The Economist Us A July 22

Will America escape recession?
The science of heatwaves

Dismantling democracy: a case study
Barbie v Oppenheimer
JULY 22ND–28TH 2023
MAKING BABYMAKING BETTER

a special report on the future of fertility
012
012
Contents The Economist July 22nd 2023 3
The world this week United States
5 A summary of political 17 Adapting to heat
and business news 18 Contraceptive pills
Leaders 19 The DeSantis campaign
7 Fertility technology 19 Bike sharing
How to improve ivf 20 Invading Mexico
8 Extreme temperatures 21 Lexington No Labels
Too darn hot
8 The world economy The Americas
Still in danger 23 El Salvador’s rockstar
9 China and India dictator
A budding detente 26 Eroding democratic
10 El Salvador norms
On the cover A model for despots
ivf is failing most women 11 Russia’s frozen assets
today. New research holds out Should they be seized?
hope for the future: leader, Asia
page 7, and Technology Letters 27 Asia’s ev supply chain
Quarterly, after page 38.
12 On deepsea mining, 28 Singapore makes meat
“The Retrievals”, a tale of
water regulation in
agony and addiction, makes 29 Americans in North Korea
Britain, the Italian left,
listeners squirm, page 68 30 Banyan Violent Bengalis
working from home
Will America escape recession?
Briefing
Falling inflation is good news.
But it is too early to hail a “soft 14 America’s economy
Turning a corner China
landing”: leader, page 8. Can
America escape the long 31 Challenges for Western
predicted recession? Briefing, Technology Quarterly: universities in China
page 14 In vitro fertilisation 32 The covid19 death toll
The most personal 32 Germany’s China strategy
The science of heatwaves technology 33 Controlling the media
As the northern hemisphere After page 38
swelters, is climate change 34 Chaguan The missing
speeding up? Page 61. Cities foreign minister
need to respond rapidly and
plan carefully to minimise the Middle East & Africa
damage done by heatwaves: 35 Africa’s energy boom
leader, page 8. The sizzling 37 Constitutional chaos
Sunbelt, page 17. Extreme Next week We will in Israel
temperatures separate “the cool publish a summer double
38 Piano smuggling
and the damned”, page 66 issue with 48 pages of
features from 1843, our
Dismantling democracy: a case sister publication that
study The “world’s coolest specialises in narrative
dictator”, Nayib Bukele, shows journalism. Look out for a
how to gut democracy and be profile of Larry Fink and
applauded for it: leader, page 10, the wild story of the
and analysis, page 23 biggest bank heist ever,
among other treats.
Barbie v Oppenheimer What
two Hollywood blockbusters
reveal about our times, page 65
→ The digital element of your
subscription means that you
can search our archive, read
all of our daily journalism and
listen to audio versions of our
stories. Visit economist.com
Contents continues overleaf
012
4 Contents The Economist July 22nd 2023
Europe Finance & economics
39 Murky Moscow 55 ai diffusion
40 Nuclear safety in Ukraine 57 China’s economy
41 France’s Zeitenwende 58 Buttonwood The dollar
41 Seizing Russian assets 59 Big tech investing
42 Ukrainians in Poland 59 Bank results
43 Charlemagne An 60 Instant payments
American v Paris
Science & technology
Britain 61 Is climate change
44 Funding universities accelerating?
46 Bagehot End the 63 Scrapyard kings
whingeocracy 64 When mammals attack
Culture
International 65 Oppenheimer v Barbie
47 ChinaIndia relations 66 Extreme heat
67 A novel about the art world
68 A history of spying
68 The podcast du jour
69 Johnson Voice cloning
Business Economic & financial indicators
49 Tesla’s surprising swerve 70 Statistics on 42 economies
51 Bartleby Our office agony
Graphic detail
uncle
71 The flames of war in Sudan, revealed by satellite data
52 The Czech bet on Casino
52 The “Call of Duty” Obituary
shootout
72 Milan Kundera, explorer of opposites
53 Dairy disrupters
53 India’s rickshaw wars
54 Schumpeter Stars v suits
Volume 448 Number 9356
Published since September 1843 Subscription service
to take part in “a severe contest between For our full range of subscription offers, including To manage your account online, please visit
intelligence, which presses forward, digital only or print and digital bundled, visit: my.economist.com where you can also access our
and an unworthy, timid ignorance Economist.com/offers live chat service which is available 24/7. To call us,
obstructing our progress.” contact our dedicated service centre on:
If you are experiencing problems when trying to
Editorial offices in London and also: subscribe, please visit our Help pages at: PEFC certified
Amsterdam, Beijing, Berlin, Brussels, Chicago, www.economist.com/help North America: +1 888 815 0215 This copy of The Economist
Dakar, Dallas, Dubai, Johannesburg, Madrid, for troubleshooting advice. Latin America & Mexico: +1 646 248 5983 is printed on paper sourced
Mexico City, Moscow, Mumbai, New Delhi, New from sustainably managed
York, Paris, San Francisco, São Paulo, Seoul, forests certified by PEFC
Shanghai, Singapore, Tokyo, Washington DC PEFC/293158 www.pefc.org
© 2023 The Economist Newspaper Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise, without the prior permission of The Economist Newspaper Limited. The Economist (ISSN 00130613) is published weekly except combined issues in July and December, by The Economist Newspaper Limited, 900 3rd
Avenue, 16th Floor, New York, NY 100225088. The Economist is a registered trademark of The Economist Newspaper Limited. Periodicals postage paid at New York, NY and additional mailing offices. POSTMASTER: Send all UAA to CFS. Canada
Post publications mail (Canadian distribution) sales agreement no. 40012331. Printed by Quad/Graphics, Saratoga Springs, NY 12866
012
The world this week Politics The Economist July 22nd 2023 5
An American soldier was the International Criminal A controversial Illegal Migra

detained in North Korea after Court, which South Africa is tion Bill was approved by the
he crossed the border from obliged to enforce. President British Parliament. The gov
South Korea. Travis King had Cyril Ramaphosa said in a ernment says the bill is essen
been in jail for two months on court filing that Russia had tial to stop small boats carry
assault charges and was due to made clear the arrest “would ing migrants across the Eng
be flown back to America be a declaration of war”. lish Channel. Opponents had
when he absconded. hoped that a series of amend
Emmerson Mnangagwa, ments would ditch bits of the
Rumours swirled around Zimbabwe’s president, signed legislation that they claimed
China’s foreign minister, Qin legislation into law that could would contravene human
Gang, who has not been seen impose the death penalty for rights, but these were all
Thailand’s parliament again in public since June 25th. the vague offence of “injuring eventually defeated.
voted to prevent Pita “Health reasons” were cited the sovereignty and national
Limjaroenrat from becoming when the diplomat did not interest of Zimbabwe”. England’s court of appeal
prime minister. Coupled with attend a summit earlier this reduced the sentence of a
a court ruling that suspended month. Now, though, the woman who was found guilty
the opposition leader from the foreign ministry says it has “no of taking abortion pills out
legislature, Mr Pita now has no information” on his status. side legal limits to a 14month
chance of getting the job. suspended sentence. The
Although his prodemocracy The Kerch bridge that con original prison conviction
Move Forward party claimed nects Russia with occupied had been widely condemned
the most seats in a general Crimea was attacked again, when it was imposed in June.
election in May, Mr Pita has this time by water drones. The
been blocked by the upper bridge carries Russian supplies
house, which is stacked with into contested areas of A flair for troublemaking
parties aligned with Thailand’s Ukraine. It will not be fully At a summit of Latin Amer
conservative military elite. The operational again until mid ican and European leaders,
Constitutional Court is even September. Last October a fuel Isaac Herzog, the Israeli presi Luiz Inácio Lula da Silva,
considering a complaint bomb on the bridge caused dent, visited Joe Biden at the Brazil’s president, said that
against Move Forward over its extensive damage. Ukrainian White House. He also gave a the world was “tired” of the
aim of reforming the country’s officials say the latest attack speech to Congress, where he war in Ukraine. Lula, who has
draconian lèsemajesté laws. will disrupt Russian logistics. said that criticising Israeli refused to admonish Vladimir
policy should not cross a line Putin, also criticised Gabriel
A senior leader in Malay Russia carried out missile into concluding that Israel Boric, Chile’s president, for
sia’s opposition alliance of strikes on Odessa and other does not have the right to exist. condemning Russia.
parties, Perikatan Nasional, Ukrainian ports. Russia earlier Mr Biden also issued an in
was charged with sedition. pulled out of a deal that had vitation to Binyamin Netanya Tens of thousands of people
Muhammad Sanusi Md Nor is permitted the safe passage of hu, Israel’s prime minister, to took to the streets of Peru to
the chief coordinator of PN’s grain exports from those ports visit, and urged caution on the protest against the president,
campaign ahead of forth across the Black Sea. As wheat legal reforms that have pro Dina Boluarte, who came to
coming state elections. He was prices rose, the UN, which voked huge protests in Israel. power only in December. She
indicted under colonialera helped broker the agreement a denounced the demonstrators
laws for questioning decisions year ago, warned that it would Iran’s morality police will as a threat to democracy.
made by the king. be people in poor countries resume patrols to enforce a
who pay the price. dress code which says women A former president of
In India 26 opposition parties must cover their hair. The Panama, Ricardo Martinelli,
formed an alliance to coordi decision comes ten months was sentenced to ten years in
nate their political strategy Afraid of a little competition after large demonstrations prison for moneylaundering,
when they compete against the An American who had been were held following the death which he denies. He had been
ruling Bharatiya Janata Party at selected to be the European in custody of Mahsa Amini, considered the frontrunner
next year’s general election. Commission’s senior econo who was arrested for not wear in a presidential election.
The Indian National Devel mist on competition issues ing a “proper” headscarf.
opmental Inclusive Alliance declined the job following a Scores of people were killed
(INDIA) includes the Congress political storm. Opposition to Tunisia signed a deal with the during severe flooding in
party, whose leader, Rahul the appointment of Fiona Scott European Union to manage South Korea. Many had
Gandhi, has been convicted of Morton was led by Emmanuel “irregular” migration. Tunisia become trapped in their cars
defamation and barred Macron. The French president has become the main point of in a tunnel in the city of
from Parliament. said he wanted a “great Euro departure for migrants cross Cheongju. It was one of many
pean” in the position, though ing the Mediterranean to reach extreme weather events.
India launched its he didn’t name one. Europe. Under the agreement Heat records were broken
Chandrayaan3 spacecraft on the EU will give Tunisia €105m across Asia, North America
a mission to explore the Vladimir Putin pulled out of an ($118m) for equipment and and southern Europe. The
Moon’s South Pole. If all goes economic summit in South training to prevent migrants temperature in California’s
well Chandrayaan3 is expect Africa in August, avoiding the from embarking. Another Death Valley hit 53.3°C (128°F),
ed to reach its destination on possibility of being arrested by €150m was also pledged for a though that was still short of
August 23rd or 24th. his host on a warrant issued by variety of other things. the 56.67°C registered in 1913.
012
6
The world this week Business The Economist July 22nd 2023
Britain’s annual rate of Blizzard, which owns the warned that “a cold winter,

inflation stood at 7.9% in June, videogame series. Sony had together with a full halt of Quiet on the set
down from 8.7% in May, a been the most vocal opponent Russian piped gas supplies to Hollywood stars (well, Susan
bigger drop than had been of Microsoft’s acquisition, the European Union” could Sarandon) joined the picket
expected. Transport costs fell which a court in America cause naturalgas prices to rise lines, after the union that
in the consumerprice index, recently gave the green light to. again. Prices have fallen sharp represents film and television
mostly because of cheaper ly this year because a mild actors called a strike, joining
fuel. Food inflation eased to winter left gas stocks in good screen writers who downed
17.3%. Core inflation, which China’s GDP shape. The IEA thinks that their pens in May. The actors
% change on a year earlier
strips out energy and food “fierce competition for gas and writers want the studios to
20
prices, was 6.9%, down slight supplies could also emerge if limit the use of artificial
ly from the previous month’s northeast Asia experiences intelligence in moviemaking,
10
rate. The news was welcomed colderthanusual weather.” such as when it replicates an
by the government. The Bank 0
actor’s image or generates a
of England is still expected to Eli Lilly presented the full story, and a bigger cut of the
raise interest rates when it -10 findings of the phasethree proceeds from streaming. The
next meets, but markets are 2020 21 22 23
clinical study of its new drug studios say the unions are
now expecting a smaller rise of Source: Haver Analytics
to treat Alzheimer’s, which being unrealistic. Film and TV
a quarter of a percentage point. showed a significant slow production has now virtually
China’s GDP grew by just 0.8% down in the progression of the ground to a halt.
in the second quarter com disease in its early stages.
A tale of two banks pared with the previous three Some patients did suffer side Pret a Manger turned an
Goldman Sachs reported net months. It expanded by 6.3% effects, however, such as annual profit last year for the
income of $1.1bn for the April over the same quarter last year, swelling and bleeding of the first time since 2018, according
to June period, its lowest quar when lockdowns were in force, brain. Eli Lilly hopes that its to newly released figures from
terly profit in three years. The falling short of economists’ drug, called donanemab, will its owner, JAB Holding. The
bank booked charges related to estimates for a stronger be approved by America’s Food purveyor of sandwiches,
its property investments and rebound. China’s property and Drug Administration by salads and coffee is on track to
retreat from retail banking. sector is proving to be one drag the end of the year. operate 700 shops worldwide
Like some other big banks it on the economy; investment by the end of the year, most of
also saw a slowdown in rev has plunged and house prices A crackdown on users sharing them in Britain, and most of
enues from trading. Higher have flatlined. This week passwords paid off at Netflix, those in London. Pret has
interest rates are helping to Evergrande, a property devel which saw its subscriber base become so synonymous with
make up for that shortfall in oper which sparked a crisis in increase by 8% in the second office workers that Britain’s
revenue and boosting profit at the market when it defaulted quarter, year on year, a faster national statistics agency
other banks. At JPMorgan on its debt, said it lost $81bn in rate of growth than in recent keeps a data set of transactions
Chase profit surged by 67%, 2021 and 2022. quarters. A year earlier it had in its stores, indexed to Janu
year on year, to $14.5bn. lost 1m customers. Netflix now ary 2020, the start of covid19,
As much of Europe sweltered has 238m paid members, far to track footfall. The index has
Tesla reported a strong net under heat domes, the more than the around 160m at risen faster in the suburbs
profit of $2.7bn for the second International Energy Agency Disney+, its closest direct rival. than it has in the city.
quarter, driven by a big
increase in car sales during its
priceslashing campaign. Tesla
said that it was still on track to
deliver 1.8m vehicles this year,
though production would dip a
bit this quarter.
America’s Federal Trade
Commission has reportedly
opened an investigation into
OpenAI, the artificial
intelligence startup behind
ChatGPT, for potentially vio
lating consumerprotection
laws. The regulator wants
OpenAI to explain its policy on
data privacy and how it trains
the large language models
behind its generative AI.
Sony signed a deal with Micro
soft that will continue to make
“Call of Duty” available on
Sony’s PlayStation once Micro
soft takes over Activision
012
Leaders 7
Making babymaking better

IVF is failing most women today. New research holds out hope for the future
A fter Louise brown was born in Manchester in July 1978,

her parents’ neighbours were surprised to see that the
world’s first “testtube baby” was “normal”: two eyes, ten fin
until menopause, which among mammals is known to occur
only in humans and five species of whale. The intricacies of how
an embryo buries into the womb and connects to the blood sup
gers, ten toes. In the 45 years since, in vitro fertilisation has be ply are also mysterious. Infertility is often classed as “women’s
come the main treatment for infertility around the world. At health”, yet male factors play at least some role in roughly half of
least 12m people have been conceived in glassware. An IVF baby heterosexual infertile couples—though how is often unclear.
takes its first gulp of air roughly every 45 seconds. IVF babies are In the face of all this, ivf is woefully inadequate. It was de
just as healthy and unremarkable as any others. Yet to their par vised as a fix for the blocked Fallopian tubes that prevented Ms
ents, most of whom struggle with infertility for months or years, Brown’s mother from conceiving. But today, when more couples
they are nothing short of miraculous. try for children later in life, a woman’s declining stock of eggs is
In a world where one person in six suffers from infertility, increasingly likely to be the problem. Here, ivf works by giving
such successes are rightly celebrated. Less discussed are the pro people more rolls of the dice, by collecting more eggs and maxi
blems of ivf. Most courses of treatment fail. That subjects wom mising the odds that they will be fertilised. That will work for the
en and couples to cycles of dreaming and dejection—and gives lucky few, but without an entirely new approach and new treat
the fertility industry an incentive to sell false hope. The obstacle ments, many aspiring parents will endure one disappointment
is a lack of progress in understanding the basic mechanisms that after another.
determine fertility. At last, however, the science is making head As our Technology Quarterly reports, recent scientific work
way, holding out more promise and less heartache for genera offers some hope. Researchers in Japan and America are exploit
tions of parents to come. ing stem cells, which have the ability to become any of the body’s
Over the years ivf has become better at making babies and many specialised tissues, to make eggs from skin and blood
safer for the women who bear the brunt of the treatment. The cells, a process called in vitro gametogenesis (ivg). In Japan
rate of twin and triplet deliveries has plummeted, reducing the healthy mouse pups have been created from cells that originated
number of risky pregnancies. Hormone treatments are safer. on the tips of their mothers’ tails. Earlier this year researchers
Combined with egg and sperm freezing, dona announced that they had delivered mouse pups
tion and surrogacy, IVF has given many, includ that shared two genetic fathers. One had con
ing samesex couples and singletons, a path to tributed sperm, the other skin, which was first
parenthood where they had none. turned into stem cells and then into eggs.
Yet the process remains gruelling and costly. Some teams are working towards applying
It is physically painful for women, and emo these techniques to humans. If cells safe
tionally draining for both sexes. For many, fer enough to make healthy babies will ever be
tility treatment is an unaffordable luxury; in available, they are still far off. But the research is
America, for instance, a cycle can cost $20,000. providing new insights into how sperm and
Some countries ration treatment according to a conservative eggs are made. ivg means that researchers may no longer need
moral code. Until 2021 French law permitted IVF only for mar to rely for their studies on donated eggs, sperm and embryos, of
ried heterosexual couples. Many countries including China for ten generously provided by IVF patients. Other teams are using
bid egg freezing, which extends reproductive years. stem cells to build embryo models (dubbed “embryoids”). These
All too often, the pain and the cost come to nothing. The will never see the inside of a womb but they can help show what
770,000 ivf babies born in 2018 required some 3m cycles. Many happens to the real embryos that do.
women go through round after round of hormone injections, In time, novel treatments may follow. Gay couples could have
sometimes moving from one clinic to the next. In America and children that are as genetically related to them as those of
Britain roughly half go home with a baby in their arms, even straight ones. Trans people who are undergoing gender reas
after several years and as many as eight cycles of treatment. signment could possibly do so without sacrificing their fertility.
This has fostered a fertility industry selling to repeat custom All this will take time—which is why ivf will remain impor
ers desperate to conceive. When a cycle fails, many clinics offer tant, and why it needs investment and regulation. A better
poorly regulated menus of “addons” that do not demonstrably understanding of fertility should help raise the success rate of
raise the chances of success, and may even reduce them. They ivf, bringing down its emotional and financial costs.
can charge hundreds to thousands of dollars for a treatment. New treatments could eventually herald the biggest trans
These problems all share a fundamental cause. Although re formation in fertility technology since Ms Brown was born. Poll
production is one of the most basic aspects of human biology, ing shows that in many countries people have fewer children
scientists have an astonishingly poor grasp of how a new life than they would like, partly because they are putting off baby
comes about. The essentials are obvious: a sperm and an egg making until later. Where the sexual revolution of the 1960s and
must meet. But many of the cellular, molecular and genetic ’70s gave women the choice not to have babies if they did not
underpinnings of babymaking remain a mystery. wish to, emerging technology could usher in a new revolution,
Little is known about how a woman’s stock of eggs is set be empowering women—and men—to have the babies they want,
fore she is even born; or why they fade in number and quality when they want them. n
012
8 Leaders The Economist July 22nd 2023
Extreme temperatures
Too darn hot

Cities need to respond rapidly and plan carefully to minimise the damage done by heatwaves
T he best thing that has happened in Phoenix, Arizona, since
the beginning of July is that the electricity grid has kept func
tioning. This has meant that during a recordbreaking run of
less people to cooling stations; encourage people to look in on
elderly neighbours and relatives (the old, especially women over
80, dominate the excess deaths associated with heatwaves);
daily maximum temperatures above 43°C (110°F), still in pro make it possible for those who must work outside to do so very
gress as The Economist went to press, the houses, indoor work early in the morning; put hospitals on an emergency footing.
places and publicly accessible “cooling stations” in the city have The appointment of chief heat officers empowered to coordin
been airconditioned. There have been deaths from heat stroke ate such things in American cities, and farther afield, is a wel
and there will be more; there has been a lot of suffering; and come trend (see United States section).
there will have been real economic losses. But if Arizona’s grid There are also things to be done in advance. It is crucial to
had gone out, according to an academic quoted in “The Heat Will work out where the people at greatest risk live. One thing that
Kill You First”, a new book (see Culture section), America would can help is deciding where to plant trees, which both provide
have seen “the Hurricane Katrina of extreme heat”. shade and, as water evaporates through their leaves, cool the air.
It is not just the United States, where 100m (It is probably best to work out how to keep
people are under heatadvisory notices, that is them green using wastewater, too, especially if,
suffering. There is currently a spate of such like the people of Phoenix, you live in a desert.)
heatwaves around the world. Much of the Medi There are smart choices to be made about the
terranean is in similar straits, with tempera built environment, from the best sort of pave
tures exceeding 40°C (104°F) from Madrid to ment and courtyards designed for passive cool
Cairo (which is suffering power cuts). In Beijing ing to the prevalence of white roofs; there are
July 18th saw a 23yearold record broken by a building codes to update so as to make those
27th consecutive day with a maximum tem choices easier, as well as regulations to change
perature above 35°C. By increasing the odds of a wide range of ex so that workers are not endangered by midday heat.
treme events, global warming also increases the chances that All these measures are easier to take when a city has resourc
they will come in waves (see Science & technology section). es to devote to them. In the developing world, where a lack of air
Unbearable heat does damage in various ways, including kill conditioning makes heat all the more deadly, such resources are
ing crops and livestock, but the immediate challenge it poses to scarce. All the more need for leaders to take the issue seriously
human health is greatest in cities. Less vegetation, more sun and for local politicians to see cooling plans as a way to compete
lightabsorbing tarmac and more waste heat produce what is for votes. Unfortunately, such a strategy works best in places
called the urbanheatisland effect, exacerbating temperatures. where voters have already felt the consequences of failing to act.
Cities also often have poor air quality, particularly in the places That makes studies which reveal that many places are at increas
where the poorest people live; extreme heat on top of dirty air ing risk of vicious heatwaves but have yet to experience one par
can stretch already hardpressed lungs and hearts too far. ticularly troubling. Phoenix at least knows what to expect—and
There are things to do as soon as the mercury rises. Get home what it will have to go on expecting for decades to come. n
The world economy
Still in danger
Falling inflation is good news. But it is too early to hail a “soft landing”
E conomists are not known for their optimism, but today

their good cheer is palpable. Not long ago it seemed that an
American recession was inevitable, as the Federal Reserve kept
economy is slowing down. On July 17th China reported that its
economy grew by a mere 0.8% in the second quarter compared
with the prior three months, even though many had expected a
raising interest rates to fight inflation. Other central banks were boom after the government abandoned its “zerocovid” policy in
following suit, their inflation problems made worse by a surging December (see Finance & economics section). Global manufac
dollar—a particular problem for the emerging markets that bor turing has suffered as consumers came out of lockdowns and
row and trade using America’s currency. Yet news that America’s began eating out more and buying less homeoffice equipment.
headline rate of annual inflation fell to 3% in June has fed hopes And, although America grew strongly in the first half of the year,
that the Fed’s next rate rise, which is expected on July 26th, will most forecasters expect the economy soon to slow.
be its last and that other central banks might relax, too. Stocks Increasingly, however, they are not expecting it to shrink.
are up, bond yields are down and the greenback is at close to its And growth cooling just enough to bring down inflation without
weakest since the Fed began raising rates (see Buttonwood). a recession is the bestcase scenario for overheated economies
The surge of hope is all the more unusual because the world like America’s (see Briefing). Even the disappointing reopening
012
The Economist July 22nd 2023 Leaders 9
in China, which does not have an inflation problem of its own, layoffs are rare. With job openings less plentiful, wage growth
has meant a feared surge in global commodities prices has not has fallen. Yet nobody knows for how long the jobs market can
materialised. That has helped Europe, which has replaced piped shed fat rather than muscle—and in recent months the fall in job
Russian gas with shipments of the liquefied sort. openings has stalled ominously. Across the rich world there is
Yet it would be a mistake to assume that the world economy evidence that firms, scarred by the memory of labour shortages,
is now on track for a socalled soft landing, for three reasons. have been hoarding workers they don’t need; in several coun
The first is that inflation, though lower, remains far above cen tries average hours worked have been falling. Should companies
tral banks’ 2% targets. The fall in America’s headline rate has decide that it is too costly to cling to workers who may or may
been driven by a oneoff decline in energy prices: exclude food not be needed in the future, then layoffs could rise abruptly.
and energy, and prices are 4.8% higher than a The third danger is that divergence among
year ago. In the euro zone the figure is 5.5%, and US consumer prices the world’s big economies means that even as
in both economies wages are still growing far in % increase on a year earlier the pressure on the Fed lifts, policymakers else
10.0
excess of productivity growth. All items
where remain worried. Britain is celebrating a
7.5
In other words, the rich world has some way 5.0 largerthanexpected fall in annual inflation in
to go before it is fully disinflated—and many Excl. energy and food
2.5 June, but with underlying price and wage
economists expect the last mile to be the hard 0 growth of around 7% it remains a troubling out
est. Though stubborn inflation of, say, 34% 2021 22 23 lier (see Britain section). Japan has barely start
does not grab headlines as much as recent ed its monetary tightening; with inflation ris
alarming price rises, it would still be a problem for central bank ing, the Bank of Japan may adjust its cap on longterm bond
ers. They might have to choose between more tightening than is yields again at the end of July. China could be contending with a
currently expected and tacitly abandoning their 2% goals. Either structural growth slowdown in which the economy is weighed
would be disruptive for asset markets and potentially for the real down by bad debts, as Japan’s was in the early 1990s, and in
economy, too. which inflation is persistently too low.
The second risk is that, whereas the world is seeing the bene Wherever you look, in other words, there remains immense
fits of cooling off now, the costs may not be visible for a while. So uncertainty about where inflation and interest rates will eventu
far America’s labour market has rebalanced fairly painlessly by ally settle. By all means celebrate good news. But the world econ
reducing vacancies rather than jobs. Hiring is still strong and omy has not yet escaped unscathed. n
China and India
A Himalayan thaw
Western strategists are unprepared for a possible detente between the world’s most populous countries
T he hope that India might act as a proWestern counter

weight to China has become a cornerstone of American for
eign policy. It is a bet on India’s future capability and geopolit
companies and introduced curbs on bilateral trade and invest
ment. Yet much of that IndiaChina iciness has now thawed.
The economic freeze was brief. In 2021 bilateral trade, recov
ical posture that was clearly articulated after a visit to Delhi by ering after the pandemic, grew by 43%. Last year it increased
Bill Clinton in 2000. Every subsequent president, two Demo 8.6%. That put its total value at $136bn—27 times greater than
crats and two Republicans, has doubled down on it. Hence Na when Mr Clinton was in Delhi. Meanwhile, the countries’ fron
rendra Modi’s latest lovefest in Washington last month. Amid tier remains largely contested and heavily militarised—but both
bilateral protestations of undying friendship, the Indian prime seem keen to defuse their quarrel over it. After 18 rounds of nego
minister pocketed the sort of defence technology deals that tiation between military commanders, they have withdrawn
America usually reserves for close allies. their troops from five potential flashpoints, in favour of “buffer
But what if India, which does not enter into formal alliances, zones” which neither side patrols. Only two major frontier hot
is on course to be a much less committed American partner than spots have yet to be made safe in this way.
many in Washington assume? As we report this week in our In A world in which India and China set their territorial dispute
ternational section, that is a distinct possibility. It is illustrated aside, as they did previously for over three decades, following an
by a quiet yet striking recent improvement in IndiaChina ties. accommodation to that end in 1988, could be very different from
They deteriorated sharply after a bloody border brawl in 2020 the one many American strategists envisage. India is already
that claimed the lives of 20 Indian troops and at least four Chi much less likely to provide support to American forces in the
nese ones. The violence, waged with rocks and iron bars along event of a conflict with China over Taiwan than many in Wash
the Asian giants’ frigid Himalayan frontier, helped spur the re ington seem to imagine. A sustained IndiaChina thaw would
cent stepup in IndoAmerican defence cooperation. America make that unimaginable. In such a world, India would also be
rushed coldweather and other gear to India’s border forces, even less of a friend to the West on thorny global issues such as
hatched plans for more joint military exercises between the two climate change, trade and debt than it is currently.
countries, and looked on approvingly as Mr Modi’s government A continued IndiaChina detente would be in both countries’
transferred some 70,000 troops in effect from India’s western interests. India’s momentary effort to reduce its economic de
frontier with Pakistan to its northern one with China. India also pendence on China underlined how hard that would be. Two of
banned over 300 Chinese apps, launched tax raids on Chinese Mr Modi’s biggest priorities, infrastructure and manufacturing,
012
10 Leaders The Economist July 22nd 2023
are especially reliant on Chinese inputs. India’s pharmaceutical more respectful of India than the violence made it seem. Recent
industry, a big exporter, gets 70% of its active ingredients from reporting from India suggests the frontier brawl, though most
China. And even if the prime minister could bear to curb such obviously instigated by China, was more down to poor local de
supplies (of which there is little sign) India’s influential busi cisionmaking than strategy. Either way, China’s strategic inter
ness lobbies would try hard to dissuade him. The brief hiatus ests and recent outreach suggest a repeat has become less likely.
also illustrated their strength of feeling and traction on the is
sue. This does not allay India’s security concerns over China. Awkward for America
They are longstanding and India will in any event continue to A peaceful and fruitful IndoChinese relationship could be
build up its defences because of them. India sees rapid econom hugely beneficial to their massive populations and the world. It
ic growth as the essential condition for the buildup, among would also represent a challenge to Western thinking that Amer
much else. And it rightly sees business with China as a necessary ican and other strategists need to weigh much more seriously.
means to help it achieve that growth. This does not weaken the case for close AmericaIndia ties. India
For its part, China has such an obvious interest in keeping In will continue to want help protecting itself against China re
dia onside that its recent pragmatic outreach is easier to under gardless of any improvement in the relationship; and those ties
stand than its former aggressiveness. China’s former antago should yield manifold benefits beyond security. Yet to the extent
nism on the frontier appeared to achieve nothing except that America’s growing belligerence towards China is intensi
strengthening Indian security ties with America. At the same fied by an assumption that India will, if necessary, help fight its
time, China’s slowing economy has underlined the growing im battles, it should knock it off. To be a counterweight to China, In
portance of India’s vast domestic market to Chinese exporters. It dia must be not merely weighty but also willing to counter. That
may be that, at the time of the border clash, China was already cannot be taken for granted. n
El Salvador
A lawless crackdown
The “world’s coolest dictator”, Nayib Bukele, shows how to gut democracy and be applauded for it
I t is a recipe to make strongmen salivate. Nayib Bukele, El Sal
vador’s president, has worked out how to chop away demo
cratic restraints while keeping an approval rating of 8090% (see
in El Salvador was 16% of GDP. Today neighbourhoods are calm
and businessfolk have mustered the optimism to open new
shops. Hence Mr Bukele’s rockstar popularity.
Americas section). One ingredient is his mastery of social me Yet his scrapping of due process carries costs that will out
dia. The main one is locking up huge numbers of young men. weigh these benefits. First, untold numbers of innocents have
Since March last year, when Mr Bukele imposed a state of been locked away. Their families cluster outside prisons, des
emergency, he has arrested more than 71,000 people, equivalent perate for news of their loved ones. (The government has re
to 7% of male Salvadoreans aged 1429. Anyone suspected of ties leased 6,000 so far, but seems in no hurry to admit its mistakes.)
to a criminal gang can be thrown into a crowded jail—indefinite More insidiously, Mr Bukele has amassed powers to pave the
ly. Little evidence is required: a suspicious tattoo or an anony way for his crackdown and then used it as an excuse to grab even
mous accusation will suffice. Those detained will eventually more. He has kept the country in a state of emergency for over a
have proper trials, the government insists, but so far they have year. He has purged judges who resist him. He is shrinking par
had only cursory hearings, sometimes with liament and tweaking election rules to en
hundreds of suspects appearing simultaneous trench his party’s majority. He intimidates the
ly before a judge. Mr Bukele glories in brutality, press: a new law prescribes jail terms of 1015
tweeting photos of suspects cuffed, halfnaked years for journalists who repeat messages from
and packed tighter than battery hens. gangs and spread “anxiety”. That could mean
Outraged liberals must admit that his crack anyone who reports critically on crime policy.
down has brought benefits. Most touted is a Next, Mr Bukele vows to crack down on corrup
plunge in the homicide rate, which fell from 51 tion. If he applies the same rules of evidence to
per 100,000 the year before Mr Bukele took of whitecollar crimes as he does to consorting
fice in 2019 to 18 in 2021 (before the state of emergency began) with gangsters, he will have a mighty tool for locking up oppo
and just eight last year. Analysts dispute how much credit to give nents. El Salvador increasingly feels like a police state.
Mr Bukele, but he can surely claim some. Some critics call his crackdown unsustainable. Previous at
More important, he has changed the balance of fear in El Sal tempts to crush crime with brute force have failed in El Salvador
vador’s extortionplagued neighbourhoods. Before, if a gangster and elsewhere. Gang bonds will strengthen behind bars, so the
demanded protection money, civilians paid up or braved a bul prisoners will cause mayhem when they are eventually released.
let. Few called the police, since gangsters were seldom convicted But what if they are not released? Mr Bukele’s crackdown is
without testimony that hardly anyone was brave enough to of unlike previous ones. He has locked up far more people, and ap
fer. Now, it is the gangsters who are scared. Knowing that an parently plans to hold them until they are old men. This will be
anonymous tipoff can put them behind bars indefinitely, those costly, but he scrimps on prisoners’ food and urges their fam
still at large are in hiding. Their absence has improved countless ilies to chip in. He is wagering that voters care more about safe
lives. A study in 2016 found that the annual cost of gang violence streets than abstract notions like the rule of law. If his political
012
The Economist July 22nd 2023 Leaders 11
opponents chide him for trampling over his people’s human tle crime. The establishment candidate for Guatemala’s presi
rights, his next electoral slogan writes itself: vote for me or the dential election next month vows to build a huge prison. A com
gangsters will be freed. batjacketwearing presidential candidate in Ecuador, which
Mr Bukele is nearing the end of his first term as president; his also votes next month, praises Mr Bukele. So do some Republi
party says he will run again in February. The constitution bars cans in the United States. His methods are ripe for copying any
him from consecutive terms, but he has cooked up a Putinesque where with high crime and weak institutions, from South Africa
workaround: he will install a placeholder president for a few to Papua New Guinea. They could tip such places into autocracy.
months and then return. The constitution clearly forbids a third Democratic politicians everywhere should pay heed. When
term, but that may not stop him either. An official close to Mr they fail to grapple with crime lawfully, with properly funded
Bukele told The Economist that there was no way for him to run police and clean, efficient courts, they invite demagogues to do
for a third term—“so far”. so lawlessly. As for Salvadoreans, if they reelect Mr Bukele in
The reputation of the selfstyled “world’s coolest dictator” is February, as seems likely, he will have five more years to tear
spreading. Sticklers for the rule of law decry him; others study down their country’s democratic guardrails. And if one day they
his formula. Honduras has declared a state of emergency to bat tire of him, they may struggle to get rid of him. n
Reparations
Should Ukraine get Russia’s frozen assets?

How to make Russia pay for the war while upholding international law
E ver since the attack on Ukraine in February 2022 Western

governments have made a show of clamping down on private
Russian assets held abroad, from seizing oligarchs’ yachts to
makes profits from investing them. Taxing those at a 100% rate
could generate over $3bn per year, and is legal. At a minimum
Ukraine could be assured of a recurring stream of income worth
forcing the sale of Russianowned football clubs. But there re 2% of its present gdp. As a oneoff this is peanuts; received each
mains a huge question mark over the really big money. Some year in perpetuity it is well worth having.
$300bn of Russian centralbank assets are frozen in Western ac The second step is to make the payment of reparations by
counts as a result of sanctions. Given the horrors that Russia has Russia a condition of any eventual release of its reserves (or eas
inflicted on its neighbour, the idea of tapping this pot to help ing of sanctions). The two must go in lockstep. Estimates of Rus
compensate and rebuild Ukraine has naturally arisen. sia’s capacity to pay should take account of its frozen reserves:
The moral case to make Russia pay is obvious. It has waged think of them as a bit like collateral being held against a future
war without provocation, without regard to civilian lives and in claim. The g7, a group of rich countries, has recently adopted
frequent violation of international law. The damage to Ukraine this position. The more countries that do so, the better.
has been vast: the cost of reconstruction has hit $411bn, accord Finally, patient, relentless work is needed to expand the legal
ing to the latest estimates from the World Bank, which were case against Russia. It is still possible that a watertight case for
compiled before the destruction of the Kakhovka dam. These immediate seizure can be built. Further votes at the un General
sums are far beyond the capacity of Ukraine, Assembly in favour of this would help: al
which now has a gdp of about $150bn. Western though the assembly can only make recom
taxpayers should not have to foot all the bill. mendations, this can sometimes be deemed a
Yet it is vital that any measures the West standin for the Security Council if the latter
takes comply with international law. For Ukrai fails to exercise its primary responsibility to
nians and their backers, the war is not just maintain international peace and security.
about defending one country against an aggres At the same time, laying the groundwork for
sor but also about upholding the post1945 glo a future reparations process is vital. The arbiter
bal order, which underpins the world’s econ of Ukraine’s claims could be the International
omy and security. Whatever the West does with Russia’s frozen Court of Justice (icj) or a un compensation commission like the
assets will set a precedent that will shape global behaviour for one set up by the Security Council after Iraq’s invasion of Kuwait
decades to come. in 1990. To try to justify its invasion, Russia has claimed that Uk
State assets are protected from seizure under international raine was committing genocide against Russianspeakers in the
law, and typically under domestic law, too (see Europe section). east of the country. Ukraine wisely asked the icj to rule on this,
There are exceptions to this doctrine of sovereign immunity, but and the verdict was clear: there was no such genocide, so Rus
lawyers have advised America and the European Union that they sia’s pretext is bunk. The West should continue to support the
may not apply in Russia’s case. A vote in the un Security Council meticulous recording of war crimes and damage to ensure this
could provide a clear legal basis for seizing the assets, but Russia evidence is available for any eventual financial showdown.
has a veto there. Reparations can be part of a peace deal, but that It would, of course, be simpler just to grab all Russia’s frozen
requires the agreement of both sides. assets; but that is what dictatorships do. Far better to take the le
What to do? The best approach involves three steps. The first gal path, which guarantees Ukraine a stream of income, secures
is to seize the income that the Russian assets generate and hand priority for its claim on Russia’s reserves and enhances its alrea
it over to Ukraine. Euroclear, a Belgian clearing house and de dy strong case for reparations. It is possible to help Ukraine,
pository that holds almost $225bn of frozen Russian assets, make Russia pay—and uphold international law. n
012
12
Letters The Economist July 22nd 2023
some people anxious. Com ulator, blocking investment. In Leftleaning Catholics oppose

Protecting the sea floor mitments to delivering a circu fact, investment in reducing it on the ground of moral
You support deepsea mining lar economy have resonated sewage discharges by English principle. Luckily Giorgia
as a means of easing the short the world over, but we must be water companies is deter Meloni, the conservative
age of battery metals (“Give honest with ourselves that this mined by the Environment prime minister, is a steadfast
nodules the nod”, July 8th). cannot be achieved without Agency’s waterindustry supporter of Ukraine’s cause.
Deepsea mining would see using more metals to close the national environment Bruno Geddo
industrial extraction on a far loop. You cannot recycle what programme, rather than Ofwat. Milan
greater scale than anything on you don’t have. Capital investment in the
land. Modelling suggests that Climate change is the great industry since privatisation in
this could affect up to 1.5m est threat to our oceans and by the late 1980s has been over Changing lifestyles
square kilometres of the Pacif saying no to nodules we tacitly £190bn ($249bn), leading to an Working from home was
ic Ocean’s Clarion Clipperton accept the alternative: more increase in the sector’s asset bolstered by the first wave of
Zone alone, the first area mines on land. That means base from £9bn at privatisa studies indicating it was more
targeted for mining. It would more deforestation and more tion to £94bn in 2023. Progress efficient. Now that the evi
cause irreversible biodiversity toxicity flooding our oceans, on reducing sewage discharges dence is shifting in the oppo
loss on the sea floor where the rivers and communities. We had been impeded by the lack site direction (Free exchange,
metal nodules support over also should not ignore the of accurate measure of their July 1st), it is worth consider
50% of life in the ecosystem. human impact of the mining use. Now this has been ad ing why employees regard
The hydraulic suction process status quo, which is displacing dressed, improved operational remote working as so valuable.
would obliterate the sea floor indigenous peoples and using performance will drive down As well as a commutefree life,
and substrate and create sedi child slave labour to extract the future sewage discharges. it relates to how employees
ment plumes that could travel very same metals that lie We agree that in some cases measure their own wellbeing,
at least a thousand kilometres. unattached on the sea floor companies have been overly specifically to how they un
The green transition does and require no drilling, blast reliant on debt rather than derstand their personal identi
not require minerals from the ing or sacrificing of human raising equity. Ofwat has iden ties. Few of us see ourselves as
deep sea. A 2022 report by lives to collect. tified issues with weak just workers, but define our
SINTEF, a Norwegian research There is a better way and financial resilience in several lives through a constellation of
organisation, finds that the answer is clear. For the companies, including Thames roles; mothers, fathers, care
demand for critical minerals energy transition to succeed Water. We have taken targeted providers, citizens and so on.
can be reduced by 58% with the least impact on the action with these companies Since these identities are more
between 2022 and 2050 environment and human lives, and secured over £3bn of new closely associated with how we
through a combination of new we need to source metals from equity since 2020. regard our lives than our abil
technology, circulareconomy where there is the least life, not Finally, although customer ity to excel at our jobs, the new
strategies and recycling. And the most. bills have risen by around 40% culture of working from home
nickel and cobalt are not need Gerard Barron in real terms since privatisa may prove hard to change.
ed for electric cars. A recent Executive chairman and CEO tion, there has been little or Dr Matthew Dennis
World Bank study concluded The Metals Company no increase in the past decade Assistant professor in the
that with the rapid evolution Vancouver for most customers. This ethics of technology
in the battery sector, fore has been due to falling returns Eindhoven University
casting which technology will to investors rather than of Technology
be the most used from now Ofwat responds reduced investment. Eindhoven, Netherlands
until 2050 is nearly impos Your article on water privatisa David Black
sible. Lithium iron phosphate tion in Britain makes a series Chief executive On the same day I read your
batteries are already well of assertions that do not accu Ofwat article I took my children to
established, leaping from 10% rately reflect how the sector London visit Isaac Newton’s family
of the global EV market share works (“Circling the drain”, home in Woolsthorpe,
in 2018 to 34% in 2022. July 8th). You claim that Lincolnshire. I was reminded
We do not need, and cannot Thames Water’s financial Italian peaceniks that it was during a plague
afford, to mine our way out of issues are exacerbated by high “Putin’s useful idiots” (July induced lockdown that New
the climate crisis. inflation. This, you say, is 8th), a guided tour of European ton returned home and came
Sian Owen because customer bills rise in opposition to the war in up with the theory of gravity
Director line with the consumer price Ukraine, didn’t say anything while sitting under the famous
Deep Sea Conservation index adjusted for housing about the left in Italy. The apple tree. This would appear
Coalition costs, whereas some of Democratic Party, heir to the to be evidence that significant
Amsterdam Thames Water’s debt is linked former Communist Party, is accomplishments can occur
to the (higher) retail price engaged in splitting hairs over while working from home.
Society faces uncomfortable index. As only part of the debt supporting Ukraine. The Five Jonathan Ramsden
decisions over how and from is indexed to inflation, higher Star Movement, Italy’s shrillest Columbus, Ohio
where we source metals for the inflation increases the value of populists, who have perfected
energy transition. The Econo- equity and reduces gearing, the art of pretending to solve
mist should be commended for easing financing issues, the problems by marching in the Letters are welcome and should be
its bravery in coming out in reverse of what you claim. streets, is against the arming addressed to the Editor at
The Economist, The Adelphi Building,
support of collecting deepsea You then attributed the of Ukraine. An assortment of 111 John Adam Street, London wc2n 6ht
metal nodules. The seemingly widespread concern about radical leftists and greens Email: letters@economist.com
ironic logic of tapping the sewage discharges to Ofwat, oppose the war in the name of More letters are available at:
Economist.com/letters
oceans to protect them has left Britain’s waterservices reg abstract pacifist principles.
012
Executive focus 13
012
14
Briefing The American economy The Economist July 22nd 2023
Turning a corner pegged the probability of a recession in the

next 12 months at about 65%. The Confer
ence Board, a business group, put the prob
ability at 99% in February. Stanley Druck
enmiller, Silicon Valley’s favourite macro
economic prognosticator, recently said
that he expects a “hard landing”, involving
a slump in corporate profits and a big rise
WASHINGTO N, DC
in unemployment.
Can America escape the long-predicted recession?
The gloomiest portent has been an ex
A s covid-19 spread throughout the

world three years ago, many pored over
the history of a previous pandemic, the
probably induce a recession. Doves coun
ter that the Fed has already gone too far and
that further economic pain is unnecessary.
treme inversion of yield curves. Normally,
rates on longterm bonds are higher than
on those with short terms because inves
Spanish flu of 191819, for clues about how A third possibility, that the Fed is getting tors expect extra compensation for the risk
the disaster would unfold. Now that the things just right, and that the economy will of holding securities that mature well into
plague has abated, history may also pro slow and inflation dissipate without a re the future. When shortterm yields are
vide a few lessons for the aftermath. As the cession (a “soft landing” in the jargon), was higher, the implication is that investors ex
first world war and the Spanish flu reced until recently seen as nigh on impossible. pect the central bank to cut rates, typically
ed, interest rates were low and government because they think growth is set to weak
spending high. Inflation surged. In order An orgy of tightening en. Inversions have a nearly perfect record
to bring prices back under control, Ameri The odds are still stacked against it. Since in foreshadowing recessions in America
ca’s central bankers cranked rates up, trig March 2022 the Fed has lifted shortterm over the past halfcentury, and they have
gering a severe recession. The Federal Re interest rates from 0% to 5%. Such rapid been screaming trouble for some time
serve described its actions in 1921 as “pain jumps tend to go handinhand with reces now. Yield curves inverted for the first time
ful but…unavoidable” following “an un sions. As higher rates raise the cost of bor in this economic cycle in October 2022,
precedented orgy of extravagance”. rowing, they drag down both spending by and are now deeply upsidedown. The lag
These days Fed officials tend to avoid consumers and investment by companies. from the onset of inversion to the dawn of
the word orgy, but they are wrestling with As a general rule, the bigger the increase in recession averages about 350 days, which
similar circumstances. They have been rates, the bigger the drag. Thus, for much of would put the start of a potential recession
raising rates at the fastest pace since the the past year, the dominant view on Wall in September. The Fed’s New York branch
early 1980s. Hawkish economists argue Street and in corporate boardrooms has calculates the probability of a recession
that, to quell inflation, the Fed will have to been that America’s economy would end based on the yield curve. In May it put the
raise them yet higher, even though that up in a funk. As of June, the median fore odds of one at more than 70%, the highest
would certainly raise unemployment and cast of economists surveyed by Bloomberg since 1982 (see chart 1 on next page).
012
The Economist July 22nd 2023 Briefing The American economy 15
Other indicators confirm this bleak out tant to fire workers. Some may well be

look. Consumer sentiment, as measured Defcon one 1 hoarding them, having found it very diffi
by a closely watched survey from the Uni United States, probability of recession, % cult to recruit enough over the past couple
versity of Michigan, plunged to an alltime In the next 12 months, based on Treasury spreads of years. Instead of firing staff, they are cut
low last year. The collapse of Silicon Valley 100 ting back on hiring. The net result of more
Bank and a couple of other financial insti workers and fewer helpwanted ads is a
Recessions
tutions in March provided evidence that 80 slightly calmer labour market, despite the
the rapid rate hikes are harming vulnerable lack of layoffs. Goldman Sachs calculates
firms, and the ensuing financial instability 60 that there are roughly 3.2m more jobs than
added to economic headwinds. Banks have workers in America at the moment. That is
made their lending standards much strict 40 still above 2m, which it considers the
er, another sign of a looming recession. maximum for a nottootight, nottoo
20
Smaller businesses—the lifeblood of loose jobs market, but the overshoot is well
America’s economy—remain extremely 0 down from its peak of 5.7m early in 2022.
pessimistic. Manufacturing is already con 1960 70 80 90 2000 10 23
As the number of vacancies has declined,
tracting, with output down since late in Source: Federal Reserve Bank of New York
the relentless upward march of wages has
2022. The debate among economists has eased somewhat (see chart 2). Economists
been less about whether a recession is at the doveish end of the spectrum are be
coming and more about whether it will be not on whether unemployment would ginning to trumpet these achievements, if
long or short, deep or shallow. need to go up for inflation to come down, not quite declare victory. “The economy is
In the past couple of weeks, though, the but rather on just how many people would defying predictions that inflation would
mood has shifted. Despite the many ill need to lose their jobs before prices were not fall absent significant job destruction,”
omens, the most important indicator of brought under control. In one muchdis Lael Brainard, head of the National Eco
the economy’s health—the labour mar cussed speech last year, Larry Summers, a nomic Council, said on July 12th.
ket—has remained amazingly resilient. former Treasury secretary, said the jobless Two additional things help explain
The unemployment rate sits at just 3.6%, a rate might need to climb as high as 10%. America’s run of good fortune. First, the
smidgen above a fivedecade low. A brief looming problems were probably overstat
rise in claims for unemployment insur A bacchanal of employment ed because of pandemic oddities. Econo
ance during the spring has petered out. America does have an ultratight labour mists’ models of the probability of a reces
America has added new jobs for 30 consec market: too many companies competing to sion have for months been flashing red.
utive months, lifting total employment to hire too few workers. That would normally But there is reason to think the models may
about its prepandemic level. lead to sharply rising wages and thus high be giving unreliable signals. They are de
At the same time, inflation is receding. er inflation. The obvious way to curb that signed to predict trouble whenever there
In the year to June 2022 consumer prices inflation, in turn, would be to inflict are abrupt shifts in the data. Recently,
leapt by 9.1%. In the year to this June they enough pain on companies through higher though, such shifts have reflected a return
rose by just 3%, the smallest increase in interest rates that they resort to wide to normal after the pandemic, rather than
more than two years. Core inflation, which spread layoffs. But another way to bring incipient economic weakness. People are
excludes energy and food, is higher, but the labour market into balance is to in buying markedly fewer laptops and exer
after a few months of stasis is moving in crease the supply of workers. That has hap cise bikes than they did in 2020, for in
the right direction again. As postpandem pened to a certain extent: fully 84% of stance, not because they are cutting back
ic supplychain snarls untangle, the cost of those of those aged 2554 have jobs or are sharply on spending but because they are
most goods is rising only slowly, and in looking for work, the highest share since not working from home as much. It may
some cases falling. Rents, hitherto a big el 2002. It also helps that immigrants—a vi be, therefore, that manufacturing’s weak
ement of inflation, are falling according to tal, if politically contentious, part of the spell is less a harbinger than a hangover.
private indices, and are likely to start de American labour force—have returned: The yieldcurve inversion could also be
clining soon in the official data, too. La more than 1m arrived last year, the highest misleading. Longterm rates may have fall
bour costs are still rising, but the rate of in figure since 2017. Since February 2020 the en below shortterm ones not because a re
crease has slowed, which bodes well for economy has added nearly 4m jobs, much cession is imminent, but for a far more
the prices of restaurant meals, car repairs, faster growth than the longterm trend. pleasant reason: that as inflation melts
tax accounting and more. Employers, meanwhile, have been hesi away, the Fed will be able to lower rates.
To say that the combination of ebbing Provided it can make those cuts before
inflation and a robust labour market is un growth gives out, it will have a good chance
expected is an understatement: many A modicum of moderation 2 of guiding America to a soft landing.
economists had assumed it was impossi United States The second factor relates to the econ
ble. They had believed that there was a omy’s underlying strength. Monetary poli
Hourly earnings*, Job vacancies per
shortterm tradeoff between jobs and % increase on a year earlier unemployed person cy may be tight, but there are countervail
prices: that, all else being equal, a low un 8 2.0 ing forces. One is government spending.
employment rate is associated with a ris America is running a budget deficit worth
ing inflation rate, a relationship known as 6 1.5 over 5% of GDP—unheard of outside reces
the Phillips curve. In the decade before the sions and wars. That is putting money in
pandemic the Phillips curve had come into 4 1.0 people’s pockets. There are plenty of rea
question, because inflation remained qui sons to worry about the sustainability of
2 0.5
escent even though the jobless rate such fiscal largesse, but, for now, it is a
plunged. But the resurgence of inflation cushion for the economy.
0 0
last year brought the Phillips curve back Several big pieces of legislation from
2001 05 10 15 20 23
into fashion, in part because the labour the first two years of the presidency of Joe
*Median wage growth, three-month moving average
market appeared to have become less effi Sources: BLS; Atlanta Fed
Biden, enacted before Democrats lost con
cient after the pandemic. Debate focused trol of the House of Representatives, are
012
16 Briefing The American economy The Economist July 22nd 2023
also starting to affect the economy. Spend mortgage rates rose sharply in early 2022 imply that roughly 1m people would have

ing on highways, ports, power plants and prompted solely by the expectation that to lose their jobs—no small dislocation.
more, enabled by an infrastructure law the Fed would soon begin raising rates, as The resilience of the economy is, in this
passed in 2021, is worth about 0.25% of GDP indeed it did. The housing industry, argu respect, discomfiting. If the rebound in
a year. Subsidies for electric vehicles, re ably the most ratesensitive part of the housing gains steam, it could easily spur
newable energy and semiconductors ap economy, is now in the throes of a minire an increase in rents and goods prices (all
pear to have catalysed a surge in private bound, with both sales and construction those new homes need sofas, fridges, car
sector investment: spending on manufac beginning to rise (see chart 3). A new finan pets and more). If wages continue to grow
turing facilities is up 70% this year in real cialconditions index developed by the Fed at about 5% annually, they, too, will put a
terms compared with prepandemic levels, suggests that, on balance, the drag on floor under prices in the service sector. Ex
hitting a record high. growth arising from higher interest rates pectations of inflation, although declin
Another countervailing force is house has actually diminished in the past few ing, do not suggest the Fed has everything
holds, whose spending accounts for about months, in part because investors in under control (see chart 4). A feedback
twothirds of GDP. They entered the era of American stocks have anticipated an end loop between a strong economy and sticky
high inflation and rising rates well pre to the cycle of rising rates. inflation would pose a stiff challenge for
pared. During the pandemic they had accu the Fed, leaving it with little choice but to
mulated “excess savings” worth about A debauched degree of listlessness raise rates to new heights—at which point
$2trn, a consequence both of having fewer It is crucial to note that a soft landing does fears of a tighteninginduced recession
opportunities to spend their money and of not equate to roaring growth. Far from it. might well come true.
receiving three rounds of stimulus What is needed to help bring inflation to The absence of a downturn to date has
cheques as well as other forms of govern heel is a period—potentially a long one—of allowed the Fed to avoid confronting any
ment support. Many people have drawn subdued growth, which would lower the serious tradeoff in its tightening. Jerome
down these savings as the cost of living has economic temperature. Such an interlude Powell, the Fed’s chairman, and his peers
risen. Nevertheless, researchers with the may, in fact, be well under way. Although deserve high marks for raising rates as
Fed’s branch in San Francisco estimate that gdp growth has held up well over the past quickly, albeit belatedly, as they have. But it
there is still a residual amount of extra sav few quarters, its close relative, gross do has been easy for them to be resolute given
ings—$500bn or so—enough to last for mestic income (GDI), has been anaemic. In the health of the jobs market. Were condi
most of this year. In any case, these savings theory the two ought to be aligned. GDP tions to deteriorate, their resolve would be
matter less than they used to: for the first tracks all final expenditures in the econ sorely tested. Richard Clarida, a former
time in a few years nominal wage growth is omy, summing up consumption, invest vicechairman of the Fed, says the central
eclipsing the rate of inflation, meaning ment, government spending and net ex bank may ratchet down rates next year
that most Americans now have rising in ports over a specific period. GDI tracks the with inflation headed to a “twopoint
comes in real terms. earnings associated with that expenditure, something destination”, instead of actual
What could go wrong? Policy lags are a summing up wages, profits and any other ly back to its target of 2%. That might help
known unknown that could yet trip up the income. In reality the two never match per to avoid a recession. But it would also rep
economy. Lags refer to the length of time fectly, since they are derived from different resent a shifting of the goalposts, with the
needed for changes in monetary policy to sources. Recently the gaps have been Fed tolerating a higher rate of inflation be
start affecting business activity. Econo unusually large—perhaps another conse cause it does not want to inflict wrenching
mists used to think that it could take more quence of distortions related to the pan economic pain. That, in itself, would make
than two years for a rise in interest rates to demic. Whereas GDP increased by 2% on an it harder to fight inflation in the future.
ripple through the economy. Stricter credit annualised basis in the first quarter of this All these risks notwithstanding, it re
standards have yet to make their impact year, GDI fell by 1.8%. It is not clear which mains remarkable that America has so far
fully felt: for instance, interest rates on number is more accurate, but one common avoided a hard landing. The economy is
credit cards have just started to shoot up, approach to reconciling the two is to split winding its way down a treacherous road
and it may be another few months before the difference. That would imply that from the highest peak in inflation in 40
delinquencies follow them higher. growth is already very low which, in turn, years. Defying conventional wisdom, it has
But cutting against that is evidence may further sap inflation. managed to add millions of jobs during the
that, in some respects, there is much less There are big risks to this rosy outlook. hairraising ride. Its descent is far from ov
of a lag than there used to be, thanks to Inflation could prove stubborn again, as it er. But a soft landing, once a faint hope, is
twitchy financial markets. For example, has for the past two years. Much of the re now among the plausible outcomes. n
cent optimism has been tied to a better
thanexpected inflation reading in June.
Shovels stirring 3 Drawing sweeping conclusions from a sin Down but not docile 4
United States, new single-family housing gle datum is never a good idea, not least United States, consumers’ expectations of inflation
Annualised, m when underlying trends are so volatile. % increase on a year earlier
2.0 Even if inflation falls again in July and 6
August, there are also questions about how
low it will go if the number of vacant jobs 5
1.5
continues to outstrip the number of avail One year ahead 4
1.0
able workers to such a large extent. Olivier
Blanchard, a former chief economist of the 3
Starts
International Monetary Fund, and Ben 2
0.5
Bernanke, a former chairman of the Fed, Five years ahead
Sales estimated in a paper in May that, at the cur 1
0
rent level of tightness in the labour market, 0
2000 05 10 15 20 23 the unemployment rate would need to rise
Sources: Census Bureau; Department 2008 10 12 14 16 18 20 23
of Housing and Urban Development
above 4.3% for some time to bring infla Source: University of Michigan
tion down to the Fed’s target. That would
012
United States The Economist July 22nd 2023 17
Hot cities was made by climate change. But, explains
Mr Crimmins, global warming “pushes all
The sizzling Sunbelt of the normal local weather extremes just a
little bit higher.” Countries elsewhere can
relate. Simultaneous heatwaves have some
academics wondering whether the rate at
which the world is warming is speeding up
(see Science & technology).
PHO E NIX
Yet extreme heat in the Sunbelt is not
Americans are moving to places besieged by extreme heat
convincing Americans to up sticks. Census
A MY SCHWABENLENDER has a frontrow
seat to suffering. From the windows of
her office in downtown Phoenix, she can
California, the hottest place on Earth, to
see if it would get warmer than the previ
ous record of 56.7°C (it didn’t). Researchers
figures suggest that 12 of the 15 fastest
growing cities in America are in the region.
A recent study from Redfin, a property
see rows and rows of tents. Their inhabit in Florida worry that hot ocean tempera platform, finds that the 50 counties with
ants keep inside, hiding from the heat that tures will bleach coral reefs and worsen the highest share of homes exposed to ex
is scorching the desert city. On July 18th hurricane season. tremeheat risk grew by an average of 4.7%
Phoenix experienced its 19th straight day The North American monsoon, which between 2016 and 2020. The five hot coun
with temperatures of at least 43°C (110°F), drenches parts of Arizona and New Mexico ties that experienced the most growth were
breaking an 18day record set in 1974. Ms over the summer, has come late this year. in Arizona, Florida and Texas. Williamson
Schwabenlender runs Phoenix’s Human Michael Crimmins, a climatologist at the County, Texas, which includes Austin,
Services Campus, a consortium of groups University of Arizona, reckons that the ar grew by a whopping 16.3%. Counties with
that serve almost 2,000 people who are rival of El Niño, a warming ocean pattern lots of homes vulnerable to drought, fire
homeless. “There’s people with burns on that affects global weather, may have de and floods also grew, though less rapidly.
various body parts” from the hot pave layed the cooling rains. It is too early to Places with relatively low climate risk ex
ment, she says. “Maybe they fall asleep, know how much more severe the heatwave perienced population declines. Rather
maybe they’re just laying there waiting for than migrating away from the areas most
the next day.” Her voice gets quiet, almost affected by climate change, Americans are
to a whisper. “I don’t know how more peo → Also in this section moving towards them, lured by the pro
ple don’t die,” she adds. mise of lower taxes and house prices than
18 Contraceptive pills
Roughly a third of Americans live in ar in costly coastal metros.
eas where the government has issued 19 The DeSantis campaign Phoenix residents expect their sum
warnings about extreme heat in the past mers to be sweaty. Their city sprawls across
19 Bike sharing
week (see map). These hot cities are in the the Sonoran Desert. Saguaro cacti stand
Sunbelt, or the southern part of the coun 20 Invading Mexico nobly atop mountain ridges like spiked
try, ranging from Los Angeles to Miami. sentries. Scorpions and rattlesnakes scut
21 Lexington: No Labels
Tourists flocked sweatily to Death Valley, tle in the brush. Most people can abide the
012
18 United States The Economist July 22nd 2023
desert heat in airconditioned homes and increase radiant heat. Sunlight that would
offices. But keeping cool is a luxury not have been absorbed into the asphalt may
everyone can afford. instead be cast onto nearby people.
Heatwaves kill more Americans than Growth and sustainability are some
any other weatherrelated disaster. The times at odds. In June, Arizona’s governor,
number of deaths associated with heat in Katie Hobbs, decided to limit construction
Maricopa County, which includes Phoenix, in parts of Phoenix that depend on limited
has risen each year since 2014. And at least groundwater supplies. Rising home insur
42% of the 425 people who died from heat ance rates in Florida and California will
in 2022 were homeless. More than half of make it more expensive to live in areas
the county’s heatrelated deaths last year prone to floods or fires. Unchecked growth
involved methamphetamine, a stimulant in places prone to extreme heat will in
that can increase body temperature. In crease heatrelated deaths, argues Vivek
Phoenix, heat, homelessness and drug use Shandas, who studies climate adaptation
have become a lethal combination. at Portland State University. “We’re going
David Hondula, who runs Phoenix’s to see two trains heading on different
new Office of Heat Response and Mitiga tracks right at each other.”
tion, reckons that a hotter city does not Mr Shandas’s trains may already be in
have to be more dangerous. Hot cities motion. As your correspondent drove
around the world—including Los Angeles, through Buckeye, Arizona, she spotted two
Miami and Athens—are appointing chief billboards representative of the Sunbelt’s
heat officers. These officials have two main perverse climatemigration paradigm. Opill needs to be affordable. Perrigo, the
jobs: to coordinate emergency response to Along the highway, one sign warned driv company that makes it, has yet to disclose
heatwaves, such as opening cooling cen ers that it was 11:33am and already 106°F its price and private health insurers are not
tres and distributing water; and to plan (41°C). On the next stretch of road was a required to cover it (though an executive
how to adapt to a hotter future, largely by sign advertising brand new homes. n order issued in June suggests that Presi
diminishing the urban heatisland effect. dent Joe Biden may try to change that).
City centres can be up to 1015°C hotter than At the right price, nonprescription
surrounding rural areas because buildings Reproductive politics pills could increase liberty. Claudia Goldin
and roads absorb and trap heat. of Harvard University found that when
There are several strategies cities can Pill pushers contraceptives became widely available in
use to cool down. Some are technical, such the 1960s, women stayed in school longer,
as painting asphalt with a reflective coat boosting the economy. Today, 12% of sexu
ing to repel, rather than absorb, sunlight, allyactive women, and 14% of poor ones,
or using different building materials. do not want to get pregnant but do not use
NEW O RLEANS AND WASHINGTO N, DC
Others are environmental, such as plant contraceptives. Though the impact will be
The FDA approves the firstever
ing more trees for shade. Phoenix likes smaller now, it could still be significant.
nonprescription birthcontrol pill
them all. Some streets around the city Kristan Hawkins, the boss of Students
shimmer with their new reflective coat
ings. Downtown’s municipal code requires
new developments to provide shade.
I f the decision was sobering, the con
curring opinion was chilling. When the
Supreme Court overturned Roe v Wade,
for Life, an antiabortion outfit, thinks the
pill will give women a false sense of securi
ty, leading to more, not fewer, abortions.
“There’s no reason we can’t have a Phoenix making states the new arbiters of abortion She points to a 2014 analysis by the Gutt
of the future that’s more comfortable than policy, Justice Clarence Thomas laid out a macher Institute, a prochoice research
the one we have today,” says Mr Hondula. blueprint for what could come next. Har group, that found that 51% of abortion pa
Officials will face hard choices. Places nessing the same legal logic that the court tients used birth control in the month they
reckoning with water scarcity must weigh used to topple Roe, he called on his col got pregnant, as evidence that women mis
planting trees for shade against the water leagues to do away with a trio of other prec use contraceptives. Yet to get FDA approval,
needed to irrigate those trees. Reflective edents. Among them was Griswold v Con- Perrigo proved that consumers use Opill
pavement reduces the surface tempera necticut, a 1965 case that established a mar safely and effectively without doctors’ in
tures of streets, but the coatings seem to ried couple’s right to buy contraceptives struction. Still, Ms Hawkins says the pro
without government restriction. Wide liferation of the pill will empower rapists
eyed progressives braced for abortion bat to slip it into their victims’ drinks to cover
Hotter than July tles to morph into a war over birth control. up their crimes and will lead to higher rates
United States, July 19th 2023 Prolifers have been mulling going after of sexually transmitted infections and de
the contraceptive pill, but an organised of pression among girls. (There is some evi
Excessive heat warning
Excessive heat watch Heat advisory
fensive to purge pharmacies of it has yet to dence for the latter two claims.)
materialise. Doing so will soon become The impact of Opill will be dulled if
harder. On July 13th the Food and Drug Ad women are wary of it. In places where abor
ministration (FDA) approved Opill, the tion is taboo, conspiracies are particularly
eath Valley, CA
Death firstever nonprescription birthcontrol potent. The nurse practitioner at Woman’s
pill. Come early 2024, women will be able New Life Clinic in New Orleans warns pa
Phoenix, AZ
to order Opill online or pick it up from drug tients that the pill is linked to cancer and
stores without a doctor’s signoff. says condoms disrupt vaginal pHlevels.
Miami, FL Liberals see this as an antidote to abor More than threequarters of American
Los Angeles, CA tion restrictions. Making contraceptive women of reproductive age favour making
Austin, TX pills more readily available should result birth control available over the counter.
Source: National Oceanic and Atmospheric Administration
in fewer unplanned pregnancies. But for But those who need it most may be least
this to be a practical option for women, likely to bring it to the till. n
012
The Economist July 22nd 2023 United States 19
The Republican primary dy reached this limit for the primaries. Mr more than Mr DeSantis. Because Mr Trump

DeSantis can use future donations from relies on a fundraising committee with dif
Big-donor these individuals (up to an extra $3,300) ferent reporting deadlines the true number
only on his generalelection campaign, won’t be revealed until the end of July.
populism should he make it that far. But some of his The DeSantis campaign’s financial state
bigdollar donors have already hit both will become clearer then, too. Super PACs—
caps: $3m of his remaining $12.2m funds which can take unlimited donations from
are reserved for the general election. undisclosed donors on behalf of cam
Ron DeSantis is relying on big donors
Under his campaign’s current weekly paigns so long as they do not coordinate
and his super PAC
spending rate ($1.5m) Mr DeSantis will with them—have the same July 31st filing
F or Ron DeSantis, whose presidential

campaign began in earnest eight weeks
ago on a glitchy Twitter livestream, even
need to raise around $33m during the re
mainder of 2023 if he hopes to reach the Io
wa caucus with cash in hand. His cam
deadline. “Never Back Down”, a DeSantis
aligned super PAC, is allegedly flush with
cash. But without coordination between
good news seems to be bad news. Newly re paign has already laid off some staffers in the campaign and super PACs, efficient use
leased data from the Federal Election Com order to rein in spending. of these funds is tricky. And come January,
mission (FEC) show the Florida governor The next few weeks could bring the De it will be the individual donors, not the su
outraised Donald Trump during the second Santis campaign worse news still. Though per PACs, who shuffle into ballot boxes to
quarter and raised some 43% more than his Mr Trump’s FEC filings report fundraising decide their 2024 Republican nominee. Mr
competitors Nikki Haley, Tim Scott, Chris of $17.7m, the former president claims he DeSantis would do well to woo them even
Christie and Mike Pence combined. But has raised $35m in the second quarter, 75% if their wallets are slimmer. n
these splashy fundraising numbers dis
guise a looming problem for Mr DeSantis:
Bicycle hire
an overreliance on bigdollar donors.
From May through June Mr DeSantis
raised $20.1m and spent $7.9m, a burn rate
Slow puncture
of 39%. Compared with the same period
CHICAGO
during the 2020 election cycle, this seems
Urban transport meets the venture-capital cycle
modest. During the second quarter of 2019,
Mr Trump’s campaign had a burn rate of
40%, and thenfrontrunners of the Demo
cratic primaries Bernie Sanders and Joe Bi
O ver the past decade not many cities
in America have won as many plau
dits for investing in bike infrastructure
den both slightly exceeded 50%. as Minneapolis. Thanks to its extensive
But those fundraising juggernauts, un network of bike lanes, in 2015 it became
like Mr DeSantis, relied heavily on small the first (and so far only) place in Amer
dollar donors—individuals who pledge ica to win a place on the Copenhagenize
less than $200 to a campaign. These con Index, a list of the world’s 20 most bicy
tributions matter not only because they clefriendly cities. Yet that was not
help line campaign coffers, but because enough to save the city’s 13yearold
smaller donations from more people sug docked bikeshare system. In March Lyft,
gest greater enthusiasm for the candidate. the taxi firm which operated the scheme,
During the second quarter of 2019, 70% of known as Nice Ride, announced that
Mr Sanders’s fundraising came from small because a sponsor had dropped out, it
dollar donors compared with Mr DeSan would close, and that they would begin
tis’s 14% during the same period this year. removing the equipment.
A reliance on bigdollar donors can be Cycling is booming across America.
hard to sustain. Fewer people have lots of Bikeshare schemes, too, have been
money to give and campaignfinance law thriving. According to the Bureau of
caps individual contributions at $3,300 per Transportation Statistics, usage of six of Tour de Williamsburg
candidate per election. Nearly 70% of do the largest docked systems nationwide
nors to the DeSantis campaign have alrea increased by 42% from March 2020 to the first to go. But docked schemes are
March 2023. Last year New Yorkers took now suffering too, especially outside the
just under 30m rides on the Citi Bike biggest cities. In Minneapolis, the fact
Raise and tell scheme there; in Chicago, the Divvy that the bikes did not function during
United States, presidential campaign scheme had 6.3m riders, up nearly 40% winter may have contributed to the
funds raised, April-June, $m on 2021. And yet many schemes, like that system’s demise. Lime, which is profit
in Minneapolis, are closing. In 2019, 109 able, is one of the firms filling the void.
2019 2023 cities were served by a dockedbicycle Schemes like New York’s or Chicago’s
hire scheme; that has now fallen to 56. are not at risk of closure. But bike ad
0 10 20 30 0 10 20 30 What is going wrong? vocates accuse Lyft, which runs those
Trump* DeSantis The basic problem, says David Spiel two systems, of not maintaining non
Sanders Biden* fogel, the chief business officer of Lime, electrified bikes in order to push riders
Biden Trump which operates dockless bikes and scoot onto pricier ebikes. For nonmembers,
Warren Scott ers, is that the boom, funded by venture hiring an ebike can rival the cost of a
Harris Haley capital, is deflating like a punctured tyre, taxi (members who pay an annual fee get
Klobuchar Christie and too many operators “haven’t figured cheaper rides). While demand stays high,
Yang Pence out how to run a profitable business”. that might sustain networks. But it will
Source: Federal Election Commission *Incumbent
Docklessbike firms (Lime aside) were hardly accelerate the boom.
012
20 United States The Economist July 22nd 2023
A new MexicanAmerican war proposition (see chart). Democrats are

largely unchanged, with about 70% regard
How Mexico has become the “enemy” ing their southern neighbour as an ally.
The Republican disenchantment has
grown in the past year.
At least three factors may be at play. The
first is frustration over fentanylrelated
deaths, which rose sharply in 2020 and
WASHINGTO N, DC
2021. The drug has become the biggest kill
Many Republicans want to use military force against drug cartels
er of Americans aged 1845, responsible for
M ore than once, as president, Donald

Trump mused about firing missiles at
the drug labs of Mexican cartels. “No one
Enamigos
“Do you consider Mexico to be an ally or
most of the 70,000 deaths from overdoses
of synthetic opioids in 2021. Second, sug
gests Mark Jones of Rice University, the de
would know it was us,” he declared, before an enemy of the United States?” feat of Mr Trump “unshackled” Republi
being talked out of the idea. Mark Esper, % of US Republican registered voters replying cans, freeing them to denounce President
the then defence secretary, recounted the 80 Joe Biden for his handling of the border.
incident in his memoirs published last “There is no better issue for Republicans,”
year, astonished that bombing a neighbour Ally 60 he says. “It mobilises their base. And it
could be seriously thought of. splits Democrats: whatever Joe Biden does
Now the extraordinary is becoming 40 will seem too fascist by the left and too per
more commonplace as Republicans argue Enemy missive by centrists.”
that greater use of military force, or the 20 A third factor, adds David Frum, a writer
threat of it, can help control America’s Not sure and former speechwriter for President
southern border and curb the smuggling of 0 George W. Bush, is the war in Ukraine. Giv
fentanyl, a synthetic opioid that is pro 2017 18 19 20 21 22 23
en the MAGA movement’s hostility to Uk
duced illegally in Mexico. Source: YouGov
raine and sympathy for Russia—a position
One congressman, Michael McCaul of that runs against many voters’ views—de
Texas, has introduced a bill to classify fen nouncing Mexico allows them to cast
tanyl as a “chemical weapon”. Lindsey Gra Mexico’s president, Andrés Manuel López themselves as “guardians of the country”.
ham, a senator from South Carolina, is Obrador, a leftwing populist who got on Such policies are gaining an intellectu
pushing one to designate Mexican cartels with Mr Trump, took issue with the milita al underpinning through a network of
as “foreign terrorist organisations”. Dan rist talk, saying: “In addition to being irre Trumpleaning thinktanks preparing for a
Crenshaw and Mike Waltz, congressmen sponsible, it is an offence to the people of future administration. A paper by the Cen
from Texas and Florida respectively, have Mexico, a lack of respect for our sovereign tre for Renewing America, entitled “It’s
proposed another that would authorise “all ty.” He warned that he might urge Mexican time to wage war on transnational drug
necessary and appropriate force” against and Hispanic voters not to cast their bal cartels”, is reported to have caught the at
foreign states, organisations or people lots for Republicans. tention of Mr Trump, among others. Its au
linked to trafficking fentanyl. The antiMexican mood on America’s thor, Ken Cuccinelli, argues that America
Republican presidential candidates, right is hardening, moving beyond Mr should be free to take military action in
too, are talking tough. Ron DeSantis, the Trump’s cheap shots against migrants in Mexico given that its government does not
governor of Florida, has suggested a naval 2015, when he said “they are bringing fully control its territory. Never mind that
blockade of Mexicobound shipping to halt drugs, they’re bringing crime, they’re rap it would stir deep antiAmericanism, or
the import of fentanyl precursor chemicals ists.” According to tracking polls by You that treating Mexico like a failed state
from China. Nikki Haley, a former ambas Gov, Republican voters are fast turning might turn it into one. “Mexico is not a
sador to the UN, has proposed sending in against Mexico. Roughly as many think friend. It is complicit in the drug cartels,”
special forces with a warning to Mexico: Mexico is now an “enemy” as consider it an says Mr Cuccinelli. “It’s time to acknowl
“Either you do it or we do it.” Tim Scott, the “ally”, with about 45% supporting each edge that the relationship has changed.” n
other senator from South Carolina, de
clared in May, “I will allow the world’s
greatest military to fight these terrorists.”
Tucker Carlson, a former Fox News host
beloved by America’s hard right, goes fur
ther, regarding Mexico as an outright foe.
On July 14th, while interrogating Republi
can presidential hopefuls (minus Mr
Trump) at the Family Leadership Summit,
a gathering of religious conservatives in
Iowa, he grilled Mr Scott about his support
for Ukraine: “No Americans killed by Rus
sia. Hundreds of thousands killed by Mex
ico. But Mexico is our ally and Russia is our
enemy—how does that work?” Mr Scott did
not demur from the idea that Mexico was
an enemy, but said America could deal
with Russia and Mexico simultaneously.
Many Mexicans feel they are again the
piñata of America’s election season, freely
beaten by any politician. Earlier this year Not high enough, apparently
012
The Economist July 22nd 2023 United States 21
Lexington Manchin in the muddle
The real justification for Joe Manchin’s thirdparty flirtation is actuarial and pragmatic, not idealistic
peared at a townhall meeting organised by No Labels alongside a
Republican, Jon Huntsman, a former governor of Utah, exambas
sador to Moscow and Beijing, and past presidential candidate.
“I truly believe that all 435 people elected to Washington want
to do good,” Mr Manchin said when asked about a radical House
member. But the “business model” of both parties leads politi
cians to motivate supporters by creating or exaggerating division
rather than compromising. Through No Labels, he said, “We can
talk about the real problems. We don’t have to villainise the other
side just because they might think different than I do.”
All of this is driving some Democrats crazy. The more sensible a
No Labels candidate sounds, they fear, the more he will undercut
Mr Biden’s advantage among sensible people. They argue that
polling shows more Republicans identify with their party’s ex
treme than Democrats do with theirs, meaning a centrist candi
date will take fewer votes from Mr Trump.
No Labels insists its polling shows it would hurt Mr Trump at
least as much. It says it will field a candidate only if, after the Super
Tuesday primaries next spring, the choice does come down to Mr
Trump and Mr Biden, and only if the No Labels candidate has a
clear shot at winning. “Those are deeply subjective judgments,”
warns Matt Bennett of Third Way, a centrist Democratic group or
N othing in American politics is more quixotic than a third
party presidential campaign. Thus, to political insiders, noth
ing is also more pathetic or else more cynical: in the best case, the
ganising against No Labels, “and so far at least we have no faith
they are making those judgments correctly.” The day Mr Manchin
turned up in New Hampshire, some political luminaries opposed
campaign is detached from reality, and in the worst (and, to insid to Mr Trump launched Citizens to Save Our Republic, a super PAC
ers, the more probable case, since this is politics for God’s sake) it dedicated to fighting No Labels. The Arizona Democratic Party is
is serving some hidden motive, some interest in the shadows. suing to keep No Labels off the ballot there.
Yet, because nothing is more quixotic than a thirdparty cam Unfortunately for those opposed to No Labels, such machina
paign, might it not actually be the most idealistic expression of tions are classic grist for the thirdparty idealism mill. In New
American politics? Americans may have elected only one candi Hampshire Mr Huntsman remarked that he had previously heard
date to the presidency from a third party, but he was Abraham Lin only Russian and Chinese officials discourage more political par
coln. And good thirdparty politicians always seem so pure. They ticipation. Mr Manchin argued that fear of No Labels would force
know the odds are stacked against them, but they also know Amer the Democratic Party to embrace more centrist positions. “Why
icans yearn for something different, for big ideas and hard truths. are they scared that they may be threatened to do the right thing?”
It sounds good to anyone who is in fact yearning for something he asked. “Why are they scared to say, ‘Hey, you’re too far to the left
different, which is pretty much everyone who is not an insider. and it doesn’t make any sense’?”
Enter Senator Joe Manchin, Democrat of West Virginia, one of
the more cynical American politicians or possibly one of the more Better angles
principled, weighing a thirdparty bid in the latest twist of a presi Yet No Labels is also playing games. As a nonprofit organisation,
dential melodrama no strikebreaking screenwriter could pitch it is not obliged to disclose its donors and it does not. Struggling to
with a straight face. Whatever further criminal indictments, mis defend that practice, Mr Manchin fell back on saying that Repub
laid cocaine, unacknowledged grandchildren, unvaccinated Ken licans and Democrats also benefited from “dark money” and that
nedys, oldage pratfalls or attempted Russian coups may yet he would vote, if given the chance, to do away with it.
await, Mr Manchin’s eventual choice could prove decisive. There is no reason to doubt the sincerity of Mr Manchin or No
Craggy and folksy, Mr Manchin has won in a state Donald Labels in seeking more public debate about the national debt, the
Trump carried twice by about 40 points, but by casting votes that need for national service or the decline of patriotism. But after the
made progressives despise him. What Mr Manchin has seen as attack on the Capitol, only cynical political calculation could pin
wise positions for an oldschool bluecollar Democrat from coal point the sensible centre of American life as equidistant from both
country, they have seen as evidence of racism, truckling to special parties. A party in thrall to Donald Trump is dangerous in ways a
interests and egomania. As the spotlight of presidential specula party resigned to Joe Biden is not.
tion shines upon him, Mr Manchin is doing nothing to dispel that In fact, some of his Democratic colleagues acknowledge, Mr
last suspicion. A fellow Senate Democrat, Dick Durbin of Illinois, Manchin deserves credit for blocking Mr Biden from moving far
recently called him “America’s biggest political tease”. ther left in the heady years when Democrats had majorities in both
If Mr Manchin runs for president, he would do so as the candi chambers, and for helping achieve landmark bipartisan legisla
date of No Labels, a centreleft organisation that argues Americans tion. Partly thanks to Mr Manchin, Mr Biden can justly claim to be
are dissatisfied with their emerging choice, between President Joe the centrist’s alternative to Mr Trump. Only should Mr Biden’s
Biden and Mr Trump. The group intends to raise tens of millions of health fail might Americans be lucky to have No Labels on the bal
dollars and petition its way onto the ballot in every state. On July lot (though Mr Manchin is 75). That is the only real argument for
17th, in the early primary state of New Hampshire, Mr Manchin ap this third party, and it is the most coldblooded one imaginable. n
012
Reap the benefits of effective
business communication
Empower your team to write with clarity and concision
From reports and memos to presentations and social-media posts,

compelling communication can bring your organisation to life.
Benefit from a tailored approach and group offers on our

executive-education course.
Find out more about team learning at:

economist.com/course-writing
012
The Americas The Economist July 22nd 2023 23
El Salvador’s wouldbe dictator out their permission],” says Miguel, a shop
owner in Sonsonate, a small town 65km
How to dismantle a democracy (40 miles) from the capital, San Salvador.
Violence was routine. Three gangsters
murdered Miguel’s sister because she
broke off a relationship with one of them.
Since Mr Bukele locked up the thugs, life
has grown easier, he says. His murdered
SO NSO NATE
sister’s daughter, whom he adopted, can
Power-hungry leaders in other countries will learn from Nayib Bukele
walk around without worrying.
T o understand why El Salvador’s presi
dent is so popular—and why aspiring
autocrats elsewhere are likely to copy his
February 2024. His critics fear he is build
ing a dictatorship—a notion he does not
exactly dispel when he dubs himself “The
The state of exception was supposed to
last 30 days, but has been extended 15
times. Prisoners will eventually have trials,
ostentatiously brutal methods—it helps to World’s Coolest Dictator”. the government says, but so far they have
visit one of the neighbourhoods he has The gang crackdown began in earnest in had only pretrial hearings, where dozens
made safer. Until recently, criminal gangs March 2022, after 87 people were murdered or even hundreds appear simultaneously
controlled huge portions of this small Cen in a single weekend, apparently after a deal before a judge, sometimes by video link.
tral American country of 6.3m, terrorising between gangs and the government broke Whole batches are charged with “illicit as
locals. A study by the central bank and the down. Mr Bukele declared a “state of excep sociation”. This need not mean belonging
UN Development Programme in 2016 esti tion” (ie, emergency). He let the police ar to a gang. It could mean knowingly receiv
mated that extortion payments added up rest anyone they suspected of gang ties, ing a “direct or indirect benefit” by having
to 3% of GDP, and the total annual cost of even if the only evidence was a tattoo or an relations “of any nature” with one. Mr Bu
gang violence, including the lost income of anonymous tipoff. More than 71,000 peo kele has raised the maximum sentence for
people deterred from working or invest ple—a number equivalent to around 7% of “supporting” a gang from nine years to 45.
ing, was a staggering 16% of GDP. male Salvadoreans aged 1429—have been El Salvador now locks up a higher share of
In 2019 Salvadoreans elected a then 37 rounded up and tossed into overcrowded its people than any other country.
yearold president, Nayib Bukele. Like jails. Humanrights groups are outraged, Of those arrested so far, 6,000 have
most candidates, he promised to crack but most Salvadoreans are delighted. been released, says Gustavo Villatoro, the
down on gangsters. Unlike his predeces “Before, this neighbourhood was ruled security minister. Asked if any more of the
sors, he has done so on such a scale that by a gang, and you couldn’t leave it [with detainees might be innocent, he says the
most are either locked up or in hiding. He police and prosecutors are working hard
hopes to parlay that success into a consti “every day” to gather the necessary evi
tutionally dubious second term. On July → Also in this section dence to determine who is guilty. Trials
9th his party, New Ideas, announced that (which have not yet started) will be con
26 What Latin America thinks
he would be their candidate at elections in cluded within two years, he says. He adds
012
24 The Americas The Economist July 22nd 2023
that the crackdown will continue until eve gested he had been beaten.
ry last gang member is locked up: there are, More popular than the pope 2 Ingrid Escobar, a lawyer who works to
he reckons, perhaps 15,000 more to catch, Views of selected figures’ leadership release detainees, describes prison condi
many of whom have fled from the country. Feb-Apr 2023, 10=very good tions as “inhumane”. Mr Bukele does not
Tossing aside due process is an essen Nayib Bukele Pope Francis try hard to rebut such allegations. On the
tial part of Mr Bukele’s strategy. Previously, 0 2 4 6 8 10 contrary, he has posted pictures on social
when a gangster swaggered into a shop and Honduras media of nearly naked inmates packed to
demanded protection money, the owner Guatemala gether like tattooed sardines. For the fam
knew that to refuse was to court death. He El Salvador ilies of the disappeared, this adds insult to
could call the police, but if he testified he Ecuador trauma. But many other voters are happy to
would be murdered and if no one testified Latin America see their former tormentors suffer.
there would not be enough evidence to Venezuela Mr Bukele is a talented showman. His
lock the gangster up. Chile father was a celebrity imam; his family
Now, if a gangster swaggers down the Mexico owns an advertising business. He grew up
street, anyone can get him locked up with Brazil
steeped in the art of lively, emotive persua
an anonymous phone call. This completely Source: Latinobarómetro
sion, not necessarily tethered to facts. On
changes the balance of power in previously Twitter, Facebook, TikTok and YouTube he
gangdominated neighbourhoods. “Be curates his image as the “CEO of El Salva
fore, the good people were afraid. Now, the countries with weak institutions could co dor” and the “Philosopher King”. Shunning
bad people are,” says Miguel. (However, he py. Call it: how to dismantle a democracy suits, he turns up to meetings in jeans and
asks that The Economist use a pseudonym.) while remaining popular. a baseball cap. He boasts of sharing a birth
El Salvador’s homicide rate was already Start with the innocents. Not far from day with Simón Bolívar, the liberator of
falling: from 106 per 100,000 people in 2015 Miguel’s neighbourhood, on a road to a pri much of South America from Spanish rule.
to 51 in 2018 (the year before Mr Bukele was son, makeshift stores have popped up sell
elected) and 18 in 2021 (before the state of ing items for care packages. Families can Hard cell
exception began). Nonetheless, it is almost buy underwear, soap and other basics to When critics accuse Mr Bukele of flouting
certain that the crackdown contributed to a send to loved ones behind bars. Those cap norms, he revels in his transgressions. For
further halving (see chart 1). El Salvador tured under the crackdown receive 1,800 example, his government invests in
had eight murders per 100,000 people in calories per day in prison, the government cryptocurrency. The only public guide to
2022, a rate only slightly worse than in the says—less than the 2,100 doled out to other how much it has bought is the president’s
United States. prisoners. It suggests that families send tweets. Sticklers for transparency com
This is such an improvement that, in a $150 worth of supplies every two weeks. plain. Mr Bukele boasts that he buys Bit
new survey from Latinobarómetro, a poll But many cannot afford it. Prisoners are coin (with public money) on his phone,
ster, the share of Salvadoreans who think rarely middleclass. Over half the popula while in the toilet. He announces new poli
crime is the country’s biggest problem is tion earns less than $328 a month. cies via social media. State outlets amplify
just 2% (see next story). This helps explain “Maria”, the mother of a young man his message; paid trolls deride his critics,
why most polls put Mr Bukele’s approval who was arrested along with his wife last according to an investigation by Reuters.
rating above 80% and some put it around year, insists that both were blameless. Amparo Marroquín of the University of
90%. No other leader in Latin America “Someone denounced him. I don’t know Central America in San Salvador reckons
comes close. Some of those polled in other who,” she says. Cops grabbed the couple, that the president needs just 12 hours to
countries like him even more than Salva roughed them up and accused them of as have everyone talking about a topic. By
doreans do. He even beats the pope in sociating with MS13, one of the country’s contrast it takes the opposition 500 hours.
much of the region (see chart 2). two main gangs. Maria learned about it While dazzling voters with his charm,
Yet his war on gangs has three enor when relatives showed her a picture of the Mr Bukele has steadily removed checks on
mous downsides. First, many innocent pair uploaded to Facebook by the police. his own power. He won over the army and
people have been incarcerated. Second, it She says her son was given two hearings police with lavish benefits. Then he me
has given him an excuse to accumulate im as part of a large group, but nothing resem thodically asserted control over all three
mense powers, and he is not finished yet. bling a proper trial. So far, he has been branches of government, wagering that the
Finally, he has created a formula that polit locked up for more than a year, and she has public wouldn’t mind ceding new powers
ical opportunists in other crimeridden been given “no information at all” about to a man waging war on crime. In 2020
his case. Maria’s husband makes $12 a day Congress refused to approve the hefty
as a driver; she makes about the same sums he wanted for his security plan, so he
Guns fall silent 1 amount, but only some days, working in a marched into the chamber with soldiers
El Salvador, homicides per 100,000 population shop. At first they sent him care packages, and accused lawmakers of thwarting the
120
but now they can no longer afford to do so. people’s desire for public safety. In 2021 his
Gov’t & As she talks, a truck rolls by, packed party won a supermajority. In June it
gang truce 100 with young men in white Tshirts and passed a law to reduce the number of seats
handcuffs. A few minutes later, another in the legislature from 84 to 60 and turn
80 truck passes with a similar load. Then an the country’s 262 municipalities into 44
Nayib Bukele
60 other. From time to time, ambulances has districts. Critics say he has tweaked rules
takes office ten in the other direction. Weeping, Maria to benefit his own party.
in June
40 says she has seen her son eight times since When El Salvador’s courts tried to re
his arrest: usually no more than a glimpse strain Mr Bukele, he first ignored and then
20
as he is taken to a hearing or some other gutted them. In 2020 the constitutional
0 destination—she doesn’t know where. court ruled that emergency powers he as
2010 12 14 16 18 20 22
Once she visited him in hospital, but was sumed during the pandemic were illegal.
Source: National Civil Police
not allowed to talk to him. He appeared He wielded them anyway. Once he had a
malnourished, and with injuries that sug majority in Congress, he pushed aside the
012
The Economist July 22nd 2023 The Americas 25
judges of the constitutional court and the This is true, but Mr Bukele’s crackdown Backed by the Guatemalan establishment,

attorneygeneral, who was investigating is different. He has locked up much larger she faces a runoff against a liberal oppo
Mr Bukele’s ministers for embezzling numbers of people, on flimsier evidence, nent on August 20th—and the elite may yet
funds, replacing them with yesmen. He and apparently plans to keep them locked block him from running.
forcibly retired a third of the country’s up until they are old men. Mr Bukele has The Bukele formula is especially ap
judges and replaced them with yesmen, built a prison designed to hold more in pealing to political insurgents. In Ecuador,
too. The way he did so was unconstitution mates than any other in the world, on 23 which holds a snap presidential election
al, says Antonio Durán, a judge. hectares of a 140hectare site in the east of on August 20th, one wildcard candidate is
Mr Villatoro says the old legal system the country. Keeping that many people be Jan Topic, a selfdescribed former Foreign
gave too much weight to criminals’ rights, hind bars costs a lot—perhaps $1.5bn per Legion sniper who rose from obscurity by
and not enough to those of honest people. year, according to Mr Villatoro. But Mr Bu promising to get tough on gangs. He tours
Another senior official observes that Mr kele is saving money for the state by lean the country in a helicopter to the sound
Bukele’s crackdown would not have been ing on families to pay for inmates’ upkeep. track of “Top Gun”, wearing a camouflage
possible without “many conditions”. Had And in the new megaprison, inmates will jacket. Flying over a notoriously violent
he not got “rid of these judges...from the have to grow their own food. prison, he told inmates: “The party is over.”
constitutional [court] in the past, all this It is possible that Mr Bukele’s erratic He praises Mr Bukele. Asked about alle
state of exception would have been de economic management might derail his gations of humanrights violations in El
clared unconstitutional”. project. El Salvador’s government debts are Salvador, he responded: “It is possibly true,
an eyewatering 76% of GDP. The president but I don’t know for sure. What I do know is
Go straight to jail often splashes out on popular things, such that since Bukele came to power, the num
The war on gangs offers a handy excuse to as a big pension rise and a hospital for pets. ber of homicides per 100,000 inhabitants
intimidate journalists, too. A law passed in Measures touted as shoring up public fi has dropped from 36 to zero.” Despite Mr
2022 allows ten to 15year jail terms for nances have sometimes involved sleight of Topic’s hyperbole, this is a message many
those who transmit or reproduce messages hand. The government blocked the IMF Ecuadoreans want to hear. Polls suggest
“created or allegedly created” by gangs that from publishing its most recent staff re their biggest worry is crime. The homicide
could foster “anxiety and panic”. Indepen port on El Salvador, making foreign lend rate more than quadrupled between 2018
dent media fear this could be used to lock ers nervous. But José Luis Magaña, a local and 2022, to 26 per 100,000.
away anyone whose reports annoy the gov economist, says Mr Bukele has such un
ernment. Mr Bukele has suggested that cer trammelled control of the public finances Security without liberty
tain reporters want his crackdown to fail. that he can keep funding his priorities well In Haiti Ariel Henry, the prime minister,
Those he singles out for criticism have re beyond the next election. signed an agreement in June for El Salva
ceived torrents of threats. Several reporters No country has yet adopted the Bukele dor to open an office in PortauPrince to
have fled from the country. formula in its entirety, but several have help the Caribbean country tackle its gang
The next crackdown, Mr Bukele prom borrowed parts of it. In November Hondu crisis. One government prosecutor has
ised in June, will be on corruption. So far, ras declared a state of emergency to tackle been filmed shooting a gang suspect; he is
not much has happened, besides the con gangs, and plans to build a prison on an is touted as a potential next president.
fiscation of an allegedly corrupt former land off the coast. Jamaica also declared A few foreign fans have reconsidered.
president’s property. But the implication is one to crush gangs in its capital. In Guate One young Colombian who moved to El
plain. If people can be arrested for white mala a minor presidential candidate, Salvador because he liked the sound of Mr
collar crimes as easily as they can be arrest Amílcar Rivera, copied Mr Bukele’s back Bukele was arrested on his first day in the
ed for gang ties, the middle and upper wards baseball cap; a major one, Sandra country, with a friend who had been there a
classes had better watch out. Defying the Torres, vowed to build two megaprisons. couple of months, after police found their
government, or even refusing to pay bribes tattoos suspicious. Their heads were
demanded by corrupt officials, could be shaved and they were crammed in a cell
come dangerous. “There is no rule of law,” with 500 other men. Only when the men’s
says a businessman. “They can take you for families kicked up a fuss in the Colombian
anything.” He says he wants to leave the press did the Salvadorean authorities let
country, “even if it means washing plates”. them go. Mr Bukele’s media team took
Celia Medrano, a humanrights activist them to a restaurant and a nightclub, film
who plans to run on an opposition ticket ing them dancing and then persuading
for the elections in February, frets that Mr them to tell the camera that they had been
Bukele is removing restraints on his power held for breaking workvisa rules and it
far more quickly than, say, the dictator of was all fine. The young men waited till they
nearby Nicaragua did. “What took 20 years were home before giving the true account.
[there] is happening here in two years,” she It is hypothetically possible that Mr Bu
laments. “He wants a oneparty state,” says kele is amassing extraordinary powers
Ms Escobar. He also appears to be cultivat only temporarily, and plans to relinquish
ing a family firm. Three of his younger them when he thinks the gangs have been
brothers are his closest advisers. crushed. But it is hard to think of a leader
Some critics, from Crisis Group, a anywhere who has swept aside term limits
thinktank, to Colombia’s leftwing presi to keep himself in office—and then given
dent, Gustavo Petro, say Mr Bukele’s crack up power voluntarily.
down is unsustainable. Previous mano du- Asked whether Mr Bukele might run for
ra (iron fist) campaigns in Latin America a (clearly unconstitutional) third term in
have ultimately failed because they ne 2029, a senior official says: “So far there is
glected to address the root causes of crimi no way to have a third term.” The “world’s
nality. Gangsters grow hardened behind coolest dictator” may be planning to stick
bars and cause mayhem when freed. around. And he is only 41. n
012
26 The Americas The Economist July 22nd 2023
difficulties, it is good for the president to
control the media”, the 36% who agreed
marked a record high. In 2010 just 26% of
participants did so. On the question of
whether a “government with an iron
fist”—a term that usually means heavy
handed security policies that lead to viola
tions of human rights, such as Mr Bukele’s
massincarceration strategy—can “solve
our problems”, the liberal side were in the
majority by an even slimmer margin. Just
51% agreed with a statement that such a
government could not solve problems,
whereas 46% disagreed.
Another set of hypothetical questions
suggested that the poor approval ratings
for Mr Maduro and Mr Ortega might have
more to do with their weak performance in
areas like the economy and public safety
than with their subversion of democracy.
Political attitudes The share of respondents agreeing with the
statement “I wouldn’t mind if a nondemo
What Latin America thinks cratic government took power, so long as it
solved problems” has been rising steadily
during the past 20 years, from 45% in 2003
to 51% in 2020. This year, it reached a new
high of 54%. Another grim record was the
35% of participants agreeing that “I would
support a military government replacing a
Young Latin Americans are unusually open to autocrats democratic one if things got difficult.” The
I n the latest edition of Latinobaróme

tro, an international poll in Latin Ameri
ca, respondents were asked to rate their ap
region is indeed becoming increasingly
fertile territory for such figures.
Two questions in the survey addressed
previous maximum, in 2020, was 31%.
These regional averages conceal varia
tion between countries. Support for de
proval of 17 named leaders on a scale of one policies often implemented by illiberal mocracy and opposition to authoritarian
to ten. In 15 of the 17 countries surveyed, leaders. Although 61% of respondents dis ism is highest in Argentina, Chile and Uru
Nayib Bukele, El Salvador’s populist, auto agreed with the statement that “in case of guay, all in southern South America. Con
cratic president, got the highest score—on versely, it is lowest in Honduras and
a list that included Pope Francis and Volo Guatemala, El Salvador’s Central American
dymyr Zelensky, Ukraine’s president. Such One cheer for democracy neighbours. On a related topic, in Ecuador,
broad international appeal has raised con Latin America Guatemala and Paraguay, outright major
cern about the durability of liberal democ ities of respondents said they could sup
racy in the region. Are Latin Americans Preferred type of government, % responding port a military government. These three
outside El Salvador yearning for their own 80 countries are also among the five where
version of Mr Bukele? participants thought a coup was most like
First conducted in 1995, Latinobaróme Democratic 60 ly to occur in the coming years, along with
tro is a leading source of regionwide data Venezuela, which is already under dicta
40
on Latin American public opinion. This torship, and Honduras.
Don’t care
year’s poll, the first since 2020, was re 20 Perhaps the most worrisome finding in
leased on July 20th. Perhaps the most the poll is the age breakdown of views on
heartening result is that support for out Authoritarian 0 democracy. Younger Latin Americans, with
right dictators remains scant. The two 1995 2000 05 10 15 20 23 no memory of the region’s murderous mil
leastpopular leaders in the survey were itary dictatorships of the 1970s, are the
Nicolás Maduro of Venezuela and Daniel Share saying democracy is preferable to any
least likely to agree that “democracy is
Ortega of Nicaragua, who have both other form of government, 2023*, % preferable to any other form of govern
banned political opponents and held pow ment”, whereas support is firmest among
er by force for more than a decade. And just By education level: University the old. Even when comparing people of
17% of the 19,000 respondents agreed with Secondary school Primary school the same sex and education level in the
the statement that “an authoritarian gov 80 same country, the share of respondents
ernment can sometimes be preferable to a 60
committed to democracy is around 16 per
democratic one”, a rate within the histori centage points lower for 20yearolds than
cal range of 1219%. 40 for 75yearolds. Unless the young of today
However, such questions reveal little change their minds as they age, average
about elected autocrats like Mr Bukele, Number of 20 support for democracy will continue to de
who maintain the trappings of democracy respondents 1,000 500 cline as older generations die off. If Latin
0
while hollowing out its substance. And al America’s remaining liberal leaders fail to
though this slipperiness makes their polit 20 30 40 50 60 70 80 improve their citizens’ lives, democratic
Age
ical potential hard to gauge using polls, the Source: Latinobarómetro *Feb 20th-Apr 18th
backsliding is likely to metastasise into a
overall pattern in the new data is that the grim regional trend. n
012
Asia The Economist July 22nd 2023 27
Green supply chains tion amounted to 48% of the global total

last year, with the Philippines making up
Asia’s battery battlefield another 10% and Australia 5%.
So far America is pursuing narrow trade
agreements with some of those countries
in order to gain access to minerals and pro
duction capacity, and it is offering enor
mous subsidies to producers through its
Inflation Reduction Act. To benefit from
A China-free electric-vehicle boom may well turn out to be impossible
America’s $7,500 credits for new EVs, pro
“I ’d like to get all the gas emissions off
the highways of the world,” said John
Goodenough, one of the Nobelprize win
Even where production is done over
seas, Chinese firms dominate the process.
American policymakers see that as a threat
ducers must meet tightening require
ments on the share of minerals processed
and batteries produced in America or in a
ning scientists who developed the lithium to the resilience of America’s supply country with which America has a free
ion battery four decades ago, during an in chains. All of this makes Goodenough’s trade agreement. China is meanwhile
terview in 2018. Goodenough died on June technology one of the most important in building a parallel battery supply chain.
25th before his dream could become reali dustrial battlefields of the new cold war. Indonesia’s dominance in nickel is it
ty. But governments around the world are The outcome will be determined in self a potential bottleneck. An estimate last
scrambling to make it so, with remarkable Asia, where most battery supply chains are year by PWC, a consultancy, suggests that
results. Global sales of electric cars quintu based. The first bottlenecks are in materi 2.7m tonnes of the stuff will be needed an
pled between 2019 and 2022, surpassing als production and processing—including nually for EVs by 2035. Indonesia currently
10m units last year. two of the most crucial battery materials, produces only 1.6m tonnes, most of which
Yet the speed of the transformation is lithium and nickel. Capturing a consistent is used for stainless steel. A huge amount
running into supply constraints and geo supply of both metals will be crucial for of capacity to mine and process the metal
political headwinds. The supply of the producers globally. Almost half of the lithi is being planned, or under construction.
minerals required to make lithiumion um produced in 2022 came from Australia, The processing may be the most difficult
batteries must grow by a third every year 30% came from Chile and 15% from China. segment of the supply chain to make Chi
this decade to meet the estimated global In the case of nickel, Indonesia’s produc nafree. By one estimate, China smelts and
demand. Tens of millions of batteries will processes about threequarters of the
be needed in America alone to meet its am world’s nickel. It also has about twothirds
bition to ensure half of all American vehi → Also in this section of the capacity for lithium processing.
cle sales involve electric vehicles by 2030. Even those figures underestimate Chinese
28 Singapore makes meat
And yet its great rival, China, is by far the heft, because a lot of processing outside
biggest processor of battery metals, pro 29 Americans in North Korea China involves Chinese companies.
ducer of battery cells and manufacturer of The three operational plants in Indone
30 Banyan: Violent Bengalis
finished batteries. sia use highpressure acid leaching, an ad
012
28 Asia The Economist July 22nd 2023
vanced process that extracts nickel from its Singapore and food security

ore without melting it. All are based on Worth a dime 2
Chinese technology, operational prowess, Nickel production, 2022 estimate, tonnes m Bloodless
or both. To secure supplies of nickel, Ford,
an American carmaker, formed a venture
Indonesia
0 0.3 0.6 0.9 1.2 1.5 1.8
revolution
with a Chinese mining company, Huayou
Cobalt, to invest in an Indonesian nickel Philippines
processing plant. The Chinese firm hailed Russia SINGAPO RE
the partnership for its contribution to Chi
New Caledonia The home of cultivated meat
na’s Belt and Road Initiative, a sentiment
unlikely to have been popular in Washing
ton. Ford is already facing political heat at
home over a different venture with a Chi
Australia
Canada
T he islandstate’s long history as a
maritime trading hub, bringing togeth
er Chinese, European, Indian and Malay
nese firm: a new plant in Michigan, manu China migrants, has given Singapore a rich culi
facturing both nickelbased and lithium Rest of world nary culture. It got even more diverse in
based batteries, for which it has joined Source: US Geological Survey
December 2020 when the country became
forces with a Chinese battery giant, Con the first to grant regulatory approval for the
temporary Amperex Technology Co. Limit commercial sale of meat produced in a lab
ed (CATL). The Chinese firm makes more LG Energy Solution, based in South Ko from cultivated animal cells.
than a third of the world’s electricvehicle rea, is the secondlargest battery manufac Concerns about food security underlie
batteries, measured by their total capacity. turer after CATL. The company is expand Singapore’s push into alternative proteins.
The overwhelming presence of Chinese ing in America, with joint ventures under A country half the size of London, which
firms is not just a result of their impressive way with Hyundai, Honda and General Mo makes only 1% of its land available for food
industrial expertise. It also reflects their tors. LG aims to produce 278 gigawatt production, Singapore imports over 90%
ability to move quickly and take risks, ac hours (gwh) worth of storage capacity in of its food. To protect itself from a volatile
cording to mining executives and experts. North America by 2030, up from just 13Gwh food supply chain, disruption by unpre
The comparatively small number of West in 2022. That may be too optimistic. Kim dictable neighbours, inflation, pandemics
ern companies working in mining and Myung Hwan, the company’s chief pro and war, the government aims to produce
nickel processing spend more time con curement officer, notes that the rising cost 30% of the country’s food by 2030.
ducting preparatory studies and work. Su of construction, shortages of skilled per It is encouraging experimentation with
mitomo Metal Mining, a Japanese miner sonnel and volatility in the price of the ma cultivated animal cells, meat, dairy and
als firm, withdrew from a nickelprocess terials needed for batteries are all barriers eggs made from plants, and food made
ing project last year, citing disagreements to rapid growth. from microbial or gas fermentation. Annu
with its partner, PT Vale Indonesia, another Some Asian manufacturers worry that al private funding for Singaporebased al
resources firm. The feasibility study into the cost of overseas production could be ternativeprotein companies doubled to
the project had been going on since 2012. prohibitively high for years. “It’s much $170m in 2022, according to the Good Food
Chinese firms also dominate the pro more important to think of how we make Institute APAC, an NGO that promotes alter
duction of battery parts. Among the com the business profitable for 10, 15, 20 years,” natives to animal products.
ponents for battery cells, China accounts says Hideo Ouchi, director of WScope, a A common challenge for alternative
for at least half of production and more Japanese company that manufactures sep protein startups is that they need to spend
than 70% in some categories. The rest of arators used in battery cells. Mr Ouchi esti a lot of their initial investment on new
the industry is concentrated in South Ko mates that to meet its goals on electric ve equipment. This means they can struggle
rea and Japan. Between them, the three hicles by 2030, America alone will need as to become profitable without heavy capital
East Asian countries make up between much batteryseparator material as was outlays. The government has therefore in
92% and 100% of the midstream parts of manufactured globally in 2021. vested in relevant infrastructure such as
the industry. Even if America secures Government policy represents another innovation centres that help startups de
enough processed minerals, meeting its uncertainty—especially as many Asian velop their products and raise capital. Nu
goals will require a massive deployment of battery manufacturers are counting on de rasa, an alternative protein service provid
Korean and Japanese batterymanufactur cades’ worth of financial support. Last er backed by Temasek, a Singaporean
ing knowhow into North America. month America’s United Auto Workers un sovereign wealth fund, helps startups min
ion criticised the Biden administration for imise the risk of buying expensive equip
failing to attach strict labourrights condi ment by renting out labs and kitchens that
Highly charged 1 tions to a loan of up to $9.2bn to Ford and replicate a restaurant environment. This
Electric-car sales, m SK ON, a Korean batterymaker, for a new allows firms to test their product and busi
10
plant in Michigan. Future Republican ad ness model before purchasing their own
ministrations might reduce or simply equipment, says Jolene Lum, its head of
Rest of world scrap the current EV targets. business development.
8
Japan This amounts to a sobering picture. Ex Singapore has also become the global
United States panding the battery supply chain to match launchpad for foods made through preci
6
Europe the enormous global demand for electric sion fermentation, notes Mirte Gosker of
China vehicles represents one of the greatest in the Good Food Institute APAC. Solar Foods
4
dustrial challenges ever attempted. Even is a Finnish startup that uses gas fermenta
2 the current order of bottlenecks in the in tion to feed microbes with hydrogen and
dustry will make it difficult. Pulling it off— carbon dioxide. It turns the resultant liq
0 for the good of the climate, human health uid into a powder, known as Solein, which
2012 14 16 18 20 22
and much else—without the country that, is nutritionally similar to dried meat. In
Source: International Energy Agency
by most measures, dominates the battery June the firm launched the world’s first So
industry may very well be impossible. n lein chocolate gelato in Singapore.
012
The Economist July 22nd 2023 Asia 29
Very Dairy, an animalfree milk brand means that many products appear in Sin skimpy pretexts. Otto Warmbier, a college

of a firm based in California, first launched gapore first, which is “a huge gift for the student from Ohio, was arrested in 2016 for
in Singapore in 2022. The milk is biologi whole world because Singapore shows allegedly stealing a propaganda poster. He
cally identical to conventional milk pro what is possible”, says Mr Vainikka. was sentenced to 15 years in prison with
teins but made from microbes instead of Whether those products can be taken to hard labour, suffered a serious brain injury
cows. That may be good for the climate, scale remains unclear. Even in Singapore soon after, and died after he was permitted
since farmed cattle produce a lot of meth the alternativeproteins industry faces to return to America in 2017. Jeffrey Fowle,
ane, a powerful greenhouse gas (see Busi high production costs and other burdens. another Ohioan, was arrested in 2014 and
ness section). Greenhousegas emissions The only cultivatedmeat company to have convicted of proselytising (a crime in
from animalbased foods are estimated to received approval in Singapore is Good North Korea) after he deliberately left a Bi
account for around a fifth of manmade Meat, an American firm. It sells less than ble containing his contact details in a bar
climate change. 2,300kg a year of its cultivated chicken. For toilet. He was imprisoned for six months
Singapore has encouraged the industry context, global meat production is forecast before being permitted to leave.
by offering a clear regulatory framework to grow to over 360m tonnes this year. The handful of Americans who have de
and an efficient approval process. Solar Last month America became the second liberately defected have sometimes been
Foods has been waiting for two years for country to approve the production and sale treated better. Another ne’erdowell sol
regulatory approval in the European Un of cultivated meat. Two companies, Good dier, James “Comrade Joe” Dresnok, was
ion, says the company’s CEO, Pasi Vainikka. Meat and Upside Food, have already got the originally viewed with suspicion in the
The EU has yet to approve any cultivated goahead to sell cellcultivated chicken North after he fled there across a minefield
meat products for sale. By contrast, Solein there. America’s vast consumer market in 1962, in order to dodge a court martial.
was granted approval in Singapore within a and cuttingedge technology could be Yet he ended up becoming a minor celebri
year. This fast and transparent process about to threaten Singapore’s early lead. n ty by playing evil American imperialists in
propaganda films. He was popularly
known as “Arthur” after one of his most
Americans in North Korea famous characters—an American army of
ficer called “Arthur Cockstud” in a TV series
There’s always one called “Unknown Heroes”, about the strug
gles of a North Korean spy in Seoul.
More recent American defectors have
fared less well, however. Matthew Miller, a
26yearold Californian visitor to Pyong
yang, was arrested in 2014 for espionage
SEOUL
and sentenced to six years’ hard labour
An American soldier has deserted to North Korea. He may already regret it
after he tore up his tourist visa and de
T he PREVIOUS time someone crossed

the border between the two Koreas at
the Joint Security Area (JSA), an enclave
King was on a guided tour of the enclave
when he gave a sudden hoot of laughter
and ran at top speed towards the border.
clared he wanted to claim political asylum.
He was released, eight months later, after
James Clapper, then America’s director of
along their heavily armed frontier, he did Tour guides chased after him in vain. He national intelligence, went to North Korea
so through a hail of bullets. Oh Chong was last seen being taken into custody by to spring him and another American.
song, a North Korean soldier, was shot and North Korean soldiers. Mr King’s best hope may be the treat
wounded five times by his comrades in America’s defence secretary, Lloyd Aus ment meted out to Arturo Martinez, a men
2017 as he sprinted into South Korea. A tin, confirmed that Mr King had crossed tally ill Texan, who allegedly entered North
crossing this week was less dramatic but into the North “wilfully and without au Korea from China by swimming the Yalu
more surprising. On July 18th Travis King, thorisation”. The soldier’s reason for doing river in 2014. After declaring his desire to
an American soldier of the 1st Armoured so is unclear, as are his prospects. North defect, Mr Martinez was unveiled by the
Division, ran over to the North while on a Korea loves detaining Americans, often on North Koreans at a crowded press confer
group tour of the JSA.
Like many defectors to Kim Jong Un’s
prisonstate, Mr King has a troubled past.
He recently spent almost two months in a
South Korean prison for assault. After his
release, he was returned to America’s
armed forces in South Korea to be sent back
to America to face possible additional pun
ishment. He was escorted to Incheon air
port, outside Seoul. He then went missing,
appearing next at the JSA, 48km (30 miles)
north of South Korea’s capital.
Also known as Panmunjom, the enclave
was carved out of the front line as part of
the armistice that paused the Korean war
in 1953—70 years ago next week. Consisting
of a huddle of buildings, the JSA is the only
direct point of contact between the two Ko
reas along their 240km frontier, and a pop
ular tourist destination in the South. Ac
cording to an American official who spoke
to the New York Times and other reports, Mr The workers’ paradise—Private King’s whereabouts
012
30 Asia The Economist July 22nd 2023
ence in Pyongyang. After making some senior Americans. Jimmy Carter and Bill the arrival in South Korea of an American
perfectly reasonable criticisms of the Clinton both flew to Pyongyang after their submarine carrying ballistic missiles.
American justice system, he began spout presidencies to secure the release of Amer Western officials also claim to have ob
ing deranged conspiracy theories. He ac ican hostages. Three more were released to served preparations for a possible North
cused America of using UFOs and “weap Mike Pompeo, the then secretary of state, Korean nuclear test, its first since 2017.
onised satillital Octocopters” to carry out in 2018, as part of negotiations that led to a On July 17th Mr Kim’s sister, Kim Yo
mass mind control and drugrunning. Mr meeting between Donald Trump and Mr Jong, rejected America’s oftrepeated offer
Martinez was quietly allowed to leave Kim later that year. Whether Mr King could of a “dialogue without preconditions” to
North Korea shortly afterwards. be another bargaining chip will depend, wards denuclearising the Korean peninsu
Yet Mr King’s status as a serving and ap however, on whether North Korea is inter la. She compared American officials’ par
parently sane American soldier may make ested in talking to America. roting of the phrase to an “answering
him a richer prize. When the North Kore There is scant sign it is. On July 19th machine”. This is bad news for South Korea
ans feel like talking to America, prisoner North Korea fired two ballistic missiles and the world. And perhaps also for the
releases can help get them face time with into the sea, apparently to protest against sprinting Mr King. n
Banyan Why are West Bengali politics so violent?
The political stakes are even higher in the eastern state than elsewhere in India
L ast month police in the east Indian

state of West Bengal took 11,000 peo
ple into “preventive detention”. They
stereotypical penchant for politicking and
quarrelling, a counterpart to their equally
fabled love of intellectualising. (The re
tics as a form of social organisation, says
Dwaipayan Bhattacharyya of Jawaharlal
Nehru University in Delhi. The entrench
confiscated more than 20,000 licensed gion has produced many of India’s greatest ment of communist rule in the state in
weapons, along with piles of ammuni artists, including Rabindranath Tagore the 1970s pushed alternative forms of
tion and explosives. The election com and Satyajit Ray.) “Two Bengalis is an sorting, including religion and Hindu
mission asked the central government in argument, three is a political party, four is caste, to the margins. The Bengali coun
Delhi to deploy 80,000 paramilitary a riot,” goes an old joke. A look at next tryside became so politicised it was as
troops across India’s fourthbiggest state, door Bangladesh, whose mostlyBengali hard to marry across the political divide
home to more than 100m people. population was joined to West Bengal’s there as it was to marry across caste lines
The purpose was not to fight an in until 1947, suggests there might be some elsewhere in India. In a patronagebased
surgency. It was to prepare for local thing to this. It is a similar case. Hundreds political system, zerosum politics of
elections in the sweltering Bengali coun of Bangladeshis are killed and thousands this kind is played for high stakes—often
tryside, which typically see eyewatering injured in political brawls each year. the difference between poverty and
levels of violence. Despite the measures, This points to a deep historical expla relative prosperity. Local political leaders
bloodshed ensued. Some 50 people have nation for the bloodletting. Bengalis had a can thereby summon mobs of foot
been killed in clashes involving rival reputation for revolutionary agitation soldiers to fight to the death against their
party activists since the announcement dating back at least to armed resistance rivals’ goons. And they do.
of the polls in June, with many killed on against the British Empire, which had its This murderous system is further
or after polling day. The violence was so capital in Kolkata (then known as Calcut enforced by the way political and eco
disruptive the vote had to be rerun in ta) until 1911. The violence then continued nomic power is distributed in West
some places. It eventually produced a seamlessly into the postindependence Bengal. It is one of only two Indian states
landslide victory for the Trinamool era in the form of peasant uprisings and (the other is communistrun Kerala) to
Congress, a regional party led by West leftist insurgencies. Yet even if Bengalis’ have devolved significant power to the
Bengal’s charismatic chief minister, history initiated their violent politics, it is villagelevel administrative units, or
Mamata Banerjee, whose activists ac being sustained by contemporary factors. panchayats, that Bengalis voted in this
counted for many of the dead. One is the importance of Bengali poli month. Devolution is supposed to bring
Even by Indian democracy’s rough decisionmaking close to home. In West
house standards, West Bengal stands out. Bengal it also brought the violence close,
According to the Armed Conflict Loca creating local political economies in
tion and Event Data Project, an NGO which access to government jobs and
based in America, the state recorded other local resources are contested both
3,338 incidents of political violence, at the ballot and in the streets.
including political murders, between The violence is now starting to erode
2016 and July 2023, the highest number the democratic system that helped create
of any state except militancyriven Jam it. Gangsterish local satraps increasingly
mu and Kashmir. This is despite the fact defy their party leaders. Violence within
that West Bengal’s underlying crime rate parties is therefore becoming almost as
is not especially high. It is much lower common as violence between them. No
than in the vast and lawless nearby states wonder the bloodletting is impossible to
of Bihar and Uttar Pradesh. police. Mitigating it would be hard even
What explains such extreme political if the state’s two main parties, Trinamool
violence in one of India’s most important Congress and its communist rival, made
and culturally rich states? NonBengali a serious commitment to ending the
Indians might attribute it to Bengalis’ violence. So far, neither has.
012
China The Economist July 22nd 2023 31
Foreign universities in China most iconic skyscraper, the Shanghai

World Financial Centre. It has twice as
A for effort, Xi for control much classroom space as NYU Shanghai’s
previous location. In August Duke Kun
shan University (DKU) in Kunshan, a city
near Shanghai, is also due to move to new
premises. The jointventure campus—in
volving Duke University in North Carolina,
Amid growing tension between China and the West, academic joint ventures
Wuhan University and Kunshan’s govern
still abound. Can they survive?
ment—will cover more than 33 hectares,
F iling into a graduation ceremony to

the strains of Edward Elgar’s “Pomp and
Circumstance March No. 1” is quintessen
munist Party’s leadership”. Under Mr Xi,
few students have dared to stage protests.
But in November small demonstrations
twice as large as the current one. In Su
zhou, a nearby city, Xi’an JiaotongLiver
pool University has 23,000 students, mak
tially American. As they did so in May, clad broke out in several cities, and on many ing it China’s largest academic joint ven
in violetcoloured gowns, students at the campuses, over harsh covidrelated lock ture. Last year it opened an additional cam
campus in Shanghai of New York Universi downs. Progovernment commentators pus, with room for 10,000.
ty (NYU) may have reflected on the oddity accused “foreign forces” of stirring the un NYU Shanghai and DKU were founded
of this cultural transplant: not just the mu rest. It has surely made the party even around the start of Mr Xi’s rule, and Liver
sic, but their whole experience as under more wary of Western influences. pool’s venture seven years earlier (follow
graduates. Relations between China and But ventures such as NYU’s in Shanghai ing the pioneer in this field, the University
the West—especially America—are becom seem a world apart. Some are even expand of Nottingham, which launched a campus
ing increasingly tense. China is trying to ing. This year NYU’s campus in the city’s fi in the city of Ningbo in 2004). But even as
purge its universities of liberal thinking. nancial district, Pudong, moved to a glitzy Mr Xi grew increasingly antiWestern,
Yet here were nearly 400 students, about new ninestorey building designed by more such ventures were introduced, albe
half of them Chinese, getting their bache Kohn Pedersen Fox, a New Yorkbased firm it on a smaller scale. In all, well over half of
lor’s certificates from a Chinese outpost of that also drew the blueprints for Pudong’s China’s more than 1,230 universities have
American academe. cooperative projects with foreign or Hong
Since Xi Jinping took over as China’s Kong counterparts. Over the past decade,
→ Also in this section
leader in 2012, he has tightened controls the number of such schemes—most of
over university education. Several liberal 32 The covid19 death toll them involving universities from English
scholars have been dismissed. Lecturers speaking countries—has increased by a
32 Germany’s new China strategy
have been ordered to stop using imported third. They range from ten fullblown uni
textbooks that are deemed to promote 33 Controlling the media versities to a plethora of smaller ventures
Western values. Universities have been such as joint departments or institutes in
34 Chaguan: The missing foreign minister
told to become “strongholds of the Com side Chinese campuses.
012
32 China The Economist July 22nd 2023
One of China’s aims is to boost the qual there is no value in the school’s existence, China and Germany

ity of its universities by helping them learn and it needs to be closed.” In 2018 Stephen
how foreigners run such institutions. An Morgan, then a professor at Nottingham The wind
other is to help local governments fulfil Ningbo (now retired), says he was pressed
their economic ambitions. It is no accident to step down from its board. He blames the of change
that several of the biggest ventures are lo party: he had written an online article crit
cated in Shanghai and cities nearby. Shang ical of Mr Xi. “A lot of the party people
hai is the country’s financial centre; its would not even look at me or say hello to
Germany adopts a tougher strategy for
hinterland is a base of hightech manufac me for at least a year,” he says.
dealings with China
turing. Officials hope that foreign univer The vicechancellor of NYU Shanghai,
sities will attract talent for such industries.
Compared with enrolment in the rest of
China’s university system, the number of
Jeffrey Lehman, remains stoical. “Within
our academic community, academic free
dom has been fully honoured,” he says.
T hree years ago, Angela Merkel, then
Germany’s chancellor, said it was im
portant to have a “relationship of trust”
students in foreignrun programmes is “Academic freedom was the clear under with China. On July 13th the government
small: fewer than 600,000, according to standing from the very beginning. And if that succeeded her published a longawait
state media, or less than 2% of the total the Chinese government is ever no longer ed paper laying out how it plans to handle
number of students in China. But that does comfortable with that, we can shut down.” those ties. It did not echo Mrs Merkel’s be
not stop the party from worrying. Even Responding to the party official’s remarks, lief. “China has changed,” it said, adding:
though most of the joint ventures’ stu the University of Liverpool said it was “ab “As a result of this and China’s political de
dents focus on subjects such as science solutely committed to academic indepen cisions, we need to change our approach to
and business that are unlikely to touch on dence” and the joint venture had “freedom China.” Governments across Europe have
politically sensitive topics, officials are of speech enshrined in its core values”. long been saying much the same. But for
nervous that foreign professors and their For all its fretting, China shows no sign Germany to set out a detailed case for Chi
textbooks might spread heretical views. of wanting to chase away prestigious uni nascepticism was striking.
In 2017 the central authorities issued a versity brands that have already estab After Mrs Merkel handed over the chan
classified directive on “party building” in lished a highprofile presence. But Mr Mor cellery to Olaf Scholz in December 2021,
foreignrun academic programmes. It said gan believes that no new ventures involv Germany’s new ruling coalition promised
the venture’s party chief (the Chinese ing humanities or social sciences are likely a rethink of the country’s China strategy.
partner always has one) should sit on the to be approved. In March the government Drafting a document setting out the fresh
governing board. This was often the case said that on Hainan, an island province, approach—the first paper of its kind pro
already. At DKU, however, the party secre foreign universities specialising in such duced by Germany—was a tortuous effort.
tary did not have a voting right. Allowing areas as engineering and medicine could There were differences to reconcile be
her to vote could have changed the balance set up campuses on their own—unlike ex tween the views of Mr Scholz, whose in
between the American and Chinese repre isting ventures, which must have a Chi stincts on China are redolent of Mrs Mer
sentatives, says Denis Simon, who was nese partner. A party secretary, however, kel’s with their emphasis on business in
then DKU’s executive vicechancellor. It will still be required on their boards. n terests, and those of the foreign and eco
would have required rewriting the joint
venture agreement, he says. The Ameri
cans were not keen to do so. That issue
The disappearing data
“was never fully resolved”.
But the party is getting twitchy. In 2020
Chongqing University of Education (which Zhejiang, cremations, January-March, ’000 China, % of national population
200 aged 65 and over, 2021
has numerous foreign partnerships) pub
lished its own guidelines for implement 10
ing the central government’s directive. 150
They clearly reflected the mood in Beijing. 8
The university instructed that Chinese 6
100
teachers and students in jointventure ar
4
rangements should “consciously resist
corrosion by all kinds of erroneous West 50 2
ern thoughts and decadent ideas”. Social
0
media such as WeChat should be used to 0 Zhejiang
help “manage” student party members 2020 21 22 23
during their periods of study abroad, it Sources: National Bureau of Statistics; Zhejiang Civil Affairs Bureau
said. Party branches should “keep abreast
of the thinking of students and teachers”
A clue to China’s true covid19 death toll
and use “supervisors” to monitor classes.
There have been ominous remarks, too, On July 13th the authorities in Zhejiang, a rich coastal province, released what they
by Chinese staff in joint ventures. In 2021 a probably thought was innocuous data about cremations in the first quarter of 2023.
party official at the University of Liver Around 171,000 took place during that time, up by 73% compared with the same period
pool’s wrote that party committees should last year. The jump was undoubtedly caused by a wave of covid19; the central govern
make sure no one with “ideological prob ment lifted all covid controls in December 2022. Just under 5% of China’s population
lems” is appointed to faculty. They should aged 65 or older lives in Zhejiang. If one assumes that its share of covid deaths is simi
“resolutely stop the spread of erroneous lar (the disease mainly kills the old), a simple extrapolation suggests that there were
thinking”. The party chief of Nottingham 1.6m excess deaths across China in the first quarter, which is roughly in line with our
Ningbo, in an interview that year with state modelled estimate of the country’s covid death toll. The central government, though,
media, said: “If the school makes mistakes has acknowledged fewer than 84,000 deaths from covid on the mainland since early
on important issues such as ideology, then December. The data from Zhejiang was quickly removed from the internet.
012
The Economist July 22nd 2023 China 33
nomic ministries, which are led by more

hawkish members of his threeparty co
alition. There were also the views of the
European Union and America, among
others, to take into account.
During the drafting, many questions
were raised about how much of a change
was under way. Last October Mr Scholz
pushed through the sale of a stake in one of
Hamburg’s port terminals to a Chinese
stateowned firm: a smaller share than had
been proposed, and with no voting rights
for the Chinese side, but still controversial
among the hawks. When Mr Scholz paid a
visit to Beijing in November, the first by a
Western leader since the start of the co
vid19 pandemic, he took a big delegation
of businesspeople, including 12 CEOs of
German bluechip firms. In June he rolled
out the red carpet for Li Qiang, China’s new
prime minister, acquiescing to Chinese de
mands that there be no questions at a joint
press conference. The media
But the strategy paper confirmed a
shift. It did not talk of hope of “Wandel
What would the party say?
durch Handel“ (change through trade),
BE IJING
once a motto of the Merkel era. “Derisking
How China trains its journalists to report “correctly”
is urgently needed,” the document said,
using the now standard language of EU and
American officials when referring to the
dangers of overreliance on economic ties
S ome years ago China’s leader, Xi
Jinping, issued instructions to the
reporters working for staterun newspa
oppressed groups, such as migrant work
ers. In 2008 candid reports about a dev
astating earthquake in the southwestern
with China. It echoed the EU’s labelling of pers and television stations. He demand province of Sichuan laid bare the failings
China as a “systemic rival” and said China’s ed “critical reports with accurate facts of local officials. Some of this spirit lives
friendly relations with Russia had “direct and objective analysis”. But he also told on in commercially run publications
security implications for Germany”. It the journalists that they must “love and such as Caixin, a magazine that focuses
warned that military escalation by China protect the Communist Party”. He did not on business and economics (less politi
in the Taiwan Strait would “affect German explain what they should do if one in cally sensitive topics).
and European interests”. The paper prom struction conflicted with the other. A journalist for state media insists
ised that Germany would coordinate A new educational app for China’s that he and his colleagues are still “re
“more closely” with its partners in the EU journalists, introduced on June 30th, vealing the truth”. He cites recent reports
on China matters. It did mention a rela makes it clear that the party comes first. about a furore involving a college can
tionship of trust: with America. Andrew One hourlong tutorial is titled “Ensure teen in southern China that served rat
Small of the German Marshall Fund of the that the politicians run the papers, the head in a meal (the authorities had
United States, a research centre, calls the magazines, the TV stations and the news claimed it was duck neck). Also, among
language “markedly different from where websites”. Another talks about how to the winners of China’s national journal
we were with Merkel and the way she was “correctly guide public opinion”. “It’s like ism awards last year was an investigative
willing to frame things”. a drumbeat,” says David Bandurski of the piece on the illegal trade in rich black soil
China Media Project, a research pro in northern China.
Business decisions gramme in America. “They want to re But when the AllChina Journalists
Mr Small says that, though large German mind them that the party is in control.” Association, which is overseen by the
firms have expressed support for the strat China locks up more journalists than party, handed out that award, it noted
egy, “they haven’t jumped in to embrace it”. any other country. But the training app is that Mr Xi had once expressed great
They have much at stake. According to the one of many softer forms of coercion. concern over protecting northern Chi
Rhodium Group, a research firm, Ger Since 2014 all reporters have had to pass na’s soil. Most of the other winners were
many’s three big carmakers—BMW, Daim an exam to get a press card. It tests puff pieces about the party. One was
ler and Volkswagen—plus BASF, a chemi knowledge of the trade—and of the par titled “Without the Communist Party
cals giant, accounted for more than one ty’s ideology. One former journalist there is no happy life for China’s people”.
third of all European direct investment in failed the exam on her first try because A number of frustrated reporters have
China between 2018 and 2021. But the paper she forgot the meaning of “the four great left their jobs. In late June a heated de
is softer than a version that was leaked in things”, one of Mr Xi’s impenetrable bate erupted on Chinese social media
November: no more talk of “stress tests” of nationalist slogans. She had read his over whether it was still worth studying
German companies that are heavily in speeches beforehand. “But he’s made a journalism at university. Many argued
volved in China, or making them “specify lot! I just wrote four things at random,” that it was not. Critics of the industry
and summarise relevant Chinarelated de she says. (Two were right.) lamented state media’s relentless pro
velopments”. Derisking, it appears, will be Before Mr Xi took power in 2012, government positivity. Journalism de
up to businesses themselves. Some of journalists were more probing. Some grees, said one commenter, “only teach
them may not share the government’s investigated corruption, pollution or you one thing: to be obedient.”
sense of urgency. n
012
34 China The Economist July 22nd 2023
Chaguan China’s missing foreign minister
Official silence about Qin Gang’s whereabouts speaks volumes about Xi Jinping’s China
force, no senior official admitted to catching the virus.
Other lessons about Chinese power are less simple. Take Mr
Qin’s job as foreign minister. That is one reason why his disap
pearance matters, but not the most significant. Chinese job titles
map poorly onto those used elsewhere. Foreign ministers are out
ranked by the head of the party’s Foreign Affairs Commission: a
post held by Wang Yi, who is China’s top diplomat. More impor
tantly, when Chinese insiders assess an officeholder’s clout, they
look at not just that one individual but all his or her patrons and al
lies and even family members, as if connections can be glimpsed
like a spectral halo of influence. In Mr Qin’s case, his absence is a
big deal because he is seen as Mr Xi’s protégé. Provoking envy as he
rose, Mr Qin was fasttracked to ministerial rank and into the par
ty’s central committee in 2022, not long after being made a vice
foreign minister and ambassador to Washington. In Beijing, that
ascension is linked to Mr Qin’s stint as head of diplomatic protocol
from 2014 to 2017, which involved lots of contact with Mr Xi.
As a result, Mr Qin’s rapid rise should offer clues about Mr Xi’s
worldview, or at least about the sort of diplomacy that he values.
The foreign minister is sometimes called a “wolf warrior”, but that
is misleading. Some Chinese diplomats deserve that tag, which
comes from a jingoistic Chinese action film. Truly wolfish envoys
A t some point the illexplained, weekslong disappearance of

China’s foreign minister, Qin Gang, will come to an end. Quite
possibly Mr Qin—a suavely confident diplomat of the ironfist and
are often crudely antiWestern. They repeat conspiracy theories
about alleged American misdeeds, harvested from shady corners
of the internet or from Russian disinformation agencies.
velvetglove type, rocketpropelled to high office by a spell as an
aide to President Xi Jinping—will quietly resume his duties, just as A West-scorning warrior, but not a wolf
suddenly as he stopped work after a day of meetings on June 25th. Mr Qin is a more sophisticated warrior, capable of charm and prag
Perhaps he will explain the undefined health issues that remain matism when the national interest calls. As the protocol chief
the only official reason for his absence. Still, it cannot be excluded charged with delivering a successful state visit by President Do
that Mr Qin’s career path is about to take a grimmer turn. That nald Trump to Beijing in November 2017, Mr Qin cleared away red
would vindicate Beijing’s elite gossip mill, which is currently tape and deescalated crises, including, it is said, a brief physical
seething with everwilder theories about Mr Qin, some of them altercation between the White House’s then chief of staff, John
worthy of a bad romantic novel or spy thriller. Kelly, and a Chinese security official. Yet Mr Qin has a talent for
However this episode ends, it is a reminder that China’s capi menace, too. He showed it in March 2021, when the European Un
tal, for all its Tesla showrooms and Apple stores and outward ion’s ambassador was called in for a midnight dressingdown over
marks of globalised modernity, remains a tough place. It is a city of EU sanctions relating to repression in Xinjiang. When the EU en
secrets and rumours. Grandees do sometimes vanish, before re voy resisted that latenight summons to the foreign ministry, he
appearing to face charges of corruption, immorality or dissent. In was warned to think of the consequences for his delegation, and
an age when other countries’ leaders drop indiscretions on social by implication for the safety of his Chinese staff, diplomats relate.
media or in interviews, China’s ruling classes heed codes of si During the meeting, Mr Qin harked back to China’s last imperial
lence that would be familiar to Communist Party cadres of the dynasty and specifically 1900, when eight foreign powers invaded
1950s. As Beijing is pounded by a heatwave, Chinese elites and for Beijing to crush an uprising by antiforeign fanatics, the Boxers.
eign ambassadors huddle in embassy gardens and drawing rooms His message was that today’s China would not be bullied in the
to exchange theories about Mr Qin. Diplomats compare notes same way that a Qing dynasty diplomat, Li Hongzhang, was by for
about when the foreign minister’s meetings first began to be can eign governments seeking reparations. I am not Li Hongzhang and
celled, and how far ahead, looking for evidence of a sudden, severe you are not the eight powers, Mr Qin told the EU ambassador. More
health crisis. Analysts scour China’s tightly policed internet for substantively, European governments blame Mr Qin for recom
signs of censors deleting comments about Mr Qin, or about an al mending sweeping, disproportionate countersanctions that con
leged friend with a boastful, indiscreet presence on social media. tinue to blight EUChina relations.
According to the brutal rules of Chinese politics, it would be a bad In encounters with foreigners, Mr Qin shows deep knowledge
sign if Mr Qin were becoming a nonperson. But a lack of censor of the Western world, gained during several postings abroad. That
ship might also signal that powerful allies are deserting him. familiarity appears to coexist with disdain for a West seen as de
Even with the mystery unresolved, a few lessons may be drawn clining, arrogant and hypocritical. Indeed, some claim that Mr Qin
about how power is wielded in China. Some are simple. If Mr Qin reserves a special scorn for Western reporters, dating back to his
really is unwell, a formal statement about his health would help first job out of university, as a governmentsupplied researcher for
calm the rumour mills. But physical infirmity is a political taboo. an American news agency in Beijing. Still, his absence is a source
This goes beyond a preference for privacy. Leaders are expected to of regret on the capital’s diplomatic circuit. In Mr Xi’s China, the
be vigorous. Any sign of frailty is risky: party gatherings are a sea black box of elite politics is only getting more opaque. When clev
of dyed black hair. While China’s strict zerocovid rules were in er, candid officials vanish, they are missed. n
012
Middle East & Africa The Economist July 22nd 2023 35
Gas and renewables fuel, are driving the change. And the swing
is swift. Mozambique shipped its first lng
Africa’s enormous energy opportunity in November and may soon export vastly
more. TotalEnergies, a French oil major,
could soon restart building a giant lng
project in Mozambique that it halted in
2021 because of a jihadist insurgency. Pat
DAK AR AND WIND HO E K
rick Pouyanné, the CEO of TotalEnergies,
Gas finds and renewable potential mean the continent is poised to become
tells The Economist that the project is al
a much big player on the global energy stage
most back on track, so should be produc
E nergy markets are being rocked by an

unprecedented double whammy. Since
Russia’s invasion of Ukraine last year,
ergy firms including Eni are dusting off or
drawing up new plans to produce liquefied
natural gas (lng) across the continent.
ing gas by 2028. Improved security could
also boost the prospects of an even larger
lng project nearby that is proposed by Ex
Europe has cut energy imports from Rus Among these are moves to restart two huge xonMobil, the largest Western oil major,
sia, the world’s secondlargest producer of lng projects that had been shelved, in Eni and China National Petroleum Corpo
natural gas and thirdlargest oil producer. cluding a $30bn40bn one in Tanzania and ration. Across the nearby border in Tanza
Prices of both shot up before falling back, another worth $20bn in Mozambique. nia, Shell and Equinor, two European ener
but anxiety over energy security persists. This activity marks a sharp change in gy companies, are resuscitating their pro
Meanwhile climate change is prompting a the prevailing mood over the past few de posed lng project worth $30bn40bn.
deep but uncertain shift away from fossil cades, when Africa had dwindled in impor Elsewhere an lng project in Senegal
fuels such as oil and eventually gas. Politi tance for energy markets. A continent that and Mauritania is expected to start produc
cians and industrialists in Europe worry once provided a fifth of the world’s inter ing this year and the prospects of its sec
about keeping homes warm and factories nationally traded lng now provides half ond phase look promising. In Nigeria, Afri
humming in the face of these challenges. that share. Its shares of global oil and coal ca’s biggest lng exporter, production ca
Africa may be the answer to Europe’s production have also fallen as investors in pacity should rise by about 35% by 2026.
immediate gas problem and its longer oil, in particular, have been put off by dete In all, new gas projects in subSaharan
term carbon one. It has 13% of global gas re riorating security in Nigeria, usually the Africa could add some 90 billion cubic me
serves, only a touch less than the Middle continent’s biggest producer. tres (bcm) in annual lng capacity by 2030,
East, and 7% of the world’s oil, as well as Higher prices, increased European de reckons Akos Losz of Columbia University.
vast greenenergy potential. African ener mand as the EU diversifies away from Rus To be sure, only about a fifth of this capac
gy could “become really central for the fu sia and a switch from coal to gas, a cleaner ity is already under construction or not on
ture for Europe—and not just for Europe”, hold for security reasons, and some pro
says Claudio Descalzi, the CEO of Eni, the jects may yet fail.
Italian oil major. “They have a lot—a lot— Yet energy firms seem determined to
of gas, they have sun, wind…[that is] per 37 Constitutional chaos in Israel press ahead. New projects in north Africa,
fect for our energy transition.” where Eni has just signed an $8bn deal to
38 Iran’s piano smugglers
This talk is not hot air. International en develop two Libyan fields, could supply an
012
36 Middle East & Africa The Economist July 22nd 2023
additional 30 bcm of gas by 2030, reckons have struggled to make money because come one of the main renewable energy
Mr Losz. Rystad Energy, a research firm, they have been supplying small markets hubs on the African continent and world
sees similar potential (see chart on next through inefficient stateowned utilities. wide,” gushed Ursula von der Leyen, the
page). If all go ahead, the 120 bcm added to Now new technologies could allow re president of the European Commission, in
Africa’s current output would raise its newableenergy producers to sidestep pro May. The bank reckons Mauritania and
share of global gas production to 8.5% blems in domestic markets by exporting Morocco could be one of the world’s most
from 6% today, even taking into account energy. With assured revenues from ex competitive producers, with costs includ
massive increases expected in Qatar. That ports, greenenergy firms can more easily ing transport to Gibraltar of about $1.60 per
much additional production in Africa secure the investment needed to build big kg by 2035.
alone would more than offset the 70 bcm and efficient plants. One spillover is that
fall in Russian gas exports to the EU be they should then also be able to provide Gas in the tank
tween 2021 and 2022. power to local economies. Big hydrogen projects are starting to gather
In the longer run Africa seems set to The first of these export opportunities speed in Africa. One of the largest is in
play an even bigger role in global energy is through producing socalled “green hy Mauritania, where last year the govern
markets. The Gas Exporting Countries Fo drogen”, which is made by splitting water ment and CWP Global, a greenenergy com
rum, a global club, expects Africa to add into oxygen and hydrogen using renew pany, signed an early agreement for a wind
more gas capacity than any other region able electricity. Rich countries see green and solar project to produce 1.7m tonnes of
bar the Middle East. It reckons Africa will hydrogen as the best hope to keep their en green hydrogen a year. Another mega
be producing almost 600 bcm a year by ergyintensive industry running while project in Mauritania by Chariot, a British
2050, up from 249 bcm now. slashing carbon emissions. America re firm, and a subsidiary of TotalEnergies
cently introduced the largest subsidies in aims to produce 1.2m tonnes a year. “This is
Counting rigs, not rigging counts the world for lowcarbon hydrogen (which an extraordinary opportunity,” says Abdes
Other indicators seem to support these includes that produced with gas and car salam Ould Mohamed Saleh, Mauritania’s
bullish views. The number of rigs operat bon capture). The EU’s new energy pro energy minister.
ing in Africa, a leading indicator of explo gramme, designed to make the bloc inde The excitement is similar in Namibia
ration and production, is at its highest pendent of Russian fossil fuels, has set a where the government recently finished
since 2019, according to Rystad. Spending target for Europe to produce 10m tonnes of negotiations with Hyphen Hydrogen Ener
on African exploration and development is green hydrogen a year and to import an gy, a renewablepower firm, for the next
expected to reach $46bn this year, the other 10m tonnes by 2030. The Interna phase of a $10bn project. It aims to produce
highest since 2017. Meanwhile, Africa’s tional Energy Agency (IEA), an intergov 2m tonnes a year of green ammonia (a pro
share of global capital expenditure on gas ernmental thinktank, reckons the world duct made from green hydrogen that is
has more than doubled since 2014, accord will need to produce 90m tonnes of low transported more easily) by 2030. It is
ing to Wood Mackenzie, another energy carbon hydrogen a year by 2030 and 450m backed by the EU. “They need the mole
research firm. tonnes a year by 2050 if it is to reach its goal cules. We need the jobs,” says James Mny
Oil is also attracting investment. Total of netzero emissions by midcentury. upe, an adviser to Namibia’s president.
Energies, the world’s thirdlargest interna Africa’s strong solar and wind potential Green hydrogen is not the only pos
tional oil and gas firm, will spend half of its make it an attractive place to produce sibility for exporting renewable energy.
global exploration budget this year in Na green hydrogen. A recent study by the Xlinks, a British firm, is planning a wind
mibia, where it appears there may be as European Investment Bank (EIB), the eu’s and solar plant in Morocco that would
much as 11bn barrels of oil and potentially development bank, argues that Africa send electricity directly to Britain along
gas too. That could make Namibia a huge could produce 50m tonnes of the stuff a 3,800 kilometres of deepsea cables by
producer. “We have no doubt that it’s going year by 2035 from three subregions: Egypt; 2030. The project could provide 8% of Brit
to happen,” says Namibia’s energy minis Mauritania and Morocco; and Namibia and ain’s electricity at a much lower cost than
ter, Tom Alweendo. Even modest hydrocar South Africa. About half of this could be for alternatives such as a longdelayed nuclear
bon exports can have a big impact on poor export. “Namibia has the potential to be power plant, says Xlinks. Though its $18bn
countries. Take Niger, where a Chinese
built export pipeline is nearing comple
tion. “Next year alone it will bring budget
resources worth a quarter of our current
budget,” says Mohamed Bazoum, Niger’s
president. “The following years it will be
even bigger.”
Africa also has huge potential to be a big
producer of green energy. Although it has
sunny, spacious deserts, windy coasts and
plains and gushing rivers, it has been a lag
gard. It has just 1% of the world’s installed
solar and wind capacity and only 4% of hy
dropower. This, too, is changing, though
perhaps not quickly enough. Installed so
lar capacity in Africa has almost quadru
pled since 2016.
Africa has punched below its weight
mainly because it has been hard to export
green energy. Investments were made
mainly for local consumption of electricity
(which is less than 3% of the world’s total)
and even privately owned power producers Orange fizz for Mozambique’s economy
012
The Economist July 22nd 2023 Middle East & Africa 37
cost is a considerable hurdle, the project structure, schools and clinics. In Equatori

has attracted initial funding from Abu al Guinea, for example, oil has propped up
Dhabi’s national energy company. the world’s longestruling dictator. His
For Africa to realise its energy potential playboy son, who hopes to take over, is
it will need to dodge a series of pitfalls. The known for splashing cash on mansions
first danger is sloth. On natural gas, com and fast cars—and squandering the rest.
petitors such as Qatar and America are Meanwhile the people of Equatorial Guin
moving quickly to expand their produc ea suffer. The country ranks 145 out of 191
tion. If Africa is tardy, its window of oppor on the UN’s Human Development Index, a
tunity to supply Europe may close, particu measure of income, health and education.
larly as demand shifts to greener sources of Shakedowns of oil and gas companies
energy. The IEA reckons that by 2030 the eu and nationalisations of their assets are still
may use 20% less gas than it did in 2021, worryingly common in Africa. In Ghana,
based on current policies. usually one of Africa’s better investment
Africa’s record on speed has been poor. destinations, Tullow Oil is going to inter
Over the past two decades new gas projects national arbitration after being given a ret
in subSaharan Africa have taken almost rospective tax bill of $387m as the country
five years longer than expected to go from scrambles for funds amid a publicdebt cri
discovery to production. On the other sis. Investors considering pumping in the
hand, African oil and gas producers are billions of dollars needed to produce lng
reasonably costcompetitive, meaning or green hydrogen will not do so if they fear
they would not be the first to struggle if their assets will not be safe, or if the rules Israel
falling demand were to push prices down. will be arbitrarily changed.
At a gas price of just $3 per 1,000 cubic feet,
twothirds of African gas is still profitable.
This is especially the case for greenhy
drogen projects, which will need to attract
Just give me
This includes much of the gas found in Al
geria, Mauritania and Tanzania. Even in
formidable amounts of capital. Namibia’s
proposed project will cost about $10bn; not
a reason
oil, which is dominated by lowcost Saudi much less than its current GDP of $12bn.
JE RUS ALE M
production, Africa is still largely in the The estimated investment needed for the
game at prices above $30 a barrel. eib’s panAfrican vision to produce 50m Israel’s constitutional chaos
Meanwhile demand for gas is expected tonnes of green hydrogen a year by 2035, is far from over
to grow in Africa itself as the continent
moves to produce electricity for the rough
ly 600m Africans who do not currently
including everything from solar installa
tions to export pipelines, is $1.4trn. The
biggest problem is whether companies and
B y 1989 the city of Jerusalem had been
trying for nearly two decades to build a
new football stadium. Powerful religious
have it. Much of this new supply will prob governments in the rich world, who want groups who saw matches on the Sabbath as
ably come from renewable sources, but gas green hydrogen, will invest. “Will words a desecration of Jerusalem’s sanctity had
could also be an important part of a stable become deeds that meet needs?” asks NJ blocked the project, but at last ground
electricity mix and be needed to fuel the Ayuk of the African Energy Chamber, an in could be broken. One obstacle remained.
furnaces of heavy industry. dustry body. The acting interior minister, Arye Deri, an
Firms and governments are also work After decades of declining relevance to upandcoming ultraOrthodox politician,
ing to ensure that Africa’s natural gas is ex global energy markets, Africa has a brief blocked the landuse change. Teddy Kollek,
tracted in the most climatefriendly ways moment of enormous opportunity. To the city’s mayor, took him to court. In Janu
possible. Eni claims that its development seize it, Africa’s governments will have to ary 1989 the Supreme Court ruled that Mr
and operation of the Baleine oil and gas learn from the mistakes made in previous Deri had acted “in an unreasonable way”.
field in Ivory Coast will be the first in Africa commodity booms, when investors were Two and a half years later the first match
to have netzero emissions (though that frightened off and revenues were squan was played at Teddy Stadium.
does not count the emissions from whoev dered. Adonis Pouroulis, the CEO of Chari Legal experts cite the case as one of the
er buys and burns the oil and gas). ot, believes that this time the continent earliest examples of the court’s nullifying a
The second major pitfall threatening will not waste its opportunity. “This centu government decision on the grounds of
Africa’s energy boom is domestic security. ry”, he says, “is Africa’s century.” n “reasonableness”. That principle was in
Jihadists have already delayed the con troduced in a ruling in 1980 by Aharon Ba
struction of Mozambique’s massive gas rak, then a new judge on the Supreme
projects by several years, prompting the Gas explosion Court. It revolutionised Israeli jurispru
government to ask other African countries Africa, gas production*, bn cubic metres dence and is a principal source of the con
such as Rwanda to send in troops to restore 500
stitutional chaos engulfing Israel today.
order. Meanwhile Nigeria partly missed On July 23rd Binyamin Netanyahu’s
Projection
out on the windfall of high gas prices last 400 government is set to pass an amendment
year, as a lack of security led to it shipping to one of Israel’s quasiconstitutional “ba
less LNG in 2022 than the year before. 300 sic laws”. It would give the government im
The third hazard is disputes over how munity from the reasonableness standard.
the rents from energy production are di 200 Israelis have been taking to the streets
vided. The dollars big oil and gas projects since the start of this year in protest. Even
100
earn could be grabbed by wellconnected Israel’s closest ally is concerned. On July
politicians and businesspeople, rather 17th, after meeting the Israeli president,
0
than benefiting populations as a whole. Isaac Herzog, President Joe Biden applaud
2020 25 30 35 40
Alas, governments in the region do not ed the vibrancy of Israel’s democracy but
*If all planned projects reach final investment decision
always have a good record of investing rev Source: Rystad Energy
urged Mr Netanyahu not to rush his re
enues from natural resources into infra forms and to seek a consensus for them.
012
38 Middle East & Africa The Economist July 22nd 2023
The reasonableness standard has af

fected decisions in almost every area of Is Tickling smuggled ivories
raeli politics. It was used by the Supreme
Court in 1989 to force the army to put on
Iran’s bizarre contraband
trial a colonel who ordered his soldiers to
BE IRUT
beat up Palestinian detainees. The follow
How wellconnected Iranians import their pianos
ing year the court invoked it to direct the
attorneygeneral to charge bankers with
share manipulation. In 1993 the court again
took on Mr Deri, ruling that he could not
H assan is an unlikely smuggler.
Affable and a bit nerdy, he looks
better suited to his old job as an interna
noses of customs officers, often with
their tacit approval. The scale of activity
is so large that some politicians lament
remain interior minister after being in tional publicrelations adviser. Now he is that smuggling has wiped out hundreds
dicted for corruption. He was forced to re one of the many shadowy operators who of thousands of jobs for Iranians in
sign, convicted and sent to prison. He then send contraband to Iran. Some reckon homegrown industries.
returned to politics. In January 2023 the goods worth $20bn25bn evade Iranian Hassan’s pianos arrive in large con
Supreme Court ruled once again he must border guards each year. His particular tainer ships. The shipping company
resign from cabinet because of a convic speciality is pianos. issues him with bank guarantees for any
tion for tax fraud. Seven of the justices cit Since Iran’s customs authorities damage incurred on the short trip be
ed the reasonableness standard. banned the import of musical instru tween a warehouse in the United Arab
Mr Deri is no longer in the cabinet, but ments in 2021, the upright pianos that Emirates and the Iranian port of Bandar
he still leads the secondlargest party in Mr Hassan (not his real name) buys for less Abbas. The company greases palms at the
Netanyahu’s coalition and is one of his than $900 in East Asia go for $6,000 port and the pianos are unloaded and
closest allies. “They are trying to immu apiece in Tehran, Iran’s capital. Musical recorded as parts of musical instruments
nise the government and all the ministers instruments are outlawed, possibly for rather than as single units, thus evading
from judicial review,” says Menachem Ma religious reasons; a member of the par the ban. They are then put onto lorries
zuz, a former Supreme Court justice and at liamentary economic committee said and driven to Tehran.
torneygeneral. that those who want to tickle the ivories That 40 containers of illegal pianos
Mr Barak was not the first to invoke the “must leave Iran”. can be regularly unloaded at Iran’s big
reasonableness standard but he greatly ex The ban is also part of a strategy to gest port, which is also the Iranian navy’s
tended its scope. He was admired by many deter imports of items officially deemed main base, suggests that someone high
who, like him, believed that in the absence unnecessary, so as to tackle a balanceof up is taking a cut. The Iranian Revolu
of a written constitution and bill of rights, payments crisis that has been fuelled by tionary Guards Corps, the regime’s prae
it was up to the Supreme Court to protect Western sanctions on Iran. Foreign torian body, has long been involved in
individual rights and the public interest. made sunglasses, fancy smartphones smuggling networks. When he was the
Others criticised him for extending the and various fashionable items of cloth country’s puritanical president, Mah
court’s powers without authority. Reason ing are prohibited, too. This has created a moud Ahmadinejad once castigated the
ableness, argues Yoav Dotan, a law profes lively illicit market for traders who al corps as “our smuggler brothers”, accus
sor at the Hebrew University and a critic of ready benefit from the authorities’ will ing it of making money at the expense of
the principle, is not a legal standard: it is “a ingness to overlook their activities in the national treasury.
linguistic construct invented by the court.” order to help them to circumvent the Smuggling—and the bribes that sus
On March 27th Mr Netanyahu an American embargo. tain it—is one way that those who call
nounced the suspension of his proposed On paper the customs authority runs the tune in Tehran continue to prosper,
legal reforms in favour of pursuing a an antismuggling programme whereby while ordinary Iranians suffer under an
broader consensus on constitutional millions of dollars’ worth of goods are ailing economy. Annual inflation hit 43%
change. But when talks with the opposi seized every year. Yet at the same time an at the last count, in June, yet those con
tion broke down in June, the government estimated 95% of smuggled goods enter nected to the regime’s rulers still flaunt
changed tack, focusing on limiting the rea Iran, not in pickup trucks crossing the sports cars and send their children
sonableness standard as a first step. border in the dead of night, but under the abroad for private education.
Many legal critics of the standard op
pose this amendment. Mr Dotan has joined
street protests against it. “I don’t want to be
anyone’s useful idiot,” he says. Like many,
he fears that the government’s reforms,
even those he agrees with in principle, are
a prelude to an erosion of democracy.
Mr Dotan and other legal experts have
advocated a less sweeping amendment
that would exclude only decisions made by
the entire cabinet (as opposed to individ
ual ministers) from the reasonableness
standard. The opposition parties have
agreed to this in principle in exchange for
the suspension of the rest of the constitu
tional changes for the duration of this
Knesset term. But the coalition is in no
mood for compromises. As huge protests
return and thousands of military reservists
refuse to “serve a dictatorship”, Israel is
once again on the brink of civil unrest. n
012
→ July 22nd 2023
3 How ivf changed the world
5 Try, try again
7 A booming baby business
8 Regulating families
9 The donor and the freezer
11 Making eggs and sperm
13 Conception, reconceived
The Economist
Technology Quarterly:
In vitro fertilisation
The most
personal
technology
012
The double issue
Twice the insight

Next week, enjoy the summer double issue of The Economist, which
includes a supplement from 1843 magazine, our digital publication
of narrative journalism. There will be no print edition for the week
of August 5th, but as a subscriber, you have full access to all our
journalism published daily on our app and website.
Visit economist.com
012
The Economist July 22nd 2023 Technology Quarterly In vitro fertilisation 3
In vitro fertilisation
The most personal technology
Demand for, and expectations of, in vitro fertilisation are growing. The technology is struggling to keep up,
write Catherine Brahic and Sacha Nauta
W ith the possible exception of Adam and Eve, all human be

ings born before 1978 were conceived inside a woman’s body.
Today the world contains at least 12m people who started off in
new attempt: couples whose biology and personal circumstances
mean they are more likely to conceive thanks to ivf will do so fast
er, leaving those with lower odds to try again. For those who do
laboratory glassware. On average, four more are born every three succeed, an ivf birth will be nothing short of miraculous—leading
minutes. That is a worldwide rate of roughly one newborn in 175. them finally to have the child they could only dream of.
There are various ways in which technology can assist repro As the technology improved and the practice gained accep
duction, for example with sperm donation, hormone treatments tance, the eggs being fertilised started to come from a wider range
or turkeybasters. But no other approach has had as momentous of sources. Louise Brown, who in 1978 became the first baby to be
an effect as in vitro fertilisation (IVF). born from IVF, was conceived the year before with the sperm and
Every year over a million women go through the rigours of a egg of a married couple. She was presented both as a miracle of sci
hormonally heightened menstrual cycle that sees their ovaries entific progress but also, to stave off worries of a “brave new
produce several mature eggs, rather than the usual monthly world”, as a baby like any other from a marriage like any other.
singleton. Those eggs are collected with needles and either fertil In 1985, though, two women gave birth to IVF babies conceived
ised with sperm from a partner or donor, or frozen for later use. using their husbands’ sperm and eggs donated by other women.
Any fertilised eggs will hopefully divide to form embryos; one or That opened the way for women who were unable to conceive with
more are then transferred into the woman’s womb or, again, fro their own eggs to nevertheless give birth. It also opened up the
zen. The experience no longer carries the level of physical risk that possibility of a woman carrying a child and giving birth on behalf
once it did. It remains painful, draining and intrusive. of another couple; the first successful “gestational surrogacy” took
As IVF has become safer and more common, it has also become place a year later.
more effective, largely thanks to advances in the handling of em Then came the first successful pregnancy to begin with a fro
bryos. In Britain, 2530% of the embryos transferred to the wombs zen egg. The development of vitrification, or flashfreezing, made
of women in their mid30s now lead to live births. That is about possible “cryobanks” which store the potential for future babies—
four times better than in the early 1990s (see chart on next page). straws containing eggs, sperm and embryos—in liquid nitrogen.
Trying again does not simply multiply the odds. The more ivf cy Infertile heterosexual couples are not the only beneficiaries.
cles a woman does, the lower her chances of success with each Samesex couples and single women can make use of IVF (and, in
012
4 Technology Quarterly In vitro fertilisation The Economist July 22nd 2023
the case of men, surrogates) to have chil Spain, where maternal age shot up in the
dren that are every bit as longed for. The There’s a song to be sung aftermath of the financial crisis of 2008,
technology is also a boon for people at high Britain, IVF births as % of total embryos transferred* 10% of births are to mothers over 40.
risk of passing on a genetic disease. Since By age group The later people try to conceive, the
the 1990s it has been possible to remove 40 more they are likely to struggle to do so. If
cells from an embryo developing in a dish 18-34 † this is driving much of the increased de
and inspect their DNA for a dangerous gene 30
mand for IVF, it is also responsible for a
that one or both of the parents is known to disproportionate share of its failures. In
35-37
carry. “It is, in some ways, the ultimate Britain, 40 to 42yearolds see an embryo
manifestation of preventative medicine,” 38-39 20 transfer lead to a baby only a third as often
says Zev Williams, of Columbia University on average as under35s.
Fertility Centre: “Helping someone be born 40-42 10
It is the age of the ovary from which the
without the disease.” egg is taken, rather than the womb that
After early concerns about its unnatu 43-50 nurtures the embryo, which matters. That
ralness, often but not always expressed in 0 is why an increasing number of women in
the name of religion, IVF has become 1991 95 2000 05 10 15 21 their late 20s and early 30s are having some
broadly accepted. In some countries it has *Fresh embryo transfers with patients’ own eggs †Preliminary data of their eggs frozen. Should they need IVF
come to be seen as a tool against demo Source: Human Fertilisation and Embryology Authority in the future, perhaps because they have
graphic change; in China over 1m IVF cycles delayed trying for children, younger eggs
happen every year, the highest number for will give them a better chance of success.
any country. The process is seen as benign by most and as provi Like delayed fertility itself, this sort of “elective” freezing looks
dential by its beneficiaries. There is, though, a side of the story less as if it could increase the size of the IVF market. Currently less
often discussed in public and instead endured in private. Most than 1% of births, this could rise to as much as 10% in the places
Petridish conceptions end not in magic but in heartache. Most of where it can be afforded. In a few it is already almost there.
the embryos transferred back into patients do not implant in the Some observers see it going further. They imagine a time when
womb, or, if they do, “fail” in some other way. These are not talked it will be possible not just to fertilise eggs in the lab, but to make
about. Indeed, the language for doing so hardly exists. them there, too. Stemcell science makes it possible to turn the de
There is a word for the loss of a confirmed pregnancy—miscar scendants of one type of cell into another type. In mice, such tech
riage—but no equivalent for the loss of an embryo that never dug niques have been used to derive viable egg cells from skin cells.
into the lining of the woman’s uterus and connected to her blood
supply. There has never been need for such a word because, Sometimes never comes
though it happens with embryos conceived inside a woman, just The same has not yet been achieved for humans. If it were, new
as for those conceived in glass, in her body the embryo is never possibilities would open up. Older women who had not previously
seen, never even known about. In vitro it will have been peered at, frozen eggs might be able to have new ones made. Gay men could
monitored, photographed. A couple leaving a clinic after an em combine sperm from one with an egg grown from the cells of the
bryo transfer know they are taking a potential life with(in) them; other to have children biologically related to both.
they will have to wait two agonising weeks to find out if it devel An egg grown in the lab could also, in principle, be an egg engi
oped or decayed. The joy of the births IVF makes possible is much neered in the lab. There are currently geneediting therapies in
like the ancient joy of any birth, perhaps sweetened by the over clinical trials where cells are harvested from a sick child’s bone
coming of adversity. The sadnesses it brings are new and strange. marrow, edited to remove a harmful mutation, like that behind
Records are kept of how many IVF cycles are undergone and sicklecell disease, and reintroduced into the body. It could be
how many births ensue: globally the ratio is about four to one. Lit simpler and cheaper to edit the genome before conception. If eggs
tle is done to track how many women go through cycle after cycle were easily massproduced it might also, in principle, be possible
fruitlessly and how many couples end up, not with a child, but to fertilise them in large numbers and let couples pick out embry
with an unusually lonely form of grief: the baffling experience of os with particular genetic traits.
losing something that could have been but never was. Attempts to gain control over human biology in such ways
should set a whole peal of alarm bells ringing; the technical barri
Young dreams ers are immense, those in the realm of ethics, public morality and
The technology’s failure rate shows how little is really known safety probably larger still. They suggest a level of control over hu
about how to make a human life, and how randomly the chance to man life with which many will be very uncomfortable—and which
have children easily is distributed. Its successes hide that lack of might well be illusory. After all, IVF is commonly understood, and
understanding. Indeed they may perpetuate it. By providing a rea sold, as a way to take control of errant biology, and for many it
sonable rate of success IVF seems to obviate the need for better un proves anything but. Studies have consistently found that a ma
derstanding. Fertility researchers interviewed for this report con jority of IVF patients drop out before completing all the cycles
sistently reported that basic questions about human reproduction which their insurers or governments will cover. The main reason
remain a surprisingly low research priority. they cite is psychological strain. They are experiencing the oppo
That said, one piece of basic understanding is clear. An increas site of the “empowerment” often advertised. They feel wildly out
ingly common reason for IVF failing is age. The females of almost of control.
all other mammals can continue to bear young more or less until The authors of this report can empathise. We have, between us,
they die. Humans and five species of whale are the known excep undertaken 14 cycles of IVF, over 550 hormonal injections and
tions; their fertility diminishes with the years. countless scans and blood tests to collect around 120 eggs. Our
In most developed countries and many developing ones wom partners have made 23 visits to awkward “sperm sample” rooms.
en are postponing reproduction. In England and Wales the average Just 34 of the eggs that were fertilised made embryos that could be
age for a woman to have her first child (29) is more than five years transferred into our wombs. Thirty did not implant. Three did but
older than it was 50 years ago. In Shanghai the mean age is one failed further down the road (one ectopic pregnancy and two mis
year higher. In America one in five women now has her first child carriages, one referred to by a doctor as “tripping before the finish
over 35, which in medical terms sees her classed as “geriatric”. In line”). After five years each, only one of us is pregnant. n
012
The process cytoplasmic sperm injection”, or ICSI (see diagram on next page).

In the case of, say, blocked tubes, the fertilised eggs produced
If at first you don’t succeed... by IVF may be the first of the woman’s eggs ever to have met any
sperm. But that is not enough to guarantee a pregnancy. Every
time a sperm and an egg fuse, the sum of their parts is a unique ge
netic package. Much of whether or not the resulting embryo is via
ble and able to develop into a healthy neonate is down to dumb ge
netic luck. Not every fertilised egg naturally leads to a pregnancy.
This makes IVF a numbers game.
IVF remains largely a numbers game
Globally, between six and seven out of every ten ivf cycles will
M ost healthy young couples seeking to get pregnant will try

for a few months before they are successful. Those who are
not will try for months more, or years, before concluding they
not result in pregnancies which go to term. As a result, many
women will try more than once. In each cycle, a woman may have
one or more embryo transfers. Each of these can take months, and
need help and stepping into the waiting room of an IVF clinic. recovery adds more time. With medical tests, life, jobs and mental
They often arrive in a state of acute emotional vulnerability, downtime in between, ivf treatments can easily take a year—for
clutching at the hope that doctors will help. many it will be longer, with no guarantee of success.
For the woman, what follows is uncomfortable at best. There The older a woman gets, the steeper the odds. She has all the
are internal ultrasounds, dozens of selfadministered hormone “oocytes” which will ever develop into eggs in her ovaries when
injections into her increasingly bruised abdomen, the swelling of she is born. After puberty every menstrual cycle will see a number
her ovaries until two clutches of hard grapes appear to be knock of them activated, but normally only one of them matures in a way
ing about on either side of her pelvis. And unless she is in the that leads to ovulation. So month by month her “ovarian reserve”
lucky minority who get pregnant the first time, she will have to do gets smaller. At the same time the dna in the oocytes which re
it again. To take home a new life, most women and couples go main gradually fragments. By the time she is 45, her odds of a child
through more than one cycle; sometimes, many more. Each brings will be less than 5% with every embryo.
with it physical discomfort and pain and intense loneliness, the
emotional impact of being jackedup on hormones and the fear of Try, try again
doing something that might impact her chances of having one Doctors are used to thinking in terms of probabilities across the
more egg cell, one more viable embryo, one healthy pregnancy. population. Patients are not. Patients know people who got preg
IVF helps overcome some of the challenges of making a baby in nant on their first IVF attempt; patients have friends whose walk
two ways: first, by increasing the number of mature eggs that a ing, talking toddler was once a “lowgrade” embryo given tiny
woman makes in one menstrual cycle by means of hormone injec odds of leading to a fullterm pregnancy. Above all, patients be
tions; second, by ensuring that those eggs have the opportunity to lieve they can and will make a life through IVF, because not believ
be fertilised by sperm. This overcomes problems caused by ova ing is inconceivable and hope is what gets them to the next ap
ries that do not of themselves give up their eggs, by blocked Fallo pointment, the next throw of the dice. It is possible to sink years
pian tubes which form a barrier between the egg and the sperm and tens of thousands of dollars into multiple rounds of unsuc
swimming to meet it and by sperm that aren’t good swimmers. cessful IVF and still feel the next one will succeed.
When sperm are truly lacklustre, fertilisation can be more or less When an IVF cycle fails, especially if it is not the first time, peo
guaranteed by squirting one straight into the egg: “intra ple naturally seek out ways to change their treatment. “Rather
than thinking ‘I have to keep rolling the
dice’ people think ‘Something is wrong’,”
says Sarah Lensen, a research fellow at the
University of Melbourne in Australia.
Right on cue, clinics—particularly private
ones—step forward with a menu of “add
ons”. Through the grief of yet another fail
ure to conceive, these optional, and gener
ally paidfor, treatments offer hope that
the next attempt might just be different.
Price tags range from zero to thousands
of dollars, depending on the treatment,
clinic and country. Several can be com
bined into each round. It is basic human
psychology to think that if you pay more
you might get more. The business model of
many clinics trades on such hope.
Unfortunately, the evidence base for
these additions is underwhelming. The
draft conclusions of a study of 35 of them
by the European Society of Human Repro
duction and Embryology found that there
was sufficient evidence to recommend
that just one of the addons—the use of hy
aluronic acid to help embryos stick to the
uterine wall—be added to IVF treatment as
a matter of routine. Another—choosing the
best sperm by running them through mi
croscopic channels, a procedure held to
012
→ Vivo vitro...vici? patients are infrequent. This may come as

a surprise; patients tend to assume that
In vivo In vitro medical interventions are required to go
Fallopian tube
Eggs from patient or donor through such tests before they are ap
Eggs in storage proved. Often, though, addons are IVF
specific applications of procedures already
approved for other purposes. “Endometrial
Frozen
scratching”, which involves lightly scar
Ovary ring the lining of the uterus with the aim of
stimulating growth factors is exactly the
Used fresh same as an endometrial biopsy, normally
Thawed carried out to test for cancer. “It got re
named,” says Dr Lensen.
IVF* ICSI† Evening odds

Sperm added Private clinics have little incentive to
from partner spend investors’ money on trials with
or donor thousands of patients, especially when
there is a risk they will show addons that
are already being sold to be ineffective.
Both authors of this report were offered a
trademarked test, costing roughly $1,000,
that supposedly determines when a wom
an’s uterus is most likely to welcome an
embryo, by a clinic that later admitted it
Developing had not yet been correctly evaluated, and
embryo that subsequent trials showed it did not
improve chances of success and “may even
be harmful”.
In September 2022, after a tenmonth
investigation into misselling, Britain’s
Competition and Markets Authority and
Advertising Standards Authority together
admonished the sector for the way it uses
Embryo Embryos claims about success rates and addons.
implants in are usually Embryos in storage Some addons have become almost
womb roughly screened standard, even when they are only benefi
between days around cial to, at best, a subset of patients. In Aus
five and ten day five Frozen
tralia and New Zealand ICSI, which can
cost up to a few thousand dollars a pop, is
performed in 56% of IVF cycles. In America
the share is 60%. Yet it has been proved to
Thawed help only couples whose infertility is due
Embryo
to low sperm quality—around 30%.
transferred More controversially, preimplantation
to the womb genetic testing (PGT) is now being used in
*In vitro fertilisation
roughly half America’s IVF cycles. The
†Intracytoplasmic sperm injection most commonly used version of the test,
Source: The Economist PGT for aneuploidy (PGT-A), involves
counting the chromosomes in a few em
bryonic cells that are taken from the part of
mimic some aspect of the environment they would encounter in the embryo destined to form the placenta. Cells are meant to have
vivo—did show some promising signs of increasing the overall an even number of chromosomes and finding that to be the case is
chance of a birth, but those signs fell below the standards required taken as a good sign.
for reliable evidence. Its defenders see PGT-A, which typically carries a price tag of
In some other cases there was a possibility that the addon about $5,000, as a better way of telling which embryos will do best
might, with further testing, be shown to help a specific subgroup; than peering down microscopes in order to assess shape and de
patients with an autoimmune disease, for example, might benefit velopment, as is the historical norm. They argue that selection
from steroids. For the rest, though, there was not just an absence with PGT-A helps women who are over 35 to get pregnant faster and
of evidence that they worked; there was sufficient evidence to be that it reduces miscarriage rates.
reasonably sure they did not. A metaanalysis that Dr Lensen led Detractors point out that randomised controlled trials have
was similarly damning. None of the 12 addons it looked at was failed to demonstrate either of those benefits. And recent studies
“supported by highquality evidence that [it] is effective and safe”. have shown that “mosaic” embryos, in which some cells have odd
Three treatments, including hyaluronic acid, seemed to provide a numbers of chromosomes, can lead to successful pregnancies
benefit, but the evidence was judged to be of poor quality. even though PGT-A may rule them out. And if they are discarded
One problem is that, given scant public funding for research in there is a chance that the woman’s overall chance of getting preg
this area, randomised and blinded studies with large numbers of nant may drop. n
012
Baby-making as a business
Selling hope
The fertility sector is booming
I VF accounts for around 9% of live births in Denmark, the high
est proportion in any country. For average number of cycles un
dergone per woman, the winner is Israel. The fundamental rea
sons for the two countries’ preeminence are distinct: Danes are
strong supporters of women’s and family rights and understand
fertility as part of the package; Israel is, culturally and politically,
much more probaby than other rich countries. The proximate
reason, though, is more or less the same. In both countries the
state makes IVF widely available and (nearly) free. Israel, in this re
spect the world’s most generous country, will in most cases pay for
as much IVF as it takes to have two “takehome babies”.
In most of the world most couples cannot afford IVF. A recent
study in lowerincome countries found that a single cycle costs
between 50% and 200% of people’s average annual income. There
is a sad irony in this. Among the forms of infertility for which IVF
is particularly effective is a blockage in the Fallopian tubes, which
often arises as a complication of infection. Those complications
are most commonly suffered by poor women in poor countries.
The population least likely to get access to IVF thus contains a dis
proportionate number of those it was originally designed to help.
Even in countries where IVF accounts for 1% or more of births,
prices are high enough that, unless governments either mandate
that they be offered by health insurers or provide the service them
selves, most women cannot afford it. An American whose insur comparison published in 2014 found that for every percentage
ance, if she or he has any, does not cover IVF can expect to pay point of average disposable income that the price of IVF drops, de
$20,000 a cycle. Unsurprisingly this means a lot of people who mand increases by 3%. It all suggests that companies which can
need treatment do not get it. Eduardo Hariton of US Fertility, a net bring costs down so as to attract more clients could do very well
work of clinics, reckons that for every patient who gets IVF in out of it. And some are trying to do just that.
America as many as four more may go without. Five years ago Joshua Abram, a veteran tech entrepreneur, co
Politicians are paying increasing attention. Five years ago, founded Conceivable Life Sciences, an IVFautomation company
there were nine American states where insurers were required to with headquarters in New York City. Neither he nor his business
cover some IVF treatment. Today there are 14. Employers are aware partner knew anything about reproductive technology at the time,
of the value placed on access to fertility treatments, too. Job pack but they could see a market gap. “Because we know that 10% of
ages which included fertility benefits such as IVF were once just a kids in a just world will be born through IVF, versus less than 1%
perk for Silicon Valley. Today, according to Mercer, a consulting today, solving this is one of the great medical and ethical opportu
firm, four in ten large employers include them. In online infertil nities of our lifetime,” says Mr Abram. “And indeed a mammoth,
ity forums, women exchange tips on where to get jobs with cover mammoth business opportunity.”
age. Walmart, America’s largest employer, recently started offer
ing fertility benefits through Kindbody, a chain of clinics. The Hope springs eternal
chain last year built a clinic near to its new client’s head office. It The sector is certainly soaking up capital. As the entrepreneurial
opened another one near Lockheed Martin in April. doctors who set up the first generation of fertility clinics reach re
Potential patients with financial worries increasingly look to tirement, investors have been buying their businesses on the ba
travel abroad as a way to afford what they cannot at home. So do sis of opportunities for consolidation and strong growth pros
some patients looking for regulatory regimes more permissive pects. “In the past decade, while the overall birth rate declined, the
than those they live under (see box on next birth rate resulting from ART [assisted repro
page). The barriers that going abroad may cir ductive technology] grew around 6% annual
cumvent include restrictions on who can try ly,” says Jennifer Gregoire from McKinsey,
to conceive (several countries restrict IVF to
About a third of IVF calling it “a market with strong tailwinds”.
married couples) and on how they can become cycles in America are The investments are often from private
parents (some countries ban surrogacy or the done through clinics equity (PE). Today about a third of IVF cycles in
use of donated eggs). But many destinations, affiliated with America are done through clinics affiliated
including the Czech Republic, Mexico and with PE funds. In January KKR, a PE firm, paid
Thailand, are popular at least in part because
privateequity funds €3bn ($3.2bn), a very high multiple of earn
they are cheaper. ings, for IVIrma, a large Spanish chain of clin
The evidence of price sensitivity provided ics. Such investment has driven a new level of
by such IVF “tourism” is backed up and quan consolidation. In Australia three networks
tified by formal research. An international now provide around twothirds of all cycles.
012
For the most part, though, these large organisations are not ways to make already fairly fat margins fatter. Zealously catering
particularly focused on increasing access. After all, patient num to patients’ desperation through “addons” to their IVF despite
bers are going up even though prices are not coming down. their lack of proven success (see previous article) is one. A recent
Though they do not see it this way, the clinics’ customers are buy study found that in America PGT-A, a controversial addon, is sig
ing hope as much as, or more than, they are buying healthy preg nificantly more likely to be part of IVF treatment in a PEaffiliated
nancies, and it is easier to upsell hope than increase the number of clinic than elsewhere.
pregnancies that go to term. “Bringing hope to life” is the headline
for Columbia Fertility Associates’ sales material. “The best way to Profit pushes perpetual
predict your future is to create it,” assures Liv Fertility in Mexico. The newest vendors in the hope market are a wave of “reprotech”
“Every two hours an SGF baby is born,” says Shady Grove Fertility. startups, some associated with starry names: TMRW, which has an
Websites juxtapose pictures of smiling babies with figures pur automated system for freezing and storing sperm, eggs and em
porting to provide a “success rate”. Professional associations cau bryos, boasts investors including Amy Schumer, a comedian, Pe
tion against choosing providers on the basis of such numbers. ter Thiel, a venture capitalist, and Susan Wojcicki, the former ceo
They can be inflated or massaged through a number of presenta of YouTube. Legacy, which sells sperm tests, dietary supplements
tional tricks. It is often impossible to tell if one site’s claimed rate that claim to improve sperm quality and spermfreezing services,
is truly comparable to another’s. Think of the range of metrics that is backed by Justin Bieber, a musician.
fund managers use to claim “aboveaverage” returns, and then re At the Reproductive Health Innovation Summit held in Boston,
member that fund managers’ claims are much more regulated Massachusetts, in February, entrepreneurs from around the world
than those of fertility clinics. But in the absence of other clear dif pitched everything from AI that promises to select the best sperm
ferentiators they will be the numbers to which most of the hope to needles that make hormone injections easier. At times, the pro
market’s consumers latch on. ceedings felt like a speeddating event. The emphasis was largely,
Other things being equal, buying more tends to bring people though not exclusively, on trying to improve the process and out
more hope and a greater sense of control. This offers a number of comes for existing patients rather than lowering prices to improve
Reasons of state
Our bodies, ourselves. Or not
Governments often have clear ideas about what sort of families they want to facilitate
T he characteristics that can dis
qualify people from being allowed to
access IVF are, for the most part, relation
about her decision on social media.
“Fertility technology is a great invention
for feminism, especially Asian femin
ship status, sexuality and age. ism,” she says. “I wanted to show my
Restrictions on the use of assisted friends and peers that this is possible.”
reproduction by samesex couples and Some countries allow only women
single women have been loosened across with a medical reason for freezing their
much of the West. But the liberalising eggs to do so; others require that frozen
trend is far from universal. A number of eggs, like fresh eggs, be used only in the
European countries, including the Czech context of a heterosexual marriage, or
Republic and Italy, still allow access only only in the wombs of women below a
to heterosexual couples. A recent survey certain age. Malaysia has banned freez
of changes to regulations concerning ing for single Muslim women while
sexuality and IVF in 18 countries by the exempting those of other faiths or none,
International Federation of Fertility thus preserving the business of clinics
Societies (IFFS) found that in 201821 five serving patients from China.
increased access for samesex couples Other areas of disagreement include
and six decreased it. donation and genetic testing. Two Euro
In Japan, where subsidies for IVF are In China, which is one of them, eggs are to pean countries allow neither egg dona
being enacted as a response to demo be used now, in existing relationships. tion nor sperm donation; three more
graphic change, parliament is discussing Ruling for a hospital that refused to freeze allow sperm donation but not egg dona
a law that would determine who is eligi a single woman’s eggs in a case last year, a tion. Embryo donation is banned in 14.
ble for treatment. The outcome could Beijing judge cited the “psychological and Eleven European countries do not allow
limit treatment to married couples, societal problems” a large age gap between preimplantation genetic testing for any
which would exclude gay couples: an mother and child would bring. “nonmedical” reasons; most of Europe
interest in more children does not neces The freezing of Chinese women’s eggs strictly forbids its use for sex selection.
sarily trump concerns about what sort of is a growing business for many clinics In places where such selection is tolerat
families there should be. elsewhere. Erika Wang, a 33yearold from ed, which include America, Mexico,
Such concerns are clearly seen when Zhejiang province, recently had her eggs Northern Cyprus and Ukraine, this abil
it comes to freezing eggs, something 35% frozen in California at her Singapore ity to choose constitutes something of a
of countries surveyed by the IFfS forbid. based employer’s expense. She has posted sellingpoint.
012
access. “Almost all of this caters to the women who can already af through the cervix of egg collection for IVF. Yet a sense that it is a
ford IVF and just digs deeper into their pockets,” grumbled one way to make the lives of strangers better still moves some women
veteran fertility doctor. to donate. Niamh, from the English city of Nottingham, donated
Some think that technology could do more. David Sable, a re her eggs for the first time when she was 20 after hearing an ad on
productive endocrinologist turned venture capitalist, reckons the radio. “I thought ‘I’m not using my eggs, why not?’” she says,
that the right investments could raise the worldwide number of six years on. Learning that the first attempt to make a baby from
IVF babies from 64,000 per month today to over a million a them did not work triggered a feeling of disappointment. “I want
month. At Conceivable Life Sciences Mr Abram says he is confi ed it to work for someone.” So four years later she donated again.
dent of being able to reduce costs by as much as 70% in America
and 50% in Britain. A large part of the company’s plan rests on cen Affective altruism
tralised labs with hypermodern microscopes and lots of automa One of her biggest complaints is poor information. Although she
tion. They also think there are savings to be made by using local knows that her first donation did not make a baby, she does not
gynaecologists rather than higherpaid fertility doctors. know the outcome of her second donation. “That is something I
Such investments may pay off in time, especially if insurers get have a fundamental problem with,” she says.
behind them. But for now the IVF part of the ART sector remains fo By unbundling aspects of parenthood that used to be all of a
cused largely on selling more hope to the sort of people who are al piece, assisted reproduction brings new types of relationships
ready in a position to buy it. into the world just as it brings new babies and new sadnesses.
This will not stop the spread of IVF. But the current state of play Some donors want to know at least something about the children
makes it likely that investors and entrepreneurs will not be the they have made possible; some want complete twoway anonym
driving force. Politicians will be—whether because they just think ity. Some children want to know about their donors, or about the
it is the right thing to do, as in much of Europe, or because they other children who received some of their genes from the same
worry about ageing populations, as in a lot of Asia, or because donor—“diblings”, as they are sometimes called. Others do not.
their voters are increasingly insistent. n Then there is the relationship, or at least the flow of informa
tion, between donors and parents. The amount parents may want
to know about donors will differ from couple to couple, and some
Donation and preservation times between two partners. Different countries give the different
players different rights in all these regards.
Eggs from elsewhere Comparing Britain and Spain brings some of the issues to the
fore. ivf with egg donation is an order of magnitude more com
mon in Spain than any other country except America, where half
as many such cycles are done. “It’s taken for granted that it’s an op
tion,” says Sara LafuenteFunes, a sociologist at Goethe University
in Frankfurt who has studied egg donation in the country. She says
Some women need eggs from other people,
the Spanish IVF sector has a particular focus on delayed reproduc
or from their younger selves
tion, which economic uncertainty has made common in Spain:
“Y ou will not have a child with your own eggs,” were the hard the average age of firsttime mothers is 32. If delayed reproduction

est words to hear. They were delivered late last year to one of is the focus, donation is an obvious area in which to specialise.
your authors and her partner, after five years of failed IVF, by a Its status as a donation hotspot leads many British couples to
doctor who quickly moved on to the remaining options: adoption investigate the possibility of a Spanish donation. To do so, though,
or seeking the help of an egg donor. means tradeoffs, both for themselves and for their children. Par
Coming to terms with the idea that you will not pass on your ents choosing a donor in Britain can search a database like one at
genes even if you do still bear a child is another of the strange new the London Egg Bank by eye or hair colour, height or education.
forms of loss that IVF has brought with it. It is possible to know They can even read a handwritten letter from the donor, if she has
that genes are not the essence of what it is to be part of a family— supplied one. In Spain they learn nothing about any distinguish
that stepchildren can be loved unconditionally, that people may ing characteristics: the clinic will attempt to match the mother’s
bear scant, if any, resemblance to their genetic forebears—and still looks to the egg donor’s, perhaps using biometrics, but will pro
struggle to adjust to what can feel like a loss of parental identity. vide no information about her. That devotion to donor privacy
The possibility of being an egg donor is also means that, whereas a child conceived
also a historical novelty. That men might in the British system has the right to learn
have children of whom they are unaware their donor’s identity when they come of
barely needs saying; that women can do so The big give age, a child born through the Spanish pro
is new. It is also becoming increasingly fre Britain cess does not.
quent, partly because of growing demand One thing that British and Spanish do
IVF cycles*, by egg Egg-freezing cycles†, by
from older wouldbe mothers. (The use of nors have in common is that the system in
and sperm source, ’000 selected age group, ’000
donated sperm is also rising in many plac which they make their donations allows
es, but that is primarily because of demand Donors for both 18-34 35-39 them to be compensated for doing so. In
8 2.0
from single women and samesex cou some countries, such as Italy, no money is
Patient eggs,
ples.) Where it was once necessary for a do donor sperm allowed to change hands when eggs are do
6 1.5
nor to have her menstrual cycle synced Donor eggs, nated. In most of the rest of the world the
with the recipient mother’s, and her eggs partner sperm 4 1.0 donor can be compensated for the travel,
collected just before use, efficient egg time off work, inconvenience and discom
freezing now means donors can stick to 2 0.5 fort that donation involves. In Spain do
their own schedules and their eggs can be ‡ ‡ nors receive €8001,300 ($8901,450) per
stored until needed. 0 0 donation cycle. Britain caps compensation
That hardly makes the process easy. Egg 2000 10 21 2000 10 21
at £750 ($980) per cycle.
donation has all the hormonal helterskel Source: Human Fertilisation *2019-20 decreases attributed to covid Though in principle such compensa
tering, internal monitoring and needles and Embryology Authority †For patient use ‡Preliminary data tion is not meant as an inducement, in
012
practical terms it can serve as such, at least in having their eggs frozen; some had done so. So
part. Dr LafuenteFunes says that compensa when a romantic relationship she was in end
tion in Spain is set at a level that will enable ed abruptly she decided, “If I’m going to do it, I
clinics to recruit donors, young women who
Some demand for should do it now.” She flew home, where freez
are normally less wealthy than the recipients. freezing may stem from ing was cheaper and her mother could admin
But that economic motive does not make do a belief that the egg in ister the daily jabs, and was lucky enough to
nation simply a commercial transaction; the the freezer might as have 31 eggs collected.
money “does not mean that the donors are not After collection, Sophie’s eggs were pre
at the same time altruistic,” she says.
well already be a baby pared for storage, something which involves
In some regimes commerce has a much dehydrating the cells and adding a “cryo
fuller role. In America, where compensation protectant” to them. If this is not done, ice
is not capped, online eggbanks can feel eerily crystals can grow in the cell’s watery cyto
like dating apps, but with far more informa plasm and disrupt the cell’s internal structure.
tion: tastes, hobbies, personality profiles, emotionalintelligence With ample cryoprotectant and the freezing done very quickly, the
scores and baby pictures. Donor Nexus, an agency based in Cali cytoplasm solidifies into a glass rather than an array of crystals.
fornia, offers “premier” donors with “specific...desirable traits That preserves its structures far better.
such as higher education, rare ethnicities, professional athletes, Having been plunged into liquid nitrogen at 196°C (320°F) So
musicians or models”. phie’s “vitrified” eggs are now safely tucked away in a freezer in
The prices paid to donors—from a few thousand dollars to Southampton. Studies suggest that, in a properly proficient lab,
$10,000 or even much more, according to Diane Tober, a research nine out of ten frozen eggs survive thawing. What is more, the
er at the University of Alabama—vary by region, agency and donor length of time the egg remains frozen seems to have no impact on
profile. Some firms pay more to donors with higher SAT scores. Ads its future prospects.
in university newspapers reflect the fact that students are well
suited to the market’s needs: typically young, presumably smart, The cold never bothered me anyway
relatively rich in free time and often conscious of the debt they are Before vitrification, eggfreezing was rare. Efforts to preserve fer
accruing. The fact that they can donate batches of eggs directly to tility tended to focus on the freezing of embryos, which was more
the freezer makes the process inherently less personal. reliable because their cells are smaller. That made it mainly an op
This commodification upsets many ethicists. Its commercial tion for women who already had partners or who used donor
logic may also expose donors to harm. If the eggs themselves are sperm. Now, thanks both to the new technology and the cam
valued, rather than the act of donation, the incentives to produce paigners who have raised awareness of it, in many places it is rou
more eggs are increased. Anecdotally, egg donors report that they tine for women facing, say, chemotherapy, which might harm
are likely to be given levels of hormones that put them at greater their eggs, to have some frozen.
risk of complications than is normal in IVF. Research by Dr Tober Two other groups have taken an interest in becoming their own
supports some of these concerns. future donors. The first, who tend to be older, would like to have a
Increasingly, though, younger women have their eggs collect child right away, but are not in a position to do so, often due to
ed for another reason: to make them available to their older selves. the lack of a partner. The second, mostly younger, do not wish to
Sophie, a 31yearold Britishborn research fellow in Philadelphia, have a child yet but want to give themselves every possibility of
is a case in point. Many of her American friends were talking about success when they do. The first group was initially bigger, but sev
eral clinics report the average age has been
coming down. FertilityIQ, which provides
courses to people considering assisted re
production, reports not just that egg freez
ing is one of the most popular ones, but
that the average age of those taking it has
dropped from 38 to 32 in just six years.
There are worries that some of the de
mand for elective freezing from younger
women stems from a belief that it is fail
safe: that the egg in the freezer might as
well already be a baby. @annelisejr, a Tik
Tok influencer, reflected what many may
feel when, having frozen 13 eggs, she post
ed: “It’s a relief knowing once I’m ready
many years from now I will be able to have
little Annelises.” She may well have in
creased the possibilities, but little ones are
never a sure thing. What freezing offers is a
slowing down of the rate at which the odds
lengthen against you, should you at some
point need IVF.
In the largest American study so far
70% of a group of women who had started
freezing their eggs before they were 38 and
who thawed at least 20 eggs were able to
have a baby. Good, but not perfect. Younger
women may do better. That said, clinics
without a track record piling into the grow
012
ing market may make things worse. “If there’s a potential black eye In 2016, a team led by Hayashi Katsuhiko, then at Kyushu Uni
for the sector down the road,” says Jake AndersonBialis of Fertil versity, announced that it had turned iPSCs from a female mouse
ityIQ, “egg freezing could be it.” into egg cells, fertilised them and implanted the resultant embry
Sophie, who says she has always wanted a number of children, os into the uteruses of other mice. This eventually produced eight
knows that freezing does not guarantee that she will get them. But healthy pups. In March this year a team which included several of
£5,000 and three weeks over the Christmas holiday have brought the same researchers announced that, by using stem cells that had
her “a huge amount of peace” along with a new romantic freedom. lost their Y chromosome, they had managed to do the same thing
The control over their fertility offered by the pill let women enjoy with eggs made from the skin of a male mouse.
sexual relationships without worrying about getting pregnant. These feats of reproductive wizardry have generated a palpable
Egg freezing allows them to explore relationships into their 30s excitement about the new field of fertility research called “in vitro
without worries about a lover’s suitability as a coparent. “I just gametogenesis” (IVG). If it proves capable of producing healthy
want to be able to date like a man,” says Sophie. eggs where there were none before, it could herald the biggest
Why would she not? Women are not delaying reproduction change in reproductive technology since IVF itself. Henry Greely
simply to concentrate on their careers. They are doing so because of Stanford University, a legal scholar who specialises in the ethics
forming a relationship with someone with whom you want (and of new biotech, thinks IVG may within a few decades be widely
can afford) to raise children takes time, whether you are a woman used even by those who have no fertility problems. The reasoning
or not. As Marcia Inhorn, an anthropologist at Yale, puts it in her is that, if IVG proves capable of producing viable eggs in copious
recent book “Motherhood on Ice”, vitrification will not fix the is amounts, it could allow the production of a large enough number
sues driving women to have their children later. But the technolo of embryos to allow screening for a wide number of genetic traits,
gy does offer them the hope of a “reproductive suspension bridge”. and that could be something many parents might want.
What women like Sophie are choosing is a personalised ver
sion of what Dr LafuenteFunes sees writ large in Spanish society: Of mice and semen
a transfer of reproductive capacity from younger to older women. The biologists behind the breakthroughs are far more circum
Such transfers are often seen as a way to deal with a crisis in repro spect. Dr Hayashi, now at Osaka University, is wary of brash state
duction that does not address its root causes. But for some women ments about IVG’s prospects in humans. Amander Clark, a biolo
the transfer is an unambiguously empowering expansion of her gist at the University of California, Los Angeles (UCLA) who has
future options. And if, as is increasingly the case, women freezing been working on IVG since the early 2000s, reckons it is “at least a
their own eggs also donate some—perhaps immediately, to defray generation, if not two” away from “ever getting to the clinic”. Ne
the costs, perhaps later when they have used those which they vertheless, patents are being filed, VC wallets are opening and ea
need—the benefits may be spread further. n ger entrepreneurs are poking around academic labs seeking
skilled researchers to poach.
The most obvious beneficiaries of a future in which people can
In vitro gametogenesis have new oocytes made from other cells will be women with low
ovarian reserves, either because of age, because cancer treatment
Eggs from scratch has meant their ovaries had to be removed, or for some other rea
son. The technique could also offer eggs, and thus genetic parent
hood, to transgender women and gay male couples. But experts
expect that translating what has worked in mice into something
that works for people will be very hard.
To make eggs from mouse cells means coaxing iPSCs into be
New ways of making babies are on the horizon, but they are
coming cells that look like “primordial germ cells”, common an
not yet to hand
cestors to egg and sperm. Those cells then have to be convinced to
T he human genome can create cells with a remarkable range of
capabilities and shapes. Looked at under the microscope, the
enterocytes which line the gut bring to mind the ghosts from a
produce primary oocytes which themselves must then be matured
into egg cells that can be fertilised. Early experiments led by Saitou
Mitinori of Kyoto University and Dr Hayashi got the germ cells to
PacMan video game. Neurons look like medieval morningstars, go eggy by transplanting them into the ovaries of infertile mice.
but with long hair. But none is more special than the big, round Signals from the tissue around them were clearly key, so the team
egg. It is not just the largest of the cells. It is also, once fertilised, set about reproducing them in vitro using cells from mouse ova
the cell from which all other sorts of cell are descended. ries (see diagram on following page).
The size of the egg allows it to carry the nutrients and chemical The Japanese team also transplanted germcelllike cells into
building blocks needed for the first days of an embryo’s develop mouse testes, where they developed into cells that produced
ment. As those days tick by, the single large cell of the fertilised sperm. They have not done the same thing entirely in vitro; a
egg splits into two, then four, eight and onwards until they are claim to have done so by Zhou Qi at the Chinese Academy of Sci
countless. In the earliest stages, the divisions produce “stem ences and others has not been replicated elsewhere. To make
cells”, from which all sorts of others can be derived. As time sperm that way would be another step forward, but a less conse
passes, the cells specialise, expressing some genes more and some quential one. Eggs are in much shorter supply than sperm. And in
genes less, eventually producing all the intricacies of tissue and nature sperm production requires Y chromosomes. Without fur
organ the newborn needs, right down to its toenails. ther innovation that would rule it out for a woman in a samesex
In nature, this differentiation is a oneway street. In the labora partnership, or a trans man, who wants to fertilise a partner’s egg.
tory, not so much. In 2006 Yamanaka Shinya and Takahashi Kazu In humans, Dr Clark has got as far as making primordialgerm
toshi of Kyoto University showed how cells which expressed the celllike cells from human skin. Dr Saitou has achieved the same
genes appropriate to being part of a mouse’s skin could be stripped thing using blood cells and, by incubating the products with re
of their dermatological determination and reprogrammed to be constituted mouse ovaries, has nudged them one step further, to
come something very like the stem cells which are found in em become “oogonia”, a closer precursor to egg cells. Matt Krisiloff,
bryos. These “induced pluripotent stem cells” (iPSCs) could, with the boss of a Californian startup called Conception, says his com
the right cues, be turned into almost any other sort of cell. The pany is further along, and could conceivably produce the first
next year they showed how to create human iPSCs. “proofofconcept” mature human oocyte “within a year or maybe
012
Unfortunately, experience and experi

ments have revealed a problem. Small
amounts of mitochondrial DNA from the
mother can get into the embryo along with
the nucleus and gradually push out the mi
tochondrial DNA from the donor, a process
called “reversion”. First identified as an is
sue in animal studies, reversion has now
been seen in at least one human case, luck
ily not one where the mother was a carrier
of mitochondrial disease. It is a sombre
warning shot about experimental repro
ductive technologies.
Regulators are taking a cautious path
with IVG. In Japan researchers are banned
from fertilising any human eggs they pro
duce using the technique. Elsewhere fertil
isation is allowed for research purposes,
but not for reproduction. In Britain the Hu
man Fertilisation and Embryology Act
specifies that only the products of geneti
cally unaltered eggs and sperm extracted
from a man or woman’s reproductive or
gans may be placed inside a woman. In
America, any human tissue that is more
than “minimally manipulated” becomes a
drug or device and this falls into the pur
view of the Food and Drug Administration.
The FDA has taken a keen interest in mito
two”. In May he showed The Economist pictures of iPSCderived chondrialreplacement therapy; if it thinks those manipulations
cells which the company believes to be relatively advanced pre are more than minimal it seems very likely to feel the same about
cursors to human oocytes. those involved in IVG. “They would probably claim that the sperm
When the same pictures were presented at a scientific meet and eggs were drugs,” says Mr Greely, “and they certainly would
ing, though, some attendees were unconvinced. And even if Mr claim the embryo was.”
Krisiloff is right and IVG eggs are just a couple of years off, he does Regulators and the politicians to whom they answer will weigh
not expect them to be of the quality a clinic would require or a reg questions beyond patient safety and welfare. As Lucy van de Wiel
ulator insist on. “It’s possible that the first egg cells could turn out of King’s College London, puts it, “There’s a lot of controversy
to be totally normal,” he says. “But I will be really surprised.” around people using technologies to have children later in life,
In the Japanese experiments, fewer than 5% of mouse eggs particularly if those people are women.” Adding trans women and
made from iPSCs produced healthy pups (the success rate with gay couples to the mix will hardly defuse that controversy. The
eggs from the ovary is 6070%). The longer eggs spend in glass comparative ethical and technical simplicity of egg donation may
ware the more development is thought to be disrupted, and iPSC see IVG’s role limited to special cases.
derived eggs spend a lot of time in glassware. On top of that, iPSCs
tend to accumulate mutations and chromosomal abnormalities of Eggs of Eden
the sort which, if seen in an embryo, would greatly increase the If controls were to be very strict, or even prohibitive, they might
risk of miscarriage and birth defects. possibly be circumvented. Many suggested this would be the fate
Another advance in reproductive technology, mitochondrial of the bans on human cloning enacted after Dolly, a sheep, was
replacement therapy, offers a cautionary tale. Mitochondria are cloned in 1996. But there is no evidence that they have been. Clon
cellular components that drive metabolism. Unlike all the other ing human embryos in the lab is possible; techniques similar to
gubbins in animal cells, they have their own genomes, a handful some of those used in mitochondrial replacement can place a new
of genes kept on their own little bits of DNA rather than on chro nucleus into an egg just after fertilisation. But despite a copious
mosomes in the nucleus with the main genome. supply of the rich, the morally challenged and the megalomaniac,
All the mitochondria a human has come from its mother; the any incipient demand the world may have for minimes seems to
egg’s copious cytoplasm is full of them. So if a woman has a dan have so far gone unfulfilled.
gerously faulty mitochondrial gene this can The market for IVG seems likely to be larger
be bad news for her children. One way round than that for cloning. But that hardly means it
this is to fertilise such a mother’s egg and a do will spring up as an undergound offering. As
nor egg at the same time and then replace the
“First we have to Dr Hayashi points out, IVF is popular because
nucleus in the fertilised donor egg with that understand the basic it is relatively safe, easily performed and un
from the mother’s egg. The resulting embryo mechanism of how eggs controversial. IVG is none of those things, at
has a nuclear genome provided by the mother get old, then we can try least not yet.
and father, as usual, and a mitochondrial ge That is one reason why Dr Hayashi’s cur
nome from the donor. This mitochondrial re
to find a way to stop it” rent research focuses as much on eggs still in
placement (sometimes misleadingly seen as ovaries as on eggs created outside them. A girl
producing “threeparent” children) is also hitting puberty typically has a few hundred
practised, in some clinics, as a possible way to thousand primary oocytes; they are the cells
better the odds for an older woman’s eggs. that can become mature eggs. Every month
012
somewhere between a few and a couple of dozen of them will be The work still needed
activated and begin to mature. Only one or two will make it to full
maturity and head out into the Fallopian tubes. The rest are, from Conception, reconceived
then on, out of the equation. (The hormonal manipulation used in
IVF cycles is designed to get round this winnertakesall approach
and let as many as possible of the activated eggs mature.)
Some researchers believe control over the activation and mat
uration of the primary oocytes could help women who do not re
A dearth of basic research has hampered assisted reproduction.
spond to hormonal stimulation. Dr Hayashi’s team recently iden
That may be changing
tified four of the genes involved. A better understanding of the
process might make it interruptible. Today’s contraceptive pill is
designed to stop ovulation, but not to keep oocytes from matur
ing. A pill that stopped oocytes from being activated might work as
O n the third day after fertilisation a human embryo is made
of six to 12 roughly identical cells; on day four its cells appear
to fuse into a mostly uniform blob; and on day five it puffs out to
a contraceptive while keeping a woman’s stock of eggs from reveal two completely new groups of cells—an outer layer that will
shrinking month by month. go on to form the placenta, and an inner clump that will develop
Quality, though, is as important as quantity. A woman’s oo into the fetus. How this happens is a mystery. So is how things
cytes accumulate chromosomal abnormalities as she ages. Older happen after day six—a particularly frustrating one, given that it
women who go through repeated rounds of IVF become painfully overlaps with the crucial stage during which the embryo readies
aware that they are not only producing fewer eggs, but also that a itself for implantation into the wall of the uterus and a pregnancy
growing number of those eggs generate embryos with genetic de either begins or does not.
fects that prevent them from progressing to full pregnancies. Many tens of millions of human embryos have been created in
Dr Hayashi wonders if this could be changed by identifying the laboratories over the past half century. Yet how they achieve their
specific processes that cause eggs to deteriorate. One insight remarkable development from a single cell to a human being re
which may help is that the quality of egg cells, and their ability to mains, in substantial ways, opaque. The fundamental mechanics
generate viable embryos, varies with their levels of cohesin, a pro which govern how a new human life takes shape—the cellular,
tein which helps hold chromosomes together and is involved in molecular and genetic underpinnings of human fertility and in
the repair of DNA. fertility—are, largely, a black box.
Do not look for a cohesin booster any time soon. “First we have There are many reasons for a lack of research into the basic bi
to understand the basic mechanism of how [egg cells] get old,” ology of babymaking. One is that health issues perceived as sig
says Dr Hayashi. “Then we can try to find a way to stop it.” But the nificant mostly to women have often been treated as low research
new tools he and others are bringing to that understanding are priorities. Another is that such studies have, until now, relied on
cause for hope—and make a strong case for a new commitment to donations of tissue, eggs, sperm and embryos. Research which
the basic science of fertility. n creates human embryos raises issues that some funders will not
countenance. Since 1996 America’s National Institutes of Health
(NIH), the largest funder of biomedical research in the world, have
→ Gamete, set and match been forbidden by law from spending money on research in which
human embryos are created for research purposes only, or in
which any embryos are destroyed. It is “difficult for scientists to
Reprogrammed to make Differentiated into
induced pluripotent primordial germ cell- even engage in new innovations in IVF and overcoming those real
Skin cells stem cells (iPSC) like cells (PGCLC) ly challenging cases of infertility” under such conditions, says
Amander Clark of UCLA.
Then there is the nature of the problem being faced. Unlike
cancer, which attracts a huge amount of research spending, infer
tility is not a lifethreatening condition and often not really seen
as a lifeimpairing one either—if it is seen as a medical condition
at all. The American Medical Association did not recognise infer
tility as a disease until 2017. Nor are drug companies queuing up to
Fetal ovarian PGCLCs mixed with Chemical signals from the
tissue ovarian “support” cells ovarian cells cause them take a crack at the problem. They make little money out of infertil
to mature into oocytes ity treatment, and they allocate research money with the bottom
line in mind.
Confusion is nothing new

Finally, research efforts are made in the context of IVF’s success.
On average, IVF has been doing an ok job, working (in the end) for
roughly half of those who try it. That makes alternative approach
es less urgent. At the same time it masks the fact that growing driv
Oocyte fertilised Egg transferred into
with sperm collected surrogate mouse ers of infertility today—most notably, people seeking to start their
Sperm from a male families later—are not the sort of physical problems that IVF was
designed to address. Thus an increasing number of people find
themselves left behind by reproductive medicine, with all the
frustration and heartache that follows.
Added to this, ivf’s technical success is not of the sort of thing
basic scientists are used to building on. The technique did not
spring from insights into how fertility worked or could be im
Less than 5% of in vitro proved, but on first contriving a change of venue that maximised
gametogenesis (IVG) the chances of fertilisation and then making repeated attempts at
Source: The Economist eggs make pups implantation and pregnancy. Its success came from learning how
012
3050% success rate per egg. When such a woman donated eggs for
IVF, Dr Vassena noticed the success rate frequently fell to 10% or
so. “Our goal should be to [get] as close as possible to natural fertil
ity,” she says. “We are far away from that.”
Help seems to be at hand. Basic research into stem cells has
brought forth the possibility, though still a distant one, of making
eggs and possibly sperm for use in clinics through IVG (see previ
ous article). The provision of eggs for research is a nearerterm
possibility, freeing researchers from their reliance on donations.
And the insights derived from watching and manipulating the
production of eggs and sperm should prove very useful. Roughly a
quarter of infertility is due to anovulation, a condition where
women do not produce oocytes. This sort of fundamental research
might provide a treatment for that. It is quite plausible that IVG
will contribute more to infertility as a research tool than as a clin
ical alternative.
Time after time

Research will not be limited to eggs and their development. Work
done with stem cells and their derivatives could make good the
current lack of human tissues that can be used for research. Stem
cells that have been nudged into mimicking early embryonic cells
and placed in a dish are able to selfassemble into threedimen
sional structures that resemble those seen within the first weeks
after fertilisation. Fertility researchers in America, Europe and Is
rael are using stem cells to create such “embryoids” and study the
processes that go on within them.
Some embryoids are built to mimic the entire embryo, others
just one aspect of its development. Neither sort “will ever be used
for reproductive purposes”, says Dr Clark, adding that the latter
type of embryoid lacks any potential to form a baby. “They are ask
ing very specific questions about very specific cell types.” Such re
search should provide answers to questions about infertility—like
to extract eggs, recognise viable embryos and transfer them to the what it is about an embryo which leads to a miscarriage—and also
womb. Getting better at those things provides babies to some; it congenital disease—such as how does the heart form when it
does not explain how they are made. forms properly?
“We are doing things a little bit backwards because we are As with IVG, the challenges are not purely scientific. Both tech
missing the base,” says Rita Vassena, CEO of Fecundis, a Spanish niques raise questions about what science is ethically acceptable.
Argentinian biotech company. ”We don’t have a clear understand The NIH is negotiating the federal ban on funding specific types of
ing even of how normal physiology in detail works...Because we work with embryos by allocating grants to embryoid research on a
are missing this very substantial bed of understanding under casebycase basis. The IVG question has not yet come up.
neath what we do, it is very hard for us to do something because A steady supply of new ethical questions is an inextricable part
[for example] we know that if we change this receptor then this of assisted reproduction. Indeed, those raised in the lab can be
cascade will work differently and the cell will do [something dif comparatively simple compared with those already faced by judg
ferent]. By and large, we don’t know.” This is very different to many es who have to decide questions such as whether parents can use
areas of medical research—most notably, at the moment, cancer— frozen cells from deceased children to create a new generation. As
where a layered understanding of how cells function is used to de what makes a human becomes better understood, and as new
sign treatments that are meant to correct specific problems. ways of helping the process along become more practical, new ar
Rather than being optimised according to an understanding of guments for legal constraint may arise.
what happens naturally, current practices are developed on the For many, though, they will be a price worth paying if, at the
basis of what has worked in the past. Different clinics have differ same time, inbuilt biological constraints are lowered. Such ad
ent practices for how to store sperm samples ahead of fertilisa vances could realise new possibilities for samesex and transgen
tion. Embryologists who have analysed the commercial solutions der parents and provide women with new ways to stop and reset—
in which clinics grow embryos have found different makeups. or render irrelevant—their biological clocks. The joy of parent
That might suggest that the exact nature of the incubation medi hood that IVF has brought to millions could be spread yet further.
um does not matter much; alternatively it might mean that there The heartache of a failed IVF cycle would surely remain, but fewer
is a long way to go to perfect procedures and maximise an embry would feel it. And if fewer ended up choosing quietly, privately, in
o’s chance of survival. Having found evidence that ambient pres consolably to stop trying, that would be progress indeed. n
sure controls whether the eggs of mice are dormant or not,
Hayashi Katsuhiko of Osaka University suspects pressure and acknowledgments A list of acknowledgments and sources is included in the online
temperature may be vital to the fate of an embryo. Again, such fac version of this Technology Quarterly
tors are not standardised across labs.
In her previous role as scientific director of the Eugin Group, licensing our content For information on reusing the articles featured in this Technology
Quarterly, or for copyright queries, contact The Economist Syndication and Licensing Team:
which operates 69 clinics in 11 countries, Dr Vassena noticed that Tel: +44 (0)20 7576 8000; email: rights@economist.com
IVF was falling short of what happens naturally in their donation
programme. A woman who has conceived and given birth natural more technology quarterlies Previous TQs can be found at
Economist.com/technology-quarterly
ly after just two or three months of trying can be taken as having a
012
Europe The Economist July 22nd 2023 39
Moscow murk vowed to crush the revolt, he met Mr Pri
gozhin and his commanders in the Krem
All the tsar’s men lin. He regretted that they had got mixed
up in a mutiny and offered to let them keep
serving under a new commander.
Nobody has been charged with the
deaths of some 13 pilots downed by Wag
ner. Mr Putin recently denied the group ex
isted (having admitted two weeks earlier
Vladimir Putin struggles to restore authority after a mutiny
that it had been financed by the state). Mr
T WO DECADES ago Yevgeny Prigozhin,

the violent exconvict and restaurateur
who heads Wagner, a Russian mercenary
valny, Russia’s main opposition leader,
pledging to purge Russia of its thieving
elite. The failure of security services to pre
Prigozhin is thought to be in Belarus with
some of his fighters. State TV bashes him,
but many of his channels on Telegram, a
group, published a fairy tale he had written vent the plot, the army’s lack of resistance message app, still operate. Military offi
with his children. In it, a band of friends and the silence of the regime’s propagan cials close to Mr Prigozhin, including Gen
rescue a shrinking king by blowing a magic dists exposed Mr Putin’s weakness. His be eral Sergei Surovikin (once in charge of the
flute. At first he grows too fast, smashing a wildered appearance on television ampli invasion of Ukraine), have reportedly been
hole in the palace ceiling, before they bring fied the humiliation. detained and questioned. Some of Wag
him back down to size. “A very dangerous Under Russian law Mr Prigozhin should ner’s arms have been taken over by the ar
toy,” says the king, taking away the flute. face prison for mutiny, recruiting merce my. But as Novaya Gazeta, an independent
Mr Prigozhin long helped inflate Vladi naries, arms trading and homicide. Ac Russian newspaper, writes, it is too early to
mir Putin, for example by running pro cording to the unwritten rules of Mr Putin’s write off the “chef”.
Kremlin troll farms. Now he has cut him mafia state he should probably be dead. In Whatever happens to Mr Prigozhin, his
down to size. Last month his soldiers stead, on June 29th, five days after Mr Putin mutiny revealed the erosion of the state
seized a military headquarters in the and the flimsiness of Mr Putin’s support
southern city of RostovonDon and drove base. His authority has so far relied less on
towards Moscow, downing several heli → Also in this section mass purges than on a consensus between
copters and a plane along the way. Mr Pri power groups. His political opponents
40 Nuclear safety in Ukraine
gozhin said his “march of justice” was have ended up dead, jailed or in exile.
meant to remove Sergei Shoigu, the de 41 France’s Zeitenwende Meanwhile he has sown rivalries between
fence minister, and Valery Gerasimov, his loyalists, prevented consolidation in
41 Seizing Russian assets
head of the army, or to reverse their deci the army and the security services, and
sion to integrate Wagner into Russia’s reg 42 Ukrainians in Poland created parallel structures such as Wagner.
ular forces. But he added populist anticor This worked in peacetime but faltered
43 Charlemagne: An American v Paris
ruption slogans borrowed from Alexei Na under the stress of war. Mr Prigozhin’s mu
012
40 Europe The Economist July 22nd 2023
tiny was not an underthecarpet factional Ukraine’s nuclear plant dress rehearsal for a major incident with

squabble but a public split within Mr Pu approximately 100 local rescue workers.
tin’s “prowar” constituency. On one side Bracing for Kyryko Kuzmenko, a specialist in the local
stands the conformist elite, trying to keep emergency ministry, says they “have new
up a pretence of normal life. On the other is disaster radioactive hazard suits, and we have
a group of angry military patriots, most drilled for putting out a fire at the plant if it
prominently Mr Prigozhin. Most worrying comes to it—and if we get access.”
ZAPO RIZHIA
ly for Mr Putin, the army itself seems split. The worst case for Ukrainian planners
Living next to a Russian-occupied
The Levada Centre, an independent is that Russia limits access to a nuclear
nuclear plant
pollster, found that 92% of Russians fol emergency site. In early July Ukrainian
lowed the coup to some extent. Almost half
sympathised with Mr Prigozhin’s criti
cisms of corruption, military incompe
I NITIALLY LIDA POPRUHA was not sure
what to make of claims that Russia was
preparing an attack at the nuclear power
military intelligence warned that Russia
had mined two reactor blocks and a cool
ing reservoir, and intended to set off an ex
tence and lies about the war, though only plant. She knew that her flat in the city of plosion. Russia responded absurdly that
22% trusted the Wagner boss himself. Zaporizhia sat inside a potential evacua Ukraine was preparing to attack the plant
Many of the sympathisers did not support tion zone. But would there really be an ex with a ballistic missile containing radioac
either side, said Denis Volkov, a sociologist plosion? Then she recalled being caught tive waste. Many fear a Russianengi
at Levada; they tuned in for a fight between behind Russian lines last year in her family neered incident if Ukraine’s counterof
“a toad and a viper”. home some 80km to the east, and her fensive achieves a breakthrough. A Ukrai
The mutiny also showed that Telegram, fraught escape with her two children to Za nian military source insists his side would
and Mr Prigozhin’s network of trolls and porizhia. This time she would leave before never attempt to storm the plant itself.
bloggers on it, have eroded the Kremlin’s it was too late. On July 5th the Popruhas Earlier this month four inspectors from
monopoly over information. While televi quit the city on a westbound train filled the International Atomic Energy Agency
sion propagandists awaited instructions, with anxious humanity. (IAEA) based at the plant said they had
the mutiny unfolded online. Less than a Zaporizhia has seen more of this war’s found no evidence that Russia had mined
quarter of young Russians trust TV. Mr Pu refugees and destruction than almost any the reactor blocks—though they had not
tin staged a parade of uniformed men in other city in Ukraine. Now it must manage been granted full access. A Ukrainian offi
the Kremlin, praising them merely for not its role on the nuclear front line. The huge cial expresses anger: How could the in
joining the mutiny, and flew to Dagestan, a nuclear plant 50km southwest of the city spectors issue conclusions when they had
Muslim region on Russia’s side of the Cau has been turned into a fortified base by the not seen the entire plant?
casus, for a show of adoration. An eight Russian occupiers. Many residents have The plant is the largest of its kind in
yearold who supposedly cried because left, but others are staying put. “Where will Europe. At one point it employed 11,000
she did not get to see the president was I go, me with my walking stick?” complains people; approximately 3,500 remain. Some
flown to the Kremlin and presented with Yelena Petrova, a 74yearold pensioner have signed contracts with the Russian oc
5bn roubles ($55m) for Dagestan’s needs. selling kvass (a fermented rye drink) on a cupier, but most toplevel staff remain em
The absence of public retribution nowdeserted high street. ployed by Energoatom, Ukraine’s staterun
against highranking military officers who The local children’s hospital has pre nuclear firm. In phone conversations sev
sided with Mr Prigozhin suggests that Mr pared a decontamination centre and sup eral report a regime of “terror” and an ab
Putin is worried that purges could create plies of food and water for 14 days. On the sence of safety protocols. “Maxim”, a tech
rifts in the army. New cracks appeared on first sign of nuclear danger the entire hos nician who left the plant in early July, says
July 13th. MajorGeneral Ivan Popov, com pital will move to the basement, its chief the Russians view it as a perfect fortified
mander of the 58th combinedarms army, doctor says. “Each member of staff has military base. The soldiers are in charge of
one of the country’s largest and most capa their instructions: stay in the building, “everything”, he adds. “If they say they
ble units, went public after being fired for stay low, turn off ventilation, water, wash need to pour 100 tonnes of sand on the re
telling his superiors what was happening the incoming with laundry soap.” On June actor roof…there is no one to stop them.”
at the front: huge losses, inadequate rota 29th Zaporizhia’s emergency services ran a Petro Kotin, the head of Energoatom,
tion and inferior counterartillery capabil estimates that Russia has 700 soldiers at
ities. “The forces of Ukraine could not Ukrainian
Ukrainianterritory
territory
the plant. In theory, its design protects
break through our army from the front, but annexed Dnieper against disaster. All its reactors were shut
annexedbybyRussia
Russia
our senior commander hit us from the on
onSep
Sep30th
30th2022
2022 down in September, but contrary to Ukrai
Zaporizhia
Kakhovka
rear,” said Mr Popov in an audio message Reservoir Huliaipole
nian requests, Russia maintains one in
that was posted online. UKRAINE “hot standby shutdown”, meaning the fuel
Nuclear
What happens next depends on the bat power continues to react slowly. The risks of a
Mykolaiv Dam
tlefield. The bombing of the Kerch road plant major incident are low. An explosion now
bridge that connects Russia to Crimea, Kherson Nova would emit 245 times less radiation than at
which Russia attributed to Ukrainian naval Odessa Kakhovka a working reactor, says Mr Kotin. That
drones, was another blow. Mr Putin main Sea of might not even require the evacuation of
tains that Ukraine has failed to achieve any Black Azov people living around the plant.
progress in its counteroffensive. Russian S ea Crimea But Russia could manufacture a disas
Ukrainian territory
commanders have defended against annexed by
ter in less than 24 hours, he warns, by po
Ukraine’s counteroffensive well ahead of Russia in 2014 wering the reactor up or reducing the water
prepared fortifications, instead of falling in the cooling pools to critically low levels.
100 km
back to defensive positions. This slows the That would be hard to do without technical
Ukrainians’ progress. As one foreign mili Russian-controlled: July 19th 2023 assistance. Still, Oleh Glinsky, a technician
tary official put it: “It is like hitting a brick Assessed Claimed who fled the plant in 2022, says one should
*Russia operated in or attacked, but
wall with a sledgehammer.” But Mr Prigoz Russian operations* does not control Sources: Institute assume the worst. “No one thought [the
hin’s mutiny showed that if the wall crum Approx. Ukrainian for the Study of War; AEI’s Critical Russians] would blow up the dam in Nova
bles, there may not be much behind it. n advances Threats Project; OpenStreetMap
Kakhovka, but they did.” n
012
The Economist July 22nd 2023 Europe 41
France and Europe no longer accept ‘grey zones’ between the

EU and Russia”, says an official. Unless
Le Zeitenwende countries on the fringes are anchored in
side the EU or NATO, they will be vulnerable
to autocratic powers. The last phase of en
largement happened “when we thought
that liberal democracy would spread and
PARIS
become the dominant model”, says Lau
A French geopolitical shift could
rence Boone, France’s Europe minister:
reshape Europe
“Today that’s not the case. So we need to
W hen Olaf Scholz proclaimed a Zeiten-
wende, or “historic turning point” for
Germany, after Russia invaded Ukraine, it
move to a geopolitical construction.” En
largement becomes a tool for consolidat
ing European sovereignty. And a wider EU
startled Europe. The German chancellor’s is not an alternative to a deeper political
promise to invest heavily in defence, project, but a means of achieving it. “This
though haltingly implemented, marked an really is a structural shift,” argues Benja
abrupt change. Far less noticed is an equal min Haddad, one of Mr Macron’s deputies.
ly arresting shift taking place in France. None of this means that enlargement
The implications of its turning point for will happen any time soon. Membership
Europe could be just as significant. talks are proceeding grindingly slowly
France’s tournant historique consists of with four Western Balkan countries; Mon
a double inflection point. Each touches a The beginning of a beautiful friendship tenegro’s began over a decade ago. Absorb
fundamental precept. One is Ukraine’s ing Ukraine would be complex, long and
membership of NATO. The other is the en ject. Britain, when still a member, was an fraught. But it is now viewed in Paris as a
largement of the EU’s borders to the east archenlarger, and thus viewed with suspi geopolitical imperative. Mujtaba Rahman
and south. France, once sceptical about cion in Paris for seeking to turn Europe of the Eurasia Group, a consultancy, ex
welcoming newcomers to either group, into a mere trading zone. In 2019 France ve pects EU leaders to open membership talks
has quietly become an advocate for both. toed the opening of membership talks with in December. France alone cannot dictate
It was in the runup to the NATO summit Albania and North Macedonia. the choices of the 27member club. But it
in July in Vilnius, Lithuania’s capital, that Russia’s war has transformed Mr Mac remains a forceful guide to those deci
many of France’s astonished allies first ron’s approach. Last year his diplomats sions. Its Zeitenwende could be crucial to
grasped its new approach. France lined up worked hard to secure support for the EU’s determining the future shape of Europe. n
beside Britain, Poland and the Baltic states, decision to grant Ukraine candidate status.
arguing for a fast track into the alliance for France lifted its veto on the bids by Albania
Ukraine after the war. “We need a path to and North Macedonia, enabling member Russia’s assets abroad
wards membership,” Emmanuel Macron, ship negotiations to begin. The warmth of
the French president, declared in Bratisla Mr Macron’s speech in Bratislava dazed Come and take
va, Slovakia’s capital, on May 31st. central and eastern Europeans, long fa
This set France apart from not only Ger vourable to a broader EU. “The question for them—if you can
many but America, “to the apparent sur us is not whether we should enlarge,” he
prise of the Biden administration”, noted declared, “but how we should do it.”
Daniel Fried, an American exdiplomat. In Many observers remain sceptical. “It
Russia’s assets are safe while the West
2008 France and Germany blocked Ukraine was a free lunch for Macron to back
fears precedent
from immediate membership of the alli Ukraine’s NATO membership,” argues a
ance. Four years ago Mr Macron told The
Economist that NATO was experiencing
“brain death”. Even after Russia sent in the
European diplomat, noting that France
knew full well that the Americans would
put on the brakes. The tactical interest for
“B ANK ROBBERS should not expect
banks to honour their safe deposit
boxes.” So write Larry Summers, formerly
tanks, Mr Macron at times seemed as wor Mr Macron in standing up for central and America’s Treasury secretary, and his co
ried about its future security as about eastern Europe is plain, after the credibili authors in a recent article arguing in fa
Ukraine’s. Yet Europe’s eastern flank has ty he lost last year over his outreach to vour of seizing Russian assets in Western
found an unexpected new champion. Vladimir Putin. France’s line on NATO was accounts. More than €200bn ($225bn) of
France’s second shift, on EU enlarge partly tactical too: a robust message to Rus Russian centralbank assets are frozen in
ment, is less visible. A decision on whether sia, it argued, would strengthen Kyiv’s the EU alone. Politicians in the bloc’s east
to open membership negotiations with hand in any future peace negotiations. ern states, not to mention in Ukraine, want
Ukraine (and Moldova) is not due until De Yet there are reasons to think that this them used to pay for the damages caused
cember 2023, after an initial discussion in double French shift reflects a geopolitical by Russia’s invasion. The problem is that
October. But talks are well under way, not reassessment. Mr Macron, proEuropean under international law there is no clear
least because such an expansion would re to the core, has long been preoccupied by cut way to seize those assets without a vote
quire complex changes to the rules govern the need to fortify what he calls “European in the UN Security Council, a judgment by
ing the EU’s internal organisation. A Fran sovereignty”: the continent’s capacity to the International Court of Justice (ICJ) or a
coGerman working group is looking at the determine its future amidst greatpower postwar settlement. Each of those would
implications. The European Commission rivalry. This concern is accentuated both require Russia’s agreement.
will report back in October on enlarge by the existential threat to Europe of an ex The latest to learn this was none other
ment, including to the Western Balkans. pansionist Russia, and by the possibility than Ursula von der Leyen, president of the
France has traditionally been wary of that an America led by Donald Trump, European Commission. During a speech to
enlargement, regarding expansion as a should he win next year’s election, would the annual Ukraine recovery conference in
threat to its preferred strategy of “deepen be less committed to European security. London on June 21st, she announced that
ing” the union and forging a political pro France’s conclusion is that Europe “can her commission, the bloc’s executive arm,
012
42 Europe The Economist July 22nd 2023
would come up with a proposal before the
summer to make use of Russia’s frozen as Ukrainians in Poland
sets. At the same time the ambassadors of
the EU’s 27 member states were chewing
Pierogi, by any other name
over a legal assessment of the issue by the
WARS AW
EU’s rotating chair, Sweden. The verdict of
Ukrainian immigrants are changing Poland’s economy—and its diet
many around the table, according to those
present, was that the legal obstacles would
be formidable.
About a week later, the leaders of the
“P oles are conservative,” complains
Ernest Suleimanov, who in January
opened Warsaw’s first Crimean Tatar
hairdressers in Warsaw, with 55 beauty
stations hired by freelancers. The place
has a nightclub vibe, with a barista and
EU’s countries told the commission to re restaurant. Customers love his chebureki house music, and it is a hit. Others bring
strict any proposal to what was legally (meat pastries) but have trouble with the Poles a taste of the unfamiliar. Natalya
plausible: a windfall tax on the private digital menus that are ubiquitous in Gordiyenko created Kapsula, a market
firms that hold the frozen Russian assets, techsavvy Ukraine. Mr Suleimanov is place for fashion designers. She says
and thus make profits on them. Even that one of more than a million Ukrainians Polish women are less daring than Ukrai
plan is so controversial among member living in Poland, many of them refugees nians, preferring black and white clothes
states that the proposal has been post from Russia’s invasion. Now they are over bright colours, and prioritising
poned until after the summer, according to reshaping the country’s high street: since fabric quality over tailoring.
press reports. The European Central Bank the war started, Ukrainians have opened Ukrainian companies have followed
(ECB), too, has major reservations. some 8% of all new soleproprietor busi the émigrés. Nova Post, Ukraine’s biggest
Legally, experts say, the plan is sound. nesses, and the number keeps rising. private postal service, has opened
Euroclear, a private clearinghouse and se Some Ukrainians are piloting new branches in 21 Polish cities. Initially it
curities depository in Belgium, had to stop concepts. Olha Savchenko founded a brought refugees their belongings; its
all payments to Russia as a result of sanc coworking space for beauticians and next goal is delivery services for online
tions. It is now sitting on almost €200bn shops. In 2022 Poland lowered adminis
worth of assets and cash. Smaller amounts trative barriers for Ukrainians setting up
are frozen in the accounts of similar firms Setting up shop businesses, putting them on the same
elsewhere. These holdings generate gains: Poland, new business launches with footing as locals. That makes the country
in Euroclear’s case, €720m of pretax pro sole Ukrainian owners, ’000 an easy gateway to European markets.
fits in the first quarter of 2023 alone. That 3.0 Polish companies are seeking the
profit could be taxed more heavily—at a newcomers’ business too. Banks run
rate approaching 100%—to generate rev 2.5 Ukrainianlanguage services; one offers
enues. The clearing house would keep Ukrainians free accounts with no need
2.0
something to compensate it for the cost of for a Polish address or phone number.
managing the cash (which Euroclear says 1.5 Supermarkets carry Ukrainian staples
amounted to €9m in the first three months like saltdried fish and crabflavoured
1.0
of 2023) and for any higher capital require crisps. The word “Russia” has been exor
ments that regulators prescribe. 0.5 cised from food labels. The potato
Yet the ECB and some finance ministers cheese dumplings once known as pierogi
fear for the euro’s reputation. Any move 0 ruskie have been rebranded as pierogi
against Russian centralbank assets could 2022 2023 ukrainskie. As for “Russian” mustard, it is
undermine the euro and European govern Source: Polish Economic Institute now simply “spicy”.
ment bonds as a store of value for other
central banks around the world, they say.
At the least, the argument goes, Europe legal risks are higher, since the EU would means to change behaviour, she adds, not
should act in tandem with other states in take a more active role in managing Rus as punishment.
the G7, the club of the world’s richest de sia’s assets. If losses occurred on the in Such scruples matter especially to the
mocracies, to make sure the reputational vestments, European taxpayers could, EU, a club founded on rules. Amid the geo
loss is shared. awkwardly, be liable for making whole the political contest between America and
Critics of the ECB’s position argue that Russian central bank. China, where international norms seem to
any reputational damage is already done: The eu dismissed more drastic propos matter less and less, the EU is keen to up
the reserves became useless to Russia als out of hand. It would be a clear breach hold them where it can. In their latest at
when they were frozen. The G7 made clear of international law to seize Russian assets tempts to becomes less dependent on Chi
on July 12th that the freeze will remain in unilaterally. States are immune from other na, European policymakers are at pains to
place until Russia pays for the damage it countries’ legal jurisdiction and from hav find measures that comply with global
has done in Ukraine, providing an incen ing their property expropriated to settle trade rules. Less highmindedly, state im
tive for Russia to settle. Using revenues debts. Under international law, sanctions munity protects the EU’s biggest country,
from the assets, it is argued, is a small addi on Russia are permissible only as a means Germany, from claims by victims of Nazi
tional harm. If agreement among the G7 to induce it to act differently. Simply con occupation. A decade ago, the ICJ ruled that
can be found, the commission will proba fiscating assets would go beyond what glo Italian and Greek courts cannot award Ger
bly present a proposal after the summer. bal rules allow. “The rules on countermea man government assets to plaintiffs in
Other ideas have been mooted. The EU sures contain a fine balance between what such cases. There is little chance that Ger
could try to get better returns on the assets, states need to be allowed to do to protect many would agree to undermining state
for example by demanding that the private themselves and their rights, and the risk of immunity. Taxing private profits on the
entities holding the Russian funds put abuse, especially by powerful states,” says Kremlin’s assets may seem like too little
them into higheryielding investments, Federica Paddeu of Cambridge University. for Ukrainians and others outraged by Rus
and transfer the profits to an EU fund. But Such measures must be temporary, as far sia’s atrocities. But it is the most that the EU
that option has been taken off the table: the as possible reversible and intended as a will be willing to do. n
012
The Economist July 22nd 2023 Europe 43
Charlemagne An American v Paris
A spat in Brussels pits an open vision of Europe against an insular one

her breed of economists (including the current holder of the job
she had wanted), made her a difficult cause to crusade for.
The defenestration of a wouldbe Eurocrat does not merely
make the EU look provincial. It is indicative of France’s success in
its campaign to change the way the bloc thinks. The view from Par
is, traditionally sceptical of globalisation and unduly free mar
kets, used to be balanced out by more liberal voices. Bits of the EU
apparatus in Brussels acted as a sort of liberal deep state, backed by
small countries in northern and central Europe (not to mention
Britain, once). The French view is now clearly dominant. Its core
argument is that the EU is being naive by sticking to liberal shibbo
leths, since the rest of the world stopped playing by such rules a
long time ago. Why, say, should the EU remain open to any and all
foreign trade at a time when America and China have put up self
serving barriers at every turn? European stateaid rules prohibit
subsidising “national champions” even though policymakers in
Beijing and Washington gorge their firms with handouts. In short:
America and China shamelessly put themselves first, so Europe
should too. Liberal rules be damned.
The brief Scott Morton saga shows that the French still know
how to get their way in Brussels. Four years ago Ms Vestager
prompted dismay in Paris by (rightly) blocking a planned merger
P aris, Rome, Amsterdam: Americans are everywhere you look

in Europe these days, sweltering as they queue for tourist at
tractions in the midst of a heatwave. One place where they are ap
of the rail bits of Siemens and Alstom, two large European compa
nies. Though she was decried in Paris as an “ayatollah” of free mar
kets, the ruling stood, quietly backed by the open faction. That
parently not welcome is Brussels. A proposal by the European turned out to be a high point for liberal Europeans. The pandemic
Commission to appoint an American citizen, Fiona Scott Morton, dented the appeal of globalisation and its worldspanning supply
as chief economist to its competition arm fell through on July chains. War in Ukraine showed the risk of relying on others for vi
19th. After a week of Frenchled protests at the idea of une Améri- tal inputs such as gas. The prospect of Trumpism rebooted has
caine! advising the EU’s executive arm in its trustbusting efforts, also set nerves jangling. Mr Macron’s calls for “strategic autono
the Yale professor said she was no longer interested. What could my”—Europe making plans to cope if it cannot rely on others, on
have been a signal of admirable European openness to the world anything from trade to defence—have become mainstream.
has instead underlined the growing influence of those who think
the continent needs a more insular, Europefirst approach. Gosplan’s revenge
Ms Scott Morton’s appointment on July 11th had been some The results are starting to add up. Europe’s economy is looking
thing of a coup for the commission and its chief competition en evermore statist, ie French. The idea of industrial policy was once
forcer, Margrethe Vestager. Antitrust regulation is a niche field, taboo in Brussels. Now the need for one is accepted (the effort is
and Ms Scott Morton one of its more recognised wonks, keen to led by Thierry Breton, the EU commissioner whose remit includes
advance the interests of consumers while preserving open mar industry; not coincidentally he hails from France). National gov
kets and innovation. The hiring of foreign nationals by govern ernments these days shower favoured firms with oncebanned
ments anywhere is rare, and unthinkable in America. Ms Scott subsidies: Germany has spent an eyewatering €10bn ($11.2bn) to
Morton landing the job as the result of a competitive process made entice Intel to build a microchip plant there. Increasingly, foreign
the EU look quietly confident, a place happy to bring in the best firms keen to invest in some sectors now need official approval. At
and the brightest regardless of their passport. In a world domin EU level, central planningstyle targets have been proposed for the
ated by American tech firms, why not tap one of their compatriots local production of everything from heat pumps to minerals.
(and a onetime official in the Obama administration) for in Thus far, the French campaign has made steady advances
sights? The EU is about to get sweeping new policing powers over against the liberal bloc rather than routed it entirely. But the mo
digital giants; America in recent years has refreshed its thinking mentum may shift further in France’s favour. In Brussels, rumours
on regulating antitrust as it too has started taking on Big Tech. abound of two big impending departures. The most notable is that
In Paris, however, Ms Scott Morton’s qualities were apparently of Ms Vestager, who has put herself forward to run the European
irrelevant. Minister after minister clutched their pearls and de Investment Bank, the union’s financial arm. Another proglobali
manded to know why Europe needed to look abroad to fill jobs. sation heavyweight, Frans Timmermans, the Dutch commission
Emmanuel Macron, France’s president, waded in by questioning er in charge of the EU’s Green Deal, is said to be mulling a return to
whether the commission would lose its “autonomy of thought” if politics in the Netherlands ahead of elections in November. A new
it hired one midlevel foreign adviser. A slew of MEPs and five of slew of commissioners will be appointed next year, giving Mr
Ms Vestager’s fellow commissioners also criticised the appoint Macron an opportunity to lobby for more influence for dirigistes.
ment. The French campaign got notably little support in the EU’s The direction of travel is clear—and worrying. Europe will not
26 other capitals. But though many fellow academics came for soon descend into a planned economy. But a continent lacking in
ward to defend her, few notable politicians did: her past work as a economic dynamism needs all the policymaking advice it can af
paid adviser to tech giants, although a common practice among ford. That might even mean importing it, sometimes. n
012
44
Britain The Economist July 22nd 2023
Higher and higher education bills three destinations for foreigners seeking

swanky certificates.
Crunch time On taking office, the Conservatives saw
universities as engines of growth. In 2012
the coalition government gave them a
huge boost by agreeing to triple domestic
tuition fees. At a stroke, funding per stu
dent rose by around 25%. The idea was in
Squeezing foreigners ever harder is not a sustainable way to pay
part about fairness, with more of the costs
for world-class universities
of doing a degree covered by graduates
S PARE A Thought for students graduat

ing from British universities this sum
mer, after three grim years. In 2020 the
value. The maximum charge was set at
£9,000 in 2012; by September the fee will
be worth only about £6,500 at 2012 prices.
whose salaries are boosted by it. It was also
to help universities expand faster—while
keeping quality high—without being reli
pandemic forced the cancellation of their It is not set to be reviewed until 2025. Uni ant on government grants. Expand they
schoolleaving exams, compelling them to versities are heading towards a crunch. have: the share of English 18yearolds go
make do with simulated grades. Lock By most measures they still rank among ing to university was about 38% last year,
downs and remote learning tarnished their the best in the world. Britain produces far up from about 28% in 2012. For disadvan
first years at university. Rocketing living more than its share of highly cited re taged youngsters, it was up to 24% from
costs and strikes by lecturers have been the search. Only America (with five times the about 15%.
latest buzzkill: because of a marking boy population) wedges more universities into Today the government has a chillier
cott, thousands will graduate late or with the top slots of global league tables. Drop view of the sector. One reason is money.
out a proper classification. At Cambridge, out rates for English students are among Student borrowers in England enter a na
one of the worstaffected places, half of fi the lowest anywhere. Britain is in the top tional repayment system that collects a
nalyear undergraduates are in that boat. share of earned income over a given
Students are not alone in feeling mo threshold (graduates this year will start
rose. The Office for Students (OfS), which → Also in this section paying when their earnings hit £27,295).
regulates the sector, is monitoring financ Any debt outstanding when borrowers ap
46 Bagehot: End the whingeocracy
es at 31 universities. These undoubtedly in proach retirement is forgiven. The design
clude the University of East Anglia, in Nor → Read more at: Economist.com/Britain ers of this system have always assumed
wich, which is seeking £30m ($39m) in an that sizeable sums will be writtenoff in
— Better news on inflation
nual savings by September. Tuition fees this way, writes Sam Freedman of the Insti
paid by English undergraduates are capped — The return of Sir Tony Blair tute for Government, a thinktank. But re
by the government and have barely risen in cent projections suggest taxpayers will be
— Cooling on China
ten years. Inflation has eaten away at their on the hook for much more than had been
012
The Economist July 22nd 2023 Britain 45
expected—perhaps half of all that students market will bear. In 202122 foreigners bring along a spouse or children.

have recently borrowed. made up 30% of all new undergraduates Even that source of income could be in
One reason is that, once the cap on fees and postgraduates in England, up from jeopardy. The government worries that too
was raised, almost all universities sold de less than 24% four years before. At the start many foreign students hurts its efforts to
grees at the maximum price permissible of this century fees from nonEU students look tough on immigration. Universities
(the hope had been that at least some contributed about 5% of all university in fear it might reverse a policy, from 2019,
would try to compete on price). Govern come. Now foreigners hand over more that lets foreigners work in Britain for two
ment tinkering is also to blame: in 2017 than 20% of their revenues. In 2020 for years after their courses end (this is espe
Theresa May, then prime minister, loos eign students spent £18bn on fees and liv cially attractive to Indian students). Brit
ened repayment terms to appeal to young ing expenses. ain, meanwhile, may have to compete
voters. But what has really hurt is a banal One study using data from 201718 harder against rival destinations for for
but crucial accounting change. In 2018 the found that foreigners were on average pay eign students. Australia said this year it
Office for National Statistics forced the ing £5,100 a year more than their courses would let some foreigners hang around for
government to start booking expected cost to run. For years universities used up to five years after graduation.
losses on student loans in the year they are these surpluses to subsidise re
issued (it could previously boot them far search. Needs in that sphere are only grow A muddled income trap
into the future). ing: for more than two years the govern All this is going to get harder to handle if
Money worries compound other con ment has been failing to negotiate Britain’s British parents start believing that foreign
cerns. Education has an intrinsic value, but reentry into Horizon, a European research ers are squeezing their children out of
the government is struck by research sug collaboration programme that it left be places in their firstchoice universities.
gesting around onefifth of graduates cause of Brexit and that scientists say is es Rejection rates at the most prestigious
would be better off financially over their sential to rejoin. But profits from foreign ones have been rising. That is more to do
lifetimes if they had not gone to university ers are also having to be used to cover with the national increase in university
(that is particularly true among students of shortfalls in the cost of teaching English going than with foreigners. But the crunch
creative arts). It worries that Britons are students. This year Vivienne Stern of Uni will only continue: because of a demo
less keen than other Europeans to do ap versities UK, an industry group, told a graphic boom, the number of 18yearolds
prenticeships, or courses that require just House of Lords committee that interna in Britain will be 25% higher in 2030 than it
one or two years of postschool study. tional recruitment “should be the cherry was in 2020. Biggerspending internation
Those might be as useful as degrees, and be on the cake” for the higher education sys al students may become the focus of more
cheaper. Ministers are also drawn into de tem, but has become “more like the flour”. gnarly debates.
bates about “Mickey Mouse” degrees and Educating foreign students brings What comes next? The government has
“noplatforming”, perhaps hoping to benefits. Yet relying on them to keep uni tightened loanrepayment terms for new
please voters irritated by woke lecturers versities solvent is unwise. Until recently borrowers. The new rules will somewhat
and students. China sent more students than any coun cut government spending on higher edu
Muddled thinking on universities has try: institutions that take a lot of money cation, increasing the share of debt that fu
led to muddled policies. One big reform from Chinese youngsters may become less ture students will be asked to repay. In ef
was the creation in 2018 of the OfS. The reg likely to encourage teaching and research fect this reverses Mrs May’s attempt to
ulator aims to give youngsters certainty on topics that might displease Chinese of please the crowd six years ago. But there is
that their degrees are worth paying for. It ficials. In the past few years arrivals from no stomach to let fees float up. In May Rob
puts useful pressure on those universities China have plateaued, as students from In ert Halfon, the universities minister, said
that have done a poor job of ensuring stu dia and Nigeria make up the numbers in putting up fees was “the last thing I can do”,
dents finish their studies and find decent stead. The newcomers bring less geopoliti given the costofliving crisis. Fees are
jobs. On July 17th the government con cal baggage—but also less money. They are likely to remain frozen for at least another
firmed that the regulator can limit recruit likelier than East Asians to fund studies couple of years. Labour, which may form
ment to courses that fail to get at least 60% with borrowed cash and so seek out lower the next government, has only just junked
of students across those thresholds. But cost institutions. An average student from its longheld opposition to any tuition
ministers have, over the years, also handed India pays about half as much in fees as a fees, so sudden increases are unlikely.
the OfS an assortment of tasks, such as Chinese one, reckons the British Council, a As money grows shorter, universities
monitoring policies on sexual misconduct government body that promotes culture may make some efficiencies. But they will
and policing freespeech on campus. This abroad. They are also likelier to want to not necessarily shed their least useful ac
distracts from original priorities, such as a tivities. Tighter budgets could mean they
goal of nurturing “challenger” universities promote courses they find cheapest to de
to compete with incumbents. The regula Growing appeal liver (generally not the rigorous technical
tor’s rulesetting may, instead, be making Britain, non-EU university students, degrees the government believes will make
it trickier to launch new outfits. tuition-fee income Britain more productive). That might end
The biggest worry among vicechancel % of universities’ total income £bn
up increasing bills for government, if more
lors is the longstanding erosion of fees. 20 10.0 graduates reach their twilight years with
These have been pushed up only once in a out paying off their debts.
decade. Last year analysts for the Russell 15 7.5 The decline in real fees feels like “a trap
Group of universities, which includes we don’t know how to get out of”, says Ms
many of Britain’s best, said institutions in 10 5.0 Stern of Universities UK. Universities may
England were on average losing £1,750 a forgo investments in equipment and sup
5 2.5
year per home undergraduate—this could port services that gradually lower the qual
become a £4,000 loss by the 202425 aca 0 0 ity of the degrees on offer. The big risk, she
demic year. 2001 05 10 15 20 22
says, is not that a swathe of universities
Lots of universities have tightened their Academic years ending
will go bust. “My worry is that we’re going
belts. They also seek more foreign stu Source: HESA
back to the 1990s, where you get a system
dents, who may be charged whatever the that is slowly run into the sand.” n
012
46 Britain The Economist July 22nd 2023
Bagehot Cheer up, Westminster!
The rise of the self-pitying MP

aries in Westminster may widen the talent pool, but it would not
solve the fundamental problem: that the typical mp probably
earns less than the best mate who went into the private sector.
Telling an mp about to spend another weekend litterpicking in
their constituency that their hours could be worse would win few
friends. It is, however, true. Parliament no longer regularly sits
into the early morning. Recess, which kicks off for six weeks on Ju
ly 20th, is not technically holiday even if many parliamentary as
sistants hear nothing from their bosses bar the odd call with a for
eign dial tone. There are few professions which allow people the
time to write books, practise law and present television shows on
the side. Managing that as a head teacher would be tricky.
Other problems are selfinflicted. In recent years, mps have
willingly taken on the role of social workers rather than mere law
makers. Now a constituency mp is expected to be able to help with
everything from asylum applications to dampridden council
flats. It is bighearted but boneheaded. Too much focus on individ
ual problems leads to mps neglecting systemic ones. Politics is the
quickest way to change a country; focus on that and the constitu
ency mailbag will deal with itself.
Some things have become worse for mps through no fault of
their own. Abuse of politicians online is rife. Greenink letters at
T he House of Commons is designed to create conflict not con
sensus. Parliamentarians sit facing each other in the chamber
and heckle. Coalitions are rare. Governments govern and opposi
least took effort; now nutters can send an insult at 1.13am on Twit
ter, confident it will be read by an MP “doomscrolling” in bed. At
the same time, mildmannered critique is sometimes painted as
tions oppose. Yet practically all mps agree on one thing, that being abuse. During a row over free school meals, Gary Sambrook, a Con
an mp is terrible. Speak to a parliamentarian for longer than a few servative mp in Birmingham, complained about graffiti that read
minutes and the complaints will come fast: the pay is woeful, pa “scum”, which is unkind, and “Gary Sambrook eats big dinners”,
tronage trumps competence, constituency work is draining, on which is merely surreal.
line abuse is rife and mps are leaving in droves. The most powerful Few people are willing to offer mps a reality check. Pitying the
people in the country are now the most selfpitying. most powerful people in the country is common among journal
What is more, pundits agree. “Why We Get The Wrong Politi ists in Westminster. During reshuffles, hacks sympathise with the
cians” by Isabel Hardman, a journalist, explains the everyday iniq ministers and their aides who have lost their jobs. The fact that
uities of life in Parliament and has become a set text in SW1. Rory ministers can lose their livelihood quickly is a feature, not a bug.
Stewart, a former mp and now a podcaster, said being a legislator Moaning about it is akin to complaining about democracy, and a
was “bad for my brain, my body, my soul”. The Sunday Times added call for a world in which human resources trumps politics.
to the pile: “All out! Why nobody wants to be an mp any more”. It is
a miserable picture. Thankfully, it is an inaccurate one. Cheer up, Nobody goes to Westminster any more, it’s too crowded
Westminster: things are better than they look. For a supposedly terrible job, plenty of people still want to do it.
For starters, talk of an exodus is overdone. Almost 70 mps have Hordes of ambitious 30something Labour activists are gouging
said they will leave at or before the next election, with Ben Wal each other for seats ahead of the next election. The Conservatives
lace, the outgoing defence secretary the latest. But this is no more may be set for a hiding, yet each available seat has triggered a bun
than usual. Between 1979 and 2010, an average of about 90 MPs fight among wannabe mps. Opposition is an opportunity. The
stood down at each election. At the last election 74 jumped. Many Conservatives who ran the country from 2010 were those who
of those departing prematurely are doing so because they are like signed up for duty in the 1997 and 2001 elections, when the party
ly to lose their seats anyway. received drubbings. Yet a certain type of prospective politician ex
Complaints among mps that incompetent bootlickers rise fast pects to flounce into government, without muddying their hands
er than their more talented and more principled peers are over campaigning or enduring a stint in opposition.
done. Parliament is, mostly, meritocratic. Those who are skilled Complaining about life as an mp is the apogee of Britain’s shift
rise quickly. Rishi Sunak became chancellor five years after enter from democracy to whingeocracy. Ministers sit atop the most un
ing Parliament; Sir Keir Starmer became party leader in the same constrained executive in the democratic world and complain
stretch of time. Just because a few duds also reach the top does not about the “blob”, a cabal of civil servants and judges who suppos
mean that Parliament is stuffed with unused talent. This is tough edly thwart their will. Literal lawmakers claim that they are po
to accept for anyone still on the backbenches, who gripe to jour werless to change Britain.
nalists about it. Luckily, they have the time to do it. All jobs have some drawbacks. But few come with the opportu
Working in a swanky palace by the Thames does peculiar nity to wield power. Shaping a G7 country beats collecting a fat sal
things to one’s perspective. Pay, probably the biggest gripe for mal ary in the City. Britain has a centralised and responsive state. A
content members, is only low when compared with industries good decision in Westminster can change the lives of millions for
where salaries have exploded, such as finance and law. At £87,000 the better. Running a country is a privilege, not just a burden.
($113,000), it is around double the London average. Increasing sal There is no finer job. n
012
International The Economist July 22nd 2023 47
China-India relations Academy of Military Science.

Yet the fundamentals of the ChinaIn
Asia’s biggest beasts dia relationship—military and econom
ic—are now changing in ways that are forc
ing the world’s biggest democracy and its
largest autocracy to reassess how they deal
with each other, and with the rest of the
world. The hope among American and al
DE LHI
lied officials is that India’s continuing
Friendship between China and India could transform geopolitics
frontier friction with China is pushing it ir
C hina’s rulers like to look down on In

dia. They scorn its turbulent politics,
its creaky infrastructure and its poverty.
become “Indianised”, wrote Chen Duxiu, a
cofounder of the Chinese Communist Par
ty. “Unless, that is, they want their coffins
reversibly into a democratic coalition de
termined to constrain Chinese power. The
question is: what if they find a way to
India has looked across with a combina to lie one day in a land under the heel of a shelve the border dispute?
tion of fear and envy, hoping in vain to be colonial power.” Consider the military equation first. In
treated as an equal. Now the tectonics of Almost a century later, a sense of dis dia has been drawing closer to America
the transHimalayan relationship are dain still infuses perceptions of India since they signed a civil nuclear coopera
shifting. Recent border bloodshed sug among Chinese officials and scholars. Just tion pact in 2008. But their alignment has
gests mounting hostility. But blossoming look at the data, they say. At its indepen accelerated since a series of clashes on the
economic ties tell a different story that dence in 1947, India’s GDP per head was Indian frontier with China, including one
could trouble America and its allies. higher than China’s (on a purchasingpow in 2020 that killed 20 Indian troops and at
When India’s most revered poet toured er basis). But by the early 1990s, China had least four Chinese ones. That was the
China in April 1924, Chinese intellectuals moved ahead on that and many other mea bloodiest skirmish there since 1967 and
were unimpressed. Rabindranath Tagore sures. By 2022, their populations were brought to an end a threedecade period of
had been feted globally as the first non roughly equal but China’s economy was relative stability on the border.
European Nobel literature laureate. A more than three times bigger. India’s armed forces have since under
fierce critic of British rule in India, he China’s generals tend to dismiss India, gone a historic shift of focus away from
hoped to rebuild an ancient cultural bond too. China’s crushing victory in a border Pakistan. They have transferred about
between Asia’s oldest civilisations. war in 1962 is recalled with pride. And they 70,000 troops as well as fighter jets and
For leading Chinese thinkers, however, contrast China’s current arsenal of home surfacetoair missiles to the frontier with
his call for a revival of Eastern values and grown modern weaponry with India’s con China. They have also expanded joint exer
spirituality rang hollow. The Chinese, they tinuing reliance on Russian imports. cises with America and its allies, especially
argued, could only resist the West by learn “There’s no way that India can catch up Australia and Japan. America has provided
ing from it—and rejecting their own tradi with China in the next 2030 years,” says some intelligence and highaltitude train
tional culture. China’s youth should not Senior Colonel Zhao Xiaozhuo of China’s ing for Indian border forces too.
012
48 International The Economist July 22nd 2023
The war in Ukraine has provided anoth Privately, though, many of India’s busi
er spur. Indian commanders fret about A bigger bazooka 1 ness leaders predict that it will depend on
their dependence on Russian arms. India Military spending, $bn, 2021 prices* Chinese imports for years to come if the In
wants to buy advanced American weapon 300
dian government is to achieve its goals in
ry and to make more in India. In Washing developing infrastructure and manufac
ton in June the prime minister, Narendra 250 turing. India’s pharmaceutical industry,
Modi, made progress, with deals to buy China† for instance, relies on China for roughly
armed aerial drones and to jointly manu 200 70% of its active ingredients.
facture fighterjet engines in India. 150 That does, in theory, make India vulner
China’s exact motivations on the border able to the kind of economic coercion that
are murky. It may have been responding to 100 China has inflicted on others. But China’s
recent Indian roadbuilding, which en India leverage may be waning as it faces an eco
50
abled more extensive patrolling, or to frus nomic slowdown, a shrinking population
tration at a lack of progress in negotiations 0 and an increasingly hostile West. Chinese
on a settlement. Or it may have wanted to 2002 05 10 15 20 22
companies now see India, whose popula
penalise India for its earlier rapproche Source: SIPRI *At market exchange rates †Estimates
tion overtook China’s this year, as an im
ment with America, to expose the relative portant source of growth, with Goldman
weakness of Indian forces and to show that Sachs predicting that Indian GDP will be
they cannot rely on American help. had surged to $88bn, with China enjoying a second only to China’s by 2075.
China sees itself as in another league surplus of $46bn and ranking as India’s There are economic synergies in other
from India, competing directly with Amer biggest trade partner (see chart 2). China areas too. India is the biggest borrower
ica, says Deependra Singh Hooda, a former had also become a big source of invest from the Beijingbased Asian Infrastruc
chief of the Indian Army’s Northern Com ment, notably in technology, property and ture Investment Bank, which China set up
mand, which oversees part of the Chinese infrastructure. Chinese brands are popu in 2016 as an alternative to Westernled
border. China’s message appears to be: lar, too. Oppo and Xiaomi are among the lending institutions. India is also a mem
“You’re no match for the PLA (People’s Lib bestselling mobile phones. ber of the Shanghaibased New Develop
eration Army)…You’re just a sideshow.” The border skirmish in 2020 put that all ment Bank, formed by Brazil, Russia, India,
at risk. India banned some 320 Chinese China and South Africa (the BRICS) in 2015.
A two-sided triangle apps, launched tax raids on several Chi Hearty economic exchanges are no
For whatever reason, Xi Jinping, China’s nese companies and introduced new rules guarantee against further border blood
leader, seems to think the fallout manage requiring the Indian government’s approv shed—or even war. Both countries are led
able. India’s redeployments mean it can al for Chinese investments. Indian offi by men who feed off nationalism and his
impose greater costs on China if it tries an cials say they since have rejected 157 rele torical grievances. Other tensions include
other border incursion. But China will for vant applications. And yet bilateral goods China’s growing influence in South Asia,
years keep enough military superiority to trade grew by 43% in 2021 and 8.6% last its damming upstream of rivers vital to In
deter India from trying to recoup any per year. Chinese investment is finding ways dia, and the sanctuary that India affords
ceived losses (see chart 1). And though In in too, sometimes via Singapore. Shein, a the Dalai Lama, Tibet’s spiritual leader.
dia can help America in some areas, nota Chinese online fashion company whose Still, the burgeoning business ties will
bly the Indian Ocean, it balks at a formal al app was among those banned by India in weigh ever heavier in both sides’ decision
liance and is unlikely to join a conflict over 2020, is relaunching there soon in partner making. And stabilising the border issue,
Taiwan or the South China Sea. ship with Reliance Industries, India’s big as was achieved for three decades after Ra
Nonetheless, Mr Xi has strong incen gest private company. jiv Gandhi visited China as Indian prime
tives to stabilise the border, as America Indian officials want to rely less on Chi minister in 1988, would leave ample room
steps up efforts to circumscribe Chinese nese imports and to woo more investment for cooperation. Both countries want a
power. So does Mr Modi. He seems keen to from elsewhere, notably big multinational bigger role in global governance, reject
play down the frontier issue, knowing he manufacturers looking for an alternative Western criticism on human rights and cli
has few military options. He is wary of to China. “We need to stop looking for a mate change and share concerns about Is
drawing domestic attention to any per China fix,” Mr Jaishankar, the Indian for lamic extremism. Both refuse to condemn
ceived loss of territory. And compromise eign minister, said in May. “Indian growth Russia’s invasion of Ukraine.
seems possible. After 18 rounds of talks be cannot be built on Chinese efficiency.” Also noteworthy is that before the re
tween military commanders, troops have cent frontier flareup, Mr Modi seemed de
pulled back from five flashpoints, estab termined to build a close relationship with
lishing “buffer zones” where neither side A Himalayan range 2 Mr Xi, taking the unusual step of hosting
patrols. Two major flashpoints remain. China, goods trade with India, $bn him in his home state of Gujarat in 2014.
China is pushing for another round of 120
India and China shared similar aspira
talks and urging India not to let the border tions, challenges and opportunities, Mr
issue define the bilateral relationship. In Modi said in Beijing the following year. “In
dia’s foreign minister, Subrahmanyam 80 the global uncertainties of our times, we
Jaishankar, met his Chinese counterpart in Exports
can reinforce each other’s progress.”
Jakarta on July 14th and discussed the fron 40 Such a prospect may not please Ameri
tier. In recent weeks he has stressed that cans and others who see India as a counter
without a peaceful and stable border, nor weight to China. Nor is it what Tagore had
mal business ties cannot be resumed. 0 in mind in 1924, when he urged China to re
A survey of the economic landscape, ject Western materialism and “free the hu
however, puts such Indian warnings in Imports man soul from the dungeon of the mach
40
perspective. Commerce between China 2005 10 15 20 22
ine”. But it may be the more realistic path
and India was negligible for most of their Source: IMF
towards a sustainable, mutually beneficial
modern history. But by 2020 trade in goods relationship between Asia’s titans. n
012
Business The Economist July 22nd 2023 49
Tesla Mr Musk’s ambition to dominate the

auto business—by making 20m cars a year
The swerve by 2030, double the current output of to
day’s top manufacturer, Toyota, and by
creating the goto selfdriving system—
certainly compels investors, who value
Tesla at around $900bn. That is down from
over $1trn in early 2022 but still more than
the next nine most valuable carmakers put
Elon Musk’s new route to EV domination: be more like the industry you disrupted
together. Incumbents are scrambling to
I N 2011 TESLA stated an aim of becoming
“the most compelling car company of the
21st century, while accelerating the world’s
an expansion plan for its German factory,
where it wants to double capacity to 1m ve
hicles per year.
electrify their product ranges and to copy
Mr Musk’s vertically integrated approach
to production, while fending off a wave of
transition to electric vehicles”. At the time Besides almost singlehandedly reima EV newcomers, many of them Chinese, all
this was easy to dismiss as crackers. In the gining the car, Mr Musk has done the same trying to be the next Tesla.
eight years since its founding in 2003 the to the car industry. His focus on stream The question now is whether Tesla can
firm had manufactured a piddling 1,650 lined manufacturing of only a handful of keep growing as fast and as profitably as it
EVs. Its first bigselling car, the Model S, models has kept costs at bay. Last year Tesla has for much longer. In its latest quarterly
had yet to hit the road. boasted operating margins of 17%; among earnings on July 19th, it reported margins
Today it is almost as mad to argue that nonniche carmakers only Porsche, which of 9.6%, even lower than the 11.4% it eked
Elon Musk, the carmaker’s boss since 2008, churns out fewer than 1m cars annually, out in the three previous months, as it
has not achieved that goal. His company, a matched its performance. slashed prices in order to compete with
rare insurgent in an industry with formi cheaper rivals (see chart 2). Its advantages
dable barriers to entry, has grown at neck as a disruptive tech firm with a Silicon Val
snapping speed. In the first quarter of 2023 ley mindset are in danger of being eroded.
Tesla’s Model Y miniSUV was the world’s 51 Bartleby: Our office agony uncle To make even 5m6m cars a year this de
bestselling car. In the second quarter it de cade, a more realistic target than Mr Musk’s
52 The Czech bet on Casino
livered a total of 466,000 cars, beating an goal of 20m, would require “embracing the
alysts’ forecasts (see chart 1 on next page). 52 The “Call of Duty” shootout techniques of legacy auto”, observes Dan
Mr Musk’s promise of 2m sales this year, up Levy of Barclays, a bank. In order to remain
53 Dairy disrupters
from 1.3m in 2022, no longer seems fanci a disruptive force, Tesla may, paradoxical
ful. On July 15th the first Cybertruck, an 53 India’s rickshaw tech war ly, need to become a bit more like the stod
angular, retrofuturistic pickup, rolled off gy car business it has shaken up.
54 Schumpeter: Stars v suits
the production line. Tesla has just unveiled Tesla maintains a lead over its more
012
50 Business The Economist July 22nd 2023
established rivals in batteries, software Tesla has belatedly come around is price
and manufacturing productivity, notes Profit motors 2 cuts. Mr Musk had pledged never to offer
Philippe Houchois of Jefferies, an invest Operating-profit margin, % discounts or allow inventory to build up.
ment bank. But competitors are catching 30
His company has lately done both. Produc
up. In some areas, like marketing and pro tion exceeded sales in the past five quar
duct planning, they have overtaken it, Porsche ters. After growing at an average annual
20
notes Mr Houchois. When it launched the rate of 60% for years, quarterly sales vol
Model S—large and pricey with big batter Toyota 10 umes expanded by an average of 3040%
ies and a long range—it had the EV market between the second quarter of 2022 and
largely to itself. Nowadays motorists can 0 the first quarter of 2023. To shift more vehi
choose between 500 or so EV models from cles Mr Musk began slashing prices late
dozens of marques. Bernstein, a broker, es BYD last year, by up to 25% on some models.
-10
timates that around 220 new models may Sales duly ballooned, by more than 80% in
be launched this year and another 180 in Tesla Ford the second quarter, compared with a year
-20
2024 (chart 3). For Tesla to grow fast in the 2018 19 20 21 22 23
ago. The flipside was those duly contract
face of all this competition will be difficult. Source: Refinitiv Datastream
ing margins. Investors have tolerated Mr
Unlike incumbent carmakers’ “some Musk’s price cuts more than in the case of
thing for everybody” approach, Tesla his rivals: on July 17th Ford’s share price fell
manufactures just five models (if you have done the trick for its original custom by 6% after it announced hefty discounts
count the Cybertruck) and relies heavily on er base of earlyadopter techies but is un on its F150 Lightning EV pickup. They may
two of them. The Model 3, a small saloon, likely to cut it with the average motorist. not stay so forgiving for ever.
and the Model Y account for 95% of the ve One solution is to offer more options for its As its various costs rise, Tesla will try to
hicles Tesla shifts. By comparison, Toyota’s existing range. Barclays estimates that the keep cutting them elsewhere, notably in
two bestsellers, Corolla and RAV4, make up Model 3 comes in 180 configurations, a manufacturing. In March it unveiled what
just 18% of the vehicles sold by the Japa fraction of the 195,000 trims for a compara it called the “unboxed process”, designed
nese firm. For Tesla to hit its target of sell ble (petrolpowered) BMW 3 Series saloon. to make cars “significantly simpler and
ing a combined 3m4m Model 3s and But this would introduce the sort of com more affordable” by streamlining or even
Model Ys, each model would need to con plexity Mr Musk has hitherto shunned. eliminating stages of production. It is un
trol 50% of the cars in its class ($40,000 Another route to higher sales is to clear what exactly Mr Musk has in mind.
60,000 massmarket cars and $45,000 launch new models, like the Cybertruck or Despite his record of engineering ingenu
65,000 SUVs, respectively). According to a lowcost massmarket vehicle—unoffi ity, at least one previous attempt to upend
Bernstein, no carmaker has ever had more cially called the “Model 2” and with prices car manufacturing, by replacing people
than 10% in those two segments. starting at $25,000—which Mr Musk has with robots for the Model 3, led to what Mr
promised to start selling in the next couple Musk himself candidly described as “pro
Off the marque of years. New models, though, come with duction hell” and nearbankruptcy in 2018.
And both models are ageing. The Model Y is new challenges. The relevant pickup mar Mr Musk’s last fresh challenge—and an
three years old and the Model 3 has just ket, with global sales of 1.3m, according to other one he shares with incumbent West
turned six, which makes them less desir Bernstein, is relatively modest—and the ern carmakers—is what to do about China.
able in a business where novelty has his Cybertruck’s bold styling may limit its ap Tesla, which makes more than half its cars
torically counted for a lot. Carmaking’s peal. And though lowcost Teslas could ex at its giant factory in Shanghai, no longer
rule of thumb to keep sales chugging along pand the company’s market beyond Amer seems to hold its privileged position in the
is to refresh models every 24 years and re ica, China and Europe, they would almost country. It was allowed to set up without
design them completely every 47 years. certainly generate lower margins, further the Chinese jointventure partner required
Tesla’s planned “refresh” of the Model 3’s depressing the company’s overall profit of other foreign carmakers, at a time when
styling and its tech innards this year looks ability. Moreover, granting regional ven China needed Mr Musk to supply EVs for
late by industry standards. tures greater autonomy to manage region Chinese motorists and, importantly, to en
The company will need to go well be al differences in taste, as established car courage China’s own budding EV industry
yond its current strategy, of offering soft makers have historically done, again adds to raise its game.
ware updates that improve some of its cars’ complexity and costs. That has worked too well. Tesla is
features, or that add new ones. This may Mr Musk may no longer be able to avoid thought to have sold 155,000 cars in China
other expensive industry practices. One is
marketing. In contrast to all other big car
1 Carnucopia 3
Production heaven makers, which spend princely sums on
Tesla, vehicle deliveries, ’000 ads, Tesla has depended on wordof Worldwide electric-vehicle models
500
mouth and Mr Musk’s own largerthanlife 250
persona to promote its products. Barclays Battery Hybrid
reckons that eschewing ads and, by selling 200
400
directly to buyers, bypassing dealers, cur 150
Launched
300 rently saves the company $2,5004,000 for
100
every car it sells. As it seeks new custom
200 ers, and as Mr Musk risks affecting Tesla 50
sales with his polarising stewardship of 0
100 Twitter, his $44bn sideproject, the com
pany is likely to forgo some of those sav -50
ings. Mr Musk has conceded as much, say Retired Forecast
-100
0
2012 14 16 18 20 23
ing that, for the first time, his company 2017 18 19 20 21 22 23 24 25
Source: Company reports
might “try a little advertising”. Source: Bernstein
Another carmaking staple to which
012
The Economist July 22nd 2023 Business 51
in the second quarter, 13% more than in the Chinese authorities are pushing back deals to open its charging network to Ford

previous three months. But China Mer against Tesla’s efforts to increase manufac and General Motors customers. As brands
chants Bank International Securities, an turing capacity in China. And that is before become defined by the digitally mediated
investment firm, reckons its market share getting into the increasingly fraught geo experience of driving rather than the body
may have slipped below 14%, from 16% in politics of SinoAmerican commerce. shell or handling, its superior software—
the preceding quarter, as buyers switched If Tesla is to sell 6m cars a year at an op including, one day, selfdriving systems—
to fastimproving homegrown brands. In erating margin of 14% by 2030, which Mr may allow it to keep offering fewer models
a sign that Tesla now needs China more Levy of Barclays thinks possible, it proba than its rivals. Mr Le thinks Tesla will miti
than China needs Tesla, the company was bly needs to avoid at least some of these gate the China risk by manufacturing more
obliged to sign a pledge on July 6th with pitfalls. It would be foolish to dismiss that of its cars in Germany and other countries,
other car firms to stop its price war and eventuality, given Tesla’s knack for con including lowcost ones. Tesla has been by
compete fairly in line with “core socialist founding sceptics. It could, for example, far the most compelling car company of
values”. Tu Le of Sino Auto Insights, a con offset part of the decline in sales growth the early 21st century. If it is to hold on to
sultancy, says rumours are rife that the with new revenue streams, such as recent that title, it must work for it. n
Bartleby Advice squad
Our agony uncle, Max Flannel, answers your workplace questions
D ear Max, I am an extremely nervous
public speaker and I was told long ago
that it can help to imagine that my audi
Now everyone around me keeps talking
about the importance of kindness and au
thenticity, and I don’t understand what the
My company has introduced hotdesk
ing at our new postpandemic office. This
means I have been given a “hotbox” to carry
ence is naked. I casually mentioned this hell is going on. Please help. my photos and the team gourd to whichever
piece of advice to another member of staff It is true that the workplace has desk I will be working at that day. Each
the other day and have now been reported changed in recent years: empathy and morning I take my hotbox out of my locker
to HR for inappropriate behaviour. What compassion have become part of the and am struck afresh by the futility of life.
should I do? lexicon of the modern workplace. But I Can you help?
Hmmm. I doubt you are in breach of want you to know that you are not alone; This is a surprisingly common com
any rules unless you have told specific very many people share your lack of pain. plaint from my correspondents. Hot
individuals that you are thinking about There is no stigma attached to being un boxes have to be small enough to carry:
what they look like without clothes on. able to interrogate your own feelings or to that means there is usually room only for
But it’s probably wise not to repeat this trundling along in a state of emotional a couple of personal possessions. To be
piece of advice to anyone else. That’s not vacuity; it’s a condition also known as one of a crowd wandering around in
just because it sounds so dodgy. In my being male. It’s OK to feel invulnerable. search of a place to settle down, with
experience it’s also a hopeless tip: you During the pandemic I decided to move to your existence distilled down to a hand
will almost certainly end up feeling even Montana in order to fulfil my dreams and ful of mementoes and a cactus, is pro
more nauseous. It is better, and safer, to work remotely from a ranch I bought on foundly depressing. It’s like an episode of
imagine people wearing many more credit. My company is now requiring people “The Last of Us” with chinos. My advice
clothes and ideally a balaclava, too. to come into the office two days a week. would be to ditch the hotbox altogether
My new teammates try hard to estab Unfortunately, the office is in New York and and sit at a bare desk. You will work just
lish an atmosphere of psychological safety. I my commute takes about 12 hours each way if as well and suffer from much less angst.
genuinely agree with this aim, but one of I’m lucky. What should I do? Last month I got an unexpected promo
our rules is that people can only talk in The obvious answer is that you need to tion and went out with some friends to
meetings if they are holding a wooden change either your job or your location. celebrate. The evening got a little out of
gourd. Whenever I am handed this ridicu But really you need to reexamine the way hand and I woke in the morning to find that
lous thing, I start laughing uncontrollably. you take decisions. You are terrible at it. I had got a tattoo of my company logo. I
Do you have any advice? don’t expect you to be able to help, but I
If your team are truly believers in bitterly regret the decision and just wanted
psychological safety, then you should be to tell someone.
able to tell them that gourdhandling is I followed up with this letterwriter
not what you came into the workplace to directly to find out a little more. If the
do. Perhaps you could suggest another company in question had a fashionable
way of giving the floor to people without brand, a logo might at least be passed off
interruption? Is there another object that as a cool consumer choice. And with
you might find less absurd? If it is too luck, the tattoo would be in a discreet
difficult to have an honest conversation place. No dice. It turns out that my corre
with them, then say, “Oh gourd, not this spondent works for an auditing firm. He
again,” when it comes your way and has the letter “E” emblazoned on one
before you begin sniggering. With luck eyelid, and the letter “Y” on the other.
your colleagues will just think you have a You can see how that might have seemed
lame sense of humour. really clever at the time. I cannot help
I am a repressed older man with no real this poor wretch but I’ll be back with
capacity to feel. This barren emotional more of your workplace dilemmas as
landscape has served me well for years. soon as I have made them up.
012
French supermarkets
Video games
The Casino gamble Shooter to win
A mega-deal’s winners and losers
BE RLIN
A Czech tycoon bets big on
an ailing retailer
T HE GAME is on. Or so ruled an Amer
ican appeals court on July 14th when
it threw out another effort by the Feder
I t is something of a revolution in the

country which once deemed yogurt
making to be a strategic industry. For the
al Trade Commission to block Micro
soft’s $69bn acquisition of Activision
Blizzard, a games developer, which a
first time in the history of the fifth republic federal judge had cleared three days
one of France’s big retail chains will be in earlier. A few days later Sony and Micro
foreign hands. Daniel Kretinsky, a Czech soft agreed to keep “Call of Duty”, Acti
tycoon who made his fortune investing in vision’s hit firstperson shooter, on
coal and natural gas, is on the verge of tak Sony’s PlayStation console, increasing
ing control of the Casino group, which in the pressure on Britain’s trustbuster,
cludes a chain of hypermarkets, as well as the last holdout, to approve the merger.
Monoprix and Franprix, two other retail Can the losing streak end? Microsoft’s truce with Sony follows
chains, and convenience stores. similar agreements with Nintendo,
In May Casino, collapsing under a no will require a bigger cash injection than another Japanese gaming company, and
mountain of debt, entered talks with credi the €1.2bn proposed in Mr Kretinsky’s plan. Nvidia, an American chipmaker which
tors, shareholders and the French state to The cost could be nearer €3bn, he reckons. also owns a cloudbased gaming ser
shore up its balancesheet. Mr Kretinsky, To make its shops more attractive the com vice. It allays Sony’s fear that it would be
whose existing 10% stake makes him the pany needs not just to remodel them but cut off from “Call of Duty”, which re
firm’s secondbiggest shareholder, joined also lower its prices, which are 40% higher portedly generated $1.5bn in revenues
forces with Marc Ladreit de Lacharrière, a than in rival supermarkets as a result of Ca for Sony in 2021. However, it is not a
fellow billionaire whose holding company, sino’s desperate effort to boost margins. It clearcut victory for the PlayStation
Fimalac, is the thirdbiggest, to present a must also win back suppliers put off by late maker. Its arrangement with Microsoft
rescue plan. A trio of French tycoons, Xavi payments. Within a year the future owners is limited to “Call of Duty”, and does not
er Niel, Matthieu Pigasse and MoezAlex may either need to cough up more cash or extend to Activision’s other blockbust
andre Zouari, came out with a rival offer, sell off a valuable asset such as Monoprix, a ers, such as World of Warcraft.
with the backing of Attestor, a hedge fund fixture of French city centres, where shop For its part, Microsoft hopes the deal
that owns a big slug of Casino’s debt. pers can stock up on quality garb and grub. will help it Candy Crush it in mobile
On July 15th Mr Kretinsky submitted a One problem Casino may be able to gaming. In 2023 global spending on
revised plan, this time with the backing of avoid is meddling by the French govern mobile games is forecast to hit $125bn,
Attestor, which defected from its erstwhile ment. In early 2021 Bruno Le Maire, the around twothirds of the industry’s
partners. He and his collaborators are pro finance minister, balked at the proposed overall revenues, according to Omdia, a
posing to inject €925m ($1bn) into the ail $20bn acquisition of Carrefour, another research firm. Activision’s popular
ing business in return for a 53% stake. A onetime French supermarket star, by Ali mobile apps, including Candy Crush
further €275m is likely to be provided by mentation CoucheTard of Canada. At the and a smartphone version of “Call of
other creditors, but backstopped by Mr time he argued that the government want Duty”, may enable Microsoft to conquer
Kretinsky, Mr Ladreit de Lacharrière and ed to preserve France’s food security and Asia, Sony’s historic stronghold. It had
Attestor. They will also convert €4.7bn of sovereignty. This time Mr Le Maire has better, for the company is losing the
Casino’s debt into equity. stressed the need to be “vigilant” about Ca console wars. Its Xboxes have consis
Unable to match this proposal, Messrs sino’s 53,000 jobs in France—which, to tently been outsold by PlayStations.
Niel, Pigasse and Zouari withdrew their bid gether with Casino’s headquarters in the This year Sony is expected to sell 22m
the following day. They blamed, among backwater city of SaintEtienne, Mr Kretin PlayStation 5s, twice the forecast for the
other things, unwarranted scepticism to sky has promised to preserve. But the state Xbox. Whether mobile supremacy is
wards their offer from Casino’s manage has so far mostly stayed out of it, possibly worth the $69bn price tag is another
ment. In fact, says Clément Genelot of Bry because it is keenly aware that the only re matter. Giant deals often destroy value
an, Garnier & Company, an investment maining alternative to Mr Kretinsky’s bid in a way that puts the most trigger
bank, the trio put forth a less attractive pro is liquidation. happy “Call of Duty” pros to shame.
position, with a more meagre capital injec “For shareholders this is a huge de The biggest winners from the deal,
tion and without explaining where some struction of value,” says Tomás Mannion of besides Activision shareholders, may
of the money would come from. Sarria, a research firm. They will be left be other game developers, such as Take
With his competitors out of the picture, with 1.8% of equity and a tiny fraction of Two and Electronic Arts. Their popular
Mr Kretinsky looks poised to prevail. He their original investment. That includes franchises, Grand Theft Auto and FIFA,
wants to put Philippe Palazzi, a former JeanCharles Naouri, Casino’s chairman, respectively, make the companies ripe
executive at Metro, a big German retailer of chief executive and majority shareholder, targets for acquisition, which Micro
which the Czech mogul owns more than who will lose control of the group after 30 soft’s regulatory success makes less
40%, and JeanPaul Mochet, who used to years. Despite a doctorate in mathematics, likely to be challenged. Share prices
run Monoprix and Franprix, in charge of Mr Naouri, considered one of France SA’s across the industry have been rising
the turnaround. most formidable intellects, was unable to since the American ruling, possibly in
The new bosses will have their work cut make Casino’s sums add up. Mr Kretinsky anticipation of a takeover spree.
out. Mr Genelot thinks that reviving Casi is wagering that he can do better. n
012
The Economist July 22nd 2023 Business 53
Foodmaking (which may explain why producers prefer shaw drivers’ union, directly connects rid

to call it “animalfree”). Regulators create ers to drivers, with no commission for dig
A new big cheese hurdles, too. Although the startups are ital middlemen. It averages around 68,000
confident they will get the green light—the trips a day, from only 2,000 at the start of
technique is already used for flavourings the year, and boasts more than 78,000 driv
and insulin—they worry about the time ers and 1.4m customers on its platform.
this will take and about labelling disputes. Namma Yatri is built on a new open net
According to GFI, even in America, the land work that represents the next phase of the
Startups are producing real dairy
of free enterprise, it takes about nine “India stack”—a set of digital services
without a cow in sight
months. It Europe it takes twice as long; created by the state. With a national bio
I T LOOKS LIKE cheese. It smells like

cheese. It tastes like cheese (specifically
mature cheddar). And it is cheese—at least
the first products will not reach European
supermarkets until 2024.
The technology is also a work in pro
metric system and a hugely successful pay
ments network in place, the government
has now set its sights on reshaping India’s
under the microscope. “Synthetic dairy” is gress. For now Better Dairy’s cheddar still ecommerce market. The Open Network
made with the same ingredients as the uses bovine casein, one of the proteins in for Digital Commerce (ONDC) allows small
conventional sort. But instead of getting milk; the firm is working on a synthetic er retailers to reach buyers, bypassing priv
the main ingredient from a live ruminant, version that would make its cheese proper ate marketplaces like Amazon. In theory, it
Better Dairy, a threeyearold British ly vegan. And the process remains costly. A unbundles every part of the shopping pro
cheesemaker, derives some of it from fermenter that can hold about 30 litres of cess, allowing shoppers to choose from
yeast. These microbes are fed sugar, which milk can cost £150,000 ($190,000). Buying thousands of sellers and select delivery op
they then convert into milk proteins in a a cow, which can produce about as much in tions by different providers rather than re
process which is similar to brewing. a day, will set you back £1,600. n ly on overweening incumbents.
Plenty of milk alternatives have hit café ONDC is still new. Besides the rideshar
counters and supermarket shelves in ing app, early pilots have focused on food
recent years. Plantbased beverages made Digital platforms and local grocery deliveries. Questions
from things like soyabeans, almonds and abound about who bears responsibility
oats make up 15% of all milk sales by value The rickshaw wars when things go wrong, from fake products
in America and 11% in western Europe, to payment disputes. No app has so far
reckons the Good Food Institute (GFI), a reached the scale to match the incum
thinktank. Yet lovers of real dairy, which bents, which are also toying with the plat
plantderived products cannot quite mim form. In February Amazon announced that
ic, still need cows, goats and ewes. “Preci it would integrate its logistics services
A battle of travel apps highlights the
sion fermentation” companies like Better with ONDC. In April PhonePe, a Walmart
promise and perils of the India stack
Dairy hope to change that—and take a fat backed payments system, launched a local
slice of the $900bn global dairy market.
Remilk, an Israeli startup, has recently
received approval to sell its fare in Ameri
I N INDIA’S STARTUP capital of Bangalore,
autorickshaw drivers are no less prized
than software engineers. Given the city’s
delivery app on the open network. Still, the
Indian government’s aim seems clear: it
desires a noisy digital bazaar instead of
ca, Israel and Singapore. Perfect Day, a Cali chaotic traffic, rickshaws are sometimes one with a few big monopolies.
fornian one, already sells synthetic milk, the fastest way to get around. But finding Or does it? Piyush Goyal, the commerce
ice cream and cream cheese. It recently one isn’t easy. Threats, pleas and moral ap minister, wants big ecommerce firms to
signed contracts to sell its proteins to Nes peals are necessary before a driver accepts use ONDC for all their operations. Fence
tlé, a food giant, and to Starbucks. In its lat a ride. The experience is no better with Ola sitters risk being banned from the plat
est funding round two years ago it raised and Uber, two ridehailing firms which form. He has also vowed to use the “full
$350m, valuing it at $1.6bn. All told, preci offer rickshaw services for a commission. force of the government” to promote it,
sion fermenters have raised nearly $3bn Help is at hand. An app called Namma putting Amazon and Flipkart on notice. So
from investors since the start of 2021. Yatri, launched in November by the rick much for openness and competition. n
Synthetic dairy dispenses with certain
undesirable aspects of milk and milkmak
ing. Lactose, to which some people are al
lergic, and hormones, which have been
linked to some adult diseases, can be
stripped out. Fermentation tanks do not
need to be pumped full of antibiotics and
can be set up anywhere—handy at a time of
rising worries about food security and cli
mate change. The process uses less water
and, because it requires less energy and
less land, emits fewer greenhouse gases
than conventional dairy production,
which is responsible for more than 3% of
annual planetwarming emissions, almost
twice as much as aviation (and a lot of it
from belchy cows).
One challenge for the innovators is
winning consumers’ trust. Steel tanks lack
the familiarity of cows. A quarter of re
spondents to a survey in America aren’t
keen to try “precisionfermented” fare Driving change
012
Schumpeter Stars v suits
A blockbuster strike by Hollywood’s actors and writers may become a flop
awards than broadcast TV, their shorter seasons make work pre
carious. Actors and writers want higher minimum wages and a
successbased payment when shows are released.
On the face of it they are in a strong position. Without writers,
the creative pipeline is empty. Without actors, worksinprogress
like Ridley Scott’s “Gladiator” sequel have been shut down. Even
completed films will struggle without stars to promote them.
Disney had to rustle up entertainers in Mickey and Minnie cos
tumes to walk the red carpet at the premiere of “Haunted Man
sion” on July 15th. The Venice film festival next month will be a
lonely affair. The Emmy awards, in September, could be derailed;
some wonder if the strike might even last until the Oscars, next
March. Unsurprisingly, the striking stars are also proving better at
communicating their concerns than the suits in the studios. Fran
Drescher, current president of the actors’ union, drew on her years
starring as “The Nanny” to scold “disgusting” studio chiefs for
their fat salaries. Bob Iger, Disney’s boss, responded with an inter
view from a Sun Valley getaway known as “billionaires’ summer
camp”; around the same time news leaked that he recently com
missioned a new yacht.
Yet the stars will struggle more than they did when Reagan was
in charge. Strikes are less disruptive to TV schedules now that
M unching popcorn, a crowd of glamorous movie people and
somewhat less glamorous journalists gathered in a London
cinema on July 13th for the premiere of “Oppenheimer”, a new film
there is no longer a schedule to disrupt. The ondemand era means
viewers face a sea of choice on opening their apps; any gaps are
less obvious. Streaming has also made Hollywood less reliant on
from Universal Pictures. As the audience waited for the entrance America, both in terms of its audience and in terms of production.
of the movie’s stars—Cillian Murphy, Emily Blunt, Matt Damon Netflix is the most extreme example: more than twothirds of its
and others—they were greeted instead by an apologetic Christo 238m subscribers live overseas, and nearly twothirds of the
pher Nolan, the film’s director. His cast had just gone home, he an shows it commissioned in the past 12 months are being made
nounced. “They’re off writing their signs, to join the picket lines.” abroad, according to Ampere Analysis. (It may even be happy to
The strike called moments earlier by America’s Screen Actors shift its viewers’ consumption away from expensive American
Guild, which coincides with one by the Writers Guild of America productions and towards to these lowercost shows, speculates
that began in May, has detonated a bomb under America’s enter one sometime rival.)
tainment industry. The reverberations will travel much farther: In a world dominated by franchises, actors also wield less eco
nine of the ten biggest boxoffice hits worldwide last year were nomic clout than they used to. Last month Warner Bros replaced
Americanmade, and American streaming services now reach into its Superman; Sony has fielded multiple SpiderMen (the most re
living rooms everywhere. As the stars face off against the studios, cent is animated). As Anthony Mackie, who plays Captain Ameri
the world’s great entertainment machine has ground to a halt. ca, has put it: “The evolution of the superhero has meant the death
The last time writers and actors went on strike together Ronald of the movie star.” And as audiences tire of superheroes, studios
Reagan was president—not yet of the United States, but of its ac are finding new franchises. This year’s highestearning movie so
tors’ union. The argument then, in 1960, was about television, and far is Universal’s animated reboot of “Super Mario Bros”.
how bigscreen actors should be compensated when their work
was replayed on the small screen. Today’s confrontation is also Cut! Cut costs!
about new technology. Above all, the distressed state of the entertainment business
One concern is artificial intelligence. Writers and actors want means studios are in no shape to increase their outgoings. Big
guarantees that it won’t be used to churn out scripts or clone per titles like “Indiana Jones” continue to fizzle at the box office,
formers. The bigger argument is over streaming. The “streaming which this year is expected still to be a quarter lower than before
wars” have seen a surge in content spending, as centuryold stu the pandemic. The broadcast and cableTV businesses are in ter
dios compete for subscribers with deeppocketed new rivals like minal decline. In his Sun Valley interview Mr Iger was frank about
Apple and Amazon. Worldwide, TV and film companies spent their future: “The business model that forms the underpinning of
more than $230bn on programming last year, nearly double their that business, and that has delivered great profits over the years, is
expenditure a decade earlier, estimates Ampere Analysis, a re definitely broken,” he said. Wall Street has begun to demand that
search firm. Jobs in American show business are growing about streamers deliver not just growth but profit, causing an almighty
twice as fast as employment overall. rush to trim costs. Even before the strike, projects were being can
Some “talent” still feel shortchanged. Streamers make gener celled. Last year Warner Bros canned a completed “Batgirl” film.
ous upfront payments, but they offer a smaller share in their pro The industrial action provides helpful cover for more costslash
jects’ future success. So whereas an appearance in a flop is much ing: “A lot of shareholders and executives are happy to clean up
better paid than it was a decade ago, being part of a smash hit no their balancesheets,” says one former streaming executive. The
longer means being set up for life. And although the streamers’ actors are delivering Oscarworthy performances at the picket
output tends to be creatively fulfilling, with more potential for lines. This time, they face a tough crowd. n
012
Finance & economics The Economist July 22nd 2023 55
Artificial intelligence puters to manage supply chains, compared
with 95% in New Zealand. According to our
Machine dreams analysis, Japan is roughly 40% poorer than
would be expected based on its innovation.
France is the opposite. Although its re
cord on innovation is average, it is excel
lent at spreading knowledge. In the 18th
century French spies stole engineering se
BOSTO N AND TO KYO
crets from Britain’s navy. In the early 20th
New tech is taking longer to spread through economies. That is bad news for AI
century Louis Renault visited Henry Ford
T o understand the impact that artifi

cial intelligence may have on the econ
omy, consider the tractor. Historians dis
the University of Chicago, “is arguably as
critical as innovation for longrun growth.”
The importance of diffusion is illustrat
in America, learning the secrets of the car
industry. More recently, former ai experts
at Google and Meta founded Mistral ai in
agree about who invented the humble ed by Japan and France. Japan is unusually Paris. France also tends to do a good job of
machine. Some say it was Richard Trevith innovative, producing on a perperson ba spreading new tech from the capital to its
ick, a British engineer, in 1812. Others argue sis more patents a year than any country periphery. Today the productivity gap in
that John Froelich, working in South Dako bar South Korea. Japanese researchers can France between a top and a middling firm
ta in the early 1890s, has a better claim. Still take credit for the invention of the qr code, is less than half as big as in Britain.
others point out that few people used the the lithiumion battery and 3d printing. During the 19th and 20th centuries
word “tractor” until the start of the 20th But the country does a poor job of spread businesses around the world became more
century. All agree, though, that the tractor ing new tech across its economy. Tokyo is French, with new technologies diffusing
took a long time to make a mark. In 1920 far more productive than the rest of the ever faster. Diego Comin and Martí Mestie
just 4% of American farms had one. Even country. Cash still dominates. In the late ri, two economists, find evidence that
by the 1950s less than half had tractors. 2010s only 47% of large firms used com “crosscountry differences in adoption
Speculation about the consequences of lags have narrowed over the last 200 years.”
ai—for jobs, productivity and quality of Electricity swept across the economy fast
life—is at fever pitch. The technology is er than tractors. It took just a couple of de
aweinspiring. And yet ai’s economic im 57 China’s struggling economy cades for personal computing in the office
pact will be muted unless millions of firms to cross the 50% adoption threshold. The
58 Buttonwood: The dollar’s dip
beyond tech centres like Silicon Valley internet spread even faster. Overall, the
adopt it. That would mean far more than 59 How not to invest in big tech diffusion of technology helped propel pro
using the occasional chatbot. Instead, it ductivity growth during the 20th century.
59 A health check for Wall Street
would involve the fullscale reorganisa Since the mid2000s, however, the
tion of businesses, as well as their in 60 Instant payments reach America world has been turning Japanese. True,
house data. “The diffusion of technologi consumers adopt tech faster than ever. Ac
— Free exchange is away
cal improvements”, argues Nancy Stokey of cording to one estimate TikTok, a social
012
56 Finance & economics The Economist July 22nd 2023
media app, went from zero to 100m users tion, health care and utilities, account for a
in a year. Chatgpt was the fastestgrowing Two-tier economy quarter of American gdp.
app in history until Threads, a rival to Twit Britain, labour productivity, output per worker Could ai break the mould, diffusing
ter, launched this month. But firms are By firm’s productivity percentile, £’000, 2019 prices across the economy faster than other re
increasingly cautious. In the past two de 120 cent technologies? Perhaps. For almost any
cades all sorts of mindblowing innova firm it is easy to dream up a usecase. No
tions have come to market. Even so, ac more administration! A tool to file my tax
90
cording to the latest official estimates, in es! Covid19 may have also injected a dose
2020 just 1.6% of American firms em 90th (highest productivity) of dynamism into Western economies.
ployed machine learning. In America’s 60 New firms are being set up at the fastest
manufacturing sector just 6.7% of compa pace in a decade, and workers are swap
nies use 3d printing. Only 25% of business 50th 30 ping jobs more often. Tyler Cowen of
workflows are on the cloud, a number that George Mason University adds that weaker
10th (lowest)
has not budged in half a decade. 0 firms may have a particular incentive to
Horror stories abound. In 2017 a third of 1998 2005 10 15 19
adopt ai, because they have more to gain.
Japanese regional banks still used cobol, a Source: ONS
ai can also be incorporated into exist
programming language invented a decade ing tools. Many coders—maybe most—al
before man landed on the moon. Last year ready use the technology on a daily basis
Britain imported more than £20m($24m) miliar. People stuck using old technologies owing to its integration in everyday coding
worth of floppy disks, MiniDiscs and cas suffer, along with their salaries. In Britain, instruments through Github’s Copilot.
settes. A fifth of richworld firms do not average wages at the least productive 10% Word processors, including Google Docs
even have a website. Governments are of of firms have fallen slightly since the 1990s and Microsoft Word, will soon roll out doz
ten the worst offenders—insisting, for in when adjusted for inflation—even as aver ens of ai features.
stance, on paper forms. We estimate that age wages at the best firms have risen
bureaucracies across the world spend $6bn strongly. According to Jan De Loecker of ku Not a dinner party
a year on paper and printing, about as Leuven and colleagues, “the majority of in On the other hand, the most significant
much in real terms as in the mid1990s. equality growth across workers is due to benefits from new forms of ai will come
increasing average wage differences be when firms entirely reorganise themselves
Best and the rest tween firms”. What, then, has gone wrong? around the new technology; by adapting ai
The result is a twotier economy. Firms Three possibilities explain lower diffu models for inhouse data, for example.
that embrace tech are pulling away from sion: the nature of new technology, slug That will take time, money and, crucially, a
the competition. In 2010 the average work gish competition, and growing regulation. competitive drive. Gathering data is tire
er at Britain’s most productive firms pro Robert Gordon of Northwestern University some and running the best models expen
duced goods and services worth £98,000 has argued that the “great inventions” of sive—a single complex query on the latest
(in today’s money), which had risen to the 19th and 20th centuries had a far bigger version of Chatgpt can cost $12. Run 20 in
£108,500 by 2019. Those at the worst firms impact on productivity than more recent an hour and you have passed the median
saw no rise. In Canada in the 1990s frontier ones. The problem is that as technological hourly American wage.
firms’ productivity growth was about 40% progress becomes more incremental, dif These costs will fall, but it could take
higher than nonfrontier firms. From 2000 fusion also slows, since companies have years for the technology to become suffi
to 2015 it was three times as high. A book by less incentive and face less competitive ciently cheap for mass deployment. Boss
Tim Koller of McKinsey, a consultancy, and pressure to upgrade. Electricity provided es, worried about privacy and security, reg
colleagues finds that, after ranking Ameri light and energy to power machines. Cloud ularly tell The Economist that they are un
can firms according to their return on in computing, by contrast, is needed only for willing to send their data to modify models
vested capital, the 75th percentile had a re the most intensive operations. Newer in that live elsewhere. Surveys of small busi
turn 20 percentage points higher than the novations, like machine learning, may be nesses are not encouraging. One, by Go
median in 2017—double the gap in 2000. trickier to use, requiring more skilled Daddy, a webhosting company, suggests
Some companies see huge gains from buy workers and better management. that around 40% of those in America are
ing new tech; many see none at all. Business dynamism fell across the rich uninterested in ai tools. The technology is
Although the economics can sound ab world in the first decades of the 21st centu undoubtedly revolutionary. But are busi
stract, the realworld consequences are fa ry. Populations aged. Fewer new firms were nesses ready for a revolution? n
set up. Workers moved companies less fre
quently. All this reduced diffusion, since
Working smart, not hard workers spread tech and business practic Laboured
Selected countries, 2020 es as they move across the economy. Britain, labour productivity, output per hour
Log scale In industries run or heavily managed by % change on ten years earlier
GDP per person, $’000
100
the government, technological change 60
Japan happens slowly. As Jeffrey Ding of George
Washington University notes, in the cen
40
10 trally planned Soviet Union innovation
France was worldbeating—think of Sputnik—but
diffusion was nonexistent. The absence of 20
1
competitive pressure blunted incentives
to improve. Politicians often have public 0
0.1 policy goals, such as maximising employ
0.001 0.01 0.1 1 10 100 1,000
ment, that are inconsistent with efficiency. -20
Patents per 100,000 people
Heavily regulated industries make up a big 1770 1800 50 1900 50 2016
Sources: World Bank; The Economist
chunk of Western economies today: such Source: Bank of England
sectors, including construction, educa
012
The Economist July 22nd 2023 Finance & economics 57
Consumer prices did not rise at all in

June compared with a year earlier, and pro
ducer prices—charged at the factory gate—
fell by 5.4%. China’s statisticians have
blamed this weakness on changes in global
commodity prices, such as the falling cost
of oil. That is an unconvincing explanation
for the weakness of China’s nominal
growth, because gdp should count only
the value added to a good in China itself,
thus excluding the value of imported com
modities. Perhaps deflationary pressures
are spreading. Or perhaps China’s statisti
cians have got their sums wrong.
Mulish response
Some members of the public feel the econ
omy is doing even worse than the official
figures suggest. There is a “temperature
difference” between the macroeconomic
data and “micro feelings”, as one commen
tator put it. In response, Mr Fu of the Na
tional Bureau of Statistics pointed out that
Post-covid economics macroeconomic data are more compre
hensive and reliable than “micro feel
Feel-bad recovery ings”—prompting a netizen to joke that if
state statisticians say you are okay, you
should adjust your feelings accordingly.
The government’s own feelings towards
the economy are hard to read. During the
global financial crisis, when world trade
fell off a cliff, China’s authorities swooped
China’s struggling economy poses a test for Xi Jinping
in with vast stimulus, which propelled
W hen janet yellen visited Beijing

this month she did her bit for the lo
cal restaurant trade. America’s treasury
market is lost in the cabbage patch. Sales of
flats fell by 27% in June compared with a
year earlier. They are now running well be
economic growth and spilled over to the
rest of the world. Today they seem in no
such rush. The country’s central bank has
secretary dined with her team at an estab low the pace economists think would be cut interest rates a little. Tax breaks on
lishment known for Yunnanese dishes, justified by underlying demand, given Chi electric vehicles have been extended. The
which subsequently unveiled a “God of na’s urbanisation and the widespread de state’s planning agency has held pep talks
Wealth” menu in her honour. She also sire for better accommodation. this month with firms ranging from Baidu,
hosted a lunch with female entrepreneurs China’s “nominal” growth, before ad an internet giant, to Spring Tour, a tourism
and economists (including a representa justing for inflation, was also weaker than agency, and Donkey Meat Cao Catering, a
tive of The Economist Group). Although the inflationadjusted figure; something firm serving donkey burgers. Leaders have
restaurants have prospered since China that has happened only four times in the released 31 guidelines exhorting officials to
dropped its covid controls at the end of last past 40 quarters. It suggests that the price promote the private sector. But no detailed
year, the gods of wealth have been less kind of Chinese goods and services is falling. In fiscalstimulus plan has emerged.
to the rest of the country’s economy—as deed, it implies they fell by 1.4% in the year This lack of urgency may reflect the
gdp figures released on July 17th revealed. to the second quarter, which would be the government’s enduring confidence in the
They showed that the economy grew by sharpest drop since the global financial recovery. Officials may believe that the
6.3% in the second quarter compared with crisis (see chart 2). economy still has enough momentum to
a year earlier. That looks impressive. But it
was slower than expected. And the figure
was flattered by a low base in 2022, when Another rebound needed
Shanghai and other cities were locked China
down. The economy grew by only 0.8% in
the second quarter compared with the first GDP, % change 1 GDP price deflator, % change on a year earlier 2
three months of the year, an annualised 20 10
rate of merely 3.2% (see chart 1). On a year earlier 15 8
Obstacles to growth were both foreign
and domestic. The dollar value of China’s 10 6
exports, for example, shrank by more than 5 4
12% in June, compared with a year earlier—
0 2
the sharpest drop since the height of the
pandemic in February 2020. “The recovery On previous quarter, -5 0
annualised
of the world economy has been sluggish,” -10 -2
said Fu Linghui of the National Bureau of 2021 22 23 2009 11 13 15 17 19 21 23
Statistics, by way of explanation. Mean Sources: Haver Analytics; The Economist
while, the recovery of China’s property
012
meet their targets for the year, including the year, more than half of the govern The problem is that such “quick and ea
for gdp growth of around 5%. The govern ment’s 12m target for the year. Although sy” measures might not be enough, argue
ment’s restraint may also betray its misgiv unemployment among urban youth in Yu Xiangrong and his colleagues at Citi
ings about additional stimulus. Policy creased to 21.3%, the overall jobless rate re group, a bank. Slower, more difficult op
makers do not want a lending and spend mained steady at 5.2% in June, below the tions include cash handouts to poor fam
ing spree to erode the profitability of state target of 5.5%. ilies, as well as additional investment in
owned banks or undermine financial dis But the labour market can be a lagging green infrastructure, financed by state
cipline among local governments. indicator of economic momentum. If guided policy banks or even—heaven for
The government can draw some com growth remains weak, unemployment will fend—centralgovernment bonds. Chinese
fort from the job market. China’s economic eventually edge up. By that point, the gov policymakers are willing to tolerate a tem
reopening so far has been led by services ernment will be forced to do more to revive perature difference between official data
industries, such as restaurants, that tend the economy. Options include further cuts and public feelings. They will be unwilling
to be labourintensive. China’s cities have to interest rates, a weaker currency and ex to tolerate a glaring gap between the econ
added 6.8m jobs in the first six months of tra support for property developers. omy and their targets. n
Buttonwood Greenback setback
The dollar’s dip is unlikely to become a sustained decline
T he ENDLESS queues, filled with
American accents, outside Dishoom,
a chain of upmarket British curry houses
Another reason for the recent decline is
that inflation is falling more slowly out
side America, particularly in Britain and
economy’s lukewarm growth, which puts
it in the middle of the smile, as a sign of
dollar weakness to come.
that has gained international fame the euro zone. Even in the land of low Yet these driving forces are hardly
thanks to TikTok, tell a story which any inflation, Japan, consumer prices rose by guaranteed to continue. Each could
one who has recently visited Paris, Rome 3.2% yearonyear in May—higher than suddenly reverse, causing the dollar to
or Tokyo can confirm: the dollar is America’s figures a month later. Central strengthen once more. If inflation proves
mighty. American tourists are rushing to bankers in such countries may have more to be stickier than expected in America,
take advantage of bargain sterling, euro fighting ahead. Higher rates would drag for instance, and stops dropping quite so
and yendenominated holidays. investment from dollardenominated rapidly, Fed policymakers have made
Those who booked early will have assets into higheryielding currencies. clear that they would be willing to keep
scored the biggest bargains, however. The third reason for the decline is raising interest rates aggressively. More
The dollar is still strong by the standards middling American growth. The country’s over, it is still possible that America’s
of the past two decades. But since its gdp is expected to increase by a modest economy will slow under the weight of
peak in September, it has dropped by 13% 1.3% this year. Stephen Jen, now of Eurizon higher interest rates, despite the remark
against a basket of currencies. The sell Capital, an assetmanagement firm, first able resilience it has so far displayed.
off accelerated last week, when the dollar posited the idea of a “dollar smile” a cou Indeed, it may transpire that other
fell by 3%—a big move for a currency. The ple of decades ago. The theory suggests rich economies are simply running a few
dxy index, which measures the currency that when America is powering ahead of months behind America. American
against six others, is at its lowest since the world, the dollar strengthens as in prices rose more rapidly than those
April 2022, just after the Federal Reserve vestors pour in. But the currency can also elsewhere in 2021, and the Fed began
started to raise interest rates. strengthen when the world’s largest econ raising interest rates earlier than most
The recent weakening is welcome omy is in the doldrums, since a depressed central banks the next year. Britain’s
news for those parts of the world, partic American economy is a threat to global latest inflation figures, released on July
ularly developing countries, which rely financial stability. That paradoxically adds 19th, showed prices rising by 7.9% year
on financing in foreign currencies. to demand for the country’s safe Treasury onyear in June, below the 8.2% forecast.
Emergingmarket issuance of dollar bonds. Mr Jen today sees the American Whether an investor believes the surge
bonds hit an 11year low in 2022. Frontier in inflation was caused by a transitory
markets—the smallest, least liquid and burst of supplyside factors, or is the
often poorest such markets—issued less result of monetary and fiscal largesse,
than $10bn of dollar bonds last year, they will think there is a good chance
down from $30bn in 2021. inflation elsewhere will follow America’s
Sadly for these countries, there is downwards trend. If this does happen,
reason to doubt the dollar’s dip is the monetary policy in America and the rest
start of a new phase. To understand why, of the world would look more similar.
consider what caused the fall. The recent The global situation would also look
selloff was prompted by American similar to that found—with the excep
inflation data, released on July 12th, tion of recent years—since the dollar’s
which showed consumer prices rose by sharp rally in late 2014 and throughout
just 3% yearonyear in June—still above 2015. Now, as then, the American econ
the Fed’s 2% target, but the lowest rate in omy is stronger than its competitors and
over two years, and below analysts’ American stocks are more favoured than
expectations. Investors now wonder if those elsewhere. With these two pillars
the Fed is about to declare victory in its of strength in place, it is difficult to
fight against inflation. imagine a markedly weaker dollar.
012
The Economist July 22nd 2023 Finance & economics 59
Investment strategies This is designed, says Mr Lilja, to ensure Banking after the turmoil
funds tracking the index comply with reg
Balancing act ulatory diversification rules. And so on Ju What crisis?
ly 24th Nasdaq will reduce the sway of its
seven biggest firms (and, conversely, in
crease that of the other 93 constituents).
The result will be a more balanced in
dex, but also some difficult questions
Big tech’s winning streak is straining WASHINGTO N, DC
about just how passive “passive investing”
the logic of passive investing American finance is in rude health
really is. The biggest fund tracking the Nas-
“D on’t look for the needle in the hay

stack. Just buy the haystack!” So
wrote Jack Bogle, who founded Vanguard
daq 100, Invesco’s “qqq Trust”, invests
more than $200bn (roughly the value of
Netflix, the index’s 14thlargest firm). Fol
F rom one perspective, it seems like a
torrid time to be a banker. A handful of
financial institutions failed in the first
Asset Management in 1975 and brought in lowing the rebalancing, it will need to quarter of the year after their depositors
dex investment to a mass market. Subse quickly sell large volumes of shares in its fled, spooked by the impact of higher inter
quent decades proved him right. “Passive” biggest holdings and buy more in its small est rates. After these failures, smaller
strategies that track market indices, rather er ones. It is hard to argue that such a move banks struggled to keep hold of deposits,
than trying to beat them, now govern near simply tracks the market rather than—at pushing up their interest costs. At the same
ly a third of the assets managed by global the margins, at least—influencing it. time, the economy is cooling, owing to
mutual funds. Since a stockmarket index The need for rebalancing also high higher rates, raising the prospect of job
weighted by company size is just the aver lights a criticism of index investing: that it losses and defaults. Higher rates have al
age of underlying share owners’ perfor is really a form of momentum play. Putting most entirely shut down activity in capital
mance, it is impossible for investors, in ag money into a fund that allocates it accord markets, too. The climbing cost of debt has
gregate, to beat it. In the long run, even ing to firms’ market value necessarily put off wouldbe acquirers in the business
professional fund managers do not. means buying more of the shares that have world, prompted firms to delay issuing
Yet today’s haystack has grown unusu done well. Conversely, keeping money in bonds and encouraged startups to post
ally topheavy. Since the start of the year, such a fund means not taking profits from pone initial public offerings.
America’s seven biggest corporate behe the outperformers, but continuing to hold The misery is particularly obvious at
moths—Alphabet, Amazon, Apple, Meta, them as they grow bigger. Even if chasing the most famous of all Wall Street institu
Microsoft, Nvidia, and Tesla—have left the winners is often a lucrative strategy, it is tions: Goldman Sachs. The firm is also the
rest of the stockmarket in the dust. Giddy not an entirely passive one. most exposed to ups and downs in deal
on ai optimism, investors have raised Meanwhile, as America’s stockmarket making and most reliant on trading rev
these firms’ combined value by 69%, a grows ever more concentrated, some spy enues, meaning it has struggled over the
much larger increase than that seen in an opportunity. On July 13th Invesco an past year or so. Goldman hit another low
broader indices. The “magnificent seven” nounced an “equalweight” nasdaq 100 on July 19th, when it reported its worst
now account for 29% of the market value of fund, investing 1% of its assets in each of quarterly profits in three years. Cyclical
the s&p 500, and a whopping 61% of the the index’s constituents. This sort of strat woes have been compounded by an illfat
Nasdaq 100, up from 20% and 53%, respec egy will mainly appeal to private investors, ed push into consumer lending, which
tively, at the start of the year. who, unlike professional fund managers, now looks like a serious error. In the sec
That leaves index investors in a tight can afford to be “index agnostic”, says ond quarter the firm wrote off $500m of its
spot. On the one hand, owning shares that Chris Mellor, one of those overseeing the investment in GreenSky, an online lender
have done so blisteringly well that they launch. This year, the outperformance of acquired by David Solomon, Goldman’s
dominate your portfolio is a nice problem the biggest companies would have left in boss, in 2021. The poor results will only add
to have. On the other, it is somewhat awk vestors lagging behind. But trends like this to the pressure Mr Solomon is under.
ward. After all, part of the buythehay periodically reverse—as in 2022, when the Things are much sunnier for the rest of
stack logic’s appeal lies in the risklower giants plunged (see chart). Mr Mellor America’s big lenders, however. Despite
ing benefits of diversification. Now, buy guesses that the new fund could garner the recent turmoil, between July 14th and
ing the Nasdaq 100 appears less like perhaps a tenth of the assets of its main July 18th they reported strong quarterly re
spreading your bets and more like placing stream counterpart. Its administrators, at sults. Their seemingly perverse success is
them on a few hot companies whose prices least, will still be making hay. n explained by the fundamentals of banking.
have already soared. A supposedly passive When a financier provides a loan he must
investment strategy has come to feel un consider two things above all else. The first
comfortably similar to stockpicking. Weighty matters is the interest he can expect to receive. By
Nasdaq is therefore stepping in to alle NASDAQ 100, July 1st 2022=100 handing over $100 he might hope to earn,
viate the discomfort. As Cameron Lilja, 140 say, $5 a year for the life of the loan, before
who runs its indexing operations, notes, the $100 is paid back. The other is the risk
Weighted by market capitalisation
the Nasdaq 100 is a “modified marketcap 130 that the borrower will default, failing to re
italisation weighted” measure. This means pay the principal. These risks and rewards
the weights assigned to firms’ shares are 120 must be balanced such that, even if some
usually in proportion to each company’s borrowers default, the income is sufficient
Equal weight
total market value, but that those of the 110 to compensate. In other words, the juice
biggest firms can be scaled back if they must be worth the squeeze.
come to represent too much of the index. 100 For most institutions, the juice has nev
In particular, if the combined weight of er been more worth it. Thanks to the high
shares that each account for more than 90 est interest rates in 15 years, net interest in
4.5% of the index exceeds 48%, as is now 2022 2023
come at Bank of America, Citigroup,
the case, Nasdaq’s methodology prescribes Source: Bloomberg
JPMorgan Chase and Wells Fargo hit a re
a “special rebalance” to cut this to 40%. cord $63bn in the second quarter (see
012
Financial transactions JPMorgan Chase and Wells Fargo, two

A nice glass of juice heavyweight banks, have signed up to Fed
United States banks FedLate Now. But Wall Street is not entirely on
JPMorgan Bank of Wells Citigroup board: a longer list of institutions, includ
Chase America Fargo ing Bank of America, Citigroup and Gold
man Sachs, is absent. Although the current
Net interest income, $bn
25 system is slow, it is also profitable for those
20 involved. Financial institutions can take
Instant payments reach America, many
15 advantage of slow settlements to park cash
years after the rest of the world
10
in interestbearing shortterm securi
5
0
A merica’s financial plumbing is over
due a spot of maintenance. The current
payment “rails”—built by a group of the
ties overnight, or merely keep the money
at the Fed to accrue interest. They also
pocket latepayment fees and some make
2005 10 15 20 23 country’s biggest banks to replace paper money from their own instantpayment
cheques—are more than half a century old systems, such as The Clearing House,
Provision for loan losses, $bn and run on antiquated code. Although ro which is run by a group of banks.
15 bust, the system is painfully slow. Ameri Some observers, recalling the banking
10 can payments are less sophisticated than turmoil this spring, worry that FedNow
those in the rest of the rich world, and in might destabilise the financial system. A
5
deed those in much of the poor world, too. report by Moody’s, a creditratings agency,
0 It is a problem the Federal Reserve is warns that the new scheme could make
-5 trying to fix with a centralised instantpay bank runs more likely by making it easier
2005 10 15 20 23
ments system. Aptly called FedNow, this for depositors to flee. Such worries are
Source: Bloomberg
will soon allow Americans to ping money likely to prove overblown, however. The
to their compatriots, via their existing fi current system, where weekends are
nancial institutions, and for payments to closed for business, provided little relief to
chart). All that extra juice does not seem to settle straight away. The Fed is gearing up Silicon Valley Bank and others a few
have come with much additional squeeze. for the launch of its new scheme in late Ju months ago. Moreover, since FedNow is a
Provisions for loan losses—the money ly, with 41 banks and 15 payment providers backend system, participating institu
banks must set aside to protect against de all set to use the service once it goes live. tions are able to set limits in line with their
faults, based on their assessments of the At the moment, bank transfers are risk appetite. They can, for instance, cap
economic outlook—have risen only mod cheap but processed in batches, often tak payments or limit transactions.
estly, to around $7.5bn. True, that level is ing days to settle. Peertopeer networks, Other countries are also light years
higher than in recent quarters. But it is like Cash App, appear much quicker to cus ahead of America—and do not appear more
hardly alarming. Aggregate provisions tomers but, beneath the surface, rely on vulnerable to bank runs. In India, for ex
were far higher in 2020 and, indeed, in al the old system. Regulators have warned ample, instant payments are the norm, ac
most every quarter from 2007 to 2012. that funds held on such apps might not counting for 81% of domestic electronic
All told, quarterly net interest income, qualify for deposit insurance in the event transactions last year (see chart). In Thai
minus provisions for loan losses, has ho of a failure. Credit cards, which offer juicy land and Brazil they accounted for 64%
vered at around 1.4% of the banks’ total rewards at the cost of even juicier fees, also and 37% respectively. Emerging markets
loan books a quarter, or about 6% annual use existing rails. According to the San have embraced instant payments in part
ised, throughout 2023. This is higher than Francisco Fed, nearly a third of payments because of demography (consumers are
at any time since 2005. Forget the turmoil: last year were made using plastic. younger and more open to change), in part
so long as you do not work at Goldman, Typically, Americans use different because of a crackdown on cash (policy
there has rarely been a better time to be a methods for different types of payment: a makers are keen to shrink the size of grey
commercial banker. JPMorgan even posted water bill is paid via bank transfer; $100 markets, and increase tax takes) and in part
its best ever quarterly profits. owed to a friend is sent through a payment because, unlike in America, new payment
There are flickers of life in capital mar app; a purchase on Amazon is made with a systems did not have to push aside existing
kets, too. Debt and equityissuance num credit card. A single, realtime payments ones, and those who benefited from them.
bers surpassed expectations. Bank bosses solution could improve the quality of all. FedNow is unlikely to transform pay
sound increasingly optimistic. “We’re see ments immediately. The scheme will only
ing less anxiety around funding, as most support “push” transfers—ones that con
large corps are biting the bullet and paying Paper pushers sumers initiate themselves. By contrast,
higher rates to take advantage of issuance Real-time payments, 2022 FedNow’s counterparts in Europe and In
windows,” reported Jane Fraser of Citi. % of all electronic transactions dia also have “pull” capabilities that busi
These results support the conclusion, 0 20 40 60 80
nesses may use when given permission
which is gradually becoming the consen (which enable, say, regular payments for
India
sus on Wall Street, that the American econ electricity). Fed officials claim to have no
omy has taken the most extreme dose of Brazil plans to extend the system for such uses,
monetary tightening in 40 years on the but bankers suspect it is the next step.
Sweden
chin. The housing market appears to have Mass adoption will face one more hur
bottomed out, as does the stockmarket. Britain dle: the American consumer, over whom
Meanwhile, the labour market remains ro Canada paperbased payments retain a particular
bust. The hope is that financial markets hold. According to aci Worldwide, a pay
really have adjusted to skyhigh rates more Germany ments firm, around a fifth of all cash trans
smoothly than expected. For once, bankers United States fers in the country happen via cheque.
will not be the only ones celebrating their Source: ACI Worldwide
Still, it will be nice for them to have the op
bumper profits. n tion, just like the rest of the world. n
012
Science & technology The Economist July 22nd 2023 61
Within the rising global averages lie

savage peaks in particular places. On July
16th a site in the Turpan Depression in Xin
jiang, sometimes called China’s Death Val
ley, reported a high of 52.2°C. In America,
in Death Valley proper, the same day saw a
peak of 53.9°C. Of more immediate concern
than isolated spikes in deserts, tempera
tures have been dangerously high in places
where hundreds of millions of people live,
too. On July 6th, after the city measured its
highest July temperature ever, authorities
in Beijing announced their second red
alert for heat in two weeks. July 19th
marked the 19th day in a row that the tem
perature in Phoenix, Arizona, has exceed
ed 43°C (see United States section). Things
are similarly sweltering in Italy and many
nearby countries (see map on next page).
Life in the greenhouse

Asked how such a thing might be, one cli
mate scientist replies drily “I suspect it
might have something to do with accumu
lation of greenhouse gases in the atmo
sphere.” More greenhouse gas in the atmo
sphere results in more of the warmth from
the sun being trapped near the surface and
absorbed by the oceans. The level of carbon
dioxide, the most important longlived
greenhouse gas, as measured at Mauna
Loa, a mountain peak in Hawaii, reached
424 parts per million in May, the highest it
has been for over 3m years. Methane and
nitrous oxide, two other longlived green
house gases, have also reached levels never
before experienced by humans. The world
is now, on average, around 1.2°C warmer
than it was before humans started thicken
ing the glass in the greenhouse.
The climate has natural variations, too,
and the most famous of them, the El Nino
Southern Oscillation (ENSO), is adding to
Climate change the warmth. ENSO is a sloshing back and
forth in the winds and currents of the trop
Turning up the heat ical Pacific ocean which sometimes sees
the waters suck up more heat, and some
times sees them give more heat out. In
June the world entered an “El Niño” phase,
in which heat is released. The greatest ef
fect of an El Niño on global temperatures
tends to be seen after it has been in place
As the northern hemisphere swelters, is climate change speeding up?
for a year or so. But today’s ocean tempera
E stimates of Earth’s average tempera

ture, having set a new record on July
3rd, have yet to fall back below the previous
So is what is happening in the oceans
(see chart on next page). Since March 13th
the seasurface temperature in low and
tures look like evidence of this one getting
off to a flying start.
On top of these global effects, there is
record, which was set just last year. That a midlatitudes has been higher than on the the fact that moving the top of a bell curve
run of very hot days should happen in July same day in any year since 1979. Normally even a touch to the right can change the
is, by itself, perhaps unsurprising. Two highest in the southern summer (most of values in the tail a lot. According to James
thirds of the Earth’s land is in the northern Earth’s water is in the south), temperatures Hansen, a climate scientist at Columbia
hemisphere, and land warms up faster are at record levels in the southern winter. University, the sort of summer which
than water does, so northern summers are would have been a onceinacentury
the hottest times of year for the planet as a event between the 1950s and 1980s has be
whole. But the highest temperatures tend come a onceeveryfive years event now. If
to come later in the season. That this year’s 63 Unassembling cars sweltering summers are more likely every
should start so early, rise so high and run where, the chances of more than one re
64 When mammals attack
so long is unprecedented. gion being affected at a time go up, too.
012
62 Science & technology The Economist July 22nd 2023
accepted for publication in Global Biogeo-
Summertime, and the living’s uneasy chemical Cycles, argues that not all the extra
Average air temperature, methane can be explained that way.
July 1st-12th 2023 The researchers think that the surplus
Deviation from 1981-2010 may be coming from the growth of tropical
wetlands, whose plants produce the gas
12°C
when they rot. This is one candidate for the
6
mechanism that drives the methane spikes
seen at the end of ice ages. If true, it opens
0 up the possibility of a feedback loop start
ing today similar to the ones that seem to
-6 have operated in the past. More methane
means more warming, which means more
wetlands, and therefore more methane.
That idea is speculative, for now. Per
haps a more plausible culprit is falling
Source: Copernicus, ERA5
emissions of sulphur. The burning of coal
and heavy fuel oil produces a lot of sulphur
dioxide. Once in the atmosphere that gas
So are the thickening of the atmospher The Hunga eruption did not throw any forms sulphate particles. These particles
ic blanket, an outpouring of heat from the thing like that much sulphur into the cause air pollution leading to hundreds of
Pacific and the random effects of yearon stratosphere. But it did pump in a great thousands of deaths every year. Environ
year variation enough to explain this sum deal of water vapour; between 70m and mental regulators have been trying to re
mer’s freakish temperatures? Or is there 150m tonnes. Water vapour is a powerful duce sulphur emissions for decades.
something more going on? greenhouse gas. In the lower atmosphere it But sulphate particles in the lower at
Dr Hansen thinks there is. He argues condenses out into rain or snow fairly mosphere reflect sunlight, just like those
that the rate at which the world is warming quickly. In the stratosphere, though, it lin created in the stratosphere after volcanic
seems to have gone through a step change gers for longer. The Hunga eruption is eruptions. And, unlike those in the nor
in the 2010s, though he has not yet con thought to have increased the amount of mally bonedry stratosphere, particles
vinced his peers. This summer’s surprises, water vapour in the stratosphere by 13%. lower down can help create clouds which
especially a run of record temperatures in That would have warmed the planet— reflect away more sunshine still. Controls
the North Atlantic, might help change that. though if Hunga is playing a role, it is one on pollution mean that this climatecool
“I wouldn’t be surprised if we see papers that is already waning. ing side effect has been weakening.
appearing over the next few years saying Other possible influences are waxing. Of particular relevance are new regula
[the Atlantic anomaly is] more than just When ice ages end, methane levels in the tions on the sulphur content in shipping
another extreme,” says Myles Allen, a cli atmosphere shoot up, ushering in the fuel that came into force in 2020. The regu
mate modeller at Oxford University. warmer climate of the “interglacial” to lations were brought in by the Internation
Several things could be speeding up come. Some scientists cite recent increases al Maritime Organisation on the basis of
warming. One is the change to the strato in methane levels as evidence that some estimates that they would save around
sphere brought about by the eruption of thing similar may be afoot today. Methane 40,000 lives a year. They are thought to
Hunga Tonga–Hunga Ha’apai, a submarine levels rose throughout the 20th century, have reduced sulphur emissions from
Pacific volcano, in January 2022. This was mainly because of the rising use of fossil shipping by more than 80%. The evidence
the largest eruption on Earth since Mount fuels and agriculture. They flattened off at is visible as a worldwide decline in “ship
Pinatubo, in the Philippines. In 1991 Pina the beginning of the 21st century, but are tracks”, long, thin clouds created when sul
tubo injected tens of millions of tonnes of now growing faster than ever. phate particles in a ship’s exhaust provide
sulphurdioxide gas into the stratosphere, Some of this is doubtless still because nuclei around which water droplets can
where it reflected some of the sun’s light. of farming and fossil fuels. But a paper by form. Fewer, fainter ship tracks and other
The result was a worldwide cooling of Euan Nisbet, an Earth scientist at Royal clouds mean less sunlight is bouncing
about 0.5°C that lasted about a year. Holloway, and his colleagues, and recently back out to space, and is instead being ab
sorbed by the oceans below.
The indirect effects that aerosol parti
Surf’s up (and up) cles have on cloud cover are notoriously
Average global sea-surface temperature*, °C hard to capture in climate models. Esti
21.00
mates of how much cooling shipping pol
lution might have caused vary by a factor of
2023
ten. But Dr Hansen thinks the changes
20.75
could plausibly explain most of the quick
er warming that he sees in the data. From
20.50 1970 to 2010 the warming trend was 0.18°C a
2010- decade. Since around 2015, Dr Hansen
2023 20.25 thinks it has been between 0.27°C and
1990- 0.36°C per decade—between half as high
2009 20.00 again and twice as high. A study by Dr Allen
1979- and his colleagues published last year sees
1989 19.75 a similar increase in the trend, but warns
Jan Feb Mar Apr May Jun Jul
that it may be strongly influenced by natu
Source: Copernicus, ERA5 *Excluding poles
ral variability, with aerosol effects playing
a much smaller role than that which Dr
012
The Economist July 22nd 2023 Science & technology 63
Hansen would assign them. “Quantifying Recycling
the role of human influence in these ap
parently unprecedented events is hard,” Dr The new scrap kings
Allen cautions.
A sweltering world might try to find a
way to keep the cooling properties of sul
phates without the drawbacks for air qual
POO LE
ity and health. In 2006 Paul Crutzen, an at
High-tech “deproduction” lines are turning the car business
mospheric scientist, suggested this might
into a circular industry
be done by continuously injecting small
amounts of sulphur directly into the
stratosphere. Since there is no rain to flush
them out, highflying stratospheric parti
H anging on the wall in the offices of
Charles Trent, a vehiclerecycling
company based in Poole on Britain’s south
cars are now called. When it is fully opera
tional, the plant should be able to render
more than 100 ELVs a day into their constit
cles last much longer than those in the coast, is a blackandwhite photograph uent parts. With plans for five more plants,
lower atmosphere. from the 1920s. It shows rows of old jalop the firm aims eventually to disassemble
That means that a few million tonnes of ies piled high in the scrapyard. Marc Trent, 300,000 vehicles a year, around a fifth of
sulphur dioxide added to the strato Charles’s greatgrandson and the firm’s the total number scrapped in Britain. In to
sphere—technically quite plausible— current boss, smiles at the photo and re tal, just over 96% by weight of an ELV can be
could provide as much cooling as the 100m marks: “those days have long gone.” either reused or recycled, says Mr Trent.
tonnes or so that humans dump into the He is referring to a time when motorists To do that, the firm will build some
lower atmosphere each year. And as with usually had a bit of mechanical nous and thing that looks much like a modern car
warming itself, its effect on extremes used scrapyards as repositories of spare assembly line, but which runs backwards.
would be greater than its effect on averag parts when their cars broke down. Custom When an ELV arrives, it is assessed for parts
es. Unwelcome things in the tail of the dis ers, spanners in hand, would search for a that could be reused or refurbished, the de
tribution could be made a lot less likely. donor car, negotiate a price, then remove tails of which go into an elaborate comput
the required component themselves. er system which oversees the entire pro
Sunscreen for the planet Nowadays the customers are more like cess. The car is then “depolluted”, which
This idea, a form of “solar geoengineering”, ly to be professional mechanics and ga involves removing the wheels and decant
is controversial, and with good reason. Its rages buying online. The parts they find ing fuel, oil and airconditioning gases.
effects on stratospheric chemistry cannot will have already been removed, cleaned, The vehicle is then loaded onto the line.
yet be predicted accurately. Of particular tested and often guaranteed. As often as Technicians, using much the same equip
concern are what it might do to the ozone not they are dispatched overnight. It is all ment found in modern car plants, system
layer, which screens out a good deal of the part of the transformation of what was atically remove the panels, interiors, en
sun’s harmful ultraviolet radiation before once a murky and informal business. gines, gearboxes, and everything else that a
it reaches the ground. Stricter rules, supplychain snarls and different set of technicians had carefully
Because solar geoengineering’s effects higher prices for both cars and compo screwed into place years before. Some are
on rainfall, as well as temperature, would nents mean that firms like Charles Trent— sent for recycling. Others are cleaned, test
differ from place to place, a cooling tai and even some big carmakers—are turning ed and put up for resale. The bare shell of
lored to the needs of one country might not into sophisticated recycling operations. the vehicle is fed into a crusher, before go
be to the taste of others. Settling such dis At its Poole facility, for instance, ing off to be melted down and used again.
putes is beyond any current system of glo Charles Trent has invested around £10m Worn parts, such as engines and gear
bal governance. Above all, a technology ($13m) to set up a “deproduction” process boxes, can be refurbished or even “reman
that could cool the planet without ending for “endoflife vehicles” (ELVs), as scrap ufactured”, a more involved process de
fossilfuel use might well slow or even
scupper that phaseout.
So far these worries have carried the
day. Research on solar geoengineering has
been sidelined, and its possible role in cli
mate policy has gone largely undiscussed.
All those who take part in such discussions
as there are stress that solar geoengineer
ing should at best be seen as a complement
to decarbonisation, shaving off extreme
risks while the world moves towards a fos
silfree economy. But the fear that it would
instead be treated as an alternative is suffi
ciently persuasive as to be pervasive.
If 2023 is not an aberration, though, and
the world really is moving into an acceler
ated phase of warming, that reluctance
might be reassessed. Emissions reduction
should be able to slow the warming of the
Earth within a few decades. Pursued with
real zeal, it might bring it to an end this
century. But it provides no cooling in the
meantime. If that proves to be what the
world wants, solar geoengineering is the
only thing which looks able to provide it. n Picked clean and ready for recycling
012
64 Science & technology The Economist July 22nd 2023
signed to return them to the condition they their most valuable parts. Good batteries stead. This is possible because often it is
were in when new. LKQ is a Chicagobased are resold; damaged ones are sent to spe not the entire battery that fails, but just one
firm that operates 170 dismantling plants cialists that are setting up operations to re of the many smaller modules from which
in North America that process 700,000 cover the useful materials which they con they are made up. Replacing the damaged
ELVs a year. It reckons remanufacturing us tain. Once the batteries are gone, though, part could give the rest of an old battery
es about 15% as much energy, and produces there are comparatively few juicy pickings many more years of useful life. Doing that,
about 30% as much carbon emissions, as left for the recyclers. though, will demand even greater techni
making a new part from scratch. So, to try to capture more value from cal skills and yet more specialised technol
A number of factors are driving the dismantling EVs, Indra is hoping to find ogy. But if there’s money in it, the scrap
transformation. Carmakers are having to ways to refurbish damaged batteries in kings will do it. n
take greater responsibility for what hap
pens to their products. (The European Un
ion, for instance, is considering tighter re Palaeontology
cycling targets.) Reusing parts helps cut
manufacturing emissions.
Role reversal
Other pressures come from the market
rather than the statute book. Rising prices
A spectacular new fossil shows a mammal making a meal of a dinosaur
for raw materials and parts make the cost
savings from secondhand components
more attractive. According to eBay, an on
line marketplace, used car parts are up to
T hat dinosaurs ate the mammals
that scurried beneath their feet is not
in doubt. Now an extraordinary fossil
occasionally take caribou. And Dr Han
and his colleagues point out that scaven
gers typically leave tooth marks all over
70% cheaper than new ones. (eBay uses a newly described in Scientific Reports, the bones of the animals. The dinosaur’s
certification scheme, with approved sell unearthed by a team led by Gang Han at remains show no such marks. There is
ers and moneyback guarantees to reas Hainan Vocational University of Science also a chance the fossil could be a fake.
sure buyers.) Secondhand parts are often and Technology in China, shows that Many of the most convincing forgeries
faster to get hold of as well as cheaper, sometimes the tables were turned. have come, as this one did, from China—
thanks to the supplychain problems that The fossil—dated to about 125m years though Dr Han and his colleagues argue
have dogged the car industry since the co ago, during the Cretaceous period—was that the complex and entwined nature of
vid19 pandemic. Many insurance compa formed when a flow of boiling volcanic the skeletons makes that unlikely, too.
nies, which once eschewed their use, now mud engulfed two animals seemingly Assuming it is genuine, the discovery
allow some recycled components, such as locked in mortal combat. The one on top serves as a reminder that not all dino
body panels, in repairs. is a ferretlike mammal known as Repe saurs were enormous during the Creta
Carmakers are getting in on the act, too. nomamus robustus. The animal below is a ceous and not all mammals were tiny.
The Stellantis group (whose biggest share herbivorous relative of Triceratops From nose to tail, the dinosaur is just 1.2
holder, Exor, also partowns The Econo known as Psittacosaurus lujiatunensis. metres long. The mammal is a bit under
mist’s parent company) this year converted Animal interactions such as this are half a metre in length. Despite being half
a factory at its Mirafiori complex in Turin, exceptionally rare in the fossil record. the size, the mammal has one paw firmly
Italy, into a centre for reconditioning com One possibility is that the mammal wrapped around one of its prey’s limbs,
ponents and cars. The company’s brands was scavenging something already dead, and another pulling on its jaw. It is biting
include Chrysler, Peugeot and Fiat. rather than hunting live prey. These days down on the dinosaur’s chest, and has
While an ordinary production line it is uncommon for small mammals to dislodged two of its ribs. Before they
builds a single type of car, a deproduction attack much larger animals. But it is not were interrupted, it seems that the mam
line must deal with all sorts, says Loïc Bey unheard of. Wolverines, for instance, mal was winning.
Rozet. Mr BeyRozet runs Indra Automo
bile Recycling, a French firm jointly owned
by Suez, an environmentalservices group,
and Renault, a carmaker. It manages 380
independent recyclers in France, which be
tween them dealt with 600,000 ELVs last
year. It also runs a demonstration plant in
Romorantin, in central France, which de
velops dismantling techniques for all
manner of vehicles. The firm supplies “de
production” systems to recyclers around
the world, including Charles Trent.
Going electric
One of the things the firm is working on is
how to deal with electric vehicles (EVs).
These already require special handling.
Dangerous voltages can linger in the vehi
cles’ electronics, for instance, even when
their batteries are flat. If those batteries are
damaged, they can catch fire or explode.
At the same time, the mechanical sim
plicity of electric cars, at least compared
with internalcombustion ones, means A fight, interrupted
that the batteries are by some distance
012
Culture The Economist July 22nd 2023 65
“Oppenheimer” v “Barbie” were also created by producing actual ex

plosions (albeit not nuclear ones), bright
Bombs and a bombshell ened by aluminium and magnesium pow
der. His films toy with narrative conven
tions and tricksy subjects, such as the
unconscious mind and theoretical astro
physics. They have earned a combined
total of around $5bn in ticket sales;
“Dunkirk”, released in 2017, is one of the
What two Hollywood blockbusters reveal about our times
highestgrossing films ever made about
T HEY MAKE an intriguing pair of rivals:

he in a dark suit and porkpie hat, she in
a gingham dress and matching hair bow.
delighted the internet. People have created
memes, remixed the trailers into jarring
“Barbenheimer” hybrids and debated
the second world war.
Greta Gerwig, the director and cowriter
of “Barbie”, has her own large fan club. She
His domain is a vast scientificresearch fa whether to see the biographical drama or started out in the “mumblecore” genre of
cility in New Mexico; hers is a fluorescent the fantasy comedy first. independent film (so named for its focus
pink party house with a slide. J. Robert The brouhaha is partly a result of the on dialogue) but has since had hits with
Oppenheimer (played by Cillian Murphy, filmmakers. Christopher Nolan, the writ “Lady Bird” (2017) and an adaptation of
an Irish actor) spends his days corralling erdirector of “Oppenheimer”, is the clos “Little Women” (2019). Her work claims
the finest scientific minds in America to est thing Hollywood has to a mad scientist. humbler gross ticket sales of $300m. For
create a nuclear bomb—work a colleague He shoots on film and mostly eschews “Barbie”, she has cited old Hollywood mu
calls “the most important fucking thing to computergenerated imagery, blowing up sicals and films about the afterlife, such as
ever happen in the history of the world”. an actual Boeing 747 for a previous film. “Heaven Can Wait” (1943), as inspiration.
Barbie (played by Margot Robbie, an Aus The nuclear reactions in “Oppenheimer” The two films encapsulate some of the
tralian actress) may seem like she has the caprices of the modern movie industry.
perfect life, but she has existential worries “Barbie” is one of many productions to ex
too. Do her friends and fellow dolls, she → Also in this section ploit decadesold intellectual property.
wonders, “ever think about dying?” Mattel, a toymaker, has sold roughly a bil
66 Extreme heat
No recent movie matchup has been as lion dolls since it first introduced Barbara
eagerly awaited as “Barbie” and “Oppen 67 A novel about the art world Millicent Roberts (call her “Barbie”) to con
heimer”. Released on July 21st in America sumers in 1959. Ms Robbie, who is also a
68 Spooks and spying
and Britain, the two films will serve as a producer of the film, has said she was
test of whether viewers can be coaxed off 68 The podcast du jour drawn to the project because the Barbie
their couches to return to cinemas. The in name is “more globally recognised than
69 Johnson: Voice cloning
congruity in the films’ subject and tone has practically everything else other than
012
66 Culture The Economist July 22nd 2023
CocaCola”. It is easy to imagine that a se regular life, or you can know the truth bat. In 1968, at the height of the Vietnam
quel is already in the works. about the universe.” Barbie chooses the sti war, the biggest movie in America was
“Oppenheimer”, by contrast, holds no letto and is quickly chastised. “You have to “Funny Girl”. In 2007, during the financial
such franchise potential. The scientist may want to know, OK? Do it again.” crisis, it was a film from the “Pirates of the
be “one of history’s most essential and “Barbie” and “Oppenheimer” offer an Caribbean” franchise.
paradoxical” figures, as Mr Nolan has put other version of the Birkenstockstiletto David Thomson, another film historian
it, but he is not likely to return for “Oppen dilemma. History suggests more viewers and author, reckons that, at a time of eco
heimer 2: Learning to Love the Bomb”. It is will opt for escapism. During the Great De nomic strain, war and populism, viewers
a serious, standalone drama—the kind of pression, many of the highestgrossing will not want to see a serious film as much
film made less frequently as studios focus films were musicals or historical epics. as they will want to see a frivolous one.
on sequels and spinoffs. Its opening The same was true during the second “Comedies have always done well at the
weekend is predicted to fetch $40m50m world war. Movies that did broach the sub movies,” he says, because they do “some
in ticket sales, compared with around ject of conflict, including “Gone with the thing that the movies were made for,
$80m for “Barbie”. Wind” and “Sergeant York”, were often set which is to reassure people and give them a
Though “Oppenheimer” features stars in the past; those that were contemporane couple of hours of escape from pretty big
such as Emily Blunt and Matt Damon, the ous, such as “Casablanca”, tended to tell problems.” Who wants reality when life in
sombre story is not obviously a crowd love stories rather than tales of grisly com plastic is so fantastic? n
pleaser. That it has also been made with a
large budget of $100m reflects the faith
that studios have in certain filmmakers Climate change
and the risks they allow them to take.
“There have been films previously about The heat also rises
the development of the atomic bomb in the
1940s and 1950s, and they haven’t been
boxoffice successes,” says Sheldon Hall, a
film historian and coauthor of the book
“Epics, Spectacles and Blockbusters: A
Hollywood History”. “This film is being
Extreme temperatures separate “the cool and the damned”
hinged on Nolan’s reputation,” he adds.
The “Barbenheimer” rivalry brings a the morning of June 26th 2021 it hit 38°C,
more serious question for the public: The Heat Will Kill You First. By Jeff but Mr Perez still went to work as usual, to
whether to favour realism or escapism. As Goodell. Little, Brown and Company; 400 try to ensure that the young trees at the
war rages on in Europe, and countries pages; $29 and £25 nursery where he was employed had
including China and North Korea continue enough water to withstand the searing
to develop their nuclear arsenals, the ori
gin story of these weapons of mass de
struction may feel too real and raw.
I T May BEGIN with a cracked throat, lips
that stay dry no matter how many times
they are licked. As the heat overwhelms the
heat. By 3pm the temperature had risen to
41°C, and Mr Perez had collapsed. A mi
grant farmworker, he had journeyed to
“Oppenheimer” is not a film that will ease body, the head throbs and vision goes blur Oregon to make enough money to build his
viewers’ anxieties. It explores the physi ry, before the world turns black. This is wife Maria a house back in Guatemala. “I
cist’s concerns about the horrifying power probably how Sebastian Perez felt on the promised I would wait for him,” she says,
of his weapon and other bombs; it also day he died. “and now he’s coming home in a box.”
shows how the American government at In late June in Willamette Valley, Ore “The Heat Will Kill You First”, a new
tempted to silence him when those opin gon, where oak and Douglas fir trees dot book by Jeff Goodell, a longtime climate
ions became politically unpopular. Oppen the state’s lush wine country, top tempera journalist, reads like an anthology of hor
heimer has disturbing visions of the tures usually hover around 25°C (77°F). On ror stories. A couple and their oneyearold
bomb’s victims in excruciating pain, their
skin peeling. “Some people leave the movie
absolutely devastated,” Mr Nolan has said.
“They can’t speak.”
From Hiroshima to Barbie Land

Ms Gerwig’s production is much more
playful. She has described the set—which
contributed to a global shortage of pink
paint—as “a dopamine generator”. The
film’s tone is witty and slyly selfreferen
tial: it pokes fun at Mattel, here run by a
team of men, and the vexed history of the
toys. (The Barbies mistakenly assume that
all women revere them as role models.) It
has the kind of plot that only makes sense
if a viewer does not think about it deeply.
“Barbie” recognises the alluring com
fort of dream worlds. At one point Weird
Barbie, a doll that has been handed around
and mistreated, offers Barbie a choice,
symbolised by a high heel and a clunky Bir
kenstock sandal: “You can go back to your The fire of a thousand suns
012
The Economist July 22nd 2023 Culture 67
daughter die of overheating on a hike in

northern California. A Parisian woman re New fiction
turns to her flat after a heatwave in 2003 to
find her home caked with blood and urine.
Opposites that never meet
Her upstairs neighbour had died, and no
one found the body for more than a week.
The book is a remarkable exploration of
the deadly consequences of rising tem Nothing Special. By Nicole Flattery. from 2019, and “Nothing Special” ven
peratures wrought by humans pumping Bloomsbury; 240 pages; $26.99 and £16.99 tures into that familiar terrain.
greenhouse gases into the atmosphere. Warhol plays the role of an extra,
Unlike wildfires and hurricanes—which
create whirls of flame, paint skies an apoc
alyptic orange and drown cities—heat
W hen Mae, 17 years old and adrift, is
offered a job as a typist for Andy
Warhol, she is given instructions.
rather than a lead, in the novel. As is true
of many of today’s “superartists”, such as
Jeff Koons (who once had 120 artists
waves cannot easily be captured on film. “Don’t become invested in how good you working in his studio), Warhol’s work,
Heat slaughters silently, snuffing out more are at this,” says Anita, the head secre brilliant as it was, did not emerge from
American lives each year than any other tary. Her role is to listen to tapes and his singular talent. He relied heavily on
type of weather. “How do you make visible transcribe them, no more. In “Nothing others’ toil. He appears to Mae in dreams,
the story of an invisible killer?” asks Mr Special”, Nicole Flattery, a raucously but she is never introduced to him.
Goodell. Some policymakers are trying, by talented young Irish writer, takes in When he enters the room, everything
creating new heatwarning systems and spiration from the imagined lives of the brightens as if “suddenly everybody
naming heatwaves as they do hurricanes. young women who were never credited knew exactly where to direct the beam of
The book’s biggest takeaway is that the but worked on “a, A Novel” (1968), an their attentionseeking”. A spectral fig
harm from heat falls unfairly on those least experimental book the Pop Art supremo ure, he is “vast and untouchable”, but
able to protect themselves. “A heatwave is a compiled from unedited conversations when he speaks to people, they become
predatory event,” writes Mr Goodell, “one with his stable of muses, whom he called “more alive, more human, in that mo
that culls out the most vulnerable people.” his “superstars”. ment”. “Nothing Special” expertly cap
Rich places and people can plant trees for Betrayed by her best friend, ostracised tures the hold celebrity artists exert over
shade, paint heatabsorbing asphalt to by her peers and ignored by most around peons and patrons alike.
reflect more sunlight, retile zinc roofs, her, Mae is a lifelong outsider who takes Through Mae, Ms Flattery also limns
make their cities oases of airconditioning more comfort in objects than people. The the “internal disorder” and “gloomy
or move to colder places. But adaptation is Factory, Warhol’s studio, reminds her of impatience” of adolescence and early
much harder for poor people and places. At a doll’s house, “with girls arranged every adulthood vividly. Like J.D. Salinger’s
the end of a chapter devoted to “cheap cold where, spread on every surface, lying Holden Caulfield and Sylvia Plath’s
air”, Mr Goodell concludes that “the most across the couch, the faded carpets”. Her Esther Greenwood, Mae is a lonely but
enduring legacy of airconditioning may father is absent, and she lives with her memorable character. Friends disap
be the divide it has created between the mother, a charming but selfcentred point her, school is dull, boys are un
cool and the damned.” waitress with a fondness for booze. A reachable. Puberty seems “both boring
The book isn’t all fire and brimstone. “moody, prickly girl”, she persistently and disgusting”. Attention is intoxicating
Unlike some climatescience writers who mistakes cruelty for care and tells a but elusive. “It was so beautiful to be
drown readers in data and seem to write doctor, “I keep doing things that are filmed by someone who had loved you,”
only for other activists, Mr Goodell tells his nothing like the way I want to behave.” she says twice in the book, once of her
story colourfully. Readers meet many Ms Flattery took deadend jobs, female mother, and later, of Edie Sedgwick,
memorable people working to raise aware friendship and power imbalances as Warhol’s tragic addictmuse. With a style
ness of climate change by figuring out themes in “Show Them A Good Time”, like Lorrie Moore’s, Ms Flattery is witty,
which extreme weather events can be at her acclaimed shortstory collection propulsive and darkly delightful to read.
tributed to it, and helping its victims by
leaving water for migrants crossing the
Arizona desert or campaigning for safer
conditions for farmworkers.
The author’s intrepid reporting will
make some readers feel lazy. To illustrate
the effects of melting sea ice, Mr Goodell
faces down polar bears in the Canadian
Arctic and crosses a treacherous passage
on the way from Chile to Antarctica by
boat. In West Texas he scales a rock forma
tion made of the skeletons of ancient sea
creatures, which 260m years ago was
under water.
Other readers may feel frightened after
reading this book. In July the average glo
bal air temperature broke records three
times in a week. A third of Americans live
in areas where the government is currently
issuing warnings about extreme heat, and
Europe looks poised to break previous
temperature records. “The Heat Will Kill The male gaze
You First” could not be more timely. n
012
68 Culture The Economist July 22nd 2023
The past and future of espionage
Hi, spy
Spies: The Epic Intelligence War Between

East and West. By Calder Walton. Simon &
Schuster; 688 pages; $34.99. Abacus; £25
I n June 1941 Josef Stalin received a warn

ing from the NKVD, the forerunner of the
KGB, that a Nazi attack on the Soviet Union
was imminent. “You can tell your ‘source’
in German air force headquarters to go
fuck himself,” was the Soviet leader’s re
sponse. “He’s not a ‘source’, he’s a disin
former.” The invasion came a week later. Spot the know-it-all
The anecdote is one of many gems un
earthed from the archives in “Spies”, a lu bought a Soviet codebook from Finnish speech on July 1st, Bill Burns, the director
cid history of the intelligence contest be officers in 1944, the president ordered his of the CIA, said that he had doubled the
tween America, Britain and Russia. spooks to return it to the Soviets. share of the budget devoted to Chinarelat
The author, Calder Walton, is an accom Stalin, meanwhile, intensified his ef ed activity in the previous two years. But
plished historian, having contributed to forts, placing a higher priority on espio recognising a challenge is different from
the authorised history of MI5, Britain’s do nage against his allies than against Nazi containing it. Mr Walton reckons that
mestic security service. He is also the assis Germany. When Stalin met Churchill and American intelligence agencies are unlike
tant director of an intelligence programme Roosevelt at Yalta in 1945 to hash out the ly to have penetrated the Chinese leader
at Harvard University that attracts current postwar European order, his intelligence ship as they did that of Vladimir Putin pri
and retired spooks, lending his book both on them “probably surpassed that of any or to the invasion of Ukraine. More worry
scholarly clout and an insider feel. “Spies” leader in history”, writes Mr Walton. Re ingly, some intelligence insiders believe
explains how espionage and covert action markably, Stalin knew about both Bletch that a Chinese mole might have sabotaged
shaped the cold war, but its enduring mes ley Park’s successes and the American the CIA’s operations in China a decade ago.
sage is the folly of failing to realise you are atomicbomb project years before Harry America and its European allies insist
in an intelligence war in the first place. Truman, who learnt of those momentous they do not want a cold war with China.
In December 1917 Vladimir Lenin found secrets only on becoming president. “That, of course, overlooks one of this
ed the Cheka, the secret police, to terrorise It is hardly news that the Soviet Union book’s central conclusions,” argues Mr
the enemies of the Bolshevik revolution spied a lot. But there are few accounts as Walton: “Western powers can be in a cold
and steal secrets abroad. It quickly grew to comprehensive as this one, spanning the war irrespective of whether they seek one
be 100,000people strong and used news Bolshevik revolution to the present day, and before they recognise it.” n
agencies, trade missions and companies to while weaving in new archival material,
spy across Europe. In the early 1930s Rus some declassified as recently as 2022.
sian spies burrowed deep into Western There are also lessons for the present. A new podcast on fertility
governments. The most notorious moles The final chapter of “Spies” persuasively
were the Cambridge Five, who rose high in draws a comparison between the West’s At the sharp end
MI6. (One of them, Kim Philby, briefly previous contest and its new one. Mark
wrote for The Economist.) Kelton, a former head of counterintelli
Western democracies were often obli gence at the CIA, suggests that the scale
vious. In 1929 Henry Stimson, America’s of current Chinese espionage against
secretary of state, shut down the country’s America’s government at least matches So
“The Retrievals”, a tale of agony and
codebreaking agency on the basis that viet activity in the 1930s. It may even ex
addiction, makes listeners squirm
“gentlemen do not read each other’s mail”. ceed it. A report published on July 13th by
In 1936 Britain’s ambassador in Moscow
refused to allow MI6 to open a station in
the embassy because “it was liable to cause
the British Parliament’s intelligence com
mittee said China “almost certainly main
tains the largest state intelligence appara
T HE WOMEN remember pain ripping
through the most intimate parts of
their bodies. “It felt like someone had…
embarrassment”. On the eve of the second tus in the world—dwarfing the UK’s Intelli gutted me,” says one. Another recalls buck
world war, notes Mr Walton, “Soviet intel gence Community”. ing her hips wildly on the operating ta
ligence perversely had more graduates of Much as in the 1930s, America and its al ble. These harrowing experiences at Yale
British universities than Britain’s own in lies were lamentably slow to recognise and Fertility Centre are the subject of “The Re
telligence services, MI5 and MI6.” then blunt the threat. As late as 2017, coun trievals”, a gripping new podcast from Seri
During the second world war, Britain’s terterrorism, not the risks posed by China al Productions and the New York Times.
Foreign Office went so far as to ban espio or Russia, received the most funds among Donna Monticone, a nurse, withheld
nage against its new Soviet ally. British American intelligence priorities. All that fentanyl, a painkiller, from an estimated
codebreakers at Bletchley Park were not has changed. In 2020 the FBI said it was 200 women over five months in 2020. (She
permitted to monitor, let alone decrypt, opening a new Chinarelated counter later admitted to stealing the drug.) Pa
Soviet communications. When America intelligence case every ten hours. In a tients undergoing in vitro fertilisation
012
The Economist July 22nd 2023 Culture 69
Johnson Speak easy
Technology is making it possible to clone voices and cause trouble

DESTEFANO answered a call and dispassionate newsreader. ter of seconds. The Telegraph, a British
JENNIFER
from a number she did not recognise. Taylor Jones, a linguist and consultant, broadsheet, recently reported on actors
“Mom, I messed up,” her daughter’s voice took a careful look at the quality of Eleven who had mistakenly signed away rights
told her, sobbing. “These bad men have Labs’s clone of his voice in a YouTube to their voices, making it possible to
me.” A man proceeded to demand mon video. Using statistical tests he showed clone them for nothing. New contracts
ey, or he would drug her daughter and that there were a few things off in “his” will be needed in future. But some actors
leave her in Mexico. But while she kept pronunciation of certain vowels. But a may, in fact, find cloning congenial. Val
him on the phone, friends managed to lowertech test, a “conversation” with his Kilmer, who has lost much of his voice to
reach her daughter, only to discover that own mother, fooled the woman who throat cancer, was delighted to have his
she was, in fact, free and well on a skiing raised him. (“Don’t you ever do that again,” voice restored for “Top Gun: Maverick”.
trip in Arizona. The voice used on the she warned.) Johnson repeated the experi Others may be spared heading to the
phone was a fake. ment with his own mother, who did not studio for retakes. It is the middling
Ms DeStefano, still shaken, told this miss a beat in replying to cloneJohnson. professional, not the superstar, who is
story to a US Senate subcommittee hear For several years, customers have been most threatened.
ing on artificial intelligence in June. The able to identify themselves over the phone Another industry that will have to
dangers that voicecloning technology to their bank and other companies using come to grips with the rise of clones is
pose are only now starting to be uttered their voice. This was a security upgrade, journalism. Onthesly recordings—such
aloud. In recent months, most of the not a danger. Not even a gifted mimic as Donald Trump’s boast of grabbing
attention paid to artificial intelligence could fool the detection system. But the women by a certain private body part—
(AI) has gone to socalled “largelanguage advent of cloning will force adaptation, have long been the stuff of blockbuster
models” like ChatGPT, which churn out for example by including voice as only one scoops. Now who will trust a story based
text. But voice cloning’s implications will of several identification factors (and thus on an audio clip?
also be profound. undercutting the convenience), in order to Slightly easier to manage might be the
A brief sample of a voice can be used prevent fraud. false positives: recordings purporting to
to train an AI model, which can then Creative industries could face dis be someone but which are fakes. Sophis
speak any given text sounding like that ruption too. Voice actors’ skills, trained ticated forensic techniques could be of
person. Apple is expected to include the over a lifetime, can be ripped off in a mat use here, proving a clip to be AI, say, in a
feature for iPhones in its new operating courtroom. The opposite problem—the
system, iOS 17, due to be released in Sep false negatives—will arise when public
tember. It is advertised as helping people figures deny authentic recordings. Prov
who may be in danger of losing their ing that a clip is genuine is hard, perhaps
voice, for example to a degenerative even impossible. Journalists will need to
disease such as ALS. show how they obtained and stored
For those eager to try voice cloning audio files—unless, as so often, they
now, ElevenLabs, an AI startup, offers have promised a source anonymity.
users the chance to create their own During his first presidential run, Mr
clones in minutes. The results are dis Trump did more than anyone to popular
turbingly accurate. When generating a ise the term “fake news”—and that was
playback, the system offers a slider well before voice cloning, deepfake
that allows users to choose between videos, artificially generated images and
variability and stability. Select more the like were widespread. Now, ever
variability, and the audio will have a more people caught up in wrongdoing
lifelike intonation, including pauses and will be tempted by the defence, “It wasn’t
stumbles like “er…” Choose “stability”, me.” Many people will have even more
and it will come across more like a calm reason to believe them.
(IVF) were forced to endure egg retrievals, quality that is spellbinding. the first podcast to win a Peabody journal

during which a doctor pierced their vaginal The second reason relates to the story ism award—helped launch the format and
wall with a needle, “stonecold sober”. telling. The taut, fivepart series probes fuelled a boom in richly detailed, investi
These women were betrayed twice: by the personal themes of motherhood, betrayal gative productions. In 2020 the New York
medics who, the patients say, ignored their and loss, which suit the intimacy of the Times snapped up the company for a re
pain and by Ms Monticone, a mother who format. Earbudwearers will wince at the ported $25m.
had undergone IVF treatment herself. personal, excruciating details. This is how “The Retrievals”, which releases its epi
The tale of agony and addiction has Serial Productions has mastered longform sodes over five weeks, will soon be over,
mesmerised people across the English audio: by presenting astounding stories but the reallife drama will not. Sixtyeight
speaking world and topped Apple’s pod that people want to hear. The same produc women are suing the Yale clinic for medi
cast chart in North America. Two factors ers were behind “Serial” in 2014, a true cal malpractice and medical battery,
explain its success. The first concerns plot: crime series that reexamined a murder among other allegations. Yale says it has
stories about nefarious caregivers are case. Until then podcasting was a nascent changed some of its practices. Listeners,
chilling, and the podcast has a truecrime industry. The show’s success—it became however, have already chosen a side. n
012
70
Economic & financial indicators The Economist July 22nd 2023
Economic data
Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units
% change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change
latest quarter* 2023† latest 2023† % % of GDP, 2023† % of GDP, 2023† latest,% year ago, bp Jul 19th on year ago
United States 1.8 Q1 2.0 1.3 3.0 Jun 3.9 3.6 Jun -2.9 -5.7 3.8 74.0 -
China 6.3 Q2 3.2 5.5 nil Jun 1.2 5.2 Jun‡§ 2.4 -3.0 2.4 §§ -15.0 7.22 -6.7
Japan 1.9 Q1 2.7 1.3 3.2 May 2.6 2.6 May 3.2 -5.8 0.5 23.0 140 -1.2
Britain 0.2 Q1 0.6 0.3 7.9 Jun 6.7 4.0 Apr†† -3.3 -4.3 4.5 227 0.78 6.4
Canada 2.2 Q1 3.1 1.2 2.8 Jun 3.5 5.4 Jun -0.1 -1.0 3.4 28.0 1.32 -2.3
Euro area 1.0 Q1 -0.4 0.8 5.5 Jun 5.6 6.5 May 1.7 -3.3 2.4 110 0.89 10.1
Austria 1.9 Q1 0.4‡ 1.0 8.0 Jun 7.6 4.6 May 1.1 -2.4 3.0 122 0.89 10.1
Belgium 1.3 Q1 1.5 0.8 4.2 Jun 3.6 5.7 May -1.9 -4.4 3.0 118 0.89 10.1
France 0.9 Q1 0.7 0.7 4.5 Jun 5.6 7.0 May -1.7 -5.0 3.0 135 0.89 10.1
Germany -0.5 Q1 -1.3 -0.2 6.4 Jun 6.0 2.9 May 5.1 -2.3 2.4 110 0.89 10.1
Greece 2.3 Q1 -0.3 2.0 1.8 Jun 3.9 10.8 May -6.8 -2.3 3.7 26.0 0.89 10.1
Italy 1.9 Q1 2.2 1.2 6.4 Jun 6.4 7.6 May 0.1 -4.7 4.1 60.0 0.89 10.1
Netherlands 1.9 Q1 -1.3 0.9 5.7 Jun 5.2 3.5 May 6.5 -2.3 2.8 119 0.89 10.1
Spain 3.8 Q1 2.4 2.0 1.9 Jun 3.2 12.7 May 1.5 -4.2 3.5 111 0.89 10.1
Czech Republic -0.2 Q1 -0.2 0.6 9.7 Jun 10.3 2.5 May‡ -1.9 -4.5 4.1 -44.0 21.4 11.9
Denmark 1.9 Q1 2.3 0.5 2.5 Jun 5.0 2.8 May 9.8 0.7 2.7 110 6.66 9.0
Norway 3.0 Q1 1.0 1.6 6.4 Jun 4.8 3.4 Apr‡‡ 17.6 12.5 1.4 76.0 10.0 -1.3
Poland -0.3 Q1 16.1 1.3 11.5 Jun 12.3 5.0 Jun§ -1.1 -4.9 5.4 -122 3.97 17.1
Russia -1.8 Q1 na -1.6 3.2 Jun 6.0 3.2 May§ 5.4 -4.2 11.2 208 91.5 -38.4
Sweden 0.8 Q1 2.4 1.0 9.3 Jun 7.1 7.9 May§ 4.2 -0.3 2.4 78.0 10.3 -0.7
Switzerland 0.6 Q1 1.1 1.2 1.7 Jun 2.6 2.0 Jun 7.1 -0.7 0.8 nil 0.86 12.8
Turkey 4.0 Q1 1.3 3.3 38.2 Jun 44.3 8.8 May§ -5.4 -4.8 17.7 -21.0 26.9 -34.6
Australia 2.3 Q1 0.9 1.5 7.0 Q1 5.5 3.5 Jun 1.0 0.2 3.9 34.0 1.48 -2.0
Hong Kong 2.7 Q1 23.0 3.5 2.0 May 2.4 2.9 Jun‡‡ 6.6 -1.5 3.7 70.0 7.81 0.5
India 6.1 Q1 5.3 6.2 4.8 Jun 5.3 8.1 Apr -1.3 -5.7 7.1 -36.0 82.1 -2.6
Indonesia 5.0 Q1 na 4.9 3.5 Jun 3.8 5.5 Q1§ 0.9 -2.6 6.2 -125 14,995 -0.1
Malaysia 5.6 Q1 na 3.9 2.8 May 2.7 3.5 May§ 3.1 -5.0 3.8 -23.0 4.54 -2.0
Pakistan 1.7 2023** na 1.7 29.4 Jun 31.2 6.3 2021 -1.5 -7.0 15.4 ††† 254 284 -21.9
Philippines 6.4 Q1 4.5 5.3 5.4 Jun 5.7 4.5 Q2§ -5.3 -6.3 6.3 -64.0 54.5 3.2
Singapore 0.7 Q2 1.1 1.0 5.1 May 5.0 1.8 Q1 16.3 -0.7 2.9 10.0 1.33 4.5
South Korea 1.0 Q1 1.3 1.3 2.7 Jun 3.0 2.7 Jun§ 1.9 -2.4 3.6 30.0 1,266 3.8
Taiwan -2.9 Q1 -2.4 0.6 1.8 Jun 2.0 3.5 May 12.5 -0.9 1.2 -12.0 31.1 -3.8
Thailand 2.7 Q1 7.8 3.2 0.2 Jun 1.8 1.3 May§ 1.3 -2.7 2.8 14.0 34.0 7.5
Argentina 1.3 Q1 2.7 -3.0 116 Jun 116.3 6.9 Q1§ -2.6 -4.5 na na 268 -51.9
Brazil 4.0 Q1 8.0 2.4 3.2 Jun 4.8 8.3 May§‡‡ -1.9 -7.5 10.8 -283 4.79 12.5
Chile -0.6 Q1 3.4 0.1 7.6 Jun 7.7 8.5 May§‡‡ -3.6 -1.9 5.3 -133 813 14.3
Colombia 3.0 Q1 5.9 1.6 12.1 Jun 11.5 10.5 May§ -4.0 -4.2 10.1 -300 3,976 8.0
Mexico 3.7 Q1 4.1 2.1 5.1 Jun 5.0 3.0 May -1.9 -3.7 8.7 -40.0 16.8 21.7
Peru -0.4 Q1 -2.2 1.5 6.5 Jun 6.5 6.0 Jun§ -1.6 -2.0 6.7 -172 3.57 9.0
Egypt 3.9 Q1 na 3.8 35.8 Jun 30.8 7.1 Q1§ -1.9 -6.4 na na 30.9 -38.8
Israel 3.8 Q1 3.2 2.9 4.2 Jun 4.3 3.6 Jun 4.7 -2.4 3.6 97.0 3.59 -4.2
Saudi Arabia 8.7 2022 na 1.0 2.7 Jun 2.2 5.1 Q1 3.4 -1.2 na na 3.75 0.3
South Africa 0.2 Q1 1.4 0.5 5.7 Jun 5.7 32.9 Q1§ -1.7 -5.6 10.3 -81.0 17.9 -5.0
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 30th index one Dec 30th
The Economist commodity-price index % change on
In local currency Jul 19th week 2022 Jul 19th week 2022 2015=100 Jul 11th Jul 18th* month year
United States S&P 500 4,565.7 2.1 18.9 Pakistan KSE 45,086.3 -1.1 11.5 Dollar Index
United States NAScomp 14,358.0 3.2 37.2 Singapore STI 3,275.2 3.1 0.7 All Items 144.1 147.4 -1.9 -2.1
China Shanghai Comp 3,198.8 0.1 3.5 South Korea KOSPI 2,608.2 1.3 16.6 Food 136.0 135.5 -3.6 -6.2
China Shenzhen Comp 2,037.1 0.3 3.1 Taiwan TWI 17,116.4 0.9 21.1 Industrials
Japan Nikkei 225 32,896.0 3.0 26.1 Thailand SET 1,536.6 3.1 -7.9 All 151.7 158.5 -0.5 1.3
Japan Topix 2,279.0 2.6 20.5 Argentina MERV 453,206.9 5.0 124.3 Non-food agriculturals 110.8 111.6 0.2 -30.4
Britain FTSE 100 7,588.2 2.3 1.8 Brazil BVSP* 117,552.1 -0.1 7.1 Metals 163.8 172.4 -0.7 11.1
Canada S&P TSX 20,491.2 2.1 5.7 Mexico IPC 53,740.2 -0.4 10.9
Sterling Index
Euro area EURO STOXX 50 4,362.3 nil 15.0 Egypt EGX 30 17,578.7 2.5 20.4
All items 170.5 172.0 -4.5 -10.0
France CAC 40 7,326.9 -0.1 13.2 Israel TA-125 1,920.9 4.8 6.7
Germany DAX* 16,108.9 0.5 15.7 Saudi Arabia Tadawul 11,752.6 0.2 11.4 Euro Index
Italy FTSE/MIB 28,712.3 0.6 21.1 South Africa JSE AS 77,081.0 0.7 5.5 All items 145.4 145.5 -4.8 -10.8
Netherlands AEX 775.0 0.9 12.5 World, dev'd MSCI 3,048.0 2.0 17.1 Gold
Spain IBEX 35 9,451.8 nil 14.9 Emerging markets MSCI 1,019.6 1.4 6.6 $ per oz 1,932.1 1,982.8 2.4 15.7
Poland WIG 71,636.2 2.8 24.7
Brent
Russia RTS, $ terms 1,015.1 1.0 4.6
$ per barrel 79.5 79.6 4.9 -25.9
Switzerland SMI 11,120.2 0.9 3.6 US corporate bonds, spread over Treasuries
Turkey BIST 6,571.3 3.6 19.3 Dec 30th Sources: Bloomberg; CME Group; Cotlook; Refinitiv Datastream;
Australia All Ord. 7,538.2 2.7 4.4 Basis points latest 2022 Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool
Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional.
Hong Kong Hang Seng 18,952.3 0.5 -4.2 Investment grade 142 154
India BSE 67,097.4 2.6 10.3 High-yield 440 502
Indonesia IDX 6,830.2 0.3 -0.3 Sources: Refinitiv Datastream; Standard & Poor's Global Fixed Income For more countries and additional data, visit
Malaysia KLSE 1,403.0 0.4 -6.2 Research. *Total return index. economist.com/economicandfinancialindicators
012
Graphic detail Horror in Sudan The Economist July 22nd 2023 71
→ Throughout southern Sudan, the number of fires detected from space is abnormally high
Fires in inhabited areas, excess compared Fires in inhabited areas, by week

with a year earlier, April 15th-July 16th 2023 Villages Towns/suburbs Cities Excluding large factories and oil facilities
150
Number 150 EGYPT
of fires Red
50
Sea 2023
10
100
50
2013-22 trend
Fighting in the capital has been
Darfur 0
intense. The destruction is clearly
CHAD
visible in satellite images Jan Feb Mar Apr May Jun Jul
SUDAN
A mass grave has already been ERITREA Violent events, by month

found in el-Geneina, which has Khartoum
Selected categories
been looted and burned 400
al-Fasher el-Obeida Excessive force against protesters,

abductions and sexual violence
300
Armed clashes and explosions
Looting, property destruction

Nyala
and mob violence 200
100
ETHIOPIA
CAR
Paramilitary forces stormed the village
SOUTH SUDAN of el-Rahad on May 15th. The number 0
of casualties remains unknown 2010 12 14 16 18 20 23
Sources: NASA; ACLED; GRID3; Google Earth; The Economist
Crescent of fire flagrations alike. Fire rates in Sudan vary

by month, peaking during the dry season
tory, a research outfit at Yale University
commissioned by America’s State Depart
from September to March. But many more ment to monitor a series of partially ob
fires have been recorded in this year’s wet served ceasefires, at least 0.7 square kilo
season than in those of the past decade. metres of elGeneina in West Darfur had
To isolate fires plausibly tied to fight been affected by fire by late June. In nearby
Data from satellites suggest that ing, we filtered out hot spots near cement Murnei, at least two square kilometres
violence has surged in much of Sudan factories, power stations and oil facilities, were torched in just two days last month.
as well as areas marked as unpopulated in The increase in fires also aligns with re
S udan’s civil war is thought to have

uprooted at least 3m people. Such esti
mates are highly imprecise, because so lit
maps by grid3, a nonprofit. Since the war
began in April, firms has recorded five
times as many fires in the remaining areas
ports trickling out from the country. The
Armed Conflict Location and Event Data
Project (acled), a nonprofit, finds that the
tle information is available. Local journal as the average for these months in 201322. current rate of violent events reported in
ists and activists have been besieged—lit The spread of recent fires is as striking Sudan is twice as high as the previous
erally, in some cities—and foreign report as their scale. When the civil war started, it maximum since its records began in 1997
ers cannot get close to the fighting. pitted Sudan’s regular army against the (though such data may be more complete
Soldiers have attacked telecoms infra Rapid Support Forces, a paramilitary in recent years). Just like the fire maps,
structure, stopping news from getting out. group. At first, much of the destruction was acled’s log shows fighting across the
Yet some witnesses are beyond the confined to the capital, Khartoum, where south, a region previously spared from
reach of Sudan’s warring factions: satel belligerents were fighting for control of the mass violence—though the rise in fires
lites flying over the country. Data from government. Yet by the end of April, abnor seen from space greatly exceeds the num
their instruments can provide evidence of mally numerous fires had erupted across ber of violent events tracked by acled.
war crimes, such as the burning of villages. most of southern and western Sudan. Estimating the death toll is a far harder
They can also reveal how the current car Satellite images confirm that fires de task. Fire counts reveal nothing about vic
nage compares with that of the recent past. tected in both Darfur, the site of the 21st tims, and of the 1,150 violent events logged
nasa, America’s space agency, runs a century’s first genocide, and Khartoum by acled since April 15th, 388 are listed
satellitebased system called firms, which stem from violence. Highresolution pho with “casualties unknown”. When news
detects places with unusually high tem tos of areas where firms detected lots of does emerge, it is likely to be grim. On July
peratures. It was designed to track forest fires show buildings burned to the ground. 13th the un said it had discovered 87 bodies
fires, but logs natural and manmade con According to the Sudan Conflict Observa in a mass grave outside elGeneina. n
012
72
Obituary Milan Kundera The Economist July 22nd 2023
separateness and freedom; heaviness was to be earthandbody
bound, rulebound and constricted. Clear enough.
But not so fast. Lightness also made both history and life insub
stantial, airy as a feather, the happenings of a day. It justified be
trayal, irresponsibility and breaking ranks (as he from the party),
where heaviness stressed duty and obedience. Most important,
lightness was about forgetting, and heaviness insisted on remem
brance. What was the self, but the sum of memories? In “The Book
of Laughter and Forgetting” the heroine, Tamina, clung constantly
to the memory of her dead husband even when making love with
other men. Was that a good or a bad thing?
The question applied especially to Czechoslovakia, in its high
ly vulnerable position on the map. How could it survive without
remembering its past great men, Hus, Comenius, Janacek, Kafka,
or without the language they had spoken? Memory gave it identity,
and gave Czechs themselves the only power they had against the
states that oppressed them. In 1967 Mr Kundera appealed to fel
lowwriters to seize the moment with their pens. But he still re
sisted the thought of enclosing cultures within borders. Borders
between ideas were there to be crossed.
In Paris after 1975, living in an attic flat on the rue Récamier,
feasting on frogs’ legs and eventually writing a trio of novels in
French, it seemed to him that notions of “home” and “roots” might
be as illusory as the rest of life. His Czech citizenship had been re
voked and, though he still mostly spoke Czech, he was almost in
different when, in 2019, he got it back. Like Goethe, he saw litera
ture becoming global and himself as a citizen of the world.
When angels laugh He had been one for a long time. His youthful reading was
mostly French: Baudelaire and Rimbaud, but especially Rabelais
and Diderot. French wit and experiment wonderfully foiled the
socialist realism imposed on art and literature by the postwar So
viet regime. He fed it into his writing to defy the kitsch all around
him. Sadly, it was kitsch he had fallen for himself when, at 18, he
Milan Kundera, novelist and author of “The Unbearable
eagerly joined the party: all those heavy, emotional images of
Lightness of Being”, died on July 11th, aged 94
wheatsheaves, mothers and babes, heroworkers brandishing
before the Prague Spring in 1968, when the Communist re spanners, the glowing brotherhood of man. He saw himself as a
Just
gime in Czechoslovakia seemed briefly to relax, Milan Kundera knifeblade, cutting through the sweetish rosetinted lies to show
managed to publish a novel about a joke. The joke, sent by a young the shit—and the mystery—beneath.
man to a girlfriend on a postcard, read: “Optimism is the opium of Because truth was mysterious. And novels were a wideopen
the people! A ‘healthy’ atmosphere stinks of stupidity! Long live territory of play and hypotheses where he could question the
Trotsky!” It landed the young man in a lot of trouble. world as a whole: digressively like Sterne in “Tristram Shandy”, or
The novel, his first, sold well. But when later that year Soviet adventurously, like Cervantes’s Don Quixote. No answers, ques
tanks rolled in, forcing his country back into line, “The Joke” dis tions only; answers (in advance) were what kitsch provided. He
appeared from bookshops. He himself was kicked out of the Com played with philosophical musings, psychological analysis, in
munist Party (he had been expelled before, in 1950, for being crit vestigations of misunderstood words, irony, eroticism and
ical, but had reapplied) and was fired from his lecturer’s job at the dreams. It could make a mishmash for readers, especially Anglo
Academy of Fine Arts. Since no one was now allowed to employ phone ones, and no other novel did as well as “Unbearable Light
him, he played dance gigs in the taverns of mining towns. Eventu ness”, though “Laughter and Forgetting” and “Immortality” sold
ally, though, there was nothing doing in Czechoslovakia, so he and respectably. The Nobel talk came to nothing, and he was glad, be
his wife Vera left for France, and stayed. cause he preferred reclusive delving to any sort of fame.
In retrospect, writing “The Joke” had been a bad decision. But it He liked to call his novels “polyphonic”: a word learned from
was good at the time. That was life. You had only one, with no sec his father, a concert pianist and musicologist. The many voices,
ond or third chances to take a different course. His novels were full parts and motifs in his work were united by “novelistic counter
of characters struggling, like him, to unpick the past, predict the point” into a single music. His chief hero in the enterprise was Ja
future and, on the basis of that, jump the right way. In the most nacek, whose photo hung beside his father’s in the Paris flat: a
famous of them, “The Unbearable Lightness of Being”, the protag composer who had refused to write by the rules but made directly
onist Tomas first appeared standing at a window, ruminating. for the heart of things. He doubted he himself had got anywhere
Should he invite the lovely bartender Tereza to his room, or not? close. Since the world couldn’t be stopped in its headlong rush, it
Would he get too involved? If so, how would he get out of it? After was best just to laugh at it. The devil laughed, because he knew life
spending the night with her, the questions only multiplied. had no meaning; the angels, as they flew over, laughed too, know
Tomas, like his creator, made a bad (or good) decision to defy ing what the meaning was.
the party. He lost his post as a surgeon and became a window As a child he often sat at the piano playing two chords fortissi-
cleaner. He also decided, for good or bad, to stay with Tereza. But mo, C minor to F minor, until his father furiously removed him.
all through the novel he had wrestled with his creator’s favourite But as those chords became heavier he felt himself grow lighter
theme, the weighing of opposites. The Greek philosopher Parmen until, in a moment of ecstasy, he seemed to float free of time. If
ides had stated, in particular, that lightness was positive and that was unbearable lightness, he—and many others—spent an
heaviness negative. Lightness was the realm of the soul, space, awful lot of their brief, insignificant lives trying to find it again. n
012
2nd annual
Metaverse
Summit
October 10th 2023 | Los Angeles
Building connections and

communities through mixed reality
Bringing together senior industry leaders, policymakers, innovators and technology experts
to discuss the business case for the metaverse and how to unlock new revenue streams.
Sir Martin Sorrell Doug Rosen Vera Chien

Executive chairman Senior vice-president Executive director,
S4 Capital of games and corporate research,
emerging media data and insights
Paramount Warner Bros Discovery
Susanna Pollack Christina Wootton Tony Parisi

President Vice-president of global Metaverse pioneer and
Games for Change partnerships chief product officer
Roblox Lamina1
Find out more and book your ticket:

metaverse.economist.com
Lead Immersive experience sponsor Gold sponsors Silver sponsors
012
012

The Economist Us A July 22

Uploaded by

Copyright:

Available Formats

You might also like

The Economist Us A July 22

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Economist Us A July 22

Uploaded by

Copyright:

Available Formats

Will America escape recession?

The science of heatwaves

MAKING BABYMAKING BETTER

An American soldier was the International Criminal A controversial Illegal Migra­

Britain’s annual rate of Blizzard, which owns the warned that “a cold winter,

Making babymaking better

A fter Louise brown was born in Manchester in July 1978,

Too darn hot

The world economy

E conomists are not known for their optimism, but today

China and India

T he hope that India might act as a pro­Western counter­

Should Ukraine get Russia’s frozen assets?

E ver since the attack on Ukraine in February 2022 Western

some people anxious. Com­ ulator, blocking investment. In Left­leaning Catholics oppose

Turning a corner pegged the probability of a recession in the

A s covid-19 spread throughout the

Other indicators conﬁrm this bleak out­ tant to ﬁre workers. Some may well be

also starting to aﬀect the economy. Spend­ mortgage rates rose sharply in early 2022 imply that roughly 1m people would have

The Republican primary dy reached this limit for the primaries. Mr more than Mr DeSantis. Because Mr Trump

F or Ron DeSantis, whose presidential

A new Mexican­American war proposition (see chart). Democrats are

M ore than once, as president, Donald

From reports and memos to presentations and social-media posts,

Beneﬁt from a tailored approach and group oﬀers on our

Find out more about team learning at:

judges of the constitutional court and the This is true, but Mr Bukele’s crackdown Backed by the Guatemalan establishment,

I n the latest edition of Latinobaróme­

Green supply chains tion amounted to 48% of the global total

vanced process that extracts nickel from its Singapore and food security

Very Dairy, an animal­free milk brand means that many products appear in Sin­ skimpy pretexts. Otto Warmbier, a college

T he PREVIOUS time someone crossed

L ast month police in the east Indian

Foreign universities in China most iconic skyscraper, the Shanghai

F iling into a graduation ceremony to

One of China’s aims is to boost the qual­ there is no value in the school’s existence, China and Germany

nomic ministries, which are led by more

A t some point the ill­explained, weeks­long disappearance of

E nergy markets are being rocked by an

cost is a considerable hurdle, the project structure, schools and clinics. In Equatori­

The reasonableness standard has af­

Twice the insight

The most personal technology

W ith the possible exception of Adam and Eve, all human be­

The process cytoplasmic sperm injection”, or ICSI (see diagram on next page).

M ost healthy young couples seeking to get pregnant will try

→ Vivo vitro...vici? patients are infrequent. This may come as

IVF* ICSI† Evening odds

The fertility sector is booming

“Y ou will not have a child with your own eggs,” were the hard­ the average age of ﬁrst­time mothers is 32. If delayed reproduction

Unfortunately, experience and experi­

Confusion is nothing new

Time after time

T WO DECADES ago Yevgeny Prigozhin,

tiny was not an under­the­carpet factional Ukraine’s nuclear plant dress rehearsal for a major incident with

France and Europe no longer accept ‘grey zones’ between the

A spat in Brussels pits an open vision of Europe against an insular one

P aris, Rome, Amsterdam: Americans are everywhere you look

An American soldier was the International Criminal A controversial Illegal Migra

T he hope that India might act as a proWestern counter

some people anxious. Com ulator, blocking investment. In Leftleaning Catholics oppose

Other indicators conﬁrm this bleak out tant to ﬁre workers. Some may well be

also starting to aﬀect the economy. Spend mortgage rates rose sharply in early 2022 imply that roughly 1m people would have

A new MexicanAmerican war proposition (see chart). Democrats are

I n the latest edition of Latinobaróme

Very Dairy, an animalfree milk brand means that many products appear in Sin skimpy pretexts. Otto Warmbier, a college

One of China’s aims is to boost the qual there is no value in the school’s existence, China and Germany

A t some point the illexplained, weekslong disappearance of

cost is a considerable hurdle, the project structure, schools and clinics. In Equatori

The reasonableness standard has af

W ith the possible exception of Adam and Eve, all human be

“Y ou will not have a child with your own eggs,” were the hard the average age of ﬁrsttime mothers is 32. If delayed reproduction

Unfortunately, experience and experi

tiny was not an underthecarpet factional Ukraine’s nuclear plant dress rehearsal for a major incident with

S PARE A Thought for students graduat

expected—perhaps half of all that students market will bear. In 202122 foreigners bring along a spouse or children.

C hina’s rulers like to look down on In

Foodmaking (which may explain why producers prefer shaw drivers’ union, directly connects rid

T o understand the impact that artiﬁ

“D on’t look for the needle in the hay

E stimates of Earth’s average tempera

“Oppenheimer” v “Barbie” were also created by producing actual ex

I n June 1941 Josef Stalin received a warn

(IVF) were forced to endure egg retrievals, quality that is spellbinding. the ﬁrst podcast to win a Peabody journal

Crescent of ﬁre ﬂagrations alike. Fire rates in Sudan vary