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The Economist - Leaders
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   Full-text available via subscription Subscription journal
   ISSN (Online) 1358-274X
   Published by The Economist Group Homepage  [4 journals]
  • Stay away
    • Abstract: WHEN owning one home seems like a struggle, resenting those with two comes easily. Second-home ownership is uncommon: in 2010 around 4% of houses in America were second homes; 1% of English homes are second properties of people living in England. But they still arouse passions. Norway and Denmark limit second-home ownership, and in 2012 the Swiss voted to restrict second homes in places where they were most common. Australia has also clamped down on foreign purchases of residential property. Latest to the barricades is St Ives, a seaside town in south-west England, where a quarter of houses are second homes or holiday lets. On May 5th 83% of St Ives’s voting residents decided that newly built homes should be off-limits to non-residents. It is unclear if the vote is enforceable. It is certainly wrong-headed. In some cases antipathy to second-home ownership simply reflects an ugly dislike of outsiders; in others, the NIMBYism of second-home owners themselves, keen to preserve the exclusiveness of their holiday patch. (In Switzerland the vote to ban new construction of second homes in sensitive areas was carried by urban residents of...
      PubDate: Thu, 12 May 2016 14:56:03 GMT
  • The rule of flaw
    • Abstract: ATLAS could hold up the sky. Atlante, Italy’s bank-rescue fund, looks like a weakling. The fund, which raised €4.25 billion ($4.9 billion) last month, almost half of it from Italy’s two largest banks, has two purposes. One is to act as an emergency investor in banks starved of funds; the other is to kick-start a market in dud loans clogging up banks’ balance-sheets. On both counts, the fund has not done enough to calm nerves. Italy should have acted sooner to sort out its banks. But Europe’s approach to financial crises is also to blame. Italian officials talk about the fund as a “game-changer”—partly because it has already pulled off a rescue of Banca Popolare di Vicenza (BPVi), a regional bank whose initial public offering (IPO) flopped. But that only underlines how close Italy has come to disaster. BPVi’s IPO had been fully, and foolishly, underwritten by UniCredit, Italy’s largest bank: had not the fund stepped in, UniCredit itself might have run short of capital. A banking crisis at the heart of the euro zone might by now have been raging. As it is, the BPVi’s rescue has depleted Atlante’s firepower. More calls on its cash may be...
      PubDate: Thu, 12 May 2016 14:56:03 GMT
  • A preventable tragedy
    • Abstract: ONE of the mysteries of epidemiology is why Asia does not suffer from yellow fever. The disease is endemic in Africa, the continent where it evolved. It is widespread in South America, having been carried there by European slave ships. It was once found in both North America and southern Europe, but it was eradicated by the application of considerable effort and money—and both places shared the good fortune of lacking monkeys, which act as reservoirs for the yellow-fever virus. Yet, although much of Asia is plagued by Aedes aegypti, the mosquito that spreads yellow fever, it remains blessedly free of infections. It may be that Asian strains of A. aegypti are poor transmitters of yellow-fever viruses (though they have no difficulty passing on those of dengue, a related illness). It may be that surviving and recovering from dengue, which is widespread in southern Asia, confers a degree of resistance to yellow fever. Or it may be that past trade between Africa and Asia was too modest for the virus to take root. The world may soon find out. For an unplanned experiment has just started that...
      PubDate: Thu, 12 May 2016 14:56:03 GMT
  • The dangers of Duterte Harry
    • Abstract: DURING the six years of President Benigno Aquino’s administration, the Philippines has amazed itself and others by being both boring and successful. Once South-East Asia’s chronic underachiever, with a sluggish economy and a politics that puts showmanship over substance, the Philippines belatedly took the path of other, more successful economies. It adopted policies (now there’s a novelty) and these have encouraged foreign investment, spurred spending on infrastructure and boosted consumption. Growth has been a healthy 6% a year, the best among the region’s bigger economies. Jobs have been generated—call centres in the Philippines handle many of the world’s complaints. And social spending has risen even as the national debt has come down. Now all that progress is thrown in doubt with the emphatic election as president of Rodrigo Duterte, a loudmouth pursuing a wildly populist campaign (see Briefing). After the dull-but-sound Mr Aquino, the great risk is that bad old ways are about to return....
      PubDate: Thu, 12 May 2016 14:56:03 GMT
  • The war within
    • Abstract: WHEN Sir Mark Sykes and François Georges-Picot secretly drew their lines on the map of the Levant to carve up the Ottoman empire in May 1916, at the height of the first world war, they could scarcely have imagined the mess they would set in train: a century of imperial betrayal and Arab resentment; instability and coups; wars, displacement, occupation and failed peacemaking in Palestine; and almost everywhere oppression, radicalism and terrorism. In the euphoria of the uprisings in 2011, when one awful Arab autocrat after another was toppled, it seemed as if the Arabs were at last turning towards democracy. Instead their condition is more benighted than ever. Under Abdel-Fattah al-Sisi, Egypt is even more wretched than under the ousted dictator, Hosni Mubarak. The state has broken down in Iraq, Syria, Libya and Yemen. Civil wars rage and sectarianism is rampant, fed by the contest between Iran and Saudi Arabia. The jihadist “caliphate” of Islamic State (IS), the grotesque outgrowth of Sunni rage, is metastasising to other parts of the Arab world. Bleak as all this may seem, it could become worse still. If the Lebanese civil war...
      PubDate: Thu, 12 May 2016 08:18:20 GMT
  • Underdogs are overrated
    • Abstract: THE British like being on the side of the underdog. This affinity has more than a whiff of historical hypocrisy; the British empire, a distinctly top-doggy affair, was hardly noted for its enthusiastic encouragement of the downtrodden. Still, it is a genuine part of the national character. So when, on the evening of May 2nd, Leicester City were anointed champions of the English Premier League, a football competition, the country was united in delight. Bookmakers, to their subsequent regret, had set the odds of such a victory at 5,000 to 1. Leicester’s triumph was heralded as the greatest underdog story in sporting history, and Britain rejoiced in it. The world is short enough of occasions for joy that to disparage such a blameless one may seem harsh. No one would begrudge the long-suffering supporters of Leicester, or the citizens of this East Midlands city (see article), their moment of jubilation. But a delight in seeing the expected undone can be a pathway to poor thinking. It encourages people to value the...
      PubDate: Thu, 05 May 2016 14:45:37 GMT
  • Dealing with murky moguls
    • Abstract: THE past 20 years have been a golden age for crony capitalists—tycoons active in industries where chumminess with government is part of the game. As commodity and property prices soared, so did the value of permits to dig mines in China or build offices in São Paulo. Telecoms spectrum doled out by Indian officials created instant billionaires. Implicit state guarantees let casino banking thrive on Wall Street and beyond. Many people worried about a new “robber baron” era, akin to America’s in the late 19th century. They had a point. Worldwide, the worth of tycoons in crony industries soared by 385% in 2004-14, to $2 trillion, or a third of total billionaire wealth; much of it (though by no means all) in the emerging world. Now cronies are on the back foot. Their combined fortunes have dropped by 16% since 2014, according to our updated crony-capitalism index (see article). One reason is the commodity crash. Another is a backlash from the middle class. Corruption scandals have lit a fire under...
      PubDate: Thu, 05 May 2016 14:45:37 GMT
  • Under-age and at risk
    • Abstract: IN 1939, at great personal risk, an English stockbroker rescued 669 Jewish children from Nazi-occupied Czechoslovakia. Nicholas Winton travelled to Prague, helped the children onto trains and battled with his own country’s bureaucrats to have them admitted to Britain. Among those he saved from the gas chambers was Alf Dubs, now a Labour peer, who is pressing Britain’s government to grant asylum to refugee children in Europe without their parents. He has met stout resistance. On April 25th the House of Commons, including nearly all MPs from the ruling Conservative Party, voted against Lord Dubs’s proposal to admit 3,000 of these children. After an outcry from various charities, on May 4th the prime minister, David Cameron, relented somewhat. Reversing his previous stance that Britain would take refugees directly only from the region around Syria, he said that the country would take an unspecified number of unaccompanied children from European camps. That is a start. But neither Britain nor the rest of Europe has done nearly enough to provide proper homes for the 90,000 unaccompanied refugees under the age of 18 who made...
      PubDate: Thu, 05 May 2016 14:45:37 GMT
  • The coming debt bust
    • Abstract: CHINA was right to turn on the credit taps to prop up growth after the global financial crisis. It was wrong not to turn them off again. The country’s debt has increased just as quickly over the past two years as in the two years after the 2008 crunch. Its debt-to-GDP ratio has soared from 150% to nearly 260% over a decade, the kind of surge that is usually followed by a financial bust or an abrupt slowdown. China will not be an exception to that rule. Problem loans have doubled in two years and, officially, are already 5.5% of banks’ total lending. The reality is grimmer. Roughly two-fifths of new debt is swallowed by interest on existing loans; in 2014, 16% of the 1,000 biggest Chinese firms owed more in interest than they earned before tax. China requires more and more credit to generate less and less growth: it now takes nearly four yuan of new borrowing to generate one yuan of additional GDP, up from just over one yuan of credit before the financial crisis. With the government’s connivance, debt levels can probably keep climbing for a while, perhaps even for a few more years. But not for ever. When the debt cycle turns, both...
      PubDate: Thu, 05 May 2016 14:45:28 GMT
  • Trump’s triumph
    • Abstract: DURING its 160-year history, the Republican Party has abolished slavery, provided the votes in Congress to pass the Civil Rights Act and helped bring the cold war to a close. The next six months will not be so glorious. After Indiana’s primary, it is now clear that Republicans will be led into the presidential election by a candidate who said he would kill the families of terrorists, has encouraged violence by his supporters, has a weakness for wild conspiracy theories and subscribes to a set of protectionist and economically illiterate policies that are by turns fantastical and self-harming. The result could be disastrous for the Republican Party and, more important, for America. Even if this is as far as he goes, Mr Trump has already done real damage and will do more in the coming months. Worse, in a two-horse race his chances of winning the presidency are well above zero. It is possible that, with the nomination secured, Mr Trump will now change his tone. The crassness of his insults may well be muted as he tries to win over at least some of the voters, particularly women, who now abhor him. His demeanour may become more...
      PubDate: Thu, 05 May 2016 09:03:13 GMT
  • Going negative
    • Abstract: GERMANY and the Netherlands are usually great supporters of central-bank independence. In the 1990s Germany blocked France’s push for a political say over monetary policy in the new European Central Bank (ECB). The Dutchman who first headed that bank, Wim Duisenberg, said that it might be normal for politicians to express views on monetary policy, but it would be abnormal for central bankers to listen to them. That was then. Now German and Dutch politicians are trying to browbeat Mario Draghi, the ECB’s current president, into ending the bank’s policy of negative interest rates (see article). The German finance minister, Wolfgang Schäuble, accused Mr Draghi of causing “extraordinary problems” for his country’s financial sector; wilder yet, he also pinned on the ECB half of the blame for the rise of the populist Alternative for Germany (AfD) party. Both countries’ politicians attack low rates as a conspiracy to punish northern European savers and let southern European...
      PubDate: Thu, 28 April 2016 14:42:18 GM
  • Sweet little lies
    • Abstract: AMERICA’S corporate-earnings season is always a spectacle worth watching. Every quarter, in the space of a few weeks, 500-odd big firms report their results. Together, they are a barometer of the world economy: they account for a third of global market value and make half of their sales abroad. It matters that investors can easily decipher how these companies are doing. Instead, the quarterly reporting season has become a carnival of confusion, obfuscation and fibbing that would make even a presidential candidate blush. For a time after the financial crisis of 2007-08, firms were on best behaviour, keen to look investors in the eye and tell the truth and nothing but. Now, after a long bull market, investors have got lazy again and managers are taking the mickey.   In the cycle that is now under way, earnings-per-share are expected to drop by 9% for the first quarter, compared with the previous year, or by 4% once losses at energy firms are excluded. Some technology firms are also losing their shine: Apple, the world’s most valuable public company, this week reported its first drop in revenue since 2003 (see...
      PubDate: Thu, 28 April 2016 14:42:18 GM
  • Fatal distraction
    • Abstract: FOR too long the Philippines was the sick man of Asia—cheerful, democratic but a chronic underperformer. In recent years, though, its fortunes have begun to turn. Much of the credit should go to the outgoing president, Benigno Aquino. The economy is booming and investors are flocking in. The country has gained in geopolitical importance, too, thanks to its resistance to China’s expansionism. But Mr Aquino’s achievements risk being squandered by an old weakness at the heart of Filipino politics: its love of showmanship and personality over policy and administrative ability. Boxers and film stars project themselves into public jobs while the diligent and competent too often languish. This year’s presidential campaign is no exception (see article). The foundling and the beast Ahead of the ballot on May 9th, the field is narrowing to two leading candidates. One is Grace Poe, a foundling, adopted daughter of an action-man actor (the late Fernando Poe junior, a failed presidential...
      PubDate: Thu, 28 April 2016 14:42:18 GM
  • Little London
    • Abstract: THERE are many ways to kill the goose that lays the golden eggs. London’s economy makes Britain rich. If Britons were to vote on June 23rd to leave the European Union, London would suffer. But another problem is just as threatening. Soaring property prices are constraining London’s ability to foster new businesses and create jobs. The great city must overcome that problem if it intends to remain great. The past two decades have been kind to the capital. It is growing by more than 100,000 new residents a year. Like other booming cities, including New York, London thrives amid globalisation and technological change, which boost both demand for its financial services and the market for its startups. Yet if London has given striving people and firms plenty of reason to come, it has done a poor job housing them. Building is maddeningly difficult. London has been adding only 25,000 or so new homes a year (New York City approved nearly that much in half the land area). The median price of a London home has tripled over the past two decades as a result. Office construction lags, too. Commercial property in London’s West End is twice as...
      PubDate: Thu, 28 April 2016 14:42:18 GM
  • How to measure prosperity
    • Abstract: WHICH would you prefer to be: a medieval monarch or a modern office-worker? The king has armies of servants. He wears the finest silks and eats the richest foods. But he is also a martyr to toothache. He is prone to fatal infections. It takes him a week by carriage to travel between palaces. And he is tired of listening to the same jesters. Life as a 21st-century office drone looks more appealing once you think about modern dentistry, antibiotics, air travel, smartphones and YouTube. The question is more than just a parlour game. It shows how tricky it is to compare living standards over time. Yet such comparisons are not just routinely made, but rely heavily on a single metric: gross domestic product (GDP). This one number has become shorthand for material well-being, even though it is a deeply flawed gauge of prosperity, and getting worse all the time (see article). That may in turn be distorting levels of anxiety in the rich world about everything from stagnant incomes to disappointing...
      PubDate: Thu, 28 April 2016 09:03:17 GM
  • Tie breaker
    • Abstract: TECH moguls look upon the European Commission with as much enthusiasm as does the average Tory MP from the English shires. Europe has no successful technology companies of its own, they whisper, which is why Eurocrats spend their time hassling American tech giants instead. Not for the first time Google finds itself in the commission’s crosshairs. This week, the head of the EU’s trustbusting division, Margrethe Vestager, issued charges against the internet-search firm (see article). Its “preliminary view” is that Google is guilty of unfairly using its control of Android, the operating system that powers over 80% of the world’s smartphones, as a means to get its apps and services preferred over those offered by rivals. Europe trying to protect its own? Perhaps. Nevertheless, Google has a case to answer. The commission’s claim has echoes of antitrust battles against Microsoft, which was found guilty on both sides of the Atlantic of trying to extend a monopoly in one area, the...
      PubDate: Thu, 21 April 2016 14:41:44 GM
  • Burundian time-bomb
    • Abstract: WHEN a Hutu politician says it is time to “pulverise and exterminate” rebels who are “good only for dying”, outsiders should sit up. When he talks of spraying “cockroaches” or urges people to “start work”, it is hard to miss the old codewords for massacring Tutsis. When the politician is not some obscure backbencher but the president of the Burundian Senate, the world should be alarmed. History does not always repeat itself in central Africa, but it rhymes cacophonously. Rwanda and Burundi, two small countries with Hutu majorities and Tutsi minorities, have seen large-scale ethnic massacres in 1959, 1963, 1972, 1988, 1993 and 1994. These were not, as some outsiders imagine, spontaneous outbursts of tribal hatred. They happened because those in power deliberately inflamed ethnic divisions. The Rwandan genocide of 1994, in which perhaps half a million Tutsis were hacked to death, was meticulously planned by Hutu army officers and politicians. They did it to avoid sharing power with Tutsi rebels after a peace accord to end a civil war. They raised a militia, cranked up the genocidal propaganda and imported hundreds of thousands of machetes...
      PubDate: Thu, 21 April 2016 14:41:44 GM
  • The new oil order
    • Abstract: FOR generations, oil and stability have gone hand in hand in Saudi Arabia. The puritanically conservative kingdom has used its oil wealth to buy loyalty at home and friends abroad. But since King Salman came to the throne last year, his 30-year-old son, Muhammad, has injected unpredictability into the Middle East. Critics consider the deputy crown prince a hothead, whose dangerous obsession with Iran, Saudi Arabia’s rival, is feeding sectarianism and fraying relations with America. At home, though, the impetuousness of Muhammad bin Salman may be just what Saudi Arabia needs to start weaning itself off oil, the price of which has fallen sharply over the past 18 months. A big test comes on April 25th, when the prince is due to unveil the kingdom’s long-delayed “Vision” reform plan. Under the prince, Saudi Arabia has certainly seemed rash. A year ago it went to war in Yemen, and is now bogged down. In January it executed a prominent Shia cleric, inflaming relations with Iran. Days later the prince revealed to this newspaper plans to float shares in Saudi Aramco, thought to be the world’s biggest company, surprising executives and...
      PubDate: Thu, 21 April 2016 14:41:44 GM
  • The great betrayal
    • Abstract: BRAZIL’S Congress has witnessed some bizarre scenes in its time. In 1963 a senator aimed a gun at his arch-enemy and killed another senator by mistake. In 1998 a crucial government bill failed when a congressman pushed the wrong button on his electronic voting device. But the spectacle in the lower house on April 17th surely counts among the oddest. One by one, 511 deputies filed towards a crowded microphone and, in ten-second bursts broadcast to a rapt nation, voted on the impeachment of the president, Dilma Rousseff. Some were draped in Brazilian flags. One launched a confetti rocket. Many gushed dedications to their home towns, religions, pet causes—and even Brazil’s insurance brokers. The motion to forward charges against Ms Rousseff to the Senate for trial passed by 367 votes to 137, with seven abstentions. The vote comes at a desperate time. Brazil is struggling with its worst recession since the 1930s. GDP is expected to shrink by 9% from the second quarter of 2014, when the recession started, to the end of this year. Inflation and the unemployment rate are both around 10%. The failure is not only of Ms Rousseff’s making. The...
      PubDate: Thu, 21 April 2016 09:03:21 GM
  • Can she fix it?
    • Abstract: SOMETIMES relief makes triumph all the sweeter. That is how Hillary Clinton must feel after this week’s Democratic primary in New York, when she broke a losing streak by beating Bernie Sanders handily. She is now almost certain to be her party’s presidential candidate in November. After a 50-year slog through American politics, even the cautious Mrs Clinton was emboldened to declare that “Victory is in sight!” Mrs Clinton is experienced. In an age of extremes she has remained resolutely centrist. Yet, rather than thrilling to the promise of taking the White House or of electing America’s first woman president, many Democrats seem joyless. And America as a whole is seething with discontent. It may dodge putting a populist, an ideological extremist or a socialist in the White House in 2017. But, if voters’ anger remains unabated, it will not do so for much longer. Mrs Clinton needs a bold plan to counter this popular frustration. Alas, judging by her economic policies so far, she is more inclined to tinker. The not-a-fan belt To gauge Mrs Clinton’s programme, start with the Clintonomics that her husband...
      PubDate: Thu, 21 April 2016 09:03:15 GM
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