Professional Documents
Culture Documents
Prigozhin’s Götterdämmerung
The race to build a superbattery
Of India, vultures and sanitation
https://t.me/+f_j1J3beXuplMTAx AUGUST 26TH–SEPTEMBER 1ST 2023
014
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The Economist August 26th 2023
Contents 3
4 Contents The Economist August 26th 2023
International
Culture
53 Reassessing Obama's red
line in Syria 74 China’s Monkey King
75 Four female philosophers
76 Ukrainian culture
77 America’s top song
77 Africa’s biggest fraudster
78 Back Story The casting
Business wars
55 Corporate disruption
57 Arm’s listing plans Economic & financial indicators
57 The ipo revival 80 Statistics on 42 economies
58 Tourism in Europe
Graphic detail
59 America’s steelmakers
81 Why the death of Indian vultures killed thousands of people
60 Bartleby Mentoring
61 Schumpeter The Supreme Obituary
Court and business
82 Bindeshwar Pathak, India’s Toilet Man
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registered trademark of The Economist Newspaper Limited. Printed by Walstead Peterborough Limited
6
The world this week Politics The Economist August 26th 2023
dead or wounded. Now Fukushima nuclear plant into The BRICS group of countries
120,000 Russian soldiers are the sea. Japan’s closest neigh- (Brazil, Russia, India, China
believed to have died as well as bours think it will harm fish, and South Africa) invited six
70,000 Ukrainian ones. though the UN nuclear watch- new nations to join them,
dog says it is safe. China has including Iran and Saudi
America, Britain and France banned all Japanese seafood. Arabia. Vladimir Putin did not
condemned an assault on UN attend the group’s meeting in
peacekeepers in the buffer The UN mission in Afghan- Johannesburg, South Africa’s
zone that divides the Turkish- istan said that 218 officials commercial capital, as he
occupied north of Cyprus from from the armed forces, police risked being arrested there
the Greek-Cypriot south. Turk- and former government had under a warrant of the
ish-Cypriots injured three been killed since the Taliban International Criminal Court.
Yevgeny Prigozhin, the leader peacekeepers who had been regained power in 2021. But he sent a message saying
of the Wagner Group of Rus- trying to stop the unautho- Russia was ready to pick up
sian-backed mercenaries, was rised construction of a road The Republican presidential the slack from Ukraine as a
presumed to have been killed and used bulldozers to smash candidates held their first global supplier of grain.
when a private plane he was UN vehicles. primary debate. Eight candi-
travelling in crashed north of dates took part, but not The African Union called on
Moscow. Two months ago Mr The bodies of 18 suspected Donald Trump, who says he its members to refrain from
Prigozhin led a rebellion of his illegal migrants were found in won’t attend any of the party’s any action that could
men, resulting in a short a building scorched by wild- debates because the “public legitimise the military junta
“march on Moscow” and skir- fires in northern Greece, close knows who I am”. Mr Trump which took power in Niger
mishes with Russian troops, to the Turkish border. may also have been too busy last month. The Economic
because he was unhappy with preparing to surrender to the Community of West African
the direction of the war in authorities in Atlanta on States rejected a proposal by
Ukraine. Vladimir Putin called Thaksin times charges that he tried to over- the coup leaders to relinquish
him a traitor; it was said to be Srettha Thavisin became turn the presidential-election power in three years.
only a matter of time before Thailand’s new prime min- result in Georgia in 2020.
the Russian president would ister. Mr Srettha comes from Zimbabwe held presidential
exact his revenge. the populist Pheu Thai party, Bernardo Arévalo, a reformer and parliamentary elections
which came second in May’s who ran on an anti-corruption amid fears that the result
The Biden administration gave election. The candidate of the platform, won Guatemala’s would once again be rigged in
approval for Denmark and the winning party, Move Forward, presidential election with a favour of President Emmer-
Netherlands to send F-16s to was prevented from getting the landslide, taking 61% of the son Mnangagwa and the
Ukraine, the first time Amer- job by the conservative estab- vote. Mr Arévalo, the son of the ruling Zanu-PF that has run
ica has allowed the transfer of lishment. Mr Srettha’s eleva- country’s first democratically the country since indepen-
the American-made fighter tion was made possible by a elected president, presented dence in 1980. The main
aircraft after months of deal with the army that himself as an outsider to the challenger is Nelson Chamisa
entreaties from Kyiv. The jets allowed Thaksin Shinawatra, political elite. and his Citizens Coalition
will not be deployed for some who was ousted as prime for Change.
time, as Ukrainian pilots need minister in a coup in 2006 and In Ecuador the presidential
training to fly them. is connected with Pheu Thai, election will now head to a
to return from exile. Mr run-off in October. The two
President Volodymyr Zelensky Thaksin was promptly jailed candidates who will compete
said his country will use the for corruption, but is expected are Luisa González, a protégée
jets “to keep Russian terrorists to be released soon. The day of Rafael Correa, a former
away from Ukrainian cities after being imprisoned he was left-wing populist president,
and villages”. His comments sent to a hospital. and Daniel Noboa, a 35-year-
came after a Russian missile old who was polling in single
attack on a theatre in The prime minister of Japan, digits shortly before the vote.
Chernihiv, a city in northern Kishida Fumio, and the presi-
Ukraine, killed seven people dent of South Korea, Yoon
and injured 144 others. Mean- Suk-yeol, joined Joe Biden for a Unholy orders
while Ukraine carried out summit at Camp David. The Nicaragua’s dictator, Daniel India became the fourth
more drone attacks on Russia. three allies agreed to strength- Ortega, intensified his crack- country to carry out a landing
en their security ties, such as down on the Catholic church on the Moon, and the first to
Around half a million Russian by holding military exercises by seizing Central American land near its south pole. The
and Ukrainian troops are now once a year. In a statement University (UCA), a Jesuit-run Chandrayaan-3 mission land-
thought to have been killed or they condemned China’s “dan- college, and, a few days later, ed a rover which will gather
injured since the war in gerous and aggressive behav- evicting six Jesuits from their data from the lunar surface
Ukraine began in February last iour” in the South China Sea. residence in Managua, the and try to establish whether
year, according to American capital. The church has drawn craters in the area hold frozen
officials cited in the American The new rapprochement be- the regime’s ire for criticising water. India’s success came a
press. The numbers have tween Japan and South Korea Mr Ortega’s increasing political few days after a Russian
soared since last November, is being tested by Japan’s deci- repression. Last year he spacecraft, Russia’s first Moon
when America estimated that sion to release treated radio- imprisoned a prominent mission in 47 years, crashed
each side had suffered 100,000 active water from the damaged bishop on charges of treason. as it prepared to land.
The world this week Business The Economist August 26th 2023 7
Arm published a prospectus the full year. The video-confer- amount than had been expect- mount that Country Garden,
for its blockbuster IPO on the encing company has been ed. The People’s Bank of China another huge developer, is
Nasdaq exchange next month. struggling to adapt to the end reduced the one-year loan heading towards a default.
SoftBank, a Japanese tech of the pandemic, when remote prime rate by just a tenth of
conglomerate, bought the working caused its business to one percentage point and left Mukesh Ambani seemed to
British chip designer in 2016 soar, though it is expanding its the five-year rate unchanged. have made a rare misstep
for $31bn. It is expected to be range of services through the That led investors to surmise when the IPO of his Jio
worth between $60bn and use of artificial intelligence that the government is more Financial Services flopped on
$70bn when it makes its and has invested in Anthropic, interested in protecting bank the Mumbai exchange. JFS was
Nasdaq debut. Arm’s chip an AI startup founded by for- profits than in stimulating the spun out of the Indian tycoon’s
architecture is used in 99% of mer employees of OpenAI. economy. A package of reforms Reliance Industries, and is the
the world’s smartphones. from the country’s securities first demerger of a Reliance
Although that market has regulator, such as extending business in 20 years. But
slowed, tech titans such as United States market-trading hours, also investors are not sure that it
Ten-year Treasury-bond yield, %
Amazon, Apple and Nvidia are failed to inspire. can compete against bigger,
5
reportedly interested in taking established non-banking
big stakes in the company. 4
Underlying profit at BHP for financial companies.
3 the 12 months ending June
2 30th fell to $13.4bn, the lowest Subway was rumoured to be
Chips with everything 1 in three years. The mining on the verge of being sold to a
The superlatives came thick 0 company said that conditions private-equity firm for around
and fast when Nvidia released 2021 22 23
in the iron-ore market for the $10bn. The sandwich chain has
quarterly earnings. Revenue Source: Refinitiv Datastream
rest of the year would depend been owned by its two found-
more than doubled at the in part on “how effectively ing families since 1965.
maker of chips for AI, year on Investors eagerly awaited a China’s stimulus policy is
year, to $13.5bn. Perhaps that is speech by Jerome Powell, the implemented”.
no surprise, given that just one chairman of the Federal Will it work?
of Nvidia’s H100 chips can cost Reserve, at the Jackson Hole China’s economic woes are in WeWork announced a stock
upwards of $40,000. It is symposium for clues about the part the result of an increas- swap of 40 of its existing
delighting investors by buying future direction of interest ingly unstable property shares for one new one in an
back $25bn-worth of stock. rates. The yield on American industry. Now Evergrande, a attempt to lift its share price
ten-year government bonds big developer which rattled above $1, the floor for listing
Britain’s Competition and hit a 16-year high, as markets markets two years ago when it on the New York Stock Ex-
Markets Authority cleared continued to bet that favour- defaulted on its debt, has filed change. The provider of shared
Broadcom’s proposed $69bn able economic conditions will for bankruptcy protection in working spaces has warned
takeover of VMware, a month allow the Fed to keep rates New York to protect it from about its ability to continue as
after regulators in the EU gave around their current level. creditors in America. The a going concern. Its stock
their approval. America’s company has over $300bn in dropped below $1 in March and
Federal Trade Commission is China’s central bank dis- liabilities, a fraction of which is now worth around 12 cents.
still scrutinising the deal, appointed markets when it cut is held by foreign investors. The post-split shares will start
which was announced 15 a key interest rate by a smaller The news comes as fears trading on September 5th.
months ago. Separately,
Microsoft submitted a restruc-
tured proposal for its takeover
of Activision Blizzard to the
CMA in the hope of getting the
regulator’s blessing, after it
said it would block the deal.
014
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Leaders 11
12 Leaders The Economist August 26th 2023
Benighted Russia
Prigozhin’s Götterdämmerung
A healthy country uses justice to restore order. Mr Putin uses violence instead
Extreme weather
Fair warning
El Niño will bring chaotic weather to large parts of the world. The time to prepare is now
The Economist August 26th 2023 Leaders 13
On current forecasts, this El Niño is likely to be a strong one. ter has struck. By wisely building resilience before an El Niño,
The last such cycle was in 2014-16, and was ruinous in the coun- you can minimise the damage and hence the spending on emer-
tries it hit hardest. Droughts led South African food production gency help and repairs.
to fall to a 20-year low and ignited one of Indonesia’s worst-ever Some aid agencies are indeed using better forecasts to start
spates of wildfires. At the same time warmer and wetter weather planning ahead. The International Federation of the Red Cross
fuelled disease across South America, including the worst out- and Red Crescent, for instance, now runs anticipatory pro-
break of infections from the Zika virus in 65 years. grammes in 17 countries, and aims for a quarter of its disaster-re-
One reason the effects of this El Niño are likely to be severe is lief funding to be spent in advance by 2025. The World Health Or-
that they will be felt on top of more global warming. Although it ganisation has begun working with the World Meteorological
is only just getting going—El Niños are named after the Baby Je- Organisation so that it can successfully predict where best to al-
sus because they tend to peak around Christmas—it has already locate medical supplies and personnel.
contributed to the closure of the world’s largest This is just a tiny fraction of the aid that is
fishery, as anchovies have fled the coastal wa- needed. Only 1% of disaster funding raised
ters of Peru. It has also rocked the global rice through UN appeals between 2014 and 2017 was
market, as India has pre-emptively banned allocated in advance, despite one in five events
most exports of its crop. being highly predictable. Natural disasters were
Humanitarian agencies have warned about estimated to have affected 185m people world-
the threats to food security and sanitation and wide last year, but fewer than 4m were helped
from outbreaks of disease including malaria, through anticipatory measures.
dengue and cholera in large parts of Africa and The trouble is that many of the countries
South America. South-East Asia is likely to see excessively hot which will bear the brunt of the effects of El Niño are still reeling
and dry weather. Widespread fires in Indonesia could affect air from previous disasters. Some of those are linked to past epi-
quality across Asia. sodes of extreme droughts and floods, others to the lingering ef-
Frightening as these dangers are, it is possible to prepare for fects of covid-19 and the spike in food prices caused by the war in
some of them before they strike. Helpfully, El Niños offer some Ukraine. It is a reminder of the difficulties of dealing with cli-
predictability. No two are exactly the same, but their cyclical na- mate change: stresses come thick and fast without giving gov-
ture reveals patterns of hot and dry and excessively wet weather. ernments and societies enough time to recover. Yet that only
Seasonal forecasts are much more reliable than they were in strengthens the case for helping countries that cannot afford to
2014-16. These can help steer funds in order to improve water pay for their own preparations. Whoever foots the bill, it is a
infrastructure pre-emptively, for example, or to reinforce build- false economy to skimp on spending today when there is a
ings in regions likely to be hit by storms—rather than after disas- known chance of disaster tomorrow.
Global alliances
Mateship reinvented
Joe Biden is transforming America’s alliances in Asia
14 Leaders The Economist August 26th 2023
in March, amid a flurry of equipment deals and military exer- These plans still have weaknesses. Mr Biden’s protectionism
cises. Should war break out with China, the Aussies seem the prevents America from offering an economic counterweight to
most willing to fight at America’s side. Australian land, sea and China, the largest trading partner for most Asian economies. He
air bases are expanding to receive more American forces. Under shows no sign of joining cptpp, a trade pact whose precursor
the aukus deal, Australia is gaining its own long-range weap- was negotiated by Barack Obama and ditched by Donald Trump.
ons, such as nuclear-powered (but not nuclear-armed) submar- While China complains about an “Asian nato”, there is no mu-
ines to be developed jointly with America and Britain. The three tual commitment by America and its Asian allies to defend each
partners want to work on other military technologies, from other, let alone go to war over Taiwan. Australia’s government, if
hypersonic missiles to underwater drones. it is to sustain bipartisan public support, must also be more can-
Taken together the “latticework” of security agreements, did about the costs of the alliance.
shows how America’s long-heralded pivot to Asia is accelerating. Last, if Mr Trump becomes president in 2024, Mr Biden’s reju-
Mr Biden is proving that America and its allies can deter China venation of America’s security alliances could yet be undone. All
(and Russia). More could be done. Congress should agree to sell the more reason for America and its allies to keep advancing at
Virginia-class submarines to Australia in the 2030s as a step to speed. The more they can lock into place, and the more Congress
acquiring the aukus subs in the 2040s, and to expand submar- can demonstrate that the vision for Asian security is bipartisan,
ine-building capacity. It should waive fiddly restrictions, such the better for all. The past month shows that America’s network
as the International Traffic in Arms Regulations (itar), to make of friendships and alliances is alive and kicking, and that creat-
the partners’ defence co-operation seamless. ing competing alternatives will be hard.
O n the face of it, the deal struck this week between Thai-
land’s military establishment and its second-biggest party,
Pheu Thai, represents progress. The new coalition will end nine
bility to an economy that has fared miserably under military
rule. As recently as 2005 to 2009, Thailand’s economy, the sec-
ond-biggest in South-East Asia, enjoyed the highest foreign di-
years of military-dominated government in South-East Asia’s rect investment of any of its regional peers, reflecting Thailand’s
oldest democracy. Under the influence of Pheu Thai’s de facto status as a manufacturing hub, particularly of electronics and
leader, Thaksin Shinawatra, a populist tycoon and former prime vehicle parts. But over the past five years investment inflows
minister who returned this week from a long exile, the new gov- have lagged behind those of neighbours such as Indonesia and
ernment should be less incompetent than its army-run pre- Vietnam. Under the premiership of Pheu Thai’s Srettha Thavi-
decessor. Democratically, too, Pheu Thai seems an improve- sin, another mogul with a populist touch, the new government
ment, having come a close second in the general election in May. should improve on that dire record. It will also have a strong in-
But that would be to gloss what has really happened. The deal centive to maintain its disparate 11-party coalition—though not
is not a win for Thai democracy so much as for the monarcho- one that Thaksinists should find reassuring. If the government
military elite’s latest effort to stifle it. The elite is out to foil the founders, new elections will be held in which Move Forward
election’s actual winner, a reformist party could do even better than in May.
called Move Forward which is popular because That reflects the depth of Thais’ unhappi-
it promises to break their grip on power. In ness with the establishment politics that Mr
helping to sabotage Move Forward, by doing a Thaksin is helping perpetuate. Launched by lib-
deal with the army establishment that his party eral activists only three years ago, Move For-
had promised to shun, Mr Thaksin has revealed ward did surprisingly well across the country,
that he is no friend of Thai democracy but rath- including in Pheu Thai’s rural strongholds. If it
er an instrument of the status quo. had Thailand’s best interests at heart, the Thak-
The details are damning (see Asia section). sin party would take on some of Move Forward’s
In return for betraying Move Forward—once its comrade in the liberal reforms, including trustbusting and scrapping the coun-
fight to restore democracy—Pheu Thai could at least have min- try’s absurd lèse-majesté laws. But that is not likely for a govern-
imised the establishment’s hand in its new coalition. It appears ment cobbled together to stave off change.
instead to have used up its leverage on securing Mr Thaksin’s re- Thailand’s best longer-term hope is that the reformist forces
turn. He has been arrested and jailed on long-standing corrup- Move Forward has unleashed become too powerful to deny. In a
tion charges, but is expected to receive a royal pardon shortly. way, Mr Thaksin has made this likelier. His grubby compromise
His party will go into government with some of the establish- has enraged pro-democracy activists, leading to rowdy protests
ment’s most unapologetic stooges—cheerleaders for the coups outside Pheu Thai’s headquarters. Move Forward’s leaders must
that ended Mr Thaksin’s government in 2006 and his sister’s in now do their part, by striving to ensure the opposition remains
2014. Meanwhile, even as Mr Thaksin awaits release from jail, peaceful and united. They have already performed wonders, in-
Thailand’s rightful next leader, Move Forward’s Pita Limjaroen- spiring Thais with the promise of a better future. If they can hold
rat, could face imprisonment on trumped-up charges. together, despite the establishment’s provocations, they will
In the short term, Mr Thaksin’s dealmaking should bring sta- probably be able to honour that promise in the end.
Letters The Economist August 26th 2023 15
The Economist August 26th 2023
16
Briefing El Niño
The Economist August 26th 2023 Briefing El Niño 17
tion” of the world’s weather systems. interest rates; the second with the Asian fi- Three straight years of La Niña mean there
No two El Niños are the same, but some nancial crisis. In both periods, in other is more heat to be released.
general patterns exist. Broadly speaking, words, as El Niño unfolded, other com- But it is not just La Niña that has been
the Amazon Basin, Australia, the Indian pletely unrelated factors were also curbing storing heat in the world’s oceans. So has
subcontinent, the Sahel, South-East Asia economic growth in emerging markets. global warming. For decades researchers
and southern Africa often suffer drier con- Disaggregating the impact of these differ- have been taking the temperature not only
ditions; Central and East Asia, the Horn of ent events is extremely difficult. at the surface but also at depths of up to
Africa, the southern cone of South America All analyses, however, agree that poor 2,000 metres. Since the 1990s these deeper
and the southern United States tend to get countries are hit harder by El Niño than waters have been running an ever-rising
wetter (see map). Sometimes, the conse- rich ones. Even in the IMF study that found fever. Some climate researchers are won-
quences can be devastating. A relatively little overall impact, big costs in the devel- dering whether the off-the-charts surface
mild El Niño in 2018-19 helped to fuel some oping world were offset by higher agricul- temperatures observed in the past month
of the worst wildfires in Australia’s history. tural yields in the United States in particu- or so around the world’s oceans could be
The exceptionally strong El Niño of 2014-16 lar. Inflation, meanwhile, rose almost linked to this pelagic flu.
brought droughts and floods that left some everywhere as commodity prices jumped. Although El Niño does cause surface
60m people around the world short of temperatures to rise outside the Niño 3.4
food, drove huge outbreaks of Zika virus ENSO on ENSO on region, that usually does not happen until
across South America and bleached 29% of The more severe the El Niño, naturally, the much later in the year. A possible explana-
Australia’s Great Barrier Reef. bigger the impact. According to the latest tion of the early surge in temperatures is
At times, the changes in the weather forecast from NOAA, the American govern- that some of the heat accumulated in the
can also bring benefits. This year rains in ment’s meteorological agency, there is a deep ocean is starting to resurface. “Per-
Argentina are expected to increase grain 66% chance that the current one will be haps we’re beginning to see some of that
production, breaking a long drought. El Ni- “strong”. The assessment rests on the rise redistribution of heat now manifesting it-
ño years typically yield milder Atlantic in surface temperatures above the norm self,” says Piers Forster of the University of
hurricane seasons, reducing damage to within a specific area of the Pacific known Leeds in Britain.
property and crops (though that may not as “Niño 3.4”. A 1.5°C rise constitutes a The theory that shifting thermal dy-
hold this year because of unusually hot wa- strong event; more than 2°C counts as “ve- namics within the oceans may be intensi-
ters in the North Atlantic). El Niño’s im- ry strong”, on a par with the biggest El Ni- fying this El Niño is not yet proved, but
pacts are hugely varied, too, going far be- ños of the past century. The previous El Ni- there is no question that global warming
yond fisheries and agriculture. In 2015 pro- ño, in 2018-19, peaked inside Niño 3.4 at more broadly is set to make El Niños worse.
duction at a lithium plant in northern 0.9°C. A climatologist calls it a “little futz of “As climate change unfolds, the impacts
Chile that accounted for 30% of the world’s an El Niño”. The one before that, in 2014-16, for a given El Niño are not the same, they’re
output was disrupted by heavy rain. The spanned two winters and peaked at 2.6°C bigger,” says Adam Scaife of the Met Office,
ensuing jitters in the lithium market were (see chart on next page). Global average Britain’s meteorological agency. Global
not something forecasters had predicted. temperatures reached successive records warming means the air is more charged
Such diversity makes it hard to assess in 2015 and 2016. According to Michelle with water, rainfall fluctuations are in-
whether the overall effect of El Niño is pos- L’Heureux, who co-ordinates NOAA’s El Ni- creasing, “and therefore, a given El Niño
itive or negative for the world economy. A ño forecast updates, there is a 30% chance with the same strength as we had in the
study by researchers at the International that this year’s will end up just as mighty. past can dump more water or cause a big-
Monetary Fund published in 2016 found Three factors are likely to compound ger drought.” Whereas the “triple dip” La
that El Niño had little effect one way or the this El Niño, bringing new extremes. First, Niña masked some warming, making tem-
other. But a paper published earlier this it arrives right on the heels of three consec- peratures cooler than they would other-
year in Science by Christopher Callahan of utive years of La Niña, the inverse of El Ni- wise have been, an El Niño will amplify it.
Stanford University and Justin Mankin of ño, when winds propel warm Pacific water “I am confident that 2024 will be un-
Dartmouth College finds that the El Niño more strongly than usual westward, to- precedented in terms of global tempera-
cycles of 1982-83 and 1997-98 permanently wards Asia, temporarily reducing global tures,” says Dr Scaife. Currently, the planet
reduced global gdp by $4.1trn and $5.7trn temperatures. The wind patterns that is 1.26°C warmer than before the invention
respectively. The first cycle, however, coin- dominate during La Niña tend to push heat of the steam engine. As a rule of thumb, cli-
cided with a period when the Federal Re- deeper into the ocean. Some of that heat re- matologists say, every degree of warming
serve, America’s central bank, was raising surfaces during subsequent El Niños. in the Niño 3.4 region during an El Niño
temporarily adds 0.07°C to global average
temperatures. A strong or very strong
event could therefore push the total rise in
the average temperature to 1.4°C.
That means that the regions that often
Nov-Mar
suffer drought and wildfires during El Ni-
Jan-Apr Jun-Oct Dec-Mar ño—Australia, Indonesia and parts of the
Nov-Feb Jan-Apr
Jun-Sep Nov-Apr Amazon Basin—are at heightened risk. In
Jul-Apr Jun-Oct Australia alone, even the weak El Niño of
Jul-Sep Jan-Apr Feb-Jun
Jul-Dec
Jun-Mar 2019 helped to incinerate 240,000 square
Sep-Jan Oct-Dec Jun-Apr Niño 3.4 Jan-May Apr-Jun
Jun-Jan kilometres of bush, killing nearly 500 peo-
Pisco
Jul-Mar Dec-Apr Sep-Dec ple, destroying thousands of homes and
Sep-Mar wiping out A$5bn ($3.5bn) of crops and
Nov-Mar Jul-Nov Apr-Oct
Jul-Jan Sep-Jan
livestock. This year’s El Niño is likely to be
Jun-Sep compounded by the positive phase of the
Indian Ocean Dipole (IOD), a weather pat-
El Niño’s typical impact on rainfall, by season Drier Wetter tern characterised by fluctuating surface
Source: International Research Institute for Climate and Society 5,000 km
temperatures in the Indian Ocean that fur-
18 Briefing El Niño The Economist August 26th 2023
The Economist August 26th 2023
Britain 19
20 Britain The Economist August 26th 2023
Refugees from Hong Kong and Ukraine farms have struggled, says Kerry Maxwell cisely how much is not yet clear. The muse-
were part of the increase, but more stu- of the British Poultry Council. The trade um has announced a few facts: objects dat-
dents and workers were also brought in. body estimates the poultry sector has ing as far back as the 15th century BC, in-
Britons may say they want lower immigra- shrunk by 10% since 2020. cluding gold jewellery and gems, are
tion, but they also want more migrant nur- The government could do more. The en- “missing, stolen or damaged”. A staff mem-
ses, doctors and fruit-pickers. Businesses vironment department has not used post- ber has been sacked. More details have,
mostly swapped out EU workers for non- Brexit freedoms to adjust subsidies to give with archaeological painstakingness, been
EU ones. In bars and restaurants Poles were farms incentives to spend on technology. unearthed by others: it is said that the Mu-
replaced by Indians, often dependants of At the last budget Jeremy Hunt, the chan- seum first learnt of this in 2021; it is said
those on student or worker visas. In fields cellor, did introduce a tax reform that lets Roman cameo gems are among the things
Romanians were replaced by Ukrainians businesses fully deduct investments in stolen. This might sound small—the gems
and, last year, by a surge in new arrivals machinery. Unfortunately, in order to meet are tiddly. It is not. Dr Christos Tsirogian-
from Central Asia. his fiscal rules, it is limited to just three nis, who heads a UNESCO group on antiqui-
Despite the high numbers, some firms years which negates much of the bene- ties trafficking at Ionian University, says
have struggled. Brexiteers wanted fewer fit. Tackling problems like weak manage- this is “probably the worst case so far…No
but higher-skilled immigrants. The oppo- ment and low investment will be a grind, one expects that to happen in a museum.”
site happened: fewer than one in seven ar- with few quick answers. But providing This is less about pottery than princi-
rivals last year were skilled workers (offi- more certainty on immigration and tax ples. To lose one antiquity may be regarded
cially defined as those paid over £26,200 policy would be a good place to start. as a misfortune; to lose hundreds looks as
($33,500)). The new visa system has forced if you are a museum that cannot do its job.
firms to take some drastic measures. In The museum has built its reputation—and
2022 Cranswick, a big food producer, paid Stolen antiquities defended its collection—by arguing that it
£4m to fly in 400 Filipino butchers to avoid looks after things well. This would imply
a Christmas shutdown. Now museum… that it can’t. Paul Cartledge, emeritus pro-
A lack of commitment was not the only fessor of Greek culture at Cambridge Uni-
reason the Brexiteers’ experiment failed. Now you don’t versity, thinks that is overstating it: the
The thinking behind it was also faulty. The theft of some jewels does not mean the Par-
real productivity problem starts at home. A thenon sculptures are unsafe. But, he says,
significant factor is the poor quality of Brit- if this was going on for some time, “How
BLOO MSBURY
ish managers, according to John Van Ree- the hell was it not noticed?”
An embarrassment for the institution
nen and Nick Bloom, two economists who Equally: how the hell would it be? Mu-
have conducted international surveys.
Other research suggests that this is espe-
cially true in low-wage sectors. Weak in-
G o into the British Museum. Ignore the
Rosetta Stone; don’t turn left for the
Parthenon sculptures; don’t be seduced by
seums are icebergs of antiquity, with the
vast majority of their collections unseen.
In the case of the British Museum’s 8m ob-
vestment is also to blame, though that is a the sumptuous naked statue of Venus. In- jects, only around 1% are usually on dis-
concern throughout the economy. stead, head up the stairs to Room 69. Here, play. As with humans, museums’ “one per-
Nor is automating a business as simple it is quieter. There is the usual old stuff: cent” tends to be glamorous and notice-
as switching workers for robots. Machines Greek pots; some rude Roman decorations; able: the Parthenon sculptures, the Rosetta
require skilled operatives. The Nether- and a pair of wooden double doors whose Stone. Steal that, and it would be noticed
lands, with the most productive farms of brass buzzer announces, expansively, that immediately. Steal a tiny Roman cameo
all, pioneered vertical farming and the use they lead to “GREEK AND ROMAN ANTIQUI- and most would be none the wiser. Other
of robotics in harvesting and milking. But TIES”. Press it, and no one answers. They curators may not have even known they
success there grew from decades of nurtur- are not likely to. Because, after a series of had it in the first place.
ing links between farms and universities, thefts, there are fewer antiquities behind Until, that is, the theft becomes known,
and investing in research. For British this museum’s doors than there should be. for filched art is fascinating. Some of the
farms and factories, workers with techni- The British Museum is in trouble. Pre- most famous exhibits acquired their fame
cal skills are hard to find. less from artistic merit than because they
Running automated systems requires were nicked. The Mona Lisa, until it was
some labour, as when a packing machine stolen in 1911, was little known except to art
sits at the end of a row of human fruit-pick- enthusiasts; it took 26 hours for the Louvre
ers. Yet businesses lack certainty about to notice it had gone. The British Museum
their labour supply. As long as the govern- knows this better than anyone: as a former
ment talks of ending some visa schemes curator once pointed out, the Parthenon
and slashing immigration firms cannot sculptures became “this great icon of West-
plan. Professor Simon Pearson, who led a ern art because they were removed”.
government review of automation in hor- Those sculptures are one reason why
ticulture last year, says that this is a big fac- these thefts are so embarrassing. The sweet
tor deterring investment. A new field rig savour of Schadenfreude is evident in some
might pay off over several seasons, but if a of the comments on the thefts. The muse-
farm cannot see beyond the next harvest it um, says Dr Tsirogiannis, is “having a taste
will not risk buying one. of their own medicine”. For centuries, it
Britain also timed its experiment badly. has collected objects—to the fury of other
Around the world borrowing rates have countries, which often claim such items
soared and businesses have been hit by were stolen. “Now they find themselves
higher costs of labour, energy and feed- being…the victims of theft.” Though if the
stocks. Selling goods abroad also became museum ever gets these gems back they
harder with post-Brexit border checks. could put them on display. This time, as a
That made investing harder. Chicken Something’s missing star appearance, not a mere cameo.
The Economist August 26th 2023 Britain 21
Londongrad redux
Dangerous dogs
Still (mostly) Bully by name
welcome BREASTO N, D E RBYSHIRE
One breed of dog is responsible for killing eight people since 2021
22 Britain The Economist August 26th 2023
Lessons from the Blitz parts of the City of London, for centuries a
financial hub, are now home to some of the
Air raids and agglomeration area’s tallest buildings such as 30 St Mary
Axe (known as the Gherkin). Their vastness
drastically expanded the amount of com-
mercial floor space. Between Leadenhall
Street and Fenchurch Street, for example,
whole blocks were ruined. In the years
The Blitz flattened much of London, but also lowered barriers
after the war, sites demolished by bombs
that hindered economic growth
were sometimes used as car parks before
Regent’s Park
Theobalds
Road
River Thames
Central London, building height Bombing during the Blitz = one bomb 1 km
2022, metres 0 25 50 100 200 Oct 1940-Jun 1941 Sources: Emu Analytics; OpenStreetMap; Bomb Sight
The Economist August 26th 2023 Britain 23
24 Britain The Economist August 26th 2023
Britons are not all in it together, even if they think they are
For others, rising interest rates are a boon. Almost three-quar-
ters of pensioners own their home without a mortgage. For them,
higher interest rates mean little but higher returns on cash sav-
ings. Inflation whittles away at their living standards, but the gov-
ernment has upped the state pension to compensate. Public-sec-
tor workers have to strike for pay rises that struggle to match infla-
tion. Thanks to the triple lock, pensioners receive an inflation-
linked bump automatically. Yet few pensioners accept that they
are the lucky ones. There is a cost-of-living crisis, after all.
Britons are tightening their belts, but in general only by a few
notches. Two-thirds of voters say they have cut down on non-es-
sentials, while almost half say they have reduced even essentials.
But there is a gap between how people answer surveys and how
they behave at the tills. Retail volumes, which adjust for inflation,
are down by barely 3% on 2019. Likewise, living standards do not
have to fall as prices rise. Some Britons can rely on savings. At 10%
of gdp, Britons have more excess savings, built up in the pandem-
ic, than any rich country bar Canada, according to a rough esti-
mate by Deutsche Bank.
For most people the “cozzie livs” has resulted only in a reduc-
tion of fun, rather than a descent into poverty. Thus when help ar-
rived, much of it was spent on pleasure. The Institute for Fiscal
The Economist August 26th 2023
Europe 25
26 Europe The Economist August 26th 2023
General Valery Gerasimov, Russia’s chief of chiefs have now received satisfaction. ing us to do,” says the source.
general staff, whom Mr Prigozhin routine- The Wagner boss’s death could help The source adds that Ukraine’s army
ly attacked, has “brought some order to the consolidate Mr Putin’s power. But it could was never blind to the challenges of
military chaos of last year”, says John Fore- also destabilise the pro-war constituency breaching Russian minefields and defence
man, Britain’s defence attaché in Moscow by alienating his followers and champi- lines without air superiority. For that rea-
until last year. Wagner forces had been ons. “The assassination…will have cata- son the military leadership delayed the
shoved aside after they led the conquest of strophic consequences,” warned Grey counter-offensive as long as it could. After
Bakhmut in May. Its shock troops were not Zone, a Wagner-affiliated group on Tele- a disastrous start in early June, when two
as important once Ukraine went on the of- gram, a social-media site. “The people who Western-trained brigades lost an uncom-
fensive, says Mr Foreman. gave the order do not understand the mood fortable number of men and equipment in
The impact on African countries, where in the army and morale at all.” minefields, Ukraine has prioritised pre-
Wagner remains active, is more uncertain. As the drama unfolded, Mr Putin was serving its army. “The emphasis is now on
Mr Prigozhin had reportedly been in Africa addressing a gathering in Kursk, hailing degrading the enemy: artillery, drones,
recently, attempting to prevent the gru, the victory of Soviet troops over German electronic warfare and so on.”
Russia’s military intelligence agency, from invaders 80 years ago. Russian prosecu- In recent days Ukraine’s forces have
pushing his forces out of the continent. tors, who promptly shut down an investi- made important advances in the crucial
Wagner is not the only mercenary firm gation into Mr Prigozhin’s mutiny after he southern theatre. Still, they remain a long
around, and African leaders in need of accepted a deal to go into exile in Belarus, way off their goal of nearing the Azov sea—
muscle will not much care whether Rus- were quick to open an investigation into a thus cutting Russia’s seized land corridor
sian troops answer to Mr Prigozhin or an- violation of air-traffic and safety rules. The to Crimea—before the rains of late October.
other Kremlin functionary. Russian public may learn that it was a pi- The grim mood is spilling over into
The biggest ripples will be inside Rus- lot’s mistake or a fault in the plane that Ukraine’s politics, which have been on
sia. If Mr Prigozhin was killed on Mr Putin’s brought Mr Prigozhin to his end. In Russia, hold for much of the war. Rumours have
orders, it would reinforce the president’s nobody expects to be told the truth. circulated all summer that Mr Zelensky’s
image as a vengeful strongman willing to office may call early parliamentary and
dispense with procedure and law. Over the presidential elections. The logic is that it is
years, his enemies have suffered a range of Politics in Ukraine better for him to seek re-election while still
exotic methods of attack, from a radioac- a national hero, rather than after being
tive isotope slipped in tea to nerve agent Frustrated forced into peace talks that might require
smeared on underpants. Yet these meth- unpopular concessions. Mr Zelensky has
ods have also undermined the notion that expectations no rival apart from commander-in-chief
Russia is a regular state, exposing Mr Pu- Valery Zaluzhny, who is busy running the
tin’s regime as a mafia-like enterprise dri- war, says Volodymyr Fesenko, a political
KYIV
ven by whim and blood feuds. The very ex- analyst. But “Zelensky’s team understands
Ukraine’s slow counter-offensive is
istence of Wagner—a private army formal- that could change.”
souring the public mood
ly banned under Russian law—demon- Conducting an election with up to 6m
strated Mr Putin’s mistrust in institutions
and his reliance on informal connections.
Kirill Rogov, a political analyst, argued
A nastasia Zamula is a co-founder of
Cvit (Blossom), an all-women volun-
teer organisation that supports Ukrainian
Ukrainians living outside the country and
hundreds of thousands fighting away from
home would be complex. And martial law
on his Telegram channel that Mr Prigozhin units on the front line. Her crowdfunding precludes elections, meaning parliament
had become a victim of the uncontrolled appeals have struggled as hopes of a quick would have to change electoral rules. The
violence he had promoted; the crash of his breakthrough in Ukraine’s counter-offen- talk was initially of holding both elections
plane was a mirror image of the downing of sive have dwindled. “The idea of a counter- this autumn, but that is unlikely. Polling
military aircraft by Wagner during the mu- offensive is bliss when you talk about it suggests that Mr Zelensky’s team would
tiny. Mr Prigozhin’s blasting of General Ge- from an armchair,” she says. “It’s much struggle to persuade citizens of the need
rasimov and Mr Shoigu once made him harder when you understand that it means for an early vote. “There just isn’t a demand
useful to Mr Putin by deflecting blame for darkness, death and despair.” for it,” says Lubomyr Mysyv of Rating, a Ky-
the disastrous invasion. But the army’s The public mood is sombre. Criticism iv-based sociological group.
somewhat improved performance of of Volodymyr Zelensky, the president, has Peace negotiations with Russia would
late made this unnecessary. The army increased. Having once promised a march be an even harder sell. There have been
to Russian-occupied Crimea, political some signs of a shift in mood: in early Au-
leaders are now curbing expectations. “We gust a sniper made waves by dismissing
St Petersburg have no right to criticise the military sit- the prospect of Ukraine ever regaining its
EST.
ting here in Kyiv,” says Serhiy Leshchenko, full territory. He suggested that many sol-
Plane
crash site Kuzhenkino a presidential spokesman. “Every metre diers would welcome a ceasefire—a notion
250 km forward has its price in blood.” that would once have been unthinkable.
Known
LATVIA
Tver flightpath Ukraine’s leadership is frustrated that But for now, few would agree. Too much
Western equipment has not yet arrived in blood has been spilt.
Contact lost Moscow
with plane its promised numbers. Equivocation Yet Ukraine’s young are bearing the bur-
Minsk among allies over newer weapons, and the den of a war with no end in sight. For
RU SSIA prospect of America re-electing Donald young men, in constant danger of being
BELARUS
Kursk Trump next year, have added to the anxi- conscripted, the pressure is intense. Those
eties. A source in the general staff says that keen to fight volunteered long ago; Uk-
Kyiv
Ukraine has received just 60 Leopard raine is now recruiting mostly among the
UKRAINE
Bakhmut tanks, despite the promise of hundreds. unwilling. As Ms Zamula says, everyone
Ukrainian territory De-mining vehicles are particularly scarce. knows that the cost of territory is dead sol-
annexed by Russia Rostov-on-Don
on Sep 30th 2022 “We simply don’t have the resources to do diers. “Even hoping for success...has be-
Source: Flightradar24
the frontal attacks that the West is implor- come an act of self-destruction.”
The Economist August 26th 2023 Europe 27
Spain’s languages
Belgrade graffiti
Plural forms The art of war
BE LGRAD E
Backers of Ukraine and Russia are fighting with paint
S ANTIAGO DE COMPOSTE LA
Spain’s parliament now accepts
Basque, Catalan and Galician
A S GLEB PUSHEV, an artist who fled
Russia to dodge the draft, was finish-
ing a pro-Ukraine mural in Belgrade,
shooting on May 3rd killed ten people, a
mural of Vladimir Putin has been re-
painted repeatedly to support Ukraine
28 Europe The Economist August 26th 2023
The Economist August 26th 2023 Europe 29
HUè v® Ú
ÏÚ Úª
Responsibility is the law of tomorrow
The Economist August 26th 2023
United States 31
32 United States The Economist August 26th 2023
education department. Recently, covid-19 clean it up instead of being sent home. Migrants in New York City
has returned, and protocols still require Chicago Collegiate is encouraging at-
pupils to stay at home for five days after tendance by giving pupils individual re- Breaking point
testing positive. wards and by holding class pizza parties. In
This alarming absenteeism is coincid- Baltimore 58% of pupils miss at least 10%
ing with falls in enrolment. In a separate of the school year. The mayor, Brandon
study released in February, Dr Dee found Scott, plans to award a trophy to the school NEW YO RK
that public-school enrolment fell between with the most improved attendance rate. Eric Adams struggles with the
autumn 2019 and autumn 2021 by 2.5% The state of New Mexico offers competitive obligation to house newcomers
(about 1.2m pupils). Some of this is because grants to schools to encourage new atten-
the number of school-age children in
America is shrinking, and a small part re-
flects a shift to private schools. But much
dance initiatives.
Teachers and school staff are also going
to pupils’ homes to urge them to attend
T he tent city in the parking lot of
Creedmoor Psychiatric Centre in
Queens is far from ideal. The neighbour-
seems to be the result of families opting regularly. In Baltimore Mr Scott is planning hood, 15 miles (24km) outside Manhattan,
out of school entirely. Private school atten- to join the city’s school leaders this year on is mostly residential and is served by a sol-
dance increased by 4%; homeschooling visits to missing pupils’ homes. He has itary bus line. But because of the influx of
rose by 30%. Exactly what that means for also brought back older tactics: sending migrants the tents are badly needed. It
the quality of tuition children are receiving truant officers to search for kids on the opened on August 15th and within a week
is unclear. Some states insist on strict rules streets. During the 2022-23 school year, Mr the 1,000-bed facility was nearly full. An-
for homeschooled children; but some Scott’s office cracked down on “squeegee other shelter site, on Randall’s Island, be-
barely check on them at all. boys”—kids who washed car windows for tween Manhattan and Queens, along with
Attending school in person is impor- cash at intersections—after a 14-year-old one soon to open at Floyd Bennett Field, a
tant. Studies show that even after adjust- boy shot and killed a 48-year-old man who helicopter base in Brooklyn, will add 5,500
ing for poverty levels and race, children had confronted a group with a baseball bat. beds for migrants.
who skip more school get significantly Vans picked the kids up and hauled them Over 110,000 people are housed in New
worse grades. One published by the Insti- to school. York City’s homeless shelter system. Of
tute of Labour Economics, a German think- There are few easy fixes, though some those, 53% are asylum seekers. For over a
tank, by three American academics, found look for them. In Chicago, at the start of year they have arrived in the Big Apple on
that missing ten maths classes reduced the this year, the schools inspector-general ac- buses, shipped by Texan politicians, or of
chance of a high school student graduating cused several schools of misreporting their own accord, coming by plane, train,
on time by 8%. Schools also connect pupils truant (or entirely missing) children as car and bus. In the week ending on August
to important services. In Baltimore, having transferred to other schools to 20th, 3,100 arrived. New York’s “right to
schoolchildren can get free meals or be fit- mask absenteeism. Almost half of pupils shelter” mandate, in place since a lawsuit
ted for glasses through school; and their in the city were reported absent in 2021-22. was settled in 1981, means that anyone
parents can be hooked up with social ser- Most teachers, however, are simply trying without a roof to sleep under is entitled to
vices. Educators can also spot if a child is to adapt. “Our youngsters, the competition one from the city.
being neglected or abused. Pupils develop for their attention has never been more “We’ve been forced to play an unsus-
social skills in school, take part in after- difficult,” sighs a teacher in a New York City tainable game of ‘whack-a-mole’, opening
school programmes and learn sports. middle school. The challenge, he says, is to site after site as asylum seekers continue to
What will it take to coax kids back into “make kids gravitate to school”. Mass edu- arrive by the thousands,” said Eric Adams,
classrooms? Skipping school frequently is cation needs mass. the city’s mayor, on August 21st. Earlier this
illegal and in many states parents can face month many people were forced to sleep
fines or even jail. On August 15th Missouri’s for days on the pavement outside the Roo-
state supreme court upheld a law that per- Bricks in the wall sevelt Hotel, the city’s largest intake cen-
mits jail time for parents if their children United States, state-school pupils absent for tre. Mr Adams says there is “no more
are truant. But there is little evidence that 10% or more of the academic year, % of total room”. The state attorney-general is look-
criminalising truancy prevents much of it. 2018-19 2021-22 ing into allegations that DocGo, a medical
And because chronic absenteeism is pow- services provider hired by the city, mis-
erfully correlated with disadvantage, en- Highest rate handled migrants in its care.
forcing such laws would hurt the poorest 0 10 20 30 40 50 Housing huddled masses is not cheap.
families. In Washington, dc, three-fifths of Alaska It will cost $4bn a year over three years:
pupils who were eligible for government about 6% of what the city takes in tax, or
New Mexico
assistance were truant. roughly equivalent to the combined
Instead, many schools are trying to Michigan spending on the city’s fire and sanitation
solve some of the problems that keep chil- Oregon departments. Sheltering a single family
dren away. In New Mexico many pupils Nevada costs around $380 a night, says Murad
missed whole days of school to travel long Awawdeh, of the New York Immigration
distances for medical appointments, says Coalition, a refugees’ rights organisation.
Lowest rate
Mr Frostad. So some of the state’s schools Renting an apartment costs a fifth of that.
teamed up with federal health clinics. 0 10 20 30 40 50 New York City is unique in having as-
Tennessee
“Now [pupils] can be seen in 30 minutes sumed this obligation. Other cities, like
and then be back to class,” he says. Some- Virginia Chicago and Philadelphia, are also strug-
times pupils are forced to miss school be- Oklahoma gling to help migrants, but neither has a le-
cause they have been suspended or ex- New Jersey gal requirement to house them (or the stag-
pelled. Administrators are now reconsi- gering numbers New York does). Only Mas-
Alabama
dering disciplinary policies. If a pupil has sachusetts has anything remotely similar.
Source: “Higher chronic absenteeism threatens academic
vandalised school property, for example, recovery from the covid-19 pandemic”, by T. S. Dee, Aug 2023
It, too, is seeing an influx of arrivals; its go-
school officials can require that the child vernor has declared a state of emergency.
The Economist August 26th 2023 United States 33
Some migrants have been bussed to the Leprosy ma. In some countries leprosy is recog-
suburbs on the city’s dime. But Kathy Ho- nised as grounds for divorce.
chul, the governor of New York state, is not Avoid armadillos It is the symptoms that give the disease
a fan of moving migrants around. “Putting its awful reputation, says Dr Bloom. Those
someone in a hotel on a dark, lonely road with a visible infection develop lesions,
in upstate New York and telling them usually on their face and extremities, that
they’re supposed to survive is not compas- lack feeling. This is because the bacteri-
WASHINGTO N, DC
sion,” she said on August 16th. The state um—mycobacterium leprae—affects the
An ancient disease is spreading in
has directed $1.5bn to the city to help. But it skin and the nervous system. In severe cas-
Florida and elsewhere
has not budged otherwise. On August 23rd es sufferers may lose fingers, toes and
state and city lawyers gathered behind
closed doors with a judge and the Legal Aid
Society, a charity, to try to hash out a deal,
I n many ways the past few years have
seemed biblical. First came a pandemic.
Then war, followed by food shortages, fires
other body parts. When you cannot feel
pain in your extremities, it is harder to
avoid accidents that may cut them off.
but produced nothing. and floods. Just when it seemed that things In the Bible leprosy afflicts the sinful; at
New York has always been a gateway to could not look more like the end of days, least until Jesus “cleanses” them. Scien-
America. But in the past the government leprosy has joined the list. tists today are less sure how it spreads.
did little beyond lifting the lamp beside the Hansen’s disease, better known as lep- This is partly because the disease can re-
golden door to the tired and poor. Migrants rosy, is a tropical malady that is rare in main dormant for up to 20 years, so con-
were expected to find their own way, and America. In 2020 (the last year with avail- tact-tracing is difficult. (Who remembers
mostly did, through family and kinship able data) just 159 cases were reported. what they were doing 20 years ago?) Scien-
ties. The arrivals now tend not to have such Only 5% of people seem to be susceptible tists think that people catch the disease
links. Most are from Venezuela, but people to infection. Because it is so rare, Ameri- through prolonged contact with a conta-
get to America from as far afield as Russia cans seldom think about leprosy, and gious person, perhaps when that person
and West Africa. One Mauritanian, who is many clinicians have never seen it outside coughs or sneezes.
staying in a suburban hotel paid for by New a textbook. This is starting to change. Today there is a cure—a round of sever-
York City, says his family sold their live- Charles Dunn, a dermatologist, and his al antibiotics does the trick. After a few
stock to pay for his travel costs. Most mi- colleague, Rajiv Nathoo, came across their weeks infected people are no longer conta-
grants would love to work, but it takes first leprosy patient last year in a clinic in gious. The lesions go away; though they
months for work permits to be issued. Orlando, Florida. “It was very classic in may leave scars. The treatment is free
Mr Adams has begged White House offi- terms of what you read in the books,” says thanks to the World Health Organisation.
cials to expedite work permits. Stopping Dr Dunn. Yet the 54-year-old patient had In the old days, leprosy was seen as a mark-
people from working is “anti-American”, been seen by multiple clinicians, and none er of sin. Today it is simply a sign that peo-
he says. But the federal government is not had properly diagnosed him. ple should see a doctor.
going to change the asylum system quick- “I am hoping that people take their
ly, if at all. Nor is the right to shelter likely blinders off,” says Dr Dunn, referring to
to go away—and even if it did, the city is other clinicians, especially those in central “Tranq dope”
hardly going to start dumping people on Florida. Nearly 17% of American leprosy
the streets. “New York City would look like cases were in Florida in 2020, and over In the flesh
the West Coast cities with a lot more street 80% of those were in central Florida. This
homelessness,” says Kathryn Kliff, a lawyer year the state has reported 16 cases. Dr
with the Legal Aid Society, a charity. Some- Dunn says medics should look out for the
thing needs to change though. More mi- disease, so they can diagnose and treat it.
grants arrive every day. The mayor will In the past, Americans with leprosy had
NEW YO RK
have to get more inventive. usually caught it while travelling to coun-
A new drug cocktail rots limbs
tries where it is more common, such as
Brazil, India or Indonesia, or had been in
close contact with people who had trav-
elled to such places. Armadillo wrestlers
I n the early 2010s a nightmarish new
drug spread across Russia and Eastern
Europe. Krokodil, a cheap substitute for
(who chase, capture and wrangle with the heroin cooked up in kitchen laboratories,
creatures) are also at risk—the nine-band- left users with scaly skin and rotting
ed armadillo can carry the disease. This lat- wounds. Now an eerily similar drug called
est outbreak is unusual in that the new pa- “tranq dope” has infiltrated America. Last
tients are neither intrepid travellers nor ar- month the White House issued a national
madillo wrestlers. This suggests that the plan to fight it.
disease is now endemic in the south-east. Tranq dope is a combination of fenta-
Though few people know what leprosy nyl, a powerful synthetic opioid, and xyla-
is, ears prick up at its mention. “There is zine, a veterinary tranquiliser. Adding xy-
essentially no population in history…that lazine to an opioid seems to make the high
didn’t have a stigma associated with lepro- last longer. Between January 2019 and June
sy,” says Barry Bloom, an immunologist 2022, the share of all fentanyl-related over-
and former dean of Harvard University’s dose deaths where xylazine was present
School of Public Health. People have been shot up from 3% to 11%.
burned or buried alive for having it, says Dr The cocktail was first detected by drug
Bloom. Many were cast out of society, or authorities in the early 2000s in Puerto Ri-
forced to sound bells or clappers to warn co. Later it circulated there and in limited
others of their approach. That led to “a areas within America’s north-east, such as
mortal fear of the disease”. Many people Philadelphia. But it has now been detected
Let them work still shun medical help for fear of the stig- in nearly every state in the country and, ac-
34 United States The Economist August 26th 2023
cording to the Drug Enforcement Adminis- Ohio. “Things are fun right now.”
tration (dea), is probably being mixed “at Concentration among churches accel-
retail level” (ie, on the street). erated as costs rose in the 1970s, notes
Xylazine can be bought for as little as $6 Mark Chaves of Duke University. Smaller
per kilogram on Chinese websites, so drug ones lost members. Though evangelicals
suppliers can pad their profits by using it aim to convert non-believers, about three-
to bulk up their more expensive fentanyl, quarters of those who join megachurches
supplied mostly by Mexican drug gangs. were already practising. “We’d like to think
Consequently, many end users will not that we’re reaching atheists. We’re reach-
know whether they are buying pure fenta- ing some, but the truth is that the body of
nyl or tranq dope, though it is increasingly Christ is consolidating,” says Mr Tome.
risky to assume the former. In March the With more money and more hands,
dea warned that almost a quarter of Amer- megachurches can innovate. Though they
ican fentanyl powder now contains xyla- account for just 0.5% of all churches and
zine. In Philadelphia, more than 90% does. 7% of churchgoers, their influence is felt in
Though chemically different, tranq af- the music played elsewhere and the popu-
fects the body in ways reminiscent of kro- larity of their TED-talk-style sermons, says
kodil. Researchers believe that xylazine Scott Thumma of the Hartford Institute.
causes the outer blood vessels to constrict, Nearly all the top contemporary worship
which means the skin does not get enough songs between 2010 and 2020 came from
fresh blood. The result is deep, necrotic just four megachurches.
open sores, which can form even if the Megachurches Their success illustrates what it takes to
drug is snorted, not injected. Eventually, compete in a dynamic spiritual market-
tissue simply rots away. Such wounds can Throngs of praise place. Bill Hybels, a megachurch pastor
easily become infected, and limbs may ul- felled by sexual-misconduct allegations in
timately need to be amputated. Users ap- 2018, was said to parrot Peter Drucker, a
pear to enter a stupor, which makes them management guru: “What does the cus-
easy to rob or assault. tomer consider value?” Andre Audette, a
O KLAHO MA CITY
Worryingly, the emergency treatment political scientist at Monmouth College in
Even as Christianity stumbles,
for a fentanyl overdose does not work on Illinois, found that four-fifths of evangeli-
megachurches are thriving
non-opioids like xylazine. When people cal Christians have shopped around for a
overdose, first responders give them nal-
oxone, which acts on opioid receptors in
the brain to reverse the effects of the
E arplugs are available, should the mu-
sic get too loud. Sure enough the vol-
ume—not to mention the tattooed front
church—more than any other group.
What would Drucker say of the faith
customer? Two trends stand out. They
opioid, in particular suppressed breathing. woman and bobbing crowd—evokes a want to choose their level of engagement,
Xylazine has no such antidote. country-rock concert. Only the lyrics sug- which megachurches make easy. Those
Doctors say their primary worry is still gest otherwise: “Fill it all up, fill it all up craving connection can join any number of
fentanyl, rather than what it is mixed with. with Jesus.” Afterwards a pastor, in T-shirt small groups. Life.Church hosts a club for
The opioid kills more Americans every and high-top sneakers, compares an Old Dungeons & Dragons fans (“gamers con-
year. In 2021 around 70,000 people died Testament parable to a rom-com. Dona- necting and growing closer to Christ”).
after having taken it. Fentanyl itself is tions are solicited by QR code. The service Others like the anonymity. There is more
increasingly used as a deadly bulker for is entertaining and, for many first-timers, pressure to donate and serve at smaller
more expensive party drugs, such as co- unlike anything they expected of church. churches. Megachurch members show up
caine and ecstasy. Yet those taking tranq Welcome to Life.Church, one of Ameri- and contribute less per capita.
dope are at even greater risk of a fatal over- ca’s largest megachurches, headquartered The other trend is the weakening of de-
dose, or of suffering a life-changing injury, near Oklahoma City. Really it is a chain of nominations. Two-fifths of megachurches
such as a lost limb. The drug’s spread com- churches, with 44 sites across 12 states. are non-denominational. The rest tend to
plicates an already complex battle against Every weekend around 80,000 people at- downplay theirs and emphasise their own
addiction and overdose deaths. tend one of 170 services in person. Most brand. Life.Church is affiliated with the
American authorities seem to be taking watch a pre-recorded sermon by a senior Evangelical Covenant Church—but few
the challenge seriously. In February the pastor, Craig Groeschel; a junior pastor acts congregants realise that. Todd Mullins of
federal Food and Drug Administration an- as an in-person MC and a worship band Christ Fellowship Church, a church with 14
nounced that it would start tracking im- plays live. The whole thing blends seam- sites in Florida, estimates that about half
ported xylazine, which previously was lessly, and it is streamed online, too. his flock were once Baptists or Catholics
mostly unmonitored, and detain suspi- Churches have closed as the proportion and the other half unchurched.
cious shipments. The Biden administra- of Americans who call themselves Chris- Consolidation will level off at some
tion has also set a goal of reducing deaths tian has fallen from 76% in 2010 to 64% in point, says Mr Chaves. And today’s winners
from tranq dope by 15% in at least three of 2020. But most of America’s 1,750 mega- will probably not look the same in future.
four American census areas by 2025, pri- churches—all Protestant and mostly evan- Back in 2006 he found that the largest
marily by increasing testing and adjusting gelical churches with at least 2,000 wor- churches retained their top spot for about
treatment accordingly. shippers—are thriving. Between 2015 and 20 years before being overtaken. Growing
Nevertheless, the dea suspects tranq 2020 their congregations grew by a third has stresses of its own. Mr Tome says he
will continue to spread. In Puerto Rico on average, turning younger and more stopped sharing attendance numbers with
drug users have specifically sought it out, multi-racial, according to the Hartford In- Outreach Magazine, which ranks congrega-
hoping for a lasting high. By some reports, stitute for Religion Research, a think-tank tions by size, because he felt like a chief ex-
demand is similarly rising in Philadelphia. in Connecticut. After a covid dip, “We’re in ecutive answering to the stockmarket. “I’m
As bleak as the opioid crisis seems, it could growth mode,” says Brian Tome, pastor of not in corporate America”, he says. “I’m go-
get grimmer. Crossroads, a nine-site church based in ing to church!”
The Economist August 26th 2023 United States 35
COMPANIES SHOULD
FOCUS ON PROFITS.
SHOULDN’T THEY?
Booth researchers are exploring
what should drive corporate decisions
in the 21st century.
014
The Economist August 26th 2023
The Americas 37
38 The Americas The Economist August 26th 2023
country to do so. Now it wants its overseas Town lent their addresses to some 480,000 noted that the BVI needed to diversify the
territories to follow suit, by the end of this fee-paying companies. That was more than kinds of financial services it offers, as well
year. The idea is that allowing journalists 15 for every resident. as strengthen other pillars of the economy,
and NGOs to trawl records that at present Since then the number of new compa- such as tourism. But progress has been
are made available only to police and other nies being created every year has slowed slow. It has certainly not been aided by the
relevant authorities will make it easier to dramatically, from almost 80,000 in 2007 catastrophic impact of Hurricane Irma,
detect tax abuse and fraud. But the offshore to some 28,000 in 2022. The total number which struck the islands in 2017.
centres are dragging their feet, presumably of businesses registered in the territory That calamity destroyed or damaged
because they fear that having a public reg- has fallen at a somewhat slower rate. some 70% of buildings and set back essen-
ister will dent sales. Whereas customers once bought and tial efforts to improve infrastructure. Look
A second pressure is a global corporate- threw away BVI companies at some speed, away from Road Town’s shimmering har-
tax deal struck by some 130 countries in they now purchase fewer and hang on to bours, and the territory looks scruffier
2021 which, among other things, aims to them for longer. But this figure is also drift- than its income level suggests (its GDP per
ensure that big multinationals pay at least ing downwards, nonetheless. Lately the person is about the same as Britain’s). Fires
a minimum level of tax on their profits, government has managed to prop up the smoulder at its rubbish dump. Its power
wherever in the world they choose to book revenues this industry generates for the station occasionally packs up. As else-
them. For years companies have used legal territory, in part by raising fees. But there is where in the Caribbean, youngsters get
loopholes to declare profits in havens that probably a limit to how long it can do that. tempted into gangs that ship drugs to the
charge little or no levies, instead of where Some of the BVI’s customers may be mov- United States; violence sometimes results.
their sales are actually made. In the future, ing to incorporation centres that are On the edge of Road Town sits a car with
when companies use these kinds of ar- cheaper and better able to promise ano- three bullet holes in its windscreen.
rangements to achieve a tax bill lower than nymity, such as Delaware.
15%, they will be asked to cough up extra The BVI’s economy is more vulnerable No man is an island
money wherever they have their main to changing regulation than its Caribbean Dysfunctional politics have harmed it, too.
headquarters. Or at least that is the idea. competitors because its financial sector is Even before Mr Fahie’s arrest, the BVI’s Brit-
much less diverse. The Caymans is a big ish governor had launched a commission
A bit rum domicile for hedge funds; Bermuda a hub seeking evidence of corruption or “serious
The extent to which Caribbean centres for insurers. The incorporation work dishonesty” in government. Last year it
benefit from the corporate “profit-shift- which the BVI excels at is, by comparison, concluded that politicians had been
ing” of a sort that will be affected by this much easier to replicate. The territory has spending public money “without applying
agreement ranges widely. A global mini- done a poorer job than its neighbours of any objective criteria, without giving any
mum tax could reduce incentives for big building expertise in other kinds of finan- reasons and without fearing any come-
corporations to pitch tents in palm-fringed cial and corporate services, which would back”. The British government declined to
places, but will not eliminate them. The provide more security as its ability to offer suspend the territory’s parliament, as the
Bahamas and Bermuda are talking about tax advantages and secrecy erodes. Efforts commission advised—but says it could
raising taxes for the biggest foreign firms: to diversify can be fraught with risk. The still do so if islanders do not make reforms
if multinationals will be forced to pay Bahamas courted cutting-edge finance, that its report recommended.
more, goes their thinking, they might as only to find it was host to Sam Bankman- Locals insist that after years of tumult,
well try to pocket the cash themselves. The Fried, a cryptocurrency tycoon, who was the territory is finally making good pro-
Cayman Islands and the BVI are still decid- jailed on August 8th in the United States, gress. Lorna Smith, deputy leader in a gov-
ing how to respond. There is a high chance ahead of his trial for fraud (in January he ernment that took office this year, says her
that the United States will yet wimp out of entered a plea of not guilty). new ministry of financial services will pro-
the deal; that would greatly limit its effect. A government report published in 2014 tect the BVI’s incorporation business and
These and various earlier initiatives
have taken the BVI some way from its glory ↑ 780 km
United States
days. In the 1950s the colony made half its Bermuda (Britain)
revenues selling stamps to philatelists, Miami
Bahamas
notes Oliver Bullough in his book “Butler ATLANTIC OCEAN
to the World”. Everything changed in the
late 1970s, when American firms began in-
Turks and Caicos Is.
corporating there in order to exploit the fa- Cuba
(Britain)
vourable treatment the BVI then enjoyed British Virgin Is.
under a tax treaty between Britain and the Mexico (Britain)
United States. Within a few years, the terri- Haiti Dominican
Cayman Is. Republic Anguilla
tory was selling brass-plate companies to (Britain)
(Britain)
people from all over. Hong Kongers grew Belize Jamaica US Virgin Is.
especially keen. Protecting their assets us- (United States)
ing offshore shells was one way to hedge Caribbean Sea
against risks posed by their own island’s Honduras Montserrat
looming return to China. Aruba (Netherlands) Curaçao
(Britain)
In the 1990s the Caribbean offshore cen- (Netherlands)
Nicaragua
tres were “very wild west”, in the words of
Jason Sharman at the University of Cam-
bridge. “Think private jets full of cocaine Panama
cash being flown in and taken to the bank,”
Costa Rica Corporate tax-haven score, 2021 47 60 70 80 90 100
he says. During that period the BVI’s finan- Colombia Venezuela
100=most scope for tax abuse
cial sector grew by around 50% each year. 500 km
Source: Tax Justice Network
At their busiest, bland buildings in Road
TELL THEM I MADE IT
Hem Moktan earned just $45
over the three years he was
concealed as a child laborer in
Nepal. He was only a young boy,
but the carpets he hand-knotted
were sold in fine showrooms
across the United States and
Europe – until one company
partnered with GoodWeave.
GoodWeave rescued Hem
and provided him counseling,
education and a place to live.
Now with a master’s degree,
Hem heads GoodWeave Nepal’s
child protection program,
transforming other children’s
futures as his was.
goodweave.org
014
40 The Americas The Economist August 26th 2023
encourage value-added services to grow Making the most of these opportunities be quickly resolved. “The message of the
around it. She talks enthusiastically about will require reforms, such as slashing the voters was very clear,” he says.
opportunities in “blue finance”, under red tape that impedes too many local en- Similarly, in Ecuador the electoral per-
which the islands could raise money from trepreneurs. It will mean liberalising the iod has been turbulent. Just 11 days before
international investors by protecting their BVI’s immigration system (until now is- the vote Fernando Villavicencio, a candi-
waters and reefs. Next year, she adds, the landers have not been very keen to offer ad- date campaigning on an anti-corruption
BVI will host a big fintech conference on a mission and long-term residency to large platform, was shot and killed. This led an-
cruise ship. Mr Wheatley, the premier, says numbers of foreigners). In particular, it alysts to believe that candidates who em-
that tourism is bouncing back from its will require big efforts to fix iffy schools, phasised a law-and-order message would
pandemic doldrums. For the first time in which during fat years proved easy to ne- come out on top. Homicide rates have qua-
years visitors can reach the islands on a di- glect. Without these solid foundations, the drupled since 2018 to 26 per 100,000 people
rect flight from Miami. treasure islands risk slipping behind. per year. That is a higher rate than in Mex-
ico or Colombia.
Instead, Ecuador’s result shows a deep-
A win for democracy ly divided country. Ms González won 34%
of votes. Her success points to the continu-
The rise of the outsider candidate ing influence of Mr Correa, who ruled from
2007 to 2017 and later went into self-im-
posed exile in Belgium, where he worked
as a host for Russia Today, a news channel
linked to the Kremlin. In 2020 he was tried
MEXICO CITY AND QUITO
in absentia for corruption (which he de-
Elections in Ecuador and Guatemala suggest an ongoing anti-incumbent surge nies) and sentenced to jail for eight years.
But many voters may be nostalgic for his
The Economist August 26th 2023
Middle East & Africa 41
42 Middle East & Africa The Economist August 26th 2023
The Economist August 26th 2023 Middle East & Africa 43
Lebanon foreign visitors. Two summers ago, for ex- count deficits (it hit 26% of GDP in 2014).
ample, a subsidy scheme allowed food im- The economy was unproductive, but the
The Phoenician porters to buy dollars for 3,900 lira, while peg allowed many Lebanese to feel as if
the street rate was around 20,000. When they lived in a middle-income country,
problem your correspondent took some contacts buying imported brands and booking for-
for a beachside lunch, the bill came to eign holidays. A state with a double-digit
765,000 lira, more than Lebanon’s monthly unemployment rate had 400,000 migrant
BYBLOS
minimum wage: $196 at the food-subsidy workers pumping petrol and cleaning
A flood of tourists is a reminder of how
rate, but just $39 with dollars changed on homes. None of this was sustainable.
Lebanon’s economy fell into crisis
the black market. While the diaspora has stopped storing
44 Middle East & Africa The Economist August 26th 2023
wives are bundled together with girls recognise marriage, birth and death certif-
forced into marriage. Countries like Britain icates issued by IS. Local officials require
refuse to take back their own citizens. Iraq women to disavow their IS husbands, even
has suspended repatriations from al-Hol. if they are widows, to get clearance. This all
The American-backed Kurdish group makes it hard for them to find jobs and
that rules the area is meant to control the health care, go through checkpoints, or
camp, but aid-workers speak of a free-for- register children at school.
all. Women loyal to IS hold sway with guns Some UN officials, explaining why the
and train a new generation of believers in world body has stopped overseeing the re-
jihadist ideology. Killing is commonplace. turn process, say that Iraq should take over
“It’s more an IS base than a prison,” says a responsibility because it is flush with oil.
Western researcher monitoring the place. This year it has a budget of $150bn. But they
The perimeter is punctured with tun- neglect to ask whether it is likely that Iraq’s
nels through which IS infiltrates weapons. Shia-led government would actually pro-
Inmates get out unvetted. While official re- tect the Sunnis it suspects still sympathise
patriation proceeds at a snail’s pace, al- with their genocidal foe.
Hol’s population has fallen roughly by half, Most of those who lived under IS rule
as inmates sneak away. But it still holds crave a fresh start. After IS was finally de-
some 42,000 people, of whom 24,500 are feated at its last stand in early 2019 in the
reckoned to be Iraqis. small Syrian town of Baghouz on the Eu-
Mothers fund their escape from al-Hol Teaching staff at al-Hol phrates, just north of its border with Iraq,
by selling their offspring as child soldiers its diehards headed to far-flung places
to Kurdish, Sunni or Shia militias—or to that those returning are often threatened such as the Sahel and Afghanistan.
IS. Kitaib Hizbullah, a Shia militia in Iraq, with death. Some have been killed. Iraqi Still, pockets of sympathy fuelled by re-
is said to charge $3,000 for getting a pris- militias which helped recapture the terri- sentment persist. This summer IS hailed a
oner out of the camp and back across the tory hound them away, says a UN docu- new caliph, Abu Hafs al-Hashimi al-Qu-
border into Iraq. Western governments, ment, or extort bribes at checkpoints. raishi. It has since staged roadside and
loth to take back extremists, are washing Some 1m of them now doss down in unsu- other attacks in Syria. “We’re just fostering
their hands of the problem. “They’re hop- pervised places such as Mosul’s car parks. a new IS generation,” says a UN observer.
ing for a cholera epidemic,” says a consul- An estimated 430,000 lack basic docu- Getting the return process wrong could
tant with America’s defence department. ments. Iraq’s authorities are reluctant to spark another nastier sort of return.
On paper Iraq has the biggest return
programme for those in al-Hol. In 2019 its
Viniculture
government promised to bring back all the
Iraqis who were still held there. It opened a
transit camp in Iraq called Jadda 1, south of
Grapes of wrath
Mosul, the biggest city the caliphate had
BETHLE HE M
held, to serve as a pipeline for receiving
Making Palestinian wine is a challenge
people from al-Hol and putting them back
into the community. But the process has
ground to a halt. Jadda 1 was meant to offer
three months of rehab and trauma coun-
T he vines are heavy with grapes, the
harvest just a few days away. Yet Sari
Khoury is stressed: he cannot find work-
cause Palestinians can earn five times as
much across the wall in Israel. And it is
virtually impossible to get a permit from
selling there, but aid-workers call it “Iraq’s ers to pick grapes in his vineyards. Proud the Israeli authorities to expand his type
Guantánamo”. Inmates need security owner of the Philokalia label, he is one of of business physically. “I can’t even build
clearance and sponsors to leave it. Few a handful of Palestinians in the West a shed for my tools,” he explains. “I have
meet those requirements, so many are Bank producing wine under the trickiest to bring them with me in the car every
stuck there. of circumstances: Israel’s occupation. time.” Other big obstacles are the Israeli
UN humanitarians argue with Iraqi se- A “separation wall” between Israel checkpoints that hamper his logistics
curity men over turf, funding and agendas. proper and most of the Palestinian terri- and the scarcity of water that is guzzled
Aid-workers say sexual abuse by UN staff tory it occupies towers above Mr Khou- by the nearby Jewish settlements.
and Iraqis overseeing security clearance at ry’s cellar in Bethlehem. Mr Khoury’s Many Israeli wineries grow European
Jadda 1 is rife, while claims of rape are not vineyards are hemmed in by Gush Et- grapes that need a lot of irrigation. But
investigated. After weeks of requests, the zion, a cluster of Jewish settlements the lack of water supplies for Palestin-
UN agencies funding the process declined nudging the south of the city. Constant ians in the West Bank means that they
interviews for this article. niggles of the occupation abound. struggle to grow the likes of Chardonnay
Iraq’s government has closed the camps In 2014 Mr Khoury gave up his job as or Cabernet Sauvignon. Hence Mr Khou-
which hosted 5m internally displaced peo- an architect in Paris to return home to ry’s focus on local varieties such as Da-
ple who had been ruled over by IS. Many requite his passion for wine. A year later bouki and Jandali that need less water
have no home to go back to. Thousands of he was producing hundreds of bottles as and can survive the baking sun.
buildings were destroyed in the war to de- one of the West Bank’s handful of wine Mr Khoury also emphasises sustain-
feat IS, or have new occupants. The lucky producers to use only indigenous grapes. ability, but warns against growing indig-
ones who have recovered their homes are Now he fills 10,000 bottles a year. The enous grapes as a gimmick. “I want to
often badly discriminated against. “When business of wine-making is testing create the highest quality wine possible,
they go out they’re harassed by their neigh- enough at the best of times. The head- to be judged on its merits,” he says.
bours saying, ‘You’re Daesh’ [the Arabic ac- aches of production under military “That’s my resistance,” he adds, referring
ronym for IS],” says a researcher for an occupation are even more painful. to Palestinian efforts to push back
American institute. Mr Khoury is short of labourers be- against the Israeli occupation.
Such is the stigma of affiliation to IS
The Economist August 26th 2023
Asia 45
46 Asia The Economist August 26th 2023
The most ambitious leap for the alli- years. Thereafter, total defence spending
ance is the aukus defence-industrial Beijing will rise only gradually, from the current
agreement, which some liken to a mar- Japan 2% of gdp to about 2.3% in 2033.
riage. The centrepiece is a long-term effort China East For Hugh White of Australian National
China
to arm Australia with nuclear-powered Sea PA C I F I C University, Australia would do better to de-
Vietnam
(but not nuclear-armed) submarines. The Taiwan
73 * OCEAN fend waters closer to home with cheaper
boats are planned to be British-designed India South Philippines diesel-electric submarines. Efforts to pre-
China
with American nuclear propulsion, and to Bay of
77Sea
11
Manila Guam serve America’s primacy are doomed to
Bengal
emerge in the 2040s. That could be a pro- 78 14 fail, he says: America cannot win a conven-
Malaysia
blem. The geopolitical risk may be sharp- tional war close to China’s shore and may
est this decade, as China seeks the capacity Indonesia ultimately pull back from Asia.
81 23 PNG Solomon
to invade Taiwan by 2027. 83 28 84 31
Is. Champions of aukus retort that losing
American Virginia-class attack subma- Guadalcanal Taiwan would mean the “Finlandisation”
INDIAN
rines will therefore call more often at AUSTR ALIA of much of Asia, ie, its subjugation to Chi-
OCEAN
HMAS Stirling, a base on the western coast, Brisbane na even if countries remain sovereign.
as the USS North Carolina did earlier this Stirling Sydney Moreover, adds Michael Green of the Uni-
month. From 2027 America will rotate four naval base Canberra versity of Sydney, China’s economic woes
subs through the base (Britain will send suggest its dominance is not preordained.
another). In the 2030s Australia aims to 1,500 km New Zealand For America, the relationship showcas-
buy three, and perhaps five, of its own Vir- es its effort to rally allies against China
ginia boats. Plans are afoot for a second without suggesting it is rushing to war.
submarine base on the east coast. now. Mr Albanese won the support of the Australia must balance a fear of abandon-
The second “pillar” of aukus ranges Labor conference, albeit with a promise ment against a reasonable fear of entangle-
from co-operation on artificial intelli- that all aukus boats would be built locally ment. Critics of aukus cite a comment at-
gence to quantum computing and hyper- and that Australia could not “be directed” tributed to Kurt Campbell, Mr Biden’s Asia
sonic missiles. The three partners hope it by others on their use. Not for Labor the “tsar”, who reputedly said of Australia: “We
will start to deliver deployable technology forthright view of Peter Dutton, the Morri- have them locked in now for the next 40
within months. America also promises to son-era defence minister, who declared in years.” Equally, though, Australia may have
help Australia make, repair and maintain 2021 that “it would be inconceivable that America locked in for the same duration.
munitions, including missiles for the hi- we wouldn’t support the US in an action”.
mars system, now busy in Ukraine, which Even so, aukus almost inevitably makes
Australia is buying. This would help ease such Australian participation more likely. Thailand’s new government
the West’s munitions bottlenecks. On Au- The public is also broadly on board. A
gust 21st Australia announced plans to buy survey by the Lowy Institute, published in Thaksin’s grubby
200 Tomahawk ship-borne cruise mis- June, found 82% of Australians considered
siles, with a range of about 1,500km. the alliance “important” or “very impor- compromise
tant”. A majority favoured establishing
Not quite so fast… American bases on Australian soil. Two- SINGAPO RE
Joint weapons development will work best thirds supported acquiring nuclear-po- The monarcho-military establishment
if America grants aukus partners waivers wered submarines, though many recoiled stiffs the democrats
from rules that guard American know- when told the likely price: A$268bn-368bn
how. Some talk of a “free-trade agreement
in defence”. The Pentagon is supportive.
Whether the State Department and Con-
($173bn-238bn) over three decades. In case
of a war over Taiwan, a majority would
send the navy to prevent a Chinese block-
E ver since Thaksin Shinawatra, one of
Thailand’s richest men, became prime
minister in 2001 he has loomed over the
gress will agree is unclear. A more immedi- ade. Most opposed sending troops. country’s politics. Leaders of the army and
ate possible sticking-point is a Republican But if most Australians view China as a royal establishment, Thailand’s dominant
reluctance to give Australia precious Vir- threat rather than an economic partner, institutions, despise him and resent his
ginia-class boats at a time when America the government recognises that Mr Morri- popularity among the poor Thais he wooed
does not have enough of its own. son’s hawkishness contributed to his elec- with populist giveaways. Even after Mr
The politics of aukus are even harder in toral defeat, especially among Australia’s Thaksin was ousted in an army coup in
Australia, despite bipartisan support for many China-born voters. Hence Mr Alba- 2006 and later fled the country, parties
the deal. It was signed in 2021 by the con- nese’s greater stress on regional diplomacy connected to his family continued to com-
servative government of Scott Morrison, and stabilising relations with China. He is mand widespread support.
and later endorsed by his Labor successor, due to visit Manila, Washington and, per- That pattern shifted dramatically in
Anthony Albanese, a left-winger who did haps, Beijing, in the coming months. May, when a party of punchy liberal re-
not want to be considered weak on de- Meanwhile, Australian exports to China formers called Move Forward won more
fence. Stalwarts on the Labor right have are booming, reaching a record A$103bn in seats than any other party. This was a
long been critical. Bob Carr, a former for- the first half of this year, partly on the back threat to the military establishment—
eign minister, criticises the “grandiosity” of growing sales of lithium concentrate. which therefore used its control of an ar-
of aukus, based on a reasonable fear that it China has ended unofficial bans on Austra- my-rigged system to stop Move Forward
risks hollowing out the rest of the armed lia’s timber and coal, and recently lifted ta- forming a government. The deadlock end-
forces. He also worries that Australia is riffs on its barley. ed on August 22nd when Srettha Thavisin,
making itself a target for nuclear attack. On Mr Albanese stresses the job-creating a property tycoon and candidate from Mr
August 18th, at Labor’s annual conference, potential of AUkus. But its financial cost Thaksin’s Pheu Thai party, was appointed
loud dissent emerged from the Labor left, may end up mattering more. Experts doubt as the country’s next prime minister.
too. The Greens, on whom Labor relies for that the new weaponry can be paid for un- At the head of a sprawling coalition of 11
support in the Senate, are also hostile. der Australia’s current plans. The core de- parties, he received a clinching majority in
The opposition is relatively small for fence budget is set to shrink in the next two a combined vote of the House of Represen-
The Economist August 26th 2023 Asia 47
tatives and the military-appointed Senate. legal grey zone. That changed in May 2022
After weeks of uncertainty, the promise of when the government passed a law target-
a functioning government was needed; the ing the sort of coercion Ms Kurumin had
Thai baht rose on the news. But the deal be- experienced. It obliges companies to sign
tween Mr Thaksin and the military estab- contracts with performers, and to clarify
lishment, in effect to nobble Move For- what they are expected to do during
ward, looks bad for Thai democracy. shoots. For such a law to have passed Ja-
A former critic of the establishment, Mr pan’s male-dominated parliament (only
Thaksin has now launched his party into a 15% of legislators are women) was a “mir-
coalition including the two largest military acle”, says Shiomura Ayaka, who, as a
parties—an arrangement Pheu Thai had member of the opposition Constitutional
previously forsworn. Move Forward, Democratic Party, initiated it.
which said it would not support any alli- Abuse in the porn industry had long
ance with pro-military parties, will now be been a concern. In 2020 a government sur-
the main opposition party. vey suggested one in four women under 40
The price of Pheu Thai’s accommoda- had been accosted on the streets about
tion with the establishment was suggested supposed modelling gigs. Of those who
earlier on August 22nd, when Mr Thaksin agreed, 14% were asked to perform sex acts.
arrived in Bangkok by private jet, thereby The problem became more urgent last
ending 15 years in self-imposed exile. Upon Thaksin times year when Japan lowered the age of adult-
disembarking, he bowed before a portrait hood from 20 to 18. That meant teenagers
of the king. He was then arrested on long- should survive a four-year term, predicts could become legitimate targets of the
standing corruption charges for which he Siripan Nogsuan Sawasdee of Chulalong- porn industry. “We could have seen a surge
has been sentenced to eight years in pri- korn University. That is because, if the gov- in high-school girls turned porn stars,”
son. But he is expected to receive a royal ernment foundered and fresh elections says Ms Shiomura. Last year, before the
pardon before long. How active a role he were held, Move Forward would be likely to adult age was lowered, 40,000 people
will then play in politics is unclear. The 74- win by a bigger margin than it did in May. signed an online petition urging legisla-
year-old claims merely to want to be close Despite Mr Thaksin’s dealmaking, Thai- tors to allow 18- and 19-year-olds to void
to his grandchildren. But even if that were land’s most popular party is not done yet. porn contracts. The new law ended up ex-
plausible, his lead role in the formation of tending that protection to all age groups.
the new government is testament to his Yet the law has sparked a fierce back-
continuing political clout. Japan’s porn industry lash from porn-industry workers. Before
Many in Thailand are outraged by Mr passing the law, which took just three
Thaksin’s opportunism. Ahead of the elec- Regulating sex months, politicians conducted hearings
tion, Pheu Thai promised to minimise the with victims of the industry and groups
army’s role in politics. It had good reason that help them, but did not make much ef-
to. Mr Thaksin is not the only member of fort to speak to representatives of the thou-
his family ousted in a military coup; a gov- sands who work in it willingly.
TO KYO
ernment led by his sister, Yingluck Shina- The hasty passage of the bill also caused
Politicians want to protect porn actors,
watra, was also toppled in 2014. During confusion about its contents. A survey last
but many want to be left alone
violent street protests in 2010, the army year found that more than half of porn ac-
shot and killed Mr Thaksin’s supporters.
Yet instead of reducing the army, Mr Thak-
sin has now cemented its overreach. Mr
K URUMIN AROMA, a 33-year-old YouTub-
er who lives near Tokyo, used to dream
of becoming a singer. A decade ago, a man
tors had seen job offers and income fall
after its passage. Actors and producers
have criticised various provisions in the
Srettha would not have been appointed approached her on the street and asked her law as unrealistic. These include forbid-
without support from pro-military parties. to be a swimsuit model. He also offered to ding filming for a month after contracts are
Mr Thaksin’s party may come to rue pay for singing classes and help her suc- signed, and banning the release of videos
this. In a poll by the National Institute of ceed in the entertainment business. After
Development Administration, a research some cajoling, she agreed. On the day of
outfit, over 60% of Thais said they dis- the photo shoot, she was coaxed into get-
agreed with Pheu Thai going into govern- ting naked. She ended up appearing in sev-
ment with pro-military parties. In expecta- eral porn videos. Beset by feelings of
tion of the deal, protesters recently gath- shame and fear, Ms Kurumin considered
ered outside Pheu Thai’s headquarters in committing suicide. “I kept thinking: what
Bangkok. Some poured fake blood onto ef- went wrong with my life?”
figies of Mr Thaksin and set them alight. The Japanese porn industry is enor-
Mr Thaksin and his party must hope to mous. It is estimated to churn out 4,500
placate Thais by providing better govern- videos a month, to generate about 55bn yen
ment than the army has. That should not (about $380m) a year, and to employ
be hard. A decade of military rule has been around 10,000 performers. While it has
defined by incompetence and corruption. shrunk since its peak in the early 2010s it
Thailand’s economy has lagged its neigh- remains a significant export, including to
bours, including Indonesia and Vietnam. South Korea, where the production and
Its post-covid economic recovery has been distribution of pornography is officially
the slowest in South-East Asia. Mr Thaksin banned. Taipei, Taiwan’s capital, once is-
and his party at least have a record of de- sued metro cards stamped with the picture
cent economic management. And despite of a popular Japanese porn starlet.
the sprawling nature of its new coalition, it The Japanese industry long existed in a Girls on film
48 Asia The Economist August 26th 2023
for four months after they are shot. kihara Hideki of the ruling Liberal Demo- on sex and women’s rights in Japan are out-
In the 2010s Japan saw a series of coer- cratic Party, who took part in negotiations dated, though improving. In June the
cion allegations like Ms Kurumin’s. Facing on last year’s law. While big porn-produc- country raised the age of sexual consent
a public backlash, the porn industry “had tion companies tend to be fairly transpar- from 13 to 16. In March it amended the legal
to transform to survive,” says an industry ent, there are believed to be many under- definition of rape to “non-consensual sex-
player. In 2017 it formed an oversight orga- ground businesses that ignore the rules. ual intercourse”, removing a stipulation
nisation, the AV Human Rights Ethics Or- Some feminists object to the new law that the crime involve physical force.
ganisation. This body established rules on the basis that it legitimises porn. Still, Ms Kurumin doubts that the porn
that mandate contracts, regular inspec- “There’s no such thing as consent in the law “could actually save others from going
tions and certification of porn. sex industry. You can’t buy sexual con- through” what she did. Improving sex edu-
Yet how much the porn industry has sent,” says Kanajiri Kazuna of PAPS, an NPO cation at schools and teaching students
improved is unclear, as is the extent of on- that helps victims of the porn industry. about consent might help, she suggests. At
going exploitation. A lack of research There is at least agreement on the need least Japan is now not only watching sex
makes the industry a black box, says Ma- for a broader debate about consent. Laws avidly, but talking about it seriously.
The Economist August 26th 2023
China 49
50 China The Economist August 26th 2023
The Economist August 26th 2023 China 51
52 China The Economist August 26th 2023
Repression in Hong Kong is a work in progress, and a revealing window on Xi Jinping’s worldview
the territory’s 7.5m people, who were promised a high degree of
autonomy and the preservation of many fundamental freedoms
for 50 years after British colonial rule ended in 1997, under China’s
formulation of “one country, two systems”.
Then there is the impact on the stand-off over Taiwan, the
democratic, self-ruled island that China calls its own. China’s pre-
ferred Taiwan scenario involves the island’s peaceful submission,
in return for limited autonomy under a version of “one country,
two systems”. If foreign governments allow China to trample com-
mitments to Hong Kong with impunity, they risk encouraging rul-
ers in Beijing to imagine they can do the same to Taiwan. It is hard
to see how that could be a consensual, bloodless process. Under-
standably, China’s crushing of freedoms in Hong Kong has left the
people of Taiwan warier than ever of a mainland takeover.
There is a practical reason to keep tracking repression in Hong
Kong, too. A good way to understand any edifice is to watch it be-
ing built. In the same way, the stifling of Hong Kong’s pluralism is
a work in progress, and as such is unusually revealing about the
ambitions and terrors that drive China’s secretive rulers, and
about the controls they think are needed in an orderly society.
For now, the territory enjoys freedoms unknown in mainland
China. The internet is not sealed behind China’s “great firewall”.
The Economist August 26th 2023
International 53
54 International The Economist August 26th 2023
Assad was accused of using chemical gency sessions at the OPCW, Syria’s ambas- leaders in Israel and the Gulf.
weapons against his people. On the first sador flaunted his contempt by playing Dr Yarhi-Milo argues that, as well as be-
occasion Mr Obama called such weapons “Angry Birds” on his phone. ing judged on policies, leaders also acquire
“totally unacceptable”, on the second “a But the record is surely better than if a “signalling reputation” reflecting their
game-changer”. Yet, having thus built up America and its allies had tried to elimi- record of carrying out threats and honour-
expectations, three weeks after Ghouta, nate Syria’s chemical weapons from afar. ing promises. Experts disagree about how
the president suddenly denied that his Mr Simon recalls how the early months of much this reputation is worth. Some argue
credibility was at stake, saying, “I didn’t set the war were all about how to stop chemi- that foreign powers take hard-nosed deci-
a red line. The world set a red line.” cal weapons falling into the wrong hands. sions, based on their assessment of a lead-
With hindsight, Mr Obama’s error was “I spent a lot of my time dealing with the US er’s capabilities and interests in the mo-
to seem to want to have it both ways. The and Israeli intelligence communities on ment, rather than on his or her past. How-
red-line formulation helped strengthen pinpointing where all this stuff was,” he ever Dr Yarhi-Milo’s research suggests that,
America’s warning when Mr Assad ap- says, “and tracking or monitoring the vul- in the real world, foreign powers use repu-
peared to be thinking about using nerve nerability of specific installations to a tation as a guide. “Somebody like Putin
gas to terrorise his people. Yet, after the breach by opposition forces and exploring doesn’t engage in those kinds of super-ra-
atrocity, the very firmness that made it a ways with the US military on how those tionalist calculations,” she says. “They use
powerful threat also raised the cost of stockpiles might be destroyed by the Unit- shortcuts. And those…many times are
seeming to do too little. Theodore Roose- ed States unilaterally without creating a based on their personal experience inter-
velt, America’s 26th president, famously monstrous public-health hazard.” acting with that country.”
advised leaders to “speak softly and carry a In addition, the Syrian civil war has not Mr Obama’s reputation strikes Mr Si-
big stick”. Mr Obama swapped noise for weakened the CWC (see chart). Many coun- mon as monumentally unfair. He points
stick and paid a heavy price. tries strongly condemned Russia over its out that in 2013 the former president began
attempt to poison Sergei Skripal, a former a massive operation to train and support
The -um in ultimatum member of the KGB living in Britain, back rebel fighters in Syria and argues that was
Except that, if Mr Obama’s aim was to stop in 2018 and Alexei Navalny, an opposition far more significant than a punitive strike
Syria using nerve gas, he also succeeded leader, in 2020 using another nerve agent for Ghouta would have been. Middle East-
beyond expectations. A few weeks after the called novichok. The taboo against chemi- ern leaders knew about this commitment,
attack, Russia had a plan for international cal weapons remains. but it does not seem to have won much
inspectors to oversee the dismantling of Yet if Syria’s programme was mostly credit with them. Furthermore, Mr Simon
Syria’s chemical-weapons programme, if dismantled and the CWC is intact, why has describes in his book how, since the sec-
America would not strike. American credibility suffered? One an- ond term of George W. Bush, every Ameri-
“The deal to bring Syria into the Chem- swer, says Keren Yarhi-Milo, dean of Co- can president has sought to limit Ameri-
ical Weapons Convention (CWC) was one of lumbia University’s School of Internation- ca’s commitment to the Middle East. And
the greatest non-proliferation achieve- al and Public Affairs, is that policy choices yet the red line over Syria is nevertheless
ments of the 21st century,” believes Gregory have audiences far beyond their narrow treated as a turning-point.
Koblentz, a chemical-weapon expert who target. In Mr Obama’s case this audience Looking back across a decade, Mr Oba-
teaches at George Mason University in was packed with people who already ma’s record shows how elusive credibility
Fairfax, Virginia. doubted his resolve. His tough talk over can be. Mr Obama has insisted he has no
Syria had the Middle East’s most ad- Syria’s red line was overshadowed by his regrets. In 2016 he told the Atlantic that
vanced programme, which it had built to oft-stated desire for America to devote less “dropping bombs on someone to prove
deter a conventional military attack by Is- of its resources to policing the Middle that you’re willing to drop bombs on some-
rael. With Russia’s encouragement, inter- East—and indeed the world as a whole. The one is just about the worst reason to use
national help and the good offices of the United States had become bogged down in force”. That is surely correct. When Rich-
Organisation for the Prohibition of Chemi- Afghanistan and Iraq. The decision to “lead ard Nixon bombed Cambodia and the Viet
cal Weapons (OPCW), it destroyed 1,300 from behind” in Libya to remove Muam- Cong in the 1970s, in the belief that devel-
tonnes of weapons and precursor chemi- mar Qaddafi, its tyrannical president, at oping countries would otherwise topple
cals, 1,200 munitions and demolished 27 the behest of Britain and France had ended like dominoes, it cost a lot of lives without
production facilities. Dr Koblentz points in chaos. Mr Obama’s attempts to strike a saving America’s reputation. Furthermore,
out that ten to 12 rockets had killed over deal with Iran over its nuclear programme leaders such as Turkey’s president, Recep
1,000 people on August 21st. Each carried was seen as too accommodating by some Tayyip Erdogan, feel free to flip-flop but
around 50 litres of nerve agent weighing a are still able to exert power.
little under 55kg. By comparison, he reck- Even so, the success in dealing with Syr-
ons, the nerve agents Syria destroyed may Steady progress ia’s chemical weapons has been eclipsed
have weighed 1,000 tonnes—enough to at- Global chemical-weapons stockpiles destroyed* by the more general truth that America’s
tack Ghouta 1,800 times over. Cumulative total, tonnes, ’000 position in the Middle East has weak-
The record was far from perfect. Syria 80 ened—partly by choice. That has been
continued to use chlorine, including in thrown into relief by the rise of Islamic
one highly lethal attack in 2018, which Do- 60 State in 2014 as a violent source of anarchy
nald Trump, Mr Obama’s successor, and and chaos. It was made worse by the fact
Britain and France met with a barrage of 40 that the man who stepped in to handle Syr-
cruise missiles. Dr Koblentz also observes ia with Mr Obama’s blessing was Vladimir
that Syria held on to some nerve agent— 20
Putin. He has since increased his hold over
though a tiny fraction of its initial stock— the country, derided America’s pretences
because Mr Assad launched three more to act as a global policeman and sent his
0
nerve-agent attacks, though they caused troops into Ukraine. The red line has stuck
2011 13 15 17 19 21
much less harm than in Ghouta. In every because it represents a powerful metaphor
*Under the Chemical Weapons Convention
case, Russia covered up for its ally, blaming Source: Organisation for the Prohibition of Chemical Weapons
for America’s ongoing struggles to cope
the attacks on rebel forces. During emer- with a complicated world.
The Economist August 26th 2023
Business 55
56 Business The Economist August 26th 2023
thine regulatory system that favours big The recent growth of electric vehicles from sprayer, which it was then able to sell
institutions with well-staffed compliance Ford and General Motors, America’s two through its vast network of distributors.
departments helps. The insurance indus- largest carmakers, offers another example. Over the past decade 74% of venture-capi-
try, also dominated by geriatric giants like Their bulky balance-sheets have allowed tal “exits” in America were via such acqui-
aig and MetLife, is much the same. them to spend heavily on reinventing their sitions, according to PitchBook, a data pro-
The pattern is not unique to financial businesses at a time when raising capital is vider. That is up from next to none in the
services. Walmart, America’s mightiest re- becoming more difficult for newcomers. 1980s, leading to warnings of a plague of
tailer, almost missed the rise of e-com- A third explanation for the endurance “killer acquisitions”, with big firms eating
merce. David Glass, its boss in the 1990s, of America’s incumbents is that their scale their potential future rivals.
predicted that online sales would never ex- creates a momentum of its own around in- Such cases do occur, but are rare. A
ceed those of its single largest retail ware- novation. Joseph Schumpeter, the econo- study in 2021 by Colleen Cunningham,
house, according to a recently published mist who coined the phrase “creative de- then at the London Business School, and
book, “Winner Sells All”, by Jason Del Rey, a struction”, first argued that economic pro- co-authors found that 5-7% of acquisitions
journalist. Nonetheless, Walmart’s finan- gress was propelled mostly by new en- by drug companies, which rely heavily on
cial heft and enormous customer base gave trants, noting in “The Theory of Economic startups to top up pipelines, looked sus-
it the chance to change course later. Only Development” in 1911 that “in general it is pect. Most of the time, folding into an es-
Amazon now sells more online in America. not the owner of stage coaches who builds tablished giant is simply the most efficient
railways”. By the time he published “Capi- way for an innovative new firm to bring its
talism, Socialism and Democracy”, his breakthroughs to the world.
Founding grandfathers 1 magnum opus of 1942, he had changed his A final explanation for the lack of com-
Fortune 500 companies, 2023 mind. It was, in fact, big firms—monopo- petitive disruption relates to demograph-
lies, even—that drove innovation, thanks ics. “Young firms are generally built by
Number by decade founded to an ability to splash cash on research and young people,” notes John Van Reenen of
50 development (r&d) and quickly monetise the London School of Economics. Between
breakthroughs using existing customers 1980 and 2020 the share of America’s popu-
40
and operations, spurred on by a constant lation aged between 20 and 35 fell from
30 fear of being toppled. 26% to 20%. The rate of new business for-
America’s tech titans offer the quintes- mation dipped from 12% to 8% in the same
20
sential illustration. Alphabet, Amazon, period (see chart 2). In a study of 2019 com-
10 Apple, Meta and Microsoft invested a com- paring variations in population growth
0 bined $200bn in r&d last year, equivalent and new business formation across states
to 80% of their combined profits and 30% in America, Fatih Karahan of the Federal
1780s 1850s 1900s 1950s 2010s
of all r&d spending by listed American Reserve Bank of New York and co-authors
firms. Less obvious examples abound, too. concluded that falling population growth
Average age, years John Deere, America’s largest agricultural- accounted for 60% of the decline in the
90
equipment firm, founded in 1837, leads the business-entry rate over the past 40 years.
way in innovations like driverless tractors Application rates to start new business-
85
and clever sprayers that use machine es in America surged in late 2020 after
learning to spot and target weeds. Its ambi- plunging in the early months of the pan-
80 tion is to make farming fully autonomous demic, and have since remained well
by 2030. After snatching laid-off techies above pre-pandemic levels. That entrepre-
75 from Silicon Valley it now employs more neurial burst has mostly focused on hospi-
software engineers than mechanical ones. tality and retailing, which were hammered
1990 2000 10 23 Incumbents and newcomers also often by covid, and over time may peak, especial-
Year of Fortune 500 list play complementary roles in innovation. ly as pandemic-swollen household savings
William Baumol, an economist, wrote in dwindle. Optimists will hope that the re-
Average age by industry, years 2002 of a “David-Goliath symbiosis” in cent flurry of investment in ai startups can
which radical breakthroughs generated by sustain the momentum. Even if it does, the
0 50 100 150 independent innovators are then en- corporate giants of the past may well re-
Banking hanced by established firms. A paper in main on top.
Insurance 2020 by Annette Becker of the Technical
Consumer goods University of Munich and co-authors split
The innovator’s departure 2
Materials r&d spending by a sample of firms into
Industrial goods more exploratory “research” and more United States, new businesses formed
Utilities commercially oriented “development”, as % of total businesses
Asset management and found that the relative weight of re- 14
Pharmaceuticals search fell with firm size. Likewise, a paper
Commodities in 2018 by Ufuk Akcigit of the University of 12
Cars Chicago and William Kerr of Harvard Busi-
Transport and logistics ness School found that patents generated 10
Construction by big firms were less radical and more fo-
Health care cused on incremental improvements to ex- 8
Media isting products and processes.
Payments That division of labour may help ex- 6
Retail plain why many startups are bought by es-
Computers and software tablished firms. John Deere’s acquisition 1980 90 2000 10 20
Sources: Fortune; The Economist
in 2017 of Blue River, for example, gave it Source: US Census Bureau
the technology behind its clever weed
The Economist August 26th 2023 Business 57
Chipmaking The ai boom brightens Arm’s prospects. filings Arm admits that it is “particularly
Earlier in August Nvidia unveiled Grace susceptible” to tensions between China
Arm-twisting Hopper, a new chip that combines an Arm- and America. In December Arm chose not
based central processing unit (cpu) with to license its designs for a high-end cpu to
its graphics-processing unit (gpu). The Alibaba, a Chinese e-commerce giant, for
chip promises to run bigger and faster ver- fear that it would fall foul of a ban imposed
sions of the language models that are by America last year on selling certain cut-
trained on text from the internet to pro- ting-edge chips in China.
The chip designer looks to its ai
duce human-like output. And as Sara Rus- The question is whether the hype
future, not its smartphone past
so of Bernstein, a broker, points out, as ai around ai means that investors pay less at-
58 Business The Economist August 26th 2023
slug of capital in return. Fed’s rate rises are at or near an end. Yet un- last wave was dominated by tech firms, he
Importantly, says James Palmer of Bank certainty over how long rates will stay high says, the next will involve many more in-
of America, volatility has also been sub- persists, largely due to the surprising resil- dustrial, energy-transition, consumer-fo-
dued for months. That lowers the likeli- ience of America’s economy (see Finance & cused and health-care outfits.
hood of would-be floaters kicking off a economics section). Mostly as a result of All agree that a return to the breakneck
weeks-long listing process only to see the this, the yield on ten-year Treasuries—pos- pace of dealmaking that preceded the cur-
market plunge and the value of their soon- sibly the most important benchmark for rent drought is unlikely. Central banks are
to-be minted shares fall with it. Aloke investors—has risen by 0.8 percentage no longer flooding markets with liquidity,
Gupte of JPMorgan Chase, another bank, is points since early May, to 4.2%. Until this the rate rises of the past 18 months could
more bullish still. The pace of work at measure begins to settle, ipos will remain yet tip many economies into recession,
firms using his team’s help to go public, he hard to price and, as a result, sparse. and an American stockmarket that is at its
says, has “gone from second gear to fifth” A second factor required for listings to most expensive in decades could yet crash.
in recent weeks. resume in earnest is for firms themselves But “if nothing upsets the apple cart”, says
Meanwhile, the listings that have alrea- to grow in confidence. “I’ve thought for Mr Gupte, then a reasonable number of
dy taken place suggest a market that is some time that market readiness would firms should be looking to go public in
hungry for more. Oddity Tech, a beauty come before company readiness,” says 2024. All eyes on Arm, then, to see if the ap-
outfit that perhaps inevitably uses artifi- Bank of America’s Mr Palmer. A successful ple cart can stay on the road.
cial intelligence (ai) to develop its pro- flotation, he says, involves the businesses
ducts, listed on the Nasdaq on July 19th. It making a series of reassurances: to regula-
saw demand for its offering vastly outstrip tors, investors and research analysts. The Tourism in Europe
supply. The firm sold $424m-worth of its firm will offer guidance on its financial
shares, while investors placed orders for performance not just over the next quarter, Too hot to handle
over $10bn. After Arm’s ipo, Instacart, a but probably over the coming year.
grocery-delivery group, Databricks, a soft- For as long as geopolitical tensions, es-
ware firm, and Socure, an identity-verifica- pecially between America and China, are
tion company, are all likely to follow up running high, companies that rely heavily
BE RLIN
with their own flotations. on cross-border trade will find such reas-
Extreme weather will change when
If this steady drip is to become a rush, it surances fiendishly hard to offer. Virtually
and where tourists go
will require three developments in its fa- all, meanwhile, are hampered by uncer-
vour. The first is a clearer picture of where
interest rates are heading. One senior
banker cites confusion over this as the
tainty over where inflation will settle and
whether the world’s big economies have
avoided, rather than merely delayed, reces-
“A rrived in Bologna, Italy, today, now
it’s off to Tuscany. The heatwave is
spectacular here. If things continue like
main reason that listings, as well as other sions. Some firms, such as those owned by this, these holiday destinations will have
deals such as mergers and acquisitions, private-equity funds with limited life- no future in the long term. Climate change
were so slow to return in the first half of spans, may have few options but to make is destroying southern Europe. An era
2023. With the Federal Reserve’s fastest the jump and list despite the fog of uncer- comes to an end.” This tweet in early July
tightening cycle in decades still under way tainty. But those with the freedom to by Karl Lauterbach, Germany’s health min-
and a clutch of American regional banks choose are more likely to wait until it lifts. ister, went down badly in Italy. The coun-
teetering close to collapse, guessing where A final, if obvious, requirement for a try’s minister for tourism, Daniela Santan-
long-term rates would end up felt like tak- new ipo boom is that the firms now pre- chè, sourly retorted that she thanked Mr
ing a shot in the dark, she argues. As well as paring to float manage to do so successful- Lauterbach for picking Italy for his holiday,
determining firms’ funding costs, this is ly. Crucially, says Rachel Gerring of ey, a but the Italian government was well aware
the ultimate benchmark against which ipo consultancy, that means their shares end of climate change and that sustainability
investors measure their potential returns. up being sold at around the price investors was one of the central elements of its strat-
And so without much idea of where the have been led to expect and then rise from
“risk-free rate” will settle, pricing a new there. That the opposite happened for
tranche of shares with any confidence be- many of 2021’s floaters was the death knell
comes impossible. of the previous boom: few ipo investors
There is now a growing sense, both in want to open their chequebooks without
markets and among economists, that the benefiting from the share-price “pop” as-
sociated with new listings. In this sense,
Arm’s flotation has acquired totemic im-
Floating is sinking portance. Should its share price leap,
Global initial public offerings, deal value, $bn others will be quick to follow; should it
600 flop, they may not.
Whenever it materialises, the next co-
United States 500 hort of ipos is likely to look substantially
Rest of world different to the class of 2021. With the hea-
400
dy days of rock-bottom interest rates firm-
300 ly in the past, investors will prize “safer”
prospects. This means big firms over
200 small, profits over revenue growth, sea-
soned executives over newbies, and easy-
100
to-model business plans over more specu-
0 lative ventures. JPMorgan’s Mr Gupte sees
1995 2000 05 10 15 20 23*
these preferences reflected in a much more
Source: Dealogic *To August 21st
diverse group of companies now preparing
to go public than did in 2021. Whereas the A fan of the hot weather
The Economist August 26th 2023 Business 59
egy for managing tourism. that the prospects of oppressive heat will American steelmaking
The industry is not just an important deter the elderly and those with children in
contributor to Italy’s economy. Europe is particular. Torsten Kirstges, another tou- A question
the planet’s most visited region, welcom- rism expert at Jade University of Applied
ing 585m of the world’s 900m internation- Sciences in Wilhelmshaven, thinks that of furnace
al travellers in 2022. On top of this, domes- while wildfires remain sporadic travellers
tic holiday-makers outstripped foreigners will continue to flock south, even in the
in terms of nights spent in tourist accom- hot summer months, at least for the next
More consolidation may be the
modation in the eu. Little wonder then five years. Youngsters in particular still
only option
that the sector directly generates 5% of the want to roast in the sun, says Mr Kirstges.
eu’s GDP and by some estimates indirectly
accounts for more than 10%. Some coun-
tries rely heavily on travellers’ contribu-
The lure of the Mediterranean will
probably endure as long as the alternatives
do not look as enticing. Northern destina-
A merica’s steelmakers were the big-
tech firms of their day, at the corporate
forefront in the 19th century as industrial-
tions both direct and indirect, including tions, in particular the Baltic Sea, Germany, isation led to rocketing demand. In 1901 ten
Croatia (26% of GDP), Greece (18.5%), Spain eastern Europe and Scandinavia, may see industrial firms were combined to create
(13.6%) and Italy (10%). an increase in demand during the peak us Steel, one of the world’s first billion-
Changes to the climate that lead to ever- summer period. But these destinations dollar corporations, and for the next 70
wilder weather could deliver a nasty blow cannot replace southern resorts because years business boomed for steelmakers
to the tourist industry. This year southern they are not equipped for mass tourism boosted by rearmament in two world wars.
Europe has endured an abnormally turbu- (which many don’t want anyway). For po- Those heady days are long gone. Many
lent summer. Extreme hot weather in Italy tential visitors the weather is too unpre- firms such as us Steel, which smelt steel in
in July contributed to wildfires that rav- dictable in the summer. But travel trends blast furnaces from iron ore using coking
aged Sicily as the temperature at one time do change, if slowly. In the 1950s the fa- coal, have either been bought or gone bust.
climbed to 47°C in Palermo, the island’s vourite holiday destination for Germans Indeed, on August 13th Cleveland-Cliffs, an
capital. Farther north, hailstorms in Lom- was a trip across the border to Austria. It America competitor, said it had offered
bardy claimed several lives. Also in July was not before the mid-1980s that Spain $7.3bn for us Steel, half in cash and half us-
Greek authorities had to evacuate tens of took over. And experts agree that tourism ing its own shares. Shortly afterwards Ar-
thousands of tourists from Rhodes and in Europe in 30 years’ time will be different celorMittal, the world’s second-largest
Corfu after wildfires engulfed those is- from what it is today. steelmaker, was said to be mulling a bid.
lands. After heatwaves scorched Spain over The industry has joined in with wider us Steel, once a juggernaut of the Amer-
the summer, Tenerife battled fires that last promises by businesses to hit the targets of ican stockmarket, now languishes in the
week forced thousands to flee their homes. the Paris climate agreement by becoming s&p 400, a mid-cap index, as does Cleve-
Heavy floods have deluged southern Aus- net-zero emitters of carbon dioxide by land-Cliffs. Meanwhile, companies using
tria, Croatia and Slovenia. 2050. TUI, for instance, wants to be cli- electric-arc furnaces (eafs), which process
Despite the devastation, Italy’s tourism mate-neutral across its operations and scrap metal using electricity in mini-mills,
industry—and that of Europe as a whole— supply chain by 2050. Yet such efforts by now account for 75% of American produc-
is set for a record summer this year as holi- firms to mitigate the effects of global tion compared with 10% in 1960. Mini-
daymakers return in force after the travel warming will have little overall impact. mills are greener and cheaper to build and
restrictions of the pandemic. Few have More importantly, tourism will need to run, so generally remain profitable even
cancelled trips despite the dangers that adapt to climate change. during downturns. That translates into
may await them. According to Demoskopi- In the short term, this will be a question nifty margins. Mini-mill operators such as
ka, a market researcher, 68m people will of measures such as strict management of Nucor and Steel Dynamics posted operat-
have taken a holiday in Italy this summer, water resources where these are becoming ing margins of around 22% in the latest
with around half arriving from abroad. increasingly scarce, early-warning sys- quarter, compared with 12.5% for us Steel
Tourist numbers this year may even sur- tems for extreme weather events and an
pass the record set in 2019, when 743m visi- extension of the holiday seasons, says
tors arrived in European destinations from Thomas Ellerbeck, chief sustainability of-
other countries. According to Germany’s ficer at tui. His company is, for instance,
tuI, the world’s largest travel group, in extending the booking season for Greece
spite of higher prices summer bookings until November. Mr Kirstges thinks many
were around 6% higher than a year ago. more hotels in the Med will install air con-
Can the rebound last if tourists are fear- ditioning (fuelled by solar power), water
ful of the effects of climate change in years coolers and the like. Tourists may adapt by
to come? Harald Zeiss, an expert in sustain- going out in the mornings and evenings to
able tourism at Harz University of Applied avoid the midday furnace.
Sciences in Wernigerode, speaks for many Longer term, some switching from the
climate watchers when he says that golden sands of the Med to the beaches of
Europe’s weather will become hotter and the Baltic is inevitable. But there is a silver
drier, and that extreme weather events will lining for the holidaymakers who will ei-
become even more likely in the future. ther discover the unexpected beauty of Bal-
Aside from the awful consequences for tic beaches or may go south at different
populations caught up in floods or fires, times of the year. A shift by some tourists
this also threatens the livelihoods of those to the spring or autumn will help with the
who rely on income and employment from overcrowding which has become a such a
tourism in affected areas. nuisance for residents and those visitors
The classic “all-inclusive” package holi- eager to imbibe the culture of Dubrovnik,
day on the beaches of the Med will have a Venice, Barcelona or other marvels of
rough ride, predicts Mr Zeiss. He reckons southern Europe in relative peace. A blast from the past?
60 Business The Economist August 26th 2023
and 8% for Cleveland-Cliffs. buy another big steelmaker to consolidate authorities may deem it a consolidation
The legacy steelmakers could fall even blast furnaces further. The industry has al- too far. Politicians may be more amenable,
further behind. eafs have the flexibility to ready heavily consolidated; 14 steelmakers especially as an election approaches.
make the flat-rolled steel used by railways made up around 80% of the market in 2000 United Steelworkers, the union that
and carmakers as well as long-steel pro- compared with just four today. represents us Steel’s employees, is batting
ducts mainly used in construction. Blast Cleveland-Cliffs, the only confirmed for Cleveland-Cliffs. The union wants to
furnaces are limited to just the former. bidder for us Steel so far, has been particu- keep blast furnaces, as they are heavily
That leaves the incumbents with few op- larly active: in 2020 the firm snapped up ak unionised, and claims to have veto power
tions. One is to embrace the new. In 2021 us Steel and ArcelorMittal’s blast furnaces over prospective bidders. us Steel’s boss,
Steel purchased Big River Steel, a mini- when it left America. Merging with us Steel David Burritt, disputes this and has so far
mill, for around $1.5bn and is building an- is a bigger gamble. It would create a steel- turned down his rival’s offer, calling it un-
other, taking its steel capacity from eafs to making juggernaut, giving it half of flat- reasonable. He may soon have no choice
around 6.6m tonnes in 2024, 28% of its to- rolled steel, 60% of the car market and to- but to accept if he wants to restore us Steel
tal. A more audacious move would be to tal control over electrical steel. Antitrust to anything its like former glory.
The Economist August 26th 2023 Business 61
Corporate America has lost the Republican right. Is it losing the Supreme Court, too?
enced American commerce. For most of the 20th century, data
from Ms Epstein and Mr Gulati show that the most business-
friendly court was under William Howard Taft in 1921-30, a laissez-
faire age when cases against unions predominated. The nadir of
corporate success was during the 1950s and 1960s. After that, with
the re-emergence of free-market thinking, the corporate win rate
improved. Emblematic of the pro-business environment that de-
fined the Roberts court in its early years was Citizens United v fec, a
decision finding that corporations have a constitutional right to
spend what they like on political campaigns.
Recent rulings have darkened the mood, though. Two that di-
rectly went against the interests of corporations have big potential
spillover effects. In upholding a California law that bans the sale
of pork from overly confined pigs, the court in May rejected an at-
tempt by out-of-state farmers (who produce almost all of the na-
tion’s pork) to claim the law, called Proposition 12, violated the
constitution by harming interstate commerce. In support of the
farmers, the Chamber of Commerce unsuccessfully sought to
show that the California precedent could allow other powerful
states to impose regulations on businesses beyond their borders,
thereby Balkanising state-by-state trade.
Another case, Mallory v Norfolk Southern Railway Company,
The Economist August 26th 2023
62
Finance & economics
The Economist August 26th 2023 Finance & economics 63
water” and “sewing machines that leaked For some observers, there is little hope
oil onto the fabric”. Confidence sick 1 of improvement. Adam Posen of the Peter-
Market reforms meant managers China, consumer confidence son Institute for International Economics,
“switched from politics to business”, as 130 a think-tank, has suggested that China’s
one of them put it. China’s gdp per person economy is suffering from something akin
now exceeds $20,000, above the global av- 120 to “long covid”. Draconian and arbitrary
erage. The most wretched poverty has been lockdowns in 2020-22 ruptured people’s
eliminated. Those 12 trading firms have 110 faith in Mr Xi’s meddlesome party. House-
been succeeded by tens of millions of holds and entrepreneurs can no longer as-
others, turning China into the world’s big- ↑ Optimistic sume that the party will not bother them if
100
gest exporter of goods by 2009, and per- they do not bother it, he argues. Therefore
haps its biggest exporter of cars this year. ↓ Pessimistic private investment is tentative, purchases
90
The country’s manufacturing gdp exceeds of consumer durables are weak and bank
America and the European Union com- 80 deposits are unusually high, as people self-
bined, churning out chips, ships and in- 2019 20 21 22 23
insure against an uncertain future.
dustrial sewing machines (60m leakless Source: National Bureau of Statistics
Confidence has also suffered as a result
ones in the past ten years). In its combina- of the “regulatory storm” that struck after
tion of scale and speed, this economic rev- 2020, humbling China’s online platform
olution has no precedent. sustain a broader recovery of spending. In companies, such as Alibaba and Meituan,
The transformation included a remak- April consumer confidence fell back to last and all but killing the ed-tech industry. The
ing of China’s urban landscape. From 2010 year’s lows, according to the National Bu- succession of crackdowns and lockdowns
to 2020, the country added more than reau of Statistics, which promptly stopped left the impression that the government
140m units of housing to its cities, accord- releasing the figure (see chart 1). Foreign was newly willing to sacrifice economic
ing to Morgan Stanley, a bank. In just three direct investment all but vanished in the growth for other ends. Whereas Mr Zhu
years, it produced enough cement to turn second quarter, falling by 87% year-on- urged China to keep growth at 8%, Mr Xi in-
the whole of Britain into a car park. The year to $4.9bn, as multinationals repatriat- sists that it must be “high-quality”, by his
amount of living space per person in- ed their earnings rather than reinvesting own evolving definition. For entrepre-
creased from a cramped 27 square metres them. The Shanghai Composite, a bench- neurs, that requires an uncomfortable
(like the eastern half of Europe) to a more mark stock index, is down by about 5% switch from business to politics.
comfortable 35 (like the western half), ac- compared with a year ago, when the mem- If Mr Posen is right, China is stuck. If
cording to calculations by Rosealea Yao of ory of Shanghai’s torturous lockdown was spending is weak because households and
Gavekal Dragonomics, a research firm. still fresh. Prices for existing properties in entrepreneurs fear the party’s intrusive
Chinese residential property became one China’s 100 biggest cities have dropped by policymaking, their spirits will not revive
of the world’s largest asset classes, worth 14% compared with their 2021 peaks, ac- until Mr Xi commits to self-restraint—a
over $30trn by the end of 2019. cording to Beike, a broker. In the smaller commitment that he cannot credibly
China’s miracle is long over. Its econ- cities, where price information remains make. Even if the setbacks of the past two
omy has matured. Its workforce is shrink- patchy, things are probably worse. years have chastened him, he cannot prove
ing. Fundamental demand for new proper- he will not change his mind again. The par-
ty in China’s cities, driven by people’s aspi- An old trick ty lacks the power to limit its own power.
rations for a first home or better digs, has Many economists now expect growth to Yet low confidence may have more
passed its peak. For China’s leadership, the meet the government’s target of “around mundane explanations. Households may
pursuit of prosperity must now compete 5%” only because the word “around” gives be despondent because employment is in-
with other goals. Mr Xi wants to break the it some wriggle room. Slowing growth has secure, wages are stagnant and assets, es-
West’s chokehold on vital technological in- also been accompanied by declining prices pecially houses, are losing value. If so, mo-
puts. He wants to keep finance tethered to and a weaker currency. The combined ef- rale should pick up if the job and housing
the needs of the “real” economy, like a kite fect could wipe trillions off the dollar value markets improve. The animal spirits of
tied to a tree, according to an official think- of China’s gdp. In the past four months, for private entrepreneurs should also revive if
tank. He frowns on the “disorderly expan- example, Goldman Sachs, a bank, has their sales regain momentum.
sion of capital” into social realms like edu- slashed its forecast for this year and next It may, in fact, be property that is at the
cation and child rearing. And he despises by a combined $3trn (see chart 2). heart of the problem. In manufacturing, by
the mix of gumption and corruption that contrast, private investment has been re-
motivates many local cadres. spectable, growing by 8% in June com-
The age of miracles is past 2
The question now is whether the next pared with a year earlier. Weak spending
phase is moderate or malign. China’s strict China’s GDP as % of United States’s on consumer durables may also reflect
“zero-covid” policy played havoc with its 80 property-market woes, which have de-
economy last year. Thus hopes for this year Date of forecast: pressed furniture and white-goods sales.
were high. China’s reopening released Apr 1st 2023 70 Purchases of other consumer durables
pent-up demand for the goods and services Aug 23rd 2023 have shown more signs of life. Sales of cars
it was hard to enjoy when a single infection 60 surged in the first half of this year, helped
could imprison an entire city block. It also by the exemption of electric vehicles from
50
cleared a backlog of export orders and al- a 10% sales tax. China’s households are not
lowed a flurry of home purchases in Chi- FORECAST
40
so worried by their government that they
na’s more expensive cities. Some private- will miss out on a bargain.
sector economists raised their growth 30 The renewed weakness in China’s prop-
forecasts for the year to a jaunty 6%. erty market has certainly contributed to
This bout of spending was, however, 2010 12 14 16 18 20 22 24 fears of deflation and default (see chart 3
considerably briefer than hoped. And, cru- Source: Goldman Sachs
on next page). The price of building mate-
cially, it did not lift morale sufficiently to rials fell by 5.6% in July compared with a
64 Finance & economics The Economist August 26th 2023
The Economist August 26th 2023 Finance & economics 65
66 Finance & economics The Economist August 26th 2023
The Economist August 26th 2023 Finance & economics 67
on credit cards and car loans have started omon to Hamilton College, three young-
to increase sharply. Finally, higher rates sters wrote an open letter complaining Not great, not terrible
are clouding the outlook for housing. Like that their conversation with him about cli- Share prices, October 1st 2018=100*
the wider economy, the market has been mate change had “racist and sexist under- 250
most notable for its resilience to date. But tones”, something Goldman disputes.
mortgage rates have jumped over the past Mr Solomon’s increasingly precarious Goldman Sachs
couple of months and hit 7.5% this week, employment is now the butt of jokes. Ste- Morgan Stanley 200
their highest since 2001. This is already ven Starker, a former Goldmanite who JPMorgan Chase
having a dampening effect on existing founded btig, a brokerage firm, recently Citigroup
home sales, which could spread to home- moderated a soirée in the Hamptons, at- 150
building and construction more generally. tended by Gary Cohn, Goldman’s former
The lesson of recent history is that the chief operating officer, and Larry Sum-
American economy inevitably blows mers, a former treasury secretary. “If you 100
through such problems. Nothing lasts for happen to see [Mr Cohn] leave early, that
ever, though. The higher yields rise, the means they’re probably calling him be-
greater the challenge. In the advertise- cause he’s a candidate to be the future CEO
50
ments the Energizer Bunny’s batteries nev- of Goldman Sachs,” quipped Mr Starker.
2018 19 20 21 22 23
er fade. In real life even the strongest bat- Few think Goldman should be run by a
*David Solomon becomes chief executive of Goldman Sachs
teries are drained eventually—or uncere- teddy bear. This is the firm that was charac- Source: Refinitiv Datastream
moniously yanked out. terised in 2009 as a “great vampire squid
wrapped around the face of humanity, re-
lentlessly jamming its blood funnel into The institution’s poor earnings for the
Goldman Sachs anything that smells like money”. But there past three quarters do reflect some strate-
is a difference between being disliked for gic errors. Goldman has taken losses in its
Solomon problem being smarter and more successful than consumer-banking efforts, and has writ-
everyone else, and the kind of vitriol that is ten down the value of acquisitions. Slug-
being spewed now. It is increasingly em- gish profits also reflect a failure to shrink
barrassing for Goldman that its boss is be- its proprietary investment arm quickly.
ing laughed at in rarefied circles, and that But Mr Solomon has recognised these is-
WASHINGTON, DC
employees see fit to make petty criticisms. sues and is adapting the firm’s strategy, in-
Once Wall Street’s smartest, most
The situation is evidence of a rot within cluding by exploring a sale of its financial-
envied bank; now the butt of jokes
the firm, which it is hard to see reversing advisory business. His shareholder returns
68 Finance & economics The Economist August 26th 2023
The IMF flounders $20bn. But that would have barely covered
repayments to the fund for the year.
Perma-crisis Another option is for the imf to admit
that Argentina has too much debt and
things will have to change. Although the
fund reckons that Argentina is just about
solvent, with a bit of luck, many outside
economists think the country is already
Argentina is pushing international lending to its breaking point unable to repay its debts without restruc-
turing. It is unlikely other creditors, most-
The Economist August 26th 2023 Finance & economics 69
What if the boatbuilder was an economist? Some biblical lessons for today’s conservationists
the Library of Alexandria. All the scrolls might be valuable, but
many have information on them that is in other libraries. The aim
would be to save those with information not recorded elsewhere.
Weitzman applies the same logic to animals: biodiversity has both
an aesthetic value and an informational one, with content embed-
ded in the genetics of animals. The selection for the ark should try
to preserve as much of this information as possible, even if the an-
imals themselves do not do much for human welfare.
That led to what some conservationists might consider a re-
pugnant conclusion: counterintuintively, the best way to preserve
biodiversity is for the resource-constrained ark to pick a single
species and squeeze in as many as possible. Preventing just one
type of animal from going extinct preserves not only what is dis-
tinct about that animal, but everything it shares genetically with
every other animal as well. Trying to keep two species alive, and
failing, means losing everything. The real-world implication of
this is that using conservation funds on highly endangered spe-
cies risks throwing good money after bad. Pandas, for instance,
are cute but require a lot of effort to keep alive. Noah might be best
to fill the ark with resilient cockroaches instead, ensuring that at
least one creature makes it through the flood.
To reach that counterintuitive conclusion, Weitzman assumed
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Science & technology 71
72 Science & technology The Economist August 26th 2023
as powerful as they are, traditional Li-ion teristic of a battery. How quickly it can de-
cells come with a risk. This is because they It’s getting better all the time 1 liver its power, how long it will last and
contain a liquid electrolyte which is typi- Electric-car batteries* how much it will cost are just as important.
cally made from organic solvents, and But resolving these issues involves trade-
these are extremely flammable. Hence, if a Cost, €’000, 2023 prices Average range, km offs. Increasing the amount of energy that
>80 800
Li-ion battery is damaged, which can hap- can be stored, for instance, is likely to in-
pen in an accident or if it overheats whilst 60 600
crease costs if more lithium is required.
recharging, it can explode into flames. Us- And regular fast-charging might shorten a
ing a non-flammable, solid electrolyte pre- 40 400 battery’s life. The trick in getting the bal-
vents that. Solid electrolytes can be made ance right depends on the battery materi-
from a variety of chemicals, including po- 20 200 als that are chosen.
lymers and ceramics. But even Toyota, the
0 0
master of mass production, initially found Material issues
it difficult to get solid-state cells to work 1900 1950 2000 30† Start with cathodes, the most expensive
efficiently over a long period of time. Battery Lead-acid Lithium-ion Solid-state component in a Li-ion battery. In theory,
By itself, a solid electrolyte does not Source: Porsche Consulting *Mid-market car †Forecast
solid-state batteries are fairly agnostic
necessarily improve the performance of a about which type to use. The two most
battery. But it does allow a Li-ion battery, common varieties of cathodes are so-
for example, to be redesigned so that it can great advances in working out how to called NMCs, which contain coatings of
be made even smaller and lighter, and thus manufacture solid-state Li-ion batteries at lithium along with various ratios of nickel,
pack more energy into less space. It also al- scale, says Mr Miedreich. Having been a bit manganese and cobalt; and LFPs, made
lows engineers to broaden the range of ma- of a laggard in launching EVs, he believes, from a blend of lithium iron phosphate. By
terials which they can use to produce a Li- they plan to use these new batteries to avoiding the use of expensive nickel and
ion battery and tinker with how it works. overtake competitors. Perhaps, but the cobalt, LFPs are gaining in popularity. They
Despite their fiery nature, electrolytes race to build a superbattery is far from are a particular Chinese speciality. But
are used in a liquid form for good reason. won, not least because the contenders with a lower storage capacity than NMCs,
Ions are charged particles and are created come in many different forms. they tend to be used in vehicles that do not
at one of the battery’s electrodes, the cath- Some solid-state batteries are already require a high level of performance.
ode, when the cell is charged, causing elec- on the market. For instance, Blue Sol- With hundreds of laboratories around
trons to be stripped from lithium atoms utions, a French company that is part of the the world working on new battery materi-
(see chart 2 on next page). The electrolyte giant Bolloré Group, produces one con- als, other types of cathodes are bound to
provides a medium through which the taining a polymer as its electrolyte. As this appear. Umicore, for example, has teamed
ions migrate to a second electrode, the an- requires a high operating temperature, the up with Idemitsu Kosan, a Japanese pro-
ode. As they do so, the ions pass through a battery is best suited to vehicles that, once ducer of electrolytes, to develop a type of
porous separator that keeps the electrodes the battery is warmed up, remain in con- material called a catholyte, which com-
apart to prevent a short-circuit. The elec- stant use. Hence it is being used to power bines cathode chemicals with a solid elec-
trons created at the cathode, meanwhile, electric buses. trolyte to form a single layer. If it works,
travel towards the anode along the wires of Others are something of an interim this would make battery construction even
the external charging circuit. Ions and step, as they still contain small amounts of simpler. Scientists are also working on us-
electrons reunite at the anode where they a liquid electrolyte to help with conductiv- ing sodium instead of lithium as a source
are stored. When the battery discharges, ity. Many of the Chinese battery-makers of ions in a battery. Sodium is abundant
the process reverses, with electrons in the that dominate the market are working on and cheap, though lithium, as the lightest
circuit powering a device—which in the semi-solid versions. Contemporary Ampe- metal of all, would still have the edge in
case of an EV is its electric motor. rex Technology (CATL), a Chinese firm that some transport applications.
makes more than a third of the world’s EV As for anodes, changes are also afoot. At
The medium is the message batteries, measured by their total capacity, present, most anodes are made from
For all this to work efficiently, the ions says it could begin production later this graphite, a pure form of carbon extracted
need to move between the electrolyte and year of a semi-solid version it calls a “con- from a handful of mines, mostly in Mo-
the electrodes with ease. The electrodes are densed” battery. The company claims this zambique or China, or produced syntheti-
coated with various materials, in the form will have both a high level of safety and a cally in petrochemical works using car-
of layers of minute particles. As the liquid big storage capacity. bon-intensive processes. Because a solid
electrolyte in a traditional Li-ion battery A battery’s capacity can be measured by electrolyte reduces the risk of adverse reac-
can flow into these layers and immerse the its specific energy, which is the amount of tions, materials such as silicon and certain
particles, it provides a large surface area energy that can be stored by weight. Ac- metals, particularly lithium in its metal
through with the ions can pass. A solid cording to CATL, its condensed battery will form, can be used instead. These can store
electrolyte cannot flow into all the nooks be able to store up to 500 watt-hours per ki- more energy in less space than graphite,
and crannies, so it needs to be compressed logram (Wh/kg). The highest performing which allows batteries to be made smaller
hard against the electrodes to make a good Li-ion batteries with liquid electrolytes and lighter. Additional space is saved be-
contact. Doing this in the construction of presently available on the market tend to cause a solid electrolyte can also double up
the battery, however, can damage the elec- top out around 300Wh/kg. Completely sol- as a separator.
trodes. Solving this so-called conductivity id-state batteries might be able to reach Some solid-state batteries will be “an-
problem is one of the main technical chal- 600Wh/kg or beyond. Besides boosting the ode-free” (also shown in chart 2). This is
lenges in manufacturing solid-state bat- performance of EVs on the road, batteries the direction taken by QuantumScape. It
teries, says Mathias Miedreich, the boss of of such power and lightness will also great- uses a proprietary ceramic that acts as both
Umicore, a Brussels-based company that ly extend the range of small vertical-take- separator and electrolyte, and which is
supplies battery materials. off-and-landing air taxis that are on the placed between a cathode and a metal foil.
Despite their initial problems, in the brink of being certified airworthy. When the battery is charged, lithium ions
past year Japanese carmakers have made Capacity, however, is just one charac- migrate through the solid electrolyte and
The Economist August 26th 2023 Science & technology 73
The Economist August 26th 2023
74
Culture
The Economist August 26th 2023 Culture 75
have concentrated on the need for disci- constraints. Mr Xi has made clear that the Netflix is not available in China, and the
pline to quell the inner voice. Others stress primary job of film-makers is a political streaming service has no plans to release
the democratising theme of a lowly being one: to “tell China’s story well”. In the past the film on a Chinese platform.
rising to great heights. five years even slightly edgy social issues With geopolitical tensions between
Flexible interpretation of the novel’s have become taboo, says Chris Berry, a pro- China and America rising, even this be-
message has allowed the story to thrive in fessor of film studies at King’s College Lon- loved cultural icon is raising hackles. Neti-
Communist China, even when other don. Propaganda, even with whizzy special zens in China who watched the trailer
aspects of traditional culture were effects, rarely makes great art. complained that the cartoon creature
crushed. Mao Zedong admired Monkey An animated version of the Monkey looked too “Western” and criticised the
King, who repeatedly challenged the hier- King should be the perfect vehicle to tran- film as yet another attempt to stereotype
archies of Heaven, as a “wrecking ball who scend national boundaries, with no need the “mysterious power of the East”. As a
battles the forces of tradition”, says Julia for awkward dubbing or distractingly seventh-century monk must once have ob-
Lovell, who translated the novel into Eng- strange facial hair on human actors. But served, there are always obstacles on a
lish in 2021. A stage adaptation in 1955 this “Monkey King” again reflects its times. journey to the West.
praised Monkey’s “working-class wisdom”
in defeating his oppressive rulers, the
court of the mythical Jade Emperor. During Philosophy
the Cultural Revolution some of Mao’s Red
Guards likened themselves to Monkey Women who shaped the world
Kings, rebelling against the Party as Mon-
key did against the immortals.
Netflix’s film offers a pseudo-Freudian
version, with Monkey’s self-doubt stem-
ming from a desperate need to be loved and
to belong. It will resonate with navel-
A sharp new book explains the legacy of four women everyone should know
gazing viewers in the West. As most ver-
sions have done, it situates the legend in a philosopher, recounts in this lively book,
stereotyped ancient China, with wispy- The Visionaries: Arendt, Beauvoir, Rand, which spans the turbulent years from 1933
bearded men, curved rooftops, pagodas Weil and the Power of Philosophy in Dark to 1943 (when Hitler was staring down de-
and red lanterns. On-screen adaptations Times. By Wolfram Eilenberger. Translated feat). The others are Simone de Beauvoir, a
often feel reductionist as a result, particu- by Shaun Whiteside. Penguin Press; 400 pioneering feminist; Simone Weil, a trade-
larly since most retell the book’s first seven pages; $32. Allen Lane; £25 union activist who combined mysticism
chapters—Monkey’s bid for eternal life— with a yen for social justice; and Ayn Rand,
and ignore the 93 chapters that describe
the monk’s journey to find the scriptures.
At first glance, Netflix’s “Monkey King”
I n February 1933 the Reichstag, home of
Germany’s parliament, caught fire. The
country’s new chancellor, Adolf Hitler,
a Russia-born critic of communism who
immigrated to America and later shaped
the doctrine of libertarianism (although
seems like an example of a successful Chi- claimed arson and used it as an excuse to she did not identify with it).
nese cultural export. The real picture is revoke civil liberties. For 26-year-old Han- The book is translated from German,
more complex. Developed as an idea by a nah Arendt, toiling in an archive to collect and its original title, “Feuer der Freiheit”
Shanghai-based studio in collaboration “everyday anti-Semitic expressions”, Hit- (“Fire of Freedom”), suggests what links
with Stephen Chow, a film director in Hong ler’s reaction demonstrated the ruthless- the quartet. They barely met, but the immi-
Kong, and then sold to Netflix, the film was ness of totalitarianism. Soon she was in- nence and then eruption of European con-
ultimately made by an American studio. terrogated by the secret police—an experi- flict stirred each to explore alternatives to
(So was the recent adaptation of the graph- ence that catalysed a long career as a schol- political violence.
ic novel.) Though the story of a mischie- arly observer of persecution and mob rule. Mr Eilenberger applauds Arendt’s integ-
vous monkey has crossed borders, genres Arendt is one of four women whose rity and toughness. But, after an exciting
and generations, Communist China has lives and thoughts Wolfram Eilenberger, a start, she is not a vivid presence on the
produced few international box-office hits page. Weil is more sharply drawn—squab-
or stories that endure elsewhere. It took bling with her parents’ tenant, Leon Trot-
Disney to popularise the ancient Chinese sky, and, as a volunteer in the Spanish civil
folk legend of “Mulan”, first in 1998 and war, scalding her feet in a pot of boiling oil.
then again in 2020. Between stints working in a factory and
China’s state media regularly boast flights of religious ecstasy, she wrote tire-
about the success of new Chinese films and lessly, hardly eating or sleeping as she
TV series abroad, yet in truth most are crafted essays on the empty rhetoric of
flops. “The Great Wall” starring Matt Da- extremism and man’s “need for roots”.
mon—the most expensive film ever made Rand, based in New York and distanced
in China when it came out in 2016—was from Europe’s turmoil, could surround
panned. With improvements in Chinese herself with “intellectual aristocrats” and
film-making technique, special effects and keep a journal expounding her elitism and
scriptwriting, many films now become hatred of religion. After a decade of literary
blockbusters at home, but few gain trac- obscurity—her efforts included a court-
tion beyond China’s borders. “Crouching room drama play called “Penthouse Le-
Tiger, Hidden Dragon” and “Hero”, two gend”, in which members of the audience
Chinese-made martial arts films, per- were chosen as the jury—she broke
formed well in the West, but that was more through in 1943 with her novel “The Foun-
than 20 years ago. tainhead”. Marketed by her publisher as a
Much of this has to do with creative Ayn Rand looking laissez-faire love story set among architects, it was
76 Culture The Economist August 26th 2023
actually a manifesto. Readers, undeterred Ukrainian culture rights to one of Ukraine’s most celebrated
by terrible reviews, lapped up her paean to novels, Sofia Andrukovych’s “Amadoka”,
individualism and rationality, which be- A different tour an epic tale of a protagonist who suffers
came a word-of-mouth hit. Given Rand’s from amnesia after fighting Russians.
reputation for egotism, one of the book’s of duty After the war began last year, galleries
most memorable details is how she ad- in Europe and North America rushed to put
dresses her husband in a letter (“Cubby on shows of Ukrainian art. Germany cur-
Sweet”) and signs off (“Your Fluff”). rently boasts major surveys in Dresden and
Interest in Ukrainian culture is rising,
Unlike the other three, de Beauvoir was Cologne. In October the fifth edition of the
as a new symphonic tour shows
not from a Jewish family. Nazism im- Kyiv Biennial art exhibition will open in
pinged on her less directly, and during this
period she channelled much of her energy
into a liaison with a fellow philosopher,
O n August 20th the Ukrainian Free-
dom Orchestra—composed of 75 musi-
cians based in their homeland or abroad,
Ukraine before travelling to Vienna, War-
saw and Berlin.
This new visibility has led to fresh en-
Jean-Paul Sartre. The couple had many lov- some of them refugees—began their sec- counters and reframed histories. The Uk-
ers, who formed a “network of asymmetri- ond international tour with Beethoven’s rainian Freedom Orchestra has introduced
cal relationships and dependencies that Ninth Symphony in Warsaw. In collabora- works by the composers Valentyn Silves-
eluded any kind of benevolent descrip- tion with the New York Metropolitan Opera trov and Yevhen Stankovych, whom many
tion”, writes Mr Eilenberger. These entan- and Polish National Opera, the tour will outside of Ukraine have never heard of.
glements exhausted her. But, in illustrat- hold eight performances in Germany, Swit- Their music unites local and global influ-
ing the ways society thwarted women’s in- zerland, the Netherlands and Britain. Keri- ences, with wistful echoes of Ukraine’s tra-
dependence, they provided rich material Lynn Wilson (pictured), a Canadian con- ditional melodies and harmonies.
for her masterpiece of 1949, “The Second ductor of Ukrainian descent, has translat- More contentiously, museums have re-
Sex”, which argues that women are side- ed into Ukrainian the words of “Ode to Joy”, labelled painters such as Sonia Delaunay
lined by men. Her theories were so contro- which has been used as a protest song be- and Kazimir Malevich as Ukrainian rather
versial that the Vatican put “The Second fore, including by students in Tiananmen than Russian. Peter Doroshenko, director
Sex” on its list of prohibited books, but it Square. “I have never conducted before as I of the Ukrainian Museum in Manhattan,
became a seminal text of feminism, inspir- have with this orchestra,” she says, prais- notes a passion among artists for “decolo-
ing campaigners for women’s rights. ing the group’s “extraordinary intensity nising Ukrainian art history from 200
In his previous book, “Time of the Ma- and intimacy”. years of Russia’s long shadow of repres-
gicians” (published in English in 2020), Mr Russia’s invasion of Ukraine in 2022 sion, lies and propaganda”.
Eilenberger wove together the lives of four was not only a military contest. It was a Some worry that if military support for
male intellectuals of the 1920s, and “The cultural siege. Yet far from being obliterat- Ukraine’s defence erodes in the West, the
Visionaries” reproduces its historical ed, Ukrainian culture has survived, and in- groundswell of interest in Ukrainian cul-
sweep, snappy chapter headings and inev- terest in it has surged. Condemnation of ture may diminish. Others point out that
itable affection for the adverb “mean- Russia’s aggression has been accompanied cultural charm offensives do not always al-
while”. Sometimes he insists too firmly on by “a newfound global acknowledgment of ter political outcomes. During the Spanish
the parallels between the four women’s and respect for Ukrainian culture”, says Bo- civil war in the 1930s, stars such as Pablo Pi-
lives, whether claiming that, for each of ris Dralyuk, a Ukrainian-American author. casso and the cellist Pablo Casals inspired
them in 1937, “the chief source of joy…was a The sale of foreign rights for Ukrainian recruits abroad and at home to the Repub-
gramophone” or that a letter of Rand’s books nearly doubled in 2022. Data for lican cause. But they still lost to the Na-
“could have been committed to paper with 2023 are not yet available, but Andrey Kur- tionalists in 1939. In his poem, “Spain 1937”,
equal aptness” by any of the others. kov, a leading Ukrainian writer, says that W.H. Auden lamented, “History to the de-
Attempts to capture the immediacy of “over the past year and a half, more Ukrai- feated/May say Alas but cannot help or par-
his characters’ thoughts can sometimes re- nian books have been translated into for- don”. However, as the Ukrainian Freedom
sult in portentousness. Weil, for example, eign languages than in the previous 20 Orchestra performs, “alas” is hard to con-
leaps “out from the ivory tower of theory, years.” Recently Simon & Schuster, a large template, as the music’s majesty mixes
into the everyday suffering of the workers” publishing house, bought the English with the righteousness of the cause.
and concludes that “to truly liberate hu-
manity from this planetary nightmare, a
comprehensive cultural U-turn would be
necessary”. But Mr Eilenberger’s most valu-
able achievement is his focus on Weil, who
died at the age of 34 in a sanatorium in
Kent. In the 1950s Albert Camus declared
her “the only great mind of our time”, re-
sponsible for “a body of work whose full
impact we can as yet only guess”.
This is still broadly true. Sickly and
lonely yet courageous, she championed
the oppressed, extolled the dignity of work
and teased out the similarities between the
politics of the far left and the far right.
Most strikingly, as she foresaw a future rid-
dled with narcissism and constant distrac-
tion, she preached the virtues of contem-
plating not the self, but the world’s beauty
and fragility. “Attention”, she declared, “is
the rarest and purest form of generosity.” Beethoven, not bombs
The Economist August 26th 2023 Culture 77
Minstrel of
the moment
A musical critique of Washington has
excited the internet
78 Culture The Economist August 26th 2023
Calls for actors’ backgrounds to match those of their characters have gone too far
Temple Black, the former child star, was enforcement finally twigged on to the book’s central tragedy.
one of the few sceptics to raise questions scam, it took years to unravel. Blay-Miezah With many of the relevant documents
about Blay-Miezah while she served as am- returned to Ghana but was never fully held destroyed in coups or by those hoping to
bassador to Ghana, at one point even ca- to account, dying at his home in 1992 after a cover up their involvement, Ms Yeebo had
bling Henry Kissinger, then the secretary few years of house arrest. to dig tenaciously to reveal the full story of
of state, with her concerns. The backdrop to Blay-Miezah’s shenan- Blay-Miezah’s exploits. In addition to in-
Many of the investors simply could not igans is a nation blessed with resources terviewing dozens of people who crossed
admit to themselves that they had been (gold, cocoa and, increasingly, oil) but pe- paths with or were scammed by him, she
scammed. It was less painful to keep giving rennially exploited by slave-traders, colo- drew on unpublished memoirs and family
Anansi one last chance. In this sense the nists and corrupt politicians. Nkrumah’s archives, tracked down missing official re-
fraud, for all its audacity, was like so many offshore gold may have been illusory, but cords and sifted through files compiled by
others before and since. The high life Blay- Ghana’s natural wealth is real. Its decades- the FBI and American prosecutors. “Anan-
Miezah enjoyed for so long owed much to long betrayal by rapacious colonisers, lead- si’s Gold” is a welcome, if belated, addition
the sunk-cost fallacy. After American law- ers and sharks like Blay-Miezah is the to the canon on great swindlers.
Appointments 79
Courses
80
Economic & financial indicators The Economist August 26th 2023
Economic data
Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units
% change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change
latest quarter* 2023† latest 2023† % % of GDP, 2023† % of GDP, 2023† latest,% year ago, bp Aug 23rd on year ago
United States 2.6 Q2 2.4 1.8 3.2 Jul 3.9 3.5 Jul -2.8 -5.7 4.2 114 -
China 6.3 Q2 3.2 5.2 -0.3 Jul 0.8 5.3 Jul‡§ 2.0 -2.8 2.4 §§ -4.0 7.29 -6.0
Japan 2.0 Q2 6.0 1.3 3.3 Jul 2.9 2.5 Jun 2.9 -5.2 0.7 45.0 145 -5.9
Britain 0.4 Q2 0.8 0.3 6.8 Jul 6.7 4.2 May†† -3.3 -4.3 4.8 228 0.79 6.3
Canada 2.2 Q1 3.1 1.7 3.3 Jul 3.4 5.5 Jul -0.6 -0.9 3.6 61.0 1.36 -4.4
Euro area 0.6 Q2 1.0 0.9 5.3 Jul 5.4 6.4 Jun 2.0 -3.3 2.5 117 0.92 8.7
Austria 1.9 Q1 0.4‡ 0.8 7.0 Jul 7.3 5.1 Jun 2.0 -2.4 3.1 117 0.92 8.7
Belgium 0.9 Q2 0.8 0.9 1.7 Jul 3.2 5.7 Jun -2.8 -4.7 3.2 125 0.92 8.7
France 0.9 Q2 2.2 1.0 5.1 Jul 5.4 7.1 Jun -1.7 -5.0 3.2 144 0.92 8.7
Germany -0.1 Q2 0.1 -0.1 6.5 Jul 5.9 3.0 Jun 5.3 -2.3 2.5 117 0.92 8.7
Greece 2.3 Q1 -0.3 2.4 3.5 Jul 3.8 11.1 Jun -5.9 -1.8 3.9 -15.0 0.92 8.7
Italy 0.6 Q2 -1.4 1.1 6.3 Jul 6.1 7.4 Jun 0.9 -4.8 4.2 51.0 0.92 8.7
Netherlands -0.3 Q2 -1.3 0.9 5.3 Jul 5.3 3.6 Jul 7.5 -2.3 2.9 121 0.92 8.7
Spain 1.8 Q2 1.7 2.3 2.1 Jul 3.1 11.7 Jun 1.8 -4.1 3.7 133 0.92 8.7
Czech Republic -0.2 Q1 0.4 0.2 8.8 Jul 10.5 2.6 Jun‡ -1.2 -4.5 4.4 -18.0 22.2 11.1
Denmark 1.9 Q1 0.8 2.0 3.1 Jul 4.0 2.8 Jun 10.5 1.5 2.8 111 6.87 8.4
Norway 0.7 Q2 0.1 1.6 5.4 Jul 4.8 3.3 May‡‡ 17.6 12.5 1.4 76.0 10.6 -8.7
Poland -0.5 Q2 -14.0 1.3 10.8 Jul 11.9 5.0 Jul§ -0.2 -4.8 5.7 -67.0 4.12 16.0
Russia 4.9 Q2 na -0.6 4.3 Jul 6.0 3.1 Jun§ 2.4 -3.7 11.3 233 94.3 -36.2
Sweden -0.9 Q2 -5.9 1.0 9.3 Jul 7.1 9.2 Jun§ 4.2 -0.3 2.9 121 10.9 -3.2
Switzerland 0.6 Q1 1.1 1.2 1.6 Jul 2.2 2.1 Jul 6.8 -0.7 1.0 24.0 0.88 9.1
Turkey 4.0 Q1 1.3 3.2 47.8 Jul 46.3 9.0 Jun§ -5.4 -4.8 18.4 540 27.2 -33.4
Australia 2.3 Q1 0.9 1.6 6.0 Q2 5.5 3.7 Jul 1.5 0.2 4.2 60.0 1.55 -7.1
Hong Kong 1.5 Q2 -5.2 3.5 1.8 Jul 1.9 2.8 Jul‡‡ 9.1 -1.5 4.0 112 7.84 0.1
India 6.1 Q1 5.3 6.2 7.4 Jul 5.5 8.1 Apr -1.3 -5.9 7.2 -9.0 82.7 -3.4
Indonesia 5.2 Q2 na 4.9 3.1 Jul 3.8 5.5 Q1§ 0.9 -2.6 6.6 -46.0 15,295 -3.0
Malaysia 2.9 Q2 na 4.2 2.4 Jun 2.7 3.4 Jun§ 2.9 -5.0 3.9 -11.0 4.66 -3.6
Pakistan 1.7 2023** na 1.7 28.3 Jul 32.2 6.3 2021 -1.7 -7.0 16.2 ††† 370 300 -27.7
Philippines 4.3 Q2 -3.6 5.4 4.7 Jul 5.5 4.5 Q2§ -5.3 -7.0 6.6 55.0 56.7 -1.1
Singapore 0.5 Q2 0.3 1.0 4.1 Jul 5.0 1.9 Q2 16.2 -0.7 3.2 44.0 1.35 3.0
South Korea 0.8 Q2 2.4 1.3 2.3 Jul 3.0 2.7 Jul§ 1.7 -2.7 3.9 54.0 1,340 0.5
Taiwan 1.4 Q2 5.6 0.8 1.9 Jul 2.0 3.4 Jul 13.2 -0.4 1.2 -3.0 31.9 -5.4
Thailand 1.8 Q2 0.7 3.2 0.4 Jul 1.5 0.9 Jun§ 1.1 -2.7 2.8 28.0 35.1 3.0
Argentina 1.3 Q1 2.7 -2.4 114 Jul 116.1 6.9 Q1§ -2.3 -4.2 na na 350 -60.9
Brazil 4.0 Q1 8.0 2.4 4.0 Jul 4.5 8.0 Jun§‡‡ -1.9 -7.6 11.1 -107 4.89 4.1
Chile -1.1 Q2 -1.2 0.1 6.5 Jul 7.5 8.5 Jun§‡‡ -3.6 -1.9 5.9 -111 860 7.9
Colombia 0.3 Q2 -4.1 1.6 11.8 Jul 11.5 9.3 Jun§ -4.0 -4.2 10.8 -128 4,081 7.3
Mexico 3.7 Q2 3.6 2.4 4.8 Jul 5.0 2.7 Jun -1.9 -3.5 9.3 38.0 16.8 18.9
Peru -0.4 Q1 -2.2 1.3 5.9 Jul 6.5 6.7 Jul§ -1.3 -2.0 7.0 -81.0 3.71 4.0
Egypt 3.9 Q1 na 3.8 36.4 Jul 36.2 7.0 Q2§ -1.5 -6.9 na na 30.9 -38.0
Israel 3.3 Q2 3.0 3.0 3.3 Jul 4.1 3.4 Jul 4.7 -2.0 3.9 121 3.76 -13.3
Saudi Arabia 8.7 2022 na 1.0 2.3 Jul 2.2 5.1 Q1 3.2 -1.4 na na 3.75 0.3
South Africa 0.2 Q1 1.4 0.5 4.8 Jul 5.7 32.6 Q2§ -1.8 -5.7 10.3 -6.0 18.5 -8.3
Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving
average. §§5-year yield. †††Dollar-denominated bonds. Note: Euro area consumer prices are harmonised.
Markets Commodities
% change on: % change on:
Index one Dec 30th index one Dec 30th
The Economist commodity-price index % change on
In local currency Aug 23rd week 2022 Aug 23rd week 2022 2015=100 Aug 15th Aug 22nd* month year
United States S&P 500 4,436.0 0.7 15.5 Pakistan KSE 47,418.6 -1.5 17.3 Dollar Index
United States NAScomp 13,721.0 1.8 31.1 Singapore STI 3,174.2 -1.2 -2.4 All Items 140.5 143.2 -5.7 -6.3
China Shanghai Comp 3,078.4 -2.3 -0.4 South Korea KOSPI 2,505.5 -0.8 12.0 Food 131.8 131.5 -8.6 -8.5
China Shenzhen Comp 1,901.9 -3.3 -3.7 Taiwan TWI 16,576.9 0.8 17.3 Industrials
Japan Nikkei 225 32,010.3 0.8 22.7 Thailand SET 1,549.0 1.9 -7.2 All 148.6 154.2 -3.3 -4.4
Japan Topix 2,277.1 0.7 20.4 Argentina MERV 615,499.3 9.3 204.6 Non-food agriculturals 111.3 111.4 -1.2 -27.7
Britain FTSE 100 7,320.5 -0.5 -1.8 Brazil BVSP* 118,134.6 2.2 7.7 Metals 159.6 166.9 -3.7 2.1
Canada S&P TSX 19,879.8 -0.1 2.6 Mexico IPC 53,635.3 -0.4 10.7
Sterling Index
Euro area EURO STOXX 50 4,266.7 -0.4 12.5 Egypt EGX 30 18,133.4 0.4 24.2
All items 168.2 171.7 -4.8 -12.7
France CAC 40 7,246.6 -0.2 11.9 Israel TA-125 1,876.3 0.6 4.2
Germany DAX* 15,728.4 -0.4 13.0 Saudi Arabia Tadawul 11,367.1 -0.2 7.8 Euro Index
Italy FTSE/MIB 28,233.8 0.2 19.1 South Africa JSE AS 74,022.6 -1.2 1.3 All items 142.4 146.4 -4.0 -13.7
Netherlands AEX 740.7 -2.1 7.5 World, dev'd MSCI 2,937.7 0.4 12.9 Gold
Spain IBEX 35 9,315.6 -0.4 13.2 Emerging markets MSCI 970.2 -0.6 1.4 $ per oz 1,908.2 1,897.1 -3.3 8.3
Poland WIG 68,153.4 -1.1 18.6
Brent
Russia RTS, $ terms 1,051.2 3.6 8.3
$ per barrel 85.1 84.1 0.5 -16.1
Switzerland SMI 10,973.6 -0.2 2.3 US corporate bonds, spread over Treasuries
Turkey BIST 7,602.2 -0.8 38.0 Dec 30th Sources: Bloomberg; CME Group; Cotlook; Refinitiv Datastream;
Australia All Ord. 7,367.6 -0.6 2.0 Basis points latest 2022 Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool
Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional.
Hong Kong Hang Seng 17,845.9 -2.6 -9.8 Investment grade 138 154
India BSE 65,433.3 -0.2 7.5 High-yield 433 502
Indonesia IDX 6,921.4 0.3 1.0 Sources: Refinitiv Datastream; Standard & Poor's Global Fixed Income For more countries and additional data, visit
Malaysia KLSE 1,440.1 -1.6 -3.7 Research. *Total return index. economist.com/economic-and-financial-indicators
Graphic detail Ecology and public health The Economist August 26th 2023 81
Carrion call → The loss of vultures had knock-on effects throughout India’s ecosystem
82
Obituary Bindeshwar Pathak The Economist August 26th 2023
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