The Economist - May 18, 2019 USA.pdf - Farage Brexit\u2019s pinstriped populist How to bust the sanctions-busters Low-paid America Comedy and politics

The Economist - May 18, 2019 USA.pdf - Farage Brexitu2019s...

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Unformatted text preview: Farage: Brexit’s pinstriped populist How to bust the sanctions-busters Low-paid America Comedy and politics, joined at the quip MAY 18TH–24TH 2019 A new kind of cold war #21 #22 ASK YOUR BROKER IF THEY OFFER $4.95 ONLINE EQUITY TRADES AND A SATISFACTION GUARANTEE. IF THEIR ANSWER IS NO, ASK SCHWAB. How much is your broker charging you? Schwab E*TRADE Fidelity TD AMERITRADE Standard Online Equity Trades $4.95 $6.95 $4.95 $6.95 Satisfaction Guarantee YES NO NO NO Vanguard $7-$20 depending on number of trades NO Competitor firm information is standard online pricing obtained from their respective websites as of 1/9/2019. Competitor pricing and offers subject to change without notice. Ask your broker if they follow these rules. If you don’t like their answer, ask again at Schwab. Visit Schwab.com/CompareUs to learn more Wealth Management at Charles Schwab PLANNING | PORTFOLIO MANAGEMENT | INCOME STRATEGIES | BANKING “Rated the Best Broker Overall by Investor’s Business Daily.” Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value The $4.95 standard online equity commission does not apply to certain transactions. See Schwab.com/pricing for details. If you are not completely satisfied for any reason, at your request Charles Schwab & Co., Inc. (“Schwab”) or Charles Schwab Bank (“Schwab Bank”) will refund any eligible fee related to your concern within the required timeframes. Schwab reserves the right to change or terminate the guarantee at any time. Go to schwab.com/satisfaction to learn what’s included and how it works. Wealth Management refers to a number of different products and services offered through various subsidiaries of The Charles Schwab Corporation. See Schwab.com/wealth. The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (Schwab), Member SIPC, offers investment services and products, including Schwab brokerage accounts. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides deposit and lending services and products. From Investor’s Business Daily, January 28, 2019, ©2019 Investor’s Business Daily, Inc. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution or retransmission of this Content without express written permission is prohibited. Results based on an Investor’s Business Daily (‘IBD”) and Technometrica survey of 2,762 visitors to the IBD website between November and December 2018. Those individuals were asked to name and rate their primary online broker. Limiting data analysis to only those firms that were cited by 200 or more participants, six online brokers were ranked based on Customer Experience Index scores for fourteen separate attributes. For further information on how the ratings were calculated, see IBD’s Criteria and Methodology. ©2019 Charles Schwab & Co., Inc. All rights reserved. Member SIPC. (0419-9THE) ADP106860-01 Contents The Economist May 18th 2019 The world this week 6 A round-up of political and business news 9 10 10 11 On the cover How to manage the growing rivalry between America and a rising China: leader, page 9. Trade has long anchored their relations, but it is no longer enough. The world should be worried. See our special report, after page 42. The trade war’s latest blows, page 62 • Farage: Brexit’s pinstriped populist He is once again at the heart of British politics: Bagehot, page 49. In an unwanted election, both of Britain’s main parties look like taking a drubbing, page 47. In the rest of Europe, the vote looks oddly consequential: briefing, page 16 12 Leaders China v America A new kind of cold war South Africa Now for the hard part America’s abortion laws Supremely wrong Fiscal policy Cocked and ready Politicians and comedy You couldn’t make it up Letters 14 On Narendra Modi, religion, Brexit, YouTube, monarchies • Comedy and politics, joined at the quip Legislators are the unacknowledged comics of the world: leader, page 12. The populists’ secret weapon, page 50 25 26 26 28 The Americas Argentina’s politics Colombia's peace process Education in Mexico Bello Ineffectual sanctions on Cuba 29 30 Briefing 16 European elections Parliamentary perspectives Special report: China and America A new kind of cold war After page 42 • How to bust the sanctions-busters Some companies face big risks from a surge in sanctions. Others spy opportunities, page 52. A mysterious attack in the Middle East raises war jitters, page 39 • Low-paid America Life is improving for those at the bottom, page 19 19 20 21 22 24 United States Better at the bottom Alabama’s abortion law Amy Coney Barrett Fixing broken schools Lexington Campaigning as the incumbent Schumpeter Why the techie obsession with sleep makes perfect sense, page 59 32 33 33 34 Asia Afghanistan’s feeble government Poppy-growing in Afghanistan Banyan Dismal dowries Democracy in Kazakhstan Age in South Korea Australia’s election China 35 Taming deserts 37 38 39 39 40 Middle East & Africa South Africa’s election Fancy sheep in Senegal Getting by in Rwanda War jitters in the Gulf Putin’s road to Damascus 1 Contents continues overleaf 3 4 Contents 43 44 45 45 46 The Economist May 18th 2019 Europe Immigration in Germany Bulgaria’s “apartments scandal” Crimean wine A new metro in Paris Charlemagne Eurovision 61 62 63 63 64 64 65 Britain 47 Bizarre, unwanted European elections 48 Football and finance 49 Bagehot Mr Brexit is back 66 68 71 72 72 74 75 75 International 50 Comedians in politics 52 53 54 54 55 58 59 76 77 Business Sanctions Inc Chaebol family feuds Corporate spin-offs Digitising road freight Bartleby The joy of absence Chinese businesswomen Schumpeter Sleepless in Silicon Valley 78 78 79 Finance & economics After Abraaj China talks tough on trade Pakistan and the IMF Going public in the Valley Dank stats in Canada Flipping houses Buttonwood European stocks Fiscal policy Free exchange The final economic frontier Science & technology 3D-printing body parts Growing cells in a lab Saving bilbies Jeff Bezos’s 1970s reprise New units for old Dung-free farming Books & arts The history of tolerance From Mockingbird to murder A novel of terrorism The value of women’s art Climate change Economic & financial indicators 80 Statistics on 42 economies Graphic detail 81 Why beer snobs guzzle lagers they claim to dislike Obituary 82 Jean Vanier, apostle of tenderness Subscription service Volume 431 Number 9143 Published since September 1843 to take part in “a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.” Editorial offices in London and also: Amsterdam, Beijing, Berlin, Brussels, Cairo, Chicago, Johannesburg, Madrid, Mexico City, Moscow, Mumbai, New Delhi, New York, Paris, San Francisco, São Paulo, Seoul, Shanghai, Singapore, Tokyo, Washington DC For our full range of subscription offers, including digital only or print and digital combined, visit: Economist.com/offers You can also subscribe by mail, telephone or email: North America The Economist Subscription Center, P.O. Box 46978, St. Louis, MO 63146-6978 Telephone: +1 800 456 6086 Email: [email protected] Latin America & Mexico The Economist Subscription Center, P.O. Box 46979, St. Louis, MO 63146-6979 Telephone: +1 636 449 5702 Email: [email protected] One-year print-only subscription (51 issues): Please United States..........................................US $189 (plus tax) Canada......................................................CA $199 (plus tax) Latin America.......................................US $325 (plus tax) PEFC/29-31-58 PEFC certified This copy of The Economist is printed on paper sourced from sustainably managed forests certified to PEFC © 2019 The Economist Newspaper Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Newspaper Limited. The Economist (ISSN 0013-0613) is published every week, except for a year-end double issue, by The Economist Newspaper Limited, 750 3rd Avenue, 5th Floor, New York, N Y 10017. The Economist is a registered trademark of The Economist Newspaper Limited. Periodicals postage paid at New York, NY and additional mailing offices. Postmaster: Send address changes to The Economist, P.O. Box 46978, St. Louis , MO. 63146-6978, USA. Canada Post publications mail (Canadian distribution) sales agreement no. 40012331. Return undeliverable Canadian addresses to The Economist, PO Box 7258 STN A, Toronto, ON M5W 1X9. GST R123236267. Printed by Quad/Graphics, Saratoga Springs, NY 12866 This document has been issued by Pictet Asset Management Inc, which is registered as an SEC Investment Adviser, and may not be reproduced or distributed, either in part or in full, without their prior authorisation. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Responsibility. One of our natural resources. Geneva Zurich Luxembourg London Amsterdam Brussels Paris Frankfurt Madrid Milan Dubai Montreal Hong Kong Singapore Taipei Osaka Tokyo assetmanagement.pictet 6 The world this week Politics its proxies, but they presented no evidence. America pulled all “non-emergency employees” from Iraq amid concerns about alleged threats from Iran. The ruling African National Congress won South Africa’s general election with 58% of the vote. The party had never before received less than 60% at a national poll. Many voters were put off by the corruption that flourished under Jacob Zuma, president from 2009 to 2018. The anc might have done worse but for Cyril Ramaphosa, who replaced Mr Zuma and vowed to clean up his mess. The Democratic Alliance got 21% of the vote. Violence flared in Sudan as the ruling military council and protest groups tried to reach a political-transition deal. At least six people were killed. It has been more than a month since the army toppled Omar al-Bashir amid large demonstrations against his presidency. Generals and civilians have yet to agree on how power will be shared. A militia allied with the Nigerian government freed almost 900 children it had used in the war against the jihadists of Boko Haram, according to the United Nations Children’s Fund. Of the 3,500 or so children in total who were recruited by armed groups to fight Boko Haram, more than 1,700 have now been set free. Yemen’s Houthi rebels attacked two oil-pumping stations in Saudi Arabia with armed drones. Saudi Arabia supports the Yemeni government in its war against the Houthis, who are aligned with Iran. The un held talks in Jordan aimed at consolidating a truce between the parties. Policy tactics Alabama’s governor signed a law banning abortion in all cases except when the mother’s life is in danger, the most stringent in a number of “heartbeat” bills that have been approved by Republican states. Pro-lifers hope the bills will eventually make their way to the Supreme Court, where they think they have a chance of overturning Roe v Wade. A federal judge ordered 32 of Florida’s 67 counties to provide election material and ballot papers for Spanishspeakers in time for the presidential primaries next year. Florida has started the process of supplying bilingual forms, but the judge wants that to speed up; he warned officials that complying with the order was “not optional”. ing Republican leaders, called the protesters “useful idiots”. Meanwhile, Mr Bolsonaro said he would nominate Sérgio Moro, his justice minister, to Brazil’s supreme court in 2020. Mr Moro faced allegations of bias when he joined Mr Bolsonaro’s government after sentencing Luiz Inácio Lula da Silva, Mr Bolsonaro’s one-time political rival, for corruption. Guatemala’s constitutional court ruled that Zury Ríos, the daughter of a former dictator, could not stand in June’s presidential election, in which she is a leading candidate. The court found that relatives of coup leaders are barred from the presidency. Efraín Ríos Montt took power for 18 months in the early 1980s in a coup. He died last year during a retrial of his quashed conviction for genocide. May day In Britain Theresa May was facing a humiliating defeat at the European Parliament elections. Ahead of the vote on May 23rd the new Brexit Party has sapped so much support from her Conservative Party that the Greens briefly polled higher, pushing the Tories into fifth place. The prime minister remains defiant, announcing that she will attempt for a fourth time to get her Brexit deal passed by the House of Commons in early June. Lower education Sweden reopened a rape case against Julian Assange, who is currently in prison in Britain for evading bail. If the investigation ends with a request for extradition, Britain will have to decide whether to send him to Sweden or to America, which also wants to try him, for allegedly helping to hack classified documents. At least 28 troops in Niger were killed in an ambush near the border with Mali, a region that is a hotbed of jihadist activity. Tensions rose in the Middle East, as officials in the Gulf said four oil tankers, including two from Saudi Arabia, had been sabotaged off the coast of the United Arab Emirates. Unnamed American sources were quoted as blaming Iran or The Economist May 18th 2019 Hundreds of thousands of students and teachers took to the streets of Brazil’s state capitals to demonstrate against a 30% cut in the federal funding allocated to universities. Brazil’s president, Jair Bolsonaro, who was in Dallas meet- The European Commission warned Romania to change new rules that will give the government more power over the judiciary and will shorten the statute of limitations for corruption charges. If it does not, it could face disciplinary action similar to that dished out to Poland. Awkwardly, Romania currently holds the rotating presidency of the eu. Rodrigo on a roll Candidates backed by Rodrigo Duterte, the president of the Philippines, won nine of the 12 seats up for grabs in the Senate in mid-term elections, as well as a strong majority in the House of Representatives. The results should give fresh impetus to Mr Duterte’s plans to overhaul corporate taxes and amend the constitution to institute a federal form of government. Sri Lanka imposed a curfew after mobs began attacking mosques and Muslim-owned businesses. The attacks are in retaliation for the bombing of several churches and hotels at Easter by Muslim extremists. Separatist gunmen in Balochistan province in Pakistan attacked a hotel frequented by Chinese visitors in the city of Gwadar. Four employees and one soldier were killed in the attack, but no guests. The separatists vowed more strikes on Chinese targets. North Korea demanded the immediate return of a ship America had seized on suspicion of violating un sanctions. America said the ship was being used to export coal illicitly. The North denounced the seizure as “gangster-like”. Relations between the two countries have deteriorated recently as disarmament negotiations have stalled. China’s president, Xi Jinping, said it would be “foolish” to regard one’s own civilisation as superior and “disastrous” to attempt to remould another. His remarks appeared to be directed at America. Two weeks earlier a State Department official, referring to China, said America was involved in “a fight with a really different civilisation” and for the first time was facing a “great power competitor that is not Caucasian”. 1 SOME CHEFS COOK THEIR BEST AT 30.000 FEET turkishairlines.com 8 The world this week Business The Economist May 18th 2019 China said it would increase tariffs on a range of American goods. This was in retaliation for Donald Trump’s decision to raise duties on $200bn-worth of Chinese exports following the breakdown of talks that had tried to end the two countries’ stand-off over trade. In addition, American officials said they were seeking to extend levies to all remaining Chinese imports to the United States. Both sides are holding off on imposing their punishing tariffs for a few weeks, giving negotiators more time to try to end the impasse. Even if there is a deal, it is unlikely to reduce tensions between the two powers over trade, and other matters. made by Monsanto, which Bayer took over last year, caused their cancer. This time the jury ordered the German conglomerate to pay $2bn in damages to an elderly couple, a sum far greater than that awarded to the plaintiffs in two previous trials. Bayer’s share price plunged. The transfer of technology is another contentious issue for China and America. A few days after the collapse of the trade talks, Mr Trump and the Commerce Department signed orders blocking Huawei, a Chinese tech giant, from involvement with American mobile networks and suppliers. America has pressed its allies to shun the firm, citing security worries, but has had only limited success. Officials in San Francisco voted to make it the first American city to ban the use of facialrecognition software by the local government. Legislators worry that the technology, which is spreading rapidly, is unreliable and open to abuse. Thyssenkrupp and Tata Steel abandoned a plan to merge their European steel assets because of stiff resistance from the eu’s antitrust regulator. Pushed by activist investors demanding reform at Thyssenkrupp, the proposal had been announced in September 2017. The German company will now spin off its lifts division, its most profitable business. What’s up? WhatsApp, a popular encrypted-messaging app owned by Facebook, reported a security flaw that allows hackers to install surveillance software on smartphones by placing calls in the app. It was reported British Steel told the British government that it needs more state aid because of “uncertainties around Brexit”. That is in addition to the £100m ($130m) loan from the government the company had recently secured to pay its eu carbon bill. A no-deal Brexit would hit The Chinese economy may be slowing more than had been thought, according to new data. China’s retail sales grew at their slowest rate in 16 years in April. Industrial production expanded by 5.4%, the slowest rate in a decade. Germany’s economy grew by 0.4% in the first three months of the year compared with the previous quarter. That brought some relief for the government following a six-month period when the country almost slipped into recession. Officials warned that global trade rows could still knock the economy off course. In Britain, gdp rose by 0.5% in the first quarter, helped by businesses stockpiling goods ahead of the now-missed Brexit deadline of March 29th. Bayer lost a third court case in America brought by plaintiffs claiming that a weedkiller that a team of Israeli hackersfor-hire had used the vulnerability to inject spyware onto phones belonging to humanrights activists and lawyers. America’s Supreme Court gave the go-ahead for iPhone users to sue Apple. The case centres on whether Apple’s App Store, which takes a 30% cut of all sales, constitutes an unfair monopoly. Unlike Androidbased rivals, Apple’s phones are designed to prevent users from installing apps from other sources. British Steel hard, subjecting it to 20% tariffs under wto rules. Global investment in renewables has stalled, according to the International Energy Agency, taking the world further away from meeting the goals of the Paris agreement on climate change. This is aggravated by the continued expansion of spending on coal-fired power plants, especially in Asia. Investment in coalmining rose by 2.6% in 2018. By contrast, growth in new renewable installations was flat for the first...
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