Economist 12/8/15

  1. The first sign of a bust-up came on November 27th, when Slovakia’s prime minister, Robert Fico, said that European leaders were keen to shoo Greece out of the visa-free zone.Greeks reacted to the possibility of being pushed out of Schengen with consternation.By December 4th Greece had agreed to let Frontex, the EU’s border agency, carry out patrols and to accept EU humanitarian aid for people stranded on islands and other land-border areas.Suspending Greece from the Schengen zone would not do much to limit the number of migrants crossing into the rest of Europe. Greece has no borders with other Schengen-zone states, so for refugees travelling by land it would be no easier or more difficult to make the journey than before. The only consequence would be to deprive Greek citizens of the right to travel freely within Schengen and, perhaps more importantly, to force overseas visitors to obtain a visa to enter Greece—a blow to Greece’s tourism-reliant economy.At a meeting of European interior ministers in Brussels on December 4th, ministers decided to press ahead with plans to reinstall border checks for up to two years.
  2. Transparency International, a Berlin-based global NGO that focuses on reducing graft. It ran a survey in 28 countries in sub-Saharan Africa in 2014 and this year to attempt to measure the level of corruption.According to the survey, 22% of Africans who had contact with public services admit to having paid a bribe in the past year. In Liberia the figure was 69%. In Kenya and Nigeria, two of the most important African economies, it was 37% and 43% respectively. Across the region, a majority of respondents said that they thought corruption had got worse in their country in the past year. In South Africa, the figure was 83%. The most affluent respondents were half as likely to have paid a bribe as the poorest. The type of bribes most commonly paid were to police officers and court officials. Half those forced to pay such bribes had done so more than once.Just 1% of those surveyed in Botswana and Mauritius said they had paid a bribe, a share comparable to that in the developed world.With a per-capita income of roughly $17,000, Botswana is also one of Africa’s richest countries.
  3. A recent joint investigation by The New Orleans Advocate and WWL-TV found that New Orleans police have taken an average of 79 minutes to respond to 911 calls so far this year. That figure has tripled since 2010. And while police usually come more quickly to priority calls, response times in those cases have doubled as well, to an average of 20 minutes.With its persistent violent-crime problem, there are plenty of genuine emergencies to worry about in New Orleans. The city’s murder rate is always among the nation’s highest, and armed robberies have been on a steep upswing. They are not all happening in dark alleys.Indeed, things have got so bad in New Orleans that crime victims have often left the scene by the time officers get there. The proportion of calls that are classed “gone on arrival” or “unfounded” has doubled in recent years, to one in four.How long is too long to wait for the police? There isn’t really an agreed-upon standard in America.High-functioning cities, like New York, do much better on both ends: 9 minutes for a typical call, and about half that for priority calls. Dallas officials this year reported average response times of 22 minutes for non-emergency calls, and under 9 minutes for emergencies. For police departments around the country, meanwhile, the average response time is of 11 minutes, according to the Detroit report.
  4. As the authors of recent academic paper l point out, it is hard to know whether the ability of the corporate sector to beat forecasts is due to good management, a growing economy or outright manipulation. So they focus on companies that the SEC has identified as indulging in manipulation.Sure enough they find that 53% of such firms have a record of four straight quarters of beating forecasts, compared with just 43% of all firms. Secondly, they find that firms tend to indulge in earnings manipulation when they already have a high stock market multiple; they are trying to prop up their share price, not inflate it. The average price-earnings ratio during the manipulation period is 35.
  5. China is the world’s biggest market for luxury goods, accounting (by some measures) for half of all luxury spending. The slowdown in the growth of China’s economy and household incomes is usually seen as bad for rich-country purveyors of luxuries such as perfumes, golf clubs, art and the like.But demand for most other Chinese luxuries depends on a culture of gift-giving. Every transaction must be marked by a present: jade, tea, a meal.Since 2013 the anti-corruption campaign of Xi Jinping, China’s president, has made conspicuous consumption politically suspect and reined in the practice of lavishing gifts on officials. Tea used to be a favourite present, especially Pu’er, a fermented and aged variety from the south-western province of Yunnan. The price of top-of-the-line Golden tea from the Tae tea company, the world’s largest Pu’er maker, fell from 917 yuan per 357 grams in March 2014 to 512 yuan, before rallying a bit.
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