Economist 5/7/15

  1. SEVEN weeks after winning an hard-fought victory in Israel’s election, and just hours before a constitutional deadline, Binyamin Netanyahu informed President Reuven Rivlin on May 6th that he had succeeded—just—in forming a new government.He had been negotiating with the right-wing and religious parties to build a solid block of 67 seats in the 120-member Knesset. In the event, he has ended up with the slimmest of possible majorities: 61 seats.In the final 48 hours of negotiations, Naftali Bennett, the leader of Habayit Hayehudi (Jewish Home), the last party to sign an agreement, held the fate of the new Netanyahu government in his hands. Mr Netanyahu was forced to surrender the Justice Ministry, which is now set to be headed by Mr Bennett’s ally, Ayelet Shaked.Mr Netanyahu was forced to surrender the Justice Ministry, which is now set to be headed by Mr Bennett’s ally, Ayelet Shaked.A fierce critic of the Supreme Court’s powers to strike down legislation, Ms Shaked will spearhead the right wing’s campaign to diminish the court’s role.
  2. A raft of “automated wealth managers” is now available, on the premise that algorithms can offer sound financial advice for a small fraction of the price of a real-life adviser. With names that suggest a mix of blue-blooded discretion and startup ebullience—Wealthfront, Betterment, Personal Capital, FutureAdvisor—they are growing at a rapid clip. The platforms work by asking customers a few questions about who they are and what they are saving for. Applying textbook techniques for building up a balanced portfolio—more stable bonds for someone about to retire, more volatile equities for a younger investor, and so on—the algorithm suggests a mix of assets to invest in.  Nearly all plump for around a dozen index funds which cheaply track major bond or stock indices such as the S&P500. They keep clear of mutual funds, let alone individual company shares. A major selling point for robo-advisers is that they promise they will not make any money from their customers other than through the annual fee. That is refreshing in an industry rife with potential conflicts of interest. Banks, for instance, often recommend that their clients invest in funds run by their asset-management subsidiaries.Regulation has, if anything, helped the robo-advisers get off the ground. If one of them were to go out of business, investors would not lose any money.The robo-advisers are doubling their assets under management every few months, but their combined assets still run to less than $20 billion, against $17 trillion for traditional managers.Vanguard, the group that puts together the low-fee funds that most robo-advisers recommend, is launching its own low-cost advisory service.  Charles Schwab also rolled out its own automated wealth service.
  3. FOR years, Washington, DC’s leaders have dreamed of renovating, expanding and generally revolutionising Union Station, the city’s main rail hub. Last month, the Union Station Redevelopment Corporation (USRC), which manages the 107-year-old terminus, announced that it had selected Beyer Blinder Belle, the architecture firm behind the late-1990s overhaul of Grand Central station in New York, to dream up what its Washington, DC cousin will look like a decade or so from now.Yet these are exactly the sorts of infrastructure projects that America seems to be able to complete. It is easy to see why. Train stations are big and visible. Track-straightening and bridge maintenance are similar investments: crucial but, for too many people, boring.
  4. In April NGOs and think-tanks in Mexico lobbied successfully for laws opening up greater access to government information. They also launched a “civil observatory” to monitor the building of a vast new airport near Mexico City; the government says it will cost 169 billion pesos ($11 billion), but has not said where the money will come from.The NGOs’ methods include “name and shame” campaigns that play well on social media. Ms Ríos’s outfit, México ¿Cómo Vamos? (How are we doing, Mexico?), has designed an anti-corruption “breathalyser”. It shows in real time which states have and have not approved the anti-corruption reform that will, for the first time, subject them to federal audits.Recently, two NGOs, the Mexican Competitiveness Institute (IMCO) and Transparencia Mexicana, created a platform called Three out of Three, which encourages candidates in mid-term elections on June 7th to go beyond legal requirements and make public their assets, interests and proof of tax payments. It has not been easy for NGOs to attain this influence in a country where the technocratic elite used almost automatically to join the government.

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