Economist 7/20/16

  1. Today there are more reasons than ever to treat nerds with respect: never mind the fact that every company is clamouring to hire them, geeks are starting to shape markets for new products and services.But nerds’ influence now goes well beyond technology. They hold greater cultural sway. “Silicon Valley”, a show on HBO which will soon start filming its fourth season.Nerds carry more clout in part because their ranks have swelled. IDC, a research firm, estimates there are now around 20m professional and hobbyist software developers worldwide; that is probably low. Geeky, addictive video games are drawing more into the fold. Each month at least 70m people play “League of Legends”, a complex multiplayer online game; that is more than play baseball, softball or tennis worldwide.As a result, companies had better pay attention to the rise of a “nerd economy” that stretches well beyond their direct technology needs.
  2. At the beginning of the convention, Donald Trump’s campaign manager said that his candidate was planning to copy Richard Nixon’s 1968 campaign, presenting himself as the law-and-order candidate.The country described within the Quicken Loans Arena is very different. It is a lawless, borderless place, threatened by terrorists and run by crooks. The most memorable moments of the first evening came in painful speeches given by bereaved parents, whose children had been killed by illegal immigrants or by terrorists in Libya.This stuff was interspersed with bizarre moments from some formerly famous people, notable only for their willingness to say nice things about the nomineeThus far this convention has suggested that the Trump campaign is too strange, amateurish and pessimistic to triumph.The Republican nominee, he concluded, has the ability to create the conditions that favour him, by encouraging disorder and then promising to dispel it, in a way that no other candidate could.
  3. J.D. POWER, a market-research company, has released the 2016 results of its annual hotel satisfaction survey for the United States, Canada and Mexico.  Contentment among customers is at an all-time high, and has risen for four years in a row.But the report also contains some bad news. It is going to become increasingly difficult to impress guests with perks they have come to take for granted.The biggest problem for the hotel industry is a demographic one. According to the survey, satisfaction is significantly higher among guests who are members of a hotel’s reward programme.But while 66% of hotels’ baby-boomer clients are rewards members, and 56% of Generation Xers are, just 39% of millennial guests have signed up for a scheme.
  4. Call it the Airbnb effect, perhaps. As another Gulliver recently reported, the use of Airbnb properties by business travellers around the world more than tripled last year. Partly, that’s because hosts have become better at catering for those on corporate trips.But largely, it’s because the travellers themselves want a more engaging experience than hotels typically offer.They want to stay in lively neighbourhoods rather than hotel districts, and to be able to cook meals if they are staying for more than a couple of nights.The Ritz-Carlton was the most beloved luxury hotel group for the second consecutive year, earning the highest score in the survey’s 20-year history. It was trailed by Four Seasons and JW Marriott, with the Grand Hyatt and W Hotels receiving the lowest luxury scores. Omni got top marks among “upper upscale” hotels for the second year running, with Kimpton in second and Sheraton at the bottom. Hilton Garden Inn was the top choice among upscale hotels.
  5.  Although global defence spending grew by just 1% last year—after five years of severe budget cuts in many countries—the global market for missiles and missile-defence systems is racing ahead at around 5% a year.Mounting armed conflicts around the world, and the persistent threat of global terrorism, are partly responsible.But governments also see missiles as a way of reducing civilian casualties in warfare. While traditional aerial-bombing tactics often kill more civilians than hostile combatants, missiles are much more effective at hitting their target without collateral damage.America and China are developing competing hypersonic missiles that can travel at five or more times the speed of sound.And to avoid the need to carry bulky ammunition at sea and in the sky, directed-energy weapons (powered by electricity) that look like the laser guns from “Star Wars” films are being developed.

Economist 7/19/16

  1. Tallies by the Washington Post show that police shot and killed 990 people in America in 2015 and 552 people so far this year.In 1985, the Supreme Court considered the case of Edward Garner, a 15-year-old boy who was shot and killed by police after he ignored calls to “halt” and fled on foot from the scene of a burglary. The officers pursuing Mr Garner (who was later found with a stolen purse and $10) did not believe him to be armed, and indeed he carried no weapon. But Tennessee law, codifying a long-standing common-law rule, held that “[i]f, after notice of the intention to arrest the defendant, he either flee[s] or forcibly resist[s], the officer may use all the necessary means to effect the arrest.” By a vote of 6-3, the justices found that legal standard too permissive.The upshot of this legal framework is that police need simply to be reasonable. The standard’s ambiguity explains why it is notoriously difficult to prosecute officers involved in seemingly rash lethal encounters.
  2. SINCE the 1960s, whenever Turkey’s meddlesome generals have seized power, Turks have accused America of being responsible. After the botched coup attempt on July 15th by a cabal of mid-ranking generals and junior officers, the old reflex appeared again.The  biggest source of friction is the presence in America of Fethullah Gulen, a cleric who leads a secretive Muslim sect, and whom the Turkish government accuses of masterminding the failed putsch.Since 1999 Mr Gulen has been living in self-imposed exile in rural Pennsylvania. For years, Mr Erdogan has accused the imam, a former ally in his battle to declaw the army, of seeking to topple his government. The Turks demand that America hand him over. Yet Turkey has not formally requested Mr Gulen’s extradition; the file, over 1,000 pages long, has yet to be fully translated into English.Western diplomats reckon it will be padded with outlandish, conspiratorial claims, and that federal prosecutors will throw it out.
  3. Today Turkey  is seen as a buffer between Europe and the Middle East, with its homicidal jihadists and millions of Syrian refugees. And continued access to Turkey’s Incirlik air-base is vital to the American-led war effort against Islamic State (IS). Some Western officials worry that Turkey will seal off the base if America refuses to hand over Mr Gulen.Turkey’s relations with America were already strained by America’s support for the Syrian Kurdish militia groups known as the People’s Protection Units (YPG). The YPG are widely seen as the most effective force fighting IS in Syria, but they are closely linked to the Kurdistan Workers’ Party (PKK), an outlawed guerrilla movement that has been fighting the Turkish state for decades in the name of Kurdish autonomy.Turkey views the YPG as terrorists too, and has repeatedly asked America to ditch them, only to be snubbed each time.
  4. AMERICA’S temporary help industry first emerged after the second world war, when companies like Manpower and Kelly Girl Service began “renting out” office workers on a short-term basis. In those early years, temps numbered in the hundreds of thousands. Today, the industry employs some 2.9m people, over 2% of America’s total workforce. Since the country’s economic recovery began in 2009, temporary employment has been responsible for nearly one in ten net new jobs. But as temping has grown, the quality of the jobs it provides has deteriorated. According to government statistics, temps earn 20-25% less per hour than their permanent counterparts in similar roles. And few are covered by health-care or pension plans.Many of the costs that employers of temps avoid, such as health insurance, are now borne in part by taxpayers in the form of increased social-benefits spending. Temp work may also suppress the wages of permanent employees.
  5.  London has become the tech capital of Europe: according to one study, more than 1,000 tech investment projects were located in London in 2005-14, many more than the next-most attractive city, Paris (381), or indeed the whole of France (853). Britain attracted £524m of investment in financial tech (fintech) alone in 2015.Following the referendum, however, the mood has changed.That is largely because tech companies rely heavily on the free movement of labour for their success. Half of TechHub’s members in London are non-British, and almost one-third are from continental Europe, a pattern repeated across most of the industry.Furthermore, fintech startups could be hit by the withdrawal of “passporting” rights in Europe, whereby London-based firms can sell financial services throughout the EU.With London’s future under a cloud, other cities have pounced on the opportunity to supplant it as Europe’s next tech capital. Paris is one candidate; Berlin also has its eyes on the prize. 

Economist 7/18/16

  1. This week, came news that the 82-year-old Emperor of Japan Akihito would like to retire.The reign of his father, Hirohito, coincided with Japan’s transformation from militarist empire to modern economic powerhouse. Akihito’s own reign since 1989 oversaw a period of gentle economic decline and diminished capacities.Now pneumonia, prostate cancer and heart surgery have weakened him.A law must first be passed to allow Akihito to step down—nothing like this has happened in modern times. As for his son and successor, Prince Naruhito, he may struggle in the role. The royals are virtual prisoners of the Imperial Household Agency, the gnomic bureaucracy that runs the world’s oldest hereditary monarchy. It has treated Naruhito’s wife, Masako, a former diplomat, as an imperial birthing machine, and she has grappled with depression.
  2. THIS spring the world’s first Hello Kitty-themed train began service in Taiwan. It proved so popular that almost all the head-rest covers on the seats were snaffled by passengers on the first day. Last week EVA Air, Taiwan’s second-largest airline, announced that it would increase the number of Hello Kitty flights to Paris.The craze is about more than infantile consumerism: Hello Kitty has become an unlikely token of Taiwanese identity. She is part of a wider embrace of Japan’s kawaii, or “cuteness”, culture. And this is a way for the Taiwanese to define themselves as different from China, which lays claim to their island, by cleaving to Japan, their former coloniser.The obsession is thought to have been started by McDonald’s, a fast-food chain, which gave out Hello Kitty toys with its meals in August 1999. Its supply of half a million toys ran out in just four hours. Later that year Chunghwa Telecom sold out of 50,000 telephone cards within five minutes of making them available.
  3. THE murder on July 10th of Kem Ley, an independent-minded commentator who castigated the ruling party and the opposition alike, has jangled nerves ahead of local elections next year and a general election the year after in Cambodia.Mr Ley criticised politicians in general, but he singled out Hun Sen’s ruling Cambodian People’s Party (CPP) for particular contempt.Shortly before his death Mr Ley had spoken at length about the Global Witness report which claimed that the prime minister’s family had acquired assets worth at least $200m, in one of the poorest countries in Asia.Mr Hun Sen’s relatives have vilified the report.A Nazi-style cartoon depicting America, Britain and Russia as threats to peace in Cambodia began circulating on social media, with local English-language newspapers and Global Witness portrayed as villains.Mr Hun Sen and his party are facing their toughest test. Attitudes have changed a lot since the civil war ended. A younger, more educated generation has grown up. Two-thirds of Cambodia’s 16m people are under 30. In the most recent general election, in 2013, many voted for the opposition Cambodia National Rescue Party. Since then many of its politicians have been beaten up, jailed and sued.
  4. The Permanent Court of Arbitration, an international tribunal in The Hague, has declared China’s “historic claims” in the South China Sea invalid. It was an unexpectedly wide-ranging and clear-cut ruling, and it has enraged China.The case was brought by the Philippines in 2013, after China grabbed control of a reef, called Scarborough Shoal, about 220 miles (350km) north-west of Manila.China claims it has such rights in the South China Sea, and that they long predate the current international system. Chinese seafarers, the government says, discovered and named islands in the region centuries ago. It says the country also has ancestral fishing rights.These rights are said to exist within a “nine-dash line.It is a tongue-shaped claim that slurps more than 1,500km down from the southern coast of China and laps up almost all the South China Sea.
  5. The court comprehensively rejected China’s view of things, ruling that only claims consistent with the UN Convention on the Law of the Sea (UNCLOS) were valid. Under UNCLOS, which came into force in 1982 and which China ratified in 1996, maritime rights derive from land, not history. Countries may claim an Exclusive Economic Zone (EEZ) up to 200 nautical miles (370km) off their coasts, or around islands. Based on this, the tribunal ruled that the nine-dash line had no standing. The judges wrote that there was “no legal basis” for China to claim historic rights within it. UNCLOS, they said, took precedence.The court ruled that China had been building on rocks that were visible only at low tide, and hence not eligible to claim territorial waters.China refused to take any part in the court’s proceedings and said it would not “accept, recognise or execute” the verdict.It is thought unlikely that China would quit UNCLOS: that would reinforce the impression that China is a law unto itself and do grave damage to its global image.More likely is that it will set up an Air Defence Identification Zone (ADIZ) in the South China Sea, like the one it declared over the East China Sea in 2013 after a spat with Japan over islands there.

Economist 7/15/16

  1. Germany exempts most heirs of businesses from inheritance tax, provided they do not lay people off for seven years. That, however, can lead to rather perverse outcomes. Heirs of non-business wealth face a steep tax schedule that rises to 50% at the top. Inheritors of businesses often get away with paying nothing.This means that even though Germans pass on more than €200 billion ($221 billion) of wealth each year, their government collects very little inheritance tax: €5 billion to €6 billion a year, less than 1% of overall tax revenues. A glance across Europe reveals many options. Countries such as Austria, Portugal or Cyprus no longer have any inheritance tax at all. Others, such as France, Spain and Belgium, tax inheritances at relatively high rates (though with complex loopholes). A third group, including Greece and Germany, is in the middle, combining low tax rates with small exemptions (Greece) or high rates with big and complicated exemptions (Germany).The proposed new system tightens some loopholes. Heirs of businesses worth more than €26m will have to show that they cannot pay the tax out of their private wealth to get off free, while those inheriting more than €90m will get no exemptions at all. But there are so many other tweaks that the new system will raise only an additional €235m, a pittance.
  2. LOOKING to the natural world for engineering inspiration is an idea at least as old as Leonardo da Vinci.Copying nature directly, though, has often proved hard.Many creatures flap wings, or wing-like structures, to “fly” through water. That is something human engineers can aspire to imitate because the buoyancy of water provides free lift and its density makes propulsion easier. And, as they write in this week’sScience, a group led by Kit Parker of Harvard University have done just that. They have built a robotic stingray that imitates the motion of its biological counterpart.The ray itself is a so-called soft robot, a type of ’bot that has gained prominence of late. Soft robots, which are made of materials such as latex and silicone, are able to squeeze through tight openings, handle fragile objects.Yet most soft robots are propelled by pneumatic pressure or cables that are, in turn, driven by bulky, rigid motors.Dr Parker and his team chose rat muscles for their rays. They grew rat-muscle cells in culture and then “printed” them onto sheets of elastomer that were to act as the surfaces of a robo-ray’s wings.
  3. Kurdish flags now fly over the remains of deserted and destroyed Sunni Arab villages and towns. Time and again, the peshmerga have chased the jihadists out. In Syria, too, Kurdish forces boast similar gains. Thanks to the war on IS, they control some 600km of Syria’s 800km northern border with Turkey. In March they declared their own autonomous region there, Rojava.In Iraq the area ruled by the Kurdistan Regional Government (KRG) has been beyond the effective control of Baghdad since 1991; only Kurds over 40 now speak Arabic there.Having struck oil, the KRG’s leaders sell it independently of Baghdad, exporting it through their own pipeline to Turkey.In a referendum in 2005, 99% of KRG voters chose Kexit. A decade on, Kurdish officials say they need a second vote, but will not name a date.Infighting is the main reason for delay. Having taken back control of their territory in Iraq and Syria, the Kurds have proved incapable of sharing it.A Syrian analyst counts 45 in Rojava alone. In Iraq there are almost as many.
  4. In Iraqi Kurdistan, the core of their putative state-in-waiting, the two dynasties,Mr Barzani and Jalal Talabani that fought a nasty civil war back in the 1990s are also at loggerheads again.Such rivalries make it all the easier for regional powers to turn the Kurds into their pawns. In 1996 Mr Barzani’s men rode the tanks of their former murderer, Saddam Hussein, into Sulaymaniyah. Mr Talabani needed Iran’s forces to win it back. Today Iraq is preoccupied with its own fighting, and the chief puppeteers are again Turkey and Iran.Mr Barzani control of KRG oil revenues, but also makes him dependent on the Turks. Loth to lose influence, Iran is helping Mr Talabani’s men finance a second pipeline from its refineries in Kermanshah to the oilfields of Kirkuk, which Mr Talabani’s forces control.Iran and Turkey are training, arming and directing rival Kurdish militias, say Kurdish intelligence chiefs from both sides. Mr Barzani echoes Turkey in describing the YPG as the Syrian arm of the PKK, the Kurdish armed group waging a bombing campaign against the Turkish state.Mr Talabani (with a nod from Iran) helps build them up. Both armed groups operate from his territory, and the PKK is said to have helped him bolster his hold on Kirkuk.
  5. In the meantime, the rivalry between Turkey and Iran is prising Kurdistan apart. Neither country wants to allow the birth of a Kurdish state that could inspire and lend material assistance to their own Kurdish separatists.Kurdish nervousness is entirely understandable. Twice over the past century, in 1922 and 1946, Kurds have declared their own state only to see stronger powers crush it within months. Even so, they might have done more to prepare their institutions for government. Too often, the leaders of the KRG have replicated the bad practices of their neighbours. Having taken control of the production and sale of oil, the Barzanis seem bent on concentrating power in their own hands.La Familia” is the nickname Kurds have given to the president, his son and intelligence chief, Masrour, and his nephew and prime minister, Nechirvan.As long the revenues kept rolling in, no one quibbled much.Oil prices have also plummeted. As the coffers emptied, the critics brayed.. The tiny KRG (population around 5m) has an astonishing $20 billion of debt, and its banks have exhausted their liquidity.Yet the KRG is worth saving. It retains a surprisingly tolerant multi-faith air, where ministers sip vodka and orange on a Ramadan afternoon in restaurants playing Lebanese love songs.

Economist 7/14/16

  1. Official statistics suggest that divorce is exceedingly uncommon in Nigeria. Just 0.2% of men and 0.3% of women have legally untied the knot, according to the National Bureau of Statistics. And well under 1% of couples admit to being separated. Yet such counts exclude the vast majority of Nigerians, whose traditional marriage ceremonies are not governed by modern law, says Chief Robert Clarke, a barrister.In the mostly Muslim north of the country, men may take up to four wives (so long as they obey the Koranic injunction to treat all equally). Often the younger wives are not yet 18.Couples also marry young farther south, but women there tend to be a little more empowered. Olayinka Akanle, a professor of sociology at the University of Ibadan, reckons that when things fall apart they demand separations more readily than in the north.Deal-breakers include a wife’s failure to bring cooking utensils from her father’s house.
  2. The Government of Zimbabwe is broke. In 2009 Mr Mugabe’s inept and murderous regime printed so much money that inflation topped 500 billion per cent at its peak.When no one would accept Zimbabwe dollars that did not even make good tissue paper, the government abandoned its own currency and adopted the American one instead.But then Mr Mugabe’s cronies rigged elections in 2013 and took back full control of the country.After three years of misrule and dazzling corruption, the treasury is bare again.Government employees have not been paid for weeks. Soldiers and police are restless.The government cannot print money any more, and commercial bankers would rather be buried in a fire-ants’ nest than lend it any.So, its finance minister is asking for aid to borrow about $1 billion to pay off Zimbabwe’s arrears to the World Bank, the IMF and the African Development Bank, which in turn could then start lending to Zimbabwe again.
  3. The IMF estimates that Zimbabwe’s economy has grown slowly but steadily since 2013 and is now about 7% bigger than it was then.Delta, a brewer that sells 98% of the lager in Zimbabwe, now sells about 30% less than it did in 2012, despite having cut the price several times.It seems unlikely that this is because ordinary Zimbabwean drinkers have traded up to champagne.The IMF says the Zimbabwean authorities have “met their commitments” under an IMF staff-monitored programme. But these “commitments” consist mostly of promising to enact reforms, such as curbing public spending and making procurement more transparent, rather than actually doing so.History teaches that aid money cannot buy reform unless the recipient government actually believes in it. Does that apply to Mr Mugabe’s regime? These are the same people who have been in charge of the country, alone or in coalition, for 36 years.The last time the Mugabe regime ran out of money, it lost an election and ended up sharing power. This time, donors risk helping it prolong its misrule.
  4. AMERICA’S National Highway Traffic Safety Administration (NHTSA) is investigating the fatal crash in May of a Tesla Model S electric car.According to Tesla, neither the Model S’s driver nor the car’s own sensors noticed a large articulated lorry crossing the road ahead. The car therefore failed to brake, and it ended up careering under the lorry’s trailer. That ripped off its roof, killing the driver.One possibility is that the vehicle’s cameras, working in combination with its forward-facing radar, wrongly concluded that the lorry was an overhead sign with space beneath it. Some reports have suggested the driver might have been watching a video at the time.For Tesla and other firms developing autonomous vehicles, the systems now available are more akin to intelligent cruise control than robot chauffeurs.. A new facility, at the University of Warwick, in Britain, offers an alternative approach. It is a driving simulator specifically designed to test “intelligent” vehicles. It can thus interact with the sensors of an autonomous car and put that car through its paces without its needing to go on the road.
  5. THE self-proclaimed caliphate of Islamic State (IS) is weakening fast.In total, IS is now thought to have lost half of the land it seized in Iraq and 20% of its territory in Syria.The biggest fights are still to come: for Raqqa and Mosul, in northern Iraq, the two biggest cities under IS control.As it loses that land, and any chance of building an Islamic Utopia, its appeal to disaffected Muslims may dwindle. So the group is adapting.In an abrupt and remarkable shift, Abu Muhammad al-Adnani, the group’s spokesman, said in May that IS does not fight for territory.And Mr Adnani repeated an appeal for followers to hit the group’s enemies abroad.Several individuals and groups have responded to his call. Attacks in places such as Orlando, Istanbul, Dhaka, Baghdad and Jeddah have killed hundreds in the past month.All have distracted attention from the group’s failures in Iraq and Syria, leading some to predict that the attacks will increase.Many analysts think that a completely stateless IS would lose most of its appeal.

Economist 7/13/16

  1. Mr Wang Shi,chairman of Vanke, one of China’s biggest property firms gained the upper hand in his battle against a corporate raider attempting to seize control of his listed company. Baoneng, a private Chinese conglomerate, fired the first salvo last year by raising its stake in Vanke to more than 24%. That made its holding bigger than the one held by China Resources, a state-owned enterprise which has long backed the firm’s leadership, and set the stage for a takeover bid.Declaring Yao Zhenhua, Baoneng’s boss, an unwelcome barbarian, Mr Wang asked for trading in Vanke’s shares to be suspended on December 18th and tried to organise an alternative investor to outflank Baoneng. In March he unveiled a convoluted plan to acquire properties held by Shenzhen Metro, a government entity.But China Resources, unhappy that its stake would also be diluted, opposed this plan.Whatever the outcome, the affair has revealed the sad state of corporate governance in China. Hostile takeovers are extremely rare on the mainland, especially of firms this large.
  2. Israel once christened the “startup nation” is losing steam.The main cause for the slowdown is a growing shortage of trained workers, according to a recent report by the chief economist of the ministry of finance.Until recently, the tech industry was helped by two trends: academics and employees of state-owned industries moving into the private sector and the arrival of tens of thousands of Jewish engineers emigrating from the former Soviet Union. Both these sources of fresh talent have now dried up, even as others remain obstructed. Two growing parts of the Israeli population are underrepresented in the job market: Israeli Arabs and the ultra-Orthodox, who together make up around 25% of the population. Israel’s universities are producing fewer engineers, too: the share of graduates with science degrees is down from 12% in 1998 to 9% in 2014.Moreover, the Israeli tech industry doesn’t make the best use of the talent available. Many workers want to start their own firm, rather than toiling at a big one, meaning that most firms are tiny with only a handful of employees.
  3. Kingfisher Airlines’s missing accounts—apparently stored on servers seized by a vendor who had gone unpaid—is an unwelcome complication for those who had hoped the Kingfisher saga might be inching towards some sort of resolution.Mr Mallya, who did in fact personally guarantee the loans, has claimed it was coincidence that he flew to Europe just as government agencies were closing in on him in March.Having insisted he cough up the entire 90 billion rupees ($1.3 billion) he owes, including overdue interest, there are now reports that some banks may be happy if they get little more than their principal back.That would still equate to a recovery rate of over 50 cents on the dollar, more than double the Indian average in such bankruptcy cases.
  4. Two things stand out about taxes in California. The first is their progressivity. The top rate of state income tax, levied on incomes greater than $1m, has been 13.3% since 2012, when voters approved a ballot measure raising it from an already steep 10.3%.Today the income-tax rate is the highest in the country. As inequality has increased over the past two decades, the state’s fondness for soaking the rich has proved lucrative.In 2014 the top 1% of earners paid 48% of all income tax, up from 36% in 1995.The second oddity is the set of strict constraints on local property taxes.Proposition 13, a ballot measure passed in 1978, caps these levies at 1% of a property’s value. It also stops the tax bill on a given property from rising by more than inflation unless the property changes hands, no matter how much its value increases. This benefits homeowners but also firms who, on selling a property, can use shell companies to avoid a technical change of ownership.Because incomes fluctuate more than property prices, these two features make the tax take highly volatile.
  5. This year the amount stashed away will reach $6.7 billion, or 5.6% of annual revenues. The goal is 10%, but even that may not be enough. In April Moody’s, a rating agency, ranked the 20 most-populous states by the solidity of their buffers against another recession. California came 19th; only Illinois looked less prepared.. One idea is to fix the state’s outdated sales tax. Currently, this applies only to goods, but Americans spend an ever-greater fraction of their income on services, in part because trade has kept goods cheap in recent decades. The fact that the federal government allows individuals to deduct either state income taxes or sales taxes from their taxable income, but not both, may have weakened the incentive for California to fix its sales tax.

Economist 7/12/16

  1. Canada created the world’s first points system, in 1967. Would-be immigrants who scored highest on youth, education, experience and fluency in English or French were offered permanent residency. In 1979 Australia created a similar system. Both countries were abandoning racist schemes that had favoured whites.The new systems soon attracted admirers. New Zealand built a points-based immigration system in 1991; Britain, the Czech Republic, Denmark and Singapore began to experiment. But it gradually became clear that Australia and Canada were much better at attracting accomplished immigrants than at using their skills.In Australia, 13.5% of recently arrived immigrants who had applied from overseas under the points system were unemployed in late 2013, compared with just 1% of those who had come in with a job offer.Another problem in Canada was that the number of applicants exceeded the number allowed in each year.To deal with these flaws Australia and Canada have transformed their immigration systems. Both now weigh local work experience and job offers more heavily.
  2. Migrants between Britain and the 27 countries that will make up the post-Brexit EU fear losing not only the right to move freely, but to stay put.The luckiest will be eligible for a useful second passport. About a tenth of Britons, for example, qualify for Irish citizenship through a parent or grandparent. Anyone already married to a native, and those who have had children in the country where they live, will presumably be able to get permanent residence relatively easily.All rich countries try to stop “marriages of convenience”—unions whose sole purpose is to get a visa. In America, visa overstayers are banned from applying for a green card for up to ten years—except for fiancés of American citizens. A 2008 report by the Centre for Immigration Studies suggested that Americans willing to pose as a bride or groom charged $5,000-20,000.The past few years have seen a big increase in applications for British spousal visas by EU citizens, mostly from the continent’s poorer countries, married to non-EU nationals.It has spotted a trend for young women from eastern or southern Europe being lured to Britain to marry men.
  3. Trouble lurks for the giants in consumer packaged goods (CPG), which also include firms such as General Mills, Nestlé, Procter & Gamble and Unilever.Nestlé, the world’s biggest food company, has missed its target of 5-6% sales growth for three years running.For a time, size gave CPG companies a staggering advantage. Centralising decisions and consolidating manufacturing helped firms expand margins. Deep pockets meant companies could spend millions on a flashy television advertisement, then see sales rise.Yet these advantages are not what they once were.The impact of television adverts is fading, as consumers learn about products on social media and from online reviews. At the same time, barriers to entry are falling for small firms. They can outsource production and advertise online. Distribution is getting easier, too: a young brand may prove itself with online sales, then move into big stores.
  4. In America and Europe, the world’s biggest consumer markets, many firms have been similarly leaden-footed. If a shopper wants a basic product, he can choose from cheap, store-brand goods from the likes of Aldi and Walmart. But if a customer wants to pay more for a product, it may not be for a traditional big brand. This may be because shoppers trust little brands more than established ones. One-third of American consumers surveyed by Deloitte, a consultancy, said they would pay at least 10% more for the “craft” version of a good, a greater share than would pay extra for convenience or innovation.Big companies have been trying to respond. One answer is to focus more. In 2014 Procter & Gamble said it would sell off or consolidate about 100 brands.
  5. Big firms are also acquiring or backing smaller rivals. In 2013 two American food companies and a French one—Campbell Soup, Hain Celestial and Danone—each snapped up a maker of organic baby food.Such strategies may eventually make CPG firms even more like big pharmaceutical companies. They may invent few products themselves and instead either acquire small firms or join up with them, then handle marketing, distribution and regulation.