TheEconomist 2024 06 08
TheEconomist 2024 06 08
TheEconomist 2024 06 08
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The world this week
Politics
Business
KAL’s cartoon
This week’s covers
The world this week
Politics
June 6th 2024
Narendra Modi looks likely to serve a third term as India’s prime minister,
after his Bharatiya Janata Party and its allies won a slim majority. The ruling
alliance won 293 seats, compared with the opposition’s 234. Mr Modi had
claimed that they would win upwards of 400 seats. The BJP itself lost 63 seats
compared with the last election in 2019.
South Korea said it would resume military activities along its border with
the North. President Yoon Suk-yeol suspended the military agreement
between the two Koreas after Pyongyang sent balloons carrying rubbish over
the border. It called them “gifts of sincerity”. Seoul vowed to “protect the
lives and safety of its people”.
Hunter Biden’s trial in Delaware began this week. Prosecutors allege that
the president’s son lied about using drugs while buying a revolver in 2018.
Another trial, over allegations that he failed to pay his taxes, is due in
September. It had seemed that Mr Biden might avoid the two ordeals
altogether, until his plea deal with prosecutors fell apart last year.
President Joe Biden signed an executive order that would limit asylum
claims at America’s southern border with Mexico. The rule prevents people
who cross the border illegally from applying for asylum once encounters
with border-control officials exceed an average of 2,500 a day—a threshold
that will be easily crossed.
Quick U-turn
New York abruptly cancelled contentious plans to introduce congestion
pricing on cars driving downtown. The scheme was due to begin on June
30th but has been postponed indefinitely. It had been predicted to raise $1bn
annually for capital projects by New York’s Metropolitan Transportation
Authority.
The African National Congress lost its parliamentary majority for the first
time in the 30 years since the end of apartheid in elections on May 29th. The
party, which got 40% of votes, will need a coalition if it is to form a
government. Investors hope it will do so with the main opposition, the
Democratic Alliance, which got 22% of votes and has sensible economic
policies. There are concerns the ANC might instead form a government with
radical populist parties such as the Economic Freedom Fighters or
uMkhonto weSizwe, both of which want to nationalise land and banks.
Joe Biden revealed an Israeli proposal for a pause in the fighting in Gaza
and the exchange of Israeli hostages held by Hamas for some Palestinian
prisoners. This would form the basis of a long-term “cessation of
hostilities”. America said it was waiting for a response from Hamas, the
Islamist group in Gaza. Meanwhile Israel bombed a school in Gaza,
claiming it contained fighters involved in the October 7th attacks. Hamas-
affiliated press said the strike killed at least 27 people.
Missile attacks by Hizbullah, the Lebanese militia-cum-political party,
sparked wildfires in northern Israel and the Golan Heights. Israeli shelling
started fires in Lebanon near the border. On a visit to the region, Binyamin
Netanyahu, the Israeli prime minister, said Israel was prepared for “very
intense action in the north”.
All rise
Egypt announced that it would quadruple the price of subsidised bread. The
subsidy was due to cost 125bn Egyptian pounds next year, more than 3% of
government spending. When the government tried to reduce subsidies in
1977, deadly riots ensued. So far, the response has been muted.
Business
June 6th 2024
India’s stockmarket, which became the world’s fourth-largest earlier this
year, swung wildly in the wake of a surprise election result that saw
Narendra Modi’s Bharatiya Janata Party lose its majority. Having reached a
record high after exit polls forecast a landslide for the BJP, the benchmark BSE
Sensex index fell by 6% once the results were announced. It recovered a
little the next day. The prices of shares in companies owned by Gautam
Adani, a close associate of Mr Modi, were especially hard hit.
Mexican share prices also dropped after a shock election result, with
Claudia Sheinbaum winning the presidency by a bigger-than-expected
margin. Investors worried that her congressional majority would allow her to
change the constitution and erode checks and balances. The peso fell, too.
GameStop saw its share price jump by as much as 75% after a photo posted
to Reddit seemed to show Keith Gill holding 5m shares and 120,000 call
options in the company. Mr Gill was one architect of the “meme stock”
craze of 2021, exhorting retail traders to buy shares in order to give hedge
funds (several of which had shorted GameStop) a bloody nose. By the time
trading closed on the day the photo was posted, his position was worth
$260m.
Bill Ackman sold a 10% stake in Pershing Square, the firm through which
he manages a closed-end hedge fund with over $15bn in assets. The deal
values his company at more than $10bn, and is thought to be a prelude to a
public listing.
Chocks away!
Boeing launched its CST-100 Starliner spacecraft from Cape Canaveral,
Florida, carrying two astronauts from NASA, America’s space agency. It was
only the sixth launch of a new, crewed spacecraft in NASA’s history. Boeing’s
Starliner programme is a rival to one run by Elon Musk’s SpaceX.
An EU court ruled that McDonald’s has lost its “Big Mac” trademark for
chicken burgers, though it will keep it for the better known beef recipe. The
decision followed a long battle between McDonald’s and Supermac’s, an
Irish competitor that claimed the trademark was preventing its expansion.
Softly, softly
The Bank of Canada lowered its policy rate from 5% to 4.75%, making it
the first G7 central bank to cut rates in this cycle. Inflation has fallen to 2.7%
from a peak of 8.1% in 2022. Though the central bank’s target is 2%, a
softening economy may have prompted it to cut early: Canada’s
unemployment rate hit 6.1% in April.
Fears grew that America’s economy may also be slowing down, after the
private sector added fewer jobs than forecast in May. The manufacturing
sector contracted, too, with factory activity falling. Treasury yields dropped
in response, as traders marked up the probability that the Federal Reserve
would cut rates sooner rather than later.
KAL’s cartoon
June 6th 2024
As seas rise, the relocation of Caribbean islanders has begun (June 6th)
How Saudi Aramco plans to win the oil endgame (June 6th)
Why any estimate of the cost of climate change will be flawed (May 30th)
KAL’s cartoon appears weekly in The Economist. You can see last week’s
here.
This article was downloaded by zlibrary from https://www.economist.com/the-world-this-week/2024/06/06/kals-cartoon
The world this week | The Economist
THIS WEEK WE had two covers. In Britain we considered what the Labour
Party might do in power. On economic growth, the avowed centrepiece of
Labour’s plan for government, the answer is: not enough.
On our cover in the rest of the world, we looked at India’s shock election.
After a decade in charge, Narendra Modi was forecast to win a landslide
victory in this year’s election; yet on June 4th it became clear that his party
had lost its parliamentary majority, forcing him to rule through a coalition.
The result is a triumph for Indian democracy that will change the country—
ultimately for the better.
Leader: A triumph for Indian democracy
Briefing: Narendra Modi could respond to disappointment in two different
ways
Briefing: The people and places that turned away from the BJP
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weekly Cover Story newsletter.
This article was downloaded by zlibrary from https://www.economist.com/the-world-this-week/2024/06/06/this-weeks-covers
Leaders
Britain’s Labour Party must be bolder about growth
A triumph for Indian democracy
America’s billionaires should resist the urge to support Donald Trump
Morena’s landslide win threatens to take Mexico down a dangerous
path
Three reasons why it’s good news that robots are getting smarter
South Africa stands on the brink of salvation—or catastrophe
Leaders | Getting growing
One way of thinking about how fast the economy needs to grow is to look at
the fiscal hole that Britain is in. On paper, the Tory government’s tax-and-
spending plans meet the fiscal rule that the ratio of public debt to GDP should
start falling in the final year of a five-year forecast period. In reality, these
plans already imply unrealistic cuts for underfunded courts and denuded
local government. Worse still, the spending plans are based on implausibly
optimistic medium-term forecasts by the Office for Budget Responsibility
(OBR), a watchdog that checks the government’s sums. According to The
Economist’s calculations, if Britain grows by the consensus forecast of
1.5%, rather than the 1.8% expected by the OBR, the annual hole in the public
finances would deepen by roughly £30bn ($38.4bn, or 1.1% of GDP). Growth
of 1.1%, the average since 2008, would create a gap of roughly £60bn.
Such sobering numbers have two implications. The first is that taxes will in
fact need to go up—whatever the main parties say and whoever is in power.
Borrowing at high interest rates to compensate for slow growth is
unsustainable. And the money cannot be found simply by cutting public
services further. The pressures on the public purse are rising. For Labour, in
particular, raiding public services would be self-defeating, because it wants
growth to fund their expansion.
Desperate not to trip up before the election, Labour has pledged to leave
Britain’s main tax rates unchanged even though small increases to income
tax or VAT would be the most painless way to fill the hole. Labour has other
options: if it chose a land-value or a carbon tax The Economist would set off
fireworks. More likely is a mess of smaller levies and threshold fiddles that
further complicate Britain’s tax system.
Unfortunately, the simplest way to boost the economy is also the trickiest.
Brexit made Britain poorer, but negotiations on renewed integration with the
European Union would soak up diplomatic and political capital. Unless the
Tories become more constructive on Europe, the EU would also be wary of
making an agreement that a future British government could immediately
undo. A deeper relationship with Brussels ought to be a medium-term goal
for Labour. Until then, streamlining food checks, intra-firm transfers and the
like, though worthwhile, are unlikely to have much effect on growth.
The big opportunity is fixing the planning system. Britain has no more built-
up land per person than it did in the 1990s; last year the number of planning
applications fell to the lowest in almost three decades. Labour’s leaders have
identified the problem, but their rhetoric far outruns their policies. More
planning officers and tougher house-building targets are too timid. Building
new towns, a Labour enthusiasm, would be costly and slow: better to make
cities bigger and denser. Instead of trying to squeeze more out of the current
planning system, Labour should overhaul it. That means allowing building
on the green belt, the rings of protected land surrounding many English
cities, and moving from a discretionary model to a rules-based one in which
projects that meet a design code go ahead automatically.
Sir Keir may have bolder plans for office than he is willing to admit before
an election: he ran a cautious leadership campaign in 2020, then ruthlessly
reshaped the party after he won. But on both tax and growth he faces a trade-
off between being timid now and having a mandate to get things done in
office. A Labour government is likely to oversee a modest economic
recovery. But it has not yet outlined a path to prosperity. ■
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about-growth
Leaders | The Modi Raj
The world’s biggest electorate has just shown how democracy can rebuke
out-of-touch political elites, limit the concentration of power and change a
country’s destiny. After a decade in charge, Narendra Modi was forecast to
win a landslide victory in this year’s election; yet on June 4th it became
clear that his party had lost its parliamentary majority, forcing him to rule
through a coalition. The result partially derails the Modi project to renew
India. It will also make politics messier, which has spooked financial
markets. And yet it promises to change India for the better. This outcome
lowers the risk of the country sliding towards autocracy, buttresses it as a
pillar of democracy and, if Mr Modi is willing to adapt, opens a new path to
reforms that can sustain its rapid development.
The drama unfolding amid a scorching heatwave begins with the election
results. Mr Modi’s Bharatiya Janata Party (BJP) aimed to take up to 370 seats
in the 543-member lower house, an even bigger majority than in 2014 or
2019. Instead it won just 240. It lost seats to regional parties in its heartlands
in Uttar Pradesh and beyond, reflecting a revival of caste-based politics and,
it seems, worries about a lack of jobs. Whereas his coalition partners were
previously optional extras, he will now rely on them to stay in power. Their
loyalty is not guaranteed.
Read more:
For over a decade Mr Modi’s answer has been to concentrate power. That
meant winning elections decisively on a platform that emphasises his own
brand, Hindu chauvinism and an aspirational message of rising prosperity. In
office, his method has been to use executive might to ram through policies
that boost growth and reinforce the BJP’s grip on power.
Mr Modi has changed India for good and ill. Fast growth promises to make
its economy the world’s third-largest by 2027. India has better infrastructure,
a new digital welfare system for the poor and growing geopolitical clout.
However, good jobs are too scarce, Muslims suffer discrimination and,
under a sinister illiberalism, the BJP has captured institutions and persecuted
the media and opposition.
This year’s election was supposed to mark the next phase of the Modi Raj.
With an even larger majority and a new presence in the richer south of the
country, the BJP aspired to unitary authority across India at the central and
state level. That might have made big-bang reforms easier in, say,
agriculture. But such power also raised the threat of autocracy. Many in the
BJP hoped to forge a single national identity, based on Hinduism and the Hindi
Mr Modi would have reigned supreme. Yet every Raj comes to an end. If, as
expected, the BJP and its allies form the next government, Mr Modi will have
to chair a cabinet that contains other parties and which faces parliamentary
scrutiny. That will come as a shock to a man who has always acted as a chief
executive with unchallenged authority to take the big decisions. Succession
will be debated, especially inside the BJP. Even if Mr Modi completes a full
term, a fourth one is now less likely.
These dangers are real, but they are outweighed by the election’s promises.
Now that the opposition has been revived, India is less likely to become an
autocracy. The BJP and its allies also lack the two-thirds majority they needed
to make many constitutional changes. Disappointed investors should
remember that most of the value of their assets lies beyond the next five
years and that the danger posed by democratic backsliding was not just to
Indians’ liberty. If strongman rule degenerated into the arbitrary exercise of
power, it would eventually destroy the property rights that they depend on.
More open politics also promises to boost growth in the 2030s and beyond.
The election shows that Indians are united by a desire for development, not
their Hindu identity. Solving India’s huge problems, including too few good
jobs, requires faster urbanisation and industrialisation, which in turn depend
on an overhaul of agriculture, education, internal migration and energy
policy. Because the constitution splits responsibility for most of these areas
between the central government and the states, the centralisation of the past
decade may yield diminishing returns. That means the next set of reforms
will require consensus. There are precedents. Two of Mr Modi’s main
achievements, tax reform and digital welfare, are cross-party ideas that
began under previous governments. India has had reforming coalitions
before, including BJP-led ones.
Modi modified
The question facing India is therefore whether Mr Modi can evolve from a
polarising strongman into a unifying consensus-builder. By doing so, he
would ensure that India’s government was stable—and he would usher in a
new sort of Indian politics, capable of bringing about the reforms needed to
ensure India’s transformation can continue when the Modi Raj is over. That
is what real greatness would look like, for Mr Modi and his country.
Fortunately, if he fails, India’s democracy is more than capable of holding
him to account. ■
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This article was downloaded by zlibrary from https://www.economist.com/leaders/2024/06/05/a-triumph-for-indian-democracy
Leaders | Don’t do it
The benefit to Mr Trump is much more than financial. Politicians seek the
support of moguls because it is taken as proof that they would be good for
the economy. For their part, many billionaires doubtless think it is in their
self-interest to back Mr Trump. He is the narrow favourite to win, and
courting him now could secure a valuable pay-off for those who crave
influence or need political favours (or fear his vindictiveness). Businesses,
and billionaires themselves, would benefit directly from Trumpian tax cuts
and deregulation.
Yet Trump 2 poses a threat to the economy—a greater one than a second
Biden presidency. In 2016 many observers, including this paper, fretted
about the consequences of Mr Trump’s economic populism, only for
America to enjoy strong GDP and jobs growth. This time, however, the
economy is closer to its speed limits, meaning that tariffs and deficit-
financed tax cuts would cause an inflationary surge. If Mr Trump deported
illegal immigrants en masse, as he has promised, it would only add to the
pressure.
Moreover, tax cuts would strain the already parlous public finances. In 2016
the budget deficit was 3.2% of GDP and net debt was 76% of output; today
America is running an underlying deficit of 7%, and debt is nearing 100%.
The Federal Reserve would be forced to offset the stimulus, pushing up
debt-servicing costs. If Mr Trump appointed a pliant ally to lead the Fed
when the term of its current chairman expires in 2026, the inflation problem
could grow bigger still.
Mexicans know the dangers of one-party rule. In 2000 the country emerged
from seven decades under the Institutional Revolutionary Party (PRI), which
were defined by corruption, inequality and political repression. Yet in
elections on June 2nd they voted to hand the ruling party, Morena, a degree
of power not seen since the PRI’s fall. Morena and its coalition allies are less
disciplined and monolithic than the PRI was, but they still pose a grave threat
to Mexico. Much now turns on the political courage of the country’s next
president, Claudia Sheinbaum, the first woman to hold the post.
The fact that Ms Sheinbaum won the presidency was not a surprise. She had
enjoyed a 20-point lead in the polls for months, buoyed up by the valuable
support of Andrés Manuel López Obrador, the outgoing president. But few
expected Morena to be so dominant. The ruling coalition is likely to control
between 346 and 380 of the 500 seats in the lower house, a supermajority
that enables it to amend the constitution. In the upper house it has at least 82
of 128 seats, three shy of a supermajority (which it will probably gain thanks
to a few “grasshoppers”, as Mexicans call lawmakers who switch parties).
Morena’s coalition also now runs 24 of 32 governorships and has
supermajorities in at least 22 of the 32 state congresses.
Investors reacted to Morena’s landslide by selling off the peso, which fell by
4% against the dollar, and stocks, which lost 6%. They fear that the
government will use its supermajorities to bring about constitutional changes
that will make it harder to operate in Mexico and which will undermine
democracy.
Their fear is well founded. Immediately after the vote, Mr López Obrador
talked of using the supermajority to enact an agenda he introduced in
February. Supreme Court judges and the heads of the electoral authority
would be appointed by popular vote; many independent bodies would be
dismantled; the army would take control of the national police force;
supposedly independent energy regulators would answer to ministers.
Fracking, opencast mining and imports of genetically modified corn would
all be banned. Generous retirement benefits would be further increased,
though money is short.
Mr López Obrador will have a chance to get Congress to pass some of these
bills himself in September, because legislators take their seats one month
before Ms Sheinbaum replaces him, on October 1st. But he will struggle to
get them all through. It will be for her to enact the rest.
Ms Sheinbaum should resist. For her to stand up to the man who eased her
path to power may seem unlikely. The slender hope is her own record. As
mayor of Mexico City she was more international, competent and pragmatic
than Mr López Obrador has been as president. On election night she
promised to preserve democracy, govern for all Mexicans, work with the
United States and back investment and business.
To ditch his worst plans would be in her own long-term interest, as well as
her country’s. Ms Sheinbaum inherits a fiscal deficit and a sluggish
economy. She may soon discover that she cannot afford to continue with the
redistribution that underpinned Morena’s landslide win—and which will
underpin her popularity in office. During the campaign she talked about
protecting the legacy of her mentor, Mr López Obrador. Ms Sheinbaum
would do well to think about her own. ■
This article was downloaded by zlibrary from https://www.economist.com/leaders/2024/06/06/morenas-landslide-win-threatens-to-
take-mexico-down-a-dangerous-path
Leaders | From chatbots to robots
As a result, robots are becoming more capable, easier to program and able to
explain what they are doing. Investors are piling into robotics startups.
OpenAI, the creator of ChatGPT, which gave up on robots a few years ago, has
changed its mind and started hiring a new robotics team. When brought to
bear upon the physical world, previously disembodied AI now appears to have
enormous potential.
Robots can inspire fear. Human beings are trained from birth by Hollywood
to be afraid of them—the latest incarnation of the ancient tale of the inventor
who loses control of his creation. And even if robots are not literally the
murderous machines of the “Terminator” films, they can kill off decent-
paying jobs in factories and warehouses. Nevertheless, the latest advances in
robotics will bring real and substantial benefits.
Another benefit is that the new models enable robots to explain the
reasoning behind their actions. That is useful when they behave in
unexpected or unwelcome ways. So long as robots’ brains are not
inscrutable black boxes, programming and debugging them is fairly
straightforward. The new models are also less likely to hallucinate—tech-
speak for “make things up”—because their perception is grounded in
observations of the world, and they aim to ensure that cognitive and physical
reality match. That makes them safer and more reliable.
And one more benefit is that robots are getting better at learning quickly
through imitation and at generalising from one skill to another. This opens
the door for robots to move out of factories and warehouses. Several
companies and research groups are using the latest AI models to build
humanoid robots, on the basis that most of the world, unlike an assembly
line, has been designed for people to move around in. Labour markets across
the rich world are tight—and getting tighter as societies age. As well as
boosting productivity while workforces shrink, more capable robots could
cook and clean, and care for the aged and the needy.
Advanced economies will need more automation if they are to maintain their
standards of living. South Korea, Japan and China are all in the top five
countries with the most robots for each manufacturing worker. It is no
coincidence that they are also ageing rapidly. Without robots to help out,
more people may have to work longer and retire later. In the coming years,
attitudes could well flip from fearing the arrival of robots to wishing that
they would get here sooner. ■
This article was downloaded by zlibrary from https://www.economist.com/leaders/2024/06/06/three-reasons-why-its-good-news-that-
robots-are-getting-smarter
Leaders | The humiliation of the ANC
The defeat is eroding the authority of Cyril Ramaphosa, who took office as
president in 2018 promising renewal and good governance after obscene
graft under his predecessor, Jacob Zuma. Already there is talk of a palace
revolt by his opponents within the party. If he is ejected, his place would
most probably be taken by his deputy, Paul Mashatile, who is under
investigation by the police for allegations of corruption. (He has denied any
wrongdoing.)
Since it will be unable to form a government on its own, the ANC will have to
enter a coalition with a big opposition party if it wants to stay in power. The
biggest danger is that it will do a deal with the Economic Freedom Fighters
(EFF), led by Julius Malema. His is a radical socialist; his race-baiting party
wants to seize and redistribute farmland and nationalise mines, banks and
other big companies without compensation. Although it came fourth, with
9.5% of the national vote, the EFF has the affection of many in the ANC, who see
themselves as revolutionaries and the EFF as a kindred spirit.
Any national coalition deal with either the EFF or MK would probably result in
the government dumping many of Mr Ramaphosa’s economic reforms.
These have included initiatives that have led to a flood of investment into
renewable energy and aim to attract private investors and operators to run
jammed ports and broken railways.
Another path is open to South Africa: for Mr Ramaphosa to team up with the
Democratic Alliance (DA), the official opposition with 21.8% of the vote.
Standing for sensible, liberal economics, the DA has a proven record of
governing well in places where it has a majority. In Cape Town services
largely work, roads are maintained and residents are shielded from the worst
of the frequent power cuts imposed on the rest of the country. The Western
Cape province has a lower unemployment rate than ANC-controlled provinces.
Yet because the DA is widely perceived as a “white party” in a country with a
black majority, it has struggled to translate good governance into votes.
John Steenhuisen, the DA’s leader, says the party is open to talks that put “the
country’s interests first” and is willing to enter the government “if it is the
best way to prevent an anti-constitutional state”. Mr Ramaphosa and his
allies are also said to be willing to do such a deal. Informal talks have
smoothed over some potential stumbling-blocks, including differences in
foreign policy. The DA, which has criticised Mr Ramaphosa’s government for
refusing to condemn Russia’s invasion of Ukraine, has indicated that it may
compromise on this issue, according to Bloomberg, a news agency.
Forming a coalition of the sensible would not be without risks to both sides.
Mr Ramaphosa would probably face accusations from his own party of
“selling out”. Mr Steenhuisen risks tarnishing the DA’s reputation by tying it
to a party that has become synonymous with corruption. Yet many of these
risks could be managed.
To ensure that it is still able to act as an opposition and hold the government
to account, the DA needs not take seats in cabinet. Instead it could offer its
support in the parliamentary vote needed to elect Mr Ramaphosa as
president in exchange for other concessions, such as getting a DA member
elected as the speaker of parliament, and for commitments about legislation.
To broaden the appeal of such a deal, and to make it more palatable to the
ANC, smaller and equally sensible parties could be brought in to form a wider
government of national unity, such as the one that served for a few years in
Nelson Mandela’s cabinet. These could include established parties such as
the Inkatha Freedom Party as well as upstarts such as Rise Mzansi and Build
One South Africa.
This would not be an easy coalition to hold together. Forming it could mean
both the ANC and DA losing the support of their more radical wings. Hammering
out an agreement on policies and a legislative agenda would require huge
compromises. Yet to prevent South Africa following the road to ruin, both
Mr Ramaphosa and Mr Steenhuisen need to put country before party. ■
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This article was downloaded by zlibrary from https://www.economist.com/leaders/2024/06/01/south-africa-stands-on-the-brink-of-
salvation-or-catastrophe
Letters
Letters to the editor
Letters | On Somalia, democracy in America, Shirley Conran, large language
models, Beethoven’s ninth, TV comedy
Accurate and reliable data are crucial for effective governance and
development. Although Somalia’s challenges are real and pressing, it is
essential to acknowledge and support the progress being made in building a
robust statistical foundation.
SHARMARKE FARAH
Director-general
National Bureau of Statistics
Mogadishu
Heidelberg, Germany
As a retired lieutenant-colonel I can confirm that the armed forces take their
oath to support and defend the US constitution as solemn and unbreakable.
There are indeed dangers to our democracy but the army would not permit a
dictator to gain a foothold in violation of the constitution, which has served
our country well for nearly 250 years.
KEVIN DUNN
Dieburg, Germany
Lord Woodhouselee, a British historian from the 18th and 19th centuries,
observed that democracies are not permanent and evolve into dictatorships.
The two primary factors that drive this are loose fiscal policy, driven by the
increased demands of citizens, and the loss of public and private virtue.
On fiscal policy, America’s national debt has increased fivefold over the past
two decades. On the second factor, the Journal of Democracy’s April issue
has a piece entitled “America’s Crisis of Civic Virtue”. America may be
headed into a dictatorship. The more important question is, what kind of
dictatorship?
MARK EVERS
Philadelphia
Galway, Ireland
A Colossus mistake?
The concept of multi-agent systems (MAS), or teams of large language models,
and in particular the danger they may cause, was explored in “Colossus: The
Forbin Project” (“Two bots are better than one”, May 18th). In the film,
released in 1970, America builds an artificial-intelligence computer system
called Colossus to try to eliminate human error in controlling nuclear
weapons. Unfortunately, Colossus, with increasing sentience, quickly
determines that the Soviet Union has constructed its own AI-based system
named Guardian. Colossus asks to be linked to Guardian, and the resulting
MASexpands its original programming of protecting the world from nuclear
weapons to imposing its own computer-based logic on humanity. This makes
the world safe from nuclear destruction, but also devoid of human oversight
and freedom.
ROBERT CHECCHIO
Suzhou, China
Comedy situation
The piece on TV humour (“No laughing matter”, May 11th), brings to mind
Stephen Colbert’s summation of George W. Bush at the White House
correspondents’ dinner in 2006. With the president sitting just two seats
away, and admiring how constant, dependable and true he is, Mr Colbert
proclaimed that Mr Bush “believes the same thing on Wednesday that he
believed on Monday…no matter what happened on Tuesday”.
KEITH CARLSON
Belmont, Massachusetts
If you think that comedy on TV isn’t so funny, remember what Groucho Marx
once said: “I find television very educational. Every time someone switches
it on I go into another room and read a good book.”
NUNZIO TRITTO
Bari, Italy
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Briefing
Narendra Modi could respond to disappointment in two different ways
The people and places that turned away from the BJP
Briefing | Electoral rebuke
The Indian voter has confounded expectations again. A decade ago, when
Narendra Modi swept to power with an outright majority in parliament, a
quarter-century of messy coalition politics came to an end. When his
Bharatiya Janata Party (BJP) expanded that majority to 353 of the 543 seats in
the lower house five years later, many pundits hailed the dawn of a new
“dominant-party system” akin to independent India’s first three decades,
when the Congress party ruled without interruption.
The real test, however, will be how Mr Modi responds to this rebuke. As a
former adviser puts in our new eight-part podcast about the prime minister,
“The Modi Raj”, which launches this week, “One of his strengths is his
ability to evolve.” Under one scenario, he could restrain his ideological
instincts and prioritise his main economic goal, to transform India into a
developed country by 2047, the centenary of independence. A less
confrontational approach to politics could help him tackle some of the
country’s most important long-term challenges, including agricultural and
labour reforms, which require extensive consultations with state
governments and other stakeholders. It could also ease tensions between
India’s north and its richer, less populous south.
What disappointment?
Mr Modi put a brave face on the result. In an address to party workers, he
portrayed it as an endorsement of his vision of a developed India. “In the
third term, the country will write a new chapter of big decisions,” he
pledged, flagging the suppression of corruption as a priority. BJP officials
stressed that only Jawaharlal Nehru, India’s first prime minister, had
previously led his party to three consecutive general-election wins. They
also noted that the BJP’s seat tally was more than double that of its nearest
rival, Congress.
Although Mr Gandhi, who is 53, does not formally lead Congress, he helped
cobble together the Indian National Developmental Inclusive Alliance (INDIA),
as the opposition coalition dubbed itself. He also helped shape its campaign,
which focused on inequality and sought to mobilise a coalition of voters
from minorities and lower castes that together constitute about 80% of the
population.
Leaders of the opposition met in Delhi the day after the results came out, to
discuss whether they could enlist other partners to form a government. This
is numerically possible, but would require Congress not only to hold
together its own coalition and win over almost all independents, but also to
lure allies of the BJP to defect to its side. That would be an improbable feat,
especially given the apparent unity of Mr Modi’s coalition.
Even as Congress’s allies were meeting, so was the BJP’s coalition, the
National Democratic Alliance. Its members unanimously endorsed Mr Modi
as their candidate for prime minister. The BJP will no doubt try to persuade
other smaller parties and individual legislators to switch sides, too. It has far
greater resources than its opponents to encourage such defections. Still, there
will be intense negotiations in the next few days as existing and potential
allies try to extract concessions.
Another pivotal figure is Nitish Kumar, the 73-year-old chief minister of the
eastern state of Bihar and head of the Janata Dal (U) party, which won 12 Lok
Sabha seats. He has often switched sides and teamed up with the BJP again
only in January after helping to form the opposition alliance. Mr Kumar has
criticised Hindu nationalism in the past. But he is notoriously transactional
and will most likely back Mr Modi in exchange for financial support for
Bihar, India’s poorest state, and perhaps a prestigious post in Delhi.
Mr Modi will be less beholden to allies than Congress was when it was last
in power. Congress formed a coalition government 20 years ago with just
145 seats and another one five years later with 206. Even so, Mr Modi will
have to compromise in a way that he has never experienced before in
government. He may find that hard, given what former colleagues describe
as his “fascination for detail” in “The Modi Raj”. “His ability to manoeuvre
both in cabinet nominations and on big decisions that require strength in
parliament would be greatly diminished,” says Rahul Verma of the Centre
for Policy Research, a think-tank in Delhi. “I think now the smaller parties
will become crucial.”
Liberal dawn
Some of Mr Modi’s critics also hope that he will rein in his autocratic
tendencies. The election outcome means that some of the changes they
feared are off the table. Those include any plans to amend the constitution,
by scrapping its secular preamble or its commitment to affirmative action for
minorities and lower castes. The BJP may also have to drop its manifesto
pledge to introduce simultaneous national and state elections, which
opponents see as a stratagem to give an advantage to the incumbent party at
the national level.
The BJP may also be more careful about the redrawing of parliamentary
boundaries that is due after 2026. Southern leaders fear that Mr Modi could
expand parliament to as many as 753 seats, with the bulk of new ones going
to more populous states in the Hindi heartland. Another gripe is that too
much of the tax they pay goes on subsidies in the Hindi belt. The south is
likely to have a powerful voice within the ruling coalition in the form of Mr
Naidu.
Mr Modi will not abandon Hindu chauvinism, given its centrality to his
party and his own identity. His political thinking is rooted in his background
as a volunteer for the RSS, which he joined aged eight. In “The Modi Raj” a
fellow volunteer describes the young Mr Modi’s ideological fervour, saying
his “entire personality is the contribution of the RSS”. Mr Modi may now
conclude that he needs to do more to rally his base. He is adept at distracting
public attention from previous failings. “On the face of it, it looks to be a
political setback but in the last decade, we have seen him converting
adversities into opportunities and I will not be surprised if a similar attempt
is made,” says Sandeep Shastri, an expert on Indian politics.
Recent opinion polls suggest that the front-runner is Amit Shah, the 59-year-
old home minister and the BJP’s chief electoral strategist. Although overseeing
the security agencies gives him a big advantage, he is disliked by many in
the BJP and in business and will be associated with the disappointing election
result. The runner-up in the polls is Yogi Adityanath, a 51-year-old Hindu
priest who is the chief minister of UP and the party’s most vocal Muslim-
basher. But he is distrusted by many senior figures in the BJP and will be
tarnished by the BJP’s poor showing in his state.
One beneficiary could be Nitin Gadkari, the 67-year-old roads minister who
has ranked third as a potential successor in recent polls. As a Brahmin (the
highest caste), his popular appeal might be more limited than Mr Modi’s,
who comes from a lower caste. Mr Gadkari’s relative reticence on religion
and outspokenness on other issues is said to have irked the prime minister.
But he is popular with party members and business leaders. He is also
thought to have strong backing from the RSS, whose headquarters are in his
constituency.
In the end, Mr Modi may have to choose between the two political avatars
that have dominated his career. One is the “Emperor of Hindu Hearts” (as an
interviewee puts it in “The Modi Raj”), determined to impose a national
identity based on the faith of the nation’s majority. The other is the
“Development Man”, a moniker he adopted to boost his image as an
economic reformer bent on eradicating poverty and unleashing India’s
potential. Which incarnation Mr Modi will elevate is unclear. But his choice
will determine his legacy—and the future of India. ■
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disappointment-in-two-different-ways
Briefing | Anatomy of a dressing-down
“Ab ki baar, 400 paar.” This time, more than 400 seats. That was the
campaign slogan of the Bharatiya Janata Party (BJP) and its allies ahead of
India’s election. Yet in the end they fell far short, winning just 293. The BJP
itself suffered a 63-seat loss, taking its tally from 303 to 240, below the 272
needed for a majority. Where did it all go wrong?
It is not that the BJP’s popularity has fallen across the board. Its overall share
of the national vote declined only fractionally, from 37.3% to 36.5% (see
chart 1). In the south, in the past a weak spot for the BJP where it was hoping
to make headway this time, its vote share did in fact rise markedly. But in its
heartland, the Hindi-speaking states of the north, its vote share fell. And
whereas its increased support in the south was not enough to win it any extra
seats there, its decline in the north cost it dearly (see chart 2). In effect, the
BJP’s vote was unchanged, but much less efficiently distributed. In 2019 its
37% share of the vote won it 56% of the seats; this time a similar showing
yielded only 44% of seats.
The north accounts for the vast majority of the BJP’s underperformance. The
party won 55 fewer seats in the region than in 2019. Its steepest decline was
in Uttar Pradesh, the country’s biggest and most politically important state.
In 2019 the BJP swept 62 of the state’s 80 seats with 50% of the vote; this time
those figures fell to 33 and 41% respectively.
The increase in the BJP’s share of the vote in the south was substantial: it
jumped from 18% to 24%. This was the reflection of a determined push to
make the BJP a truly national party, with lots of spending and visits from
grandees devoted to the region. But under India’s first-past-the-post electoral
system, the BJP’s improved standing did not translate into a single extra seat.
Elsewhere the BJP’s performance was patchy. In the east, gains in the state of
Odisha were largely offset by losses in West Bengal. In the west the BJP’s
support held up in Gujarat but slipped in neighbouring Maharashtra. The
lack of a national trend may reflect the failure of the BJP to frame the election
around a single, galvanising theme. In 2019 Mr Modi had just sent fighter
jets to bomb Pakistan, in retaliation for a terrorist attack in the part that India
controls of the disputed territory of Kashmir. This show of force unleashed
nationalist fervour, which probably boosted the BJP across the country.
The anti-Muslim rhetoric which Mr Modi relied on this time does not seem
to have been as potent a rallying cry. Many voters, especially in rural areas,
named unemployment and inflation as the most pressing issues. What is
more, many lower-caste voters seem to have worried that the BJP might roll
back popular affirmative-action policies. At any rate, the BJP won only 44% of
rural seats, down from 58% in 2019. And in places with high numbers of
lower-caste voters, the BJP’s share of seats fell by nearly half from 50% in
2019.
The BJP may also have been punished for its no-holds-barred approach to
politics in several states. In Maharashtra it had conspired to seize control of
the state government in 2022 by persuading biddable factions in two big
local parties to defect. The two breakaway factions contested the election as
parties allied to the BJP—and were thumped. The BJP-led alliance lost more than
half its seats. Voters seemed to deliver a similar message in the state of
Jharkhand, where in January national authorities arrested Hemant Soren, the
chief minister and an opponent of the BJP. He claimed the corruption
allegations against him were politically motivated; the BJP retorted that his
government was a club of thieves. Voters seem to have taken his side: the BJP
lost three seats in the state.
The other big factor in the BJP’s downfall was the cannier tactics of the
opposition, led by the Congress party. Together with dozens of regional
parties, it formed the Indian National Developmental Inclusive Alliance
(INDIA). Before the election the big-tent group was derided as lacking identity,
organisation and political nous. But unlike in past elections, it struck
sensible seat-sharing deals that helped prevent the fracturing of the
opposition vote in states like Uttar Pradesh and Maharashtra. Even in places
without such arrangements, the BJP’s many rivals deferred to one another
more often, reducing the number of races where opposition parties competed
against one another. In West Bengal, for instance, Congress bowed out of
several races, helping a local party, the Trinamool Congress, to increase its
seat count to 29, up from 22. In general, Congress was rewarded for
narrowing its focus. In 2019 it contested in 423 seats but won only 55. This
time it competed in just 328 but managed to win 99, with a higher average
margin to boot.
But savvier tactics will get the opposition only so far. Congress’s overall
share of the vote barely rose, from 19.4% to 21%. The BJP remains far and
away India’s most popular party, with almost double Congress’s popular
support and more than double its seats. The BJP’s vote share this time was
higher than Congress has achieved in any election since 1989. Mr Modi may
have lost his air of invincibility, but his party retains a commanding position.
■
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away-from-the-bjp
United States
What Donald Trump’s 34 convictions mean for the presidential election
Why New York scrapped congestion charging
Biden’s border order: impractical policy, pragmatic politics
A new wave of stadium-building is busting budgets in America
Black baseball players of yore get their due, at last
American parents want their children to have phones in schools
Grown up in the USA
United States | Motive and intent
Donald Trump’s date with Manhattan Criminal Court is not over yet. Next
comes his punishment for falsifying business records in the first degree. In
days or weeks Mr Trump will sit for an interview with a probation officer, a
ritual that informs every sentence. Routine questions will be put to him.
How are his health and home life? Describe friends and associates—are any,
by chance, gang members? Then the kicker: does the defendant take
responsibility for his crimes?
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presidential poll tracker.
Joe Biden got a slight bump in several post-conviction polls, though this
may be fleeting and Mr Trump still leads. Really, it is too early to discern the
impact, and measuring small shifts accurately is hard. More noteworthy is
the Republicans’ capacity to rationalise behaviour that until recently they
had considered beyond the pale. The share who told YouGov, a pollster, that
a convicted felon should be allowed to serve as president rose from 17% to
58% between April and June (see chart).
Indeed, there are reasons to be sceptical that a trial about a pay-off to a porn
star will change many minds. The charges were minor and the story at its
centre was old news. Mr Trump has weathered an impeachment, controversy
over the storming of the Capitol, then another impeachment. Other events in
the five months before the election will overtake this: there will be debates,
conventions, a vice-presidential pick by Mr Trump. Not to mention the fact
that the Biden family faces its own legal travails. Hunter Biden, the
president’s son, is on trial in Delaware for allegedly lying about his drug use
while buying a handgun, and could go to prison if convicted.
Still, in a close election that will be decided in a few states, even slight shifts
matter. The verdict will strengthen Mr Biden’s case that the other guy is
unfit to lead. And Mr Trump’s remaining legal jeopardy is considerable and
could get worse.
Few embraced the notion that presidents can do no wrong while in office.
But a majority seemed to think that some presidential acts may be protected
from criminal prosecution even if others are not. If such a nuanced ruling
arrives this month, Tanya Chutkan, the judge presiding over that trial, may
need to hold hearings on which of Mr Trump’s alleged acts fall under the
immunity umbrella—delaying the legal reckoning past the election.
If that happens Mr Trump’s legal woes will no longer be front of mind for
undecided voters, who tend to tune in shortly before elections. That would
be a remarkable thing, given the number of times Mr Trump has been held
accountable in court. He has been found liable in civil cases for sexual
assault and defamation (twice), and for fraud at his business. His former
campaign chairman, two former White House advisers and his former chief
financial officer are convicted criminals too.
Instead voters will be treated to the spectacle of Hunter Biden’s second trial.
In September he will be in the dock again, for allegedly dodging taxes
between 2016 and 2019. House Republicans have tried and failed to show
that the president enabled or profited from his son’s business dealings. But
their relentless messaging to that effect has served its purpose. In a mid-May
poll by Marquette Law School, 46% of registered voters said the president
had done something illegal in relation to his son—not much lower than the
54% who said the same of Mr Trump in the Manhattan case.
For anyone even remotely plugged in, the notion that people are unaware of
the verdict is easy to forget and startling when it registers. Your
correspondent, who was in the court the whole way through the trial,
confronted the fact on a flight a day after the verdict came down. Seated
next to a pleasant woman from Nashville who works in advertising, he asked
if she was moved by the trial’s outcome. She chewed her mini-pretzels and
looked a little puzzled. Trial? Whose trial? ■
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convictions-mean-for-the-presidential-election
United States | Jam today
Her explanation for slamming on the brakes was weak. She claimed that
“circumstances have changed” and that $15 “can break the budget of a
working- or middle-class household”. But the city’s economy has improved
and the $15 fee has been in the works since last year. So why did she change
her mind?
“I just don’t get it,” says Sam Schwartz, better known as Gridlock Sam. He
unsuccessfully tried to introduce congestion pricing in the 1970s when he
was a city traffic engineer. He believes the governor’s decision shows where
the power in New York lies. “It’s not with the masses of people suffering
underground,” he says. It’s with “a handful of people who have a windshield
view of everything”.
“It is devastating news for transit riders and the environment,” says Kate
Slevin of the Regional Plan Association, which has been pushing for
congestion pricing for decades. “The economy really relies on traffic
moving, on transit working.” Traffic congestion already costs $20bn a year,
according to the Partnership for New York City, which represents big firms.
And the promise that air pollution will improve has now evaporated.
The “pause” will have an impact beyond New York. Boston, Chicago and
Los Angeles had all been thinking about how to use pricing to control
traffic. They may now be discouraged. “I’m sure William Vickrey is turning
over in his grave,” says Mr Schwartz. Vickrey, an economist, proposed
congestion pricing back in 1952. London, Milan and Singapore are among
the cities elsewhere that have introduced it. But in America pricing
proponents fear it could be decades before the idea gets out of gridlock. ■
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congestion-charging
United States | A border order
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presidential poll tracker.
Too bad it won’t work. There are three reasons why. First, it will certainly be
tied up in the courts. The order’s power is derived from an obscure statute
that gives presidents broad authority to suspend the entry of people who
“would be detrimental to the interests of the United States”. But applying
that notion to asylum contravenes both international and domestic laws,
which hold that asylum-seekers can lodge a claim no matter how they enter
the country. The courts blocked Mr Trump from barring asylum for those
who crossed the border illegally. A similar, extant Biden-administration rule
is in legal limbo.
Second, it is unclear how the order can be enforced. Some screenings the
government will not halt, such as determining whether migrants would be
subject to persecution or torture if returned, though the order does raise the
standard to be considered for such protections. Turning migrants back into
Mexico depends on Mexican co-operation. And though Mr Biden has
increased deportations, they are a logistical nightmare. Not every country
accepts deportees. Venezuelans have made up 12% of migrant encounters at
the southern border this fiscal year. Yet Venezuela stopped allowing
deportation flights when relations with America soured.
Last, the surge in migrant arrests under Title 42, a public-health measure
brought in during the pandemic that allowed America to quickly return
migrants to Mexico, should serve as a warning. Migrants just tried to cross
again—and again. Rather than reducing Border Patrol’s workload, the
executive order may inflate it. To try to prevent this, the order threatens
migrants who are removed with a five-year ban on re-entry and possible
criminal prosecution if they try to cross again.
So why issue an order at all? Mr Biden may hope that tough talk deters
migrants from making the journey. That could happen. But he is also
thinking about the election. The bipartisan border bill failed because
Republicans wanted to be able to campaign on “Biden’s border chaos”,
rather than fix the problem. That left the president with few options. Just
32% of registered voters polled in May by YouGov and The Economist
approve of Mr Biden’s handling of immigration. He is trailing Mr Trump by
nearly five points in Arizona and six in Nevada, swing states where the
border feels more visceral. If voters deem the order an earnest attempt to
solve the issue, then Mr Biden is betting that impractical policy will at least
make good politics.■
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policy-pragmatic-politics
United States | Fields of dreams
Stadium construction tends to come in waves. Most venues are used for
about 30 years before their owners look for new digs. With many facilities
now at that age, professional sports teams across America are getting
restless. In baseball, Tampa Bay is building a new stadium, Cleveland is
undertaking renovations and Oakland is hoping to move to Las Vegas. In
American football, Buffalo and Nashville are in the throes of giant
construction projects. In basketball, Los Angeles is building a glitzy new
arena, and Philadelphia and Oklahoma City hope to follow. The list goes on.
The economic case for stadiums rests on three pillars: they create thousands
of jobs; they unleash a steady stream of consumption; and they serve as
anchors for thriving neighbourhoods. But a half-century of evidence
suggests that the three pillars are actually rather wobbly.
Does the “no” vote in Kansas City suggest that people are getting tired of
stadium subsidies? Probably not. Some disliked the plan to build a new
stadium in a district of old warehouses converted into art galleries and hip
restaurants. “There was an immediate backlash from the businesses that had
built their brands and their clientele here,” says Kate Blackman, a manager
at The Pairing, a wine store in the area. Others were upset that, along with a
new home for the Royals, the money would have gone to renovations of the
stadium used by the Chiefs, the city’s football team, including sprucing up VIP
suites. “Voters were receptive to a populist message that people who have a
lot should not be taking from people who have little,” says Tim Smith, a
leader of the “no” campaign.
State lawmakers in Kansas are now trying to concoct a funding plan to lure
the Royals and the Chiefs to their side of the border. In Virginia opposition
within the state Senate scuppered the governor’s plan to build an arena for
the basketball and hockey teams that play in Washington, DC. DC’s municipal
council stepped in with $515m to refurbish their existing arena. In Chicago a
proposed lakefront stadium for the city’s football team has run into political
hurdles, but the project may well go ahead on a different site.
The root of the problem is fandom itself. Local politicians craving re-
election do not want to be known for presiding over the exodus of their
city’s beloved team. This gives owners leverage. In Kansas City, a
commonly heard view is that if the stadium-tax vote had cut out the Royals
and just been about the Chiefs—fresh from back-to-back Super Bowl
victories—things would have turned out differently. “It absolutely would
have passed,” says Ms Blackman. Love of sports, like many passions, is not
reducible to rational calculations. ■
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is-busting-budgets-in-america
United States | Home, at last
Last week MLB acknowledged the statistics of more than 2,300 players who
competed in the Negro Leagues between 1920 and 1948. That changed some
long-held records. Gibson is now the leader in all-time career batting
average and slugging percentage, overtaking Ty Cobb and Ruth.
“It is long overdue recognition,” says Mr Kendrick. The players knew how
good they were—as did MLB. Black teams won the majority of the exhibition
games in which great black and white players went head to head.
On June 20th MLB will salute the Negro League in Rickwood Field, once
home to the Birmingham Black Barons. The San Francisco Giants and the St
Louis Cardinals will don Negro League uniforms in a televised game, which
will also honour Willie Mays, a Hall of Famer who began his professional
career with the Barons. Gibson never got to play in MLB. He died a few
months before Jackie Robinson broke the colour barrier in 1947. ■
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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.
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get-their-due-at-last
United States | Hung up
“It’s like they don’t trust us,” says Eva King, a 14-year-old pupil at Alice
Deal Middle School in Washington, DC. She is standing outside the school
during dismissal with two others who nod their heads and laugh in
agreement. Deal’s administration has banned mobile phones during the
entire school day. Pupils must store their devices inside Yondr pouches, grey
padded cases that supposedly can be opened only with a special tool. The
adults unlock the pouches with special magnets as pupils leave for the day.
Unsurprisingly, pupils have hacked the system. (“What do you expect?” Eva
says. “We’re middle-schoolers.”) The girls recite a list of workarounds.
Those magnets have become hot commodities, and a few have gone missing.
Pupils have been seen banging pouches open in the toilets. Other pupils have
faulty cases that no longer lock but have kept that information to themselves.
The girls say that since phones have become a forbidden fruit, pupils only
crave them more. They hope their school will reverse course after the
summer break.
Debates about teenagers’ access to phones and their use in schools have
heated up lately. Some state legislatures in America are passing laws to stop
phones from being used in classrooms, without removing them from schools
altogether. A popular book published in March, “The Anxious Generation”,
by Jonathan Haidt, has called fresh attention to evidence that social media,
mostly accessed through smartphones, may be to blame for a sharp rise in
anxiety, depression and self-harm among young people today.
Some researchers are unconvinced that phones are causing mental illness.
Although America and Britain have reported a rise in problems as social-
media use has surged, not all rich countries have had similarly correlated
increases. “Adolescence is influenced by multiple things,” says Margarita
Panayiotou, a researcher at the University of Manchester. “It would be
unrealistic to expect that one thing—social media—is driving adolescent
mental health.”
The devices are plainly disruptive. Pupils can receive more than 50
notifications during a school day, according to a study of 203 children by
Common Sense Media, a non-profit group based in San Francisco. Teachers
complain that pupils watch YouTube and use other apps in class. Phones can
be instruments of bullying, and pupils have been secretly recorded while
using the toilets or undressing in locker rooms. These days, the notorious
schoolyard fight can be organised by phone.
Hung up
It is also clear that mobile phones can undermine learning. Several studies
have found that their use decreases concentration in school, and the phones
do not only affect the user. “There’s a second-hand-smoke effect,” says
Sabine Polak, a founder of the Phone-Free Schools Movement, another
advocacy group. Even if a child does not have a phone, they are still affected
by others using them. The devices are stressful for teachers, too. They must
police their use, ensuring that pupils are not sneakily using phones under
their desks or during long toilet-and-Netflix breaks.
An all-day ban is one way to avoid this, but as Deal’s pupils can testify, it is
also difficult to enforce. Teachers must ensure that each child on arrival has
placed the phone in the pouch and secured it. That adds one more task to a
teacher’s day that does not involve instruction. Alternatives must be found
for those pupils who forget their pouches, a predictable problem at any
school full of teenagers.
New state laws seek to enforce phone-free classrooms while also keeping
pupils and parents connected. Florida’s governor, Ron DeSantis, signed a
law last year that bans the use of mobile phones by pupils in class, and a
similar law in Indiana is due to go into effect in July. Other states are
considering bills along the same lines. These moves are distinct from the
more ubiquitous push for legislation aimed at protecting children from social
media (according to the National Conference of State Legislatures, 30 states
and Puerto Rico are debating laws designed to protect children on the
internet).
The answer for parents in America is to agree to delay giving their children a
smartphone and for schools to support them, argues Kim Whitman of the
Phone-Free Schools Movement. For communication and keeping tabs on
their children, parents could use simpler devices, such as flip phones, smart
watches or tracking devices. Overall Ms Whitman wishes that parents who
want instant communication with their children would relax. “We all
survived for a very long time and functioned absolutely fine without having
a phone and without being able to have instant access to our parents,” she
notes. ■
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children-to-have-phones-in-schools
United States | Lexington
First, Democratic politicians also bore responsibility for many of the failures
whose consequences Mr Springsteen lamented, starting with the war in
Vietnam. Second, though few would believe that Ronald Reagan, then the
president, parsed the lyrics before citing Mr Springsteen as evidence of
American greatness, such ignorance cannot explain the enduring reverence
for Mr Springsteen by some conservatives, long after he made his partisan
leaning clear. (Chris Christie, a former governor of New Jersey, has attended
more than 150 of his concerts.) Most important, this political summary of
the music obscures Mr Springsteen’s own sophistication. The album was full
of despair, but it was not despairing. It was heartsore about America but still
patriotic.
Mr Springsteen told a radio interviewer, Terry Gross, in 2005, that his music
had “often been a football”. Referring to the blaring refrain, “Born in the
USA!”, that led some to hear an anthem to America as it was, he said: “In my
songs, the spiritual part, the hope part, is in the choruses.” But “the details of
what the song is moving to transcend are almost always contained in the
verses.” Mr Springsteen was doing something American partisans are losing
the habit of—reckoning with ideas that were in tension with each other. And
he believed in the power of rock music to draw people together, according to
a new book about the album, “There Was Nothing You Could Do”, by
Steven Hyden, a rock critic.
“In the mid-eighties, a pop star could still position himself ‘above’ politics
and exist as a common touchstone that people with opposing ideologies
could enjoy,” Mr Hyden writes. Those scare quotes suggest two questions
relevant to today. Is it possible any more for a cultural figure to stand
“above” politics? If so, would that even be the right thing to do?
The answer to the first question, Mr Hyden argues, is no. Taylor Swift is a
star whose magnitude exceeds Mr Springsteen’s. She might better be
compared to the artist who had the bestselling album of 1984—indeed, of all
time—“Thriller”. As Michael Jackson did, Ms Swift tends to dwell on the
joyful and painful consequences of choices made within relationships more
than on the consequences for those relationships of broader socioeconomic
forces. However, after not endorsing a candidate for president in the 2016
election, Ms Swift faced severe criticism, and she later made her partisan
preferences clear.
That kind of empathy may come more easily when people cannot reflexively
supply a partisan answer to all the hard questions about why American
policymaking is failing those who need its support most. When executed
with Mr Springsteen’s generous spirit, sidestepping the partisan fray was no
retreat from politics, no surrender to cynicism—to invoke another song from
the album, one that Mr Springsteen himself, in his endless self-doubt and
quest to get things right, worried was too simplistic about all the
compromises that come with being a grown-up in America. ■
Few doubted that Claudia Sheinbaum would win Mexico’s election on June
2nd, and become the country’s first female president. But the landslide
voters delivered for her and Morena, the ruling party, surpassed
expectations. She got at least 58% of the vote, a share larger than that won in
2018 by her predecessor, Andrés Manuel López Obrador. Morena’s coalition
will almost certainly obtain a supermajority in Congress. This spells danger:
even before she takes office on October 1st, her ruling party will be able to
shape Mexico, even by altering the constitution.
Congress takes its seats one month before the new president takes office, so
Mr López Obrador will have a chance to push through a package of 20
constitutional changes himself. He wants to enshrine animal welfare and a
minimum wage pegged ahead of inflation. Supreme Court judges and the
heads of the electoral body would be appointed by popular vote. A raft of
autonomous agencies would be abolished. Control of the federal police
would pass to the defence ministry, which the Supreme Court had ruled
unconstitutional.
The SAN JOSÉ was sailing for Cartagena, on Colombia’s Caribbean coast, when
in 1708 a squadron of British warships set upon the galleon and she sank.
She was carrying riches gathered in the New World back to Spain to fund its
war of succession: emeralds, porcelain of the Qing dynasty, gold coins and
silver from Potosí, modern-day Bolivia. With a present-day value estimated
at many billions of dollars, the San José is the world’s most valuable wreck.
Colombia’s navy found it in 2015 with the help of a firm called Maritime
Archaeology Consultants. The discovery prompted a bitter row over the
wreck’s ownership. Colombia says the ship is protected as an “inalienable
item of cultural interest” because it lies in its territorial waters. Spain argues
that it owns the vessel because international law recognises a wreck like the
San José as the property of the state whose flag it flew. The Qhara Qhara, an
indigenous Bolivian group, says the precious metals on board came from
their land, a claim that Colombia’s president, Gustavo Petro, acknowledged
last year.
Colombia has recently moved one step closer to revealing the ship’s secrets.
Its researchers have sent a remotely operated vehicle (ROV) down to
photograph, scan and study the San José, which is mostly buried in the
seabed 600 metres beneath the waves. On June 5th Juan David Correa,
Colombia’s culture minister, said they found several anchors and confirmed
that the wreck has not been looted. It is the first “very successful” phase of a
government-run mission that may last for years. But Mr Petro is in a hurry.
He wants grand results under his presidency, which ends in 2026. Like other
leftist leaders in Latin America, he wants to “decolonise culture”.
Mr Correa is trying to calm the storm. He insists his country is not after the
gold. “This is not an excavation, it is an exploration,” he says. Speeches
about the wreck by government officials are littered with the phrase “non-
intrusive investigation”. The scientists will intervene only when they have a
better picture of what is down there, says Dr Alhena Caicedo, director of
Colombia’s Institute of Anthropology and History. After studying the
footage from the ROV, they will lift samples to the surface and send them to
laboratories in Cartagena that have been kitted out by Colombia’s maritime
authorities.
Experts doubt that Colombia can pull off such a feat without international
support and technology. None of the worthy archaeologists involved has
experience of deep-water sites, says Rodrigo Pacheco-Ruiz, who has
explored shipwrecks in the Black Sea. Juan Guillermo Martín Rincón, a
Colombian archaeologist, worries that national pride may be trumping
science. The government wants to show “self-sufficiency using phrases such
as ‘decolonial archaeology’ or ‘south-south co-operation’”, he says. “That is
no good for science.”
Deep-sea archaeology is expensive. Colombia has already put $4.5m into the
survey of the San José, the most the government has ever stumped up for
archaeology. But that is insufficient for the kind of project Colombian
officials envisage. For comparison, the Black Sea Maritime Archaeology
Project on which Mr Pacheco-Ruiz worked cost $63m over four years. It
took a decade for scientists to haul the 17th century Vasa warship out of the
Baltic Sea.
Spain and Colombia may well agree to share whatever comes up from the
San José, provided nothing is sold. Such a rapprochement might help
Colombia to persuade Spain to give back artefacts such as the gold
Quimbaya statues, suggests Pierre Losson, who studies Latin American
culture. But if the San José is to facilitate this detente cash will be needed,
probably from Colombian-government coffers, while the treasure that went
down with the ship is dutifully ignored. ■
She is, or was, a resident of Gardi Sugdub, a tiny coral island about a
kilometre off the northern coast of Panama. On June 3rd the Panamanian
government began moving 300 families from the island to new government-
built housing on the mainland. A changing climate and rising seas are slowly
swamping the island, and 37 other inhabited islands nearby, most of which
lie less than one metre above sea level. That level is rising 3.4 millimetres
every year. Storms are becoming heavier and more frequent. Steve Paton of
the Smithsonian Tropical Research Institute in Panama City says the islands
will be uninhabitable by the end of the century.
A young boy holds an injured bird he found on the main street of Gardi
Sugdub. When the sun goes down and the heat softens, the streets of the
island fill with life, especially with the children who have already finished
their classes.
Gardi Sugdub’s families are the first to move. More may follow if things go
well. “This is an historic event,” says Rogelio Paredes, Panama’s housing
minister. “It’s the first time in Latin America that, as a result of climate
change, a whole community has been moved to a new place. The eyes of the
world are on Gardi Sugdub.”
But the notion of climate change driving unfortunate people from their
homes is simplistic. Gardi Sugdub’s older residents have certainly noticed
the creeping effects of warming; rainy-season flooding has become more
frequent, and waters now lap a little higher on the ankle. But for the past 20
years their main concern has been sanitation, not submersion. A growing
population meant several families began to live in each of the the narrow,
reed-walled houses. Outdoor space in which children could play was
squeezed out. Water, supplied by a pipe from a river on the mainland, was
scarce and intermittent. The island’s lavatories are shacks at the end of piers
which drop directly into the water below.
José Davis, the island’s octogenarian leader, says the community first began
planning a move in the 1990s. The idea received financial and technical
support from the Inter-American Development Bank as a climate-migration
project in 2018. The government then tendered contracts for the construction
of the new settlement on the mainland.
The new village, christened Isber Yala after the local loquat trees, was built
on farmland owned by the community, half an hour from Gardi Sugdub by
boat and road. Three hundred beige plastic houses with tiled roofs sit in a
grid pattern. Each has two bedrooms, a bathroom with running water, and an
ample back garden.
Marcos Suira, head of architecture at the housing ministry, stresses that Isber
Yala is the first project of its kind. With bigger budgets, more sophisticated
housing developments could come later.
But the relocating residents don’t seem to mind. Within minutes of arriving
at Isber Yala they had strung up hammocks, the Guna’s preferred beds, from
the houses’ metal beams.
“It’s pretty, it’s bigger than I’m used to. I love it,” says Yany Prestán, who is
46. On Gardi Sugdub she shared a house with four families; there was little
privacy and frequent arguments over food and money. She wants to build a
kitchen on the porch and two bedrooms in the garden to house her family of
seven. The narrow patch of grass between the pavement and the drainage
channel is perfect for a flowerbed.
One street over, 45-year-old Genaro Fernandez arrived early to build a reed
fence round the perimeter of his plot. Shoots of plantain and manioc sprout
from the ground.
But next to it is a large, modern school which will be open by the end of the
year. With air-conditioned classrooms, dormitories and a soccer pitch, the
school is a big draw for the new residents. Classes will be taught both in
Spanish and Guna.
Two Kuna women talking with a member of the National Civil Protection
System of Panama (SINAPROC) at the Niga Kantule dock, Gunayala. On
June 3rd, the official transfer of the first 50 families to the Isberyala
community began.
Florina Chieri Lopez, 60, and her daughter Luzdalia Lopez Bonilla walk on
the streets of the Isberyala community on the way to their new home. This
family was one of the first to move, on June 2nd, a day before the authorities
organised the official transfer of the first 50 families.
The Guna do not feel that the move will cause a major cultural dislocation
either. They lived on the mainland 200 years ago, before moving to the
islands to escape disease and conflict with Spanish colonists. Many
ceremonial songs refer to the rivers and mountains of the mainland.
According to the UN, some 41m people in Latin America and the Caribbean
live in coastal areas that are exposed to life-threatening storms and flooding.
The Gardi Sugdub move looks like the sort of managed retreat that has a
good chance of succeeding, largely because it serves other development
goals, such as improved housing, sanitation and schooling. Sabrina Juran of
the UN says managed-retreat programmes are more likely to succeed when
they include communities in the decision-making, thereby meeting
numerous needs.
To and fro
After some initial scepticism, most on Gardi Sugdub accept that the waves
will eventually claim their homes. But they will not abandon their island yet.
Some of the new mainlanders say they intend to visit each weekend. Others
say they will let their friends and cousins from crowded neighbouring
islands string their hammocks there. One building on the island is being
renovated. Its 64-year-old owner, Gustavo Denis, reckons that, with the
competition moving to the mainland, it’s the perfect time to open a new
shop. ■
India’s politicians clearly believe that the country’s poor are still numerous
enough to sway elections. But what do its statisticians think? In 1990 the
World Bank tried to put a number on the kind of deprivation Nehru
described. Inspired by national poverty lines in India and six other poor
countries, the bank defined poverty as living on less than a dollar a day. That
line has since been revised to $2.15 a day at the prices prevailing in 2017.
The bank calculates that roughly 2bn people lived below this line in 1990,
once you allow for differences in prices across countries and time. Most of
these unfortunates (roughly 1.2bn) lived in two countries: India and China.
If the new figures are right, about 95% of the world’s remaining poor live
outside China and India. The largest number are in Congo, Nigeria and other
countries south of the Sahara. This progress resonates far beyond the people
who directly benefit from it. Advances against poverty make for economic
pride and political legitimacy. The changing map of deprivation could shift
some ideological co-ordinates, too.
Poverty is political, even in China. Its eradication, say the country’s leaders,
is proof of the wisdom of party rule. China’s success has roots in the ruthless
land reform of the 1950s as well as widespread investment in literacy and
primary education. It gained pace in the 1980s as collective farms were
dismantled, agricultural prices improved and village enterprises flourished.
“Poverty is not socialism,” declared Deng Xiaoping, then China’s leader. In
1986 a “leading group” of officials introduced China’s first poverty line and
identified almost 700 counties being left behind. By 2001 the government
could claim to have met basic needs, such as food and clothing, for more
than 200m poor people in little over 20 years. This “fully reflects the
superiority of the socialist system with Chinese characteristics”, it said.
In the 2000s China rebuilt rural health care, cut agricultural taxes and
introduced rural pensions. Then in 2013 it adopted what it called “precise”
poverty alleviation, aimed at poor people rather than places. It deployed
800,000 officials to build a database of almost 90m impecunious souls.
Eradicating their poverty was one of the “decisive battles” Xi Jinping,
China’s new ruler, resolved to win by 2021, the centenary of the party’s
founding.
Boom boom
Politics aside, the country’s success against poverty has added lustre to its
growth model. It combined smallholder agriculture, rapid urbanisation and
export-led manufacturing. As farms became more efficient, millions of
peasants could migrate from the overmanned countryside to the cities. Many
found work in coastal factories, which attracted foreign capital and served
global customers.
On the face of it, India’s progress against poverty challenges both these
narratives. In glaring contrast to China, the country is an impatient, fractious
democracy. Its political system imposes many competing claims on the state
and a similar number of constraints on its action. In 2014 Mr Modi’s BJP was
the first party in three decades to win a majority by itself. After its less
convincing performance this year it will have to govern in a potentially
messy coalition that will include several former opponents.
India, like China, has profited from globalisation. But its most eye-catching
successes have been in exporting services, not goods. Thanks to patchy
education, onerous labour laws and adversarial unions, India’s unskilled
labour is abundant but not cheap. As a result, Indian manufacturing has a lot
of technology and surprisingly few workers. In a survey of over 10,000
Indians by the Centre for the Study of Developing Societies, a research
institute, 62% said finding jobs had become harder in the past five years.
That concern may have been one reason the BJP lost its majority in the
election.
When the line was first drawn, the World Bank provided several examples of
the kind of person it was meant to capture. They included landless labourers
eating just two meals a day, sleeping on a mud floor, under burlap sacks,
with dried palm leaves serving as walls. When India’s politicians talk of “the
poor”, by contrast, they have in mind a much wider range of income
brackets. Over 800m people are eligible for free food. That could include
people living on more than $5 a day. In America, by comparison, an
individual earning as much as $30 a day (in 2017 dollars) falls below the
official poverty line.
The notion that inequality has narrowed has attracted particular scorn. Taken
at face value, the February figures suggest that in India’s cities the
consumption of the richest tenth has grown by only 1% a year (even as the
consumption of the poorest tenth grew several times faster). This pattern
does not pass the smell test. “It is hard to associate [it] with the development
experience of this country over the last decade”, according to S.
Subramanian, an economist in Chennai.
It did introduce dibao cash payments for the urban poor in 1997 and their
counterparts in the countryside in 2007. But coverage was limited. One
study found that it missed over 80% of the rural poor in 2013. Adding
together cash transfers, in-kind transfers and fee waivers, China spent just
0.76% of its GDP on social-safety nets in 2014, according to a World Bank
study.
How does that compare with India’s welfare programmes? The same study
reckons India spent over 1.5% of its GDP on them at that time, including
public-works projects and school feeding schemes, as well as transfers and
waivers. A more recent estimate puts India’s welfare spending at 1.8% of GDP,
including direct cash payments to farmers and others, facilitated by the
spread of no-frills bank accounts under one of Mr Modi’s signature schemes.
Unheralded success
But India’s efforts at redistribution have still made a difference to its poverty
figures. The government’s cash payments to small farmers would have
appeared in the statistics, assuming they were spent. The same is true of
subsidies to help poor women buy gas cylinders. One of the most prominent
interventions is a workfare programme, known as the National Rural
Employment Guarantee Act, which offers 100 days of minimum-wage work
per year to rural households, building dams and digging ditches. Spending
on this programme, which spiked during the pandemic, was budgeted at
about 0.3% of GDP last year.
Critics worry that it has crowded out private employment. But Karthik
Muralidharan of the University of California, San Diego, and his co-authors
have shown that the scheme could raise both wages and jobs in the
surrounding labour market, where employers had earlier had an incentive to
underpay their workers, even if that meant attracting fewer of them.
The previous government tried to enshrine the poor’s claims on the state as
“rights”—including rights to employment, food, information and education.
Mr Modi has replaced that approach with something more transactional. He
has made use of India’s newly direct welfare machinery to distribute goodies
to the needy in his own name. That has made him popular. But it does not
make his party unique or indispensable. The BJP has no comparative
advantage in doling out welfare. Any leader can offer to throw money
around: hence Mr Gandhi’s gigantic fiscal “splurges”. Insofar as the BJP’s
appeal rests on its generosity with taxpayers’ money, it can be easily outbid
by other parties.
What about the future of India’s poverty fight? It took China seven years to
remove the final 2% of its population from poverty. It increased handouts to
the worst-off households. But it did not entirely dispense with its
“productivist” approach. Local officials found jobs for the poor in
warehouses, agribusiness, security or sanitation. In one “model” community
in Shaanxi province, poor households worked in a dried-tofu factory,
according to research by Sarah Rogers of the University of Melbourne and
her colleagues.
China’s government also tried to remove the chronically destitute from the
social and geographical circumstances that kept them poor. This entailed a
huge bureaucratic effort—monitoring, relocating, training—and a degree of
bossiness that sometimes bordered on coercion. In 2016-20, China resettled
9.6m people, severing ties to the land in return for modern housing in closer
reach of public services. “My kids tell me to move,” an elderly woman in a
mountain village told Ms Rogers and her colleagues. “I still don’t want to
move out. Here it’s cool, the air is good.”
India, for its part, has adopted a new measure of its progress which better
reflects the dizzying variety of schemes it offers the poor. Its
“multidimensional” poverty index, which it embraced in 2021, combines a
dozen indicators, spanning health and education as well as material assets,
such as animal carts and refrigerators.
qualified as poor last year. That is a lot of voters for any new coalition
government to please. ■
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the-fight-against-poverty
Asia | Old ghosts, new nightmare
THE GUNMEN came for Abu Bakkar, a young Rohingya man, while he
was hanging out with friends in the Kutupalong complex of refugee camps
outside Cox’s Bazar in Bangladesh, close to the border with Myanmar. “You
all have to go with us now,” they said. Out of fear, Mr Bakkar (not his real
name) followed. The gunmen, he says, were members of the Rohingya
Solidarity Organisation (RSO), an insurgent group that has sway in the camps.
They told him he would need to “support” Myanmar’s armed forces. These
are controlled by the junta that seized power in February 2021 by ousting
Myanmar’s democratic government.
Mr Bakkar is one of many Rohingya, a persecuted Muslim minority people
from Myanmar’s Rakhine state, who say they are being pulled into
Myanmar’s spreading civil war. As the junta has lost ground to ethnic
groups challenging its control of the country, the army appears to have
turned to recruiting people it once massacred in an attempt to replenish its
forces. It may also be trying to stir inter-ethnic tensions to help its campaign
in places such as Rakhine, where its losses have been grievous. Even where
it is doing neither, Rohingya with nowhere to run are caught in the middle of
a spreading civil war.
One reason is the junta’s increasing desperation. In recent months the AA has
seized control of at least nine of Rakhine’s 17 townships as well as most of
the areas bordering Bangladesh. Myanmar’s army, which has also faced
losses elsewhere in the country, is demoralised and depleted, including from
desertions. In February General Min Aung Hlaing, the junta’s leader,
activated a dormant conscription law to replenish troop numbers. Though
the law applies only to those with Burmese citizenship, which most
Rohingya have long been denied, they say they are being recruited anyway.
The bitter irony is not lost on them: only seven years ago, the same armed
forces that are now press-ganging them killed and raped thousands of their
people and forced around 750,000 of them to flee to Bangladesh. The UN
has called those events crimes against humanity.
The junta gets help from accomplices in the camps such as the RSO and other
small-time militias, which have grown into powerful rival gangs by running
extortion rackets and smuggling drugs. They have long terrorised the
Kutupalong camps. The RSO denies involvement in forced conscription. Yet in
late May two men were shot dead after they refused to come with the RSO,
according to their families. James Rodehaver of the UN reports instances of
people swept up at night and taken away in hoods, their hands bound.
Weak security in the camps is a boon for the gangs. Bangladesh’s Armed
Police Battalion, which is charged with maintaining it, is failing to do its job,
especially at night. It has links with criminal gangs. (Bangladesh’s
government denies this.)
Rohingya have also been recruited in Rakhine state itself, where around
600,000 still live, some in camps. They report being threatened or lured by
the junta with false promises of citizenship or extra food. At least 60 have
been killed fighting, says Nay San Lwin, a Rohingya civic activist.
Rohingya say that the AA also targets them for conscription and extortion in
Rakhine. (The AA denies this.) Even when not conscripted, Rohingya are
caught in fighting between the junta and the AA, with both groups blaming the
other for recent burnings of Rohingya homes.
The junta may also be aiming to stir ethnic tensions between Rohingya and
Rakhine, who are the majority in the state and dominate the AA. That is
working, argues Thomas Kean of the International Crisis Group, a conflict-
prevention outfit. The AA, though it denies abuses against Rohingya,
nevertheless refuses to recognise them as citizens of Myanmar, calling them
“Bengalis”. For the Rohingya, the fighting in Rakhine is a new nightmare
that contains the same old ghosts. ■
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myanmars-civil-war
Asia | Banyan
For now the contest is in the grey zone, between peace and war. China’s
coastguard regularly harasses Filipino vessels with water cannon near
disputed shoals in the South China Sea. But at the Shangri-La Dialogue, an
annual defence talkfest in Singapore that ended on June 2nd, China got the
political blasting.
For all its economic and military power, China is hobbled by ideology.
Unwilling to give an inch on dubious “historic rights”, even in minor shoals,
China disappointed Mr Duterte and pushed Mr Marcos into America’s arms.
Bewildered Chinese officials seek conspiracies to explain this turn of events.
They should instead look in the mirror.
Yet uncertainties abound. America cannot be sure which allies will really
fight. Mr Marcos’s successor could flip back to China. And Donald Trump,
should he be elected president this year, could throw it all away in his
disdain for needy American allies. After all, China has shown how easy it is
to lose friends.■
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cannon-on-china
China
Watch out Beijing, China’s second-tier cities are on the up
Changes to China’s gaokao exam are about politics, not fairness
It’s a bird, it’s a plane…it’s a Chinese flying car
China unites America and Europe in alarm
China | The bright side of China
The list of risers includes places from across China. In the west, Xi’an,
Chengdu and Chongqing are attracting young tech workers and social-media
influencers. In the centre, Wuhan, Hefei and Changsha are home to
entertainment companies and electric-vehicle manufacturers. Nanjing and
Hangzhou in the Yangzi river delta feature venture-capital firms and
startups. Some people refer to these places (and others) as “new first-tier” or
“1.5-tier” cities. But we’ll call them the “great eight”—a group that is
gaining ground on the “flagging four” of old.
These eight tend to have fewer people than the four behemoths. But their
populations are growing faster (see chart 1). China’s overall birth rate has
fallen to below replacement level, which means its population of 1.4bn is
shrinking. The number of people in first-tier cities has grown by just 1.7%
on average over the past four years. In the great eight there was growth of
18%. These cities are already giants by Western standards, with an average
population of around 10m.
While some of their new inhabitants come from rural areas, many migrate
from other cities. A recent survey by Zhaopin, a recruitment company, found
that white-collar workers preferred leading second-tier cities to bigger or
smaller alternatives. One reason is the infrastructure, which is already high-
quality—and improving. Dotted with skyscrapers, these cities feature four of
the ten tallest buildings under construction worldwide. Over the past five
years, the total length of their subway networks has doubled.
As Beijing and Shanghai grew, in some ways they became less welcoming
to outsiders. Both cities strictly enforce China’s hukou system of household
registration, excluding non-locals from schools and city pension schemes.
Even if newcomers could settle down, they would have trouble affording a
home. In first-tier cities median house prices are typically 30 to 40 times
higher than median incomes.
In contrast, most second-tier cities have flung open their doors by largely
scrapping hukou restrictions. They even offer incentives to come. Changsha
is giving “national top talents” a 1.5m-yuan ($200,000) reward to move
there. Hangzhou is offering startup founders with PhDs up to 15m yuan in
funding. Those who do not qualify for such payments may still see a
financial benefit in moving to the second tier, where housing is much more
affordable (see map).
This new migratory flow has coincided with changing attitudes among
young Chinese. Salaries tend to be higher in Beijing and Shanghai, but these
days many youngsters are prioritising quality of life. Whereas first-tier cities
have become associated with the “996” culture—meaning a work schedule
of 9am to 9pm, six days a week—jobs in leading second-tier cities tend to
offer a better work-life balance.
Just ask Gong Zhenghua, a young tech worker who moved to Chengdu after
years in Guangzhou and Shanghai. His new home offers shady tree-lined
canals and spicy hotpot restaurants. His wages are lower, but he can afford
to rent an apartment that is three times bigger than his previous one. He is
enjoying life more. Mr Gong hopes to buy a house and start a family soon,
goals which seemed unfeasible in the first-tier cities.
Whereas Mr Gong had to move in order to improve his life, others are
simply staying put. Cities from the great eight often top rankings of
“stickiness” for university graduates, or the proportion who choose to work
in the city where they studied. That, in turn, adds to these cities’ dynamism.
All of them have universities that rank in the top 5% in China.
The great eight account for about a tenth of China’s GDP, which grew at an
average annual rate of 6% over the past decade. The growth rate in first-tier
cities was about that, too. But the leading second-tier cities sped ahead.
Their economies grew by 7.2% per year on average (see chart 2).
Other members of the great eight are charting their own course. One such
city is Chengdu. Economists often criticise China for relying too much on
manufacturing and not rebalancing towards higher-value services and
consumption. China’s leaders, who like factories, tend to ignore such advice.
But Chengdu has embraced it. Over the past decade the service sector’s
share of GDP in the city has risen from 50% to 68% (the national average is
55%). Chengdu’s service firms are growing more than twice as fast as its
manufacturing ones. It is a showcase for how China’s cities can build a more
balanced economy, says Robin Xing of Morgan Stanley, a bank.
Cultivating the softer side of the economy also has cultural benefits.
Chengdu’s music industry is booming thanks to a thriving hip-hop scene—
and government support. Officials have a five-year plan for the industry,
which they hope will be worth 100bn yuan by 2025. The city also attracts
throngs of tourists and internet celebrities, who film themselves eating,
drinking and dancing. When your correspondent visited Chengdu’s bar
district—strictly for the purpose of reporting—it was far busier than the
most popular drinking area in Beijing. A number of cities in the great eight
have a more liberal vibe than those elsewhere in China.
But they also have disadvantages. Being inland, they will always struggle to
attract more investment than China’s coastal cities. Exporters are more likely
to build factories near ports. Most of those in the second tier are also still
behind in the services they offer. Some businessmen complain that the
officials on the other end of government hotlines in second-tier cities are less
responsive than those in the first tier. Executives would still rather send their
children to school in Beijing or Shanghai.
In order to continue their ascent, the great eight must keep investing wisely
in themselves. Tianjin offers a cautionary tale of how it could all go wrong.
The once-vibrant city near Beijing has a busy port and good universities. But
corrupt officials wasted funds on a new financial district and a high-tech
zone, both of which remained empty for years. Rising labour costs took
away its advantage in manufacturing. Since 2017 Tianjin municipality has
gone from being China’s sixth-biggest city by GDP to its 11th. Its population is
shrinking. The great eight have come a long way. But there is no guarantee
that they will continue to rise. ■
Starting on June 7th millions of young people will sit for the world’s largest
academic test. China’s university-entrance exam, known as the gaokao, is
punishingly difficult. Students spend endless hours cramming for it. But it is
also meant to be meritocratic. Work hard, score well and, no matter what
your social background, you can get into a good college.
Yet the test is administered in ways that do not seem so meritocratic. Local
governments are allowed to produce their own versions of the gaokao, with
different questions and scoring methods. Students in elite cities, such as
Beijing and Shanghai, enjoy an easier route into local universities, which
include some of the country’s finest.
The maximum possible score on the gaokao can change from year to year
and may vary according to province, but it is usually 750. Most provinces
give extra points (ranging from five to 20) to certain groups, such as military
veterans and Chinese who return from overseas. Until recently, some
provinces showered points on students who exhibited “ideological and
political correctness” or had “significant social influence”. But such
arbitrary criteria led to corruption and calls by the central government to
phase them out.
The state itself has backed away from the policy in recent years. In 2014 the
central government indicated a desire for it to be re-evaluated. Since then a
number of provinces—such as Anhui, Jiangsu, Shandong and Shanxi—have
stopped giving extra points to minority students. Last month Henan joined
them. In provinces where the policy is still in place, adjustments are being
made. This year Hunan and Fujian have reduced the extra points that
minority students can get, with the aim of removing the system soon. Even
in Inner Mongolia, home to a large ethnic-Mongol population, the bonuses
are shrinking.
Under Xi Jinping the Communist Party has promoted the idea of a single
Chinese identity, an effort that has involved trampling on the freedoms of
minority groups and abolishing affirmative-action policies. But the
authorities justify the latest moves as a way to promote “exam equality” and
prevent cheating in the admissions process. Officials also claim that the
schools in regions with big minority populations have improved so much
that the bonuses are no longer needed to even things out.
That is questionable. Students from minority groups still lag behind their
Han peers. And if the government were so concerned about fairness, it
would do away with other extra-point schemes, such as the one targeting
Taiwanese students in an attempt to lure them to mainland universities. But
none of this is likely to make young Han cramming for the gaokao feel any
less anxious. ■
The vehicles often look like very big consumer drones. Some are designed
to be autonomous, meaning no pilot is needed. One model, the EH216-S made
by EHang, a company in Guangdong province, was awarded a “production
certificate” in April by the Civil Aviation Administration of China (CAAC).
That allows the firm to start mass production. The EH216-S is the first flying
car to receive such regulatory approval anywhere in the world.
There is foreign competition, too. But China accounts for 50% of the world’s
eVTOL models, much more than America (18%) or Germany (8%), according
to China Merchants Securities, a bank.
China has two big advantages. The first is the country’s edge in electric-
vehicle technology, some of which is transferable from the driving sort to
the flying sort. Batteries are especially important. The ones in eVTOLs must be
light and high-capacity. China is home to the world’s biggest battery-makers.
The leader, CATL, is wrestling with the challenges posed by flying cars.
The government is already thinking about how to manage the airspace once
drones and eVTOLs really take off. Shenzhen has mandated the establishment of
a “co-ordination mechanism” for low-altitude flights, one that would
delineate the airspace. To the north, Nanjing has said it will open up 120
low-altitude flight paths by 2026. The CAAC will have a say in all this, too. In
December it designated two new bands of low-altitude airspace for use by
drones, helicopters and eVTOLs.
For now, eVTOL firms in China are targeting niche-use cases, such as
sightseeing and emergency services. The majority of orders received by
EHang have come from businesses or the government. But in the future the
company hopes to offer flying-taxi rides at a similar price to cabs on the
ground. The government has been encouraging. While Western regulators
are taking a relatively cautious approach to eVTOLs, China is flying ahead. ■
Russian aggression led Sweden (preceded by Finland, which joined NATO a few
months earlier) to bind its security, formally, to that of the American-led
West. Sweden’s resolve, and that of like-minded European governments, has
been strengthened by what China did next. In late May Chaguan attended
the Stockholm China Forum, a closed-door meeting of American and
European officials, business executives and analysts, as well as Chinese
scholars. Your columnist has attended these forums since 2008. This one
stood out for a convergence of views over the challenge that China poses to
the global security and economic order.
For all the signs of convergence between America and Europe, important
differences may be seen. The EU calls China “a partner for co-operation, an
economic competitor and a systemic rival”. It matters greatly that this tripod
has now gained a fourth leg, with several Europeans in Stockholm declaring
China a full-blown security threat. Yet it also matters, a lot, that America’s
vision of relations with China has lost its leg marked “partner”. The Biden
administration is still trying to avoid conflicts and to co-ordinate work with
China on climate change, drug-smuggling and other global issues. Examples
of active co-operation are now rare.
Then there is the election in America this November. The China agenda of a
new Trump administration would overlap on trade with Biden-era policies.
But the forum heard of ways in which political tensions could soar
unpredictably, for example if Mr Trump appoints China hawks who release
American intelligence on the wealth of Chinese leaders and their families, or
impose entry bans on Communist Party officials. That would stoke fears in
Beijing that America is bent on all-out regime change.
Meetings of the African National Congress (ANC) are a mix of materialism and
narcissism. The fancy SUVs parked outside any gathering hint at the spoils of
office enjoyed by South Africa’s ruling party. Inside there will be a
selfindulgent atmosphere: regalia and songs that hark back to the anti-
apartheid struggle; discussion about the meaning of transformation,
liberation, revolution and renewal. There are few things that the ANC enjoys
more than talking about the ANC. There is enough navel-gazing to require an
army of chiropractors.
How the ANC sees itself—and its self-interest—will determine the future of
South Africa. On June 2nd electoral officials announced that Africa’s oldest
liberation movement had taken a licking at the election four days earlier. The
ANC won 40.2% of the vote, down from 57.5% in 2019. It has until June 16th
Cyril Ramaphosa, South Africa’s president, struck the right notes after the
results were announced. “Our people have spoken, whether we like it or
not,” he said, praising the elections as “free, fair and peaceful”. He added
that South Africans “expect the parties for which they have voted to find
common ground”.
The contrast with his predecessor, Jacob Zuma, was stark. The former
president’s uMkhonto weSizwe (MK) party came third with 14.6%, the highest
share for any new party in a post-1994 election. But he still pushed his own
version of the big lie, saying “the results are not correct” and warning that
the independent electoral commission was “provoking us”. The sinister
implication was that his fans might cause violent riots, as they did in 2021
after he was imprisoned for contempt of court.
The EFF, which sees “white monopoly capital” as the cause of South Africa’s
problems, and wants to nationalise swathes of the economy and erode the
independence of the central bank, would quash any hope of further progress.
A deal with the DA, Mr Ramaphosa’s camp believes, could lead to
improvements in the economy and public services—and therefore give the
party its best chance of regaining votes at the national elections in 2029.
An agreement with the DA could take several forms. The most minimal would
be a “confidence and supply” deal whereby the DA supported Mr Ramaphosa
at the head of a minority government (the confidence bit) and backed certain
things like budgets (the supply). The most extensive would be a full-blown
coalition, either between the ANC and DA or, more likely, one involving other
parties as well, such as the Inkatha Freedom Party, a Zulu nationalist outfit.
In return the DA could ask for cabinet jobs or a greater say in parliament, for
instance by having the speakership.
Any alliance with the ANC has risks for the DA. The closer it gets to the ruling
party, the more it might horrify its own voters. They might have to swallow
being in a government that endorses race-based policies such as affirmative
action that are cherished in the ANC but opposed by the DA. It might also have to
work with figures it distrusts; the DA recently asked the police to investigate
corruption allegations against Paul Mashatile, Mr Ramaphosa’s deputy.
The biggest obstacle to a pragmatic government is not the DA but the ANC itself.
The obstacles are both material and ideological. Some figures at the top of
the party, such as Gwede Mantashe, the energy minister and ANC chair, might
fear that the DA would either want them out of cabinet or block their pet
projects. Other bigwigs, including several regional power-brokers in the
party, reportedly worry about what ANC voters will think if the party does a
deal with the “white party”, as the DA is often viewed. The leader of COSATU, a
federation of unions allied to the ANC, has said he opposes a deal with the DA
because it is critical of a minimum wage.
For many in the ANC there is a natural affinity with the EFF, which is seen as part
of the broad church that is African nationalism. Mr Mantashe suggested that
the votes awarded to MK and the EFF in fact demonstrated how the ANC’s legacy
remained attractive. There is some logic to this: the combined share of the
three parties (64%) was roughly the same as what Nelson Mandela’s ANC got
in 1994 (63%). There will be many within the ruling party who see a
coalition with the EFF or MK as a prelude to reuniting these breakaway elements
with the ANC. By this argument the best way to regain ANC voters is to absorb
other parties, rather than improve its record in office.
That misses the obvious lesson from the election: that the ANC has been
punished for governing badly. In his six years as president, Mr Ramaphosa
has tried hard to keep his party together. His desire for consensus within the
ANC has slowed his stated efforts to end graft and promote reform. He focused
on party unity because he felt it was the best way to keep the presidency and
for the ANC to stay in power. The election results suggest that his softly-softly
approach has failed. The next week will show whether he has learned his
lesson—and finally stops indulging his party’s worst instincts. ■
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Middle East & Africa | Shooting for the hoops
Its record of nurturing African football has been less triumphant, however.
Africa’s best talent plays in European football leagues, yet no African side
had ever made it to the semi-finals of the World Cup until Morocco in 2022.
Though the Afcon increasingly attracts money and global viewers, there is
still no high-profile pan-African league to speak of. To flourish
professionally, the continent’s best footballers must leave it.
A new era for African sport may, however, be taking shape—and it can be
found in a new 15,000-seat basketball stadium in Senegal. Last month the
Dakar Arena, which was completed in 2018 at a cost of more than $100m,
hosted the Sahara Conference, one of the three divisions of the Basketball
Africa League (BAL), the continent’s premier basketball competition. Based in
Dakar, the BAL is the brainchild of the International Basketball Federation, the
sport’s global governing body, and NBA Africa, the North American basketball
league’s regional subsidiary, which was valued at $1bn when a private-
equity firm bought a stake in 2021. With 12 national-league champions
competing for a panAfrican title—the finals were played in Kigali, the
capital of Rwanda, on June 1st—the basic model emulates Europe’s football
Champions League. It is also the most ambitious attempt so far to build a
continent-wide professional sports league.
The NBA has long aspired to enter new markets as the business of sport has
become more competitive. Thanks in large part to its success in popularising
the game in China, basketball is probably the world’s second-favourite sport,
after football. The NBA has organised exhibition matches in China since 2004,
and a series of “global games” since 2013. The BAL, however, is its first
attempt at running a league outside North America.
Governments are paying attention, too. The African sports market could be
worth more than $20bn a year in revenue by 2035, reckons Oliver Wyman, a
consultancy, up from about $12bn today. Basketball has the potential to be a
lucrative slice of it. It was with such financial rewards in mind that Rwanda
unveiled its own swanky arena in 2019. Nigeria, Kenya, Benin and Uganda
are following suit. “Our league is starting to open eyes to all this untapped
economic potential,” argues Amadou Gallo Fall, the BAL’s president.
Africa, which has the world’s youngest population, is an obvious place for
basketball to bloom. Unlike American football, it can be played almost
anywhere. And unlike cricket or rugby, it is not associated with former
colonisers. Indeed, the NBA itself has an increasingly African flavour. More
than 50 of its current players were either born in Africa or have at least one
parent from the continent, including Joel Embiid from Cameroon, who last
year won the NBA’s Most Valuable Player award. In Senegal, “it is now
football first, basketball second,” enthuses a fan outside the Dakar Arena.
“So many young people dream of playing in the NBA.”
The goal is for all young Africans “to be able to play here professionally
without having to leave”, says Mr Fall. To encourage the development of
local talent, the BAL enforces strict limits on the number of foreigners each
team can field. The strategy seems to be working. Simon Rofe of the
University of Leeds notes that already a number of African players have left
European clubs and returned to the continent in order to join the BAL.
Correction (June 6th 2024): An earlier version of this story scored an own
goal by mistakenly stating that no African team had ever made it to the semi-
finals of the World Cup.
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Middle East & Africa | Avocado paradise
Look beyond the lions and elephants. Resist the cups of coffee and tea. Hail
instead Kenya’s latest success story: the firm but luscious avocado pear, now
climbing up the list of Kenya’s exports. Already the biggest African avo-
exporter, well ahead of South Africa, Kenya has been expanding its sales to
Europe and is trying to push into the mass markets of India and China. “We
are number five [in the world] in avocado exports and can easily get to
number one,” says Simon Chelugui, Kenya’s minister for co-operatives.
Kenya is also well placed as seasons go: it can send its avocados onto the
global market before many of its rivals’ pears have ripened. With two rainy
seasons in some areas, luckier orchards have a double harvest, stretching the
period when Kenya can sell the fruit. And its entrepreneurial smallholders
are catching on fast. A well-tended avocado tree can bear a decent crop
within a few years.
The modest wages of farm workers, whose official minimum is around $57 a
month against $280 in Peru, is another plus, though some of Kenya’s bigger
growers pay more than $90. You can buy a ripe avocado in a Kenyan rural
market for as little as ten Kenyan shillings (about eight American cents).
Supermarkets in Britain sell a single pear for the equivalent of about $1-2
depending on global prices, which fluctuate according to the season.
There are snags, though. Mr Chelugui warns that Kenya will rise in the
global stakes “only if we maintain global standards relating to crop
husbandry, traceability and sustainability, as every fruit exported carries
Kenya’s reputation.” Kenya has been accused of sometimes shoving unripe
avocados onto the market. Last year the country’s agriculture authority
briefly banned exports because some farmers, especially smallholders
lacking the technology to keep stored pears at the right temperature or keep
their trees correctly watered, were selling immature ones with tastelessly
tough flesh to exporters.
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driving-another-sort-of-green-economy-in-kenya
Middle East & Africa | An Israeli ceasefire proposal
The timing of Joe Biden’s speech on May 31st seemed deliberate. It was
broadcast on Friday, shortly after sundown in Jerusalem. Israeli cabinet
ministers from the religious right would be off their phones and unable to
make public statements because the Sabbath had begun. The American
president chose this moment to reveal an Israeli proposal to Hamas, the
militant group, for what he described as “a road map to an enduring
ceasefire and the release of all hostages”.
Israel’s leaders did not approve the leak, but they knew it was coming.
Binyamin Netanyahu, the prime minister, grudgingly admitted that the plan
was of his government’s own making. It is Israel’s first official outline for
ending the war in Gaza.
Read all our coverage of the war between Israel and Hamas
The proposal, which was sent to Hamas through its Qatari patrons, has three
stages. The first would involve a six-week truce during which Israel would
withdraw its forces from the main urban areas in Gaza and Hamas would
free female, elderly and wounded hostages in exchange for Palestinian
prisoners held by Israel.
Simultaneously, a second stage would begin with the two sides negotiating,
through intermediaries, a longer-lasting ceasefire to include a full Israeli
withdrawal from Gaza and the release of male Israeli soldiers held by Hamas
and of more Palestinian prisoners. The third step would involve the return of
the bodies of dead hostages to Israel and the rolling out of an internationally
funded programme to rebuild the Gaza Strip.
Despite Mr Biden’s enthusiasm, this is still merely a proposal for more talks.
On the Israeli side only the war cabinet, which does not include most of Mr
Netanyahu’s hardline allies, has endorsed it. Once the Sabbath silence was
over, the leaders of the far-right parties in the prime minister’s coalition lost
little time in rejecting the plan and warning the prime minister that they
would leave his government, should it come to pass.
Nevertheless, the details of the plan mark a shift. The number of hostages to
be released in the first stage is not specified, perhaps because of fears that
many are no longer alive. Israel has accepted that during the initial ceasefire
Gazan civilians, including men, will be allowed to return to whatever
remains of their homes throughout the strip. Even though Mr Netanyahu
insists that the war will continue, the plan opens the possibility of
negotiations intended to achieve a full ceasefire.
But for the proposal to become reality, a majority of Mr Netanyahu’s cabinet
will have to agree to it, as will Hamas. It is far from clear that the prime
minister is wedded to his own deal, but he may be coming around to it. The
growing desperation of the hostages’ families has increased the pressure on
him. Of the 124 hostages still in Gaza, 43 are presumed to be dead. The
actual number is almost certainly higher and prospects for the rest are
getting grimmer by the day. If a deal is not reached soon, few living hostages
will be saved.
The consensus within the Israeli security establishment is that most of the
military aims in Gaza have been achieved and a pause in the fighting to free
the hostages should be the priority. A truce in Gaza could also lead to a
ceasefire on Israel’s northern border with Lebanon, where the daily
exchange of fire with Hizbullah, the Shia party-cum-militia, has risen
sharply in recent days. Meanwhile Mr Netanyahu has been invited to address
a joint session of Congress in Washington. A ceasefire in Gaza, even a
temporary one, would ensure a warmer reception there.
Hamas will have to agree, too. The group has yet to issue an official
response. Its political leaders, who live outside Gaza and are under pressure
from the regimes of Egypt and Qatar, are more open to the deal. However,
Yahya Sinwar, the Hamas chief in Gaza who remains holed up somewhere
underground, will have the final word. He is expected to demand explicit
guarantees that Israel will accept a full ceasefire and must stop trying to find
and kill him. It is hard to imagine this or any Israeli government agreeing to
such a condition for the man who is held responsible for planning the
atrocities of October 7th.
Moreover, Hamas may see advantages in continuing the war. The more
wrecked Israel leaves Gaza, the less anyone but Hamas will want to rule it.
And it reckons that Israel’s diplomatic position is steadily worsening in the
Middle East and beyond. The country is in the dock in international courts.
The costs of the war are rising, for Israel as well as Hamas.
Either way, Mr Netanyahu can expect his coalition to start falling apart in
the coming weeks. If a deal with Hamas goes ahead, the far right will
abandon ship. Even before that, the pragmatic wing in Israel’s government,
led by Benny Gantz, may go. He said he would resign by June 8th unless Mr
Netanyahu presented a detailed strategy, though he may extend his deadline
to help push through a deal that he supports as the only way to rescue the
hostages. Meanwhile, the ultra-Orthodox parties in the coalition are in
uproar over an upcoming Supreme Court ruling that would force religious
students to serve in the army.
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Middle East & Africa | One step closer
SUMMER WILDFIRES are common in northern Israel and southern Lebanon. But
war, not weather, brought them early this year. Rocket and drone attacks by
Hizbullah, the Lebanese Shia militia, sparked wildfires that have burned
more than 3,700 acres in northern Israel and the Golan Heights. In Lebanon,
meanwhile, Israeli shelling set fire to forests near the border.
Read all our coverage of the war between Israel and Hamas
It is not just the number of attacks that has increased. Hizbullah is also
striking deeper into Israel. The group is making greater use of explosive
drones, which are harder for Israel’s air defences to intercept. Israel is hitting
more often around Sidon, the largest city in southern Lebanon.
Once again, the Israeli army is preparing for a bigger war. Ground troops
would be tasked with creating a “security zone”, similar to the one Israel had
in south Lebanon until 2000, to make it more difficult for Hizbullah to
launch rockets at border communities. “We are prepared for very intense
action in the north,” said Binyamin Netanyahu, the prime minister, while
visiting the region on June 5th.
Still, none of this means that all-out war is inevitable. Israel is war-weary
and the fighting in Gaza persists. Its leaders worry about Hizbullah’s arsenal
of medium-range missiles. An offensive in Lebanon would drive Hizbullah
to fire them at central Israel; enough would probably get through to cause
serious damage and a heavy psychological blow. “We can’t continue letting
Hizbullah have thousands of fighters right up on our border, but there is no
good timing to go to war with them,” as an Israeli security official puts it.
As for Lebanon, it cannot afford a war. This is the start of the vital tourism
season, when more than 1m visitors (mostly Lebanese expats) will pump
billions of dollars into an economy whose GDP has fallen by half since 2019.
Most Lebanese, including many of Hizbullah’s supporters, do not want the
fighting to escalate.
But it will be impossible for Hizbullah to accept a ceasefire until the Gaza
war ends. It has lost more than 300 of its men fighting Israel, including a
few senior commanders. Its campaign has brought extensive damage to
southern Lebanon. It would be a humiliation to stop fighting before Israel
implements a truce in Gaza.
Once it does, Lebanon may still be unable or unwilling to negotiate a border
deal. Hizbullah did not block the maritime agreement in 2022. But that was
meant to unlock oil and gas exploration in the Mediterranean, where Israel
had already found rich gas deposits and Lebanon hoped to follow suit.
Demarcating the land border would offer fewer financial benefits.
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israel-and-lebanon-is-growing
Middle East & Africa | The lure of the Great Satan
Growing up, Iran’s aghazadehs, the children of the elite, chanted death to
America each morning at school. But as soon as they had finished their
education, they set off in search of the American dream. Iran touts its pivot
to Russia and China, but the aghazadehs of the Islamic Republic still want to
go West.
How many go to bury the regime and how many to praise it is hard to gauge.
Mr Khamenei’s nephew calls for the death of his uncle. By contrast,
Maasumeh Ebtekar, who was a spokesperson for the students who seized the
American embassy in 1979, says she moved to Canada to lambast her enemy
better (and her son went to America). Some fill Iran’s Islamic centres in
Western capitals and spread the Islamic Republic’s teachings. Others
allegedly bust sanctions, for instance by setting up gambling websites to
launder money. Still more move in search of knowledge. Mr Larijani’s
brother lectures in cyber-security at the Glasgow Caledonian University in
Scotland. Most come simply for the opportunities they lack at home. Freed
from their parents’ scrutiny, they post scenes of their sybaritic lifestyles
online.
They may yet become an election issue. The Guardian Council, a quango of
clerics and lawyers, will vet all 80-odd candidates. Mr Qalibaf has strong
regime credentials. Related to Mr Khamenei, he has commanded the Islamic
Revolutionary Guard Corps, and was the chief of police and parliament’s
speaker. But he is dogged by stories that his son declared he had funds of
$150,000 available to him in support of his application for permanent
residency in Canada. (It was initially declined.)
The Paydari (or stability) Front, a bloc of religious hardliners with growing
clout in Iran, cries betrayal. But it is far from immune, too. Its favourite
cleric, Morteza Aqa-Tehrani, got a green card when he ran Iran’s Islamic
centre in New York. If only, notes a wag in Tehran, any senior official with
personal ties to the West could be barred. “They would have to disqualify
our supreme leader, too.”■
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revolution-still-want-to-go-west
Europe
In Crimea, Ukraine is beating Russia
Russia’s explosion of a huge Ukrainian dam had surprising effects
Germany is thinking about bringing back conscription
The Dutch are getting a half-populist, half-pragmatist government
Remembering the Normandy landings
Peak Europe turns 25: why June 1999 marked the continent’s zenith
Europe | The war in the south
GOOD NEWS, at last, from Ukraine. The approval in April of the Biden
administration’s $61bn military-support package, after six months of
Congressional delay, is having an impact. In particular, the arrival of ATACMS
ballistic missiles, with a range of 300km, means that Ukraine can now hit
any target in Russian-occupied Crimea, with deadly effect.
In the past two weeks the Russian offensive in the north-east on Kharkiv,
Ukraine’s second city, also appears to have lost momentum. Of potentially
even greater significance, on May 30th President Joe Biden, under pressure
from a growing chorus of European allies, eased the restrictions on
American weapons being used against military targets on Russian soil,
imposed because of fears of Russian nuclear escalation. The Ukrainians are
now to be allowed to use some American kit to hit Russian forces on the
other side of the border as they prepare to attack Kharkiv. It is not clear
whether this includes Russian tactical aircraft launching glide-bomb attacks
like the one that killed at least 18 people in a Kharkiv hardware shop on
May 25th.
That would be a huge prize for Ukraine. Since the reign of Catherine the
Great, Russians have regarded Crimea as a military jewel. Vladimir Putin
saw Crimea, linked to the Russian mainland by the Kerch Bridge since 2018,
as an unsinkable aircraft-carrier. Its logistics hubs, air bases and the Black
Sea Fleet, operating out of Sevastopol, could be used to dominate the south
of Ukraine, close off its vital grain exports, and provide a steady flow of
men and materiel to push Ukraine out of areas to the north. Mr Putin has
invested huge sums in military infrastructure in Crimea, all of it now under
threat.
Belbek was hit again the next day, showing that Ukraine has rather more
than the 100 or so ATACMS thought to have been donated. In what is becoming
almost a nightly occurrence two Russian patrol boats were destroyed on
May 30th and two transport ferries were damaged near the Kerch Bridge in
separate drone strikes.
The general says that Russian forces have “no place to hide”. With the help
of satellite and aerial reconnaissance provided by NATO allies, their own deep
knowledge of the territory, and covert forces on the ground, nothing can
move in Crimea without the Ukrainians knowing about it. With the arrival of
the ATACMS and the increasing sophistication of Ukraine’s own drones, every
square metre of the peninsula is in range, including aircraft and equipment
convoys moving by road or rail.
General Hodges is confident the Ukrainians will “take down the Kerch
Bridge when they are ready”. But it may be more challenging to disrupt the
new improved railway line running along the Sea of Azov from Rostov,
through the occupied Ukrainian cities of Mariupol and Berdiansk and down
into Crimea. Dmitry Pletenchuk, a spokesman for Ukraine’s southern
military command, says: “The railway along the land corridor is recognition
on the part of the Russian occupiers that the Crimean [Kerch] Bridge is
doomed. They are looking for a way to hedge their bets because they are
aware that sooner or later, they will have a problem.”
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Europe | Après le déluge
Early on June 6th 2023 explosives tore through the Kakhovka dam and
hydroelectric power plant in southern Ukraine. The blast shook windows
80km away and released a thundering cascade from the reservoir, which had
a capacity of around 18 cubic km, almost as much as Utah’s Great Salt Lake.
The flood devastated dozens of towns and villages. Volodymyr Zelensky,
Ukraine’s president, called it “an environmental bomb of mass destruction”.
Ukraine blames Russia, which occupied the dam. Western governments and
independent open-source analyses support that claim. A year later, the long-
term consequences are becoming clear. They are environmental, social,
political and economic. ■
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huge-ukrainian-dam-had-surprising-effects
Europe | Bulking up the Bundeswehr
“Kriegstüchtig” does not trip easily off the English tongue. Nor does it fall
easily on German ears. Translated roughly as “war-ready”, it is a word
deployed by Boris Pistorius, the defence minister, to describe his favoured
destination for the long under-resourced Bundeswehr, or armed forces.
Money is now pouring in, and Mr Pistorius is overhauling the Bundeswehr’s
structures. But like many of its NATO allies, Germany is struggling to find
enough willing recruits. The minister is among many who want Germany to
consider restoring conscription, suspended since 2011, to get the numbers
up.
Under plans drawn up in 2018 Germany aims to boost the Bundeswehr to
203,000 troops by 2031, up from around 181,000 today. This is a fraction of
the size of the men under arms during the cold war (see chart 1). But the
army is ageing and shrinking: given attrition, it needs to recruit 25,000
soldiers a year just to stand still. And Germany’s drum-tight labour market
makes it hard for the Bundeswehr to compete with other employers. The
situation is “really dire”, says Johann Wadephul, an MP from the opposition
Christian Democrats, who back a return to the draft.
Since then Germany has taken on extra commitments inside NATO, including an
ambitious pledge to station a permanent brigade in Lithuania. Demands are
likely only to grow. Andreas Schwarz, an SPD MP who sits on the Bundestag’s
defence committee, says it would be “advisable” to rethink the 203,000
target. His view is widely shared inside the armed forces.
There are other ways to beef up the numbers. In time, some reserves might
be activated. Meanwhile Martin Elbe, a military sociologist, says the
Bundeswehr should scrap its temporary-service model, under which most
recruits serve for a maximum of 17 years, and often far fewer. Only one-
third of Germany’s armed forces are permanent hires. Ms Nanni adds that
sexism inside the Bundeswehr turns off potential female recruits. Just 13%
of troops are women, and in recent years the number of young women to
whom a military career appeals has plummeted (see chart 2).
That looks sensible, for now: Germany has neither the infrastructure nor
money to take on tens of thousands of extra recruits. The deeper division
may be over the purpose of conscription in the first place. To make Germany
war-ready means not only building up the Bundeswehr but convincing
Germans of the value of deterrence through strength in the face of Russian
aggression. That is a way off. In the run-up to the European elections on
June 9th, Germany’s streets are littered with SPD posters advertising the
party’s ability to “secure peace”—under a photo of Mr Scholz. ■
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back-conscription
Europe | Normalising the radicals
The talks took so long because the parties mistrust each other. The biggest of
the four is the Party for Freedom (PVV), led by Geert Wilders, a nativist
rabble-rouser. The PVV was long boycotted by other parties, and its manifesto
includes unconstitutional measures such as banning the Koran. That posed a
special problem for the third-biggest party, New Social Contract (NSC), a year-
old outfit whose founder, Pieter Omtzigt, is a stickler for the rule of law. He
spent months ensuring Mr Wilders would respect the constitution.
The PVV is also disdainful of climate measures, wobbly on Ukraine, and long
advocated a Nexit. Such positions are anathema to the coalition’s second
party, the centre-right Liberals (VVD), who have led the government for the
past 13 years. Their new head, Dilan Yesilgoz, secured promises that the
Netherlands will remain a reliable EU member, honour climate agreements
and aid Ukraine. Mr Wilders as prime minister was unacceptable, so the
parties agreed that their leaders would stay in parliament and pick an
outsider; hence the unobjectionable Mr Schoof.
Other policies presage conflict with the EU. The accord calls for scrapping
measures to cut nitrogen pollution mandated by the EU’s biodiversity law, and
for asking to extend a derogation that lets Dutch farmers dump extra
manure, which is expiring. These are priorities for the coalition’s fourth
member, the small Farmer-Citizen Movement. It also calls for lowering
expected Dutch contributions to the EU budget by €1.6bn ($1.7bn) annually. It
is unclear why the European Commission or other EU countries would agree
to all this.
Mr Schoof is widely respected, but has no experience as a politician. In his
first press conference he was awkward and ill-prepared to defend the
coalition’s agenda, which, after all, he played no role in negotiating. He will
take office in a few weeks, once the parties agree on the rest of the cabinet;
half are to be non-politicians. With Mr Schoof paving the way, senior figures
from business, government and civil society should feel more comfortable
signing up. As elsewhere in Europe, the Dutch governing elite is moving to
accommodate the populists it long shunned. ■
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half-pragmatist-government
Europe | D-Day 80 years on
Yet the French remain attached to the transatlantic tie. A majority (51%)
think American influence in global affairs today is positive, higher than in
Germany (48%) or Italy (46%), according to a poll for the German Marshall
Fund in 2023. Three-quarters of the French think their country a reliable
partner for America. And 62% of the French support American involvement
in European defence and security, up from 45% in 2020, before Russia
invaded Ukraine. Villages in Normandy this week were decked out in
American and other allied flags and military memorabilia.
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Europe | Charlemagne
It is not that France, Britain or others can take all the credit for having
pushed Milosevic into retreat. The 11-week NATO bombing campaign was
largely run by America, then as now the backbone of the alliance. But the
brief conflict seemed to point to a world heading not just in the direction of
the West, but specifically of Europe. Since time immemorial geopolitics had
been a case of might-makes-right. Kosovo showed principles mattered at
least as much: the aim of the bombing was to prevent genocide, not to
conquer territory. As the cold war had ended, “The End of History” seemed
nigh, a world of liberal democracy at home paired with growing
interdependence abroad. The purveyor of the theory, Francis Fukuyama, is
American, but for him it was the European Union that was closest to the
final destination we would all reach. America still had the power, but
Europe, which had already figured out how to replace war with interminable
summits about fish quotas, instinctively knew how to navigate the soon-to-
arrive placid international order. One book explained “Why Europe Will
Run The 21st Century”.
Europe seemed like a pioneer in other ways. “Third Way” politicians such as
Tony Blair had sussed out how to get stuff done beyond left and right.
Grands projets abounded: the euro in 1999, shortly after internal borders had
been scrapped and the single market created. The economy was in fine fettle,
apart from Germany, then as now the “sick man of Europe”. Of the world’s
top 1,000 listed companies, 300 were from Europe. Some noted that new
American firms with funny names like Amazon and Google seemed to be
doing well. But Europe would surely soon come up with its own tech giants
to take them on.
A FEAR LOOMING over British politics in the 1960s was that France and Germany
would soon surpass Britain’s economy. Today, worrywarts fret that Britain
may be poorer per person than Poland within the decade. Sir Keir Starmer,
the Labour Party leader, has voiced this concern repeatedly. Donald Tusk,
the Polish prime minister, has made overtaking Britain an explicit goal. If
both countries were to stay on the same per-person growth trend as in the
past ten years, Poland would slip ahead of Britain in 2031. That is unlikely.
But the fact that this scenario no longer looks fanciful is a reflection of
Britain’s sorry recent growth record.
Little surprise, then, that pledges to reignite growth feature heavily in the
general-election campaign. Rishi Sunak, the prime minister, says the
economy is at a turning-point and urges voters to “stick with the plan”.
Labour, which is well on track to win a big majority on July 4th, has been
more explicit still. It says economic growth will be its first priority if it gets
into power. The shadow chancellor of the exchequer, Rachel Reeves, has
pledged to lead the most “pro-growth, pro-business Treasury our country has
ever seen”.
Growth is crucial: it is the only way to keep living standards rising over the
long haul. But British politicians also obsess over growth for a narrower
reason: an expanding economy is what keeps their tax-and-spending plans
credible. Both main parties have signed up to a fiscal rule that requires
government debt to fall as a percentage of GDP between the fourth and fifth
year of the forecast period. Current spending plans hit that target only by a
vanishingly narrow margin, despite including some improbably hefty future
cuts to public services. The budget in March left £8.9bn ($11.3bn, 0.3% of
GDP) of annual headroom to meet the rule. Today, that figure is down to
For now these are just figures on a spreadsheet. Britain’s fiscal rules are
loose: the five-year deadline for debt to start falling rolls forward every year.
But the longer growth falls below the OBR’S ambitious forecasts, the more
Britain’s fiscal sustainability will look like fiction. Both main parties have
ruled out big new tax rises if they are elected, and have said they won’t rejig
the rules to permit more borrowing. Voters have little appetite for spending
cuts to frayed public services. Revving up growth, which delivers the tax
revenues to fund public services, is the only way to square the circle. So how
much growth is it realistic to expect over the next parliament?
The answer to that question should start with an analysis of what has been
suppressing Britain’s growth rate. The economy has endured two big
external shocks in recent years: the covid-19 pandemic and the energy crisis
brought about by Russia’s war with Ukraine. The country would have to be
unlucky to endure similar blows in the next five years.
Economists blame several culprits for that. One is a broken planning system.
Britain has struggled for decades to build enough housing and infrastructure.
Built-up land per person in Britain has stagnated since the 1990s, just about
the worst record in the rich world (see chart 3). Years of under-building have
clogged up the economy: housing shortages push workers out of Britain’s
most productive areas and poor infrastructure hinders growth elsewhere.
A lack of business dynamism is another suspect. A hallmark of a productive
economy is creative destruction: successful businesses grow, failing ones
die. That pushes workers and capital to where they are most productive. But
in Britain this motor seems to be stalling. Workers are half as likely to
switch industries as they were in the 1990s, according to the Resolution
Foundation, a think-tank. Business births and deaths are responsible for a
decreasing share of the churn in jobs (see chart 4). Dispersion in firm
productivity has widened, dragging the laggards further away from the
leaders.
Some blame for that lies with Britain’s illogical tax code. It implicitly
subsidises unproductive small businesses, for example, which are exempt
from VAT if their revenues are under £90,000. A dearth of competent managers
probably doesn’t help, either. Another intriguing suggestion from Benjamin
Nabarro of Citigroup is that a more services-heavy economy is to blame. It
can be difficult to sell intangible assets like databases or customer registers,
or to borrow against them, which means unproductive businesses may
simply decide to plough on as they are.
And then, of course, there is Brexit. Most economists reckon that leaving the
EU knocked several percentage points off the potential size of the British
economy. Goldman Sachs, a bank, estimates a 5% hit; the OBR guesses 4%.
Part of the shortfall comes directly from higher trade barriers: goods exports
have sunk by 10% since 2019. Another problem has been political
instability. The Tories took five messy years to settle on their preferred
vision of Brexit. Throughout that period, around half of businesses said in
surveys that Brexit uncertainty was a top concern for them. Business
investment flatlined immediately after the referendum in 2016 and didn’t
pick back up again until 2023.
The party has rightly said that planning reform is vital: Ms Reeves calls
planning the “biggest obstacle to growth and investment” in Britain. There is
a lot of low-hanging fruit there: only three onshore wind farms have been
built in England over the past decade because of retrograde planning rules.
In principle a flurry of building could lift growth quickly. But in practice
“shovel-ready” projects can often turn out to be anything but. And Labour’s
policy proposals appear thinner than the rhetoric behind them (see next
story). Critically, Labour has not said much about whether it will try to shift
Britain’s heavily discretionary planning system to a more building-friendly
rules-based one.
The big question for Labour is whether it can lay the political groundwork
for a deeper reintegration with Europe in a second term, for instance by re-
entering the customs union. That would transform British growth prospects
much more than anything else currently proposed. But progress there
depends partly on an improbable shift in position on the part of the Tories;
the EU is unlikely to negotiate a deal that a future British government would
be likely to blow up.
Add all this together and what do you get? Ms Reeves has in the past
mentioned as a benchmark the 2%-plus annual growth rate achieved during
the last Labour government in 1997-2010. Not even the most bullish
forecaster expects that. A more realistic scenario is that productivity
improvements largely offset the impact of Britain’s worsening demography.
But even that would probably mean an annual growth rate closer to 1.5%
rather than the 1.8% rate assumed by the OBR. Britain is likely to grow faster
than in the recent past, enough to fend off Poland for a while longer. But it
will not grow fast enough to spare the next government a big fiscal shortfall
or having to raise taxes. ■
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Britain | Building blocks
The diagnosis, at least, is spot on. In Britain it has simply become too hard
to build. By preventing building where it is needed, argued Rachel Reeves,
the shadow chancellor of the exchequer, in a recent lecture, the planning
system has pushed prices ever higher and held back Britain’s most
productive cities. She described planning as “the single greatest obstacle” to
economic success.
See our other coverage of Britain’s election, including our poll tracker,
updated daily
Labour says it would aim for 1.5m new homes over the next five-year
parliament if it were to win the upcoming election. It has one big advantage:
its voters are not NIMBYs. But its policies are a mixture of the sensible, the
vague and the misguided.
First, the sensible proposals. The Labour Party would bring back targets and
force local authorities to adopt plans that identify developable land—
reversing Mr Gove’s changes. Any council that failed to comply would have
development foisted upon them. Labour would also recruit more planning
officers; it has separate plans to speed up infrastructure development by
making it harder for local groups to veto national projects. All this would
improve the way the current system works.
Next, the vagueness. Labour promises to review the green belt, a series of 16
rings around English cities designed to stop urban sprawl. This is the part
that could be transformative, says Paul Cheshire of the London School of
Economics. According to the Centre for Cities, a think-tank, if you worked
on less than 2% of the green belt surrounding Britain’s five biggest cities it
would be possible to build 2m homes within half a mile of railway stations.
Labour could decide to allow such targeted building. But the party has yet to
say much about its review, which could get bogged down or focus only on
more modest changes like releasing brownfield sites.
Least promisingly Sir Keir has a plan for a “next generation of new towns”,
reprising a favourite of post-war Labour governments. Although some later
new towns, like Milton Keynes, have been relatively successful, it would
make more sense to focus on making cities bigger and denser than on
creating entirely new towns. More practically, it is doubtful that Labour
would be able to get any built quickly. A similar plan under the last Labour
government fell flat, in part because councils would not agree to them.
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radicalism-on-planning
Britain | Tables turned
Mr Cowan blames the baleful influence of social media. But another trend
also explains the abuse: the precipitous decline of the SNP’s standing among
the electorate. It now trails the Labour Party by 31 percentage points to 40,
according to The Economist’s poll tracker, down from a thumping lead of 47
points to 14 in January 2020. Like the Tories, it has worked through three
leaders since then. Nicola Sturgeon resigned in 2023 amid a party-finance
scandal; her successor, Humza Yousaf, stepped down in May to be replaced
by John Swinney. Our prediction model offers a central scenario of the SNP
taking 24 seats in Scotland, half the number it took in 2019.
See our other coverage of Britain’s election, including our poll tracker,
updated daily
Labour, which was the dominant party in Scotland for the half-century
before the 2014 referendum, is also seeing changed behaviour as a result.
One of its candidates recalls how an activist was once chased down the
street by a voter with a chainsaw. “It’s nice that people don’t call us the c-
word as much now.”
Sir Keir Starmer, the Labour leader, offers a conciliatory form of unionism
in response. He promises a less hostile relationship between politicians in
London and Edinburgh. “I do understand the sentiment that leads a number
of people to say: ‘After 14 years of being shackled to this Tory government
in Westminster, we’d be better off out’,” he told The Economist during a
visit to the constituency.
This tactic is designed to blunt the SNP’s attacks on Sir Keir for disappointing
progressives on immigration, the EU, private provision in the NHS and more. Mr
Cowan’s leaflets highlight occasions when Labour frontbenchers have
praised Margaret Thatcher, who is blamed by many in the area for the
collapse of shipbuilding and other heavy industries. “What on earth has
happened? I do not recognise this Labour Party,” he says. The desire to
contain the SNP in Scotland may push a future Labour government to the left.
The SNP’s struggles are not just good news for Labour; they also offer a rare
glimmer of hope for the Tories. Although polls suggest that the party will
suffer brutal losses across England and Wales, our model suggests that the
Scottish Conservatives will hold six of their seven seats. Douglas Ross, the
leader, even predicts they will make gains, by focusing on underperformance
in health and schooling, which the Scottish government runs, and by
drawing attention to Scotland’s tax burden, which has risen faster than
England’s.
Mr Ross has carefully differentiated his party from its brethren in London.
And since the Scottish Tory coalition is overwhelmingly drawn from
unionists, he openly urges his supporters to use the election to squash the
prospect of a second referendum. “This could be a defining moment in
Scottish politics,” he says. “[The SNP] can have a truly terrible night which
ends the obsession with independence.” In truth, the constitutional question
is not going to disappear. But a bad night for the nationalists is more likely
than not. ■
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election-campaign
Britain | Give me votes but not too many
What is the point of the Liberal Democrats? Even to ask the question feels
unkind, akin to asking “What is the point of kittens?” In Knighton, a small
town in mid-Wales, a crowd of Lib Dem supporters have gathered to see Sir
Ed Davey, the party leader, speak. They all look exactly as you would
imagine. There is a lot of sensible rainwear and a good showing of beards;
most look like retired maths teachers; all look like the kind of people who
worry about washing their yogurt pots before recycling them. When Sir Ed
appears on a bicycle and puts his legs out like Coco the Clown, the crowd,
with a rustle of raincoats, clap jollily.
The niceness is not contrived. Most of their policies (less sewage, more
nurses) are hard to dislike. Their battle bus—the term feels too martial;
“mild disagreement” bus would feel more fitting—is nice, too. Yellow on
the outside, it smells of oranges within. Even their attention-seeking is rather
sweet: as well as bicycling in Wales, Sir Ed gains it by pretending to fall off
a paddleboard in the Lake District and going down a water slide in Frome.
See our other coverage of Britain’s election, including our poll tracker,
updated daily
It is clear, then, that the Lib Dems are generally lovely. But even if you are
extremely animated by sewage, it is not all that clear why you should vote
for them—or even how hungry the party is for success.
For decades, the Lib Dems offered old-fashioned liberalism to those who
wanted it. For those interested in the politics of local issues, they pioneered
that. For everyone else, they offered a protest vote: they were a superior
alternative to spoiling your ballot paper. Occasionally they gained large
numbers of votes but these were always too thinly spread across the country,
in a first-past-the-post system, for them to do anything so alarming as wield
actual power. In 1992 they won 18% of the vote but just 20 seats. Then came
2010.
Each political party has endured an election so awful that it reshapes it for
years to come. For Labour it was not winning power in 1992. For the Tories
it was losing it in 1997. For the Lib Dems the trouble was doing too well in
2010, paving the way for a coalition with the Conservatives.
Seasoned politicians know that coalitions may seem symbiotic but are
actually antagonistic. Before the election, Angela Merkel, the German
chancellor, told David Cameron, the then Tory leader: “The little party
always gets smashed!” After it, William Hague, another senior Tory figure,
emerged from coalition negotiations and said to his wife: “I think I’ve just
killed the Liberal Democrats.” The only people not seasoned enough to see
all this were the Lib Dems themselves, who became wildly unpopular during
their spell in power. Talk to senior Lib Dems and they use terms such as
“PTSD” and “trauma” to describe their reaction to the election drubbing (they
went from 57 seats to eight) that followed in 2015.
This election—which for many voters is mainly about kicking the
government—should see the Lib Dems benefit from tactical voting among
Labour supporters in seats where they are the main challengers to the Tories.
There are plenty of votes to be had among traditional low-tax, small-c
conservatives who dislike what has happened to the Tory party. But after a
few years in the wilderness, voter recognition is low. While Sir Keir
Starmer, the Labour leader, does interviews with Vogue (which notes his
silver quiff), Sir Ed is interviewed by Nursery World and Civil Service World
(which notes his interest in mutualisation).
Hence, perhaps, all the clowning around. All third parties have to be protean
and be all things to all undecideds. Sir Ed has clearly decided to be all things
to all picture editors, too. Clips of him faux-falling off the paddleboard were
all over the news that day (even if in person, he is flintier and not quite as
cuddly as his Sir Wet Suit persona might lead you to believe).
Whether this will work with the public is uncertain. In Knighton, a couple
are discussing the election. They want “the Tories out” but aren’t sure if they
should vote Lib Dem and can’t name the leader. Sir Ed happens to walk past
and says “hello”. They don’t recognise him. When told who it is they are
amused. “Ooh. They do need to raise their profile then.” Perhaps the
combination of Tories and sewage will give the Lib Dems a good result. Just
so long as they don’t end up in power again. ■
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Britain | A seaside tradition
Mr Farage came here in 2014 to parade with Douglas Carswell, a local Tory
MP who had defected to his UK Independence Party. They posed for photos at
the top end of the pier by the Moon & Starfish pub; Mr Carswell would win
the by-election that followed. The result: David Cameron solidified his plan
for a referendum on Britain’s membership of the EU.
See our other coverage of Britain’s election, including our poll tracker,
updated daily
Mr Farage was in the same spot again in 2019, as leader of the Brexit Party.
He turned European parliamentary elections that year into a verdict on
Theresa May’s Brexit deal. Soon she, and it, were gone. And on June 4th he
was there again. The day before Mr Farage had announced that he would
take over the leadership of Reform UK, an upstart party which he controls, and
stand for Parliament in Clacton.
The crowd was far bigger this year; the speakers struggled to carry his
speech over their heads. He flattered them: Brexit would not have happened
without Clacton. “Is this not the most patriotic town in the whole of our
country?” he asked. Alas, they had been betrayed by their leaders. “They
don’t believe in Britain and the British people the way you do.”
Mr Farage’s goal is even bigger this time: to remake the British right.
Reform UK’s support is drawn overwhelmingly from former Tory voters. It
stood at 11% in the polls before Mr Farage’s announcement; if that figure
were to rise by three percentage points exclusively at the Tories’ expense,
they would lose another 40 seats, according to our prediction model.
This new movement would speak “for the little guy”, he says. He proposes a
net-zero migration regime, leaving the European Convention on Human
Rights (ECHR) and the automatic deportation of irregular migrants (“If you’re
from Syria, you go back to Syria, end of”). He claims it would speak for
small businesses.
Many in the crowd in Clacton conceded that leaving the European Union
had been a disappointment, but they did not hold Mr Farage responsible. “It
has been sabotaged from the inside,” said one attendee who was wearing a
Donald Trump hat. Mr Sunak might have stood a chance if he’d only
ordered the Royal Navy to tow migrant boats back to France or put some
sharks in the channel, added a friend. Phil Suarez, a retired policeman, said
that Brexit had made life more complicated for his wife’s floristry business
and that, as an electric-car driver, he disagreed with Mr Farage’s hostility to
climate-change schemes. But he was minded to vote for him regardless
because of immigration.
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Britain | Bagehot
Neither Rishi Sunak nor Sir Keir Starmer is a natural politician. That may be
a strange thing to say about a man who was the youngest prime minister
since 1812 and an opponent who is on track for a historically large majority.
But in a less feral era of British politics, Sir Keir would have capped off a
successful legal career with a few years as attorney-general and Mr Sunak
would still be a mid-ranking cabinet minister rather than the boss. Extreme
events put both in a high place, like a fishing boat marooned halfway up a
hill after a tsunami.
All their flaws and frailties were on display during their first televised head-
to-head debate on June 4th. Neither shone. Mr Sunak has two registers:
simpering and hectoring. When members of the public laid out their
hardship stories, Mr Sunak responded with the learned empathy of a man
worth £651m ($830m). When the debate moved to technical matters, he
responded with the pernickety fluency of an over-promoted junior minister.
Sir Keir, meanwhile, is remarkably wooden for a former barrister, clumsily
dragging every other question back to his tenure running the Crown
Prosecution Service. The viewer was left pleasantly surprised that anyone
was jailed during his stint there.
If each struggles with this format, why did both agree to participate in it?
One answer is that debates are now a mainstay of British politics, which has
taken a presidential turn. Party leaders dominate election coverage at the
expense of colleagues who would also be running the country under
Britain’s system of cabinet government. Combining the profile of a president
with the powers of a prime minister is a bad mix. A pair of flawed
politicians, such as Mr Sunak and Sir Keir, make the absurdities of this
accidental system apparent.
THE MANAGERS of Saudi Aramco could have the cushiest jobs in the
energy business. The oil colossus produces 11m barrels of oil a day, more
than any other firm and a tenth of the world’s total (see chart 1). It boasts by
far the largest proven reserves of the stuff, which would last into the second
half of the century at current pumping rates. Its piddling production costs of
$3 a barrel, a tenth of what many Western private-sector rivals must content
themselves with, allowed it to generate an eye-watering $282bn in total net
profit over the past two years. And although its oil burns as dirtily as any
other, Aramco emits less carbon when liberating it from rock formations
than competitors do. That makes the company’s product appealing in a
world increasingly concerned about global warming but still hooked on
hydrocarbons.
As less generously endowed rivals fall by the wayside, Aramco’s market
share would, in other words, be almost certain to rise with a few modest
investments in maintaining reservoirs. Yet the company’s employees are
busier than ever. That is because Aramco is the linchpin of the strategy of
Muhammad bin Salman, Saudi Arabia’s crown prince and de facto ruler, to
end his country’s reliance on its oil riches, diversify its economy and
decarbonise its energy production.
Aramco is, for a start, the chief source of funds for this vision. On June 2nd
it launched a long-awaited secondary share offering, hoping to raise $13bn
in exchange for just 0.7% or so of its government-held stock. This followed
a record-breaking $30bn initial public offering in 2019. Some of the money
will again flow to the Public Investment Fund, the main vehicle for the
kingdom’s sovereign wealth.
Yet Aramco is more than just a princely piggy bank. As the kingdom’s most
important business, it also has to transform itself in line with the royal
strategy. “Our goal is to make our energy source as affordable and
sustainable as possible,” says Ahmad al-Khowaiter, Aramco’s head of
technology and innovation.
Achieving that goal involves a three-pronged strategy. Its first element is to
double down on oil, but to extract it in ever-cleaner ways. Aramco is
planning to spend between $48bn and $58bn this year on capital
investments. Wood Mackenzie, a consultancy, reckons it will disburse more
than $200bn on exploration and production between 2024 and 2030, far and
away the most in the industry. At the same time, Mr al-Khowaiter stresses
that his firm is determined to keep its own emissions in check. It routinely
uses sophisticated modelling and clever drilling technology to minimise how
much carbon is released in its operations. It has pledged to spew no net
greenhouse gases by 2050, a decade ahead of Saudi Arabia’s national target.
One area of diversification is natural gas. Because it burns more cleanly than
oil or coal, and because the resulting CO2 emissions are more concentrated
and thus easier to capture and store, it is considered by many governments a
realistic bridge to a greener energy future. Aramco wants to produce 165bn
cubic metres of gas a year by 2030, up from 110bn in 2022.
Petrochemicals, another big area of interest for Aramco, could soak up a
further $100bn in Saudi investments this decade. The firm plans to direct 1m
barrels of its oil into making such products. SABIC, a Saudi petrochemical
company in which Aramco has a 70% stake, is working with two industrial
giants, BASF and Linde, on technology that converts oil into chemicals using
electricity rather than natural gas to heat the process. A full-scale pilot plant
was inaugurated in Germany in April.
Some of this clean power can be used to produce equally clean hydrogen,
which could replace hydrocarbons both as a store of energy and in some
industrial processes such as steelmaking. In addition to this “green”
hydrogen, made by splitting it from oxygen in water molecules using lots of
renewable energy, Aramco wants to become the world leader in “blue”
hydrogen, which is derived from natural gas but in a process that prevents
the resulting carbon from reaching the atmosphere.
Hydrogen can also be used to produce synthetic liquid fuels that would do
the same job—and use the same infrastructure—as petrol, diesel and
aviation fuel, minus the carbon emissions. Aramco is planning to invest
hundreds of millions of dollars in partnership with Repsol, a Spanish oil
company, to produce such “drop-in” e-fuels. As a proof of concept, Mr al-
Khowaiter points to Formula One motor racing. Starting in 2026 the teams,
including Aramco’s partnership with Aston Martin, a British sports-car
maker, will have to use 100% sustainable fuels.
All Aramco’s blue-hydrogen plans rely on its ability to capture the carbon
emitted in its production. As its collaboration with Topsoe and its shipments
of blue ammonia to Asia show, it is having some success in this area. But its
carbon-capture plans are much grander, and go far beyond hydrogen
production.
Even by AI’s frenetic standards G42 has had a busy couple of years. It has
struck deals with OpenAI, creator of ChatGPT, and with Cerebras, a chipmaking
upstart, to construct a new supercomputer. It is erecting data centres to
accommodate vast cloud-computing workloads. It has teamed up with
AstraZeneca, a European drugmaker (to manufacture “innovative”
medicines in the UAE), and with the Mercedes Formula One racing team (for
reasons that are vaguer still). Through investment vehicles co-founded with
Mubadala and ADQ, two Emirati sovereign-wealth funds, it is also placing
multibillion-dollar bets on startups around the world. And in April it found
itself on the receiving end of a $1.5bn investment from Microsoft, the $3trn
software behemoth whose own partnership with OpenAI has put it at the sharp
end of the AI revolution.
All this dealmaking should furnish G42 with AI nous that, the UAE’s rulers hope,
will help diversify the country’s economy away from hydrocarbons. This
expertise can also be redeployed abroad—also partly in the service of
Emirati statecraft. The company seems particularly keen on digital projects
in places which the UAE sees as strategically useful. In Kazakhstan, where its
compatriots are developing large renewable-energy projects, G42 has signed
an agreement with that country’s sovereign-wealth fund to, among other
things, smarten up the Kazakh energy grid.
The company has been especially busy in Africa, a continent across which
the UAE is opening embassies, building ports and developing oil-and-gas
projects. In Angola, Gambia and Kenya, G42 is helping develop data centres.
In Senegal and Zambia it is assisting governments in digitising public
services.
Whether all this elevates G42 to global AI stardom is up for debate. Although
the UAE is seeking a “marriage” with America, in the words of its AI minister,
security hawks in Washington are uncomfortable about the country’s
friendliness with China. Microsoft’s investment required G42 to sever its ties
with controversial Chinese hardware manufacturers such as Huawei.
Now the tables are turning. Starbucks’s Chinese sales fell by 8% in the first
quarter, year on year, and Yum China reported a drop of 3%. Yet even as
they lose their appetite for foreign chains, Chinese consumers cannot get
enough of domestic ones. Tastien, which fills hamburgers with local
delicacies such as Peking duck or mapo tofu rather than beef, has opened
1,600 new shops in the past six months, bringing its total to 7,000. Wallace,
another burger-flipper, now has more than 20,000. Cotti, a two-year-old
coffee-shop chain, plans to have that many by the end of 2025, up from
6,000 last October. An older caffeine-pedlar, Luckin, opened 8,000 in 2023,
doubling its network. Mixue hawks its bubble tea through 36,000 outlets.
Investors are licking their lips. Mixue, which also sells ice cream and
churned out 2.5bn yuan ($350m) in net profit in the first nine months of
2023, may soon seek a $1bn initial public offering (IPO) in Hong Kong. A
rival tea-seller, Chabaidao, raised $330m when it listed there in April.
Another, Chagee, is said to be preparing for an IPO in America. According to
local media, the privately held Tastien is valued at 7bn yuan.
A big reason for the sudden popularity of domestic chains is their lower
prices. Rather than forgo lattes as China’s economic prospects sour,
consumers are trading down. Luckin is selling coffee at a promotional price
that is one-third that of an equivalent beverage at Starbucks (it is also lacing
some coffees with baijiu, a local firewater). Mixue and Cotti offer similarly
cheap (though less boozy) fare.
This has allowed the locals to take advantage of perkier consumer sentiment
in such places. According to McKinsey, a consultancy, 30-somethings living
there are less gloomy about their prospects than their metropolitan coastal
counterparts. UBS, a bank, recently found that residents of smaller cities
intended to spend more on dining, cosmetics and sportswear than those in
larger conurbations.
Can the feast last? Foreign rivals are catching on. Between January and
March about 60% of new Chinese KFCs and Pizza Huts (also owned by Yum
China) opened in cities that are no bigger than third-tier. Many of the 4,000
new restaurants that McDonald’s is planning to open by 2028 are expected
to be in smaller towns.
There is another reason for the West to keep its cool. Although Chinese
chipmakers rival foreign makers of mature semiconductors in
manufacturing, they are still outmatched when it comes to design,
engineering and product reliability. This is especially true for fiddly
semiconductors such as microcontrollers (a type of computer-on-a-chip) and
analogue processors (which use wave-like signals instead of digital ones and
zeros). Having doubled their domestic market share to around 12% between
2019 and 2021, Chinese makers of analogue chips have been unable to make
further inroads since. Bernstein expects them to supply just 14% of the
domestic market by 2026. That leaves lots of room for Western producers
such as Analog Devices, Texas Instruments and NXP.
Rare is the chief executive who extols the virtues of a lie-in. Tim Cook, boss
of Apple, maker of the iPhone, wakes between 4am and 5am. So does Bob
Iger, his counterpart at Disney, a media giant. According to one survey, two-
thirds of the chief executives of large American companies are up by 6
o’clock; for average Americans the share is less than one in three. For those
aspiring to corporate greatness, the message seems clear: you snooze, you
lose.
Your guest Bartleby harbours no such ambitions. But he has, in the past,
experimented with early starts, and can confirm that their benefits go beyond
the smug sense of satisfaction that comes from arriving at your desk before
your editor. Inboxes can be cleared and tricky problems mulled over before
the onslaught of emails and meetings begins, leaving you feeling well
prepared for the day ahead.
Those quiet hours of the morning need not be spent solely on work. In a
popular genre of TikTok videos, influencers film themselves performing
elaborate morning routines in which they submerge themselves in ice baths,
recite affirmations and mindfully prepare nootropic coffees. In one widely
pilloried video, Kris Krohn, a business coach, details how he wakes at 4 in
the morning to “align the pharmacy of the body and over-dopamine the
mind”.
Early birds are certainly held in higher regard. Rolling into the office late
continues to be frowned upon in most workplaces. A study published in
2022 by Jessica Dietch of Oregon State University and her co-authors found
that night owls were perceived by respondents as being “lazy”,
“undisciplined” and “immature”. To pile on the the stereotypes, they are
fatter, too, according to research by Lap Ah Tse of the Chinese University of
Hong Kong and colleagues.
Rising early is not, though, all upside. Those ready and waiting to receive
work when the boss arrives may be given more of it. If the early bird gets
the worm, the clever worm stays in bed. Urgent tasks often come up during
the day, meaning that those who come in early may end up working just as
late as their dawn-averse colleagues. And the more emails you send in the
morning, the more responses you are bound to get back.
Waking before sunrise also risks turning you into a bore. Some larks cannot
resist describing how much they got done while owls bashed the snooze
button. Others go home early to tuck themselves in rather than socialise after
hours. Night owls, by contrast, let loose. Research shows they drink more
and take more drugs. They also have more sex. Christoph Randler and
colleagues at the Heidelberg University of Education found that men who
stayed up later had “higher mating success”. In the eyes of many, late nights
are the preserve of youth, whereas early mornings are the domain of the
geriatric.
Efforts to alter your circadian rhythm are likely to end in sleepy frustration.
A person’s chronotype, to use the scientific lingo, is largely a product of
their genes. Dimming your lights at night and buying a special alarm clock
will not magically transform you into a morning person. Those early hours
will be of little use if they are spent staring blankly at a screen through
bleary eyes. This Bartleby abandoned his efforts at early starts after growing
alarmed at the quantities of caffeine he required to stay awake. Early birds,
for their part, lose out by never being the life of the party after the sun goes
down. If nothing else, that gives them one fewer thing to feel smug about.
Perhaps the best advice, then, is to stop worrying about your body clock.
Most people are neither early birds nor night owls, but in between. They do
not perform well first thing in the morning or late in the evening. Many,
including your columnist, get sleepy in the afternoon, too. That is why most
offices operate between 9 and 5—and why they ought to have nap rooms.■
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a-night-owl
Business | Schumpeter
The two firms do share similarities. Both have been celebrated as good
places to work while being staunchly anti-union. Coulombe wrote that his
core value from the start was high compensation, which he says boosted
productivity so much it was worth it. “You can’t afford to have cheap
employees.” Mr Mackey says pay was of secondary importance, but that
Whole Foods’ sense of mission and community attracted workers. Both
founders had a nose for changing customer tastes. In the 1960s Coulombe
realised that Americans were becoming better educated and travelling more,
which made them keen to explore new tastes. Early items he sold were wine,
which offered a guaranteed profit thanks to price controls, and Brie, on
which Wisconsin’s cheese lobby had neglected to demand import
restrictions. Mr Mackey bet boldly on his hunch that even young Texans
would crave healthier foods. Later, after a proselytising lecture he heard on
olive oil, he was quick to see the potential in foodies as well as hippies.
Both men, for all their community values, had a shrewd eye for the bottom
line. Coulombe’s business epiphany came when he centralised the stores’
buying and delivery activities, slashed the number of items available, put
most of them under the Trader Joe’s brand, and sought a gross profit on
every one (“No ‘loss leaders’,” he wrote). Whole Foods had a less
centralised approach. But it kept tight control of administrative expenses,
and reinvested profits in the business. It was a master at making the stores
that it acquired quickly profitable, enabling further expansion.
As father figures of their firms, their differences are more obvious. “I’m
going to disillusion those dear souls—there seem to be a lot of them out
there—who think that Trader Joe’s sprang, fully developed, from my brain,
like Athena from the head of Zeus,” Coulombe wrote. He was not one to
dwell upon himself. Mr Mackey, in contrast, puts himself and his personal
life (including paramours) at the centre of the Whole Foods story. Likewise,
they built their companies in different ways. Coulombe said that in order to
survive, Trader Joe’s had to be regularly reinvented from the bottom up. Mr
Mackey, to begin with, treats Whole Foods as his baby. As it expands, he
accepts that it should become more independent of him. But there is not
enough reinvention.
The fallout for Whole Foods was momentous. First came accusations from
regulators in California and New York City that it was overcharging
customers on pre-packed food. These led to a fine and a settlement. Then
shareholder activists tried to oust Mr Mackey. In response, he sold the
company to Amazon, which swiftly cut prices and raised hourly pay. He
writes that he regrets the circumstances that led to the sale more than the sale
itself. But he gives the impression that Whole Foods quickly lost its
individuality. Frustrated, he quit in 2022. Coulombe had regrets, too. In 1979
he sold out to the Albrecht family, co-founders of Aldi, a German discount
retailer, though he stayed on as boss for nine years. He died in 2020, wishing
he hadn’t sold. Like Mr Mackey, he built his business to last, not for the
quick buck. ■
Twenty years ago Joshua Cooper Ramo, a consultant, first wrote about the
“Beijing consensus”. The Washington consensus of financial liberalisation,
floating currencies and openness to foreign capital was, he posited, a
damaged brand. China was pioneering its own approach to development
based on principles of equality, innovation and a relentless focus on
sovereignty and national security. This would appeal to lots of developing
countries.
In the years since, China’s leaders have mostly denied any ambition to
export a state-led model of development. But they are sometimes more
brazen. Last year, for instance, Xi Jinping argued in a speech to Communist
Party officials that the country’s economic model “breaks the myth that
modernisation equals Westernisation”, and that its growth was expanding
“choices for developing countries”. Leaders past and present in the
developing world—from Pakistan’s Imran Khan and Malaysia’s Mahathir
Mohamad to Brazil’s Luiz Inácio Lula da Silva and South Africa’s Cyril
Ramaphosa—have expounded the benefits of at least some aspects of the
model. And since Mr Cooper Ramo first wrote about the Beijing consensus,
the Chinese economy has quadrupled in size in real dollar terms, boosting
the country’s diplomatic and military sway.
More recently, though, China’s economy has stumbled. Its recovery from
covid-19 has been weak, limited by a property crisis, which has seen
investment in the industry drop by almost a quarter in nominal terms since
2021. Efforts to boost manufacturing have produced clashes with Western
powers, whose leaders accuse China of dumping underpriced goods. Given
this gloomy context, surely demand for the China model is slipping? Not
quite. As Kristalina Georgieva, head of the IMF, put it in a recent interview
with Chinese state television: “I travel around the world and I see models of
development that have come out of China replicated in other places.” To
analyse the extent to which this is true, we have produced an index that
measures how similar other economies are to China’s. It mostly confirms her
conclusion. There is, moreover, reason to believe that China’s influence will
continue to grow.
What exactly is the China model? Some of its better-known features can also
be found in other East Asian success stories, including Japan, South Korea
and Taiwan. Economies in all four countries are orientated towards exports
and investment. For its part, China has had a current-account surplus for
three decades. Its gross fixed capital formation, a measure of investment,
runs to 42% of GDP, one of the highest shares in the world. A largely closed
capital account prevents citizens from moving money abroad. Financial
repression, the practice of keeping interest rates artificially low, ensures
cheap bank financing for industries favoured by the state.
But there are other more distinctly Chinese elements. South Korea and
Taiwan moved from autocratic to democratic rule while poorer than China is
today. In Beijing there has been no political liberalisation, and the state’s
economic power is enthusiastically wielded for political ends, including
through the use of state-owned enterprises. That is particularly true in the
financial sector. Despite the growth of private enterprise since the 1980s,
officials have kept a tight grip on the banking system, with more than 50%
of bank assets still held by state-owned lenders.
Beijing’s trendsetters
Using these seven measures—a country’s current-account balance, the
openness of its capital account, the scale of its investment, the share of
exports that are manufactured goods, the size of the state-owned banking
system, its level of democracy and the number of large SEZs per person—we
calculate how much other economies have in common with China (see
table). Most similar of all is Vietnam, which has an export- and
manufacturing-intensive economy governed by its own Communist Party.
Australia and Britain, neither of which is ruled by communists, are among
those at the bottom of the rankings. Greece’s economy is the least like
China’s.
Other countries’ positions are perhaps more surprising. Although South
Korea’s early development is often compared to China’s, the two countries
have now diverged. Indeed, China now has more in common with
Bangladesh and Turkey, both countries that aim to promote exports but
which have more democratic politics. India and Ethiopia also resemble
China, in part owing to their state-led banking systems. Meanwhile,
Angola’s closed capital account pushes it up the ranks. All these countries
also have SEZs.
Unlike the Washington consensus, which was supported by the IMF and World
Bank, the Beijing consensus has no international institutions pushing it.
China’s lending also comes with fewer political conditions. But it is
extensive and focused on industries typical of the China model. Between
2019 and 2023, some 76% of China’s overseas disbursements and
construction activity, running to $541bn, was in just four sectors: energy,
metals, property and transport. Similarly, Yu Zhang and colleagues at the
Civil Aviation University of China have identified 103 SEZs outside China that
are run by China’s Ministry of Commerce, with investment facilitated by
these zones focusing on industries associated with the China model. As a
result, host countries may find their economies becoming more Chinese.
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retains-a-dangerous-allure
Finance & economics | No returns
Nothing has been able to stop American consumers. At first they splashed
covid-19 savings on home-exercise bicycles; now they are more likely to
plump for beachside holidays. Predictions made by bank bosses last summer
that households would be squeezed by inflation have been confounded.
Instead, their outlays have powered American GDP ever higher, at a pace
beyond the country’s G7 peers.
Nowhere is the pain clearer than in credit-card data. According to the San
Francisco Fed, households burned through the last of their $2.1trn of
pandemic-era excess savings in March. The drawdown has pushed more and
more to rely on credit cards to meet their outgoings, and some are now
struggling to repay debts. Paul Siegfried of TransUnion, a credit bureau,
estimates that since April last year, 440,000 credit-card holders have been
downgraded to subprime status. Accounts are becoming delinquent at a pace
last seen in 2011. People who have taken out loans to buy cars are falling
behind on repayments almost as fast, causing some to sell their vehicles.
According to Kelley Blue Book, a sales platform, used-car listings were up
6% in May from a year earlier.
Florida is at the heart of the trouble. The state is home to lots of low-income
workers and has the highest delinquency rates of a sample analysed by the
New York Fed. Esther Lopez has worked at ACE Cash Express, a payday
lender in Little Havana, Miami, for 15 years. She says her store is handing
out fewer loans than before covid—but only because so many competing
lenders have recently opened, in anticipation of a rise in demand. The city’s
residents will take longer than those anywhere else in the country to repay
their credit-card debt, reckons WalletHub, a personal-finance firm. Aptly,
Miami’s baseball stadium is called loanDepot Park.
instance.
What matters for the overall economy is how many consumers end up
struggling to make ends meet. Rising incomes, along with pandemic
savings, were what really fuelled America’s rip-roaring spending. With
saving rates low and excess savings exhausted, continued spending will have
to be fuelled by still-higher incomes. Employment remains strong and initial
jobless claims are steady. Although in April monthly nominal wage growth
crept down, recent data also suggest that inflation may have resumed its
descent, which would provide a boost to real incomes. Households’ balance-
sheets have weakened, but with a bit of luck America might keep dodging a
consumer crunch. ■
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heading-for-a-consumer-crunch
Finance & economics | Equities in Dallas
Times may be changing. On June 4th an upstart Texas Stock Exchange (TXSE)
said it had received $120m in funding from financial giants including
BlackRock, a fund manager, and Citadel Securities, a marketmaker. The TXSE
will, its boss wrote, be the best-capitalised challenger to the New York Stock
Exchange.
No New Yorker should expect actual exile, for the exchange will be
electronic. The aim is to lure firms that resent the Big Apple’s listing
requirements. The Nasdaq, a tech-heavy exchange, introduced a rule in 2021
requiring many firms to have two “diverse directors” by December 2025,
one of whom must be a woman and one gay, lesbian, bisexual, trans or from
another “underrepresented minority”—or else to “provide explanation”. The
TXSE will be less demanding.
Even the NYSE is now starting to look like a relic, though, with its opening
bells, 9.30am-to-4pm hours and blue-jacketed traders. By contrast,
exchange-traded funds, one of the most common ways of buying shares,
trade off-exchange and after hours. Geography is irrelevant and listing
locations ought to have little impact on valuations or the liquidity available.
That makes things easier for an upstart based somewhere unusual, and
offering less demanding requirements. “Equities in Dallas” may one day be
said with more relish.■
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stockmarket-rules-list-in-texas
Finance & economics | Rouble-rousers
Some European banks, such as France’s Société Générale, sold their Russian
operations at the start of the war. Although those that remain have reduced
their staff by just 3%, their portfolios have shrunk by quite a bit. Only
Raiffeisen retains significant exposure, with 15% of its assets remaining in
the country, compared with 5% for UniCredit, which has the next-most. But
it, too, has slashed its loan book—by 58% since the invasion—and stopped
making new loans (even if it is rolling over some existing ones).
What, therefore, explains the continued profitmaking? One answer lies in the
spread between the meagre interest rates banks pay depositors and that of the
Russian central bank. The latter stands at 16%, nearly four times as high as
three years ago. Another answer is technical. In 2022, anticipating a rush of
Russian defaults, banks booked hefty loan-loss provisions. When the feared
tsunami of bad debt failed to arrive, these provisions were released, buoying
profits, notes Halil Sentürk of Morningstar DBRS, a rating agency.
Yet such business is lucrative only on paper, since profits are tough to
repatriate. Russia has stringent capital controls that prevent banks from
shifting cash. At the same time, sizeable paper profits are attracting the
attention of American and European regulators. Last month several lenders
received a letter from the European Central Bank urging them to cut their
exposure to Russia. Raiffeisen was ordered to slash its Russian loan book by
a further 65% by 2026, faster than the bank had planned. In December the
White House issued an executive order exposing foreign banks to secondary
sanctions if they were found to facilitate transactions involving Russia’s
military-industrial complex. In May Janet Yellen, America’s treasury
secretary, warned European banks that “operating in Russia creates an awful
lot of risk”.
The problem for European banks in Russia is that they have few exit routes.
Ideally they would sell local units to other foreign companies, but few are
interested in picking up such geopolitically complicated businesses. Selling
to locals requires the approval of Mr Putin and, given the context, any deals
are unlikely to be concluded at a fair price. Most recent attempts to complete
sales have either dragged on or collapsed. More creative ways to repatriate
capital involve big risks, too. Raiffeisen first came into the cross-hairs of
America’s Treasury this spring, when it tried to swap some of its Russian
assets for a stake in Strabag, an Austrian construction firm, ultimately
owned by Oleg Deripaska, an oligarch under sanctions.
That leaves European banks with a final option: to continue winding down
their Russian portfolios. But even this is far from straightforward, and not
just because of the increased scrutiny from Western regulators. In May a
Russian court ordered the seizure of the assets of Commerzbank and
Deutsche Bank, two German lenders, because of their involvement in a gas
project that was cancelled after the invasion. In a parallel lawsuit, the court
also seized assets belonging to UniCredit, which is an Italian institution. All
this means there is a good chance that many Western units in Russia will end
up being at least partly written down. European banks face a high
reputational price—and the pay-off is hardly likely to be worthwhile. ■
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making-heady-profits-in-russia
Finance & economics | Buttonwood
On June 7th each share in Nvidia is due to become many. In one sense such
stock splits ought not to matter much: they merely lower the share price,
usually returning it to somewhere near $100, in order to make small trades
easier. Yet for the company and its longtime backers this administrative
exercise is cause to pop the champagne. For a split to be necessary in the
first place, the share price must have multiplied, commonly by two or three,
prompting each share to be divided by the same factor. Each Nvidia share,
however, will become ten. Two years ago both Alphabet and Amazon split
each of their shares into 20. Investors in big tech have had plenty of
opportunities to let the corks fly.
All three firms have made traditional valuation measures look hopelessly
outdated. Dividend yields, for instance, were once a popular tool for
assessing prospective returns. But Amazon has never made such a payout
and Alphabet will make its first ever on June 17th (of 20 cents per $175
share). Nvidia’s quarterly dividend after the split will be just one cent per
share, each priced at around $120. Plainly, there is no stretch of the
imagination by which these payouts explain the stocks’ spectacular returns.
The stage is, therefore, set for the revival of a fierce argument. Low yields
might mean that dividends will rise, or that future returns will be poor.
Reams of academic research suggest that, historically and for the
stockmarket as a whole, they have portended poor returns. Even so, a school
of thought has stubbornly held that investors know what they are doing, and
if they are buying stocks that yield little, they must expect payouts to grow.
Of late, hewing to this school and buying the likes of Alphabet, Amazon and
Nvidia would have made you a lot richer than fretting about valuations. So
could it be correct after all?
Contrast this with the alternative view, which is that prices move for all sorts
of other reasons, too. The value of a stock is the sum of its expected future
cashflows, discounted by myriad factors such as the uncertainty of the
expectation, the cost of capital and investors’ risk appetite. Changes to any
of these will feed through to stock prices. In particular, if risk appetite is
high, prices may also be high relative to expected payouts simply because
investors are able to take more risk and hence happy to receive low yields in
return. Conversely, if risk appetite is low, investors may feel unable to buy
stocks even if their expected payouts are high. This dynamic alone can
change both yields and prospective returns, without expected payouts
changing at all.
Previous work—most notably a landmark paper published in 2011 by John
Cochrane, then of the University of Chicago—has concluded that it is
entirely changes to such “discount rates”, rather than growing or shrinking
dividends, that cause yields to vary. Unfortunately, Messrs Atkeson,
Heathcote and Perri do not present an effective challenge to this notion.
Rather, they construct a model that relates prices to dividends, plus a third
variable that they then derive and dub “expected dividends”. Naturally, the
addition of this residual explains the price changes it is defined to explain.
But you might equally call it “risk appetite”, and claim a win for the other
side of the debate.
Many people have experienced the joy of finding some spare change down
the back of the sofa. On May 30th the World Bank experienced something
similar, if on a grander scale. After rooting around in 176 countries, it
discovered almost $7trn in extra global GDP—equivalent to an extra France
and a Mexico.
In fact, there may be a better analogy. What the World Bank discovered was
not additional money to spend, but the equivalent of a discount voucher,
which cuts 4% off the price of every good and service the world buys in a
year. That means global spending can stretch further than previously
thought.
To understand why, it helps to carry out a thought experiment. Imagine that
the many countries of the world all produced only one thing: Big Macs. In
calculating the GDP of these economies, their national accountants would use
market prices. America might, for example, value Big Macs at $5.69 each
(the average price across big American cities, according to McDonald’s). If
it produced a hundred in a period of time, its GDP would be $569. In adding up
the size of the world economy, it would make sense to use the same prices in
all countries. If a rival economy produced 125 burgers, its measured GDP
should be 25% higher.
There is an obvious solution: ignore the currency markets and look at prices
instead. If the yuan price of a Big Mac is roughly four times the dollar price,
why not use that as the exchange rate? If China’s GDP were converted into
dollars at 4.39 yuan to the dollar, its Big Macs would have the same value as
America’s. These alternative exchange rates, which equalise the prices of
goods and services, are known as purchasing-power parities, or PPPs.
Every few years, the World Bank leads an initiative to do just that. The
International Comparison Programme, as it is called, has just concluded its
latest effort, the tenth in the past 56 years. It gathered the prices of hundreds
of items across 176 countries, taking care to look at similar products in each
place. Within China alone teams consulted about 16,000 shops and other
outlets. The exercise is not without its difficulties, both practical and
conceptual. Not every good is as standardised as a Big Mac, making like-
for-like comparisons a matter of judgment. And often the same consumer
need is met by different goods in different parts of the world. In rural
Thailand, workers live on rice. In similar parts of Ethiopia, they live on teff.
But “rice is hard to find in Ethiopia and teff is impossible to find in
Thailand, so price comparisons are not possible,” as Angus Deaton of
Princeton University and Alan Heston of the University of Pennsylvania
have pointed out.
This extra buying power is not evenly distributed. Almost $1.1trn of it was
found in India, which is comfortably the third-biggest economy in the world
by the PPP measure. The revisions also added $660bn to Russia’s economy,
making it bigger than Japan’s. That is unwelcome news for Ukraine, which
is fighting a costly war with its larger neighbour. But the embattled country
can draw consolation from the extra $118bn that the revisions bestowed on
it, increasing its purchasing power by more than a quarter.
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7trn-bigger-than-everyone-thought
Science & technology
Robots are suddenly getting cleverer. What’s changed?
The quest to build robots that look and behave like humans
Zany ideas to slow polar melting are gathering momentum
Science & technology | Robotics
“WHAT DO YOU see right now?” a man asks a humanoid robot standing
behind a table. “I see a red apple on a plate in the centre of the table, a
drying rack with cups and a plate, and you standing nearby, with your hand
on the table,” the robot replies. “Great—can I have something to eat?” says
the man. “Sure thing,” says the robot. It flexes its arms, picks up the apple
with its right hand, passes it to its left hand, and then hands it to the man. He
asks the robot to explain its actions. “So I gave you the apple, because it’s
the only, er, edible item I could provide you with from the table,” it replies.
The robot in Figure’s video had its speech-recognition and spookily lifelike
speech-synthesis capabilities provided by OpenAI, which is an investor in the
company. OpenAI shut down its own robotics unit in around 2020, preferring
instead to invest in Figure and other startups. But now OpenAI has had second
thoughts, and in the past month it has started building a new robotics team—
a sign of how sentiment has begun to shift.
In other words, a VLAM can act as a “brain” for robots with all sorts of bodies—
whether giant stationary arms in factories or warehouses, or mobile robots
with legs or wheels. And unlike LLMs, which manipulate only text, VLAMs must
fit together several independent representations of the world, in text, images
and sensor readings. Grounding the model’s perception in the real world in
this way greatly reduces hallucinations (the tendency for AI models to make
things up and get things wrong).
Bot chat
Another benefit is “in-context learning”—the ability to change a robot’s
behaviour using text prompts, rather than elaborate reprogramming. Dr
Tuscher gives the example of a warehouse robot programmed to sort parcels,
which was getting confused when open boxes were wrongly being placed
into the system. Getting it to ignore them would once have required
retraining the model. “These days we give it a prompt—ignore open boxes
—and it just picks the closed ones,” says Dr Tuscher. “We can change the
behaviour of our robot by giving it a prompt, which is crazy.” Robots can, in
effect, be programmed by non-specialist human supervisors using ordinary
language, rather than computer code.
Such models can also respond in kind. “When the robot makes a mistake,
you can query the robot, and it answers in text form,” says Dr Chen. This is
useful for debugging, because new instructions can then be supplied by
modifying the robot’s prompt, says Dr Tuscher. “You can tell it, ‘this is bad,
please do it differently in future.’” Again, this makes robots easier for non-
specialists to work with.
Being able to ask a robot what it is doing, and why, is particularly helpful in
the field of self-driving cars, which are really just another form of robot.
Wayve, an autonomous-vehicle startup based in London, has created a VLAM
called Lingo-2. As well as controlling the car, the model can understand text
commands and explain the reasoning behind any of its decisions. “It can
provide explanations while we drive, and it allows us to debug, to give the
system instructions, or modify its behaviour to drive in a certain style,” says
Alex Kendall, Wayve’s co-founder. He gives the example of asking the
model what the speed limit is, and what environmental cues (such as signs
and road markings) it has used to arrive at its answer. “We can check what
kind of context it can understand, and what it can see,” he says.
As with other forms of AI, access to large amounts of training data is crucial.
Covariant, which was founded in 2017, has been gathering data from its
existing deployments for many years, which it used to train RFM-1. Robots can
also be guided manually to perform a particular task a few times, with the
model then able to generalise from the resulting data. This process is known
as “imitation learning”. Dr Tuscher says he uses a video-game controller for
this, which can be fiddly.
But that is not the only option. An ingenious research project at Stanford
University, called Mobile ALOHA, generated data to teach a robot basic domestic
tasks, like making coffee, using a process known as whole-body
teleoperation—in short, puppetry. The researchers stood behind the robot
and moved its limbs directly, enabling it to sense, learn and then replicate a
particular set of actions. This approach, they claim, “allows people to teach
arbitrary skills to robots”.
Investors are piling in. Chelsea Finn, a professor at Stanford who oversaw
the Mobile ALOHA project, is also one of the co-founders of Physical
Intelligence, a startup which recently raised $70m from backers including
OpenAI. Skild, a robotics startup spun out of Carnegie Mellon University, is
thought to have raised $300m in April. Figure, which is focusing on
humanoid robots, raised $675m in February; Wayve raised $1.05bn in May,
the largest-ever funding round for a European AI startup.
Dr Kendall of Wayve says the growing interest in robots reflects the rise of
“embodied AI”, as progress in AI software is increasingly applied to hardware
that interacts with the real world. “There’s so much more to AI than chatbots,”
he says. “In a couple of decades, this is what people will think of when they
think of AI: physical machines in our world.”
Such humanoid robots are now starting to work in the real world. Amazon,
an e-commerce giant, is testing Digit, a robot made by Agility, in helping its
warehouse employees with repetitive tasks. Close to two metres tall, with
skinny bird legs and a flat tubular head, Digit can carry empty yellow bins
from a shelf to a nearby conveyor belt. Boston Dynamics, a Massachusetts-
based robotics firm, plans to use its latest humanoid robot, Atlas, in the
manufacturing operations of its owner, Hyundai, a South Korean carmaker.
The regimented nature of their tasks and the highly controlled environments
in which these robots operate reveal how far these machines are from fully
replacing humans. However, there is much to be gained from the attempt.
To be widely used, such robots also need to match the dexterity and
versatility of human beings in real-world settings. Most viral videos of
robots running or jumping are carefully choreographed in controlled
conditions. A study published in November 2023 by Robert Riener, Luca
Rabezzana and Yves Zimmermann from ETH Zurich, a Swiss university,
compared the performance of 27 humanoid robots with humans. They found
that at the functional level, robots outperform humans. This is hardly
surprising: many motors can work longer hours, and lift more weight
without tiring, than human muscles can; carbon fibre, which is used to build
modern robots, is engineered to take a bigger beating than bone.
But although robots can walk, run and climb stairs like humans, when these
functions are measured in relation to size, weight or energy use, most robots
cannot match the efficiency or speed of the human body (see chart). The
machines are also less dexterous with their fingers and hands. (Digit, for
instance, is equipped with fingerless palms designed for nothing more
sophisticated than moving boxes.) Mr Riener believes biology’s advantage
over engineering arises from better integration of these appendages.
Even so, all companies in this space must deal with Moravec’s paradox,
which observes that tasks straightforward for humans can prove extremely
difficult for machines. The paradox is named after Hans Moravec, a
Canadian roboticist who noted that machines can solve mathematical and
logic problems easily, but struggle with movements a one-year-old human
child can master. Mr Rose cites the example of holding a coffee cup. For a
robot, that seemingly simple task involves sophisticated vision-processing
software to identify the cup, rigorous training on the motions needed to
grasp the cup and enough real-time awareness to adjust its motion to
changes in the environment.
Whereas today’s most advanced robots can grasp cups without difficulty, the
intelligence needed to function without supervision in a rapidly changing
environment remains out of reach. That may not be the case for long.
Advances in artificial intelligence are allowing robots of all kinds to interact
with humans, as well as their environments, with more sophistication than
ever before. Robots that can act and perform tasks like humans may not be
the stuff of science fiction for long.■
Globally, sea levels have risen by somewhere between 21cm and 24cm since
1880. Most of this rise is a consequence of water physically expanding as it
warms, but in recent decades meltwater flowing off Greenland and
Antarctica has significantly contributed too.
These rises in sea levels threaten coastal properties and the livelihoods and
lifestyles of coastal communities, as well as the very existence of low-lying
countries. Rising seas not only erode or flood land, they also let destructive
storms reach ever farther inland. As melting polar ice becomes an ever more
important contributor to sea-level rise, some have begun to embrace the
notion that it could be slowed by technological means ranging from
underwater curtains to ice-thickening pumps.
For a long time such ideas—and others, including holding outlet glaciers in
place with physical barriers, as well as thickening vulnerable sea ice by
pumping seawater on top of it and freezing it in place—were seen mainly as
science fiction. But they are gaining momentum. Dr Mankoff’s workshop
was one of three held between October and December to discuss polar
geoengineering; a fourth was held earlier this year. More are planned, and
several research papers are in the works.
Let it go
Some counter-arguments revisit themes familiar from the solar
geoengineering debate—that techno-fixes detract from the main work of
decarbonising, for instance, and that even exploratory research lubricates a
slippery slope towards deployment. “If a government chose to make
geoengineering-based research a part of its national Antarctic programme, it
would send a pretty strong signal about the state’s intentions,” says Peder
Roberts, a historian and member of the Scientific Committee on Antarctic
Research, which advises various intergovernmental groups including the UN
and the Antarctic Treaty secretariat. “The more expensive a piece of
research is, the harder it is to say it isn’t political.”
Even if such research were undertaken, practical hurdles could stand in the
way of implementation. Polar projects, unlike solar ones, are likely to be
extremely expensive—costing many tens of billions of dollars. They present
unprecedented engineering challenges: a seabed curtain to protect Thwaites
glacier might be 80km long and would have to be installed, maintained and
repaired in some of the roughest seas on Earth.
GEOFFREY TANDY was not sure why he had been summoned for war work in 1939.
He was a botanist at the Natural History Museum in London and a friend of
T.S. Eliot, a poet. Bletchley Park, Britain’s codebreaking centre in the
second world war, had asked for an expert in cryptograms (encrypted text).
Tandy was an expert in cryptogams (algae). Sometimes everything pivots on
a consonant.
That story may be apocryphal, an in-joke shared by the eccentrics who
cracked German codes in the English countryside. But what is not disputed
is that Tandy’s botanical knowledge had cryptological benefits. His expertise
on saltwater algae proved essential in salvaging German codebooks
recovered from the sea. Tandy’s role in wartime codebreaking exemplifies
the themes of a new book by Robert Hannigan. He is a former director of
GCHQ, Britain’s signals-intelligence service, responsible for intercepting and
deciphering messages, like its American peer the National Security Agency.
Diversity, equity and inclusion (DEI) has a bad name these days. The concept
is associated with woke pseudoscience and corporate flimflam. But Mr
Hannigan’s engaging book is a compelling corrective to that view. “Tandy
would probably not have made it through recruitment into a modern high-
performing company,” writes Mr Hannigan, but “sums up the amalgam of
oddness, random skills and dedication that led to spectacular innovations
and sustained success in the secret world of intelligence”.
Human-intelligence agencies like MI6 and the CIA recruit and run human
agents, and thus rely on influence, persuasion and manipulation. Meanwhile,
signals-intelligence (SIGINT) agencies focus on data and communication
technology—cables in the 19th century, radio in the first part of the 20th and
now the internet. The aim is to understand those systems and to “attack”
their weaknesses, as cryptanalysts say.
Those with autism tend to have better visual perception, a fact which Israel’s
armed forces exploit to interpret fuzzy satellite images. Drawing on research
into neurodiversity and autism-spectrum disorders, GCHQ “has actively sought
to recruit this kind of diverse workforce”, says Mr Hannigan. Dyslexia
(challenges in reading or writing) and dyscalculia (difficulty in
understanding numbers) are “prevalent” at GCHQ; Mr Hannigan guesses that one
in four of the organisation’s staff has some sort of neurodiverse condition.
Such people would not always prosper in traditional job interviews or
flourish under the rigid hierarchy of the armed forces or the formality of the
civil service.
agencies are not the only ones interested in diversity of all sorts. In
SIGINT
recent years MI6 has eased entry requirements so that candidates with dual
nationality and one British parent can apply to become officers. Spy
agencies increasingly recognise the importance of a diverse cadre of officers,
not least because they must blend in and connect with agents in a variety of
countries. Markus Wolf of the Stasi, East Germany’s brutal spy agency, once
described how West German spooks weeded out his agents by paying
attention to their haircuts. East Germans had short hair at a time when long
styles were popular in the West: “Turning one into a convincing hippy was
nearly impossible.”
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Culture | Forgoing the single life
TO BILLIE EILISH, things like cassettes and CDs probably seem charmingly
retro. Born in 2001, the musician was six years old when Spotify launched;
today she is the fourth-most popular artist on the platform. Ms Eilish has
only ever known 21st-century listening habits. And yet she has emerged as
an unlikely champion of a time-worn format: the album. She declared that
her new record, “Hit Me Hard and Soft”, released in May, was a “cohesive”
piece of work, “ideally listened to in its entirety from beginning to end”. No
singles were released in advance as amuse-bouches for famished fans.
She is not the only hitmaker emphasising the album rather than its
component parts. Ariana Grande advertised “Eternal Sunshine”, released in
March, with just one single, stressing that she wanted listeners to
“experience the album in full this time”. Dua Lipa’s debut album in 2017
was preceded by six singles; she scaled back for her latest record. And
Taylor Swift has issued four successive sets of new material with no advance
singles. Two of these were “surprise releases”, announced just ahead of their
arrival, which again emphasises the primacy of the album format.
For decades after the birth of recorded music in the 1920s, the single was the
only thing that mattered, mostly because it was the only thing there was:
early gramophone records could hold just a few minutes of music on each
side. As technology improved, playing times increased, and groups such as
the Beatles came to see LPs (“long play”) as statements of ambition. From the
mid-1960s onwards, albums became something to be appreciated as
complete works of art. In 1988 Prince released his “Lovesexy” album on CD
as one continuous track, with the explicit goal of making it impossible to
cherry-pick songs.
No doubt Ms Eilish and co want to prove their serious musical chops. Pop
music is still often regarded as ephemeral, because it relies on catchy tracks
that can dominate airwaves and charts. Singles account for around 65% of a
hit rock album’s total “consumption” (including streaming as well as
physical purchases). For a pop album that figure rises to 85%.
This crop of pop stars has discovered that a deluge can be better than a drip-
feed. Stars can encourage fans to buy their record on vinyl and stream the
album, too. As a result, “The artist and their label partner earn twice,” says
Chris Cooke of CMU, a music-industry website. And, by releasing the songs all
at once, artists enjoy the kind of chart dominance that sporadic singles do
not provide. Ms Eilish currently has three tracks in the Billboard top 20.
After the release of “The Tortured Poets Department”, Ms Swift claimed the
top 14 spots. Singles are still useful for pop’s aspiring princesses, but not the
queens. ■
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Culture | Your land is my land
The Language of War. By Oleksandr Mykhed. Allen Lane; 304 pages; $24
and £18.99
Revolusi: Indonesia and the Birth of the Modern World. By David Van
Reybrouck. W.W. Norton; 656 pages; $32.50. Bodley Head; £30
CAMPUS LEFTISTS in the West and nationalists in the global south never tire of
pointing out the evils of imperialism. Yet few include the Soviet Union on
their list of villains. This is odd: the Soviet empire stretched over 11 time
zones, oppressing its vassal states so egregiously that all declared
independence the moment they had the chance.
Airbrushing this history makes it harder to understand the present, when the
man with the world’s fourth-largest army is trying to reassemble a version of
that empire, minus the Marxism. When Vladimir Putin described the
liberation of the Soviet Union’s former subjects as the “greatest geopolitical
catastrophe of the 20th century”, he was expressing a worldview shared in
previous centuries by Spanish conquistadors and ruffians of the British East
India Company: that strong nations should rule weaker ones, regardless of
the wishes of those who live there.
Two new books offer first-hand accounts of how that feels for the colonised.
In “The Language of War”, the author himself is the eyewitness: Oleksandr
Mykhed is a Ukrainian writer who lived through Russia’s invasion of his
country and is now serving in the Ukrainian army. In “Revolusi”, the author
is a historian who gets his boots dirty. From remote Asian islands to Dutch
nursing homes, David Van Reybrouck has tracked down eyewitnesses to
Indonesia’s colonial period, producing the definitive account of a neglected
epoch.
Both books demolish the simplistic takes that dominate debate on social
media today. Imperialism was not, as some on the left argue, simply a
Western sin. But, contrary to the splutterings of the nostalgic right, it was a
grave one.
For four years the newly liberated Dutch fought to keep their colony
subjugated, sending boatloads of conscripts to face an army of guerrillas
wielding sharpened bamboo sticks and looted Japanese rifles. The Dutch
used what Mr Van Reybrouck calls ‘“the Westerling method”, which
involved rounding up villagers, asking them where the local guerrillas were
hiding, and shooting them if they failed to provide useful intelligence.
“The Language of War” brims with horror. Girls are pulled out of a
basement by their hair and raped. A 96-year-old survivor of Nazi
concentration camps is killed during the supposed “denazification” of
Ukraine. The deliberate murder of 50 Ukrainian prisoners of war is made to
look like an errant mortar.
This is myopic. Russians who choose exile because they do not want to be
drafted to kill Ukrainians share an obvious common interest with Ukrainians
who do not wish to be killed. The same goes for Russians who yearn for a
democratic, post-Putin Russia. To refuse to make common cause with such
people may be emotionally satisfying, but it is strategically daft. The notion
that guilt is collective, regardless of individual actions, is a recipe for
unending strife, and not just in Ukraine.
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about-imperialism
Culture | Not so Jolly Rogers
Enemies of All: The Rise and Fall of the Pirates. By Richard Blakemore.
The History Press; 336 pages; £25. To be published in America by Pegasus
in August as “The Rise and Fall of the Golden Age of Piracy”; $29.95
THE VERY word “pirate” has a cheery ring. It evokes wooden legs, eyepatches,
coins and cutlasses, as well as the likes of Francis Drake, William Kidd,
Blackbeard and Henry Morgan. Children’s and adult fantasy is pirate-
packed, from Captain Hook in “Peter Pan” to Johnny Depp’s swashbuckling
turn as Jack Sparrow in the “Pirates of the Caribbean” films. In Gilbert and
Sullivan’s “The Pirates of Penzance”, an opera, the obliging pirates release
any captives claiming to be orphans.
The reality is more sordid than that, as Richard Blakemore, a lecturer at the
University of Reading, argues in a new book. Labels like “buccaneer”,
“corsair” or “privateer” sound even more romantic than “pirate”. So those
practising piracy used them. This is not just a question of etymology. In the
early part of the golden era of piracy—from roughly the late 17th to the
early 18th centuries—pirates under respectable labels often had at least the
tacit approval of monarchs and states.
Piracy itself is as old as seamanship. But in the author’s telling, it took off
after the European discovery of the Americas. The gold, silver and slaves
brought back by Portuguese and Spanish ships proved irresistible targets. As
well as the lure of booty came the knowledge that, in frequent times of war,
pirates were inflicting damage on a sovereign’s opponents. Hence the search
for vaguely written official “commissions”, documents that created a veneer
of government endorsement for privateering against a state’s declared
enemies. Many well-known pirates forswore attacks on ships flying their
own national flags.
None of this made their acts of piracy any less bestial. British, Dutch and
French pirates, often based outside legally constituted colonies, such as off
the Azores or on the island of Tortuga near Haiti, lay in wait for Iberian
fleets before attacking them. They would raid newly established forts and
settlements on the American mainland. No quarter was given: those sailing
on captured ships were tortured to reveal where treasure was; slaves were
tossed overboard or sold; any women found were treated as mere spoils of
battle.
As the flow of bullion from Latin America started to dry up, pirates looked
elsewhere, often following shipping routes. Some sought to ingratiate
themselves with colonial authorities: after making a fortune as a privateer,
Henry Morgan (who became the namesake of Captain Morgan rum) even
served as lieutenant-governor of Jamaica. As its wealth increased, the North
American seaboard became a target, with pirates operating out of the
Bahamas. Another hunting ground was the Indian Ocean. Mr Blakemore
includes a harrowing account of how pirates flying English flags captured a
ship bringing Muslim pilgrims back to India. For days the buccaneers
pillaged the ship, tortured victims and raped the female passengers,
plundering loot worth some 5m rupees (over £500,000, or $635,000, at the
time).
As shipping and colonial ambitions shifted, piracy moved too: to the Pacific,
to the Barbary Coast of north Africa and indeed to anywhere suitable for
plundering. But by the early 18th century, European states had lost patience
with these vicious criminals. State-built navies started tackling pirate ships
in their lairs.
This coincided with the publication 300 years ago of “A General History of
the Pyrates”, a book that sold so well that it had four editions and many
translations. Mr Blakemore draws on the book extensively, as did Robert
Louis Stevenson for “Treasure Island” and J.M. Barrie for “Peter Pan”. Its
most intriguing characters were two female pirate leaders, Anne Bonny and
Mary Read, who fooled many of their crews into believing they were men
and were later rumoured to have been lovers.
Piracy continues even today. The author closes his story not just with
reflections on the inaccuracies of Hollywood’s romantic portrayal of pirates,
but also with a look at those still operating, including off Somalia.
Nowadays profits come more from ransoming ships and crews than from
plunder and rape. But the evil of these aquatic enemies persists all the same.
■
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piracy-is-far-more-fearsome
Culture | Battle lines
The Road to the Country. By Chigozie Obioma. Hogarth; 384 pages; $29.
Hutchinson Heinemann; £16.99
NIGERIANS DO NOT speak much of the civil war of 1967-70. Most schools do not
teach it in their curriculums. The median age of Nigerians is 17, so only a
fraction of the 219m-strong population lived through the conflict. Those that
did are often too scarred, or scared, to talk about it for the memories it might
prompt.
Simmering ethnic tensions boiled over. An attempted coup d’état in 1966
was followed by a series of pogroms in the north in which tens of thousands
of Igbo people were killed. Biafra, a mostly Igbo region in the south-east,
declared independence; the Nigerian government, then dominated by Hausas
and Fulanis, fought alongside Yorubas to keep the oil-rich region from
seceding. They prevailed; estimates vary widely, but around 1m-2m
Nigerians are thought to have died in, or due to, the war.
Chigozie Obioma sheds light on this dark period. The 37-year-old author
explored his country’s recent history in two acclaimed novels, “The
Fishermen” (2015) and “An Orchestra of Minorities” (2019), which were
both shortlisted for the Booker prize. His new book warns of what happens
when nation-building fails.
It follows Kunle, a young Yoruba man who is recruited into the Biafran
army while searching for his missing brother. He is given a suitably Igbo
name and fights valiantly for a people not quite his own. Still wrestling with
the guilt of a childhood accident that left his brother unable to walk, Kunle is
determined to save him. But first he has to stay alive—and sane.
Mr Obioma describes the battlefields and the swampy terrain of the Niger
Delta with disturbing viscerality. You can almost smell the putrid mix of
blood, faeces and vomit in the trenches. Transfixed by the book’s gory
conflict scenes, the reader, like the fighters, loses sight of what is happening
in the wider war.
The novel captures Nigeria’s fault lines in both language (with a mix of
English, Yoruba and Igbo) and form. It flits between the real and the
supernatural. The novel is narrated in part by a Yoruba seer who predicted
the conflict and features an interlude with testimonies of people who died in
battle, evoking an Igbo proverb: “The story of a war can only be fully and
truly told by both the living and the dead.”
Almost 60 years on, the war’s aftershocks can still be felt. A separatist
movement, the Indigenous Peoples of Biafra, is striving to create a modern-
day Biafran state. As a result, “The Road to the Country” links the past and
present. Mr Obioma has been described as the heir to Chinua Achebe, a
20th-century Nigerian novelist. He pulls from the same wells of rage and
horror as his literary forebear did in a book from 2012 about the same war.
Nigeria’s wounds, still untreated, have festered. ■
Clarification (June 6th 2024): An earlier version of this review said that Mr
Obioma’s previous novels were “nominated” for the Booker prize. It would
be more accurate to say they were “shortlisted”. This has been updated.
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explores-nigerias-civil-war
Culture | Back Story
TWO HOUSES, both alike in dignity, have invoked ancient grudges and
sparked new mutinies on the vexed question of who should play whom in
drama. Both are theatres in London that have made headlines with
Shakespearean leads. In different ways they suggest the commotion that
casting decisions can cause, the benefits they can confer and the problems
left unsolved.
Mr Holland enters in a hoodie and the sort of nasty short-fringe haircut that
some teenagers now go in for. With wit and warmth, plus a flash of bicep, he
proves the doubters wrong. Nuanced and lucid, Francesca Amewudah-
Rivers, a relative unknown, is even better as Juliet. (A black actor, she has
been vilely abused by racists purporting to know what Juliet really looked
like.) There is no balcony in this pared-back production. The star-cross’d
couple sit touchingly side by side to declare their love.
Jamie Lloyd, the director, has brought in lots of young punters. Alas, his
stylised staging lets them and the actors down. He uses cameras and screens
to relay action from the foyer and roof; passion is intercut with bloodshed.
Much less successful is the choice to have many lines declaimed into
standing microphones, as if in a slam-poetry contest. Weakening the links
between characters, this trick frays their bond with the audience.
Across the Thames at Shakespeare’s Globe, a new “Richard III” has set off
another kind of ruckus. Michelle Terry, the theatre’s artistic director, is the
titular villain in an almost entirely female cast. She has received abuse for
presuming, as a woman, to play a king. But gender is not the main
flashpoint.
Rather it is the flouting of a new orthodoxy. This holds that, for reasons of
authenticity and justice, disabled parts must be played by disabled actors
(and trans parts by trans actors—and so on with other marginalised groups).
Richard III is described and typically portrayed as disabled. Thus, the
Disabled Artists Alliance protested, “This role belongs to us.”
Like many battles in the culture wars, this is not a skirmish between lefties
and reactionaries, but between progressives with diverging tactics.
Committed to “anti-literalism” in casting, the Globe is a champion of
inclusivity. Recently Francesca Mills, who has a form of dwarfism, was a
sensational Duchess of Malfi. Nadia Nadarajah, who is deaf, will soon star
in “Antony & Cleopatra”.
If the Globe is the wrong theatre to berate, this is also the wrong show.
Largely described in insults, Richard’s physical affliction is sketchy in
Shakespeare’s text. Here almost all these references are excised; the focus is
on the play’s deep seam of misogyny. An able-bodied Richard glories in
forcing the widow of a man he killed to marry him—then murders her. He
hates women and, perceptively, they hate him back. The cross-gender
casting makes you think anew about the play’s macho violence.
Yet this show, too, has a tragic flaw. It wants you to see the parallels between
Richard and bullies today, especially Donald Trump. Unfortunately it
whacks you over the head with this analogy like a Plantagenet knight with a
mace. It is anyway a flimsy comparison. True, both men are dangerous
bosses to serve; both disparage norms and women. But the king is less a
demagogue than a machinator. He is funnier than Mr Trump—and has a
glimmer of conscience.
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the-casting-wars
The Economist reads
Six non-fiction books you can read in a day
The Economist reads
THE SHORT book, long underestimated, has a lot going for it. To start with
the prosaic: if you want to get through more volumes, short is shrewd.
Slender books can be slipped into a bag or coat pocket and plucked out again
in an idle moment, so you’ll be more likely to finish them. For adventurous
readers the format allows for casual experimentation with new styles, topics
and authors. For indecisive ones it can make a bookshop’s universe of
possibilities feel less daunting: just scour the shelves for slim spines. Most
of all, there is a rare satisfaction in reaching the final pages of a book while
still holding the full sweep of its story in your mind. Taut prose is intense
and immersive, like a distilled fragrance. These books offer that, too. They
must; they don’t have long to make their point. In an era of many
distractions, that is a great virtue.
These six non-fiction books include memoir, journalism, essays and pictorial
essays. They take you into the bedroom of a grieving husband in imperial
China; into the courtroom where a sensational murder trial split New York’s
Bukharan Jewish community in the late 2000s; and, classically, into a room
of one’s own. In short, they get plenty done in just 150 pages.
Oranges. By John McPhee. Farrar, Straus and Giroux; 149 pages; $16.
Daunt; £9.99
Are there 150 sparkling pages to be written about the everyday orange? John
McPhee proves there are. “Oranges”, which evolved from an essay
published in the New Yorker in 1966, established a new form of journalism:
one that marries whimsy with forensic explanatory reporting. Mr McPhee
examines the rise of frozen orange-juice concentrate after the second world
war—already then a $700m industry and “the boomiest boom since the
Brazilian rubber boom”. He interviews Florida’s orange barons, pickers,
packers and pomologists. His essay flows from the fantastic sex life of
oranges to the Sanskrit origins of the word (naranga) to oranges’ role in the
Norman invasion of Sicily. It is sweet to read about Botticelli and Degrees
Brix (the standard measure of sugar) in a single sitting. This is also
dissection at its sharpest, and eating an orange will never be the same again.
Among the most influential essays of the 20th century, “A Room of One’s
Own” was based on a lecture that Virginia Woolf gave at Newnham College
and Girton College, the first two for women at Cambridge University. Woolf
lands her best-known line by the second page: “A woman must have money
and a room of her own if she is to write fiction.” That sends her down new
routes of inquiry. As she relays the train of thought she has while walking
around “Oxbridge” (a barely fictitious composite) and London, her wry
humour develops a fierceness that builds to anger. “Why are women poor?”
she asks. “What effect has poverty on fiction?” And “What conditions are
necessary for the creation of works of art?” She summons the work of
women over the centuries, from Aphra Behn to the Brontë sisters, to find the
answers. The lot of women in Britain has improved dramatically in the
century since Woolf wrote her essay. Yet it still feels like essential reading,
in particular as a manifesto on the right to form one’s own opinion and
express it.
Ways of Seeing. By John Berger. Penguin Modern Classics; 155 pages; $11
and £9.99
Adapted from a four-part BBC television series of the same name that aired in
1972, John Berger’s book will probably change how you think about art.
Four essays consider the reproduction of art; the female form and the male
gaze; how ownership influences art; and publicity and the illusion of
authority. These are delightfully complemented by three wordless pictorial
essays, bold visual arguments for Berger’s incantatory opening—which
purposely appears right on the cover of this edition—that “seeing comes
before words”. He shows how the meaning of art is always influenced by
how and where it is viewed. Berger’s book is naturally a product of its time,
too: Marxist, radical and preoccupied with the ruling class. But it made
complex ideas about a closed world accessible and engaging. Its influence is
lasting: read the review we wrote for its 50th anniversary.
Try also
Ms Ernaux wrote a short biography of her mother, “A Woman’s Story”. It is
as accomplished as that about her father, and secured her reputation with
French readers. If you enjoyed Janet Malcolm’s “Iphigenia in Forest Hills”,
try “Still Pictures”, a short book published posthumously that is also perhaps
her most personal. We reviewed it last year here. New to John McPhee’s
writing? He has written more than 30 books. After “Oranges”, why not try
his most recent, “Tabula Rasa”—it comes in at under 200 pages. We offered
our appraisal here.
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can-read-in-a-day
Economic & financial indicators
Economic data, commodities and markets
Economic & financial indicators | Indicators
For more than four decades Barry Kemp lectured and taught at Cambridge
University. But for almost all that time his mind, and preferably his body
too, were elsewhere. Cambridge is a well-watered place of meadows and
college greens; Professor Kemp, with the tan, full beard and far-seeing eyes
of an explorer, was walking in the pale red sand of Egypt’s eastern desert. In
Cambridge, noble old buildings surrounded him. In the city that filled his
thoughts, Amarna, 200 miles south of Cairo, little was left but low mounds
and remnants of walls. In between writing the core text for Egyptology
courses, a primer on hieroglyphs and a guide to “The Book of the Dead”, he
ceaselessly searched that tract of land for what had once been there.
Amarna had been dreamed up by Akhenaten, a radical among Egypt’s
pharoahs. He said he had been led to the site by the Aten, the disc of the sun,
whose cult as a single divinity he had established in place of Egypt’s myriad
gods. The site lay to the east, facing tall cliffs through which the sun rose.
Around 1344BC Akhenaten began to build a new city there. Temples,
administrative buildings, warehouses and worker dwellings went up at
breakneck speed. The pharoah ordered 20,000 people to move in; they found
themselves on a bleak desert bluff above the Nile, with little drinkable water
and where few crops could grow. Since he was absolute, no one had dared to
tell Akhenaten that this was a bad idea. After 20 years the city was
abandoned. For the next 31 centuries wind, sand and plunderers took it over.
In practice, getting the answers was often frustrating. For much of the 1970s
and again in the mid-1990s, war or uprisings closed the site. It was 1977
before he and his team got there, travelling by felucca down the Nile. In
subsequent years farmers tried to grab the land for fields, and the bordering
village of El-Till wanted to expand its cemetery; rubbish was routinely
dumped there. And not only the land, but the ruins themselves, needed
constant vigilance. Many were fragile mud-brick, wearing away in the
weather as fast as they were repaired.
So what of the man who was the cause of it all? At first, Professor Kemp
had little interest in Akhenaten. But soon enough he was writing books on
him and leaping among the northern rock tombs of Amarna, decorated in
Akhenaten’s new flowing style, with true enthusiasm. This pharoah was a
visionary, no doubt. He had firm ideas and pursued them, though even his
clarity could be baffling. He once declared that he lived on maat (truth and
righteousness) as if they were his food: a rich remark, when his subjects
were suffering. Yet he may have been no worse than other rulers. As for
Atenism, worship of the One God, it was squashed too soon by the
traditionalists to mark a cultural shift. Besides, it had never caught on. The
Otherworld was a terrifying place; humbler burials in Amarna featured the
old, comfortable gods.
Much about the city and its people remained unknown to him. But after 40
years of work his imagination could roam freely there. At dawn he threaded
his way between the grey-brown mud houses, breathing in their smoke and
peering into workshops where small, bent people met his gaze. Servants
squeezed by, most carrying water from the distant river. Conscripts for
labour gathered to be checked off; they carried bread, onions and pots of
beer. He entered the gridded gardens to admire the fresh leaves of wild
celery and coriander. A funeral went past, with the body wrapped in a mat of
sticks and women throwing dust on their hair. In silent sympathy, he
watched them disappear. ■
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up-akhenatens-abandoned-city
Table of Contents
The world this week
Politics
Business
KAL’s cartoon
This week’s covers
Leaders
Britain’s Labour Party must be bolder about growth
A triumph for Indian democracy
America’s billionaires should resist the urge to support Donald Trump
Morena’s landslide win threatens to take Mexico down a dangerous
path
Three reasons why it’s good news that robots are getting smarter
South Africa stands on the brink of salvation—or catastrophe
Letters
Letters to the editor
Briefing
Narendra Modi could respond to disappointment in two different ways
The people and places that turned away from the BJP
United States
What Donald Trump’s 34 convictions mean for the presidential election
Why New York scrapped congestion charging
Biden’s border order: impractical policy, pragmatic politics
A new wave of stadium-building is busting budgets in America
Black baseball players of yore get their due, at last
American parents want their children to have phones in schools
Grown up in the USA
The Americas
Claudia Sheinbaum’s landslide victory is a danger for Mexico
A battle royal over deep-sea archaeology in the Caribbean
As seas rise, the relocation of Caribbean islanders has begun
Asia
Will India’s new government turbocharge the fight against poverty?
Rohingya are being forced to fight in Myanmar’s civil war
How the Philippines is turning the water-cannon on China
China
Watch out Beijing, China’s second-tier cities are on the up
Changes to China’s gaokao exam are about politics, not fairness
It’s a bird, it’s a plane…it’s a Chinese flying car
China unites America and Europe in alarm
Middle East & Africa
South Africa’s future is in the hands of a divided ANC
The National Basketball Association is making a big bet on Africa
Why avocados are driving another sort of green economy in Kenya
Joe Biden leaked Israel’s first plan to end the war in Gaza
Talk of war between Israel and Lebanon is growing
The children of Iran’s revolution still want to go West
Europe
In Crimea, Ukraine is beating Russia
Russia’s explosion of a huge Ukrainian dam had surprising effects
Germany is thinking about bringing back conscription
The Dutch are getting a half-populist, half-pragmatist government
Remembering the Normandy landings
Peak Europe turns 25: why June 1999 marked the continent’s zenith
Britain
Can Britain’s economy grow as fast as it needs to?
Labour’s growth ambitions demand more radicalism on planning
The SNP feels the heat in Scotland’s election campaign
What is the point of the Lib Dems?
The return of the Farage ratchet
Rishi Sunak and Sir Keir Starmer fight for a poundshop presidency
Business
How Saudi Aramco plans to win the oil endgame
G42, an Emirati AI hopeful, has big plans
Chinese fast-food insurgents are beating McDonald’s and KFC
Elon Musk could earn more at Tesla than other company bosses
Should the world fear China’s chipmaking binge?
Is it better to be an early bird or a night owl?
Lessons in capitalism from Whole Foods and Trader Joe’s
Finance & economics
China’s economic model retains a dangerous allure
Is America’s economy heading for a consumer crunch?
Want to avoid woke stockmarket rules? List in Texas
European banks are making heady profits in Russia
Should you buy expensive stocks?
Why global GDP might be $7trn bigger than everyone thought
Science & technology
Robots are suddenly getting cleverer. What’s changed?
The quest to build robots that look and behave like humans
Zany ideas to slow polar melting are gathering momentum
Culture
How to hire a spy
Pop stars are all about albums
What the left and right get wrong about imperialism
Forget Jack Sparrow and Captain Hook. Piracy is far more fearsome
Chigozie Obioma’s visceral novel explores Nigeria’s civil war
Romeo and Richard III are enlisted in the casting wars
The Economist reads
Six non-fiction books you can read in a day
Economic & financial indicators
Economic data, commodities and markets
Obituary
Barry Kemp spent his career digging up Akhenaten’s abandoned city