5
9 The world this week
On the cover The cracks appear in Vladimir Putin's Russia: leader, page 13. Routine election fraud turns into full-scale protest, page 55. The upheavals in Russia show how hard it is, 20 years after the system collapsed, for the country to put away its Soviet past, pages 27-30
Leaders 13 Russia's future Cracks appear 14 The rise of political Islam And the winner is .. . 16 Ten years of China in theWTO Shades of grey 16 Another EU summit Beware the Merkozy recipe 18 Video games The serious business of fun Letters 20 On the London Stock Exchange, roundabouts, bond markets, Thomas Cook, diasporas
49
Briefing 27 Russia The Long Life of Homo Sovieticus
52
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Volume 401 Number 8763
First published in September1843 to take part in "a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing
50 51
54 54
United States 31 The election Barack Obama chooses his ground 32 Stimulus and the economy Looking up 32 Transport in Georgia Spare a penny? 34 Technology and dvil liberties Don't shoot 36 Detroit nears bankruptcy Nowhere to run 36 Insider trading and Congress Capitol crimes 38 Tort reform Closing the Lottery 40 Lexington The wretched Middle East
our progress. "
Editorial offices in London and also: Atlanta, Beiji ng, Berlin , Brussels, Cai ro, Chicago, Hong Ko ng, Johan nesburg, Los Angeles, MexlCo C1ty, Moscow, New Delhi, New York, Paris, Sa n Francisco, Sao Pau lo, Singapore, Tokyo, Washington DC
Asia 45 China's economy and theWTO All change 46 Chinese politics and theWTO No change 47 Japan's energy crisis Nuclea r winter 47 Market reform in India Off t heir trolleys 48 Banyan Hornets' nest in Pakistan
The Americas 41 Canada and the United States The bo rder two-step 42 Colombia's floods That damned Nina 42 Mining in Peru Doing the Conga 44 Publishing in Latin America A Literary deficit
Middle East and Africa Political Islam Everywhere on the rise Israel and the Isla mists Oh no! But Let's talk Religious Israelis They're on the ri se too Uncertainty in Iran Did they really mean this? Congo's election It could get worse South Africa's courts President v judges Special report: Video games All the world's a game After page 54
Europe 55 Political crisis in Russia Voting, Russian-style 56 Germany's debt brake Tie your hands, please 56 France and Germany No thanks for the memories 57 Italy's budget Saving Italy 58 Romania's economy Buckle up 58 Macedonia Call it what you want 59 Charlemagne Those obstructive Brits
The Arab spring PoliticaL Islam is on the march-and the West must keep its nerve: Leader, page 14. The Middle East votes for Islamists, page 49. Israel's fears, page 50, and its own fundamentalists, page 51. Why America can never escape the Middle East: Lexington, page 40
Barack Obama The president offers America a new square deal for his re-election campaign, page 31. Anew round of stimulus might help him, page 32
China The world is richer because China was Let into the World Trade Organisation. Now the world's biggesttrader needs to grow up: Leader, page 16. The impact on China of joining the WTO ten yea rs ago , page 45 .The BRICs are also ten years old: Economics focus , page86
~~
Contents continues overleaf
6 Contents
The Economist December lOth 2011
Britain 61 Reforming welfare Nice work if you can find it 62 Shrinking cigars Up in smoke 63 Bagehot God in austerity Britain
Euro crisis The flaws in the Merkozy plan : leader, page 16. The sovereign bond markets hope for a solution, page 79 . Italy's budget, page 57. The British problem: Charlemagne, page 59 . Lessons from the Great Depression, pages 76-78
Special report Video games will be the fastest-growing and most exciting form of mass media over the coming decade: read our special report after page 54. Abit of the entertainment business that many other firms can learn from: leader, page 18
International 65 City building Hong Kong in Honduras 67 Free cities Honduras shrugged Business 69 Macau's gambling industry Awindow on China 70 American telecoms A breath of fresh airwaves 71 Thomson Reuters Screen test 71 Advertising Publicis's durable boss 72 Biotech patents Taking it personally 73 Carmakers Revenge of the petrolheads 74 Schumpeter University challenge Briefing 76 Lessons ofthe 1930s There could be trouble ahead Finance and economics 79 Europe's debt crisis Scaling the summit 80 The IMF and the euro Cash for credibility 80 Mexico's plunging peso jArriba, arriba! 81 Buttonwood The equity gap
Books of the year The best readsof2011, in ourview, page 91. What we wrote when we weren't in the office, page 96
82 Financial accounting Tax cuts that hurt 82 Private equity One careful owner? 84 Helping the poor to save Small wonder 86 Economics focus The BRICs atten Science and technology 87 30 printing The shape of things to come 88 Arthritis Botox as pain relief 90 Human evolution The first mattresses 90 Another Earth? Home away from home Books and arts 91 Books of the year, 2011 Page-turners 96 Books by Economist writers Pens and ink 104 Economic and financial indicators Statistics on 42 economies, plus our monthly poll of forecasters Obituary 106 Socrates Football's philosopher
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9
Politics
Ahead of a European Union summit, Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, called for changes to the European Union treaties to enforce tighter fiscal rules. The pair said they wanted all eurozone countries to introduce laws limiting government deficits, and for spendthrifts to be punished. David Cameron, the British prime minister, came under pressure from Eurosceptic members of his Conservative Party to hold a referendum on any new treaty. In Russia's parliamentary election the ruling United Russia party of Vladimir Putin won just under half the votes, less than it had expected. After widespread reports of voting irregularities Moscow saw its biggest political protests in years. Several prominent opposition figures were arrested and jailed. Elections were held in Croatia and Slovenia. Both were won by centre-left parties; as predicted in Croatia's case, but surprisingly in Slovenia's. Italy's new prime minister, Mario Monti, announced a new austerity budget of €30 billion ($40 billion) in tax rises and spending cuts. The welfare minister broke down in tears as she announced a big shake-up of Italy's generous pension system. After a world-record 541-days, Belgium finally formed a government, under pressure from the markets. The new prime minister is Elio di Rupo, a Socialist from the Walloon (French-speaking) community.
Fundamentalist concerns The Muslim Brotherhood won an even bigger proportion of the vote than predicted in the first of three sets of votes for Egypt's parliament, getting 37% in party lists but raising its seat tally to 46% after a series of run-offs in single-member constituencies. The Salafists, a more extreme group of Islamists, surprised pollsters even more, getting 24% of the vote on party lists and 21% overall after the run-offs. The Brothers said if they won they would not team up with the Salafists but would form a coalition with secularists. The voting is due to end in mid-January. Kuwait's emir dissolved parliament amid a crisis over allegations of corruption. Elections will be held within 6odays. The United States opened a "virtual" embassy for Iranians that offers them services such as visa information. The real American embassy in Tehran has been closed for more than 32 years. Meanwhile, Iran claimed to have shot down an American drone over its eastern border. Laurent Gbagbo, the former president of Cote d'Ivoire, appeared at the International Criminal Court in The Hague. The first former head of state to go before the court, he was charged with crimes against humanity in the aftermath of a disputed presidential election a year ago.
of Mazar-i-Sharif as worshippers gathered, and were a rare form of sectarian violence in the country. The next day, 19 people travelling in a minibus were killed by a roadside bomb in Helmand province. India's communications minister asked Google, Facebook, Yahoo! and Microsoft to screen user-generated content for offensive material before it goes online. The move is aimed at protecting the sensibilities of Indians from blasphemous material, though the volume of content posted online by India's 1oom internet users makes any such regulation impossible. Japan's Fukushima nuclear plant, which was seriously damaged after March's earthquake, was found to have sprung a leak. Some 45 tonnes of contaminated water spilled out of the plant into a nearby wastewater area. Thailand jailed a Thai-born American citizen for two-anda-half-years for criticising the monarchy. Joe Gordon uploaded a blog post about the king written from Colorado, but was arrested when he entered Thailand.
The leaders of 33 countries met in Caracas to found the Community of Latin American and Caribbean States (CELAC). They condemned the American economic embargo against Cuba and supported Argentina's claim to the Falklands (Malvinas). But they did not support a plan by the host, Venezuela's Hugo Chavez, to give CELAC a permanent secretariat or budget. Canada's prime minister, Stephen Harper, and America's president, Barack Obama, signed an agreement called Beyond the Border under which Canada will share information about people entering and leaving the country while the United States will ease some security checks on cross-border trade.
Progressive values Barack Obama went to Kansas, deep in the Republican heartland, to give a big speech on the economy, in which he attacked Republican economic policy and said America was at a "make-or-break moment for the middle class". Mr Obama laid out his case in the same town where Teddy Roosevelt called for a progressive "new nationalism" in 1910.
The new battle of Cajamarca Peru's new president, Ollanta Humala, declared a state of emergency in the northern department of Cajamarca and sent troops to quash protests against Minas Conga, a $4.8 billion gold and copper mining project.
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Two bomb blasts in Afghanistan killed 59 people on the most important day of Muharram, a Shia festival. The bombs exploded near religious sites in Kabul and the northern town
Brazil's Senate approved a reform of the country's Forest Code, reducing the amount of forest cover farmers are obliged to maintain, but requiring them over 20 years to replant areas illegally deforested. This came as the government announced that deforestation in the year to July had fallen to the lowest level since satellite monitoring began 23 years ago.
Herman Cain "suspended" his campaign for the Republican presidential nomination, in effect ending his candidacy. Newt Gingrich is likely to be the main beneficiary of his withdrawal from the race. RodBlagojevich was sentenced to 14 years in prison for a range of crimes, including trying to sell Mr Obama's old Senate seat. He is the second consecutive former governor of Illinois to be jailed for corruption.
~~
10 The world this week
Business Standard &Poor's put 15 of the euro zone's 17 members on negative credit watch (Cyprus is already on the list and Greece is at risk of a default). Along with Italy and Spain, s&P threatened to downgrade its ratings for AAA countries such as France and even Germany, and gave warning that it might also cut the credit rating of the European Financial Stability Facility. Its decision caused outrage in Brussels, with some politicians accusing s&P of retaliating against European proposals to curtail the influence of ratings agencies. s&P cited the increased systemic risk of a failure of the eurozone. The unemployed count America's unemployment rate fell sharply to 8.6% in November, the lowest it has been since March 2009. Much of the decline is due to more people simply giving up looking for work and leaving the labour market, but revised data also showed that job growth was stronger throughout the autumn than had previously been thought. A study prepared for an American natural-gas trade body by IHS Global Insight forecast that shale gas will account for 6o% of all natural-gas production in America by 2035 and support 1.6mjobs. The study projected that capital spending in American shale gas would amount to $1.9 trillion between 2010 and 2035. MidAmerican Energy, a holding company controlled by Warren Buffett's Berkshire Hathaway, said it was buying the Topaz Solar Farm in southern California, which will be one of the largest photovoltaic power plants in the world when it is completed. MidAmerican's boss, Greg Abel, said Topaz shows that solar energy is commercially viable. But following the Solyndra scandal, which cost taxpayers a fortune, spats over green subsidies show no sign of cooling.
The Economist December lOth 2011 BP accused Halliburton, one of its main contractors in the stricken Deepwater Horizon project, of destroying test results from the cement that Halliburton used on the rig before it exploded. A court in New Orleans is to hear claims for damages related to the resulting oil-spill disaster in the Gulf of Mexico. Halliburton said that BP had chosen to "mischaracterise" the tests, which have "little or no relevance to the case".
I
A panel investigating an accounting scandal at Olympus produced a damning report on the Japanese company's management, which it described as "rotten". Headed by a former judge on Japan's Supreme Court, the panel detailed the scheme that executives allegedly used to hide investment losses by parking them in offshore funds. Olympus, which commissioned the report, is being investigated in Japan, America and Britain. The entire board is expected to step down soon.
which reached15 billion app downloads in July. Research In Motion said it was writing down its inventory of BlackBerry PlayBooks by $485m because of the steep price discounts being offered by retailers for the tablet. It is another blow for the maker of the BlackBerry, which is struggling in the market for smart devices. The PlayBook hit the stores at $500 but can now be bought for $200. RIM's share price has fallen by 70% so far this year.
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Brazil's economy was all but flat in the third quarter compared with the previous three months (but grew by 2.1% compared with the same quarter in 2010). The global slowdown has hurt capital spending and the industrial sector in Brazil, but most analysts were surprised by the quarter's plunge in consumer spending, which accounts for 6o% of the economy.
Two big online gaming firms set the price range for their respective initial public offerings later this month. Nexon, which attracts nm players a month, hopes to raise $1.2 billion on the Tokyo Stock Exchange in what will be Japan's biggest IPO of the year. Zynga, which boasts 26om garners, hopes to raise a similar amount as it floats 14.3% of the company, giving it a market value of around $7 billion. Both are expected to be heavily oversubscribed. App, app and away! Google marked the download of the 10-billionth app from its Android store; it sold the 9-billionthjust a month ago. It is catching up fast with Apple,
A closed shop India's government backtracked on its recent decision to open up the country's retail industry to foreign supermarkets in the face of protests whipped up by politicians. Indian shoppers would have benefited from lower prices and investors had celebrated the proposed reforms. But middlemen, who would have suffered, objected. In China competition regulators approved Nestle's acquisition of Hsu Fu Chi, which makes sweets and biscuits, in one of the biggest foreign takeovers of a Chinese firm. Other economic data and news can be found on pages 104-105
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13
The cracl<s appear Vladimir Putin should clean up the Kremlin and modernise the economy-for Russia's sake and for his own
USSIA'S elections are not in-
R tended to produce surprises,
just as its streets are not meant to heave with protesters and its politicalleaders are not supposed to be publicly booed. The country's "managed democracy", with the media muzzled, only tame opposition candidates allowed and widespread vote-rigging, is designed to hand big victories to Vladimir Putin and his United Russia party. Yet the Duma election on December 4th produced an upset: United Russia's share of the vote fell from 64% to under so%, giving it only a slim majority. Even more remarkably, demonstrators took to the streets in the biggest protests Russia has seen in years, chanting "Russia without Putin" before troops poured in to stop them (see page ss). Smaller protests took place in other cities. Now some 17,000 people have signed up for a protest on December 10th in Revolutionary Square, Moscow's main public space. The government has asked them to find a different location. These events constitute the biggest crack in Russia's regime since Mr Putin first came to power in late 1999. That they are happeningjust as he prepares to return next March for at least another six years as president is no coincidence. Mr Putin's power has rested on two foundations. One is that, despite his government's contempt for human rights and his tolerance of the kleptocracy around him, Mr Putin had legitimacy because he was personally extremely popular. The other is that, thanks largely to ever higher oil prices, he was able to ensure steadily rising living standards for Russians. Both foundations now look fragile. That does not portend an imminent end for Putinism; but for the first time, the prospect of a post-Putin Russia no longer seems fantastical. That should be a wake-up call for Russia's leader to embrace reform. The popularity stakes Mr Putin starts with certain strengths. His people are hardly yearning for liberalism: in a recent poll by the Pew Foundation, Russians, by a margin of 57% to 32%, preferred to rely on strong leadership rather than democracy to deliver good government. And by the standards of leaders elsewhere, Mr Putin still seems pretty popular, with approval ratings of around 40%. Nothing is likely to stop him winning the presidency in March. But opinion is clearly moving against him. Mr Putin, who is now prime minister, saw his popularity start to fall the moment in September when he announced his plan to swap jobs with Dmitry Medvedev, the puppet he installed as president after his first two terms ended in 2008. Soon afterwards Mr Putin was booed at a martial-arts contest-a staggering idea only a few months ago. He cancelled further public appearances, but the substitutes he sent were booed in his stead. This may not be a "Ceausescu moment", when a coddled dictator wakes up to popular fury. But it is still a big shock. A bigger problem for Mr Putin is that the demands of the economy and of his political operation are increasingly in conflict. In order to hold on to power, he has kept a tight grip on the
economy. As a result both Russia and the regime's patronage system remain heavily dependent on oil and gas. Corruption and inefficiency mean that the budget will not balance unless oil prices stay around $no a barrel-which, given the grim global outlook, they are not likely to. Capital and talent are fleeing an economy that offers few opportunities. Growth rates are likely to come down. Without rising living standards, resentment against the government is likely to swell. Twenty years ago, a similar contradiction between politics and economics brought down the Soviet Union (see pages 2730). Weirdly, Mr Putin seems to welcome comparison with this period. He touts as his new foreign-policy priority a "Eurasian Union" of former Soviet republics, and he lets his supporters praise the Brezhnev years-another period in which stability turned to stagnation. Yet he must fear the possibility that resistance to his regime, too, will grow. Can he avoid it? Mr Putin presents himself, first and foremost, as a strongminded patriot. If he has his country's interests at heart, he will respond to rising discontent by opening up the economy and curbing corruption. The criminal-justice system has become a tool of the Kremlin and its commercial allies. Russians of all sorts loathe such cronyism. Both Mr Putin and Mr Medvedev have talked about tackling graft, but done nothing. If they took action, they would lose some power, but win kudos. The alternative is more repression. The decision to call in the troops suggests this is Mr Putin's chosen route. He may entrench his hold in other ways-perhaps by distancing himself from United Russia, widely derided as "the party of crooks and thieves", or by dumping Mr Medvedev as prime minister. Seasoned observers also expect imagined threats to the state, to which the government reacts by cracking down. For a model, Mr Putin needs only to look next door to Belarus, where Alyaksandr Lukashenka clings on as Europe's last dictator. Such an approach may work, for a while. His regime has a tight enough grip on the security services to suppress dissent for some time. Yet as the old Soviet Union found (and today's Belarus is finding), economic problems make repression harder to sustain. With the internet watching, it is also difficult to keep engineering large-scale voting fraud. There is a growing risk of a social and political explosion in Russia, even if it is too early and the opposition is too disjointed for there to be much hope of a Russian spring. Don't bet on a falling tsar The idea has taken hold abroad that Mr Putin's regime, though mildly distasteful, provides stability. That has proved wrong. As many Western companies have found, Mr Putin has failed to build the rules-based system that provides the economic security foreign investors need. Nor, as recent events suggest, has he delivered a political equilibrium. It is not just this week's protests that are a reason for concern: rising lawlessness in the north Caucasus may cause problems notjustfor Russia, but for the entire region. Russia is not stable. It is rigid. Unless its tsar moves to reform his realm, it will become more dangerous-both for its neighbours and for Mr Putin himself. •
The Economist December lOth 2011
14 Leaders Isla mists, elections and the Arab spring
And the winner is ... Political Islam is on the march. The West should keep its nerve
~~~~~:j~ IS THE Arab spring turning into ~
bleak midwinter? Earlier this year the revolutions sweeping through the region seemed encouragingly modern and secular. Indeed, the young Facebookers and Twitterers braving the bullets in Cairo and Tunis seemed to give the lie to the dictators' claims that the only alternative to the thuggery of a strongman was mullah-led theocracy. But look across the Arab world today and political Islam has jumped to the fore (see page 49). Egypt offers the most dramatic example. The relatively mild-mannered Muslim Brotherhood, the best-organised of the Arab movements espousing an ideology that bases its message on the texts of Islam, is winning the three-stage election to Egypt's parliament by a wider margin than pundits predicted, with 46% of the seats so far. Far more frightening is the party coming second, with 21% of the seats. The Salafists, whose name denotes a desire to emulate the "predecessors" who were early followers of the Prophet Muhammad, decry alcohol, pop music and other aspects of Western lifestyle. They want to ban interest in banks, think women should cover themselves and stay at home, would segregate the sexes in public, might turn Christians, around a tenth of Egypt's Ssm people, into second-class citizens and denigrate Jews, not to mention the people of Israel. Assuming that the two Islamist parties do no worse in the next two rounds this month and next, generally in more conservative areas, they will control a clear majority of seats; the only question is whether the Brothers will keep their promise not to team up and rule together. Under a Crescent Moon In Tunisia and Morocco Islamists of a similar stripe to the Brotherhood have handsomely won elections. In Libya, with Muammar Qaddafi gone, they may yet do so too. In Syria they are prominent in an opposition front that may eventually displace Bashar Assad. And in Palestine the Islamists of Hamas, a branch of the Muslim Brothers that still on paper rejects the state of Israel, are as secure as ever in control of Gaza. Even in chaotic Yemen, an Islamist party might well emerge as the biggest party if elections are held as promised. In Iraq Muqtada al-Sadr, a fiery mullah, has the power to veto decisions he dislikes-and has succeeded in enforcing the removal of all American troops by the end of the year. Though unchallenged at any ballot box, the royal rulers of Saudi Arabia remain in hock to a deeply intolerant clerical establishment. Moreover, the two other great peoples of the region, the Turks and Persians, are both under the sway of governments with an Islamist label, albeit of wildly different hues. Indeed, political Islam now has more clout in the region than at any time since the Ottoman empire collapsed almost a century ago, and perhaps since Napoleon brought a modernising message to the Arab world when he invaded Egypt in 1798. All this is worrying, not just for secular liberal Arabs but also for the West. On the election trail, Barack Obama is being
attacked for his naive trust in the Arab spring and for not doing more to protect Israel. That will surely only increase as the scale of political Islam's success becomes evident. Are the sceptics who said that Arabs could not handle democracyand would inevitably elect nasty people who would never surrender power-being proved horribly right? The answer is no. Until the Brothers actually take power, it is hard to say with certainty where the dominant mainstream of political Islam stands. But most of the signs are that it is a long way from both its intolerant caricature and the tenets promoted by some of the Brothers' predecessors a generation ago. Indeed, the most striking feature of the Arab spring remains the complete failure of violently radical Islam. Al-Qaeda, the murderous perversion of Islam responsible for felling the Twin Towers and for countless other atrocities against Muslims as well as Christians and jews, has entirely failed to make its presence felt. As peaceful political Islam advances, alQaeda and its violent jihadi friends have retreated to the remotest patches of Yemen, Somalia and the Sahara desert. That would be small comfort for liberal Egyptians if the Brotherhood teamed up with the Salafists and then claimed a democratic right to expunge secularists from governmentand from most of Egypt's institutions. But that does not seem likely. The Brothers have repeatedly insisted that they will uphold the rights of women and religious minorities and respect the verdict of the polls, even if it goes against them. They say they will not enforce the veil or immediately ban alcohol. As in Tunisia and Morocco, they will seek to rule in coalition with secularists. As in Turkey, they want the generals who used to rule and persecute them to go back to their barracks. They will be keener to support the Palestinians than Hosni Mubarak was, but do not want to tear up the peace treaty with Israel. The main reason for Islamists' popularity is their hatred of corruption, the scourge of secular dictatorships throughout the region, and their promotion of justice and dignity, words that have resonated in the Arab spring even more than democracy. The Islamists appeal to the poor, often by providing a rudimentary welfare system via the mosque when state provision has been lacking. Their political appeal lies in their ability to get things done. Their Turkish counterparts offer a mostly hopeful example of vigorous democracy, free media and economic liberalisation, even if the Turkish prime minister has sometimes betrayed an unpleasantly authoritarian streak. Risky and messy None of this will be easy for outsiders. The foreign policy of Egypt, the Arabs' leading country, is likely to be less amenable to the West. Even mild-mannered Islamists may still prove narrow-minded on some scores. But that is no reason for the West to desert them, let alone hark nostalgically back to the era of secular strongmen. Democracy entails risks. It is often messy. Like people everywhere, Arabs may make bad choices. Political Islam comes in many shapes and guises. So far, the version emerging as predominant seems relatively benevolent. Grit your teeth and cautiously welcome it-in the hope that the Arabs turn away from the more malignant variety. •
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16 Leaders
The Economist December lOth 2011
Ten years of China in the WTO
Shades of grey It was right to let China in. Now the world's biggest trader needs to grow up
HINA'S efforts to join the World Trade Organisation Since WTO accession, $2010 trn (wTo) dragged on for 15 years, 1.6 long enough to "turn black hair 1.2 white", as Zhu Rongji, China's 0.8 former prime minister, put it. 0.4 (His own hair remained Politbu2001 03 05 07 09 10 ro-black throughout.) Even after membership was granted, ten years ago this week, Mr Zhu expected many "headaches", including the loss of customs duties and the distress of farmers exposed to foreign competition. Yet the bet paid off for China. It has blossomed into the world's greatest exporter and second-biggest importer. The marriage of foreign know-how, Chinese labour and the open, global market has succeeded beyond anyone's predictions. It is instead China's trading partners who now contemplate its WTO membership with furrowed brows (see page 45). They have a variety of complaints: that China exports too much, swamping their markets with cheap manufactured goods, subsidised by an undervalued currency; that it hoards essential inputs, such as rare earths, for its own firms; and that it still skews its own market against foreign companies, in some cases by being slow to implement WTO rules (notably on piracy), in others by suddenly imposing unwritten rules that are unfavourable or unknowable to foreigners. The meddling state lets multinationals in, only to squeeze them dry of their valuable technologies and then push them out. Much of this criticism is right. China made heroic reforms in the years around its WTO entry. That raised expectations that it has conspicuously failed to meet. It signed up for multilateral rules, but neglected the rule of law at home. Free trade did not bring wider freedoms, and even the trade was not exChina's foreign trade
C
actly free. It is in China's interest to liberalise its exchange rate further, to prevent local officials from discriminating against foreigners and above all to do far more to support the global trading system. The WTO is undermined when any member flouts the rules, never mind one as big as China. Too big to be a bystander-or to be kept out But China's sins should be put into perspective. In terms of global trade consumers everywhere have gained from cheap Chinese goods. Chinese growth has created a huge market for other countries' exports. And China's remaining barriers are often exaggerated. It is more open to imports than Japan was at the same stage of development, more open to foreign direct investment than South Korea was until the 1990s. Its tariffs are capped at 10% on average; Brazil's at over 30%. And in China, unlike India, you can shop at Walmart, most of the time. As for the hurdles foreign firms face in China, they are disgraceful-but sadly no worse than in other developing countries. The grumbles are louder in China chiefly because the stakes are higher. Foreigners may have won a smaller slice of China's market than they had hoped, but China is a bigger pie than anyone dared to expect. Had China been kept out of the WTO, there would have been less growth for everybody. And the WTO still provides the best means to discipline and cajole. Rather than delivering congressional ultimatums, America and others could make more use of the WTO's rules to curb China's worst infractions. So celebrate China's ten years in the WTO: we are all richer because of it. But, when it comes to trade, China's rulers now badly need to grow up. Their cheating is harming their own consumers and stoking up protectionism abroad. That could prove to be economic self-harm on an epic scale. •
The EU summit
Beware the Merkozy recipe The euro crisis cannot be solved by yet another one-sided solution HEN the history books are written, will December 8th-9th be seen as a turningpoint in the euro crisis? That is when Europe's leaders were due to meet for the latest in a string of much-ballyhooed summits at which they repeatedly promise big reforms to their rules to save the single currency. As The Economist went to press, the focus of this summit was already clear, thanks to a deal on December 5th between the two people who matter most: the German chancellor, Angela Merkel, and the French president, Nicolas Sarkozy. It will be all about tightening the euro's fiscal rules. The "Merkozy" duo have decreed that the priority should be a march towards
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greater fiscal discipline, to be enforced by strong referees. Yet such a priority is dangerously lopsided. If the euro is to survive, Europe needs a more balanced plan to build the fiscal and financial integration that matches today's monetary union. Finding ways to police governments and prevent fiscal profligacy is part of that. But it is only part; it is not the most important component; and, on its own, it is unlikely to work. A set of incomplete ingredients Consider, first, what Mr Sarkozy and Mrs Merkel have agreed to. By the end of March 2012 they want the European Union's member governments (ideally all27, but if need be only the 17 that are in the euro) to sign up to an overhaul of the fiscal rules. Euro members would enshrine both debt and deficit ceilings in their constitutions. The European Court of Justice would de-
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The Economist December lOth 2011
18 Leaders ~
termine whether this national legislation was sufficiently binding. Sanctions on countries that broke the ceilings would be more automatic than they are now. Whether or not all this requires a full-blown-and disruptive-change to the EU treaties is a matter of anxious debate. The president of the European Council, Herman Van Rompuy, thinks much can be done simply by changing a protocol; Mrs Merkel thinks that is not enough. The British prime minister, David Cameron, is already being awkward (see Charlemagne). But in any case such reforms, for all the political brouhaha surrounding them, will not be enough to solve the problem. The odds of deterring a malfeasant country with fines, however semi-automatic they may appear, are slim. And the flouting of fiscal rules was not the only, or even the main, cause of the problem in the first place. To day's crisis is less about fiscal profligacy than about investors' fears for the euro's sustainability and their flight from peripheral assets. In the short run an obsession with austerity could make matters worse by deepening recession. And without a framework for common financing, investors' confidence will not return. On this score the Merkozy vision offers nothing. Mrs Merkel persuaded Mr Sarkozy to rule out jointly issued Eurobonds.
He got her to water down the idea that private bondholders must take a hit whenever countries get into trouble. The hope seems to be that tough talk on fiscal discipline will be enough to persuade the European Central Bank that it should step in more boldly. Mario Draghi, the ECB president, has indeed hinted that a "fiscal compact" could elicit such help. But there is no strategy on the bigger question of how and how far euro-zone countries should go towards joint liability for some debts. This is crucial. The past ten years provide ample evidence that fiscal rules alone are not enough (and if you want to be really scared, look at Europe's experience in the 1930s of monetary rigidity without a lender of last resort-see pages 76-78). If, however, new stricter rules were combined with some form of joint liability, then there would be a reward for good behaviour and also a credible sanction: any country that overstepped its fiscal limits could not benefit from Eurobonds. That would still leave a lot of other things to do, including structural reforms to boost competitiveness and the creation of a truly European banking system. But the core of the solution has to be the link between good behaviour and joint liability. Otherwise this will be just another much-ballyhooed summit that fails to save the euro. •
Video games
The serious business of fun A bit of the entertainment business that many other firms can learn from
LD stereotypes die hard. Picture a video-game player and you will likely imagine a teenage boy, by himself, compulsively hammering away at a game involving rayguns and aliens that splatter when blasted. Ten years ago-an aeon in gaming time-that might have borne some relation to reality. But today a gamer is as likely to be a middle-aged commuter playing" Angry Birds" on her smartphone. In America, the biggest market, the average game-player is 37 years old. Two-fifths are female. Even teenagers with imaginary rayguns are more likely to be playing "Halo" with their friends than solo. Over the past ten years the video-game industry has grown from a small niche business to a huge, mainstream one (see our special report). With global sales of $56 billion in 2010, it is more than twice the size of the recorded-music industry. Despite the downturn, it is growing by almost 9% a year. Is this success due to luck or skill? The answer matters, because the rest of the entertainment industry has tended to treat gaming as being a lucky beneficiary of broader technological changes. Video gaming, unlike music, film or television, had the luck to be born digital: it never faced the struggle to convert from analogue. In fact, there is plenty for old media to learn. Video games have certainly been swept along by two forces: demography and technology. The first gaming generation-the children of the 1970s and early 198os-is now oveoo. Many still love gaming, and can afford to spend far more on it now. As gaming establishes itself as a pastime for adults, the social stigma and the worries about moral corruption that have historically greeted all new media, from novels to pop
0
music, have dissipated. Meanwhile rapid improvements in computing power have allowed game designers to offer experiences that are now often more cinematic than the cinema. But even granted this good fortune, the game-makers have been clever. They have reached out to new customers with new gadgets: Nintendo's Wii console showed that games with cross-generational appeal can make money faster than a virtual Rafael Nadal returns your puny serve. They have branched out into education, corporate training and even warfare, and have embraced digital downloads and mobile devices with enthusiasm. Big-budget shoot-' em-up franchises such as "Call of Duty" and "Halo" are still popular, but much of the growth now comes from "casual" games that are simple, cheap and playable in short bursts on mobile phones or in web browsers. "Angry Birds" has been downloaded so om times. On to the next level The industry has excelled in two particular areas: pricing and piracy. In an era when people are disinclined to pay for content on the web, games publishers were quick to develop "freemium" models, where you rely on non-paying customers to build an audience and then extract cash only from a fanatical few. In China, where piracy is rampant, many games can be played online for nothing. Firms instead make money by selling in-game perks and "virtual goods" to dedicated players. China is now the second-biggest gaming market, but does not even rank in the top 20 markets for the music business. As gaming comes to be seen as just another medium, its tech-savvy approach could provide a welcome shot in the arm for existing media groups. Time Warner and Disney have bought games firms; big-budget games, meanwhile, now have Hollywood-style launches. Homo ludens is here to play. •
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20
Measuring stock exchanges
What's sauce for the Greeks ...
SIR- You asserted that the merger of the financial exchanges in Tokyo and Osaka would create the world's thirdlargest market, overtaking the London Stock Exchange ("Listing, not keeling", November 26th). The statistics used to calculate this ranking measure only domestic and not internationa! market capitalisation of the world's exchanges. London remains significantly larger than the soon-to-merge Japanese entity. The omission of internationa! market capitalisation barely shifts Japan's combined standing, as the Tokyo Stock Exchange has only 12 internationa! listings and Osaka fewer than that. London is home to 326 international listings, which, when added to Loncion's domestic market capitalisation, gives a total value of $5.75 trillion, approximately $2 trillion more than the future Tokyo-Osaka exchange. One of London's abiding strengths is its openness to overseas companies, internationa! investors, entrepreneurs and ideas. To ignore that is to sell London short.
SIR- One could not help but notice the contradictory arguments put forth in separate leaders in your November 26th issue on the euro and the failure of the "supercommittee" in Washington to reach agreement on reducing America's deficit. The headline to your leader on the euro asked "Is this really the end?", and criticised Germany for refusing to take the pressure off indebted countries by backing Eurobonds. One page later, in "A downgrade for Congress", you came to the conclusion that it will take a "terrifying bond crisis" to force American politicians to act on the deficit. So in Europe, Germany is to remove all market pressure from debt-laden countries as soon as possible, but in America more bond market pressure is needed to enforce reform?
XAVIER ROLET
Chief executive officer London Stock Exchange Group Driven round the bend SIR- Residents of Indiana may think a traffic roundabout to be a novelty ("What goes around", November19th), but inN ew Jersey traffic circles have been in use during the 6o years that I have lived here. Despite this history, locals and visitors have never quite got the hang of them. An afternoon's entertainment can be had by setting up a chair and watching people attempting to navigate one. Some speed up and hope for the best. Some stop and get rear-ended. A few motor straight across the centre island. Some find it difficult to read signs while driving in a circle. This is always accompanied by horns, rude gestures and the sound of metal and plastic being deformed. ROGER TIMPSON
Short Hills, New Jersey
question of any tour opera tor's failure causing the CAA to collapse. ANDREW HAINES
Chief executive Civil Aviation Authority
London Over the hills and far away
MARTIN STOEBE
SIR- The Economist's continued defence of the value of migration in human development is impressive ("Weaving the world together", November 19th). However, your briefing could have gone beyond economics. Many of the most vibrant diasporas are those whose members have left conflict and crisis behind, Somalis, Afghans and Iraqis for instance. There is increasing evidence that these transnational diasporas' remittances, as well as the social capital and skills they accumulate through migration, play a vital role in preventing further displacements.
Hamburg
KATY LONG
Britain's aviation regulator SIR- You suggested that if Thomas Cook, a struggling travel agency with a big presence on the British high street, were to cease trading, the Civil Aviation Authority would "probably go under, too" ("A tour operator's travails", November 26th). This is not the case. The CAA runs the ATOL scheme, which protects package holidaymakers if their tour operator stops trading, repatriating them if they are overseas and refunding them if they are yet to travel. The scheme is backed by the Air Travel Trust Fund, which is financed by a £2.50 ($3.90) levy on every ATOL -protected holiday, bank borrowing facilities and a backup insurance policy. ATOL is a statutory scheme, created and backed by the government. As such, anyone booking an ATOL-protected holiday can be confident they will be looked after should their operator fail. The CAA is financed entirely separately to ATOL, with charges levied on industry for its regulatory services. Contrary to your claim, there is no
Department oflnternational Development LondonSchoolofEconomics SIR- The age of jet travel, transcontinental commuting and internet connectivity has no doubt enabled the spread of mass migration without migrants incurring the isolation and demoralising home sickness of the past. The a!most instantaneous opportunity to interact with family and business partners in distant countries confers mutual support. But I wonder whether this ease of access to the country of origin also reduces the incentive to socialise and mix with local communities in the countries that migrants have relocated to. Efficient transport and realtime communications with the folks back home could unintentionally make migrant communities more insular.
become a responsible and successful individual who adhered to the laws and customs of the adoptive country. I would never have thought of imposing customs from the society I left behind. Unfortunately, this notion seems to have become a thing of the past. ILONA DUNCAN
Heathsville, Virginia SIR -Your account of the politics of illegal immigration in the United States was woefully naive ("Crying wolf", November19th). You described illegal immigration as a "disappearing problem" that Republicans needlessly worry about. As a Hispanic-American who leans Democratic, I agree that most illegal immigrants have something to contribute. And yes, illegal immigration has, overall, been in decline. But you went further and seemed to be wholly against any attempt even to patrol or guard our borders. Additionally, you completely ignored the surging problem of the drug wars that have already scarred Mexico and are slowly seeping into the American south-west. Every day, drugs and weapons are smuggled into the country through vehicles, tunnels, or blatantly in plain sight. JOSEPH CARIZ
St Petersburg, Florida -I found your briefing on diasporas to be very interesting (I have recently returned to Indonesia after graduating from the University of Birmingham). But what I really enjoyed were the captions that peppered your article: "The immigrant song", "In through the out door", "Rambling on" and so on. I assume that you too are a big fan of Led Zeppelin. SIR
YOOPI ABIMANYU
Jakarta •
JOSEPH TING
Brisbane, Australia SIR- I arrived
in America with a suitcase and a dream 45 years ago. At that time one needed a sponsor or firm employment in order not to become a public burden. The dream was to
Letters are welcome and should be addressed to the Editor at The Economist, 25 StJames' s Street, London SWlA lHG E-mail: letters @ economist.com Fax : 020 7839 4092 More letters are available at:
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Women and work
Festival voices
Baroque ain't everything
Should more be done to increase women's participation in the workforce? Expert guests convene at our online debating site to discuss the motion "This house believes that a woman's place is at work". The floor is open for your comments, and the result depends upon your votes
Geoffrey HilL considered one of the best poets writing in English, is appearing at The Economist's inaugural Books of the Yearfestivalalong with Simon Sebag Montefiore, Janine de Giovanni and others. He spoke to us about politics, art and the impact of religion on his work
Who would swap Vienna for boring Geneva or grey Prague? Alas, companies locating a regional headquarters for central and eastern Europe are putting good communications, infrastructure and an internationally minded labour force ahead of grand opera and Sachertorte
Economist.comfdebates
Economist.comfmultimediafculture
Economist.comfnode/21541287
Europe: This time it's serious
Middle East: Portraits of a revolution
Business: Talking with Richard Branson
Our correspondent reports from the latest euro summit, as Angela Merkel and Nicolas Sarkozy present their plan to fellow leaders
AGerman-British artist has been painting Syrians during the uprising
Doing good does not have to hurtthe bottom line, say the authors of a new book about corporate philanthropy
Economist.comfnode/21541330
Economist.comfnode/21541331
Economist.comfnode/21541334 Asia: Bombay naval-gazing
Avideographic breaking down the November data on America's presidential election
ASunday afternoon spent by the Gateway of India, watching the gunboats, cameraphones and flying colours go by
Economist.comfnode/21541321
Economist.comfnode/21541251
United States: Jon Huntsman comes to town
Business education: No research required
Aphotographic look at a Republican candidate's tour of New Hampshire
Should it matter to students whether a business school has a strong research base? Our diaristthi nks not
United States: Amonth of surprises
Technology: RegulationVille
South Koreans are among the world's biggest consumers ofsmartphone apps, but mobile games have not really taken off-until now Economist.comfnode/21541275
Economist.comfnode/21541233
Economist.comfnode/21541322 Africa: Until death do us part
Abillcriminalising same-sex marriage in Nigeria could hinder the efforts of groups helping those most at risk of AIDS
Culture: Loonytunes
Economist.comfnode/21541328
Economist.comfnode/21541257
Companies sometimes choose rather odd music to accompany their adverts
Europe: The busy Balkans
The centre-left wins elections in Slovenia and Croatia; Macedonia wins an international-court ruling; and Serbia anxiously awaits a verdict on its EU bid Economist.comfnode/21541274 Links to all these stories can be found at Economist. com/ node/ 215413 51
23
Executive Focus Director Po itions at the Umted Nations (0-2) Do you drive for change and improvement without accepting the t tus quo? Do you have excellent m nagement and leadership kills? The United Nations is looking for dynamic, experienced leaders for the following positions in NewYork: • Director of the Field Budget and Finance Division in the Department of Field Support • Director of the Peacekeeping Financing Division in the Office of Programme Planning, Budget and Accounts These senior positions require representation before the United Nations legislative bodies as well as strategic direction for the development of International Public Sector Accounting Standards (IPSAS) and Enterprise Resources Planning (ERP). Education: A Master's degree or equivalent in management, accounting, finance, economics, business administration or a related area. Work experience: A minimum of fifteen years of progressively responsible experience in budgeting, finance or programme management. res ron I e
Applications ror
~.;ourageo .
Investment Climate Specialists IFC, a member ol th World Ban Group, IS the large global development In ubon focused on the pnvate sector in developmg countr1es We create opportun1ty for people to escape poverty and Improve the r 1 s We do so by prov!drng flllanctllg ID help busmesses employ more people and supply essential serviCes. by moblh21fl0 capital from others and by dehvenng ad\'lsory servas ID ensure sustainable development IFC manages the Investment Climate AdV150rY Sef\llces of the WOI1d Bank Group wfllch offers d1ent govemm nts a wide range of sef\llCes to !ISSist them n cmprovmg the legal and regulatOfy frameworks for doing buscness and attractJng Investment Our work focuses on several d mef1Slons. Bustness regulabon, trade log1st1CS. busln taxatiOn, Investment poiJCY, Insolvency, program 1n agnbu ine 1nf tructure nd oth r Industries, and pubUc-pnvate dlalogu . Improving e inv tm nt dtmate In Sub-Saharan Atr1ca IS a strategl prtortty !of the or1d Bank Group. To further scale up the tmpact and u ainabilrty of our work, the IFC IS reaultulQ Investment Climate Specialists who II deSign, tmplement and mon1tor investment dtmate reform programs. coordtnate relationships across the WOI1d Bank Group, With donors and other external takeholders. partiCipate In knowledge building and dl m1naoon. and prov!de guidance to staff and external consultants IFC reau
Country and Regional Zambia, Uganda, Gu nea, Cote d'lvoire, S erra Leone, Central Africa Program Managers Positions based 1n Lusaka & Kampala Pos. 112454; Freetown, COnakry & AbidJan Pos. 112453; Oouala Pos. 112452. Senior/Operations Officers
Agribu ine and Infra tructure Positlons based 111 Oakllr & Nairobi: Agnbusiness Pos. 112455 & 112456: Infrastructure Pos. 112457 & 112458 Regulatory Refonms - Bus ness Regulation lnve tment Policy, Debt Resolution, Business Taxation PoSitions based in Dakar & N8JI'Obr Debt ResolutJon Pos 112464. Busmess RegulatJon Pos. 112461 & 112462. Business TaxatJon Pos 112465. Investment Climate Programs - Private-Public Dialogue, Industry Investments, Economics PosltJOns based 111 Dakar & Natrobl' Pnvate PUbliCDialogue Pos. 112468; Industry Investments PrJ 112463. Econorm Pos. 112469 & 112470. lnfonmatlon Technology PosltJons based m Nairobi & Dakar or AcerB Pos 112459 & 112460.
All carldldate are e pected ID have an advanced university degree equrval nt to a ster' degree, 5 to 8 or more y rs ol profesSJonal e perieoce in an ea related to lnve tment Climate ISSUes. soltd expenence In the1r re pectJve It ld of experll , and be able d monstrate strong knowledge about Sub-Saharan Alnca For detailed jOb informabon and to apply on-line. pte vi I the IFC career website at www.ifc.org D adhne Is January 9, 2012
IFC offers rewaro'ng careers In a glObal enYironmen . Women are encouraged to apply.
The Economist December lOth 2011
24
Executive Focus F
BURGH
d
I
Appointment of the Head of the Business chool The Un1verS1ty ol Edinburgh Business School Is a dynam1c, growing School w1ttun the wood-leadmg Umversity of Ed•nburgh Offering a Wide ranging undergraduate degree portfoliO. high-quahty MSc programmes to a truly intemauonal student body, an MBA that ran s 13th n Europe and 88th 1n the world and a flounshmg PhD programme, the School IS eKc pt10nally well-positioned to conunue Its JOurney to establish 1tsell as a world-lead•ng School for Busmess at the heart of one of the world's most respected res arch ntensrve umvers1 es Th UntverSity Is se klng to appoint a new Head ol the Business School Cand•dates lor thiS pos1tlon Will be expected to demonstrate leadership of the h1ghest cahbr , strong research cred1b1hty, excellent representa!Jonal and ambassadonal qualities. a record of developtng and strengthening relationshipS with leacling busmesses. peer 1nslltut10ns and busmess schools whtlst lead1ng a team of academiC and admlmstratrve colleagues For further details and to apply, please vi it www.perret11aver.com'candidate , quoting reference 0953. Applications clo midday on Wednesday 11th Jan ry 2012. Comm• Equahty anc1 1ty The Unhl'efllty of Edonburgh IS a ch r a e body w h r~.stra oon number SC005336
reg
red 1n Sc:o
nd
International Oil Pollution Compensation Funds
HEAD, CLAIMS DEPARTMENT (Vacancy N°20 ll-06) The International Oil Pollution Compensation Funds (IOPC Funds) are three intergovernmental organisations (1992 Fund, Supplementary Fund and 1971 Fund) which provide compensation for pollution damage resulting from oil spills from tankers. Compensation is governed by an international regime elaborated under the auspices of the International Maritime Organization (IMO). At present, 105 countries belong to this regime. The IOPC Funds are administered by a joint Secretariat, based in London, with 32 staff members. Detailed information on the role ofHead, Claims Department, including the main duties and responsibilities, as well as qualifications and experience required, can be found on the Funds' website www.iopcfund.org. Applicants should have an advanced university degree or equivalent qualifications in an appropriate field (law/law of torts; finance; accounting; science) and significant relevant professional experience at a managerial level. Experience of working in an international environment; a solid foundation in the Civil Liability Convention and the Fund Conventions; experience in handling claims for compensation and technical knowledge and experience of the effects of oil spills on fisheries and aquaculture and coast related commercial activities are all essential requirements. There are various attractive benefits, including six weeks annual leave and a provident fund. Only candidates from 1992 Fund Member States will be considered. The working languages of the IOPC Funds arc English, French and Spanish. Fluency in English is required. Fluency in French and/or Spanish would be an asset. The post is to be filled as soon as possible. Salary is in accordance with Grade D.1 of the United Nations scale and is free of United Kingdom income tax. The dependency rate (D.1, Step 1) therefore starts at US$103,070 plus post adjustment of $76,168, i.e. a total of US$179,238 per annum whereas the single rate starts at US$95,270 plus post adjustment ofUS$70,404 i.e . a total ofUS$165,674 per annum. Applications must be accompanied by a copy of the IOPC Funds' Personal History Form. Please visit our website http:/ jww\v.iopcfunds. org/vacancies .htm. The completed IOPC Funds Personal History Form should be sent by e-mail to
[email protected] or alternatively posted to: Human Resources Manager, Finance and Administration Dept., International Oil Pollution Compensation Funds, Portland House, Bressenden Place, London SW1E 5PN. The deadline for the receipt of applications is 9 January 2012.
The Economist December lOth 2011
25
Executive Focus Exciting Career Opportunities in Nigeria Inter-Bank Settlement System Pic.
kPMh: cuttingrtrrougtrc:ompiexity '"
Nig ria tnt r·Bank Senlem nt Syst m CNIBSSl is a I ding payments and settlement institutiOn 10 Nigeria. Established in 1993, the Company is jointly owned by II licensed ban . Central Ban of Ntgeri and Discount Houses. It w s set up a a Bank10 Industry Sh red-Service to str amlin inter-ban payments nd settl ment mcch ni ms, nd to promote ectronic paymen in Nig ria. The Company also provid th mfr ructure for utom ted processing. lem nt of payments nd fund tr nsfer betw n ban , ockbfokers, discount houses nd card compani IBSS is currently implementing key str tegic tnltlattves atmed t re-posrtiOfllng and transform•ng the Company as a workl>dass payments and set1lement lnstrtut•on. In line with thi drive, the Company desires to recruit suit bly Q lifted, compet nt nd lf-moliv ted tndividu I to mlthe following management position ·
Chief Executive Officer (ES00614)
Executive Director, Operations Executive Director, Business General Manager, Finance & & Technology (ES00615) Development (ES00616) Admin (ES00617)
Reporting to the CEO, the candidate will be responsrble for II as· peels of IBSS operations and techno! ogv. tncfudtng technology infra rue ture, appiiC8tl()(l integratl()(l, operations certiftCallons, network management, security nd antr·fraud. he Will egtC provid global technical and dtrection for a h~ghly servic&riented NIBSS nd Oper uons. nd ensure ITIOO(h operations nd high· ilabil· ity of NIBSS' tnfr structure, tncludmg II terns nd pplication a ble ope ting enwonmen and xoell nt operational service in line With Sl.As ·A good ftrst degree 1n any related prov ed to cu tom8f dtscipline from a reputable ins(ttunon Cmanag m nt, economics or engineering). Relevant post-gr du ~ d r (s) •A good first degree in computer sci such as MBA Will be a disltnct advan ence. ngin nng or related techniC81 rage reid from a r putable institution. Rei ev nt p -graduate degr s) n or ·Minimum of 10 years' senior man· prof ion 1 certtftcations will be n ag ment xperi nee in payments or added advanta related tndustry Reporting directly to the Board of Di rectors, the successful candidate will be responsible for overseeing effecttve d Y·to ·day operattons of NIBSS and ensunng anai nment of strateg1c goals and targets He/ he will be n e pert n th paym nts sp ce and will lead NIBSS in executing •ts man· date, sa cmical enabler toward the re lisat•on of the country's paym nt systems v sion
•Expert knowledge nd appreciat•on of the payme busin , including em rging payment tr nds, regulatory polic•es. emerg•ng payment methods and schemes ·Vi ion ry nd
r regie thinker
rr
·Mmtmum of 10 y ars' cogn te expe ri nee in telacommunication , ba ing, electroniC payments experience. prov n leadership and experience 10 operation / IT manag m nt roles
·Demonstr ble track-record of resu •n managingiove ing the manage-
R porting to the CEO. th sue· cessful candidate will be primarily focused on strategy, product development and managem nt. and sale relationship management H /she wtll be respons•ble for defining the appropriate bu tness model to support NIBSS' trategy, seNe as the prim ry pomt of cont ct for new and existing clients, and m nage all aspects of interaction with clients.
Oualifatioo IS. experience and llt1rbut •A good fi rst degree •n any related discipline from a reputable insu· tution. R levan post-gradu t degree<sl such as MBA wilt be a dis t•nct advantage · Minimum of 10 y ars' senior man· agement experience in p yments or related indu try uch as finan cial services, telecommunicat•ons andlCT · Good underst nding of 11 r~ous payment products and ris and compliance tssues related to pay· m nts, lncludtng fraud preven tion, an1i-money laundering (AML), scheme rules. tc
ment of mid to large-seal • complex, ·Proven track record of ach•evement nd cross-funct•onal related prOJects, nd contribut•on to the dev lopment and ab lrty to work effectJIIely m a hig~ of the payment tndustry, including svs· r 'd manding rwironmen pr terns, polici and procedures.
•Excellent knowledge and ppreciation of th payments bus10ess. ,,.. eluding emerging payment methods andsch m
·Strong working knowledge of rei ·Excellent I d rshtp nd xpen nee vant technologies. systems and mira in g neral man g mentlboard lev I ructure, oper811onal requirernen roles, with track record of achieveurity rand rd • procedures, IT men results regulatory policies, certifiCatiOnS nd trends with10 the payments pace ·W If-honed skills to persuade, influ· ence, n otl e. man g and su t n · Strategic. With a seNice orient uon ucc I rei tionships bolh tnt rn tty m lndset nd excell nt le r htp, and ext rnally. interpersonal, negotl lion, analytiC81 and commun•cations sluffs
•Strong commercial acumen and good appreciation of bu in str tegy i sues, cu tomer relation ship and bus10ess performance management.
rr
R porting to the CEO. the ucces · ful candidate wtll h ve overall responsibility for the dev loprnent and implementation of appropri te fin nci I man g m nt framewor to support the realilahon of overall corporate goals and obJectives of the Compeny H she will fegu rd the of rh Company nd maintain the integrity of the financial reports. In ddt!lon, he/ he will h ve oversight r pon tbthty for all the back· offtee functions in NIBSS. including Admm, HR. Legal nd Logi ics.
Clualifications
expel--
and attrilutes
•A good first degree from a repuUible i . !Aion. Post-gad ) in
finance, 8001 o •lies or 1:>\s
admi
rstratJon
•Pr ional qu lification( ) in counting uch as ACA
c·
·M•n•mum of 10 years' relevant ex peri nee •n a nior financial management position ·PreviOU expen nee a a CFO or Finance Controller Will be n added advantage ·Strong an lytical background, and demonstrable ability to establish goals and deltver results •Str tegic mind tiation kills
, and strong nego-
·Fam liarity with major applications
ounting
•Exc llent I der hip, interperson I, relation htp manag men negoti tion nd communiC8tiOns skills
To apply. pi quote ppropriate r terence number the subject of your e-mail nd send your current curriculum vr nd salledwithyourfull nam J to us t
[email protected] not t rth n31 Oecember2011.
(prepared as Microsoft Word documen
Please indud m vour apphcat1on, a statement of how you meet the adverused criteria, as well as names and oetntact details (includ•ng telephone and e-mail addr ) of three r who re knowled ble bout your pro ·on I achrevemen nd bilru All the posrtiOns are based in lagos, Ntgena The CEO poSitiOn •s ex.cluSive to 1get1 n Within and outs•de the country. Other posrt•ons are open to both and non-Nigeri n pplican All pphcatiom Will be tr ted in strict confidence. Only short-listed candid t will be contacted C 2011 KPMG Prof
The Economist December lOth 2011
tgenan
www.n g.kpmg.com
26
Executive Focus
IDRC
United Nations Development Programme
CRDI
The International Developm nt Rese.rch Centre llDRCl, Canildtan Crown corporc1uon, supports financially and through capacuy-bulld•ng, research 1n developtng regtons of the world to promo e growth and development. Th result Is lnnovauve,lasttng, local soluhons tha bring choiCe and chclnge to those who need 1 most.
SENIOR PROGRAM SPECIALIST Governance for Equity in Health Systems Ottawa, Canada The Governance for Equ1ty 1n Health Systems Program supports research 1n developing countnes to strengthen thetr health systems and Improve health ou tcomes. Our program Includes research on equ1tabl health ftnancing, pohc•es and tnnovattons for 1mproved health serv1ces dehvery, health formatiOn system$. and addresstng access and governance chclllenges across 1 number of regions As the Sen10r Program Spec1ahs a key member of our muh1dlsctphnary team you Will identtfy crulcal research Issues; ass st in developtng the research strategy; and ta the lead tn d loptng. m.tnagtng. monttonng and evaluating a portfolio of research proJects. In particular, you will be tnvolved with our portfolio on health pohcy and systems w1th a strong emphasis on governance and equ1ty to develop programs related to he lth InformatiOn systems ndprtmaryhe lthcarefocuu.ngonlaonAmerk:aandtheCar ben. For more Information about this opportuMy and how to apply, vtsll our websne a www.idrc.u/careers. Appliut on Deadline: January 9, 2012.
An tquol opporruntry tmploytr. JDRC tncourogts oppliamons from quohfitd womtn, Abortgmol ptoplel, prrsons WJih diSOb•~lles ond mtmbtrs ol ~~s bit mmOI'IIIes
The United Nat1ons Development Programme (UNDP) partners with people at all levels of society to help build nattons that can Withstand cnsts, and drtve and sustatn the kind of growth that 1mproves the quality of life for everyone. On the ground tn more than 177 countries and territones, we offer global perspective and Management local ins1ght to help for Development empower lives and build resilient nations. UNDP is recrUiting for the Assistant Administrator and Director (at the Assistant Socretary-Generallevel) of the Bureau of Management The Director is a member of UNDP's ExecutiVe Group and contnbutes to shaptng and moo•tonng overall corporate strategic directions. He/She directs and manages the corporate management function to address the organization's priorities and achteve outcomes. UNDP IS seektng cand•dates with a m1n1mum of 15 years of relevant experience; a strong record of progressively responsible, substantive experience and results achievement in the corporate management f1eld, includmg in large organ•zatlons. Sentor expenence at the internatiOnal level, including in operations/corporate functions, inter-agency and intemat1onal co-operation. negotiation of partnerships and management of resources are especially relevant. The candtdate will have held leadership roles and demonstrated his/her ab1lity to advocate for effective solut1ons. For more tnformatton dnd to wbm•t
dfl
appltcatton. go to
http://jobs.undp.org/cj view job.cfm?job id:26972
EDITORS Economist Intelligence Unit
Ea t, latin
A ia, Middl
m ri a
Regional director to cover Asia and Australasia a~ th I dtng provider o country. industry and manag~mrnt analysis, ddfvenng informat on that helps organhations suy on top of market opportunf ies a!OIJI!d ~ wotld.
IUnaging nint regional o~nalysu. you II mainu.n and elop the quality and ~n cove,.g o our servic6. combining ou ~lldlng tdttori s~ndards and In Utctualleadtrsh•p with an ability to r pr !W!nt the cOmP'nY both frrt ~mlly and emalty.
or
With m.n g rMn pel!fnc~. strong editorial and macroeconomic foiMi!sting sl • PrurJUlh f){o(p
r 1011 .
www.taylorbennett.com The
Economist December lOth 2011
27
The long life of Homo sovieticus MOSCOW
This week's elections and upheavals in Russia show how hard it is, 20 years after the system collapsed, for the country to put away its Soviet past WENTY years to the month since the T Soviet Union fell apart, crowds of angry young people have taken to the streets of Moscow, protesting against the ruling United Russia Party ("the party of crooks and thieves") and chanting "Russia without Putin!" Hundreds have been detained, and the army has been brought into the centre of Moscow "to provide security". Although the numbers are a far cry from the half-million who thronged the streets to bury the USSR, these were the biggest protests in recent years. The immediate trigger for this crisis was the rigging of the parliamentary elections on December 4th (see page 55). But the causes lie far deeper. The ruling regime started to lose its legitimacy just as Vladimir Putin, Russia's prime minister, declared a final victory for "stability", promised to return to the Kremlin as president and pledged to rebuild a Eurasian Union with former Soviet republics. The Soviet flavour of all this had been underscored at United Russia's party con-
gress at the end of November, where Mr Putin was nominated for the presidency. "We need a strong, brave and able leader ... And we have such a man: it is Vladimir Vladimirovich Putin," enthused a film director. A steelworker told the congress how Mr Putin had "lifted our factory from its knees" and supported it "with his wise advice". A single mother with 19 children thanked Mr Putin for a "bright future". Such parallels with the now idealised late Soviet era were supposed to be one of Mr Putin's selling points. No tiresome political debate, fairly broad personal freedoms, shops full of food: wasn't that what people wanted? Instead, unthinkably, Mr Putin has been booed: first by an audience at a martial-arts event on November 2oth, then at many polling stations, and now on the streets. The Soviet rhetoric conjured an anti-Soviet response. According to Lev Gudkov of the Levada Centre, an independent polling-research organisation, this reaction against the mo-
nopolistic, corrupt and authoritarian regime is itself part of a Soviet legacy. It is driven by the lack of alternatives rather than a common vision for change. For Russia is still a hybrid state. It is smaller, more consumerist and less collective than the Soviet Union. But while the ideology has gone, the mechanism for sustaining political power remains. Key institutions, including courts, police and security services, television and education, are used by bureaucrats to maintain their own power and wealth. The presidential administration, an unelected body, still occupies the building (and place) of the Central Committee of the Communist Party. More important, the Soviet mental software has proved much more durable than the ideology itself. When, in 1989, a group of sociologists led by Yuri Levada began to study what they called Soviet Man, an artificial construct of doublethink, paternalism, suspicion and isolationism, they thought he was vanishing. Over the next 20 years they realised that Homo sovieticus had mutated and reproduced, acquiring, along the way, new characteristics such as cynicism and aggression. This is not some genetic legacy, but the result of institutional restrictions and the skewed economic and moral stimuli propagated by the Kremlin. This mental software was not a generational feature, as the Levada group at first suspected. The elections were rigged in Moscow not only by middle-aged people with Soviet memories, but by thousands of pro-Kremlin younger folk gathered from across the country and dispatched to cast multiple ballots around the city. Symbolically, they made their camp in an empty pavilion of the Stalinist Exhibition of People's Achievements. Most of them had no memories of the Soviet Union; they were born after it had ceased to exist. Yet the election results also revealed the reluctance of a large part of Russian society to carry on with the present system. Thousands of indignant men and women, young and old, tried to stop the fraud and protect their rights. One election monitor, who was thrown out of the polling station, wrote in his blog that "I thought I would die of shame .. .I did not manage to save your votes ... forgive me." Such voices may still be a minority, but the clash between these two groups was essentially a clash of civilisations-and a sign that the process of dismantling the Soviet system, which started 20 years ago, is far from over. A moral vacuum When the Communist regime collapsed in 1991 there was an expectation, both in the West and in Russia, that the country would embrace Western values and join the civilised world. It took no account of a ruined economy, depleted and exhausted human capital and the mental and moral dent
~~
28 Briefing Russia
The Economist December
~ made
by 70 years of Soviet rule. Nobody knew what kind of country would succeed the Soviet Union, or what being Russian really meant. The removal of ideological and geographical constraints did not add moral clarity. In particular, the intelligentsia-the engine of Soviet collapse-was caught unprepared. When their "hopeless cause" became reality, it quickly transpired that the country lacked a responsible elite able and willing to create new institutions. The Soviet past and its institutions were never properly examined; instead, everything Soviet became a subject of ridicule. The very word "Soviet" was shortened to sovoh, which in Russian means "dustpan". In fact, says Mr Gudkov of Levada, this selfmockery was not a reasoned rejection of the Soviet system; it was playful and flippant. Sidelined by years of state paternalism and excluded from politics, most people did not want to take responsibility for the country's affairs. The flippancy ended when the government abolished price regulation, revealing the worthlessness of Soviet savings, and Boris Yeltsin, faced with an armed rebellion, fired on the Soviet parliament in 1993. Soon the hope of a miracle was replaced by disillusion and nostalgia. As Mr Levada's polling showed, it did not mean that most people wished to return to the Soviet past. But they longed for order and stability, which they associated with the army and security services rather than with politicians.
Enter the hero Mr Putin-young, sober, blue-eyed and calm-was a perfect match for people's expectations. Although picked by Yeltsin, he made a striking contrast with the ailing leader. Though he owed his career to the 1990s, he stressed that his own times were very different. Two factors made him popular: a growing economy, which allowed him to pay off salary and pension arrears, and the prosecution of a war in Chechnya. Both symbolised the return of the state. In the absence of any new vision or identity, the contrast with the 1990s could only be achieved by appealing to a period that preceded it-the late Soviet Union. Yet although Mr Putin exploited the nostalgia for an idealised Soviet past and restored the Soviet anthem, he had no intention of rebuilding the Soviet Union either economically or geographically. As he said repeatedly, "One who does not regret the passing of the Soviet Union has no heart; one who wants to bring it back has no brain." As a KGB man, Mr Putin knew perfectly well that the state-controlled Soviet economy did not work and that the ideology was hollow. But also as a KGB man, he believed that democracy and civil society were simply an ideological cover-up
It was better before Russia,% surveyed*
•
ves
No 0 10 20 30 40 50 60 70
Are you satisfied with the way things are going in Russia? Would you describe the current economic situation as good? Is it a great misfortune that the Soviet Union no longer exists? Have the changes since 1991 helped ordinary people? Have they improved the standard of living? Have they enhanced pride in our country? Have they had a good influence on public morality?
lOth 2011
brought television under his control, then oil and gas. Igor Malashenko, who helped to establish NTV, the first private television channel in Russia, says he thought that "there would be enough young journalists who would not want to go back to the stables. I was wrong." Russia was much freer in the 1990s than it became under Mr Putin. But the change was gradual rather than sudden, and was based on a relationship between money and power inherited from a previous era. The privatisations of the 1990s put property in the hands of the Soviet officialdom and a small group of Russian oligarchs. As Kirill Rogov, a historian and analyst, has observed, the real problem was not that the accumulation of capital was unfair-it usually is-but that clear rules of competition and a mechanism for transferring property from less to more efficient owners were never established. Under Yeltsin, the oligarchs were shielded from competition by their political clout. Mr Putin simply flipped the formula, turning owners into vassals who were allowed to keep their property at his discretion. From now on it was the power of the bureaucrat, not the wealth of the owner, that guaranteed the ownership of an asset. The nexus between political power and property was never broken-as it must be in a functioning democracy.
What should we rely on to solve Russia 's problems? 0 10 20 30 40 50 60 70
Democratic government Astrong leader
-
What is more important in society? 0 10 20 30 40 50 60 70
Freedom from state interference State ensuring no one in need Source: Pew Global Attitudes survey
*Survey conducted in spring 2011
adopted by the West. What mattered in the world-East or West-were money and power, and these were the things he set out to consolidate. The country was tired of ideology, and he did not force it. All he promised (and largely delivered) was to raise incomes; to restore Soviet-era stability and a sense of worth; to provide more consumer goods; and to let people travel. Since these things satisfied most of the demands for "Freedom" that had been heard from the late 1980s onwards, the people happily agreed to his request that they should stay out of politics. Though Mr Putin was an authoritarian, he seemed "democratic" to them. The ease with which Mr Putin eliminated all alternative sources of power was a testimony not to his strength but to Russia's institutional weakness. Yeltsin, who hated communism, had refused to censor the media or interfere in the court system. Mr Putin had no such qualms. First he
Monetising privilege Under communism, the lack of private property was compensated for by power and status. A party boss did not own a factory personally-he could not even buy a flat-but his position in the party gave him access to the collective property of the state, including elite housing and special food parcels. The word "special" was a favourite one in the Soviet system, as in "special meeting", "special departments" and "special regime". The Soviet system collapsed when top officials decided to "monetise" their privileges and turn them into property. The word "special" was also commercialised, to become ehshlusivny (exclusive) and e!itny (elite). It was used to market almost anything, from a house to a haircut. Under Mr Putin, "special" regained its Soviet meaning without losing its commercial value. A black Mercedes with a blue flashing light, ploughing its way through pedestrians, became the ultimate manifestation of power and money. It was also one of the symbols of injustice which helped to trigger the latest protests. Stories of bureaucrats, and especially the security services, putting pressure on businesses are now common. The most famous example is that of Mikhail Khodorkovsky and the dismembering of the Yukos oil company. But there are thousands of others. The statistics are staggering: one in six businessmen in Russia has been
~~
30 Briefing Russia ~ prosecuted
for an alleged economic crime over the past decade. Most of the cases have no plaintiff and the number of acquittals is close to zero, according to studies by Russia's Centre of Legal and Economic Research. This means that the vast number of Russian businessmen in jail are victims of corrupt prosecutors, police and courts, which can expropriate a business with impunity. As Yegor Gaidar, a prominent liberal economist, warned in 1994, "The carcass of a bureaucratic system can become the carcass of a mafia system, depending on its goals." By the time his book appeared in 2009 his warning had become reality. In the past few years this "monstrous hybrid" has started to extend its tentacles into every sphere of public life where money can be made. Examples of violence against businessmen abound. This adds up to a Soviet-style policy of negative selection, where the best and most active are suppressed or eliminated while parasitic bureaucrats and law enforcers are rewarded. What Stalin wrought by repression and extermination, today's Russia achieves by corruption and state violence. The bureaucracy's main resource is participation in the rent-distribution chain. While this allows it to channel money towards sensitive regions and factories, it also increases the country's addiction to oil and gas and fans paternalism. Mr Putin has worked hard to build up the image of the state as the sole benefactor, taking credit for rising incomes generated by high oil prices. As he stressed at the United Russia congress, only the state and its ruling party are capable of sorting out people's problems. "No one else is responsible for affairs in a village, town, city or region or the whole country. There is no such force." This idea was spread by local governors, who told their citizens before the elections that regional funding depended on voting for United Russia. "If we are responsible, we have no choice," the governor of impoverished Udmurtia told his people. "We must go and vote for the [United Russia) party candidates 99.99%. This is how it was in Soviet times, and if we had not broken this order, we would still be living in the Soviet Union ... much better than now." In practice, critics say, the state has failed to perform many of its functions, such as providing adequate health care, education, security and justice. But in Russia words and symbols often count for more than experience. A fortress mentality
Among Mr Putin's rediscovered Soviet symbols, none is more important than that of Russia as a great power surrounded by enemies. Having promoted a version of history in which Stalin represents Russia's greatness (his repressions just an unfortunate side-effect of a cold war forced upon
The Economist December him by America), Mr Putin has employed one of Stalinism's favourite formulas: Russia as an isolated and besieged fortress. Although Russia has no iron curtain and the internet is free, "it is as though an invisible wall still counterpoises everything that is 'ours' to everything 'foreign'," Mr Levada has written. Indeed his polling showed that, by 2004, the number of Russians who considered themselves no different from people in other countries had fallen, while the opinion that Russia is surrounded by enemies had grown stronger. The recent parliamentary elections were accompanied by a heavy-handed propaganda campaign that portrayed America's anti-missile system as an existential threat to Russia. Dmitry Medvedev, Russia's president, made belligerent statements and state television showed lengthy footage of Russian missiles, radars and other threatening stuff, accompanied by a tense soundtrack. It was as though Russia was about to be attacked. The target of this campaign was not the West, where the Russian elite spends much of its time and money, but the domestic audience. Anyone who criticises the government from within Russia gives aid to the enemy without. In his speech to the party congress Mr Putin particularly attacked NGOs which receive money from the West "to influence the course of the election campaign in our country". The "so-called grant receivers" were like Judas, he said, ending his speech with a quote from Stalinist times: "Truth is on our side. Victory will be ours!" He conspicuously left out the third bit: "The enemy will be destroyed!" But no sooner had he spoken than Russia's slavish television (which has shown none of the current protests) aired a propagandist film about Golos, a leading independent election monitor, trying to frame its staff as Western agents. Such tactics, in which enemies are everywhere and no one is allowed a noble motive, breed a general cynicism. In this, post-Soviet Russia feels very different from
lOth 2011
the Soviet Union. Leaders then had values, not just interests. The Communist Party might have been sclerotic and repressive, but it was not called" a party of thieves and crooks". Soviet leaders did not encourage cynicism: they took themselves and their words seriously. It would have been impossible, for example, for a chief Soviet ideologist to write an anonymous novel exposing the vices of the system he himself had created, as Vladislav Surkov, the chief Kremlin strategist, has just done. Many Kremlin politicians in fact perceive themselves as progressive Westernisers struggling with a backward, inert population which has neither the taste nor the skill for democracy. They assume people will swallow anything as long as their incomes keep rising. But when Mr Putin said that his job swap with Mr Medvedev had been planned long ago, people felt duped. These blatant machinations, where everything was imitation and nothing was real, leached away support for United Russia even before the elections. When the Kremlin decided to rig the ballot openly, fury boiled over. After a decade of "stability", Russia now looks as vulnerable to shock as the Soviet Union was at the end of its days. The big difference, however, is that the Soviet Union had a clear structure and, in Mikhail Gorbachev, a leader who was not prepared to defend himself with force. Today's circumstances are very different. Mr Putin is unlikely to follow the advice of Mr Gorbachev and cancel the results of the rigged election. He may instead resort to more active repression, thereby making the country look a lot more Soviet. This would only make the crisis worse. How Mr Putin's highly personalised power might be challenged, and what the consequences would be, remain unanswerable questions. But it is obvious that unless Russians create a system that promotes honesty, openness, tolerance and initiative, no change of leader will free their country from the Soviet grip. •
31 Also in this section 32 The economy and stimulus 32 Transport in Georgia 34 Technology and civil liberties 36 Detroit nears bankruptcy 36 Insider trading and Congress 38 Tort reform 40 Lexington: The wretched Middle East
For daily analysis and debate on America, visit Economist.comfunitedstates
The election
The president chooses his ground WASHINGTON, DC
Barack Obama offers America a new square deal VERY time a president seeks re-election, E it is something of a parlour game in Washington, c, to ask which of his predeD
cessors' campaigns he will take as a template. Will Barack Obama attempt to persuade voters, as Ronald Reagan did in 1984, that the darkness of recession was giving way to "morning in America"? The enduring listlessness of the economy makes that a tricky sell. Could he perhaps emulate Harry Truman's successful tirade of 1948 against the "do-nothing Congress"? Mr Obama is better at warming cockles than thumping tubs, and in any case control of Congress is divided, making Democrats as responsible for its ineffectiveness as Republicans are. This week Mr Obama put an end to the debate by publicly invoking a different role model: Teddy Roosevelt. On December 6th Mr Obama travelled to Osawatomie, a small town in Kansas where Roosevelt gave a celebrated speech in 1910, laying out the platform that he would eventually adopt as a third-party candidate for president two years later. Before a crowd of 30,000 he elaborated on his longstanding theme of a "square deal" for working Americans-a concept that had made him wildly popular during his nearly two terms in office. America's economy and political system were biased towards the rich, the former president complained; he promised to give the little guy a fair shake.
In a speech to a more modest crowd in the local high school, Mr Obama said much the same. Getting into the middle class and staying there has been growing ever harder in recent years, he lamented, and yet the rich have got ever richer. The solution, he maintained, is higher taxes on the wealthy to fund more investment in education and infrastructure while keeping America's debt in check. The alternative, he said, was a "you're on your own" economy, marked by falling wages, rising pollution and emasculated unions. Mr Obama was at pains to make clear that he had no wish to punish success or suggest that government had the solution to every problem. "This isn't about class warfare," he said at one point. "This is about the nation's welfare." The word "fair" cropped up again and again: the rich should pay their "fair share" of taxes; poorer Americans should get a "fair shot" at success; it was "the height of unfairness" that billionaires should pay a lower effective tax rate than middle-class folk. All this is quite clever. By invoking aRepublican president, Mr Obama can and did claim to be rising above partisan politics. He also shifts attention from his personal stewardship of the economy, which Americans consider inept, to the broader and more abstract question of inequality, where Democrats should be on firmer ground. In essence, he is attempting to di-
rect the widespread sense that America has lost its way-something that would normally count against him-into exasperation with the Republicans. But Mr Obama must walk a fine line. As Chuck Schumer, a Democratic senator, noted earlier this month, Americans are put off by anything that smacks of soaking the rich, but are attracted to the notion of fairness. (Roosevelt, it should be noted, lost the election following his Osawatomie speech, dividing his party and leaving it in the political wilderness.) The Democrats in the Senate have for months suggested paying for a series of worthy-sounding schemes-most recently an extension and expansion of a soon-to-expire reduction in payroll taxes-by raising tax rates for millionaires. These proposals, all so far stymied by Republican opposition, are intended to show that Republicans, when forced to choose between the interests of the middle class and those of the rich, will abandon the struggling mass of Americans without a second thought. Most polls suggest that voters agree with Mr Obama and the Democrats in principle. Our own Economist/YouGov poll finds that a majority of Americans would like to see the payroll-tax cut extended, for example, and two-thirds of those think a surtax on millionaires is the best way to pay for it. Yet Mr Obama has been harping on about raising taxes on the rich since his first election campaign. The Republicans do not seem to have paid an electoral price for dismissing the idea as class warfare and preventing its implementation in Congress. Indeed, Democrats in swing states have often voted with them when the idea has been put to the test, for fear of being labelled tax-and-spend liberals. Mr Obama seems to be hoping that his
~~
The Economist December lOth 2011
32 United States ~ Republican
opponents, many of whom have put forward proposals for regressive flat taxes, for example, will take their coddling of the rich too far for most voters' tastes. That case will be harder to make if Mitt Romney, the former governor of Massachusetts, wins the nomination. He has the least doctrinaire tax plan in the Republican field, complete with tax breaks exclusively for middle-income groups. In our latest poll, however, Mr Romney has seen his support among likely primary voters decline to 15%, less than half the level of Newt Gingrich, a former Speaker of the House of Representatives who appears to be benefiting from the "suspension" of the campaign of Herman Cain, a candidate dogged by multiple accusations of sexual impropriety. Mr Gingrich supports a flat tax and has denounced Mr Romney's plan as Obama-style class warfare. That presents Mr Obama with a bigger target. He told the crowd at Osawatomie that the debate about inequality "is the defining issue of our time", meaning that he would like it to be the defining issue of the presidential campaign. •
The economy and stimulus
Lool
Education: Advanced university degree in Accounting , Finance, Business, Public Administration or related field .
>
Work experience: A minimum of 15 years in the area of finance/ accounting, of which at least 5 years in an inter-governmental public sector organization such as the UN. Solid experience in accrual accounting at international level (IPSAS or similar).
We offer an exciting and wide-ranging function at the forefront of humanitarian assistance impacting on UNHCR's global operations, on the basis of a UN type employment contract and benefits. Applications: A complete job description and details on how to apply are available on the UNHCR website at: www.unhcr.org/careers. Closing date for receipt of applications: 3 January 2012 UNHCR aims for wor!..force diversity and strongly encourages qualified women to apply. Acknowledgments will only be sent to short-listed candidates under serious consideration.
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lATA, UFTAA, WTAAA and ECTAA are currently recruiting for the following position:
Travel Agency CommissionerEurope, Africa, Middle East The Travel Agency Commissioner ("TAC") is an independent arbiter appointed jointly by the International Air Transport Association (lATA), the United Federation of Travel Agency Associations (UFTAA) and the World Travel Agents Associations Alliance (WTAAA) including the European Travel Agents and Tour Operators Association (ECT AA). The TAG's role is to conduct reviews affecting agents and applicants under the lATA Passenger Agency Programme - more details in lATA Resolutions 820d and 820e available at:
http://www.iata.org/whatwedo/travel-tourism/resolutions.htm The vacancy concerns Area 2 (Europe, Africa, Middle East), while the rest of the world is serviced by two other TAGs. The appointee, resident in Area 2, will mostly work out of his/her office, with some travel required within the Area. The position is part time and the caseload is variable. The ideal candidate will meet the following criteria: • Experience in the travel industry ideally gained from previous employment within the travel industry • Have a good knowledge of the IATA Passenger Agency Programme or a demonstrated ability to acquire such knowledge • Be fluent in written and oral English with the same skills in at least one other major language • Experience in dispute resolution and/or legal background will be highly regarded • Be an independent contractor not associated, employed or involved with an airline, travel agency, travel agency association or lATA. Candidates are invited to send a cover letter and Curriculum Vitae to jobs@wtaaa. org by 15 January 2012. Position to be filled as soon as practicable.
www.aif.nl The Economist December lOth 2011
We thank all candidates for applying, but can only acknowledge those under consideration.
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To advertise within the classified section, contact: United Kingdom Martin Cheng- Tel: (44-20) 7576 8408
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[email protected] The Economist December lOth 2011
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The full Wfslon of this Request for Expressions of Interest and further InformatiOn is available on the Monistry Mbsue (www.mom gov.af) . Th1s ndu 1,467.7 977.5 5,767.9 55,138.9 4,351.3 19,240.6 16,877.1 3,793.2
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Pakistan (KSE) 11,283.9 Singapore (STI) 2,782.6 South Korea (KOSPI) 1,919.4 Taiwan (TWI) 7,033.0 Thailand (SET) 1,046.7 Argentina (MERV) 2,615.6 Brazil (BVSP) 59,536.2 Chile(IGPA) 19,817.8 Colombia (IGBC) 12,665.3 Mexico (IPC) 37,071.2 ~nezuela (IBC) _ _119 02.4 Egypt (Case30) 3,993.7 Israel (TA-100) 970.9 Saudi Arabia (Tadawul) 6,216.9 South Africa (JSEAS) ~ 760.3
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Sources: BNP Paribas, Citigroup, Commerzbank, Decision Economics, Deutsche Bank, Economist Intelligence Unit, Goldman Sachs, HSBC Securities, lNG, JPMorgan Chase, KBC Bank, Morgan Stanley, RBC, RBS, Schroders, Scotia bank, Societe Generale, UBS
The Economist commodity-price index
Other markets %change on Index Dec 7th United States (S&P 500) 1,258.5 United States (NAScomp) 2,649.6 China (SSEB, $terms) 222.4 Japan (Topix) 749.6
Dec 31st 2010 one in local in$ week curren cy terms +0.9 +0.1 +0.1 +1.1 -0.1 -0.1 -3.0 -29.4 -26 .9 +2 .9 -16.6 -13.0
2005=100 Nov 29th
Dec 6th*
Dollar index _ _ _}Z§l. _ _ l§QJ_ _ _: ~9_ _:2.!-2. _E2q£ ____ _}~&_ __ 1JZ.:..8__ _: ~2__ _:E.1_
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f\~l ' .. )57_,9 1_7~._0 ..Nfat.. Metals 150.1 Sterling index All items 207 .6 Euroindex All items 166.2 Gold l.Rer oz 1,709 .1 West Texas Intermediate $per barrel 99.8
*Total return index. tcredit-default-swap spreads, basis points. Sources: National statistics offices, central banks and stock exchanges; Bloomberg; CBOE; CBOT; CMIE; Cotlook; Darmenn &
•Provisional !Non-food agriculturals.
Curl; EEX; FT;HKMA; ICCO; !CO; ISO; Jackson Rice; JPMorgan Chase; NZ WoolServices; Thompson Lloyd & Ewart; Thomson Reuters; Urner Barry;WSJ; WM/Reuters
%change on one one month year
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Indicators for more countries and additional series, go to: Economist.comfindicators
Socrates Socrates Brasileiro Sampaio de Souza Vieira de Oliveira, Brazilian footballer and political agitator, died on December 4th, aged 57
NE was short, fat and famously ugly; the other was handsome, slim and 0 very tall indeed, with tumbling dark curls caught back in a headband. One skulked about in a grubby robe and sandals; the other shone in blue micro-shorts and the sun-yellow shirt of Brazil. One wandered round the market place, teasing out the Good with onslaughts of severely logical questions. The other played football; and that was pretty good, too. The fact that both men were called Socrates was not the only link between them. For the one born in Belem do Para, at the humid mouth of the Amazon, was also an intellectual. In a sport in which most players' brains soon take residence in their boots, he talked of Van Gogh and Cuban history, practised medicine and worried about democracy. Over a career that included almost 300 games for his main club, Corinthians of Sao Paulo, and 6o games for Brazil, he trod the pitch as a man of thought, reading the game like a mathematician before, almost nonchalantly, applying some genius touch. Whether this love of wisdom had soaked in with the baptismal water, or whether he had picked it up in the library proudly assembled by his self-taught father (who also named two of his brothers S6focles and Sostenes), no one knew. He
himself said his childhood heroes were Fidel Castro, Che Guevara and John Lennon. Yet his book, "Football Philosophy", ended with a maxim that would have pleased his namesake: "Beauty comes first. Victory is secondary. What matters is joy." He meant what he said. He was never in a team that won the World Cup (though Brazil has done so five times); but then the relentless focus and discipline required to lift that trophy never pleased him. Like his namesake, he sought Beauty. And spectators found it whenever he played, with his elegant gazelle runs, his leaps and accelerations, his classy back-heels and his long, loping passes from midfield. There were few keener reminders of the Beautiful than the game against Italy in the 1982 World Cup, when he was captain: a game of surpassing skill and spontaneity capped by a wonderfully deceptive goal of his own, almost disguising the fact that Brazil then lost and left at the second-group stage. A gadfly in boots Yet Dr Socrates, as Brazilian fans called him, never put football first in his life. Early on he would miss training sessions if they clashed with his medical studies. In a country that eats, breathes and lives football, where commerce stops for it and elections are planned by it, he insisted that the
most vital thing was to get rid of poverty, build roads and schools and, not least, teach manners. His namesake would have called this pursuing the virtuous life. He called it "prioritising the human being". The best thing about football, he said once, was the ordinary people he met-including those of Garforth, near Leeds in northern England, whose non-league team he coached for a chilly month in 2004. He also spoke up for the common man. Like the first Socrates, he saw himself as a gadfly of the tyrannical, lazy or self-satisfied. He disliked the way Corinthians was run, with management treating players like children, and organised a system where everyone in the club, from kit-boy to president, would vote about the length of training and the time of lunch-hoping, no doubt, for greater laxity about parties and smoking and beer, all of which he found essential to his own free-ranging game. ("I am an anti-athlete," he explained. "You have to take me as I am.") He disliked the way Brazil was run too, under a cohort of generals after a coup in 1964; he pestered for free elections by leading a Corinthians team with "Democracia" printed on their shirts, and by marching off in 1984-85, when Congress failed to pass the necessary laws, to play for Fiorentina in Italy. If this was subversion and "corrupting the youth", he revelled in his dangerous influence. And he didn't let up: Lula was good, he said, but earned a mere seven or so out of ten for how he had governed Brazil. For Socrates only outright revolution, Fidel-style, rated a ten. Retired from football, he continued to campaign against the corruption rampant in the game. He demanded open elections-by players, fans, everyone-for the top job in the Brazilian Football Confederation, and toyed with fielding his teammate Zico against the scandal-tangled president. He began to write a novel, set during Brazil's hosting of the World Cup in 2014, in which public money was yet again disappearing into private pockets, and white-elephant stadiums were rising across the land. He saw no change in prospect. His own Corinthians, once struggling, were rolling in money, but he preferred his political slogans to the dozens of sponsors now blazoned on their shirts. And he would rather have seen a creative defeat than the ill-tempered game that made them national champions a few hours after his death. He died too young, after a dinner with friends which his weakened liver couldn't take. But he always needed to set Brazil to rights over copious cacha~as at some cafe table: his own "Symposium", where ideals would be pursued through smoke, alcohol and argument. As a doctor and ex-midfielder, he knew he should not have done it. As a philosopher, he sealed his death warrant with his usual wit and serenity. •
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