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The Economist: Leaders



Why America’s post office should be privatised

Thu, 19 April 2018 14:48:19 GMT


THE Founding Fathers thought that operating a postal service was a crucial responsibility of the federal government. The constitution allows Congress a monopoly on delivering post. Today the United States Postal Service (USPS) is the third-biggest employer in America, behind Walmart and the Defence Department. For most of the country’s history, USPS provided the arteries along which information flowed.

Not any more. The number of first-class letters has fallen by almost half from its peak in 2001, as communication has migrated to the internet. About half of what still lands in letterboxes is advertising. USPS’s revenue from its monopoly is down by 35% in real terms since 2008. Seeking a survival strategy, and with online shopping booming, the post office is focusing on delivering parcels. But it has no monopoly in this business, and its network was built for letters. Parcels still comprise less than a third of revenue. Competition from the likes of UPS, FedEx and DHL means that USPS...

IKEA furniture and the limits of AI

Thu, 19 April 2018 14:48:19 GMT


COMPUTERS have already proved better than people at playing chess and diagnosing diseases. But now a group of artificial-intelligence researchers in Singapore have managed to teach industrial robots to assemble an IKEA chair—for the first time uniting the worlds of Allen keys and Alan Turing. Now that machines have mastered one of the most baffling ways of spending a Saturday afternoon, can it be long before AIs rise up and enslave human beings in the silicon mines?

The research also holds a serious message. It highlights a deep truth about the limitations of automation. Machines excel at the sorts of abstract, cognitive tasks that, to people, signify intelligence—complex board games, say, or differential calculus. But they struggle with physical jobs, such as navigating a cluttered room, which are so simple that they hardly seem to count as intelligence at all. The IKEAbots are a case in point. It took a pair of them, pre-programmed by humans, more than 20 minutes to assemble a chair that a...

The EU should get tough on its illiberal democracies

Thu, 19 April 2018 14:48:19 GMT


THERE was once no brighter star in Europe. Since shaking off communism in 1989 Poland has rivalled the bounciest Asian tigers in GDP growth. It has become a vital NATO ally. But it is also on the front line of what France’s president, Emmanuel Macron, calls a “European civil war” over the rule of law.

The optimism that attended the EU’s great eastward expansion in 2004 has given way, in some places, to angry, nationalist “illiberal democracy”. In Hungary, having nobbled the courts, media and public prosecutor, Viktor Orban is squeezing civil society and using state (and EU) funds to nurture oligarchs. Romania’s leaders endlessly seek to weaken anti-graft laws that might otherwise ensnare them.

But the gravest challenge is in Poland. Since taking office in 2015 the nationalist Law and Justice (PiS) party has stacked the courts, skewed public media and stuffed the bureaucracy with supporters (see...

The humbling of India’s tycoons

Thu, 19 April 2018 14:48:19 GMT


FOR decades, personal connections have provided a well-trodden path to success in Indian business. State-owned banks provided cheap financing for firms whose success often rested on winning official approvals. If a venture soured, the taxpayer frequently ended up being left to shoulder losses. There are plenty of gifted businesspeople in India. But cronyism, not competition, has been the surest route to riches, even after the partial dismantling of the “licence raj” nearly three decades ago.

A new era of Indian capitalism may be dawning. For the first time a large number of struggling tycoons face the prospect of having their businesses seized from them. The fate of 12 troubled large concerns is due to be settled within weeks; another 28 cases are set to be resolved by September. Between them, these firms account for about 40% of loans that banks themselves think are unlikely to be repaid. For enforcing a bankruptcy system that is usually skirted by those with connections, the government of...

The Republican Party is organised around one man

Thu, 19 April 2018 08:18:28 GMT

ALL presidents, Republican and Democrat, seek to remake their party in their own image. Donald Trump has been more successful than most. From the start, the voters he mesmerised in the campaign embraced him more fervently than congressional Republicans were ready to admit. After 15 months in power, as our briefing explains, he has taken ownership of their party. It is an extraordinary achievement from a man who had never lived in Washington, DC, never held public office, who boasted of groping women and who, as recently as 2014, was a donor to the hated Democrats.

The organising principle of Mr Trump’s Republican Party is loyalty. Not, as with the best presidents, loyalty to an ideal, a vision or a legislative programme, but to just one man—Donald J. Trump—and to the prejudice and rage which consume the voter base that, on occasion, even he struggles to control. In America that is unprecedented and it is dangerous.

Already, some of our Republican readers will be rolling their eyes. They will say that our criticism reveals more about us and our supposed elitism than it does about Mr Trump. But we are not talking here about the policies of Mr Trump’s administration, a few of which we support, many of which we do not and all of which should be debated on their merits. The bigger, more urgent concern is Mr Trump’s temperament and style of government. Submissive...

If Syria’s despot is not punished, others will use chemical weapons

Thu, 12 April 2018 14:54:50 GMT


AFTER seven years of war and hundreds of thousands of deaths, it takes an act of utter barbarism to shock the world out of its indifference. But every so often, Bashar al-Assad supplies one. On April 7th more than 40 Syrians were killed with poisonous gas in the town of Douma. Videos showed men, women and children lying lifeless, with foam dribbling over their lips. Such horrors are why most countries outlawed the use of chemical weapons long ago—and why Syria’s despot flouts that ban. He has carried out dozens of chemical attacks over the course of Syria’s war, sowing terror in rebel-held areas. The world should not let him get away with it.

As The Economist went to press, America and its allies were considering responding to the atrocity in Douma with military action. If they are convinced of the evidence against Mr Assad (who denies responsibility), then they should punish him hard enough to deter him from gassing his people again. That will take more than...

British productivity is rising at last. But Brexit looms over the economy

Thu, 12 April 2018 14:54:50 GMT


LOW productivity growth has plagued Britain’s economy since the financial crisis. From 2010 to 2016 output per hour grew, on average, by just 0.2% a year, down from 2.5% between 1950 and 2007. In the G7 group of rich countries, only Italy has done worse. Productivity drives a country’s living standards in the long term. It is a relief, then, that the stagnation may at last be coming to an end. In the second half of 2017 productivity grew at an annual rate of 3.4%, the fastest growth since 2005.


Accelerating productivity is the latest, and most important, piece of good news on Britain’s economy. Capital spending is...

Great news for the dead: the funeral industry is being disrupted

Thu, 12 April 2018 14:54:45 GMT


FEW choose how they die, but they can choose what happens next. Most leave this to loved ones who, in their distress, usually outsource the decision to an undertaker. The transaction is often a let-down, with hardly any choices beyond “Burn or bury?” and “Cheque or card?”

The average American funeral with a burial costs nearly $9,000. In some countries, the exorbitant cost of staging a “proper” funeral can lead families to financial ruin. Nearly everywhere, the bereaved have put up with rip-off last rites because of the lack of better options. At last, technology and competition are starting to disrupt this most conservative of industries (see article). This is good news for anyone who plans to die one day.

The funeral trade has the most basic of business advantages: inexhaustible demand. Every minute...

What to make of Mark Zuckerberg’s testimony

Thu, 12 April 2018 08:03:21 GMT


SAYING sorry can be an enriching experience. For Mark Zuckerberg, who this week endured two days of questioning in front of Congress, the rewards of contrition are not just metaphorical. Over the course of his testimony, as the Facebook boss apologised for the leakage of data on 87m users to a political-campaign firm, his company’s shares rose by 5.7% and his own net worth by $3.2bn.

Shareholders were doubtless relieved by Mr Zuckerberg’s robotic but gaffe-free display. And even the firm’s fiercest critics ought to acknowledge the distance that it has travelled since the Cambridge Analytica story broke in March. Mr Zuckerberg welcomed the idea of regulation and cautiously endorsed a forthcoming European law on data protection. By saying explicitly that Facebook was responsible for the content on its platform, he has opened the door to bearing greater liability for the material it carries. But the bounce in the share price also signals something worrying: that neither the firm nor American...

Germany is becoming more open and diverse

Thu, 12 April 2018 08:03:21 GMT

SINCE the fall of the Berlin Wall the Ampelmännchen, the jaunty, behatted “little traffic-light man” of communist East Germany, has escaped his dictatorial roots to become a kooky icon of Germany’s trendy capital. Tourists pose with life-size models and snap up memorabilia in souvenir shops. The Ampelmännchen’s quirky coolness is an increasingly apt symbol of the country as well as its capital. As our special report in this issue describes, Germany is entering a new era. It is becoming more diverse, open, informal and hip.

At first blush that seems a preposterous suggestion. The Germany of international newspaper headlines is a country with anxious citizens and stagnant politics. Angela Merkel is Europe’s longest-standing political leader, a woman who epitomises traditional German caution. Last September’s election saw a surge in support for the far-right Alternative for Germany (AfD); it took Mrs Merkel six months to cobble together a lacklustre new coalition. To conservative foreign observers Germany is a byword for a reckless refugee policy; to others it is the country that bullied indebted southern Europeans.

But take the long view...

Chinese aviation takes off

Thu, 05 April 2018 14:51:19 GMT


OVER the past few decades, established airlines in Europe and America have been hit by one thing after another. First came low-cost carriers, chipping away at their short-haul routes. Lately, a new crop of super-connecting airlines in the Gulf, Emirates, Etihad and Qatar Airways, has lured away their long-haul passengers with superior service and lower fares. Now looms the biggest threat of all—the rise of several promising Chinese airlines (see article). Unfortunately, the response of the incumbents risks depriving passengers of the benefits from this latest wave of competition.


Railway strikes test Macron’s reforms

Thu, 05 April 2018 14:51:19 GMT


MAYHEM at railway stations. Gridlock on the roads. The scenes of strife in France this week were as familiar as they were symbolic. On April 3rd train drivers and other rail staff began a rolling strike, planned for two out of every five days, that may last for months. It could be a re-run of the strikes that paralysed the country in 1995, forcing Alain Juppé, Jacques Chirac’s prime minister, to back down in the face of chaos. How President Emmanuel Macron handles the confrontation with unions will determine whether he lives up to his electoral promise to “unblock” France, or joins the long list of French leaders defeated by the revolt of the street.

A grève problem

Strikes are part of France’s culture of protest. They are seldom just a demand for better wages or working conditions. Rather, they are a political show of force. Having failed to mobilise workers against Mr Macron’s labour reform last September, hardline unions now sense a chance to test his resolve....

How to narrow Britain’s gender-pay gap

Thu, 05 April 2018 14:51:19 GMT


PITY Britain’s press officers. April 4th was the deadline for employers in Britain with 250 workers or more to publish details of the difference between the average pay of their male and female employees, under a new annual reporting requirement (The Economist Group recorded a median gap of 29.5%). The overall figures are eye-opening: eight out of ten employers pay men more than women. Theresa May, the prime minister, has promised to tackle this “burning injustice”.

Some take the numbers to mean that women are paid less than men for the same job. In fact the exercise bluntly compares employees’ pay without accounting for their differing roles—so Premier League football clubs have vast but meaningless pay gaps, as the men on the pitch are compared with the women on the turnstiles. This may even create perverse incentives, as firms could appear better by outsourcing low-paid jobs done by women. Yet the exercise could also lead to deeper questioning of what causes differences in pay (see...

America should borrow from Europe’s data-privacy law

Thu, 05 April 2018 08:33:19 GMT


AMERICA rarely looks to the bureaucrats of Brussels for guidance. Commercial freedom appeals more than dirigisme. But when it comes to data privacy, the case for copying the best bits of the European Union’s approach is compelling.

The General Data Protection Regulation (GDPR) is due to come into force next month. It is rules-heavy and has its flaws, but its premise that consumers should be in charge of their personal data is the right one. The law lets users gain access to, and to correct, information that firms hold on them. It gives consumers the right to transfer their data to another organisation. It requires companies to define how they keep data secure. And it lets regulators levy big fines if firms break the rules.

America has enacted privacy rules in areas such as health care. But it has never passed an overarching data-protection law. The latest attempt, the Consumer Privacy Bill of Rights, introduced in 2012 by the Obama administration, died a...

How to cut the murder rate

Thu, 05 April 2018 08:33:16 GMT


THE planet has rarely been so peaceful. Even with terrible fighting in such places as Congo, Syria and Yemen, wars between and within countries are becoming less common and less deadly. But a dark menace looms. Some of the developing world’s cities threaten to be engulfed by murder.

Of the 560,000 violent deaths around the world in 2016, 68% were murders; wars caused just 18%. Murder has been falling in rich countries (though London is suffering an outbreak—see article), but it has long plagued Latin America and is starting to climb in parts of southern Africa, the Middle East and Asia. The world often goes to great lengths to stop wars. Just imagine if it put as much effort into stopping murders.

Latin America shows what is at stake. It has 8% of the world’s people but 38% of its recorded murders (see...

Britain underestimates Brexit’s damage to Northern Ireland

Wed, 28 March 2018 15:36:08 GMT


BRITAIN’S bloodiest battlefield of the past half-century was not in the Middle East, the Balkans or the South Atlantic. It was on home turf. A thousand British soldiers and police officers were killed in Northern Ireland during three decades of the “Troubles”, twice the number who died in Iraq and Afghanistan combined. The civilian death-toll was twice as high again.

Twenty years ago that awful conflict was ended by the Good Friday Agreement. As Britain and Ireland each softened their claim to the province, Protestants and Catholics agreed to share power in Stormont. The centuries-old question of to whom Northern Ireland belonged was carefully buried for future generations to unearth when they were ready.

Now Britain’s impending exit from the European Union, foreseen by nobody in 1998, has posed the question again, long before Northern Ireland has an answer. Britain’s ruling Conservatives treat this as, at best, a detail and, at worst, an irritation on the road to Brexit. That is an error—possibly a fatal one.


Scrapping the Iran nuclear deal will harm America

Wed, 28 March 2018 15:36:08 GMT


LAST summer John Bolton was a hawk with clipped wings. The former ambassador to the UN and cheerleader for the Iraq invasion was grumbling that White House staff were thwarting his attempts to give President Donald Trump his plan for scrapping the Iran nuclear deal brokered by Barack Obama in 2015. Not any more. On April 9th Mr Bolton, whose walrus moustache and verbal bluster mask a skilled and ruthless bureaucratic infighter, becomes Mr Trump’s national security adviser. As a result, that deal to roll back Iran’s nuclear-weapons programme seems on its last legs. That is bad news for the Middle East, for America’s allies and for America itself.

Mr Trump has long scorned the deal, the Joint Comprehensive Plan of Action (JCPOA), as the “worst ever”. Yet every 120 days he must sign a waiver for sanctions to remain unenforced—and hence for America to continue to honour the agreement. Mr Trump half-disowned the Iran pact in January, but the sobersides in uniforms and suits running his foreign...

Fifteen years after America’s invasion, Iraq is doing well

Wed, 28 March 2018 15:36:08 GMT


IT IS less than four years since the homicidal zealots of Islamic State (IS) stood on the doorstep of Baghdad, their black flag already fluttering over several other Iraqi cities. The jihadists triumphed, albeit temporarily, because disgruntled Sunnis, former Baathists and others who felt alienated by the rule of Nuri al-Maliki, the Shia prime minister, stood aside. The central government lost control over much of the country. The independence-minded Kurds in the north watched while Iraq fell apart—until IS turned on them, too.

Today things look very different. Iraq has defeated IS and avoided the wave of Shia-on-Sunni violence that many predicted would follow. The number of civilians killed each month in fighting is a fraction of what it was in 2014. The government in Baghdad saw off a premature Kurdish push for independence last year. Oil production is up and the state has money. The power of foreigners, including Iran and America, has diminished as Iraqi politicians have learnt how to play...

The workplace of the future

Wed, 28 March 2018 08:18:26 GMT


ARTIFICIAL intelligence (AI) is barging its way into business. As our special report this week explains, firms of all types are harnessing AI to forecast demand, hire workers and deal with customers. In 2017 companies spent around $22bn on AI-related mergers and acquisitions, about 26 times more than in 2015. The McKinsey Global Institute, a think-tank within a consultancy, reckons that just applying AI to marketing, sales and supply chains could create economic value, including profits and efficiencies, of $2.7trn over the next 20 years. Google’s boss has gone so far as to declare that AI will do more for humanity than fire or electricity.

Such grandiose forecasts kindle anxiety as well as hope. Many fret that AI could destroy jobs faster than it creates them. Barriers to entry from owning and generating data could lead to a handful of dominant...

Even if America wins concessions, worry

Wed, 28 March 2018 08:18:18 GMT

JUST six words suffice to sum up President Donald Trump’s approach to trade (and, you may mutter, too much else): make threats, strike deals, declare victory. In recent weeks Mr Trump’s campaign-trail threats of 2016 have been turned into tariffs of 25% on imports of steel and 10% on aluminium, and proposed levies on up to $60bn-worth of Chinese goods.

Foreigners have duly queued to sue for peace. On March 26th South Korea agreed to limit its steel exports to America, and accepted an extension of American tariffs on its pickup trucks. China is said to be discussing cuts in tariffs on American cars, increased purchases of American semiconductors and the further opening of its financial industry. With many of America’s allies belatedly exempted from the metals tariffs, and consensus among policymakers and business types that China should indeed change its behaviour, stockmarkets are less fearful of an outright trade war (see Buttonwood). The man who tweeted that “trade wars are good, and easy to win” may be able to claim a string of victories with scarcely a shot fired.

Vindication? Far from it. For one thing, no deal has yet been done with China. Other countries have politics too, even...