The Economist (October 5th 2019)

67 Pages·2019·13.964 MB·English

by  The Economist

China at 70—pomp and protests
Big Tech and the state gird for battle
Europe’s anti-populist backlash
What would Trump’s gators cost?
OCTOBER5TH–11TH2019
Masters
of the
universe
How machines are taking
over Wall Street
Contents The EconomistOctober5th2019 5
The world this week United States
8 Asummary of political 21 Texas won’t turn blue
andbusinessnews
22 On impeachment
23 Aunion retreat
Leaders
24 Kennedy 4.0
11 Robo-investing
24 University admissions
Masters of the universe
25 Alligators in the desert
12 Greece’s debt odyssey
End extend and pretend 26 LexingtonDougJones
12 Kashmir
Vale of tears The Americas
13 Technology and politics 27 Peru’s president v congress
Openseason 28 Chile’s lithium-battery
dream
14 Politicalrhetoric
On the cover
Downwiththepeople 28 Inuit orthography
Forget Gordon Gekko.
30 BelloArgentina’s difficult
Computers increasingly call
Letters roadtoredemption
the shots on Wall Street:
16 OnBrexit,Afghanistan,
leader,page 11. How machines
popes,Einstein, Asia
manage markets: briefing,
Columbus,T.Boone
page18 31 India’s courts and Kashmir
Pickens
32 Elections in Afghanistan
•Chinaat 70—pomp and
protests Official celebrations 33 Bumpkins’ brides in Japan
Briefing
for National Day showed a 33 Halal-crazy Indonesia
18 Robo-investing
worrying contempt for history:
Marchofthemachines 34 Making Indian computer
Chaguan,page 40. Weapons on
chips
parade, page 38. Hong Kong
35 BanyanThe next phase in
riots, page 37
theSouthChinaSea
•Big Tech and the state gird
for battleThe American
China
government is lining up against
37 Violence in Hong Kong
the technology companies,
38 Cutting-edge weapons
page 55. Europe has so many
complaints it hardly knows 40 ChaguanParading 70
where to begin, page 56 years of Communism
•Europe’s anti-populist
backlashAfter a series of
reverses, the populists are down
but not out, page 45. Politicians Middle East & Africa
who invoke “the people” are 41 Crisis in Lebanon
usually up to no good: leader,
42 Roads to ruin in Iraq
page 14
43 Netanyahu makes his case
•What would Trump’s gators
LexingtonDoug Jones, a 43 Angola’s oil decline
cost? The president would like
prophet of Deep South 44 Reform in Ethiopia
to reinforce his wall with a
moderation, illustrates
reptile-infested moat. We tot up
liberalism’s present pains
the bill,page 25
and future promise,
page 26
1 Contents continues overleaf
6 Contents The EconomistOctober5th2019
Europe Finance & economics
45 Populists under pressure 63 Unshackling Greece’s
economy
46 Culture war in France
47 Direct democracy in 65 Achallenge to FATCA
Belgium 65 Boeing v Airbus
48 European commissioners 66 Turmoil for India’s banks
on trial
66 Credit Suisse’s spying
48 GamblinginFinland furore
67 Another cloud over crypto
Britain
68 Germans against the ECB
49 Anew Brexit proposal
68 How streaming is
50 Prince Harry v the press changing pop
51 BagehotRichard Milhous 70 Free exchangeWealth
Johnson taxes
Science & technology
71 Open-source computing
International
72 Super-black coatings
53 The competition between
73 Sand-swimming lizards
sports
73 SpaceX’s Starship
74 Oceanic litter
Books & arts
75 Art and faith in Russia
Business
76 Stories from Bosnia’s war
55 Big Tech v the state
77 Poverty in London
56 Der Techlash
77 George Gershwin’s life
57 “On your way” delivery
78 JohnsonThe new insults
57 Uberising luck in Africa
58 Bartleby From rags to
Richer Economic & financial indicators
59 How woke is Nike? 80 Statisticson42economies
59 Delisting China
Graphic detail
60 Schumpeter Labour in
81 Moderncitiesaddpeoplebyspreading
the 21st century
Obituary
82 Jacques Chirac, president of many parts
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8 The world this week Politics The EconomistOctober5th2019
acquitted,sincehisparents Inacloselywatchedcase,a Some 20,000 people took to
hadabsolvedhimofblame,a judgeruledthatHarvarddoes the streets in Moscowto
factorPakistanicourtsoften notdiscriminateagainst demand the release of those
takeintoaccount. Asian-Americansinitsappli- arrested in earlier demonstra-
cationsprocess,findingthatit tions over the exclusion of
passes“constitutionalmuster”. opposition figures from a city
Vizcarra’svictory Theplaintiffsarguedthat council election.
Peru’spresident,MartínViz- Harvard’saffirmative-action
carra,dissolvedthecountry’s policyfavoursblackandHis-
congress,whichhasobstruct- panicapplicants.Thematter Atinderbox
edhislegislativeprogramme, willprobablyendupinthe As many as 25 soldiers were
andproposedtoholdacon- SupremeCourt. killed and another 60 are
Chinastaged a huge parade to gressionalelectioninJanuary. missing after jihadists attacked
celebrate 70 years of Commu- Congressrefusedtoacceptits two army bases in Mali. Sepa-
nist rule. It involved more than dissolutionandvotedtosus- Two borders for four years rately al-Shabab, a jihadist
100,000 civilians, 15,000 pendMrVizcarraaspresident. Boris Johnson, Britain’sprime group affiliated with al-Qaeda,
troops and hundreds of weap- Itinstalledthevice-president minister, made a new Brexit attacked a convoy of Italian
ons. Some of the equipment inhisplace,butshequitafter offer to the European Union. troops and an air base used by
had not been shown in public justhoursinthejob. His proposal includes customs American forces in Somalia.
before, including the df-41 checks, but not at the border in The attacks highlight the
intercontinental ballistic Guyanaistoholdelectionson Northern Ireland, plus a regu- deteriorating security across
missile, which can hit any part March2nd.Thegovernment latory border in the Irish Sea. the Sahel and into the Horn of
of America. But a “white paper” lostavoteofconfidencelast Mr Johnson is determined to Africa.
issued by China said the December.NextyearGuyanais leave the euon October 31st,
country had “no intention” of expectedtobeginreceiving but is hampered by Parlia- At a pre-trial hearing lawyers
challenging the United States, revenuefromvastreservesof ment’s legal stipulation that he for Binyamin Netanyahu,
or supplanting it. oildiscoveredoffshore.The must ask for an extension if Israel’s prime minister, argued
imfthinksthatitseconomy there is no deal. that he should not be charged
In Hong Kong, meanwhile, maygrowby85%. with corruption. The attorney-
thousands of people marked general will decide whether to
the occasion as a “day of ProsecutorsinNewYork Britain proceed with the indictments.
Votingintention*,2019,%
mourning” by staging an unau- allegedthattheyoungerbroth- Meanwhile, talks between Mr
thorised march. Some people eroftheHonduranpresident, 40 Netanyahu’s Likud party and
Conservative
Boris Johnson
later clashed with police in JuanOrlandoHernández,had Blue and White, a centrist
elected leader
30
several locations. A policeman accepted$1mfromJoaquín Labour party, over forming a govern-
shot a teenage student in the Guzmán,aMexicandrugbaron 20 ment have stalled.
chest—the first injury in- knownas“ElChapo”,thatwas LibDem
BrexitParty
volving live ammunition since intendedforthepresident.Mr 10 Hundreds of people protested
Green
pro-democracy unrest broke Hernándezsaidtheclaimwas in Lebanonas the government
SNP 0
out in the city four months ago. absurd,andnotedthatprose- grappled with a worsening
Jun Jul Aug Sep Oct
cutorsneverallegedthathe economic crisis. Enormous
Source: Politico *Poll of polls
Afghansvoted in a presi- hadreceivedthemoney. debt and shrinking foreign
dential election. The Taliban Brexitisnottheonlytrouble investment have led to fears
had vowed to disrupt the for Mr Johnson. Hard on the that the Lebanese pound will
polling, which nonetheless On a mission heels of the controversy sur- be devalued and prices raised.
was relatively peaceful. Democrats in the House of rounding his relationship with Iraqisalso took to the streets to
Turnout was extremely low. Representatives pushed ahead an American businesswoman protest against unemployment
The results will not be with an impeachment in- when he was mayor of London, and corruption. Security forces
announced until November. vestigationof Donald Trump’s a female journalist accused Mr responded with live fire; at
request to the Ukrainian presi- Johnson of groping her thigh in least 18 people were killed and
North Koreaagreed to resume dent to dig up dirt on the son of 1999, when he was her boss. He hundreds wounded.
disarmament talks with Amer- his rival, Joe Biden. Subpoenas denied it happened. Despite its
ica after a hiatus of eight were sent to Mike Pompeo, the leader’s problems theConser- Software developers in Lagos,
months. It later tested a mis- secretary of state, and to Ru- vative Partyholds a resilient Nigeria’smain commercial
sile, which it said it launched dolph Giuliani, the president’s lead in the polls. city, started a campaign against
from a submarine near its lawyer. In a Twitter meltdown, harassment by the police, who
coast into Japanese waters. Mr Trump claimed the Demo- Sebastian Kurz and his People’s single out people carrying
crats were staging a “coup”. Party were the clear winners in laptops or smartphones for
A court in Pakistansentenced Austria’ssnap election, caused extortion. The arrests threaten
the brother of Qandeel Baloch, Bernie Sanderscancelled after his government collapsed a boom in startups.
a social-media star, to life in events in his campaign for the following a scandal connecting
prison for her murder. He said Democratic presidential nomi- his coalition partners, the Ugandabanned people from
he had killed her to preserve nation until further notice, Freedom Party, and Russian wearing red berets, which are
the family’s honour, after she after he had heart stents insert- money. However, he is still associated with an opposition
posted pictures of herself ed to relieve some chest pains. short of a majority, and is movement led by Bobi Wine.
online. Activists for women’s The 78-year-old has kept up a casting around for an alterna- Mr Wine was recently charged
rights had feared he would be gruelling campaign schedule. tive to join a new government. with “annoying” the president.
10 The world this week Business The EconomistOctober5th2019
A15-yeardisputeoversub- had an acrimonious relation- central bank would cut interest gear and clothing company,
sidiesintheaerospacein- ship with Mr Khan; the pair rates again, despite recent was sold to Kathmandu, a New
dustrycametoapartialclimax reportedly had a blazing row at remarks by its new governor Zealand outdoor specialist.
whentheWorldTradeOrgani- a cocktail party in January. that there was limited room for The men, now in their 70s, sold
sationruledthatAmerica manoeuvre. their firm for A$350m ($235m).
couldlevy$7.5bn-worthof Wells Fargonamed Charles
tariffsonexportsfromthe Scharf as its new chief PayPal became the first foreign A report from Kroll, a corporate
EuropeanUnionbecauseofthe executive, six months after company to enter China’s investigations and consultan-
illegalaidgiventoAirbus.Next Tim Sloan resigned in the payments industrywhen it cy firm, highlighted the rep-
yearthewtowillprobably aftermath of a mis-selling took a 70% stake in a domestic utational risk to businesses
approveEuropeanpenaltieson scandal. Mr Scharf has led digital-payments firm. Ameri- from fake news on social
Americabecauseofitsaidto Bank of New York Mellon and can companies have been media. Across the company
Boeing.Thedecisionaddsto Visa and was a senior executive trying for years to break into a bosses surveyed in 13 coun-
alreadyheightenedtradeten- at JPMorgan Chase during the market that is dominated by tries, 84% felt threatened by
sions.Americasaiditwould financial crisis. Alibaba and Tencent. attempts to manipulate mar-
startimposingthetariffson kets with fake stories, either by
October18th,of10%onaircraft India’scentral bankreassured Japan’s sales taxrose from 8% competitors or short sellers.
and25%onarangeofother the public that the banking to 10%. The increase had been One American cosmetics
goods,includingcheese, system is “safe and stable and postponed in 2015 and again in company saw sales drop by a
olives,wineandwhiskey. there is no need to panic” as 2017 amid worries of a slump in fifth after a campaign on Twit-
another scandal emerged. consumer spending, which ter falsely claimed it tested its
Curbs had to be imposed on happened after a previous raise products on animals.
Economic policy uncertainty withdrawals by nervous savers to the tax in 2014. Food and
Global average 1997-2015=100
from Punjab and Maharashtra non-alcoholic drinks continue
400 Co-operative Bank as it came to be taxed at 8%. The guru
300 under scrutiny for financial The leaked transcript of Mark
irregularities. Another bank Novartisannounced a Zuckerberg’scomments at a
200
faced restrictions on its ability partnership with Microsoftto staff meeting provided a
100 to make new loans. apply artificial-intelligence glimpse into the inner
technology to medicine. In one thoughts of Facebook’s boss.
0
Faced with a sharp downturn of the biggest collaborations in Mr Zuckerberg said that Eliza-
2005 10 15 19
in the country’s housing mar- the field, the Swiss drugmaker beth Warren’s proposal to
Source: Economic Policy Uncertainty
ket, Australia’scentral bank said the research would start break up big tech companies
Earlier,thewtosaiditnow cut its main interest rate by a with tackling personalised would “suck” and “you go to
expectsglobaltradeflowsto quarter of a percentage point, remedies for eye degeneration, the mat and you fight” over
increasebyjust1.2%thisyear, to 0.75%, the lowest ever. cell and gene therapy and drug something so “existential”.
downfromthe2.6%itforecast design. When asked about brain-
inAprilandtheslowestpace A drop in Turkey’sannual computer interfaces, he joked
sincethefinancialcrisis. inflation rate to 9.3%, the Founded in 1969 by two men that disapproving headlines
Unresolvedtradeconflicts lowest in almost three years, making surfboards in a garage, would say “Facebook wants to
haveledtogreateruncertainty increased the betting that the Rip Curl, an Australian surfing perform brain surgery”.
aboutpolicy,causingbusi-
nessestoputoffinvestment.
Thegrowthofexportsand
importsslowedacrossall
regionsinthefirsthalfof2019.
Meanwhile,anindexofAmeri-
canmanufacturingfelltoits
lowestlevelsinceJune2009.
Perils of the cocktail party
The chairman of Credit Suisse
said the bank had been wrong
to conduct surveillance on
Iqbal Khan, a former executive,
over fears he would lure away
staff and clients. The bank’s
chief operating officer, who
admitted to acting alone in
ordering the operation, and the
head of security, resigned. A
review by a law firm called in
by Switzerland’s second-big-
gest bank cleared Tidjane
Thiam, the chief executive, of
any involvement. Mr Thiam
Leaders Leaders 11
Masters of the universe
Forget Gordon Gekko. Computers increasingly call the shots in financial markets
The job of capital markets is to process information so that Untilnowtheriseofcomputershasdemocratised finance by
savings flow to the best projects and firms. That makes high cutting costs. A typical etfcharges 0.1% a year, compared with
finance sound simple; in reality it is dynamic and intoxicating. It perhaps 1% for an active fund. You can buy etfs on your phone.
reflects a changing world. Today’s markets, for instance, are An ongoing price war means the cost of trading has collapsed,
grappling with a trade war and low interest rates. But it also re- and markets are usually more liquid than ever before. Especially
flects changes within finance, which constantly reinvents itself when the returns on most investments are as low as today’s, it all
in a perpetual struggle to gain a competitive edge. As our Briefing adds up. Yet the emerging era of machine-dominated finance
reports, the latest revolution is in full swing. Machines are tak- raises worries, any of which could imperil these benefits.
ing control of investing—not just the humdrum buying and sell- One is financial stability. Seasoned investors complain that
ing of securities, but also the commanding heights of monitor- computers can distort asset prices, as lots of algorithms chase
ing the economy and allocating capital. securities with a given characteristic and then suddenly ditch
Funds run by computers that follow rules set by humans ac- them. Regulators worry that liquidity evaporates as markets fall.
count for 35% of America’s stockmarket, 60% of institutional These claims can be overdone—humans are perfectly capable of
equity assets and 60% of trading activity. New artificial-intelli- causing carnage on their own, and computers can help manage
gence programs are also writing their own investing rules, in risk. Nonetheless, a series of “flash-crashes” and spooky inci-
ways their human masters only partly understand. Industries dents have occurred, including a disruption in etf prices in
from pizza-delivery to Hollywood are being changed by techno- 2010, a crash in sterling in October 2016 and a slump in debt
logy, but finance is unique because it can exert voting power over prices in December last year. These dislocations might become
firms, redistribute wealth and cause mayhem in the economy. more severe and frequent as computers become more powerful.
Because it deals in huge sums, finance has always had the Another worry is how computerised finance could concen-
cash to adopt breakthroughs early. The first transatlantic cable, trate wealth. Because performance rests more on processing
completed in 1866, carried cotton prices between Liverpool and power and data, those with clout could make a disproportionate
New York. Wall Street analysts were early devotees of spread- amount of money. Quant investors argue that any edge they have
sheet software, such as Excel, in the 1980s. Since is soon competed away. However, some funds
then, computers have conquered swathes of the are paying to secure exclusive rights to data.
financial industry. First to go was the chore of Imagine, for example, if Amazon (whose boss,
“executing” buy and sell orders. Visit a trading Jeff Bezos, used to work for a quant fund) started
floor today and you will hear the hum of servers, trading using its proprietary information on e-
not the roar of traders. High-frequency trading commerce, or JPMorgan Chase used its internal
exploits tiny differences in the prices of similar data on credit-card flows to trade the Treasury
securities, using a barrage of transactions. bond market. These kinds of hypothetical con-
In the past decade computers have graduated flicts could soon become real.
to running portfolios. Exchange-traded funds (etfs) and mutual A final concern is corporate governance. For decades com-
funds automatically track indices of shares and bonds. Last pany boards have been voted in and out of office by fund manag-
month these vehicles had $4.3trn invested in American equities, ers on behalf of their clients. What if those shares are run by
exceeding the sums actively run by humans for the first time. A computers that are agnostic, or worse, have been programmed to
strategy known as smart-beta isolates a statistical characteris- pursue a narrow objective such as getting firms to pay a dividend
tic—volatility, say—and loads up on securities that exhibit it. An at all costs? Of course humans could override this. For example,
elite of quantitative hedge funds, most of them on America’s east BlackRock, the biggest etffirm, gives firms guidance on strategy
coast, uses complex black-box mathematics to invest some and environmental policy. But that raises its own problem: if as-
$1trn. As machines prove themselves in equities and derivatives, sets flow to a few big fund managers with economies of scale,
they are growing in debt markets, too. they will have disproportionate voting power over the economy.
All the while, computers are gaining autonomy. Software pro-
grams using aidevise their own strategies without needing hu- Hey Siri, can you invest my life savings?
man guidance. Some hedgefunders are sceptical about aibut, as The greatest innovations in finance are unstoppable, but often
processing power grows, so do its abilities. And consider the lead to crises as they find their feet. In the 18th century the joint-
flow of information, the lifeblood of markets. Human fund man- stock company created bubbles, before going on to make large-
agers read reports and meet firms under strict insider-trading scale business possible in the 19th century. Securitisation caused
and disclosure laws. These are designed to control what is in the the subprime debacle, but is today an important tool for laying
public domain and ensure everyone has equal access to it. Now off risk. The broad principles of market regulation are eternal:
an almost infinite supply of new data and processing power is equal treatment of all customers, equal access to information
creating novel ways to assess investments. For example, some and the promotion of competition. However, the computing rev-
funds try to use satellites to track retailers’ car parks, and scrape olution looks as if it will make today’s rules look horribly out of
inflation data from e-commerce sites. Eventually they could date. Human investors are about to discover that they are no lon-
have fresher information about firms than even their boards do. ger the smartest guys in the room. 7
12 Leaders The EconomistOctober5th2019
Greece’s debt odyssey
Time to end extend and pretend
Greece wants freedom. Its creditors don’t want it to have a free lunch. A new grand bargain is required
TenyearsagothismonthGeorgePapandreou,thenthenewly Thepenaltermsofthedealof2018reflectmistrust.Northern
elected prime minister of Greece, announced to the world politicians could not sell a deal at home that appeared to let
thatthegovernment’sbookshadbeencookedandthatthebud- Greeceoffthehook.AsrecentattacksinGermanyonthedoveish
getdeficitin2009wasinfactdoublepreviousestimates.Inves- policies of the European Central Bank illustrate, suspicions in
torspanickedandGreecelostaccesstocapitalmarkets,eventu- thenorththattheyareunderwritingthesoutharestillalive.
allyforcingittoseekhelpfromtheEuropeanUnionandtheimf. For its part Greece has shirked the reforms needed if it is to
Aseverefinancialcrisis,togetherwithswingeingspendingcuts start growing fast enough to catch up with the rest of the euro
demandedbythecreditors,plungedGreeceintooneofthedeep- area.Thepreviousgovernment,ledbySyriza,aleft-wingparty,
est downturns experienced by a rich country since the second hit its fiscal targets but slid back on reform. Banks are stuffed
worldwar. with dud loans and the framework for dealing with them is in-
Nowanothernewprimeminister,KyriakosMitsotakis,istry- complete.Taxrevenuesrelyontoonarrowabase,inturnrequir-
ingtogetGreecebackonitsfeet(seeFinancesection).Though inghighratesthatdeterhiring.Inregisteringpropertyorresolv-
the economy has begun expanding again, growth is lacklustre ingbusinessdisputes,theWorldBank’s“DoingBusiness”report
andoutputisnearlyaquarterbelowitslevelin ranksGreeceinthebottomthirdofcountries.
2007.Thecountryleftitsthirdbail-outlastyear Greece Thereisawayout.WhenGreeksvotedinJuly
withapublicdebtof180%ofgdp.Itisnowsub- Generalgovernmentgrossdebt,%ofGDP for Mr Mitsotakis, who stood on a platform of
jecttothetermsofadebt-reliefdealstruckwith 200 reform, they turned their back on populism.
150
its European creditors. This deal was designed Creditors should take that as a sign of good
100
tolooktoughinordertobepalatabletoelector- faith.Theyshouldalsosetoutanewgoal—that,
50
atesinthenorthofEurope,whohatetheideaof in exchange for more reforms, Greece should
0
bailingoutsoutherners,butexpertsagreethatit getadebtwrite-downthatisbigenoughtoallow
2004 10 15 18
iswildlyunrealistic.Thetimehascometostop it to service its debts sustainably without run-
pretendingandsettleGreece’sfinancesonceandforall. ning a primary surplus. During this period, provided Greece
The agreement of 2018 extends the maturities of some of passes milestones on reforms, its fiscal-surplus targets should
Greece’sloansandofferssomeinterest-raterelief.Inreturn,as graduallyberelaxed.Asagoodwillgesture,theeucouldmean-
wellascontinuingreforms,Greecemusthitdraconianfiscaltar- while release over €1bn a year of profits from a bond-buying
gets.Itmustrunaprimarysurplus(ie,beforeinterestpayments) schemetogiveGreeceextrafiscalspace.
of 3.5% of gdp a year until 2022, and of 2.2%, on average, until YetMrMitsotakishasbeenslowtohonourhispromiseofre-
2060.Thequestionofdebtreliefisnottoberevisiteduntil2032. form.Heneedstorolluphissleeves.Hehaswonpublicsupport
Thatthesetargetsarefancifulisanopensecret.Onlyahand- and impressed the markets—the premium of Greek ten-year
fulofcountrieshavepulledoffsuchafeat—mostwereresource- governmentbondyieldsoverGermanoneshasfallenbyhalfthis
richandthriving.ToexpectGreecetocommittosuchfiscalmas- year.HemustpersuadenorthernersthatGreecehasearnedsome
ochismforfourdecadesisnotsensible.Astheimfpointsout,it flexibility.Thismeansfacinguptotheproblemsthatholdback
willeventuallyneedrealdebtrelief.Andastheeconomyisstill the economy. For ten years governments and creditors have
depressed,thereisastrongcaseforsomefiscallooseningnow. muddledthrough.Greeksdeservebetter.7
Kashmir
Vale of tears
The courts’ refusal to curb repression in Kashmir should alarm all Indians
It is two months now since India’s parliament abruptly sible only on the authorities’ say-so. In theory the ruling Bhara-
amended the constitution to downgrade Jammu & Kashmir tiya Janata Party (bjp) is integrating Kashmir into the rest of In-
from a partly autonomous state to a territory administered by dia. In practice it has turned the valley into a vast open-air
the central government. That means it is also two months since detention centre.
the Indian authorities detained some 2,000 prominent Kashmi- That the bjphas it in for Kashmiris is hardly news. The mani-
ris—politicians, businessmen, activists, journalists—to prevent festo the party put out before it won its thumping victory in na-
them from protesting. They continue to be held without charge, tional elections earlier this year called for the scrapping of Jam-
many in unknown places. Meanwhile the 7m-odd residents of mu & Kashmir’s special status. The state is the only one in India
the Kashmir valley, the state’s main population centre, are under with a Muslim majority, and the Hindu-nationalist bjpdislikes
a lockdown of a different sort. Mobile phones and the internet anything that smacks of privileges for Muslims. The bjp also
remain cut off; getting around is hard and getting in or out is pos- likes to parade its defiance of Pakistan, which controls a slice of 1
The EconomistOctober5th2019 Leaders 13
2Kashmir and claims the rest, and has vehemently denounced the detention without trial for the Kashmiris rounded up by the au-
upheaval in the valley. For Narendra Modi, the prime minister thorities and another month during which humbler Kashmiris
and leader of the bjp, picking on Kashmir presents an easy op- will be deprived of rights that other Indians take for granted.
portunity to pose as a resolute nationalist who will not hesitate Few of those other Indians will care very much. The Kashmir
to confront his enemies. valley is hemmed in by the Himalayas at the northern extreme of
But if Mr Modi’s actions are not that surprising, the reaction the country, far from most Indians’ thoughts and experience. It
of the courts has been (see Asia section). India’s judges are noto- has been in some degree of turmoil since partition and indepen-
riously meddlesome and difficult. No question is beneath their dence 71 years ago. It suffers separatist violence, now mostly
scrutiny: what destinations state-owned airlines should fly to, home-grown rather than instigated by Pakistan, which demands
say, or just how close a liquor store can be to a highway. They a response from India’s security services—though that does not
have dealt all sorts of embarrassing defeats to the central govern- justify today’s wholesale lockdown. To the extent that the rest of
ment in recent years, inventing a previously unknown right to the country gives Kashmiris any thought, it tends to see them as
privacy that almost scuppered a huge biometric identification troublemakers, if not traitors. Many Indians are toasting Mr
scheme, and voiding a lucrative auction of mobile-telephone li- Modi for at last giving them their comeuppance.
cences. Yet on the many glaring abuses occurring in Kashmir Both gleeful and indifferent observers ought to be more wor-
they have remained resolutely—and shamefully—silent. ried. Mr Modi’s authoritarian instincts are not confined to Kash-
Although the courts in Kashmir are in theory functioning, mir. If the courts continue to let him, he will doubtless continue
lawyers are striking, making it hard for petitioners to get any- to reshape India in keeping with the bjp’s plainly stated goals.
where. The chief justice of the Supreme Court in Delhi has de- That includes stripping 1.9m poor and illiterate residents of the
clared that he is simply too busy to hear all the cases related to state of Assam of their citizenship, for example, if they do not
the government’s actions in Kashmir. He passed them to other have the correct paperwork to prove that they are Indian citizens.
benches of the Supreme Court, one of which gave the govern- Then there is the bjp’s plan to finish the job begun by Hindu zeal-
ment a further month to contemplate its response. Conveniently ots in 1992 by building a temple on the site of the mosque they de-
enough, that pushes any ruling about whether or not the govern- molished. Events in Kashmir show that the government is ready
ment’s downgrading of Jammu & Kashmir from a state to a terri- to trample Indians’ civil rights in order to squelch resistance to
tory was constitutional until after the change takes effect, on Oc- its actions. If the Supreme Court is willing to look away today,
tober 31st. It will also mean, in all likelihood, a further month of who is to say that the government will not feel free to carry on? 7
Technology and politics
Open season
The rise of open-source computing is good for competition—and may offer a way to ease the tech war
To theaverage capitalist “open source” software may seem Google, Nvidia and Qualcomm (see Science section). In August
like a pretty odd idea. Like most products, conventional com- ibmmade its Power chip designs open-source. These moves are
puter software—from video games to operating systems—is de- welcome, for two reasons.
veloped in secret, away from the prying eyes of competitors, and The first is economic. The chip business is highly concentrat-
then sold to customers as a finished product. Open-source soft- ed. risc-vcompetes with closed-source designs from Arm, a Jap-
ware, which has roots in the collaborative atmosphere of com- anese-owned firm which monopolises the market for tablet and
puting’s earliest days, takes the opposite approach. Code is pub- smartphone chips, and is a dominant presence in the fast-grow-
lic, and anyone is free to take it, modify it, share it, suggest ing “internet of things”. ibm’s Power will challenge Intel’s grip on
improvements or add new features. desktops and data-centres. A dose of competi-
It has been a striking success. Open-source tion could lower prices and quicken innovation.
software runs more than half the world’s web- The second reason is geopolitical. America
sites and, in the form of Android, more than and China are waging a technological cold war;
80% of its smartphones. Some governments, in- it threatens to damage a computer industry that
cluding Germany’s and Brazil’s, prefer their offi- has become thoroughly globalised. The open-
cials to use open-source software, in part be- source model, were it to be widely adopted,
cause it reduces their dependence on foreign might help defuse these tensions, by giving both
companies. The security-conscious appreciate sides at least some of what they want.
the ability to inspect, in detail, the goods they are using. It is per- Start with China. In May America blacklisted Huawei, a Chi-
fectly compatible with making money. In July ibmspent $34bn nese tech giant which makes both smartphones and mobile-net-
to buy Red Hat, an American maker of a free open-source operat- work equipment. That underlined, to other Chinese firms and to
ing system, which earns its crust by charging for ancillary ser- the country’s leadership, the risks of a model in which Chinese
vices like customer support and training. tech firms build their products on American software and hard-
Now the model is spreading to chips. risc-vis a set of open- ware designs. Under the label “Made in China 2025”, the country
source designs for microchips that was initially developed a de- is investing billions to try to boost its domestic capacity.
cade ago at the University of California, Berkeley. These days it is Open-source components offer an alternative supply chain,
attracting attention from many big technology firms, including less subject to any individual country’s control. Alibaba, a Chi-1
14 Leaders The EconomistOctober5th2019
2nese e-commerce giant, has already shown off a machine-learn- torship to steal secrets—or, worse, to sabotage societies that are
ing risc-vchip. Xiaomi, a maker of smartphones and other con- increasingly dependent on networked computers.
sumer gadgets, is planning to use risc-v chips in its fitness Here too, open-source technologies can begin to change the
bands. Were Android not open source, Huawei would be in an mood. Most Chinese products remain closed-source “black box-
even deeper hole than it already is. es” containing software and hardware whose inner workings are
Other countries are interested, too. India’s government has unknown. Particularly for software, and to some extent with
been investing in risc-vdevelopment in the past year; it is also hardware, an open-source model would give buyers the ability to
keen to develop a technology ecosystem that minimises foreign compare what they have with what they were promised. To the
dependence (see Asia section). In an effort to reassure the com- extent that they can verify, they will not have to trust.
panies using its technology, the risc-v Foundation is moving The tech war is a battle for influence between an incumbent
from America to neutral Switzerland. superpower and an aspirant one. A complete rupture would be
Many in the West, meanwhile, see China’s growing techno- extraordinarily costly and force most countries to take sides.
logical prowess as a malign development. One worry is that Chi- Open-source computing can help calm tempers. That would be
nese products may be Trojan horses, allowing a repressive dicta- good for everybody. 7
Political rhetoric
Down with the people
Politicians who invoke “the people” are usually up to no good
Since the first three words of the preamble to the United a democracy but, inevitably, inconvenient for presidents and
States’ constitution thundered into the world’s political lexi- prime ministers who are not particular about the means they use
con, “the people” has been one of the favourite invocations of to achieve their ends. President Donald Trump has referred to
those in, or in pursuit of, power. It has also been one of the most the media as “enemies of the people”; Poland’s ruling pis party
abused. No state has been as undemocratic or unpopular as the justifies its attacks on the legal system and the opposition by ref-
Democratic People’s Republic of Korea. The People’s Movement erence to its connection to the narod; Boris Johnson, Britain’s
for the Liberation of Angola has paid more attention to liberating prime minister, has set himself up as defending the will of “the
the country’s assets into its leaders’ foreign bank accounts than people” against those in Parliament and the courts who are stop-
to freeing Angolans from the oppression of poverty. In the media ping Britain from leaving the European Union without a deal.
the formula signals a determination to ignore popular taste: the Once a politician has defined those who elected him as “the
People’s Daily makes no more effort to appeal to its Chinese read- people”, then he embodies their will and it is but a short step to
ers than Pravda did to tell the truth to its Soviet ones. So when defining his own enemies as the nation’s. After Polish mps called
Downing Street frames the election Britons are expecting as “Par- for an euinvestigation of their government, the prime minister,
liament versus the people”, the people should beware. Jaroslaw Kaczynski, called them traitors. Mr Johnson calls a law
References to “the people” are standard fare in political designed to avoid a chaotic departure from the eu“the Surrender
speech. Emmanuel Macron, France’s president, Act”, and accuses its supporters of “collabora-
likes to bang on about the mandat du peuple, and tion”. Mr Trump tweets that “what is taking
the responsibility it confers. This is fine; the place is not an impeachment, it is a COUP, in-
danger arises when “the people” are weap- tended to take away the Power of the People,
onised against a supposed enemy. their VOTE, their Freedoms, their Second
It is not just politicians who do this. Princess Amendment, Religion, Military, Border Wall,
Diana said she wanted to be the “queen of peo- and their God-given rights as a Citizen of The
ple’s hearts”—in implied contrast to the awk- United States of America!”
ward husband who commanded the affections If “the people” are thwarted by the courts or
of nobody but his mistress. But with the rise of populism, the tac- parliament, they may be driven to unconstitutional action.
tic is spreading among politicians. Sometimes the enemy is a That’s what some Britons thought the Conservative Party chair-
foreign one. Hugo Chávez, Venezuela’s late demagogue, called man meant when he said that, if they were denied Brexit, they
on the people to resist “the empire”—George W. Bush was unpop- would “look at other ways of initiating change”. And it is what
ular worldwide, and thus a convenient target. Today Mexico’s some Americans concluded when Mr Trump retweeted a pastor’s
president, Andrés Manuel López Obrador (amlo), unwilling to warning that impeachment would “cause a Civil War like frac-
antagonise his northern neighbour, prefers the vaguer “mafia of ture in this Nation”. If “the people” take matters into their own
power”. Sometimes it is a religious minority, such as Muslims, hands, what is a president to do? At a recent press conference,
who are clearly excluded from the ruling Bharatiya Janata Party’s amlo declared, “I believe that not only you’re good journalists
celebration of its success in India “in inciting amongst the peo- but you’re also prudent...And if you cross the line, well, you
ple a desire for a unique cultural Indic renaissance”. Any of these know what happens, right? But it’s not me, it’s the people.” He did
foes may be used to whip up support for a struggling politician. not specify what the people might do, but Mexico’s journalists
But the target is usually the institutions that stand in the poli- understand the risks: 12 have been murdered this year.
tician’s way, especially the legislature, the courts and the media. Voters should keep an ear cocked for this dangerous phrase. It
Such checks and balances are essential to the proper workings of marks the user out not as a democrat but as a scoundrel.7
16 Letters The EconomistOctober5th2019
Askingpeopletovoteina cessationofformalcombat Communist International’s
It’s time to leave secondreferendumwouldbe operationsin1989,thatpre- liaison office with East and
Clearly you have thrown cau- anincrediblemarkofdisre- sagedthecollapseoftheNaji- South-East Asian communist
tion to the wind regarding any spect.Itwouldmeanthat bullahregimeandtheeventual parties, all of them illegal at the
reluctance to hold back on your democracyhasbeenreplaced Talibantakeoverin1996.The time. He also supported, after
ill-concealed bile regarding withaperniciouskindof parallelsarenotencouraging. an about turn, the Moscow
Boris Johnson (“The reck- dictatorshipwherepeopleare Inallthis,Britainhasre- show trials. Yet, in 1931he had
oning”, September 28th). You stillallowedtospeakup,but sponsibilitiesdistinctfrom written in a private letter:
say he is the worst prime min- theirvoicesareneverheard. ourdutyasanatoally.These
Iam not for punishment at all,
ister in living memory, an kenjioshiguru aretosupportandsustainthe
but only for measures that
opinion so grossly uncharita- Yokohama,Japan legitimateAfghangovernment
serve society and its protec-
ble that it could only emanate anditssecurityforcesandto tion. In principle I would not
from rabid, Brussels-infatuat- Charlemagnehasthecheekto protectourpartnersinthat be opposed to killing individ-
ed journalists, wholly given mention“theeu’scommit- struggle,especiallyourformer uals who are worthless or
over to Remain propaganda. A menttofreetrade”andthe interpreters.Ourhistoryand dangerous in that sense. I am
few lines later, you say he is Doharoundofmultilateral engagementwithAfghanistan against it only because I do not
trust people, ie, the courts.
“inadequate” to the task and tradenegotiations(September andthesacrificesofthecam-
only in office because of Brexit. 14th).Infact,theeuwasthe paigndemandnothingless. Stalin seems to have become
Is this surprising when one principalculpritinwrecking colonel(ret’d)simon trustworthy to Einstein. His
considers how deliberately the thisroundtodefendtheeco- diggins politics cannot be reduced to
deep-state establishment has nomicobscenityofthecom- Defenceattaché,Kabul2008-10 supporting free opinion; he
done its best to scupper Brexit monagriculturalpolicy,which Rickmansworth,Hertfordshire may even sometimes have
altogether? It would dishonour youdescribedas“disgraceful” ignored that principle.
the wishes of 17.4m of us atthetime(“Deadlockedin freddy litten
stupid, brainless, moronic, Doha”,March29th2003).That Thepopesoncapitalism Munich
uneducated, gormless half- articleforetoldthatthefailure SchumpeterdescribedCatho-
wits, who want our govern- ofDohawouldresultin“trade- licsocialteachingas“pro-
ment back, who want to con- divertingbilateralorregional capitalist”(September7th). Hello, Columbus
trol our own borders, make our tradedeals”.Theeuisnot True,thechurchhaslong For those who may not be able
own laws, spend our own committedtofreetrade.Itis rejectedcollectivismand to get to Columbus, Indiana, to
money, and who do not wish to committedtomanagedtrade championedprivateenter- check out its surprising Mod-
be ruled by France and Ger- toprotectthecap. prise.Butpopeshavealso ernist buildings, I recommend
many and their back-scratch- charlesefford cautionedagainstcapitalism, an offbeat movie called, some-
ing bureaucrats, manipulating London notleastitsneoliberaliter- what unsurprisingly, “Colum-
a hopeless crony capitalism. ation.PiusXIIblamed“the bus” (“Modernism in the
You know very well that the exploitationofprivatecapital” cornfields”, September 14th). It
euro is on life support and can NATO in Afghanistan (aswellas“stateabsolutism”) features most of the architec-
only prosper if fiscal union is Regarding the stalled peace forworkingpeople’s“servi- tural gems referred to in your
achieved, which implies the deal with the Taliban in tude”.PaulVIcriticisedthe article, and it got sparkling
end of the nation state. The Afghanistan (“Talking chop”, “unbridledliberalism”inher- reviews. As Rotten Tomatoes
Lisbon treaty demands full September 14th), the over- entincapitalism.JohnPaulII says, “‘Columbus’…balances
compliance in fiscal and mon- whelming brunt of the fighting condemnedtheincreasingly the clean lines of architecture
etary policy, in defence and is conducted by the Afghan “intrusive,eveninvasive, against the messiness of love.”
social interaction, of which the National Security Forces who, characterofthelogicofthe nigel brachi
most economically damaging because of their limited train- market”.BenedictXVIcalled Edmonton, Canada
and socially divisive is ing and capability, are taking for“aneweconomicmodel”.
uncontrolled immigration. huge casualties. The Afghan PopeFrancisstandssquarelyin
Is it right-wing to resist government stopped pub- thistradition,whichdoesn’tfit Alegendary oil man
these negative developments? lishing the data in 2017 but one neatlyonthesecularleft-right T. Boone Pickens didn’t just
Is it wrong to want sovereignty reliable estimate suggests ideologicalspectrum. show inefficient firms who was
returned? Is it unacceptable to some 20 are killed each day. danbrendel boss (Buttonwood, September
wish not to be a continental This affects morale and recruit- Oceanside,California 21st). When Drake, a hip-hop
European? You leave me al- ment; their natoco-operation star, posted a humble brag on
most speechless at your lack of troops have to work hard to Twitter that making “the first
patriotism (let me guess, you keep them going. Despite the Einstein’s politics million is the hardest”, Pickens
have a house in France and collective effort, the Afghan It is interesting that the Albert shot back: “the first billion is a
friends in Tuscany). For you government controls just over Einstein exhibition in Shang- helluva lot harder.”
democracy is dead, replaced by 50% of the country, at best. hai ignores the fact that he yacov arnopolin
technocracy, the rule of Plato’s This demonstrates that, supported some communist London
golden souls who know (how although a peace settlement is causes in the 1920s and 1930s,
do they?) all the outcomes, the ultimately the only way to though not all (“Relatively
ideal way forward, the pre- settle Afghanistan, this is not revealing”, September 21st). Lettersarewelcomeandshouldbe
scriptions for universal happi- the time to tinker with nato Einstein campaigned, for addressedtotheEditorat
TheEconomist,TheAdelphiBuilding,
ness, unlike us benighted, force numbers. We should not example, for the freedom of the
1-11JohnAdamStreet,LondonWC2N6HT
dead-wood, has-beens. forget that it was the with- Noulens couple, who had been Email:[email protected]
david maples drawal of Russian co-operation arrested in Shanghai in 1931for Morelettersareavailableat:
Economist.com/letters
Petersfield, Hampshire troops in 1992, not the Soviets’ being leading members of the