Economist 12/21/15

  1. ELECTION night in Spain on December 20th ended with a disturbingly messy result. Neither the incumbent prime minister Mariano Rajoy, whose conservative People’s party (PP) lost 43 of its 186 seats, nor the Socialists (PSOE) of Pedro Sanchez can form a government without the help of the new insurgents of anti-austerity Podemos or the new liberal party, Ciudadanos. Even that may not be enough. As many as five parties may be needed to form a new government.Sunday’s results confirmed the demise of Spain’s two-party system. PP and the Socialists took just 50% of the vote between them, down from 73% four years ago. The new insurgent parties are not yet strong enough to replace them. But nor can they be ignored.If Spain wants stable government, an agreement between two or three of these parties is the only real option. Otherwise a new government will need the backing of Catalonia’s increasingly belligerent and rebellious separatists who, in yet another blow to the status quo, took a key bloc of seats.
  2. If you want to fly a quadcopter outdoors in America, you must now license it, under rules that take effect today. The Federal Aviation Administration says drones weighing 0.55-55lb (0.25-25kg) must be added to an online database by February 19th; a three-year licence costs $5, but signing up is free until January 20th. Drones must display a registration number and be kept at least five miles (8km) from airports and below 400 feet (120 metres)—an altitude most small devices cannot reach anyway.
  3. Business, indeed, is the principal business of Gujaratis. Everywhere, they are to be found running businesses, from corner-shops to hotels, from tech start-ups to some of the world’s largest conglomeratesHaving arrived in numbers from the 1960s onwards, Gujaratis now run about a third of all its hotels and motels in America. Furthermore, this was achieved mostly by just one group, essentially an extended family, the Patels.They own almost half (12,000) of America’s independent pharmacies (as well as one of the biggest chains in Britain, Day Lewis). There are thousands of Gujarati doctors in America, and they are quicker than most to start up their own practices.These stories point to a couple of outstanding characteristics. Most fundamentally, those Gujaratis who turn to business say that they are constitutionally unsuited to working for other people.Starting a small corner-shop is seen as more impressive than holding a mid-level management job in somebody else’s company.
  4. An impressive 90% of the world’s rough diamonds are cut and polished in the Gujarati city of Surat, a business worth about $13 billion a year, and Indians, predominantly Gujaratis, control almost three-quarters of Antwerp’s diamond industry.Trust and honesty remain essential to Gujarati-dominated industries. Mr Mehta, himself a Jain from Palanpur, whose diamond company has a turnover of $1.8 billion and offices from Antwerp to Tokyo, says that, despite the size of the business, it is still “all based on handshakes and words, with no contracts”. In order to make the system work, he explains, diamond merchants prefer to deal with “the people they trust”—this usually means a group within the Gujaratis, in this case their fellow Jains from Palanpur.Traditionally, most of the finance to start a business comes from within the family, or at least the community.Business failure is also largely handled within families. Gujarati entrepreneurs are risk-takers, but they know that the family network provides a safety net.
  5. When the Portuguese, Dutch and then the British started arriving in India from the 16th century they used Gujaratis as their principal trading partners. The headquarters of the British East India Company was originally at Surat.Hundreds of thousands emigrated to east and southern Africa in particular, but also to Malaysia, Burma, Singapore and beyond, as well as more obscure territories such as Fiji.Gujaratis enjoyed similar success in other colonies of the British empire, notably Kenya and South Africa.The intimate connection with the British, however, came at a price. The Gujaratis were identified as little more than colonial satraps by indigenous Burmans, Ugandans and others. So once the British left, they were often targeted by the first post-independence politicians, asserting their nationalist credentials.In Burma (now Myanmar), the military regime that took over in 1962 nationalised all foreign businesses, forcing hundreds of thousands of Indians out of the country. In Uganda, in 1972, the deranged dictator, Idi Amin, abruptly gave the country’s 60,000 South Asians, mostly Gujaratis, 90 days to leave.

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