Economist 7/31/14

  1. Satiated diners have a one-track mind: pay for the meal and leave as quickly as possible. It was discovered that it can take more than ten minutes for a party to pay for the food at the end of a meal. For groups bigger than six, each diner adds another 90 seconds to the transaction., Flypay, claims to cut that time down to a minute. Integrating with restaurants’ existing payment systems, Flypay allows customers to pay with their phones by downloading an app and scanning a QR code on their table, or waving their handset over a near field communication (NFC) tag.Using wireless (Bluetooth) technology, Cover recognises when a diner enters a participating restaurant. Connected to a pre-registered credit or debit card, the app allows diners to add a tip, split their bill, and pay for their food without waiting. Cover do not disclose the precise share of the bill it takes, but Mr Egerman explains it is equal to or less than the standard New York card handling fee, between 3.2% and 4.7%.
  2. IT WAS in a rather brusque and unceremonious fashion that the Cenci Journalism Project, a crowdsourced and volunteer-run media translation site, was systematically removed this month from the Chinese internet. Its website was blocked and erased from domestic search engines. Its private discussion forums were shut down; the personal social media accounts of its founder and executive editor were deleted;Mr Kang soon discovered that, in the new and tightly restricted media environment of the Xi Jinping administration, it is no longer the content that matters. It is the format and the concept: citizen journalists providing diverse perspectives. Since Xi Jinping took over as China’s president in March 2013, Chinese journalists have operated under increasingly tighter media restrictions.
  3. The border  is unmarked around the lake, which abutted Cameroon, Chad, Niger and Nigeria until it began to dry up and shrink over the past few decades.Boko Haram, the equally murderous Nigerian outfit that is striving to expand its base beyond its original area south-west of Lake Chad.. Chad is sending ever more troops to the border. Checkpoints and military vehicles are visible on the roads outside N’Djamena, which is close to the lake.Oil-rich Chad has one of the fiercest armies on the continent. It has deployed peacekeepers in Mali and the Central African Republic (CAR). Nigeria’s armed forces are plagued with corruption; its rates of desertion are high. Niger is poor even by regional standards and militarily unable to cope. The weakest link in the region, however, is Cameroon.Nigeria closed its border with it in February and has called its government negligent. Unlike Chad and Niger, it does not allow troops from neighbouring countries the right of hot pursuit across its border. That may be partly because Cameroon and Nigeria lack an agreed frontier due to a long-running territorial dispute; the UN’s attempt to mark the 2,100km boundary, which cuts across mountains and deserts, may be the biggest project of its kind in the world. In May Cameroon at last deployed a thousand troops to the border region.
  4. Whole Food’s shares have fallen by more than 40% since hitting a peak last October, in a period when stockmarkets have been strong.The problem is that at Whole Foods, shoppers have been paying way over the cost of regular produce, and its success in getting them to do so has now attracted a lot of competitors, from rival organics chains like Sprouts and Trader Joe’s to mass-market retailers like Walmart and Costco. As a result, the price premium for organic produce is crashing down.
  5. Reliance invests more in India and pays more corporation tax there than any other firm. Without Reliance, which generates 15% of the country’s exports, the balance of payments would be a wreck.Yet in other ways, Reliance is a rotten role model for corporate India. Reliance is a patriarchy with a lightweight board. Although a listed firm, it makes payments equivalent to a quarter of its pre-tax profits to related entities, mainly privately held by the Ambani family. Its ultimate ownership and beneficiaries are obscured by a mesh of holding vehicles that India’s securities regulator says it does not fully understand. The regulator accuses the firm of making illegal gains from trading derivatives linked to its own subsidiary’s shares (an accusation Reliance is contesting). Some foreign investors, put off by the lack of transparency, shy away. Mr Ambani seems to believe that Reliance does not need to reform. He is wrong, for two reasons. First, India’s economy is opening up, and the firms most exposed to global competition—tech giants, for instance—have the world-class governance and open cultures. 

Economist 7/30/14

  1. JEANNE CALMENT (pictured), who lived for 122 years and 164 days (longer than any other person), said the secret to her longevity was a diet rich in olive oil, port wine and chocolate. She smoked until the age of 117.Old age is also a leading risk factor for many common illnesses, such as cancer and heart disease. Tackling ageing, therefore, is seen as a way to combat many diseases at once. This is the motivation behind Google’s anti-ageing startup called Calico, which was founded last year and is led by Art Levinson.The chances of a person living to 80 are based mostly on behaviour—don’t smoke, eat well and exercise—but the chances of living beyond that are based largely on genetics. A more realistic hope is that anti-ageing research leads to lower health-care costs. One of the characteristics of the very old is that they tend to be healthy right up until their deaths. They therefore cost health-care systems less than most old people, especially those suffering from chronic diseases.
  2. INDA GREENHOUSE went “out on a limb” last week and predicted that the Supreme Court will refuse to hear a challenge to an appeals court’s ruling upholding the affirmative action admissions policy at the University of Texas.on July 15th demonstrated convincingly that the University of Texas pursued its goal of educational diversity with holistic, individualised assessments of candidates’ files and considered race in only highly circumscribed ways. This approach is consistent with the Supreme Court’s long-standing position that while rigid quotas are unconstitutional, using race as one “plus-factor” among many in a candidate’s file is a permissible way to advance the “compelling state interest” of educational diversity.
  3. The national brewers’ association declares Germany “European Champion”. It brewed 94.4m hectolitres last year, beaten only by China, America and Brazil.At unification in 1990, annual consumption averaged 148 litres per head; last year it was just 107 litres. Instead, they are turning to wine, which has a higher status.Rory Lawton, an Irish beer expert in Berlin, thinks Germany’sReinheitsgebot, or beer-purity law, is discouraging innovation. The 1516 law was intended to make it easier to tax beer, through levies on its permitted ingredients: malted barley, hops, water and, later, yeast. Centuries on, brewers began using the Reinheitsgebot as a marketing tool to promote their products as pure and authentic. If anything else is put into a brew made in Germany it cannot be called Bier, but must be labelled “alcoholic malt drink”. Since the restriction on experimenting with ingredients has meant that the country has largely missed out on the American-led “craft beer” craze.
  4. On July 22ndBill Ackman the billionaire boss of Pershing Square, a hedge fund, delivered a three-hour presentation that he said would kill off Herbalife, the seller of nutritional shakes and foods by showing it to be a criminal enterprise that preys on the poor. Neither side disputes that Herbalife’s main retail channel has a structure in which participants share in revenues generated by the salespeople they recruit, as well as revenues generated by the recruits of those recruits. But Mr Ackman says his investigations show that the vast majority of nutrition-club “customers” are people paying through their consumption of Herbalife products for training they need to qualify to open a nutrition club of their own, in the hope (for most, false hope, he says) that this will provide a decent living and perhaps one day make them rich.

Economist 7/29/14

  1. There are more than 2m registered drug users in China (up from about 70,000 in 1989) but the head of China’s drugs control bureau says the actual figure is more like 10m. Heroin remains the most popular narcotic, accounting for 60% of registered users, but its take-up by new users is declining. Instead, people are opting for synthetically manufactured drugs, such as K, ecstasy and methamphetamine (“meth”). In 2005 nearly 7% of new registered addicts used synthetic drugs, according to China’s National Narcotics Control Commission. By 2013 that had risen to 40%.Meth is especially addictive. It is also easily manufactured. It has become the scourge of China’s anti-drug departments and of neighbouring countries. In 2012 Chinese authorities seized 102m methamphetamine pills, more than double the haul in 2009.Hundreds of laboratories clustered around Chinese ports fulfil the orders for “legal highs” from dealers in America and Europe. Global courier services ship the orders. China also produces many of the chemicals used in banned drugs. 
  2. GRUBHUB, an online restaurant-delivery-service, says it has seen a big increase in the number of orders it receives from hotel guests. This, reports Skift, has coincided with a 9.5% drop in the revenue hotels made from room service between 2007 and 2012.The best way for hotels to fight back, you might think, would be to offer more reasonable prices for room service.According to Christopher Nassetta, the boss of Hilton, it doesn’t even cover its costs when it sells such eye-poppingly expensive salty snacks. The reason? Because too few people own up to eating them when they check out.
  3. On July 21st Frans Timmermans, the Dutch foreign minister, vowed that his country will not rest until justice is served for the 298 civilians (over half of them Dutch) killed on board flight MH17, the Malaysia Airlines flight which was shot down over eastern Ukraine. One of the few things most legal experts agree on is that there are some 13 different jurisdictions under which both a criminal and a civil prosecution might fall. This includes the legal systems of the 11 nationalities of the victims (including the carrier country, Malaysia), along with Ukrainian law and international law.Two potential links to the Russian state will need to be examined: whether those who committed the attack were either Russian forces or under Russian direction or control, and whether or not Russia supplied the weapons which brought down the plane.
  4. On July 28th the Permanent Court of Arbitration in the Hague demonstrated that its triumphs may come at a price: the court ruled that the 2003 prosecution of Mikhail Khodorkovsky and the dismantling of his Yukos oil company was in violation of international law. It awarded former Yukos shareholders $50 billion, roughly half what they asked for, but still the largest such compensation package in history.Russia plans to appeal. But it has shaky legal ground to do so. The best it can try to argue is that it is not a party to the Energy Charter Treaty, under which the court made its ruling, but that is unlikely to yield much.With $175 billion in state reserves, Russia has enough cash to pay, yet it is a sizeable sum all the same. The Russian business daily RBK calculated that $50 billion was equal to 13% of state budget revenue for 2014.
  5. Last year China’s mortality rate for children under five years old was just one-fifth the rate it was in 1991, down from 61 deaths per 1,000 live births to 12. The maternal mortality rate has also dropped substantially—by 71%—since 1991. In 1992, one in ten Chinese children under five contracted hepatitis B. Today fewer than one in 100 of them carry the disease.China was one of ten countries to have made exceptional progress in reducing infant and maternal mortality.China’s improvement lies in two basic, connected areas: better care at birth and countrywide immunisation. Since 2000 the government has offered subsidies to mothers who give birth in hospitals, thereby reducing health dangers from complications—especially the risk of neonatal tetanus.From 2001 to 2007, the share of births that took place in hospitals rose by 46%, making it easier to give a hepatitis B vaccine immediately. China now has one of the highest usage rates of the birth dose of the vaccine in the world: 96% of Chinese babies receive it on their first day of life. China and the WHO claim that about 95% of children are vaccinated for measles, rubella and polio.

Economist 7/28/14

  1. When Tony Abbott, Australia’s prime minister, boasted on June 19th that no asylum-seekers had reached Australia by boat for six months. It did not last. On July 27th the government itself landed 157 Sri Lankan Tamil asylum-seekers on the Australian mainland. Australian authorities had intercepted them at sea a month earlier when they were trying to reach Australia. Lawyers for the boat people are challenging the government’s “stop the boats” policy before Australia’s High Court. Before the boat people’s transfer to the Australian mainland, the High Court had been due to hear their case on August 5th. Partly because they were no longer being held at sea, a judge on July 28th cancelled that hearing.
  2. LIBERIA has closed most of its borders, banned public gatherings and announced quarantines of some communities in an effort to contain an outbreak of the Ebola virus. So far this year there have been 1,201 confirmed, suspected or probable cases of the disease in west Africa. Over 670 people have died. Ebola has no vaccine or cure, and kills up to 90% of those infected. It is transmitted to people by wild animals or by other infected patients. Fruit bats, often eaten by people living in West Africa, are thought to be a host for the virus, which starts with flu-like symptoms but can impair kidney and liver function, and in severe cases damages blood cells, leading to external and internal bleeding. Last week Nigeria reported its first probable case, and was put on high alert after a Liberian man died in its most populous city, Lagos.
  3. Catalan is spoken informally in southern France, but the region is dominated officially by French. Nearby Andorra, a microstate sitting between Spain and France, is the only officially Catalan-speaking state in the world, and despite mass tourism, public signage tends to be only in Catalan. It is in Spain that Catalan is the most controversial. Catalan is the official language of the autonomous province of Catalonia. (Nearly identical Valencian is spoken in Valencia.) Linguists, however, usually say two varieties are separate languages rather than mere dialects when the speakers of one cannot understand normal full-speed speech in the other. By this standard, Catalan is clearly a language.The second complaint is that Spain has given Catalan more and more privileges in the semi-autonomous province of Catalonia. Schooling in Catalonia is in Catalan, and pupils from other regions are expected to learn quickly from immersion. Yet Catalan politicians are angling for a vote on full sovereignty. The government in Madrid insists that this is illegal under the constitution, which declares the indivisibility of the nation.As Johnson wrote in the context of Ukraine, national multilingualism is expensive, in budgetary terms and in the trade-off against other priorities—but it is cheaper than the breakup of a country. And the cheapest solution is merely an attitudinal one: all Spaniards should treat Galician, Basque and Catalan not as regional languages.
  4. SINCE President Xi Jinping launched his anti-corruption campaign at the end of 2012, the question has been how high he would aim. On July 29th an emphatic answer came with the news that Zhou Yongkang was under investigation by the Communist Party for “serious violations of discipline”—for which, read corruption.Mr Zhou was once one of the most feared and powerful men in the land. Until two years ago he was a member of the Politburo’s ruling standing committee; in charge of the state’s vast security apparatus, he controlled a budget bigger than the one publicly declared by the army. Mr Xi and his able sideman, Wang Qishan, who runs the anti-corruption campaign, appear deadly serious about graft. In the first five months of this year, the party says, nearly 63,000 officials have been punished. The total for last year exceeded 180,000. Included in the haul are three-dozen ministers, provincial leaders or top executives at state-owned  companies.. But the two men also seem to think that graft provides an existential threat to the Communist Party’s rule. And they are probably right. Ordinary people are disgusted with party corruption, and going after corrupt “tigers” underpins Mr Xi’s popularity.
  5. In 2010, the average adult in Latin America and the Caribbean had 10.2 years of schooling only a couple of years less than in developed countries. The problem is that Latin Americans don’t learn enough. The international test known as PISA shows that at 15 they are more than two years behind their peers in developed countries in maths and reading comprehension. The main reason for Latin America’s educational failure is simple. The region churns out large numbers of teachers recruited from less-bright school leavers. It trains them badly and pays them peanuts (between 10% and 50% less than other professionals). So they teach badly. A World Bank study found that the region’s teachers spent less than 65% of their time in class actually teaching, compared with a benchmark of good practice in schools in the United States of 85%.The next step is to introduce in-service evaluation of teachers, and to link pay and promotion to performance instead of seniority. Half a dozen places, including Chile, Ecuador, Mexico, Peru and Rio de Janeiro, have passed or proposed laws to do this.

Economist 7/17/14

  1. Verizon, a telecoms company, studied 621 data breaches in 2012 in which 44m records were lost and found that in four out of five cases where hackers had struck they had been able to guess passwords easily—or had stolen them.Technology can help. Darktrace, a British startup, is one of several firms touting continuous network monitoring software. This uses complex algorithms and mathematical models to map what normal daily behaviour on a network looks like and then flags up anomalies, such as a computer that suddenly starts downloading unusually large data files. To catch hackers early and create defences to keep them out, some companies are systematically studying the habits of highly organised groups.. Goldman has built a threat-management centre staffed by ex-spooks who scan cyberspace.Facebook, a prime target for hackers and spammers, has built ThreatData, a computer system that sucks in vast amounts of information about threats from a wide range of sources, including lists of malicious websites. Big banks in America have been doing this for some time; indeed, the retailers’ ISAC is modelled after the financial-services version, FS-ISAC Information Sharing and Analysis Centre, which was set up in 1999. The finance group now has 4,700 members and in recent years has helped co-ordinate banks’ defences against massive DDoS attacks.  The Australian Signals Directorate, the equivalent of Britain’s Government Communications Headquarters (GCHQ), says that at least 85% of targeted breaches it sees could be prevented by just four measures: whitelisting software applications; regularly patching widely used software such as PDF viewers, web browsers and Microsoft Office; doing the same for operating systems; and restricting administrator privileges (granting control over a system) to those who really need them to do their job.
  2. As yet airlines are not allowed standing sections on their planes. So it should be of little surprise that Airbus has applied for a patent for the next-most bovine configuration: a “motorcycle saddle” for short-haul cabins. Certainly no tray-tables, underseat storage or pockets to keep your sick bag in. This, it reckons, will allow airlines to wedge a third more people on to a plane—that’s an extra 63 passengers on one of Ryanair’s Boeing 737-800s.
  3. Israel’s arms manufacturers have devised an anti-missile system, offering what they call an “Iron Dome” overhead.he $1-billion programme, subsidised by the United States, has served Israel well in Operation Protective Edge.. Palestinian militants have lobbed almost 1,000 missiles into Israel, but Iron Dome’s interceptors have struck down 87% of their targets, according to the Israelis.Iron Dome is the short-range component of Israel’s three-tier anti-missile defences. As soon as enemy rockets are launched, Iron Dome’s radar tracks their trajectory, calculates their impact point and launches a missile which within seconds locks onto the rocket and shoots it down. Each interception costs about $60,000, but its architects claim to have saved Israel billions.Problems do remain: even when rockets are successfully shot down, potentially lethal shrapnel falls from the sky. 
  4. On June 24th Citizen Lab, a Toronto-based cyberspace security outfit, said it had detected specialised spyware being used in Saudi Arabia—the first time it has seen such sophisticated software in that country. The software, known as a remote control device (RCS), can hack into mobile phones, giving the government access to all the user’s information—what he or she has looked at or written online and the call history, for example. Unlike basic surveillance software, the RCS can also transform the device into a monitoring tool by switching on and controlling the camera and microphone, without the user noticing.Citizen Lab says the software was disguised as a copy of a mobile phone news application called Qatif Today.Citizen Lab is unable to tell how many devices have been infected, but has linked the RCS to the legal Italian spyware providers known as Hacking Team.  Hacking Team’s website says it provides the technology “to the worldwide law enforcement and intelligence communities”.   In October 2012 similar software known as FinFisher, manufactured by Anglo-German company Gamma, was linked to the monitoring of high profile dissidents in Bahrain.
  5.  On July 15th Mr Cook and Virginia Rometty ,the boss of IBM, announced that their companies( Apple and IBM) are working together to develop more than 100 business-specific mobile applications for Apple’s iPhones and iPad tablet computers. IBM’s employees will also serve as a sales force for promoting the use of Apple’s gear inside firms and provide on-site service for its devices.

Economist 7/16/14

  1. Now it is Citicorp’s turn: early on July 14th it preempted the government’s usual self-congratulatory announcement by disclosing a $7 billion payment to settle fraud charges linked to its sale of residential mortgage-backed securities between 2003 and 2008. But the statement is brief and does not assign culpability to any individuals.The last point in particular touches an increasingly sensitive nerve: the settlement once again places the burden of penalties on current shareholders, employees and clients—while extracting nothing from those who were involved. How the proceeds will be used is controversial as well.A record $4 billion will go to the Department of Justice. And some $2.5 billion will be used to lower interest rates for some borrowers, provide funds for housing groups to be used in counseling.
  2. THE CARDS have been stacked against Atlantic City for years. This resort city in New Jersey lost its casino monopoly in the region when neighbouring states began legalising gambling a decade ago. In 2012 Pennsylvania, which opened its first casino in 2006, edged out Atlantic City to become the nation’s second-largest gambling market. The casino industry is the city’s biggest employer, and roughly a quarter of all jobs are now in jeopardy. Four of Atlantic City’s dozen casinos have already announced plans to close their doors. ers. Atlantic County, which includes Atlantic City, represents 20% of the state’s tourism industry, and tourism is the third-most important industry to the state.
  3. After much speculation over the cause of a deadly set of explosions in Lagos last month, Boko Haram’s leader, Abubakar Shekau, released a video claiming responsibility.In laying claim to the bombing, Boko Haram has exacerbated concerns over its ability to reach deep into the south of the country. Lagos is the biggest city in Nigeria and the business centre for Africa’s largest economy.
  4. America’s homicide rate is certainly far higher than that of any country where guns are largely prohibited, such as Britain, France, Germany and Japan. Yet this rate is in decline, with firearm-related homicides falling 39% from 1993 to 2011, even as gun ownership remains widespread. And in New Hampshire, where guns are flaunted proudly, the rate of violent crime is among the lowest in the country, behind only Maine and Vermont, according to FBI figures.There are several reasons for New Hampshire’s particularly low rate of firearms-related crime. The mostly rural state has relatively high levels of education, income and employment.The state is also fairly ethnically and racially homogenous.The question then becomes what to do about places where gun violence is more common, such as Chicago, where urban poverty, poor schools, higher unemployment and racial friction create an often toxic mix.? Messrs Cook and Ludwig suggest a combination of solutions: make it costlier to get guns in high-crime areas; improve the records available for screening gun buyers (with more information on possible mental-health problems); keep a paper trail to help connect legal gun owners to illegal gun-use; and offer better law enforcement against illicit gun use.
  5.  Reynolds, America’s number two tobacco company, and Lorillard, the third-largest, took the more dramatic step of agreeing to merge. Reynolds is to pay $27.4 billion in cash and shares to form a combined company with $11 billion in sales. Its biggest shareholder, British American Tobacco, will spend $4.7 billion to maintain its 42% share in the merged firm. The transaction will reshape the American tobacco market, the world’s second-biggest by volume (after China). The main point of the merger is to bring Lorillard’s Newport brand, a menthol-flavoured cigarette that is especially popular among black and Hispanic smokers, into Reynolds’s domain. It is the number-two American cigarette and takes in more revenue than “original” Coke. It will be a more formidable competitor for tobacconists’ shelf space to Altria, Marlboro’s manufacturer.  Britain’s Imperial Tobacco will acquire Lorillard’s blu, the biggest brand of e-cigarettes (most analysts had thought that blu was one of the prizes that Reynolds coveted.