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  The Economist - Leaders
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   ISSN (Online) 1358-274X
   Published by The Economist Group Homepage  [4 journals]
  • The granny state
    • Abstract: INVOKING the spirit of the Blitz, Britain’s Conservative-led government says that, when it comes to austerity, Britons are in it together. Yet the group born under the shadow of the country’s wartime trials is largely exempt. Since 2010 the basic state pension has risen by 16%—5% in real terms—under a formula that guarantees generous increases whatever the economic weather. Pensioners also enjoy free TV licences, free bus passes and a handout to help pay winter fuel bills. The government even subsidises their savings, by offering bonds yielding 4% interest—more than five times its own borrowing cost—exclusively to the over-65s. And if the Tories are returned to power at the general election in May, oldies can expect more of this largesse. On February 23rd David Cameron, the Tory prime minister, promised to protect their handouts on the basis that “these people have fought wars, seen us through recessions—made this the great country it is today” (see article). That argument is...
      PubDate: Thu, 26 February 2015 15:44:28
       
  • Games that must stop
    • Abstract: BAKU is humming with the customary accompaniments to showcase events: lavish new facilities are being finished, sponsors schmoozed, and human-rights activists and awkward journalists locked up. For June’s European Games—an unconvincing new tournament that Azerbaijan is hosting—the brutal regime is using the formula it honed at the Eurovision Song Contest of 2012, and hopes to deploy for the Olympic games of 2024. Smile, spend big and suppress dissent. Sport is separate from politics, and can even be therapy for it; or so its organisers often maintain. What does it matter if some faraway goon blows his petrodollars on a summer jamboree—or a winter one, as will now be the case for the 2022 World Cup in Qatar, which FIFA, football’s disgraced governing body, this week farcically moved to December to avoid the intolerable heat? It matters. Frivolous as they seem, staging these events in ghastly places not only tarnishes FIFA, the International Olympic Committee (IOC) and other overseers. It renders all involved complicit in corruption, and worse. As a new study (reviewed on page 82) makes clear, democratic governments and their pinched...
      PubDate: Thu, 26 February 2015 15:44:28
       
  • A slow-motion coup
    • Abstract: VENEZUELA’S “Bolivarian” regime is lurching from authoritarianism to dictatorship. On February 19th it arrested the elected mayor of metropolitan Caracas, Antonio Ledezma. Then it moved to expel Julio Borges, a moderate opposition leader, from the National Assembly—a fate already suffered by his colleague, María Corina Machado, ejected last year. Leopoldo López, another opposition leader, has been in jail for a year and is now on trial. Almost half the opposition’s mayors now face legal action. The regime’s favourite charge to level at hostile politicians is plotting to overthrow the government, often in conspiracy with the United States. But it is the president, Nicolás Maduro, who is staging a coup against the last vestiges of democracy. Venezuelans call it an autogolpe, or “self-coup”. Hugo Chávez, who created and presided over the Bolivarian state-socialist system until his death in 2013, was repeatedly elected by Venezuelans, thanks to windfall oil revenues and his rapport with the poor. He took his majority as a mandate to squeeze the life out of Venezuelan democracy, seizing control of the courts and the electoral...
      PubDate: Thu, 26 February 2015 15:44:28
       
  • In a quagmire
    • Abstract: CAMPAIGNING for a second term as Brazil’s president in an election last October, Dilma Rousseff painted a rosy picture of the world’s seventh-biggest economy. Full employment, rising wages and social benefits were threatened only by the nefarious neoliberal plans of her opponents, she claimed. Just two months into her new term, Brazilians are realising that they were sold a false prospectus. Brazil’s economy is in a mess, with far bigger problems than the government will admit or investors seem to register. The torpid stagnation into which it fell in 2013 is becoming a full-blown—and probably prolonged—recession, as high inflation squeezes wages and consumers’ debt payments rise (see article). Investment, already down by 8% from a year ago, could fall much further. A vast corruption scandal at Petrobras, the state-controlled oil giant, has ensnared several of the country’s biggest construction firms and paralysed capital spending in swathes of the economy, at least until the...
      PubDate: Thu, 26 February 2015 09:03:09
       
  • Planet of the phones
    • Abstract: THE dawn of the planet of the smartphones came in January 2007, when Steve Jobs, Apple’s chief executive, in front of a rapt audience of Apple acolytes, brandished a slab of plastic, metal and silicon not much bigger than a Kit Kat. “This will change everything,” he promised. For once there was no hyperbole. Just eight years later Apple’s iPhone exemplifies the early 21st century’s defining technology. Smartphones matter partly because of their ubiquity. They have become the fastest-selling gadgets in history, outstripping the growth of the simple mobile phones that preceded them. They outsell personal computers four to one. Today about half the adult population owns a smartphone; by 2020, 80% will. Smartphones have also penetrated every aspect of daily life. The average American is buried in one for over two hours every day. Asked which media they would miss most, British teenagers pick mobile devices over TV sets, PCs and games consoles. Nearly 80% of smartphone-owners check messages, news or other services within 15 minutes of getting up. About 10% admit to having used the gadget during sex. The bedroom is just the beginning....
      PubDate: Thu, 26 February 2015 09:03:07
       
  • The anti-charm of Rahm
    • Abstract: ALL politicians, when faced with disappointing poll numbers, comfort themselves with the idea that unpopularity is a measure of their boldness. Sometimes it is even true. Chicago’s coolness towards Rahm Emanuel, who is seeking a second term as mayor on February 24th, is partly due to his abrasive personality and fondness for Anglo-Saxon epithets. Yet the bigger reason is that he has confronted vested interests that would normally support his party, the Democrats. This is a rare virtue, and one that national politicians should emulate. America’s third-largest city has no shortage of troubles, from violent crime on the streets to ancient water pipes below. For a long time Chicago’s most efficient public service was the smooth exchange of government jobs and contracts for votes. Mr Emanuel has taken a meat cleaver to such back-scratching mediocrity. He has put two of the city’s tottering pension funds on a path to solvency and promised to tackle two others. He has closed 50 failing schools, incurring the wrath of the city’s teachers’ unions, and opened some publicly funded but privately run charter schools in their place. He is expanding free education...
      PubDate: Thu, 19 February 2015 15:58:57
       
  • Feeling down
    • Abstract: FALLING prices sound like something to cheer. In 1950 talk was not cheap. It cost $3.70 to place a five-minute call between New York and San Francisco—or $36.35 in today’s money. Now that same call costs you nothing. The emergence of the sharing economy is driving down the price of a taxi ride and a bed for the night. More recently tumbling prices for natural resources, especially oil, have boosted the spending power of consumers from Detroit to Delhi. Mark Carney, the governor of the Bank of England, reckons that falling energy prices are “unambiguously good” for the British economy. Mr Carney is not wrong. Nonetheless, the world is grievously underestimating the danger of deflation. The problem is that aggregate prices are dipping in so many places at once. Deflationary pressures are visible far beyond food and energy, and in countries that cannot claim to be leading the charge towards the new economy. In the euro zone, where deflation grips tightest, consumer prices fell by 0.6% in the year to January; Germany, Italy and Spain all saw falls. Prices in Greece have been declining for 23 months. Ultra-low inflation is also widespread....
      PubDate: Thu, 19 February 2015 15:58:57
       
  • The return of Jew-hatred
    • Abstract: TOULOUSE, Brussels, Paris and now Copenhagen. The list of European cities where Jews have lately been murdered for being Jews grows longer. It adds poignancy that this should happen in Denmark, which saved most of its Jews from the Nazis by helping them flee to Sweden. There are many smaller outrages, such as the desecration of Jewish graves. And what to make of Roland Dumas, a former French foreign minister, who claims that Manuel Valls, the prime minister, acts under “Jewish influence” because his wife is Jewish? No wonder Jews in Europe ask themselves questions they hoped had been banished long ago: is it safe to wear a kippah (skullcap), send one’s children to Jewish schools or attend synagogue? And, given the rise of populist and far-right groups, is it time to leave Europe (see article)? Such worries are understandable, but they need to be put in context. The shooting at the Great Synagogue on Krystalgade does not herald another Kristallnacht. Jews...
      PubDate: Thu, 19 February 2015 15:58:57
       
  • Set the Kurds free
    • Abstract: THE Kurds, at least 25m-strong, are one of the world’s most numerous peoples without a state. Other small nations in their region have a home alongside the Arabs, the Persians and the Turks: the Jews created (or, in their book, recreated) Israel after the second world war; Armenia and Georgia re-emerged as independent as the Soviet Union fell apart. The Kurds have twice come close to fulfilling their dream, once after the first world war and the Ottoman empire’s collapse, when they were promised a state by the treaty of Sèvres, and again after the second world war, when for ten brief months the Kurdish republic of Mahabad rose up in what is now north-western Iran. Today the Kurdish Region of Iraq, home to at least 6m people, is independent in all but name (see article). It is that benighted country’s only fully functioning part. Since 1991, when the West began to protect it from Saddam Hussein, it has thrived. In due course, it deserves its place in the community of independent nations....
      PubDate: Thu, 19 February 2015 15:58:57
       
  • A tricky business
    • Abstract: INSURANCE rests on the idea of imperfect knowledge. Since its creation in the 17th century, insurers have sought to amass lots of policies in each class of risk they cover. They do so not only to make money, but also to be safer. This is the law of large numbers. Insurers don’t know exactly where risks lie. By insuring a barrelful of policies, it matters less if one of them is bad. But the law of large numbers is threatened by the rule of precise data. Thanks to technology, insurers have access to more and more information about the risks that individuals run (see article). Car insurers have begun to set premiums based on how actual drivers behave, with “telematic” tracking devices to show how often they speed or slam on the brakes. Analysts at Morgan Stanley, a bank, predict that damage to insured homes will fall by 40-60% if smart sensors are installed to monitor, say, frayed electrical wiring. Some health insurers hand out digital fitness-bands to track policyholders’...
      PubDate: Thu, 12 March 2015 15:48:30 GM
       
  • The resistible rise of Marine Le Pen
    • Abstract: ALMOST 13 years have passed since the then leader of the Front National (FN), Jean-Marie Le Pen, shocked the world by reaching the run-off in the presidential election of 2002. The far-right party, now led by his daughter, Marine, came first in last year’s European elections. It is expected to be top again in the first round of local elections on March 22nd, with perhaps 30% of the vote. Back in 2002 Le Pen père was so widely loathed that the left and the right rallied around Jacques Chirac, who won the run-off easily. Today, by contrast, there is no such united front. Instead, mainstream politicians openly speculate about Ms Le Pen reaching the second round in the 2017 presidential election—and, just conceivably, winning it. Ms Le Pen is a more appealing political leader than her father. To detoxify the FN’s brand she has shed much of the neo-fascism, racism and anti-Semitism it once embodied. She is working hard to strengthen the party’s foundations, so that it is acquiring not only more voters but also more members and greater political experience. The party has 1,500 councillors and two deputies in the National Assembly....
      PubDate: Thu, 12 March 2015 15:48:30 GM
       
  • Bibi’s a bad deal
    • Abstract: BINYAMIN NETANYAHU is articulate, dashing—and distrusted, by friends and foes alike. Nicolas Sarkozy, a former French president, was once heard telling Barack Obama: “I can’t stand him. He’s a liar.” Mr Obama did not demur. This month the Israeli prime minister offered fresh glimpses of his deviousness. Following reports that he had offered the Palestinians more generous terms than his rhetoric admits, Mr Netanyahu (pictured, right) tried to regain right-wing support by repudiating his acceptance, in a speech in 2009, of (strictly limited) Palestinian statehood. This leaves a big question: is the real Bibi a man of negotiation, or of occupation? Recklessly, he gambled with bipartisan American support for Israel when he defied Mr Obama by brazenly appearing before a Republican-dominated Congress to denounce the administration’s nuclear negotiations with Iran: “This is a bad deal. It’s a very bad deal. We’re better off without it.” On March 17th Israeli voters will have their say on Bibi (see...
      PubDate: Thu, 12 March 2015 15:48:30 GM
       
  • Spurious George
    • Abstract: THE British government’s great boast is its resolve. Fainter hearts might have trembled before the political law that you cannot cut your way to re-election. But the Conservative-Liberal Democrat coalition, forged in the dark days following the financial crisis, formed a plan for the economy and stood its ground. Its reward has been to see unemployment tumble and Britain grow faster than any other big rich country in 2014. It is a rousing refrain. And when George Osborne, the chancellor of the exchequer, gives the budget speech on March 18th, less than two months before a general election that will revolve around the economy, he is sure to utter the words “long-term economic plan” and to affirm his iron commitment to a fiscal surplus for Britain by 2018-19 (see Bagehot). The shabby truth, however, is that the success of Mr Osborne stems from the goals he has abandoned, rather than the guns he has stuck to. And next week, unless his budget plans are more apt, Britain...
      PubDate: Thu, 12 March 2015 15:48:30 GM
       
  • Made in China?
    • Abstract: BY MAKING things and selling them to foreigners, China has transformed itself—and the world economy with it. In 1990 it produced less than 3% of global manufacturing output by value; its share now is nearly a quarter. China produces about 80% of the world’s air-conditioners, 70% of its mobile phones and 60% of its shoes. The white heat of China’s ascent has forged supply chains that reach deep into South-East Asia. This “Factory Asia” now makes almost half the world’s goods. China has been following in the footsteps of Asian tigers such as South Korea and Taiwan. Many assumed that, in due course, the baton would pass to other parts of the world, enabling them in their turn to manufacture their way to prosperity. But far from being loosened by rising wages, China’s grip is tightening. Low-cost work that does leave China goes mainly to South-East Asia, only reinforcing Factory Asia’s dominance (see article). That raises questions for emerging markets outside China’s orbit. From India to Africa...
      PubDate: Thu, 12 March 2015 09:33:12 GM
       
  • How to fire up America
    • Abstract: A SATIRICAL film in 2004, called “A Day Without a Mexican”, imagined Californians running scared after their cooks, nannies and gardeners had vanished. Set it in today’s America and it would be a more sobering drama. If 57m Hispanics were to disappear, public-school playgrounds would lose one child in four and employers from Alaska to Alabama would struggle to stay open. Imagine the scene by mid-century, when the Latino population is set to have doubled again. Listen to some, and foreign scroungers threaten America, a soft-hearted country with a wide-open border. For almost two centuries after America was founded, more than 80% of its citizens were whites of European descent. Today, non-Hispanic whites have dropped below two-thirds of the population. They are on course to become a minority by 2044. At a recent gathering of Republicans with presidential ambitions, a former governor of Arkansas, Mike Huckabee, growled about “illegal people” rushing in “because they’ve heard that there is a bowl of food just across the border.” Politicians are right that a demographic revolution is under way. But, as...
      PubDate: Thu, 12 March 2015 09:33:09 GM
       
  • Cocking up all over the world
    • Abstract: BANKS are yet again in trouble—not pure investment banks such as Lehman Brothers, or mortgage specialists such as Northern Rock; but a handful of huge global “network” banks. These lumbering giants are the woolly mammoths of finance, and if they cannot improve their performance they deserve a similarly grievous fate. The pressure is intense. Last month JPMorgan Chase felt obliged to tell investors why it should not be broken up. Citigroup awaits the results of its annual exam from the Federal Reserve: if it fails, as it did last year, its managers will be for the chop. Deutsche Bank is rethinking its strategy, after years of feeble performance and drift. HSBC, the world’s local bank, has been hammered for both a tax scandal in its Swiss operation and because of its poor profits. A shining Citi on a hill On paper global banks make sense. They provide the plumbing that allows multinationals to move cash, manage risk and finance trade around the world. Since the modern era of globalisation began in the mid-1990s, many banks have found the idea of spanning the world deeply alluring. In practice,...
      PubDate: Thu, 05 March 2015 15:49:00 GM
       
  • Nature plus nurture
    • Abstract: STENDHAL once wrote that all geniuses who were born women were lost to the public good. At least in the rich world, that wasteful truth has been triumphantly overcome. More than half of new graduates in the OECD club of mostly rich countries are now female. In several the share is around 60%. Former male redoubts such as medicine and law have increasingly been captured by women. Indeed, elite American colleges are widely suspected of admitting male applicants with lower grades, to even up the numbers. Yet despite this monumental advance, prejudices continue to hamper girls—and boys, too. Happily, neutralising them, at least within schools, should be much easier than reversing centuries of patriarchy. Educational results still seem to support the old idea that male and female intellectual capabilities differ. An analysis by the OECD of PISA tests for 15-year-olds in 60-odd countries turns up some eerily similar patterns. Girls trounce boys in literacy, but boys do better in mathematics. Boys do less homework and are more likely to fail in all subjects. The courses that both sexes choose at university mirror their earlier strengths at school. Women...
      PubDate: Thu, 05 March 2015 15:49:00 GM
       
  • Don’t kill Obamacare
    • Abstract: AMERICA’S health-care system is the costliest in the world, gobbling up 17% of GDP. The average for rich nations is only 9%; even the French spend less than 12%. Despite this avalanche of cash, one American in ten has no cover and American life expectancy, at 79, is four years worse than Italy’s. The Affordable Care Act of 2010, better known as Obamacare, was supposed to deal with these problems. Five years later, Barack Obama’s most important domestic reform is unpopular (56% of Americans disapprove of it) and under renewed attack. This week the Supreme Court heard yet another legal challenge. In King v Burwell, the law’s opponents argue that its subsidies for individuals buying health insurance on the federally organised online exchanges are illegal (see article). They are unlikely to prevail but, if they do, the law will be gutted and the insurance market thrown into turmoil. That would be a terrible shame, for Obamacare appears to be working...
      PubDate: Thu, 05 March 2015 15:49:00 GM
       
  • Seize the day
    • Abstract: ON THE face of it, prospects for lasting peace in Afghanistan look as bleak as at any time in the 13 years since NATO-led forces ousted the Taliban—only for them to regroup in a long, bloody insurgency. Last year a record 3,700 civilians died in the fighting. As America and other NATO countries pull out their troops, Afghanistan’s own army, less well trained and equipped, is being hammered. It has struggled to find enough recruits to replace those who die or desert. And now the Taliban and other insurgents are preparing for a spring offensive. Fortunately, this grim picture is not the whole story. The bright spot is the efforts made by Ashraf Ghani, Afghanistan’s president since September, to improve his country’s tattered dealings with Pakistan. Closer relations hold out the tantalising possibility of making peace with the Taliban. From meddling to making Peace in Afghanistan is inconceivable without help from Pakistan. Machinations by the Pakistani army’s spy agency in the 1990s helped bring the Taliban to power. The country’s military establishment still backs them and related groups, such as the Haqqani...
      PubDate: Thu, 05 March 2015 15:49:00 GM
       
  • The new nuclear age
    • Abstract: WITHIN the next few weeks, after years of stalling and evasion, Iran may at last agree to curb its nuclear programme. In exchange for relief from sanctions it will accept, in principle, that it should allow intrusive inspections and limit how much uranium will cascade through its centrifuges. After 2025 Iran will gradually be allowed to expand its efforts. It insists these are peaceful, but the world is convinced they are designed to produce a nuclear weapon. In a barnstorming speech to America’s Congress on March 3rd, Binyamin Netanyahu, Israel’s prime minister, fulminated against the prospect of such a deal (see article). Because it is temporary and leaves much of the Iranian programme intact, he said, it merely “paves Iran’s path to the bomb”. Determined and malevolent, a nuclear Iran would put the world under the shadow of nuclear war. Mr Netanyahu is wrong about the deal. It is the best on offer and much better than no deal at all, which would lead to stalemate, cheating and,...
      PubDate: Thu, 05 March 2015 09:48:09 GM
       
 
 
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