Economist 2/18/15

  1. American farm subsidies are egregiously expensive, harvesting $20 billion a year from taxpayers’ pockets. Most of the money goes to big, rich farmers producing staple commodities such as corn and soyabeans in states such as Iowa.To this day, to be treated as a farmer in America doesn’t necessarily require you to grow any crops.Between 2008 and 2012, $10.6m was paid to farmers who had been dead for over a year.Few politicians are inclined to vote against farm subsidies: though farmers make up only a small number of voters, even in agricultural states, they are loud and organised enough to punish lawmakers who vote against a farm bill.The 2014 bill, which passed with 68 votes in the Senate and comfortably in the House, at least nodded to reform. Most importantly Congress abolished direct payments based on land ownership. Instead, farmers now get more subsidised insurance, and new payments which are linked to past crop prices and productivity. Those not “actively engaged” in farming are in theory banned from collecting subsidies—though Congress delegated the task of defining who is really a farmer to Mr Vilsack’s department.
  2. About 1,140 children were in detention on the mainland, Nauru and Christmas Island, an Australian territory in the Indian Ocean. Most were from Iran, Sri Lanka, Vietnam, Iraq, Afghanistan and Somalia; many were stateless.Over the 15 months to March 2014, they document 233 assaults and 33 reported sexual assaults against children in these camps. Authorities have since released most of these into Australia (including more than 100 over the past two weeks) while their asylum claims are heard. That still leaves more than 300 children in detention, including 119 in Nauru, where the Australian camps are a mainstay of the economy.Facing a thorny election in 2001, John Howard, Mr Abbott’s predecessor as Liberal prime minister, opened the offshore detention camps in Nauru and on Manus Island in Papua New Guinea. Four years later, Mr Howard released all child detainees and their families into Australia—only after members of his own party, who had demanded a more humanitarian policy.Kevin Rudd, when Labor prime minister, banished all boat people to the offshore camps while contesting the last election, in 2013.
  3. According to Real Capital Analytics, an information provider, Europe saw €213 billion ($241 billion) of commercial-property transactions last year, up by 13% from 2013 and the highest annual total since 2007. The number of transactions more than doubled in Spain last year and there were big gains in Switzerland and the Netherlands, too.Europe’s rebound outpaced the 9% rise in global property transactions, although not a 15% rise in American deals.Office buildings and hotels were the most active sectors worldwide.Yields of 5% on American property or even 4% on office blocks in central London look attractive.The long-term returns from property look very respectable. In the ten years to end-September, American commercial property delivered a total annualised return of 7.9%. That compares with the 8.1% annual return (including dividends) achieved by American equities over the same period.Property is vulnerable to three things: a rise in interest rates, a downturn in the economy that hits demand, and a burst of speculative building that leads to oversupply. On the first point, central banks are still cutting rates in much of the world.
  4. A recent survey by Mexicanos Primero, an education NGO, found that four-fifths of secondary-school graduates in Mexico  had “absolutely no knowledge” of English, despite having spent at least 360 hours learning it in secondary school. English teachers were not much better: one in seven had no English whatsoever.Common problems include bad teachers hired via written tests rather than oral ones, and an outmoded approach that sees English as a foreign language to be taught about, rather than a lingua franca to be taught in. Just over 1m English-language staff teach over 200m Chinese pupils, a heroic, if mind-boggling, teacher-pupil ratio.Uruguay takes a different, and more novel, approach. It makes up for its dearth of English-speaking teachers by contracting Filipinos who teach via videoconferencing from Manila to pupils’ laptops or tablets in Montevideo.
  5. ON FEBRUARY 5th, the day the beleaguered chain of Radio Shack electronics stores filed for Chapter 11 bankruptcy.At the peak of its popularity in the 1970s, Radio Shack (owned since 1963 by Tandy Corporation of Fort Worth, Texas) had over 7,000 neighbourhood stores spread across three continents.Things started going pear-shaped for suppliers of electronics kits in the 1980s. The seeds had been sown a decade earlier when Radio Shack—spurred on by its success with products for citizens-band radio—introduced the TRS-80 personal computer.The “trash-eighty” hit the market around the same time as the first Commodore and Apple computers and, for a while, handily outsold both of them.From then on, Radio Shack became hooked on pricier, pre-assembled products. When kits and components dominated its business, the average sale in Radio Shack’s busy little stores was said to be $30. By contrast, the first TRS-80 sold for $600. This was  well beyond the reach of Radio Shack’s hobbyist following. Radio Shack’s migration from components to commodity products gathered pace after AT&T, America’s telephone monopoly, was dismantled in 1982. Subscribers then became free to buy their own telephone equipment, instead of having to rent it expensively from Ma Bell.Since its founding in 1985, Fry’s has managed to do all that Radio Shack ever dreamed about: sell consumer electronics, household appliances, mobile phones, computer hardware and software—as well as electronic components and circuit boards, while also offering in-store hobbyist advice and repair work.
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