Economist 5/6/16

  1. Even before today’s opening in the biggest markets, America and China, “Captain America: Civil War” took more than $240m in its first week. It’s Disney’s third blockbuster release this year. The current champion, “The Jungle Book”, earned more than $700m globally in three weeks, and three more major releases await. Cinematic triumphs have boosted Disney’s share price, which had slumped owing to subscriber losses at ESPN, a sport channel and long-time Disney cash cow.“Captain America” is from Marvel Entertainment, which Disney bought in 2009; the hugely successful “Finding Nemo” and its upcoming sequel were made by Pixar Animation, hoovered up by Disney a decade ago.Last week, DreamWorks Animation, a rival studio, was acquired by NBC Universal, a media conglomerate that narrowly beat Disney in box-office receipts last year.
  2. Tensions between the increasingly Turkey’s authoritarian president, Recep Tayyip Erdogan and Ahmet Davutoglu, his prime minister have simmered for months. The two disagreed over the future of peace talks with Kurdish insurgents, and over Mr Erdogan’s plans to change the constitution to give the presidency executive powers, cementing his grip on government and his own Justice and Development (AK) party.They also clashed over the management of the economy, and Mr Erdogan’s crackdown on critics.Signs that Mr Davutoglu was fighting for his political life emerged last Friday when AK’s executive body stripped him of the right to appoint provincial party officials.In the coming weeks, AK is expected to hold an extraordinary congress to elect Mr Davutoglu’s successor as party leader. Ahmet’s ouster suggests there is no tolerance left for opposition to the president inside his party. It also reveals the price that Mr Erdogan is willing to pay to pursue his agenda.
  3. IT IS OFTEN said that London is becoming a city just for the rich, particularly as far as housing is concerned.Some researchers suspect that there may be a persistent market failure in the British housing market. They have noted that house builders do not build houses across the price spectrum.Instead, they tend to target the price of new-build houses at the upper decile of the prices prevailing in the local property market: ie, at the top 10% of all the houses sold nearby in a given period of time.In London this problem is magnified, since the top 10% of the housing market is especially expensive.Just 2% of houses currently being built in the capital will be priced under £250,000 (this is the lowest price category tracked by JLL, but even this is equivalent to ten times the average salary). There is only one year of data here, so it would be wrong to draw too strong a conclusion. But in just one year the proportion of London houses being sold for between £250,000-500,000 seems likely to fall from 51% to 45%. . It may simply free up already-built houses for poorer folk. But housing markets are extremely complex and things probably don’t work out quite so happily.
  4. Shanghai is stepping up its efforts to control the growth of its population. One of its techniques is to make it more difficult for unskilled workers from the countryside to live there, such as by knocking down their cheap, ramshackle accommodation.Similar efforts are under way in the capital, Beijing.Last year Beijing’s government said it would not allow the capital’s population (those resident six months or longer) to exceed 23m before 2020. That is only 1m more than the current population.Shanghai followed, setting a population limit of 25m by the end of the decade for its urban and rural areas, up from 24m today.Living in large cities has never been easy for rural migrants. Until 2003, police could expel anyone found without proof of employment or a residence permit.In 2014 the central government issued a plan for what it called “new-type urbanisation”. This envisaged 60% of the population living in urban areas by 2020 (56% do now) and outlined measures to give migrants greater access to public services. But the 16 largest cities were urged to restrict migration by using a “points system” offering urban-welfare privileges only to the educated and affluent few.
  5. Beijing and Shanghai, the megacities of greatest political and business importance, have exploited this leeway with the most enthusiasm. Both have large middle-class populations, many of whose members resent sharing the cities’ superior amenities with people they regard as outsiders.Since 2014, the two cities have tightened restrictions on access to local schools. Parents in Beijing need to show contracts proving they have jobs and housing. This is difficult for the many migrants who are employed casually and have no formal agreement with their landlords.The cities’ measures may be working. Government statistics show the migrant population in Shanghai fell by 1.5% in 2015, the first drop in 28 years.In Beijing, the number of migrants increased by 0.5%, the slowest rate since 1998.There are other reasons for the cities’ loss of allure. They include the soaring cost of housing in both, and the growth of job opportunities in smaller cities closer to migrants’ hometowns.

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