The struggle for Taiwan

Macron’s double trouble

The West’s employment miracle
War at the Oscars
MARCH 11TH–17TH 2023

THE MISSING
QUARTER
OF A MILLION
Britain’s unexplained deaths

012
012
 Contents The Economist March 11th 2023 3

The world this week Britain

5 A summary of political 19 A decade of early death
and business news 22 ai, inventor
Leaders 22 Stopping the boats
7 Life expectancy 23 Romantic novels
The missing quarter of 24 Bagehot Supermarket
a million Britons Sunak
8 America, China and
Taiwan Europe
How to avoid world war 25 Preparing for Ukraine’s
10 The world economy counter­offensive
Too fast to land 26 A wave of French strikes
10 Emmanuel Macron 27 Turkey’s opposition
On the cover Trouble on two fronts 27 Estonians back Ukraine
What to do about Britain’s 12 American universities 28 Russia’s demographic
woeful life expectancy: leader, Testing fail nightmare
page 7. Why did 250,000
29 Charlemagne Germany’s
Britons die sooner than Letters
car row
expected? Page 19 14 On medical research,
fertility in the oecd, United States
The struggle for Taiwan soldiers’ mental health,
How to avoid a superpower energy firms, the car 31 The Democratic bench
conflict: leader, page 8. China 32 Trans­medicine lawsuits
and America are preparing for Briefing 33 Cannabis and anaesthesia
a devastating war: briefing,
15 Defending Taiwan 34 Education reform
page 15. Taiwan’s fate will,
Storm warning 35 Republicans and voting
ultimately, be decided by the
battle­readiness of its people, 35 Composting humans
Special report:
says Alice Su. See our special
Taiwan 36 Lexington Congressional
report, after page 40. Tough
A vital island paranoia
language from China’s leaders
belies their anxiety, page 49 After page 40
The Americas
Macron’s double trouble Strikes 37 Argentina and China,
at home and war in Ukraine test a wasted chance
the French president: leader,
page 10. Emmanuel Macron’s
view of a more muscular Europe
is coming true, page 39

The West’s employment

miracle A stubbornly strong International
economy is frustrating central 39 Macron’s diplomatic
banks: leader, page 10. Why the balancing act
jobs boom looks likely to
continue, page 59. The West Schumpeter The world’s
suffers from too little two biggest shipping
automation, not too much, companies boldly set sail
page 55 in opposite directions,
page 58
War at the Oscars Conflict is
the theme of the Oscars—even
in films that seem to be about
something else: Back Story,
page 72

→ The digital element of your

subscription means that you
can search our archive, read
all of our daily journalism and
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stories. Visit economist.com
Contents continues overleaf

012
 4 Contents The Economist March 11th 2023

Middle East & Africa Finance & economics

41 Arab bureaucracies 59 The West’s jobs miracle
42 Egypt’s daylight­saving 60 China’s true growth
muddle 61 The ccp v bankers
43 Africa’s booming cities 61 New York’s dominance
62 ai and finance
63 Buttonwood Investing in
a time of stagflation
Asia
64 Free exchange Emerging­
45 Free trade in Asia
market inflation
47 Thailand’s gay tv dramas
47 South Korea and Japan Science & technology
48 Banyan Singapore’s first­ 65 The Human Cell Atlas
family feud 68 The ocean and the climate
68 Genes and brains
China 69 Silver and democracy
49 Xi Jinping’s anxiety
50 A low growth target
51 Leaders educated abroad Culture
52 Chaguan The party’s 70 Lockdown in Wuhan
power grab 71 An environmental history
72 Back Story It’s war at
the Oscars
Business
73 Singaporean nosh in
53 How China sells to the
New York
West
73 A real­life “Succession”
55 Where are the robots?
74 Eleanor Catton’s novel
55 The glass­ceiling index
57 Bartleby Consoling
Economic & financial indicators
irritations
76 Statistics on 42 economies
58 Schumpeter Shipping
rerouted
Graphic detail
77 Retail traders are losing billions on stock options

Obituary
78 Justin Schmidt, the King of Sting

Volume 446 Number 9337

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012
 The world this week Politics The Economist March 11th 2023 5

Al­Shabab, a jihadist group in tutional Court has the power to uncertainty regarding her
Somalia linked to al­Qaeda, quash that. The report alleges country’s stalwart support for
recaptured a base that it had that Mr Lasso failed to stop Ukraine. The Centre Party,
lost in the south, a sign that bribery at public companies. favoured by Estonia’s Rus­
the biggest government offen­ sian­speaking minority, did
sive against the group in years Armed men kidnapped four badly in the election.
may be stalling. Americans and killed two of
them in the Mexican city of Georgia’s ruling party with­
Nigeria postponed elections to Matamoros, just across the drew a bill that would have
choose governors in 28 of its 36 border from Texas. A Mexican required NGOs and media that
states to March 18th in order to woman was also killed. Amer­ receive at least a fifth of their
configure voting machines ican officials believe that the funding from abroad to regis­
The National People’s after a chaotic presidential Gulf Cartel, a gang based in ter as foreign agents. The
Congress, China’s rubber­ election last month. Matamoros, is responsible for legislation had sparked huge
stamp parliament, opened its the killings. It is not clear what demonstrations in Tbilisi, the
annual session. The outgoing After a visit to Tehran, Rafael the motive was. capital. The protesters, some
prime minister, Li Keqiang, Grossi, the head of the waving EU flags, feared that
kicked things off by announc­ International Atomic Energy the bill would be the first
ing an economic growth target Agency, the UN’s nuclear stage towards adopting a
of “around 5%” in 2023, lower watchdog, said that Iran had clampdown on press free­
than many external forecasts. agreed to the reinstallation of doms similar to Russia’s.
Xi Jinping blamed Western cameras and other monitoring
countries led by America for equipment at its nuclear sites. In Athens police clashed with
trying to suppress China. The He later clarified that the terms demonstrators protesting
congress is expected to of these concessions would over a train crash that killed 57
approve a set of reforms that have to be worked out in future people. Unions claim that the
will give Mr Xi more direct negotiations with the regime. neglect of rail infrastructure
control over government in Greece contributed to the
bodies. It will also confirm Israeli forces killed six tragedy, putting pressure on
him for a norm­busting third Palestinians in a raid on Jenin Cities across Ukraine were the government just as it is
term as president. refugee camp in the West struck by a wave of Russian due to call an election.
Bank. Binyamin Netanyahu, missiles targeting power
Israel’s prime minister, said infrastructure but which also Unions in France held their
On the wrong track that one of the dead had been hit residential buildings. The biggest strike yet to protest
China’s foreign minister, Qin responsible for killing two missiles fell on Kyiv, the cap­ against the government’s
Gang, warned America that its Israeli settlers in February, ital, Odessa, Kharkiv, Dnipro proposal to raise the state
hostile attitude was in danger which had prompted hundreds and other areas. Meanwhile, retirement age to 64, from 62.
of souring relations between of settlers to attack a Palestin­ fierce fighting continued for
the two countries, comparing ian town. Two days after the control of Bakhmut. Volody­ The British government un­
the situation to a train heading raid, Israeli security forces myr Zelensky said that the veiled its umpteenth plan to
towards derailment. China is killed three Palestinians near battle for the town and the try to stop the tide of illegal
also “seriously concerned” that Jenin who had opened fire on Donbas region was Ukraine’s migrants crossing the Eng­
the president of Taiwan, Tsai them while they were trying to first priority. lish Channel. If the bill
Ing­wen, is going to meet the make an arrest. passes, new arrivals will be
speaker of America’s House of detained and swiftly re­
Representatives, Kevin McCar­ Canada’s prime minister, Murky waters moved, some to Rwanda or a
thy, in the United States. Justin Trudeau, said he would Germany’s defence minister safe third country. Asylum
appoint an independent spe­ warned against jumping to claims would then be heard
Japan’s space agency com­ cial rapporteur to investigate conclusions about who sabo­ remotely. Migrant charities
manded its new H3 rocket to claims that China had attempt­ taged the Nord Stream pipe- said the proposals were un­
self­destruct after its second ed to influence the federal lines that carried gas from workable and may flout in­
engine failed to ignite after elections in 2019 and 2021. Mr Russia. Boris Pistorius was ternational law. The opposi­
lift­off. It is a big setback for Trudeau has been under pres­ responding to press reports tion described the announce­
Japan’s rocket programme, sure to take more seriously linking the attack last year to ment as “groundhog day”.
which hopes to compete in the reports that China had tried to Ukrainians, and said there was
growing business of launching help his Liberal Party. He con­ an equal chance that it could The American Senate voted to
commercial and government tends that the interference did have been a “false­flag oper­ overturn a decision by the
satellites. The rocket was not affect the election results. ation staged to blame Ukraine”. council of Washington, DC,
carrying a satellite that could, to reduce sentences for some
among other things, monitor Ecuador’s National Assembly The liberal Reform Party in­ violent crimes in the city.
North Korean missile tests. approved a report by a legisla­ creased its number of parlia­ Democrats in the Senate
tive commission that recom­ mentary seats in Estonia’s joined Republicans in block­
A suicide­bomber killed ten mends the impeachment of general election, allowing Kaja ing the measure, which critics
police officers in Pakistan’s the country’s president, Guil­ Kallas to continue as prime say was soft on crime. Homi­
Balochistan province, the lermo Lasso. The vote suggests minister. She was urged to cides are up by a third in
latest in a series of attacks on that the legislature will try to form a new coalition quickly to Washington this year, though
the country’s security forces. impeach him, but the Consti­ head off any notion of overall violent crime is down.

012
 6
The world this week Business The Economist March 11th 2023

Jerome Powell said that the to use capitalism to benefit its ago, before Juul was accused by This week Cyril Ramaphosa,
Federal Reserve may have to shareholders, but also address regulators of pushing vaping the president, appointed a new
raise interest rates higher than the priorities of society, which products to teenagers. The electricity tsar to get to grips
it had anticipated only recent­ may not do much to placate stake is now worth $250m. with the crisis that has beset
ly, because new data on in­ the critics of ESG. Expanding its reach into the Eskom, the state provider,
flation, jobs and spending alternative­cigarette market, which is struggling to meet the
pointed to an overheating Australia’s central bank lifted Altria has agreed to pay $2.8bn demand for power given its old
economy. The Fed lifted its its main interest rate to 3.6%, for NJOY, which has had an and broken network.
main rate by a quarter of a the tenth consecutive rise. The easier time with the regulators.
percentage point at its last bank said that the rate would Volkswagen said that it would
meeting, but investors now need to rise again, but it The company behind Weight build a factory in South Caroli­
reckon it could increase the dropped language referring to Watchers announced its ac­ na to assemble electric cars
rate by half a point on March “multiple” increases. quisition of Sequence, a tele­ and would open a facility to
22nd. Stockmarkets swooned. health platform that provides make batteries in North Amer­
visits from doctors who can ica. The German carmaker is
Meanwhile, and pouring more Holding pattern prescribe Ozempic, Wegovy reportedly suspending plans
cold water on investors’ hopes America’s Justice Department and other weight­loss drugs. for a battery plant in eastern
of smaller interest­rate rises, sued to block JetBlue’s take­ The company described Europe as it waits to see if the
Christine Lagarde said that over of Spirit Airlines, arguing weight­management medica­ EU will match subsidies for
“inflation is a monster that we that their combination would tions as the “biggest innova­ manufacturing EVs in Amer­
need to knock on the head” eliminate competition on tion in our industry today”. ica’s Inflation Reduction Act.
and that price pressures hundreds of routes and in­
remain “sticky”. The president crease air fares. JetBlue won a
of the European Central Bank bidding war for Spirit last year, South Africa Vegetable stew
GDP, % change on previous quarter
said another half­point after Spirit’s merger deal with A shortage of fresh produce in
2
increase by the ECB on March Frontier Airlines fell apart. Britain caused unit sales of
16th was “very, very likely”. Both companies said they 1 tomatoes and peppers to drop
would fight the lawsuit. The 0
by around 17% in February,
Arm, a British chip designer boss of JetBlue said regulators according to NIQ, a market­
owned by SoftBank, will had been determined to stop -1 research firm. But the unit
reportedly raise up to $8bn in a the deal from the outset. -2 sales of some vegetables did
blockbuster IPO later this year. 2021 2022
grow, even though adverse
In a blow to the London Stock Altria, one of the world’s Source: Haver Analytics
weather in exporting regions
Exchange, and the lobbying biggest tobacco companies made them hard to find;
efforts of three prime and owner of the Marlboro South Africa’s GDP shrank by cucumbers were up by 32%.
ministers, Arm has decided to brand, swapped its stake in 1.3% in the last three months of And although the volume of
list only in New York. Juul Labs, a maker of electron­ 2022 compared with the previ­ fresh produce sold declined,
ic cigarettes, for intellectual­ ous quarter. The country en­ inflation meant that overall
China’s government an­ property rights to some of dured a series of rolling black­ grocery sales rose by 11%. So all
nounced sweeping changes to Juul’s technology. Altria paid outs that is estimated to have in all Britain’s salad days are
its supervision of the financial $12.8bn for the stake four years cost the economy $50m a day. far from over.
sector, and will create a new
body to replace the China
Banking and Insurance
Regulatory Commission. The
oversight of financial compa­
nies (except for securities) will
fall under the control of a new
department that will take over
some of the functions of the
central bank and report to the
State Council. The aim is to
consolidate the operations of
numerous regulators.

Bank of America declared in

its annual report that “We are
capitalists,” a statement that
may not be obvious to critics of
the bank’s ESG (environmental,
social, governance) goals.
Brian Moynihan, the chief
executive, said in the report
that he has been asked in
Congress whether he is a cap­
italist (he replied “yes”). He
elaborated that the bank wants

012
 Leaders 7

The missing quarter of a million

Britain has endured a decade of early deaths, and the pandemic is not the only reason

I n RECENT YEARS Britain has been hit by one health crisis after
another. First came the covid­19 pandemic—then backlogs in
health and social care that the coronavirus exacerbated, and a
deaths have more than doubled in a decade; Dundee is now the
drug­death capital of Europe. Yet although a similar problem
may be brewing in England and Wales, the rate of drug deaths is
long winter of strikes and overwhelmed emergency depart­ nearly four times higher in Scotland.
ments. But in the background, long before the pandemic hit, an The recent struggles of the National Health Service (NHS)
even more disturbing story has been unfolding. Britain has en­ have played their part. Hospital waits of record lengths and a cri­
dured a grim decade during which perhaps a quarter of a million sis in primary care jeopardise timely treatment. But delays in
people died younger than expected (see Britain section). medical care cannot explain all the extra deaths, especially be­
By our calculations, that is the number of extra deaths Britain fore the pandemic. Besides, the greatest improvements in life
has suffered, compared with similar countries such as France expectancy come not from treatment but from better diagnosis
and Denmark. The reason is that, in the early 2010s, life expec­ and prevention, and wider prosperity. This is where Britain ap­
tancy stalled in Britain compared with long­run trends and pears to have fallen short. It could do much better in all three.
other countries. This slowdown in life expectancy struck all age First, diagnosis. Poorer Britons are 20% more likely to be di­
groups, not just the elderly. And it disproportionately affected agnosed with cancer at a later stage, when the disease is more
the poor. If you travel just 10km (six miles) from the poshest part complex and expensive to treat. Having more NHS diagnostic
of Kensington in London to New Cross Gate, life expectancy for centres would help, as well as cutting the pandemic­related
men falls by a staggering 18 years, from 92 to 74. The burden backlog. Prescribing more statins for those at risk of heart attack
these deaths place on the living is not just weighed in grief. or stroke would be good, too. Both treatments are cheap and
When more people are dying and life expectancy is stagnating, a cost­effective, and are recommended. But with around one in 11
greater number of people are also living in ill health. NHS posts vacant, it will be tricky to find enough radiologists
Life expectancy in Britain, as in almost all other rich coun­ and general practitioners to make a difference.
tries, had been rising for nearly two centuries. But something Next, prevention. Individuals bear responsibility for their
went wrong in the early 2010s. Life expectancy at birth today, at own decisions but public­health interventions, from vaccines to
81, is just eight weeks longer than it was in 2011. anti­smoking and weight­loss programmes,
In a best­case scenario, in which the pace of im­ can improve things. They also provide good val­
provement between 1980 and 2011 had been sus­ ue for money. One study found that it cost near­
tained, life expectancy today would have been ly four times as much to gain an extra year of
over 83. By The Economist’s calculations, that is good health via clinical interventions than
no minor difference: it implies that between through public­health programmes. Yet fund­
2012 and 2022 approximately 700,000 Britons ing for the public­health grant, which is allocat­
died sooner than they might have. ed to local authorities by central government
Two features make this figure even more and amounts to a mere 2% of the NHS budget,
worrying. Death comes mostly when people are old. But the has been cut in real terms in recent years.
slowdown in life expectancy has occurred across all age groups. Ultimately the greatest improvements will come from rais­
Mortality rates have stalled for infants, and risen among young ing the living standards of the poor. Their lower life expectancy
adults and the middle­aged. Death rates for 30­ to 49­year­olds has many causes, from less money to spend on home insulation
have steadily increased in Britain since around 2012, in sharp or nutritious food, to the stress of financial insecurity. One use­
contrast with neighbouring countries. ful long­term thing the government can do is help improve the
Although the deaths have been spread across generations, country’s dreadful record on productivity by liberalising plan­
they have not been spread across the income spectrum. Life ex­ ning and devolving fiscal powers to local authorities.
pectancy has fallen among the poorest in society but risen for
the richest. A poor English girl could on average expect to live 6.8 Life after life
years less than a rich girl in 2011, but 7.7 less in 2017. For boys, the The government should also recognise the role that deprivation
gap increased from 9.1 to 9.5 years over the same period. plays in health. Reweighting funding formulas to benefit gener­
The combined effect of the pandemic and global demograph­ al practitioners in the poorest areas would be a good idea. They
ic trends can explain only some of Britain’s missing multitude. care for 10% more patients than practices in the richest areas,
Though other rich countries have also experienced slowdowns, but receive 7% less cash. And as Jeremy Hunt, the chancellor of
Britain has done the worst out of a cohort of its European peers. the exchequer, prepares his budget for March 15th, he should
After stripping out the effects attributable to covid and the broad recognise how spending cuts show up in other areas. The data
European slowdown from the toll of 700,000, you are still left show that life expectancy was worst affected in the places with
with those 250,000 unexplained deaths. the largest relative declines in housing services and adult social­
Working out what has gone wrong is not easy. In America, care spending between 2009 and 2019.
where life expectancy has fallen even more sharply in recent In its covid response, Britain went to extraordinary lengths to
years, “deaths of despair” from drugs, alcohol and suicide have prevent its citizens from suffering an early death. The pandemic
done the most harm. The same is true for Scotland, where drug may be over, but that job is nowhere near complete. n

012
 8 Leaders The Economist March 11th 2023

America, China and Taiwan

How to avoid a third world war

A superpower conflict would shake the world

E UROPE is witnessing its bloodiest cross­border war since

1945, but Asia risks something even worse: conflict between
America and China over Taiwan. Tensions are high, as American
failed when China did not pick up. Rhetoric aimed at domestic
audiences has grown more martial, whether on the American
campaign trail or from China’s top leaders (see China section).
forces pivot to a new doctrine known as “distributed lethality” What one side sees as a defensive act to protect its red lines, the
designed to blunt Chinese missile attacks. Last week dozens of other sees as an aggressive attempt to thwart its ambitions. Thus
Chinese jets breached Taiwan’s “air defence identification zone”. both sides are tempted to keep hardening their positions.
This week China’s foreign minister condemned what he called It is unclear how far America would go to defend Taiwan. The
America’s strategy of “all­round containment and suppression, island is not a domino. China has some territorial designs be­
a zero­sum game of life and death”. yond it, but does not want to invade or directly rule all of Asia.
As America rearms in Asia and tries to galvanise its allies, two And as our special report explains, it is unclear how many Tai­
questions loom. Is it willing to risk a direct war with another wanese see China as a real threat, or have the stomach for a fight.
nuclear power to defend Taiwan, something it has not been pre­ The Taiwanese, like the Ukrainians, deserve American help.
pared to do for Ukraine? And by competing with China militarily The island is admirably liberal and democratic, and proof that
in Asia, could it provoke the very war it is trying to prevent? such values are not alien to Chinese culture. It would be a trage­
No one can be sure how an invasion of Taiwan might start. dy if its people had to submit to a dictatorship. If America walked
China could use “grey­zone” tactics that are coercive, but not away, the credibility of its security umbrella in Asia would be
quite acts of war, to blockade the self­governing island and sap gravely in doubt. Some Asian countries would accommodate
its economy and morale. Or it could launch pre­emptive missile China more; South Korea and Japan might seek nuclear weap­
strikes on American bases in Guam and Japan, clearing the way ons. It would boost China’s worldview that the interests of states
for an amphibious assault (see Briefing). Since Taiwan could re­ come before the individual freedoms enshrined in the UN after
sist an attack on its own only for days or weeks, any conflict the second world war.
could escalate quickly into a superpower confrontation. But the help Taiwan receives should aim to deter a Chinese
Rather than the trenches and human­wave attacks seen in attack without provoking one. America needs to consider Mr Xi’s
Ukraine, a war over Taiwan could involve a new calculus. A blanket American security guaran­
generation of arms, such as hypersonic mis­ tee might embolden Taiwan to declare formal
siles and anti­satellite weapons, causing untold independence, a red line for him. The promise
destruction and provoking unpredictable re­ of a much larger American military presence on
taliation. The economic fallout would be devas­ Taiwan could lead China to invade now, before
tating. Taiwan is the world’s essential supplier it arrives. A botched invasion, however, would
of advanced semiconductors. America, China cost Mr Xi and the Communist Party dearly.
and Japan, the three largest economies, and America needs to calibrate its stance: reassure
among the most interconnected, would deploy Mr Xi that his red lines remain intact, but con­
sanctions, crippling global trade. America would urge Europe vince him that aggression carries unacceptable risks. The goal
and its other friends to impose an embargo on China. should not be to solve the Taiwan question, but to defer it.
War is no longer a remote possibility, because an unstated Taiwan has avoided provocation. Its president, Tsai Ing­wen,
bargain has frayed. Since the 1970s America has been careful nei­ has not declared independence. But it needs to do more to deter
ther to encourage Taiwan formally to declare independence nor its neighbour, by boosting defence spending so that it can sur­
to promise explicitly to defend it. While not ruling out force, vive longer without American help, and by preparing its citizens
China has said it would favour peaceful reunification. But those to resist grey­zone tactics, from disinformation to vote­rigging.
positions are changing. President Xi Jinping has told the Peo­ For its part, America should try harder to reassure China and to
ple’s Liberation Army to be ready for an invasion by 2027, says deter it. It should avoid symbolic acts that provoke China with­
the cia. President Joe Biden has said that America would defend out strengthening Taiwan’s capacity to defend itself. It should
Taiwan if China were to attack (aides say policy is unchanged). keep modernising its armed forces and rallying its allies (see
The military balance no longer so clearly favours America as it Asia section). And it should be prepared to break a future block­
did in the 1990s. And public opinion has shifted in Taiwan, not ade, by stockpiling fuel, planning an airlift, providing backup
least because of how China has snuffed out freedoms in Hong internet links and building an allied consensus on sanctions.
Kong. Only 7% of Taiwanese favour reunification. America and today’s Chinese regime will never agree about
Both sides are shoring up their positions and trying to signal Taiwan. But they do share a common interest in avoiding a third
their resolve, with destabilising consequences. Some acts gener­ world war. The first 15 years of the American­Soviet cold war fea­
ate headlines, as when Nancy Pelosi, then speaker of the House tured a terrifying mixture of brinkmanship and near­cata­
of Representatives, visited Taipei last year; others are almost in­ strophic mistakes, until the Cuban missile crisis prompted a re­
visible, such as the mysterious severing of undersea internet ca­ vival of diplomacy. This is the terrain the world is now on. Un­
bles to remote Taiwanese islands. Diplomacy has stalled. Top fortunately, the potential common ground between America
American and Chinese defence officials have not spoken since and China on Taiwan is shrinking. Somehow, the two rival sys­
November. During the recent spy­balloon incident, a “hotline” tems must find a way to live together less dangerously. n

012
012
 10 Leaders The Economist March 11th 2023

The world economy

Too fast to land

A stubbornly strong economy is frustrating central banks in their fight against inflation

Y ou mighT have expected the fastest tightening of global loosened the screws on its economy. But above all else, consum­
monetary policy in 40 years to deal a heavy blow to the world ers and firms in most big economies are in strikingly good finan­
economy. Yet in 2023 it seems to be shrugging off the effects of cial health. Many households are still flush with savings built up
higher interest rates. Not only is inflation stubbornly high, but during the covid­19 pandemic; firms managed to lock in low in­
economic activity also appears to have quickened. Faster growth terest rates for long stretches and have yet to suffer much from
may sound good, but it is a headache for policymakers, who are higher borrowing costs. Only in the most rate­sensitive sectors
trying to bring about a managed slowdown. And it could mean of the global economy, such as property, is the impact of higher
that a recession, when it eventually strikes, is more painful. rates clearly visible. In America the economy is so strong that
At the end of last year, according to business surveys, manu­ even housing may be recovering slightly.
facturing and services output were both shrinking around the The acceleration means that recession is not imminent. But it
world. Today manufacturing output is flat and services are re­ also means that central banks will have to raise interest rates fur­
bounding. American consumers are spending freely. Both wages ther if they are to succeed in returning inflation to their 2% tar­
and prices continue to grow fast, even in places gets. On March 7th Jerome Powell, the chairman
where they were long stagnant. Japan looks set Purchasing managers’ index of the Federal Reserve, hinted as much, causing
for a round of bumper wage rises in the spring. Global stockmarkets to fall. Policymakers now face
60
In the euro zone the monthly rate of “core” in­ Services Manufacturing two difficult judgments.
55
flation, which excludes food and energy prices, The first is the extent to which monetary
broke records in February. Labour markets are ↑ Expanding 50 tightening to date has yet to have its full effect.
↓ Contracting
extraordinarily tight. As we report this week, in 45 Economists often talk up the “long and variable
half of the members of the oecd, a group of 2021 22 23 lags” with which interest rates work, but re­
mostly rich countries, employment rates are search suggests policy may be working faster
currently at record highs (see Finance & economics section). today. If the effects of last year’s tightening are already exhaust­
From equities to credit, financial markets are priced for glo­ ed, much more may be needed. A second judgment is over the
bal economic growth that is above trend. Not so long ago, inves­ persistence of the factors that seem to have immunised much of
tors were debating whether the world economy would face a the economy against rate rises. Eventually, consumers will run
“hard landing” involving a recession, or a “soft landing”, in out of spare cash and firms will feel the pinch from higher bor­
which inflation was conquered without any downturn. Today rowing costs. In Sweden, where interest­rate rises rapidly pass
they are asking whether the world economy is landing at all. through to households, the economy is suffering.
There are several reasons for the apparent acceleration. The One thing is clear: the ideal path, where inflation falls with­
mini­boom that took hold in the markets late in 2022 stimulated out growth faltering much, looks narrower than it did even a
animal spirits. China’s reopening from zero­covid has led to a month ago. Instead, central banks are increasingly likely to have
swift economic recovery which has caused order books in to choose between tolerating higher inflation or slamming on
emerging markets to fill up. Falling energy prices in Europe have the brakes for a second year running. n

Emmanuel Macron

Trouble on two fronts

Strikes at home and war in Ukraine test the French president

E mmanuel Macron swept to power in 2017 on the back of a

twin promise: to shake up France, and embolden Europe to
act as a more muscular power. The French president’s first term
leader of the eu’s second­biggest economy and foremost mili­
tary power can keep modernising France and shaping Europe.
Mr Macron’s domestic woes concern his plan to raise the
had its ups and downs, but France today is broadly a more vigor­ minimum pension age from 62 to 64. The French live almost a
ous place, more enterprising, job­creating and welcoming to in­ decade longer than in 1980, and spend longer in their deckchairs
vestors. The European Union, too, has moved in Mr Macron’s di­ than their neighbours. Without reform, the pension system fac­
rection. Russia’s savage war on Ukraine has shown that a frac­ es an annual deficit of €14bn ($15bn) by 2030. But Mr Macron has
tious rules­based club of 27 members can hold together, think failed to persuade the French that his fix is the right one. Last
geopolitically and export weaponry into a war zone. year voters denied him a majority in parliament. Now unions
Now, though, Mr Macron faces trouble on both fronts. His au­ want to defeat his project on the streets (see Europe section).
thority is being tested in the National Assembly and on the This pension reform is necessary for France. Mr Macron
streets at home, and his leadership challenged abroad (see Inter­ needs to do a better job of explaining why it is not just an ac­
national section). How he responds will determine whether the counting tool, but part of a wider effort to get the French to work

012
012
 12 Leaders The Economist March 11th 2023

more, and more of the French to work. The unemployment rate and rules. Yet Mr Macron is struggling to persuade his allies that
stood at 7.2% in the most recent quarter, roughly twice the rate in his policies, notably on European security, are the best way to
America and Britain. The last time it was as low as 5% was in the achieve this. He is not leading the debate over Ukraine. And in
1970s. His government also needs to take on the opposition par­ Africa he is losing influence to China, Russia and Turkey.
ties’ claim to have a better solution that entails more taxes on If Mr Macron is to revive his eu leadership, he would do well
companies and the rich. That is the last thing France needs. De­ to spend less time musing out loud about the future contours of
spite Mr Macron’s tax cuts, France is still the most highly taxed a post­war settlement, and more crafting closer ties to countries,
economy in the euro zone. Hence, even if painful strikes drag on, including Poland and the Baltics, which still suspect him of
the president cannot afford to back down. wanting to press Ukraine prematurely into talks. Having at first
If Mr Macron cannot secure parliamentary support before the focused on its diplomacy with Russia, France has swung firmly
deadline of March 26th, he could still force the reform through. behind Ukraine. Its position now is close to America’s. Yet Mr
But that would be best avoided. Left­wing opposition parties Macron is too often tempted to voice ideas that America may
have repeatedly sought to create havoc and derail parliamentary share, but keeps to itself. France could also do more to send hea­
procedure. They would seize any chance to declare the reform il­ vy weaponry to Kyiv, and fast.
legitimate. The centre­right opposition has behaved dishonour­ A more robust Europe, faced with the threat from autocratic
ably too, reluctant to back a change that, in 1995 and 2010, it also powers and the risk of excessive reliance on America, needs a
proposed. It has no excuse for not supporting the reform. strong France. Mr Macron is now one of Europe’s most experi­
Abroad, Russia’s war on Ukraine has in many ways vindicated enced leaders. He brims with ideas, many of them good, and
Mr Macron’s call for a stronger eu, squeezed between America commands a fine diplomatic machine. This is a critical moment.
and China, which can assert itself with hard force, not just trade He cannot afford to get it wrong. n

American universities

Testing fail
The right way to pursue fairness is to ditch legacy admissions, not standardised exams

T HE BEST American universities wish to be ruthlessly dis­

criminating on academic merit—and beacons for diversity
on everything else. Trying to accomplish both at once can
ity Blues scandal of 2019, very rich parents paid to have others sit
their children’s exams.
Worse, supposedly progressive universities like Columbia
prompt mistakes. Lately Columbia University, an Ivy League operate affirmative­action schemes for deep­pocketed dullards
member in New York, has been making a lot of them. Last year it in the form of “legacy” admissions that shower advantages on
admitted to submitting incorrect data to a college­rankings out­ the relatives of alumni. One study found that undergraduates at
fit in a bid to seem more exclusive than it really is. And on March Columbia are more than 100 times more likely to belong to the
1st, in a bid to seem more inclusive than it is, Columbia said it top 0.1% of families by income than to the poorest 20%. The best
would drop the requirement for applicants to submit standar­ way to promote fairness would be to eliminate such a regressive
dised exam scores. pathway to admission.
Campaigners claim that exams favour the privileged. Evi­ In the 1920s Harvard moved to a “holistic” admissions system
dence for this is thin. Maths problems involve neutral things because its president thought it had too many Jewish students
like numbers and algebra; reading­comprehen­ (who excelled on the standardised exam adopt­
sion tests are rarely about silverware or yacht­ ed in 1905). A century later, Harvard is being
ing. The bias, however, is said to be latent. Be­ sued over a holistic admissions system that
cause scores are correlated with race and paren­ limits the number of Asian­American students,
tal income, the exams must therefore be con­ who also do well on tests. Based on that case,
taminated with racism and classism. the Supreme Court is expected to rule that race­
This confuses disparity with discrimina­ based affirmative action is unconstitutional. A
tion. Tests correctly measure educational in­ cynical observer might conclude that universi­
equality, which begins before kindergarten and ties are jettisoning quantitative measures, the
grows as a result of bad policy. Just as smashing thermometers lawsuit’s key evidence, to make discrimination harder to detect.
does not prevent climate change, so abandoning the measure­ Fixing educational inequality requires more data, not less.
ment of educational inequality will not magic it away. Susan Dynarski, an economist at Harvard, makes the case that
In fact, for meritocrats to abandon exams is self­defeating. free, universal testing helps unearth promising young talent
Scores may be correlated with privilege, but they are probably from rough backgrounds. Timely reminders about financial aid
the hardest part of an admissions application to warp with mon­ also help. For decades, elite universities have sought skin­deep
ey. Children of the rich can get ample help in completing their diversity to paper over abysmal socioeconomic diversity, a fail­
coursework (which may receive inflated grades), hire profes­ ing that is exacerbated by legacy admissions. If the Supreme
sional writers to “edit” their essays and even spend lavishly on Court rules that stratagem out, universities should not devote
consultants who will help craft a delectable smorgasbord of ex­ their energies to maintaining an undesirable status quo, but to
tra­curricular activities. Yet research shows that intensive tutor­ crafting something better: a true meritocracy shorn of an unjus­
ing has a marginal effect on test scores. That is why, in the Vars­ tifiable, hereditary mediocracy. n

012
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 14
Letters The Economist March 11th 2023

visible when all countries dustry in the European Union. for Norwich, persuaded his
The integrity of research (beyond the OECD club) are However, it will boost all English city council to pedes­
You criticised publishers for included in the analysis. Do the big players in the American trianise London Street as long
failing to allocate more not take my word for it, check market, most of which, iron­ ago as 1967.
resources to rooting out the data published by the ically, are European compa­ The convenience of cars has
problematic medical­research United Nations Population nies. In wind turbines, only GE certainly transformed cities,
papers (“Doctored data”, Febru­ Division, United Nations is American. The remainder of but the car did not create
ary 25th). Springer Nature has Statistical Division, Eurostat, the American market is suburbs and the tide against
for years committed signif­ World Bank and so on. dominated by Vestas (Danish), their destructiveness began to
icant staffing and investment There are many factors that SGRE (German­Spanish) and turn decades ago.
in technology to tackle issues influence fertility rates. Some Nordex (German). The R&D Terence Bendixson
relating to research integrity. of them were mentioned in the departments of all these com­ Former president
We have a dedicated team of article. Others were not. For panies will remain in the EU. Living Streets
employees with relevant example, the article did not On the developer, owner London
academic expertise focused on take into proper consideration and operator side of the busi­
investigating papers of the importance of the ethnic, ness, including transmission Walkable cities are great for
concern and preventing pro­ religious and cultural make­up networks, European compa­ residents and the laptop class,
blematic submissions from of the population, also as a nies are equally if not more but banning cars makes those
entering the literature. function of immigration. dominant. EDF (France), Enel cities less affordable for the
We continue to invest Aldo Badiani (Italy), EDPR (Portugal), RWE working class. If you prohibit
heavily to develop new artifi­ Professor of pharmacology (Germany) and Orsted cars, how is a tradesman with a
cial intelligence and other Sapienza University of Rome (Denmark) are some of the 40­pound toolkit going to get
tech­based tools and have largest in America, and this is to work? Turning parking
numerous checks in place to an inexhaustive list. Iberdrola spots into bike lanes is great
identify and prevent deliberate Mind the peace (Spain) has a mind­boggling for cyclists, but where are the
manipulation, as well as devel­ Soldiers on the front lines, in number of American subsid­ trucks supposed to park when
oping and delivering training Ukraine or elsewhere, have iaries ranging from retail delivering goods to those cosy
for all our editors. Springer pressing mental­health needs, energy, transmission, charging neighbourhood cafés?
Nature is also working to share but their longer­term reinte­ networks and power plants. A city dweller can work
our knowledge and support gration into peaceful commu­ The only thing the EU should from a coffee shop with a
the wider publishing commu­ nities requires the healing of do with regards to the IRA is laptop, but the coffee neither
nity in addressing this through trauma and stress combined buy shares in Europe’s various delivers, brews, nor serves
our contributions to the STM with livelihood­skills training energy champions. itself. The Uber passenger may
Integrity Hub, a holistic centre (“The enemy within”, February Nicolas Bourbonniere relish not needing a car, but
for all publishers. 11th). New research shows that Montreal the driver doesn’t have that
Chris Graf strengthening mental health luxury. Congestion pricing
Research integrity director and livelihood skills at the keeps traffic down in exclusive
Springer Nature same time, rather than Against and for the car neighbourhoods, but it is in
London separately, can reduce depres­ Efforts to tame the use of cars effect a tax on people driving
sion among traumatised stretch back longer than in­ into them. The concept of the
people by 64% and anxiety by dicated in your report (“Driven 15­minute city, where you can
Fertility in the OECD 60%. It can also increase away”, February 18th). In 1959 walk or cycle to everything you
Your article looking at why forgiveness by 71%. Soldiers the plan for a partly elevated need within 15 minutes,
there are so few babies in need both peace of mind and Embarcadero freeway in San doesn’t seem to give much
southern Europe did not ways to live productively once Francisco, designed to connect thought to the help.
provide evidence in support of the guns are silenced, as do the the Bay and Golden Gate bridg­ Gus Downes
the claim that in the OECD, a even greater number of civil­ es, was cancelled by the board Los Angeles
club mostly of rich countries, ians in war­torn societies. of supervisors following un­
there is now a positive correla­ Simon Gimson precedented opposition from In the 1980s owning a car for a
tion between GDP per head and Vice­president affected residents. In London young man was a universally
fertility (“Baby gap”, February Interpeace three concentric ringways, acknowledged requirement by
18th). There is no correlation Geneva including a hugely destructive both sexes in the Darwinian
whatsoever between GDP per inner one called the motorway struggle to find a mate. Marga­
head and fertility within the box, were cancelled in 1973 by ret Thatcher once said that a
OECD (by the way the data for European energy in America an incoming Labour­con­ man who has gone beyond 26
Ireland are muddied by the fact It is indeed puzzling that trolled council. Homes Before and remains without a car is a
that Ireland has been for a America’s Inflation Reduction Roads, an upstart political bit of “a failure”.
while a tax haven for tech Act has caused such a fuss in party that contested the Lon­ Paul D’Eath
firms like Google, Facebook Europe, especially pertaining don election in 1970, helped to Toronto
and Apple). to renewable energy (Charle­ damn the huge roads. The
Actually, within each single magne, February 11th). The fine OECD held a transport min­
OECD country there is an print of the legislation will isters’ conference in 1975 Letters are welcome and should be
inverse correlation between probably have little to no themed “Better Towns with addressed to the Editor at
The Economist, The Adelphi Building,
income and fertility (see, for impact on the sourcing strat­ Less Traffic”. And town plan­ 1­11 John Adam Street, London wc2n 6ht
instance, data from the Amer­ egies of wind­turbine manu­ ners have been arguing against Email: [email protected]
ican Census Bureau). A clear­ facturers and will not affect cars for longer than 20 years. More letters are available at:
Economist.com/letters
cut negative correlation is also the existing solar­panel in­ Alfred Wood, architect planner

012
 Briefing Defending Taiwan The Economist March 11th 2023 15

Storm warning people of Taiwan, but for the world.

China’s Communist leaders have
claimed Taiwan since Nationalist forces
fled to it after losing a civil war in 1949.
America has long pledged to help the is­
land defend itself. But in recent years, on
both sides, rhetoric and preparations have
grown more fevered. China’s forces often
GUAM, HO NO LULU, O KINAWA AND TAIPE I
practise island landings. Its warships and
China and America are preparing for a devastating war
fighter jets routinely cross the “median

T HEIR FACES smeared in green and

black, some with Stinger anti­aircraft
missiles on their packs, the men of “Dark­
southern end of the Japanese archipelago,
is just 600km (370 miles) from Taiwan. The
two islands are part of what American mil­
line” (in effect Taiwan’s maritime bound­
ary) and harass military ships and planes
of America and its allies. After Nancy Pelo­
side”—the 3rd battalion of America’s 4th itary planners call the “first island chain”: a si, at the time the Speaker of America’s
marine regiment—boarded a pair of Sea series of archipelagoes and islands, big and House of Representatives, visited Taiwan
Stallion helicopters and clattered away small, that stretches from Japan to Malay­ last year, China fired missiles towards it.
into the nearby jungle. Their commanders sia, impeding naval passage from China to
followed in more choppers carrying ultra­ the Pacific. Whether by harrying Chinese Dire strait
light vehicles and communications gear. ships from a distance or—much less like­ America, meanwhile, is sending more mil­
Anything superfluous was left behind. No ly—by deploying to Taiwan to help repel a itary trainers to Taiwan. The Taiwanese
big screens for video links of the sort used Chinese landing, the marines will be early government recently increased mandatory
in Iraq and Afghanistan: to avoid detec­ participants in any conflict. military service from four months to a
tion, the marines must make sure their The hardest part, says Lieutenant­Colo­ year. Prominent congressmen have urged
communications blend into the back­ nel Jason Copeland, Darkside’s command­ President Joe Biden to learn from Russia’s
ground just as surely as their camouflage ing officer, would be dealing with “an ad­ attack on Ukraine and give Taiwan all the
blends into the tropical greenery. The goal versary that’s coming at you in mass”. As weapons it may need before an invasion,
of the exercise: to disperse around an un­ China’s military power grows, predicting not after one has started. Adding to the
named island, link up with friendly how a war over Taiwan might unfold, and sense of impending crisis are America’s ef­
“green” allies and repel an amphibious in­ thus improving the odds of fending China forts to throttle China’s tech industry and
vasion by “red” forces. off without unleashing a nuclear calamity, Mr Xi’s growing friendliness with Russia.
Ignore the polite abstractions. The ma­ is getting ever harder. The only certainty is American military commanders and
rines are training for a war with China, that, even if all nuclear weapons remained intelligence chiefs say Mr Xi has ordered
probably precipitated by an invasion of in their silos, such a conflict would have the People’s Liberation Army (PLA) to de­
Taiwan. Their base in Okinawa, at the horrific consequences, not just for the 23m velop the capacity to invade Taiwan by

012
 16 Briefing Defending Taiwan The Economist March 11th 2023

2027. Some think conflict is closer. “My gut 2.3m reservists. It would also have to con­ China will also do its best to sap Taiwan’s
tells me we will fight in 2025,” General Mi­ trol widespread panic, as multitudes at­ will to fight. Its cyber­forces will try to hack
chael Minihan, head of America’s air mo­ tempted to flee and as transport links to local television and radio, and bombard
bility command, recently warned subordi­ the outside world were cut. Taiwanese soldiers with text and social­
nates. Both sides fear that time is running America, too, would be dispersing jets media messages, offering rewards to muti­
out: America worries that China’s armed from exposed bases. The marines would neers and deserters.
forces may soon become too strong to de­ deploy around maritime choke­points. China must then confront the formida­
ter, while China frets that the prospect of American submarines would slip under ble challenge of an amphibious assault,
peaceful reunification is evaporating. the waves, some mustering close to Tai­ one of the most difficult forms of warfare.
“War with China is not inevitable, and wan. Some American and Taiwanese mili­ The beaches of Kinmen, a Taiwanese is­
it’s not imminent,” declares Admiral John tary commanders would no doubt press for land just 3km from the mainland, are dot­
Aquilino, commander of America’s Indo­ military strikes against China’s gathering ted with relics from an attempted invasion
Pacific Command, who would oversee any invasion force. They would probably be in 1949, when Nationalist forces killed or
fight with China. Speaking in his head­ overruled by those seeking a diplomatic captured almost the entire advance party
quarters overlooking Pearl Harbour, scene solution, or at least not wanting to be of 9,000 Communist troops who landed in
of Japan’s pre­emptive strike in 1941, he blamed for firing the first shot. small fishing boats. The PLA has come far
says his first mission is “to do everything China, for its part, would have to take a since then, acquiring advanced weaponry
in my power to prevent a conflict”. None­ momentous decision. Should it limit its at­ and studying precedents such as D­Day,
theless, he adds, “if deterrence fails, you tack to Taiwan, hoping to create a fait ac- the American­led landings at Incheon in
must be prepared to fight and win.” As Rus­ compli as America and its allies dither? Or Korea in 1950 and Britain’s recapture of the
sia’s invasion of Ukraine shows, he warns, should it strike America’s forces in the re­ Falkland Islands from Argentina in 1982.
“There is no such thing as a short war.” gion, in a new Pearl Harbour? The first op­
The first question for America’s strat­ tion leaves America free to attack the inva­ Walk of strife
egists is how much warning they would get sion fleet; the latter all but guarantees its Yet the risks are still great. China has not
of an impending invasion. The PLA, with wholehearted entry into the war, and prob­ fought a war since invading Vietnam in
an estimated 2m active personnel, versus ably Japan’s, too, if China attacked Ameri­ 1979. Although the Taiwan Strait is only
Taiwan’s 163,000, would need extensive can bases there. 130km wide at its narrowest, its currents
preparations to conduct what would be the An invasion would almost certainly be­ and tides are powerful and erratic. Condi­
biggest amphibious assault since the D­ gin with massive missile and rocket strikes tions are usually propitious only in March­
Day landings in 1944. It would have to can­ on Taiwan. These would quickly destroy May and September­October. Just 14 of Tai­
cel leave, gather landing ships, stockpile much of Taiwan’s navy, air force and air de­ wan’s beaches are suitable for landings and
munitions, set up mobile command posts fences. Wang Hongguang, a former deputy they are heavily fortified, especially the
and much more. commander of the PLA region opposite Tai­ ones close to Taipei, where Chinese forces
But in a war of choice, with Mr Xi able to wan, predicted in 2018 that there would be would probably prefer to start an invasion
pick his timing, many of these moves 24 hours of bombardment—first on mili­ (see map 1). Taiwan has built lots of bun­
could be disguised as military exercises. tary and political targets, then on civilian kers and tunnels in the area.
American defence officials say they might infrastructure such as power plants and Nor is it certain that the PLA has enough
see unambiguous signs of imminent war, fuel depots. He suggested that China ships to transport an adequate landing
such as stockpiling of blood supplies, only would blind Taiwan’s satellites, cut its sub­ force quickly across the strait. It would
a fortnight ahead. For smaller operations, sea internet cables and use electronic war­ need 300,000 to 1m troops to be sure of
to seize islands Taiwan controls close to fare to scramble its command­and­control subduing Taiwan. It has six amphibious ar­
the mainland, say, there might be only a systems, hobbling co­ordination with my brigades stationed nearby, with a com­
few hours’ warning—if that. American and allied forces. bined 20,000 troops, plus a similar num­
America would want to expose China’s General Wang said the onslaught would ber of marines. But China’s amphibious
preparations early, as it did with Russia’s cause enough havoc to open at least a two­ landing ships could probably ferry only
invasion of Ukraine, and rally an interna­ day window for invasion. If American forc­ about 20,000 soldiers across in the first
tional coalition in opposition. That would es did not arrive within three days, he blus­ day or two, depending on how much
be easier if Mr Xi embarked on an outright tered, “don’t bother to make a trip in vain”. equipment they take. Likewise, the PLA’s
invasion. But China may try to exploit the transport aircraft could probably convey
ambiguities of Taiwan’s status: it does not 1 only half of its 20,000 airborne troops in
have diplomatic relations with most other Matsu the opening phase. The PLA recently prac­
East China Sea
countries (see Special report). If Mr Xi cites CHI N A tised using ferries and other civilian ships,
Median line
some “provocation”, and begins with ac­ Jinshan South which could bring across many more units
tions short of war, such as a blockade, but, for that to work well, China would
Xiamen Taipei
America or its allies might equivocate. Taiwan Strait
need to capture a still­usable port.
America must also weigh how far its The war in Ukraine has raised fresh
preparations risk precipitating conflict. Kinmen doubts, too, especially about China’s
Send aircraft­carriers to the region as a TAIWAN Yonaguni ground forces. Its combined­arms battal­
show of force? Deploy troops to Taiwan? Penghu Japan ions, including its amphibious ones, are
Threaten China’s oil supplies through the modelled on Russia’s battalion tactical
Strait of Malacca? All might be deemed South Philippine groups, which have struggled in Ukraine.
Kaohsiung
provocations by China, if not acts of war. China Sea Even if China succeeded in swiftly decapi­
As war approaches, Taiwan will move Sea tating Taiwan’s leadership, it might still
Jialutang 150 km
navy ships from its vulnerable western face protracted fighting against forces rep­
coast to the east, behind the mountain Suitable beaches for landing licating the Ukrainians’ use of portable
range that runs along the eastern side of Most Medium missile­launchers and drones.
the island. It would seek to hide jet fighters Source: “The Chinese Invasion Taiwan’s strategy, meanwhile, is to
Threat”, by Ian Easton, 2019
in underground shelters and mobilise its thwart China’s initial landing or prevent it

012
 The Economist March 11th 2023 Briefing Defending Taiwan 17

ca’s air defence is worryingly thin. It also

has few means of passive defence, such as
concrete aircraft hangars.
American officers speak of the prospect
of war with a mixture of dread at China’s
growing power (“Every day I am astounded
by their capabilities,” says one), and opti­
mism that new tactics can achieve victory.
They emphasise “distributed lethality”,
meaning the scattering and constant
movement of forces to avoid becoming ea­
sy targets, while maintaining the capacity
to gather or co­ordinate in attacks. This
will rely to an unprecedented degree on
America’s experience of fighting as a “joint
force”, in which separate military branches
and weapons systems reinforce each other.
Military jets would disperse from big
bases, gather in the air for battle and settle
where they can on specks of land. They
would repeat the pattern as quickly as pos­
No easy way past sible by “hot­pit” refuelling with engines
running. Sometimes planes would perch
from bringing enough troops. Taiwanese troops, has capable forces. The Philippines in civilian airports; sometimes on austere
forces would block ports and beaches with is weak militarily but close to Taiwan. Aus­ airfields, many dating from the second
sea mines, submerged ships and other ob­ tralia is closely allied but modestly armed world war, which are being refur­
stacles. Backed by surviving aircraft and and farther away. Countries in the Pacific bished. Adding ever more concrete to pro­
naval vessels, they would strike China’s ap­ could provide rear bases. More distant al­ tect aircraft “is a fool’s errand”, says Briga­
proaching force with missiles and pound lies, such as Britain, might send naval ves­ dier­General Paul Birch, commander of the
disembarking Chinese troops with artil­ sels. A big uncertainty is how much India 36th Wing at Andersen air base, in Guam.
lery and rockets. Some PLA texts suggest would help. A lot would depend on how the “Being in the air is much safer.”
that Taiwan has underwater pipelines off crisis unfolds and who is blamed for it. Engineers, meanwhile, would aim to
its beaches that could release flammable America’s plans to help Taiwan used to repair cratered runways within about six
liquid. Some of its outlying islands are pro­ hinge on aircraft­carriers. It sent one to the hours. Ground crews would set up pop­up
tected by remote­controlled guns. area after China fired missiles near Taiwan hangars as well as traffic­control centres
If the PLA broke out of its beachheads, it in 1995 and again after another salvo in and data links. A big headache would be
would face a slog through arduous terrain 1996. But China has since invested heavily how to get fuel and munitions to the right
to reach Taipei and other urban centres. in “anti­access/area­denial” (A2/AD) weap­ places. One aim of this “agile combat em­
Then both sides would face a challenge for ons, designed to fend off American ships ployment” is to force China to expend its
which neither is fully prepared: urban war­ and aircraft. They include the DF­26 mis­ large but finite stock of missiles.
fare. Taiwan is reluctant to fight in its cit­ sile, which can strike deep into the Pacific Rather than fight near Taiwan, Ameri­
ies, fearing high civilian casualties. The (see map 2 on next page), and new hyper­ can surface ships would probably hold
PLA does train for urban warfare, but had sonic missiles that are harder to intercept. back, to survive, provide air defence for
long banked on a quick victory if it reached China’s navy is now the world’s largest, Guam and other rear bases and blockade
Taipei. Since the war in Ukraine began, with a fleet of submarines to attack ap­ Chinese trade. They would “pulse”—sail­
however, both sides have been practising proaching American ships. Its long­range ing briefly in and out of the danger zone—
fighting in built­up areas more. bombers are also a menace. David Ochma­ to shoot at Chinese ships and planes.
Even if a Chinese invasion got bogged nek of the RAND Corporation, a think­tank
down, though, time would not be on Tai­ that has run classified war­games simulat­ Brothers with arms
wan’s side. “We can fend them off for one ing a Taiwan conflict, argues that old Marines would deploy to “key maritime
or two weeks but no longer,” says Si­fu Ou American strategies now “lead to defeat”. terrain”, especially islands dominating the
of Taiwan’s Institute for National Defence American planners’ alternative is straits that separate Taiwan from Japan and
and Security Research, a think­tank. Un­ summed up with three D’s: disrupt Chi­ the Philippines. They would reinforce the
less Taiwanese forces resist steadfastly, nese operations within the first island local troops, reconnoitre Chinese disposi­
everything else is futile. But, by the same chain, defend allies on it and dominate the tions and, armed with new missiles com­
token, Taiwan cannot hope to defend itself sea and air beyond. America must over­ ing into service in the next few months,
in the long run without American help. come daunting problems: the “tyranny of fire on enemy ships. The marines are creat­
As an island, Taiwan is not just harder distance” in the vast Pacific Ocean, the ing three new “marine littoral regiments”,
to invade than Ukraine, but also harder to growth of China’s “weapons engagement each with more than 2,000 troops, giving
support. Its ports might be destroyed by zone” to encompass American bases in the up their tanks and many of their howitzers.
China, its own forces or even America’s. At­ western Pacific and the sheer mass of Chi­ Some critics say these units would be
tempting to bring reinforcements or sup­ na’s manpower and weapons, which ex­ too vulnerable; others reckon that, without
plies to the island as Chinese missiles rain ceeds America’s in many categories. deployment to Taiwan itself, they would be
down would be almost as difficult as at­ The risk of Chinese attack, by missiles too distant to help much in the main battle.
tempting to invade. or bombers, decreases with distance (see The marines, though, argue that they
At the very least, America and Taiwan chart on next page). But even Guam, Amer­ would multiply the threats China must
would need help from allies. Japan, which ica’s big military hub some 3,000km from face, “canalise” Chinese ships into vulner­
hosts tens of thousands of American China, is vulnerable. What is more, Ameri­ able positions and, above all, “sense and

012
 18 Briefing Defending Taiwan The Economist March 11th 2023

make sense” of Chinese deployments. JAPAN 2 der its “base scenario” Taiwanese, Ameri­
Beijing
General David Berger, the marines’ com­ S. KOREA
can and Japanese forces typically severed
mandant, talks of “turning the tables” on DF-21A missile PLA supply lines after about ten days,
CHINA Range 1,770 km
China by using an A2/AD strategy to defend stranding some 30,000 Chinese troops on
the first island chain. America won’t have Okinawa PA C I F I C the island. Taiwan survived as an autono­
to fight its way in, he says: “We are there TAIWAN OCEAN mous entity, but was left with no electrici­
persistently, 52 weeks a year.” 1st Island 2nd Island Saipan
ty or basic services. America and Japan suf­
Dispersed warfare sacrifices efficiency Chain Chain (US) fered, too, losing 382 aircraft and 43 ships,
for resilience. To succeed, though, lots of VIETNAM PHILIPPINES Guam including two American aircraft­carriers.
things need to go well. First, command­ (US) China lost 155 planes and 138 ships.
and­control networks must be able to MALAYSIA DF-26 missile
The economic cost would be enormous,
withstand Chinese electronic attack. Plan­ PALAU Range 4,000 km too. RAND estimated in 2016 that a year­
ners talk of a yet­to­be­perfected “kill long war over Taiwan would reduce China’s
web”, in which artificial intelligence helps GDP by 25­35% and America’s by 5­10%. The
INDONESIA
“sensors” and ”shooters”—including those Rhodium Group, a consultancy, concluded
of allies—operate together even when far Source:
1,000 km
in 2022 that the disruption to the supply of
apart. Marines on islands, stealthy F­35 Hudson Institute AUSTRALIA semiconductors (Taiwan makes 90% of the
fighters, drones and more can all act as world’s most advanced computer chips)
nodes. Second, America would need more that, by then, China has also run short of would cause global shortages of electronic
sophisticated logistics to supply far­flung long­range munitions. goods, leading to “incalculable” damage to
units. Last, it must persuade allies to risk America and China would debate the world economy.
China’s wrath. Their willingness would be­ whether and when to attack each others’ Given the appalling consequences,
come clear only as hostilities erupt, which satellites, potentially turning low­earth or­ would America and China really go to war?
complicates planning. bit into a scrapyard. Some war­games sug­ Chinese officials say their preferred option
Early in the war the job of sinking Chi­ gest they might refrain from doing so for is still peaceful unification, and deny there
na’s invasion fleet—the critical task in de­ fear of harming themselves. But as a senior is any timetable for an attack. China also
fending Taiwan—would fall mainly to sub­ American military official puts it, “The has many options short of an all­out inva­
marines and long­range bombers. Though side that shoots first gets a big advantage.” sion. They include economic coercion, a
its boats are outnumbered by China’s, Every stage of the war would be fought full or partial blockade and the seizure of
America retains the edge in underwater in the shadow of nuclear weapons. Mr Bi­ outlying islands such as Kinmen. China
warfare. Its attack submarines carry torpe­ den has talked about reducing America’s may well embark on this sort of “grey­
does, cruise missiles and sea mines. Soon­ reliance on nukes, and China espouses “no zone” operation as a substitute for, or a
er or later, however, they would run out of first use”. But the risk of disaster is presum­ prelude to, a wider attack.
munitions, and would have to sail away for ably rising as China expands its arsenal. It Mr Xi has strong incentives to bide his
several days to replenish in places such as will grow from 400 or so warheads today, time, not least because his forces are grow­
Guam, where they would be vulnerable. the Pentagon reckons, to 1,000­odd by ing, whereas American defence spending
2030 (still less than America and Russia is near an 80­year low as a share of GDP. But
Too far away have). A recent war game conducted by the he may also feel pressure to attack if Tai­
Bombers flying from Hawaii, Alaska and Centre for a New American Security, a wan abandons all pretence that it might
the American mainland, meanwhile, think­tank, suggested that both sides un­ ever reconcile with the mainland, and for­
would be using munitions that can be fired derestimate the risk of escalation. This mally declares independence, or if Ameri­
from beyond the reach of Chinese anti­air­ grows if either attacks the other’s main­ ca deploys troops to Taiwan. The year­long
craft missiles. But America’s Long Range land, or if the conflict becomes protracted. conflict in Ukraine is proof that an irreden­
Anti­Ship Missiles, which can travel 200 The toll of even a purely conventional tist autocrat can miscalculate appallingly.
nautical miles or more, would probably war would be devastating, for the victors as Zhou Bo, a former senior officer in the PLA,
run out within a week. Thereafter, Ameri­ well as the losers. A war game by the Centre notes that to achieve its aims, China does
can forces would have to move closer to for Strategic and International Studies, an­ not need to exceed America’s global might;
Taiwan to sink ships. America’s hope is other American think­tank, found that un­ it just needs an edge in the western Pacific.
Many strategists in America and Asia
fear that the loss of Taiwan would replace
Too close for comfort the American­led order in the region with a
China, PLA* conventional strike capacity at selected targets†, 2022, kilotonnes Missiles Aircraft Chinese­led one. Japan and South Korea
might feel obliged to develop their own nu­
Taipei Okinawa Tokyo Singapore Guam Darwin Anchorage Honolulu 12 clear weapons. Rather than constraining
China, the first island chain would become
10
a platform for it to project power farther
8 afield. “Taiwan is the cork in the bottle,” as
J-10 an American military official puts it.
6 America draws solace from Russia’s
failures in Ukraine, believing they have in­
H-6 4 creased Mr Xi’s doubts about his ability to
DF-26 take Taiwan. But to preserve the precarious
2
JH-7 balance across the Taiwan Strait, America
0 must act with exquisite skill. It needs to re­
0 1 2 3 4 5 6 7
inforce Mr Xi’s hesitation by strengthening
Range, km, ’000
itself, its allies and Taiwan, but not go so
*People’s Liberation Army far that he thinks he must attack fast or
Source: Hudson Institute †On first day of war, assuming all missiles are fired
give up on seizing Taiwan for ever. n

012
 Britain The Economist March 11th 2023 19

Life expectancy of lost life expectancy equates to roughly

700,000 more deaths in Britain than might
Nasty, British and short have been expected in the early 2010s.
There are caveats to these figures. First,
our life­expectancy estimate for 2022 is
based on provisional death figures using
population projections that have not yet
incorporated changes from the 2021 cen­
MID D LESBROUGH
sus. These are the best data available for
Why did 250,000 Britons die sooner than expected?
now. Second, starting­points matter: a life
ames Cook University Hospital in ment of Britain, The Economist has used expectancy of 83.2 years would have repre­
JMiddlesbrough, in the north­east of Eng­ provisional figures for the last two years. sented the best possible scenario for Brit­
land, is home to a world­leading heart unit. The result is disturbing. We calculate that ain, one in which long­run gains contin­
The unit was a pioneer in primary angio­ life expectancy in Britain in 2022 was 81 ued unabated from 2011. But since progress
plasties, in which balloons are inflated in­ years for boys and girls combined, just started to stall in the early 2010s, it is a nat­
side blocked arteries to open up the ves­ eight weeks longer than a decade ago. ural moment to choose.
sels. In 2016 surgeons there fitted a 71­year­ That is an astonishing slowdown in the Finally, to convert life expectancy to ab­
old woman with a wireless pacemaker no rate of progress. Between 1980 and 2011 life solute numbers of deaths we have made a
bigger than a grain of rice—the first opera­ expectancy was rising steadily, at an aver­ simplifying assumption that gains and
tion of its kind outside a clinical trial. The age pace of close to three months per year. losses in life expectancy reflect death rates
unit marked its 30th birthday in January Had that rate of improvement been main­ which change proportionally among all
with news of funding for a research lab. tained over the last decade, Britons’ life ex­ age groups. In practice, death rates can rise
But there was also a deflating sense of pectancy at birth in 2022 would be 83.2 and fall at differential rates across the pop­
reality. Despite the unit’s successes, years. A difference of 2.2 years, the equiva­ ulation: the elderly were more at risk from
cardiovascular diseases still cause around lent of 26 months, may not sound like covid­19, for example.
one in five premature deaths in Middles­ much. But to demographers it is colossal. Yet such caveats cannot obscure the fact
brough. The town of 144,000 people has Life expectancy declines when people die that something has gone badly wrong in
some of the worst mortality rates for heart earlier. Between 2012 and 2022, 26 months the past decade, and that large numbers of
disease in England. Life expectancy at Britons have lived shorter lives as a result.
birth, a good indicator of health, has fallen That raises two big questions. How much
→ Also in this section
slightly over the last decade, from 75.7 of this is specific to Britain? And why?
years to 75.4 years for men. 22 AI, inventor Some things are common to all coun­
It is not just in Middlesbrough where tries. The pandemic is an obvious example.
22 Stopping the small boats
life expectancy has flatlined. The latest of­ Covid killed millions around the world in
ficial data end in 2020, when covid­19 was 23 Romantic novels 2020 and 2021, meaning that life expectan­
still claiming large numbers of lives. To cy was especially bad in those years. But
24 Bagehot: The aisles have it
provide a post­pandemic health assess­ deeper trends are also at work. For almost

012
 20 Britain The Economist March 11th 2023

two centuries the story of life expectancy

in the rich world had been one of unfet­ Not too young to die 2
tered progress. In 1841 a baby boy born in Age-standardised mortality rates by age groups, 2012=100
England or Wales could expect to live to the
age of 40, and a girl to 42. By the 20th cen­ Aged 0-29 30-49 50-69 70 and over
tury’s end, life expectancy had nearly dou­ 160
bled; in the first decade of the new millen­
nium, improvements even sped up. “2000­ England 140
2010 was a halcyon decade for life expec­ and Wales
tancy,” notes Veena Raleigh of The King’s 120
Fund, a think­tank.
The slowdown that occurred in the next 100
decade may have been an inevitable come­ France*
down from the preceding period, given the Netherlands† 80
mortality rates associated with ageing pop­ 2000 10 21 2000 10 21 2000 10 21 2000 10 21
ulations. Deaths from Parkinson’s disease Sources: Office for National Statistics; Human Mortality Database; The Economist *To 2020 †To 2019
and Alzheimer’s are increasing, often in
conjunction with respiratory disease, es­
pecially flu and pneumonia. Medical inter­ graphic and economic attributes with Brit­ main to be explained. Around a quarter of a
ventions have kept sicker people alive for ain. We excluded Germany, because reuni­ million people, almost two whole Middles­
longer, but may be finding their limits. fication in 1991 had specific effects on life broughs, have died sooner than expected
Take cardiovascular disease, which for expectancy. We also did not include outli­ in little more than a decade. Why?
the past half a century contributed the larg­ ers such as America, whose dreadful per­ To answer that, you have to look not just
est gains to life expectancy in rich coun­ formance reflects an opioid epidemic, or at how many are dying, but at who. It is not
tries. Those who survive heart attacks are East Asian countries such as Japan and just the elderly: improvements in life ex­
at greater risk of developing valvular heart South Korea, whose gains in life expectan­ pectancy have slowed across all age
disease, which if untreated can result in cy make them stand out for better reasons. groups. Between end­2019 and mid­2022
heart failure. “So while we’ve seen heart­ Improvements in life expectancy Britain had the 19th­highest cumulative ex­
attack deaths going down, we’ve actually among our 12 European countries slowed cess­mortality rate of 33 European coun­
seen the numbers of cases of heart failure from an additional 12 weeks per year on av­ tries for the over­65s, but the fifth­highest
and heart­failure deaths going up,” says erage between 1980 and 2011 to seven weeks among those who died younger.
Mike Stewart, chief medical officer at per year from 2011 until the start of the pan­ This fits with a “worrying trend” of
James Cook. “You can postpone [the effects demic. But they slowed much more dra­ more 50­ to 64­year­olds dying than would
of heart disease] but you can’t get rid of it.” matically in Britain. The international otherwise be expected in 2022, notes Dr
As you might expect, such longer­run slowdown in comparable countries, ad­ Jonathan Pearson­Stuttard of LCP Health
slowdowns in life expectancy are also ob­ justing for covid, explains only about Analytics, a consultancy. Many probably
servable in other European countries. But 300,000 of the additional 700,000 British succumbed to heart disease, diabetes and
none has stalled quite so much as Britain deaths in the 11 years to 2022. liver problems, which were leading causes
(see chart 1). To create an international Strip out the age­standardised deaths of excess deaths in 2022. Some of these
benchmark we selected a dozen rich Euro­ associated with the pandemic too, and deaths may have been caused by interrupt­
pean countries that share similar demo­ around 250,000 of the 700,000 deaths re­ ed health care during the pandemic. But
for those aged between 40 and 64, death
rates for cardiovascular disease were in­
Breathtaking 1 creasing well before covid struck.
Life expectancy at birth, years In England and Wales mortality rates
among 30­ to 49­year­olds have steadily in­
Compared with Europe, 1980-2022 Britain, 2010-22 creased since 2012, in sharp contrast with
84 83 neighbouring countries such as the Neth­
“Best-case scenario”
erlands and France (see chart 2); the same
Average of similar
European countries* If long-run trend had applies to mortality rates for men between
80 continued starting 82 the ages of 49 and 54. Deaths at younger
700,000
Britain from 2011 deaths ages are less easily explained by demo­
graphy or the limits of medical advances;
76 81 other factors are at work. Obesity, for ex­
ample, is associated with increased mor­
Long-run trend Britain,
actual tality for cardiovascular diseases and can­
1980-2011
72 80 cer; obesity rates have risen faster in Brit­
ain than in most other rich countries.
As for where people are dying, the un­
1980 90 2000 10 22 2010 12 14 16 18 20 22 comfortable truth is that the 250,000 do
not die in places like the London borough
700,000 more deaths than expected in the best-case scenario, of which:
of Westminster (where life expectancy sur­
300,000 150,000 250,000 passes that in the Swiss canton of Geneva).
They die in poorer towns and cities.
Explained by slowdown in life expectancy Age-standardised Additional deaths that
A government press release in 2021 ,to
seen in comparable European countries effects of covid-19 appear specific to Britain
mark the creation of an Office for Health
*Population-weighted average of Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland Improvement and Disparities, acknowl­
Sources: ONS; National Records of Scotland; Northern Ireland Statistics and Research Agency; Public Health England; OECD; The Economist
edged that around 80% of a person’s long­

012
 The Economist March 11th 2023 Britain 21

term health is determined not by the care health outcomes. Statistical boffins define
they receive but by wider social factors. Prosper and live long 3 preventable deaths as those which could
Cold, damp homes can increase the risk of England, deprivation* v life expectancy† have been avoided with public­health in­
developing heart and respiratory diseases. By local authority terventions such as improving health edu­
A low income or a limited education can Years cation or helping people to stop smoking,
Westminster 86
worsen the choices a person makes about say, or manage their weight.
their diet. Poor people sometimes use These interventions are not easy to get
food, drugs and gambling as an escape. 84 right but they can be very effective. A study
“Deaths of despair”, from drugs, sui­ looking at coronary heart­disease deaths
cides, accidents and alcohol, play a partic­ 82 in England and Wales between 1981 and
ular role in Scotland. Death rates from drug 2000 found that this kind of primary pre­
misuse are around 3.7 times higher there 80 vention avoided four times as many deaths
than in Britain as a whole, making them Circle size=
as secondary prevention did, and that the
comparable to opioid­ravaged America. population, 78 average person saved gained almost three
Within Scotland, they are 18 times higher 2017-19 Middlesbrough times as many years of additional life (21
in the poorest 20% of neighbourhoods 76 years compared with 7.5). Experts reckon
than the richest. Drug overdoses have been that 40% of the burden on the NHS may be
second only to covid­19 as the biggest con­ 10 20 30 40 preventable through tackling the causes of
tributor to rising mortality rates in Scot­ More deprived → avoidable chronic conditions. But in 2020
land over the last four years. *A measure of deprivation in England weighted by: less than 7% of overall government health­
income (33%), employment (33%), education (20%)
Drug­and­alcohol­related deaths have and crime (14%). Data collection in 2015-16 care spending went on prevention, a third
been rising south of the border too, and are †Life expectancy over three-year period: 2017-19 of that on covid testing and tracing.
the main reason for the alarming rise in Sources: ONS; Department for Levelling Up, Such services have been pruned in the
Housing & Communities; The Economist
death rates among people in their 30s and last decade. Since 2013 public health in
40s. But in England “deaths of despair” England has come under the purview of lo­
only explain about one sixth of the life­ex­ coalition government that was in power cal authorities. The public­health grant,
pectancy gap between the richest 20% and from 2010 to 2015. which is paid to councils by the Depart­
poorest 20% of neighbourhoods. Reductions in government funding ment of Health, was cut by 24% in real
Outside London, there is almost a per­ then tended to hit the most deprived areas terms per person between 2015­16 and
fect correlation between life expectancy in hardest. During the 2010s, spending per 2021­22; the government is yet to publish
a local authority and its level of depriva­ person decreased by 16% in the richest its allocation for 2023­24, making it hard to
tion—as measured by a government index councils, but by 31% in the poorest. Bene­ plan. Public­service agreements commit­
of a battery of economic and other factors fits were also cut. Our analysis of a detailed ting the previous Labour government to
(see chart 3). Our calculations also suggest dataset of local government spending from tough targets on life expectancy, among
that between 2001 and 2016 income and 2009­19, compiled by the Institute of Fiscal others, were discontinued in 2010. “From
employment deprivation alone accounted Studies, a think­tank, shows that places our heart­disease point of view, I think we
for 83% of the variation between local au­ with the largest relative declines in adult were doing public­health intervention bet­
thorities in life expectancy. social­care spending and housing services ter 20 years ago,” says Dr Stewart.
In 2020 Sir Michael Marmot, an epide­ were the ones that suffered the greatest There is no substitute for stopping peo­
miologist, published a follow­up to an in­ headwinds to life expectancy. ple from falling ill in the first place. But
fluential report from 2010 into health dis­ The connection of austerity with life ex­ once a disease is present, secondary pre­
parities across England. He found that, pectancy is controversial—correlation vention with treatments such as statins
whereas in London life expectancy had im­ does not necessarily mean causation. But and cardiac rehabilitation can do much to
proved across all income deciles, in the there is at least one specific way in which reduce mortality rates. That is where short­
years between 2011 and 2017 life expectancy funding cuts are likely to have worsened falls in medical care are liable to show up.
had declined for women living in the poor­ Britain had higher rates of treatable mor­
est decile of areas, and for the men living in tality (deaths which could have been
the poorest parts of the north­east and avoided with timely and effective health­
Yorkshire. A poor English girl could on av­ care interventions) than the OECD median
erage expect to live 7.7 years less than a rich country long before the waiting lists start­
girl, and a boy 9.5 years less. ed to spiral. This is partly because the poor­
If working­age and poorer people are at est tend to present to health services later,
the heart of a decade of British deaths, when their conditions are more advanced.
many forces will have been at play, some of Sorting out these problems is not a
them overlapping. But funding cuts, re­ quick or easy task. But it is an urgent one.
duced public­health interventions and Back in Middlesbrough, the gap in life ex­
problems in the National Health Service pectancy between the richest and poorest
(NHS) all are likely to have played a part. fifth of the population is 11.3 years for men
For many the connection between and 8.8 years for women. This discrepancy
slowing life expectancy and austerity is is something that Kevin Leavesley, who of­
increasingly clear. “It’s all down to the ficiates at 300­350 funerals a year across
weight of evidence,” argues David Walsh of the north­east, sees all too often. “If I’m do­
the Glasgow Centre for Population Health. ing a funeral in east Middlesbrough then it
On this view, funding cuts in other Euro­ is less of a surprise when it’s a 62­year­old,”
pean countries during the 2010s help ex­ he says. Some 10m years of life have been
plain some of their slowdowns, and Brit­ lost in Britain over the past decade, com­
ain’s worse performance reflects the par­ pared with what might have been expected
ticular brand of austerity enacted by the in 2011. That grim total keeps ticking up. n

012
 22 Britain The Economist March 11th 2023

Migration

Go Home Office

A new plan to stop the boats is

unlikely to work

“S topping the boats” is one of Rishi

Sunak’s five promises for 2023. More
than 45,000 small­boat migrants crossed
the English Channel last year, exposing
Britain’s inability to control its borders.
That figure was expected to grow this year.
Mr Sunak and Suella Braverman, the home
secretary, have now come up with a plan.
New legislation unveiled on March 7th
would render inadmissible asylum claims
Patent law by those who travel across the English
Discovery process Channel on flimsy dinghies. Instead, they
would almost all be detained and deported,
never to return.
Yet it is difficult to imagine how the
Can an AI be an inventor? A landmark case at the Supreme Court
government’s new Illegal Migration Bill
processes involve slow, ited commercial repercussions. “There is can do much to alleviate the problem. De­
Judicial
deliberative thinking. Artificial in­ very little point in only the UK protecting taining asylum­seekers is morally and le­
telligence (AI) involves mind­blowing AI inventions,” says Matt Hervey of Gow­ gally dubious: under international law
computational speed. On March 2nd, in a ling WLG, a law firm. “If a company has a asylum­seekers cannot be deemed “ille­
hearing at the Supreme Court in London, viable choice to keep its invention a gal”. The Home Office itself acknowledges
these two worlds came together to raise secret and exploit it, it won’t disclose the that many of those who enter Britain in
big questions for intellectual property in secret in a patent application to get a small boats are legitimately in search of
the age of machines. monopoly in only one country.” sanctuary. In 2022 migrants from the five
In 2019 Britain’s Intellectual Property But the technology is moving fast and countries that accounted for nearly half of
Office denied Stephen Thaler, an Amer­ the questions raised by the case are those who crossed the Channel had an asy­
ican computer scientist, patents for two profound. There is ambiguity in British lum grant rate of above 80%. For three na­
inventions—a beverage container and a law over who, or what, can claim credit tionalities—Afghans, Eritreans and Syri­
search­and­rescue device. The applica­ for an invention. The Patents Act of 1977 ans—it was 98%.
tions were not denied because the in­ was written long before its drafters could The plan has myriad practical flaws,
ventions lacked novelty, but because the imagine robots creating anything and too. Britain has no capacity to hold large
named inventor was not a human being. refers to the inventor as the “deviser”. If numbers of detained migrants. The gov­
AI is often used as a tool to help re­ the Supreme Court does interpret the law ernment’s idea is to deter others from mak­
searchers find new inventions. Appli­ to include machines, that could un­ ing the journey, thus keeping the numbers
cants normally put the name of the dermine the societal bargain on which locked up and deported manageable. But it
person (or people) who worked most patents are based. Inventors are encour­ is far from clear that the policy would have
closely with the machine as the inventor. aged to innovate on the understanding this effect. Or if it did, how long that would
Until now this has not been a problem that if they disclose their inventions in a take and how many migrants Britain
because AI has always required human patent, they will be granted monopoly would first have to detain.
assistance. But Dr Thaler asserts that his rights to recover their investment. An AI The next question is where would these
“creativity machine”, DABUS (short for is different: robots do not require any migrants then be deported to? Britain al­
“Device for the Autonomous Bootstrap­ incentive to innovate. ready has a returns agreement with Alba­
ping of Unified Sentience”), had come up If the court decides that only a human nia, which has reduced the number of Al­
with the two inventions without any inventor can hold a patent, its view on banians claiming asylum. But it will not be
intervention and that it would be dis­ how rights can be legitimately trans­ able to strike similar deals with most of the
honest to claim that he was the inventor. ferred from an AI to humans (particularly other countries asylum­seekers flee. That
He is making the same argument in other if it is not clear how the AI works) will be is because it is illegal to return them to
jurisdictions. But this is the first time it closely watched. Although a machine has countries considered unsafe. In the ab­
has reached a country’s highest court. not yet created a pharmaceutical product sence of a returns agreement with France
The immediate stakes may not seem on its own, Avi Goldfarb, an economist (which is not in the offing), Britain could
that high. The British government con­ researching AI and health care at the not send them back there. An attempt to
ducted a consultation in 2021 on patents University of Toronto, worries that if use Rwanda as a destination for processing
and AI; despite Dr Thaler’s assertions, such inventions are not patentable there claims and settling those who succeeded is
most respondents said AI is not suffi­ will be little incentive for firms to create stalled in the courts. Britain has no other
ciently advanced to invent without hu­ machines that do drug research. The arrangement with a safe third country.
man involvement. And a ruling in his court is expected to deliver its verdict in It seems likely, then, that Britain will
favour in Britain alone would have lim­ a few months. It will not be the last word. continue to process the claims of those
who come from countries to which they

012
 The Economist March 11th 2023 Britain 23

cannot be returned. This would echo an gees with family members, and for Af­ census of female desire. Type in “Italian”,
earlier failure to tackle the problem. Under ghans, Hong Kongers and Ukrainians to and you will be offered 338 titles; “Sheikh”
rules introduced in 2022 migrants who apply to be resettled (although too few Af­ brings up 282; and “Welsh” four. “Brood­
have arrived in Britain, having passed ghans who helped Britain during its war ing” returns 66 results, while “Cheerful”
through other safe countries without against the Taliban have been allowed to produces zero. “Billionaire” offers you 754,
claiming asylum, are classed as “inadmis­ come to the country). Asylum­seekers “Surgeon” 206 and “Doctor” 380 (though to
sible”. Yet immigration lawyers say that from other countries have no way to travel judge by titles such as “Baby Surprise for
has made no actual difference to the way into Britain except by small boat or lorry. the Doctor Prince” and “A Doctor in Her
their claims are processed, except to The government has promised to intro­ Stocking”, neither the doctor’s knowledge
lengthen further the wait for a decision. duce new safe routes, but says it must first nor his morals would seem to deserve such
The new law seems likely to have a similar fix the small­boats problem. “That’s the reverence). “Middle Manager” returns the
effect, though it may temporarily please wrong way round,” says Sunder Katwala, pitiless phrase: “Sorry, no products
some on the right of the Tory party. director of British Future, a think­tank. He matched the keyword.”
Critics of this and previous attempts to says that introducing new schemes target­ Middle managers aside, tastes vary
tackle the small­boats crisis point out that ed at certain countries could, along with a when it comes to romantic fiction. Elisa­
there are few other routes for people flee­ returns deal with France, reduce the num­ beth Kendall is mistress (the title feels
ing war and persecution to claim asylum in ber of people travelling to Britain in small unusually apposite) of Girton College,
Britain. There are schemes to reunite refu­ boats. The new law will not stop them. n Cambridge and a world expert in jihadi
chick lit. In “I Fell In Love With a Jihadi
Fighter”, two distant cousins are thrown
Literature together in the same house in the Syrian
civil war (#forcedproximity). Smouldering
#Lovestory glances are followed, somewhat unexpect­
edly, by the hero’s death. Happily all is not
lost because, as Dr Kendall explains, “the
woman decides she wants to join him” and
so the rest of the novel is about “her meta­
morphosis into a suicide­bomber”. The
smouldering resumes.
Sales of romance novels are rising in Britain. Tiktokers help explain why
The novels that straddle the romance­

P assion is being partitioned. Online,

and particularly on TikTok, romantic
fiction is being carved into categories by its
novels already fit these new paradigms
perfectly: online, “Pride and Prejudice” is
now categorised as #enemiestolovers. As
bestseller charts in Britain strike a differ­
ent tone. Many are modern and American;
all have taut­jawed heroes and a fondness
fans. Where once people merely read a cat­ P.D. James, a novelist, once observed, Jane for exposition. In one, a #billionaire
egory called “books” now they read catego­ Austen novels are merely “Mills & Boon checks his “Patek Philippe watch. Limited
ries called #friendstolovers, #enemiesto­ written by a genius”. edition, hermetically sealed and water­
lovers and #academicrivalstolovers. There Mills & Boon itself is marketed by a ge­ proof, the stainless­steel timepiece had set
is #spicytok and there is #smuttok; there is nius. Long before most Tiktokers were [him] back a cool twenty grand.” It’s almost
#forbiddenlove and there is the slightly born, the romantic publisher had cornered like reading Austen. In another, a surgeon
creepy #forcedproximity. Feminism is not the market in categories. Its website offers hero has a habit of uttering such improba­
this movement’s strong suit. There is a cat­ the drop­dead gorgeous in drop­down ble sentences as: “I get to perform a very ra­
egory called #billionaireromance; there is menus, with entries for such things as re…craniopagus separation on Monday”
no category named #earningsparity. “Historical”, “Medical” and “Desire”. and “I think I like you too much” and “Your
Progressive or not, the hashtags are The Mills & Boon search bar is a kind of mother is wonderful, by the way.” (Natural­
shifting books. Thanks in part to TikTok ly he turns out to be a monster.)
memes, sales of romance and saga fiction Not every title is modern. The covers of
in Britain have risen by 110% in three years, historical bestsellers feature winsome
to £53m ($64m) a year—their highest figure women in shawls; their plot lines feature
in a decade, according to figures from Niel­ pirates, illegitimate children and a liberal
sen BookData. Publishers have started to supply of scoundrels. As the blurb for one
take notice. For many years the industry explains: “Marcus is excited by Emmy’s vir­
had regarded romantic fiction with Darcy­ ginity and has her kidnapped, but Emmy
like disdain but now its pulse is quicken­ hits him over the head and escapes.” It was
ing. Bookshops no longer stash books with all go in the past.
pink covers at the back of shops but put Romance is a genre with great continu­
them on tables near the tills; publishers are ity. But as Sharon Kendrick, a bestselling
learning to brave the word “heartwarming” Mills & Boon author, points out, the past
without embarrassment. few years have left their mark. The Black
It is thought the rise in romance is due, Lives Matter movement has diminished
in part, to the pandemic. “We’re looking for the appeal of the Regency rake because, as
escapist fiction,” says Molly Crawford, edi­ with National Trust houses, everyone won­
torial director at Simon & Schuster UK. But ders “how this great wealth was acquired”.
it is also perhaps because the genre lends Although women still like masterful he­
itself so readily to filters and personalisa­ roes, #MeToo means “Sheikhs aren’t quite
tion. Antique poets might have claimed as popular…as they have been” (bit too
love was as limitless as the stars but ro­ masterful). Billionaires now far outnum­
mantic fiction, however good, has always ber millionaires because of “the cost of liv­
been prone to tropes. A large number of old #booklovers ing…I mean, look at the price of a stamp.” n

012
 24 Britain The Economist March 11th 2023

Bagehot This sceptred aisle

The story of British politics is once again the story of the supermarket
tar, a consultancy, shifting from big brands to own labels and from
fancy lines to budget products. A price war is under way. Ocado, a
posh online grocer, promises to match Tesco’s prices; Tesco and
Sainsbury’s promise to match those of Aldi, a discounter.
Mr Sunak realises the dangers. He has made halving inflation
by the end of the year his priority. (Unlike Liz Truss, he correctly
remembers Thatcherism as a project to curb inflation first and cut
taxes second.) He is likely to succeed in that aim, but its pursuit
makes for miserable politics: there is little to do except sit tight
and not spend money. Nor will he be thanked. Of 36 countries sur­
veyed by Ipsos, a pollster, British voters are the most likely to
blame their government for inflation. History suggests that eco­
nomic competence is decisive in general elections, and that once a
party loses its lead in this area, as the Tories did under Ms Truss, it
can take years to claw it back. The feedback from government fo­
cus groups is bleak: participants go around the table comparing
the price of cheese and milk.
The scruffy Finchley store testifies to the straitened times. The
aisles are adorned with banners: “GREAT PRICES”; “SPECIAL OF­
FERS”; “£2 AND UNDER”. There are large gaps where the celery and
tomatoes should be. The return of inflation would dismay Thatch­
er. But what would distress her more is that parts of her party seem

T here is no museum to Margaret Thatcher. There is no need for

one, given the Sainsbury’s supermarket on the high street in
Finchley, her former constituency. She opened it on March 16th
to view supermarkets differently now. She saw the clockwork
beauty in the supply chain: her archives contain a note in which
she has underlined how one store had tweaked its truck axles to
1987, inspecting the sausages, zapping cans at the till and deliver­ increase load capacity. She asked Roy Griffiths, a Sainsbury’s di­
ing a sermon to its employees. “The market economy isn’t some rector, to fix the management of the National Health Service.
theory—it is, in fact, men and women being able to spend their But a wing of the Tory party that calls itself Thatcherite has
own earnings in the place of their choice, in shops like these.” treated the supermarkets’ just­in­time distribution network
The supermarket is the best way to understand Thatcher and much as a toddler with a hammer treats a wristwatch. Brexit has
her creed. Her father had been a greengrocer. As a young Conserva­ been painful for an industry whose business model was built
tive candidate, she preached fiscal discipline through the analogy around seamless borders, the free movement of hauliers and a flu­
of a housewife managing the shopping budget. When she was id labour force. It will get worse if and when full import controls
drawing up an agenda for privatisation as leader of the opposition, are finally imposed next year.
she would often compare the cut­throat competition between Tes­ Suspicion seems to have replaced admiration. Andrew Davies,
co and Sainsbury’s with sluggish state­owned industries. In the the leader of the Welsh Conservatives, this month mocked an op­
cold war the supermarket meant freedom itself: to know the dif­ ponent who lamented a shortage of greens as a “metropolitan lib­
ference between our systems, she would say, compare the sparse eral”; the triumph of the 1980s had been to bring metropolitan
stores of Moscow with the abundance of an Asda. tastes to provincial tables. Ministers have responded to the dearth
Thatcher’s pocketbook politics has been out of fashion for a of fresh vegetables, which is largely due to high energy costs, by
while. Brexit, the pandemic and internal party convulsions summoning retailers for a reprimand. In response, some retailers
crowded out more quotidian worries such as the price of sausages. are refusing to share their data on shortages. “There is a lack of
In the wake of Boris Johnson’s victory in 2019, Conservative intel­ genuine respect for the depth of complexity this [industry] in­
lectuals declared that culture had vanquished economics. “It’s not volves,” says one supermarket boss.
the economy, stupid”, ran one headline. Economics had other
ideas. The supermarket is again at the centre of British politics. It The aisles have it
is the site of Rishi Sunak’s biggest achievement and worst head­ It often seems that the more the Conservative Party tries to imitate
aches. What happens at the tills will shape his premiership. Thatcher, the less well she is remembered. The aesthetics of con­
Politicians like supermarkets partly because their store­card frontation and upheaval are easy to mimic. The strategic patience
data and consumer panels produce a picture of the electorate that and love of the consumer are often neglected. Mr Sunak, at least,
is more sophisticated than anything political parties can draw. seems to get this and it is in the supermarket that his greatest
“They’d invariably come to me first at the start of the meeting and achievement is found. At the core of his revamped agreement with
say ‘What’s going on out there?’” says Justin King, a former CEO of the EU on Northern Ireland is a customs fix for supermarkets, an
Sainsbury’s and a member of David Cameron’s business council. attempt to reconcile the constitutional revolution of Brexit with
What’s going on out there is brutal. In the year before Mr Cam­ the simple wish of folk in Belfast to buy shepherd’s pie and micro­
eron’s surprise victory in 2015, food prices consistently fell as dis­ wavable lasagne as easily as residents of Blackpool can. Supermar­
counters entered the market. Now, all has changed. Food prices ket bosses have been impressed by the prime minister’s grasp of
rose by 17% in the year to January, as the war in Ukraine drove up the technicalities. “He was the first person who really, really got
the cost of grain, energy and cooking oil. Shoppers tend to change into it in any detail,” says one. That is far from a guarantor of polit­
their habits when inflation hits 4%, says Fraser McKevitt of Kan­ ical success. But in miserable times it is an essential start. n

012
 Europe The Economist March 11th 2023 25

Ukraine’s coming counter­offensive not arrive for months. Poland, which has
promised 14 Leopards and has already sent
Lock and load around 250 Soviet­designed T­72 tanks to
Ukraine, will send 60 modernised T­72s. A
variety of infantry fighting vehicles, from
the ageing Soviet­era BMP­1 to America’s
Stryker and Bradley vehicles, will pad out
the armoured brigades.
Yet the fixation on tanks has distracted
Ukraine has received a bonanza of Western arms in the past few months
from a more important shift in strategy. In

O N SEPTEMBER 22ND 1941 Britain de­

clared “tanks for Russia” week, with
factories churning out armour to “repel the
alition has pledged just two battalions of
the most modern Leopards (a Ukrainian
tank battalion is supposed to have 31
December America and Britain realised
that a protracted war was not in the West’s
interests. Russia, moreover, was even
savage invaders”. The wife of the Soviet tanks). Denmark, Germany and the Neth­ weaker than previously thought. The
ambassador in London christened the first erlands are also purchasing at least 100 mood, says one official involved in those
tank personally: “Stalin”. The first Leopard older, but refurbished, Leopard 1A5s for Uk­ discussions, was: “If we want something to
tank to arrive in Ukraine, a gift from Poland raine, making up another three battalions. change, we need to change something.”
in February, has remained anonymous. But The Leopards are being supplemented The turning­point came on January 20th at
it is the vanguard of a substantial arsenal with a motley collection of other tanks. the eighth meeting of the Ukraine Defence
coming Ukraine’s way. While all eyes are Britain is sending a company of 14 Chal­ Contact Group, an American­led meeting
now on the battle for the eastern town of lenger 2s. America has promised 31 M1A2 of defence ministers held roughly monthly
Bakhmut, attention will soon turn to an ex­ Abrams, the most advanced tanks in its ar­ at a big American air base at Ramstein in
pected counter­offensive that could start senal, though it looks likely that they will Germany. There, allies agreed to equip Uk­
as early as April. raine with more than a division’s worth of
The German­made Leopard has been at kit, with the aim of having much of it in
the heart of tricky debates among → Also in this section place by the end of March.
Ukraine’s partners. On January 25th Olaf The flow of arms has accordingly
26 A wave of French strikes
Scholz, Germany’s chancellor, ended turned from a trickle to a flood. Of all the
weeks of dithering by promising to send 27 Turkey’s opposition military aid pledged by the Pentagon since
the Leopard 2A6, an advanced variant. the war began, 40%—costing over $8bn—
27 A win for Ukraine in Estonia
Many thought that would unleash a torrent has come in the three months since De­
of donations from the dozen other Euro­ 28 Russia’s demographic nightmare cember 9th (see chart). One European de­
pean countries which operate Leopards. It fence official says that the infusion of arms
29 Charlemagne: Germany’s car row
has been more of a trickle. So far, the co­ agreed on in Germany in January alone

012
 26 Europe The Economist March 11th 2023

amounts to two­thirds of the total sent to 150 km French strikes

Ukraine in all of 2022. Most of the dona­ Kharkiv
tions are not as sexy as tanks, but are still UKRAINE Kupiansk War of attrition
crucial—the latest American package in­ Ukrainian territory
annexed by Russia Luhansk
cludes armoured bridge­laying vehicles, on Sep 30th 2022
Dnieper Bakhmut
for instance, which would be vital for any
offensive in the south or east. Don
bas
Ukraine’s army is being transformed as Zaporizhia Donetsk
PARIS
a result. The bulk of its hardware is still of
Strikes harden against pension reform
Soviet origin. But whereas the ratio of Sovi­ Zaporizhia
Mariupol
et­standard to Western kit stood at five to
one at the end of last year, that is expected
to fall to five to two as the aid flows in. In
Kherson
Kherson
Sea of
Area controlled by
Russian-backed
separatists before
A rolling national strike, launched on
March 7th and in its third day as The
Economist went to press on March 9th, will
Azov Feb 24th 2022
other words, almost a third of Ukraine’s ar­ “bring the economy to its knees”, declared
my will soon have NATO­standard equip­ Crimea RUSSIA one union leader. With nearly 1.3m protes­
ment. General Valery Zaluzhny, Ukraine’s Black Kerch Bridge ters on the streets across France on day
top officer, hopes that he will eventually Sea Ukrainian territory one, a third of classrooms shut, and spo­
annexed by Russia
have three new army corps at his disposal, in 2014 radic illegal power cuts, the country’s trade
each with six brigades, and each compris­ unions are engaged in a stand­off with the
March 8th 2023
ing more than 20,000 men. government over pension reform that is
Assessed as Assessed Russian
A Russian offensive that began in late Russian-controlled operations* approaching its finale. The deadline set for
January was intended, in part, to force Uk­ Claimed as Approximate Ukrainian parliament to examine President Emman­
raine to commit these reserves, thereby Russian-controlled advance uel Macron’s legislation is March 26th. The
making it much harder to mount a coun­ *Russia operated in or attacked, but does not control unions, which are renewing their strike
Sources: Institute for the Study of War; AEI’s Critical Threats Project
ter­offensive. In recent days, Russian sol­ every day, want him to back down and
diers and mercenaries have advanced shelve the plan before that.
deeper into Bakhmut, a town in Donetsk it will have to run down its own meagre re­ The centrepiece of the reform is a rise in
province that has been under Russian as­ serves even more. It might eventually start the minimum pension age from 62 years to
sault since last summer. But the battle for pulling units from other parts of the long 64, and an accelerated increase in the re­
the town has resulted in far greater Rus­ front line, creating gaps that Ukraine can quired number of annual contributions
sian losses than Ukrainian ones. And, exploit, suggests Gustav Gressel of the from 41 years to 43 to qualify for a full pen­
more important, General Zaluzhny has European Council on Foreign Relations, a sion. As every French leader who has ever
avoided the obvious trap. think­tank. Ukraine’s allies are watching tried to delay its citizens’ retirement
Instead of throwing sizeable reserves closely for weak points. knows, pension reform is a tinderbox. This
into Bakhmut to save the town, which is of On March 2nd, Mark Milley, America’s time, hostility has hardened as the protests
far greater symbolic than military value, he top general, visited tabletop wargames go on. Turnout on the streets on March 7th
has sent troops abroad to train on the new held by America at a base in Wiesbaden, was slightly higher than the previous re­
equipment. Since January America’s 7th Germany, to help Ukrainian officers con­ cord, on January 31st. Two­thirds of the
Army Training Command has been run­ sider different options for an offensive. French still say that they want the govern­
ning a five­week course for Ukrainian un­ Few think that Ukraine can restore its pre­ ment to shelve its plan, just as they did at
its at its Grafenwoehr training area in east­ war boundaries at a single stroke, let alone the start of the year.
ern Bavaria, in Germany. During its offen­ take back territory, including Crimea, Olivier Dussopt, the pensions minister,
sives last year, Ukraine’s army largely at­ seized by Russia in 2014. But if Ukraine can who came to Mr Macron’s centrist move­
tacked in company­sized formations. The tear another significant chunk out of Rus­ ment from the Socialist Party, has patiently
training in Grafenwoehr is intended to sian­occupied territory, as it did last year tried to explain why an ageing population
bring these together into bigger battalions in the north­east around Kharkiv, and in and generous retirement scheme mean
and brigades capable of waging “com­ the south around Kherson, it would quash that something has to give. By 2030 the an­
bined­arms” warfare, in which infantry, ar­ the belief—expressed by General Milley, nual deficit in the pension regime will
mour, artillery and other combat arms among others—that the war is doomed to reach €14bn ($15bn) unless the rules are
work together rather than just sequential­ stalemate. n changed. He and the prime minister, Elisa­
ly—as is mostly the case now. beth Borne, have engaged in weeks of dis­
Western officials are divided on wheth­ cussions, and made various concessions,
er all this will be enough to eject Russia Saddling up to try to secure parliamentary support. But
from the roughly 18% of Ukraine it controls United States, military assistance* to Ukraine, $bn Mr Macron lost his majority in the Nation­
at present. Only a battalion’s worth of sol­ 6
al Assembly last year. The centre­right Re­
diers will pass through Grafenwoehr each Russia invades Ukraine
publicans, whose votes he needs, have
month; a large proportion of Ukraine’s ar­ 5 been playing hardball—even though they
my is still made up of mobilised men with 4 themselves raised the retirement age when
limited experience. Ammunition remains in government in the past.
3
a serious problem, because Western allies In the National Assembly the debate
have been slow to ramp up production. 2 has become toxic. Jean­Luc Mélenchon’s
And Ukraine’s lack of air power may be­ 1
Unsubmissive France, which leads NUPES,
come a bigger issue if Russian warplanes † a left­wing parliamentary alliance that is
prove willing to run bigger risks during any 0 the biggest opposition group, has been on a
Ukrainian offensive. 2021 22 23 wrecking mission. It originally tabled
On the other hand, Russia’s army is in *Presidential drawdown of security assistance, some 13,000 amendments in order to hold
excludes other assistance †To March 6th
dire shape. If, after conquering Bakhmut, it Sources: US Congress; US Department of Defence
up proceedings and block a first vote in the
decides to plough on deeper into Donetsk, lower house on the article to increase the

012
 The Economist March 11th 2023 Europe 27

pension age. Mr Mélenchon now wants Mr leader promised to appoint the two mayors
Macron to dissolve parliament or hold a as his vice­presidents. Turkey’s vice­presi­ Estonia
referendum. The president, he says, is im­
posing an unfair reform “against the will of
dency, however, does not count for much.
Mrs Aksener’s misgivings about Mr Kil­
The centre holds
the people”. icdaroglu are not entirely misplaced. For
TALLINN
France’s inability to conduct a serious an opposition committed to dismantling
Ukraine’s toughest backer wins big
debate about pension reform does not Mr Erdogan’s executive presidency, a by­
bode well. Neither side is in any mood to
budge. Mr Macron and his government
have failed to persuade public opinion of
word for one­man rule, and to cooling
down tensions at home and abroad, the
unassuming CHP leader, less rabble­rouser
E STONIA’S general election on March
5th was, in large part, a referendum
on Estonia’s support for Ukraine. Kaja
the merits of their reform, even though it than paper­pusher, may be the best possi­ Kallas, the prime minister, has become
keeps in place a generous system, is less ble president. But he may also be the worst the face of eastern EU members’ resis­
radical than the one he originally proposed possible candidate. Polls in the past year tance to Russian aggression. She began
and shelved due to covid­19, and was in his have suggested that both Mr Yavas and Mr sounding an alarm over the looming
election manifesto last year. Imamoglu would stand a much better invasion of Ukraine in late 2021, when
If the government cannot scrape the chance of unseating Mr Erdogan in the many European leaders doubted it
votes together in time, it can still resort to a presidential election run­off. would happen. She has since made tiny
constitutional provision that would force Mrs Aksener’s botched power play, Estonia the biggest military donor to
the reform through. This would get the however, has damaged not only her own Ukraine relative to its GDP, and her
new rules onto the statute books. But such standing with voters but also the opposi­ proposal for a joint European ammuni­
an option would carry risks of its own. Not tion’s collective image. Her walkout re­ tion fund has been picked up by the
only would it prompt claims from the op­ minded many Turks of the 1990s, when EU’s heavyweights. Foreign publica­
position that the government is abusing its squabbling politicians brought down one tions call her “Europe’s new iron lady”.
power; it could also provoke fresh legisla­ coalition government after another. Mr Er­ Yet that nickname sits oddly on Ms
tive elections. n dogan is sure to spend the next two Kallas, an informal and self­deprecat­
months jogging their memories. ing politician who often says the worst
But he will need to do more than that to advice she ever got was to act more like
Turkey beat Mr Kilicdaroglu. Slowing growth and a man. Until recently she struggled to
55% inflation have nibbled away at support emerge from the shadow of her father,
Turning the tables for Turkey’s leader and his governing co­ who was prime minister in 2002­03.
alition, made up of the Justice and Devel­ The war has changed that: she is now
opment (AK) and Nationalist Movement the most popular politician in the
(MHP) parties. The government also came country. When the balloting ended, her
under fire over its slow response to last Reform Party had taken 31% of the vote
month’s earthquakes that killed over and 37 seats out of 101 in the Riigikogu,
ISTANBUL
52,000 people in southern Turkey and Syr­ Estonia’s parliament.
The opposition has picked its man
ia. Rescue teams took days to reach major Ms Kallas’s win was a triumph for

I T TOOK THEM long enough. On March

6th, with fewer than 70 days left before
the expected date of Turkey’s presidential
cities, condemning countless survivors to
die under the rubble. Anger also mounted
after Turkey’s Red Crescent was revealed to
Estonian liberalism. In the early 2000s,
Reform Party governments gave the
country a reputation for transparent,
and parliamentary elections, a group of six have sold thousands of tents to a charity, technocratic governance. But in recent
opposition party leaders, known collec­ instead of distributing them free. Mr Kilic­ years the party has faced competition
tively as the Nation Alliance or the Table of daroglu seems to have seized the momen­ from the populist EKRE party, Estonia’s
Six, unveiled Kemal Kilicdaroglu, the head tum. Turkiye Raporu, a polling company, edition of Europe’s ubiquitous Eu­
of the Republican People’s Party (CHP), as sees him leading Mr Erdogan by a margin rosceptic, anti­immigrant, anti­gay,
their presidential candidate. The atmo­ of up to eight points. n covid­ and climate­change­denying
sphere outside the Ankara headquarters of outfits. One poll published just before
the Felicity Party, where the meeting took the election showed EKRE in first place.
place, was hardly electric. As Mr Kilicdaro­ That threat seems to have motivated
glu spoke, his political allies looked on Reform’s supporters: in all, a record
with stony faces. Meral Aksener, the head 615,009 votes were cast, a turnout of
of the Iyi (“Good”) party, the second­big­ 63.5%. In the end EKRE got just 16% and
gest group in the alliance, looked as if she 17 seats in parliament, two fewer than
had swallowed a bar of soap. in the previous election in 2019. The
Mr Kilicdaroglu’s nomination, expect­ Centre Party, an older populist group
ed to be a formality, became a drama. On supported by most of Estonia’s ethnic
March 3rd, a day after opposition Russian voters, finished third with 15%
leaders confirmed they had settled on a and 16 seats.
candidate, Mrs Aksener suddenly walked Ms Kallas’s next task is to build a
away from the Table of Six, said she refused new governing coalition. Whatever
to back Mr Kilicdaroglu, and called on Ek­ arrangement she chooses, she is now
rem Imamoglu and Mansur Yavas, the CHP the dominant figure in Estonian poli­
mayors of Istanbul and Ankara, to throw tics. For those wondering whether
their hats in the ring. Choosing between support for Ukraine can weather eco­
Turkey’s current president, Recep Tayyip nomic hardship, the answer is that in
Erdogan, and Mr Kilicdaroglu was choos­ the corner of Europe closest to Russia, it
ing “between death and malaria”, she said. turns out to be good politics.
She caved in at the 11th hour, after the CHP The man to beat Erdogan?

012
 28 Europe The Economist March 11th 2023

Russian demography est mortality rate of all, with 850­1,100

deaths per 100,000 people.
The disappeared If you add pandemic mortality to the ca­
sualties of war and the flight from mobili­
sation, Russia lost between 1.9m and 2.8m
people in 2020­23 on top of its normal de­
mographic deterioration. That would be
even worse than during the disastrous ear­
ly 2000s, when the population was falling
Russia’s population nightmare is going to get even worse
by roughly half a million a year.

A DEMOGRAPHIC TRAGEDY is unfolding

in Russia. Over the past three years the
country has lost around 2m more people
Back down
Russia, population, m
What might that mean for Russia’s fu­
ture? Demography is not always destiny;
and Russia did for a while begin to reverse
than it would ordinarily have done, as a re­ 150
its decline in the mid­2010s. The impact of
sult of war, disease and exodus. The life ex­ population change is often complex, as
pectancy of Russian males aged 15 fell by 148 Russia’s military mobilisation shows. The
almost five years, to the same level as in decline in the number of ethnic Russians
Haiti. The number of Russians born in 146 of call­up age (which is being raised from
April 2022 was no higher than it had been 18­27 to 21­30) will make it harder for the
in the months of Hitler’s occupation. And 144 armed forces to carry out the regular spring
because so many men of fighting age are draft, which begins in April.
142
dead or in exile, women now outnumber Such complications notwithstanding,
men by at least 10m. 140 the overall effect of demographic decline
War is not the sole—or even the main— will be to change Russia profoundly—and
cause of these troubles, but it has made 1990 95 2000 05 10 15 21
for the worse. Most countries which have
them all worse. According to Western esti­ Source: UN Population Division
suffered population falls have managed to
mates, 175,000­250,000 Russian soldiers avoid big social upheavals. Russia may be
have been killed or wounded in the past different. Its population is falling unusu­
year (Russia’s figures are lower). Some­ in 1995. According to Alexei Raksha, an in­ ally fast and may drop to 130m by mid­cen­
where between 500,000 and 1m mostly dependent demographer who used to work tury. The decline is associated with in­
young, educated people have evaded the for the state statistics service, if you look creased misery: the life expectancy at birth
meat­grinder by fleeing abroad. Even if just at peacetime years, the number of of Russian males plummeted from 68.8 in
Russia had no other demographic pro­ births registered in April 2022 was the low­ 2019 to 64.2 in 2021, partly because of co­
blems, losing so many in such a short time est since the 18th century. April was a par­ vid, partly from alcohol­related disease.
would be painful. As it is, the losses of war ticularly cruel month, but it was a reveal­ Russian men now die six years earlier than
are placing more burdens on a shrinking, ing glimpse of a chronic problem. men in Bangladesh and 18 years earlier
ailing population. Russia may be entering Population decline is not unique to than men in Japan.
a doom loop of demographic decline. Russia: most post­communist states have And Russia may not achieve what en­
The roots of Russia’s crisis go back 30 seen dips, though not like this. Their de­ ables other countries to grow richer as they
years. The country reached peak popula­ clines have been slow but also manageable. age: high and rising levels of education.
tion in 1994, with 149m people. The total Russia’s population in recent decades has Nicholas Eberstadt, a demographer at the
has since zig­zagged downwards. It was seen a precipitous slump, then a partial re­ American Enterprise Institute in Washing­
145m in 2021 (that figure, from the UN, ex­ covery (thanks to a period of high immi­ ton, argues that the country presents a pe­
cludes the 2.4m people of Crimea, which gration from parts of the ex­Soviet Union culiar combination of third­world mortali­
Russia seized in 2014 and incorporated and more generous child allowances after ty and first­world education. It has some of
into its national accounts). According to 2007), followed by a renewed fall. the highest rates of educational attain­
UN projections, the total could be just 120m According to the state statistics agency, ment among over­25s in the world. But the
in 50 years, if current patterns persist. That in 2020 and 2021 combined the country’s exodus of well­educated young people is
would make Russia the 15th­most­popu­ population declined by 1.3m; deaths out­ eroding this advantage. According to the
lous country in the world, down from sixth stripped births by 1.7m. (The UN also shows communications ministry, 10% of IT work­
a fall, but it is shallower.) The decline was ers left the country in 2022. Many were
largest among ethnic Russians, whose young men. Their flight is further skewing
Birth dearth number, the census of 2021 said, fell by Russia’s unbalanced sex ratio, which in
Russia, population, m 5.4m in 2010­21. Their share of the popula­ 2021 meant there were 121 females older
2.5
tion fell from 78% to 72%. So much for Mr than 18 for every 100 males.
Deaths
Putin’s boast to be expanding the Russki The demographic doom loop has not, it
2.0
mir (Russian world). appears, diminished Mr Putin’s craving for
1.5 All this began before the war and re­ conquest. But it is rapidly making Russia a
Births 1.0 flects Russia’s appalling covid pandemic. smaller, worse­educated and poorer coun­
0.5 The official death toll from the disease was try, from which young people flee and
Births minus deaths 388,091, which would be relatively low; but where men die in their 60s. The invasion
0
The Economist estimates total excess has been a human catastrophe—and not
-0.5 deaths in 2020­23 at between 1.2m and only for Ukrainians. n
-1.0 1.6m. That would be comparable to the
number in China and the United States, Award We are proud to report that Wendell
-1.5 Steavenson, who has been reporting from Ukraine
1990 95 2000 05 10 15 21
which have much larger populations. Rus­ for our 1843 magazine as well as for the weekly
Source: UN Population Division
sia may have had the largest covid death newspaper, has been recognised as Feature Writer
toll in the world after India, and the high­ of the Year at this year’s British Press Awards.

012
 The Economist March 11th 2023 Europe 29

Charlemagne Infernal combustion politics

Germany is letting a domestic squabble pollute Europe’s green ambitions

the Greens and the liberal Free Democrats (FDP), the smallest of
the three, who hold the transport ministry. Rather oddly, its con­
ception of liberalism includes mollycoddling incumbent car­
makers, some of whom are not keen on having to scrap their pol­
luting technologies. The FDP has been trounced in a spate of re­
gional elections, and needs a cause to rally its base. It wants the EU
to introduce an exemption for cars accepting “e­fuels”, which
work in petrol cars but are made with renewable energy (in tiny
quantities, for now). The FDP says it wants to keep technological
options open. But a loophole for e­fuels might allow Porsche, BMW
and others to keep making internal­combustion engines—which
owners might keep filling with carbon­spewing fuels.
At this point, European etiquette indicates that Mr Scholz
should put the FDP back in its place: Germany had cut a deal with
its EU partners, and that should be that. Instead, he has backed the
liberals in their campaign, knowing it will cause ructions among
his European allies (few in Germany seem to have noticed the
spat). Having seen Berlin balk, others have been emboldened. Ita­
ly, home of a few zippy carmakers, now says it too wants the law to
be revisited: it had been agreed to under the centrist Mario Draghi,
but now the hard­right Giorgia Meloni reigns. Poland, also run by
populists without much love for EU green rules, has come on

F or an internal-combustion engine to keep chugging along

requires hundreds of parts to move in perfect unison: just one
component misfiring can blow the whole thing up. Much the
board, as have others in central Europe. That lot may not settle for
the modest commitments on e­fuels that could satisfy Germany.
The main fear in Brussels is that gauche coalition­manage­
same is true of the process to create new EU laws, a human cre­ ment by Mr Scholz has resulted in the derailing of a vital EU green
ation whose inner workings rival the complexity of a car motor. measure. The commission may well pull out some face­saving as­
Nobody knows this better than Germany, present at the birth of surances to help him placate the FDP and still allow the law to
both the automobile and the EU. And yet. A clumsy attempt to pass. Its president, Ursula von der Leyen, is herself a former Ger­
scupper new European legislation at the last minute—on scrap­ man minister, and attended a meeting of its federal cabinet last
ping the sale of new internal­combustion cars by 2035, as it hap­ weekend. But anything beyond cosmetic changes would require a
pens—has left fellow EU members seething. Not for the first time, wholesale reopening of the law, complete with all those rounds of
the German chancellor, Olaf Scholz, is accused of putting domes­ negotiations. Who knows what the outcome of that might be.
tic political convenience ahead of the European interest.
This month would have marked something of a public­rela­ Car-buncle
tions triumph for the EU’s regulatory machine. Seldom do laws This is not the first time Mr Scholz has put Germany—and co­
agreed in Brussels—by 27 member states, the European Commis­ alition management—ahead of the European interest. In October
sion and 705 MEPs—draw much interest from anyone beyond lob­ a package of €200bn ($211bn) in energy bungs to insulate German
byists and a few Twitter obsessives. The banning of the internal­ firms and households from the fallout from the war in Ukraine
combustion engine was such a case. It points to Europe taking tan­ was poorly received by other EU countries, which could not match
gible steps towards reaching “net zero” carbon emissions by 2050, such largesse. Central Europeans fume that Berlin has repeatedly
including a 55% cut on 1990 emissions by the end of the decade. dragged its feet when it comes to arming Ukraine. Mr Scholz’s pro­
Forcing change on the powerful car industry was a feature of the pensity to focus on domestic matters has caused the Franco­Ger­
law: it gave the EU credibility when it demanded that the rest of the man alliance, once the reliable engine of the EU, to sputter.
world should also take action to combat climate change. The war in Ukraine triggered what Mr Scholz called a Zeiten-
The self­congratulations have been delayed—or perhaps can­ wende in Germany, a change in the spirit of the times. The EU’s big­
celled, nobody quite knows. Even Brussels insiders had assumed gest country would stop being a wallflower when it came to de­
the internal­combustion rule had been passed months ago. Only fence, and perhaps beyond. Far from criticising Berlin, its neigh­
the procedural step of ministerial signatures remained, another bours welcomed promises of new assertiveness. Less so now. The
opportunity for politicians to take plaudits for a job well done. result has not been a dynamic new Germany at the heart of the EU,
What should have been a mere formality has turned into a giant but rather one that has allowed home­grown spats to metastasise
spanner in the works. Despite German officials having been pre­ to the continental sphere. Lots of other European leaders have
sent at every stage of the law’s passage through the complex Brus­ tricky coalitions to deal with. None scuppers important EU legisla­
sels process, and having signed off time after time, Germany is tion for the sake of political expediency at home.
now refusing to approve it. Such behaviour is just about unprece­ Grumbles about Germany and the EU are nothing new. For
dented. Revisiting agreements once consensus has been achieved much of the 16 years she was in power, Angela Merkel faced barbs
is a recipe for wrecking the EU machine, the diplomatic equivalent for the manner in which she put off making decisions until the
of pouring a glug of diesel into a petrol car. last minute. If anything, those days are remembered fondly now:
To understand the German spanner, look to its domestic poli­ for when Mrs Merkel agreed to something, no matter how belated­
tics. Mr Scholz presides over a coalition of his Social Democrats, ly, at least she stuck to it. n

012
012
 United States The Economist March 11th 2023 31

The Democratic bench of the pandemic, passed the largest cli­

mate­change­mitigation bill in history, re­
Say it ain’t Joe paired international alliances and led the
West in supporting Ukraine. A younger
president with a similar record would have
an unquestioned right to seek re­election.
But the other impulse that might keep
the Democratic ticket unchanged is an ex­
WASHINGTO N, DC
treme kind of risk aversion. The party is
It looks highly likely that Joe Biden will run for re­election. But what if he didn’t?
terrified of Mr Trump’s return to the White

P RESIDENT JOE BIDEN is literally living

history. With every passing day he sets a
new record for oldest president—the sole
of Mr Trump in 2024. Most insurrectionist
chatter of pushing the president out before
he wanted to go was quelled. The exception
House and the damage that would do. Mr
Biden owes his current position to a simi­
larly pragmatic calculation: when the party
octogenarian ever to occupy the Oval Of­ is the declared challenge from Marianne risked nominating the ultra­progressive
fice. When he began his campaign to un­ Williamson, a quackish self­help guru who Bernie Sanders in 2020, support consoli­
seat Donald Trump, Mr Biden intimated thinks the Avatar movies hold the secret to dated around Mr Biden as the only viable
that he would not seek a second term, pre­ Middle East peace. option for winning.
senting himself as an elder statesman who The unexpectedly light rebuke by This time, too, many Democrats fear
would calm the nation’s turbulent politics voters—who only narrowly awarded Re­ that an open primary could be disastrous.
before a younger generation took over. And publicans the House of Representatives Kamala Harris, the vice­president, has de­
yet he is now giving every sign that he in­ and even granted Democrats an extra seat veloped a reputation for bungling issues
tends to stay in office for six more years, by in the Senate—gave the administration assigned to her, like deterring migration at
seeking re­election in 2024. scope to crow about its accomplishments. the southern border. Her approval rating
It is not as though his age doesn’t show. The president had steered the country out among the public is even lower than the
The president stammers through his president’s. Her gaffes rival her boss’s, but
speeches, sequesters himself from the without the available excuse of old age. Yet
→ Also in this section
press and recently had a minor health plenty of donors and perhaps enough
scare in the form of a cancerous skin le­ 32 Detransitioners voters would find the prospect of passing
sion. So why doesn’t Joe want to go? over the country’s first female vice­presi­
33 Cannabis and anaesthesia
The proximate cause was the midterm dent off­putting. The memory of Hillary
elections, which did not go nearly as badly 34 Education reform Clinton’s loss still haunts the party.
for Democrats as Mr Biden’s lacklustre ap­ Despite her weaknesses, hardly anyone
35 Republicans and voter fraud
proval ratings suggested they might. That in Washington expects Mr Biden to choose
halted the sense, once well­established 35 Composting humans a different running mate. The vice­presi­
among Democrats, that he was leading the dential survival sweepstakes are a qua­
36 Lexington: Congressional paranoia
party to disaster and the likely re­election drennial parlour game, but the last presi­

012
 32 United States The Economist March 11th 2023

dent to actually go through with it was have been unsubtly signalling that they are Detransitioners
Franklin Roosevelt in 1944. keen to run for president—Democrats
Mr Biden himself sees it as his mission could plump for Gretchen Whitmer, who Will suing change
to defeat Trumpism. “Donald Trump and just won handy re­election in an important
the MAGA Republicans represent an ex­ Midwestern swing state, Michigan. The transgender care?
tremism that threatens the foundations of newly elected governors of Pennsylvania
our republic,” he said in a severe speech de­ and Maryland, Josh Shapiro and Wes
livered in Philadelphia last year. In 2020 Moore, are both gifted speakers. Jared Po­
WASHINGTO N, DC
Mr Biden promised to beat Mr Trump “like lis, the freethinking governor of Colorado,
The backlash to medical transitioning
a drum”; he thinks he can deliver another is an effective tactician.
thumping in 2024.
But although Mr Biden’s credentials as a
Trump­beater are impeccable, the calcula­
Then there are governors, like Andy
Beshear in Kentucky and John Bel Edwards
in Louisiana, who have proved capable of
F EW ISSUES divide Americans, and their
politicians, as much as medical care for
children with gender dysphoria. Gover­
tions in a match against a Republican alter­ winning in red states. And Gina Raimondo, nors in six Republican states have signed
native are less compelling. The president’s who was governor of Rhode Island before bills that restrict or ban such care, which
approval ratings remain underwhelming, becoming Mr Biden’s secretary of com­ some see as “child abuse”. In response,
barely better than Mr Trump’s at this point merce, is arguably the most effective mem­ some of these states are being sued, and
in his presidency. Recent polling from You­ ber of the current administration. governors in several Democratic states are
Gov shows that only 44% of Democrats are If a senator must be chosen, there are putting protections in place for a treat­
keen for Mr Biden to run again. (Other polls mild­mannered newcomers who might ment that they see as “life­saving”. Do not
show even less enthusiasm.) Most are un­ suit a general election better than a pro­ expect the politicians to try to settle their
sure who they would rather have to replace gressive bomb­thrower. Raphael Warnock differences—they have too much to gain
him, though. Only 2% say they would like is an African­American preacher who won from whipping up outrage among their
to see Ms Harris at the top of the ticket. the crucial swing state of Georgia twice in supporters. Instead the serious action is
two years. Mark Kelly has done the same in likely to play out in the courts.
Make way while the sun shines Arizona—and would have the distinction On February 22nd a lawsuit was filed
Democrats are probably right to think that of being the first astronaut president that that could mark the start of a backlash.
widespread antipathy towards Mr Trump, schoolchildren dream of. Chloe Cole, an 18­year­old who has become
who has alienated much of the donor class All may be capable, but none will chal­ a voice for detransitioners in America, is
of his own party, would paper over some of lenge the president unless he excuses him­ suing Kaiser Permanente, a large American
Mr Biden’s vulnerabilities. But the contrast self. Almost every modern president who medical provider, for medical negligence.
with Ron DeSantis, the 44­year­old Repub­ has garnered a serious primary challenger Ms Cole decided at the age of 12 that she
lican governor of Florida who is closer in as an incumbent—Johnson, Jimmy Carter, was a boy, was put on puberty blockers and
age to some of the president’s grandchil­ George Bush senior—has gone on to lose. testosterone at 13 and underwent a double
dren, would be particularly extreme. And And no Democrat wishes to be blamed for mastectomy at 15, before changing her
highly visible: unlike the campaign of ensuring their party’s loss. mind and detransitioning at 16.
2020, which was largely conducted in lock­ Mr Biden obsessively tries to study the The complaint, filed in California by
down, the coming race will require strenu­ examples of presidents past, and convenes the Centre for American Liberty, a conser­
ous campaigning. councils of historians at the White House. vative non­profit that supports Ms Cole,
There is precedent for a president re­ He may do well to look back beyond the accuses Kaiser of performing a “mutilat­
neging on a re­election pledge, but it is not modern era, to the time when George ing, mimicry sex­change experiment” on a
a happy one. In 1968, after a disappointing Washington gave up power so that the vulnerable girl instead of focusing on her
show in the New Hampshire primaries, business of democracy could properly complex mental health. Her lawyer, Har­
Lyndon Johnson dropped his campaign for flourish. After accomplishing the Hercule­ meet Dhillon, said medical professionals
another term just eight months before the an task of defeating Mr Trump, Mr Biden “permanently disfigured her for profit”. Ms
presidential election—which his party has already scored unexpected success. Cole, whose lawyers say she meets the cri­
subsequently lost to Richard Nixon. Still, That is all a fitting coda; losing to a spright­ teria for being on the autism spectrum,
an open primary might not be as cata­ lier Republican would be an undignified says she is particularly concerned about
strophic as some Democrats fear. end for America’s eldest statesman. n her fertility and about pain and discomfort
When evaluating a party’s presidential caused by skin grafts.
bench, conventional wisdom tends to fo­ Kaiser’s broad statement, in response to
cus on those who campaigned in the previ­ Plan B a request to comment on the allegations,
ous election. Most of those also­ran Demo­ United States, Democrats responding*, % of total says it “provides patient centred gender­
crats—such as Pete Buttigieg, now trans­ March 4th-7th 2023 affirming care that is consistent with the
portation secretary, and Elizabeth Warren, standards of medical care and excellence”.
a Massachusetts senator—do not inspire “Do you want Joe Biden to run for It emphasises that it respects “the patients
much confidence as contenders. Ms Har­ president again in 2024?” and their families’ informed decisions
ris’s standing is so dismal that she would about their personal health”. But a crucial
not freeze the field as Mrs Clinton did in Yes 44 Unsure 21 No 35 part of the claim is that Ms Cole says she
2016. That leaves room for alternatives. and her parents were not informed of alter­
As Democrats have moved away from native, less invasive treatments, such as
“Who do you want the 2024 Democratic
the progressive stances that were voguish psychiatric care. According to the com­
presidential nominee to be?”
in 2020 and back towards the centre, a crop plaint, physicians suggested that her gen­
of state governors, who tend to be more Sanders 4 Someone else der dysphoria would “never resolve unless
pragmatic than senators, appear more Biden 43 Unsure 37 14 she chemically/surgically transitioned”.
compelling. Rather than opting for pro­ Harris 2 Ms Cole told a rally outside the Capitol in
*Among Democrats and
gressives like Gavin Newsom in California Source: YouGov/The Economist Independents who lean Dem
September that the clinic presented her
or J.B. Pritzker in Illinois—both of whom case to her parents as a choice between

012
 The Economist March 11th 2023 United States 33

having a suicidal daughter or a trans son.

Proponents of adolescent medical tran­ Drug and drugs
sition say detransitioning is very rare. Op­
ponents point to two recent studies that
O beautiful for spacious highs
suggest 20­30% of patients may discontin­
WASHINGTO N, DC
ue hormone treatment within a few years.
As more Americans get high, medical drawbacks of marijuana come to the fore
So far there has been little litigation
from “detransitioners”, people who re­
ceived care for gender dysphoria but then
decided to stop or reverse the treatment.
W aking up in the middle of a surgery
is the stuff of nightmares. Your
eyes squint open as a surgeon digs her
since shown that marijuana can relieve
chronic pain, dull chemotherapy­in­
duced nausea and help treat epilepsy.
The medical procedures they underwent scalpel into your abdomen. The operat­ Even though in 2019 the World Health
are relatively new; it can take years for peo­ ing team becomes frantic; an anaesthe­ Organisation recommended rejigging
ple to change their minds or to start experi­ siologist rushes to administer a stronger the categorisation, in America this has
encing negative effects. Moreover, many dose. Though some such horror stories not been done. That makes it tricky to
states have short statutes of limitations, have made headlines, thanks to modern conduct clinical trials. Labs must be
says Candice Jackson, a west­coast lawyer. medicine that kind of situation is ex­ fitted out with elaborate safety equip­
Some state politicians have promised to ceedingly rare. But the risk of it happen­ ment for the Drug Enforcement Adminis­
change those restrictions. ing may be rising and anaesthesiologists tration to give its stamp of approval and
Another complication is that, in con­ are taking note. The culprit is not an funding is scarce. As more and more
trast to botched surgery, claiming and invasion of evil doctors or a bad batch of Americans light up joints, other grim
measuring harm is more difficult when a drugs, but the rise in Americans’ casual side­effects could be lurking.
doctor has provided exactly what was use of a substance that many think is To clinicians, the downsides for
promised. Muddying matters further still harmless: marijuana. surgery are clear enough to justify chang­
is the belief that medical practitioners are A study published in 2019 found that ing medical protocols—even before more
shielded from litigation by the fact that patients who used marijuana on a daily studies come in. In January the American
they can say they were following their or weekly basis needed up to three times Society of Regional Anaesthesia and Pain
medical bodies’ guidelines on gender­af­ the typical anaesthesia dose to stay Medicine released guidelines on how to
firming care, a little­tested assumption. under while they were in the operating screen patients for marijuana use before
Few law firms want to risk being la­ theatre. Smoking weed before surgery surgery. Pregnant women should be
belled transphobic, being “cancelled” or can make patients confused, irritable discouraged from smoking weed, the
losing clients. Ms Jackson co­founded her and sometimes even violent when they organisation said, and non­emergency
own firm after she realised how hard it was wake up. But the problems do not end surgeries should be postponed by at least
for detransitioners to find legal represen­ there. A working paper presented in two hours if the patient comes in blitzed.
tation. There has been little money in this October, which has yet to be peer­re­ A slew of other new reports warn anaes­
business, at least up to now. And, adds one viewed, suggests that weed can hinder thesiologists of the mounting risks.
paediatrician, many detransitioners have a recovery, too. Of the nearly 35,000 Cleve­ The common perception that mari­
history of mental illness. They may make land Clinic patients assessed, those who juana eases nerves works against doctors
poor witnesses. But a credible star witness used marijuana within 30 days of their Some people seem to be getting stoned
could break the mould. This may turn out operation experienced 14% more pain in before they arrive at the hospital in order
to be Ms Cole, whose lawyers claim they the day after surgery and took 7% more to calm themselves down. New users
have been contacted by others from across prescription opioids to ease it. Why this may be particularly likely to smoke for
America, who are preparing lawsuits on might be is, like anaesthesia itself, some­ such a purpose. For a better experience,
behalf of their detransitioner clients. thing of a mystery. patients should forgo the parking­lot hit.
Cases such as this will take time to be The problem is magnified by a grow­ Economist readers will now know better.
heard and ruled on; some may be settled ing number of Americans getting high.
behind closed doors. Ms Jackson says she This past November Maryland and Mis­
is preparing for an arduous battle, much souri joined 19 states and Washington,
like the one fought against Big Tobacco. Le­ DC, in legalising recreational marijuana.
gal victories for detransitioners could have New York recently awarded its first can­
knock­on consequences, by making insur­ nabis retail licences; in January Connect­
ers come to regard gender­transition treat­ icut stores got the green light to start
ments as a liability. That would push up the selling it. The share of Americans who
costs of providing the treatment, and make report smoking weed jumped from 7% in
providers more careful about advertising. 2013—the year before legal sales began in
Most Americans favour protecting Colorado, the pioneering state—to 16% in
trans people from discrimination, but they 2022. That spike is at least partly driven
sharply disagree on medically transition­ by the change in laws: a study of twins
ing children. Whereas 72% of Republicans living in different states found that
believe it should be illegal to provide a mi­ legalisation led to a 20% uptick in use.
nor with medical care for gender transi­ Meanwhile federal regulation re­
tion, just 26% of Democrats agree, accord­ mains tight, making marijuana hard to
ing to the Pew Research Centre, a think­ study. The Controlled Substances Act of
tank. Activists who believe such care saves 1970 classified weed as a Schedule One
lives have tried to discredit Ms Cole, by fo­ drug, just like heroin. Back then it was
cusing on the support she receives from deemed to have a “high potential for
firebrands on the right. But the facts of this abuse” and no established medical use.
case—if they are as claimed—could give at Studies from around the world have Nil by mouth
least some of them pause for thought. n

012
 34 United States The Economist March 11th 2023

or less, according to local government data

analysed by “Wirepoints”, a blog. The
smallest has around 30 youngsters and a
little over 20 staff.
The patchwork way in which American
schooling is governed—by board members
in some 14,000 districts—may make it
more difficult than in other countries for
schools in large metro areas to shrink ef­
fectively. America’s teaching unions are
unusually tetchy: their hostility towards
testing has sometimes prompted boards to
declare, gallingly, that a school’s results
will play no role in deciding which ones
will close or merge. Tensions about race
make things more complicated. Families
in inner cities sometimes suspect that
their schools have been earmarked for clo­
sure only because parents in richer, whiter
areas have more power to make a fuss.
Dragging feet rarely helps. Smaller
classes do not reliably boost results. Excel­
lent teachers are more important; training
Education reform and rewarding good ones is easiest if they
are not thinly spread. Smaller schools also
How not to close schools find it more difficult to provide all the
courses and extra­curricular activities that
American education ought to offer. Lead­
ers of good school systems elsewhere in
the world have sometimes been ruthless
about closing small institutions. In 20
years the number of comprehensive
Ageing countries need fewer schools. America will find closing them hard
schools in Finland, for example, has

A T A MEETING earlier this year, board

members in Seattle’s biggest public­
school district were treated to a grisly
in the three years since the disaster started;
in a few of its neighbourhoods the decline
is almost a fifth. Families with children
shrunk by about 40%.
Planning ahead would save trouble.
When New York City closed schools ten
chart. Over five years the number of full­ under five were especially likely to leave years ago it found enough time and money
time staff on the district’s payroll has drift­ big cities during the pandemic, suggest da­ to shut some of them slowly, grade by
ed upwards, even as the number of pupils ta from the Census Bureau. So the full im­ grade. That gave youngsters who did not
on its books has fallen. In September pact may not yet have registered. want to move the option to age out. Au­
teachers won a pay rise following a strike thorities in Chicago have given teachers
that delayed the new school year. But en­ Class divides who seem likely to lose their jobs an early
rolment could keep shrinking for a decade, School districts are generally funded on a chance to retrain for roles in high demand.
reckon district leaders, who warn of bud­ per­pupil basis. Even small declines in en­ But too often talk of shuttering schools
getary black holes. Threatened bankruptcy rolment may therefore be hard. Some of starts only when things are desperate, says
may eventually require “consolidating”, the children who left city schools during Paul Hill of the Centre on Reinventing Pub­
which may mean shutting down schools. the pandemic may end up returning to lic Education, a think­tank. That forfeits
Pupil numbers are falling in urban class: a proportion are home­schooling, the chance to close schools “respectfully
schools across much of America. As a re­ and may tire of that. But the other trends and transparently”. Instead, doing things
sult of rock­bottom fertility rates and low­ that have been thinning downtown class­ in a rush just makes district leaders look
er­than­usual levels of immigration, the rooms will probably not reverse soon, even “as if they are stealing something”.
total number of children in the country de­ if immigration starts nudging the number The worry is that few urban school dis­
clined by 1m in the ten years to 2020. Many of children in America back up. In some tricts are taking their problems seriously
big cities have an added problem: families cities the need to close schools is growing. enough, says Marguerite Roza, a school­fi­
have been leaving. Chicago’s main public About 1% of traditional public schools shut nance expert at Georgetown University.
school district has lost a fifth of its pupils up shop each year, says Douglas Harris of Since the start of the pandemic they have
in a decade (though some of these have de­ Tulane University (the closure rate is 5% been handed lots of federal relief money.
camped to charter and private schools). for charter schools and 3% for private Some have used this merely to delay deci­
Los Angeles has lost a quarter. District ones). The number will probably rise. sions about downsizing that were already
leaders in that city say numbers could fall a Recent battles suggest that this is going overdue. The extra cash that is sloshing
further quarter or so by 2030. to hurt. Protests, including a hunger strike, around has also made unions more likely
The pandemic speeded up these woes. broke out last year after school­board to demand pay rises and bonuses—even in
Parents who already had itchy feet found members in Oakland, California, voted to places where drops in enrolment have
that a plague made their cities less appeal­ close or merge several schools. Angry lo­ been sharp. A cliff edge approaches next
ing. Urban schools kept remote learning cals installed a new board; in January it year, when relief funds are set to expire. At
longer than others; that gave some families said it was cancelling many of the cuts. In the moment, it seems the rows that follow
extra reason to leave. Enrolment in New Chicago about one­third of schools are op­ will be about everything except how best to
York City’s public schools has fallen by 10% erating in buildings at only half­capacity, help children learn. n

012
 The Economist March 11th 2023 United States 35

Voting laws
Burials
Roll reversal Soul soil
NEW YO RK
Quite a few young Americans plan to end their days as compost
WASHINGTO N, DC
How some Republican states made
voter fraud easier
A s a 30­year­old architecture student
in 2013, Katrina Spade began ponder­
ing her mortality. Specifically, what
vessel alongside woodchips, straw, and
alfalfa, which together create a warm
atmosphere of carbon, nitrogen, oxygen

I f Republicans have made election in­

tegrity a core issue, this week marked
something of a U­turn for the party’s state
would happen to her body after she died.
Ms Spade, who was enrolled at the Uni­
versity of Massachusetts Amherst at the
and moisture. It is then left for up to
twelve weeks, during which microbes
help break it down. It may all sound
officials. On March 6th Florida, Missouri time, was in the minority: only about a rather grisly, but the process ends with a
and West Virginia—all Republican states, fifth of Americans plan their own funer­ small mound of soil, which is then given
where the party controls the offices of go­ als. Traditional burial, which 44% of back to the families and can be used to
vernor, secretary of state and attorney­ Americans choose, didn’t feel right for plant trees or nurture plants. Later this
general—withdrew from a multi­state data her, and nor did cremation, which has month, New York will become the sixth
partnership intended to prevent voter become the more popular option (see state to allow it.
fraud. The trio of election officials cited chart). Neither did a “natural burial” The idea is not without its detractors.
concerns over data security and a partisan which, although pleasingly green, would For religious groups with strict burial
adviser in their exit letters. probably have required her to be laid to customs it goes against core teachings.
The Electronic Registration Informa­ rest outside her home city due to lack of Edward Mechmann, the director of pub­
tion Centre (ERIC), with which they cut space: New York City, for example, lic policy for the Archdiocese of New
ties, is a coalition that helps election offi­ banned burials in Manhattan south of York, argues that the Catholic church’s
cials sustain accurate voter rolls and iden­ 86th Street in 1851. She grew increasingly belief in the “unity of body and soul”
tify fraud. It does so by comparing voter da­ nonplussed that “there was no urban renders the process disrespectful, a
ta across member states to a “death master ecological death­care option” available. “violation of dignity”. The state’s Catholic
file” from the Social Security Administra­ Then the brainwave came. If farmers Conference laments that “human bodies
tion and driver­licence records. Since its could turn whole cows into compost, are not household waste”, saying com­
inception in 2012, ERIC has spotted 1m du­ why not the same with humans? A de­ posting “is more appropriate for vegeta­
plicate voters and taken over 570,000 dead cade on from presenting the idea in her ble trimmings and eggshells”.
people off the rolls. By January 2022, 33 master’s thesis, Ms Spade now runs The environmental benefits are clear,
states along with Washington, DC, had Recompose, a “human­composting” though. Every year, burials in cemeteries
joined the effort. facility in Seattle. For many, it’s a difficult across the country require vast quanti­
For a decade ERIC was celebrated as a idea to chew over. A body is placed in a ties of steel and concrete to reinforce
rare bipartisan triumph. States like Con­ graves, as well as millions of litres of
necticut and Oregon joined forces with embalming fluid, which seep harmful
Utah and Texas. That started to change in Eternal flame chemicals into the ground. Meanwhile,
early 2022 when Gateway Pundit, a con­ United States, means of body disposal, % cremating one corpse emits the carbon­
spiratorial blog, made the outfit its target. 100
dioxide equivalent of driving about 750
Known for spewing hoaxes about vaccines kilometres in a car.
and elections—in 2021 Google banned the Burials Human composting, on the other
site from running ads due to misinforma­ 75 hand, is thoroughly green. There are bills
tion—the blogger claimed that ERIC was that would legalise it currently being
manipulated by left­wingers and bank­ considered in five states, including
50
rolled by George Soros, a progressive phi­ Nevada, Minnesota and Connecticut.
lanthropist. Neither was true. Recompose has several thousand people
One week later, over concerns of “ques­ 25 from across the country on its waiting
tionable funding sources” and “possible list, a quarter of them under the age of
partisan actors”, Louisiana became the first Cremations 49. While many remain instinctively
to pull out of ERIC. In January, Alabama’s 0 repulsed by the idea, the human­com­
newly­elected secretary of state also cut 1960 70 80 90 2000 10 21 posting industry would appear to be
ties. A February board meeting, during Source: Cremation Association of North America growing in fertile soil.
which member states refused to adopt pro­
posed bylaw amendments, was the catalyst
for three more states to defect this week. raised were not serious enough to per­ only incite more mistrust.
The leavers object to the involvement of suade the majority of member states to More states could yet pull out of ERIC.
the only non­voting board member, David vote for change. Alabama and Missouri plan to craft new
Becker, a former Department of Justice of­ “This is all an effort to create more cha­ systems to clean voter rolls. But replicating
ficial who founded ERIC. But claims of his os, to weaken the guardrails of democracy it in the short­term is infeasible—it took
liberal bias fall flat: his most notable case and allow for losing candidates to spread ERIC three years to get its data­sharing ap­
was against Georgia Democrats for gerry­ more lies,” says Mr Becker. States that de­ paratus up­and­running. John Ashcroft,
mandering and his non­profit, which gave fect hurt themselves most. Unorderly voter Missouri’s secretary of state who led the
$65m to states for non­partisan election rolls make for delays. Come 2024, voters in withdrawal, is not sure how his voters feel
education, is run by experts from both par­ these states will face lengthy lines at polls about it. That does not matter. “True lead­
ties. (Both Florida and Missouri received and more trouble with mail­in ballots. ers do what needs to be done without tak­
grants.) The data­security concerns they Confusion and longer waits for results will ing a poll,” he says. n

012
 36 United States The Economist March 11th 2023

Lexington Paranoia strikes deep

And, in the halls of Congress, it can make for ineffective government

Ms Plaskett, a former prosecutor, says she hopes Mr Jordan is
withholding better witnesses he plans to spring on her later. “I’m
hoping that we’re playing chess and not, you know, Connect 4,”
she says. “Right now it feels more like Connect 4.”
Also unlike the January 6th committee, this subcommittee is
following the standard approach to public questioning, under
which members alternate by party. The result at the first hearing
was a bewildering oscillation for almost four hours between alter­
nate realities, compounded by lousy questions, a bipartisan pro­
blem. Most members addressed their friendly witnesses, treating
them as backboards against which to thwack their talking points.
(Q: “Is it ever appropriate to turn congressional oversight author­
ity into a weapon to harm a political opponent?” A: “No.”)
Even Mr Jordan’s fellow spelunkers posed a problem for him.
Each vanished down a rabbit hole of their choosing, often popping
out of yet another one: The Twitter Files, Russiagate, the FISA
court, investigations of uproar at school boards, Hunter Biden’s
laptop, Anthony Fauci, the surveillance state—a litany implicat­
ing just about every acronym from the ATF to the FTA. Each theory
would require dizzying explanation for the blessedly uninitiated.
Kat Cammack, a Republican from Florida, noted that agencies
like the IRS were buying “millions of dollars’ worth of ammuni­

I f you set out to crystallise what is self­defeating and immiserat­

ing—yet, admittedly, also kind of funny—about American poli­
tics and governance, you might come up with something quite
tion and tactical ballistic gear”, and stirred that concern with an­
other one to conjure a menacing phantom: “Can you detail why
the capability, coupled with extensive warrantless data­collection
like the Congressional Committee for the Spelunking of Rabbit efforts, of these agencies should concern everyday Americans?”
Holes (technically operating under a less precise name, the Select she asked a witness called by the Republicans, Jonathan Turley, a
Subcommittee on the Weaponisation of the Federal Government). law professor. A seasoned witness, Mr Turley ignored the bit about
The subcommittee’s chairman, Jim Jordan, was a champion weaponry and filibustered about data collection.
wrestler in college, and he retains both impressive pugnacity and Mr Jordan’s biggest problem may be that no vast underground
a lean, bantam physique incidentally accentuated by his habit of warren connects all these holes. That does not mean the concerns
appearing in his shirtsleeves. An astute politician from Ohio, he are crazy. The IRS has been buying weapons. But it has been doing
has vaulted into the Republican leadership without dulling his po­ so since 1919, for its criminal­investigation division. It is careless
sitions as a founder of the razor­edged Freedom Caucus. Mr Jordan to hint that Mr Biden is turning the IRS into his secret police. But it
believes Americans’ First Amendment rights are under assault, would be refreshingly workmanlike for Congress to check that the
and there is certainly cause for concern, or at least vigilance. programme is justified and, if so, rightly configured.
He has said he suspects deep corruption, that President Joe Bi­
den and other Democrats are using federal agencies—as well as big A virus made in America
tech firms and left­wing news media—to crimp Americans’ rights At least until recently both parties, as Mr Turley noted, were wor­
for the benefit of his family and party. Though the name of the ried about government’s ability to vacuum up data via social­me­
subcommittee may suggest prejudgment, Mr Jordan insists his fo­ dia companies. But the logic of polarisation dictates that if one
cus is “facts and truth”. He faces a hard road, for several reasons. party expresses a concern the other must denigrate it. Not long ago
No party will ever again make the mistake the Republicans the Democrats were the ones complaining about partisanship at
made when they chose to object to the January 6th committee by the FBI, an agency whose powers and history of violating Ameri­
not nominating members to it. That freed the committee’s Demo­ cans’ civil liberties justify regular congressional scrutiny.
crats, and the two Republicans who defied their leadership to take When Republicans seized on the hypothesis that covid leaked
part, to script a coherent and at times riveting television series from a Chinese lab, Democrats—and, yes, the left­wing media—
about how Donald Trump tried to overturn the 2020 election. mocked their suspicion. Now Mr Biden’s Department of Energy
Mr Jordan, by contrast, is stuck with Democrats, including the has said the theory is probably correct. Recently, at a conservative
formidable ranking minority member, Stacey Plaskett of the Vir­ conference near Washington, Mr Jordan pointed to that as evi­
gin Islands, who can grill his witnesses and call their own. At the dence that, despite “the left and the mainstream press and big
first hearing, last month, Mr Jordan said “dozens and dozens of tech”, the truth will win. “The only thing we get wrong”, he said, “is
whistle­blowers” at the FBI were coming forward. On March 2nd it’s always worse than we thought.”
Ms Plaskett and other Democrats released a book­length report on And so the two parties’ reciprocal scorn intensifies, along with
the three FBI witnesses they know of so far, describing them as suspicions of the evil the other side is plotting. To the satisfaction
embracing conspiracy theories about the January 6th attack (“In­ of their most partisan supporters, 21 congressmen backed by doz­
surrection my a$$,” tweeted one of them. “It was a set­up.”), and ens of aides are devoting countless hours battling over suspicion
offering extreme opinions but no evidence of misconduct. “We piled on suspicion, while questions about how to make govern­
urge Chairman Jordan to schedule the public testimony of these ment more effective go unasked. You might almost suspect some
individuals without delay,” they wrote, drolly. sort of conspiracy. n

012
 The Americas The Economist March 11th 2023 37

Argentina 2021 have gone to Argentina, according to

the Inter­American Dialogue, a think­tank
How not to deal with China in Washington (see chart on next page).
Most of this has taken place since 2015. A
branch of ICBC, China’s biggest commer­
cial bank, dominates the skyline near the
presidential palace in Buenos Aires.
Lately, though, progress has stalled.
BUE NOS AIRES
Wherever Argentina has a comparative ad­
A pro­Chinese government is wasting the opportunities China offers
vantage, the Fernández government erodes

T HEY SHOULD be a perfect match, like a

steak and a glass of Malbec. Argentina
has fertile land and skilled farmers. China
infuriated their Chinese customers.
Cleverer engagement would yield huge
benefits. Argentina desperately needs cap­
it. The total ban on beef exports has gone,
but bans remain on seven popular cuts of
beef, such as short ribs. Crops are whacked
has 1.4bn mouths to feed. Bilateral trade ital; China has deep pockets. China craves with export taxes ranging from 7% (for
should be sizzling. But Argentine policy is minerals; Argentina has mountains of sunflower oil) to a crushing 33% for soya.
so erratic that China is often left asking: them. Rather than exploit those economic This discourages investment and costs Ar­
where’s the beef? opportunities, Argentina’s current govern­ gentina a fortune. If it had halfway sensible
Sometimes, literally. In 2018 China ment of prickly left­leaning Peronists has policies it could add $25bn a year to grain
opened its market to Argentine beef. At given priority to political and diplomatic and oilseed exports within a decade, esti­
first, trade boomed. However, in 2021 Ar­ ties with China, which alarms the United mates David Miazzo of Fada, a think­tank.
gentina slapped a beef­export ban on itself. States. A more pragmatic one would seek to That is equivalent to 5% of today’s GDP. But
“The Chinese couldn’t believe it,” recalls get along well with both big powers, while the government is desperate for short­
Patricio Giusto of the China­Argentina Ob­ taking full advantage of the way the Argen­ term cash, and shiploads of grain are hard
servatory, a think­tank. tine and Chinese economies complement to hide and easy to tax.
The convoluted logic went like this. Do­ each other. Argentina’s next national elec­ Chinese investments that generate
mestic meat prices were rising, upsetting tion, due in October, may bring such a gov­ headlines often run into trouble. A year ago
barbecue­loving Argentines. President Al­ ernment to power. China announced an $8bn deal to build a
berto Fernández reasoned that if he In recent decades the economic rela­ nuclear power plant near Buenos Aires. It
stopped foreigners from wolfing Argentine tionship between Argentina and China has was eager to show off its Hualong One nuc­
beef, there would be more for domestic burgeoned. Bilateral trade has increased lear technology, which so far produces
consumers. The ban did little to curb infla­ from $2.3bn in 2001 to $26bn last year. Sev­ power only in China itself. It also hoped to
tion, which is now nearly 100% year on eral big Chinese investment projects have lock Argentina into the kind of long­term
year and mostly caused by the govern­ been announced. More than half of the 62 relationship that nuclear projects require.
ment’s frenzied money­printing. But the loans doled out by Chinese commercial The problem is that Argentina cannot
export ban gored Argentine farmers and banks in Latin America between 2007 and afford the price tag (which with interest

012
 38 The Americas The Economist March 11th 2023

could add up to $13bn, estimates Julian Ga­ now buy vintage American jets instead, if it
dano, a former energy official). Its net for­ Bankers’ pet can find the money.
eign reserves are a mere $2.5bn, according Number of commercial loans from China* Frustrated with Argentina’s central gov­
to Econviews, a consultancy. Argentina 2007-21 ernment, some Chinese investors are deal­
owes more than any other country to the ing directly with provincial governments.
0 5 10 15 20 25 30 35
IMF, and is trying to secure another life­ Governor Morales in Jujuy has made multi­
Argentina
line. Having renegotiated the nuclear pro­ ple trips to China. Jujuy’s arid soil is little
Brazil
ject several times, Argentina is begging use for farming, but it has sunshine and
Chinese lenders to cover 100% of the cost, Peru minerals. A solar park at Cauchari, built
up from 85%. The project “is not going to Chile high on an altiplano (plateau) with Chinese
happen”, predicts Mr Gadano. Ecuador money and technology, yields enough
In 2014, during the presidency of Cristi­ Mexico electricity for 160,000 homes. A nearby
na Fernández de Kirchner (who is now the Colombia
$852m Sino­Argentine lithium project is
country’s vice­president), Argentina bor­ expected to start producing the metal, used
Venezuela
rowed $4.7bn from three Chinese state­ in electric­car batteries, this year. Mr Mo­
owned banks to build two hydroelectric Honduras rales says Argentina has “great opportuni­
dams in Santa Cruz, Ms Fernández’s politi­ *From China’s “big five” commercial banks: ICBC, Bank of ties…in a world hungry for food and ener­
China, ABC, CCB, Bank of Communications
cal stronghold. Interest payments are now Source: Inter-American Dialogue
gy”. It would receive “far greater invest­
a big drain on the budget, and the dams ment flows” if it scrapped capital controls
have yet to produce any electricity. Last and had only one exchange rate.
year Chinese firms seemed well placed to Last year Mr Fernández announced that Ar­ The election in October is expected to
win a contract to build a pipeline to Buenos gentina would join the Belt and Road Ini­ bring in a government with saner econom­
Aires for gas from Vaca Muerta, one of the tiative, a Chinese global infrastructure ic policies, which ought to help Argentina’s
world’s largest deposits of shale gas and scheme. The agreement included no new commercial relations with China. It may
oil. But after some wrangling, they aban­ financial commitments. China has built a also be less willing than the Peronists are
doned the bidding. In 2020 Sinopec, a Chi­ space observatory in Patagonia, which it to promote China’s ambitions in the west­
nese oil giant, pulled out of Argentina after claims is purely for scientific purposes— ern hemisphere. “We are democratic and
squabbles with labour unions. the far­southern latitude gives it a view of believe in human rights. We don’t [share
The incentive to invest in energy is the cosmos unavailable from China. the Chinese] vision of the world,” says a se­
dulled by price controls. Households pay Others suspect it is spying; unlike a similar nior member of the opposition. But eco­
hardly anything for electricity and waste it European observatory, China’s is closed to nomically, “they need what we have, and
copiously. Power cuts are common. outsiders and staffed by military folk. In we should take advantage of that, [by ex­
Regardless of their line of business, September the governor of Tierra del Fue­ porting] minerals and food.” Mr Giusto
“Chinese firms have the same problems as go, on the tip of Argentina, offered his agrees. Uruguay, Argentina’s better­gov­
all companies that want to invest in Argen­ province as “the gateway” for China to Ant­ erned neighbour, maintains excellent rela­
tina,” says Gerardo Morales, the governor arctica, with a logistics base for ships. tions with the United States and good ones
of Jujuy province. In addition to high infla­ The Fernández administration may with China, he notes. It exports beef and
tion investors must contend with currency have underestimated how hostile the Unit­ behaves predictably.
controls, which make it hard to repatriate ed States has recently become towards Chi­ China’s communist regime may grum­
profits. A system of multiple exchange na, and how determined it is to prevent ble if Argentina elects a government that is
rates (there are at least a dozen for the dol­ China from gaining a foothold in its hemi­ less friendly to its strategic aims and closer
lar) causes confusion and distortion. Ex­ sphere. Anything that looks like Chinese to the United States. But if that makes Ar­
porters must surrender their dollars at the military activity in the region is sure to in­ gentina’s economic policy less wacky, Chi­
official rate, which is roughly half what furiate any American administration. Al­ nese investors may quietly welcome it. n
they are worth. The government allocates though Argentina is not like the dictator­
cut­price hard currency in a process rid­ ships in Cuba or Venezuela, which the Un­
dled with graft. Special rates apply to such ited States regards as foes, some hotheads
things as rock concerts (the “Coldplay” in Washington suggest it is heading that
rate) and streaming services (the “Netflix” way. On February 28th María Elvira Salazar,
rate). Chinese firms find it hard to operate an American legislator, claimed that Ar­
in a country where policy changes direc­ gentina had struck a deal with China to
tion as often and unpredictably as a foot­ build Chinese warplanes in Argentina. She
ball at Lionel Messi’s feet. called it “a pact with the devil that could
Argentina seems more interested in be­ have consequences of biblical propor­
ing China’s ally than its supplier. Vice­ tions”. The Argentine government said
President Fernández (no relation to her there was no such plan.
nominal boss) recently gushed that China Although the Peronists are suspicious
was the “most successful capitalist sys­ of the government in Washington, they do
tem”. China plays up similarities between not want to alienate it, not least because
Taiwan and the Falkland islands, a British support from the IMF depends on Ameri­
territory that Argentina claims. (One paral­ can goodwill. They have begun to walk
lel it does not mention is that the Falkland back from the deals with China to which
islanders, like the Taiwanese, have no de­ the United States most objects. Argentina
sire to be ruled by their bigger neighbour.) now says it will build the maritime base in
Many of Argentina’s recent ventures Tierra del Fuego with its own money,
with China are long on political symbol­ which means it is unlikely to happen. An
ism and short on economic substance. Argentine plan to buy Chinese fighter jets
Some of these have irked the United States. was cancelled in December; Argentina may A ray of hope in Jujuy

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 International The Economist March 11th 2023 39

Macron and the world to underpin it all. Mr Macron likes to speak

of the grand bouleversement (great upheav­
Perpetual motion al). By this he means the end of the unipo­
lar, American­dominated global system
that emerged after the cold war, and its re­
placement with a more fragmented world
and a new round of great­power rivalry. To
PARIS
Mr Macron’s mind, the best response to
Emmanuel Macron’s view of a more muscular Europe is coming true.
that shift is more “sovereignty”, says one of
But his allies disagree on strategies and goals
his advisers, meaning “reinforcing the ca­

I t was a cautious but hopeful French

president who took his seat in the beige­
trimmed aircraft office, bound from Mos­
notably its future security, it is still not per­
suaded by Mr Macron’s ideas.
No one could fault Mr Macron’s work
pacity to decide for ourselves, and con­
tinuing to be able to do so”.
Mr Macron and his advisers think Rus­
cow to Kyiv on February 8th 2022. The pre­ ethic. Constantly tapping out text messag­ sia’s invasion has vindicated their world­
vious night Emmanuel Macron had spent es to his peers, Mr Macron has this year al­ view. When he set out his ideas in 2017, in a
over five strikingly socially distanced ready hosted 16 different world leaders in speech at the Sorbonne, his calls for “Euro­
hours seated opposite Vladimir Putin at a Paris. In April he is heading to China to see pean sovereignty” sounded like high­
table the length of a shipping container. Xi Jinping. That will make him the first G7 minded abstractions. They are more con­
Their exchange was tense, he recount­ leader to meet him this year (he is expected crete in a world in which Europe no longer
ed, but Mr Putin had vowed that Russia to urge Mr Xi to put pressure on Mr Putin talks only of rules, trade and peace, but also
would “not be the cause of escalation”. Two over the Ukraine war). Last week he com­ of guns, autonomy and power. In the after­
weeks later, Russian tanks rolled into Uk­ pleted a four­country tour of Africa. On math of the invasion Germany has prom­
raine, sparking the biggest conflict in March 10th he will welcome Britain’s gov­ ised a huge boost in military spending. The
Europe since the second world war, and ex­ ernment, and then its king on his first EU is exporting arms to Ukraine and trying
posing the futility of Mr Macron’s venture. overseas visit as monarch. to reduce its dependence on Russian gas
Across Europe, leaders are grappling He has levers of hard power possessed and promote self­sufficiency in energy. It
with the fallout from Russia’s war. In by no other member of the eu. Nuclear­ is displaying a new­found liking for indus­
France, the conflict has shone a light on Mr armed, with a permanent seat at the United trial policy. “The European conversation
Macron’s ambition to keep his mid­sized Nations Security Council, France main­ has rarely sounded so French,” says Georgi­
country seated among the giants at the top tains a big army with a global reach. Its mil­ na Wright, of the Institut Montaigne, a
diplomatic table—and the frustrations of itary bases and overseas territories stretch think­tank in Paris.
trying to do so. In many ways Europe has from the Caribbean to the Pacific. With 264 Yet if Mr Macron’s diagnosis has be­
come round to the French president’s way embassies and missions, France runs the come popular, his practical prescriptions
of thinking. The continent is rearming, as­ world’s third­biggest diplomatic network are proving less so. At the Munich Security
serting itself and learning to speak the lan­ after China (275) and America (267). Conference on February 17th he called for
guage of power. Yet on crucial questions, And he has a grand theory of the world talks in Paris on the future of the conti­

012
 40 International The Economist March 11th 2023

nent’s air defences, and offered to discuss This tension is “almost insurmount­ Initially France helped beat back a jihadist
the “European dimension” of France’s nuc­ able”, says Benjamin Haddad, one of Mr incursion in Mali. But it could not counter
lear deterrent. Yet countries nearer the Macron’s parliamentarians: “It’s very diffi­ anti­French sentiment, increasingly
sharp end of the Ukraine war are conclud­ cult both to have a special dialogue with stoked by Russia. Eventually Mali hired the
ing that only NATO—and specifically Amer­ countries like Russia or China, and to act as Wagner Group, a mercenary firm run by
ica, which provides the lion’s share of the the pivot in Europe, building consensus one of Mr Putin’s cronies. Having pulled all
alliance’s muscle—can guarantee their se­ and leveraging Europe to project power.” French troops out of Mali, Mr Macron is
curity. Even Germany, despite its talk of a Trying to have things both ways can lead to now winding down most military bases in
historic Zeitenwende (turning point), has maddening ambiguity. Mr Macron has the region. Against Russia and China,
been reluctant to take big decisions with­ hardened his tone on Russia, declaring France is losing the battle for influence.
out American cover, and is as keen as ever that it should be “defeated” and vowing to Another illustration is AUKUS, a de­
to buy American weaponry. back Ukraine “all the way to victory”. But he fence pact between America, Australia and
also says Russia should not be “crushed”, Britain unveiled in 2021. This sank a
Semi-detached? and keeps a line open to Mr Putin, to whom French deal worth A$90bn ($60bn) to sup­
Mr Macron himself, who in 2019 told The he last spoke in September. ply Australia with submarines, torpedoed
Economist that NATO was experiencing In reality Mr Macron’s views are close to France’s Indo­Pacific strategy, and enraged
“brain death”, has shifted his tone on the Joe Biden’s, though America’s president is its government. If allies can do this to each
alliance. He has helped to reinforce NATO’s more judicious about expressing them out other, Paris concluded, then France is right
eastern flank with French troops, and talks loud. The French president wants to help to reinforce its independence. Mr Macron
more about a “European component of Ukraine secure territorial advantage on the has since cultivated ties with other coun­
NATO” than full­blown “strategic autono­ battlefield in order for it to dictate the tries in the Indo­Pacific, including India,
my”. He has increased France’s planned de­ terms of peace. Many fellow Europeans, Japan and Thailand.
fence spending for 2024­30 by over a third, though, conclude that Mr Macron is too ac­ The upcoming trip to China will be Mr
to €413bn ($437bn), compared with 2019­ commodating to Russia. When talks come, Macron’s next diplomatic test. The French
25. “I think he has finally understood the French president is keen to make sure president believes that Europe should
NATO…and why it matters,” says François that Europe has a seat at the table. Other maintain its own dialogue with China, in­
Heisbourg of the International Institute Europeans are unsure they want that seat cluding over Mr Putin’s war, and that keep­
for Strategic Studies. to be occupied by Mr Macron. ing talks going can help lower tensions be­
Yet old assumptions die hard. In 1966 The third point of tension is between tween the West and China. He had origi­
France removed its troops from NATO’s in­ ambitions and means. Mr Macron has nally wanted to go to Beijing last year joint­
tegrated command structure, returning to helped launch a “European Political Com­ ly with Mr Scholz (in the end, the German
it only in 2009. Despite the warm words munity” that reaches from Britain to Mol­ chancellor went solo). This time Ursula
and the extra money, many of the alliance’s dova, convened peace talks between Azer­ von der Leyen, the head of the European
other members suspect that France will al­ baijan and Armenia, and warmed up ties Commission, might join him. Even if she
ways keep a certain distance. “We still talk with gas­rich Algeria. Paris hums with does, many Europeans will not feel that Mr
about NATO as if it is ‘them’ and not ‘us’,” ideas on grand causes: preserving biodi­ Macron is making the trip for them.
says Camille Grand, a (French) former versity, improving food security, ensuring
NATO official now at the European Council “effective” multilateralism, curbing ex­ Plus ça change
on Foreign Relations, another think­tank. tremism online. Overstretch beckons. As Some of these points of tension are struc­
A further strain arises from French am­ Michael Shurkin at the Atlantic Council, tural. French ambivalence towards NATO
bitions to build up European sovereignty another think­tank, put it diplomatically, long predates Mr Macron. But the presi­
on the one hand, while still asserting France is a “strong ally stretched thin”. dent’s personal manner can make things
French national interests on the other. It is Mr Macron’s decision last year to close worse. “His style is to go for it, never give
a decades­old tension. Charles de Gaulle, down Operation Barkhane, a French­led up, push as hard as possible, and take
France’s first post­war leader, sought to re­ counter­terrorism operation in the African risks,” says an aide. He listens to many, but
build Europe as a powerful assembly of na­ Sahel begun in 2014, illustrates the point. is beholden to none. Ultimately, says Bru­
tions, while keeping France’s “hands free” no Tertrais of the Foundation for Strategic
to conduct a diplomacy of geopolitical Research, a think­tank, “Macron’s chief
“balance”. Today, Mr Macron likes to talk diplomatic adviser is Macron.”
about France as a puissance d’équilibres For the president’s critics it is exactly
(balancing power), that is independent this unilateralism, a failure to craft mean­
and open to speaking to all. ingful alliances, and a tendency to say out
Even today, that approach can annoy al­ loud things that might more usefully be
lies. For Mr Macron, the attempt to dis­ kept quiet, that irks others and saps his in­
suade Mr Putin from war showed that fluence. From Lebanon to Russia, Mr Mac­
Europeans could take the lead. The French ron has little to show for his personal out­
president co­ordinated his 2022 trip to reach. “He has too many ideas, all the
Moscow with Olaf Scholz, the German time,” says a European diplomat, “so it is
chancellor, and Volodymyr Zelensky, hard to make any of them stick.”
Ukraine’s president. For Poland and the But Mr Macron is not about to stop sug­
Baltic states, by contrast, long fearful of Mr gesting them. This will keep him both an
Putin’s expansionism, the visit underlined impressive and tricky partner. “The presi­
that the French president does not speak dent will never accept that France is a mid­
for them. These countries “will never back dling power,” says a presidential aide. “He
Macron’s conception of strategic autono­ believes that without an ambition of rayon­
my if he persists in thinking he can one day nement (influence), of being open to the
work with Putin,” says Michel Duclos, a world, of speaking to everybody, France
French former ambassador. I’ve had an idea... would not be itself.” n

012
 Frontline
SPECIAL
REPORT:
Taiwan
Formosa
→ March 11th 2023
3 An island story
5 History and identity
6 The economy
7 Semiconductors
8 The home front
9 Defence strategy
11 Political change
12 The future
 Caution:
elephant in the room
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012
 Special report Taiwan The Economist March 11th 2023 3

A vital island

Taiwan’s fate will, ultimately, be decided by the battle­readiness of its people, says Alice Su

W hen Taiwan’s president, Tsai Ing­wen, announced the ex­

tension of military conscription in December 2022, she
called it an “incomparably difficult decision”. Taiwan’s young
and has expanded his army at an alarming pace. The People’s Lib­
eration Army has begun beating the Americans in war games. Chi­
na boasts the largest navy in the world, with an expected force of
were previously subject to only four months of conscription. 400 ships by 2025 (America has less than 300, Taiwan just 26). It
Starting from 2024, they will serve a year each, with improved has expanded its missile and nuclear arsenal to keep foreign forc­
training. “No one wants war,” she said. “But peace will not fall from es away from the Taiwan strait.
the sky.” Taiwan must prepare for war, she added, to prevent it. China is also taking more “grey zone” actions (threatening
Ms Tsai’s decision should not have been so difficult. That it was moves short of war). The number of Chinese warplanes crossing
reflects a troubling reality: Taiwan has not made up its mind how the strait’s median line, an unofficial divider, and entering Tai­
or even whether to defend itself. It is at once the “most dangerous wan’s south­west air­defence identification zone, has almost dou­
place in the world” yet numb to China’s threat. Only since Russia’s bled in the past two years. The figure rose especially sharply after
invasion of Ukraine has serious debate about a possible Chinese Nancy Pelosi, who was then speaker of America’s House of Repre­
invasion become normal. That is in part because China’s Commu­ sentatives, visited the island in August 2022. China acted out a
nist Party is engaged in an information war designed to sow con­ mock blockade after her visit, firing missiles directly over Taiwan
fusion. It also reflects Taiwan’s tortuous history and politics. for the first time.
Western officials are already planning for Taiwan’s possible While American officials prepare for a worst­case scenario of
struggle against China. Yet Taiwanese have no consensus on who all­out invasion, Taiwan’s defence ministry is more concerned
they are, how they relate to China or if they should ever fight. Their about “grey zone” actions such as a blockade or the seizure of an
future depends on how they answer these questions especially as outlying island. Taiwan’s main island is roughly 160km away from
the next presidential election approaches. the Chinese coast, but the island of Kinmen is only 3km away. Kin­
China sees Taiwan as a renegade province that it has threat­ men has been a conduit of cross­strait tourism and economic ex­
ened with invasion for more than 70 years. But until recently war change. It has been importing water from China through a 16km
seemed unlikely. With American help, Taiwan had the military pipeline ever since 2018. Some of those who urge Taiwan to pre­
edge throughout the 20th century, and an ambiguous but secure pare for invasion have suggested that, after seeing the impact of
place within a peaceful Sino­American relationship. In the past sanctions on Russia because of its attack on Ukraine, China would
decade, though, that relationship has flipped from economic co­ need a quick conquest of Taiwan, not a drawn­out conflict. Tai­
operation into overt competition. China’s president, Xi Jinping, wanese officials worry that grey zone actions might serve as an
speaks of national rejuvenation in terms of victory over America, early test of international will. America might well fight China to

012
 4 Special report Taiwan The Economist March 11th 2023

theories and Chinese propaganda stirring mistrust of America.

NATO backed Russia into a corner, it is often claimed, and is sacri­
Taiwan’s air-defence East China ficing Ukraine for American interests. Taiwan must beware of
identification zone Sea
America pushing it to be the next Ukraine. Such stories are sur­
prisingly widespread in Taiwan. When China launched military
Median line exercises around Taiwan after the Pelosi visit, many blamed the
Senkaku/
Diaoyu Taiwanese government and American politicians for provoking it,
CHINA Fuzhou Islands not China for threatening the island.
Matsu
Such victim­blaming is in part a product of Chinese disinfor­
Taipei
mation designed to upset Taiwanese society. But it also reflects
Taiwan
i Taiwan’s history. Taiwan’s official name is the Republic of China
Xiamen Strait
raii (ROC), which dates from 1912, when the Qing dynasty was over­
Taichung
Kinmen
i thrown. The nationalist Kuomintang (KMT) party incorporated
Okinawa
TA I WA N Prefecture Taiwan into the ROC in 1945. It fled to the island after losing the civ­
Guangzhou Penghu Japan il war in 1949, and then imposed an authoritarian one­party sys­
tem and four decades of martial law, forcing the local population
Kaohsiung
Hong Kong to speak Mandarin and to embrace a Chinese identity.
Philippine
Only after Taiwan democratised fully in the late 1980s did a
Sea
South China suppressed local identity re­emerge. Polls in 1992 found just 17.6%
Sea 150 km of respondents identifying as Taiwanese, against 25.5% as Chinese
and 46.4% as both. By 2022 a similar poll by the Election Study
Centre at National Chengchi University found 61% of respondents
identifying as Taiwanese, 2.7% as Chinese, and 32.9% as both.
defend Taiwan—but would anyone fight for Kinmen? Younger generations born after the lifting of martial law hold es­
As Chinese pressure on Taiwan grows, the Taiwanese look for pecially strong Taiwanese identity. Yet a minority of Taiwan’s old­
the world’s support. Taiwan stands “at the vanguard of the global er generation still identifies with China and hopes one day to be
defence of democracy”, Ms Tsai has said. To let it go under would part of the mother country. America’s switch of recognition to
be a devastating step towards the might­is­right world that both communist China and its discouragement of Taiwan’s indepen­
Mr Xi and Russia’s Vladimir Putin seem to favour. dence have also fostered more mistrust of Washington.
Taiwan also has outsize importance in the world economy. A The next presidential election is due in early 2024. Candidates
conflict over Taiwan would do a lot more damage even than Rus­ will have to propose a new vision for Taiwan’s future in a world of
sia’s war on Ukraine. Taiwan makes more than 60% of the world’s deepening Sino­American hostility. Looking at the identity polls,
semiconductors, which power everything from mobile phones to it might seem that Ms Tsai’s pro­independence Democratic Pro­
guided missiles, and 90% of the most advanced sort. Rhodium gressive Party (DPP) should win easily. Support for independence
Group, a research outfit, estimates that a Chinese blockade of Tai­ has grown and support for unification has dropped. KMT affili­
wan could cost the world economy more than $2trn. ation has fallen as DPP affiliation has risen.
Identity is not the only factor in Taiwan’s politics. A plurality of
First defend yourself Taiwanese are undecided on either party affiliation or on indepen­
Taiwan’s leaders know that neither strong democracy nor eco­ dence versus unification. Around 57% of respondents in recent
nomic importance is enough. The Ukraine war has taught them polls support the “status quo” of de facto independence—and no
that a small country bullied by a bigger neighbour must demon­ war. Yet voters may have to choose between one or the other: fight­
strate that it has the will to resist. Fight back, and there is more ing for sovereignty or surrendering for peace. The Chinese Com­
chance that the world will come to your aid. But Taiwan is not rea­ munist Party pushes the defeatist message that America is ma­
dy to fight. After decades of falling defence spending, its army has nipulating Taiwan’s “separatist” leaders to provoke China, and it
shrunk to a paltry 163,000 active soldiers (against China’s 2m). It will be their fault if China is “forced” to attack. Taiwanese should
has more than 2m reservists, but can train only 110,000 of them instead quietly co­operate with China against a deceitful West.
each year. Taiwanese conscripts often liken their training time to Taiwan’s youth may be inured to such propaganda. But they are
“summer camp”, joking about sweeping floors and pulling up the group with the lowest voter turnout. The highest turnout is
weeds, not learning to fire weapons. among those aged 55­75, who include conservatives most likely to
American officials and retired Taiwanese military leaders wor­ favour appeasement. “Vote for the DPP and your youth go to the
ry about Taiwan’s defence strategy. Its generals spend too much of battlefield. Vote for the KMT and there will be no cross­straits war,”
their defence budget on fighter jets, tanks and battleships that declared Ma Ying­jeou, a former president and KMT leader, before
may have been useful 30 years ago against a weaker China, but are local elections in November, which the KMT won. Local elections
now vulnerable to Chinese missiles. Tai­ may be more of a judgment on city­ and county­level government
wan’s government repeats American talk­ than on policy to China. But the talk of war in this campaign was a
ing­points about asymmetric warfare, the preview of a larger debate about to take place in Taiwan.
fighting a small country needs to defend it­ Taiwan’s leaders Taiwan is a democracy, so its future lies in its people’s hands.
self against a larger enemy, but its army has know that neither But that makes it vulnerable to authoritarian exploitation. China
yet to commit to it. Ms Tsai’s announce­ is already promoting defeatist and divisive ideas in the Taiwanese
ments of conscription and training reform
strong democracy media. It is up to the Taiwanese to unite against them. They must
are a step forward, but not enough. nor economic decide who they are, what they believe in, whether they will fight
The most threatening Chinese attack importance is and what that might cost. They should value their freedoms
against Taiwan may be psychological. enough enough to be ready to make sacrifices for them. That is a politically
Since the Ukraine war began, Taiwanese difficult message, though not an entirely new one. After all, the
media have been flooded with conspiracy freedom they enjoy now also came at a price. n

012
 The Economist March 11th 2023 Special report Taiwan 5

The past

A people divided

Understanding Taiwan requires study of its history

I n the centre of Taipei is a sprawling memorial to Chiang Kai­

shek, leader of both the KMT and the Republic of China (ROC),
which formally moved to Taiwan in 1949. A bronze statue of the
general sits atop a white marble tower, gazing towards China and
his lost capital of Nanjing. A newcomer to Taiwan might assume it
is just a monument to a beloved founding father.
But inside the building the exhibitions divide into two. One
side pays homage to the ROC. Dark display chests hold its founding
charter. Two sleek black Cadillacs that once carried Chiang around
Taipei hint at the glamour of ruling one of the world’s richest polit­
ical parties. On the other side a new exhibit decries the KMT’s bru­
tal dictatorship. Poems about censorship evoke the stark drama of A dictatorial founder
a prison cell. Black­and­white portraits of massacre victims’ chil­
dren line one wall. Another wall shows pictures of Taiwanese rests, executions and exile in their 40­year fight for democracy.
protesters demanding free speech. Only in 1987 did the KMT drop martial law. Only in 1996 did Taiwan
The two exhibits tell different versions of Taiwan’s story. The hold its first competitive presidential election. In 2000 Taiwan
first is defined by a nationalist nostalgia for the lost homeland. elected its first opposition president and vice­president, Chen
The second displays a decades­long struggle for democratic rights. Shui­bian and Annette Lu (a former political prisoner).
At the heart of Taiwan’s political divisions today is disagreement Taiwan today feels a long way from this past. Old jails and exe­
over how to reconcile the two sides of the island’s history. cution sites are now independent bookshops and riverside parks.
When the KMT took over Taiwan in 1945, it imposed mainland­ The streets are filled with banyan trees and bubble­tea shops. Tai­
ers’ rule on a people who had been colonised by the Japanese for wan’s residents enjoy one of the world’s best universal health­care
half a century and hoped to be treated as equal citizens. Instead systems. There is a vibrant civil society, with activists working for
the Taiwanese were forced to adopt the Mandarin Chinese lan­ a better environment, for migrant rights and for gender equality.
guage and to watch as the KMT plundered the island’s resources to President Tsai Ing­wen apologised to Taiwan’s indigenous people
support its war. When Taiwanese people protested in 1947, KMT for their mistreatment in 2016. In 2019 she oversaw the legalisa­
troops slaughtered an estimated 18,000­28,000 in what became tion of same­sex marriage.
known as the February 28th massacre. In 1949 the KMT imposed
martial law on Taiwan, beginning a four­decade period of sup­ Remembrance of things past
pression often called the “white terror”. Yet Taiwan has not reached a consensus on its history or its identi­
The KMT asserted control over every aspect of life, using sur­ ty. There was no sharp break of the sort that took place in post­war
veillance, propaganda and censorship reminiscent of the Chinese Germany or post­apartheid South Africa. That is good, says Na­
Communist Party’s. Its army served the party more than the coun­ than Batto of the Institute of Political Science at Academia Sinica:
try, and it had two enemies: communist spies and independence sudden transitions often come only after traumatic crises. But it
activists. At least 140,000 people were imprisoned, including also means that Taiwanese society exists without a reckoning for
many from the intellectual elite. Taiwanese activists suffered ar­ its authoritarian past. “This process comes differently for every
person,” says Mr Batto. “Everyone will come to it at their own pace,
in their own way—and some people won’t at all.”
The ROC legislature passed laws in the 1990s to compensate vic­
Identity issues tims of the February 28th massacre and of martial law. In 1995 Lee
Taiwan, % responding Teng­hui, the KMT president, apologised publicly. A later KMT
president, Ma Ying­jeou, approved the National Human Rights
Identifying as: Status preference Museum. In 2018 Ms Tsai formed a transitional justice commis­
80 80 sion to open up political archives to the public, overturned wrong­
ful convictions during the “white terror” and tried to remove au­
Taiwanese Maintain status quo thoritarian symbols such as statues of Chiang Kai­shek. These
60 60
moves were controversial. DPP supporters complain that KMT­led
efforts did not go far enough. KMT voters accused the DPP of ex­
40 40
ploiting the transitional justice commission for political gain.
Independence Taiwan struggles to face its history without political acrimony,
Taiwanese and Chinese 20 20 says Tsao Chin­jung. Mr Tsao is a 70­year­old author of a collection
Chinese of oral histories from female survivors of KMT concentration
0 Unification with China 0 camps set up in the 1950s on an island off Taiwan. Several thou­
1992 2000 10 22 1994 2000 10 22 sand prisoners, including nearly a hundred women, were subject­
Source: Election Study Centre, National Chengchi University ed to political re­education and forced labour. In 1953 some re­

012
 6 Special report Taiwan The Economist March 11th 2023

belled against camp demands that they write nationalist slogans political risk and covid­19. But it is also be­
in blood and tattoo them on their bodies. Fourteen prisoners were cause manufacturing is moving to South­
executed. It is a chilling parallel to the labour camps the Chinese Trade deals East Asia in pursuit of lower labour costs.
Communist Party has always run. That is why Mr Tsao collected would help That reflects regionalisation of supply
his accounts, he says. Taiwan must understand its history to avoid chains, not wholesale exit from China. Yet
repeating it. China’s ambassador to France recently said Taiwan­
stabilise the Taiwan faces a unique obstacle to further
ese citizens will need “re­education” after reunification. Taiwan strait by regional integration: China wants to ex­
Mr Tsao’s book of oral histories was turned into a film, “Untold strengthening clude it, and has the clout to pressure its
Herstory”, last October. “The whole point of the film was to say, the status quo neighbours. Taiwan has but a handful of
don’t be so quick to draw lines between you and me,” he says. He free­trade agreements. It hoped its latest
included complex characters who were at once collaborators and FTAs, signed with Singapore and New Zea­
victims of an authoritarian system, in the hope of encouraging land in 2013, would pave the way for its
more nuanced reflection on the period. Yet public reaction to the eventual entry into the Regional Comprehensive Economic Part­
film was “disappointing”, he says. Even before it came out, KMT nership (RCEP), which includes 15 Asia­Pacific countries. But it has
supporters were criticising it as a distortion of the truth. It was re­ been blocked by China.
leased just before local elections, sparking accusations that this Taiwan has also applied to join the Comprehensive and Pro­
was done to win the DPP votes. One cinema in central Taiwan had gressive Agreement for Trans­Pacific Partnership (CPTPP), a trade
to stop screening the film after online attacks. deal that replaced the Trans­Pacific Partnership after Donald
Such political polarisation may sound familiar to many. But Trump pulled America out in 2017. However China has applied too.
Taiwan is unique in being a democracy without statehood, isolat­ According to Taiwan’s foreign minister, Joseph Wu, the CPTPP
ed by a superpower neighbour that denies its right to exist. n members agree that Taiwan meets the required standards. Yet they
fear Chinese retaliation if they were to admit the island.
China has found other ways to punish Taiwan for asserting its
The economy sovereignty. In August 2022, just after Nancy Pelosi’s visit, China
suspended imports of more than 2,000 Taiwanese food products.
It has banned Taiwanese pineapples, beer, grouper fish, pomelo
Enemy at the gates and other goods heavily dependent on the Chinese market. Mr
Chen notes that these goods comprise less than 2% of Taiwan’s to­
tal trade with China, so the economic impact is small. China has
noticeably refrained from banning Taiwanese chips or other high­
Taiwan’s economy is strong enough, but it badly needs to tech products it most needs.
reduce its reliance on China Taiwan’s government has launched campaigns (#FreedomPi­
neapple) asking friendly countries like Japan to import more Tai­

T aiwan has long depended on America for defence and China

for growth. That worked when the two superpowers broadly
co­operated. Taiwan flourished in an age of globalisation, build­
wanese farm products whenever China imposes a new ban. They
say this has increased Taiwan’s trade diversification. Yet the bans
still have a political impact, and they affect Taiwanese livelihoods.
ing both a strong economy and its own security on hopes that free “We want the world to recognise that our policy is actually to
trade would prevent conflict. But in the process it became depen­ maintain the status quo,” says Mr Chen. China is trying to shrink
dent on trade with its greatest threat. Now China is using its eco­ Taiwan’s economic space, he says. Taiwan joined the WTO in Janu­
nomic clout to isolate Taiwan. ary 2002 (just after China) and should accordingly have a right to
In 2010 Taiwan signed the Economic Co­operation Framework trade as freely as China. But China continues to use its economic
Agreement (ECFA), a deal with China that allowed cross­strait trade clout to intimidate Taiwan’s would­be trade partners not to sign
to grow. China had been Taiwan’s leading trade partner since 2005, free­trade deals or include the island in trade blocs.
when it made up 17% of its trade flows. Last year China accounted Mr Chen argues that trade deals would stabilise the Taiwan
for 25% of Taiwan’s exports and 20% of its imports, roughly the
same shares as in 2016, when Tsai Ing­wen became president. She
was elected after a student movement had protested against grow­
ing dependence on China. She herself had criticised the ECFA, but Dependence days
has not changed it as president. That is because her priority was
stability, says Taiwan’s deputy minister of economic affairs, C.C. Taiwan, merchandise trade Taiwan, approved outward
Chen. “From day one, when President Tsai took office, China has % of total investment, $bn
been our largest trade partner. We don’t want to rock the boat. We ECFA* Tsai elected
want to make it stable.” signed as president 30 18
Instead of pushing for decoupling from China, the new govern­ China
ment pursued diversification, particularly to South­East Asia. Ms China
Tsai’s “New Southbound Policy” promotes trade and investment 20 12
with the rest of the region, including ten members of the Associa­ NSP† countries
tion of South­East Asian Nations (ASEAN), six other countries in
10 6
South Asia, and Australia and New Zealand. The value of trade US
with all these countries has increased from $96bn in 2016 to
$180bn in 2022. Investment flows have risen from $2.4bn in 2016 0 0
to $5.3bn in 2022. In 2022 Taiwan’s investment in these countries 2000 05 10 15 22 2000 05 10 15 22
combined made up about 35% of its total investment abroad, out­
*Economic Co-operation Framework Agreement †New Southbound Policy, includes ASEAN countries,
stripping investment in China for the first time. Australia, Bangladesh, Bhutan, India, Nepal, New Zealand, Pakistan and Sri Lanka
Taiwanese investment in China has dropped partly because of Sources: Ministry of Finance; Ministry of Economic Affairs

012
 The Economist March 11th 2023 Special report Taiwan 7

strait by strengthening the status quo. Foreign governments being a pawn in the two superpowers’ game.
should not accept China’s view that trading with Taiwan is an esca­ The Biden administration is no less serious about countering
lation that hurts China’s interests, he argues. “A free­trade agree­ China’s rise, though it favours alliance­building and security part­
ment is nothing more than trade. It just puts us on an equal foot­ nerships. Yet it is behind on the economic front. In 2022 America
ing.” The most sought­after partner would be America, Taiwan’s launched the Indo­Pacific Economic Framework for Prosperity, an
second­largest market. America accounted for 13% of Taiwan’s to­ initiative meant to increase trade with Asian partners that fell
tal trade in 2022, compared with China’s 23%. Yet the American short of a free­trade deal. It excluded Taiwan. Too many Asian
consensus on supporting Taiwan has not translated into stronger partners feared punishment from China. America has instead de­
support for a free­trade agreement. signed separate smaller trade initiatives with Taiwan.
Donald Trump was popular in Taiwan because he took an early Taiwanese officials still hope to move closer towards a free­
call from Ms Tsai and was hawkish on China. But his administra­ trade deal. Ms Tsai eased rules on imports of American pork in
tion put bilateral trade relations in an “ice age”, says Andrew Wyle­ 2020, despite public concerns about its safety. The main obstacle
gala, president of the American Chamber of Commerce in Taiwan. to a deal now is neither Chinese intimidation nor Taiwanese pro­
The Trump administration froze trade talks with Taiwan for four tectionism, but American public opinion, says Mr Wylegala. If
years as Robert Lighthizer, the trade representative, focused on a America really wants to wean Taiwan off its dependence on China,
deal with China. Such treatment feeds Taiwanese anxieties about it must overcome its “allergy to free­trade deals”, he concludes. n

Chips with everything

America and China are pushing Taiwan’s chipmakers to choose sides

T hey are the chips that power every­

thing from mobile phones to electric
cars—and they make up 15% of Taiwan’s
business home were “doomed to fail”. Yet
the shift to local supply chains is happen­
ing, boosted by covid­19 and the war in
in August 2022, offering $39bn in sub­
sidies and a 25% tax credit to promote
manufacturing at home, as well as $13bn
GDP. Taiwan produces over 60% of the Ukraine. Governments want critical tech of investment in chip research. In October
world’s semiconductors and over 90% of made in safer places, closer to home. And 2022 it banned the export of advanced
the most advanced ones. Most are manu­ America and China are competing to chips and chipmaking gear to China.
factured by a single company, Taiwan control the most sophisticated chips that America’s success in bringing TSMC to
Semiconductor Manufacturing Corpora­ may prove crucial to the next generation Arizona sparked alarm in Taiwan. The KMT
tion (TSMC). Until now, the most ad­ of advanced weapons. accused the government of “gifting” TSMC
vanced have been made only in Taiwan. Taiwan is pulled between the two. to America. “TSMC will surely become
The semiconductor industry is called China has poured $50bn into chipmaking, USMC in the future,” said Tseng Ming­
Taiwan’s “silicon shield”, giving the hoping to meet 70% of domestic demand chung, a KMT legislator. Officials say such
world a big reason to defend the island. for chips by 2025. It has also poached fears are overblown. TSMC aims to produce
Yet chips are the industry most affected Taiwan’s chip engineers, executives and 600,000 wafers a year at its American
by the split between America and China. trade secrets. That brain drain has alarmed fabs. But its manufacturing capacity is
Parts of the shield are now moving Taiwan’s government, which has raided more than 13m wafers a year. It is also
abroad. In December TSMC held a cere­ Chinese chipmakers and passed new laws building a new fab in Japan and consider­
mony to mark the start of a chip plant (or against economic espionage. America is ing one in Europe. “It’s not that Taiwan’s
“fab”) in Arizona. Joe Biden was there, as also trying to stop China getting advanced cake is being cut in half. The cake is get­
were Tim Cook from Apple and TSMC’s chips. It passed the CHIPS and Science Act ting bigger, and we’re giving some of the
founder, Morris Chang. Mr Chang said extra slices to America and Japan,” says
TSMC would triple its investment in Emile Chang from the economic ministry.
Arizona to $40bn, open a second fab in The minister of economic affairs, Wang
2026 and make three­nanometre chips, Mei­hua, says TSMC’s new fabs do not
now the most advanced, in America. Mr mean a loss of Taiwan’s advantage. The
Biden declared that “American manufac­ most advanced nodes will still be made in
turing is back, folks.” Mr Chang more Taiwan, and research will stay. In January
morosely called globalisation and free Taiwan passed its own chips act, offering
trade “almost dead”. tax subsidies worth 25% of research costs.
The chip industry was built on global­ Foreign chipmakers are investing in Tai­
isation, with every part of the supply wan. ASML, a Dutch company that makes
chain supporting it. TSMC’s fabs, based advanced lithography machines for cut­
on efficiency and high­skilled, long­hour ting­edge chips, is opening its sixth fact­
labour, could make chips faster and more ory in Taipei in 2023. Micron and Applied
accurately than any rival. Experts agree Materials, two American semiconductor
that replicating this supply chain else­ firms, are expanding in Taiwan.
where would be inefficient. Mr Chang None of this changes the fact that
told reporters in November that the cost “friend­shoring” semiconductor making
of making chips in America would be will involve inefficiencies. But this is the
55% higher. He reportedly told Nancy reality of a world reshaping itself around
Pelosi that American efforts to bring the A fab company geopolitical risk.

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 8 Special report Taiwan The Economist March 11th 2023

The home front

Cognitive warfare

China hopes to make Taiwan surrender without fighting

R OBERT TSAO pulled a helmet on, grinning as he held up a copy

of his Taiwan identity card. “I am 100% Taiwanese, and I’ve
come back to defend my country,” he said. It was September 2022,
weeks after Nancy Pelosi’s visit was followed by belligerent Chi­
nese military exercises around Taiwan. The billionaire founder of
UMC, Taiwan’s second­largest chipmaker, announced a $100m do­
nation to Taiwan’s defence. He promised to support the training of
3m “black­bear warriors” over three years.
Mr Tsao, who is 76, had given up citizenship and emigrated to
Singapore after the Taiwanese government sued him for illegally
investing in China in 2011 (he was found not guilty). He had also
once proposed a referendum on peaceful unification with China.
But now he called on the Taiwanese to stand up against Chinese
Communist Party “thugs”. Taiwanese reporters wondered if he
had lost money in China or been paid off by a political party before
the local elections. Why would such a successful businessman put
money into Taiwan’s defence, when anyone he trained would not
even be legally allowed to pick up weapons? Was this all just a pro­ First aid first
paganda campaign?
In Mr Tsao’s view, that is exactly the point. He spoke up after against the influence of “red media” such as those of Want Want
the Pelosi visit not because of China’s military exercises, but be­ Group, a food company invested in China, that are said to co­ordi­
cause of the media response. Too many commentators criticised nate coverage with Chinese officials. Taiwan’s media regulators
the government and the Americans for upsetting China, not China fined Want Want’s TV channels several times for failure to check
for intimidating Taiwan. “It’s as if we are victims of domestic facts, and terminated one channel’s broadcast licence in 2020.
abuse, but when police come to check on us, we say: ‘Don’t let Those restrictions sparked accusations of censorship.
them come or we’ll be abused more.’ So cowardly!” says Mr Tsao. Taiwan has had more success in strengthening civil society
This comes after decades of Chinese propaganda telling the Tai­ and transparency than in curtailing “red” speech. A flurry of fact­
wanese they will be safe from war so long as they don’t annoy Chi­ checking organisations post rebuttals to false narratives in the
na. That is dangerously naive, says Mr Tsao, who witnessed Chi­ media. One group made a chatbot that could detect false messages
na’s crackdown on Hong Kong’s pro­democracy protests in 2020. and automatically send fact­checks. Taiwan has added online­
and media­literacy programmes to public education. It requires
Red menace government agencies to debunk disinformation on a “222 princi­
China’s Communist Party has been running psychological opera­ ple”: responses should be posted within two hours, with 200
tions against Taiwan for decades. It tries to affect Taiwanese think­ words and two images, making official clarifications speedy, clear
ing in two ways: by cultivating businessmen and politicians to and easy to share. Ms Tsai’s presidential victory in 2020, with a re­
support unification, and by sowing defeatism. China works not cord 8.2m votes, showed that the strategy worked. Although 80%
only through traditional media, but also by of respondents to exit polls said they had
hiring Taiwanese influencers and posting heard that Ms Tsai’s thesis was fake, only
false content on social media. Chinese dis­ 20% believed this to be true.
information exploits a media scene that is Fighting spirit The information battle rages on. After
already rife with rumour­mongering. Taiwan, willingness to fight for country Russia invaded Ukraine, public confidence
When Hong Kong’s protests broke out if there is a war, % responding that America would send troops to defend
in 2019, Chinese­run social media carried Taiwan against an invasion fell from 65%
Don’t know/not applicable
disinformation about protesters taking 100 in October 2021 to 34.5% in March 2022, ac­
American money and being controlled by cording to polls from the Taiwan Public
No
the CIA. Before Taiwan’s 2020 presidential 75 Opinion Foundation. Taiwanese respon­
election, Taiwanese media spread false dents were more confident (43%) of Japa­
claims that Tsai Ing­wen had faked her 50 nese assistance in a war than of American
doctoral dissertation, which Chinese me­ help. That belief is divorced from geopolit­
Yes
dia picked up and amplified. The London 25 ical reality, says Taiwan’s foreign minister,
School of Economics had to make an offi­ Joseph Wu. But it was influenced by propa­
cial statement certifying her thesis. 0 ganda in Taiwanese media blaming NATO,
The growth of Chinese disinformation 1995 2006 2012 2019 not Russia, for the Ukraine war.
in Taiwan has raised social awareness and Sources: World Value Survey; Academia Sinica; Taiwanese society is susceptible be­
resistance. Thousands protested in 2019 National Chengchi University cause of its authoritarian history, says Lee

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 The Economist March 11th 2023 Special report Taiwan 9

Ming­che, an activist who returned to Tai­

Defence
wan in 2022 after five years of imprison­
ment in China. Mr Lee was convicted of “in­
citing subversion of state power” because
he raised funds for families of Chinese po­
Fending off Goliath
litical prisoners. In the 2000s, when cross­
strait relations were close and China more
open, Chinese activists often came to Tai­
Taiwan’s defence strategy lacks clear priorities and is clouded
wan to learn how it moved away from one­
by its allies’ ambiguity
party authoritarianism. “They thought,
and so did we, that Taiwan could show the
way forward for China,” says Mr Lee.
The past five years have shattered that
T he Yu Shan landing platform is one of the navy’s largest ves­
sels. The 10,000­tonne warship rises out of the water at Zuoy­
ing naval base, its missiles pointing skyward. In January the de­
illusion. Imprisoned in Hunan, Mr Lee fence ministry invited reporters aboard, noting that the ship could
spent his days sewing gloves, shoes and carry amphibious assault vehicles, land helicopters and launch
purses, and his nights watching propagan­ smaller boats. This is Taiwan’s first amphibious warship of such a
da. He experienced how China treats its size, replacing an American one built in 1969. President Tsai Ing­
people “as machines to be controlled, not wen praised it as a symbol of Taiwan’s “national defence autono­
as humans”. He shifted from hopes of Tai­ my”. Taiwan must counter Chinese threats by giving its armed
wan inspiring change in China to the need forces the best equipment, she declared.
to protect Taiwan from a Chinese takeover. The Yu Shan is certainly impressive. But Taiwan’s prioritisation
While Mr Lee was in prison, his wife Lee of such equipment is at the heart of a debate over its defence stra­
Ching­yu spearheaded a campaign to save tegy. American experts criticise Taiwan for spending too much on
him. She flew to America and Germany to expensive items without asking what they would do in a war. In­
demand that China adhere to its laws, and stead of buying and building big ships, jets and tanks that can eas­
led a letter­writing drive to promise he had ily be disabled by Chinese missiles, they say Taiwan should build
not been forgotten. Yet some Taiwanese up ammunition reserves and buy cheaper and more mobile weap­
media criticised Ms Lee for provoking Chi­ ons. Taiwan needs a “porcupine” strategy to make it more painful
na and Mr Lee for having gone there. Ms Lee for China to take over. That requires an approach that treats inva­
was urged to keep quiet and look for ways to collaborate with Chi­ sion as the top priority, rather than seeing invasion and “grey
na to save her husband. She refused. zone” threats as equally important.
That kind of victim­blaming is a leftover from Taiwan’s mar­ Taiwan’s leaders do now speak of “asymmetric warfare”, the
tial­law era, says Mr Lee. “We are taught to obey power. We fear and need for small powers to focus on the weakest point of a bigger en­
respect it. We demand a lot from the victims, but we are gracious emy. Yet they are unwilling to give up conventional defence, be­
to the abuser.” It suits China that Taiwanese censor and blame cause there is no guarantee that America would step in. America
themselves. That may be how many Taiwanese survived decades has had no obligation to defend Taiwan since 1979, when it ended
of political oppression. But Mr Lee insists that, in the case of Chi­ its mutual­defence treaty. It enacted the Taiwan Relations Act, un­
na, “backing down to appease them does not work.” What does der which America provides arms “of a defensive character” and
work, he says, is resistance. sees any non­peaceful effort to determine Taiwan’s future as “a
That message is new to many Taiwanese, although activist threat to the peace and security in the Western Pacific area and of
groups are now promoting it. One is Kuma Academy, the non­pro­ grave concern to the United States”.
fit where Mr Tsao’s 3m warriors are trained. The training does not This leaves the issue of American military intervention delib­
involve actual weapons. Rather it aims to teach civilians about erately vague. Joe Biden has said four times that American troops
modern warfare, Chinese disinformation and first aid. Puma would defend Taiwan if China invaded. Each time the White
Shen, one of Kuma Academy’s co­founders, says the point is to get House has clarified that policy is unchanged. Officially America
the Taiwanese to think seriously about the risk of war and what to holds only to the view that Taiwan’s sovereignty should be “decid­
do if it comes. ed peacefully by the Chinese themselves”. But Mr Biden has
That is already a big step, say two young men at a Kuma Acad­ tweaked the phrasing. “Taiwan makes their own judgments about
emy training session in the basement of a church. “We don’t have a their independence,” he said last September. Nancy Pelosi added
sense of crisis,” says Weng Shih­hsuan, a software engineer. De­ that independence is “up to Taiwan to decide”. Former Trump offi­
spite the growing threat of Chinese aggression, none of his family cials have gone further, calling for recognition of Taiwan as a
ever talks about war, he says. “Even this morning I was thinking, country and an end to strategic ambiguity.
defence is not my responsibility. The government should serve Taiwan also needs to change strategy because China has
me.” But the Kuma lectures have changed his mind. If war does changed. It began in the 1990s, when China
come, he says, everyone will have to respond. Taiwan should ex­ fired missiles into the Taiwan strait. Amer­
pand this training to its schools and military, he adds, saying they ica’s navy sent two carrier groups, sailing
would be more valuable than today’s conscription. Taiwan needs one through the Taiwan strait, to deter fur­
His friend Tsai Cheng­wei, another young software engineer, a “porcupine” ther action. China has since been develop­
agrees. Taiwanese society needs to get over its fear of war, he says. ing the naval, air and missile capacity to
“Everyone is used to thinking, ‘We just want peace’. But the ques­
strategy to stop America defending the island. Experts
tion is, if you want peace, what kind of risk are you willing to un­ make it harder fear that China’s missiles could disable Tai­
dertake to attain it?” The best way to stop a war is to increase the for China to wan’s navy and air force: jets could not take
cost to the invader by mobilising nationwide resistance, he reck­ take over off if runways were bombed and the navy
ons. Such thinking is growing faster in civil society than among would have to set sail to survive.
Taiwan’s armed forces. n America’s defence planners realised

012
 10 Special report Taiwan The Economist March 11th 2023

they had to change course to deal with a to buy better planes partly as a public­rela­
stronger China. American troops are re­ Too big a peace dividend tions exercise. Politicians like to point to
turning to bases in the Philippines after a Defence spending, % of GDP arms sales as evidence of American sup­
30­year absence. The marines have got rid 6
port. Better weapons boost morale. They
of tanks and are reorganising their land ar­ demonstrate to the public that the govern­
my into smaller, island­hopping amphibi­ United States 5 ment and the army are standing up to Chi­
ous regiments. They have urged Taiwan to nese incursions.
shift towards focusing less on overpower­ 4 Yet public polling finds low confidence
ing China (now an impossibility) and more in Taiwan’s defences. Civil­military rela­
3
on fortifying the homeland. tions are complicated by the ROC’s history.
Admiral Lee Hsi­ming, the ROC chief of Taiwan Under the one­party system, the army’s en­
2
general staff in 2017­19, shares this ap­ emies were not just China, but also inde­
proach. He proposed a defence concept China 1 pendence activists. Only after Taiwan’s de­
that prioritises the littoral battle, meaning mocratisation was the army properly sep­
less spending on the newest, biggest tanks, 0 arated from the KMT. Reforms in the 1990s
jets and ships, and more on missiles and 1990 95 2000 05 10 15 21 and early 2000s asserted civilian control,
mines that might obstruct a Chinese inva­ Source: SIPRI dismantled the army’s secret police and re­
sion, as well as on mobile weapons. How­ moved political indoctrination from train­
ever the admiral worries that Taiwan has ing. But the army is still one of Taiwan’s
lost sight of this concept since he retired. Taiwan continued to ask most conservative, pro­KMT institutions. Many officers are
for expensive weapons like M-1A2 Abrams battle tanks and F-16 “equally as suspicious of the United States as they are of China,”
fighter jets—although American defence experts say these could says an American official once based in Taipei. As late as the
serve no sensible purpose. In recent years Americans have lost pa­ mid­2010s, officers told him the Chinese were their cousins and
tience with Taiwan’s military leaders. The government is starting they would “never fight for Taiwan’s independence,” he adds.
to reject Taiwanese weapons requests and attempting to sell Democratisation also meant a shifting of budget priorities. Tai­
asymmetric systems instead. wan’s defence spending dropped from a peak of 7.6% of GDP in
1979 to just 1.8% of GDP in 2016, when Ms Tsai took office (she has
My weapons are bigger than yours since raised it to an expected 2.4% of GDP this year). Those spend­
Critics say the problem is old­fashioned thinking among service ing cuts were supported by both the DPP and the KMT. Both parties
chiefs who joined up in the days of martial law. They want to up­ chose to spend more on politically popular areas like education
grade their forces according to battle plans built around the old and health care. Taiwan also began reducing conscription terms,
dream of taking back the mainland. “They’re building what they from two years to one year in 2008 and then to only four months in
want based on their image of themselves, rather than what they 2013. The goal of cutting conscription was to create a more profes­
need based on the threat that they face,” says Drew Thompson, sional all­volunteer force. That would allow better training and a
who managed defence relations between America and Taiwan at reshaping of the army from being a symbol of Chinese nationalist
the Pentagon in 2011­18 and is now at the Lee Kuan Yew school of rule into a defender of Taiwanese sovereignty.
public policy in Singapore. The results have been disappointing. Although training has
Taiwan is mistakenly following the American military model, improved, Taiwan’s all­volunteer force was still 7,000 short of its
argues Mr Lee, despite its small size. “Even America is trying to tell target in March 2022, when it was only 163,000 strong. Joining the
Taiwan, don’t follow me. Follow small, resilient countries like Uk­ army is not popular, despite Ms Tsai’s frequent donning of combat
raine. But we keep trying to buy more jets, tanks, and ships,” says fatigues in photos. Both pay and social status of soldiers are low,
Mr Lee. The defence ministry counters that it needs conventional and retention rates are poor. Taiwan also has a shrinking and age­
weapons to respond to grey zone activity around Taiwan. China ing population, with a birth rate of only 0.87 per woman in 2022.
sent 1,732 planes into Taiwan’s air­defence identification zone in Its interior ministry has warned that Taiwan’s 2022 military intake
2022, almost twice the number of incursions in 2021. was the lowest in a decade, and that the numbers of military­age
Some argue that Taiwan must prepare for all contingencies be­ youths will continue to decline.
cause doubts over whether America would Taiwan and America agree a Chinese in­
intervene may persist even if fighting vasion is not imminent, because China is
breaks out. If Taiwan could count on Amer­ not confident that it could deter American
ica joining the battle come what may, its Flying high intervention and take the island. But it is
armed forces could pivot back to being a Chinese warplanes entering Taiwan’s ADIZ* past time for Taiwan to act. Just as Russia’s
porcupine that is hard to digest. But with­ 60 annexation of Crimea in 2014 spurred re­
out that clarity, they must fear that they National Day Nancy Pelosi Christmas forms and new military training in Uk­
may fight alone. Americans retort that of China visits Taiwan incursions raine, Taiwan must overhaul its defences
what Taiwan needs to demonstrate most is to prepare for Chinese aggression. It has
40
that it can survive more than a few days taken some steps by extending conscrip­
after a Chinese invasion. Even if America tion, increasing defence spending, chang­
were committed to intervene, it might take ing arms purchases and improving train­
a few weeks to mobilise, says Ivan Kana­ 20 ing. Taiwan needs a better national securi­
pathy, director for China, Taiwan and Mon­ ty strategy and a serious public debate to
golia at the National Security Council in build consensus, says Andrew Yang, a for­
2018­2021. “No matter what we say, it’s a 0 mer defence minister. But, he adds, this
question of what we can do. If we can’t do 2020 21 22 23 would require a “healthy political environ­
it, it doesn’t matter,” says Mr Kanapathy. Source: Ministry of *Air-defence
ment” which Taiwan lacks. That is a test for
Taiwan continues to build big ships and National Defence identification zone the next presidential election. n

012
 The Economist March 11th 2023 Special report Taiwan 11

Politics That movement marked a new generation in Taiwanese poli­

tics: youth born after martial law, often called tianrandu, “born in­
dependent”. The Sunflower Movement helped Ms Tsai win the
A crucial vote presidency in 2016. China’s crackdown on Hong Kong then carried
her to re­election in 2020. She beat the KMT candidate, who pro­
moted the old mantra of getting rich through trade with China.
That has lost appeal for a generation more concerned with sover­
eignty than with being Chinese.
The presidential election will do much to decide Taiwan’s future The KMT will struggle to offer a new vision in the election. Its
party charter still includes the 1992 consensus. But even Mr Jiang,

T aiwan’s next presidential election is due in early 2024. As in

past elections, the vote will be in large part a referendum on
Taiwan’s identity and future vis­à­vis China. Taiwanese identity is
the former prime minister, admits this has been overtaken. Were
Taiwan to revert to the 1992 consensus, Xi Jinping insists it now
means accepting that the Chinese Communist Party rules China,
stronger than ever, with 61% of its people identifying as Taiwanese including Taiwan. That is unacceptable to most Taiwanese. Amer­
only. Yet it is not guaranteed that the Democratic Progressive Party ican­Chinese relations have moved from engagement to confron­
(DPP) will win. Opinion polls find support for both main parties tation, with Taiwan as a potential flashpoint. “This has gone far
hovering around 25%, with the rest uncommitted to either party. past what Taiwan can control on its own,” says Mr Jiang.
The DPP’s probable nominee, Lai Ching­te, has expressed his The KMT has been unable to articulate a new cross­strait strat­
vision of Taiwan: it is already independent, so has no need to de­ egy beyond continuing dialogue with the Chinese Communist
clare independence. That clever phrasing was coined by President Party. That is no longer popular. The party’s vice­chairman, An­
Tsai Ing­wen to reassure those worried that the DPP might provoke drew Hsia, has been criticised by both the DPP and even by some
China by declaring independence. “Already independent” clearly KMT members for visiting China in August 2022 after its military
affirms Taiwanese sovereignty. It remains a popular stance, but exercises, and then again last month. Yet the DPP has also been
the DPP must sell a harder message now: that the Taiwanese have hesitant about telling voters to prepare for war. DPP officials say
to make sacrifices to preserve that independence. This means em­ the party leadership worries that talk of war is unpopular. The DPP
bracing policies to prepare for war. has already softened its messaging, from Ms Tsai’s slogan of
The KMT promises prosperity and peace. Under martial law, it kangzhong baotai, “Resist China and protect Taiwan”, to the more
had purged Taiwan of suspected communist spies. After demo­ pacific heping baotai, “Peacefully protect Taiwan”.
cratisation, the KMT became a chief advocate of closer ties with the It is not clear that Taiwanese public opinion is as allergic to talk
Chinese Communist Party, hoping economic interdependence of war as the DPP believes. In January the Taiwan Public Opinion
would stop conflict and pull the two sides together. Ma Ying­jeou, Foundation found 72.7% backing for extending conscription. If
a former KMT leader who was president in 2008­16, led a honey­ the DPP takes serious action on defence reform, that may boost its
moon with China, signing 23 treaties on cross­strait trade, and vote. Polls find wide agreement that it is needed.
opening direct flights and school and business exchanges. Taiwan’s identity battle has gone beyond Taiwanese against
This engagement rests on what is called the “1992 consensus”, Chinese, says Wu Jieh­min of the Institute of Sociology at Acade­
based on a meeting between unofficial representatives of both mia Sinica. He does not fear a vote for unification. But it is harder
sides. Neither could agree to the other’s claim of ruling all of main­ to persuade voters to support painful reforms for the sake of a
land China plus Taiwan. But they agreed that Taiwan was part of sovereign future. They must be willing to endorse a “long­term vi­
China, whoever ruled it. So they settled on the notion that “There sion for Taiwan,” says Mr Wu, even if it requires sacrifices such as
is only one China, but there are different interpretations of what longer military service or a decoupling from China. n
that China is.” This was “Chinese playing
word games, the highest level of rhetoric,”
says Jiang Yi­huah, prime minister during
Mr Ma’s second term. Nathan Batto at Aca­
demia Sinica has a less charitable descrip­
tion. “It was a lie to China, a lie to Taiwan­
ese voters, a lie to the KMT themselves. It
was based on everyone else ignoring the
part they didn’t like.” Yet the ambiguity has
allowed both sides to trade and prosper.

Born independent
Growing cross­strait ties have however
raised anxiety about dependence on Chi­
na. In 2014 students occupied Taiwan’s leg­
islature for more than three weeks in what
became known as the Sunflower Move­
ment, demanding a halt to a trade deal they
said would open Taiwan up too much to
Chinese influence. When they broke into
the cabinet building, the government de­
ployed riot police to expel them. Over
100,000 protesters rallied outside, waving
banners with slogans such as “Save democ­
racy, don’t sell our country”. A sunflower moment

012
 12 Special report Taiwan The Economist March 11th 2023

dence, which is what the Taiwanese need most. “Any kind of ges­
ture, however symbolic, allows Taiwanese people to understand
that we are not alone,” he adds.
Analysts are divided over how best to help Taiwan. Some ac­
tions are symbolic not substantive, says Bonnie Glaser of the Ger­
man Marshall Fund. The national defence authorisation act of
2018 allowed American warships to call at Taiwan’s ports, for ex­
ample. Yet that would provoke a punitive response without im­
proving Taiwan’s defences, says Ms Glaser. Renaming Taiwan’s de
facto embassy in Washington or designating it as a non­NATO ally,
both of which were proposed but dropped from a congressional
bill in 2022, might create openings for Beijing to change the status
quo in the Taiwan strait more in its favour.
“Of course we should not let Beijing define what we do and
don’t do,” says Ms Glaser. But foreign governments should balance
how China responds to acts of support against how they will bol­
ster Taiwan’s security. The most important way to do this is mili­
tary help. Aside from arms sales, America is trying to improve
training. European countries could do the same. If Taiwan decided
to form territorial defence forces, they could learn from European
experience. Asian countries might provide real­time intelligence
to Taiwan in war, especially if undersea cables were cut.
The least confrontational yet most underutilised tools to
strengthen Taiwan are economic. “I’d rather see a bilateral trade
agreement than any of the sexiest, biggest weapons systems the
United States could come up with to sell Taiwan,” says Rupert
Hammond­Chambers, president of the US­Taiwan business coun­
What Taiwan needs
cil. Despite resistance to free­trade deals in America, there is rare
bipartisan consensus on the need to support Taiwan. A study by
Help wanted the Heritage Foundation finds that a free­trade agreement would
benefit both economies. More important, it would set a precedent
for other countries.
The other form of messaging that matters is to China. America
and its allies should clearly communicate the cost of any use of
A vibrant small democracy deserves the world’s protection
force against Taiwan. They should let China know it will be isolat­
against a giant autocracy
ed and subject to sanctions just as Russia was after its attack on

I n 2021 Lithuania allowed Taiwan to open a representative of­

fice in Vilnius under its own name, not “Chinese Taipei”, as most
de facto embassies are called. An infuriated China shut the Lithua­
Ukraine. Some say America should end its strategic ambiguity al­
together and tell China it will fight for Taiwan. Others argue that
greater clarity might merely heighten the risk of war. The Biden
nian embassy in Beijing, revoked its diplomatic visas and stopped administration has chosen to let actions speak louder than words.
trade. Lithuania’s economy suffered. But it did not change course. The formation in 2021 of AUKUS, a security pact between Australia,
In November 2022 it opened a trade representative office in Taipei. Britain and America, was a signal of stronger military determina­
Taiwan said it would invest €10m ($9.9m) in Lithuania’s chip in­ tion in the Indo­Pacific. So was the expansion of American mili­
dustry. Some west Europeans complained about a lack of warning. tary co­ordination with Japan and the Philippines announced ear­
But the Czech president, Petr Pavel, wants to meet Taiwan’s presi­ lier this year.
dent. Joseph Wu, the foreign minister, says most people do not see This special report has argued that Taiwan’s own people must
Lithuania as a warning against upsetting China. “They look at determine their future. But many of the actions they take on the
Lithuania and think, ‘China shouldn’t have done that.’ ” economy, identity, politics and defence need to be bolstered by
That is the change in thinking Taiwan needs. For decades Chi­ greater support from the rest of the world. Taiwan should be in­
na has tried to isolate it, keeping the ROC out of international insti­ cluded in trade pacts, allowed into international institutions and
tutions and regional trade pacts. China has used its economic given greater military and diplomatic assistance.
power to scare firms and governments from even using the name Taiwan endures China’s economic, military, and psychological
“Taiwan”. That may be understandable for poor countries in need threats, as well as social fissures from its own history. This is a mo­
of Chinese money. But rich, democratic countries should not let ment for Taiwanese democracy to prove its resilience. Its people
China dictate their relations with Taiwan. Doing so only strength­ overcame an authoritarian past. They now have to ward off an au­
ens China’s belief that it will enjoy impunity if it invades. thoritarian future. They should not be left to stand alone. n
Russia’s invasion of Ukraine was a wake­up call. Nearly 200
foreign officials came to Taiwan in 2022, many eager to discuss acknowledgments A list of acknowledgments and sources is included in the online version
how to contain Chinese aggression. Such visits have accelerated of this special report
since Nancy Pelosi’s trip of August 2022, despite China’s show of
force that followed. Ms Pelosi’s successor as house speaker, Kevin licensing our content For information on reusing the articles featured in this special report,
or for copyright queries, contact The Economist Syndication and Licensing Team.
McCarthy, has promised to go to Taiwan. That could provoke Chi­ Tel: +44 (0)20 7576 8000; email: [email protected]
na again. Mr Wu promises a welcome for Mr McCarthy—and in­
deed anyone else. “They cannot dictate how we make friends with more special reports Previous special reports can be found at
Economist.com/specialreports
the international community,” he says. Such visits boost confi­

012
 Middle East & Africa The Economist March 11th 2023 41

Arab bureaucracies that the wage bill absorbs around 20% of

public spending in rich countries and 30%
The incredible shrinking state in poor ones. In most Arab countries it is
above 40% (see chart on next page).
The public sector should provide good
services to citizens. It can also help expand
the middle class and reduce income in­
equality, as it did in mid­century Egypt, or
CAIRO AND DUBAI
serve as an effective (if expensive) way to
Arab states have cut back on hiring, but their wage bills are still enormous
hoover up lots of unemployed young peo­

D RIVING an uber was never part of Ka­

rim’s plan. His father had a comfort­
able job at Egypt’s national­statistics agen­
public payroll. Wage bills consumed a big
chunk of revenue, leaving little to spend on
health, education or capital investments.
ple. In much of the Arab world, it does
none of these things: states are spending
lots of money and getting ever less for it.
cy. His grandfather was a civil servant too, This is starting to change. As a percent­ For decades the Saudi civil service grew
hired during the large expansion of the age of total employment, the public sector steadily, adding around 20,000 citizens
public sector in the era of Gamal Abdel is shrinking in many Arab countries. About annually. Hiring surged during the
Nasser. Five years ago, armed with his ac­ 20% of working Egyptians were employed mid­2000s’ oil boom: from 2005 to 2015
counting degree from Cairo University, Ka­ by the government in 2021, down from 27% the state laid on almost half a million
rim set out in search of his own sinecure a decade ago, reckons the International La­ workers. Then it stopped. Since 2016 the
doing sums for the state. bour Organisation. The absolute number number of governmental employees has
He never found it. Public hiring has of civil servants has dropped as well. These grown by just 2%, according to central­
slowed, especially for graduates. “I could figures are still high. In the OECD, a club of bank data. As more Saudis take private­
have been a cleaner with an accounting de­ rich countries, the average share of public sector jobs, the share of public employ­
gree, but not an accountant,” he quips. Nor employment is 18%. Still, the proportion is ment has fallen from around 70% in 2016
is there much work in the private sector, falling—not only in Egypt, but in Jordan, to 52% in 2022.
which has shrunk almost every month Saudi Arabia and other Arab countries. Less hiring will slow the growth of the
since he left university. That leaves odd Relatively high wage bills still put pres­ wage bill—but not reduce it. Total salaries
jobs: ride­hailing apps and shifts at a café. sure on budgets. The IMF estimated in 2016 climbed from 409bn rials ($109bn) in 2016
His story is becoming a common one to an estimated 506bn rials last year, a 24%
across a region once characterised by enor­ increase during a period when cumulative
→ Also in this section
mous public sectors. Many citizens saw inflation was less than 9%. Salaries were
make­work jobs in the civil service as a 42 Egypt’s daylight saving muddle budgeted to absorb 58% of public spending
birthright. Sluggish state­run firms, which in 2022, unchanged from six years earlier.
43 Africa’s booming cities
often ran at a loss, added more fat to the Even as the number of public employ­

012
 42 Middle East & Africa The Economist March 11th 2023

ees in Egypt decreased, the wage bill more low, sometimes barely enough to live on. sector. Or take benefits. The ERF found that
than doubled from 199bn pounds ($28bn Jobs with the state are harder to find, 95% of public­sector employees had paid
then) in 2014 to 400bn pounds last year. and harder to live on—yet the public sector sick leave and 96% received health insur­
When Abdel­Fattah al­Sisi took power in remains the employer of choice. In 2020 ance. In the private sector, those figures
2014, after a military coup, the public­sec­ researchers at the Economic Research Fo­ were 40% and 36%.
tor minimum wage was 1,200 pounds. He rum (ERF), a think­tank, calculated Egypt’s Governments probably cannot cut their
has raised it five times. The latest increase, “reservation wage”, the salary below which way to a lower public­wage bill. Nor is it
to 3,500 pounds, takes effect on April 1st. a worker will not accept a job. The median obviously the right policy: it would require
result for unemployed men was 2,500 firing lots of people at a time when many
Honey, I shrunk the state pounds in the public sector, and 3,000 in economies are sluggish. If they were more
Mr Sisi’s government, which finalised a the private sector. The gap was wider for vibrant, they might draw civil servants
$3bn IMF loan in December, insists it is women: 1,500 pounds for the public sector away from stultifying sinecures. Until
making progress towards shrinking the and 2,500 at a private business. then, Arab bureaucracies will call to mind
public­wage bill. Officials point out that It is not hard to see why. Many roles still an old Jewish joke: “The food here is terri­
salaries have fallen from 27% of expenses have better job security than in the private ble—and the portions are too small.” n
in 2014 to 20% last year. But those numbers
need a caveat. Egypt loaded up on debt dur­
ing that time. The annual cost of servicing Egypt’s economy
it has increased by 360%.
Strip out interest payments, and the
Time’s up—whatever the time is
budget looks less impressive: wages ate up
CAIRO
38% of discretionary public spending last
Fiddling with the clocks while the economy burns
year, compared with 40% in 2014. Egypt
devotes a smaller share of spending to wel­
fare and public services today than it did
nine years ago. Its citizens rail at the shod­
A s winter draws to its dreary end,
many Egyptians look forward to
spring. But they are less keen on their
dy state of public schools and hospitals. parliament’s recent approval of a law to
Even if governments wanted to fire lots bring back daylight saving time (DST)
of bureaucrats, civil­service rules make it designed to ensure that darkness falls
difficult. And they do not want to—be­ later in the day. It hopes that doing so
cause it would be politically unpopular. will curb the country’s electricity usage
Tunisia has offered to freeze state hiring to and free up natural gas for export, since
secure an IMF deal. But it will have to grap­ it generates about 60% of Egypt’s power.
ple for decades with the consequences of a But Egyptians are rolling their eyes.
hiring spree that nearly doubled the size of DST was first brought in as a fuel­
the public sector after the 2010 revolution saving measure in the second world war.
against Zine el­Abidine Ben Ali, the coun­ Since then, Egypt’s governments have
try’s former dictator. chopped and changed. None has been
In 2017, when hiring slowed, the wage able to determine definitively the nature
bill was 15% of gdp. By 2020 it was 18%. In of its effects on energy consumption. In
2021 the cash­strapped state started delay­ 2014 President Abdel­Fattah al­Sisi con­
ing the wages of many employees. fused matters still more by announcing
Even when salaries have risen in nomi­ that the clocks would change four times His moment in the sun
nal terms, civil servants often feel hard that year to ease the burden on those
done by. In Egypt their raises have not kept fasting during Ramadan. Egyptians had Egypt’s economic woes are such that it
pace with a devaluing currency: in dollar to resort to social media to ask the time. would make little difference.
terms, a civil servant on the new minimum Some Red Sea hotels ignored the changes And recent studies suggest that in
wage next month will take home 34% less in favour of “resort time”, thus creating a countries where summer days are long
than in 2014. And the absolute level of pub­ rival time zone. and mild an extra hour of daylight reduc­
lic­sector pay in Arab countries is typically In 2016, three days before clocks were es energy usage only a tad. In hot coun­
to jump forward, the government abrupt­ tries like Egypt the yen for air­condition­
ly said it would drop dst for good. Egypt­ ers means that extending summer days
Feeling bloated Air’s chairman complained that the short may even be counter­productive.
Public spending on wages as % of total notice given would cost his company Other energy­saving measures in­
Selected countries, 2022* $2m through delays and missed connec­ clude dimming streetlights, ending the
0 10 20 30 40 50 60
tions. The International Air Transport decorative illumination of government
Administration reportedly told Egypt’s buildings, and capping air­conditioning
Tunisia
government to fork out $8m to cover the in shopping centres at 25° C (77° Fahren­
Saudi Arabia cost of changing flight schedules. Day­ heit). In 2020 and 2021 the government
Iraq light saving went from being a mild restricted business opening hours. The
Jordan annoyance to a bad national joke. motive behind this was variously cited as
Under Mr Sisi natural­gas exports an attempt to reduce noise, to limit
Kuwait
have almost quadrupled, but Egypt’s late­night crowds, or to slow the spread
Qatar energy needs have soared, too. Even if, as of covid­19, but it may also have been an
Morocco the government hopes, reviving daylight attempt to cut energy costs. Whatever
Algeria saving time reduces the country’s energy the truth, clock­changing edicts will not
Source: IMF *Or latest available
usage and thus boosts gas exports, mend Egypt’s ailing economy.

012
 The Economist March 11th 2023 Middle East & Africa 43

African urbanisation Africa, rural­urban migration is important.

But so too is the impact of natural popula­
Beyond the metropolis tion growth in urban and rural parts, caus­
ing cities to absorb villages and villages to
turn into towns.
As towns and cities have become bigger
and more numerous, urban areas have en­
croached on one another, forming what
KISUMU
planners call “urban clusters”. These often
The growth of Africa’s towns and small cities is transforming the continent
span more than one country. In 1960 the

I n 2012, when Moses Aloo inherited a

plot from his grandfather, his neighbour­
hood in Kisumu, western Kenya, had plen­
lations of more than 1m people, according
to David Satterthwaite of the International
Institute for Environment and Develop­
median distance between African cities
was 84.3km; in 1990 it was 55.7km. By 2015
this had fallen to 27.3km (see chart on next
ty of farmland. But over the past decade, as ment, a British think­tank, which looked page). The largest cluster in sub­Saharan
Kisumu has grown, Nyamasaria has be­ only at cities with 300,000­plus people. Africa encompasses the Nigerian cities of
come part of the city. Mr Aloo is building Many of the burgeoning places are “sec­ Lagos and Ibadan, as well as Cotonou, the
two houses on his land. He will rent them ond cities”: regional economic and admin­ commercial capital of neighbouring Be­
out, “hopefully to God­fearing people”, for istrative hubs, such as Bunia and Kabinda nin—and dozens of other small towns and
8,000 Kenyan shillings ($62) each per in Congo, and Kuito in Angola. Others are cities. In total, Africapolis has identified 31
month, more than twice the going rate five satellite towns on the outskirts of major clusters in sub­Saharan Africa each of
years ago. “Now it is urban,” he says, “this cities. Ruiru, home to 400,000 on the which has more than 2.5m city dwellers
is a prime area.” fringes of Nairobi, Kenya’s capital, is the who live within 100km of each other.
The city’s growth has disrupted tradi­ sixth­fastest­growing city in Africa. At the
tional ways. Jamlick Onchari, who rents a top of the list is Gwagwalada, a satellite We built this city
one­room house behind his small dairy in town for Abuja. The rise of Africa’s cities has generally been
Nyamasaria, says that Kenyans who have These small cities have expanded from good for people. Wages in cities are about
moved from other parts of the country feel a combination of natural population twice as high as they are in the country­
increasingly at home in the historic growth (more births than deaths) and in­ side, reckons the OECD. And urbanites
stronghold of the Luo ethnic group. “This flows of migrants from the countryside. work 30% more hours per week than their
mix­up thing,” he says, “with people from Rural folk have been upping sticks for cen­ country cousins. Small towns offer inhab­
different tribes…it speeds up development turies: think of the Lancashire farmhand itants some of the biggest potential gains.
because when people live together they moving to a Manchester warehouse or the For a range of outcomes measured by the
bring ideas together.” Chinese peasant getting a job in a factory. OECD, the benefits of moving from a village
Mr Onchari puts his milky finger on But there is another source of African to an area of 50,000 people are more than
why urbanisation matters. By bringing urbanisation, often overlooked. Call it the those from going from a town of that size
people and firms into close contact, cities rise of small­town Africa. As villages ex­ to a city of at least 1m.
make both more productive. Yet, even pand, usually because of rural population And Africans need not even live in a city
though urbanisation is enriching Africans, growth, they turn into towns. The total to enjoy the benefits of one. Today some
they are not benefiting as much as they number of towns and cities in Africa more 50% of rural Africans live within 14km of a
could. The growth of African cities is idio­ than doubled from 3,319 in 1990 to 7,721 in city. This proximity means they can more
syncratic and inefficient. This is true not 2015, according to Africapolis. In large part easily gain access to the public and private
just of megacities such as Lagos and Kin­ this reflects the emergence of small towns: services that cities offer. For instance, rural
shasa, but of towns and smaller cities, like the average population of these new urban households living within 5km of a city are
Kisumu, that draw less attention but where areas was 22,000. twice as likely to have a bank account as
most African urbanites live. All parts of the world have cities of dif­ those 30km away.
When the wave of independence began ferent shapes and sizes. But the rise of Afri­ The rise of small towns is blurring the
sweeping the continent in the 1950s, the ca’s small towns is a reminder that African distinction between rural and urban Afri­
vast majority of Africans lived in the coun­ urbanisation is often subtly different. In ca. It is generally cheaper to live in small
tryside (see map). Today there are more ci­
ty dwellers in Kenya than there were in all
of Africa in 1950. As recently as 1990 just Gone to town
31% of Africans lived in urban areas, ac­ Africa, urban population*, m 1 5 10
cording to Africapolis, a research project
supported by the oecd, a group of mainly
1950 1980 2015
rich countries. (Its analysts define “urban”
as areas with at least 10,000 people.) By
2015, the latest year for which Africapolis
presents continent­wide data, half of Afri­
cans were city­dwellers. That share is fore­
cast to rise to more than 70% by 2050.
Though megacities and their slums of­
ten get more attention, roughly 60% of the Kisumu
continent’s urban population lived in Urban
population,
towns and cities that had fewer than 1m in­ % of total
habitants in 2015. Of the 20 cities in Africa
with the fastest­growing populations from 13.1 26.8 49.9
2000 to 2020, only one is a capital city Source: Africapolis *Those living in settlements of 10,000 or more people
(Abuja in Nigeria) and just five have popu­

012
 44 Middle East & Africa The Economist March 11th 2023

towns than large cities, which allows fam­ services or construction, rather than ex­ cities is that land and property markets are
ilies to rent a house in town while still be­ port­oriented sectors. In Kisumu, Mr broken. The nub of this problem is a lack of
ing able to afford to keep a home in the Nyong’o worries about the lack of formal clear property rights. Instead there is a
countryside, where they can grow food. jobs for young Kenyans. He says that many patchwork of overlapping forms of land
This is a form of insurance that reduces the youngsters end up working informally. ownership—modern title deeds, tradition­
risks of moving. Now that urban areas are “They are moving to cities for jobs that al communal land, and informal “grey”
closer by, with cheaper transport options don’t exist,” he says. claims. In Durban, South Africa’s third­
(such as imported Chinese and Indian There are many reasons for Africa’s sub­ largest city, more than a third of land is
motor­cycles), more Africans can com­ optimal urbanisation that have little to do jointly administered by a trust overseen by
mute from villages, too. The daytime pop­ with cities themselves. A low adult literacy the Zulu royal family. In Ghana’s Ashanti
ulation of Kisumu is around 800,000; at rate impedes the transition to a more pro­ region the king operates a land registry
night, that shrinks to 500,000, notes Peter ductive, industrialised economy. Low agri­ parallel to the official registry office. In
Anyang’ Nyong’o, its governor. cultural productivity keeps food prices in Kampala, Uganda’s capital, where there are
Urbanisation is good for Africa—but it the cities high, which makes it harder for at least four different types of property
could be so much better. Economists talk a economies to shift from growing things to rights, the productivity of a given area is
great deal about the magic of agglomera­ making them. The “resource curse” dis­ linked to its type of tenure. As cities ex­
tion: how, as cities get bigger, the econo­ torts both politics and economies. pand into rural areas, all of this becomes
mies of scale and the spillover effects can But some of the reasons relate directly more complicated.
lead to higher productivity. Yet, as the to urban policy. Planning regulations, es­ Many African countries have tried re­
World Bank puts it, African cities are “too pecially in former British territories, are forms. Hargeisa, the capital of Somaliland,
crowded, too disconnected and too costly” outdated (the French were keener to im­ an autonomous territory that wants to be­
to make the most of this magic. pose compact cities). The minimum plot come an independent country, has a so­
size in Dar es Salaam, Tanzania’s commer­ phisticated property tax that allows the re­
In a tired old street cial capital, is more than ten times that in gion to make up for a lack of funding from
About half of urban residents in sub­Saha­ Philadelphia, making it harder to get a Mogadishu, Somalia’s capital. Botswana
ran Africa live in slums. These settlements cheap proper house. Restrictive zoning regularised customary land rights in 2008.
are often dense patches in otherwise helps push people into informal areas on In 2019 Togo redrew the boundaries of Lo­
sprawling cities. Whereas many cities in the outskirts. Few city governments tax mé, the capital, to recognise its expansion
other parts of the world grow upwards, be­ land, leaving them short of revenue and and that of satellite towns. Ghana, Moroc­
coming denser over time, African ones with no way of benefiting from increased co, Rwanda, Senegal and Uganda all have
tend to grow outwards. That is a problem land values when they invest in infrastruc­ dedicated plans to develop second cities.
because it is generally cheaper to provide ture. Property taxes are just 0.5% of GDP in Yet not all are thought through. African
water, power, transport and other infra­ sub­Saharan Africa, versus 2% for OECD politicians sometimes prefer to build
structure to compact cities than to sprawl­ countries. Many countries have not updat­ flashy new—sometimes “smart”—cities,
ing ones. Denser cities and those with good ed property rolls for several decades. rather than fix old ones. Many projects do
transport links let more workers reach po­ In addition, the boundaries of local not survive a change of leader. Witness Ya­
tential jobs, making labour markets more governments rarely match those of con­ moussoukro, Ivory Coast’s neglected capi­
efficient by allowing better matching of temporary cities, making it hard for offi­ tal, home to one of the world’s largest
skills and opportunities. cials to plan. Accra, Ghana’s capital, is churches, a monument to God and the ego
A World Bank report published in 2017 spread across 30 districts. Far less spend­ of Félix Houphouët­Boigny, the country’s
analysed the growth of 21 African cities in ing is devolved to local governments in Af­ first president.
the first decade of the century. It found that rica than elsewhere. They are responsible
between 46% and 77% of their growth for an average of 11% of investment by Afri­ Someone stole the stage
came from expansion, rather than infilling can governments. That is about half the The danger for Africa is path dependency:
existing areas. A related problem is “leap­ global average and is lower than in other once cities grow in a certain, inefficient
frogging”, whereby patches of land are left developing countries. Local bureaucrats way, they can be hard to rebuild. Cheap ma­
undeveloped and construction happens toil in tough conditions. Just 6% of Nigeri­ terials and weak foundations mean it is
farther out. Another study, from 2016, an local government employees have ac­ impossible to add lots of floors to build­
looked at 265 cities in 70 countries and cess to a computer. ings in slums. Once informal settlements
found that, after controlling for popula­ But the main factor distorting African develop, they accrue vested interests that
tion size and GDP per person, African cities block their redevelopment.
were more fragmented and their residents Many cities that keep growing will
less likely to interact with each other. Making it there eventually reach a point where the costs of
The inefficiency of African cities com­ Africa growth outweigh the benefits. The risk in
pounds another problem: they are expen­ African cities is that, in the words of an
Median distance between Number of urban
sive. The World Bank reckons that living closest urban areas*, km areas, ’000 OECD report published in 2022, “many cit­
costs (food, housing, transport and so on) 80 8
ies appear to be arriving prematurely at
are about a fifth to a third higher in African this point.”
cities than those in other developing coun­ 60 6 “We are only waking up now to how Af­
tries. So long as firms must pay steep wag­ rica is not a rural continent any more,” ar­
es to cover steep living costs, that can make 40 4 gues Astrid Haas, a Uganda­based urban
them less internationally competitive. In scholar. She says that, as smaller cities
other parts of the world manufacturing has 20 2 grow, policymakers must learn from the
tended to rise sharply as a share of GDP as mistakes made in metropolises. If they do
0 0
the rate of urbanisation approached 60%; not, they risk wasting the benefits of ur­
1950 60 70 80 90 2000 10 15
in Africa it has broadly remained flat. The banisation that have driven growth in
Sources: OECD; UN; *More than
dominant “industries” in African cities are African Development Bank 10,000 residents
other parts of the world. “We only have a
typically those that involve “non­tradable” generation to get this right,” she warns. n

012
 Asia The Economist March 11th 2023 45

Free trade in Asia Even so, other countries, including

America’s greatest rival, are clamouring to
Donald Trump could not kill it join the deal. Indonesia, the Philippines,
South Korea and Thailand have all ex­
pressed interest in joining. The pact may
soon have its first new member: Britain is
expected to reach an “agreement in princi­
ple” to join as early as this week. That will
SEOUL , SHANGHAI, SINGAPO RE AND TO KYO
put the spotlight on applications from Chi­
China is clamouring to join the Trans­Pacific Partnership’s successor
na and Taiwan, which were submitted in

D onald trump entered the White

House in 2017 with a long hit list. The
Trans­Pacific Partnership (TPP), a trade
values by as much as 11.6% for every per­
centage­point drop in tariffs, reckons the
Asia Competitiveness Institute, a research
late 2021. The group’s handling of those du­
elling bids will have big implications for
the balance of power in Asia, as well as the
deal which he called “a rape of our coun­ centre in Singapore. But external shocks— future of what’s left of the liberal interna­
try”, was near the top. Just three days into the pandemic, the US­China trade war, the tional trading system. “Just as the mettle of
his presidency, Mr Trump moved to kill it— actual war in Ukraine—have muddied the the TPP project has been tested by the Unit­
and succeeded only in denying America its picture and complicated data analysis. ed States, now it will be tested by China,”
benefits. While America ditched the pact, Companies have also been slow to seize says Mireya Solís of the Brookings Institu­
others defied expectations by staying wed­ the potential gains from big tariff cuts. And tion, a think­tank in Washington.
ded to it and the principles of free trade member countries have themselves failed The CPTPP originated in the halcyon
and multilateral rule­making it represent­ to implement the behemoth agreement days of the 1990s, when great­power com­
ed. Five years ago this week, ministers fully. Cracking down on laggards was, after petition was over, America was ascendant
from the 11 remaining countries met in all, supposed to be America’s role. The and globalisation in vogue. The leaders of
Chile to sign the renamed Comprehensive CPTPP has no dedicated secretariat with the Asia­Pacific Economic Co­operation,
and Progressive Agreement for Trans­ full­time responsibility for enforcement, or APEC, grouping gathered at a beach re­
Pacific Partnership (CPTPP). notes Deborah Elms of the Asian Trade sort in Bogor, Indonesia in 1994, and, clad
How has it fared? Without America— Centre in Singapore: “They didn’t set one in intricately patterned Javanese shirts,
whose Democratic president, Joe Biden, up because we anticipated that this is pledged to pursue “free and open trade and
dares not offend the protectionists in his where America will hold feet to the fire.” investment” in the region by 2020. A big
party by undoing Mr Trump’s error—the step towards that vision came in 2005
economic impact has been less than was when an agreement between four small
once envisaged. Certain pairs within the → Also in this section economies—Brunei, Chile, New Zealand
group, especially those such as Vietnam and Singapore—caught America’s eye.
47 Thailand’s gay TV dramas
and Canada that did not have free­trade Australia, Peru and Vietnam joined the
agreements, have seen big rises in trade. In 47 South Korean­Japanese detente talks that ensued, followed by Canada, Ma­
some industries import values within the laysia, Mexico and, in 2013, Japan. The
48 Banyan: Singapore’s first­family feud
bloc rose by as much as 22.9% and export monster free­trade pact taking shape be­

012
 46 Asia The Economist March 11th 2023

came the economic centrepiece of Barack ceed. Some argue it is better to let China
Obama’s much­touted “pivot” to Asia. En­ Trading places have a hearing, and, ultimately, join if it
compassing some 40% of global GDP, the CPTPP members, merchandise trade meets the standards. “It’s in Singapore’s in­
TPP was sold in America as offering open 2020, % of total terests to have China in the TPP—it creates
markets and enforcing high standards to China United States Rest of world
a more stable and predictable environ­
counter China’s growing unruliness. ment for trade in goods and services, par­
0 25 50 75 100
If its economic punch has been sub­ ticularly in intellectual property,” says
Australia
dued, the CPTPP has had much more im­ George Yeo, a former Singaporean trade
Chile
pact on global trade rules. Its provisions on minister. Others, especially Japan, are less
Peru
digital governance, customs procedures keen and aim to hold off on even allowing
New Zealand
and intellectual­property protection have its initial accession process to commence.
Vietnam
become reference points for deals else­ Whether or not China’s bid proves suc­
Japan
where. “These rules are living beyond the cessful, it has already been effective at
Malaysia
corners of CPTPP,” says Wendy Cutler, a for­ complicating Taiwan’s. (Some experts be­
Brunei*
mer American official who negotiated the Singapore
lieve this was China’s primary aim.) The is­
TPP. America’s revised free­trade deal with Mexico
land, which China claims as its territory,
Mexico and Canada, the United States­ Canada
submitted its bid less than a week after
Mexico­Canada Agreement (USMCA), lifted Source: World Integrated Trade Solution *Yet to ratify
China. Taiwan’s government has been up­
sections on digital commerce from the dating its regulations to meet the pact’s
CPTPP. This influence is invaluable at a standards. If Taiwan joined first, China
time when the “multilateral system as a test. Its government has in recent months would be livid. “The crux of the matter isn’t
whole, the World Trade Organisation at its been emphasising its intention to join the Taiwan’s ability to fulfil the standards—it’s
core, are under threat like never before,” ar­ CPTPP; China’s departing prime minister, about how you deal with the concerns of
gues Shiro Armstrong of the Australian Na­ Li Keqiang, called for “active steps” to­ many countries in the region about China’s
tional University in Canberra. wards accession during a speech before the reaction,” Ms Solís says. But if China joined
Britain’s accession will expand the National People’s Congress on March 5th. first, it could block Taiwan. Joint acces­
deal’s reach. “It can show it doesn’t have to There is a lot of scepticism about Chi­ sion, after the model of their wto entry in
be just an Indo­Pacific agreement,” Ms Cut­ na’s application. China and many existing 2001­02, might be a solution; but today’s
ler says. For the British government, too, CPTPP members already belong to the Re­ politics are less amenable to it.
the political pull is stronger than the eco­ gional Comprehensive Economic Partner­ A drawn­out process on China and Tai­
nomic one. Joining would, it is estimated, ship (RCEP), a lower­standard Asian mega­ wan’s bids could become a distraction,
boost the baseline level of British gdp by trade deal signed in 2020. China would slowing much­needed updates of the
£1.8bn or 0.08%. But MPs in the ruling Con­ have to undertake major economic re­ pact’s provisions to keep up with techno­
servative Party love trade deals and are des­ forms to join the CPTPP on its current logical change. It could also clog up the en­
perate to secure visible benefits from leav­ terms. The country lags far behind many of try queue. In addition to Asian aspirants, a
ing the EU and to ensure that Britain has a the CPTPP’s standards on treatment of trio of Latin American countries—Costa
degree of influence in the Indo­Pacific. state­owned enterprises, intellectual Rica, Ecuador, and, as of last December,
Equally important, the British prece­ property, labour rights and digital trade. Uruguay—have applied to join. Despite de­
dent should help set high standards for the The “heavy hand of state interference” in lays, South Korea is keen; its formal appli­
CPTPP itself. Britain’s strict accession pro­ recent years has “moved them farther from cation is a “matter of time”, says Yeo Han­
cess, which admitted no exception to the the starting line”, says Jeffrey Schott of the koo, a former South Korean trade minister.
club’s rules, was intended to establish a Peterson Institute for International Eco­
“UK model” for future applicants, says nomics, an American think­tank. Can’t count on Uncle Sam
Munakata Naoko, a former Japanese trade Yet many policymakers and trade ex­ Some in Asia dare to hope that the interest
negotiator. China will try to put that to the perts in Asia treat the possibility of Chi­ from other suitors will draw America back.
nese membership more seriously than Japan’s prime minister, Kishida Fumio, has
those outside the region. Officials in the repeatedly called on Mr Biden to rejoin the
Chinese Ministry of Commerce are in ear­ CPTPP. It is extremely unlikely. Yet it is not
nest about it, they say, even if the process entirely implausible, say two pioneers of a
of negotiation is likely to be protracted. strategy to use smaller trade pacts to pull
China may try to secure carve­outs from America into the region: Mr Yeo, the for­
the club’s rules. Meanwhile, the possibility mer Singaporean official, and Tim Groser,
of Chinese membership will exert a strong a former New Zealand trade minister. “Chi­
pull for many in the region and beyond. nese interest will eventually spur the US to
Research by Peter Petri of Brandeis Interna­ become interested again,” says Mr Yeo.
tional Business School and Michael Plum­ Though the CPTPP remains electoral poi­
mer of Johns Hopkins University finds that son in Washington, Mr Groser points to the
if China joined CPTPP, global annual in­ USMCA agreed in 2018 as a model for a shift.
come gains due to the pact would quadru­ Certainly, Mr Biden’s current economic
ple to $632bn, or a quarter more than under offering, the Indo­Pacific Economic
the original TPP with America involved. Framework, which pointedly lacks any ele­
China’s bid is already testing the ment of trade liberalisation or expanded
group’s cohesion. Any decision on new market access, leaves much to be desired
members must be unanimous. “China is for export­oriented Asian economies. If
trying a divide and conquer strategy, obvi­ America, the world’s largest import mar­
ously,” Ms Munakata says. Among and ket, fails to understand that, many in the
within CPTPP member countries, there are Indo­Pacific may start to feel pulled ever
different schools of thought on how to pro­ more towards China, the second­largest. n

012
 The Economist March 11th 2023 Asia 47

Asian media storylines about the discrimination they she says, is that “the offenders will offer a
face, notwithstanding Bangkok’s reputa­ sincere apology before I die”.
Gay dramas for tion as a gay mecca. The shows’ success is She may at least be offered some hard
itself a rebuke to that chauvinism. “These cash. On March 6th the government of
straight women days, you see BL couples featured on big Yoon Suk­yeol, South Korea’s president,
advertisements in public. That used to be announced a new compensation fund for
unthinkable,” says Mr Bunyavejchewin. victims of Japanese wartime forced labour
TO KYO
This puts the Thai government in a or their surviving relatives. The details—
Will Thailand’s Boys’ Love shows be the
slightly awkward position. While embrac­ including, crucially, whether Mitsubishi or
next K-pop?
ing the BL shows’ potential to burnish any Japanese firm will pay into it—are un­

T HE “2gether cafe”, a pop­up restau­

rant on the second floor of the Tower
Records Shibuya building in Tokyo, is a
Thailand’s soft power, it tends to play
down their gay content when promoting
them; it is also opposed to same­sex mar­
clear. Yet Mr Yoon hopes this will end a dis­
pute that has for decades poisoned the two
countries’ relations, even as American
hub for a new Asian craze. Visitors, all riage. Back in 2007 the government briefly pressure and worries about China and
women, swoon over wall­to­wall pictures banned BL comics under obscenity laws. North Korea draw them closer. Joe Biden,
of Bright Vachirawit and Win Metawin, The production companies will be wary of America’s president, hailed the announce­
stars of “2gether: The Series”, a Thai TV dra­ provoking another backlash. “If they go too ment as “a groundbreaking new chapter of
ma about two students who fall in love. far, they might get crushed,” warns Ms co­operation and partnership”.
The actors, both men, are depicted ex­ Ishikawa. In Thailand, Boys’ Love is in, gay It follows a ruling by South Korea’s Su­
changing flirtatious glances and hugging. rights not so much. n preme Court, in 2018, that two Japanese
Airy Thai pop music plays in the back­ companies, Nippon Steel and Mitsubishi
ground. “I didn’t know Thailand had such Heavy Industries, must compensate South
handsome men,” says Kobayashi Maki. An East Asian relations Koreans, or their surviving relatives, who
ardent fan of the TV series, she is studying were forced to work in their factories. Ja­
Thai because of it. Litigating history pan’s government objected, saying the is­
Thai soap operas about gay romance, sue had been settled by a treaty between
generically known as “Boys’ Love” (BL) or the two countries in 1965. A stand­off en­
sometimes “Y series”, are stealing hearts sued, raising the prospect that Japanese
across Asia. Though the first shows ap­ firms such as Mitsubishi would have their
SEOUL AND TO KYO
peared in 2014, the genre, including over a South Korean assets seized by the court.
South Korea announces a plan to end
hundred series to date, took off outside Since Mr Yoon came to power last May, offi­
its forced-labour feud with Japan
Thailand during covid­19 lockdowns, cials in Seoul and Tokyo have been engaged
thanks in part to many being available on
YouTube. In Japan, a key market, the hash­
tag Thai numa or “Thai swamp”—a refer­
Y ang Geum­deok, a child of 1940s Ko­
rea, dreamed of being a teacher. When
her head teacher suggested she should
in a closed­door effort to patch things up.
The compensation fund will be filled
mostly or entirely by South Korea’s govern­
ence to the shows’ addictiveness—is popu­ study in Japan, the country’s colonial ruler, ment. South Korean companies that re­
lar on social media. Thailand promotes BL she enthusiastically agreed. Aged only 13, ceived money under the 1965 treaty (which
content at international trade shows. In she forged the necessary documents and included $800m in grants and low­interest
June 2021 the industry secured 360m baht left her home in South Jeolla province. She loans to South Korea) will be encouraged
($10.4m) in foreign investment. was promptly dispatched not to the prom­ but not forced to contribute. Japanese
BL originated as a Japanese manga sto­ ised school in Japan, but to an aeroplane firms may do so on a voluntary basis.
ryline, which became popular in the 1990s. factory run by Mitsubishi, a Japanese con­ Meanwhile Japan’s government, instead of
It has always been mainly consumed by glomerate. “I was worked almost to death issuing a fresh apology, will reissue
straight women, just as the Thai televised and never paid,” she recalls. Her last hope, the “deep remorse and heartfelt apology” it
version is. “I get to see two handsome men offered in 1998 for the “tremendous dam­
together. It’s a feast for my eyes!” says Taka­ age and suffering” caused by the Japanese
bayashi Otoha, a 20­year­old Japanese fan. colonial occupation of Korea in 1910­45.
Rujirat Ishikawa, a Thai academic at Aoya­ The formula reflects how little Kishida
ma Gakuin University in Tokyo, says some Fumio, Japan’s prime minister, felt able to
women find it liberating to watch romance compromise. He fears upsetting the right
as a sexual “outsider”, with no female pro­ of his Liberal Democratic Party, which is
tagonist to make them feel jealous. against any new apology. Mr Kishida hailed
For the shows’ Thai producers, the glo­ the fund as a “return to a healthy relation­
bal success of another group of delicately ship”. Within hours, Japan’s trade ministry
featured young men—South Korea’s K­pop announced bilateral talks on lifting con­
stars—was another inspiration. They have trols, in place since 2019, on exports to
copied elements of the K­pop business South Korea of materials for semiconduc­
model, including heavy use of “fan servic­ tor manufacturing. (South Korea said it
es” such as meet­and­greet events to boost would suspend a related complaint that it
revenues. Poowin Bunyavejchewin of had lodged with the World Trade Organisa­
Thammasat University in Bangkok calls tion.) On March 9th the two countries an­
Thai BL a “melting pot” that mixes “the Jap­ nounced that Mr Yoon would make an offi­
anese ingredient and Korean ingredient”. cial visit to Japan the following week. He
Thai BL’s success has also started to at­ may also be welcomed as a guest at the G7
tract more gay viewers. A recent survey summit in Hiroshima in May.
suggested that more than 20% of the TV The South Korean leader still has to sell
shows’ fans in Thailand are gay. That may his fix domestically. His push for better bi­
be in part thanks to a growing number of Yang Geum-deok wants her apology lateral relations rests on an appeal to South

012
 48 Asia The Economist March 11th 2023

Koreans to weigh the benefits of co­operat­ nounce his or her claim to compensation forced­labour victims as if they are a stum­
ing with Japan against their grievance over from the Japanese firm. And some of them, bling­block to the improvement of rela­
its past abuses. In a speech on March 1st, a he suggested, will insist that Nippon Steel tions”. Much the same charge helped undo
day that commemorates Korean indepen­ must itself apologise and pay up. “How will a “final and irreversible resolution” of the
dence, Mr Yoon said Japan had trans­ we be able to accept this when there is not issue of Korean women forced into war­
formed itself from a “militaristic aggressor one apology, not one yen?” he asks. time sexual slavery by Japan, negotiated by
of the past into a partner that shares the Most South Koreans want better rela­ the two countries in 2015.
same universal values”. But he may fail to tions with Japan. Yet a recent poll suggests As dusk fell on March 6th, protesters
placate either the victims of Japanese 64% consider a further apology from Japan against the deal gathered outside Seoul’s
forced labour or his political opponents. and an investigation into its past wrongdo­ city hall. Candlelit signs decried Mr Yoon’s
Lim Jae­sung, a lawyer acting for 15 ing to be prerequisites. And Mr Yoon’s op­ “humiliating pro­Japanese diplomacy”
plaintiffs in relation to Nippon Steel’s use ponents will inflame that feeling. Lee Jae­ and America’s support for it. The big ques­
of forced labour, argues that, for the fund myung, the leader of the opposition party, tion is whether Mr Yoon has done more to
to work as hoped, each will have to re­ has accused the government of “treating soothe the anger, or to stoke it. n

Banyan Legacy issues

A row over Lee Kuan Yew’s house shines a light on Singaporean power politics

W HEN LEE KUAN YEW died in 2015,

many recalled how he reacted to
the idea that a monument should be
father must have felt strongly about this—
it was the one clause in his will he wanted
made public. His elder son, the current
promptly rushed to the airport. These
events were made public only on March
2nd in a senior minister’s written answer
raised to him. “Remember Ozymandias!” prime minister, once described him as to a parliamentary question about the
Singapore’s founding prime minister had “unwavering” on the issue. house controversy. He said the couple
said, referring to Shelley’s sonnet about a In 2017 a family dispute over the were under investigation for having
great pharaoh memorialised, in the end, house’s fate became public when Lee given false evidence in the proceedings
only by a broken statue in a desert. Lee Hsien Yang and Lee Wei Ling issued a long against Lee Suet Fern.
wanted no monument apart from a statement accusing their brother, the Lee Hsien Yang believes this revela­
thriving Singapore. prime minister, of being “behind what was tion was intended to thwart his ambi­
He tried hard, even from beyond the represented to the family as a government tion. Singapore will hold a presidential
grave, to preclude the establishment of initiative to preserve the house”. The rift election between June and October, and
one potential memorial in particular: the has since widened. Lee Suet Fern’s role in he has hinted at running. The presidency
colonial­era bungalow at 38 Oxley Road the execution of the final will was official­ is a largely ceremonial role, but has
where he had lived from 1945 until his ly investigated and in 2020 she was sus­ important veto powers. And Lee Hsien
death. Lee left instructions for it to be pended as a lawyer for 15 months—even Yang had been a plausible contender. The
bulldozed. Instead, the house, still very though she was not found to have acted office, held in six­year terms, is rotated
much standing, has become the focus of dishonestly in her dealings with her fa­ around Singapore’s biggest ethnic com­
a bitter dispute between his three chil­ ther­in­law. Her husband, Lee Hsien Yang, munities. This year’s contest will be
dren. One of them, Lee Hsien Loong, has joined the political opposition, campaign­ “open”—meaning that candidates from
been Singapore’s prime minister since ing for the small Progress Singapore Party the ethnic­Chinese majority, to which
2004; another, his daughter Lee Wei at a general election that year. the Lee family belongs, can stand. Lee
Ling, in ill health, lives in the house; the The couple, now living in exile, were Hsien Yang is also one of the few people
third, their brother Lee Hsien Yang, is on a trip to Singapore last June when they who could meet the strict criteria for
being investigated for perjury over the were visited early one morning by two candidates from the private sector, hav­
row and has fled the country. senior policemen. Rather than report for a ing been chief executive of Singapore
The squabble has gripped Singapor­ formal police interview as requested, they Telecommunications for 12 years.
eans, and no wonder. It is hard to think A big believer in both meritocracy and
of a better allegory for the island­state’s the power of heredity, Lee Kuan Yew
power politics and economic devel­ would not be perturbed that a son of his
opment than an intra­Lee family dispute should occupy his former office. He
over a British­era property. The dis­ might even have taken in stride another
agreement centres on the handling of Lee son running for president as, in effect, an
Kuan Yew’s will, the last of seven iter­ opposition candidate. But that now
ations. Signed in December 2013, it was seems unlikely to happen. It could not be
handled not by his usual solicitor but by done from exile.
his daughter­in­law, Lee Hsien Yang’s Even were Lee Hsien Yang to run, Lee
wife Lee Suet Fern, and her law firm. Like Hsien Loong, like his father, loses few
most earlier drafts, it contained what has political battles. A son of Lee Hsien Yang
become known as “the demolition and Lee Suet Fern, the Harvard econo­
clause”, instructing that the house mist Li Shengwu, acknowledged his
should be demolished either immedi­ uncle’s clout in a tweet. “Many families
ately after Lee’s death or, if Lee Wei Ling have vindictive relatives. My relatives
still wanted to live in it, as soon as she just happen to control a small authori­
had moved out. Singapore’s founding tarian government.”

012
 China The Economist March 11th 2023 49

The National People’s Congress suggests anxiety levels are growing. He

said American­led efforts at containing
Wolf worriers China had presented “unprecedented se­
vere challenges” to the country’s develop­
ment. At an NPC­organised news confer­
ence, his new foreign minister, Qin Gang
(known for his feisty language, no matter
the context), was even more forthright: “If
the United States does not hit the brake but
Tough language from Xi Jinping and his underlings belies their anxiety
continues to speed down the wrong path,

C hina’s all-out struggle to crush co­

vid­19 is now over, but its leaders still
see a world fraught with peril. During the
metaphors: lurking tigers, boulders on the
road, terrifying waves and stormy seas.
One bit comes from remarks to domestic
no amount of guardrails can prevent de­
railing, and there will surely be conflict
and confrontation.”
annual session of the country’s parlia­ security chiefs in 2014, just over a year after For all such rhetoric, however, Chinese
ment, which began on March 5th, Chinese Mr Xi became China’s leader. It shows how officials have avoided using the NPC, and
officials have been airing their worries. long­standing his current worries are: the parallel meeting of its advisory body, to
President Xi Jinping pointed his finger at “Western countries such as America make any explicit threats against America.
America, accusing it of leading Western increasingly feel fishbones in their throats On Taiwan, the most contentious issue in
countries in a campaign of “all­out con­ and blade­tips in their backs, so are step­ the bilateral relationship, they have stuck
tainment, encirclement and suppression” ping up their strategy of Westernising and to ambiguous language. In his farewell
against China. The outgoing prime minis­ splitting our country.” speech to the NPC, Mr Li said the armed
ter, Li Keqiang, said such threats were esca­ Usually Mr Xi avoids explicit criticism forces should “intensify military training
lating. He set an unexpectedly cautious of America at public­facing occasions such and preparedness across the board”. Chi­
target for China’s economic growth this as meetings of the National People’s Con­ na’s defence spending is higher than it ad­
year (see next story). Their message is gress (NPC), as the legislature is known. mits. But a draft budget said it should grow
clear: China’s post­covid reopening to the His break from custom this time, at a meet­ by 7.2% this year. That would leave its
world could be a bumpy one. ing on March 6th with advisers to the NPC, share of GDP largely unchanged, once in­
Mr Xi is China’s worrier­in­chief. A flation is taken into account. And Mr Li
handy 251­page book, published by the said China should “promote the peaceful
Communist Party in 2020, contains noth­ → Also in this section development of cross­strait relations”.
ing but anxiety­related snippets from his It may be that, for all their disquiet, Chi­
50 A low growth target
speeches. They cover every topic from ter­ nese leaders do not want to escalate ten­
rorism and “colour revolutions” to the 51 Leaders educated abroad sions with the West, nor narrow their room
“middle­income trap”—that is, stalling for manoeuvre. Mr Xi said officials should
52 Chaguan: The party’s power grab
growth. The extracts are peppered with “dare to struggle”, but he also called for

012
 50 China The Economist March 11th 2023

calm (using the word three times) in the last year to stop the spread of covid. credibility over confidence. On March 5th
face of “profound and complex changes in Businesspeople tend to have a higher opin­ Li Keqiang, China’s outgoing prime minis­
the international and domestic environ­ ion of him. High­level politics in China is a ter, opened the National People’s Congress,
ments”. By emphasising threats from the black box. But Reuters, a news agency, said China’s rubber­stamp parliament, with his
West, such as America’s efforts to limit that Mr Li was behind the sudden ending of annual “work report”. It revealed a growth
Chinese access to cutting­edge technol­ the “zero­covid” policy in December. As target of “around 5%” in 2023.
ogies, it is possible that China hopes to fo­ the newly appointed head of a covid task­ That may seem like a respectable pace,
cus attention at home on the need for force, Mr Li “resisted pressure from the roughly in line with China’s underlying
greater industrial self­reliance. On March president to slow the pace of reopening”, “trend” rate of growth. But the economy
10th the nearly 3,000 delegates are due to Reuters reported. would normally be expected to exceed that
vote on (ie, rubber­stamp) a plan for re­ Also closely watched will be people trend comfortably this year, because it fell
structuring some government ministries. chosen to work under Mr Li on economic so far short of it last year. The target is low­
This is expected to give the party more con­ matters. Many of those slated for top posts er than many external forecasts. Even if it
trol over vital areas of work, including have far less experience of the West than is met, China’s GDP will remain more than
technological development (see Chaguan). their predecessors. But Mr Xi may reckon 2% below the path it was supposedly on be­
A senior official said one reason for the that matters less now, with the West gang­ fore the Omicron variant arrived last year.
shake­up was “the severe situation of…ex­ ing up against him. n The government reckons that China
ternal containment and suppression”. must create about 12m new urban jobs this
Such a response is typical of Mr Xi. His year. This target is more demanding than
book of worries, titled “Excerpts from Xi The economy last year’s (12m versus “over 11m”) even
Jinping’s Talks on Guarding Against Risks though the growth target is less so. The
and Challenges and Responding to Emer­ Credibility over government may be hoping that China will
gencies” (a snip at $7.50), is replete with enjoy an unusually “job­full” recovery, as
recommendations that the party tighten confidence labour­intensive service industries, like
its grip. But at the same time, Mr Xi and his retail and catering, bounce back from the
officials have been using the NPC, which pandemic­era restrictions that hit them
HO NG KO NG
ends on March 13th, to send reassuring sig­ particularly hard. It also wants employ­
Interpreting China’s unambitious
nals to entrepreneurs who have been ment to keep pace with the record 11.58m
growth target
spooked by the party’s growing musculari­ students who are expected to graduate
ty in the economic domain. To revive
growth, which was 3% last year, the sec­
ond­lowest rate since the death of Mao Ze­
W HEN CHINA’S government sets its
economic growth target for the year,
it often faces a dilemma. A balance must be
from universities and colleges in 2023.
The undemanding growth target re­
moves any pressure to stimulate the econ­
dong in 1976, private firms will be crucial. struck between inspiring confidence and omy further. Compared with last year, Mr
They contribute three­fifths of GDP. maintaining credibility. A high target Li’s report contained fewer exhortations to
“In the coming period,” said Mr Xi, could give courage to entrepreneurs, mak­ local governments to keep the economy
echoing the prime minister, “the risks and ing fast growth easier to achieve. But ambi­ going. He instead pointed out the need to
challenges we face will only increase and tious targets can also be missed, denting prevent a build­up of new debts. “The bud­
become more severe.” He then heaped the government’s reputation. (They can getary imbalances of some local govern­
praise on the private economy, calling it an also induce reckless stimulus spending to ments are substantial,” he noted. This year
“important force for long­term rule by our avert any such embarrassment.) they will be allowed to issue 3.8trn­yuan
party” and describing entrepreneurs as Last year the government missed its tar­ ($550bn) worth of “special” bonds (which
“our own people”. Businesspeople will be get by a wide margin (see chart on next are supposed to finance revenue­generat­
cautious, however. These are phrases he page), largely owing to its costly attempt to ing infrastructure projects). On paper, that
has used before. There may have been a keep covid­19 at bay. This year it has prized quota is a little higher than last year. But it
sigh of relief among some company bosses
that Mr Li did not mention the term “com­
mon prosperity” in his speech to the NPC.
The slogan, favoured by Mr Xi, is associat­
ed in some people’s minds with heavy­
handed treatment by the party of billion­
aires and their firms. But in his meeting
with the NPC’s advisers, Mr Xi used the
phrase four times.

The new guys

Many businesspeople will wonder wheth­
er to take solace from several high­level ap­
pointments that will be unveiled at the NPC
(aside from the inevitable reconfirmation
of Mr Xi as president, which will be an­
nounced on March 10th). The most impor­
tant will be the naming of a new prime
minister on March 11th. It is almost certain
to be Li Qiang, a former party chief of
Shanghai and protégé of Mr Xi.
Mr Li is an intriguing figure. He is dis­
liked by many in Shanghai for overseeing a
draconian two­month lockdown of the city Go forth and spend

012
 The Economist March 11th 2023 China 51

Eye on the target Foreign education

China, GDP, % increase on a year earlier
Learning skills, not values
Actual Target
15 BE IJING
Many top politicians studied in the West. It did not endear them to it
12

9 I n the early 20th century thousands of

Chinese Communist Party members
went to Russia to learn how to stage a
haigui swelled, the distrust faded.
Today over 20% of Central Committee
members—the 370 most powerful party
6 revolution and build a socialist state. The officials in China—have had some for­
Russians, in turn, hoped the study pro­ eign education, mostly at Western uni­
3
grammes would give them lasting influ­ versities. That is up from 6% two decades
0 ence over their Chinese comrades, many ago, according to Cheng Li of the Brook­
2005 10 15 20* 23
of whom would rise to positions of great ings Institution, a think­tank in Wash­
Source: Haver Analytics *No target set
power. But within a decade of becoming ington. Eight of the 24 members of the
communist, China began squabbling Politburo have studied in Western coun­
with the Soviet Union. In 1961 leaders in tries, the most ever by far.
may not feel like it in practice, because lo­ Beijing denounced Soviet communism Like many overseas Chinese students
cal­government spending last year was as the work of “revisionist traitors”. today, the leaders often focused on STEM
bolstered by an unusually large stash of The episode holds sobering lessons subjects (science, technology, engineer­
bond proceeds carried over from 2021. for Western countries, which have host­ ing and mathematics). A Politburo mem­
The report’s conservatism is in keeping ed millions of Chinese students over the ber called Chen Jining, who is the party
with a theme of this year’s congress: Chi­ past four decades—many of whom have boss of Shanghai, spent a decade in
na’s rulers tightening their grip over the risen to positions of great power. While Britain studying engineering. Another
state. President Xi Jinping’s new economic universities raked in cash, Western member, Yuan Jiajun, studied at Ger­
team will feature trusted aides and aco­ leaders hoped the experience would many’s centre for aerospace research. He
lytes. Li Qiang, the party’s number two, is endear future Chinese leaders to liberal later ran the rocket programme that sent
expected to replace Li Keqiang as prime values. But, as with the Russians, they the first Chinese man into space.
minister. He Lifeng, who worked with Mr have been disappointed. Today the party But there was demand for other sub­
Xi in Fujian (and attended his second wed­ is more anti­Western than it has been in jects, too. In 2002 Harvard University’s
ding), is likely to become a deputy prime decades, a mood reflected in the words of Kennedy School of Government, working
minister in charge of economic policy. He President Xi Jinping and Qin Gang, the with Chinese institutions, set up a three­
may also serve as party chief of the central foreign minister, at a meeting of the month programme to teach mid­ranking
bank. If so, he will oversee a new governor National People’s Congress this month. Chinese officials about administration.
of the bank, who is likely to be Zhu Hexin, a Foreign­educated students who re­ Similar short­term programmes sprang
commercial banker who served as vice­go­ turn to China are known as haigui (sea up at universities elsewhere in America
vernor of the province of Sichuan. turtles), a homophone for “returning and the West. (Some, such as Harvard’s,
Mr Li’s report offered little guidance on home from abroad”. For a long time those were later shut down.)
what closer control would mean in prac­ who entered China’s bureaucracy found Despite all this, an anti­Western spirit
tice. Like previous editions, the document themselves swimming upstream. While permeates the leadership. State direc­
is a combination of theological boilerplate their technical knowledge was valued, tives rage against “erroneous” Western
(“hold high the great banner of socialism the party feared that they might have ideas, such as having an independent
with Chinese characteristics”), policy bro­ divided loyalties. But as the number of judiciary. Students in China’s schools are
mides (“we should enhance the intensity warned not to be misled by foreign con­
and effectiveness of our proactive fiscal cepts. In February a teacher in Anhui
policy”) and technocratic factoids (China province was denounced by a student for
increased the length of expressways by “worshipping the West and pandering to
30% and drainage pipelines by more than foreign powers” after he encouraged
40% over the past five years). students to study abroad. Never mind
The most striking novelty in this year’s that China’s education minister, Huai
report was its nostalgia. Last year’s edition Jinpeng, was a visiting scholar at Amer­
turned from past to present by the eighth ica’s Columbia University in the 1990s.
page (of the English translation). This year President Xi Jinping studied only in
Mr Li did not leave the past behind until China. But his ideological tsar, Wang
the 31st page and then spared only four pag­ Huning, was a visiting scholar in Amer­
es to discuss priorities for 2023. Perhaps he ica in 1988. He wrote a book about his
found it hard to talk about the future, given experience which revealed admiration
that he will have no role in shaping it. n for some aspects of the country, such as
the way presidents reliably leave office
We are seeking interns to write about foreign affairs when their term ends (Mr Xi will soon be
for The Economist. The internships will be confirmed for a norm­busting third
London­based and paid. Anyone is welcome to
apply, regardless of citizenship or any characteristic term). But, Mr Wang wrote, there were
unrelated to the job. An interest in economics is “undercurrents of crisis” caused by racial
helpful although not essential. Applicants should tensions, disintegrating families and
send an unpublished article of 600 words suitable poor education. For him, America mostly
for publication in The Economist, a CV and a cover
letter to [email protected]. The Liberal or leader, his options are open offered a lesson in what to avoid.
deadline is March 31st, 2023.

012
 52 China The Economist March 11th 2023

Chaguan What party control means

The Communist Party is grabbing powers from government offices and experts. That is worrying
years after Mao’s death in 1976, economic reformers moved to sep­
arate party and state. They sought to free enterprises from the sti­
fling hand of central planners, and to liberate farmers and factory
managers from micromanagement by party committees. They
took political cover from the paramount leader, Deng Xiaoping,
who—though no liberal politically—gave public warning that
“over­concentration of power is liable to give rise to arbitrary rule
by individuals.” By the late 1980s, reformers were promoting the
notion of a “vanguard party”, a smaller, nimbler party whose role
was to set an overall ideological line, not “try to control every­
thing”, recalls Professor Anthony Saich of Harvard University, who
interviewed reformist officials in China in those years.
Over time more power was decentralised to local governments,
whose officials were rewarded for presiding over rapid growth. In
the late 1990s, when entrepreneurs could no longer be ignored, the
party moved to co­opt them, admitting businesspeople as mem­
bers. Then came Mr Xi. Soon after becoming leader in 2012, he de­
clared the Communist Party dangerously corrupted by money and
distant from the everyday lives of the masses. He has spent the
past decade reasserting the party’s authority over every aspect of
public life. This week Mr Xi declared that entrepreneurs need
more “theoretical and political guidance” to understand their ob­

T HE workings of Chinese power are not easy for outsiders to

follow. Visitors to some official buildings, for example, are
greeted by two vertical signboards, one bearing black characters,
ligations to the party and country.
Mr Xi talks of the party’s almost 97m members as if they are
missionaries in an atheist church, stressing their self­sacrificing
the other red. The black­lettered sign denotes a government de­ “red spirit” and paying homage to “martyrs” who died for the revo­
partment. Red characters signal an organ of the Communist Party. lution or in the people’s service. That faith­tinged language is use­
In bureaucratic slang this is known as “party and government on fully clarifying. Most senior officials, whether in a ministry, may­
one shoulder­pole”. Sometimes the two offices oversee the same or’s office, state­owned enterprise or university, are party mem­
policy area, and employ some of the same officials. They are not bers. One way to think of them is as lay believers, with varying de­
equally transparent. Especially when meeting foreigners, officials grees of faith. Then there are party cadres whose careers take them
may present name cards bearing government titles but stay quiet from the party committee of a town, say, to a post as party secre­
about party positions which may or may not outrank their state tary of a county or other public institution. They are more like
jobs. Many party branches are not publicly marked at all. priests, with lives dominated by doctrine, discipline and secrecy.
It is a good moment to remember this quirk of Chinese gover­
nance. The annual session of the National People’s Congress When ideology trumps expertise
(NPC), the country’s largely ceremonial legislature, is under way Jing Qian of the Asia Society Policy Institute, a think­tank based in
from March 5th to 13th. This year’s NPC meeting comes after a big New York, describes some important differences between state
party congress last October. At that gathering China’s supreme and party offices. China’s government bodies are subject to (some)
leader, President Xi Jinping, secured a norm­trampling third term institutional and legal constraints. Party bodies are self­policing
and filled his party’s highest ranks with loyal aides. Now Mr Xi’s and their powers are limited only by the party constitution. He
new team has made headlines with a bureaucratic shake­up that contrasts the professionalism of technocrats with the political in­
takes powers from several government ministries and agencies, centives that guide party cadres. By way of example, he imagines
including bodies charged with making China self­reliant in high­ an official with 20 years’ experience at the People’s Bank of China
technology and with regulating data and financial markets. Many debating policy with a party cadre on a short posting to the central
of those powers will now be wielded by party­led commissions. bank. Perhaps the banker urges caution in the name of financial
NPC delegates applauded the changes in their marble­pillared, stability. But the party cadre wants to please political superiors
crystal­chandeliered simulacrum of a parliament, for they know and earn a promotion. So the technocrat is overruled.
the drill. Soon they will rubber­stamp Mr Xi’s latest move to im­ China’s “zero­covid” campaign offers real­world evidence of
pose the party’s will, meaning his own, on China’s vast bureau­ professional judgments trumped by politics. Once the Omicron
cracy. When they do, outsiders are entitled to recall those black variant arrived in 2022, some prominent scientists called for
and red signboards and ask an innocent question: in a country greatly increased efforts to vaccinate old and vulnerable citizens
where government and party office­holders may share the same and stockpile antiviral drugs. But Mr Xi had declared that lock­
building—and may even be the same people—what does it actual­ downs and quarantines could defeat the virus, so suggesting ways
ly mean for the state to cede power to the party? to co­exist with covid­19 was heresy. Experts fell silent or were
In China’s opaque political system, one way to understand a sidelined. As a result, when zero­covid collapsed last December,
new policy is to study old ideas that it repudiates. Mr Xi’s power the country was unprepared. After concealing many covid deaths,
grab challenges lessons that his predecessors drew from Chair­ China’s rulers now call their pandemic controls “a miracle in hu­
man Mao Zedong’s chaotic rule, when loyalty to the leader and man history”. All governments make mistakes. What matters is
ideological fervour took precedence over good government. In the whether they learn from them. Mr Xi’s record is not reassuring. n

012
 Business The Economist March 11th 2023 53

China Inc in the West form for anti­Western propaganda or to

gobble up Western users’ personal data
Seizing the moment (TikTok denies both these accusations).
For ambitious Chinese firms eyeing
wealthy Western shoppers this presents a
conundrum: how do you do business in
places where you are increasingly unwel­
come? Companies like Shein, Temu and
SHANGHAI
the beleaguered TikTok are all coming up
A Chinese CEO’s guide to doing business amid anti-China sentiment
with answers that have a lot in common.

A MERICAN-FOOTBALL fans watching the

Super Bowl last month in the sport’s
heartland were treated to a surprising TV
At the same time, Western suspicions of
Chinese business are mounting, together
with intensifying geopolitical tensions be­
Whether they pull it off will determine the
fate of Chinese commerce in the West.
China Inc began making a global mark
commercial. In it, a woman switched mag­ tween China and the West. America has in the 1980s, as foreigners poured invest­
ically between chic but cheap outfits as she banned Huawei, a Chinese maker of tele­ ments into Chinese factories which then
scrolled through a mobile­shopping app coms gear, at home and crushed its efforts shipped cheap goods to the West. Consum­
called Temu. The jingle—“I feel so rich; I to capture Western markets. On March 6th ers would buy these almost exclusively
feel like a billionaire”—refers to the sensa­ it was reported that Germany’s govern­ through retailers such as Walmart or from
tion of wealth evoked by the endless choice ment was close to forcing mobile operators Western brands that sourced products
and rock­bottom prices for Temu’s clothes. to stop buying Huawei kit and to replace from China. Then, in the mid­2000s, Chi­
Since its launch last September Temu has installed Chinese equipment. TikTok may nese firms began building a presence in
become America’s most­downloaded app be in for similarly harsh treatment. Several foreign markets. Until Uncle Sam clipped
for iPhones. That is a feat for a young brand countries, led by America, are discussing its wings, Huawei was selling its own net­
based in Boston. It is all the more impres­ full bans on TikTok over concerns about working kit and handsets across the West.
sive because Temu hails from China. the Chinese government using the plat­ Other Chinese champions such as Haier, a
This is a critical moment for Chinese home­appliance maker, bought and nur­
companies in the West. On the one hand, tured Western brands (GE’s white­goods di­
→ Also in this section
Chinese brands have never been more pop­ vision, in Haier’s case). Between 2011 and
ular in America. Hot on Temu’s heels in 55 Where are all the robots? 2021 Chinese firms acquired nearly $90bn­
iPhone downloads are CapCut, a video­edi­ worth of foreign retail and consumer
55 The glass­ceiling index
tor, and TikTok, a time sink. Shein, a fash­ brands, according to Refinitiv, a data com­
ion retailer, ranks above Amazon. This year 57 Bartleby: Consoling irritations pany. Many of the targets were Western.
it may pull off one of the world’s biggest In recent years, however, the dealmak­
58 Schumpeter: Shipping rerouted
initial public offerings (IPOs) in New York. ing has slowed. In 2022 Chinese compa­

012
 54 Business The Economist March 11th 2023

nies spent just $400m on foreign brands advantage in developed markets, says Xin ByteDance, for its part, stresses it is domi­
(see chart). The authorities in Beijing have Cheng of Bain & Company, a consultancy. ciled in the Cayman Islands, not China.
grown warier of capital flight even as West­ The firms’ savvy use of technology and Seeing that none of this has fully placat­
ern governments have become more hos­ supply chains allows them to limit their ed Western regulators, other Chinese com­
tile to such transactions, often blocking non­Chinese assets—their third shared panies are going further. Last year Shein
them. Chinese brands seeking to build a strategy. Asset­lightness appeals to inves­ also decamped to Singapore, from Guang­
Western presence have had little joy. Leno­ tors, says Zou Ping of 36Kr, a Chinese re­ zhou. The city­state is now its legal and op­
vo, a Chinese firm that in 2004 acquired search firm. It helps cut costs and reduce erational home. Add its planned New York
IBM’s personal­computer division, has the risk of assets being stranded should listing and its executives almost bristle
captured a mediocre 15% of America’s PC Western politicians turn the screws. when you call Shein Chinese. More busi­
market, far behind HP and Dell, which to­ For many Chinese brands, their only nesses may adopt a version of this model.
gether control more than half of it. Xiaomi, Western assets are customer­facing web­ The success of these strategies is hard to
which in 2021 overtook Apple to become to sites and apps. Although it recently opened gauge. Export figures from China do not
the world’s second­biggest smartphone­ a distribution centre in Indiana, Shein distinguish between Chinese brands and
maker, has been unable to crack America. ships most goods directly from China to goods made for foreign clients. Many pack­
The latest wave of global Chinese buyers in America. Its Boston base not­ ages are sent by courier and not counted as
brands has taken a different approach. withstanding, Temu has no warehouses in exports. But it is clear that, in some areas at
Many initially eyed the domestic market, America, let alone factories (though it does least, Chinese brands are taking market
before the covid­19 pandemic and China’s not rule out storage). Naturehike, a maker share in the West. Anker has become one of
draconian response to it forced them to of camping gear, has conquered the West America’s biggest purveyors of phone
look abroad for growth, says Jim Fields, a and Japan without employing a single per­ chargers. In 2021 about half its $1.8bn in
marketer who works with Chinese brands son outside China. Instead, says Wang global sales came from North America; less
in America. Companies such as Shein, Te­ Fangfang, a spokeswoman, it is boosting than 4% came from China. A few Chinese
mu and TikTok may grab the headlines but its on­demand manufacturing capacity so makers of smart appliances like robot vac­
hundreds of Chinese firms have been mak­ it can better understand customers from uum cleaners rank among top global sell­
ing similar inroads in America, Europe and afar. In February CATL agreed to furnish its ers alongside American and German firms.
Japan—using similar strategies. electric­vehicle batteries to Ford by licens­ One, Roborock, had foreign sales of $500m
The first is not to flaunt their Chinese­ ing its patents to the American carmaker in 2021, accounting for 58% of its total rev­
ness. The Economist has reviewed dozens of rather than building a factory in America. enues, up from 14% two years earlier.
companies’ websites and found that most America is its main market. Chinese firms
could easily pass for a Western brand. Made in China? Who, me? such as EcoFlow are poised to dominate
Their names sound English: BettyCora pro­ The most dramatic way in which some Chi­ sales of household power banks there.
duces press­on nails; Snapmakers makes nese companies are guarding themselves Investors are bullish. Shein’s IPO could
3D printers. Almost none mention their against a Western backlash, as well as be a blockbuster. Last year Hidden Hill Ca­
country of origin. One young entrepreneur Communist Party meddling in their West­ pital, a Singaporean fund, raised nearly
who is currently planning the launch of his ern business, is by distancing their gover­ $500m with TPG, an American private­
own brand in America discerns a long­ nance structures from China. The first big equity firm, to invest in Chinese firms
standing prejudice against Chinese­made name to pursue this strategy was Byte­ backing the supply chains of future global
goods as being of poor quality. This percep­ Dance, TikTok’s parent company. From the brands. Some of the entrepreneurs behind
tion is linked to the first wave of cheap fac­ start, it kept TikTok’s popular Chinese sis­ these success stories nevertheless worry.
tory wares in the 1980s. Increased hate ter app, Douyin, separate from the version One concern is overcoming the shabby
crimes against people of Asian descent in used in the rest of the world (which in turn reputation of the “Made in China” label.
America in recent years have not encour­ cannot be used in China). Then TikTok Today fake or shoddily made me­too items
aged companies to come out as Chinese. moved its headquarters to Singapore, to can hurt the cachet of Chinese firms that
Most people hoping to start such business­ separate itself from decision­making at do invest in research and development. In
es will avoid references to China if possi­ ByteDance’s headquarters in Beijing. Now 2021 Amazon banned 600 Chinese brands
ble, the entrepreneur says. it reportedly wants to create an American on concerns that they were churning out
The second common characteristic is subsidiary tasked with safeguarding the fake reviews of their wares.
the use of technology to beat Western ri­ app, which would report to an outside But Chinese bosses lose most sleep over
vals on service and price. Many Chinese board of directors rather than ByteDance. the deteriorating Sino­American relations.
firms use their own websites and mobile Many look to TikTok as the bellwether. In
apps to sell directly to customers. They January the firm said it would set up a data
thus bypass retailers while gaining access Crouching dragon, hidden tiger centre in America to store local users’ data
to data on consumer trends, allowing them Chinese companies, acquisitions of foreign and give American authorities access to its
to react quickly to shifts in demand—or, retail and consumer brands, $bn algorithms; on March 6th the Wall Street
using sophisticated analytics, predict 20 Journal reported that it was seeking a simi­
these changes and respond in advance. lar deal in Europe. Despite the assurances,
This “on­demand manufacturing” has bills are moving through Congress that
15
allowed Shein to triple its American sales would let President Joe Biden ban the app.
between 2020 and 2022, to over $20bn. Its If Beijing and Washington continue to
app attracts 30m monthly users in Ameri­ 10 grow apart, as seems likely, American poli­
ca. Hundreds of Chinese firms are experi­ ticians may take aim at other Chinese apps.
menting with this model in the American 5 For those that collect data on shopping
marketplace. Halara, a newish women’s­ habits—which is to say most of the con­
apparel retailer, gets around 1.5m digital 0 sumer­facing ones—this would turn their
visitors monthly to its app. Newchic, a ri­ 2000 05 10 15 20 22
technological strength into a geopolitical
val, attracts 1.7m. The ability to understand Source: Refinitiv
weakness. Facing up to that threat will re­
customers through data analytics is a big quire a whole other level of ingenuity. n

012
 The Economist March 11th 2023 Business 55

Machines and jobs the launch of a suite of AI “co­pilots” for

workers in jobs ranging from sales and
Where are all the robots? marketing to supply­chain management.
Excitable observers murmur about a loom­
ing job apocalypse.
Fears over the job­displacing effects of
technology are, of course, nothing new. In
early 19th­century Britain, the Luddites
SEOUL
burned factory machines. The term “auto­
The rich world suffers from too little automation, not too much
mation” first rose to prominence as the

“I think we might exceed a one­to­one

ratio of humanoid robots to humans,”
Elon Musk declared on March 1st. Coming
bots, this might all smack of science­fic­
tion. But he has waded into a very real de­
bate about the future of work. For certain
adoption of wartime innovations in mech­
anisation sparked a wave of panic over
mass joblessness in the 1950s (see chart on
from the self­styled technoking of Tesla, it forms of AI­enabled automation are fast next page). In 1978 James Callaghan, Brit­
was not so much a prediction as a promise. becoming science fact. ain’s prime minister, greeted the break­
Mr Musk’s car company is developing one Since November ChatGPT, an AI conver­ through technology of his era—the micro­
such artificially intelligent automaton, sationalist, has dazzled users with its pass­ processor—with a government inquiry
codenamed Optimus, for use at home and able impression of a human interlocutor. into its job­killing potential. Ten years ago
in the factory. His remarks, made during Other “generative” AIs have been conjuring Carl Frey and Michael Osborne of Oxford
Tesla’s investor day, were accompanied by up similarly human­like texts, images and University published a blockbuster paper,
a video of Optimus walking around appar­ sounds by analysing reams of data on the since cited over 5,000 times, claiming that
ently unassisted. internet. Last month the boss of IBM, a 47% of the tasks American workers per­
Given that Mr Musk did not elaborate computing giant, forecast that AI will do form could be automated away “over the
how—or when—you get from a promo­ away with much white­collar clerical next decade or two”. Now even the techno­
tional clip to an army of more than 8bn ro­ work. On March 6th Microsoft announced optimistic Mr Musk wonders what it
would mean for robots to outnumber hu­
mans: “It’s not even clear what an economy
The glass-ceiling index is at that point.”
Gap year Although Messrs Frey and Osborne still
have a few years to be proved right, and Mr
Musk can be safely ignored for the time be­
ing, the earlier fears about job­killing tech­
Is the gender pay gap opening up again?
nology never materialised. On the con­

O n average, women earn less than

men. Much of this is because of the
jobs they perform, by choice or social
Bucks and the trend
Median gender wage gap*, %
trary, labour markets across the rich world
are historically tight—and getting struc­
turally tighter as societies age (see Finance
expectation; these are often worse­paid Selected OECD countries, inverted scale & economics section). There are currently
than typical male occupations. Some, as 0 two vacancies for every unemployed
when women’s pay is lower for the same Norway American, the highest rate on record.
position, is the result of discrimination. America’s manufacturing and hospitality
10
Before the covid­19 pandemic, the gap Britain Canada sectors report labour shortages of 500,000
between median male and female wages and 800,000 respectively (as measured by
was at least edging down. The Economist’s 20 the gap between job openings and unem­
United States
glass­ceiling index of female workplace Japan ployed workers whose last job was in the
empowerment, published each year on 30 sector in question).
March 8th, international women’s day, South Korea
shows that this salutary trend reversed in 40 Rage for the machine
2021 in some of the mostly rich members 2016 17 18 19 20 21 The immediate problem for advanced
of the OECD, including Britain and Cana­ *Male minus female wages,
economies is, then, not too much automa­
da (see chart, and economist.com/glass­ Source: OECD divided by male wages tion but too little. It is exacerbated by the
ceiling for the full index). fact that, for large businesses, automating
One explanation is a hangover from other end of the income spectrum. In tends to be difficult to get right in practice.
the pandemic. When hotels, restaurants 2022 the share of board members across And it is likely to prove no easier with the
and shops shut their doors amid lock­ the OECD who were women crept over latest buzzy AIs.
downs, their workers’ wages suffered 30% for the first time. MSCI now expects Mechanical arms on a factory floor per­
disproportionately. And those workers parity by 2038, four years earlier than forming repetitive tasks such as welding,
were disproportionately women. If so, previous estimates. Only 64 out of 3,000 drilling or moving an object have been
the widening pay gap may have been a or so big companies in the research around for decades. Robot usage histori­
blip: demand from employers in these firm’s global stock index had a female­ cally centred on the car industry, whose
sectors has been hot since economies majority board. But that was double the
began to reopen. Americans working in number in 2021 and includes giants like Internship We invite promising journalists and
leisure and hospitality have seen their Citigroup and Shell. Analysis just pub­ would­be journalists to apply for an internship
supported by the Marjorie Deane Foundation.
earnings grow faster than those toiling in lished by Moody’s, a credit­rating agency, Successful candidates will spend three to six
more male­dominated industries such as shows that such firms in North America months with The Economist in London writing about
transport over the past year or so. have consistently higher credit ratings. business. Applicants are asked to send a covering
The return to the pre­pandemic trend Disentangling cause and effect is not letter and an original article of about 500 words that
would be suitable for publication in the Business
will be helped by women’s gains at the easy. Empowering women ought to be. section. Applications should be sent to
[email protected] by April 1st.

012
 56 Business The Economist March 11th 2023

heavy parts and large batches with limited levels of adoption remain low, especially
variety are ideally suited to the machines. in the West. According to the IFR, even
The electronics industry, with its need for South Korean firms, by far the world’s
precise but repetitive movements, was also keenest robot­adopters, employ ten manu­
an early adopter. facturing workers for every industrial
More recently the list of industries robot—a long way from Mr Musk’s vision.
which are embracing robots has length­ In America, China, Europe and Japan the
ened, observes Jeff Burnstein, president of figure is 25­40 to one. The $25bn that, ac­
the Association for Advancing Automa­ cording to consultants at BCG, the world
tion, an American industry group. Advanc­ spent on industrial robots in 2020 was less
es in computer vision have made ma­ than 1% of global capital expenditure (ex­
chines much more dexterous, points out cluding the energy and mining sectors).
Sami Atiya, who runs the robotics business People spent more on sex toys.
of ABB, a Swiss industrial firm. Lightweight The long lifetimes of industrial equip­
“collaborative robots” now work side­by­ ment limit how quickly older, dumber
side with human workers rather than be­ machines can be replaced with cleverer
ing caged off, and autonomous vehicles new ones, observes Rainer Brehm, who
ferry objects from one place to another in runs the factory­automation unit of Sie­
factories and warehouses. mens, a German industrial giant. And most
At the same time, robot prices have menial jobs in advanced economies these
tumbled. The average price of an industrial Optimus not ready for prime time days are anyway in the services industries,
robot fell from $69,000 in 2005 to $27,000 where physical tasks are harder to auto­
in 2017, reckons Ark Invest, an asset man­ 3.5m in 2021. Sales at Fanuc, a large Japa­ mate. The human body, with its joints and
ager. In December ABB opened a 67,000­ nese robot­maker, rose by 17% last quarter, digits affording 244 planes of motion, is a
square­metre “mega factory‘‘ in Shanghai year on year; those of Keyence, a Japanese marvel of versatility. A typical robot has six
where robots make other robots. Installa­ company that acts as an automation con­ such “degrees of freedom”, notes Kim Povl­
tion costs have come down, too, with new sultant to the world’s factories, shot up by sen, chief executive of Universal Robots, a
“no code” systems requiring no program­ 24%. Although they are down from the manufacturer of industrial robot arms.
ming skills, notes Susanne Bieller, general frothy peaks of 2021, when chief executives The automation of office work has been
secretary of the International Federation of sought alternatives to human workforces similarly halting, for similar reasons of
Robotics (IFR), another industry body. incapacitated by covid­19, robot­makers’ legacy systems and corporate inertia. In
As a consequence of better technology share prices remain a fifth higher than be­ theory, digitisation should make it possi­
and lower prices, the global stock of indus­ fore the pandemic. ble to remove most human involvement
trial robots grew from 1m in 2011 to nearly For all that growth, however, absolute from routine tasks like ordering inventory,
paying suppliers or totting up accounts.
In practice, most businesses born be­
Stuck on repeat fore the digital era use a tangle of outdated
and incompatible systems, notes Cathy
Share of words published in Industrial robots Tornbohm of Gartner, a research firm.
English-language books, % Worldwide stock, m Rather than shell out on IT consultants to
0.0020 4 come and untangle the thicket, many firms
prefer to outsource the menial office work
Automation to low­cost countries like India or the Phil­
0.0015 3
ippines. IDC, another research firm, puts
Robot the market for software that automates un­
0.0010 2
rewarding office tedium at $20bn a year,
even less than is being spent on robots of
0.0005 1 the physical variety.
Artificial
Intelligence
0 0 Automatic for the people
1900 20 40 60 80 2000 19 2000 05 10 15 21
In time, further innovation is likely to re­
move some of those obstacles. For physical
robots, this is well under way in machine­
Industrial robots Stockmarket indices mad South Korea. Doosan Robotics, one of
Per 10,000 manufacturing workers, 2021 January 2020=100
the country’s biggest robot­makers, has
180
0 200 400 600 800 1,000 opened up its software to outside develop­
160 ers to create pre­programmed applications
South Korea
ROBO* for its robots. These are now used for
140
everything from making coffee to laying
Japan
120 flooring on construction sites. Robert
China
Chicken uses robotic arms to operate its
100
deep fryers at its fast­food restaurants; to
MSCI World 80 keep upfront investment for franchisees
United States
down, the company rents the robots out to
60
Western Europe them for around $900 a month, substan­
2018 19 20 21 22 23 tially less than the cost of a human opera­
Sources: Google Ngram Viewer; Bain & Company; tor. Naver, a South Korean internet giant,
International Federation of Robotics; Bloomberg *Global Robotics and Automation Index
has a unit developing robot vehicles that

012
 The Economist March 11th 2023 Business 57

can navigate busy environments with ready serves 10,000 clients. Power Auto­ gal assistant with ChatGPT­like powers, re­
complicated layouts: an army of such bots mate, a tool from Microsoft that allows reg­ quires its lawyers to cross­check every­
already whizzes around delivering lunch ular desk jockeys with little programming thing the bot spits out. CNET, a tech­news
boxes and parcels to its workers. experience to automate tasks, such as ex­ site, starting in November quietly pub­
Office­process automation is also be­ pense or travel approvals, now has 7m lished 73 articles written by a bot, first to
coming more sophisticated. UiPath, a pio­ monthly active users, says Charles Laman­ the consternation and then the delight of
neer in automating mindless tasks such as na, who is responsible for many of the soft­ journalists, after the articles were found to
copying and pasting information from one ware giant’s automation products. be riddled with errors.
program to another, now offers other tools Some businesses are tentatively begin­ The AI technology that underpins chat­
that extract data from paperwork using im­ ning to embrace generative AI, too. How­ bots could one day be a boon for automa­
age­recognition algorithms or that map ever, as with robots and process automa­ tion, reckons Mr Lamanna. But getting
business processes by observing what tion, bedding in the new technology will from science fiction to science fact is one
workers do on their computers. Rob En­ not happen overnight. Allen & Overy, a law thing. Getting from there to economic fact
slin, UiPath’s co­CEO, says the company al­ firm that in February launched a virtual le­ is quite another. n

Bartleby Silver linings

The small consolations of office irritations

E ven people who love their jobs have a

few gripes. Even people who excel at
their work have their share of worries.
who make office life so teeth­grinding?
Every company has its share of toadies
who specialise in managing up: flattering
that may be holding them back? Impos­
tor syndrome, the belief some people
have that they do not deserve to be in
The office environment makes it hard to the bosses and claiming more credit than positions of influence, is usually thought
concentrate; their colleagues are annoy­ is their due. Unctuousness is undoubtedly of as being bad for individuals and orga­
ing beyond belief; their career path with­ irritating. But it, too, can sometimes have nisations alike. But it can have an upside.
in the organisation is not obvious. There wider benefits. Research by Basima Tewfik of the MIT
are aspects of the workplace, like “reply Recent research by Wei Cai of Colum­ Sloan School of Management found that
all” email threads and any kind of role­ bia Business School and her co­authors people who worry about being an impos­
playing, which are completely beyond found that teams performed better when tor are regarded by others as having
redemption. This column is here to they had some crawlers among them. better interpersonal skills than those
administer the balm of consolation for People who got better assessments from who are untroubled by self­doubt. It may
some of work’s recurring irritations. their superiors than from their peers in be that a concern about lacking compe­
Start with a pervasive problem: being performance­review processes were des­ tence leads people to compensate by
interrupted. You have muted notifica­ ignated as “upward influencers” in the developing stronger relationships with
tions on Slack and cleared your calendar; study. Too many characters of this sort is others. In a world that increasingly
the Prelude from Bach’s Cello Suite No 1 bad: at some point, team members will prizes collaboration and soft skills, that
is playing; your fingers are poised above expend more effort competing for recog­ is not to be sniffed at.
the keyboard and a thought of world­ nition than getting actual work done. But Weaknesses can turn into advantages
altering profundity is gradually taking because these personality types are pre­ in other ways, too. The idealised en­
shape in your mind. Then there is a pared to invest more time communicating trepreneur may drip with confidence and
knock at the door, and a colleague asks if with their managers, the presence of a charisma, for example. But not everyone
you have a minute to discuss the air­ handful of them ensures that a team does fits that mould. In a recent study, Lauren
conditioning. By the time they have not become invisible to the bosses. A few Howe and Jochen Menges of the Univer­
gone, so has that momentous thought suck­ups can be good for everyone. sity of Zurich asked participants in an
and any sense of well­being. What of traits that workers find most investment game who had been asked
Context­switching of this sort is more irritating about themselves, the things about their own flaws to allocate funds to
than simply annoying. A survey conduct­ startups. They found that entrepreneurs
ed in 2021 found that it takes people nine who reveal a personal shortcoming, such
and a half minutes to resume a focused as indecisiveness or insecurity, are more
state of mind after switching between likely to attract funding from investors
apps. But there is a bright side to being who share these same characteristics.
interrupted. A paper by Harshad Puranik Some weaknesses are not to be admitted:
of the University of Illinois Chicago and stupidity, say, or narcolepsy. But flaws
his co­authors asked a sample of employ­ can sometimes help people get ahead,
ees in America to record how often they not hinder them.
were distracted by colleagues and to The problem with silver linings is that
report their sense of belonging to their they are attached to clouds. You are still
organisations. They found that being being interrupted all the time. You are
interrupted involves a social interaction still surrounded by annoying colleagues.
with colleagues that can strengthen a Impostor syndrome still causes you
worker’s feelings of connection. The next unnecessary anxiety. Your weaknesses
time a knock comes, remind yourself are still weaknesses. But there are bright
that at least you are not lonely. sides to most things in office life, and
What about some of the characters they go beyond the payslip.

012
 58 Business The Economist March 11th 2023

Schumpeter High risk on the high seas

The world’s two biggest shipping companies boldly set sail in opposite directions
Maersk was the opposite. It was the industry’s most punctual,
best­staffed and most service­oriented carrier. But in the
mid­2010s it had over­ordered mega­sized vessels, and needed
help filling them. MSC, whose main selling point is cost, was de­
lighted to oblige, partly to emulate Maersk’s standards of service. It
worked so well that alliances began to be considered the corner­
stone of improved financial discipline in the industry. In a sign of
MSC’s “Maerskisation”, in 2020 Mr Toft jumped ship from the Dan­
ish firm, where he had been chief operating officer.
There were drawbacks, though. As Alan Murphy of Sea Intelli­
gence, a research firm, notes, alliances are a “fast track to com­
moditisation”. Once you entrust your cargo to someone else’s
ships, it is hard to differentiate yourself. Moreover, as the strat­
egies of both companies diverged, the alliance made less sense.
MSC used boom times during the covid­19 pandemic to order
enough ships to go it alone. As Maersk focused on logistics, it
needed complete control of its cargoes, which was easier if they
were on its own ships. In late January the two firms said that they
would end the alliance in 2025 and sail their separate ways.
Their divergent strategies are bold—almost to the point of
recklessness. MSC’s buying spree will contribute to serious over­
capacity in the market this year, driving down shipping rates. The

D on’t feel bad if MSC, the Mediterranean Shipping Company, is

the biggest ocean­going carrier you have never heard of. It is
meant to be that way. Its founder, Gianluigi Aponte, is a publicity­
assumption is that it hopes that its overwhelming size will enable
it to achieve economies of scale, reduce unit costs and further ex­
pand market share, which is about 17% by volume. This is the clas­
shy Italian billionaire, based in Switzerland, a country with no sic approach of the market leader in a cyclical, investment­heavy
maritime borders and a culture of secrecy as deep as the ocean. His industry, which feels it can outgun its competitors. The trouble is
firm has taken the seafaring world by stealth. Born in 1970 with a that smaller shipping lines are also spending their pandemic
single vessel trading between Somalia and southern Italy, msc last windfall on new ships. Size may also mean that MSC’s standards
year overtook A.P. Moller­Maersk to become the world’s biggest slip, says Simon Heaney of Drewry, a shipping consultancy. He
container­shipping company. Yet its culture of silence remains. notes that last month the Australian Maritime Safety Authority, a
When its CEO, Soren Toft, spoke at a shipping jamboree in Long regulator, said it had detained five MSC ships already this year,
Beach this month, he revealed next to nothing. “We’re not going to many because of substandard maintenance practices.
make [talking in public] a habit,” he said gruffly. Maersk has a different problem. However sensible it is to main­
Do not be put off. Actions speak louder than words. MSC hasn’t tain a disciplined order book, the risk is that its smaller fleet rela­
simply edged past Maersk. It has left it in its wake. When it takes tive to MSC’s puts off customers who want a greater choice of sail­
delivery of the ships it has on order, its total tonnage could be a ings and destinations. Maersk argues that many of its customers
whopping 40% greater than its Danish rival’s, according to Alexia will benefit more from reliability, data­driven insights and the
Dogani of Barclays, a bank. Meanwhile Maersk, the industry blue­ flexibility to divert cargoes at short notice than they will from size.
blood with a pedigree dating back to 1904, is abandoning the quest Sceptics wonder whether customers will cough up more for inte­
for dominance on the high seas. Instead of a big order book, it grated services, especially in a lacklustre economy. Moreover,
hopes to focus investment on higher­return services along the Maersk’s logistics business will compete with freight­forwarders,
supply chain, from ports to rail, road and air networks, becoming, such as DHL and Kuehne+Nagel, which perform similar functions
in the jargon, an integrator rather than a mere box­carrier. using a variety of carriers. If Maersk’s strategy puts their noses out
In effect, then, the number one and number two companies in of joint, they may stop directing cargoes to its ships.
an industry at the centre of world trade are placing radically differ­
ent bets on the future. They are doing this against the backdrop of Long slogistics
a post­pandemic slowdown in container shipping, as well as lon­ Maersk has tried and failed to pivot in this way in the past. But this
ger­term questions about the future of globalisation. Whether is a new era. It has more data than ever to work with. Companies
either succeeds or not, they provide an intriguing natural experi­ wondering whether to reduce their exposure to China, to create
ment on different approaches to industrial commoditisation. additional capacity in Asia, or to “nearshore” production to North
It is an extraordinary parting of the ways. For eight years the America may welcome new supply­chain options. And Maersk
two companies have been in an alliance, called 2M, in which, like may be able to make a virtue of offering climate­friendlier freight
airlines swapping passengers in code­sharing agreements, they routes for customers willing to pay for greenery.
provide container space on each other’s vessels. They have always From an economic point of view, the success of both long­term
made an odd couple. Imagine a budget airline like Ryanair team­ strategies would be a good thing. If MSC drives down shipping
ing up with a plush carrier like Singapore Airlines and you get the costs, this would help reduce goods prices. If Maersk becomes a
picture. MSC was infamously unreliable (its initials, an old joke smooth integrator, supply chains could go back to being as boring­
went, stood for “maybe ship comes”). Its staffing levels, as one ex­ ly reliable—and unnewsworthy—as they once were. Even MSC
Maersk employee puts it, were “lean to the point of starvation”. would welcome that. n

012
 Finance & economics The Economist March 11th 2023 59

→ Also in this section

60 China’s true economic growth
61 Communists v hedonistic bankers
61 New York’s remarkable dominance
62 Finance and artificial intelligence
63 Buttonwood: Stagflation investing
64 Free exchange: Risking inflation

The new economics of work trade with Russia, the country’s gdp fell by
0.6% in the fourth quarter of 2022. But
Jobs for all “worst” is relative. At 7.1% in January, Fin­
land’s jobless rate is still well below its
long­run average. Meanwhile, most of the
places synonymous with the sky­high job­
lessness of the early 2010s—Greece, Italy,
Spain—are doing much better now.
S AN FRANCISCO AND TO KYO
This employment miracle hints at a
Why the West’s employment miracle looks likely to continue
change in Western economies. To under­

T o see what a world swimming in jobs

looks like, visit Japan. At airports staff
straighten suitcases after they tumble onto
line with the long­run average. In half of
oecd countries, including Canada, France
and Germany, there has never been a high­
stand why, return to Japan. Local employ­
ers dislike firing workers, even if they have
little for them to do. In part because more
the carousel. Men with fluorescent batons er share of working­age folk in a job. and more people are retiring, firms strug­
stand near construction sites, reminding Joblessness is rising in a few countries, gle for new staff and are reluctant to let
you not to walk onto the site. In depart­ including Austria and Israel. One of the people go unless they have no choice. The
ment stores smartly dressed women help worst performers is Finland, where the un­ result is an unemployment rate which
you use the lifts. And in one of Tokyo’s best employment rate has risen by a percentage barely rises, even in recessions. In the past
bars, a team of four prepared your corre­ point from its post­lockdown low. In the 30 years Japan’s jobless rate has varied by
spondent’s gin martini (from the freezer, of face of soaring energy prices and reduced just 3.5 percentage points, compared with
course, free­poured, and very dry). 9.5 points in the average rich country.
Now the rest of the rich world is starting A more Japanese labour market would
to look more Japanese. Since the heady Missing: robots have disadvantages. If workers do not leave
post­lockdown days of 2021 gdp growth OECD countries, unemployment rate, % poorly performing firms, they cannot join
across the 38 countries of the oecd has 10
innovative ones which drive growth. In­
slowed almost to a standstill, and in some deed, the data suggest that rich­world pro­
countries is negative. Business confidence 8 ductivity growth is exceptionally weak at
is below its long­run average. Yet there is present. However, spells of unemploy­
not much sign of weakness in the labour 6 ment can exert a terrible human toll. Coun­
market. On March 7th Jerome Powell, tries where unemployment is less volatile
chairman of the Federal Reserve, observed 4 also tend to have milder recessions, points
that in America, “despite the slowdown in Global financial Covid-19 out Dario Perkins of ts Lombard, a finan­
growth, the labour market remains ex­ crisis pandemic 2 cial­services firm. When the labour market
tremely tight.” Across the oecd as a whole does not crack, people can keep spending
the unemployment rate was 4.9% in De­ 0 even as growth slows.
cember—the lowest in many decades. 2001 05 10 15 20 22
What explains employers’ Japanese
From the third to the fourth quarter of the Source: OECD
turn? Perhaps, after the pandemic, bosses
year, the rich world added about 1m jobs, in are kinder to workers. Another, more real­

012
 60 Finance & economics The Economist March 11th 2023

istic, possibility is that firms are in a strong the National Federation of Independent Critics argue that the declining energy
financial position. This may allow them to Business, a lobby group, finds an unusu­ intensity of China’s economy undermines
withstand lower revenues today without ally large share of small firms plan to create the index. But that is not quite true. As long
needing to slash costs. Many received help new jobs in the next three months. as electricity follows an identifiable trend,
from governments during the covid era. Confronted with labour­market resil­ deviations from the trend are revealing
And in recent years corporate profits have ience even in the face of rising interest about economic upturns and downturns.
been hefty. Businesses across the rich rates, central banks may be tempted to What really broke the Li Keqiang index was
world are still sitting on cash piles about a tighten monetary policy faster still. Fur­ the covid­19 pandemic. The decline in re­
third higher than before the pandemic. ther increases in rates, or another energy tail sales, air travel and the property mar­
A more intriguing possibility concerns shock, may push employers over the edge, ket was far more dramatic than the slow­
the workforce. According to our estimates, forcing them to cut staff. The pressure to down in industry, electricity use or rail
the rich world is “missing” 10m workers, or retain staff could, however, become a freight. Meanwhile, m2 grew quickly at the
roughly 1.5% of the labour force, relative to structural issue. Over the next decade rich­ end of last year as people hoarded cash.
pre­pandemic trends. In Britain and Italy world populations will age rapidly, drag­ What are the alternatives? Those scepti­
the workforce has actually shrunk. Early ging further on labour supply. Good work­ cal of China’s data yearn to escape its sta­
retirements and an ageing population ex­ ers are likely to become harder to find. tistical system altogether. Perhaps the
plain part of the deficit. Covid may have Next time there may only be three people brightness of lights at night, recorded by
pushed people to reassess their priorities, making your correspondent’s martini. n satellites, could offer a truly independent
prompting them to drop out. Some even guide to growth? But this measure has its
think long covid is forcing people to stay own problems. The newer satellites do not
on the sidelines. Whatever the explana­ China’s economic growth have a long track record and the older ones
tion, falling participation has wreaked struggled to distinguish between the
havoc with plans. Many firms fired staff Qiang Ker-ching bright and very bright lights of cities. Cov­
when the pandemic hit, only to struggle to erage is also patchy from month to month.
rehire them in 2021. That year vacancies in Mr Pinkovskiy and his co­authors have
the oecd hit an all­time high of 30m. instead used night­time lights not as a di­
Employers may now want to avoid mak­ rect measure of growth, but as a way to ad­
ing the same mistake. A recent report by judicate between other potential proxies.
HO NG KO NG
s&p Global Market Intelligence, a consul­ If the contenders are good at tracking
What comes after the Li Keqiang index?
tancy, identifies “a reluctance among com­ night­time lights, they should be good at
panies to sanction job cuts due to the im­
mense challenges they faced in rehiring
post­pandemic”. In America gross job loss­
W hen Li Keqiang, China’s prime min­
ister, gave his final speech at the Na­
tional People’s Congress on March 5th, it
tracking growth, too. The authors’ investi­
gations suggest that in addition to lending
(or m2), electricity and (to a lesser degree)
es have so far been smaller than is normal was already clear who would succeed him. rail freight, retail sales are a useful indica­
at the start of the year. Daniel Silver of But a successor has yet to be found for the tor. Adding them would certainly have
JPMorgan Chase, a bank, speculates that “Li Keqiang index”. This unofficial proxy made a difference during the pandemic.
this is because “firms are reluctant to let go for China’s economic growth was inspired No diplomatic cable has yet come to
of workers given perceived difficulties in by a leaked conversation between Mr Li, light revealing the indicators favoured by
eventual rehiring.” when he was party secretary for the prov­ China’s probable new prime minister, Li
Labour­market pain may end up being ince of Liaoning, and an American dip­ Qiang. He was previously party chief of
merely delayed. In some past recessions lomat. Mr Li confessed that the province’s Shanghai, where services account for
unemployment only started to rise deci­ gdp figures were “unreliable”. Instead, he about three­quarters of gdp. The equiva­
sively some time after gdp started to fall. focused on electricity consumption, rail lent figure in rust­belt Liaoning was only
But “real­time” data show little sign that cargo and bank lending. Taking our cue 40% when Li Keqiang first revealed the in­
joblessness is about to surge. A recent sur­ from Mr Li, this newspaper thought it gredients of the index named after him.
vey by ManpowerGroup, a staffing firm, would be fun to see what the three indica­ Safe to say, then, any “Li Qiang index” will
suggests employers in most countries still tors, bundled into a single index, revealed not neglect the services sector of China’s
have ambitious hiring plans. In America about China’s economy at a national level. vastly altered economy. n
The index has had a good run since its
introduction in 2010. A version has its own
Hire, don’t fire “ticker” on Bloomberg. It inspired a similar Li’s legacy
World, companies reporting a decline in index for India. Teams of researchers at the China, GDP, % change on a year earlier
employment due to cost-cutting* Federal Reserve Bank of San Francisco and 20
Long-term average=1 separately at the New York Fed have tested
the usefulness of Mr Li’s preferred indica­ Official measure
Global financial crisis 5 15
Jun 2008-Jul 2009 tors. A paper published in 2017 by Hunter
4 Clark and Maxim Pinkovskiy of the New
Covid-19 pandemic 10
Feb 2020-Jun 2020 York Fed, together with Xavier Sala­i­Mar­
3
tin of Columbia University, calculated that 5
2 the best combination of the three indica­
Li Keqiang proxy
tors gave roughly 60% weight to loans, 30% 0
1 to electricity and 10% to rail cargo. In a sub­
Aug 2022-Jan 2023 sequent paper, Mr Clark, Mr Pinkovskiy -5
0
and Jeff Dawson of the New York Fed sug­
1 3 6 9 12 13
gested replacing lending with m2, a mea­ -10
Month of episode
sure of the money supply, because bank­ 2011 13 15 17 19 21 22
*Based on a survey of
Source: S&P Global PMI purchasing managers
credit figures failed to capture a govern­ Sources: Haver Analytics; The Economist
ment crackdown on shadow lending.

012
 The Economist March 11th 2023 Finance & economics 61

Finance and fun bank focused on technology, has also On March 3rd Arm, a British semi­
shocked local executives. His company has conductor firm owned by SoftBank, a Japa­
An anti-party party been unable to reach him since he disap­ nese investment outfit, announced that it
peared in mid­February, but has said it has would list only in New York, rebuffing a
been informed he is co­operating with an campaign by British ministers to encour­
investigation. According to the Wall Street age a London listing. A day earlier, crh, a
Journal, Mr Bao has been detained by the London­listed building­materials firm,
SHANGHAI
same corruption watchdog that published said it would move its main listing to New
The Chinese Communist Party takes
the recent attack on the financial industry. York. Other European countries have also
aim at hedonistic investment bankers
The Communist Party has already lost out. The same week Linde, a chemical

S enior staff at China’s largest invest­

ment banks have been flying economy,
not first class, in recent months. They are
claimed success in avoiding the rise of a
“crypto­bro” culture, which it did by ban­
ning cryptocurrency trading. Some of the
firm that was until recently the largest con­
stituent of Germany’s dax index, quit
Frankfurt, keeping its American listing.
cutting back on entertaining clients and talent that would otherwise have gone into After a pause of almost two years, Chi­
drinking less, if at all, at banquets. A bank­ developing related products has been nese firms are also looking westward. New
er says he has been warning junior col­ channelled elsewhere. Perhaps Mr Xi rules published last month by the coun­
leagues to avoid ostentatious displays of thinks he can do the same to a generation try’s securities regulator mean that over­
wealth. It is, he reports, for their own good. of West­loving, hedonistic bankers. n seas listings will be vetted more closely,
“Common prosperity”, a campaign for a but they also offer an avenue for more
more equal China, which was launched in firms to list abroad. Last month Hesai
2021 by Xi Jinping, is coming to investment Overseas listings Group, a Chinese electronics company,
banking. A recent commentary by the offi­ raised $190m on the Nasdaq, the largest
cial corruption watchdog, published on The bigger apple Chinese listing in America since 2021.
February 23rd, orders financiers to smash Shein, a fashion firm, is also said to be
“financial elitism, worship of wealth and looking to float its shares in New York.
reverence for the West”. Meanwhile, the American regulators may be toughening
disappearance of Bao Fan, a high­profile up on some Chinese firms, by employing
banker, reportedly to take part in an inves­ sanctions and export controls, but the Big
New York is hoovering up business
tigation, has put the industry on edge. Apple seems to have retained its allure.
from Hong Kong and London
Just a few years ago a steady stream of The trend reflects the failures of Hong
Chinese­born, Wall Street­trained bankers
was flowing from London and New York to
Beijing, Hong Kong and Shanghai. The
I n 2006 Charles Schumer and Michael
Bloomberg took to the pages of the Wall
Street Journal to express their concerns
Kong and London, the only stockmarkets
that can really compete with New York. In
the past four quarters, during which busi­
growing cohort was swapping mostly mid­ about New York. The senator and mayor ness was slow, American exchanges won
level (but sometimes senior) jobs at elite both feared that the Big Apple was losing $24bn in overseas ipos, eight times as
Western financial firms for better­paid po­ its financial edge. The city had, after all, much as managed together by London and
sitions at Chinese investment banks. captured only one of the previous year’s 24 Hong Kong (excluding Chinese stocks), ac­
The trend was about more than just pay, largest initial public offerings (ipos). cording to Dealogic, a data provider. In
however. Many bankers wanted to return New York’s bigwigs have little to worry 2019, by contrast, New York only took in
to a richer, more vibrant homeland after about these days. In the battle between glo­ three times as much business.
years spent overseas. Foreign financial bal financial centres, the city is increas­ Hong Kong’s stockmarket once held
firms were, and still are, expanding their ingly a power with no equal. That is espe­ some attraction for foreign companies, in­
local offices. Nightlife, restaurants and cially true when it comes to stockmarkets, cluding Rusal, a Russian aluminium firm,
luxury­car dealerships exerted a pull all of where America’s financial hub is extend­ Prada, an Italian fashion house, and Sam­
their own. In short, Chinese cities were ing its already comfortable lead. sonite, an American luggage company. But
ready to cater to a class of young bankers
with cash to burn.
Now the party is winding down. Even
before the focus on Chinese finance’s cul­
ture, the industry had been subject to a
years­long corruption crackdown target­
ing bosses. The country’s zero­covid policy
stopped high­flying bankers travelling
abroad for several years—forcing those
who had recently returned to consider
whether their future really did lie in China.
And it is has become clear that the Com­
munist Party has taken an extremely grim
view of finance. The watchdog’s critical
commentary instructs bankers to cast out
any notions they may have of “exceptional­
ism, distinctiveness and superiority”. At
times the document talks about finance as
if it were a virus with “hidden variants”
that must be battled in an effort which “one
cannot grow too tired to fight”.
The detention of Mr Bao, founder of
China Renaissance, a boutique investment You wouldn’t want to be anywhere else

012
 62 Finance & economics The Economist March 11th 2023

the city’s current listings pipeline contains $5.4trn, but these days manages to attract off against quant investors, who had auto­
few firms from beyond China. Meanwhile, little international business. mated their investment processes; algo­
London has its own drawbacks. One com­ Other places simply cannot match the rithms managed a majority of investors’
mon gripe is the lack of a natural base of in­ big three’s heft. Amsterdam and Dubai assets in passive index funds; and all of the
vestors. Britain’s pension funds and insur­ have grown, but remain regional, murky or biggest, most successful hedge funds used
ers invest a notably small proportion of both. Singapore, which passed Hong Kong quantitative methods, at least to some de­
their assets in domestic stocks. in last year’s Global Financial Centres In­ gree. The traditional types were throwing
Stock exchanges in Shanghai and dex, compiled by Z/Yen, a consultancy, is a in the towel. Philippe Jabre, a star investor,
Shenzhen are enormous, boasting com­ growing wealth­management hub, but re­ blamed computerised models that had
bined total market capitalisations of more mains a minnow when it comes to stocks. “imperceptibly replaced” traditional actors
than $12trn. But the Chinese Communist As Messrs Schumer and Bloomberg can when he closed his fund in 2018. As a result
Party is an ever­present threat, and Chi­ attest, financial competition sometimes of all this automation, the stockmarket
nese stockmarkets still behave somewhat changes in unpredictable ways. Right now, was more efficient than ever before. Execu­
irrationally. Indeed, shares in firms listed though, New York appears to be the listing tion was lightning fast and cost next to
on mainland and Hong Kong bourses are venue of choice for companies in America, nothing. Individuals could invest savings
almost 40% more expensive on the main­ Europe, and—when officials on both sides for a fraction of a penny on the dollar.
land. Tokyo’s stockmarket is also big, with allow—China, too. The city is fast pulling Machine learning held the promise of
a total market capitalisation of nearly away from the rest of the field. n still greater fruits. The way one investor
described it was that quantitative invest­
ing started with a hypothesis: that of mo­
Quantitative investing mentum, or the idea that stocks which
have risen faster than the rest of the index
Hedge-fund lessons would continue to do so. This hypothesis
allows individual stocks to be tested
against historical data to assess if their val­
ue will continue to rise. By contrast, with
machine learning, investors could “start
with the data and look for a hypothesis”. In
GRE E NWICH, CO NNECTICUT
other words, the algorithms could decide
The experience of finance suggests ai will take time to infiltrate other businesses
both what to pick and why to pick it.

W ho are the earliest adopters of new

technologies? Cutting­edge stuff
tends to be expensive, meaning the answer
human involvement. The flagship fund of
Renaissance Technologies, the first ever
quant outfit, established in 1982, earned
Yet automation’s great march forward
has not continued unabated—humans
have fought back. Towards the end of 2019
is often the extremely rich. Early adopters average annual returns of 66% for decades. all the major retail brokers, including
also tend to be incentivised by cut­throat In the 2000s fast cables gave rise to high­ Charles Schwab, e*trade and td Ameri­
competition to look beyond the status quo. frequency marketmakers, including Cita­ trade, slashed commissions to zero in the
As such, there may be no group more likely del Securities and Virtu, which were able to face of competition from a new entrant,
to pick up new tools than the uber­rich and trade shares by the nanosecond. Newer Robinhood. A few months later, spurred by
hyper­competitive hedge­fund industry. quant outfits, like aqr and Two Sigma, beat pandemic boredom and stimulus cheques,
This rule appears to hold for artificial humans’ returns and gobbled up assets. retail trading began to spike. It reached a
intelligence (ai) and machine learning, By the end of 2019, automated algo­ peak in the frenzied early months of 2021
which were first employed by hedge funds rithms took both sides of trades; more of­ when day traders, co­ordinating on social
decades ago, well before the recent hype. ten than not high­frequency traders faced media, piled into unloved stocks, causing
First came the “quants”, or quantitative in­ their prices to spiral higher. At the same
vestors, who use data and algorithms to time, many quantitative strategies seemed
pick stocks and place short­term bets on Green light, red light to stall. Most quants underperformed the
which assets will rise and fall. Two Sigma, United States, hedge-fund returns markets, as well as human hedge funds, in
a quant fund in New York, has been experi­ 2020 and early 2021. aqr closed a handful
menting with these techniques since its December 31st 2009=100 of funds after persistent outflows.
founding in 2001. Man Group, a British out­ 250 When markets reversed in 2022, many
fit with a big quant arm, launched its first Quants of these trends flipped. Retail’s share of
200
machine­learning fund in 2014. aqr Capi­ trading fell back as losses piled up. The
tal Management, from Greenwich, Con­ 150 quants came back with a vengeance. aqr’s
necticut, began using ai at around the All 100 longest­running fund returned a whop­
same time. Then came the rest of the in­ ping 44%, even as markets shed 20%.
50
dustry. The hedge funds’ experience dem­ This zigzag, and robots’ growing role,
onstrates ai’s ability to revolutionise busi­ 2009 11 13 15 17 19 21 23 holds lessons for other industries. The first
ness—but also shows that it takes time to is that humans can react in unexpected
do so, and that progress can be interrupted. December 31st 2019=100 ways to new technology. The falling cost of
Ai and machine­learning funds seemed 130 trade execution seemed to empower in­
like the final step in the march of the ro­ All 120 vesting machines—until costs went to ze­
bots. Cheap index funds, with stocks ro, at which point it fuelled a retail renais­
110
picked by algorithms, had already swelled sance. Even if retail’s share of trading is not
in size, with assets under management Quants 100 at its peak, it remains elevated compared
eclipsing those of traditional active funds 90 with before 2019. Retail trades now make
in 2019. Exchange­traded funds offered 2019 20 21 22 23
up a third of trading volumes in stocks (ex­
cheap exposure to basic strategies, such as Sources: PivotalPath; Bloomberg
cluding marketmakers). Their dominance
picking growth stocks, with little need for of stock options, a type of derivative bet on

012
 The Economist March 11th 2023 Finance & economics 63

Buttonwood A ripe harvest

Why commodities shine in a time of stagflation

W atching Jerome Powell testify

before Congress on March 7th
brought on an irrepressible sense of déjà
growth, things got much worse. Shares
lost 4.7%, and bonds 9%.
In other words, neither bonds nor
stock­only portfolio, and three­quarters
of the volatility. Best of all for an investor
fearing high inflation and low growth,
vu. “The process of getting inflation back stocks are short­term hedges against commodity futures had an average ex­
down to 2% has a long way to go and is inflation, even if both outrun it in the long cess return of 10% in stagflationary years.
likely to be bumpy,” warned the Federal term. But this dismal conclusion is paired All this is appealing to the high­oc­
Reserve’s chairman. Recent economic with a brighter one. Commodities, as a tane end of finance. aqr Capital Manage­
data suggest that “the ultimate level of frequent source of inflation, offer an ment, a hedge fund known for its mathe­
interest rates is likely to be higher than effective hedge. What is more, commodity matical sophistication, published a
previously anticipated.” It is a message futures—contracts offering exposure paper last April entitled: “Building a
that Mr Powell and his colleagues have without requiring the purchase of actual better commodities portfolio”. Citadel,
been repeating, in various forms, since barrels of oil or bushels of wheat—look an investment firm that last year broke
the Fed started raising rates a year ago. As like a diversified investor’s dream asset. the record for the largest annual gain in
so many times before, markets that had To see why, start with their excess dollar terms, has been building up its
lulled themselves into a sense of compla­ return over cash­like Treasury bills. In the commodities arm for years. This part of
cency took fright and sold off. long run, the Yearbook’s authors put this at the business is reported to have made a
Investors are serially reluctant to take an annualised 6.5% for dollar investors, hefty chunk of the $16bn in net profits
Mr Powell at his word because its impli­ beating even American stocks’ 5.9%. Citadel made for clients.
cations are unpleasant for them. An ideal Better still, this return is achieved while Yet commodity futures remain an
portfolio would contain a mix of asset being little correlated with shares, and esoteric asset class rather than a port­
classes that each prospers in different moving inversely with bonds. folio staple. Like any investment, they do
economic scenarios. But all the tradi­ Commodity futures can be mixed with not offer guaranteed returns, as history
tional classes—cash, bonds and stocks— other assets for a portfolio with a much demonstrates. Gary Gorton and Geert
do badly when inflation is high and rates better trade­off between risk and return. Rouwenhorst, two academics, brought
are rising. Inflation erodes the value of At historical rates, a portfolio that is even­ commodities’ merits to widespread
both cash and the coupons paid by fixed­ ly split between stocks and commodity attention with a paper published in
rate bonds. Rising rates push bond prices futures would have a better return than a 2006. That was just in time for a deep,
down to align their yields with those lengthy crash, beginning in February
prevailing in the market, and knock 2008. From this point, a broad index of
share prices by making future earnings commodity prices lost 42% in real terms
less valuable today. and did not regain its peak until Septem­
Elroy Dimson, Paul Marsh and Mike ber 2021. Investors were scared off.
Staunton, three academics, demonstrate Another reason is that the market is
this in Credit Suisse’s Global Investment tiny. Out of total global investible assets
Returns Yearbook. They show that global­ worth $230trn, commodity futures make
ly, between 1900 and 2022, both stocks up less than $500bn, or 0.2%. Physical
and bonds beat inflation handily, posting supply, meanwhile, is constrained. Were
annualised real returns of 5% and 1.7% the world’s biggest investors to plough
respectively. But during years of high capital into the futures market, they
inflation, both performed poorly. On would be liable to distort prices enough
average, real bond returns flipped from to render the exercise futile. But for
positive to negative when inflation rose smaller outfits—and fast­money ones
much above 4%. Stocks did the same at like Citadel—commodity futures offer a
around 7.5%. In “stagflation” years, when lot of advantages. That is true even if Mr
high inflation coincided with low Powell keeps up the bad news.

shares, is even greater (see Graphic detail). counter­opinions, they hear their own, “we have invested a lot more in explaining
The second is that not all technologies and in politics that can lead to some dan­ to clients why we think the machine­learn­
make markets more efficient. One of the gerous craziness and in markets that can ing strategies are doing what they are do­
explanations for aqr’s period of underper­ lead to some really weird price action.” ing,” reports Greg Bond of Man Numeric,
formance, argues Cliff Asness, the firm’s The third is that robots take time to find Man Group’s quantitative arm.
co­founder, is how extreme valuations be­ their place. Machine­learning funds have There was a time when everyone
came and how long a “bubble in every­ been around for a while and appear to out­ thought the quants had figured it out. That
thing” persisted. In part this might be the perform human competitors, at least a lit­ is not the perception today. When it comes
result of overexuberance among retail in­ tle. But they have not amassed vast assets, to the stockmarket, at least, automation
vestors. “Getting information and getting in part because they are a hard sell. After has not been the winner­takes­all event
it quickly does not mean processing it all, few people understand the risks in­ that many fear elsewhere. It is more like a
well,” reckons Mr Asness. “I tend to think volved. Those who have devoted their ca­ tug­of­war between humans and ma­
things like social media make the market reers to machine learning are acutely chines. And though the machines are win­
less, not more, efficient...People don’t hear aware of this. In order to build confidence, ning, humans have not let go just yet. n

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 64 Finance & economics The Economist March 11th 2023

Free exchange Laboratory accidents

Emerging­market central­bank experiments risk reigniting inflation

seas. In October Hungary’s central bank opened one­day windows
in which depositors could earn bumper interest rates. The pro­
blem is not that these measures are ineffective. By mid­2022 the li­
ra had stabilised even though Turkish interest rates stayed ultra­
low. But by the end of the year, the Turkish government, which
covers the central bank’s expenses, had to find an extra 92bn lira
($5bn, or 0.5% of gdp) to cover the cost of the deposit scheme.
Russia’s central bank is another enthusiastic experimenter. It
had stocked up on gold and currencies from China and other
friendly countries, which helped when sanctions cut off $300bn
in reserves held by banks in America and Europe. Early in the war,
officials also steadied the ship by doubling interest rates, helping
to calm the rouble. Since then, however, things have got harder. As
the country has run bigger than expected fiscal deficits, an ob­
scure budget rule has forced the central bank to buy back lost re­
serves with roubles. This has pushed policymakers to experiment
with measures that make Russia uncomfortably reliant on China.
When officials replenish reserves, they will do so by buying a lot
more yuan, with plans for 60% of the country’s total cushion to be
issued by Beijing, up from less than 20% before the war. Work on a
digital currency has been accelerated; a pilot is scheduled for
April. It will be carried out with Chinese banks.

W hen prices began to rise unusually quickly two years ago,

one group was fastest to react: emerging­market central
bankers. They realised inflation had arrived for the long haul well
Other experiments involve playing around with central banks’
balance­sheets. The treasuries of advanced economies rarely run
budgets on a hand­to­mouth basis, since they are equipped with
before their peers in rich countries, and kept raising interest rates plenty of capital and have the option of issuing more debt. By con­
as prices soared. In policymaking environments as difficult as trast, emerging­market governments, such as those in India and
Brazil and Russia officials have resisted pressure from politicians the United Arab Emirates, increasingly plug gaps by dipping into a
to cut rates. This follows two decades in which emerging­market “ways­and­means” account at the central bank. This is a risky
central bankers pulled off the impressive feat of bringing down in­ move. If tax revenues do not come in above expectations, to even
flation in places where it had seemed intractable. The whole per­ out the gap, the government ends up in an overdraft. As long as the
iod has been a triumph not just for the officials involved, but for overdraft is small, and interest rates high enough to encourage
the economists who insisted on the need for independent central politicians to borrow elsewhere when possible, it is hard to go too
banks in emerging economies—and for them to focus on keeping wrong. But in recent years governments have used these ac­
prices stable, just like policymakers in rich countries. counts—which are counted as borrowing by the imf and World
Yet even as the inflation monster remains untamed, emerging­ Bank, though not by the countries involved—to get around debt
market central banks are engaging in experiments that put this limits set by domestic lawmakers. Nigeria’s overdraft is now
progress at risk. Some of the new measures are in response to roughly equal to its entire stack of official domestic debt.
changes beyond their control, such as Vladimir Putin’s invasion of
Ukraine. Others are attempts to overcome painfully familiar pro­ Boom!
blems, like currency depreciation. All threaten to undermine re­ Central bankers in countries including Ghana and Nigeria have
cent advances, which are ultimately based on central­bank credi­ come up with what at first glance appears a clever fix: converting
bility. Over the past few decades, the better policymakers managed the overdrafts into bonds, which have lower interest rates and are
to anchor inflation, the more their targets were believed and the easier to restructure. There is, however, a catch. Emptying the ac­
more prices were constrained. In 1995 median inflation in emerg­ counts by issuing bonds allows governments to build up their
ing economies was 10%; by 2017 it had fallen to 3%. This was the overdrafts once again, in the process relying on central banks for
pinnacle of a slow, miraculous transformation. yet another lifeline. Ultimately, this is tantamount to financing
The most expensive recent experiments are those which seek government borrowing through the back­door—something that
to prevent currencies falling in value. Central bankers once used tends to end up with markets pricing in runaway inflation.
to make their currencies more attractive by ratcheting up interest There are already plenty of threats to emerging­market central
rates and selling off foreign­exchange reserves. They are now less banks. Chief among them is the fact it will be harder to get policy
keen on raising rates to protect exchange rates, preferring to do so right as inflation falls than it was while it rose. As emerging­mar­
only to tackle inflation, and some lack reserves after sales at the ket central bankers quickly spotted, global shocks sent prices
start of the covid­19 pandemic. Thus officials are trying new ways soaring everywhere. But economies cool in very different ways,
to seduce depositors into keeping funds in local currencies, rather based on the reactions of consumers, industries and politicians.
than dollars. At the end of 2021, during a months­long collapse in Central bankers in emerging economies lack the granular data at
the lira, Turkey’s central bank offered to compensate anyone still the disposal of those in advanced economies to track these chang­
willing to deposit the currency for however much they ended up es. They would be well­advised to spend their time scrutinising
losing against the dollar. Shortly before Sri Lanka’s government the limited information available to them rather than dreaming
defaulted in April, it offered a similar guarantee to citizens over­ up innovations that may undermine hard­won credibility. n

012
 Science & technology The Economist March 11th 2023 65

The American Association for the Advancement of Science (and they were all men) of boundless ego
and public presence. Contrariwise, the Cell
Worlds within, worlds without Atlas project was founded and is run by a
pair of quietly determined women: Sarah
Teichmann and Aviv Regev. Their day jobs
are, respectively, at the Wellcome Sanger
Institute, near Cambridge, England, and
WASHINGTO N, DC
Genentech, a biopharma firm near San
This year’s meeting of the AAAS looked at coinage and democracy, brains and
Francisco. But they also manage to find
genes, and the ocean and the climate. But first, the Human Cell Atlas
time to run the steering committee which

W hat gets hyped, and what remains

neglected, often depends on good
storytelling. When the Human Genome
editors to explain what DNA actually was
every single time it was mentioned.
Who, however, has heard of the Human
keeps the atlas show on the road. Together
with Stephen Quake, organiser of a parallel
and co­ordinated project called Tabula Sa­
Project began, in 1990, it had a simple story, Cell Atlas? Precious few. Yet its goal resem­ piens, which was carried out at the Chan­
well told. From a standing start, American bles the genome project’s. It is to do for his­ Zuckerberg Biohub in California, they ap­
taxpayers would pay for an exhaustive map tology what was done for genetics by mak­ prised those attending the meeting of the
of the DNA that makes up the 24 sorts of ing an exhaustive map of a set of compo­ project’s progress to date.
chromosomes found in the human ge­ nents of the human body—in this case, its
nome (women have 23; men possess an ex­ cells, rather than its DNA. That, as this I contain multitudes
tra tiddler that carries the genetic switch year’s meeting of the American Associa­ An average adult human body is composed
for maleness). Others were welcome to tion for the Advancement of Science of 37.2trn cells. Clearly, no currently imag­
join in (and did; a third of the work was (AAAS), held in Washington, DC, heard, is a inable technology is going to be able to lo­
done in Britain, paid for by the Wellcome goal with as much medical importance as cate them all individually. But, just as a real
Trust), and there would be international the genome project had. But the Human atlas does not show every building, a cell
co­ordination, to stop duplication of ef­ Cell Atlas’s modest beginnings, decentral­ atlas need not show every cell. It should,
fort. But the moving spirit was the Ameri­ ised organisation and unpushy leaders, however, identify and characterise every
can government. And the budget was mea­ mean it has remained almost invisible. type of cell, and also where that cell type is
sured in billions. The genome project was led by men found in the body—not only which organ,
It was a brilliant success, both scientifi­ or even which tissue within an organ, but
cally and as a public­relations exercise for whereabouts within a tissue.
American science. By the time it was done, → Also in this section As of March 3rd, the date of the session
most people who would consider them­ addressed by Drs Regev, Teichmann and
68 The ocean and the climate
selves well­informed had heard of it. In­ Quake, the Cell Atlas project, which began
deed, in a rare shift in public conscious­ 68 Genes and brains in October 2016, had signed up 2,704 re­
ness about scientific jargon, journalists no searchers from 1,483 institutes in 86 coun­
69 Silver and democracy
longer found themselves required by their tries. Together, those scientists had exam­

012
 66 Science & technology The Economist March 11th 2023

ined 14,635 samples from 9,554 donors, and have been collected and verified, so that
logged data from 120m cells—a number other researchers may benefit from them.
that is doubling every 180 days or so. After a year or so of preliminaries, the
Importantly for the organisers’ goals Cell Atlas project was launched at an event
(and also in contradistinction to the ge­ in London, organised by Dr Regev (then at
nome project), institutes on every inhabit­ the Broad Institute, in Cambridge, Massa­
ed continent are helping to create the atlas. chusetts) and Dr Teichmann. This was at­
Since they draw their material from local tended by about 100 researchers. In 2017,
samples, this means that from the start, the Chan­Zuckerberg Initiative came on
even though the richer parts of the planet board. So far, this charity has donated
are inevitably over­represented, data from $254m towards the project, as well as
a wide variety of ethnic backgrounds have sponsoring Tabula Sapiens. That enter­
been included. prise collected its first samples in 2019,
Unlike the genome project, which had a building on the back of an earlier project
clear end point, known in advance (the on mice. The idea is to produce a first draft
number of genetic “letters” in the human of the full atlas in 2025.
genome could be calculated by measuring Besides posting data immediately, each
how much DNA it contained), the Cell Atlas group involved puts out its own papers.
project’s goal is fuzzy. When it began, no The Tabula Sapiens team, for example,
one knew how many types of cell there published a manuscript in 2022, describ­
were. The answer turns out to be, “a lot ing what they had done. They had focused
more than people once thought”. on obtaining samples of multiple different
A textbook printed in 2016 would prob­ Human cell types in two dimensions organs from the same individuals. To do
ably have given a figure of about 300, while so, they had harvested material from peo­
acknowledging that was surely an under­ the way they cluster, it can sort them into ple who had volunteered as organ donors,
estimate. So far, researchers for the atlas baskets corresponding to cell types. and had then met an untimely end.
have identified thousands—the precise Then, for the benefit of benighted hu­ In collaboration with a local organ­do­
number depending on how finicky you are man brains, it can apply a mathematical nation charity, and having obtained family
about the amount of difference there technique which compresses the whole consent, the project’s “crash team” re­
needs to be between two cells for them to thing back to two dimensions, for ease of moved from these donors tissues not re­
count as different types. viewing. From this (see picture above) it is quired for transplant, and did so within an
possible to see cell types emerge. hour of the withdrawal of life support. Not
No tabula rasa Different organs have different num­ all donors offered were deemed suitable. In
That difference is determined by which of bers of cell types. The one with the most particular, in order to draw the widest­
the 20,000 protein­coding genes identi­ (3,000 from an early draft, but undoubted­ ranging possible set of conclusions, the
fied by the genome project are active with­ ly more than that) is the brain. This is little team needed a balance of both sexes and a
in a cell—for this mix of proteins deter­ surprise considering the complexity of the range of ethnicities. In the end, they ob­
mines both a cell’s structure and what it brain’s job. But even the humble gut has at tained multiple samples of 24 types of tis­
does. It is that variability of protein com­ least 137. sue and organ from 15 donors.
position which permits the division of la­ Each organ, though, whether rich or Most other research groups are not as
bour and specialisation of function that poor in cell types, is the subject of its own focused as this. They will use material
have allowed complex multicellular organ­ sub­atlas in the project. And all data col­ from biopsies collected for medical rea­
isms such as human beings to evolve. lected by participant organisations are sons, when such are available. But they of­
Rather than hunt proteins directly, the made available to the world as soon as they ten study post­mortem samples, which
atlas’s cartographers are hunting RNA. Pro­ have frequently been frozen, and may thus
teins are made by translating edited tran­ have had their structure changed in subtle
scripts of genes, known as messenger RNA ways. Whatever a sample’s source, how­
(mRNA) molecules, into chains of amino ever, it must then be processed.
acids. Such messengers can thus act as The genome project relied on two main
proxies for the proteins they encode. And technologies. One was DNA sequencing,
techniques for counting and characteris­ which provided the genetic letters, in or­
ing RNA molecules are much better estab­ der, of short bits of DNA chopped at ran­
lished than equivalents for proteins. dom from a chromosome. The other was
It is thus possible to take a single cell, computers, which spotted overlaps be­
extract its mRNA, and measure the tween those sequences, and so patched the
amount, if any, of each such transcript. whole chromosome together. Cell atlases,
This, as Dr Regev explained to the meeting, however, require many approaches. In­
means the cell thus analysed can be put at a deed, many times many of them.
location in a mathematical space that is
described not by two axes, as on a standard Ways and means
graph, or even by three, as with a three­di­ A paper Dr Teichmann and Dr Regev pub­
mensional graph, but by 20,000 axes, one lished in December 2022 describes six
for each protein­coding gene. classes of technological methods involved
Though human brains cannot begin to in the Cell Atlas project. They range from
cope with the idea of a 20,000­dimension­ tissue imaging and histology via transcrip­
al graph, a computer can. It is able to clus­ tomics to “genome and epigenomics”.
ter cells according to their positions in These classes further subdivide into 100
such a multidimensional space, and from Virus particles escaping from a kidney cell categories, ranging from techniques like

012
 The Economist March 11th 2023 Science & technology 67

magnetic­resonance imaging which can be ing the airways of the lungs being too sitting in their surface membranes. Once
applied to entire bodies, to nucleosome oc­ thick. That makes breathing difficult and the relevant proteins for SARS­CoV­2’s cell
cupancy and methylome sequencing, encourages infections, shortening the entry were identified, researchers around
which concerns itself with individual lives of sufferers. the world were able to go through the atlas
nodes of DNA wrapped around protein Those who study cystic fibrosis had looking for cell types that express ACE2 and
clusters inside chromosomes. known all this for a long time. What they TMPRSS2, the proteins in question. That
Top of the list of techniques, though, had not known (though they thought they enabled them to pinpoint tissues beyond
are the ability to handle individual cells, in did) was which of the lungs’ cells were ex­ the respiratory tract which would also
order to study their mRNA patterns, and pressing CFTR. By studying transcript pat­ probably be harmed by the infection, such
the ability to do what is called spatial se­ terns, cell­atlas researchers discovered as the liver, heart and kidneys (a cell from
quencing, which permits identification of that those which do this are a rare and hith­ which is pictured on the previous page,
the types of individual cell in thin sections erto unknown type that they have dubbed with SARS­CoV­2 particles budding from its
of tissue mounted on microscope slides. ionocytes (some of which are pictured at surface membrane).
Cell­handling is Dr Quake’s particular the beginning of the story). This discovery Other medical uses to which cell atlases
area of expertise. In 2012 he commercial­ is now changing the direction of cystic­fi­ may be put include identifying the best
ised a microfluidic device which could brosis research. candidates for cell engineering (the em­
break cells open to release their mRNA and Gut­cell atlas researchers have similar­ ployment of genetically modified cells as
analyse the resulting transcript patterns 96 ly discovered entirely new cell types— therapies), the mass screening of potential
cells at a time. Just a decade later, it is now which might thus become targets for drug drugs to see their separate effects on par­
possible to handle hundreds of thousands treatment—involved in inflammatory ticular cell types, and the design of orga­
of cells at a time—the trick being to sus­ bowel disease. And those working on the noids, which are small simulacra of actual
pend each of them in a drop of fluid float­ cancer­cell atlas can predict from mRNA organs, using which experiments can be
ing in a medium of oil and accompanied by profiles whether or not a case of melanoma carried out that would not be possible on
a bead that has been tagged with molecules will respond to immunotherapy. people. The Human Cell Atlas will, in
which act like a bar code to identify it. Dr Regev and Dr Teichmann are particu­ short, turn the human body into terra far
Having characterised cell types in this larly proud, though, of the atlas’s role in less incognita than it previously was, and
way, the next stage is to seek them out in the response to covid­19. As is the case with make it much easier to mend when it goes
actual tissue. This is where the spatial se­ all viruses, SARS­CoV­2, the causative agent wrong. It will, in other words, carry on
quencing comes in. As still happens in un­ of covid, gains entry to cells by latching on­ where the Human Genome Project left off.
dergraduate histology labs, the tissue to be to particular molecules, usually proteins, And now, at last, you have heard of it. n
studied is embedded in a block of wax and
that block is cut into thin slices with a → Cell atlases have been collected for a broad range of diseased organs and tissues*
sharp knife. Each of these slices is then laid
on a microscope slide.
The next stage in classical histology Nervous system Eye
Alzheimer’s; multiple sclerosis; Macular degeneration; retinal
would be to use a chemical stain to show
Parkinson’s; low-grade glioma; degeneration; retinal dystrophy;
up the individual cells. In this case the cerebral malformation; others retinoblastoma; uveal melanoma
stain is made of single­stranded DNA mole­
cules that have had fluorescent tags at­ Lung and airways Oral-craniofacial
tached to them. These will stick only to Asthma; idiopathic pulmonary Nasopharyngeal carcinoma;
complementary RNA molecules in the fibrosis; non-small-cell lung oral squamous cell carcinoma;
slice, thus marking only cells containing carcinoma; cystic fibrosis; others covid-19; periodontitis
RNA relevant to the cell type under study.
The slides so mapped are, in essence, Heart Breast
the pages of the atlas—or, more accurately, Atherosclerosis; hypertension; Breast cancer
pages in one of the various volumes of the myocarditis; hypoplastic-
atlas that are being created, for each organ left-heart syndrome; others Blood and immune
has its own volume, and there are volumes, Alzheimer’s; lupus; multiple
too, for various stages of life, particularly Kidney myeloma; hypoplastic left heart
Renal cell carcinoma; covid-19 syndrome; HIV; covid-19; others
pre­partum, and for diseased tissues as
well as healthy ones.
That last is especially important, for the Liver Adipose
Liver fibrosis; non-alcoholic Crohn’s disease; obesity; others
ultimate purpose of the exercise is to im­
fatty-liver disease; Alagille
prove human health. As the diagram syndrome; covid-19; others
shows, separate atlas volumes have so far Gut
Crohn’s disease; ulcerative
been created of diseased tissue in 15 organ
Pancreas colitis; oesophageal cancer;
systems that are common to both sexes. Diabetes (type I); pancreatic gastric carcinoma; others
They are also available for the male and fe­ ductal adenocarcinoma;
male reproductive systems, and for devel­ Wolfram syndrome; others Bladder
oping fetuses. Dr Regev outlined to the Bladder carcinoma
meeting four examples of where this ap­ Musculoskeletal
proach has already made a difference. Osteoarthritis; osteosarcoma; Skin
The first is in transforming under­ psoriatic arthritis; Duchenne Atopic dermatitis; psoriasis;
standing of cystic fibrosis, an illness muscular dystrophy; others scleroderma; melanoma
caused by a person inheriting two broken
versions of a gene called CFTR, one from *Studies of people with common complex diseases, cancers, rare diseases and infectious diseases.
each parent. Lack of a working CFTR gene Fetal development, male and female reproductive organ profiles not shown
results in the mucus produced by cells lin­ Source: “Impact of the Human Cell Atlas on medicine”, Nature Medicine, Dec 2022

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 68 Science & technology The Economist March 11th 2023

The ocean and climate change Oceanographers worked out in the sec­ counterpart, OSNAP, the Overturning in the
ond half of the 20th century that the sys­ Subpolar North Atlantic Programme.
Signals and noise tem’s engine room is in the North Atlantic. The upshot has been the discovery that
Here, in a process called the Atlantic me­ the rate of overturning can vary, apparently
ridional overturning circulation (AMOC), at random, as much as six­fold during the
water moving up from the tropics cools, course of a year. The fall described in the
thus increasing in density, until it be­ Nature paper was an artefact of an impov­
WASHINGTO N, DC
comes so heavy that it starts to sink, pull­ erished data set.
Understanding how the ocean
ing more water up from farther south to re­ Another finding of OSNAP has been that
circulates is hard
place it. Having descended as much as the details of where overturning happens

F or Homo sapiens, a dry­land species,

discussions of the climate and how it is
changing tend to revolve around what is
3km, it then heads south itself.
Though some oceanic overturning of
this sort goes on elsewhere, 90% of it hap­
in the North Atlantic are not as models had
predicted. Most turnover, it turns out, oc­
curs on the east side of the ocean, not the
going on in the atmosphere. This is a dan­ pens in the North Atlantic. And it is this west, as previously believed. Though this
gerously parochial attitude, for the atmo­ North Atlantic overturning which drives may not matter much in the grand scheme
sphere is but one of two fluid systems cir­ what is often described as a planet­span­ of climate change, it is a further example of
culating above Earth’s solid surface. The ning conveyor belt of connected currents. how poorly people have understood what
other, the ocean, is in many ways the more That, at least, is conventional thinking. is going on at sea.
important of the pair. But Dr Lozier reckons it a bad analogy. A The next step for OSNAP is to extend its
It is the circulation of the ocean which, conveyor belt conveys an image of smooth remit into looking at carbon dioxide up­
by redistributing heat, limits the tempera­ and linear progress. This belt, though, take. And more systematic studies are get­
ture difference between tropics and poles jerks around all over the place, making it ting going in other parts of the ocean, too,
to about 30°C. Were the atmosphere alone far harder to discover what is going on. as landlubbing humans are, at last, taking
responsible for moving heat, that differ­ A smoothly moving belt need be exam­ proper notice of the hitherto­neglected
ence would be more like 110°C. And, when ined only occasionally to check if its rate of 71% of the surface of the planet they are
it comes to anthropogenic global warming, progress is varying. So when, in 2005, a pa­ pleased to call “Earth”, but which might, in
the problem would be far greater without per in Nature reported, on the basis of the truth, be better dubbed “Sea”. n
the ocean’s buffering effect. five pertinent shipborne surveys which
Not only does the ocean absorb heat had been made since 1957, a 30% drop in
which would otherwise remain in the air, it the volume of AMOC between 1992 and Chromosomal deletions and neurology
also swallows a third of the carbon dioxide 2004, there was serious concern. If such a
emitted by human activity. Though that fall continued, it would change weather Double or quits?
makes seawater more acid (or, strictly patterns, particularly in Europe, by alter­
speaking, less alkaline), which may harm ing planetary heat distribution. It would
some marine species, much of the CO2 in­ also reduce the rate at which CO2 was car­
volved ends up in the abyss, where it can ried into the deep ocean.
WASHINGTO N, DC
cause no greenhouse effect, and where it is As it happened, though, 2004 was a
Stretches of DNA that are often deleted
likely to remain for many centuries. turning­point in observations of what is
or repeated can shed light on the brain
The poverty of human understanding going on, for it saw the beginning of the de­
of ocean circulation, compared with that
of the atmosphere, is therefore lamenta­
ble. And the AAAS meeting was treated to
ployment of a set of recording instruments
which are now known as RAPID AMOC.
These monitor the Atlantic a couple of de­
I t is sad, but true, that much of what is
known about how human brains work
has been learned by studying brains that
an excellent lamentation on the matter by grees north of the Tropic of Cancer, the part are broken. Injuries caused by disease or
Susan Lozier of the Georgia Institute of of the world where the surveys reported in accident show, from the list of functions
Technology, who was also last year’s presi­ the Nature paper had been conducted. RAP- thus disabled, the jobs of the part of the
dent of the American Geophysical Union. ID AMOC was joined in 2014 by an arctic brain that has been damaged. Similarly,
“injuries” to the genome, resulting in the
deletion or duplication of stretches of DNA,
sometimes have clear effects which can il­
luminate the functioning of healthy
brains. At the AAAS meeting Karen Berman
of America’s National Institute of Mental
Health and Carrie Bearden of the Universi­
ty of California, Los Angeles, told partici­
pants of the latest finding concerning two
of these genetic injuries.
Some segments of the genome are at
particular risk of being lost or duplicated
during the process of meiosis, when pairs
of chromosomes swap genetic material
prior to the formation of eggs and sperm.
The reason is that they are flanked by
stretches of DNA which have matching se­
quences of genetic letters. These matching
flanks can confuse the molecular machin­
ery that does the swapping. Sometimes
this confusion causes the pertinent sec­
Finding out if AMOC is going amok tion to be left out. Sometimes the section

012
 The Economist March 11th 2023 Science & technology 69

in question ends up duplicated. Any indi­ er area, the insula, which has been linked relate all of this with systematic differ­
vidual inheriting a chromosome so altered to emotions such as compassion, is depen­ ences in the thicknesses and surface areas
will thus have either a deficiency or a sur­ dent on the dose of GTF2I. Those findings of parts of the cerebral cortex. Those with a
plus of the genes that are part of the affect­ nicely match genes to brain function. deleted segment had thicker, but less fold­
ed section. Dr Bearden had a similar approach with ed cortices than those with intact chromo­
Dr Berman works on part of chromo­ DiGeorge syndrome and its opposite. As somes. Those with a duplication had thin­
some 7, the deletion of which causes Wil­ with Williams and Dup7 syndromes, delet­ ner, but more folded cortices.
liams syndrome, identified in 1961 by a ing or adding part of a chromosome has How an extra copy of this section of
doctor of that name. Dr Bearden works on many effects. In this case, one of the most DNA protects against schizophrenia is not
DiGeorge syndrome, likewise eponymous­ intriguing is that deletion often results in yet clear, but investigations continue. If it
ly identified in 1968, and caused by a dele­ symptoms of schizophrenia, while addi­ can be determined, that might be an im­
tion of part of chromosome 22. Both have tion protects against this condition. portant step towards treating this trouble­
counterparts, noted more recently, that re­ Using MRI, Dr Beardon was able to cor­ some condition. n
sult from an extra copy of the labile chro­
mosomal section. As the two researchers
explained, comparing the under­ and over­ Silver and democracy
representations of these sections has
deepened understanding of the neurologi­
Piecing it together
cal roles of the genes thereon.
WASHINGTO N, DC
People with Williams syndrome have a
Mercenaries armed with newfangled coins may have brought about democracy
range of symptoms. Some are anatomical,
such as a characteristic face shape. Others
are behavioural—a tendency to be talk­
ative, to be sociable, to be good at recognis­
I n the view of many, money corrupts
democracy. In the view of Francis
Albarède, however, it was money, in the
ing faces (though otherwise poor at visual­ form of coined silver, which created
spatial tasks) and to have good empathy democracy in the first place.
with others. In essence, these are the oppo­ Dr Albarède is a geochemist at the
site of autism. Those with the syndrome’s École Normale Supérieure in Lyon,
converse, known as Dup7, have a different France. His definition of “geochemistry”
face shape. They also learn to talk later stretches, however, well beyond many
than normal, are bad at recognising faces people’s, into political and economic
(though otherwise good at visual­spatial history. In particular, he has just finished
tasks), and are unsociable. These latter running the European Research Coun­
traits are those associated with autism. cil’s SILVER (Silver Isotopes and the Rise
Dr Berman has shed light on the role in of Money) project. This, by studying the
this of two genes, GTF2I and LIMK1, found isotopic composition of ancient silver
in the affected region. GTF2I encodes a type coins, has tried to draw conclusions
of protein called a general transcription about where the metal in a coin was
factor. Transcription factors initiate pro­ mined, and thus about patterns of trade.
duction of RNA copies of genes that then Dr Albarède explained to the AAAS
act as instructions for making proteins. As meeting how, in his opinion, the trick of
that suggests, GTF2I is involved in many turning silver into small discs of more or No vote for you, I’m afraid
such initiations, which may help explain less constant weight and purity, certified
Williams syndrome’s disparate manifesta­ by authority, had catalysed the over­ kingdom of Lydia, one of Persia’s con­
tions. LIMK1 encodes an enzyme known to throw of the oligarchies of dozens of quests, and adopted by Cyrus, the Persian
be involved in brain development. Greek city states, most notably Athens, in empire’s founder. Though many Greek
the sixth and fifth centuries BC, and their city states had begun to take up Lydia’s
Hard copies replacement with versions of the idea invention, too, meaning coins were a
Dr Berman and her group have demon­ that all free men should share in govern­ familiar idea, when these men returned
strated correlations between the “doses” of ing the polity they live in. home, as rich, metaphorically, as Croe­
these genes (whether there are one, two or Both the silver and the free men came, sus, the Lydian king whom Cyrus had
three copies) and the sizes of affected brain in his interpretation of events, from the overthrown, they upset the political
areas. Magnetic­resonance imaging (MRI) contemporary Persian empire’s habit of applecart by forming the ambitious
showed that the brain’s total volume in­ hiring Greeks as mercenary soldiers. middle class that is the sine qua non of all
creases with the number of copies of the Hoplites, the heavily armed infantrymen successful revolutions.
affected chromosomal region (so is small­ who formed the core of Greek armies of Elsewhere, though the advantages of
er than normal with the deletion, and larg­ this period, were much in demand as coinage were quickly appreciated
er than normal with Dup7). But all of this soldiers of fortune, and many found throughout the Mediterranean and near­
growth happens in the biggest part, the ce­ employment in non­Greek armies—not eastern world, this sudden influx of
rebrum. In the second­biggest part, the infrequently fighting their fellow Greeks. money and men did not happen, so the
cerebellum, the reverse happens. Persia was a particularly large cus­ powers­that­were, were able to adjust.
She has now narrowed things down. tomer during its wars of expansion But in many Greek cities the local oli­
Within the cerebrum, she has found, the around the end of the sixth century, and garchs could not resist the tide of merce­
amount of grey matter in an area called the frequently paid its hoplite recruits in the nary silver, and the rule of free men
intraparietal sulcus, which is known to be newfangled medium of silver coins. (though not of women or slaves, obvi­
involved in visual attention (and thus visu­ These were a form of easily portable and ously—for nobody was yet that radical)
al­spatial awareness), is dose­dependent exchangeable wealth invented in the took over.
on LIMK1. In contrast, the volume of anoth­

012
 70
Culture The Economist March 11th 2023

Covid­19 in China 2019, and of how the Chinese government

responded, is another that will be clouded
How it was done in Wuhan in Chinese minds by disinformation and
lies. There will be no public inquiry in Chi­
na into how officials handled the outbreak
or the harsh and protracted lockdowns in
city after city. There will be no open inves­
tigation into where the virus came from, or
The Chinese government wants to control the narrative of covid­19.
whether better safety precautions—say in
A few brave voices have told a different story
a lab or a wet market in the central Chinese
famine triggered by Mao Zedong’s Great city of Wuhan—might have prevented a
Deadly Quiet City. By Murong Xuecun. Leap Forward of the late 1950s. But poor global disaster. Victory will be the only
New Press; 336 pages; $27.99. To be harvests were officially blamed on natural permissible verdict.
published in Britain by Hardie Grant disasters. Without a free flow of informa­ This enhances the value of the few
in May; £14.99. tion to help them identify the real culprit, independent accounts that Chinese people
Wuhan Diary. By Fang Fang. Translated by most Chinese bought the party line. Like­ have written of how the pandemic unfold­
Michael Berry. HarperVia; 400 pages; $17.99. wise, many who have grown up since the ed in their country. It has taken much
HarperNonFiction; £11.49 Tiananmen Square protests of 1989 are bravery to produce them. Several citizen
confused about what happened. Some journalists have suffered the consequenc­

C hina’s new mantra is unequivocal. The

country has won a “major and decisive
victory” over covid­19. The outgoing prime
sympathise with the party’s decision to
crush what were in fact peaceful demon­
strations, believing the official narrative
es of reporting independently: imprison­
ment, police intimidation to keep them
silent, or simply being “disappeared”.
minister, Li Keqiang, repeated this phrase that large riots had broken out. Yet one author, Murong Xuecun (the
on March 5th in a speech at the opening of The story of how covid emerged late in pen name of Hao Qun), managed in 2020 to
the annual session of China’s parliament. interview people about their experiences
He cautioned the nearly 3,000 masked de­ of Wuhan’s 76­day lockdown at the start of
legates that the pandemic was not over, but → Also in this section the pandemic and to write a book, “Deadly
he did not suggest the virus needed to be Quiet City”. Before its publication—last
71 An environmental world history
crushed, a feat that China spent nearly year in Australia and now elsewhere—he
three years battling to achieve, until late in 72 Back Story: It’s war at the Oscars fled abroad. In the preface he says that re­
2022. The Communist Party wants to move calling his efforts, undertaken while dodg­
73 Singapore­style dining in New York
on from—and wants citizens to forget—the ing the Chinese police, still gives him a
trauma of deaths and lockdowns. 73 A real­life “Succession” “heart­sinking, bitter taste of terror” even
The party is a master at controlling and though he is now “out of their reach”.
74 Eleanor Catton’s new novel
confusing memories. Millions died in the Mr Murong’s book follows another by a

012
 The Economist March 11th 2023 Culture 71

prominent Chinese writer about Wuhan’s behind bars included being shackled hand victory, yet she still charged onto the bat­
shutdown: “Wuhan Diary” by Fang Fang and foot for several days to the floor of a tlefield,” writes Mr Murong.
(whose real name is Wang Fang and whose cell, in her own excrement. Even at that time, Ms Fang was worry­
home town is Wuhan). Published in 2020, Ms Zhang spent 104 days in Wuhan, ing about the post­covid future. “What I
it is a translation of her posts to Chinese posting essays and videos about the lock­ fear is that once people get back to their
social media in that period. Like Mr Mu­ down. She quixotically protested against normal, happy lives, no one will be willing
rong’s, it is scathing about the govern­ the authorities’ efforts to keep everyone in­ to revisit this painful moment,” she re­
ment’s response, including the initial at­ doors by repeatedly pushing down a gate cords in her diary. “If you don’t pursue this
tempts to suppress news of the disease’s they erected to stop people in her neigh­ and hold people accountable, at the end of
spread. She describes how “ultra­leftists”, bourhood leaving the area. She “fought a the day, the biggest victim will be the na­
enraged by her criticisms, bombard her battle knowing there was no prospect of tion itself.” The party begs to differ. n
with online tirades. She hints that the
trolls may have government backing.
Ms Fang’s journal was written from Environmental history
home, drawing on information provided
by her extensive network of contacts in Nature and nurture
Wuhan. Mr Murong’s book takes a differ­
ent approach. Each of his chapters focuses
on one of eight protagonists, ranging from
a doctor at a small community hospital to
the unlicensed driver of a motorcycle taxi
and another citizen journalist, Zhang
A fresh take on how the environment shapes history and vice versa
Zhan, whose daring efforts earned a four­
year jail sentence. of the locals were at mass. A huge tsunami
It is a harrowing collection of stories, The Earth Transformed. By Peter followed. Soon the Portuguese capital lay
grippingly narrated. The doctor finds him­ Frankopan. Knopf; 736 pages; $40. in ruins. Tens of thousands of people are
self in a baffling new world. Dispatched to Bloomsbury; £30 thought to have died, a big chunk of the
a busy isolation station, where people with city’s population.
suspected covid are sent, he finds that the
results of virus tests are treated as classi­
fied. Bizarrely, security guards at the en­
P eople are exercised by three things
above all else, wrote Voltaire in the
mid­18th century: climate, government
The earthquake and ensuing upheaval
epitomise the way natural disasters can
change mindsets. It struck as the vogue for
trance may see the results, but when he and religion. He was ahead of his time in scientific observation was beginning to
asks them about a particular person’s test, putting climate first. Peter Frankopan undermine the church’s prerogative in ex­
the answer is: “That’s secret. Can’t tell you.” opens his new book with Voltaire’s com­ plaining life on Earth. The meaning of the
Because the doctor’s hospital has to focus ment and proceeds to show how all calamity was a matter of dispute between,
on coronavirus cases, its revenue from manner of natural disasters have shaped on one side, modernising rationalists such
charges for other kinds of treatment dries human history: not just floods and storms, as Voltaire and, on the other, believers, for
up. So for months he has to work unpaid. but earthquakes, volcanic eruptions and whom it was a sign of God’s wrath.
crashing meteorites, too. Professor Frankopan, who teaches glo­
Memory and forgetting Voltaire was fascinated by the earth­ bal history at Oxford, has long been keen to
The book is packed with detail of a dys­ quake that struck Lisbon in 1755, which he expand Westerners’ understanding of the
functional medical system that cannot incorporated into his philosophical novel past. “The Silk Roads”, his book of 2015, was
cope with the deluge of patients, leaving “Candide”. Tremors began on the morning about Central Asia and early globalisation;
many to die at home, in hospital corridors of November 1st, All Saints Day, when most it was followed three years later by “The
or on the streets. At another isolation sta­ New Silk Roads”, modestly subtitled: “The
tion a seriously ill patient is ignored. His Present and Future of the World”. His latest
wife begs neighbourhood officials for help. book is, if anything, even more ambitious.
“Those fuckers just watched Mum kneel­ In contrast to the study of history based on
ing there,” recalls their son. Eventually the war, economics and political power (what
officials give in and arrange for the man some call “chaps and maps”), “The Earth
and his wife to be taken to a hospital, Transformed” aims to put climate in its
where he dies. broadest sense at the centre of the story.
Ms Zhang’s bravery is astonishing. Even It canters through the formation of the
before setting out on her reporting trip to Earth, with its shifting land masses and
Wuhan, the then 36­year­old lawyer had a pop­up volcanic islands. Then it focuses
record of snubbing authority to a perilous on how humanity has “exploited, moulded
degree. She angered the government with and bent the environment to its will, both
her posts online, including some that at­ for good and for ill”, beginning 12,000 years
tacked corruption in the financial indus­ ago at the start of the Holocene period,
try. Early in 2019 she staged a protest in when humans spread across the globe
Shanghai, where she was living, against amid favourable conditions.
police harassment of her: she held up a In roughly chronological order, and in
banner in a subway station saying, “Down his characteristically pacey style, Professor
with the Communist Party, End Socialism”. Frankopan traces how ice ages alternated
Later that year she did it again, walking with warmer periods; how resources came
along a busy street carrying an umbrella to be exploited around the globe; how cli­
adorned with a similar slogan. She was de­ mate influenced food production and the
tained both times. The second spell The Earth shook in Lisbon rise of cities; how, in turn, urbanisation

012
 72 Culture The Economist March 11th 2023

Back Story This means war

War is the theme of the Oscars—even in films that seem to be about something else

T omorrow, on the mainland, “the

Free State lads are executing a couple
of the IRA lads,” says a brutish policeman
industrial­scale, merciless hell. Surren­
dering troops are incinerated by flame­
throwers, death is agonising and obscene.
commander tells him, “and you’re not in
it.” He’ll see about that.
Storytelling, it is true, always runs on
on Inisherin, a fictional island off Ire­ The first German­made adaptation of conflict. Man versus fate, or nature, or
land’s west coast. It is 1923 and civil war Erich Maria Remarque’s novel of 1928, “All society, or another man (or woman):
rages on. “Or is it the other way around?” Quiet on the Western Front” is plainly typologies of it abound online and in
Whoever is executing whom, he is head­ about war. But it is also about food. The creative­writing seminars. As Kurt Von­
ing over to lend a hand. “For six bob and a soldiers talk and sing about it. They snatch negut enjoined, “every character should
free lunch, I don’t care.” it from dying comrades and pilfer it from want something, even if it is only a glass
“The Banshees of Inisherin” (pic­ locals. While the sybaritic top brass toss of water.” Someone or something gets in
tured), which is up for nine Academy meat to their dogs, or query the freshness the way, and the ensuing friction forges
Awards at the ceremony on March 12th, is of their croissants, ordinary soldiers wolf characters, generates tension and drives
ostensibly the story of a ruptured friend­ down the rations in the trenches they the plot. Even so, the martial drumbeat of
ship. But it is also a war film—even storm. Their two primitive imperatives are this year’s Oscars seems loud, chiming
though the shooting remains out of sight to survive and to find something to eat, with the concussions from Ukraine and
across the water. It shares that theme even at their peril. the bellicose timbre of wider politics.
with most of the Oscars front­runners. “Top Gun: Maverick” (six nominations) Take the suite of conflicts in “Tár”
War rumbles through the nominations, has the outline and kit of a war film. At its (also six nominations). At first the film
on the surface or audibly below it. daredevil climax, Maverick (Tom Cruise), seems to be a dispatch from the cultural
On Inisherin, the row between Pá­ back in his shades, leather jacket and sort of war, as Lydia Tár (Cate Blanchett),
draic (played by Colin Farrell) and Colm cockpit after 36 years, must blow up a maestro of the Berlin Philharmonic, riles
(Brendan Gleeson) flares up in a time of uranium­enrichment plant in a nameless a class of young musicians with her
war and mimics its rhythms. Life is too rogue state. But the real clashes here are old­school insistence on separating art
short to waste any more of it in nice­but­ among the ego­addled American fighter from the artist. When a student who
dull Pádraic’s company, decides Colm, pilots, and, above all, between Maverick’s identifies “as a BIPOC pangender person”
when he could be composing music for analogue heroism and the automated has issues with “white, male, cis com­
his fiddle. Pádraic disagrees about what march of time. “The future is coming,” a posers”, she brusquely says people ought
matters, what lasts and whether the two not to be “so eager to be offended”.
are the same. Like many a casus belli, But the hot­button spats turn out to
theirs seems both foolish and profound. be camouflage for the film’s more impor­
Colm is a grouchy crank—or perhaps has tant war: between Tár and her past and
seen life for what it is. And like many conscience. A walking, baton­wielding
conflicts, theirs involves misunder­ will to power, she tyrannises her un­
standing, escalation and self­mutilation: derlings, exploits her rights of patronage,
Colm resolves to chop off his fingers if cheats on her wife, drives fast and
Pádraic insists on speaking to him. Their punches hard. Yet she is haunted, and
private war makes them different people. undone, by uncanny motifs and memo­
The sense of queasy intimacy with an ries—disembodied screams, the image of
enemy suffuses the most powerful scene a maze, a head of red hair.
in “All Quiet on the Western Front” (also In a sequence that hovers between
nominated for nine Oscars). Stuck in a realism and nightmare, Tár descends
first­world­war shell hole with a French into a basement and is stalked by a spec­
soldier, Paul (Felix Kammerer), the Ger­ tral dog. Down there, below the surface,
man protagonist, cannot decide whether an elementary, eternal conflict is fought
to kill or embrace him. This is war as an and often lost: the one against yourself.

promoted the spread of disease; and how, dominant countries of the future? Will century in the area between the Shashi and
over the past few decades, anxiety about access to water be more important than Limpopo rivers of southern Africa, for ex­
the Earth’s ecology has become en­ access to mineral resources? How can ample, or the recent identification of the
trenched. He shows, in other words, both India, Pakistan and Bangladesh clean up process whereby seeds were preserved in
how the climate shaped modern life and the filthy air that chokes their citizens if the pits and cesspits of Jerusalem under
how it increasingly defines the world’s they fail to co­operate amicably? the Abbasid caliphate. That has offered
economic and political tensions. The author does not claim to be able to fresh evidence about the westward spread
This is not a new field. In his study of see into the future. Above all, his work will of crops in the early Islamic period.
the Mediterranean, published almost 75 encourage readers to think differently In these ways, bygone people and soci­
years ago, Fernand Braudel, a French histo­ about the past. He highlights new forms of eties that had seemed mute are finding a
rian, identified geography and the envi­ computer modelling and data analysis that voice. By the same token, pressure to
ronment as the bedrock layers of history. are shedding light on little­known areas— acknowledge climate­changing sins of the
Still, “The Earth Transformed” raises fresh infrared spectroscopy that has allowed re­ past—and demands for better policies
and urgent questions. Which will be the searchers to study social change in the 12th now—are becoming harder to resist. n

012
 The Economist March 11th 2023 Culture 73

Hollywood moguls

Sins of the father

Unscripted. By James Stewart and Rachel

Abrams. Penguin Press; 416 pages; $32.
Cornerstone Press; £25

“W hy are you so mean to people?”

asked one of Sumner Redstone’s
many girlfriends, after he had summoned
a chef to their table just to throw an over­
cooked steak at him. “I don’t care,” replied
the mogul. “I’m going to hell anyway.”
Though he boasted he would live for
World in a dish ever—“I eat and drink every antioxidant
known to man”—Redstone died in 2020,
Night hawkers aged 97. James Stewart and Rachel Abrams,
two New York Times journalists, have put
together a deeply reported account of his
final years, delving in sometimes excruci­
ating detail into his extraordinary antics in
both the boardroom and the bedroom.
NEW YO RK
After a scholarship to Harvard, where
Singapore’s unique dining style comes to Manhattan
he learned Japanese and later helped crack

C OOKING A DISH from one culture while

living in another is simply a matter of
ingredients and technique. Translating an
with rice cubes). A sublime chicken rice
could hold its own with any stall in Singa­
pore, the poached chicken soothingly soft
codes in the second world war, Redstone
saw off his brother to inherit control of the
Boston­based family business, National
entire dining style is harder. No matter and springy, every grain of rice distinct yet Amusements, which ran two drive­in cine­
how tasty the pâté de campagne, how artful­ slicked with rich chicken flavour, the mas. He went on to amass one of the
ly nicotine­stained the walls and how sauces—thick soy, fiery chilli and ginger— world’s largest collections of entertain­
much Édith Piaf warbles from the speak­ complementary rather than overpowering. ment assets, with controlling stakes in Via­
ers, eating at a bistro in Phoenix will al­ But unlike Singapore’s hawker centres, com and cbs, combined before his death to
ways be different from eating at one in Manhattan’s is indoors. It has a cocktail form what is now Paramount Global.
Lyon. The trick, as a new Singapore­style bar, whereas Singapore’s serve nothing Though he earned a multi­billion­dol­
hawker centre in midtown Manhattan stronger than Tiger, the local lager. And the lar fortune and a star on the Hollywood
shows, is knowing which parts of the expe­ prices are high: New Yorkers will evidently Walk of Fame, he was also “banned from
rience can be transplanted successfully, pay around $20 for a plate of chicken rice every restaurant in LA”, in the words of one
and which should be left at home. that would cost a few Singaporean dollars long­suffering dining companion. He de­
In Singapore, hawker centres are large, (a couple of American ones). scribed Barack Obama using the N­word
semi­outdoor spaces (they have roofs but In Singapore, everyone eats at hawker and faxed his daughter, Shari, to call her
no walls). Food stalls line the perimeter centres because they are everywhere and the C­word, copying executives at Viacom,
while customers stake out seats at tables in serve familiar food cheaply. In New York where she was on the board. He harassed
the middle. Ubiquitous and cheap, they are that role mainly falls to halal carts and fast­
integral to eating in Singapore, where your food chains. Urban Hawker’s target clien­
columnist once lived. They let groups of tele is posher: the sort of people who know Sign up to Plot Twist
friends with different tastes and dietary what hawker centres are despite living
requirements eat together. They are unpre­ halfway around the world. Dining there is Plot Twist, our new culture newsletter,
tentious and fun: vendors banter and flirt an event rather than a habit. In other offers insights from our reporting and tips
with their customers and the open setting words, it sells cachet as well as food, like on books, TV shows and more. Subscribers
encourages relaxed conversation. the many French bistros outside France can sign up at economist.com/
Urban Hawker in Manhattan hews to that serve cuisine grand­mère at prices newsletters/plot­twist
the same basic design principles, with ven­ many actual grandmothers cannot afford.
dors along the walls and communal tables Compare the New World Mall’s food
in the centre. The hawkers sell similar court (in effect, an indoor hawker centre), a
foods to their Singaporean counterparts, 40­minute subway ride away in Queens. It
including creditable prata (a folded fried is at least as delicious and a lot cheaper. But
bread of South Indian origin, served with it is authentically Asian­American and
dhal that was sweeter and less spicy than it aimed at locals in New York’s biggest
should have been), greasy and delicious Chinatown; other visitors need to do some
char kway teow (fried flat noodles), and translation work. Urban Hawker gives din­
properly chewy if slightly ungenerous ers a helping hand—and reaches into their
satay with lontong (grilled skewered meat wallets with the other one. n

012
 74 Culture The Economist March 11th 2023

his female staff, asking an attendant on a

company jet if she liked to be spanked. Fiction from New Zealand
His exploitation of younger women—
and, as he became infirm, their exploita­
The profits of doom
tion of him—is the focus of the first half of
“Unscripted”. To buy their affection and
discretion, Redstone doled out favours,
gifts and cash. Favourites got career leg­ Birnam Wood. By Eleanor Catton. New Zealand is suddenly abandoned
ups; one, a singer in a band called the Elec­ Farrar, Straus and Giroux; 432 pages; $28. after a late­summer landslide closes the
tric Barbarellas, performed on CBS at his Granta; £20 nearest pass for several months, Mira
insistence. Towards the end of his life, two senses that Birnam Wood may have
live­in girlfriends­cum­nurses extracted
$150m from him. Finally his family evicted
the pair, with the help of private detectives
“T HE LUMINARIES”, the novel that
made Eleanor Catton, at 28, the
youngest­ever winner of the Booker
found its playground. But someone else
is interested in the place: an American
tycoon with a calculating mind and a
and a lot of lawyers. prize, is set in a frontier town in New preternaturally calm exterior. His name
The second half of the book concerns Zealand. Published in 2013, it opens in is Robert Lemoine (his surname is
the Redstone businesses, where Sumner the smoking room of a hotel where an French for “monk”), and he is an aspiring
remained executive chairman even as he assortment of strangers are dressed in “doomsteader”, someone who sets up
had to be carried into annual meetings at “frock­coats, tailcoats, Norfolk jackets home in preparation for civilisation’s
which he barely spoke. Later, as his voice with buttons of horn, yellow moleskin, collapse. At least, that is what Lemoine
deteriorated, he had a laptop programmed cambric and twill”. In Ms Catton’s new claims to be. He offers Birnam Wood a
to say phrases including “Would you like novel, “Birnam Wood”, the characters deal—and seed funding to massively
some fruit salad?” and “Fuck you.” After a wear dark gloves, balaclavas and jackets expand its cultivation.
legal hearing in which he struggled to re­ zipped to the throat, listening out for a “Birnam Wood” is a taut novel about
call his birth name (Rothstein, later angli­ “shout of warning, or a gunshot, or the what it means to sup with the devil,
cised by his father), investors began to fret. now unmistakable sound of a drone”. distinguished by its character studies
Eventually, following a cognitive test in The setting is still New Zealand, but and the author’s sharp pen. She skewers
which he could not perform basic arith­ instead of 1866 the date is 2017. anti­capitalist activists with the same
metic or spelling, he stepped down. Birnam Wood is the name of a witchy relish she exhibits in chewing up the
This set the stage for a boardroom battle guerrilla gardening group run by a char­ billionaire class. Lemoine turns out to be
between the Redstones, now led by Shari, ismatic ideologue called Mira Bunting, a surprisingly attentive in bed, but he is
and cbs’s management, principally Leslie horticulturalist by training, and her also amoral and blind to his failings. Ms
Moonves, a former actor who was chair­ seemingly quiet and devoted sidekick, Catton is acute about the chippiness of
man and chief executive and stood to run Shelley Noakes. For years the group has even the most successful New Zealand
both cbs and Viacom should they be com­ cultivated small plots of urban land men (marooned as they are at the edge of
bined. Mr Moonves, named the fourth­ around care homes, nursery schools and the world), the self­mythologising of
most­powerful person in entertainment the car parks of dental surgeries. Their middle­class do­gooders and the fric­
by the Hollywood Reporter, was a hit with equipment is mostly salvaged and they tions that bind female friendships, while
investors. Yet after Harvey Weinstein was barter what they grow; none of them is undermining them at the same time.
unmasked as a serial sexual abuser, nu­ paid and everything they own is com­ This book is not as self­consciously
merous women accused Mr Moonves of monly held. Seeds are one of the only literary as “The Luminaries”. But with its
past assaults, which he has always denied. things they spend money on. Mira works deft plotting, penetrating observations
The mainly elderly, male board of cbs full­time for the collective. Her ambition and swirling, rhythmic sentences, “Bir­
was initially inclined to accept these deni­ is for it to make “radical, widespread and nam Wood” is a rare accomplishment: an
als. “We all did that,” said Arnold Kopelson, lasting social change”. intelligent and elegant thriller that is
a director. Even some of those claiming to When an area of rich arable land in also a damn fine read.
help the alleged victims appeared to take
advantage of them, such as the agent who
used his client’s claims to press Mr
Moonves to give parts to other actors on his
books. Only investigations by the New
Yorker and Vanity Fair (whose journalists
were told by CBS’s communications chief
to “have some fucking ethics” and “find a
real story”) brought Mr Moonves down.
Like a lot of reality tv, “Unscripted” is
riveting because its cast is so awful. Shout­
ing matches in Nobu, restraining orders,
custody battles (over children and pets),
non­disclosure agreements and psychics
all feature. One of the few sympathetic
characters, Shari Redstone, at least gets a
Hollywood ending. After a reconciliation
with her father, she sees off Mr Moonves
and becomes chairwoman of the newly
combined Paramount. The book ends at
Sumner Redstone’s funeral, with Shari Stand­off at the end of the world
singing “My Way”. n

012
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012
 76
Economic & financial indicators The Economist March 11th 2023

Economic data

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units
% change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change
latest quarter* 2023† latest 2023† % % of GDP, 2023† % of GDP, 2023† latest,% year ago, bp Mar 8th on year ago
United States 0.9 Q4 2.7 0.7 6.4 Jan 4.0 3.4 Jan -3.0 -5.2 4.0 212 -
China 2.9 Q4 nil 5.7 1.0 Feb 2.2 5.5 Jan‡§ 1.9 -4.1 2.7 §§ 18.0 6.97 -9.5
Japan 0.4 Q4 0.1 1.0 4.4 Jan 1.9 2.4 Jan 3.0 -5.9 nil -8.0 137 -15.6
Britain 0.4 Q4 0.1 -0.3 10.1 Jan 5.9 3.7 Nov†† -3.2 -5.9 3.9 263 0.84 -9.5
Canada 2.1 Q4 nil 0.8 5.9 Jan 3.4 5.0 Jan -1.2 -1.1 3.3 145 1.38 -6.5
Euro area 1.8 Q4 -0.1 0.7 8.5 Feb 5.9 6.6 Jan 1.0 -3.5 2.6 252 0.95 -3.2
Austria 2.6 Q4 -0.1‡ 0.8 11.0 Feb 6.6 5.1 Jan nil -3.7 3.3 277 0.95 -3.2
Belgium 1.4 Q4 0.4 0.4 6.6 Feb 6.1 5.8 Jan -1.9 -5.3 3.3 275 0.95 -3.2
France 0.5 Q4 0.3 0.5 6.2 Feb 5.0 7.1 Jan -1.9 -5.3 3.2 281 0.95 -3.2
Germany 0.9 Q4 -1.7 -0.1 8.7 Feb 6.2 3.0 Jan 3.5 -2.0 2.6 252 0.95 -3.2
Greece 4.5 Q4 5.6 1.0 7.0 Jan 3.9 10.8 Jan -6.0 -3.5 4.5 215 0.95 -3.2
Italy 1.4 Q4 -0.5 0.6 9.2 Feb 6.8 7.9 Jan -0.5 -4.8 4.4 284 0.95 -3.2
Netherlands 3.0 Q4 2.5 0.7 8.0 Feb 7.1 3.6 Jan 6.3 -2.7 3.0 258 0.95 -3.2
Spain 2.7 Q4 0.9 1.4 6.1 Feb 4.3 13.0 Jan 0.3 -4.7 3.7 274 0.95 -3.2
Czech Republic 0.1 Q4 -1.4 -0.2 17.5 Jan 9.9 2.6 Jan‡ -1.0 -4.6 4.9 147 22.3 5.6
Denmark 1.7 Q4 3.5 0.8 7.7 Jan 5.0 2.8 Jan 9.0 0.5 2.9 249 7.05 -3.0
Norway 1.3 Q4 0.8 1.4 7.0 Jan 4.6 3.4 Dec‡‡ 20.0 11.4 1.4 76.0 10.6 -15.5
Poland 0.6 Q4 -9.3 1.3 17.2 Jan 12.6 5.5 Feb§ -1.9 -3.0 6.3 144 4.43 2.5
Russia -3.7 Q3 na -2.4 11.8 Jan 7.3 3.6 Jan§ 6.8 -4.6 10.8 -174 76.3 71.6
Sweden -0.1 Q4 -2.0 -0.6 11.7 Jan 5.6 7.6 Jan§ 3.0 -0.3 2.6 219 10.7 -6.7
Switzerland 0.8 Q4 0.1 0.9 3.4 Feb 2.2 1.9 Feb 6.5 -0.7 1.5 131 0.94 -1.1
Turkey 3.5 Q4 3.8 3.1 55.2 Feb 40.8 10.4 Dec§ -4.3 -2.4 11.5 -1356 18.9 -23.0
Australia 2.7 Q4 1.9 1.6 7.8 Q4 4.2 3.7 Jan 1.1 -2.1 3.8 153 1.51 -8.6
Hong Kong -4.2 Q4 nil 3.4 2.4 Jan 2.3 3.4 Jan‡‡ 3.5 -1.4 3.9 222 7.85 -0.4
India 4.4 Q4 -3.4 5.4 6.5 Jan 5.3 7.5 Feb -1.4 -5.9 7.5 56.0 82.0 -6.3
Indonesia 5.0 Q4 na 4.7 5.5 Feb 3.9 5.9 Q3§ 0.8 -2.8 7.0 28.0 15,435 -6.7
Malaysia 7.0 Q4 na 3.9 3.7 Jan 2.3 3.6 Dec§ 2.3 -5.1 4.0 36.0 4.53 -7.7
Pakistan 6.2 2022** na 2.2 31.5 Feb 9.9 6.3 2021 -4.9 -5.4 15.7 ††† 442 277 -35.5
Philippines 7.2 Q4 10.0 4.8 8.6 Feb 5.7 4.8 Q1§ -3.0 -6.4 6.5 102 55.3 -5.4
Singapore 2.1 Q4 0.3 1.7 6.6 Jan 3.1 2.0 Q4 17.3 -0.4 3.4 153 1.35 1.5
South Korea 1.3 Q4 -1.6 1.3 4.8 Feb 2.8 3.6 Jan§ 2.7 -2.4 3.7 100 1,321 -6.4
Taiwan -0.4 Q4 -1.5 2.2 2.4 Feb 1.6 3.6 Jan 12.2 -2.0 1.2 52.0 30.8 -7.8
Thailand 1.4 Q4 -5.9 3.8 3.8 Feb 2.5 1.0 Dec§ 2.1 -2.6 2.7 57.0 35.1 -5.4
Argentina 5.9 Q3 7.0 -0.2 98.8 Jan 90.6 7.1 Q3§ -1.0 -3.9 na na 200 -45.7
Brazil 1.9 Q4 -0.9 1.0 5.8 Jan 4.8 7.9 Dec§‡‡ -3.0 -8.1 13.4 123 5.12 -0.6
Chile 0.3 Q3 -4.6 -0.6 11.9 Feb 7.5 8.0 Jan§‡‡ -4.3 -2.6 5.9 nil 804 1.1
Colombia 2.9 Q4 2.7 1.6 13.3 Feb 9.7 13.7 Jan§ -4.5 -4.4 12.4 260 4,738 -20.1
Mexico 3.6 Q4 1.8 1.1 7.9 Jan 5.9 2.9 Jan -1.1 -3.8 9.3 98.0 17.9 19.5
Peru 1.7 Q4 -6.0 1.9 8.6 Feb 6.5 8.8 Jan§ -3.3 -1.6 8.1 162 3.78 -1.3
Egypt 4.4 Q3 na 3.0 25.9 Jan 19.2 7.2 Q4§ -2.9 -6.5 na na 30.9 -49.0
Israel 2.9 Q4 5.8 3.0 5.4 Jan 3.4 4.3 Jan 4.0 -2.3 3.9 196 3.59 -8.1
Saudi Arabia 8.7 2022 na 2.8 3.4 Jan 2.2 5.8 Q3 6.5 1.6 na na 3.75 nil
South Africa 0.9 Q4 -4.9 1.3 7.2 Jan 5.1 32.7 Q4§ -1.9 -4.8 10.2 -11.0 18.5 -17.4
Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving
average. §§5-year yield. †††Dollar-denominated bonds.

Markets Commodities
% change on: % change on:
Index one Dec 30th index one Dec 30th
The Economist commodity-price index % change on
In local currency Mar 8th week 2022 Mar 8th week 2022 2015=100 Feb 28th Mar 7th* month year
United States S&P 500 3,992.0 1.0 4.0 Pakistan KSE 41,358.9 2.3 2.3 Dollar Index
United States NAScomp 11,576.0 1.7 10.6 Singapore STI 3,226.9 -0.9 -0.8 All Items 156.8 157.6 -0.8 -22.4
China Shanghai Comp 3,283.3 -0.9 6.3 South Korea KOSPI 2,431.9 0.8 8.7 Food 142.0 142.3 0.1 -17.1
China Shenzhen Comp 2,114.9 -2.3 7.1 Taiwan TWI 15,818.2 1.4 11.9 Industrials
Japan Nikkei 225 28,444.2 3.4 9.0 Thailand SET 1,612.6 -0.5 -3.4 All 170.6 171.8 -1.5 -26.0
Japan Topix 2,051.2 2.7 8.4 Argentina MERV 250,911.8 0.5 24.2 Non-food agriculturals 126.1 123.6 -5.2 -34.8
Britain FTSE 100 7,929.9 0.2 6.4 Brazil BVSP* 106,540.3 2.1 -2.9 Metals 183.9 186.2 -0.7 -24.0
Canada S&P TSX 20,346.5 0.4 5.0 Mexico IPC 53,388.7 -0.2 10.2
Sterling Index
Euro area EURO STOXX 50 4,288.4 1.7 13.0 Egypt EGX 30 16,315.6 -4.7 11.8
All items 197.1 198.7 -1.6 -15.9
France CAC 40 7,324.8 1.3 13.1 Israel TA-125 1,779.4 2.4 -1.2
Germany DAX* 15,631.9 2.1 12.3 Saudi Arabia Tadawul 10,410.2 2.1 -1.3 Euro Index
Italy FTSE/MIB 27,911.5 2.2 17.7 South Africa JSE AS 77,741.8 -1.1 6.4 All items 162.8 164.8 nil -20.4
Netherlands AEX 753.4 0.5 9.3 World, dev'd MSCI 2,725.2 0.7 4.7 Gold
Spain IBEX 35 9,466.1 1.5 15.0 Emerging markets MSCI 978.1 -0.6 2.3 $ per oz 1,835.6 1,826.0 -2.6 -11.2
Poland WIG 61,096.3 1.0 6.3
Brent
Russia RTS, $ terms 951.4 -0.5 -2.0
$ per barrel 83.1 84.0 0.1 -34.5
Switzerland SMI 11,025.3 -0.3 2.8 US corporate bonds, spread over Treasuries
Turkey BIST 5,438.4 2.2 -1.3 Sources: Bloomberg; CME Group; Cotlook; Refinitiv Datastream;
Dec 30th
Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool
Australia All Ord. 7,503.9 0.6 3.9 Basis points latest 2022
Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional.
Hong Kong Hang Seng 20,051.3 -2.8 1.4 Investment grade 147 154
India BSE 60,348.1 1.6 -0.8 High-yield 438 502
Indonesia IDX 6,776.4 -1.0 -1.1 Sources: Refinitiv Datastream; Standard & Poor's Global Fixed Income For more countries and additional data, visit
Malaysia KLSE 1,454.7 0.3 -2.7 Research. *Total return index. economist.com/economic­and­financial­indicators

012
 Graphic detail Investing The Economist March 11th 2023 77

→ Options trading has surged since 2019, harming retail investors but benefiting brokers

Retail trading in shares, % of market Options contracts traded per day, m Distribution of one-day returns, %
United States, seven-day moving average S&P 500 index, 30-day moving average American retail traders, 2019-21
20 10
Pandemic Pandemic

Median
10
Expires in
Stocks
More than 30 days
Unlike stocks, options
0 8-30 days 7.5 were more likely to lose
2018 19 20 21 22 2-7 days than to make money

One day
Same day

Options ↑ Frequency
5.0
-100 0 100 200 300 400

Recession
n
Share of total, %
Selected American retail brokers, 2020-22
2.5
Volume of trades

37 8 55

Money earned from routing trades

65 6 29
0
2008 09 10 11 12 13 14 15 16 17 18 19 20 21 22 Options S&P 500 stocks Other stocks

Sources: JPMorgan; OptionMetrics; “Payment for order flow and asset choice”, by T. Ernst and C. Spatt, working paper, 2022; company reports

No good options fall—on market indices, which can be used

to limit risk. Most of these contracts are
0dte options pose a systemic risk. In theo­
ry, if the investors selling them do not hold
probably held by institutional investors. positions in the securities underlying
Retail traders, though, seem to be using op­ these contracts, an abrupt intraday price
tions mainly to speculate: in 2020­21 they change could force them to trade vast
bought twice as many calls (bets that a quantities of those assets simultaneously.
price will rise) as puts. And such investors, Even if options do not threaten markets
Retail traders are losing billions
whose share of overall stock trading in as a whole, they clearly represent a siren
on stock options
America has doubled since 2019, now ac­ song for retail investors. Despite the rise in

N ot long ago trading in American stock

options was limited mainly to profes­
sional investors. Options are contracts that
count for 48% of trading volume in op­
tions, according to a forthcoming paper in
the Journal of Finance by Svetlana Bryzgalo­
share prices since early 2020, traders who
have treated stockmarkets like a casino
have on average fared about as well as a
provide the right to buy or sell a security at va, Anna Pavlova and Taisiya Sikorskaya of typical slot­machine player. The Journal of
a specified price over a fixed time period. London Business School. Finance authors estimate that between No­
They can produce big payouts if a stock Moreover, rather than trading options vember 2019 and June 2021, retail investors
moves in the desired direction, and expire that last for weeks, months or years, buyers collectively lost $2.1bn on options.
worthless otherwise. Sophisticated buyers are now piling into zero­days­to­expira­ The proceeds from these traders’ losses
use options to hedge against risk, generate tion (0dte) contracts. These options, accrue both to counterparties (the inves­
income or as a form of leverage. However, which expire the day that they are bought tors selling the options) and to middle­
options can also be used to gamble. and yield windfalls if a price moves sharply men. According to a working paper by
Interest in American options has grown that day, became more widely available in Thomas Ernst of the University of Mary­
rapidly since the covid­19 pandemic began. 2022, after exchanges increased the num­ land and Chester Spatt of Carnegie Mellon,
In early 2020 the number of options traded ber of trading days on which they are avail­ “bid­ask spreads”—the gap between mar­
per day rose from 20m to 30m. It surged able. As meme­stock mania has faded, ketmakers’ listed buy and sell prices for a
again to 40m in early 2021, when trading 0dte options, mainly written on market­ given security—are wider for options than
erupted in “meme” stocks such as Game­ wide indices, have become the new fad. for stocks. To collect such juicy spreads,
Stop and enthusiasts flocked to options to Daily trading of 0dte contracts recently marketmakers pay brokers twice as much
magnify their bets. Trading has reached re­ reached a record notional value of $1trn. for the privilege of executing trades in op­
cord highs this year. The daily average in And according to OptionMetrics, a data tions as for stock transactions. As a result,
February was 45m contracts, and on Febru­ provider, these contracts now account for in 2022 retail brokers made $2bn from op­
ary 2nd 68m options changed hands. more than half of trading in options on the tions trading, a small but fast­growing
Overall, the most heavily traded options s&p 500 index, up from a quarter in 2019. share of their profits. Just like casinos, in
are puts—bets that a security’s price will Some market analysts have warned that options trading, the house always wins. n

012
 78
Obituary Justin Schmidt The Economist March 11th 2023

will come to seeing the blue of a flame from within the fire.”
This sounded like pure masochism, from a man who relished
pain and had been stung so often by honey bees that he found it
boring. (“Like a burning matchhead that lands on your skin.”) The
sting of the club­horned wasp (0.5) was actually rated “disappoint­
ing”. But he strongly denied that he was either a masochist, or cra­
zy. His list was a tool to explore why inflicting pain was more nec­
essary for some insects than others.
Solitary insects, he found, tended to have a much milder sting
than those organised into complex colonies. From this he de­
duced that stings allowed insects to get more food, hence build so­
cial structures, hence need to defend the nest, the workers, the im­
mobile larvae and the whole teeming enterprise. The greater the
danger, the higher the venom’s potency—even, in the case of a col­
ony of paper wasps he was annoying once, blinding him when it
was sprayed in microdroplets through the air. All that defending,
incidentally, was left to the females; male insects did not sting,
but hid, or fled. When he wanted to appal people he would pick up
a male of a hyper­stinging species, like his favourite tarantula
hawk wasp (pictured), and put on a brave grin.
Most stings were highly effective. Buzzing, bright colours and a
hard shell helped; but predators thousands of times larger re­
membered stings keenly, and kept their distance. Only bears,
skunks and honey badgers thought the pain worth the reward. He
himself had never forgotten his first encounter with a bumble bee,
which stung him on the neck when he was five and running wild
in the woods of Appalachian Pennsylvania. That did not put him
The King of Sting off, though. He was well adapted for entomology, a small, skinny
kid with tiny fingers and a delicate way of picking honey bees off
clover flowers. Insects enchanted him, especially flashy yellow­
jackets and tiger swallowtail butterflies; he fell in a swamp once,
filthy and smelly, as he tried to catch a green darner dragonfly. As a
teenager, he had his own beehives. In his early 20s, after an unsat­
isfying flirtation with chemistry (which did not creep and crawl
Justin Schmidt, entomologist, died on February 18th, aged 75
enough), he was on the road in a car crammed with buckets and

T o be stung by a wasp, an ant or a bee raises—beyond the

“Ow!”—immediate questions. How can a creature so tiny in­
flict such remarkable pain? And why, when all you have done is to
shovels to dig up and study harvester ants in Georgia. Their stings
were curiously lasting. That curiosity shaped his life.
In general, he thought insects got a raw deal. Government re­
make a jam sandwich or dare to eat a peach, does it launch such a search funding went to bigger creatures; no one seemed to care
vicious and unprovoked attack? about wasps, or even ants. So although he held a senior post for 25
Justin Schmidt wondered too, and spent his life trying to find years at the Carl Hayden Bee Research Centre in Tucson, part of the
out. Hence his nickname, “The King of Sting”. To further human federal Department of Agriculture, he worked on his own self­
knowledge he thrust his bare arms into hives of honey bees, dug funded projects much of the time. They included looking for in­
up in Brazil a boiling swarm of bullet ants (which reduced him to a sects whose stings he might not have experienced yet.
shaking wreck, held together by ice and beer), teetered in trees to For him, stings were not only interesting chemically and so­
cut down hornets’ nests, and filled his home­cum­lab west of Tuc­ cially. They were also philosophically intriguing. The purpose of
son with tanks of irritated wasps. He harvested the venom of hun­ pain was to tell the body that damage was occurring, or about to
dreds of ants to compare it with the venom of other ants, at 200 occur. Many stings on his list, including those of the tarantula
ants for one­thousandth of a teaspoon. Over 35 years 150 different hawk, packed a punch but did no harm beyond a prick and a welt.
species of insect jabbed him but, to his regret, his pain threshold By contrast, others, including the sting of the honey bee, seemed
never rose. If they would not voluntarily perform (most were ea­ milder but were much more toxic; they could close down the body
ger) he gritted his teeth, placed them on his arm and enticed them, and, if delivered en masse, stop the heart. Stings seemed to be a
in the name of science. Then, after cursing just a little, he took out sharp statement of truth, insect to human. But pain was often a lie.
his notebook and stopwatch and wrote it up. Only toxicity counted. It was all part of an awkward web of mis­
Most famously, in 1983, he compiled the Schmidt Index, rank­ communication and non­understanding which he hoped to un­
ing the stings of 78 insects from one to four according to their ravel, given patience and time.
pain. Most he had endured himself—felt he had to endure, be­ Meanwhile he had installed himself in south­eastern Arizona,
cause of his list—though colleagues chipped in. The honey bee on the edge of the Sonoran desert. He had already found Maricopa
was his anchoring value, since most people knew what a bee sting harvester ants there, the most savage variety. (“After eight unre­
felt like, and was rated a two. He also provided a line or so, trem­ lenting hours of drilling into that ingrown toenail, you find the
bling on the edge of poetry, to describe each pain precisely. Thus drill is wedged in the toe.”) For the worst stingers, though, he
the sweat bee sting (1), was “light and ephemeral, almost fruity. A would have to go farther south, as he often had, to the tropical and
tiny spark has singed a single hair on your arm.” The honey wasp’s semi­tropical Americas. There he would encounter again the bul­
(2) was “Spicy, blistering. A cotton swab dipped in habanero sauce let ant (4+) with its “pure, intense, brilliant pain. Like walking over
has been pushed up your nose.” The unstable paper wasp’s (2) was flaming charcoal with a three­inch nail in your heel.” Or, possibly,
“like a dinner guest who stays much too long.” As for the red­head­ another 4, the warrior wasp: “Torture. You are chained in the flow
ed paper wasp’s (3), this was “irrationally intense...the closest you of an active volcano. Why did I start this list?” n

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 2nd annual

Commercialising
Quantum Global
May 17th–18th 2023 | London and virtual

More than:
2,000 virtual attendees 400 in-person attendees 80 speakers 60 sessions

From qubits to profits: achieving near-term

quantum advantage
Looking beyond the hype, this hybrid event will inform, inspire and educate
executives about the scope of near-term quantum advantage.

Francesco Marzoni Thomas Zerbuchen George Freeman

Chief data and Former head of Minister of state for science,
analytics officer science research and innovation
Ingka Group (IKEA) NASA UK Government

Ricardo Vidal Ling Ge Marielle van de Pol

Head of innovation Chief European Global area head, scientific
British Airways representative and solution engineering and
general manager architecture
Tencent Roche

Register:
commercialisingquantum.economist.com

Lead sponsor Sapphire sponsors Gold sponsor Silver sponsors

Lanyard sponsor Workshop sponsor Associate sponsor Shark tank sponsor

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