The Economist (February 10th, 2018)

67 Pages·2018·6.578 MB·English

by  The Economist

The ascent of Elon Musk
Germany’s miserable coalition
Winter Olympics: slope-a-dope
Guerrilla drones
FEBRUARY 10TH–16TH 2018
Running hot
America’s extraordinary
economic gamble
Contents The EconomistFebruary10th2018 5
8 The world this week United States
33 The economy
The great experiment
Leaders
11 America’s economy 35 Politics and the FBI
Running hot Against the law
12 Germany 35 Wildfire and fraud
Reheating the GroKo Insult to injury
12 Philanthropy 36 Politics in South Dakota
The billionaires and the Plains speaking
Falcon Heavy 37 The Great Lakes
Mind-bending stuff German politicsA new
13 Telecoms
government at long last.
Next-generation thinking 38 Lexington
Unfortunately, it will look very
Honest Injun
14 Drugs in sport like the old one: leader, page
On the cover Dope on the slopes 12. Germany’s main parties
America is about to test the The Americas conclude a coalition deal,
merits of running an economy Letters 39 Venezuala page 48
hot. Expect more bumpy Lights out for democracy
16 On Honduras, Italy, tech
weeks: leader, page 11. The
companies, walking, The 40 Ontario
decision to stimulate an
Darkness Double-wage trouble
already pacy economy is less
illogical than it seems, page 40 Americans in Mexico
Trump supporters welcome
33. After a long period of Briefing
calm, investors get a shock, 42 Bello
19 Elon Musk’s futures
page 63. Recent market The impact investor Political decay
ructions highlight the role of
22 The Boring Company
instruments that bet against
Tunnel vision Middle East and Africa
volatility, page 64. Central
banks must occasionally 43 Egypt’s economy
gamble that faster Asia The price is wrong
productivity growth is 44 Israel and its neighbours EgyptWhat fuel, bread and
25 Insurgency in the
possible: Free exchange, The guns of February water reveal about how the
Philippines
page 68 Peace without dignity 45 Saudi Arabia’s nukes country is mismanaged, page 43
An unenriching debate
26 Digital spin in Asia
#TechSavvyPols 45 Ethiopia’s new railway
The Economist online Danger, camels crossing
26 Politics in Bangladesh
Daily analysis and opinion to Condemned 46 Africa’s energy drink
supplement the print edition, plus Bacchus goes bananas
27 Gangs in New Zealand
audio and video, and a daily chart
Bigger than the army 46 South African politics
Economist.com
Long waltz to freedom
28 The Winter Olympics
E-mail:newsletters and
Frosty South Koreans
mobile edition
Economist.com/email 28 Bathing in Japan Europe
Print edition: available online by Ink stink 47 Spanish politics
7pm London time each Thursday 30 Banyan Ciudadanos on the march
Economist.com/printedition Atempest in the Maldives 48 The Berlin Wall Sports dopingPerformance-
Audio edition:available online Still healing enhancing drugs are still
to download each Friday China 48 Germany rampant in sports. There are
Economist.com/audioedition Aloveless marriage ways to reduce their use:
31 Population policy leader, page 14. Why no one
Gilding the cradle 49 French education
seems to want to do so, page 55
Back to bac
32 Hong Kong’s democrats
Three men and a vote 49 Russia’s opposition
The approved challenger
Volume426 Number9078 50 Romania
Nobbling the nobblers
Published since September 1843 51 Charlemagne
to take part in "a severe contest between
intelligence, which presses forward, and History wars
an unworthy, timid ignorance obstructing
our progress."
Editorial offices in London and also:
Beijing, Berlin, Brussels, Cairo, Chicago, Madrid,
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1Contents continues overleaf
6 Contents The EconomistFebruary10th2018
Britain Science and technology
52 The politics of trade deals 70 Guerrilla drones
Not so global Britain Buzz, buzz, you’re dead
53 Brexit, trade and the EU 71 Fossil spiders
The wheat and the chaff When doctors disagree
54 Bagehot 72 Diet and health
Meritocracy and its Bitter fruits
discontents 72 Satellite prospecting
Lithium in Cornwall
International 73 Amelia Earhart
The ambition of Elon Musk 55 Doping in sport Mystery solved? French culture wars
He is trying to change more Emmanuel Macron’s bid to
Whatever it takes
worlds than one. Despite his enlarge French culture has
gifts, failure is most definitely Books and arts caused controversy—and not
an option, page 19. The mega- Business 74 French culture wars as he might have expected,
rich have grand plans to shape 57 Mobile telecoms The river and the sea page 74
humanity’s future. Should that The forces of 5G 75 Achilling Russian film
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now a threat to conventional
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8 The world this week The EconomistFebruary10th2018
Politics have been delivered bythe cessful advance ofprivate The governmentof
president, Jacob Zuma. Itwas enterprise into space. Macedoniaoffered to add a
the clearestsign yetthatthe qualifierto the country’soffi-
rulingAfrican National Con- Pre-wedding nerves cial name, aftermore than a
gresspartyistryingto get Mr Fabricio Alvarado won the million people demonstrated
Zumato step down before the mostvotesin the firstround of in Greeceagainsttheirneigh-
end ofhissecond term in 2019. Costa Rica’spresidential bour’sdisputed use of
election. He rose in the polls “Macedonia”, which isalso a
Memogate afterthe Inter-American Court region in Greece.
Arowerupted in Washington ofHuman Rights, which is
when Republicansin Congress based in Costa Rica’scapital, (More) trouble in paradise
released a memo, written by said the countryhad to legalise Abdulla Yameen, the president
the Republican chairman of gaymarriage. MrAlvarado, an ofthe Maldives, declared a
the House intelligence com- evangelical Christian, has state ofemergency, suspended
mittee, thatpurportsto show promised to defythe ruling. much ofthe constitution and
In Syriathe regime ofBashar political biasin the FBI’s The run-offison April 1st. arrested two ofthe five judges
al-Assad pounded the rebel investigationinto Russian ties on the supreme court. The
enclave ofEastern Ghouta, to Donald Trump’saides. The Negotiationsbetween Vene- remainingthree judgesthen
killingdozensofpeople. More FBIhad asked forthe docu- zuela’sauthoritarian regime reversed a rulingthathad
than 100 fightersbackingthe mentnotto be declassified. Mr and the opposition, which overturned the convictionsof
regime were killed byUS-led Trump crowed thatthe memo would have setground rules nine opposition leaders.
forcesin a thwarted attack on a vindicated him. The Demo- forthe forthcomingpresi-
rebel stronghold. Turkeysuf- cratspushed forthe release of dential election, broke down. Acourtin Bangladesh sen-
fered itsworstlossessince amemo theyhave penned Venezuela’selectoral commis- tenced Khaleda Zia, a former
invadingnorthern Syria last thattellsa differentstory. sion, which the opposition prime ministerand leaderof
month. ARussian warplane saysactsatthe behestofthe the main opposition party, to
wasshotdown overIdlib. And America’sSupreme Court government, setApril 22nd as five yearsin prison forcorrup-
Israeli warplanesfired missiles refused an emergencyrequest the date forthe election. tion. MrsZia claimsthe prose-
atpositionsin Syria, probably byRepublicansin Pennsylva- cution ispoliticallymotivated.
to blockthe transferofarms to nia to reinstate the state’s In a referendum, Ecuadoreans
Hizbullah, the Lebanese mili- currentboundariesforcon- approved the introduction of Hong Kong’sfinal courtof
tia-cum-partybacked byIran. gressional districts. Pennsylva- term limitsforelected officials. appeal overturned the prison
nia’shigheststate courthad Thatwill probablyprevent sentencesofthree activists
Aswomen in Irancontinued found thatthe districtshad Rafael Correa, who waspresi- who tookpartin pro-democra-
to protestagainsthavingto been gerrymanderedspecifi- dentfrom 2007 to 2017, from cyprotestsin 2014. Butthe
covertheirheadsin public, the callyto favourthe party. The returningto office. The referen- courtalso said thatthe harsher
office ofthe president, Hassan Supreme Courtdid, however, dum wasorganised byMr sentencingguidelinescalled
Rouhani, released a three-year- temporarilyblocka similar Correa’ssuccessor, Lenín forbythe city’sgovernmentto
old reportshowingthatnearly orderin North Carolina to Moreno, who hasrejected deal with protesterswill be
halfofIranianswanted to end redrawitscongressional map. authoritarian politics. Voters adhered to in future cases.
the requirement. also endorsed a measure that
allowsMrMoreno to sack
Morgan Tsvangirai, the leader judgesand otherofficials
ofone ofthe main opposition appointed bya panel con-
partiesin Zimbabwe, was trolled byMrCorrea.
reported to be criticallyill in a
hospital in South Africa. Mr Getting there
Tsvangirai,who won a presi- More than fourmonthsafter a
dential election in 2008 before general election, Germany’s
the rulingpartyrigged the Christian Democrats, their
resultto keep RobertMugabe Bavarian sisterpartyand the
in power, hasbeen receiving Social Democrats(SPD) con-
treatmentforcancer. Elon Musk, the founderof cluded a new“grand coalition” An earthquakehitthe Tai-
SpaceXand co-founderof deal, similarto the one that has wanese town ofHualien. At
The governmentin Kenya shut Tesla Motors,launched a ruled the countryforthe past leastten people were killed
television stationsand arrest- Falcon Heavyrocketinto fouryears. Martin Schulzsaid and dozensare still missing.
ed politiciansin an unconstitu- space from the KennedySpace he would step down asSPD
tional crackdown on free Centre in Florida. The payload leader; he istipped to be for- South Korea announced that
speech, afterRaila Odinga, a wasone ofMrMusk’sTesla eign minister. The deal must be the sisterofNorth Korea’s
leaderofthe main opposition cars, which wasdispatched on ratified bythe SPD’smembers. dictator, Kim JongUn, will
alliance, declared himselfthe atrajectorytowardsMars. The attend the WinterOlympics
“people’spresident”. Mr spectaculardisplayincluded Poland’spresidentsigned a inPyeongchang, the firsttime
Odinga lostlastyear’sdisput- two boosterrocketsreturning newlawthatcriminalises thata memberofthe ruling
ed presidential election. in synchronised formation to reference to “Polish death Kim dynastywill visitthe
land nearthe launch pad. The camps”. The government South. The South’sdemocrati-
South Africa’s parliament central boosterrocketmissed insiststhateveryone call them callyelected president, Moon
delayed an annual “state ofthe itsrendezvousatsea, butthat Nazi death campsthat Jae-in, will have breakfast with
nation” speech thatwasto did notdetractfrom the suc- happened to be in Poland. the brutal god-king’skin. 1
The EconomistFebruary10th2018 Theworldthisweek 9
German reinsurerestimates app on a dailybasis, to 187m. Levandowski, an engineer
Business
thatthe industry’sclaimsfrom The companyfloated on the who worked atWaymo.
natural catastrophesin 2017 stockmarketlastMarch, but its Waymo contendsthe acquisi-
will top $135bn, a record. share price hasfallen farbelow tion wasa ruse through which
CBOE volatility index (Vix) itsclosingprice atthe time of Ubergained itstechnical
Percentage points ASouth Korean appealscourt itsIPO. secrets.
halved the five-yearprison
40
sentence forbriberyhanded The Los Angeles Timeshasa Broadcomsubmitted its“best
30 down lastyearto Lee Jae- newowner. PatrickSoon- and final” offerto take over
yong, Samsung’sde facto boss, Shiong, a biotech entrepre- Qualcomm. The latestpropos-
20
and suspended hisremaining neur, isbuyingthe newspaper al isworth $146bn. Qual-
10 jail term, allowinghim to walk alongwith the San Diego comm’sboard hasso farnot
0 free. The decision disappoint- Union-Tribunefor$500m from engaged with itschipmaking
2017 2018
ed reformerswho had hoped Tronc, which used to be part of rival, butthe issue will surely
Source: Thomson Reuters the sentence represented a the Tribune media empire. dominate itsshareholders’
Itwasa turbulentweekon the breakfrom the leniency meetingon March 6th.
world’sstockmarkets, a rude shown byjudgestowards Dalian Wanda, a Chinese
awakeningaftera longperiod businessmen in corruption conglomerate, sold a stake in Roads to nowhere
ofcalm duringwhich share- cases. MrLee wasnotcleared itsfilm businessto a consor- LosAngeleswasthe most
price indiceshave soared. The ofall charges. Hisfather, Lee tium headed byAlibaba, Chi- congested cityatpeaktravel
DowJonesIndustrial Average Kun-hee, wasmeanwhile na’sbiggeste-commerce com- timesin 2017, accordingto a
plunged by1,175 pointsin a day, charged asa suspectin a tax- pany. Dalian Wanda isunder reportbyINRIX, a transport-
itsbiggestpointsdecline to evasion case. pressure from the Chinese analyticsfirm. The city’sdriv-
date. The FTSE100 fell by2.6%, governmentto pare back ersspentan average of102
the mostsince June 2016 when Wynn’s gambling loss assetsin orderto reduce debt. hoursa yearsittingin con-
Britain voted to leave the EU. A Steve Wynnresigned aschair- gestion duringrush hour, more
measure ofmarketvolatility, man and chiefexecutive of Aftermonthsofpre-trial hear- than ten hourslongerthan in
the Vix, also known as“the Wynn Resorts, one ofthe ings, a courtcase gotunder Moscow, which ranked second
fearindex”, soared to itshigh- world’slargestcasino compa- wayin which Uberisaccused in the study. Although America
estlevel since China’scurrency nies, followingallegations byWaymo, a self-drivingcar overall waspositioned joint
crisisin 2015. Amongother stretchingbackdecadesthat he businessowned byAlphabet, fifth with Russia outofthe 38
things, marketsare worried coerced employeesinto sex. Google’sparentcompany, of countriessurveyed, five of its
thatthe improvingworld He deniesthe accusations. stealingtrade secrets. Travis citiesmade the listofthe ten
economyand pressureson Kalanick, who wasousted as mostcongested. Despite its
inflation will cause central Despite a doublingofitsnet Uber’schiefexecutive last congestion charge, Londoners
banksto ramp up interestrates. losses, Snap’sfourth-quarter year, tookthe stand. He de- still wasted 74 hoursa year
earningsdelighted investors scribed howdriverlesscars snarled up in traffic, the worst
Welcome to the office! when itreported higher-than- were a threatto Uber’staxi- ofanycityin western Europe.
The marketturmoil coincided expected revenuesand an hailingbusinessmodel, which
with Jerome Powell’sfirstday increase in the numberof impelled him to acquire Otto, a Other economic data and news
on the job aschairman ofthe people who use itsmessaging startup created byAnthony can be found on pages 80-81
Federal Reserve.
Crypto-currenciesalso swung
even more wildlythan usual.
Bitcoindropped below$6,000
before jumpingby30% within
24 hours. Anote byGoldman
Sachscompared tradingin
digital currenciesto the in-
ternetbubble ofthe 1990s.
America’strade deficitgrew
by12% lastyear, to $566bn, the
highestithasbeen since 2008.
Although American exports
increased to $2.3trn, imports
surged to $2.9trn. Thathelped
push up the politicallysensi-
tive goodsdeficitwith China to
arecord $375bn.
Lastyear’sintense hurricane
season, wildfiresin California
and earthquakesin Mexico all
tooka toll on Munich Re’s
annual profit, which slumped
by85% to €392m ($442m). The
Leaders The EconomistFebruary10th2018 11
Running hot
The United States is taking an extraordinaryeconomicgamble
VOLATILITY is back. A long mentspending, ifa budgetdeal announced thisweekholds
spell of calm, in which up. Democratsare to getmore fundsforchild care and other
America’s stockmarket rose goodies; hawksin both partieshave won more moneyfor the
steadily without a big sell-off, defence budget. MrTrump, meanwhile, still wantshisborder
ended abruptly this week. The wall and an infrastructure plan. The mood offiscal insouci-
catalystwasa reportreleased on ance in Washington, DC, istroubling. Add the extra spending
February 2nd showing that to risingpension and health-care costs, and America is setto
wage growth in America had ac- run deficitsabove 5% ofGDP forthe foreseeable future. Exclud-
celerated. The S&P500 fell bya bitthatday, and bya lot on the ingthe deep recessionsofthe early1980sand 2008, the United
nexttradingday. The Vix, an indexthatreflectshow change- Statesisbeingmore profligate than atanytime since 1945.
able investors expect equity markets to be, spiked from a Acocktail ofexpensive stockmarkets, a maturingbusiness
sleepy14 atthe startofthe month to an alarmed 37. In other cycle and fiscal largesse would testthe mettle ofthe mostexpe-
partsofthe world nervesfrayed. rienced policymakers. Instead, American fiscal policy isbeing
Marketslaterregained some oftheircomposure (see page run bypeople who have boughtinto the mantra thatdeficits
63). Butmore adrenalin-fuelled sessionslie ahead. That isbe- don’tmatter. And the central bankhasa brand newboss, Je-
cause a transition is under way in which buoyant global rome Powell, who, unlike hisrecentpredecessors, has no for-
growth causesinflation to replace stagnation asinvestors’ big- mal expertise in monetarypolicy.
gestfear. And thatlong-awaited shiftisbeingcomplicated by
an extraordinary gamble in the world’s biggest economy. Does Powell like fastcars?
Thanksto the recentlyenacted taxcuts, America isadding a Whatwill determine howthisgamble turnsout? In the medi-
heftyfiscal boostto juice up an expansion thatisalready ma- um term, America will have to getto gripswith itsfiscal deficit.
ture. Publicborrowingissetto double to $1trillion, or5% of Otherwise interestrateswill eventuallysoar, much as theydid
GDP, in the nextfiscal year. Whatismore, the team thatissteer- in the 1980s. Butin the shortterm mosthangson MrPowell,
ingthisexperiment, both in the White House and the Federal who muststeerbetween two opposite dangers. One isthat he
Reserve, isthe mostinexperienced in recentmemory. Whether istoo doveish, backingawayfrom the gradual (and fairly mod-
the outcome isboom orbust, itisgoingto be a wild ride. est) tighteningin the Fed’scurrentplansasa salve to jittery fi-
nancial markets. In effect, he would be creatinga “Powell put”
Fire yourengines which would in time lead to financial bubbles. The other dan-
The recentequity-marketgyrationsbythemselvesgive little geristhatthe Fed tightenstoo much too fastbecause itfearsthe
cause forconcern. The world economyremainsin fine fettle, economyisoverheating.
buoyed by a synchronised acceleration in America, Europe On balance, hastytighteningisthe greaterrisk. New to his
and Asia. The violence ofthe repricingwasbecause of new- role, MrPowell maybe tempted to establish hisinflation-fight-
fangled vehiclesthathad been caughtoutbettingon low vola- ingchops—and hisindependence from the White House—by
tility. However, even astheyscrambled to reactto its re-emer- pushingforhigherratesfaster. Thatwould be a mistake, for
gence, the collateral damage to other markets, such as three reasons.
corporate bondsand foreign exchange, waslimited. Despite First, itisfarfrom clearthatthe economyisatfull employ-
the plunge, American stock prices have fallen back only to ment. Policymakerstend to considerthose who have dropped
where theywere atthe beginningofthe year. out ofthe jobs market as lost to the economy forgood. Yet
Yetthisepisode doessignal justwhatmaylie ahead. After manyhave been returningto work, and plentymore may yet
yearsin which investorscould relyon central banksfor sup- follow(see page 33). Second, the riskofa sudden burstof infla-
port, the safetynetofextraordinarilyloose monetary policyis tion islimited. Wage growth haspicked up onlygradually in
slowly being dismantled. America’s Federal Reserve has America. There islittle evidence ofitin Germanyand Japan,
raised interestratesfive timesalreadysince late 2015 and isset which also have lowunemployment. The wage-bargaining ar-
to do so again nextmonth. Ten-yearTreasury-bond yields have rangementsbehind the explosive wage-price spiral ofthe early
risen from below2.1% in Septemberto 2.8%. Stockmarketsare 1970sare longgone. Third, there are sizeable benefitsfrom let-
in a tug-of-warbetween strongerprofits, which warrant higher tingthe labourmarkettighten further. Wagesare growing fast-
share prices, and higherbond yields, which depressthe pre- estatthe bottom ofthe earningsscale. Thatnotonly helpsthe
sent value ofthose earnings and make eye-watering valua- blue-collar workers who have been hit disproportionately
tionsharderto justify. hard by technological change and globalisation. It also
Thistension isan inevitable partofthe return of monetary promptsfirmsto investmore in capital equipment, giving a
policyto more normal conditions. Whatisnotinevitable isthe boostto productivitygrowth.
scale ofAmerica’s impending fiscal bet. Economists reckon To be clear, thisnewspaperwould notadvise a fiscal stimu-
thatMrTrump’staxreform, which lowersbillsforfirms and lusofthe scale thatAmerica isundertaking. Itispoorly de-
wealthyAmericans—and to a lesserextentforordinary work- signed and recklesslylarge. Itwill add to financial-market vola-
ers—will joltconsumption and investmentto boostgrowth by tility. Butnowthatthisexperimentisunderway, it iseven more
around 0.3% thisyear. And Congressisaboutto boostgovern- importantthatthe Fed doesnotlose itshead. 7
12 Leaders The EconomistFebruary10th2018
Germany
Reheating the GroKo
Germanymayatlong lasthave a newgovernment. Unfortunately, itwill lookverylike the old one
THE Berlin Wall stood for28 make itinto the programme.
years, two months and 27 The coalition deal has few fans, even among the people
days; asofthisweekithas been who laboured formonthsto negotiate it. Angela Merkel, who
down for longer. Just as Ger- will become chancellorfora fourth (and almostcertainly last)
many’s “post-Wall” era has time, spoke of “the painful compromises” that she had to
come to an end, so the cosy poli- make. To seal the deal she wasobliged to hand overthe pow-
tics of the past three decades erful finance, foreign and labourportfoliosto hermuch-small-
looksasifitisrunningout ofin- ercoalition partners. Yetthose partnersare unhappy, too. Car-
spiration. On February 6th news came that the Christian sten Schneider, chiefwhip forthe SPD, admitted thatthe deal
Democrat alliance (CDU/CSU) and the Social Democrats was“no masterpiece”.
(SPD), had agreed on yetanothergrand coalition. Germany is Voterswill surelyshare theirdespondency. Havingham-
desperate forpolitical renewal, butall thatitspoliticians have mered the “grand coalition” partiesin lastSeptember’sincon-
been able to come up with isa drearysortofcontinuity that clusive elections, they have been telling pollsters that their
haslefteveryone unhappy. supportforMrsMerkel’sCDU/CSU alliance and the SPD isslid-
ing. One poll thisweekgave the coalition partieswell under
Falling short halfthe votes, notenough to form a governmentwere a fresh
The coalition agreementsetsoutsome modestambitions (see election to be held.
page 48). There are spendingpledgeson infrastructure, where Which isreallythe onlyreason whya repeatofthe unloved
wealthyGermanyissurprisinglydeficient. The newgovern- “GroKo” will nowtake power, so longasitwinsthe blessing of
mentwill increase child benefits, cuttaxesmodestly and limit the SPD’s460,000 members, in a postal ballotthatwill be run
immigration. Itwill tinkerwith the labourmarketand health overthe nextthree weeks. Neitherthe CDU northe SPD has
care. In Europe itwill aim to negotiate a permanentstabilisa- anyappetite foranotherelection. ForMrsMerkel, it would be a
tion mechanism for the euro, together with increased com- humiliatingend to hersecond attemptto form a government.
mon investmentsin the shape ofa possible euro-zone budget. Forthe SPD, anotherelection mightbe catastrophic. In one poll
That, atleast, iswelcome—though the language iswaffly. the partywasonlytwo pointsahead ofthe anti-immigrant Al-
Workingoutthe detailswill be hard. The likelyappoint- ternative for Germany. It’s uncharismatic leader, Martin
mentofan SPD finance ministerfrom the more hawkish end of Schultz, announced hisresignation on February7th; even his
the spectrum isone sign ofthat. Anotheristhe absence from colleaguesfelthe hasbeen outoftouch with voters’ concerns.
the coalition agreementofanycommitmentto a vital missing Germany and Europe are better off without another six
partofthe euro construct, a bank-depositprotection scheme. monthsofdrift. Britain, Spain and Italyall sufferfrom weak
Othersignalscomingoutofthe coalition are also worrying. governmentsand itisin no one’sinterestforGermanyto join
The overlypro-Russian SPD will continue to hold the foreign- them. Butthe country’scrop ofhumdrum centristpoliticos can
affairsportfolio. And an undertakingto boostdefence spend- barelytotteron, even in lovelessalliances. Watch out forthe
ingsignificantlytowardsthe NATO targetof2% ofGDP failed to younger, more extreme alternativessnappingattheirheels. 7
Philanthropy
The billionaires and the Falcon Heavy
The mega-rich have ambitious plans to improve the world. Should thatbe a cause forcelebration orconcern?
NOTHING declares world- all diseasesbythe end ofthe century. Bill Gates, having made
changing ambition like a hisfortune atMicrosoft, wantsto eradicate polio and malaria,
space rocket. This week’s spec- aspartofa broadergoal ofimprovinghealth and alleviating
tacular test confirmed the Fal- poverty. Both are among a number ofphilanthropists who
con Heavyasthe planet’smost plan to remake education—MrZuckerberg’sothergoal isfor
powerful operational launch children to “learn 100 timesmore than we learn today”.
vehicle. It also testified to the Asthe Falcon Heavysoared above the KennedySpace Cen-
outsized vision ofElon Musk, its tre in Florida, one question wasoverwhatMrMusk’sdreams
creator. To ensure humanity’s long-term survival he wants mean forbusiness(see page 19). The otherwaswhatto make of
both to colonise Marsand to wean the Earth offfossil fuels. thisdesire to save humanity, in pursuitofwhich MrMusk and
MrMuskisnotthe onlybillionaire entrepreneurwith grand hisfellowbillionaireshave been strikinglyinnovative.
ambitionsto improve the future ofmankind. MarkZuckerberg, Acenturyago John D. Rockefeller, AndrewCarnegie and
the founderofFacebook, wantsto “cure, preventormanage” Henry Ford ruthlessly made fortunes and then established 1
The EconomistFebruary10th2018 Leaders 13
2foundationsto enlighten the massesand ensure world peace Given thatso manyoftoday’sbillionairesare geeks, there is
longaftertheirdeath. MrGatesand others, havingseen how also a dangeroftechno-solutionism. The idea thatproblems in
foundations can eventually become cautious and conven- health, education and so on can be solved with whatever tech-
tional, favoura “sunsetphilanthropy” model, aimingto spend nology is in vogue (today’s favourite is the blockchain) has
theirrichesbefore theydie. (Warren Buffett, now87, isdonat- usuallyproved naive. Deep change generallyrequiresco-oper-
ingmostofhisfortune to MrGates’sfoundation, to dispense ation with governmentsand social mobilisation. Recognising
on hisbehalf.) Such tycoonsalso pride themselveson measur- such thingsishard fortechiesused to seeingpoliticians asclue-
ingimpactsand outcomes, applyingthe same rigorousscruti- lessand regulation assomethingto be innovated around.
nyto theircharitable activitiesastheydid in their business. And yetthese reservationsare surelyoutweighed by the
billionaires’ scope forgood. The would-be world-changers are
From Rockefellerto Rocket-fella applyinginnovative and evidence-based approachesin clinics
In the latesttwistyoungerbillionaireslike MrZuckerberg, who and classrooms, where elected politiciansare often too timid
made theirfortunesin their20sor30s, have switched from a to riskfailure, captured byentrenched interestsorunwilling to
serial model ofphilanthropy, in which youmake money first spend publicmoneyon experimentation. Forall theirwealth,
and then retire and give itaway, to a parallel one, where you the billionaireswould struggle to force change upon society.
startgivingthe moneyawaywhile itisstill comingin. MrMusk Although today’sphilanthropistsare more visible than those
hasgone furtherstill. Ratherthan usinghisbusiness wealth to ofpreviousgenerations, theyaccountforlessthan a quarterof
supportphilanthropyin an unrelated area, he runstwo giant all charitable givingin America—which hasremained roughly
companies, Tesla (a clean-energyfirm thatsellselectric cars) constant, ataround 2% ofGDP, fordecades, accordingto David
and SpaceX(which buildsthe Falcon rockets), thatfurther his Callahan ofInside Philanthropy, a specialistwebsite.
ambitiousgoalsdirectly. Both companiessell something that The billionaires’ mostuseful function, then, isnotto bring
people happen to wantnow—carsand satellite launches—as a aboutchange themselves, butto explore and testnewmodels
wayofhasteningMrMusk’sdreams. and methods for others to emulate. Using their access to
The grand schemesofthe mega-rich provoke excitement in policymakers, theyencourage the adoption ofthe ideas that
some quartersand unease in others. One complaintinvolves work. Even an Avengers-style coalition ofbillionaires, like the
accountability. Billionaire philanthropists do not answer to one assembled byMrGatesand MrBuffettunderthe “Giving
voters. Theirspendingpowergivesthem the abilityto do great Pledge” banner, could notsolve reallybigproblemslike infec-
good, butwhatiftheypreferto actmore like Blofeld-style Bond tiousdiseases, colonisingMarsand climate change without
villainsthan Iron Man-style superheroes? Wealth also grants the co-operation ofgovernments, industryand voters.
the mega-rich special accessto policymakersand elected offi- So, asthe Tesla carsentskywardsbythe Falcon Heavy be-
cials. Shovellingyourfortune into a charitable foundation has ginsitstrip around the sun, salute the billionairesfor theiram-
the happyside-effectofreducingtaxbills, too—meaning that bition. Raise youreyebrows, in some cases, attheirhubris and
billionaires’ schemescan leave poorertaxpayersto fill in the political naivety. Butapplaud theirrole aspublic-policy trail-
gapsin publicspending. blazers, openingup pathsto a betterfuture. 7
Telecoms
Next-generation thinking
Building a single, shared 5Gwireless networkis notsuch a stupid idea
FORmore than three decades, reach byAmerica’sown securityagencies.
Mobile network speeds telecoms policy, at least in Yetthe memo containsanotheridea thatmeritsmore dis-
Theoretical maximum uplink, Mbps rich countries, has been a one- cussion, and notjustin America butelsewhere too. This isthe
3G 2 way street: more deregulation proposal that 5G be rolled out as a national wholesale net-
and more privatisation in order work that can be used by several service providers, just as
4G 1,000
to fostermore competition. This some rail networksand electricitygridsare.
5G 10,000 direction wassetbyAmerica in
1984, when itbroke up AT&T, its High five
telephone monopoly. So there wasmuch surprise ata recent In the fixed partofthe telecomsnetwork—the cablesthat run
memo, written forthe White House byan official atthe Na- underground, say—wholesale networks are already wide-
tional SecurityCouncil, which argued thatthe nextgeneration spread. Underthismodel, the ownersand operatorsdo not
ofmobile network, “5G” forshort, should be builtand run by also provide the services; these are supplied byseparate firms,
the American government. which share the networkand compete with each other. Singa-
The 30-page paperwaswidelycriticised, and quickly dis- pore and NewZealand have thissortofarrangement; so do cit-
missed byexpertsand regulators. Protectingthe networkfrom iesin Sweden. Mobile networkshave conventionallybeen in-
Chinese hacking, the main reason forthe proposal, does notre- tegrated affairs, with operators both managingthe network
quire the state to run the entire network. Huawei, a Chinese and also providingservices(although theydo sometimes sub-
makeroftelecomsgear, isalreadyall butbarred from sellingits letcapacityto others). Butsharingdoeshappen. Rwanda has
wares to American operators. Government-run broadband had a wholesale mobile networkforsome time. Mexico’sRed
would instead stifle competition and increase the risk ofover- Compartida isexpected to startup soon; ithasbeen built bya 1
14 Leaders The EconomistFebruary10th2018
2private consortium, with the government providing radio crease competition forthe serviceson top ofit. Next-genera-
spectrum and fibre-opticlinksto connectthe base stations. tion networksare supposed to become the connective tissue
The obvious risk of a single wholesale network is that, forall sortsofdevices, from sensorsto medical equipment (see
withoutthe cutand thrustofcompetition, itendsup actinglike page 57). Iffirmscan lease capacityto create such networks
the sluggish and underfunded telecoms monopolies ofold. withouthavingto build them, in much the same wayas firms
Criticspointoutthatthe average speed ofinternetconnections use smartphonesand app storesto reach consumers, the “in-
on Australia’sgovernment-owned National Broadband Net- ternetofthings” will be more vibrant. Thiskind ofenviron-
worklagsbehind thatofmostrich countries. South Korea, by mentwould also ease worriesaboutthe end of“netneutral-
contrast, hasa system ofcompetingbroadband networks and ity” in America. Ifone companydiscriminatesagainstcertain
some ofthe zippiestspeedson the planet. online content, consumerscan switch to another.
Butmanypeople in South Korea live in clustersofresiden- Governmentsdo nothave to go asfarasmandatingthe cre-
tial high-rise buildings, which are easilywired up. For farther- ation ofa wholesale network, asMexico hasdone, to get some
flungnetworks, particularlyin rural areas, the costs are higher. ofthe benefitsfrom sharing. Manystatesin America restrict or
And 5G networks will anyway be more expensive to build even ban municipalitiesfrom buildingnetworks. Eliminating
than theirforebears. Theywill eventuallyuse higher-frequen- such lawswould be an obviousstart. Regulatorscan also en-
cyradio waves, which cannotpenetrate buildingsand other courage other forms of sharing, for instance of spectrum,
obstacles; thatmeanstheywill need more base stations and somethingAmerica hasstarted to experimentwith. The White
antennae. Ifeveryproviderhasto build itsown 5Gnetwork, House’s 5G memo is an unlikely milestone on the path to-
costswill be unnecessarilyhigh—sometimesprohibitively so. wardsmore sharing. Butin questioningthe need fora lotof
Asingle shared networkwould be cheaper. Itcould also in- competingnetworks, itissendingthe rightsignal. 7
Drugs in sport
Dope on the slopes
Performance-enhancing drugs are still rampantin sports. There are ways to reduce theiruse
PROFESSIONAL athletes pay “tamper-proof” sample bottleswith dental instruments.
ahigh price fortheirpursuit Athleteswho take banned substancesputtheirhealth at
ofexcellence and glory. Training risk. Sovietathleteswho were fed steroidssuffered a hostofse-
to the limit tears muscles and riousproblemsin laterlife. Theywere more likelyto commit
wears out joints. Gymnasts of- suicide, orto miscarryorhave a disabled child. No one knows
ten need hip replacements whatrisksthose takingnew“designer” versionsare running.
when barely into middle age. Blood-dopingcan cause heartattacks; more than a dozen cy-
Few footballers make it to the clists’ deathshave been linked to it. Some unscrupulous coach-
end oftheircareerswith theirkneesintact. esdope promisingteenagers, before theyare eversubjected to
Butmanyalso run a darkerrisk: doping. The Winter Olym- testing. The performance-enhancing benefits will last into
pics in Pyeongchang, in South Korea, starts this week in its theirfuture careers. So will the damage.
shadow. Yearsafterwhistle-blowersfirstrevealed wholesale The agencies that set out to stop doping are hugely out-
dopingin Russia, the International OlympicCommittee (IOC) classed. Asthe backtrackingand bickeringoversanctions on
atlastdecided to baritfrom takingpart. Butithas allowed Russia illustrate, they are divided and weak. Most testing is
manyRussiansto compete asindividuals. And on the eve of done bynational bodies, which maynottryveryhard to find
the competition the CourtofArbitration forSportsaid that28 evidence thatwould gettheirown starsbanned. The World
othersshould receive a more lenientpenaltyfrom the IOC, fur- Anti-DopingAgency(WADA), which overseesthem, ispacked
thermufflingthe anti-dopingmessage. with officialsfrom national sportsfederationsand the IOC.
Russia’sdopingisunusual onlyin itsscale and institutional Theirinterestsare likewise conflicted. Itsbudgetis tiny. The
nature. No countryorsportisimmune (see page 55). Studies, system seemsto be designed to looktough butpunish only the
and an anonymoussurveyatthe World AthleticsChampion- occasional scapegoat. Honestathletesdeserve better.
shipsin 2011, suggestthata third ofathletespreparing forbigin-
ternational competitionstake banned substances. Yetjust 1-2% Don’tthrowin the towel
fail a testeach year. Lance Armstrong, a cyclistwho won the Fixingdopingmeansfixingincentives. WADA needsmoney,
Tourde France seven timesand lateradmitted to doping all the and to be independentofthe sportsofficialswho currently call
while, wastested on 250 occasions. The fewtimeshe failed, he the shots. Then itcould improve testingand carryout more in-
avoided sanctionsbyclaiminghe had taken anti-inflammato- vestigations—Russian dopingwasproved afterwhistle-blow-
riesforsaddle-sores. ers raised the alarm. “Athlete biological passports”, which
Dopingismore sophisticated than when communiststates monitora range ofmarkersin blood, showpromise.
used steroidsto bulkup athletes. Newdrugsare designed to be Above all, the punishmentfordopingshould be severe and
undetectable in a blood orurine sample. Manyathletes “blood certain. No Russians should be competing in Pyeongchang
dope”, receivingtransfusionsortakinga drugthatstimulates after their country is known to have attempted wholesale
the production ofred blood cells to improve their stamina. fraud. Athletes should not have to choose between risking
Russian cheats“lost” testrecordsin state-run labsand opened theirhealth orbeingbeaten bya cheat. 7
16 Letters The EconomistFebruary10th2018
cal instabilityand consequent and humane digital economy. operate astaxis. Butthe
The election in Honduras
lackoflong-term vision, Mr Butyourexample ofdata emphasisshould be on
Yourarticle on the contested Renzi’sreformsare actually portabilitybetween banksin walkers, cyclistsand buses.
inauguration ofthe president encouragingsigns. Europe illustratesthe problem. TERENCE BENDIXSON
ofHondurasincludessome ALBERTO BRIGHENTI Itexistsin principle butnot in President
interpretationsthatI feel com- London practice, in spite ofa gargan- Living Streets
pelled to clarify(“Atarnished tuan legislative effort. Having London
presidency”, January27th). I been passive data generators
Techlash backlash
do appreciate yourcharac- forso long, itisalso not obvi- Surelythe vehiclesofthe
terisation ofthe position of the “Tamingthe titans” (January ousthatconsumershave the future will be able to extract
Organisation ofAmerican 20th) suggeststhatsuccessful appetite to take control. real-time data from a transpor-
States, which clearlyexplained American technologyfirms These challengesare not tation database and send it
the irregularitiesand deficien- are alien forcesthatneed to be insurmountable. Theyde- ahead to trafficlights. The data
ciesofthe electoral process controlled. However, you mand a newkind ofregulation could directthe timingof
and therefore the impossibility concede that“much ofthis and regulator: ambitious, trafficlights, helpingthe flow
ofestablishinga clearwinner. techlash ismisguided” and uncompromisingand athome oftraffic. Howmanytimes
However, I disagree with note thatAmazon, Apple, with technology. Ratherlike have we satata red lightwhen
the viewthatstartinga negoti- Facebookand Google are the tech titansthemselves. no carscrossed ourhorizon?
ation with the government amongthe companiesmost CHRIS GORST Howmanytimeshave we
and all institutional actors admired byinvestors. Theyare Nesta Challenge Prize Centre slowed and stopped ata four-
leavesdemocracydefenceless. also the companiesmostloved London waystop sign when no other
In fact, I found thisto be the byconsumers. There isa dis- vehicleshave been around?
mostuseful wayahead in cussion to be had aboutthe Asa consumer, I would payfor DERRICK VANKAMPEN
orderto keep workingon the powerofthe tech industry, but control overmydata. Butthat Tampa
strongrecommendationsof much ofthe techlash isin fact isprobablythe lastthingthese
the three reportsofthe mission fuelled bycomplaintsfrom companieswill give up. There
Southern man
thatobserved the election. competitorswhose business isa saying: ifyou’re notpaying
Defendingdemocracyand modelshave been disrupted. fora service, you’re notthe
human rightsdoesn’tmean The tech ecosystem gener- customer. You’re the product.
thatthe mostforceful measure ateshundredsofbillionsof NIKOLAUS VAERST
hasto be the firstone taken. dollarsin consumersurplus Hamburg
We all have clearobligations value each year. Asa champi-
arisingfrom the Inter-Ameri- on ofstrongantitrustlaws, I
Getoutofyourcar
can DemocraticCharter. am well aware ofthe costsof
LUIS ALMAGRO misapplied competition law. Anotherwayoflookingatthe
Secretary-general Antitrustremediesworkfor future ofurban traffic(Free
Organisation of American States consumerswhen theyare exchange, January20th) isto
Washington, DC used to safeguard competition, considerthatthe ease oftravel
notcompetitors. Theyshould islargelydetermined byques-
be applied to misconduct, not tionsofspace. Carsneed a lot
Italy’s compromising politics
speculation. Consumersdo ofit, underground rail creates Havinglistened to The Dark-
Idisagree with yourcomments notbenefitwhen regulators more ofitbyburrowingtun- ness, I wasn’tsurprised to read
aboutMatteo Renzi beinga pickwinnersand losersfrom nels, busesuse itefficiently aboutthe despondencyof
“failed reformer” who “man- amongbusinesses, especially (when full), butpedestrians commuterson Southern Rail
aged onlymodestlabour when goaded byparochial even more so. Walkingisthe (“Offthe rails”, January6th).
reformsbefore beingejected” special interests. invisible and essential form of Lastyearthe band released
from office asItalian prime ED BLACK citytravel. In central London it “Southern Trains”, a songthat
minister(“Battle ofthe bene- President and CEO accountsfor78% ofall trips, capturesthe miseryendured
fits”, January27th). MostofMr Computer and Communications 47% in innerLondon and 35% bythe train company’spas-
Renzi’sdraftreformsreflected Industry Association in the outersuburbsofthe city. sengers. Amongthe more
the principlesyouespouse, Washington, DC The logicofthisisthat in explicitlyrics, Justin Hawkins
such asmore labour-market busydistrictswalkingshould singsaboutthe
flexibility(the JobsAct), boost- Transferringanonymised be given pre-eminence, asthe
Heavingcarriagesof
inginvestmentsin automation consumerdata from estab- CityofLondon hasrecently
indignation
(the Industry4.0 plan) and lished companiesto their recognised atBankstation.
Grown men weepingin pure
introducinga form ofuniver- challengers, which youpro- Thisjunction, which used to
frustration.
sal basicincome (Reddito di pose asone wayto weaken the be a maze ofcrawlingcars, is
Inclusione, recentlyintroduced marketdominance oftech nowpeacefullydevoted to ALEX DEW
bythe Gentiloni government). giants, isfiendishlydifficult. buses, walkersand cyclists. Salt Lake City7
MrRenzi couldn’tcounton Data thatare anonymous Thisisthe wayahead forcity
asolid parliamentarymajority todaymayno longerbe when and suburb. Private carsdo not
and he had to compromise newdata see the lightofday. workin cities. Theytake up too Letters are welcome and should be
with otherparties. Thatis a Sharingsuch information much room, whetheron the addressed to the Editor at
The Economist, The Adelphi Building,
historical condition which has could create seriousrisks. move orparked (astheymost-
1-11John Adam Street,
doomed the reformingambi- Youare rightto saythat lyare). Driverlessvehicles, the London WC2N 6HT
tionsofmanypastItalian givingpeople ownership of focusofyourarticle, could E-mail: [email protected]
governments. When you theirdata could be the founda- playa vital partin getting cities More letters are available at:
factorin Italy’schronicpoliti- tion fora more competitive movingagain, provided they Economist.com/letters