Is generative Al built on theft?

How to counter Iran

4

Economist
Musk v Brazil’s supreme court

Shrinking America
APRIL 20TH-26TH 2024

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Reasons to be cheerful

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The Economist April 20th 2024 3

Contents

The world this week United States

5 A summary of political 19 Trump’s trial begins
and business news 20 Busted trust
21 Tents in cities
Leaders 21 Bribing voters
9 Generation Z 22 Touching fentanyl
Better off than you think
23 Patentsville
10 India's opposition
24 Lexington A Trumpian
Not fit for purpose
triumph
10 Israel and Iran
Don’t rush to retaliate
The Americas
11 Conscription
First, raise soldiers’ pay 25 Brazil’s mighty supreme
On the cover
court
12 Monetary policy
Reasons to be cheerful about the The second Powell pivot 26 Canadian maple syrup
young: leader, page g. The world 27 Why Ecuador stormed
economy has been kind to Mexico’s embassy
Letters
Generation Z, page 57. Demands
grow to restrict young peoples 14 On China, WEIRD
access to phones and social countries, nuclear
media, page 67. Our number­ weapons, software Asia
crunching shows that the plight engineers, banlieues, 28 The last Gandhi?
of graduates in China is much uniforms
30 China v the Philippines
worse than previously thought,
page 32 30 Japanese journalism
Briefing
31 Banyan Singapore’s PM
15 Shrinking America
Is generative Al built on theft?
Emptying and fuming
Lawyers v large language models,
page 51. Moving beyond today’s
LLMs will require some China
fundamental breakthroughs,
32 The plight of graduates
page 64
33 A message for Taiwan
Howto counter Iran Israel should 34 Frustrating poplar fluff
try a novel tactic to respond to 35 Chaguan The coming
Iran’s missile attack: restraint: wave of Alzheimer’s
leader, page 10. An old conflict
enters a new phase, page 36.
Iranians fear their brittle regime
will drag them into war, page 37 Middle East & Africa
36 Iran’s attack on Israel
Musk v Brazil’s supreme court 37 Iranian hardliners
Elon Musk’s latest feud, page 25
38 Israel’s dilemma with Iran
Shrinking America Much of 39 Catastrophe in Sudan
America is shrinking, something
its system of government makes
o 40 Tanzania’s hobbled
opposition
even harder than it need be: Bartleby How to combine
briefing, page 15 heritage and innovation,
page 54

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4 The Economist April 20th 2024

Contents

Europe Finance & economics

41 Germany’s failing 57 Generation Z
schools 59 Buttonwood Smaller
42 China and Germany stockmarkets
43 Macron the hawk 60 China’s growth
43 Waiting for the Russians 60 Russian assets
44 Ukraine’s drones 61 Pricey petrol
45 Charlemagne Repressing 62 Citigroup’s turnaround
right-wingers 63 Free exchange How to
solve debt crises
Britain
46 Election predictions Science & technology
47 Tactical voting 64 Al’s next top model
48 Bagehot Madness and 66 Locust control
mayors 67 Smartphones and anxiety

International
49 The rights and wrongs Culture
of conscription 68 Impressionism turns 150
69 Video-game adaptations
70 Crossword puzzles
70 Climbing Everest
71 The first world war,
re-examined
Business 72 Back Story Salman
51 Al and copyright Rushdie’s “Knife”
53 LVMH’s pups in cashmere
54 Bartleby Lessons of woke Economic & financial indicators
Scrabble 73 Statistics on 42 economies
55 Insecure Chinese biotech
56 Schumpeter Epistolary Obituary
CEOS
74 Akebono, the first foreign-born sumo champion

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The Economist April 20th 2024 5

The world this week Politics

economic crisis. Without a American firms have until the In Germany police arrested
sufficiently large write-off of end of May to wind down their two German-Russian men for
debt it will be unable to access business in the country’s ener­ allegedly spying for Russia.
a $3bn bail-out from the IMF. gy sector, although some exist­ One of the men is suspected of
ing licences to sell Venezuelan planning to sabotage an Amer­
Nigeria’s inflation rate climbed oil, such as the one granted to ican facility in Bavaria that
to 33.2%, a 28-yearhigh, follow­ Chevron, will still be valid. trains Ukrainian troops. He is
ing a collapse in the value of its also thought to have fought for
currency, the naira. Although The Democratic-controlled pro-Russian forces in the
the central bank has increased Senate in America voted swift­ Ukrainian region of Donetsk
interest rates, prices have ly to toss out the impeachment from 2014 to 2016.
continued to rise because of of Alejandro Mayorkas, the
Iran launched an unprecedent­ economic reforms, including homeland security secretary, Cancelled
ed direct attack on Israel in the removal of a fuel subsidy. dismissing the trial and reject­ The prime minister of Belgium,
retaliation for a strike at the ing claims by Republicans that Alexander De Croo, sharply
beginning of April that killed Stable government Mr Mayorkas had wilfully criticised the decision by a
two generals at its embassy The prime minister of Singa­ ignored border-security law. district mayor in Brussels, Emir
compound in Damascus, pore, Lee Hsien Loong, Kir, to order police to shut
Syria’s capital. Almost all of the announced that he would step down a conference being held
more than 300 drones and down on May 15th, after20 by national conservatives, an
missiles launched by Iran were years in office. In a long- emerging political alliance in
successfully intercepted. Amer­ planned succession Mr Lee is Europe. The event’s speakers
ica, Britain, France, Jordan and handing the reins to Lawrence included Nigel Farage, who
other Arab states contributed Wong, his deputy, who is also championed Brexit in Britain,
to Israel’s defence. Binyamin the finance minister. Mr Wong and Viktor Orban, the populist
Netanyahu, Israel’s prime will be only the fourth prime prime minister of Hungary. Mr
minister, said his country was minister in the city-state. Mr Kir, a Socialist,said he wanted
determined to defend itself. Joe Lee’s father, Lee Kuan Yew, to shut the conference because
Biden, America’s president, held the job from 1959 to 1990. protesters were targeting the
urged him to show restraint to venue (the courts disagreed
avoid regional escalation. Two violent incidents shocked The first-ever criminal trial of and the conference resumed).
Sydney. A man stabbed five an American president, former Mr De Croo, a liberal, said that
Local officials said that four women and a man to death, or sitting, got under way in “Banning political meetings is
Palestinians were killed by before he was shot dead by a New York. Donald Trump unconstitutional. Full stop.”
Israeli settlers in the West policewoman. The perpetrator faces charges of illegally con­
Bank. Their deaths took place had mental-health issues. And cealing hush-money payments An envoy for business in the EU
amid violence that erupted in what police described as a to a porn star, which he denies. who was controversially hand-
after the killing of a 14-year-old terrorist attack, a 16-year-old Dozens of potential jurors were picked for the role by Ursula
Israeli boy in what the Israeli boy stabbed and injured a dismissed during jury selection von der Leyen, the president of
army said was a terrorist attack. bishop at an Assyrian Ortho­ because they could not pro­ the European Commission,
dox church during a mass that mise to be impartial. The trial quit just hours before he was
Gulf states were battered by was being streamed live. A mob could last six to eight weeks. supposed to start the job.
storms that caused floods confronted police outside the Markus Pieper, who comes
leading to the deaths of 20 church, where the boy was Mike Johnson, the speaker of from the same party in Germa­
people. The United Arab being held for his own safety. America’s House of Repre­ ny as Mrs von der Leyen, had
Emirates saw its heaviest sentatives, pushed forward scored lower on a test for the
rainfall since records began 75 Australia’s Laborgovernment with a complex package of bills position than othercandidates.
years ago. Dubai airport, the announced plans to increase that would provide military
world’s seco nd-busiest, told defence spending by A$5obn aid to Ukraine, Israel and Britain’s plan to ban anybody
passengers to stay away. ($32bn) over the next decade. other allies. The Senate had born after2008 from ever
That would raise defence passed a single bill, but it ran buying cigarettes passed its
Donors pledged around $2.ibn spending from 2% of GDP to into opposition in the House, first big hurdle. Rishi Sunak,
to humanitarian relief in 2.4%. Australia, America and not least from supporters of Mr the prime minister, easily won a
Sudan, which is facing the Britain have created the AUKUS Trump, who gripe about giving vote in the House of Commons
world’s largest humanitarian security pact to counter Chi­ more funding to Ukraine. by 383 to 67. A significant
crisis because of a year-old civil nese ambitions in Asia Pacific. number of those who voted
war. Experts warn that the Meanwhile, Ukraine’s presi­ against the bill came from his
country is entering the grip of America is to reimpose oil dent, Volodymyr Zelensky, said own Conservative Party; no
famine, which could lead to sanctions on Venezuela for his army had been unable to opposition Labour MPs voted
500,000 deaths. failing to keep to the spirit of thwart a Russian attack that against it. The bill now moves
an agreement to allow a free destroyed a power plant, be­ to its next stages. If implement­
Ghana failed to reach a deal on and fair presidential election. cause “We ran out of missiles.” ed, the ban would be among
debt forgiveness with its credi­ The Venezuelan authorities Separately, a Russian missile the strictest in the world. New
tors, which holds up its efforts have since barred the opposi­ attack on Chernihiv, in north­ Zealand scrapped a similar
to emerge from default and an tion’s most popularcandidate. ern Ukraine, killed 18 people. plan earlier this year.
6 The Economist April 20th 2024

The world this week Business

As it adjusts to slower demand evidence that the economy Microsoft announced a $i.5bn weak yen and an influx of
for its electric vehicles, Tesla is remains red-hot. Investors strategic investment in G42, a Chinese shoppers. Meanwhile
reportedly set to shed io% of its pushed back their bets on an firm developing artificial­ Bernard Arnault, LVM H’s boss,
global workforce, or around interest-rate cut from the Fed­ intelligence technology in Abu shored up his succession plan
14,000 jobs. Adding to the woes eral Reserve. They were also Dhabi, which is backed by the by asking shareholders to
of Elon Musk’s firm, two senior perturbed by comments from emirate’s government. The deal approve the addition of two of
executives said they were Jerome Powell, the Fed’s chair­ has the blessing of the Biden his sons to the board; they join
leaving. Tesla’s deliveries fell in man, about inflation taking administration, which persuad­ two other siblings.
the first quarter of this year. As “longer than expected” to fall ed G42 to divest from China
othercarmakers, especially in to the central bank’s 2% target. and focus on America. CVC Capital Partners, one of
China, step up their EV ambi­ Europe’s biggest private-equity
tions, Tesla is facing intense The numbers game A little of the shine came off firms, announced its intention
competition in markets that it Britain’s annual inflation rate ASML, Europe’s most valuable to list shares on the Euronext
used to have to itself a few slowed to 3.2% in March, from tech company, when it report­ exchange in Amsterdam. CVC
years ago. Its share price is 3.4% in February. Inflation is ed a big drop in quarterly sales. had planned an IPO in 2022,
down by 37% this year. The now lower in Britain than in The value of the company’s which was upended by Russia’s
company wants shareholders America, where it is 3.5%, but order book for the lithography invasion of Ukraine. It also
to reaffirm Mr Musk’s pay at its higher than the euro area, machines it supplies, which are considered a float last year, but
annual general meeting in June, where it stands at 2.4%. Still, an essential component in chip postponed it in November
after a court in Delaware struck the figurescaused traders to manufacturing, plunged to amid market uncertainties.
it down in January. think that the Bank of England €3«6bn ($3.8bn) in the first
might not reduce interest rates quarter, from €9.2bn in the Running ahead
until September or November. final quarter of 2023. ASML Following its first annual loss
GDP forecasts
expects the second half of the in three decades, Adidas raised
2024, % increase on a year earlier
Goldman Sachs released a set year to be stronger “in line with its profit guidance for the year
of quarterly earnings that at the industry’scontinued on the back of strong sales in
last delighted investors. Net recovery from the downturn” the first quarter. Adidas may
profit surged by 28% in the first in the chip cycle. face a new reputational pro­
quarter, year on year, to $4.ibn, blem, however, with the revela­
helped by a 32% jump in rev­ LVMH saw its weakest quarter tion that Rishi Sunak, Britain’s
enue from investment banking for sales growth since the prime minister, has a penchant
and a 10% rise in revenue from post-pandemic boom three for its popular Samba trainers.
Souice: IMF trading. The results take some years ago. The luxury-goods Mr Sunak, whom one newspa­
of the pressure off David Solo­ company recorded a big drop per has described as a “geeky
The latest estimates from the mon, the bank’s chief exec­ in revenue from champagne tech bro”, recently made a
IMF suggest that global GDP is utive, who faces a shareholder and watches and jewellery in humorous “fulsome” apology
on track to grow by 3.2% this proposal at the impending the first three months of 2024, for reducing the hip appeal of
year. The fund said the world annual general meeting to vote though sales in Japan grew by the shoes. I’ve worn them for
economy “remains remarkably against his pay award. double digits, helped by the “many, many years”, he said.
resilient” and that there would
be “less economic scarring”
than it had thought from the
pandemic. The biggest
upgrades to its forecasts for the
largest economies it tracks
were for America, where the
IMF now thinks GDP will ex­
pand by 2.7%, and Russia,
projected to grow by 3.2%.

China’s economy grew by a

better-than-expected 5.3% in
the first quarter of 2024, year on
year, helped by a 6.1% rise in
industrial production. iMuch of
the growth came in January and
February. In March retail sales
struggled, and the output of
cement plummeted, highlight­
ing the problems besetting the
country’s property market.

Markets were rattled by figures

that showed retail sales grow­
ing rapidly in America, more
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The Economist April 20th 2024 Leaders 9
The
Economist

Generation Z
Reasons to be cheerful about the young

vast cohort is coming of age. Globally, some 2bn ger wage growth, house prices as a multiple of earnings are
A people were born between 1997 and 2012, and so are part
of “Generation Z” In America and Britain this group makes up
roughly where they were for millennials a decade ago. And
young people today are at least able to put more of their sala­
a fifth of the population, rivalling the share of baby-boomers; ries into savings.
in India and Nigeria the young far outnumber the old. For each Already Gen Z-ers are transforming the world of work.
generation there is a simple narrative: that boomers were They have bargaining power—and they know it. Many millen­
shaped by post-war plenty, for example, or millennials by the nials came of age in the shadow of the global financial crisis;
financial crisis of 2007-09. For Gen Z the popular view is that they felt so precarious that they were afraid to ask for pay rises.
smartphones have made them miserable and they will live Gen Z seems to have fewer qualms about quitting for a better
grimmer lives than their elders. opportunity, or taking things slowly and enjoying life. Bosses,
More and more people in the West tell pollsters that today’s unused to being on the back foot, complain. But older workers
children will be worse off than their parents. Youngsters them­ will be quietly thankful if overall pay and perks go up.
selves worry about everything from the difficulty of buying a Gen Z will shape society in other ways, too. Young people’s
home to the looming dangers from climate change. Social sci­ concern about climate change will, as they reach voting age,
entists fret that Gen Z-ers, having spent their formative years make states more likely to act. More broadly, Zoomers tell poll­
doomscrolling and suffering from fomo, are now gripped by sters they want bigger government. They may change their
an epidemic of anxiety and depression. Politicians in America minds when they have to pay more taxes—or they may not.
and Britain are mulling banning smartphones and restricting They are a serious bunch, less given to late nights, binge
social media for the under-i6s; parents and schoolteachers drinking and promiscuity than their elders were. There is a
everywhere are trying to police screen time. dark side to this. They socialise in person less, have less sex,
All this can make it hard to feel optimistic about Gen Z. But and are more likely to say they are lonely. Reported rates of
when you look around the world, and at a wider set of mea­ anxiety and depression are rising in much of the West. Some
sures, the Zoomers are far from doomed. In many respects, of this probably reflects a greater willingness to open up about
they are doing rather well. mental health. But other factors play a role.
For a start, the popular narrative makes an The extent to which social media fuel men­
important omission: the roughly four-fifths of tal distress among the young is furiously de­
the world’s 12- to 27-year-olds who live in bated. In the West the rise in anxiety coin­
emerging economies. Thanks to growth and cides with the adoption of social media. How­
the spread of technology, youngsters in places ever, hard evidence of causation is limited, and
like Jakarta, Mumbai or Nairobi are far better most of it comes from studies of adults in the
off than their parents were. They are richer, rich world (see Science & technology section).
healthier and more educated; those who have What is clear is that Generation Z has been
smartphones are better informed and connected. Small won­ at the sharp end of a technological revolution. The speed with
der that, in a survey by the UN in 2021, the young in emerging which smartphones and then social-media apps were adopted
economies were more optimistic than those in the rich world. around the world left users, and young people in particular,
Yet in some places there is a fear that the rapid progress of scrambling to figure out how best to navigate them. Social me­
recent decades might fail to repeat itself. That anxiety is evi­ dia have brought benefits, such as entertainment and connec­
dent in China. Thanks to economic uncertainty and an empha­ tivity, but also costs. Some content may be harmful, and time
sis on quantity over quality in higher education, over a third of spent scrolling could have been devoted to study or sleep.
degree-holders there may be unemployed (see China section).
In the rich world the picture is rosier than people think. OK Zoomer
Those of Gen Z who are in work—and in America there are Transformative technologies often have downsides. In the
nearly as many of them in workplaces now as there are boom­ past, people have adapted: think of the seat belts and regula­
ers—are doing nicely (see Finance & economics section). Red- tions that made cars less deadly. Encouragingly, there are signs
hot demand for workers helps, as does the fact that Gen Z-ers that social-media habits are already shifting as users weigh the
are wisely acquiring marketable skills. More of them are pursu­ costs and the benefits. Instead of posting about themselves
ing science, engineering and medical degrees; the humanities publicly, for example, many are retreating to private groups on
have fallen out of favour. messaging apps. So far, the evidence that would justify a blan­
Wages for Gen Z are rising at a much faster pace than they ket ban on smartphones for the young does not exist, though
are for older workers, and the youth-unemployment rate schools should be free to bar them from classrooms, and par­
across the rich world is at its lowest in decades. In America the ents are right to restrict screen time.
income of the average Zoomer, after adjusting for taxes and It is only natural for the old to worry about the young. If
transfers, comfortably exceeds that of a millennial or a Gen X- that leads to better mental-health treatment, or fewer restric­
er at the same age, in real terms. True, housing affordability tions on building more homes, well and good. But celebrate
has worsened since the 1980s. But, thanks to Gen Z-ers’ stron­ Gen Z’s resourcefulness, and its successes, too. ■
10 Leaders The Economist April 20th 2024

India's election

An ossified opposition
The Congress party is too weak to hold the government to account. Blame dynasty and dysfunction

ver the next six weeks nearly a billion Indians will cast in some polls, is over 75%. His strongman persona, combining
O their votes. If the polls are right, the general election will
be a triumph for Narendra Modi, the prime minister. His Bha­
Hindu chauvinism and Muslim-bashing with an emphasis on
economic development and national renewal, appeals to many
ratiya Janata Party (bjp) will secure another big majority; he Indians. His powerful oratory and humble roots as the son of a
will serve a third term. For the opposition, disaster beckons. tea-seller help him connect with ordinary folk. By contrast, Ra­
The Congress party, which led the struggle for Indian inde­ hul Gandhi is easy to dismiss as a privileged amateur leading
pendence and dominated politics for decades afterwards, is an ossified party with neither the talent nor the ideas to govern
headed for a third consecutive defeat (see Asia section). With the world’s most populous country.
luck, this will be a Schumpeterian moment that forces it to re­ A big electoral defeat should be a clarifying moment for In­
form: the health of India’s democracy depends on it. dia’s opposition. There is strong demand for an alternative to
It is hard to overstate the role Congress has played in mod­ the bjp: more than half of voters support other parties. The
ern India. Under Mahatma Gandhi it marshalled (largely non­ trouble is, these are mostly a mosaic of regional movements
violent) resistance to British imperialism. Under Jawaharlal that cannot plausibly aspire to national power. Congress is still
Nehru and his successors it ruled India for 54 the best bet to lead a national opposition, but
years, positioning itself as a one-nation, multi­ to do so it must change.
faith, left-of-centre movement. First, the Gandhi family, and the party el­
Yet it remains a family firm. Nehru and his ders around them, should make way for youn­
descendants have led the party, or India, or ger, more dynamic leaders. Second, Congress
both almost continuously since independence must transform how it communicates, not just
in 1947. Congress’s current de facto leader is grumble about media bias and censorship. Mr
Nehru’s great-grandson, Rahul Gandhi (who is Modi has mastered technology to reach ordin­
not related to the Mahatma). Under him, Con­ ary Indians, as our analysis of his monthly
gress is not expected to improve much on the 20% of the vote it show, relayed on everything from YouTube to WhatsApp, illus­
won in 2019, down from nearly 50% in the 1980s. That could trates. Congress must learn to compete.
translate into a paltry 10% or less of seats in parliament. Finally, Congress needs better ideas, rather than a timid re­
Congress complains that the contest is rigged. Mr Modi has heating of the welfarism of the past or griping that the bjp has
stifled dissent, cowed the media and harassed his opponents. stolen its more innovative policies, such as India’s digital iden­
Arvind Kejriwal of the Aam Aadmi Party, another opposition tity scheme. Mr Modi’s economic management has been com­
group, recently became the first sitting chief minister to be ar­ petent, but India faces giant problems, from improving its dis­
rested. Last year Mr Gandhi was suspended from parliament mal schools to managing migration from farms to cities.
for four months after being convicted of defamation for mock­ To avoid sliding into autocracy, India needs a serious oppo­
ing Mr Modi’s name (the Supreme Court suspended a two-year sition, as capable as the bjp but less divisive. If Congress does
jail sentence). Congress has had its bank accounts frozen. not change, its young, would-be reformers should split and
But a skewed playing field is only part of the problem. Mr create a new movement. Mr Modi has remade Indian politics.
Modi is an exceptionally gifted politician. His approval rating, Time for the opposition to remake itself. ■

The Middle East on fire

Don’t rush to retaliate

Israel should try a novel tactic to resp nd to Iran’s missile attack: restraint

he war cabinet in Israel is grappling with a perilous deci­ against Iran now seems inevitable. But Israel’s government
T sion: how to respond to Iran’s unprecedented drone and
missile attack on April 13th (see Middle East & Africa section).
should stay its hand.
There is a precedent. In 1991 Saddam Hussein, Iraq’s des­
The barrage was, fortunately, blocked with help from friends pot, hit Israel with dozens of Scud missiles. His aim was to
and neighbours. Should Israel “take the win”, as President Joe provoke Israeli retaliation, and thus divide an Arab coalition
Biden is urging, letting a blatant act of wargo unanswered? Or poised to help America evict his forces from Kuwait. At Amer­
should it retaliate and risk sparking a regional conflagration? ica’s urging, Israel did not retaliate. Today, too, Israeli restraint
A small country with many enemies, Israel has long prized could make it easier to build a coalition against a regional
massive—some would say disproportionate—deterrence. It threat: Iran. But only America can muster such a coalition.
has wrecked Gaza in the attempt to crush Hamas, which mas­ Iran claims Israel invited the attack by killing seven mem­
sacred Israeli civilians on October 7th. Israeli retribution bers of its Islamic Revolutionary Guard Corps (IRGC), includ- ►►
 The Economist April 20th 2024 Leaders

► ing two generals, with an air strike on its diplomatic com­ create a common front with like-minded countries, the better.
pound in Damascus. This is cant. Iran cared little for diplomat­ Co-ordinated sanctions, diplomatic isolation, cyber-attacks
ic premises when it took American diplomats hostage in 1979, and support for Iranian dissidents—and rapprochement be­
and when its agents or allies blew up the American embassy in tween Israel and Arab states—may prove better at containing
Beirut in 1983 and the Israeli one in Buenos Aires in 1992. Re­ Iran than strikes. If Israel acts rashly, its neighbourswill bear a
gardless, Iran’s recent strike is disproportionate. heavy cost in a wider regional war; America and Europe will be
It fired 170 drones, and about 120 ballistic and 30 cruise mis­ sucked into hostilities; oil prices will soar; and global trade
siles. It made overt the long covert war with Israel, breaking will be disrupted. Only Iran’s “axis of resistance” would wel­
the taboo against openly attacking each other’s territory. The come chaos. Iran itself could cross the nuclear threshold.
strike is a challenge to America, too. Mr Biden has repeatedly America would be vital to creating a coalition to contain
warned Iran and its allies “Don’t”. They ignored him. First Iran. America and European powers can start by co-ordinating
proxies started shooting at Israel; now Iran has joined in. sanctions on the IRGC and allowing the “snapback” of UN pen­
As the war in Ukraine shows, drones and alties suspended under a now-defunct nuclear
missiles favour the attacker because they are deal from 2015. Diplomacy with Iran, direct or
hard and costly to shoot down. But they can be indirect, should continue but with no illu­
thwarted by technology and co-ordination. sions. America and Israel—and ideally
American, British and French forces—and others—need to make a calibrated but credi­
more quietly Jordanian and perhaps Saudi ble threat of military action if Iran makes a
ones—took out many of the Iranian warheads. dash to acquire nukes.
The rest were almost all destroyed by Israel. To make all this possible, however, Israel
The few that got through did little damage. needs to end the war in Gaza, starting with a
The attack proves the menace of Iran’s ever more zealous temporary ceasefire and the exchange of prisoners and hostag­
rulers. Its proxies in Lebanon, Yemen, Iraq and Syria hollow es. The more Hamas loses hope of fomenting a regional war,
out states and destabilise the region. This “axis of resistance” the likelier it is to agree to such a deal. Progress towards Pales­
has fired drones and missiles not only at Israel but at Saudi tinian statehood, under a reformed Palestinian Authority,
Arabia, the United Arab Emirates and Pakistan. Iran’s weapons would unlock the big prize—normalisation with Saudi Arabia.
are being used against Ukraine, too, as it aligns itself with Rus­ None of this will be easy or without risks. But Iran’s attack
sia, China and North Korea. The danger is all the greater be­ highlights the dangers of escalation in a never-ending war. It
cause Iran is alarmingly close to having nuclear arms. also shows that Israel alone cannot defeat Iran and its net­
Even so, Israel should bide its time. Restraint would help to work. To counter it, Israel needs its own network—with Amer­
heal the rift with America over the conduct of the war in Gaza. ica, Europe and emerging Arab friends. A moderate coalition is
It would allow the budding air-defence partnership to grow the surest way to end the perpetual conflict with the Palestin­
into a bigger and more lasting coalition. The more Israel can ians, which feeds Islamic radicalism, and to contain Iran. ■

Military recruitment

Your country needs (more of) you

Western armies are short of people. Conscription is not the answer—yet

andatory military service is under discussion once short answer is not yet. Armies should be designed to reflect
M more in Europe. The reasons? The possibility of
Ukraine’s defeat looms large (see Europe section), as does the
both geography and how they expect to fight. In countries with
relatively small populations that have borders close to Russia,
threat of a future president Donald Trump abandoning NATO. such as Estonia and Finland, public acceptance of conscrip­
Boris Pistorius, Germany’s defence minister, says that Europe tion is high and training prepares forces for a “porcupine” de­
must be ready for war before the decade’s end. He describes fence against an invader. There is a strong sense of a shared
dropping a one-year period of service for school-leavers in 2011 national endeavour. For similar reasons, military service in Is­
as “a mistake”. Britain’s army chief, General Patrick Sanders, rael, which faces constant security threats, is uncontroversial
has called for a “citizen army”. (aside from resentment that the ultra-Orthodox do not have to
Compulsory stints in the armed forces can take several serve). Taiwan and South Korea have conscription because
forms, including the conscription of civilians of any age, call­ they, too, are close to bellicose powers.
ups using lotteries and a standard period of military service for Citizens in most of the rest of the rich world do not yet feel
young people after they leave school. Compulsion is being an imminent threat. So for conscription to be workable, there
considered because many rich countries struggle to recruit would need to be a clear and shared understanding of why it
enough people for their all-volunteer professional forces (see was needed. That is lacking in countries such as Britain and
International section). Some countries look admiringly at France, where it is not obvious what conscripts could do in a
NATO’s Nordic and Baltic members, all of which have some modern, technologically sophisticated army. Besides, “in a cri­
form of mandatory service which enjoys high levels of public sis” each country must field a full division (30,000 troops with
support. Sweden ended it in 2011, only to resurrect it in 2018. heavy equipment) within 30 days if needed by NATO. Dealing
Is this an approach that other countries should follow? The with lots of conscripts could be a distraction. ►►
 12 Leaders The Economist April 20th 2024

► Because conscripting young people infringes harshly on with university studies or other training. And despite much
their liberty, the policy would need public support. Even Uk­ discussion, few armies have done enough to recruit women
raine, in existential peril, found lowering the call-up age from and combat sexual harassment.
27 to 25 this month politically tricky. Undoubtedly the difficul­ Second, more civil-society support is needed to attract
ties faced by most of Europe’s armed forces in recruiting reg­ those with the specialist skills required in emergencies. In ad­
ular soldiers and building proficient reserves need redress. But dition to wooing more volunteers to augment regular forces,
they can mostly be resolved by means other than compulsion. armies could swell reserves by making soldiers who leave the
First, consider raising soldiers’ salaries. Older folk some­ forces agree to annual training days until they reach their
times grumble about the supposed character flaws that make mid-4os. In this way Britain could mobilise as many as 300,000
young people unwilling to serve. But poor pay and conditions such people if needed. The numbers might be even higher in
are by far the biggest obstacles to recruitment when job-seek­ France and Germany, as they have larger armies.
ers have other choices. Defence budgets are rising but will In these tense times countries should still maintain plans
need to do so faster. NATO members’ target of spending 2% of for how, if the worst came to the worst, a much wider mobil­
GDP on defence will not be enough to cover both higher wages isation might occur. To deter the most dangerous enemies, you
and new kit. There should also be more experimentation, for must be ready for a war that you do not want to fight. Just ask
instance with one-year trials of service that can be combined the courageous Ukrainians. ■

Monetary policy

The second Powell pivot

America’s interest rates are unlikely to fall this year. There will be painful consequences

or most of the year everyone from stockpickers and stockmarket boom; though that recently lost steam, the S&P
F homebuyers to President Joe Biden has banked on the Fed­ 500 index of stocks remains a fifth above its level at the end of
eral Reserve cutting interest rates soon. Over the past two October, when rates were last expected to stay higher for lon­
weeks those hopes have been dashed. Annual consumer price ger. Stocks now look vulnerable to a correction.
inflation in March, at 3.5%, was higher than expected for the Moreover, the problems that high rates exposed in Ameri­
third month in a row; retail sales grew by a boomy 0.7% on the ca’s banking system in 2023 still lurk. At the last count there
previous month. On April 16th Jerome Powell, the Fed’s chair­ were $478bn of unrealised losses on banks’ balance-sheets,
man, warned that the battle against inflation was taking “lon­ much of which result from higher rates reducing the value of
ger than expected”. Investors had begun 2024 pricing in more government and mortgage-backed bonds. That figure will
than 1.5 percentage points of interest-rate cuts over the course have risen now that bond yields have shot up again.
of the year. Today they expect rates to fall by only 0.5 points. The consequences of higher rates in America will also rip­
Mr Powell has conducted a pivot upon a pivot. The euphor­ ple out to the rest of the world. Though there are signs of
ic expectations for rate cuts took on a life of their own after the somewhat sticky inflation elsewhere—Britain’s consumer
Fed turned too doveish in December. That unduly stimulated price inflation was also higher than expected in March—no
the economy and will force the central bank to major economy is as hot as America’s. The
retrace its steps, and then some. The conse­ Tcn-year government-bond yield IMF’s forecast for euro-zone growth this year,
quences of higher-for-longer interest rates will for example, is just 0.8%. The result is a
reverberate around America, financial markets strengthening dollar, which is up about 5%
and the world economy. against its biggest trading partners this year.
America’s economy has demonstrated that Strikingly, the Japanese yen has slipped to
it can withstand at least a temporary period of nearly 155 against the greenback, despite a his­
higher rates. On April 16th the imf forecast 2023 2024 toric (though modest) monetary tightening in
that it would grow by 2.7% in 2024, up from the March, prompting speculation that the gov­
2.1% it expected in January. Yet its resilience to prolonged ex­ ernment may intervene to defend the currency directly.
posure to high rates is less certain. In theory a stronger dollar should help the rest of the world
Many companies issued corporate debt during the pan­ by making its exports more competitive, and growth in Amer­
demic when rates were much lower. That has helped them ica should spill across borders as it sucks in imports. But a
cope with high rates so far; but eventually they will have to refi­ surging greenback can also disrupt trade and borrowing that is
nance and pay up. Mortgage-interest rates of nearly 7% have denominated in dollars. Economies that rely on commodity
frozen much of the housing market. America’s high and rapid­ imports, such as Japan’s, face a double squeeze from a stronger
ly growing government debt is also becoming much more ex­ greenback and a rising dollar price of oil, which is up by about
pensive to service: the yield on ten-year Treasury bonds has 20% since early December and could rise a little further if strife
risen to about 4.6% from 4.2% at the end of March. Already the in the Middle East worsens (see Finance & economics section).
most recent forecasts, predicated on lower rates, saw net inter­ If high interest rates in America end its enviable economic
est absorbing more of this year’s federal budget than defence. run, rate cuts will eventually follow. Until that time comes,
Financial markets will also feel the effects of continued America’s monetary policy will remain a problem for the rest
high rates. The Fed’s doveishness in December propelled a of the world. ■
 EXECUTIVE FOCUS 13

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14 The Economist April 20th 2024

LETTERS ARE WELCOME AND SHOULD BE ADDRESSED TO THE EDITOR AT:

Letters THE ECONOMIST. THE ADELPHI BUILDING, 1-11 JOHN ADAM STREET. LONDON WC2N 6HT
EMAIL: LETTERS@ECONOMIST.COM. MORE LETTERS AVAILABLE AT: ECONOMIST.COM/LETTERS

China’s economic quandary In “The WElRDest People in the adoption of the Treaty on would be interested in joining
You described the “new the World”, Mr Henrich the Prohibition of Nuclear such a programme. What
productive forces” strategy showed that it is the citizens of Weapons in 2017. Almost half young techie wouldn’t love also
adopted by China’s leadership WEIRD (Western, educated, the world’s countries have to be a sergeant.
as the country’s gravest eco­ industrialised, rich, demo­ signed or ratified the treaty. JON WIGGINS
nomic test since Deng Xiao­ cratic) societies that seem The nations with nuclear Machine-learning engineer
ping relaunched reforms in the weird to everyone else. weapons and their allies must Salt Lake City
1990s (“China’s risky reboot”, weirdos keep riches for learn from that. Instead of
April 6th). The significance of themselves, rather than sharing putting their faith in a flawed On the edge of French cities
this new approach goes beyond theirgains with theirclan, and theory of deterrence, they Karim Bouamrane, the mayor
the economy, and could pose a snitch on friends for the sake of should join the treaty and of Saint-Ouen, is quoted as
threat to the regime that Xi upholding the law. Mr Henrich finally remove this existential saying that “etymologically the
Jinping has fashioned over the ascribes the split between threat. Eliminating nuclear word banlieuemeans the ‘place
past dozen years, which is WEIRD and non-WEIRD coun­ weapons is simply good risk of the banished’. It’s the place
centred on buttressing the tries to the policies of the management. where we don’t like you”
power of the Communist Party Catholic church in the 5th MELISSA PARKE (“Making a splash”, April 6th).
around its core chieftain. century, which sought to Executive director Although this interpretation
Deng struck a simple bar­ undermine kinship. International Campaign to certainly supports the gist of
gain with China’s population JOHANN WIRSING Abolish Nuclear Weapons the article, the truth is less
after the repression of protests I Ioh enschdftlarn, Germany Geneva dramatic. Historically, the
in 1989: leave politics and banlieue was the area around a
power to the Communist Party The risk of nuclear weapons Drafting software engineers city (usually within one league,
and, in return, the party will Yourclaim that nuclear I was not surprised to learn that oxlieue) where the authority of
make you materially better off deterrence has worked up to an engineer at Microsoft the city applied and its
through high growth. The now is questionable (“A world discovered the attack on XZ decisions were relayed via
means used to generate the without America’s protection”, Utils, open-source software proclamations, ax bans.
second element of that deal April 6th). There is no corrob­ which is incorporated into ANDREW JOHNSTON
have now proved unsustain­ orative evidence for this, only Linux systems (“Cyber-scary”, Pans
able, as was inevitable given the correlation of the April 6th). Skilled developers
the reliance on investment, possession of nuclear weapons typically work on important What to wear to work
overcapacity, weak domestic by rival countries with the fact projects either as a hobby or Bartleby’s column on corporate
consumption, the build-up of that they have not been used because their employer needs uniforms missed an important
debt and other interlocked since 1945. Even in the case of a bug fix or new feature to point (March 30th). Uniforms
factors. This presents the party Ukraine, which you cite as support a business function. help us realise when our own
with the puzzle of what to evidence of deterrence in Policymakers should consider values are at odds with an
put in place of high growth operation, there is no way of two initiatives. organisation’s. As a new man­
to enable it to claim political knowing whether NATO really First, offering tax credits to agement consultant, I was told
legitimacy and enjoy would have sent combat troops developers for time spent that I could wear a charcoal
popular appeal. to join the fight against Russia writing, fixing and reviewing suit, a navy suit, a white shirt or
Given the likely failure of if the Kremlin did not have code on open-source projects a pale blue shirt. I looked down
Mr Xi’s programme to provide nuclear weapons. that are maintained by regis­ at the yellow tartan dress I was
a convincing answer, the dan­ Deterrence doctrine is an tered charities would give wearing and realised that this
ger for the leadership is that a unproved theory based on the people with the required skills was not my place, and that
faltering economy may now naive assumption that political a reason to spend a few week­ these were not my people.
have a severe knock-on effect. leaders will act rationally 100% ends each year contributing to I quit, and joined a company
That will bring the first part of of the time. It assumes each these public goods. We already where I was complimented on
Deng’s equation into question side always has accurate offer tax credits to volunteer my long-standing and deeply
in a manner for which even Xi information about its oppo­ firefighters or teachers. held belief that sequins
Jinping Thought cannot nent’s intentions. It fails to Second, the armed forces are day wear.
provide a ready answer. consider the possibility of should consideropen-source SIAN DAVIES
JONATHAN FENBY accidents, miscalculations, software development as a Oxford
London terrorist groups, cyber-attacks model for their cyber-reservist
or simple mistakes. We now programmes. Since 2002 Frank Zappa was interrupted
WEIRD countries know it was a matter of luck various government initiatives from playing once by a member
Two articles in the April 6th that a Soviet submarine did not in America have been trying to of the audience who heckled
edition, “The white-collar fire a nuclear torpedo at block­ find ways to put America’s him about some concert­
mafiosi of Naples” and “Meet ading American navy vessels professional programmers to guards in uniform. Zappa’s
the political nepo babies” on during the Cuban missile crisis. work at the weekends. Asking reply was “Everybody in this
Asia’s damaging dynasties, are Rather, it is the devastating them to help maintain code on room is wearing a uniform, and
similar in that they report on humanitarian impact of nuc­ open-source projects used by don’t kid yourself.” You can
cultures that place an emphasis lear weapons, as shown in the government would be hear the live exchange on
on looking after their own. But Hiroshima and Nagasaki, and better suited to a weekend and “Burnt Weeny Sandwich”, an
according to Joseph Henrich, the threat they pose to the night-time work regime than album released in 1970.
neither the Italian mafia nor whole world, not just the states transitional full-time software DENIS BONACCOLTA
Asian nepotism is that peculiar. that possess them, that led to engineering. Personally I Nashua, New Hampshire
The Economist April 20th 2024 15

Briefing Shrinking America

Emptying and fuming

CAIRO, ILLINOIS

Much of America is shrinking, something its system

of government makes even harder than it need be

AIRO, A TOWN at the southern tip of and, when your correspondent visited, was because America’s population is growing
C Illinois founded in the early 19th cen­
tury, was given that name because it was
deathly quiet, with many bare shelves.
Cairo is on its way to becoming Amer­
more slowly. The change will be wrench­
ing, because of America’s demographic
expected to grow into a huge metropolis. ica’s newest ghost town. Its population, and administrative peculiarities.
Located at the confluence of the Mississip­ having peaked above 15,000 in the 1920s, Between 2010 and 2020 the number of
pi and Ohio rivers, it was the transport hub had fallen to just 1,700 people by the 2020 people in the country grew by around 7.4%.
of a region that became known as “Little census. Alexander County, Illinois, of That was the slowest decade of growth
Egypt” because of its huge deltaic plains which it is the capital, lost a third of its since the Great Depression (when the pop­
where farmers could grow anything. people in the decade to 2020, making it the ulation grew by 7.3%). In the 1990s the
Today, however, the name is redolent of fastest-shrinking place in America. growth rate was 13%. The main culprit is
lost civilisations. To walk around is a falling birth rates. The total fertility
strange experience. Turreted Victorian Huckleberry Finnished rate—a measure of how many children a
houses gently crumble, being reclaimed by Its collapse has many causes. A century typical woman will have in her lifetime—
the weeds. What was once downtown (pic­ ago the supplanting of river transport by was steady or rising for 30 years from the
tured) resembles an abandoned film set. railroads started the decline. In the wake of mid-1970s. In 2008, however, it fell below
Cairo has no petrol stations, no pharma­ civil-rights legislation in the 1970s, white- 2.1, the level needed to keep the population
cies and no hospitals. It has gone from six owned businesses fled to avoid hiring stable, and has since declined to 1.67 (see
schools to two, both half-empty. ‘"When I black people. In the past decade the demo­ chan on next page). If it remains below 2.1,
was growing up in the 1970s, we had two lition of public housingdisplaced yet more only immigration can keep the population
grocery stores, we had two gas stations. residents. But its biggest problem now is a growing in the long run. Yet net immigra­
You know, a lot of businesses were still national demographic headwind. Between tion, too, has been falling since the 1990s.
open,” says Toya Wilson, who runs the 2010 and 2020 over half of the country’s The pandemic almost stopped the pop­
city’s still operating and beautiful Victor­ counties, home to a quarter of Americans, ulation growing altogether. In 2020 over
ian library. One modest grocery store re­ lost population (see map on next page). 500,000 more people died than in 2019,
mains, but it is run at a loss by a charity Over the coming decades still more will, even as the birth rate also fell. With bor- ►►
 16 Briefing Shrinking America The Economist April 20th 2024

► ders closed and American diplomatic out­ This is what is called a death spiral.
posts shuttered, net immigration dropped Tough times for storks Death spirals tend to be worse in Amer­
precipitously. In 2021 the Census Bureau United States, total fertility rate, ica because of the remarkable level to
estimated that the population expanded births per woman which the government is decentralised.
by just 0.2%, the lowest showing in the Just 8% of spending on primary and sec­
country’s history. As covid-19 has receded, ondary education comes from the federal
deaths have fallen back. And in the past government, for example, and less than a
year or so, according to estimates pub­ quarter of the spending on law enforce­
lished in January by the Congressional ment. Local and regional authorities levy
Budget Office, immigration has increased, 48% of all tax collected in America, com­
largely owing to people crossing the south­ pared with just 20% in France and 6% in
ern border illegally. But demographers do Britain. And even America’s federal spend­
not think this surge will alter the long-term ing typically comes in the form of grants
trend. This decade, according to William 0 linked to population levels. So when local
Frey, of the Brookings Institution, a think­ —1—»—1—'—1—»—1—'—1—1—1—»—r-------------------- tax revenues shrink, services must be cut or
1960 70 80 90 2000 10 22
tank in Washington, DC, the population taxes must rise.
Sources: National Ont re lor Health Statistics: World Bank
will probably grow by around 4%. Even if Research by Christopher Berry of the
you assume immigration stays high, Mr University of Chicago finds that, as cities
Frey notes, America “would still show doubtless exacerbated the trend, but inter­ lose population, the cost of providing pub­
slower growth in coming decades than in nal migration shows no sign of stopping, lic services tends to stay about the same.
any decade in the nation’s history”. so these contractions are in all likelihood a “Virtually nowhere reduces the public sec­
The phenomenon is hardly unique to sign of things to come. tor in line with the population,” he says. Ex­
America. The populations of many other Shrinking is bad for many reasons. As actly why that happens is unclear: it could
rich countries are growing even more slow­ people leave a place, once beloved busi­ be that servicing a given geographical area
ly or shrinking. So are those of many devel­ nesses become less viable and close. entails fixed costs, regardless of popula­
oping countries. That of China, America’s Schools without enough pupils struggle to tion; it could be that laying off municipal
biggest geopolitical rival, shrank in 2023 maintain sports teams, or bands, or to workers is politically tricky. Whatever the
for the second year in a row. Its fertility rate teach a wide curriculum, even if their fund­ reason, the result is that the remaining tax­
has tumbled to just 1.15 children per wom­ ing per pupil remains generous. payers must pay more simply to support
an. Russia’s population is smaller than it But the biggest problem is that, once a the same services.
was in 1991. America’s demographic pro­ place starts shrinking, it can set in motion When high taxes combine with deterio­
blems are much smaller than those of its reinforcing cycles that accelerate the de­ rating public services, people leave. Austin
peers. Yet there are reasons to worry that cline. For example, when there is far more Berg of the Illinois Policy Institute, a right­
America will adapt to slow growth even housing available than people to fill it, the leaning think-tank, notes that people in
less readily than other countries. result tends to be a collapse in the value of southern Illinois have an easy way to es­
homes. If it is severe enough, landlords and cape higher taxation: they can simply go to
Celebrated jumping frogs even homeowners stop maintaining their the next state. Whereas Alexander County
America’s population is growing at about properties, because the cost of repairs is in Illinois has shrunk drastically, neigh­
the same rate as those of Britain and higher than the return they will generate. bouring counties just to the south are still
France. But America is different from Brit­ As the resulting blight spreads and neigh­ growing. The population of Paducah, Ken­
ain or France in that its population is much bourhoods begin to feel hollowed out, the tucky, 30 miles away on the other side of
more prone to move around the country. incentive to stay is reduced even further. the Ohio river from Cairo, grew by 8.4% in ►►
Some parts of America are extraordinarily
successful at attracting new people. The
population of the state of Nevada has Red dawn
grown ten times larger since the early % change in population, 2010-20*, by county
1960s, when it was so empty it could be
used to test atom bombs. That of Texas has
more than tripled over the same period. In
general Americans have long flocked to J Chicago
“Sunbelt” states in the South and south­ Muncie

west. In the past that was not a problem, ■

Detroit
because the national population was grow­
r
ing fast enough that lots of people could
leave the colder, cloudier states in the
Nevada
rs
, New York City
north-east and Midwest without causing inois
their populations to shrink. But if the pop­ West Virginia
ulation as a whole is barely increasing, for
one region to grow fast, another must con­ Paducah
tract, notes Beth Jarosz of the Population Cairo
Reference Bureau, a non-profit research or­
ganisation that works with the Census Bu­ San Francisco
Atlanta
reau. Growing becomes a zero-sum game.
Between 2010 and 2020 just two states Mississippi
lost population: Mississippi and West Vir­ Houston
ginia. The population of Illinois was essen­
tially unchanged. All the rest grew. But in
Source: US Census Bureau *2020 figures are estimates
2021, 17 out of 50 shrank. The pandemic
 The Economist April 20th 2024 Briefing Shrinking America 17

► the 2oios. Many who have stayed put still cash to firms that open factories or offices. tions about American decline resonate.
leave Illinois to buy petrol and groceries, to Now cities and states are wooing work­ Yet much of the recent slowdown in
benefit from lower sales taxes elsewhere. ers directly, too. Take Muncie, Indiana, a America’s population growth dates to iMr
As revenue gradually diminishes in this city of 65,000 people about 50 miles north­ Trump’s presidency when, even before the
way in much of Illinois, the state is becom­ east of Indianapolis. Since 2021 it has of­ pandemic, net migration fell by a quarter
ing ever more dependent on the taxpayers fered a $5,000 grant to remote workers as his administration deliberately gummed
of its one metropolis, Chicago. who agree to move there. The cash is in es­ up the immigration services. If he is re­
The biggest contributor to death spirals sence a marketing device to get potential elected, Mr Trump promises “the largest
is often pensions for government workers. movers to consider a town they might not domestic deportation operation in Ameri­
As America’s population ages, the overall otherwise have heard of, says Dan Ride­ can history”, to remove illegal immigrants.
burden of paying for such pensions is get­ nour, the city’s Republican mayor. “It’s be­ (Admittedly Mr Trump says that he is in fa­
ting heavier everywhere. But many pen­ come very competitive—and not just for vour of legal immigration. He occasionally
sions are funded locally—and there are of­ remote workers, for all workers,” he says. promises a “big beautiful door” as well as
ten shortfalls. Taxpayers in cities or states So far 152 people have moved to the city “a big beautiful wall”. But he wants to let in
that shrink end up lumbered with a pen­ under the scheme, which is run by iMake- only people from “nice” countries.)
sion bill from when the population was MyMove, a firm based in Indiana which
much larger and so was the number of helps promote the incentive schemes of No life on the Mississippi
teachers, firemen and police officers. As a cities that are willing to pay people to Driving your correspondent around Cairo,
result, says Mr Berry, “Places that shrink move there. From its foundation in 2017 Phillip Matthews, the chairman of the
are screwed.” MakeMyMove has expanded enormously, Democratic Party in Alexander County,
When Detroit went bankrupt in 2013, says Christie Hurst, its spokeswoman, not lists services that have been cut over the
the state of Michigan bailed out its pen­ least thanks to the pandemic, which freed years: public housing closed, government
sioners. But such bail-outs are dependent many workers from having to go to an of­ offices moved, schools shut down. He
on the state having reasonably healthy fi­ fice. The result is a much larger pool of po­ points out the public hospital in which he
nances. When the population of a state as tentially mobile workers over whom cities was born—now a derelict concrete hulk. “A
a whole is stagnant or shrinking, that be­ can compete—hence the growth of the lot of this is done by design,” he declares,
comes much less likely. Across Illinois the business. Yet a taxpayer gained by Muncie, of his town’s decline. What he means is
total burden of unfunded state and local Indiana, is one lost to somewhere else. And that politicians took many of the decisions
pension liabilities is estimated to be with growth overall slowing, not every­ that have contributed to the decay. Mr
around $2iobn, or roughly four times the where can win. In fact, re mote-working Matthews is pinning his hopes on a stalled
state’s entire annual budget. Despite re­ may only hasten the decline of some strug­ plan to spend $40m on a new river port in
cent reforms, the state government does gling places, by making it possible for a Cairo, which has been backed by J.B.
not expect state pensions to be fully fund­ worker in, say, Muncie, to relocate to a Pritzker, the state’s Democratic governor.
ed for another 25 years. Chicago, mean­ pretty mountain town in Colorado. If the port is ever built, perhaps Cairo will
while, is grappling with its own pension Ultimately, the risk is that all of this is recover somewhat. But in the meantime,
problems. That does not leave much cash at best “keeping places on life support”, Mr Matthews, a black pastor, says he un­
to bail out or revive places like Cairo. says Mr Berry. If America’s population derstands why more and more people in
Does it matter if places die? Some does not grow faster, far more places will his region support Mr Trump. “The Demo­
would argue no. People are better off if begin to die. The politics of that will be ug­ cratic Party is failing its constituents,” he
they can move to opportunity, instead of ly. Of the counties that lost population in says. “People are scared to say it, but truth
becoming trapped in dying cities or jobless the decade to 2020, 90% voted for Donald is truth.” The worse things get, the more
rural areas. Indeed, competition between Trump in 2020. Presumably, his Elimina­ votes Mr Trump will win. ■
cities helps explain America’s economic
dynamism; many economists would like
there to be even more movement. Al­
though people are flocking to new jobs in
places like Houston or Atlanta, high hous­
ing costs stop workers from moving to
even better paid jobs in places like San
Francisco or New York City. If those cities
built more housing, they would attract
more workers from other parts of America.
Places like Cairo would shrink even faster,
but America as a whole would be richer.
Yet in reality, shrinking is hugely politi­
cally unpopular because, inevitably, many
people are left behind, and the lives of
those unwilling or unable to move worsen
as their neighbours depart. Federal, state
and local officials know this. And so they
will do almost anything to avoid shrinking.
All manner of big government facilities,
from air-force bases to prisons, can be lo­
cated in rural areas, ensuring there are jobs
that in turn sustain the rest of the econ­
omy. For decades cities and states across
America have also competed to attract new
businesses, handing out land, tax breaks or All signs point to trouble
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The Economist April 20th 2024 19

United States

Donald Trump on trial the campaign to them. When a former

Trump Tower doorman tried to sell a bo­
Do I look guilty to you? gus story to tabloids about how Mr Trump
had fathered an illegitimate child, iMr
Pecker warned team Trump, which direct­
ed him to buy exclusive rights to the story
and bury it, a practice known as “catch and
NEW YORK kill”. A similar deal was struck w’hen Karen
What to expect from the first criminal prosecution of a former president McDougal, a former Playboy model,
emerged from the woodwork to allege an
anhattanites once rolled their Stormy Daniels, before the 2016 election. affair with Mr Trump starting in 2006.
M eyes at Donald Trump. Then they Prosecutors allege that the payment was
came to revile him. Soon 12 will decide if he
made to protect his candidacy and thus
About a month before die election Ms
Daniels surfaced, shopping around her
is a felon. Jury selection in his first criminal amounted to an undeclared campaign ex­ story about a sexual encounter with Mr
trial, expected to last up to eight weeks in a pense. Mr Trump is accused of falsifying Trump, also in 2006. The “Access Holly­
shabby courtroom, has sped along; prose­ business records to hide the pay-off. He wood” tape, in wrhich Mr Trump bragged
cutors will set out their case in a matter of denies any such scheme. about grabbing women’s genitals, had just
days. One prospective juror confessed that Early in his first campaign Mr Trump appeared in the press and nearly sunk his
the weight of the task at hand had kept her met his lawyer, Michael Cohen, and his candidacy. The campaign could ill-afford
up at night: “This is, like, a big deal in the friend David Pecker, then the boss of a tab­ headlines about how he had slept with a
grand scheme of things.” loid publishing company. iMr Pecker porn star w’hile his wife was nursing their
Yes and no. Manhattan’s district attor­ agreed to be Mr Trump’s “eyes and ears*— newborn son. This time iMr Cohen paid Ms
ney, Alvin Bragg, has brought the first to look out for damaging stories and alert Clifford $130,000 from his own pocket.
criminal indictment against a former presi­ To reimburse Mr Cohen, Mr Trump al­
dent, who also happens to be running legedly agreed to pay him in monthly in­
ALSO IN THIS SECTION
again. But the felony charges are low-level stalments and mislabel them as legal ex­
and the details tawdry. The case is about 20 Busted trust penses in the company’s accounts. Hence
sex, money and blackmail. Mr Trump’s for­ the 34 felonies alleged by Mr Bragg: 11 re­
21 Tents in cities
mer lawyer and fixer, who will testify lated to invoices, 12 to ledger entries and 11
against him, once described the conduct at 21 Bribing voters to cheques. Normally these w'ould be mis­
issue as the “filth and muck of politics” demeanours. To upgrade them, prosecu­
22 Touching fentanyl
and, less delicately, a “shit sandwich* tors must show’ that the records w'ere falsi­
The charges centre on Mr Trump’s ef­ 23 Patentsville fied to commit or conceal another crime.
forts to buy the silence of Stephanie Clif­ They have suggested a few: that the hush
24 Lexington: A Trumpian triumph
ford, a former porn star better known as money violated federal campaign-finance ►►
 20 United States The Economist April 20th 2024

► rules, and that tax wasn’t properly paid on Incredulous America role in Americans’ low trust in the electoral
the reimbursements. system, says Henry Brady of the University
A parade of witnesses should bolster Busted trust of California, Berkeley. This no doubt also
the prosecutors’ case. Mr Cohen and Mr contributes to growing distrust of the judi­
Pecker will testify to Mr Trump’s alleged ciary-just last week Mr Trump called the
involvement in the scheme. There is an criminal “hush money” trial against him “a
ample paper trail, including cheques that WASHINGTON. DC communist show trial” But few things
iMr Trump personally signed, and a record­ America has startlingly lower trust in its seem to have done more to directly erode
ing of him discussing the payment for Ms institutions than other rich democracies trust in the judiciary than the Supreme
McDougal’s silence. Court’s decision in 2022 to overturn Roev
Mr Trump’s lawyers, for their part, will AS FAR AS stereotypesgo, brash national Wade. Before this ruling removing a consti­
contend that there was nothing illegal self-confidence has long been a defin­ tutional right to abortion in America,
about the hush money: that it was paid ing feature of how Americans are viewed Democrats and Republicans trusted the
purely to protect his personal reputation abroad. In 2006, when Gallup first started court in roughly equal measure; after­
and spare his wife embarrassment, not to asking Americans about their trust in key wards, confidence among Democrats
influence the vote or skirt campaign-fi­ institutions, the country ranked at the top dropped through the floor.
nance rules. John Edwards, a former of the G7 league table, tied with Britain. In The divergence with Britain is especial­
Democratic candidate for president, suc­ 2023, for the first time, America came last. ly striking. Whereas British confidence in
cessfully made that argument and was ac­ New data from Gallup, a pollster, show the country’s judiciary and electoral sys­
quitted of breaking campaign-finance laws that American trust in several national in­ tem is higher than at any point in the histo­
to hide an affair and a child outof wedlock stitutions is on the decline. That may not ry of the survey, America has moved in the
during the 2008 election. But it will not be surprising, given the fraught state of the opposite direction. Some 70% of Britons
help that Mr Cohen has admitted in court country’s politics, but the cumulative fall now say that they have confidence in the
that it was a crime. In 2018 he pleaded guil­ over the years is startling (see chart). Twen­ honesty of elections, compared with only
ty to making an undeclared campaign con­ ty years ago Americans had the highest 44% of Americans.
tribution (among other charges) and spent confidence in their national government of “Like America, the UK has seen a pretty
just over a year in prison. people in any G7 country. Today they have steady decline in confidence in national
iMr Trump's principal strategy, then, the lowest. Americans are tied with Italians government,” observes Benedict Vigers,
will be to impugn Mr Cohen’s credibility in having the lowest trust in their judicial from Gallup, “but this more core belief in
and paint him as a fabulist. Indeed Mr Co­ system, and come last in faith in honest the foundation of the democratic system
hen has an impressive record of lying un­ elections. Even the army is suffering from a and in fair elections is still pretty strong.”
der oath and a well-documented animus dip. Although still high at 81%, American The same cannot now be said about Amer­
towards his former boss, who reportedly trust in its armed forces is now lower than ica. Even within the broader OECD club of
relished treating him like garbage. If Mr at any point since 2006, and—gasp—lower mostly rich democracies, only Hungary,
Trump is convicted, sentencing will be de­ than in France. Turkey and Colombia have less trust in
cided by the judge, Juan Merchan. Jail time The reasons behind this crisis of confi­ honest elections.
seems unlikely for a first-time, white-collar dence in the self-declared greatest country Yet more than the loss of trust overall,
felon. There is no mandatory minimum on Earth are varied. The roots of a what really worries Mr Brady is the in­
sentence. Each count carries a maximum (healthy) scepticism of government can be creased polarisation of trust in America.
of four years in prison. traced back to the Vietnam war and the Having some institutions that Democrats
Would a conviction sway voters? That Watergate scandal of the early 1970s. The trust more (journalism, higher education,
iMr Trump wanted his philandering kept gradual dying-out of the second world war science) and others that Republicans trust
quiet is neither surprising nor news; Amer­ generation, which had significantly higher more (religion, the armed forces and the
icans are inured to his sex scandals by now. institutional trust than later generations, police) is a matter of concern, particularly
Compared with his other indictments this also plays a role. However, more recent de­ for the institutions themselves. The pro­
is small bore. Voters consider it the least velopments help explain the sharp decline blem is even starker when the workforces
serious of the four and a plurality thinks a of the past years. of such institutions become increasingly
guilty verdict will have no bearing on his Donald Trump’s “constant barrage” of homogenous, something that has hap­
political career, according to polling by unfounded accusations about the 2020 pened in predominantly progressive high­
YouGov. An acquittal would vindicate Mr presidential election clearly plays a big er education as well as in the predominant­
Trump’s claim to be the victim of a politi­ ly conservative military services.
cal crusade by Mr Bragg, an elected district Strong and credible institutions count
attorney who is a Democrat. Outlier among the best guarantors of a country’s
The indictment has come in for heavy G7 countries, confidence In long-term stability. People who broadly
criticism, even among lawyers on the left. national institutions* % trust authority are more likely to comply
There was doubt about whether state pros­ with government directives, such as filing
ecutors could bring a case that rests on a their tax returns. During the pandemic,
federal campaign-finance violation, since people who had high trust in government
that is the domain of federal prosecutors. were more likely to get vaccinated and
Those questions might arise on appeal, but comply with public-health guidance on
for now they are academic: judges have re­ lockdowns or social-distancing rules, ac­
fused to toss the case out. Of the four in­ cording to a meta-analysis by Daniel De­
dictments against Mr Trump, it may be the vine of the University of Southampton and
only one to produce a verdict before the colleagues. Blind trust in authority is dan­
election in November. The other, weightier gerous, and a degree of scepticism can be
charges, about alleged election interfer­ *Key national institutions: the military, the judicial system, healthy. But America’s slide towards be­
the national government and the honesty of elections
ence and the mishandling of classified Source: Gallup
coming an ever more distrusting place has
documents, are beset by delays. ■ perils of its own. ■
The Economist April 20th 2024 United States 21

Homelessness how to comply with the Boise and Grants

Pass rulings, argues that they are narrower
Sleeping rough than many think. “Sweeping” or breaking
up encampments is allowable so long as
cities aren’t ticketing homeless people
who have no other shelter, argues Mr Rey.
LOSANGELES
Sweeping encampments is anathema to
Is ticketing homeless people a cruel and activists who argue that tearing down tents
unusual punishment? is traumatising, but doing so does not
criminalise homelessness.
N 2013 LOCAL leaders in Grants Pass, Still, some policymakers argue that the
I Oregon, held a meeting to brainstorm
ideas for how to tackle the city’s growing
courts have tied their hands. In some cases
that is true. In 2022 a federal judge inter­
“vagrancy problem”. A record of that meet­ preted the Boise and Johnson rulings
ing states that participants suggested broadly, and blocked San Francisco from
“driving repeat offenders out of town and clearing encampments when there is no
leaving them there”, and buying homeless other shelter available. Politicians have an­
people a bus ticket to anywhere else. “The other reason to blame the courts: it is easi­
point”, said Lily Morgan, a city-council er to whine about judges than to shoulder
member, “is to make it uncomfortable the blame themselves for failed policies.
enough for them in our city so they will The interest in Johnson is also revealing
want to move on down the road ” of a larger trend. As recently as the early
The city, tucked between the Cascade part of the covid-19 pandemic, Democrats
and Siskiyou mountains north of the Cali­ John Roberts’s next case were leery of sweeping away encamp­
fornia border, banned sleeping and camp­ ments. That liberal mayors around the
ing in public places. Over the next few tackle the proliferation of tent encamp­ West are now trumpeting their attempts to
years Ed Johnson, the director of litigation ments. Half of the growth in America’s eradicate them is testimony to how fed up
for the Oregon Law Centre, a legal charity, homeless population between 2020 and their voters are with homelessness in Los
started to hear from homeless people in 2023 came from the nine western states Angeles, San Francisco and Portland.
Grants Pass. They were woken by police, that comprise the Ninth Circuit. More than Tents have come to symbolise disorder and
he recalls, slapped with fines they couldn’t a quarter came from California alone. Os­ failed policies. No wonder politicians who
pay and thrown in jail. In 2018 Mr Johnson kar Rey, a lawyer who advised cities on hope to stay in office want them gone. ■
sued the city on behalf of his homeless cli­
ents. On April 22nd the Supreme Court
will hear oral arguments in Grants Pass v Bribing voters
Johnson, The question at the heart of the
case is whether penalising homeless peo­ Regressive Democrats
ple for sleeping outside when they have
nowhere else to go counts as cruel and un­
usual punishment, which is banned by the
Eighth Amendment.
WASHINGTON. DC
Two cases will serve as important pre­
cedent. In 1962 the Supreme Court found The White House unveils a pair of bad policies to woo voters
in Robinson v California that a Golden
State law making drug addiction illegal— T IS A Washington truism that little gets fit. The plan would also help more than 2m
rather than the use, purchase or sale of
drugs—was unconstitutional. Jail time
I done in Congress during an election
year. This means that pandering politi­
borrowers who have held loans for at least
20 years and an additional 2m who quali­
alone is not cruel and unusual, wrote Jus­ cians, and particularly the president, need fied for existing assistance programmes
tice Potter Stewart, in his majority opinion. to get creative. Consider two recent moves but didn’t sign up. Those who attended
But the law criminalised a status rather by President Joe Biden to shore up support “low-financial-value programmes or insti­
than an act, and “even one day in prison among blocs traditionally supportive of tutions” could get relief as well.
would be a cruel and unusual punishment the Democratic Party. The rule faces a month-long public­
for the ‘crime’ of having a common cold.” On April 17th iMr Biden called for a 25% comment period, then a review. The ad­
In 2018 the Ninth Circuit Court of Ap­ tariff on certain Chinese steel and alumini­ ministration hopes to implement the new
peals, which covers nine western states, um products; in some cases that amounts proposal by the autumn. All this follows an
applied the logic set out in Robinson v Cali­ to more than tripling existing import taxes. announcement on April 12th of another
fornia to homelessness. In Martin v Boise This is in addition to tariffs put in place by student-loan cancellation for 277,000 bor­
the court held that the city of Boise could Donald Trump on some products. Mr Bi­ rowers that adds up to $7«4bn. The Educa­
not penalise people for sleeping rough den also told a steelworkers’ union that his tion Department is working on yet another
when no shelter was available to them, as administration will investigate Chinese proposal to help those “experiencing hard­
such citations ran afoul of the Eighth shipbuilding subsidies and work with ship” repaying their loans.
Amendment. The Supreme Court declined Mexico to block Chinese tariff evasion. These moves are the latest in a long
to review the case in 2019. Deciding to hear The day before the tariff announce­ White House campaign to relieve hun­
Grants Pass v Johnson gives the court, now ment, the Department of Education pro­ dreds of billions of dollars in student debt.
more conservative than it was five years posed a regulation that would forgive un­ The White House estimates that it already
ago, another crack at the issue. paid interest for Americans who owe more has approved $i53bn (or 0.6% of GDP) for
Western politicians are hoping the on their student loans than they originally more than 4m borrowers. The Committee
court’s ruling will offer clarity on how to borrowed. Around 25m voters could bene­ for a Responsible Federal Budget (CRFB) ►►
 22 United States The Economist April 20th 2024

► believes the new policies cost $i47bn. The

hardship cancellation could range be­
tween $ioobn and $6oobn, depending how
stringent the final proposal is.
This is probably good politics for Mr Bi­
den, as the Democratic Party continues to
consolidate support among college-edu­
cated voters and worries about losing rank-
and-file union members seduced by Mr
Trumps overtures towards them. As poli­
cies, they are retrograde bungs to favoured
groups at the expense of other Americans.
The steel and aluminium tariffs are in­
flationary, which makes them worse for
low-income Americans. As for student­
loan forgiveness, helping borrowers at
high default risk could be progressive. But
many borrowers in relatively good finan­
cial health carry debt because they choose
to cover only their minimum monthly pay­
ments. Some voters might wonder whether
law-school graduates really need more fed­
eral help than plumbers.
Congress has given the presidency Banning it harder
broad but not unlimited authority to enact
tariffs; iMr Biden’s student-loan actions are The fear is so widespread that Florida’s public spaces, such as buses. Yet passen­
more dubious. The Supreme Court struck governor, Ron DeSantis, even signed a bill gers and drivers are not dying. Nurses and
down a previous proposal, which relied on on April 8th making it a felony, punishable doctors administer the drug and treat over­
an overly expansive reading of a law that with prison time, to recklessly endanger dose victims every day. Drug-dealers
allowed for debt forgiveness during na­ the life of a first responder by causing “in­ would also “be dropping dead left, right,
tional emergencies. “This one is a lot more halation” of fentanyl or “absorption and centre”, says David Juurlink of the Uni­
targeted, but if you pick enough targets, through skin” which leads to “an overdose versity of Toronto, unless they w'ore pro­
you get to a similar place,” Marc Goldwein or serious bodily injury”. Yet there is no tective equipment. But Brandon del Pozo, a
of the CRFB says of the new' proposal. documented case of this taking place and former police chief and public-health pro­
Both parties see value in having a de­ medical researchers say it is extremely un­ fessor at Brown University, says that dur­
bate about the cost, legality and fairness of likely. “The law creates a felony assault ing fentanyl-related drug busts, the scene
Mr Biden’s student-loan efforts. While that charge for something that is scientifically was often quite casual. “There’s one guy
goes on, the country is avoiding a more se­ impossible and has never happened,” says w atching TV, one guy eating Chinese take­
rious conversation about w'hat has made Ryan Marino, a toxicologist at University out, another guy cutting fentanyl on the ta­
college so expensive in the past few de­ Hospitals Cleveland Medical Centre. ble,” he explains. “They are not wearing
cades. And xMr Biden’s tariff play is only The Drug Enforcement Agency (DEA) hazmat suits and gas masks.”
the latest sign that embracing protection­ has a webpage from 2017 warning first re­ Perpetuating the myth of incidental
ism is now a bipartisan habit. ■ sponders about the dangers of fentanyl. harm makes an already tough job that
“The opioid epidemic nationwide has much more fraught. “Imagine being a cop
caused havoc and heartbreak...Any fenta­ and believing that any time I go near these
Panics nyl exposure can kill innocent law enforce­ people, I could just die,” says Dr Del Pozo.
ment, first responders and the public.” Fen­ “That is an incredibly needless source of
Can touch this tanyl is indeed a scary drug. It is responsi­ stress.” Some medical professionals say
ble for 70% of drug-overdose deaths per that the officers in those viral videos prob­
year. And policing is also a tough job. By ably had real physical reactions, but they
the nature of the role, officers are at greater do not resemble the symptoms of an
WASHINGTON, DC
risk than the general public. opioid overdose. Some think the officers
Lots of state legislators believe any But toxicologists show that such inci­ may have been stricken with panic instead.
contact with fentanyl is fatal. It is not dental exposures are not harmful. The Confusion about the potency of fenta­
American College of Medical Toxicology nyl could also have consequences for peo­
N AN EPISODE of the cop drama “Blue and the American Academy of Clinical ple who are actually overdosing. Drug us­
I Bloods”, Detective Maria Baez touches a
dish covered in fentanyl, a powerful syn­
Toxicology say that “fentanyl and its ana­
logs are potent opioid receptor agonists,
ers may now hesitate to call for help for an
overdose victim for fear of punishment. If
thetic opioid. Moments later she is rushed but the risk of clinically significant expo­ first responders take time donning unnec­
to the hospital, fighting for her life. In the sure to emergency responders is extremely essary protective gear, the victim could die.
real world, viral videos show’ first respond­ lowr.” According to the Centres for Disease Lawmakers in Florida passed the bill
ers seemingly harmed by the drug. In one, Control and Prevention, no law-enforce­ anyway. Jay Collins, a Green Beret army
an officer is warned not to get too close to ment officers have died from fentanyl ex­ veteran and state senator w'ho sponsored
the substance. Within seconds he staggers posure w'hile performing their duties. it, is undeterred by the naysayers. “We
back and falls to the ground. His peers ad­ If fentanyl were truly as toxic as have to make sure we protect and preserve
minister naloxone, a drug that reverses the claimed by agencies like the DEA, then our lawr enforcement,” he says. “I want our
effects of opioid overdose, and he slowly everyone would be at risk. Researchers law enforcement to know' that, unequivo­
regains consciousness. have found trace amounts of the drug in cally, we here in Florida have theirback.” ■
The Economist April 20th 2024 United States 23

Niche towns tempo suits plaintiffs, as deep-pocketed

defendants can afford to drag out litiga­
If you build it, they will sue tion. Early on, verdicts in the Eastern Dis­
trict were lopsided, because the posh de­
fence lawyers were “terrible” at arguingbe-
fore juries, says Michael Smith, a longtime
patent litigator in Marshall. Verdicts in the
MARSHALLAND WACO
Eastern District now' conform to national
How two small Texas towns became the patent-law centre of America averages: in Waco, defendants actually w in
more, according to Lex Machina.
N 2019 A federal judge named Alan Al­ predictable process—into the unwieldy But the optics in iMarshall w'ere suffi­
I bright gave a presentation to a group of
lawyers. His courthouse in Waco, Texas,
cases. He adopted similar ones, tweaking
them to prioritise speed. Litigants reached
ciently bad that in 2017 the Supreme Court
made it harder, in effect, for plaintiffs to
where he is the only judge, sits near a sweet trial in half the time it took in California. file lawsuits there, by requiring defendants
shop. The talk was called “Why You Around the same period, “it also happened to have “regular and established” business
Should File Your Next Patent Case Across that there was an explosion of patent-troll where they are sued. Apple shut dow'n its
the Street from the ‘Hey Sugar”*. litigation,” says Paul Gugliuzza of Temple nearby stores. (Samsung did not and, de­
The intellectual-property lawyers wrho University, referring to plaintiffs w'ho own spite the ice-rink, was hit with a $30301 jury
heard his pitch were apparently persuaded. bad patents and seek quick and cheap set­ verdict in Marshall last year.)
Less than two years after being appointed tlements. By the mid-2oios Mr Ward’s suc­ By 2021 Waco’s patent docket—similar­
to the bench, Judge Albright had nearly cessor, Rodney Gilstrap, had about a quar­ ly speedy, thanks to local rules—was at­
20% of the country’s patent cases, accord­ ter of the country’s patent cases. tracting scrutiny, too. John Roberts, the
ing to Lex Machina, a legal-analytics firm. chief justice of the Supreme Court, ac­
By 2021, he had 23%. Trial teams of white­ Patentsville, USA knowledged senators’ concerns about the
shoe attorneys from New'York and Califor­ The caseload in iMarshall books up the “extreme concentration of patent litiga­
nia, representing clients such as Google courthouse and boosts businesses down­ tion” there. Starting in 2022 Waco patent
and Intel, began streaming into Waco, a ci­ town. One hotel bought a subscription to cases w'ere required to be put into a lottery,
ty of 140,000 people in central Texas more PACER, an online database for court re­ so that any of the Western District of Tex­
widely known for being the birthplace of cords, to keep track of potential clients. In as’s 12 judges could draw’ them. In 2023
Dr Pepper, a questionable fizzy drink. an apparent bid to make locals (read: ju­ fewer patent cases w'ere filed overall, and
Bill Wetterman, a real-estate developer rors) like it more, Samsung, a frequent de­ Waco saw a steep drop-off.
and Waco native, spotted a business op­ fendant, sponsored an ice rink across from Patent litigation could reasonably war­
portunity. In 2021 he opened up Legal the courthouse. TiVo spent $10,000 on a rant a specialised court, similar to the sys­
Lawfts, rentable offices—“war rooms”, in champion steer at a livestock auction, and tem America uses to handle bankruptcy
the parlance—that come outfitted w ith se­ named it TiVo. cases, stacked with experienced judges.
curity cameras, back-up internet and, by This sits uneasily with some. Federal “There are compelling reasons w'hy Con­
request, gluten-free Oreos. judges are meant to be generalists, and gress might think it was wise to create a
In Waco Mr Wetterman’s competitors courts are not supposed to pow'er their lo­ national patent court,” says Steve Viadeck
include Connect Litigation, a firm that cal economies. And the rules “tend to be of the University of Texas. “The problem is
runs a few war rooms downtown. But Con­ more plaintiff-friendly”, says Andrew Rus­ that it’s for Congress to decide, not the
nect focuses its operations about 200 miles sell, a patent litigator in Delaware. Defen­ judge of the 37th-largest city in Texas.”
north-east. The “patent docket” is a famil­ dants often try to transfer their cases else­ Waco in fact ranks 24th in the state. Mar­
iar term in Marshall, a faded but quaint where. Yet hat is partly because the speedy shall is tied for 138th. ■
towrn of about 24,000 people near the Loui­
siana border. Between 2000 and 2020,
more than 17% of all patent cases filed in
federal court wrere in the Eastern District
of Texas—roughly 13,500. By comparison
Delaw are, where most big American com­
panies are incorporated, had fewer than
10,000 cases; the Northern District of Cali­
fornia, w here Big Tech firms are based, had
fewer than 5,000.
T. John Ward, Marshall’s federal judge
from 1999 to 2011, is responsible for the
town’s puzzling popularity. Patent cases
are technical. Judges must referee the shar­
ing of sensitive source code, for example:
plaintiffs argue it will prove their case; de­
fendants resist, fearing their secrets will
leak. They also interpret what a patent’s
words actually mean, which can be “out­
come determinative”, says Mark Sieg­
mund, a patent litigator in Waco. Cases
can also take years to get to trial.
Mr Ward learned that Northern Cali­
fornia’s court had implemented local rules
to build w'hat lawyers call “certainty”—a Caution, lawyers crossing
24 United States The Economist April 20th 2024

LEXINGTON
Truth Social is a win for Donald Trump

And disturbing evidence of how he destabilises reality for Americans

Mr Trump will win in November and, as the first president with his
own social platform, insist on making all his pronouncements
upon it. Maybe they adore him and want to multiply his billions.
Whatever their motives, the performance of Mr Trump’s stock so
far represents the purest demonstration of his power not just to
bend reality, but to convert illusion into reality—and also, maybe,
of how Americans are coming to confuse the two.
For years Mr Trump has used his mastery of the virtual world—
the controversy and excitement he generates online—to increase
his political power. He has just 7m followers on Truth Social, com­
pared with 87m followers on X. But by taking ownership himself
of the virtual events he is so skilled at provoking, he has created
tremendous paper value, and he appears to be on his way to turn­
ing that virtual value into real wealth. Mr Trump holds 78.8m
shares in the company, or about 57% of the total, and he is due to
receive 36m more if the share price stays above $17.50 until late
April. Under a “lockup” agreement Mr Trump cannot sell for six
months, until September 25th, unless the company’s board releas­
es him from the restriction.
What Mr Trump has called “truthful hyperbole”, and others
call lying, has been central to his success. When he built Trump
Tower it had 58 floors, but in numbering them he skipped ten to
INCE SHARES in Donald Trump’s media firm began trading claim 68 instead. This tactic has occasionally caught up with him,
S publicly on March 26th, their value has slid by more than half,
prompting headlines, and some crowing from the left, about the
most severely in the $355111 penalty imposed on him in February
after a New York judge found Mr Trump had lied for years to se­
decline. Which still seems less newsworthy than that anyone is cure loans and make deals—trebling the size of his penthouse
buying at all: even at roughly $26 per share, investors are prizing apartment, for example, and valuing his Mar-a-Lago estate in Flor­
Mr Trump’s social-media platform, Truth Social, at a heroic value ida based on its potential for residential development, though he
relative to its performance or apparent potential. had surrendered the rights to develop it as anything but a club.
One must write “roughly” $26 per share because even the Will Yet Mr Trump’s trademark hyperbole is the very foundation of
Street Journal has st niggled to ascertain just how many shares are Truth Social. Its value rests on his participation—his agreement
outstanding. Other possible red flags for investors include the with the company constrains his posting elsewhere—and his
company’s independent auditor reported on March 25th that its posts are full of exaggerations if not lies, whether about the crimi­
“operating losses raise substantial doubt about its ability to con­ nal cases against him, President Joe Biden, or the state of the
tinue as a going concern”. After forecasting sales of $i44in for country. Is that some sort of fraud? Or is it just life online, and how
2023, Truth Social delivered just $4.im, and a loss of $58.2in. value is best created there, to be exchanged for an offline currency
Truth Social says it is contending with such entrenched giants via advertising, the stockmarket or the ballot box?
as Facebook and Amazon, but it does not disclose its audience
numbers. In a regulatory filing it tried to make a virtue of this by There is no s *•11 Oil
arguing that “adhering to traditional key performance indicators” Virtual reality always seems to be a step away. Alternative digital
such as traffic or advertising results—the sorts of results that typi­ worlds like “Second Life” have not caught on, and clunky AR
cally obsess media investors—could “potentially divert its focus headsets have proved more aversive than immersive. But Ameri­
from strategic evaluation” of its business. For March, the analytics cans may not recognise the degree to which reality online—a reali­
firm Similarweb found Truth Social had about 7.7m unique visi­ ty that did not exist for most just a generation ago—has washed
tors, or roughly 0.05% of Facebook’s traffic. back into the real world, distorting their politics, their relation­
Maybe such realities will suddenly drag down the stock. But it ships, their apprehension of what is true or what has value. The
has a long way to fall to depart the reaches of faith for the realm of rules governing all of this have changed, and it is not clear what
reason. John Rekenthaler, a vice-president of Morningstar, an in­ the new rules are. Mr Trump and others are still inventing them.
vestment research firm, has estimated that if people valued Truth Officials in the administration of President George W. Bush
Social as they did the initial offerings of such firms as Tesla, used to deride what they called the “reality-based community”
Google and Facebook, the shares would be selling for 50 cents. and insist they could “create our own reality” They were pikers
Investors in Truth Social, compared with those in other start­ compared with Mr Trump. It seemed like a joke, during his cam­
ups, are clearly not relying upon the same sort of analysis or even paign for president in 2016, when he referred to his political fol­
indulging the same sort of dream. They are not even playing the lowing as a “movement”. Now it is reasonable to call him the most
same game as the very online investors who drove up such meme consequential figure in American politics since Ronald Reagan.
stocks as AMC and GameStop to irrational valuations that were Maybe Mr Trump will lose the election in November, and maybe
also relative fractions of the paper value of xMr Trump’s company. that will cause stock in Truth Social to crash, if it does not collapse
Something else is happening here, a tremor in market logic, before then. But it does not seem like a crazy act to buy a few
even a rupture with common sense. Maybe investors believe that shares now, just in case. ■
The Economist April 20th 2024 25

The Americas

Brazil’s supreme court assembly was called to rewrite the coun­

try’s constitution. It produced one of the
Elon v Brazil world’s longest charters, covering every­
thing from maternity leave to public wag­
es. It also let political parties, trade unions
and some other organisations file cases di­
rectly with the court, rather than having
SAO PAULO them filter up from lower bodies.
Elon Musk is feuding with Brazil’s powerful Supreme Court A prolix constitution combined with
the empowerment of a wide range of ac­
VER THE past two weeks Elon Musk, a of Brazil’s Supreme Court, which enjoys tors to file petitions means that “just about
O serial entrepreneur, has been on a very
public tirade against Alexandre de Moraes,
outsize authority over the lives of Brazil­
ians. The other is the debate over how to
anything can get to the court”, says Luis
Roberto Barroso, the court’s president.
one of the Brazilian Supreme Court’s n regulate social media without hurting free­ The US Supreme Court receives around
judges. The dispute is about X, a social­ dom of speech. Brazilians adore social me­ 7,000 petitions a year, and reviews the 100-
media company that Mr Musk owns. On dia. According to GW I, a market-research 150 it deems of national relevance. Brazil’s
April 6th X announced that a Brazilian firm in London, they spend an average of heard over 78,000 new cases in 2023 and
court had ordered it to block an undis­ three hours and 49 minutes a day swiping made more than 15,000 judgments.
closed set of “popular” accounts or face and scrolling, more than people anywhere To deal with this workload, Brazil’s
hefty fines. Instead, Mr Musk said he else (see chart on next page). They also court allows individual judges to rule on
would lift restrictions on previously sus­ send the most messages on WhatsApp, a cases. Requiring the full bench to rule
pended Brazilian accounts, and threatened messaging platform, and rely heavily on would take months or even years. In an av­
to close down X in Brazil. Mr Moraes then social media for news. This makes Brazil erage year only around 10% of the court’s
opened an inquiry into Mr Musk for ob­ fertile ground for the spread of misinfor­ decisions are taken by the full court, says
struction of justice. That prompted Mr mation and efforts to regulate it. Diego Werneck of Insper, a university in
Musk to rail that censorship in Brazil is So far, regulating has been left to Bra­ Sao Paulo. The rest are unilateral. This has
worse than in “any country in the world in zil’s Supreme Court. The body draws its led to accusations that unelected judges
which this platform operates”, and to call strength from the period after the military have too much power. “We decide cases
xMr Moraes a “dictator” who should be im­ dictatorship that ended in 1985, when an that in other parts of the world are left to
peached and put “on trial for his crimes” politics and ordinary legislation,” says Mr
So far, so hyperbolic; on April 15th it Barroso. Since 2019 the most visible target
-> ALSO IN THIS SECTION
emerged that X had sent a letter to Brazil’s of criticism has been Mr Moraes.
Supreme Court, assuring the court that X 26 Canada’s maple syrup boom That year Jair Bolsonaro, a far-right
would comply with its orders. But the row populist, became president. He was no fan
27 An unusual arrest in Ecuador
is revealing on two issues. One is the power of the court. After he took office, threats to ►►
 26 The Americas The Economist April 20th 2024

► the court’s justices and their families in­ Fired up by Mr Bolsonaro’s baseless claims Other institutions failed to restrict xMr
creased dramatically, says Felipe Recondo of fraud, his supporters camped outside Bolsonaro’s behaviour. As president he ap­
a news website focused on Brazil’s military barracks in the capital for two pointed a pliant attorney-general, who
judiciary. In response, the court launched a months before the election, urging the ar­ shelved over 100 requests to investigate
probe into “fake news” under the leader­ my to stage a coup. On January 8th 2023, a him. Some members of the army support­
ship of Mr Moraes, and gave itself the pow­ week after his opponent Luiz Inacio Lula ed staging a coup. Police did not dislodge
er to investigate threats and defamatory da Silva was inaugurated, bolsonarista zeal­ the coup-mongers camped outside the bar­
statements made against it online. Usually ots stormed Congress, the presidential racks. In February this year investigators
this power rests with prosecutors. The palace, and the Supreme Court. Instead of revealed that xMr Bolsonaro possessed a
court thus became victim, prosecutor and conceding defeat, xMr Bolsonaro continued document that outlined his plan for a coup.
arbiter all at once. to question the result from Florida, where It would have involved arresting Mr Mo­
xMr Moraes repeatedly used this trinity he briefly went into self-imposed exile. raes and calling new elections. Police also ►►
to order social networks to take down the
accounts of politicians and influencers,
saying they threatened Brazil’s institu­ 79 million litres
tions. In February 2021 he ordered the ar­
rest of a far-right congressman, Daniel Sil­ It’s on the flag, after all
veira, who had uploaded an expletive-lad­
en rant about the court’s members to
YouTube. Such decisions are almost im­
possible to appeal. In 2022, one day after
The world has an insatiable appetite for Canada’s maple syrup
the full court upheld Mr Silveira’s prison
sentence, Mr Bolsonaro pardoned him. But
the pardon was later overturned by the Su­ ammer a tube called a spile into ting the industry in a sticky situation.
preme Court. Mr Silveira is still detained.
In the buildup to the presidential elec­
H the bark of a maple tree and its
translucent yellow sap will start flowing
xMore frequent ice storms and strong
winds can wreak havoc on maple groves,
tion of 2022, which Mr Bolsonaro lost, he out; the tree has been tapped (see pic­ and pests thrive in warmer weather too.
spread lies about voting machines being ture). This gloop drips from some 55m xMr Vaudeville says it is too early for the
rigged against him. Mr xMoraes, who is also Canadian maple trees today, raw materi­ industry to draw conclusions about the
president of the electoral tribunal, expand­ al for the tangy golden syrup which is overall impact. But producers in Quebec
ed his crusade. In August 2022 he autho­ one of the country’s proudest exports. are talking to forestry engineers about
rised police to raid the homes of eight Poring over the numbers reveals that planting new groves in northern regions
businessmen, froze their bank accounts, maple-syrup production reached new where they weren’t previously viable.
and ordered social networks to suspend heights in 2022. Some 79m litres were They also want to create a kind of in­
some of their accounts. This was prompted produced, 54% more than in 2021. Pro­ dustry-specific insurance against weath­
by WhatsApp messages from the two men duction has grown seven-fold in the past er as dodgy as it was in 2023.
which had been made public, and which 50 years. But a warming climate is mak­ Forest management is becoming
appeared to express support for a coup. ing output erratic. Ice storms helped to more important. Canada suffered the
Critics call Mr Moraes’s tactics heavy- reduce syrup flow by 40% in 2023 com­ worst fire season on record last year.
handed and opaque. Pablo Ortellado of pared with 2022. Industry representa­ Loss of tree cover increased five-fold
the University of Sao Paulo notes that it is tives expect a return to growth this year. between 2022 and 2023. The leaves of
unclear how many accounts have been sus­ Canada produces 78% of the world’s deciduous trees like maples hold more
pended, why, and for how long. Davi Tan- maple syrup, 92% of it from the province moisture than pine needles and are
gerino, a criminal lawyer, says that an of Quebec. Strong recent production therefore less flammable. Prioritising
“endless inquiry without a defined scope” helps to replenish Canada’s Internation­ them might be good both for big maple
is not compatible with the rule of law. al Strategic Reserve. This stockpile is at and for Canada’s forests.
Yet many Brazilians believe these unor­ its lowest level for 16 years.
thodox tactics were justified at the time. Yet the price of the golden goo won’t
fall even if there are more record-setting
years to come. Perversely, the synip’s
Hooked price is tightly controlled by a handful of
Social-media use, average hours per day large wholesalers, who every year negoti­
per person*, top ten countries* ate a minimum price at which the pro­
2018 • 2023
duct must be sold in bulk to domestic
and international buyers. The industry
a-2.0 2.5 3.0 3.5 4.0 4.5
Brazil operates in this way with the approval of
Kenya the government “so that maple produc­
South Africa ers can have a predictable and sufficient
Nigeria income to earn a good living", says Joel
Philippines Vaudeville of Quebec xMaple Syrup
Colombia Producers. Consumers pay the price.
Chile* The 2024 season is showing that a
Mexico » warmer climate is a boon to production.
Indonesia X Temperatures near zero help the sap to
Argentina run. Production is beginning earlier than
Global average in the past, says xMr Vaudeville.
*16- to 64 year-olds fOut of 53
But climate change may also be put­ Sapping sap with a tap
Source: GWI ’ No dal a available for 2018
 The Economist April 20th 2024 The Americas 27

► claim to have found evidence that Mr Bol- er which institutionsshould administer the ceived another eight-year sentence on a
sonaro’s aides were monitoring Mr Mo­ new law. Tech companies were enraged by separate bribery charge. In 2022 Mr Gias
raes’s whereabouts. Mr Bolsonaro denies its requirement forthem to pay influencers was conditionally released by Emerson
wrongdoing. Against this fragile backdrop and journalists for their content. The law Curipallo, a judge.
the Supreme Court was “the last bastion of floundered, leaving regulation to the Su­ In December 2023 Ecuadorian prosecu­
democracy”, says Mr Tangerino, though he preme Court, says Peter Messitte, a judge tors said they had found evidence that Le­
thinks its actions have since gone too far. who runs a programme on Brazilian law at andro Norero, a drug lord, had paid Mr Cu­
xMeanwhile Brazil’s Congress was sit­ the American University in Washington. ripallo a bribe of $250,000 to secure xMr
ting on legislation that would regulate on­ On April 9th, spurred by Mr xMusk’s Glas’s release. In March Marcelo Lasso, a
line speech. A bill influenced by the Euro­ spat with Mr xMoraes, the speaker of the cellmate of Mr Norero’s, gave evidence in
pean Union’s Digital Services Act, which lower house said he would create a work­ the state’s investigation into organised
came into force in February, was approved ing group to draft a new social-media bill crime and corruption. He said he had seen
by Brazil’s Senate in 2020, but stalled in the within 45 days. The dispute between judge Mr Norero take video calls with xMr Glas’s
lower house. It would have required social­ and tech boss rumbles on; on April 18th Mr former boss, ex-president Rafael Correa, in
media platforms and search engines to Musk accused Mr xMoraes of violating Bra­ which they discussed Mr Glas’s release. xMr
produce reports detailing their content­ zilian law. X says the United States’ Con­ Curipallo is now in prison for unlawfully
moderation efforts. The firms would have gress has asked to see the Brazilian Su­ releasing 60 people with links to organised
been forced to tell users when their posts preme Court’s orders on content modera­ crime. He says his detention is illegal.
were taken down and provide them with tion. To avoid foreign pressure, Brazil’s Sonia Vera, the former vice-president’s
instructions for appealing the decision. Yet other institutions would do well to reclaim lawyer, says he is being persecuted and
legislators got bogged down in quarrels ov- their responsibilities. ■ that there is “no due process”. Ms Vera also
says that Mr Gias attempted suicide three
days after he was seized. He has since been
Security in Ecuador refusing to eat. She also claims that xMr
Gias has been tortured, and says he has yet
The Gias affair to be given medicine he needs for a chron­
ic medical condition, treatment for two
broken thumbs, or antidepressants that he
was prescribed after witnessing a massacre
in Cotopaxi prison. The German foreign
office says it is trying to establish contact
Why Ecuador risked global condemnation to storm the Mexican embassy with Mr Gias, as he has German as well as
Ecuadorian citizenship.
N APRIL 5TH Ecuadorian police To boost his standing at home, Mr No­ To many Mr Gias, who faces more than
O scaled the walls of the Mexican em­
bassy (pictured) in Quito, Ecuador’s capi­
boa is prepared to risk international oppro­
brium. For many Ecuadorians Mr Gias is
30 charges, is deplorable. Comunicaliza, a
pollster based in Quito, reckons that a
tal. They stormed the building and seized the embodiment of the corruption that has mere 16% of Ecuadorians approve of the
Jorge Gias, Ecuador’s former vice-presi­ long plagued their country. In office he former vice-president. A few, though, see
dent. He had been granted asylum by Mex­ was known as “the constructor” for his suc­ him as an opposition politician who is be­
ico just hours earlier. (Andres Manuel Lo­ cess in getting things built, most notably ing hounded by the government for his as­
pez Obrador, xMexico’s president, is sym­ eight hydroelectric plants. But prosecutors sociation with the divisive figure of xMr
pathetic to Mr Glas’s party.) For domestic allege that all the while he was taking Correa. The debate around Mr Gias has
police to raid an embassy is extremely un­ bribes, including some $i3-5m from Ode- been polarised, but both sides could be
usual. It has outraged diplomats and been brecht, a Brazilian construction firm. In right. It is possible to be a bad man fleeing
condemned around the world. Mexico im­ 2017 he was sentenced to six years in pri­ from justice and a victim of political perse­
mediately brought the case to the Interna­ son on those charges, and in 2020 he re­ cution at the same time. ■
tional Court of Justice in The Hague.
At first glance the assault seems foolish.
Why would Daniel Noboa, Ecuador’s pres­
ident, jeopardise his country’s reputation
when it needs international support in its
battle against drug gangs, which have
threatened parts of the state itself?
The answer seems to be that Mr Noboa
believes that iMr Gias is a central figure in
that struggle. Ecuadorian prosecutors say
xMr Gias is entangled with the gangs. Had
he been able to evade justice and flee to
xMexico, it would have been embarrassing
for the president, especially after two drug
bosses, Adolfo xMacias and Fabricio Colon
Pico, escaped from prison in January, just
weeks after xMr Noboa took office. O11
April 21st Ecuadorians will vote on a set of
security measures proposed by Mr Noboa,
including harsher penalties for gang-relat­
ed crimes such as kidnapping, and legalis­
ing extradition for gang members. Not your typical Gias house
28 The Economist April 20th 2024

Asia
dominate its economy. And he deplored its
rampant inequality. “There’s no space for
you in this country” he told one crowd in
(now fluent) Hindi. “I don’t understand
why you’re not doing anything about it.”
iMr Gandhi’s newfound zeal has almost
certainly come too late to swing this year’s
result, due on June 4th. Mr Modi’s Bharati­
ya Janata Party (or BJP) is widely predicted
to win again. But the hope among Con­
gress loyalists is that it will help to revital­
ise the party in the years ahead and to posi­
tion iMr Gandhi as a more serious challeng­
er in 2029. By then, they say, public anger
over unemployment and inequality may
have dented Mr Modi’s popularity. And Mr
Gandhi has time on his side. At 53, he is
two decades younger than Mr Modi.
The question, then, is no longer if Mr
Gandhi has the stomach for the fight. It is
whether the Cambridge-educated, half­
Italian scion of a political dynasty is the
right person to overhaul a party that even
some allies liken to a dysfunctional family
business. Loyalists argue that the party
needs a Gandhi to bind it together and that
Rahul has proved his mettle on his two-
stage trans-Indian tour, much of which he
completed on foot. But after a series of
prominent defections, even some suppor­
ters are starting to wonder if a third con­
secutive general-election loss should sig­
nal the end of the Gandhi family’s nearly
eight-decade grip on the party.
To be fair to Mr Gandhi, the odds have
been stacked against him lately. Mr Modi
has curbed the independence of the me­
dia, the courts and civil society. His tax
and investigative agencies have targeted
India's general election dozens of the opposition’s politicians, ar­
rested two of its party leaders and frozen
The last Gandhi? Congress bank accounts. Mr Gandhi him­
self is being probed for alleged money­
laundering (he denies wrongdoing) and
was suspended from parliament for four
months in 2023 after being convicted of
NASHIK
defamation for mocking iMr Modi’s name.
As India heads to the polls, the opposition is weak, divided and ineffective So uneven is the contest that Congress
leaders have discussed boycotting the poll.
ahul Gandhi seems angrier now. For Gandhi has found the fire in his belly. That Nonetheless Congress is still the only
R years, even close friends wondered if
he had the drive to follow in the footsteps
was one takeaway when The Economist
joined the final leg of a 6,300-mile
viable national alternative to the BJP. Al­
though its national vote share has declined
of his father, grandmother and great­ (10,000km) journey across India that he steadily from a peak of 49% in 1984 to 20%
grandfather, all of whom were Indian finished last month. In rallies across the in 2019 (see chart 1 on next page) it retains
prime ministers. When he fronted the state of iMaharashtra he denounced Naren­ a hard core of support among secular-
Congress party’s ill-fated campaign for a dra Modi, the prime minister, as a threat to minded Indians, Muslims and other minor­
general election in 2014, his speeches, of­ democracy. He castigated the tycoons who ities, especially in the south. And there is
ten in faltering Hindi, mostly fell flat. Five still a pathway back to national power—if
years later, he led his party to another Mr Gandhi can confront three urgent chal­
bruising defeat, even losing his own parlia­ -» ALSO IN THIS SECTION lenges that are within his purview.
mentary seat in the long-time family The first is ideological. In the past de­
30 Tensions in the South China Sea
stronghold of Amethi, in northern India. cade, Congress has struggled to identify a
Soon afterwards he resigned as party chief. 30 How to have a scoop in Japan coherent message to compete with the
And yet in the run-up to the general bjp’s combination of Hindutva (Hindu na­
31 Banyan: Singapore gets a new PM
election, which starts on April 19th, Mr tionalism) and development. Branding Mr ►►
 The Economist April 20th 2024 Asia 29

More troubling still for Congress is the

From great heights 0 apparent disconnect between voters’ Modi’s marks
India, Lok Sabha elections vote share, % everyday concerns and their political India, reasons for re-electing the BJP
choices. While many care about unem­ March 28th-April 8th 2024, % responding
ployment and want a caste census, they
still back Mr Modi. That suggests that
Overall good work
many voters do not trust Congress to deliv­
er, especially on jobs, says Rahul Verma of Welfare schemes
the Centre for Policy Research, a Delhi­
Modi's leadership qualities
based think-tank. Nor can the party cite a Building a Ram
state that it recently transformed, as Mr temple in Ayodhya
Modi could with Gujarat pre-2014. “The Revoking Kashmir’s
challenge is harder for Congress because it special status

was in power for so long,” says Mr Verma. India's international image

“It comes with baggage.” Protecting Hindu interests

•Forecast based on the Lokniti CSOS poll Mr Gandhi’s second big challenge is
Sauces: hived! Centre lor Political Data; I okniti CSDS Sauces: I okniti-CSDS; lhe Hindu
with organisation. The BJP’s recent elector­
al success is based in part on its ruthlessly
► Modi a threat to democracy hardly dents efficient party management and messag­ The third challenge facing Mr Gandhi
his support base in the Hindu majority, ing. Congress, by contrast, is plagued by is personal. Although more energised now,
much of which admires his muscular lead­ slow, opaque and sometimes erratic deci­ he still prefers the intellectual side of poli­
ership (see chart 2). Congress leaders have sion-making. It has often been reluctant to tics. While relishing deep discussions on
dabbled in “soft Hindutva”, schmoozing jettison candidates loyal to the Gandhi social issues, he dislikes the dealmaking
with holy men and making high-profile family, even after they have lost elections. needed to manage his party. His enthusi­
temple visits. But that seems only to anger Its message discipline is also notorious­ asm for initiatives often wanes when he
Congress stalwarts, while failing to steal ly sloppy. Senior Congress figures often meets resistance. And he lacks experience,
many BJP votes. disagree openly orsay things that upset al­ having never run a state or a ministry.
Recently Congress has made inequality liance partners. Last year the party flip­ “Gandhis are only prime ministers,” one
its central campaign theme. A manifesto flopped over its response to the Hamas at­ former party insider recalls being told,
put out on April 5th (and denounced by Mr tacks on Israel. In January, Congress lead­ after proposing that xMr Gandhi join the
iModi as pro-Muslim) made commitments ers split publicly over whether to attend Mr cabinet when Congress was in powder.
including a legal right to apprenticeship, a Modi’s opening of a controversial Hindu A bigger concern is that Mr Gandhi
minimum support price for farmers, cash temple. And in March, one senior Con­ lacks the steeliness to grasp control of his
transfers of 100,000 rupees ($1,200) to poor gress figure wrote an open letter challeng­ party. In the 2000s he led a drive to intro­
families and a minimum wage of 400 ru­ ing its support for the caste census. duce new’ blood by holding open elections
pees a day. It promised to carry out a na­ Two years ago the party tried to enlist for its youth w ing and promising the same
tionwide census of all groups in the Hindu Prashant Kishor, an electoral strategist for the party leadership. That brought an
caste system, to strengthen an affirmative­ w'ho helped engineer the BJP’s 2014 victory influx of young talent. But over the next
action scheme and to reverse several BJP (and is now' starting a new political party). decade they wrere repeatedly sidelined by
policies it considers anti-democratic. He presented the Gandhis with a detailed Congress elders, leading many rising stars
plan to overhaul the way Congress organ­ to defect. Since 2019 at least 25 prominent
It’s not just the economy ised itself, picked candidates and ran cam­ figures have deserted Congress. Failure to
The manifesto has also pledged to create paigns. They rejected it. “They are yet not overrule party elders contributed to its de­
millions of jobs in manufacturing and min­ ready to accept that there is a problem and feat in three state elections last year.
ing. But the focus on government interven­ they need to change,” says Mr Kishor. Some party insiders worry that Mr
tion and handouts (with few details of how “They still believe that this is just a tempor­ Gandhi is still in limbo, neither fully in
to finance them) gives it a distinctly left­ ary phase, that it will blow' over, and sooner control of Congress nor willing to let
wing flavour. That partly reflects Mr Gand­ or later they will be back.” others take charge. After resigning as party
hi’s personal politics. Associates say he is leader in 2019, he was replaced by his Ital­
less concerned about boosting economic ian-born mother, Sonia. In 2022, a Con­
growth than distributing its benefits more Modi on the air gress veteran, Mallikarjun Kharge, re­
evenly. “Most Indian politicians would ac­ placed her. But Mr Kharge, now 81, is no
cept inequality as the price of rapid eco­ Narendra Modi has for a decade sweet-talked match for Mr Modi and decision-making is
nomic growth,” says Jairam Ramesh, a par­ voters via his monthly radio show. We analysed still dominated by the Gandhis and a clus­
ty spokesman. “He refuses.” all 110 of his broadcasts to show how he ter of family loyalists. So far the party has
There is a logic to iMr Gandhi’s leftward carefully moulds his image, and to gain insights not nominated a prime ministerial candi­
tilt. To counter the BJP’s majoritarianism, into his vision for India. Read and listen at date, leaving Mr Modi with no direct rival.
he seeks to mobilise lower castes and mi­ economist.com/radio-modi Congress officials say Mr Kharge’s ap­
norities that represent around 80% of Indi­ pointment proves the party’s commitment
ans. Still, it can be a hard sell coming from to meritocracy. Besides, they add, this is
a product of wealth and privilege. Mr Mo­ not a presidential race; prime ministers are
di, by contrast, is the son of a tea-seller, normally chosen after an election. Even so,
from a relatively low caste. He has won Mr Gandhi’s ambiguous role in the party
many votes among the poor by expanding leaves him vulnerable to suggestions that
digital welfare. And the BJP has pledged he is shirking a head-on fight w'ith iMr Mo­
more handouts in its own manifesto, re­ di. If Congress is to reverse its decline in
leased on April 14th (and denounced by the years ahead, Mr Gandhi will have to
Congress as an “empty jugglery of words”). make a choice: step up or step aside. ■
30 Asia The Economist April 20th 2024

South China Sea American counterpart, and Kishida Fumio, have been indicted. In December four cab­
the prime minister of Japan, in Washing­ inet ministers and five vice-ministers were
Maritime ton earlier this month for the first high-lev­ sacked. On April 4th Kishida Fumio, the
el meeting between the three leaders. xMr prime minister, asked two of his party’s
manoeuvres Biden warned at the summit that “Any at­ heavyweights to quit and punished 37
tack on Philippine aircraft, vessels or other LDP members.
MANILA
armed forces in the South China Sea would What is perhaps surprising is that this
Tensions are mounting between invoke our mutual defence treaty.” political turmoil can be traced back to
China and the Philippines So far, publicising China’s aggression Shimbun Akahata (“Red Flag Newspaper”),
has not deterred it. The number of Chinese a relatively niche newspaper run by the Ja­
OULD THE Philippines be the next big ships around Second Thomas Shoal in­ pan Communist Party (JCP). It is read by
C flashpoint in the South China Sea? On
April 13th a Chinese coastguard vessel
creased in 2023, according to the Asian
Maritime Transparency Initiative, a project
850,000 subscribers, down from a peak of
around 3.5m in 1980. It first reported on the
blocked a maritime-research vessel and its run by CSIS, an American think-tank. It us­ funding discrepancies in 2022. “I didn’t ex­
escort, both belonging to the Philippines. es data from automatic identification sys­ pect things would blow up,” says Sasagawa
The incident was just 35 nautical miles tems to track Chinese ships in the South Kamiyu, the 33-year-old journalist who
from the coast of the Philippines and bare­ China Sea. Chinese researchers also claim first reported on the scoop after scrutinis­
ly inside China’s notorious “nine-dash to have developed an Al-controlled water ing government documents. He worked
line", which it uses to claim territory over cannon. Expect more escalation in the with Kamiwaki Hiroshi, a law professor at
its waters. Reports have also emerged of world’s most contested waters. ■ Kobe Gakuin University, who filed a crimi­
Chinese coastguard vessels firing water nal complaint with prosecutors.
cannons at supply boats trying to reach This is not the first time that Akahata
troops on the Sierra Madre, a rusty warship Journalism in Japan has punched above its weight. In 2013 it led
grounded on purpose by the Philippines investigations on black kigyo (“black com­
within its exclusive economic zone. Chi­ Waving the panies”), which shed light on the preva­
nese boats are also swarming around is­ lence of abusive workplaces and pushed
lands occupied by the Philippines and con­ red flag the government to introduce tighter regu­
ducting patrols within its waters. lation. In 2019 it reported on politicians
TOKYO
China has long had a contentious rela­ subsidising dinners for supporters during
tionship with countries in the South China A relatively obscure communist an annual cherry-blossom-viewing party.
Sea. The recent spate of incidents has had newspaper shapes Japanese politics Abe Shinzo, then prime minister, was
more publicity partly because the govern­ questioned by prosecutors; though he was
ment of the Philippines now highlights SINCE JAPAN’S parliamentary session never charged, the scandal hounded Abe
China’s actions as part of a “transparency began three months ago, one issue has until his resignation in August 2020. The
initiative”. This policy shift has been driven dominated the agenda: a financial scandal paper reports on issues “that everyone else
by President Ferdinand “Bongbong” Mar­ within the ruling Liberal Democratic Party is too afraid to touch”, says Nick Kapur at
cos who, after being elected in 2022, re­ (LDP). At the end of last year, prosecutors Rutgers University in America.
turned the country to its usual pro-West­ launched an investigation into factions of The paper’s tumultuous history con­
ern stance. By contrast, Rodrigo Duterte, the LDP which had failed to report revenue tributes to its “strong will to stand up
the previous president, appeased China, from fundraising events, thereby evading against power”, says Kogiso Yoji, its chief
generally staying silent about its growing taxes. Several people linked to the LDP, in­ editor. Akahata was founded in 1928, six
aggression in the South China Sea. “He cluding accountants and parliamentarians, years after the JCP was established. Japan’s ►►
didn’t even want us to patrol our exclusive
economic zone, that’s how far he went,”
says Rommel Ong, a retired rear admiral.
Mr Duterte’s reticence yielded no bene­
fits. Instead, China encroached ever more
forcefully on the Philippines’ waters. In
February 2023 China pointed a military­
grade laser at a coastguard ship on a resup­
ply mission to the Sierra Mat Ire, which sits
atop the Second Thomas Shoal, temporar­
ily blinding the crew. “We finally decided
that it doesn’t help to suppress these
things,” says Jay Batongbacal of the Uni­
versity of the Philippines. Since early 2023
the Philippines’ government has been re­
leasing videos of China’s growing aggres­
sion and taking journalists on its patrol
ships to witness China’s “grey-zone” tac­
tics (strategies to harass and intimidate
that fall short of an all-out war).
This increased transparency has raised
awareness among Filipinos over Chinese
aggression. It also helps Mr xMarcos win in­
ternational support. Amid growing con­
cerns over China’s coercion in the South
China Sea, the president met Joe Biden, his Tomorrow’s news, today
 The Economist April 20th 2024 Asia 31

► militarist regime banned the communist some of the largest circulations in the dom-of-press ranking slipped from nth in
party because it was viewed as subversive. world, printing 6.8m and 4m copies a day 2010 to 68th in Akahata s scoops usu­
Akahata was produced and circulated un­ respectively. Yet such mainstream outlets ally derive from information available to
derground; police arrested and tortured often fail to hold politicians to account. the public, including government reports
those reading it. After the second world Self-censorship is widespread as journal­ and social media posts. Regarding the
war, American occupying forces made the ists develop close-knit ties with authorities cherry-blossom scandal, journalists were
JCP a legal party, as it claimed to promote and try to avoid upsetting ultra-nationalist invited to and attended Abe’s banquet eve­
democracy and free speech. groups, which the police estimate have ry year. Yet they failed to realise that he
But Akahata's accomplishments point tens of thousands of members. These can might be violating political-funding rules.
to an awkward truth. Traditional media re­ be an intimidating force in public life. “Usually, the big media outlets already
main powerful in Japan. Yomiuri and Asahi, According to Reporters Without Bor­ know what we know,” says Mr Kogiso. “We
two of Japan’s national newspapers, have ders, an NGO based in Paris, Japan’s free­ just have a different perspective.” ■

BANYAN
Installing the 4 G network
Singapore's next leaderpromises continuity and change

N THE REPUBLIC’S 59-year history, The party likes to leave little to chance, ness “to break new ground”. Some think
I Singapore has had only three leaders.
On May 15th it gets its fourth, when the
and before change comes continuity. Mr
Wong downplays expectations of major
his agenda will be thwarted by a short­
age of political capital. He was not the
prime minister of 20 years, Lee Hsien cabinet reshuffles before the election. 4G’s first choice. Heng Swee Keat, cur­
Loong—who is 72 and whose father, Lee After it, Mr Lee, as did his father before rently the economy minister, was Mr
Kuan Yew, ruled with an iron will for 31 him, will stay on, as senior minister (more Lee’s anointed successor until he sud­
years—will resign. At a ceremony at the commonly called SM—the party loves denly withdrew in 2021. Mr Wong, a
presidential palace, Lawrence Wong, the initials). At least one key member of the highly competent former technocrat
current finance minister, will be sworn old guard, K. Shanmugam, will stay in who entered politics in 2011, was the
in. He is Mr Lee’s junior by two decades. post. Since 2008 he has served as law public face of the administration during
Singapore now faces the prospect of a minister and runs the home ministry, too. the pandemic. Still, he remains relatively
future without a Lee at the helm. Mr Shanmugam takes a bleak view of unknown among Singaporeans.
The investiture also marks when the threats to Singapore. They range from In reality, being the compromise
ruling party, the People’s Action Party extremism spilling over from majority- candidate may be no bad thing. No 4G
(pap), passes the baton from a “3G” Muslim ^Malaysia and Indonesia; to disin­ member can hope to rule with the charis­
(third generation) of senior party cadres formation campaigns by foreign states; to matic authority of earlier leaders. Mr
to the “4G” cohort who chose Mr Wong great-power rivalry and other trade­ Wong’s is likely to be a more collective
as their man. Mr Wong will then call a wrenching forces to which Singapore’s leadership, one that reaches for consen­
general election, likely sometime this open economy is especially vulnerable. sus—perhaps, even, including outside
year. The PAP has made sure never to Vigilance is the watchword. The PAP also the party. Promisingly, two years ago Mr
lose one, and iMr Wong will certainly not likes to warn of the dangers of populist Wong led a consultative initiative,
lose his. He is guaranteed a majority to politics elsewhere; it presents itself as the known as Forward Singapore, that
make the leaders of many other coun­ guard against profligacy. sought opinions among citizens about
tries weep. Yet never think that elections Yet Mr Wong has promised a break such issues as raising taxes on the rich
do not matter to the PAP. More is at stake from the past. This week he described a and strengthening social welfare. The
than meets the eye. “rapidly changing environment” which mild-mannered Mr Wong is more relat­
Singaporeans no longer judge the PAP demanded fresh approaches and a readi­ able to Singaporeans than most of the
merely on its traditional emphasis of governing elites. The guitar-strumming,
delivering economic growth and of self-confessed nerd brought up on an
keeping Singapore, a tiny, multi-ethnic East Coast housing estate did not go to
dot of prosperity in a sea of troubles, any of the elite schools that the PAP
safe from threats to its extraordinary high-flyers often judge themselves by. To
success and social cohesion. many, that is a plus.
Indeed many younger Singaporeans, Mr Wong, then, kicks off with a de­
less respectful of hierarchy, want more gree of goodwill. Still, the election will
fairness in terms of who shares in be his key test. The PAP will win thanks
growth: they think that a country sitting to formidable organisation, unrelenting
on such gargantuan financial reserves attacks on the opposition, a docile press,
should more generously support welfare. a record of good governance and a not
They also want politics to be more par­ always subliminal message that its sur­
ticipatory rather than heavily directed vival and that of Singapore are syn­
from the top. At stake for iMr Wong, onymous. Yet if the opposition gets
when he goes to the country, is not his many more than the ten out of 87 elected
(and the 4G’s) formal mandate but rather seats it currently holds, the change
moral legitimacy. candidate will start off on the back foot.
32 The Economist April 20th 2024

China

Unemployment ployment rate for 16- to 24-year-olds with a

university education was 25.2% in 2020, the
Degrees and difficulty last year for which census data are avail­
able. That was 1.8 times the unemploy­
ment rate for all young people at the time.
It could be that things have got better
since 2020 or that the variables affecting
Our number-crunching suggests that the plight of graduates our calculations have changed in unpre­
could be much worse than previously thought dictable ways. But it is also possible that
things have got worse. To simplify, if we as­
round this time each year compa­ ica, Britain and many other countries in­ sume that the proportional relationship
A nies visit university campuses in China
looking for potential employees. This year
clude such students when calculating their
rates.) The new numbers are lower, but still
from 2020 still holds, over a third of young
graduates might be unemployed today.
the mood is grim. At a job fair in Wuhan a depressing: in March 15.3% of young peo­ One reason to believe that things are
firm was looking to hire management ple in cities were unemployed. That’s near­ not improving is that graduates as a share
trainees—but it wanted only elite gradu­ ly three times the overall jobless rate. of unemployed youth are increasing faster
ates and offered just 1,000 yuan ($140) per For young graduates the situation is than might be explained by broader demo­
month, claimed a post that went viral on probably even more dire. China does not graphic trends (see chart 1 on next page).
social media. At a fair in Jilin most of the release an unemployment rate for this co­ Graduates of universities and vocational
advertised positions required advanced hort. But we combed through data from and technical colleges accounted for 70%
degrees, said a soon-to-be graduate online. the country’s decennial census and its sta­ of the unemployed young in 2022, up from
“Next time don’t bother inviting us.” An­ tistical yearbooks in order to produce an 9% two decades ago. As a percentage of
other griped that firms are not hiring. The estimate. By our calculations (including the youth population, those graduates
recruitment process is “a lie”, she wrote. students who are seeking jobs), the unem- amounted to 47% in 2020.
The data paint a similarly bleak picture. China’s sluggish economy is at least
The unemployment rate for people aged 16 partly to blame. Demand for graduates has
to 24 in cities reached a record high of -> ALSO IN THIS SECTION stagnated. Meanwhile, the supply of them
21.3% last June. That was perhaps too em­ is growing. This year nearly 12m students
33 A message for Taiwan
barrassing for the government, so it are expected to graduate from higher-edu­
stopped publishing the data series while it 34 Frustrating poplar fluff cation institutions, an increase of 2% com­
rejigged its calculation to exclude young pared with last year. Between 2000 and
35 Chaguan: An Alzheimer’s test
people seeking jobs while studying. (Amer­ 2024 the number of Chinese graduates per ►►
 The Economist April 20th 2024 China 33

am, the gaokao, than public institutions. cation dropped from 72% to 34% between
Learning how to cope R1 But the acceptance rate at all colleges and 2007 and 2018 for those under the age of 35.
China, university graduates* as % of: universities has been rising. Before 1999 In 2008 an official in the education
less than a quarter of gaokao-xakexs were ministry seemed to admit that the state
accepted by these institutions. Today most had made a mistake in expanding college
make it in (see chart 3). and university enrolment so quickly. But
The rising number of graduates might the ministry quickly backtracked. Today
not be such a problem if they were learning the government seems to care more about
skills desired by employers. But Chinese the size of the education system than the
companies complain that they cannot find quality of it. Sixty-one new colleges and
qualified candidates for their open posi­ universities opened in China last year.
tions. Part of the problem are low-quality “Our country has built the largest higher-
minban daxue. Yet the skills mismatch ex­ education system in the world,” boasted
tends across higher education. For exam­ the Peoples Daily, a party mouthpiece.
ple, the number of students studying the In his state-of-the-nation speech last
‘Includes vocational and technical colleges *16- to 24-year olds
Sources: National Bureau ot Statistics; rhe Economist
humanities is growing even though de­ month Li Qiang, the prime minister, at
mand for such graduates is much lower least paid lip service to the idea of making
than that for specialists in other fields. sure more graduates were learning the
► year grew more than tenfold (see chart 2). Some students are trying to dodge the skills needed in sectors such as advanced
The trend can be traced back to Min tough private-sector job market. The num­ manufacturing and elderly care. But many
Tang, a Chinese economist who proposed ber of people sitting for China’s civil-ser­ will continue to find that their degree is
expanding enrolment in higher education vice exam hit a record high of 2.3m in 2024, not a ticket to a good job. Told for years
as a way of dealing with the Asian financial a 48% increase year on year. Others are that higher education was a ladder to a bet­
crisis of the late 1990s. Such a policy would pursuing postgraduate studies. The num­ ter life, their frustrations are growing. ■
postpone young people’s entry into the job ber of master’s and doctoral students has
market and stimulate the economy by way increased by so much that some campuses
of education spending, he said. The gov­ have run out of housing. China and Taiwan
ernment adopted his plan, which coincid­ Unable to find work befitting their de­
ed with societal changes that pushed in the grees, a number of graduates are settling A meeting and
same direction. Children born under Chi­ for low-skilled jobs, such as delivering
na’s one-child policy began to come of age food. Last year a memo from an airport in a message
in 1999. With family size limited, parents Wenzhou noted that it had hired architects
TAIPEI
had more to invest in each child—and and engineers to be its groundskeepers
more of an incentive to encourage their and bird-control personnel. China is talking to Taiwan’s next
studies, since these children were expect­ Xiaoguang Li of Xi’an Jiaotong Univer­ leader, just not directly
ed to provide for their parents in old age. sity and Yao Lu of Columbia University
As demand for slots increased, universi­ have studied underemployment in China. 11 days in China, during which
fter
ties grew in size and number. Laws passed
in the early 2000s allowed companies to
Using national survey data, they found
that 25% of workers between the ages of 23
A time he was granted an audience with
Xi Jinping, its supreme leader, Ma
get in on the action. Privately run institu­ and 35 were overqualified for their job in Ying-jeou came back to Taiwan this month
tions, called minban daxue, charge sub­ 2021, up from 21% in 2015. The problem is with a message. The island’s former presi­
stantially higher fees than public universi­ likely to get worse, says Ms Lu, as gradu­ dent, posting on Facebook, wrote that Mr
ties and have an incentive to admit ever ates facing unemployment have no choice Xi had “extended an olive branch to us”. iMr
more students. Enrolment at these schools but to accept menial work. Ma hoped that Lai Ching-te, Taiwan’s next
has ballooned, increasing by 560% since As a result of all this, the returns from president, would “put the people first and
2004. Back then one in ten students in col­ pursuing higher education seem to be fall­ respond pragmatically”.
lege or university studied at a minban da­ ing. In a working paper published last year, Much has changed since Mr Ma left of­
xue. Now one in four does. researchers led by Eric Hanushek of Stan­ fice in 2016, having pursued closer rela­
Minban daxue tend to require lower ford University found that in China the tions with China. His successor, Tsai Ing-
scores on China’s university-entrance ex­ wage premium associated with higher edu- wen, has asserted Taiwan’s status as a
sovereign, democratic country. Mr Lai has
called himself a “pragmatic worker for Tai­
Scads of grads wan independence”. China froze high-level
China, universities* contacts with Taiwan years ago. During Mr
Lai’s successful campaign for president,
Number of graduates, m Acceptance rate, %
Chinese officials denounced his party as
12 separatists and called the election a choice
between “war and peace”.
So it is no surprise that Mr Xi’s sup­
posed olive branch comes with conditions.
Mr Ma counselled Mr Lai to confirm that
China and Taiwan are not two countries
and to promise that he would not pursue
independence. Little is expected to come
of all that. China has ignored Mr Lai’s of­
fers to talk, calling them insincere.
Source: National Buteau ol Statistics ‘Includes vocational and technical colleges forecast
The question, then, is why did Mr Xi
even meet Mr Ma, a diminished figure ►►
 34 China The Economist April 20th 2024

► whose views are outside the mainstream in the status quo”. In 2015 the Chinese au­ spected a Taiwanese tourist ship, an un­
Taiwan? Mr Ma, for example, believes that thorities planned a similar move, only to precedented move. It also began carrying
people on both sides of the Taiwan Strait compromise after Mr Ma’s administration out patrols close to Kinmen, encircling the
share a common national identity. But complained. Now the TAO is saying there island and entering waters that Taiwan
more than 6o% of those on the island say is “no such thing” as the median line be­ deems restricted.
they are Taiwanese, not Chinese. During cause Taiwan is part of China. In the air and on the sea, China’s
the election campaign Mr Ma was side­ The TAO said something similar after a manoeuvring falls well short of war. But its
lined by his own Kuomintang (KMT) party recent incident around Kinmen, an archi­ actions amount to claims of sovereignty in
after saying that Taiwan had to trust Mr Xi. pelago that is controlled by Taiwan but lies the affected areas, says Lee Jyun-yi of the
Less than io% of Taiwanese believe China only 3km from China. On February 14th Institute for National Defence and Securi­
is a trustworthy country. two Chinese fishermen drowned while be­ ty Research, a Taiwanese think-tank. The
China, though, thinks there is still a ing chased by Taiwan’s coastguard. Taiwan message from China seems clear: a presi­
benefit to embracing people like Mr Ma. said they were in “prohibited waters”; the dent who seeks more sovereignty for Tai­
Officials in Beijing stress the importance TAO said there is “no such thing”. Soon wan will see it diminish; but think and act
of supporting Taiwan’s “patriotic unifica­ after, China’s coastguard boarded and in­ like Mr Ma, and we can talk. ■
tion forces”. China’s Taiwan Affairs Office
(TAO) receives a steady stream of delega­
tions made up of Taiwanese religious lead­ Poplar trees
ers, businessmen and students. Andrew
Hsia, the KMT’s vice-chairman, has visited A puff piece
China at least seven times since 2022. Chi­
nese leaders seem to believe that by divid­
ing the island now they may one day win it BEIJING
over. Even though Mr Lai was victorious, Examining the fluff that frustrates northern China
his Democratic Progressive Party (DPP)
lost its majority in parliament and most
Taiwanese back more cross-strait talking. ike most blizzards, it begins with sandstorms are less severe and the threat
There is also a domestic component to
China’s strategy. “Beijing is telling its own
L just a few white wisps swirling about.
Gradually the volume increases and the
of desertification has faded. But the
annual onslaught from catkins is another
people that it has not lost control over the stuff starts to accumulate on the ground. legacy. Female trees are the cotton-ball
Taiwan issue and that there is still time to During the heaviest downfalls the air is culprits. There are millions of them
achieve unification,** says Amanda Hsiao so thick with it as to impair visibility. But (poplar and willow) in Beijing alone.
of Crisis Group, a think-tank. The Ma-Xi this is no winter scene. It is what hap­ Authorities have sought to mitigate
meeting, front-page news in China, aimed pens every April across much of north­ the mess. The simplest way is to spray
to make that point. China’s leaders may ern China, when poplar trees start giving water on the trees, turning the fluffy
want to give themselves more “political off their cotton-like seed-pods. flyers into damp squibs. More advanced
space” on Taiwan, says Ms Hsiao, as they The phenomenon has already begun solutions involve “birth control”, or
deal with economic challenges and await in Beijing. On April 8th an eddy of fluff injecting female trees with chemicals
the outcome of America’s election. balls wafted around the American trea­ that suppress catkin production. Anoth­
But that does not mean China is sitting sury secretary, Janet Yellen, as she held a er option is “gender-reassignment sur­
back. As it embraces so-called patriots, it is press conference in an embassy garden. gery”, in which branches on female trees
also exerting pressure on Taiwan. Chinese To call this a nuisance is an under­ are cut and replaced with male grafts.
warplanes have continued to cross the Tai­ statement. In many people the fluff But experts say that these efforts will
wan Strait’s median line (the de facto mar­ triggers allergies, asthma and other take time. The good news is that the
itime border) on a regular basis. And on respiratory problems. Experts say the flurries of poplar fluff will only last for a
February 1st China’s Civil Aviation Admin­ white balls—produced by the trees’ few more weeks. The bad news is that
istration changed a flight path to allow catkins—are not themselves allergenic, wafts of willow fluff will then begin.
Chinese civilian planes to fly closer to the but that they distribute irritating pollen.
median line, too. Taiwan responded by ac­ They also clog rain gutters, drain
cusing China of trying to “unilaterally alter pipes and car radiators. Worse, they pose
a fire hazard. Officials have warned that
the fuzz balls have a low ignition point
and called for extreme caution on the
part of smokers, welders or anyone
inclined to burn them “out of curiosity”.
China’s catkin problem is the unin­
tended consequence of an old effort to
improve the environment. Intensive tree
planting began in the 1950s with the aim
of ending the scourge of sandstorms
caused by winds sweeping out of barren
areas. The trees were also meant to firm
up the soil and slow desertification.
Poplar trees, along with willows, were
selected because they are cheap, fast­
growing and drought-resistant.
150 km In some ways the plan worked. Today When catkins attack
I----------------------1
The Economist April 20th 2024 China 35

CHAGUAN
The dark side of growing old

A coining wave of Alzheimer’s and other forms of dementia will test China to its limits

mugs to a green canvas satchel. The surrounding neighbourhood

is a pilot scheme in its own right, with large graphic signs on shop
fronts to help those with dementia buy fruit or find the pharmacy.
Public and private hospitals are expanding old-age services,
preparing for the time, around mid-century, when China expects
to have more than 500m people over 60. The community centre in
Gongshu is operated by Lejoy, a private health-care firm. A com­
pany executive, Fan Yixin, says that old-age services barely turn a
profit for now, in part because today’s elderly have low expecta­
tions for their own comfort, after enduring the Cultural Revolu­
tion and other disasters. Those born in the 1960s will be more de­
manding as they age, she says. When they begin to ask for high-
quality services “that will really be an opportunity for us.”
For now Gongshu is an exception, not the norm. Few places are
as prosperous as Hangzhou, one of 50 pilot cities chosen by the
central government to test a range of elder-care programmes. And
though lots of countries face challenges as they age, China starts
with some disadvantages. Half of adult Chinese men smoke.
Chronic conditions including high blood pressure, depression
and diabetes are common and poorly managed. All those are risk
factors for dementia. For a country boasting a space programme
and aircraft-carriers, China has a weak primary health system.
r ZHANG has stared down death during his 90 years on Many community doctors spend three years or less at medical
M Earth. He has been diagnosed with cancer twice. During his school. As a result, sick city-dwellers crowd into large hospitals to
latest bout doctors gave him 18 months to live. “That was 16 years seek care from specialists. Lots of rural patients receive traditional
ago,” he recalls wryly. Trim, snowy-haired and energetic—the key Chinese medicines from poorly trained village doctors.
is “no exercise” and “no smoking”, he says—the retired manager Insurance coverage is patchy. Cognitive tests for detecting de­
cuts a dash in a blue shirt, green trousers and black cotton slip­ mentia are widely available, but brain-imaging scans—an impor­
pers. Yet on this spring afternoon in the city of Hangzhou, Mr tant tool for confirming Alzheimer’s—are expensive for patients.
Zhang is afraid. Not of death, but of dementia. In his youth, the This January China became the third country, after America and
old who lost their faculties were called “crazy”. Later the Chinese Japan, to approve lecanemab, a new treatment for Alzheimer's. But
learned about a disease named by foreigners: Alzheimer’s. He has at up to 200,000 yuan ($28,000) a year, it will be unaffordable for
feared it for years. Advanced sufferers cannot recognise their fam­ most. Dementia is not one of the chronic diseases that public in­
ilies and so always feel alone or numb, he sighs: “That is the most surance schemes must cover. Chinese families already save at high
terrible thing.” Quietly he adds that he has begun to forget things. rates, fearing ruinous health crises. More awareness of dementia
Mr Zhang is luckier than many. He lives in his own apartment will reinforce that behaviour, sapping consumer demand.
with his wife (88). Hangzhou is one of China’s richest cities. His
home district of Gongshu is a pioneer, used to test government A cruel disease that finds society’s weak points
plans for tackling dementia, a disease on the rise as China ages. Dementia threatens to widen rural-urban divides. In China fam­
Officials estimate that 53m Chinese have some form of cogni­ ilies must fund residential elder care themselves. The largest
tive impairment, of whom 10m have Alzheimer’s. That number will state-run pension scheme, for salaried urban workers, pays retir­
grow as Chinese live longer, for the risk of Alzheimer’s soars after ees 3,600 yuan a month on average. Migrant workers or farmers
the age of 75. Various dementias already have 16,000 inhabitants may receive pensions of just 200 yuan a month, putting nursing
of Gongshu in their grip. The district’s residents are older than the homes out of reach. In rural areas, many of these homes are bleak
national average and enjoy a life expectancy of 83, similar to Ja­ places, reserved for the poor without families to support them.
pan’s, explains Li Qiuyang, who directs old-age services at the lo­ Typically, urban families rely on grandparents for child care. In
cal Centre for Disease Control, a public-health agency. Mr Li has villages the old raise left-behind children, while working-age
made early detection of dementia a priority. He invites specialists adults toil elsewhere. The age at which Chinese marry and have
to hold clinics in neighbourhood health centres and asks universi­ children is rising, so future grandparents will be older and more
ty professors to give popular-science talks, working to overcome a prone to dementia. Daughters (and daughters-in-law) will face
pervasive belief that memory loss is just part of ageing. pressure to quit work or return to villages to care for stricken el­
Chaguan encounters Mr Zhang in a publicly subsidised, pri­ ders. Young women are already reluctant to have children. It can­
vately managed community centre full of features designed to not help if a growing number must look after sick parents (often
slow cognitive decline. The 90-year-old has dropped in to collect a with no siblings to lend a hand, thanks to the one-child policy).
coupon for a cheap haircut and is not staying long. The same cen­ China’s leaders have taken for granted free labour from the old
tre offers residential care, charging around 5,000 yuan ($691) a and from adult daughters and daughters-in-law. The state relies
month. On an upper floor, residents with dementia are being on family savings and on local governments of very different
helped to make clay-and-paper collages. A corner is filled with means to fund health and social services. That already creates dra­
xMao-era items to stir long-dormant memories, from old enamel matic inequalities. Dementia will test that system to its limits. ■
36 The Economist April 20th 2024

Middle East & Africa

Iran and Israel Israel, but caused little damage.

Israel’s leaders have vowed to hit back.
Striking out “Any enemy that fights against us, we will
know how to strike him, no matter where
he is,” Yoav Gallant, the defence minister,
said on April 16th. Their options range
from a response in kind against military
DUBAI bases in Iran to cyber-attacks on key infra­
One of the Middle East’s oldest conflicts has entered a new era structure or strikes on the IRGC abroad.
Allies have spent days pushing for re­
ven an ineffective act can be trans­ almost the entire leadership of its Islamic straint. Joe Biden told Binyamin Netanya­
E formative. The iMiddle East spent the
first half of this month waiting for Iran to
Revolutionary Guard Corps (IRGC) in Syr­
ia. The attack on a consular building was a
hu, the Israeli prime minister, that America
would not support a direct counter-attack.
retaliate for an Israeli air strike, on April last straw for hardliners, who demanded a The American president worries that it
ist, which killed two generals at its embas­ muscular response (see next article). But would lead to expanding tit-for-tat bom­
sy compound in Damascus. When it came, most observers, including Israel, thought bardment—the sort of regional war he has
on the night of April 13th, it was bolder Iran would do so in a less direct way, pur­ sought to avoid since October 7th. Euro­
than expected, a barrage of more than 300 suant to a long-standing policy of fighting pean leaders sent a similar message.
missiles and drones aimed at Israel. That it Israel through proxies rather than head-on. To dissuade Israel, they will need to
caused no death and little destruction did Iran’s strike was telegraphed for days. convince it that they take the Iranian threat
not diminish its import: this was the first That gave ample time to prepare: not only seriously. That is easier said than done.
time Iran has struck Israel directly. for Israel, but also for an ad hoc coalition America promises new sanctions 011 Iran’s
Now the region waits nervously again, that included America, Britain, France, Jor­ missile and drone programmes, but that
this time to see when and how Israel con­ dan and other Arab states. They shot down alone will not reassure Israel. Some Amer­
ducts its almost inevitable response. Its all but a handful of the projectiles. Four ican officials suggest a loftier idea. They
partners in the West, particularly America, missiles hit Nevatim air base, in southern point to the unprecedented co-operation
must strike a delicate balance between de­ between Western and Arab states during
fending their ally and restraining it. the Iranian attack: Jordanian jets downed
-> ALSO IN THIS SECTION
Friendly Arab states are in an awkward po­ dozens of Iranian drones, while Qatar,
sition, too. And the belligerents them­ 37 Hardliners in Iran Saudi Arabia and the United Arab Emir­
selves, Iran and Israel, must now navigate a ates (uae) helped behind the scenes. Such
38 Israel’s dilemma with Iran
conflict in which the old rules of engage­ co-ordination seems to fulfil a long-held
ment have been abruptly shredded. 39 Catastrophe in Sudan American goal. For years it has urged Arab
No one doubted that Iran would retali­ states and Israel to integrate their air de­
40 Tanzania’s hobbled opposition
ate. Months of Israeli strikes had wiped out fences, hoping to blunt Iran’s arsenal.
The Economist April 20th 2024 Middle East & Africa 37

If* Israel refrains from a spectacular which imposed strict caps on enrichment nuclear programme and its scientists in
counter-attack, these officials argue, there work in exchange for relief from economic Tehran, the capital, Mr Khamenei’s advis­
is an opportunity to reinforce a regional sanctions (and which Mr Trump aban­ ers called for “strategic patience”.
coalition. The idea appeals to Israeli offi­ doned in 2018). The effort failed. Iran now That has all changed. The salvo of more
cials as well. “This event is not over,** said has a stockpile of 122kg of uranium at 60% than 300 drones, cruise and ballistic mis­
Benny Gantz, a member of the war cabinet. purity, enough to produce three nuclear siles launched at Israel on April 13th her­
“The regional co-operation which we built, bombs if refined further to weapons-grade. alds “a paradigm shift”, says Ahmad Dast-
and which withstood a significant test, The Iranians have been cautious. They malchian, Iran’s former ambassador to
needs to be strengthened.” have walked up to the “nuclear threshold” Lebanon. The firepower stunned many Ira­
but refrained from crossing it, lest they nians, far exceeding that used after Amer­
Don’t forget Gaza trigger tougher multilateral sanctions or a ica assassinated Iran’s top general, Qassim
Such talk makes Arab officials uncomfort­ military strike. The past few weeks may Soleimani, in 2020. The head of Iran’s Is­
able. They are still furious with Israel over change their calculus. If drones and mis­ lamic Revolutionary Guard Corps (IRGC),
Gaza and also worry about the threat from siles are not enough to deter Israel, they Major-General Hossein Salami, has said
Iran, which has threatened to attack Jordan may reckon they need a nuclear weapon to the regime is now working with “a new
if it co-operates further with Israel. do so. That, in turn, would greatly increase equation”. “The era of strategic patience is
Jordan says, rightly, that it shot down the chances of an Israeli attack on their nu­ over,” said an adviser to Iran’s president on
Iranian drones because they violated its clear facilities. Iran chose to move its de­ X (formerly Twitter) on April 14th.
airspace. It also probably saw a diplomatic cades-long conflict with Israel into the Foreign pressure partly explains the
benefit. The kingdom is among the world’s open—but the consequences of that deci­ policy change. Israel has ratcheted up its
most aid-dependent countries. America, sion will be hard for anyone to predict. ■ attacks on Iranian targets throughout the
its largest single donor, provided $i.2bn, Middle East since the start of the war in
along with military aid worth around 20% Gaza in October. It has killed 18 IRGC com­
of Jordan’s defence budget in 2022. Help­ Iranian politics manders and about 250 Hizbullah fighters
ing protect Israel gives King Abdullah a in attacks on Syria and Lebanon. Israel’s air
boost with lawmakers in Washington. Who’s in charge? strike on April 1st proved that Iran’s prox­
Gulf states had their own motives. ies were no longer providing the deter­
Some officials were miffed to watch Amer­ rence on which it has relied for so long.
ica rush to Israel’s defence. They saw a But domestic forces in Iran are also
contrast with 2019, when Iranian-made shaping decision-making. For most of his
drones struck Saudi oil facilities, and 2022, Iranians fear their brittle regime will career Mr Khamenei relied on gruff conser­
when they hit Abu Dhabi, the capital of the drag them into war vative pragmatists like himself. iMany were
UAE. America did little in response.The in­ commanders in the IRGC, the regime’s
cidents are not quite analogous. There was espite its 45-year-old hostility to­ most powerful fighting force, and ready to
no advance warning of the attacks on Sau­
di Arabia and the UAE. Saudi Arabia is
D wards the “Little Satan”, Iran had nev­ work with the West if they thought that
er fired a shot at Israel from its own territo­ would bolster the regime. But more recent­
pushing for a defence treaty with America. ry. Instead, the road to Jerusalem went ly a group of ideological diehards has risen
By helping shoot down Iranian drones, through Karbala, an Iraqi city holy to Shi­ to prominence. They are to Iran what the
Gulf leaders hoped to show that a formal as, said the Islamic Republic’s founder, religious hard right is to Israel. The Paydari
arrangement would offer tangible benefits. Ayatollah Ruhollah Khomeini. Hence he Front, or Front of the Stability of the Islam­
Like Israel, many Arab states see Iran as waged war with Iraq. Ayatollah Ali Khame­ ic Revolution, are Shia supremacists who
their main threat. But a sense of shared nei, Iran’s supreme leader since 1989, used oppose any kind of compromise with any­
danger will not override their anger about its proxies—Hizbullah, a Shia militia in one inside or outside Iran. They consider
Gaza or their fear of an Iranian attack. The Lebanon, and Palestinian militant groups, any reconciliation with the West such
prerequisites for deeper co-operation, they Hamas and Islamic Jihad—to hit Israeli anathema that some of their ilk burnt the
insist, are a ceasefire in Gaza and a com­ targets and avoid direct confrontation. text of the JCPOA, the deal Iran signed with
mitment from America to defend them if When in recent years Israel attacked Iran’s seven world powers in 2015 that limited its
attacked. Neither seems imminent. nuclear programme—in parliament. They
Israeli leaders should not be overconfi­ liken “strategic patience” in the face of Is­
dent. Their air defences were impressive, Middle East Dispatch raeli attacks to appeasement.
albeit they had days of advance warning Their opponents speak of state capture.
and ample foreign help. A surprise attack Subscribers to The Economist can sign up for Ebrahim Raisi, the hardline cleric elected
might be more effective. Still, Iran can only Middle East Dispatch, our new weekly president in 2021, has given them promi­
repeat the trick so many times. America es­ newsletter that keeps you in the loop on a nent positions in his government. His fa­
timates it has around 3,000 ballistic mis­ complex and consequential part of the world, ther-in-law is perhaps Iran’s most radical
siles. So it used 4% of its arsenal—and a by visiting economist.com/newsletters/ cleric; his sermons fire up the Paydaris’
much larger share of those able to reach Is­ middle-east-dispatch zeal. They tightened their grip on power in
rael—in a single night, to no great effect. parliamentary elections last month after
Iran had two goals: to appease hard­ many people boycotted the vote. They
liners and to deter Israel from future have passed new chastity laws. Against the
strikes. It almost certainly failed at the lat­ advice of IRGC old-timers, they want to re­
ter. Firing hundreds of missiles and drones impose the mandatory hijab after its de
and hitting nothing of value makes Iran facto suspension following widespread
look belligerent yet weak—a mix that in­ protests in 2022. On the day Iran struck Is­
vites, not deters, further attacks. rael, they sent the morality police back on­
That suggests a longer-term worry. Mr to the streets after a year-long hiatus.
Biden spent the first half of his presidency Realists in Iran know that their military
trying to revive the nuclear deal with Iran, hardware is no match for Israel’s. Its air ►►
38 Middle East & Africa The Economist April 20th 2024

force projected regional power under the Arabs, have already been working quietly
shah, but has not been upgraded since together for years,” says an Israeli security
then. Its 1960s F-4 American warplanes are official. “This is the first time they’ve been
no match for Israel’s F-35S, the world’s seen openly in action against Iran—and
most advanced fighter jet. Many of its that’s a massive development.”
tanks date back to the 1960s and 1970s. But Mr Biden, anxious to avoid a regional
the Paydari Front sees its earthly battle in war, urged Binyamin Netanyahu, Israel’s
divine terms. “When you shot arrows at prime minister, to “take the win” and avoid
the enemies, you did not shoot; rather God further escalation. The Arab regimes that
did,” said the zealots, quoting the Koran were involved, particularly Jordan and Sau­
after Iran’s attack. They pray for a confla­ di Arabia, do not want to be seen as Israel’s
gration that could trigger the coming of protectors; most of the Middle East is still
Imam Zaman, a messianic leader who will focused on the bloodshed in Gaza. Pre­
inaugurate the end of days. After Iran’s serving the coalition will be no easy task.
strike their followers celebrated in the The Iranian attack has shifted some of
streets and distributed sweets. They have the international focus away from Gaza.
plastered Tehran with banners in Hebrew After months of condemnation of its ac­
warning Israelis to stock up on supplies in tions in Gaza, Israel has unexpectedly
anticipation of another attack. found itself once again in the position it
Paydari clerics have also infiltrated the was in the wake of the Hamas massacres
ranks of the IRGC. The most recent gener­ on October 7th—supported by its allies.
ation of commanders spent their careers “We’ve been given another moment of
attending summer camps run by Paydari grace. Let’s see how quickly we waste it,”
clerics, many of whom are also posted to Iran’s attack says one jaded Israeli general.
their units. “The new generation is more The consensus among Israel’s war cabi­
ideological and abrasive, less experienced Israel’s dilemma net and generals is that Israel will retaliate.
and less pragmatic,” says Saeid Golkar, an But the timing and nature have been hotly
expert on the IRGC at the University of debated in a series of inconclusive cabinet
Tennessee at Chattanooga. Unlike earlier meetings. Plans for an immediate counter­
JERUSALEM
generations, they have no memory of the attack were already in the works in the ear­
Iran-Iraq war in the 1980s. They use reli­ How does Israel retaliate against Iran ly hours of April 14th, while Iran’s drones
gious texts to devise strategy. “Those who without squandering a new coalition? and missiles were on their way to Israel.
don’t know war are more eager to fight,” he The failure of the Iranian attack and the
says, quoting an Iranian saying. N THE SPACE of two weeks Israel has phone-call from iMr Biden stopped Israel
iMr Khamenei still calls the shots. His
senior commanders say they gave Israel
I been dealt two major strategic surprises.
The first came in the aftermath of Israel’s
in its tracks. But this may not last.
As the ministers and generals argue, the
and its allies three days’ notice of the at­ airstrike against Iran’s embassy compound biggest mystery has been the position of
tack. They signalled when it was over. But in Damascus on April 1st. Intelligence indi­ Mr Netanyahu. Since the 1980s he has been
some Iranians question the 84-year-old’s cated the Islamic Republic was about to warning of the Iranian threat and the need
strength to withstand the Paydari cam­ abandon its decades-long strategy of con­ for the West to co-operate with Israel and
paign. Under Mr Raisi, the religious right fronting Israel through proxies and this the Sunni Arab nations against it. But in
has purged the civil service of reformists time retaliate directly from its territory. the days since Iran’s strike he has fallen no­
and other naysayers. It has used Israel’s The Iranian attack came on April 13th tably silent. He has appeared once in pub­
continued attacks to marginalise the re­ in the shape of hundreds of drones and lic, in front of new IDF conscripts. All he
maining pragmatists within the regime missiles launched towards the Jewish state. had to say was that “Iran stands behind
and to rebuff their calls for restraint. Some With it came the second surprise. A co­ Hamas” and that Israel is determined “to
claim to welcome the prospect of an Israeli alition of Western and Arab nations de­ defend ourselves in all sectors”.
strike on Iranian soil. They reckon it would ployed fighter jets in the skies over the Mr Netanyahu’s dilemma is that even as
unite Iranians, a nationalist bunch. Middle East and, along with Israel’s mis­ he is being offered the coalition against
But for all its power, the Paydari Front’s sile-defencesystems, intercepted nearly all Iran that he has demanded for so many
rise may be making the regime more brit­ the incoming threats. Together they re­ years, his far-right allies in government are
tle. The gap between Iran’s rulers and its duced the immediate impact of the attack demanding he take action which would
subjects grows ever wider. Mr Raisi is al­ to one wounded girl and some minor dam­ squander that opportunity. They are clam­
most as unpopular with his people as Bin­ age to an Israeli air base. But they also left ouring for “a crushing attack”, in the words
yamin Netanyahu is in Israel. Many Irani­ Israeli decision-makers with a dilemma. of Itamar Ben-Gvir, the national-security
ans blame his inexperienced ideologues For Israel, a small nation that has built minister. The far right is also worried that
for crippling the economy (the rial reached its survival in a hostile region on military America will force Israel into agreeing to a
a new nadir against the dollar after the deterrence, failing to respond to a direct ceasefire in Gaza and the return of the Pal­
April 13th attack). And they fear that their attack on such a scale on its territory is all estinian Authority there. Mr Netanyahu’s
zealotry could drag Iran into all-out war. but unthinkable. The missiles fired by Iran silence is explained by his dependence on
Such is the antipathy towards them that could have been devastating. Few in Israel the support of such political allies.
many view the regime’s enemies as friends. doubt the need for a response. But Aryeh Deri, one of the prime min­
Graffiti have appeared calling for Israeli re­ But Israel has a lot to lose if it fails to ister’s closest allies in the government,
prisals. “Hit them, Israel. Iranians are be­ calibrate its response. The international hinted at Mr Netanyahu’s position in a
hind you,” read one in Tehran. As an Iran- coalition formed at the urging of President radio interview. “We have to remember
watcher noted, Iranians’ reaction to an Is­ Joe Biden to foil Iran’s attack could contin­ that there is still an unfinished campaign
raeli strike could prove a greater threat to ue to be a big strategic asset. “All the coun­ in Gaza,” said Mr Deri. “At a time like this,
the regime than the attack itself. ■ tries involved, both from the West and the we shouldn’t open more fronts.” ■
The Economist April 20th 2024 Middle East & Africa 39

Sudan's civil war dy under way in parts of Sudan. In the

worst-affected areas, which include the
Ever deeper into hell capital, people are eating leaves to survive.
Children are already beginning to die from
malnutrition or related diseases. Some 70%
of health facilities in war-stricken areas are
no longer functional, according to Deep-
EL-FASHER
mala Mahla of CARE, an aid group. For
After a year of bloody civil war, Sudan faces starvation most of last year refugees arriving in Chad,
which borders Darfur, said they were es­
T HAS BECOME a morbid sort of trivia caping a fearsome campaign of ethnic
I game. Which country has the world’s
largest population of internal refugees?
11 BY A
SAUDI
ARABIA cleansing unleashed by RSF troops and al­
lied Arab militias against local black Afri­
The highest number of people facing fam­ SUDAN Red cans. Now the new arrivals tell aid workers
ine? And where do aid agencies have the they are fleeing hunger.
CHAD
biggest humanitarian load, but until this North
Khartoum
Both sides are obstructing humanitar­
week were short of 95% of the funding they West Darfur ERITREA ian assistance. RSF fighters regularly attack
need? The answer is not, as many might as­ Darfur Khartoum"
aid lorries and loot warehouses belonging
el-Fa she r
sume, Gaza or Ukraine. It is Sudan. to NGOs. In February the SAF banned aid
When the conflict in Africa’s third-larg- I ETHIOPIA
agencies from delivering supplies via
East
est country began a year ago it might have Darfur Chad. Since then it has partially relented,
been mistaken for a clear-cut fight be­ but it continues to withhold visas and tra­
tween two generals, each vying for control vel permits for aid workers. Crossing the
of the central state. On one side were the CAR SOUTH SUDAN lines between territory controlled by the
Sudanese Armed Forces (Saf), led by Gen­ _ SAF and RSF to deliver assistance is “cum­
eral Abdel Fattah al-Burhan; on the other Food-insecure areas, bersome and deliberately time-consum­
June-September 2024, forecast
the Rapid Support Forces (RSF), a paramil­ ing”, notes a UN official. As a result, whole
Crisis I Emergency
itary unit under the command of Muham­ regions have for months been cut off from
Source: FEWS NET
mad Hamdan Dagalo (a Darfuri warlord emergency supplies. “Previous food crises
universally known as Hemedti). Even after in Sudan were localised,” argues Alex de
fighting exploded in the capital, Khar­ 500,000 people, according to the “most Waal, an expert on famines at Tufts Uni­
toum, and quickly spread to Darfur, some likely scenario” in a study by the Clingen- versity. “Now we are witnessing something
observers still imagined it could be con­ dael Institute, a Dutch think-tank. In its we haven’t seen since the 19th century: a
tained or that the two sides would grind “extreme” scenario forecast, up to a million nationwide food emergency.”
themselves to a stalemate, and then strike may perish. Because of the war, large parts Consider el-Fasher, North Darfur’s cap­
a power-sharing deal. of Sudan—in particular Darfur—collected ital and the SAF’s last major holdout in the
Instead the conflict has metastasised almost no harvest in 2023. National cereal west. Before die wrar the city was a sanctu­
into a nationwide conflagration so vast and production collapsed by almost half; the ary for those escaping violence and hunger
anarchic it could yet destabilise several of price of basic food commodities shot up by elsew’here: tens, if not hundreds, of thou­
Sudan’s neighbours. If there were, at first, as much as 83%. These trends are set to sands of civilians had sheltered there since
two broadly coherent armed blocs under worsen with fighting having now reached the previous round of ethnic cleansing in
identifiable leadership, now there is a mo­ the breadbasket state of Gezira. Darfur 20 years ago. Yet these days it is a
saic of competing militias and rebel move­ Though the UN has yet to declare a microcosm of the chaos that prevails else­
ments, each with its own interests and famine, few experts doubt that one is alrea- where in Sudan. In theory the national ar­
agendas. Arms and mercenaries are pour­ my remains in charge, with several thou­
ing over the border from Chad, Libya and sand troops holed up in barracks in the city
the Central African Republic, and across centre. But in reality rebels from the local
the Red Sea (see map). Even fighters from Zaghawa ethnic group provide most of the
as far afield as Russia and Ukraine have re­ security, while much of the outskirts is un­
portedly joined the fray. With neither side der the control of the RSF and affiliated
having managed to land a decisive blow, militias. Crossing from one side of the city
both the SAF and the RSF have begun to to the other means navigating multiple
splinter. “We are hurtling towards a failed checkpoints, each manned by a different
state,” frets Tom Perriello, America’s re­ armed group. Though the SAF conducts
cently appointed special envoy. “There is a frequent air strikes on RSF positions, they
real risk of a 20- to 25-year setback for the often end up hitting civilian areas, includ­
people of Sudan and the wider region.” ing those under the army’s control.
More immediate is the risk of mass star­ With movement in, out and around el-
vation. “The situation is catastrophic,” says Fasher so costly and dangerous, life inside
Michael Dunford, the head of the UN’s is growing desperate. “We are already too
World Food Programme in east Africa. late,” says Justine Muzik of Solidarites In­
“When you look at the sheer size and scale, ternational, a French humanitarian charity.
we’re desperately concerned about where Dengue fever and malaria are running ram­
this is headed.” pant. Every twro hours in Zamzam, a refu­
On April 15th donors pledged around gee camp on the south-western side, a
$2.ibn to fund humanitarian efforts. Yet child dies from lack of food or medical
this may already be too late to avert a fam­ care, says iMedecins Sans Frontieres, an­
ine, which is expected by June and may kill Losing hope other French charity. With new' arrivals ►►
 40 Middle East & Africa The Economist April 20th 2024

► streaming into the city from other parts of chairman, was assaulted and had his leg
Darfur, basic supplies are dwindling. broken. Mr xMagufuli may be dead, but the
Though food is still available in the mar­ chilling effect of his presidency lingers.
ket, a sack of rice can cost almost eight Worse than the fear, though, was the
times what it did before the war. systematic dismantling of the opposition
Across large parts of the country sol­ at a local level. In 2016 xMr xMagufuli
diers from both sides are raping women banned the opposition from holding polit­
and girls, in some cases because of their ical rallies. These allow politicians to forge
ethnicity. In Khartoum state alone more connections with potential voters, particu­
than 1,000 rapes have taken place, accord­ larly in villages and the countryside. More
ing to lawyers and doctors. Ghada Abbas, a people attend political rallies in Tanzania
human-rights lawyer who recently fled Su­ than anywhere else in the world, as far as
dan, describes an incident in which sol­ available statistics show, according to Dan
diers violated three sisters aged 12,16 and Paget of the University of Sussex, who is
18 in Omdurman, a city close to the capital. writing a book on the subject. Although
Although people heard their cries, “nobo­ xMrs Sarnia lifted the ban last year, it had si­
dy dared to go out,” she says. lenced the opposition across swathes of
Elsewhere there are some hopeful Tanzania for six years.
signs. Discreet ceasefire talks are under Perhaps the most grievous blow Mr Ma­
way in the Egyptian capital, Cairo. A sep­ gufuli struck against the opposition came
arate process backed by America is also to not in the general elections of 2020 but in
resume in Saudi Arabia soon. However, in the local polls the year before. The elector­
recent weeks the regular army has reversed Brighter than their prospects al commission barred 94% of Chadema
some of the RSF’s earlier gains in Khar­ candidates from standing, prompting an
toum, raising hopes among its supporters She is also more vulnerable electorally opposition boycott. As a result, the CCM
of a decisive victory. Just a few weeks be­ than her predecessor. The margin of Mr won 99% of local seats.
fore it had been the RSF that appeared tri­ Magufuli’s victory may have been inflated, It took two decades from the restora­
umphant. “What this looks like now is mu­ but he was undoubtedly popular. By demo­ tion of democracy in 1992 for the opposi­
sical chairs,” not a genuine sea-change, ar­ nising foreign investors, denouncing tion to become competitive. Its emergence
gues Kholood Khair of Confluence Adviso­ Western imperialism and championing the at national level was built on its successes
ry, a Sudanese think-tank. With both sides poor, he built a broad support base. xMrs in running local governments. Without a
still determined to gain the upper hand, Sarnia, by contrast, has rebuilt ties with the presence in parliament or local govern­
the prospect of peace is slim. ■ West, welcomed foreign investors and de­ ment, the opposition can hardly present it­
clined to engage in rabble-rousing. These self as a government-in-waiting. “Under
may be sensible policies, but there are few xMagufuli our focus was on survival,” says
Democracy in Tanzania votes in them. xMr Kabwe. “Now we have to rebuild.”
Tanzania’s GDP per person is among the Tanzania’s election process has long
Pleading no contest 30 lowest in the world. Some 44% of people been laughably skewed. Every official in­
are poor. Given that the CCM has held pow­ volved in running previous polls, from re­
er since independence from Britain in 1961, turning officers to the electoral commis­
there must be a sizeable chunk of Tanza­ sion, was either directly appointed by the
OAR ES SALAAM
nians yearning for change. president or was a public servant whose
The next elections will be both Even so, diplomats and analysts think it livelihood depended on not upsetting the
uncompetitive and unfair may take 15 years before the opposition has ruling party. Losing candidates were for­
a shot at winning power. “Politicians like to bidden from mounting court challenges in
he most recent Tanzanian general say ‘we will win, we will win’, but we have a legal system where, in any case, judges
T election, held in 2020, made a mockery
of democracy. Agents of the ruling CCM
to be practical,” says Zitto Kabwe, who
stepped down as the leader of Tanzania’s
are also appointed by the president.
Negotiations between Chadema and
party stuffed ballot boxes, pre-marked vot­ second-biggest opposition party, ACT-Wa- the government for electoral and constitu­
ing slips and erected fake polling stations. zalendo, in xMarch. Mr Kabwe reckons the tional reforms have broken down. xMr Lis­
Police officers rounded up opposition can­ best the combined opposition can hope for su, who opposed the talks, says that the
didates and their supporters. To hide the next year is about 25% of the vote. CCM “flatly rejected” all proposals for
fraud, the authorities shut down the inter­ This is because Mr Magufuli eviscerat­ meaningful change that Chadema put for­
net, gagged journalists and suppressed ed the opposition in a five-year reign of ter­ ward. “While uttering pretty phrases, she
rights groups. The few opposition suppor­ ror. The trigger was an election in 2015, has actually been consolidating authoritar­
ters brave enough to protest were shot at. when the opposition won 40% of the presi­ ianism,” he says of xMrs Sarnia. Now, he
At least 14 were killed. John Magufuli, then dential vote and 45% of the parliamentary fears, the CCM is intent on ensuring that
Tanzania’s president, duly won re-election vote. In response, Mr Magufuli intimidat­ local elections in December will be a re­
with 84% of the vote. The CCM did even ed, bought off and silenced his critics. De­ peat of those in 2019, with Chadema candi­
better, securing all but seven of the directly fections from Chadema, the principal op­ dates again excluded on technicalities.
elected seats in the country’s parliament. position party, were encouraged. The busi­ In this gloomy view, any prospect of re­
Overturning such a whacking majority ness interests of opposition members and building and securing even 25% of the vote
in a single electoral cycle would be tough donors were relentlessly targeted. next year therefore looks remote. “Without
anywhere. Yet, when Tanzanians return to Those who could not be induced to de­ electoral reform, there is no hope that we
the polls next year, the opposition ought fect faced arrest, or worse. Tundu Lissu, will get democracy peacefully,” says xMr
not despair. The execrable Mr Magufuli is Chadema’s presidential candidate in 2020, Lissu. “We will have to advance our cause
dead. His successor, Sarnia Suluhu Hassan, survived after being riddled with bullets by on the streets through demonstrations and
is more tolerant of criticism. unknown assassins. Freeman Mbowe, its mass action.” ■
The Economist April 20th 2024 41

Europe

Education in Germany The failure is not catastrophic. Ger­

many’s leading universities are still among
Schuling around the world’s best, as are its opportunities for
vocational training. Even in decline, its
schools perform in the middle rank of
European standards; but that still means
that they do worse than Austria, Poland,
BERLIN, COLOGNE AND DORTMUND the Czechs and the Swiss—Germany’s
Germany’s scores are heading down, as its schools fail to adapt neighbours. Nor is the alarm new. When
their schools first underwent comparative
From may 1ST the proud holders of doc­ found that 25.4% of the German cohort tests, back in 2000, the results so surprised
torates will no longer be allowed to put lacked adequate skills in 2021, up from Germans that the ensuing “PlSA-SZ’/wdf
the title Dr in front of their name in Ger­ 18.9% five years earlier and 17% in 2001. prompted a wave of reform.
man passports. For a country obsessed Meanwhile the latest survey of German- What is new is that Germany is achiev­
with qualifications—Prof Drs are fairly language competence among ninth-grad­ ing mediocre and diminishing results de­
common and even Dr Drs not so rare—this ers by iqb, an educational-research insti­ spite having tried varied reforms since the
decline in standing may be hard. But it is tute that compares outcomes between Schock, and despite spending a similar pro­
not as hard as the decline in German edu­ German states, found that the proportions portion of its GDP on schooling as better­
cational standards. nationwide that fail to reach minimum performing neighbours do. Nor can the
The most recent results from three very standards in reading, listening and spell­ poor showing be ascribed simply to either
different testing regimes, comparing pu­ ing had risen respectively by 9, 16 and 9 the covid-19 pandemic or to immigration,
pils of varied ages, point in a single direc­ percentage points since 2015. though the system’s failure to respond well
tion: downwards. The best-known, the to the influx of nn refugees in 2015-16 is
Programme for International Student As­ certainly part of it.
sessment (PISA), tests performance in -> ALSO IN THIS SECTION The causes lie deeper. Germany “is fail­
maths, reading and science among 15-year- ing to adjust to the learning needs of the
42 Scholz in Beijing
olds across some 80 countries every three 21st century, as in Asia and the Nordic
years. Its most recent scores confirm steep 43 Macron the hawk countries”, says Andreas Schleicher, direc­
plunges in all three subjects in the past de­ tor for education at the OECD, which runs
43 Waiting for the Russians
cade in Germany (see chart on next page). the PISA tests, in Paris. The system’s rigidi­
A separate study that measures reading 44 Ukraine’s drones ties start with unhelpful cultural attitudes.
competence among fourth-graders across In the country that invented the kindergar­
45 Charlemagne: Repressing rightists
65 countries, known by the acronym IGLU, ten, many parents shun pre-school educa­ te
 42 Europe The Economist April 20th 2024

► tion in the belief that it encourages exces­ ing countries. One result is that across Germany and China
sive competition. German children start Germany high-school students relegated
school at six, but early schooling is often to the non-academic track can now more An awkward
lax and playful, because children “should easily cross over, or simply study to take
not be overstressed”. Fourth-graders, for the Abitur. Since education falls under meeting
instance, spend almost 30% less time read­ state rather than federal control, German
BERLIN
ing in class than the OECD average. states have also tinkered by introducing
Teachers, traditionally unquestioned longer school days, by extending primary It is time for Xi Jinping to accept that
masters of their classrooms in Germany, school (as in Berlin) or by altering the Germany isn’t America’s puppet
often resist evidence-based new methods length of high school (as in the southern
or standardised tests that might “stigma­ state of Baden-Wiirttemberg). N OFFICIAL CHINESE read-out said
tise” poor performers. Many see education
not in terms of building core competences,
But as Ms McElvany, an education ex­
pert and vice-president for research at TU
A the summit meeting in Beijing that
ended on April 16th reflected the strong
but as a mission to create cultured citizens. Dortmund University, notes, too many ties that bind the world’s second- and
In most German states primary school such efforts have stalled or gone into re­ third-largest economies. A morning of
lasts just four years; pupils are then divid­ verse. The obstacles are numerous. Educa­ talks with Xi Jinping, China’s president,
ed between those destined for academic tion is a heated subject, involving stake­ punctuated by a comradely stroll in the
studies orfortechnical/vocational careers. holders from anxious parents to powerful garden and ending in a cordial lunch,
All these traits mean that children from teachers’ unions. Election cycles are short. seemed to have marked a friendly climax
less-educated, poorer or non-German- Politicians have a lot to lose from med­ to the three-day visit to China by Olaf
speaking families are far less likely to be dling in schooling, notes Ms McElvany, Scholz, Germany’s chancellor.
chosen for the academic secondary and little to win from projects that are of­ But not all is as rosy as spring. For a
schooling that leads to better-paying ca­ ten expensive and long-term. start, the German home audience was de­
reers. Of children with at least one parent The city-state of Hamburg has experi­ nied a live view of their chancellor’s frolic
holding a higher degree, 79% will go on to mented successfully. But other states suf­ in Beijing because ZDF, a German public
university; of those with only professional fer from systemic inertia. This often ex­ broadcaster, could not get Chinese press
qualifications, just 27%; of those who tends down to district level and to individ­ accreditation from the host country’s no­
speak a foreign language at home, 23%; ual schools. A survey in 2017, for instance, toriously awkward bureaucrats. But behind
and of those whose parents hold no pro­ discovered that whereas schools in the that quibble lurked much bigger troubles.
fessional qualification, a mere 12%. Netherlands exercised direct control over Just before the trip to China—his second
Such things are slow indeed to change. 92% of decision-making, including the hir­ since he became chancellor in 2021, and
On the day Nele McElvany’s son was born ing of teachers, Germany’s level of inde­ one for which he has attracted a fair
19 years ago in the Berlin district of pendence trailed at a meagre 17%. “When I amount of criticism from within Europe-
Kreuzberg, another mother in the same had to replace some simple parts that a kid Mr Scholz told an interviewer that al­
building also gave birth. Ms McElvany— broke in a science lab, I found that our though an American-style “decoupling” of
now Prof Dr xMcElvany—was dismayed at school doesn’t even have a bank account,” the German economy from China is a bad
the time to think that while her own child says a teacher at a Berlin high school. “Eve­ idea, “de-risking” would be wise. “In Ger­
would almost certainly end school holding ry spending decision has to go through the many, the peacemaking effect of economic
an Abitur, the certificate for university en- district council.” contacts was certainly overemphasised,”
trance, her neighbour’s would not, simply Asked how she would ideally tackle said the former mayor of Hamburg. “No­
because of their contrasting backgrounds. school reform, Ms McElvany unhesitating­ body has that illusion today.”
The problem is compounded, says Mr ly ticks off a dozen measures she would This may be true for Germany, which
Schleicher, by the fact that nearly everyone take. Luckily for Germany, none of them learned a lesson after wooing Russia for
in a position of power is a product of the sounds very hard: following Hamburg’s ex­ decades with fat energy contracts, only to
academic track. They simply cannot see ample of language pre-schooling; empha­ see it invade Ukraine. Yet the statement
the shortcomings of a system that they sising core competences such as reading; from Mr Xi stressed a contrary message. It
themselves benefited from. loosening budget strings to let underper­ said that the intertwining of economies is
Even so, would-be educational reform­ forming schools fix their own problems. not a risk but an opportunity, as well as
ers have repeatedly tried to shake up a sys­ Unluckily for Germany, the political will to “the guarantee of a stable relationship”.
tem unique to a clutch of German-speak- do much of this is absent. ■ This difference means a lot to the boss­
es of 12 big German firms who accompa­
nied iMr Scholz. xMany are deeply exposed
Across the board as investors in China, or face stiffening
Germany, mean PISA test scores of 15-year-olds Chinese competition. A recent report by
economists at Allianz, a German insurance
giant, suggests that the two countries are
Maths Science
530 moving “from complementarity to substi­
tution”, as China begins to replace Germa­
520
ny even in high-value manufacturing. One
510
example: since 2019 German machinery
500 exports to ASEAN countries have fallen by
490 14%, and Chinese exports of the same
480 goods have risen by 31%. China is pushing
470
Germany aside even in Europe. In some
-V sectors, such as solar panels and basic in­
IIv1II1IVIII1II1u
11’11111 1 1 I 111111 •»' I I ”
gredients for essential pharmaceuticals, it
2000 05 10 15 22 2006 10 15 22
already enjoys a near-monopoly.
Source: OECD PISA
So when xMr Xi argued against protec- ►►
 The Economist April 20th 2024 Europe 43

ened that a French aircraft patrolling over Sceptics still query the sincerity of iMr
the Black Sea would be shot down. iMacron’s conversion, pointing to French
In recent months France has cata­ efforts to cap Ukrainian farm exports. Fine
logued an intensified Russian campaign to words are one thing: concrete action an­
sow division, discredit the country and test other. Figures from Germany’s Kiel Insti­
its army. Russian security services, say tute suggest that French bilateral military
French sources, commissioned the stars of aid is a fraction of Germany’s, though the
David stencilled on walls in Paris last Oc­ latest numbers go up only to mid-January.
tober, to stir up inter-religious tensions. In With a budget deficit in 2023 of 5.5% of
March cyber-attacks briefly took down GDP, France is strapped for cash, its army
some of the French government’s websites, has little kit to spare and its industry is
and hackers stole data from its jobs agen­ struggling to produce stuff much faster.
cy. With the added help of Russia apolo­ Others dismiss Mr Macron’s hardline
gists in France, Russian bot farms turbo­ stance as electioneering, intended to dis­
charged scare stories about bed bugs in tinguish his geopolitics from Marine Le
Paris, used a deepfake French news report Pen’s, whose National Rally (rn) was once
to fabricate a supposed attempt on iMr financed by a Russian bank. While this is
Macron’s life, and spread vile false ru­ indeed a campaign theme, its effectiveness
mours about his wife, Brigitte. is doubtful. The RN looks set to crush his
This systematic targeting, say those party at polls for the European Parliament
An unequal relationship close to the president, underlies a shift that in June. The idea of sending ground forces
continues to puzzle many observers: Mr to Ukraine is deeply unpopular in France.
► tionism, the response from Mr Scholz is Macron’s conversion from a leader who It is noteworthy that Mr Macron’s volte-
likely to have been as stilted as the Chinese sought to engage with Russia’s Vladimir face has won the loudest approval from
leader’s response to German nagging on Putin to one of Europe’s most hawkish Europe’s once sceptical eastern fringe. “I
such subjects as Ukraine or human rights. voices. The president who once urged al­ do think it’s genuine,* says Nicu Popescu, a
The fact is that although both countries lies not to “humiliate” Russia has now former foreign minister of Moldova. “Mac­
would like to insulate their bilateral rela­ called for Russia’s defeat, urged allies not ron has concluded that the EU’s security
tionship from the more strident behaviour to be “cowardly* and warned that a Rus­ depends on the security of its neighbours.*
of their allies (for China that means Rus­ sian victory would spell “the end of Euro­ Mr Macron backs Estonia’s idea of joint EU
sia; for Germany it is America and some of pean security*. Mr Macron has not spoken borrowing to pay for arms to Ukraine, an
the more hawkish European countries), to Mr Putin since September 2022. On Feb­ idea that is hated in frugal Germany.
they both sense that this is not sustainable. ruary 26th he refused to rule out sending French diplomats recently drew up alarm­
Soon enough, China will have to stop pre­ ground forces to help Ukraine. ing scenarios about the implications of a
tending that Germany, and indeed Europe, What explains this shift? At a basic lev­ Russian victory. Mr Macron, says a French
is acting tougher only because of Ameri­ el, says Bruno Tertrais of the Institut Mon­ military source, no longer harbours any
can pressure, and accept that Europeans taigne, a think-tank, Mr Macron was doubts about Moscow’s expansionist am­
do indeed have their own reasons to be wa­ “mugged by reality*. Mr Putin lied to him bitions. If Russia wins, the president said
ry of China. And Germany will have to stop and played him. The French president’s last month, Mr Putin will not stop at Uk­
pretending there is much of a difference pre-war diplomatic outreach was a failure, raine. Now Mr Macron needs to act on his
between “de-risking” and “decoupling*. ■ even if he knew it was high-risk at the time. new understanding. ■
The assassination of Alexei Navalny in
February served as a further jolt. As a for­
France, Russia and Ukraine mer minister told Le Monde, Mr Macron Ukraine’s defences
was “radicalised by disappointment*.
Le nouveau faucon Ukraine’s difficulties on the ground, as The Russians
well as the prospect of another Donald
Trump presidency, have made standing up are coming
to Russia more urgent. This comes at a
PARIS
time when Mr Macron has already con­ SUMY PROVINCE. UKRAINE

How Russia targeted France and cluded, in a speech in Bratislava last May, Ukraine is digging in as the Kremlin
radicalised Emmanuel Macron that bringing Ukraine into both the Euro­ steps up its offensive. Will it be enough?
pean Union and NATO would actually
N JANUARY 16th the French president, strengthen his ambition for European col­ The sunken faces that peer from be­
O Emmanuel Macron, announced that
he would send another 40 long-range
lective defence, not dilute it.
“For decades France had believed that
hind battered fences are aged, whether
or not the bodies that carry them are old.
Scalp cruise missiles to Ukraine. Later that when it came to Europe, smaller was bet­ Russia, eight kilometres away, isn’t hiding.
day Russia bombed Kharkiv, in north-east­ ter,* writes Celia Belin of the European In the past 24 hours, three guided bombs
ern Ukraine, claiming French mercenaries Council on Foreign Relations, in the Amer­ landed in the village, with two of them ex­
were based there and supplying a list of ican magazine Foreign Affairs. Russian ag­ ploding to devastating effect. Everyone
names that the French army says is fake. gression, she notes, has transformed the here is in waiting mode. Oleh, the officer in
Shortly afterwards the French uncovered case for a wider EU. A French ten-year se­ charge of constructing a new network of
193 websites set up to undermine public curity commitment to Ukraine is now en­ fortifications on the outskirts of the vil­
support for Ukraine in France (as well as in trenched in a bilateral agreement, signed lage, shouts back a warning. “If you hear a
Germany and Poland), run by a Russian by Mr Macron and Volodymyr Zelensky in whistle, you’ve got a few seconds to drop
firm based in Crimea. Days later Sebastien February. It is worth €3bn ($3.2bn) in 2024 down on the floor. And hope for the best.”
Lecornu, the French defence minister, said and includes a French promise to support The construction of three new lines of
Russian air-traffic controllers had threat­ Ukraine’s entry into NATO. fortifications in Sumy province is part of a ►►
 44 Europe The Economist April 20th 2024

► billion-dollar Ukrainian scheme to shore

up defences ahead of an expected Russian Ukraine
summer offensive. Diggers are working
around the clock, as they are in Kharkiv, Droning on
Zaporizhia and Donetsk provinces, where
the main push is expected. Construction
follows a master plan of interlocking KYIV
trenches, underground command-points, The sky’s no limit for Ukraine’s deep-strike programme
observation posts, and sleeping quarters
that double as field hospitals. The general
rule is that army brigades build the first GUARD LOOKS on nervously. With Born out of necessity—the West has
line. Engineering forces, local authorities
and occasionally local businesses take care
A every step, the air thickens with the
smell of petrol. Around a corner is the
been reluctant to provide Ukraine with
long-range weapons—the programme
of the rest. The outer line, about 30km workshop, and the buzz of manufactur­ has disrupted much of Russia’s oil and
back, is the sturdiest, built in relative calm ing. Inside, lab-coated technicians are military infrastructure. But the White
with diggers and reinforced concrete. After busy assembling grey birds under the House is not happy. It is pushing the
a long delayed start, the first part of the glow of overhead lights. Young men in Ukrainians to stop the strikes.
project is due to be completed by the end T-shirts scuttle about, before packing America’s concerns have varied, from
of the month. The question is whether that the drones in boxes for onward delivery. a rise in the oil price to the prospect of
will be soon enough. The destination for some of them will be an uncontrollable tit-for-tat in which
Things are already critical in part of the 1,000km away and more—hunting for Ukraine could end up the loser. Fears of
Donetsk area. On April 14th Ukraine’s important targets inside Russia. the latter rose in late March, when Rus­
commanding general, Oleksandr Syrsky, Since President Volodymyr Zelensky sia inflicted millions of dollars of dam­
said he was particularly concerned by a de­ prioritised the technology, Ukraine has age on Ukraine’s energy infrastructure.
terioration around the small town of Cha- invested hundreds of millions of dollars The attacks revealed gaps in air defences
syv Yar. Russian troops had been ordered into long-range drones, capable of and vulnerabilities to Russia’s new Kh-69
to seize it by Victory Day on May 9th, he searching out and striking distant tar­ low-altitude cruise missile. On April nth
said, and were amassing a huge strike gets. Half a dozen firms now make them. such missiles destroyed Ukraine’s Try-
force. There is frankly little to seize. Anton, The best of the new models has a pilska power station, 40km from Kyiv,
a drone-company commander, describes range of 3,000km, able to reach Siberia. though it was in range of the capital’s
the once-quiet town in apocalyptic terms. Patriot air-defence systems.
The earth is ash-grey; the air heavy with So far, Ukraine is ignoring American
the smell of gunpowder and burning. Most advice to call off the strikes. “Detective”,
buildings have been destroyed by artillery an intelligence officer responsible for
and guided bombs, he says, “dozens” of part of the programme, says he has not
which land every day. received instructions to dial down oper­
In Anton’s view, the Kremlin is repeat­ ations. Yes, there has been a switch away
ing scorched-earth tactics it used with suc­ from aiming at oil infrastructure in the
cess to seize nearby Avdiivka in February. past week, but it is probably temporary.
With Russian guns firing at least seven “Our targets change day to day. We keep
times more than Ukrainian ones, it was the Russians on their toes.”
just “a matter of time” before the process One long-range-drone producer
would be completed once again. Ukraine claims that not every American repre­
has spent most of the war in serious artil­ sentative agrees with its policy. His
lery deficit, he says, but the shortages have contacts “winked” while they delivered
been more pronounced since December. warnings. “They’re privately telling us to
With Ukraine lacking the means to sup­ keep going.” The producer predicted an
press infantry advances, the Russian army expansion of Ukraine’s drone pro­
is now able to approach its positions with gramme in the months to come. “Russia
ease. “You’re always trying to preserve the is scorching Ukrainian earth. It’s time we
ammunition you have, to defend against Modern war did the same to European Russia.”
more serious advances. And so they keep
creeping up, and you keep falling back.”
The vulnerabilities have many people Russia will find it difficult to achieve any­ staff had made the military picture seem
worried. Some media reports, quoting un­ thing other than limited tactical success in worse than it was. “We are losing the infor­
named Western officials, have even sug­ small places like Chasyv Yar. “The front mation war to Russia,” he complains. An­
gested Ukraine may be on the verge of mil­ lines aren’t pleasant, but the Russians have other source suggests that bureaucratic pa­
itary collapse. Those fears are exaggerated. real problems too.” ralysis had resulted from the worsening
Mr Kostenko, who oversees groups in the Not that any of that is calming nenes in military situation, with few people willing
south and east, assesses that there is only a Kharkiv, Odessa or even Kyiv, where ru­ to take the initiative.
“minimal” risk of a major Russian break­ mours of imminent large-scale offensives For some, the delays in starting the for­
through in the near future. Ukraine is ad­ have been stimulated by Russian influence tification programme are a case in point.
dressing its manpower shortages, he says. operations and confused Ukrainian com­ Ukraine long denied the reality, they say,
Things already look better than they did in munications. A defence insider, who asked and waited far too long, until February, to
December, when Ukraine’s draft system to remain anonymous to speak freely, in­ begin digging. But knee-deep in the black
essentially “broke down”. But the critical sists that none of the supposed Russian soil, the upbeat Oleh counters the critics.
factor remains ammunition. As long as a operations looked particularly viable. He “Try constructing a trench in snowy, fro­
minimum keeps arriving, which so far it is, suggests “chaos” within Ukraine’s main zen minefields,” he retorts. ■
The Economist April 20th 2024 Europe 45

CHARLEMAGNE
When farce meets petty tyranny

How a conservative conference in Brussels morphed into a crisis of liberalism

an issue when the National Conservative bunch had held a similar

event at the same venue in 2022. Discomfiting as that show of cen­
sorship was, more was to come. A backup Brussels venue was se­
cured at a cavernous Sofitel near the European Parliament also
well used to political confabs. As the conservative organisers were
in the midst of setting up their stage on the day before the event,
another Brussels district mayor worked to evict them, taking pride
in foiling the conference of people whose views he disagrees with.
And thus it was that the homeless nationalists ended up
cramped inside the Claridge, a former nightclub turned into a
concert venue and part-time conference hall (with no connection
to the luxurious London hotel, nor anything remotely posh). If the
site originally booked was the Ritz of political rallies, this was
more akin to a roadside motel, jammed between a second-hand
clothes shop and a kebab joint in Belgium’s poorest district; up­
coming events include a Shrek-themed rave (“Bring out your inner
ogre!”). Even then, yet another Brussels mayor sent in the cops.
The offstage rigmarole spiced up what was otherwise predict­
able globalist-bashing fare. Those speakers who could attend—
Eric Zemmour, a French firebrand, was among them though
barred by police on the first day—delivered platitudes about fam­
ily values and bent elites. Among the forces to be combated: the
NE OF THE few benefits of Britain leaving the European Un­ European Parliament, the European Commission, the mainstream
O ion, at least for denizens of Brussels, was that Nigel Farage all
but disappeared from the city’s parliament, pubs and speaking cir­
media, polite society, the UN, immigrants, political correctness,
NGOs, “Bolshewokism”, George Soros, and green regulation.
cuit. The blowhard Brexiteer’s return to the Belgian capital on Things liked by conference speakers included the freedom-loving
April 16th will have done little to rekindle his passion for the place. owners of the Claridge, farmers, Donald Trump, national sover­
As the former MEP addressed several hundred fellow-travellers of eignty, motherhood and “the will of the people”. Conspicuously
the hard right at a conference, Belgian police swooped into the absent, as well as lunch (which did arrive later, for there is only so
venue with orders to shut the event down. Outnumbered, the cop­ much self-sacrifice even conservatives will put up with), was any
pers ended up beating a discreet retreat, allowing Mr Farage to de­ kind of speech a liberal society should not be able to tolerate.
liver a few more quips about gravy-train Eurocrats and fake-news
media. After some to and fro, the police opted to seal the confer­ Conservatives at the gates
ence venue instead, leaving the afternoon’s speakers stuck outside Charlemagne holds little truck with the ideas featured at the con­
and—worse, for attendees including Charlemagne—caterers un­ ference. Many well-meaning speakers, notably from America, do
able to deliver food. Not to worry: lunch was replaced by a stern not seem to realise their Hungarian patrons (who helped fund the
lecture from Suella Braverman, Britain’s former home secretary, event) are abusers of their conservative ideology, using it as cover
about the dastardliness of human-rights lawyers. to build a patronage system benefiting cronyish insiders. Some,
The half-hearted police raid at a reactionary gabfest was the like xMr Zemmour, hold truly reprehensible views. But to be mis­
culmination of a discomfiting series of events around the “Na­ guided is their business, not that of either the thought police or
tional Conservatism” conference on April i6th-i7th. At the ninth the Brussels variant. Happily, the ham-fisted censorship proved
such jamboree, organised by the Edmund Burke Foundation, an surmountable. As the first day of the conference closed, Alex­
American outfit, the star attraction of this iteration was Viktor Or­ ander De Croo, the Belgian prime minister, decried attempts to
ban, Hungary’s proudly illiberal prime minister. Unsurprisingly, shut it down as “unacceptable”. An overnight court ruling quashed
some speakers held views outside the centrist consensus, albeit the original order to ban the event. Boosted by the furore around
ones endorsed by plenty of voters. This lese-liberalisme sent local the efforts of his liberal enemies to silence him, Mr Orban got to
Belgian authorities on a misguided mission to prove the “cancel address his fans, railing against the EU and the very liberal norms
culture” decried by conservatives is not just a conspiracy. A policy that (belatedly) ensured his right to speak.
that aims to exclude hard-right parties from coalition govern­ Stuck between the hubbub of police blockading the venue and
ments, known as the cordon sanitaire, metastasised into an ugly persecuted conservatives within, your columnist got to chat for a
variant whereby merely expressing such ideas is beyond the pale. few minutes with the owner of the Claridge. A first-generation mi­
The first sign of trouble came a few days before the event, grant from Tunisia, Lassaad Ben Yaghlane has run the place with
when its original venue, a posh set of heavily gilded rooms near his family for a decade. When he got the call to host the event, he
the EU institutions used by political parties and diplomats for thought before agreeing, then decided there could be no harm in
their own shindigs, decided to turf out the conservatives. One of providing anyone a room to debate in. The conservative organis­
Brussels’s 19 district mayors had ginned up fears of “anti-fascist” ers were a polite lot, he said. Didn’t he mind that some speakers
protests, arguing that security was impossible to arrange. This is were spewing migrant-bashing rhetoric from a stage he was pro­
clearly nonsense. Brussels hosts dozens of summits featuring viding? The 59-year-old shrugged and asked: “What’s a democra­
grandees that run into no such problems. Nor had policing been cy if you say, ‘You can listen to this guy but not that one’?” ■
46 The Economist April 20th 2024

Britain

The general election has a near-certain chance of being the larg­

est party in Parliament, and an 87% chance
All change of winning the 326 seats needed for an out­
right majority. Our central estimate is that
it would win 372 seats if polling stations
were to open tomorrow (though the range
of possible outcomes is wide). The mid­
point estimate for the Conservatives is 198
The Economist's new model drives home the scale of the task facing Rishi Sunak seats. Labour would retake many of the
Conservatives’ 2019 “red wall* gains in the
HERE have been 17 elections in Brit­ port for parties rises and falls across all north and the Midlands: the Tories would
T ain since the start of 1959 and the Con­
servative Party has been successful in ten
constituencies in the country by the same
magnitude—and augments it with specific
be left with just 55 seats north of the Wat­
ford Gap, compared with 147 now.
of them. The next one is almost certain to regional polling from Scotland, Wales, Labour is expected to gain at rhe ex­
take place in the second half of this year. It London and so on. The output is not so pense of other parties, too. Scottish poli­
is safe to say that Rishi Sunak’s Tories are much a forecast as a “nowcast*—a predic­ tics is in a febrile state at the moment, but
very unlikely to add to their victory tally: tion of what would happen if the election our central estimate is that the Scottish
they currently trail Labour, led by Sir Keir were held tomorrow. If you happen to be National Party (SNP) would end up with 32
Starmer, by 20 percentage points in the Mr Sunak, you should look away now. seats, 16 fewer seats than it would have
polls. But it is tricky to predict how many Our modelling concludes that Labour won if the last election had been fought
iMPs each party will have, partly because under newly redrawn constituency bound­
national voting intentions do not convert aries. We think Labour has a 40% chance
-> ALSO IN THIS SECTION
simply into seats in Parliament. In 1997, for of winning between 350 and 399 seats, and
example, the Labour Party won 63% of the 47 Tactical voting a 27% chance of winning more than 400, as
seats on 43% of the vote. Sir Tony Blair did in 1997.
48 Bagehot: Mad mayors
To tackle this problem, The Economist If all that sounds bad enough for Mr Su­
has built a new prediction model using -> Read more at: Economist.com/Britain nak, the real picture may be even worse.
9,398 individual constituency-level elec­ The biggest determinant of the final com­
— Where are the robots?
tion results along with available polling da­ position of Parliament is the nationwide
ta from every election since 1959. Our mod­ — Decriminalising abortion gap between Labour and the Conserva­
el builds on the simple principle of uni­ tives; our model translates that into seat
— The black-mass problem
form national swing—the idea that sup­ counts pretty reliably. But it does not take ►►
 The Economist April 20th 2024 Britain 47

► into account the full possibilities of tacti­

cal voting (see box) or the attention that Red-letter day
Median
parties’ campaign managers will give to Britain, predicted seats in 2024 general election*, April 15th 2024 Low • High
particular seats. These effects may, if any­
0 100 200 300 400
thing, push the Tory seat tally even lower.
Labour
In our model’s central estimate, for ex­
ample, the Liberal Democrats, who are Conservative
hoping to become the third-largest party Liberal Democrat
again in Westminster after being sur­ 326 for
SNP w*
passed by the SNP in 2015, are expected to majority

win 21 seats. But if enough Labour voters Reform

switch votes in constituencies where the Other

Lib Dems are the only credible challengers
to the Tories, they could do much better. A 2019 results+ IO o
different prediction approach, enticingly *11 an election wete hekl tomorrow 1 Based on recently adopted const ituency boundaries
Sources: Biitish Election Study. Colin Railings & Michael Thrasher, Univeisity ot Plymouth:
called multi-level regression with post­
I teetotalCalculus; ONS; National Recoids ot Scotland: lhetconomis!
stratification (MRP), attempts to capture
these local effects; a recent MRP from You-
Gov, a polling firm, reckoned that the Lib percentage points, the Tories would in­ a 20-percentage-point polling gap and
Dems would win 49 seats. crease their own chances of electoral suc­ won the subsequent election. The fact that
The waters are muddied further by un­ cess to one in ten—still measly, but better. the Tories’ poll deficit has been impervious
certainty over the impact of Reform, an in­ It is ever plainer, however, that the To­ to Mr Sunak’s various efforts suggest that
surgent right-wing party that is critical of ries have a very steep mountain to climb. their chances of victory are increasingly
mass immigration and that is currently No governing party has entered the final slim. However long there is to go until poll­
polling at 13%. In 2019 the Brexit Party, nine months of a parliamentary term with ing day, time may already have run out. ■
which was renamed Reform UK in 2021,
did not have candidates in 317 constituen­
cies held by the Conservatives. There will The general election
be no such respite for the Tories this time.
Our model thinks it is unlikely that Reform Crossover voters
will win any representation in Parliament,
because Britain’s first past-the-post system
punishes parties whose support is diffused
across constituencies. (Reform’s best shot
There are signs of co-ordinated anti-Tory behaviour
at a seat is in Barnsley North, in South
Yorkshire, where it would currently attract
around 30% of voters.) But its ability to F AN ELECTION were held tomorrow, percentage points; in seats where the Lib
hurt the Tories by taking votes away from
them is both real and unpredictable.
I our prediction model is sure that the
Tories would lose. But it may still be
Dems were not going for victory, La­
bour’s vote rose by ten percentage
So should Sir Keir begin measuring up being too kind, since it does not explic­ points. This may partly be because La­
for the curtains in Downing Street? Not itly consider the potential fora jump in bour chose not to campaign hard in seats
quite yet. Predictions are not promises. tactical voting. When the Conservatives where the Lib Dems were stronger. But it
Our swing model does reasonably well if have suffered landslide defeats in the is also likely to reflect voter behaviour.
asked to predict the outcome of the elec­ past—as they did in 1906,1945 and Less politically engaged voters, who
tions it was trained on. It correctly antici­ 1997—these have been at the hands of are more likely to vote in a general elec­
pated a hung parliament in the 2010 elec­ co-ordinated anti-Tory coalitions. Anoth­ tion than in by-elections, may not be as
tion, for instance. But it is not foolproof: er such coalition maybe forming now. attuned to these possibilities. But if they
like most pundits and pollsters it gave the That is because of a big rise in the also vote tactically, the Tories could fare
Tories only a small chance of an outright number of centre-left crossover voters even worse than our model suggests.
majority at the following election in 2015. who are prepared to cast their ballots for
The biggest source of hope for iMr Su- more than one party (see chart). This
nak is that voting intentions can still increases the chances that people will Open to switching
change. Our prediction is based on a sce­ opt for a party other than their first Britain, voters considering both parties, %
nario in which the election takes place to­ choice in order to defeat the Tory candi­
General elections 25
morrow. We only account for the pattern date in their constituency. In 2019
of voters’ behaviour today and in the past, around 17% of all voters were consider­
so shifts in the polls will affect our predic­ ing both Labour and the Liberal Demo­
tions (which will be regularly updated on­ crats, compared with only around 13% in
line). If the gap in the national polls be­ 2015. In May 2023 it was almost 22%.
tween them and Labour narrowed to 15 This number may be even higher now.
Labour is more palatable to crossover
voters under Sir Keir Starmer than Jere­
Who will win the next election? my Corbyn. And constituencies that
have held by-elections since 2019 show Labour/
Conservative
You can explore our seat-by-seat predictions, evidence of tactical voting. In by-elec­ 1--------i---------- 1------- r-—I-----------------1--------------------- 1--------- 1--------- r~r
track the latest polling and build your own voter tion seats targeted by the Lib Dems, the 2014 15 16 17 18 19 20 21 22 23
profiles by visiting our new interactive. Go to Labour vote fell by an average of 7.5 Souice: Biitish Election Study

economist.com/britain-election-forecast
48 Britain The Economist April 20th 2024

BAGEHOT
The good, the bad and the mad

Local politics is always much messier—and weirder—than people think

pledged to overhaul a 1,800-hectare site by the Tees in an effort to

turn the graveyard of a former steelworks into something produc­
tive. Lord Houchen even bought a loss-making airport on the ba­
sis that executives could fly in to invest while Teessiders could fly
out to spend the proceeds on the Med. “Dirigisme” is the idea that
tltWl the state can orchestrate an economy; “Houchisme” is a shrunken
version, with a local economy bossed by a regional big man.
The scheme has been dogged by accusations of mismanage­
ment and worse. Andy McDonald, a local MP, made allegations of
“industrial-scale corruption” while speaking in Parliament, which
is exempt from England’s libel laws. Lord Houchen in turn la­
•J 1 r. ■
belled Mr McDonald a “liar”, a “coward” and a “disgrace”. A report
p has found no evidence of corruption but a litany of governance
F f failures, with 28 changes recommended for the complex set-up.
£ The project has, at times, taken a unique approach to stake­
Il3
If I holder management. During one disagreement about access
rights to the site with a neighbouringbusiness, the then vice-chair
of the development corporation opted for film-dialogue threats: “I
want your eyes out of your head: I want the fucking roof off your
house: I want your kids out of private school; I want no shoes on
your fucking feet.” Devolution succeeds in putting the spotlight
on sometimes forgotten areas; the glare will not always flatter.
a 'QUILDINGS OF ENGLAND”, the Bible of architectural histor­ Sometimes devolved schemes are wacky but largely harmless.
ic ians, is effusive about the Grand Hotel in Scarborough, a In the West of England Combined Authority, the mayor intro­
chilly, rather tired seaside resort on the coast of Yorkshire. It is “a duced a birthday bus pass, giving people free travel during the
High Victorian gesture of assertion and confidence: of denial of month of their birthday (at a cost of £8m). Other local decisions
frivolity and insistence on substance, than which none more tell­ have bigger consequences. In Greater Manchester Andy Burnham,
ing can be found in the land* the Labour mayor, has attracted plaudits for bringing the region’s
Other reviews vary. “ABSOLUTELY HORRENDOUS,” reads bus system into public ownership but chickened out of a “clean­
one. “If I could give it o i would!!!” says another. A third vividly re­ airzone” that would have charged polluting vehicles fordriving in
calls: “The first room I got had pubic hair all over the sheets” the centre of the region. In London Sadiq Khan expanded a simi­
When Bagehot visited, he avoided that fate. But he found that the lar scheme at some political cost. Pollution in the capital has
“glorious hall” highlighted in “Buildings of England” now hosts an plunged; pollution in Manchester is the country’s worst. If Man­
air-hockey table and a luminous arcade machine, where punters chester’s residents choke, at least it is due to their own choices.
can win prizes like an Xbox controller or a bottle of Prime, a sickly This is part of the point of devolution. The British government
energy drink. In the bar four bored pensioners watched “The and, in particular, its mighty Treasury are good at stopping sins of
Chase”, a quiz show, at a disconcertingly loud volume. commission. White elephants do exist but they are rare, since so
The Grand Hotel’s owner is Britannia, which is consistently many projects are aborted moments after conception. As a result,
ranked the country’s worst hotel chain. Soon it could have a new however, sins of omission are common. Devolution means more
one: British taxpayers. Keane Duncan, the 29-year-old Conserva­ things will be tried because of decisions made by local politicians.
tive candidate for the newly formed York and North Yorkshire But that will, inevitably, lead to mistakes.
Combined Mayoral Authority, has pledged to buy the decaying
hotel if he wins office in local elections on May 2nd. If Britannia Having a right mayor
refuses to sell, then iMr Duncan says he will use compulsory-pur- At the moment, a place like Scarborough is stuck in limbo. Central
chase powers bestowed on the mayor to force it to do so. “Sounds government has neither the guts to let it die nor the will to try to
bonkers, I know,” says Mr Duncan. resuscitate it. A mayor will neither change the weather (it is still
When it comes to devolution in England, there is a broad con­ woolly-hat temperatures in spring) nor return the town to its Vic­
sensus. The Conservatives are proud of introducing regional may­ torian pomp. But someone might end up cleaning the layer of
ors in every major urban area and now in some rural ones. Under a grime and seagull droppings that covered the window in Bage-
future Labour government the powers of mayors will be juiced up hot’s filthy hotel room. Whether that is a good use of taxpayer
further. Wonks generally agree that devolution is “a good thing”. money is for voters—or at least the fraction of them who bother to
What gets forgotten is that it is also a very messy thing. Some vote in local elections—to decide.
ideas will work. Others will fail. Some will be insane. Local politics Devolution is a long-term punt that local politicians will, on
is always a mixture of the good, the bad and the mad. the whole, make better decisions about their area than national
For a taste of all three, drive 70 minutes north up the A171 to ones. Boosters insist a virtuous circle will kick in: more powers will
Teesside, a struggling industrial region. Ben Houchen, the Con­ attract higher-calibre candidates, which will lead to more scrutiny,
servative mayor of this traditionally Labour region, is fighting for which will mean better policy. Everyone in British politics has
re-election. His offer to voters is one of unapologetic economic in­ signed up to the gamble. The price in the short term? Whatever a
terventionism. Almost 36560m ($7oom) of public money has been 413-room Victorian hotel in Scarborough goes for these days. ■
The Economist April 20th 2024 49

International

Military service form; by the mid-2oios it was just under

40%. The practice reached its peak during
Raining on their parade the world wars, and many countries con­
tinued to rely on it throughout the cold
war. Thereafter the West’s focus turned to
high-tech counterinsurgency campaigns
such as those in Afghanistan and Iraq.
ERMELO Mass-conscript armies were mostly re­
Why many young people don’t want to fight for their country placed by smaller, professional volunteer
forces. Since 1995, 13 members of the
Belly down in a muddy Dutch forest, tain them. By 2030 Germany hopes to raise OECD, a club of mostly rich countries, have
Sabrina van den Goorbergh fires its troop strength from 182,000 to 203,000, scrapped conscription. All but eight of
blanks from a Colt C7 assault rifle. The and France from 240,000 to 275,000 (see NATO’s 32 members have done away with
third-year medical student is taking part in chart 1 on the next page). Poland plans to it. But authoritarian countries such as Iran,
the Dienjaar (service-year), a new pro­ go from 197,000 to 220,000 by the end of North Korea and Russia have doubled
gramme that lets young Dutch sign up for this year, and eventually to 300,000. down on their press-ganged armies.
a year-long trial in the armed forces rather The problem is that today’s career-ori­ The most urgent discussion around
than the regular four-year enlistment term. ented, individualistic young people are re­ mandatory military service and conscrip­
The programme is a success, drawing three luctant to join up. And it is not just Europe tion is in countries that face a serious
applicants for each spot, and the govern­ that is struggling with recruitment. In and threat of war, or are already in one. Take
ment plans to scale it up from 625 to 1,000 around the world’s conflict hotspots the Ukraine. More than two years on from
trainees next year. question of how to get more people into Russia’s invasion, thousands of men there
Yet it can hardly begin to solve the uniform is vital. Some countries are recon­ are fleeing across the country’s borders, or
country’s recruitment problems. The sidering an old solution: mandatory mili­ hiding, to avoid being served enlistment
Dutch armed forces number 49,000, less tary service for young people (or young papers. On April 2nd a lack of troops
than a fifth of their size during the cold men), often for school-leavers. Terminol­ meant Ukraine’s government was forced to
war, and one in ten positions is vacant. ogy varies. Conscription typically means lower the minimum age of conscription
Last year regular enlistment yielded just compelling civilians to enlist in the armed from 27 to 25. Russia has thrown hundreds
3,600 of a hoped-for 5,000 new soldiers. forces, whereas military service often re­ of thousands of forcibly mobilised men
This is at a moment when, in the face of fers to a subset of that—ordering young into the meat-grinder of its war.
the largest war on the continent since 1945, people to do a stint in the forces. In Israel, military duties are a central
many European countries actually want to At the start of the 20th century around pillar of citizenship. After the October 7th
expand their armed forces, not just main­ 80% of countries had conscription in some attacks, some 300,000 Israelis left civilian ►►
 50 International The Economist April 20th 2024

► life and rushed to join their units. Israel to Russia.) Their expanding armed forces
wants to lengthen male conscripts’ service Boots on the ground R~l also have no trouble finding soldiers: all
to three years (young women currently Active-duty military personnel, m four have compulsory military service for
serve for 24 months and young men for 32) Selected countries young people.
and to extend the call-up age for reservists • 2024 2030s target
Sweden actually eliminated the prac­
to 45. At the same time, ultra-Orthodox tice in 2011, but brought it back in 2018
0 0.1 0.2 0.3 0.4 0.5
Jews’ exemption from service is the subject United States* after failing to meet recruiting targets. It is
of a bitter political struggle. an intriguing case study for others. Having
Meanwhile in Asia, Taiwan is trying to France just joined NATO, it is scaling up from
prepare for a possible war with China as + 69,700 to 96,300 soldiers, an endeavour
Poland F
Sino-American tensions persist. Taiwan which requires about 10,000 recruits a year.
Germany A.
extended military service in 2022, from All the country’s 19-year-olds (men and
four months to a year. But the island still Taiwan
•+ women) must fill out service question­
boasts just 169,000 active soldiers (China naires; a bit under a third qualify, and then
has around 2in). South Korea, where mili­ Sweden e a tenth are ultimately inducted.
‘Army only tNo target period
tary service has a brutish reputation, is try­ Rather than souring young people on
Sources: IISS; government statistics; press reports
ing to make it more appealing. Service has the armed forces, in Sweden mandatory
been shortened to 18 months, wages are service seems to make them more enthusi­
rising and sadistic drill-sergeants have right is not so eager to fight,” says Mr Wag­ astic. In exit surveys at the end of their
been pruned. The government also wants ner, at least in Germany and the Nether­ stints, “about 80% of the conscripts would
to hire more women (men-only conscrip­ lands. Last year he and his colleagues com­ recommend other young people to do mil­
tion has fuelled male resentment and anti­ missioned a study in those countries which itary service”, says Pal Jonson, the defence
feminist politics). found that few people who planned to vote minister. Some 30% re-enlist as soldiers or
In many places recruiters for the armed for either far-left or far-right parties were reserves. Because more young people qual­
forces are struggling in the face of shifting willing to fight for their country. Those ify than are needed, only the best candi­
values: young people have grown averse to who backed centrist parties, such as Ger­ dates make it in, and military service looks
fighting even in defensive wars. For de­ many’s Social Democrats and Christian good on one’s CV.
cades the World Values Survey (wvs), an Democrats, were more prepared to do so. This kind of conscription helps keep
academic research project, has been ask­ Besides changing values, military re­ Nordic armies a melting-pot for different
ing people around the world the same cruiters face an economic hurdle: young classes, and discourages political polarisa­
question: “Would you be willing to fight people currently have lots of employers tion. (Volunteers in armed forces tend to
for your country?” In the survey’s most re­ bidding for their services. In most wealthy skew towards the right; in Germany neo-
cent round, between 2017 and 2022, just countries, Generation Z has its pick of jobs Nazi cells have been uncovered in the
36% of Dutch 16- to 29-year-olds said yes (see Finance & economics section). Unem­ Bundeswehr.) In the Middle East too,
(see chart 2). ployment among 15- to 24-year-olds in the many states see military service for young
Recruiters try to counter with the rheto­ European Union was 14.5% last year, down people as a social adhesive. The United
ric of patriotism, self-fulfilment and shared from 22.4% in 2015. In Germany it was just Arab Emirates introduced it in 2014 partly
values; the emphatic slogan of Germany’s 5.8%. In such tight labour markets, armies to forge a sense of shared identity among
armed forces, the Bundeswehr, is Wir. Di- have a hard time competing with the priv­ its youth. Morocco, Jordan and Kuwait
enen. Deutschland. (We. Serve. Germany.) ate sector. And sitting at a desk is rather have followed suit.
They also run campaigns with influencers nicer than crawling through mud.
on TikTok and Instagram. But it does not In some wealthy countries, however, You got no time to lose
seem to be enough to hit their targets. young people’s willingness to fight re­ Shortfalls across many democratic states
This is partly to be expected. As coun­ mains high. In France the share is 58% in suggest that better recruitment strategies
tries get richer, their citizens tend to be­ the WVS. The figure is higher still in Singa­ can do only so much to boost troop num­
come less eager to sacrifice themselves for pore, Taiwan and South Korea. In Den­ bers. Few medical students have Ms Van
the nation. Herfried Miinkler, a German mark, Finland, Norway and Sweden, four den Goorbergh’s drive to take up infantry
political scientist, called Western demo­ of the wealthiest and most peaceful coun­ training on the side. In liberal societies,
cracies “post-heroic” societies, in which tries in the world, two-thirds or more of large segments of the population have
“the highest value is the preservation of citizens say they are willing. (All are close come to see serving in the army as some­
human life” and personal well-being. His­ one else’s job. Reintroducing obligatory
tory certainly plays a role. Willingness to military service for youngsters might be
fight is low in the countries that lost the Jai Hind! LU politically and practically unworkable for
second world war (Germany, Italy and Ja­ ‘’Are you willing to fight for your country7’, the same reason recruitment is falling
pan). In Spain and Portugal, decades of 16- to 29-year-olds, % responding yes short: citizens feel alienated from the
military dictatorship left many citizens 2022 or latest available armed forces.
suspicious of the armed forces. Yet the Nordic model seems to help
But things can change when conflicts bridge that gap, ensuring that military ser­
draw near. According to a forthcoming pa­ vice remains a natural part of social life
per by Wolfgang Wagner and Alexander and nudging more school-leavers to con­
Sorg of the vu University in Amsterdam sider a related career. Other youngsters
and Michal Onderco of the Erasmus Uni­ may still only join up in a crisis. “It is fear
versity in Rotterdam, proximity to war that moves you to action,” says Andrei, a
makes citizens more willing to fight. In former television producer now fighting in
Europe, this helps explain why countries eastern Ukraine. He signed up the day
close to Russia are less doveish. after Russia invaded. Most Ukrainians did
Political alignment is a poor predictor not believe they would ever have to fight
Source: World Values Survey
of willingness to bear arms. “The radical for their country, either. ■
The Economist April 20th 2024 51

Business

Artificial intelligence and copyright Als are trained on vast quantities of

human-made work, from novels to photos
The imitation game and songs. These training data are broken
down into “tokens”—numerical represen­
tations of bits of text, image or sound—
and the model learns by trial and error how
tokens are normally combined. Following a
prompt from a user, a trained model can
Generative Al is a marvel. Is it also built on theft? then make creations of its own. More and
better training data means better outputs.
The footballers look realistic at first bot made by Anthropic, can be made to Many AI companies have become cagey
sight but, on closer inspection, some­ repeat lyrics from hit songs. Stable Diffu­ about what data their models are trained
thing is wrong. Their faces are contorted, sion, from Stability Al, reproduces features on, citing competitive confidentiality (and,
their limbs are bending in alarming direc­ of images, including the watermark of Get­ their detractors suspect, fear of legal
tions, the ball is slightly egg-shaped. ty, on whose archive it was trained. action). But it is widely acknowledged that,
Strangest of all, running across one foot­ To those who hold the rights to these at least in their early stages, many hoo­
baller’s left leg is the ghostly trace of a creative works, generative Al is an out­ vered up data that was subject to copy­
watermark: Getty Images. rage—and perhaps an opportunity. A fren­ right. OpenAl’s past disclosures show that
Generative artificial intelligence (Al) zy of litigation and dealmaking is under its GPT-3 model was trained on sources in­
has caused a creative explosion of new way, as rights-holders angle for compensa­ cluding the Common Crawl, a scraping of
writing, music, images and video. The in­ tion for providing the fuel that powers the the open internet which includes masses
ternet is alive with Al-made content, while creation of Als. For the model-makers it is of copyrighted data. Most of its rivals are
markets fizz with Al-inspired investment. an anxious period, notes Dan Hunter, a thought to have taken a similar approach.
OpenAI, which makes perhaps the most professorof law at King’s College London. The tech firms argue there is nothing
advanced generative-Al models, is valued “They have created an amazing edifice wrong with using others’ data simply to
at nearly $9obn; Microsoft, its partner, has that’s built on a foundation of sand.” train their models. Absorbing copyrighted
become the world’s most valuable compa­ works and then creating original ones is,
ny, with a market capitalisation of $3.itrn. after all, what humans do. Those who own
ALSO IN THIS SECTION
But some wonder how creative the A is the rights see a difference. “I’ve ingested
really are—and whether those cashing in 53 LVMH’s pups in cashmere all this incredible music and then I create
have fairly compensated those on whose from it,” says Harvey Mason Jr, a song­
54 Bartleby: Lessons of woke Scrabble
work the models were trained. ChatGPT, writerand chief executive of the Recording
made by OpenAI, can be coaxed into re­ 55 Insecure Chinese biotech Academy, which represents musicians.
gurgitating newspaper articles that it ap­ “But the difference is, I’m a human, and as
56 Schumpeter: Epistolary CEOs
pears to have memorised. Claude, a chat­ a human, I want to protect humans.,.1 have ►►
 52 Business The Economist April 20th 2024

► no problem with a little bit of a double

standard.” Roger Lynch, chief executive of
Conde Nast, which owns titles such as
Vogue and the New Yorker, told a Senate
hearing in January that today’s generative-
Al tools were “built with stolen goods”. Al
companies “are spending literally billions
of dollars on computer chips and energy,
but they’re unwilling to put a similar in­
vestment into content”, complains Craig
Peters, chief executive of Getty.
Media companies were badly burned by
an earlier era of the internet. Publishers’
advertising revenue drained away to search
engines and social networks. Record
labels’ music was illegally shared using
applications like Napster. Content-makers
are determined not to be caught out again.
Publishers (including The Economist) are
blocking Al companies’ automated “crawl­
ers” from scraping words from their web­
sites: nearly half of the most popular news
websites block Open Al’s bots, according Not all media types enjoy equal protec­ defence. Much the same is true in Britain,
to a ten-country survey by Oxford Univer­ tion. Copyright law covers creative expres­ where Getty has brought its case against
sity’s Reuters Institute in February. Record sion, not ideas or information. Computer Stability Al, which is based in London (and
companies have told music-streaming ser­ code, for example, is only thinly protected, had hoped to fight the lawsuit in America).
vices to stop Al companies from scraping since it is mostly functional rather than ex­ Some jurisdictions offer safer havens.
their tunes. There is widespread irritation pressive, says Matthew Sag of Emory Uni­ Israel and Japan, for instance, have copy­
that tech firms are again seeking forgive­ versity in Atlanta. (A group of program­ right laws that are friendly for Al training.
ness rather than permission. “A $9obn val­ mers aim to test this in court, claiming that Tech companies hint at the potential
uation pays for a lot of lawyering,” says Mr Microsoft’s GitHub Copilot and OpenAl’s threat to American business, should the
Hunter. “That’s the business plan.” CodexComputer infringed their copyright country’s courts take a tough line. Open AI
by training on their work.) News can like­ says of its dispute with the New York Times
The sincerest form of flattery wise be tricky to protect: the information that its use of copyrighted training data is
The lawyering is now happening. The big­ within a scoop cannot itself be copy­ “critical for US competitiveness”.
gest rights-holders are leading the charge. righted. Newspapers in America were not Rights-holders bridle at the notion that
The New York Times, the world’s largest covered by copyright at all until 1909, notes America should reduce its protections to
newspaper by number of subscribers, is Jeff Jarvis, a journalist and author. Before the level of other jurisdictions just to keep
suing Open Al and Microsoft for infringing then, many employed a “scissors editor” to the tech business around; one describes it
the copyright of 3m of its articles. Univer­ literally cut and paste from rival titles. as unAmerican. But it is a reason why the
sal Music Group, the largest record com­ Image-rights holders are better protect­ big cases may end up being decided in
pany, is suing Anthropic for using its song ed. Al models struggle to avoid learning favour of the Al firms. Courts may rule that
lyrics without permission. Getty, one of how to draw copyrightable characters— models should not have trained on certain
the biggest image libraries, is suing Stabil­ the “Snoopy problem”, as Mr Sag calls it, data, or that they committed too much to
ity Al for copying its images (as well as referring to the cartoon beagle. Model­ memory, says Mr Sag. “But I don’t believe
misusing its trademark). All four tech firms makers can try to stop their Als drawing in­ any US court is going to reject the big fair­
deny wrongdoing. fringing images by blocking certain use argument. Partly because I think it’s a
In America the model-makers are rely­ prompts, but they often fail. At The Econo­ good argument. And partly because, if they
ing on the legal concept of fair use, which mist's prompting, Microsoft’s image crea­ do, we’re just sending a great American in­
provides broad exemptions from the coun­ tor, based on OpenAl’s Dall-E, happily dustry to Israel or Japan or the EU.”
try’s otherwise ferocious copyright laws. drew images of “Captain America smoking
An encouraging precedent comes courtesy a iMarlboro” and “The Little Mermaid Copyrights, copywrongs
of a ruling on Google Books in 2015. The drinking Guinness”, despite lacking ex­ While the lawyers sharpen their argu­
Authors Guild sued the search giant for press permission from the brands in ques­ ments, deals are being done. In some
scanning copyrighted books without per­ tion. (Artists and organisations can report cases, suing is being used as leverage.
mission. But a court found that Google’s any concerns via an online form, says a “Lawsuits are negotiation by other means,”
use of the material—making books search­ Microsoft spokesman.) iMusicians are also admits a party to one case. Even once
able, but showing only small extracts—was on relatively strong ground: music copy­ trained, Als need ongoing access to
sufficiently “transformative” to be deemed right in America is strictly enforced, with human-made content to stay up-to-date,
fair use. Generative-AI firms argue that artists requiring licences even for short and some rights-holders have done deals
their use of copyrighted material is similar­ samples. Perhaps for this reason, many Al to keep them supplied with fresh material.
ly transformative. Rights-holders, mean­ companies have been cautious in releasing OpenAl says it has sealed about a dozen
while, are pinning their hopes on a their music-making models. licensing deals, with “many more” in the
Supreme Court judgment last year that a Outside America, the legal climate is works. Partners so far include the Associat­
series of artworks by Andy Warhol, which mostly harsher for tech firms. The Euro­ ed Press, Axel Springer (owner of Bild and
had altered a copyrighted photograph of pean Union, home to Mistral, a hot French Politico), Le Monde and Spain’s Prisa Media.
Prince, a pop star, were insufficiently Al company, has a limited copyright excep­ News Corp, which owns the Wall Street
transformative to constitute fair use. tion for data-mining, but no broad fair-use Journal and Sun among other titles, said in ►►
 The Economist April 20th 2024 Business 53

► February it was in “advanced negotiations’* clam chowder, based on the paper’s restau­ LVMH
with unnamed tech firms. “Courtship is rant reviews. The BBC said last month that
preferable to courtrooms—we are wooing, it was exploring developing Al tools Pups in cashmere
not suing,” said its chief executive, Robert around its 100-year archive “in partnership
Thompson, who praised Sam Altman, or unilaterally”. iMost big publications, in­
OpenAl’s boss. Shutterstock, a photo cluding The Economist, are experimenting
BERLIN
library, has licensed its archive to both behind the scenes.
OpenAI and Meta, the social-media em­ It is too early to say if audiences will A titan of luxury sizes up
pire that is pouring resources into Al. Red­ take to such formats. Specialised Al tools his heirs apparent
dit and Tumblr, two online forums, are re­ may also find it difficult to compete with
portedly licensing their content to Al firms the best generalist models. OpenAl’s Bernard arnault likes to describe
as well. (The Economist Group, our parent ChatGPT outperforms Bloomberg’s Al LVMH as une affaire de famille. The
company, has not taken a public position even on finance-specific tasks, according world’s richest man calling the €4oobn
on whether it will license our work.) to a paper last year by researchers at ($425bn) luxury empire, of which he is
Most rights-holders are privately pessi­ Queen’s University, in Canada, and JPMor­ chief executive, chairman and controlling
mistic. A survey of media executives in 56 gan Chase, a bank. But licensing content to shareholder, “a family business” is both a
countries by the Reuters Institute found tech firms has its own risks, points out humblebrag and true. All five of his chil­
that 48% expected there to be “very little” James Grimmelmann of Cornell Universi­ dren work for him. And at LVMH’s annual
money from Al licensing deals. Even the ty. Rights-holders “have to be thinking general meeting on April 18th, after we
biggest publishers have not made a for­ very hard about the degree to which this is published this, two of his sons (Alexandre
tune. Axel Springer, which had revenue of being used to train their replacements”. and Frederic) are poised to join Delphine
€3.9^ ($4.ibn) in 2022, will reportedly and Antoine, his eldest offspring from his
earn “tens of millions of euros” from its Fake it till you make it first marriage, on its board. Only 26-year-
three-year deal with OpenAI. The new questions raised by Al may lead to old Jean, the youngest, does not have a
“There is not a big licensing opportuni­ new laws. “We’re stretching current laws board seat (yet).
ty. I don’t think the aim of [the Al models] about as far as they can go to adapt to this,” Arnault /vrecan head LVMH for anoth­
is to provide alternatives to news,” says says Mr Grimmelmann. Last month Ten­ er five years. In 2022 shareholders, who
Alice Enders of Enders Analysis, a media­ nessee passed the Ensuring Likeness Voice credited the then-73-year-old with minting
research firm. The licensing deals on offer and Image Security (ELVIS) Act, banning their fortunes as well as his own (see chart),
are “anaemic”, says Mr Peters of Getty. unauthorised deepfakes in the state. But happily amended the company’s by-laws
“When companies are...saying, ‘We don’t Congress seems more likely to let the to raise the mandatory retirement age for
need to license this content, we have full courts sort it out. Some European politi­ the CEO from 75 to 80. The wolf in cash-
rights to scrape it,’ I think it definitely cians want to tighten up the law in favour mere, as the billionaire is known thanks to
diminishes their motivations to come to­ of rights-holders; the EU’s directive on dig­ his killer dealmaking instincts, is showing
gether and negotiate fair economics.” ital copyright was passed in 2019, when no signs of letting up. But the boardroom
Some owners of copyrighted material generative Al was not a thing. “There is no reshuffle and other recent job moves sug­
are therefore going it alone. Last year Get­ way the Europeans would pass [such a di­ gest the succession plans for his lupine
ty launched its own generative Al, in part­ rective] today,” says Mr Sag. litter are well under way.
nership with Nvidia, a chipmaker. Getty’s Another question is whether copyright Last year Delphine took over as head of
image-maker has been trained only on will extend to Al-made content. So far Christian Dior, the iconic fashion house
Getty’s own library, making it “commer­ judges have been of the view that works which is LVMH’s second-largest brand (and
cially safe” and “worry-free”, the company created by Al are not copyrightable. In which had a sparkling run under Pietro
promises. It plans to launch a video-maker August an American federal court ruled Beccari, who quadrupled sales in five years
this year, powered by Nvidia and Runway, that “human authorship is a bedrock and was recently put in charge of Louis
another Al firm. As well as removing copy­ requirement of copyright”, dismissing a re­ Vuitton, the group’s crown jewel). Antoine
right risk, Getty has weeded out anything quest by a computer scientist to copyright is now chief executive of the family hold­
else that could get its customers in trouble a work of art he had created using Al. This ing company which controls LVMH. Alex­
with IP lawyers: brands, personalities and may change as A Is create a growing share andre is the de facto number-two at Tiffa­
less obvious things, from tattoo designs to of the world’s content. It took several de­ ny & Co, a jeweller. Frederic and Jean have
firework displays. Only a small percentage cades of photography for courts to recog­ senior roles in the group’s watch business. ►►
of Getty’s subscribers have tried out the nise that the person who took a picture
tools so far, the firm admits. But Mr Peters could claim copyright over the image.
hopes that recurring revenue from the ser­ The current moment recalls a different In Paris, no match
vice will eventually exceed the “one-time legal case earlier this century. A wildlife
royalty windfall” of a licensing deal. photographer tried to claim copyright over
A number of news publishers have photographs that macaque monkeys had
reached a similar conclusion. Bloomberg taken of themselves, using a camera he had
said last year that it had trained an Al on its set up in an Indonesian jungle. A judge
proprietary data and text. Schibsted, a big ruled that because the claimant had not
Norwegian publisher, is leading an effort taken the photos himself, no one owned
to create a Norwegian-language model, the copyright. (A petition by an animal­
using its content and that of other media rights group to grant the right to the mon­
companies. Others have set up chatbots. keys was dismissed.) Generative Al prom­
Last month the Financial Times unveiled ises to fill the world with content that lacks
Ask FT, which lets readers interrogate the a human author, and therefore has no
paper’s archive. The San Francisco Chroni­ copyright protection, says Mr Hunter of
cle's Chowbot, launched in February, lets King’s College. “We’re about to move into Source: LSEG Workspace
readers seek out the city’s best tacos or the infinite-monkey-selfie era.” ■
54 Business The Economist April 20th 2024

Erwan Rambourg of HSBC, a bank, sees and Jay-Z, a rapper. The third is a collegial foreshadowed the slowdown by talking of
three possible succession scenarios. One is approach in which the five scions run five “normalisation” following a period of post­
for the 49-year-old Delphine, who since divisions of the group. pandemic revenge shopping for bling.
2000 has worked her way up through Dior If Mr Arnault has made up his mind, he This first-quarter disappointment may,
and Vuitton, to inherit the top job from her is keeping his decision to himself. Either though, prove to be a blip. And Mr Ar­
father. Another is the enthronement of 31- way, he will hand over an enviable busi­ nault’s new normal could still mean rude
year-old Alexandre, who did well as boss of ness. True, after a stellar 2023, when sales health. Fabbio Cereda of GAM, an asset
Rimowa, a German luggage-maker that he rose by 9%, revenues in the first quarter of manager, expects global luxury sales to
persuaded his father to buy. He is now 2024 did dip by 2% year on year, to €2ibn, expand by 6-7% annually in the next few
jazzing up Tiffany’s old-fashioned image chiefly owing to softening demand from years—and LVMH to keep gaining market
through collaborations with superstars Chinese shoppers worried about their share. A tidy inheritance, for whichever
such as Beyonce, an American pop icon, country's economy. In January Mr Arnault Arnault fils or fille prevails. ■

BARTLEBY
The lessons of woke Scrabble
How to combine heritage and innovation

U’T’HICK”, SCOFFED the headline on TBS Business School Barcelona and fellow those who thought it had been estab­
1 the Daily Mail website on April researchers, the authors showed people lished recently gave them the same
9th, in response to the news that Scrab­ two logos for an unfamiliar chocolate ratings. Heritage can command a premi­
ble has had an overhaul. In some parts of company, one with an old-school font and um but it can also be a prison.
the world the word-play game has been a black-and-white photo of a building, the These trade-offs are also visible in a
relaunched with a double-sided board; other with a more modern font and a paper by Giulia Cancellieri of Ca’ Foscari
one side now shows a new, simpler de­ picture of a contemporary office. Partici­ University of Venice, Gino Cattani of
sign that is meant to be less intimidating pants were willing to pay more for the New York University and Simone Ferria-
and more inclusive than the original. brand that had apparently been around for ni of the University of Bologna, which
The idea that Scrabble needs to be aeons (five points but really handy if you looks at the programming decisions
made less competitive in order to be have a lot of vowels). made by Italian opera houses. Directors
attractive to Gen Z was always going to But a rich history—even an entirely of such cultural institutions have to
make some people rather vexed (16 fictional one—also makes it harder to balance respect for the traditional canon
points). “Next, they’ll turn to chess, but make changes. In another study, by Minju with a desire to put on original produc­
with only one piece each and only two Han of Singapore Management University tions; in management terms, they have
squares on the board,” ran one typically and her co-authors, people were told to innovate while being true to their qi
balanced reader comment. Rants about about a made-up cosmetics company. (which is not the right word but does
snowflakes and wokeness aside, the new Some heard it had been founded in 1917, give you 11 points and gets rid of that
version of the game, which Mattel is others that it had been established 100 stranded “q”).
introducing outside North America, years later. Each group then tested two The researchers examined in partic­
looks like a perfectly good solution to a hand creams, one ostensibly made to the ular how attendance was affected by
common strategic problem: how to make original formula and the other a newly reinterpretations of classic operas. They
changes to much-loved products. developed product. Even though the categorise these changes depending on
Reams of innovation research focus cream was the same in every instance, whether they are more cosmetic (the plot
on the need for managers to draw on people who thought the firm had been of “La Boheme” remains unchanged, for
diverse sources of thinking. The more founded in the early 20th century rated example, but takes place in a Dunkin’
you rely on a group of the same old faces the new product as inferior to the original; Donuts) or more radical (Mimi has in­
for new ideas, the more you constrain credibly warm hands, say). They find
the chances of breakthroughs. To take that opera-goers liked novelty but that
one example among many, a recent they reacted differently depending on its
paper by Paul Vicinanza of Stanford extent: season-ticket holders, who were
University and his co-authors analysed more familiar with the classics, were less
the emergence of prescient ideas in tolerant of radical changes whereas
court rulings, earnings calls and speech­ single-ticket visitors were keener on
es by American politicians. It found that them. Freedom to innovate depends in
such ideas tended to come from the part on how much you depend on loyal,
periphery. But the perils of entrenched repeat customers.
thinking can also apply to customers. If Given all these pitfalls, Mattel’s in­
the people who buy your products and novation works well. It allows tradition­
services view them as traditional, they alists to play the game they grew up with
are more likely to resist changes. while also permitting an experiment that
Such resistance is most obvious for might bring in new players. Despite the
brands with a long heritage and a loyal sound and fury, it is all rather elegant
following. Consumers like the notion of (which gives you a bingo, 58 points and
longevity. In a study by Fabien Pecot of total, annihilating victory).
The Economist April 20th 2024 Business 55

Business and geopolitics legations and inaccurate assertions”. WuXi

Biologies says it “has not, does not and will
The health-care horserace not pose any national-security risk to the
US or any other country”.
Western customers have not yet sev­
ered ties with the WuXi companies, says
Lila Hope, a lawyer specialising in biotech
partnerships at Cooley. Some drugmakers
America wants to nobble Chinese biotech are reportedly sounding out alternative
suppliers from India, a big provider of
American health-care costs are similar services. But that would require a
sky-high; as treatments get pricier and Bio insecure thumbs-up from American regulators, who
the number of patients swells owing to an Share prices, January 1st 2024=100 have longstanding concerns about Indian
ageing population, they are getting higher. companies’ lax quality standards.
Chinese biotechnology is increasingly so­ Jefferies, an investment bank, reckons
phisticated and, as its companies gain that replacing Chinese capacity would
scale, getting cheaper. A growing number take big Western drug firms at least five
of American drugmakers, from startups to years and almost certainly end up costing
big pharma, rely on firms like WuXi App- more. For biotech startups, which tend to
Tec and WuXi Biologies, which conduct rely on Chinese partners with proven re­
drug research on behalf of clients and cords to save time and money on research
manufacture compounds used in drug­ and manufacturing, the BIOSECURE bill
making. MGI Tech, a maker of gene-se­ could be an existential threat. According to
quencing machines, is offering American a survey conducted in March by BioCentu­
hospitals kit that is cheaper to buy and half ry, a consultancy, biotech bosses and their
as expensive to run as American-made al­ investors expect a slowdown in drug devel­
Source: LSEG Workspace
ternatives. A match made in heaven? opment in the event of its passage.
Not to America’s Congress. A bill cur­ Cutting ties with the lawmakers’ sec­
rently before the Senate would forbid the in the past two and a half months. ond target—China’s genomics industry—
federal government from buying health­ The knock-on effects for the Chinese would have a less immediate impact on
care products from companies that do firms’ American customers are also likely American firms. MGI Tech is only just en­
business with partners like the WuXi sister to be profound. Start with the contract tering the American market for gene-se­
firms and MGI Tech. A bipartisan group of manufacturer-researchers. WuXi is to big quencers, having settled a patent dispute
lawmakers in the House of Representa­ pharma what Foxconn, the Taiwanese as­ with its bigger American rival, Illumina, in
tives is pushing for the BIOSECURE act, sembler of iPhones, is to Apple—a high- 2022. BGI Genomics, which sequences
which would do much the same. quality supplier entrusted with sensitive IP. more human genomes than any other com­
The politicians worry about American It says its clients include the world’s 20 pany (and is also named in the BIOSECURE
health data falling into the hands of the biggest drugmakers. Dozens of American bill), makes just 3% of its profits in Ameri­
Chinese authorities. They also fret about pharma firms have notified investors that, ca. But both Chinese firms bring welcome
American intellectual property (IP), forex- should the BIOSECURE bill pass, they may competition to a highly concentrated in­
ample in the form of drug recipes that big be unable to meet demand for their pro­ dustry. Despite being blocked by trust­
pharma shares with contract manufactur­ ducts or to complete clinical trials on busters from acquiring a rival in 2019, Illu­
ers, flowing to Chinese rivals. And they are schedule. WuXi AppTec says that the pro­ mina has 80% of the global market for
concerned about American money going posed legislation “relies on misleading al- high-end gene-sequencers.
to Chinese firms that collaborate with the MGI Tech’s American subsidiary, Com­
People’s Liberation Army (PLA) and with plete Genomics, says it “is not a sequenc­
the Chinese government’s repression of ing-service provider and does not have ac­
Uyghurs, an ethnic minority. Should the cess to, collect, or maintain genetic data”.
bills’ sponsors succeed, America’s patients Independent investigators it brought in to
may be left bearing some of the costs. inspect its sequencers have confirmed that
Despite irreconcilable differences on the company cannot access patient data
most other subjects, Democrats and Re­ through the devices. BGI Group says that
publicans are united in their dislike of the allegations made in the BIOSECURE
China. Last month the Senate version of bill that it collects, stores and analyses per­
the legislation cleared the relevant com­ sonal genetic information for the purpose
mittee by n votes to one. Investors seem to of infringing human rights, that it supports
believe it has a good chance of becoming the surveillance of minorities and that it is
law. The share price of WuXi AppTec, controlled by the Chinese government or
which generates two-thirds of its revenues the PLA are all “false”.
in America, has fallen by 40% since the The law, if passed, would almost cer­
BIOSECURE bill was introduced in the tainly face legal challenges from the Chi­
House in late January (see chart). WuXi nese firms and, maybe, their American cli­
Biologies, half of whose sales come from ents. It may be watered down, especially
American customers, has lost more than once big pharma’s lobbyists on Capitol
50% of its value. MGI Tech has lost more Hill get to work on it. But the anti-Chinese
than a third. The three companies, which sentiment guiding its congressional spon­
the House bill name-checks, have shed a sors is not going away—even if that spells
combined $22bn in market capitalisation In Congress’s crosshairs trouble for American health care. ■
56 Business The Economist April 20th 2024

SCHUMPETER
A merica, Ink

Shareholder letters reveal a lot about how CEOs see the world

ciaries of the artificial-intelligence (Al) boom—Amazon and

Microsoft, which provide the computing power; Nvidia, which
supplies them with Al chips; and xMeta, whose advertising busi­
ness has been strengthened by Al. It will be harder for less techie
firms. Unless they, too, show strong earnings growth, the market’s
mood may sour.
When it comes to Al, the big question on earnings calls will be
to what extent big tech’s investments in Al infrastructure and ser­
vices are in fact generating higher revenues. In his letter, xMr
Dimon indulges in the hype. Al, he writes, may be as transforma­
tional as “the printing press, the steam engine, electricity, com­
puting and the internet”. But he also makes clear it is still early
days. His bank, JPxMorgan Chase, appears to be experimenting
with “generative” Al, the type that has grabbed attention in the
past 17 months, rather than deploying it at scale. Mr Jassy
describes a three-layer system of building blocks that Amazon’s
cloud-computing arm, AWS, is creating to help customers train
generative-Al models, feed their data into existing ones and
develop Al-related applications. For such services to make real
money, however, big firms like JPMorgan Chase must move from
experiments to deployment.
Look beyond big tech, propelled by the tailwinds of Al, and
CHUMPETER LIKES to write—and receive—handwritten let­ bosses’ main concern is the business cycle. In recent weeks expec­
S ters. When he got out his pen last year and wrote to Larry Fink,
boss of BlackRock, he explained to the passive-investing billion­
tations of a soft landing have given way to those of a “no landing”:
growth and inflation staying higher for longer, keeping long-term
aire that he was doing so because he believed they shared a mutu­ interest rates elevated. If those forecasts come true, investors will
al interest: letter-writing. Your columnist went so far as to use a be asking whether revenues and profits can grow fast enough to
John Donne quote, “letters mingle souls”, to elicit a response. Evi­ offset the drag of higher rates. If not, fears of stagflation, seeming­
dently soul-mingling, whatever its merits in Elizabethan England, ly put to rest last year, may resurface. On this score, xMr Dimon
is not the done thing in Hudson Yards. Mr Fink agreed to an sounds almost prophetic. Consumer spending, and thus the
interview but not, sadly, to an exchange of correspondence. American economy, have remained resilient, he writes, partly
The personal touch is not quite dead, though. You can see that thanks to government largesse. But sloshing buckets of public
in Mr Fink’s latest letter to shareholders, as well as those of War­ money into clean-energy investments, military spending and so
ren Buffett, America’s most celebrated investor, and Jamie Dimon, on risks making inflation stickier—and keeping rates higher—
Wall Street’s top banker. Mr Fink, to explain the importance of re­ than markets expect. Adding to the uncertainty is “one of the most
tirement savings, tells an uplifting story about his late mum and treacherous geopolitical eras” since the second world war.
dad. xMr Buffett writes of his sensible (and now very rich) sister, Days after Mr Dimon’s letter was published, his words came
Bertie. Mr Dimon, though hardly heart-on-sleeve, sounds like he back to haunt him. Fears of a long spell of higher interest rates
carries the cares of the world on his shoulders. The least personal contributed to a rare slump in JPMorgan Chase’s share price on
is Amazon’s Andy Jassy, who in a shareholder letter on April 11th April 12th, decent first-quarter results notwithstanding. Mean­
came across as an Amazonian to the marrow of his bones. No mat­ while, tensions in the xMiddle East put upward pressure on oil
ter. The day the letter was published his firm’s stockmarket value prices, further stoking fears of inflation. Mr Jassy also alluded to
soared by $3obn to a record high of almost $2trn. That is an ROI— economic uncertainty in inflationary times. Though consumers
return on ink—of $6m a word. For shareholders, pure poetry. continue to spend, he warns shareholders, they are doing so care­
There is more to these letters than self-publicity. They give a fully. To save money, people are trading down whenever they can.
sense of how America’s corporate bigwigs see the world. Two let­
ters, from xMessrs Dimon and Jassy, are particularly relevant as the The write stuff
country enters the spring earnings season. After three Goldilocks Mr Dimon and xMr Jassy lead giant companies. The bigger a busi­
months from January to March, when the stockmarket rallied on ness, the more it tends to benefit from faster economic growth.
hopes of lower inflation, falling interest rates and a soft landing, The richer it is, the less it fears an interest-rate crunch that could
they are less upbeat than you might expect. curtail its access to capital. Other large, deep-pocketed firms,
The main pressure on companies in this round of results will such as oil producers and obesity-drug sellers, may reinforce big
be to prove their worth. Buoyed by expectations of lower interest tech’s and big banks’ hopeful earnings narrative. Smaller, more
rates, the recent rally has lifted the share prices of the big compa­ indebted ones will struggle if their interest costs do not fall.
nies that make up the S&P 500 index. The index’s ratio of price to In business, the worse your balance-sheet, the higher the inter­
earnings looks high compared with the average of the past five est-rate risk. That is true in society at large. As Mr Dimon points
years. Yet inflation has not fallen as fast as hoped—and therefore out, nearly 40% of Americans do not have $400 in savings to deal
nor have rates. For the lofty valuations to be justified, in other with emergency payments such as medical bills or car repairs. His
words, earnings must rise. That should be easy enough for benefi­ was not a cheerful letter. It was a bleakly powerful one. ■
The Economist April 20th 2024 57

Finance & economics

Earning power likely to be depressed or say they were as­

signed the wrong sex at birth. They are less
Winning the generation game likely to drink, have sex, be in a relation­
ship—indeed to do anything exciting.
Americans aged between 15 and 24 spend
just 38 minutes a day socialising in person
on average, down from almost an hour in
KA LA MATA AND NEW YORK the 2000s, according to official data. Mr
The world economy has been kind to today’s youngsters Haidt lays the blame on smartphones, and
the social media they enable.
Generation z is taking over. In the the high-inflation 1920s came to detest ris­ His book has provoked an enormous re­
rich world there are at least 250m peo­ ing prices. Americans who lived through action. On April 10th Sarah Huckabee
ple born between 1997 and 2012. About half the Depression tended to avoid investing Sanders, the governor of Arkansas, echoed
are now in a job. In the average American in the stockmarket. Mr Haidt’s arguments as she outlined
workplace, the number of Gen Z-ers Many argue that Gen Z is defined by its plans to regulate children’s use of smart­
(sometimes also known as “Zoomers”) anxiety. Such worriers include Jonathan phones and social media. Britain’s govern­
working full-time is about to surpass the Haidt, a social psychologist at New York ment is considering similar measures. But
number of full-time baby-boomers, those University, whose new book, “The Anxious not everyone agrees with Mr Haidt’s thesis
born from 1945 to 1964, whose careers are Generation”, is making waves. In some (see Science & technology section). And
winding down (see chart 1 on next page). ways, Gen Z-ers are unusual. Young people the pushing and shoving over Gen Z’s anxi­
America now has more than 6,000 Zoomer today are less likely to form relationships ety has obscured another way in which the
chief executives and 1,000 Zoomer politi­ than those of yesteryear. They are more cohort is distinct. In financial terms, Gen Z
cians. As the generation becomes more in­ is doing extraordinarily well. This, in turn,
fluential, companies, governments and in­ is changing its relationship with work.
ALSO IN THIS SECTION
vestors need to understand it. Consider the group that preceded Gen
Pundits produce a lot of fluff about the 59 Buttonwood: Smaller stockmarkets Z: millennials, who were born between
cohort. Recent “research” from Frito-Lay, a 1981 and 1996. Many entered the workforce
60 China’s misleading economic growth
crisp-maker, finds that Gen Z-ers have a at a time when the world was reeling from
strong preference for “snacks that leave 60 How to use frozen Russian assets the global financial crisis of 2007-09, dur­
remnants on their fingers”, such as cheese ing which young people suffered dispro­
61 Pricey petrol is here to stay
dust. Yet different generations also display portionately. In 2012-14 more than half of
deeper differences, in part shaped by the 62 Citigroup’s surprising turnaround Spanish youngsters who wanted a job
economic context in which they grow up. could not find one. Greece’s youth-unem­
63 Free exchange: Debt crises
Germans who reached adulthood during ployment rate was even higher. Britney ►►
58 Finance & economics The Economist April 20th 2024

Spears’s “Work Bitch**, a popular song re­ ates have more debt than before. In reality,
leased in 2013, had an uncompromising You're livin' the life though, Gen Z-ers are coping because they
message for young millennials: if you want earn so much. In 2022 Americans under 25
good things, you have to slog. Youth-unemployment rate*, % 0 spent 43% of their post-tax income on
Gen Z-ers who have left education face housing and education, including interest
very different circumstances. Youth unem­ on debt from college—slightly below the
ployment across the rich world—at about average for under-25s from 1989 to 2019.
13%—has not been this low since 1991 (see Bolstered by high incomes, American
chart 2). Greece’s youth-unemployment Zoomers’ home-ownership rates are higher
rate has fallen by half from its peak. Hotel­ than millennials’ at the same age (even if
iers in Kalamata, a tourist destination, they are lower than previous generations’).
complain about a labour shortage, some­ What does this wealth mean? It can
thing unthinkable just a few years ago. 1985 90 2000 10 20 23 seem as if millennials grew up thinking a
Popular songs reflect the Zeitgeist. In 2022 job was a privilege, and acted accordingly.
the protagonist in a Beyonce song boasted, They are deferential to bosses and eager to
United States, median hourly earnings1,
“I just quit my job”. Olivia Rodrigo, a 21- % increase on a year earlier
please. Zoomers, by contrast, have grown
year-old singer popular with American up believing that a job is basically a right,
Age group —16-24 25-54 — 55+
Gen Z-ers, complains that a former love in­ 15
meaning they have a different attitude to
terest’s “career is really taking off”. work. Last year Gen Z-ers boasted about
Many have chosen to study subjects “quiet quitting”, where they put in just
that help them find work. In Britain and enough effort not to be fired. Others talk
America Gen Z-ers are avoiding the hu­ of “bare minimum Monday”. The “girl­
manities, and are going instead for more boss” archetype, who seeks to wrestle cor­
obviously useful things like economics and porate control away from domineering
engineering. Vocational qualifications are T T I 1 ’1" I T ] J I I""l‘ TT FT I f f 1" r T ] I I ' H men, appeals to millennial women. Gen Z
also increasingly popular. Young people 1998 2005 10 15 20 24 ones are more likely to discuss the idea of
then go on to benefit from tight labour *15 to24 yeai olds ’Nominal wages. 12 month moving average being “snail girls”, who take things slowly
Sources: OECD; f ederal Resave Bank ol Atlanta: the Economist
markets. Like Beyonce’s protagonist, they and prioritise self-care.
can quit their job and find another one if The data support the memes. In 2022
they want more money. come by generation, after accounting for Americans aged between 15 and 24 spent
In America hourly pay growth among taxes, government transfers and inflation 25% less time on “working and work-relat­
16- to 24-year-olds recently hit 13% year on (see chart 4). Millennials were somewhat ed activities” than in 2007. A new paper
year, compared with 6% for workers aged better off than Gen X—those born be­ published by the IMF analyses the number
25 to 54. This was the highest “young per­ tween 1965 and 1980—when they were the of hours that people say they would like to
son premium” since reliable data began same age. Zoomers, however, are much work. Not long ago young people wanted
(see chart 3). In Britain, where youth pay is better off than millennials were at the to work a lot more than older people. Now
measured differently, the average hourly same age. The typical 25-year-old Gen Z-er they want to work less. According to analy­
pay of people aged 18-21 rose by an aston­ has an annual household income of over sis by Jean Twenge of San Diego State Uni­
ishing 15% last year, outstripping pay rises $40,000, more than 50% above baby­ versity, the share of American i2th-graders
among other age groups by an unusually boomers at the same age. (aged 17 or 18) who see work as a “central
wide margin. In New Zealand the average Gen Z’s economic power was on dis­ part of life” has dropped sharply.
hourly pay of people aged 20-24 increased play at a recent concert by Ms Rodrigo in Another consequence is that Gen Z-ers
by 10%, compared with an average of 6%. New York. The mostly female teenagers are less likely to be entrepreneurs. We esti­
Strong wage growth boosts family in­ and 20-somethings in attendance had paid mate that just 1.1% of 20-somethings in the
comes. A new paper by Kevin Corinth of hundreds of dollars for a ticket. Queues for EU run a business that employs someone
the American Enterprise Institute, a think­ merchandise stalls, selling $50 T-shirts, else—and in recent years the share has
tank, and Jeff Larrimore of the Federal Re­ stretched around the arena. iMs Rodrigo drifted down. In the late 2000s more than
serve assesses Americans’ household in­ will have no trouble shifting merchandise 1% of the world’s billionaires, as measured ►►
in other parts of the world, as her tour
moves across the Atlantic. That is in part
Now you'll watch me bloom H~l because Gen Z-ers who have entered the He's got money, but not too much 0
United States,full-time workplace are earning good money United States, median income after
employment by generation, m throughout the rich world. In 2007 the av­ taxes and transfers*, $ 000,2019 prices
_____________________________________________ 60 erage net income of French people aged
Boomer (born Millennial 16-24 was 87% of the overall average. Now
it is equal to 92%. In a few places, including
Croatia and Slovenia, Gen Z-ers are now
bringing in as much as the average.
Some Gen Z-ers protest, claiming that
higher incomes are a mirage because they
do not account for the exploding cost of
Millennial (1981-96) 10
college and housing. After all, global house
prices are near all-time highs, and gradu-
0
-i-------1------ 1--- 1----1------ 1--- 1-------1----1------ 1---- 1------1----1------ 1---- r—!------------

15 20 30 40 50 60 70 80 89
We’re hiring an economics writer. Journalistic
Age, years
1994 2000 05 10 15 20 23 experience is not necessary; the ability to write clearly
Source: Federal Reserve ‘Adjusted by household
and a thorough understanding of economics are crucial.
Sources: Census Bureau: Glassdoor working paper. Feb 2024 sue. data from 1964 2023
For more information visit economist.com/econwriter
 The Economist April 20th 2024 Finance & economics 59

► by Forbes, a magazine, were millennials. in the recent past. Or consider the Bill­ sions always do. Artificial intelligence
Back then pundits obsessed over ultra­ board Hot 100, measuring America’s most could destabilise the global economy, even
young tech founders, such as Mark Zuck­ popular songs. In 2008, 42% of hits were if youngsters may in time be better placed
erberg (Facebook), Patrick Collison sung by millennials; 15 years later only 29% to benefit from the disruption. For now,
(Stripe) and Evan Spiegel (Snapchat). To­ were sung by Gen Z-ers. Taylor Swift, the though, Generation Z has a lot to be happy
day, by contrast, less than 0.5% on the world’s most popular singer-songwriter, ti­ about. Between numbers at Madison
Forbes list are Zoomers. Who can name a tled her most famous album “1989”, after Square Garden, Olivia Rodrigo sits at the
famous Gen Z startup founder? the year of her birth. The world is still wait­ piano and counsels her fans to be thankful
Gen Z-ers are also producing fewer in­ ing for someone to produce “2004”. for all that they have. “Growing up is fuck­
novations. According to Russell Funk of How long will Generation Z’s economic ing awesome,” she says. “You have all the
the University of Minnesota, young people advantage last? A recession would hit time to do all the things you want to do.”
are less likely to file patents than they were young people harder than others, as reces­ The time and the money. ■

BUTTONWOOD
Was it all a dream?
Why the stockmarket is disappearing

The law of supply and demand is information and strategy favour compa­ institutional investors may blunt some of
one of the first things that students nies with tangible assets, such as machin­ the trend’s more damaging consequenc­
of economics learn. When the price of ery and real estate. When a firm announc­ es. Allocations from such investors to
somethinggoes up, producers bring es it owns a building, competitors can private equity have grown in recent
more to market. What, then, is going on hardly steal the asset. When it comes to years, rising to 10% of their assets in 2023
in global stockmarkets? ideas, research and other intangibles, the from 6% five years earlier, at the same
Global share prices have never been less rival firms know, the better. If a com­ time as allocations to listed equities have
higher, having risen by 14% over the past pany tries to withhold information when dropped by a similar amount. This will
year. At the same time, the supply of listing, it may be undervalued. Worse still, provide households with exposure to
stocks is shrinking. As analysts at JPiMor- it may be breaking the law. privately held investments through their
gan Chase, a bank, note, the pace of People other than company founders pension and mutual funds.
company listings is slower this year than may be worried by the trend, however. But institutional investors will do
last, and last year was already a slow one. Public markets are more transparent than little to improve transparency in private
This means that equity issuance net of private ones. Thus their reduced impor­ markets. One option that might appeal
stock buy-backs so far this year is al­ tance matters not just for investors, but for to regulators is to impose tighter require­
ready negative, at minus $i2obn—the regulators monitoring financial stability ments on large companies that choose
lowest such figure since at least 1999. and analysts assessing the market. Stocks not to list, in order to close the gap be­
Companies including ByteDance, Ope- also still tend to be the cornerstone of tween the rules faced by public and
n Al, Stripe and SpaceX have valuations portfolios for less sophisticated retail private firms. A less coercive option
in the tens or even hundreds of billions investors. Alexander Ljungqvist, Lars would be to reduce the amount of in­
of dollars, and remain private. Persson and Joacim Tag, three economists, formation that companies are forced to
Jamie Dimon, JPMorgan’s boss, is suggest that the disappearance of markets share when they go public.
among those to have voiced concern. He may reduce public support for business­ Unfortunately, such efforts have
identifies demand for environmental, friendly government policies, as voters produced mixed results in the past. The
social and governance reporting and the benefit less from corporate profits. Jumpstart Our Business Startups (JOBS)
pressure of quarterly earnings reports as Might anything be done to revive Act, which was introduced in America in
part of the trend’s explanation. But for stockmarkets? The changing behaviour of 2012, reduced disclosure requirements
the most part, the disappearing stock- for public firms. Although an assessment
market is a side-effect of something in 2015 indicated that it had boosted
more positive for company founders: initial public offerings by 25%, another in
they simply have more options. Private­ 2022 suggested that it had done so by
equity funds managed $8.2trn by the encouraging low-quality offerings that
middle of 2023, according to McKinsey, ended up underperforming the market.
a consultancy—more than twice the As a result, the best hope for stock-
amount in 2018. If founders do not want markets may lie with the greed of priv­
to go public, they now face less pressure ate-equity investors. Public markets still
to do so. There are plenty of funds that provide an unparalleled exit route for
are willing to invest in them regardless. those who would like to turn corporate
Founders have many reasons to stay holdings into ready cash. Bain, another
private. The rise of intangible assets is a consultancy, notes that private-equity
big one. Such assets range from copy­ funds are currently sitting on $3.2trn in
rights, software and other intellectual unsold assets. At some point, end-in­
property to brand recognition. Rene vestors will want the money back. But
Stulz of Ohio State University notes that until then, iMr Dimon is right: shrinking
requirements for disclosure of financial public markets are cause for concern.
60 Finance & economics The Economist April 20th 2024

China's economy Retail sales were surprisingly poor in Conflict finance

March. Consumer confidence remains low.
Manufacturing And the property market’s misery contin­ Drip into torrent
ues. The price of new flats in 70 of China’s
miracles biggest cities fell by 2.2% on average in
March compared with a year earlier, the
steepest drop since 2015, according to Reu­
HONG KONG
ters, a news agency. Sales of newly built A novel idea to make use of frozen
Better growth hides reasons to worry residential housing fell by over a fifth. Russian assets gathers support
The slump in China’s property market
HEN CHINA’S leaders set an eco­ has contributed to falling prices in many FTER RUSSIA destroyed the Trypilska
W nomic-growth target of “around” 5%
for this year, the goal was widely agreed to
related parts of the economy, such as
building materials and housing appliances.
A power plant on April 11th, Ukraine
blamed a lack of anti-missile ammunition.
be ambitious. Now the country looks That has deepened deflation’s grip on the The country’s leaders are also desperate
increasingly likely to meet it. Several for­ economy. Factory-gate prices have now for more financial support. The two short­
eign banks have raised their forecasts. Da­ fallen for 18 months in a row. Consumer ages—of ammunition and money—reflect
ta released on April 16th show the econ­ price inflation, after a brief uptick during different constraints among Ukraine’s al­
omy grew by 5.3% in the first quarter, com­ the lunar new year holiday in February, re­ lies. Whereas the lack of ammunition is
pared with a year earlier—quicker than ex­ mained near zero in March. Declining pric­ mostly the product of limited industrial ca­
pected and faster than the target requires. es are a double-edged sword, as Ting Lu of pacity, the lack of money is the product of
How is this happening? Countries at Nomura, a bank, has pointed out. They limited political will.
China’s stage of development often shift have increased China’s competitiveness In one area, though, there are signs of
towards services. Yet China’s leaders have a abroad, which is one reason why the coun­ progress: over what to do with Russia’s fro­
soft spot for “hard” output. Xi Jinping, the try’s exports have been surprisingly strong. zen assets. After Vladimir Putin invaded
country’s ruler, sees manufacturing as a But if deflation persists it could erode rev­ Ukraine, Western governments quickly
source of both prosperity and security. He enues, making debts harder to bear. It locked down €26obn-worth ($282bn) of
covets what officials call a “complete” in­ might also force companies to cut wages, Russian assets, which have remained fro­
dustrial chain that would free China from which would do nothing to restore house­ zen ever since. Proposals about what to do
reliance on foreign powers for vital techno­ hold morale or spending. with them have ranged from the radical
logical inputs. His latest five-year plan For all the paranoia of China’s leaders, (seize them and hand them over to Uk­
aims to stop the steady decline in manu­ they seem worryingly complacent about raine) to the creative (force them to be re­
facturing’s share of GDP. the danger of deflation. Perhaps they view invested in Ukrainian war bonds). Until re­
The first quarter was consistent with it as a blip, which should not distract them cently, none has found widespread favour
that goal. Manufacturing output grew by from long-term aims to fortify China with Western governments.
6.7% compared with a year ago, faster than against shifts in the global balance of pow­ Could that soon change? On April 10th
the overall economy. High-tech manufac­ er—what xMr Xi calls “changes unseen in a Daleep Singh, America’s deputy national
turing fared even better. China’s leaders century”. Falling prices can, though, turn a security adviser for international econom­
have talked a lot about the need to culti­ passing downturn into a protracted slump. ics, declared that the Biden administration
vate “new quality productive forces”, buzz­ This week’s figures showed that China’s now wanted to make use of interest in­
words that appeared in the monthly statis­ GDP deflator, a broad measure of prices, come on frozen Russian assets in order to
tical press release for the first time. has fallen for four quarters in a row. That “maximise the impact of these revenues,
But even as China weans itself off for­ has not happened since 1999. Or to put it in both current and future, for the benefit of
eign suppliers, it remains reliant on foreign terms Mr Xi might appreciate, it is a Ukraine today”. Six days later David Cam­
buyers. The volume of exports grew by 14% change unseen this century. ■ eron, Britain’s foreign secretary, an­
in the first quarter compared with a year nounced his support, too: “There is an
earlier, according to Zhiwei Zhang of Pin­ emerging consensus that the interest on
point Asset xManagement. Falling prices those assets can be used.”
and a competitive currency have helped. The approach is an elegant one. In­
America’s Bureau of Labour Statistics reck­ come earned on Russia’s foreign holdings
ons the price of goods from China fell by can be seized in a manner that is both legal
2.9% year-on-year in the first quarter. That and practical. xMany of the country’s bonds
is the third-steepest drop on record. have already matured. Cash from redemp­
China cannot rely on strong exports for tion of bonds is held by the depository in
long without provoking a protectionist which it currently sits until it is withdrawn,
backlash from its trading partners. Olaf paying no interest to the owner as per the
Scholz, chancellor of Germany, raised depository’s usual terms and conditions.
fears about Chinese overcapacity when he Any interest earned thus belongs to the de­
met Mr Xi in Beijing on April 16th. Germa­ pository—unless, that is, the state decides
ny used to benefit from China’s economic to tax it at a rate close to 100%.
progress. It sold sophisticated industrial Next, as suggested by The Economist in
goods to China, even as China’s manufac­ February, would be to transfer the net pre­
turers conquered lower-end markets sent value of that income stream to Uk­
around the world. Now the two countries raine. Investing Russia’s cash holdings into
have become rivals in many industries Ger­ five-year German bunds would yield
many holds dear, including chemicals, ma­ €3-3bn a year, enough to service EU debt of
chinery and, of course, cars. about €u6bn at the same maturity. The
China’s reliance on markets abroad re­ rest is financial plumbing: set up a G7-
flects some enduring weaknesses at home. A bit of bounce guaranteed fund that receives the deposi- ►►
 The Economist April 20th 2024 Finance & economics 61

► tories’ incomes on Russian cash, issue that March refiners in India—Russia’s second-
funds debt to the markets and send the biggest buyer since 2022—said they would
proceeds in bulk to Ukraine. no longer welcome tankers owned by Sov­
Although the EU has agreed to seize comflot, Russia’s state-owned shipping
profits from depositories, it has not agreed firm, for fear of Western retribution. Most
to the subsequent steps. Under the bloc’s of the 40-odd tankers subject to sanctions
current plans, the proceeds will be used to by America since October have not gone
pay for Ukrainian ammunition by July if all on to load Russian oil. The reimposition of
goes well, with a small portion set aside to sanctions on Venezuela could further dent
compensate depositories for any Russian supply. America may also decide to better
legal action or retaliation. But many in police its embargo on Iran’s oil sales.
Europe remain suspicious about America’s The biggest supply disruption is delib­
desire to unlock more money through fi­ erate. It is coming from the Organisation
nancial engineering. On April 17th Chris­ of the Petroleum Exporting Countries and
tine Lagarde, president of the European its allies (OPEC+). In November the group
Central Bank, suggested that such propos­ pledged to cut output by 2.2m barrels a day
als face a “very serious legal obstacle”. (b/d), or 2% of global production. Most ob­
A drip of funds would be welcomed by servers had expected that, with prices like­
Ukraine, but a big wodge of cash, as prom­ ly to rise throughout 2024, members would
ised by America’s proposal, would be bet­ take the chance to row back on the cuts. In­
ter still. European politicians would there­ stead, several announced in March that
fore be wise to sign up to it before there is a they would extend them until the end of
new occupant of the White House. ■ June. Russia even said it would deepen its The next Trump voter
cuts by another 471,000 b/d, reducing out­
put to 9m b/d, from 10.8m b/d pre-war. that a rapid rise in the oil price could de­
Oil prices Last year supply growth outside the stroy demand. Dearer crude is pushing
cartel more than made up for the rise in de­ American petrol prices, already at $3.60 a
Explosive material mand. This year non-OPEC output will rise
again—Brazil and Guyana are expected to
gallon, closer to $4. A surge past that point
could shave 200,000 b/d off petrol demand
pump record amounts—but growth will over the summer, estimates JPMorgan
slow. Global oil stocks are already falling. Chase, a bank. Thus OPEC+ may signal its
They will shrink faster this summer, as intention to produce more at its next meet­
Even without war in the Gulf, more holidaymakers in America take to the road. ing. Jorge Leon, a former OPEC analyst now
expensive petrol is here to stay All this is happening at the same time at Rystad Energy, a consultancy, expects
as demand becomes more pressing. iMea- crude to average $90 a barrel in the third
WHEN IRAN’S missiles whizzed to­ sures of manufacturing activity in Ameri­ quarter of the year and $89 in the final
wards Israel on Saturday April 13th, ca, China and Europe have surprised on quarter. Futures markets are even more
oil markets were closed. When they the upside, leading the International Ener­ sanguine: buying crude for delivery in De­
opened on Monday, their reaction was a gy Agency, an official forecaster, to predict cember costs around $85 a barrel.
loud “meh”. Brent crude, the global bench­ that global crude demand will rise by an Even if the tit-for-tat between Israel and
mark, dipped below $90 a barrel. It has average of 1.2m b/d this year, up from the Iran escalates, it is unlikely to change
since hovered around that level (see chart). 900,000 b/d it suggested in October. much. Any reduction in Iran’s exports—
Traders had expected an attack of pre­ Others, including some big traders and worth 1.6m b/d in March—might be bal­
cisely this variety: big enough to cause OPEC itself, reckon demand growth may anced by more pumping from the rest of
concern; obvious enough to be foiled. near or surpass 2m b/d. OPEC. In a worst-case scenario, Iran could
They are now betting that Israel will avoid Where will the oil price go next? If decide to close the Strait of Hormuz, a wa­
anything too rash in response. Yet even if OPEC+ keeps its cuts unchanged, it could terway that connects the Gulf to the Indian
oil prices do not surge, they remain un­ reach $100 within months. But that is not Ocean, through which 30% of the world’s
comfortably elevated and seem likely to an outcome the cartel really wants. Many seaborne oil, and nearly all of the Gulf’s,
rise higher still in rhe summer, when in­ members, not least Saudi Arabia, worry must pass. Yet doing so would anger just
creasing demand amid tight supply will about everyone in the region, and cut off
probably tip the market into deficit. A cast Iran from its sole oil buyer: China. Al­
of decision-makers—from central bankers Russia's revenge though Iran could opt to cause trouble in
to President Joe Biden, who faces re-elec­ Brent crude oil price, $ per barrel less self-harming ways, such as harassing
tion in November—is watching anxiously. ships in the Gulf, this may not have a big
Geopolitical risk explains, in part, why impact. Even the tanker war of the 1980s—
oil prices have risen by a quarter since De­ when hundreds of tankers were attacked—
cember. Brent passed $90 for the first time failed to durably boost prices.
in nearly six months after Israel bombed The most likely scenario, therefore, is
Iran’s consulate in Damascus on April 1st. that oil prices remain tolerable to the
Supply disruptions are playing an even world economy, at somewhere in the re­
bigger role. ^Mexico is slashing shipments gion of $85-90 a barrel, while allowing
in order to produce more petrol at home. A OPEC members to earn juicy margins. Pric­
leaky Scottish pipeline was forced to close. es are unlikely to fall soon, though. And
Turmoil in Libya is disrupting output; war whether such a level is tolerable to Ameri­
in South Sudan could do the same. 2023 2024
can voters, who see gasoline prices adver­
Meanwhile, tougher sanctions on Rus­ Source: LSEG Workspace
tised in big red numbers by the highway
sia are leaving more of its oil stranded. In every day, is another matter entirely. ■
62 Finance & economics The Economist April 20th 2024

Citigroup vices are located; wealth management; and

the American consumer-bank and credit­
House of Fraser card businesses. Citi now details the capi­
tal allocated to each of these and their re­
turns, as well as their revenues and profits.
The reorganisation has cut red tape. Be­
fore, “if you wanted to get something done
NEW YORK
with a client, you had to get the approval of
Wall Street’s biggest loser at last looks to be on the up the corporate-bank chain, and then you
would move to the approval from the geog­
NMANAGEABLE AND uninvestible. ket”. In 2000 Citi was the largest bank in raphy management and then you had to
U That is how investors have long consi­
dered Citigroup. For over a decade the
the world, as measured by its capital base.
Flaws are clear in hindsight. Harmonies
get the approval from the legal entity, from
the CEO of the regional bank,” says Mr Tor­
bank, which was once the largest and most between businesses never materialised. In­ res Cantu. It has cut thousands of jobs.
valuable in America, has been a basket stead, Citi became bloated. Layers of man­ And it has also shed light on performance.
case. It trades at half the value it did in agement obscured what was happening— “We want these business heads to com­
2006, making it the only big American which was, in the mid-2ooos, a vast pete with one another to achieve their re­
bank to fetch a valuation lower than its amount of bad mortgage lending. In 2008 turn targets,” says Mark Mason, chief fi­
peak before the global financial crisis. Pick Citi required more bail-out money than nancial officer at the firm. “Everything is
any measure and Citi is invariably dead any other bank. It laid off 75,000 people, a out in the open now.” What has become
last compared with its rivals. The firm has quarter of its workforce. Its share price, clear is that Citi has a crown jewel: its ser­
more staff than Bank of America, yet which at over $500 in 2007 had valued the vices arm, which uses a sixth of the firm’s
makes only a third of the profit. firm at $27obn, had fallen to less than a capital and has returned 20-25% on that
Its prize for this miserable drubbing is dollar by 2009. After the financial crisis, capital over the past year (excluding the
not a participation trophy, but a consent Citi’s bosses promised to simplify the firm. fourth quarter of 2023, which included sig­
order from regulators instructing it to im­ Assets were sold. But “all of the other re­ nificant restructuring costs). Other busi­
prove internal oversight and change how it structurings we have made, until this one, ness returns are poor or, at best, average.
measures risk. The firm became the laugh­ wanted to preserve that idea [of being in all
ing-stock of Wall Street in 2020 when it ac­ businesses in all markets] in some way or Get the polish out
cidentally wired $894m to creditors of another,” says Mr Torres Cantu. Ms Fraser wants a bigger crown jewel. Be­
Revlon, a failing company. That Jane Fra­ Ms Fraser has ditched the mission once cause Citi is a global bank, it has an advan­
ser became the first woman to run a Wall and for all. Her first act was to outline tage with corporate clients that operate
Street bank following the mess attached plans to sell 13 consumer banks. Nine are across borders. The bank now hopes to
an asterisk to her appointment. “Glass gone; three are being wound down. Only gain smaller mid-market customers. Ms
cliff” is a term used to describe the phe­ one in Poland, where the process has Fraser would also like to turn around the
nomenon of women being appointed to stalled owing to war in Ukraine, remains. two laggards—banking and wealth man­
top jobs at companies in deep crisis. These cuts have paved the way for the agement—for which she has brought in
It seemed as if Ms Fraser was bound to next phase: restructuring. A tangled mess new blood. Andy Sieg, who ran wealth
fall from that cliff. Some Citi staff grum­ of reporting lines has been replaced by five management at Bank of America, joined in
bled that she was a consultant, not a real businesses that report directly to Ms Fra­ September. Vis Raghavan, the head of
banker, because she spent a decade at ser: markets, which includes debt and JPMorgan Chase’s investment-banking
Me Kinsey before joining the firm in 2004. stock trading; banking, which houses in­ business, will join in the summer.
Those who bought shares on her first day vestment banking; services, which is where Investors are delighted. Citi’s share
in 2021 were choking down annualised re­ Treasury management and securities ser- price has risen by almost twice as much as
turns of -15% by mid-September last year. those of America’s other large banks since
But a remarkable turnaround now appears September. But will the changes produce
under way. On September 13th Ms Fraser the goods? Citi is still under regulatory
announced a restructuring. She later laid scrutiny. The firm’s results from the first
out plans to sack 20,000 people by the end quarter, released on April 12th, were medi­
of 2026, some 7,000 of whom have already ocre; its share price slipped. Just because
been shown the door. Investors seem to be investors can now see how poorly wealth
rediscovering their faith in the firm. Citi’s management and banking are performing
share price rose by more than 50% between does not mean those businesses will im­
September and March, meaning that Ms prove. And talent is expensive. As the firm
Fraser now appears to be on the path to an sacked thousands, Mr Sieg was paid $nm
accolade far more elusive than “first wom­ for his first three months of work.
an to do something”. She may become the There is nevertheless a sense that Citi is
banker who turned around Citi. at last changing. Reflecting on the firm’s
To understand what an achievement decision to abandon its global consumer­
that would be, look to the bank’s creation banking businesses, Anand Selva, the
in 1998. Citi was going to be “everything to firm’s chief operating officer, recalls how
everyone, everywhere”, recalls Ernesto Tor­ “years ago we were competing with all of
res Cantu, who has worked at the bank for these big regional and global banks”. But
22 years and runs its international busi­ as regulations changed, many packed up,
ness. That was its ambition under Sandy leaving just local banks as competitors.
Weill, who was a legend on Wall Street. Mr “You decide where you want to focus...and
Weill had bought and merged financial in­ build scale,” he says. Citi will no longer be
stitutions to form a “financial supermar­ The first woman to turn around Citi? everything, to everyone, everywhere. ■
The Economist April 20th 2024 Finance & economics 63

FREE EXCHANGE
Time for some hardball

The IMF unveils a tough new plan to solve the poor world’s debt crisis

and Suriname, which reached a deal with all its creditors but the
biggest, China. Zambia has waited four years for a deal. Since no
creditor wants a worse bargain than any other, there has been next
to no principal debt relief during the worst debt crisis in four de­
cades. Four years ago G20 countries signed up to the Common
Framework, an agreement to take equal cuts in restructurings, but
creditors have split over the degree of generosity needed.
The IMF, which usually cannot lend to countries with unsus-
tainably high debts, has been unable to do much. Yet on April 16th
it made a move. It said it would lend to countries that have default­
ed on debts but have not negotiated a deal to restructure all their
debts. The policy is known as “lending into arrears”.
In the past the fund, worried about getting its cash back, has
lent into arrears sparingly and only with the permission of credi­
tors still tussling over restructuring. Now all it is asking for is a
promise from borrowing countries and co-operative creditors that
its cash injections will not be used to pay off the holdouts. The
IMF’s economists have long feared that such a step would antago­
nise problem creditors, which are also countries with stakes in the
fund itself. It seems the fund’s patience has run out: officials want
to get debt restructuring moving.
The new policy has the potential to impose discipline on the
T IS NOW four years since the first poor countries were plunged holdouts. In theory, restructurings work because easing the bur­
I into default because of spiralling costs from covid-19 spending
and investors pulling capital from risky markets. It is two years
den on borrowers maximises creditors’ chances of getting some—
perhaps most—of their money back. The fund lending into arrears
since higher interest rates in the rich world began to put even sharpens the incentive to comply because lenders who hold up ne­
more pressure on cash-strapped governments. But at the spring gotiations face the prospect of not getting anything. They would
meetings of the IMF and the World Bank, held in Washington, DC, be the ones frozen in limbo, while everyone else strikes a deal and
this week, many of the world’s policymakers were acting as if the carries on. The policy also strengthens the hand of debtors. In the
worst debt crisis since the 1980s, by portion of world population past they may have feared walking away from their debts to, say,
affected, had come to an end. After all, the poorest countries in China, which is an easy source of emergency cash even after a de­
the world grew at a respectable 4% last year. Some, such as Kenya, fault. Now if they wish to do so, they will have an alternative lend­
are even borrowing from international markets again. er in the form of the IMF.
In reality, the crisis rolls on. The governments that went bust Getting cash flowing would certainly be good for populations
still have not managed to restructure their debts and dig out of de­ of the troubled countries. Doing so might also keep the fund hon­
fault. As such, they are stuck in limbo. Over time more—and big­ est. Its debt-sustainability analyses are used as a benchmark for
ger—countries could join them. So in between the spring meet­ restructurings, and it may have an incentive to be too optimistic
ings’ embassy dinners and think-tank soirees, the IMF’s board an­ about sustainability, to avoid pushing a borrower into restructur­
nounced a radical new step to deal with the problem. ing limbo. In a process that does not depend on playing down
The core of the difficulty in resolving debt crises has been that poor countries’ problems so as to avoid impossible restructurings,
there are more creditors, with less in common, than in the past. the fund will probably become a better broker, distinguishing be­
Over 70 years of debt restructurings, Western countries and banks tween countries that need debt write-downs and those that just
came to do things a certain way. Now decisions require the assent need a little more liquidity to make their next payment.
of a new group of lenders, some of which see no reason to comply.
Each part of the process, even if it was once a rubber stamp, can be Arrears and tears
subject to a protracted negotiation. The question is whether the IMF can stomach the costs. Its threat
Chief among the new lenders is China. Even though the coun­ will only bring creditors into line if it chooses to make use of its
try is now the world’s biggest bilateral creditor, it has yet to write new powers. But in Washington officials still worry about aggra­
down a single loan. India has doubled its annual overseas lending vating the newer creditors, particularly China, with which the
from 2012 to 2022; it sent $3-3bn to Sri Lanka soon after the coun­ fund prizes its relationship. They might turn their back on co-op­
try was plunged into crisis. The United Arab Emirates and Saudi erative restructurings altogether. Some borrowers could walk
Arabia are in the group, too. They have together lent more than away from the IMF and take bail-outs from elsewhere.
$3obn to Egypt. The Gulf creditors’ preferred method is to depos­ In the end, though, the fund may have little choice. Too many
it dollars at the recipient’s central bank—a form of lending so nov­ countries are in crisis. A clutch of big developing countries that
el that it has never been subject to a debt restructuring before. have avoided default are teetering closer than ever to the edge. To
As a result, the seven countries that have sought restructuring avoid a catastrophe for hundreds of millions of people, interna­
since the start of the pandemic have been unable to strike a deal to tional financiers need a way to get governments out of default be­
whittle down what they owe. Only two small countries have made fore a country like Egypt or Pakistan goes under. Lending into ar­
progress: Chad, which rescheduled rather than reduced debts, rears is the best available tool. ■
64 The Economist April 20th 2024

Science & technology

Computing power though the future will hold limitless expo­

nential growth. This chimes with a view
Al’s next top model shared by many Al researchers called the
“scaling hypothesis”, namely that the ar­
chitecture of current LLMs is on the path to
unlocking phenomenal progress. All that is
needed to exceed human abilities, accord­
ing to the hypothesis, is more data and
Moving beyond today’s LLMs will require some fundamental breakthroughs more powerful computer chips.
Look closer at the technical frontier,
N Al-LAND, technologies move from re­ rumours are to be believed, the next gener­ however, and some daunting hurdles be­
I markable to old hat at the speed of light.
Only 18 months ago the release of
ation of models will be even more remark­
able-able to perform multi-step tasks, for
come evident.

ChatGPT, OpenAl’s chatbot, launched an instance, rather than merely responding to Beauty’s not enough
Al frenzy. Today its powers have become prompts, or analysing complex questions Data may well present the most immediate
commonplace. Several firms (such as An­ carefully instead of blurtingout the first al­ bottleneck. Epoch Al, a research outfit, es­
thropic, Google and Meta) have since un­ gorithmically available answer. timates the well of high-quality textual da­
veiled versions of their own models For those who believe that this is the ta on the public internet will run dry by
(Claude, Gemini and Llama), improving usual tech hype, consider this: investors 2026. This has left researchers scrambling
upon ChatGPT in a variety of ways. are deadly serious about backing the next for ideas. Some labs are turning to the priv­
That hunger for the new has only accel­ generation of models. GPT-5 and other ate web, buying data from brokers and
erated. In March Anthropic launched next-gen models are expected to cost bil­ news websites. Others are turning to the
Claude 3, which bested the previous top lions of dollars to train. OpenAl is also re­ internet’s vast quantities of audio and visu­
models from Open Al and Google on va­ portedly partnering with Microsoft, a tech al data, which could be used to train ever-
rious leaderboards. On April 9th Open Al giant, to build a new $ioobn data centre. bigger models for decades. Video can be
reclaimed the crown (on some measures) Based on the numbers alone, it seems as particularly useful in teaching Al models
by tweaking its model. In the coming about the physics of the world around
weeks Meta is expected to release Llama 3. them. If a model can observe a ball flying
-» ALSO IN THIS SECTION
OpenAl is sure to make a splash at some through the air, it might more easily work
point thereafter when it releases GPT-5, 66 A golden age of locust-busting out the mathematical equation that de­
which may have capabilities beyond any scribes the projectile’s motion. Leading
67 How is screen time affecting children?
current large language model (LLM). If the models like GPT-4 and Gemini are now ►►
 The Economist April 20th 2024 Science & technology 65

► “multimodal”, capable of dealing with va­ more resources, others see signs that the whereas a more primitive model wrould
rious types of data. scaling hypothesis is running into trouble. have forgotten all about the start by the
When data can no longer be found, it Physical constraints—insufficient memo­ time it had got to the end of the song.
can be made. Companies like Scale Al and ry, say, or rising energy costs—place prac­ Transformers can also be run on many pro­
Surge Al have built large networks of peo­ tical limitations on bigger model designs. cessors at once, significantly reducing the
ple to generate and annotate data, includ­ More worrying, it is not clear that expand­ time it takes to train them.
ing PhD researchers solving problems in ing context windows will be enough for Albert Gu, a computer scientist at Car­
maths or biology. One executive at a lead­ continued progress. Yann LeCun, a star Al negie /Mellon University, nevertheless
ing Al startup estimates this is costing Al boffin now at Meta, is one of many who be­ thinks the transformers’ time may soon be
labs hundreds of millions of dollars per lieve the limitations in the current Al mod­ up. Scaling up their context window’s is
year. A cheaper approach involves generat­ els cannot be fixed w ith more of the same. highly computationally inefficient: as the
ing “synthetic data” in which one LL.M Some scientists are therefore turning to input doubles, the amount of computation
makes billions of pages of text to train a a long-standing source of inspiration in required to process it quadruples. Along­
second model. Though that method can the field of Al—the human brain. The aver­ side Tri Dao of Princeton University, Dr
run into trouble: models trained like this age adult can reason and plan far better Gu has come up w’ith an alternative archi­
can lose past knowledge and generate un­ than the best LLMs, despite using less powd­ tecture called Mamba. If, by analogy, a
creative responses. A more fruitful way to er and much less data. “Al needs better transformer reads all of a book’s pages at
train Al models on synthetic data is to have learning algorithms, and we know’ they’re once, xMamba reads them sequentially, up­
them learn through collaboration or com­ possible because your brain has them,” dating its worldview' as it progresses. This
petition. Researchers call this “self-play”. says Pedro Domingos, a computer scien­ is not only more efficient, but also more
In 2017 Google DeepMind, the search tist at the University of Washington. closely approximates the way human com­
giant’s Al lab, developed a model called Al- One problem, he says, is the algorithm prehension works.
phaGo that, after training against itself, by w'hich LLMs learn, called backpropaga- LLMs also need help getting better at
beat the human world champion in the tion. All LLMs are neural networks ar­ reasoning and planning. Andrej Karpathy,
game of Go. Google and other firms now ranged in layers, w'hich receive inputs and a researcher formerly at OpenAl, explained
use similar techniques on their latest LLMs. transform them to predict outputs. When in a recent talk that current LLMs are only
Extending ideas like self-play to new the LLM is in its learning phase, it com­ capable of “system 1” thinking. In humans,
domains is hot topic of research. But most pares its predictions against the version of this is the automatic mode of thought in­
real-world problems—from running a reality available in its training data. If these volved in snap decisions. In contrast, “sys­
business to being a good doctor—are more diverge, the algorithm makes small tweaks tem 2” thinking is slow’er, more conscious
complex than a game, without clear-cut to each layer of the network to improve fu­ and involves iteration. For Al systems, that
winning moves. This is why, for such com­ ture predictions. That makes it computa­ may require algorithms capable of some­
plex domains, data to train models is still tionally intensive and incremental. thing called search—an ability to outline
needed from people who can differentiate The neural networks in today’s LLMs and examine many different courses of ac­
between good and bad quality responses. are also inefficiently structured. Since 2017 tion before selecting the best one. This
This in turn slows things down. most Al models have used a type of neural- would be similar in spirit to how game­
network architecture known as a transfor­ playing Al models can choose the best
More silicon, but make it fashion mer (the “T” in GPT), w'hich allowed them moves after exploring several options.
Better hardware is another route to more to establish relationships between bits of Advanced planning via search is the fo­
powerful models. Graphics-processing un­ data that are far apart within a data set. cus of much current effort. xMeta’s Dr Le­
its (GPUs), originally designed for video­ Previous approaches struggled to make Cun, for example, is trying to program the
gaining, have become the go-to chip for such long-range connections. If a transfor­ ability to reason and make predictions di­
most Al programmers thanks to their abil­ mer-based model w'ere asked to write the rectly into an Al system. In 2022 he pro­
ity to run intensive calculations in parallel. lyrics to a song, for example, it could, in its posed a framew'ork called “Joint Embed­
One way to unlock new capabilities may lie coda, riff on lines from many verses earlier, ding Predictive Architecture” (JEPA), which
in using chips designed specifically for Al is trained to predict larger chunks of text or
models. Cerebras, a chipmaker based in images in a single step than current gener-
Silicon Valley, released a product in March ative-AI models. That lets it focus on glo­
containing 50 times as many transistors as bal features of a data set. When analysing
the largest GPU. xModel-building is usually animal images, for example, a JEPA-based
hampered by data needing to be continu­ model may more quickly focus on size,
ously loaded on and off the GPUs as the shape and colour rather than individual
model is trained. Cerebras’s giant chip, by patches of fur. The hope is that by ab­
contrast, has memory built in. stracting things out JEPA learns more effi­
New models that can take advantage of ciently than generative models, which get
these advances will be more reliable and distracted by irrelevant details.
better at handling tricky requests from us­ Experiments with approaches like
ers. One way this may happen is through xMamba or JEPA remain the exception. Un­
larger “context windows”, the amount of til data and computing pow'er become in­
text, image or video that a user can feed surmountable hurdles, transformer-based
into a model when making requests. En­ models will stay in favour. But as engineers
larging context windows to allow users to push them into ever more complex appli­
upload additional relevant information cations, human expertise will remain es­
also seems to be an effective way of curb­ sential in the labelling of data. This could
ing hallucination, the tendency of Al mod­ mean slower progress than before. For a
els to confidently answer questions with new generation of Al models to stun the
made-up information. world as ChatGPT did in 2022, fundamen­
But while some model-makers race for tal breakthroughs may be needed. ■
66 Science & technology The Economist April 20th 2024

mote sensing mean that some of these en­

vironmental features are getting easier to
detect from space.
By comparing satellite readings with
massive data sets from ground sensors, as
well as the ample historical record, re­
searchers are building statistical models to
better predict which nests pose the great­
est risk. One such model was rolled out in
October 2023 by an FAO commission co-or­
dinating desert-locust work in ten north
and west African countries. It provides
field officers with an online map complete
with probabilities of finding locusts at spe­
cific locations. This will help field scouts
prioritise routes, saving money and time.
Drones can help them cover even more
ground. The FAO and the Hemav Founda­
tion, a Spanish non-profit, have jointly de­
signed dLocust, a portable drone shaped
like a Stealth bomber and launched by
slingshot. It is designed to fly a loop up to
80km long, autonomously snapping high-
Pest control resolution pictures of suspicious greenery.
Field scouts review these by tablet or
Who you gonna call? smartphone and choose which to visit.
Twenty-three dLocust units are in field op­
eration, mostly in Africa.
Attack drones are also in the works.
Kenyan researchers have run experiments
to determine the optimal height for a
Locust-busting is entering a new, more high-tech era drone to unleash a pesticide over its hun­
gry targets. (Spray it too high, and the wind
N THE LIST of plagues inflicted upon the same time, forest environments that were dissipates the deadly mist; spray too low,
I people of Egypt in the Book of Exodus,
only darkness and death get higher billing
once too damp for locusts to lay eggs in are
being transformed through desertification
and some may be wasted). The ideal height
was found to be ten metres.
than locusts. That ranking is apt. Today, into drier habitats where they can thrive. Pesticides, too, are overdue for an up­
Schistocerca gregaria, also known as the Add in hotter temperatures, says Arianne grade. In the panic following the latest up­
desert locust, is considered the most dan­ Cease of Arizona State University, and the surge, some governments carpet-sprayed
gerous migratory pest in the world. Mea­ future looks rosy for the desert locust. organophosphate pesticides, chemicals
sured by the volume of foliage consumed, a Controlling this pest depends on locust that serve as locust nerve agents. The ef­
small swarm can devour as much food in a hunters spotting dens in the desert and fect was as satisfying as it was swift. “You
single day as 35,000 people. In places with snuffing them out early. Patrolling known could more or less see the insects falling
fragile food security, the effect can be dev­ hotspots in the aftermath of rainstorms, dead from the sky,” said Wiin Mullie, an
astating. Outbreaks are regrettably com­ these scouts spray pesticide on smaller environmental toxicologist in Dakar.
mon. As of April 2024 the Food and Agri­ dens by hand or truck, and douse larger Any humans nearby would have felt
culture Organisation (FAO), an agency, was ones by aeroplane. But this work burns up poorly too: such compounds are banned in
monitoring five active outbreaks of 5. gre- time and resources, and is rarely compre­ the EU, Dr Mullie says, because of their
ga?ia in countries near the Red Sea. hensive—especially in countries with lim­ toxicity to other species. In Ethiopia, pesti­
The problem is that swarms grow fast. ited means or ongoing conflicts. In 2018, cides may have killed or scared off billions
In the right conditions, 1,000 locusts can for example, a pair of cyclones lashed rain of honeybees. More targeted chemicals do
become 20,000 within three months, and upon a remote Yemeni desert. As civil war exist, including Novacrid, a fungus-based
160m within a year. The last big upsurge, had left the government powerless and dis­ biopesticide first developed in the 1990s.
which began in the Arabian peninsula in tracted, three generations of desert locusts Somalia, which used Novacrid throughout
2018, lasted three years and affected coun­ were left to breed unobserved. Their de­ the latest upsurge, got its locust problem
tries as far afield as Tanzania and Iran. For­ scendants invaded 12 countries. under control. The problem, however, is
tunately, this invasion also drove invest­ that it costs more than its competitors and
ment into new locust-hunting tools. Some A break in the clouds takes three weeks to kill the insect. This
of this is now beginning to pay off. The resulting disaster also bred innova­ has left many governments hesitant to rely
The desert locust lives in the belt of tion. Keith Cressman of the FAO estimates on it. Better chemicals are needed.
drylands that stretches from Mauritania, 16 significant developments have resulted Such technological advances will not
on the west coast of Africa, to India. The from the upsurge. Among them are tools fix the problem on their own. Locusts
harsh conditions, low in water and vegeta­ that use data to make expeditions more ef­ thrive in conflict zones and under-re-
tion, normally keep its numbers down. But ficient. Desert locusts are creatures of hab­ sourced regions; field agents may well stay
human activity is starting to make their it: females like to lay eggs in soil that is home if they risk being shot at, or if there is
lives more comfortable. Climate change is moist, but not sodden, and juveniles are insufficient power to run their equipment.
bringing heavier storms to deserts, driving more likely to survive if they are surround­ Where there is death and darkness, locusts
greenery in unexpected places. At the ed by ample foliage to eat. Advances in re­ remain close behind. ■
The Economist April 20th 2024 Science & technology 67

Screen time and anxiety we have is quite limited,” admits Matthew

Gentzkow of Stanford University, one of
Time for a digital detox? the authors of the 2018 study. But, he ar­
gues, most points in the same direction as
the circumstantial evidence around timing.
“If you put all that together, I think it’s
enough to say there is a substantial proba­
bility that these harms are large and real.”
Demands grow to restrict young people’s access to phones and social media Much remains uncertain. The best ran­
domised experiments have been done on
wo MONTHS ago Daisy Greenwell spend more time doom-scrolling than hap­ adults, who are not the main objects of
T and Clare Fernyhough set up a Whats-
App group to discuss how to stave off their
py ones do.
A small number of randomised experi­
concern. Most studies focus on Facebook,
which these days is a small part of teens’
young children’s demands for smart­ mental studies are chipping away at the media diet. And they are mostly in Ameri­
phones. After they posted about their causal question. In 2017 Roberto Mosquera ca, which is unlike the countries where
plans on Instagram, other parents wanted of the Universidad de las Americas, and most of the world’s teenagers live. A 72-
in. Now their group, Smartphone-Free colleagues, got a group of Facebook users country study last year by the Oxford In­
Childhood, has more than 60,000 follow­ in America to stay off the platform for a ternet Institute found that Facebook adop­
ers debating how to keep their children week. The abstainers reported being less tion correlated with a small improvement
away from the demon devices—a debate depressed than the control group and took in well-being among the young.
they are naturally conducting on smart­ part in more varied activities; they also People’s relationship with social media
phones of their own. consumed less news. also defies categorisation. The Mosquera
This group, based in Britain, is not the In 2018 researchers at Stanford and experiment found that, although people
only one worried about children’s screen New York University did a similar experi­ said they were happier when they didn’t
time. Last month the state of Florida ment, again in America. After a month use Facebook, they nonetheless valued its
passed a law banning social media for un- away from Facebook their detoxees felt utility at $67 a week—and, after a week of
der-i4S. Britain’s government is reportedly happier than the control group, spent less abstinence, the detoxees valued it even
considering a ban on mobile-phone sales time online, more time with family and more highly. Asking whether social media
to under-i6s.The concerns are summed up friends and were less politically polarised. are good or bad for mental health is the
by a recent book by Jonathan Haidt, “The (Again, they knew less about the news, and wrong question, argues Pete Etchells of
Anxious Generation”, which argues that spent more time watching television Bath Spa University, author of “Unlocked”,
smartphones, and especially the social net­ alone.) The effects on well-being in both a somewhat more upbeat book about
works accessed through them, are causing studies were modest. screen time. Perhaps a better question, he
a malign “rewiring of childhood”. “The really convincing causal evidence says, is: “Why is it that some [children]
In a contentious debate two things are really thrive online? And why is it the case
fairly clear. First, smartphones and social that others...really struggle?”
media have become a big part of child­ Generation gaps Unless that question is answered, ban­
hood. By the age of 12 nearly every child Suicide rates*, by age group, 10- to 59-year-olds ning phones or social media until a later
has a phone, according to research in Brit­ age would simply delay the problem, he
ain. Once they get one, social media is how fears. It is also unclear what should be co­
they spend most of their screen time. vered by such a ban. Social media include
American teens spend nearly five hours a everything from Facebook to the chat
day on social apps, according to polls by function in games like “Fortnite”, points
Gallup. YouTube, TikTok and Instagram out Dr Etchells. Dr Gentzkow, who sup­
are most popular (Facebook, the world’s ports a higher minimum age for some so­
largest social network, is a distant fourth). cial media, warns against limiting all of it.
Second, most agree that in much of the “Actual communication with your
rich world there has been a decline in men­ friends”—by phone, text or video chat—
tal health among the young. The share of “those may well be things we want to en­
American teenagers reporting at least one courage more of,” he says. Most social apps
“major depressive episode” in the past year offer a mixture of functions, which can be
has increased by more than 150% since enjoyed or misused.
2010. Perhaps such terms have simply be­ There are some signs that, while ex­
come less taboo, sceptics suggest. But it is perts ponder how to rein in the worst of so­
more than talk. Across 17 mostly rich coun­ cial media, ordinary users are working out
tries, there has been a sharp rise in suicide how to do so themselves. Posting about
Per 100,000 people, 2019-21*
among teenage girls and young women, 30
oneself in public is becoming less com­
though their suicide rate remains the low­ mon: last year only 28% of Americans said
est of any cohort (see chart). they enjoyed documenting their life on­
Are the phenomena linked? The timing line, down from 40% in 2020, according to
is suggestive: mental health began to slide Gartner, a research firm. Messages are
just as smartphones and social apps took moving from open networks to private
off, in the 2010s. Some studies also suggest chats. O11 Instagram, more photos are now
that children who spend more time on so­ ‘Aushalia, Austria, Belgium, Czech Republic, England, Estonia,
shared in direct messages than on the main
cial media have poorer mental health than Get many, Ireland. Italy. Mexico, Netherlands, Norway. Slovenia. feed, the company says. As middle-aged
lighter users. But such correlations do not South Korea, Sweden, Switzerland. United States and Wales folk identify the problems with the social
’Three-yeai moving average ‘Data unavailable lor five countries
prove causation: it may be, for instance, Source: National statistics
networks they grew up with, youngsters
that depressed, lonely children choose to may already be moving on. ■
68 The Economist April 20th 2024

Culture

Impressionism turns 150 the focus of traditional painting—classical

myths, history and idealised portraits—in
Show me the Monet favour of scenes of contemporary life, in­
cluding the theatre and Paris’s boulevards.
Theirs was a democratic and capitalist
undertaking: the 31 artists who took part in
the Anonymous Society’s show wanted to
PARIS
select which of their works to exhibit and
What the once-derided movement reveals about art today to sell them directly. This was in response
to a government-sponsored Salon put on
he world was not always an arena of lingo of painters in 1874.) That show is now by the Academic des Beaux-Arts, which
T Claude iMonet superfans. “Wallpaper
in its embryonic state is more finished than
the subject of another exhibition, “Paris
1874: Inventing Impressionism”, which re­
screened paintings with a jury and had
conservative taste. Only four paintings
that seascape,” sneered Louis Leroy, an art cently opened at the Musee d’Orsay. In sold during the Anonymous Society’s exhi­
critic, when describing Monet’s “Impres­ September it will travel from Paris to the bition; the company formed to put on the
sion, Sunrise”. The painting of a hazy port National Gallery in Washington, DC. show dissolved within months.
in Normandy was hung in a show put on by Today Impressionist paintings are Viewers regarding these paintings from
the Anonymous Society of Painters, Sculp­ among the most recognisable, beloved and the past can see some parallels with the
tors and Engravers Etc that opened on valuable, so it is easy to forget the shock present. The Impressionists evoked the de­
April 15th 1874. Some of the comments many people felt when first confronted by struction of the natural world, with a pure
about the sketchy style adopted by Monet them. The startled reaction was as much a environment altered by railroads and
and some of his fellow “rebels” were so result of the subject matter as it was the smokestacks. They also painted in the
acerbic that they sound more like put- rough brush work depicting the fleeting shadows of violence and political uncer­
downs from social-media trolls than pro­ quality of natural light. The artists rejected tainty: only a few years after France’s
fessional art commentary. An “appalling defeat in a war with Prussia and a subse­
spectacle of human vanity losing its way to quent insurrection against the govern­
the point of dementia” was how another -> ALSO IN THIS SECTION ment, known as the Paris Commune. The
critic in the 1870s described the new style. way the artists “deliberately or maybe un­
69 Video games, reimagined
The Anonymous Society’s show 150 consciously erased anything having to do
years ago is remembered as the Impress­ 70 The history of crossword puzzles with war from the paintings”, focusing in­
ionist movement’s birth; it was then that stead on “happy scenes of modern life”, is
70 Will interest in Everest ever peak?
the painters were called “Impressionist” by “in itself fascinating and intriguing”, says
Leroy, though the artists would not claim 71 Re-examining the first world war Anne Robbins, co-curator of the show at
the label themselves for another couple of the iMusee d’Orsay. She posits that this is
72 Back Story: Salman Rushdie’s “Knife”
years. (An impression was a sketch, in the not unlike how people are anxious to move ►►
 The Economist April 20th 2024 Culture 69

► on from dislocations wrought by covid-19. has infected the art world, with artists
The Impressionists were also reacting becoming afraid to ruffle feathers and go
to new technology, which influenced the against consensus. In today’s political
creation of art, as it does today. They climate museums are “terrified” to push
worked outdoors, rather than in studios, the envelope, says Leslie Ramos of the
thanks to the invention of portable paint in Twentieth, a firm that advises on art and
tubes. Their pictures were influenced by philanthropy: they have to be “woke but
another innovation: photography. Some not too woke, interesting but not too
other artists tried to emulate photo­ scholarly, not too expensive but not too
graphy’s clarity. But with the Impression­ cheap”. Others blame the internet: a premi­
ists’ thick, visible brushstrokes, it is um is now put on creating large, vibrant
“almost as if they were saying, ‘Look, this is canvases that look good on social media.
paint. This is not photography,”’ says Those paintings by young artists
Philip Hook, author of “The Ultimate Tro­ (called “ultra-contemporary” in today’s
phy”, a history of Impressionism. parlance, according to Clare xMcAndrew of
Arts Economics, a research firm) can sell
Deja vu for six- and seven-figure sums. Here the
Fittingly, the Musee d’Orsay makes good Impressionists also offer a humbling re­
use of innovative tech to present these minder. Of the 31 artists who presented at
works, harnessing virtual reality to imagine the Anonymous Society’s show in 1874,
what the exhibition in 1874 might have fewer than ten are remembered today. A
looked like. Visitors can don a headset and handful are so obscure that the curators
go on a startlingly realistic guided tour. could find virtually nothing about them, Taking it to the next level
You can almost touch the paintings you says Ms Robbins of the Musee d’Orsay.
could have bought back then for 1,000 The odds are that an even smaller pro­ entertainment website, counts more than
francs (if only you had!). Many museums portion of artists working now will be cele­ 70 games in development for film or TV, in­
have tried to use tech to complement their brated in 150 years. As Helena Newman of cluding shows based on “Tomb Raider”
old-fashioned shows and lure in younger Sotheby’s, an auction house, puts it: “Look and “League of Legends” and films based
audiences; this is one of the most success­ at what we see today, and we know in our on “Zelda” and “Minecraft”.
ful attempts to date. bones that only a small amount will stand What explains the enthusiasm for these
This exhibition is about the art world in the test of time.” ■ game-shows? One reason is that Holly­
1874, but it makes you ponder art’s current wood’s favourite source of creative materi­
state. It raises the question of what has al, comic books, is getting boring. For two
happened to the avant-garde today. In go­ Video-game adaptations decades the box office has been ruled by
ing from shocking audiences to gaining superheroes. But more recently each Mar­
broad acceptance, the Impressionists set a Press play vel film has seemed to be less successful
“template that has been repeated regularly and lauded than the last. “The iMarvels”, re­
with every new modernist art movement”, leased in November, was the lowest-gross­
says Mr Hook. In subsequent decades art­ ing so far. Games offer an alternative: “A
ists played with style, subject matter and deep well of franchises, a built-in audi­
form, challenging viewers to consider what ence, years of storylines and endless spin­
exactly art is, from Marcel Duchamp’s uri­ How Hollywood fell in love with gaming off franchise possibilities,” says Fred Black
nal to Tracey Emin’s unmade bed. of Ampere Analysis, a research firm.
Today there is much less revolutionary Anew instalment of “Fallout”, a long- The pioneers of the new wave of adapt­
experimentation. “Artists challenge much running series of video games, was re­ ations have been Amazon Prime Video
less today,” says one art dealer, who finds leased recently to rave reviews. Critics (which commissioned “Fallout”) and Net­
contemporary architecture more willing to called the post-apocalyptic adventure a flix. These streaming companies, relative
break with norms. “In a moment when I “rare gem” and an “absolute blast”. In its newcomers to Hollywood, have been on a
thought more artists would be reaching look and feel, the new “Fallout” is much commissioning binge to attract subscri­
out more politically, they seem to be reach­ like previous releases. The difference is bers. Unlike older rivals such as Disney,
ing in more conservatively,” agrees Josh that the latest iteration is not a game at all, which owns Marvel, they have a limited ar­
Baer, an art adviser and gallerist. Depicting but a television series. chive of intellectual property. “Most of the
beauty and personal identity are today’s Converting pixelated adventures to comic franchises were already owned, so
popular artistic preoccupations. “I thought live-action narratives long defeated script­ they needed to find something else,” says
we’d be seeing something a little bit more writers in Hollywood, resulting in turkeys Mr Black. Games were that something.
aggressive,” Mr Baer adds. like “Street Fighter” (1994) and “Doom” Their success with titles like “Castlevania”
This year’s Whitney Biennial in New (2005). The developer of one celebrated (2017) and “The Witcher” (2019) got the
York is a collection of sleek works that take game confides that its silver-screen adapt­ attention of Hollywood studios.
little risk. The Venice Biennale, which ation around a decade ago was the worst Changes in the gaming world have also
opens on April 20th, will be another pulse­ movie he had ever seen. helped. The game-playing public has bal­
taking. With prizes and pavilions, it is of­ But now studios are reworking games looned, thanks to smartphones (which put
ten described as the Olympics of the art and finding commercial and critical suc­ a miniature console in everyone’s pocket)
world, and it usually captures the Zeitgeist. cess. Last year “The Super Mario Bros” was and the covid-19 pandemic (which created
This year’s theme is “foreigners every­ the second-highest-grossing film at the millions of new gamers through sheer
where” and focuses on artists whose iden­ worldwide box office. “The Last of Us", a boredom). Big titles like “Minecraft” are
tity and sexuality make them outsiders. TV show based on a PlayStation game, won played by more than 100m people each
Many feel the political correctness that a haul of Emmy awards in January. More month, guaranteeing a large potential au­
has strangled dissent on college campuses game adaptations are on the way: IGN, an dience for film spin-offs. The broader and ►►
 70 Culture The Economist April 20th 2024

► ageing pool of gamers makes it easier to Adventure quests

get video-game projects greenlit in Holly­
wood. Previous generations of producers Ain’t no mountain
were befuddled by youngsters’ games; to­
day’s moguls grew up playing them. high enough
Most significant, modern games are
better fodder for adaptation than their
precursors. Amazon’s “Fallout” has a sharp
script and a strong cast. But its epic, post-
apocalyptic setting, twisting plot and rich Everest, Inc. By Will Cockrell. Gallery Books;
back story all come from the game. The 352 pages; $29.99 and £20
PlayStation version of “The Last of Us”
was so cinematic that the opening scenes LIMBING MOUNT EVEREST used to be
of Warner’s tv adaptation were barely
changed. Its central characters, Joel and
C a feat of staggering bravery, endurance
and skill. In the 40 years after Sir Edmund
Ellie, were already vividly drawn; the TV Hillary and Tenzing Norgay first reached
series borrowed plenty of dialogue from the summit in 1953, an average of 12 people
the game. a year followed in their footsteps. In 2023
For all the recent hits, game adapta­ more than 1,200 people attempted the
tions are not yet such reliable performers climb, with 655 making it to the top.
as superheroes. Paramount’s “Halo” and What was once an “almost certainly
Netflix’s “Resident Evil” did not live up to fatal” endeavour is “the new Ironman
expectations. The biggest hits, says Mr Back to square one triathlon”, argues Will Cockrell, a journal­
Black, tend to be either so well known that ist, in “Everest, Inc”, a fascinating new
even non-gamers recognise the brand through the women who helped create it. book. High-tech equipment and better
(think “Mario”, “Sonic” or “Angry Birds”), In the 1920s and 30s, newspapers understanding of the physiological impact
or so engaging that their digital origin warned of “crossword puzzleitis”, an “epi­ of high altitudes have brought new hope­
ceases to matter (“The Last of Us” or “Fall­ demic” they claimed was draining Amer­ fuls to Everest. But the biggest reason for
out”). The explosive first episode of “Fall­ ica’s brainpower and distracting women the rising number of Everest conquerors is
out” is entitled, “The End”. For games on from their household duties. But by the the establishment of a professional guid­
screen, it is just the beginning. ■ 1940s, the New York Times, which had re­ ing industry. For a hefty fee—between
sisted the crossword craze, introduced the $35,ooo and $110,000—experienced climb­
puzzle, partly to offer readers relief from ers will put novices on top of the world.
The history of crossword puzzles unrelenting news about the second world As with many extreme sports, Everest
war. “You can’t think of your troubles while offers a test. Amateurs want to know if
Get a clue solving a crossword,” wrote Margaret Far­ they can achieve something physically and
rar, its founding editor. Farrar, who edited mentally demanding. According to some
the Times crossword until 1969, insisted on psychologists, people undertake Hercu­
decorum. Words and clues too unsavoury lean endeavours to deny their own mortal­
for a morning breakfast on Sundays were ity. iMr Cockrell believes this helps explain
stricken from the grid. The clue offered for why interest in climbing Everest increases
“LSD”, for example, was “British currency” after deaths are reported: people are more
The Riddles of the Sphinx. By Anna instead of “psychedelic drug”. attracted to the adventure if they are
Shechtman. HarperOne; 288 pages; As more women entered the workforce, reminded of its dangers. ►►
$29.99 and £22 the number of them producing puzzles de­
clined. In 1989 Eric Albert, a computer sci­
HAT IS A three-letter word for “prep­ entist, developed constructing software,
W py, party-loving, egotistical male, in which helped designers fill a grid by en­
modern lingo”? Answer: “Bro”. When Anna abling them to create and manage word
Shechtman, a cruciverbalist (crossword lists. The world of crossword creation be­
constructor), introduced this clue to the gan to look more like the heavily male tech
New York Times crossword puzzle in 2014, industry. Ms Shechtman interweaves this
readers took notice. “Bro” was traditionally history with a memoir of her puzzle-mak­
clued as “sibling for sis”. Ms Shechtman ing and eating disorder (reflecting a need
was modernising the puzzle and capturing for control that she sees in the rigid format
the Zeitgeist. of the grid). In constructing, she thinks
What makes a word puzzle-worthy? about cultural representation. Should
Since its appearance in the Sunday edition crosswords push solvers to expand their
of the New York World in 1913 (pictured), knowledge or keep them comfortable?
the crossword has helped define the canon Since the covid-19 pandemic, the popu­
of common knowledge. Though it was in­ larity of the crossword and similar online
vented by Arthur Wynne, an editor, in its games like Wordle has only increased. The
early days, women—especially bored New York Times acquired Wordle in 2021,
housewives—were the primary construc­ and in 2023 subscriptions to the Times's
tors and solvers. In “The Riddles of the Games app climbed to over a million,
Sphinx”, Ms Shechtman, who now creates around a tenth of the newspaper’s total
crosswords for the Afoc Yorker traces the subscriber base. Games, now a big driver of
history of the crossword in America revenue, are a five-letter strategy. ■ The high life
The Economist April 20th 2024 Culture 71

The guiding industry exists in large The first world war Fascination with the Great War en­
part because of a foolhardy but irresistible dures. The name has stuck despite the
character called Dick Bass. The heir to an All quiet about even larger conflict—and death toll—that
oil fortune, Bass had the lunatic idea of came later. Though the books devoted to
climbing the highest mountains on all sev­ the Eastern Front the first world war’s Western Front are ex­
en continents. He bought his way onto tensive, the story of the Eastern Front has
three different Everest expeditions and, in been mostly neglected. Mr Lloyd, a profes­
1985, aged 55, he became both the oldest sor of modern warfare at King’s College
and least experienced climber to reach the London, has produced the first major his­
summit. The sight of an average Joe on top The Eastern Front. By Nick Lloyd. Viking; tory of the Eastern Front in English in
of the world generated a media frenzy— 672 pages; £30. To be published in America nearly 50 years.
and the establishment of companies that by W.W. Norton in August; $42 The first world war drew in 32 coun­
could cater to the new demand for tours. tries; its Eastern Front stretched over 900
The early years of guided expeditions TUST 29 YEARS old, Karl I was desperate miles “from the Baltic to the Alps, from the
in the 1990s were mostly successful. In I to lead Austria-Hungary out of the first peaks of the Carpathians to the shores of
1992-95, around 150 people paid to be led world war. He was crowned as Habsburg the Aegean”. Some of the fiercest fighting
up the mountain, and a third succeeded. emperor in November 1916 after the death was in Galicia, a region that includes what
But in 1996, Jon Krakauer, an American of his great uncle, who had ruled for 68 is today western Ukraine. It was very
writer, joined one of two simultaneous ex­ years. Though the empire had been instru­ different from the war on the Western
peditions that went wrong. A storm mental in starting the conflict following Front where, other than in its opening and
“dropped down on the climbers like a pi­ the assassination of its archduke, Franz closing stages, the armies of both sides
ano on a cartoon character”. The guides, Ferdinand, in June 1914 by a militant Serb were locked into a highly concentrated,
eager for their clients to reach the top, de­ nationalist, now Karl could see only the trench-bound stalemate. In the east, there
layed turning them around. Three guides nightmarish cost. Austria-Hungary’s in­ was often the space and terrain for
and two climbers died. In a bestselling creasingly ramshackle, polyglot army had manoeuvre warfare and pitched battles—
book, “Into Thin Air”, Mr Krakauer argued suffered devastating losses at the hands of and even the potential for dramatic,
that Everest had become a high-end tourist Aleksei Brusilov, a Russian general, five cavalry-led breakthroughs.
trap. He decried the judgment of the months earlier. To function it depended on Although more fluid, the Eastern Front
guides and the selfishness of inexperi­ its ally, Germany. Vienna was starving. But was as lethal as its Western counterpart,
enced climbers. Many businesses assumed secret peace talks went nowhere, and Aus­ due to the destructive power of modern
that the book would crush them. Instead, tria-Hungary was dragged limpingly along artillery and the machine gun. Mr Lloyd es­
fascination with Everest soared. in Germany’s wake to disaster. timates that the two doomed empires,
The industry has depended on local Karl, ultimately exiled in Madeira, died Russia and Austria-Hungary, lost upwards
labour. Large numbers of Nepalis were from pneumonia in 1922. Though unsuc­ of 2.3m and 1.2m men respectively. Some
hired by companies in the West to install cessful, Karl was beatified by the pope 82 450,000 Germans were probably killed on
ropes and carry equipment for clients. The years later for his peacemaking efforts. He the Eastern Front. Because the fighting
guiding firms made efforts to build lasting is one of a small number of sympathetic was less static but also because of simmer­
relationships with their teams on the figures in Nick Lloyd’s superb history of ing ethnic hatreds, many more civilians
ground. But, Mr Cockrell notes, “The rea­ the Eastern Front in the first world war and died or were displaced than in the west.
sons Westerners and Sherpas were climb­ one of even fewer who had some inkling of When Winston Churchill wrote about
ing mountains remained very different.” how it might end. But apart from the hero­ the Eastern Front in his sixth and final vol­
Two accidents in the 2010s brought ism and resilience of the ordinary soldiers, ume on the Great War, published in 1931,
change. In 2014,16 Sherpas were buried by this is a story of vainglory, cynicism, in­ he described it as both the “greatest war in
falling ice while transporting clients’ gear. competence and callousness. history” and the “most frightful misfor- ►►
Their colleagues went on strike and forced
the cancellation of the season. Then, in
2015, an avalanche killed ten Sherpas and
nine foreign clients. In the aftermath,
many Western operators lost their enthusi­
asm for Everest; today all the biggest guid­
ing firms are Nepali-owned.
“Everest, Inc” ends on a confounding
note. More people are reaching the sum­
mit, but more are dying en route, too: 18
people perished in 2023, the highest-ever
number. Nepalese authorities say climate
change has caused more extreme weather.
Mr Cockrell argues that there was no negli­
gence on the part of the firms. He suggests
that Nepali guides consider themselves in
the logistics business and generally leave
decisions of safety to clients.
But amateur climbers make bad choic­
es. The disaster in 1996 showed that even
guides get these decisions wrong. Experts
know more than ever about how to navi­
gate Everest safely. But that does not make
it a safe place. ■ Death and the horseman
 72 Culture The Economist April 20th 2024

► tune” to fall upon mankind since the de­ the strategies pursued by both sides. It is East and Ukraine today, some might find
struction of the Roman Empire. Yet the all this and more that Mr Lloyd has resur­ the prospect of turning to a story of grue­
book was called “The Unknown War” rected in compelling detail. some conflict from the past unattractive.
Some individual episodes are still re­ Unusually for such a vast confrontation But it was such a painfully consequential
membered, such as the Russian loss at of forces, all three major belligerents end­ war that it continues to demand attention.
Tannenberg early in the war and Brusilov’s ed up as losers. Russia collapsed into cha­ As the German-American historian, Fritz
offensive, which was Russia’s greatest and otic revolution in 1917; Aust ria-Hungary’s Stern, ruefully observed, the conflict was
bloodiest feat of arms, resulting in nearly stricken empire was formally dissolved in “the first calamity of the 20th century, the
2.5m casualties on both sides in three 1919; Germany met with humiliating defeat calamity from which all other calamities
months. But so much has been forgotten, on the Western Front. sprang”. The calamity of the “unknown”
including the course of the war in the east The first world war redrew the world Eastern Front is inseparable from every­
across multiple theatres of operation and map. With conflict raging in the Middle thing that occurred afterwards. ■

BACK STORY
The knife and the heart
Salman Rushdie's gripping take on being stabbed is also a love story

here are, writes Sir Salman Rush­ in “Knife” is the knife itself—at once a avers, “the tool I would use to remake
T die, “three important characters” in
“Knife”, a new memoir of his near-fatal
cold, sharp object and a metaphor for
hatred, fanaticism and life’s ruptures.
and reclaim my world.”
Yet the principal riposte to the brutal­
stabbing in August 2022 and his arduous Intermittently he thinks of the second ity in “Knife” comes from its third main
recovery. The first two are predictable: character, the young Lebanese-American character: Rachel Eliza Griffiths, an
the author and his blade-wielding assail­ who has pleaded not guilty to attempted American writer and photographer and
ant. The third character turns this chron­ murder and assault, and who, typically, Sir Salman’s fifth wife. In forensic detail,
icle of violence into a surprisingly tender had barely opened “The Satanic Verses”. he recounts the “coin-toss moments”
and redemptive story. Omitting his name—he is “My Assailant”, that led them to meet and fall in love, his
Sir Salman was about to speak at a then “the A”—Sir Salman wavers over giddy infatuation and eventual proposal.
festival in upstate New York when a whether he wants to confront him. Instead All this is more than a gushy ode: it is
black-clad man charged the stage. His he makes up a jokey-serious dialogue essential to his underlying themes.
first thought was: “So it’s you. Here you between them, probing the imaginary One of those is time. His next
are.” It was 33 years since Ayatollah suspect about faith, failure and loneliness. thought, up on that stage, was: “Why
Ruhollah Khomeini of Iran had called “You aren’t capable of understanding me,” now?” The knifeman was “a murderous
for his death because of the alleged the suspect insists. Standing outside the ghost” seeking “to drag me back in time”.
blasphemy of his novel, “The Satanic jail where the real man was awaiting trial, The past, he sees, is both inescapable
Verses”. It was more than 20 since he Sir Salman had an urge to dance. and fixed. He poses lots of questions and
moved to America after years of police All he wanted was to be a novelist, but what-ifs about the assault, including why
protection in Britain. Now the half­ the ayatollah and the knife have made him he “just stood there like a pihata”. He
expected, still-astonishing assassin was a global champion of free speech. He nearly pulled out of the talk but needed
upon him. “I raise my left hand in self- reaffirms its value here. “Without art,” he the fee for an air-conditioning bill. He
defence. He plunges the knife into it.” writes, “our ability to think, to see freshly, knows, though, that time allows no
And into his neck, face, abdomen and and to renew our world would wither and do-overs. Nor, because of Eliza, does he
eye—15 wounds in a 27-second frenzy. die.” He decries the “false narratives” of ultimately want it to: “We would not be
Violence, he notes, is confounding to its bigots and autocrats and extols openness who we are today without the calamities
victims: “Reality dissolves and is re­ and debate. “Language was my knife,” he of our yesterdays.”
placed by the incomprehensible.” Bur he His other deep theme is the challenge
was alert enough to think this was the of living in a bleak world; or, to put it
end. In a book that is both passionate another way, the riddle of human nature.
and illusionless, he is clear there was no He “experienced both the worst and
out-of-body experience: “My body was best” when onlookers tackled his attack­
dying and it was taking me with it.” He er and saved his life. Above all, however,
seemed unlikely to survive but was the counterbalance to evil is the love and
stitched and stapled together. His blind­ devotion of Eliza, with whom Sir Salman
ed eye bulged from its socket “like a salvaged “a wounded happiness”.
large soft-boiled egg”. “Knife” is a love story about being
Only after a few weeks did Sir Salman stabbed, a paradox captured in the
see his disfigured face in the mirror. skewed symmetry between the attack
When he left hospital there were more and another central scene. On the night
scares and treatments and nightmares. he met Eliza, Sir Salman walked klutzily
He dreamed of the blinding of Glouces­ into a glass door; he lay on the floor,
ter in “King Lear”; he thought of the blood streaming down his face, until she
knife that kills Kafka’s protagonist in ministered to him. He got up then, and,
“The Trial”. Among the supporting cast triumphantly, he has risen again now.
The Economist April 20th 2024 73

Economic & financial indicators

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units
% change on year ago % change on yrear ago rate balance balance 10-yi gov't bonds change on per $ % change
latest quarter* 2024* latest 2024* % %o( GDP. 2024 ‘ %ot GDP. 20241 latest,% year ago, bp Apr 17th on year ago
United States 3.1 Q4 3.4 2.0 3.5 Mar 2.7 33 Mar 23 ■■■ 4.6 99.0 •
China ■H|qi 6.6 4.7 0.1 Mar 1.0 52 Mar** 1.4 4.6 2.1 « 55.0 724 ■5.1
Japan 12 0.4 13 2.8 ; Feb 2.3 2.6 Feb 2.7 4.7 0.9 40.0 155 13.0
Britain 02 | Q4 -12 0.4 32 Mar 2j6 42 Jan** -2.8 42 4.3 60.0 0.80 1.2
Canada 09 Q4 1.0 17 2.9 Mar 2.5 6.1 Mar -03 3.7 60.0 1.38 2.9
Euro aiea 0.1 | Q4 -0.2 OB 2.4 Mar 2.4 6.5 Feb 2.7 32 2.5 | -1.0 0.94 -2.1
Austria -1.7 | Q4 0.2* 0.5 4.1 i Mar 3.5 4.7 Feb 2.4 2.4 3.0 -18.0 0.94 -2.1
Belgium 1.5 1 04 1.4 1.1 3.8 Mar 22 5.5 Feb -05 4.4 3.0 -10.0 0.94 •2.1
France 0.7 j 04 0.2 0.9 2.4 Mar 2.7 7.4 Feb 0.7 49 3.0 1.0 0.94 -2.1
Get many ^■■04 -11 0.1 2.3 Mar 2.1 3.2 Feb 62 -15 2.5 -1.0 0.94 -2.1
Greece 1.1 0.6 23 3.4 1 Mar 32 11.0 Feb -5.4 -2.1 3.5 -90.0 0.94 -2.1
Italy 0.6 04 0.7 0.6 1.2 Mar 1.7 7.5 Feb 0.9 -53 3.9 -44.0 0.94 -2.1
Netherlands 0.4 | 04 14 0.9 3.1 ' Mar 2.4 3.7 Feb 8.3 2.4 | 2.7 -12.0 0.94 2.1
Spain 2.0 Q4 2.3 1.7 3.3 Mar 2.9 11.5 Feb 1.8 -35 3.2 -13.0 0.94 -2.1
Czech Republic 02 1.8 12 2.0 Mar 2.1 2.7 Feb* 05 -25 45 -27.0 23.7 9.7
Denmark 3.5 ! 04 10.8 1.3 0.9 1 Mar 1.8 2.9 Feb 9.4 12 2.5 -27.0 7.02 -2.7
Norway 0.5 | 04 6.2 1.0 3.9 Mar 2j6 3.9 Jan11 14.4 12.0 3.9 72.0 11.0 -5.1
Poland 1.0 . nil 23 2.0 Mar 4.1 5.3 Mar* nil 52 5.8 -39.0 4.09 3.7
Russia 4.9 | Q4 na 1.9 7.7 Mar 6.4 2.8 Feb* 22 •1.8 13.5 252 94.2 13.2
Sweden 0.1 | 04 -0.2 0.3 4.1 J Mar 2.4 8.5 Feb* 5.6 ■19 1 23 19.0 11.0 -5.8
Switzerland 0.6 04 1.2 1.0 1.0 Mar 1.4 23 Mar 9.0 9 -03 0.79 -34.0 0.91 -1.1
Tuikey 4.0 04 3.9 3.1 68.5 I Mar 52.4 92 Feb* -3.0 -43 26.2 1.441 32.5 40.4
Australia 1.5 04 1.0 2.0 4.1 Q4 2.7 3.8 Mar 05 nil 4.1 93.0 1.56 4.5
Hong Kong 4.3 | 04 1.8 32 2.1 | Feb 22 2.9 Feb’* 7.0 -1.4 4.0 94.0 7.83 0.3
India 8.4 04 8.0 6.6 4.9 1 Mar 43 7.6 Mar -0.8 -53 7.2 4.0 83.5 -1.9
Indonesia 5.0 04 na 5.1 3.0 Mar 2.9 53 03* -0.1 -2.4 6.9 30.0 16.220 -8.8
Malaysia 3.0 04 na 4.4 1.8 | Feb 26 3.3 Feb* 1.9 -4.4 4.0 7.0 4.79 -7.7
Pakistan nil 2023** na 1.0 20.7 Mar 21.0 6.3 2021 -22 ■■1 142 93.0 278 | 2.2
Philippines 5.5 | 04 8.7 5.7 3.7 Mar 2.7 4.5 Qi* -22 -6.1 ■ &9 62.0 57.2 -2.4
Singapore 2.7 01 0.2 2.4 3.4 | Feb 3.1 2.0 04 18.5 0.1 3.4 60.0 1.36 1.5
South Korea 22 . 2.5 23 3.1 Mar 2.5 3.0 Mar* 1.9 13 3.6 29.0 1.387 5.5
Taiwan 4.9 9.7 33 2.1 ' Mar 2.0 3.4 Feb 14.4 0.1 1.8 50.0 32.5 -6.1
Thailand 1.7 04 -2.3 32 -0.5 Mar 12 1.0 Feb* 3.0 -35 2.8 24.0 36.8 6.6
Argentina -1.4 | 04 -7.3 -3.5 288 Mar 258.3 5.7 04* 02 -1.1 na na 869 75.11
Brazil 2.1 04 0.1 1.8 3.9 Mar 4.1 7.8 Feb*” ■1*5 •72 11.7 69.0 5.24 5.5
Chile 0.4 | 04 0.4 23 32 1 Mar 3.5 8.5 Feb*** 35 25 6.2 66.0 974 17.6
Colombia 0.3 1 Q4 0.1 12 7.4 1 Mar 5.8 11.7 Feb* -3.1 -5.1 10.9 -58.0 3,905 13.4
Mexico 2.5 04 0.3 23 4.4 | Mat 42 2.6 Feb -0.6 4.7 10.0 107 17.0 7.0
Peru 0.4 | 04 0.9 2.4 3.0 Mar 26 7.0 v.H* 0.4 -29 7.5 6.0 3.74 1.1
Egypt 2.7 . na 2.6 33.4 Mar 31.8 6.9 04* -3.4 -113 na na 48.5 36.3
Israel 4.7 | 04 -21.0 1.9 2.7 Mar 23 3.3 Mar 4.9 1 63 | 4.9 91.0 3.79 3.7
Saudi Arabia -0.8 | 2023 na 2.0 1.6 J Mar 2.1 4.4 04 0.7 -19 na na 3.75 nil
South Africa 12 04 0.2 1.6 5.3 ] Mar 4.7 32.1 04* -2.0 -5.7 110.7 66.0 19.1 3.9

Source: Haver Analytics. *% change on previous quarter, annual rate. *T he Economist Intelligence Unit estimate/forecast.^Not seasonally adjusted. * New series. **Year ending June. f,Latest 3 months.113-month moving
average. ^5 year yield. **1 Dollar denominated bonds. Note: Euro area consumer prices are harmonised.

Markets Commodities
<K change on: % change on:
Index one Dec 29th Index one Dec 29fh The Economist commodity-price index % change on
In local curiency Api 17th week 2023 Apt 1/th week 2023 2020=100 Apr 9th Apt 16th* month yeai
United States S&P500 5,022.2 -2.7 5.3 Pakistan KSE 70,333.3 nil 12.6 Dollar Index
United States NAScomp 15,683.4 3.0 4.5 Singapore STI 3,154.7 2.6 -2.6 All Items 133.6 135.2 6.6 0.6
China Shanghai Comp 3,071.4 1.5 32 South Korea KOSPI 2,584.2 4.5 2.7 Food 146.8 146.1 7.4 nil
China Shenzhen Comp 1.700.8 -1.1 -7.5 Taiwan TWI 20213.3 -2.6 12.7 Industrials
Japan Nikkei 225 37.961.8 4.1 13.4 Thailand SET 1366.9 -2.9 35 All 122.7 126.1 5.8 1.1
Japan Topix 2,663.2 -22 12.5 Argentina Ml RV 1,172,353.0 5.0 26.1 Non food agricultuials 138.5 134.0 -3.1 8.9
Britain FTSE100 7,848.0 -1.4 15 Brazil BVSP* 124,171.1 -3.0 75 Metals 118.7 124.1 85 -0.8
Canada S&PTSX 21.656.1 -2.4 3.3 Mexico IPC 55,415.7 -23 -3.4
Sterling Index
Euro area EUROSTOXX50 4.914.1 -1.7 8.7 Egypt EGX 30 29,667.7 4.1 19.2
All items 135.4 139.6 8.9 0.5
France CAC 40 7.981.5 0.8 5.8 Israel TA 125 1,912.7 3.7 1.4
Euro Index
Germany DAX* 17,770.0 -1.8 6.1 Saudi Arabia ladawul 12,466.0 -19 42
All items 140.6 145.3 8.9 3.7
Italy FTSE/MIB 33,632.7 12 10.8 South Africa JSEAS 72,9952 -3.3 -5.1
Netherlands AEX 865.4 -2.4 10.0 World, dev’d MSCI 3281.1 2.9 35 Gold
Spain IBEX 35 10,633.9 1.3 5.3 Emerging markets MSCI 1,012.5 -43 1.1 $ per oz 2.3462 2386.2 10.8 18.8
Poland WIG 82.393.9 -2.4 5.0
Brent
Russia RTS, $ terms 1.154.3 -0.4 6.5 US corporate bonds, spread over Treasuries
$ per barrel 89.9 90.3 3.3 6.4
Switzerland SMI 11231.8 -23 0.8 Dec 29th
Turkey BIST 9,530.5 -2.9 27.6 Basis points latest 2023 Sources: Bloomberg; CME Group: Fastmaikets: FT: LSEG Workspace:
Australia All Ord. 7,861.0 •3.1 0.4 Investment grade 107 154 1 MR N7 Wool Services: S&PGIoImI Commodity Insights: Thompson
Hong Kong Hang Seng 16251.8 52 1 47 High-yield 358 502 l loyd & Fwart; Urner Batty; WSJ. * Provisional.

India BSE 72.943.7 -2.8 1.0

Indonesia IDX 7,130.8 -2.1 -2.0 For historical indicators data, visit
Sources: LSEG Workspace; Standard & Pool's Global Fixed Income
Malaysia KLSE 1.540.4 0.8 5.9 Research. * Total return index. economist.com/economic-and-financial-indicators
74 Obituary The Economist April 20th 2024

OBITUARY
Akebono

The firstforeign-born grand champion of sumo died in early April, aged 54

Then a Hawaiian sumo-recruiter spotted him, and that was that.

The first months were tough, since he spoke almost no Japa­
nese and pined for a decent American steak. But in the wrestlers’
training stable he suffered no more nor less than all the others in
the lowest ranks, getting up at 4am to exercise before breakfast,
slopping out for his superiors, cooking their rice and serving it be­
fore getting a mouthful himself. The only differences w'ere his
dumbness, but he was shy anyway, saying little either in Japanese
or English; his Hawaiian horror of cold winters; and the need to
forget all the codes of life he had learned over 18 years.
But he stuck it out, and felt as he progressed that, when he
wrestled, he was neither American nor Japanese: just a wrestler,
whose body by the end did the thinking for him. It was never a
matter of planting his flag in the middle of the ring and taking on
a rival nation. He was learning a great, ancient skill.
The more serious racial frictions emerged as he climbed high­
er. An essential virtue of the sumo w restler was hinkaku, dignity.
He should be sober, uncomplaining, and modest, celebrating his
triumphs with nothing more than a wave of the right hand. The su­
mo elders doubted that foreigners could ever possess that. In 1992
another hefty Hawaiian, Konishiki, “the Dump Truck”, had been
turned down for the title of yokozuna. In terms of tournaments
UMBERINGLY, he paced to the centre of the ring, then back to won, he deserved it; but, said the elders, he did not have enough
L his corner again. Several times he did this, flexing his arms.
Then he squatted, and fixed his opponent with his stare. That
hinkaku. Konishiki called this racism, pure and simple. Only eight
months later, however, Akebono was promoted to that foremost
stare, of absolute focus, which he could keep for days. rank and stayed there for eight years.
Except for his loincloth, he was naked. His mountainous torso His elevation calmed the controversy, for he had the sumo eth­
glistened with sweat, oil, fat and muscle. Moments before he had os in spades. Already, as a sekitori or senior wrestler, he qualified
rinsed his mouth with power-water, nibbed his body with power­ for a car and driver, customised kimonos to wear in public and a
paper and grabbed a handful of purifying salt to scatter in the host of assistants. But he was not a man for showing off. As a yoko­
ring. His long hair was caught up in a topknot styled like a leaf of zuna his new monthly salary of $15,000, though huge for a sumo
the ginkgo tree. He had clapped his hands to alert the gods, wrestler, was still tiny by American standards. And it was all he
stamped his feet to scare off evil spirits, and shown with a few deft needed. Once the splendid belt was off he stayed dignified and
postures that he had no weapons. He was more than ready. humble, an ordinary Hawaiian wfho loved welcoming high-school­
Then it was over. In seconds he had charged forward, lunged ers, plying them with snacks and teaching them how to wrestle. To
for the throat, and pushed his opponent out of the ring. Job done. American visitors, he was still “Chad”.
So ended many of Akebono’s matches. At 2.03 metres, he to­ His example brought many more foreign wrestlers to sumo.
wered above his rivals. (His name meant “dawn”, because when he Some were Hawaiian; more were Mongolian. Eastern Europeans
stood up it was like the sun rising.) He also outweighed most of came. By 2000 many Japanese worried that their national sport did
them, swelling from 154kg, when at 18 he started training, to 235kg not have enough native recruits, let alone champions. In 2002 the
five years later. His long arms could shove a rival off-balance in a elders reduced to one the number of foreigners allowed in each
heart-beat, making him touch the ground with something other stable. But the truth was that, among the young, sumo was
than the soles of his feet, which doomed him. Brute force was all it increasingly seen as hidebound and audience-unfriendly. Akebo­
took; no matter if they wrere on your belt, push them, and fast. no himself wanted it to be more exciting and open to anyone. But
iMuch of his size-advantage came from the fact that he was a when he asked to join the rule-imposing body that governed su­
gaijin, a foreigner. It had been enhanced for sure by sumo training, mo—just for a year, perhaps—he was told, firmly, “No”. At that
which involved huge meals of chicken-broth stew’ and litres of point he retired as ayokozuna, feeling he had no future there. He
beer, followed by naps, to build bulk. But Akebono w'as also Amer­ had worried sometimes that Japan was becoming too American­
ican, a Haw aiian, one of very few foreigners before the 1990s w ho ised; but clearly not as far as that.
endured the training regime. He was big wrhen he arrived, a handy In 2001, at his retirement as ayokozuna, he sat in the ring in his
centre in high-school basketball games, and his first coach feared robes. He had no plans to abandon martial arts in general, and w as
he might prove too lanky for sumo. He was wrong. His pupil to win several pro wrestling championships before both knees and
romped through the regular 15-match tournaments, rose swiftly heart gave out. But he was laying down his sumo career. Eleven
through the rankings and became, in 1993, the first-ever non-Japa­ thousand people watched as, one by one, 320 friends and col­
nese yokozuna, or grand champion. leagues came up to snip a few strands from his topknot with a pair
His ascent seemed quite improbable. He had been brought up of gold-plated scissors. He felt sad, much more than he thought
poor on Oahu Island as Chad Rowan, the son of a half-Irish taxi­ he would. His head felt lighter, but not with the loss of his hair;
driver. His boyhood was spent learning street-smarts and watch­ more with the loss of a great honour, and the responsibility he had
ing wrestling on TV, and his future seemed to be as a beach bum. carried to bring two nations together. ■
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 THERE IS ETERNITY
IN EVERY RLANCPAIN
The spirit to preserve.

“Creation"
Wildlife Fliotographer
of the Year 2021
Grand I i tie winner
© Laurent Ballesta

A Fifty Fathoms is for eternity.

Launched in 1953, the Fifty Fathoms is the first
modern diver's watch. Created by a diver and
chosen by pioneers, it played a vital role in the
development of scuba diving. It is the catalyst
of our commitment to ocean conservation.

JBs
BlancpaiN
MANUFACTURE DE HAUTE HORLOGERIE