Economist, Vol-357, Issue no.-8191-8202

1811 Pages·2000·435.7 MB·

SRI LANKA'S
pages 19 and 23-26
conomist
THE FUTURE
OF PHYSICS
OCTOBER 7TH - IJTH 2000
pages 103-105
1486 02674 ?'
Behind every successful visionary
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Issued by Goldman Sachs International, regulated by the Securities and Futures Authority. ©Goldman, Sachs & Co., 2000. All rights reserved.
- . -oR
c OCTOBER 7TH 2000
ETTERS BUSINESS
4 On child labour, Japanese financial 75 Silicon Valley feels the strain
reform, Chile, fuel taxes
76. pccw in the doldrums
LEADERS 81 Corporate governance in France
15 The road to war? 81 Red tape in Russia
16 Dilemmas from Denmark 82 Ford’s European problems
17 Trust and antitrust 82 Something rotten at Apple
18 Shoving Milosevic 85 Microsoft buys a struggling rival
18 On to Winston-Salem 86 Face value: Paul Allaire, Xerox’s
19 Sri Lanka votes and hopes embattled boss
20 New media, old message
SPECIAL
SPECIAL 87 Antitrust resurgent
23 Sri Lanka’s forgotten struggle 93 ...in Europe too
NEWS SUMMARIES
ON THE CC FINANCE AND ECONOMICS
29 Politics this week
97 Is inflation being wrongly measured?
The events of the past week have killed
30 Business this week
hopes of an early agreement on East Jerusa­ 98 A controversial Wall Street sacking
ASIA lem and of the broader deal between Israel 98 China’s wto wobble
31 Signs of decisiveness in Indonesia and Palestine that had lately seemed within 99 Bad news about share buybacks
reach. The peace process looks in ruins, and
32 More defiance by the Falun Gong 99 Fund managers under fire
there may be worse violence to come: leader,
32 Japan may allow foreigners a vote page 15; what sparked the fighting, page 53; too Our tips for the economics Nobel prize
32 Corruption convictions in India Arabs united again, page 54 102 Economics focus: The World Bank
35 Saving Cambodia’s children replies, by invitation
35 Taiwan changes prime ministers EUROPE
36 The real Olympic winners 61 Serbia on the brink SCIENCE AND TECHNOLOGY
36 Soap drama in Kazakhstan 62 The eu after the Danish no 103 Beyond the standard model: three
pages on the future of physics
65 Denmark without the euro
UNITED STATES
65 A little-used Nordic bridge
37 The first presidential debate BOOKS ANDARTS
38 On the trail 66 Sweden delays its euro vote 107 Mary McCarthy and Sylvia Plath
39 Making sense of the health plans 66 A new grand duke for Luxembourg 108 Maria Callas and Aristotle Onassis
40 Genes and babies 67 Italy’s generous budget 108 Keeping classical music popular
40 Chuck Robb fights for survival 67 Greece’s Olympic worry 111 New novel by Ireland’s John Banville
4t A seat up for grabs in Silicon Valley 68 Charlemagne: Jacques Chirac, France’s 111 New fiction from Louis Begley
41 The battle of the Hamptons changeable president 112 Giles MacDonogh on the last kaiser
42 Chicago’s upmarket newscast 112 BrandingSir Richard Branson
44 Lexington: Partisanship BRITAIN 113 America’s Supreme Court
69 Tories on the rebound
THEAMERICAS
70 Parties and their ad agencies OBITUARY
49 Argentina’s lingering recession
70 The mad-cow inquiry 115 Pierre Trudeau, Canada’s stylish prime
50 Panama and Colombia’s wars
minister
50 Brazil’s municipal vote 71 The Krays and the East End
52 Church and state in Mexico 72 Bagehot: The race card
INDICATORS
132 Economic and financial statistics on 15
INTERNATIONAL SURVEY; E-ENTERTAINMENT
developed countries, plus closer looks
53 The Palestinian eruption The digital revolution in entertainment was at coffee, economic forecasts, and
54 Other Arabs in support expected to sweep all before it. But so far it foreign reserves
55 Child labour in Morocco has proved somewhere between a disap­
55 Congo-Brazzaville’s recovery pointment and a disaster, says Emma Dun­ 134 Economic and financial statistics on 25
emerging economies, plus a closer look
can, after page 68
56 Angola and its new friend, America at cross-border mergers
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VOLUME 357 NUMBER 8 19 1
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The Economist, AsStJahieSf Street, tondotvswftA iho: fas : 020 7839 2968 e-m.au : lettersteoflomistcom
Children at work not clear that especially poor and institutions regarding the length shown), and blocked the entranj
marginalised children, who most of the time horizons of their as­ of a British band, Iron Maiden, <
Sir—Your article on child labour need help in attending school, are sets, the fsa does not intend to leging that it was “satanic”. Ar|
(Economics focus, September likely to enjoy the higher incomes postpone introducing new ac­ Chile has been a “democracy”
16th) is so oriented toward econ­ needed to pay back the loans. counting standards in this sector. the past it years.
omic theory rather than empirical This is because of labour-market As for the entry of non-banks Zagreb Tomas Green]
evidence that it misses some distortions and the extremely into the banking business, we be­
points of central importance. poor schooling generally avail­ lieve that a wider range of partici­
Fuelled again
Contrary to apparent common able to the poor, there is consid­ pants in the banking business will
sense, there is no evidence yet erable evidence that in the poorer enhance financial innovation, re­
that excluding all children from rural and urban-periphery com­ vitalise the financial system and Sir—Your leader strongly op
economic participation would munities of many countries no benefit consumers. To this end, poses the current level of Euro]
necessarily cause adult wages to more than a quarter of children comprehensive and specific oper­ pean petrol taxes, saying that
rise. Labour markets are not per­ completing primary school are ational guidelines for licensing they control neither congestion!
fectly competitive and in many likely to be functionally literate. In non-finandal entities, including nor pollution and the only good
developing countries non-econ- such cases there is little private or e-finance, have recently been they do is raise money (“Burning
omic barriers such as caste, gen­ social return on the sunk educa­ published. issue”, September 23rd).
der, ethnicity, religious affiliation tional costs. Second, nobody has Finally, the fsa is in no way However, high petrol taxes
and socio-economic class so seri­ come up with a realistic mecha­ opposed to capital-gains tax re­ helped European countries to be
ously restrict adult employment nism for collecting the repay­ form and is proposing a system come less dependent on oil im
and income that the work of ch il­ ments on loans in the face of the that would deepen the securities ports not by discouraging driving
dren has little impact. Also, chil­ public-sector inefficiency, cor­ market by encouraging the par­ much in the short run, but in the
dren often arc used primarily as ruption and incompetence that ticipation of individual investors long run by encouraging the pro
reserves when adult labour is tends to characterise the countries while ensuring tax neutrality duction of more enetgy-efficien
scarce, such as during agricultural where such loans are most among financial products. The cars. Europe’s problem is that pet
■'harvest seasons. needed. fsa is committed to building a rol taxes were not raised as mud
More interestingly, many fam­ Elk Grove, healthy and vital financial system as they should have been during
ily enterprises, such as farms and California William Myers in Japan and market liberalisa­ the 1990s. More economical cars
small shops, typically depend for tion is an important means to would make the current oil-price
their economic viability on family achieve this goal. Although we shock much less painful.
labour, in which case even the in­ Appetite for reform have many reforms already un­ Berlin Sebastian Duixien
ternational labour Organisation der our belt, and many more on
has observed that the work of Sir—With regard to Japanese fi­ our plate, our appetite for reform
children reinforces rather than nancial regulation, I share the remains hearty. Sir—Part of what is fuelling the
undermines adult employment. view that “the long-term health Masamichi Kono public outcry over petrol taxes is '
Some even surmise that, in many of the sector will depend on the Director that there is no alternative to driv­
developing countries, the net ef­ Financial Services Agency’s will­ International ing cars in most cases. Gov­
fect of children’s economic par­ ingness to promote competition” Affairs Division ernment efforts at alleviating oil
ticipation on adult employment (“A loss of appetite”, September Tokyo fsa dependency have been invisible
and income is likely to be positive 16th). However, 1 dispute the con­ In the interest of reducing pollu­
rather than negative. tention that willingness has been tion and congestion, taxes levied
Advancing public money for diminished in any way. Chile response on oil should have been spent on
children’s schooling and recoup­ It is untrue that life insurers emphasising public transport effi­
ing it afterward through wage de­ will be exempted from the re­ Sir—You criticise an alleged dou­ ciency. Also, alternative technol­
ductions or direct repayments is quirement to account for assets at ble standard of Chilean society in ogies could have been promoted
not a new idea. There are two market values. While life insurers terms of private and public mo­ with this tax money: for instance,
fundamental problems. First, it is may be unique among financial rality (“Public virtues, private cars with dual fuel-cells or do­
vices in Chile”, September 9th). mestic solar panels for heating or
Chile may well be the most con­ electric power. Although these
Subscription Service servative country in Latin Amer­ cannot folly substitute for oil,
ica but it has also by far the low­ they can substantially reduce
est levels of corruption. 1 would consumption. What were the
rather a double standard than a taxes on fuel consumption actu­
Mease enter a subscription for 1 year
lowering of the virtues we Chil­ ally spent on?
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□ Other Asia/Pacific US$165 Sir—Your leader on petrol taxes
QThe Economist Quarterly Index Sir—Your article fails to do justice made several excellent points.
US$66 per year to the extent of the influence of Can you make it into a rap album
OThe Economist Binders the Catholic church in Chile, it or a music video with explicit lyr-|
US$74 per set of 4 owns one of the country’s top ics so that other Americans will!
The Economist Newspaper limited football teams, censored the have a chance to learn something
30 Raffles Place, #13-01 Caltex House, movie, “The Last Temptation of from it?
Comm? 0»A Steilnegpahpoonree :0 4(6856)2 523, 4S i5n1g6a6p oFraex, : (65) 534 5066 Christ” (giving Chile the puritan St Louis,
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At McKinsay, we bring together great minds to deliver to deal confidently and. credibly,with senior people-aeross,;;.
outstanding solutions to'client problems. But for our Europe. ;
consultants: to operate to foaxitnum effect, they require the
In ail cases, you will need to be of exceptional calibre: a
. proactive support of accomplished business professionals
graduate with a strong academic-background ianct at .feast "ip-
within our industry, practice teams who appreciate the
five years’ high-level industry experience in- consorrfer-Y'-
challenges they face and share their commitment to
related industries. You will also be an outstanding manager;'
problem solving.
of people, with the ability to handle a varied -and" demanding- V
Working at the forefront of the Consumer Sector in our workload and the communications skis required-to", @
specialist Retail or Consumer Qoods Practices you'll help energise a network of consultants. Positions available locus’;;
:-create and manage the infrastructure that supports our on the UK.(London-based), Franca (Paris-based) and;
teams.. You‘11 provide support in areas such as client Europe as a whole (likely to be based in London or Paris). ;
development, external relations, internal communications,
In return, we offer oustanding rewards, both financially and;
people deYafopmerit and training. Success will come from
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co-ordinating,'.'supporting and challenging some of the most
talented minds in the business. To apply, please write with your CV, to Liz Cusack at
Whitehead Warm GKR, 11 Hi Street, London WU 5LQ.
Although not in a conventional client-facing rote, you’ll
Email: [email protected]
need clear thinking, foresight and creativity as you help
shape the future direction of ydur Practice and the ability wvsrw.mcWnsey.com
THE ECONOMIST OCTOBER 7TH 2000
(EXECUTIVE FOCUS
Mobile • Interactive TV • Internet • Content Rights • Media • Broadband
Anything you can do, you can do better
Does your current job give you opportunities to:
• Apply your strategic consulting expertise in the digital market place?
• Develop your platform as a thought leader within the industry?
• Progress from managing to leading projects?
• Help to shape the company in which you work?
Spectrum Strategy Consultants offers you all these things. We are the leading international strategy
consultancy working exclusively within the digital industries. This has made us a highly successful business
with an enviable industry reputation. We are expanding rapidly from London with offices in Brazil,
Germany and Singapore and another opening soon in Italy.
Our clients include many of the world’s leading players in our sectors as well as the most exciting start
ups. Our work spans TV, Internet, mobile and fixed telecoms: from advising the English Premier League
on the £1.6bn sale of its TV and online rights to 3G strategies for mobile operators to e-business
strategies for fixed operators.
We are looking for Managers and Senior Associates to drive our expansion in the UK and around the
world. Consulting and sector experience are essential.
Please send your CV and covering letter to Carolyn Wileman at:
economistl [email protected] or
Greencoat House, Francis Street, London SW1P 1DH
www.spectrumstrategy.com
You’ve been smart enough to get in and smart enough to get on.
Now you want to shape your own career. At Eden McCallum, we can
make that happen. We connect the top independent consultants with
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stan-ups/VCs, blue-chip companies and professional client-service firms
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questions for CEOs to providing management expertise for start-ups.
THE OPPORTUNITY
As an independent consu tant with Eden McCallum, you control the
type and timing of the work you do, with per diems that enable you to
match a full-time salary in 100-150 days. Eden McCallum offers you all
the richness of work you would choose for yourself. With marketing,
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getting the best job done
THE CANDIDATES
You need: at least six years’ work experience, including two or more
in a top-flight professional client-service firm (preferably management
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BE AN INDEPENDENT CONSULTANT. IT’S YOUR LIFE.
Email your CV, including current earnings, to [email protected],
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edenn
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THE ECONOMIST OCTOBER 7TH 2000
EXECUTIVE FOCUS
Oyster Partners
www.oyster.com building digital relationships
Head of Research
Create this new role, providing the vision and driving
force underpinning Oyster's research services and
project managing the future development and structure
of our internal research holdings. Your strong academic
background, coupled with knowledge management
experience gained ideally within media, technology,
or a bricks and mortar blue chip, will be enhanced
by team leading and project management skills.
Oyster Partners is a leading European
e-business Researcher
Internet services company and an
As an e-business researcher, you will work with
innovative provider of e-business
interactive strategists on the validation of business
strategy, technical solutions and
cases, as well as undertake competitor and market
on-line environments. Clients include
analyses. Communicating knowledge both within Oyster
Channel 4, Go, Orange and Unilever.
and externally (briefings, presentations, white papers
Our working culture is energetic,
and the like), you are ideally a recent MBA and/or have
open and non-hierarchical. With 160 relevant interactive agency experience. With a background
employees currently in our London in market analysis and researching trend directions, your
office, we are now expanding fast in innovative thinking skills and the ability to deliver to tight
the UK and continental Europe. deadlines complement critical judgement.
On the contrary, it's just We're looking for:
getting good. You Head of Research
E-mail cvs to: [email protected]
ought to see what you
e-business Researcher
are missing. If you
EE--mmaaiill ccvvss ttoo:: eecc117744bb@@oyster.com
think that the Internet
starts and stops with
dotcoms. Think Again.
8 THE ECONOMIST OCTOBER ?TH 2000
EXECUTIVE FOCUS
C S
urrency trategist
Frankfurt Competitive Salary + Bonus
Our client, a major European Bank, has an The position is an integral part of a small but well
opportunity for an enthusiastic, highly motivated, respected currency research team operating out of
German speaking Economist/Cutrency Strategist. London, Paris and Frankfurt. Opportunities for career
This is not just another office based research role. This progression are excellent.
position is based in the centre of a busy dealing room
at our client’s Frankfurt head office. Reply in strictest confidence, enclosing cover letter
and CV in both German and English, to: Response
The person will be working alongside foreign
Handling, Bartlett Merton, Bartlett House,
exchange market makers providing advice on short
Greenhill Rents, London, England EC1M 6HS.
term and long term market trends. Candidates must
Email: [email protected]
have excellent analytical, presentation and
Please quote ref: E/CS/1.
communication skills and be able to get their
message over to everyone including traders, other
business areas, external clients and the news media. It
is essentia] that candidates are fluent in both German
and English, written and spoken, and have practical
experience of foreign exchange market.
Shaping the future
a
Opportunities in the Treasury
POLICY ANALYSTS London £33,500-£44,000 increasing to £48K + excellent pension package
We want the same as you do - growth, development and opportunity. Find it for yourself while designing and
developing the economic policies that help deliver it for everyone else.
We are looking for people who, having already proved that they can find solutions to difficult problems and
come up with ideas that work, want more challenge and involvement in the ideas that affect people at
home and abroad.
In addition to a good degree in any subject, you will have at least three years' experience in a
role that has tested and developed your analytical and influencing skills. But to be effective,
you will need to have more than convincing ideas, you need to be able to deliver
practical outcomes, and to work collaboratively with others to achieve this,
respecting and valuing their point of view.
For more details and an application form (to be returned by 23 October),
write to: Capita RAS, Innovation Court, New Street, Basingstoke,
Hampshire RG21 7JB or telephone [phone] (24 hours)
or fax [phone]. Internet: www.rasnet.co.uk Quote ref B5225.
Visit the Treasury website on www.hm-treasury.gov.uk
The Treasury is an equal opportunities employer. Our aim is to reflect
the diversity of modern Britain. We welcome applications from suitably
qualified individuals, irrespective of race, gender or disability.
All applications will be treated on merit.
THE ECONOMIST OCTOBER 7TH 2000
EXECUTIVE FOCUS
Pricesaroundtheworld.com is a site for both the sales and procurement
department of any company (click www.pricesaroundtheworld.com ). Subscribers
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Pricesaroundtheworld.com is the fastest growing Internet company in the world
and is positioned to become the Web's premier price information page for
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paced, and well capitalized organization. We are currently seeking experienced
professionals to join our executive team. The salaries for these positions are in
the six-figure range, and we offer a generous stock option plan for our executives.
We are located in Washington, D.C.
Our Director of International Sales will find, appoint, train and support
representatives in every region of the world, outside the United States, to sell
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years of experience in creating and managing successful sales forces in multiple
countries for insurance, yellow pages and similar service products.
The Director of International Procurement will work with our large corporate
clients in the United States to provide them with specialized, effective worldwide
price research for the products and materials they buy. This position requires at
least 10 years of experience as a top procurement manager for large industrial
concerns, or nationwide distributors or retail chains.
Send your resume today to:
[email protected] or fax to: 1-202-777-8557.
10 THE ECONOMIST OCTOBER 7TH 2000