive Seine-Saint-Denis, a banlieue (suburb) that hugs the
north and eastern edges of Paris. During the games many sporting events
will take place in the historic city centre, including beach volleyball under
the Eiffel Tower. But some of the most prestigious, such as athletics, will be
held at the Stade de France in Seine-Saint-Denis. More than this, the
Olympics is part of a big rethink of greater Paris, and its transport system,
which could in time radically change the capital’s geography.

As in many of Europe’s old cities, the historic centre of Paris, with its tree-
lined avenues and cycle lanes, is fringed by poverty, high-rise blocks and
former industrial land. Paris, delineated by its forbidding périphérique, an
eight-lane ring-road, is particularly cut off. In the capital’s cobbled centre,
urban planners enthuse about the “15-minute city”, in which work, cafés and
cinemas are but a short walk away. In the banlieues, it often takes longer
than that just to reach the station—if there is one.

Fully 1.7m people of different tongues and faiths crowd into Seine-Saint-
Denis, where tower blocks were built in the 1960s and 1970s partly to house
industrial workers recruited in North Africa, and their families. Its poverty
rate is 28%, nearly twice that in Paris. Almost a quarter of families are
headed by a single parent. At the age of ten, says Quentin Gesell of the
Métropole du Grand Paris, an administrative body, half the children in
Seine-Saint-Denis today do not know how to swim.

The various greater Paris authorities now hope that the Olympics can help
turn this area’s fortunes, and reputation, around. The sheer scale of
investment, much of which will not be complete until the end of the decade,
is eye-watering. Under a plan first hatched in 2007, tunnels are still being
dug to create a giant loop of 200km of new driverless Metro lines and 68
new stations, known as the Grand Paris Express. When finished, it will
double the existing Metro network. Crucially, instead of carrying people
from the banlieues only in and out of the centre, it will also link the outskirts
to each other and the city’s airports, all at a cost of some €42bn ($45bn).

The idea, says Marie Barsacq, in charge of Olympics legacy-planning, is that

the games leave behind facilities and transport, as well as creating jobs and
boosting skills. Seine-Saint-Denis, which today has the fewest swimming
pools per head in France, will be bequeathed not just the new aquatics centre
but over a dozen new or renovated public pools. The staff needed to prepare
and serve 13m meals in the athletes’ village are all being hired locally.

Karim Bouamrane, the Socialist mayor of Saint-Ouen, sees the Olympics as

an accelerator for reviving the area. Projects already under way have been
given a boost; sporting facilities a facelift. New transport links will make
Saint-Ouen one of the best-connected hubs in the Paris banlieue. Elon
Musk’s Tesla, an electric-car firm, has picked Saint-Ouen for its new French
headquarters. Tony Parker, a French-American former professional
basketball player, is opening a new sports academy there. “Before, when you
used to come to Saint-Ouen it was because you had no choice,” says Mr
Bouamrane. “Now it’s a choice.”

The lesson from other European cities that have tried similar projects,
including London’s Stratford or Hamburg’s HafenCity, is that better
infrastructure can help revive neighbourhoods and lure private developers.
But it takes time, and huge upfront public investment. Post-covid,
developments that rely on office space are fragile. Extravagant vanity
projects can leave a pile of debt and little else. France certainly loves its
grands projets. But Paris is focusing events mostly on existing facilities, in
order to avoid the fate of host cities such as Athens, where the stadiums at
Hellinikon were left abandoned for years afterwards.

For places like Saint-Ouen, just beyond the ring-road, the chances of such
investment paying off are probably greater than for those on the outer
periphery. Yet the challenge of bridging the gulf between Paris and its
banlieues is still daunting. Advanced sales of flats at the athletes’ village
have been slow. Many Parisians seldom, if ever, venture to the outskirts.
Locals feel their address, and the département code 93, stigmatises them.
“We really struggle with the 93,” says a woman outside a boulangerie in
Saint-Ouen; “As soon as you mention 93, it’s no good.” Mr Bouamrane
notes that “etymologically the word banlieue means the ‘place of the
banished’. It’s the place where we don’t like you.”

Across from the nearly finished Metro station at Saint-Denis Pleyel, a

teenage girl on a street bench thinks that not much will change: “There will
still be drugs, alcohol, traffickers, dealers and all that.” A young man
hanging out with friends by the Turkish kebab shop laughs at the idea that
they would use the swimming pool afterwards: “We’re not children!” Yet
others in his group display an unexpected optimism. “There will be a before
and after for Saint-Denis,” declares one: “After the games, Saint-Denis will
be super-beautiful.” ■

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The trouncing of a strongman

An electoral bruising for Recep Tayyip Erdogan in

Turkey
The opposition triumphs in mayoral elections in Istanbul, Ankara and
across the country
Mar 31st 2024 | ISTANBUL

Editor’s note: This article was updated on April 1st 2024

TURKEY WOKE up transformed on April 1st, after the country’s main

opposition party scored a spectacular upset in local elections. It won big
victories in the country’s largest cities, surging past the ruling Justice and
Development (AK) party nationwide and handing Recep Tayyip Erdogan,
the country’s president, a stinging rebuke. The Republican People’s Party
(CHP) got 37.8% of the overall vote, compared with 35.5% for AK. That
figure masked landslide wins in the big cities. In Istanbul, the biggest prize,
Ekrem Imamoglu, the city’s CHP mayor, coasted to another term. He got
51.1% of the vote, compared with 39.6% for his AK rival, Murat Kurum, a
former urban-affairs minister.
“What message did the people give our opponents, the government and the
president?” asked Mr Imamoglu, standing on his campaign bus to celebrate
the victory. “Tayyip, resign!” chanted part of the crowd. Mr Imamoglu,
however, sounded more conciliatory. “There will be no booing…The era of
partisanship is over.”

Mr Erdogan’s job is safe. But the outcome in Istanbul was a blow to

Turkey’s strongman, who had been determined to win back Istanbul, which
he and AK had run for a quarter of a century until Mr Imamoglu’s surprise
victory in 2019.

Even more striking were the results elsewhere. “Tsunami”, an Imamoglu

adviser crowed on X. Only ten months after a poor showing in the general
elections, when it blew a golden chance to unseat Mr Erdogan, the CHP
handed AK its worst defeat in its 22-year history. The results again
confounded the pollsters. Many had expected the CHP to do well in the
cities. But none expected it to top 30% nationwide.

In Ankara, the country’s capital and its second-biggest city, the CHP’s
incumbent mayor, Mansur Yavas, trounced AK’s candidate by nearly 29
percentage points. In Izmir, Turkey’s third city, the CHP’s man won by 12
points. For the first time in decades the opposition also made major inroads
in the country’s conservative heartland, AK’s power-base. “The electoral
map of Turkey has been transformed,” said Evren Balta of Ozyegin
University. Mr Erdogan acknowledged that the outcome marked “a turning
point” but pledged to bounce back at the general elections in 2028. “We will
correct our mistakes.”

Mr Imamoglu’s victory was a far cry from his win in 2019, when he edged
out his AK foe by a mere 20,000 votes, only for Mr Erdogan to pressure
Turkey’s election authority to overturn the results and order a rerun. Mr
Imamoglu won again, by a bigger margin. Three years later a court banned
him from politics and sentenced him to two years in prison (both penalties
were stayed pending appeal), for calling the officials who stripped him of his
initial victory “idiots”. That case goes on.

Mr Imamoglu’s re-election and the CHP’s resurgence should reshape

national politics. A victory for AK would have made it easier for Mr
Erdogan to push ahead with introducing a new constitution, probably
designed to give him at least another term. The scale of AK’s losses in
Istanbul and elsewhere means that his appetite for such changes, which
would need to be put to a referendum, may be gone. “This is off the books
now,” says Berk Esen of Sabanci University. Mr Erdogan may have to speed
up plans to find a successor as AK leader.

The marked improvement on the CHP’s disappointing result (25.3%) in last

year’s general election had a lot to do with the economy, which remains in
the doldrums. Even after interest-rate increases totalling more than 40
percentage points, annual inflation is still inching upwards. In March it
topped 68%. Cheap credit and government largesse have run out. Mr
Erdogan can no longer offer voters the kind of handouts that once shielded
them, though only to an extent, from rocketing prices. “People are feeling
the economic pain even more than before,” says Ms Balta.

An overhaul of the CHP’s leadership also helped. Last November the party
deposed its longtime leader, Kemal Kilicdaroglu, who had squandered a
chance to beat Mr Erdogan in the presidential election, and replaced him
with Ozgur Ozel, who is much closer to Mr Imamoglu. Another factor was a
strong showing for New Welfare, a newly formed Islamist party that took
votes from AK, having recently split from Mr Erdogan’s governing
coalition. It got 6% of the overall vote and won outright in two of Turkey’s
81 provinces. So AK can no longer take hardline Islamist voters for granted.

The Good party, an opposition party that once seemed on course to dominate
Turkey’s centre right, continued its slide. The party, which only two years
ago polled in the high teens, received 3.8% of the overall vote. Its leader,
Meral Aksener, whose leadership had already come under scrutiny after she
flip-flopped on Good’s alliance with the CHP last year, is under pressure to
step down.

Nowhere in the elections were the stakes as high as in Istanbul. Home to

16m people, it accounts for nearly 20% of Turkey’s population and more
than 30% of its economic output. Control over its $16bn budget and its
patronage networks helps political parties finance themselves and their
cronies. The city also makes and breaks careers. It was his win in the
mayoral elections in 1994 that propelled Mr Erdogan onto the national stage
and eventually to Turkey’s highest office.

Mr Imamoglu’s chances of following the same route have now vastly

improved. Already the opposition’s most recognisable politician, the 52-
year-old now has a clear path to a run in the presidential election in 2028.
Meanwhile, Mr Erdogan is in a pickle. “He may even have to contemplate
an early election or a transition back to a parliamentary system,” says Mr
Esen. The last thing he wants is for Mr Imamoglu to inherit the executive
presidency Mr Erdogan designed for himself, which places almost no checks
on his powers. “For him, that’s a nightmare scenario.” ■

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suffers-an-electoral-disaster
A well-timed feud

Poles and Ukrainians are at loggerheads. That’s

good news for Putin
Farm exports and freight are the problems
Apr 2nd 2024 | Hrebenne

FLASHING BLUE lights shield protesting Polish farmers from the ten km-
long line of Ukrainian lorries they are holding up at the Hrebenne-Rava
Ruska border crossing. The drivers say they would waste little time in
moving the protesters aside were the police not there. Huddled around a
barrel fire, the farmers say they are only protecting their economic future;
they do not want to be undercut by “under-regulated” Ukrainian grain. The
drivers, some of whom have been waiting in freezing weather for weeks, ask
what that has to do with the lorries carrying goods and humanitarian aid into
Ukraine, which are also being held up. No one has an answer.

The border demonstrations, now five months old, have economic roots. At
the start of the war, when Ukraine lost access to its deep-water ports in the
Black Sea, the EU temporarily exempted Ukrainian lorry drivers from a
permit system that restricts movement in and out of the bloc. That upset
Polish drivers, who had dominated the local freight business. Meanwhile a
suspension of import duties and quotas on Ukrainian farm goods, produced
by larger, more efficient outfits, posed competition to small Polish
farmsteads, already pinched by EU environmental laws. A slump in world
grain prices, plus politicking ahead of Polish local elections in April,
heightened the tension.

The protests have cost Ukraine hundreds of millions of dollars in lost farm
and freight business. It is worse for the drivers waiting at Hrebenne. Before
the protests, they were making five trips a month; now they are lucky to
make one. Strict quotas decide who gets through. At the Hrebenne crossing
it is one lorry an hour, or four for perishable or humanitarian goods.

The farmers’ protests are fertile ground for Russia to influence Poles with
misgivings about Ukraine’s potential accession to the EU, when its drivers
and exporters would face no limits at all. An investigation showed that one
of the protesters appeared to be connected to the Russian embassy in
Warsaw. One protest banner appealed to Mr Putin to “restore order”, an
unlikely message in Poland but one that generated a lot of media heat. There
may be links between Russia and some members of Poland’s hard-right
Confederation party, which played a role in the earlier protests. Andriy
Cherniak, a spokesman for Ukraine’s military-intelligence agency, says the
Kremlin is trying to work on whatever level it can. “We see it very clearly
and we follow it. We doff our hats to them, to be honest. It’s impressive
work.”

One Ukrainian military researcher says Russia is stepping up its media-

influence ambitions. The internet has provided new opportunities to
penetrate public opinion at a fraction of the previous cost. The researcher
says a recent Ukrainian exercise found 18,000 suspicious Facebook pages
promoting fake narratives about the Polish protests—for example,
exaggerating Ukrainian corruption.

An analysis by Antibot4Navalny, an activist group that tracks Doppelganger,

the Kremlin’s social-media influence network, tells a similar tale. A network
of approximately 10,000 bots retweeted a fake news story about the Polish
protest seen by 50,000 users. Many Doppelganger stories exaggerated
tension between Ukrainians and their neighbours. The impact of these
operations is less clear. Colonel Taras Dzyuba of the Ukrainian army’s
strategic-communications department says the Russians play a long game.
“They rarely achieve results immediately, but wear down people’s defences
so they become willing to hear new sources of information.”

Intense negotiations at the EU level offer hope of resolving the border

problem. Krzysztof Paszczyk, parliamentary leader of the Polish People’s
Party, part of the governing coalition, says Ukraine and Poland are close to a
compromise on agricultural imports that would appease the farmers and let
the EU reach an agreement to extend duty-free trade with Ukraine.

In any event, the protest has damaged the countries’ relations. At the start of
the war Poland and Ukraine were united as blood brothers against a common
enemy. The Poles took in refugees and slipped MIG fighter jets over the
border, disguising them as spare parts. Now many Poles see Ukraine as a
corrupt or even dangerous competitor. Many Ukrainians see Poles as
impeding their survival. Confusion and distrust reign. And even if the idea
that Russia has had a hand is exaggerated, it has poisoned the well further. ■

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Organised crime in Italy

The mafiosi of Naples turn white-collar

They run restaurants and bars and rent out apartments these days
Apr 4th 2024 | NAPLES

IT IS COLD enough for the waitress serving in the lane outside to be clad in
a puffer jacket. Yet the diners, tourists hardened by northern winters, seem
untroubled as they savour their meals. An unexceptional scene. Except that
it is past 10pm and the restaurant is in the Quartieri Spagnoli, a gridiron of
alleyways in the heart of Naples that, until recently, outsiders entered at their
peril. Pickpocketing, mugging and bag-snatching were all common—
licensed and exploited by a clan of the Camorra, the Neapolitan mafia.

The opening of the Quartieri and other traditionally crime-ridden districts is

symptomatic of profound changes in the criminal landscape of the city and
its surrounding province. In 2023 there were ten gangland killings,
compared with 34 in the 12 months to mid-2013. Attempted murders
ascribed to the Camorra fell over the same period from 17 to just four.

In part, this is due to police success. Most of the older bosses have been put
away. And on March 29th it emerged that one of the most powerful,
Francesco Schiavone, aka Sandokan, who led the clan that inspired Roberto
Saviano’s best-seller “Gomorrah”, had turned state’s evidence.

Still, according to the inter-force police detachment that targets organised

crime nationally, Naples, along with nearby Caserta, still has the country’s
highest density of mafia penetration. Rosa Volpe, the chief district anti-mafia
prosecutor, warns against reading too much into those figures. “Organised
crime in Naples has not diminished,” she says. “It has evolved.”

According to police intelligence, there are 46 clans in the city itself and
another 24 in the surrounding province. Some have made vast profits,
notably from importing and selling cocaine. The most credible estimate of
the Camorra’s annual turnover dates from 2014 when it was put at around
€3.3bn ($3.6bn). Individual drug traffickers became fabulously wealthy.
Raffaele Imperiale, whose trial is due to end this month, owned two stolen
Van Goghs and an island off Dubai. After his arrest in 2021 he was found to
have spent almost €7m in the first quarter of the previous year.

Ms Volpe divides the Camorra’s affiliates into three overlapping categories.

Those who belong to groups still controlling defined areas of the city make
their money from extortion, drug peddling and other criminal activities. But
they have been gradually curtailed over the past 20 years by the jailing of
many of their long-standing bosses. Second are “baby gangs”: young street
criminals, in many cases sons of imprisoned Camorristi whose territory they
are charged with securing. The third group consists of those who have so far
escaped arrest and whose focus is on investing and laundering the profits
from drug trafficking. Many are no longer in Italy.

A special team has been set up to detect large-scale money laundering. But
according to a businessman with family ties to the Camorra, much of the
investment has been in small businesses—bars, restaurants and apartments
suitable for short-term tourist letting—that offer risk diversification. “If you
buy a hotel and it’s seized, you lose everything,” he says. “If you buy ten
bars and two are seized, you still have eight.” That also helps explain the
remarkable changes in central Naples: street crime is bad for business, and
business is increasingly where Camorristi are to be found, though Ms Volpe
cautions that many remain active in drug trafficking.
Those with personal experience of the Camorra’s world argue that mobsters
laundering their wealth have a vested interest in doing businesses legally.
That might sound like good news, after a fashion. Ms Volpe is unconvinced.
“The risk is that of the pollution of the city’s legitimate business system,”
she says. ■

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Happy Finns

The secret behind the world’s happiest country

Sweating in the sauna helps
Apr 4th 2024 | BERLIN

FOR THE seventh year running Finland has just been declared the world’s
happiest country by the World Happiness Report, launched in 2012 to
promote the sustainable development goals of the United Nations (UN).
Those surveyed were asked to evaluate their lives on a scale of one to ten,
with ten the highest. While Scandinavian countries as usual occupied the top
spots, both America and Germany fell out of the top 20. War- and
revolution-racked Afghanistan held the bottom spot in the ranking of 143
countries, with a score of only 1.7 compared with Finland’s 7.7 and
Denmark’s 7.6.

Gender equality, trust in national institutions and fellow citizens, and low
corruption are all important factors in Finns’ happiness, says Kai Sauer,
Finland’s ambassador to Germany. In 1906 Finland became the first country
in the world to give women both the full right to vote and to run in
parliamentary elections. When last year a reporter for Reader’s Digest, a
magazine, pretended to lose 12 wallets with cash and contact details in 16
cities around the world to test citizens’ honesty, Helsinki, the Finnish capital,
turned out to be the most honest of the lot; 11 of the 12 wallets were
returned. And according to the latest annual index by Transparency
International, a Berlin-based organisation, Finland is the second-least-
corrupt country in the world—after Denmark.

Excellent free education, universal health care and family-friendly policies

play an important role in making Finns content with their lives. Finland’s
education system ranks eighth among the world’s best educated countries
according to the UN World Population Review. Health services are not free,
but they are affordable.

Yet some argue that the real reason is that the Finns sweat out their negative
thoughts. Finland has roughly 3.5m saunas, more than one per two Finns.
All government buildings have saunas. An exhibition in Berlin called Die
Sauna. Echt heiss. Echt finnisch. sponsored by the Finnish embassy, is
celebrating sauna culture with photos, videos and, you guessed it, a sauna.
It’s a huge hit. All its remaining sessions are booked out.■

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country
Charlemagne

Germany’s Free Democrats have become

desperate spoilers
They face extinction at the next election
Apr 4th 2024

LIKE SMALL nations (think of Bosnia or Kuwait), pipsqueak political

parties can generate outsize effects. Consider Germany’s Free Democratic
Party (FDP). The smallest of three partners in the coalition that has ruled the
country since 2021, it holds just four cabinet posts, out of 17. The pro-
business party is weaker still at the local level, serving in just two of the 16
state governments, and as a junior coalition member in both of them at that.
Barely one in 20 Germans currently says they would vote for it in a national
election. Yet this very fragility has made the FDP increasingly desperate to
fire up its base.

That makes it dangerous. In domestic politics the party now constantly

snipes at its coalition allies and flirts with the opposition, making an already
unpopular government even more so. In Brussels, meanwhile, FDP
grandstanding has helped gum up EU legislation on issues from vehicle
emissions to supply-chain rules to the protection of nature. The actual
damage that has been caused has, so far, been limited, except perhaps to the
mental health of thwarted Eurocrats and to Germany’s reputation as a force
for moderation. But as the spring budget-making season in Berlin heats up,
and as European elections approach in June (followed by a trio of tight
German state elections in September), the temptation for the FDP to
undermine its coalition partners and sabotage European unity will only
increase.

Founded in 1948, just before the German federal republic itself, the FDP has
served in more national governments than any other party, albeit always in a
supporting role. The party’s peak performance in a federal election, in 2009,
saw it win 14.6% of the votes and a record 93 of the 600+ seats in the
Bundestag (the number of MPs varies slightly with each election). Yet at the
very next election, in 2013, the FDP failed to reach the 5% threshold of
votes cast that are needed for a party to win any seats in parliament.

The party soon bounced back off the ropes. Under an energetic new leader,
Christian Lindner, it found its way back into not just the Bundestag but
national government. In the current coalition the FDP yellow flickers
uncomfortably between the red of chancellor Olaf Scholz’s Social
Democrats (SDP) and the Greens’ obvious green; hence the “traffic light”
nickname for the coalition. Mr Lindner serves as finance minister, a role he
has not shied from using as a pulpit for the party’s agenda.

That has often meant taking a rigid stand over the “debt brake” that has since
2016 put strict limits on German governments’ ability to borrow. Appealing
as it may be to many voters as a check against profligate spending, the curb
has proved onerous in a time of multiple crises. Predictably, Mr Lindner has
clashed with his cabinet colleagues, with those from the left-wing SDP
decrying threatened cuts to social services and the Greens complaining about
delays to environmental measures, even as security hawks worry that he has
failed to make fiscal room for what is sure to be a sustained rise in defence
spending. Jens Südekum, a Düsseldorf-based economist, has described the
finance minister’s rumoured plans for sweeping cuts in next year’s budget as
“insane”, given Germany’s flatlining GDP growth.

Mr Lindner is neither an incompetent manager nor a political novice. He has

faced internal pressure; in a vote in December just 52% of his party’s
members voted to stay in the coalition. Yet Tarik Abou-Chadi, a teacher of
European politics at Oxford, suggests that Mr Lindner’s focus on sustaining
the FDP’s brand has put the party on a “destructive mission”. The feeble
response from Mr Scholz has not helped. Mr Abou-Chadi suggests that in
trying to keep peace in his coalition and protect the domestic agenda of its
Social Democrat and Green components, the chancellor has given its
smallest member extra leeway at the European level.

Hence, perhaps, the FDP’s stirring of trouble in Brussels. To be fair, plenty

of other parties, typically from the right, agree on the same issues. What
really annoys European legislators is that the FDP has repeatedly intervened
at the finish line of the laborious lawmaking process. For a struggling party
with barely 70,000 members to variously scupper, delay or force late-night
work-arounds for legislation affecting 450m Europeans is infuriating. “If we
don’t agree to what we’ve already negotiated, we undermine the entire
European legislative process,” declared Eamon Ryan, Ireland’s environment
minister, in late March, as a long-prepared law aimed at rehabilitating the
EU’s rivers, seas and forests faced sudden flak that was partly initiated by
the FDP and which has left it blocked.

Dangerous friends
Needless to say, the FDP’s supporters take pride in punching above their
weight. They include powerful corporate interests. German carmakers were
not displeased when the party last year succeeded in slipping last-minute
exemptions into a proposed EU ban on selling new internal-combustion
vehicles from 2035. And there was relief among smaller firms after a long-
debated corporate sustainability due-diligence directive (obliging companies
to ensure their supply chains are free of environmental or human-rights
abuses) had its proposed ceiling for compliance raised from an annual
turnover of €150m ($162m) to €450m.

These minor gains, which have hurt Germany diplomatically, have not
improved the party’s ratings. In poll after recent poll, the FDP has skated
along the edge of the 5% abyss; this week, it was at around 4%. Instead of
rewarding the party for its fiscal probity and Euroscepticism, voters are
turning to more reliably conservative, or even hard-right alternatives. “They
have been so worried about their brand position that they have ended up
hurting it,” says Mr Abou-Chadi. “In the end they would have benefited
more from being part of a smooth-running government.” ■

Read more from Charlemagne, our columnist on European politics:

How Europe’s fear of migrants came to dominate its foreign policy (Mar
27th)
Ukraine’s European allies are either broke, small or irresolute (Mar 21st)
Europe’s economy is a cause for concern, not panic (Mar 14th)

Also: How the Charlemagne column got its name

This article was downloaded by zlibrary from https://www.economist.com/europe/2024/04/04/germanys-free-democrats-have-become-
desperate-spoilers
Britain

How has the Bank of England dealt with four years of

shocks?
Two cities show the problems faced by Britain’s renters
What Jeffrey Donaldson’s arrest means for Northern
Ireland
Why some parts of England have so few graduates
Madame Tussauds reflects the fragmentation of fame in
Britain
Sadiq Khan’s London offers a taste of Starmer’s Britain
Stormy weather

How has the Bank of England dealt with four

years of shocks?
Its credibility is battered but intact. It can do better
Apr 4th 2024

SEVEN DAYS after Andrew Bailey became governor of the Bank of

England in March 2020, Britain’s first covid-19 lockdown began. Storms
have kept coming. The economy has had to endure two more supply shocks
(the completion of Brexit and a leap in energy prices after Russia invaded
Ukraine); a demand boost (post-pandemic fiscal stimulus); and a bond-
market blowup (after Liz Truss’s reckless mini-budget in September 2022).
Any central banker would want calmer weather.

Halfway through Mr Bailey’s eight-year term, how has the bank fared?
Judged by its main job, maintaining price stability, direly. The annual
inflation rate has exceeded the bank’s target, 2%, for almost three years,
peaking at 11.1% in late 2022 before falling to 3.4% in February. The core
rate—excluding food and energy—is at 4.5%.
Still, most forecasters expect the bank to be nearing its target again within a
few months. And central bankers are not all-powerful. Their tools—in
essence, spurring or reining in demand by setting short-term interest rates
and intervening in bond markets—can be little use in the face of big supply
shocks. A fairer yardstick is inflation expectations: has the bank persuaded
firms, households and markets that inflation won’t stay high for long?
Expectations of persistently high inflation can be self-fulfilling, as firms and
workers bid up prices and wages in an attempt to stay ahead.

Here, the record looks better. Britons’ long-term inflation outlook has barely
budged (see chart 1). But the bank’s credibility, polished over a quarter-
century of independence, is showing a few dents. Prices of inflation-linked
bonds imply that markets expect inflation to be 0.3 percentage points higher
in the long term than they did when Mr Bailey took charge. Surveys say that
39% of Britons expect inflation to exceed 3% in five years, against 31% in
early 2020. The number of Google searches for “inflation” has trebled in the
past four years. When inflation surges again, the bank cannot afford to
dither.

Even allowing for its blunt tools, might the bank have done better? It was
taken by surprise not once but twice. The first surprise was that inflation
emerged at all. The trouble started in 2021, as the pandemic ebbed and the
need for stimulus wore off. The bank delayed raising rates until that
December (see chart 2), earlier than many central banks but still too late.

At the time the need to tighten was not wholly clear-cut. Spending on goods
had boomed in the pandemic, straining supply chains. But it was hard to be
sure that that was truly a sign of broad overheating rather than of isolated
stress. The labour market looked slack—a government “furlough” scheme
was supporting around 1m jobs—but proved not to be. When the scheme
ended, unemployment kept falling.

Even so, the bank was too sanguine. A “Taylor rule”—a rule of thumb
devised by John Taylor, an American economist—suggests that rates should
have been rising by mid-2021. Other countries, including Brazil, Chile and
Norway, did lift rates sooner.

Worse, the bank continued quantitative easing (a policy of buying bonds

begun when rates were at rock bottom after the financial crisis of 2007-09)
deep into 2021, even as markets had stabilised and bond yields sat at their
lowest for centuries. (The bank has lost an estimated £50bn-130bn, or
$63bn-164bn, on its bond purchases, covered by the Treasury.) And the
sheer size of the government’s pandemic spending, amounting to 10% of
GDP in 2020-21, should have caused concern sooner, especially given the
disruptions to supply.
The second surprise was that inflation stayed high. By 2022 post-pandemic
inflation had been amplified by Russia’s invasion of Ukraine. Natural-gas
prices went parabolic, hitting ten times the levels of the 2010s. The bank
consistently predicted that inflation would soon fall (see chart 3). Instead, it
spread from energy, food and other goods to services, wages and housing,
from which it is harder to root out.

Even as gas prices plummeted in 2023 after a warm winter in Europe and a
slowdown in China, core inflation kept rising. Last summer the bank asked
Ben Bernanke, an ex-chairman of the Federal Reserve and a Nobel
economics laureate, to review its forecasting practices. His findings are due
on April 12th.

Macroeconomic forecasting is notoriously tricky. Data are sparse and

inexact; the structure of economies shifts over time. A key variable in
forecasting inflation is the size of “second-round” effects: how far will price
rises be self-perpetuating? Such effects fed a decade of brutal inflation after
the oil shocks of the 1970s. But from the 1990s they faded. Workers did not
chase inflation-reinforcing pay increases. Weaker trade unions, migration
and globalisation probably played a part; so did credible, independent
central banks.
The bank was wrong-footed when that post-1990s pattern did not persist.
Second-round effects were back. Academics suspect that recent price shocks
were severe enough to make history a poor guide to how firms and workers
might respond.

The bank will doubtless revise its models accordingly. But good central
banking ought to try to take account of uncertain forecasts. Mr Bernanke is
expected to recommend scenario-oriented forecasting. Developing and
publishing a scenario incorporating 1970s-style second-round effects, for
instance, would have been valuable. Another good idea, advocated by
Catherine Mann (who is on the bank’s rate-setting committee) and Isabel
Schnabel (of the European Central Bank) is to lean towards tighter policy
when rising inflation is not well understood (eg, when it has defied
forecasts).

Many central banks have struggled with forecasting. But the Bank of
England’s lapses in communication have stood out. Sometimes it has been
tin-eared (if economically accurate). Mr Bailey called pay rises
“unsustainable”. Huw Pill, the bank’s chief economist, said Britons should
“accept that…we’re all worse off” from the energy shock. On occasion, it
has embarrassed itself. Rumours trickled out about Mr Bailey’s penchant for
falling asleep in meetings. Uncharitable colleagues nicknamed him “Rock-a-
bye Bailey”.

Communications mishaps about policy are more serious. Especially during

crises, central bankers must speak clearly to financial markets, which set the
long-term borrowing costs facing households and businesses. Policymakers’
priorities will then be transmitted quickly across markets. But the bank
approached rate rises slowly and piecemeal.

Mr Bailey did not, for example, give a speech like that of Jerome Powell,
who heads the Fed today, in August 2022 at Jackson Hole, Wyoming. Mr
Powell hammered home the idea that he would tighten policy as much as
needed to tame inflation. Mr Bailey sometimes tried unhelpfully to talk
markets out of pricing in interest-rate rises. In March 2023 he questioned
whether it was wise to expect rates to go as high as 4.75%, as markets then
did. They ultimately reached 5.25%.
With inflation high, by 2022 public confidence in the bank had sunk
uncomfortably low (see chart 4). But the bank found unlikely saviours in the
49-day prime minister, Ms Truss, and her 38-day chancellor, Kwasi
Kwarteng. Their spendthrift fiscal plan caused an implosion in bond prices
that the bank handled deftly with an injection of liquidity into the gilt
market.

That earned the bank political capital, which will be especially valuable as a
general election, due by next January, draws near. When moves in interest
rates could, in principle, help one party or the other, the bank must be above
suspicion.

If, as looks highly likely, the Labour Party wins the election, what might that
mean for the bank? Much less than after Labour’s most recent return, in
1997. Within days the new chancellor, Gordon Brown, surprised markets by
declaring the bank independent. Rachel Reeves, the shadow chancellor
today, who once worked at the bank, has more modest intentions. She
promises to uphold its independence, keep the 2% inflation target and
refocus financial regulation on climate risk.

Some Conservatives may be less friendly, blaming the bank for both the
inflation and the stagnation likely to contribute to their defeat. Out of office,
they will pose no direct danger, but if the economy remains lacklustre they
may nevertheless fuel distrust of the bank.

So the bank will have to get better at politics. The best way to do that will be
to get better at its main job, fighting inflation. The past four years have
battered its credibility, though it remains mostly intact; and in a more
volatile, inflation-prone economic environment, it will be called upon to
police price rises more than to stave off recession. Mr Bailey may hope that
the next four years will be less stormy. Don’t expect the weather to oblige. ■

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with-four-years-of-shocks
Private renting

Two cities show the problems faced by Britain’s

renters
Politicians have noticed their plight, but have largely failed to ease it
Apr 4th 2024 | GLASGOW AND LONDON

TARA JONES-CHUBB, a secretary in the National Health Service, has

rented in Bounds Green, in north London, for almost 35 years. She and her
two children have moved often—once, from an ex-council flat, when their
landlady said she would prefer more lucrative young professionals. Now
they are looking again, but struggling because rents have surged. Despite
decades of good references, Ms Jones-Chubb earns too little to rent without
a guarantor. The idea of owning a home is fanciful.

A century ago almost eight in ten Britons lived in a rented home. Over the
next eight decades families of all types got onto the housing ladder, helped
at first by a housebuilding boom and later by falling interest rates. Social
housing declined from the 1970s. By the turn of the millennium, 70% of
people lived in their own home. Renting had become, for most, a waiting
room on the journey to ownership.
No longer. In the past two decades, the proportion of people renting
privately has doubled, to one-fifth. In London it is one-third. As rents and
house prices have climbed and mortgage terms tightened, private tenants
have been trapped. More than half are over 35; almost 1m privately rented
homes in England are headed by people aged over 55.

Not all of Britain’s 13m private tenants are miserable. Renting is good for
those who want flexibility; it helps the young move around to find jobs.
Outside London and the south-east, and a handful of other cities, rents have
not soared quite as much. But tenants often have to put up with grotty homes
and dodgy landlords.

Politicians have taken notice, but two of Britain’s biggest cities show why
they have largely failed to make things better. One is the capital. London is
one of the least affordable cities in The Economist’s global tracker: on
average around 40% of tenants’ pre-tax incomes goes on rent. The average
rent on a new let in January was £2,100 ($2,650), up by more than a third in
three years (see chart). Across the country wages rose by 17.5% in the same
period.

This is partly a problem born of success. Lots of people want to live in a

thriving global city; high immigration and the return of young people after
the covid-19 pandemic have fuelled the surge. A strong labour market
supports high rents.

But it also reflects decades of failure to build enough homes. In the 1930s an
average of 61,000 a year were built in London. That included hundreds of
dense apartment blocks, points out Jon Neale of Montagu Evans, a property
consultancy, before post-war planning policies and rent controls nixed such
projects. London has not managed to build more than 40,000 homes in a
single year since. An inability to build upwards—or outwards, thanks to the
green belt—has choked supply. The supply of rentals has been flat since
2016, when a boom in buy-to-let mortgages tailed off, partly because of less
favourable taxation.

Young people who cannot afford homes of their own crowd into shared flats
or endure long commutes. Homes are converted for “multiple occupancy”,
squeezing out families like Ms Jones-Chubb’s. Last year new lets were so
scarce that tenants would offer more than the asking price.

London’s renters also have weak protections. Housing policy is devolved,

but in England tenancies tend to last six months or a year, after which
landlords can kick tenants out with just two months’ notice without giving a
reason, or raise the rent. That can be used as leverage, for example to avoid
making repairs. Ms Jones-Chubb’s horror stories include two mouldy flats
and one collapsed ceiling (she was offered £50 in compensation). The
system for redress is lousy, says Dan Wilson Craw of Generation Rent, a
lobby group.

The Conservatives have been promising reform for eight years. Michael
Gove, the housing secretary, has pledged to ban no-fault evictions, introduce
rolling tenancies and create an ombudsman to resolve disputes. But with the
legislation midway through Parliament, those plans are in doubt. Mr Gove
faces stiff opposition from fellow Tory MPs concerned that making
tenancies more secure will put off landlords and further squeeze supply.

Policymakers in England could learn much—both what to do and what not

to—by looking north, to Glasgow. Tenants there have long enjoyed better
protection than those in London. Scotland banned no-fault evictions in 2017,
but no exodus of landlords ensued; the private rented sector then grew faster
than England’s. Moves to bring protections in Scotland closer to the
European norm have strengthened the market by making the sector more
attractive to tenants, says Nick Ponty, a lettings agent in Glasgow.

What caused problems, however, was a rent freeze introduced in 2022 by the
governing coalition of the Scottish National Party and the Greens. In the
subsequent year rents rose faster in Scotland than in any other part of
Britain. Many landlords in Glasgow either jacked up rents for new tenancies
not covered by the freeze or took their properties off the market. London’s
mayor, Sadiq Khan, has repeatedly called for powers to implement a rent
freeze. Fortunately, the government has said no.

To ease pressure on renters, both cities ultimately need to build more

housing. Glasgow has many beautiful four- and five-storey Victorian and
Georgian tenement (apartment) blocks. With less stringent rules on
extending upwards, London could replicate the gentle density of hip
neighbourhoods like Govanhill and Shawlands. Build-to-rent developments
can help, too, but in Scotland the rent freeze has led investors to pull out of
projects.

Britain may not be returning to the 1920s. But its millions of renters are not
going away. And they have votes, for whichever party starts taking them
seriously. ■

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britains-renters
Unionism stunned

What Jeffrey Donaldson’s arrest means for

Northern Ireland
The devolved government is secure for now, but will be tested
Apr 1st 2024 | BELFAST

THE STORY has transfixed Northern Ireland. On March 28th Sir Jeffrey
Donaldson was roused from his bed by police, arrested and later charged
with sex offences, including rape. The next day, Good Friday, he resigned as
leader of the Democratic Unionist Party (DUP), Northern Ireland’s biggest
unionist party. The legal process will probably take more than a year. The
political impact has been immediate and immense.

The DUP now has its fourth leader in under three years—making the
Conservative Party at Westminster look almost stable. Gavin Robinson, the
interim head, is likely to get the job permanently. The moderate, articulate
MP for East Belfast, a barrister by training, is the DUP’s youngest-ever
leader. If he can hold the DUP together, he has the ability to help the party
appeal to the younger, more liberal voters it needs to reverse unionism’s
recent decline. But he has his work cut out.
Sir Jeffrey’s arrest has been a brutal psychological blow. Ever since Ian
Paisley, a firebrand Protestant pastor, founded the DUP in 1971, the party
has fused faith with a ferociously tribal defence of the union with Great
Britain. It has stood against abortion, gay marriage and longer Sunday
opening hours for shops. Not all its members are religious, but they all know
they are joining a religious party.

The 61-year-old Sir Jeffrey personified this blend of prayer and politics.
Marked as a future unionist leader from his early 20s, he is publicly pious,
wearing the ancient Christian symbol of a fish in his lapel. The party
suspended him at once after his arrest and purged his image from its website
homepage. It is important to note that Sir Jeffrey is understood to deny the
charges and will be strenuously contesting them.

The affair has also shaken Northern Ireland’s devolved government, less
than two months after its restoration following a two-year hiatus. In January
Sir Jeffrey led his party back into a power-sharing arrangement with Sinn
Féin, the biggest nationalist party, which wants a united Ireland and which
beat the DUP into second place at elections in 2022. He had hitherto insisted
that the trade barrier between Great Britain and Northern Ireland, a
consequence of Brexit, must be swept away, but changed his mind after a
deal was reached to soften it. The speed of his U-turn surprised many.
Several of his senior colleagues opposed the move.

In office the relationship between the DUP and Sinn Féin has been like an
extended honeymoon, characterised by smiles, magnanimity and warm
cross-community gestures. There is no likelihood of devolution failing in the
short term. Having at last committed itself to being in government, the DUP
is not about to walk out. Although he was the party leader, Sir Jeffrey (an
MP at Westminster) was not a member of the devolved administration. But
with the partnership’s leading unionist sponsor gone, the warmth may
vanish.

Many of the DUP’s supporters are uneasy at its eagerness to work with Sinn
Féin. If there are fewer smiles and photo opportunities, ministers will be
forced to confront Northern Ireland’s deep problems. After two years’
degradation of public services, every department is demanding more money;
yet the devolved administration, which has some tax-raising powers, is
unwilling either to increase taxes substantially or to make offsetting
budgetary cuts.

For now, people of all political backgrounds are convulsed by the allegations
against Sir Jeffrey. As a young man, he was a protégé of Enoch Powell, an
English politician who left the Conservatives in 1974 and became the Ulster
Unionist (UUP) MP for South Down. (Sir Jeffrey later quit the UUP for a
party Powell derided as a “Protestant Sinn Féin”.) Powell once remarked:
“All political lives, unless they are cut off in midstream at a happy juncture,
end in failure.” How Sir Jeffrey’s political life ends now depends on the
courts.■

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Young people’s movements

Why some parts of England have so few graduates

More than one route to an unfortunate destination
Apr 4th 2024

BRITONS TEND to believe that jobs should come to them, not the other
way round. A poll in 2021 showed that a majority wanted the government to
focus on ensuring that everyone could find a good job in their local area.
“For many, if you want to get on you need to get out,” explained the
government the following year. It promised “to change that for good”.

But how exactly do people move around? In particular, why do some places
end up denuded of young graduates, and therefore less attractive to
employers, while others are stuffed with them? Last month the Office for
National Statistics released data that track people through school and
university and into jobs. This allows you to see, in slightly creepy detail,
how the young migrate.
Take Richmond (pictured), a lovely small town in North Yorkshire
represented in Parliament by the prime minister, Rishi Sunak. It has a castle,
a tradition of hand-knitting props for its annual pantomime, and some
successful schools. Of the roughly 430 teenagers who did GCSEs there
between 2008 and 2011, fully 205 ended up graduating from university (see
chart).

Only one-third were living in Richmond by their late 20s. Paul Harrison of
the Original Richmond Business and Tourism Association (“original” to
distinguish the town from some jumped-up Richmonds, including one in
London) suggests several reasons. The town offers few high-tech jobs;
homes are expensive; public transport to job hotspots like Darlington is not
great. Other rural towns have similar flaws, and similar out-migrations.

Mr Harrison says that Richmond has started to think about how to retain
more young graduates. Building lots more housing is unlikely to be a
favoured solution: one plan to build 32 homes on a field next to the town
was rejected last year. More than 700 people signed a paper petition against
the development—not bad, given Richmond’s population of about 8,000.

South Shields, a bigger, poorer post-industrial town not far from Newcastle
and Sunderland, has a different pattern. It churns out fewer graduates—only
a quarter of young people obtain degrees, compared with almost half in
Richmond. But more than two-thirds of them end up living in South Shields.
One likely reason is the range of universities in and around Tyneside.
Whereas just 2% of young graduates from Richmond study nearby, 38%
from South Shields do. They never break the link to home.

The two towns take different routes to a similar outcome. Once you include
the (rather few) young people who move to Richmond and South Shields
from somewhere else, both end up with only 22 young graduates for every
100 people who took GCSEs. Richmond probably has the edge when it
comes to attracting middle-aged and old graduates, including knitters.

In this light, the success of comfortable suburbs in south-east England

becomes a little clearer. Bushey, on the outskirts of London, produces
graduates as reliably as Richmond and holds on to them like South Shields.
It also draws more young graduates from elsewhere than either northern
town. Bushey ends up with 47 graduates for every 100 GCSE-takers. It is a
happy hunting-ground for recruiters. ■

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graduates
Waxing and waning

Madame Tussauds reflects the fragmentation of

fame in Britain
Not every newcomer is widely recognised
Apr 4th 2024

WHEN MARY EARPS was at school there was little to suggest that
celebrity and sporting greatness lay ahead. Footballing fame was then for
men only. Now the Manchester United and England goalkeeper—European
champion, World Cup runner-up and BBC sports personality of the year—is
to have her stardom sealed. Having topped a poll organised by Madame
Tussauds, Ms Earps is expected to be the first female footballer to be
replicated in wax at the London museum.

Since opening in 1835 Madame Tussauds has reflected fame in waxen form.
The 1950s and 1960s brought Julie Andrews and the Beatles; the 1970s,
Cilla Black and Bruce Forsyth. In the 1980s the museum modelled the
wedding of Prince Charles and Lady Diana Spencer. King Charles now
graces the Royal Palace Experience, dedicated to all things monarchical.
Diana is in an adjacent room, in the company of Sir David Attenborough and
Cristiano Ronaldo.
But finding celebs most Britons recognise is getting trickier. A stream of
people files past Olly Alexander, lead singer of Years & Years, a band with
several hits in the 2010s, and Britain’s representative at next month’s
Eurovision Song Contest; parents and children, unable to put a name to the
face, ask each other who he is. In decades past, musicians like Mr Alexander
had their celebrity status cemented by television shows such as “Top of the
Pops”, which in its prime drew more than 15m viewers a week, or dedicated
channels like MTV and VH1. Those days are long gone.

According to Ofcom, Britain’s media regulator, 2022 saw the steepest fall in
weekly TV viewers since records began. People aged 15-24 spend on
average an hour a day on TikTok; 90% of internet users rely on
algorithmically powered video content from YouTube or Facebook. Spotify
and Apple, highly customisable streaming platforms, account for most of
Britons’ spending on music.

A fragmented media landscape means fragmented fame. Michael Cragg, a

music journalist and author of “Reach for the Stars: 1996-2006: Fame,
Fallout and Pop’s Final Party”, an effervescent oral history of how
mainstream pop culture slowly lost its power, describes the problem. When
the Spice Girls unveiled their wax doubles in 1999, the pop quintet were all
but inescapable. “You can be successful without being famous now,” says
Mr Cragg.

Without the name on her shirt, many might not recognise Ms Earps either.
But even if not all its exhibits are universally famous, the museum’s ability
to hold up a mirror to celebrity endures. When Marie Tussaud founded it,
there were no footballers or pop stars, male or female. Times change. Fame
changes with them.■

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Bagehot

Sadiq Khan’s London offers a taste of Starmer’s

Britain
How not to run a city or a country
Apr 3rd 2024

FOR A FEW hours on July 21st last year, Piccadilly Circus’s advertising
hoarding provided the perfect symbol of Sadiq Khan’s eight years as mayor
of London. The 5,500 individual LED tiles arranged themselves into six
five-metre-high letters to spell one giant word: “MAAATE”. It was the
pinnacle of Mr Khan’s “Say ‘Maaate’ to a Mate” campaign, which
encouraged young men to call out sexism by their peers. It even came with
an interactive video, in which a young man’s behaviour degrades—at one
point he dry-humps a sofa—until the viewer hits a button marked
“MAAATE”, the man apologises and the group of jobbing actors return to
their game of FIFA.

It is well-meaning, ineffectual, cringeworthy and yet the best the mayor can
do with his limited resources. The mayor of London has a mighty title but a
puny role. Ending violence against women is beyond his actual powers,
which extend to managing public transport, some planning law and advising
the police. London is, ultimately, beholden to central government when it
comes to how many police patrol its streets or how many social workers
local authorities can afford. Sometimes, all a politician can do is plaster
“MAAATE” on a billboard and hope for the best.

When power and money are lacking, policy can become limited and
gimmicks prosper. It is not a happy recipe, but it is one that Sir Keir Starmer,
the Labour Party’s leader, has pledged to follow. Sir Keir’s vision for Britain
is one of little extra spending coupled with modest reform. Those wondering
how this will turn out should consider Mr Khan’s years in power in London.

Mr Khan came to office largely by default, as most likely will Sir Keir. The
Conservatives dismiss London as a hotbed of liberal luvvies even though it
is also a city of bankers, lawyers and accountants in million-pound houses.
Mr Khan’s re-election on May 2nd will come via apathy rather than
affection. In the run-up to the poll, he holds a 25-point lead over Susan Hall,
a little-known, scandal-prone local Conservative (though the mayor’s aides
say the race is closer). Sir Keir is likely to enter Downing Street because the
Tories have, in 18 months, run through three prime ministers, caused a
market panic, increased taxes to their highest in 70 years and let immigration
rise to a record level having promised to cut it.

Winning by default can lead to caution. A timidity haunts both Mr Khan and
Sir Keir. The mayor’s main achievement has been extending the Ultra Low
Emission Zone (ULEZ)—inside which pollution-heavy vehicles incur a
daily levy of £12.50 ($15.70)—to all of London, including its car-loving
outer boroughs. Yet Mr Khan pushed on largely because it was seen to be
uncontroversial; barely 5% of cars are affected. The backlash hurt him. Now
he flinches from genuinely ambitious ideas, such as pricing road use by the
mile. London, which has low rates of car-ownership and generally good
public transport, is the only place where such policies can be easily tried. Mr
Khan’s cowardice costs the country as a whole.

Labour is in danger of repeating Mr Khan’s mistake. It talks boldly about

planning reform, for instance. Yet the proposals are thin. Tweaks to existing
legislation will be favoured. Fundamental problems with the planning
system—that it allows erratic case-by-case decision-making by local
politicians—will remain. Tinkering with a system causes just as much
political pain as a wholesale change, as Mr Khan found with ULEZ. Why
not be bolder if the political price is likely to be the same?

Both Sir Keir and Mr Khan let opponents set the terms of debate. Rather
than push on with a radical agenda to further reduce London’s reliance on
cars, Mr Khan allowed a ring of voters in the capital’s suburbs to limit his
ambition. Mr Khan has a toxic relationship with central government, with
both sides revelling in the fight. By contrast Andy Burnham, the Labour
mayor of Greater Manchester, managed to squeeze money and power out of
a Conservative government while still landing blows.

Likewise Rachel Reeves, the shadow chancellor, has pledged to abide by the
Conservatives’ fiscal rules almost wholesale, while matching their farcical
post-election spending plans pound-for-pound. Labour has promised to
radically improve Britain’s public services without spending extra money.
What is the result when a politician promises change without the means to
pay for it? Usually, a billboard emblazoned “MAAATE”.

Where Mr Khan has been bold, it has often been belatedly. Eight years after
he was first elected he has begun to implement unapologetically left-wing
policies, such as free school meals. If children need free school meals in
2024, they needed them in 2016, too. Policy delayed is policy denied. A
similar sluggishness afflicts Labour nationally. The party talks of fixing
Britain being a ten-year project. With little money up front, improving
public services via better management alone becomes an even longer, slower
grind. Perhaps its leaders are lying and an emergency budget, with the blame
dumped on their predecessors, is in the works. More likely, the party will
waste a few years, panic, increase taxes, borrow more and then take the
blame itself.

Have a word
If Labour is to prosper in government, it must avoid the errors of Mr Khan.
Not being the Conservatives is an adequate electoral strategy, but a poor
governing one. Initial boldness will ensure more policy survives the
inevitable backlash. Luckily Sir Keir and Mr Khan can help each other out.
Devolving tax-raising powers to mayors would help Mr Khan do more than
hire giant billboards. Ensuring London, Britain’s most dynamic city, can
prosper is the best of way of boosting growth, the main goal of Sir Keir’s
administration. Labour is rarely in government at all, never mind with a big
majority. Control of both the capital and the country is a gift. Blowing it
would merit only one response. Maaate. ■

Read more from Bagehot, our columnist on British politics:

British boomers are losing out for the first time (Mar 27th)
The Conservative Party’s Oppenheimer syndrome (Mar 20th)
How Britain’s Tories came to resemble the trade unions (Mar 13th)

Also: How the Bagehot column got its name

This article was downloaded by zlibrary from https://www.economist.com/britain/2024/04/03/sadiq-khans-london-offers-a-taste-of-
starmers-britain
International

Thirty years after Rwanda, genocide is still a problem from

hell
Mass killings

Thirty years after Rwanda, genocide is still a

problem from hell
From Gaza to Sudan, mass killings are at their highest level in two
decades
Apr 3rd 2024

THE KILLING started on April 7th 1994, as members of the presidential

guard began assassinating opposition leaders and moderates in the
government. Within hours the genocide of Rwanda’s minority Tutsis was
under way. It was among the fastest mass killings in history: 100 days later
three-quarters of Rwanda’s Tutsis, about 500,000 people, were dead. Most
were killed not by the army but by ordinary Hutus, the majority group.
“Neighbours hacked neighbours to death,” wrote Philip Gourevitch, an
American journalist. “Doctors killed their patients, and schoolteachers killed
their pupils.”

The roughly 2,500 United Nations peacekeepers in Rwanda did almost

nothing. Agathe Uwilingiyimana, the moderate Hutu prime minister, was
among the first to die. She had been guarded by 15 UN peacekeepers, but
they surrendered. Lando Ndasingwa, the Tutsi leader of the Liberal party,
called the peacekeepers, saying that soldiers were preparing to attack his
home. An officer promised to send a detachment, but was still on the phone
when he heard gunfire. “It’s too late,” Lando said.

The world stood by and watched. Roméo Dallaire, the Canadian general
commanding the peacekeepers, was warned beforehand of the extermination
plan. In a cable to Kofi Annan, then the UN’s peacekeeping chief, he said he
planned to raid arms caches and pre-empt the genocide. Annan refused
permission and ordered him to do nothing that “might lead to the use of
force”. Three weeks into the genocide, the Security Council voted to
withdraw all but about 270 peacekeeping troops. “This world body aided
and abetted genocide,” the general later wrote.

Thirty years later, the Rwandan genocide is remembered as one of two

events in the 1990s that prodded a guilt-ridden world to pledge never again
to stand aside and allow mass atrocities. The other was the massacre by
Bosnian Serbs of thousands of Muslim men and boys in Srebrenica the
following year. In 2005 the UN General Assembly unanimously adopted the
principle that all countries have a “responsibility to protect” (R2P) people
from genocide and war crimes, by force if necessary. The dream was that
from Rwanda’s horrors would emerge a well-policed world.

Instead the nightmare has continued. In Ethiopia, Myanmar, Sudan, Syria,

Yemen and elsewhere, global powers have done almost nothing as millions
have been bombed, gassed and starved. The war in Gaza, too, has brought
tensions between principles and geopolitics to a head, with bitter claims and
counterclaims about Hamas’s atrocities and the legality of Israel’s
destructive six-month-long military campaign, which have played out in the
media, diplomacy and international courts.

To understand how the global push to prevent mass killings collapsed (and
whether it can be revived), it helps to start with Rwanda, which strengthened
the case of global human-rights advocates, and then to examine how cynical
realpolitik made a comeback.
The early 1990s were hopeful years. The end of the cold war allowed
democracy to blossom in eastern Europe and in Africa. The first Gulf war
ejected Saddam Hussein’s army from Kuwait and signalled that wars of
expansion would not be tolerated. Western powers led by America sent
troops into famine-struck Somalia to guard a humanitarian mission under
attack by warlords, showing that they cared not just about oil but about the
welfare of the starving. The spread of liberal democracy seemed
unstoppable.

Yet reality had a vote. Six months before the genocide in Rwanda, America
pulled out of Somalia after 18 of its commandos were killed in Mogadishu,
the capital. The battle cast a long shadow: UN peacekeepers in Bosnia were
instructed not to respond forcefully when fired on, for fear that they “cross
the Mogadishu line” and become embroiled in the fighting. Bill Clinton,
America’s president, turned against peacekeeping operations unless they
involved America’s national interests.

Rwanda did not. State Department lawyers warned officials not to call the
atrocities there a genocide, lest it commit the government to “actually do
something”. Britain’s ambassador to the UN warned against “promising
what we could not deliver” in terms of protecting civilians.
Still, when the horror of the genocide became clear, Western voters and
political elites were revolted by this cold-hearted calculus. Samantha Power,
a former journalist who now heads America’s aid agency, recounts in her
memoir that President George W. Bush scribbled “not on my watch” on a
memo summarising an article she had written about America’s failure to act
in Rwanda. “You had a generation of politicians like Tony Blair, David
Cameron, Nicolas Sarkozy in France, who had seen their predecessors’
failings, and that shaped their responses to later crises,” says Richard
Gowan, a veteran UN-watcher in New York with the International Crisis
Group (ICG), a think-tank. In 2000 Mr Blair, Britain’s prime minister, sent
troops into Sierra Leone, stopping rebels who were chopping off people’s
hands.

Standing in the way of such interventions was the doctrine that countries
should not interfere in each other’s internal affairs. The UN’s charter, signed
in 1945, forbade meddling in “matters which are essentially within the
domestic jurisdiction of any state”. Though its Security Council could
authorise force, this was intended as a response to aggression, not to prevent
atrocities. Newly independent African countries had had their fill of colonial
powers trampling on their sovereignty. In 1963, when they formed the
Organisation of African Unity (OAU), the members committed themselves
to “non-interference”.

Rwanda shook that belief. In 2003 the African Union (AU), the OAU’s
successor, gave itself the power to intervene to prevent grave crimes. Others
went further: America, Britain and several other Western countries began
claiming the right to use force unilaterally without the authority of the
Security Council, which they argued had become paralysed because each of
its five permanent members—America, Britain, China, France and the
Soviet Union (now Russia)—has veto power. In a speech in Chicago in
1999, Mr Blair outlined a doctrine of just wars “based not on any territorial
ambitions but on values”. He insisted the world could not simply allow mass
murder. That doctrine has since become policy. In 2018 the British
government reserved the right to prevent atrocities without the Security
Council’s authorisation, if its paralysis would lead to “grave consequences”
for civilian populations.

Angels with F-16s

All this converged into a current of thought known as “liberal
interventionism”. In Kosovo in 1999 NATO bombed what was then part of
Serbia, without Security Council authorisation, to stop a genocide against
ethnic Albanians. An international commission subsequently judged the
bombing campaign “illegal” but nonetheless “legitimate” because there was
no other way to stop the killing of civilians. Yet many were unsettled that
powerful countries were arrogating the authority to bomb others in the name
of human rights. Weaker states worried it would excuse “neocolonial”
interference.

Annan, by then the UN’s secretary general, tried to reconcile sovereignty

and protection of civilians. In 2000 he asked: “If humanitarian intervention
is indeed an unacceptable assault on sovereignty, how should we respond to
a Rwanda, to a Srebrenica?” The answer was R2P, which tried to reconcile
the aspirations of liberal interventionists with the worries of weak states. The
R2P resolution, passed unanimously by the UN in 2005, held that countries
had a responsibility to intervene, but only when authorised by the Security
Council. A British historian, Sir Martin Gilbert, called it “the most
significant adjustment to national sovereignty in 360 years”. That goes too
far, thinks Gareth Evans, a former foreign minister of Australia and one of
the founders of R2P. Nonetheless, he calls it “a wildly successful enterprise”.

Mr Evans argues that R2P created a new norm: no official today can openly
shrug off genocide for reasons of state, as Henry Kissinger, then America’s
secretary of state, did while cosying up to Cambodia’s Khmers Rouges in
1975. Meanwhile, since Rwanda almost all UN forces have been ordered to
protect civilians—though they are seldom given enough troops to do so, says
Alan Doss, who ran such missions in Liberia and Congo. Critics counter that
R2P creates no binding obligations on countries. The doctrine is a
“slogan...enthusiastically avowed by states but one devoid of substance”,
says Aidan Hehir of the University of Westminster.

In early 2011, in the first real-world test of R2P, the Security Council
approved the use of force by NATO to protect civilians in Libya. (It did so
again two weeks later in Ivory Coast.) “I refused to wait for the images of
slaughter and mass graves before taking action,” President Barack Obama
said. Crucially, the council’s three rotating African members (Gabon,
Nigeria and South Africa) broke with the AU and supported the resolution.
But not everyone was enthusiastic. John Bolton, a Republican former
diplomat, had called R2P “a gauzy, limitless doctrine” whose greatest danger
was not that it might fail, but that it might succeed and lead to ever more
foreign entanglements.

In the event, what was to have been R2P’s vindication proved its undoing.
At first the bombing in Libya worked, preventing a massacre of civilians in
Benghazi, a city in the country’s east. Yet Britain and France then stretched
the authority granted by the Security Council and toppled Muammar
Qaddafi, Libya’s dictator. The subsequent civil war destabilised the entire
region. That dampened the West’s enthusiasm for intervention. It also
revived “long-held suspicions of the motivations behind Western
interventions in Africa”, argues Karen Smith of Leiden University, a former
UN special adviser on R2P. African supporters of the doctrine, such as South
Africa, turned into sceptics. “Good intentions do not automatically shape
good outcomes,” Ramesh Thakur, a former UN official and an architect of
R2P, wrote after the effort in Libya went sour. “On the contrary, there is no
humanitarian crisis so grave that an outside military intervention cannot
make it worse.”

For many, mission creep in Libya was the original sin that undermined R2P.
“It’s when things started to fall apart,” laments Mr Evans. Yet even had the
Libyan campaign succeeded, the doctrine would probably have stumbled.
Western publics were tiring of the decade-long “war on terror” and
unsuccessful efforts at building liberal democracies in countries that did not
seem to want them. “We now have a generation of politicians who have been
shaped by the failure of intervention in Iraq and Afghanistan,” says the
ICG’s Mr Gowan.

That became clear in 2013 when Syria’s president, Bashar al-Assad, dropped
nerve gas on civilians. By then Mr Obama had grown sceptical about using
force; he spoke of red lines but did little when they were crossed. Other
Western powers were no more eager to act. Inaction, it turned out, has costs
too. By 2023 Syria’s civil war had claimed perhaps 350,000 lives and
displaced roughly half of the population, sending waves of refugees into
neighbouring countries and Europe.
Whose responsibility is it to protect him?

The Security Council was hamstrung by geopolitical rivalry. Some point to

the problem of the “great-power perpetrator”, in which a permanent member
of the council itself commits atrocities. Russia invaded Georgia in 2008, and
Ukraine in 2014 and on a bigger scale in 2022; it has been mainly interested
in undermining the council. Between 2011 and 2022 it vetoed 17 resolutions
on Syria, and it has blocked any action on Ukraine. China has been reluctant
to approve actions to prevent atrocities, perhaps because it reserves the right
to abuse its own citizens. On Syria it voted with Russia, insisting that
sanctions would abridge the country’s sovereignty.

The failure to act in Syria has been followed by passivity in the face of
atrocities elsewhere. In 2017 government forces in Myanmar began killing
and raping Rohingyas, a long-persecuted Muslim minority group, in what
the UN and America have branded genocide. Again the Security Council
was powerless, as China and Russia prevented it from issuing even mild
statements of concern.

In 2020 civil war broke out in Ethiopia. Government forces sealed off
Tigray, a northern region, and deliberately starved its roughly 6m people. By
the war’s end two years later some 600,000 are thought to have died, nearly
all of them civilians. The Security Council stayed almost completely silent.
Russia and China were not the only obstacles: the AU dropped its policy of
“non-indifference” to war crimes and sided with the Ethiopian government,
blocking efforts to raise the conflict before the council. As a result, “the
atrocity-prevention toolbox for Africa is likely to remain shut, its tools
quietly rusting away,” wrote Alex de Waal of Tufts University.

The situation is being repeated today in Sudan, where civil war risks causing
the world’s biggest famine, with at least 25m people in need of food. Much
of the blame lies with the Sudanese Armed Forces, which have blocked the
flow of aid into areas controlled by their enemy, the Rapid Support Forces, a
group of rebellious paramilitaries. They, in turn, are accused of genocidal
killings. For almost a year Russia and China blocked even calls for a
ceasefire. The wider world has been indifferent. “We seem to be rapidly
unlearning the lessons of Rwanda,” says Mr Gowan.

This is the backdrop for the claims and counterclaims in the Middle East.
After Hamas attacked Israel on October 7th, killing and abducting 1,400
people, mainly civilians, the West affirmed Israel’s legitimate right to self-
defence. Yet worldwide protests erupted almost immediately against Israel,
and have spread as its military campaign has killed around 33,000 civilians
and fighters in Gaza, according to the Hamas-run health authority.

Tell it to the judge

From one perspective the conflict has triggered a renaissance in the use of
international law to curtail violence. The Security Council has proved
ineffective, with America, China and Russia blocking each other’s
resolutions (although on March 25th America allowed one to pass, calling
for a ceasefire and the release of Hamas’s hostages). But several countries
have turned to international courts. South Africa asked the International
Court of Justice (ICJ) in The Hague to order Israel to halt its military
operations, invoking the Genocide Convention, which Israel has signed. It
also filed complaints at the International Criminal Court (ICC), a different
court in The Hague that can arraign individuals. (This was quite a turnabout:
South Africa had flirted with quitting the ICC to avoid honouring its arrest
warrants.) While the trial at the ICJ continues, it has ordered Israel to take
steps including providing humanitarian aid, on the basis that it is “plausible”
that it is breaching the Genocide Convention. Israel says it is complying
with the order; many dispute that.

Yet from another viewpoint the ICJ case illuminates the shortcomings of
international law in an age of bitter geopolitical divides. The ICJ has no
jurisdiction over war crimes other than genocide, which encourages
complainants to allege genocide even when the facts do not support it. That
cheapens the taboo against genocide and discredits the court. The ICJ case
has disillusioned some Western countries. America says the allegation of
genocide is “meritless”, and Britain says South Africa’s decision to bring the
case was “wrong and provocative” and that Israel’s actions cannot be
described as genocide. For its part, China, usually a foe of international
courts’ ordering countries around, has opportunistically decided it likes the
claims against Israel. The case will take years to resolve and the ICJ cannot
compel compliance with its orders without the help of the Security Council,
which is split.

Is there still hope for a credible and universal doctrine to prevent mass
killings? Mr Evans thinks so, and that current conflicts may alert the midsize
powers of the new multipolar world to the need to prevent atrocities. That
seems more a wish than a prediction: his memoir, published in 2017, is titled
“Incorrigible Optimist”. But it is hard to disagree with his aspiration. “We
can’t afford to let the flame die,” he says. ■

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This article was downloaded by zlibrary from https://www.economist.com/international/2024/04/03/thirty-years-after-rwanda-
genocide-is-still-a-problem-from-hell
Business

The mind-bending new rules for doing business in China

Bob Iger has defeated Nelson Peltz at Disney. Now what?
India’s biggest conglomerate takes on chipmaking
Will GE do better as three companies than as one?
Meet the French oil major that balances growth and
greenery
The six rules of fire drills
Why Japan Inc is no longer in thrall to America
A new opening?

The mind-bending new rules for doing business in

China
Xi Jinping is sending mixed messages to Western bosses and investors
Apr 3rd 2024 | Beijing

FOR YEARS foreign companies were desperate to get into China, and faced
formidable bureaucratic obstacles in their way. Now many are getting out.
Over the past 12 months several foreign law firms have closed some or all of
their Chinese offices. Orrick, Herrington & Sutcliffe, an American one, said
on March 22nd it would shut the Shanghai office it opened 20 years ago.
Another, Akin Gump Strauss Hauer & Feld, plans to exit China altogether
this year. Some global investment banks are pruning their Chinese staff. So
are a few large accountancies and due-diligence groups. In 2023 foreign
direct investment in China fell to its lowest level in 30 years.

One reason for foreigners’ change of heart is the sorry state of the Chinese
economy. Of the 18 largest multinational companies that report their
earnings from China, 13 saw annual revenues there fall in 2023. Qualcomm
and Samsung, two technology giants, recorded sales drops of more than
20%. Apple sold nearly a quarter fewer iPhones in the first six weeks of
2024 than it did in the same period the year before. In February Tesla shifted
19% fewer electric cars. Weak Chinese sales are the main reason why
Kering, the French owner of Gucci, expected to flog a fifth less of its bling
in Asia in the first quarter.

President Xi Jinping and the Communist Party are keenly aware of these
problems. And they care. At least that was the message broadcast loudly at
the China Development Forum (CDF) in Beijing on March 24th-25th, and
echoed a few days later at the Boao Forum, China’s (less snowy) answer to
Davos. The mood at both jamborees was decidedly better than last year,
when it was spoiled by a suspected Chinese spy balloon floating above
America before being shot down on the orders of President Joe Biden. Many
Western corporate bigwigs who stayed away were back; more than 80
foreign chief executives turned up in Beijing, including lots of Americans.
In Boao a senior official vowed that China would make it easier to move
capital in and out of the country. Two days earlier, at a separate event, Mr Xi
assured a handful of American CEOs that China would continue to reform
and open up.

Participants report that Mr Xi and party officials are doing more now than in
the past four years to stress that China is still open for business—a nice
change after the pandemic years, when its leaders assiduously quarantined
themselves from the outside world. “At the very least the meetings showed
there is a strong desire to communicate,” says a boss who attended the CDF
both this year and last. Earlier in March the State Council, China’s cabinet,
launched a 24-point “action plan” for attracting foreign investment. It
included familiar ideas such as protecting intellectual property and
promoting trade agreements, and welcome additions such as fostering cross-
border data flows. A few weeks later the main internet regulator eased some
onerous data rules that in the past two years have made foreign
businesspeople nervous about routine things such as sending emails to
colleagues abroad.

The trouble is that Mr Xi’s desire to lure back foreign business runs up
against his other objectives. Observers describe his leadership model as
“wanting this, that and the other”. Foreign companies are to do business in
China but keep their hands off Chinese data. Multinationals are to double
down on China and homegrown brands are meant to give them a run for
their money. China’s technology industry is to decouple from the West while
attracting Western investment. And global businesses are to like all this,
never mind that it works against their commercial interests.

Marxist theories of the sort Mr Xi likes to elevate may be able to resolve

these contradictions. But capitalists see trade-offs and choices. And business
logic increasingly argues in favour of greater circumspection about China.

Consider data flows. Regulators may have loosened some restrictions but
weeks earlier they tightened others, by updating a state-secrets law for the
first time since 2010. The law now covers “work secrets”, or information
that is “not state secrets but will cause certain adverse effects if leaked”. The
vague wording gives security agencies broad powers to consider any
communication between foreigners and Chinese employees as a potential
violation. On March 28th, as foreign CEOs mingled with party bosses in
Boao, the Ministry of State Security released a six-minute instructional
video. In it a Chinese engineering company is convinced by foreign
investors to allow a foreign due-diligence firm to investigate it. An executive
at the company travels in time to visit an incarcerated version of his future
self, who warns him not to hand over company secrets to the investigators.
When, back in reality, they ask him to share sensitive information, the
enlightened executive reports them to the authorities instead.

Spooked
The lessons of the film are as unsubtle as the acting. For Chinese viewers, it
is that foreign investors and consultants could be working for hostile foreign
governments and must not be trusted. For foreigners, it is not to look too
hard into obvious material concerns such as a company’s supply-chain
vulnerabilities or its links to the state, which could make a business
susceptible to Western sanctions.

Any such investigation of China’s chip industry, a big target of American

restrictions, has long incurred the party’s wrath. Now less sensitive sectors,
such as electric vehicles (EVs), batteries, renewables and biotechnology, are
increasingly out of bounds, too. Chinese executives at the Beijing branch of
a climate consultancy were recently questioned by security agents about the
information it collects on local firms and to what foreign entities it has
divulged it. The interrogation came as a surprise, because the outfit had
enjoyed seemingly strong support from China’s environmental regulators.
The incident led it to slim down its Chinese operations and try to eliminate
reporting lines between staff based in China and in other countries.

A further reason foreigners are having second thoughts about China is

stiffening local competition, a lot of it given a leg-up by the state, one way
or another. Government support for makers of EVs, batteries, solar panels
and wind turbines has created oversupply and pushed down prices. This has
been a blessing for foreign importers of Chinese-made components. For
multinationals trying to compete in China it has been a curse. Margins on
sales of electrolysers, bulky machines used to produce hydrogen, are said to
have dropped to almost nothing in recent months. In March BYD, a Chinese
EV giant and longtime recipient of state largesse, dropped the price of its
compact electric car to just $9,700, perpetuating a price war that has forced
Tesla to sell its EVs for less. Foreign industrial firms face hundreds of local
rivals that appear to operate in the red. In 2023, 22% of industrial companies
in China lost money, an all-time high.

Officials also invoke a mix of national security and national pride as a

reason to choose Chinese products over Western ones. Apple must contend
not just with downbeat consumers but also with a new line of smartphones
from Huawei, a Chinese tech champion targeted by American sanctions—
and with public servants and employees of state-run firms being told not to
buy iPhones, lest they contain backdoors through which the American
government can steal information. Teslas have been banned from some
government facilities and airports on the grounds that they film their
surroundings. State-owned enterprises and government agencies have been
instructed to replace chips from Intel and AMD, two American
semiconductor firms, with Chinese-made ones by 2026. They are also to
phase out Microsoft’s Office software over the next few years.

For many foreigners, overcoming these obstacles may be a price worth

paying. In a survey of 354 multinationals conducted by Morgan Stanley, a
bank, two-thirds of foreign firms were optimistic about China in the last
quarter of 2023, the most in two years and up from a trough of 46% in the
first quarter of 2022. For some companies China is a place to sharpen their
competitive edge: if they can make it there, they can make it anywhere.
Plenty want to preserve access to China’s vast market and manufacturing
base. On March 21st, to much fanfare, Tim Cook, Apple’s boos, opened a
new flagship store in Shanghai and reiterated that “There’s no supply chain
in the world that’s more critical to us than China.” To ram the point home,
days later he told an audience at the CDF in Beijing, “I love China and the
people.”

Yet to many Western ears, Mr Xi’s commitment to openness rings

increasingly hollow. His regime can repeat such bromides only so many
times before you grow cynical, says a weary boss of a multinational’s
Chinese branch. In the long run a surfeit of foreign cynicism may end up
being even more damaging to China’s economy than a glut of EVs and
electrolysers. ■

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business-in-china
King of the castle

Bob Iger has defeated Nelson Peltz at Disney. Now

what?
The Magic Kingdom’s transformation is far from over
Apr 3rd 2024

WHEN BOB IGER returned to the top job at Disney in November 2022,
some anticipated a fairytale ending to the entertainment giant’s troubles. In
February last year Nelson Peltz, a feared activist investor, called off a
campaign by his hedge fund, Trian Partners, for a shake-up after Mr Iger
announced measures to slash costs and otherwise improve Disney’s fortunes.

With the company’s share price languishing, however, Mr Peltz returned to

the warpath in October. Blackwells, another activist investor, launched a
campaign of its own. Both sought seats on Disney’s board, arguing it had
grown too chummy with Mr Iger and failed to find a viable strategy amid the
decline of “linear” TV.
On April 3rd both activists’ candidates were rejected by shareholders at
Disney’s annual general meeting (AGM), by what the company said was “a
substantial margin”. This has handed Mr Iger what he surely hopes is a
decisive victory. Investors began to regain faith in Disney’s boss after an
earnings call in February, when he reported that losses in its streaming
business, including Disney+, had narrowed sharply in the final quarter of
2023, and trumpeted splashy new initiatives including a partnership with
Epic Games, a video-game developer, to incorporate Disney characters into
its popular “Fortnite” franchise. The announcement that Disney would
increase its dividend by 50% and repurchase $3bn of shares also went down
a treat. Its share price jumped by 11% the following day, and has kept
climbing since (see chart).

At the AGM Mr Iger declared that Disney has “turned a corner and entered a
new, positive era”. Yet such triumphalism is premature, for Mr Iger still has
much work to do, in three areas especially. The first is to generate the
“double-digit” operating margins in Disney’s streaming business that he has
promised investors. That will require a lot more subscribers, to provide
economies of scale, which may put Mr Iger in a bind. To stem losses in the
business he has jacked up prices, undermining growth. Between the third
and fourth quarters of last year the number of subscribers to Disney+
(outside India) shrank by 1.3m.
What is more, over half of the $7.5bn in costs Mr Iger has pledged to slash
are to come from Disney’s content budget. That will hardly help the
company grow, and could undermine a second of Mr Iger’s promises—to
restore Disney’s creative magic. In his letter to shareholders from 1966, the
last before he died, Walt Disney declared a disdain for sequels. Mr Iger, by
contrast, is an avid fan. Of the 15 forthcoming films he mentioned in his
presentation in February, all bar one were sequels, prequels, spin-offs or
remakes. Mr Iger applauded a greater reliance on franchises as a “smart
thing”. Results at the box office, however, have been disappointing. Last
year Disney lost the top spot for global cinema-ticket sales, to Universal, for
the first time since 2015. On March 31st it was reported that last year’s
Indiana Jones film, a Disney reboot featuring an 80-year-old Harrison Ford,
took in $134m less at the box office than it cost to produce.

The third promise Mr Iger must still fulfil is to find a more durable successor
than his last pick, whom he then supplanted. Worryingly, three of the four
directors on Disney’s succession-planning committee were involved in that
bungled process. Already Mr Iger’s two-year contract has been extended
until the end of 2026.

If Mr Iger trips up, the interlopers may return. In his remarks at the AGM,
Mr Peltz noted that, regardless of the outcome of the vote, he would be
“watching the company’s performance”. The veteran activist, too, may be a
fan of sequels. ■

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at-disney-now-what
The world’s largest startup

India’s biggest conglomerate takes on chipmaking

Tata Group goes into growth mode
Apr 4th 2024 | Mumbai

ON APRIL 1ST diggers at large construction sites in two Indian states broke
ground on a pair of semiconductor factories. The plant in Gujarat, which will
cost $11bn, is to employ 20,000 people and produce 50,000 silicon wafers a
month. At the $3bn facility in Assam, 27,000 workers will package chips
into processing units.

The two projects are masterminded by Tata Group, India’s biggest

conglomerate. In Gujarat it has teamed up with Powerchip Semiconductor
Manufacturing Corporation of Taiwan. In Assam Tata is going it alone. It is
all a giant bet that the Indian government’s dream of turning the country into
a high-tech manufacturing powerhouse will materialise. And it illustrates the
ambitions of Tata and its chairman, Natarajan Chandrasekaran, to move
from a years-long restructuring firmly back into growth mode. “We have a
big vision to play,” says Mr Chandrasekaran.

In 2017, when Mr Chandrasekaran was handed the reins of Tata Sons, the
group’s holding company, such a vision would have seemed preposterous.
The group, which dates back to 1868, was in disarray. Mistimed acquisitions
of foreign steel and car businesses were losing billions of dollars a year. A
homegrown $1,300 car for the masses was a flop. Of its hundreds of
affiliated firms only Tata Consultancy Services, the IT-services giant Mr
Chandrasekaran ran at the time, was a real winner.

In his first three years in the top job he consolidated the corporate sprawl
into 30-odd listed businesses and, importantly, gave them a new focus. In
2020 a car model, the Nexon, was reconfigured into an electric vehicle and
became a smash hit. Today Tata Motors, the group’s car unit, sells one in
seven passenger cars in India, up from one in 20 four years ago. Some of the
group’s underperforming European steel mills are being shut and the
domestic steel business is riding India’s economic boom. An upsurge in
Indian holidaymaking has transformed the hotels subsidiary from a money
pit into a cash machine. Air India, bought from the government in 2022, is
enjoying a similar tailwind. The combined market value of Tata’s listed
affiliates has shot up from around $140bn in 2017 to roughly $400bn (see
chart). The group’s ratio of net debt to income has plummeted from eight in
2020 to just 2.4.

This success has given Mr Chandrasekaran the confidence—and the

financial muscle—to pursue new ventures, most notably in chipmaking. Past
efforts to create a domestic semiconductor industry have failed. A
government-led effort in the 1970s went nowhere. Promising talks between
India and Intel broke down in 2007 because the government in Delhi was
dragging its feet, the American chipmaker’s boss grumbled at the time.
Investment went to China and Vietnam instead.

Under the current prime minister, Narendra Modi, things are moving
considerably faster. He hopes to lure production from China, starting with
less advanced chips of the sort used in cars and appliances and then
gradually moving towards the cutting edge. His government is believed to be
footing around half of the capital costs of new chip factories, including the
ones in Gujarat and Assam, with states chipping in another 20%. Even so,
the projects represent a big wager by the private sector, and by Tata in
particular. In January 2023 Mr Chandrasekaran said that the group’s capital
expenditure would amount to a staggering $90bn over five years. A slug of
that would be spent directly by Tata Sons on semiconductors, where the
company wants to be present in everything from design to packaging.

The idea that India can become a chipmaking champion strikes some
observers as bonkers. Raghuram Rajan, a former governor of India’s central
bank now at the University of Chicago, decries all the vast subsidies for
commoditised chips, especially at a time when richer places like America
and Europe are pouring billions into production at the cutting edge. India
would be better off, he thinks, funding its cash-strapped engineering schools
and focusing on areas that require less investment, such as chip design.

Mr Chandrasekaran disagrees. He reckons domestic buyers alone will be

spending $100bn a year on chips by 2030, up from $40bn today. His firm is
one of the few in India that can carry out big projects fast. It has recruited 75
executives from abroad with expertise in the chip business. Some 70% of
capacity in the Assam factory, due to start production in 2025, has already
been contracted for by global customers. What is a fanciful initiative for
India may still be good business. ■

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chipmaking
Less general, more electric

Will GE do better as three companies than as one?

How to dismantle an industrial icon
Apr 2nd 2024

“THE DIFFICULTIES inherent in such a reorganisation were many and

serious.” In 1893 that was how Charles Coffin, the first chief executive of
General Electric (GE), described merging three businesses into what became
the legendary American conglomerate. More than 130 years later Coffin’s
latest successor, Larry Culp, must have similar feelings about doing the
reverse. On April 2nd GE split into two public companies: GE Aerospace, a
maker of jet engines, and GE Vernova, a manufacturer of power-generation
equipment. A third, GE HealthCare, a medical-devices firm, was spun off in
January 2023.
Investors are not mourning the end of GE as they, their fathers, grandfathers
and great-grandfathers knew it. On the eve of the split the company’s market
value hovered at around $190bn. The next day the two new firms were
worth nearly $200bn—and some $240bn if you add GE HealthCare (see
chart). In November 2018, shortly after Mr Culp took over as boss, the
whole group was worth $65bn, the least since the early 1990s. That June it
had been ignominiously kicked out of the Dow Jones industrial average, an
index of American blue-chip firms. In the past year both GE and GE
HealthCare have handily outperformed the Dow. Their shares have also
done better than those of most American spin-offs. Mr Culp says that the
group could not continue as an “all-singing, all-dancing GE”. Instead, GE’s
corporate progeny will become less general and, amid the energy transition,
more electric.

For much of its history GE was synonymous with size. Under Jack Welch,
the acquisitive CEO who ran it from 1981 to 2001, it became the world’s
most valuable company. Subsequent losses at GE Capital, its bloated finance
arm, and troubles in its core industrial businesses laid the giant low. Jeff
Immelt, Welch’s successor, sold off GE’s media, home-appliance and,
belatedly, finance assets but spent $11bn on the ill-timed takeover of a
power-and-grid business of Alstom, a French conglomerate, and $7bn on a
stake in Baker Hughes, a purveyor of oil-industry gear. John Flannery, who
replaced Mr Immelt in 2017, had the idea of spinning off the health-care
division and focusing on GE’s core businesses: aviation and power
generation. But he was dumped barely a year into the job, as GE’s share
price cratered.

As a result, Mr Culp, the first outsider to run GE, inherited a mess. GE

ended 2018 with a $23bn write-down of its power business (largely due to
the Alstom deal), a $15bn capital shortfall in a rump reinsurance business, a
net annual loss of $22bn and more than $130bn in debt. On paper his rescue
plan looked similar to Mr Flannery’s: hive off health, double down on
aircraft engines and power. The way he went about it, though, was different.

He halted his predecessor’s proposed spin-off of the health-care division,

realising that GE would be too weak in the short run to survive without the
successful unit’s income. Instead he sold GE’s biotechnology business to his
old employer, Danaher, another industrial group, for $21bn; accelerated the
move towards cleaner energy by divesting the stake in Baker Hughes; and
flogged GE’s aircraft-financing unit for more than $30bn. He also cut the
quarterly dividend from 12 cents a share to a cent. Taken together, these
moves reduced GE’s debt by some $100bn.

Critically, Mr Culp understood that reforming GE required not just changes

to its structure but also to its operations. Six Sigma, a series of techniques
championed by Welch that aimed to keep manufacturing defects below 3.4
per million parts, had become a barrier to innovation and was dropped.
Instead Mr Culp introduced GE to “lean management”, which looks for
small changes that add up to big improvements over time. This approach,
pioneered by Toyota in Japan, involves managers solving problems by
visiting the factory floor or their customers, rather than from the comfort of
their desks.

Today GE executives pepper their disquisitions with Japanese terms such as

kaizen (a process of continuous improvement), gemba (the place where the
action happens) and hoshin kanri (aligning employees’ work with the
company’s goals). More important, Mr Culp and his underlings routinely
spend a week on the factory floor alongside workers. The company credits
this system for improvements such as reducing the total distance a steel
blade for one of its gas turbines travels during the manufacturing process
from three miles (5km) to 165 feet (50 metres), and slashing the time to
build a helicopter engine from 75 to 11 hours.

All this puts the two daughter firms in fighting shape to thrive as their sister,
GE HealthCare, has done. In 2023 GE Aerospace and GE Vernova generated
combined revenues of $65bn, up from $55bn the year before. Engines made
by GE Aerospace, the group’s most profitable division, which Mr Culp has
chosen to run after the break-up, power three-quarters of all commercial
flights. GE Vernova’s gas and wind turbines generate a third of the world’s
electrical power.

Like many successful managers, Mr Culp also has luck on his side. Demand
for passenger jets—and thus the engines that keep them aloft—is rebounding
sharply from a pandemic slump. With a backlog of orders until the end of
the decade, GE Aerospace expects adjusted operating profit to surge from
$5.6bn in 2023 to $10bn by 2028. The turbulence at Boeing, which GE
supplies with engines for the planemaker’s troubled 737 MAX planes,
means that airlines facing delayed deliveries of these narrowbody
workhorses will need to stretch their exisiting fleet. That, points out Sheila
Kahyaoglu of Jefferies, an investment bank, increases demand for GE
Aerospace to keep older engines going. Last year the services business
accounted for almost 70% of the division’s revenues.

The winds look favourable for GE Vernova, too. Operating margins in the
business rose from low single digits in 2019 to almost 8% in 2023. The
International Energy Agency, an official forecaster, reckons that demand for
electricity will grow by more than half by 2040 as power-hungry data
centres and electric cars guzzle more of it. America is lavishing subsidies
and tax breaks on renewable-energy projects. Scott Strazik, a GE veteran
who will run GE Vernova, believes that this will help the company attain the
scale necessary to spread the high costs of wind-turbine manufacturing,
which is still lossmaking.

GE’s run of good fortune may not last. Projections for traffic in the
notoriously cyclical airline business may turn out to be too rosy. If Boeing
doesn’t pull out of its nosedive, GE Aerospace’s order books could take a
hit. The transition to clean energy in America, GE Vernova’s largest market,
has been fitful even under Joe Biden, its climate-friendly president. Should
the carbon-cuddling Donald Trump return to the White House next year, he
has vowed to gut green subsidies. GE’s businesses, in other words, face
many and serious difficulties ahead. But at least reorganisation is not one of
them. ■

Correction: Improvements were made to the manufacturing time for blades

for gas turbines, not wind turbines

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than-as-one
System engineering

Meet the French oil major that balances growth

and greenery
TotalEnergies has pulled off something its rivals haven’t
Apr 4th 2024 | HOUSTON AND PARIS

“TEXAS IS AN El Dorado for us, an energy El Dorado,” declared Patrick

Pouyanné, boss of TotalEnergies, last month at CERAWeek, the energy
industry’s annual shindig in Houston. He unveiled an expansion of the
French supermajor’s shale holdings in the south of the state, a deal intended
to bolster its position as the leading exporter of American liquefied natural
gas. It had earlier bought three Texan gas-fired power plants and opened a
new electricity-trading desk in Houston. Meanwhile in Brazoria, a
windswept county an hour’s drive from the city, it has built a solar park
capable of producing 380 megawatts (MW) of clean power, and of stashing
some of the resulting joules in a bank of lithium-ion batteries made by Saft,
its energy-storage arm. Hundreds of sheep and the odd gazelle graze among
700,000 photovoltaic panels on its 2,300 acres (930 hectares), with not a
nodding donkey in sight. “You love energy here in all forms, from gas to
renewables,” Mr Pouyanné told the oilmen at the Houston gabfest.
This ecumenical strategy is TotalEnergies’ attempt to bridge its industry’s
transatlantic divide when it comes to the energy transition. The French
firm’s big European rivals, BP and Shell, invested heavily in “electrons”
businesses like wind and solar energy—until weak returns and sagging share
prices forced them into embarrassing U-turns. Its American counterparts,
ExxonMobil and Chevron, have instead doubled down on oil and gas, while
backing “clean-molecule” businesses like hydrogen and carbon capture—
and have been rewarded with higher valuations.

Mr Pouyanné thinks he can straddle both worlds. His firm will continue to
invest in “System A”, as he calls the oil and gas that the world still needs.
Examples include its recent hydrocarbon projects in Brazil, Suriname,
Namibia and the United Arab Emirates. Here Mr Pouyanné’s imperatives are
reducing the amount of carbon released in extracting the crude and,
critically, slashing production costs, down to “less than $20 a barrel”, he
says. If barrels keep trading for around $90, this should spin out plenty of
cash to invest in “System B”, the low-carbon business that needs to grow
fast if global climate goals are to be met. TotalEnergies has or is building
some 5,000MW of clean-power capacity in Texas alone, making it one of
America’s biggest backers of such ventures. It plans to devote 30% of its
capital spending, or around $5bn a year globally, to low-carbon electricity,
twice as much as a typical major. By 2030 it wants to produce over 100
terawatt-hours annually, enough to light up Arizona. Perhaps a quarter of
those terawatt-hours would be generated in America.

What makes TotalEnergies’ green plans distinctive is that it has found a way
to make good money from them. Last year its return on capital was nearly
20%, higher than all its big rivals (see chart 1). As a result, since 2019 its
shareholders have enjoyed a total stockmarket return, including dividends,
of nearly 80%, roughly in line with Chevron’s and around twice those of BP
and Shell (see chart 2).

One big reason renewable energy suffers in the marketplace is intermittency.

In time lots more grid-scale batteries like those installed in Brazoria will
cleanly complement its wind and solar. Until then TotalEnergies will use gas
turbines as “flexible” backup to manage windless days and sunless nights. A
big chunk of the profits from its low-carbon-electricity business last year
came courtesy of those gassy “flexible-generation” assets.

The dual strategy is a byproduct of TotalEnergies’ history. CFP, in its

original French acronym, was founded 100 years ago to ensure France’s
energy independence. Initially that involved drilling for hydrocarbons in
Iraq. This profitable business ended when the Iraqi oil industry was
nationalised in 1972. In 2021 the company returned to Iraq in a spectacular
way by securing the lead role in a $27bn energy project. Mr Pouyanné thinks
it edged out competitors because it offered financial and technical assistance
to help Iraq generate electricity using gas that would otherwise be flared, as
well as building 1,000MW of solar power. A similar approach has found
favour in Libya, Mozambique and other countries with plentiful
hydrocarbons and pitiful power sectors. Now, amid the energy transition, it
is gaining ground even in places like America.

Some climate campaigners question this strategy. They see gas, which burns
more cleanly than oil or coal, not as a bridge to a greener future but a fossil
cul-de-sac. TotalEnergies’ capital-spending plans suggest that view is too
cynical. Of its $5bn in annual investments in low-carbon energy, 93% is
going to renewables and just 7% to gas. By 2028 flexible generation’s share
of profits is expected to fall to a quarter, as a surging System B begins to
match, and then surpass, a shrinking System A. By 2050 only 25% of
TotalEnergies’ sales will derive from oil and gas, according to the
company’s climate plan, down from 90% today. The firm envisages that
electricity generation and renewables will make up half its revenues, with
hydrogen and renewable biofuels making up the rest. Between now and then
it will try to prove that profits and the planet need not be at odds—even for
an oil major. ■

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balances-growth-and-greenery
Bartleby

The six rules of fire drills

Please display this somewhere in your office where no one will read it.
Thank you
Apr 4th 2024

Rule 1.The fire drill must never feel useful. It may be a proven way to help
save people’s lives, to say nothing of being a legal requirement in many
workplaces. But it is important that people experience the exercise only as
an inconvenience. The drill should take place when people are up against a
deadline. It must not be timed to coincide with a long meeting, when it
might come as a bit of a relief. Ideally, it should be pouring with rain. The
drill can be counted a success only if enough people are rolling their eyes
and muttering to themselves. (The sixth rule is essential to achieving this
outcome, too.)

Rule 2. Remember that the drill is not really a drill but an exercise in
begrudging consensus. When the alarm sounds, people must never just get
up and leave. They must first satisfy themselves that this is not a mistake.
Someone might have pressed the wrong button; that voice might yet drone
“This is a test” and for once people will feel grateful.
They must then see other employees getting ready to leave. This stage
involves people bobbing up and down at their desks like demented meerkats
to see what their colleagues are doing. When it is clear that this is indeed a
drill, people must then spend inordinate amounts of time deciding what
things to take with them. What’s the weather like? Should they take the
laptop? Where did they put their reusable coffee flask? Should they pack a
suitcase? The one thing they must not have as they leave is any sense of
urgency.

Rule 3. This stage of the drill is when the fire wardens must show
themselves. Only the wardens can accelerate the speed of departure from the
building. This secretive group is the Opus Dei of the office but with a bit
less of the fervour or sense of menace. The fire wardens have often been in
the role for years; no one knows how they got the job or how to apply. They
hide in plain sight: there may well be sepia photos of their younger selves on
the office wall, next to an even more obscure sect known only as the “first-
aiders”. The wardens reveal themselves during a drill by putting on high-
visibility jackets, which instantly confer on them a mysterious authority. The
cabal is never seen together at other times.

Rule 4. The fire drill will produce a sense of belonging. That is because a
drill will suddenly expose you to everyone who works in your building. In
the normal course of events, you might briefly share a lift with people from
other companies or other departments. You might glimpse their offices as the
doors open and close and think how soulless they look. (They will think the
same of yours.) But you never realise how outnumbered you are.

In a drill, however, strangers surround you. Stairwells fill with people, most
of them also weighed down by coats, laptops and reusable coffee flasks.
They spiral down below you on the way out and form long queues by the
lifts on the way back. You will suddenly feel grateful for the comfort of any
recognisable face. You spot someone from legal you think may be called
Keith and say hello. You have never given him any thought before; in this
moment of grave non-peril he is like family.

Rule 5. The assembly area is not so much a designated spot as a place of

people’s choosing within a ten-minute walk of your building. Your employer
might have specified a place for employees to gather. They may have given
it militaristic names like the “primary muster point” or the “tertiary
evacuation zone”. No one else will have the faintest idea where it is. A
clump of people will mill about as close to the site of the notional blaze as
possible. Another group will scatter in various directions in search of a
coffee or an early lunch. If they walk purposefully enough, other people will
assume they know where the assembly area is and follow them. As a result
most of the office may accidentally end up at Starbucks.

Rule 6. Confusingly also known as the first and second rules of fire drill,
you must never talk about fire drill. At some point word will spread that the
drill is over and people will start to drift back to the office. Once they have
returned to their desks, everyone must act as though the whole thing never
happened. There must never be any reference to how it went or whether any
safety lessons were learned. The fire wardens must fold away their high-viz
jackets and settle back into the shadows. The work you were doing must
simply be picked up where it was left. You will not speak to Keith from
legal again. But you do know not to use the lifts if there is a real
emergency.■

Read more from Bartleby, our columnist on management and work:

The pros and cons of corporate uniforms (Mar 27th)
The secret to career success may well be off to the side (Mar 21st)
Every location has got worse for getting actual work done (Mar 13th)

Also: How the Bartleby column got its name

This article was downloaded by zlibrary from https://www.economist.com/business/2024/04/04/the-six-rules-of-fire-drills
Schumpeter

Why Japan Inc is no longer in thrall to America

As the home of capitalism turns protectionist, Japan is opening up
Apr 2nd 2024

ONE OF THE most chilling moments in America’s post-war relationship

with Japan occurred in Detroit in 1982. Two American car workers clubbed
a Chinese-American man to death, mistaking him for a Japanese citizen they
accused of stealing American jobs. A sympathetic judge fined them $3,000,
with no jail time. This outrageously lenient verdict reflected a mood that
later extended to the highest level of government. Fearful of being overtaken
by Japan as the world’s economic superpower, America wielded the
crowbar. It imposed trade restrictions, sought to pry open Japan’s domestic
markets and led international efforts to reduce the value of the dollar against
the yen. Only after Japan’s asset-price bubble burst in the 1990s did America
leave it alone.

You would think a new bout of protectionism in America, most recently the
bipartisan attempt to block Nippon Steel’s $15bn acquisition of US Steel
under the guise of safeguarding American jobs, would elicit a sense of déjà
vu in Japan. But it is more complicated than that. In recent years one of the
most important strategic partnerships in the world has done a switcheroo.
Japan is embracing shareholder-friendly, pro-market reforms that have long
been America’s thing. America is adopting the sort of industrial policies and
protectionism that once defined Japan. This reveals a lot about the
contradictions America faces as it attempts to build global alliances to
counter China while pursuing business autarky at home. Japan’s approach
makes more sense.

Japan’s transition in just the ten years since Schumpeter lived there in the
early 2010s is remarkable—and not merely big-picture stuff such as rising
interest rates and the surging stockmarket. As Japan struggles to offset the
economic headwinds of depopulation, things are changing on the ground,
too. Ask an optimist, and several aspects of Japan’s lost decades are fading
from view.

Sayonara deflation: prices are rising and Japan’s large firms recently agreed
to the biggest wage increase in 33 years. Sayonara xenophobia: immigrant
employment, though still small by Western standards, is going up. Sayonara
cosy capitalism: firms, though still awash with cash, are targeting higher
returns, conducting more takeovers and reaping the benefits of shareholder
activism. “It’s endogenous. This is the elite of Japan saying if we don’t
sweat our assets, we won’t be around,” says Jesper Koll, a veteran Japan-
watcher. As usual Warren Buffett, who bought big stakes in Japan’s trading
houses in 2020, invested shrewdly.

There are several hisashiburis, or “long time no sees”, too. Japan is a

stronger trading power, with exports surging for the past three years (thanks
in part to a cheap yen). Sales by its most valuable company, Toyota, have
risen sharply in America this year; many car buyers favour the firm’s hybrid
models over rivals’ electric vehicles (EVs). Japan is enjoying an industrial
renaissance, especially in high-tech products such as semiconductors. In
February TSMC, the world’s biggest chip manufacturer, opened its first
factory in Japan less than two years after construction started. It has suffered
big delays trying to do the same in America.

So what does Japan make of America turning Japanese, in the bad old sense?
The first blow to trust came in 2017 when Donald Trump withdrew America
from the Trans-Pacific Partnership, a trade treaty that America, Japan and
ten other countries had painstakingly crafted partly to counterbalance China.
Mr Trump’s successor, Joe Biden, doubled down on an America-first
industrial policy. His Inflation Reduction Act (IRA) discriminated against
firms from Japan and other places that lacked a free-trade treaty with
America (Japan later signed a critical-minerals deal that provides its EVs
with some of the tax incentives they had been denied.) Mr Biden’s
opposition to the trans-Pacific steel merger has been a slap in the face. Not
only were his protectionist arguments spurious. They came just as
lawmakers were proposing to add Japan to a whitelist of strategic allies
permitted to bypass America’s strict foreign-investment rules.

Japan’s economy ministry will not go on the warpath against America as the
Commerce Department did against Japan in the 1980s. For all its pro-market
progress it is no paragon of capitalist virtue, deploying industrial policy to
promote clean energy and chipmaking. America’s giant economy is growing
fast, so Japan cannot afford to be too huffy. Its firms have pledged to invest
billions in America to take advantage of the IRA. As for Nippon Steel,
expect it to keep its head down and hope the merger brouhaha blows over
after the presidential election in November. If Mr Biden’s pro-jobs stance
helps him defeat Mr Trump, a protectionist to the marrow of his bones,
Japan will sigh with relief.

Yet the relationship is no longer one-sided. In the past America was not just
Japan’s most important export market but also a guarantor of its safety under
the US-Japan Security Alliance, a defence treaty. That protection remains
vital. In recent years, though, as threats from China and North Korea have
grown, Japan has taken more of its defence into its own hands. It has
decided to spend vastly more on powerful new weapons, such as cruise
missiles. Its tech industry is hoping to play a bigger role in the West’s
military supply chains. On April 10th Mr Biden and Japan’s prime minister,
Kishida Fumio, will reportedly unveil the biggest upgrade to the security
pact in decades when they meet at the White House.

The Tokyo consensus

America, for its part, needs Japan not just as a military partner in Asia. As
Peter Tasker, another long-time Japan-watcher, puts it, Japan is increasingly
seen as the “non-China” leader in the region, and America relies on it as an
economic counterweight to China. As more Asian countries move into
Japan’s orbit, with luck they will emulate its new-found pro-trade
pragmatism. That, after all, is the true American way. ■

Read more from Schumpeter, our columnist on global business:

Meet the digital David taking on the Google Goliath (Mar 27th)
Can anything stop Nvidia’s Jensen Huang? (Mar 20th)
Elon Musk is not alone in having Delaware in his sights (Mar 14th)

Also: If you want to write directly to Schumpeter, email him at

schumpeter@economist.com. And here is an explanation of how the
Schumpeter column got its name.
This article was downloaded by zlibrary from https://www.economist.com/business/2024/04/02/why-japan-inc-is-no-longer-in-thrall-
to-america
Finance & economics

How Xi Jinping plans to overtake America

The Federal Reserve cleans up its money-printing mess
Will FTX’s customers be repaid?
How to build a global currency
Daniel Kahneman was a master of teasing questions
Hype and hyperopia

How Xi Jinping plans to overtake America

Digital twins, nuclear fusion and the small matter of fixing China’s
economy
Mar 31st 2024 | Hong Kong

LAST YEAR Xi Jinping, China’s president, paid a visit to Heilongjiang in

the country’s north-east. This province, part of the industrial rustbelt,
exemplifies the problems besetting China’s economy. Its birth rate is the
lowest in the country. House prices in its biggest city are falling. The
province’s GDP grew by only 2.6% in 2023. Worse, its nominal GDP, before
adjusting for inflation, barely grew at all, suggesting it is in the grip of deep
deflation.

Never fear: Mr Xi has a plan. On his visit, he urged his provincial audience
to cultivate “new productive forces”. That phrase has since appeared scores
of times in state newspapers and at official gatherings. It was highlighted in
last month’s “two sessions”, annual meetings of China’s rubber-stamp
parliament and its advisory body. In the preface of a new book on the
subject, Wang Xianqing of Peking University likens the term to “reform and
opening up”, the formula that encapsulated China’s embrace of market
forces after 1978. Those words “shine” even today, he wrote, implying that
“new productive forces” will have similar staying power.

What does the phrase mean? Chinese officials are hunting for ways to power
the country’s economy. For years its productive forces drew on the
mobilisation of labour and accumulation of capital. Its workforce grew by
100m people from 1996 to 2015. Its stock of capital rose from 258% of GDP
in 2001 to 349% two decades later, according to the Asia Productivity
Organisation. After the global financial crisis of 2007-09, capital
accumulation often took the form of new property or infrastructure.

But China’s workforce is now shrinking and demand for property has
slumped: fewer people are moving to China’s cities, speculative gains on
real estate are no longer assured and potential homebuyers are reluctant to
buy flats in advance in case distressed developers run out of cash before
building is complete. The property downturn has hurt consumer confidence
and deprived local governments of crucial revenues from land sales. Even
after China abandoned its strict covid-19 controls, the economic recovery
has been muted and uneven. Spending has not been strong enough to fully
employ China’s existing productive forces. As a consequence, according to
one measure, deflation has persisted for three quarters in a row.

At China’s stage of development, economies typically pivot towards

services. Yet the government’s heart lies elsewhere. The pandemic boosted
demand for China’s manufactured goods, from surgical masks to exercise
bikes. America’s export controls on “chokepoint technologies” have created
a need for homegrown alternatives, from lithography machines to aviation-
grade stainless steel. China’s 14th five-year plan, which spans 2021-25,
promised to maintain manufacturing’s share of GDP, which had declined
from almost a third in 2006 to just over a quarter in 2020.
In its quest for a sophisticated, but self-contained, manufacturing system,
China employs a variety of helpful policies. Its Ministry of Education, for
example, recently approved a new undergraduate concentration in high-end
semiconductor science and engineering. Spending on more explicit
industrial policies, including subsidies, tax breaks and cheap credit,
amounted to 1.7% of GDP in 2019, according to the Centre for Strategic and
International Studies, a think-tank—more than three times the percentage
spent by America.

“What China really wants to be is the leader of the next industrial

revolution,” says Tilly Zhang of Gavekal Dragonomics, a consultancy. That
will require it to upgrade traditional industries, break foreign strangleholds
on existing technologies and forge a new path in industries of tomorrow.
Although the central government’s ambition is impressive, even unsettling,
it cannot succeed without the help of local governments, which are short of
cash, and private entrepreneurs, who are short of confidence. As such, the
new slogan may betray a damaging hyperopia—long-sightedness that is
blinding the leadership to more immediate economic concerns.

The owl spreads its wings

To Barry Naughton of the University of California, San Diego, who
confesses to reading some Hegel in his younger days, the phrase “new
productive forces” evokes the “dialectical” idea that an accumulation of
quantitative changes can result in a qualitative break or sudden leap, as
Hegel put it, much like when an incremental increase in temperature turns
water into steam. Marx, meanwhile, noted that when new productive forces
achieve sufficient weight in the economy, they have the capacity to remake
the social order: “The handmill gives you society with the feudal lord,” he
wrote, “the steam-mill, society with the industrial capitalist.” New
productive forces, then, can be a big deal.

In presenting the concept, Mr Xi has said that the test for new productive
forces will be improvements in “total factor productivity”, a term lifted not
from Marx, but from mainstream economics. It refers to increases in output
that cannot be attributed to increases in measurable inputs, such as physical
and human capital. In mixing Marxist and neoclassical concepts, new
productive forces are a “strange hybrid beast”, says Mr Naughton.

According to Mr Xi, the new productive forces will flow from the
application of science and technology to production. The phrase is a signal
that China’s technology push should be even more ambitious than it is today,
and more tightly integrated into economic production. China’s leaders have
promised a “whole of nation” effort to boost technological self-reliance. The
central government’s budget, unveiled in March, increased annual spending
on science and technology by 10%, the largest percentage increase of any
division. Frugal innovation, this is not.

Nor is it China’s first assault on the problem. In 2006 a 15-year plan set
national targets to raise research-and-development (R&D) spending, reduce
dependence on foreign technology and increase technology’s contribution to
growth. It also identified 16 “megaprojects”, such as building China’s own
large passenger aircraft and landing a probe on the moon. These were largely
attempts to replicate existing technologies. In 2010, after the global financial
crisis, China changed tack, lavishing some of its heavy stimulus on a variety
of “strategic emerging industries”, including new kinds of information
technology, renewable energy and electric vehicles (EVs)—many of which
were still embryonic.
Six years later, China shifted emphasis again. Its “innovation-driven
development strategy” expressed faith that the world was in the midst of an
industrial revolution. Advances in digital technologies, the internet of things,
green tech and artificial intelligence (AI) promised breakthroughs across the
economy. Rather than pick a miscellany of emerging industries, China’s new
strategy emphasised this cluster of mutually reinforcing technologies. China
aimed to become a “world power” in innovation by the middle of this
century. By 2020 it was spending almost 2.9trn yuan ($420bn, or 2.8% of
GDP) on science and technology, according to Rhodium Group, a
consultancy. The government’s contribution exceeded 60% if generous tax
breaks are included. Of the recipients, a sixth ended up with universities or
research institutes. Roughly 60% flowed to companies.

Mr Naughton has called China’s innovation strategy “the greatest single

commitment of government resources to an industrial-policy objective in
history”. What does the country have to show for it? The results have so far
been better than any middle-income country could expect. But they are not
quite as impressive as China’s leaders might have hoped.

In e-commerce, fintech, high-speed trains and renewable energy, China is at

or near the frontier. The same is strikingly apparent in EVs, where success
helped China last year to become the world’s biggest exporter of cars. In a
list of 64 “critical” technologies identified by the Australian Policy Research
Institute, a think-tank, China leads the world in all but 11, based on its share
of the most influential papers in the fields. The country is number one in 5G
and 6G communications, as well as biomanufacturing, nanomanufacturing
and additive manufacturing. It is also out in front in drones, radar, robotics
and sonar, as well as post-quantum cryptography.

In addition, China has made good progress in measures of a country’s

innovation “ecosystem”. The Global Innovation Index, published by the
World Intellectual Property Organisation, combines about 80 indicators,
spanning infrastructure, regulations and market conditions, as well as
research effort, patent awards and citation counts. A middle-income country
with China’s GDP per person would expect to rank in the 60s. China ranks
12th.

The economic impact of these achievements is harder to measure. China’s

list of “strategic emerging industries” has kept evolving since its
introduction in 2010, making it tough to track progress. Two members of
China’s National Bureau of Statistics once lamented that the criteria for
inclusion, especially at the level of products, are “vague”. How to know if a
boiler counts as “energy saving” or a composite material counts as “high
performing”? Nonetheless, China’s statisticians estimate that strategic
emerging industries accounted for 13.4% of GDP in 2021, up from 7.6% in
2014 but below the original target for 2020 of 15%. By comparison, the
value added by property building and services (ignoring upstream links to
steel, iron-ore and other such industries) was about 12%.

Although these gains are impressive, China’s leaders are not content. They
have been alarmed both by America’s technological embargoes and its
recent technological triumphs. Sweeping export controls on the sale of chips
and chipmaking equipment have revealed China’s dependence on foreign
components, software and equipment. America’s advances in AI have also
prompted reflection. AI was an industry in which China thought it had an
edge. The country’s leaders were shocked by the arrival in 2022 of
ChatGPT, a large language model developed by OpenAI.

China’s progress has also been hurt by its own leaders. They cracked down
on many of the country’s most advanced tech firms in 2021, accusing them
of mishandling data, thwarting competition and exploiting gig workers. This
regulatory storm targeted consumer-facing “platform” companies, such as
Alibaba and Meituan, rather than advanced manufacturers or other firms in
“hard tech”. However, the damage to investor confidence was hard to
contain. The disfavoured platform companies, with their huge troves of data,
are also big investors in many frontier technologies, such as AI, which
China’s leaders are keen to foster. The country’s large internet firms cut their
R&D spending by almost 7% in the first half of 2023, compared with a year
earlier, according to Rhodium.

Scientific socialism
Total-factor productivity growth—Mr Xi’s preferred test of new productive
force—has also slowed. The tech programme China introduced in 2006
implied that its contribution to growth should rise to 60%. Instead, it has
fallen to less than a third, according to Louis Kuijs of S&P Global Ratings, a
credit-rating agency. China is thus suffering from its own version of the
“Solow paradox”: you can see a new technological age everywhere but in
the productivity statistics. These setbacks and shortcomings may explain the
perceived need for a fresh slogan to shake things up.
The country’s innovation push now seems split into three. First, it seeks to
replicate “chokehold” technologies. A second goal is to invent technologies
the rest of the world is yet to create. In January government ministries issued
a list of “future industries”, many of which are even more pathbreaking than
the strategic emerging industries of the past. They include photonic
computing, brain-computer interfaces, nuclear fusion and digital twins—
simulacra of patients that doctors can monitor for illnesses that might arise
in their real-life counterparts. The government is encouraging laboratories
and research institutes to spend more than half of their basic funding on
scientists under 35 years of age, in the belief they are more likely to make
the breakthroughs the country needs.

These moonshots could be seen as a folly China can ill afford—a distraction
from the dogged pursuit of self-reliance, which requires homegrown
versions of technologies that China can no longer count on importing from
abroad. But according to Ms Zhang of Gavekal, China’s leaders hope that
futuristic industries will contribute indirectly to the country’s technological
sovereignty by giving it “bargaining chips” in the tech battles ahead. If
America threatens to cut off China’s access to a vital input, China can
retaliate in kind.
Chinese commentators often talk about “overtaking at the curve”. China’s
success in EVs, after its longstanding failure to displace incumbent makers
of traditional vehicles, demonstrates that it can sometimes be easier to make
advances in fields that are not already occupied by well-entrenched
incumbents. According to Jie Mao of the University of International
Business and Economics in Beijing and his co-authors, China’s science-and-
technology policies from 2000 to 2012 boosted productivity most in
industries in ferment, rather than in those that had reached maturity either at
home or abroad. In fighting a guerrilla war, Mao Zedong famously believed
in occupying the countryside before advancing on the cities. In the same
way, China may be marching into wilder and woollier areas of technological
discovery, where its long-entrenched adversaries have a smaller advantage.

A third objective is to upgrade existing industries. “Even the most traditional

agriculture can form new productive forces,” Wang Yong of Peking
University has argued, so long as it employs revolutionary technologies. He
cites automated planting or selective breeding using big data. At the two
sessions, the annual meetings of China’s parliament and its advisory body, a
delegate from a prominent state-owned distillery even argued that the new
productive forces can be found in hard spirits.

The pursuit of these goals will be expensive. One lesson of the past decade
is that lots of money cannot guarantee a Hegelian transformation of
production. But a lack of spending will surely preclude one.

It must therefore worry China’s leaders that local governments’ budgets are
stretched and animal spirits are low. In the past, much of the money for
China’s tech push has come from local-government funds that raise money
from land sales and “special bonds”. Their revenues fell by more than a fifth
from 2020 to 2023.

When the economy is booming and local authorities are flush, they are at
liberty to invest in ventures that may not pay off for five or ten years, points
out Matt Sheehan of the Carnegie Endowment for International Peace, a
think-tank. In 2010, for example, growth was rebounding and stimulus
money could flood into EVs, solar panels and other evolving technologies.
But for local governments in today’s more straitened times, “firefighting is
going to end up overwhelming attempts to think long term”, he says. Firms
will be urged to invest in projects with short-term payoffs. They may also be
pestered and harassed for taxes and fees to help their provincial or municipal
patron balance its books.

At this year’s two sessions, Li Qiang, China’s prime minister, set out the
country’s “major tasks” for the year ahead. First on Mr Li’s list was “to
modernise the industrial system” and develop “new quality productive
forces”. Expanding domestic demand, which is necessary to dispel deflation,
ranked only third. If the mood and markets do not revive, local governments
will struggle to refill their coffers and private investment may fall short. Mr
Xi is determined to reinvent China’s economy. To do so, he needs to
reinflate it first. ■

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overtake-america
A lovely wall

The Federal Reserve cleans up its money-printing

mess
It wants to avoid upsetting markets, and is so far succeeding
Apr 4th 2024 | Washington, DC

AT THIS POINT, almost everyone in global markets is familiar with the

notion of higher-for-longer interest rates. Soon, they are likely to meet
another concept as important for understanding central-bank policy: less-for-
longer quantitative tightening (QT). This phrase describes how the Federal
Reserve intends to continue reducing its assets to undo its huge bond
purchases during the covid-19 pandemic. It hopes that a less-for-longer
approach will ultimately leave it with a smaller balance-sheet than would
otherwise be the case.

This may all seem quite technical. Indeed, in one metaphor much liked by
Fed officials, tracking QT should be as interesting as watching paint dry. But
the very dullness—if it remains that way—has crucial implications, because
it would help to make balance-sheet expansion and contraction a staple in
central banks’ tool kits for staving off financial crises. Although other
monetary authorities are also in the midst of QT, the Fed plays a dominant
role in this experiment as the central bank for the world’s biggest economy.

The Fed has already reduced its assets by about 16% to $7.5trn since the
start of this round of QT in mid-2022—a slightly bigger reduction than its
previous attempt at QT from 2017 to 2019 in the wake of the global
financial crisis of 2007-09 (see chart). Yet its balance-sheet remains about
80% larger than in early 2020. Shrinking it further would give the Fed more
scope to expand it again by purchasing bonds (often described as printing
money) when the next financial maelstrom arrives. Managing to do so
without crashing markets would also help answer critics who view
quantitative easing (QE) as a cause of high inflation and bubbly asset prices.

No one, including Fed officials, knows precisely the right size for the central
bank’s holdings. The crucial measure is not the assets on its balance-sheet
but its liabilities—specifically, the reserves held by commercial banks,
which rise as a counterpart to the central bank’s bond purchases during QE.
The Fed’s goal is to return banks to “ample” reserves, down from their
“abundant” level today. Before the pandemic, such reserves came to about
10% of their assets. Now, they are about 15%. Given increased needs for
liquidity, in part owing to stricter financial regulation, economists at
Goldman Sachs, a bank, think a good level would be about 12%. This would
imply that the Fed may want to shrink its balance-sheet by another $500bn.

Without any fixed target, the Fed is allowing itself to be guided by market
signals. In particular, it is watching whether overnight financing rates for
banks trade above the rate that it pays on their reserve balances. This would
be an indication that liquidity conditions have become much tighter. Money-
market ructions in the autumn of 2019, including surging short-term
financing costs, led the Fed to bring its previous round of QT to a screeching
halt. This time, it has avoided such instability.

Having got this far, officials now want to slow their asset reduction, betting
that doing so will minimise the risk of market disruption and thus, over a
longer period, maximise their balance-sheet shrinkage. With Jerome Powell,
the Fed’s chairman, promising last month to start “fairly soon”, a fair
conjecture is that the Fed will lay out plans for tapering QT after its next
meeting on May 1st and begin to do so in June. Currently, the Fed is not
selling securities but letting up to $95bn roll off its balance-sheet each
month. A tapered QT may see it aim for a roll-off of roughly half as much.

The corollary of less-for-longer QT is that the Fed will probably continue to

reduce its assets for the rest of this year, which means it may be shrinking its
balance-sheet (ie, monetary tightening) at the same time as it cuts interest
rates (ie, monetary loosening). Although that may sound contradictory,
investors should in theory price in much of the impact of tapered QT as soon
as the Fed announces it.

In any case, the big picture is just how few ripples the central bank’s
balance-sheet reduction has caused so far—a contrast with both the
turbulence of 2019 and the “taper tantrum” of 2013, when the Fed first
discussed plans for trimming asset purchases. “People are getting more used
to thinking about balance-sheet tools, and the Fed is more used to
communicating them,” says William English, a former Fed economist.
Watching paint dry is boring. But a well-painted wall can be lovely. ■

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cleans-up-its-money-printing-mess
The $10.6bn question

Will FTX’s customers be repaid?

As Sam Bankman-Fried is locked up, his erstwhile depositors await their
fate
Apr 4th 2024

IN THE DAYS after the fall of his crypto exchange, Sam Bankman-Fried
opened a Google Doc and began to type. Beneath the title “probably bad
ideas” he listed potential strategies, which included coming out as a
Republican and arguing that “SBF died for our sins”. Mr Bankman-Fried
ultimately decided against both, but there is one fiction he never let die. He
has always claimed FTX was, in fact, solvent and could repay the $10.6bn it
owed customers.

Mr Bankman-Fried lost his empire in November 2022, but it was not until
March 28th that he learned his fate: 25 years in prison. FTX’s customers-
turned-creditors are still waiting. The bankruptcy is messy, extending to over
100 entities with assets lawyers say are “hopelessly” mingled. So it was
surprising to possibly everybody except Mr Bankman-Fried himself when
FTX told a court in January that it should be able to repay its 36,000
customers in full.
FTX is good for the cash not because it was always solvent, but because
administrators have clawed back assets that its last chief executive frittered
away, argues John Ray III, the firm’s current boss. Rising crypto prices have
also helped. Mr Ray’s team has located $7bn in assets, including luxury
homes and private jets. They reckon that another $16.6bn flowed out of the
company before its collapse—a third of which went to insiders and affiliates
—and some of which may be clawed back.

Mr Ray’s success in tracking down FTX’s cash has made claims on its estate
a hot commodity. Imposters have pumped up their total value to $23.6qn
(quintillion, that is). Although legitimate claims on FTX’s debt first traded at
as low as one-tenth of their face value, reflecting expectations they would
not be repaid, these certificates have almost entirely recovered their value.
One customer is trying to regain $166m of claims in court, having sold them
for a third of their face value.

Mr Ray only has to repay, without interest, the dollar value of customers’
crypto accounts at the time FTX filed for Chapter 11 protection on
November 11th 2022. By then, bitcoin tokens had lost a fifth of their value
since Mr Bankman-Fried had barred withdrawals three days earlier. And
crypto has since been on a tear. The price of solana tokens, FTX’s largest
holding, has increased eleven-fold; bitcoin has more than tripled in value.
This has led some creditors to sue for payment in tokens, rather than dollars.
They claim the tokens are their property under FTX’s terms.

Yet FTX does not have the tokens they seek. Mr Ray says there were only
105 bitcoins left on the exchange when he took over, against customer
entitlements to nearly 100,000. In truth, customers seem to have made a
lucky escape. Their repayment relies on FTX’s owners losing out on their
$12bn claim, the federal government forgoing $43.5bn in fines and taxes,
and Mr Ray being allowed to sell what remains. None of this would have
happened if FTX really had been solvent. ■

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repaid
Buttonwood

How to build a global currency

India is the latest country to try. Painful reforms are required
Apr 4th 2024

SEVENTY YEARS ago the Indian rupee was often found a long way from
home. After India gained independence from Britain, the currency remained
in use in sheikhdoms across the Arabian Sea. Until as late as 1970, some
employed the Gulf rupee, a currency issued by India’s central bank.

Today the picture is rather different. The rupee accounts for less than 2% of
international-currency transactions, even though the Indian economy is the
world’s fifth-largest. Narendra Modi, India’s prime minister, would like to
see the currency span the globe once again. Speaking at the 90th anniversary
of the Reserve Bank of India on April 1st, Mr Modi told the central bank’s
policymakers to focus on making the rupee more accessible. Historically,
however, national leaders have been a lot more likely to express enthusiasm
for the idea of making their currency a global one than to enact the reforms
required to do so.

Although the American dollar is the undisputed king of currencies, there are
many with a global role of their own. The euro, the British pound, the Swiss
franc, and the dollars of Australia, Canada, Hong Kong and Singapore are
all examples. These currencies are found in foreign reserves and private
portfolios worldwide, and used for both trade and financial transactions. In
theory, there is no reason why the rupee should not join the illustrious group.

Having a widely used currency brings sizeable benefits. Demand from

overseas investors lowers financing costs for domestic companies, which are
no longer compelled to borrow in foreign currencies. Such demand also
reduces exchange-rate risks for exporters and importers, who do not need to
convert currencies so often when trading, and enables the government to
reduce the size of its foreign-exchange reserves.

Some of the foundation stones of an international currency are being laid in

India. The country now has assets that foreigners want to buy, making the
rupee a potential store of value overseas. In September JPMorgan Chase, a
bank, announced that it would include Indian government bonds in its
emerging-market index. Bloomberg, a data provider, took the same decision
last month. The explosive performance of the country’s stocks, which are up
by 37% in dollar terms over the past year, has piqued global interest.

The rupee is also increasingly a unit of account and a medium of exchange

for foreigners. Banks from 22 countries have been permitted to open special
rupee-denominated accounts, without the usual exchange limits. In August
India made its first rupee payment for oil, to the Abu Dhabi National Oil
Company.

Yet China shows how far India has to go. Although Chinese policymakers
have been trying to make the yuan a global currency for more than a decade,
it still accounts for less than 3% of international trades made via SWIFT, a
payments network, outside the euro zone, despite the fact that China
accounts for 17% of global GDP. Moreover, 80% of such international yuan
transactions occur in Hong Kong. China’s relatively closed capital account,
which prevents investments from flowing freely across its borders, is the
main obstacle to wider use of its currency. India’s capital account is less
closed than it once was, but is still far more sheltered than that of any of the
countries with a global currency.
Japan provides a better example. In 1970 it accounted for 7% of global GDP
—more than the 4% it does now—and its companies were beginning to
make a mark abroad. But the yen was a nonentity. That changed over the
following decade: in 1970, 1% of Japan’s exports were invoiced in yen; by
the early 1980s, 40% were. In 1989 the yen made up 28% of all foreign-
exchange transactions. It still accounts for 16% today.

To make the leap to global-currency status, Japan’s leaders had to transform

the country’s economy. They allowed foreigners to hold a wide range of
assets, deregulated big financial institutions, and peeled back controls on
capital flows and interest rates. These changes disrupted Japan’s export-
oriented economic model, and undermined the power of the country’s
bureaucrats.

Changes just as far-reaching—and uncomfortable—will be required for any

country that now wants to join the top table. Few seem to have the stomach
for them at present. Indeed, without American pressure and the threat of
tariffs, Japan itself might not have made such reforms. America is not about
to lean on India in the same way. The desire for change will have to come
from within. ■

Read more from Buttonwood, our columnist on financial markets:

How the “Magnificent Seven” misleads (Mar 27th)
How to trade an election (Mar 21st)
The private-equity industry has a cash problem (Mar 14th)

Also: How the Buttonwood column got its name

This article was downloaded by zlibrary from https://www.economist.com/finance-and-economics/2024/04/04/how-to-build-a-global-
currency
Free exchange

Daniel Kahneman was a master of teasing

questions
How a psychologist transformed economics
Apr 4th 2024

WINNERS OF THE Nobel prize in economics tend to sprinkle their papers

with equations. Daniel Kahneman, who died on March 27th, populated his
best-known work with characters and conundrums. Early readers
encountered a schoolchild with an IQ of 150 in a city where the average was
100. Later they pondered the unfortunate Mr Tees, who arrived at the airport
30 minutes after his flight’s scheduled departure, and must have felt even
worse when he discovered the plane had left 25 minutes late. In the 1970s
readers had to evaluate ways to fight a disease that threatened to kill 600
people. In 1983 they were asked to guess the job of Linda, an outspoken,
single 31-year-old philosophy graduate.

Kahneman used such vignettes to expose the seductive mental shortcuts that
can warp people’s thoughts and decisions. Many people, for example, think
it more likely that Linda is a feminist bank-teller than a bank-teller of any
kind. Presented with two responses to the disease, most choose one that
saves 200 people for certain, over a chancier alternative that has a one-third
chance of saving everyone and a two-thirds chance of saving no one. But if
the choice is reframed, the decision is often different. Choose the first
option, after all, and 400 people die for sure. Choose the second and nobody
dies with a one-third probability.

Teasing questions came easily to Kahneman, even in his sleep, according to

“The Undoing Project”, a book by Michael Lewis. Some sprang from his
teaching, which was not confined to ivory towers. He once explained the
idea of “regression to the mean” to flight instructors in Israel’s air force. The
reason pilots tended to improve after a sloppy manoeuvre was not because
the instructor screamed at them, but because the chances of an improvement
are higher if the prior performance was unusually bad.

Kahneman was a harsh grader of his own incorrigible self, attentive to his
own lapses. One of his early hit papers exposed the kind of methodological
muddles to which he himself was vulnerable, such as the misplaced
confidence that an outlier, like a child with an IQ of 150, would not skew
even a small sample.

Kahneman also had a lifelong—and life-preserving—interest in gossip. His

childhood, as the son of Lithuanian Jews living a comfortable but edgy pre-
war existence in Paris, was full of talk about other people, he once wrote.
Jews in Europe had to “assess others, all the time,” a friend of his told Mr
Lewis. “Who is dangerous? Who is not dangerous?…People were basically
dependent on their psychological judgment.”

Gossip was both a source of his work and an intended target. His bestselling
book, “Thinking Fast and Slow”, was written not for decision-makers, but
for “critics and gossipers”. Decision-makers were often too “cognitively
busy” to notice their own biases. Pilots could be corrected by observant co-
pilots and overconfident bosses might be chastened by whispers around the
water-cooler, especially if the whisperers had read Kahneman’s book.

To spread psychological insight, Kahneman once tried to add a course on

judgment to Israel’s school curriculum. He expected the project would take a
year or two. It took eight, by which time the ministry of education had lost
enthusiasm; a humbling example of what he and Amos Tversky, his frequent
co-author, called the “planning fallacy”. He had more success inveigling
psychological wisdom into the well-guarded realm of economics, which had
clung to a thin but tidy model of human decision-making.

How did he do it? One answer is that he teamed up with Tversky, whose
elegant mind was as ruthlessly tidy as his desk. They incorporated the
cognitive illusions they had discovered into a model called “prospect
theory”. According to this theory, people’s well-being responds to changes
in wealth, more than levels. The changes are judged relative to a neutral
reference point. That point is not always obvious and can be recast: a bonus
can disappoint if it is smaller than expected. In pursuit of gains, people are
risk averse. They will take a sure win of $450 over a 50% chance of winning
$1,000. But people gamble to avoid losses, which loom larger than gains of
an equivalent size.

Prospect theory translated this model of decision-making from vignettes into

the language of algebra and geometry. That made it palatable to economists.
Indeed, the discipline began to claim this sort of thing as its own.
Applications of psychology “came to be called behavioural economics”,
lamented Kahneman, “and many psychologists discovered that the name of
their trade had changed even if its content had not.”

The cold-hand fallacy

Even as economics was rebranding psychology, Kahneman revived an older
economic tradition: “hedonimeters”, gauges of pleasure and pain that
Francis Edgeworth, a 19th-century economist, had imagined. Kahneman’s
hedonimeter simply asked people to rate their feelings moment-to-moment
on a scale. He found that people’s ratings were often at odds with what they
later recalled. Their “remembering” selves put undue weight on the end of
an experience and its best or worst moment, neglecting its duration. People
would rather keep their hand in painfully cold water for 90 seconds than for
a minute, if the final 30 seconds were a little less cold than the preceding 60.
Likewise, people sign up for hectic tourist itineraries because they look
forward to looking back on them, not because they much enjoy them at the
time.
The implications of this discovery extend into philosophy. Which self
counts? Despite its manifest flaws, the curatorial self, artfully arranging
unrepresentative memories into a life story, is dear to people. “I am my
remembering self,” Kahneman wrote, “and the experiencing self, who does
my living, is like a stranger to me.” Now his experiencing self has done its
living. And it is up to the many people he touched to do the remembering for
him. ■

Read more from Free exchange, our column on economics:

How India could become an Asian tiger (Mar 27th)
Why “Freakonomics” failed to transform economics (Mar 21st)
How NIMBYs increase carbon emissions (Mar 14th)

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master-of-teasing-questions
Science & technology

Could weight-loss drugs eat the world?

Why robots should take more inspiration from plants
A stealth attack came close to compromising the world’s
computers
Pharmacology

Could weight-loss drugs eat the world?

Scientists are finding that anti-obesity medicines can also help many other
diseases
Mar 30th 2024

THE GILA monster is a poisonous North American lizard that measures

around 50 centimetres and sports a distinctive coat of black and orange
scales. This lethargic reptile, which mostly dwells underground and eats just
three to four times a year, is the unlikely inspiration for one of pharma’s
biggest blockbusters: a new generation of weight-loss drugs that has patients
—and investors—in a frenzy. Originally made for diabetes, evidence is
growing that they also have benefits in diseases of the heart, kidney, liver
and beyond.

Since the late 1980s scientists believed that a gut hormone called glucagon-
like peptide-1 (GLP-1), which is secreted by the intestines after a meal,
could help treat diabetes. GLP-1 increases the production of insulin (a
hormone that lowers blood-sugar levels) and reduces the production of
glucagon (which increases blood-sugar levels). But GLP-1 is broken down
by enzymes in the body very quickly, so it sticks around for only a few
minutes. If it were to be used as a drug, therefore, patients would have faced
the unwelcome prospect of needing GLP-1 injections every hour.

In 1990 John Eng, a researcher at the Veterans Affairs Medical Centre in

The Bronx, discovered that exendin-4, a hormone found in the venom of the
Gila monster, was similar to human GLP-1. Crucially, the exendin-4
released after one of the monster’s rare meals is more resistant to enzymatic
breakdown than GLP-1, staying in its body for hours. It took more than a
decade before exenatide, a synthetic version of the lizard hormone, created
by Eli Lilly, an American pharma giant, and Amylin Pharmaceuticals, a
biotech firm, was approved to treat diabetes in America. This breakthrough
spurred other firms to develop more effective and longer-lasting GLP-1
medications as a treatment option for diabetes, beyond injections of insulin.

Scientists had also been aware that GLP-1 had another side-effect: it slowed
the rate of “gastric emptying”, which allows food to stay in the stomach for
longer and suppresses appetite. But the potential weight-loss benefits were
not seriously pursued at first. It was only in 2021 that Novo Nordisk, a
Danish firm, showed data from a clinical trial where overweight or obese
patients were put on a weekly dose of its GLP-1-based diabetic drug,
semaglutide, which was then being marketed under the name Ozempic, for
68 weeks. The results were dramatic—participants had lost 15% of their
body weight, on average.

Fat profits
The medicines that mimic the GLP-1 hormone then became blockbusters.
With close to half of the world’s population expected to be obese or
overweight by 2030, according to the World Obesity Federation, demand for
these drugs is surging—Bloomberg, a data provider, estimates that these
medications will hit $80bn in yearly sales by then. The market is projected
to grow by 26% per year in the next five years, compared with 16% per year
for oncology drugs and 4% per year for immunology medicines, the two
other biggest areas.
So far only three GLP-1 drugs have been approved to treat obese or
overweight individuals: liraglutide and semaglutide, developed by Novo;
and tirzepatide, made by Lilly. But the market has already attracted a wave
of competitors (see chart 1). Bloomberg tracks close to 100 wannabe drugs
in the development pipeline. Most new therapies hope to outdo semaglutide
and tirzepatide by crafting drugs that are easier to take, cause fewer side-
effects or result in more effective weight loss (see chart 2).

One issue is convenience. Both semaglutide and tirzepatide are injections

that need to be taken weekly. Stop the dose and most of the weight returns
within a year. Amgen, a large American biotech firm, is developing an anti-
obesity drug that relies on doses once a month, and hopes the weight-loss
effects will last even after treatment ends. AMG133 activates receptors for
GLP-1 while blocking receptors of glucose-dependent insulinotropic
polypeptide (GIP), a hormone secreted in the small intestine in response to
food intake that stimulates the production of both insulin and glucagon. The
company is now conducting clinical trials to find out if patients can, over
time, be gradually weaned towards smaller doses.
Switching from injections to pills would also make the drugs a lot more
tolerable for those who dislike needles. Novo is working on an oral version
of semaglutide that works just as well as its jabs. But the pill requires 20
times the amount of the active ingredient as the injection, and must be taken
daily. With semaglutide in short supply, Novo has had to push back the oral
version’s launch. Lilly also has a daily pill that targets GLP-1 receptors
called orforglipron in late-stage clinical trials.

Another drawback of GLP-1-based medicines is the nausea and vomiting

that frequently accompanies their use. Zealand Pharma, a Danish biotech
firm, is developing a drug that is based on a different hormone called
amylin, produced in the pancreas along with insulin in response to food
intake. But unlike GLP-1, which suppresses appetite, amylin induces satiety,
or the feeling of fullness after a meal.

Adam Steensberg, boss of Zealand, says that in most people a hormone,

leptin, is released from fat tissue that signals to the brain that the body is
full. Obese individuals are insensitive to that hormone. Clinical studies have
shown that analogues of amylin can make people sensitive to leptin again,
helping them to stop eating earlier. Feeling full, rather than lowering
appetite, may also reduce the feeling of nausea. Mr Steensberg says that
results from early-stage trials suggest that its drug could achieve similar
weight loss as GLP-1 drugs, but with less nausea and vomiting.

Besides pesky injections and nausea, a bigger concern is that patients on

these drugs do not just shed fat, they also lose lean muscle mass. Some
patients drop almost 40% of their body weight in lean mass, a serious
concern for older patients. To counter this, companies are trying out,
alongside GLP-1 drugs, medicines originally designed to treat muscle
atrophy.

Regeneron, an American pharma company, is testing drugs that block

myostatin and activin, proteins that inhibit muscle growth in the body. Taken
with semaglutide, the combination could boost the quality of weight loss by
preserving lean muscle. Similarly, BioAge, a California-based biotech, is
testing a drug that can be taken alongside Lilly’s tirzepatide. The drug,
called azelaprag, mimics apelin, a hormone secreted after exercise that acts
on skeletal muscle, the heart and the central nervous system to regulate
metabolism and promote muscle regeneration. In obese mice, the
combination led to greater weight loss compared with tirzepatide alone,
while preserving lean body tissue.

The slimming drugs aren’t just for shedding pounds. Because obesity is
linked to over 200 health issues, including strokes, kidney problems and
fatty liver, GLP-1 drugs are proving useful in many other areas of medicine.

A recent clinical trial by Novo that ran for five years and enrolled more than
17,500 participants found that semaglutide cut the risk of serious heart issues
like heart attacks, strokes, or death from heart disease by 20%. Novo
believes that the heart benefits of the treatment are not due to weight loss
alone, because the reduction in the risk of cardiovascular problems occurred
early, before patients lost weight. In March semaglutide was approved by the
US Food and Drug Administration for reducing the risk of heart disease in
obese or overweight people, the first time a weight-loss medication has been
approved for this purpose. Results from another clinical trial have shown
that semaglutide reduced the risk of kidney-disease-related events by 24% in
patients with type-2 diabetes.
Another weight-loss drug, survodutide, being developed by Boehringer
Ingelheim, a German drug company, and Zealand, has shown promising
results in being able to treat a serious liver condition called metabolic
dysfunction-associated steatohepatitis (MASH). This is caused by the build-
up of excess fat in the liver and can lead to liver cancer or liver failure.

In a recent trial of 295 patients, 83% of them saw a significant improvement

in their condition when treated with survodutide, compared with 18% of
those on a placebo. Survodutide targets receptors for GLP-1 and glucagon.
Waheed Jamal from Boehringer Ingelheim says that there is evidence that
glucagon breaks down more fat in the liver compared with GLP-1 and
reduces fibrosis (build-up of excessive scar tissue in the liver).

Gut meets brain

Though a lot of focus has been on the action of these medicines on
improving metabolic health, scientists are now uncovering that these drugs
also engage with the brain and immune system, by interacting with GLP-1
receptors in the brain. Daniel Drucker, a diabetes researcher at Mount Sinai
Hospital in Toronto, found that in mice suffering from extensive
inflammation throughout the body, GLP-1 drugs reduced the condition, but
only when the receptors in the brain were not blocked. When the brain
receptors in mice were blocked or genetically deleted, the anti-inflammatory
properties of the drugs were lost. This suggests that GLP-1 drugs tame
inflammation by acting on the brain cells.

For some this suggests that these drugs might be useful for treating brain
disorders that are characterised by inflammation, such as Alzheimer’s
disease and Parkinson’s disease. Since 2021, Novo has been conducting a
clinical trial involving more than 1,800 patients to test whether semaglutide
helps patients with early stages of Alzheimer’s. This study is expected to be
completed by 2026.

Dr Drucker sees the anti-inflammatory qualities of GLP-1 medications as

key to their versatility. He notes that, besides Alzheimer’s and Parkinson’s,
chronic inflammation is a factor in many complications for people with
type-2 diabetes and obesity, and affects organs like the kidneys, heart, blood
vessels, and liver. If these drugs eventually help in treating these conditions,
Dr Drucker believes that their inflammation-reducing properties could
explain part of their success.

The appetite-suppressing effects of these drugs has also raised interest in

their ability to curb cravings more generally. Researchers in Denmark
investigated the effect of GLP-1 drugs on 130 people with alcohol-use
disorder. They found no overall difference in subsequent alcohol
consumption between patients who used the drugs (alongside therapy)
compared with those given a placebo. However, a subset of obese patients
taking the drugs did end up drinking less alcohol. The researchers also
looked at brain activity in the patients when they were shown pictures of
alcoholic drinks—for those in the placebo groups the reward centres of their
brains lit up; for patients on GLP-1 drugs, activity in the areas of the brain
associated with reward and addiction was attenuated, indicating a direct
brain effect. Researchers are now exploring if the drugs might have an
impact on how people use other addictive substances such as tobacco or
marijuana.

All these findings are still early. Developing new drugs is costly and time-
consuming. There are steep failure rates. Successes in the lab may not work
in people, and results in small groups may not replicate in larger ones. But
with the potential to treat many conditions well beyond obesity and diabetes,
hope around the new drugs will only grow. ■

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drugs-eat-the-world
Robotics

Why robots should take more inspiration from

plants
They would be able to grow, grip and move in more useful ways
Apr 3rd 2024

THE ENORMOUS titular robots of the “Transformers” universe, a popular

franchise spanning toys, TV series, video games and films, move along the
ground in one of two ways. On wheels, when they are shaped like vehicles;
on giant humanoid feet when they are not. For decades, most real-world
robots also fell neatly into these two fictional paradigms.

Then, around 15 years ago, came the realisation that other means of
locomotion were possible. “Zoomorphic” robots mined the animal kingdom
for inspiration, piggybacking on evolution’s millennia of research and
development. One mimicked an octopus’s malleable arm, allowing it to
easily grasp objects and manoeuvre into tight, tricky spaces. Another
replicated the ridge-covered toes of a gecko and, consequently, its ability to
scale walls.
Animal-like robots continue to be popular. In recent years both America’s
and Britain’s armed forces have experimented with quadrupedal robot
“dogs” for patrols and surveillance; in February a snake-shaped robot was
sent into one of the damaged nuclear reactors of the Fukushima power plant
in Japan to inspect the debris left inside. And yet, says Barbara Mazzolai, an
Italian roboticist, the field of robotics has proved far less keen to investigate
the other major category of living things—plants. She attributes the
reluctance to a misconception about the usefulness of plant behaviour: that
they are capable of neither motion nor perception. “It’s not true at all,” she
says.

Dr Mazzolai and her team at the Bioinspired Soft Robotics Laboratory at the
Italian Institute of Technology (IIT) in Genoa recently unveiled a machine
meant to uproot this dogma. Writing in Science Robotics, they described
“FiloBot” (pictured above), a robot based on climbing plants. Like the real
thing, FiloBot (from the Italian word for “tendril”) is capable of growing,
attaching to and twining around supports, and navigating through an
environment in response to external stimuli.

To survive, a climbing plant must have the capacity to switch between

several different modes of behaviour. In forest environments, it must first
grow out of the soil and travel along the ground in search of a support to
latch onto—a nearby tree, say. To do this the plant must have a structure
capable of bearing its own weight. Once a support is located, though, the
plant must switch strategy—anchoring itself around the object and then
growing upwards towards the light. To outcompete other plants, it must
move as quickly as possible, prioritising rapid growth over heft.

To help it choose the best angle at which to grow, a climbing plant uses
information from light and gravity receptors distributed along each shoot. It
can also modify the bulkiness of its tendrils by changing how their
constituent cells divide and elongate: more padding in the middle will create
a firmer tendril, while extra growth on one side will lead to curvature.

Move into the light

FiloBot mimics these behaviours using sensors in its head—at the tip of the
main shoot—which is also equipped with a spool of plastic and a heating
element. By melting and extruding the plastic in a circular pattern, it can 3D-
print its own body at a rate of between two and seven millimetres per minute
(bamboo, the world’s speediest plant, cannot beat 0.1). Depending on
brightness and orientation, it alters the heat that the plastic is exposed to—
lower temperatures result in a more brittle body that increases in size more
quickly, while higher temperatures make denser and stronger clumps that
grow more slowly. By varying the amount of plastic deposited around the
circle, it can also grow in a rotating pattern to coil around a support.

The researchers found that these simple functionalities were enough to let
FiloBot move through a complex, unseen environment, cross gaps and find
things to attach to. The lack of heavy on-board computing hardware, they
say, means that it remains nimble and requires minimal oversight, while its
slow pace means that it doesn’t disturb things around it. They reckon that
this makes it suitable for potential applications including environmental
monitoring in hard-to-reach or unknown locations (where piloting a robot
along an exact course might be impossible), or monitoring disaster sites
where existing infrastructure is unstable.

For now, as the researchers tweak and test it further, FiloBot’s tendrils have
not left the laboratory. Still, it has already been useful in deconstructing
plant behaviour. For example, it was long hypothesised that climbing plants
find their supports by harnessing an ability to grow towards shade, though
the exact mechanism was unclear. FiloBot could replicate this behaviour by
seeking out the far-red wavelengths characteristic of shaded areas, providing
an insight into how plants might accomplish the same thing.

FiloBot is not the only plantlike robot the team is cultivating. Dr Mazzolai
has been developing “plantoids”, based on roots, since 2012 (then the first
plant-inspired robotics venture in the world). These can burrow through
earth, and could be used to analyse chemicals or find water. And in 2021 the
group at IIT, along with European partners, started developing “I-Seed”, a
biodegradable mini-bot that can be moved about by wind and rain and
change shape according to humidity. Based on the seeds of the South
African geranium, it could be used to carry and distribute real seeds for
reforestation, opening up and releasing its cargo once it hits suitable soil.
Dr Mazzolai hopes that such projects will inspire other roboticists to take
their cues from botany. The plant kingdom is another world, she says, with a
completely different approach to the animal one. “And so we can develop
completely new technologies and artificial solutions, because it is so
different.” ■

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more-inspiration-from-plants
Hacking the internet

A stealth attack came close to compromising the

world’s computers
The cyber-scare shows why the internet’s crowdsourced code is vulnerable
Apr 2nd 2024

IN 2020 XKCD, a popular online comic strip, published a cartoon depicting

a teetering arrangement of blocks with the label: “all modern digital
infrastructure”. Perched precariously at the bottom, holding everything up,
was a lone, slender brick: “A project some random person in Nebraska has
been thanklessly maintaining since 2003.” The illustration quickly became a
cult classic among the technically minded, for it highlighted a harsh truth:
the software at the heart of the internet is maintained not by giant
corporations or sprawling bureaucracies but by a handful of earnest
volunteers toiling in obscurity. A cyber-security scare in recent days shows
how the result can be near-disaster.

On March 29th Andres Freund, an engineer at Microsoft, published a short

detective story. In recent weeks he had noticed that SSH—a system to log on
securely to another device over the internet—was running about 500
milliseconds more slowly than expected. Closer inspection revealed
malicious code embedded deep inside XZ Utils, some software designed to
compress data used inside the Linux operating system, which runs on
virtually all publicly accessible internet servers. Those servers ultimately
undergird the internet, including vital financial and government services.
The malicious code would have served as a “master key”, allowing attackers
to steal encrypted data or plant other malware.

The most interesting part of the story is how it got there. XZ Utils is open-
source software, meaning that its code is public and can be inspected or
modified by anyone. In 2022 Lasse Collin, the developer who maintained it,
found that his “unpaid hobby project” was becoming more onerous amid
long-term mental-health issues. A developer called Jia Tan, who had created
an account the previous year, offered to help. For more than two years he,
she or they contributed helpful code on hundreds of occasions, building up
trust. In February they smuggled in the malware.

The significance of the attack is “huge”, says The Grugq, a pseudonymous

independent security researcher who is widely read by cyber-security
experts. “The backdoor is very peculiar in how it is implemented, but it is
really clever stuff and very stealthy”—perhaps too stealthy, he suggests,
because some of the steps taken in the code to hide its true purpose may
have slowed it down and thus raised Mr Freund’s alarm. Jia Tan’s patience,
supported by several other accounts who urged Mr Collin to pass the baton,
hints at a sophisticated human-intelligence operation by a state agency,
suggests The Grugq.

He suspects the SVR, Russia’s foreign-intelligence service, which in 2019-

20 also compromised SolarWinds Orion network-management software to
gain extensive access to American government networks. Analysis by Rhea
Karty and Simon Henniger, published on their Substack, suggests that Jia
Tan made an effort to falsify their time zone but that they were probably two
to three hours ahead of Greenwich Mean Time—suggesting they may have
been in eastern Europe or western Russia—and avoided working on eastern
European holidays. For now, however, the evidence is too weak to nail down
a culprit.

The attack is perhaps the most ambitious “supply-chain” attack—one that

exploits not a particular computer or device, but a piece of back-end
software or hardware—in recent memory. It is also a stark illustration of the
frailties of the internet and the crowdsourced code upon which it relies. For
defenders of open-source software, Mr Freund’s eagle eyes are a vindication
of its premise: code is open, can be inspected by anyone, and errors or
deliberate backdoors will eventually be found through collective scrutiny.

In the shadows
Sceptics are less sure. Some code security and debugging tools did pick up
the anomalies in XZ Utils, but Mr Freund acknowledges “the number of
coincidences that had to come together to find this”, including a series of
technical but arbitrary choices he made while troubleshooting an unrelated
problem. “Nobody else had raised concerns,” writes Kevin Beaumont,
another cyber-security specialist. Software engineers are still probing the
inner workings of the backdoor, attempting to understand its purpose and
design. “The world owes Andres unlimited free beer,” concludes Mr
Beaumont. “He just saved everybody’s arse in his spare time.”

The attack was detected and stopped before it could cause widespread
damage. There is no way to tell whether Jia Tan, or the team apparently
behind that persona, has been working on squirrelling into other vital pieces
of internet software under other aliases. But security researchers are
concerned that the foundations of the internet are ripe for similar campaigns.
“The bottom line is that we have untold trillions of dollars riding on top of
code developed by hobbyists,” notes Michal Zalewski, an expert. Other
backdoors may yet lurk, undiscovered, elsewhere in the internet’s critical
software. ■

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close-to-compromising-the-worlds-computers
Culture

What would nuclear war look like in the 21st century?

On his 70th birthday, Godzilla has roared back to relevance
How to make money from the Bible
In the Premier League, data help minor clubs take on the
mighty
How Paul Kagame uses culture to keep Rwandans on
message
Under the mushroom cloud

What would nuclear war look like in the 21st

century?
Two books examine atomic weaponry and the global annihilation it could
bring about
Mar 29th 2024

Nuclear War: A Scenario. By Annie Jacobsen. Dutton; 400 pages; $23.95.

Torva; £20

Countdown. By Sarah Scoles. Bold Type Books; 272 pages; $30 and £25

IN 1960 AMERICA had around 18,000 nuclear weapons. It also had

detailed plans for how to use them. Had it implemented them, 275m people
in the Soviet Union would have been killed in the first hour of war. Another
325m would have died from radioactive fallout over the next six months.
Even if China stayed out of this prospective war, the fallout would have
killed perhaps 300m of its citizens.

“I thought of the Wannsee conference,” wrote John Rubel, an American

defence official present at one nuclear-planning meeting, referring to a
gathering of Nazis in a suburb of Berlin in January 1942, at which they
prepared the systematic extermination of European Jews. “I felt as if I were
witnessing a comparable descent into the deep heart of darkness.”

In “Nuclear War: A Scenario” Annie Jacobsen, a journalist and the author of

several books on military affairs, tells Mr Rubel’s story as a preface to her
own non-fiction account of a hypothetical North Korean nuclear attack on
America and the ensuing spiral which consumes the world. Her book is at
once methodical and vivid, technically grounded and at times lurid.

The American satellites which pick up the North Korean launch have
sensors “so powerful they can see a single lighted match from 200 miles
away”, she writes. Within 15 seconds radars can work out that the missile is
heading for America. It will take just over half an hour to arrive. Once the
president has been briefed, he has six minutes to make a choice.

Ms Jacobsen coolly lays out the speed with which entire countries can be
snuffed out. A Russian submarine off America’s west coast could launch its
full complement of missiles at all 50 states at once in 80 seconds. Even if an
American submarine was close behind it could not fire a torpedo in that
time, notes one expert. That fact is said to have shocked America’s navy
chief when it was revealed to him in 1981. Missiles launched from close to
the American coastline would take a little over seven minutes to hit their
target.

“Nuclear War” sits in the long tradition of didactic nuclear dystopia. The
genre flourished in the 1980s with a series of films—“The Day After”,
“Threads” and “The War Game” (which had been made 20 years earlier, but
was deemed too shocking to release then). All of these reflected
contemporary fears that the cold-war arms race was spinning out of control.

The genre receded in the 1990s and 2000s: nuclear weapons were tools of
the past. Yet Russia’s invasion of Ukraine—a country which inherited
nuclear missiles from the Soviet Union in 1991, but later gave them up—has
put them squarely back at the forefront of geopolitics and culture. Consider
the success of Christopher Nolan’s biopic of J. Robert Oppenheimer, the
father of the atomic bomb, and the commercial revival of “American
Prometheus”, the book on which that film was based.
There is a cinematic quality to Ms Jacobsen’s scenario, too. In her account,
the president is rushed onto a helicopter to escape to a mountain hideout. He
is harangued by generals to retaliate quickly. “If somebody launches a
nuclear weapon against us,” says General John Hyten, a former commander
of American nuclear forces, “we launch one back.” William Perry, Bill
Clinton’s secretary of defence, tells Ms Jacobsen that once an incoming
missile is detected “we prepare to launch…we do not wait.” The aim is to
“decapitate” North Korea—destroy its leadership and command—before it
can fire more missiles.

Ms Jacobsen conveys the reality of nuclear war in sometimes stomach-

churning detail. In her imagined scenario, a North Korean missile obliterates
a nuclear-power station north of Los Angeles, seeding spent fuel into the
fallout. Victims of the X-ray flash are left “a shredded horror of bloody
tendons and exposed bone”. Another bomb destroys Washington, DC.
Firestorms bring hurricane-like winds of 660°C; people are baked alive in
the bowels of the Capitol and White House. In documenting the minutiae of
the apocalypse, the writing is redolent of “Hiroshima”, a seminal article by
John Hersey published in the New Yorker in 1946.

The story is about not just nuclear use, but nuclear war. Ms Jacobsen’s
narrative is built on an elaborate sequence of tragic misunderstandings.
American missiles bound for North Korea must overfly Russia by dint of
geography. American leaders cannot get Russia’s president on the phone.
Russia’s sub-par early-warning satellites, which have indeed been known to
confuse clouds for plumes, mistakenly see hundreds of missiles incoming.
The Kremlin attacks America. America responds. There are 100
“aimpoints”—jargon for targets—in the greater Moscow area alone.

It is possible to quibble with details in Ms Jacobsen’s scenario. It is hard to

see why North Korea would risk a suicidal bolt from the blue. America
might have a “launch on warning” policy, but as Dick Cheney, a former
defence secretary and vice-president, has observed, “realistically, most
presidents wouldn’t do it.” And would Russian leaders truly end the world
because of data from faulty sensors?

What is not in dispute, however, and what has receded from public
understanding over the past 30 years, is the world-changing impact of
nuclear weapons. The vast injection of soot into the atmosphere would result
in a 70% reduction in the sun’s rays for a decade. Rainfall would decline by
50%. “After 10,000 years of planting and harvesting,” writes Ms Jacobsen,
“humans return to a hunter-gatherer state.”

And yet humans continue to deploy, maintain and build nuclear weapons. In
“Countdown” Sarah Scoles, a science journalist, profiles the people who
work in America’s vast complex of nuclear laboratories, including Los
Alamos in New Mexico (where Oppenheimer oversaw the invention and
construction of the first nuclear bomb), the nearby Sandia labs, and
Lawrence Livermore National Laboratory in California. The most
compelling parts of her book are those in which she explores how these
scientists, like Oppenheimer, reconcile their work with their principles.

Some are gung-ho about the importance of nuclear deterrence, brandishing

charts which show how deaths from major wars plummeted after the
invention of the bomb. Others are equivocal, expressing opposition to
nuclear weapons while insisting that someone has to ensure that the ones
which exist remain safe and reliable. Still others seem deeply conflicted,
preferring to emphasise the civilian applications of their research. “I wonder
if the activists on the outside understand that there are those of us on the
inside that share many of their goals,” says one scientist at Los Alamos,
professing support for (eventual) disarmament. “That’s not an extreme
position here at all.”

A generational divide also shines through “Countdown”. Before 1992

America kept its nuclear weapons in good order by explosive testing.
“People would just get on the airplane in the morning, go down [to Nevada]
and blow shit up in the desert,” says Rob Neely, head of simulations and
computing at Livermore, with a hint of contempt. “It wasn’t until they shook
the Earth that they really felt confident.” As America designs a new
warhead, the W93, for the first time in decades, some scientists of that era
are sceptical that it can be done without testing. Mr Neely’s generation relies
on computer modelling, aided by the world’s largest supercomputers and
other technical wizardry. “We’ve got a new generation of designers coming
up,” says Mr Neely. In a digital world, “the codes are their test site.”
Ms Scoles has written a balanced and readable book, one which conveys the
attitudes of nuclear disarmers and deterrence advocates alike. What is
striking is that even among those who believe that nuclear modernisation is
essential in a world where China’s arsenal is growing and Russia’s is
becoming more diverse, there is profound ambivalence about the
consequences of this and the precariousness of deterrence. Nuclear weapons
“will either have a pacifying effect or a catastrophic effect”, acknowledges
Brad Roberts, the author of “The Case for US Nuclear Weapons in the 21st
Century” and once the Pentagon’s top nuclear official. “Monday,
Wednesday, Friday, I feel one way. Tuesday, Thursday, Saturday, another,”
he tells Ms Scoles. “Then Sunday I drink.” ■

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Atomic beast

On his 70th birthday, Godzilla has roared back to

relevance
The monster made his first appearance in 1954 as a symbol of nuclear
weapons
Apr 2nd 2024

AT THE AGE of 70 some might think about retiring, if they have not done
so already. Not Godzilla. Since the giant lizard made his screen debut in
“Godzilla”, a Japanese film released in 1954, he has crashed his way through
nearly 40 movies. (Guinness World Records certifies Godzilla as the
longest-running movie franchise.) Nor does he shows any sign of slowing
down. In December “Godzilla Minus One”, a Japanese film, became a box-
office hit. “Godzilla x Kong: The New Empire” has recently hit cinemas,
too.

From his conception, Godzilla has symbolised the fears of his time. He was
created from the wreckage of the second world war. Honda Ishiro, the
writer-director of “Godzilla”, was haunted by the bombing of Hiroshima, the
aftermath of which he witnessed first-hand. “It was said that, for the next 72
years, not a single blade of grass would grow there—and that really stayed
with me,” he said. “Godzilla represents the frightfulness of nuclear
weapons.”

In “Godzilla”, after the monster destroys a village on Odo Island,

researchers conclude that he was roused from his prehistoric slumber by
hydrogen-bomb testing. The bomb’s cloud still hung in the air: earlier in
1954 America had detonated powerful thermonuclear bombs on Bikini Atoll
in the Pacific. The crew of a Japanese fishing boat was accidentally
irradiated.

“Godzilla” provides plenty of horror-film thrills, including scenes that have

been endlessly imitated: people fleeing through narrow city streets and the
monster crunching on train carriages. But it also reflects on Japan’s war
trauma. “I barely escaped the atomic bomb at Nagasaki,” one woman says,
“and now this!” Japan is isolated from major world powers and must face
the monster alone. In the story’s most interesting turn, a scientist has to
decide whether to use a terrible new weapon to defeat this enemy.

As the memory of nuclear destruction started to recede, Godzilla’s meaning

mutated. America has been producing its own Godzilla films since 1956,
and Hollywood has often ignored the historical aspect of the beast’s story in
favour of pure action. In time Godzilla went from myth to meme. He
became one of several characters in a franchise known as the
“MonsterVerse”. Recent instalments have brought supersize lizard and
enormous ape together: “Godzilla x Kong” is a sequel to “Godzilla vs.
Kong” (2021).

The MonsterVerse has tended towards the absurd, but has also explored a
theme implicit in the Godzilla story: the environment. In one movie Godzilla
helps defeat eco-terrorists who want to unleash primitive monsters to rid
Earth of the “infection” of mankind. In “Godzilla x Kong” the monster
defends an untouched natural realm. In these films, released in an age of
anxiety about the climate, Godzilla represents an ancient natural order that
humans are wont to ruin.

“Godzilla Minus One” is the best recent addition to the creature’s canon: it
even earned Godzilla his first Oscar in March, for Best Visual Effects. Yet
the film is not just aesthetically impressive; it is as profound as the original,
and in conversation with it. Set at the end of the second world war the film
follows Shikishima Koichi, a timid kamikaze pilot. When he first encounters
Godzilla, at a landing strip on Odo Island, he fails to act. He returns to
Tokyo to find his parents have been killed in the bombing of the city.

By the time Godzilla strikes again—the monster has gained strength from
nuclear tests in the Pacific—Koichi has a makeshift family he must protect.
He makes up for his wartime dishonour by defeating the reptile and, with it,
the cult of death that was gripping Japan at the time.

Today, as tensions rise between nuclear powers, Godzilla has regained some
of his ominous symbolism. The Doomsday Clock, an estimate of the risk of
global catastrophe by the Bulletin of Atomic Scientists, is set at 90 seconds
from midnight—as close as it has ever been to Armageddon. As long as the
clock keeps ticking, this monster will matter. ■

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Selling scripture

How to make money from the Bible

Donald Trump has entered a competitive and unusual market
Mar 29th 2024

AMERICA’S 45TH president has excellent taste in Bible translations. When

deciding which one to endorse this Easter, Donald Trump chose the King
James version, widely considered to be one of the greatest works of English
literature of the 17th century. Or rather, he chose a modern repackaging of it
dubbed the “God Bless the USA Bible”. This includes in one volume the
American constitution, the lyrics of a country song called “God Bless the
USA” and the scriptures.

“All Americans need the Bible in their home, and I have many. It’s my
favourite book,” intoned Mr Trump in a promotional video. “Religion is so
important,” he added. “We must make America pray again.”

And, tacitly, pay again: the new book costs $59.99 (plus postage). Mr Trump
is not selling it directly, but receives royalties with each purchase, according
to the New York Times. Thus, he has entered the highly competitive business
of trying to make a buck from the holy book.
This is a new kind of venture for Mr Trump, whose previous offerings have
tended to be flashier: gold-finished Trump sneakers for $399, an enticing
Trump cologne for $99. The Bible, far from being a luxury object, inveighs
against wealth. It tells of the life of a man who said things like “Blessed are
the poor” and “Love your enemies.” Such sentiments are not easily mistaken
for those of Mr Trump, which include “Part of the beauty of me is that I am
very rich” and “The worst thing a man can do is go bald.”

The market in religious publishing is thriving in America: the recent

StatShot Annual Report from the Association of American Publishers found
that revenues of religious presses had risen 7% in the first ten months of
2023, to $674m. A portion of that might defray at least some of Mr Trump’s
sizeable legal expenses, but this is a very unusual market, with obstacles for
new entrants.

The biggest is that many suppliers insist on giving its most popular product
away for nothing. The Gideons, a charity founded in 1899, have placed
2.5bn Bibles and New Testaments in hotels, hospitals and domestic-violence
shelters around the world—roughly one for every Christian man, woman
and child. Weary travellers yearning for gospel truths can simply reach into a
bedside drawer and find some. Other groups have posted the entire Bible
online, so the faithful can search for their favourite verses. Against such
unfair competition, can Mr Trump compete?

Probably, for several reasons. First, the revered text he is touting is not
subject to copyright—a concept that did not exist when the King James
Bible was first published in 1611. So he is demanding a high price for a text
whose long-dead authors do not need paying. Never mind scribbling notes in
the margins of the books of the minor prophets; the profit margins on each
copy of this book should be major.

None of that will matter if no one buys the God Bless the USA Bible. But it
has two celebrity endorsements: Lee Greenwood, the country star who sings
“God Bless the USA”, is involved, too. And Mr Trump is pushing the tome
during a bitter election campaign, to a vast number of followers, many of
whom are passionate both about scripture and about supporting the former
president against his fiendish enemies.
Others in the devotional publishing industry have faced the same challenge
as Mr Trump—how to refresh a blockbuster written thousands of years ago
—and come up with even more creative solutions. They cannot commission
sequels by living authors, as the literary estates of Agatha Christie and Ian
Fleming have done to produce new Hercule Poirot and James Bond stories.
But they can commission new translations (a huge task) or tailor versions for
specific audiences.

Thus from Zondervan, the Christian arm of HarperCollins, you can buy the
“Boys Bible” (“gross and gory stuff you never knew was in the Bible”).
From a smaller German outfit, there is the “Biker Bible” (“the whole New
Testament and life stories of bikers”). The Bible is long and confusing:
many modern readers yearn for shortcuts to passages that might be
especially relevant, and commentaries to aid comprehension. Others seek
whimsy: you can buy the “Mother’s Bible” (it’s pink), or Bibles in regional
dialects (a Glaswegian one opens with “In the Beginnin’”). There are even
scriptures in fictitious tongues such as Klingon, from “Star Trek”, or
Quenya, invented by J.R.R. Tolkien.

Such experimentation is much easier with the Bible than it is with the Koran,
and much easier today than in previous centuries. In the 16th century the
scholar William Tyndale translated the Bible from Hebrew and Greek into
English, in a way that displeased the church. He was later burned at the stake
for heresy. The church was less tolerant of novelty in those days, and created
literal ghostwriters.

Since many people take the Bible literally, careful proofreading is essential.
In 1631 printers in London accidentally left the word “not” out of the
seventh commandment, thus rendering it as “Thou shalt commit adultery.”
This delighted many readers, but not the authorities. The printers were hit
with ruinous fines and lost their licence. The “Wicked Bible” subsequently
became a collector’s item; surviving copies are now valued at tens of
thousands of dollars. Whether future generations will treasure Mr Trump’s
Bible so dearly remains to be seen. ■

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A numbers game

In the Premier League, data help minor clubs take

on the mighty
A new book analyses Brentford’s statistical shrewdness
Apr 3rd 2024

Smart Money: The Fall & Rise of Brentford FC. By Alex Duff.
Constable; 327 pages; £22

AT MOST FOOTBALL clubs, the equation is simple: you put in (vast

amounts of) money, and you get out star players and trophies. Take
Manchester City, the Premier League’s reigning champions. Before its
takeover in 2008 by Sheikh Mansour of Abu Dhabi, the club often
languished in the bottom half of the table; it has won English football’s top
trophy seven times since 2011. Chelsea also won back-to-back titles after the
club was bought by Roman Abramovich, a Russian oligarch, in 2003.
(Never mind that City is accused of financial mismanagement, which it
denies, and Mr Abramovich was forced to sell Chelsea after Russia invaded
Ukraine.)
Brentford FC has taken a different approach. The club, based in west
London, was promoted into the Premier League in 2021 after toiling for
decades in the lower reaches of football. What makes its success surprising
is not how much money its owner, Matthew Benham, has put into the team,
but how little. In a new book Alex Duff, a lifelong Brentford fan, explains
how a frugal plan paid dividends.

Mr Benham first saw “the Bees” play in 1979, when he was 11. As a young
adult he studied physics at Oxford University and then went to work in the
City, where he became a derivatives trader. In his early 30s, sensing
correctly that bookmakers were inaccurate when setting odds for football
matches, Mr Benham left banking to become a full-time gambler.

He set up his own company, Smartodds, where he applied his aptitude for
finding the underlying value of stocks to identifying the underlying strength
of football teams. He competed with financial institutions to hire the best
mathematicians. They were told to focus not on how many goals a team was
scoring—which, according to Mr Benham, was subject to too much
randomness—but on the “goalscoring opportunities” it was creating. In time,
he reckoned, the goals would come.

The approach was so efficient that when Brentford, going through one of its
periodic financial crises, put out a general appeal for help in 2005, Mr
Benham offered his services. Within a decade he owned the club and was
applying his ideas to how the team was constructed. Analytics underpinned a
remarkably lucrative buy-low-sell-high transfer strategy.

Like “Moneyball” (2003), Michael Lewis’s hit book about the use of
statistics in baseball, “Smart Money” is both informative and entertaining.
Mr Duff introduces a disparate cast of characters, including Tony Bloom,
another bettor, who took over Brighton in 2009. The book makes diverting
excursions into the academic field of sports statistics and the birth of sports
betting in America, among other subjects.

Mr Duff is also alert to football’s long-standing, problematic relationship

with gambling. Critics have voiced concerns about the effect of near-
ubiquitous advertising on supporters. Players have become addicted to
betting, too. Brentford’s star striker, Ivan Toney, has just finished an eight-
month ban after breaching betting rules more than 200 times.

There were plenty of sceptics within football about Brentford’s philosophy.

(As one old-timer carped: “Next week, why don’t we get your computer to
play against their computer and see who wins?”) But in time it worked. In
their debut season in the Premier League, Mr Benham’s investment of
around £100m ($126m) in the club—a tiny sum compared with competitors
—realised its first profit of £25m.

Statistics have helped the team win on the pitch, too. Mr Benham identified
set pieces as an important part of creating scoring opportunities, and hired
Gianni Vio, an Italian coach with 4,000 such plays in his repertoire. Players
are instructed to press the opposition and tackle players within ten seconds
of them receiving the ball. Though Brentford is not vying for the title, in
recent years the team has beaten several of football’s plutocrats—including
Manchester City. What were the odds? ■

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Rwanda

How Paul Kagame uses culture to keep Rwandans

on message
The uses and abuses of the arts 30 years after the genocide
Apr 4th 2024 | NYAMATA

WHEN KIZITO MIHIGO was 12 years old he fled from his home. His
father, a Tutsi, had been butchered by their Hutu neighbours. It was one of
hundreds of thousands of murders in the Rwandan genocide, which began 30
years ago this month, in April 1994. At one point on his journey to safety in
neighbouring Burundi, Mihigo survived only by playing dead underneath a
pile of corpses.

Yet survive he did. The armed wing of the Rwandan Patriotic Front (RPF)
defeated the genocidal regime; its leader, Paul Kagame, has run Rwanda
ever since. When Mihigo returned he showed precocity for gospel music.
“Twanze Gutoberwa Amateka” (“We Refuse to Let our History be
Miscontrued”), in which he described the genocide as the cross Rwanda
must carry, was played at commemorative services attended by Mr Kagame.
But Mihigo’s doubts soon grew. He worried that the RPF’s efforts to
reconcile the country were superficial. His song of 2014, “Igisobanuro
Cy’urupfu” (“The Meaning of Death”), mentioned those “slaughtered in
revenge”, a reference to Hutus killed by the RPF in the 1990s—acts that the
RPF glosses over. Mihigo was held incommunicado, beaten and made to
confess to “terrorism charges” which landed him in prison. After his release
in 2018 he remained under surveillance. When he tried to flee in 2020 he
was arrested. A few days later he was found dead in a cell.

Mihigo’s story is symbolic of how culture has been used and abused in the
three decades since the genocide. In some cases the arts have brought
Rwandans together. In others they have been interpreted by the regime as a
threat, ostensibly to the country’s unity, but also to its own survival.

After 1994 the RPF promoted a narrative that there are no Hutus or Tutsis
any more, just Rwandans, and everyone has agarico (dignity). These ideas
are on display at genocide-memorial sites. In Nyamata, south of the capital,
Kigali, authorities have preserved a church where 5,000 Tutsis were killed.
On a recent visit the sun shone through bullet holes in the walls, illuminating
the victims’ clothes still lying on the pews. “The healing is a process,” says
Josephine, a guide. “After the genocide the new government abolished these
ethnicities. We are all Rwandans now.”

That mantra has been subtly encouraged through popular culture. During the
slaughter a popular radio station called for the extermination of Tutsi
“cockroaches”. But now some three-quarters of Rwandans tune into
“Musekeweya” (“New Dawn”), a radio show which has been on the air
since 2004. It follows people from different, unspecified groups living in
neighbouring villages, with Romeo-and-Juliet-style plotlines of love across
divides.

Alongside unity-promoting culture is support of indigenous arts. In March

the president watched the popular Inyamibwa Cultural Troupe (pictured) in a
show marking 30 years since 1994. Such patronage highlights culture that
predated colonialism (which entrenched Hutu and Tutsi identities) and
supports Mr Kagame’s oft-stated desire for Africa to avoid the wholesale
import of Western values.
Yet in the real “land of a thousand hills” not everything is so heartwarming.
Journalists, YouTubers and opposition politicians who break broadly defined
laws on “divisionism”, “terrorism” or genocide “denialism” can face unfair
prosecutions, forced disappearance and unexplained deaths, according to
Human Rights Watch, an NGO. Last year HRW documented how Rwandan
spies intimidate Rwandans abroad. Critics may live far away, “but they are
close to the fire. The day they get closer, the fire will burn them,” said Mr
Kagame, ominously, in 2019.

For all Mr Kagame’s celebration of traditional arts, last year several

members of the RPF were sacked from government jobs after attending a
clan-coronation ceremony, suggesting concern about rival political
groupings. In July, having already barred the most credible opposition
figure, Mr Kagame will win re-election as president with a thumping
majority.

At a “reconciliation village” in Mbyo Lauren Niyonagira tells her story of

escape from genocidal militias. She sits in her house next to Aloys
Mutiribambe, a fellow villager, who killed her sister. Remarkably, his son
and her daughter have married.

Working out what to make of such scenes is a microcosm of thinking about

Rwanda more broadly. The stories are harrowing; their codas inspiring. Both
(state-backed) polls and independent research suggest that, although
Rwandans may be irked by a bossy state, most people now rub along.

Yet in private pollsters fret that Rwandans do not feel safe to answer
honestly. Other academic work describes a disgruntled peasantry unable to
openly express dissent. In 2009 a study suggested that “New Dawn”, the
radio show, encouraged listeners to speak up about local problems, but had
no effect on their willingness to affiliate with different groups.

Perhaps, then, it is not too cynical to wonder if there is something deceptive

about reconciliation villages. Residents show off the cows they received for
living there. Parked outside are 4x4s full of tourists paying hundreds of
dollars to visit. After giving their accounts the villagers walk off in separate
directions, without so much as a goodbye. ■
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Economic & financial indicators

Economic data, commodities and markets

Indicators

Economic data, commodities and markets

Apr 4th 2024
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data-commodities-and-markets
Obituary

Paul Alexander lived longer than anyone in an iron lung

Fighting for breath

Paul Alexander lived longer than anyone in an

iron lung
The lawyer and author died on March 11th, aged 78
Apr 3rd 2024

ROLLING IN THE Texas dirt to feel the life in it. Creeping after bugs in the
bushes. The intense smell of the clover he pulled up for his rabbits in the
front yard. Wind in his face, fresh and soft. Racing with his friends as fast as
possible, until he was exhausted. Cows gently nuzzling him, which made
him feel alive. Even the smell of their patties was good.

Then it all disappeared: both that living, and the amazing world. At just six,
he was confined almost completely. He could not tell how, because his limbs
no longer moved. Through the water-trickles on his breathing tent he could
dimly make out the shape of his mother, and hear her, so after a terrifying
interval he knew he was not dead. But a tracheotomy to suction out his lungs
had turned off his power to speak. In a whisper through his still-working
mouth, he told her he was going to be all right.
Paul Alexander was one of thousands of American children who caught
polio in the 1950s, and one of the severest cases to survive. He did so
because he was encased in a metal tube, an iron lung, which regularly
pumped in air and then extracted it to force his immobilised lungs to work.
Only his head was still free and in the world. In the air and without the
machine, he would suffocate. Most victims stayed in the lung for a short
time, either quickly dying or recovering. Since he remained paralysed from
the neck down for life, he depended on his for seven decades.

His attitude to it was complicated. The sound of it, chugging and puffing,
was often comforting, like an old steam train at rest. It was a stalwart
companion, and indispensable. But it could also fail him. In a power cut,
family and neighbours had to hand-pump the bellows; when it began to leak,
in 2015, a desperate search began for antique parts, since no one used iron
lungs any more. But his chest was too damaged for more portable devices.
Sometimes he called the iron lung “she”, almost tenderly; sometimes “it”,
his oppressor, which had to be unlocked by someone else even when he only
wanted to relieve himself. A prison, or his home.

Besides, the iron lung was not all he relied on. During his two years in
Parkland Hospital he survived on a mixture of terror, pain, hope and sheer
determination. Polio was the Demon, stalking up and down his spine,
shooting out everything that worked like a baddie in a Roy Rogers film. But
he would beat him, because he was a Greek, with a Greek father and a
Lebanese mother, and Greeks were hero-kings like Alexander, unyielding
spirits. He was even extra-special, a fair-haired blue-eyed Greek in a dark-
haired family, which meant he was intended for great deeds.

Second, though his arms and legs might not work any more, God didn’t
want him to die just then. The doctors said he wasn’t worth saving, but he
knew he was. He would prove them wrong, as well as the callous unskilled
nurses who ignored his whispered pleas. To get out of the hospital, he
stopped eating, to make them all think he should go home to die. Once home
to his mother’s wonderful cooking, he grew strong and thrived.

And how. Thanks to his father, who was ingenious at making gadgets, he
used a supply of plastic sticks to hold brushes, pencils or pens in his
incredible, versatile mouth. He was sure he could be a great artist, and an
independent man. Thanks to home schooling, he graduated from Samuell
High School in Dallas second in his class. He went to Southern Methodist
University, then to Texas Law. After passing the bar exam he set up an office
in downtown Dallas, where clients were astonished to find him lying in a
machine. His dream was to be a trial lawyer, so he became one, appearing in
court in a proper suit and an adapted wheelchair that held him upright to
make his case.

For, among his other triumphs, he had taught himself to breathe again. It
meant deploying undiscovered muscles in his throat and persuading the
epiglottis not to block his windpipe as he forced air into his lungs. “Frog-
breathing” was his name for it, after the little gulping creatures he caught in
the creek. This was hard, but his reward for succeeding for three minutes
was a boxer puppy called Ginger with white stockings, a white chest and fur
the colour of honey. She connected him with Nature once more.

The other, wonderful, reward was that for longer and longer spells he could
move to a wheelchair and get outside, breathing on his own. On the porch,
neighbours’ small children would crowd round to kiss him. Older friends
could push him back to the creek and the woods, even laying him on the
ground to search for bugs in crannies. At SMU, still living with his parents,
other students helped him get to classes. At Texas Law in Austin he stayed,
sleeping in his iron lung, in student accommodation. Again, with the help of
friends, he managed. Life was beautiful.

Friendships were often difficult, though. It had been hard, after all, even to
fit back into his family where he had left off. He was included in everything
possible, but could not share their lives as before. His voice had returned as
soon as the tracheal tube had been removed, but he had to speak loudest to
make demands, as loudly and insistently as the alarm bell his father had once
rigged up for him. That deterred some people, and meant he tended to live
alone, with friends and carers dropping in. It didn’t bother him. He drew joy
from the callers he had.

His closest friends were the women with whom he fell in love, or they with
him. One, Kathy Gaines, looked after him like a sister for years. Another,
beautiful Claire, came close to marrying him, until her mother cruelly
intervened. Parents could see only the huge, ugly iron lung and the tedious
burden of care. Their daughters, however, saw a man who could plan, create
and succeed, as well as love. He could also escape, for as much as a day or
so, from the machine. Old delights flooded back then. The sweet smell of
honeysuckle; the wind fresh in his face; his body enclosed not by metal but
by a soft, warm embrace. ■
This article was downloaded by zlibrary from https://www.economist.com/obituary/2024/04/03/paul-alexander-lived-longer-than-
anyone-in-an-iron-lung
 Table of Contents
TheEconomist.2024.04.06 [Fri, 05 Apr 2024]
The world this week
Politics
Business
KAL’s cartoon
This week’s cover
Leaders
Xi Jinping’s misguided plan to escape economic stagnation
Central banks have spent down their credibility
Beware a world without American power
A chilling near-miss shows how today’s digital infrastructure
is vulnerable
What Boeing, Disney and others can learn from General
Electric
Letters
Letters to the editor
By Invitation
Yu Hua on why young Chinese no longer want to work for
private firms
As the world changes, so should America’s nuclear strategy,
says Frank Miller
Briefing
America and its allies are entering a period of nuclear
uncertainty
Asia
Why India’s elite loves Narendra Modi
Japan is still reeling 100 days after the Noto earthquake
The end of cricket’s Indian monopoly
Asian “nepo babies” are dominating its politics
For a glimpse at Japan’s future, look at its convenience stores
China
How China’s political clans might determine its future
China’s tin-eared approach to the world
United States
 The Biden campaign in Michigan has a tremendous ground-
game advantage
An abortion ruling has Democrats hoping Florida is in play
The rise of the remote husband
Joe Biden’s assault on the $900 child-eczema cream
Are American progressives making themselves sad?
Middle East & Africa
Israel is ratcheting up its shadow war with Iran
What Israel’s killing of aid workers means for Gaza
Protests have erupted against another Syrian dictator
Ugandan judges uphold a draconian anti-gay law
Recent heatwaves are a harbinger of Africa’s future
The Americas
Latin America’s new hard right: Bukele, Milei, Kast and
Bolsonaro
South American vineyards brace for another scorching
summer
Justin Trudeau is beset by a divided party and an angry
electorate
Europe
The new geography of Paris
An electoral bruising for Recep Tayyip Erdogan in Turkey
Poles and Ukrainians are at loggerheads. That’s good news
for Putin
The mafiosi of Naples turn white-collar
The secret behind the world’s happiest country
Germany’s Free Democrats have become desperate spoilers
Britain
How has the Bank of England dealt with four years of
shocks?
Two cities show the problems faced by Britain’s renters
What Jeffrey Donaldson’s arrest means for Northern Ireland
Why some parts of England have so few graduates
Madame Tussauds reflects the fragmentation of fame in
Britain
Sadiq Khan’s London offers a taste of Starmer’s Britain
International
 Thirty years after Rwanda, genocide is still a problem from
hell
Business
The mind-bending new rules for doing business in China
Bob Iger has defeated Nelson Peltz at Disney. Now what?
India’s biggest conglomerate takes on chipmaking
Will GE do better as three companies than as one?
Meet the French oil major that balances growth and greenery
The six rules of fire drills
Why Japan Inc is no longer in thrall to America
Finance & economics
How Xi Jinping plans to overtake America
The Federal Reserve cleans up its money-printing mess
Will FTX’s customers be repaid?
How to build a global currency
Daniel Kahneman was a master of teasing questions
Science & technology
Could weight-loss drugs eat the world?
Why robots should take more inspiration from plants
A stealth attack came close to compromising the world’s
computers
Culture
What would nuclear war look like in the 21st century?
On his 70th birthday, Godzilla has roared back to relevance
How to make money from the Bible
In the Premier League, data help minor clubs take on the
mighty
How Paul Kagame uses culture to keep Rwandans on
message
Economic & financial indicators
Economic data, commodities and markets
Obituary
Paul Alexander lived longer than anyone in an iron lung