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[Jan 20th 2024]
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The world this week

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The world this week
Politics
Jan 18th 2024 |
Donald Trump stormed to victory in the Iowa caucuses, the first contest in
the Republican race to choose the party’s presidential nominee for
November’s election. Mr Trump took 51% of the vote, underlining his
dominance in the race (in 2016, when Mr Trump started his first presidential
campaign, he came second with 24%). Ron DeSantis and Nikki Haley were
far behind, taking 21% and 19% of the caucus vote respectively. Some 65%
of caucus-goers thought Mr Trump would be fit for the presidency even if he
were convicted of a crime.
The day after the caucuses Mr Trump’s legal troubles came to the fore again
as a trial began in Manhattan to determine how much he should pay in
damages for defaming E. Jean Carroll, a writer. Ms Carroll won a civil trial
last May that found Mr Trump liable of sexually abusing her and of
defamation.

Israel marked 100 days since the Hamas attacks of October 7th. At a big
commemorative event in Tel Aviv many carried pictures of the more than
130 hostages still being held in Gaza. Meanwhile, under a deal brokered by
France and Qatar, Israel and Hamas agreed that medicines would be given to
the hostages while more humanitarian aid would be delivered to Gaza where
conditions are increasingly dire. Intense fighting continued in southern Gaza,
especially around Khan Younis where Israel believes Hamas’s leaders are
holed up. Jordan said Israeli air strikes had damaged its military field
hospital there.
Israel offered its defence against South Africa’s accusation at the

International Court of Justice that the war in Gaza amounted to a genocide
against the Palestinians. Israel argued that South Africa had ignored the
events of October 7th and that Israel had a right to defend itself. Its lawyers
blamed Hamas for the high civilian death toll.
America and Britain bombed dozens of Houthi targets in Yemen in response

to almost two months of attacks on commercial vessels in the Red Sea. The
Iranian-backed group continued its campaign, however, firing on several
ships, which just prompted more American strikes against the militants. The
American government put the Houthis back on a list of terrorist groups.
Tensions increased between Iran and Pakistan after Iran launched a missile
attack in western Pakistan targeting Jaish al-Adl, Sunni militants whom it
considers to be terrorists. Pakistan then fired missiles into eastern Iran,
hitting what it said were “terrorist hideouts”. Each country has accused the
other in recent years of harbouring militants in the border region. Iran also
hit targets in Iraq and Syria.
Russia and Niger, whose democratically elected leader was overthrown last
year by a soldiers’ junta, agreed to enhance military co-operation.
Azali Assoumani, who came to power in 1999 in a coup, won election to a

fourth five-year term as president of the Comoros, an archipelago in the
Indian Ocean. His opponents cried foul.
Britain’s home secretary, James Cleverly, asked Parliament to proscribe the

Islamist Hizb ut-Tahrir group under the Terrorism Act 2000. Anybody

belonging to the group, or showing support for it, could face up to 14 years
in prison. Mr Cleverly said that Hizb ut-Tahrir’s praise of the October 7th
attack by Hamas on Israel constitutes “promoting and encouraging
terrorism”.
Rishi Sunak, Britain’s prime minister, survived a challenge from rebels in

his own Conservative Party to a new law clearing the way for a controversial
plan to deport illegal migrants to Rwanda. Three Tories resigned from their
posts because they think the legislation is too weak.
Donald Tusk, Poland’s new reformist prime minister, and politicians from
the previous right-wing Law and Justice (PiS) government continued to row.
The Constitutional Tribunal blocked Mr Tusk’s attempt to remove the head
of the public prosecutor’s office, after Andrzej Duda, the country’s president,
said the dismissal did not have his consent. Mr Duda is from the PiS. A
meeting between Mr Tusk and Mr Duda to smooth things over ended in
acrimony. And the former deputy foreign minister was arrested over a visa
scandal.
Keep on truckin’
Polish lorry drivers suspended their blockade of three border crossings into
Ukraine, after reaching a deal with the Polish government over driver
permits. Ukraine said the blockade had hurt its economy and its war effort.
Ukraine shot down a Russian military spy plane over the Sea of Azov and
damaged another Russian aircraft used for airborne command. The planes
were being used to co-ordinate Russia’s ground operations. The spy plane
could track more than 300 targets simultaneously.

William Lai Ching-te was elected president of Taiwan, giving a third term in
office to the independence-minded Democratic Progressive Party. He will be
inaugurated in May. Mr Lai has been an even more outspoken proponent of
Taiwan’s national sovereignty than the incumbent president, Tsai Ing-wen,
though in his victory speech he emphasised his aim of avoiding
confrontation by talking to China. The DPP lost its parliamentary majority,
however.
The election in Taiwan angered China. It warned the Philippines “not to

play with fire” and summoned the Filipino ambassador after the country’s
president, Ferdinand Marcos junior, congratulated Mr Lai. China said that
this was “a serious violation of the One China principle”. The Pacific nation
of Nauru ditched its diplomatic links with Taiwan in order to forge closer
ties with mainland China, leaving Taiwan with just 12 countries that
formally recognise it.
The new government of the Maldives said it had asked India to withdraw
the 80 or so troops it has stationed there by March 15th. Last year the Indian
Ocean archipelago elected a new president, Mohamed Muizzu, who is
strengthening ties with China and reducing his country’s long-standing
reliance on India. The Indian foreign ministry did not give a timeline for any
withdrawal.

North Korea’s dictator, Kim Jong Un, pivoted away from his country’s
formal desire for unification with South Korea, ordering the closure of all
state offices that had been working towards that goal. Mr Kim said his
people should no longer think of South Koreans as “fellow countrymen”.
Meanwhile North Korea’s foreign minister visited Russia for talks. North
Korea is supplying Russia with weapons for its war on Ukraine.
One of the ethnic rebel groups fighting the junta in Myanmar said it had
captured the port town of Paletwa, a big trading hub that lies close to the
border with India and Bangladesh. The Arakan Army has been fighting
Burmese troops for several years. Along with other insurgents, it stepped up
its operations after the army seized power in a coup in February 2021.
The presidential zeal
Bernardo Arévalo was sworn in as Guatemala’s president. Since his

landslide election victory last August, sections of Guatemala’s political elite
have done their utmost to stop the anti-corruption Mr Arévalo from taking
office. His swearing-in ceremony was delayed by nine hours amid more
shenanigans from his opponents in Congress, underlining the huge battle he
faces fighting corruption.
In Ecuador the prosecutor who was leading an investigation into the recent
storming of a television station by an armed gang was assassinated,
according to the country’s attorney-general. César Suárez was shot dead in
the city of Guayaquil, the centre of most of the violence that has rocked the
new government.
The pace of deforestation in Brazil’s Amazon forest fell by 50% in 2023

over the previous year, according to the government. Satellite data showed
that 5,153 square kilometres (1,990 square miles) were bulldozed, the
smallest area since 2018. Deforestation soared under the presidency of Jair
Bolsonaro.
This article was downloaded by calibre from https://www.economist.com/the-world-this-

week/2024/01/18/politics
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The world this week
Business
Jan 18th 2024 |
China’s economy grew by 5.2% last year, just above the government’s
target of 5%. Speaking at Davos, Li Qiang, China’s prime minister, crowed
that the government had not had to resort to massive stimulus to achieve an
economic rebound. However, the figure is a comparison with the low base of
2022, when GDP expanded by just 3% because of pandemic restrictions.
Investors weren’t impressed. Chinese stockmarkets extended their rout from
the start of 2024, despite the authorities ordering some institutional investors
not to sell shares. China’s population also fell in 2023 for the second year, by
2m people to 1.409bn.
German GDP was 0.3% smaller in 2023 than the previous year, as higher
prices hit household consumption and trade. The economy may have
avoided a recession in the second half of the year, just. An initial estimate
showed GDP shrinking by 0.3% in the fourth quarter over the third quarter,

but the statistics office now says that in the third quarter the economy merely
“stagnated”.
Britain recorded an unexpected rise in inflation. The annual rate rose to 4%

in December, the first increase in ten months. Coming after a surprise
increase in America’s inflation rate (to 3.4% in December) and a rise in the
euro zone’s (to 2.9%) investors are pushing back their estimates of when
central banks will cut interest rates. Christine Lagarde, president of the
European Central Bank, hinted this week that the ECB won’t start reducing
rates until the middle of the year.
America’s big banks reported a mixed bag of earnings. Net profit at

Goldman Sachs was $2bn in the fourth quarter, which was better than
markets had expected. But its annual profit of $8.5bn was its worst in four
years. Morgan Stanley’s 12-month profit of $9.1bn was also its worst since
2019. By contrast, JPMorgan Chase’s net profit of $49.6bn was a record for
the bank, which benefited more than its rivals from higher interest rates.
Citigroup is slashing at least 20,000 jobs, a tenth of its workforce. It reported
a hefty loss for the fourth quarter related in part from its exposure to Russia.
BlackRock struck a deal to buy Global Infrastructure Partners for

$12.5bn. It is the asset manager’s biggest acquisition since 2009, when it
bought Barclays Global Investors. GIS owns infrastructure and energy
assets, including London’s Gatwick and City airports.
Flight cancelled
A federal judge blocked JetBlue Airways’ proposed takeover of Spirit

Airlines, finding that the merger of America’s sixth-and seventh-largest
carriers would hurt competition. The $3.8bn deal was announced in July
2022 and had been delayed in the courts ever since.
Kroger and Albertsons pushed back the date by which they hope to
complete their proposed merger, as talks continue with the Federal Trade
Commission and state regulators about combining the two supermarket
giants. Meanwhile Washington state asked a judge to halt the deal, arguing
that it would lead to higher prices for consumers.

Shell sold its 68-year-old onshore-oil business in Nigeria to a consortium of
mostly local companies. Like other energy giants that have withdrawn from
the Delta region, Shell has grappled with damage to infrastructure, often
blamed on communities suffering from damage to their environment.
Meanwhile, BP confirmed Murray Auchincloss as its new chief executive;
he has held the job on an interim basis since the resignation of Bernard
Looney last September.

Apple passed Samsung last year to become the world’s biggest seller of
smartphones by volume, according to IDC, a market-research firm (Apple
has long been the most profitable smartphone-maker). Apple shipped nearly
235m of the devices, 4% more than in 2022 and despite a downturn in the
wider market. That compared with Samsung’s 227m, a drop of 14%.
Transsion, a Chinese manufacturer, made the top five by selling lots of its
phones in Africa.
Rising stock
The news was a fillip for Apple in a week when Microsoft pipped it to
become the most valuable company. Microsoft is now worth around
$2.9trn on the stockmarket, compared with Apple’s $2.8trn.
The revolution in chipmaking spurred another big takeover, as Synopsys,

which makes software tools for chip design, agreed to buy Ansys, which
provides engineering simulation software to a variety of industries, for
$35bn.
An annual survey of global chief executives by PwC found that a quarter of

them expect to cut their workforce by at least 5% this year because of
generative artificial intelligence. Those cuts are already starting to
materialise, with Google reportedly laying off hundreds in advertising and
Amazon making hundreds of redundancies in its streaming business, both
because of AI.

week/2024/01/18/business

The world this week
KAL’s cartoon
Jan 18th 2024 |
Dig deeper into the subject of this week’s cartoon:
How backing Ukraine is key to the West’s security

The US congress remains far from the finish line of a budget deal
Can Europe arm Ukraine—or even itself?
KAL’s cartoon appears weekly in The Economist. You can see last week’s
here.

week/2024/01/18/kals-cartoon


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Leaders
Donald Trump is winning. Business, beware
Chaos—or opportunity? :: What a second term would mean for American business and the
economy
Narendra Modi’s illiberalism may imperil India’s economic

progress
Hindu nationalism :: Fulfilling his great-power dream requires restraint, not abandon
How America accidentally made a free-money machine for

banks
Bagehot weeps :: The Federal Reserve should switch it off
Charging Israel with genocide makes a mockery of the

court
Show trial :: And it diverts attention from the real humanitarian crisis in Gaza
AI-generated content is raising the value of trust

Pics and it didn’t happen :: Who did the posting will soon matter more than what was posted

Chaos—or opportunity?
Donald Trump is winning. Business, beware

What a second term would mean for American business and the economy
Jan 18th 2024 |
WHEN DONALD TRUMP slunk out of the White House in 2021,

executives at large American companies sighed with relief. Now that he has
won Iowa’s caucuses by a margin of 30 points, they are digesting the reality
that this time next year Mr Trump could be behind the Resolute desk once
again. The Economist has spent the past few weeks talking to these titans.
Some are deeply alarmed by the prospect of Trump 2. But others quietly
welcome the chaos trade.
People who run large organisations have to be optimistic. They must find
opportunities when others are panicking. CEOs had an uneasy relationship
with President Trump, many distancing themselves from his most
outrageous pronouncements and tut-tutting about protectionism, even as they

enjoyed his more conventional policies. Republicans in Congress may have
talked about being the pro-worker party, but in practice they cut business
taxes. It was hard for corporate America to be miserable amid a soaring
stockmarket.
If Mr Trump is indeed elected again, those running big firms plan to keep
their heads down (“don’t be Bud Light” is a frequent refrain, after the beer
brand fell victim to the culture wars). They would avoid being dragged onto
Mr Trump’s business councils, dodge presidential photo-ops and get on with
making money. True, if Mr Trump did a deal with Russia that ended the war
and sold out Ukraine, that would be bad for Western civilisation. But it
would reduce energy bills.
What’s more, Trump enthusiasts in the C-suite have plenty of grumbles

about Joe Biden. Mention Lina Khan, who oversees the Federal Trade
Commission (the antitrust police), or Gary Gensler, who leads the Securities
and Exchange Commission (the Wall Street police), and they inhale sharply.
Mr Biden wants to raise taxes on companies. His administration also wants
to go ahead with the Basel III “Endgame” regulations, which oblige big
banks to hold perhaps 20% more capital on their balance-sheets, sedating
animal spirits and damaging profitability.
Yet this bullish case for Mr Trump’s economic management is complacent. It

fails to recognise how Trumponomics—a mix of deficit-funded tax cuts and
tariffs—would work differently today. And it ignores the ways in which Mr
Trump’s most chaotic tendencies could threaten America, including its
companies.
In his first term the economy did better than many economists (including
ours) expected. That was in part because Trumponomics turned out to be
more moderate than the campaign had promised. The economy was also
running further below capacity than thought, making it possible to cut taxes
without stoking inflation. Strong overall growth and low inflation masked
the damage done by Mr Trump’s protectionism.
There is no evidence that Mr Trump has updated his approach: he is still a

tax-cuts-and-debt guy. But the economic conditions have changed. For the
past two years the Federal Reserve has been trying to bring down inflation.

Though it has nearly succeeded, the labour market remains tight. Today
2.8m more 25- to 54-year-olds are in work than would be if the employment
rates of January 2017 had persisted. Then there were 1.3 unemployed
workers for every job opening; today there are only 0.7. As a result the
economy is more prone to overheating.
The budget is in worse shape, too. In 2016 the annual deficit was 3.2% of
GDP and debt was 76% of GDP. The forecasts for 2024 are 5.8% and 100%,
respectively. Should Mr Trump once again pursue tax cuts, the Fed will have
to hike up interest rates to offset the stimulus, making it costlier for
businesses to raise capital and for the government to service its growing debt
pile.
These are the conditions under which Latin American populists bully their
central banks to keep rates low, a practice Mr Trump dabbled in last time.
The Fed is supposed to be independent, but Mr Trump will have a chance to
nominate a stooge as chair in May 2026 and a pliant Senate could indulge
him. The risk of more inflation would surge, perhaps exacerbated by more
tariffs, which would also slow growth.
On top of that big macroeconomic risk are many others. Firms would not
relish further trade restrictions, but some members of Mr Trump’s circle
have floated a 60% tariff on imports from China. Lots of companies like the
federal government’s support for renewable energy (which Mr Trump calls
the Green New Scam). He has promised the biggest deportation scheme in
American history to reduce the number of illegal immigrants in the country.
As well as causing misery, this would be a shock to that tight labour market.
As ever, saying what Mr Trump would actually do is very hard: he has few
fixed beliefs, is a chaotic boss and can reverse position several times a day.
In a town hall in Iowa he said he would be too busy in his second term to
seek retribution against his political enemies. That was a few hours after his
own campaign sent out an email with the subject line: “I am your
retribution!” He could recognise Taiwan’s independence, prompting a
meltdown in Beijing and a blockade of the island. Or he could walk away
from Taiwan in exchange for China buying more stuff from America.
Businesses often say that what they fear most is uncertainty. With Mr Trump
that is guaranteed.

This unpredictability could make a second Trump term very much worse
than the first. His administration would lack establishment types like Gary
Cohn, once of Goldman Sachs, to shuffle the president’s in-tray and hide the
madder ideas from him. More moments like January 6th are possible, as is a
full-on revenge presidency. The idea that in this scenario business leaders
could keep a low profile and focus on EBITDA is fanciful. Employees,
customers and the press would demand to know where bosses stood and
what they proposed to do. The administration might in turn take exception to
every whiff of criticism.
In the long run, the idea that corporate profits can be insulated from societal
upheaval is a fantasy. If Mr Trump is broadly corrupting of American
politics, and businesses are seen to profit from his rule, that poses a big risk
to them in the future. In Latin America, when big businesses have become
associated with autocrats the result was usually that capitalism was
discredited and the appeal of socialism rose. That seems unthinkable in
America. But so, until recently, did a second Trump term. ■
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https://www.economist.com/leaders/2024/01/18/donald-trump-is-winning-business-beware

Hindu nationalism
Narendra Modi’s illiberalism may imperil India’s

economic progress
Fulfilling his great-power dream requires restraint, not abandon
Jan 18th 2024 |
“POLITICS AND religion cannot be mixed,” ruled India’s Supreme Court in

1994 in what was then considered a decisive elucidation of the country’s
secular constitution. Tell that to the millions who on January 22nd will
watch Narendra Modi preside over the consecration of a controversial
$220m Hindu temple, in a ceremony that marks the informal launch of his
campaign for a third term as prime minister in elections to be held by May.
To the alarm of India’s 200m Muslims, and many secular-minded Indians, it
will mark a high point of a decades-long Hindu-nationalist project to
dominate India.

Even as Mr Modi appears at the temple in Ayodhya in northern India, the
other pillar of his mission continues apace: India’s extraordinary
modernisation. The country is the planet’s fastest-growing major economy
and now its fifth-biggest. Global investors toast its infrastructure boom and
growing technological sophistication. Mr Modi wants to be India’s most
consequential leader since Jawaharlal Nehru. His vision of national greatness
is about wealth as well as religion. The danger is that a hubristic Hindu
chauvinism undermines his economic ambitions.
To understand the strange symbolism of Ayodhya you have to travel back in

time. Mr Modi’s once-fringe party, the Bharatiya Janata Party (BJP), built its
name by campaigning over the status of a mosque there from 1990. It
organised a rally of Hindu activists in 1992 that led to its destruction,
sparking Hindu-Muslim riots across South Asia.
The lavish Hindu temple that Mr Modi is about to open is built on the site of
that destroyed mosque. For many Hindus this represents the righting of an
ancient wrong: the location is also the mythical birthplace of the Hindu god
Ram. Previous BJP leaders, such as Atal Bihari Vajpayee, downplayed the
party’s Hindu-first ideology, known as Hindutva, to win mainstream support.
After ten years in power, Mr Modi, who was implicated in deadly anti-
Muslim riots in 2002 when he ran Gujarat state (he was later absolved by the
courts), no longer seems so restrained.
The BJP’s radicals have been empowered. There have been mob attacks on
Muslims. Several BJP-run states have passed anti-conversion laws. Mr Modi
has exacerbated Islamophobia by, among other things, promoting a
citizenship law that discriminates against Muslims. His strongman style of
rule has also featured harassment and attacks on the pillars of India’s old
liberal order, including the press, charities, think-tanks, some courts and
many opposition politicians.
Were Mr Modi and the BJP to win a third term—as seems almost certain—
many worry that the Hindutva project would go further. BJP activists are
agitating to replace mosques with temples at hundreds of other sites. Mr
Modi wants to scrap constitutional provisions for Muslim family law. A
possible redrawing of parliamentary districts could see power accrue to the
populous Hindi-speaking and BJP-supporting north, at the expense of the

richer industrialised south. Mr Modi, aged 73, could rule as a strongman for
a further decade or more.
The whiplash-inducing reality is that this religious and political struggle is

occurring alongside enormous economic optimism. Growth has exceeded
7% in recent quarters. The country now has vastly improved transport
infrastructure, huge and deep equity markets, stronger banks, massive
currency reserves, a less complex tax system and less corruption. India is at
last becoming a single market, letting firms exploit economies of scale and
promising faster business investment. While manufacturing has yet to take
off, industry is starting to couple with global supply chains, from internet
routers to electric two-wheelers. The giant technology-services sector hopes
to make a fortune as companies around the world seek help in adopting
artificial intelligence.
The economic record is still far from perfect. The rate of formal job creation
is much too low—one reason Mr Modi has built up digital welfare-schemes
for the poor, augmenting his image among ordinary Hindus as a leader who
cares about the downtrodden. India does too little to develop human capital
and its education system is terrible. Some powerful firms have too much
influence. Yet it is a foundation worth building on.
The question is whether the religious agenda and rapid economic

development are compatible. The answer is yes, but only up to a point. In the
past ten years many of Mr Modi’s economic accomplishments have existed
alongside his religious agenda. The BJP’s parliamentary strength and Mr
Modi’s popularity have made it possible to push through difficult reforms,
including a national sales tax. The government’s unity and clout have given
investors confidence that policy is stable, even though civil liberties have
been eroded.
Yet if Mr Modi in his third term were to lurch further towards Hindutva and
autocratic rule, the economic calculus would change. Take the north-south
divide. If India continues to grow fast, the industrialised, wealthy and
technologically advanced south is likely to pull further ahead, drawing
labour from the north. But Hindutva holds little appeal in the south, and by
pushing it further while concentrating more power in his own hands, Mr

Modi could exacerbate already rising tensions over internal migrants, tax
revenues and representation.
Or consider economic stability, which depends on the management of the

economy by internationally credible technocrats, not BJP ideologues. You
can overdo how much store companies put by the rule of law—they invested
in China for decades. But if decision-making becomes authoritarian and
erratic as Mr Modi grows old and isolated, and if institutions are weakened,
firms will grow warier of deploying huge sums of capital.
As he stands at the ceremony at Ayodhya before admirers and acolytes—the

leaders of India’s new, brash, nationalistic elite—does Mr Modi see this
danger? He has in the past: before he was prime minister he tried to rebrand
himself from a Hindu zealot into a pragmatic manager of his successful
home state of Gujarat. With a third term looming, he should realise that, to
fulfil his dream of making India a great power, the balancing-act must
continue. It requires restraint, not abandon. If Mr Modi fails, the hopes of
1.4bn people and the prospects for the brightest spot in the world economy
will be dashed. ■
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https://www.economist.com/leaders/2024/01/18/narendra-modis-illiberalism-may-imperil-
indias-economic-progress

Bagehot weeps
How America accidentally made a free-money

machine for banks
The Federal Reserve should switch it off
Jan 18th 2024 |
HIGHER INTEREST rates have brought America’s bankers both ruin and
riches. Less than a year ago rising rates caused Silicon Valley Bank (SVB)
and then First Republic to fail, the largest bank collapses since 2008. Yet on
January 12th JPMorgan Chase reported its seventh consecutive quarter of
record net-interest income. One reason the crisis did not spread in 2023 is
that the Federal Reserve contained it with a new—and generous—loan
programme. Unfortunately, that has come at a cost that the Fed should have
foreseen. Thanks to another turn in the interest-rate outlook, its intervention
has mutated into a free-money machine for any bank brazen enough to
exploit it.

The bank term funding programme (BTFP) offers banks loans secured
against the face value of Treasury bonds. The idea was to stop wobbly banks
having to sell Treasuries to raise cash if depositors fled. At SVB, a fire sale
induced by a bank run crystallised losses, because higher rates had reduced
the prices of long-term bonds far below their face value. But the BTFP lends
the face value, rather than the market value, of the securities against which
its loans are secured and, sure enough, its generosity succeeded in shoring up
the system and stopping what could have become a severe crisis.
Today, however, the BTFP is itself causing trouble. The interest rate that
banks must pay to borrow reflects, with a small premium, the one-year
interest rate set in financial markets. That is in turn based on predictions of
the average Fed policy rate over the next year. Because investors are betting
the central bank will cut rates significantly, the cost of borrowing today is

only 4.8%. Yet because those rate cuts have not yet happened, the Fed still
pays banks 5.4% on their cash balances.
In other words, banks can draw loans just to make a spread of 0.6 percentage
points, risk-free, at the expense of the central bank. Should the expected rate
cuts take place, the banks need not suffer a negative interest margin, because
they are free to repay the loans early, a valuable option the Fed, in effect,
gave away for nothing. Borrowers’ identity will eventually be made public,
so the only constraint on them is the risk to their reputations—but some may
consider such shameless opportunism a virtue.
Naturally, the use of the BTFP has shot up. Since the start of November
outstanding balances have risen from $109bn to $147bn. It is not certain this
is all arbitrage, but over the same period bonds have risen in value, shrinking
the problem the BTFP was designed to fix. This strongly suggests that the
motive for the new borrowing is opportunism rather than necessity. And
because the Fed is owned by taxpayers, the free money the banks are
hoovering up comes at the taxpayers’ expense.
What should the Fed do? In the heat of the crisis it rashly promised to keep
the BTFP open until March 2024. It has since strongly hinted that the facility
will cease making new loans then. Shutting the BTFP early could undermine
the credibility of the Fed’s promises. But it should immediately amend the
interest rate on new loans, either to track its policy rate or to appropriately
price the prepayment option. Either fix would remove the scope for
arbitrage.
In the next crisis the Fed should design its interventions more carefully. A
central-banking rule named after Walter Bagehot, a 19th-century editor of
The Economist, prescribes that central banks should lend freely to solvent
institutions that are threatened by bank runs, against good collateral and at a
penalty rate of interest. By lending at generous rates, with a reverse-haircut,
and to banks that might be insolvent on a mark-to-market basis, the Fed has
arguably violated all three of Bagehot’s conditions. The crisis in 2023 was
ugly, but so was the fix. ■

https://www.economist.com/leaders/2024/01/18/how-america-accidentally-made-a-free-
money-machine-for-banks


Show trial
Charging Israel with genocide makes a mockery of

the court
And it diverts attention from the real humanitarian crisis in Gaza
Jan 18th 2024 |
GENOCIDE IS A uniquely horrific crime. Not because it is the bloodiest:

Stalin and Mao killed many more people in gulags and famines than the
nearly 6m Jews murdered by the Nazis. But the Holocaust was seen as so
monstrous that the UN adopted the Genocide Convention, promising never
again to allow an attempt to wipe out a group of people, or part of one,
simply because of their nationality, race, religion or ethnicity.
That promise has been repeatedly broken—in Bosnia, Darfur and Rwanda,
to name a few. Each new case brought before the International Court of
Justice (ICJ) in The Hague ought to give the world a chance to make good
on its word and help strengthen the taboo against genocide by clarifying the

obligations of countries to prevent and punish it. Alas, South Africa’s claim
that Israel is committing genocide against the Palestinians, heard by the ICJ
this week, cheapens the term. It risks weakening the taboo and body of law
aimed at preventing it. It obscures the real worry that Israel’s destructive
campaign is breaking the laws of war; and the fact that permanent
occupation is wrong.
With its case, South Africa is making a mockery of the court. Genocide
requires that Israel is killing people in Gaza simply for being Palestinian. In
fact it is targeting Hamas fighters in response to a deadly attack on its
territory. Some far-right Israeli politicians have used hateful language, but
they are not articulating government policy. South Africa has called on the
ICJ to impose a unilateral ceasefire on Israel, which would leave it unable to
defend itself against Hamas, a terrorist group whose founding charter calls
for the killing of Jews. By trying to hold Israel solely responsible for the
death of Palestinians, it is vindicating Hamas’s tactic of fighting from
schools and hospitals in the knowledge that the death of civilians killed in
the crossfire will inflame global public opinion.
The ICJ is unlikely to offer a final ruling for years. South Africa’s case is so
flimsy that it would be shocking if its final arguments convince the judges
that Israel had committed genocide. But in the next few weeks they must
rule on whether South Africa has a “plausible” claim in order to decide
whether to impose “provisional measures”. This is a lower bar and such a
provisional ruling would be widely seen as a finding that Israel was indeed
guilty of genocide, even if the court were later to rule it was not. Israel
would claim it is being treated unfairly, and it would be right. Instead of
restraining Israel in the war, such a provisional ruling might even embolden
it to dismiss all international criticism; Israel would feel it is damned, no
matter what it does.
It would be even more absurd for the court to order Israel—but not Hamas,
over which it has no jurisdiction—to cease military operations in Gaza.
Israel is still under attack. It would refuse to give up its right to self-defence,
as enshrined in the UN Charter. Besides, the only way of enforcing such a
ruling would be through the UN Security Council, which America would
veto.

South Africa is setting a terrible precedent. Its case is more of a political act
than a legal one, long on theatre and short on principle. After all, earlier this
month South Africa rolled out the red carpet for Sudanese génocidaires. One
consequence is that the next time one country accuses another of genocide,
the charges will be easier to brush off, regardless of their merits.
Those appalled by the suffering in Gaza may argue that genocide was the
only charge that could be brought, because the ICJ has no jurisdiction over
other war crimes. Yet the focus on an implausible crime diverts attention
from the possibility that Israel is breaching the laws of war. These require
Israel to distinguish between civilians and combatants and to minimise
civilian casualties by being proportionate in the use of force.
The death toll of women and children raises grave doubts over whether
Israel is meeting these obligations. It may also be failing to meet its duty
under the Geneva Convention to provide medicine and food to civilians in
the areas it occupies. As Gaza nears famine, its people do not need
grandstanding, they need food. Israel’s leaders need to realise that if they
block supplies, they will be held accountable by the court of public opinion
—the only court available. ■

https://www.economist.com/leaders/2024/01/18/charging-israel-with-genocide-makes-a-
mockery-of-the-court

Pics and it didn’t happen
AI-generated content is raising the value of trust

Who did the posting will soon matter more than what was posted
Jan 18th 2024 |
IT IS NOW possible to generate fake but realistic content with little more
than the click of a mouse. This can be fun: a TikTok account on which—
among other things—an artificial Tom Cruise wearing a purple robe sings
“Tiny Dancer” to (the real) Paris Hilton holding a toy dog has attracted 5.1m
followers. It is also a profound change in societies that have long regarded
images, video and audio as close to ironclad proof that something is real.
Phone scammers now need just ten seconds of audio to mimic the voices of
loved ones in distress; rogue AI-generated Tom Hankses and Taylor Swifts
endorse dodgy products online, and fake videos of politicians are
proliferating.

The fundamental problem is an old one. From the printing press to the
internet, new technologies have often made it easier to spread untruths or
impersonate the trustworthy. Typically, humans have used shortcuts to sniff
out foul play: one too many spelling mistakes suggests an email might be a
phishing attack, for example. Most recently, AI-generated images of people
have often been betrayed by their strangely rendered hands; fake video and
audio can sometimes be out of sync. Implausible content now immediately
raises suspicion among those who know what AI is capable of doing.
The trouble is that the fakes are rapidly getting harder to spot. AI is
improving all the time, as computing power and training data become more
abundant. Could AI-powered fake-detection software, built into web
browsers, identify computer-generated content? Sadly not. As we report this
week, the arms race between generation and detection favours the forger.
Eventually AI models will probably be able to produce pixel-perfect
counterfeits—digital clones of what a genuine recording of an event would
have looked like, had it happened. Even the best detection system would
have no crack to find and no ledge to grasp. Models run by regulated
companies can be forced to include a watermark, but that would not affect
scammers wielding open-source models, which fraudsters can tweak and run
at home on their laptops.
Dystopian possibilities abound. It will be difficult, for example, to avoid a

world in which any photograph of a person can be made pornographic by
someone using an open-source model in their basement, then used for
blackmail—a tactic the FBI has already warned about. Perhaps anyone will
be able to produce a video of a president or prime minister announcing a
nuclear first strike, momentarily setting the world on edge. Fraudsters
impersonating relatives will prosper.
Yet societies will also adapt to the fakers. People will learn that images,
audio or video of something do not prove that it happened, any more than a
drawing of it does (the era of open-source intelligence, in which information
can be reliably crowdsourced, may be short-lived). Online content will no
longer verify itself, so who posted something will become as important as
what was posted. Assuming trustworthy sources can continue to identify
themselves securely—via URLs, email addresses and social-media platforms
—reputation and provenance will become more important than ever.

It may sound strange, but this was true for most of history. The era of
trusted, mass-produced content was the exception. The fact that people may
soon struggle to spot the invisible hand of AI does not mean the marketplace
of ideas is doomed. In time, the fakes that thrive will mostly be the funny
ones. ■

https://www.economist.com/leaders/2024/01/18/ai-generated-content-is-raising-the-
value-of-trust

Letters
Letters to the editor
On Joe Biden, migrants, green data, electrifying heat, wine, meeting rooms :: A selection of
correspondence

On Joe Biden, migrants, green data, electrifying heat, wine, meeting

rooms
Letters to the editor

A selection of correspondence
Jan 18th 2024 |
Letters are welcome via e-mail to letters@economist.com

Go, Joe, go!
You criticised the lack of alternatives in the Democratic Party to Joe Biden
(“Roadworthy in ’24?”, January 6th). In defence of the president, his
administration has focused on policies that chime with ordinary Americans,
such as lowering everyday expenses for families, achieving historic levels of
employment, revitalising manufacturing, rescuing the economy during the
pandemic and rebuilding infrastructure. He has expanded benefits for
veterans, enacted laws to reduce gun violence, protected marriage rights,
confirmed diverse federal judges, supported Ukraine against Russian

aggression, executed counter-terrorism missions, provided student-debt
relief, advanced racial justice, tackled climate change and improved health
care.
We Democratic voters are a varied and splintered group who never really see
eye to eye. We barely coalesced around Mr Biden in 2020, until we did. Mr
Biden didn’t win a primary in 2020 until African-American voters backed
him in South Carolina, a victory he rode all the way to the general election.
Don’t mistake our whining and complaints for anything more than just that;
it is part of our democratic process. Yes, Mr Biden is much older than we
would prefer, and a little unsteady on his feet, but so too was Franklin
Roosevelt and look at what he accomplished. Mr Biden’s mind is as sharp as
ever. The gaffes and stumbles are just part of who he is. He isn’t done yet.
He is just getting started and we would be wise not to count him out. His
critics will be eating crow yet again come November.
NIGEL SONARIWO
Founder and CEO
Nth-Communications
Rockville, Maryland
Kamala Harris should indeed reconsider seeking a second term as vice-

president. Voters lack confidence in her, a big danger to Mr Biden’s
electability. Selecting someone like Evan Bayh, Tom Daschle or Susan Rice
for vice-president would completely change the campaign narrative,
providing a universally respected commander-in-chief in waiting. Ms Harris
could become secretary of state or UN ambassador.
THOMAS O’BRIEN
Charlottesville, Virginia
You underestimate the Democrats. They shrewdly outplayed the Republicans

in 2020 and 2022 and there is a decent chance they will do so again in 2024,
potentially holding onto the White House and Senate and even winning the
House. Donald Trump is the key. Mr Biden does not need to energise his
base. Mr Trump will do that for him.

MARK EVERS
Lake Oswego, Oregon
Measuring migrant numbers
“How to detoxify migration politics” (December 23rd) was a thought-

provoking piece on an important issue. However, the statistic you cited on
international migrants didn’t capture the true growth of this population. In
1960 3.1% of people lived outside their country of birth, you said, and today
it is 3.6%, a figure that has “barely changed”. That may be true, but the
global population has grown more rapidly from 1960 to the present day. So
for context, in 1960, there were approximately 75m international migrants
and in 2021 there were 281m, an increase of 275%. This is an alternative
measure that may help us appreciate the scale of the migration issue more
comprehensively.
CHIA-HUI LIN
Taipei, Taiwan

Awash with green data
It would help if each individual who is trying to assess what his or her
responsibility is to stop climate change had better access to unbiased
information (“The green man’s burden”, December 23rd). It is the biggest
problem facing a DIY climate warrior. For instance, trying to determine
whether to trade in a three-year old petrol car for an electric one raises so
many issues. How efficient is the petrol car compared with the average?
How much carbon will building and delivering a new electric one use? What
will be the carbon footprint of the electricity powering the new car?
Many people who want to switch to green fall back on fuzzy, unverified data
that is usually supplied by one of the competing technology groups. Just try
finding figures comparing, say, the carbon footprint of a central-heating
system using locally produced gas compared with LNG or with a heat pump
using energy that relies on coal for a fifth of its generation.
Many superficially attractive solutions do more harm than good. A truly

objective, regularly updated database would be a great help, providing the
numbers on climate change and cost implications for various materials and
technologies. Green organisations could easily produce this and it would

have a far greater practical impact than flying to global conferences on, er,
climate change.
DAVID SCOTT
Port St Mary, Isle of Man
How to electrify heat
It is not just wind turbines and solar panels that must be plugged into
Britain’s electricity grid (“The Great Rewiring”, January 6th). Electrifying
heat is a critical step towards decarbonising our economy. But this will put
even more pressure on the grid as electrifying heat demands power. To
reduce grid reliance, we should be looking to decentralised heat networks.
By 2030, the overall European market share of heat networks is expected to
reach 30% and meet half of Europe’s heat demand by 2050. However, in
Britain we lag behind in our approach to decentralised heat networks. This is
exemplified by Scotland, which has the lowest share of heat supplied by
renewable sources in Europe, and yet 53% of its total energy consumption is
for heat.
A decentralised network, with onsite renewables, will ease pressure on our

overburdened grid and help support our pathway to net zero. Britain must

invest in new technologies and a smart network to redistribute power for
heating when the grid is at its greatest demand.
JOSH BULLARD
Divisional director of smart energy and sustainability
Hydrock
Bristol
What is in a glass of plonk?
The special on “Wine and climate” (December 23rd) was an excellent read
over a glass of Douro. But as well as the grape varieties and terroir, yeast is
also critical for wine. Wine yeasts are fungi best known for their ability to
convert sugars to alcohol. Yet they do much more by producing glycerol,
organic acids and a wide range of aroma compounds that are all essential to
wine. New yeast varieties are under development and will be an important
factor shaping the geography and practices of winemaking under changing
climates. After all, as Sheldon pointed out in the “Big Bang Theory”, wine is
nothing but grape juice pre-digested by a fungus.
PROFESSOR KIRAN PATIL

University of Cambridge

The salsa room
Max Flannel, The Economist’s agony uncle, clearly missed the mark in his
advice to someone who complained about office meeting rooms being
named after different types of savoury dips (Bartleby, December 23rd). I
would have simply told the writer to develop a sense of hummus.
I. J. SHAPIRO
Toronto

https://www.economist.com/letters/2024/01/18/letters-to-the-editor

By Invitation
A former ambassador argues that Pakistan needs a new
political compact
Pakistan’s election :: Free and fair elections are just the start of what’s required to bring
stability and prosperity, says Husain Haqqani

Pakistan’s election
A former ambassador argues that Pakistan needs a

new political compact
Free and fair elections are just the start of what’s required to bring stability
and prosperity, says Husain Haqqani
Jan 16th 2024 |
PAKISTAN’S NEXT general election, scheduled for February 8th, is

unlikely to resolve problems rooted in the country’s troubled history. Carved
out from the Muslim-majority portions of British India, Pakistan has spent
the best part of its life competing with India. In the process, the country has
developed nuclear weapons and boasts the world’s sixth-largest standing
army. But it has faced repeated economic failures and persistently poor
human-development indicators.
Pakistan’s greatest failure, however, has been in developing a workable

political system. For more than two decades after its creation in 1947, the

country struggled to agree on a constitution and failed to hold general
elections. The first ostensibly free and fair election, held under military rule
in 1970, in response to huge pressure from civilians, led to civil war and the
transformation of the country’s eastern wing into the independent state of
Bangladesh. Ten more elections since then have either been disputed by the
loser or resulted in governments that could not complete their terms.
Pakistan’s army, which does not trust the country’s politicians and has its
own views on how the country should be run, has assumed power in four
coups. The generals believe that the military has kept Pakistan’s disparate
nationalities and ethnicities from tearing each other apart. But the military’s
direct, and often indirect, intervention has not ended political chaos; indeed,
it has caused much of it.
The army wants the final say on foreign policy and national security, and
most politicians seem willing to concede that. Military-backed efforts to
create dyarchy, or dual control, which allows generals and politicians to play
well-defined roles in running the country, have not worked. Politicians
initially favoured by generals have eventually turned on them, complaining
of military meddling in all spheres of policy.
Pakistanis have not abandoned their desire for democracy, but Pakistan’s
political class has failed to make democracy work. After each election,
whoever is popular at the time takes up office, tries to silence their
opponents, reportedly enriches their family and friends, and refuses to
compromise with other politicians, until being toppled and, in most cases,
jailed. There is little regard for democratic norms between elections: critics
of the government and the businesses of opposition politicians are targeted
by the police, security services, tax authorities or others, often on flimsy
grounds.
Politics in Pakistan is not about alternative policies or visions; it is deeply

personal and factional. Some factions, or parties, have evolved into dynasties
while others are propelled by the populist rhetoric of a charismatic celebrity.
Leading politicians often ignore parliament and show little regard for a free
press, especially while in power.

In his tenure of three years and eight months as prime minister, Imran Khan
attended just 38 (9%) of the 442 sittings of the National Assembly. His
predecessor, Nawaz Sharif, did only marginally better, by turning up at
13.4% of parliamentary sittings. The attendance of most MPs in recent years
has also been poor and continues to decline.
Politicians complain about repression while out of favour with the army but
target their rivals for similar treatment upon gaining power, usually with the
generals’ blessing. This pattern has become more blatant in recent years. In
2018 Mr Khan and his supporters saw nothing wrong with the military
allegedly manipulating elections in his favour and against Mr Sharif. This
time around, Mr Khan is at the receiving end of military-backed persecution,
which has the tacit support of Mr Sharif and other opponents of Mr Khan.
Almost everyone in Pakistan, including the army’s current chief, publicly

agrees that the military should have no role in politics. However, an election
that is free and fair but offers voters a choice between one of Pakistan’s
political dynasties and a conspiracy-minded populist like Mr Khan will do
little to address the country’s serious economic and security problems.
Tough decisions, such as expanding the tax base and making peace with
India, cannot easily be addressed in a polarised polity. They require a
measure of national consensus.
Economic realities require Pakistan to sell off or shut down state-owned

enterprises that have been losing money for years, including the national
airline and various transport and energy concerns. Swathes of the economy
including agriculture, real estate and retail that pay little or no tax need to
contribute more, to reduce Pakistan’s swelling debt and deficit: between now
and 2026, Pakistan needs to repay $78bn in external debt, a tall order for an
economy whose annual GDP is around $350bn. In addition to expanding its
tax base, Pakistan would benefit from opening up trade with India, for which
normalisation of diplomatic relations is a precondition.
Jihadist terrorist groups, encouraged or tolerated as part of sub-conventional

warfare against India, have become a security threat to Pakistan. They
benefit from the narrative of persecution that has become part of Pakistan’s
psyche and is advanced by populists who blame conspiracies by India, Israel

and America (or Hindus, Jews and Christians) against Islamic Pakistan for
the country’s problems.
Action against the jihadists, and countering their narrative, is as important as

economic reforms and shifts in foreign policy. None of these major
initiatives is possible while Pakistan’s politicians are tangled in a game of
oneupmanship or in confronting the army.
If Pakistan is to become a functioning democracy and address its complex,

long-running problems, free and fair elections should not be the end but the
beginning of the country’s journey. Pakistan needs a grand bargain between
its generals and its politicians, as well as among the politicians, to determine
political ground rules, to establish mechanisms for enforcing them and to
end the prevailing “winner takes all” game of power.
Barring that, Pakistan will continue to lurch from one crisis to the next, and
another election will make little difference. ■
Husain Haqqani is a former Pakistani ambassador to America, Diplomat-in-

Residence at the Anwar Gargash Diplomatic Academy in Abu Dhabi and
Senior Fellow at the Hudson Institute in Washington, DC.
This article was downloaded by calibre from https://www.economist.com/by-

invitation/2024/01/16/a-former-ambassador-argues-that-pakistan-needs-a-new-political-
compact

Briefing
Narendra Modi’s electoral juggernaut looks unstoppable
Invincible Indian :: But Indian democracy is stronger than it seems

Invincible Indian
Narendra Modi’s electoral juggernaut looks

unstoppable
But Indian democracy is stronger than it seems
Jan 18th 2024 | AYODHYA
THE CITY of Ayodhya is central to the story of Ram, one of Hinduism’s

most revered deities. It is also central to the fortunes of India’s ruling
Bharatiya Janata Party (BJP). Starting in the late 1980s, the BJP agitated for
the replacement of a 450-year-old mosque in Ayodhya with a temple,
because it occupied the spot where Ram had supposedly been born. In 1992
a mob worked into a frenzy by fire-breathing speeches by the BJP’s leaders
did indeed destroy the mosque, prompting riots across India in which some
2,000 people, mostly Muslims, were killed. Since then, despite the
bloodshed, the BJP has pledged at election after election to get the temple
built. It is therefore hard to imagine a more triumphant moment for Narendra

Modi, the prime minister, than the ceremony he will lead on January 22nd,
when the long-awaited temple will at last be consecrated.
Unofficially, the consecration will also serve as the launch of the BJP’s
campaign for the next national election, expected to be held over several
weeks in April and May. Mr Modi has asked all Indians to celebrate the
temple’s inauguration by lighting lamps, much as Hindus do on Diwali, a
holiday that commemorates Ram’s triumphant return to Ayodhya after
slaying the king of the demons. But only 80% of Indians are Hindu, and not
all of them see the construction of the temple as a victory, let alone the 14%
who are Muslim. Business tycoons and Bollywood stars will attend the
consecration, to flatter Mr Modi, but most opposition politicians—and some
Hindu priests—are staying away.

To Mr Modi’s detractors, the fact that he would make the source of such
bloodshed the centrepiece of his campaign is proof of his malign intentions.
His blurring of religion, government and electioneering shows his disdain
for India’s secular constitution and its strict campaign rules. Worse, they
fear, if these abuses help propel the BJP to its third election victory in a row,
as expected, Mr Modi will go further, and attempt to turn India into an
authoritarian Hindu state.
But as true and troubling as it is that Mr Modi and his party deliberately
stoke communal tensions and undermine institutions, Indian democracy is
hardly a lost cause. The BJP is not as all-conquering as it first appears. Its
vote share in a general election has never reached 40%, a mark its main
rival, the Congress party, passed seven times in its heyday (see chart).
Moreover, the BJP benefits as much from Mr Modi’s personal popularity
and its superior electoral machine as from popular support for its ideology.
And India’s institutions have survived worse abuses.
Amrit large
The BJP wants to create a national identity based on Hindutva, or Hindu-

ness, that it says was suppressed for centuries by Muslim and British
invaders. Hence the jamboree in Ayodhya, which is above all a rallying cry
to the BJP’s electoral base. The guest list is dominated by leaders of the
party and affiliated Hindu nationalist groups, including the Rashtriya
Swayamsevak Sangh (RSS), a sort of pious cadet corps, and the Vishva
Hindu Parishad (VHP), which launched the temple-building campaign.
The ceremony concludes “500 years of continuous struggle for Hindus”,

says Champat Rai, the VHP’s vice-president and general secretary of the
trust building the temple. The event, he says, will send a clear message to
Indian Muslims: “They should search for their roots: who were they four or
five hundred years ago?” They were Hindus, he continues, and should “say
that this land is our mother”.
But Hindutva is not the only thing the BJP cares about in Ayodhya. It is also
boosting the local economy by pouring $9.6bn into development schemes,
including a new airport and a new railway station. It has grand plans to turn

the city into a tourist hotspot, with a Ram “experience centre”, a fountain
park, some 60 hotels and “patriotic” wedding venues.
The city thus neatly captures the BJP’s sales pitch: that it is building a
prosperous, confident new India by restoring Hinduism to its rightful place
as the bedrock of society. The violence of 1992 was a “sad moment”, says
Ayodhya’s BJP mayor, Girish Pati Tripathi. “But Indian civilisation has
passed it. We’re moving forward. Why are Muslims worrying so much?”
This blend of economic development and Hindu revivalism is an appealing

formula for many, especially in Hindi-speaking northern and central India.
Pollsters believe it will win the BJP another majority in the Lok Sabha, the
543-seat lower house of Parliament, either on its own or as head of a
coalition. That would make Mr Modi India’s only prime minister to win
three consecutive terms since the first, Jawaharlal Nehru of Congress.
Mr Modi, who is 73, is another of the BJP’s strengths. The image he has
cultivated—muscular, pious and avuncular—appeals across India. His
humble origins as the son of a tea-seller strike a chord with poorer Indians.
His nationalist rhetoric resonates with the aspirational middle class. His
reputation as an adept, industrious administrator appeals to the wealthy.
Many also applaud his efforts to raise India’s international status. Mr Modi’s
popularity accounted for up to a third of the BJP’s votes in the most recent
national election, surveys suggest.
No Meru accident
Mr Modi has not earned this reputation by chance, of course. The BJP
carefully cultivates it, in part by strong-arming media to ensure positive
coverage. In July a survey of Indian journalists showed that 82% thought
their employers favoured the BJP. The party also enhances Mr Modi’s image
by attaching his name and face to popular government programmes.
Above all, the BJP has a clear organisational edge. The party claims to be
the world’s biggest, with over 180m members, including 100m “active” ones
(China’s Communist Party has 98m). Verifying that is hard: a call to a toll-
free number is all that is needed to join. Still, academics who study the BJP
say it can mobilise vast cohorts of party workers and volunteers, many of
whom also belong to other Hindu nationalist groups. Managing them using a

dedicated website and smartphone app, it appoints several to oversee each of
India’s million-odd polling stations, and even individual polling booths
within them, with a party worker responsible for each page of the electoral
roll.
Among them is Sachin Nahar, a 39-year-old Hindu farmer in the central state
of Madhya Pradesh. Like his father and grandfather, he joined the RSS as a
child, attending weekly sessions of exercise and political discussion. He then
volunteered as a BJP booth worker in 2013 and now oversees 30 voters. He
regularly visits them in person, adds them to WhatsApp groups and ensures
that they turn out to vote.
For Mr Nahar Hindutva is central to the BJP’s message. He reminds voters

that Mr Modi has fulfilled many long-standing Hindu-nationalist demands,
such as ending the special constitutional status of India’s only Muslim-
majority state, Jammu & Kashmir, and getting the temple in Ayodhya built.
He and other BJP supporters in his constituency, which is 11% Muslim, are
celebrating the temple’s consecration with daily marches during which they
chant, “Jai Shri Ram” (“Victory to Lord Ram”). As for the future, he hopes
—and tells voters—that the BJP will replace more mosques with temples
and scrap special laws for Muslims regarding inheritance, divorce and other
family matters.
But the BJP arms him with more than talking points about communal
disputes. It also provides a completely different means to target voters, by
giving him a list of the beneficiaries in his district of various forms of
government welfare. Under Mr Modi the government has rolled out new
digital identification, payment and data-management platforms which allow
most Indians to access public services and receive direct cash transfers from
the state. Mr Nahar highlights this system in his outreach, crediting the
prime minister.
The BJP is equally organised and efficient when it comes to social media. It
claims only 20 people work in its National Digital Operation Centre,
producing posts for its official accounts and trawling platforms for BJP-
friendly content to promote. The heavy lifting is done by an army of
volunteers (the party says it does not pay them), who help circulate official
BJP content and create material of their own.

These digital campaigners often use WhatsApp, even after Meta, its parent
company, tried to counter disinformation by restricting mass messages. “We
invite like-minded people to the group, they invite their friends, they make
separate groups and invite more people, and so it spreads,” says Rathan
Ramesh Poojary, a BJP media co-ordinator in Karnataka. He denies
responsibility when volunteers advocate violence against Muslims: “We
don’t support killing.” Still, he admits, “These guys support our ideology.”
The popularity of the BJP’s Muslim-bashing puts opposition parties in a

bind. Most are reluctant to denounce Hindutva policies for fear of irking
Hindu voters. In fact, some Congress leaders have embraced “soft
Hindutva”—visiting temples, building statues of Hindu deities and
schmoozing with holy men. So far, that has annoyed secular and non-Hindu
supporters without luring many votes from the BJP.
But Hindutva presents problems for the BJP as well. Its appeal is much more
limited in south India, where Islam arrived not by conquest but with
proselytising merchants. Hindu reformist movements have more influence in
that part of the country and fewer people speak Hindi, in which the BJP’s
leaders deliver their fiery speeches. The BJP no longer runs any of the
region’s states, having lost an election in May in Karnataka to Congress.
And of the 130 seats representing South India in the Lok Sabha, the BJP
holds only 29.
That helps explain why the BJP is not really the overwhelming force it
appears. Its share of the national vote in Mr Modi’s first election victory, in
2014, was only 31%. At the most recent national election, in 2019, it
improved to 38%, still well short of a majority. If anything, Indian politics
has become more competitive over the years, as Congress’s star has faded
and other parties, including the BJP, have grown bigger. The BJP is just
remarkably good at translating its plurality of the vote into thumping
parliamentary majorities, aided by India’s first-past-the-post electoral
system.
Were the opposition less divided and disorganised, the BJP would have
much more of a fight on its hands. The most obvious problem is Congress’s
ossified structure, epitomised by the dynasticism at the top. The party’s most
prominent leader is the 53-year-old Rahul Gandhi, whose father,

grandmother and great-grandfather all served as prime minister. He has
recently become more confident, but has always seemed ambivalent about
politics—not surprisingly, given that both his father and his grandmother
were assassinated.
Yet Congress has hemmed and hawed about replacing him and, to the extent
that it has done so, has plumped for an even less inspiring figure. In 2022 it
chose a party veteran, Mallikarjun Kharge, as its first leader from outside the
Gandhi family since 1998. He also heads the opposition’s 28-party Indian
National Developmental Inclusive Alliance. At 81, though, he lacks the
charisma and vigour to challenge Mr Modi. And both Mr Gandhi and his
mother, Sonia, remain very much on the scene.
A similar dynamic plays out in the lower echelons of the party. Whereas the
BJP is ruthless about sidelining unpopular veterans and picking candidates
based on their electoral prospects, Congress is dominated by ageing
stalwarts who resist both new blood and new tactics. That, in turn, causes
bright young things to defect to the BJP, where their prospects for
advancement are much better.
When Congress does appoint younger, more charismatic leaders and uses
modern election techniques, it can do well. It won state elections in
December in Telangana, for instance, helped by both a fresh face as local
party leader and by the number-crunching of Sunil Kanugolu, an election-
data specialist. But the party lost two other state elections held at the same
time, in which local party chiefs of long standing declined Mr Kanugolu’s
help.
Congress is trying fitfully to reform. It has initiated a recruitment drive to

expand its membership beyond the current 60m and launched an app for
members, much like the BJP. It remains a contender, even in the Hindi-
speaking heartland. Its average vote share in the three state elections there in
December was 41%, not so far from the BJP’s 46%. In fact, it had led two of
the three outgoing state governments, so could hardly be described as a long-
spent force.
None of this, of course, excuses the underhanded methods Mr Modi uses to

retain power. He has a troubling record of eroding democratic institutions.

His government has harassed and jailed journalists and activists. It has
undermined the independence of the judiciary and the Election Commission.
Its investigative agencies have targeted opposition leaders. In December an
astonishing 146 opposition MPs were suspended from Parliament.
Opposition leaders are billing the coming election as a fight for the “soul of
India” and a turning point in a global struggle between freedom and
autocracy. They fear that Mr Modi wants to change the constitution to purge
secular language and empower the executive. A revision of electoral
boundaries, due in a couple of years, could facilitate that by expanding the
Lok Sabha to around 750 seats, with most new ones going to the BJP’s
strongholds in the north.
Opposition parties are attempting to fight back, in part by promoting

themselves better. The digital ID and payments system for which the BJP
takes credit was in fact initiated under Congress; Mr Modi oversaw only the
final stages of its roll-out but receives endless adulation for it. Schooled by
such experiences, opposition parties are trumpeting welfare schemes run by
state governments they control.
Kailashings of failings
The opposition also decries Mr Modi’s failures, including the sudden

withdrawal of most banknotes in 2016, the ditching of agricultural reforms
after protests in 2021 and a botched response to the pandemic. Several of the
BJP’s promises, to double farmers’ incomes, for example, and to boost
manufacturing as a share of GDP, remain unmet. By some measures the
economy has done worse under Mr Modi than under the previous Congress
government.
Another potentially potent line of attack is Mr Modi’s close relationship with

a handful of Indian tycoons, especially Gautam Adani, whose conglomerate
was accused a year ago of fraud and insider trading by a short-selling firm
based in New York (Mr Adani denied the allegations). Indian voters dislike
cronyism and punished the previous Congress government after a series of
corruption scandals.

Under Narendra Modi, the BJP is cleaning up
Yet the opposition has not landed many punches. That is partly owing to Mr
Modi’s reputation for probity. Mainly, however, the opposition has not
united around a single message or, critically, a single slate of candidates.
Such a seat-sharing agreement could dramatically alter the electoral
arithmetic, turning the BJP from the favourite to the underdog in many
districts. But it would require strong, decisive party leaders, able to impose
unpopular choices on the lower ranks. In Congress’s case, neither Mr Kharge
nor Mr Gandhi fits the bill.
Some opposition politicians have concluded that, after 25 years of messy

coalition governments from 1989 to 2014, India has reverted to the
“dominant party system” of the prior four decades. Back then, Congress won
big majorities and ruled with few constraints. It often passed laws and
constitutional changes to empower the central government and so get its
way. It sometimes resorted to abject authoritarianism. Most notably, Indira
Gandhi, Rahul’s grandmother, cancelled elections, jailed critics and
suspended civil liberties during the Emergency of 1975-77.
The pessimists should remember, however, that India’s democracy managed

to correct itself. Mrs Gandhi lifted the Emergency under pressure from
courts, students and political allies. She lost the subsequent election, badly.

And although Congress soon returned to power, it could not reverse a long-
term decline caused largely by its over-reliance on charismatic, centralised
leadership. That may be scant comfort for opposition parties facing another
drubbing—but it should be food for thought for the BJP. ■
weekly newsletter.

https://www.economist.com/briefing/2024/01/18/narendra-modis-electoral-juggernaut-
looks-unstoppable

Asia
Defying China, Taiwan elects William Lai Ching-te as
president
Democracy island :: It will have to cope with China’s anger
Cambodia’s genocide is still hurting its people

Killing fields :: New research highlights the Khmer Rouge’s terrible legacy
Married women in Japan are re-entering the labour

market
Housewives and work :: Legislators see them as the country’s hidden asset
The Korean peninsula is as divided as ever

North Korean belligerence :: But rumours of war are overblown
How Hindu is India’s foreign policy?

Banyan :: A new book by the foreign minister explains diplomacy through the Ramayana

Democracy island
Defying China, Taiwan elects William Lai Ching-te

as president
It will have to cope with China’s anger
Jan 18th 2024 | TAIPEI
CHINA HAS no say in Taiwan’s elections, but for months its officials had
warned that Taiwan should not choose William Lai Ching-te of the
Democratic Progressive Party (DPP) as their new president. Mr Lai was a
separatist whose election would create a “dangerous situation of high winds
and urgent waves in the Taiwan Strait”, a spokesman for China’s Taiwan
Affairs Office threatened. On January 13th Taiwan’s voters elected Mr Lai
anyway, ushering in an unprecedented third term for the pro-independence
ruling party.
So far the Taiwan Strait has remained relatively calm. But Mr Lai may soon
face storms at home. His party has lost its majority in the Legislative Yuan,

Taiwan’s parliament. It will struggle to forge consensus on divisive issues
like defence spending and strategy. China already seems to have identified
such domestic divisions as Taiwan’s weak point. Its first statement
responding to the election claimed that the DPP’s victory “does not represent
mainstream public opinion” and promised that it would keep working with
“relevant parties, groups and people” within Taiwan to promote “national
unification”.

Most Taiwanese support neither immediate unification nor independence but
the current state of de facto independence. Yet voters are divided over how
best to safeguard it. Mr Lai won with 40% of the vote, a sign that a plurality
want to continue along his party’s path of strengthening deterrence and
relations with other democracies. Another third of the vote went to Hou Yu-
ih of the Chinese Nationalist Party, or Kuomintang (KMT), who promised to
lower tensions through trade and dialogue with China, based on rejecting
Taiwan’s independence. A hefty 26% went to a third-party challenger, Ko
Wen-je, of the parvenu Taiwan People’s Party (TPP).
“Taiwan is telling the whole world that between democracy and

authoritarianism we choose to stand on the side of democracy,” Mr Lai told
his victory rally on election night. But vows to defend democracy are no
longer enough for many voters. Mr Ko’s supporters in particular were drawn
to his focus on domestic issues like housing and wages. Many were young
Taiwanese who said they disliked the two traditional parties’ “ideological”
politics.
The DPP is already worrying about how to unite the country. From February
the parliament will be split between the three parties, with TPP legislators a
potentially decisive vote. The last time Taiwan had a split assembly and
executive was under the DPP’s Chen Shui-bian, president from 2000 to
2008. The KMT-dominated parliament blocked Mr Chen’s proposed military
budgets more than 60 times, eventually forcing him to cut defence spending
from a proposed $19.6bn to $320m. During his campaign Mr Lai warned
that opposition lawmakers might block his budgets.
That will alarm America, Taiwan’s main military partner. An unofficial

delegation of former senior US officials visited Taiwan just after the
elections. They met not only Mr Lai and the outgoing president, Tsai Ing-
wen, but also Mr Hou, Mr Ko, and the KMT’s party chair, Eric Chu.
Afterwards Laura Rosenberger of the American Institute in Taiwan said that
America would continue to “work across the political spectrum” in the belief
that all Taiwan’s parties want to do “what’s best for Taiwan, regardless of
their political affiliations”.
China’s Communist Party seems to disagree. On January 15th its journal

Qiushi published a speech by President Xi Jinping about the importance of

winning hearts and minds among ethnic Chinese worldwide, including
“patriotic unification forces” in Taiwan. On January 16th China’s Ministry
of State Security published an article on China’s Anti-Secession Law, calling
it a “sharp sword hanging high” over the heads of would-be separatists, and
warning Taiwanese spies that the DPP might put their lives at risk. The
Global Times, a Chinese tabloid, said China would try to rally Taiwan’s
people, distinguishing “compatriots” from “secessionists”.
In the past, Mr Lai was known for being more outspoken in his advocacy of
independence than Ms Tsai. But during the campaign he promised not to
declare independence. Taiwan is already independent in effect, so has no
need to declare it, the DPP’s leaders say. Mr Lai’s running-mate, Hsiao Bi-
khim, the island-state’s former representative to America, is known in
Washington as a firm but careful defender of Taiwanese democracy.
Together they are rather unlikely to stray from Ms Tsai’s path of moderation.
That is little reassurance to the Chinese Communist Party, which also hated
Ms Tsai. Since she came to power eight years ago, China has cut off
communication with Taiwan’s authorities and increased military pressure on
the island. In August 2022, China sent missiles over Taiwan and enacted a
mock blockade around it after a visit from Nancy Pelosi, then speaker of
America’s House of Representatives. China also sent balloons over the
island and reimposed some tariffs on Taiwanese products in the weeks
before the vote. But it did not make a major new show of force.
That may change in the coming months as China tries to isolate Taiwan
internationally and divide it internally. On January 15th the Republic of
Nauru, one of Taiwan’s few remaining diplomatic partners, said it was
cutting ties with Taiwan to recognise the People’s Republic of China instead.
China’s foreign ministry gloated.

Given the fuss China made over Mr Lai, some kind of symbolic military
action seems likely. That would excite China’s online nationalists: an
Economist analysis of posts on Weibo, a microblogging platform, found that
hostile posts about Taiwan more than doubled after the election (see chart).
Mentions of “motherland” rose five-fold; “Taiwan independence” jumped
eight-fold. A potential flashpoint is May 20th, Mr Lai’s inauguration day.

Mr Lai did not quite manage to avoid controversy during the campaign. He
caused a rumpus by saying he hoped, against precedent, to see a Taiwan
president visit the White House one day. Such language makes American
officials nervous. For its part, China will want to make Taiwanese citizens
feel they have entered more dangerous waters by electing Mr Lai. The
government in Beijing failed to scare Taiwan’s voters into ditching the DPP.
It will now try to make them regret it. ■

https://www.economist.com/asia/2024/01/18/defying-china-taiwan-elects-william-lai-
ching-te-as-president

Killing fields
Cambodia’s genocide is still hurting its people

New research highlights the Khmer Rouge’s terrible legacy
Jan 18th 2024 | SINGAPORE
REMEMBER THE past but look to the future. That was the message
Cambodia’s leaders gave to the 20,000 people who gathered in Phnom Penh,
the country’s capital, on January 7th to commemorate “victory over
genocide” day. Around 2m people (nearly a quarter of the population) were
killed between 1975 and 1979 during the Khmer Rouge’s attempt at a great
leap forward. Since that communist regime’s fall, Cambodia’s recovery has
been impressive. Over the past decade annual growth has averaged 5.5%.
Still, the effects of genocide linger.
More than 40 years on, the households and villages most ravaged by Khmer
Rouge atrocities are among the country’s poorest, according to a new
working paper by Rahul Mehrotra of the Geneva Graduate Institute, a

university. To quantify the long-term impact of the genocide, he measures
the wealth of a household in relation to its proximity to a Khmer Rouge mass
grave. In areas with more mass graves, households are likelier to be in the
poorest quintile of Cambodia’s wealth distribution. Few have access to piped
water. This chimes with earlier studies. One published last year in the
American Political Science Review, a journal, by Donald Grasse of the
University of Southern California found that poverty rates in villages ruled
by a radical faction of the Khmer Rouge were 4% higher than those
controlled by a more moderate one.
These effects are so deeply entrenched because, in the Khmer Rouge’s

fanatical quest to establish an egalitarian society, educated Cambodians
suffered especially. The loss of their lives and the forgone years of education
among survivors set back subsequent generations. Decades later, men and
women with median levels of exposure to the genocide, in terms of
proximity to mass graves, receive 1.8 fewer years of education than they
otherwise might. They are also likelier to work on farms than in factories or
offices. These effects are most pronounced in families that lost members to
the Khmer Rouge.
Households near former Khmer prisons are also especially likely to be poor,
according to Mr Mehrotra’s study. These enduring effects should serve as a
warning to the current government. The ruling Cambodian People’s Party
has banned the opposition, shut down independent news outlets and
threatens activists. Cambodia’s economy might otherwise be doing even
better than it is. Remembering the past is important, but learning from it
even more so. ■

https://www.economist.com/asia/2024/01/18/cambodias-genocide-is-still-hurting-its-
people

Housewives and work
Married women in Japan are re-entering the

labour market
Legislators see them as the country’s hidden asset
Jan 18th 2024 | TOKYO
AFTER GRADUATING from college, Obora Shizue, now in her 40s, was
building a solid career at an insurance firm. But after giving birth to her first
child she became a full-time mother. “I wanted to keep working, but I
suppressed those feelings,” she says. But unlike previous generations of
Japanese women she was unwilling to stay at home. Eight years later, in
2015, she returned to work as a journalist.
Ms Obora represents a hugely important change. Female participation in

Japan’s labour force used to be much lower than in other big rich countries.
For decades most women quit their jobs after giving birth to their first child.
Outdated tax and welfare systems, as well as cultural mores, underpinned

this anomaly. But it is now becoming less pronounced. As Japan’s labour
force ages and shrinks, women are playing a growing role in it. In 2022 the
employment rate for women aged 25-39 surpassed 80% for the first time
since records began. Meanwhile, the percentage of households with stay-at-
home wives fell below 30%, another record.
A shift in cultural attitudes towards women and work underlies this change.
As talent has become scarcer, working women are more prized. Japanese
women’s high education levels make them well placed to take advantage of
the shift: 53% of women go to university in Japan, compared with 59% of
men. “Women are Japan’s hidden asset,” says Mori Masako, a former
gender-equality minister.
But outdated family laws still serve as a barrier to women’s advancement.

Japanese tax and welfare policies discourage married women from working.
When “dependent spouses” earn less than 1.3m yen ($8,900) a year, they do
not need to pay in to public-pension and health-insurance schemes. A
government report published in October suggested that more than 1.1m
working women were limiting their working hours and earnings in order to
stay under that threshold.
The ruling Liberal Democratic Party (LDP) is starting to take steps to tackle
the issue. Last October the government introduced subsidies and other
measures to alleviate the effects of the so-called “income wall”, which
penalises women who go over the million-yen threshold. Experts reckon
lawmakers will further chip away at the income wall next year, following a
five-yearly review of the pension system.
But such policy updates alone may not be enough to entice millions of
Japanese housewives back to the workplace. Oshima Yasuko of Recruit
Works Institute, a research outfit, reckons a bigger shift in corporate culture
is needed. In a study in 2019, she showed that among housewives who re-
entered the workforce some 30% soon quit because they found it difficult to
balance work schedules with child-rearing and household chores. Re-
entering the workforce after a pause is also hard because Japanese firms tend
to look with suspicion on candidates with “blanks” in their résumé. Ms
Obora, who suffered many rejections before landing her journalism job,

describes how demoralising that can be. “I used to think if I become a
housewife once, I’ll always be one.”
It would help if Japanese men and women shared their domestic burdens
more equitably. In 2022 just 17% of men eligible for parental leave actually
took it, compared with 80% of women. Among married couples, Japanese
women spend five times more time doing chores than men (in Germany the
gap is three times). When the government speaks of gender equality, “the
emphasis always seems to be on making women do more,” says Mochizuki
Rie, a former housewife who now works in marketing.
When Kishida Fumio, the prime minister, announced a plan last year to
invest in “reskilling” for those on parental leave to support their transition to
the workforce, many housewives complained that they were already
overloaded with domestic work. “I used to think that being a housewife must
be easy. I couldn’t have been more wrong,” says Ms Obora. Women such as
her are part of a major, long-overdue socioeconomic change. More is
required from both sexes to make it go faster. ■

https://www.economist.com/asia/2024/01/18/married-women-in-japan-are-re-entering-the-
labour-market

North Korean belligerence
The Korean peninsula is as divided as ever

But rumours of war are overblown
Jan 18th 2024 | SEOUL
KIM JONG UN, North Korea’s dictator, ended 2023 with war on his mind.
Speaking to assembled party grandees on December 30th, he declared that
the North and the South were now “two belligerents in the midst of war”. In
early January he claimed to have no intention of starting a real conflict, but
would have “no hesitation in annihilating” South Korea if it did.
Since Mr Kim’s bromance with Donald Trump, then America’s president,

fizzled out after an ill-starred summit in Hanoi in 2019, such belligerence
has become increasingly common. Hardly a month passes without Mr Kim
testing fearsome weapons or threatening to annihilate South Korea. Yet a
recent commentary published on the website 38 North by Robert Carlin and
Siegfried Hecker, veteran North Korea-watchers , raised eyebrows by saying

Mr Kim had made the “strategic decision to go to war”. That is hard to judge
and perhaps overblown. Yet North Korea is certainly more threatening than
ever and grows more dangerous by the day.
Its war machine is getting stronger. In the past two years it has tested an
unprecedented number of missiles able to fire nuclear weapons at South
Korea and America. In November it put a military satellite into orbit, the
first step towards building a network that would provide vital military
information. Already in 2024 it has conducted artillery drills and a test of
what state media claim is a solid-fuelled intermediate-range ballistic missile
that is topped with a “hypersonic” warhead.
Accompanying this military build-up has been a hardening North Korean

attitude towards the South. Reversing decades of policy, Mr Kim now claims
that Northerners and Southerners no longer belong to a single Korean people
and that talk of unification with the South’s governing “clan” is pointless.
North Korean propaganda sites and radio stations targeting the South have
gone dark. On January 15th Mr Kim ordered the closure of three
departments that deal with the South. The Arch of Reunification, a garish
monument to inter-Korean rapprochement straddling the motorway between
North Korea’s capital and the demilitarised zone separating the two
countries, will be torn down.
Yet none of this need suggest that Mr Kim really wants war. He is “more
comfortable than ever”, notes Christopher Green of Leiden University in the
Netherlands. China provides food and industrial imports to keep his country
going. America, distracted by Ukraine, Israel and the Red Sea, pays it little
heed. And North Korea’s new friendship with Russia is going swimmingly.
On January 17th the two countries’ foreign ministers met to follow up on a
pow-wow between Mr Kim and Vladimir Putin, his Russian counterpart,
held last September. North Korean munitions have been sighted on the
battlefields of Ukraine.
War would be costly and risky for Mr Kim, even in the unlikely event that
America stayed out of it. Any victory would be pyrrhic. What could be more
destabilising for his totalitarian regime than absorbing 52m people with a
passion for democracy?

Mr Kim is probably sticking to North Korea’s pattern of using aggression to
get leverage before eventual negotiations with America, says Go Myong-
hyun of the Asan Institute, a think-tank in Seoul. Although America insists
that denuclearisation must be on the table and North Korea clings to its
nukes, neither side is keen to talk. But Mr Kim can afford to wait, perhaps
for the return of Mr Trump.
In 2010 North Korea shelled Yeonpyeong, a nearby South Korean island,

killing four South Koreans. Robert Gates, then America’s secretary of
defence, recalled in his memoirs how the South Koreans needed to be talked
out of a “disproportionately aggressive” response involving artillery and air
strikes, which he feared would trigger an escalation. Yoon Suk-yeol, now
South Korea’s president, promised on January 16th to respond to
provocations “with a punishment multiple times more severe”. Such an
overreaction would be more likely to start a war than Mr Kim’s wild rhetoric
about conquering the South. ■

https://www.economist.com/asia/2024/01/18/the-korean-peninsula-is-as-divided-as-ever

Banyan
How Hindu is India’s foreign policy?

A new book by the foreign minister explains diplomacy through the
Ramayana
Jan 18th 2024 |
THE CONSTITUTION of India begins: “India, that is Bharat, shall be a

union of states.” Unable to agree on whether to use the English or Sanskrit
name for the country, its authors included both. On the surface, the
difference is no greater than that between Germany and Deutschland. But
from the debates in the constituent assembly 75 years ago until today, India’s
alternative names have been loaded with distinct meanings. One was
imposed by a colonial power and is increasingly associated in India with an
out-of-touch anglicised elite. The other is increasingly considered a true
reflection of a proud, ancient civilisation.

So it was significant when, at the G20 summit in Delhi in September,
Narendra Modi, India’s prime minister, sat behind a nameplate that read
Bharat, bolstering his credentials as a representative of the “real” India. In
the same vein, a new book by Subrahmanyam Jaishankar, India’s erudite
foreign minister, is called “Why Bharat Matters”.
Mr Jaishankar deploys the Ramayana, one of two great Hindu epics, to

illustrate the importance of allies, intelligence and a rules-based order. The
Ramayana tells the story of Lord Ram, a noble king and avatar of the god
Vishnu, who is forced into forest exile where he faces multiple travails,
including the abduction of his wife, Sita, by the demon-king Ravana. For
many Indians it is the ultimate story of the triumph of good over evil, and
Ram the embodiment of honourable conduct.
Mr Jaishankar’s previous book, “The India Way”, included a chapter that

drew on the Mahabharata, the other great Hindu epic, and its lessons on
statecraft. The central argument of that book was that India must resist
pressure and chart its own course in a turbulent world. In the four years since
it was published India has done so—in particular, by refusing to condemn
Russia’s invasion of Ukraine even as it grew closer to the West in general
and America in particular.
India’s foreign policy must be based on “its own values and beliefs”, writes
Mr Jaishankar in his new book, drawing “from the totality of its culture,
heritage and traditions”. This is consistent with his previous volume, in
which he lamented that “the standard American introduction to Indian
strategic thought does not even refer to the Mahabharata”. He is right to
stress the importance of understanding Indian culture. Whether or not they
have actually read the epics, for many Indians the Mahabharata and
Ramayana are at the heart of their conception not just of the cosmos but also
of everyday conduct.
Even so, the foreign minister’s efforts to assert the connection between
Indian culture and policy become tautologous and hard to fathom. “India can
only rise when it is truly Bharat,” he writes. And then again, after noting
India’s increased global weight: “This is an India that is more Bharat.”
Overall, he concludes, “with each passing day, it is becoming clearer that
India matters because it is Bharat.”

It is tricky to know what to make of this—as the author concedes elsewhere.
“Why Bharat Matters” is, as he explains in its opening pages, “a volume that
is to be read between the lines”. Doing so suggests pretty standard realism,
not Hindu mythology, is his guide. India’s foreign policy will be determined
by its national interest, which will in turn be directed by the needs of most
Indians.
To Indians, Mr Jaishankar’s message is that their government will protect

them from a dangerous world. He describes this as a corrective to the
relatively weak counter-terrorism policies and idealistic internationalism of
earlier Indian governments. Here, too, Mr Jaishankar’s mythological
analogising can go overboard, such as when he describes “Ram Rajya” (the
rule of the Lord Ram) as “the epitome of a rules-based order”. On January
22nd Mr Modi will breeze through the constitutional barriers between state
and religion by consecrating a controversial new temple at the claimed
birthplace of Ram in north India. For the one-fifth of India’s 1.4bn people
not represented by what Mr Jaishankar calls the “totality” of India’s culture
—which omits its Islamic, Christian, secular and liberal traditions—this will
not be rules-based or reassuring.
Mr Jaishankar claims to describe two big policy shifts under Mr Modi. One,
which is at least arguable, involves the replacement of an internationalist
foreign policy with an India-first one. The other, the graduation from India
to Bharat, is harder to grasp. But a third metamorphosis, also between the
lines of the foreign minister’s tome, is indisputable. That is Mr Jaishankar’s
development from a bureaucrat into a politician.■
Read more from Banyan, our columnist on Asia:

The favourite in Indonesia’s presidential election has a sordid past (Jan
11th)
Anwar Ibrahim, Malaysia’s prime minister, is wasting his opportunity (Dec
31st)
Hsiao Bi-khim is Taiwan’s cat warrior (Dec 13th)

https://www.economist.com/asia/2024/01/18/how-hindu-is-indias-foreign-policy

China
Why China’s government is hushing up court rulings
Crime and punishment :: Xi Jinping’s fresh attack on the rule of law
China’s leaders are less popular than they might think

Survey says :: A clever new poll unearths more discontent with Xi Jinping than had been
assumed
How China is making the burger its own

Step aside, Ronald :: Duck, pork, tofu—what will it be?
How China’s public views Taiwan’s elections

Chaguan :: Ordinary Chinese express no eagerness for war, but back threats of force

Crime and punishment
Why China’s government is hushing up court

rulings
Xi Jinping’s fresh attack on the rule of law
Jan 15th 2024 | BEIJING
OVER THE past three decades China’s legal system has been gradually
improving, albeit from a low base. The Communist Party still dominates the
system: Xi Jinping, China’s leader, considers judicial independence a
dangerous idea. Suspected criminals who end up in court are found guilty
99% of the time. But analysts reckon the quality of judges on the civil and
commercial side has got better and corruption has decreased. The World
Bank has a rule-of-law measure that uses indicators like property rights and
judicial independence. In 2006 China was in the bottom third of countries.
By 2022 it was in the top half.

Better pay for judges and harsher punishments for misconduct have helped.
But one crucial change has been more transparency. A decade ago China’s
courts were ordered to upload all but the most sensitive of their rulings to a
database called China Judgments Online, which was open to anyone. The
platform grew to contain over 140m decisions. This unprecedented window
into the system was a boon for civil-society groups, which could refer to
cases in their campaigns to, say, protect the environment or defend women’s
rights.

But the era of transparency seems to be ending. In December the supreme
court admitted that the pace at which rulings were uploaded to China
Judgments Online had fallen (see chart). Some judges have reportedly been
told that they no longer need to upload cases at all. “Judicial transparency
doesn’t mean we need to post all judicial information on the internet,” said
the court. It suggested that China Judgments Online raised privacy and
security concerns. An alternative database will be launched this year, but
will be accessible only to court officials and police.
Transparency does not guarantee fairness in a justice system. In 1980 China

televised the trial of Mao Zedong’s widow, Jiang Qing, who stood accused
of persecuting thousands of people during the Cultural Revolution of the
1960s and 1970s. Prosecutors assembled evidence and called witnesses. The
public, wrote one of the judges, could “see for themselves what was meant
by the rule of law”. But the verdict was never in doubt. The Communist
Party needed a scapegoat for the chaos of Mao’s rule. Jiang received a death
sentence, later commuted to life imprisonment.
More recently, the increased visibility of China’s court system has improved
the quality of justice. But it has also caused embarrassment. Similar offences
often yield differing rulings. Some decisions, such as judges denying the
victims of human-trafficking a divorce from their buyers, are cruel and
absurd. A more accountable government might acknowledge such problems
and promise to do better. The Chinese government, though, seems to have
tired of providing fodder for activists by putting its failings on display.
That this experiment in transparency is ending comes as little surprise. China

has been growing more opaque in other ways, too. Last year foreigners lost
access to parts of a database called China National Knowledge Infrastructure
(CNKI), which contains around 95% of Chinese academic articles and a host
of other documents. The firm that runs CNKI cited cyber-security rules. In
August the government stopped releasing the unemployment rate for city-
dwellers aged 16 to 24 after it rose to 21.3%. In January officials began
calculating the rate differently, producing a lower number, and started
releasing it again. Analysts at banks have been warned against publishing
bearish views on the economy.

The gutting of China Judgments Online will have as big an impact as any of
these moves. Lawyers used the database to find precedents that could
strengthen their arguments. Those who specialise in helping citizens sue the
state—a tricky task at the best of times—complain that almost all such cases
have vanished from the database. With a bit of persuasion, court officials
might provide relevant rulings. But that could involve paying backhanders.
An informal market for judgments that are no longer publicly available has
reportedly sprung up on social media. Lawyers warn that less public scrutiny
of decisions could also lead to more corruption.
Activists at home and abroad may be most affected by the changes. They
had employed the database in a variety of ways, such as exposing how the
government uses vague offences like “picking quarrels and provoking
trouble” to criminalise dissent. Many related cases have been removed. So
have others that expose the party’s brutality, including those resulting in a
death sentence (China does not reveal how many people it executes). Cases
involving sensitive terms, “freedom of speech” for example, have also
disappeared.
The government’s efforts to contain scandals extends to the database. In

2022 a woman was found chained by the neck in a freezing outhouse in
Jiangsu province, provoking public outrage. After issuing a series of
contradictory statements, officials admitted that she had been sold into
marriage. Embarrassed, the government limited access to the woman’s
village and censors deleted news reports about her plight. Many cases related
to human-trafficking appear to have been removed from China Judgments
Online, too.
Cases involving wildlife-trafficking have also gone missing from the

database. With many people believing that the covid-19 virus jumped from
animals to humans at a market in Wuhan, that is perhaps no surprise. Other
deletions are more puzzling. Cases to do with “stealing or insulting a corpse”
can no longer be found. Researchers believe the government is deleting
anything that could be embarrassing.
If the decline in transparency leads to more corruption, the party will not
fight it in the open. It has a parallel system for dealing with graft, managed
by the Central Commission for Discipline Inspection (CCDI). Since

assuming power in 2012 Mr Xi has increased the CCDI’s resources and
authority. In 2023 alone it punished over 400,000 officials. Only a tiny
fraction of such cases are ever revealed to the public.
One of Mr Xi’s favourite slogans is yifa zhiguo, or “governing the country

according to law”. He is not referring to the rule of law in the Western sense.
Rather, he wants the party’s rule to become more professional and
predictable. That, he hopes, will give it more legitimacy.
But lawyers believe that the decline in transparency will have the opposite
effect. In response to their criticism, the supreme court has pledged to be
more open. Few believe it. Some lawyers, such as Han Xu of Sichuan
University, argue that by reducing the public’s access to cases the supreme
court is itself breaking laws that require courts to disclose their judgments.
With the court setting such a bad example, he asks, “How can we cultivate
people’s belief in the rule of law?” ■
Subscribers can sign up to Drum Tower, our new weekly newsletter, to

understand what the world makes of China—and what China makes of the
world.

https://www.economist.com/china/2024/01/15/why-chinas-government-is-hushing-up-court-
rulings

Survey says
China’s leaders are less popular than they might

think
A clever new poll unearths more discontent with Xi Jinping than had been
assumed
Jan 16th 2024 | BEIJING
CHINA’S LEADERS have no qualms about using intimidation and force to

stay in power. But the Communist Party also claims that it deserves to rule
because it governs well and has the support of the public. Officials point to
decades of impressive economic growth—and to opinion surveys that
researchers at Harvard University conducted between 2003 and 2016. In the
last such survey, over 90% of Chinese people expressed satisfaction with the
party. “Such high approval ratings are beyond the wildest dreams of
American politicians,” boasted Hua Chunying, a foreign-ministry
spokeswoman, in 2020.

Gauging public opinion in China is hard. Foreign firms are generally banned
from carrying out surveys. Chinese pollsters tend to avoid sticky subjects,
though some work with Western researchers (this was how Harvard
conducted its study). No matter who is asking the questions, respondents
may not share their actual views for fear of reprisal. So researchers at the
University of Southern California tried to get around this problem by using a
survey method called a “list experiment”. Their findings, published this
month, suggest that the Communist Party has fewer fans than previously
thought.
The researchers divided participants in their survey (conducted online) into

two groups. Those in the first were shown three anodyne statements, such as
“I consider myself a sports fan”. Those in the second were shown the same
three items plus one sensitive statement, such as “I support Comrade Xi
Jinping’s leadership”, or “China’s system of government is better than any
other I can think of”.
Respondents in both groups were then asked how many statements they
agreed with, without having to identify them. This allowed them to express
their political opinions indirectly. By subtracting the average of the first
group from that of the second group, the researchers were able to estimate
the share of respondents who agreed with the sensitive statement.
The results suggest that when the survey was conducted in June and
November 2020 between 50% and 70% of Chinese people supported the
party. (This is an upper bound, say the researchers, because concerns about
online surveillance may still have spooked some respondents into giving
positive responses.) Around half of respondents did not agree that China’s
system of government is best. Nearly 40% said they were “afraid of the
consequences” of protesting against the state. Support for Mr Xi was
between 65% and 70%.
His approval rating has probably fallen since then. Mr Xi’s “zero-covid”
policy angered many Chinese, who grew tired of the constant testing and
lockdowns. When the government at last dropped its pandemic controls at
the end of 2022, analysts predicted a big rebound in economic activity. But
consumers remain gloomy and many young Chinese are struggling to find
jobs.

Even if it has fallen, Mr Xi’s rating could still be the envy of Western
politicians. A paltry 33% of Americans approve of the job President Joe
Biden is doing, according to a recent poll. Still, the results of the study might
concern China’s leaders. The Communist Party relies on the (circular)
presumption that the public thinks that it is overwhelmingly popular. If
disgruntled citizens believe they are in a small minority they are less likely
to discuss political issues, let alone resist the party. But if they believe there
are many others like them, dissent could snowball, says Erin Baggott Carter,
an author of the study.
There is no sign that China’s Communist Party is about to face a revolution.

But party officials are keen students of history. They are haunted by the
collapse of communist regimes in eastern Europe, where opposition
movements grew quickly once people realised their anger was widespread.
Mr Xi has ordered his propagandists to “adhere to the correct guidance of
public opinion”. They might point to a different survey, conducted in
November by Edelman, an American consultancy. In that one 85% of
Chinese expressed trust in their government. That was second best among
the 28 countries surveyed. The firm did not use a list experiment. ■

world.

https://www.economist.com/china/2024/01/16/chinas-leaders-are-less-popular-than-they-
might-think

Step aside, Ronald
How China is making the burger its own

Duck, pork, tofu—what will it be?
Jan 18th 2024 |
AT FIRST GLANCE, the burger appears like any other. But on closer
inspection, something is different. Pressed between the buns is not a patty of
minced beef, but morsels of roasted duck. The buns themselves are wrinkled
and slightly charred. They are hand-rolled and made using traditional pastry-
making techniques, says Tastien, the fast-food chain serving up this meal. If
duck isn’t your thing, other options include fish-fragrant shredded pork and
mapo tofu. Though not technically a hamburger, Tastien’s ads declare, “The
Chinese hamburger is here!”
It appears to be popular. Last year Tastien added nearly 3,500 stores, for a
total of around 6,700 in China. That is more than McDonald’s, which has

6,000, according to GeoHey, a Chinese analytics firm. KFC (11,000) and
local brand Wallace (18,000) still lead the fast-food industry.
McDonald’s and KFC brought burgers to China. When the first KFC opened
in Beijing in 1987, customers queued up to get a taste. Back then the fast-
food chains targeted well-off Chinese. But as incomes rose, such meals grew
more affordable. Still, a big part of Tastien’s success is its prices, which are
well below those of Western fast-food chains.
Founded in 2012, Tastien started out making pizzas. It began selling burgers
in 2017. Two years later it claimed to be the creator of the Chinese
hamburger, though it was hardly the first to offer such a thing. Still, the
patriotic marketing has gone down well. Tastien received a 120m yuan
($19m) investment from Chinese venture-capital firms in 2021. Until
recently, it has focused on smaller cities where it faces less competition from
Western chains.
Now it is taking on rivals in big cities like Guangzhou and Shanghai. And
the competition is growing. Local fast-food chains such as Running Panda
and Chuzheng have also attracted sizeable investments. Many of these
smaller chains offer burgers similar to Tastien’s and have adopted marketing
strategies that emphasise their Chinese origins.
Chinese burgers are part of a wider trend, called xinzhongshi (new Chinese
style), which sees companies infusing elements from traditional Chinese
culture into their products and branding. The label “Chinese style” has been
attached to everything from coffee to fried chicken. There is a political tinge
to the fad. Companies are capitalising on the nationalist tendencies of young
people.
This type of marketing is no guarantee of success. Tea-houses in China date

back hundreds of years, but some that have opened recently under the
“Chinese style” banner are still struggling. So too are some vendors of
steamed buns, which originated in China long ago. It is perhaps less of a
surprise that Chinese-style ice cream has not taken off. The label can often
seem like a gimmick, attached to products that have little to do with
traditional culture. One might say the same about burgers. Good thing
Tastien’s are cheap. ■

world.

https://www.economist.com/china/2024/01/18/how-china-is-making-the-burger-its-own

Chaguan
How China’s public views Taiwan’s elections

Ordinary Chinese express no eagerness for war, but back threats of force
Jan 18th 2024 |
AS CHINA’S RULERS tell it, the Communist Party must control Taiwan to
make the whole country safe and strong. “Unification brings strength while
division leads to chaos,” says the State Council, China’s cabinet. “This is a
law of history.”
Actually, the party’s obsession with Taiwan is a political choice. After 1991
China signed a series of treaties fixing its borders with the Soviet Union and
Russia, in effect ceding over a million square kilometres of Chinese territory
grabbed by Russia in the 19th century. No law of history forbade that
decision to forget past wrongs.

Taiwan is different because it represents a direct affront to the Communist
Party. That dates back to 1949 when the island became the home-in-exile of
the Nationalist regime defeated by Mao Zedong and the People’s Liberation
Army (PLA) in the Chinese civil war. If Xi Jinping could take Taiwan, he
would be the final victor of a war that Mao could not end. In contrast, letting
the island slip out of China’s grasp would undermine the party’s legitimacy,
or so Chinese scholars claim.
Political self-interest, then, explains decades of investments to build up the

PLA, with a focus on deterring America from coming to the island’s rescue.
It explains, too, threats to use force should Taiwan declare formal
independence. Those are political calculations. They make the world more
dangerous than it needs to be.
Still, there is another self-serving choice by China’s leaders that arguably

keeps the peace in the Taiwan Strait. That choice involves telling the
Chinese public—despite much evidence to the contrary—that most
Taiwanese long to be part of China, but are thwarted by separatists egged on
by America, Japan and other hostile foreign powers. This is a gambit. Mr Xi
enjoys more room for manoeuvre as long as lots of ordinary Chinese believe
that Taiwan may one day embrace “peaceful reunification”.
The tactic can be seen at work since Taiwan’s presidential election on

January 13th was won by the Communist Party’s least-favoured candidate,
Lai Ching-te. Mr Lai’s win marks the third presidential term in a row for the
Democratic Progressive Party (DPP), which emphasises Taiwan’s separate,
democratic identity. Yet since that victory, mainland propaganda outlets have
downplayed its significance and played up the DPP’s poor showing in
parliamentary elections held the same day. Chen Binhua, a spokesman for
China’s Taiwan Affairs Office, assured the Chinese public that the elections
show that the DPP “does not represent mainstream public opinion” in
Taiwan. Rather than stoke anger, party media dug up soothing past
comments by Mr Xi about the need to woo “patriotic”, pro-unification forces
on the island.
It is unclear how angry China’s public is even ready to be, after years of
being told that most Taiwanese are their blood brothers. When researchers
from the South China University of Technology and the National University

of Singapore polled Chinese people in nine cities in 2019, they found almost
40% ready to rule out unifying Taiwan with the mainland by force under any
circumstances.
A paper for the Journal of Contemporary China, published in 2022, records

the survey organisers’ surprise that support for keeping force on the table as
an option was highest among the well-educated and those knowledgeable
about Taiwan. Qi Dongtao, a lead author, suggests that well-informed
Chinese may not be war hawks as such, but simply more aware than regular
folk that Taiwan is not about to submit peacefully to Beijing.
To sample the post-election mood, Chaguan flew south to Xiamen. The

Chinese port city enjoys close economic and cultural ties to Taiwan—and
would be on the front line in a war. Serving as a reminder is Hulishan
Fortress, whose weathered cannons point at an outlying Taiwanese island,
Jinmen, just 27km (17 miles) offshore. In the Mao era, the PLA shelled
Jinmen. The fort acted as a military radio base. Now a museum, it hosts
tourists who tended to flee when asked questions about politics. Those who
stuck around offered strikingly diverse views.
A middle-aged woman from Tianjin, strolling on the beach below the fort,
expressed confidence that most Taiwanese support unification. She did not
know the election results but had recently seen online reports about islanders
travelling to an ice festival in the city of Harbin, in China’s frozen north.
“We should promote this kind of contact,” she enthused. That said, she
supported threats of force as an option, venturing that “toughness” by
China’s leaders should balance “softness” towards Taiwan’s people.
Talking of war and peace, in a fort
Up in the fort a retired man from Ningbo, a coastal city, stood taking pictures
of Jinmen through the mist. The photographer disclosed that his own father
served in China’s navy and was killed in the Taiwan Strait in the late 1960s.
His family’s loss makes him long for peace, he said, adding that China needs
to become more appealing, economically, politically and culturally, if
Taiwan is to choose unification. Yet his patience co-exists with a belief that
force cannot be ruled out. “If we promise to give up the threat of force

altogether, and promise that in front of the world, then the island would just
declare its independence, right?” he asked.
A university student from Shanghai saw Mr Lai’s victory as a sign of trouble

ahead, but called the election the will of Taiwan’s voters. “Among my
generation, I know few who want a war. Whereas some older people may
hope that we can recover Taiwan by force one day,” he worried.
The student was not wrong. A former rural official from the province of
Jiangsu was encountered briskly climbing the fort’s stone steps with his
granddaughter, though he turns 85 next month. Every place wants to be ruled
by its own king, he declared, and Taiwan has been separate for too long. “We
have to reunite with Taiwan by force.” Indeed, if the PLA were not
powerful, Britain would not have given Hong Kong back, the old man added
with a glare. Having laid down that law of history, off he marched. ■
Read more from Chaguan, our columnist on China:

Nostalgia for China’s boom years drives a TV hit (Jan 11th)
For China, Taiwan’s elections are a looming crisis (Jan 4th)
Why China’s rulers fear Genghis Khan (Dec 20th)
Also: How the Chaguan column got its name

https://www.economist.com/china/2024/01/18/how-chinas-public-views-taiwans-elections

United States
Why are Americans so gloomy about their great economy?
The mood thing :: Inflation, partisanship and the pandemic have made them glummer than the
numbers suggest they should feel
How did the Iowa result change the Republican primary?

Hope springs ephemeral :: The notion that another Republican could overtake Trump looks
far-fetched
Where Donald Trump still looks vulnerable

Iowa’s hidden hints :: His relative weakness among college-educated and suburban voters
persists
Why car insurance in America is actually too cheap

Crashing truths :: Prices are rising, but most drivers still have paltry coverage
America’s southern border has become a global crossroads

Over the wall :: More migrants are arriving from China, India and Russia. Why?
The election in Georgia could be as pivotal as it was four

years ago
Finding the votes :: Donald Trump’s future, election security and voting rights are all in play in
the Peach State
It’s not the Trump Party quite yet

Lexington :: Chris Sununu and Nikki Haley claim, against the odds, that their brand of
conservatism is the Republican future

The mood thing
Why are Americans so gloomy about their great

economy?
Inflation, partisanship and the pandemic have made them glummer than the
numbers suggest they should feel
Jan 14th 2024 | Washington, DC
“THE VIBES are off” is a phrase that does not usually appear in rigorous
economic analysis but has cropped up again and again in serious discussions
about America over the past year. From an array of hard data, there is reason
to think that people ought to be quite satisfied about the state of the
economy: inflation has slowed sharply, petrol prices are down, jobs are
plentiful, incomes are rising and the stockmarket is strong. But survey after
survey suggests that Americans are in fact quite unhappy. They think that the
economy is in bad shape and that President Joe Biden is mismanaging it.
What gives?

Start with the evidence of gloom. The figure watched most closely by
economists for an idea of what people are feeling is a consumer-sentiment
index from the University of Michigan. For the past two years it has bounced
around at levels last seen during the global financial crisis of 2007-09. Even
with an improvement in December, it is still 30% below its recent peak on
the eve of the covid-19 crisis in early 2020.

Many other surveys are equally downcast. Every week since 2009 The
Economist/YouGov poll has asked some 1,500 Americans to assess the
economy: nearly half now think it is getting worse, up from about one-third
in the decade before covid. Questions focused on Mr Biden’s record yield
even less enthusiasm: two-thirds of respondents to a Gallup poll in
November disapproved of his handling of the economy. And all this despite
America outgrowing its large, developed peers over the past few years.
The fact that so many Americans are so dejected about such a strong
economy has spawned a cottage industry of theories. A first batch argues
that they have every right to feel glum: some of the figures which matter
most to their pocketbooks are just not that rosy. Inflation has eroded their
wages. Controlling for consumer prices (one common measure of inflation),
average earnings for private-sector workers are basically stuck at the same
level as in February 2020, right before covid struck.
More recent baselines are even less flattering. Although few Americans
would want to go back to a world of covid shutdowns, many did receive big
benefits from the government’s spending spree at the time. After-tax
personal income is about 15% lower now than in March 2021, when it was
propped up by the massive stimulus package passed by Democrats soon after
Mr Biden took office. Another unflattering comparison with the recent past:
the aggressive interest-rate rises needed to tame inflation have made loans
for houses and cars much more expensive. Housing affordability hit its
lowest in decades last year, serving as an easy target for critics of Mr Biden.
The Republican National Committee says Bidenomics is “pricing out
millions of people from the American Dream”.
However, as the Biden administration is only too keen to point out, there are
many things to like about the current economy. The supposed stagnation in
private-sector wages is in fact a statistical illusion caused by upward bias in
the consumer-price index. Use a better alternative—the personal-
consumption expenditures index targeted by the Federal Reserve—and real
wages are roughly on their pre-pandemic trend. At 3.7% the unemployment
rate is just a touch above a five-decade low. Wage growth has been

especially strong for low-income Americans. The S&P 500, an index of
America’s leading stocks, has been flirting with record highs.
To judge from the range of indicators—good and bad—Americans do appear

to be unduly pessimistic. Ryan Cummings and Neale Mahoney, two
economists who previously served in the Biden White House, created a
simple model to predict the level of the consumer-sentiment index, drawing
on inflation, unemployment and consumption data as well as stockmarket
performance. Their conclusion was that the index has been about 20% lower
than where the data suggest it ought to be. Other models have found a
similar discrepancy.
This suggests a second category of explanation: that opinion polling and

sentiment surveys may have a negative bias. Profound partisan hostility is
undoubtedly one factor. In their study Messrs Cummings and Mahoney
calculated that Republican antipathy towards a Democrat-controlled White
House may account for about 30% of the sentiment gap today.
Another element may be the tone of news coverage. Ben Harris and Aaron
Sojourner of the Brookings Institution, a think-tank, studied the relationship
between economic data and an index of economic news sentiment. Since
2021 the news-sentiment index has, like the consumer-sentiment index, been
notably worse than what would be expected from the data. And that may be
only scratching the surface. The news-sentiment index, created by the
Federal Reserve’s branch in San Francisco, is based on economic articles in
major American newspapers. Throw in the vitriol that tends to go viral on
social-media platforms, and the negative bias might be even more
pronounced.
A final explanation is that there may simply be a long lag between the post-
pandemic recovery and feelings about the economy. It has been a topsy-
turvy period. The extreme uncertainty of the covid years—job losses, school
closures, bankruptcies and illness—took a toll on people. Many are still
upset by the bruising battle with inflation. Although inflation has moderated,
prices are nearly 20% higher than when Mr Biden took office. The sticker-
shock takes some getting used to. Messrs Cummings and Mahoney estimate
that a 10% inflation surge reduces consumer sentiment by 35 index points in

the year it occurs, 16 points in the next year and eight points the year after
that.
If a similar timeline is now in play, Americans have probably gone about

halfway towards accepting their new higher-priced reality. It also helps that
real-income growth has accelerated over the past year, letting them recover
some of their lost purchasing power. The consumer-sentiment index has
been volatile, but it did clearly bottom out in mid-2022—right around the
peak in inflation—and it did also post a solid rise in December, even if it
remains low by historical standards.
“Our theory of the case is that if we can continue to maintain a tight labour
market while easing inflation and delivering real wage gains, that recipe
should show up in improved sentiment. And we think we’re starting to see
that,” says Jared Bernstein, chair of the White House Council of Economic
Advisers. The vibes, in other words, may be picking up. ■
Stay on top of American politics with Checks and Balance, our weekly
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and the issues that matter to voters.
This article was downloaded by calibre from https://www.economist.com/united-

states/2024/01/14/why-are-americans-so-gloomy-about-their-great-economy

Hope springs ephemeral
How did the Iowa result change the Republican

primary?
The notion that another Republican could overtake Trump looks far-fetched
Jan 18th 2024 | WASHINGTON, DC
DONALD TRUMP dominated public-opinion polling before the Republican

presidential primary in 2023. Yet his rivals could reasonably argue that the
party faithful still had not cast any votes, and the actual results might reveal
a greater appetite for an alternative than surveys suggested. Mr Trump’s
decisive victory in the Iowa caucus on January 15th seems to have put an
end to that hopeful theory.
Some Republicans had predicted record attendance at Iowa’s caucuses this

year, but turnout fell by around 40% from the peak in 2016. No doubt many
voters opted to stay at home given the sub-zero temperatures and Mr
Trump’s apparent invincibility. But TV networks also began calling the race

for the former president less than an hour after the caucuses began; some
caucus-goers were even told that he had won before they had a chance to
vote.
Naming a victor while others are still voting was bad democratic hygiene but
unlikely to sway the eventual outcome. Mr Trump won 51% of the vote and
half of Iowa’s 40 delegates to the Republican National Convention. Ron
DeSantis, the governor of Florida, took second place with 21% and nine
delegates. Nikki Haley, a former South Carolina governor, fell to third with
19% and eight delegates. Vivek Ramaswamy, a bloviating biotech
entrepreneur, finished fourth and dropped out. The first-time candidate,
whose speeches were frequently ominous, kept it weird until the very end:
“There’s no path for me to be the next president absent things that we don’t
want to see happen in this country.”
The only hope for Mr DeSantis and Ms Haley is that a candidate needs 1,215
delegates to become the nominee, and nearly 2,400 are still up for grabs.
Both runners-up agree that a head-to-head slog with Mr Trump over the next
several months is the only path to victory. The problem is that neither is
willing to back down in order to let the other become the former president’s
sole challenger.
“I can safely say, tonight Iowa made this Republican primary a two-person
race,” a smiling Ms Haley declared after finishing third. Betsy Ankney, her
campaign manager, argued in a memo published after the results came in
that “the race now moves to less Trump-friendly territory. And the field of
candidates is effectively down to two, with only Trump and Nikki Haley
having substantial support in both New Hampshire and South Carolina.”
Ms Haley, endorsed by New Hampshire’s Republican governor, is betting

that a surprise victory on January 23rd would provide momentum ahead of
the South Carolina contest a month later. But if she pulls off an unlikely
upset, it will be thanks to support from moderate Republicans, independents
and strategically minded Democrats who loathe Mr Trump. That coalition
might win a state of 1.4m but isn’t fit for purpose in a national Republican
primary.

A Haley win in New Hampshire is a long shot. A polling average from
FiveThirtyEight, a data-journalism website, shows Mr Trump with 44.4% in
New Hampshire compared with Ms Haley’s 31.4%. Chris Christie, a former
New Jersey governor and Mr Trump’s most direct critic, stood at third place
before dropping out. He disparaged Ms Haley ahead of his exit and declined
to endorse a candidate. Mr DeSantis fares even worse in New Hampshire
polling than Mr Ramaswamy did in Iowa.
The DeSantis campaign exudes confidence nevertheless. “While it may take

a few more weeks to fully get there, this will be a two-person soon enough,”
says Andrew Romeo, communications director for Mr DeSantis. “Despite
spending $24m in false negative ads against Ron DeSantis, Nikki Haley
couldn’t buy herself the kill shot she so desperately wanted [in Iowa], and
now she will be out of this race after failing to win her home state on
February 24.” That state is South Carolina, where Mr Trump has nearly 55%
of likely primary-goers, according to FiveThirtyEight. Ms Haley trails him
by 30 points, while Mr DeSantis is at about 12%.
Ms Haley may think a third-place finish in Iowa was enough to make this a
two-person race, and Mr DeSantis that a third-place finish in South Carolina
will do the trick for him. Both camps seem to confuse barely surviving with
building momentum. Nor is it clear whether they will have the financial
wherewithal to sustain an expensive multi-state campaign.
The coming contests in New Hampshire and South Carolina could inject
some life into the Haley campaign. Perhaps Mr DeSantis will raise the cash
needed to hang on. But Mr Trump’s lead in national polling—around 55
points above Mr DeSantis and Ms Haley, according to The Economist’s
tracker—means that there wouldn’t be much of a race even if one of the
remaining candidates dropped out. Mr Trump’s ongoing legal travails have
only helped cement his bond with Republican primary voters.
Mr Trump’s campaign called for an end to primary debates and for a focus
on beating Joe Biden months ago. The candidate probably won’t gain an
insurmountable lead until March 5th, “Super Tuesday”, when more than a
third of delegates will be up for grabs. But on the night of the caucuses he
clearly had his eyes on November. He called his Republican opponents “very

smart people, very capable people” and declared: “We’re going to come
together. It’s going to happen soon.” ■

states/2024/01/18/how-did-the-iowa-result-change-the-republican-primary

Iowa’s hidden hints
Where Donald Trump still looks vulnerable

His relative weakness among college-educated and suburban voters persists
DONALD TRUMP loves to crow about his big crowds and smashing
victories, even when he has to stretch the truth. His record-breaking
performance in the Iowa Republican caucuses required no exaggeration. He
enjoyed the largest margin of victory for any contested Republican caucus in
the state’s history. Among Republicans he may be better understood as an
incumbent president seeking re-election than as the insurgent outsider he
performs at rallies. But Mr Trump’s dominance of the party faithful is no
guarantee of success in November. What can the results of the earliest
caucus reveal about his prospects for a general election still ten months
away?

Those who endeavour to draw sweeping conclusions from quirky, low-
turnout contests like the Iowa caucuses do so at their peril. Iowa (with its
whiter-than-average population) and caucuses (which draw more engaged
and older voters) tend not to reflect the American electorate. This year, only
some 15% of registered Republicans in Iowa showed up to vote. Despite
these caveats, the very first contest on the long road to election day can offer
a glimpse into Mr Trump’s 2024 coalition. While the former president
showed strength across all demographic segments, the results suggest he
remains comparatively weaker among the college-educated and suburban
voters who probably cost him the election in 2020.
In 2016 Mr Trump came in second in the Iowa caucuses, winning 37 of 99

counties. This year he won 98, losing only Johnson County, which is home
to the University of Iowa, by one vote. Entrance polls, which survey voters
before they enter their caucus site, indicate why. According to one such poll,
AP VoteCast, 31% of college graduates said they would vote for Mr Trump,
just barely edging out Ms Haley and Mr DeSantis, who polled at 30% each.
Mr Trump’s divided primary opposition masked his weakness with this
segment.
Entrance polls, like their better-known sibling the exit poll, are notoriously
noisy and unreliable as samples of wider populations. But The Economist’s
county-level analysis of Mr Trump’s vote share shows a similar pattern.
Across the ten most educated counties in Iowa Mr Trump won 42% of the
vote, compared with 66% across the ten least educated ones. And this
analysis also points to a weakness among suburban voters. Mr Trump
received an estimated 43% of the suburban vote in contrast to 60% of the
rural vote.

Mr Trump lost in 2020 in part because of gains Democrats made among
college-educated and suburban voters. According to data from Catalist, a
political-data firm that helps Democrats, whereas college-educated white
voters were split between Hillary Clinton and Mr Trump in 2016, in 2020 he

lost those voters by nine points. His share of suburban white voters fell
similarly. The Iowa caucuses suggest he may still have a problem with these
groups. On January 15th Mr Trump failed to crack 40% of the vote in only
four counties: Dallas, Johnson, Polk and Story, counties that are
disproportionately educated and suburban (see map).
Mr Trump may overcome this vulnerability by attracting yet more non-

college voters away from the Democrats. The political logic of his nativist
populism is to do just that. And it seems likely that many voters like the
suburban Iowans who caucused for Ms Haley or Mr DeSantis will make
their way to Mr Trump’s camp come November. But despite broad support
overall among Republicans, his narrower margins among some key parts of
the electorate could also presage struggles in the general election. Mr Trump
may be building a winning coalition for November, but its makeup is not
stable. ■

states/2024/01/18/where-donald-trump-still-looks-vulnerable

Crashing truths
Why car insurance in America is actually too

cheap
Prices are rising, but most drivers still have paltry coverage
Jan 18th 2024 | Chicago
IN 2010, ERIC DUBARRY and his two-year-old son Seamus were crossing
a street in Portland, Oregon, when an elderly driver mistook the accelerator
for the brake, and ploughed into the pair and another man. They were flung
across the street—the pram wrapping itself around a lamppost. In hospital
that evening, Michelle DuBarry, Seamus’s mother, recalls “this realisation
of, my God, how are we going to pay for this?” The day after the crash,
Seamus died. The hospital charged the couple’s insurance $180,000 for his
care. The DuBarrys had to raise $4,500 of that themselves; and had no
coverage for the time off work they had to take. Ms DuBarry thought that at
least the driver’s car insurance would pay for some of those costs.

She quickly discovered that there was little hope of that. The driver who
killed Seamus had just $100,000 of liability coverage per victim. Before the
DuBarrys saw a penny, their health and car insurers claimed the entire
amount to cover their costs. Eventually, with the help of a lawyer, they
clawed some back. But, says Ms DuBarry, “I still was just left with this
feeling: How can it be this hard?”
She began campaigning for a change in the law in Oregon which had
allowed hospitals and insurers to get the first bite of any settlement—and
succeeded. Yet the real problem, she points out, was the low level of liability
coverage. “In Oregon, the minimum amount of insurance you’re required to
have is $25,000,” she says. “Even if you’re just admitted to the ER, there’s
not going to be money left over.”
Car insurance in America is getting far more expensive. In the year to

December 2023, prices paid for it, as measured by the consumer-price index,
rose by 20%, even as inflation overall moderated. Prices are often controlled
at state level, but regulators are approving the increases because the industry
is losing money hand over fist. According to the American Property
Casualty Insurance Association (APCIA), a trade association, last year
insurers paid out $1.08 in claims for every $1 in premiums they took in.
And yet what Ms DuBarry’s story shows is that, in fact, American car
insurance is still far too cheap. As much as drivers may resent paying higher
premiums, insurance covers only a small fraction of the costs inflicted in car
crashes. Instead, health insurers, government and drivers involved in crashes
shoulder the burden, and victims are rarely fully compensated.
According to a study published last year by the NHTSA, America’s

highway-safety regulator, the direct economic costs of car crashes in 2019
was $340bn, or about 1.6% of GDP. Yet the NHTSA says insurance—and
not just car insurance—covered just 54% of that. The agency put the true
social cost, including lost life years, at nearly $1.4trn. In 2019, 9m people
were involved in serious car crashes; around 4.5m people suffered injuries
and 36,000 were killed.
Since then, the number of severe crashes has climbed. It is hard to say
exactly why. New, heavier sports utility vehicles and pick-up trucks seem to

be deadlier. Since the pandemic, traffic has spread out more evenly through
the day, and so speeds have increased. Insurers also point to more people
driving while looking at their phones. Whatever the cause of the spike, in
2022 nearly 43,000 people were killed in car crashes, including 7,500
pedestrians—the highest figure since 1981.
America’s spartan car insurance stands out in the rich world. Legal minimum
bodily-injury coverage varies state by state, but nowhere does it pass
$100,000 per accident. According to the Insurance Research Council (IRC),
an industry data group, 29% of claims nationally (and over 50% in several
states) involve people insured at the state minimums. Few policies go
beyond a few hundred thousand dollars of liability. The cost of a serious
crash “is never going to be covered by that”, says Dale Porfilio, of the IRC.
By contrast, in Germany drivers are required to have €7.5m ($8.2m) of
bodily-injury coverage, and in Britain liability is unlimited. And in those
countries, going into hospital does not mean running up a life-altering bill.
Hardly by accident
Why not raise the liability legal limits? The problem, points out Robert
Gordon, a vice-president at the APCIA, is that it would make insurance cost
more. And that is deeply unpopular.
In October California raised its minimum limits for bodily-injury coverage

—but to just $30,000 per victim. A few states are going in the other
direction. Michigan, where car insurance is “no fault”, which means that
victims claim from their own policies regardless of whose fault the crash
was, in 2019 removed a requirement for people to buy coverage for
unlimited medical costs. That led to a big drop in premiums, defying the
national trend (previously Michigan drivers had higher bills than most).
Gretchen Whitmer, the state’s Democratic governor, considers that to be a
victory for consumers.
Cheaper premiums do not mean that the costs go away. Indeed, as prices rise
nationally, in part because of the greater number of crashes, some worry that
more drivers will forsake buying insurance altogether. Already around one in
eight American drivers is not covered, a far higher share than in other rich
countries. David Abels, a personal-injury lawyer in Illinois, says that “in

reality, you have to protect yourself.” Drivers are subsidised, and society at
large pays the bill. ■

states/2024/01/18/why-car-insurance-in-america-is-actually-too-cheap

Over the wall
America’s southern border has become a global

crossroads
More migrants are arriving from China, India and Russia. Why?
Jan 18th 2024 | Jacumba Hot Springs and Mumbai
SOME MIGRANTS huddled in tents provided by local volunteers. Others

slept on the desert floor, facing fire pits burning rubbish. The camp, which in
2023 sprang up outside Jacumba Hot Springs, a town in San Diego County,
California, was encircled by mountains, highways and the border wall.
When Border Patrol agents came to take people for processing, they had to
resort to nonverbal communication. “Sit if you have a passport.” “Step
forward if you are travelling with children.” If the migrants were from
Mexico and Central America, as most used to be, Spanish would suffice. Yet
among those who had just walked across from Mexico were people from
China, India and Turkey.

Last year seems to have set records for the number of migrants apprehended
at the southern border, and Republicans in Congress are demanding reforms
to America’s asylum system in return for aid to Ukraine. A deal has proved
elusive. Slightly more under the radar, the diversity of the Jacumba camp
reflects a big change in who is crossing over. In fiscal year 2023, for the first
time, migrants from places beyond Mexico, El Salvador, Guatemala and
Honduras made up more than half of all those apprehended at the border (see
chart 1). Venezuelans are the largest part of this group. But last year 43,000

Russians, 42,000 Indians and 24,000 Chinese also made the crossing—up
from 4,100, 2,600 and 450, respectively, in 2021. America’s northern border
has proved porous, too. In total some 40,000 Indian and Chinese migrants
came south from Canada last year.
Migrants take different paths to the southern border, depending on where

they come from. An analysis by Idean Salehyan and Gil Guerra of the
Niskanen Centre, a think-tank in Wasington, DC, suggests that most Chinese
fly to Ecuador, to which they have visa-free travel, before making the long
and dangerous trek through Panama’s Darién Gap. Panamanian data confirm
that the number of Chinese migrants crossing the jungle rose steadily in
2023. In October, El Salvador began to tax African and Indian travellers at
the country’s main airport. Turkish migrants in Jacumba had flown to
Tijuana and then walked into California.
Certain nationalities tend to cluster in specific border sectors. Chinese and

Russians often cross near San Diego and Indians near Tucson, Arizona.
Migration flows are constantly evolving, says Ariel Ruiz Soto, of the
Migration Policy Institute, a think-tank. He likens the border to a balloon. If
you squeeze one side (say, enforcement increases in San Diego), the air will
flow to another (migrants will head to Tucson or El Paso.) Social media and
messaging apps have helped spread information. TikTok and YouTube are
filled with videos teaching migrants about routes. “Once families know that
their friend or cousin has made it,” says Mr Ruiz Soto, “they’re much more
likely to take a chance.”
Smuggling networks have evolved to serve the increased demand. Notices

painted on walls and printed on fliers all over the Indian states of Punjab and
Gujarat promise help with moving to America, Australia, Britain and
Canada: visa services, college admissions, job opportunities. A charter plane
bound for Nicaragua and filled with Indian migrants was recently grounded
in France while officials conducted a human-trafficking investigation. The
Turks in Jacumba admitted they had paid a coyote to show them the way to a
hole in the border wall. Mexican cartels are also diversifying their
enterprises by getting into the people-smuggling business.
Why the surge? A number of trends converged in 2023 to diversify illegal

migration to America. War and instability pushed people to leave their

countries. The Jewish Family Service of San Diego, which runs a migrant
shelter, helped more Russians than any group besides Mexicans in the nearly
two years since Russia invaded Ukraine. The end of China’s lengthy and
repressive zero-covid policy allowed Chinese to travel internationally again.
Several Republican politicians have suggested that China is sending spies to

infiltrate America. It is not lunacy to be wary of potential agents working for
Chinese security services. Last year the Department of Justice charged two
Chinese men living in New York City with operating an illegal police station
“to monitor and intimidate dissidents”. Yet Mr Salehyan argues that there is
no evidence that asylum-seekers, who willingly give themselves up to
Border Patrol, have sabotage in mind.

Roughly 70% of asylum applications from Chinese migrants between 2003
and 2023 were granted, suggesting that their reasons for leaving China were
mostly credible (see chart 2). In fact, Ecuadorian data show that a
disproportionately high share of Chinese migrants are coming from Hong
Kong, where dissent has been punished, and Xinjiang, where Uyghurs have

been persecuted. Rather than plotting to undermine America, plenty seem to
be seeking freedom.
But many, probably most, migrants have a financial incentive to come.

Several at the camp in Jacumba said they were fed up waiting years for a
visa, and hoped to earn more money in America than back home. As of
December, more than 300,000 people who had submitted immigrant visa
applications were waiting for an interview. Delays are largely the result of
the pandemic, which shut down consulates and decimated their staff. More
important, there are not nearly enough visas for the number of people who
want to come. Yet expanding legal pathways has not, so far, been part of
Congress’s spasmodic negotiations.
This increasingly global migration to America’s borderlands says something

about the enduring power of the idea that America is a land of opportunity.
For many migrants in Jacumba there is no other place that they would risk
everything—their money, their safety—to get to. When asked why he didn’t
try to move somewhere closer to Turkey, Selim Gok, a 20-year-old student,
responded matter-of-factly: “Because I speak English.”■

states/2024/01/18/americas-southern-border-has-become-a-global-crossroads

Finding the votes
The election in Georgia could be as pivotal as it

was four years ago
Donald Trump’s future, election security and voting rights are all in play in
the Peach State
Jan 18th 2024 | Atlanta
IN 2020 NO other state produced as much election drama as Georgia. In the

end it gave Democrats slender victories that helped them win both the White
House and a majority in the Senate, though not before Donald Trump,
unsuccessfully, implored Georgia’s Republican secretary of state, Brad
Raffensperger, to “find 11,780 votes”, the number needed to overturn the
swing state’s results in his favour. In 2024 Georgia will again find itself
taking centre stage—for three reasons.
The first is Mr Trump. After a big win in Iowa, the former president looks as
politically robust as ever. Though his legal woes have not alienated

Republican voters (rather the reverse), they could yet cause him trouble, not
least in Georgia. Last August a grand jury indicted him for running a
criminal ring that conspired to overturn the state’s 2020 election. Unlike in
the federal cases pending in Washington and Florida, if re-elected Mr Trump
could not pardon himself from the Georgia charges (though, according to
long-standing policy, he would have immunity while in the White House).
Nor could Brian Kemp, the state’s Republican governor, nix them.
But the case has taken an unexpected turn. On January 8th Fani Willis, the
district attorney prosecuting Mr Trump, was accused by one of his co-
defendants of having a fling with a special prosecutor she hired. Though the
salacious claim is unlikely to disqualify her from litigation, it opens her to
allegations of corruption (Ms Willis denies acting improperly in hiring him).
Her foes are calling for her to go. That plot twist is unlikely to be the last.
Second, there is the matter of election security. Though Georgia is not home
to the country’s loudest election-deniers—its Republican statewide
politicians have staunchly asserted that its contests have been fair—fierce
debates over election safety are playing out in the courts. A case that has
been dragging on for over six years is reaching its end. An Obama-appointed
judge will decide in the coming weeks if Georgia must scrap its electronic
voting machines. Left-wing plaintiffs argue that the touchscreen ballot-
markers are eminently hackable and make paper audits impossible. They
point to a breach in Coffee County, where Trump allies copied election
software from a rural polling station in January 2021, as proof that bad
actors have all they need to do damage in 2024.
Good on paper
To the dismay of the cyber-security professors making the case for a switch
to hand-marked paper ballots, Georgia’s most infamous conspiracy-theorists
have taken their side. During opening statements the courtroom was packed
with Trump apostles keen to tell your correspondent about the counterfeit
ballots that flipped elections past. The office of Mr Raffensperger, the
defendant, says it refuses to negotiate with election-deniers of left or right,
noting that the trial is sowing unsubstantiated distrust of the state’s elections.

On 11 criteria for “fair, accessible, secure and transparent” elections—
including, for example, whether a state has early voting and conducts audits
—the Bipartisan Policy Centre, a think-tank based in Washington, DC, ranks
Georgia best in the country (tied with Colorado). Even some who do not see
it that way reckon it is too late to change the voting system before
November. “It would cause mayhem,” says Cianti Stewart-Reid, the head of
Fair Fight Action, a voting group started by Stacey Abrams, a Democrat who
ran for governor in 2018. The case plants the seeds for fights over the
validity of the results in November.
Third, voting rights: Georgia’s increasingly diverse electorate makes the

state a laboratory for the demographic changes expected across America—
and the fights over voter access that come with them. That has catalysed a
movement to get unlikely voters registered and to persuade national
campaigns to invest in Georgia. The Abrams machine spent $400m doing so
in the decade to 2022. But since 2013, when the Supreme Court struck down
the pre-clearance regime that gave the federal government authority to
monitor election rules in places with historical injustices, Georgia’s
Republicans have also been tightening voting laws.
After Joe Biden won Georgia in 2020 the legislature passed SB202, a bill
that, among other things, made it illegal to pass out water and snacks to
those queuing to vote and allowed individual citizens to challenge the voter
registrations of neighbours they suspect are unlawfully registered. Though
the law has had a more muted effect than some expected, it has forced
Democrats into new battles. According to ProPublica, an investigative outlet,
in two years nearly 100,000 registrations were challenged (oddly, 89,000
challenges were filed by just six people). Those who fail to respond to the
notices can get kicked off the rolls. In early January Democrats lost in court
to True the Vote, a conservative group leading the challenge crusade.
Following the decision, its leaders announced the launch of new automated
mass-challenge software.
All this amounts to the most dynamic political tug-of-war outside the capital.
“Without a doubt there was some sore-loser politics involved, but SB202
addressed real issues as well,” says a Republican who took part in its
deliberations. The handful of Georgia judges making decisions on the Trump
trial, election security and voting-rights cases have the hard task of

distinguishing between political high-jinks and good-faith arguments. Their
rulings will matter for all Americans. ■
subscriber-only newsletter examining the state of American democracy, and
read other articles about the elections of 2024.

states/2024/01/18/the-election-in-georgia-could-be-as-pivotal-as-it-was-four-years-
ago

Lexington
It’s not the Trump Party quite yet

Chris Sununu and Nikki Haley claim, against the odds, that their brand of
conservatism is the Republican future
Jan 18th 2024 |
SLENDER, HIGH-SPIRITED and young, at least by the sagging standards

of American politics, Nikki Haley, the former governor of South Carolina,
and Chris Sununu, the current governor of New Hampshire, make a dynamic
team as they barnstorm his state in advance of its primary on January 23rd.
“What better place to meet the next president of the United States than in a
candy shop,” boomed Mr Sununu, grinning, as he introduced Ms Haley
recently to a gaggle of constituents in Chutters sweet store in Littleton, in the
White Mountains. Smiling as brightly as her ally, she reeled off a list of
policy objectives before warning that America could not hope to move
forward with either Joe Biden or Donald Trump as president. “You can’t do

it if you’ve got two 80-year-olds as the choice of where we’re gonna go,”
she said.
That is the essence of her argument as Ms Haley tries, after Mr Trump’s

thumping victory in the Iowa caucus, to block his march back to the
Republican nomination. Ms Haley came in a close third there to Ron
DeSantis, the governor of Florida, but both were out of hailing range of Mr
Trump. The next day, her campaign began running a new advertisement in
New Hampshire saying that Mr Trump and Mr Biden were America’s most
disliked politicians, “consumed by chaos, negativity and grievances of the
past”.
Yet the paradox of Ms Haley’s candidacy is that although she looks like the
party’s future she, more than Mr Trump, can sound like its past. While Mr
Trump continues to revise Republicanism, Ms Haley wants to return the
party to its pre-Trump principles, to when it at least made a more substantial
pretence of caring about cutting debt, reforming entitlement programmes and
containing Russia, not to mention being polite and not getting indicted.
Though Mr Trump may have stolen Ronald Reagan’s campaign slogan

(“Let’s make America great again”), he has otherwise shown little deference
to the values Reagan laid down. In a sign of how Mr Trump has upended the
party, and of his lingering anxiety about Ms Haley, he is running an ad in
New Hampshire attacking her as wanting to cut Social Security, traditionally
the kind of thing Democrats say Republicans are out to do.
There is a whiff of nostalgia in the very way Ms Haley is campaigning, not

just in her commitment to retail politics but in the company she keeps. In
1988 another Governor Sununu—John, this Sununu’s father—rescued
George H.W. Bush after he came in third in Iowa, delivering a victory that
propelled him to the White House. “We’re copying a few pages out of that
playbook,” Mr Sununu acknowledges, after snagging a chocolate bar from
one of Chutters’s giant jars. “But only in that it’s tried and true.”
He argues that his state’s politics still depend on activating networks in

towns such as Littleton, and that if Ms Haley, whom he endorsed last month,
beats Mr Trump in New Hampshire, and then in her home state of South
Carolina, “everything would flip upside down on him very, very quickly.”

That is a very long shot but somehow, borne along on Mr Sununu’s stream
of enthusiastic patter, it starts to sound more than barely plausible.
Mr Sununu, who is 49, has been elected to four consecutive two-year terms,
most recently by more than 15 points, in a state whose two senators and two
representatives are all Democrats. In his party he is a relative moderate on
social issues, including abortion rights, but he boasts of being the most
fiscally conservative governor in the country. He has little patience with the
argument that Mr Trump has fundamentally changed the Republican Party,
insisting he has merely hijacked it.
Mr Sununu thinks the anger of Americans over the failures of “elitists in

Washington”, rather than any policies, led them to support Mr Trump in
2016 as a disrupter, and now as a victim. “He provides no leadership, no
guidance, no basis in the Republican fundamentals of being fiscally
conservative or limited government, or any of that,” Mr Sununu says. “His
unique skill is making people feel like he’s sharing their troubles and chaos,
right?” But Mr Trump is “using their anger for his own personal benefit.
He’s not going to help them, at all. He didn’t before.” He fears a Republican
wipeout at other levels of government if Mr Trump is re-elected.
He predicts that once Mr Trump leaves the scene—after a Haley victory, or

further down the road—the old dynamics in the party will reassert
themselves, “with no one individual trying to redefine where the party goes”.
Courage about conviction
This may sound wishful, or even delusional, particularly in light of Mr

Trump’s showing in Iowa. But the picture remains more complicated than
that. Less than 15% of registered Republicans turned out, and of them almost
half preferred a different candidate from Mr Trump, a quasi-incumbent.
More broadly, Republican governors—not just in New Hampshire but in
states like Georgia, Ohio and even Iowa—are succeeding not as Trump
acolytes, but with more conventionally conservative and pragmatic
Republican politics. Congressional Republicans, particularly in the House,
are falling in line behind Mr Trump, but Mr Sununu insists that is only
because they need him to raise campaign money. He thinks they will also

revert to previous form when “they won’t have this emperor, this, you know,
this dictator, if you will”.
Maybe. For all his criticism of Mr Trump, Mr Sununu, a fierce opponent of

Mr Biden, has also said he would support Mr Trump if he becomes the
Republican nominee, even if he is convicted of a felony. Mr Sununu insists
he was engaging in a “hypothetical” for “shock value”, to persuade
Republicans they should not rely on the courts. “If you think Trump is a
threat to democracy, then get up and participate in the democratic process
and vote him out,” he says. “It happens in the primary.” But if it does not
happen in the primary, conservatives such as Mr Sununu will have to ask
themselves a hard question: whether they will really save their party by
helping Mr Trump burn it down. ■
Read more from Lexington, our columnist on American politics:

Ron DeSantis has some lessons for America’s politicians (Jan 11th)
How to win the culture war (Jan 4th)
Why Donald Trump is gaining ground with young voters (Dec 20th)
subscriber-only newsletter examining the state of American democracy, and
read other articles about the elections of 2024.

states/2024/01/18/its-not-the-trump-party-quite-yet

Middle East & Africa

After it ends, the war in Gaza will still continue to shape
Israel
How Israel has changed :: Its defence posture and economy will feel the effects for years
Even as war rages in Gaza, Israel’s Arabs are feeling more

Israeli
How Israel’s Arabs see themselves :: That is partly because of their shared horror of Hamas
and the threat it poses
Joe Biden puts the Houthis back on America’s baddies list

Sea change :: A president who wanted to end the war in Yemen now has his own conflict there
Killings and abductions persist in Nigeria

Insecurity in Nigeria :: Yet Tinubu’s security plan is worryingly like his predecessor’s
Why diplomacy over Sudan, Africa’s enduring nightmare,

is stuck
Solving Sudan :: A notorious warlord is winning the public-relations war as well as the real
one

How Israel has changed
After it ends, the war in Gaza will still continue to

shape Israel
Its defence posture and economy will feel the effects for years
Jan 18th 2024 | JERUSALEM
ISRAEL’S GENERALS are calling 2024 a “year of warfare”. That is quite a

prediction, given the bloodshed of 2023. They believe it will take many
months to dismantle Hamas’s military capabilities. For now, Israel’s focus
remains on its immediate battles in Gaza and the fate of the more than 130
hostages still held there. But it is increasingly obvious that even after the
fighting ends, the impact of this war will be felt for years on Israel’s military
strategy and by extension on its economy.
This is Israel’s worst war in half a century in terms of casualties and its most
prolonged since the conflict in 1948-49 which the country calls its War of
Independence. Economists refer to the years between the Yom Kippur war in

1973 and Israel’s invasion of Lebanon in 1982 as its “lost decade”. Defence
spending soared, as did the deficit and inflation while foreign investors
stayed away. Israel escaped financial meltdown only by enacting a drastic
economic stabilisation plan in 1985. Though there are huge differences
between Israel’s economy now and then, from its world-leading tech sector
to its ample foreign reserves, some Israelis worry that a protracted war could
be a long-term drag on growth.
Before October 7th the IMF had expected Israel’s GDP to grow by 3.1% in
2023 and 3% in 2024, more than double the rich-country average. The
deficit for 2023 was projected at a mere 0.9% of GDP. Public debt, which
stood at 61% of GDP at the end of 2022, had fallen by ten points since the
pandemic. But the war is slowing growth and leading to a wider deficit. The
Bank of Israel expects GDP to expand by 2% this year. Others are more
pessimistic: the OECD forecasts 1.5% and S&P, a ratings agency, just 0.5%.
The deficit, meanwhile, has blown out to 4.2% of GDP—Israel’s highest

since 2012 (apart from 2020, during the pandemic). The shortfall came from
war spending of 17bn shekels ($4.5bn, or 1% of GDP) in December alone,
as well an 8% slump in tax revenue in 2023. An amended budget for 2024
adds 55bn shekels in defence spending (3% of GDP), imposes cuts on many
civilian ministries and predicts a budget deficit of 6.6% of GDP.
Though much of this increased spending is directly related to the current

war, Israel is unlikely to return to its pre-war economy when the fighting in
Gaza eventually ends. To begin with, it seems to be reversing a multi-year
trend of reducing the size of its ground forces. Before the attack by Hamas in
October, Israel had spent billions on its missile defences and a sophisticated
border fence, hoping technology could substitute for soldiers. These
defences failed to stop the terrorists crossing the border. “We relied on
technology and thought we would never again manoeuvre in large
formations,” says one veteran general. “That was wrong.”
In response, Israel called up more than 300,000 reservists, strangling the

economy. The labour ministry estimated in November that 18% of Israel’s
workers could not do their jobs. That included reservists as well as the more
than 100,000 people displaced from their homes. Their absence is affecting
vital sectors. Many of Israel’s tech entrepreneurs and engineers are now in

uniform. Start-Up Nation Policy Institute, an Israeli think-tank, found that
Israeli startups raised just $1.3bn in the fourth quarter of 2023, down 46%
from the previous year and the lowest since 2017.
Though thousands of reservists are now being sent home—many more will
be released by the end of January—Israel aims to keep twice as many
soldiers guarding its borders as before the war. Previously about 130,000
reservists were on “active service”, meaning they spent at least 20 days on
duty over three years. Now the army will be calling up nearly three times as
many of them. That will not be cheap, because it pays the civilian salaries
and the benefits of those it has called up.
In order to fund this, the government would have to increase defence

spending by about 1% of GDP in the long term. Doing so would require tax
increases or spending cuts elsewhere. It will also need the money to buy
tanks and gear to equip an expanded force, which includes a newly formed
tank battalion and border-security brigade. It will also have to replenish its
depleted stockpiles of munitions.
Many of those stripping off their uniforms are getting only a brief reprieve
and have already been handed the dates of their next call-up in just a few
months. But their return to civilian life could well be politically
consequential. After a bloody war in 1973 and two others in Lebanon—in
1982 and 2006—reservists coming back from the fighting led protests that
ultimately brought down the governments of the day.
Israel was dragged into this war after nine months of civil unrest over efforts
by the right-wing government led by Binyamin Netanyahu to weaken the
courts and control the appointment of judges. This turmoil is one reason why
investment in the tech sector was lacklustre before October 7th. Yet since
then the protests that had rocked Israel’s major cities were put on hold as the
country united. Many of those involved turned the movement into a
campaign to distribute aid to the displaced.
Most of the leaders of the protests against the legal reforms are wary of
damaging that unity by restarting the demonstrations before there is a
ceasefire. But anger is building: over three-quarters of Israelis say they want
the prime minister to go, once the war is over. The protests that have

resumed against him are still small, but if returning reservists join them in
large numbers, that could mark the beginning of his end.
Whoever replaces Mr Netanyahu, a generation of young working Israelis

will have to pay for this war, out of their pockets and in months of reserve
duty, for years to come. That will shape how they see their country—and
build its future. ■
This article was downloaded by calibre from https://www.economist.com/middle-east-

and-africa/2024/01/18/after-it-ends-the-war-in-gaza-will-still-continue-to-shape-
israel

How Israel’s Arabs see themselves
Even as war rages in Gaza, Israel’s Arabs are

feeling more Israeli
That is partly because of their shared horror of Hamas and the threat it
poses
“O PEOPLE IN the Negev, in the Galilee and the Triangle, set the ground
ablaze under the feet of the invading occupiers through killing, burning,
destruction and roadblocks.” The command came from Muhammad Deif,
Hamas’s military chief, as he unleashed the horrors of October 7th. It was
aimed at Israel’s Arabs, who make up a fifth of its population. They have not
answered his call. “We all agree that civilians should be outside the theatre
of battle,” says Muhammad Barakeh, the head of the High Follow-Up
Committee, an umbrella group of Arab factions in Israel.

The contrast with previous bouts of fighting is striking. When missiles flew
from Gaza in 2021, violent clashes between Arab and Jewish Israelis erupted
across Israel’s mixed cities. This time the response has been a studied
silence. Palestinians in Israel “don’t want to be part of the war”, says
Muhammad Darawshe of Givat Haviva, Israel’s oldest centre promoting
Jewish and Arab co-existence.
Many Jewish Israelis think this is because their Arab compatriots are afraid,
particularly of the police. In 2021 Itamar Ben-Gvir, a far-right Jewish
politician, urged Jewish mobs to take up arms and shoot Palestinian stone-
throwers. Today Mr Ben-Gvir is the minister for national security, in charge
of the police. Since October 7th forces have detained or interrogated some
200 Israeli Palestinians, many women, many for minor offences, such as
endorsing social-media posts expressing sympathy with Gaza’s dead. Mr
Ben-Gvir’s supporters have sent prominent Palestinian Israelis death threats.
Rallies demanding a ceasefire have been banned. Any such gatherings have
been forcibly dispersed.
But after decades torn between their state and their people, opinion polls
suggest Israel’s Palestinians are siding firmly with the state. In a survey this
month by Givat Haviva, over half of Arab respondents attributed the calm to
their desire for peace and a shared destiny with mainstream Israel. Another
survey published last month showed two-thirds of Israeli Palestinians saying
they identified with their state, up from half before the war.
This desire for integration is counterintuitive. The Palestinian death toll has
been higher than in any other war in the long conflict. The yearning has
several causes. One is the shared horror at Hamas and the threat it poses. On
October 7th the Islamists abducted Israeli Arabs and Jews alike, including a
veiled Muslim girl. (An embarrassed Hamas later released her.) Its attack
and rockets have killed some 20 Palestinians in Israel. “Hamas threatens
Arabs as well as Jews,” says Makbula Nassar, an Israeli Palestinian
journalist.
The war in Gaza is also eroding workplace barriers. Hundreds of thousands

of Jewish reservists have gone to fight, so Israeli firms have recruited
Palestinians from Israel and occupied East Jerusalem in their place. Israeli
Palestinian attendance was high when universities reopened earlier this

month. Some campuses plastered their walls with appeals for co-existence.
And although Mr Ben Gvir and his cohorts spew hate, at a conference in Tel
Aviv on January 9th Benny Gantz, the defence minister, insisted that the
slogan emblazoned on main roads across Israel, “Together we will win”,
included the country’s Arabs. And Moshe Arbel, the ultra-Orthodox interior
minister, overruled the decision of Bezalel Smotrich, the far-right finance
minister, to cut Arab municipalities’ funding.
Still, communal divisions run deep. In the survey 44% of Jewish Israelis said
they would stop their children from playing with Arabs. (13% of Arabs said
the same of Jewish children.) Over 40% thought Arabs should receive less
state funding than Jews. And 62% opposed Arab parties being part of
Israel’s governments. Among Arab Israelis, Arabic’s downgrading as an
official language in 2017 still rankles. So does the lower funding for Arab
public services.
That Israel’s Arabs feel closer to the state does not mean that they no longer
feel Palestinian.“We won’t forget our identity,” says Reem Younis, a female
entrepreneur from Nazareth, Israel’s largest Arab town. “Why can’t I feel
pain for Palestinians as well as Jews?” ■

and-africa/2024/01/18/even-as-war-rages-in-gaza-israels-arabs-are-feeling-more-
israeli

Sea change
Joe Biden puts the Houthis back on America’s

baddies list
A president who wanted to end the war in Yemen now has his own conflict
there
Jan 18th 2024 | DUBAI
IT IS ENOUGH to cause whiplash. Three years ago America removed the

Houthis from its list of foreign terrorist groups over the objections of Saudi
Arabia, which was fighting a war against the Shia rebel group in Yemen.
Now it is putting the Houthis back under broad sanctions and bombing them
—while the Saudis are trying to make peace with the group.
On January 17th the Biden administration labelled the Houthis, who are
backed by Iran, a “specially designated global terrorist” group. That comes
after two months of Houthi attacks on commercial shipping in the Red Sea

and the Gulf of Aden, and days after America and Britain began bombing
Houthi targets in Yemen.
Neither the strikes nor the sanctions are likely to stop the Houthis’ piracy,
which they say is in solidarity with Gaza. They initially said they would
target only vessels with links to Israel (in practice, some of their attacks have
been random). The first round of Anglo-American strikes on January 12th
struck some 60 targets across the country. “This was intended as limited,
single action and we hope the Houthis will now step back and end their
destabilising attacks,” Rishi Sunak, the British prime minister, told
Parliament on January 15th.
That was wishful thinking. Since the British and American strikes the
Houthis have hit a Greek-owned vessel sailing to Israel and an American-
owned ship (neither sustained much damage). The group also fired a missile
at a tanker carrying Russian oil, but missed. On January 16th Shell became
the latest energy giant to suspend shipments through the Red Sea.
American officials believe they only destroyed a fraction of the Houthis’

anti-ship missiles and drones. They have carried out further strikes since the
initial barrage including one targeting a radar station and another aimed at
four anti-ship missiles that were being readied for use.
Sanctions are another tool, albeit a weak one. The Trump administration put
the Houthis on America’s foreign-terrorist list in January 2021. Mr Biden
reversed that decision a month later, amid warnings that the designation
would complicate delivery of food to Houthi-controlled areas already on the
brink of famine.
Sanctions will not stop the Houthis from stealing aid, smuggling oil and
imposing taxes on Yemenis, their main sources of revenue. Nor will they
prevent Iran from delivering weapons. Two American Navy SEALs went
missing off the coast of Somalia on January 11th while trying to seize a
shipment of Iranian-made missile parts allegedly being smuggled to Yemen,
in defiance of a UN arms embargo.
Those shipments will continue: Iran finds it useful to have a proxy that can
shut a vital waterway. In recent days it has taken the unusual step of lashing

out directly. On January 17th Iran launched a missile attack in western
Pakistan. It said it was targeting Jaish al-Adl, Sunni militants blacklisted by
Iran as terrorists. This came after it hit targets in Iraq and Syria. Pakistan
retaliated with strikes inside Iran. Broadly, though, the Islamic Republic
prefers to stoke regional chaos from a distance.
In private, American officials acknowledge that their strikes are unlikely to

be a deterrent. They can impose a cost on the Houthis and perhaps degrade
their ability to continue the campaign. But as long as the Houthis control
large bits of Yemen and receive weapons from Iran, their ability to threaten
shipping will remain. ■
Stay on top of our defence and international security coverage with The War
Room, our weekly subscriber-only newsletter.

and-africa/2024/01/18/joe-biden-puts-the-houthis-back-on-americas-baddies-list

Insecurity in Nigeria
Killings and abductions persist in Nigeria

Yet Tinubu’s security plan is worryingly like his predecessor’s
Jan 18th 2024 | Abuja
HOW MUCH politicians in Nigeria care about national insecurity has long
been correlated with how close it gets to their mansions in Abuja, the capital.
On its outskirts on January 2nd a father and his six daughters were
kidnapped, prompting a rare outcry on high. A crowdfunding effort to pay
the ransom was even backed by a former minister. But the kidnappers
instead killed one of the girls and demanded more cash. The wife of
President Bola Tinubu publicly lamented a “devastating loss”. Yet such
horrors are still appallingly frequent—and largely ignored by politicians. In
one incident last week in the south-east 45 people were kidnapped and are
still missing, yet few leaders spoke out.

The deadliest zone is the north-east, where jihadists linked to Islamic State
attack the army and villages. The north-west, too, is riddled with gangs that
routinely kidnap for ransom. A decades-long conflict between mostly
Muslim herders and largely Christian farmers rumbles on in the country’s
centre, where on Christmas Eve gunmen mowed down at least 160 people.
Separatist violence still smoulders in the south-east.

At his inauguration last May Mr Tinubu declared security his “top priority”.
Yet more than 3,600 people were kidnapped in 2023, the most ever,
according to ACLED, a global monitor of conflict. The snatching rose
sharply after Mr Tinubu took office. And almost 9,000 Nigerians were killed
in conflict last year (see chart).
The government stresses that, in its most recent budget, spending on defence
and the police took the biggest share, about 12% in all. Defence got a fifth
more than it did last year. Yet inflation is running at 29%, so in real terms the
defence budget has actually fallen.
The government tends to splurge on fancy weapons systems that fail to

tackle the roots of the problem, which is poverty, poor education and anger
at army atrocities. The latest budget includes funds for six T-129 Turkish
attack helicopters on top of the 12 costly Bell choppers bought last year from
America for $1bn, not to mention 12 Super Tucano attack aircraft. Buying
strike drones has become so popular that the army actually runs its own fleet
alongside that of the air force.
But drones are not much good at guarding schools from kidnappings, and
heavy weaponry risks disaster. A drone recently killed at least 85 civilians at
a festival in Kaduna state—not the first such cock-up. The army promised to
“fine-tune” its operations, but more radical change is needed. The police,
well equipped but able to use better human intelligence, should lead on
domestic security, not the army, which has been deployed in all 36 of
Nigeria’s states.
Another huge problem is graft in security spending. “Defence is a really

prime part of the budget where you can take large quantities of money out
without people being any the wiser,” says Matthew Page of Chatham House,
a think-tank in London. Much of the budget, he says, is still about rewarding
those who paid to get Mr Tinubu elected. Sometimes the army fails to
receive its budget allocation.
This is worsened by a system known as “security votes”, whereby parts of

defence spending are deemed too sensitive to require public oversight. The
practice, which accounts for perhaps $700m a year, increased sharply under
the last president and may well jump more under Mr Tinubu. The defence

budget has nearly tripled since 2019. But thanks to inflation, wasteful
purchases and corruption, Nigerians do not seem safer. General Christopher
Musa, chief of the defence staff, appears to understand the roots of the
insecurity. “Military effort alone is incapable of restoring enduring peace,”
he says, adding that the army helped build hundreds of schools under his
command in the north-east.
Yet many politicians seem keener to spend on themselves, rather than create
the conditions for peace or fill the country’s fiscal hole. Even if Mr Tinubu
resists the temptation to reinstate the petrol subsidy that he largely removed
last year, debt servicing alone in 2024 may gobble up 61% of revenue.
In November the national assembly approved new SUVs for all 460
lawmakers, at a reported cost of $150,000-plus per car. In two months the
government has budgeted $31m to improve accommodation for the president
and vice-president—in a country of around 220m people where more than
80m are reckoned to live on less than $2 .15 a day and many fear being
kidnapped. ■

and-africa/2024/01/18/killings-and-abductions-persist-in-nigeria

Solving Sudan
Why diplomacy over Sudan, Africa’s enduring

nightmare, is stuck
A notorious warlord is winning the public-relations war as well as the real
one
Jan 17th 2024 | Nairobi
IT IS HARD to imagine a greater irony than a man who stands accused of

genocide being welcomed on an official tour of a memorial to that most
heinous of crimes. But on January 6th that is precisely what happened, when
Sudan’s most infamous warlord, Muhammad Hamdan Dagalo (better known
as Hemedti), visited the genocide memorial in Kigali that commemorates the
Rwanda catastrophe of 1994. Sudan, he said barefaced, “must learn from
Rwanda”.
Mr Dagalo’s paramilitary body, the Rapid Support Forces (RSF), is waging a

war to the death against Sudan’s regular army, the Sudanese Armed Forces

(SAF), for control of the state. Since the fighting erupted last April, more
than 7m Sudanese have been forced from their homes; 1.4m of them have
fled to neighbouring countries. Khartoum, the capital, has been laid waste,
while parts of the countryside are on the brink of famine.
Neither side is angelic; the SAF has bombed civilians and persecutes peace
activists. But only the RSF faces credible allegations of genocide. Along
with allied Arab militias, it is conducting a campaign of ethnic cleansing
against black Africans in Darfur, a region in the west, so bloody that many
fear a repeat of the genocide there two decades ago.

This makes the welcome Mr Dagalo has been getting in capitals across
Africa all the more galling for many ordinary Sudanese. He has recently
enjoyed a string of official receptions that more befit a head of state than a
genocidal warlord. Beginning on December 27th in Uganda, he has since

waltzed through Ethiopia, Djibouti, Kenya and South Africa, before his
controversial visit to Rwanda.
In Nairobi he was greeted on a red carpet with a hug from William Ruto,
Kenya’s president, who commended him for his efforts to end the war. In a
post on X, previously Twitter, which was later deleted, the office of South
Africa’s president, Cyril Ramaphosa, referred to his guest as “His
Excellency President Mohamed Dagalo of Sudan”. Since then, the
Intergovernmental Authority on Development (better known as IGAD), an
eight-country east African regional bloc, has asked him to attend a summit
on January 18th, prompting his rival, General Abdel Fattah al-Burhan, who
commands the regular army and is Sudan’s de facto president, to withdraw
from negotiations in protest.
Diplomatic recognition granted to Mr Dagalo by African leaders may partly

reflect a pragmatic adjustment to reality. “Hemedti is winning,” says Entisar
Abdelsadig of Search for Common Ground, an NGO based in Washington
and Brussels. In December, his forces captured Wad Madani, one of Sudan’s
biggest cities, which had been presumed to be a stronghold of the national
army. Since then they have threatened to push east towards Port Sudan,
where General Burhan’s government has been based since it was forced out
of Khartoum in August. IGAD has tried to arrange a ceasefire, which means
its members may reckon they must receive Mr Dagalo so as to retain the
bloc’s neutrality as a mediator.
But “it’s not just that [African leaders] met with Hemedti—it’s how they met
him,” says Kholood Khair of Confluence Advisory, a Sudanese think-tank.
For instance, Uganda’s President Yoweri Museveni studiously maintains
social-distancing protocols because of covid-19 yet had himself
photographed mask-free shaking hands with Mr Dagalo. Perhaps Mr
Museveni has not forgiven Sudan’s regular army for once backing the Lord’s
Resistance Army, a rebel group that terrorised northern Uganda from 1987 to
2006. Like several other east African leaders, Mr Museveni may view the
RSF as having “less baggage” than the SAF, Ms Khair notes. General
Burhan can count on only Egypt and South Sudan as reliable allies in the
region.

Mr Dagalo’s key advantage on the battlefield is the backing of the United
Arab Emirates (UAE), which is said to have been providing him with
weapons, armoured vehicles and drones. The UAE’s support may help
explain the success of his recent diplomatic forays. Many African countries
are keen to strengthen ties with the UAE, which is flush with petrodollars
and ambitious to expand its influence across the region. Mr Dagalo, who
owns UAE-linked gold mines in Darfur and has been criss-crossing the
continent on a Dubai-registered jet, is a member of an emerging bloc led by
the UAE. This includes Ethiopia, Chad and the internationally unrecognised
breakaway state of Somaliland. The Emiratis are also believed to have
pushed several Sudanese opposition politicians, including Abdalla Hamdok,
the former prime minister, into signing an agreement with Mr Dagalo in
Addis Ababa, Ethiopia’s capital, on January 2nd.
This is the stuff of nightmares for the SAF, which has threatened to
“investigate” those who hobnobbed with Mr Dagalo in Addis Ababa.
Meanwhile General Burhan has recently visited Iran, which is said to have
given him arms. Though denouncing others for treating the RSF commander
as his equal, the SAF general nonetheless says he too is ready to meet Mr
Dagalo in person, but insists that the RSF must withdraw from Khartoum
and other cities as a precondition for negotiations. Mr Dagalo, for his part,
scents outright victory. And so the war goes on. ■

and-africa/2024/01/17/why-diplomacy-over-sudan-africas-enduring-nightmare-is-stuck

The Americas
The fightback against Javier Milei’s radical reforms has
begun
Milei vs the caste :: Argentina’s powerful trade unions are preparing to strike on January 24th
Wild boar hybrids are raising hell on the the Canadian

prairies
Reaping what you sow :: They are well adapted to the cold, with thick fur, long legs, and tusks
as sharp as steak knives
Plunging fertility rates are creating problems for Latin

America
Accelerated ageing :: Rapidly ageing societies will struggle to afford pensions and health care

Milei vs the caste
The fightback against Javier Milei’s radical

reforms has begun
Argentina’s powerful trade unions are preparing to strike on January 24th
Jan 14th 2024 |
JAVIER MILEI has wasted no time. Forty-eight hours after taking office on
December 10th his economy minister, Luis Caputo, a former banker,
unveiled measures to cut public spending by 3% of GDP. He devalued the
peso, pledged to slash subsidies, and eliminated nine of 18 government
ministries. One week later Mr Milei decreed that state-owned companies
could be privatised, price controls eliminated and labour laws reformed.
In the midst of Argentina’s worst economic crisis in two decades, this flurry
of activity is intended to push the budget into surplus (before interest
payments) by the end of 2024. The IMF, to which Argentina owes $43bn,
has noticed. On January 10th it agreed to restart payouts to the Argentine

treasury, stating that Mr Milei’s government had “moved quickly and
decisively” to “restore macroeconomic stability”. The global elite has
noticed, too. Mr Milei’s thundering about defending “the values of the West”
was met with enthusiastic applause by the audience at Davos in Switzerland
on January 19th.
But as well as striving for fiscal rectitude, Mr Milei is doggedly determined

to destroy what he calls “the caste”, a network of corrupt politicians,

business cronies, media lapdogs and, most important, powerful trade
unionists. On December 27th he sent a sprawling “omnibus” bill to
Congress, designed to “free the productive forces of the nation from the
shackles of the oppressive state”. It would allow him to rule by decree for
two years, change Argentina’s electoral system and enforce prison terms of
up to six years for those who organise protests that obstruct transport or
damage property. All the better to break the caste. One month into Mr
Milei’s presidency, the caste has started fighting back.
Lawyers are furious about plans to fast-track divorces through the civil
registry without requiring their services. Doctors hate a new requirement for
them to preferentially prescribe generic medicines. Arty types are protesting
about gutted funds and the closure of the national theatre institute.
Fishermen are cross about permit deregulation. Sugar producers are railing
against plans to remove import tariffs. Football clubs are manoeuvring to
escape plans to turn them into limited companies in order to attract
investment from what Mr Milei calls “Arab groups”.
But no one is more affected by Mr Milei’s shock therapy than Argentina’s

trade unions, or more enraged by it. His labour reforms would kneecap them
by requiring employees to opt in to union membership, rather than having
dues taken automatically, as they are at present. This would leave the unions
out of pocket.
They are leading the pushback. The day after Mr Milei vowed to “break the
shackles of the oppressive state” the General Confederation of Labour
(CGT), Argentina’s largest union group, called a national strike for January
24th. That is record-setting time for an Argentine president to prompt such
action. The unions are fighting back through the courts, too. On January 3rd
one suspended the chapter on labour reform in the emergency decree, in
response to a request filed by the CGT.
Trade unions are central to the system Mr Milei seeks to tear down. They are
powerful and enduring, often run like family businesses. The truckers’
syndicate, for example, has had the same boss, Hugo Moyano, for 36 years.
His oldest son is installed as the union’s co-chief. A daughter and another
son sit on the board, while a different son ran a separate union established
for toll workers. He then became a congressman. The family has owned

football clubs and runs a political party. They have been investigated for
corruption, money-laundering and fraud, but few investigations have ended
in charges. The Moyanos, who can freeze the transport of food and petrol
around the country, have hitherto seemed untouchable. But Mr Milei seems
unfazed.
Markets were initially buoyant about Mr Milei’s plans. Bond prices hit a
two-year high after the emergency decree. But investors are beginning to
question the political feasibility of his project.
Union opposition is not the only hurdle. Mr Caputo wants not just to slash
public spending but also to raise annual revenues by 2% of GDP. He would
do this by temporarily raising import and export taxes. He plans to boost the
central bank’s foreign reserves, which are $7bn in the red, by using a
crawling peg to the dollar which devalues the peso by 2% every month.
Contact with the enemy
But Congress has not yet approved the tax rises, and revenues are shrinking.
Argentina is in recession. Last year GDP contracted by 2.7%, estimates the
World Bank. Mr Milei’s devaluation and the lifting of price controls will fuel
inflation and deepen Argentina’s recession, at least in the short term. This
combination means that by the time taxes are collected, their worth will have
fallen. Econviews, a consultancy in Buenos Aires, estimates that the
government could lose 0.8% of GDP in tax collection in 2024. Populist
bungs have also hurt revenues. In September, before the presidential
election, the Peronist candidate, Sergio Massa—who was also the economy
minister at the time—all but abolished income taxes, which accounted for a
good chunk of the government’s revenues. Even though he voted for the tax
cut, Mr Milei now says he wants to reverse it. He will have to go through
Congress to do so.
Many analysts fear that the 2% crawling peg is not enough, as prices rise
faster than expected. Annualised inflation surpassed 211% in December—
higher than the rate in Venezuela. The peso is once again weakening on the
country’s black market, which offers a route around currency controls. If
another sharp devaluation looms, prices could rise even more.

It will also be difficult to pass much of the omnibus bill in its current form.
Even with the support of centre-right parties, Mr Milei cannot muster a
majority in Congress, which threatens his tax rises too. He is attempting
hardball, nonetheless. Congress, Mr Milei says, can either do the right thing
and pass his law, or dedicate itself “to destroying the lives of Argentines”.
The mastermind behind much of this slash and burn, Federico Sturzenegger,
a former central-bank president who advises Mr Milei, appears to be
unflustered. He says the government is only getting started. In an interview
with Bloomberg, he said the administration will send another bill to
Congress soon to scrap 160 “absurd” regulations. Boldly, he claimed that the
only way to change Argentina’s rotten economic structure is “to disarm it”
and “drain it of its resources”. That will not sit well with the likes of Mr
Moyano, his offspring, and the country’s caste.■
This article was downloaded by calibre from https://www.economist.com/the-

americas/2024/01/14/the-fightback-against-javier-mileis-radical-reforms-has-begun

Reaping what you sow
Wild boar hybrids are raising hell on the the

Canadian prairies
They are well adapted to the cold, with thick fur, long legs, and tusks as
sharp as steak knives
Jan 18th 2024 | Vancouver
IT SEEMED LIKE a good idea at the time. When Canadian pig farmers
were told in the 1980s that their animals’ gene pool was thin, they turned to
wild boars from Britain for fortification, crossing them with an improved
strain of domestic pig. This yielded a longer creature with an extra rib, and
more meat per beast.
Then, in 2001, the boar-meat market plunged. Some farmers, unable to sell
their stock, simply released their hybrid pigs into the wild.

Today those pigs’ descendants roam the Canadian prairie provinces, a horde
some 62,000 strong. They reproduce at a clip, and are well adapted to
withstand the extreme winters, with thick fur and long legs that let them
traipse through the snow. Their tusks are as sharp as steak knives. Their
meaty breeding lends them a troublesome bulk now they are feral. One
captured boar weighed more than 280kg (600lbs).
They are destructive, opportunistic omnivores who feed by shoving their

snout and tusks into the soil in search of grubs and roots. Some Canadian
farmers now live in fear of discovering acres of crops ploughed up by a herd
of pigs.
“They’re turbocharged superpigs,” says Ryan Brook of the University of

Saskatchewan: the animals are both smart and adaptable. They have learned,
for instance, to burrow for shelter. “When we have howling winters, these
pigs are under a half a metre or a metre of snow and comfortable,” he says.
So far, Canada’s animal-management programmes have proved no match for

the hybrid pigs’ fecundity, removing a mere 300 of them in 2023. Mr Brook
says that getting rid of even ten times as many would not be enough to keep
the superpigs in check.
In fact, the pigs have multiplied to such an extent that they have now started
spilling over the border to the south. Lori Stevermer, a Minnesotan who
grew up on a pig farm, married a pig farmer and now sits on the board of the
National Pork Producers Council, says the scale of Canada’s superpig
problem became clear to her just last year.
Farmers and pork producers in the northern United States are worried about
damage to their crops and the potential for wild pig herds to be a vector for
African swine flu. An outbreak could cost the domestic pork industry $7.5bn
of its roughly $20bn annual sales, according to a recent study by Iowa State
University.
The United States already has a feral pig problem, but in the warm south.
What concerns John Tomecek, chair of the National Wild Pig Task Force in
Texas, is that their physiology is actually better suited to cold weather. That

makes the new sort of swine coming down out of the prairies into chilly
northern states a cause for serious concern.
“What you’re seeing in Canada,” he says, “is the beginning of a very real,
very long-term problem.” ■

americas/2024/01/18/wild-boar-hybrids-are-raising-hell-on-the-the-canadian-prairies

Accelerated ageing
Plunging fertility rates are creating problems for

Latin America
Rapidly ageing societies will struggle to afford pensions and health care
Jan 18th 2024 | BUENOS AIRES, MEXICO CITY, SÃO PAULO AND
SAN SALVADOR
DANIELA BARROS does not want children. Her mother had three by the
time she was Ms Barros’s age, but the 31-year-old São Paulo hair stylist
decided against it years ago. “It would mean giving up my personal and
professional life, as well as changes in my body that I don’t want to go
through,” she says.
Her choice is not unusual. Latin America’s fertility rate fell below the 2.1
births per woman required to maintain a stable population in 2016; the
region is home to some of the fastest-falling fertility rates in the world.
Together with rising life expectancy and high levels of emigration, mostly of

working-age people, this is creating a problem for Latin America: the region
is getting old very quickly.
The United States enjoyed a 57-year period over which its population of
people older than 65 doubled from 10% to 20%. Latin America is about to
embark upon the same transition in just 28 years. This provides little time to
adapt to what Simone Cecchini of the UN’s Economic Commission for Latin
America and the Caribbean calls a “radical change”. Footing ballooning bills
for pensions and health care will be a big challenge. Dealing with the drag
on economic growth created by a shrinking workforce will be another.
Look at pensions. Countries with defined-benefit systems, such as Brazil and

Argentina, face rising bills as the number of claimants grows. Brazil’s
pension deficit is running at 2.6% of GDP, and is projected to rise to 5.9%
by 2060. In places that use defined-contribution systems, such as Mexico
and Chile, pensioners often find payouts to be meagre. The region’s legion
of informal workers often have no retirement savings at all. Fully 82% of
Salvadoreans are neither paying into a pension nor saving independently for
old age, according to the country’s central bank.
The response to these problems is often cash handouts for old people. But
those are already becoming unaffordable. Almost a quarter of Mexico’s
federal budget will be spent on the “well-being pension” in 2024. By 2050
the number of over-65-year-olds potentially in receipt of the handout is
expected to double.
Health care for the old is even patchier. Many Latin American countries
entirely lack services designed for older people. There are very few public
nursing homes in the region. Private ones are expensive. Traditionally
families look after each other. But that is becoming harder when more
women—the default carers—work or simply don’t want to provide care.
Noemí Domínguez Punaro, a university lecturer in Mexico City, moved her
92-year-old mother in with her a few years ago. “The government takes
advantage of this expectation,” she says. “Caring limits my life.”
All the extra spending entailed by its ageing population will make the
obligations of Latin America’s governments exceed their revenues by some
3.8% by 2065, according to research by Carola Pessino and colleagues at the

Inter-American Development Bank; that gap is running at 1.7% in the
European Union. After the old are looked after there will be “little to spend
on everything else”, says Ms Pessino.
Failure to launch
Countries with high birth rates, like Bolivia, should try to make the most of
it. But doing so successfully would be out of character for the region. Latin
American countries have mostly failed to take advantage of their expanding
working-age populations, largely because they have not managed to get
young people into decent jobs. Youth unemployment in Costa Rica, for
example, is as high as 27%. Informal labour is much to blame. Dropping out
of school to take temporary, informal work is standard. When that work
ends, the dropout does not return to school, and is left without the skills
required for the formal jobs market. Keeping children in school for longer
would pay dividends for the whole region.
Where dependents will soon outnumber workers a different focus is needed.

Raising the age at which people stop working is sensible. Brazil began
raising its retirement age from the mid-50s in 2019. It estimated that this
would save $200bn by 2029, but it will soon need to go higher. Uruguay
started raising its pensionable age from 60 last year. Similar reforms in Costa
Rica took effect on January 12th.
Latin American countries could help themselves by boosting productivity

and becoming more attractive to working-age people, potential immigrants
and emigrants alike. There is room for improvement. Latin America’s
productivity is the second-lowest of any region in the world after the Middle
East. Overhauling education systems which fail to equip young people
properly with the skills they need is vital. Attracting migrants seems harder.
The region’s sluggish economic growth and soaring murder rates are not
alluring.
Women could perhaps prove fertile in a different way, says Ms Amarante.

The female labour participation rate in the region is only 51% versus 59% in
East Asia and the Pacific. But women can work only if there are decent jobs
and a market providing affordable care for the old people and children that
are their responsibility at present. Ms Domínguez Punaro has had to go part-

time in order to care for her mother. That Latin America’s women have long
been able to choose how many children to have has been a great boon. Now
they need more and better choices about caring for their family members,
too. That might just help Latin America face up to the challenges of rapid
ageing.■

americas/2024/01/18/plunging-fertility-rates-are-creating-problems-for-latin-america

Europe
Shell-shocked :: More weapons production is a hedge against a Trump presidency
A new therapy for Ukraine’s scarred soldiers: ketamine

Trip out of hell :: Psychedelics can help them to overcome trauma, and possibly to fight
Russia’s war is splitting the indigenous Sami in two

Reining in the reindeer :: Border restrictions keep Scandinavian and Russian Sami apart
Spain shows regional nationalists make bad coalition

partners
Ungainly Spain :: Pedro Sánchez discovers how unwieldy his disparate coalition is
Kin of Italian victims of Nazis may finally get

compensation
O partigiano :: But funds are scarce and some may never see a euro
Europe’s monarchies are a study in dignified inanity

Charlemagne :: Like the human appendix, their purpose today is unclear

Shell-shocked

More weapons production is a hedge against a Trump presidency
Jan 14th 2024 |
WARS OF ATTRITION, which is what large-scale conflicts between

militarily sophisticated adversaries such as Russia and Ukraine tend to
become, are usually decided by which side has the better arms industry.
Russia’s economy is nearly 14 times the size of Ukraine’s, but the combined
resources of Ukraine’s allies are so much greater that it should be able to
win. Yet as the conflict enters its third year, it is Russia’s defence industry
that is slowly turning the war in its favour.
Nothing shows the problem more starkly than artillery shells. At the height
of Ukraine’s summer counter-offensive, it was using some 7,000 a day,
significantly more than the Russians. This has reversed: since last month,
while Ukrainian forces have been rationed to 2,000 shells a day, the Russians

have been firing five times that number. The West now faces a choice, said
Jack Watling, an expert at RUSI, a think-tank in London, earlier this month.
It can give Ukraine what it needs, “or cede an irrecoverable advantage to
Russia”.
Both America and the European Union are having trouble delivering aid. In
Washington, $61bn-worth of military assistance is held up in Congress. In
Brussels, €50bn ($54bn) of financial support is stymied by the veto of
Hungary’s pro-Russian leader, Viktor Orban. Ukraine is worried that
American hyper-partisanship and Donald Trump’s hostility will steadily
throttle support from the Pentagon. That may leave the Ukrainians wholly
dependent on Europe.

So far, the Europeans have not done badly. The committed military aid of
EU countries has surpassed America’s €44bn. Germany has given more than
€17bn; the Nordic countries are digging deep, too. But the picture is patchy.

France has contributed just €0.5bn, though its president announced on
January 16th that more is on the way. Last March the EU said it would buy
Ukraine 1m artillery shells over the course of a year, via the European
Defence Agency. By last month it had supplied just 480,000, though the EU
still insists the total will be met.
This month NATO’s Support and Procurement Agency said it would help
EU members bulk-buy 1,000 Patriot air-defence missiles worth about €5bn.
NATO cannot send lethal aid directly to Ukraine, but the order will free up
members to transfer their own air-defence assets. The EU’s Act in Support
of Ammunition Production (ASAP) programme, launched in October, will
allocate €500m to ramping up shell-making. Yet it will take time to have any
impact. On January 9th the EU’s internal market commissioner, Thierry
Breton, proposed a €100bn fund to boost Europe’s defence industry—not
just to help Ukraine but to hedge against an American withdrawal from
NATO if Mr Trump becomes president. But it is unclear whether anyone else
supports the idea.
None of these efforts meets the urgency of the situation. Russian military
spending has increased by 68% this year, reaching 6.5% of its GDP.
According to Estonia’s ministry of defence, Russian production of artillery
munitions will rise to 4.5m units this year. Justin Bronk of RUSI reckons
Russia is churning out 100 long-range missiles a month, more than double
its capacity at the start of the invasion.
American and European shell production is also surging, but not fast
enough. American production of 155mm shells is slated to reach 1.2m a year
by 2025, a sixfold increase from last year. Sash Tusa, a defence analyst at
Agency Partners, an equity-research firm, estimates European production
will hit 1.25m. But unlike America, where munitions factories are
government-owned, Europe depends on private firms, making increases less
certain.
Europe has four main munitions producers: Germany’s Rheinmetall,

Britain’s BAE Systems, France’s government-owned Nexter, and Nammo,
owned by the Norwegian and Finnish governments. After the cold war they
concentrated on making fewer, more sophisticated systems. Tim Lawrenson
of the International Institute for Strategic Studies, a think-tank, says they

came to resemble artisans crafting small numbers of exquisite products.
Before shifting to high-tempo production lines, they want governments to
provide the certainty of multi-year contracts, says Jan Pie, who heads the
ASD, the European defence trade organisation.
“Our orders are already three times higher than they were in March 2022,”
says Morten Brandtzaeg, the boss of Nammo. He says the increased
production capacity is so huge that government must help industry share the
risk. The most forward-leaning European producer has been Rheinmetall. It
has committed to annual production of 700,000 artillery rounds by the end of
2024, and this year will open production and maintenance facilities in
Ukraine for armoured vehicles.
One way for Europe to move faster could be to relax technical

specifications. Shells will rarely meet fine-tuned accuracy demands anyway
when fired from Ukraine’s often worn-out artillery barrels (the country will
probably need 2,000 new barrels per year). And safety regulations for long-
term storage make little sense for shells that will be fired within days. In
wars of attrition the need for quantity nearly always overrides quality.
Churning out other kinds of munitions, particularly guided multi-launch

rocket systems (GMLRS) and ground-based air defence (GBAD)
interceptors, is even harder for Europe. Estonia’s defence ministry estimates
Ukraine will need 8,760 GMLRS a year by 2025. Europe can make GMLRS
and interceptors, but not at scale. The Estonians say annual production for
some European air-defence systems is in single figures. Nico Lange, a
former adviser to the German defence ministry, says that for Europe’s
biggest missile-maker, MBDA, to set up new factories, governments must
buy at least ten years’-worth of production. If investments were made now,
he reckons the rockets might start arriving in 2026.
Europe will struggle to keep Ukraine in the fight this year if American
assistance dries up. In the longer term, with American support growing
uncertain, the continent has no option but to rebuild its defence industry.
“We have the technology, we must build the capacity,” says Mr Brandtzaeg.
“We can’t not do this.” ■

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weekly subscriber-only newsletter.

https://www.economist.com/europe/2024/01/14/can-europe-arm-ukraine-or-even-itself

Trip out of hell
A new therapy for Ukraine’s scarred soldiers:

ketamine
Psychedelics can help them to overcome trauma, and possibly to fight
Jan 15th 2024 | Kyiv
IHOR KHOLODILO should probably not have survived. The military

psychologist and medic was evacuating comrades in early 2023 when his
jeep was hit by a Russian tank shell. He was left barely able to communicate.
Operations saved his heart and vision. But doctors were unable to correct his
slur and stammer. He tried all kinds of radical therapies, but nothing helped.
Then he met Vladislav Matrenitsky, a pioneer of psychedelic-assisted
psychotherapy, who posed an unexpected question. Would he try ketamine?
Mr Kholodilo did not expect much, but the results were astonishing. After
one session his stammer all but disappeared. Another five and he was almost
back to normal. Gone were the nightmares and the fears about daily life.

Ketamine therapy was not easy, he says, but it allowed him to resolve the
trauma that caused his symptoms: “I returned to what you could call life…I
felt light, just blessed.”
Ketamine has been legal in Ukraine to treat mental illness since 2017. The
therapeutic use of psychedelics has a long history, and was explored in
America in the 1950s-60s. After the hippie movement it fell out of political
favour, and for a while psychedelics were equated with narcotics like heroin.
But in the past decade or so they have experienced a renaissance.
Now the war is putting Ukraine at the forefront of the treatment. Dr

Matrenitsky, who runs the country’s only clinic offering ketamine therapy,
says he has handled nearly 300 patients suffering from depression, post-
traumatic stress disorder (PTSD) or anxiety. A growing share are soldiers.
A 40-minute session at Dr Matrenitsky’s clinic, on the top floor of a drab

children’s hospital in north Kyiv, costs just 4,000 hryvnia ($105), although
the clinic provides some soldiers with treatment free. A typical course runs
between two and six sessions. The ketamine dose—0.5 mg per kilo of body
weight—is administered by drip. A psychotherapist leads the patient through
their trip. The aim, says Dr Matrenitsky, is to tap subconscious traumas:
“What we are doing is turning the memories into a metaphorical journey.”
He says about a third of his patients receiving ketamine enjoy “extremely
good” results, and another third “reasonably good” ones. Bad reactions,
usually panic attacks, are rare. That is the signal to stop the drip.
The doctor says most soldiers on the front lines would benefit from his
treatment. He blames stigma and a “Soviet” approach to military medicine
for slowing access, and is lobbying to make it more common. Another goal
is to expand the treatment to include banned substances like MDMA and
psilocybin (the active molecule in magic mushrooms).
MPs and officials in the health ministry are largely sympathetic. Kseniya
Vozsnityna, director of Forest Glade, a government military-rehabilitation
centre, thinks a pilot project using MDMA and psilocybin could get the go-
ahead within six months. In May her centre sponsored a conference on
psychedelics in psychotherapy. But Ms Voznitsyna thinks psychedelics
should be used sparingly, and never for active soldiers. “This is a therapy for

difficult situations, medication-resistant PTSD, when the usual methods
don’t work.”
Others disagree. Mr Kholodilo says Ukraine should be using psychedelics to

improve battle performance. He sees two uses. The first he calls
“decompression”, to prevent depression from developing in front-line
fighters in the first place. The second would be a ritual to prepare soldiers
for the possibility of death. “It’s foremost in the mind of any soldier heading
to the front lines. It paralyses some of them.” A soldier who accepts the risk
of death is a much more effective warrior, he says—and has a greater chance
of surviving.
The notion of using psychoactive drugs to help soldiers fight raises troubling
moral issues. The army is still far from formally embracing ketamine
therapy, let alone giving it to serving soldiers. But Ukraine’s armed forces
are highly decentralised, and some units are apparently experimenting. Mr
Kholodilo says he has already referred one elite special-forces unit for the
treatment. “The soldiers were surprised at being able to return to the front
lines so quickly,” he says. “They simply didn’t think it was possible.”■

https://www.economist.com/europe/2024/01/15/a-new-therapy-for-ukraines-scarred-
soldiers-ketamine

Reining in the reindeer
Russia’s war is splitting the indigenous Sami in

two
Border restrictions keep Scandinavian and Russian Sami apart
Jan 18th 2024 |
THE SAMI are used to change. The indigenous people has been pushed
north by settlers and pulled south by economics. They now number just
70,000, a small share of the population of the Sapmi, their ancestral
homeland, which stretches across Scandinavia and the Kola peninsula. Now
Russian aggression has split them in two.
Since Russia attacked Ukraine in 2022, border closings have cut off Russian
Sami from their kin in Norway, Sweden and Finland. This winter Finland
shut its border after influxes of migrants, leaving Norway’s Storskog the
only open crossing from Russia to the EU. Some visa agreements have been
cancelled. Russian-registered cars are banned.

States have often conflicted with indigenous peoples’ conceptions of space.
Reindeer husbandry, central to Sami culture, has long been hampered by
borders. Last August, Russia demanded $4.4m from Norway’s government
after 42 Norwegian-owned reindeer wandered into its territory to graze.
The fall of the Soviet Union allowed Sami in Russia to reconnect with their
Scandinavian brethren after decades of isolation, but the war in Ukraine has
turned the clock back. “We are back almost to the beginning in 1992,”
laments Stefan Mikaelsson, deputy chair of the board of the Sami
Parliament. Russia has stopped taking part in the Barents Euro-Arctic
Council and the Arctic Council, two regional bodies. The International Sami
Council suspended co-operation with its Russian members in April 2022
after its Russian vice-president was filmed playing a guitar marked with a Z,
a symbol of support for Russia’s war.
Sami in Russia have been subject to a crackdown on freedoms. In 2012 the

state shut down the association of northern indigenous peoples, then let it
reopen with a head from the ruling party. Russia’s foreign-agents law has
stifled cross-border communication, says Silje Karine Muotka, president of
the Norwegian Sami Council. Indigenous men are disproportionately
recruited to the army. Andrei Danilov, a Russian Sami activist seeking
asylum in Norway, says that Sami hunters and fishermen are classified as
jobless by the state, which can then conscript them more easily.
All of this has serious consequences for the Sami. Cross-border political
organising and cultural preservation projects have been suspended. But
above all, the impact is personal. “We are suffering from being separated
from our family,” says Mr Mikaelsson. ■

https://www.economist.com/europe/2024/01/18/russias-war-is-splitting-the-indigenous-
sami-in-two

Ungainly Spain
Spain shows regional nationalists make bad

coalition partners
Pedro Sánchez discovers how unwieldy his disparate coalition is
Jan 18th 2024 | MADRID
WHEN THE conservative People’s Party (PP) won Spain’s elections in

1996, its supporters chanted “Pujol! Enano! Habla castellano!” They were
taunting the diminutive separatist leader of Catalonia, Jordi Pujol: “Pujol!
Dwarf! Speak Spanish!” The next day, though, it turned out the PP would
need support from Mr Pujol’s party to govern, and it is said that the chant
quickly changed to “Pujol! Guaperas! Habla lo que quieras!“ “Pujol!
Handsome! Speak whatever you like!”
Spain’s regional nationalists have a tendency to get their way. The two big
national parties do not form grand coalitions. So when they lack majorities,
both the PP and the centre-left Socialists devolve powers to Catalonia and

the Basque Country in exchange for votes. But the current Socialist
government of Pedro Sánchez, installed in November, is already testing the
breaking point of such arrangements.
To secure the votes to return to power, Mr Sánchez promised a Catalan

separatist party, Junts per Catalunya (Together for Catalonia), an amnesty for
the organisers of an illegal independence referendum held in 2017. This
infuriated many Spaniards. But Junts promised to provide “stability” in the
legislature.
Yet on January 10th, when the government needed parliamentary approval of

three decrees, Junts held back. One decree included economic measures
needed to unblock a €10bn ($10.9bn) tranche of European Union covid-
recovery funds. In the end that decree and one other passed, but at a heavy
cost. Junts and the Socialists agreed that the government would transfer
control of immigration to Catalonia. Analysts scratched their head at what
exactly control of immigration at a regional level would look like.
The parties had not worked that out either. The written deal referred to a
“complete” transfer of authority on immigration. Mr Sánchez maintains this
does not include border control or expelling migrants. Junts’s secretary-
general, Jordi Turull, insists that “’complete’ must mean complete”, and
threatens to pull the party’s backing for the government unless there is
progress towards another independence referendum. Mr Sánchez defends his
deals with Spain’s various national separatists by arguing that they guarantee
a “progressive” government. But Junts is a conservative party close to
Catalonia’s business interests, and its leaders flirt with Catalan chauvinism.

To make matters worse, Mr Sánchez has trouble on his left. His third decree,
on social spending, failed on January 10th not because of Junts but because
of a split in Sumar, the prime minister’s smaller left-wing coalition partner,
itself an amalgam. One element of Sumar, Podemos, quit the grouping after
being given no ministries in the new government, and voted against the
social-spending decree. Podemos argued it would cut unemployment
benefits, though the claim is debatable. The real cause is probably lasting
bitterness between Sumar and Podemos. Whatever the cause, Mr Sánchez
cannot reliably count on Podemos as part of his wobbly majority.
Across Europe, parties of the centre-right and centre-left are failing to win
the majorities they once enjoyed. But many countries solve this with broad
coalitions. The refusal of Spain’s left and right to cross the aisle renders this
harder. Divisions between the centre and the periphery—not just Catalan but
Basque, Galician and so on—are making it almost impossible.

Mr Sánchez’s best hope for now might be distraction. An investigation by La
Vanguardia, a Barcelona-based newspaper, claims that the previous PP
government, in power from 2011 to 2018, had engaged in illegal tricks
against Catalan nationalist leaders. Mr Sánchez says the matter will be
looked into “until the last consequence”. Bashing the right (and fear of the
far right) has held the left and the separatists together. Yet focusing on past
Spanish repression also feeds Catalonia’s drive for independence. The prime
minister is an inveterate escape artist. But it is hard to imagine how he can
survive almost four more years.■

https://www.economist.com/europe/2024/01/18/spain-shows-regional-nationalists-make-
bad-coalition-partners

O partigiano
Kin of Italian victims of Nazis may finally get

compensation
But funds are scarce and some may never see a euro
Jan 16th 2024 | ROME
HEARING GUNFIRE, Leonildo Pistoni ran from the stables of his farm on
the outskirts of Monchio, a mountain village in central Italy. He did not get
far before he was shot dead. His killer was a rifleman of the Hermann
Göring 1st Paratroop Panzer Division. The date was March 18th, 1944.
Pistoni’s only crime was to live in Monchio: the rifleman belonged to a
detachment sent to avenge nearby killings by local partisans of German
soldiers, who had occupied Italy after it withdrew from the second world
war the previous September.
The echoes of that lethal shot will reverberate again next month when the
victim’s granddaughter, Walda Pistoni, presents a petition for compensation

to a judge in Rome. It is the latest in an avalanche of applications to a €61m
($66m) fund set up by the Italian government. “The issue has become
enormous,” says Giulio Arria, a lawyer representing several applicants,
including Ms Pistoni. He estimates that up to 1,500 claims have been
submitted.
Petitioners include descendants of victims of arbitrary killings, like Ms

Pistoni; of executed partisans; of Jews and Roma who died in Nazi camps;
and of Italian soldiers, sailors and airmen sent to Germany to work as forced
labourers. In cases already judged, the descendants of those forced to labour
have received payouts of €30,000-40,000. The kin of those who died have
been awarded much higher sums. Two sisters orphaned when their father
died in a massacre in Tuscany got €270,000 each. That has raised questions
over the adequacy of the fund, which was created to avert a crisis in relations
between EU partners.
Germany has long argued that its liability for the actions of its armed forces
in Italy was settled in 1962 when it handed over 40m D-marks (worth
around €1.5bn today). But the cash was not primarily intended to
compensate individuals and, where it did, only applied to then-existing
claims. Italian judges later ordered the German government to pay awards to
numerous survivors and descendants of victims, but Germany refused.
Italy is not the only country with claims. A Greek parliamentary commission
reckoned damage from its wartime occupation at €289bn, and the country’s
government has said it wants to negotiate reparations. Poland’s previous
government made even bigger demands—it wanted €1.3trn. But in both
cases, Germany says all debts were discharged in agreements struck decades
ago.
In 2012 the International Court of Justice ruled in Germany’s favour on the

grounds that governments were not subject to decisions by the courts of
other countries. But two years later Italy’s constitutional court ruled that they
were liable if the underlying offences violated international law. Italian
judges continued issuing verdicts, and in 2022 a court in Rome was poised to
order the confiscation of German government-owned properties, including
the Goethe Institute, a cultural agency. Italy’s previous government, headed
by Mario Draghi, then stepped in and created the new fund. It was originally

intended for outstanding claims, and set a 30-day deadline to file any new
ones. But that deadline was pushed back in stages to the end of 2023,
enabling hundreds more to be submitted.
Meanwhile, Italian government lawyers have taken the place of the German
government’s representatives, fighting the applicants at every turn. Their
objections have drawn fire from some politicians. “They’ve put up
arguments that make your skin crawl,” says Dario Parrini, a senator for the
opposition Democratic Party. Last May he submitted a bill to rein in the
government’s lawyers. It got cross-party support, but has languished in
committee.
Since the government appeals against every judgment, and appeals in Italy
take years, some of the cash is unlikely ever to be disbursed. The two
orphaned daughters, now in their eighties, may never see a euro. “From a
juridical standpoint, I am not surprised,” says Mr Arria, the lawyer. “But as
the grandson of a Jew who was deported to Auschwitz and never came back,
I am horrified.” ■
Correction (January 17th 2024): An earlier version said the compensation

would come from the EU’s Covid recovery fund. In fact, while the
compensation was authorised by legislation relating to the disbursement of
EU financing, it will come from two Italian government funds.

https://www.economist.com/europe/2024/01/16/kin-of-italian-victims-of-nazis-may-
finally-get-compensation

Charlemagne
Europe’s monarchies are a study in dignified

inanity
Like the human appendix, their purpose today is unclear
Jan 18th 2024 |
FRANCIS II ASCENDED the French throne after his father took a lance in
the eye at a jousting tournament in 1559. A century earlier James III became
King of Scotland after his father had found himself unwisely standing next
to an exploding cannon. Other princes got promoted as the by-product of a
brother’s poisoning or an uncle’s beheading—a pity, to be sure. The
ascension of Frederik X to the throne in Denmark on January 14th was a
staid affair by comparison. A fortnight earlier his mother, Margrethe II,
startled her subjects by announcing that 52 years on the throne was quite
enough. Unbeheaded, unpoisoned and seemingly unflappable, she convened
government ministers to witness her signing the instrument of abdication,
then invited Frederik to take her seat at the Council of State. After uttering

“God Save the King,” the 83-year-old shuffled out of the room and off the
royal scene. Outside, cheering crowds awaited a glimpse of their new
monarch.
Every family has an heirloom which is too precious to throw away yet of
little practical use. A dozen European countries have the constitutional
equivalent. Kings, princes and one grand duke still rule over otherwise
enlightened places mainly in northern Europe—think egalitarian
Scandinavia, pragmatic Britain or no-frills Benelux. In an age of democracy
none is elected; in an era striving for gender balance all now happen to be
men; in these times of accountability many float somewhere above the law.
They exude the mustiness of quill and parchment in an age of ChatGPT. Yet
most monarchies have approval ratings their democratically elected
counterparts might murder a parent for. Like the human appendix, Europe’s
royal highnesses are essentially vestigial: they serve little obvious purpose,
but few think there is much reason to excise them until they cause trouble.
Perhaps Charlemagne is being uncharitable to his fellow crowned heads.

Sweden, Luxembourg and Spain (the only European monarchy south of the
Alps, apart from tiny Monaco and Andorra) are hardly hothouses of tyranny.
As emblems of the state, monarchs provide continuity: governments come
and go, kings stick around for decades. Crowns, sceptres and royal uniforms
with enough military medals to make a North Korean general blush add a
little pomp to the polity. Such was the case for tolerating monarchs put
forward by Walter Bagehot, The Economist’s greatest editor. In 1867 he
posited that the state needs an “efficient” part, made up of ministers, but also
a “dignified” one, to “excite and preserve the reverence of the population”.
In Bagehot’s time monarchies were the political system de rigueur across

Europe, as they had been since the Middle Ages. In the ensuing century, two
world wars and the advent of communism got the better of most of the
continent’s crowned heads (even if literal beheadings have become
mercifully rare). Those that retained their thrones lost much of their power,
and learned to adapt by becoming charity patrons, state banquet hosts and
expert ribbon-cutters. Once separated from the commoners they ruled over,
they came to join them, at least on occasion. “Bicycle monarchies” mostly
replaced fusty aristo balls. The Dutch king has been a part-time pilot for

KLM for over two decades. Princess Victoria, next in line to the Swedish
throne, married her personal trainer.
Beyond providing employment for hatmakers and tabloid columnists, what

is the point of monarchy today? Fans of the institution play up its role in
attracting tourists, or opening doors to companies while on trade missions
overseas. In times of crisis, a dignified royal can heal wounds, as King
Harald V of Norway did by grieving publicly after 77 people were killed in a
terrorist attack in 2011. In periods of instability they can provide a calming
influence. Juan Carlos I of Spain is credited with cementing its return to
democracy after 1975. The Belgian king is sometimes said to be one of the
few things—alongside beer and the football team—keeping the place
together. For many, monarchs symbolise a realm’s glorious history and serve
as a way of co-opting a form of national superstition into healthy patriotism.
The case against monarchy is clearer. Elected figurehead presidents, as in

Germany, are just as capable of public grieving as kings. What threats to
democracy exist in Europe these days are not the sort that monarchs can do
much about. There is something feudal about having unelected, often
untaxed plutocrats at the heart of modern polities. And crowned heads enjoy
more power, or at least influence, than is sometimes supposed. In most
countries, including Britain, Norway and the Netherlands, the prime minister
meets the monarch weekly to discuss affairs of state—an opportunity to
sway policy in ways entirely opaque to the public.
House of cads
The problem with royal families is not so much the royal as the family.
Siblings with grand titles but no real job abound, and have a tendency to
create trouble. The Belgian king’s brother once tried to partner with the
regime of Libya’s Muammar Qaddafi, of all people, on a forestry project (it
did not go well). The future Norwegian king’s sister claims she can talk to
angels and relinquished her royal duties to run a quack medicine business
with her fiancé, a self-proclaimed shaman from America. Juan Carlos, who
stepped down in 2014, has in recent years been in self-imposed exile in Abu
Dhabi, after facing investigations over Saudi bribes involving Swiss bank
accounts and a disgruntled ex-mistress. And the less said about Britain’s

Prince Andrew, the better. The dignified bit of the constitution is all too
often the grubbier one.
Royals know they are on thin ice and act accordingly. Even if unelected,
they serve at the pleasure of the people. Where is the fun in that? Being seen
to flash their privilege is out: the Dutch king had to apologise after being
caught jetting off to a Greek island getaway during covid-19. Frederik lost
no time in pledging fealty to the Danish people as he ascended to the throne
last week. Once upon a time, it would have been the other way around.■
Read more from Charlemagne, our columnist on European politics:

How the spirit of Jacques Delors might be rekindled (Jan 11th)
On Gaza, Europe is struggling to make its diplomacy matter (Jan 4th)
At Christmas, Europeans look less united than ever (Dec 20th)
Also: How the Charlemagne column got its name

https://www.economist.com/europe/2024/01/18/europes-monarchies-are-a-study-in-
dignified-inanity

Britain
Northern Ireland’s peace process is not over
Still troubled :: Compensation payments and amnesties cause fresh controversy
Britain has seen an alarming rise in poetry sales

Getting verse :: Instagram poets are / behind a rise in revenue / and platitudes
Rishi Sunak’s pyrrhic victory on Rwanda

Rejoice! :: The British prime minister defeats his internal critics, at a heavy price
Britain’s Post Office scandal is a typical IT disaster

Human says no :: The perils of public bodies and IT procurement
The map for the next British election has been redrawn
Constituency cartography :: It makes Labour’s job of winning tougher
Britain tries to correct the treatment of gender-dysphoric

kids
Notes on a scandal :: But puberty blockers are still available from private providers
Scottish nationalism’s left turn

Bagehot :: Humza Yousaf tries to fight off a resurgent Labour Party

Still troubled
Northern Ireland’s peace process is not over

Compensation payments and amnesties cause fresh controversy
Jan 18th 2024 | Belfast
MORE THAN 3,500 people were killed in Northern Ireland during the 30
years of violence known as the Troubles. Although those killings stopped 26
years ago, the conflict has never truly ended. The 1998 Good Friday
Agreement saw (pro-British) unionists accept that the political
representatives of the Irish Republican Army (IRA), the largest terrorist
group, would enter government. Nationalists accepted that Northern Ireland
would remain British unless a majority of its inhabitants voted for their
cause of a united Ireland.
These political compromises have largely worked, but they came at the
expense of victims. All paramilitary prisoners were released from jail, for
example; anyone subsequently convicted would serve no more than two

years in prison. Some thought that the passage of time would smooth these
injustices away: as victims and their relatives died, the problem would fade.
It has not. A sense of injustice does not die with an individual; families took
up their cases through the civil courts or in media campaigns. Constant
anniversaries of atrocities mean that the past is always present. Prosecutions
of British army veterans have still been happening. The moral questions
raised by the Troubles are powerfully alive.
One such question is over state compensation to victims of the violence.

Although payments were made during the early years of the Troubles, they
were often paltry: one bereaved family had their loved one’s life valued at
just £44.62 (worth £403.29, or $511, now); another family got £90. But
righting such wrongs is hard. Even the most basic question—who counts as
a victim and who as a perpetrator—is a source of continuing controversy.
Since 2006 the law has deliberately defined victims so broadly as to include
a bomber blown up by their own bomb. On January 2nd Ian Jeffers, the
province’s outgoing victims’ commissioner, proposed a payment of at least
£10,000 to each close relative of those killed during the Troubles, including
to the families of killers.
That date was already painful for Jennifer Jordan; on the same day 44 years
earlier, her father had been murdered by the IRA. In all, she lost six relatives
in the Troubles. She is incredulous: “What other country in the world would
do that? You might as well say that the families of the 19 hijackers on 9/11
will get a payment for blowing themselves and other people up. It’s the same
principle. How ridiculous is that?”
Now 75, Ms Jordan says she wouldn’t accept the money if it was offered,
regardless of who was to get it, because it attempts to put a price on the lives
of her loved ones. But she accepts that some other victims think there can
never be a fair compensation scheme and are wearily resigned to money
being paid to murderers’ relatives.
A second source of controversy is a “legacy law”, passed by the British

government in September 2023, which in effect gives an amnesty to
Troubles-era killers. The law created a body that will examine deaths and
very serious injuries caused during the conflict and give “conditional

immunity” to those who co-operate with it. All other bodies will be
statutorily barred from investigating such cases; the law also ends all civil
actions and outstanding inquests dating from the Troubles.
The law was driven more by the Tory government in Westminster than
sentiment in Northern Ireland, where it is almost universally opposed.
Several British army veterans, including soldiers accused of being
responsible for the “Bloody Sunday” massacre of civilians in Londonderry
in 1972, are now being hauled in front of the courts. Critics say that an
amnesty for everyone is designed to make the threat of such prosecutions go
away.
There is an enlightened case for such a bill. Only a handful of people will
now be successfully prosecuted because of the passage of time. The police
and courts are spending considerable resources on crimes from half a
century ago. The amnesty requires killers to tell the truth about what they
did, freed from the fear of prosecution. If justice is unlikely, truth would at
least be something. That may be unrealistic, however. Is a killer ever going
to admit, even to himself, the full ugliness of sectarian assassinations? Will a
soldier really admit they deliberately targeted a civilian?
The law is now being fought over in the British courts; a second legal front
opened up in December when the Irish government in Dublin launched a
challenge to it at the European Court of Human Rights. That has enraged the
British government, which in an undiplomatic statement accused Ireland, in
effect, of hypocrisy since it has no stomach for prosecuting IRA killers in its
territory. The statement highlighted the words of Michael McDowell, a
former Irish attorney-general, who said in 2021 that there had been “a de
facto moratorium on investigation and prosecution of IRA members” after
1998. Labour, which is likely to be in power within a year, has pledged to
repeal the law on the grounds that it is wrong in principle and commands no
support within the province.
Tim McGarry, a comedian from Belfast, once joked that the definition of
success in Northern Ireland was “passed off peacefully”. In that regard, the
past 26 years has been thoroughly successful. Despite episodic rioting and
killings, the violence of the Troubles is long gone. Northern Ireland has had
no devolved government for two years because of a dispute about post-

Brexit trade borders; a huge public-sector strike over pay took place on
January 18th. But in the context of even recent history the province is in an
enviable position.
The unresolved injustices of the conflict are not about to reverse these
achievements. But they do have a unique ability to poison the mood,
especially if still-violent dissident republicans can stoke the idea that Britain
is giving its soldiers an amnesty for their role in atrocities. And the ugly
truth about Northern Ireland’s peace process is that an end to the violence
involved buying off lots of nasty people and turning a blind eye to others. As
a result, the people who had already been hurt the most are also the most
likely to suffer now. ■
For more expert analysis of the biggest stories in Britain, sign up to Blighty,
our weekly subscriber-only newsletter.

https://www.economist.com/britain/2024/01/18/northern-irelands-peace-process-is-not-
over

Getting verse
Britain has seen an alarming rise in poetry sales

Instagram poets are / behind a rise in revenue / and platitudes
Jan 15th 2024 |
DONNA ASHWORTH, a British poet, loves words. You can tell because on
her website she calls herself “Donna Ashworth—Author and lover of
words”, doubtless to distinguish herself from all those other authors who
don’t like words. But Ms Ashworth loves so much more than words, for, as
she says, “what are we here to do, if not love?” So she also loves our
“magical” planet, and being kind, and wrinkles, and the child within us all
and putting meaningful things in italics.
It goes without saying that she loves motherly love. A mother’s love for her
son is “like a beautiful black-hole”, which is not a line to run past an
astronomer. Or a Freudian. She loves hope (“It is the light”), ageing and
stretch marks (for they are “by Mother Nature’s paintbrush”). The overall

effect feels less like poetry than as though ChatGPT has been asked to
produce inspirational fridge magnets.
But people love her back. Ms Ashworth’s writing is, as one fan says, “like a
warm hug”, which is not something anyone ever said of Philip Larkin, a
misanthropic English poet. Then again, people do not buy Larkin in their
droves. In early January “Wild Hope”, the latest of Ms Ashworth’s eight
books of poetry, reached number seven on the Amazon bestsellers list. It is
one of a handful of books behind a rise in British poetry sales: 2023 was the
highest since records began. Which is to say, still very low (at £14.4m, or
$18.2m, according to Nielsen BookData). Britain may occasionally produce
very good poets but Britons are not much interested in them, and they
certainly don’t pay to read them.
Poets used to be marketable. Lord Byron—often described as the first

celebrity—could sell 10,000 copies of a poem in a single day; in the 20th
century a book by John Betjeman could shift 2.5m copies. Modernism may
be partly to blame for the decline, says Jonathan Rose, a professor of history
at Drew University, since it aimed to make literature deliberately difficult
and “frown[ed] on anything that…was relatively easy to appreciate”. High-
minded imprints still publish poetry by clever sorts sounding glum and using
words like “quixotic”. Almost no one buys them.
Ms Ashworth does sell, and not just on paper. She is one of a number of
poets for the Instagram age who market their work via social media (where
she has 1.6m or so followers) and on websites. The poems may be of
variable quality but the accompanying products are lovely. Ms Ashworth’s
website offers a “Wild Hope” tote bag (£8), scented candle (£30) and hoodie
(£58); the site of an American poet, Rupi Kaur, offers not only books but a
signed tapestry ($100); a T-shirt ($45) and a box of cards titled “Writing
Prompts Self-Love”. Not a phrase you find in Virginia Woolf.
The problem with Instapoetry is not that it is full of nice words. Poetry has
always allowed for prettiness: who knows, or frankly cares, what “In
Xanadu did Kubla Khan” means when it sounds so good? The problem is
that it doesn’t feel true. Larkin gives the reader a shiver of pleasure not
because his lines are nice but because they are spot-on. Perhaps Instagram
account-holders do indeed look at their stretch marks and see “Mother

Nature’s paintbrush”. It seems much more likely that they just think,
“Damn”.
Yet comparisons can also be unfair. As Ms Ashworth writes in a poem called

“Youier”, imagine “if snow didn’t dare to fall / because rain was fallier / if
planets did not glow / because stars were glowier.” You should, she says,
“stop all that folly”. And no one said a truier word than that. ■

https://www.economist.com/britain/2024/01/15/britain-has-seen-an-alarming-rise-in-
poetry-sales

Rejoice!
Rishi Sunak’s pyrrhic victory on Rwanda

The British prime minister defeats his internal critics, at a heavy price
Jan 17th 2024 |
THE DICTIONARY definition of “pyrrhic” just gained a new example. On

January 17th Rishi Sunak secured a comfortable victory when MPs voted in
favour of the third reading of the Safety of Rwanda Bill, a piece of
legislation designed to unblock a totemic government scheme to deport
asylum seekers to Kigali. For weeks Mr Sunak’s internal critics had rattled
their sabres and issued chilling war cries. In the end Conservative rebels
were scattered: the bill cleared the House of Commons with only 11 Tory
MPs voting against it. The prime minister can claim victory. But it has been
a costly week for his authority.
The Rwanda scheme lives on but its credibility has been shredded by the
MPs it was intended to please. The idea is for the Rwandan regime to take

responsibility for people claiming asylum in Britain, at a cost so far of
£240m ($304m). The prospect of deportation is an essential deterrent, Mr
Sunak says, to illegal attempts to cross the English Channel in small boats.
Some Tory MPs also claim it is the one route to avoiding electoral defeat.
The bill is meant to circumvent judicial and legal objections to the scheme
by declaring Rwanda a “safe country” in law and by disapplying elements of
human-rights legislation.
But the new law is a dud, according to 60 of Mr Sunak’s own MPs. They
argue that the prospect of planes taking off for Rwanda will be stymied
either by appeals from individual migrants or by injunctions from the
European Court of Human Rights (ECHR). On January 16th these MPs
supported an amendment intended to beef up the bill by fully disapplying
international and domestic human-rights law. This amendment, and others
like it, failed. But a policy that members of his own party call legally and
operationally flawed and “simply not adequate” is one that Mr Sunak must
now defend in the House of Lords and brandish at the election.
“He had lost a great part of the forces with which he came, and all his
friends and generals except a few,” wrote Plutarch of Pyrrhus of Epirus, a
Greek king who defeated the Romans but shattered his army in the process.
Mr Sunak has also lost a fair few friends as a result of this policy.
Before Christmas Robert Jenrick, once a close ally of the prime minister,
resigned as immigration minister and reinvented himself as a hardliner on
Rwanda. On January 17th Lee Anderson, a miner-turned-MP with a talent
for hiding ambition beneath a confected persona, also resigned. Mr Sunak
had liked Mr Anderson’s pub-landlord routine (“If they don’t like barges [on
which some asylum-seekers are housed] then they should fuck off back to
France”) so much that he made him the deputy chairman of the Conservative
Party. Mr Anderson did not think enough of this position to want to defend
the bill.
The rows over the bill have highlighted Mr Sunak’s electoral weakness.
Some 72% of Britons, and 76% of Brexit supporters, think the prime
minister’s pledge to “stop the boats” has gone badly, according to Savanta, a
pollster. Instead of fearing the policy, the opposition Labour Party treats it as
the butt of jokes. The Conservatives’ ideological rifts have been prised open

a little wider. During the debates this week hardline MPs made the case for
leaving the ECHR, the next frontier for much of the Tory right; Tory
centrists lamented the party’s disregard for international law.
Discipline is breaking down in other ways, too. A YouGov analysis

commissioned by a group calling itself the Conservative Britain Alliance,
and released on January 14th, showed that the Tories are on track for a
crushing defeat at the next election. Isaac Levido, the Tories’ campaign
chief, accused Mr Sunak’s enemies of wilfully undermining the government
and its electoral chances for their own careers.
The irony is that none of this was necessary. Mr Sunak had reservations
about the Rwanda plan as chancellor but then endorsed it in the race to
succeed Boris Johnson as Tory leader in 2022. “If we could have our time
again, I rather wish that we never got ourselves into this position in the first
place,” said Mark Garnier, a Tory backbencher. If Mr Sunak scores more
victories like these, he shall be ruined. ■

https://www.economist.com/britain/2024/01/17/rishi-sunaks-pyrrhic-victory-on-rwanda

Human says no
Britain’s Post Office scandal is a typical IT

disaster
The perils of public bodies and IT procurement
Jan 18th 2024 |
PAUL PATTERSON was repentant. Fujitsu was “truly sorry”, the head of its
European business told MPs on January 16th, for its role in Horizon, a faulty
payments system that resulted in the false conviction of over 900 Post Office
sub-postmasters between 1999 and 2015. Why did the Japanese firm do
nothing about bugs it knew bedevilled its software, even as tales of injustice,
destitution and worse mounted? “I don’t know. I wish I knew but I just don’t
know.”
Mr Patterson is the first Fujitsu executive to be questioned publicly about the

scandal; others will be probed more forensically at a separate public inquiry.
Yet already the evidence points to classic problems with the way public

bodies contract firms to build and manage large IT systems—as well as to
the risks of believing that computers are always right.
At the turn of the millennium many functions of the British state were still
administered with pen and paper. The prime minister did not have an email
account until 2003. Modernisation was a vast, urgent and difficult task, and
one for which the civil service was wholly unprepared. There was a
“strategic failure” to take IT skills seriously, says William Perrin, a
technology adviser to Tony Blair in the early 2000s. The decades since have
been littered with costly disasters.
Horizon is an egregious example, but also an instructive one. The most

obvious problem was that the Post Office, which is a public corporation, was
a credulous customer. Senior executives had no idea how branches worked
in practice or what a “computerised” payments system would involve,
according to John Murray, a former Post Office project manager.
In the tender for the contract, the tactic of ICL, a British firm that developed
Horizon and was fully absorbed into Fujitsu in 2002, was to bid low. IBM
and Cardlink produced better pitches that were focused on “difficulties and
complexities”, says Mr Murray. Executives plumped for cheap promises.
Outsourcing disasters have often come from departments or agencies blindly
selecting lowball bids, reckons the Institute for Government, a think-tank.

Contract oversight was poor. Paula Vennells, the CEO of the Post Office
between 2012 and 2019, responded to concerns about Horizon by referring
to assurances from Fujitsu that the software was “like Fort Knox”. What that
really meant was the Post Office did not know what was going wrong.
Jeremy Folkes, the employee tasked with ensuring the system worked, called
it a “black box”; the Post Office had no access to design documentation or to
code.

Another procurement problem is that the penalties for poor performance are
light. Fujitsu has had a patchy reputation in Whitehall yet ministerial efforts
to block it from winning new contracts largely failed. The threat of legal
challenge under EU competition rules, and a scarcity of big suppliers, have
allowed it to keep landing work (see chart). Proprietary code and the need to
keep services running make failing IT contracts hard to escape from.
The IT cowed
The obvious solution to such problems is more digitally capable

government. Between 2010 and 2015 the Government Digital Service
(GDS), a team of tech-savvy upstarts within the civil service, notched up
some successes, including to how contracts were run. But GDS’s influence
waned; the best techies went back to the private sector; skills remain patchy.
The Post Office scandal also invites a bigger question. Even as sub-
postmasters raised concerns, it was easy for the Post Office and Fujitsu to
insist that the system was robust. That is partly because of a law, which MPs
are now seeking to change, that assumes that computer evidence is reliable.
But it also reflects a mindset that is in evidence well beyond Britain. In the
Netherlands an automated system for predicting child-benefit fraud
malfunctioned; more than 1,000 children were taken into care before the
prime minister, Mark Rutte, was forced to resign. In Australia Robodebt, an
algorithm for recovering debts from benefit claimants, similarly went badly
wrong. The government eventually had to pay victims A$1.8bn ($1.2bn).
The potential for technology to improve the public sector is vast. But those
in charge of government institutions cannot blindly rely on computers. When
humans say there is a problem, they must listen. ■

https://www.economist.com/britain/2024/01/18/britains-post-office-scandal-is-a-
typical-it-disaster

Constituency cartography
The map for the next British election has been

redrawn
It makes Labour’s job of winning tougher
Jan 16th 2024 |
LINES ON MAPS matter—to security, to identity and to elections. In 2023

the boundaries of Britain’s 650 constituencies were revised for the first time
since 2010. Unlike redistricting in America, the exercise in Britain is
determinedly non-partisan. Its effects are not. New data released on January
16th cast some light on how these new boundaries will affect MPs’ prospects
of re-election.
With a few exceptions the new boundaries follow a simple rule, laid down in
2020: to keep the number of electors in each constituency within 5% of
73,393, while staying faithful to geography. The process was run by
independent boundary commissions in each of Britain’s four devolved

nations. Political parties took part. But Glenn Reed, from the Boundary
Commission for England, says that the consultations gave as much weight to
the views of Joe Public as to, say, Tory campaign headquarters. He says that
the borders of one constituency in Devon were amended on the back of one
individual’s persuasive argument at a town-hall meeting.
The changes are substantial. Greater absolute population growth in the south
of England means that this region will have 15 more MPs at Westminster
after the next general election. Wales will have eight fewer; Scotland two
fewer. The equalisation rule means that most constituencies’ borders have
been altered. Only 65 were spared the red pen.
Outside Northern Ireland, where the differences from 2010 are marginal, the
population of electors in the remaining 554 seats is, on average, 20%
different from those inside the old boundaries. Fully 265 old constituencies
have been split into entirely new areas. The 59,000 former constituents of
Ogmore in south Wales, for example, have been scattered among five newly
created constituencies, from Cardiff to the Rhondaff.
To see how the new boundaries affect parties’ prospects, psephologists have
tried to work out how each of them would have fared if the boundaries had
applied at the last general election, held in 2019. Colin Rallings and Michael
Thrasher, both professors of politics at the University of Plymouth, have this
week published such estimates on behalf of Britain’s three largest
broadcasters.

The pair calculate that the Tories would have won seven additional seats in
2019 under the new boundaries, taking their total to 372 (see chart 1). The
allocation of more seats in the south of England means they have notionally
“gained” 11 there. The Labour Party, whose 202-seat total in 2019 marked
its worst election performance since 1935, would have won two fewer seats
overall.

In theory the changes make it harder for Labour, now led by Sir Keir
Starmer, to achieve a majority. The seats at the top of its target list have
become a bit harder to win (see chart 2). Messrs Rallings and Thrasher
calculate that whereas the party would have required a 12.0-percentage-point
swing from the Conservatives under the old boundaries, it now needs a 12.7-
point swing. That is equivalent to winning 4m more votes than in 2019.

These are not the only changes to the electoral map. A law passed in 2022
means that British citizens who left the country more than 15 years ago can
now sign up to vote in the constituency where they were last registered. The
government reckons that an extra 2.3m people are eligible to cast ballots as a
result; based on how many eligible overseas voters actually registered ahead
of the election in 2019, that would mean perhaps 500,000 more people on
the rolls.
None of this is likely to dismay Sir Keir too much. According to The
Economist’s tracker, the latest opinion polls imply a 14-percentage-point
swing to his party since 2019; Labour’s vote will be more efficiently spread
than it was then. A large poll released by YouGov this week suggested that
the Tories would lose 196 seats if an election were held now, their worst
result since 1997. The new boundaries may have given Tory MPs a little
edge. It won’t make them less twitchy. ■

https://www.economist.com/britain/2024/01/16/the-map-for-the-next-british-election-
has-been-redrawn

Notes on a scandal
Britain tries to correct the treatment of gender-

dysphoric kids
But puberty blockers are still available from private providers
Jan 18th 2024 |
“YOU ARE the expert in your gender experience.” So says GenderGP, a

private provider of cross-sex hormones. This is a nod to the “affirmation”
model of transgender medical care, which originated in America and uses a
patient’s self-diagnosis as the starting-point for treatment. It is also,
inadvertently, a nod to gender stereotypes. Humans are male or female and
some have more of the traits that are traditionally associated with the
opposite sex than others. A small number, some of whom feel great distress,
believe these traits define their “gender” and take drugs or undergo surgery
to make them resemble the opposite sex.

If they are adults that is entirely their business. But GenderGP’s online
“appraisal pathway” is also designed for children. The question, “What
would you like GenderGP to help you with?”, is followed by a list of options
including “puberty blockers”. These drugs, which are used to treat some
cancers and precocious puberty (a rare condition), are now also given to
children with gender dysphoria, the painful feeling of being in the wrong
body. They are not licensed for this use, which means there have been no
trials; anecdotal evidence suggests that, when taken in adolescence, they can
cause sterility and anorgasmia. Britain is one of several countries trying to
curb their use.
The existence of outfits like GenderGP, which was founded by a British

doctor and is based in Singapore, show how difficult this is, and not just
because such private providers exist. It is also because gender ideology—the
idea that a person’s innate “gender” can be more important than their
biological sex—has taken deep root in public institutions. Until recently the
affirmation model dominated the treatment of gender-dysphoric patients in
the National Health Service (NHS). It has also influenced the way schools
respond to such children.
Britain is not the only place to have been affected. In January the UN special
rapporteur on violence against women and girls criticised the World Health
Organisation (WHO) over plans to draw up guidelines on medical
transitioning. Not one member of the committee appointed to do this
represented “a voice of caution for medicalising youth with gender
dysphoria or the protection of female-only spaces,” she said. The WHO later
said its guidelines would not cover children.
Britain is trying to counter this ideology. In 2020 the NHS commissioned

Hilary Cass, a respected paediatrician, to review the treatment of children
and young people with gender dysphoria. Her final report is expected early
this year. An interim report, published in 2022, made worrying reading. It
suggested that a disproportionate number of patients at the NHS’s specialist
youth gender-identity clinic in England, the Gender and Identity Service
(GIDS) at the Tavistock foundation trust in London, were autistic or in care.
GIDS, which failed to undertake proper record-keeping of its young charges,
is no longer accepting new patients; it is in the process of being closed down
and will be replaced by regional clinics.

Dr Cass said too little was known about puberty blockers’ effects, including
on brain development. Although they are often described as providing a
“pause button”, the vast majority of children who take them proceed to
cross-sex hormones. These can cause myriad health problems. The NHS has
since recommended that blockers should only be prescribed to dysphoric
under-18s in trial conditions.
This has prompted some doctors (including at least one who used to work
for GIDS) to set up privately. No one knows how many children have
obtained blockers this way; anecdotal evidence suggests that long waiting
lists at GIDS have pushed an increasing number to go private.
Treatment is only part of the problem, though. Action is needed outside

health care to tackle what Maya Forstater, executive director of Sex Matters,
a campaign group, calls a “school-to-clinic pipeline” of patients. Some
schools have allowed pupils to change their names and pronouns, a process
known as “social transitioning”, without their parents’ knowledge. Dr Cass
warned that social transitioning was no “neutral act” but could affect
“psychological functioning”.
In December the Department for Education published new draft guidance for
schools. It is designed to counter the influence long exerted by trans-activist
organisations, whose lesson plans have taught innumerable children that
human beings can change sex. The new guidance makes clear that this view
is unscientific and schools should not promote it.
It says schools should work with parents rather than letting children change
gender without their families’ knowledge. The guidance also makes clear
that the law—and safeguarding—requires schools to maintain single-sex
toilets, sleeping arrangements and sports. The guidance was welcomed by
Labour’s shadow education secretary. Given that many Labour politicians
once routinely repeated the talking points of trans activists, this shows a
political shift is well underway.
There is still a long way to go, though. In August NHS England published
new guidance saying health-care professionals should consider sexual
orientation, mental health and education when treating gender-dysphoric
children. But when children turn 17 they are moved to adult gender services.

That means that teens who have long identified as trans, and been on a
waiting list for treatment, risk missing the NHS’s reversal of thinking and
being prescribed cross-sex hormones. If they had been born a few years later
their experience would have been very different. ■

https://www.economist.com/britain/2024/01/18/britain-tries-to-correct-the-treatment-
of-gender-dysphoric-kids

Bagehot
Scottish nationalism’s left turn

Humza Yousaf tries to fight off a resurgent Labour Party
Jan 18th 2024 |
BIDENOMICS HAS many fans. The newest is Humza Yousaf, the first
minister of Scotland. In a speech on January 8th he praised the Biden
administration’s revival of industrial strategy and the “great force and
clarity” of its vision. He noted approvingly the Inflation Reduction Act, a
vast package of manufacturing tax breaks, and the CHIPS Act, intended to
bring semiconductor-makers to America. Here was a blueprint for an
independent Scotland. With oil revenues and borrowing powers, he said, a
new nation would plough £2bn a year ($2.5bn, 1% of GDP) into green
energy.
As policy, this is nonsense. No one in the Scottish National Party (SNP)

really thinks that independence is coming any time soon. Momentum has

been stalled, first by a ruling in 2022 from Britain’s Supreme Court that a
unilateral referendum would be unlawful and then by a party-finance scandal
involving Nicola Sturgeon, Mr Yousaf’s predecessor. America can indulge in
protectionism and splurge on subsidies because it has a vast domestic market
and the world’s reserve currency. Scotland’s population is little larger than
South Carolina’s, and nationalists can’t agree on what currency their new
state would use.
As politics, however, it adds up. For Mr Yousaf is in trouble. The SNP’s

monopoly on pro-independence voters is slipping: between May 2022 and
November 2023, its share of those who voted “Yes” in the 2014 referendum
fell from 81% to 69%. These voters are leaching to Labour, which presents
itself as the surest route to an end to Conservative rule from Westminster.
The Economist’s poll tracker has Labour holding a narrow lead over the
SNP, which would mean heavy losses in an election. In the short term Mr
Yousaf would then face the sack, say his SNP colleagues. In the long term a
Labour government supported by a raft of Scottish Labour MPs would
puncture nationalism’s most potent claim—that the union condemns
Scotland to governments it doesn’t elect.
Mr Yousaf’s answer is to tack to the left, and dress the SNP up as more
Labour than Labour. Sir Keir Starmer is on track for power come what may,
the argument runs, but he is so compromised by fear of alienating English
swing voters that he might as well be a Tory. Note, says Mr Yousaf, how
Labour won’t reverse Tory welfare cuts and is already trimming back its
own Bidenomics-inspired industrial strategy. Wince as Labour shuns the
idea of rejoining the EU; gag at it refusing to support a ceasefire in Gaza.
This is not just rhetoric. Mr Yousaf has kept a promise to trade unionists in
last year’s SNP leadership contest that he would squeeze high earners.
Income tax elsewhere in Britain falls into three bands, at 20%, 40% and
45%. Scotland now has six. A new 45% rate was introduced in a budget in
December on incomes between £75,001 and £125,140; the top rate was
increased from 47% to 48%. Anyone earning over £28,850 pays more in
Scotland than they do elsewhere in Britain; the marginal rate on earnings of
£100,000-£125,000 (adjusting for national-insurance contributions and tax
allowances) is now 69.5%, compared with 62% in England. Other left-
leaning measures pile up. Temporary rent controls, introduced as inflation

rose, are to become permanent in spite of evidence they have not worked.
New levies are planned on supermarkets that sell alcohol and tobacco.
This agenda is justified by a notion of Scottish exceptionalism, which draws

a cartoonish contrast between Scotland’s “social contract”, where the
wealthier “are asked to pay a bit more”, and a supposedly crueller England.
Such exceptionalism is also central to the pitch for independence, which Mr
Yousaf says will be “page one, line one” of the SNP manifesto. Yet it is
increasingly difficult to get the sums behind this social contract to add up.
The Scottish government still depends on money from Westminster for much
of its spending. The SNP boasted of having averted strikes by handing
doctors the biggest pay deals in Britain; that will be hard to reconcile with
next year’s tight budget settlement, says the Institute for Fiscal Studies, a
think-tank. Free university places, one of the SNP’s crowning glories, will
have to be cut back.
The new income-tax increases are not going to change this picture
materially. The 48p rate will fall on just 40,000 earners; a notional yield of
£53m will become a nugatory £8m once behavioural changes are accounted
for, reckons the Scottish government’s official forecaster. Banks and doctors’
groups warn of employees heading south. The underlying problem is a tax
base that has grown more slowly than England’s since devolution, due to an
ageing population and fewer people in work. Mr Yousaf has spent a lot of
political capital on a hike that raises little real capital.
No more Celtic tiger
Far from uniting all nationalist voters, Mr Yousaf’s leftward tilt has left
many of his colleagues unconvinced. Nationalism’s success has been its
heterogeneity and flexibility: socialists and libertarians parked their
differences until after independence day. Alex Salmond, the first minister
from 2007 to 2014, wanted to emulate Ireland and slash corporation tax. Ms
Sturgeon, Mr Yousaf’s mentor, styled herself a Nordic social democrat, and
displaced Labour as Scotland’s centre-left party after the 2014 referendum.
But she was also assiduous in reassuring the aspirational “middle Scotland”
of professionals and public-sector workers living in new-build estates that
nationalism would not bankrupt them.

Those voters deserted the SNP at a by-election in Rutherglen in October.
The free eye tests and prescriptions afforded by the SNP’s social contract are
all very well if they are funded by fiscal transfers from London; paying
substantially higher taxes than the English may be another matter.
Relationships with business have become frosty; donations have dried up.
Perhaps, says one nationalist, Mr Yousaf might have been able to sell his
colleagues on a core-vote plan to outflank Labour if it had been more
coherent and better executed: “You’re too kind in calling it a strategy. It’s a
drowning man grasping at anything.” ■
Read more from Bagehot, our columnist on British politics:

Keir Starmer, Reform UK and Britain’s populist paradox (Jan 11th)
What Britain’s Labour Party thinks of Europe (Jan 2nd)
Inside the banter-industrial complex (Dec 20th)
Also: How the Bagehot column got its name

https://www.economist.com/britain/2024/01/18/scottish-nationalisms-left-turn

International
The genocide case Israel faces is more about politics than
the law
Israel in the dock :: But there are still grave doubts over its adherence to the laws of war
Israel’s judge in The Hague is its government’s bogeyman

On the bench :: Aharon Barak led the controversial “constitutional revolution”

Israel in the dock
The genocide case Israel faces is more about

politics than the law
But there are still grave doubts over its adherence to the laws of war
SINCE ITS creation in 1946 the International Court of Justice (ICJ) has
heard an average of fewer than three cases a year. Many are obscure, such as
a dispute over pulp mills in Uruguay. The trial that began on January 11th,
though, was one of the highest drama, when it heard arguments from South
Africa that Israel was committing genocide in Gaza.
Palestinians were elated by the sight of Israel in the dock after decades of
impunity for its conduct in the occupied territories. Crowds gathered to
watch it broadcast in squares in Ramallah, the de facto capital of the West
Bank.

A full trial would take years to conclude. In the meantime South Africa has
asked the court for “provisional measures”, one of which is that it orders
Israel to stop fighting in Gaza. The burden of proof for an injunction is low:
“South Africa just needs to show that its claims are plausible,” says Adil
Haque of Rutgers Law School. Judges must now decide whether to demand
that Israel end its longest and deadliest war against the Palestinians since
1948.
As a political gambit, South Africa’s case is already a success. Yet as a legal

strategy it is risky. Some of Israel’s actions in Gaza since October 7th could
plausibly be described as war crimes. But in seeking to label them genocide,
a uniquely horrific crime, it risks making the debate about the label rather
than the actions themselves.
In politics, genocide has become a byword for the worst human suffering
imaginable. But legally it is a tightly defined concept, and hard to prove.
This is because it entails not just particular acts, such as killing civilians or
causing them “serious bodily or mental harm”, it also requires that they be
done with the “intent to destroy, in whole or in part, a national, ethnical,
racial or religious group, as such”.
To prove intent, South Africa cited Israeli ministers, lawmakers, army

officers and soldiers: the Knesset member who spoke of “erasing the Gaza
Strip from the face of the earth”; the troops who later chanted “may Gaza be
erased”. It sought to show that these statements were followed by rank-and-
file soldiers. Israel argued that these were “random quotes that are not in
conformity with government policy”.
Parts of South Africa’s presentation were sloppy: its lawyers referred to a

speech in which Mr Netanyahu invoked the biblical story of Amalek, a
nation that persecuted the Israelites, yet in seeking to explain how the
allusion was genocidal they cited the wrong biblical passage. Their filing
then quoted Yoav Gallant, the Israeli defence minister, saying on October
10th that “Gaza won’t return to what it was before. We will eliminate
everything.” That sounds genocidal. But in Mr Gallant’s actual comments
there is an additional sentence in the middle: “Hamas will no longer be.” The
correct quote, and the rest of the clip, make clear that he is referring to
Hamas, not to Palestinians.

Still, it is impossible to deny that some prominent Israelis have said things
that could incite genocide, which is also an offence under the UN
convention, to which Israel is a signatory. Though they have suffered no
legal or political consequences for doing so, it would be hard to prove that
their incitement amounts to state intent.
A second issue is proving Israel has killed Palestinians because of their

nationality. South Africa’s lawyers claim that Israel’s use of 2,000lb (907kg)
bombs, the largest in its arsenal, in densely populated places like Jabalia, in
northern Gaza, is evidence of genocide. Using such large bombs could be a
war crime, unless Israel can show it had no other way to strike a vital
military target. But it is not a genocidal act unless South Africa can prove
that Israel dropped those bombs specifically to kill lots of Palestinians. Thus
far, it has failed to do so. The same goes for the restrictions Israel has
imposed on aid to Gaza. “Israel could argue that it used starvation as a
weapon of war to make people suffer,” says Mr Haque. “That would be a
war crime, but it’s not genocide.”
To call these arguments distasteful would be an understatement. The South

African filing describes a litany of horrors committed against Palestinians in
Gaza. Whichever way the ICJ rules, they will still be horrors. By pressing
the charge of genocide, South Africa has created a situation in which a ruling
in Israel’s favour could be seen as absolution for its conduct.
Yet even if it is absolved of genocide, Israel should still be scrutinised for

other possible violations. Start with two of the core principles of
international law: distinction and proportionality. The former requires armies
to distinguish between civilian and military targets. The latter demands they
not inflict excessive harm on civilians in relation to military utility. With
northern Gaza now a wasteland, and thousands of civilians dead, it is hard to
trust that Israel has adhered to those principles. Israeli officials concede that
in this war the army has approved strikes that are both deadlier for civilians
and achieve smaller military gains than in previous conflicts in Gaza. Some
Western officials think Israel has crossed a legal line with its new calculus of
proportionality.
Other questions of law deserve scrutiny as well. One is the destruction of

Gaza’s medical facilities. There is strong evidence that Hamas has used

hospitals for military purposes, which is itself a war crime. Under
international law, hospitals can lose their protection if used for “acts harmful
to the enemy”. But they do not become valid targets indefinitely. That
Hamas militants might have used Shifa hospital in October does not
necessarily justify an Israeli raid there in November. In many cases Israel
has not offered compelling proof that its attacks on hospitals were justified.
Another question is over the appalling humanitarian conditions in Gaza,

where the UN says there is a risk of imminent famine. Israel told the ICJ that
it has not limited deliveries of food to Gaza, which is true in theory but not
in practice. It has largely barred such deliveries via its own territory, which is
how most supplies entered Gaza before the war, and it imposes long and
unpredictable inspections on aid entering from Egypt.
Investigating such cases, however, will not be the job of the ICJ. That task
would fall to the International Criminal Court (ICC), the other big court in
The Hague, which claims jurisdiction over both the Hamas attacks in Israel
on October 7th and the war in Gaza that followed because Palestine is a
signatory to its founding treaty. But such investigations will be sluggish.
For now, that leaves the genocide case at the ICJ and the question of whether
to impose any of the provisional measures requested by South Africa.
Because the ICJ settles disputes between UN member-states, and Hamas is
not one, judges are in the uncomfortable position of being asked to order
Israel to implement a unilateral ceasefire with no corresponding obligation
on Hamas to halt its genocidal attacks.
Even if it were to issue such an order, it would have no means to enforce its
judgments, which governments sometimes ignore. Israel has made clear that
it will do just that. “We will continue this war until the end,” Mr Netanyahu
has said. “No one will stop us, not even The Hague.”
Still, a ruling against Israel could have far-reaching consequences. It would

certainly make the politics of supporting Israel’s war more complicated for
its allies. There could also be legal implications. In America the so-called
“Leahy law” bars the government from providing military aid to foreign
forces that commit human-rights abuses. If the ICJ were to find that Israel is
“plausibly” committing genocide, some Democrats would no doubt try to

invoke this law. It is unlikely that such a view would find majority support in
a country that is both supportive of Israel and hostile to international courts.
But President Joe Biden’s administration could still find itself in the
uncomfortable position of appearing to much of the world to be excusing a
crime it has long sought to end. ■
cide.
ding them.

https://www.economist.com/international/2024/01/17/the-genocide-case-israel-faces-is-
more-about-politics-than-the-law

On the bench
Israel’s judge in The Hague is its government’s

bogeyman
Aharon Barak led the controversial “constitutional revolution”
EVEN IN RETIREMENT Aharon Barak, a former president of Israel’s

supreme court, remains a controversial figure. Binyamin Netanyahu’s right-
wing government spent most of 2023 attempting to dismantle his
constitutional legacy. Yet when asked to appoint a judge to join the panel of
the International Court of Justice (ICJ) hearing South Africa’s claim that
Israel is committing genocide in its war in Gaza, it chose Mr Barak, Israel’s
most renowned jurist.
Mr Barak, who is 87, has earned acclaim and condemnation for

spearheading what he called Israel’s “constitutional revolution”. In a series
of landmark rulings he broadened the court’s powers to accept petitions from

public bodies and individuals, intervene in government decisions and cancel
legislation.
His supporters see him as the man who built the ramparts protecting Israel’s
fragile democracy from a rising tide of populist nationalism and religious
fundamentalism. To his detractors he is a “judicial dictator” whose rulings
have usurped the will of the people and imposed liberal values that they
claim contradict traditional Jewish ones. Mr Netanyahu’s coalition came to
power promising to roll back Mr Barak’s precedents, weaken the courts and
gain control over the appointment of new judges.
On January 1st the supreme court, following in Mr Barak’s footsteps, struck

down a law passed five months earlier that had all but abolished the court’s
ability to use the “reasonableness standard” to hold the government to
account. Mr Netanyahu’s decision a week later to appoint Mr Barak to the
ICJ ruffled feathers in his Likud party: one parliamentarian accused the
prime minister of “showing contempt for his voters”.
For once, Mr Netanyahu had done the right thing in defying his hard-right
supporters. Mr Barak is Israel’s foremost legal scholar and a Holocaust
survivor. Who better to defend Israel from charges under the Genocide
Convention, drawn up in 1948 to prevent another Holocaust from occurring?
■

https://www.economist.com/international/2024/01/17/israels-judge-in-the-hague-is-its-
governments-bogeyman

Business
Many CEOs fear a second Trump term would be worse
than the first
Duck and cover :: Though they will only say so in private
Donald Trump’s populism is turning off corporate donors

Hardly PAC-ed to the rafters :: Republican fundraisers are in for a tough year
Donald Trump’s tax cuts would add to American growth—

and debt
Fiscal Trumponomics :: He has unfinished businesses in making his tax reforms of 2017
permanent
The bosses of OpenAI and Microsoft talk to The Economist

The Sam and Satya show :: Tech’s best bromance reflects on regulation, the future of AI and
how to control superhuman intelligence
China may be losing its sway over Taiwanese business

Cross-strait squeeze :: The election of a pro-independence president will intensify bullying
from Beijing
Companies run to their own annual rhythms

Bartleby :: Seasonality in firms, from budgeting cycles to bonus rounds
Can Arc’teryx’s owner revive Chinese IPOs in America?

Amer’s American dream :: Amer and its Chinese parent, Anta, eye a $1bn New York listing
A $35bn mega-merger strengthens a quiet chip duopoly

Big by design :: The purchase of Ansys by Synopsys is a bet on the ubiquity of
semiconductors
Why BlackRock is betting billions on infrastructure

Schumpeter :: Demand for investment is soaring thanks to decarbonisation, digitisation and
deglobalisation

Duck and cover
Many CEOs fear a second Trump term would be

worse than the first
Though they will only say so in private
Jan 16th 2024 | NEW YORK AND WASHINGTON, DC
WHEN DONALD TRUMP left office three years ago, still huffing, puffing
and plotting to overturn the results of the 2020 presidential election, the
leaders of most of America’s biggest corporations were only too happy to
see the back of him. They wore their moral outrage like a badge of honour.
True, they had conveniently put aside their earlier scruples about Mr
Trump’s suitability for the White House, bought off by generous corporate
and personal tax cuts in 2017. True, many had cravenly turned a blind eye to
his torching of environmental rules in support of a broad-brush regulatory
bonfire. But his attempts to subvert American democracy, and the storming
of the Capitol by his supporters on January 6th 2021, were a step too far.

With unusual unity, they huffed and puffed back. Manufacturers called the
riots a “disgusting episode”. The Business Roundtable, a lobby group for big
companies, called on Mr Trump to “put an end to the chaos”. Some
prominent firms pledged not to provide financial support to the 147
Republican lawmakers who had refused to certify Mr Trump’s defeat.
Mr Trump’s runaway victory in the first bout of the Republican primary

contest in Iowa on January 15th cemented his status as the party’s
presumptive nominee. The polls suggest that in a head-to-head battle with
President Joe Biden, he would win. But if there are murmurings of alarm
about what a sequel to his chaotic presidency might mean for corporate
America, this time they remain behind closed doors and off the record.
Recently, Larry Summers, the pro-Biden former treasury secretary, urged
CEOs to reject Mr Trump, noting that Italy’s markets did well in Benito
Mussolini’s first few years in power—until they didn’t. Yet for the moment,
most advisers and leaders of business associations counsel bosses to keep
their heads down. Forget Il Duce. The message is: duck and cover.
There is rationale for lying low. For a start, with ten months to go before the
elections, anything can happen. Health issues could force either candidate
out of the race (combined, Messrs Biden and Trump have had 158 years on
Earth, nearly two-thirds the age of America itself). Mr Trump has not only
his Republican rivals and Mr Biden to contend with, but 91 felony counts
across two state courts and two federal districts, which could cause havoc.
Staking out the moral high ground from corner offices may also be counter-
productive. It could backfire on those who attack Mr Trump in public, and
bolster his anti-elite appeal. In office, he was quick to retaliate when
attacked (preferred weapon, CAPITALISED TWEETS!). With trust in big
companies on the wane in recent decades, it has become easier for populists
to whip up an anti-business hue and cry. The head of a prominent business
organisation ruefully admits that if he took a public stand against Mr
Trump’s campaign proposals, “the former president would be delighted.”
In the past few years, as the relationship between big business and Mr
Trump’s MAGA Republicans has soured, executives have learned the hard
way the risks of sticking their necks out. A public-relations adviser to CEOs
thought a year ago that it would be relatively easy for business to disown Mr

Trump because of his legal travails. But then came the unofficial boycott of
Bud Light, a beer, by right-wing culture warriors offended by its marketing
campaign with a transgender influencer. The PR man realised the power of
the mob to hurt the bottom line. “We are back to walking on eggshells,” he
says—caught between progressive employees and customers demanding that
firms take a stand against Mr Trump, and fear of the MAGA masses.
Then there is Mr Biden. When pushed to express a preference, many

businesspeople say they see him as a steadier pair of hands in policymaking
and geopolitics. But they are fed up with his administration’s anti-business
rhetoric (Gina Raimondo, the commerce secretary, is an honourable
exception). That makes them more tolerant of Mr Trump. Of the two, Mr
Biden is “hands down a bigger threat to prosperity”, says a billionaire
financier.
Even Mr Biden’s backers rail against the ”big is bad” stance of his
trustbusters. Those trustbusters’ bite has not been as bad as their bark; many
of their cases have failed in court. But the bark alone has chilled dealmaking,
laments an investment banker. As for the risk that Mr Trump could
“weaponise” administrative agencies against his corporate enemies, Neil
Bradley of the US Chamber of Commerce counters that Mr Biden, too, has
urged his administration to crack down on “junk fees” and price gouging in
industries ranging from airlines to banking and health care. Mr Bradley
draws few distinctions between either party’s economic populism.
Some business folk angrily dismiss efforts to draw parallels between the
dangers of Mr Trump and Mr Biden. Calling it “whataboutism”, they quietly
profess to be terrified by the prospects of a second Trump administration. In
the first one, the former president may have pushed radical policies, but
sensible conservatives in his administration, as well as his own predilection
for chaos, got the better of him. Now he is surrounded by true believers,
such as those at the Heritage Foundation, a pro-MAGA think-tank whose
job, says one business leader, is “to prevent the amelioration of the Trump
agenda”.
In other words, Mr Trump has plenty of people in place to advance a plan

that could shake up the economic framework on which American business
has prospered for generations. The pillars of that plan of most immediate

concern to corporate America are trade, migration, the fiscal deficit and
public debt, and clean energy.
A trade war is the most palpable worry. The self-described “Tariff Man” has
floated the idea of imposing a baseline 10% levy on all imports. These
would be raised, “an eye for an eye”, in retaliation against any country with
a higher tariff. China is the main target. Businesspeople fear his goal is to
terminate, unilaterally, trade with China, which would be a nightmare for
any firm exposed to the country. Such a trade policy would be far more
draconian than that of the Biden administration, which has kept Mr Trump’s
tariffs but worked with allies such as Japan and the Netherlands to restrict
export of strategic goods such as advanced semiconductors without cutting
China off altogether.
Some hope that Mr Trump is posturing. They take solace in the fact that
Congress, not the White House, regulates commerce and that courts
adjudicate trade law. Yet Kent Lassman, who contributed a bold essay in
support of free trade to the Heritage Foundation’s pro-Trump “Project 2025”
road map, thinks the former president means it, even if it disrupts America’s
existing trade treaties. Mr Trump “is not changing his stripes”; his sense that
everything is a deal and that America is victimised is stronger than ever. His
chief advisers on trade, protectionist hawks such as Robert Lighthizer and
Peter Navarro, “know how to play off of those beliefs”, Mr Lassman says.

Mr Trump’s threat to round up and deport millions of undocumented
migrants has also alarmed businesses—not only for humane reasons but also
because of a chronic worker shortage afflicting many American firms. In
November America had 8.8m job openings. The number of unemployed is
6.3m.
Mr Trump’s harshest proposals would be hard to implement. He made a

similar mass-deportation promise on the campaign trail in 2016 but was
frustrated by court challenges and other pushback. Still, any pickup in
expulsions could hurt industries such as farming, leisure, retail and
hospitality that rely on low-cost labour, executives say. However important it
is to maintain strong borders, whipping up anti-immigrant fervour for
political ends jeopardises legal migration. That hurts businesses’ ability to
recruit skilled and unskilled workers alike.
Government debt also looms large in CEOs’ minds. They praised Mr

Trump’s Tax Cuts and Jobs Act, which reduced corporate-tax rates from
35% to 21%. But they fear that neither Mr Trump nor Mr Biden has credible
plans to stop the deficit from swelling. If Mr Trump pursues his most
unorthodox economic ideas, there are fears that a loss of confidence could
jolt the treasury market, pushing up borrowing costs and sending the dollar
into a tailspin.

Greenbacks and green leafs
Some think that is going too far. “The world has insatiable demand for US
treasuries,” notes a pro-Biden Wall Street grandee. But a few corporate
advisers raise the possibility that an unrestrained Mr Trump could trigger an
American version of Britain’s bond-market sell-off in 2022, when investors
lost faith in the economic stewardship of Liz Truss, a prime minister who
was outlasted by a lettuce. “I have parliament envy,” the leader of a lobby
group chuckles—unlike American leaders, he observes wryly, fiscally
irresponsible British ones such as Ms Truss can be quickly forced out of
office.
America’s environmental trajectory under Mr Trump is another concern. The

former president, like the current one, would be expected to double down on
industrial policy. But unlike Mr Biden, whose signature effort has been the
green-tinged Inflation Reduction Act (IRA), Mr Trump remains a climate
sceptic who is likely to try to gut clean-energy programmes. In this case, he
may face pushback from his own party. Many of the clean-energy projects
predicated on funding from the IRA are in Republican-leaning states.
Business, too, is likely to oppose a reversal of Mr Biden’s green agenda. Mr
Bradley says that though industrial policy writ large remains “incredibly
problematic”, government programmes that induce changes of behaviour are
justified when technology is at an early stage, as with clean energy.
If Mr Trump’s policy proposals directly related to business do not inspire

confidence, his efforts to undermine faith in the judiciary, rule of law, NATO
and other alliances, including with Ukraine, raise big questions about
America’s role in the world. Some executives shrug this off. A few weeks
ago the head of an international asset manager met a group of American
bankers and found them “shockingly sanguine” about the election. They told
him that whatever the outcome, the system would hold; that stockmarkets
had done well under both presidents; and that the American economy was in
such rude health that it could survive even electoral shenanigans. “Maybe
their point is that business has transcended politics in America,” he says. He
adds pensively: “Maybe they are right.”
Or maybe they aren’t. Michael Strain of the American Enterprise Institute, a

pro-business think-tank, says that Mr Trump’s populism makes political

violence in America more likely this year. That would hurt business. The
head of a global risk-advisory firm says that uncertainty over Mr Trump’s
geopolitical agenda will haunt multinationals, making it hard for them to
decide, for example, whether or not to allocate resources to China or perhaps
even Russia. Any sense that he is weakening the rule of law and the sanctity
of contracts and treaties would ripple around the world. “Things like the rule
of law are gossamer concepts that disappear just like that,” says a New York
financier.
His colleague, an expert on geopolitics, says that American businessmen

rarely step back to consider how much the country’s global influence,
including the hegemony of the dollar and the defence of maritime shipping
routes, underpins their companies’ prosperity. Ron Temple, chief market
strategist at Lazard, an investment bank, says the gap between right and left
has widened in America, amplifying policy variability and becoming too
important a factor for business to overlook. “There is almost a sense of
complacency, married with entitlement, combined with presumptuousness,”
he concludes. If anyone is likely to shake corporate America out of such
numbness, it is Mr Trump. ■
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the Bottom Line, our weekly subscriber-only newsletter.

https://www.economist.com/business/2024/01/16/many-ceos-fear-a-second-trump-term-
would-be-worse-than-the-first

Hardly PAC-ed to the rafters
Donald Trump’s populism is turning off corporate

donors
Republican fundraisers are in for a tough year
Jan 18th 2024 |
“GO WOKE, GO broke,” intone Republicans fed up with socially aware

American firms. But it is the politicians who are paying for their own
ideological zeal. In 2000 and 2004 corporate political-action committees
(PACs) gave them twice as much as they gave Democrats. After divvying up
donations nearly evenly between the two parties in 2008 (perhaps thanks to a
charismatic newcomer named Barack Obama), in 2012 and 2016 they
favoured Republican candidates again, by a factor of nearly two to one.
Company bosses, too, preferred conservatives. A paper in 2019 found that
between 2000 and 2017 CEOs of firms in the S&P 1500 index directed two-
thirds of their giving to the right.

In the 2019-20 election cycle, by contrast, corporate PAC donations to
Republicans fell by a quarter, compared with four years earlier. One
explanation is that donors were unhappy with the party’s populist shift away
from trade, immigration and international co-operation. After Mr Trump’s
supporters stormed the Capitol on January 6th 2021, dozens of firms halted
donations to Republican lawmakers who voted against certifying Joe Biden’s
2020 election win. According to Jeffrey Sonnenfeld of the Yale School of
Management, more than three-quarters of these firms were still withholding
such donations a year later.

Preliminary figures suggest this will be another disappointing year for
Republican fundraisers. Data from the Federal Election Commission show
that in the first 11 months of this presidential cycle Republicans got a third
less from corporate PACs than in 2020 and half as much as in 2016 (see
chart). Comcast, a cable operator, and Northrop Grumman, an armsmaker,
have cut their cheques by a third since 2020. ExxonMobil, an oil giant, has
halved donations. Top-spending trade groups, such as the National Beer
Wholesalers Association and the National Association of Realtors, gave
Republicans less than four years ago.
The unspent money may not go to Democrats. According to End Citizens

United, an advocacy group, 73 mostly Democratic congressmen have sworn
off corporate PACs entirely, up from 56 five years ago. America Inc is
always looking for friends in Washington. In the post-Trump era, it is finding
itself alone. ■


https://www.economist.com/business/2024/01/18/donald-trumps-populism-is-turning-off-
corporate-donors

Fiscal Trumponomics
Donald Trump’s tax cuts would add to American

growth—and debt
He has unfinished businesses in making his tax reforms of 2017 permanent
OF THE MANY differences between Donald Trump and Joe Biden, perhaps
the easiest to quantify has to do with tax policy. Mr Biden has long pledged
to raise taxes on both the wealthy and companies. Mr Trump’s main
legislative achievement from his presidency was a tax-cut package in 2017.
Unsurprisingly, many corporate bosses prefer Mr Trump on taxes. The big
economic question is whether they are being short-sighted and overlooking
America’s fiscal health, which they also profess to care about.
When Mr Trump was elected in 2016, net federal debt was about 75% of
GDP. When he left office in 2021, it was 97% of GDP. The Congressional
Budget Office (CBO) forecasts that it is on track to hit an eye-watering

181% three decades from now. At that level the government’s annual interest
payments are expected to exceed its combined spending on national defence,
education and highways. That raises the risk of a financial crisis—hardly an
ideal environment for business.

Critics of Mr Trump point to the debt trajectory on his watch as evidence of
fiscal mismanagement and warn he would make things worse if elected for a
second term. Many of his tax cuts are set to expire at the end of 2025 (the
individual-income-tax rate for the highest earners will revert to 39.6% from
37%, for instance). If Mr Trump returns to office, he will try to make the
cuts permanent. The CBO estimates that this would add $350bn or so to the
deficit annually over the next decade, equivalent to 1% of GDP (see chart).
Yet this line of criticism misses two important points. First, the accumulation
of debt under Mr Trump largely stemmed from the stimulus launched soon
after covid-19 struck, which countered some of the economic drag from the
pandemic. The comparison is unflattering for Mr Biden: he expanded the
stimulus in 2021 when there was less need for extra fiscal support from the
government, and this additional spending helped stoke inflation.
Second, it is not enough to look at taxes alone. The interaction between

taxation and growth lies at the heart of debt sustainability. “The overriding
driver of our fiscal problems is that we don’t have enough growth,” says
Stephen Moore, who helped design Mr Trump’s tax cuts in 2017. “We want
to bring jobs and capital here, and yes, we can grow out of this.” Many
economists dismiss such talk as hyperbole. After all, in the 2016 election,
Mr Trump vowed that deregulation and tax cuts would unleash a torrent of
economic growth; in reality America’s growth rate ticked up just slightly in
the two years after his tax law went into effect, before covid erupted. But
this extra activity did help to boost America’s fiscal revenues, offsetting
some of the cost of the tax cuts. “Thinking you should tax away to a lower
deficit is misleading,” says Tomas Philipson, an economic adviser in Mr
Trump’s administration.
Mr Biden’s approach offers a counterpoint. He has called for a range of tax

increases, including raising the corporate rate from 21% to 28%. “That may
be counterproductive,” says Erica York of the Tax Foundation, a think-tank.
Ms York and her colleagues estimate that Mr Biden’s tax proposals would
lower America’s debt-to-GDP ratio but also shrink the economy by 1.3%,
whereas Mr Trump’s tax cuts would, if permanent, push up debts but expand
long-run GDP by 1.2%. It is not a simple trade-off either way.

A true clean-up of America’s finances would require reforms to big social
programmes, especially income support for pensioners and state-provided
medical insurance, which together account for nearly half of federal
spending. Here, Mr Trump and Mr Biden look indistinguishable. Both are
silent on serious changes to these programmes, because both are well aware
how deeply unpopular any cuts would be. ■


https://www.economist.com/business/2024/01/18/donald-trumps-tax-cuts-would-add-to-
american-growth-and-debt

The Sam and Satya show
The bosses of OpenAI and Microsoft talk to The

Economist
Tech’s best bromance reflects on regulation, the future of AI and how to
control superhuman intelligence
Jan 17th 2024 | DAVOS AND SAN FRANCISCO
ONE REASON the world’s corporate elite jet off to Davos each year is to
check in on important relationships, be they with critical suppliers or big-
spending clients. This year many are wondering about their relationships
with Microsoft and OpenAI, the startup behind ChatGPT. The companies are
the world’s most prominent purveyors of artificial intelligence (AI), which
has the business world giddy. OpenAI exclusively licenses its technology to
Microsoft. The software giant is busy injecting it into products from Word to
Windows.

The relationship between the two companies is also under scrutiny—
including in recent weeks by EU and British antitrust regulators. In
November Sam Altman, OpenAI’s boss, was fired by his board, only to be
reinstated days later. Satya Nadella, Microsoft’s chief, whose company
reportedly owns 49% of the startup, supported Mr Altman during the ordeal.
The kerfuffle left many wondering about risks to what Mr Altman has called
the “best bromance in tech”. When the pair sat down with The Economist in
Davos on January 17th, they were upbeat and, for the most part, singing
from the same hymn sheet. Their partnership is “great” and “unbelievable”.
They often remarked on how much they agree.

One concurrence was that the tie-up boosts competition. “You can look at
the vertically integrated option and you can look at our partnership, and you
can decide which is more pro-competition,” says Mr Altman. Another was
that 2024 will be a big year for AI. Microsoft’s huge bet on the technology
this month helped it to dethrone Apple as the world’s biggest firm (see
chart). It is closing in on a value of $3trn. Its next quarterly earnings will
give the first hint of how much corporate customers are willing to spend on
AI.

Although some observers have been underwhelmed by the progress made by
OpenAI’s latest model, GPT-4, Mr Altman hints at new capabilities, such as
greater ability to understand and produce audio. Mr Nadella says models will
get better at all tasks, from writing essays to churning out computer code. “I
really think the magic of this is the generality,” says Mr Altman.
The general-purpose nature of AI is why Mr Altman thinks of the

technology as “a new computer”. Mr Nadella sees it in similar terms. He
argues that “since the PC, we have not had […] the real driver of getting
more things done with less drudgery.” Microsoft’s supply-chain team already
use AI to help model the impact of their decisions, without having to wait
for the finance department at the end of the quarter.
AI’s ability to replace skilled workers, such as accountants, raises concerns

about its effect on jobs. An new IMF paper suggests that people with a
university degree are most exposed to disruption but also best placed to reap
the rewards. Both Messrs Nadella and Altman are convinced that AI will
create more new jobs than it destroys. Mr Nadella thinks it may make the
labour market more dynamic, by allowing people to learn new skills and
switch jobs faster. That, he says, will cause some wages to go up and others
to be “commoditised” (in other words, decline).
Disruption will be all the more dramatic with the advent of artificial general
intelligence (AGI), which, if it is achieved, would be able to outperform
humans on most intellectual tasks. AI doomers think this could engender
economic chaos or even a robot apocalypse. Nonetheless, producing AGI is
the stated goal of OpenAI. Mr Altman describes progress towards this aim as
“surprisingly continuous”. He likens it to the evolution of the iPhone, where
no single new model represented a big leap but the jump from the first
version to the latest one has been extraordinary. For that reason he expects
the fuss caused by the first AGI to be short-lived. “The world will have a
two-week freakout and then people will go on with their lives,” he says.
Neither Mr Nadella nor Mr Altman will say when AGI might come around.
Mr Nadella believes that by the time it does, its use will be regulated:
“Nation states are absolutely going to have a say on…what is ready for
deployment or not.” Mr Altman broadly agrees, but is a bit more
circumspect. Regulators, he notes, will have to weigh the risks and

capabilities of AI—as with aeroplanes, which create enormous benefits
despite occasionally crashing. Likewise, AI’s “tremendous upside” means
that halting progress would be a mistake. Safety is not a binary question of
using or not using a technology; it is “the many little decisions along the
way”. He points to the launch of GPT-4, which was pushed back by seven or
eight months.
Mr Altman, ever the techno-optimist, insists that “technological prosperity is

the most important ingredient to a much better future”. Mr Nadella, a
corporate veteran, strikes a more businesslike note. He talks about the 20
meetings he had earlier in the day with executives from a range of industries,
talking to them “about something that they are doing where I can have some
input”. He is, in other words, firming up Microsoft’s relationships—as befits
a big boss in Davos. ■


https://www.economist.com/business/2024/01/17/the-bosses-of-openai-and-microsoft-
talk-to-the-economist

Cross-strait squeeze
China may be losing its sway over Taiwanese

business
The election of a pro-independence president will intensify bullying from
Beijing
Jan 15th 2024 | Taipei
ON JANUARY 13TH William Lai Ching-te was elected as Taiwan’s

president. He thus secured a third term for his pro-independence Democratic
Progressive Party (DPP). The vote will shape relations between self-
governing Taiwan and China, which wants the island to be governed from
Beijing. It will also affect the commercial relations between the two—and,
because Taiwanese manufacturers sit at the heart of critical global supply
chains, between them and the rest of the world.
For Taiwan’s big businesses, the cross-strait tensions are unwelcome.

Taiwanese entrepreneurs have been building factories on the mainland since

the 1980s. These used to make textiles and other cheap goods. Today many
make sophisticated electronics, including chips. Chinese data suggest that in
2022 Taiwanese firms had assets worth $43bn in the People’s Republic; by
comparison the figure for those from America, an economy 35 times the size
of Taiwan’s, was $86bn. The real sum is almost certainly higher; Taiwan’s
companies often channel investments via Hong Kong and other jurisdictions
to avoid the scrutiny of their China-wary government.
The Chinese Communist Party is likely to express its displeasure at the

DPP’s victory by putting a squeeze on Taiwanese business. The corporate
supporters of the first DPP president, Chen Shui-bian, who served from 2000
to 2008, faced regulatory scrutiny and investment restrictions from China,
according to Taiwan’s Mainland Affairs Council, an agency dealing with
cross-strait relations. In 2005 Shi Wen-Long, a petrochemical magnate and
one of Mr Chen’s biggest backers, was forced into a humiliating public
endorsement of a Chinese anti-secession law, which formalised military
threats against the island.
Since the DPP returned to power in 2016 under Tsai Ing-wen, Chinese
commercial pressure has increased. Far Eastern Group, a Taiwanese
conglomerate, was hit by a fine in 2021, which Chinese publications tied to
the political views of its chairman, Douglas Hsu. Shortly afterwards Mr Hsu
issued a statement rejecting Taiwanese independence. Even businessmen
friendlier to China have not been spared. In October Chinese state media
reported a tax investigation into Foxconn, a giant Taiwanese contract
manufacturer with vast operations in China. Taiwan’s National Security
Council claims that the tax probe was a targeted effort by China to prevent
Foxconn’s founder, Terry Gou, from dividing the pro-unification camp by
running for president. In January China slapped tariffs on a range of
Taiwanese chemical exports, a move widely viewed as another warning shot
ahead of the election.
In the past such bullying led companies either to back the independence-
wary Kuomintang (KMT), which favours closer economic links with the
mainland, or to stay out of politics altogether (the approach of TSMC, the
world’s biggest chipmaker and Taiwan’s most valuable firm). This time
corporate grandees, even those with exposure to the mainland, appear less
cowed. Some have gone so far as to affiliate themselves with the DPP. Early

last year Tung Tzu-hsien, who chairs Pegatron, a big contract manufacturer,
became vice-chairman of the New Frontier Foundation, a DPP-associated
think-tank. In the run-up to the election Frank Huang, chairman of
Powerchip Semiconductor Manufacturing Corporation, endorsed Mr Lai
openly.
Taiwanese businesses’ increased resistance to China’s strong-arm tactics has

several causes. American tariffs on Chinese-made goods have made export
manufacturing on the mainland less attractive, notes Chun-yi Lee of
Nottingham University. Harsh policies such “zero-covid” lockdowns and
arbitrary crackdowns on sectors such as consumer technology have further
dented China’s appeal. The recent weakness of its economy is compounding
the sense that Taiwan’s economic future may not be so bound up with the
mainland.

A shift is already visible in Taiwan’s trade and investment trends. The share
of the island’s exports going to the mainland dropped to 22% over the 12
months to November, down from an all-time high of 30% in 2021 and the
lowest in almost two decades (see chart). In 2010 over 80% of Taiwan’s
annual outbound investment went to mainland China. In 2023 just 11% did.
Firms like Pegatron and Foxconn are investing in places like India and
Vietnam, which offer both cheaper labour and a chance to avoid the
American tariffs. According to one recent poll, more Taiwanese business
owners care about Taiwan’s admission to the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership, a trade deal between
12 countries including Australia and Japan, than the Economic Co-operation
Framework Agreement, which a KMT government signed with China in
2010.
China’s ability to inflict pain on Taiwanese business is diminishing for

another reason. More than 60% of the island’s exports to the mainland and
Hong Kong are electrical machinery and equipment, including computer
chips. Cutting off such products could damage Chinese buyers more than it
does Taiwanese sellers. ■


https://www.economist.com/business/2024/01/15/china-may-be-losing-its-sway-over-
taiwanese-business

Bartleby
Companies run to their own annual rhythms

Seasonality in firms, from budgeting cycles to bonus rounds
Jan 18th 2024 |
SEASONALITY IS A big part of business. For some industries, seasonal

patterns are a defining feature. Agriculture is one obvious example; tourism
another. Western toymakers notch up a huge proportion of their annual sales
in the run-up to Christmas. Construction is harder during cold weather,
which is why that industry employs fewer people in the winter.
Firms that are less obviously tied to the seasons can still be deeply affected
by them, as a recent review by Ian Hohm of the University of British
Columbia and his co-authors makes clear. An analysis of social-media posts
on Twitter, now X, found that dieting-related tweets peak in the spring, as
the season of body dysmorphia (ie, summer) approaches. Condom sales and

online searches for pornography in America tend to rise in the summer and
around Christmas.
Even when overall demand does not vary greatly between the seasons,
preferences change. Beef-eaters buy diced meat and roasts in the slow-
cooking winter season and plump for steaks during the summer grilling
months. Starbucks is among those firms that make seasonality a marketing
event. The pumpkin-spiced latte is a reliable sign that autumn is on its way,
along with falling leaves and glum faces at condom manufacturers.
Seasonality also leaves a less obvious imprint inside organisations. Just as

there are daily and weekly patterns of activity, from slumps in concentration
during the late afternoons to the ebb and flow of hybrid workers coming to
the office, so annual cycles leave their mark.
One is occurring this week, with the World Economic Forum’s annual
shindig in Davos. Public holidays aside, in no other week in the working
year are so many CEOs of large organisations reliably away. The corporate
world is briefly without a government, a concentrated version of Belgium in
the early 2010s. This may well be Davos’s real contribution to improving the
state of the world: with so many bosses stuck on a mountain for a few days,
productive employees can get on with some work and lazy ones can relax.
School holidays offer an obvious form of seasonality, although in that case

people throughout the organisation are off. Mass absences make it hard to
schedule meetings in Brazil in the period between Christmas and the start of
Carnival; it is a similar story in August in Europe.
These patterns of clustered absences show up inside organisations in big

ways and small. Second-fiddle employees are more likely to get their chance
to run the show; fewer big initiatives are likely to be launched when the
holidays are in full swing. Employees without children are resentful that they
are covering for colleagues on holiday; colleagues on holiday are resentful
that they have children.
There is some evidence that people feel more creative after returning from
holiday—but you need to schedule that brainstorming session quickly. A
paper from 2010 by Jana Kühnel of Goethe University and Sabine

Sonnentag of Universität Mannheim reckoned that the benefits of a break
fade within a month.
Set-piece events mark the corporate calendar, too. Some are public: annual
general meetings and shareholder letters, say. Others are internal. At many
companies the annual budgeting process involves a gathering organisational
effort, in which more and more people spend more and more time arguing
about numbers that are certain to be wrong. It is almost a season in itself. A
pre-pandemic estimate from APQC, a benchmarking organisation, reckoned
that the median firm spends around 30 days on this effort; at plenty of firms,
it takes an awful lot longer.
Pay decisions are seasonal events, too. The time when employees find out
their salary rises and bonuses sets off ripples of disappointment and
happiness in all workplaces. In some, they are more like tsunamis. The
bonus round on Wall Street, when bankers find out what they will get for
their work the previous year, is under way now and is predated by months of
internal wrangling and gossip. The actual date on which bonuses are paid
matters, too—once the money is safely deposited in the bank, people are
more likely to move jobs.
There are other forms of corporate seasonality. The office Christmas party
signals another wind-down in activity. Some firms shorten the workweek
during the summer months. Yearly calendars are punctuated by sales
conferences and leadership retreats. There is not much research on the
impact of seasonality within firms. That they have their own annual rhythms
is indisputable. ■
Read more from Bartleby, our columnist on management and work:

When your colleagues are also your rivals (Jan 11th)
A new year’s message from the CEO (Jan 1st)
The return of The Economist’s agony uncle (Dec 20th)
Also: How the Bartleby column got its name

https://www.economist.com/business/2024/01/18/companies-run-to-their-own-annual-
rhythms


Amer’s American dream
Can Arc’teryx’s owner revive Chinese IPOs in

America?
Amer and its Chinese parent, Anta, eye a $1bn New York listing
Jan 18th 2024 | Shanghai
FOREIGN ACQUISITIONS by Chinese buyers have a lousy reputation. The

takeover of PizzaExpress, a British restaurant chain, by Hony Capital, a
Chinese private-equity firm, ended up in restructuring. Financial collapse
forced HNA, a Chinese conglomerate, to sell its stake in Hilton Worldwide,
an American hotel chain, not long after buying it. Sanpower, a Chinese mall
operator that bought House of Fraser, a British department store, succumbed
to similar pressures.
An exception is the €5.6bn ($6.3bn) purchase in 2019 of Amer, the Finnish

owner of brands such as Arc’teryx, Salomon and Wilson, by a consortium
led by Anta Sports, a Chinese rival to Adidas and Nike. The year before,

stiffening competition in sports goods all but wiped out Amer’s revenue
growth. In the first nine months of 2023 sales swelled by nearly 30% year on
year; a fifth came from China. Bankers hope that having scored a win for
Chinese foreign buyouts, Amer can do the same for Chinese foreign listings.
On January 4th Amer filed for an initial public offering (IPO) on the New
York Stock Exchange.

A few years ago, when Chinese firms were raising billions from foreign
investors, it would have been an easy lift. Now it is enough to make a cross-
fit champion buckle. In the West, politicians are looking askance at
commercial ties to China. At home, economic growth may be in long-term
decline and President Xi Jinping is becoming more ideological. Investors
fear a repeat of Didi Global, a Chinese ride-hailing giant: in 2021, days after
a $4.4bn New York debut, it faced a probe by its domestic regulators, lost
much of its market value and was eventually forced to delist. IPO activity in
Hong Kong, once the top offshore venue for such listings, is sluggish. In
America, it is worse. In 2020 and 2021 Chinese firms raised a total of $27bn
in New York. In the past two years they raised $1bn (see chart).
Amer hopes to rake in as much all by itself. The company is in a sweet spot
for foreign investors, says a banker. It is controlled by Anta, but most of its
assets sit abroad. Its headquarters stayed in Helsinki. Retail is deemed safe
from the whims of Chinese regulators. Having gone from stitching trainers
for Nike in the 1990s to eclipsing its former client as the world’s largest
sportswear firm by revenues, Anta is regarded as a national champion—and
thus safer still. Salomon skis and Wilson tennis rackets are not the sort of
strategic gear to set China hawks’ pulses racing (other than literally).
Plenty of globally curious Chinese stars would love Amer to succeed. They
include Ant Group, a fintech giant whose $37bn IPO in Hong Kong was
halted by regulators in late 2020; ByteDance, the owner of TikTok, which is
backed by KKR, an American investment firm, and SoftBank, a Japanese
one; and Shein, a superfast-fashion firm which has filed for an IPO in
America under pressure from American investors such as General Atlantic
but may go public only after Amer. Didi, too, must one day re-list its shares
in Hong Kong. Those firms’ foreign backers need them to float shares
offshore to avoid trapping the proceeds within China’s strict capital controls.
They will be watching Amer’s IPO closely. ■


https://www.economist.com/business/2024/01/18/can-arcteryxs-owner-revive-chinese-
ipos-in-america


Big by design
A $35bn mega-merger strengthens a quiet chip

duopoly
The purchase of Ansys by Synopsys is a bet on the ubiquity of
semiconductors
Jan 18th 2024 |
TECH DEALMAKERS had a quiet 2023. S&P Global, a financial-data firm,

reckons that total spending on technology mergers and acquisitions reached
its lowest level in a decade. Big tech mostly sat on the sidelines, as it fended
off trustbusters. This year began on a louder note. On January 10th Hewlett
Packard Enterprise, a business-software giant, snapped up Juniper Networks,
a maker of telecoms gear, for $14bn. Less than a week later Synopsys, an
American maker of programs for chip designers, splurged $35bn on Ansys, a
computer-simulation company.

The megadeal shines a spotlight on an obscure but critical link in the
semiconductor supply chain. Like many other of its links, this one, too, is
highly concentrated. Yearly sales of chip-design software have grown by
12% since 2018, twice as fast as the chip industry as a whole, to around
$15bn. Synopsys and its smaller American rival, Cadence, each capture
around a third of this, reckons IDC, a research firm. Siemens, a German
engineering giant with 15% of the market, is a distant third. The two

American firms’ market values have almost sextupled in the past five years
(see chart). They are worth nearly $80bn apiece.
This growth looks likely to continue. Chipmakers such as Nvidia and AMD
are racing to design better graphics-processing units (GPUs), which
technology firms are hoovering up in order to train artificial-intelligence
models. Big tech’s model-builders are themselves getting into the chip-
design business, creating custom-made blueprints optimised for training
their AIs and outsourcing manufacture to contract “foundries” like TSMC of
Taiwan. This GPU race is shortening the time between releases of new chips
—and more designs mean more licensing fees for the software firms. It has
also reduced Synopsys’s and Cadence’s reliance on a few big chipmaking
customers.
This reliance is diminished further by another trend. Although chip demand

has lately been driven primarily by computers, smartphones and data centres,
semiconductors increasingly pervade the economy, powering everything
from cars to toasters. These products require silicon tailored to their needs.
Ansys’s software, which simulates how electronic systems behave in the real
world, can help with that. It enables system designers to craft the packaging
of “chiplets”, as stacks of chips in modern processors are known. Sassine
Ghazi, Synopsys’s boss, expects that Ansys’s broad customer base across
industries, from carmaking to health care, will open up new markets for his
company’s tools. The merged company will be able to offer them a complete
service: Synopsys designs the chips and Ansys simulates the behaviour of
systems that contain them.
The deal still needs the blessing of regulators. Mr Ghazi points out that there
is not much overlap between what Synopsys and Ansys do, so their merger
would not increase concentration in his firm’s core market. Even though
trustbusters have grown warier of such “vertical” mergers in tech, he
remains confident.
A bigger worry is China. Nearly 15% of Synopsys’s revenue comes from the
country and growth there has outpaced that in any other region. Chinese chip
firms buy nearly 90% of their design software from American companies,
including Cadence and Synopsys. Security hawks in Washington
increasingly want to keep American tech out of Chinese hands, lest it give

China a boost in a bigger race: the geopolitical one for technological
supremacy. ■


https://www.economist.com/business/2024/01/18/a-35bn-mega-merger-strengthens-a-quiet-
chip-duopoly

Schumpeter
Why BlackRock is betting billions on

infrastructure
Demand for investment is soaring thanks to decarbonisation, digitisation
and deglobalisation
Jan 18th 2024 |
THE GLOBAL economy is on the cusp of an “infrastructure revolution”, if

Larry Fink is to be believed. The boss of BlackRock, the world’s largest
asset manager, made the modest prediction shortly after announcing on
January 12th that his firm would acquire Global Infrastructure Partners
(GIP) for $12.5bn. That company, led by Adebayo Ogunlesi, an old pal of
Mr Fink’s from their banking days, is the world’s third-largest infrastructure
investor, behind Australia’s Macquarie and Canada’s Brookfield. Its assets
range from Gatwick Airport in London to the Port of Melbourne. Mr
Ogunlesi and his fellow partners will collectively become BlackRock’s
second-largest shareholder.

Mr Fink is not the only one excited about the industry. On January 16th
General Atlantic, a private-equity (PE) firm, confirmed reports that it would
buy Actis, an infrastructure investor focused on emerging markets. In
September CVC, another PE firm, announced it was buying DIF, a Dutch
infrastructure investor. Over the past decade assets under management in
infrastructure funds have increased almost five-fold, to $1.3trn, according to
Preqin, a data provider. Pension funds and sovereign-wealth managers have
been lured in by the industry’s returns, which are both handsome and
relatively stable. More than half of such backers surveyed by Preqin intend
to increase the share of their portfolios allocated to infrastructure. Some of
the larger among them now invest directly in these dull assets. Why, then, all
the excitement?
The infrastructure-investment business took shape in the 1990s and 2000s.

Western governments with growing debts began seeking out private
investors to acquire—and help rejuvenate—ageing infrastructure from
airports and railways to water pipes. Later, a growing assortment of
companies from energy suppliers to telecoms operators also turned to
infrastructure investors to offload assets such as pipelines and cell towers,
observes Sam Pollock, boss of Brookfield’s infrastructure business.
Now demand for infrastructure investment is soaring thanks to three

megatrends, explains Mr Pollock. The first is decarbonisation. For the world
to meet its climate goals, some $8trn will need to be invested over the
remainder of this decade in renewable energy such as solar and wind, as well
as batteries to store it and transmission lines to transport it. Hefty
investments will also be needed in hydrogen facilities, to produce carbon-
free fuel for planes and ships, and in carbon removal. The second megatrend
is digitisation. Software may well be eating the world, as a venture capitalist
once predicted, but it is relying on an awful lot of physical assets to do it,
from fibre-optic cables and 5G networks to data centres. Third,
deglobalisation. Efforts to shift supply chains away from China are spurring
demand for capital-hungry factories and new transport infrastructure to
move goods over land and sea. In Europe concerns about energy security
following Russia’s invasion of Ukraine have also provoked a rush to build
liquefied-natural-gas terminals to bring in the fuel from less belligerent
places.

All that demand for investment is arriving at a time when government and
corporate balance-sheets are under strain. America’s $26trn (98% of GDP)
pile of federal-government debt is expected to continue expanding over the
coming decade. Many governments in Europe also have weighty debt
burdens. Higher interest rates are making those liabilities more expensive to
service. They are also making life awkward for companies which have
gorged on cheap debt to juice shareholder returns. The need to deleverage
will limit their ability to make big investments in the years ahead.
Infrastructure investors are ready and willing to fill the gap. In 2022 Intel, a
big chipmaker, turned to Brookfield to fund 49% of a new $30bn chip
factory in America.
So far most infrastructure investors have concentrated on rich countries,

where governments are more dependable and currencies more stable. More
than four-fifths of assets under management in the industry are allocated to
Western markets, according to data from Preqin. At the same time, the need
for new infrastructure is most pronounced in the global south, where both
populations and economies are growing faster. “Emerging-market
investment is a big opportunity for us,” says Raj Rao, one of GIP’s co-
founders. Leigh Harrison, who leads infrastructure investing at Macquarie,
notes that his firm is increasing the share of its funds it allocates to such
markets.
The industry, then, looks set to become increasingly important to the global
economy. Yet it is not without its detractors. In Britain Macquarie has been
criticised for its stewardship of Thames Water, which manages the water
supply of London and its surrounds. During its ownership of the utility from
2006 to 2017, Macquarie tripled the company’s debts, to £11bn ($14bn),
helping to deliver a hefty return for itself and fellow shareholders. Since then
the utility, weighed down by those debts, has struggled to afford necessary
investments in fixing leaky pipes and reducing the sewage it pumps into
rivers. Mr Harrison counters that £1bn a year was invested in the company
during Macquarie’s tenure as its owner, more than in any previous period.
Still, he concedes that “markets were very different” when it bought the
business, and that his firm no longer loads its assets with debt to the same
extent.
From spreadsheets to hard hats

In a world of pricier debt, the way infrastructure investors make money is
shifting from financial engineering to cleverer management of assets. Mr
Harrison notes that Macquarie is bulking up the number of industry experts
in its team. “Where we really add value is when we bring greater operational
rigour to an asset,” says Mr Rao of GIP. He offers the example of Gatwick,
where GIP has focused on speeding up security screening, leaving travellers
with more time to relax—and indulge in some pre-flight shopping. For the
infrastructure firms, merely shopping around for assets is increasingly an
indulgence, too. ■
Read more from Schumpeter, our columnist on global business:

AI can transform education for the better (Jan 11th)
Meet the shrewdest operators in today’s oil markets (Jan 3rd)
Can anyone bar Europe do luxury? (Dec 20th)
Also: If you want to write directly to Schumpeter, email him at

schumpeter@economist.com. And here is an explanation of how the
Schumpeter column got its name.

https://www.economist.com/business/2024/01/18/why-blackrock-is-betting-billions-on-
infrastructure

Finance & economics

How strong is India’s economy under Narendra Modi?
Of money and Modi :: It has neither boomed nor slumped. But growth may be taking off
The countries which raised rates first are now cutting them
Global monetary policy :: Farewell to Hikelandia
Ted Pick takes charge of Morgan Stanley

Follow that! :: Can he keep the bank’s stellar run going?
Australian houses are less affordable than they have been

in decades
The turn of the screw :: In spite of rising borrowing costs, prices have stayed stubbornly
resilient
China’s population is shrinking and its economy is losing

ground
Double dip :: The “peak China” narrative is proving difficult to shift
Wall Street is praying firms will start going public again

Buttonwood :: The IPO market is on its longest cold streak since 1980
The Middle East faces economic chaos

The fallout :: Escalating conflict threatens to tip several countries over the brink
What economists have learnt from the post-pandemic

business cycle
Free exchange :: The curious and furious recovery has brought some old ideas back to the fore

Of money and Modi
How strong is India’s economy under Narendra

Modi?
It has neither boomed nor slumped. But growth may be taking off
Jan 15th 2024 | Chennai and Mumbai
IN THE SECOND week of 2024 business leaders descended on Gujarat, the

home state of Narendra Modi, India’s prime minister. The occasion was the
Vibrant Gujarat Global Summit, one of many gabfests at which India has
courted global investors. “At a time when the world is surrounded by many
uncertainties, India has emerged as a new ray of hope,” boasted Mr Modi.
He is right. Though global growth is expected to slow from 2.6% last year to
2.4% in 2024, India is booming. Its economy grew by 7.6% in the 12 months
to the third quarter of 2023, beating nearly every forecast. Most economists
expect annual growth of 6% or more for the rest of this decade. Investors are
seized by optimism.

The timing is good for Mr Modi. In April some 900m Indians will be
eligible to vote in the largest election in world history. A big reason Mr
Modi, in office since 2014, is likely to win a third term is that many Indians
think him a more competent manager of the world’s fifth-largest economy
than any other candidate. Are they right?
To assess Mr Modi’s record The Economist has analysed India’s economic

performance and the success of his biggest reforms. In many respects the
picture is muddy—and not helped by sparse, poorly kept official data.
Growth has outpaced that of most emerging economies, but India’s labour
market remains weak and private-sector investment has disappointed. But
that may be changing. Aided by Mr Modi’s reforms, India may be on the
cusp of an investment boom.
The headline growth figures reveal surprisingly little. India’s GDP per
person, after adjusting for purchasing power, has grown at an average pace
of 4.3% per year during Mr Modi’s decade in power. That is lower than the
6.2% achieved under Manmohan Singh, his predecessor, who also served for
ten years.

But this slowdown was not Mr Modi’s doing: much of it is down to the bad
hand he inherited. In the 2010s an infrastructure boom went sour. India faced
what Arvind Subramanian, later a government adviser, has called a twin
balance-sheet crisis, which struck both banks and infrastructure firms. They
were left loaded with bad debt, crimping investment for years afterwards. Mr
Modi also took office amid slowing global growth, caused by the financial
crisis of 2007-09. Then came the covid-19 pandemic. All told, average
growth among 20 other large lower- and middle-income economies fell from
3.2% during Mr Singh’s tenure to 1.6% during Mr Modi’s. Compared with
this group, India has continued to outperform (see chart 1).
Against such a turbulent backdrop, it is better to assess Mr Modi’s record by

considering his stated economic objectives: to formalise the economy,
improve the ease of doing business and boost manufacturing. On the first
two, he has made progress. On the third, his results have been poor.
India’s economy has certainly become more formal under Mr Modi, albeit at
a high cost. The idea has been to draw activity out of the shadow economy,
which is dominated by small and inefficient firms that do not pay tax, and
into the formal sphere of large, productive companies.
Mr Modi’s most controversial policy on this front has been demonetisation.

In 2016 he banned the use of two large-value banknotes, accounting for 86%
of rupees in circulation—surprising many even in government. The stated
aim was to render worthless the ill-gotten gains of the corrupt. But almost all
the cash made its way into the banking system, suggesting that crooks had
already gone cashless or laundered their money. Instead, the informal
economy was crushed. Household investment and credit plunged, and
growth was probably hurt. In private, even Mr Modi’s supporters in business
do not mince words. “It was a disaster,” says one boss.
Demonetisation may have accelerated India’s digitisation nonetheless. The

country’s digital public infrastructure now includes a universal identity
scheme, a national payments system and a personal-data management
system for things like tax documents. It was conceived by Mr Singh’s
government, but much of it has been built under Mr Modi, who has shown
the capacity of the Indian state to get big projects done. Most retail payments

in cities are now digital, and most welfare transfers seamless, because Mr
Modi gave almost all households bank accounts.
Those reforms have helped Mr Modi ameliorate the poverty resulting from
low job-creation. Fearing that stubbornly low employment would stop living
standards for the poorest from improving, the government now doles out
welfare payments worth 3% of GDP per year. Hundreds of government
programmes send money directly to the bank accounts of the poor.
It is a big improvement on the old system, in which most welfare was

distributed physically and, owing to corruption, often failed to reach its
intended recipients. The poverty rate (the proportion of people living on less
than $2.15 a day) fell from 19% in 2015 to 12% in 2021.
Digitisation has probably also drawn more economic activity into the formal
sector. So has Mr Modi’s other signature economic policy: a national goods
and services tax (GST), passed in 2017, which knits together a patchwork of
state levies. The combination of homogenous payments and tax systems has
brought India closer to a national single market than ever.
That has made doing business easier—Mr Modi’s second objective. GST has
been a “game-changer”, says B. Santhanam, the regional boss of Saint-
Gobain, a French manufacturer with big investments in India. “The prime
minister gets it,” adds another manufacturing executive, of the need to cut
red tape. The government has also put serious money into physical
infrastructure, such as roads and bridges. Public investment rose from 3.5%
of GDP in 2019 to nearly 4.5% in 2022 and 2023.
The results are now materialising. Mr Subramanian recently wrote that, as a

share of GDP, in 2023 net revenues from the new tax regime exceeded those
of the old system. This happened even as tax rates on many items fell. That
more money is coming in despite lower rates suggests that the economy
really is formalising.
Yet Mr Modi is not satisfied with merely formalising the economy. His third
objective has been to industrialise it. In 2020 the government launched a
subsidy scheme worth $26bn (1% of GDP) for products made in India. In
2021 it pledged $10bn for semiconductor companies to build plants

domestically. One boss notes that Mr Modi personally takes the trouble to
convince executives to invest, often in industries where they face little
competition.
Some incentives could help new industries find their feet and show foreign
bosses that India is open for business. In September Foxconn, Apple’s main
supplier, said it would double its investments in India over the coming year.
It currently makes some 10% of its iPhones there. Also in 2023 Micron, a
chipmaker, began the construction of a $2.75bn plant in Gujarat that is
expected to create 5,000 jobs directly and 15,000 indirectly.
So far, however, these projects are too small to be economically significant.

The value of manufactured exports as a share of GDP has stagnated at 5%
over the past decade, and manufacturing’s share of the economy has fallen
from about 18% under the previous government to 16%. And industrial
policy is expensive. The government will bear 70% of the cost of the Micron
plant—meaning it will pay nearly $100,000 per job. Tariffs are ticking up,
on average, raising the cost of foreign inputs.

So what matters more: Mr Modi’s failures or his successes? As well as
economic growth, it is worth looking at private-sector investment. It has
been sluggish during Mr Modi’s time in office (see chart 2). But a boom may
be coming. A recent report by Axis Bank, one of India’s largest lenders,
argues that the private-investment cycle is likely to turn, thanks to healthy
bank and corporate balance-sheets. Announcements of new investment
projects by private corporations soared past $200bn in 2023, according to the

Centre for Monitoring Indian Economy, a think-tank. That is the highest in a
decade, and roughly double the value for 2019, in real terms.
Although higher interest rates have sapped foreign direct investment in the
past year, firms’ reported intentions to invest in India remain strong, as they
seek to “de-risk” their exposure to China. There is some chance, then, that
Mr Modi’s reforms will kick growth up a gear. If so, he will have earned his
reputation as a successful economic manager.
The consequences of Mr Modi’s policies will take years to be felt in full.

Just as an investment boom could vindicate his approach, his strategy of
using welfare payments as a substitute for job creation could prove
unsustainable. A failure to build local governments’ capacity to provide
basic public services, such as education, may hinder growth. Subhash
Chandra Garg, a former finance secretary under Mr Modi, worries that the
government is too keen on “subsidies” and “freebies”, and that its
“commitment to real reforms is no longer that strong.” And yet for all that,
many Indians will go to the polls feeling cautiously optimistic about the
economic changes that their prime minister has wrought. ■
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economics/2024/01/15/how-strong-is-indias-economy-under-narendra-modi

Global monetary policy
The countries which raised rates first are now

cutting them
Farewell to Hikelandia
Jan 18th 2024 |
OVER THE past two years The Economist has studied the economic
fortunes of Hikelandia. This group of eight countries—Brazil, Chile,
Hungary, New Zealand, Norway, Peru, Poland and South Korea—started to
tighten monetary policy in 2021, many months ahead of the Federal Reserve
and the European Central Bank (ECB). They also raised rates far more
aggressively. Yet for much of 2022 and 2023 Hikelandia’s central bankers
had little to show for their hawkish determination. Inflation just kept on
climbing.

Now, though, that has decisively changed. Hikelandian inflation is still far
too high, but it is falling fast (see chart). So fast, in fact, that the club’s
central bankers are now getting ahead of the rest of the world in a new way:
by cutting interest rates. Policymakers in Hikelandia have reduced
borrowing costs by about a percentage point on average from the peak last
year. Chile’s central bank has reduced its policy rate by three percentage
points. Neither the Fed nor the ECB, meanwhile, has moved. Lower interest

rates seem to be helping Hikelandia’s growth. A year ago economic output
across the club was declining sharply. Now it is rising.
Not everywhere in Hikelandia is enjoying sharply lower inflation. In

Norway “core” prices, a measure that excludes those of food and energy, are
still rising by 6% year on year. That is only a bit below a recent peak of 7%.
The core-inflation slowdown in Peru is also modest. But elsewhere, price
growth is easing fast. Core inflation in Hungary has fallen by an astonishing
15 percentage points since the beginning of last year, when huge rises in
energy prices had raised the cost of producing practically everything.
Other data show inflation becoming less entrenched. In late 2022 prices for
every category of good and service in Poland’s inflation basket had risen by
more than 2% year-on-year. By late 2023, only 90% of them had. The fall in
“inflation breadth” in South Korea is even more impressive. Wage gains are
moderating, limiting further increases in companies’ costs. In Chile in
November nominal wages were 8.2% higher than a year previously,
compared with well over 10% for much of 2022. Annual wage growth in
New Zealand has fallen from about 5.5% to 5%. People across Hikelandia
are no longer Googling “inflation” anything like as much as they were.
Hikelandia’s central bankers are still keen to stress their inflation-fighting

credentials. Hungary’s central bank boasts of its “careful approach to
monetary policy”, pointing out that real interest rates are still restrictive. On
January 9th Poland’s central bank declined to cut rates; South Korean
policymakers reached the same decision on January 11th. But tumbling
inflation is undoubtedly good news. And if Hikelandia’s hawkish central
bankers are now cutting rates, others may soon follow. ■
For more expert analysis of the biggest stories in economics, finance and
markets, sign up to Money Talks, our weekly subscriber-only newsletter.

economics/2024/01/18/the-countries-which-raised-rates-first-are-now-cutting-them

Follow that!
Ted Pick takes charge of Morgan Stanley

Can he keep the bank’s stellar run going?
WHEN JAMES GORMAN took the helm at Morgan Stanley it was barely
afloat. His tenure as the bank’s chief executive began on January 1st 2010, in
the teeth of the global financial crisis. After the failure of Lehman Brothers,
in 2008, fear had spread that other dominoes would soon topple. Morgan
Stanley seemed a likely candidate. Hank Paulson, then treasury secretary, is
rumoured to have offered it up to JPMorgan Chase for free (Jamie Dimon,
JPMorgan’s boss, apparently declined). The firm then accepted a
government bailout. In 2009 its return on equity, a benchmark measure of
profitability, was just 4%.
Fourteen years later Mr Gorman has handed the wheel of a far finer vessel to
Ted Pick, the former head of its investment-banking and trading arms. “We

had our moment before the abyss,” said Mr Pick on January 16th, during his
first earnings call in charge. “We are determined never to face anything like
those days again.”
Mr Pick described Morgan Stanley’s progress after 2009 as a “classic ‘self-

help’ story”. It started out as a highly leveraged, volatile outfit specialising
in trading and investment banking. In the years since it has transformed itself
into Wall Street’s pre-eminent wealth manager, through a series of well-
chosen deals.
Mr Gorman has often described this strategy as building “ballast” to balance

the “engine room” of the traditional investment-banking business. He started
by scooping up Smith Barney, a wealth-management business, from
Citigroup for a song during the financial crisis. In 2019 a small stock-plan
administration company followed. Then in 2020 Mr Gorman pulled off two
mammoth deals in just three months, buying E*Trade, a brokerage firm, and
Eaton Vance, an asset manager.
The result is that Morgan Stanley is sitting on $6.6trn in client assets, the
biggest pot of wealth in the world. It now earns almost two-thirds of its
profits from that pot, and has posted a juicy return on equity, averaging 16%
a year since 2020. Other global banks are now aping its push into wealth
management. Analysts making the bull case for UBS’s recent acquisition of
Credit Suisse, a firm with a large wealth business that ran into trouble in
2023, point to Morgan Stanley as an example of how such a merger can pay
off.
Could the firm become a victim of its own success? On the earnings call on
January 16th one analyst asked Mr Pick if he anticipated fiercer competition
in wealth management, as other banks attempt to beef up their operations.
Margins in Morgan Stanley’s wealth-management business in 2023 were
around 25%, a drop from the 30% or so the firm had posted in prior years.
Investors may share such concerns: the bank’s share price fell by some 4.5%
in the hours after the earnings call.
Mr Pick himself seems set to stay the course. Those who have worked with
him describe a disciplined, straight-talking, no nonsense kind of man—a
steady pair of hands who can keep things sailing smoothly. “There may have

been a change in leadership,” he told investors, “but there has not been a
change in strategy.”
He did not rule out that Morgan Stanley might grow through acquisitions,
either. “We have made five different acquisitions. The view inside the house
is: that’s good for now.” But if opportunities come up, especially outside
America where the firm has lower market share, “we could staple them on,”
he said.
In a sign of how far Morgan Stanley has come since 2009, Mr Pick added
that the “ballast” and “engine room” analogy Mr Gorman favoured might
need updating. “At one point we called the wealth and investment
management business ‘the ballast’, which was the right word because we
wanted to convey stability,” he said. But now he thinks “it is actually the
engine for future Morgan Stanley growth.” ■

economics/2024/01/16/ted-pick-takes-charge-of-morgan-stanley

The turn of the screw
Australian houses are less affordable than they

have been in decades
In spite of rising borrowing costs, prices have stayed stubbornly resilient
Jan 18th 2024 |
IN AUSTRALIA, AS in most places, waterfront property comes at a

premium. But to see the full effects of high-cost Australian housing, look
beyond trophy homes on Sydney Harbour and beach pads in Bondi. In cities
across the country, tents and other makeshift shelters are springing up by the
water. They are the dark side of a housing market that has held firm despite
rising interest rates. For households of all incomes, the share of homes that
are affordable is at its lowest in 30 years.
Australians are not alone. House prices are high relative to incomes across
the rich world, and last year defied expectations by rebounding after only the
briefest of blips. Rental markets are hot, too. Vacancies are at or near historic

lows in many rich countries, while rents are climbing quickly. In previous
decades, notes Peter Tulip, an economist, rising housing costs were offset by
cheaper lending. Now mortgage rates have risen as well, meaning would-be
buyers can afford to borrow less.
What is behind the unexpected resilience in prices? It is partly down to

global trends, such as people working from home more and so placing a
higher value on their living space. But Australian policymakers are
increasingly focusing their attention on three domestic factors, too.
The first is that foreign demand for Australian housing is greater than ever.
Net immigration was 500,000 in the year to June, more than twice the intake
in 2019. At the same time some 650,000 international students call Australia
home, and all need somewhere to stay. And even foreigners who do not live
in Australia full-time seem keen on its housing market: such buyers snapped
up 10% of newly built homes sold in the third quarter of 2023.
The second factor is the cost of materials. The producer price index for
construction has risen by 30% since the start of 2021. As well as making
houses costlier to build, this has left Australia with fewer builders. More
than 1,500 construction firms collapsed in the year to June, mostly owing to
cost overruns. The result is a reduced supply of new homes and even more
upward pressure on prices.
But the biggest brake on home-building, says Mr Tulip—and the third factor
driving house prices up—is local councils’ planning rules. A prime example
is Sydney, where large numbers of homes face development restrictions.
Meanwhile, zoning rules raise house prices well above the combined
underlying cost. Mr Tulip’s research suggests that, again in Sydney, this
increase is a whopping 73%.
Might the government be able to ease the squeeze? It has promised to reduce
immigration, to triple the fees paid by foreign purchasers of existing homes
and increase taxes on properties left vacant. A national target to build 1m
homes over the next five years has been raised to 1.2m. And there are some
signs of planning restrictions being loosened. The New South Wales state
government is rewriting its zoning rules to force local councils to accept
higher density housing. Such efforts will inevitably provoke furious

objections. But they will not come from the growing number of Australians
who settle down for the night in a waterside tent. ■

economics/2024/01/18/australian-houses-are-less-affordable-than-they-have-been-in-
decades

Double dip
China’s population is shrinking and its economy is

losing ground
The “peak China” narrative is proving difficult to shift
Jan 17th 2024 | Hong Kong
“HOW SHOULD one look at the Chinese economy?”, asked Li Qiang, the
country’s prime minister, at the World Economic Forum in Davos on January
16th. “It is similar to looking at the Alps,” he suggested, an “undulating
mountain range” that is best appreciated from afar. Official figures released
the next day revealed two notable undulations in China’s economic
landscape. The country’s population fell in 2023 for the second year running.
And its GDP shrank in dollar terms.
In his previous job as Communist party chief of Shanghai, Mr Li oversaw a

strict lockdown of the city to quell an outbreak of covid-19. After China
abandoned such measures at the end of 2022, many people succumbed to the

virus, although doctors were pressed to attribute their deaths to other causes.
One academic model, drawing on Hong Kong’s experience, suggested the
national death toll might have been as high as 1.4m between December 2022
and February 2023. The Economist’s modelling estimated that the virus
would claim about 1.5m lives if left to spread unencumbered.
The official data released this week showed that deaths from all causes in
2023 rose to 11.1m, up from 10.4m in the previous year. The 0.7m increase
is lower than the modelled estimates of the covid death toll. But some of the
fatalities included in those estimates would have occurred in the last month
of 2022. And some of the elderly and infirm people killed by covid in early
2023 might have died anyway from other frailties before the year was out.
The official number is within the wide range of possible outcomes yielded
by our model. In China it is relatively easy to fudge the cause of a death. But
it is harder to pretend it never happened.
The increase in deaths was mirrored by a decline in births, which fell by

over half a million despite China’s reopening. All told, the country’s
population dropped by more than 2m last year. And it is greyer as well as
smaller: over a fifth of its people are now aged 60 or above. If these 297m
elderly Chinese were a country of their own, they would be the fourth-
largest in the world.
Despite its shrinking and ageing population, China struggles to employ its
younger workers. After the unemployment rate among the urban young
exceeded 21% in June, China abruptly stopped releasing figures for it. This
week the National Bureau of Statistics (NBS) began publishing a revised
measure which excludes students who may be looking for work. By this new
metric, youth unemployment in China’s cities was 14.9% in December.
It is hard to know how much of an improvement that represents, because the

NBS statisticians did not show what the past figures would have looked like
under the new method. Excluding those students who were looking for work
might have made a big difference. In April last year an official disclosed that
almost 39% of China’s unemployed young people had yet to graduate.
Removing them from the labour force, and hence dropping them from the
unemployment count, would have reduced the youth unemployment rate for
March 2023 from 19.6% to 13%.

In another departure from statistical norms, Mr Li revealed China’s 2023
growth figure in his speech at Davos, a day before its scheduled release. The
economy grew by 5.2% in real terms, comfortably meeting the government’s
official target of about 5%. Consumption (private and public) contributed
over 82% of that growth, its highest share since 1999, offsetting some of the
enduring weakness in the country’s property market.

All this looks good from afar. But zoom in, rather than appreciating the view
from a distance, and the landscape looks more treacherous. Prices across
China’s economy are falling on average. The drops are concentrated in food
and fuel but not confined to them. The price of vehicles, for example,
declined by 4% in 2023. The GDP deflator, a broad measure of prices, fell in
2023 for only the fifth time in 40 years. As a consequence, China’s nominal
GDP, which makes no adjustment for changing prices, grew by only 4.6% in
2023.
To fight this deflationary pressure, China’s central bank eased monetary

policy last year even as America’s Federal Reserve continued to raise
interest rates sharply. China’s wobbly growth, its regulatory crackdowns and
its geopolitical rivalry with America also spooked the kind of cosmopolitan
investors who congregate in Davos. One result is that the yuan weakened
against the dollar in 2023. Indeed China’s GDP, converted into dollars at
market exchange rates, fell in 2023, even as America’s GDP may have
grown by 6% or so last year in nominal terms.
Exchange rates, like mountain ranges, tend to undulate. And the dollar may
not always be so strong. But economists have nonetheless begun to wonder
whether China’s recent setbacks are harbingers of something more
fundamental holding the country back. According to some forecasts, China’s
GDP might stop rising relative to America’s in the next decade or so, and
lose ground thereafter. There is much talk of “peak China”. Mr Li’s big
speech was an opportunity to shift this perception a little. But in the Alpine
village of Davos, mountainous metaphors are hard to avoid. ■
Correction (January 18th 2024): An earlier version of this piece, relying on

unrevised GDP data, said that nominal growth was 4.2%.

economics/2024/01/17/chinas-population-is-shrinking-and-its-economy-is-losing-ground

Buttonwood
Wall Street is praying firms will start going public

again
The IPO market is on its longest cold streak since 1980
Jan 18th 2024 |
CAN YOU FEEL the chill? It is bone-deep, now. In 2021 capital markets
were searing hot. On average, at least one new firm went public every
working day. But financial districts today are icy. For two long years private
companies have spurned public markets, as rising interest rates dashed lofty
valuations and stock prices vacillated.
All this has been bad news for Wall Street. In 2021 America’s five largest
investment banks together earned an average of $13bn per quarter through
their dealmaking and initial-public-offering (IPO) desks. Over the next two
years they managed barely half of that.

Could conditions soon thaw? Company bosses like to make their debut in a
roaring bull market, when investors are cheery and liable to overpay. With
markets now back near all time highs, that seems to be the case. And
executives are encouraged by narrow credit spreads—the difference between
the rates companies borrow at and risk-free rates on treasury bonds—which
indicate investors do not expect financial trouble.
A strong economy helps, too, because it boosts demand for capital. So do

high real interest rates, since they make the capital provided by an IPO more
attractive. Given the resilience of the American economy, a Federal Reserve
policy rate of 5.5% and underlying inflation around 3%, both conditions are
in place.
Sure enough, there is some evidence of activity picking up. Total

investment-banking revenues were better than expected in the fourth quarter
of 2023, climbing by 15% compared with the previous three months. On
earnings calls bank bosses sounded cautiously optimistic about 2024. There
are rumours that all kinds of firms, from SKIMS, a pants purveyor founded
by Kim Kardashian, to Stripe, a payments giant, are considering making
their debut.
Still, executives are easily put off by volatility—and it is hard to describe

recent stockmarket moves as anything other than unpredictable. Given that a
month or so often elapses between filing for an IPO and actually going
public, a steady march higher is far preferable to a rollercoaster ride. Such
circumstances tend to mean that those who can wait, do. In even moderately
difficult times firms often put off IPOs altogether, rather than accept a lower
price, and a stockpile of those waiting to go public builds up.
It still feels as if the economic mood could spin on a dime. This could hurt
newly public firms. Shares in Cava, a fast-casual salad seller, doubled in
price when it went public in June. Other firms got excited and started
chewing over their options. In August Instacart, another firm which
specialises in flogging vegetables to the idle, and Arm, a British chipmaker,
filed to go public. Yet by the time they made it to market in late September,
interest-rate expectations were climbing and share prices were falling.
Instacart was valued at $39bn in 2021. It went public with a market
capitalisation of $10bn, and is now worth just $7bn.

So when might the IPO winter truly give way to spring? In an attempt to
answer this, Gregory Brown and William Volckmann of the University of
North Carolina have built a mathematical model. It takes in variables
including stockmarket returns, credit spreads and real interest rates, and uses
these to try to predict IPO volumes.
Their first find is that today’s market really is extraordinarily chilly. They
define the IPO market as “cold” when the average of the number of IPOs
over the last three months is lower than it was three-quarters of the time
between 1975 and 2020 (an average of 5.3 or fewer IPOs per month). On
that measure, this is the longest cold spell for American IPOs since 1980. It
is also much cooler than the model would anticipate. It says some 20 firms a
month should have been going public by the end of 2023. Yet only one firm
went public in December.
Messrs Brown and Volckman suspect the market is suffering from a

hangover. Far more firms went public in 2021 than their model implied
should have done. The stockpile, in other words, was depleted. So despite
the recent pause, followed by improved conditions, there are still not many
firms ready to list.
A true thaw, then, would take more than a few quarters of rising markets and
economic resilience. It needs not only heat, but time as well. That is time in
which unexpected developments—such as interest rates resuming their
upward climb—could easily spook bosses all over again. So perhaps it is
unwise to predict a heatwave. But some green shoots may eventually poke
through the ice.■
Read more from Buttonwood, our columnist on financial markets:

Bill Ackman provides a lesson in activist investing (Jan 11th)
Why bitcoin is up by almost 150% this year (Dec 18th)
The mystery of Britain’s dirt-cheap stockmarket (Dec 14th)
Also: How the Buttonwood column got its name

economics/2024/01/18/wall-street-is-praying-firms-will-start-going-public-again


The fallout
The Middle East faces economic chaos

Escalating conflict threatens to tip several countries over the brink
Jan 18th 2024 |
JUST OVER 100 days after Hamas’s brutal attack on Israel started a war in
Gaza, the conflict is still escalating. On January 11th America and Britain
started attacking Houthi strongholds in Yemen, after months of Houthi
missile strikes on ships in the Red Sea. Five days later Israel fired its biggest
targeted barrage yet into Lebanon. Its target is Hizbullah, a militant group
backed by Iran.
A full-blown regional war has so far been avoided, largely because neither
Iran nor America wants one. Yet the conflict’s economic consequences are
already vast. Trade routes are blocked, disrupting global shipping and
devastating local economies. The Middle East’s most productive industries

are being battered. And in Lebanon and the West Bank, growing hardship
threatens to spark even more violence.
Start with trade. Before Hamas’s attack, a fifth of the average Middle
Eastern country’s total exports—from Israeli tech to oil from the Gulf—were
sent somewhere else in the region. Geopolitical enemies were increasingly
trading with each other. Now, the routes that transported more than half of
all goods are blocked. Intra-regional trade has collapsed. At the same time,
the cost of shipping goods out of the Middle East has risen. That will send
many exporters, operating on razor-thin margins, out of business in the
months to come.

The Red Sea used to handle 10% of all goods moving around the world. But
since the Houthis began launching missiles, its shipping volumes have
dropped to just 30% of normal levels (see chart). On January 16th Shell, an
oil and gas giant, became the latest multinational to say it would avoid the
Sea.
For some of the countries bordering the Red Sea, Houthi missile strikes have
far worse consequences. Eritrea’s economy is propped up by fishing,

farming and mining exports, all of which travel by sea owing to tense
relations with its neighbours. For crisis-stricken Sudan, the Red Sea is the
sole point of entry for aid, almost none of which has reached the 24.8m
people in need of it since the attacks began.
Further disruption could visit financial ruin on Egypt, one of the region’s
biggest countries. For its population of 110m, the Red Sea is a vital source of
dollars. Its government earned $9bn in the year to June from tolls on the
Suez Canal, which links the Mediterranean to the Red Sea. Without the toll
revenue, Egypt’s central bank would have run out of foreign exchange
reserves, which stood at $16bn (or two months-worth of imports) at the start
of 2023. The government would also have faced a yawning hole in its
budget, which already relies on cash injections from Gulf states and the IMF.
Both crises may materialise in 2024. Egypt’s year-to-date income from the
Suez is 40% less that it was this time last year. That puts it at real risk of
running out of dollars, which would push its government into default and its
budget into disarray.
Conflict has also hit the Middle East’s most promising industries. Before
October 7th Israel’s tech sector was its brightest bright spot, contributing a
fifth of the country’s GDP. Now it is struggling. Investors are pulling
funding, customers are cancelling orders and much of its workforce has been
called up to fight.
Jordan, meanwhile, is suffering from forgone tourism, which would

normally constitute 15% of its GDP. Its struggles are emblematic of those
across the region: even Gulf states have seen tourist numbers dip. In the
weeks after Hamas’s attacks, international arrivals to Jordan fell by 54%.
Just like Egypt, the lost revenues leave it perilously close to default.
Yet the most dangerous economic consequence of the war may be the
hardship inflicted on populations in Lebanon and the West Bank, two
powder kegs that could easily explode into more violence. As Israel and
Hizbullah trade air strikes, they are destroying southern Lebanon. More than
50,000 people have already been displaced (as well as 96,000 in northern
Israel). Repairs will be expensive, but there is no cash left for them: Lebanon
has had a shell government since it defaulted in 2019. In recent months its

economic freefall has accelerated as foreign tourists and banks, which
together make up 70% of its GDP, have deserted the country on the advice
of their governments.
Things are no better in the West Bank. Of its 3.1m residents, 200,000 are
factory workers who used to commute to Israel every day. They are out of
work after Israel revoked their permits. Meanwhile, 160,000 civil servants
have not been paid since the war began. The West Bank’s government now
refuses to accept its tax revenues from Israel (which collects them) after
Israel withheld funds that would usually be sent to Gaza. Public services are
shutting down, and missed mortgage payments from civil servants risk
triggering a banking crisis.
The Middle East has long been full of economies on the brink. Israel’s war
with Hamas may now tip them over. To make ends meet, their governments
have built houses of cards, balancing bail-outs from Gulf states, handouts
from America and expensive short-term loans. The risk of it all tumbling
down is worryingly high.
The rest of the world economy has so far faced few costs from the conflict.
Oil prices have remained relatively calm, except for a spike in early January,
and the effects on global growth and inflation are likely to be minimal. But if
much of the Middle East slides into a debt crisis, all that could change, and
fast. It would hit populations that are young, urban and increasingly
unemployed. That is a recipe for even more extreme politics in a large group
of strategically important, chronically volatile countries. The consequences
would reverberate across the world. ■

economics/2024/01/18/the-middle-east-faces-economic-chaos

Free exchange
What economists have learnt from the post-

pandemic business cycle
The curious and furious recovery has brought some old ideas back to the
fore
Jan 17th 2024 |
SCIENCE ADVANCES one funeral at a time, to paraphrase Max Planck.

The Nobel prize-winning physicist was arguing that new ideas in his field
would only catch on once the advocates of older ones died off. With a little
adaptation he could have been describing the dismal science, too: economics
advances one crisis at a time. The Depression provided fertile soil in which
John Maynard Keynes’s theories could grow; the Great Inflation of the
1970s spread Milton Friedman’s monetarist ideas; the global financial crisis
of 2007-09 spurred interest in credit and banking.

Sure enough, the recovery from the covid-19 pandemic has given
economists another chance to learn from their mistakes. Papers presented at
the recent conference of the American Economic Association (AEA) offer
clues as to the theories that might eventually become the received wisdom of
the next generation.
One such paper takes a harder look at the Phillips curve, which describes a
theoretical trade-off between unemployment and inflation. When
unemployment is low, the logic goes, inflation should be higher, as
competition for workers exerts upward pressure on wages. In turn, consumer
prices rise. Yet during the 2010s the curve appeared to have vanished.
Unemployment kept falling but inflation stayed quiescent. Then, after the
pandemic, the relationship suddenly seemed to re-exert itself: inflation rose
as swiftly as unemployment fell.
At the AEA conference, Gauti Eggertsson of Brown University suggested

that adding a kink to the (previously smooth) Phillips curve might rescue the
concept. The idea is that, at a certain point—as the last available worker is
employed—the relationship between inflation and unemployment suddenly
becomes non-linear. “As you hire all the people you hit the maximum level
of employment…there is only one way to go,” he told the conference.
Beyond that point, inflation no longer rises smoothly as unemployment falls,
but instead shoots up.
Mr Eggertsson’s kink could explain both inflation’s absence in the 2010s and
its sudden resurgence in 2021. To understand how inflation has recently
faded without a rise in unemployment, he suggests examining how a tight
labour market interacts with supply disruptions. A scarcity of materials and
components exacerbates labour shortages. Without extra workers available,
businesses cannot ramp up production or use labour as a substitute for other
inputs. As supply shortages eased, this process went into reverse. And so the
inflationary effect of a tight labour market abated without leading to a rise in
unemployment.
Part of the confusion over the Phillips curve, suggested another paper
presented by Stephanie Schmitt-Grohé, of Columbia University, arose
because the Great Inflation looms too large in economists’ minds.
Friedman’s work emphasised the role of inflation expectations during that

episode. Workers and businesses lost faith in central bankers’ willingness to
fight rising prices. Then came a vicious cycle in which soaring inflation
fuelled expectations of future price rises, which then became self-fulfilling.
But the experience of the 1970s was far from typical, suggests Ms Schmitt-
Grohé. Peering further back, she points to frequent instances of American
inflation suddenly rising, then falling just as suddenly. One such episode
took place amid the Spanish flu pandemic, starting in 1918. That year annual
inflation rocketed to 17%. But by 1921 it had turned to deflation, with prices
falling by 11%. Consider data from the whole 20th century, and not just its
second half, and the fading of the most recent bout of inflation is much less
surprising. Ms Schmitt-Grohé suggests that the shocks now hitting the
economy—such as climate change, conflicts and a pandemic—mean a return
to the greater volatility of earlier ages.
Meanwhile, others are trying to refine models for the overall economy.
These have traditionally represented production as taking place in a single
sector—employing workers, renting capital and producing output—that is
hit by shocks to demand and supply. Iván Werning, of the Massachusetts
Institute of Technology, suggests instead considering a set of different
sectors, each hit by such shocks in its own way. The challenge for monetary
policy is then to control inflation without inhibiting the necessary
reallocation of labour between sectors.
Mr Werning’s model is a good fit for the post-pandemic economy. It adjusted

not just to a shift in demand from services to goods, but to supply-chain
disruption, energy shocks and employees in some sectors working from
home. As such, inflation moved through the economy in waves, starting in
select goods then spreading out. That is not to say that monetary and fiscal
stimulus did not also contribute to rising prices, says Mr Werning. It is more
that the rejigging of the economy acted like a supply shock, raising inflation
for any given level of aggregate demand.
New ideas in old books
Many of these ideas are not exactly new. Mr Eggertsson, for instance, said
that the experience of the past few years led him back to an “old Keynesian
fairytale”, and that his version of the Phillips curve is similar to the original.

Mr Werning points to a speech by James Tobin, a Keynesian economist, in
1972. Like Mr Werning, Tobin suggested that inflationary pressure can arise
from sectors growing and shrinking at different rates. Combine that with a
non-linear Phillips curve, Tobin argued, and you can envisage inflation
taking off even without a hot labour market.
That crises spur a search through the archives is itself nothing new. To make
sense of the Depression, Keynes looked to Thomas Malthus, a 19th-century
economist. Friedman’s take on the causes of the Great Inflation owes much
to the quantity theory of money, which was first mentioned in ancient
Chinese texts and popularised in Europe by Nicholas Copernicus, a 16th-
century astronomer. Science may indeed proceed one funeral at a time.
Economics, however, has resurrections. ■
Read more from Free exchange, our column on economics:

Has Team Transitory really won America’s inflation debate? (Jan 10th)
Robert Solow was an intellectual giant (Jan 4th)
Where does the modern state come from? (Dec 20th)
markets, sign up to Money Talks, our weekly subscriber-only newsletter

economics/2024/01/17/what-economists-have-learnt-from-the-post-pandemic-business-
cycle

Science & technology

The Pentagon is hurrying to find new explosives
More bucks for bigger bangs :: Most of America’s existing ones date from the second world
war
Common sense is not actually very common

A slipper concept :: Very few claims meet with universal agreement
Many AI researchers think fakes will become undetectable

Fake-news news :: Both detection software and watermarks can be defeated
Researchers in China create the first healthy, cloned rhesus

monkey
Mass production? :: Their new technique could make the routine cloning of primates easier

More bucks for bigger bangs
The Pentagon is hurrying to find new explosives

Most of America’s existing ones date from the second world war
Jan 17th 2024 |
AMERICA’S WARS are high-tech affairs. Many of the bombs and missiles
with which it has attacked the Houthis in recent days, as part of an effort to
protect shipping in the Red Sea, were guided to their targets by lasers or
signals from satellites.
But the business ends of such weapons are looking rather long in the tooth.
RDX and HMX are the two most common explosives in American weapons.
RDX was invented in 1898. HMX dates from 1941. As Bob Kavetsky, who
runs the Energetics Technology Centre (ETC), a research group in Maryland,
puts it, America’s explosives have been made with mostly “the same
processing, literally, since World War II”.

Now, alarmed by growing Chinese and Russian investment, things are
changing. A study funded by the Office of Naval Research and published in
2021, worried that some Russian and Chinese weapons “overmatch”
American ones in range and power. Another, published in 2022 by the
Hudson Institute, a think-tank, noted that for every scientific paper on
energetics published by American researchers, Chinese ones published
nearly seven. Five years ago the budget of the part of the Department of
Defence that concerns itself with improving “energetics”—army-speak for
explosives, propellants and pyrotechnics—was $20m. In 2023 it was more
than $250m.
Bigger bangs, more bucks
In the decades following the development of cheap sensors and

microprocessors in the 1970s, better precision, not more firepower, “became
almost our singular focus”, says Bill Hix, a former senior leader of the Army
Futures Command, a modernisation outfit. Quests to build laser and
microwave weapons have also steered R&D away from explosives and
propellants, as has the fact that, in the decades after the fall of the Soviet
Union, America’s military rivals were all technologically far inferior.

Progress did not stall entirely. Take hexanitrohexaazaisowurtzitane, better
known as CL-20 after the base at China Lake, in California, where it was
first synthesised. It packs at least 10% more power than explosives made
with HMX. It also detonates faster, an important factor in an explosive’s
performance (see chart). That can produce a larger number of smaller and
faster-moving pieces of shrapnel, increasing the number of “hits on target”,
says Anthony Di Stasio, head of the Pentagon’s Manufacturing Capability
Expansion & Investment Prioritisation directorate. By one reckoning,

shaped-charge explosives made with CL-20 have up to 40% more armour-
penetrating power than those made with HMX.
It also shows promise as a propellant. Of the molecule’s 36 atoms, 12 are

oxygen. This reduces the amount of oxidiser required compared with other
missile fuels, saving space and weight. That could give a range boost of
between 5% and 20%, and might allow bigger missiles to be shrunk enough
that they would fit inside a stealth aircraft’s internal weapons bays.
CL-20 was first synthesised in 1987. But limited funding and strict safety
rules slowed its development. The Switchblade 300, a kamikaze drone which
has been supplied to Ukraine, is the first American munition developed for
the explosive.
The size of the bang is not the only measure of an explosive’s performance.
LLM-105 was first produced at Lawrence Livermore National Laboratory in
1995. Part of its appeal lies, paradoxically, in its reluctance to detonate. It
can withstand high temperatures without blowing up, making it a candidate
for warheads used in hypersonic missiles, which fly and manoeuvre at more
than five times the speed of sound.
LLM-105 can also tolerate heavy knocks and bumps. It is therefore being
put into a new generation of “bunker-buster” warheads designed to punch
through hard structures before blowing up inside. A munition full of LLM-
105 is also less likely to be set off by an enemy attack, even if it is hit by
shrapnel or bullets. Mr Di Stasio reckons that the first weapons with LLM-
105 could be ready in three years’ time.
The fact that it has taken so long for new explosive compounds to make it to
the battlefield underlines how tricky such substances are to develop. Safety
precautions, for obvious reasons, are rigorous. Many exotic materials require
specialised equipment such as diamond anvil cells, which can create
enormous pressures. And enough surprises lurk in the underlying chemistry
that luck also plays a significant role, notes John Fischer, ETC’s principal
scientist, who likens it to occasionally finding “hidden gems in that brown
[chemical] muck you just made”.
It’s called nitroglycerine for a reason

The gems most sought-after are molecules which contain a lot of nitrogen
atoms. The amount of energy released by an explosive depends on the
difference between the energy locked up in its starting state, and that in the
more stable end state reached once all the chemical reactions have finished.
Nitrogen atoms like to pair up into a very stable molecule linked by a strong
chemical bond. That means that the energy difference between the start and
end states of nitrogen-containing compounds can be very large, which makes
for a big bang.
Nitrogen makes up a third of the atoms in a molecule of CL-20, for instance.

More exotic setups should be possible. Hexazine, for now still theoretical, is
a molecule composed of six nitrogen atoms arranged in a ring like that of
benzene, a common hydrocarbon. If hexazine proves makeable, says Dr
Fischer, its molecular setup means it is “going to be good”.
Part of Dr Fischer’s job is keeping an eye on advances made in other

countries. One paper, published in June by Ru-jing Yu, a chemist at Nanjing
University of Science and Technology, and his colleagues, describes a
pentazolate salt, a chemical based on a five-atom nitrogen ring. It has a
detonation velocity measured at 9,487 metres per second, a bit faster than
CL-20. In 2022 a team at Ludwig-Maximilian University of Munich
reported an explosive based on tetrazole (a ring with four nitrogen atoms and
one carbon) with a detonation speed of 9,697 metres per second. When it
comes to specific impulse, a measure of propulsive power, CL-20 appears to
be outperformed by a class of substances called furazans.
Better energetics are also being made by packaging explosives in “reactive”

materials including aluminium and Teflon, a polymer often usually used in
non-stick frying pans. Reactive materials are normally inert, but when
subjected to sufficient heat or mechanical stress from a blast, they burn
quickly, releasing additional energy. America’s army and navy are testing
explosives made with reactive materials that the Pentagon’s Mr Di Stasio
says will soon be incorporated into the country’s arsenal.
Efficiency can be boosted further by using reactive materials with

thermobaric weapons, which use a small explosive charge to disperse fuel
that is then ignited. Rather than carrying their own oxidisers alongside the
fuel, thermobaric weapons (which America began using in the Vietnam war)

use the oxygen in the air. The ETC reckons this can lead to weight savings of
up to 60%, potentially allowing even small drones to carry powerful bombs.
Other innovations focus on things besides the bang itself. A group at the
Ludwig Maximilian University of Munich, for instance, aims to reduce
erosion in gun barrels by designing novel nitrogen-rich propellants. The
chemical effects of such propellants can harden gun barrels every time they
are fired. And they have lower combustion temperatures than other
propellants, which also reduces stress.
Resodyn Acoustic Mixers, a firm based in Montana, has pioneered a new

way to produce energetics. The standard approach is to mix the ingredients
with blades. Resodyn’s machines use acoustic vibrations instead. A 420-litre
mixer, the biggest model, takes three years to build and costs about $12m.
Sales are nevertheless brisk. Safety is one benefit: in conventional mixers, a
broken blade or loose ball bearing risks sparking an explosion.
Speed is another. With standard kit, the mixing happens in vortices at blade
edges. In an acoustic mixer, it happens everywhere. This can cut the time it
takes to mix a polymer-bonded explosive like HMX more than tenfold.
Lawrence Farrar, Resodyn’s boss, says acoustic mixing can reduce the
amount of (non-explosive) binder chemicals in a standard explosive mix
from about 13% to just 7%, leaving more room for the energetics
themselves.
Totting up the benefits of better explosives is hard. But in 2021 the ETC
concluded it might be possible to build a 400lb (181kg) state-of-the-art
bomb roughly as deadly as an existing 1,000lb munition. And the rate of
advance is only likely to accelerate. Few things spur innovation better than
competition. Mr Di Stasio reckons that America’s lead over its rivals in
deploying better explosives is around two years at most. ■
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technology/2024/01/17/the-pentagon-is-hurrying-to-find-new-explosives


A slipper concept
Common sense is not actually very common

Very few claims meet with universal agreement
Jan 17th 2024 |
IN 1776 THOMAS PAINE, a traitorous Englishman living in the American

colonies, published a seditious 47-page pamphlet. Called “Common Sense”,
it became a best-seller. It argued that the colonies should seek independence
from British rule. Later that year they did exactly that.
Appeals to common sense are a staple of politics, especially when an

insurgent wishes to distinguish himself from a supposedly aloof and out-of-
touch elite. But in a paper published in Proceedings of the National Academy
of Sciences, Mark Whiting and Duncan Watts, a pair of computational social
scientists at the University of Pennsylvania, note that the idea has seldom
been rigorously studied.

The two researchers set out to fix that. They started by noting that the
standard concept of common sense has a somewhat circular definition:
common sense is a set of claims that sensible people agree with, and sensible
people are those who possess common sense.
To get around such philosophical tangles, the researchers turned to

Mechanical Turk, a website run by Amazon, a big tech firm, that allows
people to post odd jobs. They recruited 2,046 human participants and asked
them to rate 50 statements from a corpus of 4,407 claims that might
plausibly be seen as commonsensical.
As common sense might have predicted, the researchers found that plainly
worded claims concerning facts about the real world were the most likely to
be rated as demonstrating common sense (“triangles have three sides”, for
example, which is true by definition, or “avoid close contact with people
who are ill”). The more abstract the claims, the less likely participants were
to agree that they were common sense (“all human beings are created equal”;
“perception is the only source of knowledge”).
When they split the claims by subject, the researchers found that those
concerning technology and science were the most likely to be rated as
commonsensical, while matters of history and philosophy were the least
likely. A respondent’s age, sex, income and personal politics had little effect
on what they thought counted as common sense, although psychological
measures of social perceptiveness and the ability to reflect on one’s opinions
did.
Having investigated individual opinions, the researchers looked at how

common sense works across big groups. Here, they found much less
agreement than might have been expected. Only around 44% of claims in the
corpus were rated as commonsensical by at least 75% of respondents. A
stricter definition of common sense, in which everyone has to agree with a
claim for it to count, cut that number to just 6.6%. Where exactly a sensible
cut-off lies is a matter for debate. But truly “common” sense, it seems, is an
elusive thing. ■


technology/2024/01/17/common-sense-is-not-actually-very-common

Fake-news news
Many AI researchers think fakes will become

undetectable
Both detection software and watermarks can be defeated
Jan 17th 2024 | New Orleans
RISHI SUNAK is Britain’s prime minister. If some advertisements on

Facebook can be trusted (which they cannot) he also appears to be flogging
get-rich-quick schemes. One such advert shows Mr Sunak endorsing an app
supposedly developed by Elon Musk, a businessman, into which viewers can
make regular “savings”.
The video is fake. Generated with the help of AI, it is just one of 143 such
advertisements catalogued by Fenimore Harper Communications, a British
firm, which ran in December and January. It is not just those in the public
eye who can have their likenesses used for dubious ends. In June 2023 the
Federal Bureau of Investigation in America warned the public of “malicious

actors” using AI to create fake sexually themed videos and images of
ordinary people, in order to extort money.
How to detect such trickery is a live topic among AI researchers, many of

whom attended NeurIPS, one of the field’s biggest conferences, held in New
Orleans in December. A slew of firms, from startups to established tech
giants such as Intel and Microsoft, offer software that aims to spot machine-
generated media. The makers of big AI models, meanwhile, are searching
for ways of “watermarking” their output so that real pictures, video or text
can be readily distinguished from the machine-generated sort.
But such technologies have not, so far, proved reliable. The AI cognoscenti
seem gloomy about their prospects. The Economist conducted a (deeply
unscientific) straw poll of delegates to NeurIPS. Of 23 people asked, 17
thought AI-generated media would eventually become undetectable. Only
one believed that reliable detection would be possible. (The other five
demurred, preferring to wait and see.)
Detection software relies on the idea that AI models will leave a trace. Either
they will fail to reproduce some aspect of real images and video, or of
human-generated text, or they will add something superfluous—and will do
so often enough to let other software spot the error. For a while, humans
could do the job. Up until about the middle of 2023, for instance, image-
generation algorithms would often produce people with malformed hands, or
get the numbers wrong on things like clock faces. These days, the best no
longer do.
But such telltales often still exist, even if they are becoming harder for
humans to spot. Just as machines can be trained to reliably identify cats, or
cancerous tumours on medical scans, they can also be trained to differentiate
between real images and AI-generated ones.
It seems, though, that they cannot do so all that well. Detection software is
prone to both false positives (wrongly flagging human content as generated
by AI) and false negatives (allowing machine-generated stuff to pass
undetected). A pre-print published in September by Zeyu Lu, a computer
scientist at Shanghai Jiao Tong University, found that the best-performing
program failed to correctly spot computer-generated images 13% of the time

(though that was better than the humans, who erred in 39% of cases). Things
are little better when it comes to text. One analysis, published in December
in the International Journal of Educational Integrity, compared 14 tools and
found that none achieved an accuracy of more than 80%.
If trying to spot computer-generated media after the fact is too tricky,

another option is to label it in advance with a digital watermark. As with the
paper sort, the idea is to add a distinguishing feature that is subtle enough
not to compromise the quality of the text or image, but that is obvious to
anyone who goes looking for it.
One technique for marking text was proposed by a team at the University of
Maryland in July 2023, and added to by a team at University of California,
Santa Barbara, who presented their tweaks at NeurIPS. The idea is to fiddle
with a language model’s word preferences. First, the model randomly
assigns a clutch of words it knows to a “green” group, and puts all the others
in a “red” group. Then, when generating a given block of text, the algorithm
loads the dice, raising the probability that it will plump for a green word
instead of one of its red synonyms. Checking for watermarking involves
comparing the proportion of green to red words—though since the technique
is statistical, it is most reliable for longer chunks of writing.
Many methods for watermarking images, meanwhile, involve tweaking the

pixels in subtle ways, such as shifting their colours. The alterations are too
subtle for human observers to notice, but can be picked up by computers.
But cropping an image, rotating it, or even blurring and then resharpening it
can remove such marks.
Another group of researchers at NeurIPS presented a scheme called “Tree-

Ring” watermarking that is designed to be more robust. Diffusion models,
the most advanced type of image-generation software, begin by filling their
digital canvas with random noise, out of which the required picture slowly
emerges. The tree-ring method embeds the watermark not in the finished
picture, but in the noise at the start. If the software that created a picture is
run in reverse, it will reproduce the watermark along with the noise.
Crucially, the technique is less easy to thwart by fiddling with the final
image.

But it is probably not impossible. Watermarkers are in an arms race with
other researchers aiming to defeat their techniques. Another team led by
Hanlin Zhang, Benjamin Edelman and Boaz Barak, all of Harvard
University, presented a method (not yet peer-reviewed) that can, they say,
erase watermarks. It works by adding a dash of new noise, then using a
second, different AI model to remove that noise, which removes the original
watermark in the process. They claim to be able to foil three new text-
watermarking schemes proposed in 2023. In September scientists at the
University of Maryland published a paper (also not yet peer-reviewed)
claiming that none of the current methods of image watermarking—Tree-
Rings included—is foolproof.
Nevertheless, in July 2023 America’s government announced “voluntary

commitments” with several AI firms, including OpenAI and Google, to
boost investment in watermarking research. Having imperfect safeguards is
certainly better than having none (although open-source models, which users
are free to tweak, will be harder to police.) But in the battle between the
fakers and the detectives, it seems that the fakers have the upper hand. ■


technology/2024/01/17/many-ai-researchers-think-fakes-will-become-undetectable

Mass production?
Researchers in China create the first healthy,

cloned rhesus monkey
Their new technique could make the routine cloning of primates easier
Jan 16th 2024 |
PRIMATES RESIST cloning. For some, that is a blessing, since it postpones

the awkward day when somebody proposes cloning people. For others it is a
problem. Medical researchers would find the genetic standardisation which
cloning brings useful, especially if it could be applied to the two species of
monkey—crab-eating and rhesus macaques—that are the mainstay of non-
human-primate research. And if monkeys with clinically interesting genetic
modifications could be mass-produced, it would be even better.
That sort of routine cloning is the goal of Sun Qiang, of the Chinese
Academy of Science’s Institute for Neuroscience, in Shanghai. In 2018 Dr
Sun made headlines by bringing to term and raising two cloned crab-eating

macaques. The following year, he and his group performed the same trick
with five genetically engineered crab-eaters. Now, they have managed it
with a (non-genetically modified) rhesus macaque. As they reported on
January 16th, in Nature Communications, they have in their institute a
healthy, two-year-old cloned male rhesus. And in creating him, they may
have invented a better way of cloning monkeys in bulk.
Cloning, in this context, means taking a cell from the body of an animal,
extracting its nucleus, and inserting it into an unfertilised egg from the same
species that has had its own nucleus removed to make room. That produces a
zygote, which is nurtured through until it becomes a blastocyst, at which
point it is implanted into the uterus of a female of the species. If fortune
smiles upon the effort, the result, a few months later, will be a healthy baby,
genetically identical to the animal that donated the body-cell.
Somatic-cell nuclear transfer, as the trick is officially known, has come on

since it gave the world Dolly, a sheep that, in 1996, became the first
mammal to be cloned from an adult with this method. But success rates are
low. For most species only 1-3% of implants produce a viable new-born.
Even for cattle, where the odds are better, they are still only 5-20%. At the
moment, the only people making money from cloning are companies that
clone pets and horses. If cloning animals is to become a scientifically useful
technology, then better ways of doing it will be needed.
One cause of failure is problems with the placenta—the organ by which a

fetus is attached to the uterine wall, and through which it feeds. The placenta
grows from both maternal cells and cells from a blastocyst’s outer layer, the
trophoblast. The embryo proper, meanwhile, develops from the blastocyst’s
inner cell mass. Dr Sun therefore experimented with the idea of a second and
subsequent transplant—moving the inner cell mass of a cloned blastocyst
into a trophoblast created by a non-cloning technique called intracytoplasmic
sperm injection (ICSI), which is sometimes used for human in vitro
fertilisation.
Dr Sun was encouraged by the discovery that four genes in trophoblast cells
from clones had often had their imprinting removed, while blastocysts
resulting from ICSI did not. Imprinting is a strange phenomenon, which
applies to a handful of mammalian genes, in which a gene’s activity depends

on which parent it was inherited from. A lot of imprinted genes are active in
the placenta, where they are believed to be a molecular manifestation of the
battle of the sexes. Genes bearing the father’s imprint encourage the transfer
of more resources from mother to fetus while those bearing the mother’s
oppose this. Upset that balance by removing the imprints and placentas will
not work properly.
After going down a blind alley involving a variant of somatic-cell nuclear

transfer called electrofusion, which results in cells with four sets of
chromosomes, rather than the usual two, the researchers simply took the
inner cell masses of several cloned blastocysts and injected them into
blastocysts created by ICSI that had had their own inner cell masses
removed. From 11 implants into seven surrogate mothers, they obtained two
pregnancies. One, of twins, failed to come to term. The other gave rise to the
now two-year-old. Not yet an industrial process, but not a bad outcome for
the first outing of a new technique. ■


technology/2024/01/16/researchers-in-china-create-the-first-healthy-cloned-rhesus-
monkey

Culture
The rise of foul-mouthed female slam poets in Africa
In your face :: One of the world’s most sexist countries is a hub for feminist poetry
A tougher sentence for Hitler in 1923 could have changed

history
Diary of a bad year :: A new book looks at a consequential year in German history
A new book looks at the past and future of copyright

Copy wrongs :: Whether it benefits creators or fuels inequality depends on who you ask
How should cinema tackle the horror of the Holocaust?

Back Story :: Two very different new films rise to the challenge—up to a point
Does Las Vegas’s Sphere reveal the future of concerts?

Live music :: The venue is dazzling. But copycats are unlikely to be built soon

In your face
The rise of foul-mouthed female slam poets in

Africa
One of the world’s most sexist countries is a hub for feminist poetry
Jan 12th 2024 | N’DJAMENA
IN A RESTAURANT in N’Djamena, the capital of Chad, a woman in a

white dress picks up a microphone as a keyboardist gently plays. “I wanted
to silence these scars that reminded me how I was broken, bullied, beaten
and cut open alive,” she begins. Épiphanie Nodjikoua Dionrang is not only
trying to entertain the audience but also to express her rage.
In her poem, she addresses all the men who abuse women: “If one day life
allows me, with my vagina I will piss on your face.” Her voice rises, and her
hand gestures between her legs. “Yes,” she repeats, in case the men sipping
sodas missed it, “with my pussy I will piss on your face.”

Young Chadian women do not normally use such coarse, defiant language in
public. Many are scared to speak out at all. Chad, a desert-covered African
country, is poorer than Afghanistan and nearly as sexist. Half of Chadian
men and almost three-quarters of women think it acceptable for husbands to
beat their wives sometimes for such transgressions as arguing or going out
without asking, according to a survey in 2015. The same poll found that
nearly one in three Chadian women had experienced physical or sexual
violence from a partner at some point. A quarter of girls marry before they
turn 15.
Chad is not an easy place for men either. Dissidents are routinely arrested
and tortured. Mahamat Idriss Déby, the president, is an autocrat who seized
power in 2021 after his predecessor, who was also his father, was shot dead
while fighting rebels. But grim as life is for everyone, it is especially bad for
women.
Far fewer women than men are visible in the dusty streets of Chadian cities.
Men whizz around on motorbikes and throng streetside shops. Many women
are stuck at home. If they go out, they are expected to conform. Roukhaya
Mahmat Traoré, a soft-spoken 26-year-old, recalls that when she stepped
into the street after shaving her head for health reasons, a man “immediately
called me a prostitute”.
Ms Nodjikoua Dionrang, known on stage as Fanny’s D’Or, answers

patriarchy with poetry—sometimes “very, very vulgar” poetry, as she puts it.
“There are no taboos for me,” she says as she wolfs down fried plantain at a
café, her huge Africa-shaped earrings swaying vigorously. “We must say
things as they are.”
She is a slam poet, a practitioner of an art form that originated in Chicago in

the 1980s and is now conquering Francophone Africa. Slammers recite their
rhymes competitively in front of lively, demanding audiences. For young
people, it is a way to speak truths that might normally be silenced. For
women, it is liberating.
Ms Nodjikoua Dionrang first saw slam in 2014 when she was a student in
Niger. She was moved by the female poets, known as slameuses: “It was as
if I was them.” At the time, N’Djamena was fast becoming a hub of slam

poetry on the continent. “Chad was taking the lead,” says Mirjam de Bruijn
of Leiden University. In 2018 the city hosted the inaugural African Cup of
Slam Poetry, with entrants from 20 countries.
Slam’s surprising strength in this conservative Muslim country owes much

to Didier Lalaye, known as Croquemort. One of his poems, “Cousin de
l’UE” (Cousin of the European Union), made slam popular almost overnight.
In it, he rails against European ignorance of Africa. “They think that our
fathers are all polygamous; that our grandfathers are cannibals,” he says.
“They have Treblinka, the Gestapo and the Nazis. But they adore the
genocide of the Tutsis and Hutus.”
In 2013 Croquemort founded an annual festival called N’Djam s’enflamme

en Slam (roughly: N’Djamena is burning with Slam). Another collaborator,
Gabriel Kada, known as Bokal, helped Chadian slammers set their poems to
music, a Chadian twist on the genre’s origins. Slam festivals, complete with
light shows and live music, sound like literary rap concerts. The audience
cheers, shouts and applauds wildly as poets drop lyrics.
Most slam fans are young urbanites, including young women keen to push
past society’s conservative expectations. The slightly literary bent helps
reassure at least some wary parents that it is a passion worth indulging. Not
all slam is angry—at times it is playful and funny—but it can often have the
fury of an opposition rally.
Croquemort sought female participants for the festival. In 2016 Ms

Nodjikoua Dionrang signed up, performing a poem about surviving a near-
fatal bout of appendicitis. She was the first female Chadian slam poet to
compete. “I came third,” she smiles, “and, as I was the only woman, I was
immediately declared the number one slameuse in Chad!” She quickly
became a fixture on the Chadian slam scene.
At first she was not radical. That changed in 2020, when a friend in Togo
stopped replying to her messages. Eventually she found out why. “She had
been kidnapped, raped and killed,” she says. The police never found the
perpetrator. “That was the biggest turning-point in my life,” she says. “That
made me rage.” Many women “suffer this way. And nothing is done.”

Ms Nodjikoua Dionrang’s slamming became overtly feminist. “Tell me, is
being born a woman a curse?” she asks in one performance. “Can we live,
constantly dreading the evening blows?” Her words became angrier, too.
“Let all this stop, otherwise we will take up our axes and our machetes
against these cowards,” she spits, her voice rising.
Around this time she got to know Ms Mahmat Traoré. When asked what
made her a feminist, Ms Mahmat Traoré takes a slow, deep breath. “I was
abused by my older brother and my cousin for six years,” she says. Her
brother told her that God approved of what he was doing. Ms Mahmat
Traoré finds the idea absurd. “If God really existed, why was he allowing all
this to happen to me?” she asks.
In 2020 Ms Mahmat Traoré and Ms Nodjikoua Dionrang became activists as

well as artists. They founded the Chadian Women’s Rights League, which
campaigns against violence against women. It helps victims get medical and
legal aid and publicly denounces alleged attackers. “I’ve had so many
problems with the authorities,” says Ms Nodjikoua Dionrang. Officials at
Chad’s ministry for women, who in theory have the same goals, “do not
want me to say [blunt] things”.
She is not the only slameuse demanding a better deal for women. Many have
suffered abuse. Ommel Gwladice Djiraibe, known as Djemi, began
performing in public in 2018. The next year she appeared at “Slam et Eve”, a
festival devoted to women performers. Her poems are bracing: “The one
who was in charge of my education took it upon himself to rob me of my
innocence; he enrolled me very early in the course of, ‘Come, I pee between
your legs’.” She says that “slam is as therapeutic for the slameuse as it is for
the listener.”

Slam poets also test the limits of what conservative Chadians and the
paranoid government will stomach. Many criticise female poets for talking
about sex or abuse. “When they say ‘It’s not done for a girl’, that pisses me
off,” says Djemi. She adds that many men also lust after slameuses who
speak frankly about sex: “Everyone tries to have sex with you.” Ms
Nodjikoua Dionrang provokes extreme reactions. “Be careful. One day we
are going to kill you,” she is often told on social media. On one occasion she
saw a car full of men tracking her as she took a motorbike taxi home.
“I’m not afraid of death,” she says. On stage, she throws her critics’ taunts
back at them: “Yes, I am the one you called a dirty slut, less than nothing,
easy woman, a prostitute and above all—and above all—whore,” she says,
spitting the final French word, pute. Many women thank her for speaking up.
Fighting words
Pressure from the government has worsened since Mr Déby took power in
2021, says Croquemort. Financial supporters of slam festivals sometimes
pull out. Permits for events are often denied. Radio stations refuse to play
poets’ tracks. Self-censorship is on the increase, too, adds Croquemort. At
other times the government tries to co-opt slam poets, inviting them to
perform at official events but restricting what they can say.
In October 2022 the regime delayed elections and brutally cracked down on
the resulting protests, killing at least 128 people. Outspoken artists were
targeted. “It was truly a door-to-door hunt,” says Croquemort. “It was clear
at that moment that I could not be in Chad and express myself,” he says.
He is now based in the Netherlands. With elections finally due in Chad in

October, he worries about more repression. “No independent voice will be
tolerated,” he says. Djemi, too, lives abroad: “by choice” one would not live
in Chad, she says. Ms Nodjikoua Dionrang still writes poetry but, swept up
in the league’s battles, she performs less often now.
Chadian slam lives on all the same. After a long pause precipitated by the
covid-19 pandemic, N’Djam s’enflamme en Slam was back in style in
November. Slam still helps young people “become” and find an identity,
says Ms de Bruijn.

A dozen teenage Chadians gather for their debut slam performances after a
three-day workshop. As the hall fills up, the young slammers shuffle around,
eyes downcast, speaking little. Even as they are called up, their heads remain
bowed.
And then, suddenly, magic. Eyes light up, jaws jut forward and voices ring
out. “Je suis venue; j’ai vu; j’ai vécu; j’ai été déçue,” begins one young
slameuse, evoking the words of Julius Caesar to decry Chadian and African
politics: “I came; I saw; I lived; I was disappointed.”
Young female slammers continue to shatter taboos. “STDs spread

unchecked; no education, therefore no protection, that’s the thing,” declares
Louange, a slameuse. “Sexual suffering that has no cure. Education is the
key, but for her the doors are locked; an uneducated girl, condemned to
break down,” she cries to applause. From the audience, Ms Nodjikoua
Dionrang watches proudly. ■
For more on the latest books, films, TV shows, albums and controversies,
sign up to Plot Twist, our weekly subscriber-only newsletter

https://www.economist.com/culture/2024/01/12/the-rise-of-foul-mouthed-female-slam-
poets-in-africa

Diary of a bad year
A tougher sentence for Hitler in 1923 could have

changed history
A new book looks at a consequential year in German history
Jan 18th 2024 |
1923. By Mark Jones. Basic Books; 432 pages; $32 and £25
THE YOUNG murderers were out for more than blood. By gunning down
Walter Rathenau, the Jewish foreign minister, in June 1922, they were
hoping to spark a crisis that would lead to the destruction of the Weimar
Republic, the German government formed after the first world war. The
heavily armed, virulently antisemitic terrorist network that Rathenau’s killers
belonged to, called the Organisation Consul, wanted to rise up and destroy
the republic, avenging Germany’s defeat in 1918 and subsequent
humiliations.

Rathenau’s death briefly became a rallying point for the republic, with
people taking to the streets to oppose violence and the depleted German
army demonstrating loyalty to the country’s young democratic institutions.
But the trial of 13 men who had been involved in Rathenau’s murder ended
in laughably lenient sentences. As Mark Jones, a historian, argues, it was a
political and judicial failure that would have profound consequences. His
book, “1923”, is a gripping narrative of the extraordinary year in which
Weimar Germany was struck by successive blows, though it somehow
survived for another ten years.
As 1923 dawned, much that could go wrong had. A bad harvest was a boon
to already soaring inflation. In less than six months there had been a 24-fold
drop in the value of the mark against the dollar, the result of Germany
having funded its war effort almost entirely with debt. Instead, after the war,
Germany had to pay substantial reparations, with most owed to France.
Germany’s unwillingness or inability to meet its liabilities led the French

prime minister, Raymond Poincaré, to invade and occupy the industrial Ruhr
in January. This was a calamity for almost every German other than potential
putschists and contributed to the hyperinflation that rocked the country. By
December 1923 a dollar was worth 4.2trn marks.
The occupation of the Ruhr and its consequences provided the small but
growing Nazi party, led by a charismatic agitator, Adolf Hitler, with the
opportunity to call repeatedly for a violent “masculine” response and to
propagate the “stab in the back” myth about the treacherous politicians who
had sought a truce in 1918. By the autumn Hitler, who was inspired by
Benito Mussolini’s march on Rome the previous year, was convinced that
the “fascist moment” had come—and with it the opportunity to overthrow
the government.
However, the “Beer Hall putsch”, as the coup attempt came to be known,
failed. Hitler realised belatedly that Gustav Ritter von Kahr, the right-wing
Bavarian state commissioner general who seized emergency powers and was
also plotting the overthrow of the Weimar government, was using him. Kahr
turned on Hitler, who lacked the backing of local army units and the state
police and was too weak to prevail. A brief fight in the city centre with the
police resulted in the Nazis fleeing, leaving behind 13 dead comrades.

Despite Hitler’s high treason and the violence he unleashed against political
opponents, Jews and the police (four of whom were killed), he was
sentenced to a mere five years in prison. He was released after only eight
months, during which he wrote the first volume of his manifesto and
autobiography, “Mein Kampf”. Mr Jones surmises that Hitler’s threats and
knowledge of the anti-republican conspiracies in Bavaria led by Kahr helped
him cut a deal. The trial gave Hitler a platform that turned him into a
national figure.
Hitler had also learned a valuable lesson: to take power and harness the
forces of the army and state he must first achieve electoral success. This is
what he would achieve nine years later. Mr Jones concludes that the
unwillingness to try Hitler at the Court for the Protection of the Republic,
where he and other Nazis would have faced far more severe sanctions,
“turned out to be one of the most costly errors in world history”. ■

https://www.economist.com/culture/2024/01/18/a-tougher-sentence-for-hitler-in-1923-
could-have-changed-history

Copy wrongs

A new book looks at the past and future of
copyright
Whether it benefits creators or fuels inequality depends on who you ask
Jan 18th 2024 |
Who Owns This Sentence? By David Bellos and Alexandre Montagu. W.W.
Norton; 384 pages; $28.99. Mountain Leopard Press; £20
IF WALT DISNEY were still alive, he would be dismayed at the new film
role given to his signature character, Mickey Mouse, as a slasher hunting
teenagers in an old arcade. The trailer for “Mickey’s Mouse Trap” was
released on January 1st. That is the day the copyright of “Steamboat Willie”,
the short film that introduced Mickey Mouse’s character in 1928, expired.
This early version of Mickey is now in the public domain.
Even before the arrival of a murderous mouse, the field of copyright has
been full of dramatic turns, as a new book, “Who Owns This Sentence?”,
recounts. That is because “copyright is an edifice of words resting on a long

and complicated string of metaphors and double meanings,” write the
authors David Bellos, a professor at Princeton, and Alexandre Montagu, a
lawyer. Over centuries artists, authors, lobbyists, publishers and public
officials have defined and redefined the meaning of copyright, with debate
and legal changes happening beyond the public eye.
Initially an author’s right to their creative output was a question of honour.

Hermodorus, a student of Plato, published notes he took from Plato’s
lectures without permission, which incensed the philosopher. Privileges, a
precursor to copyright, emerged in the 15th century in Venice, where
authorities gave skilled craftsmen a seven-year monopoly over luxury goods
they produced. Among those who profited from Venice’s system was
Johannes of Speyer, an apprentice of Johannes Gutenberg, maker of the
printing press.
Authors and artists did not always benefit. Powerful publishing syndicates
treated books like property and profited from selling the works of Chaucer,
Milton, Shakespeare and others. Britain’s Statute of Anne, the first copyright
law regulated by government and the courts instead of private parties, came
into effect in 1710 and gave authors rights to their works for a limited time
(though booksellers and publishers could buy the books before the copyright
expired and claim to own the rights perpetually). But it was a decision by the
House of Lords in 1774, reasserting term limits for copyrighted works, that
fully established copyright in Britain and served as the beginning of modern
copyright law in the West.
Mr Bellos and Mr Montagu argue that copyright has gone from a right that
favours creators to something more akin to a privilege for the rich and
powerful. Two major legal developments led to this. First, in the early 1900s
a skirmish over printing posters for a travelling circus redefined the meaning
of authorship to include employers of artists. In other words, companies
could own copyrights. Second, in 1976 the meaning of literary works was
adjusted so that computer software was included.
Intellectual property is now among America’s chief exports. About a third of

the 50 richest people in the world derive their fortunes—in whole or in part
—from copyrighted goods. Some creators have benefited handsomely
(Bruce Springsteen, for example, sold his music catalogue to Sony for a

reported $550m in 2021). But many have not. “Copyright is the elephant in
the room when it comes to understanding the origins of the wealth gap in
modern societies,” the authors write.
Today the newest frontier of copyright is generative AI, which allows people
to create images, prose and sounds based on prompts. Artists have called AI
“vampirical” because it scrapes pre-existing content for training.
Some writers and artists, such as Sarah Andersen, a cartoonist, have taken
AI giants to court over copyright infringement. “We’re not necessarily
fighting for AI to go away, but if our work is going to be involved in these
systems, we would like to be credited,” Ms Andersen says. She also argues
that artists should be compensated and be able to opt out of having their
work used to train AI models.
Publishers are in legal tussles, too, including the New York Times, which in
December sued OpenAI (the maker of ChatGPT) and Microsoft for
copyright infringement, after talks between the news publisher and tech
companies failed. Others are more optimistic. Some news groups, including
the Associated Press, have signed deals to share story archives with OpenAI.
“Who Owns This Sentence?” does not predict how the future is likely to
unfold. That is because no one is quite sure. “Things are up in the air,”
Pamela Samuelson, a professor at the University of California, Berkeley
School of Law tells The Economist. Copyright law could slow down the
work of AI companies. Or AI could upend the current copyright system and
claim new victims, like Mickey’s new incarnation does on his rampage. ■

https://www.economist.com/culture/2024/01/18/a-new-book-looks-at-the-past-and-future-
of-copyright

Back Story
How should cinema tackle the horror of the

Holocaust?
Two very different new films rise to the challenge—up to a point
Jan 16th 2024 |
A BABY IS crying, but whose: the one in the nursery or someone else’s
child, beyond the garden wall topped with barbed wire? A dog is barking,
but is it the family pet or a far more menacing animal? In “The Zone of
Interest” (pictured), an ambitious new film by Jonathan Glazer, the nursery
and the dog belong to Rudolf Höss (played by Christian Friedel), the
commandant of Auschwitz. The wall divides his family home from the
adjacent concentration camp.
Every director who grapples with the Holocaust—from Mr Glazer to Steven

Spielberg, whose landmark hit “Schindler’s List” came out 30 years ago—
faces a daunting, possibly insuperable challenge. They must attempt to

convey the horror while knowing that their efforts are bound to be
inadequate, and risk seeming disrespectful of the suffering. Different as they
are in other ways, “The Zone of Interest” and another new release, “One
Life”, offer similar solutions. Both succeed—up to a point.
“The Zone of Interest” takes its theme of domestic life at Auschwitz (though
little else) from Martin Amis’s novel of the same name. It is less a story than
a map of a moral void. In the shadow of the crematoria Rudolf, his wife
Hedwig (Sandra Hüller) and their five children live “how we dreamed we
would”. They enjoy picnics, parties in the garden, looted clothes and bucolic
swims in rivers that are only sometimes awash with human remains. Rudolf
is sad to be transferred away, then thrilled to be sent back to Auschwitz to
oversee the murder of the Jews of Hungary.
Ghostly inmates tiptoe into this warped idyll to wash blood from his boots or
spread ash on the flower beds. Terrible sounds—gunshots and heinous
commands as well as barks and cries—drift over the barbed wire. But
midway through the film you realise, with a complicated sort of relief, that
the camera will not be going over the wall to show the barbarity first-hand.
Watchtowers, the steam from trains, belching chimneys: the visual shorthand
of the Holocaust is enough, the film seems to say.
Whereas “The Zone of Interest” is arty (and an Oscar contender), “One Life”
is as unflashy as its protagonist. He is not a mass-murderer but a rescuer:
Nicholas Winton, a self-effacing stockbroker who helped spirit 669 mostly
Jewish children from Prague to Britain on the eve of war. He embodies what
you might call the banality of goodness, his feat requiring as much dogged
paperwork as derring-do. James Hawes, the director, uses a dual time-frame.
In sequences set in the 1930s Winton is played by Johnny Flynn, in the
1980s by Anthony Hopkins, wonderfully.
The climax restages Winton’s genuine appearance on “That’s Life!”, a

British TV show, in 1988, which brought him together with some of the
people he saved. Here is another big difference between these films. Like
many feted Holocaust movies—not just “Schindler’s List” but “The Pianist”
and the facile “Life is Beautiful”—“One Life” succumbs to cinema’s bias for
redemption over desolation; for a happy ending, or at least survival, over
oblivion. “The Zone of Interest” does not.

In the matter of the horror, though, the films are alike in their restraint. The
most heart-rending scenes in “One Life” involve desperate partings on train
platforms or old photos of lost children. There is vanishingly little violence.
The two films stand in tactful contrast to others that intrude into the gas
chambers. Back Story’s reservation about them is as much a question of
timing as content. Are such oblique tales an apt way to dramatise the
Holocaust now?
Its place in Western culture has become vexed. Commemorated in museums,

memorials and memoirs, it can often seem inescapable. At the same time, as
the Holocaust slips out of living memory it is widely misrepresented, even
forgotten. It is a common touchstone in political disputes, not least for voices
on both sides in the tragedy of Israel and Gaza. On the web it is material for
risqué memes. According to a recent poll, one in five young Americans think
the Holocaust is a myth.
In this context, the urgent job of storytellers is to remember—to insist on—

the victims, not just the perpetrators or heroes. The recent film which did
that best was “Three Minutes: A Lengthening”, a documentary that boasted
neither stars nor avant-garde effects. It aimed to identify the people in a
home-movie clip from a small Polish town in 1938. Almost all the gap-
toothed Jewish boys and smiling girls soon perished, but the film does not
dwell on that fate. What it mourns is not the horror, but the loss.■
Read more from Back Story, our column on culture:

A cultural guide to new year’s resolutions (Dec 30th)
Holding out for a hero in 2024 (Dec 20th)
Ridley Scott’s “Napoleon” cuts the emperor down to size (Nov 15th)
Also: How the Back Story column got its name.

https://www.economist.com/culture/2024/01/16/how-should-cinema-tackle-the-horror-of-
the-holocaust

Live music
Does Las Vegas’s Sphere reveal the future of

concerts?
The venue is dazzling. But copycats are unlikely to be built soon
Jan 12th 2024 | LAS VEGAS
NESTLED BETWEEN hotels and conference centres, a short walk from the
Las Vegas strip, is a giant, wide-eyed emoji. Sometimes it is an enormous,
hyperrealistic eyeball, a basketball or a whorl of flames. The Sphere, a
remarkable new concert venue, is 366 feet (110 metres) tall and 516 wide; an
LED screen spanning almost 600,000 square feet covers the exterior.
Inside, enveloping the 17,500 seats, is another vast, ultra-high-resolution

screen. This pleasuredome offers an experience unlike any other. It also
raises questions about the future of live entertainment.

The high-tech arena was opened in September by U2, who remain in
residence until March. The Irish band has a history of innovative concert
design as well as corporate ventures, including a long partnership with
Apple. Perhaps just as important, U2 is loved by middle-aged rock fans, who
form the bulk of concertgoers in America and might shell out for a ticket.
(Prices start at $140 and go up to $1,500.)
A celebration of “Achtung Baby”, an album released in 1991, U2’s show is

an overwhelming phantasmagoria. The band plays on a stage shaped like a
turntable while work by artists including Es Devlin and John Gerrard
appears on the vaulting screen. During “Even Better Than the Real Thing”,
there are animations of slot machines and Elvis kitsch. For “Where the
Streets Have No Name”, the crowd is transported into the blinding daylight
of the high desert. During “With Or Without You” the ceiling teems with
images of endangered local species such as the leaf-nosed bat. “It’s a show
that’s about the venue that it’s in,” says Willie Williams, U2’s longtime
production designer. “It’s about us all going to experience the venue.”
From one angle, the Sphere represents a major development in an existing

trend of the arts becoming more immersive. Exhibitions that turn the
paintings of Monet or Van Gogh into interactive, room-encompassing

installations have proliferated in recent years, as have immersive theatre
productions. Virtual-reality technology has improved significantly.
From another angle, it is part of the evolution of the modern rock concert,
which since the 1960s has combined light and sound to transport fans into
another dimension. At a show your correspondent attended at the Sphere in
October, there were moments when the experience was transcendent. (There
is a quiet room, filled with bean bags, for the over-stimulated.) Yet viewers
still took their eyes off the big screen to reach for the smaller ones in their
pockets. At times the band seemed like an expensive soundtrack to the bright
lights.
Is this the future of the concert? In the short term, no. The sheer cost of the
Sphere—$2.3bn—means that the model cannot be easily reproduced. Its
ostentation is also a barrier: Sadiq Khan, the mayor of London, recently
vetoed a sister Sphere in the city, calling it “bulky, unduly dominant and
incongruous”. Sphere Entertainment Company, the owner, hopes to build
other iterations and is in “serious” talks for an arena in Abu Dhabi. But
negotiations regarding Spheres in Saudi Arabia and South Korea have
stalled.
Some artists and promoters are said to be wary of developing shows that
cannot be taken on tour to other, standard arenas and of letting the venue
outshine the music. For now, at least, what happens in Vegas is staying there.
The Sphere does mark a bullish bet on the future of live music, however. The
biggest acts have long had to make do with sports stadiums with dodgy
acoustics, but this is a capacious, purpose-built venue. There seems to be
plenty of demand for lavish productions by the biggest hitmakers: witness
the billions of dollars in revenue made by Beyoncé’s “Renaissance” and
Taylor Swift’s “Eras” tours.
According to Luminate, an analytics firm, in 2023 consumers spent 91%

more on live music events than the year before and attended 32% more
concerts. Goldman Sachs predicts the market for live music will grow by 5%
this year to reach nearly $40bn annually by 2030.

This growth is not just driven by pent-up demand from the pandemic.
Youngsters, who prefer to spend their money on experiences than on items,
consider concerts good value, even when they are pricey. “People still want
to have that experience of liveness,” says Steve Waksman, a concert
historian, regardless of whether, as at the Sphere, it is “mediated” through
screens. To some, the Sphere may be more bewildering than beautiful, but
one thing is clear: the future of concerts is as rosy as Bono’s trademark
glasses. ■

https://www.economist.com/culture/2024/01/12/does-las-vegass-sphere-reveal-the-
future-of-concerts

Economic & financial indicators

Economic data, commodities and markets
Indicators ::

Indicators
Economic data, commodities and markets

Jan 18th 2024 |

This article was downloaded by calibre from https://www.economist.com/economic-and-
financial-indicators/2024/01/18/economic-data-commodities-and-markets

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Obituary
Elmore Nickleberry pinned his hopes to Martin Luther
King
From boys to men :: One of the last striking sanitation workers of Memphis died on December
30th, aged 92
| Main menu | Previous section |

From boys to men
Elmore Nickleberry pinned his hopes to Martin

Luther King
One of the last striking sanitation workers of Memphis died on December
30th, aged 92
Jan 18th 2024 |
THAT EVENING of April 3rd 1968, round Mason Temple in Memphis,

Tennessee, a mighty storm was blowing. The tin roof banged in the rain, and
the rafters blew against each other. Yet the vast hall was packed, because
people had come to hear another mighty voice, Martin Luther King’s,
thundering out among them. Somewhere in that crowd was Elmore
Nickleberry, wiry and neat, listening hard. What he heard was a great man
who could change things, where hundreds of black Memphians could not.
Mr Nickleberry was one of 1,300 sanitation workers in the city who had
gone on strike at the start of February. It was sparked off by the dreadful

accident that had happened to two colleagues, Echol Cole and Robert
Walker, nice fellas, in a storm much like this. They were hiding from the rain
in the back of the garbage truck when suddenly the compactor got going and
crushed them both to death. Because they were only hourly workers, not full
employees, the city would not pay proper compensation to their families.
This, added to a lot else, prompted the walk-out, which in April was still
going on. Mayor Henry Loeb refused to budge or to recognise the union they
had formed, an offshoot of the American Federation of State, County and
Municipal Employees (AFSCME). Instead, he ordered “my Negroes” to get
back to work.
Work was tough. Every morning during that time Mr Nickleberry would get
up at 4am, walk the two miles to the depot, and spend his days humping
number-three tubs in and out of people’s backyards. The tubs, loaded with
loose waste, were heavy, so he didn’t have much choice but to tote them on
his head; they were old and leaky, so maggots and foul stuff ran down his
face. They were given no overshoes, uniforms or rain-suits, and could not
use the depot’s bathroom or the shower, being black men. By the end of the
day he stank so bad that he couldn’t ride the bus, but walked home, where
his wife Peggy would make him take off his clothes in the back yard, put on
a housecoat and take a shower before he did anything. Peggy, as a proud
house lady, wasn’t about to welcome some hobo to her kitchen table.
This was not the future he’d imagined for himself. When he was given
honourable discharge from the army, where he served in Korea driving a
GMC 6x6 truck and rose to corporal, he thought he might get a job at
Firestone, the tyre company. He was 21, and eager to work hard. But there
weren’t too many jobs in Memphis for black men. Eventually he took to
standing outside the gates of the parking lot for sanitation trucks, until a
white man inside said “You looking for a job, boy? Come on in.” The next
day, he started.
By 1968 his pay was $1.65 an hour for a nine-hour day. He and Peggy
already had three children, and you couldn’t feed a family on that. Fully
40% of the sanitation workers were on welfare and food stamps. So he also
became a hustler, as his daddy was, in the good sense of doing any job he
could find and could fit into his hours. Sometimes he picked cotton,
sometimes chopped wood or pruned trees. (In the elegant white parts of the

city, homeowners assumed that he could tidy their gardens as well as collect
the trash.) School had been no big thing for him, and he left after sixth
grade; he learned instead to be flexible. His father had managed to provide
for 17 children, but in that respect at least he didn’t follow him. He stopped
at seven.
The first strike march, down Main Street, was marvellous until the police
messed it up, spraying Mace and whupping round with batons, yelling “Get
off the sidewalk, boy!” Some people had dogs sicked on them. But it was
that word “boy” that irked him more than anything. “Do this boy, over here
boy.” He’d tell them, he was no boy. As a sanitation worker he also heard
“Hey, garbage man!” as if he was garbage himself. But a clever young black
official at AFSCME, Bill Lucy, thought up a slogan for the strikers that said
simply, “I am a Man”. By late March they could march silently and in single
file, just holding up that message.
Though they still seemed to be getting nowhere, and the mayor kept digging
in, they had been noticed well away from Memphis. The union backed them
more strongly, and Dr King decided to make their cause part of his Poor
People’s Campaign to elevate and house the poorest. On March 28th Mr
Nickleberry was overjoyed to see America’s most inspiring black preacher
linking arms at the head of a march on Beale Street, Memphis’s famous
home of the blues. But again, when a few black youths on the sidelines
broke windows and looted shops, the police pounced with their batons and
Mace. A young man got killed by a shotgun, and he himself was clubbed so
hard on his arm that he fled down to the strong, reassuring Mississippi river.
But Dr King had planned another march for April 8th, and on the 3rd at
Mason Temple the sanitation workers with their supporters squeezed in to
hear him speak.
Mr Nickleberry never forgot that day. The speech was all about the change
black people could make, even when they felt helpless. They could make a
difference—he could make a difference—simply by not drinking Coca-Cola
and not eating Wonder Bread, both made by companies with unfair hiring
policies. The end, though, was the most extraordinary part, where Dr King
spoke with a real voice of power: when he talked of letting justice roll down
like waters, and said he had been to the mountaintop and seen the promised

land. It was as if he knew something was going to happen, because the next
day he was shot at the Lorraine Motel.
The world’s eyes turned to Memphis then. Within a month, the shamed city
agreed to give Mr Nickleberry and the others a fair amount of what they had
been asking for. He got 15 cents more an hour, shoes, a uniform and a depot
bathroom he was allowed to use. Even the trucks were new. He kept working
there well into his 80s, partly needing the money, but confident that he was
respected now. It was Dr King who had achieved this, and he felt tears ever
afterwards when he thought of that. Someone had come from out of town to
fight for them; thanks to him, the kicked-around “boys” had become men.
And more than men: because, with him, they had climbed the mountain and
glimpsed the promised land. ■

https://www.economist.com/obituary/2024/01/18/elmore-nickleberry-pinned-his-hopes-to-
martin-luther-king

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The world this week

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The world this week

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The world this week

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Israel offered its defence against South Africa’s accusation at the

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Britain recorded an unexpected rise in inflation. The annual rate rose to 4%

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The revolution in chipmaking spurred another big takeover, as Synopsys,

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The world this week

Dig deeper into the subject of this week’s cartoon:

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Narendra Modi’s illiberalism may imperil India’s economic

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Donald Trump is winning. Business, beware

Jan 18th 2024 |

WHEN DONALD TRUMP slunk out of the White House in 2021,

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What’s more, Trump enthusiasts in the C-suite have plenty of grumbles

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