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What Milei can teach Trump

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NOVEMBER 30TH–DECEMBER 6TH 2024

The least bad deal

for Ukraine

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 The Economist November 30th 2024 5

Contents

The world this week Britain

7 A summary of political 19 The opportunity index
and business news 20 Roads and Reform UK
21 Adios, Adele
Leaders 21 What is a woman?
9 Ukraine and Russia 22 Rathlin Island
The least bad deal
23 RIP securonomics
10 Lessons from Argentina
24 Bagehot Deliverism
What Milei can teach
Donald Trump
11 Ceasefire over Lebanon Europe
A chance for Trump 25 NATO and America
11 Trade war 26 Ukraine’s south
On the cover Trump takes on Canada 27 Le Pen on trial
How to make peace talks with and Mexico
28 Charlemagne Ursula
Putin work: leader, page 9. What 12 Industrial policy von der Leyen II
will be Donald Trump’s approach Northvolt’s failure
to the war in Ukraine? Page 15.
For Russia, advances on the
Letters United States
battlefield mask growing pressure
at home, page 17. The frightening 14 On assisted dying, the 29 The resistance, part two
maths of Europe’s military black Central African Republic,
30 Tariff Man
hole, page 25 airships
31 Farewell to Trump’s trials
Britain’s best employers They 32 Drama in Jackson
Briefing
vary greatly in how they find, pay 33 Secessionists in Illinois
15 Russia, Ukraine and
and promote their staff, page 19 33 Spooking the spooks
Donald Trump
Inaugural call
What Milei can teach Trump
Argentina’s president is idolised by 17 Russia’s home front The Americas
the Trumpian right. They should All disquiet 35 An interview with Milei
get to know him better: leader, 37 Uruguay’s elections
page 10. An interview with Javier
Milei, page 35 37 Bracing for Trump’s tariffs
38 Bolsonaro’s setbacks
Why ultra-processed foods are
bad They harm health. Scientists
are racing to find out why, page 68
Middle East & Africa
The best books of 2024 Readers
will never think the same way 39 Ceasefire in Lebanon
again about games, horses and 40 Trump’s new Arab pal
spies, page 72 41 Biden and Africa
42 Beating tropical diseases
42 Nigeria’s new museum

Schumpeter Has Sequoia Asia

Capital outgrown its 43 India’s next leader?
business model? Page 58 44 Fatherhood in East Asia
45 Indian education
45 Ice Age antelopes
46 Banyan Prabowo on tour

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 6 The Economist November 30th 2024

Contents

China Finance & economics

47 Fears of unrest 61 Trump’s trade wars
48 Raising the birth rate 62 Veterans’ benefits
49 Wegovy comes to China 63 Corporate borrowing
64 Debt crunch
65 Hong Kong property
66 Buttonwood Great men
67 Free exchange The
International problem with Black Friday
50 Gangsters’ paradise
52 The Telegram Good Cop, Science & technology
Bad Cop
68 Ultra-processed foods
69 Large behaviour models
70 Elon Musk and the Royal
Society
71 Deforestation's costs
Business
53 Europe’s carmakers
under pressure
Culture
54 Life after Northvolt
72 The best books of 2024
55 The audiobook boom
76 Angela Merkel’s memoir
55 TikTok does shopping
56 Elon Musk v Sam Altman
57 Bartleby Quick wins
58 Schumpeter VC returns
to its roots

Economic & financial indicators

Briefing
77 Statistics on 42 economies
59 Adani under fire

Obituary
78 Celeste Caeiro, whose gift of a flower named a revolution

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 The Economist November 30th 2024 7

The world this week Politics

Police investigators in Brazil the capital of Albania, who are ruling Bharatiya Janata Party
accused Jair Bolsonaro, the calling for the Socialist govern- has tried to thwart previous
country’s hard-right president ment to be replaced with a investigations into Mr Adani,
from 2019 to 2023, of plotting a caretaker administration of who is an ally of Narendra
coup after losing his bid for technocrats. Two opposition Modi, the prime minister. The
re-election. The police said leaders have been charged with Adani Group says the bribery
that Mr Bolsonaro and 36 allies corruption, which they say is a allegations are “baseless”.
pressed government and mil- politically motivated act. The
itary officials to support a prime minister, Edi Rama, In Pakistan six people, in-
coup, drafted a state of emer- claims the opposition is trying cluding four soldiers, were
gency to keep Mr Bolsonaro in to seize power illicitly. killed amid protests calling for
power and entertained an the release of Imran Khan, a
A ceasefire began in Lebanon, assassination plot to kill the former prime minister, from
scheduled to last initially for 60 election winner. The police prison. Separately, more than
days. Israeli forces and those of sent the indictments to the 80 people died in clashes be-
Hizbullah, a Shia militia public prosecutor, who will tween Shia and Sunni Muslims
backed by Iran, will gradually decide whether to press char- in the country’s north-west in a
withdraw from a buffer zone ges. Mr Bolsonaro described dispute over land.
south of the Litani river. A the accusations as “creative”.
five-country committee led by A family feud
the United States and France Yamandú Orsi won Uruguay’s The rocky relationship
will oversee the process. Joe presidential election for the between Ferdinand “Bong-
Biden said he hoped the break- centre-left, beating Álvaro bong” Marcos, the president of
through would lead to peace in Delgado, a former aide to the the Philippines, and Sara
Gaza, and in the wider region. current centre-right president. The first round of Romania’s Duterte, the vice-president, hit
Lebanese officials said more Mr Orsi promises to keep presidential election produced a spectacular new low, when
than 3,800 citizens had been business taxes at a reasonable a shock result. Calin Georges- Ms Duterte claimed she had
killed by Israeli bombard- level and attract investment. cu, a pro-Russian critic of hired an assassin to kill Mr
ments; Israel said it had lost 82 NATO, came first with 23% of Marcos and his wife if she
soldiers and 47 civilians. If at first you don’t succeed the vote, and Elena Lasconi, herself were killed. When
Donald Trump filled out more who heads the centre-right officials called for an explana-
The International Criminal of his prospective cabinet opposition, came second with tion, Ms Duterte said her com-
Court in The Hague issued an appointments, including Scott 19%. Both candidates go ment was a “conditional act of
arrest warrant for Israel’s Bessent, a hedge-fund manag- through to a run-off on Decem- revenge”. Mr Marcos and Ms
prime minister, Binyamin er, as treasury secretary. Mean- ber 8th. Mr Georgescu had Duterte, who both hail from
Netanyahu, and his former while, Matt Gaetz withdrew scant support before the elec- political dynasties, have de-
defence minister, Yoav Gallant. from consideration as attor- tion. The result has raised fears tested each other ever since
In principle, signatories to the ney-general amid allegations of that Russia is gaining influence forming an uneasy alliance to
court’s statutes would be sexual misconduct. Mr Trump in Romania, which joined win election in 2022.
obliged to arrest them if they is likely to have more luck with NATO in 2004. Liberals are
visited. But France suggested it his second choice, Pam Bondi, rallying around Ms Lasconi. Australia’s House of Repre-
might not as Israel did not sign a former attorney-general sentatives overwhelmingly
the treaty that established the of Florida. Anne Hidalgo announced that passed a bill that would ban
ICC, and Germany said it was she would not run for a third children under 16 from having
“examining” its position. Russia increased the pace of term as mayor of Paris. Since access to social media. Google
its assault on Ukraine, launch- taking office in 2014 Ms and Meta had asked for the
The South West African Peo- ing a huge missile attack on the Hidalgo has overseen a contro- legislation to be delayed until
ple’s Organisation, better country’s energy infrastruc- versial plan to reduce motor they could complete tests of
known as SWAPO, which has ture. Russia recently struck traffic in the city by giving age-verification systems. Elon
ruled Namibia since its in- Ukraine with a new conven- priority to cyclists. It has not Musk weighed in, describing
dependence in 1990, faced its tional intermediate-range been universally popular. Paris the bill as a “backdoor way to
biggest-ever challenge in a missile, hitting a weapons now has more than 1,000km control access to the internet
presidential and general elec- facility. For its part Ukraine (620 miles) of bike lanes, up by all Australians”.
tion. Opinion polls show it is said it had damaged an oil from 200km in 2001.
increasingly unpopular. depot near Moscow and targets The COP29 climate summit in
in Russia’s Bryansk and Kursk India’s lower house of Parlia- Baku almost ended in acrimony
A refugee camp near the city of border regions. Russia said that ment twice suspended pro- in a row over finance. In the end
el-Fasher in south-west Sudan an airbase that housed an ceedings as opposition MPs a compromise deal of $300bn a
housing about 500,000 people, air-defence system had been made noisy demands for a year for countries most vulner-
many of them said to be close hit with ATACMS, longer-range debate on the bribery charges able to the effects of global
to starvation, received its first missiles that America is allow- laid by American authorities warming was reluctantly
aid convoy in several months. ing Ukraine to fire into Russia. against Gautam Adani, one of agreed to by poorer states, but
Deliveries by the UN had been India’s most prominent busi- many, especially India, were
held up by fighting during the Police fired tear-gas and water nessmen. The opposition angry. The Indian negotiator
18-month-old civil war. cannon at protesters in Tirana, Congress party claims that the said it was a “paltry” sum.

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 8 The Economist November 30th 2024

The world this week Business

expansion into technological SoftBank was reportedly plan- May, Anglo American sold its
United States, goods imports
areas, such as artificial ning to invest an additional remaining coal assets to
2023, % of total
intelligence, which attracted $1.5bn in OpenAI. After its Peabody Energy for $3.8bn.
0 5 10 15 20 investors but which Northvolt latest round of fundraising
Mexico
failed to commercialise. Its OpenAI is now thought to be Macy’s had to delay the full
China
Canada main factory, in remote north- worth $150bn. publication of its quarterly
Germany ern Sweden, never reached earnings report, which would
Japan full capacity. For the second time this year have included its forecast of
S. Korea
Samsung overhauled the the crucial Christmas shopping
Vietnam
Taiwan Sticks, but no carrots senior-management ranks of season, because it uncovered
India Stellantis decided to close its its chip division, which is strug- an attempt by a former employ-
Ireland factory in Luton, near London, gling to compete with the likes ee “to hide approximately
Source: BEA which makes vans under the of TSMC. “I am fully aware that $132m to $154m” of delivery
Vauxhall brand. The carmaker there are grave concerns about expenses since 2021. The em-
Donald Trump fired the open- said it hoped it could relocate the future of Samsung,” ployee reportedly did not make
ing salvo in his trade war by hundreds of workers to a plant acknowledged its chairman, a financial gain. It is unclear
threatening to impose tariffs near Liverpool, though unions Lee Jae-yong. whether this was an accounting
of 25% on all goods exported to warned that 1,100 jobs were at error that had gone unnoticed.
the United States from Canada risk. Stellantis reportedly The share prices of Dell and
and Mexico and a further 10% blamed the British government HP fell sharply after both The war on woke
on all Chinese goods. Mr for imposing targets on car- PC-makers reported disap- Robby Starbuck, an online
Trump said he would do this makers to produce electric pointing earnings. The compa- activist, claimed another victo-
because Canada and Mexico vehicles when consumer de- nies hope that sales will im- ry in his fight against corporate
were permitting illegal mi- mand for EVs was slowing. Ford prove when consumers buy diversity, equity and inclusion
grants and drugs to cross their also chimed in, decrying the new PCs with AI capabilities. policies, when Walmart told
borders, and because China lack of incentives in Britain for him it would no longer provide
was not executing enough drivers to switch to EVs. UniCredit, Italy’s second- preferential treatment to sup-
fentanyl smugglers. Econo- biggest bank, offered to buy pliers based on diversity and
mists warned of soaring prices Amazon doubled its invest- Banco BPM for $11bn, which its discontinue racial-equity
in America if the duties are ment in Anthropic, an artifi- smaller rival rejected. The training, among other things.
imposed. Canada’s oil industry cial-intelligence startup, to proposal was unexpected. Mr Starbuck had threatened to
said the tariffs would under- $8bn. It made an initial in- UniCredit has ambitions to highlight Walmart’s DEI prac-
mine energy security. After his vestment only in September take over Commerzbank, a tices ahead of the Christmas
announcement Mr Trump said last year. Amazon is integrating large German lender, though season, which might have
that he had had a “wonderful Anthropic’s technology into its that proposition is fiercely prompted a conservative boy-
conversation” with Mexico’s cloud services, and aims to resisted in Germany. cott of its stores. Announcing
president, Claudia Sheinbaum, incorporate Anthropic’s chat- Walmart’s climbdown, he said
about stopping migration. bot, Claude, in its Alexa voice- In the first of four big divest- “companies can clearly see that
command platform. Separately, ments that it announced in America wants normalcy back”.
Meanwhile, Mr Trump chose
Jamieson Greer to be the trade
representative in his new
administration. Mr Greer was a
senior aide to Robert Light-
hizer, the trade chief in Mr
Trump’s first government. In
May Mr Greer said that “The
effort to pursue strategic
decoupling from China will
cause short-term pain.”

Peter Carlsson stepped down

as chief executive of Northvolt,
shortly after the Swedish maker
of battery cells declared bank-
ruptcy. Northvolt had once
been hailed as Europe’s cham-
pion in the global market for
electric-car batteries, which is
dominated by China, but it
collapsed under a pile of debt.
The company laid off workers
earlier this year as it struggled
to survive. Some of its pro-
blems came from its rapid

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 The Economist November 30th 2024 Leaders 9

The least bad deal for Ukraine

How to make a success of peace talks with Vladimir Putin

OR TWO years the war in Ukraine has been fought metre by The Economist has argued that the best way of protecting
F blood-soaked metre. Suddenly, dramatic change is at hand.
One reason is that Russia’s grinding advance has exposed
Ukraine would be for it to join NATO. Membership would help
prevent it from becoming unstable, embittered and vulnerable
grave weaknesses in manpower and morale that could eventu- to co-option by Mr Putin in pursuit of his ultimate aim, which
ally lead to a collapse in Ukraine’s lines. More urgent, Donald is to destabilise and dominate Europe. It would also bring
Trump has made clear that, as president, he will be impatient Europe’s largest, most innovative and battle-hardened army
for the shooting to stop. and defence industry into the alliance—something that Mr
The great worry is that Mr Trump will impose a disastrous Trump might welcome, because NATO would then need fewer
deal on Ukraine. Vladimir Putin says he might be willing to American troops.
freeze the front lines, though Russia occupies just 70-80% of Membership raises hard questions, because of the alliance’s
four Ukrainian provinces it has annexed. But he is also de- “Article 5” pledge that an attack on one member is an attack on
manding that the West should lift sanctions; that Ukraine all. But answers exist. The guarantee need not cover the parts
should renounce NATO membership; that it be demilitarised of Ukraine that Russia now occupies—just as it did not cover
and formally neutral; that it “denazify” itself by jettisoning its East Germany when West Germany joined in 1955. Troops
leaders; and that it protect the rights of Russian-speakers. from other NATO countries may not need to be based in Uk-
Should Mr Trump back this, Mr Putin would have achieved raine in peacetime, as when Norway joined in 1949.
most of his war aims and Ukraine would have suffered a cata- We still favour these arguments. However, for Ukraine to be
strophic defeat. What is more, Russia’s president would not re- in NATO requires the backing of all its 32 members, including
spect a piece of paper. He would hope that post-war Ukraine, Hungary and Turkey, which delayed the accession of Sweden
consumed by infighting and recriminations against the West, and Finland. As our reporting shows, some countries, includ-
would fall into his lap. If it did not, he might seize more territo- ing the front-line states, plus Britain, France and, under a new
ry by force. As the self-appointed guardian of Ukraine’s Rus- chancellor, Germany, may therefore be open to bilateral deals
sian-speakers, he could easily concoct a pretext. in which they base their troops in Ukraine as a tripwire force
That is the fear. But it is not inevitable, nor (see Briefing). In effect, they would be seeking
even the likeliest outcome. Capitulation to Mr to deter Mr Putin with the threat that further
Putin would be a public defeat for America Russian action could bring them into the war.
and Mr Trump. It would spill over into Asia, It looks like an elegant solution, but a trip-
where America’s foes might become more ag- wire force would amount to an Article 5 guar-
gressive and its friends might lose confidence antee by another name. Countries should not
in their ally and curry favour with China in- offer such a promise to Ukraine unless they
stead. And Mr Trump would surely want to are ready to honour it—as walking away under
avoid the humiliation of being known as the Russian fire would undermine them as mem-
man who lost Ukraine by being out-negotiated by Mr Putin. It bers of NATO, too, perhaps fatally. Simply because it was new,
is in his own narrow interest to forge a deal that keeps Ukraine the tripwire force would be likely to be probed and tested for
safe for at least the four years of his term. In that time Ukraine weak points by Mr Putin. To be credible it would need formal
can accomplish a lot. backing from Mr Trump, even if he provided no troops, be-
Mr Trump has leverage over Russia if he wants to use it. Be- cause Europe still depends on America to fight wars, especial-
cause he is unpredictable, he could threaten to go all-in with ly against an adversary as big as Russia.
Ukraine by sending it more and deadlier weapons, and Mr Pu- It would also need a change of approach in Europe, partic-
tin would have to take him seriously. In addition, the Russian ularly in Germany. To signal to Mr Putin that they were serious,
economy is hurting, the rouble is tumbling and Russians are European countries would need to demonstrate their support
tired of fighting (see Briefing). Although Mr Putin could sus- for Ukraine. That would involve massive aid for rebuilding the
tain the war for another year or more, he might also benefit country and weapons, as well as progress in EU accession
from a pause. As Mike Waltz, Mr Trump’s incoming national talks. To signal to Mr Putin that they would fight back if he at-
security adviser, has suggested, America can therefore also tacked, they would need to dramatically increase their own de-
threaten to use sanctions to make that pain worse. fence spending and overhaul their arms industries (see Europe
What, then, should a deal aim for? Restoring the borders of section). Mr Trump, who has long urged bigger European de-
1991 is a pipe dream. Morally and legally, all that land belongs fence budgets, ought to welcome such an outcome.
to Ukraine, but it does not have the soldiers, arms or ammuni- A ceasefire would present two competing visions of
tion to recapture it. Instead, the aim should be to create the Ukraine’s future. Mr Putin’s calculation is that he will win from
conditions for Ukraine to thrive in the territory it now controls. a deal because Ukraine will rot, Russia will re-arm and the
For that it will require stability and reconstruction, both of West will lose interest. But imagine that, with Western back-
which depend on being safe from Russian aggression. That is ing, Ukraine used the lull to rebuild its economy, refresh its
why at the heart of the talks will be how to devise a credible politics and deter Russia from aggression. The task is to en-
and durable framework for Ukrainian security. sure that this vision prevails over its grim alternative. ■

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 10 Leaders The Economist November 30th 2024

Lessons from Argentina

“My contempt for the state is infinite”

Javier Milei is idolised by the Trumpian right. They should get to know him better

ANY PEOPLE in America hope that the new Trump ad- Make no mistake, the Milei experiment could still go badly
M ministration will take an axe to a bloated and overbearing
government, cutting spending and rolling back regulation.
wrong. Austerity has caused an increase in the poverty rate,
which jumped to 53% in the first half of 2024 from 40% a year
Whether this goal is even plausible any more is a crucial ques- earlier. Mr Milei could struggle to govern if resistance builds
tion for America and the world, after two decades in which and the Peronist opposition is better organised. Investor confi-
government debt globally has risen relentlessly, fuelled by the dence will be tested if he finally removes capital controls and
financial crisis of 2007-09 and the pandemic. For an answer, shifts an overvalued peso to a flexible exchange-rate regime: a
and a case study of taming an out-of-control Leviathan, head currency slump could test nerves and push inflation back up.
5,000 miles south from Washington, where an extraordinary Mr Milei is an eccentric who could become distracted by cul-
experiment is under way. ture wars over gender and climate change, and thus neglect his
Javier Milei has been president of Argentina for a year. He core mission of restoring Argentina’s economy to growth.
campaigned wielding a chainsaw, but his economic pro- Nonetheless, and despite the fact that Argentina is a very
gramme is serious and one of the most radical doses of free- unusual country, Mr Milei’s first year holds lessons for the rest
market medicine since Thatcherism. It comes with risks, if of the world, including his admirers and detractors in America.
only because of Argentina’s history of instability and Mr Mi- Take the growth of the state. Global public debt has risen from
lei’s explosive personality. But the lessons are striking, too. 70% of GDP 20 years ago to 93% this year and will hit 100% by
The left detests him and the Trumpian right embraces him, 2030. Debt is a scourge not only in rich countries but also in
but he truly belongs to neither group. He has shown that the China and India, which are both running vast deficits.
continual expansion of the state is not inevitable. And he is a The financial crisis and the pandemic raised borrowing and
principled rebuke to opportunistic populism, of the sort prac- created a sense that the government will always step in when
tised by Donald Trump. Mr Milei believes in free trade and free people are in adversity. Many countries face rising health-care
markets, not protectionism; fiscal discipline, not reckless bor- and pension costs as the population ages. Regulations only
rowing; and, instead of spinning popular fantasies, brutal pub- ever seem to accumulate. Governments are at a loss as to how
lic truth-telling. to break the cycle. In some places, such as
Argentina has been in trouble for decades, France, the prospect of doing so threatens po-
with a state that handed out patronage, politi- litical chaos (see Europe section).
cians who lied and a central bank that printed Some of Mr Milei’s lessons are technical.
money to paper over the cracks. To control in- To cut spending he has asked government de-
flation, its governments resorted to a blizzard partments to slash expenses on procurement,
of price controls, multiple exchange rates and administrative costs and salaries rather than
capital controls. It is so far the only country in cash transfers to the poorest. He recognised
modern economic history to have tumbled that controlling pension spending is essential
from rich-world status back into the middle-income bracket. because an ageing population eats up vast chunks of the bud-
Mr Milei was elected with a mandate to reverse this decline. get, a fiscal reality that many countries have yet to confront. In
His chainsaw has cut public spending by almost a third in real power, he has learned to add a dose of pragmatism to his con-
terms, halved the number of ministries and engineered a bud- victions. He has set the direction for Argentina, but delegates
get surplus. There has been a bonfire of red tape, liberating legislative horse-trading to his staff and asks skilled ministers
markets from housing rentals to airlines. The results are en- to oversee the economy—most notably Federico Sturzenegger,
couraging. Inflation has fallen from 13% month on month to his deregulation tsar.
3%. Investors’ assessment of the risk of default has halved. A
battered economy is showing signs of recovery. Big ego, small government
What is fascinating is the philosophy behind the figures. Perhaps the biggest lesson is about courage and coherence.
Mr Milei is often wrongly lumped in with populist leaders such Like them or not, Mr Milei’s policies align with each other,
as Mr Trump, the hard right in France and Germany or Viktor which magnifies their effect. Unlike Mr Trump, he has not
Orban in Hungary. In fact he comes from a different tradition. promised to unleash the power of markets and consumers in
A true believer in open markets and individual liberty, he has a one breath, and to protect businesses from competition in the
quasi-religious zeal for economic freedom, a hatred of social- next (see Leader). By winning the argument for tough but vital
ism and, as he told us in an interview this week, “infinite” con- reform, he has shown that voters used to sugar-coated banal-
tempt for the state (see Americas section). Instead of industri- ities can in fact be trusted with hard truths.
al policy and tariffs, he promotes trade with private firms that Mr Milei, with his biker jackets, “anarcho-capitalist” mantra
do not interfere in Argentina’s domestic affairs, including Chi- and explosive temper, is an unlikely saviour, and he may not
nese ones. He is a small-state Republican who admires Marga- save Argentina. But his attempt to confront, coherently and
ret Thatcher—a messianic example of an endangered species. systematically, one of the most extreme incarnations of what
His poll ratings are rising and, at this point in his term, he is is now a near-universal problem deserves to be watched close-
more popular in Argentina than his recent predecessors were. ly around the world. Including in the White House. ■

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 The Economist November 30th 2024 Leaders 11

Ceasefire over Lebanon

A chance for Donald Trump

The president-elect must build on Joe Biden’s belated success

T LAST, A flicker of hope. The ceasefire between Israel and es. Ending the war in Lebanon is a welcome gesture towards
A Hizbullah, which took effect on November 27th, brings re-
spite to millions of Lebanese and Israelis. It ends a war of near-
Mr Trump, who campaigned on doing just that.
When it takes power in January, though, the Trump admin-
ly 14 months that Hizbullah, a Shia militia, no doubt regrets istration should demand more. It may seem that the region’s
having started. It also gives Israel much of what it sought, in- two wars have been separated and, with Lebanon becalmed,
cluding a right to strike if Hizbullah re-arms. America, mean- Gaza is now just an isolated conflict. That is an illusion. Any
while, has a responsibility for monitoring compliance. path to a grand bargain of the sort Mr Trump’s aides are keen
But this agreement is just a start. It offers only a promise to pursue must begin in the ruins of Gaza.
that Hizbullah will be disarmed, and such pledges have often Far-right Israeli lawmakers see Mr Trump’s second term as a
been broken. The reason to hope that this time will be differ- golden opportunity to rebuild Jewish settlements in the nar-
ent is that Hizbullah has been much diminished and will row Gaza Strip that were dismantled in 2005. They are also
struggle to regain its former strength. keen to annex parts of the West Bank, thus precluding a future
It was a rare success for America’s dip- Palestinian state. Allowing this would be a di-
lomats, who have often looked feeble since saster, not only for Palestinians but also for Mr
October 7th 2023. For months, Hizbullah in- Trump’s regional agenda. There is little pros-
sisted that Lebanon’s fate was entwined with pect of his cherished aim of normalisation be-
Gaza’s: the only way for Israel to end one war tween Israel and Saudi Arabia if Israeli settle-
was to end both. For his part, Binyamin Netan- ments are sprouting on the rubble of Gazan
yahu, Israel’s prime minister, promised to keep homes, or if, contrary to Saudi demands, a Pal-
fighting in Lebanon until the residents of estinian state becomes impossible.
northern Israel felt safe to return home. Mr Trump will need to dampen the impuls-
Both sides finally abandoned those positions. Hizbullah es of Israel’s coalition (and of his own Republican Party). At
decoupled its war from the one in Gaza, with the blessing (and the same time, he can help strengthen the ceasefire in Leba-
perhaps the encouragement) of its Iranian sponsors. Mr Net- non. He should offer to negotiate with Iran but make clear that
anyahu accepted a ceasefire over the objections of some Israe- shipping arms to Hizbullah would instantly end such talks.
lis. Both sides had good reason to accept a deal, for both are Joe Biden has dismally failed to use American leverage in
exhausted. Hizbullah and Lebanon have been battered, while the Middle East. He promised there would be no daylight be-
Israel’s army has been gasping under the burden of two wars. tween America and Israel, even as Mr Netanyahu defied him
Donald Trump was an encouragement, too. Iran may be time after time. He kept Iran under sanctions that he failed to
keen to negotiate with him, which would have been impossible enforce. No side took him seriously, since there seemed to be
while Hizbullah was shooting at Israel. Iran now has an incen- no consequences for resisting America. Mr Trump will need to
tive to restrain its militia, at least for a while. As for Mr Netan- be tougher—and remember to use his leverage on America’s
yahu, he is also eager to stay in the president-elect’s good grac- regional allies, not only its foes. ■

Trade war

Shots fired
The threat of tariffs will do harm, whether or not the Trump administration imposes them

T DID NOT take long. Even before getting into office, Do- more than half the pickup trucks sold by GM and Stellantis in
INovember
nald Trump fired the opening shots in a new trade war. On
25th America’s president-elect posted on social me-
the United States are made in Canada or Mexico, which is why
the firms’ share prices fell by 9% and 5%, respectively, on the
dia that he would add an extra tariff of 10% on Chinese goods. day after Mr Trump’s announcement. (Stellantis’s largest
But the shock was news of tariffs of 25% on Canada and Mex- shareholder part-owns The Economist’s parent company.)
ico as soon as he returned to the White House. These, he thun- Goldman Sachs thinks the tariffs could raise core consumer
dered, would remain in place until the two countries clamped prices, which exclude food and energy, by as much as 0.9%.
down on drugs and migrants illegally crossing the border. No one knows how much Mr Trump sees tariffs as negotiat-
If they are imposed, the tariffs will hurt American consum- ing tools, and how much he wants to turn away from trade. It
ers most of all. The North American supply chain is integrat- might therefore be tempting to breathe a sigh of relief that
ed; nearly $1trn-worth of goods crossed the northern and these tariffs are a theatrical way to gain leverage. He has alrea-
southern borders of the United States last year. Half of Amer- dy had a “wonderful conversation” with Claudia Sheinbaum,
ica’s fruit and vegetables come from its two neighbours. And Mexico’s president. In 2019 he threatened levies of 25% on all ⏩

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 12 Leaders The Economist November 30th 2024

▸ Mexican goods, only to do nothing when Mexico and the Un- system using steeper and wider-ranging tariffs. Mr Bessent
ited States reached a border deal. Throughout the first term, and Mr Lutnik have been joined by Jamieson Greer, his new
the cabinet tempered his protectionist instincts. So did the trade representative, who takes a harder line. Although he was
stockmarket, which he saw as a barometer of public approval. constrained in his first term, Mr Trump did still manage to
This time, too, Mr Trump could curb his mercantilist enthu- raise some tariffs on China and Europe.
siasm. He has appeared to take unusual care in selecting his Moreover, if Mr Trump routinely uses the threat of tariffs
economic-policy team in order to avoid sabotaging a post- whenever he wants countries to do his bidding, they could spi-
election rally. Scott Bessent, a hedge-fund manager who is Mr ral out of control. Mexico has warned of retaliation. And the
Trump’s pick for treasury secretary, and Howard Lutnick, an- more tariff threats are repeated, the greater the danger of mis-
other financier who has been chosen as commerce secretary, calculation. If threats are never carried through, they will lose
have said tariffs are for negotiating with, unlike some of Mr their power. Ultimately that is likely to force Mr Trump to show
Trump’s inner circle who are ideologically opposed to trade. that he means what he says.
Another check on the administration could be the fear of
tariff-induced inflation. Americans’ experience of the highest It’s a beautiful word
price rises in 40 years helped doom Kamala Harris’s election For decades the benefits of global trade were so widely ac-
bid. Mr Trump may not want to be seen as the architect behind cepted that retaliatory tariffs were limited to trade disputes.
surging prices of everything from Americans’ breakfast avoca- Today free trade has depressingly few advocates, and tariffs
dos to their newest set of wheels. are used willy-nilly. Even if Mr Trump intends them only as a
The trouble, though, is that you cannot bank on any of this. negotiating tactic, the fear that the gains from trade might eas-
Mr Trump could still seek to re-engineer the global trading ily be frittered away will hang over the world economy. ■

Out of juice

Lessons from Northvolt’s failure

Governments blew billions on a battery champion. Time to welcome foreign investment instead

IdoneTpean
WAS SUPPOSED to be a battery pioneer, a symbol of Euro-
competitiveness and an example of industrial policy
right. Yet on November 21st Northvolt, Europe’s best-
waste several electric lorryloads of taxpayers’ money. That is
especially true if the champion in question is far behind the
market leaders. Governments often base their industrial poli-
funded startup, filed for bankruptcy. A day later its boss and cies on the “infant-industry” argument, which says that do-
founder, Peter Carlsson, announced his resignation (see Busi- mestic firms in new industries need protection until they are
ness section). What went wrong? viable. The trouble is, if they are too far behind, they may never
Northvolt certainly didn’t fail for lack of investment. The catch up with their foreign rivals—and support may simply al-
firm raised $15bn in total, including nearly $5bn in grants and low them to grow flabby.
loans from the governments of Canada, the European Union, Northvolt spent lavishly on lab-level breakthroughs and
Germany, Poland and Sweden. Wall Street titans such as Gold- next-generation technologies, but never worked out how to
man Sachs and BlackRock backed it. Big carmakers such as commercialise them and never came close to matching the
BMW, Scania and Volkswagen ordered more than $50bn-worth world’s best battery-makers. Its failure echoes Intel, an Amer-
of its products. VW was its largest investor. ican chipmaker that is due to receive $7.9bn of
But it struggled to get anywhere. Owing to Northvolt, pre-tax loss, $bn public funding, but still may not catch up with
incompetence and bad luck, its main battery 0 Nvidia and TSMC, the industry leaders. It post-
factory in a remote part of Sweden operated at -0.4 ed $17bn of losses in the third quarter.
a small fraction of its capacity, incurring huge There is a better way to nurture high-tech
-0.8
losses. Its managers were so eager to expand industries, which need not cost taxpayers any-
that they neglected the basics. Now Northvolt -1.2 thing. That is to smooth the way for foreign di-
may be broken up for parts and pounced on by 2019 20 21 22 23 rect investment, a proven means to spread
rivals, including Chinese ones. know-how from one country into another.
Its failure holds lessons. First, investors should not take it America and the rest of the West have fallen behind China and
for granted that when governments back an industrial champi- other Asian countries in some crucial areas, including large-
on, they will keep throwing money at it for ever. The banks that scale chipmaking and clean technologies such as solar power
lent to Northvolt, the pension funds that bought its shares and and electric vehicles. The way to catch up is to let leading firms
the carmakers that lodged big orders for its batteries all did so in those areas open factories in the West. TSMC, a Taiwanese
on the assumption that it was as safe as a well-insulated wire. company, is building what will probably be America’s most ad-
Even after its troubles became obvious, JPMorgan Chase and vanced chip factory in Arizona, even as Intel struggles. CATL, a
24 other lenders announced a $5bn loan earlier this year, the Chinese firm and the world’s largest EV-battery-maker, is in-
biggest green loan ever in Europe. Their faith in government vesting in Germany and Hungary; LG Energy Solution, a South
may have cost them a fortune. Korean firm, is now the biggest maker of lithium-ion batteries
Second, when politicians try to back national champions in in Europe. Asia learned from the West by welcoming its best
areas where technology is rapidly evolving, they are likely to companies. Now the West needs to learn from Asia. ■

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 14 The Economist November 30th 2024

LETTERS ARE WELCOME AND SHOULD BE ADDRESSED TO THE EDITOR AT:

Letters THE ECONOMIST, THE ADELPHI BUILDING, 1-11 JOHN ADAM STREET, LONDON WC2N 6HT
EMAIL: [email protected]. MORE LETTERS AVAILABLE AT: ECONOMIST.COM/LETTERS

Against assisted dying ready legal withdrawal of of being able to commit sui- to “avoid approaching CAR’s
The Economist has been consis- life-sustaining treatment from cide, which is already legal, is government solely from the
tent in its position on assisted patients in a “vegetative state” not matched by the equivalent perspective of geopolitical
dying, or assisted suicide, over to the provision of drugs to positive liberty to actually carry competition with Russia”.
the decades. But it is wrong to actively bring about the end of this out. Viewing the country only
espouse a hastily written bill someone’s life. There is no The bill aims to give people through this lens overshadows
that would legalise the proce- equivalence. As an intensive- the “freedom to” end their lives compelling aspects of central
dure in Britain (“It’s time”, care doctor I am routinely at a time of their choosing by African security and policy
November 23rd). If this really involved in supporting deci- extending government support dynamics. For example, no
were a “chance to enrich peo- sions with patients and their to allow them to decide for analysis of CAR’s political
ple’s fundamental liberties” the families to withhold or with- themselves rather than having landscape is complete without
patient alone would decide draw life-sustaining treatments the decision made for them by considering the land-use con-
whether or not to live or die. from people who are dying physical limitations. Converse- flict arising out of trans-
Instead, two doctors and a from a disease that is beyond ly, the bill’s opponents argue humance—the annual cross-
judge decide, according to this treating (or in the case of “vege- that the negative liberty al- border migration of livestock.
bill. This is hardly the “autono- tative state”, where brain death ready granted (suicide) is suffi- Tensions between nomadic
my” you think it is. has occurred, already dead). cient, and that the positive cattle-herders and sedentary
And it may be right that These decisions take place liberty put forward by the bill is agrarian communities have
“the principle of assisted dying knowing that the treatment has too difficult to operate, given shaped the government’s
has already been established”. reached a point of futility. Our the potential for family trajectory and the country’s
Indeed, patients already have a goals then switch from sustain- pressure. Fundamentally, recent history.
right to refuse treatment or ing life to managing the dis- rather than seeing the bill as Herders are often armed as
even food and drink. Doctors tressing symptoms of dying, keeping the government out of they guide cattle southward
have the right to refuse to treat including maximising patients’ the hospice they see this bill during the dry season in search
a patient if the treatment is autonomy where this has been as bringing the state into of lush fields. The farther south
futile. And the risk of compan- stripped from them by the the hospice. cattle are sold, the greater the
ions going to prison for accom- disease. The latter does not The phrase “assisted dying” return a herder can expect.
panying someone to Swit- involve any interventions that implicitly recognises that the Compared with other exports
zerland is minute. Not one are administered with the bill doesn’t just propose that such as diamonds and gold that
relation has been successfully intention of bringing about the the terminally ill have a right to have attracted international
prosecuted for accompanying death of the patient. Any such end their life, it proposes that (and Russian) attention, live-
someone who undertook an intervention would not, could they have help to do so. stock is underappreciated, yet
assisted suicide in Switzerland. not, be classified as either JOSEPH CARD accounts for up to 12% of CAR’s
But this bill aims to change the treatment or palliation. Paris GDP. Russian mercenaries were
Suicide Act of 1961, which I am a doctor who has reportedly interested in profit-
prohibits assisting a suicide. worked with patients in and Assisted dying should be a ing from this trade but they too
On one hand, you dismiss around the end of their lives for right, and the restrictions may have been deterred by its
the idea of the slippery slope. all of my career. To cross the round it should be loosened. complexity.
On the other, you agree that Rubicon that distinguishes The evidence from various THOMAS VELDKAMP
being a burden is a legitimate palliating dying from causing jurisdictions is that abuse is Legal adviser
reason for opting to die. That is death would be a betrayal of virtually non-existent. The Doctors Without Borders
chilling. The bill also allows everything I have stood for alternative for someone of any Paris
doctors, who are desperate to since qualifying from medical age is suicide, mostly by very
free up hospital beds, to raise school. Assisting someone to unpleasant means. If someone Spotting a trend
the issue with patients. What commit suicide is not a medical wants to leave, why not let As an airship enthusiast, I am
could possibly go wrong? intervention and we should not them depart in a civilised man- glad to see that the industry is
What we know is that if this ask doctors to do it. Doing so ner at vastly reduced cost to on the verge of taking off (“The
bill is passed, many elderly and will fundamentally undermine public-health services? The sky’s the limit”, November
ill people will opt for an assist- the trust patients have in the fear of being a burden is very 2nd). I always get a lift out of
ed death because the care they medical profession. real. A dear friend of mine has this story when you run it, such
need is so difficult to get. We DR ROGER STEDMAN sadly reached this state, one I as “Airships could be returning
also know that this bill opens Consultant sincerely hope to avoid. for commercial travel” (March
the doors to seeing death as a Intensive care and anaesthesia JOHN ARNOTT 22nd 2016), “Reviving airships”
legitimate medical treatment. I Swindon Toronto (March 8th 2014), “Flying
hope MPs will reject it. saucers” (December 11th 2010),
PROFESSOR KEVIN YUILL Bagehot (November 23rd) Valuable cattle in the CAR “Are they coming back?” (no,
Chief executive missed a central point of Isaiah The Central African Republic’s alas, July 12th 2008) and “Push-
Humanists Against Assisted Berlin’s argument about posi- horrific internal conflict start- ing the envelope” (May 29th
Suicide and Euthanasia tive and negative liberties. ed in 2013, long before the 1999), just to name a few.
Durham Rather than supporting a nega- arrival of Russian mercenaries With soaring spirits I look
tive liberty, the assisted-dying (“After Prigozhin”, October forward to your next report
Although I respect your posi- bill is an extension of positive 19th). The International Crisis about the sky-high future
tion on assisted dying I dis- liberty. The bill tackles the Group, a global NGO that of airships.
agree with it profoundly. For reality that for many terminally provides independent analysis, JOHN ASTELL
instance, you equate the al- ill people the negative liberty recently advised policymakers Holden, Massachusetts

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 The Economist November 30th 2024 15

Briefing Russia, Ukraine and Donald Trump

Inaugural call

How will Donald Trump handle the war? And how will Ukraine, Russia and Europe respond?

HEY’RE DYING, Russians and Ukrai- one way or another,” declared J.D. Vance, territory. But with Ukrainian forces retreat-
“T nians,” lamented Donald Trump last
year. “I want them to stop dying. And I’ll
the vice-president-elect, in 2022. “I…re-
main opposed to virtually any proposal for
ing, the Russian defence industry hum-
ming and North Korean troops joining the
have that done…in 24 hours.” In January Mr the United States to continue funding this fray on Russia’s side, Mr Putin believes he
Trump returns to the White House. Can he war,” he added in April this year. has the upper hand. Although economic
put an end to the largest war in Europe If America cut Ukraine adrift, Vladimir and social pressures are rising at home (see
since 1945? The odds are stacked against Putin, Russia’s president, could more or next story), he is in no rush to end the war.
him. He will need to overcome Russian re- less dictate terms. In June he set out his He could even dust off some of the humili-
calcitrance, Ukrainian indignation and stall: Ukraine should withdraw its forces ating demands Russian negotiators made
European disunity. “It’s like Christopher from four of the provinces annexed by in peace talks in 2022, including strict lim-
Columbus trying to see over the ocean, Russia—Donetsk, Luhansk, Kherson and its on Ukraine’s armed forces (no more
thinking he is headed for India,” says Kon- Zaporizhia—even though roughly a quar- than 85,000 personnel), tanks (342 at most)
stantin Gryshchenko, a former Ukrainian ter of their territory remains in Ukrainian and missiles (a maximum range of 40km)
deputy prime minister and foreign secre- hands (Russia would also keep Crimea, because he knows the Ukrainians would
tary. The fear is that Mr Trump will push which it occupied in 2014). Ukraine would not accept this, even under pressure.
through a bad deal for appearances’ sake. have to drop plans to join NATO, too. Some observers believe, however, that
If Mr Trump’s priority is to strike a That is doubtless posturing. In Novem- Mr Trump would consider a Ukrainian de-
deal—any deal—then he could simply cut ber Russian officials told Reuters, a news feat bad both for America and his own im-
aid to Ukraine and insist that it accept agency, that they would consider merely age. “Trump won’t be played for a sucker,”
Russia’s demands. Some in his circle, such freezing the current lines with “room for argues Matthew Kroenig of the Atlantic
as his son Donald junior, delight in the negotiation over the precise carve-up” of Council, a think-tank in Washington, who
idea that Mr Trump will cut off Ukraine’s recently co-wrote an article for The Econo-
“allowance”, ie, the billions America is giv- mist with Michael Waltz, whom Mr Trump
ing it in military and economic support to → ALSO IN THIS SECTION has chosen as his national security adviser.
fend off Russia’s full-scale invasion. “I “He will walk away from a bad deal.” Mr
don’t really care what happens to Ukraine 17 Russia’s home front Trump, insiders say, fears a failure in Uk- ⏩

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 16 Briefing Russia, Ukraine and Donald Trump The Economist November 30th 2024

▸ raine would dent his popularity, just as the continue to re-arm. Ukraine, meanwhile, part of a multinational European force, it
chaotic withdrawal from Afghanistan in would be forced to demobilise to revive its might seem more palatable.
2021 hurt President Joe Biden. economy. That might tempt Mr Putin to Mr Macron has publicly aired the idea
Mr Waltz has acknowledged that Amer- try again in a year or two. of sending French troops to Ukraine. Brit-
ica may need leverage to extract better Ukraine, naturally, would like firm se- ain would also be a plausible member of
terms from Mr Putin. He has suggested curity guarantees. That would ideally any expeditionary force. Its armed forces
that America expand gas exports, crack come in the form of NATO membership. have been heavily involved in Ukraine and
down on Russian oil sales, provide more But Mr Trump has often disparaged the al- Sir Keir Starmer, Britain’s prime minister, is
weapons to Ukraine and ease restrictions liance. “NATO is a relic and should be keen to rebuild security and defence ties
on their use if Mr Putin does not come to scrapped,” wrote Pete Hegseth, his pick for with European partners. German officials
the table. Kurt Volker, who served as a spe- defence secretary, four years ago. And even are more hesitant. But Friedrich Merz, the
cial envoy to Ukraine during Mr Trump’s if Mr Trump were to come around, it is pos- leader of the right-wing Christian Demo-
first term, suggests Mr Trump’s approach sible that other members of NATO, such as crats and the likely chancellor after elec-
might initially be simple: a demand to Hungary, would veto Ukraine’s accession. tions in February, is thought to be more
“stop the war” without conditions. Some in Mr Trump’s entourage have open to the idea.
Others in MAGA-land are also thinking suggested that Europe instead form a co-
about how a deal might be enforced. Keith alition of the willing to deploy troops in- Move on and blame Biden
Kellogg, a retired general whom Mr Trump side Ukraine. Any deployment would se- These plans depend, however, on Mr
this week picked as special envoy to Russia verely tax Europe’s armed forces. Eastern Trump retaining some interest in a deal.
and Ukraine, and Fred Fleitz, a CIA veteran European countries, several of which host Eric Ciaramella of the Carnegie Endow-
at a pro-Trump think-tank, have proposed multinational NATO battlegroups, would ment for International Peace, a think-tank
that America “continue to arm Ukraine…to not want to give them up. Nor would in Washington, who served in the White
ensure Russia will make no further advanc- NATO’s high command want to hand over House under Mr Trump, argues that the
es and will not attack again after a cease- the alliance’s reserve forces. Money is an- isolationist wing of the Republican Party is
fire”. Ukraine would not be asked to cede other concern. Germany’s planned deploy- ascendant. Mr Trump may look for an easy
territory and America and its allies would ment of a brigade to Lithuania, for exam- deal through a combination of “carrots for
lift sanctions and normalise ties only if ple, may cost as much as €6bn to set up Russia and sticks for Ukraine”: the offer to
Russia were to sign a settlement “accept- and €800m a year to run. Bases in Ukraine lift sanctions on Russia and the threat to
able to Ukraine”. If Mr Trump were to em- would involve more complex logistics and cut off weapons to Ukraine. If Ukraine col-
brace these proposals, Ukrainians would require more sophisticated defences. Lo- lapses, says Mr Ciaramella, Mr Trump will
be delighted. cating five brigades there, say, could easily simply blame Mr Biden.
Another question is what role Europe exceed the €43.5bn spent to date by EU Ukrainian collapse is not inevitable,
will play. Advisers to Emmanuel Macron, countries on military aid to Ukraine. though Russian advances are likely to ac-
France’s president, worry that diplomacy Above all, it is unlikely that Europeans celerate in the coming weeks. Mr Biden’s
will become an American-Russian affair, would send any troops without at least administration is hastening arms deliveries
with both Ukraine and Europe left out. “I some American involvement, although air during its final weeks in office, spending
don’t think we should fight Trump on the cover and indirect support might suffice. the last of the funds authorised by Con-
point that we want peace in Ukraine,” says European governments do not appear gress and rushing whatever it can to the
a diplomat from eastern Europe. It need to have thought all this through in detail, front. It has eased rules restricting the use
not be only apologists for Russia who call says a person familiar with the issue. “We of certain missiles against targets in Russia
for the war to end, he argues. But the goal, haven’t detected any sort of serious plan- and is transferring landmines to hamper
he adds, should be a lasting peace, not a ning effort behind the big idea.” But the Russia’s advance. Weapons will continue
half-baked one. Mr Trump is still “playing big idea is at least being discussed at high to flow well into next year, unless Mr
with ideas,” says the diplomat, “and he’s levels in European capitals. Northern and Trump halts shipments. Senior Biden ad-
looking for input from Europeans”. eastern European states would probably ministration officials argue Ukrainian
Input, yes, but perhaps also a pound of be the most comfortable with it; western stocks of artillery shells, anti-aircraft mis-
flesh. Mr Trump believes that when it and southern ones less so. Although public siles and other munitions are healthier
comes to helping Ukraine, as with Euro- opinion appears to be opposed in many than they have been for a long time.
pean defence in general, Europeans should European countries, were a deployment to More out of hope than conviction,
be bearing most of the cost. European take place after a cessation of hostilities as America’s allies express confidence that
countries allocated around €118bn Mr Trump will not sell out Ukraine. Many
($124bn) in aid to Ukraine from January of Ukraine’s top officials welcomed Mr
24th 2022 to August 31st 2024, compared Wedge issue Trump’s election. Volodymyr Zelensky,
with America’s €85bn—almost a 60:40 ra- Ukraine, cumulative total aid* allocated, €bn Ukraine’s president, has floated special ac-
tio (see chart). But if Mr Trump were to de- By source cess for American firms to Ukraine’s de-
mand an 80:20 split instead, so be it, sug- 120 posits of rare minerals as a quid pro quo
gests the European diplomat, who thinks Europe that may appeal to the transactional Mr
100
that a modest price to pay for America’s Trump. Admiral Rob Bauer, the head of
continued involvement. Europe’s war fa- 80 NATO’s military committee, speaking at
tigue is overstated. In Germany, for in- 60 the Halifax International Security Forum
stance, according to a recent Politbarome- in Canada in late November, declared, “I
United States 40
ter poll, 43% of respondents would like aid cannot imagine it’s in the interest of the
to Ukraine to increase whereas only 24% 20 United States that Putin comes out of any
want it reduced. possible peace negotiations as the winner.”
0
The problem is that, if a deal is done, A European foreign minister refused to en-
political support for maintaining aid may 2022 23 24 tertain the idea that Ukraine would be
dissipate quickly. Russia is spending more *Military, financial and humanitarian abandoned. “It would be such a shock that
Source: IfW Kiel, Ukraine Support Tracker
than 8% of GDP on defence, and so could it’s not going to happen.” ■

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 The Economist November 30th 2024 Briefing Russia, Ukraine and Donald Trump 17

there is a war going on,” says a resident of

Cheremushkin. “It is as though we don’t
have war,” echoes someone in Buryatia.
The big payouts for those who enlist
are a topic of conversation: a neighbour
who has earned a fortune, for example, or
the wife of a dead soldier who bought a car
with the compensation and then took up
with another man. “Fuck your money, why
do I need it?” scoffs a woman at the idea
that her husband would sign up to improve
the family’s finances. “I’ll earn those
200,000 myself and I’ll know that I have
everything and my family is healthy. I’ll
buy myself those earrings and I’ll have a
man by my side. I would never send my
man to certain death!” The fact that people
earn so much by signing up means that ca-
sualties are seen not as victims of the state
so much as free agents making a risky but
rational effort to improve their lives.
Many people seem to mistrust official
statements about the war and yet to parrot
Russia’s home front the narrative that the West is to blame.
“They are sending kids to fight the war!” a
All disquiet woman in Cheremushkin laments. “I don’t
understand these politics. What are they
trying to achieve?” Yet, the same woman, a
few minutes later, complains, “The US is
hitting ordinary people. They are killing ci-
vilians and blaming Russia for it.”
The war in Ukraine is straining Russia’s economy and society People do not like to associate them-
selves with the war, the research suggests.

ItinNofgave
EARLY NOVEMBER, on the anniversary
the Bolshevik revolution, Vladimir Pu-
a speech meditating on the pat-
conducted interviews and observed every-
day life, providing first-hand reporting on
the mood in Mr Putin’s political heartland.
An estate agent in Krasnodar gripes that
her relatives in Ukraine have stopped talk-
ing to her. “What do I have to do with it?
terns of history. The communist takeover The study found that Russians in such Did I want this war or did I start this war?”
of Russia, he said, was one of the “mile- places are neither indoctrinated militarists she asks. The report notes, “In general,
stones…that determined the course of his- nor passive automatons, as is often as- everyone is ready to agree that war is ‘bad’
tory, the nature of politics, diplomacy, sumed. Instead they appear to be equally and ‘scary’; some interlocutors, in particu-
economies and social structure”. The war alienated from the state, from jingoistic lar, admitted that they cannot understand
he started in 2022 by invading Ukraine, he patriots and from pro-Western exiles. In all the meaning of the war.” What people
implied, was another such moment. three towns pro-war propaganda has all crave is not victory, since they have no
“We are witnessing the formation of a but disappeared. People have taken down clear idea what that means, but for things
completely new world order, nothing like the “Z” stickers they had put on their cars to return to how they were before the war.
we have had in the past, such as the West- in the first weeks of the “special military
phalian or Yalta systems,” he claimed. At- operation”. In Cheremushkin (an invented The silent majority
tempts to isolate and contain Russia have name for a real place in the Urals), a black- Public polling, such as it is, bears out these
failed spectacularly, he argued. “Our oppo- and orange-striped flag (another military findings. Roughly half of Russians, a re-
nents assumed that they would inflict a symbol) still hangs outside a hotel, but has cent survey found, would support the with-
crushing defeat, dealing a knockout blow faded. Residents struggle to recall any pa- drawal of Russian troops from Ukraine
to Russia from which it would never recov- triotic events held in the town in recent without achieving Mr Putin’s stated goals.
er.” Instead, “Chaos, a systemic crisis, is al- months. A free screening of a propaganda The proportion is higher among women
ready escalating in the very nations that at- film attracted almost no one. and the young. As Kirill Rogov, an exile
tempt to implement such strategies.” The But there is no open criticism of the who runs Re:Russia, a policy-analysis net-
insinuation that America’s and Europe’s war, not only because of government re- work, explains, “There is no pro-war major-
problems are bigger than Russia’s is wild pression, but also because people in small ity in Russia. There is a militant pro-war
hyperbole—but the idea that the war has towns fear being ostracised. When a re- minority and an anti-war minority.”
reshaped Russia’s economy and social searcher in Buryatia asked a woman what The majority are broadly patriotic, but
structure is no exaggeration. was stopping people from speaking out not at any cost. In 2014, after Russia seized
A recent study by the Public Sociology against the war, she explained, “People just Crimea from Ukraine and was subjected to
Laboratory, an independent research want to be with everyone else and don’t Western sanctions as a result, respondents
group, gives a sense of the alienation or- want to splinter from the majority or to fall were equally divided over whether it was
dinary Russians feel about the war. It ex- out from the norm.” better for Russia to be a great power, re-
amined three provincial towns, each in a People largely pretend the war is not spected and feared by other countries, or
different region: Buryatia in eastern Rus- happening. “Had it not been for the per- to have a higher standard of living. By 2021,
sia, Ural in the centre and Krasnodar in the iodic news of someone’s death and for the with the economy stagnating, prosperity
south. Over several weeks ethnographers funerals, people would not remember that trumped great-power status, 60% to 30%. ⏩

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 18 Briefing Russia, Ukraine and Donald Trump The Economist November 30th 2024

▸ Half of Russians want closer economic ties ting other spending, the government for Human Sciences, an academic institu-
with the West, twice the share that advo- scrapped a rule that had obliged it to stash tion in Austria, Mr Putin’s expansionism is
cates autarky. In a poll just after the war in its rainy-day fund all its extra income partly driven by the idea of making Russia
began in 2022, only 25% expressed enthusi- when the oil price rose above $45 a bar- a more populous country. His annexation
asm for annexing more Ukrainian territory. rel. Instead, it began spending its savings. of Crimea added 2.2m inhabitants. But his
Even some strident, militarist bloggers But the fund is dwindling fast, so the gov- attempt to conquer Ukraine has had a dev-
are unhappy with the war, despite Russian ernment has had to raise corporate- and astating effect on Russia’s population.
forces’ continuing advances. One of them, personal-income taxes from next year. It The number of people in Russia—
Maksim Kalashnikov, published a Russian has also included in projected revenue for roughly 144m—was shrinking even before
soldier’s account of a front-line medical next year 600bn roubles ($5.3bn) in fines the war, as was the workforce, of around
post: “Corpses, corpses, corpses of our for offences that have yet to be committed. 75m. Perhaps 200,000 Russians have been
fighters. You can see them everywhere… killed and half a million wounded in the
They are already lying in two or three lay- Storing up trouble fighting, according to Western estimates.
ers close to the wounded. A persistent None of this is about to bring the economy Some 700,000 men are on the front lines.
smell of cadavers and the stink of rotting to its knees, but neither is it sustainable in- To sustain recruitment at its current rate of
meat from wounds filled the basement.” definitely. Mr Vyugin argues that the gov- perhaps 30,000 a month, the army has had
In October Russian forces are thought ernment faces a choice between cutting to raise its signing bonus more than five-
to have suffered some 1,500 casualties a back military spending, which would in- fold, from 200,000 roubles at the start of
day, counting both dead and injured. “We duce a recession, or spurring inflation yet the war to 1.2m on average now. In addi-
take territories, but at an exorbitant price,” higher by continuing to spend lavishly, tion, at least 650,000 Russians, and per-
Mr Kalashnikov complains. It is “only a which would necessitate even harsher haps as many as 1m, have fled the country
matter of time”, he thinks, before Russia’s medicine later. Starving the armed forces to avoid being sucked into the war mach-
offensive peters out, without doing any se- of cash is all but inconceivable, argues the ine. Although this is only around 1% of the
rious harm to Ukraine’s supply lines and Bell, an independent business-news outlet: pre-war workforce, they are disproportion-
command systems. He blames the timidity “Even acknowledging that the war and ately young and educated.
of the elite and fears that Donald Trump sanctions have triggered this cycle of over- At the same time, the birth rate has fall-
will force Russia to freeze the conflict heating and decline is impossible.” en to levels not seen since the 1990s, at the
along the current front lines—an abject Elvira Nabiullina, the governor of the nadir of Russia’s economic collapse after
failure, in his view. central bank, has defended high interest the fall of the Soviet Union. The typical
At the same time, the economic boom rates in parliament. The Russian economy, Russian woman is expected to have 1.4
sparked by lavish government spending on she argued, is operating at full capacity. children in her lifetime, far below the 2.1
the war and wage growth owing to a man- “Now, for the first time, we are in a situa- needed to keep the population stable. In
power shortage is beginning to run out of tion where almost all resources in the June there were fewer than 100,000 births
steam. Next year the central bank is fore- economy are used,” she said. The unem- for the first time ever. Even were the war to
casting GDP growth of between 0.5% and ployment rate is at a record low of 2.4%. end tomorrow, it has altered Russia’s de-
1.5%, well below this year’s 3% and last “The Kremlin does not have sufficient hu- mographic trajectory, a “catastrophe” in
year’s 3.5%. The official inflation rate, man resources both to continue the war the words of Mr Putin’s spokesman.
meanwhile, is 9.5%, even though the cen- and sustain economic growth,” writes Al- Another indication of the social dislo-
tral bank has raised its main interest rate to exandra Prokopenko of the Carnegie Rus- cation brought about by the war is the rise
21%. That may be an understatement: RO- sia and Eurasia Centre, a think-tank. in serious crime. Russia’s Interior Ministry
MIR, an independent research firm that The irony, of course, is that the war is says offences including murder, rape,
tracks the spending of 40,000 Russians in not just creating demand for labour, but grievous bodily harm, sabotage, property
240 towns, believes the average bill for also reducing supply, both by prompting violations and interethnic violence are at
everyday goods and services is going up by many people of working age to flee and by their highest in at least 15 years. Convicts
more than 22% a year (see chart). killing or maiming many others. Mr Putin who have been released from prison to join
The exchange rate of the rouble is slid- has been fixated with reversing Russia’s the war and return home as “heroes” may
ing, both because of inflation and because demographic decline since he came to be partly responsible. Verstka, an indepen-
of fresh American sanctions on Russian power. He has spent trillions of roubles on dent Russian news organisation, reckons
banks that are making it harder for them to various schemes to boost birth rates. In- that at least 242 Russians have been killed
obtain dollars. This week it fell well below deed, argues Ivan Krastev of the Institute by soldiers returning from Ukraine and an-
100 roubles to the dollar for the first time other 227 seriously injured.
since the immediate aftermath of the inva- The return to normality that ordinary
sion of Ukraine in 2022. Irrepressible people crave is impossible, Mr Rogov ar-
State-owned enterprises, especially in Russia, consumer prices, gues. Any cessation of hostilities will inev-
the defence industry, are sucking in huge % increase on a year earlier itably prompt questions about what the
amounts of capital, leaving the private sec- 50 war was for and whether it was worth the
tor struggling to borrow, even at high rates. Russia invades Ukraine cost. In the meantime, Russia may have the
Few have the confidence to do so, anyway. 40 upper hand on the battlefield and, despite
As a businessman put it in an inter- ROMIR* calculation frequent predictions to the contrary, its
view with the Russian edition of Forbes 30 economy does not appear to be on the
magazine, “There is no vision for the fu- verge of collapse. But the war, which had
20
ture. Thinking about long-term plans not previously had a huge impact on most
mostly leads to depression. It’s difficult to people’s lives, is beginning to cause dis-
10
come up with a business idea that could ruption. The upheaval within Russia is not
compete with a deposit in Sberbank.” Official rate 0 yet as severe at that initiated by the Bolshe-
Worse is to come. Oleg Vyugin, a for- vik revolution. But Mr Putin is correct to ar-
2021 22 23 24
mer deputy head of the central bank, ex- gue that he has set Russia on a dramatical-
Sources: ROMIR; Haver Analytics *Independent research firm
plains that, to pay for the war without cut- ly different path. ■

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 The Economist November 30th 2024 19

Britain

The British opportunity index The challenge of finding and keeping

The score for talent

good employees is particularly salient
right now. The first budget of the Labour
government jacked up employers’ nation-
al-insurance contributions. Poor health has
driven millions out of the workforce: Brit-
ain is the only G7 country whose econom-
ic-inactivity rate is still above its pre-covid
British employers vary greatly in how they find, pay and promote their staff level. Bosses noisily lament skills shortages
in AI and beyond. All of these problems
O LAND A job at Schroders, one of Brit- Burning Glass Institute, a non-profit re- can be improved or worsened by the gov-
T ain’s oldest and most venerable fund
managers, it helps to avoid certain univer-
search organisation, in partnership with
The Economist, looks at how well British
ernment. But when people are costlier to
hire and skills are lacking, firms can also do
sities. “We’ve moved away from hiring Ox- employers do at helping people to move on a lot to help themselves.
bridge history graduates,” says Peter Harri- and up. Among other things it finds that The Burning Glass Institute has ana-
son, Schroders’ just-departed CEO, who individual firms differ widely on their crite- lysed 20m professional profiles, along with
joined the fund manager in the 1980s as ria for hiring: there is a 67% chance that a job adverts and salary data, to identify ca-
one of its first non-Oxbridge graduates. job will not require a degree among the top reer data in four categories—access to
These days the firm is casting its net wider, quintile of employers, compared with only jobs, promotions, pay and retention—for
opening its doors to non-degree-holders a 36% chance among the bottom fifth (see 151 British employers. Between them, these
with skills in IT and data-wrangling. chart on next page). firms employ nearly one in ten workers in
Schroders is not alone in moving to- the country. In order to compare compa-
wards what HR types call “skills-based hir- nies on a like-for-like basis, the index con-
→ ALSO IN THIS SECTION
ing”. Nearly half of British employers say a trols for the occupational make-up of a
degree is no longer important, according 20 Roads and Reform UK firm. Coca-Cola’s British unit comes top of
to Hays, a recruitment firm. That widens the pay metric, for instance, not because it
the applicant pool and boosts retention; 21 Adios, Adele pays the absolute highest salaries but be-
hires without degrees are more likely to 21 What is a woman? cause it does best given the occupational
stay than their university-educated peers, mix of workers that it employs.
according to research done in America. 22 Rathlin Island This methodology is not perfect. Public
But plenty of firms take a more tradi- 23 The death of securonomics data are not always reliable, for example;
tional approach. The British opportunity the index does not control for financial
index, a new data set produced by the 24 Bagehot: What voters want performance. But the essential point holds. ⏩

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 20 Britain The Economist November 30th 2024

▸ “There’s a span of performance across than Zara. But management also has an
companies, even within the same sector,” impact. Information about career opportu- Politics
says Matt Sigelman, president of the Burn- nities is not always available: an analysis of
ing Glass Institute. “That says you’re not global job-seekers in 2021 by Gartner, a re- Potholes and
prisoner to your business model.” search outfit, found that nearly half of
Take the area where Schroders has them were not aware of internal vacancies. populists
changed its approach: the accessibility of Training also helps people’s promotion
jobs. The index rates British firms on two prospects, inside firms and beyond. British
A theory for the rise of Reform UK
measures: the share of new hires who have firms do not have a great record on train-
fewer than three years’ work experience ing. They spend half the EU average per
and the share of employees in the firm worker on it; a badly designed apprentice- ET THE Acle Straight responsi-
without a university degree. As well as va-
riations within industries—Chanel, a luxu-
ships levy which came into force in 2017
seems to have made things worse. But
“G bly dualled” does not sound like
the rallying cry of a populist firebrand.
ry retailer, hires more people without de- some employers see the upside. Chris Rea, But that pledge was central to the
grees or experience than Burberry does— founder of AES Engineering, a mid-sized campaign of Rupert Lowe, a busi-
there are disparities within roles. Software manufacturer of mechanical seals, says nessman who won the constituency of
developers without degrees are more likely that he has seen a “substantial return” from Great Yarmouth for Reform UK in the
to get hired by Amazon than Meta; non- upgrading the skills of his workforce. BAE general election. He was referring to a
graduates seeking customer-service roles Systems more than doubled its spending dreadful 10km stretch of the A47, which
have a better chance of success at Aviva, an on training to £230m between 2019 and runs across a bog and connects the
insurer, than at its rival, Legal & General. 2023, says Richard Hamer, its director for seaside town with the outside world.
BAE Systems, Britain’s largest defence education and skills. Built by the Victorians, the single
contractor, allows youngsters to earn a It’s a similar story of divergence with carriageway carries 22,000 vehicles a
wage and a degree at the same time. In pay and retention. The index calculates day and has a terrible record for con-
fields where Britain is short on graduates, how much the median employee in any gestion and accidents.
such as aerospace engineering, the firm given occupation at a company is paid, Most accounts of the rise of Reform
fills the gap itself by offering degree ap- alongside changes in that salary over the UK, a hard-right party that won five
prenticeships. Activities such as subma- past year. The top fifth of British employ- seats in the summer and is now backed
rine-welding and aircraft maintenance are ers pay data scientists an average of by a fifth of voters, do not mention
also challenging to recruit for in the open £73,000 ($92,000) annually, compared asphalt. The party has exploited fury
marketplace. Over 20,000 applicants ap- with £38,000 for those in the bottom quin- about immigration; it gleefully wades
plied for fewer than 1,300 apprentice roles tile. Unsurprisingly, low-margin industries into culture wars. But a new study by
at BAE Systems this year. like hospitality and retail tend to pay less Michael Dnes of Stonehaven, a consul-
The second measure in the index is pro- than high-margin ones but competitors tancy, points to something else: all four
motions. It consists of four indicators: how still differ greatly. Marketing managers at of the seats recently gained by Reform
likely employees are to be promoted and Ocado, a supermarket, rank in the top fifth UK (Lee Anderson already held Ash-
how frequently, how much more they are for pay in their occupation; those at Marks field) have a “missing road”. Not only
paid as a result and the chances of finding & Spencer rank in the bottom fifth. that, poor transport infrastructure is
a job elsewhere with a decent salary bump. Whereas some employers churn correlated with the seats the party
Again, some firms offer much more scope through staff, others emphasise retention. appears most likely to win next time.
for advancement than others. The proba- The likelihood of remaining employed So far Reform UK has done best in
bility that someone is promoted within after three years at the best performers in coastal towns in the east of England.
three years is twice as great at top-quintile this category is 71%, compared with 45% According to the Office for Road and
firms as at bottom-quintile firms. for the worst. High turnover is costly, even Rail, a watchdog, the region has the
The size of the local workforce doubt- for low-wage workers. Replacing them can worst roads in the country by some
less has some bearing on this. British- cost employers up to 35% of the departing distance. That is mostly because it has
headquartered banks like HSBC and Lloyds person’s annual earnings, according to Jo- lots of badly maintained A-roads.
do better than foreign ones such as Société seph Fuller of Harvard Business School. Seaside towns struggle to make a case
Générale and Deutsche Bank; retailers like Beazley, a specialist insurer in the City for road investment because they are
Marks & Spencer and Next rank higher of London, works hard to keep its people often poor and “fish don’t drive”, notes
satisfied. “Insurance isn’t on the [vision] Mr Dnes, a former official in the trans-
boards of many school leavers,” admits Liz port department.
Spread vetting Ashford, Beazley’s chief people officer. It In Clacton, the seat of Nigel Farage,
The British opportunity index*, 2024 offers various benefits: paid lunches and Reform UK’s leader, around half of
commutes; a £100 monthly allowance for workers drive to their jobs on a half-
Top quintile, 67%
wellbeing activities; study leave and com- finished dual carriageway. In Skegness,
Chance of job not pletion bonuses for any qualifications at- won by his deputy Richard Tice, many
requiring a degree
Bottom, 36% tained; and three-month sabbaticals for people have to drive 50 minutes to get
every ten years of service. The firm claims to a hospital. Both men spend much of
Chance of getting 17% an annual attrition rate of 8.3% compared their time talking about immigrants.
a promotion after with an industry average of 12%. But roads are the service that Britons
three years 8%
It is tricky for jobseekers to work out rely on most in their daily lives, and are
which employer does what well. “There are an especially emotive issue for older,
Chance of 71% no nutrition labels for jobs,” says Mr Sigel- male voters. The Acle Straight cam-
remaining in job
after three years 45% man. You could ask prospective employers paigners have been largely ignored for
how they perform on the categories in the three decades. That may help explain
*Analysis of 151 companies index. Or you can explore the data yourself why populists make inroads.
Sources: The Burning Glass Institute; The Economist
at economist.com/opportunity-index. ■

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 The Economist November 30th 2024 Britain 21

Pop music She has released four albums, each tracks streamed. That is mostly because of
named for her age when she worked on the global rise of streaming. But Sophie
To be loved them. All went to number one in Britain. In Jones, the BPI’s chief strategy officer,
America, “25” sold faster in its first week of points out that some governments, notably
release than any album since records be- South Korea’s, have lavished attention and
gan. It accounted for 3% of the entire money on pop music. Britain has made
American album market in 2015—by far the matters worse by leaving the EU; that has
largest annual share held by any release flung up barriers to touring acts.
Adele could be the last of her kind since at least 1992, according to Matthew The country has important advantages.
Ball, who follows media at Epyllion (and Its people are culturally diverse and Eng-
N NOVEMBER 23rd a staggeringly suc- sometimes contributes to The Economist). lish-speaking. It has strong intellectual
O cessful British producer and exporter,
a national champion in a business at which
Her latest, “30”, sold modestly only when
compared with her past performance.
property rights. It also has the BRIT
School, a state school in south London
the country excels, suspended operations. Other musical stars have built careers founded in 1991, which specialises in the
Were the business carmaking or banking, as clothiers, actors, perfumiers and prolific performing arts. A remarkable number of
questions would surely have been asked in tourers. Adele has shown little interest in successful musicians, including Adele,
Parliament. Instead it is music, and the the first three, and, although good at it, has Raye and the late Amy Winehouse, went
champion is Adele, a writer and singer of struggled with performing live. “Behind there. A second school, funded by the mu-
heartbreaking songs, who finished a two- the eyes it’s pure fear,” she once said. In- sic industry, is expected to open in a few
year residency in Las Vegas. stead, she specialises in the old-fashioned years’ time in Bradford. Britain will pro-
Adele Adkins, as she is known to her business of making and selling albums, duce more pop stars—but, probably, not
bank manager but to nobody else, has told particularly the kind you can touch (Ed another Adele. ■
interviewers and audiences that she has no Sheeran, another British singing success, is
plans for new music and will not perform better at racking up streams). Adele ap-
again “for an incredibly long time”. Per- peals so widely that her fans include old Women’s rights
haps. Musicians can have long, sinuous ca- people who thought piracy dishonest and
reers, especially if they lay off the drugs find streaming confusing. Sexual courting
and booze: The Eagles, an American rock “She’s strange by today’s standards, but
band who broke up in 1980, are currently not by yesterday’s standards,” says Mark
playing in Las Vegas. But Adele is such a Mulligan, a music analyst at MIDiA Re-
star that even an extended pause is bad for search. Had she been born a decade later,
the music business. Worse, it seems un- success would have been harder. Mr Mulli- Britain’s Supreme Court wonders
likely that Britain will be able to produce gan points out that Adele, and other stars what a woman is
anybody to replace her. like Taylor Swift, amassed devoted follow-
She signed with XL Recordings, an in- ings in the days when many people still ac- OURT RISE.” A hush falls in the Su-
dependent label in London that was
known for rave and grime music, in 2006—
quired albums and listened to them repeat-
edly. In the streaming era there is always a
“C preme Court. Five judges—three
lords, two ladies, roughly two centuries of
hardly a propitious year. The music indus- new track to sample, and people are herd- accumulated professional experience—
try was being crushed by digital piracy. ed into musical niches by algorithms. New- walk in. The question that the country’s
Chris Anderson had just published “The er stars like Charli XCX burn faintly and highest court and finest legal minds have
Long Tail”, a book that explained how flickeringly by comparison. come to consider, in a two-day hearing that
technology was ending the tyranny of the Music executives everywhere worry took place on November 26th and 27th, is:
hit and enabling businesses to prosper by about the future supply of stadium-fillers. what is a woman? Finally, an answer looms
selling lots of not-too-popular things. In Britain the BPI, which represents record for those who wonder what those 34m peo-
Adele proceeded to prove that the biggest labels, frets that the country’s artists now ple in Britain who are not men might be.
acts are subject to different forces. account for less than 10% of worldwide Inside the Supreme Court, with its su-
premely institutional grandeur (portraits,
panelled walls, truly tasteless carpets),
there is talk of cervixes and men who are
women and women who are men. There is
talk of “women” who have penises and of
pregnant “men”. The word “prostate” is
used. It is strong stuff for a Tuesday. Brit-
ain’s finest legal minds sound a little con-
fused. This, says one, is “quite difficult”.
Sex in Britain was once quite simple.
The Oxford English Dictionary stated,
with Hemingwayesque brevity, that a
woman is an “adult human female”—and
more or less all Britons agreed. Then came
the rise of trans rights and the mantra that
“trans women are women”. This case came
about because the Scottish authorities
have stated that when the Equality Act
2010 says “woman” this means not just
“woman” but also any man with a full gen-
der recognition certificate (GRC). A group
No one like you called For Women Scotland (FWS) cried ⏩

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 22 Britain The Economist November 30th 2024

▸ “bunkum” and went to court. That it has

reached the Supreme Court makes this, Recycling

Waste test
says Michael Foran, a lecturer in law at
Glasgow University, a “monumental case”.
Britain’s legal system has tackled the
question of what a woman might be be-
fore. Not always to its credit: in a 1914 case RATHLIN ISLAND
it concluded that a woman is not a “per-
The tiny island aiming to get to net zero
son”. It has also considered how someone
might become a woman. In a 1970 case a
British judge ruled that four factors (chro- EING AT THE heart of an experiment also involves educational activities and
mosomes, gonads, genitals and “psycho-
logical factors”) make someone a wom-
B isn’t new for Rathlin Island. It was
from the L-shaped outcrop off Northern
“repair cafés” to fix broken items.
Some islanders are doing things
an—but that a “sex-change” operation did Ireland’s north-eastern coast that Gug- differently. Marina McMullan’s sheep
not. Many who underwent one signed a lielmo Marconi sent the world’s first have been farmed for meat for as long as
document stating that they understood commercial wireless transmission in she can remember. Now she’s also mak-
that it would “not alter my male sex”. 1898. More than a century later, the ing plastic-free rope from the wool.
In 2004 the GRC was introduced in Brit- province’s only inhabited island is a Marianne Green, another resident, hopes
ain. This government document can be ac- laboratory again. the wool rope can be used to farm sea-
quired by obtaining a diagnosis of gender Rathlin has set itself a net-zero date weed around the island. “Imagine if we
dysphoria, jumping through some legal of 2030. Even if it got there, the impact were able to use Rathlin wool to grow
hoops and paying £5 ($6.30). It changes a on the climate would be negligible. The Rathlin seaweed,” she enthuses.
person’s legal sex for such things as birth, island has just 140 inhabitants. It got But the Rathlin project shows how
death and marriage certificates. It made it mains electricity only in 1992 and an difficult it is to alter habits. Much of the
possible for a man, with full male genitalia, undersea cable to the UK electrical grid island’s waste is still being dumped in
legally to become a woman, and vice versa. in 2007. For years the only vehicles were landfill; plans to reuse processed plastic
Such transubstantiation sounds odd the islanders’ cars, the odd tractor and a on the island through 3D printing have
but is not unprecedented. The law allows bus taking tourists to see the 250,000 been discarded. The plan “needs more of
for “legal fictions”. It calls a company a resident seabirds. a technological support infrastructure”,
“person” (when clearly it is not) and states But small communities can be good says Justin Magee, who’s leading the
that “the King never dies” (when kingly places to test new ideas. Two years ago project. He says the work hasn’t been
corpses in Westminster Abbey amply the devolved government in Belfast wasted, however. Beach plastic can be
prove otherwise). But these should be un- funded a community e-car and 20 e- hard to recycle because of damage
derstood as a judicial sleight of hand bikes. In 2023 a consortium led by Ulster caused by ultraviolet light while it is in
(which the law is good at) and not as meta- University was given £4.6m ($5.7m) by the ocean. But the team managed to do
physical mastery (which it is not). the UK’s Arts and Humanities Research so and is in talks about how degraded
Supporters of the GRC say that it helps Council to look in particular at how polymers might be reused commercially.
alleviate the undoubted pain of gender waste on the island might be dealt with It was in a Rathlin cave that Robert
dysphoria. Critics say that it spreads con- more effectively. the Bruce, a Scottish king, reputedly
fusion, and sometimes worse; in one case a One of the big ideas was to reuse watched a spider eventually succeed
trans woman (a biological male) was made plastic waste, which is not just discarded after repeated attempts to spin its web
the head of a rape-crisis centre. No one, by islanders and tourists but also washes across the entrance. That supposedly
tellingly, is that interested in the question up along the coastline. The team dis- strengthened his resolve to fight the
of “what is a man?”. Since women are tributed simple leaflet instructions for English. Worthy as it is, Rathlin’s battle
underrepresented among murderers (7%), beach-litter picking; the waste was taken against landfill is less likely to echo
assaulters (a fifth) and sexual assaulters to Belfast for processing. The project down the generations.
(2%), women who transition are rarely con-
sidered a threat.
To have a certificate that transforms a
man into a woman is, says Naomi Cun-
ningham, the chair of Sex Matters, a hu-
man-rights charity, “as stupid as…[giving
someone] a certificate to say that they are
dead when they are alive or that they are
alive when they are dead”. Unshackle the
meaning of words such as “man” and
“woman” from biology, said Aidan O’Neill
KC, acting for FWS, and it results in “ab-
surd” and “nonsensical outcomes”.
There was a bit of this absurdity in the
Supreme Court. Is there, asked one judge, a
“third gender”? The court tittered. The
barrister speaking demurred: there is not a
third gender. And, as FWS argues, there are
also just two sexes: male and female. The
lords and ladies of the Supreme Court will
give their ruling in a few months’ time. And The future is combing
it will matter. ■

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 The Economist November 30th 2024 Britain 23

Political economy Ms Reeves’s defenders in the party

Securo-what now?
downplay the scale of this shift. She always
said that Britain would have to apply the
lessons of Bidenomics to suit its circum-
stances, they say, rather than adopt them
off-the-peg. She always wanted to recali-
brate Britain’s approach to trade, rather
than blow it up. But the change is real,
What the fading of a Labour buzzword says about Britain nonetheless, and illuminating.
In government Labour is having to
T’S DEAD,” says one Labour MP. “Or of the West’s addiction to cheap Russian work with the grain of the economy as it is,
“I perhaps on its deathbed,” adds a wonk.
“Securonomics” was a neologism coined in
gas. In office it has been more balanced. So
far Britain has not mirrored American and
rather than as it wishes it was. Britain was
always too exposed to global trade, too re-
opposition by Rachel Reeves, now the La- European tariffs on Chinese carmakers. liant on services and in too weak a fiscal
bour chancellor. It summed up her plan to On November 18th Sir Keir became the position to recreate Mr Biden’s plan to
introduce a variant of President Joe Biden’s first British prime minister to meet Xi Jin- create industrial jobs by splashing cash. In-
industrial policy to Britain. But the term ping, the Chinese leader, since 2018. stead a government that wants to encour-
hasn’t appeared in her speeches since be- Officials talk of a relationship charac- age growth has realised that it has to play
fore the election. It did not feature in her terised by consistency and judiciousness, to the country’s strengths.
address to the Labour Party conference in rather than one jolted by rebellions of In Washington last year, for example,
September nor in the budget in October. backbench China hawks as under the Tor- Ms Reeves lamented how Britain had be-
Asked about it in Parliament in Novem- ies. Ministers seem enthused about the come reliant on financial services. In her
ber, Ms Reeves insisted that “securonom- prospect of Shein, a Chinese-born firm, November speech she declared that regu-
ics” was still a guiding principle. “It’s very listing in London. In November Jonathan lation of the industry had “gone too far”
much in vogue,” insists one official. But a Reynolds, the trade secretary, told law- and that the government would tweak it to
real policy shift has taken place. In opposi- makers that Britain was “much more ex- allow more risk-taking. A Foreign Office
tion Ms Reeves declared that securonom- posed” to a trade confrontation between review of economic diplomacy is expected
ics would mark a clean break with the em- China and the West than Americans; it to emphasise promotion of services ex-
brace of globalisation and market liberal- would be “a much more painful proposi- ports such as education and culture.
isation that characterised New Labour. In tion” than people imagined. Events across the Atlantic also explain
office, however, the logic of Britain’s small, Third, subsidies. Ms Reeves had initial- the shift. Labour enthusiasts for securo-
open economy has prevailed. ly promised lavish subsidies for green pro- nomics saw how Mr Biden had appeared to
Ms Reeves unveiled her big idea at a jects, at £28bn ($35bn, 1.2% of GDP). But weld an urban and graduate-dominated
speech in Washington, DC, in May 2023. It that pledge was slashed in February 2024, party to its historic industrial electorate.
appeared to draw heavily on an address before it could become a liability in an Mr Trump’s triumph in the presidential
given the previous month by Jake Sullivan, election that would put Labour’s fiscal dis- election in November has helped make the
Mr Biden’s national-security adviser. Trade cipline under the microscope. Although political rewards of industrial strategy
liberalisation had been gamed by China, Ms Reeves now plans to borrow more for seem much less certain.
echoed Ms Reeves; excessive openness investment, the bulk of the money allocat- Labour now places a bigger emphasis
had led to the “hollowing out of our indus- ed to date has gone on hospitals, school on housebuilding and the creation of a
trial strength”. The watchwords of a La- buildings and other bits of the public es- new generation of asset-owners who can
bour government would be resilience and tate rather than subsidising industrial jobs. pass wealth onto their children. You can
home-grown industries. In office the government has been admira- call that “securonomics” if you like. But it
Big chunks of this agenda do remain. bly restrained in refusing to bail out failing resembles Margaret Thatcher’s idea of a
Most notably Sir Keir Starmer’s govern- firms such as Harland & Wolff, a famous property-owning democracy as much as it
ment seeks greater self-sufficiency in ener- shipyard in Northern Ireland. does the thinking of Mr Biden. ■
gy, through a state-driven programme of
decarbonisation. But the shift in emphasis
from the Washington speech has been
profound in three ways.
The first concerns free trade. Labour
may have been a cheerleader for the mer-
cantilism of Mr Biden but it is sounding
the alarm over Donald Trump’s version. In
a speech on November 14th the chancellor
addressed the president-elect directly, de-
claring that Britain would defend “free and
open trade” and wanted to deepen its eco-
nomic relationship with America. The new
government has by and large picked up
where the Tories left off on trade: embrac-
ing a Pacific-rim agreement and cracking
on with other half-done deals.
Second, China. In opposition Labour
echoed some of the Biden administration’s
hawkish rhetoric. Ms Reeves said that a re-
liance on heavily subsidised Chinese cars
would be short-termist and naive; a repeat

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 24 Britain The Economist November 30th 2024

BAGEHOT
The triumph of false consciousness

British voters are much less clueless than the Labour intelligentsia believes

Shoplifting is at a 20-year high; knife crime is near its peak. As-

suming that voters are confused about reality, rather than worried
about an aspect of it, can cause political peril. For all that the
American economy roared in the run-up to the recent election,
prices had also rocketed. Soaring inflation trumped GDP growth.
Often, what is called false consciousness is accurate but un-
welcome analysis. Immigration is now the main concern of British
voters, pipping the economy and the NHS, according to Ipsos, a
pollster. Concern about this issue tracks actual numbers. Immi-
gration hit an all-time high in 2022; the number of people crossing
the English Channel annually has jumped from a few hundred in
2018 to over 30,000 today. And lo, immigration is the most impor-
tant issue in British politics once more.
Anxiety about immigration is seldom interpreted as being
about the volume of people arriving in Britain. Worries are dis-
missed by the left as surrogate concerns about housing or job se-
curity, or attributed to the workings of a malign press. A more
plausible view is that Britons sincerely want less immigration and
voted for successive governments which have pledged (and failed
to deliver) just that. In 2024 Labour became the latest party to be
elected on such a pledge. If Labour is the first to fulfil it, why
would it not be rewarded by the voters it most needs to keep?
OE IT IS to be a Labour wonk right now. A streak of nihilism If it is true that voters are incapable of giving thanks for, or
W has infected the party’s boffins after Kamala Harris’s defeat
in the American presidential election. The American economy
even noticing, material improvements, then social democracy is
toast. A creed built on the prosaic improvement of living stan-
zoomed under Joe Biden yet voters defenestrated his party. Essays dards cannot compete with the politics of identity and grievance.
such as “The Death of Deliverism” by Deepak Bhargava, Shahrzad But deliverism—hoping that voters appreciate improvements—is
Shams and Harry Hanbury, which argued in 2023 that voters still Labour’s best bet, whatever the party’s brains trust may think.
would not thank Mr Biden’s Democrats for a thumping economy, Sir Keir Starmer, the prime minister and a political idiot savant,
are passed around the British left like sombre samizdat texts. has come to the same conclusion by being unable to think of any
The idea that voters no longer reward material improvements other. “Populists are waiting in the wings with their easy answers
has taken root among the academics, advisers and think-tankers and their snake oil,” he is quoted as saying in a biography by Tom
who make up Labour’s intellectual milieu. “Substantive policy Baldwin. “We can beat them by delivering change.”
achievements simply don’t have much electoral resonance,” writes There is little false consciousness when it comes to public ser-
Ben Jackson, a professor at Oxford University, summarising an vices. Perception of public services largely matches their reality,
increasingly dominant strand of pessimism. Parties can no longer according to Public First, a research firm. Where public services
rely on “deliverism”—whether a growing economy or thriving pub- are good, people rate them highly; where services are poor, they
lic services—to produce electoral rewards. do not. People who live in areas with shorter waiting lists for GPs
This critique of deliverism relies on an old idea: false con- and dentists rated those services more highly than people in areas
sciousness, or the notion that people are so misled about reality with longer waiting lists. People in places with higher crime
that they act against their own interests. What was once the pre- thought their areas indeed had higher crime. Those lucky enough
serve of Marxists, flummoxed that workers refused to lose their to have good schools locally knew about it. Reality trumps vibes.
capitalist chains, is now the fall-back position for the modern Brit-
ish centre-left, which worries that voters cannot accurately com- Deliver us from evil
prehend the world in which they live. Deliverism is a simple ethos that has fallen out of fashion for a
False consciousness has often clouded Labour’s political simple reason: it has been so long since a British government
thinking. How could voters possibly re-elect a Conservative gov- could honestly say that things have improved. Ask for the achieve-
ernment after five years of austerity? The simple explanation— ments of the Conservative Party’s 14 years in power and former
that enough voters were unaffected by spending cuts—passed ministers will mutter something about the covid-19 vaccine and
many Labourites by. Why on earth would a majority of Britons school standards. Practically every area of British public policy,
vote to leave the EU? Explanations focused on misinformed from health care to defence, has got worse since the financial cri-
voters, rather than the idea that 17m people got what they wanted. sis. Pledging to actually improve public services now feels as out-
This thinking now pollutes almost every policy area. It is easier landish as pledging world peace and a free pony.
for a politician to assume that voters are confused about the stats Assuming that voters will not notice improvements is a belief
than that they are concerned by other things. When batting away that swings between arrogance and insanity. If public services im-
complaints about crime, ministers huff that it is down overall. So- prove, so will Labour’s standing. British politicos kid themselves
cial media are to blame for providing a stream of misleading vid- with ideas of false consciousness. Far better to adopt a different
eos of phone-snatching thugs and gory knife fights. That specific adage of diehard communists: deliverism is not dead, true delive-
types of crime are up, and often in a way voters can see, is ignored. rism has never been tried! ■

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 The Economist November 30th 2024 25

Europe

NATO and America ble. If Mr Trump cuts military support for

Ukraine to bully it to the negotiating table,
Spend to defend Europe will have to contribute a lot more
funding and weaponry while struggling to
replenish its own stocks.
Poland is setting the pace, with an am-
bition to spend 5% of GDP on defence next
year; all three Baltic states are on course to
The frightening maths of Europe’s military black hole spend more than 3%. Mr Rutte has not so
far set a new target. He thinks it may make
N NOVEMBER 23RD Mark Rutte, the Few believe this will persuade Mr more sense for specific countries to be giv-
O head of NATO, and Donald Trump,
America’s president-elect, were photo-
Trump that America’s allies are doing
enough. He seems to dislike the very no-
en “capability targets”. But assuming that
Mr Trump deigns to attend the next NATO
graphed grinning and shaking hands in tion of NATO, which was founded on the summit, in The Hague in June, a commit-
Palm Beach, Florida. Yet the mood in principle that all members must regard an ment to hitting 3% may be needed to stop
Europe’s defence ministries is one of fore- attack on one as an attack on all. During him from “throwing his toys out of the
boding. At a gathering of defence officials the campaign he invited Russia to “do pram”, as one official in Prague put it. Bas-
and industry executives in Prague a few whatever the hell they want” to any NATO tian Giegerich, the director-general of the
days after the election, the most optimistic country that is not paying its way. IISS, says that 3% is, moreover, easy for
sentiment was that Mr Trump was “unpre- Mr Rutte has warned that the 2% everyone to understand. To meet it,
dictable”. Others were a lot less upbeat. spending goal is now obsolete: meeting it Europe would have to increase its annual
Some at the meeting, run by the Inter- is enough neither to impress Mr Trump, spending by $280bn at current prices, Mr
national Institute for Strategic Studies nor to deter Vladimir Putin should Europe Giegerich says. In practical terms, Germa-
(IISS), took heart from the fact that this be forced to bear most of the responsibility ny, for instance, would need to find an ex-
year 23 out of 32 NATO members are meet- for its own security, as seems all too possi- tra $40bn a year, roughly.
ing or exceeding a target to spend 2% of For all Mr Trump’s antagonism towards
GDP established ten years ago after Rus- NATO, his nominees for secretary of
sia’s annexation of Crimea. Since 2022, → ALSO IN THIS SECTION state—Marco Rubio—and national securi-
when Russia launched its full-scale inva- ty adviser—Mike Waltz—understand the
sion of Ukraine, defence budgets across 26 Ukraine’s threatened south value of the alliance, says Sir Lawrence
Europe have risen steadily. This year total 27 Le Pen on trial Freedman, a British military strategist.
spending has increased by an average of (Grave doubts exist about some of his
9% in real terms, reaching $436bn. 28 Charlemagne: von der Leyen II other picks, though.) There will also be ⏩

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 26 Europe The Economist November 30th 2024

▸ strong resistance within America’s armed popular with voters. Defence big-spenders Ukraine

Bracing for a surge

forces to major changes to the status quo, such as Britain and France have new gov-
and pushback from many Republican sen- ernments that are scrambling to lower

in the south
ators who would balk at relinquishing their fiscal deficits, too. Germany’s consti-
American leadership of NATO. tutional debt brake limits its support for
Instead, Sir Lawrence thinks there may Ukraine (though the question of how to
be more coalitions formed within NATO to find a way around it is being debated on ORIKHIV, ZAPORIZHIA PROVINCE

perform specific tasks, such as the Joint the campaign trail ahead of an election Vladimir Putin’s war machine is pushing
Expeditionary Force, a military alliance of early next year). This has created pressure harder and crushing Ukrainian morale
ten European nations that was founded in on the EU to cut some budgetary slack for
2014 to protect northern Europe. Other member countries wanting to borrow to FTER TEN days in the trenches of Ro-
more recent ones include the German-led
21-nation European Sky Shield Initiative to
bolster their armed forces. The idea would
be for it to rule that Europe faces a security
A botyne, Grisha is ready for a rest.
“Time for sex, drugs and rock-and-roll,” he
create an Israel-style layered air defence; crisis similar to the covid emergency. says, his voice jittery from front-line adren-
and a coalition between Britain, France, The European Commission took a big aline. The 36-year-old infantryman with
Germany, Italy and Poland to develop step in this direction on November 11th by Ukraine’s 65th brigade has just marched
long-range strike missiles. allowing some “cohesion funds” from its 7km from his position, hauling 60kg of
Rather than planning to do without seven-year common budget, possibly equipment, jammer aerials and a large bat-
America, European countries should be worth up to €130bn ($137bn), to be spent tery pack—vital survival kit for anyone
developing the capabilities to operate, at on military-related programmes. Accord- working in the drone-filled skies of Zapo-
least under certain circumstances, with ing to a report in the Financial Times, in the rizhia province. In 2023, during Ukraine’s
only minimal American assistance, Mr next few weeks member governments will failed counter-offensive, every square me-
Giegerich suggests. Europe still falls short be told the money can be used to support tre of this ground was the subject of world
in air-defence missiles of all ranges, preci- their defence industries and invest in pro- news. Now the Russians are pushing back,
sion strike power, airborne surveillance, jects to improve military infrastructure. and far fewer are paying attention. “It’s
and command and control. Mr Giegerich Reappointed for a second term (see happening,” Grisha says. “You can see it.
reckons that, even with adequate funding, Charlemagne), Ursula von der Leyen, the They are coming—crawling, crawling, up
it would take ten years for Europe to sub- president of the commission, has made and over, trying for any way through.”
stantially reduce its reliance on America. building a “European Defence Union” a Ukrainian intelligence believes that
Many member countries struggle to re- priority. She has nominated politicians Russia is gearing up for a bold assault on
cruit for the possibility of high-intensity from two front-line states for key posi- Zaporizhia city, 30km from the front.
warfare, points out a senior NATO official. tions. Kaja Kallas, the former prime minis- When exactly, no one is clear, but it makes
Several that scrapped conscription after ter of Estonia, will become the EU’s top some sense. As one of three remaining cen-
the cold war are looking at bringing some diplomat from December 1st; Andrius Ku- tres of heavy industry in the country, the
form of it back as a way to rebuild ade- bilius, a former Lithuanian prime minister, provincial capital remains crucial to
quate reserves. Decades of neglect after will be its first commissioner for defence. Ukraine’s survival as a functioning state. In
the cold war have left both personnel and The main focus of Mr Kubilius’s work will late 2022 Vladimir Putin claimed the entire
equipment levels severely depleted. be co-ordinating defence procurement province as his own, despite controlling
Europe will require sustained higher levels and helping to steer Europe’s fragmented only a third of it. For two months, Russian
of funding and a more resilient defence-in- defence industry towards creating shared missiles and glide bombs have hammered
dustrial base to repair the damage. programmes that cut out wasteful duplica- the city. And the front lines are rumbling
It is unclear where all the money for this tion, and investing in new capacity. anew too. A Ukrainian spokesman warns
will come from, much less the political NATO has previously been suspicious of that 130,000 Russian troops could soon be
will. It will need to come at the expense of EU ambitions to muscle in on its patch. hurled into the fray.
social programmes that are much more The senior NATO official says: “It’s all Not every soldier is convinced an attack ⏩
hands on deck. If the EU can mobilise
money and raise military and industrial ca-
Squeaking it pacity, it will be great.” But he says the EU
Bakhmut
Defence spending, % of GDP must avoid protectionism. A competitive D
defence market must include NATO mem- o n
Selected NATO members Pokrovsk b a s
2014 2024 forecast bers such as Britain, Norway and Turkey— UKRAINE
not to mention America—who are not in
0 1 2% target 3 4
Poland the EU. France has now reportedly
Zaporizhia
Estonia dropped its long-standing opposition to
United States giving EU-funded incentives for Europe’s Orikhiv Donetsk
Latvia defence industry to non-EU firms. Nuclear
Robotyne
Greece Mr Trump could conceivably be per- power plant
Lithuania suaded that Europe is moving fast enough
Zaporizhia
Finland to keep America committed, at least to
Denmark some degree, to the continent’s security.
Britain But America is preoccupied with confront-
Sweden ing China, and Russia will seek any oppor- RUSSIA
50 km Sea of Azov
Germany tunity to divide and weaken NATO.
France Europe’s leaders know that, for everything November 27th 2024
Netherlands
to stay the same, everything must change Russian-controlled Russian operations*
Italy
when it comes to defence spending. Claimed as Russian-controlled Ukrainian advances†
Spain
Whether Europe’s voters realise this, still Russian
*Russia fortification
operated lines
in/attacked, but does not control †Since May 2023
Source: NATO Sources: Institute for the Study of War; AEI’s Critical Threats Project
less accept it, is another matter. ■

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 The Economist November 30th 2024 Europe 27

▸ is imminent. Colonel Oleksiy Khilchenko, we’re screwed, I ask them when hasn’t Uk- On the first count, Mr Barnier’s co-
commander of Spartan, a rapid-response raine been screwed?” alition is hanging by a thread. When the
brigade, says Russia is tied up elsewhere. But Ukraine’s weakness is taking its toll prime minister was appointed in Septem-
He claims the Russians had planned to on the morale of its fighters. With no hope ber, Ms Le Pen pledged not to vote against
send two divisions (20,000-30,000 troops) for rotation or demobilisation, some of the his government right away. But she offered
for an initial assault, but half were diverted once most committed now wonder if a no more support than that. As the budget
to Russia’s Kursk area to strengthen its ceasefire might be the only way out. “Che- has wound its way through parliament, and
counter-offensive against a Ukrainian in- chen”, the brigade officer leading the new into a blizzard of tax-raising amendments,
cursion there. “Lemberg”, a battalion com- soldiers’ training session, says he remains Ms Le Pen’s hostility has hardened. None
mander with the 118th brigade manning determined to fight to the end. “Giving of the measures she dislikes, such as a rise
the south-western defences of Zaporizhia away territories to these disgusting people in tax on electricity bills or delaying an in-
province, agrees: “They aren’t ready to hit is no guarantee it will stop.” But he admits flation-linked increase to state pensions,
yet, but when they are, the first blow will that fewer soldiers than ever share his re- has been removed.
be the hardest.” solve. “It’s not even 50-50 any more, but 30- Mr Barnier, who must pass the budget
But Ukraine is taking no chances. New 70.” Lemberg puts the situation in even by December 21st, now says he will proba-
fortifications are being built in rings radi- starker terms. “In 2022 I was ready to tear bly use a constitutional device to force it
ating from the provincial capital. The work the Russians apart with my teeth,” he says. through. This would prompt a no-confi-
is thorough—minefields and obstacles “In 2023, I just needed rest. This year? I al- dence motion from the left, which would
made of concrete and iron—unlike the most couldn’t give a fuck.” ■ topple the government if backed by RN
more chaotic picture in neighbouring Do- deputies. A poll suggests 67% of her elec-
netsk province, still the site of the heaviest torate wants her to do this. “If the budget
fighting. There, Russia is moving faster Marine Le Pen remains as it is,” declared Ms Le Pen after

Double trouble
than at any time since the early days of the meeting Mr Barnier on November 25th,
invasion. Russian commanders have devel- “we’ll vote for no confidence.” The next
oped a grim formula that works: drones, day the spread on French ten-year govern-
electronic warfare, guided air-launched ment debt over German bunds widened to
bombs and waves of disposable infantry. It 0.86 percentage points, its highest since
is not easy going—they have been losing as PARIS the days of the euro-zone crisis in 2012.
many as 1,500 troops a day in their now A leader with huge parliamentary Ms Le Pen’s moment as a pivotal figure,
year-old offensive. But they are recruiting power could lose it all however, could be short-lived. On Novem-
more than they lose. “Look, they will never ber 27th she was back in a courtroom in
have a problem with manpower,” says Col- ITHIN WEEKS, Marine Le Pen, the Paris for the last day of her trial. She and 24
onel Khilchenko. “They drive people into
debt, into loans, and will force them to
W leader of the hard-right National
Rally (RN), could be propelled to the cen-
other party figures are accused of using
nearly €7m ($7.4m) of European Parlia-
fight for them. They aren’t going to stop.” tre of French parliamentary politics—or ment money between 2004 and 2016 to fi-
Ukraine’s problems, meanwhile, are out of it. Two imminent decisions will de- nance assistants who, says the prosecu-
worsening mainly because of manpower termine both the government’s survival tion, were in fact working for the national
problems. The army is long out of willing and Ms Le Pen’s own future. The first is party. Ms Le Pen denies any wrongdoing.
recruits, and its mobilisation campaign is whether she decides to bring down Michel The stakes for Ms Le Pen are huge. The
falling short, recruiting barely two-thirds Barnier’s minority government over next prosecution has asked for her to be sen-
of its target. A senior Ukrainian official year’s budget. The second depends on tenced to a €300,000 fine, five years be-
says he is worried the situation may be- whether judges in a trial over the misuse of hind bars (with three suspended) and to be
come irretrievable by the spring. An even public funds decide in March 2025 to bar barred from holding electoral office for
bigger problem is the quality of the new re- her from holding public office for five five years. Under an anti-corruption law
cruits. “Forest”, a battalion commander years with immediate effect. passed in 2016, the five-year ineligibility
with the 65th brigade, says the men being period is obligatory if she is found guilty.
sent from army headquarters are now The judges do, however, have discretion
mostly too old or unmotivated to be useful. over whether to order Ms Le Pen to start
All but a handful are over the age of 45. her sentence immediately, and whether to
“I’m being sent guys, 50 plus, with doctors’ adjust the sentence to take into account
notes telling me they are too ill to serve,” he her “personality”. If they do decide to bar
says. “At times it feels like I’m managing a her immediately, she will be out of the
day-care centre rather than a combat unit.” presidential race.
The situation on the front lines is wide- The trial has taken the party aback. It
ly accepted to be as difficult as at any time had been doing its best to sound respectful
since the early days of the war, with many of democratic institutions in order to look
fearing a significant Ukrainian retreat may like a government-in-waiting. Now Ms Le
soon be inevitable. For now, the looming Pen has accused the judiciary in almost
threat keeps the soldiers in Zaporizhia fo- Trumpian terms of wanting her “political
cused. They say they remember the atroc- death”. A poll makes Ms Le Pen the most
ities that followed Russian advances and popular figure to succeed Emmanuel Mac-
occupation. The experience of resistance ron as president. The idea, she declared,
still counts for something. As weak as Uk- that the French “could be deprived of their
raine is, Russia can be beaten, argues For- choice is a violent attack on democracy”. If
est. The proof? An ambush in February, she is barred from office it will bring relief
when his battalion singlehandedly de- in some quarters. But it could also shore up
stroyed a mechanised column of two doz- support among those convinced that the
en Russian vehicles. “To those who shout Be careful who you martyr system is against her. ■

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 28 Europe The Economist November 30th 2024

CHARLEMAGNE
The right stuff

Ursula von der Leyen is back—with a new doctrine on how to deal with the hard right

Renew faction. But in part because the trio lost ground in the last
elections, Mrs von der Leyen has sniffed around on the outer edg-
es of her old coalition to secure enough votes for herself and the
26 members of her new team. Reaching out to Greens for support
has been uncontroversial, given that they back the commission’s
ambitions to cut carbon emissions aggressively. More contentious
has been Mrs von der Leyen’s willingness to at least be civil to
parts of the hard right, starting with Ms Meloni’s Brothers of Italy
party. For the first time, an influential vice-presidency of the com-
mission will go to a politician outside the political centre, in this
case Raffaele Fitto, a minister from the Brothers.
To some in the EU this is an aberration. A cordon sanitaire that
keeps hard-right politicians far from power is an article of faith,
the last thing standing between Europe and Trumpian folly or
worse. Never mind that voters seem to quite like hard-right lead-
ers—Calin Georgescu, an ardent nationalist, scored a surprise vic-
tory in the first round of Romania’s presidential contest on No-
vember 24th. The key thing for pure-of-heart centrists is to pre-
tend their rivals do not exist. In some countries eschewing any
kind of alliance is common sense. Popular as it might be, the Al-
ternative for Germany party is deeply xenophobic and should in-
deed be beyond the scope of any coalition. Mr Georgescu is a pro-
HE HARSH winds of political change have howled through the Russia vaccine sceptic. The hard left has its own cranks and un-
T corridors of power in the past year. Consider the nine politi-
cians attending G7 summits—seven leaders of big industrialised
reconstructed Stalinists, too, best left in political Siberia.
Mrs von der Leyen’s starting-point is that not everyone to the
countries and two representing institutions of the European Un- right of mainstream conservatives is beyond the pale. She has sen-
ion. In Britain, America and Japan the incumbent politicos have sibly set three tests of whether a party could be considered a
been pushed out of office; Germany’s Olaf Scholz is headed for an partner: if it upholds core tenets of the rule of law, supports Uk-
electoral drubbing come February. The rest have hardly fared bet- raine, and is, more ambiguously, “pro-Europe”. That plainly ex-
ter. Emmanuel Macron called and lost a snap legislative election cludes Viktor Orban, the Hungarian autocrat who seems to prefer
in France, Canada’s Justin Trudeau is likely to be forcibly retired Moscow and Mar-a-Lago to Brussels. The French National Rally
within a year and Charles Michel will lose his role chairing EU of Marine Le Pen is still out, as is the Polish Law and Justice party,
summits on December 1st after hitting term limits. Amid the car- which undermined state institutions while in office. The most no-
nage two women stand out. Giorgia Meloni is still popular, though table party to be welcomed is that of Ms Meloni, who governs as a
admittedly she has not faced voters since becoming Italy’s prime staunch conservative (including on social issues, often in unpalat-
minister in 2022. The other, Ursula von der Leyen, stands alone in able ways, such as on gay adoption) but has picked few fights with
having secured her place at future G7 confabs until 2029: on No- Brussels and, above all, ardently supports Ukraine.
vember 27th the European Parliament endorsed her for a second
five-year term as president of the European Commission. Right-oh
Retaining control of the powerful Brussels machine and the Notwithstanding the pearl-clutching of political purists, a wider
right to boss around its more than 30,000 Eurocrats is perhaps less coalition at EU level can only be welcome. Politicians need to re-
arduous than triumphing in hard-fought national votes (under EU flect what voters plainly want. Reaching out to some “extremes”
rules the parliament endorses a candidate nominated by the bloc’s encourages them to moderate. The von der Leyen doctrine gives
27 national leaders, whose choice must reflect the result of Euro- an opportunity to the hard right to participate in the crafting of
pean elections which were held in June). Mrs von der Leyen had EU policies—and to be accountable for their outcomes. Far from
her tenure extended mostly by having done a good job since being undermining democracy, it shows that EU institutions are respon-
a surprise appointment in 2019, notably dealing with the fallout sive to shifts in opinion. Loth as they may be to admit it, main-
from covid-19 and Russia’s full-scale invasion of Ukraine. Given stream politicians have quietly made once-taboo ideas put for-
the election results in America, nobody wanted to keep EU poli- ward by the hard right their own, most notably on migration.
tics in suspense any longer than necessary by rejecting one of the After six months of political navel-gazing, Brussels now re-
commissioners put forward by national governments. But Mrs von turns to work. Mrs von der Leyen has promised to cut red tape and
der Leyen has also deftly handled the most thorny problem facing bolster the bloc’s flaccid economy. The return of Donald Trump in
the continent’s politicians: how to handle the ever-rising number America may force Europe into decisions on funding defence
of parties from outside the political centre. By setting clear rules (which now has its own commissioner). A hawkish new foreign-
of engagement with bits of the hard right, she has set a new doc- policy supremo, a former Estonian prime minister, Kaja Kallas,
trine others in Europe might learn from. should inject some spine in the debate over Ukraine. The EU is
Mrs von der Leyen’s second term, like her first, involves an in- mulling taking in up to nine new members. These are thorny is-
formal centrist alliance of her own centre-right European People’s sues, where broad political consensus must be sought—including,
Party (which won most seats in June), the socialists and the liberal at times, from politicians whose views one may disagree with. ■

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 The Economist November 30th 2024 29

United States

State politics tration’s policies in three broad ways:

The resistance, part two

through litigation, legislation and state-
centred foreign policies. Start with the
courts. Data collected by Paul Nolette of
Marquette University suggest that the first
Trump administration was subjected to
more multi-state lawsuits (where more
LOS ANGELES than one state files as a plaintiff ) than that
Democratic states are preparing for Donald Trump’s return of any president since at least Ronald Rea-
gan. The federal government was sued
N A RECENT episode of “Politickin’”— thing similar happened in 2017, when twice as many times in Mr Trump’s one
O Gavin Newsom’s podcast in which he
tries to convince listeners that he is their
Democrats weaponised tactics used by
Republican-run states to resist Barack
term as in Barack Obama’s two (see chart
on next page). California and New York,
totally normal podcast bro bestie—the Obama. After Mr Trump was inaugurated, the two most-populous Democratic states,
Democratic governor of California muses his crackdown on immigration and roll- were in the vanguard.
about how his state will react to Donald back of environmental rules led to a cas- Rob Bonta, California’s attorney-gener-
Trump’s inauguration. “He’s got all the cade of multi-state lawsuits. The same will al, says that all his Democratic counter-
power in the world, but we’re not some happen in 2025, but this time both the parts (there will be 21 come January) are co-
small isolated state and we’re not going to states and the Trump administration will ordinating on potential litigation. Many
be navel-gazing either,” says Mr Newsom be better prepared for the fight. confess to going through Project 2025, a
(pictured above). “We’re going to be firm States will react to the Trump adminis- detailed agenda drawn up by a conserva-
and…aggressive.” To this end, he has called tive think-tank, line by line to understand
a special session of the state legislature to what policies may be coming. They will be
→ ALSO IN THIS SECTION
convene on December 2nd in order to helped by offices that expanded during Mr
“safeguard California values”. One of the 30 The powers of Tariff Man Trump’s first administration. Bob Fergu-
governor’s co-hosts, a former NFL running- son, Washington state’s attorney-general
back, Marshawn Lynch, wonders aloud 31 Farewell to Trump’s trials who is about to become governor, reckons
whether the governor would like to “slap 32 Drama in Jackson, Mississippi that his environmental division grew from
the shit out of” Mr Trump. two people in 2017 to 28 today. Those offic-
California and other Democrat-run 33 Secessionists in Illinois es may get even bigger. Lawyers in the fed-
states are preparing legal and legislative 33 Spooking the spooks eral Department of Justice who don’t want
strategies to push back against the Trump to work for Mr Trump may decamp to the
administration on several fronts. Some- — Lexington is away states. California’s special session will be ⏩

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 30 United States The Economist November 30th 2024

▸ devoted to securing more funding for the barred city workers, property or data from Trump and tariffs

What might hold

state’s justice department. being used for federal immigration en-
Democratic states were successful in forcement. Mayors in Denver and Boston,

Tariff Man back?

83% of their multi-state lawsuits against among other places, have vowed not to co-
the Trump administration. But the legal operate with ICE.
landscape has changed. Mr Trump’s ap- There is a risk of overreaction. Nearly
pointments have transformed the federal 12m Americans across California, Illinois WASHINGTON, DC

judiciary, including the Supreme Court. and New York, the biggest Democratic Not the law, but other considerations
James Tierney, a former attorney-general states, voted for Mr Trump. They won’t like could constrain the president-elect
of Maine and a lecturer at Harvard Univer- their leaders resisting him at every turn.
sity, reckons that Mr Trump’s many ap- Finally, Democratic governors will try HE ORIGINAL intention was for Amer-
pointments to the Ninth Circuit Court of
Appeals, which covers California and eight
to boost their foreign-policy activities.
This will be most evident in climate diplo-
T ican presidents to be mere legal execu-
tors—not emperors able to impose their
other western states, may mean that more macy, where America will abdicate global will unilaterally. Over time, though, Con-
suits are filed in the First Circuit, in the leadership by pulling out of the Paris gress has ceded more and more authority
north-east. Mr Trump’s team also has a bet- Agreement (again). When Mr Trump with- to the executive branch, and the courts, the
ter understanding of what it takes to win drew the first time Jerry Brown, then Cali- third coequal branch of government, have
legal battles. “One of many reasons we fornia’s governor, wrote that “Trump is happily blessed the arrangement. Nowhere
were successful…was that they were often AWOL but California is…ready for battle,” is this clearer than in trade policy.
sloppy in the way they rolled out their ex- and sought to rally subnational govern- The constitution explicitly grants to
ecutive actions,” Mr Ferguson said in a re- ments to commit to curbing emissions. Mr Congress the powers “to lay and collect
cent press conference. “This time around I Newsom will try to follow in his predeces- taxes, duties, imposts and excises” and “to
anticipate that we will see less of that.” sor’s footsteps. California’s carbon-trading regulate commerce with foreign nations”.
Fights over immigration law will come market, one of the world’s largest, is alrea- And yet laws passed over the past century
swiftly. If Mr Trump again tries to institute dy linked to Quebec’s. But no amount of have turned power over to the president to
a travel ban for people from certain coun- state initiatives can replace federal action raise and lower tariffs as he sees fit. Presi-
tries or to end DACA, a programme protect- on emissions reductions. dent-elect Donald Trump is promising to
ing from deportation migrants brought to Two levels of political jockeying are in- immediately use these powers when he re-
America as children, Democratic states fluencing the resistance. Many attorneys- turns to office on January 20th 2025 by im-
will surely sue. They will also challenge ex- general have ambitions for higher office. posing tariffs of 25% on all imports from
ecutive action rolling back President Joe Mr Bonta is weighing a run for governor in Mexico and Canada and 10% on those from
Biden’s environmental rules. Mr Newsom 2026. Becoming the anti-Trump is a not-so- China. Could he really do so?
visited Washington, DC, in November to subtle way to raise his profile. Governors Legally, yes. To get his way Mr Trump
lobby the Biden administration to grant are making a similar calculation, with 2028 could invoke a myriad of legal authori-
California eight waivers so that it can en- in mind. Mr Newsom is brazenly ambi- ties—some with off-putting three-digit nu-
force stricter clean-air rules than the feder- tious, and California’s economic and cul- merical names like Section 232 and Section
al government on things as diverse as leaf tural heft give him an excuse to swan 301—but the most straightforward would
blowers and trains. Even if Mr Biden grants around the world (he met Xi Jinping last be the International Emergency Economic
them before he leaves office, Mr Trump year). Jared Polis and J.B. Pritzker, the go- Powers Act (IEEPA). This allows the presi-
has pledged to revoke them. vernors of Colorado and Illinois, are co- dent to impose tariffs with few limits (“to
“Over a year ago, shortly after the Dobbs chairing a group meant to “fortify Ameri- deal with any unusual and extraordinary
case came down, we started planning for can democracy”. After the election Mr threat…if the president declares a national
the potential of a national abortion ban,” Pritzker denounced mass deportations. emergency with respect to such threat”).
says Mr Bonta, referring to the Supreme “You come for my people,” he warned, “you IEEPA has attractive features for Mr
Court decision that overturned a federal come through me.” Tom Homan, Mr Trump. “It’s an emergency power, so
right to abortion. He worries that Mr Trump’s border tsar, replied: “Game on.” ■ there’s minimal procedural requirements.
Trump will try to restrict the use of mife- So, he could do it very quickly—on day
pristone, an abortion drug, and enforce the one, if he wants,” says Warren Maruyama, a
Comstock Act, a 19th-century anti-vice law States of defiance former general counsel for the United
that some anti-abortion advocates argue United States, multi-state lawsuits against the States Trade Representative. Mr Trump
would prevent the posting of all abortion federal government, by administration was the first to invoke the law to impose ta-
pills and tools. Several states are stockpil- 0 40 80 120 160 riffs when, in 2019, he threatened a 5% levy
ing the drug—just in case. on all Mexican goods in retaliation for ille-
Reagan, 1981-85
States and cities will also tweak local gal migration. And there is another impor-
policies to stymie Mr Trump. During his Reagan, 1985-89 tant precedent. In 1971, when Richard Nix-
first term many local governments passed H.W. Bush, 1989-93 on took America off the gold standard and
sanctuary laws, barring police from work- Clinton, 1993-97 in effect ended the first Bretton Woods
ing with Immigration and Customs En- system, he imposed an extra 10% duty on
Clinton, 1997-2001
forcement (ICE), the agency that deports all imports by declaring the need “to
migrants. These policies were not born out W. Bush, 2001-05 strengthen the international economic po-
of the resistance—some municipalities W. Bush, 2005-09 sition of the United States” to be an emer-
stopped working with ICE during the Oba- gency. Courts upheld Nixon’s actions.
Obama, 2009-13
ma administration to protest against his Constitutional objections—for exam-
aggressive deportation policy—but an Obama, 2013-17 ple, that the president had exceeded the
aversion to Mr Trump pushed more places Trump, 2017-21 bounds of administrative action—would
to adopt them. The threat of mass deporta- Biden, 2021-24*
face an uphill battle, says Kathleen Claus-
tions will turbocharge such efforts. On No- sen, a professor of law at Georgetown Uni-
Source: State Litigation and AG Activity Database *To Nov 23rd
vember 19th Los Angeles’s city council versity. Although American courts have ⏩

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 The Economist November 30th 2024 United States 31

▸ become gradually more sceptical of the ad- Politics and justice

Farewell trials, hello retribution

ministrative state, they have remained de-
ferential to presidents when they invoke
national security. In principle, simple ma-
jorities in Congress could pass a joint reso-
lution to overturn Mr Trump’s emergency
declaration, but in reality a two-thirds ma-
jority would be needed to override the NEW YORK

president’s inevitable veto. Republicans Donald Trump hopes to hand the Justice Department to loyalists
may even choose to pass some of Mr
Trump’s tariffs into law to make fiscal N THE END Jack Smith jumped before he derstanding of the law as a form of politics
room for the tax cuts they promised, put-
ting them on unquestionable legal ground.
Ispecial
could be pushed. On November 25th the
counsel who spent two years pur-
is manifest in Mr Trump’s legal appoint-
ments—together they resemble a perso-
The other legal avenues at Mr Trump’s suing Donald Trump dropped the two fed- nal-defence bar. Pam Bondi, his nominee
disposal are better tested but slower. Sec- eral indictments against him. The Depart- for attorney-general, represented him dur-
tion 301 (of the Trade Act of 1974) was the ment of Justice (DoJ) forbids prosecuting ing his first impeachment trial in Con-
workhorse of his first administration, used sitting presidents, so this was a question of gress. If all are confirmed, her deputies at
for tariffs on $370bn of Chinese imports when, not if. Mr Smith will file a report the DoJ will be two lawyers who defended
(and $7.5bn from the European Union). It about his futile endeavour before packing Mr Trump during his hush-money trial.
could easily be invoked to slap broader ta- his things. The alternative was a stand-off His choice for solicitor-general argued the
riffs on China but would be less immedi- with Mr Trump, who had promised to fire immunity case before the Supreme Court.
ately useful for Mexico and Canada, since him “within two seconds” of his inaugura- Unlike Matt Gaetz, who withdrew from
the president must conduct an investiga- tion. The two criminal cases against Mr contention to lead the DoJ amid scandal,
tion and adhere to the long notice-and- Trump in state court, in Georgia and New Ms Bondi should have no trouble getting
comment periods required in American York, are in effect over, too. confirmed by a Republican-controlled
administrative law. Section 232, also de- The unceremonious end of the Trump Senate. She has the requisite CV as a for-
ployed during Trump I for steel and alumi- trials highlights the failure of the judicial mer attorney-general of Florida, where she
nium duties, would be less useful for broad system to hold the former and future presi- was part of a class of activist state prosecu-
tariffs as it needs designation of specific dent to account for his attempts to over- tors who took the Obama administration
products as threats to national security. turn the 2020 election and other alleged to court. Later she proved her MAGA cre-
Domestic litigation is not all Mr Trump misdeeds. If anything, the cases fuelled his dentials as a telegenic and tireless promot-
must fend off. America has a free-trade political comeback, adding grist to his vic- er of Mr Trump’s false claims about elec-
deal with Mexico and Canada called the timisation narrative and rallying Republi- tion fraud. She was reportedly nixed for a
USMCA, negotiated under Mr Trump. It has cans to his cause. Arguably their most pro- job in the first Trump administration over
a dispute-settlement mechanism that found effect was to make it immensely an ethics issue—in 2013 she declined to
Mexico or Canada would undoubtedly in- more difficult to prosecute Mr Trump or join a civil lawsuit against one of Mr
voke if Mr Trump were to go through with his successors in future. In July, in Trump v Trump’s companies after he donated to her
his threats. But here, too, IEEPA would United States, the Supreme Court granted political campaign. That reflects how stan-
prove useful. Mark Wu, of Harvard Law immunity, or the presumption of it, to all dards have shifted this time around.
School, says Mr Trump’s subordinates sorts of presidential conduct. Now comes the wait to see if Mr Trump
could point to the national-security excep- Over the past two years it became an ar- will follow through on his promise to seek
tions in the deal to argue that they had not ticle of faith among Republicans that the retribution against his political opponents,
violated it. USMCA faces a mandatory re- legal system was weaponised against Mr and how accommodating Ms Bondi and
view (and probable renegotiation) in 2026. Trump; now many want payback. This un- others will be of such demands. Last year
A protracted dispute over its fundamental she told an interviewer on Fox News that
tenets might lead to its collapse. “the prosecutors will be prosecuted—the
The likeliest constraint on Mr Trump bad ones.” She has called Mr Smith a “rabid
will not be legal. It will be fear of backlash dog”. (Dogs are a preoccupation for Ms
from the markets and the public. “More Bondi, who once got into a custody dispute
than half of our fresh fruits and vegetables over a St Bernard.)
are from Canada and Mexico…Super Bowl Politically motivated prosecutions
season is right around the corner. Do we would shred the post-Watergate rule that
really think Trump’s going to impose a 25% presidents stay out of the DoJ’s business.
guacamole tax on his first day in office?” Already this norm was tested during Mr
says Scott Lincicome of the Cato Institute, Trump’s first stint in office, when federal
a libertarian think-tank. He suspects that prosecutors investigated both John Kerry
Mr Trump is issuing tariff threats as a ne- and Hillary Clinton, seemingly at the pres-
gotiating tactic to force concessions that ident’s request. Of course judges are able
he can then tout before his inauguration to toss out spurious cases and juries can
even begins (see Americas section). acquit defendants. But nothing constrains
Mr Trump campaigned on resolving the a president from opening a probe in the
plight of carworkers, farmers and consum- first place. The Supreme Court said as
ers angry about the price of everyday sta- much in Trump v United States. “Allega-
ples. He would quickly run out of goodwill tions that…requested investigations [are]
if he were to make imported goods much ‘shams’”, wrote the justices, “do not divest
more expensive. The court of public opin- the president of exclusive authority over
ion is probably the only one that can curb the investigative and prosecutorial func-
Mr Trump’s instincts. ■ Jack Smith bows to reality tions of the Justice Department.” ■

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 32 United States The Economist November 30th 2024

er the mayor is a colossal failure or a hero”,

says Othor Cain, a citizen-journalist. Crit-
ics say Mr Lumumba accelerated the city’s
decline by staffing his administration with
ideologues who didn’t know how to gov-
ern. Others reckon the problem is corrup-
tion as well as incompetence. In 2021 Ken-
ny Stokes, a city councillor, claimed that
the mayor’s “relationship with dope boys”
was making him “soft on crime”. Last year
Mr Lumumba raised eyebrows by battling
with the city council to direct a garbage-
collection contract to a specific vendor.
The mayor’s allies say the decline is a
result of chronic underinvestment by poli-
ticians who want to choke America’s
“blackest city”, and that Mr Lumumba is in
the cross-hairs because he refuses to bow
to them. Mr Lumumba will have his day in
court, but there can be no doubt about his
commitment to racialised and radical poli-
tics. His father, a leader of the Republic of
New Afrika, a militant black-nationalist
Drama in Jackson group, moved his family from Detroit to

Lumumba in limbo
start a black colony. A shoot-out with the
police left one officer dead and most of the
group’s leaders arrested. Lumumba senior,
who was away that day, became a criminal-
defence lawyer and represented Tupac
Shakur, a rapper, and Geronimo Pratt, a
JACKSON high-ranking Black Panther. In 2013 he was
The sensational undoing of the leader of Mississippi’s failing capital elected mayor of Jackson, before dying
suddenly of natural causes.
VERYONE THOUGHT a new hotel facing a prison sentence of up to 75 years. His son, who wears skinny suits and
E would revitalise the downtown area.
Nearly two decades ago city leaders in
A band of self-described “radicals”
close to the mayor say the sting operation
Rolex watches and lacks his father’s unfus-
sy charisma, made black autonomy his
Jackson, the capital of Mississippi, negoti- was a set-up concocted by white extrem- mission. In office he has resisted the state’s
ated a $10m loan to fund developers to ists to dethrone their black leader. They attempts to seize control of Jackson’s air-
build on empty land next to a glossy con- suggest that the state’s Republican politi- port, take over the schools and police the
vention centre. But the area was derelict cians are behind it, even though the case’s heart of the city. To ease gun violence Mr
and no one put in a bid for it. federal prosecutor was appointed by Joe Lumumba tried, unsuccessfully, to sus-
That was until last year, when two Biden. “You’re witnessing a legal lynching,” pend the state’s open-carry law. “He is
Nashville developers met Jody Owens, the says Tariq Abdul-Tawwab, a social-justice seen as an incarnation of black Jackson
district attorney, in a cigar lounge near the campaigner. The only crimes the mayor standing up against white supremacy,”
Capitol and asked him how to strike a deal. was charged with, they correctly note, are says D’Andra Orey, a political scientist at
He told them that they needed the mayor’s ones he was lured into by the FBI. In order Jackson State University. To the more po-
blessing to build and that $100,000 ought for the ruse to not be considered entrap- werful state politicians who control the
to convince him. The money, he allegedly ment, the government must prove at trial flow of federal funds, the mayor is a failed
said, “can come from blood diamonds in that it had dirt on the mayor beforehand. and now allegedly corrupt politician pre-
Africa, I don’t give a fucking shit”. Soon he siding over an urban disaster. “He contin-
and Chokwe Antar Lumumba, the mayor, One sting and another ues to try to blame the white folks instead
were flying to Florida on the developers’ The indictment is a blow to a city that is al- of taking responsibility for his administra-
private jet. Aboard a yacht in Miami they ready spiralling downwards. After a treat- tion’s fiscal failures,” says Pete Perry, a for-
handed Mr Lumumba a personal cheque ment plant failed in 2021, Jackson went mer head of the county Republicans.
and Mr Owens a wad of cash. The mayor without clean drinking water for a month. For now, the mayor’s soldiers are brac-
called a clerk to get the application dead- When the system crashed again, a court ing for war. “The gloves have to come off, I
line moved up and deposited the money put the utility under third-party control. tell the movement, this is not training day,”
into his campaign coffers. That night they The city’s sewage system is so leaky that says Danyelle Holmes of the Poor People’s
partied at Tootsie’s Cabaret, a strip club, locals complain of faeces bubbling up into Campaign, an activist group. Clicking her
on the developers’ dime. the streets when it rains. Four of the seven hot-pink nails together she explains that
But the Nashville men had no plans to public libraries have at some point closed her radicalness is inspired by her great-
build: they were undercover FBI agents. On due to mould. During the pandemic Jack- great-grandfather, who killed his slave
October 23rd Mr Owens and Mr Lumumba son became America’s murder capital. In master. When asked what happens if Mr
were indicted for bribery and money-laun- 2022 it had 94 homicides for every 100,000 Lumumba is convicted of the crimes he is
dering. Both pleaded not guilty. The mayor residents, a rate comparable to notoriously accused of, Ms Holmes’s eyes scan your
called the charges a “political prosecution” dodgy cities in Mexico and Ecuador. New correspondent fiercely. “The movement
and said that he still plans to run for re- Orleans, America’s runner-up, had 76. continues,” she says, “but it continues in an
election in the spring, despite potentially Even so, the city “is divided over wheth- even more aggressive way.” ■

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 The Economist November 30th 2024 United States 33

Secessionists residents of the Windy City. “The only way plans have ever succeeded and none since

Looking for
for people outside of Cook County to get the creation of West Virginia in 1863. Doz-
their voice back is to have a separate state,” ens have failed, from Absaroka, a proposal

a new Illinois
says G.H. Merritt, of New Illinois, a rival in the 1930s to carve out a new state around
group which wants much the same thing. Mount Rushmore, to Superior, a proposed
“You have regions that are much differ- state in the Upper Peninsula of Michigan
CHICAGO ent from Chicago and we are outnum- plus bits of Wisconsin and Minnesota.
The rural-urban divide is producing bered,” says Kurt Prenzler, the Republican Even so, Illinois’s separatists are not alone.
a wave of wannabe state-splitters chairman of the Madison County Board. Thirteen counties in eastern Oregon re-
Of six statewide elected officials in Illi- cently declared they would like to be al-

IhaveLLINOIS HAS only one true metropolis,

the city of Chicago. It does, however,
another Metropolis, a pretty little
nois, only the treasurer is not from the Chi-
cago region. Mr Prenzler in fact opposed
the ballot proposal—he says breaking up
lowed to join more conservative Idaho, for
example, and in California several compet-
ing state-partition plans are in the works.
town of around 6,000 people on the border Illinois is unrealistic. But he says he is not The pattern these days is almost always
with Kentucky which rather implausibly that surprised that 56% of people in his rural areas wanting to be free of cities. But
claims to be the hometown of Superman. county voted for it. He points in particular it wasn’t always thus. In 1925 Chicago’s city
And in Metropolis they would rather not to the covid lockdowns ordered in 2020 as council passed a resolution to look into its
have the metropolis. In 2020, 70% of voters something that supercharged anger with own secession from Illinois. The city then
in Massac County, which contains Metrop- representatives from Chicago. Voting to felt ganged up on by the rest of the state.
olis, opted in a non-binding referendum secede is “a way of speaking up”, he sighs. Big demographic and cultural divides in
for the rest of Illinois to separate from Both Ms Merritt and Ms Newlin insist politics can change rather surprisingly. ■
Cook County, which contains Chicago and their campaign is non-partisan. Yet this ru-
many of its suburbs. That helped start an ral-urban divide aligns with the state’s pol-
unlikely state-splitting movement. itics. Just 14 of 102 counties voted for Ka- The spy who purged me

Spooking the
This November Massac was joined by mala Harris over Donald Trump, but state-
seven more counties. Of Illinois’s 102 coun- wide almost 55% of the voters did. Demo-

spooks
ties, 33 have voted to tell their governing crats have a supermajority in the state
boards to consider leaving the state. Most, legislature created in part by drawing
like Massac, are rural places with small maps that string together urban areas out-
populations. But among the new seces- side Chicago into lots of Democrat-lean-
sionists is Madison County, a suburb of St ing districts while rural Republican voters Donald Trump’s intelligence picks
Louis in next-door Missouri, with 265,000 are concentrated together. Democrats suggest a radical agenda
people. In all, the separatist counties are hold 14 of the state’s 17 seats in the House
now home to more than 800,000 people, of Representatives, too. A generation ago, F DONALD TRUMP’s nominees to high
just over 6% of the population of Illinois.
Why separate? The reason is simple,
rural interests could sometimes unite with
suburbanites against the Democratic Chi-
O office, few are more suspicious of the
government they are pegged to join than
says Loret Newlin, the organiser of the Illi- cago machine, notes John Mark Hansen, of Tulsi Gabbard. The Democrat-turned-Re-
nois Separation Referendum movement, the University of Chicago. No longer. publican warns of a “slow-rolling coup” by
which gathers signatures to get the ques- Still, independence is unlikely. Creating “the entire permanent Washington mach-
tion onto county ballots: “Our votes don’t a new state within the territory of an exist- ine”, as she describes it in “For Love of
count.” Cook County, with 5.1m people, ing one requires the agreement of both Country”, a campaign book published in
has 40% of Illinois’s population. Those that state’s legislature and of Congress. April. Her list of putschists is long, catholic
elsewhere in the state, especially in the Few state governments want to sunder and spook-heavy: “the Democratic Na-
south, feel dominated by laws passed for themselves. Only three state-partition tional Committee, propaganda media, Big
Tech, the FBI, the CIA, and a whole net-
work of rogue intelligence and law en-
forcement agents working at the highest
levels of our government”. Yet she may
soon oversee some of that machinery.
On November 13th Donald Trump
chose Ms Gabbard as his nominee for Di-
rector of National Intelligence (DNI), a
post that co-ordinates the work of the al-
phabet soup of 18 spy agencies in the
country’s intelligence community. The
news raised fears in the agencies and
among America’s allies that intelligence
will be distorted to suit Mr Trump’s prefer-
ences. And it heralds rifts within Mr
Trump’s administration between hawks
like Mike Waltz and Marco Rubio, nomi-
nated as national security adviser and sec-
retary of state respectively, and radicals
such as Ms Gabbard, who have argued for a
softer line on China, Russia and Iran.
Mr Trump’s intelligence team is still
taking shape. On November 12th he picked
Look! Pie in the sky! It’s Superstate! John Ratcliffe as CIA director. He is a for- ⏩

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 34 United States The Economist November 30th 2024

▸ mer congressman who briefly served as for government requests,” argues Ms Gab- by Mr Carmack and Ms Gabbard—“sug-
DNI at the end of Mr Trump’s first term. At bard (not inaccurately). If Mr Trump de- gested strongly that Joe Biden himself was
the FBI, Christopher Wray, the director, cides to quash it, the FBI will lose a major compromised by a number of foreign ac-
who was appointed by Mr Trump in 2017 to source of intelligence. tors, the Chinese Communist Party fore-
a ten-year term, seems likely to be re- Other clues for Mr Trump’s plans might most amongst them”.
placed. In his first term, Mr Trump clashed be found in the writings of those in his po- The Economist spoke to a dozen former
repeatedly and frequently with the FBI and litical orbit. Last year Project 2025, an ini- and serving intelligence officials from
other agencies. He was angered by their re- tiative by the Heritage Foundation, a con- America and European allies to ask them
ports that Russia had intervened on his be- servative think-tank, to prepare for a how they thought all this churn might af-
half in the 2016 election. In 2020 he fired a Trump administration, published “Man- fect American and allied agencies. Some
string of top intelligence officials includ- date for Leadership”. Dustin Carmack, a urged calm. One American official said
ing Chris Krebs, the director of the Cyber- former aide to Mr Ratcliffe, contributed a that he had briefed Ms Gabbard on the
security and Infrastructure Security Agen- chapter on intelligence. In May this year House Armed Services Committee and
cy, who had declared that the 2020 election the America First Policy Institute pub- that she was less radical in private than in
was not, as Mr Trump insisted, stolen. lished a similar volume, with a chapter on public. The DNI, in any case, is the most
intelligence by Sam Faddis, a retired CIA senior figure in American intelligence but
You only live twice officer who sought to overturn Mr Trump’s not always, or even usually, the most po-
That history suggests that Mr Trump and election defeat in 2020. Many of Mr Car- werful. She oversees intelligence assess-
his appointees will seek dramatic reforms, mack’s proposed reforms are technocratic, ments and manages budgets, but does not
even purges, in the spy agencies and at the such as efforts to improve intelligence directly run the agencies.
FBI. The bureau, the top federal law-en- sharing and streamline security clearances
forcement agency, houses counter-intelli- across agencies. He also expresses enthu- From Russia with love
gence and counter-terrorism sections that siasm for covert action, in line with the One European intelligence official pointed
collect and analyse intelligence. It is likely views of traditional Republicans. Other out that intelligence-sharing between his
to be first in line for Mr Trump’s plans to proposals are more contentious. country and America actually improved
neuter perceived enemies. Kash Patel, an Mr Carmack argues that “woke” culture during Mr Trump’s first term. Within the
inexperienced loyalist whom Mr Trump in the spy agencies has replaced patriotism Five Eyes intelligence pact, made up of
sought and failed to install as deputy CIA and competence. He says that the intelli- America, Australia, Britain, Canada and
director in the dying days of his first ad- gence community must “restore confi- New Zealand, signals-intelligence gather-
ministration, is rumoured to be a contend- dence in its political neutrality”, alleging ing is so tightly integrated that it would be
er for Mr Wray’s job. “We will go out and that John Brennan, a former CIA director impossible to unravel without causing
find the conspirators, not just in govern- who was sharply critical of Mr Trump, used massive disruption to America itself. “The
ment but in the media,” promised Mr Patel intelligence “as a political weapon”. And he Five Eyes sharing always holds,” soothed
last December. “Whether it’s criminally or urges the president to replace the leaders the American official.
civilly…we’re putting you all on notice.” of the CIA’s directorates and mission cen- Others are less sanguine. Many mid-
The bureau might also be checked in tres—led by career officials rather than po- ranking intelligence officers are likely to
other ways. Mr Trump and Ms Gabbard are litical appointees—to make them more leave, says one insider, fearful of falling
both opposed to Section 702 of the Foreign “responsive” to the White House. foul of political loyalty tests. Mr Trump’s
Intelligence Surveillance Act (FISA), which Mr Faddis goes further. He argues that lax approach to security is another con-
authorises electronic surveillance on American spies “today act as if they are an cern. In his first term he divulged secret in-
American soil. It was renewed this year independent branch of government that telligence to Russian officials, allowed un-
after a fierce debate in the Senate but it is does not answer to the president”. And he vetted foreigners to roam free at Mar-a-La-
due to lapse in 2026. “The [FISA] court has says that his own perusal of Hunter Biden’s go, his club in Florida, and, infamously,
proven to be a dependable rubber stamp laptop—a right-wing obsession also cited carted off boxes of highly classified mate-
rial when he left the presidency. More re-
cently, his aides have proposed eliminating
FBI background checks and granting im-
mediate security clearances to staff even if
they fail private-sector vetting.
Ms Gabbard’s Russophile tendencies
are particularly jarring. “Democrats don’t
want a peaceful relationship with Russia at
all,” she complained in her recent book.
“How would their friends in the military-
industrial complex make trillions of dollars
from the fear they fomented in America
and Europe by stoking the fires of the new
cold war?” Some in the intelligence world
believe that European agencies might start
holding back human-intelligence reports
or “sanitising” them of information that
would previously have been shared. For her
part, Ms Gabbard is clear about the ongo-
ing threats she sees emanating from the in-
telligence agencies which, she warns, “are
so dangerous that even our elected offi-
cials are afraid to cross them”. The spies
Chapter and verse from the book of Gabbard are on notice. ■

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 The Economist November 30th 2024 35

The Americas

One year of anarcho-capitalism He is enjoying his best moment since

True believer
taking office. His two most important au-
diences, markets and Argentines, are
chuffed. The JPMorgan country-risk index,
an influential measure of the risk of de-
fault, has fallen from around 2,000 when
BUENOS AIRES he took office in December 2023 to about
Javier Milei explains the economic revolution 750 now, its lowest level in five years. De-
he has unleashed in Argentina spite huge spending cuts, Mr Milei is more
popular with Argentines than his two pre-
OMETIMES FAMILIARITY breeds fond- forms aimed at shaking Argentina out of decessors were after their first year. In re-
S ness. Not so for Javier Milei, Argentina’s
president. After running the Argentine
decades of humiliating decline caused by
rampant inflation, absurd handouts and
cent months, his popularity has risen.
Argentines are impressed by falling in-
state for a year, his contempt for it remains thickets of regulation. The result has been flation. It has long been their scourge, fu-
“infinite”, he told The Economist in an inter- better than almost anyone expected: infla- elled by wild government overspending fi-
view on November 25th. Holding forth in tion is down sharply, government spend- nanced by printing money. When Mr Milei
his office in the Casa Rosada, the red-car- ing is almost 30% lower in real terms. took office inflation was running at 13%
peted and marble-statuaried historic seat These successes could still be reversed; Ar- month on month. It spiked to 25% after he
of power, Mr Milei has a presidential air. gentina’s recent history is littered with devalued the artificially and unsustainably
But when he explains the philosophy be- failed economic reforms. But fortified by strong peso. It is now under 3% per month
hind his radical experiment he sounds just the clarity of his convictions and immersed (see chart 1 on next page).
like the “mole” that he claims to be, de- in free-market theory, Mr Milei has a better The reduction rests upon Mr Milei’s
stroying the state from within. Any re- chance than those who came before him. brutal cost-cutting. That impresses mar-
straints on free enterprise push society to- kets. He campaigned brandishing a chain-
wards socialism, he says. Even neoclassical saw, then delivered a primary surplus in his
economics, the framework that guides → ALSO IN THIS SECTION first month—and every month since (see
most economic policymaking, “ends up fa- chart 2). The surplus, crucially, eliminates
vouring socialism”. For Mr Milei the lesson 37 Uruguay’s elections the pressure for the central bank to finance
is clear: “anything I can do to remove the 37 Bracing for Trump’s tariffs spending by making “temporary” transfers
interference of the state, I’m going to do.” to the government, which are in fact rarely
This resolve has guided a blast of re- 38 Bolsonaro’s setbacks paid back, a form of money-printing. ⏩

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 36 The Americas The Economist November 30th 2024

▸ Mr Milei says he has tried to make sure tines understand the peso’s strength; some
that the cuts fall upon the state itself, more Draining the poison 1 55 buses carry eager shoppers to Chile eve-
than its poorest citizens. He slashed the Argentina, consumer prices, ry day, where goods are much cheaper.
number of ministries from 18 to eight, halt- % increase on previous month This is a drag on exports and growth.
ed the vast majority of public works and 30 And Mr Milei cannot maintain the scheme
Milei becomes president
ended most transfers to provincial govern- without capital controls, but these put off
ments. According to Invecq, an Argentine investors who want to be sure they can get
economic consultancy, spending on both 20 their money out of Argentina, not just in. If
public salaries and universities is 20% low- and when he does finally remove capital
er this year in real terms than it was in 2023. controls and free up the exchange rate,
10
Still, the biggest savings came from hold- there is a risk of a sudden depreciation.
ing down the real value of pensions. That could set off another bout of infla-
At the same time Mr Milei has been try- 0 tion, undermining Mr Milei’s signature
ing to clean up the balance sheet of the achievement, and perhaps his popularity.
J J A S O N D J F M A M J J A S O
central bank, which had previously Overvaluation is a classic Argentine pro-
2023 2024
pumped a vast amount of pesos into the blem. It tends to end in crisis.
Source: Haver Analytics
system. Its foreign reserves were $11bn in Mr Milei rejects all this. He says his re-
the red when he took office. The balance forms justify the peso’s value, and that cap-
has improved, but remains negative. Some “I’m not going to be friends with Lula, but ital controls don’t deter investors because
$20bn has re-entered the formal banking I have an institutional responsibility,” he he has promised to remove them next year.
system, thanks to a tax amnesty that says, enthusing over a recent deal to sell Moreover, he declares, “we are not in a hur-
brought dollars out of mattresses and Argentine gas to Brazil. ry.” If he had more foreign finance he could
home from offshore accounts. All this bodes well for Argentina’s con- remove capital controls sooner; he needs
Alongside these efforts to stabilise the tinued economic recovery. But big risks hard cash to defend the flexible exchange
macroeconomy, Mr Milei and his team loom over Mr Milei’s successes. One is po- rate. But the IMF appears unenthusiastic
have slashed reams of red tape tangled litical. He has benefited from disarray about that use for new money. This may be
around everything from air travel and among the opposition that will not last for- curdling relations with the Fund. Argenti-
apartment rentals to divorce and satellite ever. Nor will the public’s tolerance for na owes it $42bn. Mr Milei pointedly em-
internet. He is not finished. “Every day we weak growth, high unemployment and phasises that new finance from the IMF “is
deregulate and we still have 3,200 structur- poverty, even if inflation has been wrestled only one of the options”.
al reforms pending,” he says. Elon Musk, down. By frankly telling voters that cuts The question of the peso’s value is man-
whom he recently met at Mar-a-Lago, is would hurt he lowered their expectations. ageable, for now. Markets are not betting
keen to follow suit, he says. Now Mr Milei trumpets that “Argentina is on an imminent devaluation as they did,
The cuts hurt. The economy entered a entering its best moment in 100 years.” wrongly, earlier this year. But on longer
recession this year and unemployment That is a harder expectation to manage, es- timelines risks remain. Donald Trump’s
jumped. The share of Argentines who are pecially if Argentines do not feel such ela- policies could push the dollar higher and
poor surged to 53%, up from 40% in 2023. tion in their wallets. If the Peronists rise in pressure on the peso could rise sharply,
But the recession seems to have bottomed the polls or unmanageable protests break warns Robin Brooks of the Brookings In-
out. Growth should help ease poverty and out, it could send investors running and stitution, a think-tank.
unemployment, though it will add infla- threaten the recovery. A different worry is that in his zealotry,
tionary pressure. The government hopes a Another risk is economic. The peso Mr Milei may undermine Argentina’s
new law which provides whopping invest- looks overvalued again. The government checks and balances. “I don’t deviate one
ment incentives, such as multi-decade tax inherited and maintains capital controls. It millimetre from the rules that are agreed to
breaks and customs exemptions, will at- also sets the official exchange rate; it de- in the Constitution,” he says. He does,
tract capital and boost growth. valued the peso by 50% in December 2023, however, want to reform the courts. Noth-
To get that law through Congress Mr then by 2% each month since. But because ing wrong with that, but to do so he has
Milei displayed a streak of pragmatism. inflation has been running higher than 2% nominated a judge to the Supreme Court
“I’ve learned a lot about doing politics,” he per month, the real exchange rate has been who is widely considered unqualified and
says. He eventually empowered his chief of rising. It is now approaching the level it who faces allegations that he manipulates
staff to make compromises with the very was at before Mr Milei took office. Argen- cases to benefit the well-connected. The
same political elite that he decries as nomination has been so slow to progress
“thieves” and “criminals”. Surprisingly, Mr through the Senate that the government
Milei now says that he has no enemies in “A surplus empowers you" 2 has raised the prospect of forcing it
Argentinian politics, only rivals. Even Argentina, primary government through by decree, a controversial move.
those rivals, he says, “do not explicitly budget balance*, trn pesos Mr Milei also claims that 85% of what is
want the country to do badly”. 3 written in the Argentine press is lies.
Milei becomes president
The president’s newfound pragmatism A final risk comes from Mr Milei’s own
shines through in foreign affairs, too. 2 volatility. He has recently fallen out with
While campaigning in 2023 he repeatedly 1
his vice-president. At the very least that
insulted China. At one point he pondered will make it harder for him to pass laws in
whether it was right to “trade with an as- 0 the Senate. And he is increasingly engaged
sassin”. Now it is “a fabulous partner,” he by culture wars, much like his allies abroad.
gushes, having recently met China’s Presi- -1 He rails against “transgender ideology”,
dent Xi Jinping. “They don’t ask anything. -2 abortion and climate change, which he de-
They want to trade calmly.” In a similar nies is caused by man. These causes are
J J A S O N D J F M A M J J A S O
vein, he once called Brazil’s president Luiz Marxism’s new front, he claims. But with
2023 2024
Inácio Lula da Silva, known as Lula, “a cor- Argentina’s economy still balanced on a
Source: Haver Analytics *Excludes interest payments
rupt communist”. Now he is more nuanced. knife edge, any distraction is a danger. ■

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 The Economist November 30th 2024 The Americas 37

Uruguay’s elections None of these are easy problems to synthetic opioid, and irregular migrants

The limits
solve. But political parties ought to offer stopped coming into the United States
more than right- and left-flavoured ver- across either border. If he follows through

of stability
sions of more-of-the-same certainty. Uru- it will cause huge economic damage, and
guayan politicians’ preference for compar- destroy the United States-Mexico-Canada
ing Uruguay with its troubled region, rath- Agreement (USMCA), the free-trade deal to
MONTEVIDEO er than the rich world, is a concession to which all three countries are party.
Steady Uruguay stands out in mediocrity. Perhaps the electorate does The leaders of Mexico and Canada re-
the region, but not in the world not want deep reform, but it has not been sponded quickly, and in different ways.
seriously offered it for years. Justin Trudeau, Canada’s prime minister,
AFE CHANGE that will not be radical.” Might Mr Orsi be bolder in office? jumped on the phone to Mr Trump to chat
“S It is not a political slogan to set pulses
racing. Yet a campaign centred on that
“Let’s hope so,” says Martín Rama, one of
Uruguay’s leading economists. The trick is
about the “intense and effective connec-
tions” between their countries. His deputy,
message was enough for Yamandú Orsi of to find centrist radicalism, not the infla- Chrystia Freeland, released a statement
the Broad Front, a left-wing party, to win tion-inducing sort popular across the re- about the importance of border security.
the presidential run-off in Uruguay on No- gion. Radical reforms driven by those fur- Mexico’s President Claudia Sheinbaum
vember 24th. Mr Orsi, a former governor of thest left in Mr Orsi’s party could be worry- took a harder line. She read out a letter to
Canelones, the state surrounding the cap- ing. Still, the lesson to take from Uruguay’s Mr Trump at her daily press conference,
ital Montevideo, beat Álvaro Delgado, the last decade is not so much that stability is warning him that Mexico would meet ta-
former chief of staff to the current centre- crucial. It is that stability without ambition riffs with tariffs. She said this would hurt
right president. Mr Delgado was weighed is not enough. ■ firms like General Motors, which make
down by a spate of scandals in his party cars in Mexico for export to the United
and a post-pandemic uptick in inflation. States. She also said Mexico had already
He too ran a cautious, centrist campaign. Trade in North America reduced the flow of migrants to the border

Getting real
Stability, both political and economic, and is working on tackling fentanyl (con-
is at the very heart of Uruguayan politics. sumers of which, she noted, are in the Un-
Both candidates repeatedly promised it. A ited States). She added that Mexico suffers
phalanx of analysts argues that it is the from the southern flow of American guns
country’s great virtue. It has, indeed, into the hands of gang members, which
helped the country of 3.4m become one of MEXICO CITY AND OTTAWA the United States does little to stem.
the most prosperous in Latin America, Officials in Canada and Mexico are This more aggressive tack may signal
with relatively low inequality and a largely actively preparing for a trade war exasperation in Mexico City. Officials had
functional welfare state. Yet, increasingly, hoped that rational thinking would prevail,
Uruguay demonstrates not just the bene- OW DO YOU handle an ally, neighbour and that Mr Trump would back away from
fits of stability, but also its limits as a de-
velopment strategy.
H and trade partner who promises to
slap you with tariffs? That is the question
such destructive acts. Many are reluctant
to bend the knee. It is “crazy” to apply ta-
The focus on stability seems to have en- facing Mexico and Canada after Donald riffs to your closest trade partners, says
gendered a worrying lack of urgency about Trump took to social media on November one Mexican official. The idea that Mexico
some serious problems. Take growth. Be- 25th and pledged—for the first time as should adapt its position to something
tween 2005 and 2014 surging commodity president-elect of the United States—to that does not make sense is frustrating.
prices paired with sound macroeconomics impose a 25% tariff on both countries on But that is what Mexican and Canadian
helped Uruguay to boom. But since 2014, his first day in power (see Finance & eco- officials realise they must do. A trade war
when the commodity super-cycle ended, nomics section). He said the tariffs would would do far more harm to their countries
Uruguay has stagnated. Income per per- be in place until both fentanyl, a potent than it would to the United States. Some
son, which grew by more than 50% in the 83% of Mexico’s goods exports and 77% of
nine years to 2014, has only increased by Canada’s go to the United States. Another
7% since then. Uruguay’s performance has Mexican official says the threat marks the
been worse than that of Bolivia, Paraguay start of a “serious negotiation”. And in-
and Colombia. Inequality, which had been deed, in a phone call on November 27th,
plummeting, has edged up. The poverty Mr Trump and Ms Sheinbaum seemed to
rate has been stuck at around 10% of the strike a conciliatory note. Both agreed that
population for a decade. the movement of migrants through Mexico
Yet economic ambition was in short to the border would be curbed. Mr Trump
supply on the campaign trail. Mr Delgado’s called the conversation “wonderful”.
big promise was to make Uruguay Latin Mexican officials have been offering
America’s most developed country within two arguments to try and ward off tariffs.
five years. By most measures it already is. The first is that the United States needs
Mr Orsi’s loudest economic message in the Mexico if it is to decouple from China
campaign was simply that he will not mess while remaining the pre-eminent global
up macroeconomic stability. economic power. The second is an offer to
More alarming is the security situation. unpick any Chinese integration into sup-
Uruguay’s annual murder rate is about 11 ply chains in Mexico that has already hap-
per 100,000 people, some 16 times higher pened, by substituting imports. Sensible
than in Spain. That is an increase from an ideas they may be, but Mr Trump probably
already high eight per 100,000 in 2014. Yet wants something more tangible and imme-
both campaigns largely promised more of diate: a large number of Mexican soldiers
what their parties did in their most recent deployed to stop flows of migrants and
terms. Neither had much impact. General Motors, an obvious target fentanyl in their tracks. ⏩

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 38 The Americas The Economist November 30th 2024

▸ Canadian officials, meanwhile, are out- The police report describes Mr Bolso- assassinations had been carried out.
raged at being lumped in with Mexico. naro’s efforts to stay in power. In the No assassinations ever happened. On
Marc Miller, Canada’s immigration minis- months running up to the election, the for- January 8th, 2023, a week after Lula was in-
ter, points out that the number of migrants mer president and his allies repeatedly augurated, Bolsonarista zealots attacked
who illegally cross from Canada into the claimed that voting machines could be Congress, the Supreme Court and the
United States in a year is equivalent to the rigged. The report claims that Alexandre presidential palace. Since then, the report
number crossing the Mexican border on “a Ramagem, the head of the national intelli- alleges, Mr Bolsonaro and his allies have
significant weekend”. Earlier in November gence agency and a confidant of Mr Bolso- tried to put pressure on witnesses involved
the country’s politicians tried to inoculate naro’s, directed the agency to spy on politi- in the case, to prevent them from dishing
themselves against Mr Trump’s aggression cal enemies, and to produce false reports dirt. A probable target is Mr Cid, who was
by criticising Mexico themselves. Doug discrediting the electoral process. After already in trouble over Mr Bolsonaro’s first
Ford, the populist premier of Ontario, losing the election, Mr Bolsonaro became two indictments (for alleged embezzle-
called for Mexico to be kicked out of USM- desperate. The report alleges that on De- ment and forging covid-vaccine certifi-
CA. Ms Freeland then said she shared the cember 7th 2022 he called the heads of the cates). When police found the material on
United States’ concerns about whether navy, army and air force and presented his phone they threatened to cancel an
Mexico was “aligned” with Canada and the them with a decree declaring a state of agreed plea deal because he had not men-
United States on trade with China. emergency and giving him powers to call a tioned the assassination plot. Mr Cid now
Throwing Mexico under the bus didn’t new election. The head of the navy agreed appears to be working with the police in
work. Officials in both countries must now to go along with it—the others did not. order to maintain his plea bargain.
work hard, probably hand-in-hand, if they The most damning part of the report al- The indictment has galvanised the left.
are to halt Mr Trump’s harmful plans. ■ leges that after Mr Bolsonaro’s electoral “The chances are very high” that Mr Bolso-
defeat, his associates plotted to murder naro now goes to jail, according to Marco
Luiz Inácio Lula da Silva (known as Lula), Aurélio de Carvalho of Grupo Prerrogati-
Plots and coups in Brazil who was then Brazil’s president-elect, his vas, a left-leaning legal association. He

Killing the
running mate Geraldo Alckmin, and Su- calls Mr Bolsonaro “the intellectual au-
preme Court judge Alexandre de Moraes. thor” of the coup. “His prison sentence is a

comeback
According to the report, police obtained question of when, not if.”
material about the plot from the devices of Yet even if Mr Bolsonaro does go to jail,
Mauro Cid, Mr Bolsonaro’s personal aide, it may not end his involvement in politics.
SÃO PAULO and General Mário Fernandes, a deputy Right-wing hopefuls for the presidential
Jair Bolsonaro, Brazil’s former minister in the Bolsonaro government. election in 2026 have minimised the accu-
president, may end up in prison The report claims that Mr Fernandes sations, wooing his voters. One of the most
used a printer in the presidential palace to popular right-wing politicians after Mr
N NOVEMBER 21ST Brazilian police print a plan for the assassination plot, in- Bolsonaro, Tarcísio de Freitas, the gover-
O formally accused Jair Bolsonaro, Bra-
zil’s former far-right president, and 36
cluding details of the weapons to be used.
The report also alleges that Mr Cid and
nor of São Paulo state, wrote on X that
“there is a widespread narrative against
others of attempting to prevent the coun- others started monitoring Lula and Mr President Bolsonaro that lacks evidence”.
try’s elected government from taking of- Moraes’s movements after a meeting on Some supporters believe that deeper legal
fice in late 2022. It was the third time Bra- November 12th 2022 at the house of Walter trouble could turn Mr Bolsonaro into a
zil’s federal police recommended criminal Braga Netto, who had been Mr Bolsonaro’s martyr. Sóstenes Cavalcante, a federal
charges against the ex-president, but these running-mate. The report says the police Congressman for Mr Bolsonaro’s party,
accusations are by far the most serious. found documents owned by Mr Fernandes puts it more succinctly: “The more perse-
They sharply increase the likelihood that outlining how a “crisis cabinet”, co-led by cution there is, the stronger Bolsonaro and
Mr Bolsonaro will spend time in jail. The Mr Braga Netto, was to be set up after the the right become.” ■
former president denies all charges and
claims he is being politically persecuted.
This is not how Mr Bolsonaro (pic-
tured) expected his November to pan out.
After his misleadingly named Liberal Party
won big in Brazil’s local elections in Octo-
ber, he triumphantly proclaimed that he
would be the candidate of the right in
2026, when Brazil will hold presidential
elections. More good news arrived with the
re-election of Mr Bolsonaro’s idol, Donald
Trump, as president of the United States.
Mr Bolsonaro seems to have taken this as a
harbinger of his own return to power. “May
Trump’s victory inspire Brazil to follow the
same path,” he posted on X.
Not likely, it seems, if Mr Bolsonaro is
involved. Brazil’s top federal prosecutor
will now review the police report which al-
leges Mr Bolsonaro’s involvement in an at-
tempted coup, and decide whether to pur-
sue charges. Mr Bolsonaro could be tried
next year for alleged crimes which carry a
maximum prison sentence of 28 years. Never mind the darkness

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 The Economist November 30th 2024 39

Middle East & Africa

Ceasefire in Lebanon war. It began last year, when Hizbullah

started firing rockets at Israel in solidarity
Israel and Hizbullah strike a fragile deal with Hamas, the Palestinian militant
group that massacred more than 1,100 Is-
raelis on October 7th, 2023. For almost a
year Israel and Hizbullah limited the battle
to back-and-forth bombardment near the
DUBAI border. In September, though, Israel ex-
Joe Biden makes a last push to bring peace to the Middle East panded its air strikes across Lebanon, and
in October it launched a ground invasion.
T FIRST THE mood in Lebanon was ju- time on November 27th, called for a 60-day A year of combat, both in Lebanon and
A bilant. Thousands of people jumped
into their cars and drove south on the
halt to the fighting. During that period
Hizbullah will move its fighters north of
in Gaza, has placed enormous strain on the
Israeli army. Many reservists have been
morning of November 27th, hours after a the Litani river, about 30km from the bor- called up for long tours of duty: 54% of
ceasefire ended the year-long war between der with Israel, which will gradually with- those mobilised since October 7th have
Israel and Hizbullah, a Shia militia. They draw its own forces from Lebanon. The done more than 100 days of service. To
were eager to return to homes from which Lebanese army will deploy around 5,000 continue the war in Lebanon would mean
they had fled months earlier. soldiers to the region (it has already sent expanding it, and Israel’s generals are re-
But as the day wore on, a sobering reali- an initial batch). All of this will be moni- luctant to impose an even heavier burden
ty set in. The returnees found terrible dam- tored by a panel of five countries, led by on the force. Binyamin Netanyahu, the Is-
age in southern cities like Tyre and Naba- America. Israel will retain the right to raeli prime minister, alluded to these pres-
tieh (see map on next page). The Lebanese strike at “immediate threats” in Lebanon. sures in a speech announcing the truce: he
army warned them not to go too far south, Both sides have good reason to end the said the army needed a breather.
citing the risk of unexploded bombs. Then As for Hizbullah, its leadership has
Israel issued its own warning, declaring been largely wiped out this year, including
→ ALSO IN THIS SECTION
some areas in south Lebanon to be closed Hassan Nasrallah, its charismatic boss for
military zones. On at least one occasion Is- 40 Trump’s new Arab pal more than three decades. It has lost much
raeli troops fired warning shots at cars try- of its advanced missile arsenal and its mil-
ing to enter a village near the border. The 41 America in Africa itary infrastructure in southern Lebanon.
ceasefire held, but the friction was a re- 42 Beating tropical diseases Those losses will only mount if the war
minder that it will be fragile and complex. drags on. Most Lebanese did not want it to
The deal, which took effect at 4am local 42 Nigeria’s new museum begin in the first place and have become ⏩

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 40 Middle East & Africa The Economist November 30th 2024

▸ increasingly desperate for it to end. GDP. Close to 1m people have been dis- they did not threaten to bolt from the gov-
But both sides also have concerns placed and around 100,000 homes have ernment over it. A truce will also please
about the deal. Many Israelis fear a repeat been damaged. Entire villages in the south Donald Trump, who told Lebanese-Amer-
of 2006: their previous war against Hizbul- have been razed. ican voters in October that he would end
lah ended with UN Resolution 1701, which Yet for all the caveats, the ceasefire is a the war in their homeland.
called for the militia to disarm. Hizbullah rare bit of good news. A regional war that Mr Netanyahu has very different incen-
ignored that edict and the Lebanese army, seemed to be inexorably growing will now tives in Gaza. His far-right allies dream of
which was meant to patrol the region shrink. American officials used to say the rebuilding the Jewish settlements there
south of the Litani, was too weak to en- way to end the crisis in Lebanon was to get that were evacuated in 2005. They have
force it. Some Israeli politicians fear that a deal in Gaza. Now they hope they might vowed to bring down the coalition if Israel
this agreement will prove equally hollow. do the opposite. “One of the things that withdraws. The prime minister himself
“We must not do half the job,” said Benny Hamas has sought from day one is to get fears that a ceasefire would clear the way
Gantz, the opposition leader. others in on the fight,” said Antony Blin- for a commission of inquiry into Israel’s
The Lebanese army is still weak. Five ken, America’s secretary of state. “If it sees failure to prevent the October 7th massa-
years into an economic crisis that bank- that the cavalry is not on the way, that may cre (he is unlikely to come out of it looking
rupted the Lebanese state, many soldiers incentivise it to do what it needs to do to good). And Mr Trump does not seem eager
moonlight as taxi drivers to supplement end this conflict.” Joe Biden, the American to squeeze him.
monthly salaries that are worth as little as president, sent his top Middle East adviser For more than a year, Hizbullah insist-
$100. The army will need donations from to Saudi Arabia to make one more push for ed it would not stop fighting Israel until Is-
Western and Arab backers to recruit and a broader regional agreement. rael stopped fighting in Gaza. Israel has
equip more troops. Even with financial He will probably come back empty- now broken the link between the two
help, it is unclear if Lebanese troops will be handed. The Israeli prime minister has po- fronts. That will take some of the pressure
willing and able to confront Hizbullah. litical cover to end the war in Lebanon. off its overstretched army. But by ending
Around 70,000 Israelis have been dis- Though some of his coalition partners are one war, Mr Netanyahu may make it easier
placed from towns near the border for unhappy with the terms of the ceasefire, to continue the other. ■
more than a year. Israel’s stated goal in the
war was to make them feel safe enough to
return home. It is unclear if this agreement Massad Boulos
will do the job. Mayors of some northern
towns criticised the deal, saying they want Donald Trump’s new Arab pal
stronger guarantees that Hizbullah will be
kept away from the border.
The five-country monitoring panel is BEIRUT
meant to review alleged violations of the
Can a Lebanese-American businessman influence the new administration?
agreement. If the Lebanese army and UN
peacekeepers fail to act, Israel says it will.
“The length of the ceasefire depends on LEBANESE-AMERICAN magnate fortune, largely out of auto sales. But he
what happens in Lebanon,” said Mr Netan-
yahu. That may not mean a return to all-
A makes a most unlikely buddy for
Donald Trump. But in battered Beirut
kept tight links with his family back in
Lebanon.
out war, but there will probably be new and elsewhere in the Arab world many He had joined the Republican Party
rules of engagement between Israel and are looking at Massad Boulos as they try long before his son met Tiffany; he also
Hizbullah in the coming years, with fre- to puzzle out how the incoming Amer- tried in vain to get elected to Lebanon’s
quent Israeli strikes in Lebanon. ican administration may handle the parliament. But it was Tiffany’s wedding
Many Lebanese will be unable to return region and its wars. and Trump’s gains among Arab-Amer-
home. The World Bank estimates the war Mr Boulos was propelled into ican voters this year that have made him
has caused $8.5bn in damage and econom- Trump’s orbit when his son Michael a potential influencer in Middle Eastern
ic losses, more than one-third of Lebanon’s married Tiffany Trump, the president’s affairs. At events for Arab-American
fourth child, at Mar-a-Lago in 2022. Yet it voters, where those of Lebanese heritage
ka

was not just Boulos junior who was are the biggest bloc, Mr Boulos said Mr
Be

Beirut marrying into the Trump family. The Trump was Lebanon’s “last hope”.
Dahiyeh wedding also pushed his father, a suc- Unpicking where he fits into Leba-
cessful Lebanese-American business- non’s political kaleidoscope is tricky. He
30 km
LEBANON man largely unknown in the wider world, is a close childhood friend of Suleiman
Sidon Litani into Mr Trump’s inner circle. Frangieh, a Christian politician who
river Damascus Mr Boulos’s profile rose this year as ardently backs Syria’s Bashar al-Assad
Nabatieh
Nabatieh he cast himself as the liaison to Arab- and was the preferred candidate of
Tyre American voters in the presidential Hizbullah, the pro-Iranian party recently
UNIFIL
presence Area under election, campaigning hard in Arab- hammered by Israel, to fill the current
UN control heavy cities. Mr Trump romped home in presidential vacuum. Yet he has man-
some of them, partly on the back of aged to reassure other figures in Leba-
Golan Heights
Evactuation Israeli-controlled promises to end the war in Lebanon. non that he does not share all of Mr
ISRAEL
zone The Boulos family is Maronite Chris- Frangieh’s views. Joseph Gebeily, a
Haifa SYRIA tian, hailing from Lebanon’s far north, prominent Lebanese-American who
with an illustrious history. Mr Boulos knows Mr Boulos, says Mr Trump’s new
Lebanon, November Afula27th 2024 senior left Lebanon as a teenager for friend understands that the issue with
Israeli military operations Texas, eventually ending up in Nigeria, Iran is “not just focusing on the nuclear
Sources: Institute for the Study of War; where like many Lebanese he made a big programme but also on the militias”.
AEI’s Critical Threats Project JORDAN

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 The Economist November 30th 2024 Middle East & Africa 41

America in Africa ceived in the Oval Office. America wants

Angola, which has one of Africa’s largest
Pragmatism wins the day armies, to play a bigger role in regional se-
curity. Last year it became only the third
African country to join the Artemis Ac-
cords, a set of principles championed by
LUANDA NASA meant to ensure the peaceful use of
Joe Biden’s visit to Angola celebrates a new alliance. Oil and geopolitics will make it space (and which China and Russia reject).
last under Donald Trump Then there is the Lobito Economic
Corridor, America’s largest-ever invest-
T WAS PRETTY unthinkable ten years ment in African infrastructure, based
“I ago,” says an Angolan cabinet minister
in his office, where the waft of the air con-
D. R.
CONGO
around the LAR and an adjoining line in
Congo. It is the centrepiece of the Partner-
ditioner ripples both his Hermès tie and Luanda Kolwezi ship for Global Infrastructure and Invest-
the Soviet-inspired national flag behind Luau ment, the G7’s rival to China’s Belt and
him. Like everyone in Luanda, the capital, Lobito Road Initiative. American officials say gov-
he is talking about Joe Biden’s expected ar- Chingola ernments and firms have pledged to invest
rival on December 2nd, the first trip to sub- ANGOLA ZAMBIA almost $5bn in it. This includes financing
Saharan Africa by an American president Lusaka from the American government for a solar-
since 2015—and the first by any to Angola. power project and to support a study into
For João Lourenço, Angola’s president NAMIBIA ZIMBABWE extending the railway to Zambia. “Lobito
since 2017, it is the fruit of seven years of is an example of what can happen when
Lobito corridor, Nov 2024
forging closer ties to the West after de- BOTSWANA
America decides to lead,” argues Judd De-
Lobito Atlantic Railway
cades of dependence on Russia and, espe- SOUTH vermont, a former top official for Africa in
Proposed extension SOUTH
cially, China. His canny diplomacy shows AFRICA the White House. One day the line may be
Congolese line AFRICA
how African leaders can exploit geopoliti- 500 km
part of a trans-continental network linking
Source: African Energy
cal rivalries. For Mr Biden the visit will the Atlantic and Indian oceans.
highlight how his team has wooed a new Angolan bigwigs have similarly high
partner in the global south. Since this has says a Portuguese businessman. hopes. José de Lima Massano, the econ-
required a heavy dose of pragmatism in The first Trump administration re- omy minister, says the corridor will help
Washington, the unlikely friendship be- sponded to Mr Lourenço’s entreaties. Mike lessen reliance on oil. Ricardo De Abreu,
tween America and Angola should endure Pompeo, then Mr Trump’s secretary of the transport minister, says it will let Ango-
under Donald Trump. Indeed, it foreshad- state, visited Luanda in 2020. Trumpish la “become more integrated into global
ows the realpolitik that will guide the new China hawks saw a chance to loosen Chi- supply chains…What we’re not doing is ex-
administration’s approach to Africa. na’s grip in Africa. After Mr Biden took of- cluding China. But we are getting much
Relations between America and Ango- fice, Angola became part of his efforts to closer to the US than we were before.”
la—sub-Saharan Africa’s second-largest oil build Western-friendly supply chains in Ordinary Angolans are less keen on the
producer and home to 37m people—have critical minerals. In 2022 an American- visit. They like Angola’s moment in the
not always been so warm. In the civil war backed consortium that included Trafigu- spotlight but are fed up with double-digit
after Angola’s independence from Portu- ra, a commodities trader, won a concession inflation and corruption. This week thou-
gal in 1975, the MPLA, the ruling party, was to upgrade what is now known as the Lobi- sands of opposition supporters—who say
backed by Cuba and the Soviet Union. Its to Atlantic Railway (LAR). It runs from Lo- the elections in 2022 were rigged—protest-
opponents were supported by America bito to the border with copper-rich Congo ed in the streets. Carlos Rosado de Carval-
and South Africa’s white-led regime. Amer- (see map). A Chinese group lost the bid. ho, a newspaper editor, notes that the
ica recognised Angola only in 1993 (though In 2021 Angola awarded a licence to West was vocal when Nicolás Maduro
American oil firms pumped throughout Africell, an American-owned telecoms op- stole Venezuela’s election but quiet in An-
the war, a sign of how the MPLA rarely lets erator. The firm had earlier raised $100m gola’s case. “Lourenço is more popular out-
its ostensible Leninism get in the way of from a US government agency to support side the country than inside the country.”
business). After the cold war Angola got its ventures. Africell will use infrastructure Do not expect that to change. Joshua
more arms from Russia than any country in built by Nokia, a Finnish firm, rather than Meservey of the Hudson Institute, a con-
sub-Saharan Africa. After 2000 no African Huawei, the Chinese telecoms giant. servative think-tank, argues that under Mr
country borrowed more money from Chi- Trump American policy in Africa will be
na, often via oil-backed loans. The cost of neglect influenced more by “a realist understand-
Angola’s westward turn began when Mr Russia’s invasion of Ukraine in February ing of American national interest and not
Lourenço replaced José Eduardo dos San- 2022 and the fence-sitting over it in many the cultural preferences of groups within
tos, a corrupt autocrat who had ruled for 38 African capitals spurred American offi- the Democratic Party”. It is unlikely, for in-
years. Some credit the pivot in part to his cials to bump up diplomacy in the global stance, that there will be a repeat of what
influential wife, Ana Lourenço, who south, including Angola. “The Angolans happened in 2023, when Uganda lost ta-
worked in Washington for the World Bank. managed to tell the Americans quickly that riff-free access to America because it
(The couple reportedly still own a house in they could be had for a price,” says Ricardo passed anti-gay legislation.
Maryland.) But it was mostly pragmatism. Soares de Oliveira of Oxford University, a The Lobito corridor is “one of the few
Angola had maxed out its Chinese credit historian of modern Angola. “It is an exam- bright spots the new president will be in-
card. Better relations with America were ple of how African leaders can try to ex- heriting on the African continent” amid
required to unlock support from the IMF ploit the nooks and crannies of global poli- “an overall disappointing stewardship of
and foreign direct investment. If Mr Lou- tics at a time of geopolitical upheaval.” America’s interests”, argues Peter Pham, a
renço could sell his clear-out of the Dos Later that year Mr Lourenço had promi- senior official in the first Trump adminis-
Santos clan as a broad anti-corruption nent billing at a US-Africa summit in tration. He believes that realpolitik means
drive, all the better. “He’s a chess player,” Washington and he has since been re- the project will continue. ■

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 42 Middle East & Africa The Economist November 30th 2024

Disease in Africa nates philanthropy for NTDs with funds

It can be beaten
from governments and international out- Nigerian history
fits. This is prompting donors to give more.
Another reason is a recent push to de- Restoring pride
velop and test drugs in Africa, where just
4% of clinical trials are currently conduct-
AMUDAT ed. When the Drugs for Neglected Diseas- BENIN CITY
Wiping out neglected diseases es initiative (DNDi), a non-profit research-
An ambitious new museum
is no longer unthinkable and-development organisation, first tested
the treatments used for kala-azar in Asia
S THE SUN rises and the nurses enter on patients in east Africa, they found they CLUTCH OF artists, curators and
A the ward, the children whimper. When
the trolley approaches their beds, they be-
were much less effective there; children in
particular responded badly. DNDi has
A enthusiasts is welcomed by drum-
mers, dancers and an unforgiving bout
gin to wail. Each morning in Amudat, a called for a “new model of drug develop- of sunshine amid cranes and scaffold-
town in eastern Uganda, those in the local ment”, says Simon Bolo, the group’s lead ing. The burgeoning, clay-coloured
hospital brace themselves for treatment. on kala-azar. This means, among other edifice with its earthen finish designed
When the nurse administers the jabs—one things, “carrying out clinical trials in the by David Adjaye, a knighted Ghanaian-
in each buttock for 17 days straight—some field, where the action is”. Brit, is to house the Museum of West
try to resist. The drugs are so toxic that for Today DNDi runs such trials across Af- African Art (MOWAA), a new hub for
several days it can be painful just to sit. rica, including in Amudat. A single-dose arts and culture in Nigeria’s historic
The commonest treatment in Africa for cure for sleeping sickness, developed by Benin City. A jamboree of talks and
visceral leishmaniasis, a parasitic disease DNDi in partnership with Sanofi, a French workshops is more a proof-of-concept
(also known as kala-azar) that destroys the drugs giant, recently completed clinical than a full-blown opening. Yet MOWAA
internal organs, is a harrowing ordeal, es- trials in Congo and Guinea. New drugs for already stands shoulders above most
pecially for children; one of the drugs in- river blindness and mycetoma, a gruesome other Nigerian museums, where many
volved, sodium stibogluconate, can be le- flesh- and bone-eating infection, are also valuable artefacts are shut away in old
thal. For decades it was used on its own, re- in the pipeline. As for kala-azar, a poten- warehouses.
quiring 30 days in hospital and sometimes tially ground-breaking oral drug being In 1897 most of Benin City, then the
leaving debilitating side-effects. Many suf- tested in Ethiopia “shows very promising capital of an extensive kingdom, was
ferers preferred traditional alternatives, results”, says Martina Penazzato of the razed by the British. Their trove of
which in Uganda includes drinking goat’s WHO. Researchers hope a pill could one looted plaques and sculptures—some
blood. Even today, nurses in Amudat say day be taken at home, easing the disease’s of the finest art in Africa—ended up in
patients at the hospital find it so excruciat- immense burden on clinics and families. museums all over the world.
ing they sometimes try to escape. The goal of total elimination may still A common argument against restor-
Kala-azar is one of what the UN’s World be a while off. Though a kala-azar jab is ing this treasure to its original home is
Health Organisation (WHO) describes col- scientifically feasible, “there is still not that Nigeria has nowhere to keep it
lectively as “neglected tropical diseases” really a business model out there for mak- safe and on permanent view for locals.
(NTDs). It is deadly if left untreated in ing a vaccine for people who can never MOWAA is Nigeria’s riposte: a top-class
most cases. Like other NTDs, which in- hope to pay for it,” says Peter Hotez, a re- museum on the edge of the royal pal-
clude the biblical scourges of sleeping nowned vaccine expert in Houston, Texas. ace’s compound to be managed by
sickness, river blindness and elephantiasis, In the longer term, some researchers put experts from home and abroad. “You’ve
half of those infected are children. And be- their hopes in artificial intelligence, which got to be very careful not to build
cause the populations blighted by kala- could dramatically reduce the cost of med- something that is simply mimicking
azar are overwhelmingly found in the poor- ical innovation. ■ museums in the West,” says Philip
est parts of east Africa, big pharmaceutical Iheanacho, the director.
companies have tended to ignore it. For a start, the museum wants to
Research and development funding for avoid old squabbles between the gov-
kala-azar remedies has been much stingier ernment of Edo state, which includes
than for malaria, tuberculosis or HIV/AIDS, Benin City, and the royal family, who
which affect more people globally and once owned the bronzes. So it is to be
nowadays can be countered by effective run by an independent trust. About
treatments or vaccines. But now, thanks to half of the museum’s $50m budgeted
a combination of non-profit researchers cost has so far been met by a group of
and African public-health workers, there local and foreign institutional donors,
are signs of progress against NTDs. Pro- including the British Museum, which,
mising new drugs for kala-azar and several however, has refused to give back the
other diseases are belatedly on the way. many Benin bronzes in its vaults.
One reason is that philanthropic orga- The preview featured architects,
nisations have become more involved. A photojournalists, curators and even a
global campaign to wipe out NTDs by 2030 DJ: all could find a home here. Lagos,
has chalked up some big recent successes. Nigeria’s commercial capital, has long
Guinea worm has nearly been eliminated, thrived as a hub for the arts, with in-
thanks in part to funds from foundations ternational fairs like ArtXLagos show-
like the Carter Centre in America. Today casing exhibitions and fashion. MO-
the “growing political consensus and evi- WAA could link up: Benin City is but a
dence base” suggests that diseases such as flight hop away. West Africa, says Mr
kala-azar can be erased in Africa, says Sam Iheanacho, is “a cauldron of creativity”.
Mayer of the END Fund, which co-ordi- Neglected no longer

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 The Economist November 30th 2024 43

Asia
Now he is one of the candidates to suc-
ceed Mr Modi. And his chances may have
just improved with American prosecutors’
allegations against Gautam Adani, Mr Mo-
di’s closest business ally (see Briefing).
Even before those charges became public
on November 20th, Mr Gadkari had raised
his profile with several controversial public
remarks in recent weeks. Some of those
were widely seen as oblique criticism of Mr
Modi. And in an interview with The Econo-
mist on November 18th, Mr Gadkari strikes
a markedly different tone from that of the
prime minister, who cultivates an image of
semi-divine infallibility.
“No one is perfect and no one can claim
that he is perfect,” says Mr Gadkari. The
BJP lost its parliamentary majority in this
year’s general election in part because the
opposition promoted the idea (falsely, in
his view) that Mr Modi wanted to change
India’s secular constitution. But the BJP
erred, too. It needed to communicate bet-
ter and focus on development, not identity.
“We need to establish a good atmosphere
between the parties and between people
who have different types of ideology.”
He also doubles down on his assertion,
made in September, that “the biggest test
of democracy is that the king tolerates the
strongest opinion against him.” That was
widely seen as referring to Mr Modi. “I’m
not talking about any person or leader,” Mr
Gadkari says, when asked about the re-
mark. Still, he adds that tolerance and re-
spect are integral to India’s political sys-
tem. “It doesn’t mean that we are enemies
if we are in opposition,” he says. “That is
An interview with Nitin Gadkari the culture of our democracy.”
Those and other remarks seem to dis-
The roads to the top tance him from Mr Modi’s Muslim-bashing
campaign speeches and demonisation of
India’s opposition. They also echo the
leadership of the Rashtriya Swayamsevak
Sangh (RSS), the Hindu-nationalist group
NAGPUR from which the BJP emerged. Mohan Bhag-
The man who revamped India’s highways could be its next leader wat, the RSS chief, recently made plain his
frustration with Mr Modi’s divisive oratory
ITIN GADKARI leans back into his so- scandal. Later cleared of wrongdoing, he and aversion to advice or criticism.
N fa and takes a hard-earned slurp of his
tea. India’s roads minister, one of its most
rebuilt his reputation as a member of
Prime Minister Narendra Modi’s cabinet,
Mr Modi’s position is not immediately
under threat. Aged 74, he seems in good
popular and controversial cabinet mem- overseeing a huge expansion of India’s health and BJP officials have denied that
bers, has just done his 72nd rally in 13 days highways. Then he was suddenly removed the party’s rules require retirement at 75
of campaigning for a state election in his from the BJP’s parliamentary board, its top (although it has ousted some veterans that
native Maharashtra. He began the day in decision-making body, in 2022 amid ru- way). Nor is Mr Gadkari the only potential
Mumbai, in the west, and ended it 430 mours of tensions with the prime minister. successor. Opinion polls suggest that the
miles (690km) eastwards in his hometown frontrunner is Amit Shah, who is home
of Nagpur. It was a brutal schedule, more minister, the BJP’s electoral strategist and
→ ALSO IN THIS SECTION
suited to his earlier years, he admits. But at Mr Modi’s confidant. Yogi Adityanath, the
67, he knows a thing or two about endur- 44 Fatherhood in East Asia chief minister of Uttar Pradesh, India’s
ance in Indian politics. most populous state, usually ranks in sec-
When he became the youngest ever 45 India’s education problem ond place, with Mr Gadkari third.
leader of the Bharatiya Janata Party (BJP) in 45 The return of Ice Age antelopes But Mr Modi’s successor will be decid-
2009, he was hailed as a rising star, only to ed by the upper ranks of the BJP and RSS,
be ousted four years later because of a tax 46 Banyan: Prabowo’s first foreign trip not by opinion polls. And many of them do ⏩

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 44 Asia The Economist November 30th 2024

▸ not trust Mr Adityanath, who hails from a East Asian parents

rival Hindu-nationalist group. He is also
highly controversial among foreign gov- Hands on
ernments and secular-minded Indians be-
cause of his own record of Islamophobic
remarks and policies. Mr Shah, meanwhile,
is so closely tied to Mr Modi (and has so
many enemies) that he could well be side- TAIPEI, TOKYO AND SEOUL

lined as soon as the prime minister retires. Fathers are doing more of the child care. About time, too
Both Mr Modi and Mr Shah have also
been tainted by the general-election result. OR YEARS Ito Tsubasa never ques- Alongside this, women are educated
And on top of the Adani scandal, they face
allegations that Indian officials were in-
F tioned his family life: he worked long
hours while his wife did all the housework.
and employed at levels never seen before.
In Japan the employment rate for women
volved in the killing of a Sikh activist in So it came as a shock when his wife, preg- aged 25-39 surpassed 80% for the first time
Canada and the attempted murder of an- nant with their second child, suggested he in 2022. In South Korea 74% of women
other in America (India denies all the Ca- take parental leave so she could focus on aged 25-29 are now employed. In Japan and
nadian allegations but is co-operating with her career. After a heated argument, he Taiwan more than 60% of households have
the American investigation). eventually gave in, taking six months of pa- two incomes. In South Korea the share is
Mr Gadkari is untarnished by such pro- rental leave. His experience of staying at close to half.
blems. He is seen by foreign officials as the home has transformed his understanding
BJP’s moderate face and by business lead- of what it means to be a father. “I used to Daddy issues
ers as a champion of public-private part- think I was a great dad just because I What is perhaps surprising is that it has
nerships in infrastructure. He is liked by played with the child on the weekends,” taken so long. According to one ranking,
some opposition leaders, which helps in says Mr Ito (pictured), whose children are Japan and South Korea have the best paid
coalition building. And his popularity in now eight and four. “I couldn’t have been parental-leave policies for men worldwide.
Maharashtra, including among Muslims, more wrong.” Today, he and his wife share Fathers in both countries are entitled to a
has helped the BJP keep control of Nagpur the housework evenly. full year of paid leave. In Japan, nearly 70%
(whose national parliament seat he has Mr Ito is not alone. Across East Asia a of pay is compensated for the first 180
held since 2014) and to win, with its allies, quiet revolution is reshaping fatherhood. days. Yet young employees often hesitate
the recent state election there. Rigid and conservative gender roles, which to use such benefits, largely due to the de-
His other strength is his relationship involve a male breadwinner and a female sire to conform to the expectations set by
with the RSS, which is headquartered in caretaker, have been the norm for decades gerontocratic male managers. Even if they
Nagpur. He joined it in the 1970s. Although and remain entrenched across the region. do, it tends to be somewhat performative.
married, which is forbidden for most full- Yet younger men are increasingly setting In Japan, most men go on leave for less
time RSS workers, he still describes himself their priorities outside work, and married than two weeks, whereas 95% of women do
as a volunteer. “The RSS is my life’s convic- couples are moving towards a more egali- so for six months or more.
tion,” he says. It handpicked him as BJP tarian approach to child care. In Japan the By contrast Taiwan is relatively progres-
leader in 2009, an appointment of which share of eligible men taking paternity leave sive compared with its neighbours. In 2023
he is clearly still proud. It was, he says, “a reached 30% in 2023. That is a sharp in- its gender pay gap was as narrow as 15%,
big thing for me” that conveyed “tremen- crease from 17% in the previous year and a compared with 31% in South Korea and 21%
dous respect and regard”. That support has mere 2% a decade ago. In South Korea, in Japan. According to the World Values
not been unwavering: the RSS backed his 6.8% of eligible men took paternity leave in Survey, a global research outfit, fully 64%
removal from the post in 2013 (albeit reluc- 2022. That is still shockingly low, but up of Taiwanese men disagree that it is a “pro-
tantly) and from the party’s parliamentary from less than 1% in 2016. blem if women have more income than ⏩
board in 2022. In the latter case, it was re-
ported to have shared Mr Modi’s frustra-
tion with Mr Gadkari’s outspokenness and
more moderate politics.
Since the election, however, Mr Gadkari
appears to have found favour again as the
RSS recalibrates its own political message.
And he has done so without changing his
maverick ways. In July he wrote a (widely
leaked) letter to India’s finance minister
asking her to lift a tax on insurance. In Sep-
tember he alleged that an opposition lead-
er offered to make him prime minister if he
defected before the election.
Asked if he wants the top job one day,
Mr Gadkari gives the quintessential politi-
cian’s response. “I’m here, happy, I’m doing
my work. I don’t have any aspiration or am-
bition to become prime minister,” he says.
And if he was asked by his own party? “No
one is going to ask me, so no question
arises,” he says with a chuckle. Endurance
is not the only key to Indian politics. A bit
of media savvy helps, too. ■ A home run for housework

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 The Economist November 30th 2024 Asia 45

▸ their husband”, whereas only 26% of Japa- Conservation in Kazakhstan

nese and 28% of South Korean men do. But Superpower split
Taiwan’s paid parental leave lacks flexibil- Bachelor’s degrees by discipline, Undulating
ity and sets a monthly upper limit of decadal averages, %
NT$36,640 (around $1,100), which means a Social Science Engineering
ungulates
huge cut in pay for higher earners. Even so,
Teng Kai-yuan, a Taiwanese man with a China India
ALMATY

nine-year-old son, was determined not to 80 80 Ice Age antelopes surge back
become like his own aloof father. “Both my from the brink of extinction
60 60
wife and I hated the fact that our fathers
did not spend time with us,” he says. Mr HE LONG-NOSED saiga antelope, a
Teng splits the housework with his wife 50-
50; his weekends are dedicated to family
40

20
40

20
T rare species that roams the steppes of
Kazakhstan, is having a moment. Boasting
activities such as camping. 0 0 majestic ridged horns that are prized in
The implications of such shifts could 1950s 80s 2010s 1950s 80s 2010s Chinese medicine, it was once hunted to
be profound. A study by Matthias Doepke, Source: “The making of China and India in the 21st century: long- the brink of extinction. But conservation
an economist at the London School of run human capital accumulation from 1900 to 2020”, by N.K. efforts have been so successful that saiga
Bharti and L. Yang, World Inequality Lab working paper, 2024
Economics, revealed a positive correlation numbers have rocketed by 6,900% in just
between men’s share of the housework and under two decades to reach 2.8m, com-
fertility rates across rich countries. That By 1980 93% of Chinese children were en- pared with fewer than 40,000 in 2005.
could help reverse a demographic crisis. rolled in primary school, but just 1.7% of Some 95% of these prehistoric-looking
Last year South Korea’s fertility rate youngsters were in college; in India, the beasts—which were contemporaries of
reached a record low of 0.72, while Japan’s equivalent shares were 69% and 8%. long-extinct species like the woolly mam-
was at 1.2 and Taiwan’s at 0.87. Babies— Another striking difference is what col- moth and the sabre-toothed tiger back in
and better dads—are urgently needed. ■ lege-aged youngsters study. In China they the Ice Age—are found in Kazakhstan.
are more likely to pursue engineering de- This remarkable recovery achieved glo-
grees. In India they favour humanities, bal recognition this month when Altyn
India v China business or law. Vocational degrees are Dala, a conservation alliance, received the
also treated more seriously in China. Since Earthshot Prize, established by David At-
Bureaucrats, not the 1980s more than 40% of Chinese
youngsters have pursued a vocational edu-
tenborough, a British biologist and broad-
caster, and Prince William to reward en-
bridge-builders cation, compared with just 10% in India.
All this created different labour forces
deavours to fix the planet. Altyn Dala is a
collaboration between Kazakh conserva-
SINGAPORE as their economies liberalised. In 1988 tionists, international groups (including
Is India’s education system the around 60% of Indian adults were illiterate Britain’s Royal Society for the Protection
root of its problems? compared with 22% in China. That hin- of Birds) and Kazakhstan’s government.
dered Indians from moving out of agricul- It was recognised for its efforts to pre-
OR MOST of history the economies of ture into more lucrative jobs. It also lo- serve habitat and biodiversity across an
F India and China grew in lockstep. In
1970 the countries were almost identically
wered their productivity. In addition, Chi-
na’s higher share of engineering and voca-
area around the size of Turkey within Kaz-
akhstan, the world’s ninth-largest country.
wealthy. But today China’s GDP per person, tional graduates, combined with more This has led to the saiga’s recovery. Among
at around $13,000, is nearly five times In- widespread primary schooling, helped its the largest intact grasslands on the planet,
dia’s. The chasm is traditionally explained manufacturing sector thrive. India’s rela- Kazakhstan’s steppes are a giant carbon
by the way their economies opened up. tive advantage in tertiary education made sink that act as a tool in the battle against ⏩
China became the world’s factory, which it more suitable for services-led growth.
turbocharged growth. India became its The contrasting approaches to educa-
back office. But what shaped these paths? tion have historical roots. China’s Qing dy-
A big, underrated factor is education nasty leaders focused on vocational skills
policy, suggests a new study by Nitin Ku- in the late 19th century to equip their ar-
mar Bharti and Li Yang. The researchers at mies. India’s British colonial rulers wanted
the Paris School of Economics’ World In- a school system to churn out administra-
equality Lab track how education evolved tors to manage their empire. Indian leaders
in both countries from 1900 to 2020. At the after independence reinforced that bias.
beginning of the 20th century, less than Since then, though, India has tried to
10% of Indian and Chinese children at- fix these issues. A big push increased ac-
tended school; today almost every child cess to primary schooling in the 2000s—
does. But the route to universal education but at the expense of quality. The govern-
has been strikingly different, and has had ment is also promoting vocational educa-
profound effects on development. tion. And at the tertiary level, a lot more In-
China took a “bottom-up” approach to dians are studying engineering. Yet it
schooling. In the 1950s, officials in the might be too late. Many economists reckon
newly formed People’s Republic priori- that the era of manufacturing-led growth
tised expanding access to primary and sec- has bypassed India. A report released in
ondary education. Independent India, September supported such fears. Of the
however, took a “top-down” stance. That 1.5m engineering students who will gradu-
meant supporting high-quality universi- ate this fiscal year, only 10% are expected
ties, such as the Indian Institutes of Tech- to actually land a job in the year after leav-
nology, at the expense of primary schools. ing university. ■ Now you see them

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 46 Asia The Economist November 30th 2024

▸ climate change, offsetting harmful emis- rial infections triggered by increased heat toughened penalties for poaching and
sions by absorbing carbon and sequester- and humidity levels, and been felled by stepped up enforcement by rangers.
ing it underground. lightning strikes. Last year, the International Union for
The saiga is a “keystone species” in this But it was poachers who nearly made Conservation of Nature, which tracks en-
habitat and vital to the ecosystem’s surviv- the beast extinct, operating in criminal dangered species, reclassified the saiga
al. With its distinctive bulbous nose that gangs to kill saigas for their horns, prized from “critically endangered” to “near
filters dust in the blazing summers and in China as a supposed treatment for ail- threatened”. But while conservationists
warms the frigid air it inhales in the sub- ments including fevers, colds and liver dis- celebrate their success, Kazakh farmers are
zero winters, the ungulate is perfectly ease. Confronting the poachers is a dan- not so pleased. Some now complain that
adapted to survive on the Eurasian steppe. gerous job: saiga hunters have murdered the creature is becoming a pest, prompting
Still, life is precarious: saigas have per- two Kazakh rangers in recent years. Sup- the government to allow selective culling
ished in mass die-offs attributed to bacte- ported by Altyn Dala, the government has of the saiga population. ■

BANYAN
Flights of fancy
Indonesia’s new president is too eager to please

VER THE course of three presi- statement, following only cursory consul- warn Mr Prabowo of these traps, but
O dential campaigns, Prabowo Sub-
ianto told Indonesians that the country
tation with his diplomats.
The joint statement gave away long-
their objections were given short shrift
by Indonesia’s new foreign minister, an
needed a president tough enough to standing Indonesian positions. It ac- inexperienced former aide to Mr Prabo-
stand up to foreign powers. The former knowledged for the first time the exis- wo. The gap between the president and
special-forces general’s first foreign trip tence of a dispute with China over rights Indonesian foreign-policy establishment
as president has them wondering wheth- to resources in the South China Sea. In- on the South China Sea deal is so evi-
er he was referring to someone else. donesian leaders had long resisted this dent and so great that when a White
On November 8th, less than three step, seeing it as tantamount to legitimis- House spokesperson was asked about it,
weeks into the top job, Mr Prabowo ing China’s claim. Worse, Mr Prabowo she did not criticise the concessions
jetted off on a six-country world tour. agreed to jointly develop the fisheries and directly. She suggested that Indonesia
The outing revealed a man desperate for gas there, in effect committing to share consult with its own experts.
the approval of his counterparts, over- the spoils of Indonesia’s bounty. The deal reveals the risks for Mr
confident in his own abilities and poorly The statement also signed Indonesia Prabowo of relying on a small circle of
counselled by a circle of novice advisers. up to China’s vision for an alternative to longtime aides, mainly drawn from the
The trip was planned in haste, and the liberal world order, which Mr Xi calls a armed forces and his own family. They
the itinerary remained uncertain well “community of shared future”, and each of are not ones to object to his flights of
into the tour. Mr Prabowo had hoped to the three major initiatives under it, on fancy or to deliver bad news.
drop by Mar-a-Lago to see Donald development, culture and security. Non- Even Mr Prabowo’s family members,
Trump a few days after his election aligned Indonesia had previously avoided who fill several important roles, struggle
victory. On an obsequious congrat- pressure to do so, according to Klaus to speak authoritatively on behalf of the
ulatory call, footage of which was pub- Heinrich Raditio, a lecturer on Chinese president. Hashim Dojojohadikusumo,
lished on his social media channels, a politics at the Driyarkara School of Philos- Mr Prabowo’s brother, accompanied his
boyishly nervous Mr Prabowo, 73, of- ophy in Jakarta, the capital, seeing it as brother to Beijing then broke away to
fered to fly to “wherever you are” to meet China’s attempt to weaken its engagement lead Indonesia’s delegation to COP in
with the president-elect. with America and its allies. Baku. There, he announced a plan to
Mr Trump ignored this, instead com- Indonesian diplomats had tried to reduce Indonesia’s reliance on coal. Mr
plimenting Mr Prabowo’s English. Mr Prabowo blew past it, however, at the
Prabowo, who is a product of interna- G20 Summit in Rio, where he pledged to
tional schooling and speaks four lan- quit coal entirely by 2040. This will be
guages, proudly replied that “All my difficult. Two-thirds of electricity in the
training is American, Sir!” referring to country is produced by coal-fired power
courses that he completed at American plants. So far Mr Prabowo has not ex-
military bases in the 1980s. In the end, he plained how he hopes to achieve this.
had to settle for meetings in Washington One problem with Mr Prabowo is
with President Joe Biden and officials of that it is never clear whether he means
the outgoing administration. what he says. Eager to please, he tends to
No matter. On Mr Prabowo’s first tell people what they want to hear. He
stop, in Beijing, Xi Jinping showered the could always reverse himself, whether on
new head of state and a large delegation the South China Sea or on coal. Dealings
of his business backers with ceremony with him are an opportunity to set a
and appurtenances befitting the royal marker to pursue later, or to reverse an
bloodline which the new president adversary’s earlier win. Mr Prabowo may
claims. So charmed was Mr Prabowo that not drive a hard bargain, but he is hard to
he agreed to a Chinese draft of a joint pin down.

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 The Economist November 30th 2024 47

China

Violence in China tain a high level of vigilance, as if treading

Tightening their grip

on thin ice”. Officials across China have
launched a campaign to ramp up security
measures, identify likely troublemakers
and defuse potential conflicts.
China’s tight controls over the media
and opinion surveys make it hard to know
BEIJING how much discontent is brewing. But offi-
Amid random violence and increasing protests, fears mount for social stability cials have reason to worry. House-price
falls after a property-market crisis have
SERIES OF violent attacks has shaken ing knives or cars as weapons. Typically, wiped out many people’s life savings. De-
A China in recent weeks. On November
11th, 35 people were killed and 43 injured
the perpetrator seemed to be lashing out at
innocent bystanders out of anger or de-
faults by developers have left others with
unfinished homes. And bankruptcies
when a man drove through a crowd in Zhu- spair. Many Chinese are searching for ex- among manufacturers are soaring, because
hai, a southern city. The police said he was planations. Some are asking if the violence of overcapacity and weak demand. Free-
angry at how assets had been divided after is being fuelled by economic woes. dom House, a think-tank in Washington,
his divorce. Five days later in the eastern ci- The Communist Party dislikes such counted 937 protests in China in the third
ty of Wuxi, eight were stabbed to death at talk, which might raise questions about its quarter of 2024, 27% more than in the same
a vocational school by a former student, governance. But it is nevertheless acting as period in 2023, mostly sparked by econom-
said to be unhappy about his pay after if the attacks are symptomatic of deeper ic grievances (see chart 1 on next page).
graduation. Three days after that, several problems. Two days after the deaths in Young people, often in history the
people were injured when a car rammed Zhuhai, Xi Jinping, China’s president, de- source of social unrest in China, are suffer-
into families waiting outside a primary manded officials nationwide “safeguard ing disproportionately. China produced
school in Changde, a city in Hunan, a cen- social stability” and “control risks at the 11.8m graduates from its universities and
tral province. source”. On November 27th a commentary vocational colleges this year, a record num-
Such incidents are known in China as on the attacks in the People’s Daily, a party ber, but not enough jobs for them. The
“revenge on society” attacks. They have mouthpiece, called on citizens to “main- youth-unemployment rate dipped earlier
become grimly familiar in a country used this year but has gone up again in recent
to low levels of other crime. Before the lat- months (see chart 2). Some young people
→ ALSO IN THIS SECTION
est spate, at least six other attacks had oc- complain that they are living in the “gar-
curred just this year, including one at a 48 Raising the birth rate bage time” of China’s history.
school in Beijing and one at a Shanghai su- Amid these pressures, over the past
permarket. All were committed by men us- 49 Wegovy comes to China year officials had already stepped up ef- ⏩

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 48 China The Economist November 30th 2024

▸ forts to ensure social stability. Since the Baby-boosting

2
Exercises in
Zhuhai attack such efforts have gone into Garbage work
overdrive. On November 21st Wang Xiao- China, youth unemployment rate*, 2024, %

fertility
hong, the minister for public security, or- 20
dered the police to prepare for what he
called a “winter operation” of inspections 18
BEIJING
and patrols in order to “prevent extreme
16
incidents”. Two days later China’s most se- The government is expanding
nior judge pledged to punish acts of vio- 14 its pro-natalist playbook
lence so harshly that the public would “tru-
ly feel fairness and justice”. Police cars 12 S MAO WAS making lunch one day at
have appeared outside schools and nurser-
ies in Beijing. 10
M her home in the eastern city of Wuxi
when she got the phone call. Rather than
The party is also trying to spot people the courier’s delivery update she was ex-
who might cause trouble. Officials are fo- J F M A M J J A S O pecting, she found herself subject to an in-
cusing on those suffering from the “four *16- to 24-year-olds, excluding students timate interrogation by a neighbourhood
Source: National Bureau of Statistics
lacks and five frustrations”. That includes official: When was your last period? Are
everyone from people who lack a stable job you pregnant? Do you plan to have a baby?
or marriage to those whose companies Minxin Pei, of Claremont McKenna Col- “It doesn’t seem like the kind of thing that
have failed, or who have crippling debts. lege in California, says that one problem is could happen in the 21st century,” says the
All are deemed potential sources of insta- that China’s authorities simply cannot sur- 28-year-old.
bility. On November 16th the authorities in veil as many people as they want to. Based Such intrusive calls to young, recently
Guangdong province (which oversees the on government documents and police re- married women are part of an intensifying
city of Zhuhai) said they would use a sur- ports, he estimates they can monitor government campaign to stem China’s fall-
veillance “dragnet” to find such types. 10m-15m people at once. That is a lot, but ing birth-rate and reverse the drag it is hav-
Ideally, officials want to defuse ten- China has a population of 1.4bn, of whom ing on economic growth. Demographers
sions before they become a serious pro- vast numbers fall into the categories offi- estimate Chinese women have one child
blem. On November 19th China’s highest cials have identified as potential risks. each on average, far below the 2.1 needed
prosecutorial body demanded local gov- To make their task even harder, many to keep the population stable.
ernments look for signs of strife and “nip local governments are desperately short of In late October the State Council, Chi-
them in the bud”. Some enterprises have funding. Some are struggling to pay public na’s cabinet, unveiled a sweeping set of
been asked to think twice before laying off servants on time. Such constraints will pro-natalist measures, including child tax
potentially volatile workers. Local authori- probably force officials to ease up the cur- credits, more maternity and paternity
ties in a part of Inner Mongolia, in north- rent crackdown quite early next year, says leave, and, importantly, easier access to
ern China, have directed firms to offer em- Liu Dongshu, of City University of Hong housing loans, a big concern for Chinese
ployees psychological counselling. Kong. He expects a surge in social-stability families. Research by Tunye Qiu and Wei-
Ordinary citizens, too, are being enlist- efforts to last until the end of the Chinese feng Liu of the Australian National Univer-
ed to help authorities spot trouble brew- New Year festivities, which fall in late Janu- sity has found that a 10% rise in housing
ing. This approach, known as the fengqiao ary and are always a particularly sensitive prices leads on average to a delay of 0.73
model, a way of mobilising the public to time for authorities. months in marriage and 1.8 months in first
police one another, dates from the time of Critics of the government’s approach childbirth for urban residents.
Mao Zedong, but was revived by Mr Xi. say that China’s tightly controlled society He Yafu, an independent Chinese de-
Under the model, citizens are urged to lacks pressure valves for people to vent mographer, notes that the State Council
keep an eye on their neighbours for signs their frustrations, so grievances fester. has yet to specify the scale or the source of ⏩
of disputes. On November 15th officials in After the attacks, Qu Weiguo, a professor
the eastern province of Fujian said they at Fudan University in Shanghai, posted a
would use the model to monitor every- thoughtful essay on Weibo, a social-media
thing from spats between neighbours to platform. He argued that the perpetrators
“quarrels over love and marriage”. of “revenge on society” attacks feel they
Will all this prevent further attacks? have no other way to be heard. So part of
the solution, he argued, should be to open
up more public channels for complaints.
Discontent providers 1 Mr Qu’s essay was quickly deleted. Par-
China, number of protests ty officials still seem convinced that only
tightening controls will deal with the pro-
Economic Political, social and other
blem, not loosening them. They like to
400
contrast their approach to governance with
the more hands-off methods used by
300 Western governments, whose countries,
officials note, are often chaotic. China usu-
200 ally looks a model of stability in contrast.
But that does not seem to be how its gov-
100 ernment sees things just now. ■

0
Chaguan, our China column, has been
2022 23 24
suspended. Our goal is to reinstate it when
Source: Freedom House, China Dissent Monitor
we have a new columnist resident in Beijing. Just pretending

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 The Economist November 30th 2024 China 49

▸ all the goodies it is promising, making it mise to bring many other benefits as well.
impossible to gauge how much effect they Peak and trough But for a long time China’s people
are likely to have. China struggled to get hold of Wegovy because
Cash for kids is only part of the govern- the country’s regulators had not approved
ment’s strategy. China’s president, Xi Jin- it. Some persuaded their doctors to give
Population, Fertility rate,
ping, believes fixing the country’s baby bn births per woman
them Ozempic, another semaglutide-
bust requires cultural change, too. At the 1.5 8 based drug, intended to treat diabetes.
five-yearly National Women’s Congress in Others bought knock-off versions online.
2023, he preached the importance of tell- 6 Then on November 17th, after getting the
1.0
ing “good stories about family traditions”. nod from officials, Novo Nordisk at last
With two divorces occurring for every five 4 started to sell Wegovy in China. Some hos-
marriages in the first three quarters of this 0.5 pitals in Shanghai have already written
2
year, Mr. Xi worries that young people do prescriptions. Netizens are discussing
not share the right “marriage and child- 0 0 whether they can rely on the drug to lose
rearing” values. weight in time for family reunions at Chi-
1960 2000 23 1960 2000 22
The government is doing its best to in- nese New Year, which falls in late January.
Source: LSEG Workspace
stil those values. The picture of a one-child A miracle medicine for weight-loss
family that used to be on the cover of would certainly be welcomed by huge
school textbooks for eight- and nine-year- government is finding it cannot force them numbers of people in China. Although the
olds has been replaced by one showing a to have more. Take Ms Mao. She told the country suffered famines as recently as the
pregnant mother and her two children. The importunate official on the phone that she 1960s, rapid economic development since
school curriculum is being adjusted to and her husband are not yet trying for a ba- then has brought more sedentary jobs,
stress the virtues of family and marriage. by. The baby-booster said she would call richer food and bigger waistlines. Today
The government has also called for the every two weeks over the next three about half of Chinese are overweight or
production of more TV shows that extol months to check in. obese, according to state-run media. By
the virtues of having kids. Ms Mao is indignant: “This type of 2030 that share may have climbed to about
Staffing much of the pro-natalist push, private matter should be a personal deci- 63%, according to the government’s Na-
including the phone campaign, are family- sion and not reminiscent of ‘The Hand- tional Health Commission.
planning committees embedded in local maid’s Tale’.” On Xiaohongshu, an Insta- All this is straining China’s health-care
communities. Known for their strict, some- gram-like platform where she posted system. By 2030 the treatment of heart dis-
times brutal, enforcement of the country’s about the call, others too saw parallels with ease and other conditions linked to obesity
one-child policy between 1979 and 2015, Margaret Atwood’s dystopian novel about could suck up a fifth of China’s total health
they have a new mission: trying to ensure a society in which fertile women are forced spending, according to a 2021 study pub-
that more women get pregnant. to bear children. lished in the Lancet, a journal. China’s
After decades of making unscientific But as countries from Singapore to health authorities are alive to the risks. In
claims to deter baby-making—such as that Sweden have found, a decline in fertility recent months they have launched a three-
pregnancy reduces a woman’s intelli- rates is very hard to reverse. The success of year campaign against obesity and pub-
gence—the authorities are arguing the op- the Chinese government’s redoubled ef- lished China’s first set of official guide-
posite. On October 30th a magazine over- forts—from macro-level cultural reform to lines on how doctors should diagnose and
seen by China’s National Health Commis- micro-level menstruation-tracking—will treat the condition. The guidelines give
sion published an essay on “the four bene- depend on the decisions of tens of millions weight-loss drugs, alongside healthier life-
fits of childbirth”, including increased of women like Ms Mao. She declined the styles, a vital part to play.
brainpower and lower risk of cancer and official’s offer of pre-natal vitamins and Not everyone will have access to them
menstrual pain. Online, this prompted a blocked her number. ■ at first. Novo Nordisk has said it will limit
rapid backlash. “To get people pregnant, initial sales of Wegovy in China so as not
the government will literally come up with to affect the supply to other markets. A
anything they can,” fumed one writer. Obesity month’s supply of the drug will cost 1,400

The weight is over

The party is also playing matchmaker, yuan ($190), according to local media. That
setting up dating websites and forums for is a fraction of the $1,350 it costs in Amer-
young adults. A dating platform set up by ica, but still a substantial expense for many
the Communist Youth League in Zhejiang Chinese. They would also have to pay it
province had 300,000 new registrants in out of pocket, as Wegovy is not available
just three months earlier this year. Users on the public health-insurance system.
can join party-organised camping trips, BEIJING Nevertheless, Nomura, a bank, esti-
flag-football matches and murder-mystery Wegovy comes to China mates that by 2033 the Chinese weight-
games. Relationship problems? The party loss-drug market might be worth over
has that covered, too. Counsellors and psy-
chologists are on hand to offer advice.
In many residential districts in China,
InewTmedicine”.
IS KNOWN in China as “Musk’s miracle
In 2022 the boss of Tesla and
owner of Twitter, now X, gave credit
$11bn a year. Wegovy will be only one part
of the picture. Eli Lilly, an American phar-
maceutical company, is expected to mar-
banners promoting childbirth are on dis- for his slimmer figure to Wegovy, a drug ket its own GLP-1 drug in China soon (it al-
play. Common slogans promise a fulfilling manufactured by Novo Nordisk, a Danish ready has regulatory approval). And in
life with three children, not least because firm. News about the drug quickly went vi- 2026 Novo Nordisk’s patent for semaglu-
they will take care of their parents as they ral on Chinese social media, where Mr tide will expire in China, allowing local
age. More threatening ones remind village Musk is wildly popular. The hype was, firms to sell cheap generic versions of We-
officials of their duty to ensure every unusually, justified. Wegovy’s active ingre- govy. At least 11 such drugs are going
household has more than one child. dient, semaglutide, belongs to a class of through clinical trials, according to a count
After decades of successfully forcing drugs known as GLP-1 receptor agonists. in June by Reuters, a news agency. Supply
women to have fewer children, China’s GLP-1s help control blood sugar and pro- may begin to catch up with demand. ■

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 50 The Economist November 30th 2024

International

Organised crime been unthinkable previously; the spread of

synthetic drugs that are cheaper and more
Gangsters’ paradise powerful than plant-based ones; and the
rise of agile, diversified multinational
criminal groups.
Start with the new tech. Until roughly a
LYONS AND SÃO PAULO decade ago most emails and phone mes-
Globalisation and technological progress are leading to a boom sages were unencrypted, meaning police
in cross-border crime and intelligence agencies could easily read
them. Now almost everyone has access to
S THE WORLD teeters on the brink of ent and more law-abiding. In the first 20 secure messaging, allowing gangsters to
A what could become the worst trade
wars since the 1930s, with international
years of this century the worldwide murder
rate fell by around a quarter, from 6.9 per
plot in secret. The dark web allows them to
sell contraband and the spread of crypto-
capital flows falling and cross-border trade 100,000 people to 5.2 (see chart 1 on next currencies allows them to take payments
and investment stagnating, there is one page). Even in countries where worries that are hard to trace for illegal goods or
glaring exception to this unravelling of about crime have increased in recent years, even darker purposes, such as ransoms.
globalisation: international gangsters and such as America, the violent-crime rate has Digital technology has also created a new
organised criminals are on a roll. They are fallen by half since the early 1990s. criminal genre: cyber-crime.
merrily pursuing opportunities around the Yet there has also been a global surge in “Every advance brings a new threat,”
world, moving goods across borders, es- organised crime that started around the says Ivo de Carvalho Peixinho, the head of
tablishing country-spanning supply chains turn of the century, says Mark Shaw, the di- Interpol’s cyber-crime unit. “We’re starting
and hiring talent internationally. rector of the Global Initiative against to see people using ChatGPT to help them
“I fear the world is losing the fight Transnational Organised Crime, an NGO. write scam messages.” Chainalysis, a data
against gangs and organised crime,” says Driving it are three new developments: the company, reckons illicit earnings from
Jürgen Stock, who on November 7th spread of technologies such as encrypted scams, theft and ransomware attacks add-
stepped down after a ten-year stint as the apps and cryptocurrencies, which let mob- ed up to $7.6bn for 2023. Not all the money
secretary-general of Interpol, an interna- sters link up and move their earnings will have gone to criminals. North Korea is
tional police organisation. “The growth in around the world in ways that would have said to run a unit employing 10,000 hack-
the breadth, scale and professionalism of ers and others who provide it with around
organised crime is unprecedented.” half the country’s foreign-currency earn-
At first glance, Mr Stock’s alarm seems → ALSO IN THIS SECTION ings, mostly from stealing cryptocurrency.
misplaced. Most parts of the world that are Lockdowns during the covid-19 pan-
not at war have steadily become less viol- 52 The Telegram: Good Cop, Bad Cop demic pushed unprecedented numbers of ⏩

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 The Economist November 30th 2024 International 51

▸ people online, many of whom were ignor- ian Observatory for Organised Crime.
ant of the risks. They also offered new op- Murder by numbers 1 The result has been dramatic. In 2018
portunities to the criminally minded. “It World, homicides per 100,000 people Ecuador was among South America’s more
had a massive impact in South-East Asia,” 7 tranquil countries, with a murder rate of
says Jeremy Douglas, former regional di- less than six per 100,000, similar to Amer-
6
rector for the UN’s Office on Drugs and ica’s. Last year it was the most dangerous
Crime. The pandemic emptied the mob- 5 country on the continent, with a murder
sters’ casinos in the Golden Triangle, ac- 4 rate of 45 per 100,000.
celerating a move to online gambling. 3
Though drug-crime generates the most
They soon discovered they could craft violence, surprisingly the crime with the
websites that enabled them to reach punt- 2 highest annual turnover may be the trading
ers around the world as well as orchestrate 1 of counterfeit and pirated goods. Fakes
scams and frauds—and launder their ill- 0 constituted 2.5% of world trade in 2013, ac-
gotten gains. cording to the OECD, a club of mostly rich
2000 05 10 15 20 23
The second factor is a boom in drug countries, and the EU’s Intellectual Proper-
Source: UNODC
use, which is being fuelled in part by the ty Office. If that share is unchanged, it
spread of synthetic drugs, which frees would imply the trade was worth more
gangs from some of the constraints of geo- market,” says Bruno Paes Manso of the than $760bn in 2023, putting it higher than
graphy since they are not reliant on plants University of São Paulo. It “establishes most estimates for the production, traf-
such as coca trees or poppies that grow rules to reduce conflict, creates predict- ficking and sale of illegal narcotics.
best in particular places. Seizures of meth- ability in the market, and provides a guar- Gangs are not simply expanding into
amphetamine in East and South-East Asia, antee for the rules of the market to func- new lines of business and new territories;
for instance, increased fourfold between tion”. Today it has 40,000 full members and some aspire to change the course of poli-
2013 and 2022 (see chart 2). Prices have fall- an estimated 60,000 affiliates in 26 coun- tics. Last year Colombian hitmen were ac-
en by more than half as criminal gangs tries. The ’Ndrangheta, meanwhile, has cused of the assassination in Ecuador of
have scaled up production, which in turn spread to 40 countries and has an annual Fernando Villavicencio, an anti-corruption
has increased demand. turnover of around $50bn—more than presidential candidate. In 2022 six Dutch
Worldwide, the number of people tak- twice the GDP of mineral-rich Botswana, nationals were arrested in Belgium, ac-
ing drugs increased by a fifth between 2010 according to Interpol. cused of planning to kidnap the Belgian
and 2020, and the drugs they consume are Or take the internationalisation of Al- justice minister. And ahead of Mexico’s
becoming progressively stronger. Fentanyl bania’s gangs. Before the 1990s criminals general election in June, 40 candidates
is 50 times more potent than heroin. But were bottled up in a Communist dictator- were murdered.
even it is being supplanted by newer drugs, ship. As barriers to travel and commerce In some places this strategy has been so
such as etonitazene, which is perhaps 500 fell, so did the constraints on crooks. To- effective that gangs are, in effect, calling
times stronger than heroin. day Albanian gangsters are key players in the shots. More than half of people polled
the netherworld of Ecuador, which is sand- in Latin America said that there were or-
King of pain wiched between Colombia and Peru, the ganised criminals or gangs in their neigh-
The third development is that gangs are world’s two biggest producers of cocaine. bourhoods and around 14% of the popula-
becoming more nimble. Diversification— For years the FARC, a Colombian guer- tion—almost 80m people—live under
Interpol officials call it “polycrime”—is rilla group, worked with the Sinaloa Cartel some form of gang rule, according to re-
increasingly common. Previously, criminal in Mexico to control cocaine shipments searchers at the University of Chicago.
groups tended to stick to what they knew from Colombia to the giant port of Guaya- The extreme is Haiti, where for the first
best, making it easier for the police to in- quil, where they would be sent to Europe time in its history the UN Security Council
vestigate them. Today the same group and America. But the demobilisation of has authorised a multinational force to re-
could be involved in, say, drugs, pirated FARC fighters after a peace deal and the ar- store order to a country that has been tak-
software and wildlife trafficking. Some rest of the Sinaloa Cartel’s leader created en over by gangsterism.
have gone into new lines of business un- “the perfect storm” for other criminal orga- Law enforcement has had some suc-
locked by migration or increasing numbers nisations, including the Albanian mafia, to cesses, notably in gaining access to two en-
of refugees, which has led to an explosion pile in, says Renato Rivera of the Ecuador- crypted communications systems used by
of people trafficking. Venezuela’s power- gangsters in 2018 and 2020. That has led to
ful Tren de Aragua gang, for instance, several thousand arrests across the world.
makes almost all its money by trafficking Canary in a coalmine 2 And Interpol has become better at inter-
humans, not drugs. Quantities of synthetic and plant-based drugs cepting the cross-border transfers of some
Many are also diversifying geographi- seized in and around the Golden Triangle* illicit assets.
cally. To be sure, organised criminals have 2010=100, log scale But policing remains fundamentally na-
had transnational links in the past, but that 1,000 tional, and suffers from what Stephen Ka-
was because they followed diasporas. 800 vanagh, Interpol’s executive director for
Triads can be found in many overseas Chi- 600 police services, calls a “perimeter mindset”.
nese communities and the ’Ndrangheta, Methamphetamine
400
Turf, physical or otherwise, is jealously
the mafia from Calabria in Italy, has long guarded. What is needed is an approach to
had branches in Canada, Australia and law enforcement as international as that of
Western Europe. But in recent years syndi- 200 the gangs. Yet the political will to craft a
cates have begun to migrate to exploit op- Opiates new approach has been largely absent.
portunities. Brazil’s pre-eminent mob, the Before joining Interpol, Mr Kavanagh
100
First Capital Command, like a Habsburg was the police chief of Essex, an English
empire of the underground world, has 2010 12 14 16 18 20 county with a population of 1.5 million. He
grown through alliances and diplomacy. It *Laos, Myanmar and Thailand plus Cambodia, ruefully notes that his old force’s budget
Source: UNODC China, Hong Kong, Malaysia and Vietnam
acts as “a regulatory agency of the criminal was more than twice that of Interpol’s. ■

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 52 International The Economist November 30th 2024

THE TELEGRAM
Donald Trump plays good and bad cop with the world

Eye-witnesses to the drama of the first Trump presidency brace for the sequel

the words of a former official. His alarm about China as a security

threat deepened, notably after he concluded that Mr Xi lied to him
about the covid-19 pandemic, triggering a crisis that cost him the
2020 election. Chinese officials fret that Mr Trump bears a grudge
and might “re-politicise” the pandemic. They are right.
Even now, Mr Trump believes that the foreign-policy establish-
ment has its priorities backwards. To him, foreign-policy grandees
focus on shows of military might or diplomacy with allies rather
than on the task that—in his view—underpins all other sources of
strength, namely making America’s economy great again.
Like a cop with a new Taser, Mr Trump seems to see tariffs as a
way to inflict non-lethal but instructive pain. Early evidence came
on November 25th, when he threatened 25% tariffs on imports
from Mexico and Canada, and an extra 10% on Chinese imports,
as a prod to do more to stop flows of migrants and drugs.
More shocks are inevitable. The forum debated the influence
of “traders”, meaning tycoons and Wall Street financiers with Chi-
nese business interests and whose counsel Mr Trump heeds. On
past form, if tariffs were to spook markets, that would also weigh
on Mr Trump’s thinking. Such voices of restraint will compete
with “tariffers” working on trade policy for Mr Trump.
There are big questions, too, about whether Mr Trump sees ta-
O DONALD TRUMP, the current world order is a criminally bad riffs as a means or an end. His defenders insist that tariffs are a ne-
T deal for America. He is ready to play good cop and bad cop to
fix this. Public enemy number one is China’s economic model,
gotiating gambit. Yet in Washington, those same levies are start-
ing to sound worryingly permanent. Republicans in Congress are
which he has called a conspiracy to steal wealth and manufactur- enthusiastic about using revenues from tariffs to “pay for” cuts to
ing jobs from America. But allies are prime suspects, too, accused taxes on income or corporate profits, the forum heard. Advocates
of cheating America in trade while doing too little for America’s argue that the first Trump administration carefully imposed pre-
national security. Allies from Europe to North America and Asia ventive tariffs on industries in which American firms still have an
can expect to meet both the smiling and snarling versions of Pres- edge, but which China has in its sights.
ident Trump, all too soon.
Your columnist is in Washington, where he attended a closed- For a rough world, rough methods
door gathering of serving and former government officials from The Biden administration’s industrial policies may live on, though
America and Europe, joined by business bosses and experts on Mr Trump is less keen on subsidies for green technologies, and
trade and security, as well as scholars from China. This writer has more gung-ho about tasks like reviving American shipbuilding to
attended these biannual gatherings—known as the Stockholm counter China on the high seas. He is equally keen on supplying
China Forum, and co-hosted by the Swedish foreign ministry and factories with cheap fossil fuels. Controls to stop Chinese compo-
the German Marshall Fund, a think-tank—since 2008. The latest nents entering American markets via third countries will be tight-
forum stood out for its hard-boiled, grimly serious mood. ened. If Chinese exporters respond by diverting trade flows to
Mr Trump’s good cop, bad cop swagger is “how he thinks about Europe or emerging markets, wreaking havoc outside America, Mr
diplomacy”, said a participant with first-hand knowledge of the Trump will not greatly care.
next president’s negotiating style. Mr Trump, in his first adminis- Differences over policy extend to the security realm, too. Mr
tration, praised Xi Jinping as brilliant, and Vladimir Putin as Trump’s choice for national security adviser (NSA), Mike Waltz, is
smart, while slapping trade tariffs and export controls on China a fierce China hawk. So are his picks for deputy NSA, Alex Wong,
and harsh sanctions on Russia. That same disconcerting approach and for secretary of state, Marco Rubio. For all that, nobody can
is about to return, as Mr Trump prepares to announce fresh tariffs exclude that Mr Trump sees national security as a realm for unsen-
and other arm-twisting moves on Day One in the Oval Office, tar- timental dealmaking with China. His first weeks in office may
geting adversaries and allies alike. His aim is not to reform Mr Xi prove revealing, given his pledges to end the war in Ukraine quick-
or other foreign leaders: Mr Trump has little interest in changing ly. The forum heard about Chinese offers to play peacemaker in
other men’s souls. In a wicked world, his interest is in cutting deals Ukraine and to rebuild its shattered cities. That was too much for
to secure America’s jobs, borders and security interests. some Europeans. Ukraine’s cities need repair because Chinese
The dealmaking starts with US-China trade. Mr Trump is not firms are helping Russia build the drones and missiles now de-
by instinct scandalised by China’s use of subsidies or coercive stroying them, they growled. There were accounts of European
transfers of technology. Indeed, early in his first presidency, aides governments telling Chinese leaders that China’s enabling of Rus-
often struggled to alert him to the security implications of this or sia’s war machine is gravely damaging their country’s image in
that Chinese ploy to buy American technology, or geopolitical Europe. But indignant Europeans also know that Mr Trump is an
move on the far side of the world. Mr Trump was focused on the unsqueamish man, who might just welcome Chinese help as he
trade balance with China, believing “viscerally” that America is a imposes a messy peace on Ukraine. Like the star of a gritty crime
loser when it buys more from than it sells to another country, in drama, Mr Trump is not one for niceties. ■

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 The Economist November 30th 2024 53

Business

European carmaking profits in America are under threat, too.

Philippe Houchois of Jefferies, a bank, de-
Breaking down scribes it as “a downturn like no other”. Yet
efforts to slash costs at home to stay com-
petitive are hitting stiff resistance from un-
ions and politicians.
Not long ago European carmakers were
on a tear. A shortage of microchips during
Will the trouble ever end for Volkswagen and its rivals? the pandemic helped them pursue a strat-
egy of “value over volume”, as they priori-
AR DASHBOARDS have an array of €300bn ($320bn) to below €200bn, as a tised putting scarce chips into their most
C indicators that illuminate to warn of
trouble. If the boardrooms of Europe’s car-
string of gloomy profit forecasts has
spooked investors (see chart on next page).
profitable vehicles. VW broke its record for
operating profit each year from 2021 to
makers had similar systems they would be In Europe demand has shrunk and compe- 2023. Stellantis (whose largest shareholder,
lit up like a Christmas market. Volkswagen tition is intensifying from Chinese elec- Exor, is a part-owner of The Economist’s
(VW), the largest of the lot by sales, is tric-vehicle (EV) firms. “The pie has be- parent company) generated its highest-
bracing for strikes beginning on December come smaller, and we have more guests at ever revenue and profit in 2023. BMW and
1st in response to its plan to close three the table,” Oliver Blume, vw’s boss, has Mercedes also enjoyed bumper years. A
factories in Germany and cut wages. said. At the same time, the overseas busi- restructuring programme at Renault also
Northvolt, a once-promising Swedish batt- nesses of European carmakers have hit a began to pay off.
ery startup in which VW and BMW invest- pothole. Sales in China have slumped, and Lately, however, the picture has dark-
ed, has collapsed into bankruptcy (see next ened. Demand for cars in Europe has
article). Meanwhile, across the Atlantic, stalled and may be headed for structural
→ ALSO IN THIS SECTION
Donald Trump is threatening to upend decline. Europe will never return to its pre-
supply chains by imposing a 25% tariff on 54 Life after Northvolt pandemic heights of 16m sales a year,
imports from Mexico and Canada (see concedes Arno Antlitz, vw’s chief financial
Finance & economics section). 55 The audiobook boom officer. In 2023 total sales were a little over
These troubles come amid an already 55 TikTok does shopping 11.5m vehicles, up on the previous year but
difficult year for Europe’s auto industry. well below their peak. This year they are
Since April the combined market value of 56 Elon Musk v Sam Altman expected to be lower, and few in the indus-
the continent’s five biggest carmakers by 57 Bartleby: Quick wins try forecast much growth next year.
sales—VW, Stellantis, Renault, BMW and As the chip famine has ended, produc-
Mercedes—has plunged from more than 58 Schumpeter: VC returns to its roots tion has swung back towards less profit- ⏩

C003
 54 Business The Economist November 30th 2024

▸ able cars. Margins are likely to dwindle regions for the firm. Its bigger problem, readjustment for Europe’s carmakers that
further if price wars break out to meet stiff though, is its plunging profit in North will need to start with tackling overcapac-
new emission targets on the EU’s path to America. A misguided decision to raise ity at home. Efforts to do so, however, are
banning sales of petrol cars by 2035. Strict- prices for its pickups and SUVs, to bring already encountering resistance. VW’s un-
er rules next year will require a higher share them closer to those of Ford and General ions are not the only ones taking industrial
of vehicles the industry sells to be EVs, Motors, has backfired as customers have action. Last month Italian auto workers
which are currently less profitable than turned away. Last month it announced that staged a one-day walkout, their first na-
fuel-guzzling ones. its North American revenue fell by 42%, tional strike in 20 years. Strikes have also
European carmakers are also being year on year, in the quarter from July to hit auto suppliers in France and have been
squeezed on price at home by Chinese September. Ballooning inventories have threatened at two tyre plants set to close
competitors. Although there was a small led it to cut production and temporarily by 2026.
dip after tariffs on imported EVs were close factories. Politicians, too, are taking a dim view of
introduced by the European Union in The American market is set to become factory closures. “Possible wrong manage-
October, Chinese carmakers still account thornier still for European carmakers un- ment decisions from the past must not be
for one in ten sales of new EVs in Europe, der Mr Trump. VW imports nearly two- at the expense of employees,” Olaf Scholz,
according to Schmidt Automotive Res- fifths of the cars it sells in America from Germany’s beleaguered chancellor, has
earch, a consultancy. That share will rise north and south of the border, as does said in relation to VW’s planned closures.
further. BYD and Chery, two Chinese car- Stellantis. If Mr Trump also levies tariffs on Carlos Tavares, the boss of Stellantis, has
makers, are setting up factories in Europe imports from the EU that would worsen been chastised by the Italian government
to serve the continent directly. the pain. Although two-thirds of the cars for sending jobs to low-cost countries. But
Meanwhile in China, European firms BMW sells in America are manufactured unless European car companies can deal
are losing out to domestic rivals. The there, the rest are imported from the EU, with rising costs and sliding sales their
world’s largest car market has long been an according to Berenberg, a bank. plight will only worsen. The warning lights
important source of profit for Europe’s All this points to a painful period of are flashing more urgently now. ■
auto industry. Those days are drawing to
an end. According to UBS, a bank, foreign
brands’ market share has plummeted from EV batteries

After Northvolt
63% in 2020 to 37% now, with Chinese car-
makers proving better at stuffing their
vehicles with the whizzy technology that
the country’s consumers demand. VW has
been hit especially hard. Once the biggest
car company in China by some distance, its
Who will make batteries for Europe?
market share has fallen from 19% in 2019 to
14% today. It may slip into the single digits
by 2030, says UBS. EW EUROPEAN startups have attract- further their own EV plans have scaled
Business in China is also getting harder
for Germany’s upmarket firms. BMW and
F ed as much attention—and none as
much capital—as Northvolt. On Novem-
back investments and partnerships in
response to slowing demand for EVs.
Mercedes earn 48% and 37% of their oper- ber 21st the Swedish maker of batteries PowerCo, owned by Volkswagen, de-
ating profit, respectively, in the country. for electric vehicles (EVs), and a would- layed expansion plans last year. EV sales
Although they have so far shed only a few be European champion, went bankrupt, in Europe dropped by 5% in the first ten
percentage points of market share, both re- having raised $15bn from governments months of this year, compared with the
ly heavily on petrol cars in a country where and investors. Its boss, Peter Carlsson, same period in 2023; in Germany they
half of sales are now electric. The sales in resigned shortly after. fell by 27%. EVs’ share of total car sales in
China of Porsche, another fancy European Northvolt’s demise widens an already Europe slipped from 14% to 13%.
brand, have plunged by 27% since 2022. gaping hole in Europe’s battery-making As hopes for a homegrown champion
Stellantis, which has largely pulled out industry. The firm’s production capacity fade, Europe must turn to foreign batt-
of China, is nevertheless in a battle with of 16 gigawatt-hours (GWh) accounted ery-makers. LG Energy Solution (LGES), a
Chinese competitors in South America for less than a tenth of the continent’s South Korean manufacturer, runs the
and the Middle East, both important total (and problems with manufacturing continent’s biggest battery facility in
meant it used only a fraction of that). But Poland, which accounts for half of
by the end of the decade, the company’s Europe’s capacity. Next are SK Inn-
Hill descent capacity was supposed to rise about ovation, also South Korean, and China’s
Market capitalisation, €bn four-fold, helping expand overall Euro- CATL, the world’s largest maker of batt-
300 pean capacity from 192GWh to 1,142GWh, eries. In recent months, however, the two
Renault
according to Benchmark Minerals South Korean companies have signalled
250 Intelligence, a research firm. That now a pause in their expansion plans as they
Stellantis
200 looks optimistic. cut sales targets. LGES said in October it
The collapse of a competitor may was considering converting EV-battery
Volkswagen 150 seem like good news for Europe’s other lines to grid-scale batteries.
100 EV-battery hopefuls, but they are un- That leaves the continent with two
BMW
likely to cheer. The circumstances of options: CATL, which has made global
50 Northvolt’s failure, including the huge expansion one of its priorities, or im-
Mercedes technical challenge of scaling produc- ports from China, which manufactures
0
tion, will not inspire investors to support around four-fifths of the world’s lithium-
D J F M A M J J A S O N
similar ventures. European carmakers ion batteries. Neither option will delight
2023 2024
that were backing battery-makers to European policymakers.
Source: Bloomberg

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 The Economist November 30th 2024 Business 55

Audiobooks the days when listeners bought CDs for $15 and 6% in America. TikTok also now has a

Cover artists
a pop rather than streaming tracks for a logistics service that takes care of packing,
fraction of a cent each. Book publishers are delivery and returns for merchants.
more enthusiastic. Music bosses “would Although TikTok Shop is growing fast,
kill for the deal we have”, boasts one, who making social commerce as widespread in
says a stream on Spotify earns about the the West as it is in China will not be
same as a physical book sale, once a lowish straightforward. Meta has made various
Streaming subscriptions are threshold of listening has been reached. attempts to embed e-commerce into Face-
fuelling a listening boom Streaming platforms also bring in new book and Instagram without gaining much
readers by pointing them to books related traction. For TikTok Shop to continue
HE MOST popular musicians on Spot- to podcasts they have enjoyed. expanding, it will need to overcome hesi-
T ify this week included plenty of famil-
iar names, from Lady Gaga and Bruno
The audiobook boom has given a par-
ticular boost to certain types of authors.
tancy from consumers, brands and the
influencers that connect them.
Mars to Billie Eilish. But also riding high in Spotify says its subscribers are using their In China, the distinction between shop-
the streaming platform’s charts were some free hours to try out less “safe” choices—if ping and entertainment has already grown
unexpected stars, including Jane Austen, they are not gripped after a few minutes, fuzzy. Social commerce will account for
J.R.R. Tolkien and Boris Johnson. they can switch to a different title at no $900bn of online sales in the country this
Spotify, best known as a music stream- cost. Audiobook consumers skew young year, according to eMarketer, representing
er, now deals in audio of all kinds. A year and male, which is reflected in the many almost 30% of all e-commerce. Douyin,
ago it began giving customers on its paid non-fiction and self-improvement titles in TikTok’s sister-app in China, and Kuai-
tier 15 free hours of audiobooks, equivalent Spotify’s charts. Publishers have long frett- shou, its main local competitor, are now
to about a book and a half, per month. The ed that the digital world is dragging read- among the country’s biggest e-commerce
plan has since been rolled out in ten main- ers away from books. Now, for once, it platforms, based on the value of merchan-
ly English-speaking markets; rock and pop might be helping. ■ dise sold through them.
now jostle for position in the charts along- In the West, however, shoppers have
side fantasy and politics (Mr Johnson’s been slower to embrace social media as a
autobiography embraces both). The future of shopping place to buy stuff. In a recent survey of
Americans by Simplicity DX, a marketing-
What’s in store
This month Amazon announced that it
would follow Spotify’s lead and give sub- software firm, 62% thought social media
scribers to its music-streaming service was a helpful place to learn about new
access to audiobooks, with one free book a products, but 74% still preferred to buy
month from Audible, its sister company. things on traditional e-commerce sites.
Amazon’s Music Unlimited has little more It doesn’t help that the products curr-
than a third as many subscribers as Spotify, TikTok wants Western consumers ently sold on social media tend to be cheap
which boasts 252m worldwide. But in to shop like the Chinese impulse purchases, from snacks to silly
Audible it has by far the dominant player in toys. When your correspondent opened
audiobooks, accounting for more than half S THE END of the year draws closer, TikTok Shop, she was offered a 30-pack of
the market.
Amazon’s move promises to add fuel to
A shopping season is in full swing. On
Black Friday, November 29th, retailers will
Diet Coke and a stuffed toy shaped like
French fries. Joe Gagliese of Viral Nation, a
an audiobook boom. Sales so far this year offer steep discounts to lure customers. marketing agency, points out that many
are 27% higher than in the same period in Some sales started weeks ago (see Finance merchants on the platform are unknown
2023, according to the Association of & economics section). Soon will come the companies that sell a single item. TikTok
American Publishers, a trade body, helped mad dash for Christmas gifts. Shop is designed to encourage impulse
by Spotify’s entry into the market. Once This year, though, many consumers will shopping; when products are discounted,
something of a footnote in the publishing shop not in stores or on e-commerce sites, for instance, a clock is sometimes dis-
world, audiobooks now make up 12% of but via social-media apps. Social comm- played with a countdown to the end of the
America’s consumer book market, a bigger erce—online purchases that originate on sale. Another recent survey found that
share than e-books (see chart). social media—will reach $72bn in America more than half of Americans who shopped
Streaming is resented by many musi- in 2024, reckons eMarketer, a research on social media regretted their purchase.
cians and record companies, who pine for firm, accounting for 6% of online sales. Big brands have also been wary. Plenty ⏩
That is up from $47bn in 2022, and expect-
ed to reach $100bn in 2026 (see chart). A
A new leaf growing share of those transactions can be Trending
United States, book sales, % completed without requiring shoppers to United States, social-commerce sales
leave the social-media platform.
Digital audiobooks 100 % of total retail e-commerce Value, $bn
Leading the trend is TikTok, a short-
8 100
E-books video app owned by Bytedance, a Chinese
80 Forecast
tech giant. The app, which is battling an
effort by lawmakers in America to have it 6 75
60
banned or sold off, hopes to bring to the
West a business model that blurs the line 4 50
Physical 40
between shopping and entertainment. Tik-
20
Tok Shop, an e-commerce feature added to 2 25
the app in Britain in 2021 and America last
0 year, lets users scroll through posts about 0 0
products, watch live shopping events and
2014 16 18 20 22 24* 2022 23 24 25 26
buy items with just a few clicks. The app
Source: Association of American Publishers *At September 30th Source: eMarketer
takes a 9% commission on sales in Britain

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 56 Business The Economist November 30th 2024

▸ have embraced social media as a place to the company, says that is because much of gence can leave the rest in the dust.
advertise their products, often with the the emphasis on TikTok Shop is around Mr Musk’s AI company has other
help of influencers. And some, including selling products at deep discounts. advantages. The man has a knack for
Puma, a sportswear brand, and L’Oréal, a Influencers, whose content helps drive attracting brilliant engineers. xAI recruits
beauty giant, have begun to sell through engagement on TikTok, also need more from the top LLM labs as well as from
TikTok Shop. Jack Timpany, a marketing persuading. They may be happy to Tesla, his electric-vehicle maker. Its LLMs
executive at L’Oréal, says that it is a useful promote products on behalf of brands, for are partly trained on data from X, Mr
way to get new products in front of cons- a fee, but many have been reluctant to push Musk’s social-media platform, which (for
umers. “It’s pretty hard to do that on your the cheap wares typically found on TikTok all its toxicity) provides up-to-the-minute
traditional e-commerce channels where Shop. Social-media users in the West have information. xAI may also benefit from
you’re limited by what people put in the grown more sceptical of influencers who familial ties with Tesla. The car company
search bar,” he says. “It’s all about discov- act as salesmen. “The follower has become generates valuable data on the real world
ery,” says Jan Wilk, head of operations for a lot smarter,” says Samantha Bergmann, via the cameras installed on its vehicles,
TikTok Shop in Britain. founder of SESAMY, an influencer-market- which it hopes will eventually support fully
Other companies, however, have balked ing agency. “You can no longer sell them autonomous driving.
at the idea. GymShark, a sportswear brand something that doesn’t actually fit your Though some investors resent the way
that has relied heavily on influencer mar- brand.” The buzzword in the industry is Mr Musk takes from one company to give
keting to raise its profile, has held off on “authenticity”, explains Eric Sheridan of to another, he argues that xAI will ulti-
selling directly through TikTok. Noel Goldman Sachs, a bank. That may be hard mately help him realise his dream of creat-
Mack, who looks after brand strategy for to maintain while peddling stuffed toys. ■ ing autonomous cars, “robotaxis” and hu-
manoid robots. Such ambitions may help
xAI get its hands on scarce GPUs because
Elon Musk v Sam Altman Jensen Huang, Nvidia’s boss, shares Mr

Tycoons in a knife fight

Musk’s sense of higher purpose. “What
Elon is doing is so cutting-edge. Jensen
loves that,” says Umesh Padval of Thom-
vest Ventures, a venture-capital (VC) firm.
Yet compared with OpenAI, xAI is still
an underdog. OpenAI’s partnership with
SAN FRANCISCO Microsoft—though strained at times—
xAI is using fair means and foul to catch up with OpenAI gives it access to infrastructure not even
the world’s richest man can match: Micro-
N UNDERAPPRECIATED FORCE be- $4.5bn. Mr Musk promised to double the soft’s capital expenditures, mostly on
A hind great technological change is
intense—and petty—rivalry. In the “war of
size within a few months. xAI is raising
money hand over fist: $5bn in its current
GPUs and data centres, are expected to
exceed $150bn in 2024-25. Combining the
the currents” in the late 19th century, round, according to the Wall Street Jour- products it sells directly to its customers
Thomas Edison electrocuted stray animals nal, on top of $6bn in May (OpenAI has with those sold via Microsoft gives OpenAI
to discredit Nikola Tesla. A century later raised $6.6bn this year). The cash and a roughly 70% share of the LLM market.
Steve Jobs traded insults with Bill Gates computing power will help train the third That is still a big lead.
during a battle between Apple and Micro- generation of Grok, which Mr Musk, with The risk is that Mr Musk turns what
soft. Even “Silicon Valley,” a satirical HBO his usual rambunctiousness, has promised should be robust corporate competition
series, starts with a feud—and the price- will be “the world’s most powerful AI by into a knife fight. Earlier in November he
less quip: “These are billionaires, Richard. every metric”. Time is of the essence: as filed an amended lawsuit—the third ver-
Humiliating each other is worth more to OpenAI’s experience showed, the first sion this year—against OpenAI and its
them than we will make in a lifetime.” model to display a superior level of intelli- backers, with xAI as a plaintiff and Micro- ⏩
In the world of generative artificial
intelligence (AI), the scrap between Elon
Musk and Sam Altman is in the same
league. It is both silly and captivating. Silly
because they insult each other, try to dis-
credit each other’s chatbots and fight over
who meant what almost a decade ago
when they co-founded OpenAI.
Captivating because, fuelled by griev-
ance, Mr Musk has created xAI, maker of a
series of large language models (LLMs)
called Grok. It has its sights set on OpenAI,
now run by Mr Altman, which became
wildly successful with the release of
ChatGPT two years ago. While OpenAI
was last valued at $157bn, xAI, which is less
than two years old, is already reported to
be worth $50bn.
xAI is desperate to catch up. In Septem-
ber it fired up the world’s biggest super-
computer in Memphis, built in record time
with 100,000 of Nvidia’s graphics process-
ing units (GPUs), at an estimated cost of Eyes on the competition

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 The Economist November 30th 2024 Business 57

▸ soft as a defendant for the first time. Microsoft’s ties with OpenAI, as part of a portrays it as a champion in America’s tech
It repeats accusations that Mr Altman broad look at AI investments. Some Open- war with China. Its innovation is “founda-
and his co-defendants abandoned a non- AI investors fear that Mr Musk could use tional to US success—not just economic
profit, safety-first mission, partly funded his influence with President-elect Donald competitiveness but who prevails between
by Mr Musk, in order to get rich. OpenAI Trump to encourage the FTC to dig deeper. the US and China,” he says.
disputes this. The suit’s latest allegations One of those investors, Alexandre In fact, America’s technological edge
are that OpenAI and Microsoft hobbled Azoulay of SGH Capital, a VC firm, accuses would be best served by both firms slugg-
competition by restricting OpenAI’s inves- Mr Musk of using “lawfare” against Open- ing it out in the marketplace, not by either
tors from putting money into AI rivals and AI rather than fair competition. But for its of them pulling political or geopolitical
through what it calls a de facto merger. In part, OpenAI’s defensive strategy veers strings. In the meantime, all the elements
January the Federal Trade Commission, an worryingly near to wrapping the company are in place for a blockbuster remake of
antitrust body, launched an inquiry into in the flag. One person close to OpenAI “Silicon Valley” for the AI era. ■

BARTLEBY
Stupid rules and quick wins
Why every boss can benefit from asking employees what most infuriates them

NTERROGATE THE internet about the Stephanie Tully, the boss of Jetstar, a
Iexperienced
most ridiculous rules people have
at work, and the stories roll
low-cost Australian airline, made it her
business to meet as many employees as
in. The lab assistant instructed to label she could in her first weeks. Time and
the expiry dates on all chemical samples, again, she heard complaints from crew
who was reprimanded for not writing about how much they hated the uniform.
when a bottle of sand would go off (to An early decision to design a new range
comply, they put in a date 65m years sent a very visible signal that they were
hence). The accounting firm where only being listened to.
partners were allowed to have plants After a while, though, it gets harder
over a certain height. The company for bosses to spot this low-hanging fruit.
where employees were required to sub- They may have moved on to bigger
mit requests to maintenance if they things; they may well have introduced
wanted the height of their office chairs the rule that most infuriates everyone.
to be adjusted. The baroque limitations But they should be in no doubt that
on how often people are allowed to go to quick wins will still exist. Even in effi-
the lavatory. cient companies, rules and bureaucracy
These are extreme examples of cor- accumulate. The trick is to have a way to
porate red tape. But most companies will Hubert Joly, whose turnaround of Best keep finding them.
have at least one pettifogging rule that Buy, an electronics retailer, has become In “The Friction Project”, a recent
hinders more than it helps. Does it really case-study catnip, found nothing but book by Robert Sutton and Huggy Rao,
make sense to enforce a rigid definition quick wins when he became the CEO in two Stanford University academics, the
of time off if someone has suffered a 2012. He credits an initial stint working at authors write about a programme at
bereavement? Does getting an expenses a Best Buy store in St Cloud, Minnesota Hawaii Pacific Health called “Getting
claim paid have to feel like something with giving him many of his ideas. Staff Rid of Stupid Stuff”. Clinical staff were
Kafka would reject as implausible? By were upset that the previous management asked to nominate idiotic record-keep-
the same token, every company will have had cut employee discounts on products. ing processes that they wanted to ditch.
settled into a way of doing things that The store gave too much space to fading Eliminating a single data-entry require-
might once have served a useful purpose product categories like DVDs and CDs, ment, to click on a patient’s name each
but no longer does. Such stones in the and not enough to fast-growing ones like time nurses and nursing assistants did
corporate shoe are that most welcome of mobile phones. Flat-screen televisions an hourly round, freed up thousands of
things for managers: the quick win. were frequently damaged, partly because hours a year. In a similar vein AT&T has a
Quick wins are often associated with of the way they were stacked. All of these scheme called Project Raindrops, which
incoming bosses. A new broom is more were easy enough to change. encourages employees to submit ideas
likely to see things that seem to make In “The New CEO”, a book on how to for policies that should be ditched, from
little sense, and on closer inspection, make a successful start to life in the top excessive approval processes to a virtual
actually make none. Staff are happier to job, Ty Wiggins of Russell Reynolds, an private network that logged people out
say what bothers them: any implied executive-search firm, tells a couple of more often than anyone could bear.
criticism is aimed at the old regime. It other quick-win stories. One boss found There is no reason why bosses cannot
helps a new chief executive if they can that people at headquarters were dis- do “listening tours” throughout their
make changes that quickly demonstrate tributed chaotically throughout two build- tenure. Getting managers to do front-
to staff and customers their ability to ings just across the street from each other. line work is another way for them to see
make things better. Small victories also Within a month he had decided where where process has got out of hand.
give them permission to take their time everyone should be sitting, and saved a lot Running a business is hard. Why turn
over bigger decisions. of time and moaning in the process. down the chance of a quick win?

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 58 Business The Economist November 30th 2024

SCHUMPETER
Back to the roots

Has Sequoia Capital outgrown its business model?

more earlier-stage businesses at home and in Europe. Two years

ago Sequoia launched its Arc programme for young startups. In
2023 it parted ways with its Chinese and Indian units.
This seems like a sound idea in principle: why endure cross-
border headaches, or compete with spendthrift foreigners like
SoftBank of Japan or MGX of the United Arab Emirates as they bid
up valuations of today’s sexy AI startups, when ferreting out
tomorrow’s stars at home offers potentially higher returns? The
niggle is that both Sequoia and the ground beneath it have
changed in a way that makes returning to its roots difficult.
For one thing, the VC landscape has become much more
crowded. PitchBook, a data-provider, counted 3,417 conventional
VC firms active in America last year, up from fewer than 1,000 in
the mid-2000s when Mr Botha got into the business. Last year
they managed $1.2trn-worth of assets, compared with $150bn 20
years ago. The value of new deals in the first nine months of this
year exceeded $130bn. That pales beside $352bn in all of 2021, a
white-hot year for startups, but is nearly twice the figure for 2014.
At the same time, as Mr Botha acknowledges, “The number of
smart founders is not a function of the amount of money avail-
able.” With lots more cash chasing roughly the same supply of
startup talent, industry-wide returns have duly disappointed. Acc-
HE FIRST thing that catches your eye when you enter the ording to Cambridge Associates, an investment firm, the LPs of
T poshly serene headquarters of Sequoia Capital on Sand Hill
Road in Menlo Park, California, is a metre-wide cross-section of
American VC firms have made compound annual returns of 1.45%
in the past three years, compared with 41% in the three years
what appears to be a redwood. On closer inspection it turns out to before and less than the 8% they could have earned in public
have been a tree in the past—38m years ago, according to a plaque markets. As one VC veteran sums up with astonishing candour,
on the back. Now it is solid stone. A gift from Roelof Botha, the “You would be better off investing in Microsoft or Meta.” (Sequoia
venture-capital (VC) firm’s current boss, and his wife, it reminds is tightlipped about its funds’ recent performance, though to
employees and guests of the durability of the organisation they judge by its five Forbes Midases it is likely to be above average.)
are visiting, which has existed since 1972. In the accelerated time As with other old growths of Sand Hill Road, Sequoia is also
of Silicon Valley, that is aeons. contending with smaller “seed” investors, often ex-entrepreneurs,
Sequoia is not just perennial but hardy, too. In contrast to some getting between old-school VCs and the next generation of foun-
other VC old growths like Kleiner Perkins, whose reputation for ders. These newcomers are closer to the young entrepreneurs in
spotting the next hot startup has wilted in the past decade, it has age, inhabit the same WhatsApp groups and offer counsel on
managed to thrive more or less continuously for half a century. negotiating with the Sequoias, having been through it themselves.
Over the years it has made its limited partners (LPs, as VC firms’ The phenomenon dates back to the creation of Y Combinator, a
outside investors are known) and its own rainmakers (who pocket startup kindergarten, in 2005. But it is not letting up. On Novem-
around a quarter of gains plus a management fee of a couple of ber 26th the Information, a tech publication, reported that a young
percent of a fund’s assets) a total of over $70bn, thanks to early former startup manager turned partner at Andreessen Horowitz,
bets on future tech darlings including Airbnb, Apple, Google and Sequoia’s rival, was leaving to start her own $50m seed fund.
Nvidia. Of that, $43bn has been disbursed since 2019.
Alfred Lin, who co-led Sequoia’s investments in OpenAI, the Out of the woods
world’s leading builder of cutting-edge artificial-intelligence (AI) Sequoia has no plans to cede what Mr Botha calls its “unfair ad-
models, topped this year’s Midas ranking of the world’s 100 most vantage”: a respected brand name, a strong network and sophisti-
successful venture dealmakers, compiled by Forbes magazine. Mr cated data analytics. It is beefing up Arc, its startup school, and
Botha came 11th. Another three Sequoia employees made the list. maintains a “scout” scheme, lending asset-rich, cash-poor foun-
Mr Botha puts things in Darwinian terms, paraphrasing the ders money to invest and sharing the upside. In 2023 it backed five
father of evolutionary science: “It is not the strongest of the startups as they were still incorporating. It is also marketing itself
species that survives, nor the most intelligent that survives. It is more intensely. Partners speak at conferences and appear on pod-
the one that is most responsive to change.” For Sequoia, respond- casts, two of which the firm has launched in the past couple of
ing to change has included hatching a “growth fund” to bankroll years. It offers startups help with sales, recruiting and the like.
larger startups that would once have gone public (in 1999), ex- This costs money. More important, it takes up time that could
panding into China (in 2005) and India (a year later), and creating be spent actively seeking out fresh prospects. It has led Sequoia,
a hedge fund (in 2009) and a wealth-management arm (in 2010). too, to expand. Collective decision-making, on which it prides it-
Lately, as geopolitical rifts have made investments in Asia self, is necessarily less nimble with 25 investment staff than it was
trickier and deep-pocketed “tourists”, first from New York and with a dozen two decades ago. In the fast-paced VC business that
Tokyo, then from Riyadh and Abu Dhabi, have stiffened competi- can be a handicap. Time and again Sequoia has proved its sturdi-
tion for growth deals, adapting has meant once again going after ness. It still has its work cut out if it is not to turn into a fossil. ■

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 The Economist November 30th 2024 59

Briefing The fallout from the Adani scandal

A giant in American sights

DELHI AND MUMBAI

The Adani bribery case could upend India’s business environment, its politics and its international relations

IopNopen
THE COMING months, Mumbai will
a new airport and start to redevel-
its largest slum. To the north, in the
pany’s chairman, and seven others, includ-
ing his nephew. The allegation of their in-
volvement in a scheme to pay more than
its Securities and Exchange Commission
(SEC). Whatever the facts of the case, there
is reason to expect that Donald Trump,
state of Gujarat, the first phase of what is $250m in bribes to Indian officials does once in office, will make the charges disap-
billed as the world’s biggest copper smelt- not just threaten the future of a national pear or at least avoid putting pressure on
er will become fully operational. North- corporate champion. It casts doubts on In- India to co-operate, given his past chum-
wards still, near Pakistan’s border, power dia’s business environment that could de- miness with Mr Modi. Layer on to that Mr
generation will start at a wind-solar plant ter foreign investors and hinder other Indi- Adani’s plans to invest $10bn in America as
that, when finished, will be the world’s an companies’ fund-raising abroad. well as the incoming administration’s an-
largest green-energy site. Near India’s It is a political bombshell, too. The ticipated focus on China, against which it
southern tip, meanwhile, a new port will prime minister and Mr Adani both come sees India as a strategic partner.
open in Kerala with sufficient depth to from Gujarat and have worked closely to- Nonetheless, the charges strike at the
create the country’s first global transship- gether since Mr Modi was chief minister heart of the Modi brand by undermining
ment hub. And in nearby Sri Lanka, the there from 2001 to 2014. Mr Modi now faces his claim to have made India a better place
port of Colombo will inaugurate a new ter- calls from the opposition for a parliamen- to do business. And they disrupt an entity
minal designed to compete with a Chi- tary probe and Mr Adani’s arrest. The case that plays a central role in India’s economy,
nese-operated one next door. against India’s second-richest man also as its top importer of coal, its biggest priv-
Even these projects, all part of India’s raises new questions about judicial and ate thermal-power producer and its largest
Adani Group, barely convey the scale of a regulatory independence under Mr Modi non-state operator of ports and airports.
conglomerate so intertwined with govern- and could slow an infrastructure pro- The fallout could worsen if new informa-
ment priorities that it is almost synony- gramme that has won him many votes. Fur- tion emerges or if other affected parties
mous with Prime Minister Narendra Mo- thermore, it could complicate the warming back out of Adani projects or take legal ac-
di’s India. But they help to illustrate the po- relationship with America that has been tion against the company.
tential fallout from the indictment that his signature diplomatic achievement. The charges come less than two years
American prosecutors unveiled on Novem- Adani Group denies the charges from after what, at first, seemed to be another
ber 20th against Gautam Adani, the com- America’s Department of Justice (DoJ) and devastating threat to Adani Group, stem- ⏩

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 60 Briefing The fallout from the Adani scandal The Economist November 30th 2024

▸ ming from a report by a short-seller, Hin- cess to overseas markets is likely to be cur- liamentary probe and debate. After the
denburg Research, accusing the company tailed for the immediate future; a bond of- speaker (who is from the ruling Bharatiya
of massive fraud. That initially wiped out fering has already been withdrawn since Janata Party, or BJP) refused, opposition
more than $150bn in market value from its the indictment, and Moody’s and Standard members disrupted proceedings, forcing
listed firms and sparked similar opposition & Poor’s have issued negative rating out- the session to be suspended for two days.
calls for investigation. But the company ul- looks on the existing bonds of several Ada- Rahul Gandhi of the Congress party, who
timately recovered due in part to a lack of ni companies. leads the opposition in the lower house,
sanctions by India’s market regulator, and Some of Adani Group’s international had earlier accused Mr Modi of shielding
in part to improvements in financial per- partners are spooked. TotalEnergies, a Mr Adani from arrest and using him to en-
formance that persuaded many investors French oil giant, said it will halt new invest- rich the BJP. The opposition is now also
Adani was a viable business, not a fraud. ments in the conglomerate until the full raising questions about regulatory failures
The new American charges involve a impact of the bribery charges becomes and links between Mr Modi’s diplomacy
single contract responsible for less than clear. Kenya’s president, William Ruto, and Adani Group’s international business.
10% of the business of just one of Adani said he was cancelling two deals with Ada- Mr Modi has accused the opposition of
Group’s 11 publicly traded affiliates, Adani ni companies, including one to operate an “hooliganism”. Though he has not com-
Green Energy, according to the company. airport (though Adani says there had been mented on the Adani case directly, BJP spo-
And none of those affiliates has been ac- no binding agreement, and the deals were kespeople have noted that all the Indian
cused of wrongdoing: the charges target already in doubt). Bangladesh is stepping officials who were supposed to receive
individuals rather than entities. Five of the up efforts to renegotiate an electricity-sup- bribes according to the indictment were in
eight individuals—none of them Adani ply deal with Adani. states run by other parties, including Con-
employees—are accused of breaking Adani Group says that $10bn allocated gress. The SEC identified a local official
America’s bribery law, the Foreign Corrupt for foreign ventures may be curtailed. But whom it said Mr Adani met in 2021 to dis-
Practices Act (FCPA). The other three, in- it insists that all domestic projects will cuss the bribes as the chief minister of the
cluding Mr Adani and his nephew, are continue and that it has enough cash to re- southern state of Andhra Pradesh. At the
charged with securities and wire fraud in finance all debt for the coming year. It also time, that was Jagan Mohan Reddy, whose
connection with the alleged scheme. says it can cover more than 70% of all pro- party is not in the BJP’s coalition or the op-
In many ways, though, the charges are jected investment from internally generat- position alliance. He denies the allegation.
far more serious than the broader Hinden- ed funds, with the rest available from do-
burg allegations because of the influence mestic sources or those outside America Modifying ambitions
of America’s regulators on other countries’ and American influence. That may help Mr Modi weather the crisis.
capital markets. The charges also extend So far, the damage to the company’s But the disruption in parliament could de-
American jurisdiction to one of India Inc’s market value has been less than that seen lay important legislation, which was alrea-
most prominent figures, making it a dip- after the Hindenburg allegations. Nor has dy facing more resistance following the
lomatic issue as well as a legal one. Where- the damage spread to the broader stock- BJP’s loss of its parliamentary majority in
as the SEC’s civil case can proceed without market, where Adani Group has limited this year’s general election. The case also
his presence in America, the DoJ’s criminal sway due to its relatively low weighting in puts new pressure on India’s market regu-
one requires him to be extradited. Any ex- the main equity indices. lators, who have been looking into Adani
tradition request would have to go through Politically, however, the impact has since the Hindenburg allegations. A report
India’s government and courts. been explosive. When India’s parliament on 24 related investigations was expected
The likelihood of Mr Adani appearing began its winter session on November to be released soon by the Securities and
in an American court also hinges on the in- 25th, opposition leaders demanded a par- Exchange Board of India, the main market
coming administration. Daniel Pulecio- regulator. It is now reported to have
Boek of Greenberg Traurig, a law firm, opened a new probe into whether Adani
notes that the indictment’s timing, just Exposure and expenditure misled investors by not revealing the
months before Mr Trump takes office, may Adani Group American investigation.
suggest federal prosecutors wanted to act Meanwhile, on the diplomatic front,
before the new leadership takes over. A few there are signs that the Adani scandal
Debt by funding source, % of total
months into his first term, Mr Trump asked September 30th 2024
could heighten tensions with the Biden ad-
dozens of lawyers responsible for prose- ministration in its final months. The two
Global Domestic Other
cuting federal crimes to resign. A similar governments were already grappling with
housecleaning is expected this time. Banking Capital Banking another DoJ indictment alleging that Indi-
27 markets 23 42
Mr Trump has also criticised the FCPA, an officials were involved in the attempted
which applies to any company that has is- Capital markets murder of a Sikh activist in New York.
5
sued securities in America (as Adani has), American officials have also recently
Subsidiaries, capital spending, $bn
as “horrible”; the law, he argues, unfairly pressed India to curb exports of dual-use
Financial years ending March 31st
disadvantages American firms doing busi- items to Russia. A BJP spokesman suggest-
ness overseas. Though enforcement ac- 0 2 4 6 8 ed that the Adani indictment was timed to
tions continued at a good pace during his Enterprises disrupt parliament’s winter session. “There
first term, Mr Trump’s current stance on are baseless, conspiracy-filled allegations
prosecuting overseas malfeasance is un- Green being made against India from abroad,” he
Energy
clear. A former federal prosecutor says that Ambuja *
said. “We should assert that we will oper-
there is “virtually no chance” of Mr Adani Cements 2023 ate according to our own legal system, not
being extradited. Energy 2024 theirs.” Much will depend now on how
Even so, the charges raise questions Solutions 2025† both governments decide to handle the
about Adani Group’s future. The company Ports and case. Mr Adani and Mr Modi may yet sur-
has tapped overseas banks and capital SEZ vive the controversy, as they have done
markets for half of its borrowing, making it *No data †Forecast (before indictment) many others. But the damage to India’s im-
Sources: Bloomberg; company reports
sensitive to global opinion (see chart). Ac- age is already done. ■

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 The Economist November 30th 2024 61

Finance & economics

Tariff policy As this piece was published, Mr

Trump’s plans remained somewhat myste-
Get used to it rious. If he does want to introduce tariffs
on his first day in the White House, little
will stand in his way. Doing so by executive
order might break the terms of the US,
Mexico and Canada Free Trade Agreement
(USMCA), which replaced the North Amer-
With a Truth Social post, America’s president-elect reignites trade wars ican Free Trade Agreement during Mr
Trump’s first administration. Yet govern-
ONALD TRUMP has fired the first shot. so fell by 2%, reaching almost 21 to the dol- ments in Ottawa and Mexico City will
D Goods arriving in America from Can-
ada and Mexico will meet tariffs of 25% as
lar. At 1.41 to the greenback, the Canadian
dollar traded at its lowest since 2020.
struggle to prevent the incoming adminis-
tration from violating the agreement,
soon as he returns to the White House, the But markets then see-sawed again late which is due to be reviewed in July 2026.
president-elect wrote on November 25th. on November 27th, when Mr Trump said Mr Trump faces few other legal obstacles.
Mr Trump also said that he would impose that he had spoken to Claudia Sheinbaum, Whether Mr Trump actually will imple-
additional 10% tariffs on Chinese goods. Mexico’s president, and that she had ment tariffs is a more difficult question. It
He is not wasting any time in seeking to agreed to halt the flow of migrants heading is not just his apparent change of heart
exert America’s influence. to America’s southern border. Mr Trump after his conversation with Ms Sheinbaum.
Since Mr Trump’s victory in the presi- did not mention the tariffs he had prom- In 2019 he announced his intention to raise
dential election, investors had speculated ised. The peso duly erased much of its loss- tariffs on Mexico to 25%, but dropped the
(and hoped) that campaign tariff talk es from earlier in the week. plan a week later, when the Mexican gov-
might be employed merely as leverage to ernment agreed to send troops to turn
win concessions on other issues. Scott Bes- back migrants from Guatemala who were
→ ALSO IN THIS SECTION
sent, a former hedge-fund manager who heading for the American border.
Mr Trump has nominated to be treasury 62 America’s absurd veteran benefits Such is the fickleness with which busi-
secretary, had suggested that Mr Trump’s nesses relying on cross-border trade must
levies could be an opening gambit. 63 Frothy corporate-bond markets now contend. They are not taking any
The president-elect’s actions indicate a 64 How to avoid a debt crunch chances. Many are already building stock-
more chaotic approach. In posts on his so- piles of the sort of imported goods that
cial-media app, Mr Trump said that tariffs 65 Hong Kong’s brutal property slump might soon face steep tariffs. America’s
would stay in place until the flow of drugs 66 Buttonwood: Wall Street’s great men National Retail Federation, an industry
and immigrants into America had halted. group, expects import volumes to rise by
After the announcement, the Mexican pe- 67 Free exchange: Black Friday woes 14% year-on-year in November, compared ⏩

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 62 Finance & economics The Economist November 30th 2024

▸ with a 1% increase it forecast before the American spending

The price of
election. Mr Trump’s latest announcement Maple syrup and motor cars
is likely to accelerate this stockpiling. United States, goods imports, $trn

patriotism
A sudden increase in the cost of import- 1.5
ed products would raise prices for Ameri-
can consumers. Corie Barry, chief execu- 1.2
tive of Best Buy, an American retailer, said
on November 26th that the cost of incom- 0.9
WASHINGTON, DC

ing tariffs would be shared between com- China Veteran benefits have become absurd
panies, vendors and consumers. “These are 0.6
goods that people need and higher prices ONALD TRUMP delights in projecting
are not helpful,” she added. Analysts at
Barclays, a bank, suggest that the pro-
Canada
0.3 D strength, meaning he loves America’s
armed forces. During his first term, the
posed tariffs would raise American con- Mexico president-elect signed legislation to spend
0
sumer prices by 0.4 percentage points. more on defence, before proclaiming that
2000 05 10 15 20 23
Particular industries and regions would he had “accomplished the military”. On the
Source: BEA
suffer more pain. Despite its own oil-and- campaign trail, he doubled down, vowing
gas boom, America still imports 4m barrels further increases in defence spending and
of crude a day from Canada, for instance— As the arrival point for many immi- promising to tackle a recruitment shortfall.
much of which goes to the Midwest. More grants entering America illegally, its south- Yet he also wants to cut government waste,
than half of America’s imports of fruits and ern neighbour has faced particular ire from and has hired Elon Musk to lead a Depart-
vegetables come from Mexico. Carmakers, Mr Trump. “The number of friction points ment of Government Efficiency (DOGE).
which have built factories in Mexico to with Mexico is just enormous,” said Adam When it comes to the Department of
produce vehicles for the American market, Posen of the Peterson Institute for Interna- Veterans Affairs, these two instincts may
are especially vulnerable. America’s Ford tional Economics, speaking before Mr be in tension. The department’s budget
and General Motors are among those that Trump’s announcement. “Mexico is going has surged over the past two decades, ris-
would be affected, as are Japan’s Nissan to be both the most harmed, and the most ing from $86bn in today’s dollars (then
and Toyota, and Germany’s BMW and likely to be used as the demonstration equivalent to 2.6% of the federal budget) in
Volkswagen. The stock prices of several of case.” After Mr Trump’s opening salvo, Ms 2000 to $336bn (5% of today’s budget) this
the more exposed importers slumped on Sheinbaum suggested that she would fight year. It now receives almost three times as
September 26th. General Motors’s fell by back. “One tariff will follow another in re- much as the Department of Transporta-
9%; Ford’s by almost 3%. Big importers of sponse,” she explained. Then her account tion. Remarkably, this boom has occurred
materials from affected countries, includ- of the subsequent call differed to Mr despite a nearly one-third decline in the
ing Lululemon, which sells clothes, and Trump’s: Mexico’s president said that she veteran population, which has fallen from
Constellation Brands, which imports Mex- simply explained the migration measures 26m to 18m. Annual spending per veteran,
ican beers such as Corona, Modelo and Pa- her government already has in place. as a consequence, has risen six-fold.
cífico, fell by 2-4%. Some Canadian politicians had hoped Mr Musk is zeroing in on discretionary
to strike a deal with Mr Trump. Doug Ford, spending, which includes programmes
Trump’s piñata premier of Ontario and chair of the Coun- such as the department’s medical services.
Although threats to the commercial rela- cil of the Federation, which represents the But the main driver of its spending surge is
tionship between America and China have country’s provinces, had sought a separate mandatory outlays for disability compen-
attracted more attention, the economic bilateral agreement with America, cutting sation. Between 2000 and 2024, such pay-
damage to America’s neighbours has the Mexico loose. Justin Trudeau, Canada’s ments ballooned from $26bn, in today’s
potential to be far greater. Last year only prime minister, has sought to emphasise prices, to $159bn. Last year alone saw a 17%
15% of China’s goods exports went to the country’s common cause with America jump. And the department’s latest budget
America directly, compared with 78% of in criticism of China’s trade practices. For request forecasts that compensation will
Canada’s and 80% of Mexico’s. Most of both of America’s neighbours, the question soar to $185bn over the next two years.
their trade travels by land, and will be diffi- now is what exactly it will take to placate The current system was introduced
cult to redirect to alternative markets. Mr Trump. Will kind words be enough? during the first world war. It provides tax- ⏩
Chinese officials may, on the other
hand, be a little relieved. Although Canada
Time for a Modelo and Mexico would be hit hard by the tariffs A lot of sleep apnea
Share prices, November 18th 2024=100 Mr Trump proposed on November 25th, United States, benefits paid per
Trump announces
the levy on Chinese goods is lower than the eligible adult, $’000, 2023 prices
new tariffs 110 60% he had earlier suggested. Nomura, a 8
S&P 500 bank, nevertheless expects that extra ta- VA* disability compensation
Supplemental-security income
riffs of 10% would produce a 2% fall in the 6
General Motors Social-security
105 Chinese yuan, reducing it to around 7.4 to disability insurance
the dollar, its lowest in 17 years. And there Workers’ compensation 4
Constellation is always the potential for escalation.
Brands
100 Reading Mr Trump’s mind when it 2
comes to tariffs is impossible. But efforts
in foreign and finance ministries to avoid
Lululemon Ford 0
95 their full brunt, or to respond in kind, will
now be redoubled. If his threats come to 1999 2005 10 15 20 23
18 19 20 21 22 25 26 27 Fiscal years ending September 30th
pass, the impact on global commerce will
November 2024 Source: “The effects of combat deployment on
be immediate and extensive—and Ameri-
Source: LSEG Workspace veterans’ outcomes”, by Bruhn et al., 2024 *Veterans Affairs
can consumers will pay the price. ■

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 The Economist November 30th 2024 Finance & economics 63

▸ free monthly payments to soldiers who are the rolls since then, this implies 400,000 over the long term, these moves have left
injured or sick owing to their service. From may have been discouraged from work. A investors wondering what is going on.
1960 to 2000, roughly 9% of veterans qual- study in 2022 by David Silver, then of Part of the explanation is that the
ified for payments, typically for ailments Princeton University, and Jonathan Zhang, spread on residential mortgages has ticked
such as hearing loss or burns. The depart- then of McMaster University, found that up. With the Federal Reserve cutting inter-
ment assigns a rating from zero to 100% extra compensation had failed to boost est rates, investors have moved to price in
based on the severity of disabilities. In veterans’ mental and physical health. In- the risk that mortgage-holders refinance
2000 the average rating was 30%; monthly deed, suicide rates have increased relative their debts. However, the more dramatic
payments averaged the equivalent of $975 to comparable non-veterans. action has been in high-yield credit
today. Few qualified for the top tier. To rein in costs and focus the depart- spreads. The spread over Treasuries on
The modern programme bears little re- ment’s mission, policymakers could take a high-yield bonds fell from 3.7 percentage
semblance to its original form. This year page from the Congressional Budget Of- points at the start of the year to 3.2 this
6m veterans—or a third of the total—qual- fice’s recommendations. The non-partisan summer. Since September it has fallen to
ified for payments, with an average month- scorekeeper advises narrowing eligibility just 2.6 points. It is now near the record
ly benefit of $2,200. Veterans may file for disability compensation to veterans lows reached just before the global finan-
claims for an unlimited number of disabil- with severe service-connected conditions, cial crisis of 2007-09 (see chart).
ities and appeal against decisions as often lowering benefits for some veterans and in- The comparison is not entirely like-for-
as they wish. The average rating has troducing a means test. Reducing pay- like. Since the financial crisis, private cred-
climbed above 60%, and one in four dis- ments to former soldiers will never be pop- it has boomed, with funds lending directly
abled veterans now receives the once-rare ular, but it would be wise. America’s veter- to firms rather than doing so through pub-
100% rating. Such a designation ensures a an obsession has gone too far. ■ licly traded bonds. The industry tends to
generous $4,000 monthly payment for life, take on the most desperate borrowers,
with no conditions attached. Starting at meaning that such companies are no lon-
the age of 25, a former soldier could earn Corporate debt ger pushing up yields.
well over $2m in present-value terms. Yet the shift does reflect fast-changing
Why has this happened? From 2001 the Frothy holidays sentiment. It is another part of the Trump
department began to broaden its list of trade that has gripped markets in the past
presumptive conditions—where officials month, sending American shares and the
automatically assume the problem is ser- dollar soaring. The president-elect’s pro-
vice-related—to include ailments such as posed corporate-tax cuts would be espe-
type-2 diabetes, allowing any veteran with cially welcome for indebted firms, freeing
the disease to qualify for compensation. Everyone wants to lend to weak firms up cash to meet interest payments. Fast,
The reasoning for such expansion is not al- deficit-fuelled economic growth would
ways robust. For instance, a department- REDIT INVESTORS often talk in eu- also be a boon for such companies.
funded study found only “limited evi-
dence” linking herbicide exposure in Viet-
C phemisms. The safest bonds, with the
highest credit ratings and hence the lowest
Credit strategists describe the mood
among junk-bond investors as near eu-
nam to type-2 diabetes. In 2022 President yields, are almost always referred to as phoric. A survey of asset managers by Bank
Joe Biden’s PACT Act expanded eligibility “high-grade” rather than “low-yield”. Con- of America before the election found that a
further, with illnesses such as asthma and versely, the riskier stuff, where defaults are net balance of 1% expected high-grade
chronic rhinitis gaining approval, as some more likely, is politely dubbed “high-yield” debt to outperform high-yield debt in the
soldiers had picked up the conditions from rather than “low-grade”. Recently, though, coming months. After the election, a net
“burn pits” in Afghanistan and Iraq. the yield on supposedly high-yield bonds 41% expect high-yield debt to do better.
has not been all that high. Lower interest rates have also prompt-
Oh dark hundred Indeed, on November 24th the spread ed a search for yield, with investors now
Once on the payroll, veterans usually re- (or extra yield) enjoyed by investors in considering riskier bets. Fund managers
main beneficiaries for life. The stigma American high-yield bonds over that en- note that a year ago American investment-
around collecting payments has faded in joyed by investors in Treasury bonds fell grade corporate debt offered yields of 6%,
recent decades. Online videos with tips below the spread on fixed-rate residential compared with 5.3% now. By contrast, low-
about how to boost your disability rating mortgages for the first time. Since high- er-rated debt still offers around 6.9%.
are widespread. It is common for veterans yield bonds have a greater rate of default High-yield funds in both America and
to start on the programme at a 50% disabil- Europe have seen large inflows this year,
ity rating for, say, sleep apnea linked to ser- pushing spreads lower. As they fall, they
vice stress, only to then add more disabil- Taking credit also reduce the risk of a nasty surprise for
ities and have the rating increase to 100% US high-yield corporate bonds, spread over companies when they refinance existing
within a few years. “It’s a programme that Treasuries, percentage points debts, and so improve credit quality.
helps a lot of people who deserve it, but 20 Not all investors are getting in the party
getting on the programme becomes an es- mood, however. Data compiled by S&P
calator to higher disability ratings and 15
Global Market Intelligence show that cor-
compensation,” says Mark Duggan of porate-credit short positions (bets on pric-
Stanford University. “Once you qualify you es falling) have grown by 25% over the past
have an incentive not to get better.” 10 year, to $336bn. Meanwhile, businesses are
It is unclear if the spending is even ben- rushing to take advantage while they can,
efiting veterans. Research by Mr Duggan 5 with debt issuance surging as borrowers
and co-authors finds that disability com- seek to lock in attractive rates. Analysts ex-
pensation has reduced employment, with 0 pected $15bn-20bn of new issues in the
one in five new recipients leaving the work- week leading up to Thanksgiving, three to
2008 10 12 14 16 18 20 22 24
force after the change in 2001. As nearly 2m four times the usual volume. How many
Source: Bloomberg
additional working-age men have gone on will prove to be turkeys? ■

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 64 Finance & economics The Economist November 30th 2024

minister to be ejected from office. Here,

then, is a spendthrift politician’s guide to
placating the bond-market vigilantes.
The task boils down to three questions.
First, and most fundamentally, who should
you borrow from? This sets limits for ques-
tions two and three. These are what form
the debt should take (concerning currency,
maturity and instrument) and how to keep
borrowing costs from rising so high that
they snowball exponentially.
Take the decision on who to borrow
from first. The obvious choice is between
domestic investors and foreigners; a sec-
ond is between individuals and institu-
tions. At first glance, domestic investors of
both types might seem an easier crowd. In
rich countries, government bonds are as
close as they can get to a risk-free asset,
making such investors less likely than for-
eign ones to stage a “buyers’ strike”.
Inducements, meanwhile, are easier for
a government to offer to citizens. National
Debt management pride might work—think of the 20th-cen-
tury posters exhorting patriots to buy war
Crisis, to be averted bonds. Tax breaks can help, too, such as
Britain’s exemption of gilts from capital-
gains tax. Banks can be nudged to hold
bonds, which after all are among the safest
and most liquid assets on their balance-
sheets, with less onerous regulation. An ex-
How Trump, Starmer and Macron can avoid being crushed by deficits ample is the EU’s margin requirements for
derivative positions, which are lower if gov-
MERICA’S GROSS national debt is tough on fiscal policy while in opposition. ernment bonds are used as collateral.
A $36trn, or $107,000 per person. It is ris-
ing fast and will probably soon be rising
Then one of her first acts in office was to
raise borrowing by £30bn a year ($38bn, or
However, there are downsides to sink-
ing domestic capital into sovereign debt. It
even faster. If Donald Trump’s presiden- 1.2% of GDP). Voters, at least in their lead- is not only that there is less left to invest in
tial-election campaign was anything to go ers’ imaginations, simply will not tolerate the private sector, dampening growth. Lay-
by, his return to the White House heralds a higher taxes or spending cuts. na Mosley of Princeton University notes
flurry of tax cuts on everything from cor- A crucial task for many of today’s fi- that domestic investors, having better ac-
porate profits to tips. In the past fiscal nance ministers, unable to run a balanced cess to information, are often the first to
year, Uncle Sam spent $1.8trn (6.4% of budget, is therefore to buttress a lopsided dump a country’s bonds if its fiscal situa-
GDP) more than he collected in taxes. By one. Ms Reeves should be keenly aware of tion deteriorates. This can spark a cross-
one estimate, Mr Trump could raise bor- the dangers. Two years ago, her predeces- border exodus. What is more, if house-
rowing by $4.1trn in the coming decade. sor-but-one proved that debt crises are not holds and local banks are heavily exposed
It is not just America. The euro area’s just for emerging markets by announcing a to government debt, any restructuring in-
deficit is 3.6% of economic output, and bevy of unfunded tax cuts without care for flicting large losses might be politically
those of several big members—France the fiscal consequences. Gilt yields rocket- impossible. Governments will then also
(5.5%), Italy (7.2%), Poland (5.3%)—are ed, causing prices to crater, big pension struggle to restructure foreign debt, as in-
much higher. As for China, its public debts, funds to court bankruptcy and the prime vestors will not accept losses from which
smuggled by local governments into domestic bondholders are exempted.
opaque financing vehicles, exceed 120% of The second decision, on what form
GDP and are expected to rise to nearly 150% Endangered hawks debt should take, is just as thorny. Issuing
by 2027. India’s deficit is approaching 8% G7 countries, general government bonds on the public markets helps drum
of its GDP; Brazil’s a hair-raising 10%. net debt, % of GDP up demand, but puts the country’s weak fi-
Although no finance minister thinks Est. 180 nances under the spotlight. It also invites
this situation can go on for ever, you would Japan continuous judgment from traders, by bid-
150
search in vain for serious political will to ding yields up or down. Untradeable debt,
correct it. France’s minority government Italy 120 including loans from commercial banks or
hangs by a thread, as opposition parties re- other countries, dodges publicity but costs
United States 90
fuse to help pass a budget including tax more. The wrangling required by loans
rises, even as government-bond spreads France
Britain
60 from multilateral outfits, like the IMF, en-
widen. Scott Bessent, Mr Trump’s pick for Germany sures that they are a last resort.
treasury secretary, has in the past been 30 What is the ideal length of borrowing?
concerned about the size of the deficit. But Canada 0 Long-term debt is usually more costly, but
he will have to contend with a president puts off the need to refinance. This limits
2000 05 10 15 20 * 24
who shows little interest in being prudent. damage if bondholders sour on the coun-
Source: IMF *Estimate for Japan
Rachel Reeves, Britain’s chancellor, talked try, or if rates start rising. Take America’s ⏩

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 The Economist November 30th 2024 Finance & economics 65

▸ sovereign debt, with an average maturity of ment bonds. The intended target of these around half the price they might have
six years, meaning much of it was issued rules, she says, might be financial stability fetched a couple of years ago.
when money was cheaper. As a result, Un- rather than lower borrowing costs. But “if it Hong Kong, long defined by sky-high
cle Sam paid an average interest rate of quacks like a duck, if it has feathers, if it property prices, has been experiencing a
3.4% in the fiscal year that ended in Sep- swims, it’s probably a duck.” vicious slump. Home prices have fallen by
tember—lower than the 4.4% now available The catch is that fears of inflation, over a quarter since late 2021. In September
on ten-year Treasury bonds. which electorates loathe, have now re- they reached their lowest level in eight
Most important is the choice of curren- turned with a vengeance. Governments years; the number of unsold homes had al-
cy. Rich countries can issue debt in their might think fiscal restraint will cost them ready hit a two-decade high. Commercial
own, which investors trust their central re-election; America’s Democrats went no- property is in trouble, too. Office vacancy
banks not to devalue. Countries with poor- where near austerity and were still booted rates are at a 25-year high. Rental prices
er records may struggle to market local- out of office by voters sick of rising prices. have fallen by 40% from a peak in 2019, ac-
currency debt abroad. Even those that can Any hint that their borrowing made infla- cording to Savills, a property firm.
do so may choose to issue at least some tion worse would probably see politicians Some of Hong Kong’s problems are
debt in American dollars, in return for low- elsewhere treated similarly. That leaves ei- global in nature, namely interest-rate rises
er interest rates. The snag was demon- ther belt-tightening or the risk of imitating and more people working from home.
strated vividly by the Latin American and Britain’s gilt-market crisis of 2022, which Starting in mid-2022 lenders raised rates
Asian debt crises of the 1980s and 1990s. would seem certain to trigger defenestra- five times, to their highest since 2008. Hy-
Foreign-currency debts are vulnerable to a tion. In the end, any strategy for running brid working has clobbered the office mar-
doom loop in which a plunging exchange large deficits bangs up against an iron law: ket. Last year PwC, a consultancy, found
rate makes them unaffordable, which caus- you have to stop at some point. ■ that 76% of employees in Hong Kong were
es the currency to devalue even more. working partly from home—well above the
Moreover, countries borrowing in their 59% average for the Asia-Pacific region.
own currency have far more scope to sup- Housing in Hong Kong Many of the slump’s other causes are

Looking peaky
press interest rates that threaten to make unique to Hong Kong. The mainland’s eco-
their debt unsustainable—the third chal- nomic malaise has weighed on the market,
lenge of running a large deficit. “Financial and the yuan’s depreciation against the
repression” might horrify free-market American dollar—to which the Hong Kong
types, but there are endless ways for gov- dollar is pegged—has made local property
ernments to enact it. Most, says Carmen pricier for Chinese buyers. Firms have
Reinhart of Harvard University, boil down HONG KONG struggled to recover from the territory’s
to creating a captive market for the debt. The city suffers a brutal property slump long and strict covid-19 restrictions. And
Chinese-style capital controls prevent the scores of multinational companies have
population from stashing savings abroad; UXURY HOMES high on the Peak, a ver- scaled back local operations amid geopo-
caps on bank-deposit rates can nudge
them to higher-yielding sovereign bonds.
L dant mountain towering over Hong
Kong, have long been above the cares and
litical tensions. There are fewer chief exec-
utives to buy palatial homes on the Peak.
More effective still is forcing banks to concerns of the rest of the city: residents The government has tweaked the rules
buy debt. Jason Tuvey of Capital Econom- look down from sprawling mansions onto in an effort to shore up the market. In Feb-
ics, a consultancy, points to Turkey, with the dense knot of tower blocks in which ruary it removed extra stamp duty for for-
40% of its debt in lira, as a prime example. most people live. But recent property woes eign and second-home buyers, but prices
Starting in 2022 new rules obliged local have brought even the loftiest areas down began falling again after just two months.
lenders to buy government bonds (if lend- to Earth. The family of one indebted prop- Interest-rate cuts—the first in four years—
ing above a certain interest rate, for in- erty investor sold eight swanky Peak prop- and the relaxation of the maximum al-
stance). Combined with pressure on cen- erties between July and October for lowed loan-to-value ratio appear to have ⏩
tral bankers to loosen monetary policy, this
sent the yield on ten-year debt plummet-
ing, from 24% in September 2022 to 9% in
May 2023. Once both policies were re-
versed, the yield shot back up above 25%.
The need for a reversal shows how pain-
ful financial repression’s side-effects can
be. Suppressing the central-bank rate risks
rampant inflation (which in Turkey rose to
86%); forcing lenders to fund the deficit
makes matters worse. Penalising them for
lending to the private sector, not the gov-
ernment, may result in loans drying up—a
high price to pay for cheaper debt.
Although it might seem that rich coun-
tries would balk at such measures, a paper
in 2015 by Ms Reinhart found that many
used similar policies to reduce their debt
after the second world war. Asked if they
could be repeated, Ms Reinhart points to
post-financial-crisis rules in places such as
America, Britain and the EU forcing banks
and pension funds to “recapitalise” and
hold more liquid assets—meaning govern- Cheap views

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 66 Finance & economics The Economist November 30th 2024

▸ had more impact: the number of home pur- to boost its coffers by issuing close to months of this year were less than 30% of
chases reached 4,697 in October, more HK$96bn ($12bn) in debt this year—the the amount raised in the same period of
than double the number a year earlier. most in a quarter of a century. 2018. The workforce has shrunk by almost
Home prices also increased month-on- Worryingly, there are signs that this cri- 200,000 in recent years, a big fall in a city
month, for the first time since April. sis is structural, not cyclical. Hong Kong of 7.5m. Hong Kong contends with one of
It would, however, take many more faces doubt over its future. Draconian na- the world’s lowest fertility rates, and by
months of good news to clear the city’s tional-security laws and a lack of clarity 2040 a third of its population will be aged
property glut. A peaky property market is about the city’s role within, rather than 65 or older. The government has tried to
particularly problematic for Hong Kong’s alongside, China’s economy have harmed plug the gap with mainland talent, intro-
government, which relies heavily on rev- its image overseas. Some of Hong Kong’s ducing visa schemes. With luck, some of
enue from land sales to fund its low-tax pillar industries have been wobbly. Funds the talented mainlanders will have a taste
system. The government has said it will try raised on its stockmarkets in the first nine for swanky mountaintop homes. ■

BUTTONWOOD
The great men of Wall Street
Despite regulators’ best efforts, finance is still dominated by bold individuals

T THIS TIME of year, as they await ter-intuitive. Compare the current leader- cians from the glare of competitors.
A their Christmas bonuses, people on
Wall Street ponder their worth. Two
ship of America’s largest banks with those
hauled before Congress after the global
Although Gordon Gekko might not have
the numerical acumen to thrive in to-
questions can sharpen the mind of even financial crisis of 2007-09. That the coun- day’s financial system, he would certain-
the most senior employee. Imagine first try now has bigger banks run by smaller ly recognise its egotism.
accepting a position in Donald Trump’s bosses is an inescapable conclusion. Of It is also still eminently possible for
new administration. How great a fi- the crisis-weathered class, only Mr Dimon individuals to blow up firms. Mr Hwang’s
nancial loss would your employer suffer? remains. The replacements are less ma- folly earns him a statue in the pantheon
Before Mr Trump picked Scott Bessent cho. Dick Fuld, the hard-driving leader of financial disaster alongside Sam
as his treasury secretary, two of Amer- who led Lehman Brothers to bankruptcy, Bankman-Fried (who ran FTX, a crypto-
ica’s biggest financial institutions would struggle to be promoted today. currency exchange that collapsed in
weighed that question. Analysts quizzed In reality, the action (and idolatry) have 2022) and Nick Leeson (whose deriv-
Jamie Dimon, the boss of JPMorgan moved elsewhere in the financial system. atives trades nuked Barings Bank in
Chase, about whether he would leave the That includes firms such as Apollo in 1995). The location of rogues might
bank for public office. Shareholders of private markets, and also institutions change: these days working-class Mr
Apollo worried about a future without designed specifically to avoid concentra- Leeson would be underqualified to join
Marc Rowan, who has transformed the tions of power. “Multi manager” hedge the credential-clinging cadres of junior
investment firm in recent years. funds spread investment decisions be- bankers; Mr Bankman-Fried, by contrast,
The second question is dicier still: tween hundreds of largely independent was too qualified and started his career
how much damage could you inflict on and often competing stockpickers. Yet it is at Jane Street. Rest assured, though, that
your employer? Whether by fat fingers or hard to imagine Citadel or Millennium more like them are lurking somewhere.
fraud, the quantum of losses an individ- prospering as much without their promi- For all the succession planning and
ual is trusted to avoid is a good proxy for nent founders, who shape the structures in risk management, finance will never
their importance. Anyone can steal a which their underlings compete. The top really be a team sport. That is because,
paper clip. Few are able to tank a hedge brass at quant-heavy firms such as Jane perhaps with the exception of staid
fund (and, indirectly, a big bank) with Street are more secretive, but doubly keen activities like deposit taking, its in-
huge, concentrated trades like Bill to shield their most talented mathemati- stitutions are in a permanent state of
Hwang, an investor who received an renewal. When firms survive the loss of
18-year prison sentence on November visionary founders, supine managers
20th. Wall Street rewards those who are often take their place. The same thing
very good at doing risky jobs. happens when they become big and
This parlour game also elucidates one diversified. Risk takers leave and the
of the most important truths of finance. cycle starts afresh. After the death of
For an industry obsessed with managing Siegmund Warburg, the peerless post-
risk, it remains greatly exposed to the war banker, his outfit was bought by
triumphs and failures of a small number what became UBS, a Swiss lender. The
of individuals. From Warren Buffett at operation lost its lustre and its best
Berkshire Hathaway to Ray Dalio at struck out: founders of Moelis and Cen-
Bridgewater Associates, firms reflect the terview, two top advisory houses, used to
style of their leaders to an uncanny work there. Mr Hwang hails from Julian
extent. Tech firms may run finance close, Robertson’s Tiger Management, a hedge
but nowhere else in business is hero fund known for its successful offspring.
worship quite as common. Today private-market firms and hedge
A financial equivalent to the great- funds may be ascendant, but in time the
man theory of history might seem coun- same thing will happen to them.

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 The Economist November 30th 2024 Finance & economics 67

FREE EXCHANGE
Dark situation

Why Black Friday sales grow more annoying every year

blend Blender, which is sold for around $170. He prefers the Vita-
mix, and is willing to pay perhaps $200 more for it. Then, in late
October, he receives an email from a small retailer offering the
Cleanblend for just $120. He knows the Vitamix will go on sale
soon, but does not know how big the discount will be, and perhaps
the other retailer will have sold out of Cleanblends by then. He de-
cides to make a purchase. Two weeks later, while whizzing up a
morning smoothie in his Cleanblend, he sees the Vitamix has
been discounted to just $300, and feels a pang of regret.
As this tale indicates, retailers have an incentive to offer dis-
counts early, ahead of rivals, since doing so just might snag them
an extra few sales. Some customers might enjoy this long window
during which they can peruse discounted goods. But, just as on
the Chicago Mercantile Exchange, there is an advantage for buy-
ers when they are able to see all offers at once. And anecdotally, at
least, the prolonged approach to Black Friday quickly becomes ex-
hausting. Rather than a short frenzy, fuelled by leftover turkey
sandwiches and pie, the discount season feels like a never-ending
barrage of targeted advertisements and email reminders.
The expansion of Black Friday is not necessarily to the advan-
tage of retailers in aggregate, either. Although there is a benefit to
kickstarting a sale before your competitor does, offering dis-
HEN IS BLACK FRIDAY? The obvious answer is a literal one. counts six weeks early doubtless means that retailers are giving up
W It is the day after Thanksgiving, an American holiday when
families gather to gorge on turkey and pumpkin pie, which this
full-price purchases. This dynamic is even clearer with Christmas
sales. When these actually started on Boxing Day, last-minute
year falls on November 29th. Yet Black Friday is not simply a date, present buyers whose demand was surely inelastic (what choice
it is also an idea. The day traditionally marked the beginning of do they have on Christmas Eve?) were forced to pay full price.
the festive shopping season, when people would start to stock up Now, more often than not, they are able to snag a last-minute deal.
on Christmas presents. Today, it is the time of year during which If each retailer acts out of rational self-interest, and nudges for-
everything goes on sale. And pinpointing when this begins is a ward their sales a little each year, the collective problem becomes
much more difficult endeavour. In a bid to find an answer your col- a little worse each season. Even if the majority of consumers and
umnist searched her inbox for the earliest Black Friday discount retailers might prefer that holiday sales start on Black Friday and
offered by a retailer. The missive came in early October. last for a short period, the equilibrium cannot hold.
To understand this baffling development, consider the under-
lying economics. American retail is a fiercely competitive mar- Judging the problem
ket—but that is different from being a “perfectly” competitive This kind of market failure, which economists call “unravelling”, is
market. Léon Walras, a brilliant 19th-century French economist, common in “matching markets”, such as job markets for doctors
defined such a market as existing when large numbers of buyers and lawyers. In his book, “Who gets What—and Why?”, Alvin
and sellers meet, with perfect information, in order to exchange Roth of Stanford University, who in 2012 shared a Nobel prize for
homogeneous products. In a perfect market no single seller has work on matching markets, described how acute the problem
the power to set prices across the board, and there are no barriers once was in the market for clerkships. Although judges in the
to entry for new arrivals. Although real life is almost never like this, most prestigious courts were more than happy to wait to see who
it comes close in markets for standardised commodities, such as a was the most talented student at Harvard University before offer-
bushel of a certain grade of wheat. At the Chicago Mercantile Ex- ing them a clerkship, there was a strong incentive for judges in
change, there is pretty perfect information about what is being slightly less prestigious courts to make earlier offers to students
bought and sold. There are lots of buyers and sellers, who all gath- who were very likely to be at the top of their piles, so as to pinch
er in the same place at the same time. There are lots of trans- the best. This forced the most prestigious courts to respond. As a
actions. And sellers compete exclusively on price, which should consequence, offers crept earlier and earlier. They also “explod-
equate to the marginal cost of producing an extra bushel. Need- ed”. For early offers to work they had to expire. Mr Roth recounted
less to say, none of them offer Black Friday deals. the tale of a student in 2005 who boarded a flight from one inter-
The markets for toaster ovens or slippers do not quite operate view to another and received an offer from the judge he had just
in the same manner. For a start, goods are differentiated by design met via voicemail while taxiing. By the time he landed the offer
and quality. Information is far from perfect, hence the popularity had been pulled. The flight was just 35 minutes long.
of recommendation services such as The Strategist and Wire- When it comes to clerkships, judges have managed to establish
cutter, which test and rank products. Retailers compete on price, rules about how offers ought to be made, which has helped reduce
of course, but, critically, they also compete on timing. the scale of the problem. Alas, no such solution is possible for re-
Imagine a customer who is looking to purchase a blender. Bob tailers—clubbing together to decide how best to sell things would
is torn between the “top pick” on Wirecutter—the Vitamix 5200, a understandably be frowned upon by competition regulators. By
pricey $450 model—and a cheaper runner-up option, the Clean- 2035 Black Friday might, therefore, be a summertime affair. ■

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 68 The Economist November 30th 2024

Science & technology

Nutrition tional content is poor, or does the process-

Still processing
ing somehow pose risks in itself? New re-
search may soon provide answers that
could reformulate what people eat.
At the turn of the 21st century Dr Mon-
teiro noticed that people in Brazil were
buying less sugar and oil than in the past.
Yet rates of obesity and metabolic diseases
Ultra-processed foods harm health. Scientists are racing to find out why were still rising. This coincided with the
growing popularity of packaged snacks
OR MILLENNIA, people have altered ticular target is “ultra-processed foods” and ready-made meals, which were loaded
F food to please their palates. More than
3,000 years ago Mesoamericans, living in
(UPFs), a relatively recent label put forward
by Carlos Monteiro, a Brazilian scientist.
with sugar, fats and other additives.
In 2009 Dr Monteiro came up with a
what is Mexico and Central America today, Robert F. Kennedy junior, Donald Trump’s classification system, called Nova, that
cooked corn kernels in a solution of wood nominee for secretary of health, has lik- sorts foods into four buckets depending on
ash or limestone. The process, known as ened processed food to “poison” and the degree of processing they undergo.
nixtamalisation, unlocked nutrients and promised to reduce the share of UPFs in The first group includes minimally pro-
softened the tough outer shells of the corn, American diets. In November 2023 Colom- cessed foods including fruit and milk. The
making it easier to grind. bia imposed a tax on highly processed second covers basic ingredients like butter
With the invention of tinned goods and foods and drinks. Authorities in Brazil, and sugar. Next are foods such as tinned
pasteurisation in the 19th century, food al- Canada and Peru have advised the public vegetables, bread, and cold cuts.
chemy became possible on an industrial to limit consumption of these foods. In The fourth group, UPFs, includes heav-
scale. Processing innovations made food Britain parliamentarians are investigating ily processed items, for example fizzy
cheaper, more convenient and plentiful. the effects of UPFs on people’s health. drinks, sugary cereals and frozen pizzas.
According to the UN, the average daily At the heart of the debate is a question: These are made with ingredients not typi-
food supply available for a person in the are UPFs unhealthy because their nutri- cally found in a home kitchen, such as hy-
rich world increased by over 20% between drogenated oils, high-fructose corn syrup,
1961 and 2021, to 3,500 kilocalories. In that flavouring agents and emulsifiers. UPFs are
time, obesity rates have more than tripled; → ALSO IN THIS SECTION made by breaking down whole foods into
today, nearly one in three people globally components such as sugars, proteins,
is obese or overweight. 69 Using AI to train robots starches and fibre. These are chemically
Now concerns are growing that the 70 The Royal Society’s Musk problem modified and reassembled along with ad-
heavy processing used to cook up cheap, ditives like artificial colours and sweeten-
tasty nibbles may itself be harmful. A par- 71 Deforestation also hurts farmers ers to make the food more appealing. ⏩

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 The Economist November 30th 2024 Science & technology 69

▸ Since the 1990s the share of UPFs in di- improve their shelf life. But this also makes that processing, and not just nutrients,
ets worldwide has grown; they now ac- foods more energy dense. leads to poor health, policymakers will
count for more than half of the calorie in- Another theory—as anyone who has face another difficulty: the definition of
take in America and Britain (see chart). tried, and failed, to eat just one crisp from UPFs remains woolly. The Nova classifica-
And for several decades, evidence has also a bag can attest—is that highly processed tion has no tolerance at all for artificial in-
been building that these foods are harmful foods are also engineered to be irresistible. gredients. The mere presence of a chemi-
in some way. Numerous studies show that UPFs often contain combinations of nutri- cal additive classifies a food as a UPF, re-
people who consume diets high in UPFs ents—higher in either fat and sugar or fat gardless of the amount. This can lead to
tend to have more health problems, includ- and salt, or carbohydrates and salt— confusing health outcomes. A recent ob-
ing obesity, type-2 diabetes, cardiovascular known as “hyper-palatable” mixes. These servational study from Harvard University,
disease, various cancers and mental-health combinations do not appear in nature and for example, found that whereas some
problems. UPFs often contain higher con- tend to encourage people to eat more UPFs, such as sweetened drinks and pro-
centrations of fat, sugar and salt than pro- quickly, not giving the gut enough time to cessed meats, were associated with a high-
cessed foods, which could explain their tell the brain that it is full. er risk of heart disease, others, like break-
negative effects. But a recent analysis by To test these ideas Dr Hall is running fast cereals, bread and yogurt, were instead
Samuel Dicken and Rachel Batterham at another study where 36 people check into linked to lower risks for cardiovascular dis-
University College London reviewed 37 his diet hotel for a month. They will be ro- ease. Dr Astrup warns that the current
studies and found that even after adjusting tated through four different diets: two sim- classification risks “demonising” a lot of
for fat, sugar and salt UPFs were still ilar to those in his previous study and two healthy food. Insights from Dr Hall’s work
strongly linked to poor health. That sug- new ultra-processed regimes. One of these could therefore help refine the under-
gests there is more to their harm than just a is low in both energy density and hyper- standing of UPFs, paving the way for more
poor nutrient profile. palatable foods, while the other is high in balanced and useful guidelines. ■
Where those harms come from is still energy density but low in hyper-palatable
unclear, however. With so many compet- combinations. As before, all diets are bal-
ing factors that could also explain poor anced for key nutrients and Dr Hall is Robotics

Smart moves
health—such as income, education and so- tracking changes in the participants’
cial conditions—observational studies weight and other health measures. Though
alone cannot offer conclusive answers. the full results of the study are not expect-
Arne Astrup, a researcher at the Novo Nor- ed until next year, early findings suggest
disk Foundation in Denmark, argues that that both hyper-palatability and energy
most of the studies that make statistical density seem to cause most of the excess
adjustments to try to isolate the effects of calorie consumption of UPFs. Dr Hall is A new form of artificial intelligence
processing are “not good enough”. hopeful that his study will help to move the speeds up the training of robots
A better way to assess the question is conversation on UPFs from opinion to sci-
with a randomised controlled trial (RCT), ence. The extent of reformulations of food NSIDE THE robotics laboratory of the
where researchers track a person’s food in-
take and control for all other variables. In
that might be needed, meanwhile, is uncer-
tain. If the harms are found to be focused
Ibridge,
Toyota Research Institute (TRI) in Cam-
Massachusetts, a group of robots
one of the few such trials, published in on just a few ingredients or processing are busy cooking. There is nothing special
2019, Kevin Hall, a researcher at the Na- methods, foodmakers could easily adapt. about that; robotic chefs have been around
tional Institutes of Health (NIH) in Amer- However, says Dr Hall, if it turns out to be for a while. But these robots are more pro-
ica, admitted 20 adults to the NIH Clinical a “combinatorial nightmare” of many in- ficient than most, flipping pancakes, slic-
Centre for four weeks. The participants re- gredients or processes that cause harm ing vegetables and making pizzas with
ceived either ultra-processed or minimally only in certain combinations, solving the ease. The difference is that instead of be-
processed foods for two weeks before problems of UPFs will become much more ing laboriously programmed to carry out
swapping diet for the next fortnight. Par- challenging. Properly mapping the territo- their tasks, the Cambridge robots have
ticipants in both diets had access to the ry, though, is the first step. been taught only a basic set of skills. Using
same amount of calories and nutrients like Even if the results show conclusively the wonders of artificial intelligence (AI),
sugars, fibre and fat. People were free to they quickly improved upon those skills to
eat as much or as little as they wanted. become far more dexterous.
The results were striking. People on the Foods for thought Despite their extraordinary culinary ca-
ultra-processed diet ate about 500 more Consumption of ultra-processed foods pabilities, these robots are not destined for
calories per day than those on the unpro- as % of total calories, by study, 2015-21 a career in catering. “If you give a robot the
cessed one. They also ate faster and gained 0 25 50 75 confidence to work in a kitchen, it will also
an average of 1kg (2.2 pounds) over two Britain have the confidence to work in a factory or
One study
weeks. On the other diet, participants lost United States a person’s home,” says Gill Pratt, Toyota’s
a similar amount of weight. Dr Hall says Canada chief scientist. Cooking involves lots of
that, though the study was short and con- Brazil complex tasks, such as picking up and
ducted in an artificial setting, the results Australia
placing items, pouring liquids and mixing
suggest that excess amounts of salt, sugar ingredients. All this makes a kitchen an
Malaysia
and fats might not be fully to blame for the ideal training ground for experimenting
France
ill effects of processed food. with a new method of using generative AI
Further RCTs will be needed to confirm Spain to train robots known as “diffusion policy”.
Dr Hall’s results. Even then, a bigger ques- Mexico Diffusion, already used to help AI mod-
tion remains—why do people overeat South Korea els generate images, has been developed as
UPFs? Dr Hall has some ideas. One is that Italy a way to speed up the training of robots by
highly processed foods pack more calories Source: “A systematic review of worldwide consumption of TRI and roboticists at Columbia University
per bite. When creating them, manufactur- ultra-processed foods: findings and criticisms”, and the Massachusetts Institute of Tech-
by M. Marino et al., Nutrients, 2021
ers often remove water to dry the food, to nology (MIT). To explain how diffusion ⏩

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 70 Science & technology The Economist November 30th 2024

▸ works, Russ Tedrake, TRI’s vice-president The Royal Society

of robotics research and a professor at MIT,
uses a typical kitchen task: teaching a ro- Fellow feelings
bot how to load a dishwasher, once its fel-
low machines are done with their cooking.
Traditionally, robots are programmed
with reams of computer code. This can be
produced manually or created by remotely Elon Musk’s membership has
moving the robot’s arms and hands to rep- led to a high-profile resignation
licate the actions required. A robot in Cam-
bridge, equipped with camera eyes and SAAC NEWTON was a self-interested ty-
touch sensors to provide feedback, was
taught in the remote-control manner to
Ispouted
rant. James Watson, a Nobel laureate,
racist and sexist notions all his
pick up dishes and stack them in the dish- life. These men nevertheless managed to
washer. This involved about 100 such de- keep hold of one of the British scientific
monstrations, each slightly different, to establishment’s highest baubles—fellow-
deal with the various items and how they ship of the Royal Society, the oldest scien-
should be stacked. tific academy in the world. The latest
Yet even 100 demonstrations are not member of that club to be accused of un-
enough to cover every eventuality, which is becoming behaviour is Elon Musk, the
where diffusion comes in. The process is a richest man in the world and, now, a confi-
bit like learning how to build a gizmo by dant of President-elect Donald Trump. His
taking it apart and trying to reassemble it. A cut above continued inclusion—despite what some
For image generation, this involves adding other scientists have called “anti-scientif-
random “noise” to a picture until it be- based in Silicon Valley, recently teamed up ic” behaviour—has led to a fracas.
comes unrecognisable and then reversing with Boston Dynamics. Widely seen as The situation came to a head on No-
the process to learn the steps involved in one of the world’s leaders in developing vember 25th when Dorothy Bishop, a re-
generating a new, realistic image. walking robots, Boston Dynamics is work- nowned neuropsychologist at the Univer-
For robot training, the AI uses the ac- ing on a lighter and smaller version of At- sity of Oxford, announced that she had
tions it has been taught to randomly gener- las, its hulking humanoid, which can run, taken the rare step of resigning from the
ate potential new movements, which are jump and even perform cartwheels. The society in protest at its refusal to oust him.
then refined into useful actions that can new Atlas will provide an agile robot which In a blistering post on her personal blog
deal with new environments. That could the TRI aims to equip with an LBM. she declared that, because of what she saw
be how to pick up a plate placed at an un- The idea is that, initially at least, these as Mr Musk’s tendency to spread misinfor-
usual angle or an oddly shaped bowl. The robots will be deployed in factories, most mation and attack scientists online, she
robot will keep trying new actions until it likely making vehicles (both the TRI and felt she could no longer show her fellow
succeeds in its task. By using diffusion Dr Boston Dynamics are part of big carmak- fellow the courtesy required by the soci-
Tedrake says it was possible to train a ro- ers: Toyota is Japan’s largest carmaker and ety’s code of conduct.
bot in a couple of hours to load a dishwash- in 2021 Hyundai, a big South Korean pro- Mr Musk was elected to the Royal Soci-
er, whereas programming one convention- ducer, bought a majority stake in Boston ety in 2018 along with 49 other fellows. Al-
ally would have taken a year or more. Dynamics). Factories are a relatively struc- though not a scientist himself, he was hon-
Having got diffusion to work for a vari- tured environment in which automation is oured for his extensive record of techno-
ety of different tasks, the researchers are already widely used, which makes the in- logical innovation: SpaceX, his space-tra-
now trying to bring hundreds of such tasks troduction of AI-powered humanoids easi- vel company, delivers more material into
together into what they call a large behav- er. Humanoids are widely seen as the most orbit than any rival, public or private;
iour model (LBM). This will be analogous efficient shape to use in a human-built en- Tesla, another of his firms, has pioneered
to a large language model (LLM), which is vironment, rather than wheeled or tracked the manufacture of electric vehicles.
used to power AI services like ChatGPT. In- robots. The same is true in homes. As transformative as his business en-
stead of generating answers to questions Eventually the car factories could them- deavours have been, it is his behaviour on
based on information which an LLM has selves mass-produce robots, which would X, the social-media company he owns, that
been trained on, an LBM contains sets of bring prices down and allow their intro- troubles Dr Bishop and her sympathisers.
behaviours which can be used to generate duction into other areas, such as helping “He seems to have moved to a position of
new behaviours. In its simplest form, this care for the elderly and people with dis- being blatantly anti-science,” she says,
means the skills involved in picking grocer- abilities. Elon Musk appears to have a simi- which sits uneasily with the requirement
ies from supermarket shelves (which one lar strategy planned for Optimus, a hu- imposed on fellows to uphold high stan-
of the Cambridge robots has learned how manoid AI-powered robot being devel- dards in their work and conduct.
to do) can also be used to select compo- oped by his electric-car company, Tesla. Mr In her blog post she highlights his
nents in a factory making cars. Musk has not revealed any details about “downplaying” of climate change, occa-
These new skills, once acquired, can the form of AI which Tesla is using. sional amplification of vaccination hesi-
then be transferred wirelessly from one ro- All this may seem to herald a future in tancy, and his persistent attacks on indi-
bot to another using what is called “fleet which humans are no longer required in vidual scientists, notably Anthony Fauci,
learning”. This will also help speed up ro- factories. But, says Dr Pratt, as manufac- who led the Trump administration’s re-
bot training. In time, even basic training turing becomes more flexible, and a great- sponse to the covid-19 pandemic. (The
could be made faster and simpler. Instead er variety of products are made on the Economist’s analysis of Mr Musk’s social-
of having someone move its limbs remote- same line, factories will become ever more media activity finds a sharp increase in po-
ly, the robot could simply watch someone reliant on a human workforce to manage litical posts in recent years.) Now that Mr
demonstrate how a job is done. the changes and maintain the robots. Musk looks likely to co-run Mr Trump’s
To further this work the TRI, which is Many hands make light work. ■ new Department for Government Efficien- ⏩

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 The Economist November 30th 2024 Science & technology 71

Climate change

It grows on trees

Deforestation doesn’t just hurt the climate. It also costs farmers millions

ECADES OF INCREASING maize and maize-cropping time. Maximum air tem-

D soyabean production have turned Bra-
zil into an agricultural powerhouse. They
peratures increased by approximately
2.5°C over the same period (from 30°C to
have also led to the destruction of vast 32.5°C). Less rain and hotter days mean
swathes of the Amazon rainforest. That smaller harvests and smaller revenues.
has long put farmers and environmental- Preventing further deforestation in Bra-
ists at loggerheads. But a study released in zil’s southern Amazon could slow the
October by the Federal University of Mi- trend. If clear-cutting continues apace,
nas Gerais (UFMG) and Rainforest Foun- farmers of all stripes (including cattle
dation Norway (RFN) shows the extent to ranchers) are expected to face even harsher
which deforestation is hurting farmers too. conditions. One estimate says that by 2050
The report shows that the practice of they will be losing up to $1bn a year.
The great resignation clear-cutting (removing all trees from a Reforesting could even reverse rainfall
given area) in the Brazilian Amazon led to trends: the report concludes that if the
▸ cy, an advisory body that may wield influ- reduced crop yields, resulting in total eco- Brazilian state of Pará (a hub of intensive
ence over the allocation of scientific fund- nomic losses of around $1bn between 2006 agriculture) were to reforest 55,000km2 of
ing, Dr Bishop (pictured above) fears that and 2019. After accounting for production arable land, the rain could come on average
he could have a detrimental impact on costs, the net revenues for soyabeans five days earlier, and up to 19 in some areas.
American scientists. (Mr Musk was ap- dropped by 10% over that time, while In the most deforested areas, that should
proached for comment.) maize revenues dropped by 20%. Beyond bring 152mm more precipitation each year.
She is not alone in her concerns. In Au- the balance-sheet, Anders Krogh, a spe- For now, though, that seems like a tall
gust a group of 74 fellows, including Dr cialist forest adviser at RFN, says these order. Agricultural firms in Brazil tend to
Bishop, sent a letter to the Royal Society’s findings demonstrate the danger defores- treat such reports, and the researchers who
governing body expressing their hope that tation poses to global food security. produce them, with scepticism. The term
Mr Musk would be removed after making When ancient forests become rolling “agri-phobic” is often used to describe sci-
what they regarded as inflammatory com- plains, a delicate balance of water cycles is entists who criticise the country’s farming
ments on X about the summer’s riots in disrupted. As trees respire, they convert practices. Suspicion is felt at the grassroots
Britain. The society later informed the sig- water into vapour, which goes on to form level too. Despite the increasing costs of
natories that its lawyer had not found Mr large, dense rain clouds, and has a cooling adapting to drier conditions, Brazilian
Musk to have broken its code of conduct. effect on the region. This moisture-recy- farmers dispute claims that lower yields re-
According to Dr Bishop, though, the soci- cling process also influences atmospheric sult from climate change or deforestation.
ety will look at the case again—probably at circulation, which plays a key role in tem- Britaldo Soares-Filho, a researcher at
a closed meeting currently scheduled for perature regulation in the Amazon basin. UFMG and the report’s lead author, hopes
November 29th. The effects are starkest in the most de- that focusing on the financial impact of
For its part the society says it is sad- forested regions. In areas where more than deforestation, rather than abstract model-
dened by Dr Bishop’s resignation, but reit- 80% of the forest has been cleared, the on- ling, can bring critics round. Sustainable
erates the need to follow procedure. Prece- set of the rainy season has been delayed by farming practices, he contends, are in the
dent is thin on the ground. John Flam- 76 days since 1980. Between 1999 and 2019, economic interests of agribusiness. “They
steed, Britain’s first Astronomer Royal, was rainfall in these same areas fell by 40% in say we’re guilty of agri-phobia,” he says,
expelled for not paying his dues (or, per- the soyabean-cropping season and 23% at “but they’re committing agri-suicide.” ■
haps, for his disagreements with the tyran-
nical Newton) in 1709. Rudolf Raspe, a
German geologist, was kicked out for em- Reaping what is sown
bezzlement in 1775. In the intervening cen- Brazilian Amazon deforestation, 2006-19
tury and a half, however, no member has
suffered a similar fate. Cumulative forest loss*, % Economic losses from reduced crop yields*, $
To Dr Bishop, Mr Musk’s political pow- 25 50 75 100 10k 100k 1m
er and social-media reach make this a Brazilian
much more serious affair. But even if Amazon
others were to follow her lead, a handful of
voluntary resignations from among the
society’s 1,800-odd members may not pro-
duce the desired momentum. If the society PARÁ Soyabeans Maize
did expel Mr Musk, it would need to pre-
pare for accusations of political bias and,
potentially, a lawsuit. It does not take the 1,000 km
most dazzling minds in science to spot
Sources: Federal University of Minas Gerais; Rainforest Foundation Norway *Per 28×28 km grid-cell
those warning signs. ■

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 72 The Economist November 30th 2024

Culture

The best books of 2024 memoir, the murdered opposition leader

chronicles his martyrdom.
Treat your shelf
Troubled. By Rob Henderson.
A Yale graduate exposes the “luxury”
beliefs held by the educated elite. At once
a memoir and an analysis of the
widespread muddled thinking on
Readers will never think the same way again about games, horses and spies America’s university campuses.

Metamorphoses. By Karolina Watroba. Wild Thing. By Sue Prideaux.

Biography and memoir Franz Kafka’s fame is not only the product The first major biography of Paul Gauguin
of literary excellence. He also got lucky, as in three decades. The French artist is ripe
The Editor. By Sara Franklin. this study of the writer’s afterlife reveals. It for cancellation, but this clear-eyed
Judith Jones edited literary and culinary traces his metamorphosis from sickly account shows that his norm-breaking and
greats and saved Anne Frank’s diary from lawyer to global literary icon. talent were part of the same palette.
a “slush” pile of rejected manuscripts. This
biography posits that the people who One Way Back. By Christine Blasey Ford.
shape iconic books often do so invisibly. In 2018 Christine Blasey Ford accused Business, economics and technology
Brett Kavanaugh, a nominee for the
Kingmaker. By Sonia Purnell. Supreme Court, of assaulting her when The Afterlife of Data. By Carl Ohman.
A biography of Pamela Churchill, they were teenagers. Her memoir shows People generate unfathomable quantities
daughter-in-law of Britain’s former prime the cost of stepping forward. of data. What happens to that data when
minister. As “the most powerful courtesan they die? The philosophical concerns of
in history”, she seduced men during the Patriot. By Alexei Navalny. this compelling book linger in the mind.
second world war. This is a romp of a read. Alexei Navalny had a clear sense of
mission: he wanted to liberate Russia from The Art of Uncertainty.
Maurice and Maralyn. a despot’s grip. In a moving posthumous By David Spiegelhalter.
By Sophie Elmhirst. An invaluable guide to thinking about
Could your marriage survive a shipwreck? uncertainty, from a master of the craft.
This book tells the tale of a couple → ALSO IN THIS SECTION Using simple algebra to illuminate broad
stranded almost four months at sea—and ideas, this book has the sort of elegance
76 Angela Merkel’s meagre memoir
the love story that bubbled alongside. that makes mathematicians enjoy maths. ⏩

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 The Economist November 30th 2024 Culture 73

▸ Co-Intelligence. By Ethan Mollick. Cue the Sun! By Emily Nussbaum. across the ages. This elegant book shows,
How do you get the most from AI? The A detailed history of reality TV, arguing it however, that the “timeless classic” is
technology is an “alien intelligence” that is “the first draft of internet culture”. To anything but.
can augment the human sort—but people understand where the modern newsfeed
need to raise their game. came from, study the dirty documentary.
Fiction
Dark Wire. By Joseph Cox. Get the Picture. By Bianca Bosker.
A vivid account of the largest law- What makes the art world tick? A Creation Lake. By Rachel Kushner.
enforcement sting operation ever. The journalist chronicles the whims of dealers Sadie Smith, an American agent, goes
author spent years getting to know the and collectors; her account is written with undercover to infiltrate an environ-
players, many of them unsavoury humour and verve. mentalist cult in rural France. At once a
international gangsters. noirish thriller, a meditation on human
Gobsmacked! By Ben Yagoda. evolution and a deft travelogue.
How Economics Explains the World. British intellectuals enjoy bewailing the
By Andrew Leigh. influx of Americanisms into British The Empusium. By Olga Tokarczuk.
In fewer than 200 pages, the author English. But is it really so bad? An expert A consumptive young Pole travels for a
canters through the history of human on language dives in. cure to the Silesian mountains. This is
progress, pausing to explain the economic Thomas Mann’s “The Magic Mountain”,
forces that drove it. The Haunted Wood. By Sam Leith. except the men are fatuous. Meanwhile, in
At once light and learned, this tour of the forest something mysterious stirs.
Money. By David McWilliams. children’s literature from Aesop to Harry
A whistle-stop historical tour, with money Potter takes you back to your delighted Fire Exit. By Morgan Talty.
as the central character. The author is a first years of reading. The heart-wrenching tale of a man’s exile
former central banker, but do not be put from his community. What makes a
off—this is no dry tome. Origin Uncertain. By Anatoly Liberman. culture, the book asks: is it blood, or the
A tour through the annals of words’ bonds of love and protection?
Playing with Reality. By Kelly Clancy. origins. This book will appeal to
A wide-ranging survey of how games logophiles and even true-crime fans, Going Home. By Tom Lamont.
shape reality. By turns philosophical and because it feels like a detective story. Three men become responsible for a
polemical, this is a provocative and motherless toddler. In an unsentimental
fascinating book. Reading Genesis. evocation of fatherhood and male
By Marilynne Robinson. friendship, this novel explores the glory
The Power and the Money. By Tevi Troy. A close reading of the first book of the and sacrifice involved in learning to love.
What better time to produce a cautionary Bible. America’s greatest living novelist
tale about the relationship between bosses balances pessimism about human nature The Grand-daughter.
and American presidents? The lesson is: with confidence in a loving God. By Bernhard Schlink.
it’s OK to be the president’s golf After his wife dies, a bookseller learns
buddy—just don’t beat him. Stranger Than Fiction. By Edwin Frank. about her secret past. Germany’s most
Essential for anyone who loves novels, this famous living novelist evokes the divide
Slow Productivity. By Cal Newport. book examines how writers translated the between East and West Berlin.
In this diatribe against “pseudo- seismic and bloody 20th century into
productivity”, a sage of the post-pandemic memorable fiction. The Heart in Winter. By Kevin Barry.
workplace offers practical advice on how This slim book is cruel and lovely, much
to “protect” your time. Written in Water. By Rochelle Gurstein. like its Montana setting. It combines a
Classics of art, literature and music are reverence for the landscape with an
The Whole Story. By John Mackey. supposed to carry an appeal that endures awareness of its brutality. ⏩
The co-founder of Whole Foods Market
tells a story of self-discovery and
entrepreneurial chutzpah that changed
the way well-heeled Americans approach
healthy eating.

Culture and arts

All that Glitters. By Orlando Whitfield.
The rise and fall of Inigo Philbrick, a
wheeler-dealer who was convicted of
perpetrating the largest art fraud in
American history, reads like a “Liar’s
Poker” for the art world.

The Book-Makers. By Adam Smyth.

A professor of literature looks across five
centuries at 18 people who have shaped
books as objects, from printers to binders.
The stories behind books are page-turning
in their own right.

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 74 Culture The Economist November 30th 2024

▸ Help Wanted. By Adelle Waldman. The Silence of the Choir. The Invention of Good and Evil.
Employees of a “dungeon-like” warehouse By Mohamed Mbougar Sarr. By Hanno Sauer.
in upstate New York are threatened by A tale featuring refugees from Africa in What makes people good, evil or a bit of
greedy employers, monopolistic online Sicily, which unspools with multiple both? This rich narrative blends
retailers and the prospect of automation. voices and a touch of magical realism. anthropology and evolutionary biology to
Even the simplest descriptions soar. show how morality has changed.
Hum. By Helen Phillips.
This novel uses a robot-filled setting with Medieval Horizons. By Ian Mortimer.
a warming climate to probe more prosaic History Whoever thinks the Middle Ages were all
anxieties about marriage and parenting. darkness has a middling understanding of
Its setting is bleak—but plausibly so. The Eastern Front. By Nick Lloyd. history. This enlightening account shows
A professor of modern warfare shows how there was more to the period than plague,
Intermezzo. By Sally Rooney. the first world war redrew the world map. superstition and violence.
The Irish star’s fourth book may be her The first deep analysis of the Eastern
best. This story focuses on a fraternal Front in English in nearly 50 years. Nexus. By Yuval Noah Harari.
rather than romantic bond: the characters A historian whose arguments operate on
are recently bereaved, mutually Every Living Thing. By Jason Roberts. the scale of millennia manages to capture
uncomprehending brothers. The story of a forgotten rivalry that the zeitgeist. Mr Harari’s sweeping
shaped the modern world. Carl Linnaeus narrative, which ranges from the Stone
James. By Percival Everett. and Georges-Louis de Buffon raced to Age to the future, explores the political
A literary retelling of Mark Twain’s categorise all life. impact of AI and disinformation.
“Adventures of Huckleberry Finn” that is
destined for the big screen. Told from The Forbidden Garden. By Simon Parkin. Raiders, Rulers and Traders.
Jim’s perspective, this National Book The true story of the world’s first seed By David Chaffetz.
Award winner feels surprising and new. bank in St Petersburg. Botanists faced a “What we now call the Silk Road should
decision during the Nazi siege of 1941-44: more accurately be called the Horse
Karla’s Choice. By Nick Harkaway. eat a prized collection of plants or starve? Road,” the author, a scholar of Asian
A continuation novel about George history, writes in his chronicle of horses
Smiley, written by Nick Harkaway, John le The Horse. By Timothy Winegard. and people.
Carré’s son, is an accomplished homage From anatomy to the role of horses in the
and a captivating thriller. first and second world wars, this book is Reagan. By Max Boot.
packed with fascinating detail about how A peerless communicator and an introvert,
Long Island. By Colm Tóibín. hoof beats changed the world. President Ronald Reagan was an
An entrancing follow-up to “Brooklyn”, a ideologue in rhetoric but a pragmatist in
moving coming-of-age story and a portrait How the World Made the West. practice. This biography is a doggedly
of the plucky immigrants who fuelled By Josephine Quinn. researched, deeply readable character
America’s post-war boom. Even seasoned history buffs will enjoy this study, set in a bygone era of politics.
journey across the arc of European history,
Mania. By Lionel Shriver. which shows that the concept of “Western Revolusi. By David Van Reybrouck.
The America of this novel has been civilisation” has always been flawed. The history of Indonesia is convoluted. A
transformed by ideological extremism: Belgian historian gets his boots dirty,
everyone is clever and anyone who says Impossible Monsters. By Michael Taylor. chronicling brutal plunder in the 17th
otherwise is a bigot. Merciless and funny. In 1811 the discovery of a dinosaur fossil century, forced labour in the 19th and a
sparked a revelation of biblical racial caste system in the early 20th.
Our Evenings. By Alan Hollinghurst. proportions. In seven decades human
The Booker-prizewinning novelist probes thought changed for ever. Smoke and Ashes. By Amitav Ghosh.
the mysteries of the self and the politics of A history of the opium poppy, which
resentment in a yarn about Britain’s Brexit probes how the drug trade has shaped
vote and its aftermath. free-market capitalism and globalisation.
The plant may look innocuous, but its
Playground. By Richard Powers. story is one of profits and power.
This vivid tale of a seasteading mission off
the coast of Makatea in French Polynesia Spycraft.
captures the majesty of the ocean and is By Nadine Akkerman and Pete Langman.
awash in big ideas. The tools and tricks used by spies in the
16th and 17th centuries included disguises,
The Road to the Country. poisons and secret codes. There are
By Chigozie Obioma. “she-intelligencers”, letters hidden in a
Nigerians do not speak much of the civil wooden leg and even recipes for invisible
war of 1967-70. Flitting between the real inks. Do pay attention, 007.
and supernatural, this captures the
country’s faultlines in language and form. The Siege. By Ben Macintyre.
In 1980 a six-day hostage crisis at the
The Safekeep. By Yael van der Wouden. Iranian embassy in London put terrorism
Prickly Isabel lives alone in her family on television. This book tells the story of
home, where her brother’s girlfriend that week and explains how real-time
comes to stay. A meditation on family journalism, filed with satellite phones,
history, memory and sexual awakening. shot Britain’s SAS to global fame. ⏩

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 The Economist November 30th 2024 Culture 75

▸ Venice. By Dennis Romano.

A sparkling account of Venice’s past and
future. Clear, entertaining and
academically rigorous, this will become
the history of choice for readers who want
to understand the lagoon city better.

Why War? By Richard Overy.

A historian draws together nearly 100
years of scientific and historical
scholarship to understand the persistence
of warfare. “If war has a very long human
history, it also has a future,” he concludes.

The Wide Wide Sea. By Hampton Sides.

Captain James Cook has attracted
anti-colonialist ire. Yet he was not a slave
trader nor much of an imperialist but a
brilliant navigator and cartographer. This
tells the story of his final voyage.

Politics and current affairs Our Enemies Will Vanish. The Genetic Book of the Dead.
By Yaroslav Trofimov. By Richard Dawkins.
Autocracy, Inc. By Anne Applebaum. A stirring account of the first months after A tantalising tome from an influential
Despots share an enemy: checks on power Russia’s invasion of Ukraine in 2022, this scholar of evolution. It suggests that
and the democratic world that espouses paints a vivid picture of how Ukrainians efforts to “read” genomes to interpret an
them. This short, urgent book describes repulsed the blitzkrieg with cleverness organism’s history may form the basis of
how today’s strongmen have spun a and courage. a new science.
network of mutual support.
Twenty Years. By Sune Rasmussen. Gray Matters. By Theodore Schwartz.
Born to Rule. The war in Afghanistan, as told through A neurosurgeon goes on a tour through
By Aaron Reeves and Sam Friedman. the eyes and experiences of a range of different types of brain surgery—from
Two British academics describe how elites witnesses, from a Taliban fighter who seemingly crude emergency treatments to
have changed since the 19th century, grows disillusioned to a hustler who high-precision surgeries—weaving
becoming cleverer and better at creates a business empire. explanations of procedures together with
presenting themselves as ordinary. This personal and historical anecdotes.
book is flush with research, including World on the Brink.
more than 200 interviews. By Dmitri Alperovitch and Garrett Graff. More and More and More.
The Washington consensus is that China By Jean-Baptiste Fressoz.
Counter-Intelligence. represents the pre-eminent threat to An eye-opening book that explains how
By Robert Hannigan. America. This jargon-light book neatly “energy transition” has been a term
The former director of GCHQ, Britain’s sketches the China challenge and makes a misused and misunderstood to the brink
signals-intelligence service, reveals how to number of sensible prescriptions. of meaninglessness.
hire a spy. Codebreaking requires people
who think in original and unusual ways. The Year of Living Constitutionally. Origin Story. By Howard Markel.
By A.J. Jacobs. Books about Charles Darwin are at no risk
Failed State. By Sam Freedman. A journalist lives as the Founding Fathers of going extinct. Yet by making its
People deserve some of the blame for supposedly wanted Americans to. For a centrepiece a consequential debate in
Britain’s stagnant growth, dysfunctional year he decides to “walk the walk and… 1860—in which evolution triumphed over
public services and political upheavals. read the Cicero”. Funny and illuminating. creationism—this book offers something
But the country’s woes have structural welcome and new.
causes, too. This book provides a
wonk’s-eye-view of Britain’s problems. Science and health Reentry. By Eric Berger.
It has been a spectacular year for Elon
How Tyrants Fall. By Marcel Dirsus. The Anxious Generation. Musk’s SpaceX, with the firm recapturing
How do you get rid of a dictator? A By Jonathan Haidt. a rocket booster for the first time in
political scientist mines history for Gen Z is suffering from unprecedented October. This is a riveting tale of how the
evidence and considers whether the levels of poor mental health. An eminent company came to dominate its
techniques that toppled despots of old social psychologist considers the “great competitors—and how engineering
still work in an age of mass surveillance. rewiring of childhood”. This book is actually gets done.
compassionate in tone and rich in data.
Infantilised. By Keith Hayward. Tits Up. By Sarah Thornton.
A criminologist argues that young people The Catalyst. By Thomas Cech. Breasts are both ogled and overlooked.
today are less mature than previous RNA is arguably the most consequential The author’s double mastectomy and
generations and that Western culture is to molecule of them all. A Nobel- reconstruction set off a four-year quest to
blame, from films and TV to coddling by prizewinning chemist explores its role in undress breasts’ “multifarious meanings”,
schools and parents. life’s origins as well as its medical uses. ranging from strip clubs to milk banks. ⏩

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 76 Culture The Economist November 30th 2024

▸ Twelve Trees. By Daniel Lewis. Germany’s former chancellor as Germany’s first female chancellor. Mrs

Angela’s ashes
There are 3trn trees on Earth. This Merkel is eminently reasonable and mod-
arboreal adventure takes you up mighty est. But she fails to mount a persuasive de-
trunks and into blazing forest fires. The fence of her good name. Regrettably, the
dozen species chronicled show how much most striking question this book raises is:
the lives of trees are entwined with people why cannot she better defend her legacy?
and culture. As a memoir, “Freedom” does not soar.
Mrs Merkel is a shrewd judge of character,
The Underworld. By Susan Casey. but uninterested in gossip and too discreet
A Canadian adventurer describes her trip Freedom. By Angela Merkel. St Martin’s Press; to break confidences. She is also a doer,
to an underwater volcano off the coast of 720 pages; $40. Macmillan; £35 rather than a thinker. Her book’s title re-
Hawaii. She conjures the “languid beauty” flects her fundamental beliefs, but free-
of the abyss with imaginative, even EW WORLD leaders have left office as dom is not a theme she explores in any
literary, language. F lauded as Angela Merkel. When she
stepped down as chancellor in 2021, after
depth, despite having lived the first 35
years of her life under communism.
16 years, Germany’s economy was the envy Fortunately, Mrs Merkel was assiduous
Books by Economist staff of Europe. Mrs Merkel had saved the euro about keeping a diary. Unfortunately, it
and guided her nation through the pan- listed her appointments, not her reflec-
The Abiy Project. By Tom Gardner. demic. Her style of politics set an example, tions. Readers learn a great deal about her
A portrait of one of Africa’s most too. In an age of increasing demagoguery, travel schedule and her meetings with the
enigmatic and controversial leaders, Abiy fake news and partisanship, “Mutti”—or likes of the Association of German Cities.
Ahmed, and a chronicle of the most Mum, as Germans affectionately called But too often she cannot remember details.
tumultuous years in Ethiopia’s recent her—was low-key and empirical. Instead of The reader is in the room where it hap-
history. The Los Angeles Review of Books demonising her opponents, she was the ar- pened in only a handful of dramatic
called this account by one of our Africa chitect of compromises that had some- encounters that lodged in her mind, as
correspondents “groundbreaking”. thing for everyone. when she first grasped the magnitude of
How rapidly her legacy has turned to the euro zone’s financial problems in Feb-
The Achilles Trap. By Steve Coll. ashes. Under Mrs Merkel, Germany got ruary 2010, or the tortured ceasefire negoti-
Taking advantage of new materials from cheap energy from Russia, sold expensive ations between France, Germany, Russia
inside Saddam Hussein’s regime, our cars to China and outsourced its security and Ukraine in Minsk in February 2015.
visiting senior editor investigates how to America. Today, all those policies look The politician who emerges from these
hubris, human error and mis- like strategic mistakes. The economy is in a pages has strengths. Mrs Merkel is a Sta-
communication led to one of the costliest mess. China dominates electric vehicles. khanovite with a rare ability to navigate
geopolitical conflicts of our time. The Vladimir Putin is threatening Europe and, technical and political complexity. Some-
book was a finalist for the Orwell Prize for under Donald Trump, America will no lon- how, in 2010, while on a visit to Moscow,
political writing. ger be willing to pay full freight for NATO. she managed to organise a fund to help
As Germany prepares for an election in stabilise the euro, even as her own co-
At the Louvre. Edited by Antoine Caro, February 2025, its centrist parties are being alition was rebelling. She is also blessed
Edwin Frank and Donatien Grau. squeezed by the unMerkel-like extremes with uncanny timing—withdrawing, for ex-
A volume of poetry about the Louvre in on the left and right. ample, from her first run for the chancellor-
Paris, to which Fani Papageorgiou, a staff “Freedom” is Mrs Merkel’s attempt to ship in favour of Edmund Stoiber in Janu-
writer, contributed. In the foreword, restore her reputation. Over around 700 ary 2002. Mr Stoiber lost the election,
Laurence des Cars, director of the Louvre, pages, she and her long-time confidante, which was the making of her.
writes that the museum is “home to poets Beate Baumann, chronicle her life in East These virtues will not silence Mrs Mer-
who, with words, carve out new channels Germany, her entry into politics after the kel’s critics. They say, for example, that she
of meaning”. collapse of the Berlin Wall and her career should not have blocked Ukraine’s path to
NATO membership in 2008. She rebuts
Heresy. By Catherine Nixey. them with the argument that accession
It was not just Jesus. Sons of God whose would have taken years and, in the mean-
followers claimed they could heal the time, Mr Putin would have aggressively
blind, cure the lame and even raise the tried to forestall it.
dead were common in the Roman Empire However, if Mrs Merkel so clearly un-
at the turn of the first millennium, as this derstood the threat from Mr Putin, why did
book by one of our Britain correspondents she increase Germany’s dependence on
points out. “A brilliant book”, wrote the Russian gas by closing the country’s nuc-
Times. “Enthralling”, said the Telegraph lear power stations? And why did she toler-
and the Guardian. ate defence spending of just 1.33% of GDP
when she stepped down, far below the 2%
New Answers to Old Questions. she had agreed to at a NATO meeting in
By Aaron Connelly and Shona Loong. 2014? Her suggestion that her coalition
Our Asia diplomatic editor writes on three partners were to blame is feeble.
relationships that have defined the politics That gets to the heart of the matter.
of contemporary Myanmar, arguing that Compromise is all very well in a politician.
the current revolution provides more But without a vision, it can easily become
reasons for hope than Aung San Suu Kyi’s the art of splitting differences. In “Free-
previous government. A “significant dom” Mrs Merkel assures readers that she
contribution”, says Marty Natalegawa, an always got the best deal possible. She is
Indonesian diplomat. ■ Not facing the issues head-on asking them to take a lot on trust. ■

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 The Economist November 30th 2024 77

Economic & financial indicators

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units
% change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change
latest quarter* 2024† latest 2024† % % of GDP, 2024† % of GDP, 2024† latest, % year ago, bp Nov 27th on year ago
United States 2.7 Q3 2.8 2.7 2.6 Oct 2.8 4.1 Oct -3.4 -6.6 4.2 -14.0 -
China 4.6 Q3 3.6 4.9 0.3 Oct 0.5 5.0 Oct‡§ 0.7 -4.4 1.7 §§ -92.0 7.25 -1.4
Japan 0.3 Q3 0.9 -0.3 2.2 Oct 2.6 2.4 Sep 3.7 -4.7 1.1 29.0 151 -1.4
Britain 1.0 Q3 0.6 1.1 2.3 Oct 2.9 4.3 Aug†† -2.9 -4.0 4.3 1.0 0.79 nil
Canada 0.9 Q2 2.1 1.2 2.0 Oct 2.3 6.5 Oct -1.2 -1.2 3.3 -43.0 1.40 -2.9
Euro area 0.9 Q3 1.5 0.8 2.0 Oct 2.4 6.3 Sep 3.2 -3.1 2.2 -37.0 0.95 -3.2
Austria -0.9 Q2 -0.2‡ -0.5 1.8 Oct 2.9 5.6 Sep 2.3 -2.3 2.6 -49.0 0.95 -3.2
Belgium 1.1 Q3 0.8 1.1 4.5 Oct 4.0 5.5 Sep -0.9 -4.6 2.8 -41.0 0.95 -3.2
France 1.3 Q3 1.5 1.2 1.6 Oct 2.5 7.6 Sep -0.6 -6.1 3.3 44.0 0.95 -3.2
Germany -0.3 Q3 0.4 -0.1 2.4 Oct 2.4 3.5 Sep 6.3 -1.6 2.2 -37.0 0.95 -3.2
Greece 2.7 Q2 4.4 2.2 3.1 Oct 2.9 9.3 Sep -6.4 -1.3 3.1 -69.0 0.95 -3.2
Italy 0.4 Q3 -0.1 0.5 1.0 Oct 1.1 6.1 Sep 1.5 -4.3 3.4 -90.0 0.95 -3.2
Netherlands 1.7 Q3 3.3 0.6 3.3 Oct 3.4 3.7 Oct 9.6 -1.9 2.4 -48.0 0.95 -3.2
Spain 3.4 Q3 3.4 2.7 1.8 Oct 3.0 11.2 Sep 2.6 -3.2 3.0 -63.0 0.95 -3.2
Czech Republic 0.9 Q2 1.5 1.0 2.8 Oct 2.4 2.9 Sep‡ 0.7 -2.4 3.9 -42.0 23.9 -6.9
Denmark 3.6 Q3 5.1 1.8 1.6 Oct 1.3 2.9 Sep 10.8 2.1 2.0 -79.0 7.06 -3.4
Norway 3.5 Q3 -7.1 1.0 2.6 Oct 2.2 4.1 Sep‡‡ 17.0 12.3 3.6 -8.0 11.1 -3.4
Poland 2.7 Q3 -0.8 2.3 5.0 Oct 3.8 4.9 Oct§ 0.4 -5.7 5.6 -1.0 4.07 -2.2
Russia 3.1 Q3 na 3.7 8.5 Oct 8.5 2.3 Oct§ 3.1 -1.7 16.3 459 113 -21.4
Sweden 0.2 Q3 -0.4 0.7 1.6 Oct 1.8 7.8 Oct§ 6.5 -0.9 2.0 -77.0 10.9 -4.0
Switzerland 1.8 Q2 2.8 1.2 0.6 Oct 1.2 2.6 Oct 7.4 -0.9 0.3 -65.0 0.88 nil
Turkey 2.5 Q2 0.3 2.9 48.6 Oct 57.7 8.6 Sep§ -1.7 -4.1 27.4 80.0 34.7 -16.6
Australia 1.0 Q2 0.9 1.1 2.8 Q3 3.1 4.1 Oct -0.6 -1.0 4.6 5.0 1.54 -1.3
Hong Kong 1.8 Q3 -4.2 3.1 1.3 Oct 2.3 3.1 Oct‡‡ 11.9 -3.1 3.4 -65.0 7.78 0.1
India 6.7 Q2 4.5 7.0 6.2 Oct 4.7 8.7 Oct -0.5 -4.9 6.8 -46.0 84.5 -1.3
Indonesia 4.9 Q3 3.8 5.1 1.7 Oct 2.2 4.9 Aug§ -0.1 -2.5 6.9 13.0 15,930 -2.7
Malaysia 5.3 Q3 6.3 5.1 1.9 Oct 1.9 3.2 Sep§ 1.4 -4.5 3.8 -12.0 4.44 5.4
Pakistan 3.2 2024** na 2.8 7.2 Oct 13.6 6.3 2021 -1.2 -7.4 12.1 ††† -305 278 2.9
Philippines 5.2 Q3 7.0 5.5 2.3 Oct 3.2 4.7 Q3§ -2.9 -6.1 6.1 -22.0 58.7 -5.6
Singapore 5.4 Q3 13.6 3.5 1.4 Oct 2.4 1.8 Q3 19.3 0.2 2.8 -23.0 1.34 nil
South Korea 1.7 Q3 0.5 2.3 1.3 Oct 2.4 2.3 Oct§ 3.8 -1.8 2.9 -88.0 1,397 -6.7
Taiwan 4.0 Q3 4.4 4.2 1.7 Oct 2.1 3.4 Oct 14.1 0.5 1.6 23.0 32.6 -3.0
Thailand 3.0 Q3 4.9 2.5 0.8 Oct 0.6 1.0 Oct§ 1.9 -3.7 2.4 -74.0 34.6 1.6
Argentina -1.7 Q2 -6.8 -3.5 193 Oct 221.2 7.6 Q2§ 0.9 nil na na 1,008 -64.4
Brazil 3.3 Q2 5.9 3.0 4.8 Oct 4.3 6.4 Sep§‡‡ -1.6 -7.6 12.8 169 5.84 -15.8
Chile 2.3 Q3 2.7 2.2 4.7 Oct 4.0 8.7 Sep§‡‡ -2.4 -2.2 5.8 -4.0 976 -10.7
Colombia 2.0 Q3 0.8 1.6 5.4 Oct 6.7 9.1 Sep§ -2.7 -5.7 10.5 -25.0 4,407 -9.3
Mexico 1.6 Q3 4.4 1.4 4.8 Oct 4.8 2.7 Sep 0.3 -5.2 10.0 43.0 20.7 -17.1
Peru 3.8 Q3 2.8 3.0 2.0 Oct 2.4 5.9 Oct§ 1.0 -4.0 6.6 -55.0 3.76 -1.1
Egypt 2.4 Q2 12.6 2.4 26.5 Oct 28.5 6.7 Q3§ -5.2 -3.7 na na 49.7 -37.8
Israel -1.0 Q3 3.8 0.1 3.5 Oct 3.2 2.5 Oct 4.6 -7.2 4.5 28.0 3.66 1.4
Saudi Arabia -0.8 2023 na 1.5 1.9 Oct 1.7 3.3 Q2 -0.9 -2.4 na na 3.76 nil
South Africa 0.3 Q2 1.8 1.1 2.8 Oct 4.6 32.1 Q3§ -1.8 -5.2 9.0 -112 18.2 2.7
*% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield.
†††Dollar-denominated bonds. Source: Haver Analytics Note: Euro area consumer prices are harmonised. mag d l ed at m obilism . org

Markets Commodities
% change on: % change on:
Index one Dec 29th Index one Dec 29th The Economist commodity-price index % change on
In local currency Nov 27th week 2023 Nov 27th week 2023 2020=100 Nov 19th Nov 26th* month year
United States S&P 500 5,998.7 1.4 25.8 Pakistan KSE 99,269.3 3.9 59.0 Dollar Index
United States NAS Comp 19,060.5 0.5 27.0 Singapore STI 3,708.1 -0.9 14.4 All items 131.2 133.5 2.1 3.6
China Shanghai Comp 3,309.8 -1.7 11.3 South Korea KOSPI 2,503.1 0.8 -5.7 Food 143.1 146.9 6.6 9.9
China Shenzhen Comp 1,996.7 -2.0 8.6 Taiwan TWI 22,334.8 -1.6 24.6 Industrials
Japan Nikkei 225 38,135.0 -0.6 14.0 Thailand SET 1,430.4 -2.2 1.0 All 121.3 122.4 -2.0 -2.0
Japan Topix 2,665.3 -1.2 12.6 Argentina MERV 2,205,245.0 2.8 137.2 Non-food agriculturals 134.7 134.4 0.8 7.8
Britain FTSE 100 8,274.8 2.3 7.0 Brazil BVSP* 127,668.6 -0.4 -4.9 Metals 117.8 119.3 -2.7 -4.5
Canada S&P TSX 25,488.3 1.8 21.6 Mexico IPC 49,787.8 -0.8 -13.2 Sterling Index
Euro area EURO STOXX 50 4,733.2 0.1 4.7 Egypt EGX 30 29,846.0 -2.4 19.9 All items 133.1 136.5 5.7 4.6
France CAC 40 7,143.0 -0.8 -5.3 Israel TA-125 2,306.5 1.1 22.2
Germany DAX* 19,261.8 1.4 15.0 Saudi Arabia Tadawul 11,590.8 -2.3 -3.1 Euro Index
Italy FTSE/MIB 33,089.7 -0.4 9.0 South Africa JSE AS 85,102.3 -0.2 10.7 All items 141.6 145.5 5.2 8.5
Netherlands AEX 874.5 1.9 11.1 World, dev'd MSCI 3,790.3 1.5 19.6 Gold
Spain IBEX 35 11,579.5 -0.1 14.6 Emerging markets MSCI 1,086.9 -0.6 6.2 $ per oz 2,625.2 2,629.1 -5.0 29.2
Poland WIG 79,130.5 1.6 0.9
Brent
Russia RTS, $ terms 726.8 -11.0 -32.9 US corporate bonds, spread over Treasuries
$ per barrel 72.9 73.5 3.5 -10.1
Switzerland SMI 11,644.0 0.9 4.5 Dec 29th
Turkey BIST 9,639.8 6.7 29.0 Basis points latest 2023 Sources: Bloomberg; CME Group; FT; LSEG Workspace; NZ Wool
Australia All Ord. 8,659.6 0.9 10.6 Investment grade 97 154 Services; S&P Global Commodity Insights; Thompson Lloyd & Ewart;
Hong Kong Hang Seng 19,603.1 -0.5 15.0 High-yield 315 502 USDA; WSJ. *Provisional.
India BSE 80,234.1 3.4 11.1
Indonesia IDX 7,245.9 0.9 -0.4 Sources: LSEG Workspace; Moscow Exchange; Standard & Poor's For historical indicators data, visit
Malaysia KLSE 1,604.3 0.4 10.3 Global Fixed Income Research. *Total return index. economist.com/economic-and-financial-indicators

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 78 The Economist November 30th 2024

OBITUARY
Celeste Caeiro

The Portuguese restaurant worker whose gesture named a revolution died on November 15th, aged 91

silence about them. Later, back in Lisbon, she worked for a tobac-
conist who also dealt in banned books, like the works of José Vil-
hena; she would hide them in tobacco sacks. Too many voices
were prohibited, including any TV or radio that was not run by the
state. So though she was too poor to have a TV set, a radio or even a
telephone in her flat, she wasn’t missing much.
Except on that morning in April. Then, Mr Chaves met the
staff at the door with the news that Sir was closed and the party
was off. Some army captains had launched a coup, objecting espe-
cially to Portugal’s costly wars to hang on to its colonies in Africa.
Caetano had fled and was holed up in the Largo do Carmo, right
beside the ruins of the medieval Carmelite convent. That had
been destroyed in the terrible earthquake of 1755, after which most
of Lisbon had needed rebuilding. Now another earthquake was
happening. “And we’ll let you know”, added Mr Chaves, “whether
it turns out well or badly.” They were told to go home, and to pick
up bunches of carnations from the warehouse on the way. He
didn’t want them going to waste.
She, however, could not possibly go home. This was the mo-
ment she had wanted for years. Already ordinary citizens were
streaming towards Carmo. Tiny as she was, she showed up in the
crowd with her brisk, determined walk and her big sheaf of bright
EOPLE TOLD all sorts of stories about carnations. That they red flowers. Tanks and armoured personnel carriers stood in the
P were a divine flower. That they sprang from the eyes of a shep-
herd whom the Goddess Diana blinded for being too handsome,
square; soldiers on the tanks told her they had been there, waiting
for Caetano to surrender, since three in the morning. Not surpris-
or from the tears of Our Lady as she stood by the cross. The only ingly one of them, calling her “Ma’am” most politely, asked her for
thing that Celeste Caeiro knew for sure about carnations, that a cigarette. He looked exhausted. She felt sorry for him, but she
morning of April 25th 1974, was that an awful lot of them were didn’t smoke and never had, because she was so chesty. Perhaps
waiting in the warehouse in buckets, and that she and the rest of she could buy him a sandwich? No, everywhere was closed. So,
the staff at Sir Restaurant would have to fetch them and put them reaching up on tiptoe, she gave him a carnation.
on all the tables, because the bosses wanted to throw a party. He did not have to accept it. He could have laughed at her, or
That was what bosses did. Extra work for the staff, but did that tossed it away. Many men would have done: her own father, or
mean extra pay? Not likely. As it was, her pay for a basic 14-hour Helena’s father, the ones who walked out on women. But he took it
day of clearing tables, mopping, taking coats, etc, etc, barely co- gladly, and put it in the barrel of his rifle. That meant he could not
vered the rent of the one-bedroom flat that she shared with her shoot now; and suddenly, his comrades also wanted one. They
mother and her daughter Helena, who was five. But Mr Chaves, would be an army of peace. Her flowers ran out, but soon other
the owner, told Mr Ramos, the manager, to put on a special menu people brought carnations too, including all the florists who wor-
for the restaurant’s first birthday, with a free glass of port for the ried, like Mr Chaves, that their stock would die otherwise.
men and a flower for the ladies. There was no particular reason, as Back in the flat in Criada later, she stood at the window watch-
far as Celeste knew, for carnations. Probably Mr Ramos had found ing. People filled the streets, and many had carnations. It made her
they were the cheapest flowers in the market. smile. By the evening, Caetano had surrendered. Her mother cried
The restaurant deserved some celebration, however. It was “You could have been shot!”, but she had never thought that. The
huge, with seating for 300, and had self-service as well as sit-down, whole thing seemed almost accidental. She had offered a soldier a
which was unheard-of in Portugal then. It made up the ground flower. He had stuck it into his gun. This had turned into a state-
floor of an office building called Franjinhas, which had a rippling ment that grew stronger and stronger. Peace against war (only four
fa¢ade with fringes of concrete hanging down over the windows. people died in this revolution); good against evil; freedom against
People were horrified by it, but in 1971 it had actually won a prize. oppression; new versus old. It was a statement that resonated far
Between them, restaurant and building were signs that the mod- beyond Portugal, especially in Africa, where one by one the for-
ern world was beginning to creep in on Portugal, crushed as it was mer colonies gained their independence.
by the hard-right “New State” of António de Oliveira Salazar. Dic- She would have liked more recognition from the kinder gov-
tators in Germany and Italy had been brought down by the war. ernments that followed. In 1988, when a fire in Criada destroyed
Not he. He had ruled for 36 long years. After him, in 1968, Marcelo her flat, she was rehoused at first in run-down, dangerous Chelas
Caetano had taken over and was as bad, despite his glasses and his before they found her somewhere nicer. She still struggled to get
mild plump face, like a banker’s. Celeste was 40, so she had never by, living on a pension of 370 euros a month. But the people made
known any other prime ministers or any other regime. her their heroine. She was on posters and murals and, at the 50th-
She had dreamed of others, though. Secretly she was a commu- anniversary celebrations in April, the centre of attention. As for
nist, like her uncle and aunt in Amareleja, 200km east of Lisbon, red carnations, they no longer popped up on browsers as the flow-
which was called the reddest village in Portugal. When she stayed ers firstly of Diana or the Virgin Mary. They belonged to Celeste
there as a child she witnessed meetings at night, and was sworn to and the Portuguese revolution. They were hers. ■

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