Economist 4/24/15

  1. Busking has not been a crime on New York city’s streets since 1970. In 1985 a New York court ruled that banning subway music was unconstitutional, too. Yet some police still think buskers need a permit. Matthew Christian, a violinist, started a group called BuskNY after he was arrested, in the hope of stopping future wrongful arrests of buskers. Since early 2014 buskers have seen an uptick in harassment by police, Mr Christian says.Another problem for them is that people are carrying less cash.The Busking Project, an advocacy group, has created a digital toolkit to let performers accept cashless payments. It is early days, but people are donating between $3 and $20 and—crucially—staying in touch afterwards. The project is also developing an app that would allow customers to buy a performer’s music from their phones.
  2. AMERICA’S unemployment rate is 5.5%. By historical standards, that is low. It is also falling rapidly: unemployment is down more than a percentage point from a year ago. Economic theory suggests that in such circumstances, workers should begin to enjoy healthier pay rises.Yet firms in America seem not to have got the message. Inflation-adjusted wages for typical workers are stagnant. In fact, they have barely grown in the past five years; average hourly earnings rose 2% year-on-year in February of 2015: about the same as in February of 2010.The biggest reason for sluggish wages, however, remains what it has been for most of recent history: America’s sickly labour market. Unemployment is low, but other measures of labour-market “slack” paint a much bleaker picture. The number of workers who work part-time but would rather be full-time is still much higher than before the recession hit.
  3. The purpose of TRAI’s (Telecom Regulatory Authority of India) paper was to ask whether “over-the-top” services such as data, internet telephony and instant messaging, which rely on mobile networks’ data connections and which in some cases compete with those networks’ basic call and text services, should be treated differently from other traffic. Bharti Airtel, India’s biggest operator, recently launched a scheme that gives customers free access to a select group of data services.But argues that Airtel’s differential pricing means it is not being neutral between providers of online content, and that consumer choice will suffer.The industry’s poor profitability, the result of intense competition, might indeed be boosted if it were allowed to charge variable prices for data traffic. But its squeezed profits also mean a lack of money to invest in improving call quality and extending mobile coverage.
  4. Petrobras, the state-controlled oil company of Brazil said that graft had cost it 6.2 billion reais ($2.1 billion). Other charges included a bigger-than-expected write-down of 44.6 billion reais, mainly on a flagship petrochemical complex and a big refinery. The net loss was 21.6 billion reais in 2014. The previous management’s borrowing binge left Petrobras as the most indebted company in the world, and—when the scandal broke—an outcast from the capital markets.The company’s future does not lie just with its management. Politicians must not only stop stealing: they must cease interfering too. President Dilma Rousseff’s left-wing Workers’ Party forced Petrobras to sell imported petrol at a loss to keep pump prices low. That made the company bleed cash. The government has since let it raise prices, but Petrobras still suffers political pressure, such as demands for big dividends, which help bolster Brazil’s threadbare public finances.
  5. China has overtaken America as the world’s largest car market, and it has contributed between a third and a half of the global profits of many big automobile manufacturers in recent years. Like BMW, other foreign firms are also betting heavily that the good times will continue by expanding production capacity in the joint ventures that the Chinese government requires them to form with domestic firms. China is the largest market in the world for the BMW’s big 5 Series and 7 Series models, and source of perhaps half of its global profits in recent years. And yet the hard truth is that these firms may now be headed for a car crash, shattering their dreams of never-ending profits. The first reason for this is that sales growth is slowing. The days of double-digit annual increases are over.A rough rule of thumb in carmaking is that assembly plants need to be working above about 75% capacity, assuming two eight-hour shifts each normal working day, to be profitable. In contrast the average for Chinese assembly plants has now slipped to below 70%.A handful of the best state-owned carmakers—like Shanghai Automotive, which has joint ventures with both GM and VW—do make handsome profits. However, they are viable only because the government forces foreigners into these joint ventures.

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