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6 The world this week
Asia 39 India's UID scheme
Leaders 9 Mitt Romney
America's n ext CEO? 10 India's identity scheme
The magic n u m ber 11 Executive pay
Bosses under fire 1 1 Natural disasters
The cost of catastrophes 12 Scotla nd's referendum
Clarity, p lease On the cover Mitt Romney Looks Li ke win ning the Republican nomi nation. His party could do worse: Leader, page 9. H e is stiLL a n enigma to Republican voters-an d t h e rest, pages 24-26. South Carolina beckons, page 27. His career says a Lot about how American business has changed: Sch u m peter, page 68
Letters 14 On oil, the Republicans, the East India Company, suicide, Belgian beer, the rich Briefing 24 Mitt Romney
Towa rds the coro nation United States
Dai ly a n a lysis and opi nion from our 19 blogs, plus audio a n d video
28 The recovery and the election
content, debates and a daily chart Economist.comfblogs
2 9 Guantanamo
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Mitt Romney ma rches on
No way out 2 9 H a rs h Laws
Anoth er one in the net 30 Rebalancing America's forces
Downgradi ng Europe 3 2 Lexi ngton
Obama and Iran
Seekin g protection
First published in September1843
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Occupied la nd 43 Banyan
Let them eat yellowcake Middle East and Africa
India
How an ID scheme could help India's poo rest peo ple and serve as a m odel for other countries leader, page 10. Opposition to the scheme, page 39
44 Nigeria
A spreadi ng insurgency 45 South Africa
Disa ppoi ntment Shaki n g the kaleidoscope 4 6 Egypt's religions
Nervous Ch ristia ns Shifting the blame 47 Tunisia
Ideo logy v practica lity 47 Syria and Russia
Wait a n d sea Europe 49 Europe's economies
A false dawn? 50 Germany and the euro
U n happy new year
Executive pay B ritain is a case study in how politicians miss the point when they try to "fix" executive pay: leader, page 11. Bosses' pay levels are driven by globalisation. Moves to li n k pay and performance need to recognise this, page 5 5
50 French tourism
Boney-park 5 1 Greek woes
The Mediterra nean blues 52 Albanians in Greece
3 5 Brazil's trade policy
to take part in "a severe contest between intelligence, which pressesforward, and an unworthy, timid ignorance obstructing our progress. "
M u rky busin ess
That 2 004 feeli ng
The Americas
Volume 402 Number 8767
Cleari ng the air? 41 Abductions in Sri Lanka
46 Rwandan history
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The end of Sodomy 2.0 4 1 Chinese air pollution
46 Israeli politics
27 New H a m pshire's primary
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Reform by n u m bers 40 Malaysian politics
36 Iran and Lati n America
Brothers in arms? 37 Colombia's form er pa ra militaries
Criminals with attitude 3 7 Lima's metro
The train leaves at last
Headi ng home again 53 Charlemagne
Denmark and the EU Britai n 54 Scotland's referendum
If at first you don't succeed 5 5 Executive pay
Money for nothi ng?
Scotland's independence The
referendum should ask one questi o n : in or out? Leader, page 12. Wrangling over the terms of the vote, page 54
56 Terrorists and historians
Deathly archive 56 No-frills hotels
Room without a view 57 Bagehot
Edonomics
� � Contents conti nues overleaf
4
Contents
The Economi st Jan uary
International 58 Video and h uman rights
Visibi lity before a ll 59 Baby names
Than ks, mum
14th 2012
Books and arts 79 The haj on show
Journey of faith 80 El sistema in Venezuela
M usic man 8 1 Prosecuti ng al-Qaeda
Briefing
A tricky busi ness
60 Natural disasters
Kodak and Fuji Why is Kodak at death's door while Fujifilm, its old rival, is th riving? Page 63
Counti n g the cost of ca lamities
Business books quarterly 82 Setti ng a price on the future
Business 63 Technological change
The last Kodak mom ent? 66 Carrefo ur
B read, ch eese, new boss? 6 6 Golden parach utes
Rip-cord eco nomics 67 Brands in China
Fakes lose favour 68 Schum peter
The mathematics of markets 83 Wall Street analysis
Mike Mayo's memoir 83 Global marketing
Local heroes 84 World changers
Natural disasters The
risi ng cost of catastrophes, and how to limitthe damage they do: leader, page 11; briefi n g, pages 60-62
6 9 China's property market
Ma rriages and mergers
8 4 J o b i nterviews
Application 9 2 Economic and finandal i ndicators
Statistics on 42 economies, plus a closer look at our Big Mac index
70 B uttonwood
The euro's descent 71 European ba n k capital
By hook or by crook 7 1 Reviewing the cri sis
crisis of Western liberal capitalism has coindded with the rise of a powerful new form of state capitalism in emerging markets, says Adrian Wooldridge
Headba n ging
Romney the revolutionary Fi nance and economics
N ext week We publish a spedal report on state capitalism. The
Obituary 94 Ronald Searle
How to be Topp i n Art
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Politics
Suu Kyi, whose National League for Democracy party boycotted the 2010 general election, will contest a seat from a constituency near Yangon. The number of seats being contested in the by elections will not pose a threat to the government's domi nance of parliament. Walking it
A row broke out between Pakistan's military leaders
and its government after Yo usaf Raza Gilani, the prime minister, criticised the army chief of staff for participating in a public judicial inquiry. The military responded with a strongly worded statement warning of "serious ram ifications". Mr Gilani also sacked his defence secretary. Meanwhile, America resumed drone missile strikes on Pal�Ioptng a best-practrce donor portfolio m gement to secure higher levels of fundrng fOf GAV1 from current and new donors You W111 have the opportunity to structure nd rrang new fundrng wlndOW5 lookmg t ways to wpport new vc1«rne development You wrll advrst and empower a team ol 1 1 staff to build new publrc and private dooor relatronshtp nd play ll promotion I role 1n gentrllting new busrnesses. Thrs wrll involve coordrnatton wrth the lnnova1rv finance T am to manag rnarketrng of new schemes to donor countrres.. You wrll also le d the development of a donor portfolro management framework nsuring effec:trve rnstruments are In pla<e to m • forecast nd tra\\ \\'. I ll BY
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Big Mac index
The Economist's
Big Mac index is based on the theory of purchasin g-power parity: that, in the long run, exchange rates should adjust to equal the price of a basket of goods and services i n different countries. Our basket consists of one McDonald's Big Mac, and we've compared it with the average price in America, $4.20. Accordi ng to our burgernomi cs, the Swiss fra nc is 62% overva lu ed: the exchange rate that would equalise the price of a Swiss Big Mac with an American one is 1.55 francs to the dollar; the actual exchange rate is only 0.96. The chea pest burger is found in India, where it costs j ust $1.62. Big Macs aren't sold in India, so we've taken the price of a M a haraja Mac, made with chicken instead of beef.
Other markets
Dec 31st 2010 Index one Jan 1 1th week United States (S&P 500) 1,292.5 +1.2 +2.8 +2.8 United States (NAScomp) 2.710.8 +2.4 +2.2 +2.2 China (SSEB, $ terms) 221.8 +4.6 -30.2 -27.1 Japan (Topix) 733.5 -1.3 -18.4 -14.0 !!! ��(����t l_OQ} .J ..Q5� _ _ni!_ _ _:8_:2_ _·1]� World, dev'd (MSCI) 1.204.3 +0.1 -5.9 -5.9 Emerging markets (MSCI) 948.7 +1 . 2 -17.6 -17.6 World, all (MSCI) 305.6 +0.2 -7.6 -7.6 �o!!_d !_o!!_!!� (Ci!j!)!.O.!!.J.I)_ _ 2?l:? _ ..:.Q.i_ _ ..:!:_5.:.?_ _ �·2 597.2 -0.6 +8.3 +8.3 EMBI+ (JPMorgan) Hedge funds (HFRX) 1,119.1 +0.5 -8.1 -8.1 21.1 +22.2 +17.8 Volatility, US (VIX) 176.3 +2.0 +68.5 +59.4 CDSs, Eur (iTRAXX)t CDSs, N Am (CDX)t 116.0 -3.3 +36.2 +36.2 Carbon trading (EU ETS) € 7.0 +7 .5 -50.3 -53.0
in local in $ currencyterms
(levels)
*Total return index. tcredit-default-swap spreads, basis points. Sources: National statistics offices, central banks and stock exchanges; Bloomberg; CBOE; CBOT; CMIE; Cotlook; Darmenn & Curl; EEX; FT; HKMA; ICCO; !CO; ISO; Jackson Rice; JPMorgan Chase; NZ WoolServices; Thompson Lloyd & Ewart; Thomson Reuters; Urner Barry; WSJ; WM/Reuters
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Local currency under (-)/ over (+) valuation against the dollar, %
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Switzerland Brazil Australia
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Canada Euro areal
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Britain Tu rkey Russia China India
For more countries see: Economist.comfbmjan12
Source: McDonald's; The Economist
•
At market exchange rate (Jan 11th 2012) tWeighted average of member countries
The Economist commodity-price i ndex 2005=100 % change on one one Jan 3rd Jan 10th* month year Dollar index
l§i_6 __:ri_2 __:� ..§_ _}�,2_ £2q£ - - - - _j'Q.? :2.. - - �i_8_ - __:+-�2- - �·E..
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213.9
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175.1
179.6
+6.8
-14.6
1,638.1
-1.3
+18.9
102.3
+2.6
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Euro index
All items Gold
l.Rer oz
1,604.0 West Texas Intermediate 103.1
$per barrel
* Provisional !Non-food agriculturals.
Indicators for m o re countries a n d additional series, g o to: Economist.comfindicators
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{
Ronald Searle Ronald Searle, artist, limner of St Trinian's and St Custard's, died on December 30th, aged 9L Nigel Molesworth of St Custard's writes
ART is for weeds and sissies whose mater .1'"\.hav said Take care of my dear little Ce dric, he is delicate you kno and cannot stand a foopball to the head. Whenever anebode mention Art they all sa gosh mikelangelo leenardo wot magnificent simetry of line. Shurely the very pinnackle of western civilisation etc.etc. Pass me my oils Molesworth that I may paint my mas terpeece. The headmaster sa gosh cor is that the medeechi venus hem-hem a grate work so true to life reminds me of young mrs filips enuff said. Molesworth sa on the contry the most beatiful form in art is a Ronald Searle GURL from St Trinian's in a tunick with black suspenders and armed with a hock ey stick to beat the daylites out of another gurl or maybe just a teacher chortle chor tle. Mr Searle sa he hav based her on his sis ter Olive. She hav wild platts and an empty gin bottle in her pocket a sack of poysinous todestools two sticks of dynamite and pos sibly a hippo on a lede while an old crone alias a teacher sa from a window Elspeth put that back AT ONCE. Or she will be sharpening a massiv knife on a grinder with grusome heads of gurls on a shelf be hind and the headmistres will be telling the surprized parent this is Rachel, our head gurl, ha ha ha. We offer every atten tion to your prescious chicks including drunken orgeys wiches sabbaths every
form of the subjunctive in fr. or lat. and cof fin-making for a modest charge. The luvely creaturs of St Trinian's so pleased the publick that Mr Searle sa, peo ple think I have drawn nothing else, I am sick to dethe of them, so he began in 1953 to draw from Geoffrey Willans words the far est forms of St Custard's, viz, Peason my grate frend who hav a haircut like a chim ney brush, fotherington-tomas with curlie hair who believe in fairies, Molesworth 2 my younger bro who is uterly wet and a weed and Grimes the headmaster, alias soho sammy with a face of evil unpar ralled. Not to mention Me n. molesworth brave and feerless wot a noble BOY in his yellow blazer and his cap at a rakkish an gle, a gift to Art with the lite of geenius gleeming from his glasses and an ex preshun that strike fear into every teacher in the skool. Mr Searle hav drawn too the charming scenes of the place, viz, the head master's office with escape runways, the many varities of Kane one with telescopic sights, the Glurk and Lesser Titwort as found in Botany, the hairy gerund as found in lat. chiz chiz, Matron smoking in her room ahem, a corner of the playing fields with pouring rane and a ghastly THING with many feet and claws that is Moles worth 1 about to curse the skool for EVER. Mr Searle left skool at 15 cheers cheers. He was office boy for a solicitors but he
could not stop drawing, even on leegal dokuments scratch scratch, is that a kar toon you have done my lad, yes it is a fanta sy of the future Molesworth, wot a horri ble thing I think you had better leave. Cambridge Art Skool and then in the war camooflaging pill-boxes as haystacks, how about sum more straw round the doorway, perhaps a dunghill outside, how artistick feel free. A mistery voyage to Singapore then fol lowed drawing all the way, but then come the Japs invading, Boom KABOOM!! ach ach-ach-ach-ach, motorbikes roring by, urum-urum-urum-uraaaaaa, too late, into prison camp, still drawing. He staid four yeres there and was six stone when he left. A wunder he could smile agane after see ing men die all around him from cholera or torchure with bodes like sticks, but what he drew afterwards had a savvage melan koly underneath it as the art master sa, old majors with large noses and small hand kerchiefs, dogs that are undoutedly plot ting an evil de de, lugubrioos couples danc ing hem-hem, criket bats and balls killing players at a single blo, a man catching mu sic like flys in ajar, a child-hater selling bal loons that carry the pathetik little weeds far away. Yet in 1961 tired of drawing for Punch or roming America for Holiday magazine he zoomed across to France, where there were long thin men in berets long thin loaves of bred and many swurly balconys besides the usual sad dogs, maniack cats, made moiselles with long eyelashes ahem who sa, how about a good time will you have a glas of Champagne. And he looking au tour de lui sa Houp-la I am so happy here pore as a mouse in my attick in Paris and then on my hilltop in Provence, I will never return to boring old Blighty, but I will work for Le Monde and Le Figaro Litteraire, and also Life and the New Yorker. For I recall that for my first t.v. over there I was paid $1,000 a minit, super smashing good show. And he drew New York City as per ushual very tall and thin and inky humans with bodies still like sticks scowling among the skycrapers but also collossal painted but terflys flutering by, hullo clouds, hullo sun, and giant flowers of many coluours sprowting out of desks. And his Nature was v. grand and beattful red and blue while the spiky tarts and bisnessmen raced round not seing it or ruining it all. And speking of Life, sa silently the long black undertaker in his tall black hat sitting by the grave, I do not think much of that as a titel for a magazine, why not Dethe, but Dethe where is thy sting, where Grave thy victory cry Molesworth (over the WHACK of the Kane), when everbode still kepe larffing at the world Mr Searle hav made. •
Congratu lations to the
201 2 Ka uffman Prize Medal Reci pients
Eri k H u rst and Tob i as M oskowitz Erik Hurst is the V. Duane Rath Professor of Economics and the John E. Jeuc Faculty Fellow at the U niversity of Ch1cago Booth School of Business. An expert in entrepreneurship, macroeconomic policy and housing markets, Hurst researches barriers to entrepreneurship, entrepreneurial finance, and household consumption and financial behavior. Tobias Moskow1tz 1s the Fama Fam1ly Professor of Finance at the University of Chicago Booth School of Business. An expert in entrepreneurial finance, finandal markets and investments, MoskoWitz researches the returns to pnvate business ownership, the political economy of finandal regulation, corporate finance and finanoal networ s. The Ewing Marion Kauffman Prize Medal for
Distinguished Research in Entrepreneurship is awarded annually to recognize scholars under age forty whose research has made a Significant contributiOn to the body of literature in entrepreneurship. It includes a $50,000 cash pnze. This year he pnze is being shared by two outstanding scholars.
