The Economist (May 4th 2019)

78 Pages·2019·4.69 MB·English

by  The Economist

Venezuela: Guaidó v Maduro
The Democrats and the world
Fusion power from the private sector
North Korea by night
MAY 4TH–10TH 2019
Tech’s raid on
the banks
The Economist May 4th 2019 3
Contents
The world this week United States
6 A round-up of political 21 Fringe ideas in foreign
and business news policy
22 Richard Lugar
Leaders 24 Congressional subpoenas
9 Financial services 24 All the president’s banks
Tech’s raid on the banks
25 Conviction-review units
10 Venezuela
25 Trouble at the NRA
How to get rid of Maduro
26 Chicago and Liberia
10 India’s election
Orange peril 27 Lexington No sex please,
we’re millennials
11 Crisis in the Sahel
The West’s forgotten war
The Americas
On the cover 12 Drug resistance
Netflix and pills 28 Venezuela’s failed uprising
The smartphone is disrupting 29 Grammar schools in Chile
banking at last: leader, page 9. Letters
30 Feminist funk (music) in
Young people and their
14 On Notre Dame, South Brazil
mobiles are shaking up the
Africa, diplomacy, private
industry, see our special
education, YIMBYs
report, after page 42. Facebook
has a plan to overpower its
opponents, page 53 Briefing Asia
17 YouTube 31 Elections in India
• The Democrats and the world
Dreaming of the White House, Now playing, everywhere 32 Banyan Kim Jong Un’s
many Democrats itch to get options
back to business as usual in Special report: Banking 33 Democracy in Australia
world afairs. A few have other A bank in your pocket 33 Indonesia’s capital in flux
ideas, page 21 After page 42
34 The Solomon Islands
• Venezuela: Guaidó v Maduro 35 Japan and Shinto
An attempt to depose the
dictator appears to have failed.
China
It is time to try again: leader,
page 10. What went wrong, 36 A century of dissent
page 28 37 Space-themed tourism
38 Chaguan Hollywood’s
• Fusion power from the
rivals in China
private sector After decades
spent within the purview of
governments, fusion energy is
attracting the interest of
business, page 71. A government- Middle East & Africa
funded reactor may yet supply 39 The West’s war in Africa
fusion—in 2045, page 73
40 Militias in the Sahel
• North Korea by night Satellite 41 Clerics against clerical rule
data shed new light on the Kim
Bagehot Britain suffers 42 Eurovision in Israel
empire’s opaque economy,
not just from a lack of
page 81
leadership, but also from
a poisoned followership,
page 49
1 Contents continues overleaf
4 Contents The Economist May 4th 2019
Europe Finance & economics
43 Spain’s general election 61 The boom in compliance
44 Merkel’s long goodbye 63 Buttonwood Berkshire
Hathaway
45 Russian spy whales
64 Turkey’s central bank
45 Poland’s “LGBT
dictatorship” 64 No sign of recession in
America
46 Charlemagne Abolishing
France’s most elite college 65 A cryptocurrency
crackdown
Britain 65 FX trading goes digital
47 The rich Corbyn-proof 66 America’s best young
their wealth economist
48 A mole hunt gets its man 68 Free exchange Parenting
49 Bagehot The followership like a dismal scientist
problem
Science & technology
71 Has fusion’s time come?
International
73 Fusion’s biggest reactor
50 The rise in meat-eating
Books & arts
74 When contemporary art
Business went global
53 Facebook’s WeChat 76 Millennials in China
moment
76 A geriatric crime caper
54 American tech earnings
77 Ethics and evolution
54 Trouble in Deutschland AG
56 Bartleby Struggling with
Economic & financial indicators
style
80 Statistics on 42 economies
57 Fast times at PSA Group
57 Ailing antibiotics-makers
Graphic detail
58 A billion-yuan bet
81 Lights at night reveal a deep recession in North Korea
59 Schumpeter Revving up
Unilever
Obituary
82 Lyra McKee, uncoverer of Northern Ireland’s secrets
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6 The Economist May 4th 2019
The world this week Politics
Baghdadi notes his group’s population of 30m, is congest- been drawn by the state legisla-
defeat at Baghuz, its last ed and polluted. Although a ture to favour Republicans and
stronghold in Syria, but vows new location has not yet been ordered that they be redrawn in
to fight on. chosen, Palangkaraya, a city of time for the 2020 election.
260,000 in the Indonesian part Several courts have ruled that
The White House said it was of Borneo, is being considered. partisan gerrymandering can
working towards designating be unconstitutional.
the Muslim Brotherhood as a Riots engulfed Honiara, the
terrorist organisation. The capital of the Solomon
decision would bring sanc- Islands, after parliament That elusive winning line
tions on what was once the picked Manasseh Sogavare to Spain’s ruling Socialist Party
world’s pre-eminent Islamist serve a fourth non-consecutive won the most seats in a general
Juan Guaidó, who is recognised movement. Egypt’s president, term as prime minister. An election, though it is still well
as interim president of Abdel-Fattah al-Sisi, who opponent had secured a court short of a majority. Pedro
Venezuela by many democ- toppled a Brotherhood-led order delaying the vote, but the Sánchez, the prime minister,
racies, appeared outside an government in 2013, reportedly governor-general ignored it. may try to continue in office as
air-force base in Caracas and requested the move. head of a minority govern-
urged the armed forces to ment, or cobble together a
overthrow the socialist dic- The imf said Iran’s gdp would Done, but not dusted coalition. There are obstacles
tatorship of Nicolás Maduro. contract by 6% this year, William Barr, America’s to reaching a deal with either
Leopoldo López, an opposition caused in large part by Ameri- attorney-general, was grilled in Podemos or Ciudadanos, two
figure kept under house arrest can sanctions on Iranian oil Congress over his handling of possible partners. Vox, a
by the regime, appeared with exports. Annual inflation the publication of the Mueller nationalist party, entered
Mr Guaidó after being freed by could reach 37%, the fund report. Mr Barr issued a sum- parliament for the first time.
security personnel. America warned. The crisis is fuelling mary of the report before its
reiterated its support for Mr popular discontent with the full publication, but two letters The president of France,
Guaidó. Backed by Russia and government and ruling clerics. emerged this week from Robert Emmanuel Macron, made new
Cuba, Mr Maduro said he had Mueller criticising that sum- promises after long talks with
defeated an attempted coup. The African Union extended a mary for its lack of context. voters. They included tax cuts,
Amid more protests, Mr deadline imposed on coup tax exemptions for bonuses
Guaidó called for strikes to leaders in Sudan to hand pow- A gunman opened fire at a and a commitment to close the
topple the government. er to a civilian administration. synagogue near San Diego, elite civil-service college, ena.
The military junta was initially killing a woman. The 19-year- The gilets jaunes protesters
Unions staged a national strike given 15 days. This has been old suspect had posted an seemed unmollified. More
in Argentina to protest against extended by another 60 days. anti-Semitic diatribe online than 200 arrests were made in
the austerity policies of Maur- shortly beforehand. The Anti- Paris during riots on May Day.
icio Macri, the president. Mr Defamation League recorded a
Macri’s popularity has taken a The limits to friendship big increase in the harassment Julian Assange was sentenced
dive of late, and he is up for China dropped its objection to of, and assaults on, Jews in by a British court to 50 weeks
re-election in October. Cristina a proposal in the un to list America last year. in prison for jumping bail in
Fernández de Kirchner, a Masood Azhar, the leader of a 2012, when he took refuge in
spendthrift populist ex-presi- Pakistani jihadist group, as a the Ecuadorean embassy in
dent, could unseat him, a terrorist. This allowed the un London. Mr Assange still faces
prospect that scares investors. to declare sanctions on Mr extradition to America, where
Azhar, including the freezing he has been charged in relation
China sentenced a Canadian of his assets and a travel ban. to the leak of a trove of classi-
citizen to death for drug-traf- His group, Jaish-e-Muham- fied documents by WikiLeaks,
ficking. It is the second time mad, claimed responsibility which he founded.
this year a Canadian has for a suicide-bombing that
received a death sentence in killed 40 soldiers in Indian- Gavin Williamson was sacked
China. Some observers think administered Kashmir in as Britain’s defence secretary
this is in reprisal for Canada February. China had previously for leaking information from a
arresting the finance director opposed such sanctions, national-security meeting that
of Huawei, a Chinese tele- apparently in deference to Joe Biden said he would seek had discussed allowing
coms-equipment company. Pakistan, a close ally. the Democratic nomination for Huawei to build 5g networks.
president of the United States. Theresa May, the prime min-
Akihito, the emperor of Japan, He went to Pennsylvania, ister, dismissed him after a
Reports of my death… abdicated. He was succeeded where he touted his working- speedy inquiry. Mr Williamson
Abu Bakr al-Baghdadi, the by his son, Naruhito. Akihito class credentials and played denies the allegation and
leader of Islamic State, won acclaim during his 30-year down the kind of identity complains of a “kangaroo
appeared in a video for the first reign for apologising for politics that his rivals espouse. court”. The new defence secre-
time since proclaiming the Japan’s misdeeds in the second The 76-year-old former vice- tary is Penny Mordaunt, who
creation of a caliphate across world war. president is leading the polls at wrongly claimed during the
parts of Iraq and Syria five this early stage. Brexit campaign that as an eu
years ago. (He has been heard The Indonesian government member Britain would have no
in audio recordings since declared its intention to move A court ruled that Michigan’s veto if Turkey tried to join the
then.) In the new video Mr its capital. Jakarta, with a congressional districts had European Union. 1
The Economist May 4th 2019 7
The world this week Business
Apple’s latest quarterly earn- range. The startup is totemic of survived an attempt to split his approval from lawyers before
ings were viewed positively on the market’s current taste for dual role as chief executive and tweeting about Tesla’s fi-
balance. Revenue from the plant-based food companies. chairman, though 34% of nances, potential deals, pro-
iPhone continued to slow, shareholders voted for the duction or any venture the
falling by 17% in the first three Occidental appeared to have proposal. Meanwhile, Ameri- company is considering. Mr
months of the year compared scuppered Chevron’s deal to can Airlines cut its profit Musk may also want to think
with the same quarter in 2018; take over Anadarko, when the forecast for the year, in part twice before poking fun at the
the device accounts for an latter said that it now consid- because of the grounding of sec on Twitter.
ever-smaller share of Apple’s ers Occidental’s offer to be the 737 max, which has caused
revenues. And overall sales superior. Occidental has val- it to cancel hundreds of flights.
from China, where Apple faces ued the transaction at $57bn; It’s a marvel
stiff competition, were down its proposal includes a $10bn The euro zone’s economy grew
by a fifth. But compensating capital injection from Warren by 1.5% in the first quarter at an Marvel films
Cumulative box-ofce receipts*
for the bad news the company’s Buffett. Anadarko has huge annual rate, a much improved $bn, 2019 prices
revenues from services—apps, shale assets in America’s Perm- showing on the last three 25
music-streaming and the ian Basin, making it an attrac- months of 2018. That was still 20
like—grew by 16%. tive partner for energy firms. some way behind America, 15
10
which chalked up a growth rate 5
By contrast, Alphabet’s earn- In an unprecedented show of of 3.2% in the quarter. 0
ings were interpreted negative- no confidence in the manage- 1 5 10 15 20 22
ly. Although revenues at Goo- ment of a German company, The John Bates Clark Medal, Film in MCU series†
gle’s parent company grew by 56% of shareholders in Bayer awarded annually by the Source: Box *To April 30th 2019
Ofce Mojo †Marvel Cinematic Universe
17%, that was the slowest pace voted against a measure sup- American Economic Associa-
in three years. Booking its porting its business conduct. tion to an economist under the “Endgame” is a fitting title to
latest antitrust fine from the Investors are peeved at the age of 40, was won by Emi an all-dominating film fran-
eu caused net income to collapse of the German con- Nakamura. A professor at chise. The 22nd film in Mar-
plunge, to $6.7bn. The com- glomerate’s share price follow- Berkeley, Ms Nakamura won vel’s Cinematic Universe took a
pany also announced that Eric ing costly litigation related to a the award in part for her “dis- record-breaking $357m in its
Schmidt, who was Google’s glyphosate-based weedkiller tinctive approach” to a opening weekend in America.
boss for ten years until 2011, is made by Monsanto, which “painstaking analysis of data”. Less than a week into its run, it
to step down from the board. Bayer took over last year. The is already the fourth-most
vote has no legal force, but it is A judge approved a new agree- successful in the brand. The
the first time that a big German ment between the Securities first, “Iron Man”, took a com-
“The future is private” company has been censured by and Exchange Commission paratively puny $680m world-
Stung by accusations of ethical a majority of its shareholders. and Elon Musk that restricts wide during 2008. Including
shortcomings, Facebook held what he can say on Twitter “Avengers: Endgame”, total
a conference to discuss its new Boeing’s annual general meet- about Tesla. Mr Musk has revenue for the series is ex-
“privacy-focused vision”. It ing was also a testy affair. fallen foul of the regulator for pected to top $22bn. With box
also rolled out a programme Following the grounding of the tweeting what it says are mis- office like that, it is not surpris-
whereby research academics 737 max aircraft after two fatal leading statements. Under the ing that plenty more Marvel
will gain access to user data. crashes, Dennis Muilenburg new deal, Mr Musk has to seek films are in the pipeline.
Facebook stressed that privacy
was being protected, and that it
had consulted privacy experts.
If anyone had private doubts
about its new-found devotion,
it is also testing a “differential
privacy” application. All this
comes as Facebook negotiates
with regulators about beefing
up its oversight of privacy,
which reportedly may mean it
appoints a privacy tsar.
Uber offered an initial price
range for its forthcoming ipo
of between $44 and $50 a
share. That is a bit lower than
had been expected, and would
value the ride-hailing firm at
up to $92bn when it lists (it
may alter the price range).
In another highly anticipated
stockmarket flotation, Beyond
Meat priced its ipo at $25 a
share, the top end of its price
Leaders 9
Leaders
Tech’s raid on the banks
Digital disruption is coming to banking at last
ver the past two decades people across the world have seen vested $37bn in upstart financial firms last year.
Odigital services transform the economy and their lives. Tax- The benefits of technological change are likely to be vast.
is, films, novels, noodles, doctors and dog-walkers can all be Costs should tumble as branches are shut, creaking mainframe
summoned with a tap of a screen. Giant firms in retailing, car- systems retired and bureaucracy culled. If the world’s listed
making and the media have been humbled by new competitors. banks chopped expenses by a third, the saving would be worth
Yet one industry has withstood the tumult: banking. In rich $80 a year for every person on Earth. In 2000 the Netherlands
countries it is perfectly normal to queue in branches, correspond had more bank branches per head than America; it now has just a
with your bank by post and deposit cheques stamped with the third as many. Rotten service will improve—it is easier to get
logo of firms founded in the 19th century. money to a friend using a chat app than it is to ask your bank to
Yet, as our special report this week explains, technology is at transfer cash. The system will get better at its vital job of allocat-
last shaking up banking. In Asia payment apps are a way of life ing capital. Richer data will allow banks to take risks that cur-
for over 1bn users. In the West mobile banking is reaching critical rently baffle underwriters. Fraud should be easier to spot. Lower
mass—49% of Americans bank on their phones—and tech giants costs and the democratising effect of social media will give more
are muscling in. Apple unveiled a credit card with Goldman people better access to finance. And more firms with good ideas
Sachs on March 25th. Facebook is proposing a payments service should be able to get loans faster, boosting growth.
to let users buy tickets and settle bills (see Business section). Yet change also poses risks. Because the financial system is
The implications are profound because banks are not ordin- embedded in the economy, innovation tends to create turbu-
ary firms. It is one thing for Blockbuster Video to be wiped out by lence. The credit card’s arrival in 1950 revolutionised shopping
a technological shift, but quite another if the victim is Bank of but also sparked America’s consumer-debt culture. Securitisa-
America. It is not just that banks have over $100trn of assets glob- tion lubricated capital markets in the 1980s but fuelled the sub-
ally. Using the difficult trick of “maturity transformation” (turn- prime crisis. In addition, it is unclear who will win today’s battle.
ing deposits that you can demand back at any time into long- One dystopian scenario is that power becomes more concentrat-
term loans) they enable savers to defer consumption and invest- ed, as a few big banks learn to exploit data as ruthlessly as social-
ment and borrowers to bring them forward. media firms do. Imagine a crossbreed of Face-
Banks are so vital that the economy reels when book and Wells Fargo that predicts and manipu-
they stumble, as the crisis of 2008-09 showed. lates how customers behave and is able to use
Bankers and politicians may thus be tempted proprietary economic data to squeeze rivals.
to resist technological change. But that would Another dystopia involves fragmentation
be wrong because its benefits—a leaner, more and destabilisation. Banks could lose deposi-
user-friendly and more open financial system— tors to untested neobanks, creating a mismatch
easily outweigh the risks. between their assets and liabilities that could
Banking is late to the smartphone age be- lead to a credit crunch. If bank customers trans-
cause entrepreneurs have been put off by regulations. And, since act via tech or payment platforms, banks could end up with huge
the financial crisis, Western banks have been preoccupied with balance-sheets but without a direct connection to their clients. If
repairing their balance-sheets and old-fashioned cost-cutting. they thus became unprofitable, they could be broken up, with
Late is better than never, however. Several new business models the job of financing mortgages and absorbing short-term savings
are emerging. In Asia payment apps are bundled with e-com- left entirely to capital markets, which are volatile.
merce, chat and ride-hailing services offered by firms such as To tap the benefits of technology safely, governments should
Alibaba and Tencent in China and Grab in South-East Asia. These give consumers control over their data, protecting privacy and
networks link to banks but are vying to control the customer re- preventing firms hoarding information. Innovation-friendly
lationship. In America and Europe big banks are still more or less regulation would help; in 2017 the industry faced a regulatory
in control and are rushing to offer digital products—JPMorgan alert every nine minutes (see Finance section). And govern-
Chase can open a deposit account in five minutes. But threats ments should keep the system’s safety buffers at today’s overall
loom. Mobile-only “neobanks” that do not bear the cost of size (global banks hold $7trn of core capital). If new entrants are
branches are nibbling at customer bases. Payments firms like properly capitalised, central banks could extend to them the
PayPal work with Western banks but are expected to capture a lender-of-last-resort facilities that provide shelter in a storm.
greater share of profits. Lucrative niches like foreign exchange Banking’s dirty secret is that it is backward, inefficient and
and asset management are being harried by new entrants. hidebound. Banks have formidable lobbying power, however.
The pace of change will accelerate. Younger people no longer Wary of change, customers, politicians and unions complain
stay with the same bank as their parents—15% of British 18- to 23- when branches are closed and jobs cut—witness the recent col-
year-olds use a neobank. Tech firms that people trust, such as lapse of a German mega-merger that depended on both. Regula-
Apple and Amazon, are natural candidates to grow big financial tors love dealing with a few big firms. The thing is that global
arms. The biggest four American banks are spending a total of growth is sluggish and productivity gains are hard to come by. A
over $25bn a year on perfecting better customer applications and smartphone revolution in finance offers one of the best ways to
learning to mine data more cleverly. Venture-capital firms in- boost the economy and spread the benefits.7
10 Leaders The Economist May 4th 2019
Venezuela
How to get rid of Maduro
An attempt to depose the dictator appears to have failed. Try again
pril 30th dawned promisingly in Venezuela. Juan Guaidó, duro had got wind of the plan. The plotters got cold feet.
Aacknowledged as the country’s interim president by many The false start, if that’s what it was, shows the way ahead. Both
democracies and millions of Venezuelans, appeared outside an Mr Guaidó and the administration of Donald Trump will need to
air-force base in Caracas flanked by national guardsmen to de- induce the top brass to switch sides by making clear that there is
clare that the end of the dictatorship was imminent. By his side a role for them in a democratic Venezuela. The army gave up
was a leader of the opposition, Leopoldo López, who had some- power in 1958 and helped usher in civilian rule. Today’s opposi-
how been freed from house arrest. His presence, and that of the tion and soldiers could co-operate in a similar fashion. Although
guards, suggested that Venezuela’s security forces were ready at Mr Maduro and his closest associates need to go, Mr Guaidó
last to withdraw their support for Nicolás Maduro, who has ruled should welcome less tainted leaders of the chavista regime into a
his country catastrophically and brutally for the past six years. transitional government, which would relieve the humanitarian
Thus began two days of rumour, intrigue and violence (see crisis while preparing for free elections. That could yet take
Americas section). As The Economist went to press the regime many months.
was still in charge and the generals were proclaiming their loyal- The Trump administration has lumped Venezuela in with
ty to it. Mr Maduro had appeared on television to Cuba and Nicaragua in a “troika of tyranny”. It
declare that the “coup-mongering adventure” seems as eager to dislodge Cuba’s 60-year-old
had failed. Yet this week’s events reveal that his communist regime as it is to get rid of Mr Madu-
hold on power is weaker than he claims. Mr ro. To that end it recently intensified America’s
Guaidó, the United States, which supports him, embargo on the island, including by letting
and the commanders of Venezuela’s security ap- American citizens sue European and Canadian
paratus must work together to put an end to it. companies that do business using Cuban assets
That may well have been the plan. John Bol- stolen after the revolution.
ton, America’s national security adviser, said on American disdain for Cuba’s regime is justi-
April 30th that senior regime officials, including the defence fied. Its hundreds of spies in Venezuela help keep Mr Maduro in
minister and the commander of the presidential guard, had power. But the swipes at Cuba will tighten this bond precisely
agreed to dump Mr Maduro and transfer power to Mr Guaidó. when America should be trying to prise it apart. Lawsuits against
Mike Pompeo, America’s secretary of state, later insisted that Mr European firms will frustrate concerted diplomatic action
Maduro had been worried enough to have a plane waiting to spir- against Venezuela. In the cause of removing Mr Maduro, Ameri-
it him to Havana but was dissuaded by his Russian allies. ca should for the time being set its quarrel with Cuba to one side.
How true these claims are and what went wrong is uncertain. The crucial choice lies with Venezuela’s army commanders.
A letter on social media attributed to the general in charge of Mr Maduro’s misrule offers them no future. It has crushed the
Venezuela’s intelligence service, who has abruptly left his job, economy, starved the people, strangled democracy and forced
gave Mr Bolton’s assertion some support by saying that people more than 3m Venezuelans into exile. The hardship is bound to
close to Mr Maduro were negotiating behind his back. Some worsen with new American oil sanctions this year. The generals
newspaper reports say that the plan was to remove him on May must begin to act like patriots. They need to destroy the regime,
2nd but that Mr Guaidó had acted early, perhaps because Mr Ma- before the regime destroys their country.7
India’s election
Agent Orange
Under Narendra Modi, the Bharatiya Janata Party poses a risk to democracy
hen the Bharatiya Janata Party (bjp) won a landslide vic- stand up to Pakistan for having abetted terrorism. In fact, send-
Wtory in India’s general election in 2014, its leader, Narendra ing warplanes to bomb India’s nuclear neighbour earlier this
Modi, was something of a mystery. Would his government initi- year was not so much an act of strength as recklessness that
ate an economic lift-off, as businessfolk hoped, or spark a sectar- could have ended in disaster. Mr Modi’s tough-guy approach has
ian conflagration, as secularists feared? In his five years as prime indeed been a disaster in the disputed state of Jammu & Kashmir,
minister, Mr Modi has been neither as good for India as his where he has inflamed a separatist insurgency rather than quell-
cheerleaders foretold, nor as bad as his critics, including this ing it, while at the same time alienating moderate Kashmiris by
newspaper, imagined. But today the risks still outweigh the re- brutally repressing protests.
wards. Indians, who are in the midst of voting in a fresh election This impetuousness disguised as decisiveness has infected
(see Asia section), would be better off with a different leader. economic policymaking, too. In 2016 Mr Modi abruptly can-
Mr Modi is campaigning as a strongman with the character to celled most Indian banknotes in an effort to thwart money-laun-1
The Economist May 4th 2019 Leaders 11
2 dering. The plan failed, but not without causing huge disruption puppy comes under the wheel” of a car.
to farmers and small businesses. He has pushed through a na- This is not just despicable, it is dangerous. India is too com-
tionwide sales tax and an overhaul of the bankruptcy code, two bustible a place to be put into the hands of politicians who cam-
much-needed reforms. But the economy has grown only mar- paign with flamethrowers. As it is, vigilantes often beat up or
ginally faster during his tenure than it did over the previous ten lynch Muslims they suspect of harming cows, a holy animal for
years, when the Congress party was in government, despite re- Hindus. Kashmiris studying in other parts of India have been set
ceiving a big boost from low oil prices. Unemployment has risen, upon by angry nationalist mobs. And even if the bjp’s Muslim-
breaking promises to the contrary. baiting does not ignite any more full-scale pogroms, it still
Indians hear such criticisms less often because Mr Modi has leaves 175m Indians feeling like second-class citizens.
cowed the press, showering bounty on flatterers while starving, Congress, the bjp’s only national rival, may be hidebound and
controlling and bullying critics. He himself appears only at ma- corrupt, but at least it does not set Indians at one another’s
jor events. He has also suborned respected gov- throats. It has come up with an impressive man-
ernment institutions, hounding the boss of the ifesto, with thoughtful ideas about how to help
central bank from office, for example, as well as the poorest Indians. Its leader, Rahul Gandhi, al-
loosing tax collectors on political opponents, though a much-derided dynast, has helped mo-
packing state universities with ideologues and dernise the party a little, raising its profile on so-
cocking a snook at rules meant to insulate the cial media, for example. It is a worthier
army from politics. recipient of Indians’ votes than the bjp.
Mr Modi’s biggest fault, however, is his re- With less than a tenth of the seats in parlia-
lentless stoking of Hindu-Muslim tensions. He ment, Congress will not improve its showing
personally chose as chief minister of Uttar Pradesh, India’s most enough to form a government on its own. If it and its regional al-
populous state, a fiery Hindu cleric who paints the election cam- lies do better than expected, they may just be able to cobble to-
paign as a battle between the two faiths. Mr Modi’s number two gether a majority. But even if, as is more likely, the bjp remains in
calls Muslim migrants from neighbouring Bangladesh “ter- charge, it would be preferable if it were forced to govern in co-
mites”, but promises a warm welcome to Bangladeshi Hindus. alition. (The current government is technically a coalition, but
One of the bjp’s candidates is on trial for helping orchestrate a since the bjp has the numbers to rule without its partners, they
bombing that killed six Muslims. And Mr Modi himself has never have little influence.) The risk is that reforms get delayed yet
apologised for failing to prevent the deaths of at least 1,000 peo- again—but they were not progressing quickly anyway. A degree
ple, most of them Muslims, during sectarian riots in the state of of bickering and stasis would be a price worth paying to curb the
Gujarat while he was chief minister there. The closest he has bjp’s excesses. At the very least, coalition partners might be able
come has been to express the sort of regret you might feel “if a to bring down a truly wayward bjp government by leaving it. 7
Crisis in the Sahel
The West’s forgotten war
The fight against jihadists is moving to Africa
ooking somewhat dishevelled and sometimes confused, Somalia in the east to the Atlantic Ocean in the west. It is concen-
Lthe leader of Islamic State (is), Abu Bakr al-Baghdadi, issued trated in some of the poorest countries on Earth, where it is fu-
his first video message in five years on April 29th. His tone was elled by bad governance. Some of these states barely control
mostly gloomy. His followers have been vanquished in battle. much of their own supposed territory. Many jihadist recruits
His “caliphate” in Iraq and Syria lost its last bit of territory in come from ethnic minorities, such as the Fulani, who see offi-
March. Yet the fanatic who popularised beheading videos also cials as alien and predatory. Many join up after being beaten or
offered his followers some hope. He welcomed the recent robbed by police. Global warming, meanwhile, has withered pas-
pledges of allegiance to is from jihadist groups in Mali and Bur- tures, intensifying conflict over land.
kina Faso, and singled out for praise Abu Walid al-Sahrawi, the These pressures are most keenly felt in the Sahel, on the
leader of Islamic State in the Greater Sahara. The front line of the southern fringe of the Sahara desert. In Mali, Burkina Faso and
jihadists’ war against everyone else has moved to Africa. Niger the number of people killed by jihadists has doubled in
Last year almost 10,000 people, mostly civilians, were killed each of the past two years, to more than 1,100 in 2018. In the Sahel
in jihadist-related violence in Africa. That is almost as many as as a whole, some 5,000 have been killed in the past five months.
were killed in conflict with jihadists in Iraq and Syria. The num- In the area around Lake Chad some 2.4m people have fled from
ber of Western and allied troops battling jihadists in Africa may attacks by Boko Haram, a group that straps bombs to children.
also soon surpass those fighting them elsewhere. On any given The number of jihadist groups in the Sahel has multiplied, from
day America’s armed forces have about 7,000 people deployed on one in 2012 to more than ten at the last count by America’s de-
the continent. France has perhaps 4,500 in the Sahel. Throw in fence department.
Germany and Italy, each with almost 1,000, and allies such as The jihadists have deftly prised open pre-existing fracture
Canada, Spain, Estonia and Denmark, and the number surpasses lines. The mayhem is metastasising into a broader conflict be-
the 14,000 Americans in Afghanistan. tween ethnic militias, farmers and herders. In many cases jiha-
The conflict is spread across a broad expanse of Africa, from dists have started a cycle of tit-for-tat killings by attacking vil-1
12 Leaders The Economist May 4th 2019
2 lages and provoking reprisals by militias. In March a militia could work harder to curb corruption and human-rights abuses
hacked, shot and burned over 170 Fulani men, women and chil- by their armies and police forces. Since economic growth would
dren to death in central Mali, in apparent revenge for an attack foster stability, they should also open up to investment and im-
on the army by jihadists. In Burkina Faso in January a militia prove infrastructure such as roads, ports and power.
killed about 210 people in and around Yirgou, a desert village. Given the potential for African jihadism to spread attacks
Sahelian governments deserve much of the blame for all this abroad, outsiders have an interest, too. America, under Donald
bloodshed (see Middle East & Africa section). Several have sup- Trump, revealed plans last year to reduce its forces in Africa by
ported ethnic militias, which they see as a cheap, arm’s-length 10%. That is premature. Western troops will be needed in the re-
way of killing jihadists and their supporters. This tactic has back- gion for years, training and supporting local forces. Military sup-
fired. The militias are so brutal and ill-disciplined that they al- port should aim to go hand in hand with democratisation and
most certainly increase support for the jihadists. The conflict economic reform—rather than propping up regimes whose cor-
could break apart fragile states, displacing millions of people. ruption sparked unrest in the first place.
The jihadist African insurgency has too many deep-seated Like the cold war before it, the struggle against those who take
causes to be put down easily or fast. All the more reason, there- up arms in pursuit of an imaginary Islamist Utopia will probably
fore, to get some essential things right. Governments in the Sa- last for decades. And as in the struggle against communism,
hel should start by disarming the militias. At the same time, they winning hearts and minds will be the key to victory. 7
Drug resistance
Netflix and pills
A vital part of the drugs industry is broken. Take inspiration from the entertainment industry
world without antibiotics is horrible to contemplate. The first is that the antibiotics business needs to offer the
AThey underpin much of modern medicine and are essential prospect of decent profits. Asking people to pay more for drugs at
for patients undergoing chemotherapy for cancer, organ trans- a time of public outrage over the cost of medicines, from insulin
plants or common surgeries such as caesarean sections. Yet the to cystic-fibrosis treatments, is hard. But there are already moves
global rise of antimicrobial resistance, exemplified by the spread in this direction. In America Medicare is paying more for some
of Candida auris—the latest infection terrorising hospitals—and new antibiotics. And Britain’s notoriously tight-fisted drug-
super-resistant gonorrhoea, is alarming. Resistance could kill reimbursement agency has agreed to look at how its method for
10m people a year by 2050, up from 700,000 today. This week a assessing value can be adjusted to incorporate the broader soci-
un commission recommended immediate and co-ordinated ac- etal benefits of having a new antibiotic.
tion to avoid a calamity whose economic cost, the World Bank The second idea is to accept some unusual new ways to gener-
reckons, could rival that of the financial crisis of 2008-09. ate those higher profits, other than selling by the dose. Econo-
That the pharmaceutical market does not always work well is mists, including Jim O’Neill, have recommended that “market
hardly news. It has failed to develop many kinds of drugs, in- entry” prizes of $1bn or more should go to drugmakers that
cluding new vaccines and treatments for diseases that mainly af- launch the most valuable new antibiotics. Split between g20
flict the poor. But when it comes to antibiotics, countries, a prize kitty even ten times as large
matters are particularly bad. To prevent mi- New antibiotic approvals would be affordable—and value for money.
crobes from developing resistance to them, 50 But the most promising idea is for drugs
novel antibiotics tend to be reserved for use by 40 firms to change how they charge governments
30
doctors as a last line of defence and used for 20 and health insurers for antibiotics, by switching
short periods. Hence volumes are meagre. That 10 to a Netflix-style subscription model. Just as
would not matter if prices were high. But unlike 0 Netflix subscribers pay the same each month,
new drugs for cancer or rare diseases, prices of 1930s 50s 70s 90s 2010-18 whether they binge-watch boxsets all day or
antibiotics are kept low in many countries, cre- watch nothing at all, so health-care providers
ating little incentive for drug companies to develop new ones. As would pay a flat rate for access to an antibiotic, regardless of the
a result, investors avoid new antibiotic firms and are fearful that volume. When the drug is new and being saved as a last line of
they will run out of cash. The recent bankruptcy of Achaogen, a defence, the drugs company still gets paid. And if the antibiotic
biotech firm, suggests they are right to fret (see Business sec- has to be more widely used, the price does not go up. It may
tion). Big drug companies have largely bowed out of the game. sound crazy, but subscriptions are already being tried in America
Governments and charities have scrambled to stimulate ac- to pay for hepatitis c drugs. Using this model for antibiotics can
tivity by putting money into basic research, giving grants to square the circle of incentivising drugs companies to develop a
drugs startups and taking equity stakes in them, but that has not treatment that doctors will then try to use as little as possible.
been enough. Bringing a drug from the laboratory to the clinic This will not solve antibiotic resistance all on its own. Reduc-
typically takes a decade and costs around $1bn. A more extreme ing the misuse of existing antibiotics, in medicine and agricul-
option would be to nationalise antibiotic production, but that ture, is also necessary. And more could be done to improve san-
would only cause private-sector innovation to shrivel even fur- itation and processes, in hospitals and elsewhere, to minimise
ther. Instead, stimulating the development of new antibiotics the risk of infection in the first place. Fixing the pricing model is
requires governments to embrace two ideas. not a silver bullet, then. But it is a vital part of the answer. 7
14 The Economist May 4th 2019
Letters
him against the crooks in his ures in Libya or the Middle East sophomores in the oecd’s pisa
France’s national symbol party is deeply flawed, as no should not overshadow the studies have placed America
Your leader about Notre Dame mechanism exists for this. relative successes on China, below the mean of all coun-
cathedral attributed the enor- The anc’s candidate lists Russia, Iran, the Sahel and tries. A measure to test college
mous emotional response to prove he has already lost that Somalia. Other powers will readiness for maths in 2018
the fire to such factors as global battle. They are jam-packed always seek to divide eu revealed that 60% had failed.
tourism and a uniting love of with crooks. This is the same member states in order to That is after a decade of more
culture (“The human spark”, crowd that supported Jacob weaken them. So an effective school choice. More research
April 20th). All true. Yet for the Zuma through eight motions voice in the world requires to explain this decline is
French, Notre Dame is the of no confidence as he hanging together rather than needed.
closest physical embodiment destroyed the country’s hanging apart. It requires bertrand horwitz
of their deep sense of nation- institutions. South Africa is on infinite patience and endless Asheville, North Carolina
hood. Their concern arises its knees after 25 years of one- ingenuity with no guarantee of
directly from the sudden phys- party dominance by a patron- success; but that’s diplomacy. You cited data showing the
ical threat to this unparalleled age-driven party that works nicholas westcott greater efficiency (outcome per
national symbol. The response only to enrich a connected Director dollar) of private education in
is above all a powerful and elite. Our democracy urgently Royal African Society India. Yet the reverse is the
positive expression of national needs a strong alternative. London case in developed countries. As
identity, culture and history; a A strong showing for the you noted, educational out-
contrast to the destructive liberal Democratic Alliance comes are about equal in priv-
“rising threat” of nationalism will make the anc more Eton mess ate and public systems in oecd
that you mentioned. responsive to the country’s The arguments you presented countries, even though spend-
david griffiths interests and prevent it, in favour of private education ing per student is substantially
Chiddingfold, Surrey together with the socialist don’t stack up against the higher in the private sector.
Economic Freedom Fighters, evidence (“A class apart”, April Efficiency and equity therefore
You pondered the human from achieving the majority 13th). Studies from the oecd, imply using the tax system to
instinct “to care more about a required to change the consti- unesco and the World Bank, increase spending in public
building than about people”. tution to enable expropriation among others, clearly find that education, rather than encour-
Let’s do a thought experiment. without compensation. As for private schools do not perform aging private expenditure.
Donald Trump tweets, “I am Mr Ramaphosa’s supposed better than public schools. Moreover, public education
more concerned about the fire “reform agenda”, there is little Private education also perpetu- is a means of achieving in-
at Notre Dame than I am about evidence of this other than his ates disadvantage and exclu- tegration in societies with lots
1,000 black Africans.” It is easy tepid fight against corruption. sion. The eu has adopted a of migrants. Yet, in Australia at
to imagine the reaction. I’m He has supported the attack on resolution stipulating that least, subsidies to private
sure The Economist would be property rights and the forced member states must not use education have enabled recent
first in line to condemn him investment of pension funds development aid to support migrant groups to segregate
with no small hint of into chronically corrupt, commercial educational estab- their children into low-fee
superciliousness. bankrupt state-owned en- lishments, because they go private schools.
nishu sood terprises as well as the nation- against the grain of the eu’s In a free society, parents
New York alisation of the central bank principles, aligned to the un’s must be able to choose private
and of the health system. Mr goal of inclusive education. education. This does not imply
I hope that, like Quasimodo, Ramaphosa was tasked with Empowered educators and the right to public subsidies.
you ultimately realise that fixing Eskom in 2015; today the robust teachers’ unions make rex deighton-smith
gargoyles and statues are an power utility is in a death for strong education systems, Paris
inadequate substitute for true spiral and looks set to take our according to the oecd. Teach-
human connection. A single economy down with it. ers and their unions are part of
life is more valuable than any The Economist’s endorse- the solution. Instead of urging nimby, yimby, yiyby
building. ment places it on the wrong governments to weaken un- The acronym yimby, “yes in my
adam nelson side of history. ions, you should persuade backyard”, is not quite right
Oakland, California john steenhuisen them to work with unions to (“Sorry, we’re full”, April 20th).
Chief whip of the Democratic strengthen public education. When you look closely at the
Alliance in the National david edwards backers of this movement for
South Africa’s election Assembly General secretary new development and housing
Your endorsement of the Cape Town Education International in the crowded Bay Area, you
ruling African National Brussels find that the acronym is more
Congress ahead of South accurately yiyby, “yes in your
Africa’s general election was Europe’s diplomatic successes I wish you had devoted more backyard”.
unconscionable (“South Afri- Charlemagne justifiably argues analysis to the American sys- george doddington
ca’s best bet”, April 27th). The that a common European tem. During the gradual move Walnut Creek, California
anc is a criminal syndicate foreign policy is hard to towards more “choice” in
that will destroy South Africa if achieve given historic differ- education, such as charter
it remains in power for another ences among member states schools and the use of vouch- Letters are welcome and should be
decade. Your argument that a (April 20th). But don’t under- ers, mathematics results have addressed to the Editor at
The Economist, The Adelphi Building,
stronger mandate will help estimate the value of trying. declined in America when 1-11 John Adam Street, London WC2N 6HT
President Cyril Ramaphosa Without the effort to achieve a ranked with other countries or Email: