Why Monetary Policy Isn't the Only Game in Town Anymore

The Jackson Hole gathering of central bankers has been an opportunity for policy makers to pledge extraordinary support for economies, in particular via quantitative easing. But this year looks different.

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Smaller Firms Are Winning the Deals

Merger and acquisition activity is retreating, but some boutique investment banks are still raking in fees.

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The Catholic church dabbles with impact investing

The pontiff makes an impact

“YOU cannot serve both God and money,” admonishes the Bible. But the church has always tried. In the Middle Ages monasteries were what would now be termed social enterprises. They would produce bread, books or other goods. A Franciscan monk is credited with codifying double-entry book-keeping.

These days the Catholic church and related institutions control many billions of dollars. Some is invested to earn income; some is given away for good works. The two activities have been seen as separate. But, in the pontificate of Pope Francis, that divide is blurring. “Impact” investing—intended to make money and do good at the same time—is growing in importance. It is also creating some controversy.

In 2014 the pope, speaking to a conference in the Vatican on impact investing, called on Christians to rediscover “this precious and primordial unity between profit and solidarity”. His church has responded. Some...Continue reading

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China modernises its monetary policy

QIN SHIHUANG was the emperor who first unified China, through bloody conquest more than two millennia ago. Known for starting the Great Wall and burying scholars alive, he has a new claim to fame: the central bank has drawn on his construction of a national road system to help explain its new monetary system. In a report on August 11th, the People’s Bank of China seized on an idiom derived from his road-building experience: it had “shaved off mountain peaks and filled valleys” in managing liquidity.

The modernisation of monetary policy is in its own way a monumental project for China. Over the past two decades, the central bank’s conduct of policy had two defining features. It focused on the quantity, not the price, of money. And it relied on inflows of foreign cash to generate new money. Both features are now slowly changing, bringing China closer to the norm in developed markets, an essential transition for an increasingly complex economy.

Start with interest rates. These used to be of secondary importance in China. Regulators instead used quotas to dictate how much banks lent and in effect fixed their deposit and lending rates. This made sense when China was in the early stages of moving away from a planned economy. Crude targets were still needed. But as a bigger, rowdier financial system took shape, these targets became less relevant. With the...Continue reading

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The Trump administration is investigating Chinese trade practices

BEING tough on China was a constant theme of President Donald Trump’s election campaign. On August 14th he had another chance to wield his presidential pen to show that he is making good on his promises—in this case of a “zero-tolerance policy on intellectual-property theft and forced technology transfer”. With the cameras rolling, he formally instructed Robert Lighthizer, the United States Trade Representative, to consider launching an investigation into China’s alleged crimes. “This is just the beginning,” was Mr Trump’s final flourish for the news bulletins.

His record of translating signatures into policies is patchy. Two others, launching investigations into whether imports of steel and aluminium threaten America’s national security, seem to have fizzled. But whereas proposals for import restrictions on these commodities met fierce resistance from consumers and America’s allies, China’s trade practices provoke much more agreement. It is one of the few...Continue reading

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The North American Free-Trade Agreement renegotiation begins

THE North American Free-Trade Agreement (NAFTA), a 23-year-old trade deal between America, Mexico and Canada, is being revamped. On August 16th, after months of threats, taunts and tweets, the first round of talks started in Washington. The negotiators face a daunting challenge, straddling domestic and foreign policy. They must please their political masters while grappling with devilishly detailed policy problems. If they fail, it will not be for lack of experience. The professionals are in the room.

This negotiation will be more tense than most. Participation in trade talks is usually by mutual consent. In this one, President Donald Trump is trying to hold his trade partners hostage, by threatening to withdraw from the original deal if a better one cannot be agreed on. That such an outcome would also hurt America does not make the exercise any easier.

Pressure is added by a desperately tight, if unacknowledged, deadline, set by the presidential-election timetable in Mexico....Continue reading

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Hedge funds try to promote sports betting as an asset class

Chasing the money

WHEN he was 12, Warwick Bartlett bought “100 Famous Greyhound Systems”, a guide for betting on dog races. After spending a year tracking every stratagem and picking the best two, he went to the races to take his first punts. He lost. Mr Bartlett, now the boss of GBGC, a betting consultancy, says it taught him a good lesson: “A system can win for a period of time. And then it’s had its day.”

Two trading companies are trying to prove him wrong. Melbourne-based Priomha Capital, which claims to be the “world’s premier sports hedge fund”, wagers on European football, cricket and golf. Founded in 2010, the firm manages about $20m. Stratagem, a rival based in Britain that styles itself as a technology business, wants to raise $25m from rich individuals.

Both argue that techniques imported from the investment world can help turn sports betting into an alternative asset class. By crunching data, they analyse the pricing...Continue reading

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Why Africa’s development model puzzles economists

IT IS easy to buy a rolex in Uganda—albeit not one that will tell the time. Sold at ubiquitous roadside stalls, the Ugandan rolex is a greasy snack, made from an omelette wrapped in a chapati (“roll eggs”). Sellers compete side-by-side for the same custom. So do the motorcycle-taxi drivers, hustling for rides; or the countless small shopkeepers, stocking near-identical goods. In Uganda, as in much of Africa, the informal service economy is a crowded place to be. But it is hard to find work anywhere else.

Last year GDP in sub-Saharan Africa grew by just 1.4%. Income per person fell. But growth in itself is not the issue that troubles policymakers and intrigues academics: for most of this century, after all, African economies have been among the fastest-growing in the world. What has flummoxed observers is where that growth comes from. In 1954 Arthur Lewis, a Nobel prize-winning economist, argued that development occurs as labour shifts from an unproductive...Continue reading

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Low Price Is the Only Winner in Retail

It might seem like the most basic retail maxim, but the second-quarter drilled it home for investors: low prices matter. The only winners in an otherwise bleak retail landscape were the ones offering the lowest ones.

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Steve Bannon is ousted as the president’s chief strategist

THE statement was short and bland: “White House Chief of Staff John Kelly and Steve Bannon have mutually agreed today would be Steve’s last day. We are grateful for his service and wish him the best.” As with most such statements, this one concealed more than it revealed. According to President Donald Trump, there was nothing mutual about the separation: he had decided to remove his nationalist chief strategist. Mr Bannon’s camp insisted that in fact their man had resigned 11 days ago and that the events of Charlottesville had delayed the announcement. Signs that the relationship between the two men was not as harmonious as it used to be had emerged on Tuesday, when the strongest defence of Mr Bannon that Mr Trump could muster was to call him a “friend”, and “not a racist”, but warned that “we’ll see what happens with Mr Bannon.”

Of all the senior aides who have left Mr Trump’s White House over the past few weeks, this was the most surprising. Sean Spicer and Reince Priebus were creatures of the Republican...Continue reading

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Biogen Treads Tricky Path Between Politicians, Investors

Biogen is taking a political risk with aggressive multiple sclerosis drug pricing, but the company is under pressure to boost its share price.

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Islamist terrorism in Catalonia leaves the Spanish wondering why

THE jihadists of Islamic State (IS) may boast of their ambition to recover the lost Islamic lands of “al-Andalus”. But until this week Spain seemed relatively safe, and tourists have been flocking to its cities and beaches in growing numbers—nowhere more so than to Barcelona.

That illusion of security was cruelly shattered around 5pm on August 17th, when a white van veered onto Las Ramblas, a tree-lined avenue that represents the city’s easy-going spirit. The vehicle zigzagged down the avenue for about 500 metres, mowing down panicked pedestrians before crashing; the driver fled on foot. At least 13 people were killed, and more than 100 injured.

What at first seemed like a lone-wolf attack quickly turned into something more organised and sinister. A few hours later, in the early hours of August 18th, Catalan police shot dead five suspected terrorists in Cambrils, a seaside resort. Their vehicle had jumped a police checkpoint and sped towards the main...Continue reading

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Jack Ma Works His Magic With MassMutual Bid

For Alibaba’s Jack Ma, joining in a $1.7 billion bid for the Hong Kong and Macau businesses of MassMutual looks like a slick way to get into the insurance line.

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Direxion Launches Emerging-Markets Bond ETF to Growing Demand

Direxion, the firm behind popular funds that bet on gold mining companies, oil prices and Chinese stocks, launches an ETF that aims to triple the returns of emerging-market bonds.

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A mudslide devastates the capital of Sierra Leone

Torrential rains overwhelmed the drainage system in Freetown, the capital of Sierra Leone, creating a devastating flood on August 14th. Water surged through the city, causing mudslides that killed hundreds of people and washed away ramshackle homes. Hundreds more people remain missing. To the plagues of poverty, civil war and Ebola that have ravaged Freetown over the decades, now add mud.

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War in the Arab world has devastated the region’s heritage

THE Middle East is used to ruins. A millennium ago the “mad caliph” of Cairo, Hakim, ordered the levelling of all churches, including the Holy Sepulchre in Jerusalem, Jesus’s burial site. The Mongols sacked Baghdad in 1258, causing the Tigris to flow black from the ink of discarded books. Tamerlane spared nothing but hospitals and mosques as he went on what a contemporary chronicler called a “pilgrimage of destruction” across the region’s great cities. “She is empty, and void, and waste,” wailed Nahum, the biblical prophet, foreseeing the ruin of Nineveh at the hands of the Babylonians.

Still, the desolation of the past three years is probably the worst on record. According to the UN, half of the old city of Mosul, in Iraq, and a third of the old city of Aleppo, in Syria, are rubble. Hundreds of minarets, monasteries and monuments have been toppled. Of the world’s 38 endangered cultural-heritage sites, 22 are in the Middle East, says UNESCO, the UN’s cultural arm....Continue reading

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The MPLA’s grip on Angola is weakening

But will he make Angolans smile?

IT IS fitting that the black-and-red flag of Angola is hardly distinguishable from that of its ruling party. The People’s Movement for the Liberation of Angola (MPLA) has led the country since independence from Portugal in 1975. At the parliamentary election in 2008 it won 82% of the vote; in 2012 it won 72%. Few doubt it will win again when Angolans go to the polls on August 23rd.

Many Angolans credit the MPLA with bringing peace to the country after nearly three decades of civil war that ended in 2002. The party then presided over an oil-fuelled boom, with annual GDP growth averaging 7.2% between 2003 and 2015. New roads, railways and other infrastructure won it the support of voters. But just in case, the party is also accused of beating opponents, bribing local chiefs and keeping a tight grip on the media.

There are signs, though, that the MPLA’s stranglehold on Angolan politics is loosening. Its leader,...Continue reading

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Israel has a gas conundrum

LONG a resource-poor country, Israel now has more natural gas than it knows how to use. Even by conservative estimates, the fields discovered off its Mediterranean coast since 2009 hold enough energy to meet domestic needs for 40 years. The government hopes to earn a windfall by selling the excess abroad; the owners of Leviathan, the largest field, have earmarked 9bn cubic meters (bcm) for export each year. Jordan has already signed a deal to buy some. Israel wants to send the rest farther afield—offering it to Europe as an alternative to Russian supplies. But geography and politics make that difficult.

An overland pipeline would have to cross either Lebanon or war-torn Syria, neither of which recognises Israel. The shortest underwater path, to Turkey, is also problematic, because it would pass through Cypriot waters. Turkey occupied the northern third of the island in 1974; the Republic of Cyprus, which governs the south and also has gas to sell, rejects the project.

So in April...Continue reading

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A battle over language is hampering Algeria’s development

FOR most countries, language is as simple as ABC. Not Algeria. Its kindergartens are a linguistic morass. The republic’s official language is standard Arabic, but few children grow up speaking it, so they often feel lost on their first day of school. Berber, the tongue of perhaps a quarter of Algerians, was officially recognised last year—but no one can agree on which of its six dialects to teach. Algeria’s French-speaking elite prefer their old masters’ lingo. The education minister, Nouria Benghebrit, advocates the introduction of a fourth language: Darija, which fuses the other three and is the mother tongue of most Algerians. An increasing number of Anglophiles want to wipe the slate clean with English.

The choice goes to the heart of Algeria’s sense of identity. The French banned Arabic at primary school when the country was theirs, dismissing it as a backward language. After independence in 1962, nationalists pushed Arabisation to undo 132 years of French indoctrination....Continue reading

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Kenya’s new government faces serious challenges

WHEN the final results of Kenya’s presidential election were announced on the evening of August 11th, many feared the worst. Hours previously the opposition, led by Raila Odinga, a perennial presidential candidate, had walked out of a meeting with the electoral commission. James Orengo, one of Mr Odinga’s closest allies, said that the announcement was a “charade” and that the commission was in cahoots with the government. “Kenyans always rise up,” he went on. As he spoke, an ominous silence descended on Nairobi, the capital, as people stayed inside.

Yet in the end, the uprising was relatively subdued. In Mr Odinga’s strongholds, in the slums of Nairobi and in Western Kenya, protesters blocked roads and burned tyres. The police responded with typical brutality, firing tear gas and live rounds into the crowds. After a few days, at least two dozen people were dead, including a nine-year-old girl who was hit by a stray bullet and a six-month-old baby who was clubbed on the head....Continue reading

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A Pillar of Chinese Growth Starts to Show Cracks

Housing prices rose more slowly in China’s interior for the second time in two months—a potentially worrying sign for growth following a raft of weak data in July.

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Why It is Time to Own France's Biggest Bank

BNP Paribas is exploiting rivals’ weaknesses while keeping a tight rein on costs

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Donald Trump blusters, Latin America shrugs

A DEEP perplexity. That, says a senior Latin American official, describes his region’s attitude to the government of President Donald Trump.

What Latin American leaders do not feel is fear, awe or a sense of shared ambition to do great things. Lexington is in Panama, in the press pool accompanying Mike Pence on the final leg of a four-country tour of the region, also taking in Colombia, Argentina and Chile.

The single most striking impression of this tour is its smallness. Mr Pence, a man so disciplined and loyal to his boss that his favourite phrase is “As President Trump has said”, has asked each government in turn for modest, and in some cases puzzling, things. He has not described grand visions for pan-American cooperation of the sort once espoused by President George H.W. Bush, who called for a free trade area of the Americas stretching from Alaska to Patagonia.

Mr Pence has focused on policies that matter immediately to Mr Trump back home: sanctions on North Korea, more pressure on the...Continue reading

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A new threat to public-sector unions is headed to the Supreme Court

SOMEWHERE among the thousands of petitions the justices will wade through when they return to work in September is a unique case: Janus v American Federation of State, County and Municipal Employees (AFSCME). The Supreme Court refuses to hear about 99.4% of appeals at this time of year—a rejection rate even stingier than its usual 89.9%. But Janus is very likely to attract the four votes it needs to make it onto the court’s docket for the upcoming term that begins October 2nd.

The dispute revisits a question the Supreme Court answered 40 years ago in Abood v City of Detroit Board of Education: whether public-sector unions may charge a fee to non-members for the cost of negotiating their contracts. The unanimous court in Abood began with the premise that many states require all workers in a particular sector to be represented by a union and that members and non-members alike benefit from their work. Given this arrangement, the court reasoned, so-called “agency” or “fair-share” fees preserve...Continue reading

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Under Armour's Self-Inflicted Wound

A love-hate triangle has ensnared Under Armour, Dick’s Sporting Goods and Kohl’s. The dynamic among the three companies shows how brands and retail chains are tripping over each other as they struggle to survive fierce competition.

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OPEC's Sick Man, Venezuela Could Jolt Oil Market

Venezuela’s already falling oil production will get worse before it gets better, potentially roiling global energy markets.

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Alibaba Cashes In on Data Trove

Alibaba earnings are strong and shares are up 90% this year as the Chinese e-commerce giant leverages its trove of data to boost growth

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IKEA goes to Serbia

EUROPEAN integration takes different forms. For governments like Serbia’s it means struggling with thousands of instructions from the EU on how to build a modern state. Yet for thousands of ordinary Serbs, since IKEA opened in Belgrade on August 10th, it means spending the weekend like millions of other EU citizens: buying furniture from the Swedish megastore and struggling with the instructions on how to put it together.

If it had been anywhere else in Europe, the opening of the 400th IKEA store would hardly have been news, let alone an occasion for national soul-searching led by Serbia’s president, Aleksandar Vucic. In a newspaper article he penned an ode of praise for IKEA and Ingvar Kamprad, its founder. In his youth, wrote the president, Mr Kamprad had been a member of a wartime Swedish fascist party, but he had redeemed himself. No one in the Balkans needed to scratch their head and wonder what Mr Vucic was alluding to here. The president spent 16 years as a leading member of an...Continue reading

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Silvio Berlusconi may manage a political comeback

TO ANYONE outside Italy it may seem unthinkable. But the hottest political topic in a searing Italian summer is the expected resurrection of Silvio Berlusconi. Ejected from office by his own lawmakers in 2011, and convicted of tax fraud two years later, the TV and property magnate-turned-politician will be 81 next month. Still derided for hosting Bacchic “Bunga Bunga” parties while running the country, Mr Berlusconi is due to go on trial, charged with bribing his young female guests to perjure themselves in earlier proceedings. Yet, as one commentator noted, on his return from the summer recess in September, modern Italy’s longest-serving prime minister can expect to be “treated with respect by all”.

Why? Mr Berlusconi’s party, Forza Italia, has barely crept back from the low point it hit two years ago when it was winning only 10% of the national vote in polls and was overtaken by the Northern League. Forza Italia still trails the more radical, populist League, and faces a new...Continue reading

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Poland’s ruling party picks a fight with Germany

That’ll cost you

POLAND lost a fifth of its population in the second world war. Vast swathes of Warsaw were razed to the ground and the city still bears the scars. Damage to the capital alone amounted to $45bn, according to an estimate in 2004 by city hall. Yet Poland got nothing in compensation. In 1953, under pressure from the Soviet Union, its communist government renounced any claim to reparations from the then East Germany, ruled by a fellow-communist regime. (West Germany made payments to Greece, Israel and Yugoslavia.)

Now the ruling right-wing Law and Justice party (PiS) has put reparations back on the agenda, after an unsuccessful attempt by MPs in 2004 to get the matter raised. It echoes calls by the Greek government two years ago. Poland is already locked in a row with the European Commission over what Brussels sees as its undermining of the rule of law, most recently for attempting to control the judiciary. So one might think that Poland needs...Continue reading

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Germany’s new divide

WHEN Helmut Kohl was buried on July 1st, Germans reflected approvingly on his legacy: the scars of the country’s east-west division are gradually healing. Yet as the country’s longitudinal split closes, a latitudinal one is growing.

Imagine that Germany were sundered once more, this time into north and south. The south would contain the Länder (states) of Saarland, the Rhineland-Palatinate, Hesse, Baden-Württemberg and Bavaria from the former west, plus Thuringia and Saxony, the two southernmost states of the former east. South Germany’s border with north Germany would track what linguists call the Uerdingen line separating “high” and “low” dialects of German.

It would be an equal split. Each Germany would contain half of the population, five of the ten largest urban regions and similar proportions of the still-poorer easterners. Yet the new South Germany would have the better prospects of the two. For Germans in the southern states are...Continue reading

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Charlemagne: Russian culture wars

THE posters had been printed, and most of the tickets sold. The ballet, a celebration of the life of the gay dissident dancer, Rudolf Nureyev, promised to be a progressive production by the standards of the main stage of Russia’s famed Bolshoi Theatre: in videos of the rehearsal, male dancers can be seen twirling in high heels. But just days before the show was due to open in July, the Bolshoi’s director, Vladimir Urin, declared that the troupe was, apparently, not up to snuff and cancelled the premiere, replacing it with an old standby, “Don Quixote”.

Critics called it blatant censorship of the play’s homosexual themes. State media fuelled this speculation, citing anonymous sources that said the order had come directly from the minister of culture, Vladimir Medinsky, a nationalist enamoured of classicism and traditional values. Other powerful patrons of the Bolshoi, though, spoke out in support of the ballet. Mr Urin now promises that “Nureyev” will live to see the stage,...Continue reading

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Effort, not ability, may explain the gap between American and Chinese pupils

WHETHER a teenager grasps calculus is not obviously an issue of geopolitical importance. Yet since the first Programme for International Student Assessment (PISA) in 2000, the poor performance of American pupils in the global test has worried policymakers. Not least since Chinese pupils, or at least residents of Shanghai, are at or near the top of the class.

Some of Shanghai’s prowess is overstated. Children of poorer migrants to the city are not properly sampled, for example. America does a bit better in other international tests. Yet, on average, American teenagers trail their peers (see chart), especially maths whizzes from East Asia. Of the 69 other parts of the world whose 15-year-olds took the PISA maths test in 2015, 36 scored higher than America, 28 lower and five did about the same. “We can quibble,” said Arne Duncan, Barack Obama’s first education secretary, after a batch of scores came out in 2010, “or we can face the brutal truth that we’re being...Continue reading

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The Texas Legislature’s special session grinds to a halt

Spot the governor

THE Texas House of Representatives adjourned on August 15th, after a special legislative session that left many legislators, on both sides of the aisle, a bit dyspeptic. “The problem continues to be that politics rather than policy is driving the bus,” said Chris Paddie, a Republican representative from east Texas, that evening. The Texan constitution gives the governor the option of calling special legislative sessions to address issues left lingering after the Legislature’s brief, biennial regular meetings. And this year the governor, Greg Abbott, had little choice but to do so. The 85th Legislature adjourned, in May, without having passed legislation required to reauthorise several state agencies, including the Texas Medical Board, which licenses doctors.

This was a crisis manufactured by the lieutenant-governor, Dan Patrick, who is widely thought to be interested in ascending to the governor’s office. Mr Abbott responded, in June,...Continue reading

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Women alone are driving a recovery in workforce participation

IF THERE were a list of common complaints about America’s economy, the fact that too few people work would be near the top. Though unemployment is low—only 4.3% in July—the figure does not include those who are jobless either by choice, or because they have given up looking for work. The proportion of those aged between 25 and 54 in work is 79%—lower than in France, where the unemployment rate is more than twice as high. So it is a relief that over the past two years, as the labour market has improved, Americans aged 25 to 54 (prime-age, in the jargon) have been joining the labour force in greater numbers. What is remarkable, however, is that this turnaround has been driven almost entirely by women.

When people think about America’s hidden reserves of labour, they usually point to prime-age men, who have participated in the labour market at ever-lower rates since the 1960s. Things have been particularly bad for less educated men, who have suffered as technological...Continue reading

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The far right—a user’s manual

Many sides in Madison Square

AMERICA is not about to be overrun by neo-fascists. Most politicians have no difficulty condemning the far right. The Republican National Committee chairman has told white supremacists, “We don’t want your vote.” Yet this floppy fringe should not be taken lightly. “As a speaker, Hitler exercises astonishing sway over a German audience, presumably because public speaking is an unknown art in Germany,” was the British embassy in Berlin’s snarky verdict in 1937. European fascists were a bit of a joke, until they were not. Nor was America immune from swastika-waving wingnuts.

On February 20th 1939 the German American Bund, a group founded in 1936 to promote Nazism in America, held a rally at Madison Square Garden in Manhattan that drew 20,000 supporters. The Bund had about 25,000 members, and worked closely with the Christian Front, a militia linked to Charles Coughlin, an anti-Semitic priest whose radio shows drew millions...Continue reading

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Minorities, the elderly and women are drinking much more alcohol

Got to give it up, that stuff

THE White House has plans to declare the opioid crisis a national emergency. This concern is justified: in their legal and illegal forms, opioids kill an American every 16 minutes. Yet a focus on opioids has eclipsed the damage caused by an even deadlier, more common substance. Between 2006 and 2010, an average of 106,765 Americans died each year from alcohol-related causes such as liver disease, alcohol poisoning and drunk driving—more than twice the number of overdoses from all drugs and more than triple the number of opioid overdoses in 2015. Although Americans quaff less alcohol per person than the pub-loving British and Irish or the beer-fond Germans, they are drinking far more heavily than they used to.

On August 9th, researchers at the National Institute on Alcohol Abuse and Alcoholism, New York State Psychiatric Institute and Columbia University published a study in JAMA Psychiatry that compared...Continue reading

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Travels with Mike Pence

TO KNOW how the world aches for a more familiar America to return, it is enough to watch foreign leaders interact with Vice-President Mike Pence. In more normal times, Mr Pence would make an unlikely object of global fascination. Missionary-earnest and sternly conservative, he wears his loyalty to Donald Trump like a blank mask. There is no Trump provocation that the vice-president cannot explain away: usually in tones of mild, head-shaking disappointment, as if others lack the good sense to trust his boss. But even as Mr Pence defends his president and his America First agenda, he sounds enough like an old-school Reagan Republican—praising free-trade pacts, lauding NATO and chiding leftist strongmen for trampling the rule of law—that foreign allies cannot help but dream.

To us, says an official from one of four Latin American countries hosting Mr Pence from August 13th to 18th, this vice-president somehow represents all the institutions of America, not just this White House. He sounds...Continue reading

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Indian officials are humiliating people who defecate outdoors

CRAMMED into Meena Choudhary’s mud-brick house in Yeoor, on the outskirts of Mumbai, are a television, fridge and washing machine. Yet until recently her family of six relieved themselves in nearby fields. The morning ritual involved arming herself with a jug, stick and torch, negotiating squelching bogs and tall grass, glancing around for onlookers and thumping the ground a few times to scare off snakes. “It was stressful,” says Mrs Choudhary, who managed to persuade her husband to build a toilet at home two years ago.

Stories like Mrs Choudhary’s are music to the ears of Narendra Modi, India’s prime minister. He has pledged to eliminate “open defecation” by 2019. His government says it will spend almost $29bn to that end, providing a subsidy of 12,000 rupees ($187) for every toilet built. It claims the “Clean India Mission” has already led to the construction of 46m latrines, with another 64m to come.

But the scheme is beset by inefficiencies and graft. In December an investigation by the Indian Express revealed that in Dhamtari, a village in the state of Chhattisgarh declared to be “open defecation free”, a third of the households still had no toilet. “Millions of latrines reported built by the government are missing,” write Dean Spears and Diane Coffey in a new book on the subject.

Even when...Continue reading

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Cisco's Long, Slow Decline

Investors had low expectations for Cisco Systems ahead of its fiscal fourth-quarter results posted Wednesday.

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A firm that shares a name with its founder earns higher profits

A GOOD business name can be pricey. An entrepreneur looking for the perfect one can hire a naming agency to offer ideas, but that can cost tens of thousands of dollars. That may explain why many founders follow the example of the current American president and name their businesses after themselves. A recent article* by academics from the Fuqua School of Business at Duke University in North Carolina suggests that doing so not only saves money—it can also boost profits.

The study looked at small businesses in western Europe. It relied on a sample of almost 2m firms, data for which are contained in Amadeus, a commercial database. Firms in the sample tended to be, on average, fairly young, with few shareholders and employees. Checking the surnames of the largest shareholders, the authors found that 19% of firms were named after their founders.

After accounting for other factors, firms that bore their largest shareholder’s name enjoyed a return on assets (ROA) that...Continue reading

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Donald Trump’s failure of character emboldens America’s far right

LAST weekend white supremacists flocked to the picturesque college town of Charlottesville, Virginia to protest against the planned removal of a statue of Robert E. Lee, a Confederate general, from a city park. They marched on the University of Virginia on Friday night, chanting “Blood and soil!” and “Jews will not replace us!” On Saturday morning, carrying Nazi and Confederate flags, they tussled with counter-protesters. And then, after brawls forced police to clear a city park, Heather Heyer was killed (see our Obituary) and 19 others injured when a car ploughed into a crowd of chanting counter-protesters. James Alex Fields junior, a 20-year-old from Ohio whom a former teacher recalled having “sympathy toward Nazism…idolisation of Hitler [and a] belief in white supremacy”, was arrested and charged with...Continue reading

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Donald Trump’s failure of character emboldens America’s far right

LAST weekend white supremacists flocked to the picturesque college town of Charlottesville, Virginia to protest against the planned removal of a statue of Robert E. Lee, a Confederate general, from a city park. They marched on the University of Virginia on Friday night, chanting “Blood and soil!” and “Jews will not replace us!” On Saturday morning, carrying Nazi and Confederate flags, they tussled with counter-protesters. And then, after brawls forced police to clear a city park, Heather Heyer was killed and 19 others injured when a car ploughed into a crowd of chanting counter-protesters. James Alex Fields junior, a 20-year-old from Ohio whom a former teacher recalled having “sympathy toward Nazism…idolisation of Hitler [and a] belief in white supremacy”, was arrested and charged with murder.

Politicians have few easier tasks in their careers than condemning Nazis. Sometimes talking about race in America can feel like trying to pirouette across a minefield. This...Continue reading

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Floods and political crisis are back in New Orleans

TWELVE years ago Hurricane Katrina exposed the flood defences in New Orleans as a cruel joke. The floods unleashed by the storm marinated people's homes in fetid seawater and rendered much of the city uninhabitable for months. Since then, local and federal officials (the floodbanks that protect the city are designed by, built by and paid for by the U.S. Army Corps of Engineers) have mostly been focused on making the low-lying, bowl-shaped city less vulnerable to a repeat of that catastrophe. Though the new hurricane defences have barely been tested so far, they are thought to be far superior to those that failed in 2005.

However, the focus on hurricanes seems to have led officials to neglect a far more pedestrian threat. Earlier this month, the city was sorely tested by thunderstorms, which hit New Orleans on just about any summer afternoon. On August 5, around 25 centimetres (10 inches) of rain fell in just over three hours, flooding several neighbourhoods. Days after the flooding, with more rain forecast,...Continue reading

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Does the World Really Want Content From Apple?

Big money can’t guarantee Apple success in Hollywood, especially when competitors are spending more.

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The Philippine president’s zany ideas have not hurt the economy

IN MATTERS of economics, as in other realms, Rodrigo Duterte, the president of the Philippines, is more than capable of flamboyant, populist gestures. Earlier this month, to the astonishment and consternation of much of his cabinet, he signed a law abolishing tuition fees for students in state universities. When asked how the government would pay for the new policy, he replied “I don’t know, we’ll have to see.” By the same token, he has promised to restrict severely the sorts of temporary contracts under which around 30% of Filipinos are employed; he has pledged allegiance to China in exchange for investment in infrastructure; and, in April, he announced a plan to suspend imports of rice to help local farmers.

Economists point out that abolishing university tuition will be more of a subsidy for the rich than the poor, since just 12% of students come from the poorest 20% of families. It could also cost anywhere between 30bn pesos ($588m) and 100bn pesos a year, according...Continue reading

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Beijing's Heavy Hand in Chinese Business

China’s big internet companies are investing in its No. 2 telecom provider though the reason isn’t clear beyond the government wants it.

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How Fast Can Europe Really Grow?

The eurozone is consistently growing faster than estimates of its potential

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This Auto Lender Won't Pay Off

Subprime auto lender Credit Acceptance has run circles around short-sellers, but it shares are now looking expensive and vulnerable.

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Militant Buddhist monks are stoking sectarian tensions in Myanmar

Alerting the world to Muslim misdeeds

INSIDE a Buddhist monastery in Mandalay five teenagers are looking at a poster, bemused. A graphic collage of photos depicts children’s corpses, monks covered in blood and enraged jihadists brandishing weapons. A monk in a maroon robe approaches. “This is a reminder of what Muslims are like,” he says.

Ashin Wirathu, the most famous resident of the Masoeyein monastery, expands on the theme during a break between meditation sessions. Buddhism, he explains, is in danger. Centuries ago, he points out, Indonesia was principally a Hindu and Buddhist country, but it has since “fallen” to Islam. The Philippines, meanwhile, is struggling with “hordes” of jihadists. Myanmar, he warns, is next. As the leader of the most extreme fringe of the Organisation for the Protection of Race and Religion, a Buddhist charity best known by its Burmese acronym, Ma Ba Tha, he is mounting a fierce campaign to rouse Burmese Buddhists to...Continue reading

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