The Economist (September 22nd, 2018)

84 Pages·2018·7.8 MB·English

by  The Economist

Africa’s dangerous baby boom
Get ready for a long trade war
Why storms are getting worse
The science of vaping
SEPTEMBER 22ND–28TH 2018
Latin
America’s
latest
menace
The Economist September 22nd 2018 3
Contents
6 The world this week Asia
33 Japanese politics
Leaders Abe’s ambition
9 Elections in Brazil 34 Kyrgyzstan
Latin America’s menace Hunting for extremists
10 Trade 34 Talks with North Korea
Hunker down Parading for peace
10 Artificial intelligence 35 Banyan
AI, EU, go Stuffing the ballot boxes
11 Reforming Japan 36 Suicide in India
A long haul Deadly reckoning America’s mid-terms If the
Democrats are to retake the
12 African demography 36 Politics in Pakistan Senate, they will do so thanks
Not so fast Nawaz Sharif leaves jail to their moderate candidates,
On the cover page 23. The triumph of the
Jair Bolsonaro would make a Letters China far-left in Democtratic
disastrous president for
14 On farming, Syria, 37 The economy primaries has been greatly
Brazil: leader, page 9. The
immigration, Nike, the Life in a slower lane overstated, page 24
election could save Latin
armed forces 38 Hong Kong’s transport
America’s biggest democracy,
Anger over a new rail
or sabotage it, page 18
terminus
Briefing
39 Chaguan
18 Latin America
The curious role of a
The Economist online The noise from Brazil
tabloid
Daily analysis and opinion to
supplement the print edition, plus United States
audio and video, and a daily chart Middle East and Africa
Economist.com 23 The Senate 40 Demography
No fairy tale
E-mail: newsletters and Babies are lovely, but...
24 Democratic primaries
mobile edition 41 Child marriage
Economist.com/email The centre can hold Growing up too early
Fertility in Africa Countries
25 Foreign lobbying
Print edition: available online by 44 French forces in Africa can bring down their birth
Crimea river
7pm London time each Thursday Sahel or high water rates without resorting to
Economist.com/printedition 26 Nevada’s brothels
44 Israel’s armed forces Asian-style illiberalism:
Audio edition: available online Bras and ballot-initiatives Stand uneasy leader, page 12. The
to download each Friday 27 Activism continent’s high birth rate is
45 Syria’s war
Economist.com/audioedition Beyond the hashtag keeping it poor, page 40. Child
Staving off slaughter
marriage is proving stubbornly
28 Lexington
persistent, page 41. The
Brett Kavanaugh
Europe number of extremely poor
46 Turkey and Europe Africans is rising, page 69
The Americas
Erdogan visits Berlin
Volume 428Number 9110 29 Argentina 47 Poland
Shrinking pains
Published since September1843 Taking on PiS and Civic
to take part in "a severe contest between 30 Bello Platform
intelligence, which presses forward, and Mexico’s history man
an unworthy, timid ignorance obstructing 47 Health in eastern Europe
our progress." 32 Quebec’s election Mind the gap
Editorial offices in London and also: Immigration nation 48 Spanish political scandals
CAhmicsategrod,aJmo,hBaeninjiensgb,uBrge,rlMina,dBrridu,ssMeelsx,icCoaiCriot,y, 32 Cuban honey A question of degrees
Moscow, Mumbai, New Delhi, New York, Paris, Worker bee’s paradise 49 Teaching Arabic in France
San Francisco, São Paulo, Seoul, Shanghai,
Singapore, Tokyo, Washington DC Word games
49 Germany’s spy chief
Over, not out
Hurricanes and typhoons
50 Charlemagne Climate change means more
The rebirth of Eurafrica severe storms in both the
Atlantic and the Pacific. But
governments are getting
better at preparing for them,
page 54
1 Contents continues overleaf
4 Contents The Economist September 22nd 2018
69 Narrow banking
Britain
A hornets’ nest
51 Immigration
69 Poverty estimates
New order at the border
A thin gruel
52 Freedom of movement
70 Free exchange
How to bend the rules
We the shareholders
53 Bagehot
May, back from the brink
Science and technology
71 Vaping
International
Smoking without fire
54 Hurricanes and typhoons
AI in Europe It may be behind, 72 Marine biology E-cigarettes Vaping is far
Stormy weather
but the European Union can The house that sank healthier than smoking. That
56 Hong Kong
influence the development of does not mean it is good for
72 Genetics
Surviving Mangkhut
AI for the better—and not just you, page 71
Neglected genes
at home: leader, page 10.
73 Cellular ageing
Europe is gearing up to try to
Business
Out with the old
challenge the AI superpowers, Subscription service
57 Artificial intelligence in
America and China, page 57 74 Antimatter For our latest subscription offers, visit
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6 The Economist September 22nd 2018
The world this week
Argentina’s former president, by Moody’s Analytics, a re- An imperfect spy
Politics Cristina Fernández de Kirch- search firm, suggests the cost of The head ofGermany’s do-
ner, faces new charges ofcor- the storm could reach $22bn— mestic intelligence bureau,
ruption in connection with far less than the damage from Hans-Georg Maassen, was
bribes her administration is Hurricanes Katrina and Maria. forced to resign following
accused ofaccepting from comments in which he ap-
construction firms in return for A hard rain fell peared to play down the signif-
public contracts. The charges After killing at least 81people icance ofviolence against
come on top ofones laid in in the Philippines, Typhoon migrants in the eastern city of
2016. Although Ms Fernández Mangkhut roared over Hong Chemnitz. Mr Maassen had
is immune from arrest because Kong and the neighbouring previously been accused of
she is a serving senator, the Chinese province ofGuang- close links with a right-wing
proceedings may harm her dong, where it killed at least populist party. A political row
chance ofsuccess if she runs two others. More than 2.4m developed after it became
for president in 2019. people in Guangdong moved clear that he had in fact re-
Russia and Turkey agreed to into emergency shelters to ceived a promotion to a better-
patrol a buffer zone around the Poverty-stricken Venezuelans escape the storm. paid job.
province of Idlib, the Syrian are furious after a film
rebels’ last bastion, where emerged on the internet of The United States government In a fresh blow to President
2m-3m civilians fear they may President Nicolás Maduro ordered the American oper- Emmanuel Macron ofFrance,
be caught up in a final on- eating a sumptuous meat feast ations of two Chinese state- a close ally, Gerard Collomb,
slaught by the regime’s forces. at a famous restaurant in Istan- controlled news organisations, the interior minister, said he
The zone is supposed to be bul. Almost two-thirds of the Xinhua and China Global would stand down next May
demilitarised by October10th. country’s citizens have report- Television Network, to register to run for mayor ofToulouse.
No one knows if the deal will ed losing weight as a result of as “foreign agents”, the Wall The move follows the abrupt
be upheld. food shortages. Street Journal and Bloomberg resignation last month of
reported. This could limit the Nicolas Hulot, his popular
Rwanda’s president, Paul Chinese journalists’ access to environment minister.
Kagame, approved the release American officials. China’s
ofmore than 2,000 prisoners, foreign ministry urged Ameri- A leading member ofFrance’s
including Victoire Ingabire ca not to put up barriers to right-wing National Rally
Umuhoza, a prominent oppo- gathering news. indicated that the party, until
sition leader who had been recently called the National
sentenced to eight years in jail Jaw-jaw Front, is planning to join Steve
in 2012, a term later increased The leaders ofNorth and Bannon’s alliance ofEuro-
to 15 years. South Korea held their third pean nationalist parties, the
summit in six months and Movement. Mr Bannon, a
Liberia’s government has pledged to reduce tensions former adviser to Donald
banned 15 people, including a A woman has said that Brett along their border. North Trump, hopes for success in
son of the previous president, Kavanaugh, President Donald Korea also offered to allow next year’s European Parlia-
Ellen Johnson Sirleaf, from Trump’s nomination for the foreign inspections ofa mis- ment elections.
leaving the country while it Supreme Court, sexually sile-testing facility—a step far
investigates the alleged disap- assaulted her when they were short ofwhat American nego-
pearance ofmillions ofdollars both at high school in the tiators have been demanding
meant for the central bank. 1980s. Mr Kavanaugh denies in talks on its nuclear weapons
the allegations. American programme.
First comes love lawmakers have given Mr
Cuba’s president, Miguel Kavanaugh’s accuser until Shinzo Abe overcame crony-
Díaz-Canel, announced his September 21st to decide ism scandals to win a third
support for a proposal to in- whether to testify against him. term as leader of Japan’s
clude the legalisation ofsame- ruling Liberal Democratic
sex marriage in the country’s Paul Manafort, Donald Party, and is thus on course to
new constitution, on which a Trump’s former campaign become the country’s longest-
referendum will be held in chairman, pleaded guilty to serving prime minister. He Members of the European
2019. If the proposal succeeds, two federal crimes, including hopes to use the time to Union met in Austria to dis-
Cuba will become the sixth conspiracy against the United amend the constitution’s cuss migration, relations with
country in the Americas to States. He also agreed to co- clause on pacifism. Arab countries and internal
allow same-sex unions. operate with the investigation security. Theresa May, the
conducted by the special A court in Pakistan ordered British prime minister, was
The UN Office on Drugs and counsel, Robert Mueller, who the release ofNawaz Sharif, a given ten minutes at the end of
Crime warned that growing is looking into Russian interfer- former prime minister, while it dinner to talkabout Brexit.
cocaine production in Colom- ence in the presidential elec- hears his appeal against a Michel Barnier, the EU’s nego-
bia could harm the country’s tion in 2016. conviction for corruption. Mr tiator, had said he was “ready
peace-building efforts. It said Nawaz had been expected to to improve” his offer over
that the area under coca culti- Some 37 people died after serve 11years in prison. Law- Northern Ireland. But during
vation rose to 171,000 hectares Hurricane Florence made yers say that an acquittal is the meeting Mrs May com-
last year, a record high and an landfall in North Carolina on now more likely than previ- plained that his plans were
increase of17% from 2016. September14th. An estimate ously thought. “not credible”. 1
The Economist September 22nd 2018 The world this week 7
Dianping jumped by over 7%. Marc Benioff, a founder of by forecasts of rain. Beyond
Business The loss-making firm, which Salesforce, a software com- consigning him to bankruptcy,
has 340m users, is known as pany, and his wife, Lynne, the soured bets also burned
The trade war between China China’s “everything app”. It is bought Time magazine from through over €100m, or two-
and America ratcheted up also the world’s largest food- Meredith, a publisher, for thirds, of the mutual default
again. The Trump administra- delivery firm. $190m. Mr Beniofffollows in fund at Nasdaq’s commodities
tion announced that tariffs the footsteps of JeffBezos, exchange, where the futures
would be imposed on a fur- A leading manufacturer of Amazon’s founder and fellow- contracts were traded. Swedish
ther $189bn-worth ofChinese brakes used in lorries and billionaire, who bought the regulators promised to in-
imports, including furniture trains, Knorr-Bremse, an- Washington Post in 2013. vestigate how one trader al-
and car parts. A rate of10% will nounced plans to list in Frank- most wiped out the pot.
apply from September 24th, furt. Valued at €10bn, it may be Jack’s beanstalks
rising to 25% from January1st if Germany’s biggest IPO of2018. The Public Investment Fund,
there is no peace deal by then. Saudi Arabia’s main sover-
China retaliated, slapping Tesla confirmed that Ameri- eign-wealth fund, tookon
duties on another $60bn- ca’s Department of Justice had $11bn ofdebt from a consor-
worth ofAmerican goods. requested documents relating tium ofbanks in its first-ever
to the announcement in Au- borrowing. The fund is tasked
Russia experienced its first gust by its boss, Elon Musk, not just with safekeeping the
interest-rate rise in four years, that he had secured funding to kingdom’s wealth but also
an increase of0.25 percentage take the company private. with diversifying away from
points to 7.5%. The country’s oil and into new industries.
central bankblamed inflation The European Commission
of3.1% in August. announced it was investigat- Getting high on valuations
ing BMW, Daimler and VW Tesco announced it was Canadian cannabis compa-
Britain also saw higher in- over possible collusion to launching a new discount nies are blooming in the
flation than expected, 2.7%, in avoid competing to develop chain, Jack’s, to compete lead-up to the legalisation of
August. House prices in Lon- emissions-limiting devices, head-on with two German recreational use of the drug in
don moved in the opposite such as ones that can clean discount retailers, Aldi and October. Tilray, a British Co-
direction, falling by 0.7% in the nitrous oxides from diesel cars, Lidl. In recent years, the pair lumbia-based and Nasdaq-
year to July, the largest drop or particles from petrol ones. have gained an ever-growing listed firm, surged by 38% on
since September 2009. share of the fiercely compet- September19th alone, giving
Separately, the commission itive British grocery market. the firm, with $20m in revenue
The European Central Bank also announced that it would in 2017, a valuation ofover
confirmed plans to wind investigate whether Amazon Einar Aas, a Norwegian trader, $16bn. Its value thereby sur-
down its programme ofquan- used data from sales by third- made enormous losses in passed that ofCanopy, a
titative easing by halving party sellers on its platform to derivatives tied to Nordic fellow Canadian rival worth a
monthly bond purchases, to gain an edge in deciding what electricity markets, after his mere $11.2bn. Dreamy stuff.
€15bn ($17.5bn), from October. products it should sell itself, bet that prices in Scandinavia
It pointed to the robustness of and at what price. No formal would stay high relative to For other economic data and
European labour markets as case has yet been begun. German ones was scuppered news see Indicators section
explanation for the move.
Dredging up the Baltic
In the wake ofa money-laun-
dering scandal that saw an
estimated €200bn in question-
able, much of it Russian, funds
flow through its Estonian
branch between 2007 and
2015, Thomas Borgen, the chief
executive ofDanske Bank,
resigned. The bankwas
warned by Russian regulators
about the branch as early as
2007. Despite further warnings
from an internal whistle-
blower in 2013 and Estonian
regulators in 2014, the bank
only began its own internal
investigation in 2017, commis-
sioning a report from an ex-
ternal law firm that concluded
that executives “did not breach
their legal obligations”.
On its trading debut in Hong
Kong, the shares ofMeituan
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The Economist September 22nd 2018 9
Leaders
Latin America’s latest menace
JairBolsonaro would make a disastrous president ofBrazil
OD is Brazilian,” goes a himself as a no-nonsense sheriff. An evangelical Christian, he
“Gsaying that became the mixes social conservatism with economic liberalism, to which
title of a popular film. Brazil’s he has recently converted. His main economic adviser is Paulo
beauty, natural wealth and mu- Guedes, who waseducated at the UniversityofChicago, a bas-
sic often make it seem uniquely tion of free-market ideas. He favours the privatisation of all
blessed. But these days Brazil- Brazil’s state-owned companies and “brutal” simplification of
ians must wonder whether, like taxes. Mr Bolsonaro proposes to slash the number of minis-
the deity in the film, God has tries from 29 to 15, and to put generals in charge of some of
gone on holiday. The economy is a disaster, the public finances them.
are understrain and politicsare thoroughlyrotten. Street crime His formula is winning support. Polls give him 28% of the
is rising, too. Seven Brazilian cities feature in the world’s 20 vote and he is the clear front-runner in a crowded field for the
most violent. first round of the elections on October 7th. This month he was
The national elections next month give Brazil the chance to stabbed in the stomach at a rally, which put him in hospital.
start afresh. Yet if, as seems all too possible, victory goes to Jair That only made him more popular—and shielded him from
Bolsonaro, a right-wing populist, they risk making everything closer scrutiny by the media and his opponents. Ifhe faces Fer-
worse. MrBolsonaro, whose middle name is Messias, or “Mes- nando Haddad, the nominee ofLula’s left-wingWorkers’ Party
siah”, promises salvation; in fact, he isa menace to Brazil and to (PT) in the second round at the end of the month, many mid-
Latin America. dle- and upper-class voters, who blame Lula and the PT above
MrBolsonaro is the latest in a parade ofpopulists—from Do- all for Brazil’s troubles, could be driven into his arms.
nald Trump in America, to Rodrigo Duterte in the Philippines
and a left-rightcoalition featuringMatteo Salvini in Italy. In Lat- The Pinochet temptation
in America, Andrés Manuel López Obrador, a left-wing fire- They should not be fooled. In addition to his illiberal social
brand, will take office in Mexico in December. Mr Bolsonaro views, Mr Bolsonaro has a worrying admiration for dictator-
would be a particularly nasty addition to the club (see Brief- ship. He dedicated hisvote to impeach MsRousseffto the com-
ing). Were he to win, it might put the very survival of democra- mander of a unit responsible for 500 cases of torture and 40
cy in Latin America’s largest country at risk. murders under the military regime, which governed Brazil
from 1964 to 1985. Mr Bolsonaro’s running-mate is Hamilton
Brazilian bitterness Mourão, a retired general, who last year, while in uniform,
Populists draw on similar grievances. A failing economy is mused that the army might intervene to solve Brazil’s pro-
one—and in Brazil the failure has been catastrophic. In the blems. Mr Bolsonaro’s answer to crime is, in effect, to kill more
worst recession in its history, GDP per person shrank by10% in criminals—though, in 2016, police killed over 4,000 people.
2014-16 and has yet to recover. The unemployment rate is 12%. Latin America has experimented before with mixing au-
The whiff of elite self-dealing and corruption is another griev- thoritarian politics and liberal economics. Augusto Pinochet, a
ance—and in Brazil it is a stench. The interlocking investiga- brutal rulerofChile between 1973 and 1990, wasadvised by the
tions known as Lava Jato (Car Wash) have discredited the en- free-marketeer“Chicago boys”. Theyhelped lay the ground for
tire political class. Scores ofpoliticians are under investigation. today’s relative prosperity in Chile, but at terrible human and
Michel Temer, who became Brazil’s president in 2016 after his social cost. Brazilians have a fatalism about corruption,
predecessor, Dilma Rousseff, was impeached on unrelated summed up in the phrase “rouba, mas faz” (“he steals, but he
charges, has avoided trial by the supreme court only because acts”). They should not fall for Mr Bolsonaro—whose dictum
congress voted to spare him. Luiz Inácio Lula da Silva, another might be “they tortured, but they acted”. Latin America has
former president, was jailed for corruption and disqualified known all sorts of strongmen, most of them awful. For recent
from running in the election. Brazilians tell pollsters that the proof, lookonly to the disasters in Venezuela and Nicaragua.
words which best sum up their country are “corruption”, Mr Bolsonaro might not be able to convert his populism
“shame” and “disappointment”. into Pinochet-style dictatorship even if he wanted to. But Bra-
Mr Bolsonaro has exploited their fury brilliantly. Until the zil’s democracy is still young. Even a flirtation with authoritar-
Lava Jato scandals, he was an undistinguished seven-term ianism is worrying. All Brazilian presidents need a coalition in
congressman from the state ofRio de Janeiro. He hasa longhis- congress to pass legislation. Mr Bolsonaro has few political
tory of being grossly offensive. He said he would not rape a friends. To govern, he could be driven to degrade politics still
congresswoman because she was “very ugly”; he said he further, potentially paving the way for someone still worse.
would prefer a dead son to a gay one; and he suggested that Instead of falling for the vain promises of a dangerous poli-
people who live in settlements founded by escaped slaves are tician in the hope that he can solve all their problems, Brazil-
fat and lazy. Suddenly that willingness to breaktaboos is being ians should realise that the task of healing their democracy
taken as evidence that he is different from the political hacks in and reforming their economy will be neither easy nor quick.
the capital city, Brasília. Some progress has been made—such as a ban on corporate do-
To Brazilians desperate to rid themselves of corrupt politi- nations to parties and a freeze on federal spending. A lot more
cians and murderous drug dealers, Mr Bolsonaro presents reform is needed. Mr Bolsonaro is not the man to provide it. 7
10 Leaders The Economist September 22nd 2018
Trade
Hunker down
America’s tariffs on China have several goals—some of them unachievable
N HIS trade war with China, strategic competitor. Some of the president’s advisers seem to
US tariffs on China IPresident Donald Trump ap- relish the chance to do it economic harm.
Value of imports, 2017, $bn
pears to have the upper hand. The White House mayargue thatChina’sabuse ofthe rules,
Effective from: 0 50 100 150 200 The new tariffs his administra- the trade deficit and the decline of American industry are one
Jul 6th 2018
tion unveiled this week, which and the same. They are not. Even without subsidies, China,
Aug 23rd will raise the share of Chinese like most other emerging markets, would enjoy a substantial
Sep 24th imports subject to levies to at cost advantage over America. The trade deficit, meanwhile, is
least 44%, are unlikely to dam- tied to the difference between domestic saving and invest-
pen America’s sizzlingeconomy, or to boost inflation by much. ment. Tariffs might cut the bilateral deficit with China, but
Though some firms will be disrupted, most Americans will America would find it nearly impossible to shrink its overall
not notice the damage (see Finance section). China, however, deficit without engineering a domestic recession.
is under pressure. Its growth seems to be slowing and its stock- The goal of rolling back decades of American deindustrial-
market is down almost a quarter from its peak in January. Chi- isation is a pipe-dream. Should America succeed in forcing
na’s government has announced retaliatory tariffs against supply chains back onshore, it will find that many fewer jobs
American goods, but it is fast running out of imports to tax. are attached, because of rapid automation and productivity
During conflict, an imbalance in strength should lead to a growth. American manufacturing’s share of GDP has fallen
swift resolution. Here the side with the advantage may pro- only by a fifth since 2000, while its share of employment is
long the war. That is because America has several goals, some down by a third. Besides, the lowest-skilled jobs would not go
of them unachievable. to America, but to low-wage Asian countries, like Vietnam.
There is a faint hope that Mr Trump’s advisers and allies
Unjust war will play good cop to his bad cop, using tariffs as a bargaining
The official justification for the tariffs is rooted in anger about chip in rewriting global trading rules to constrain China’s mer-
Chinese mercantilism—anger which is shared across the rich cantilism—a legitimate goal. More probably, the bad cop—who
world. China gives vast and opaque subsidies to its state- is, after all, in charge—will refuse to be stood down, because of
owned firms. It requires exporters to hand over intellectual his obsession with trade deficits and jobs and because Chi-
propertyasa condition ofaccess to itsmarket. The world’s con- nese leaders seem unwillingorunable to contemplate reforms
sumers benefit from the artificially cheap imports that result. that would strengthen moderate voices in Team Trump.
But trade of this sort is unsustainable, politically and economi- The prospects for any truce with China look grim. Recent
cally. America is right to demand that China play fair. historysuggests that trade disputesare hard to settle. Tariffs im-
That is not the limit of Mr Trump’s ambition, however. He posed on Chinese tyres in 2009 under President Barack
also wants to eliminate America’s trade deficit with China, Obama, a free-trader, lasted three years. Mr Trump’s recent
which he mistakenly sees as a transfer of wealth. He has trade agreementwith Mexico doesnot include an end to levies
broadcasthisdesire to force manufacturingsupplychains back on its steel and aluminium. America’s latest escalation against
to America. And his administration has identified China as a China is no more likely to be speedily reversed. 7
Artificial intelligence
AI, EU, go
Europe can influence the development ofAI for the better—and not just at home
HE two superpowers of arti- standable. Artificial intelligence is much more than another
Tficial intelligence (AI) are Silicon Valley buzzword—more, even, than seminal products
America and China. Their tech like the smartphone. It is better seen as a resource, a bit like
giants have collected the most electricity, that will touch every part of the economy and soci-
data, attracted the best talent ety. Plenty of people fret that, without its own cutting-edge re-
and boast the biggest computing search and AI champions, big digital platforms based abroad
clouds—the main ingredients will siphon off profits and jobs and leave the EU a lot poorer.
needed to develop AI services The technology also looms large in military planning. China’s
from facial recognition to self-driving cars. Their dominance big bet on AI is partly a bet on autonomous weapons; America
deeply worries the European Union, the world’s second-larg- is likely to follow the same path. Given the doubt over wheth-
est economic power (see Business section). It is busily concoct- er America will always be willing to come to Europe’s defence,
ing plans to close the gap. some see spending on AI as a matter ofnational security.
That Europe wants to foster its own AI industry is under- Both arguments make sense. But can Europe support AI1