The_Economist_USA_-_16_05_2020

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 50 Climate brief The Economist May 16th 2020 2 temperature (wbt) allows scientists to In the nearer term, there is an increased This is an issue not just in warm, fire-prone measure temperatures in a way that re- likelihood of heatwaves. Between August places such as Australia. For several flects that difficulty (similar measures in 3rd and 16th 2003, Europe saw 39,000 more months in the summer of 2019, large America are called the heat index). wbts of deaths than would have been expected on swathes of northern Russian and Canadian 35°C and above are lethal. the basis of previous years. The excess mor- forest—and even some of Greenland’s few Until recently it was thought that wbts tality was due to a summer that was hotter, woodlands—went up in flames. that high would not be seen until warming by some estimates, than any for the previ- had continued for decades. A review of ous 500 years. Modelling suggests that, Unusual infernos have plagued Califor- weather-station data from 1979 on, how- even in 2003, climate change had made nia for many years now, again as a result of ever, shows that for very brief periods local such a heatwave at least twice as likely. parched conditions, which are drying out wbts almost that high are already being ex- rivers, lakes and underground aquifers perienced occasionally in South-East Asia, Extreme heatwaves are becoming more across the entire south-west of the state. the Persian Gulf and the coastal south-west frequent not only because temperatures This is no regular drought. It is 19 years in of America, and that their frequency had are climbing. Warming-induced changes the making, enough for it to be classed as a doubled since 1979. With 2.5°C (4.5°F) of in the climate system can weaken the pro- “megadrought”. global warming above pre-industrial lev- cesses that normally move weather around els, which is quite possible in the second the world, allowing conditions to get stuck. Tree-ring records show only four such half of this century if action on emissions Such stalling can be the difference between in the region over the past 1,200 years, and is not significantly increased, these unlive- a hot week and a lethal month, or in winter suggest that this could be as bad as the able conditions will become a regular oc- a cold snap and a deep freeze. worst of them, which took place in the 17th curence in parts of the humid subtropics. century. Such droughts are linked to chang- Another recent study defines climates Springtime and harvest ing patterns of circulation in the ocean. which people find liveable according to Hot summers can also harm crops, both di- Models suggest that such patterns are where, historically, they have lived, and rectly—many important crops are very themselves altered by warming, which can then sees which such areas move beyond sensitive to temperatures above a certain thus change the frequency of other large- those climatic bounds as the world warms. threshold—and through water stress. Mil- scale regional shifts in the climate. Temperature rises quite plausible by 2070 der winters can also do harm by allowing would see many areas where people live to- pests to survive, hurting yields. And then there is the longest term day develop climates unlike any that peo- change: sea level. The sea’s rise comes from ple have lived in before (see map). Some When unusually hot and dry conditions three different mechanisms—the expan- econometric analyses based on inter- suck the moisture off the land, the subse- sion of the oceans as they absorb more annual differences suggests that, in gen- quent droughts do not just exacerbate the heat, the addition of meltwater from eral, higher temperatures lead to lower la- problems for farmers. They also increase shrinking glaciers on land, and the physi- bour productivity and more violence. the risk and severity of fires—which an in- cal break down of ice sheets such as those crease in the amount of lightning will, in on Antarctica and Greenland. The first two some regions, spark off more frequently. factors are currently driving an increase of about 1cm every three years, and are set to → A hotter planet is a more extreme one; some regions become unliveable do so at a similar rate well into the 21st cen- tury even if global warming is held well be- Effect of changes in global temperature low 2°C; the time it takes seawater to warm up gives the process a significant inertia. Increase in mean Increase in variance Increase in mean and variance Such rises will erode coasts and increase flooding—especially when pushed inland → → by the surges intense storms produce. Fewer cold More hot More cold More hot Less impact on More hot The big unknown, though, once you get extremes to the century time scale, is the stability of extremes extremes extremes cold extremes extremes the great ice sheets. It is widely believed that there are points of no return after ↙↘ ↙↘ which such sheets are doomed slowly to collapse, thus increasing sea levels by Cold Average Hot Cold Average Hot Cold Average Hot many metres. Where these points of no re- turn are is not clear. It is possible that they Projected change in suitability* for human habitation in 2070 More suitable/ might be passed even if warming is kept to With warming of between 2°C and 2.5°C above pre-industrial levels no change Less suitable 1.5°C above the pre-industrial. Outside historical A high likelihood of drought and crop human niche failures; changes to regional climate that upset whole economies; storms more de- Sources: IPCC AR5; “Future of the human climate niche”, by Chi Xu et al., 2020 *Based on temperature and precipitation levels structive in both their winds and their rains; seawater submerging beaches and infiltrating aquifers: what is known about the impacts of climate change is already worrying enough. The known unknowns add to the anxiety. It is not just the question of the ice sheets, an uncertainty massive enough to weigh down a continent. There are other tipping points, too, which could see ocean currents shift, or deserts spread. And in the spaces between all these trou- bles are the unknown unknowns, as sur- prising, and deadly, as a thunderstorm that kills through pollen. 7

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws Business The Economist May 16th 2020 51 Bankruptcies In April, Goldman Sachs, another invest- ment bank, predicted that over $550bn of Chapter 11’s new chapter investment-grade bonds will fall to junk status by October (adding roughly 40% by NEW YORK current value to the junk-bond market). America Inc prepares for a wave of bankruptcies Edward Altman of nyu Stern Business School reckons that about 8% of all firms “You will get business failures on a are sure to get into trouble. This raises whose debt is rated speculative grade grand scale.” So declared James Bul- three questions. What early-warning signs (about1,900 in all) will default in the next12 lard, president of the Federal Reserve Bank might reveal the scale of the coming wave months. This figure could reach 20% over of St Louis, on May 12th. Peter Orszag, a for- of bankruptcies? How does the looming di- two years. He expects at least 165 large mer official in Barack Obama’s White saster compare to the pain endured during firms, those with more than $100m in li- House and now with Lazard, an investment the financial crisis? And are there mean- abilities, to go bankrupt by the end of 2020. bank, warned that the American economy ingful alternatives to outright bankruptcy? could face “a significant risk of cascading A measure known as the “distress ratio” bankruptcies”. How bad will things really First, to harbingers of doom. One is the also highlights the problem. Distressed get for America Inc? upheaval in the market for “speculative credits are junk bonds with spreads of grade” (or junk) bonds. In America, two- more than ten percentage points relative to The country has already seen a surge of thirds of non-financial corporate bonds are us Treasuries. s&p Global, a credit-rating corporate bankruptcies among big firms rated junk or bbb, the level just above junk. agency, reckons that distressed credits as a that puts 2020 on track to be the worst year share of total junk bonds in America had since 2009, at the height of the global fi- Also in this section grown to 30% by April10th, up from 25% on nancial crisis. In recent weeks well-known March 16th. Of the 32 worldwide junk-bond firms ranging from Neiman Marcus, a de- 52 Assessing earnings season defaults in April, a level not seen since the partment-store chain, and J Crew, a cloth- financial crisis, 21 took place in America. ing retailer, to Gold’s Gym, a glitzy workout 53 European defaulters s&p Global estimates that the 12-month group, have gone bust. Hertz, a giant car- trailing default rate for junk bonds in hire firm, and Chesapeake Energy, a pio- 53 China’s Adidas America increased to 3.9% in April, from neer of America’s shale industry, are both 3.5% in March. In Europe it rose to 2.7% on the brink of bankruptcy. 54 Bartleby: Teachable moment from 2.4%. As the American economy sinks further 55 Austerity in Silicon Valley A wave of defaults might unfold with in the coming months, many more firms varying severity across different indus- 56 Schumpeter: The gathering swarm tries. Thanks to the collapse of the oil price as well as other troubles in the shale patch, almost 70% of the speculative-grade debt1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 52 Business The Economist May 16th 2020 2 in the oil-and-gas industry is at distressed Debtors ledger levels. Five other sectors have ratios of 35% or higher: retail and restaurants, mining, United States, distressed-debt ratio* Global bond-default rates, % transport, cars and utilities (see chart). The upshot is that a second, bigger wave April 27th 2020 Total debt affected, $bn 25 of bankruptcies is on the cards. How would 20 that compare to past troubles? At the peak 0 20 40 60 80 Speculative-grade † 15 of the financial crisis, the global default Oil & gas 64.6 Investment-grade rate for junk bonds was 10%. Moody’s, a Retail & restaurants 18.4 credit-rating agency, predicts that if the Metals, mining & steel 9.3 ‡ 10 current crisis is more severe than the fi- Automotive 7.5 5 nancial crisis, as now seems likely, the de- Capital goods 6.9 fault rate could rise to 20.8% (see chart). Aerospace & defence 2.9 1981 90 2000 10 0 The coming bankruptcy wave could be Media & entertainment 32.1 20 worse than during the financial crisis be- Health care 14.9 cause it will be more widespread, reckons Debra Dandeneau, a bankruptcy specialist Sources: S&P Global; Moody’s *Speculative-grade bonds paying over ten percentage points above US Treasuries as % of total at Baker McKenzie, a law firm. But she †One-year pessimistic forecast ‡One-year baseline forecast thinks it will take some months to arrive: “We’re in the eye of the hurricane now.” Fitzgerald, a former bankruptcy judge now observes, “this crisis is the opposite. Capi- Another big difference to the financial at Tucker Arensberg, a law firm in Pitts- tal markets are strong and open with many crisis arises from uncertainty. The nature burgh. Amy Quackenboss of the American firms able to access capital from govern- of this pandemic makes it impossible to Bankruptcy Institute, an industry body, re- ment or from markets, but…the fundamen- know when the economy might return to ports that members are busy, which will tal operations of businesses are disrupted.” normal. As William Derrough, a restructur- translate into more filings later on. Larry ing specialist at Moelis & Company, points Perkins of Sierra Constellation Partners, a There is a flurry of activity among inves- out, “It’s very hard to value a company that restructuring firm, thinks a legal bottle- tors pouring money into so-called rescue doesn’t have clear cashflow and visibility neck is “absolutely” possible unless court- funds. According to Preqin, a data firm, dis- on its future markets.” Jared Ellias at the rooms “evolve to digest it”. Vince Buccula tressed-debt funds are looking to raise University of California at Hastings argues of Wharton business school thinks part of nearly $35bn. General Atlantic, a private- that “lenders don’t know whether to re- the solution lies in embracing faster “pre- equity firm, is in the midst of raising nearly structure out of court, grant forbearance or packaged” bankruptcy deals and debt ex- $5bn to invest in otherwise-healthy busi- insist on Chapter 11 bankruptcy when you changes (lenders agreeing to swap less nesses squeezed temporarily by shut- have no idea when a firm will make money onerous new debt for old unserviceable downs. Bill Ford, General Atlantic’s boss, again.” Worried about the coming deluge of debt) done out of court. thinks that outside the retail sector, where cases, he organised a group of experts that many business models will prove unviable, last week petitioned Congress to appoint A looming wave of bankruptcy cases “most firms will try to avoid bankruptcy more bankruptcy judges and increase bud- points to the third question: how viable are and seek rescue capital instead.” gets for law clerks and other staff. the alternatives? There is good and bad “It will be very difficult for courts to news. The financial crisis saw a massive li- All restructuring firms are hiring, notes keep up with the onslaught,” says Judith quidity crunch and financial-sector implo- Michael Eisenband of fti Consulting. He sion. But as Bruce Mendelsohn of Perella observes that there are more types of credi- Weinberg Partners, an investment bank, tor today than during the financial crisis, so there is “more opportunity to get liquid-1 Divvy-dent S&P 500 Forecast earnings for 2020*, by sector Share of companies that have withdrawn or revised January 1st 2020=100 110 % change on a year earlier earnings guidance since covid-19†, by sector, % -100 -80 -60 -40 -20 0 20 0 20 40 60 80 100 Stockmarket index 90 Utilities S&P 500 Utilities Technology average Technology Health care Health care Consumer staples Consumer staples 80 Real estate Real estate Communications Communications S&P 500 70 Materials Materials average Financials Financials Industrials Industrials Dividend-futures index‡ 60 Consumer discretionary Consumer discretionary Energy Energy Jan Feb Mar Apr May Sources: FactSet; S&P Global; Bloomberg; The Economist *At May 8th †At May 7th 2020 ‡Based on expected dividends in 2020 Profits seeping On unveiling Amazon’s strong first-quarter sales, Jeff Bezos issued a warning: next quarter’s operating profits would fall as the firm covid-proofs its e-empire. No bonanza for shareholders, then. Ditto for much of the s&p 500. Nearly all its firms have now reported their quarterly results. Because America Inc locked down in mid-March, these do not reflect the pandemic’s toll. Few ceos have been as blunt as Mr Bezos about what comes next; 45% have suspended or revised guidance. Analysts expect profits to fall by 20% this year. The futures market is pricing in large cuts to s&p 500 dividends in 2020 and 2021. The bouncy stockmarket—not so much.

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 Business 53 2 ity into firms in different ways.” He reckons have not yet risen sharply. According to the Chinese brands few want to force liquidation because “if Institute of Economic Research in Halle you can kick the can down the road, maybe (iwh) bankruptcies in March and April in Upping the Anta a vaccine comes and…there is a better Germany were no higher than in the same chance of getting a recovery for creditors.” months last year. Yet rescue measures An ambitious Chinese sportswear firm Many hedge funds and non-traditional probably just postpone a surge in bank- does some fancy footwork lenders (though not stodgy banks) are opt- ruptcies, says Steffen Mueller of the iwh. ing for debt-for-equity exchanges. That is Mr Mueller thinks “zombies” will be swept Ding shizhong, the founder and boss of so they “get the upside when the economy away later this year, but worries that even Anta, the world’s third-biggest sports- recovers”, says Thomas Salerno of Stinson, healthy companies may not survive. wear firm by market capitalisation, refused a bankruptcy lawyer. to let the covid-19 pandemic interfere with So the good news is that many squeezed Governments have learned a lesson sales. In early February, as the virus forced firms staring at bankruptcy might be saved from the global financial crisis. Bankrupt- shops to close, Mr Ding gave each of his through restructuring. Mr Derrough, a vet- cies increased by 32% in western Europe in 30,000 employees a new assignment: eran of financial crises, explains that this 2008. Ludovic Subran of Euler Hermes, a hawk Anta’s apparel and shoes to personal involves five steps: stopping the bleeding; Paris-based credit insurer, is forecasting a contacts on WeChat, a messaging platform. evaluating the injuries; performing the rise of 19% compared with 2019 to 178,365 Such resolve to protect revenues is admira- necessary surgery; rehabilitating the vic- insolvencies this year. The corporate car- ble. Yet it reflects insecurity. tim; and returning it to health. The bad nage was so brutal in 2008 because of the news is that America Inc is at the start of credit crunch, explains Mr Subran. A sud- Anta, established in 1991, has long been phase one. As he puts it, “Most of what we den slump in the availability of loans runner-up on its home turf to Nike and are doing is blood transfusions. We haven’t sealed the fate of many firms. This time eu Adidas. The Western sportswear power- even gotten to stopping the bleeding.” 7 governments have reacted far faster by houses together accounted for over two- pumping liquidity into the economy. fifths of China’s market in 2019, according Bankruptcies in Europe Moreover, the rate of bankruptcies was to Euromonitor, a market-research firm. very low between 2002 and 2007 whereas Anta has a sixth of the market but it is mov- Buying time this time Europe has seen a clean-out in the ing fast. Revenues grew by over 40% in past five years, with many firms going bust. each of the past two years, double the rate BERLIN of the industry. Operating profit hit 8.7bn Mr Subran’s forecast seems optimistic yuan ($1.2bn) in 2019. But that is still only A big surge of defaults is expected in considering that some industries suddenly half the sum made in China by Nike. the autumn lost all their business. The most vulnerable firms are in the hospitality, transport and  Anta’s aim is to become “a Chinese European businessmen who filed for non-food retail sectors. They were among brand that stands out in the world”. It is bankruptcy used to be treated harshly. the most insolvency-prone businesses be- perhaps best known in the West as the shoe The word “bankrupt” derives from banco fore the covid crisis. Germany’s Karstadt sponsor for Klay Thompson, a star player rotto, the practice in medieval Italy of Kaufhof, an ailing department-store chain, with the Golden State Warriors basketball smashing the benches that merchants sold and France’s Orchestra Prémaman, a trou- team, and Manny Pacquiao, a Filipino box- their goods from if they did not pay their bled clothing retailer, both filed for receiv- er. But the brand generates few foreign debts, to force them to stop trading. Until ership in April. In Britain Carluccio’s, a res- sales. Even in China, many urban young-1 the mid-19th century defaulters were taurant chain, Brighthouse, a rent-to-own thrown into debtors’ prisons. Bankruptcy retailer, and Laura Ashley, a fashion chain, Sportswear, after a fashion proceedings are now less violent, but in tumbled into administration in March. many European countries they mostly end in liquidation rather than restructuring. The other weak link is Europe’s 25m small and medium-sized enterprises (de- The fear of multiple bankruptcies and fined as firms with fewer than 250 staff), mass unemployment because of measures which employ over 90m people. According imposed to contain the covid-19 pandemic to smeunited, a European lobby group, is the main reason European governments 90% of Europe’s small firms are affected by are subsidising businesses on a vast scale. the pandemic and 30% of them say they are “No healthy company should go bankrupt losing 80% of sales or more. cpme, France’s because of corona,” promised Peter Alt- small-business federation, says 55% of maier, Germany’s economy minister, in small firms are concerned about bankrupt- mid-March when he announced extended cy. The French government’s €7bn solidar- credit lines, liquidity guarantees and ity fund for small companies has already grants for German businesses amounting been tapped by 900,000 firms. to €750bn ($807bn). At the end of March the German government suspended insolvent Behemoths have been rescued by the firms’ obligation to file for bankruptcy un- state, as so many jobs depend on them. til the end of September (and perhaps until France and the Netherlands are providing a March 2021)—provided they can prove taxpayer-funded bail-out of about €10bn to their troubles were caused by covid-19. salvage Air France-klm from bankruptcy. France, Spain and other European coun- Germany will follow with a bail-out for tries have introduced similar exemptions. Lufthansa. Small businesses will suffer most in spite of short-term work schemes, These emergency measures are buying cash payments, delays to tax deadlines and time. Bankruptcies and unemployment credit guarantees. But never before have governments done so much to try to help them avoid the Schuldturm—the prison tower that was the destination, in the past, for those who couldn’t pay their debts. 7

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 54 Business The Economist May 16th 2020 2 sters think Anta “lacks the cool factor”, says and Adidas have far more brand appeal. Relying on rivals’ bad luck is not a long- Lu Ge of the Beijing Institute of Fashion  Mr Ding’s all-hands-on-deck strategy term plan. Mr Ding recently wrote that Technology—despite being the official kit Anta aspires to make the leap from an “af- supplier for China’s Olympic athletes. and Anta’s clientele may have insulated the fordable brand” to a “desirable” one. He has  That perception stems in part from firm from the worst of covid-19’s ravages. some more upmarket trademarks at his Anta’s customer base. Its shops are concen- Ms Cai observes that, as China began to re- disposal. In 2009 Anta acquired the Chi- trated in medium-sized cities, to cater to open in late February, residents of cities nese operation of Fila, a sportswear firm consumers that are less well off than those where Anta is strong may have been less with Italian roots. Last year, in a $5.2bn in Beijing or Shanghai, the preferred fastidious about social distancing than deal, the firm bought a majority stake in haunts of Nike and Adidas. A pair of Anta counterparts in richer locales. Revenues at Amer Sports, a Finnish outfit with assets shoes typically costs a third less than a sim- Anta fell by 20-25% in the first quarter year- including Wilson tennis rackets and Salo- ilar pair of Nikes, observes Dallas Cai of on-year, according to the firm’s latest fi- mon skis. But that may not be enough to Oriental Patron, a broker. Pricier and asso- nancial update. That looks rosy compared take on and beat Nike and Adidas. Shifting ciated with more global superstars, Nike with Adidas. It saw sales in China drop by perceptions will be hard. 7  58% in the same period. Bartleby Teachable moment The pandemic may result in some business schools closing for good Lockdown has delivered a nasty camp. In keeping with its location, activ- chosen to continue their education shock to academia, with universities ities at the Haas School in Berkeley, Cali- rather than risk entering a shaky jobs around the world closing for the summer fornia, have included remote yoga and market. But this time could be different. term, disrupting the plans of millions of mindfulness classes. At insead, students students. Business schools are suffering gather in virtual break-out rooms for First, it is not yet clear when business along with the rest, but the shutdown has further discussions, with the groups schools can reopen for traditional teach- occurred when the sector is already picked at random to ensure interaction ing. None of the schools had a firm time- facing a host of problems. A survey of the with a broader group of classmates. table for that to happen. And candidates deans of American business schools by may wait until they do, rather than pay Eduvantis, a consultancy, found that Nevertheless, just as a friend you made top dollar for an online course. Another almost all thought the pandemic would on Facebook is not the same as someone survey, by Poets&Quants, a website for lead to permanent closures. you grew up with, virtual ties are unlikely news about business schools, found that to be as strong as normal ones. That has led 43% of prospective mba students Bartleby contacted seven leading to some dissatisfaction among students. thought that fees should be lowered, and schools in America, Britain and France to At Wharton, more than 1,000 mba students that a third might defer their courses see how they were coping with the crisis. have signed an online petition arguing until normal teaching can resume. Unsurprisingly, the immediate reaction that the school should reduce fees, which has been to switch to teaching online. run to $150,000 for a two-year course. The Second, the pandemic is likely further Many are putting a brave face on the petition claims that virtual-classroom to discourage students from applying to issue. Christoph Loch, dean of the Judge technology is “unable to fully replicate” business schools abroad. Around half of school at Cambridge, says: “If we do this the usual teaching environment, and that all American business schools experi- right, if we do it strategically, this is other elements of the course, such as enced a decline in overseas applications going to stay beyond covid.” Meanwhile foreign travel and extra-curricular activ- last year, thanks to anti-immigration the insead school in France maintains ities, “have been essentially cancelled”. political rhetoric and the greater difficul- that it is hard to imagine going back to a ty in getting visas to work once a degree world where the successes from online The rapid economic downturn caused was obtained. learning will not be combined with by the pandemic is a complicating factor. person-to-person exchanges. In the past, business schools have benefit- Neither America nor Britain has ed from recessions, as young people have covered itself in glory in recent weeks. A The pandemic also presents a teach- survey of international students by idp ing opportunity. The Wharton School at Connect found that, among Anglophone the University of Pennsylvania has countries, Britain and America ranked launched a course called “Epidemics, behind New Zealand, Canada and Austra- Natural Disasters and Geopolitics: Man- lia in terms of how they have handled the aging Global Business and Financial pandemic. The war of words between Uncertainty”. The London Business America and China over the virus will School will shortly run a course on “The also have an effect. Students from the Economics of a Pandemic”. People’s Republic may be more inclined to study in their own country. Online courses are all very well. But part of the motivation for attending That is bad news for both universities business school is to take advantage of and business schools, as international networking opportunities that could last students are very lucrative. Things may for the rest of students’ careers. Some of go back to normal in a few years’ time; this can be done online. At the mit Sloan the virus may be conquered and interna- School of Management, virtual student tional relations may settle down. But as networking has included trivia nights, with many other sectors of the economy, hackathons and a programming boot there may be a big shakeout among business schools before that happens.

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 Business 55 Austerity in Silicon Valley Silicon Valley’s leading vc firms are also trying to seize new opportunities. More The next garage than one sees the tech industry’s sweet spots moving from services that cater to SAN FRANCISCO consumers and involve the physical world, such as electric scooters and online ticket- The crisis has hit tech’s spiritual home hard, but it is already planning ahead ing, to offerings for business that are deliv- ered virtually, including specialised web- Firing somebody is hard under any cir- Peaks and valleys based software and digital infrastructure. cumstances. But doing it over a video call is brutal. “It’s not the best environment United States, unemployment rates Much of the venture capital flowing in for this, with people at home and kids in Three-month moving average, % recent weeks has been aimed at deeply the background,” observes Marwan For- technical targets, such as Confluent, which zley, the boss of Veem, a startup based in California 12 manages corporate data. The firm raised San Francisco which allows firms to trans- 10 $250m in April. Startups in telemedicine fer money cheaply. He recently had to let go and online education are also doing well. 30 of its employees. 8 And business is improving for some firms that had looked less resilient to the virus, Mr Forzley speaks for many in Silicon 6 such as Veem and Thumbtack. Firms want Valley. The largest American tech firms to move money cheaply and people stuck at may be the winners from a global pandem- Silicon Valley* 4 home are planning to give their nests a ma- ic. Demand for their online services has ex- 2 keover, driving demand for local services. ploded among people and businesses in lockdown. But many startups in tech’s 2000 05 10 0 Looking further forward, the debate heartland are hurting. Hardly a day goes by now revolves around how the pandemic without news of more lay-offs and firms Sources: Bureau of Labour Statistics; 15 20 will change Silicon Valley—and with it going out of business. Yet amid the doom California Employment much of the tech industry. The crisis will and gloom, venture-capital (vc) firms and Development Department *San Francisco, accelerate existing trends. The Valley will entrepreneurs are already doing the thing San Mateo & continue to spread out, reckons Randy Ko- they believe they do best: divining the fu- misar of Kleiner Perkins, another vc firm. ture in their crystal balls. Santa Clara counties Even before the virus hit, an exodus of sorts was under way. Exorbitant property prices, Californian tech firms and their finan- capital. Investments in America are only near-permanent traffic jams and the jar- ciers were among the first in America to down by 25% compared to before the pan- ring number of homeless people have take the threat of coronavirus seriously. demic, according to PitchBook, a data pro- pushed a growing numbers to leave. Some venture capitalists began refusing to vider. For startups with cash in the coffers, shake hands at the beginning of February it is an opportunity to scoop up weaker ri- Startups have been moving away or (and were ridiculed for it). The moneymen vals. On May 12th it emerged that Uber, a have become “fully distributed”, with only also moved quickly to “triage” companies shrinking ride-hailing service with a grow- their most important employees living in in their portfolio, classifying them accord- ing meal-delivery arm and $9bn in the San Francisco and the rest spread across ing to how likely they were to survive and bank, is seeking to acquire GrubHub, the world. Such dispersion is likely to what they should do. Mostly this involved which also delivers food. A few days earlier speed up if a consequence of covid-19 is letting people go. “The shocking thing is Uber led a $170m funding round in Lime, an that working remotely becomes the norm. how fast everything has moved,” says Mar- ailing startup that rents out electric scoot- It looks likely. Big Silicon Valley compa- co Zappacosta, who runs Thumbtack, a ers and bicycles. Expect more such deals— nies, including Facebook and Google, are marketplace for local professionals from and more criticism that the likes of Uber letting employees work from home until plumbers to dog trainers, which laid off 250 are trying to use the pandemic to monopol- the end of the year. Twitter says they can do of its 900 employees. ise markets. so indefinitely. Definitive figures are hard to come by. Feeling the business cycle Another question is whether venture When big firms cut back it makes the news. capital, Silicon Valley’s lifeblood, will go Airbnb and Uber recently announced they virtual and distributed as well. Some hope would let go 1,900 and 3,700 workers re- that the crisis will disrupt what Pete Flint of spectively. Layoffs.fyi, a website that tracks Nfx calls the “archaic world of venture cap- dismissals in the tech industry by adding ital”. In April, his firm launched an online up numbers from press reports, has count- service where startups can input the infor- ed about 17,600 jobs lost since mid-March. mation that investors want, from founders’ But this misses many sackings at smaller biographies to business plans, and then get startups. Although still well below the na- a decision on funding within nine days. tional average and the peak during the fi- nancial crisis of 2007-09, unemployment Silicon Valley may no longer be the only in the region is edging up (see chart). Some place that matters as startups hunker down vcs expect workforces to shrink by 15% on in cheaper locations with fewer distrac- average, adding up to total job losses in ex- tions. Frontier is one such firm. It has de- cess of 125,000. camped to Vancouver to build a market- place for remote workers. It was founded a Yet Silicon Valley’s denizens are not few months before the virus struck and got ones to dwell on bad numbers. vcs are its first funding a few weeks ago. Elliot scouting for promising firms whose valua- O’Connor and his co-founders are holed up tions have dropped and which need fresh in an Airbnb, using DoorDash and other de- livery services to feed themselves. It feels like working in the proverbial garage, he says—not in the Valley, but of the Valley. 7

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 56 Business The Economist May 16th 2020 Schumpeter The gathering swarm Is now a good time to start a business? capitalist system [is that] after some time of depression, new en- trepreneurs would emerge. And then there would be a new ‘swarm’ Astruggling Airbnb was still called AirBed&Breakfast when of entrepreneurs. A wave of prosperity would start up and the its founders decided to bet its future on the Democratic Na- whole cycle would roll on.” Assuming this remains the case, will tional Committee in Denver in 2008. Their air-bed idea was not the protagonists be tiny startups coming out of nowhere? Will they popular with the 80,000 people congregated to select a presiden- be better-funded entrepreneurs who have long prepared for such a tial candidate. So they focused on breakfast instead, peddling $40 moment? Or will they be the titans of tech? boxes of cereals called Obama O’s and Cap’n McCain’s (their quip: “Be a cereal entrepreneur”). The timing was as bad as the pun. The With the world in upheaval, enterprising minds are already event came just weeks before Lehman Brothers collapsed at the whirring. Some of them are altruistic: schoolchildren, for in- height of the financial crisis of 2007-09. Yet shortly afterwards stance, have been 3d-printing plastic visors for front-line workers. they obtained their first-ever funding. The angel investor who Some of them are saucy, such as the Thai bodybuilders, put out of backed them dubbed them “cockroaches” for their survival skills. work by lockdown, who last month set up Bsamfruit Durian Deliv- That may not be the most tasteful way to describe people in the ery, promoting it on Facebook not only with photos of durians and hospitality trade. The founders, though, considered it the best mangoes, but of taut abs and bulging bosoms. Some of them will compliment they had ever received. simply be hungry for fame and fortune, believing, like Michael Moritz of Sequoia Capital, a vc firm, that social changes acceler- Like Airbnb, some of the best-known names in business started ated by the crisis, such as food delivery, telemedicine and online during steep slumps, including Uber (2009), Microsoft (1975), Dis- education, will eventually generate lucrative business opportuni- ney (1923), General Motors (1908) and General Electric (1890). Dis- ties. They will also expect the economic slump to wipe out incum- ruptive products and services, too, have emerged in times of crisis, bents, muting competition and freeing up space and manpower— notably Apple’s iPod as the dotcom bubble burst in 2000 and Ali- provided governments do not interfere with the inevitable by baba’s Taobao, an online-shopping mall, during China’s sars epi- propping up zombie firms. demic of 2003. But even with the best ideas in the world, first-time entrepre- Such stories loom large in startup folklore as evidence of entre- neurs will struggle to convince investors to give them capital in the preneurial true grit. Yet they are rarities. Our calculations indicate depths of the crisis, not least if they can only pitch to them over that among almost 500 of today’s biggest listed firms in America, Zoom. Instead, the more likely standard-bearers of creative de- whose origins date as far back as 1857, a much larger number start- struction will be existing firms, albeit small ones, which raised ed life in expansionary years than during recessions. Of those enough money before the crisis to survive it and will maintain founded since 1970, more than four-fifths were born in good times their flair for innovation throughout, says Daniele Archibugi of (see chart). That, of course, overlooks innumerable firms created Birkbeck, University of London. There may be plenty of such firms. along the way that have either not made it to the top, or fallen by According to Crunchbase, a data gatherer, startups raised about the roadside. But it suggests that however hard it is for the enter- $600bn worldwide in 2018 and 2019. That provides a cushion of prising to build a lasting business, it is even harder for those who support. They will, however, have to be quick at shifting from start off with the economic winds blowing in their faces. growth to survival and back again, and at embracing new business plans if their old ones are no longer viable. Save for a few industries such as health care, it is safe to assume that investment in innovation will plummet during the covid-19 Betting on an accumulator pandemic. It usually does in times of crisis. Venture capital (vc) Yet it is not just small, scrappy firms that push innovation forward. will also dry up as everyone keeps their heads down and tries to Big firms have a critical role to play, too. Alongside creative de- preserve cash. In 2007-09, vc funding in America fell by almost struction in times of crisis, Schumpetarian academics point to 30%. Yet this column would not be named after Joseph Schumpe- “creative accumulation” in economic upswings, when incremen- ter, the father of creative destruction, if it did not believe that fol- tal innovation is carried out in the research-and-development labs lowing a slump, a burst of entrepreneurial activity will eventually of giant firms. In Europe during the global financial crisis such emerge. As he wrote in “The Theory of Economic Development”, corporations increased investment into new products and ideas, published in 1911 (itself a recessionary year), “the very logic of the as did the most innovative small firms. The cash-rich tech giants, such as Microsoft, Amazon, Apple and Alphabet, have become ex- Firm foundations amples of creative accumulation, helping foster innovation dur- ing the good times. They will probably continue to do so during the United States, number of companies* founded by year crisis. As they expand into health care, fintech and other indus- tries, they could even be part of a new wave of creative destruction. Recessions 14 12 That is the optimist’s scenario. A more pessimistic one is that big tech will use its moneybags and muscle to stifle competition, 10 by buying or scaring off more enterprising rivals. What is in little doubt, though, is that the covid-19 crisis, which has turned so 8 many people’s lives upside down, will eventually produce a wealth of new business opportunities. If it attracts swarms of entrepre- 6 neurs crawling over cosy oligopolies so much the better. But even if the tech titans prevail for now, they will inevitably find them- 4 selves victims of the forces of change. Schumpeter’s “perennial gale of creative destruction” will one day blow them away, too. 7 2 0 1857 70 80 90 1900 10 20 30 40 50 60 70 80 90 2000 10 20 Sources: Bloomberg; Fortune; *Current members of S&P 500 NBER; company reports and NASDAQ 100 indices founded since 1857

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 57 Briefing Globalisation Torn apart spread desire to stay at home even among those not ordered to do so means that the WASHINGTON, DC movement of individuals from place to place, the one aspect of globalisation that Pre-existing conditions have exacerbated covid-19’s blow to world trade had continued from strength to strength, came to a juddering halt. The 2010s were not a happy decade for Mr Trump launched his trade war. But at proponents of global trade. Though least it seemed a step in the right direction. Fewer passengers means fewer planes fears of an increase in protectionism fol- means less room for air freight. In a fore- lowing the financial crisis of 2007-09 did The covid-19 pandemic has since, by cast of covid-related costs made this April, not materialise, nor did the growth of the curtailing trade across the Pacific, made it the wto took into account higher air-cargo 1990s and 2000s re-establish itself. Fi- very hard to see how China can increase its prices, extra time spent in transit for goods nance was tamer; China was richer and de- imports from America in line with the having to go through more stringent border veloping its internal market; transport was Phase One deal’s requirements. But that is checks, and travel restrictions making no longer getting cheaper. As a share of glo- the least of the trading world’s worries. The trade in services and the delivery of equip- bal gdp, neither global trade, foreign direct United Nations Conference on Trade and ment that needs bespoke installation more investment, nor stocks of cross-border Development is predicting that covid-19 difficult. Overall, the wto thinks the rise in bank lending returned to their 2000s peak. will reduce flows of foreign direct invest- costs could be equivalent to a 3.4% global ment by 30-40%; the World Bank expects tariff. For comparison, in 2018 the global And then, belatedly, fears about protec- remittances to fall by 20%; the wto reck- average tariff was around 8%. tionism came good with the election of ons trade could fall by as much as a third. President Donald Trump. In 2018 he Much of this carnage is because of crashing As firms have foundered, fears have launched a trade war against China; he ap- demand, not new barriers to trade. But the mounted that foreign state-supported plied tariffs in the name of national securi- crisis has not made international com- companies will swoop in and snap them ty; his administration hog-tied the World merce any easier. up. The European Commission has urged Trade Organisation’s appellate court. member states to be “particularly vigilant” Travel bans, quarantines and a wide- in making sure businesses are not sold off. Optimists might have seen the 2020s The German, Italian and Spanish govern- getting off to a slightly better start. The Also in this section ments have all tightened their processes “Phase One” deal between America and for screening foreign investment. The Aus- China, signed on January 15th, left tariffs 59 Business resilience tralian government is requiring that all for- six times higher than they had been before eign investments be approved by the For- eign Investment Review Board. India has enacted new restrictions, too; China calls them “discriminatory”. Around the world, governments re-1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 58 Briefing Globalisation The Economist May 16th 2020 2 sponsive to their people are concerned Chain reaction duce its Pixel smartphone or Microsoft’s to with little more than keeping them some- produce its Surface tablet. The strategy’s thing close to safe and solvent. Meeting the Change in share of US imports between purported benefits, though, are not bought needs of the public is taken to mean being Jul-Dec 2017 and Jul-Dec 2019, percentage points cheaply, argues Jake Parker of the us-China able to provide for them independently. Business Council, a lobby group. It will take Kevin O’Rourke of nyu Abu Dhabi sees a China South-East Asia North America 10 five years for any such reconfigured supply parallel with the period which came imme- -15 -10 -5 0 5 chain to achieve costs as low as what they diately after the second world war. Policy would have been if based in China. In the was neither being driven by corporate in- Chemicals/metals (inputs) meantime prices will have to rise. terests seeking protection from foreign Other transport competitors, nor by a calamitous attempt Metals/materials (inputs) In the longer run, and once companies to impose capital controls, but rather vot- Car parts have more cash to spare, it is possible that ers’ desire for safety. It is a powerful justifi- Machinery they will attempt to set up new clusters of cation for protective measures. Vehicles production. Mike Jette of gep, a supply Electronics chain consultancy, reports hearing from Let me down easy Furniture/toys some electronics manufacturers that they Take medical supplies. In 2018 China alone Agriculture want to get 30-40% of their supply chain supplied about 42% of the world’s exports Optical within the same region as the customer, of personal protective equipment. Almost Textiles & clothing leaving around half in China. three-quarters of Italy’s imported blood Textiles & clothing (inputs) thinners come from China; so do 60% of If the customer is in Asia, that will be the ingredients for antibiotics imported by Sources: USITC; The Economist fairly easy. If the customer is elsewhere, it Japan. Such dependence on any country will be harder. Their historical and geo- seems unwise. Such dependence on China, ing the centrality of China. graphic ties give the nexus of Asian elec- which has been known to abuse its market Take regionalisation first. In the auto- tronics suppliers a huge advantage over dominance, seems idiotic. Smaller, poorer comparatively isolated firms elsewhere, countries have little choice but to build motive supply chain, which stretches from even if customers are actively trying to en- stockpiles. But the bigger, richer countries the leather for seats to the chips for dash- courage the challengers. The Asian advan- and blocs are thinking of ways to shake up board displays, 59% of trade is already in- tage will be hard to dislodge. the status quo. traregional. Such integration is self-rein- forcing; it becomes increasingly easy, and To the extent that companies do go On April 27th Bernd Lange, head of the enticing, to replace suppliers farther afield looking for new secure sources of supply, European Parliament’s Committee on In- with ones nearer to hand. Comparing the they will keep in mind how countries have ternational Trade, suggested that require- second half of 2019 with the second half of responded to covid-19. Kristin Dziczek of ments could be imposed on companies to 2017, China’s share of car parts imported by the Centre for Automotive Research says source certain intermediate products from the United States fell by 2.2 percentage that the Mexican government’s haphazard several countries, or to develop strategic points. The share coming from elsewhere approach to the pandemic generated huge agreements with companies for their as- in North America increased by 2.8 percent- uncertainty for car companies, and raised sembly lines to change quickly in a crisis. age points (see chart). questions about their reliance on the coun- Alternatively, the eu could create a list of try as a supplier. strategic goods for which European pro- What works for cars, though, does not duction would be required. work for everything. Near-shoring imports Rise of the robots of furniture, toys and clothes may not be Such concerns will be weighed against Mr Trump’s trade adviser, Peter Navarro, worth the fuss. As China’s (sizeable) share countries’ other advantages, such as trade is clearly itching to set procurement rules in America’s imports of clothing, toys and deals, existing sophisticated manufactur- which would force health-care providers to furniture fell between 2017 and 2019, North ing capacity, and competitive labour costs. buy American-made products. Mr Trump’s America’s barely budged. Drops in elec- In Mexico’s case, an incoming trade deal administration is reportedly also trying to tronics imports from China were offset not with America and Canada will increase the remedy what it sees as a strategic vulnera- by suppliers closer to home, but mostly by incentives to source car parts from within bility by convincing Intel and Taiwan other Asian countries. the region. Pierre Sauvé of the World Bank Semiconductor Manufacturing Company, reckons that deals with America and/or the two companies on the frontiers of chip- That demonstrates the other strategy European Union mean that the likes of Co- making, to build new factories in America. companies are developing: globalisation lombia, Costa Rica, Morocco and Tunisia A survey of members of the Global Busi- with fewer Chinese characteristics. Last could also gain from shifting supply ness Alliance, a group of companies with October a survey of American multination- chains, as could Malaysia and Vietnam, investments in America, published on May als found that around 40% were either con- which enjoy broad, well-established trade 11th, revealed that 77% expected the coun- sidering or in the process of relocating ties with Japan and Korea. try to become more protectionist in terms manufacturing or sourcing outside of Chi- of cross-border mergers and acquisitions, na. A more recent survey suggested that Such countries need not limit them- government procurement and trade be- 24% were planning to adjust their sourcing selves to whittling away at China’s manu- cause of the pandemic. outside of China as a result of covid-19. facturing role. Trying to supply digital ser- vices could be a better long-run Those businesses, and their peers, are For some companies, this is not a strategy—one that the pandemic may be currently in crisis-management mode. straightforward retrenchment, but an em- making easier. White-collar workers have When the dust gets to settling, they have brace of what is known as “China+1”. The just been jolted into a mostly digital exis- some reconfiguring to do. Adjusting their strategy is still to use Chinese suppliers, tence. If managers get used to supervising supply chains will probably accelerate the not least so as to go on serving the very at- staff remotely, why should they not get trend towards regionalisation, particularly tractive Chinese market, but also to en- used to managing more overseas? Employ- in complex cases where assemblies cross courage suppliers elsewhere in case some- ers will be keen on cost savings after the borders repeatedly. This will have the thing goes wrong. Witness Google’s shutdown, notes Richard Baldwin, who knock-on effect, desired by some, of reduc- reported investment in Vietnam to pro- works at the Graduate Institute in Geneva. That said, trade is not the only way to re-1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 Briefing Globalisation 59 2 alise savings. Bernard Hoekman of the supply chains in such a way as to chase the carmakers from Düsseldorf to Detroit European University Institute warns that next source of growth—mindful, of course, found themselves facing production cuts. companies may choose to automate ser- of governments prone to placing obstacles It turned out that Evonik, the factory’s vices rather than to offshore them. The between them and their favoured suppli- owner, was responsible for between a quar- same warning applies, in reverse, to people ers. It is something global business knows ter to a half of the world’s supply of cyclo- hoping that reshoring production brings how to do pretty well (see next story). “If I dodecatriene, a precursor chemical to a back jobs. It may do if you are an engineer. were advising Davos man, I would advise resin widely used in the business. Otto It will not if you wait tables. him to keep quiet and take it on the chin,” Kocsis, who works for Zurich, an insurance As defenders of the status quo try to ex- says Mr O’Rourke, adding that his study of firm, has found that while the proportion plain that strength lies in openness, and history has taught him the benefits of mod- of disruptions that can be attributed to “tier critics crow about globalisation going too eration in all things. one” suppliers—those with which manu- far, the reality is that both will probably get facturers deal directly—fell during the first their way. The medical and pharmaceutical That return to the norm could be im- half of the 2010s, the proportion which sectors should expect pressure to localise peded if political leaders see the public de- could be attributed to companies that more of their production in those coun- sire for security as requiring an all-out as- manufacturers hardly knew they were tries that have enough clout to apply it. sault on what went before. “It was clear that dealing with, like Evonik, shot up. Those Chinese companies hoping to take this kind of globalisation was ending its cy- advantage of the global market in ideas will cle,” Emmanuel Macron, the president of One way to avoid such pain is to keep as find it harder to access. Foreign acquisi- France, recently told the Financial Times in diverse a supplier base as feasible—some- tions will be treated with suspicion. Ameri- a disquisition on the lessons of the covid-19 thing which also helps you deal with cus- can scrutiny of their suppliers will make pandemic and the retrenchment it might tomers quick to change their fancies. Zara, international commerce harder. bring. If so, better for the world to start a a Spanish fashion retailer, exemplifies the But once companies can start investing new, rebalanced cycle, less centred on a approach, with its different frock lines again many will continue to set up their single dominant exporter, than to give up reaching the shops entirely independently. on the process altogether. 7 Another is to maintain spare manufactur- ing capacity. Though companies may pride Business resilience themselves on their lean manufacturing, the world’s factories do not typically run at Hanging together full tilt: across the world the proportion of their potential capacity which industrial Businesses can cope with awful surprises—up to a point firms actually use has been flat or falling over the past two decades. If a vengeful deity were to design a period last year. Mentions of “efficiency” weapon to wield against the global sup- declined from 8,100 to 6,700. Managers Then there is inventory. It is widely as- ply chains that characterise modern busi- know that supply chains are good conduits sumed that modern supply chains relent- ness, it might well hit on a virus which hit of economic pain. Looking at the aftermath lessly eat away at this source of resilience, production facilities all around the world. of the tsunami and earthquake which hit but that is not entirely true. Investors can In the face of covid-19, though, the sinews northern Japan in 2011Vinod Singhal, Brian punish firms if they start piling up stock, of business have, for the most part, held up Jacobs and Kevin Hendricks, three man- especially if there are other signs of trou- remarkably well. agement scholars, found that the share ble. But they also look askance at firms that prices of suppliers to companies directly cut too close to the bone. Air freight has suffered, but shipping affected dropped by 4%, and those of their has steamed on—and its comparatively customers by 3%. Hong Chen, Murray Frank and Owen long transit times have provided a buffer to Wu, another trio of business-school pro- the supply shocks which followed China’s The sources of disruption, and thus fessors, have looked at the period between shutdown. Prologis, an American com- pain, can be impressively obscure. In 2012, 1981 and 2000 when average inventories in pany which operates one-and-a-half Man- a month after a fire at a factory in Germany, America Inc declined from 96 days to 81 hattans-worth of warehouse space around days. The share prices of the companies the world, says that 95% of its customers Not that lean which slashed inventories by the most and have remained at least partially operation- of those which did not cut at all both suf- al. Systemic risks such as those which United States, inventory-to-sales ratio fered compared with those which made brought the banking industry crashing moderate cuts. Work by Ananth Raman and down during the financial crisis have, as 1.6 a colleague at the Harvard Business School yet, failed to materialise. 1.5 shows that when a sharp increase in opera- 1.4 tional performance is followed by some This is not to say that business is boom- 1.3 sort of downturn, investors pay heed to the ing. But it is demand, not supply, that is 1.2 nature of the setback. If it is down to some lacking. To the extent that the sinew is not 1.1 exogenous factor, such as a flood, the firm working it is for want of a task, not for want goes unrebuked. If it is down to an internal of strength. 1992 95 2000 05 10 15 20 issue, and so suggestive of excessive cost- cutting, returns on investment decline by That companies have been aflurry over Source: Census Bureau 3.8 percentage points. their supply chains is not in doubt. From January to May supply-chain disruption Since the financial crisis of 2007-09 was mentioned nearly 30,000 times in the companies have actually been increasing earnings calls of the world’s 2,000 biggest the amount of stock they have on hand. In listed firms, up from 23,000 in the same America the ratio of inventories to sales just before the pandemic had risen to levels last seen in the early 2000s (see chart). The expansion of warehouse space that has re- cently been seen around the world is not just down to the rise of e-commerce—1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 60 Briefing Globalisation The Economist May 16th 2020 2 which typically requires three times as margins in order to build up buffers and to company that offloads capital-intensive much as retailers who sell in physical loca- keep open strategic options the company operations to suppliers in China is weigh- tions. Some is down to firms concentrating will probably never willingly choose to use. ing the boost in value that provides against on being near to the consumer, which in- But good luck convincing investors of that the risks—though if the Chinese supplier creases the amount of storage a company approach. Strategies which pay off hand- does a deal with one in Vietnam which then needs. Prologis says that there has been an somely in the event of even the worst worst does a deal in Bangladesh, the level of risk uptick in pricier short-term leases in ware- case are terribly expensive. may be hard to assess. Low inventories may house space over the past few years, sug- expose you to disruptions in supply, but gesting that companies are happy to pay a Consider the Eurekahedge Tail Risk they save you from losses due to excessive- premium for flexibility. Hedge Fund Index, which tracks vehicles ly rosy forecasts of demand, notes Sunil Further evidence for buffering in the that try to make money out of “black Chopra of the Kellogg School of Manage- system can be seen in figures on working swans”, highly improbable events that have ment in Chicago. The boss of a big Euro- capital, which is calculated by subtracting a very large impact. If you had bet on the in- pean retailer doubts that his industry will what companies owe suppliers from the dex on January 1st this year you would have return to heavy stockholding. “We value value of their inventories plus what they seen a rise of 52%. But if you had bet on Jan- that efficiency because it keeps prices low,” are owed by customers. Reducing working uary 1st 2008 you would now be 25% below he explains. capital is the cheapest way for firms to get where you started. Insuring against lots of cash, since they need pay no interest to do rare risks can never be cheap. Mr Kocsis In the age of covid-19 producing closer so. Yet many companies are not making the says that insurance policies against disrup- to home is both an understandable urge most of it. tions caused by problems throughout the and smiled on by many national govern- A recent survey of15,000 large firms un- supply chain, including insolvencies of ments (see previous story), especially for dertaken by pwc, a consultancy, divided business partners, tend to cost 1% or more necessities like medicines or face-masks. them into quartiles based on their work- of the turnover insured annually. That is But a company’s home country is not nec- ing-capital performance. If each firm in the ten times what it would cost to protect the essarily the least disruptive place for oper- three lower quartiles matched the perfor- same amount of stock sitting in a ware- ations. Many factories in America are mance of companies in the quartile above house from property damage. closed or running at low capacity: on May which were in the same line of business 11th Elon Musk reopened the Tesla factory they would liberate $1.4trn in cash, equiva- Straighten out in Fremont, California, in defiance of a lent to 55% of their cumulative capital Another worry is that a company which public-health order from Alameda county. spending. But despite this theoretically co- spends on resilience may end up at a disad- Meanwhile, Tim Cook of Apple, which con- pious incentive, working-capital efficiency vantage if others survive without making tinues to make most of its iPhones in Chi- has not changed since 2016. Part of this is such provisions, for example by extracting na—and sell millions to Chinese consum- down to the increase in inventories seen in concessions from suppliers or bail-outs ers—recently told investors that “we have recent years, but another factor is reduced from governments, says Debra Dandeneau been gratified by the resilience and adapt- payables. Companies appear willing to of Baker McKenzie, a law firm. Such firms ability of our global supply chain.” spend money on their relationships with would get the benefits of insurance with- suppliers, which speaks to a sensitivity to out having paid the premiums. Mr Kouvelis expects companies mostly supply-chain management. to go back to their old ways of thinking It may also speak to the fact that many Today, having built up buffers that keep about the efficiency-resilience trade-off. companies are already sitting on stacks of things going looks smart. But in time the Firms “manage one shock at a time”, he cash. Few boast sofas as plumply padded as attractions of cutting back will begin to as- says. Having so far emerged from this one Apple, Microsoft, Amazon, Alphabet and sert themselves again. Yes, long supply relatively unscathed, Mr Cook and others Facebook, which have $270bn in net cash chains bring some added risk. But as Man- may well stick to Andrew Carnegie’s advice between them, enough to finance many Mohan Sodhi of the Cass Business School to “put all your good eggs in one basket and countries’ covid-related fiscal stimulus. in London puts it, “Nothing in the opera- then watch that basket.” Until the next But the total cash holdings of the world’s tional world is risk-free.” An American black swan waddles along. 7 2,000 biggest listed non-financial corpora- tions increased from $6.6trn in 2010 to $14.2trn today. Diversified suppliers, spare capacity, inventory and cash provide companies, es- pecially big ones, with a certain degree of security. But whether their current “portfo- lios of resilience”, as Panos Kouvelis of the Boeing Centre for Supply Chain Innovation at Washington University puts it, can with- stand the pandemic is another matter alto- gether. With respect to supply chains, the answer has so far been yes. But appetite for most non-essential goods and services among social-distancing consumers has evaporated. For some things, like air travel, ocean cruises or cinema, it may never fully recover. How, though, could business have been better prepared? It might be possible, in principle, to self-insure against a disas- trous drop in overall demand by sacrificing

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UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 63 Finance & economics The global economy state of Tasmania, both of which have kept A good kind of bubble new cases down. China and South Korea have launched a “fast track” entry channel for business people. “My expectation is that there will be a large number of small travel bubbles,” Mr Cowling says. SHANGHAI But in the same way that regional trade As some countries contain the virus more successfully than others, could travel deals are more efficient than bilateral zones offer a route to economic recovery? pacts, the economic benefits from making the bubbles bigger would be greater. Based It may be a painful fact to contemplate health experts, first critical of travel restric- on an analysis of infection data, The Econo- during these locked-down days, but last tions, have come to view strict controls as year the world was more mobile than ever, useful, especially for places that have con- mist sees two large zones that could emerge with people taking 4.6bn flights. In April tained local infections. “Every inbound this year, though, planes carried just 47m case is a potential seed that can grow into as bubbles, subsuming the smaller ones passengers; that level of mobility, annual- an outbreak,” says Ben Cowling, an epide- ised, would set the clocks back to 1978. The miologist at Hong Kong University. that are now being formed. virtual halt to travel has exacerbated the global economy’s woes, complicating trade The first bubble is due to come to life on The first is in the Asia-Pacific region, ties, upending business and devastating May 15th between Estonia, Latvia and Lith- the tourism industry. Little wonder that uania, among Europe’s best performers in where countries from Japan to New Zea- governments want to restore links. An idea taming the virus. Their citizens will be free gaining favour is the creation of travel to travel inside the zone without quaran- land have recorded fewer than ten new in- “bubbles”, binding together countries that tine. The next might be a trans-Tasman have fared well against the coronavirus. bubble, tying New Zealand to Australia’s fections per 1m residents over the past A closer look yields some grounds for Also in this section week. The second is in Europe: using a optimism. The Economist has identified po- tential bubbles that account for around 64 Turkey in trouble laxer threshold—fewer than 100 new cases 35% of global gdp, 39% of all trade in goods and services and 42% of the world’s spend- 65 Geopolitics and capital markets on the same basis—the bubble could reach ing on tourism. But the challenge of con- necting them also underscores how hard 66 Crisis-fighting at the ECB from the Baltic to the Adriatic, and take in restarting the global economy will be. 67 Free exchange: Might inequality fall? Germany (see map on next page). Our Asia- Simply returning borders to pre-virus days is, for now, inconceivable. Many — Buttonwood is away Pacific bubble would, thanks to China and Japan, account for 27% of global gdp. Our European one would make up 8%. One measure of the potential value of the bubbles is their degree of trade integra- tion, showing whether the economies are complementary. For the countries in our Asia-Pacific bubble, an average of 51% of their overall trade is with each other. In our Baltic-to-Adriatic bubble, it is 41%. Small countries would gain the most by recon- necting with larger neighbours. 1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 64 Finance & economics The Economist May 16th 2020 2 Free movement would be especially The ideal is “clean” bubbles. For these to Turkey in trouble helpful for countries such as Thailand and work, countries first have to control infec- Greece that rely on tourism. Factory Asia tions domestically, says Teo Yik Ying, dean A host of and Factory Europe also rely on workers of the Saw Swee Hock School of Public shuttling back and forth. Before the pan- Health at the National University of Singa- difficulties demic, on a normal day up to 3.5m people pore. Then they have to be open with their would cross an internal border in the Euro- partners: sharing data about infection lev- ISTANBUL AND HONG KONG pean Union, and 700,000 would go be- els and testing, and disclosing how they tween Hong Kong and mainland China. trace and isolate those who might have the The defence of the lira has been The bubbles would have spillovers be- virus. “This will all be underpinned by trust unorthodox, unwise and ineffective yond their boundaries, positive and nega- between governments,” Mr Teo says. tive. Much trade these days is in services, Policymakers in emerging markets fre- not goods, requiring less of a physical pres- The need for trust immediately puts the quently complain that foreign capital is ence. Britain would be outside the Baltic- Asia-Pacific bubble into doubt, as under- fickle. But foreign capital could be forgiven to-Adriatic bubble, but London’s financiers lined by the region’s latest spat: China sus- for having a similar gripe about emerging would still hope for business, even if they pended some beef imports from Australia markets. On a conference call on May 6th could not visit their clients. Or if, for in- after it called for an inquiry into the origins Turkey’s finance minister, Berat Albayrak, stance, Vietnam enters the Asia-Pacific of covid-19. Poorer nations might also be was solicitous and reassuring, telling ner- bubble and Indonesia does not, invest- excluded. Laos and Cambodia have report- vous overseas investors that the country’s ment that might have flowed to the latter ed few infections, but wealthier countries dollar reserves were adequate and its com- could be diverted to the former. have little faith in them. mitment to market principles was firm. In any case, the public-health require- But the next day the banking regulator ments for creating the travel bubbles will More robust testing could help over- turned cold, reprimanding three foreign be vexing. In trade terms, they resemble an come the trust deficit. Take the fast track banks, bnp Paribas, ubs and even Citi- extreme version of non-tariff negotiations: between South Korea and China. So long as group, which helped host the call, for fail- countries will need to harmonise their ap- business travellers test negative for the vi- ing to meet their lira obligations on time. proaches to managing the pandemic. That rus before departure, they are quarantined As punishment, it barred them from the is a tall order when America and Europe for just one or two days and are tested once country’s currency market. Four days later, cannot even agree on whether it is safe to more before being allowed out. But that is the mood changed and the ban was lifted. wash chickens with chlorine. cumbersome, which helps explain why Consider the question of whether coun- China admitted only 210 South Koreans in These shifts in official demeanour, tries that have high but similar infection the first ten days of the agreement. from hospitality to hostility to something rates might form travel bubbles. This in ef- in between, all reflect a consistent concern fect describes Britain and France for now: The upshot is that there are no real about the currency. The lira has lost about recording hundreds of deaths a day but not shortcuts. Michael Baker, an epidemiolo- 15% of its value against the dollar so far this quarantining each other’s citizens. This gist at the University of Otago in Welling- year, the most among big, commodity-im- could, however, pose two problems. First, ton, sees developed countries splitting porting emerging markets. In trading on given that both countries still call for social into two blocs: those like New Zealand and May 7th it briefly weakened to 7.27 against distancing, they do not actually want to see South Korea that aim to eliminate the coro- the dollar, beyond the point it reached in people crowd onto the Eurostar. Second, if navirus and those like America and Britain August 2018, after America imposed sanc- one starts to vanquish the virus, it might that merely want to suppress it. These tions on Turkish officials in retaliation for opt to close its borders to the other. “Con- blocs could, in time, resolve into two travel the detention of an American pastor. taminated” travel bubbles are thus likely to zones, he says. Goods and money would be less productive and less stable. still flow between them. But people would To stop the lira’s slide, regulators have find their horizons dictated by whether tightened limits on the amount of lira local they were on the clean or contaminated banks can provide to foreign financial in- side of the divide. 7 stitutions, making it harder for foreigners to bet against the currency. And they have Health clubs 0 1 5 10 25 50 75 100 imposed new restrictions on the spread of “misleading or wrong information” in fi- Hypothetical travel “bubbles”*, new confirmed covid-19 cases per nancial markets. “They want to discourage 1m people, May 7th-13th 2020 people from talking about these issues,” says Mustafa Sonmez, an economist. Peo- 1,000 km 2,000 km ple are “not to criticise”. He ought to know. He and dozens of others, including two Sources: Johns Hopkins University CSSE; UN; World Bank; The Economist *Including Monaco, Malta, Hong Kong, Macau Bloomberg journalists, were indicted last year on charges of seeking to “destabilise the economy” during the 2018 crisis. The authorities have intervened in more conventional ways as well. Global- Source Partners, a consultancy, estimates that the central bank, often acting through the state banks, has burned through roughly $35bn in foreign reserves this year trying to prop up the lira. How much more it can spend is a matter of controversy. The country’s “gross” foreign assets (including gold) stood at over $87bn on May 12th. But on the other side of its balance-sheet, the central bank reports foreign liabilities worth $71.3bn. It has also entered into cur-1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 Finance & economics 65 Geopolitics and capital markets investment in Chinese firms. Intent on “fi- Leery of the lira Feuding over funds nancial decoupling”, Washington seems Turkish lira per $, inverted scale Washington fires a new financial salvo ready to explore “all avenues”, says Eswar at Beijing 3 Prasad of Cornell University. Tariffs already 4 Last september a leak suggested that America imposes sanctions 5 Donald Trump’s administration was make it less palatable for American compa- 6 mulling steps to rid American exchanges of Interest rate raised by Chinese firms and force investors to dump nies to invest directly in China, since repa- 6.25 percentage points stocks listed in mainland China. The share prices of Alibaba, an e-commerce giant, triating goods made there is costlier. Interest rate and Baidu, a search engine, slid. So did the Constitutional cut by 4.25 yuan. Within a day, however, the govern- Discouraging investors from holding referendum percentage ment denied having such plans, calling points them “fake news”. Insiders say “old- Chinese stocks would put portfolio flows at school” Republicans on Capitol Hill, who favour free markets, prevailed over the risk. And there is a lot of money at stake. president’s jingoistic entourage. Markets sighed in relief. Chinese firms have raised over $336bn on 7 This week, though, the rhetoric was am- American venues since 2000, and another plified. On May 11th administration offi- cials urged the independent board oversee- $81bn through initial public offerings (see ing the Thrift Savings Plan (tsp), the 8 government’s main pension fund, worth chart). Their total market capitalisation in $600bn, to freeze plans to invest in Chi- 2017 18 19 20 nese firms. Investors’ money, they argued, New York is close to $1.1trn, about the same would be at risk if the firms were to be later Source: Datastream from Refinitiv whacked with American sanctions punish- as China’s holdings of Treasuries. Ameri- ing China for its alleged culpability in al- lowing the coronavirus to spread. Defence can portfolio holdings in China amount to hawks argue that the pension fund risks in- vesting in firms that supply China’s mili- $150bn. Before the latest announcement, tary and surveillance services. Beijing re- 2 rency swaps with local lenders, obtaining acted furiously, saying that restrictions that seemed likely to pick up: the weight of dollars in exchange for lira on the condi- would only hurt America’s interests. tion that the transaction will be reversed in Chinese stocks listed on the mainland and due course. Deduct those borrowed dollars The amounts immediately at stake are from the total, and its net reserves have small. tsp’s guardians had planned to start abroad in the msci Emerging Markets in- dipped below zero. investing part of the money it earmarks for Officials say they are seeking additional foreign investment—some $40bn—into dex, a popular benchmark, has risen from swap lines from foreign central banks. The funds that track an index that includes country already has an arrangement with some China-based stocks in the second 30.5% two years ago to nearly 40% today. China (worth $1bn) and another with Qatar half of this year. Markets mostly shrugged (worth $5bn). But it has little hope of ob- off the news. Tensions are already affecting senti- taining a similar agreement with America’s Federal Reserve. A Fed policymaker recent- The measure is, however, belligerent. It ment, says Ivy Wong of Baker McKenzie, a ly pointed out that its swap lines are limit- is America’s first serious attempt to limit ed to countries that enjoy “mutual trust” law firm. Chinese firms wanting to list in with America. The feelings that now pre- vail between Turkey and America are prob- New York are more tentative in their prep- ably mutual, but hardly trustful. Turkey bounced back from the 2018 cur- arations. Some listed in America, such as rency crisis by belatedly raising interest rates (and releasing the pastor). But the Alibaba and jd.com, are already turning to central bank’s boss was fired last year by the country’s president, Recep Tayyip Erdogan, Hong Kong to issue new shares. But it is un- who has governed with little restraint since winning new powers in a referendum in clear whether the White House can legally 2017. To revive growth and restore the pres- ident’s popularity, the new central-bank ban investors from buying Chinese stocks. governor has cut rates to 8.75%, more than two percentage points below the rate of in- It could force Chinese firms to delist from flation. “When you have a negative real in- terest rate, that is not a recipe for currency America, but that, says a lawyer, would stability anywhere,” says Paul McNamara of gam, an asset manager. “traumatise” markets. It could make life so The country has thus tried to strength- en growth, at the expense of weakening the difficult for firms that they volunteer to re- currency. And it has tried to fortify the cur- rency—but at the expense of weakening list elsewhere—but the dire economic situ- the banks, which will eventually need some of their dollars back if they are to ation makes this risky too. meet their own foreign-currency obliga- tions, points out Brad Setser of the Council Another difficulty is that most Chinese on Foreign Relations, a think-tank. Turkey should “abandon this strategy”, firms listed in America are not actually says Piotr Matys, a currency strategist at Rabobank. “The most rational move would Chinese, but are legally domiciled in off- be to let the lira float freely and publish a package of reforms, ideally overseen by the shore centres and use “variable-interest imf.” There is but one problem. Mr Erdogan wants nothing to do with the imf. On that, entities” (vies). These have contractual he has been far from fickle. 7 rights over part of the revenue or profit generated by mainland firms, which own the assets and intellectual property. An American ban on Chinese companies might fail to reach vies; but a broader legal net could risk ensnaring the Chinese arms of American multinationals. 1 Ebbs and flows Amount raised by Chinese firms through United States, stock of portfolio investment* US capital markets, $bn in mainland China, $bn 100 200 Equity capital 80 150 IPO listings 60 100 40 50 20 2000 05 10 15 00 20† 2001 05 10 15 18 Sources: IMF; Datasteam from Refinitiv *Equity and investment fund shares and debt securities †To May 13th

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 66 Finance & economics The Economist May 16th 2020 2 A forceful attack would also have unin- in New York through a vie, sacked its Lane and others during the debt crisis, is tended effects. It would prevent American bosses amid an accounting scandal). But what the pepp now tries to tackle. It makes investors from earning good returns on the best way to uncover, if not deter, fraud purchases “flexibly”, rather than in rough fast-growing Chinese stocks. Delisting may be to keep firms in the system, rather proportion to each member country’s gdp, firms in haste could mean savers lose, if than driving them away, says Matthew as the ecb’s other schemes do. share prices tumble. Discouraging Chinese Doull of Wedbush Securities, an invest- companies from listing in America would ment firm. A flight to bunds would also be averted have costs too. Wall Street banks would if debt were jointly backed by member lose the fat fees they make helping Chinese Washington has made its first move but states. In 2018 a group of advisers, led by Mr companies list, says Hao Zhou of Com- it may be unwilling to do much more. The Lane, recommended the use of sovereign- merzbank, a German lender. Securities and Exchange Commission, bond-backed securities to the European There are good reasons to demand more America’s markets watchdog, wants better Commission. Joint issuance is back on the scrutiny of Chinese firms listed in New disclosure but may be less keen on outright table as members discuss how to fund the York: some are exempted from the same financial warfare. Jay Clayton, its boss and recovery. But with northern states still re- level of reporting as American peers. (This a former capital-markets lawyer, advised luctant to share risks, it seems unlikely. So week Luckin Coffee, a Chinese firm listed Alibaba on its vie when it listed in New it falls to the ecb to avert panic. York in 2014. 7 When Ms Lagarde said in March that it European Central Bank was not the ecb’s job to close spreads, in- vestors took fright. But Mr Lane defends Lane speaking the sentiment. Eliminating spreads is not the aim: “Market discipline operates in the The bank’s chief economist on how to fight a crisis in a monetary union euro area.” It is a point of satisfaction that the ecb’s bond-buying over the years has When philip lane joined the Euro- wonks proposing ways to fix flaws in the pushed down risk-free rates, but that dif- pean Central Bank (ecb) nearly a year euro’s architecture. As governor of Ire- ferentiation between members remains. ago, he hardly expected to be fighting off land’s central bank from 2015 to 2019, he the economic effects of a pandemic. The made policy too. His experience and his Modest levels of spreads may be desir- bank’s preoccupations back then seem understated style, say colleagues, give his able, but not huge gaps. Debt-laden Italy quaint now. The euro area’s economy was arguments greater force. (It might help that and Spain have been hit hard by the virus, sputtering and the ecb was forecasting a his accent has become familiar over time.) but have spent relatively little on stimulus. growth rate of 1.4% for 2020. Now Mr Lane, What if they lose access to markets? If the bank’s chief economist, speculates that The job of central banks in the crisis is countries face solvency trouble, says Mr gdp might fall by 5-12% this year. to ensure that the conditions for a recovery Lane, other tools must kick in—eg, the euro are in place, and to stabilise panicking mar- area’s bail-out fund. That could help to un- Like other central banks, the ecb has kets. Mr Lane identifies an extra role for the lock unlimited bond purchases by the ecb. cooked up an alphabet soup of schemes— ecb, as the central bank of a monetary un- including the Pandemic Emergency Pur- ion: to avoid an “unwarranted” tightening Higher public debt will be a feature of chase Programme (pepp), which will buy in financial conditions resulting from in- the post-pandemic landscape. Cautious bonds worth €750bn ($815bn). Unlike other vestors dumping riskier (eg, Italian) gov- households will probably save more, pro- rich-world banks, though, the ecb must ernment debt for safer (eg, German) bonds. viding demand for that debt. The rich fend off suspicions that it cannot act freely. The flight to safety, first analysed by Mr world will start to resemble Japan. Low in- On May 5th Germany’s constitutional court flation may not persist, though. In the near ruled that the Bundesbank would have to term, Mr Lane says, the pandemic is “surely stop participating in the ecb’s five-year-old disinflationary”. But he reserves judgment quantitative-easing scheme unless it is on the long term. Shorter supply chains shown to be “proportionate”. Some fear the could push up inflation. Lots of firms could pepp could face a legal challenge next. go bust, handing survivors pricing power. Christine Lagarde, the bank’s president, For now, the incentives of monetary has vowed that it is “undeterred” by the rul- and fiscal authorities align neatly. With ing. It could probably pass the court’s test, policy rates at or below zero, central banks but may not wish to accede to a national are devising new ways to lower borrowing court. The row makes its credibility with costs. That suits governments, which are investors paramount. Ms Lagarde is nei- issuing vast quantities of debt to fund ther an economist nor an experienced cen- stimulus. Expect a clash, though, when tral banker, so it falls to Mr Lane to provide central banks decide raise interest rates. the technical underpinning for that credi- You could imagine politicians in America bility. He puts forward policies and devel- or Britain appointing a pliable central- ops the ecb’s intellectual framework. bank head. That is less likely in the euro area, argues Mr Lane, where “19 sovereigns The Irishman has all the credentials he watch each other”. But, as Germany’s needs. As an academic in America and Ire- judges have revealed, the institutional en- land, the Harvard-trained economist stud- vironment in which the ecb operates is all ied cross-border capital flows, which were too messy. It is just as well that Ms Lagarde at the root of the euro area’s sovereign-debt is a former politician and a lawyer. Eco- crisis in 2010-12. He was part of a circle of nomics will only get you so far. 7 Award: Alice Fulwood, our Wall Street correspondent, has been named Young Journalist of the Year at the Wincott Awards, an annual set of prizes for British journalists. Henry Curr, our economics editor, was highly commended in the Journalism of the Year category.

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 Finance & economics 67 Free exchange The great levelling Although the poorest have so far been hardest hit, the pandemic could eventually lower inequality For america’s poor, the covid-19 pandemic has delivered a swift to be temporarily laid off. But the danger is that temporary job and brutal reversal of fortune. At the start of the year unemploy- losses become permanent. The authors of the Becker Friedman pa- ment was plumbing new lows. Years of wage growth for low-in- per calculate that active employment—or the number of workers come workers had healed some of the scars left by the global finan- counted on payrolls—declined by 14% between February and cial crisis. Already by 2016, the most recent year for which figures April. About 40% of that fall occurred at firms that had ceased op- are available, the economic expansion had produced a smaller rise erations, at least temporarily. Not all will reopen. A new working in American income inequality, after taxes and transfers, than any paper by Jose Maria Barrero of Instituto Tecnológico Autónomo de expansion since the early 1980s. Between 2016 and 2019 the weekly México, Nicholas Bloom of Stanford University and Steven Davis earnings of low- and middle-income workers grew at an annual of the University of Chicago is similarly gloomy, concluding that average pace of 3.8%. Since covid-19 struck, however, a host of eco- 42% of pandemic-related job losses will be permanent. Mean- nomic statistics—and legions of pundits—have pointed to a resur- while, the crush of claimants has overwhelmed some state govern- gence in inequality. Yet if history is a guide, the pandemic could ments and slowed the flow of unemployment aid. Top-up benefits eventually render the distribution of income more egalitarian. are due to expire in July, when millions will still be jobless. There are many reasons why the well-heeled might suffer less The most vulnerable workers are therefore likely to be in the pandemic. Much of the plunge in asset prices that occurred squeezed hard by the recession. But if history is a guide, those at in March has since been retraced. In places like New York City and the top of the income distribution could yet face a reckoning. Dis- Los Angeles, covid-19 seems to have hit poorer neighbourhoods ruptive global events have often precipitated shifts towards a more harder. Low-wage earners are often less able to work from home or equal distribution of income and wealth. In his influential book, maintain social distancing. Interruptions to schooling widen the “Capital in the Twenty-First Century”, Thomas Piketty points out gaps in achievement between children from richer backgrounds that high levels of inequality in the late 19th and early 20th centu- and those from poorer families. ries were reduced by the calamitous events of the period from 1914 to 1945. In that time the share of income earned by America’s top Meanwhile, workers on the lower rungs of the income ladder 1%, for instance, dropped from 19% to 14%. The combination of de- have borne the brunt of job losses. America’s unemployment rate pression, war, inflation and taxes compressed incomes and laid rose by roughly ten percentage points, to14.7%, in April—the high- waste to vast fortunes. Walter Scheidel, a historian, goes further est since the Depression. The jobless rate for workers with a college still in his book on long-run inequality, “The Great Leveller”. Since education went up by nearly six percentage points, to 8.4%; that antiquity, he argues, only four forces have ever managed to reduce for workers without a high-school diploma leapt by just over 14 inequality in a sustained way: war, revolution, state failure and percentage points, to 21.2%. A new paper published by the Becker pandemic. (The troubles often coincide: a pandemic contributed Friedman Institute at the University of Chicago reinforces the to the failure of the Roman empire; another coincided with the end point. Between February and April, find its authors, employment of the first world war.) among workers in the top fifth of the income distribution dropped by 9%. In the bottom fifth, by contrast, it plunged by 35%. Past crises are a far cry from today’s difficulties. The Black Death compressed income gaps by dramatically reducing the ratio of Were the crisis of unemployment to end as swiftly as it began, workers to arable land. Even in the worst possible case, covid-19 the effects of these uneven job losses on inequality would be limit- will kill far fewer than the 30-60% of Europeans felled by bubonic ed, and fleeting. Many jobless workers are earning more in unem- plague. Stockmarkets could plunge again, but it is very unlikely ployment benefits than they did on the job, thanks to a top-up of that they will match the collapse of nearly 90% that took place be- $600 per week enacted by Congress in March. Of the more than tween 1929 and 1932. Yet some comparisons can still be made. The 20m Americans who were out of work in April, 78% were reported debts racked up by governments during this pandemic will in some cases reach heights last seen during the world wars. When governments eventually balance the books—and especially if they reduce debt burdens via taxation, financial repression or debt re- structuring—the wealthy could find themselves footing the bill. Time for a redeal Furthermore, the crisis could have indirect effects that influence the trajectory of inequality. In a critique of Mr Piketty’s arguments published in 2017 Marshall Steinbaum, now of the University of Utah, argued that the wars and the Depression of the 20th century mainly led to greater egalitarianism by discrediting ruling elites and the regressive policies that had enabled the rises in inequality in the first place. That created space for social democracy to bloom. Inequality fell not only because of higher taxes but also because of extensions to the welfare state. History need not repeat itself. Governments and economic sys- tems of all kinds have struggled to manage the pandemic effective- ly and equitably. But it does not take much imagination to see that if politicians allow the costs of the pandemic to be borne unequal- ly they could sow the seeds of a transformative populist backlash. They would do well to heed the lessons of the past. 7

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UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 69 Science & technology Health data and privacy on the books of gps in England and the 5,683 covid-attributable deaths therein. Looking without looking gps are the first port of call in England’s Na- tional Health Service (nhs) for any non- The pandemic has sparked a new way to study sensitive medical records emergency matter, and thus hold the most complete records of patients’ health. On may 7th an article appeared on looks worth following up. But the actual re- Studying these at this scale and degree of medRxiv, an online repository for med- sults of this study are not really the remark- detail, with individual records linked up to ical research. It showed, for England at able thing about it. That, according to its causes of death, has never been done be- least, the degrees to which sars-cov-2, the lead author Ben Goldacre, a clinician and fore. Merely making plans to meddle with virus that causes covid-19, discriminates in data scientist at the University of Oxford, is such primary-care data has been a cause of its deadliness between various groups of the method of analysis by which they were great national concern in Britain in the people. Men are more likely to die than obtained. Instead of extracting sensitive past. Dr Goldacre’s research was possible women. The old and the socially deprived patient records from the databases of the only because of the incentives created by more likely than the young, well-off and company which manages them on behalf the pandemic, and the ingenuity of the well-connected. Those with uncontrolled of general practitioners (gps, Britain’s net- group of epidemiologists and data scien- diabetes or severe asthma, more likely than work of family doctors), the team behind tists he assembled, who call themselves those without. And members of the coun- the paper developed a suite of software that the Opensafely Collective. try’s ethnic minorities more likely than lets them run their massive analysis on the those of its white majority. data in situ. The bottom of a locked filing cabinet In normal circumstances, merely obtain- None of these, even the first (for men The research was carried out by study- ing permission to look at such a trove of are more vulnerable than women to quite a ing the medical records of some17m people sensitive health data would take months, wide range of infections), is exactly a sur- perhaps years, of jumping through hoops prise. Even the finding that current smok- Also in this section held by ethics committees, computer-se- ers actually have a lower risk of death from curity checkers and so on. Running the the illness than do non-smokers, though 70 Protecting great apes from covid-19 analysis and getting it published might superficially arresting, is in line with the take months more. These are not, though, results of other studies that used different 71 Wirelessly charging electric cars normal circumstances, and in fact it took methods—though a possible protective ef- Opensafely a mere 42 days to go from idea fect on asthma patients of steroid inhalers 72 How should wind turbines turn? to publication. Three factors made this pace possible. The first is the existence of notices, signed by the country’s health minister, Matt Han-1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 70 Science & technology The Economist May 16th 2020 2 cock, which give a wide range of people records for patterns which might help Protecting great apes from covid-19 within the nhs broad licence to have access serve the provision of health care, is still in to and process health data in connection its infancy. But it is most advanced in Brit- Maintaining other with fighting covid-19. These Control of Pa- ain, for two reasons. The first is that the species’ barriers tient Information (copi) notices make it single medical market of the nhs has much easier to get data wrangling done. created huge patient-record companies Gorillas are bad at social distancing Numerous people close to the govern- like tpp. The second is that the nhs’s norm ment’s digital efforts to fight the disease of gps being the first point of call for health Late in1990, when Paul Kagame was hid- tell tales of copi notices being waved in the care means that they have become a catch- ing on the Congolese side of the Virunga faces of anyone who offers resistance to a all for medical data, and hold the richest, Mountains preparing to invade Rwanda, particular data transfer. The Opensafely most unified data sets. In China, for in- his army, the Rwandan Patriotic Front, team was acting on behalf of the nhs, and stance, people tend to go directly to hospi- were not the only formidable inhabitants so had the power of the copi notice behind tal when they are ill, rather than to visit a of that densely forested volcanic range. The its actions, speeding its way. gp. Scandinavian countries do have Virunga are also home to mountain goril- More important though, was the politi- joined-up records, and are often the sub- las. Soldiers are notoriously trigger-happy cal heft arrayed under the Opensafely ban- jects of medical-research projects for that when it comes to wildlife, but Mr Kagame ner. Academic expertise on electronic very reason. But their small, homogenous ordered his men not to shoot the apes. health records was provided by a team at populations make them less than ideal “They will be valuable one day,” he said. the London School of Hygiene and Tropical from a research perspective. The American Medicine, renowned for such work. The system, meanwhile, is fragmented across a He was right. By 2017, with Mr Kagame nitty gritty was covered by the Phoenix zillion private providers, though the health now installed as Rwanda’s president, that Partnership (tpp), a British company which care system of the Veterans Affairs depart- country’s wildlife-tourism industry, of stores, on behalf of gps, the electronic ment does have a large number of people in which gorilla-watching on the Rwandan health records of some 50m people. And Dr a unified arrangement. side of the Virungas accounts for 90%, was Goldacre himself is one of Britain’s fore- worth around $438m a year. But now the most medical glitterati. He was once a col- For now, therefore, Britain remains world’s gorillas, and also their great-ape umnist on a national newspaper and has ahead. Dr Goldacre says it is “the only cousins, the chimpanzees, bonobos and nigh-on half a million followers on Twit- country on the planet with the scale of data orang-utans, face another threat from their ter. His personal brand completed the pic- needed to deliver these analyses”. And new human neighbours: covid-19. ture, along with the data scientists and challenges are coming. The team will look coders at his Evidence-Based Medicine at the impacts of covid-19 on children, and Great apes share about 98% of their dna DataLab in Oxford. the potential protective effect of inhaled with human beings, and are vulnerable to steroids. Opensafely is also beginning to many of the same diseases. So far, there Beware of the leopard work with other health-record firms be- have been no reported cases of wild apes The most important component of Open- sides tpp, to extend the range of data avail- sickening with the new coronavirus. But safely’s success, though, was its approach able for analysis. some other non-human primates are cer- to the records themselves. It did not try to tainly susceptible. In China, for example, copy them, or move them out of tpp’s data If Opensafely’s approach continues to rhesus macaques have been infected delib- centre for processing. Instead, its coders work as it is extended in this way, others erately and successfully as part of vaccine wrote software which let them perform will surely follow suit. Dr Goldacre and his trials. Moreover, research done by Amanda their analysis within that data centre. Even collaborators have made this easy by leav- Melin of the University of Calgary, in Cana- then, Dr Goldacre’s crew were not given ing a trail of tools, in the form of open- da, and her colleagues, suggests that many free rein to poke around inside tpp’s sys- source software that can be downloaded other primates are at risk. The virus infects tems. Instead they wrote a series of pro- free, by anyone, from GitHub, a popular people by locking onto ace2, a protein1 grams which let them interrogate the pa- code repository. That code may be tweaked tient records through a secure connection. to run any query on any kind of database. Stay back! A log was also kept of all queries that the group ran on the records—thus the watch- The broad adoption of this methodolo- ers were themselves watched. gy would have big implications. Electron- ic-health-records systems would cease to This combination, not requiring their be mere stores of data, and would start to own copies of a patient’s data and leaving a become active pieces of the infrastructure log of every action they took, made it easier underpinning medical research, shifting to trust Opensafely. Dr Goldacre’s system with the needs of science. This would be has even brought Britain’s fiercest privacy particularly important for the develop- advocates on board. MedConfidential, a ment of medical artificial-intelligence, group that focuses on the confidentiality of which requires large quantities of well cu- medical records, has stated its support for rated data in order to learn about ailments this approach. “It was designed and built to with sufficient accuracy. promote both research and patient confi- dentiality at the same time, rather than Covid-19 will not last for ever. The cover suggesting they’re opposites,” says Sam of national emergency will eventually Smith, one of the group’s co-founders. pass. Those who wish to study health re- John Chisholm, who chairs the ethics com- cords in future will need more specific jus- mittee of the British Medical Association, a tifications than the sweeping permissions doctors’ trade union, said that the study offered by copi notices. But the Open- contained “hugely valuable information safely team has shown that it is possible to about risk factors” for death from covid-19. get interesting results without copying data and without asking anyone to trust This kind of research, mining medical them with a large, sensitive data set. In do- ing so, they may have made those justifica- tions a little easier to find. 7

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 Science & technology 71 2 found on the surface membranes of certain back were to die of covid-19, the females— magnetic field, which then generates an- cells—particularly those of the airways likely to have been infected as well—would other current in a second coil placed along- into the lungs. The ape version of ace2 is, probably disperse to join other groups, side it according to principles elucidated in Dr Melin has discovered, identical to the spreading the virus further. the 19th century by Michael Faraday. The human variety, so apes are likely to be par- device containing the second coil then ticularly susceptible to sars-cov-2. Mr de Merode says that if a gorilla tested converts the transmitted power into direct Conservationists are worried. “What’s positive for covid-19, his park “would con- current, which is used to recharge a battery. nerve-racking about covid-19 is its novel- sider a veterinary intervention to isolate ty,” notes Richard Wrangham, a chimpan- and treat the individual, but we would be in As users of electric toothbrushes and zee expert at Harvard University. But pri- unknown territory”. Most primatologists phones will know, device and charger must matologists like Dr Wrangham are already think isolating a sick ape would be unfeasi- be both close to each other and precisely familiar with the harm caused by diseases ble. Rather, laments Dr Wrangham, “we aligned for this process to work. That is of human origin. Though conservation ef- would just have to sit back and watch.” 7 tricky to achieve with an electric car, which forts have protected many apes from habi- sits above the ground and requires higher tat loss and poaching, the Faustian bargain Wirelessly charging electric cars levels of energy transfer. made to do this, says Peter Walsh, an ape conservationist at Cambridge University, It’s time to cut These problems are being overcome is that the apes are then exposed to poten- the cord with advances like that made by WiTricity, tially deadly viruses. a firm based near Boston, Massachusetts. Dr Walsh and a group of colleagues at Wireless vehicle-charging is starting to This company was founded in 2007 to com- Thomas Jefferson University, in Philadel- look promising mercialise the work of Marin Soljaèiæ and phia, and at the University of Louisiana, La- his colleagues at the Massachusetts Insti- fayette, estimate that Ebola alone is re- They may be facing extinction in the tute of Technology. Dr Soljaèiæ knew, in sponsible for the deaths of a third of the electric-transport revolution, but one theory, that by having the transmitting and world’s wild gorillas over the past three de- benefit of cars with internal combustion receiving coils resonate at the same fre- cades. Human respiratory viruses are the engines is that they are easy and quick to quency it should be possible to transfer leading cause of death among chimpan- refuel, so travelling a long way in one is greater amounts of energy over longer dis- zees at Gombe Stream National Park in Tan- rarely a problem. Not so for their succes- tances, and he sought to turn that knowl- zania and Kibale National Park in Uganda. sors. In the absence of universal standards, edge to practical account. In one experi- Tony Goldberg of the University of Wiscon- electric cars come with a variety of charg- ment, he and his colleagues sent enough sin-Madison was “intellectually prepared, ing systems and different sorts of cables power over a two-metre gap to illuminate a but not emotionally prepared” for the dev- and sockets. Extended journeys therefore 60 watt bulb. They also did safety tests and astation caused in 2013 by an outbreak of need careful planning to make sure that the found that transmission of this power rhinovirus c at Kibale, which killed 9% of battery is fully charged at the start and that could be done without harming people in one group of chimps. A covid-19 outbreak compatible fast-charging stations are the vicinity. would be “another problem that the apes available en route. don’t need”, he observes. WiTricity is working with a number of Jane Goodall, a pioneering primatolo- It would be much more convenient if carmakers and sold its first commercial gist who began her research on chimpan- electric cars could be recharged wirelessly. system in 2018 to bmw, which fits it to some zees at Gombe 60 years ago, is also worried. Some electric toothbrushes and other of its 530e hybrid cars. Alex Gruzen, WiTric- Tanzania has not enforced a full anti-covid small devices, such as mobile phones, can ity’s boss, expects further developments lockdown, so villagers who live around the already be topped up in this way using a soon. He says the arrangement can trans- park could still spread the disease to the process called electromagnetic induction. mit power from the grid to the car’s battery chimps. At Tchimpounga Chimpanzee Re- This employs an alternating mains current with an efficiency of up to 93%, which is habilitation Centre in Congo-Brazzaville, flowing through a coil to create a varying similar to that achieved by a plug-in sys- where her research institute also works, tem. Nor does a car’s receiving coil have to health checks are mandatory for humans be positioned directly above the charging and chimps alike. pad on the ground—a useful feature of res- The closure of conservation sites be- onating coils being that they do not have to cause of the pandemic poses another pro- be so closely aligned to transmit power. blem for apes. Around 40% of Virunga Na- tional Park’s revenue has disappeared As to how much power can be trans- overnight, says Emmanuel de Merode, its ferred, and how quickly, this is a question director. “This will present major chal- of cost and design. For most uses at home, a lenges to ensuring that conservation ef- wireless charger of 11 kilowatts might suf- forts continue uninterrupted,” he adds. Dr fice. That would provide around 50km of Walsh fears that if local economies are range per hour of charging and cost around harmed by the closure of tourism sites, $2,000, says Mr Gruzen. At this price, he people will turn to poaching. says, a wireless system would be competi- Some ape populations will cope with tive with plug-in home-charging units. covid-19 better than others. Though chim- panzee troops are generally controlled by a Another advantage of wireless recharg- dominant adult male, there are usually ing is what Mr Gruzen calls “power snack- plenty of subordinates willing and eager to ing”. This is topping up the battery when a step in, should he die or be incapacitated. car is stationary for a short time. The com- Mountain-gorilla groups, however, are pany provides systems to recharge taxis in normally harems that have several females this way while they wait in line, and to do but only a single adult male. If this silver- the same for electric buses at bus stops. It is also possible to charge vehicles while they are on the move. That might make sense in places where vehicles often queue up, such as at airports, but Mr Gruzen does not think digging up motorways to install a charging1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 72 Science & technology The Economist May 16th 2020 2 lane is a realistic proposition. team have also developed a 120 kilowatt than air higher up—an effect known as alti- Other companies are producing wire- fast-charger, which Dr Onar says would be tude-related wind shear. And the amount capable of wirelessly charging electric cars of shear, given the blade-span of modern less-recharging systems which use various at a similar rate to a Tesla Supercharger, one turbines, is large enough for Earth’s rota- forms of magnetic-resonance induction. of the fastest plug-in systems available. tion to come into play. This pushes moving So far these are mostly for commercial ve- air to the right in the northern hemisphere hicles, though such systems are bound to Crucially, as did not happen for plug-in and to the left in the southern, a phenome- encourage the spread of the technology to vehicles, standards are being developed non called the Coriolis force. The faster the cars as well. Momentum Dynamics, a that should, at least in theory, permit any airflow, the larger the deviation. Thus wind Pennsylvanian firm, for instance, an- suitably equipped electric vehicle to use shear begets wind veer, a gradual change in nounced in March a deal to supply wireless any wireless charger. China recently rati- direction with height. rechargers to GreenPower Motor Company, fied a set of national criteria similar to a producer of electric shuttle buses. those being developed and promoted by in- That matters for turbine pairs because dustry groups in the West, including Wi- the air that pushes against the blades of the Wireless recharging of electric trucks is Tricity. As China has been one of the coun- upwind device, and thus gets them to ro- also coming. In February, a team led by tries most forcefully pushing the tate, say, clockwise, is itself deflected by Omer Onar at the Oak Ridge National Lab- electrification of vehicles, its clout in the those blades in the other direction. This oratory, in Tennessee, demonstrated a 20 marketplace might ensure that most com- turns it into a turbulent wake with a rota- kilowatt set-up that thus takes three hours panies, foreign ones included, keep to the tion (in this case) going anticlockwise. This to recharge the 60-kilowatt-hour battery standards it has set. 7 anticlockwise rotation conflicts with the pack in a hybrid ups delivery truck. The Coriolis-induced veering tendency of the undisturbed wind around the wake. And Industrial standards that hampers the wake’s ability to pick up energy from this surrounding, undis- Shear, veer, cheer turbed wind and then go on to hit the sec- ond turbine with renewed vim. Which way a wind turbine turns might not seem to matter. But it does In the case that the first turbine rotates If the hands of dial clocks swept over ground, which heats the nearby air, which anticlockwise, the wake will be clockwise, their faces the other way around, that rises in whorls of turbulence, resulting in a thus matching the northern-hemisphere would be the direction known as “clock- well-mixed boundary layer that behaves in wind veer. This lets it gain energy from the wise”. And they would tell the hour just as the same way at all altitudes. The conse- surrounding air to deliver to the next tur- faithfully. It is convenient to have all clock quence, for a wind turbine, is that its rotor bine—the opposite of what now happens. hands turn in the same direction, but it is blades feel the same wind speed and direc- And in the southern hemisphere this all an accident of history which direction that tion whether they are at the top or the bot- works the other way around, so conven- is. Similarly, it seems an arbitrary but effi- tom of their rotation. tional, clockwise turbines do best. cient choice by wind-turbine makers that the blades of almost all of those devices At night, however, the ground cools. Retooling factories in light of Dr Engl- turn clockwise. However, a study present- The whorls therefore often go away and the berger’s discovery, to make turbines run ed on May 4th to the General Assembly of boundary layer stops mixing. Friction with anticlockwise instead, would certainly be the European Geosciences Union (held on- vegetation or buildings now means that air expensive. Whether the extra power that line, instead of in Vienna, as planned), sug- close to the ground moves more slowly could be squeezed out of the wind by doing gests that in the northern hemisphere, so would make that worthwhile would re- where 96% of these turbines are found, The promise of the night quire a lot more investigation. Her result universal clockwiseness may be bad. does, however, show neatly how even ap- parently arbitrary decisions can have unin- For a single turbine it does indeed not tended consequences. 7 matter. But turbines are usually planted in groups. If, in such a group, one turbine is behind another then it does matter, accord- ing to Antonia Englberger of the German Aerospace Centre, in Oberpfaffenhofen, and her colleagues. They have built a com- puter model which simulates the flow of air over a turbine turning in either direc- tion, and then calculates the effect this has on a second turbine, downwind of the first. By day, the team conclude, there is no dif- ference. But at night the power output of the downwind device may be up to 23% higher if its upwind colleague is turning anticlockwise. The reason lies in the nocturnal behav- iour of the bottom few hundred metres of the atmosphere, known as the boundary layer. By day, the sun’s rays heat the

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws Books & arts The Economist May 16th 2020 73 Also in this section 74 Stories of south London 75 Johnson: Zoom fatigue Home Entertainment 76 The rise of French TV dramas 76 Design your own board game 77 Perspectives: Confinement Disinformation and democracy ous victories is widely accepted today. That is in no small measure thanks to Russia’s The rhythm of struggle intervention in America’s presidential election of 2016 using inflammatory social- Four books analyse the weapons of political warfare media posts and the publication of hacked emails. But the practice was pioneered in In his annual lecture in December, Gen- Active Measures. By Thomas Rid. Farrar, the 1920s and refined in the cold war. eral Sir Nick Carter, Britain’s chief of de- Straus and Giroux; 528 pages; $30. fence staff, warned that “the idea of politi- Macmillan; £25 At first the cia was “even more prolific cal warfare has returned”. Tanks and jets Russians Among Us. By Gordon Corera. and brazen” than the kgb, explains Mr Rid. still mattered, he assured a bemedalled au- William Morrow; 448 pages; $32.50. William A cia-funded printing house in Berlin dience, but authoritarian rivals were un- Collins; £20 churned out more than 855,000 media picking the seams of society and politics in From Russia with Blood. By Heidi Blake. items in 1957 alone, including pamphlets, the West using disinformation, espionage, Mulholland; 336 pages; $30. William Collins; forged and real, as well as a magazine de- assassinations, cyber-attacks and proxies. £20 voted to jazz. Personalised horoscopes General Carter had struck on the same pro- The Folly and the Glory. By Tim Weiner. To were sent to unnerve Stasi officials. In 1951 blem identified by George Kennan, a re- be published by Henry Holt in October; $29.99 one front organisation was sending 15,000 nowned American diplomat, at the outset propaganda-packed balloons east every of the cold war. Americans, Kennan said, an journalist, examines America’s cam- month and maintained three ballooning viewed war “as a sort of sporting contest paign of propaganda against communist bases until 1960. outside of all political context”. Russians rivals. Gordon Corera, a security corre- grasped “the perpetual rhythm of struggle, spondent for the bbc, looks at Russia’s “il- But the kgb’s efforts would come to in and out of war”. legals” programme of deep-cover sleeper dwarf that. By the middle of the1960s it was agents in “Russians Among Us”. And in co-ordinating 300-400 “active measures” Four new books reveal different facets “From Russia with Blood”, Heidi Blake, a annually—everything from fuelling the of how that murky struggle between Russia journalist for BuzzFeed News, investigates European peace movement to, in later de- and the West has played out and evolved. In Russia’s killing spree in Britain. cades, spreading allegations that America “Active Measures”, Thomas Rid, a professor had created aids as a weapon. A large bu- at Johns Hopkins University, surveys the The notion that invisible weapons— reaucracy was devoted to the task. One history of disinformation, with an empha- “facts, fakes and ideally a disorienting mix campaign, directed against America’s sis on the kgb’s prodigious output. “The of both”, as Mr Rid puts it—can yield fam- plans to build neutron bombs, cost $200m Folly and the Glory” by Tim Weiner, a veter- (over $700m in today’s money). In 1985 the annual budget for active measures was conservatively put at $3bn-4bn (more than $7bn today). Mr Rid pulls important insights out of this tangled history. Three stand out. One is1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 74 Books & arts The Economist May 16th 2020 2 that disinformation is not the same as fab- in Volgograd pretending to be a Ukrainian”, British fiction rication. In fact, it can be most effective points out Mr Corera. when “larger truths” are “flanked by little Down to Brixton lies”. The kgb circulated genuine accounts Ms Blake’s book explores another one- of racial violence in America in the 1960s sided battle. She describes how associates Pomeranski. By Gerald Jacobs. Quartet through fake black activist groups, just as of Boris Berezovsky, an oligarch who fell Books; 256 pages; £12 real emails were spread through phoney out with Vladimir Putin, died one after the cut-outs in 2016. But precisely because ac- other in London, at a rate which “defied Vincent van gogh once lived in Brix- tive measures exploit pre-existing divi- natural explanation”. American spies re- ton, where the fledgling artist fell in sions, it can be hard, if not impossible, to peatedly told their British counterparts love with his landlady’s daughter. Formerly measure whether they are effective or not. that Mr Putin’s agents were probably re- famous as a hub of post-war British Carib- sponsible, but pusillanimous British lead- bean life, more recently a magnet for gen- Can you believe it? ers, mindful of the roubles flooding into trifying hipsters, the south London neigh- A second lesson is that disinformation is London’s property market, swept these bourhood boasts a rich cultural history. not only corrosive to open societies, which concerns aside. Ms Blake’s argument rests Until now, though, the area’s literary depend on collective trust in facts, but also on eyebrow-raising claims that Russian chroniclers have overlooked the Jewish takes a subtler toll on the perpetrator. spies have developed undetectable poisons families who settled in the place Gerald Ja- “When vast, secretive bureaucracies en- that can cause fast-acting cancers and cobs calls a “dynamic urban village”. gage in systemic deception, at large scale “mood-altering substances” to induce de- and over a long time,” warns Mr Rid, “they pression and suicide. A long-serving literary editor of Brit- will...undermine the legitimacy of public ain’s Jewish Chronicle, Mr Jacobs has writ- administration at home”. Soviet propagan- The evidence for that lurid suggestion is ten a spirited and entertaining novel of dists often deceived themselves, he notes. slender. But it relates to the third of Mr Brixton in the mid-20th century, peopled “It is impossible to excel at disinformation Rid’s arguments: that technology has with characters who balance on a knife- and at democracy at the same time.” transformed the arena of political warfare. edge between “legit gesheft” (above-board This is evident from Mr Corera’s account of business) and more rackety sorts of enter- That did not stop America from trying, the revolution in Russia’s illegals pro- prise. At times, it reads almost like a low- argues Mr Weiner. Though Kennan be- gramme. The age of biometric border con- key, south-of-the-Thames version of “The lieved that “the disrespect of Russians for trols and social-media backstories made it Sopranos”, but with slices of Bakewell tart objective truth” led them “to view all stated significantly harder to create aliases that in place of Sicilian cannoli. facts as instruments for furtherance of one would stand up to scrutiny. A new and ulterior purpose or another”, the cia itself more prosaic generation of illegals trav- After the death of Benny Pomeranski in would come to own or underwrite 50 news elled between Russia and the West under 2000 his son Simon—who has swapped the outlets around the world. America’s most their real names, hidden in a flood of émi- retail hustles of his parents’ generation for illustrious newspapers all employed “at grés, says Mr Corera. But as technology the more genteel profession of drama lec- least one journalist working or moonlight- closed one door, it opened another. turer—learns about the misadventures ing for the cia”, claims Mr Weiner. Radio that shaped his father’s life. Benny, along Free Europe, a cia-funded station, was at Soviet disinformation had to be laun- with his pals, migrated south from the war- best a source of vital news in Soviet-occu- dered into the West, typically through the battered streets of the East End (a more fa- pied Europe; at worst it was “a poison fac- media. “If they did not have press freedom, miliar stamping-ground for earlier Jewish tory”, one former employee says, devoted we would have to invent it for them,” the novelists of London). In Brixton, Benny1 to “creating chaos”. kgb’s disinformation chief quipped in 1964. The internet changed the nature of The social fabric Both countries used information as a that conduit. Information could be stolen crowbar to widen social or political divi- in vast quantities and spread anonymous- sions in the other, but Mr Rid denies any ly, quickly and cheaply, often through cred- moral equivalence. The cia, he says, “re- ulous activists and amplified by harried treated from the disinformation battlefield journalists untroubled by its provenance. almost completely”. When it did wage in- “A significant and large proportion of the formation war, it was often of a different disinformation value-creation chain was character: distributing translated copies of outsourced to the victim society,” con- “1984” into Ukraine or smuggling news- cludes Mr Rid. More perversely, the West- print into Poland. America’s worst excesses ern panic around false news stories often in political warfare were typically curbed, overstated the effectiveness of those cam- eventually, by checks and balances that did paigns—and thus compounded their dis- not trouble Soviet agencies. “What they do orienting effects. to us we cannot do to them,” as Estonia’s president noted after a landmark cyber-as- Like Kennan in 1948, Western intelli- sault in 2007. gence officers and soldiers are now re- learning how to wage political warfare. Last That becomes clearer when turning to year General Carter launched a new divi- the other arrows in Russia’s quiver. Mr Cor- sion of the British army devoted to “infor- era’s account of Russian spies who bur- mation manoeuvre and unconventional rowed into American suburbs in the 1990s, warfare”. It “routinely conduct[s] opera- having stolen the identities of dead in- tions below the threshold of armed conflict fants, is gripping. Many raised their unwit- in the virtual and physical dimensions”, ting children as bona fide Americans and boasts Britain’s defence ministry, some- retired there. That reflects the stamina of what cryptically. One of its units, the 77th Russian intelligence, but also an asymmet- Brigade, has been active in countering dis- ric advantage. No young cia or mi6 officer information around covid-19. Whether it would want to “spend two decades working also sends customised horoscopes to Rus- sian spies is not disclosed. 7

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 Books & arts 75 2 and his wife Bertha make a decent living slumland youth. “Benny the Fixer” and his ing glimpse, but no more, of the island’s from their dress shop, Pomeranski Gowns, chutzpadik gang nurture Robin Hood fanta- long-settled Jewish community. It might but his heart lies with a group of friends sies as they raid a crooked jewellers or have benefited from a tighter focus on few- who meet in the Astoria café. cheer on the career of “Kid Joey”, a half-Ja- er figures, such as near-tragic Sam “the These “Astorians” comprise not only maican, half-Irish Brixton boxer. They be- Stick” Golub, crippled in childhood and “fairly conventional male Jewish shop- lieve a “moral framework” blesses their driven by a “constant quest for revenge”. keepers” with dreams of a racier existence, scams. Not so “Little Jack” Lewis—a big Ultimately, the book endorses Bertha’s but some gay and black confederates. A se- cheese among “South London’s more felo- scorn for the “nonsense” of treating “petty ries of escapades, charmingly told if loose- nious residents”, weapons-grade thug and thieving and threatening people as a sort of ly connected, depict Benny and his sinister proof that playing at crime may political stance”. Mr Jacobs, though, keeps mates—among them “Maxie the Ganoff” lead swiftly down into darkness. the mood genial and the yarns flowing. The (“thief”), “Spanish Joe” and “Fancy Goods wheezes of his Astorians add an exuberant Harry”—as they sidestep the law to recap- Colourful and episodic, “Pomeranski” shot of yiddishkeit to “the everlasting ture the “rule-breaking” thrills of their scatters its stories liberally. A detour to drama that was Brixton”. 7 Kingston, Jamaica, gives readers a tantalis- Johnson What’s that again? The linguistic psychology of “Zoom fatigue” Readers of a certain age will remem- often isn’t, especially when the internet is A bigger problem may be interrup- ber when long-distance calls were crowded), that is a lot more time than it tions, says Ms Roberts, as delays mean expensive, international calls ruinously seems. Under “no gap, no overlap” rules, that speakers are not able to properly so, three-way calls exciting and video the typical silence between the end of one time their turns. In person, when two calls the stuff of science fiction. How face-to-face conversational turn and the people overlap one speaker may quickly quickly people take yesterday’s achieve- next is about 200 milliseconds. The wait yield; on a video call it takes longer for ments for granted. Today, international easily exceeds that threshold if Zoom users this clash to be resolved. Repairing these video hangouts are free and widely avail- experience a 150-millisecond lag after the snags regularly is tiresome. able. Instead of treating them as a mir- first speaker, followed by another 150 acle, endless commentators have com- milliseconds for the reply. To make matters worse, colleagues plained about “Zoom fatigue”. Much of who are hard to understand, even if only their criticism has been about the video: Adding these pauses to work calls can for technical reasons, are rated as less a lack of eye contact, self-consciousness make speakers seem less convincing. A trustworthy. Studies find that a foreign (whether about skin, hair or book- study by Felicia Roberts of Purdue Univer- accent reduces the believability of factu- shelves) and the like. sity and colleagues found that positive al assertions (such as “a giraffe can go answers to questions (such as “Can you without water longer than a camel”), as Yet the main reasons Zoom conversa- give me a ride?”, “Sure”) were rated as less does printing such statements in a fuzzy tions are draining are to do with audio, in genuinely willing if the responder took or low-contrast font. In humans’ prim- which the limitations of the technology more than 700 milliseconds to reply. That itive psychology, the simpler something run up against habits of speech. Studies is because it requires less time than that to is to understand, the easier it is to be- find that most cultures observe a conver- plan and utter an automatic, positive lieve. This same bias would unfairly sational rule of “no gap, no overlap”. statement. Above that limit, hearers cor- punish the worker cursed with a dodgy Despite the various stereotypes that exist rectly perceive that the speaker is using internet connection. about taciturn or interrupting ethnic- extra time to craft a response, perhaps a ities, turn-taking is well-organised and hedge or a polite “no”. Unfortunately, this With effort, listeners are able to men- almost instantaneous from Mexico to means that colleagues who think they are tally compensate for glitches and delays. Denmark to Japan. giving forthright answers might come “The First Circle”, a novel by Alexander across as cagey on video calls. Solzhenitsyn published in 1968, suggests All that is disrupted in online meet- darkly that this is easiest to do during ings. Audio and video are chopped into bland exchanges. In the book, intellectu- tiny pieces, sent via different channels to als at a Soviet work camp test a secure the recipient, and then reassembled. calling system by having one engineer Such “packet switching” is robust. read a newspaper over the line, and darpa, the Pentagon agency that pio- another rate the quality of the call. The neered the internet, wanted to be sure an hearer gives a surprisingly high score, enemy could not cut a single line and despite the spasmodic transmission: he disable the connection. But some pack- has correctly guessed the missing words, ets may arrive late for reassembly. When thanks to the formulaic propaganda in they do, the software has a basic choice: the newspaper. Any meeting where it is to wait, leading to a delay, or to gather so easy to predict what colleagues will what is available, leading to glitches. say raises the question of why it is held in the first place. Video-calling platforms tend to use audio that arrives quickly but is of mid- There is at least one upside. When dling quality. Zoom says it aims for, and workers finally return to offices, they often achieves, a lag of just 150 millisec- may actually look forward to real face-to- onds—quicker than the blink of an eye. face meetings again—to say nothing of Yet even when that goal is reached (and it post-work gatherings with friends.

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 76 Books & arts The Economist May 16th 2020 home al even among French intelligence officers. creatures and herds of space-mammoths. entertainment Equally unsentimental is “Baron Noir” Life is not easy for characters on Planet What to watch (another Canal+ production), a political Ozerdale. But at least they have plenty of drama. Set in the gilded salons of the Elysée opportunity for heroics and energetic out- Coup de théâtre presidential palace, as well as the northern door activity, and are able to spend time port of Dunkirk, it focuses on the compul- with a reasonably large social group. For Catch up on the finest French sive and self-serving character of Philippe your correspondent’s 14-year-old son, television dramas Rickwaert, superbly played by Kad Merad. stuck in lockdown with his brother and A one-time Socialist mayor and member of their parents, the outer-space scenario was When it comes to screen drama, the parliament, he is out to play power politics alluring. He dreamed up the intergalactic French have long considered cinema at all costs, even to himself. mission a few days after his school closed. and the film d’auteur to be the nobler art, Inventing—and typing up—the rules for a one that helps define national identity. What most of these series share, along home-made game, debating strategy for Television drama was traditionally treated with others such as “Engrenages” (“Spiral”) confronting aliens and working out how to as its poor cousin: unsophisticated, formu- or “Les Revenants” (“The Returned”), is the fly away to freedom have offered several laic and risk-averse. Yet in recent years this adoption of an American-style tv-writing welcome hours of diversion. hierarchy has been upended. France now structure: a pool of writers, overseen by a offers plenty of compelling showrunner who enjoys overall creative Designing your own board game lets viewing on the small screen. control. Not all French directors have taken you combine the most enjoyable elements well to being treated as hired hands. But se- of other people’s. The best involve both A good place to start is “Dix ries creators, such as Éric Rochant of “Le luck and strategy. Intricate and complex Pour Cent” (“Call My Agent!”), Bureau des Légendes”, also a director him- battles between armies, as in “Diplomacy”, which centres on a dysfunc- self, have now earned power and prestige. “Risk” or “Axis and Allies”, tend to be open- tional talent agency in Paris. ended and last many hours. A hard time The series follows half a dozen The results speak for themselves. When limit, represented by the disappearing oxy- highly strung agents as they she started out, Fanny Herrero, creator of gen, is preferable. Tasks that require some struggle to manage their roster “Dix Pour Cent”, analysed the best contem- collaboration can be satisfying, as when of stars. The agents’ caprices porary American television drama, realis- players in “Pandemic” work together to and rivalries veer from the ing that its French counterpart “had to mo- stop a deadly virus spreading, or when ri- comic to the poignant, with oc- dernise”. Now it has. Régalez-vous. 7 casional lapses into melodra- vals trade resources in “Settlers ma. All this is sustained by Home-made games of Catan”. But vicious competi- sharp dialogue, self-deprecat- tion can be relished, too, espe- ing angst and warmth. In a Your turn cially if it means putting your twist, each episode also fea- annoying relatives in their tures a French film star—Isa- For several hours of escape, invent a place. On Planet Ozerdale, the belle Adjani, Juliette Binoche, board game different astronauts work to- Jean Dujardin—playing themselves. Pro- gether to display a range of tal- duced for France 2, a public broadcaster, On a distant planet, a rocket crashes. ents. Some, if lucky, can out- “Dix Pour Cent” attracted wider attention The surviving astronauts—a medic, perform the others. when Netflix bought the rights. A fourth miner, soldier, scavenger, scientist and en- and final season is currently in post-pro- gineer—had been on a mission to collect Is it more rewarding to duction in France. rare minerals and other resources. Now create a new game, calibrate they have to co-operate to rebuild their sometimes complicated rules, For a moodier pace, and the intrigue of craft and dig up as many precious rocks as make hexagonal tiles for the contemporary espionage, it is well worth they can shift, all before their dwindling board, set up a website to share catching up with “Le Bureau des Légendes” oxygen supplies expire. They also have to the idea and anticipate how (“The Bureau”, pictured), a cult hit from Ca- cope with landslides, tunnel collapses and others will be entertained—or nal+. Starring Mathieu Kassovitz as Guil- attacks from helicopter-like birds, wolf to get down to the absorbing laume Debailly, an espion progressively business of rolling the dice, de- trapped by his own lies, the fifth season feating monsters and dodging asteroids? In launched during lockdown. The bureau in your correspondent’s household, the most question runs undercover agents for the intense excitement seems to come in the French intelligence service. But this smart, early stages of crafting a new thing. unhurried Gallic take on a spy thriller fea- For the inventor the pleasure is from be- tures no special effects and few stunts. ing a storyteller of sorts, one who intro- Rather it relies on psychological complex- duces a cast of characters, bestows each ity, intricate geopolitics and a form of slow- with attributes (a scientist able to invent burn realism said to have met with approv- new technology; the miner with geological nous) and then dreams up novel scenarios for them. For those who lead others in role- playing games, such as “Dungeons and Dragons”, it may be a small step to put a game on a board. For their audience—espe- cially parents, who are prone to being baf- fled by many intricate rules—having card- board tokens in hand helps to keep things simple. The real goal, whether for those trapped at home during lockdown, or as- tronauts stranded on a planet of wolf aliens, is to have a chance to escape. 7

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 Books & arts 77 Within four walls Bounded in a nutshell Even before nationwide lockdowns, confinement was part of human life—and, in some instances, actively sought out Perspectives is Very gradually, now here, now there, the rules that emergency that too has been, by and large, accepted. an occasional have kept a large share of the world’s people im- Physical restriction, after all, starts early, with the series in which our mured in their homes are being relaxed. There can be correspondents no sudden burst from confinement, like young colts in full-term fetus curled in a space it fills completely. This put the pandemic spring. But already the parties are being planned, the presumably seems cosy to some, intolerable to others; in context long drives to see relations, the sheer revelling in inde- attitudes to confinement may well be laid down in pendence and unfettered life. This peculiar imprison- utero. Newborn infants, when asleep, will sometimes ment will end, and most people—physically, at least— fling out their arms as if to check that the limits are still will be free. there, and to seek reassurance. And for long centuries, persisting to the present in places, this reassurance Yet, in myriad ways, confinement will continue as was partly provided by swaddling the child in linen it always does. Alarms ring at the start of the day, and bands as tightly as could be. watches are strapped on, to submit to the limits of time. Bodies are roped with belts and ties, forced into The purpose of swaddling was also to make the unkind shoes and crammed into the narrow bounds of limbs grow straight, as saplings are braced and tied; buses and tubes. Children, brushed and tidied, are and here the moral purpose of confinement enters the packed off to school. And this, of course, is the daily picture. As the limbs were straightened by the bands, round that many have been pining for. so the mind of the growing child was straightened by careful instruction in discipline and manners. Rote- It gets no looser as the day goes on. Office workers learning of noun declensions and multiplication ta- stay in one room, or one small cubicle, completing set bles kept the brain focused in a tunnel of repeated tasks. From the window they may envy the gardeners sounds. Beatings for forgetting, and deferential behav- and builders round about. But the outside labourer still iour to superiors, kept the body in check. Confinement works within the limits of his ground, to the limits of in starched clothes in a church pew, or in mosque or tools and strength, within the unpredictable impera- synagogue, for long hours of the Sabbath ensured com- tives of nature. And as workers and non-workers alike munity cohesion. When young men and women sub- snuggle into the comfortable confines of their beds, sequently went off the rails, as many did, they had sleep wraps them closely round a second time. plainly not been confined enough. Confinement, of all kinds and degrees, is part of hu- Much of that sort of restriction has disappeared man life. The word does not normally denote impris- from modern life. It is no longer bearable, though ech- onment, still less isolation, but the setting of limits. oes of it have resurfaced in current public-information Those limits are often self-imposed or set by generally campaigns: the repeated mantras about hand-wash- benevolent forces: parents, society. Confinement to ing, the threat of tighter rules for disobedience. But at- the home and thereabouts by state order is rare, but in titudes to confinement are not merely a matter of prev-1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws 78 Books & arts The Economist May 16th 2020 2 alent social norms. They also lie in the mind and mood Down the cell was, and is, their spiritual touchstone. As Abba Mo- of the beholder. ages, fear of ses, a Desert Father, said, “Sit in your cell, and your cell For Hamlet in his half-madness, the world itself confinement will teach you everything.” comprised “many confines, / wards, and dungeons, was often Denmark being one o’ the worst.” It was an “unweeded inculcated Another self-imposed confinement, for those of a garden” (gardens being hedged and walled, as even through stories platonic cast of mind, was that of the soul within the Eden had been enclosed), possessed by “rank and body. When souls lost their feathers, as Socrates ex- gross” things. The Romantic poets tended to agree. Per- plained in “Phaedrus”, they fell from the heavenly cy Bysshe Shelley thought himself confined by the en- realms and, on reaching solid ground, took on the cov- tire institutional structure of his age, especially the in- ering of mortality. In this double casing of Earth and terdiction of free love; “heart-withering custom’s cold body, they could experience beauty; on recognising it, control” was a dead hand that he could not escape. Both they would feel their feathers growing again and recall Samuel Taylor Coleridge and John Keats felt “pent” in their heavenly beginnings. Romantic poets treasured London, though Samuel Johnson had equated the city this notion of confinement awakening the soul; of see- with life itself, and they had its whole width to wander ing, through the smallest earthly forms, “into the life in. Like the caged birds that were bought to swing at of things”. For Wordsworth, in his “Ode on Intimations tenement windows, poets too could not sing among of Immortality”, the soul’s visions could be unlocked shops and chimney stacks. even by the sight of a wild pansy in the grass. Down the ages, fear of confinement was often in- culcated through stories. A large number of fairy tales They could be set free, too, when he lay on his couch featured maidens confined indoors: the Sleeping in the small, dark rooms of Dove Cottage, where the Beauty in a palace-room behind thick thorns, Rapun- views from the tiny windows were only of banks and zel in a high tower. Princes rescued them, but there was close stone walls. Writers and thinkers in all disci- usually no obvious sign that their confinement had plines have long found confinement useful, even es- ended. It was perhaps just the fate of women to be shut sential. It can be technical: strict adherence to harmo- up, as in the Song of Solomon (“A garden enclosed is my ny and counterpoint, or to metre and rhyme. As sister, my spouse”) or in medieval nunneries, or in the Wordsworth himself explained, just as nuns were con- harems of the East; after all their inexplicable or for- tent with their narrow rooms, and hermits with their ward behaviour, the ancients thought, was caused by cells, he too for a while enjoyed “the sonnet’s scanty the womb drifting in an unchecked way. The agony plot of ground”. More often, however, confinement is that may be hidden in such closed rooms is perhaps simply physical. Its purpose is focus, away from dis- summed up by the old use of “confinement” as a eu- traction. Virginia Woolf believed that women could phemism for childbirth, when a pregnant woman dis- never flourish as writers unless they had not only appeared into a female world full of secret rituals, des- “money enough to travel and to idle”, but also indepen- peration, pain and shame. dence of mind and spirit, in a room of their own. This lime-tree bower my prison The rooms, or cells, or sheds, need not be austere or Yet even strict confinement was not necessarily fear- viewless. Dylan Thomas’s writing shed at Laugharne ful. It might offer, paradoxically, a means of escape. In had a prospect so beautiful, looking over “full-tilt river Greek myth, some characters—Myrrha, who had slept and switchback sea/Where the cormorants scud”, that with her father, or the Heliades, who had offended the it could not help appearing sometimes in his poems. sun god—were turned into trees as punishment. For Yet the lands he travelled were interior. Rainer Maria others, however—the nymph Daphne, turned into a Rilke felt that his retreat at Muzot, a small square tower laurel tree as Apollo pursued her, or Syrinx, turned into in the Alpine foothills, held the secrets of his poems; a reed to frustrate Pan—that gradual spread over their for it was there that he could mine his inner life, im- soft skin of gnarled bark or hard outer layer, that stiff- mersing himself in “inwardness”. ening of their limbs, was deliverance. Restriction could mark the beginning of a different and, in some Physical feats of exploration, too, often rely on con- ways, freer life. finement. To stumble on the wonders of limestone formations underground, potholers must squeeze Many encountered this paradox. Within a few lines, through tunnels and bores that can barely admit them. world-hating Hamlet also averred that “I could be In the deep ocean, where a diver can no longer swim bounded in a nutshell, and count myself a king of infi- freely because of the weight of water above, two scien- nite space.” While the body was held, the mind leaped tists and a pilot cram into a cabin six feet across in a outwards. Julian of Norwich, in confinement and in vi- tiny sphere of titanium, the deep-diving submersible sion, saw a “little thing”, only the size of a hazelnut, in DSV Alvin, as it drops two miles or so into the dark. God’s hand, and was told it was “all that is made”. She was one of hundreds of anchorites in pre-Reformation A dive on Alvin could last no longer than nine hours. England, most of them women, who had entered a con- But Al Worden, an astronaut on Apollo 15, spent 67 finement so permanent that the Office of the Dead was hours in lunar orbit in a command-module cabin with recited over them, and the door of their tiny cell was 6.17 cubic metres of space, while his two colleagues sealed. They were not isolated; people consulted them, walked on the Moon. Other things confined him too: and through a window food would be passed in, the his clumsy space suit, and the minute-by-minute chamber pot passed out. But they were bounded, as in schedule imposed by mission control. In the simple that nutshell. In this locked place, salvation could be poems he wrote afterwards (for he felt that the official found and God encountered. Jesus himself had told his debriefing only scratched the surface), the narrowness followers not to pray in public, but to “enter into thy of his circumstances never rated a mention. He no- closet, and…shut the door…and thy Father...shall re- ticed only how unconfined he was, among the pirouet- ward thee openly.” For each monk, nun or hermit their ting stars, gazing at the “cloudy frail earth”, on which all the colours of the universe seemed to be focused: Earthbound no more, we travel afar To see for ourselves just where we are. 7

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws Tenders 79 Courses PUBLIC CALL for Submission of applications for Establishment of a Status of an Investment Project Institution announcing the public call: Government of the Republic of North Macedonia Application deadline: 31.01.2021 1. SUBJECT 1.1 This Public Call is announced in accordance with the Law on Strategic Investments in the Republic of North Macedonia, regulating the application criteria, conditions and procedure, determination of a status, selection, preparation and implementation of investment projects of the highest strategic priority for the country. 2. RIGHT TO PARTICIPATION 2.1 The right to participation in the Public Call shall be acquired by legal entities (national and international) meeting the requirements and possessing the documents required for obtaining a status of a Strategic Investment Project in accordance with the Law on Strategic Investments. 3. THE ENTIRE TEXT OF THE PUBLIC CALL IS PUBLICLY AVAILABLE ON THE NEXT LINK: https://vlada.mk/node/21288?ln=en-gb 4. ADDITIONAL INFORMATION For any additional information, please contact the following address: [email protected]к

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 80 Economic & financial indicators Economic data Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units balance balance % change on year ago % change on year ago rate 10-yr gov't bonds change on per $ % change % of GDP, 2020† % of GDP, 2020† latest quarter* 2020† latest 2020† % latest,% year ago, bp May 13th on year ago United States 0.3 Q1 -4.8 -3.8 0.3 Apr 0.6 14.7 Apr -1.9 -14.0 0.6 -176 - -3.1 China -6.8 Q1 -33.8 1.0 3.3 Apr 4.6 3.7 Q1§ 0.8 -5.5 2.0 §§ -115 7.09 1.9 Japan -0.7 Q4 -7.1 -5.2 0.4 Mar -0.1 2.5 Mar 3.4 -6.9 nil -8.0 107 -6.1 Britain -1.6 Q1 -7.7 -8.7 1.5 Mar 1.0 4.0 Jan†† -2.1 -14.1 0.3 -95.0 0.82 -5.0 Canada 1.5 Q4 0.3 -4.3 0.9 Mar 0.7 13.0 Apr -3.9 -7.2 0.6 -112 1.41 -3.3 Euro area -3.3 Q1 -14.4 -6.0 0.4 Apr 0.3 7.4 Mar 1.6 -5.9 -0.5 -45.0 0.92 -3.3 Austria 1.0 Q4 1.1 -6.0 1.6 Mar 0.4 4.5 Mar 0.1 -5.5 -0.1 -37.0 0.92 -3.3 Belgium -2.8 Q1 -14.7 -7.9 0.6 Apr 0.8 5.3 Mar -1.4 -7.7 nil -42.0 0.92 -3.3 France -5.4 Q1 -21.4 -8.8 0.4 Apr 0.4 8.4 Mar -0.8 -9.9 nil -35.0 0.92 -3.3 Germany 0.5 Q4 0.1 -6.1 0.8 Apr 0.8 3.5 Mar 4.7 -6.1 -0.5 -45.0 0.92 -3.3 Greece 0.5 Q4 -2.7 -6.0 -1.4 Apr -0.4 16.1 Feb -2.9 -5.2 2.1 -147 0.92 -3.3 Italy -4.8 Q1 -17.7 -7.0 nil Apr -0.2 8.4 Mar 1.3 -7.0 1.8 -89.0 0.92 -3.3 Netherlands 1.6 Q4 1.6 -7.0 1.2 Apr 0.5 3.8 Mar 4.5 -5.0 -0.3 -46.0 0.92 -3.3 Spain -4.1 Q1 -19.4 -6.0 -0.7 Apr -0.5 14.5 Mar 0.8 -7.3 0.8 -13.0 0.92 -9.7 Czech Republic 1.8 Q4 1.9 -5.9 3.2 Apr 1.5 2.0 Mar‡ -0.9 -4.2 0.7 -111 25.4 -3.5 Denmark 2.2 Q4 2.3 -4.5 nil Apr 0.4 4.1 Mar 5.3 -6.0 -0.3 -32.0 6.88 -13.7 Norway 1.1 Q1 -6.0 -6.0 0.8 Apr 0.2 3.5 Feb‡‡ 1.2 -2.5 0.4 -128 10.1 -9.2 Poland 3.3 Q4 1.2 -2.9 3.4 Apr 3.0 5.7 Apr§ -0.8 -4.4 1.3 -152 4.22 -11.3 Russia 2.1 Q4 na -5.2 3.1 Apr 4.2 4.7 Mar§ 1.7 -3.1 6.0 -228 73.7 -1.7 Sweden 0.5 Q1 -1.2 -3.7 -0.4 Apr 0.7 7.1 Mar§ 2.9 -3.1 nil -25.0 9.79 4.1 Switzerland 1.5 Q4 1.3 -4.2 -1.1 Apr -0.4 3.3 Apr 6.5 -4.0 -0.5 -23.0 0.97 -12.9 Turkey 6.0 Q4 na -5.4 10.9 Apr 11.4 13.6 Feb§ -1.9 -6.3 12.8 -809 6.98 -6.5 Australia 2.2 Q4 2.1 -4.2 2.2 Q1 1.6 6.2 Apr -2.5 -6.8 1.0 -77.0 1.54 1.3 Hong Kong -2.9 Q4 -1.3 -2.3 2.3 Mar 1.2 4.2 Mar‡‡ 1.5 -3.6 0.6 -106 7.75 -6.5 India 4.7 Q4 4.9 0.3 5.8 Mar 3.4 23.5 Apr -0.4 -6.1 6.1 -129 75.5 -3.1 Indonesia 3.0 Q1 na 1.0 2.7 Apr 1.3 5.0 Q1§ -1.5 -5.4 7.8 -19.0 14,885 -3.9 Malaysia 0.7 Q1 na -1.0 -0.2 Mar 0.4 3.9 Mar§ 2.4 -6.1 2.9 -92.0 4.33 -12.3 Pakistan 3.3 2019** na -1.6 8.5 Apr 7.4 5.8 2018 -1.6 -10.2 8.3 ††† -515 161 3.7 Philippines -0.2 Q1 -18.9 -0.1 2.2 Apr 1.5 5.3 Q1§ -0.7 -7.5 3.4 -243 50.3 -3.5 Singapore -2.2 Q1 -10.6 -6.0 nil Mar 0.4 2.4 Q1 19.3 -7.5 0.8 -134 1.42 -3.0 South Korea 1.3 Q1 -5.5 -1.8 0.1 Apr 0.5 4.2 Apr§ 6.1 -4.3 1.4 -48.0 1,224 3.9 Taiwan 1.5 Q1 -5.9 -1.9 -1.0 Apr -1.0 3.8 Mar 12.0 -5.3 0.5 -25.0 29.9 -1.3 Thailand 1.6 Q4 1.0 -5.6 -3.0 Apr 0.2 1.0 Mar§ 3.4 -6.6 1.0 -107 32.1 -32.6 Argentina -1.1 Q4 -3.9 -9.0 48.4 Mar‡ 45.2 8.9 Q4§ -0.3 -6.1 na -464 67.5 -32.6 Brazil 1.7 Q4 2.0 -5.5 2.4 Apr 3.7 12.2 Mar§‡‡ -2.3 -12.0 2.6 -431 5.92 -15.4 Chile -2.1 Q4 -15.5 -4.8 3.4 Apr 3.4 8.2 Mar§‡‡ -5.4 -10.5 2.6 -131 820 -15.6 Colombia 3.4 Q4 1.9 -2.7 3.5 Apr 1.9 12.6 Mar§ -5.1 -5.4 5.9 -60.0 3,906 -21.0 Mexico -1.6 Q1 -6.2 -9.5 2.1 Apr 2.8 3.3 Mar -2.3 -4.7 6.0 -218 24.3 -2.9 Peru 1.8 Q4 0.6 -3.6 1.7 Apr 1.5 7.6 Mar§ -2.6 -12.7 3.9 -129 3.43 8.4 Egypt 5.6 Q4 na 1.4 5.9 Apr 5.2 8.0 Q4§ -4.0 -11.1 na 15.8 1.1 Israel 3.8 Q4 4.6 -3.2 nil Mar -1.1 3.4 Mar 2.3 -11.5 0.8 nil 3.53 -0.3 Saudi Arabia 0.3 2019 na -4.1 1.4 Mar 0.6 5.7 Q4 -7.4 -12.8 na -112 3.76 -22.5 South Africa -0.5 Q4 -1.4 -4.0 4.1 Mar 4.0 29.1 Q4§ -2.5 -10.3 9.4 18.5 nil 90.0 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 31st index one Dec 31st The Economist commodity-price index % change on May 13th week 2019 May 13th week 2019 In local currency 2015=100 May 5th May 12th* month year -1.0 -12.7 33,693.0 -0.1 -17.3 United States S&P 500 2,820.0 0.1 -1.2 Pakistan KSE 2,572.0 -0.8 -20.2 Dollar Index 0.7 -5.0 Singapore STI 1,940.4 0.6 -11.7 United States NAScomp 8,863.2 1.8 5.8 South Korea KOSPI 10,938.3 1.5 -8.8 All Items 102.7 105.7 2.7 -3.8 3.3 -14.3 Taiwan TWI 1,294.6 1.2 -18.1 China Shanghai Comp 2,898.1 3.0 -14.3 Thailand SET 37,842.8 10.8 -9.2 Food 94.4 94.6 2.6 4.6 0.9 -21.7 Argentina MERV 77,772.2 -1.6 -32.7 China Shenzhen Comp 1,822.9 -2.2 -15.0 Brazil BVSP 36,394.6 -1.6 -16.4 Industrials -1.2 -25.0 Mexico IPC 10,396.3 1.0 -25.5 Japan Nikkei 225 20,267.1 -2.0 -27.3 Egypt EGX 30 1,394.6 -13.7 All 110.5 116.0 2.8 -9.4 -0.6 -20.4 Israel TA-125 6,721.2 nil -19.9 Japan Topix 1,474.7 0.1 -26.9 Saudi Arabia Tadawul 50,152.1 1.0 -12.1 Non-food agriculturals 86.1 86.3 -0.3 -19.0 1.3 -15.3 South Africa JSE AS 1,998.5 0.6 -15.3 Britain FTSE 100 5,904.1 -0.6 -30.6 World, dev'd MSCI -0.5 -18.4 Metals 117.7 124.9 3.4 -7.1 2.5 -21.4 Emerging markets MSCI 909.2 1.2 Canada S&P TSX 14,503.2 -0.1 -28.3 Sterling Index 0.6 -9.3 All items Euro area EURO STOXX 50 2,810.5 1.6 -12.5 125.9 130.8 4.9 0.7 0.9 -18.9 France CAC 40 4,345.0 0.2 -14.2 1.0 -22.4 Germany DAX* 10,542.7 -1.2 -27.7 Euro Index 1.5 -12.1 All items Italy FTSE/MIB 17,183.4 105.1 107.8 3.6 -0.9 Netherlands AEX 512.2 Gold $ per oz Spain IBEX 35 6,631.4 1,698.9 1,709.0 -1.3 31.8 Poland WIG 45,431.7 Brent $ per barrel Russia RTS, $ terms 1,110.4 31.1 30.1 1.2 -57.9 Switzerland SMI 9,631.6 US corporate bonds, spread over Treasuries Turkey BIST 100,159.1 Dec 31st Sources: Bloomberg; CME Group; Cotlook; Datastream from Refinitiv; 2019 Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Australia All Ord. 5,513.7 Basis points latest Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Investment grade 263 141 Hong Kong Hang Seng 24,180.3 High-yield 819 449 India BSE 32,008.6 Indonesia IDX 4,554.4 Sources: Datastream from Refinitiv; Standard & Poor's Global Fixed For more countries and additional data, visit Income Research. *Total return index. Economist.com/indicators Malaysia KLSE 1,397.1

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 81 Graphic detail Travel and covid-19 The covid network → Italians are still staying at home, but travel in Germany has bounced back Phone data identify travel hubs at high Trips per day, seven-day moving average risk of a second wave of infections February 15th 2020=100 Now that the first wave of covid-19 in- Italy United States Germany fections has crested, governments are Lockdown starting to relax their lockdowns. In Italy 100 * 100 100 shops will open their doors from May 18th. Nationwide Parts of Germany and America are also re- Nationwide Nationwide opening on a state-by-state basis. Mobile- phone data show that people are buzzing 75 75 Berlin 75 around a bit more than they did in April. Venice 50 50 Munich 50 Greater mobility raises the risk of a sec- Chicago 25 ond wave of cases. For countries where Milan 25 policies are set locally, a big worry is that Feb Mar Apr New York 25 outbreaks could begin in areas with lax 0 rules and spread elsewhere. In theory, this May 0 0 risk should mirror “interconnectedness”— Apr May the amount of travel to and from each re- Feb Mar Apr Feb Mar gion. One possible explanation for why Lombardy was hit so hard by covid-19 is → Covid-19 is more prevalent in better-networked cities that it is the best-networked part of Italy. Interconnectedness v covid-19 cases, by geographic area Teralytics, a Swiss technology firm, has Germany, Italy and the United States, three weeks after lockdown compiled data from Germany, Italy and America that support this hypothesis. Each Population density Trento is thinly populated, Cases per 100,000 time a mobile phone leaves one location Low High but well connected. It has a people, log scale and arrives at a new one for an hour or New York high infection rate more—whether such travel is within a city 1,000 or for longer distances—Teralytics logs the journey. In the week before lockdowns be- Munich gan, the firm recorded 5.7bn trips. Travel fell by 40% once they were implemented. Milan 100 Rome To test how interconnectedness affects Houston Berlin vulnerability to covid-19, we built two sta- tistical models to predict local infection ← Less connected Ragusa More connected → rates during the period just before lock- downs. The first relied solely on each area’s 10 population density and income. The sec- ond added on two measures of propensity -40 -20 Average 20 40 60 for travel: its number of journeys and its Network centrality† compared with country average, % “network centrality”, or how many other places it tends to exchange visitors with. → A second wave of infections would disproportionately harm travel hubs The more elaborate model fared better, Total covid-19 cases, actual v expected‡ May 11th 2020 with 30% more explanatory power than re- Per 100,000 people, selected cities, log scale lying on population density and income alone. Interconnectedness matters a lot. In Higher centrality 50 100 200 500 1,000 all three countries, better-networked areas Milan Actual had more infections than the simple model Washington, DC Expected predicted. Less-networked ones had fewer. Houston ↖ Houston had fewer cases Frankfurt than its high connectedness Governments should treat travel hubs Rome and density suggest with caution. So far, many German cities Berlin have seen surprisingly few infections— perhaps because the country tests widely, Lower centrality and began locking down earlier in its epi- demic (as measured by the death toll) than Philadelphia Italy did. Now that Germany is easing re- New Haven strictions, its infection rate may rise again. Verona Well-networked Frankfurt is probably at Munich greater risk than, say, comparatively dis- Hanover connected Hanover, and should reopen Bari relatively slowly. Milan in Italy, and Hous- ton in America, should be cautious, too. 7 Sources: Teralytics; Eurostat; US Census Bureau; national statistics; The Economist *Not nationwide †A measure of how many different areas a given place exchanges visitors with regularly ‡Assuming countries’ transport patterns return to pre-pandemic behaviour, while holding current infection rates constant

UPLOADED BY \"What's News\" vk.com/wsnws TELEGRAM: t.me/whatsnws The Economist May 16th 2020 82 Obituary Eavan Boland Visions in the ordinary feathers. Much of this was so ordinary that it might have seemed unremarkable. Certainly it was not named in Irish poetry. But ordi- Eavan Boland, poet, died on April 27th, aged 75 nariness, “dailiness”, was precisely what she wanted to capture. The surfaces of things could barely hold what was under them; just When summer nights were warm, Eavan Boland liked to stand as the small, routine gestures of many couples contained the un- in the front doorway of her small suburban house in Dun- spoken steadfastness of love. drum, outside Dublin. She would look at the buddleia, and at the lamplight glossing the leaves of the hedge. Yet these things were Other “women’s subjects” needed tackling more forcefully. She not simply visible to her. She saw them with her body. It was as if had no qualms about that. The whole poetic tradition had to be she was part of some great continuum, or stood in a place of myth, scrubbed and abraded with the wash stones of resistance. So an like the women singers she imagined in the hard west of Ireland anorexic torched her witch-body, its “curves and paps” until, “thin whose mouths were filled with “Atlantic storms and clouded-over as a rib”, she could slip back into Adam again, “as if I had never been stars/and exhausted birds”. away”. A menstruating woman confronted the moon, “dulled by it/ thick with it…a water cauled by her light…barren with her blood.” This sense of communality, which led her to be one of Ireland’s Shockingly, a wife who believed “I was not myself, myself” in her finest poets, was essentially a woman’s feeling. And it was missing everyday dutifulness felt herself remade when her husband, com- almost entirely from Irish poetry. There the voice was male, bardic, ing home tight, split her lip and knuckled her neck “to its proper authoritative, grown sweet and self-confident on the flattery of angle”; and was grateful for his remodelling. princes. It was “I”, not “we”. The poet was a hero, a seer, a towering figure (Yeats above all), whose themes were history, epic and elegy. Yet the all-too-ordinary often slipped into something else. She This was not a world for women. When they featured in the work was too deeply read in the myths and epics of Ireland for it to be they were mostly objectified, passive and silent. No page recorded otherwise. The life that was lived in a brick house could still have a “the low music/of our outrage”. Their own poems were not encour- visionary quality. In “Night Feed”, she noticed not only the rosy aged, as if they were women’s-magazine things that would defile zipped sleeper, the hard suckling, the silt of milk left in the bottle, the pure, visionary flow. If she were to write in the men’s style, with but the movements of earth and stars, and the “long fall from their assurance, she would fit right in, as she fitted into the clever grace” as the feed ended. The stopping of the tumble-dryer, like literary conversations in the pubs round St Stephen’s Green when death, began “to bury/The room in white spaces.” An old florin, she was at Trinity College. But once she was married and the moth- brushed on a shelf, turned into a silver salmon. er of two small daughters, happy if she could jot down just one line or one image, that was not her life. That everyday life was also not remote from history. But she preferred to call it The Past: a place of shadows, fragments, defeats, Her days now revolved round cooking, washing up, nappies, rather than heroics. The Troubles appeared, through an ancient feeds; lifting the kettle to the gas stove, setting her skirt over a chair television set, as “grey and greyer tears” and “moonlight-coloured to have it without creases for the morning. They were full of small funerals”. Emigration to America was a woman in a gansy-coat on untidinesses and oversights which assumed huge importance, the deck of the Mary Belle, holding her half-dead baby to her. In like the loaf forgotten by the cash register, or washing left wet. “Quarantine” the worst year of the famine, 1847, was encapsulated They were full, too, of hidden satisfactions: a row of cups winking in a couple found frozen, he still carrying her, holding her feet on their saucers, a copper pan well polished, fresh green celery against his breastbone to try to warm them. Just two people’s deaths, how they had lived, what they had suffered, And what there is between a man and woman. And in which darkness it can best be proved. Such themes were inevitable, for her discovery of her woman’s voice in poetry was meshed to her discovery of Ireland. She had left that home at the age of six, when her diplomat father was posted to London and then New York. When at 14 she returned, she did not know the secret language of the country, especially of Dublin, which she grew to love. As a woman she saluted “Anna Liffey” as the river rose in the hills above her house, flowing through black peat and bracken, then claiming and “retelling” the city for her, putting the pieces together, as she went on trying to. Ireland, though, could still disappoint her. In 1991, when the monumental Field Day Anthology of Irish Writing came out, she was one of only three contemporary women poets included. Furi- ous, she fired up her campaign for women to be noticed and, through poetry workshops, for poetry to be extended to all who had no voices. After 1996 a professorship at Stanford, alternating with trips home, allowed her to check on progress from abroad. By the 21st century, to her delight, women poets were flourishing in Ire- land, and two new Field Day volumes were devoted to women’s writing. Though she never liked to take credit, she had been a voice and a constant encouragement; she had changed the conversation. Make of a nation what you will Make of the past What you can— There is now A woman in a doorway. It has taken me All my strength to do this. 7

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