PEFC certified This copy of The Economist is printed on paper sourced from sustainably managed forests, recycled and controlled sources certified by PEFC www.pefc.org PEFC/01-31-162 Princi
Trang 1Welfare in the age of robots Berning out in California French resistance strikes again Walmart v Amazon
Chinese science: shooting for the stars
JUNE 4TH–10TH 2016
Free speech under attack
Trang 2DRIVE DE CARTIER
M A N U F A C T U R E M O V E M E N T 1 9 0 4 M C
THE DRIVE DE CARTIER COLLECTION IS ELEGANCE REDEFINED THE SLEEK LINES OF THIS CUSHION-SHAPED WATCH CREATE
A TRULY STYLISH PIECE, BROUGHT TO LIFE BY THE MAISON MANUFACTURE MOVEMENT 1904 MC ESTABLISHED IN 1847, CARTIER CREATES EXCEPTIONAL WATCHES THAT COMBINE DARING DESIGN AND WATCHMAKING SAVOIR-FAIRE.
Trang 3The Economist June 4th 2016 3
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The Economist online
Volume 419 Number 8992
Published since September 1843
to take part in "a severe contest between
intelligence, which presses forward, and
an unworthy, timid ignorance obstructing
our progress."
Editorial offices in London and also:
Atlanta, Beijing, Berlin, Brussels, Cairo, Chicago,
Lima, Mexico City, Moscow, Mumbai, Nairobi,
New Delhi, New York, Paris, San Francisco,
São Paulo, Seoul, Shanghai, Singapore, Tokyo,
30 Heard on the trail, page 31
On the cover
Curbs on free speech are
growing tighter It is time to
speak out: leader, page 9.
The many ways freedom of
speech is in retreat, page 51.
Where the state sits by as
Islamists murder secular
speakers, page 53.
University protesters
believe they are fighting for
justice; their critics think
Hong Kong’s struggle
39 Crimes against humanity
One dictator down
40 Nigeria’s life coaches
Yes you can!
40 Palestine
A museum withoutexhibits
46 Russia’s empty elections
United Russia, divided Putin
Pity the Brexpats
François Hollande must notcave in: leader, page 10
France tries to end itsindustrial conflicts beforeEurope’s footballchampionship starts, page 43
Brexit: the union and the
lead to a second Scottishindependence referendum.But the place to fret aboutmost is Northern Ireland, page
48 Britain’s long-overlookeddiaspora could pay a highprice on June 23rd: Bagehot,page 50
Trang 4© 2016 The Economist Newspaper Limited All rights reserved Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or
otherwise, without the prior permission of The Economist Newspaper Limited Published every week, except for a year-end double issue, by The Economist Newspaper Limited The Economist is a registered trademark of The Economist Newspaper Limited.
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Universal basic income
Proponents underestimate
how disruptive it would be:
leader, page 12 Arguments for
a state stipend payable to all
citizens are being heard more
widely, pages 21-24 Reasons
to be less afraid about the
march of machines, page 67
Education in China
Meritocratic exams for
university admission are no
remedy for deep inequalities
in education, page 28 Fraud,
bureaucracy and an obsession
with quantity over quality still
hold Chinese science back,
page 73
shoppers move online, the
retail giant fights to defend its
dominance, page 57 Lessons
from two juggernauts of
American retailing: leader,
page 14
billionaire has morphed from alibertarian into a corporateNietzschean: Schumpeter,page 63
The evolution of Mr Thiel
Finance and economics
65 Reforming Indian banks
Bureaucrats at the till
Caught in the middle
HIV’s slow retrenchment
74 Zika and the Olympics
The rise and fall of nations
78 Johnson
Language peeves
79 The 100-year life
Live long and prosper
79 The meaning of grit
Passion and perseverance
80 Tate Modern
Home of the brave
indicators
Statistics on 42 economies,plus a closer look atmanufacturing activity
Obituary
86 Jane Fawcett
The deb who sank theBismarck
Trang 66 The Economist June 4th 2016
Industrial unrest spread
throughout France A week
after a blockade of oil
refiner-ies led to panic at the petrol
pumps, the country was
crip-pled by another round of
strikes, as transport workers
joined the picket lines The
dispute, over the government’s
modest reforms to loosen
labour-market restrictions, has
pitted unionised workers
against the Socialist
govern-ment of François Hollande
The UN’s refugee agency
reported that at least 880
migrants were feared
drowned in a single week in
the Mediterranean In the first
five months of 2016, 2,510 had
died trying to make the
cross-ing to Europe, up by 35%
com-pared with the same period
last year
In Brussels the European
Com-mission issued a formal
ob-jection to changes made by the
Polish government in
Decem-ber to Poland’s constitutional
court, which potentially
en-danger the rule of law The
government, led by the
Eurosceptical Law and Justice
party, now has to address the
criticisms; failure to do so
could lead to sanctions or to
Poland losing its voting rights
in the European Union
After two decades of work,
Switzerland officially opened
the Gotthard base train
tunnel, the world’s longest, at
an event attended by
Euro-pean leaders, including Angela
Merkel At 57.5km (35 miles) the
Gotthard base is 7km longer
than the Channel Tunnel
When it starts operating in
December it will increase the
capacity for transportingfreight along the Rotterdam-to-Genoa corridor
Breaking the rules
Luis Almagro, the general of the Organisation ofAmerican States, called anemergency meeting to consid-
secretary-er suspending Venezuela
under the organisation’s
“democratic charter” He is thefirst head of the OAS to invokethe charter against the will of amember state But a group ofcountries led by Argentina isseeking to delay the meeting inorder to allow more time formediation between Venezue-la’s populist government andthe opposition
Brazil’s interim
anti-corrup-tion minister, Fabiano Silveira,resigned after recordings wereleaked in which he appears toadvise a high-ranking poli-tician on how to defend him-self in an investigation of themultibillion-dollar Petrobrasscandal He is the secondminister to resign in similarcircumstances since MichelTemer became Brazil’s interimpresident in May
Still defiant, but going to jail
Hissène Habré, the president
of Chad from 1982 to 1990, was
found guilty of crimes againsthumanity, rape and torture by
a court in Senegal set up underthe auspices of the AfricanUnion Around 40,000 peopledied under the dictator’s reign
of terror before he fled Chadfor exile in Senegal He is thefirst ex-head of state to beconvicted in another country’snational court-system, ratherthan at a special tribunal
Uganda announced it has cut
all military ties with NorthKorea after international pres-
sure It used to buy rifles andhire military instructors fromthe dictatorship
Mohamed Kuno, the plotterbehind the attacks on Garissa
University in Kenya last year
in which 148 people weremurdered, was killed in Soma-lia, according to officials
Fighter jets bombed Idlib, arebel-held provincial capital in
northern Syria, killing over 20
people Russia denied it wasresponsible for what was theheaviest bombardment of thecity since a partial ceasefirewas declared last February
Iran said it was banning itscitizens from joining the pil-grimage to Mecca in Septem-
ber in protest at Saudi
Ara-bia’s “obstacles” Hundreds of
Iranians were among some2,400 pilgrims killed in lastyear’s stampede at Mecca, butthe two countries have failed
to agree on compensation
Libyan forces pushed Islamic
State fighters back from twocoastal towns near oil in-stallations, reducing its control
of the Mediterranean shore
Escalating tensions
South Korean officials said that
North Korea tried to launch a
missile from its east coast,which flew for a few secondsbefore exploding China urgedcalm Barack Obama calledNorth Korea “a big worry”
Rodrigo Duterte,
president-elect of the Philippines, was
embroiled in more
controver-sy Just days after a reporterwas killed in Manila he said,
“If you’re an upright journalist,nothing will happen to you,”
but “just because you’re ajournalist, you are not exempt-
ed from assassination if you’re
a son of a bitch.”
Prosecutors in Singaporeopened a money-laundering
probe into 1MDB, a Malaysian
state-investment firm It is thecity-state’s biggest-ever inquiry
of its kind Bail was denied to aformer wealth manager at thebranch of a Swiss private bank,who faces charges in connec-tion with the investigation
China’s capital, Beijing, is
planning to introduce a gestion charge, possibly laterthis year, according to statemedia The rapid growth of acar-owning middle class hasreduced traffic in parts of thecity to a crawl during peakhours Cars are already some-times banned from being used
con-at certain periods of the week America’s defence secretary,
Ashton Carter, said China
could be erecting a “great wall
of self-isolation” by ting principles that other coun-tries have sought to establishfor use of the seas, the internetand management of the globaleconomy, which reflected “theregion’s distant past, ratherthan the principled future”.China responded by sayingthat some Americans’ mindswere “stuck in the cold war”
undercut-Not letting the memory fade
Barack Obama visited
Hiro-shima, the first president of
the United States to go theresince America dropped anatom bomb on the city inAugust 1945 Mr Obama calledagain for a world free of nuc-lear weapons, though underhis administration Americahas upgraded its nukes, ashave Russia and China
Donald Trump, the putative
Republican candidate forpresident, announced that hewould be in Scotland at thereopening of one of his golfcourses on June 24th The date,
a day after Britain votes onwhether to remain in the EU,may not be a coincidence.Although Mr Trump appearsnot to know the meaning of
“Brexit” in interviews, he hasexpressed a desire that Britainshould leave the club (Europe,not his golf club)
Politics
The world this week
Trang 7The Economist June 4th 2016 The world this week 7
Other economic data and news can be found on pages 84-85
In its latest twice-yearly global
assessment, the OECD warned
that the world economy is
“stuck in a low-growth trap”
The organisation said
mone-tary policy alone could no
longer be relied on to deliver
growth and governments
should be using the fiscal tools
at their disposal, such as
in-creases in investment
spend-ing, to stimulate demand It
also pointed to several
down-side risks to global growth, the
most immediate of which
would be if Britain votes to
leave the European Union in a
referendum on June 23rd
The OECD forecast that
Brazil’s economy will shrink
by 4.3% this year Official data
this week showed that the
country’s GDP contracted by
5.4% in the first quarter
com-pared with the same period
last year Although bad, many
economists were expecting the
figure to be much worse
Shinzo Abe, Japan’s prime
minister, delayed a
contro-versial rise in the country’s
sales tax until 2019 The
in-crease, from 8% to 10%, was
supposed to take place next
April, having already been
postponed once An initial rise
in the tax in 2014 was widely
blamed for throwing Japan
into recession
Tiger, tiger, burning bright
India’s economy grew by 7.9%
in the first three months of the
year compared with the same
quarter in 2015 For the fiscal
year ending March 31st GDP
rose by 7.6%, the fastest pace in
five years The government
was quick to take the credit,
pointing to its pro-business
reforms But India’s impressive
figures came with the usualwarnings about their reliabil-ity Other indicators, such asweak private investment andexports, suggest the economicpicture is more mixed
Consumer spending in
Amer-ica grew by 1% in April pared with March, the biggestincrease in nearly seven years
com-The data will be taken as moreevidence that the economy isracing ahead by those whowant the Federal Reserve to liftinterest rates again this month
Martin Senn, who steppeddown as chief executive of
Zurich Insurance in
Decem-ber, committed suicide at hisholiday home in Klosters
Three years ago the company’sfinance director also took hisown life, prompting soul-searching about the stressesfaced by busy executives Anindependent investigation intothat incident concluded thatthe insurer’s leadership wasnot putting undue pressure onmanagement
Yusuf Alireza unexpectedlyquit as chief executive of
Noble Group, Asia’s biggest
commodities-trading firm
Noble, which is based in HongKong, has been hit by theslump in commodity pricesand faces allegations from a
research outfit that it
overstat-ed its assets, which the pany denies On the day that
com-Mr Alireza’s departure wasannounced Noble also said itwould sell its profitable Ameri-can retail-energy business; theproceeds will go towardsrepairing its balance-sheet
Debt spirals
The Obama administrationdetailed new rules to regulate
providers of payday loans.
Such lending is aimed at ple on low incomes and at-tracts very high interest rates
peo-The government wants ers to do more to assess aborrower’s ability to repay
lend-Saudi Arabia’s
sovereign-wealth fund ploughed $3.5
billion into Uber and got a seat
on its board It is the ing app’s biggest single in-fusion of cash, and brings thetotal from its latest round offinancing to $5 billion Theprivately held firm is estimated
taxi-hail-to be worth more than GeneralMotors
SoftBank, a multinational
telecoms and internet groupthat is based in Japan, decided
to sell $7.9 billion-worth of the
shares it holds in Alibaba,
which will reduce its stake inthe Chinese e-commercecompany from 32% to 28%
SoftBank needs to repay thedebt it accumulated to fund anumber of big acquisitions,including the Sprint network
in America It is reportedlylooking to offload some of itsother stakes, including inSupercell, a Finnish mobile-gaming firm
A jury in California rejected
Oracle’s $9 billion claim that Google infringed its copyright
on Java by wiring the softwareinto Android phones Oracletook ownership of Java when
it bought Sun Microsystems in
2010 and it has been battlingwith Google in the courts eversince The jury found thatGoogle’s use of Java cameunder the “fair use” element ofcopyright law
High maintenance
A former director at Barclays inNew York was charged with
allegedly passing inside
infor-mation on forthcoming
merg-ers to his plumber, who haspleaded guilty to using theillegal tips to make money onthe markets The director hasyet to enter a plea The plumb-
er repaid the banker in part byrefurbishing his bathroom, butthis apparently did not includeplugging financial leaks
Trang 9The Economist June 4th 2016 9
IN A sense, this is a golden agefor free speech Your smart-phone can call up newspapersfrom the other side of world inseconds More than a billiontweets, Facebook posts and blogupdates are published every sin-gle day Anyone with access tothe internet can be a publisher, and anyone who can reach Wi-
kipedia enters a digital haven where America’s First
Amend-ment reigns
However, watchdogs report that speaking out is becoming
more dangerous—and they are right As our report on page 51
shows, curbs on free speech have grown tighter Without the
contest of ideas, the world is timid and ignorant
Free speech is under attack in three ways First, repression
by governments has increased Several countries have
reim-posed cold-war controls or introduced new ones After the
col-lapse of the Soviet Union, Russia enjoyed a free-for-all of
vigor-ous debate Under Vladimir Putin, the muzzle has tightened
again All the main television-news outlets are now controlled
by the state or by Mr Putin’s cronies Journalists who ask
awk-ward questions are no longer likely to be sent to labour camps,
but several have been murdered
China’s leader, Xi Jinping, ordered a crackdown after he
took over in 2012, toughening up censorship of social media,
arresting hundreds of dissidents and replacing liberal debate
in universities with extra Marxism In the Middle East the
over-throw ofdespots during the Arab spring let people speak freely
for the first time in generations This has lasted in Tunisia, but
Syria and Libya are more dangerous for journalists than they
were before the uprisings; and Egypt is ruled by a man who
says, with a straight face: “Don’t listen to anyone but me.”
Words, sticks and stones
Second, a worrying number of non-state actors are enforcing
censorship by assassination Reporters in Mexico who
investi-gate crime or corruption are often murdered, and sometimes
tortured first Jihadists slaughter those they think have insulted
their faith When authors and artists say anything that might
be deemed disrespectful of Islam, they take risks Secular
blog-gers in Bangladesh are hacked to death in the street (see page
53); French cartoonists are gunned down in their offices The
ji-hadists hurt Muslims more than any others, not least by
mak-ing it harder for them to have an honest discussion about how
to organise their societies
Third, the idea has spread that people and groups have a
right not to be offended This may sound innocuous
Polite-ness is a virtue, after all But if I have a right not to be offended,
that means someone must police what you say about me, or
about the things I hold dear, such as my ethnic group, religion,
or even political beliefs Since offence is subjective, the power
to police it is both vast and arbitrary
Nevertheless, many students in America and Europe
be-lieve that someone should exercise it Some retreat into the
ab-solutism of identity politics, arguing that men have no right to
speak about feminism nor whites to speak about slavery ers have blocked thoughtful, well-known speakers, such asCondoleezza Rice and Ayaan Hirsi Ali, from being heard oncampus (see page 54)
Oth-Concern for the victims of discrimination is laudable Andstudent protest is often, in itself, an act of free speech But uni-versity is a place where students are supposed to learn how tothink That mission is impossible if uncomfortable ideas areoff-limits And protest can easily stray into preciousness: theUniversity of California, for example, suggests that it is a racist
“micro-aggression” to say that “America is a land of ty”, because it could be taken to imply that those who do notsucceed have only themselves to blame
opportuni-The inconvenient truth
Intolerance among Western liberals also has wholly ded consequences Even despots know that locking upmouthy but non-violent dissidents is disreputable Nearly allcountries have laws that protect freedom of speech So au-thoritarians are always looking out for respectable-soundingexcuses to trample on it National security is one Russia recent-
uninten-ly sentenced Vadim Tyumentsev, a blogger, to five years in son for promoting “extremism”, after he criticised Russianpolicy in Ukraine “Hate speech” is another China locks upcampaigners for Tibetan independence for “inciting ethnic ha-tred”; Saudi Arabia flogs blasphemers; Indians can be jailed for
pri-up to three years for promoting disharmony “on grounds of ligion, race caste or any other ground whatsoever”
re-The threat to free speech on Western campuses is very ferent from that faced by atheists in Afghanistan or democrats
dif-in Chdif-ina But when progressive thdif-inkers agree that offensivewords should be censored, it helps authoritarian regimes tojustify their own much harsher restrictions and intolerant reli-gious groups their violence When human-rights campaignersobject to what is happening under oppressive regimes, des-pots can point out that liberal democracies such as France andSpain also criminalise those who “glorify” or “defend” terro-rism, and that many Western countries make it a crime to in-sult a religion or to incite racial hatred
One strongman who has enjoyed tweaking the West for pocrisy is Recep Tayyip Erdogan, president of Turkey At home,
hy-he will tolerate no insults to his person, faith or policies.Abroad, he demands the same courtesy—and in Germany hehas found it In March a German comedian recited a satiricalpoem about him “shagging goats and oppressing minorities”(only the more serious charge is true) Mr Erdogan invoked anold, neglected German law against insulting foreign heads ofstate Amazingly, Angela Merkel, the German chancellor, haslet the prosecution proceed Even more amazingly, nine otherEuropean countries still have similar laws, and 13 bar insultsagainst their own head of state
Opinion polls reveal that in many countries support for freespeech is lukewarm and conditional If words are upsetting,people would rather the government or some other authoritymade the speaker shut up A group of Islamic countries are lob-bying to make insulting religion a crime under international
Under attack
Curbs on free speech are growing tighter It is time to speak out
Leaders
Trang 1010 Leaders The Economist June 4th 2016
2law They have every reason to expect that they will succeed
So it is worth spelling out why free expression is the
bed-rock of all liberties Free speech is the best defence against bad
government Politicians who err (that is, all of them) should be
subjected to unfettered criticism Those who hear it may
re-spond to it; those who silence it may never find out how their
policies misfired As Amartya Sen, a Nobel laureate, has
point-ed out, no democracy with a free press ever endurpoint-ed famine
In all areas of life, free debate sorts good ideas from bad
ones Science cannot develop unless old certainties are
quer-ied Taboos are the enemy of understanding When China’s
government orders economists to offer optimistic forecasts, it
guarantees that its own policymaking will be ill-informed
When American social-science faculties hire only left-wing
professors, their research deserves to be taken less seriously
The law should recognise the right to free speech as nearly
absolute Exceptions should be rare Child pornography
should be banned, since its production involves harm to
chil-dren States need to keep some things secret: free speech does
not mean the right to publish nuclear launch codes But in
most areas where campaigners are calling for enforced civility
(or worse, deference) they should be resisted
Blasphemy laws are an anachronism A religion should be
open to debate Laws against hate speech are unworkably
sub-jective and widely abused Banning words or arguments
which one group finds offensive does not lead to social
harmo-ny On the contrary, it gives everyone an incentive to take
of-fence—a fact that opportunistic politicians with ethnic-based
support are quick to exploit
Incitement to violence should be banned However, it
should be narrowly defined as instances when the speaker
in-tends to goad those who agree with him to commit violence,and when his words are likely to have an immediate effect.Shouting “Let’s kill the Jews” to an angry mob outside a syna-gogue qualifies Drunkenly posting “I wish all the Jews weredead” on an obscure Facebook page probably does not Sayingsomething offensive about a group whose members then start
a riot certainly does not count They should have respondedwith words, or by ignoring the fool who insulted them
In volatile countries, such as Rwanda and Burundi, wordsthat incite violence will differ from those that would do so in astable democracy But the principles remain the same The po-lice should deal with serious and imminent threats, not arrestevery bigot with a laptop or a megaphone (The governments
of Rwanda and Burundi, alas, show no such restraint.)
forward to staging a big tacle this month Euro 2016, aninternational football tourna-ment second in importanceonly to the World Cup, kicks off
spec-in the Stade de France near Paris
on June 10th, the first of 51matches around the country ending with the final on July 10th
But a spectacle of a different sort is attracting attention to
France early, and for the wrong reasons: industrial unrest,
which threatens to spread chaos and spoil the party
Last week a blockade of oil refineries led to panic among
motorists as petrol stations ran dry This week the havoc
spread to the railways Pilots at Air France have voted to
dis-rupt flights A national day of strikes is threatened on June 14th,
when the Senate, the upper house, is due to consider the
changes to France’s labour laws which are at the centre of the
dispute
At issue are modest reforms designed to tackle the
coun-try’s high unemployment, which remains stubbornly at 10%
The law would ease rigid collective-bargaining rules and make
firing workers slightly less complex But this is not the direction
of change that France’s Socialist president, François Hollande,promised when he was elected four years ago, pledging to fightausterity and soak the rich (see page 43) Fearful of a rebellion
by left-wingers in his own party, his prime minister, ManuelValls, decided to ram the measures through the National As-sembly using executive powers that allow a law to be ap-proved by a motion of confidence, rather than voted on di-rectly The country’s biggest union, the hard-leftConfédération Générale du Travail (CGT), has opted to con-front the government in the time-honoured French way—and
at a moment of maximum pressure, with Euro 2016 looming
This time, no surrender
The last thing the government wanted was further trouble for
a tournament already beset by heightened concerns over rorist attacks (this week the State Department warnedwould-be American travellers that Euro 2016 was a potentialtarget) Mr Hollande, his approval rating at a dismal 13%, ispoorly placed for a showdown And the labour reforms, al-ready diluted to an extent that has cost the support of the mainemployers’ groups, might seem an odd cause for the Socialistleader to fight for At this point, with mass protests growing,past French administrations would have climbed down Ten
ter-Strikes in France
Don’t cave in, Mr Hollande
The game that really matters is the political one, not football
Trang 1212 Leaders The Economist June 4th 2016
2
most important tions It is the main mechanismthrough which spending power
institu-is allocated It provides peoplewith meaning, structure andidentity Yet work is a less gener-ous, and less certain, provider ofthese benefits than it once was Since 2000 economic growth
across the rich world has failed to generate decent pay
in-creases for most workers Now there is growing fear of a more
fundamental threat to the world of work: the possibility that
new technologies, from machine learning to driverless cars,
will cause havoc to employment
Such worries have revived interest in an old idea: the
pay-ment of a “universal basic income”, an unconditional
govern-ment paygovern-ment given to all citizens, as a supplegovern-ment to or
re-placement for wages (see pages 21-24) On June 5th Swiss
citizens will decide in a referendum whether to require their
government to adopt a basic income Finland and the
Nether-lands are planning limited experiments in which some
citi-zens are paid a monthly income of roughly €1,000 ($1,100)
People from all points on the ideological spectrum, from trade
unionists to libertarians, are supporters It is an idea whose
day may come But not soon
The basic income is an answer to a problem that has not yet
materialised Worries that technological advance would mean
the end of employment have, thus far, always proved
misguid-ed; as jobs on the farm were destroyed, work in the factory was
created Today’s angst over robots and artificial intelligence
may well turn out to be another in a long line of such scares A
much-quoted study suggesting that 47% of today’s jobs could
be automated in the next two decades looks too gloomy, for
ex-ample (see page 67) Machines may one day be a match for
many workers at most tasks But that is not a reason to rush to
adopt a basic income immediately
If the need for a basic income is unproven, the costs are
cer-tain Its universality is designed to encourage citizens to think
of the payment as a basic right However, universality also
means that the policy would be fantastically costly An
econ-omy as rich as America’s could afford to pay citizens a basic
in-come worth about $10,000 a year ifit began collecting about as
much tax as a share ofGDP as Germany (35%, as opposed to the
current 26%) and replaced all other welfare programmes
(in-cluding Social Security, or pensions, but not in(in-cluding healthcare) with the basic-income payment
Such a big jump in the size of the state should make anyonewary Even if levied efficiently, on an immovable asset likeland, tax rises on this scale would have unpredictable effects
on growth and wealth creation Yet an income of $10,000 isstill extremely low: it would leave many poorer people, such
as those who rely on the state pension, worse off than they arenow—at the same time as billionaires started getting moremoney from the state
A universal basic income would also destroy the ality on which modern welfare states are built During an ex-periment with a basic-income-like programme in Manitoba,Canada, most people continued to work But over time, thestigma against leaving the workforce would surely erode: largesegments of society could drift into an alienated idleness Ten-sions between those who continue to work and pay taxes andthose opting out weaken the current system; under a basic in-come, they could rip the welfare state apart
condition-Lastly, a basic income would make it almost impossible forcountries to have open borders The right to an income wouldencourage rich-world governments either to shut the doors toimmigrants, or to create second-class citizenries without ac-cess to state support
Basic questions
Make no mistake: modern welfare states leave plenty to be sired Disability benefits are for many people an unsatisfac-tory version of a basic income, providing those who will nolonger work with enough to get by But rather than upend soci-ety with radical welfare reforms premised on a job-killingtechnological revolution that has not yet happened, govern-ments should make better use of the tools they already have Labour-market reforms—to crack down on occupational li-censing, say—would boost employment growth More gener-ous wage subsidies, such as an earned-income tax credit,would help people stay out of poverty Long-overdue publicinvestment in infrastructure would foster demand Relaxingplanning restrictions would create jobs in construction, andhomes for workers in places with robust economies
de-A universal basic income might just make sense in a world
of technological upheaval But before governments beginplanning for a world without work, they should strive to maketoday’s system function better
Rethinking the welfare state
Basically flawed
Labour costs
Worldwide, as % of GDP
50 55 60
1980 90 2000 12
Proponents of a basic income underestimate how disruptive it would be
years ago it was a centre-right president, Jacques Chirac, who
abandoned a controversial labour reform after weeks of
stu-dent demonstrations That followed similar retreats in 1986,
1994 and 1995
Caving in once again in 2016 would be a mistake The
gov-ernment should resist even the sort of messy compromise that
seems to be tempting it as a means of avoiding disruption at
Euro 2016—making concessions to the CGT on restructuring
ef-forts for the national railways, say, in exchange for its
acquies-cence on the labour laws Such a compromise would be
against the spirit of the reforms, which aim to dilute the role ofnational law and branch agreements
Mr Valls says that he is determined to hold his ground If heand Mr Hollande want to show that they are serious about thechange France needs, this is their moment For once, they must
be frank with the French about why these labour-market forms are a step towards job creation and growth, and in every-one’s interest Disruption of the coming football tournamentwould be a shame But for the sake of France’s future, it is thepolitical game that the government has to win 7
Trang 14re-14 Leaders The Economist June 4th 2016
BANKS are usually reliable rometers of the health of theeconomies they help finance Sonews in recent days that India’slenders have lost over 200 bil-lion rupees ($3 billion) in themost recent quarter sits oddlywith zippy growth in GDP of7.9% A revving economy may help the banks overcome their
ba-weakness Far likelier is the opposite outcome: that the Indian
economy ends up being damaged by its lenders
Most of the trouble lies in India’s state-owned banks, a
net-work of 27 listed but government-controlled entities that
ac-count for 70% of India’s banking system by assets (see page 65)
Their share prices have tumbled ever since the Reserve Bankof
India (RBI), the central bank and regulator, sensibly forced
them to confess to past mistakes A staggering 17% of the loans
they made in a mini credit boom around 2011 have either had
to be written off or are likely to be
Corporate lending, particularly to powerful Indian
con-glomerates, is at the root of the problem Some of the dodgy
loans have soured because of bad luck: mining projects have
been hit by slumping commodity prices Some reflect bad
judgment: loans to infrastructure developers have proved
bankers to be wildly optimistic about the ability to get stuff
built in bureaucratic India And some reflect bad faith:
politi-cians in the previous government leant shamelessly on public
banks to supply money to their cronies in business
To its credit, the government of Narendra Modi, in office
since 2014, has cracked down on this kind of corruption Along
with Raghuram Rajan, governor of the RBI, it has been willing
to air the financial system’s problems A recently passed (but
not yet operational) bankruptcy law will give banks power to
foreclose on defaulting borrowers, many ofthem tycoons who
have historically run rings around their bankers The ment even wants to consolidate the 27 banks into less than halfthat number, over the objection of trade unions
govern-It needs to be still bolder The priority is to be more lous about cleansing the financial system of sour loans Theoption of setting up a “bad bank” to remove the dud assetsfrom ailing lenders’ balance-sheets has been ruled out Thefunds earmarked to recapitalise the banks, which now havethe most threadbare equity cushions in Asia, are insufficient.Credit-rating agencies are warning that the banking miasma is
scrupu-a threscrupu-at to Indiscrupu-a’s sovereign rscrupu-ating
Muddling through is a tried-and-tested strategy when itcomes to struggling banks Europe is a past master at this ap-proach and the result is a banking industry that has been un-able to support growth This ossification may be starting in In-dia, where loans to industry are growing by a meagre 2% a year
By contrast, America forced recapitalisations on its banks afterthe 2007-08 financial crisis—a painful exercise for all sides, butone that was rewarded with a swift return to health America
is the example for India to follow An early confirmation of asecond three-year term for Mr Rajan, who will otherwise de-part in September, would send the right message
Banks, not bureaucrats
A government that describes itself as “pro-market” should alsolay out a path to the privatisation of state-owned lenders It is
no coincidence that private-sector banks have experiencedonly a small fraction of the losses of state-backed rivals MrModi should also aim to scrap socialist-era rules that force allbanks to make a fifth of their loans to support farming and thatdictate where they can open branches The government hasmade some welcome changes But until it abandons its beliefthat a state-owned banking system is the right way to allocatecredit, India’s banks will hold the economy back 7
Indian banking
Of banks and bureaucrats
Proposed reforms to India’s financial system are welcome but insufficient
FOR decades a titan has ered over America’s shop-ping landscape Walmart is notjust the world’s biggest retailerbut the biggest private employerand, by sales, the biggest com-pany Last year its tills rang uptakings of $482 billion, abouttwice Apple’s revenue But now the beast of Bentonville must
tow-cope with an unfamiliar sensation After ruling as the
undis-puted disrupter of American retailing, Walmart finds itself
be-ing disrupted
The source of the commotion is online shopping,
specifical-ly online shopping at Amazon E-commerce accounted for $1inevery $10 that American shoppers spent last year, up by 15%from 2014 Amazon’s North American sales grew at abouttwice that rate Walmart’s share of America’s retail sales,which stands at 10.6%, is still more than twice Amazon’s, but itpeaked in 2009 at nearly12% In January Walmart said it wouldclose 154 American stores It may need to shut more
Walmart’s “supercentres” once offered an unmatched bination of squeezed prices and expansive choice, but this for-mula is losing its magic (see page 57) Discounters and othercompetitors are rivalling Walmart’s low prices at the sametime as Amazon’s warehouses can beat its range
com-Amazon is also offering something different Whereas
Wal-Shopping in America
Between Bentonville and Bezos
Lessons from the two giants of American retailing
Trang 15Why drive when you can ride?
Trang 1616 Leaders The Economist June 4th 2016
2mart has strived to help Americans save money, Amazon is
ob-sessed with helping them save time Amazon has become a
new kind of big-box retailer, with warehouses placed
strategi-cally around America to speed deliveries to customers
Inno-vations such as Dash, which lets you press a button in your
kitchen to order soap or coffee, could turn Amazon from an
on-line store into something like a utility
Walmart is fighting back It is spending billions in the hope
of growing even larger It is offering more goods to more
cus-tomers, in stores and online With its legendary attention to
de-tail, it is making its operations even more efficient For instance,
it will save more than 35 truckloads of buttercream icing this
year, after spotting that its bakers were leaving too much icing
in the bottom of their tubs By using 27 different boxes rather
than 12 to deliver online goods, the firm reckons it can save
7.2m cubic feet of cardboard boxes a year
Last month sunny results sent up its share price by 10% Yet
far from offering comfort to other retailers hoping to knit
to-gether physical and online businesses, Walmart’s fightback
shows how hard it will be for them to repel Amazon
Other retailers cannot rival Walmart’s size—still its most
po-tent weapon Nine out of ten Americans live within ten miles
of a store owned by Walmart That gives it a unique advantage
in e-commerce, because it can both ship from its stores and letconsumers pick up baskets of goods that they ordered online.Its vast grocery business, which is harder to move online thannon-perishable goods, provides further protection Althoughinvestments have squeezed Walmart’s profits, the firm can af-ford to invest more than any other in information technology
Space race
For smaller, worse-managed firms selling clothing, shoes and
so on, the prognosis is bleaker Since April 1st shares in some ofAmerica’s most famous retailers, including Macy’s, Gap andJ.C Penney, have plunged by more than 25%, in part because ofthe march of online firms In the age of Amazon only thosethat offer better service, greater convenience or an experiencethat is hard to mimic online will do well TJX, which offersbrand-name goods at a discount, is thriving, because custom-ers prefer hunting for treasures that are physically there in front
of them Customers come to Nike’s shops not just for trainersbut for running clubs Walmart is betting that it has the brawnand the brains to be in this group However, others have lesscause for hope 7
ACAR slams into a tree atspeed, and is crushed In-side, the Romanian police findthe body of the chief executive
of a company that makes gents for hospitals—one underinvestigation for watering downits products and leaving patients
deter-to die from drug-resistant infections The Hexi Pharma scandal
(see page 45) sounds like something out of “The Third Man”
For many foreigners, it confirms Romania’s reputation as a
kleptocracy riddled with malfeasance and graft
Romania is certainly rotten But the Hexi Pharma affair is
evidence of how much the country is doing to tackle
corrup-tion After investigative journalists exposed the case in late
April, it was quickly taken up by the judiciary This has become
much more independent under pressure from the European
Union, which Romania joined in 2007 The new general
prose-cutor, appointed in April by a president elected on an
anti-cor-ruption platform, is pursuing Hexi Pharma zealously Laura
Codruta Kovesi, the dauntless head of the country’s
anti-cor-ruption directorate, says her agency is also investigating Last
year it prosecuted over 1,250 officials and helped force the
prime minister from power At last month’s global
corruption-fighting summit in London, Ms Kovesi was treated as if she
were a rock star
It is a common paradox: the world often becomes aware of
corruption when someone is doing something about it That
leads people to conclude that things are getting worse when
they are, in fact, getting better The incentives for countries can
thus be perverse Investors long shrugged off the graft that
per-meated Brazil’s political system Then, in 2014, crusading
pros-ecutors revealed that the state-owned oil company, Petrobras,had funnelled hundreds of millions of dollars to officials andparties in exchange for contracts The next year Brazil’s score
on the Corruption Perceptions Index compiled by ency International, a global watchdog, fell by five points.Guatemala has suffered a similar fate Since 2008 the coun-try has hosted a pioneering UN-backed independent prosecut-ing agency known as CICIG Last year it uncovered graft at thecustoms agency and brought down the president and vice-president Yet in 2015 the country’s score on TransparencyInternational’s index got worse Dan Hough, a corruption ex-pert at Sussex University, notes that Britain’s score on theTransparency International index declined after the parlia-mentary expenses scandal of 2009, though the excesses hadbeen taking place for decades—and, in the scheme of things,Britain was not especially venal It was the exposure, not theactivity, that created the perception of corruption
Transpar-Make an honest country of them
The tendency to see countries as dirtier when they start toclean up will not surprise students of British or American his-tory The impression that both countries were unusually slea-
zy in the late 1800s is largely due to the rise of reform and gressive movements dedicated to making politics honest Thequestion is whether countries such as Romania, Brazil, Guate-mala or China will be able to follow the same path
pro-They may not The Orange revolution in Ukraine and the
mani pulite (clean hands) prosecutions in Italy failed to sanitise
those countries’ politics Still, if a country like Romania is broiled in scandals, voters and investors should applaud, notdespair When crooks make the front page, it is often becausesomeone honest has put them there
em-Fighting corruption
Cleaning up
More visible scandals may mean that a country is becoming less corrupt
Trang 17I am a CEO.
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Trang 1818 The Economist June 4th 2016
Letters are welcome and should be addressed to the Editor at The Economist, 25 St James’s Street, London sw1A 1hg
E-mail: letters@economist.com More letters are available at:
Economist.com/letters
Anti-Semitism and the left
The Anti-Defamation League’s
research confirms Bagehot’s
assertion that anti-Semitic
opinions are not widespread
among the British public, but
are disturbingly prevalent in
Britain’s Muslim population
(May 7th) ADL’s Global 100
poll, released in 2014, showed
just 8% of British respondents
agreeing with a majority of the
11 anti-Semitic stereotypes
presented, compared with 27%
in Germany and 37% in France
Our follow-up poll in 2015
showed a slight increase to 12%,
though the score for British
Muslims was 54%
Although we did not ask
about political affiliation in
our polls, we have long
ob-served on the far-left in Britain,
as in America and elsewhere, a
demonisation of Israel with
Nazi analogies and conspiracy
theories and broad tolerance
within those political circles
for anti-Semitic statements If
these noxious attitudes cannot
be eliminated, they must be
criticised and kept out of the
It is quite devastating that only
52% of British Muslims think
homosexuality should be legal
(“Integration nation”, May
21st) However, in 1983 68% of
British Catholics said
homo-sexuality was mostly or
al-ways wrong, according to the
British Social Attitudes study
By 2013 the figure had dropped
to 2% Will living in an
increas-ingly liberal Britain cause
Muslim attitudes to change,
just as it did for Catholics?
TIM RICHARDSON
Melbourne, Australia
Farmers’ views on Brexit
Your Brexit brief on agriculture
(“We plough the fields and
scarper”, May 21st) referred to
two surveys which suggested
most farmers back the Leave
campaign The surveys had a
potential for self-selecting bias
Farmers certainly have diverse
views on whether Britain
should continue its ship of the EU Our own tele-phone poll suggests over halfthe members of the NationalFarmers’ Union plan to vote toremain in the EU and over aquarter may vote to leave Butmany are undecided
member-Because farmers want moreinformation we commis-sioned our own impact assess-ment, referred to in your arti-cle, of potential Brexitscenarios Farmers’ key con-cerns are access to the singlemarket, fairness with respect tofarm-support payments, pro-portionate and science-basedrules and access to labour
There is a lot of uncertainty
We need the best possibleaccess to the EU single marketand as yet no clear model offuture trade with the EU hasemerged The Leave campaignhas officially committed tocontinuing farm-supportpayment at its current rate, butthey have also suggested otheruses for the money
For those who advocatethat we stay within the EU, it isclear that there is massivescope for improvements Wewant to see proportionate andscience-based regulations thatallow us to compete fairly inthe EU and international mar-kets What is the EU’s strategyfor achieving this?
MEURIG RAYMONDPresidentNational Farmers’ UnionStoneleigh Park, Warwickshire
I think we need a referendum
to decide if we should Remain
in or Leave the EurovisionSong Contest
RAY ROBERTSBudapest
Ban Ki-moon’s record
Your readers deserve a morecomplete portrait of BanKi-moon’s tenure as UN secre-tary-general (“Master, mistress
or mouse?”, May 21st) He hasindeed helped secure consen-sus on the landmark agree-ment on climate change But
Mr Ban has also championedwomen’s equality and backedhis words with actions, shat-tering glass-ceilings across the
UNby appointing a recordnumber of women to high-
of the Holocaust in Iran Hehas modernised the UN bystrengthening peacekeepingoperations, streamlining thebureaucracy and overhaulingits IT systems Never has somuch information about UNbudgets and activities, andeven personal financial dis-closures of senior officials,been so readily available
As one who grew up as arecipient of UN aid in war-ravaged Korea, Ban Ki-moonspeaks from the heart Thishelps him connect where itcounts most: with the sufferingpeoples of the world
STEPHANE DUJARRICSpokesman for the UN secretary-general
New York
Show some initiative
James Madison may have had
a sceptical regard for dums (“Let the people fail todecide”, May 21st) But ThomasJefferson was more insightful:
referen-I know of no safe depository of the ultimate powers of the society but the people them- selves: and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education.
David Cameron’s principalshortcoming, and that of themany politicians who default
to plebiscites when they lackthe courage to decide, is thefailure to educate
GREG PARSTONLondonReferendums may indeed bethe best way to decide “once-in-a-generation national ques-tions” It is, however, unfair ifthose who support a change,such as the Leave campaign onBritain and the EU and the Yescampaign on Scottish indepen-dence, then clamour for asecond referendum if they donot get their way the first time
Their opponents have no suchoption: if they lose, the deci-sion is irrevocable Thereshould, therefore, be a rule thatsuch a referendum can only beheld every, say, 30 years.ANTONY BLACK
Dundee
I am the eggman
Recycling egg shells for use inplastics put me in mind of thewar years (“A cracking yarn”,May 14th) My aunt lived in thecountry and kept chickens Shewould wash and grate theshells until they were very fineand she would then put theeggshell powder into variousfoods, such as homemadejams She said she would getextra calcium for her bones.She never got osteoporosis orany other bone problem andlived until she was 88
I never ate her eggs as shefed her hens on fish meal madefrom fish bones she grated and
I could taste the fish
ROSEMARIE PALLISERAigues-Mortes, FranceAll yolks aside, but shelling outmoney for the R&D of newproducts is not really such aneggcellent idea As a poultrygrower, I feed the shells of mychicken’s eggs back to them forthe minerals needed for thenext clutch Since your scien-tist has to keep buying un-shelled eggs, selling them back
to a supplier might be a morealbumentary solution
VI NOVIELLOLong Branch, New Jersey7
Letters
Trang 19The Economist June 4th 2016
Chief Executive Offi cer London-based
The Cherie Blair Foundation for Women supports women entrepreneurs
in developing and emerging economies to build and expand their businesses, and in doing so, benefi t not only themselves but also their families and communities
The Foundation has reached more than 136,000 women in over 90 countries to date It has built creative, impactful and large scale partnerships with the private sector and works closely with international development actors on entrepreneurship, gender and technology Since its establishment in 2008, the Foundation has raised over £14 million for women’s economic empowerment The organisation has a strong culture of learning and emphasises the importance of results-oriented partnerships.
The Foundation is seeking a new Chief Executive who will build on its accomplishments, drive change and take the organisation to its next stage of growth We are seeking a passionate, energetic change leader and people manager who has substantial experience in international development, entrepreneurship, gender and technology Applicants should demonstrate a thorough commitment to the Cherie Blair Foundation for Women’s mission and values of empowerment, inclusiveness and accountability.
We value diversity and welcome applications from people from all sections of the community The role will be based in London, with international travel Salary is competitive and will be commensurate with experience
For the full job description, please visit:
www.cherieblairfoundation.org/vacancies
To apply, please send a full curriculum vitae and a cover letter addressing the role and person specifi cation to Helen Hayes at hhayes@ cherieblairfoundation.org by 17:00 BST on 24 June 2016.
DIRECTOR LEGAL AFFAIRS DIVISION
The World Trade Organization, based in Geneva, Switzerland, is seeking to fi ll
the position of Director in the Legal Affairs Division.
Reporting to a Deputy Director-General, the successful candidate will lead the Legal
Affairs Division, which is primarily responsible for assisting dispute settlement panels
and arbitrators in resolving trade disputes between WTO Members The Division is
also responsible for providing legal advice on WTO agreements and other issues of
international law and the law of international institutions as they may arise to the
Director-General (DG) and the WTO Secretariat, to the Dispute Settlement Body (DSB)
and other WTO bodies and, as appropriate, to WTO Members The Division also serves
as Secretary to the DSB in Special Session, prepares reference material on WTO law,
and carries out technical assistance and outreach activities.
The successful candidate must demonstrate an expert level of knowledge in
international trade law, public international law, and international dispute settlement
mechanisms and have an excellent knowledge of economic and legal issues relating
to the WTO
Extensive management experience with broad supervisory responsibilities in a legal
environment is required, as is extensive practical experience with dispute settlement
mechanisms The successful candidate must have the skills to guide, empower and
motivate a team of approximately 40 staff members to excel in their jobs and to build
a team culture that consistently delivers high-quality results Signifi cant management
and organizational skills are essential as is the ability to interact and work with others
in a diverse international setting in a harmonious and effective way
Candidates are required to have an advanced university degree in law, including studies
in public international law and international trade law and should be licensed or be
eligible to be licensed to practice law in at least one municipal jurisdiction At least
fi fteen years as a legal practitioner in either the public or private sectors, including
considerable practical experience in trade law and trade litigation, is required
For more details regarding this position and to apply, please visit the WTO’s
e-recruitment website at www.wto.org The application deadline for the
position is 8 June 2016.
Executive Focus
Trang 21The Economist June 4th 2016 21
THE future is a paradise of technological
abundance, some say, in which paid
work is optional and no one goes without
A tiny glimpse at what that future might
look like is on offer in the village of Maricá,
a small seaside town just a short drive from
Rio de Janeiro In December 2015 each of
the town’s 150,000 residents became
eligi-ble to receive a monthly payment worth
just under $3, financed with the help of
Maricá’s share of Rio state’s oil royalties
The sum is small but for Washington
Quaquá, the mayor of Maricá and
archi-tect of the payments plan, the idea is a big
one He says he is guided by “an ethical
pre-cept” that may realise his lifelong dream of
an egalitarian society His programme is an
example of a “universal basic income”: a
no-strings cash payment to everybody in a
given jurisdiction
The idea has a long pedigree, endorsed
by great figures of the enlightenment such
as the Marquis de Condorcet and Thomas
Paine Three centuries on, a handful of
gov-ernments around the world, mostly in rich
countries, are launching experimental
ba-sic-income programmes, or at least
consid-ering the idea Finland will roll out a trial
programme next year, in which some
citi-zens will receive unconditional cash grants
of up to €800 ($900) per month Similar
programmes are being mulled in several
Dutch cities On June 5th the Swiss will
vote on a constitutional change to
intro-duce a basic income for all citizens
Political activists and thinkers across abroad array ofideologies, from libertarians
to social liberals to the hard left, are trigued, or even keen The Cato Institute,
in-an Americin-an think-tin-ank which spendsmuch of its time calling for a smaller state,published a sympathetic analysis of thepolicy in 2015 It feels that, though it mightprefer a world with no government redis-tribution, a basic income is the simplest,least intrusive and least condescendingway to provide redistribution if redistribu-tion there must be
American liberals including Paul man, an economist and columnist, andRobert Reich, a former labour secretary, arealso interested Along with writers such asAnthony Atkinson, a British economist,and Andy Stern, an American unionleader, they see a basic income (in someform) as a way of expanding the welfarestate to reduce growing inequality (seechart 1 on next page) The idea also hassome support in the further reaches of theleft as, in the words of a paper published in
Krug-1986, “A capitalist road to communism”
Unsurprisingly, given the Utopian andlibertarian flavour of the idea, Silicon Val-ley is interested, too This is not, though,simply faddishness The idea ofa universalbasic income has long been tied up withworries about accelerating technologicalchange The basic income, or “social cred-
it”, put forward in the 1920s by C.H glas, a British polymath, was born of theworry that technology was opening up agap between total output and the incomeearned by workers He suggested that gov-ernments could make up the gap by issu-ing every citizen with a “national divi-dend” (The first novel by Robert Heinlein,
Dou-a cDou-anonicDou-al 20th-century science-fictionwriter much rated in libertarian circles,consists largely of arguments in favour ofsocial credit and nudism, both of which hesaw as central to his Utopia.)
Some of the people behind today’stechnological change see universal basicincome in similar terms—a way of assuring
a living for all in a world of robots and ficial intelligence To the extent that suchdisruption is part of their business model,this beneficence is also a way to neutralisecomplaints about the havoc their innova-tions may wreak Albert Wenger, a partner
arti-at Union Square Ventures, a oriented venture-capital firm, argues in fa-vour of the policy in a new book “WorldAfter Capital” Sam Altman, the founder of
technology-YCombinator, a startup incubator, plans topilot a basic income of $1,000-2,000 amonth in Oakland, a city in California “Fif-
ty years from now it will seem ridiculousthat we used fear of not being able to eat as
a way to motivate people,” is how Mr man puts it
Alt-Startup statists
Backers make other arguments, too ers could take more time to train and ex-plore different careers The security of a ba-sic income could boost enterprise, becauseleaving a job and using up savings to open
Work-a business Work-are more pWork-alWork-atWork-able prospects insuch a world So is finding fulfilment in un-remunerated ways
Sighing for paradise to come
M a r i c á , O lt e n a n d Z u r i c h
Arguments for a state stipend payable to all citizens are being heard more widely
Briefing Universal basic incomes
Trang 2222 Briefing Universal basic incomes The Economist June 4th 2016
2 A basic income could also help to right
certain old injustices Women do the lion’s
share ofthe world’s unpaid labour In most
of the world, they work more hours a day
than men do, but command a lower share
of financial resources, largely because they
take on more unpaid child care and
re-sponsibilities for the family home A
uni-versal basic income would shift
purchas-ing power toward people who do work
which, though valuable to society, is not
re-warded financially
As well as offering the possibility of a
simpler and perhaps fairer welfare state,
supporters of a universal basic income say
it answers fears that paid work will break
down as a mechanism for distributing
pur-chasing power In recent years, across
many rich economies, the wages earned
by the typical worker have grown pitifully
slowly—and by less than GDP per person
(see chart 2)
Low wages appear to be necessary to
coax firms into taking on new employees,
often in very low-productivity jobs that
could potentially be done by machines
in-stead This could be a temporary
phenom-enon; the workers at the bottom of the
in-come scale may eventually shift into
better-paid work, or future generations
may cleverly invent new sources of
em-ployment for themselves If it is a
perma-nent state of affairs, though, then a basic
in-come might be a way of making sure that
everyone shares in society’s progress, at
least to some extent
But how such a step might be made to
work, and what harmful effects it might
have, are still open questions The Swiss
government, which is arguing for a “no”
vote in this month’s referendum, worries
that a basic income would be ruinously
ex-pensive and morally corrosive, leaving the
country with unsustainable public
fi-nances and a society of unmotivated
loaf-ers Both supporters and critics agree thatuniversal basic incomes would challengethe centrality of paid work to the way peo-ple live A world with them in place could
be as different from today’s as that of lic education and guaranteed pensionswas in the 1950s, compared with a centurybefore, when the loss of a job could meanstarvation for a worker and his family
pub-Welfare review
The reforms introduced by Otto von marck, the German chancellor whocreated the world’s first modern welfarestate, were intended to undermine supportfor socialism and build working-classbacking for the German empire The sys-tem he put in place was conceived as an in-surance against the woes of hardship, rath-
Bis-er than as a natural entitlement OvBis-er thefollowing century, as trade unions sought abetter deal for labourers, work was a cen-tral principle of organisation Those re-forms created the developed countries’
modern welfare systems: some sort of employment benefit, health-care provi-sion, universal education and state pen-sions
un-Universal-income ideas such as thosechampioned by Douglas were for the mostpart peripheral during the rise of the wel-fare state In the 1970s, in part because offlaws that were becoming apparent in theexisting structures, they briefly interestedmainstream policymakers They were ex-perimented with in Canada, where Dou-glas’s ideas had always had a following InAlaska a basic income was discussed as away to distribute oil riches George Mc-Govern, the Democratic candidate in the
1972 American election, proposed a mogrant” of $1,000 ($5,700 at today’sprices) to every citizen, a policy drawn up
“de-by James Tobin, an economist
McGovern lost 49 of the 50 states, but areform to the welfare state that was similar,
in some ways, still went ahead In 1975Congress created the Earned Income TaxCredit (EITC) It was a sort of “negative in-come tax”, an idea promulgated by theeconomist Milton Friedman, which pro-vided support in inverse proportion to a
worker’s income Like Tobin’s demogrant,Friedman’s idea was in part a response toworries about the “poverty trap” in exist-ing welfare systems The way that benefitprogrammes cut off at particular incomethresholds provided a strong incentive forrecipients not to earn too much
The demogrant avoided the trap by notphasing out benefits as incomes rose TheEITC lessened it by tapering away onlygradually For the unemployed, this in-creased incentives to work by amplifyingthe income earned by the lowest-paid.Two things made the second policy mucheasier to sell: it was cheaper, and it wasonly available to those in work Britain,France and others adopted EITC-like work-ing-tax credits in the 1990s and 2000s.Wage subsidies were increasingly seen asimportant for battling poverty
Today three decades of unequal nomic growth, the pain that followed thefinancial crisis in 2008 and the disruptivepotential of digital technologies have onceagain focused attention on the welfare ofthe struggling working class One re-sponse, in much of the developed world,has been to raise minimum wages Buteconomists warn that minimum pay canonly rise so much before employment suf-fers Rising labour costs encourage firms tolook for labour-saving alternatives, an in-vestment in productivity which might begood for GDP but would exacerbate theshortage of jobs for less-skilled workers Populist politicians argue, wrongly ifseductively, that the key to boosting work-
eco-er welfare is to undo the libeco-eralising sures of the previous generation Suppor-ters of a universal basic income, on theother hand, claim that the re-engineering
mea-of the welfare system they envisage couldallow societies to enjoy the fruits of dy-namic economies while also ensuring theyare widely spread
Their argument runs as follows Thewage-subsidy approach to welfare hasgained ground because it has real effects onpoverty, it maintains incentives to workand it doesn’t cost all that much America’sspending on its EITC programme, for exam-ple, is just 8% of its spending on public pen-sions But it has three problems, too.Though such subsidies reduce the poverty-trap effect, they do not eliminate it; gener-ous wage subsidies that phase out as in-comes rise reduce the incentive to find bet-ter-paying work, because some of the gainreceived from a raise is offset by a reduc-tion in benefits A gently sloping phase-outanswers the problem to some extent, but italso increases costs, with more of theworkforce qualifying for at least some ofthe benefit
Those cost increases highlight a secondconcern, of political economy The target-ing which keeps these programmes cheapalso limits their constituencies That makesthem cuttable In recent years austerity-
2000 02 04 06 08 10 12 15 GDP per person: Britain United States Earnings*: Britain United States
Trang 23The Economist June 4th 2016 Briefing Universal basic incomes 23
2minded governments have been more
willing to gut means-tested welfare
pay-ments than to take an axe to entitlepay-ments
such as universal pensions It is harder to
build broad support for programmes
which, by design, are aimed at a small
un-derprivileged part of the citizenry
Pro-grammes for the poor, who have little to
spend on lobbying and also tend to vote
less, are vulnerable to being chopped
Perhaps most importantly, such
tax-credit policies begin to break down if there
is no prospect of jobs that make use of
peo-ple’s skills When manufacturing jobs that
were the keystone to a regional economy
move abroad, for example, people with
few prospects look for alternative means
of support, such as disability benefits In
most age groups in Britain the share of
pop-ulation claiming disability benefits is
sys-tematically and substantially above the
level of the 1980s, despite efforts to control
growth in disability-benefit costs Since
1988, America’s disability payments have
risen from one in ten of every
social-secu-rity dollar spent to one in five Those
un-able to find work or get on such
pro-grammes sink deeper into poverty In
America many are slipping through the
cracks of a conditional welfare system: the
number of people living in extreme
pover-ty rose sharply between 1996 and 2011,
from 636,000 to 1.5m, according to Luke
Shaefer of the University of Michigan and
Kathryn Edin of Harvard University
A universal basic income might solve
these problems As Tobin argued, a flat
ba-sic-income payment eliminates the
pover-ty trap Since the benefit would not phase
out, there would be no reduced incentive
to seek additional work hours or income
Because it would be paid to all citizens, its
advocates hope that it would enjoy the
po-litical support of an entitlement
pro-gramme, and come to be seen as a right of
citizenship And it would clearly benefit
people with no prospect of work, and thusmost of those in extreme poverty
But that still leaves very hard questions,
of which the toughest is cost Any sal basic income generous enough to make
univer-a dent in poverty would be very sive As Mr Atkinson notes, a universal ba-sic income worth a given percentage of theaverage income (measured as GDP per per-son) requires a proportional rise in tax col-lection as a share of GDP In other words, abasic income of 15% of average incomewould require tax revenues of 15% of na-tional income dedicated to it That is a lot
expen-of tax for not much basic income (onlyabout $8,000 in America, in this example)
Some of the money needed could bedrawn from other welfare programmesdisplaced by the basic income The mostgenerous states in the OECD, a club ofmostly rich countries, spend nearly a third
of GDP on social programmes In Finland,where such spending, less the share de-voted to health, accounts for about a quar-ter of GDP, dividing what is spent across allcitizens would yield a payment of close to
$10,000 for every man, woman and child;
in America the same exercise would yield
a payment per person of about $6,000 (seechart 3)
This would transfer a lot of money fromtoday’s welfare recipients to people al-ready in work The largest group of loserswould be old-age pensioners, the peoplewho, in most countries, already enjoy a ba-sic income (one that in America costs morethan ten times as much as EITC does)
It is possible that providing a less ous basic income to all could help sever thelink between receipt of a pension and re-tirement, encouraging more of a balancebetween work and leisure for adults of allages It might also help the governments ofcountries with ageing populations managedemographic change, by encouraging old-
gener-er workgener-ers to stay working for longgener-er, and
by balancing the fiscal burden of ment income support across people’s lives.But politically, the scope for reductions inpensions is likely to be slim It is hard to seehow a universal basic income of evenmoderate ambition would not requirenew forms and levels of taxation
govern-As a share of GDP, taxes on income andprofits in the OECD range from about12% inAmerica and Britain to 33% of GDP in Den-mark The share has fallen as often as it hasrisen over the past decade or two It is plau-sible that the tax take, especially in thecountries with the lowest share, could go
up without many adverse effects If
Ameri-ca is unlikely to become Denmark, it mightnevertheless become Australia, with a 15%share of GDP taken in such taxes Thatwould represent half a trillion extra dollars
a year
Raising taxes on income and profits hasits risks, though It increases incentives foravoidance and evasion, and reduces the in-centives for the most productive workers
to work and for companies to invest An ternative would be to increase incomethrough more efficient taxes, such as value-added tax (VAT) Most European countriesraise at least 10% of GDP through taxes ongoods and services, primarily VAT Ameri-
al-ca, in contrast, raises only 4.5% through
tax-es on goods and servictax-es, none of which iscollected in VAT form But although a VAT
is efficient, it is also regressive, hittingpoorer people relatively harder
In some places payments for natural sources could provide some funding Oilrevenue pays for most of the Maricáscheme, and allows Alaska’s PermanentFund to pay an annual dividend to each ofthe state’s citizens (last year’s was $2,072).Not every state has a commodity that it can
re-3
Popular pennies
Source: OECD *Purchasing-power parity
Public social spending, excluding health care
As % of GDP, 2013 or latest
0 5 10 15 20 25 Denmark
France Finland Italy Sweden Germany Norway Netherlands Japan OECD average Britain New Zealand Australia United States Canada
$’000 per person, at PPP*, 2015
10.9
7.5
9.2 9.3
9.7 8.3 10.7 7.7 5.7 6.1 6.2 4.8 5.7 6.0 4.6
Trang 2424 Briefing Universal basic incomes The Economist June 4th 2016
2tax that way; but every single state has
per-haps the lowest-hanging of all taxable
fruit—land
A land tax has the advantage of being
progressive Unlike taxes on income, land
taxes do nothing to encourage apathy or
avoidance; rather, they provide an
incen-tive to owners to get the most out of their
property And they can also be lucrative
The sum value of all land in America,
ac-cording to one recent estimate, is about $23
trillion, or 1.6 times GDP A land-value tax
of 5% would raise a little over $1 trillion,
which works out at about $3,500 for every
American, or $8,500 for every American
household
Thomas Paine would have relished
such a prospect His case for a basic income
justified it as a quid pro quo for the
exis-tence of private property Before the advent
of private property, he believed, all men
had been able to support themselves
through hunting and forage When that
re-sort is taken from them, they should be
compensated by means of a “natural
in-heritance” of £15 to be paid to all men every
year, financed from a “ground rent”
charged to property owners
What might have seemed like common
sense to Paine, though, might not be so
im-mediately appealing to those hit by a
tril-lion-dollar land-tax bill Acceptable levels
of taxation do change over time The
origi-nal growth of the welfare state provides an
illuminating example At the turn of the
20th century, government spending was
about 15% of GDP in Britain and less than
10% of GDP in America By 1960, those
per-centages had risen to nearly 35% in Britain
and 30% in America
But the fact that such an increase has
been carried off once does not mean it can
be again Today’s combination of stagnant
pay and falling labour-force participation
is serious, but it is not on a par with, say, the
Depression or the world wars that
bracket-ed it, which drove the expansion of the
state’s role in the economy (see chart 4)
Things will need to become a lot worse to
generate political support for the radical
changes to budgets and tax systems a
uni-versal basic income requires
And what do you do?
Cost is not the only concern about a
uni-versal basic income Many worry that a
general disengagement from work might
prove alienating, and money for nothing
socially corrosive (Some on the left also
fear that, by weakening the power of
la-bour and the sense ofsolidarity that comes
with it, a basic income would lead to the
political and economic irrelevance of the
working class.)
People rely on work to provide order to
their day and purpose to their lives, not
just for money to pay for food and shelter,
and may not find purposeful, satisfying
al-ternatives in its absence Analysis of time
use by Americans who suffered a loss ofwork during the recent recession foundthat about half of the spare time went toleisure, mostly sleeping and watching tele-vision In general retirees who continue towork part-time are happier than thosewho do not work, though it is worth notingthat this is not the case for those who feelforced to keep working to make ends meet
In experiments with a guaranteed come in Manitoba, a Canadian province,
in-in the 1970s overall labour-market pation did not change very much Lateranalysis has suggested that there werewidespread non-economic benefits—lessuse of mental-health services, fewer hospi-tal visits and so on But such experiments,limited in space and duration and subject
partici-to what is known as the “Hawthorne fect”—change that comes about simply be-cause people know there is an interven-tion afoot—may not be good guides to theeffects of a universal system
ef-Plenty also fret that a world of universalincomes would mean even higher hurdles
to migration than today’s The evidencethat benefits are a draw to immigrants isthin—they care more about jobs than the
generosity of the welfare system But if richcountries began offering basic incomesgenerous enough to live on, migrantsmight instead be drawn by the money onoffer (The payments being considered inFinland and the Netherlands are vastlylarger than the tiny income available inMaricá, for example.) Rich countrieswould face the choice of paying generousbenefits to immigrants, shutting borders,
or tolerating the growth of a second-classcitizenry of foreign workers without re-course to the welfare state
These, then, are the questions swirlingaround Switzerland ahead of its referen-dum The Swiss initiative does not looklikely to pass, both because of its expenseand the fear of subsidising layabouts.Though surveys show that only 2% of theSwiss think that a universal income wouldstop them working themselves, about athird think it would scupper the work ethic
of others
Payment protection
Hans Peter Rubi, a 64-year-old in the smalltown of Olten, has no such worries Hewas given a pension of SFr2,600 on beingsent into early retirement, and became anentrepreneur “After doing nothing, you getbored—people want more After a while ofboredom you might become innovative.”
He has used his pension to start an exoticice-cream parlour The avocado ice cream
is proving difficult to perfect, and the vation of staying open through the winter(Olten’s established ice-creamery closes)has yet to pay off He needs a good summerfor the business to be profitable; but he canafford to fail “My security now is that Ihave my basic income It gives a security totake a basic challenge.”
inno-In a world of universal basic incomes, it
is possible that the streets would be linedwith mostly empty ice-cream shops, aspeople used society’s largesse on projects
no one really needs It is also possible thatsuch stipends would give workers theboost in incomes they have been missing
in recent decades, and the additional sure time to enjoy it, thus helping to makebusinesses like Mr Rubi’s profitable
lei-It may be, too, that the need for a sal basic income never becomes truly ur-gent Silicon Valley visionaries could bewrong in their belief that a thriving 21st-century economy will be one where jobs
univer-go to robots faster than new jobs can becreated, and that a universal income is theway to make that transition humane Thecapitalist system has been remarkablygood at finding new ways to work as it getsrid of old ones
But the past is not always a good guide
to the future The welfare system grew up
to service a model of industrial modernity
It is failing the poorest in society and may
be at risk from technological upheaval Itmay yet need a radical redesign
4
Don’t mention the war
Sources: OMB; BEA;
Bank of England *Excludes state tax receipts
Government receipts as % of GDP
0 10 20 30 40 50
1930 40 50 60 70 80 90 2000 15 United States*
Britain
Trang 25The Economist June 4th 2016 25
For daily analysis and debate on Asia, visit
Economist.com/asia
ALL things considered, the month of May
ended well for Shinzo Abe, Japan’s
prime minister He hosted his fellow
lead-ers from the rich world’s club, the G7, at a
summit at Ise in Mie prefecture last week It
went well He welcomed them at a Shinto
shrine founded 1,300 years ago Just after
the summit Barack Obama became the
first sitting American president to visit
Hi-roshima, which an American atom bomb
levelled on August 6th 1945 Japanese of all
ages and backgrounds were moved by his
speech, and by his embrace of a survivor
Mr Abe basked in the reflected political
glow
That gave the prime minister ample
cover to announce, on June 1st, that he
would put off raising Japan’s consumption
tax from 8% to 10% from April of next year
to October 2019 This marks the second
such dodge; the previous one occurred in
November 2014 Mr Abe’s advisers would
have preferred to postpone it indefinitely,
but settled for a point after his term as
pres-ident of the Liberal Democratic Party (LDP)
is currently due to end, in September 2018
Economically, the postponement looks
prudent Japan’s economy is struggling
Many worried that a second tax increase
would knock it flat When Mr Abe raised
the rate from 5% to 8% in April 2014, the
economy tipped back into recession
But politically it carries risks Mr Abe
had promised that the rise would be
car-ried out “without fail” He said that
noth-ing short ofa massive natural disaster or an
But in the end Mr Abe decided to hold
off, despite his approval rating having risenabove 50% (see chart) after the summit and
Mr Obama’s visit to Hiroshima The LDPand its coalition already hold just overtwo-thirds of the lower house, with 326 out
of 475 seats Party strategists reckoned therisks were all on the downside Tax rises, ofcourse, are never popular, but neither areleaders who fail to keep their promises The delay adds to voters’ impressionthat Mr Abe’s economic policies are goingastray On May 31st the main oppositionparties—the Democratic Party, the JapanCommunist Party, and two smallergroups—filed a no-confidence motionagainst the government, citing its failure toenact the promised tax rise as evidencethat “Abenomics” is failing (thanks to thegovernment’s majorities in both houses, itwas swiftly voted down)
Quantitative easing, which the Bank ofJapan (BoJ) began in 2013, weakened theyen while boosting corporate profits andshare prices But an uptick in the currency,even as the central bank introduced nega-tive interest rates from January onwards,has sunk the stockmarket A recent BoJ sur-vey showed that businesses are gloomierthan they have been for three years Milddeflation has returned Fears that Japanhad recently fallen into recession were as-suaged by the news that, in the first quarter,GDPexpanded by an annualised 1.7% Butthe extra day of activity provided by a leapyear contributed to the figures Underlyingprivate demand remains weak
To reverse these trends Japan must hackthrough the web of regulations hinderinggrowth The latest “Japan RevitalisationStrategy” proposed by Mr Abe’s govern-ment falls well short of the task With suchwoolly goals as restoring consumer confi-dence and bringing about a “fourth indus-trial revolution” through IT and artificialintelligence, it has been roundly criticised
economic cataclysm similar to the globalcrisis sparked in 2008 by the collapse ofLehman Brothers, an investment bank,would prevent it from going ahead Nei-ther kind of calamity has materialised Atthe G7 summit Mr Abe tried to persuadehis fellow leaders that the global economycould be on the brink of a Lehman-scalecrisis, in a vain effort to justify the post-ponement He found no takers
The precedent that Mr Abe set after thefirst delay, when he called a snap generalelection to seek voters’ approval, seemed
to demand another poll It could have cided with one that will be held for half ofthe seats in the upper house of parliament
coin-on July 10th The possibility of such a rare
“double” election prompted fevered ulation for weeks
Also in this section
26 Nervous Africans in India
27 Banyan: The Sino-American dialogue
9 6 3 0 3 6 9
+ –
Shinzo Abe’s approval rating, %
GDP, % change on previous quarter, annualised
Trang 2626 Asia The Economist June 4th 2016
2 Meaningful reforms—such as
prevent-ing Japan’s vast, quasi-statist system of
farm co-operatives from gouging hard-up
farmers with high prices for farm
sup-plies—are stalling Resistance is also
build-ing to liberalisation of the electricity
mar-ket, a long process that began on April 1st
Structural reform has been painfully slow,
says Yoichi Funabashi, chairman of the
Re-build Japan Initiative Foundation, a
think-tank, because the vested interests of the
LDPstill hold sway
Meanwhile, shelving the tax increase
will leave Japan’s finance ministry less
able to convince markets that Japan will
tame its swelling debt—now more than
240% of GDP, more than in any other rich
country Mr Abe pledged to keep a
long-standing goal of eliminating the primarybudget deficit by the fiscal year 2020 Econ-omists doubt he can do this
Even so, in the election for the upperhouse due in less than two months, theLDPis expected to do well Mr Abe’s ulti-mate goal—winning a coalition to give himtwo-thirds of the seats, enough to let himrewrite Japan’s pacifist constitution—mayprove elusive But the LDP could still win amajority on its own, allowing it to governmore independently of Komeito, a Bud-dhist-backed party that sits to its left in sev-eral policy areas Not since 1989 has the LDPheld majorities in both chambers For allthe doubts surrounding Mr Abe’s handling
of the economy, voters seem unconvincedthat the opposition could do better.7
YANN, a 31-year-old student from
Kin-shasa, does not wish to be seen
speak-ing with a white foreigner He fears
attract-ing crowds of Indians, angered at the
prospect that he might be complaining
about India (he worries that similar,
per-haps even angrier, crowds would appear if
he were seen speaking to an Indian
wom-an) He lives in one of the crowded villages
that sprawl south through India’s capital,
and the drive back to his windowless
one-room flat happens to wind down Nelson
Mandela Marg and cross Africa Avenue,
of-ficial names given in a spirit of
post-colo-nial camaraderie Also on the way he
passes the brick-strewn gully where an
ac-quaintance, another Congolese named
Masonga Kitanda Olivier, was beaten to
death by three Indian men on May 20th
Yann came to India three years ago to
study IT networks “On my second day
here,” he says, “that’s when I realised, ‘I am
black.’” People laughed at him, and called
him “kalu” (“blackie”) Children point at
him and treat him like a monster Officials
are no better: when he brought his
docu-ments to the foreigner-registration office,
“They say, first thing, ‘When are you
leav-ing? When are you leaving my country?’”
Until recently, though, he had felt
physi-cally safe Then Mr Olivier was killed, and
just days later four separate groups of
Afri-cans were publicly beaten in villages in the
south of Delhi Each attack has its own
proximate cause (Yann thinks Mr Olivier
was mistaken for an Ivorian friend of his
who had made someone cross), but no one
doubts that India’s resident African
popu-lation has gone from feeling unwelcome to
endangered
Except, maybe, the government V.K
Singh, a minister of state and retired eral, tweeted complaints that the presswere “blowing up [a] minor scuffle as [an]
gen-attack” The foreign minister, Sushma raj, clarified that the attacks were “criminalacts”, but were “not racial” Goa’s ministerfor tourism chose this moment to opinethat Nigerians make trouble in India andought to be deported African diplomatsare outraged—not just at the attacks, but atwhat they see as official indifference Astatement on behalf of envoys from 42 Af-rican countries lamented the lack of “dili-gent prosecution”
Swa-Africans have a long history on the dian subcontinent Ethiopians traded withsouth India in Roman times African
In-cavalrymen came to serve Islamic rulers;one of them, Malik Ambar, became a sul-tan in his own right And the Portuguesebrought slaves from east Africa, includingsome who escaped to form communitiessprinkled along India’s west coast, adopt-ing Indian language and dress while pre-serving elements of their earlier cultures.But the current wave of globalised mi-grants is new, as are stereotypes that havefollowed them—that they are all drug deal-ers or prostitutes In fact most Africans inIndia are middle-class; they come for high-
er education and medical care In 2014 anestimated 20,000 Nigerians visited formedical treatment According to the Asso-ciation of African Students in India,around 25,000 Africans study in Indianpublic universities, attracted by high stan-dards, low prices and the prevalence ofEnglish In all, experts believe at least40,000 Africans study and work in India,mainly in the large cities of Delhi, Mumbai,Bangalore and Pune
Some Indians argue, absurdly, that asfellow victims of Western prejudice, theycannot be guilty of racism Priyanka Cho-pra (now a star on American television) de-cries double standards in Hollywood—complaining that Indian actors are made tospeak in stereotypical accents But she her-self played a character in a Hindi filmwhose descent to rockbottom is confirmedwhen she falls into bed with a black man.Last February, after a Sudanese driver hit
an Indian woman with a car in Bangalore,
a group of Tanzanian students were tacked; one was stripped and frog-marched through the streets When shecomplained to a policeman, she says hetold her, “You all look alike,” and impliedthat because they were both African shemust know the man who hit the Indianwith his car
at-Anti-African prejudice may be linked toIndia’s stubborn, caste-related bias in fa-vour of lighter skin (Potential brides areadvertised as having “rosy” or “wheatish”complexions.) The problems faced by Afri-cans are not so different from those borne
by light-skinned Indian nationals from thenorth-east Other Indians sometimes callthem “chinky” Landlords sometimes re-fuse to rent to them; thugs occasionally at-tack them in the streets
Money provides some insulation toprofessionals of African descent NelsonIgunma, a Nigerian-American from NewYork who worked for internet start-upsacross southern India, said he experiencedsome “micro-aggressions”—like beingasked at a dinner party whether he playsbasketball—but nothing worse Now back
in New York, he is looking for a way to turn to India Like Mr Igunma, Yann says
re-he admires Indians for tre-heir intelligenceand the richness of their culture Still, hewakes up afraid every day: “I love India,but they don’t love us.”
Trang 27The Economist June 4th 2016 Asia 27
IN EAST ASIA, relations between China and America make the
strategic weather “When they are stable, the region is calm;
when they are roiled, the region is uneasy,” noted Bilahari
Kausi-kan, a Singaporean diplomat, in a recent lecture In truth, ever
since Richard Nixon went to China in 1972 and opened the
mod-ern era in Sino-American relations, the sky has rarely been
entire-ly clear; but nor has it often been clouded by so many disparate
disagreements as now As the two countries’ bureaucrats from a
range of ministries gather in Beijing on June 5th for their eighth
annual mass date, the “Strategic and Economic Dialogue” (S&ED),
rivalry is trumping co-operation The best that can be expected
this year is that the dialogue helps stem a slide into something
more dangerous
An implicit challenge by China to the American-led world
or-der has become explicit, as will be apparent at this year’s
Shan-gri-La Dialogue, an annual high-level powwow on regional
secu-rity to be held in Singapore from June 3rd to 5th The venue China
has chosen for this contest is the South China Sea, where its
terri-torial claims overlap with those of Brunei, Malaysia, the
Philip-pines and Vietnam (and are mirrored by those of Taiwan) That is
where it has been throwing its weight around most alarmingly
China’s building over the past three years of artificial islands
on some much-disputed rocks and reefs has perturbed the littoral
states and exposed the hollowness of America’s naval
predomi-nance American might has not deterred the construction spree;
and it is hard to see how, short of full-blown war, the new islands
will ever be either dismantled or snatched from Chinese control
America and China accuse each other of “militarising” the sea
Having insisted its island-building in the Spratly archipelago was
for purely civilian purposes, the Chinese defence ministry used a
row last month over its fighter-jets’ dangerous buzzing of an
American reconnaissance plane to argue for “the total
correct-ness and utter necessity of China’s construction of defensive
fa-cilities on the relevant islands”
In fact, despite sending warships on “freedom-of-navigation
operations” near Chinese-claimed features, and having an
air-craft-carrier group on patrol in the sea, America seems to be
try-ing very hard not to provoke China too much China is also
anx-ious to avoid conflict The prime concern of the ruling
Communist Party is to retain power As a way of losing it, fighting
a war with America might be the most certain as well as the mostcatastrophic Yet, at a time of slowing economic growth, the partyincreasingly relies on its appeal to Chinese nationalism In thissense, as Mr Kausikan noted elsewhere in his lectures, “the veryinsignificance of the territories in dispute in the South China Seamay well be part of their attraction to Beijing.” Nobody expectsAmerica to go to war over a Spratly
What alarms America is that Chinese behaviour in the SouthChina Sea seems to fit a pattern In a speech on May 27th Ash Car-ter, the defence secretary, made a point belaboured by Americanleaders: that “On the seas, in cyberspace, in the global economyand elsewhere, China has benefited from the principles and sys-tems that others have worked to establish and uphold, includingus.” What, Americans wonder, is China’s problem? No countryhas gained more from the current order Yet now, said Mr Carter,
“China sometimes plays by its own rules, undercutting thoseprinciples.” The result: a “Great Wall of self-isolation” Chineseanalysts counter that America, too, plays by its own rules A for-eign-ministry spokeswoman accused Mr Carter of being stuck in
“the cold-war era”, and implied his officials were typecasting
Chi-na as a Hollywood villain
Indeed, as Mr Carter suggested, it is not just in its maritime venturism that China is at odds with America Old differenceswiden, as new ones crop up It is hard for American leaders to ig-nore human-rights lobbyists, at a time when China is conductingone of its harshest crackdowns on dissent in recent years Nor isAmerican business brimming with enthusiasm for China Rath-
ad-er, it grumbles about cyber-espionage, the theft of intellectualproperty, the stalling of negotiations on a bilateral investmenttreaty and a general perception that the trajectory of economicpolicy in China is no longer towards gradually increasing open-ness, but towards greater autarky and protectionism It does nothelp that massive Chinese overcapacity in industries such assteel is generating trade disputes and fuelling anti-Chinese ti-rades in America’s election campaign
It used to be argued that, despite manifold areas of tension tween China and America, the relationship was so complex andmultilayered there would always be mitigating areas of mutualbenefit One of the reasons why relations are so fraught now isthat such bright spots are so few Most hopeful are shared com-mitments to move to cleaner energy and limit carbon emissions.Last year’s S&ED saw a “breakthrough”, on curtailing the ivorytrade to protect elephants The two countries are also co-operat-ing for now in trying to curb North Korea’s nuclear ambitions Butthe suspicion lingers that China worries more about the enforce-ment of sanctions that might topple the odious regime in Pyong-yang than about North Korea’s weapons of mass destruction
be-One no-trump
A final reason for scepticism about the S&ED’s prospects is theleadership politics of the two countries It is a forum for bureau-crats But China’s have to some extent been sidelined under thepresidency of Xi Jinping, who has grabbed power for small partygroups that he heads So, in Beijing, the Americans may be talking
to the wrong people And, on their own side, Barack Obama’spresidency is ending China may have taken his cautious foreignpolicy into account in pushing its claims in the South China Sea Itdoubtless suspects that under either Donald Trump or HillaryClinton, America is likely to be less of a pushover 7
Dialogue of the deaf
As China and America continue to talk past each other, Asia frets
Banyan
Trang 2828 The Economist June 4th 2016
For daily analysis and debate on China, visit
Economist.com/china
NO CAR may honk nor lorry rumble
near secondary schools on the two
days next week when students are taking
their university entrance exams, known as
gaokao Teenagers have been cramming for
years for these tests, which they believe
(with justification) will determine their
en-tire future Yet it is at an earlier stage of
edu-cation that an individual’s life chances in
China are usually mapped out, often in
ways that are deeply unfair
To give more students access to higher
education, the government has increased
its investment in the sector fivefold since
1997 The number of universities has nearly
doubled In 1998 46% of secondary-school
graduates went on to university Now 88%
of them do About 7m people—roughly
one-third of those aged between 18 and
22—now gain entry to some form of higher
institution each year
China’s universities offer more
oppor-tunity for social mobility than those in
many other countries, says James Lee of
Hong Kong University of Science and
Tech-nology But the social backgrounds of
those admitted have been changing Until
1993, more than 40% of students were the
children of farmers or factory workers
Now universities are crammed with
peo-ple from wealthy, urban backgrounds
That is partly because a far bigger share of
young people are middle-class But it is
also because rural Chinese face bigger
hur-dles getting into them than they used to
The problem lies with inequality of
ac-cess to senior high schools, which take
stu-barely literate or numerate Poor nutrition
is also a handicap Stanford University’sRural Education Action Programme hasfound that a high incidence of anaemiaand intestinal worms in rural areas affectseducational performance
Since the 1990s more than 200m peoplehave moved from the countryside to work
in cities Many have left their children hind because of the difficulty of gettingthem into urban schools: the country’s sys-
be-tem of hukou, or household registration,
makes it hard for migrant children to enjoysubsidised education in places other thantheir parents’ birthplace
But migrant children who do attendschools in cities usually get a worse educa-tion than their city-born counterparts.State schools that accept migrant pupils of-ten operate what Pei-chia Lan of NationalTaiwan University refers to as “apartheidschool models” In these, migrant childrenare taught separately from urban ones inthe same school, and are even kept apartfrom them in the playground Since theyare forced to take senior high-school exams
in the hometown of their hukou, many
have little choice but to return to the tryside to attend junior high school
coun-Unnatural selection
Children from poor backgrounds who do
make it as far as the gaokao face another
dif-ficulty: competition with better-preparedcandidates from 700 or so feeder (usuallyknown as “keypoint”) schools These re-ceive more funding per student than aver-age schools, have better teachers andplusher facilities They are supposed totrain the brightest students, but many get
in with the help of money and tions Hoping to make the system fairer,some feeder schools now allocate places
connec-on the basis of pupils’ proximity bly, this has sent local house prices sky-rocketing, reinforcing the schools’ privi-leged intake by a different means Hua Ye
Inevita-dents for the final three years of their ondary education Students from ruralbackgrounds who go to such schools per-form as well in the university entrance ex-ams as those from urban areas But mostnever get there Less than 10% of youngpeople in the countryside go to senior highschools compared with 70% of their urbancounterparts The result is that a third of ur-ban youngsters complete tertiary educa-tion, compared with only 8% of young ru-ral adults
sec-One reason is that junior high schools
in the countryside are far weaker cally than urban ones Local governmentsinvest less in them per student than they
academi-do in cities Urban parents tend to be bettereducated and thus better able to help chil-dren with their studies Rural pupils oftensuffer from a “poverty of expectations”,says Jean Wei-Jun Yeung of the NationalUniversity of Singapore: they are not en-couraged to think they can succeed, so they
do not try to
Expense is a huge deterrent for many
Governments cover the costs of schoolingfor the nine years of compulsory educa-tion up to the age of around 15 But at seniorhigh schools, families must pay tuition andother expenses; these outlays are amongthe highest in the world (measured by pur-chasing-power parity) Many studentsdrop out of junior high school—which isfree—because rising wages in low-skilledindustrial work make the prospect of stay-ing at school even less attractive Millionsenter the workforce every year who are
Also in this section
29 Hong Kong remembers Tiananmen
Trang 29The Economist June 4th 2016 China 29
2of Sun Yat-sen University in the southern
city of Guangzhou found that those who
are fortunate enough to attend a keypoint
school are 3.5 times more likely to enter
ter-tiary education than those who go to an
or-dinary senior high school
Some of the feeder schools channel
their pupils into the best universities via an
alternative route to the gaokao. The
Minis-try of Education introduced this in 2003 to
reward people with “special talents” that
are tricky to assess through standardised
tests, such as innovative thinking,
creativ-ity, or skills in sport or art This was
sup-posed to make the types of students
at-tending university more varied Instead it
has increased inequality, by giving
advan-tages to those who have benefited from the
superior facilities of keypoint schools
Elite universities often make
agree-ments with such schools to take a large
share of their best graduates Some of the
90 institutions qualified to do so recruited
over 30% of their intake this way in 2010
(the most recent year for which figures are
available); Fudan University in Shanghai
took almost 60% Many of those admitted
are genuinely bright, but the families of
some bribe universities with sums
equiva-lent to many years’ wages for the average
urban worker Last year Cai Rongsheng of
Renmin University in Beijing admitted to
selling university places for a total of 23.3m
yuan ($3.27m) between 2005-13 (ironically,
the university was the first to offer an MA
in anti-corruption studies) In 2015 the
gov-ernment made recruitment from keypoint
schools more difficult Quotas for
universi-ty recruitment using non-gaokao
qualifica-tions were capped at 5% Places may be
of-fered only after students have taken the
entry exams
The government is trying to reduce
oth-er unfairnesses, too But it has been tough
going: those who benefit from unequal
op-portunities are unsurprisingly reluctant to
cede their privileges This was evident
from the outcry that followed an
an-nouncement last month that 12 provinces
and cities would have to reduce quotas for
local students at their universities These
allow universities to accept local students
even though they may have lower gaokao
scores than those from elsewhere The
news triggered protests in three cities by
parents who worried about losing a
pre-cious advantage for their children
In China meritocratic exams have been
revered since imperial times, when any
man could sit them to enter the civil
ser-vice For centuries they enabled the poor
but talented to rise to high office The
gao-kao is similarly intended to be a great
level-ler But society has become increasingly
di-vided between those with degrees and
those who never even went to senior high
That will mean growing numbers for
whom social advancement will remain a
distant dream
OUTSIDE China, the bloodshed in jing on the night of June 3rd 1989 andthe morning after was a defining moment
Bei-in the country’s modern history The word
“Tiananmen” instantly evokes those rific hours, when hundreds of pro-democ-racy protesters were gunned down orcrushed by tanks in the streets around thevast central square Inside China, however,most people have only a hazy notion ofwhat happened That is because the Com-munist Party allows barely any mention ofthe massacre On the anniversary fouryears ago censors even blocked internetsearches for the term “Shanghai stock ex-change”, because the index that day fell64.89 points, the digits oddly coincidentalwith those of the date most associatedwith the killings
hor-The only large-scale commemorations
in China are in Hong Kong, which was notunder Chinese rule when the bloodshedoccurred, and still enjoys some autonomy
But even in the former British colony thereare some who side with the party andprefer to airbrush the event An umbrellagroup of pro-democracy organisations,known as the Hong Kong Alliance in Sup-port of Patriotic Democratic Movements inChina, believes that a “June 4th Museum”
it opened two years ago—the world’s firstrelating to the unrest of1989—has fallen vic-tim to such people’s concerns
The cramped, mazelike display, on thefifth floor of a nondescript office building
in Hong Kong’s Kowloon district, includes
a bullet-pierced helmet that was worn by a
student who was taking photographs ofthe army’s assault There is also a two-me-tre replica of the “Goddess of Democracy”,
a plaster statue that was erected by studentdemonstrators on Tiananmen, oppositethe portrait of Mao that hangs at the en-trance to the Forbidden City (see picture) The building’s owners are clearly un-happy with the museum and the stream ofvisitors to it In the middle of last year theydeployed security guards at the entrance tothe building, who began keeping records
of visitors’ identity cards This scared somepeople off Mainlanders once made uphalf of the trickle of visitors Their propor-tion fell to a quarter
Now the landlord is taking legal actionagainst the alliance, accusing it of violatingthe terms of the lease by using the space for
an exhibition The alliance’s chairman, bert Ho, says he believes that the Chinesegovernment and other “pro-China enter-prises” with “infinite resources” are be-hind these moves Rather than fight a cost-
Al-ly and protracted battle, the alliance islooking for new premises to house the ex-hibits It plans to sell the existing spaceafter an annual vigil on June 4th markingthe crushing of the unrest in 1989
About 130,000 people took part in thatevent last year, but organisers say theremay be fewer this time Interest amongyoung Hong Kongers is waning In the pasttwo years several student unions havewithdrawn their support, saying their pri-ority is to fight for democracy in HongKong, not the rest of China Students whotook part in the city’s “Occupy Central”protests in 2014 are preparing to contestelections to the legislature in September.One group, Demosisto, wants a referen-dum on whether Hong Kong should be in-dependent Hong Kong’s refusal to forgetTiananmen irks the Communist Party.These days, however, it is the territory’ssmall but increasingly vocal separatistmovement that alarms it far more 7
Remembering TiananmenSquaring off
Trang 3030 The Economist June 4th 2016
For daily analysis and debate on America, visit
Economist.com/unitedstates Economist.com/blogs/democracyinamerica
IN A dismal primary season, the
enthusi-asm and moral purpose of Bernie
Sand-ers’s clamorous supporters has been
uplift-ing Reflected in the vast crowds that have
flocked to hear the crotchety senator from
Vermont, and the vaster sums he has
raised—over $210m so far, mostly in
dona-tions of less than $30—it suggests that
America’s democracy remains vigorous It
is also a tribute to the clarity and justified
outrage with which he has described
pro-blems from corrupt campaign financing to
choking student debt Yet all things have
their measure, and the outpouring of
Ber-nie-love offered up by a crowd of 20,000
Sandernistas, at an open-air rally in
Oak-land on May 30th, seemed mostly inane
As Mr Sanders clambered onto a
wood-en stage, wearing his customary $99 suit,
with a face burnt purple by the sun and
broadly grinning, his adorers screamed
and showered him with flowers “Bern-ie!
Bern-ie!” they chanted, yelling louder
whenever the senator waved or chortled
to acknowledge the adulation of which he,
a septuagenarian social democrat, is such
an unlikely object Feeling the Bern has
be-come for the most devoted Sandernistas
an all-consuming pleasure; “Bernie or
bust”, “Bern the system”, their slogans
read “He’s the only politician who speaks
of the downtrodden,” said Jennifer, an
ac-tor, who swore she would write Bernie
onto the ballot paper in November even if
pledged delegates, “then we will go intothe Democratic convention with a greatdeal of momentum and we will come outwith the nomination.” He is currently trail-ing Hillary Clinton in the Golden State byaround seven percentage points: a formi-dable gap, given her advantage with theHispanic voters who make up over a quar-ter of its electorate, but closable All thesame, Mr Sanders’s prediction seems sounlikely as to be almost delusional
He has done unexpectedly well; butMrs Clinton has never looked especiallythreatened by him Mr Sanders has won al-most 10m votes; she has won 13m The sen-ator’s best, perhaps only, hope of victorylay in mobilising his advantage amongwhite liberals and in caucuses, where theresult can be swayed by a small number ofwell-organised diehards, for an early as-sault He aimed to win the first three con-tests, in Iowa, New Hampshire and Neva-
da This, he hoped, would shatter the aura
of inevitability that was his opponent’sgreatest advantage But Mrs Clinton won inIowa and Nevada, gained massive mo-mentum in the southern states that fol-lowed, and so built a lead of around 300pledged delegates—twice as big as MrObama ever managed over her in 2008.And that is without factoring in her muchbigger advantage among the 715 Democrat-
ic officer-bearers, or “superdelegates”, whowill also vote for the candidate at the con-vention; 543 have already come out for her
In short, Mr Sanders appears to havelost Yet he is hurting Mrs Clinton by refus-ing to acknowledge this The excitementaround his campaign always showed upher woodenness as a campaigner; it takes alot of loud pop music to work up an atmo-sphere at Mrs Clinton’s rallies His persis-tence in winning clusters of smallish statesthat play to his strengths—typically those,
his rival, Hillary Clinton, wins the cratic nomination And if that should handvictory to Mr Trump? “That’s her pro-blem,” she shrugged
Demo-As almost anyone would, Mr Sanders,who a year ago was hardly known to mostvoters, shows signs of believing the hype
He revels in the adulation more visiblythan he used to More important, and bi-zarrely, he appears sincerely to believe hecan win With a big turnout in California,the biggest Democratic primary, he told thecrowd in Oakland, “We are going to cap-ture a very good majority” of the state’s 475
31 Murder season in Chicago
32 Idaho’s happy refugees
34 Lexington: Trumpology
Golden state warriors
Source: RealClearPolitics
Democratic primary Delegate count, June 1st 2016
California poll average, %
0 500 1,000 1,500 2,000 2,500 Hillary
Clinton Bernie Sanders
Pledged delegates Superdelegates
NEEDED TO WIN: 2,383
2016
35 45
55 Hillary Clinton
Bernie Sanders
Trang 31The Economist June 4th 2016 United States 31
1
2recently including Washington, Utah and
Idaho, that hold caucuses—has meanwhile
given his supporters, and some journalists,
an exaggeratedly rosy view of his progress
For the most part, this has been to Mrs
Clin-ton’s advantage; it suits her to be seen
fight-ing Yet it is has latterly denied her the
boost in the polls that is customary for a
presumptive nominee, and which her
Re-publican rival, Donald Trump, is now
en-joying Having trailed Mrs Clinton in
head-to-head polling by double digits in April, he
is now more or less level-pegging with her
Desperate to heal their feuding party,
and turn its fire on Mr Trump, Democratic
bigwigs have for weeks implored Mr
Sand-ers to bow out If the way the Republicans
are rallying to Mr Trump is a guide, the
re-unification could happen rapidly—indeed
the Democrats’ primary wounds look less
deep than the Republicans’ did Asked
whether they would support Mrs Clinton
in November, many of those in Oakland
recoiled at the question: “Of course we
would!” said Annette, a teacher, as behind
her a hawker did brisk trade in “Fuck
Trump” posters and badges It is also parent that some of Mr Sanders’s advisersare turning their thoughts to what he mightdemand as the price ofhis surrender There
ap-is talk of making Mrs Clinton raap-ise herpledge of a $12 minimum wage to the $15
Mr Sanders is promising
A defeated candidate is not generally in
a position to make such demands But MrSanders, who only joined the Democraticparty last year and is aggrieved by its lead-ers’ preference for Mrs Clinton, seemsminded to test that Having implanted sur-rogates into the convention’s rule-makingcommittee, he expects to influence its poli-
cy agenda; that is normally tial but, in the event of an aggressive loser,could be fraught “If he does lose, the party
inconsequen-is going to have to help him help Clinton,”
says Tad Devine, a Sanders adviser
Painfully for Mrs Clinton, Mr Sandersmeanwhile persists in criticising her perso-nally, especially over her fund-raising onWall Street, thereby softening her up for MrTrump How long can it go on? Mr Sandershas no serious chance of overhauling Mrs
Clinton’s lead of 268 delegates in the nineremaining votes, the last of which, Wash-ington, DC, is on June 14th He would need
to secure 68% of the delegates available,which, given that the Democrats handthem out in proportion to vote share, notall to the winner, is almost unimaginable
To justify his pledge to fight on, he fore needs at least to win most of the re-maining states; above all California
there-It is by far the biggest prize of the cratic primaries Winning it handsomelywould also bolster Mr Sanders’s only seri-ous argument for turncoat superdelegatevotes: that he is likelier than Mrs Clinton tobeat Mr Trump The polls, which give MrSanders a double-digit lead over the Re-publican, give some support to that Yet if
Demo-Mr Sanders loses California, on the nightthat Mrs Clinton is likely to cross the requi-site threshold of 2,383 delegates, countingsuperdelegates, they would be immaterial
Mr Sanders would have lost his last shred
of an excuse for fighting on Even his est advisers admit this According to Mr De-
clos-vine, “California is the sine qua non.”7
The campaignsHeard on the trail
Patience is a virtue
“I don’t have a timeline in my mind and I
have not made a decision.”
The Speaker of the House, Paul Ryan, still
resists the charms of Donald Trump
Life, liberty and narcissism
“I want a statue in Washington, DC
Maybe share it with Jefferson.”
Mr Trump’s aspirations go beyond merely
becoming president
Peace, love and understanding
“We’re not buying tanks We’re not
buy-ing grenade-launchers We’re not
mil-itarising our police department.”
Cleveland city councillors reassure groups
who plan to protest at the Republican
convention in July
Crybaby
“Instead of being, like, ‘Thank you very
much, Mr Trump,’ or ‘Trump did a good
job,’ Everybody’s saying, ‘Well, who got
it? And you make me look very bad.”
Mr Trump on the press fact-checking his
claims about fundraising for veterans
Black is the new orange
“You don’t want to look like one of those
anarchist photographers.”
A former commando advises journalists
attending the Republican convention not to
wear black The New Yorker
candi-Lactose intolerant
“Feel the Bern: Hot cinnamon ice creamwith hot cinnamon swirl and red hotcandy.”
An ice-cream shop in Rehoboth Beach, Delaware, has produced a terrifying Sand- ers-themed ice cream Politico Playbook
The gentleman’s for turning
“I want to be helpful I don’t want to beharmful, because I don’t want HillaryClinton to be president.”
Senator Marco Rubio is now supporting his former rival CNN
Miles to go before
“That’s how I can sleep at night.”
Mitt Romney, Republican candidate in
2012, explains his continued objections to
Mr Trump Wall Street Journal
Friends like these
“There are many positive aspects toTrump’s ‘inflammatory policies’.”
North Korea’s state news outlet, DPRK Today, is thrilled by the prospect of a Trump presidency NK News
IT WAS Eddie Johnson’s first big test morial Day weekend usually marks thestart of the most violent period of the year,
Me-as the crime rate rises along with the perature (see chart) Thousands of officerspatrolled the city’s parks, beaches andneighbourhoods, including Mr Johnson,the boss of Chicago’s besieged police forcesince April, who worked a night shift.Fixed-wing aeroplanes circled the area’sexpressways, which have recently seen aspike in shootings In the run-up to theweekend Mr Johnson launched one of thebiggest anti-gang raids in Chicago’s history,
tem-ChicagoPredictable policing
C H I C A G O
A hot summer awaits the city’s new police chief
Hot and homicidal
Sources: City of Chicago; NOAA; The Economist
Average number of murders per day in Chicago
At a given air temperature, Jan 1st 2001 to May 24th 2016
Maximum daily air temperature, °F
0 0.5 1.0 1.5 2.0 2.5
0 20 40 60 80 100
Trang 3232 United States The Economist June 4th 2016
2resulting in the arrest of140 gang members
and the seizure of numerous guns, as well
as drugs apparently worth tens of
thou-sands of dollars
Considering the steep rise in gun
vio-lence this year, the sheer size of Chicago’s
territory, the complexity of its social
pro-blems, the large number of fractious gangs
with ever-younger members and the
re-cent breakdown in trust between residents
and the Chicago Police Department (CPD),
Mr Johnson has taken on perhaps the
toughest job in law enforcement in the
country The results of the Memorial Day
operations were mixed: killings were
down this year, with six murders,
includ-ing one of a 15-year-old girl, between Friday
morning and Tuesday morning, compared
with 12 last year Shootings were higher: 63
compared with 56
From the start of the year until
mid-May, the number of murders increased by
62% to 216 Shootings also rose by 60%
Many theories compete to explain why
One is the low morale of CPD officers,
many of whom feel they are unfairly
vili-fied and “are all being grouped with
Ja-son,” says a former cop, referring to Jason
Van Dyke, a white police officer who shot a
black teenager16 times as he lay in the road
in 2014 A task-force subsequently
appoint-ed by the mayor to lookat race and policing
concluded in April that the CPD has “no
re-gard for the sanctity of life” when it comes
to black Chicagoans
Mr Johnson reckons that the problem is
lack of confidence in the justice system He
argues that trust has broken
down—be-tween the police and the policed, bedown—be-tween
the police and an “overburdened and
bro-ken” judiciary, as well as between the
offi-cers and their leaders In some ways,
though, the CPD has suffered from an
ex-cess of trust, among officers at least On
May 31st the city paid out $2m to settle a
lawsuit with two police officers who say
they were targeted by colleagues and even
suffered death threats after they informed
on corrupt cops who ran a criminal fief in a
housing complex on the South Side
Trust will take time to rebuild, but Mr
Johnson hopes that technology will pay
dividends sooner The CPD
confiscates150-200 guns per week on average, more than
New York and Los Angeles combined
(Though Chicago and Illinois have strict
gun laws, it is easy to buy a gun in Indiana
or Wisconsin, a short drive from the city.)
The department wants to make more use
of the CPD’s “Strategic Subject List” (SSL),
which is based on a computer algorithm
developed by the Illinois Institute of
Tech-nology that calculates the propensity of
in-dividuals to get shot or shoot The fourth
it-eration of the SSL, the one now in use, has
become really good in its murderous
pre-dictions, according to Mr Johnson
The software looks at ten variables,
in-cluding a person’s previous arrests and
convictions, gang affiliations and ment in shootings People are ranked ac-cording to their probability of becoming a
involve-“party to violence” (PVE), either as victim
or assailant According to the CPD, a mere1,400 people are responsible for most ofthe gun violence in a city of 2.7m Of the
140 arrested in the recent gang raid, 117 werealready on the SSL Three-quarters ofshooting victims and more than 80% ofthose arrested for shootings so far this yearwere also found to be on the list
The SSL is a work in progress: the policedepartment is constantly updating the list
and fine-tuning its technology It is also ing to use its data to prevent crime The SSLscore ranges from one to 500, with higherscores representing greater risk Since 2013officers, social workers and communityleaders have visited the homes of morethan 1,300 people with high scores; thisyear the CPD aims to reach 1,500 peoplelikely to be involved in violence and tomeet gang members every other week MrJohnson’s next big test will be the weekend
try-of the 4th try-of July Last year ten people werekilled and 55 shot while everyone else wascelebrating Independence Day.7
THIS has not been a great election seasonfor cool appeals to reason Few publicdebates have strayed as far from Socraticideals of truth-seeking as those involvingrefugees, and in particular whether Ameri-
ca is running intolerable risks by grantingasylum to Muslims from such terror-wracked regions as the Middle East Strik-ingly, some of the loudest calls to bar newrefugee arrivals have come from commu-nities that are rarely, if ever, sent refugeesfrom Syria or other high-risk countries
After terrorist outrages in Paris, nia and Brussels, in some cases involvingattackers who arrived as asylum-seekers,more than two dozen governors and nu-merous members of Congress have de-cried the decision, made by Barack Obama
Califor-in September 2015, to Califor-increase the number
of Syrians admitted as refugees in fiscal
2016 to 10,000, up from 2,000 the previous
year Donald Trump, the presumptive publican presidential nominee, has gonefurther, calling—loudly but vaguely—for atemporary national entry ban on Muslims
Re-“until we find out what’s going on.” What’sgoing on is that whereas 158,655 Syrianscompleted asylum applications in Ger-many in 2015, Mr Obama’s much moremodest target may be missed Between Oc-tober 1st, the start of the current fiscal year,and May 23rd, a total of 2,235 Syrian refu-gees were resettled in America
A distinctively different sort of refugeedebate has gripped the small rural city ofTwin Falls, Idaho for the past severalmonths Twin Falls knows more about asy-lum-seekers than many towns its size Ida-
ho, with just 1.6m people, has taken over20,000 refugees since 1970s, with mostplaced in Boise and Twin Falls The TwinFalls refugee resettlement centre is man-
RefugeesTheir own public Idaho
T W I N F A L L S
Twin Falls, a conservative city in Idaho, likes refugees
Trang 33The Economist June 4th 2016 United States 33
2aged by the College of Southern Idaho
(CSI) Go back to the 1980s and the centre
brought Vietnamese boat people and
Cambodians, among others In the 1990s
war in the Balkans sent waves of refugees
from Bosnia (several Bosnian families
stayed, and provide much oomph to the
lo-cal soccer league) The most recent arrivals
have come from Iraq, Afghanistan and
Su-dan, as well as from Congo, Eritrea, Nepal
and Iran At the same time residents
cheer-fully call Twin Falls “ultraconservative”:
the city and surrounding county, in the
heart of Idaho’s dairy belt, gave the
Repub-lican candidate, Mitt Romney, more than
70% of their vote in the 2012 presidential
elections Though it is a young town,
bare-ly a century old, it has links to dark
chap-ters of history: from 1942 to 1945 there was
an internment camp for
Japanese-Ameri-cans in the high desert17 miles to the north
National alarm over Syrian arrivals
found an echo in Twin Falls late last year A
group of locals launched a petition drive to
put a formal ballot initiative before county
voters, asking them whether they wanted
the refugee centre closed Rick Martin, the
owner of a small repair service for medical
devices, was the prime mover behind the
petition He denies being anti-immigrant,
recalling a school friend from his
child-hood in Twin Falls, a Hmong whose father
had fought with the Americans in
South-East Asia But rumours that Syrian refugees
might be coming galvanised Mr Martin,
who believes that Islam is “a violent
reli-gion, antithetical to American values.” His
grievances are broad: he says refugees take
up much-needed affordable housing and
drive down wages, and may have brought
polygamy to Twin Falls But insecurity tops
his list: Syrians have already reached Twin
Falls, he asserts, and there is a “very, very
high potential that [Islamic State]
sympa-thisers are in our community right now.”
What happened to Mr Martin’s
cam-paign was less predictable His ballot
initia-tive failed woefully He and his
fellow-or-ganisers had six months to collect 3,842
local residents’ signatures, but by the final
deadline in early April secured only 894
Mr Martin blames cold winter weather for
slow signature-gathering: “Most of our
vol-unteers are elderly,” he notes He also
blames city power-brokers for
intimidat-ing the silent majority that he feels backed
his cause, notably the city newspaper, the
Times-News, which he says falsely
por-trayed his campaign as “bigoted” His next
plan is to try to have anti-refugee trustees
elected to the board of the CSI, a long shot
City elders and defenders of the refugee
centre have a different take They say that
they quelled public alarm with the least
fashionable of tools: facts In particular,
supporters of the refugee programme
point to the impact of a public forum
at-tended by more than 700 people,
organ-ised by the Times-News, and addressed by
Twin Falls school, public safety and cal officials, as well as by an invited speak-
medi-er from the fedmedi-eral govmedi-ernment, Larry lett, director of the State Department’sOffice of Refugee Admissions
Bart-Patiently, the panellists set out the costsand benefits ofreceiving a few hundred ref-ugees in Twin Falls each year Refugees arenot a burden on the public purse: they arehelped to find work fast, and typically thenewcomers pay more in federal taxes in asingle year than they receive in their one-
off resettlement grants On average, gees make over a dollar more per hourthan the state’s minimum wage, and pro-vide a useful boost to a healthy local econ-omy Unemployment in Twin Falls, a cityofabout 47,000 people, stands at 3.4%, wellbelow the national average, thanks to ex-pansion by such employers as Chobani, ayogurt-maker
refu-Latter-day saints
Refugees are screened for health problemsand commit crimes at an exceedingly lowrate, panellists added Asked for safetyguarantees, Mr Bartlett of the State Depart-ment assured the forum that, while noth-ing in life is “100%” guaranteed, back-ground checks for refugees by severalsecurity and intelligence agencies arestrong, and are under review to becomestronger A less diplomatic speaker mighthave added that terror groups trying to in-filtrate America would find it much easier
to send militants who hold European ports, who can visit without visas
pass-Wiley Dobbs, superintendent of theTwin Falls school district, told the forumhow special services for refugees and im-migrant children, including two centresthat prepare newcomers to learn in Ameri-can schools, account for 0.42% of his bud-get “There was a lot of false informationout there,” Mr Dobbs recalls “The neat
thing is, we were just sharing the facts.”Culture also matters Perhaps a quarter
of the city’s residents are Mormons, andmany churches of all denominations havelong worked with refugees Not least be-cause so many young Mormon adultsserve as missionaries around the world,Twin Falls families “appreciate having div-ersity” in their schools and neighbour-hoods, says Bill Brulotte, who directs feder-
al programmes in the school district
Twin Falls may offer some other sons, suggests the mayor, Shawn Barigar.His is a handsome city, built on the south-ern edge of the Snake river canyon, ameadow-bottomed gorge which at thatmoment glows a vivid green behind him
les-in the evenles-ing light The scene is peacefulnow, but the debate at times became “Whocan scream the loudest?” he recalls, with a
“handful of very vocal opponents” ing at city council meetings about al-Qaeda plots Mr Barigar is a fifth-genera-tion resident of farming stock, and alsoheads the local chamber of commerce Lo-cal businesses have long seen refugees ashigh-quality employees in a sparsely pop-ulated corner of the country But refugee-supporters were “apathetic”, the mayorsays They did not fully realise that helping
shout-to integrate newcomers might be their sponsibility, too
re-Bob Naerebout, executive director ofthe Idaho Dairymen’s Association, an in-dustry group, agrees Some ofhis membersemploy scores of refugees, in dairy farmsand cheese plants To date, no Syrians haveactually reached Twin Falls But Mr Naere-bout thinks refugee-supporters could ex-plain Syrian arrivals to the city They justneed to “speak out and do the education”.When those who back the refugee centrestay silent, “we leave a void,” he now real-ises And in the present political climate, avoid free of facts is a perilous thing.7
Lonely work in Twin Falls
Trang 3434 United States The Economist June 4th 2016
IN AT least one sense, Donald Trump’s rise is terrific news for
principled conservatives Right-wingers have long endured
al-legations that many of their cherished ideas—promoting free
markets or seeking to devolve power away from Washington—
are cover for a cruder, nastier agenda However unfairly, when
American conservatives promote individual liberty and limited
government, they are charged by critics with appealing to the
worst, I-got-mine instincts of their supporters When
Republi-cans suggest that government safety-nets will have to be
trimmed back before they grow unaffordable, Democrats and
their allies do not see hard-headed prudence Instead
conserva-tives are accused of having, or pandering to, hard hearts
Here is the good news for conservatives Mr Trump shows that
their principles and heartlessness are not the same thing The
pre-sumptive Republican nominee’s campaign fairly drips with
nas-tiness, but is strikingly uninterested in limiting the powers or
costs of government Short of designing himself a uniform
in-volving ermine and red velvet, he could hardly make it clearer
that he dreams of reigning over, rather than governing, America
He has promised not to devolve power from Washington but
to concentrate it in the Oval Office, where a President Trump
would bully and browbeat global friends, foes and corporate
bosses alike At rallies he asks roaring crowds to imagine him
lift-ing the telephone to impose punitive taxes on businesses or
trad-ing partners who defy him Individual liberty would look rather
different in his promised America, as police and federal agents
began door-to-door raids to round up and deport 11m
undocu-mented migrants Nor does balancing the public finances hold
any terrors for Mr Trump He opposes raising the retirement age,
promising to “save Social Security and Medicare without cuts.”
At the same time, he promises to slash taxes and to raise spending
on defence Eliminating waste, and a booming economy, will
make America rich enough to eliminate budget deficits, he
prom-ises vaguely, and, anyway, he understands how to manage debt
“better than probably anybody.”
The bad news for Republicans is that, when millions of
prim-ary voters were invited to choose between candidates
represent-ing most major strains of conservative thought, and Mr Trump’s
mix ofnonsense and nastiness, they chose the latter The past few
weeks have been filled with the grisly spectacle of Republicansand conservative pundits reconciling themselves to the business-man’s victory, and explaining why, though he may be a bit rougharound the edges, Mr Trump is conservative in the ways that real-
ly matter Some take a narrowly partisan path from the Trump camp to Oh, Never Mind Senator Marco Rubio of Florida,who during his presidential campaign called Mr Trump a “conman”, will now speak on his behalf if asked: “because I don’twant Hillary Clinton to be president.” The Senate majorityleader, Mitch McConnell of Kentucky, told USA Today that he
#Never-wants to win the election, adding: “and I have to say DonaldTrump has done a good job so far of winning elections.” To MrMcConnell’s credit, he did then tell NPR that, under him, the Sen-ate would block a Muslim entry ban proposed by PresidentTrump, calling that a “very bad idea”
Some conservative thinkers, such as the Speaker of the House
of Representatives, Paul Ryan, have signalled that they want cessions on policy and on tone before endorsing Mr Trump.Trump-supporting politicians and columnists have started trying
con-to shame hold-outs incon-to joining them, by casting surrender con-to thebusinessman as an act of class contrition For too long conserva-tive elites have “ignored” the preferences of grassroots activists,they say If Republican primary voters want mass deportations ofmigrants in America without legal papers, a halt to global free-trade deals and a promise not to touch old-age pensions, they ar-gue, then that is what the Republican Party now stands for.That is self-serving cant Republicans in Congress and in go-vernors’ mansions have not ignored the wishes of Trump sup-porters who favour protectionism or nativism or oppose reform-ing Social Security Republicans who believe in free markets andlimited government should (and, until five minutes ago, did) dis-agree with those Trump voters, because they think that the busi-nessman’s policies would do more harm than good If Republi-cans are sounding a tactical retreat now, it is because they do notknow how to win in November without Mr Trump’s followers
Compassion for us, conservatism for them
Apologists for Mr Trump claim that, if you squint a bit, their newchampion fits onto the conservative end of a left-right politicalspectrum In fact Mr Trump uses a different spectrum: one whichdivides the world into Ins and Outs Time and again he presentslife as a zero-sum contest between his supporters and some un-deserving Other He was at it again over the Memorial Day week-end, not only telling old soldiers at a motorcycle rally in Washing-ton, DC, that he would improve medical care by the VeteransAdministration—a laudable goal, given that agency’s deficien-cies—but growling that “illegal immigrants are taken much bettercare of by this country—better than our veterans.”
No promise is too rash or too expensive when Mr Trump is dressing those he treats as In-groups To Out-groups—such as theMuslims he says he would temporarily ban, or the millions of im-migrants he claims he would deport—he presents the hardest ofhearts Sympathise, by all means, with hard-pressed voters wholong to believe his empty promises, for not all of them are bigots.But then condemn Mr Trump for playing divide-and-rule, and forassuring Americans that others must lose if they are to win again.The businessman is running as a left-winger’s caricature of self-ish, unprincipled conservatism If elected Republicans embracethat travesty, they have themselves to blame for the damage that
ad-Mr Trump will surely do their cause.7
Trumpology
Asked to choose between conservative principle and nastiness, Trump voters pick the latter
Lexington
Trang 35The Economist June 4th 2016 35
WITH bearded baristas and furniture
cobbled together from wooden
crates, Curto Café in Rio de Janeiro is a
typ-ical outpost of Brazil’s nascent hipster
scene Aficionados of its organic coffee do
not pay set prices; instead they pay what
they thinkreasonable—or what they can
af-ford This, says Gabriel Magalhães, one of
Curto’s founders, is less and less Like other
Brazilians, cariocas (as Rio residents are
known) are pinching their pennies
Brazil is suffering its worst recession
since the 1930s, perhaps of all time On
June 1st the government reported that GDP
contracted by 0.3% in real terms in the first
quarter of this year; it is 5.4% smaller than it
was a year earlier (see chart) Over that
per-iod GDP per person dropped by more than
it did during the hyperinflationary “lost
decade” from 1981to 1992, notes Alberto
Ra-mos of Goldman Sachs, an investment
bank Over two years the number of
job-less Brazilians rose from 7m to 11m It is a
“downright depression”, says Mr Ramos
The task of pulling Brazil out of this
mo-rass falls to Michel Temer, who took over as
interim president after the Senate voted in
May to try President Dilma Rousseff on
im-peachment charges Politically, his
govern-ment has had a rough start Two of the
min-isters in his all-white, all-male cabinet,
including the one in charge of fighting
cor-ruption, had to step aside after recordings
were leaked in which they appeared to
crit-icise prosecutors’ investigation of the
mas-sive corruption scandal surrounding
Petro-Ms Rousseff’s government, which is
large-ly responsible for the economic mess Theyoffer hope of a way out of it
The centrepiece of Mr Temer’s plan is aconstitutional amendment to freeze publicspending in real terms Even health andeducation—which consume more than aquarter of government revenue withoutproviding commensurate benefits—maynot be spared The government is expected
to present a draft to Congress within thenext two weeks
The idea is to cure the government ofone of its principal vices Public spendinghas grown by an annual average of 6% forthe past 20 years, much faster than GDP.The central government’s primary fiscalbalance (before interest payments) wentfrom a surplus of 2.2% of GDP in 2010 to adeficit of 2.3% in the year to April 2016, thehighest level yet This, and the prospect ofdeficits stretching far into the future, keepsinterest rates high, which further worsensthe deficit The government’s interest bill is
a massive 7% of GDP Brazil’s high taxesthus pay for past profligacy rather than ef-fective government
The spending cap, if approved by jorities of three-fifths in both houses ofCongress, will lead to lower deficits assoon as growth and tax revenues revive Itcould help even sooner, says Arthur Car-valho of Morgan Stanley, an investmentbank That is because confidence that Bra-zil will reduce its debt could lower long-term interest rates, cutting the govern-ment’s interest bill As important, thespending cap will force the government toundertake other reforms, though in thelong run it may prove impossible to main-tain as the population grows Currently,the constitution and other legislation pro-tect 90% of spending from cuts, no matterhow unproductive it is If the government
ma-is not to breach its self-imposed ceiling,those laws will have to change
bras, the state-controlled oil company
They say they were misinterpreted
Mr Temer’s economic programme is ing better His heavyweight team, led byHenrique Meirelles, a former governor ofthe Central Bank, has proposed the mostambitious overhaul of Brazil’s economicgovernance in decades Public spending,including on the unaffordable pension sys-tem, is to be slashed, though the govern-ment has yet to say just how Enterprise-crushing regulations are to be lifted, start-ing in the oil and gas sector Mr Meirellessays the government will consider reform-ing Mussolini-era labour laws and the Byz-antine tax code Privatisation, long a taboo,
far-is a possibility for the first time since the1990s Such ideas are a radical break fromthe left-wing interventionism practised by
Also in this section
36 A social-housing project goes wrong
37 Bello: Cleavages of race and class in Peru’s election
2012 13 14 15 16
3.0
3.0
1.5 0 1.5
6 8 10 12
+
–
Trang 3636 The Americas The Economist June 4th 2016
1
2 Such prospects are already stirring
hopes among unhappy entrepreneurs and
investors Bond yields have fallen from
about 17% in January to 13%; the cost of
in-suring against default is down by a third
since December With more than a third of
industrial capacity idle, production could
revive quickly if sentiment improves “In
six months we may look back at today as
an inflection point,” says Marcelo
Car-valho of BNP Paribas, a bank But only if Mr
Temer delivers what he has promised
That “will be tough”, admits Mr
Mei-relles, the finance minister He hopes to
en-act some reforms, including the spending
cap, before next year’s budget is submitted
to Congress, which must happen by
Au-gust 31st With important local elections
looming in October, few politicians will be
in the mood to vote for less spending on
schools and hospitals
But members of Mr Temer’s team,
sev-eral of whom left lucrative private-sector
jobs to help rescue the economy, dispute
that They think the political and economic
crisis has made both voters and
congress-men more receptive to proposals for
radi-cal change A billboard put up by the
Na-tional Confederation of Industry at the
airport in Brasília, the national capital,
de-mands: “Pension reform now!”
In theory, Mr Temer can count on 356
votes in the 513-seat lower house of
Con-gress, and 56 in the 81-seat Senate, more
than enough to amend the constitution
Unlike Ms Rousseff, who also enjoyed
sol-id nominal majorities in Congress, Mr
Temer knows how to charm and cajole his
allies Unencumbered by past
commit-ments, he has more perks and patronage to
offer politicians who formerly supported
Ms Rousseff
Despite watching two ministers sink
into the quicksand of the Petrobras
scan-dal, Mr Temer has managed to keep his
government functioning That may be in
part because Brazilians have low
expecta-tions A handful of other members of his
cabinet are under investigation, as is Renan
Calheiros, the president of the Senate and
a member of Mr Temer’s Party of the
Brazil-ian Democratic Movement, who features
in the leaked recordings But neither
Con-gress nor the voters are demanding the
top-pling of Mr Temer’s government The
howls of rage from Ms Rousseff and her
al-lies have so far had little effect
A survey published this week by IMD, a
business school, puts Brazil in last place out
of 61 countries in the efficiency of its
gov-ernment, behind war-torn Ukraine and,
astoundingly, bankrupt and autocratic
Venezuela Brazilians are not expecting
moral purity from Mr Temer’s interim
gov-ernment, which will probably continue in
office until after elections are held in 2018
But they are hoping for relief from their
economic pain The early signs are that Mr
Temer knows how to provide it
EL CANTRI is a cheeky name for a ing project built for the poorest people
hous-in Jujuy, one of Argenthous-ina’s poorest inces The message is that its 15,000 inhab-itants are no less entitled to comfort thanresidents of a posh gated community—
prov-known in Argentina as “countries” A ground is equipped with dinosaur-shapedslides; a vast aquatic park has giant plasticsea lions There is a full-scale replica of theKalasasaya, a pre-Columbian temple, con-structed out of breeze blocks El Cantri hastwo factories, a clinic and a sports centre
play-On top of each house is a water tank cilled with images of such popular heroes
sten-as Che Guevara and Eva Perón
The settlement was built by TúpacAmaru, a social movement that for17 yearshas provided housing and other services to
70,000 poor jujeños The group thrived
during the dozen years when Argentinawas governed by the populist Kirchners:
the late Néstor Kirchner and then his wife,Cristina Fernández de Kirchner It was thethird-largest employer in a remote agricul-tural province, in which 45% of the land isowned by just five companies, according
to Carlos Aramayo at the National sity of Jujuy Túpac Amaru’s firebrandleader, Milagro Sala, is a celebrity PopeFrancis invited her to the Vatican in 2014
Univer-Argentina’s elections last Octoberbrought about a change of regime, and adramatic reversal of fortunes for Ms Salaand her movement Gerardo Morales be-came the first non-Peronist governor of Ju-juy in more than 30 years He is an ally ofthe new centre-right president, MauricioMacri, who is more likely to bet on free en-terprise and new infrastructure than onleft-wing social movements
A clash was not long in coming On cember10th, the day he took office, Mr Mo-rales said that all co-operatives must regis-ter with the government in order tocontinue receiving money Four days later
De-Ms Sala and her supporters set up campoutside his office, demanding a meeting.Police arrested her on January 16th, sayingshe had incited violence Since then thecharges have mounted up: she is accused
of fraud, extortion and conspiracy Judgeshave ordered her to stay in prison whileprosecutors investigate It is not certain thatthe Túpac Amaru movement, named afterthe leader of an uprising against the Span-ish in 1780, will survive the onslaught.Joaquín Millón, Jujuy’s new anti-cor-ruption investigator, alleges that more thanhalf of the 1.3 billion pesos ($90m) fun-nelled by the national planning ministrythrough the provincial government andmunicipal authorities to Túpac Amarufrom 2004 to 2015 has gone missing The co-operative movement was contracted tobuild some 8,500 houses; after touringmore than 30 projects, Mr Millón conclud-
ed that 2,300 were either incomplete ornon-existent Residents of El Cantri told Ju-juy’s prosecutor, Mariano Miranda, thatthe movement illegally withheld titledeeds to their homes and threatened toevict them if they did not support Ms Sala.She denies all the allegations
The scandal raises awkward questionsfor Ms Fernández Allegations haveemerged linking her family to the scandal
in Jujuy In April a provincial deputy who
is a former Túpac Amaru member told ajudge that Ms Sala had delivered suitcases
of cash to Ms Fernández’s son, MáximoKirchner, in the Quinta de Olivos, the presi-dent’s official residence They both deny it.Human-rights groups have leapt to MsSala’s defence Amnesty International crit-icised her initial arrest, saying she hadbeen “criminalised for peacefully exercis-ing her rights to freedom of expression andprotest” In March the UN’s WorkingGroup on Arbitrary Detention urged Ar-gentina’s government to justify her deten-tion in writing Mr Miranda bristles at the
Poverty in ArgentinaGutted community
S A N S A L V A D O R D E J U J U Y
Scandal strikes a famous social project
The pools are not the only things that have been drained
Trang 37The Economist June 4th 2016 The Americas 37
2
PERHAPS it is a sign of the times in Latin
America that both the candidates in
Peru’s run-off ballot for the presidency, on
June 5th, support the continuation of the
free-market policies that have made the
country one of the region’s most
success-ful economies After all, Peru is heading
for economic growth of around 4% this
year, while the region as a whole faces its
second year of recession What is at stake
in the election is something more basic, if
the campaign rhetoric is to be believed:
what kind of government do Peruvians
want, and for whom should it govern?
Pedro Pablo Kuczynski, a liberal
for-mer economy minister, argues that
vic-tory for his opponent, Keiko Fujimori,
means “the return of dictatorship,
corrup-tion and lies”, as he put it in the final
cam-paign debate on May 29th “I am
con-vinced that freedom is at serious risk in
Peru,” he declared That claim is based
mainly on heredity Ms Fujimori’s father,
Alberto, ran the country as an elected
au-tocrat for ten years In 1992 he sent troops
to shut down Congress He is serving long
prison sentences for corruption and
hu-man-rights abuses
In a country with almost no real
politi-cal parties, “anti-Fujimorismo” has
be-come the most powerful political
ideolo-gy That is why Mr Kuczynski has a chance
in the run-off ballot, despite having won
only 21% of the vote in the first round in
April, when Ms Fujimori secured 40% He
has other electoral disadvantages: he is 77,
and he has spent long periods working in
the United States, as an investment
bank-er and businessman He is fit—he goes to
the gym most days “It’s age versus lack of
experience,” he says of the contest He has
a deep-rooted commitment to public
ser-vice: he set up an NGO to campaign for
drinking water for all, and his father ran a
leper colony in the Peruvian Amazon
Ms Fujimori insists she is her ownwoman In person, she displays bothcharm and sharper political instincts thanher opponent She has pledged to rule as ademocrat After narrowly losing the elec-tion in 2011, she has spent the past fiveyears campaigning incessantly, visiting re-mote Andean villages and urban shanty-towns Her pitch is that she is a truer repre-sentative of Peruvian society and that shealone can offer effective government Herparty, Popular Force, is better establishedthan most It has won a majority of theseats in Congress Her aides portray MrKuczynski and his team of advisers asdesk-bound and naive “He can do a goodgovernment for big companies,” says JoséChlimper, Ms Fujimori’s running-mate
She stresses a need for government to helpsmall business
Underlying the campaign are Peru’scleavages of race and class Fujimorismorepresents more than just nostalgia for MrFujimori’s achievements of vanquishingthe terrorism of the Shining Path andlaunching economic growth It is also inpart a rejection of Peru’s traditional
“white” elites It stands for popular
capital-ism and an emerging middle class,though Ms Fujimori’s opinion-poll leadamong poorer Peruvians also stems fromher father’s clientelism
Fujimorismo represents Peru’s vast formal economy, too, and the values of asociety where growth has brought higherincomes but not (yet) widespread adher-ence to the rule of law In May a televisionprogramme aired a report in which an of-ficial of the United States Drug Enforce-ment Administration (DEA) said that theagency was investigating Joaquín Ramí-rez, the general secretary of Popular Force,apparently for laundering drug money Aformer bus-fare collector who now pos-sesses a business empire spanning prop-erty and football clubs, Mr Ramírez is thechief financier of Ms Fujimori’s cam-paign Peruvian prosecutors have been in-vestigating Mr Ramírez, who denieswrongdoing, since 2014 Ms Fujimoriwaited for three days after the DEA storybroke before asking him to “step aside”.This revelation would have doomedmany a candidate Yet in the next fort-night Ms Fujimori opened up a small butprobably decisive lead of four to sixpoints in the opinion polls Either manyPeruvians don’t care about Mr Ramírez’sconduct, or they accept his claim that he is
in-maligned as a self-made cholo con plata (a
man of mixed race with money) But if MsFujimori is to provide Peru with the moreeffective state it needs, not least to fight ris-ing crime, she must choose aides who areabove suspicion
The main reason for believing that hervictory, assuming it happens, would notentail political regression is not just thatshe is not her father Peruvian democracy
is stronger than it was in the 1990s, andboth the media and civil society are lessbiddable than they were But Peruvianswill need to be alert
Fujimori versus anti-Fujimorismo
Bello
The split imperatives of Peru’s presidential election
criticism “They say that she’s a political
prisoner, but she’s guaranteed due
pro-cess,” he fumes “Amnesty International
hasn’t tried living near Milagro Sala.”
The beneficiaries of her work are
begin-ning to lose faith El Cantri’s pastel-painted
terraced houses are showing signs of
ne-glect The clothing factory, opened in 2008
by Ms Fernández, supposedly employs 146
people, but just a handful could be seen
during a recent tour The water park, the
community’s hub, has been drained Since
Túpac Amaru’s refusal to register, so too
have its coffers “Ninety percent of people
here are against Milagro Sala,” says a man
who lives close to El Cantri “But thatdoesn’t mean they oppose Túpac Amaru.”
If the movement fails, Jujuy will needsomething to replace it More than half of
jujeños are poor and jobs are scarce At
three o’clock one recent afternoon thebenefits queue at San Salvador de Jujuy’spost office stretched around the block Thelast passenger train to Buenos Aires depart-
ed in 1993 Jujuy is among the ten provincesthat are to benefit from Plan Belgrano, ascheme promoted by Mr Macri to reducepoverty, encourage enterprise and im-prove infrastructure in the north “For de-cades Argentina turned its back on the
north,” declared the president during a
vis-it to Jujuy on May 16th He pointedly ised to back projects “that aren’t synony-mous with corruption”
prom-For residents of El Cantri, such schemesmean little compared with the tangible re-ality of their imperilled community Dan-iela Calderón, a teacher at the newlyopened primary school, bursts into tears
as she watches her pupils playing happily
in the playground “They’re gradually membering our organisation,” she la-ments “But we’ll be back, stronger.” GivenTúpac Amaru’s monumental problems,that may prove a forlorn hope.7
Trang 38dis-38 The Economist June 4th 2016
For daily analysis and debate on the Middle East and Africa, visit
Economist.com/world/middle-east-africa
THE railway station at Lubumbashi, the
Democratic Republic of Congo’s
sec-ond city and the centre of its mining trade,
has seen better days Outside the 1920s
Bel-gian-built whitewashed station, hawkers
sell bus tickets south to Zambia and South
Africa Travellers would do much better
buying one than going inside—trains in
Congo are not for the faint-hearted
In the ticket hall, standing by a
time-table on a blackboard, Baudouin Kalubi,
the station master, explains that the next
train will depart the following morning to
Kindu, about 1,600km (1,000 miles) north
From there passengers can get on buses
to-wards the Congo river The train is, Mr
Ka-lubi proudly explains, an express, with a
new Chinese locomotive That means it
should go at an average speed of 15kph “It
is not the TGV,” he admits, referring to
France’s high-speed trains Yet in Congo
there are so few roads that if you can’t
af-ford to fly, the train is all that is left
Over the past half-century, Africa’s
mostly colonial railways have mostly
atro-phied According to the International
Un-ion of Railways, in 2014 sub-Saharan
Afri-can trains carried about 158 billion
tonne-kilometres of freight, or roughly half
of what Australia’s railways carried Of
that, 84% was in South Africa, which has a
modern network Elsewhere, railways that
built nations carry a fraction of what they
did even in the 1980s
To remedy this, many African countries
are investing vast sums of money—and
ambitious Unlike the old line, which is on
a 1,067mm gauge, the new railway is built
to a modern “standard gauge” (1,435mm),which ought to increase capacity Travel-lers on the ancient British-era passengertrains, which run three times a week fromNairobi to Mombasa, now have their view
of the elephants of Tsavo National Park peded by an enormous embankment forthe new line The idea is that it will carry asmuch as half of the cargo unloaded at theport of Mombasa, or about ten times asmuch as the current railway shifts
im-Drivers on the main road to the capitalought to cheer if the line results in fewersmoke-spewing trucks coming out of theport, but the business case for it is shaky.The new track is costing Kenya about $4 bil-lion, mostly funded by a loan from the Chi-nese ExIm bank, but how it will be repaid
is unclear
Although only a year remains beforecompletion, not only are tariffs and ratesundecided, but it is not even clear who willrun the railway Kenyan officials have ap-parently taken to skipping trade confer-ences of late to avoid answering questions.Could this be because the new railway
is a dud investment? Its fastest trains will
do a fairly mediocre 80kph Much as withthe old railway, parts of the new line will
be single-track, forcing trains to stop, oftenfor hours, to let others pass Most absurdly,
it is built to a lower standard of ing than most other new freight railways.Some fret it may not be possible to loadfour full containers onto each wagon, as isdone on other new lines “They’re getting athird-rate railway for the cost of a very ex-pensive one,” says a consultant
load-bear-Repaying the loans taken out to buildthe line will require hefty fees or huge vol-umes of traffic But truckers—who nowhandle more than 95% ofthe freight movedfrom Mombasa port—will compete fiercely
on price, and shipping companies may
hope—in new lines In Kenya a Chinesefirm is building one roughly alongside theroute of the old track Another project con-nects Djibouti’s port to Addis Ababa inEthiopia Still more are proposed Rwandawants one going through Tanzania; Ugan-
da wants one going to Sudan; others areplanned in Nigeria, Guinea and Ghana Yetthere is reason to worry that the new lineswill end up much like the old
The Kenyan project is perhaps the most
Railways in Africa
Puffed out
L U B U M B A S H I
Africa’s new railways risk going the way of the old ones
Middle East and Africa
Also in this section
39 Jailing a tyrant
40 Nigeria’s life coaches
40 A museum without exhibits
41 Syria’s ceasefire is shattered
41 A forgotten leader of a lost cause
42 Innovation in the Arab world
42 Qatar’s kinder puritanism
Mt Elgon
Mt Kenya Nakuru Lamu Sauri Nyeri Homa Bay Kisumu
Masai Mara game reserve
Limuru
MAU FORESTMt Kenya
Mau Forest
Kilimanjaro
Bumbuli LUSHOTO
Lake Tanganyika
Isiolo
Lake Turkana
Lake Albert
Kampala
Dodoma
Lake Victoria
Dar es Salaam
Kisangani
Bujumbura Kigali
Lubumbashi
Congo
Under construction DJIBOUTI
500 km
Railway mania
Source: International Union of Railways *Excluding South Africa
Freight transported by rail, 2014
Trang 39The Economist June 4th 2016 Middle East and Africa 39
2look for other ports if levies rise
Rehabilitating the older line might have
cost just 5% as much as building a new one
on a new right of way, reckons Pierre Pozzo
di Borgo of the International Finance
Cor-poration, part of the World Bank But
ef-forts to mend rather than buy have
gener-ally not gone well either Since the 1990s
many African railways have been handed
over to private concessions to boost
invest-ment and improve manageinvest-ment But the
reality has been disappointing
Competi-tion from truckers (who don’t have to pay
their share to maintain roads, even though
they do the most damage to them) has
shifted cargo from rail to tarmac, shredding
the business plans of concessionaires
Many are struggling to cover their running
costs, never mind invest
When the railway that runs from Dakar
in Senegal to Mali was first put into private
hands, the average age of track was 37 years
on the Senegalese side and 51 years on theMalian side When Tanzania’s networkwas concessioned in 2001, over half of thenetwork still had the original colonialrails—more than 90 years old And newlines, too, become old In the 1970s, in aspirit of socialist co-operation, China built
a brand-new line connecting Dar es laam, Tanzania’s commercial capital, toZambia and its copper fields It has sincefallen into disrepair as bad as that of Tanza-nia’s colonial-era lines If the latest genera-tion of railways cannot make money ei-ther, the temptation then will be to skimp
Sa-on maintenance
If only governments were as tic about maintaining infrastructure asthey are about building it On a continentwhere almost everything is reused, frommobile-phone parts to plastic bags, gov-ernments seem to prefer to buy shiny newthings, however expensive 7
enthusias-HISSENE HABRE sat shrouded in
sun-glasses, a turban and a big white
bou-bou on May 30th, as a court in Senegal
found him guilty of crimes against
human-ity, rape and torture Victims cheered after
judges sentenced Chad’s ex-dictator
(pic-tured) to life imprisonment He raised his
fists and shouted: “Down with
France-Afrique!”—hinting absurdly that his
con-viction was a French colonial plot
Perhaps 40,000 people died in Chad
during Mr Habré’s reign of terror between
1982 and 1990 Armed by America (and
supported with hundreds of millions of
dollars in aid because of his opposition to
Muammar Qadaffi’s regime in Libya), his
political police crushed any tribe they
deemed a threat to his rule Simply
belong-ing to one was enough to have you locked
away in one of his prisons, the most
sinis-ter of which was a swimming pool covered
in concrete Torture was routine: a
favour-ite technique was to tie all four limbs
be-hind the back to induce paralysis; another
was to force a victim’s mouth around the
exhaust pipe of a running vehicle
Prosecutors had little difficulty linking
such crimes back to Mr Habré One
wom-an testified that he had raped her himself
One underling recalled how prisoners’
paperwork was sent to the president and
returned with annotations “E” stood for
“exécuter”, he said The dictator showed no
“compassion” or “regret”, one of three
judges concluded Now 73, he will almost
certainly die in a Senegalese jail
This is a landmark for African justice,and a coup for the victims who have pur-sued it with help from Human RightsWatch, a watchdog Mr Habré grabbed
$11m from public coffers in the last days ofhis regime and has lived in cosy exile inSenegal for most of the 26 years since
The court that finally tried him, known
as the Extraordinary African Chambers(EAC), is the first in Africa to sentence an Af-
rican leader following due process And it
is the first anywhere in which a nationalcourt has used the principle of universaljurisdiction (meaning it can hear a case re-gardless of where the crimes took place) toconvict an ex-head of state for human-rights abuses
Lawyers hope it will not be the last.Usually war crimes are investigated by in-ternational tribunals such as the Interna-tional Criminal Court (ICC), rather thannational courts In 2012, a special tribunal
in The Hague sentenced Charles Taylor, aformer president of Liberia, to 50 years injail for supporting hand-chopping rebels inneighbouring Sierra Leone But the ICC isunpopular with African governments,which (wrongly) accuse it of racism It alsocosts a fortune (the annual budget is morethan $100m) and has a dismal record forconvictions (two so far) If more Africancourts could try human-rights abusers, ei-ther in their home countries or in thosewhere they have taken refuge, then per-haps fewer tyrants would escape justice There is reason to hope this may be hap-pening Laurent Gbagbo, the ex-president
of Côte d’Ivoire, is currently on trial in TheHague for abuses committed after he re-fused to relinquish power in 2010 His wifeSimone faces judges at home, where she isaccused of organising abuses against theopposition Hers is the first human-rightstrial to take place in the country
Yet not all courts are created equal MrsGbagbo’s case is already riddled with alle-gations of irregularities and incomplete in-vestigations Côte d’Ivoire has ignored theICC’s request that she be extradited to Eu-rope In other respects, the continent’s ap-petite for accountability is rather light TheAfrican Union, for instance, wants its owncourt for human-rights abuses but thinks itought to offer immunity to heads of state
Mr Habré would no doubt agree 7
Crimes against humanity
One dictator down
L A G O S
Chad’s former president has been convicted Who’s next?
Nicer than what you did to the opposition
Trang 4040 Middle East and Africa The Economist June 4th 2016
FROM the young hawker offering to sell
motorists a toilet seat as he snakes
through the never-ending jam that is
nor-mal traffic in Lagos, to the legions of
scam-mers who make their living writing
thou-sands of e-mails in the hopes of conning a
few people out of some cash, Nigerians
cannot be said to lack optimism Yet in a
country where poverty is rife, even the
world’s most diligent transformers of
lem-ons into lemonade need some help to see a
nearly empty glass as half-full
The pastors of Pentecostal
mega-churches promise their congregations
God-sent fortunes in return for a 10% tithe
If that sounds a bit dear, then a cut-price
option is to subscribe to a service that
sends inspirational text messages to your
phone This includes pearls such as:
“Changing a face can change nothing, but
facing a change can change everything.”
Bookworms can read their way to
suc-cess Jumia, an online retailer, says that
mo-tivational and self-help books are its
best-sellers In the tiny airports of the north,
vendors offer such handy literature as
“Fat-Proofing your Children”; in Lagos street
vendors hawk the same “Everyone wants
to become the big man,” says a taxi-driver,
as he crams a “Guide to the Corporate
Ma-chiavelli” and “The Power of
Self-Disci-pline” into the seat pockets of his old SUV
“I want words that inspire me.”
But the kings of this trade are the
moti-vational speakers “You come to me if you
want to get stuff done,” says the
suavely-suited Steve Harris from a coffee spot in
one of Lagos’s smarter corners “I’m the
guy who’s going to make it happen.”
Over the past few years a handful of life
coaches like him have won semi-celebrity
status, often trading on their own rise
through the social ranks Mr Harris says he
briefly tried his hand at 419, a kind of fraud,
after dropping out of university “It’s not
what you don’t have that limits you,” he
preaches to captivated audiences in a crisp
American accent “It’s what you have but
don’t know how to use.” Ogbo Awoke
Ogbo, another speaker, spent two
unem-ployed years squatting in a Lagos slum;
eventually, he earned big bucks in oil He
tells his clients that shoddy schools should
not stop them “Self-development is a
choice,” he says from a steamy office
As well as inspirational quotes, such
gurus offer practical advice on money
management or health Mr Harris turns
away private clients if he thinks their
pro-blems cannot be solved in 90 days mantic assistance is popular too AroundValentine’s Day, life coaches lecture wom-
Ro-en depressed by their lack of luck in love
Sam Adeyemi, a pastor, attracts hundreds
of thousands of online hits when hepreaches about how to find a spouse (“Tofind the right mate, you need to becomethe right mate,” is one of his gems) Popularcoaches can command thousands of dol-lars for a speech, but bigger rewards comewhen they write books, set up onlinecourses or start consultancies Businessespay handsomely for lessons in teamwork
or customer care “Nigerians are searchingfor answers, but they haven’t been giventhem,” Mr Ogbo says “Through us they see
a way out.” And what ofthose Nigerians soinspired by their idols that they, too, want
to become motivational speakers? Well,there’s a book for that too.7
Nigeria’s life coaches
Yes you can!
L A G O S
Help for hopeful Nigerians
THE Palestinians’ new national
muse-um is a striking monmuse-ument to the statethey don’t yet have Designed by a firm inDublin, the museum itself is angular andmodern, with glass curtain walls topped
by smooth white limestone From afar itlooks almost like a low-slung bunkerperched on a hill north of Ramallah; in-side, though, it is light and airy A terracedgarden stretches out below, filled with doz-ens of local species: almond and fig trees,mint and za’atar
Only one thing is missing—the exhibits
When the first visitors arrive in June, theywill tour an empty building The curatorshad spent years planning an inaugural ex-
hibition, “Never Part”, about the personaleffects that Palestinian refugees took whenthey fled their homes But the museum’sdirector, Jack Persekian, resigned in De-cember, citing “disagreements” with man-agement, and the show was postponed.The saga of the $24m museum feels like
a microcosm of Palestine’s broader blems The idea of building it was first con-ceived in 1997, but the plans were soon sus-pended amid the violence of the second
pro-intifada, or Palestinian uprising The
organ-isers did not break ground until 2013, andthe project, which they aimed to completewithin a year, was plagued by a series ofcost overruns and delays
The museum blames many of those onIsrael, which controls the border betweenJordan and the occupied West Bank TheAustrian-made emergency-exit signs wereinexplicably delayed by Israeli customs au-thorities; so were light fixtures from Ger-many The Jordanian landscaper, mean-while, has not been able to get a visa, so hesupervises the grounds via video chat.These are common complaints amongdevelopers in the area Bashar al-Masri, awealthy businessman who is building Pal-estine’s first planned city, keeps six months
of inventory on hand to cope with the evitable delays at the border The need forvast warehouses, filled with everythingfrom cement to marble, adds to the costand the logistical challenges
in-The museum is run by a private sation, which at least spares it from theWest Bank’s incessant political feuding.Mahmoud Abbas, the unpopular presi-dent, is in the 11th year of a four-year term,and is increasingly paranoid about his grip
organi-on power Last year he sacked Yasser AbedRabbo, a vocal critic who was, in effect, thenumber-two man in the Palestine Libera-tion Organisation In an added fit of pique,
Mr Abbas also booted him from his job asdirector of the Mahmoud Darwish Foun-dation, which runs a museum dedicated toPalestine’s national poet
Over the past decade the Palestinianshave built many of the trappings of a state:
a police force, a central bank At the ration ceremony on May 18th, Mr Abbascalled the museum another importantstep “The only thing left is declaring inde-pendence, which you will all declaresoon,” he said Yet the peace process is co-matose, Israel’s government is unyieldingand the Palestinians are hopelessly divid-
inaugu-ed between Mr Abbas and the Islamistgroup Hamas, which controls Gaza.Few believe him—including, it seems,the museum’s directors Without an inde-pendent state, the 1.8m people in Gaza can-not visit, nor can the 3m refugees who live
in neighbouring countries So the curatorsare planning a series ofsatellite shows Thefirst exhibition in Palestine’s national mu-seum, about the history of local embroi-dery, will be in Beirut
Palestine
A museum without exhibits
B I R Z E I T
For a people without a state