Economist 2/24/15

  1. SMOKING cannabis becomes legal today in Alaska, the latest state to lift its prohibition of the drug after Colorado and Washington, which took the plunge last year. Alaskans over 21 can now grow up to six of their own plants, share up to an ounce (28g) of harvested pot, and smoke as much as they like in private without breaking the law. Selling the stuff commercially will become legal next year, once the state authorities have hammered out a set of rules to regulate the business.The high price of illegal pot in Alaska means that the legal market ought to be able to undercut the street dealers pretty easily. In Colorado, where illegal cannabis is much cheaper than in Alaska, licensed dispensaries sell a product that cannot quite beat the illegal sort in terms of price (though it eclipses it in terms of quality).There doesn’t seem to be much of a correlation between price and consumption at the moment: in spite of its high prices, Alaska currently has some of the highest rates of marijuana usage in the country.he second reason Alaska is interesting is that it is the first Republican state to legalise.
  2. Of the 1 billion vehicles on the world’s roads fewer than 1m are powered by electricity alone. Battery power can cut the bills considerably. An electric car with a range of 90 miles, typical for most new models, can cost as little as $2 to recharge. But buyers are not looking for cheap motoring. Electric cars are pricey. Compared to diesel and petrol models with super-frugal new internal combustion engines, even after the generous subsidies that many governments provide, the upfront costs are prohibitive. Electric cars attract some buyers not because they are cheap but because they are expensive. They serve as a badge for committed greens to demonstrate to the world that they care about the environment no matter what the cost.Over time the cost of the vehicles will be far more influential than the oil price.
  3. AFTER several years of glittering profits, the prospects for Prada, an Italian maker of luxury goods, are starting to look less fetching.But some analysts are worrying that the firm has been taking its eyes off profitability in favour of revenue growth. Over the past few years, Prada has been investing heavily in new bricks and mortar stores—with more than 50 opening in the past 12 months alone.Store-building plans have been scaled back: only around half the 65 outlets the group had in the pipeline for 2015 will now open this year.Prada has taken advantage of the rise in prices—as much as 60% in a decade—for shoes, perfume and handbags, the areas of luxury that are most profitable.Analysts have started to worry that luxury firms, with their focus on high-end products and cheaper diffusion brands, are ignoring the middle of the market in favour of the top and the bottom.
  4. MEASLES is the greatest vaccine-preventable killer of children in the world today. Nine out of ten people who are not immunised will contract the virus if they share the same living space with an infected person. In 1980 the disease was responsible for 2.6m deaths globally. By 2013, when 84% of children aged 12 months or less received a dose of the vaccine, the death toll had fallen to 145,700.But worries about a supposed link between the measles-mumps-rubella (or MMR) vaccine and autism, though scientifically discredited, have led to a drop in immunisation rates in the rich world over the last ten years.There were over 600 cases in America last year—more than in the prior five years combined—and another 154 in first 51 days of 2015.The average vaccination rate in America is a troubling 91%, but among some communities it has fallen distressingly low.
  5. FOR central banks in the rich world, two is a magic number. If prices rise at 2% a year, most shoppers can more or less ignore their slow ascent. And a touch of inflation is hugely helpful: it gives bosses a way to nudge unproductive workers—a pay freeze actually means a 2% cut—and an incentive to invest their earnings.Today 15 of the area’s 19 members are in deflation; the highest inflation rate, in Austria, is just 1%.Oil explains a lot. A year ago a barrel of Brent crude cost $110; today it is $60 (see article). This 45% price cut is trickling through economies.But even if it is short-lived, this sort of deflation can dull an economy. With inflation at 2% a boss sitting on a cash pile has a clear choice: invest it in something that returns more or give it back to the shareholders as dividends. Either step—boosting investment or investors’ incomes—is a good one. But when prices flatline, risk-averse bosses can justifiably sit on funds.Central banks are at last leaping into action. The European Central Bank (ECB) has been late to the game on quantitative easing (QE) but will begin creating money to buy government debt in March. The Bank of Japan is committed to as much QE as it takes to get inflation back to 2%.
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