Economist 10/30/15

  1. Baltimore, a once-thriving port and factory town, has lost a third of its population since 1950, dropping to about 622,000 souls. Like other north-eastern cities, it has grappled with economic decline, shrinking tax rolls and the toxic legacy of race laws which corralled black residents in districts blighted by bad schools and crime. Urban-renewal projects have brought tourists and professionals back to some districts after decades of white flight. But one of Ms Rawlings-Blake’s favourite projects—to attract 10,000 new families to Baltimore—remains a far-off dream. The mayor wants more to stay put.Cash is not the main lure for refugees who reach America. The great gift is the immediate right to work, followed by a legal pathway to permanent residency and eventually citizenship.
  2. Ten big employers in the public and private sectors—including the civil service, HSBC and Deloitte—have agreed to start recruiting on a “name-blind” basis in Britain; others may also follow suit. In such schemes, those drawing up shortlists of applicants cannot see their names, with the aim of reducing racial and sexual bias.Discrimination against job applicants based on their names is well documented, particularly among ethnic minorities.However, the results from other trials are less clear. A second Swedish experiment found that only women, not immigrants, were boosted by anonymous recruitment.According to the IZA, experiments in the Netherlands showed no increase in the likelihood of ethnic-minority candidates being offered a job if their CVs were seen anonymously, suggesting that discrimination had crept in at the interview stage.Ensuring that a candidate is completely anonymous is also tricky.In places fraught with religious tension, such as Northern Ireland, the name of a school can reveal a candidate’s faith, while a few years missing on a CV may suggest maternity leave, and thus that the candidate is female.
  3. cashpoints (ATMs, to Americans) are still evolving. This week Citibank unveiled one that can identify account-holders by scanning their irises, thus doing away with codes—and with cards, for that matter. Customers request funds via their phones before confirming their identity with a scan.Nearly half a century since the cashpoint came into service, its origin is still disputed. Barclays, a British bank, often gets the credit for installing the first one, at its Enfield branch in 1967.In fact, cashpoints are still multiplying. Nearly 200,000 were installed in 2014, taking the global total to over 3m, says RBRLondon, a British consultancy. Much of the rise is in emerging markets; Europe and America are barely growing.
  4. Globally, the number of people in credit unions has doubled since 2000, from 108m to 217m. Savings are up by 130% in real terms (see chart).Credit unions first appeared in 19th century Germany. Like banks, they took deposits and made loans. But, crucially, they were owned by their members, who shared a “common bond”, such as a profession or place of residence. Earnings were returned to members in the form of better interest rates.In Europe, most of these early institutions evolved into co-operative networks, such as DZ Bank in Germany and Rabobank of the Netherlands, which are still owned by members but no longer serve a particular group.
  5. Three forces are driving the growth of credit unions. The first is simple: they offer higher rates than banks to savers and lower rates to borrowers. American credit unions charge an average rate of 2.66% on a three-year used-car loan, against 5.13% for banks.A second factor is the financial crisis.Without the same pressure to chase short-term profit, they took fewer risks. As the big banks were hit by failure and scandal, credit unions presented themselves as a more wholesome alternative.The third cause of growth is more lasting, In America, legal changes have allowed for multiple “common bonds”, helping credit unions to merge. Big credit unions are now professional operations with nationwide ATM networks.In America, bankers complain loudly about credit unions’ exemption from federal income tax. But even in Australia, where they don’t enjoy the same tax breaks, credit unions still offer competitive rates

Economist 10/29/15

  1. Chinese demographers had been worrying aloud for years about China’s rapidly ageing population and plunging birth rate and the impact these trends would have on the country’s economy. On October 29th the Communist Party finally ended the “one-child policy” that has been widely—often excessively—blamed for exacerbating these problems. Now couples will be allowed to have two.These have long allowed those living in the countryside to have two children under certain conditions—if the first child is a girl, for example. In urban areas, the party allowed couples to have two children if both parents were themselves only children. It relaxed this in 2013, allowing couples to have two if only one parent meets that requirement. Ethnic minorities (less than 10% of the population) are often allowed two or more.
  2. FOR the first time since Japan’s Fukushima disaster in 2011, the nuclear industry would have us believe it has something to celebrate. In October the United States licensed its first new plant in 20 years, in Tennessee, and Britain took a step further towards building its first nuclear-power station in a generation at Hinkley Point. Japan has recently restarted two of its 43 reactors that have been shut since 2011. And China, which put some of its nuclear building plans on hold after Fukushima, has unveiled plans to triple its nuclear capacity by 2020.But the nuclear landscape is divided in half. In parts of America—by far the world’s biggest user of nuclear power—the talk is of crisis, not celebration; in the north-east, fairly reliable nuclear-power plants are being shut. France, the backbone of Europe’s nuclear industry, plans to reduce the share of nuclear used to generate electricity from 75% to 50% in a decade. Germany intends to shut its remaining eight reactors by 2022, and this month Sweden closed four reactors in a week.The places where nuclear is more promising are those where it can find an ingredient almost as essential as uranium: state support.
  3. Its shiny, inflammable witch costumes probably have their origins in the ancient Celtic festival of Samhain, during which people marked the onset of winter by dressing up as evil spirits. Around the eighth century, the Christian church co-opted the festival. It became Hallows (or “Holy”) Day, on which Christians remembered dead relations and saints. Hallows Day began with a vigil held the evening before—hence Hallow E’en, a contraction of evening, which became Halloween. At this time, the poor would sing and pray for alms, a practice known as “souling”. Some think this was the precursor to modern trick-or-treating. After Hallows Day became frowned upon, as a Catholic festival, during the Reformation, the holiday was construed as a burst of pre-Winter revelry. It became known as Mischief Night, taking on an association with naughtiness that has stuck.
  4. Cops in America have had a tough year. Videos of perceived or real police brutality have gone viral at regular intervals, causing loud public outcry and leading to demands that all police officers should wear body cameras.Hence heated discussions there about the reasons for the sudden increase in violent crime and the tense relationship between the police and civilians.In a speech on October 26th James Comey, the boss of the FBI, said he had no conclusive answer. But “something has changed in policing”, he said. Officers feel besieged by videos of arrests and other procedures proliferating on YouTube, a video-sharing website. Cops get taunted by youths holding up their iPhones.Mr Comey seemed to be saying that police officers cannot do their job properly if they are under constant scrutiny.Some crime experts disagree.Brett Goldstein, a former officer who now teaches at the University of Chicago,thinks thathere is now no one reason to explain its rise.
  5. GIVEN that trade unions are banned in Qatar, it should come as no surprise that the International Transport Workers’ Federation (ITF) has never been the strongest supporter of Qatar Airways. The two sides have been at loggerheads since 2013, when the ITF obtained copies of an employment contract for the airline’s cabin crew. It was not impressed. Clauses prohibiting staff from getting married or falling pregnant proved particularly irksome, as did wider reports of overbearing treatment.Qatar Airways this year phased in new contracts that remove bans on getting married and falling pregnant. Employees are now free to get hitched whenever they wish.While the company claims to have rolled out its reforms in December 2014, news of the pregnancy U-turn only surfaced in August 2015—two months after the International Labour Organisation, the UN’s labour agency, turned up the heat.

Economist 10/28/15

  1. INTERNET providers will be barred from charging online businesses for “fast lanes”—that is, giving priority to their traffic—except for certain specialised services, such as videoconferencing or telesurgery. They also must not block or slow traffic other than reasonably to manage their networks, such as to avoid congestion.This is the essence of a law the European Parliament passed on October 27th, after months of argy-bargy with the EU’s executive, the European Commission, and national governments
  2. In Europe the balance of power between the telcos and big internet companies is more uneven.Europe’s telcos, often former (and, in some cases, still partially) state-owned firms, have kept a direct line to their respective governments. And they have two arguments in particular that carry weight in national capitals and Brussels: looser net-neutrality rules would allow them to introduce new services and make the money they need to improve their networks; and such rules would also let them charge America’s online firms for using their networks.Unsurprisingly, then, Europe’s new rules have bigger loopholes than America’sAmerican internet providers can offer specialised services, but the FCC can intervene if it thinks they are using this exception to undermine the spirit of net neutrality. In Europe the exception is so broad that internet providers could bring in paid-for fast lanes simply by labelling them as specialised services, reckons Barbara van Schewick of the Centre for Internet and Society at Stanford University.Much depends on how national regulators interpret the new rules. Some countries have already passed stricter laws.
  3. THIS WEEK the World Health Organisation (WHO) labelled bacon, salami and sausages as “Group 1” carcinogens, in the same category as cigarettes and asbestos. The group gave red meat a less damning label, though “probably carcinogenic” is hardly an endorsement. The report was written by 22 experts for the WHO’s International Agency for Research on Cancer.In 1980 America’s first dietary guidelines warned of the perils of saturated fat, including red meat. Americans duly ate more pasta, bread and low-fat, sugary snacks.The WHO’s 22 experts did not produce fresh data. They simply reviewed existing research. Their most notable contribution is to conclude that there is “sufficient evidence” that “eating processed meat causes colorectal cancer”.
  4. A free-speech index compiled in February by Spiked, an online magazine, found that 135 bans of various sorts had been imposed within university campuses in the previous three years: on songs with offensive lyrics; newspapers that print topless photos on page three.The most zealous censors are not the university authorities but students themselves. Many unions now operate “safe space” policies, imported from American universities, which aim to create environments in which no student feels threatened by ideas deemed harmful.
  5. Theranos is one of Silicon Valley’s most prominent “unicorns”, or unlisted startups valued at more than $1 billion. Its aim is to disrupt a market for blood tests that, in America alone, is worth $75 billion a year. A recent injection of $400m from investors gave it an implied value of $9 billion.Soon after, the Wall Street Journal ran a report that Theranos has overstated its technology’s reach and reliability. Theranos has attracted great acclaim because it claims to be able to perform a wide variety of tests by drawing a few drops of blood instead of using a full-sized needle to take larger samples; and because of its promises to make it cheaper and easier for consumers to get blood tests without having to go through a doctor. However, the Journal’s article argued that its tests are not reliable.Ms Holmes said the Journal’s report was “false”, and defended the reliability of Theranos’s tests. But that has not quelled the storm of scepticism.Theranos, for example, is not believed to have any significant revenues or profits, yet it is valued about as highly as Quest Diagnostics, a listed laboratory company, which achieved $7.4 billion in revenues and nearly $600m in net profits in 2014.

Economist 10/27/15

  1. punitive demolitions is a controversial practice based on emergency regulations imposed by the British Mandate in 1945, which authorised commanders to destroy the homes of Palestine’s restive inhabitants. Israel demolished or sealed 1,300 houses in the two decades after it occupied the West Bank in 1967, and hundreds more during the first and second intifadas, or Palestinian uprisings.The Fourth Geneva Convention bars an occupying power from demolishing private homes except where “rendered absolutely necessary by military operations.”
  2. But the practice continued until 2005, when the Israeli army itself studied it and recommended a halt. Only three homes were blown up or sealed in the nine years after the army panel issued its report.The Fourth Geneva Convention bars an occupying power from demolishing private homes except where “rendered absolutely necessary by military operations.” A study in 2014, by Israeli and American academics, found that punitive demolitions brought a short-lived but measurable decrease in suicide attacks during the second intifada. But other research, not least the army’s own study, suggests that there is no effect.
  3. China has travelled far from its command-economy roots, but its policy planning system, an inheritance from the Soviet Union, is one of the most potent remaining vestiges. This will be the 13th five-year plan since the Communist Party took charge of China.In the era of Mao Zedong, China’s five-year plans were strictly implemented. The Communist party set specific production quotas—for instance, for steel and grain—that work units had to meet. This central direction and, often, misdirection squandered resources to disastrous effect, leaving much of the country impoverished. In the 1980s, as the government loosened its grip on the economy, it also became a bit more relaxed about the five-year plans. Rather than rigid agendas, they have become more like rough guides to how leaders want to steer the country.
  4. IVERMECTIN, a drug employed for the treatment of worm infections, has a side effect. It has been known since the 1980s that it kills arthropods (ticks, mites, insects and so on) foolish enough to bite someone treated with it. That has led some researchers to wonder if it might be deployed deliberately against the mosquitoes which transmit malaria. Preliminary studies suggested so. Mosquitoes do, indeed, get poisoned when they bite people who have taken the drug. Moreover, even if a mosquito does not succumb, ivermectin imbibed this way is often enough to kill any malarial parasites it is carrying.
  5. THE Warsaw Philharmonic bristled with competition last week. No less a figure than Poland’s president, Andrzej Duda, presented the top prize for the Chopin Competition on Thursday night.Seong-Jin Cho, a 21-year-old South Korean, won first prize, followed by Charles Richard-Hamelin of Canada and Kate Liu of the United States. But it was a close race between Mr Cho and Mr Richard-Hamelin.The Chopin Competition, held every five years, wants to be known as the Olympics for pianists.But musical contests are rather different from athletic ones: once the technical skills of playing the right notes at the right time have been mastered, the artistry is often a matter of taste.The main benefit is exposure, explains Meng-Chieh Liu, a professor of piano at the Curtis Institute of Music in Philadelphia.Many young musicians see competing as their best chance for getting a good manager, says Gabriela Montero, a former child prodigy who won third prize in the Chopin Competition in 1995.

Economist 10/26/15

  1. Mr Xi Jinping’s campaign against graft has ensnared some prominent business figures. Last month it was announced that Song Lin, a former chairman of China Resources Group, a state-owned conglomerate, was being prosecuted.Five days later Jiang Jiemin, the former head of PetroChina, another state-controlled petroleum firm, was sentenced to 16 years in jail. On October 13th Chinese media reported the arrest of Sam Pa, a middleman in resource deals done in Africa by Chinese state-owned firms.But some analysts worry that the recent arrests of business leaders signal a broader anti-corporate campaign.Such fears are overblown. Businessmen targeted so far are mostly senior managers of state-owned enterprises (SOEs), not private firms. In China powerful SOE bosses are also important figures in the Communist Party, so there are likely to be political reasons as well as economic ones for many of the arrests.Indeed, Mr Xi’s government has been rather supportive of Chinese business. Internet giants have been encouraged to expand into the provision of government-related services, such as booking hospital appointments and processing utility bills.
  2. “Spectre”, the 24th Bond film will be released in Britain today, on October 26th, and is expected to draw yet more fans to the once-flagging film franchise.That last Bond outing “Skyfall”, went on to become the most successful of the franchise to date, surpassing 1965’s “Thunderball”, the only other Bond film that has grossed (in today’s money) over $1 billion (£630m) at the box office.Daniel Craig, the sixth and current Bond, has been the most successful yet. His films as 007 have taken an average $835m at the box office. But the production budgets have ballooned as well. The first three Bond movies in the 1960s grossed over 30 times their production costs.
  3. “POTENTIALLY catastrophic”—that was how America’s National Hurricane Centre described Hurricane Patricia as it barrelled menacingly towards Mexico’s Pacific coast on the afternoon of October 23rd.Yet 48 hours after it hit Mexico, no reports had come in of major damage, and Hurricane Patricia was being blamed directly for just two deaths, caused by a falling tree.Why then did this most recent hurricane fail to deliver the cataclysm feared?Several factors appear to have played a role. Firstly, Patricia made landfall at a relatively quiet stretch of coastline between the towns of Puerto Vallarta and Manzanillo, rather than directly—and more dangerously—over either of them. It then moved quickly enough that its rainfall was not concentrated in any one place, thus reducing the chances of flooding. Its really strong winds were to be found within 50km of its “eye”, making it a comparatively tight storm.If nature turned out to be strangely benevolent, the state and federal governments should also take some credit for Patricia’s failure to deliver the blows expected–signs that lessons have been learned after less impressive responses to previous disasters.
  4. On October 9th Vanuatu’s Supreme Court found that in 2014 the country’s then opposition leader, Moana Carcasses Kalosil, had offered legislators a total of 35m vatu ($300,000) to support a no-confidence motion. The government fell in June 2015, and Mr Carcasses became deputy prime minister in an administration led by Sato Kilman.The court convicted Mr Carcasses for corruptly seeking to procure MPs’ loyalty, and the other 13 MPs for receiving bribes.One of the convicted MPs was the parliament’s speaker, Marcellino Pipite. Earlier this month, while the president, Baldwin Lonsdale (pictured), was out of the country, Mr Pipite used his temporary powers as acting head of state to pardon himself and the 13 others. He said this was necessary in order to avoid civil unrest.On his return to Vanuatu, however, President Lonsdale rescinded the pardons, resulting in the arrests of 11 of the convicted MPs, and paving the way for their sentencing.In Vanuatu, MPs sentenced to two or more years’ imprisonment lose their seats; appeals are likely to delay that outcome.The country’s politics are now plunged into uncertainty. By-elections will need to be held to replace the jailed MPs. As Mr Kilman no longer has a governing majority in parliament, he will need to form a new coalition to stay in power.Most citizens live far from the urban centres, and rarely punish politicians at the ballot box for indiscretions in the capital city.
  5. SELDOM do governments try to turn away extra tax. But that is just what Luxembourg and the Netherlands did this week, after the European Commission ruled that subsidiaries of multinationals in the two countries were paying €20m-30m ($23m-34m) too little. The commission argued that the favourable tax treatment the firms were receiving was tantamount to a government subsidy, and thus illegal under European rules on “state aid”. The two countries, worried that the decision will deter other foreign firms from investing, demurred.It claimed a Fiat finance unit in Luxembourg had provided loans to other divisions at artificially low prices, shrinking the unit’s revenue so that it paid a twentieth of the taxes it should have. By the same token, the commission said that a Dutch subsidiary of Starbucks had overpaid a Swiss unit for coffee beans and a British one for “coffee-roasting know-how”.

Economist 10/23/15

  1. Across western Europe, once-populous hamlets like Nâves are challenging policymakers to find a way to keep services going and villages viable. Rural areas in most of Europe’s poorer regions, including the former east but also Spain, Portugal and Greece, are emptying out as younger generations head for the cities.Yet after decades of decline, France’s villages have been growing again—even in unfashionable parts that tourists seldom reach.The reasons are a mix of public policy and changing aspirations. France’s strong transport links and public services help to make village life workable.The difficulty is how to make such a fragile uptick sustainable.Alpine villages are sheltered from the worst cuts by the relative vibrancy of regional cities like Lyon and Grenoble. Other rural parts are under more strain, notably the Massif Central in the country’s hollow middle. There is a general sense that rural needs are not a national policy concern.
  2. POLAND’S once boringly stable politics are now over. In parliamentary elections on October 25th the governing coalition is heading for defeat by Law and Justice (PiS in Polish), a socially conservative and mildly Eurosceptic opposition party. Poland matters: with 39m people and a $750 billion GDP, it is the biggest of the ex-communist countries which joined the European Union in 2004.The first big question is whether PiS will win strongly enough to form a government.The second big question is whether it will prioritise score-settling or build on Civic Platform’s tainted but still substantial legacy of stability and prosperity.It also appeals to socially conservative Poles on issues such as gay marriage and “gender”.This approach helped its presidential candidate Andrzej Duda trounce the Civic Platform incumbent, the lacklustre Bronislaw Komorowski in May.
  3. FOR RushCard customers, October 12th was the day the money stopped. Many of them tried that day to use the popular pre-paid card, billed as a substitute for a bank account for those too poor to afford (or qualify for) one, only to be told their balance was zero, thanks to a spectacular IT failure. The firm’s flamboyant founder, hip-hop magnate Russell Simmons, also known as Uncle Rush, issued a public apology.Prepaid cards like RushCard are increasingly popular with American consumers. They can be loaded with cash at shops that act as agents, or via an electronic transfer, often from an employer. Like a debit card, they can be used to make payments or withdrawals at a cash machine.But they are not a bank account.
  4. Some don’t qualify for Federal Deposit Insurance Corporation (FDIC) protection though RushCard users are insured by dint of an alliance with an underlying bank.In 2013 the FDIC found that two-thirds of the households that had used prepaid cards in the previous 30 days were unbanked or underbanked.Yet two-thirds did not compare fees and terms before choosing a card.They blame new rules that limit how much banks can charge retailers for processing debit-card transactions. Unable to pass costs onto consumers this way, banks have raised the minimum balances necessary to qualify for free current accounts. That has pushed more people into the hands of the prepaid-card companies (which were exempt from the rule change).
  5. Britain is not the only Western country to court China. Mr Xi was welcomed in Washington, DC, last month. The leaders of France and Germany will soon travel to Beijing.For Britain, and all Western democracies, the dilemma is over how to deal cordially and profitably with China, as they must, while encouraging it to develop in a way that neither oppresses its own people nor destabilises the world.This week Mr Xi was asked to address both houses of Parliament, an honour normally accorded only to leaders of democracies. He was to be hosted at Chequers, the prime minister’s country residence—again a first for a visiting Chinese president. Organised pro-Xi crowds were allowed to drown out protesters.

Economist 10/22/15

  1. ROAD traffic accidents kill an estimated 1.25m people a year, according to a new report by the World Health Organisation. The number has remained relatively stable since the WHO’s first assessment in 2007, even as the number of people and vehicles rises.Road accidents kill more men than women, and are the biggest killer of 15- to 29-year olds globally. As well as the human toll, it is an economic burden, costing the global economy an estimated 3% of GDP, and up to 5% in the poor and middle-income countries where 90% of deaths occur but only half the world’s vehicles are driven. Africa is the least safe place for a road user, with 26.9 fatalities for every 100,000 people in 2013 compared with 9.3 in Europe—which has ten times more cars as a share of its population. And Africa’s safety record has worsened since 2007, the only region to do so. Of the ten nations with the highest death rates, eight are African.
  2. Only Egypt requires vehicles to meet basic international safety standards such as softer bumpers to lessen impacts. Many roads are unpaved and do not have safe space for pedestrians, who account for 40% of deaths of all road users against a global average of 22%.Making the unsafest countries safer will be hard. In the three years since 2010, 16m more motorised vehicles hit the roads, half of them in poorer countries with laxer standards.he ten-largest nations account for 700,000 deaths, yet none makes the grade on all five risks (America fails on all of them but has a low death-rate).
  3. ELECTRIC lighting, television, the internet and caffeine all get blamed for reducing the amount of time people sleep compared with the days before such luxuries existed. Such alleged sleep deprivation is sometimes held responsible for a rise of obesity, mood disorders and other modern ailments. The trouble with this argument, though, is that no one really knows how long people slept before coffee and light bulbs existed.A study just published in Current Biology by Jerome Siegel of the University of California, Los Angeles and Gandhi Yetish of the University of New Mexico tries to provide an answer.In total, the researchers collected 1,165 days’ worth of data from 3 tribes – Hadza of northern Tanzania, the Ju/’hoansi San of the Kalahari Desert, in southern Africa, and the Tsimané in Bolivia.. They found that people from all three groups slept for between 5.7 and 7.1 hours a day, with an average that hovered around 6.5 hours. Far from exceeding those of a modern city-dweller,An average 7.5 hours a night is the norm there.
  4. Their bedtimes appeared to be regulated by the temperature, rather than by daylight, and it takes several hours after the sun has set for things to cool down.The study also calls into question the idea that siestas are a feature of human behaviour that has been suppressed by modern ways of life. The volunteers rarely napped in summer (doing so on about one day in five), and almost never in winter.There were some differences. One was that hunter-gatherers exhibited a bigger seasonal variation in the amount of sleep they took than “modern” folk do. They slept almost an hour longer in winter than in summer, whereas the wired sleep about 20 minutes longer. Perhaps more intriguingly, they barely suffered from insomnia.
  5. In 2014 the capacity of the global fleet of merchant ships grew by 3.5%, to a total of 1.75 billion deadweight tonnage (a measure of how much vessels can transport). This was the lowest annual growth rate in over a decade. Ships are delivered several years after they are bought: the slowdown reflects the fact that those arriving in 2014 were ordered in the post-crisis years. Greece and Japan remain the two largest ship-owning countries by capacity, controlling almost 30% of the world’s tonnage in 2014. But China now owns the most ships. Many countries’ ships are registered under foreign flags of convenience, but China has a large proportion of nationally flagged ships used in coastal shipping.