Economist 12/29/15

  1. LAST month Kai Krause, a computer-graphics guru, caused a stir with a map entitled “The True Size of Africa”, which showed the outlines of other countries crammed into the outline of the African continent. Most people do not realise how much the ubiquitous Mercator projection distorts the relative sizes of countries.A sphere cannot be represented on a flat plane without distortion, which means all map projections distort in one way or another.Gerardus Mercator’s projection, published in 1569, was immediately useful because it depicts a line of constant bearing as a straight line, which is handy for marine navigation. The drawback is that it distorts the shapes and areas of large land masses, and the distortion gets progressively worse as you get closer to the poles. (Africa looks about the same size as Greenland under the Mercator projection, for example, even though it is in fact 14 times bigger.)
  2. IT SEEMS a country’s spending reflects its national stereotypes, according to household expenditure data compiled by Eurostat: Russians splash 8% of their money on booze and cigarettes—far more than most rich countries—while fun-loving Australians spend a tenth of theirs on recreation, and bookish South Koreans splurge more than most on education. Some of the differences are accounted for by economics. Richer places like America and Australia, where household expenditure is around $30,000 per person, will tend to spend a smaller share of their costs on food than Mexico and Russia, where average spending is around $6,000. And politics plays a part too. Predominantly private health care in America eats up over a fifth of each household’s budget, whereas the European Union, where public health care is common, only spends 4% on it. In Russia, government-subsidised housing and heating make living cheaper, and this means money is left over for the finer things in life.
  3. The Swiss National Bank (SNB) suddenly announced that it would no longer hold the Swiss franc at a fixed exchange rate with the euro, there was panic. The franc soared. On Wednesday one euro was worth 1.2 Swiss francs; at one point on Thursday its value had fallen to just 0.85 francs.The SNB introduced the exchange-rate peg in 2011, while financial markets around the world were in turmoil. Investors consider the Swiss franc as a “safe haven” asset, along with American government bonds: buy them and you know your money will not be at risk.An expensive franc hurts Switzerland because the economy is heavily reliant on selling things abroad: exports of goods and services are worth over 70% of GDP.To bring down the franc’s value, the SNB created new francs and used them to buy euros. Increasing the supply of francs relative to euros on foreign-exchange markets caused the franc’s value to fall.by 2014 the SNB had amassed about $480 billion-worth of foreign currency, a sum equal to about 70% of Swiss GDP.
  4. First, many Swiss are angry that the SNB has built up such large foreign-exchange reserves. Printing all those francs, they say, will eventually lead to hyperinflation. Those fears are probably unfounded: Swiss inflation is too low, not too high. But it is a hot political issue.Second, the SNB risked irritating its critics even more, thanks to something that is happening this Thursday: many expect the European Central Bank to introduce “quantitative easing”. This entails the creation of money to buy the government debt of euro-zone countries. That will push down the value of the euro, which might have required the SNB to print lots more francs to maintain the cap.
  5. THE bronze statue of a teenage “comfort woman” in Seoul, South Korea’s capital, is intended as a daily rebuke to the Japanese embassy opposite. The figure represents one of many thousands of Korean women who were forced to serve in wartime military brothels catering to imperial Japanese soldiers. Citizens’ groups paid for the figure to be erected in 2011 when relations between Japan and South Korea were at a nadir.Yet now the statue is meant to move elsewhere as part of a landmark agreement struck between South Korea and Japan on December 28th to try to settle their dispute over comfort women once and for all—and transform dangerously strained relations.Of former sex slaves who have come forward in South Korea, only 46 survive. Under the deal, South Korea will set up a fund for them into which the Japanese government will pay $8.3m for their medical and nursing care. The Japanese prime minister, Shinzo Abe, has expressed “sincere apologies and remorse” for the women’s suffering, which was appalling.It is a big change for Mr Abe, who has in the past questioned whether the comfort women were coerced at all. But he seems to have found what the two countries’ foreign ministers called a “final and irrevocable” resolution to an issue that has poisoned the relationship for years.
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