Economist 20200411

42 Europe The Economist April 11th 2020

2 a shock that hit everyone without being some mutualisation anyway. And like their That cheery mood seems like ancient
anyone’s fault,” says Lucas Guttenberg of southern counterparts, northern govern- history. Greece faces some of the severest
the Jacques Delors Centre in Berlin. ments must also deal with restive parlia- disruption of any euro-zone economy, says
A more worrying difference is political. ments and troublemaking populists. Jakob Suwalski of Scope, a credit-rating
In Italy, which sits on a debt pile of over agency, who predicts a fall of anything
€2.5trn, Euroscepticism had emerged as a Countless proposals aim to square the from 7% to18% in gdp this year. No country
powerful force even before the corona cri- difference. There is talk of turning the eu’s in the euro zone other than Cyprus de-
sis—channelled largely through Matteo small seven-year budget into a new “Mar- pends more than Greece on tourism, which
Salvini, a former deputy prime minister shall Plan”. The Dutch have proposed a has practically ceased to exist. The sector
who leads the hard-right Northern League. small fund that would dispense no-strings accounted for half of economic growth in
In early April one poll found that 53% of aid. Perhaps most prominent is a plan of 2018, more than 20% of gdp (90% in some
Italians were ready to leave the euro or eu. Bruno Le Maire, France’s finance minister, parts of the southern Aegean) and a quarter
This has forced Giuseppe Conte, the non- to establish a temporary post-crisis rescue of the country’s jobs. Now the tourists have
partisan prime minister, to toughen his fund that would issue common bonds stopped coming. On March 19th the gov-
line, describing the esm as “utterly inade- worth several billion euros, perhaps to be ernment ordered hotels across Greece to
quate”. Recalling the austerity forced on repaid by a European “solidarity tax”. Mr Le close from March 23rd until April 30th, a
euro-zone wards like Greece by foreign Maire carefully avoids the word “corona- date that will surely be extended. The Hel-
creditors, many Italians fear that esm loans bond” while echoing Mr Sánchez’s apoca- lenic Chamber of Hotels estimates that the
will bring impossibly exacting condi- lyptic talk about the risks of failure. But so loss of profits thanks to cancellations has
tions—even though Germany has prom- far he has failed to win over Germany. already exceeded half a billion euros.
ised leniency. The loans also stack up on
national balance-sheets. As the Italian Even Angela Merkel, Germany’s chan- In mid-March the Greek government re-
government negotiated on April 7th Mr Sal- cellor, calls the corona crisis the biggest stricted public gatherings to ten people. It
vini appeared on television to denounce test the eu has ever faced. Yet her govern- also banned arrivals of non-European Un-
the “loan sharks” of Berlin and Brussels. ment’s diagnosis of the problem remains ion residents and travel to and from Alba-
Spain’s Socialist prime minister, Pedro fundamentally at odds with much of the nia, Italy, North Macedonia and Spain. And
Sánchez, is less hostile than Mr Conte to rest of the euro zone. The debate is not over, it ordered the closure of all retail business-
the esm. But he has also abandoned Spain’s but Costa-style optimism is thin on the es other than supermarkets, pharmacies,
typical Euro-quietism, warning that ruling ground. “Whatever they do magic up is un- petrol stations, pet shops, food-delivery
out coronabonds would risk the credibility likely to meet the scale of the need,” says companies, groceries, bakeries, kiosks and
of the eu in countries like his. During the Mr Rahman. “Something may break.” 7 banks. Greece is a nation of small business-
euro crisis, in which Spain’s banks had to es, most of which have scant resources to
be bailed out by the esm, Spaniards knew Greece’s vulnerable economy weather hard times. On March 23rd the
they were paying the price of their own ir- government further tightened restrictions
responsibility in inflating a property bub- A terrible toll on by imposing a national lockdown.
ble. This time they have simply been hit by tourism
bad luck. Rejection will spur Eurosceptic On top of an emergency boost of €10bn,
sentiment that populist parties on the left BERLIN Mr Mitsotakis insists that the country has
and right would be happy to harness. “more weapons” to protect the economy,
Neither Italy nor Spain is on the preci- Covid-19 is hitting Greece even harder after around €12bn of its paper was de-
pice. But the weakness of their fiscal posi- than other economies in the euro zone clared eligible for inclusion in a €750bn
tions—debt-to-gdp ratios of 136% and 97% bond-purchasing programme that has
respectively last year—is showing. Their At the start of this year it seemed as if been launched by the European Central
responses to covid-19 have been more tim- Greece might have turned a corner. Bank. That should help to hold down the
id than Germany’s (see chart on previous After a downturn that lasted longer than risk premium on Greek government debt.
page), despite the havoc it has wrought in America’s Great Depression, its economy It is also, perhaps, a signal that the eu is
their countries. More worryingly, growing was growing again. Market capitalisation prepared to believe in Greece’s recovery—
debt may inhibit their ability to pay for re- at the Athens Stock Exchange rose by 47% once the virus is tamed. 7
covery. The ecb is no panacea: its bond- in 2019, the sharpest increase in the world.
buying could be indirectly undermined in Tourism was booming, consumers were The plague of Athens
May, when Germany’s constitutional court spending and Greek banks were reducing
rules on the legality of its quantitative-eas- their burden of non-performing loans.
ing programme; and anyway it cannot last
forever. “At some point, markets will ques- Business confidence at the start of this
tion Italy’s debts,” says Nicola Nobile at the year was at an all-time high, bolstered by
Oxford Economics consultancy. the election last July of a pro-business con-
That calls for a “second line of defence”, servative prime minister, Kyriakos Mitso-
says Grégory Claeys at Bruegel, a think- takis, who promised to sweep away obsta-
tank. Yet Germany continues to rule out cles to business. The Harvard-trained
coronabonds, and the Dutch appear even former banker started well. He cut Greece’s
more immovable (although Mr Hoekstra labyrinthine red tape to make it easier to
eventually apologised for his tone). The start a new business. He reformed labour
sceptics’ old arguments about moral haz- laws, reducing the cost of firing an employ-
ard and the risks of common borrowing ee. He lowered taxes on corporations from
without centralised supervision have been 28% to 24%. Last September he fully lifted
supplemented with new ones: a corona- capital controls for individuals and com-
bond would take too long to establish, and panies. In November he signed off on a
institutions like the esm and eib involve €600m ($650m) investment by China
Ocean Shipping Company in Piraeus,
Greece’s largest port.

The Economist April 11th 2020 Europe 43

Russia

The invisible
leader

Vladimir Putin is leaving the battle Turkey and covid-19
against the virus to others
Perfumed guardian
For the past 20 years Russians have
been told they could not survive with- ISTANBUL
out their superhero president, Vladimir
Putin. Only a month ago, a Soviet-era A splash of kolonya defends Turks against the virus. And it smells nice
cosmonaut-turned-politician urged parl-
iament to lift constitutional restrictions In most regards, Turkey’s response to (57%) and the Netherlands (50%).
that require him to step down as president the covid-19 outbreak has not been out But nothing quite matches Turkey’s
in 2024. He was the only one who could of the ordinary. The government has
save the country from crisis, she said, and cancelled all international flights, sports love for cologne. Named after the Ger-
should be allowed to run again and again. events, and communal prayers at the man city in which it was invented, co-
country’s 90,000 mosques. Schools, logne arrived in the Ottoman empire in
The public was also told over the past universities and restaurants have been the 19th century. It found a brand ambas-
few months that the threat of the new closed. People over 65 and under 20 have sador in Sultan Abdulhamid II, who
coronavirus was greatly exaggerated, that been ordered to stay at home. carried Atkinsons cologne wherever he
the Americans had invented it to harm Chi- went and could get through a bottle in a
na, and that Russia was well protected. Unlike other countries, however, matter of hours. The habit caught on, and
Now, Moscow and many other cities are in Turkey has also made it a matter of policy cologne made its way into Turkish vo-
lockdown, while the number of cases is ris- to keep its citizens supplied with co- cabulary, initially as odikolon (from eau
ing exponentially. Yet Mr Putin has all but logne. On March 18th President Recep de Cologne) and eventually as kolonya.
vanished from public view, hunkered Tayyip Erdogan promised to distribute
down in his residence. If there is blame in the stuff to the elderly. Days later, local To this day, in homes across Anatolia,
the air, he does not want to catch it. producers pledged they would not raise hosts sprinkle kolonya on their guests’
prices during the pandemic. Officials hands to kill bacteria (and body odour),
To be sure, Mr Putin did perform one of vowed that stocks would never run low. before stuffing them with sweets and tea.
his trademark publicity stunts for the tele- Waiters do the same for patrons at res-
vision cameras, donning a bright yellow Turkey is a land of germophobes. taurants, and bus attendants for pas-
hazmat suit and a respirator and visiting a Food vendors hand out wet-wipes. The sengers on long-distance routes.
hospital treating covid-19 patients. But secular and pious alike wash their hands
such stunts have only made the absence of religiously. Asked how often they do so Since the outbreak, kolonya has been
empathy and leadership he has exhibited after a trip to the toilet in a 2015 survey, flying off the shelves. One online retailer
all the more apparent. Turks scored higher (94%) than any has reported a 3,400% increase in sales.
country in Europe save Bosnia and Her- Since kolonya is mostly alcohol, it may
Mr Putin has avoided personally impos- zegovina, trouncing France (62%), Italy indeed destroy the virus. Granted, soap is
ing or even mentioning such words as cheaper. But kolonya smells nicer.
“quarantine” or “lockdown”. Nor has he an-
nounced a state of emergency, fearing that of one of the largest municipal budgets in people search for alternatives to official
this would hurt his approval ratings, which the world. Mr Sobyanin has emerged as a “news”. A close ally, Anastasia Vasilyeva,
have been sliding for months. He did, how- tough, decisive leader not only fighting the the formidable leader of an independent
ever, extend “non-working days” until the crisis hands-on in Moscow but also co-or- doctors’ union, has waged her own cam-
end of April. dinating the work of other regions. Mr Pu- paign against the inadequacy of Russia’s
tin, meanwhile, seems preoccupied with medical system. She has gained enough at-
Conspicuously, he has said nothing propaganda. He has sent Russian military tention to make her a target of Russia’s re-
about how the government plans to sup- planes loaded with medical kit to America pressive state. On April 2nd, as she tried to
port the economy. Public-sector employ- and Italy, perhaps to remind domestic vot- deliver masks and gloves to a small hospi-
ees, who are 40% of Russia’s labour force, ers that Russia is a superpower. tal outside Moscow, the police roughly de-
will continue to get paid. But private firms tained her. Amnesty International, a
have been left high and dry. Mr Putin has The crisis has presented a new opportu- watchdog, commented that “It is stagger-
not spelled out a national plan for fighting nity for Alexei Navalny, Russia’s best- ing that the Russian authorities appear to
the epidemic. (Some Russian commenta- known opposition leader. His regular You- fear criticism more than the deadly
tors recall how Stalin retreated to his dis- Tube broadcasts about “Putin’s betrayal of covid-19 pandemic.” 7
tant dacha in the first few days after Ger- his people” are getting about 2m views, as
many attacked the Soviet Union in 1941.)

Unpopular measures will no doubt have
to be taken. Mr Putin has pushed the re-
sponsibility for them down to the regional
governors. This might have made sense
had he not spent the past 20 years disman-
tling Russian federalism, centralising
power and depriving the regions of politi-
cal autonomy and financial resources.

One notable exception is Moscow,
whose mayor, Sergei Sobyanin, sits on top

44 Europe The Economist April 11th 2020

Charlemagne Zoom diplomacy

The coronavirus has torpedoed the EU’s surprisingly personal way of doing politics

“Please, mute your microphone,” begged the message server. Monologues have replaced dialogues. Compromise is
splashed across the video-conference screen. That the meet- tricky on a conference call. Normally, retreats and u-turns happen
ing contained the French president and the German chancellor, outside the main room, in even greater seclusion. It is in these
along with the other 25 heads of government in the eu, proved no smaller meetings that texts are fiddled with and egos stroked.
shield against the banal horrors of remote working. Dodgy con- (Meanwhile any leaders who care little about the outcome catch up
nections, muttering off-mic and unflattering camera angles are on reading or sleep.) These side meetings have witnessed the most
now a fact of life at the top of European politics just as they are in dramatic recent moments in the eu. At the height of the Greek cri-
any office grappling with life in a time of coronavirus. A Europe- sis, in the summer of 2015, Donald Tusk refused to let Angela Mer-
wide lockdown has wrecked the eu’s way of working, at precisely kel and the then Greek prime minister Alexis Tsipras leave such a
the moment the continent is struggling to grapple with a pan- meeting without an agreement. In an era of “Zoom diplomacy”—
demic and stave off economic depression. named after the video-conferencing software—such breakouts are
now much harder, moan diplomats, making progress slower.
If you were to design a body to spread the new coronavirus,
then you would come up with something akin to the eu. A con- Now is obviously a terrible time for sluggish diplomacy. In the
stant stream of diplomats heads into Brussels, where they lock coming weeks, European leaders must compose an economic res-
themselves in airless rooms to hammer out agreements, before cue package, sifting through a soup of acronyms with billions of
flying back home. Every month, thousands make the absurd trip euros at stake. This cocktail of high politics and tiny details is dan-
between Brussels and Strasbourg—about 270 miles (430km)—for gerous. A leader’s mistake could foreshadow the break-up of the
the European Parliament’s plenary sessions. Lobbyists and hang- euro zone. Even a smaller error could swiftly guillotine a politi-
ers-on from across the globe visit to pay fealty to whichever com- cian’s career. Such negotiations are difficult enough in person,
mission official or parliamentary committee chair dictates the never mind sat opposite a disembodied face on a screen, with—in
regulatory fate of their industry. Covid-19 has jolted this carousel the case of Luxembourg’s prime minister—a large painting of a can
to a halt, throwing into confusion the social mores and practical- of Pringles behind his head.
ities of life in the Brussels bubble.
Proximity is a weapon in Brussels, where meetings run on until
Nowhere is this more true than at the head of the organisation. the early hours in the hope of a breakthrough. Such late finishes
The European Council is where the eu’s 27 leaders gather to solve are a feature rather than a bug of European gatherings, with lack of
the continent’s trickiest political questions. Originally envisaged sleep acting as a form of benign torture. Even bog-standard legisla-
as an opportunity for a fireside chat between the men (it was the tion is signed off in this way, with officials from member states and
1970s) who ran Europe, it still retains the features of a cosy dining meps scrapping over every line in the final stage of the lawmaking
club, argues Luuk van Middelaar, author of “Alarums and Excur- process well into the night in so-called “trilogue” meetings. A win-
sions”, which looks at how the eu operates in a crisis. In normal dowless meeting room can feel like a temporary prison cell in a
times, leaders use summits to speak frankly in near-total privacy, way a video conference never will. Likewise, national concerns ap-
with just a handful of civil servants for company. In person, Euro- pear distant when meeting face-to-face in Brussels, argues Mr van
pean summits are a cross between a psychiatrist’s couch, where Middelaar. European leaders have the space to think of a world be-
leaders pour out their political angst to the few people qualified to yond their home country. It is hard to lose oneself on a video call.
empathise, and a bullring, where they try to gore each other.
The political is personal
All this has changed. Now the regular meetings resemble the At the lower altitude of power, a form of Potemkin politics has tak-
interminable results section of the Eurovision Song Contest, with en over Brussels. Daily press conferences at the European Com-
national leaders rather than d-list celebrities, grumbles one ob- mission still take place, with its chief spokesperson on stage in an
otherwise empty auditorium. Journalists email in questions, giv-
ing it the air of a peculiar call-in television show for people ob-
sessed with state-aid rules. A nearly empty European Parliament
plays host to a handful of meps and visiting dignitaries. Daily busi-
ness is logistically tricky. Getting hold of interpreters, who trans-
late meetings into the 24 official languages of the eu, has proved
difficult. The language of Europe may still be translation, as Um-
berto Eco argued, but in a video conference it tends to be English. If
arranging a meeting featuring 27 leaders is tricky, try doing the
same for 705 meps.

Yet the legislative gears still turn, albeit with the occasional
grinding noise. The European Parliament has held the first remote
vote in its 62-year history, with meps emailing in their ballots. The
restaurants surrounding the eu’s institution may sit empty, but
mischievous ambassadors and officials from the institutions still
gossip with journalists, offering the same mix of accurate analysis
and blatant spin, over Zoom rather than over lunch. Few relish the
thought of keeping the new way of doing things. A reliance on the
personal side of politics belies Brussels’ technocratic reputation.
But the eu can still function. As long as people remember to mute
their microphones. 7

International The Economist April 11th 2020 45

Religious divides Pope Francis has sounded surer: “Thick
darkness has gathered over our squares,
Living on a prayer our streets and our cities; it has taken over
our lives, filling everything with a deafen-
CAIRO AND ROME ing silence and a distressing void.” But the
broader response of Western faith has been
The pandemic has exposed and deepened fissures within religions unimpressive, argues Marco Ventura of Si-
ena University. “Even for many believers,
In the 2,000 years since the story of Jesus faiths, reactions have ranged from meek medical officers are the new prophets.”
was first told in Rome, his followers have compliance to truculent defiance.
never seen an Easter like this. In Catholi- Not all Christians agree. Some Ameri-
cism’s home, the most poignant moment Covid-19 has not generally widened fis- can evangelicals, including vocal suppor-
in the Paschal drama comes on Good Friday sures between faiths. Rather, it has wid- ters of Donald Trump, have been reckless
when the pope leads worshippers on a ened those within the ranks of all great reli- denialists of covid-19. A preacher in Flori-
walk, with 14 stops, enacting the progress gions. They were already squabbling over da, Rodney Howard-Browne, was briefly
of Jesus towards his execution. how far old beliefs could live with modern arrested on March 30th after busing people
views of Earth’s origin. The pandemic exac- to worship, insisting he could neutralise
This year that has proved impossible. It erbates the rift between science-defiers the virus. Some politicians seem half-sym-
was announced that instead, Pope Francis and those who respect the laboratory. pathetic. Two days later the state’s gover-
would move about in an empty St Peter’s nor, Ron DeSantis, listed religious activi-
square. Two days later, on April 12th, in- For some, the bafflement is palpable. ties among “essential services” that could
stead of proclaiming the resurrection of Je- Russian Orthodoxy’s Patriarch Kirill de- continue (without crowds) despite a lock-
sus to a multitude, he would officiate al- clared on March 29th: “I have been preach- down. In at least a dozen other states, such
most alone in its vast basilica. Millions ing for 51 years...I hope you understand activities were left unimpeded.
could observe, but only electronically. how difficult it is for me to say today, re-
frain from visiting churches.” Among east- Secularist rage has been rising since
Past emergencies, from recessions to ern Christianity’s followers, many will not: early surges in the epidemic were traced to
wars, have galvanised people to find new clerics in Georgia, for example, continued religious recklessness. In South Korea
meaning in old rituals. But nothing pre- to offer the faithful consecrated bread and hundreds of members of the secretive
pared believers for the world of covid-19, in wine, by which it is impossible, they insist, Shincheonji Church of Jesus contracted the
which those rituals, the gestures and gath- to be harmed. virus at packed services and spread it. The
erings at the heart of their identity, have be- government complained that the church
come a public danger. For innovative reli- Also in this section was not co-operating in tracing them. Its
gious types who already use technology leader later apologised. An Islamic gather-
with confidence (see box), the crisis will ac- 46 Virtual worship ing in Malaysia in February helped spread
celerate a trend. But for more established the virus to neighbouring countries.

Elsewhere, liberal clergymen, rabbis
and imams have heeded calls to suspend1

46 International The Economist April 11th 2020

2 gatherings. But among ordinary people, ists in legal battles to keep churches open. to say. It affirms that the entire world is
the order to stop their cherished rituals In the end, the survival of religions may mysteriously blessed every time bread and
feels like a dark conspiracy. “Not even the wine are sanctified, regardless of how
communists completely forbade Easter depend on their finding a way of explain- many are present. That helps explain the
services” is a refrain in eastern Europe. ing to followers, in their own terms, why determination of Greece’s bishops to cele-
Within Judaism, many have reacted cre- their spiritual duty now lies in suspending brate “behind closed doors” this month the
atively, accepting, for instance, that a min- rites hitherto regarded as vital. As Shadi services leading to Orthodox Easter.
yan, the ten-strong quorum for worship, Hamid of the Brookings Institution, a
might assemble electronically. The ultra- think-tank, notes, Muslim jurisprudence James Alison, a radical Catholic priest,
Orthodox, or Haredim, however, have dug has accepted that human survival can proposes a solution both revolutionary
their heels in. In Israel the Haredi strong- trump other norms: a Muslim can eat for- and traditionalist. He is encouraging
hold of Bnei Brak has been a covid-19 hot- bidden pork rather than starve. For liberal- households to practise “Eucharistic wor-
spot. People have insisted on gathering for minded Jews, the ideal of tikkun olam, or re- ship” at home: to bless bread and wine and
prayers, weddings and funerals, defying a pairing the world, is higher than rules go- invoke the presence of Jesus. His approach,
lockdown and exacerbating chronic ten- verning prayer or diet. he says, affirms the intimacy and mystery
sions between the Haredim and the state. of classical worship but challenges the idea
Elsewhere zealots already at odds with Communion, during which Christians of a caste of celebrants. As he points out, a
the state or with established religious pow- consume bread and wine which some be- lack of manpower in some parts of Chris-
ers have found in the virus a fresh battle- lieve to have been transformed into the tendom is already prompting a rethink of
ground. In Iraq Muqtada al-Sadr, a fiery body and blood of Jesus, throws up partic- the role of priests: the virus could be the
cleric, has challenged Grand Ayatollah Ali ular challenges. Rule-minded Christians coup de grâce. Pope Francis has called the
al-Sistani, a Shia leader who has de- find an electronic Eucharist untenable: the pandemic “a time to separate that which is
nounced those who spread the virus as ritual has to be physical. necessary from that which is not”. Some
murderers. On March 5th Mr Sadr prayed at may take him at his word. 7
the entrance to the Imam Ali shrine in Na- And yet traditional Christian teaching
jaf until caretakers opened the teak doors. may also have hygienically helpful things
It remained open, and mourners carry
their dead around the shrine in coffins. The Virtual worship
radical preacher has called coronavirus a
punishment for gay marriage, as have Our Father, who art in cyberspace
some fundamentalist Christians.
Where the state broadly controls Islam, NEW YORK
as it does in the Gulf monarchies, orders to
suspend Friday prayers have been obeyed. The coronavirus gives a boost to online Christianity
The Saudis have told pilgrims to defer any
plans to make the haj in July. But when Enter the Reverend Albert Bogle’s rather old hat. American preachers began
Ramadan begins around April 23rd, au- coffee shop and you might see a menu experimenting with radio in the 1920s
thorities in all Islamic lands will struggle to listing espressos, enticing cakes and a and televangelism was in full swing as
restrain communal meals to break the fast. bell waiting to be rung. It never will be. early as the 1950s. African Pentecostal
In Iran, one of the first- and worst-hit Mr Bogle resides in Scotland, but his churches, among the most successful of
countries, the religious authorities wield coffee shop exists only online. A parish- Christian brands, stream services to
ultimate power. Their decision on March ioner can “enter” the virtual café by migrant diasporas. Nowadays pastors do
16th to suspend pilgrimages to holy places, clicking a link to that day’s Zoom meet- not just broadcast to their quarantined
including those in the city of Qom from ing. Mr Bogle started the virtual coffee flocks, says Heidi Campbell, a scholar of
which infection had spread to other coun- shop as a way for people to connect while religion and digital media at Texas a&m
tries, was criticised as too late by secular observing social distancing. But his University. They expect them to partici-
liberals, too harsh by the ultra-devout. Sanctuary First church started offering pate too, using apps and social media to
India is one of many places where poli- digital worship resources long before make virtual services interactive.
ticians must collaborate with religious covid-19 confined people to their
forces. In Ayodhya, claimed as the birth- homes—and it is not the only one.  Religions whose declared aims in-
place of Rama, officials tried with mixed re- clude the preservation of ancient revela-
sults to limit celebrations of the Hindu god. Streaming church services is actually tions have always had an ambivalent but
It was left up to the Hindu organisers to en- ultimately pragmatic attitude to tech-
courage restraint; they obeyed reluctantly. Hallowed be thy username nology. When printing transformed
On the spectrum of reactions, the Cath- communication in the 15th century, the
olic one stands out as respectful of science. Catholic clergy saw both opportunities
Today’s Holy See differs from the one and dangers. In the end it was the Prot-
which in centuries past persecuted astron- estant Reformers who benefited.
omers. But some critics, including conser-
vative American Catholics, see in its meek When the coronavirus retreats, will
response the church’s broader weakness. digital worship go with it? Not likely.
The contrast between cautious Catho- Life.Church, a mega-church based in
lics and gung-ho evangelicals has been Oklahoma that helps other parishes
sharp in Brazil. Catholic bishops and politi- navigate the online world, says the num-
cians have co-operated with the suspen- ber of communities using its Church
sion of services, while President Jair Bolso- Online Platform surged from 25,000 to
naro, an evangelical who has called the 47,000 in March alone. Other outfits,
virus “just a sniffle”, has joined co-religion- such as Virtual Reality Church and Sanc-
tuary First, expect to grow. In the mean-
time, Mr Bogle hopes to start running his
virtual coffee shop 24 hours a day. He is
considering starting one for Spanish-
speakers: “I think that could be real fun.” 

Business The Economist April 11th 2020 47

Also in this section
49 Bartleby: Inside jobs
50 SoftBank and sensibility
50 Zoom in, Zoom out
52 Schumpeter: Strategic pile-up

Telecommunications over from commerce into geopolitics.
At first blush, Western panic over Hua-
5Geopolitics
wei seems overblown. Many telecoms ex-
SAN FRANCISCO AND WASHINGTON, DC perts dismiss 5g as hype by makers of de-
vices and networking kit drumming up
America’s campaign against Huawei has been fruitless. Fortunately there may be business. They are partly right. 5g will not
another way to stop China dominating next-generation mobile networks profoundly alter consumers’ lives. It prom-
ises faster connections, but often only in
In the 1990s America’s telecoms industry nating the global 5g market. New netheads optimal conditions (with a base-station
was split between two rival factions. On can be found among proponents of “fully antenna in line of sight). Similar download
one side were the “bellheads”, named after virtualised mobile networks”, built on speeds can be achieved by extending 4g.
the former telephone monopolist, Bell, cheap hardware and controlled by software Outside China, South Korea and a few other
and representing firms created by its in a manner similar to computing clouds. Asian countries, the uptake of 5g may be
break-up in the 1980s. They championed They include Rakuten, a Japanese technol- barely half as quick as of 4g, which reached
“circuit switching”, which linked custom- ogy group, which launched the first full- 30% of mobile users within five years of
ers via dedicated connections with highly scale virtualised network on April 8th. If launch in 2009, reckons ubs, a bank.
specialised, highly reliable hardware ar- netheads have their way, it may prove as
ranged in a strict hierarchy. They believed momentous as Amazon’s launch in 2006 of Edging ahead
in proprietary technology, vertical monop- its trailblazing cloud-computing arm. But 5g is more than just a faster way to
olies and deference to regulators. stream Netflix on the go. It enables net-
Earlier iterations of mobile technology works that can support the “Internet of
Set against them were the “netheads”. all had their winners (see chart on next Things” (iot): a world of connected devices
They had grown up with the internet, page): mobile carriers and handset produc- from toothbrushes to tooling machines.
which is based on “packet switching”: in- ers like Nokia and Ericsson (2g), smart- Rather as the cloud has turned computing
formation is digitised, cut into small pack- phone-makers, notably Apple, and online into a utility like electricity, 5g networks
ets, each routed along the best available giants reaching consumers on such de- would permit moving more number-
connection to the destination, and then re- vices, such as Amazon or Google (3g and crunching to places where it is needed. The
combined. Netheads favoured open- 4g). 5g will be no different. It is too early to extra processing oomph could allow base
source software, collaboration between say with conviction who will take the big- stations on networks’ “edge” to guide self-
firms and decentralised decision-making. gest slice of the $2trn annual connectivity driving cars, or robots on factory floors.
boost to global gdp by 2030 that the McKin-
This old debate is playing out again, this sey Global Institute, the consultancy’s Cristiano Amon, president of Qual-
time in mobile technology—specifically its think-tank, predicts in health care, manu- comm, a big American maker of chips for
fifth generation, or 5g. Present-day bell- facturing, transport and retail alone. But smartphones, says that 5g will not just
heads are behind America’s assault on one thing is clear: America does not want it power telecoms but much of economic ac-
Huawei, the world’s biggest maker of tele- to be China. The battle over 5g is spilling tivity, making wireless networks into criti-
coms gear and China’s best shot at domi- cal infrastructure. Self-serving, perhaps,
given that his firm stands to make billions1

48 Business The Economist April 11th 2020

2 from 5g processors—but not implausible. bosses, who warn that such a move would ly, as Rakuten shows, the bellhead ap-
The technology can be conceived of as the hurt their industry. A cabinet-level meet- proach they embody is no longer the only
weft in a dense carpet of wireless connec- ing at the White House in late March came game in town. Mobile networks have been
tivity whose warp comprises things like up with a new plan. This would require any the bellheads’ last bastion. Base stations
next-generation Wi-Fi, novel short-range firm, domestic or foreign, that uses Ameri- rely on specialised hardware. Mixing kit
links, constellations of low-orbit satellites can chipmaking equipment or know-how from different suppliers in one network
and, yes, 6g (already under development). to obtain an export licence if it wants to sell risks dropped connections as users move
It is Chinese dominance of this wireless certain processors to Huawei. around and switch from one base station to
tapestry that spooks many Western securi- another. So carriers don’t do it.
ty hawks. If Huawei, suspected of links to Whatever its final shape and severity,
the Chinese state, is allowed to build even the plan lays bare that for the Trump ad- Many would like to, fed up with pricey,
parts of these networks, it could wreak hav- ministration the 5g race is not about out- inflexible kit. Luckily, engineers can now
oc if ordered by its Communist overlords, innovating China but hobbling it. It has no replicate all functions of a network in soft-
worries Elsa Kania of the Centre for a New credible strategy for a speedy rollout of 5g ware. New industry groups to promote
American Security, a think-tank. The risk is across America, says Paul Triolo of Eurasia such alternatives, such as the o-ran Alli-
less that Huawei hoovers up data—exfiltra- Group, a consultancy. Ideas such as having ance, are devising open specifications for
tion would probably be spotted and could the state build a national network and rent base stations. The Telecom Infra Project,
be prevented by encryption. A bigger fear is capacity to carriers (as Mexico is doing in which grew out of Facebook’s efforts to
that in a conflict between China and the 4g) or letting a private firm operate a lower the costs of connectivity in poor
West, the firm could shut down an enemy’s wholesale one have gone nowhere. countries, helps network operators every-
network, and maybe even turn iot devices, where procure and combine components
such as driverless cars, into weapons. Base instincts from different producers. Some carriers,
Western security experts disagree on Left to their own devices, American carri- including Spain’s Telefónica and Vodafone
the practicality of such an attack—or its ers have put up 10,000 5g base stations. Co- in Britain, are testing the new approach.
wisdom, given the retaliation it would in- vid-19 lockdowns will slow installations in
variably provoke. But the possibility has the West, even as China eases its own curbs But it is Rakuten that has built an entire
President Donald Trump’s administration now that its epidemic is apparently under network based on an open architecture.
in a bellheaded tizzy. It has obsessed over control. Chinese carriers, which boast Though 4g for now, 5g is promised in June.
China’s hardware, bemoaned the lack of an 150,000 base stations, want more than 1m The firm has assembled a network with kit
all-American vertical monopoly of its own across 330 cities by the end of 2020. from different suppliers (such as Nokia
and declared 5g a “race”, which China must and America’s Cisco), built its own com-
lose for America to win. In the ultimate act of desperation, puting platform and manages it all using
This zero-sum approach has had limit- Washington is toying with European-style software from Altiostar, an American start-
ed success, even on its own terms. Ameri- industrial policy, once considered anti- up in which it has a majority stake. “We did
can technology companies quickly found thetical to American capitalism. In Febru- our own integration, which was not easy.
legal loopholes which let them keep selling ary William Barr, the attorney-general, sug- But there was no plan b,” says Tareq Amin,
to Huawei. On March 31st the firm reported gested that America put its “large market Rakuten’s chief technologist. He hopes
a 19% rise in annual revenue last year, to and financial muscle” behind Ericsson and other firms will follow its lead, perhaps
$123bn. It spent $19bn with American sup- Nokia, Huawei’s enfeebled European ri- even use its technology. A few are consider-
pliers in 2019, $8bn more than the year be- vals, and the only firms besides Samsung of ing it. Asked if Rakuten was a model for
fore. Despite threats to cut off the flow of South Korea allowed to build 5g networks Dish Network’s planned $10bn investment
American intelligence to allies that refuse in America (Lucent, America’s last domes- in 5g, the American satellite-tv provider’s
to banish Huawei from their networks, tic producer, merged with Alcatel of France boss, Charles Ergen, said that Dish “learned
only three of them—Australia, Japan and in 2006; Nokia later bought the pair). There a lot” from the Japanese firm.
New Zealand—have complied. Even Brit- has been talk of subsidies for the Euro-
ain, America’s closest partner in security peans, sweeteners for a tie-up between The “telco cloud”, as Pierre Ferragu of
matters, in January permitted its carriers to them or a takeover by an American tech New Street, a research firm, calls it, looks
use Huawei kit in parts of the country. giant or private-equity firm. poised to billow. When it does, carriers
America’s tough talk has backfired, may be less desirous of Huawei gear, which
prompting Huawei to redouble efforts to Samm Sacks of New America, a think- tends to be cheaper than Ericsson’s or No-
wean itself off American technology. Al- tank, warns that European and, ironically, kia’s and no less nifty. Rakuten claims its
though such claims are hard to verify, Tim Chinese regulators may block any deal on network cost roughly half as much as a
Danks, a Huawei executive, has said that of competition grounds. More fundamental- conventional one to build; some of its 5g1
the 600,000 base stations the firm has
shipped to mostly Chinese carriers, 50,000 G-forces Internet firms Mobile carriers Smartphone-makers Feature-phone-makers
had no American parts. Engineers who re- 5G 5
cently took apart Huawei’s top-end smart- Market capitalisation* 3G iPhone 4G 4
phone identified only a few American- $trn
designed chips.
Hawks in Washington are now urging Launches:
Mr Trump to tighten the screws, for in- 2G
stance by lowering from 25% to 10% the
share of American technology by value that Companies founded: 3
products can contain for their makers, in 2
America or elsewhere, to be allowed to sup- Amazon Google Facebook
ply Huawei. For all his China-bashing, Mr
Trump appears to have demurred, instead 1
heeding the concerns of America’s tech
0

1991 93 95 97 99 2001 03 05 07 09 11 13 15 17 20

Source: Datastream from Refinitiv *Selected companies

The Economist April 11th 2020 Business 49

2 base stations will be no pricier than a Wi-Fi firm, warns that “making parts from differ- $750m research fund to spur the develop-
router, it says. Emerging-world consumers ent firms work well together is always ment of open-architecture networks and
should love it. So should security hawks. tricky”; such niggles delayed Rakuten’s help carriers purchase such equipment.
An open architecture gives operators more launch by six months. And many carriers Some American lawmakers want to man-
control over what gear goes into their net- that have already begun erecting conven- date the use of gear with open interfaces.
works; Rakuten’s network contains no tional 5g base stations may have locked
“black box” it must blindly trust. themselves into a single supplier for years The Trump administration faces a clear
Huawei has dismissed the nethead ap- to come. choice. It can either bellheadedly try to beat
proach as “a dream”. In contrast to Ericsson the Chinese at their own game, going after
and Nokia, the Chinese giant has yet to join Still, governments could promote the Huawei and embracing industrial policy.
the o-ran Alliance. Perhaps channelling nethead alternative, argues Tom Wheeler, a Or it can do something altogether more
his former self as a lawyer for telecoms former chairman of America’s Federal American: help usher in innovation that
firms, Mr Barr has called it “pie in the sky”. Communications Commission, now at the lets many companies thrive at a time when
Stéphane Téral of Informa Tech, a research Brookings Institution, a think-tank. A bi- cheaper, better connectivity is precisely
partisan bill in the Senate would create a what a post-pandemic world needs. 7

Bartleby It’s cold outside

The pandemic will accelerate changes in the way people work

Crises offer the ultimate test for Slack, which allow teams to communicate Revolution”, a new book. Permanent
organisations. Under the pressure of on a dedicated forum. Stewart Butterfield, employees are an expensive burden,
a pandemic, many firms will change the Slack’s chief executive, says the company thanks to the associated costs like health
way they operate. Three trends that were started to detect a significant pickup in care (in America) and pensions (every-
already in train may be accelerated. First, teams being created in South Korea and where). Online tools already let employ-
the way that meetings are undertaken. Japan in the middle of February. A bigger ers forecast workloads and schedule
Second, the way that teams are organ- surge in business began in the week of workers instantly. The current crisis may
ised. Third, the widening divide between March 9th, a hint that companies were prompt firms to embrace these, as they
company insiders, namely full-time beginning to take social distancing seri- reconsider which full-time workers are
employees, and outsiders, such as free- ously. All told, use of Slack increased essential, and which are not. 
lancers and contractors. approximately 20% between February 1st
and March 25th, while simultaneously The pandemic will also accelerate the
So many meetings have been con- connected users increased from 10.5m on trend towards automation. In some cases
ducted via Zoom and other apps that March 16th to 12.5m on March 25th. companies will increasingly rely on
bosses may decide that this is a better automated processes to fulfil tasks,
approach than gathering everyone to- The divide between insiders and out- because some workers may fall ill. In
gether in one fusty room. One estimate is siders is probably the most significant other cases the push may come from
that 2.1m people downloaded the Zoom change. The first group are likely to be outside: more consumers will become
app on March 23rd, the day Britain went protected by their employers, who will pay used to shopping online, or interacting
into lockdown and the World Health all or most of their salaries as long as they with websites rather than waiting ages
Organisation warned that the pandemic can afford to. The outsiders, whose ties for call centres to answer their queries.
was “accelerating”. Even when people with firms are looser, may be cast adrift. Those habits look likely to stick after the
start returning to offices, many of those The divide helps explain a large part of the pandemic ends, reducing the need for
who did not catch the virus will be ner- surge in unemployment claims on both human employees.
vous about being in close proximity to sides of the Atlantic.
their colleagues. A reduction in the supply of secure,
The insider/outsider split is one of the full-paid jobs may coincide with an
Remote meetings have drawbacks. trends outlined by William Davidow and increase in demand for such roles. The
Conversations can be clunky and stilted, Michael Malone in “The Autonomous crisis will have taught a stark lesson to
and not everyone (including Bartleby) those who work in the gig economy: they
welcomes the need to be on camera. So are highly vulnerable. Independence and
physical meetings will not disappear the ability to manage your own time
altogether, but they will be a smaller sound appealing when work is plentiful.
proportion of the total. In hard times workers will appreciate
security, however tiresome the daily
Another change will be a greater focus commute may be. The spike in unem-
on communication between key employ- ployment will only increase the desire
ees. Worker interaction involves a lot for stable jobs. That seems likely to keep
more than meetings. Traditionally, a downward pressure on wages.
people have popped over to each other’s
desks for a brief chat. Often, these ex- Employees may be used to hearing
changes are all the more useful when that “we are all in the same boat”. But this
they involve someone from a different crisis is cementing a class system aboard
department. Such informal interactions corporate vessels. The managers have the
are not currently possible. first-class cabins and core workers get
en-suite accommodation but the free-
Email chains are an imperfect and lancers and contractors are clinging
cumbersome substitute. In the crisis, unsteadily to the lifeboats.
many firms have turned to apps like

50 Business The Economist April 11th 2020

Technology Eclipse of the Son Online collaboration

SoftBank and SoftBank share price, discount to Zoom in, Zoom out
sensibility sum-of-the-parts value*, %
SAN FRANCISCO
Meet the new Son Masayoshi ARM SoftBank Inverted scale
acquisition telecoms-arm IPO The videoconferencing firm’s
“Stone-cold crazy” was how a private- announced 0 popularity has brought problems
equity boss described the $1.7bn gold- Vision Fund WeWork
en parachute that SoftBank, a Japanese first-round failed IPO Eric yuan likes to crack jokes. But these
conglomerate, gave Adam Neumann, co- close days the boss of Zoom, a videoconfe-
founder of WeWork, as part of the co-work- 20 rence service of coronavirus-fuelled popu-
ing empire’s bail-out last autumn. Soft- larity, is in no mood for laughs. His firm,
Bank appears to have come to its senses. On 40 whose share price has surged by 49% since
April 2nd it scrapped a deal to buy up to the end of January, is trying to avoid a seri-
$3bn in WeWork shares, which would have 60 ous case of whiplash.
made Mr Neumann a billionaire. SoftBank
says American government probes into 2015 16 80 Zoom, founded in 2011, is part of a trend
WeWork, whose initial public offering im- 17 18 19 20 in tech known as “the consumerisation of
ploded in part over governance concerns, Source: Bernstein it”. The idea is that corporate services
mean it doesn’t have to make the purchase. Research *Estimated market value of main assets should be as easy to use as consumer ones.
Two WeWork shareholders who would minus capital-gains tax and debt Meetings on Zoom can be called with a few
have benefited from the deal are suing Soft- clicks and are free if they last no longer
Bank; Mr Neumann has yet to respond. As long as Mr Son can pull off the asset than 40 minutes and have fewer than 100
sale and cut debt, says Mary Pollock of participants. Zoom also keeps oodles of
Breaking with Mr Neumann is just one CreditSights, a research firm, SoftBank’s spare capacity, ensuring a good service. Its
example of a new, sober Son Masayoshi. In balance-sheet will emerge stronger. The 17 data centres around the world were built
March SoftBank’s billionaire boss manoeu- Alibaba stake is still a get-out-of-jail-free to withstand double the expected peak
vred to reduce risk at his company. It is to card, she says. For the time being, Mr Son load. But as a consumer-business hybrid
sell $41bn of assets over 12 months to fund has probably eased fears about his entire the company has focused much less on pri-
an $18bn share buy-back and pay off $23bn empire collapsing under its weight of debt. vacy and security than old-style cor-
of debt. He may part with some of a prized porate-it firms.
26% stake in Alibaba, a Chinese e-com- That will not stop investors worrying. If
merce titan. He even let a beloved startup Vision Fund firms run into trouble during The combination became a problem
go bust. OneWeb, which filed for bankrupt- the pandemic, they fear, SoftBank may res- after the coronavirus hit. The number of
cy on March 27th, planned to transmit cue them, as it did WeWork, which got daily users has exploded from 10m in De-
broadband from satellites—a key part of Mr $1.5bn on top of the cancelled share pur- cember to more than 200m today. This is
Son’s vision of ubiquitous connectivity. chase. The fund has $15bn left for follow-on technically manageable. But with popular-
investments, enough for a few years. Soft- ity comes scrutiny. Worrying reports come
He is under pressure to make conces- Bank has put in $27bn and pledged another almost daily about data leaks, iffy encryp-
sions. Over the past few years SoftBank $6bn. It could end up coughing up more. tion and “zoombombing”, the childish
took on more debt. Mr Son spent $52bn to practice of gatecrashing meetings and
buy Sprint, an American telecoms group “Masa is a visionary who loves big pro- showing porn or worse. “I really messed
and Arm Holdings, a British chip-designer jects, and founders get star-struck by him,” up,” admitted Mr Yuan on April 3rd, pro-
(SoftBank has just sold Sprint to t-Mobile, a says an investor close to SoftBank. “This mising that the firm would make amends.
telecoms rival). He then set up a $100bn needs to be tempered to be sustainable.” Mr
tech-investing vehicle with cash from Soft- Son overrode colleagues who asked about Zoom has every reason to relieve the
Bank, Saudi and Emirati sovereign-wealth cashflow and profits at portfolio compa- tension inherent in a model that aims to
funds, and a few private-sector investors. nies. Now things are changing at the Vision provide a corporate service but is now used
He splurged $75bn from it on stakes in 88 Fund, too. The dissenters are taken more by people stuck at home and craving con-
big tech startups (including WeWork). seriously and the fund is being harder- tact with the world beyond. Unless it does
headed. Firms are being asked to find other so it will create an opening for more busi-
As investors took fright at heavily in- sources of capital. Profit, not just growth, ness-oriented services, in particular Mi-
debted firms amid a pandemic-related has become more of a priority. Governance crosoft Teams, whose video service lags be-
market sell-off, SoftBank’s vital signs weak- at certain firms is being scrutinised, some- hind Zoom both in quality and popularity.
ened. In February and March the cost of in- times at the behest of the two big Gulf in-
suring its debt against default leapt by 2.72 vestors, says a person close to the funds. Rivalry between Zoom and Teams high-
percentage points. Standard & Poor’s, a lights a battle that has been brewing for a
credit-rating agency, cut SoftBank’s out- The Vision Fund could continue spill- while. On one side are firms that provide
look to negative. The gap between Soft- ing red ink over SoftBank’s accounts for a specialised tools for online collaboration,
Bank’s market value and that of its main while. In the last quarter of 2019 its $2bn such as Zoom and Slack, a corporate-mes-
underlying assets, such as its Alibaba loss all but wiped out the group’s profits. As saging app. On the other are those that offer
stake, widened to 66% (see chart). That led markets tumble, unlisted startups will lose a complete range of such services, like Mi-
Mr Son to announce the $41bn asset sale. value in line with listed firms. But some of crosoft and Google. If, as many predict,
Then Moody’s, another rating agency, add- its companies, notably in e-commerce and working remotely becomes far more com-
ed a two-notch downgrade, far into junk health care, are thriving. Business at Cou- mon even after the virus recedes, the com-
territory: selling prize assets amid a mar- pang, a South Korean e-commerce firm, petition to create the virtual office will in-
kets rout, it implied, looked desperate. has soared. Vision Fund executives see tensify. Expect to hear more about
Bytedance, the parent of TikTok, a video- Microsoft trying to entice customers into
sharing app, as another Alibaba in waiting. its world—and startups complaining that
the ex-evil empire is back to its old tricks. 7
Venture capitalists liken Mr Son to a
Mississippi riverboat gambler. His risk-
loving style is not going away, they say. But
his recent losing streak will force him to
play things safer—for a while. 7

52 Business The Economist April 11th 2020

Schumpeter Strategic pile-up

The idea that some industries are too important to leave to markets is back on the agenda

“If we learn anything from this crisis, [it is that] never again or genetic engineering as strategic. A government body called the
should we have to depend on the rest of the world for our es- Committee on Foreign Investment in the United States (cfius)
sential medicines and counter-measures,” thundered Peter Na- scrutinises the national-security implications of deals involving
varro, a White House trade adviser, on April 3rd. A few days later American firms. Worried about losing strategic assets cheapened
President Donald Trump pressed 3m, an American multinational by the market rout to foreign buyers, Australia has just tightened
which makes medical masks, to divert more of them home, at the its takeover rules. The eu is urging member states to do the same in
expense of other countries.  sectors like utilities and transport.

Mr Navarro and his boss are knee-jerk protectionists. But with In principle such rules are sensible. The trouble begins when
the market for masks broken by covid-19 (see Finance section), their opacity—cfius rules, for instance, are notoriously hazy—al-
their worries are understandable. So are similar noises by other lows politicians to extend the definition of “strategic” to include
national leaders. Emmanuel Macron, the French president, often things that are tied not to national survival, but to perceived na-
painted by critics as a free-trading neoliberal, has called relying on tional greatness. Governments have long pampered loss-making
others for food supplies “madness” and his finance minister in- national airlines, sometimes pretending that this has to do with
structed supermarkets to buy only domestic produce. The eu has the strategic importance of aircraft. In 2005, after PepsiCo briefly
curbed exports of some medical gear. India, the world’s biggest eyed Danone, a French yogurt-maker, France’s government vowed
maker of generic drugs, has done the same with hydroxychloro- to protect it and other “strategic” companies from foreign suitors.
quine, an antimalarial drug that some suggest (with little evi-
dence) might treat covid-19. Countries from Kazakhstan to Viet- Many businesses covet the designation. No wonder: it can be a
nam have cut food exports, leading the un to warn of shortages.  ticket to cushy cost-plus contracts (think Boeing), state subsidies
(Chinese national champions like Huawei) and protection from
Many of the restrictions will be lifted once the pandemic has irksome foreign competitors (just about anyone). And with a little
passed. But not all, for the virus has reinforced an old idea that was ingenuity, almost any firm can argue its products deserve the la-
already gaining ground again: that in an uncertain world, some in- bel. After all, who can predict what will be useful in a crisis? In the
dustries are “strategic”, simply too important for countries to leave second world war Britain retooled its furniture factories to pro-
to unfettered markets, and so deserving of special protection. The duce parts for the Mosquito, a capable wooden fighter-bomber.
notion is attractive in theory, but perilous in practice.  Amid the current pandemic lvmh, a French luxury group, is turn-
ing some perfume factories over to make hand sanitiser.
If the copious academic literature on strategic industries has a
conclusion, it is that no one can agree on what counts as one. The Still, governments should resist indulging firms too liberally,
narrowest definition covers sectors directly vital to war-fighting: for two reasons. First, sheltering them behind national-security
makers of weapons and of stuff needed to forge them (steel) and arguments is, like all protectionism, expensive. The semiconduc-
operate them (energy). Even in the tightly integrated eu most tor industry, for instance, is ferociously high-tech. Its planetary-
countries shield national defence firms. At its most expansive, the scale supply chain comprises ultra-specialised companies in Tai-
concept can encompass any economic activity, since all of it con- wan, Japan, South Korea and the Netherlands, each spending bil-
tributes in some roundabout way to a state’s defensive capability. lions on research. Even a superpower would struggle to replicate
Everything is strategic in North Korea. all this within the borders of a single country, as America and Chi-
na have both discovered. Makers of generic drugs are easier to nur-
Many reasonable opinions fall somewhere between these two ture at home. But even there, global supply chains have arisen be-
extremes. After the first world war Britain created the Forestry cause they are efficient. Unwinding them will thus be costly, and
Commission to ensure a strategic supply of timber. Today America the costs will be borne by consumers and taxpayers.
and China treat things like computer chips, artificial intelligence
So will those stemming from protected firms’ tendency to grow
bloated, inefficient or—as has happened with Boeing’s ill-fated 737
max plane—potentially dangerous. All this, critically, also makes
them less able to respond effectively when a crisis does strike. 

Prisoners of their own minds
The second reason for governments to go easy on strategic protec-
tionism is that it risks ushering in the baleful logic of the prison-
er’s dilemma. Actions that appear to be in the interest of individual
countries lead to a nationalistic, distrustful world that is bad for
everyone. The present scramble for medical equipment is causing
bitter rows, even between allies. Germany has accused America of
diverting shipments of face-masks bound for Europe, decrying its
actions as “modern piracy” and “Wild West tactics”. After the eu’s
ban on the export of medical equipment, Aleksandar Vucic, Ser-
bia’s president, declared that European solidarity “does not exist”.

The more that some states pursue such policies, the more it be-
comes rational for others to do the same. That risks leaving the
world divided in the face of the next crisis, whether that is another
pandemic, the next financial crash or a slow-burn disaster such as
climate change. A few industries may indeed be “strategic”. But
governments should anoint them cautiously.  7

Briefing Ructions in the oil market The Economist April 11th 2020 53

Upside down A few months ago demand was expect-
ed to rise modestly this year. But trouble
NEW YORK festered. Surging production in Guyana,
Norway and Brazil seemed sure to weigh on
An unprecedented plunge in demand will up-end the industry prices. More worrisome, the world’s energy
powers were increasingly at odds. In 2016
Each day about 100m barrels of oil rise has dipped in only two years of the past 35. Russia teamed up with the Organisation of
from reservoirs deep below Earth’s sur- In the first six months of 2020 it may the Petroleum Exporting Countries (opec),
face. A ship called Liza Destiny sits off the plunge by more than 20%. led by Saudi Arabia, in an attempt to offset
coast of Guyana, collecting the black stuff booming American shale production. This
from wells on the seabed nearly 2km below. If that weren’t enough, a brawl between opec+ alliance proved both fractious and
On Norway’s continental shelf the Johan Saudi Arabia and Russia has led to a price ineffectual. Russia regularly ignored the
Sverdrup project is ramping up faster than war. The price of Brent crude, the global group’s self-imposed production limits,
expected. In Texas some 174,000 wells are benchmark, fell by more than half in forcing Saudi Arabia to curb its own output
at work, from big shale operations to soli- March, below $23 a barrel. The last time it more sharply. That pushed oil prices high
tary pumpjacks nodding as cattle graze was this cheap, in 1999, Britney Spears enough to shore up investment in Ameri-
nearby. Last month Saudi Arabia said it topped the charts and the dotcom bubble can shale but too low to balance the bud-
would ship a staggering 12.3m barrels a day had not burst. As for the drop, “nothing like gets of Saudi Arabia and other petrostates.
to customers in April. From the Niger delta this has ever happened before,” says Daniel
to Siberia, oil continues to flow. The rest of Yergin, a historian and vice-chairman of America, which in 2018 eclipsed Saudi
the world, meanwhile, is standing still. ihs Markit, a consultancy. Arabia and Russia as the world’s top oil pro-
ducer (see chart 1 on next page), indeed
In recent years oil producers have faced …Baby, one more time looks like the main beneficiary of opec+. In
a spectre of depressed demand that could Saudi Arabia and Russia were expected to an effort to snuff out shale Russia shocked
up-end the industry. All of a sudden the discuss production cuts with other petro- opec in March by refusing further produc-
wraith has materialised—not out of con- states on April 9th, after The Economist tion cuts. Furious Saudis declared the price
cern for the climate, as oilmen feared, but went to press, then again at a g20 meeting war in response.
because of covid-19. Crude fuels the move- the next day. Any deal is unlikely to end
ment of people and goods around the oversupply. Covid-19 is already exposing American frackers and international oil
world. A lot of this has stopped as govern- vulnerabilities of petrostates and oil firms. giants had problems of their own. Even as
ments limit travel and other economic ac- With prices poised to sink lower, the entire shale production surged, shale firms’ valu-
tivity to contain the pandemic. Oil demand industry may be forever transformed. ations sank, with more investors sceptical
of their ability to produce steady profits.
Worries over climate change clouded the
long-term prospects of supermajors such
as ExxonMobil and Royal Dutch Shell while
other industries offered better short-term1

54 Briefing Ructions in the oil market The Economist April 11th 2020

2 returns. Energy was the worst-performing Changing tap-estry 1 sify the Saudi economy away from oil are a
sector in the s&p 500 index in four of the work in progress and the country still
past six years. Crude oil production, % of world total 15 needs $84 a barrel to finance its budget.
The oil market has witnessed big shocks Saudi Arabia 12
before (see chart 2). In the late 1990s supply Other producers look more vulnerable.
rose while a demand-sapping financial cri- Russia 9 Low oil prices will tighten the vise on Iran
sis rocked Asia. In 2014 the Saudis opened United States 6 and Venezuela, each already squeezed by
the taps in an attempt to drown American American sanctions. In Iran deteriorating
shale. But never before has anyone seen 3 finances will make it even harder to deal
anything like covid-19. In the coming with high rates of coronavirus transmis-
weeks crude will come perilously close to 0 sion. Cheap oil will exacerbate strife in Lib-
filling the capacity to store it. Citigroup, a 1992 95 2000 05 10 15 19 ya and may feed unrest in Iraq, as well as Al-
bank, says that global supply needs to fall geria. A few big projects in Africa require an
by 10m barrels a day, 12% of the total, for Source: EIA oil price of $45 or more just to break even,
tanks not to spill over. Prices in parts of the reckons Rystad; many may now be put on
world may fall below $10, says Goldman support for Saudi Arabia if it refuses to lim- hold. Listed oil giants are paring spending
Sachs, another bank—or turn negative, as it output. in an effort to protect dividends. Conoco-
producers pay to have their oil taken away Phillips has delayed drilling in Alaska.
rather than shut in wells. Mr Trump may therefore help broker an Chevron has cut its capital budget for this
With opec+ in tatters and America’s agreement, particularly if armed with data year by 20%.
shalemen clamouring for help, on April showing that American companies are al-
2nd Donald Trump, who two days earlier ready cutting spending. However, contin- More damage will come as low prices
welcomed cheap oil as a tax cut for Ameri- ued animosity between Russia and Saudi compel firms and governments not just to
can consumers, tweeted that a production Arabia, combined with instability within cancel new projects but mothball existing
deal between Russia and Saudi Arabia was opec’s smaller members, will lead at best to wells. That may hurt countries with high
imminent. This pushed Brent up by 20%, temporary production deals of limited im- production costs, like Brazil and Britain.
the biggest one-day gain since 1986. pact. Output cuts agreed now would take
Mr Trump wanted to support American time to be felt in the physical market. Even The sudden plunge in demand means
oil companies further by buying their a cut of 15m barrels a day—around ten that shut-ins will depend as much on logis-
crude and storing it in the government’s times what the Saudis sought in March— tics as on production cost, argues Damien
strategic reserves. But he is not an autocrat would be dwarfed by covid-19’s obliteration Courvalin of Goldman Sachs. As inland
presiding over a petrostate and his idea was of demand, of as much as 20m barrels a day tanks fill, landlocked wells with limited ac-
rejected by Congress. Another of his sug- in April. “We are not going to fully recover cess to storage and transport will suffer. Ca-
gestions, to levy a tariff on imported oil, until we are through corona,” says Mike nadian crude has the double misfortune of
might benefit some of America’s 9,000 or Sommers of the American Petroleum Insti- being costly and hard to ship—on April 7th
so oil and gas producers. But it would harm tute, a powerful lobby group. a barrel of Western Canadian Select fetched
integrated giants such as ExxonMobil, about $10, a third as much as Brent. Some
which use heavier overseas crudes in their Even then, it is unclear that the indus- inland American and Russian production
American refineries. Large companies also try, in its current form, recovers at all. Rus- may stop, too.
resist national production caps that would sia is in a position of relative strength. It
prop up smaller, less profitable rivals. can balance its budget with oil at $42 a bar- Oops…I did it again
Some petrostates have trouble grasping rel and has more than $500bn in foreign re- When the world economy begins to open
that Mr Trump cannot call oil bosses and serves. Saudi Arabia has low operating up after the pandemic, it will find the oil in-
tell them to do this or that, says Mr Yergin. costs of just $3.20 a barrel, about one-third dustry looking different. In America less
But, he adds, the president does have “an of America’s, according to Rystad Energy, a productive shale beds may be gone, finally
enormous amount of influence”. If the gov- consultancy. That would help it in a drawn- “flushing out production that was never
ernment’s power over oil firms is limited, out battle for market share, though the cur- really warranted”, says Ed Morse of Citi-
its control of aid is plainer. A group of rent crisis has hit about a decade too soon group. The number of shale bankruptcies
American senators from oil-producing for comfort—economic reforms to diver- jumped by 50% last year. In 2020 more in-
states have threatened to withhold military efficient companies will vanish. Some
wells, once closed, are too costly to reopen.
One hundred years of oily crude OPEC+ spat amid covid-19 2 And with oil at $35 a barrel, the return on
Arab spring renewable projects—which most energy
Crude oil price, $ per barrel* 150 firms have largely ignored—can rival that
Global financial crisis 120 of a new oilfield, notes Valentina Kretzsch-
Depression Iran-Iraq war begins 90 mar of Wood Mackenzie, a consultancy.
dampens demand Arab oil embargo Iraq invades 60
Kuwait A sudden loss of production could, if
demand picks up quickly, create an oppor-
Asian tunity for more drilling. But investors may
financial now be warier of oil companies’ spending
crisis plans. Especially if they suspect covid-19
fundamentally alters oil demand: more
American 30 people may work remotely, a lot of interna-
shale boom 0 tional travel could come to be seen as un-
necessary and companies may bring sup-
1920 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 2000 05 10 15 20† ply chains closer to home to avert
disruptions. “Are we about to see a struc-
Sources: Goldman Sachs; Datastream from Refinitiv; US Bureau of Labour Statistics; Bloomberg *Constant Feb 2020 $ †At March 31st tural change in oil consumption?” wonders
Mr Courvalin. “It is a very valid question.”
Oilmen used to take comfort that it was an
abstract one. No longer. 7

Finance & economics The Economist April 11th 2020 55

Also in this section
56 The economics of price gouging
57 Buttonwood: The woes of unicorns
58 Joe Stiglitz and the IMF
58 Labour markets take ill
59 Free exchange: Special drawing rights

Banks and the economic emergency capital markets have worked, and to the ex-
tent that risk has rebounded it has been
This time we’re different largely absorbed by central banks through
their market-support programmes, not by
Banks entered this crisis in better health than the previous one. commercial banks, says Huw van Steenis
How sick might they get? of ubs, a Swiss lender.

From ebenezer scrooge to Gru in “De- The industry went into the crunch in Under those schemes, and their own
spicable Me”, the villain redeemed is a decent shape. Capital cushions, depleted steam, banks have increased lending dra-
time-honoured trope in fiction. There has going into the last crisis, have since been matically, especially in America (see
been much talk lately of bankers enjoying a plumped up. Banks have also been made chart). In March public companies there
similar rehabilitation. Reckless overexten- less vulnerable to funding runs. This time drew down $191bn from bank credit lines,
sion by lenders was the root cause of the fi- the system has creaked but not buckled. after taking next to nothing in January and
nancial crisis of 2007-09. This time the Early evidence suggests that post-2009 eff- February. The odd one out is China, where
blame lies with a microbe, not moneymen, orts to push liquidity risk from banks into loan growth is similar to last year’s rate. In
and banks are seen as potentially part of 2008-09 officials arm-twisted lenders into
the solution, not least as conduits for Turning on the taps leading stimulus efforts. They may fear
massive state support for stricken firms that another such push could break them.
and households. United States, commercial banks’ assets Chinese banks’ assets have ballooned to
% increase on a year earlier 285% of gdp, from 195% in 2007.
The corona-crisis does indeed give
banks a chance to improve their image. But Bank loans 14 To encourage banks to lend more and
it also presents them with some painful di- 12 offer forbearance, regulators in the West
lemmas and, worse, may ravage their bott- Total assets 10 have rushed to relax or delay rules brought
om lines. Michael Corbat, boss of Citi- 8 in after the financial crisis. These cover
group, has warned that banks like his have 6 everything from loan-loss accounting to
to tread a “fine line” between supporting 4 the thickness of capital buffers (see chart
clients and undermining financial stabil- 2 on next page). By one estimate, such (pre-
ity. They must conserve capital while also 0 sumably temporary) regulatory forbear-
keeping dividend-dependent investors ance has created $5trn of lending capacity.
sweet. However they handle such choices, J FMA M J J A S O ND J FM
the risk of hefty losses looms: bank shares At the same time, regulators in Europe
have fallen by twice as much as the stock- 2019 2020 in particular have nudged or ordered banks
market this year on fears of rising defaults. to bolster their defences by freezing
Source: Federal Reserve Board payouts to shareholders and star perform-
ers. British banks, for instance, are with-
holding £8bn-worth ($9.9bn) of dividends.
American ones have not followed suit,
though they have suspended share buy-1

56 Finance & economics The Economist April 11th 2020

2 backs. Bonuses are in regulators’ cross- The growing worry in the West is that emaciated for years.
hairs too: Andrea Enria, the European Cen- the short-lockdown, quick-snapback sce- Whether banks end up drowning in red
tral Bank’s top bank supervisor, has called nario proves too rosy. Several more months
for “extreme moderation”. of restrictions could mean years of losses ink, or merely spattered with it, depends
For now, the threat to banks does not on soured loans. Bankers may start to find on a host of unknowns. “The tail event is no
look existential. “Unlike 2008, it’s primari- that there is a fine line between forbear- vaccine in a year,” says Sir Paul Tucker,
ly an earnings issue, not a balance-sheet ance and forgiveness: in America calls for chair of the Systemic Risk Council, a group
one,” says Nathan Stovall of Standard & credit-card interest to be waived indefi- of former policymakers. “Banks need to be
Poor’s (s&p), a rating agency. If charge-offs nitely are growing louder. stressed against such scenarios, as post-
are similar to back then, American banks’ crisis capital requirements were not cali-
capital ratios would remain above their Ultra-low interest rates set by central brated against anything like that.”
levels after recapitalisation in 2008-09. banks to fight the pandemic are another
But with major economies at a near-halt headwind. An important factor in a bank’s In a letter on April 6th Jamie Dimon,
for an indeterminate period, loan losses profits is its “net interest margin” (nim)— boss of JPMorgan Chase (jpm), assured
could be bigger this time. Analysts cannot the difference between the rate at which it shareholders the bank could comfortably
seem to downgrade bank-earnings fore- makes loans and that at which it remuner- withstand an extreme (“and, we hope, un-
casts quickly enough. Some now think ates the deposits it has gathered. Even be- likely”) scenario, in which gdp falls by 35%
American banks, which made combined fore the corona-crisis this was a scrawny and unemployment hits 14%, emerging
profits of $230bn last year, could slip into 3.3% for American banks. With policy rates with capital above the safe minimum. jpm
loss in 2020. Investment banking won’t likely to stay on the floor until well after the is the strongest, most profitable of the
ride to the rescue. Equity issuance and cor- pandemic has abated, nims will remain world’s big banks. Others, faced with such a
porate dealmaking have sagged (though storm, could find themselves in trouble. 7
debt-raising remains strong in pockets).
Trading volumes and profits have leapt, as Price gouging
they often do early in a crisis, but are ex-
pected to fall dramatically. Signal failure
Europe is in worse shape. A senior bank-
er says the outlook for British lenders is SHANGHAI
“really shitty”. He fears some smaller banks
and non-bank providers may not survive. Many economists defend disaster profiteers. They are wrong
Italian lenders, battered by the euro-crisis,
were on the mend until covid-19, having Much about the pandemic sweeping this pandemic has been normal. Price sig-
cut their bad loans in half, but now look across the world is unprecedented, nalling alone would have been inadequate
precarious again. Deutsche Bank, which but one aspect is all too familiar: price to the challenge of ensuring vast increases
has been struggling to get back to good gouging in the wake of a disaster. In New in supply.
health for years, risks a relapse. York police arrested a man who had stock-
In China, the shock to growth will push piled medical gear, allegedly selling it for a First, consider the manufacture of
banks beyond the limits of what regulators 700% mark-up. Indonesian authorities masks. They might look simple, but pro-
had anticipated. In 2019 the central bank seized 600,000 masks from hoarders. In It- ducers need sterile factories and sophisti-
stress-tested the resilience of 30 banks in a aly the government launched a probe into cated machinery to churn out melt-blown
variety of scenarios. In the most extreme sky-high online prices for basic protective fabric. Upfront costs would be hard to jus-
hit to the economy envisaged—growth equipment. Such crackdowns are popular. tify if the virus were quickly snuffed out. So
slowing to 4.15%—it said 17 of 30 banks Who could possibly endorse disaster profi- in January, the early phase of the outbreak,
would need more capital. The World Bank teering? Many economists, as it turns out. Chinese firms began by scouring the world
expects growth this year to be just 2.3%. for masks rather than by making more of1
s&p has estimated—based on assumed To be clear, it is not that they want the
growth of 4.4%—that the bad-loan ratio public to miss out on life-saving products. The supply response
could climb to nearly 8%, a quadrupling Quite the contrary. They believe that soar-
from its pre-virus level. The questionable- ing prices stimulate greater output, and
loan ratio could hit an eye-watering 13%. that policies to cap costs might limit supp-
lies and so do more harm than good. In 2012
Buffered up 15 the University of Chicago surveyed 32 emi-
12 nent economists about legislation that
Biggest banks*, tangible common equity banned price gouging during a weather-re-
as a % of risk-weighted assets lated emergency. Only three supported the
ban; more than half criticised it. Similar
Europe views have been aired in recent weeks. An
economist with the Cato Institute, a con-
China 9 servative think-tank, lamented the “mad-
United States 6 ness” of anti-gouging rules, saying that
3 profits are what entice firms to meet rising
demand for safety equipment.
0
Yet a closer look at one key piece of
2005 07 09 11 13 15 17 19 equipment—masks—during the coronavi-
rus crisis shows that this standard view
Source: Bloomberg *Median of 12 biggest banks needs revamping. Economists are normal-
by assets in each region ly loth to tamper with prices, the most ba-
sic element of any market. But little about

The Economist April 11th 2020 Finance & economics 57

2 their own. It took government action to mask-production lines. And big compa- The public benefit of a functioning health
change that. Officials offered subsidies to nies also want to look like good corporate system far outweighs any harm in imped-
firms producing safety gear: promising not citizens. Peter Navarro, a trade adviser to ing sellers from maximising their profits.
outsized gains but an avoidance of losses. America’s president, accused 3m, one of the This was a point made to the University of
China went from making 20m masks per world’s biggest manufacturers of high-end Chicago’s survey by one of the dissenting
day before the crisis—half the world’s out- masks, of putting money before people. In economists, who argued that it was fair to
put—to nearly 120m by the end of February. fact, 3m has stuck to its list prices and dou- cap prices after a natural disaster. “Effi-
Profit, narrowly defined as the income bled its production. ciency is less important than distribution
earned from making masks, also fails to ex- under such transitory conditions,” said An-
plain corporate motives. Regulation has Pricing is usually the best way to allo- gus Deaton, now a Nobel laureate. In a glo-
been crucial. Companies in China could cate resources, by revealing who is willing bal health crisis, his argument is even more
not resume operations until all their work- and able to pay for something. But there is compelling. Conventional morality—the
ers had masks, so automakers, phone no doubt now that masks are most essen- revulsion against price gouging—trumps
manufacturers and oil giants all added tial for medical workers. Ordering large conventional economics. 7
supplies at fixed prices is the right policy.

Buttonwood Stacked and whacked

Why a lot of startups will come to regret their unicorn status

In july 2006 Yahoo, a faded internet school. “Convertible” means the security SoftMoney. It is willing to pay $150m for
giant, offered to buy Facebook, then a converts into common stock at “exit” ie, senior preferred convertible stock,
fledgling, for $1bn. Billion-dollar offers when the company is either sold to a big- meaning it is first in the queue at the exit,
for startups were then quite rare. “I ger company or is listed on the stock ex- ahead of Mr Soprano and Seedy. The
thought we should at least consider it,” change. “Preferred” means the backer will post-money valuation is $750m.
recalls Peter Thiel, an early Facebook be paid back before common stockholders:
backer, in his book, “Zero to One”. The it has liquidation preference. If, in our But Mr Soprano wants to be the foun-
initial reaction of Mark Zuckerberg, its hypothetical case, the exit value is be- der of a unicorn, a startup valued at $1bn
founder, was firmly to say no. “This is tween $0 and $20m, Seedy gets every- or more. SoftMoney says it will pay
just a formality,” he told his board. “We’re thing. If it is between $20m and $100m, $200m, for a post-money valuation of
obviously not going to sell here.” the vc gets $20m and Mr Soprano gets the $1bn, if it gets greater protection should
rest. Only if the exit value is above $100m things go wrong. It is granted two times
Entrepreneurs are supremely confi- will both parties be paid in proportion to liquidation preference: an assurance that
dent about their eventual success. They their shareholding. it will make back its $200m twice over.
have to be. Startups usually fail; in the WeWhack’s exit price must reach $400m
vernacular of Silicon Valley, they have a Were Seedy granted common stock, Mr before anyone else makes a cent. But Mr
high “kill rate”. It takes unusual self- Soprano could in principle immediately Soprano is fine with that. He is confident
belief to even set up. Mr Zuckerberg’s was sell WeWhack for $20m (the value of its that his business is worth billions.
vindicated in spades. Until recently cash holdings), pocket $16m (his 80%
investors were tripping over themselves share) and return the rest to Seedy. Pre- A good early-stage investment
to throw money at would-be Zucks. ferred stock is a disciplining device. It partner will advise founders not to go for
Founders were willing to cede certain encourages the founder to use the $20m to a headline valuation if it comes with
protections to their venture-capital (vc) create a firm that is worth a lot more. such terms, says Richard Wong, of Accel,
backers to get a billion-dollar valuation. a vc firm. They don’t always listen. After
They will now regret it. They are, in Things become more complex as the many funding rounds, a venture-backed
effect, sitting under a mountain of debt- business matures. Mr Soprano decides to company might have half a dozen layers
like claims on their companies. sell a further 20% of WeWhack to fund its in its capital stack, each with its own
global expansion. There is lots of interest protections and voting rights.
Take the case of an imaginary startup. from vc firms. The highest bid comes from
WeWhack is a tech platform that conn- When funds are raised at lofty values,
ects people who carry grudges to contract it can create misalignment later on be-
killers. (In a bull market for vc, the legal tween founders, early-stage vcs and
and moral concerns about the business late-stage investors, says Simon Levene
model are dismissed as so much naysay- of Mosaic, a London-based vc firm. A
ing.) The founder, Mr Soprano, owns all founder sitting under a mountain of
of its common stock. An early-stage vc preference stock is like the manager of an
firm, called Seedy, gives him $20m in over-indebted firm. In a bear market, his
exchange for a 20% stake. Mr Soprano stake is probably worthless. So why not
can boast that his company is worth blow the company’s remaining cash on
$100m, the “post-money” valuation. This perks, take undue business risks (“gam-
is the figure quoted in newspapers and ble for redemption”) or simply give up?
trade magazines. He may use his voting rights to stymie an
exit for other investors. It can get messy.
But in reality it is worth less. vc back-
ers such as Seedy typically receive con- Everyone can be a dreamer in a buo-
vertible preferred stock. This is a security yant market. The kill rate is low. But
that is specific to venture capital, says when trouble strikes, it reverts to the
Jean-Noel Barrot of hec Paris, a business mean—and, as a vc bigwig puts it, “a lot
of things get whacked.”

58 Finance & economics The Economist April 11th 2020

Joe Stiglitz and the IMF that any approach to the imf still carries.
Given this bad blood, Mr Guzmán’s
Pilgrimage to the
gamma quadrant links with Mr Stiglitz might have been a lia-
bility rather than an asset. But the Argen-
HONG KONG Friend, not foe tines (who are nothing if not close students
of the imf) have grasped something that is
The fund has won over its most vered economist who was the fund’s sec- still underappreciated elsewhere. Mr Stig-
fearsome critic. Can the amity last? ond-in-command from 1994 to 2001, won a litz has warmed to the fund—and the fund
lucrative job at Citigroup as a reward for has warmed to him.
Few jobs are as daunting as minister of serving American financial interests at the
the economy of Argentina. But Martín imf. In retaliation Ken Rogoff, then the “I’ve been amazed [and] impressed at
Guzmán, who was given the post in Decem- fund’s chief economist, implied that Mr the transformation of the imf over the past
ber, has two things going for him. He is a Stiglitz had wandered off into the “gamma decade and a half,” he says. The transfor-
brilliant student of unsustainable debt, quadrant”—a nerdy way of asking him mation began under Dominique Strauss-
which Argentina has in abundance, includ- what planet he was on. “It was”, Mr Stiglitz Kahn, the fund’s boss from 2007 to 2011,
ing $44bn owed to the imf and almost says now, “a very tense moment.” who responded to the global financial cri-
$100bn of foreign-currency debt owed to sis with calls for stimulus, not austerity. It
private lenders. And he is a protégé of Joe The kind of allegations Mr Stiglitz made continued under his successor, Christine
Stiglitz, a Nobel-prizewinning economist in his book still dog the imf. As countries Lagarde, who championed the fund’s new
at Columbia University who once served as flock to it for help in handling the financial concern for inequality. Economic dispar-
chief economist of the World Bank. fallout of covid-19, many worry that the ities, the fund’s research demonstrated,
fund may demand austerity in return. And were more damaging to growth than many
That close affiliation presumably helped several of the stronger emerging econo- economists presumed, and redistribution
endear him to Argentina’s powerful vice- mies that could qualify for the fund’s un- was less so. (These findings became a book,
president, Cristina Fernández, who flouts conditional loans (known as flexible credit “Confronting Inequality” by Jonathan Os-
economic orthodoxy but is fond of citing lines) have steered clear, fearing the stigma try, Prakash Loungani and Andrew Berg,
Mr Stiglitz. And the celebrated economist’s that carried a foreword by Mr Stiglitz and
warm endorsement also gave Mr Guzmán was published by his university.)
credibility in his dealings with the imf—or
so the government must have hoped when Kristalina Georgieva, who took over at
it appointed him. the fund last year, “is making another very
big step forward”, Mr Stiglitz says. They
But the neat logic of his appointment overlapped at the World Bank (where Ms
surely suffers from an obvious flaw. Mr Georgieva worked for about 20 years, all
Stiglitz is admired as an economic theorist, told) and kept in touch after Mr Stiglitz left.
but is also renowned as a bitter critic of the He wrote her a letter about Argentina
imf. His book, “Globalisation and its Dis- shortly after she was appointed. And the
contents”, published after the emerging- fund quickly endorsed Mr Guzmán’s view
market crises from 1997 to 2001, castigates that the country’s debt was “unsustain-
the fund for imposing unfettered capital able”. That declaration has increased the
flows, fiscal austerity and tight money on pressure on Argentina’s creditors to forgive
vulnerable countries. In a notorious pass- a hefty chunk of their claims.
age, he speculated that Stan Fischer, a re-
The imf’s fight against covid-19 may fur-
Lockdown and out ther redeem the institution in Mr Stiglitz’s
eyes. He supports its desire for a new allo-
United States, hours worked in small businesses* Google searches for “unemployment” 100 cation of “special drawing rights”, which
% change compared with January 2020 Maximum interest=100 80 would give the fund’s poorer members a
60 claim on the currency reserves of its richer
20 United States ones (see Free exchange). It is an instru-
0 ment he has promoted since at least 2006.
-20 Canada Much of the fund’s habitual hard-nosed-
ness reflects its fear that bail-outs might
-40 40 encourage imprudence. But such concerns
hardly apply to a pandemic. Rescuing a
-60 Britain 20 country from the virus will not make it
likelier to succumb to another outbreak.
-80 0
2006 08 10 12 14 16 18 20 Does Mr Stiglitz worry that his followers
Mar 2020 Apr will like him less if he likes the fund more?
*By employees paid by the hour He insists that he has stayed true to the
Sources: Homebase; Google Trends; Goldman Sachs “broad principles” that motivated his origi-
nal criticisms. He has been “steadfast” in
Taken ill his belief that markets fail, capital can flow
After years of robust health, labour markets have taken a dramatic turn for the worse. too freely, inequality matters and de-
With the pandemic forcing shutdowns, many people are working fewer hours, if at all. pressed economies need stimulus, not
Internet searches for “unemployment”, often a timely indicator of joblessness, are at austerity. But he is, perhaps, more tactful.
record highs. Economists at Goldman Sachs expect the unemployment rate to reach 15% The revised edition of “Globalisation and
in America later this year. That is the highest for the best part of a century. its Discontents”, published in 2017, still
mentions Mr Fischer’s departure for Citi-
group. But the passage suggesting an ex-
plicit quid pro quo has disappeared. 7

The Economist April 11th 2020 Finance & economics 59

Free exchange Special delivery

Can an obscure financial instrument help the imf rescue cash-strapped countries?

Governments around the world are seeing their finances sav- most recent of which was in 2009. They make up less than 3% of
aged by the pandemic. And poor ones, who are also suffering non-gold reserves; by contrast, the dollar makes up over half.
from capital flight, are crying out for cash. The imf, the world’s cri-
sis lender, is already parcelling out loans. It may yet resort to a As a source of liquidity, though, sdrs have their advantages.
weirder weapon: the special drawing right (sdr), an arcane finan- They are not a true currency, as they can be exchanged only be-
cial instrument designed in the 1960s. At present, some 204bn tween imf members and not in private markets. Maurice Obstfeld
sdrs sit on the balance-sheets of finance ministries and central of the University of California, Berkeley—and a former chief econ-
banks around the world. Each can, in theory, be swapped for curr- omist at the fund—sees them as a way to share risk. Countries are
ency worth $1.36. Governments in poor countries desperately need given sdrs in proportion to their imf “quotas”, which determine
cash to retain investors’ confidence, pay off creditors and buy their financial commitment to the fund and their voting rights.
medical supplies. Some economists think an infusion of sdrs is When they face a liquidity crunch, they can offer cash-rich coun-
part of the answer. Could this help tackle the corona-crisis? tries sdrs in exchange for hard currency. They must pay interest,
currently at a rate of 0.05%, on the amount of their sdrs they
When sdrs were introduced in 1969 they were intended to re- choose to convert, making exchanging an sdr a bit like drawing on
duce the world’s dependence on dollars. At the time many of the an emergency overdraft—one that does not need to be repaid.
world’s countries pegged their currencies to the greenback, which
was itself tied to gold, under the so-called “Bretton Woods” system Are sdrs an appropriate crisis-fighting tool? The imf reports
of fixed exchange rates. But the two components were in tension that several poorer countries have called for it, and that members
with one another. When too few dollars circulated in the world are discussing the idea. Rich countries are offering their citizens
economy, perhaps as a result of America spending less on imports, wads of cash with very few strings attached, say supporters. Why
countries would hoard greenbacks to defend their pegs, and global shouldn’t the imf do the same for the world’s governments? Some
commerce ground to a halt. But creating enough dollars to satisfy economists want a huge allocation of sdrs, worth $4trn.
the global demand for reserves imperilled the credibility of the
dollar’s peg to gold. Providing an alternative reserve asset, it was There are several hurdles in the way and these could take
thought, might provide an escape from this dilemma. months to overcome. Most important, America is reluctant to iss-
ue any sdrs at all, let alone $4trn-worth. Its opposition stems from
The idea was reminiscent of “bancor”, a global currency pro- a belief that the imf should not be printing money (when con-
posed by John Maynard Keynes in 1941. Like bancor, sdrs aim to verted, sdrs increase the amount of cash in circulation). And, like
share the so-called “seigniorage” benefits that accrue to America other countries, it also dislikes the idea of handouts that come
as a result of providing the world’s currency. To reinforce their bal- with so few strings attached. What if the financial lifeline allowed
ance-sheets with dollars, countries must, in aggregate, sell goods countries to slacken the pace of reforms, or made life easier for
and services to America and hold on to the proceeds. But when Iran? The imf is supposed to support governments facing tempo-
sdrs are issued, everyone gets reserves without having to provide rary liquidity problems, but also to insist on restructuring any
anything in return. Reserves fall like manna from heaven, rather debts that are unsustainable. An sdr allocation is described as li-
than emerging from trade flows. quidity support by its advocates, but it could help an otherwise in-
solvent country pay off its creditors. America’s opposition mat-
Yet sdrs failed to take off. The need for them became less press- ters. Issuing sdrs worth more than $648bn would require
ing after America untethered the dollar from gold in 1971. And too approval from its Congress. Even a smaller issuance would require
few were issued. Keynes had proposed that the stock of bancors 85% of votes at the imf. Uncle Sam, with a 16.5% share, has a veto.
would grow in line with world trade. But political wrangling
means that there have been only three allocations of sdrs, the Others point out that securing an sdr allocation would mean
spending too much political capital for too little gain. Two-thirds
would go to rich countries or those with plenty of reserves. In 2009
183bn sdrs were issued to help fight the global financial crisis. But
Ousmène Mandeng of Economics Advisory, a consultancy, finds
that emerging markets (excluding China and members of the
European Union) swapped just 1.9bn for cash in 2009-10.

Every little helps
However, sdrs do not have to be used to be useful. Their very pres-
ence on balance-sheets frees up dollars. And though the sums in-
volved might be too small to matter to many countries, the share of
a $500bn issuance flowing to the likes of Liberia or South Sudan
would be worth 7-8% of gdp, says Sergi Lanau of the Institute of In-
ternational Finance, an industry group. With global demand coll-
apsing and the world scrambling for dollars, now is not the time to
dwell on the question of whether countries face solvency or li-
quidity crises. Poor countries just need help, fast. It is worth taking
some risks to make sure they get it.

It is perhaps no surprise that America has doubts about an in-
strument first designed to reduce the dollar’s dominance. Keynes
proposed bancor just after sterling lost its sway. It might take the
emergence of a serious challenger to the dollar’s crown before
America sees the appeal of the sdr. 7

60 Science & technology The Economist April 11th 2020

Covid-19 (1) Loeb of McMaster University, in Canada.
Indeed, Dr Loeb found no significant dif-
Maskarade ferences between surgical masks and their
more sophisticated cousins, n95 respira-
Should people wear masks in public to slow the spread of sars-cov-2? tors, when it came to protecting health-
care workers from viral infections trans-
The world health organisation infect cells in that individual’s airways. Or mitted by droplets—including those
(who) says don’t bother. The British they may land on a surface, on which the caused by coronaviruses.
government agrees. America’s Centres for virus particles they contain could survive
Disease Control and Prevention (cdc) ini- for hours, or even days, and from which This suggests that n95 respirators
tially discouraged it but by the beginning of those particles may eventually be trans- (which are thicker, more rigid, and de-
April had reversed course. In parts of Asia, ferred to others who touch the surface and signed to form a close seal around the nose
including China, it is baked into public be- then touch their own face or mouth. and mouth) should be reserved for riskier
haviour and encouraged by health agen- situations. “n95” means they block at least
cies, even when there is no ongoing public- There is no doubt that masks form a bar- 95% of particles smaller than 0.3 microns
health crisis. The issue? Whether or not rier to transmission, by stopping droplets across. They are, therefore, appropriate for
members of the public should wear face- passing from infected to uninfected people situations when the threat comes from ob-
masks in a bid to slow the spread of sars- close by. The who recommends standard jects smaller than exhaled droplets—
cov-2, the virus responsible for the co- surgical masks as part of the personal pro- meaning less than about five microns
vid-19 pandemic. tective equipment to be worn by doctors across. These particularly include times
and nurses who are caring for covid-19 pa- when doctors and nurses need to “intu-
Understanding all the ways that sars- tients in clinics and hospitals. The same bate” a patient in an intensive care unit, by
cov-2 is transmitted is a matter of active goes for anyone caring for a patient at inserting the tube of a ventilator deep into
scientific discussion. In the main, though, home. In most instances this is good that patient’s trachea. Intubation is a force-
the virus hitches a ride on droplets of mu- enough, according to a meta-analysis of ful procedure, and it creates aerosol parti-
cus or saliva that come out of the respira- four randomised controlled trials that was cles (ie, smaller than five microns) that
tory tracts of infected individuals. These published this month in Influenza by Mark may carry viruses much farther through
may be expelled during normal breathing the air than droplets can manage. Though
or, more commonly, as a cough that pro- Also in this section it remains unclear whether sars-cov-2 is
pels them a few metres into the air. Thus transmitted via aerosols in this way, those
propelled, they may reach another person’s 62 Silent spreading of covid-19 performing intubations should be cau-
eyes, mouth or nose directly, and go on to tious, says Lisa Brosseau, a respiratory-
protection and infectious-diseases scien-
tist at the University of Illinois at Chicago.

Guidance for health-care workers is,
therefore, clear: wear masks. Advice for1

The Economist April 11th 2020 Science & technology 61

2 members of the public has been more vari- people shield themselves from infection, ability to save lives. We must provide the
able. Since the start of the outbreak the they could be used to stop those who are al- protection health-care workers deserve to
who and the cdc have advised people to ready infected broadcasting the virus into save our lives.”
avoid the use of masks unless they are in the air around them. Given that much
direct contact with symptomatic covid-19 transmission of sars-cov-2 is suspected to Which means that, if mask-wearing is
patients. This is because such masks are a occur before someone who has the virus to become a widespread weapon in the ar-
scarce resource. At the end of February Je- actually shows any symptoms (see follow- moury, members of the public may have to
rome Adams, America’s surgeon-general, ing article), encouraging everyone to wear make their own. This is not as bad as it
beseeched his fellow citizens on Twitter to masks in public regardless of whether they sounds. An experiment carried out in 2013
“seriously people—STOP BUYING MASKS!” are symptomatic could be a useful way to by Public Health England, that country’s
because a run on them might cause supply break the chain of transmission. health-protection agency, found that a
problems for health-care workers. commercially made surgical mask filtered
A month or so later, the advice seems to A study published in the current edition 90% of virus particles from the air coughed
be changing. The cdc now encourages the of Nature Medicine backs this idea up. Ben out by participants, a vacuum cleaner bag
populace to wear homemade coverings for Cowling, an epidemiologist at Hong Kong filtered out 86%, a tea towel blocked 72%
their mouths and noses. Dr Adams himself University, measured the amount of virus and a cotton t-shirt 51%—though fitting
starred in an official video demonstrating shed, in half an hour of breaths and coughs, any diy mask properly and ensuring a good
how to use rubber bands around folded by participants infected with a variety of seal around the mouth and nose is crucial.
pieces of cloth to make diy masks. Recent- respiratory viruses, including influenza,
ly, the Czech Republic and Slovakia started rhinovirus and coronaviruses (though not Elaine Shuo Feng, an epidemiologist at
requiring anyone stepping out into certain sars-cov-2). In the case of those with coro- Oxford University, has surveyed the vary-
public places to use nose and mouth cover- naviruses, 30% of droplets and 40% of ing advice given to members of the public
ings. The same rule applies in Lombardy, in aerosol particles exhaled by participants around the world. In a commentary pub-
northern Italy, which was the centre of the without a surgical face-mask on contained lished recently in the Lancet Respiratory
covid-19 outbreak in that country. And Aus- virus particles. When they wore masks, Medicine she and her colleagues argued
tria now requires masks in places such as that dropped to zero. that the absence of robust evidence on the
supermarkets and pharmacies. public use of masks should not prevent
The changing advice is testament to an Do it yourself precautionary action. It would be rational,
evolving understanding of sars-cov-2 it- Rupert Beale, an infections biologist at the they conclude, to recommend that people
self, and also to continuing debate among Francis Crick Institute in London, says that in quarantine who are not symptomatic
scientists about how far previous research Dr Cowling’s study presents “strong and wear face-masks if they need to leave home
on the effectiveness of masks can usefully compelling” evidence in favour of the pub- for any reason, in order to prevent poten-
be brought to bear on the current crisis. lic wearing masks, but he warns that this tial asymptomatic or presymptomatic
It might seem intuitively obvious that approach should not be used in isolation. It transmission if they unknowingly have the
having people cover their noses and could instead form part of a wider “exit virus. Vulnerable populations, such as old-
mouths in public would be useful. In fact, strategy” from lockdown, combined with er adults and those with underlying medi-
the science of the matter is not clear-cut. tried-and-tested measures including con- cal conditions, should probably also wear
Extrapolating to the laity the research tinued social distancing and thorough face-masks if available.
which shows that masks and respirators handwashing.
are effective for those who work in health For everyone else, washing hands and
care is actually problematic. This only works, though, if there are maintaining social distance is the most
One reason is that doctors and nurses enough masks to go around. According to important way to keep transmission down.
are better-trained than others in how to the who, “the chronic global shortage of Wearing masks in public does no harm,
wear these devices. For example, surgical personal protective equipment is now one and may do some good—but that is always
masks work less well when they become of the most urgent threats to our collective providing it does not reduce the supply
moist, and so need to be replaced regularly available to local doctors and nurses. 7
throughout the day. Health-care workers Choose wisely
will do this routinely. A member of the
public might not. As to n95 respirators,
they are notoriously difficult to fit in a way
that seals them properly to a user’s face. Yet
not fitting them correctly can negate their
benefits—as can touching the front of a
mask, or taking it off in the wrong way and
so contaminating your hands.
Nor do masks and respirators protect
people’s eyes from virus particles. Only
close-fitting goggles can do that. Finally, as
Susan Michie, a health psychologist at Uni-
versity College London, observes, people
might feel a false sense of security when
wearing masks, and thus pay less attention
to other important behaviours such as so-
cial distancing and handwashing.
This does not, of course, show that
masks for the public are of no use. A better
way to think about them in this context
might be that, rather than helping healthy

62 Science & technology The Economist April 11th 2020

Covid-19 (2) transmissible at an early stage of infection.
As a persistent cough is a common
Absence of evidence is not evidence
of absence symptom, it might be expected that those
who are symptomatic are more effective in
How important is silent transmission in the covid-19 pandemic? spreading the virus than those who are not.
Contrariwise, however, those with symp-
Few stories are as prominent in the infection rate exploded because of a bun- toms often feel unwell and take to their
study of infectious diseases as that of gled quarantine. Of 634 people thus infect- beds. They are, therefore, coughing mainly
Mary Mallon, a cook to wealthy families, ed, 52% had no symptoms at the time of onto their sheets and blankets rather than
and also to a maternity hospital, in New testing, including 18% who never devel- onto strangers in the street.
York in the early 1900s. As she went from oped symptoms. The residents of Vo, an
one employer to another, typhoid fever, Italian town in which all 3,300 people were The third strand of research into the
then deadly in one case in ten, followed in tested twice, is another much-cited exam- question of silent spreading is mathemati-
her wake. Public-health officials eventual- ple. Of those in Vo found to be infected, cal modelling. One such study was pub-
ly joined the dots and identified her as a 50-75% had no symptoms at the time of the lished in Science on March 31st by Luca Fer-
carrier of Salmonella typhi, the bacterium test. A smaller but similarly useful cohort retti of Oxford University and his
that causes the disease. What was striking was several planeloads of Japanese evacu- colleagues. It used data on 40 infected peo-
about Typhoid Mary, as the newspapers ated from Wuhan, the Chinese city where ple for whom the source of their infection
nicknamed her, was that she herself was the epidemic began. Among the 12 people was known with high probability, and the
healthy—proof that people could harbour in this group found to be infected, five have timing of their symptoms and those of the
and transmit S. typhi without showing never developed symptoms. people who infected them was well docu-
symptoms of the illness it causes. mented. The researchers estimate that be-
The rest is silence tween a third and a half of transmission oc-
Such silent transmission, as epidemiol- All this suggests that the number of infect- curs from people who are without
ogists call the phenomenon, has since ed people unwittingly infecting others symptoms at that point—a result which
been observed in many diseases—among could be quite large. What is unclear is how broadly agrees with estimates from similar
them measles, influenza and hiv/aids. A infectious these people actually are. That is studies by others.
fresh addition to the list is sars-cov-2, the what the second strand of research on the
coronavirus behind the covid-19 pandemic asymptomatic and presymptomatic trans- Collectively, all this research may help
now raging. Accumulating evidence sug- mission of sars-cov-2 deals with. It draws explain why sars-cov-2 has spread with
gests a substantial chunk of the infections on various laboratory studies. In several of such ferocity. But the study, in particular,
it causes are transmitted by people whose these the amount of the virus in nasal and of those who are infected but never present
symptoms have not yet appeared—or even, throat swabs taken from infected people symptoms is also crucial to understanding
like Mallon, who never develop symptoms who were presenting no symptoms at the how that spread may ebb—for the pool of
at all. That has implications for the meth- time was similar to the amount found in those who have been infected and are,
ods countries are employing to curb the those who had symptoms. Indeed, for therefore, immune to reinfection at least in
pandemic (see previous article). those who do go on to develop symptoms, the short term also includes these people.
the amount of virus they have in them Pandemics end when the pathogen causing
Currently, none of the evidence on peaks close to the onset of those symp- them runs out of individuals to infect.
asymptomatic transmission is watertight. toms, which suggests that it may be easily Some of those susceptible will have died.
According to Gerardo Chowell of Georgia Enough of the rest would then be immune
State University, in Atlanta, the best way to Modelling the enemy for the population to have developed “herd
determine the share of sars-cov-2 infec- immunity”. In the case of the current pan-
tions that happen in this way is to follow up demic of sars-cov-2, the more silent infec-
a large number of households in which tions there have been, the faster this herd
someone is already infected and then track immunity will arrive. 7
who subsequently infects whom. For this
to work, everyone involved would have to
be tested daily. If this were done, compar-
ing subtle variations from person to person
in the virus’s genetic material would show
who caught it from whom.

Definitive studies of this nature are not
yet available, though some are probably in
the works, Dr Chowell reckons. In the
meantime, a growing collection of other re-
search is shedding light on the matter. This
work comes in three strands.

The first is a set of studies of people in
groups for which unusual circumstances
have made possible tallying each and every
infection. These studies permit a fairly pre-
cise estimate of the share of those infected
who have no symptoms. One such group
are the passengers and crew of the Diamond
Princess, a cruise ship on-board which the

Books & arts The Economist April 11th 2020 63

Also in this section
64 London fiction
65 Postcards from doomsday
65 Don’t walk on by
66 The heroism of Soviet dissidents

Home Entertainment:
A choice of classics and pastimes
to enjoy in isolation
67 Welcome to Trollope’s world
67 A Flemish Robin Hood

Art and injustice set in colonial Tasmania during the 1820s.
Others are modern retellings of old tales,
Vengeance is hers such as “Women Beware Women”, a play of
1623 by Thomas Middleton that was recent-
Failed by the law, wronged women are taking justice into their own hands in a ly produced at the Globe theatre in London,
modern breed of revenge drama in which a powerful duke sexually assaults
a young bride. Separately, Middleton’s
He does not recognise her, and protests hearing that Nina’s rapist has returned to work has been reimagined by Simon Stone,
only gently when she handcuffs him to their college town to get married, Cassie an Australian theatre director, for “The Re-
the bed. He is enjoying his bachelor week- sets about targeting everyone she consid- venge Trilogy”, performed at the Théâtre de
end and assumes that this woman, in her ers responsible for her death: a friend who l’Odéon in Paris last year, which also adapt-
short, tight nurse’s costume, is a stripper was dismissive of her experience, the uni- ed scripts by William Rowley (“The
ordered for the festivities. While she as- versity official who “felt there wasn’t suffi- Changeling”), William Shakespeare (“Titus
sembles her props she reminisces about cient evidence” to take action, the lawyer Andronicus”) and John Ford (“’Tis Pity
her best friend, Nina, whom the man raped who bullied Nina until she dropped her She’s a Whore”). Despite their varied mi-
at a party when they were students, and case and, ultimately, the attacker himself. lieus, all these productions are concerned
who later committed suicide. with sex, power and its misuse.
“Promising Young Woman” is the latest
The man begins to panic, denying that in a spate of recent films, plays and televi- Other modern revenge dramas portray
the crime ever took place. “It’s every guy’s sion series that depict women taking re- different types of abuse. In “Judy and
worst nightmare, getting accused like venge for wrongs committed against them. Punch”, a film about the puppeteers who
that!” he protests. “Can you guess what ev- Like other crime dramas, several of these gave their names to their famous creations,
ery woman’s worst nightmare is?” his cap- narratives focus on sexual abuse, only now Punch is a drunk who beats Judy and leaves
tor retorts, before reaching into her medi- the women are more than ornamental her for dead. An adaptation of “Medea”—in
cal bag and producing a scalpel. corpses. “Sweet/Vicious”, a television which a woman wreaks a terrible punish-
show, follows two students-turned-vigi- ment on the man who abandoned her, re-
Cassie (Carey Mulligan), the protago- lantes as they hunt down young men who worked by Mr Stone from Euripides’s trage-
nist of “Promising Young Woman”, which have carried out sexual assaults on cam- dy—recently closed in New York, following
had its premiere at the Sundance Film Fes- pus. The protagonist of “M.F.A.”, a feature runs in Amsterdam, Madrid and London. A
tival in January, has been trying to avenge film, goes on a spree murdering college new version of “The Visit” by Tony
her friend’s assault for almost a decade. She rapists after accidentally killing her own Kushner, a Pulitzer-prizewinning play-
began by going to bars, acting as if she were attacker in self-defence. wright, was on at the National Theatre in
“too drunk to stand” and waiting for a “nice London before covid-19 struck. The main
guy” to take her home, before shaming Some of these stories have unfolded in character was impregnated as a teenager
them for their predatory behaviour. Then, the past, such as “The Nightingale”, a film and cast out of her hometown. Decades lat-
er she returns as the world’s wealthiest
woman, promising to enrich the locals in1

64 Books & arts The Economist April 11th 2020

2 exchange for her old lover’s life. London fiction
This boom in fictional retribution fol-
Through the trapdoor
lows a historical pattern. Though revenge
has inspired dramatists for millennia, the You People. By Nikita Lalwani. Viking; waitress and Oxford drop-out, and Shan
theme is especially popular in times of po- 240 pages; £12.99 himself, a trainee geologist who has fled
litical and social upheaval, when attitudes to Britain from the Sri Lankan civil war.
to power and justice are in flux. “Revenge Sivaram shan is on a London bus Compelled to claim asylum after his
became a central theme in Greek tragedy at when he is insulted by a mother with a father was murdered on the street by
a time when Athenian law courts were sick child. Heading home after a long government forces, he is unable to trace
heatedly debating questions about causa- hospital wait, the woman has no doubt the wife and young son he left behind.
tion, responsibility and guilt,” says Tanya who is to blame for the health system’s
Pollard of Brooklyn College. Aeschylus and burdens, slapping him with the lazy This sinuous morality tale unfurls
others “started wrestling with questions xenophobic slur that provides the title of from the alternating perspectives of Nia
about how to assign blame and mete out Nikita Lalwani’s emotive third novel. and Shan. Slinking along like a thriller, it
punishment to stop cycles of violence”. encompasses people-smuggling, the
It opens in 2003 in a south-west Lon- labyrinthine inhumanity of Britain’s
The new avengers don neighbourhood on the cusp of gen- immigration system, alcoholism and a
In early modern Britain, when Middleton trification. There, alongside a Polish class prejudice that cuts both ways.
and his contemporaries were at work, the greasy spoon, an Australian pub and a Kindness and its motives are a constant
law was changing from a system of private Chinese grocery, sits the Pizzeria Vesu- preoccupation. There are worlds within
redress to one administered centrally. vio. Its Singaporean owner, Tuli, is a worlds in this metropolis, an incubator
Emma Smith of Oxford University says the ponytailed live wire who sweeps in of crippling loneliness as well as of very
period saw “a huge amount of litigation”, wearing a gangster’s floor-length leather real, if makeshift, communities. “This is
particularly relating to personal grievances coat and presents himself as the local London,” Shan reflects as he traverses a
such as ownership rights. Yet old habits, benefactor, serving off-menu cigarettes grim dual carriageway fringed with
such as duelling, persisted in real life and and loans to waifs and strays. blossoming trees. “This contrary in-
on stage, as did doubts over the law’s fair- dication of motor-loud madness and
ness to ordinary people. Tuli’s devoted but hard-up employees real, actual breathing life.”
include Nia, a 19-year-old Welsh-Indian
From the 1950s onwards, as war, prot- As Shan navigates the instability and
ests and scandal increased scepticism of Top deck, bottom rung sheer exhaustion of life as an illegal
authority among American audiences, migrant, Tuli steps in to help find his
they came to love cowboys and mafiosi missing family, opening a trapdoor into a
who took the law into their own hands. In shady underworld. Meanwhile, Nia (the
Britain, meanwhile, revenge plays were least convincing of Ms Lalwani’s charac-
frequently staged during the industrial un- ters) reveals demons of her own.
rest of the late 1970s; others were inspired
by the Troubles in Northern Ireland. Theirs is a dark story, but even at its
bleakest, Ms Lalwani’s prose has a ballet-
Another kind of injustice and indigna- ic lightness. She notes the way a
tion is galvanising storytellers now. As would-be rapist is “sticky with the eyes”,
prominent court cases have highlighted or a drug-dealer’s “large white wedding
the difficulties of prosecuting sexual cake of a trainer”, then pivots to calculate
crimes—and as patience with the system the toll exacted by the moral challenges
runs out—wronged female characters have that Shan and his counterparts face every
assumed the avenger’s mantle. “If the law is day. Her blunt title ultimately comes to
ineffective, the rough justice of vigilantes seem at once an accusation of her readers
has its appeal,” says John Kerrigan of Cam- and an ethical imperative: to recognise
bridge University. In this genre women the individuality of struggling people
make compelling heroes, Mr Kerrigan who can often seem invisible to the likes
thinks, because they are “more often de- of the diners at the Vesuvio.
nied justice along official channels domin-
ated by men and the interests of power”. a university official—in both cases, a wom- tional surrogate who’s licensed to act out
an—who does nothing. “I kept seeing a lot our grievances.” But like the #MeToo move-
The women in these stories turn to re- of the same story in the news,” says Leah ment with which the genre has coincided,
venge only after they are failed by the insti- McKendrick, the writer of “M.F.A.”. “A these feminist revenge dramas are less in-
tutions supposed to protect them. Legiti- young female is raped on a college campus, terested in vanquishing a single bad guy
mate recourse against Punch is denied to she’s brave enough to report it and is than in purging a rotten system. And, like
Judy in a town ruled by the mob. In “The treated like a liar and a gossip and a pro- the most enduring avengers of previous
Visit” Claire takes Alfred, the father of her blem.” She began work on the film in 2014 eras, the best new stories feel both acutely
child, to court to establish paternity; he in pursuit of “some fantastical justice”; it contemporary and ageless. “There are ele-
pays his friends to testify that she was pro- was released just as Harvey Weinstein’s ments to [“Promising Young Woman”] that
miscuous. (After she gains her fortune, she depredations began to be exposed. are timely,” Emerald Fennell, the writer and
hires the judge who presided over the case director of the film, has said; all the same,
to work as her butler, a symbolic confirma- “For anyone who’s felt outraged at being “women have been talking about [these is-
tion that justice can be bought.) Jeremy treated unfairly,” says Ms Pollard, the aca- sues] for many, many centuries.” 7
Herrin, the director, says the drama ex- demic, “it can be cathartic to cheer on a fic-
plores what happens when trauma is left to
fester without resolution.

Similarly, the assaults in “M.F.A.” and
“Promising Young Woman” are reported to

The Economist April 11th 2020 Books & arts 65

Postcards from doomsday Stockpile like a pro book, an examination of moral courage
and its disappointing scarcity. Ms Sander-
This is the end helps that he is funny, too. Oddly, all these son thinks bullying, political corruption
ruins leave him feeling more peaceful, and corporate crime flourish because of
Notes from an Apocalypse. By Mark though the process of parenting might also “the failure of good people to stand up and
O’Connell. Doubleday; 272 pages; $26.95. have helped. do the right thing”. Drawing on an abun-
Granta; £14.99 dance of research in social psychology, she
Readers, for their part, will emerge feel- probes why this is the case—analysing, for
For much of human history, Mark ing doomed—yet oddly uplifted. “The fact instance, how witnesses to wrongdoing
O’Connell points out in “Notes from an that the world is continuing on as always— perform “subconscious cost-benefit analy-
Apocalypse”, the world has been about to that the sun is shining, and the bees cir- sis”, which typically reinforces the “natural
end. As St Augustine observed in the fifth cling the clover, and the tomatoes ripe in human tendency to stay silent”.
century, the earliest followers of Jesus be- the fields—doesn’t mean it hasn’t already
lieved themselves to be living in the last come to an end,” Mr O’Connell reflects. One Ms Sanderson maintains that even mi-
days of creation. In the centuries since, hu- of the strengths of his book is that it simul- nor transgressions should be called out,
mans have faced plagues and fires and taneously makes the reverse of that propo- because getting away with them makes the
floods and earthquakes and wars and the sition clear: the world is ending, and, as offender more likely to graduate to worse
threat of nuclear annihilation—perpetual- usual, it is carrying on. “Notes from an ones. She describes how people who so-
ly proclaiming the end of days. All the Apocalypse” was written before the co- cialise in groups generally leave poor tips
while, the world has continued spinning vid-19 pandemic, but it offers a timely if ec- for waiting staff, “assuming that their own
on its axis. But, the author asks, amid an in- centric consolation all the same. 7 contributions will not be noticed and that
creasingly irreversible climate crisis, what others will contribute more to compen-
if now really is the end? Do the right thing sate”. This is known as “social loafing”; in
other contexts, such willingness to hide in
When he began writing this book, Mr Walking on by a crowd can have graver consequences.
O’Connell says, he was depressed, a mal-
aise brought on by an obsession with the Why We Act. By Catherine Sanderson. The author elucidates several similar
future—or rather, with the possible lack of Belknap Press; 272 pages; $27.95. Published terms. “Evaluation apprehension” is being
it. He pondered the individual’s role in the in Britain as “The Bystander Effect”; William inhibited from taking action by worries
age of climate change, and his own respon- Collins; £20 about looking silly. “Pluralistic ignorance”
sibilities as a father. “I couldn’t sneeze is the phenomenon whereby someone pri-
without thinking it was a portent of end What would you do if you saw some- vately rejects a certain doctrine or attitude,
times,” he writes. He was spending too one lying unconscious in the street? yet goes along with it on the incorrect as-
much time on the internet (he had set his Would it make a difference if you were sumption that it is widely held.
home-page to an online forum devoted to rushing to an important appointment?
the topic of “collapse”). In the grip of this Why do so many people who say they de- This book’s chief virtue lies in its wealth
doomsday spiral, Mr O’Connell set out to plore racism and sexism do little to chal- of instructive examples—whether about
probe both the reality and the idea of the lenge them in practice? And what can be employees’ silence over fraud at Enron, the
looming crisis, embarking on what he calls done to purge the conformism that deters murder of James Bulger, a Merseyside tod-
“a series of perverse pilgrimages”. complaints about toxic colleagues, for fear dler, or the efforts of the helicopter pilot
of ostracism or career setbacks? Hugh Thompson Jr to halt the My Lai mas-
He delves into the internet subculture sacre. The downside is that its insights are
of “preppers”, a group mostly comprising These are among the questions that sometimes banal. “We tend to feel greater
American men who stockpile freeze-dried Catherine Sanderson, an American profes- connection to members of our own group,”
food and guns. He treks to the Black Hills of sor of psychology, addresses in her new Ms Sanderson writes, as a prelude to ex-
South Dakota, where a property magnate is plaining why Manchester United football
hawking survivalist bunkers, and stops at a fans are more likely to help a distressed
Mars Society Convention in California. He person wearing their team’s shirt than one
goes on a nature retreat with a group that in the colours of their rivals Liverpool.
believes Western civilisation is destined to “Creating a greater sense of connectivity at
disintegrate and seeks alternative forms of school”, she advises, can “go a long way to-
society. For his best chapter, he goes to the ward combating the widespread apathy of
ruins of Chernobyl and considers the iro- high schoolers”.
nies of apocalypse tourism.
A new lexicon is required, the author
These vignettes offer a fascinating in- concludes. To this end, she cites Jeffrey
sight into a species obsessed with its own Wigand, a biochemist who in the 1990s re-
demise—and into the ways humankind is vealed that Brown & Williamson, a tobacco
trying to confront the hard-to-bear reality firm, was manipulating its products to
of climate change. These range from the ab- make them more addictive. Mr Wigand
surd (colonisation of Mars), to the selfish thinks the word “whistleblower” is “laden
(billionaires buying up New Zealand), to with pejorative connotations” and should
the poignant (difficult conversations with be replaced by “person of conscience”.
young children). Along the way, Mr O’Con-
nell moves nimbly between scenes and Ms Sanderson prefers the term “moral
eras, skipping from the poetry of Czeslaw rebels”, and sets out some practical strat-
Milosz to a history of the Grand Tour. It egies to inspire more of them. “Create a cul-
ture of speaking up,” she suggests, and en-
courage children to question authority. But
she is aware of the obstacles, too. “We need
to develop our ability to feel empathy,” she
writes, while conceding this will be tricky
in an age suffused with narcissism. 7

66 Books & arts The Economist April 11th 2020

Soviet dissidents fell, one of its editors, Sergei Kovalev, be-
came a prominent mp and leading light in
Keeping the flame alight the creation of Memorial, a valiant outfit
that still seeks to chronicle all the victims
A remarkable record of the struggle for freedom in the Soviet Union of Soviet and now, under President Vladi-
mir Putin, post-Soviet repression.
It is fashionable for academics to argue The Dissidents. By Peter Reddaway.
that the doughty band of dissidents who Brookings Institution Press; 320 pages; The memoir highlights two particularly
fought for freedom in the Soviet Union, $29.99 and £25.50 noteworthy dissidents abetted by Mr Red-
during the decades between the death of daway, Anatoly Marchenko and General
Josef Stalin and the collapse of commu- viet body was forced out of the World Psy- Pyotr Grigorenko. Marchenko’s “My Testi-
nism under Mikhail Gorbachev, made little chiatric Association in 1983. Drawing on mony”, published in 1969 in the West (and
difference to the course of history: bigger archives in Moscow that were briefly in 1967 in samizdat), showed that the gu-
forces—contradictions, in the old Sov- opened in 1992, Mr Reddaway reveals that lag—the web of labour camps across the So-
speak—caused the system to perish from Yuri Andropov, the long-serving head of viet Union—had by no means ended with
within. Yet the likes of Andrei Sakharov the kgb who briefly became head of state, the demise of Stalin. When Marchenko
and Alexander Solzhenitsyn surely did authorised in his own words “a plan to de- died in 1986, he had spent a total of 20 years
help pull down the creaking edifice of the velop a network of psychiatric institutions in prison for non-violent dissent. Grigo-
totalitarian state by remorselessly expos- to help defend the Soviet system”, and that renko was a military hero with a chestful of
ing its falsehoods and speaking truth to from 1975 to 1988 some 2,438 dissidents, ac- medals for valour. But when he started to
power. Moreover, whether abroad or in in- cording to kgb records, were subjected to agitate against the system, he was incarcer-
ternal exile or jail, the dissidents—and an their malign care. Thanks to extraordinari- ated in a string of mental asylums.
array of less known heroes documented in ly brave medics such as Anatoly Koryagin
Peter Reddaway’s remarkable memoir— and Alexander Podrabinek (who both Mr Reddaway was also active in aiding
did keep alive the notion of Russian decen- served long prison sentences), this abuse those punished for promoting the rights of
cy and the flame of freedom. was exposed in the 1960s and 1970s. That Christians, Jews, Crimean Tatars and other
was also a signal achievement for Mr Red- minorities. Many of the nationalist dissi-
As a student of Russian at Cambridge, daway and his own dedicated coterie in dents in far-flung parts of the Soviet em-
Mr Reddaway was drawn into the dissi- Britain, America and the Netherlands. pire became prominent when its fake fed-
dents’ shadowy world, making the first of eralism began to buckle during Mr Gorba-
three visits to the Soviet Union in 1960. He The most impressive and durable of the chev’s reforms. This, too, contradicts the
listened assiduously to a wide range of So- dissident networks within the Soviet Un- notion that the dissidents had scant effect
viet citizens, from taxi-drivers to academi- ion was probably the one that published 64 as agents of change.
cians, recording their views in meticulous issues of the courageous Chronicle of Cur-
but engrossing detail. A stint at Moscow rent Events in 1968-82, including, early on, a Reds away
State University ended in his expulsion in seminal essay by Sakharov. All but two edi- After a lifetime entangled with Russia, Mr
1964, five months before Nikita Khru- tions were smuggled out and then translat- Reddaway has a wealth of revealing anec-
shchev’s fall, probably because he helped ed and circulated by Mr Reddaway and oth- dotes beyond the world of dissidents. He
the wife of a defector for whom he had ers. From the early 1970s Amnesty once watched Vyacheslav Molotov, Stalin’s
briefly served as a guide in Cambridge. For International also distributed it, giving it a erstwhile foreign minister, reading in a li-
the next 24 years he doggedly catalogued, still wider reach. After the Soviet Union brary in Moscow. He knew people close to
translated and disseminated the cam- Lazar Kaganovich, the longest-surviving of
paigns and experiences—often in prisons, The heroism of Sakharov Stalin’s ministers, as well as a host of liter-
labour camps and mental asylums—of a ary luminaries, such as Kornei Chukovsky
vast range of dissidents. and Bella Akhmadulina. Boris Pasternak’s
brother and son confided in him. On his re-
By dint of their contacts with the likes of turn to Moscow in the heady days of glas-
Mr Reddaway, they put the abuse of human nost, after being banned for 24 years, he
rights in the Soviet Union under the was embraced by an array of writers, from
world’s spotlight. The Kremlin pretended old-school communists to nationalists,
to be impervious to Western claims that, Slavophiles to Westernisers.
long after Stalin’s death, dissidents still
languished behind bars. Yet it plainly Above all, like the people he defended,
minded when taken to task for flouting the he never lost heart. Whereas most Western
human-rights provisions of the Helsinki experts were sure the Soviet Union would
Accords, which it had reluctantly signed in endure, as far back as 1962 Mr Reddaway
1975 as a token of East-West detente, was writing: “Ultimately, I’m afraid, I see a
spawning the dissidents’ Helsinki Human new revolution as the only outcome—in 30
Rights Group in Moscow a year later. This years’ time?” Most of the dissidents he be-
gave a fillip to Sakharov and others who ar- friended shared his view that the Soviet
gued for a “legalist” approach to opposi- Union was unreformable unless the com-
tion, which cited the authorities’ viola- munist system was junked. In 1970 a Dutch
tions of their own rules and obligations. publishing house set up with Mr Redda-
way’s help issued Andrei Amalrik’s “Will
Soviet leaders also minded when— the Soviet Union survive until 1984?”
thanks to papers smuggled out by dissi-
dents dragged off to mental hospitals that Yet this book evinces no sense of trium-
were jointly overseen by venal psychia- phalism. How could it? Mr Putin has spent
trists and the kgb—the representative So- most of his life ensuring that dissent
against the state be suppressed. Still, Mr
Reddaway’s memoir makes clear that the
dissidents’ cause will live on. 7

The Economist April 11th 2020 Books & arts 67

home powerful and laying down the moral law to TV drama
entertainment everyone else. Mrs Proudie is a clerical wife
consumed by ambition—and by disap- A Flemish Robin
Hood
pointment with her husband. Nathaniel
All the world’s a stage on Netflix
Hawthorne described Trollope’s world as
The scene is a small city in 18th-century
“just as real as if some giant had hewn a Flanders. Some 50,000 French soldiers
are stationed nearby; supplying them
great lump out of the earth and put it under leaves little food for the peasantry. The first
thing the new bailiff, Baru (Tom van Dyck),
a glass case, with all its inhabitants going sees is a ragged family who stole two rab-
bits being flogged, branded and banished.
about their daily business and not suspect- “That’s a bit harsh, isn’t it?” he asks. “We’ll
have no scum here,” says a new colleague.
Trollope’s world ing that they were made a show of”.
At first, “Thieves of the Wood” tries a lit-
Part of the appeal lies in Trollope’s abili- tle too hard to demonise the bad guys. The
mayor, after raising taxes on the poor, or-
The way to live ty to summon up a vanished society of vic- ganises a party. “I’ll have fawns at my castle
arage tea parties, where clerical careers are tonight,” he tells a fellow noble in an equal-
ly opulent wig. This turns out to mean that
now decided, and country-house shooting he and his friends put on terrifying animal
weekends, where the fate of the nation may masks and chase orphan girls into a dark
wood. But soon the series starts to grip.
hang in the balance. But part also lies in
The hero is Jan de Lichte, a Flemish Rob-
Trollope’s knack for choosing subjects that in Hood played by a soft-spo-
ken Matteo Simon, who wages
echo powerfully today. “The Way We Live war on the toffs out of sympa-
thy for their victims. He steals
Discover the king of Victorian box sets Now” (1875) is as much a portrait of the last from the rich, gives to the poor
few decades as it is of the high Victorian and rallies them to resist their
Anthony trollope’s novels are almost age, and every bit as addictive as hbo’s hit oppressors. His highway rob-
custom-made for prolonged confine- series “Succession”. beries and guerrilla raids are
ment. There are a lot of them—47 in all, di- intricately planned, sumptu-
The novel’s anti-hero, Augustus Mel- ously filmed and teeth-clench-
vided up between single-hits (“The Way We motte, is one of the great portraits of the ingly unpredictable.
Live Now”) and “box sets”, such as the six businessman as ogre—a “horrid, big, rich The mayor may be a carica-
parliamentary books and six clerical ones. scoundrel”, “a bloated swindler” and “vile ture, but the bailiff is not. Baru
And they are utterly addictive: pacier than city ruffian” who bears an uncanny resem- pursues Jan because he be-
Dickens and with a wider variety of charac- blance to the late Robert Maxwell (and to lieves in the law—though he
ters than Austen. Timothy West’s superb living figures who had best not be named also lusts after the trappings of
audio versions of the best- office (among other things). A
battle of wills unfolds between
known means you can listen to the dashing rebel and the
flawed defender of order.
them while cooking or walking
One of the boons of Netflix is that you
(if you are allowed out). can watch box sets from anywhere, in their
original languages with English subtitles.
Trollope is sometimes con- Particularly in a lockdown, it is a joy to ex-
plore the world via dramas in Galician (try
sidered a niche author for grey- “Bitter Daisies”, a murder mystery) or Zulu,
one of several tongues spoken in “Queen
ing Anglophiles. He wrote Sono”, a sort of African James Bond.

about quintessentially British Unlike Bond—or Robin Hood—Jan de
Lichte was a real person. By all accounts he
institutions such as the Houses was a thug, robbing the poor and murder-
ing rivals. (The romanticised version is
of Parliament and the Church based on “De Bende van Jan de Lichte”, a
novel by Louis Paul Boon, a Belgian writer.)
of England. He lived in the high Still, many of the show’s details are accu-
rate. The punishments endured by 18th-
Victorian era when women and century Flemish outlaws were every bit as
barbaric as they seem on screen. There are
servants knew their places and worse fates than being stuck on the sofa. 7

men wore gigantic beards.

Don’t be put off: his appeal

transcends his time and class.

The lead singer of the Pet Shop

Boys, Neil Tennant, wrote the
song “Can You Forgive Her?” Steal from the rich, give to the lockdown
after reading Trollope’s novel of

the same name. for legal reasons). Despite his foreign birth

His greatest theme is an eternal one: the and mysterious past, Melmotte forces his
lust for power and prestige, and the way it way into British society by playing on the
colours and warps human affairs. This greed of bigwigs who despise him yet com-
theme dominates his ecclesiastical and pete for his favours. He buys his way into
parliamentary novels alike; it involves his the House of Commons; he floats a railway
female characters just as much as his men. company that is ostensibly designed to
Arguably, the most accomplished politi- build a line between Mexico and America
cian in his books is a woman, Lady Glen- but is really a paper scheme for selling
cora Palliser, who brilliantly proves that, shares. The Ponzi scam eventually col-
whatever the technical rules of the fran- lapses, exposing Britain’s great commer-
chise, the dinner table was as much a cen- cial empire for a greed-fuelled racket and
tre of power as the Cabinet table.
its high society as a hypocritical sham.
Lady Glencora is only one of dozens of
“The Way We Live Now” is an excellent
unforgettable characters, who are every bit place to begin an affair with Trollope. It is
as boldly drawn as Dickens’s, and more relatively short by his standards and exqui-
plausible. Obadiah Slope is an oleaginous sitely executed. If you don’t like it, Trol-
young clergyman who divides his energies lope’s world is not for you. If you do, anoth-
between ingratiating himself with the er 46 novels await you. 7

68 Economic & financial indicators The Economist April 11th 2020

Economic data

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* 2020† latest 2020† % % of GDP, 2020† % of GDP, 2020† latest,% year ago, bp Apr 7th on year ago

United States 2.3 Q4 2.1 -2.9 2.3 Feb 0.1 4.4 Mar -2.1 -12.3 0.8 -175 -
China 6.0 Q4 6.1 1.0 1.8 -5.5 2.1 §§ -94.0 7.06
Japan -0.7 Q4 -7.1 -1.6 5.2 Feb 5.2 3.6 Q4§ 3.2 -5.4 nil -8.0 109 -4.8
1.1 Q4 0.1 0.8 -4.3 -2.4 0.4 -75.0 0.81 2.5
Britain 1.5 Q4 0.3 -3.2 0.5 Feb 0.6 2.4 Feb -3.7 -4.2 0.8 -88.0 1.40 -4.9
Canada 1.0 Q4 0.5 -0.3 2.1 -1.8 -0.3 -32.0 0.92 -4.3
Euro area 1.0 Q4 1.1 -6.0 1.7 Feb 1.3 3.9 Dec†† 0.1 -5.5 0.2 -16.0 0.92 -3.3
Austria 1.2 Q4 1.6 1.2 -0.2 -1.7 0.1 -29.0 0.92 -3.3
0.9 Q4 -0.2 1.0 2.2 Feb 0.9 5.6 Feb -0.7 -2.5 0.1 -31.0 0.92 -3.3
Belgium 0.5 Q4 0.1 -6.0 5.2 -5.2 -0.3 -32.0 0.92 -3.3
France 0.5 Q4 -2.7 -6.0 0.7 Mar 0.8 7.3 Feb -2.9 -5.2 1.9 -169 0.92 -3.3
Germany 0.1 Q4 -1.2 -1.1 2.4 -3.6 1.6 -83.0 0.92 -3.3
Greece 1.6 Q4 1.6 1.4 2.2 Feb 0.4 4.4 Feb 7.9 0.3 -0.2 -39.0 0.92 -3.3
Italy 1.8 Q4 1.7 -6.0 0.8 -7.3 0.7 -36.0 0.92 -3.3
Netherlands 1.8 Q4 1.9 2.1 0.6 Mar 1.4 5.2 Feb 0.3 -0.2 1.4 -47.0 25.1 -3.3
Spain 2.2 Q4 2.3 1.7 7.5 0.7 -0.1 -18.0 6.86 -8.9
Czech Republic 1.8 Q4 6.5 1.6 0.6 Mar 1.2 8.1 Feb 6.6 6.6 0.6 -107 10.2 -3.1
Denmark 3.6 Q4 1.2 3.1 -0.3 -1.2 1.6 -132 4.17 -15.9
Norway 2.1 Q4 na -2.6 1.4 Mar 0.8 3.2 Feb 1.2 -2.7 6.8 -159 75.7 -8.4
Poland 0.8 Q4 0.6 1.3 3.7 0.4 -0.1 -54.0 10.0 -13.7
Russia 1.5 Q4 1.3 1.0 0.2 Feb -0.8 16.3 Dec 9.9 0.2 -0.3 -1.0 0.97 -7.3
Sweden 6.0 Q4 na -3.5 -2.9 -4.5 13.7 -353 6.77 3.1
Switzerland 2.2 Q4 2.1 -0.5 0.1 Mar 0.2 9.7 Feb -1.1 -4.8 0.9 -98.0 1.62 -17.1
-2.9 Q4 -1.3 -2.3 1.5 -3.6 0.9 -68.0 7.75 -13.0
Turkey 4.7 Q4 4.9 2.1 1.4 Mar 1.6 3.7 Feb -0.3 -5.1 6.4 -94.0 75.6 1.3
Australia 5.0 Q4 na 1.0 -1.6 -5.1 8.0 50.0 16,200 -8.5
Hong Kong 3.6 Q4 na -1.0 0.7 Feb -0.5 13.6 Feb 3.3 -6.2 3.4 -39.0 4.34 -12.8
3.3 2019** na 2.2 -1.3 -7.8 9.1 ††† -431 168 -5.8
India 6.4 Q4 9.1 -0.1 3.7 Feb 2.8 2.0 Feb‡ -0.7 -7.5 4.7 -120 50.7 -15.7
Indonesia -2.2 Q1 -10.6 -3.2 19.1 -6.1 1.1 -98.0 1.42 2.8
2.3 Q4 5.1 -1.8 0.8 Feb 1.1 3.7 Feb 6.2 -3.7 1.6 -31.0 1,221 -4.2
Malaysia 3.3 Q4 7.8 -1.9 9.6 -5.3 0.5 -26.0 30.1 -6.9
Pakistan 1.6 Q4 1.0 -5.9 0.9 Feb 1.8 3.8 Jan‡‡ 4.8 -6.5 1.1 -99.0 32.8 2.3
Philippines -1.1 Q4 -3.9 -6.7 0.4 -6.1 na -464 65.1 -2.8
1.7 Q4 2.0 -5.5 4.7 Feb 3.6 5.5 Feb§ -1.9 -12.0 3.3 -375 5.24 -33.2
Singapore -2.1 Q4 -15.5 -4.9 -5.4 -7.1 3.4 -54.0 839 -26.3
South Korea 3.4 Q4 1.9 -2.7 2.6 Mar 6.8 4.6 Feb§ -5.2 -5.4 7.2 76.0 3,918 -20.8
-0.5 Q4 -0.5 -6.5 -2.0 -4.2 7.3 -78.0 24.1 -20.2
Taiwan 1.8 Q4 0.6 -2.5 1.0 Feb 1.5 8.2 Feb§ -3.1 -11.5 5.6 38.0 3.38 -20.9
Thailand 5.7 Q3 na 2.2 -3.0 -10.8 na 15.8 -2.4
Argentina 3.7 Q4 4.2 -2.3 -0.5 Mar 0.2 2.8 Mar 3.5 -11.0 0.9 nil 3.58 9.7
0.3 2019 na -3.0 -6.3 -12.2 na -112 3.76 nil
Brazil -0.5 Q4 -1.4 0.7 11.9 Mar 11.0 13.7 Dec§ -4.1 -6.9 11.0 18.3 -0.3
Chile nil -23.2
1.8 Q4 1.7 5.1 Feb 245
Colombia
Mexico 2.2 Feb 1.2 3.7 Feb‡‡
Peru
6.6 Feb 5.7 8.5 Mar
Egypt
Israel 3.0 Mar 0.7 5.3 Q3§

Saudi Arabia 1.3 Feb 1.5 3.2 Jan§
South Africa
10.2 Mar 8.2 5.8 2018

2.5 Mar 1.5 5.3 Q1§

0.3 Feb 1.3 2.3 Q4

1.0 Mar -0.2 4.1 Feb§

-0.2 Feb -0.4 3.7 Feb

-0.5 Mar 0.1 1.1 Feb§

50.3 Feb‡ 43.7 8.9 Q4§

4.0 Feb 3.9 11.6 Feb§‡‡

3.9 Feb 3.5 7.8 Feb§‡‡

3.8 Mar 1.9 12.2 Feb§

3.2 Mar 2.9 3.7 Feb

1.8 Mar 1.1 7.4 Jan§

5.3 Feb 2.6 8.0 Q4§

0.1 Feb -0.9 3.4 Feb

1.2 Feb 0.6 5.5 Q3

4.5 Feb 4.5 29.1 Q4§

Source: Haver Analytics. *% 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.

Markets % change on: % change on: Commodities

Index one Dec 31st index one Dec 31st The Economist commodity-price index % change on
Apr 7th Apr 7th week 2019
In local currency week 2019 2015=100 Mar 31st Apr 6th* month year
United States S&P 500 2,659.4 31,231.6 6.8 -23.3
United States NAScomp 7,887.3 2.9 -17.7 Pakistan KSE 2,571.9 3.7 -20.2 Dollar Index
China Shanghai Comp 2,820.8 Singapore STI 1,823.6 3.9 -17.0
China Shenzhen Comp 1,743.4 2.4 -12.1 South Korea KOSPI 9,996.4 3.0 -16.7 All Items 102.6 101.1 -7.3 -11.4
Japan Nikkei 225 18,950.2 Taiwan TWI 1,215.0 7.9 -23.1
Japan Topix 1,403.2 2.6 -7.5 Thailand SET 26,696.1 9.5 -35.9 Food 96.2 93.3 -2.1 -0.8
Britain FTSE 100 5,704.5 Argentina MERV 76,358.1 4.6 -34.0
Canada S&P TSX 13,614.1 4.6 1.2 Brazil BVSP 34,526.3 -0.1 -20.7 Industrials
Euro area EURO STOXX 50 2,857.7 Mexico IPC 9,840.6 2.6 -29.5
France CAC 40 4,438.3 0.2 -19.9 Egypt EGX 30 1,312.5 2.8 -18.8 All 108.4 108.3 -11.2 -18.4
Germany DAX* 10,356.7 Israel TA-125 6,986.4 7.4 -16.7
Italy FTSE/MIB 17,411.7 nil -18.5 Saudi Arabia Tadawul 47,496.7 6.8 -16.8 Non-food agriculturals 84.0 83.6 -11.2 -25.7
Netherlands AEX South Africa JSE AS 1,895.0 2.3 -19.6
Spain IBEX 35 499.9 0.6 -24.4 World, dev'd MSCI 3.5 -21.2 Metals 115.7 115.7 -11.2 -16.6
Poland WIG 7,002.0 Emerging markets MSCI 878.2
Russia RTS, $ terms 44,110.9 1.8 -20.2 Sterling Index
Switzerland SMI 1,099.8 All items
Turkey BIST 9,514.6 2.5 -23.7 126.2 125.9 -2.2 -5.7
Australia All Ord. 92,381.8
Hong Kong Hang Seng 5,301.3 1.0 -25.8 Euro Index
India BSE 24,253.3 All items
Indonesia IDX 30,067.2 4.2 -21.8 103.7 103.9 -2.5 -7.4
Malaysia KLSE 4,778.6
1,369.9 2.1 -25.9

3.4 -17.3 Gold
$ per oz
3.2 -26.7 1,612.1 1,649.1 -0.3 26.4

6.0 -23.7 Brent
$ per barrel
8.4 -29.0 US corporate bonds, spread over Treasuries 22.6 33.3 -9.5 -53.0

2.2 -10.4 Sources: Bloomberg; CME Group; Cotlook; Datastream from Refinitiv;
Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool
3.1 -19.3 Dec 31st Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional.
2019
3.7 -22.1 Basis points latest
Investment grade 141
2.8 -14.0 High-yield 308 449
978
2.0 -27.1

5.3 -24.1 Sources: Datastream from Refinitiv; Standard & Poor's Global Fixed For more countries and additional data, visit
Income Research. *Total return index. Economist.com/indicators
1.4 -13.8

Graphic detail Measuring covid-19 The Economist April 11th 2020 69

Footprints of the → In the past month “flu-like illnesses” besides the flu itself have surged
invisible enemy
Non-flu influenza-like illnesses 2019-20 15
Why a study showing that covid-19 is % of visits to sampled primary health-care providers, by week 10
everywhere in America is good news New Jersey

One of the few things known for sure Median 2010-19* 5
about covid-19 is that it has spread fast- 0
er than official data imply. Most countries Aug 2019 Sep Oct Nov Dec Jan 2020 Feb Mar
have tested sparingly, focusing on the sick. Oklahoma 10
Just 0.1% of Americans and 0.2% of Italians
have been tested and come up positive. In 5
contrast, a study of the entire population of
the Italian town of Vò found a rate of 3%. 0

The lack of testing has set off a hunt for Aug 2019 Sep Oct Nov Dec Jan 2020 Feb Mar
proxies for covid-19 infection, from smart-
thermometer readings to Google searches → Estimates of patients with flu-like symptoms closely track covid-19 counts
for “I can’t smell”. A new paper by Justin Sil-
verman and Alex Washburne uses data on Increase† in estimated non-flu influenza-like New confirmed covid-19 cases
influenza-like illness (ili) to show that illnesses v new confirmed covid-19 cases per 100,000 people, log scale
sars-cov-2 is now widespread in America. United States, March 22nd-28th 2020 1,000

Every week, 2,600 American clinicians Population New York
report the share of their patients who have 30m
ili—a fever of at least 37.8°C (100°F) and a 1m Michigan Washington New Jersey 100
cough or sore throat, without a known Louisiana 10
non-flu reason. Unsurprisingly, ili is often Indiana
caused by flu. But many other ailments also West Virginia Georgia
produce ili, such as common colds, strep Maryland
throat and, now, covid-19. The authors as-
sume that the share of these providers’ pa- Oklahoma
tients with ili who do have the flu matches
the rate of flu tests that are positive in the Kentucky Texas California
same state and week. This lets them esti-
mate how many people have ili seriously 1
enough to call a doctor, but do not have the
flu—and how many more people have had 10 100 1,000 10,000
non-flu ili in 2020 than in prior years.
Increase in estimated non-flu influenza-like illnesses, per 100,000 people, log scale
They find that non-flu ili has surged. Its
rise has the same geographic pattern as co- → If covid-19 has spread faster than commonly thought, it must be less deadly
vid-19 cases: modest in states with few pos-
itive tests, like Kentucky, and steep in ones United States, covid-19 cases and deaths under different Millions 25
with big outbreaks, such as New Jersey. In modelling scenarios, assuming no social distancing 20
total, estimated non-flu ili from March 8th New daily cases 15
to 28th exceeded a historical baseline by 10
23m cases—200 times the number of posi- Scenario 1: Scenario 2: 5
tive covid-19 tests in that period. This may Faster-growing Slower-growing 0
overstate the spread of covid-19, since non- and less deadly and more deadly
flu ili has other causes. It could also be too Apr May Jun
low, because people with asymptomatic or Jan Feb Mar
mild covid-19 would not report non-flu ili.
New daily deaths Thousands 200
This sounds alarming, but should be re-
assuring. Covid-19 takes 20-25 days to kill Both scenarios match the 150
victims. The paper reckons that 7m Ameri- deaths officially attributed
cans were infected from March 8th to 14th, to covid-19 in early April, 100
and official data show 7,000 deaths three then diverge
weeks later. The resulting fatality rate is 50
0.1%, similar to that of flu. That is amazing- April 5th
ly low, just a tenth of some other estimates. 1,212 0
Perhaps it is just wrong, possibly because May Jun
the death toll has been under-reported. Jan Feb Mar Apr
Perhaps, though, New York’s hospitals are *Modelled median, based on data from 2010-19
overflowing because the virus is so conta- Sources: “Using ILI surveillance to estimate state-specific case †Difference between rate in 2020 and modelled median
gious that it has crammed the equivalent of detection rates”, by J. Silverman & A. Washburne; Johns Hopkins CSSE
a year’s worth of flu cases into one week. 7

70 Obituary Catherine Hamlin The Economist April 11th 2020

Faith healing wogesha, a village doctor offering a potion made of herbs, it went
on and on. There was nothing to do but squat and push, often for
Catherine Hamlin, obstetrician, died on March 18th, aged 96 five or six days. If the fetus did not survive, the only reason the
mother could eventually deliver was because babies get smaller
The ad in the Lancet called for a gynecologist to set up a mid- when they are dead.
wifery school for nurses in Ethiopia. In the end they got two for
the price of one—Catherine, who had grown up in a wealthy Syd- But then, as she discovered, the mother wakes up to an even
ney family, and her husband, Reg, from New Zealand. She was re- greater horror: her bed is soaked and stinks. Her protracted labour
minded of her homeland as soon as she saw the rugged, biblical has left her so badly injured that her vagina has ruptured, her blad-
landscape. It looked a bit like New South Wales, with its armies of der is shredded, her rectum torn. Urine and faeces leak out of her
gum trees arrayed along steep hillsides as in the Blue Mountains. without cease. Soon, her husband leaves her. Her family and her
She liked the lemony light of early morning when she would start village community turn their backs on her. She lies on her bed, her
the day with a cup of tea on her veranda and a passage from the Bi- legs drawn up to her chin to try to stem the flow; shame is her only
ble. But in other ways it wasn’t like home at all. company.

No one was there to meet the couple when, with their six-year- The Hamlins would sit up late into the night in their little mud-
old son, Richard, they stepped off the dusty flight from Djibouti, built house in the hospital grounds, studying the history of obstet-
where their ship had docked. The telegram announcing their arriv- ric fistula, as these injuries were known, which was first written
al in Addis Ababa was not delivered until two weeks after they got about in 1550bc. They went over the evolution of the treatment, re-
there. Ethiopia had more pressing needs too, it turned out, than ei- reading the autobiography of Marion Sims, who, in the 1850s had
ther midwifery or teaching. treated similar injuries among American slave women. Of the two
of them, he was the conventional one, doing things the way they
Each day, when the hospital gates swung open, she found them had always been done. She was the more flexible, ever prepared to
there, the young women who believed she might be their last hope. experiment, radically cutting away scar tissue, for example, or try-
Some had been carried for hundreds of kilometres on the back of ing out a technique known as the Martius fat-pad graft in which a
their fathers or mothers, others had spent years saving for the bus piece of fat partly cut from the side of the vagina was used to repair
fare. One arrived at night and, finding the gate shut, tried to hang the bladder—and create a reinforcement between the bladder
herself. In the morning the guards cut her down; Dr Hamlin oper- muscle and the skin of the vagina, offering protection in a future
ated, and cured her. pregnancy. When she wrote to Heinrich Martius of her success
after doing the surgery hundreds of times, he replied: “I’m glad
They all had terrible internal injuries, such as had not been you’re curing these women with my operation. I’ve only done 26.”
seen in Europe, America or Australia since the 19th century. Here Her small hands, wearing surgical scrubs during the week and
these were endemic, owing to the malnutrition that meant the bo- white gloves for church on Sundays, were perfect for suturing
dies of Ethiopian girls remained small. The attitude of the Ethiopi- within the small confined spaces of women’s bodies.
an Orthodox church which encouraged child marriage—to keep
girls virtuous, they insisted—only made things worse, as did the Some patients were too far gone, and died. But many recovered
lack of obstetric care, especially in rural areas. Betrothed at eight or and went home—always in a new dress that she gave them for the
nine, girls would find themselves pregnant in their early teens. journey. Others made a life in the hospital as assistants to the nur-
When they went into labour, sometimes with no one to help but a ses, like Enatanesh Demisse whose urethra Dr Hamlin rebuilt us-
ing muscle taken from her leg, or Lete Birhan, who was not only in-
continent when she arrived, but also paralysed from the waist
down having been knocked over by a car. Once treated by the doc-
tor, Lete, in her wheelchair, became a stalwart of the hospital’s
physiotherapy department.

Oprah signs a cheque
Soon the hospital was curing more than 90% of its patients. Sur-
geons came from around the world to see her work. Having deliv-
ered several of the imperial princesses, she asked the emperor for
land so the hospital could expand. In 1993, when Reg died, she
found herself, at almost 70, taking on yet more tasks. The hospital
had survived the Derg, which overthrew the emperor in 1974, and
the famine that stalked the country. By then she had treated more
than 25,000 fistula cases. To help it grow she taught herself to
speak to crowds of people and to ask for money. She told Oprah
Winfrey, whom she’d never heard of before flying to Chicago to ap-
pear on her television show in 2004, that she was a professional
beggar. Oprah signed her a personal cheque for $450,000, a year’s
running expenses for the hospital.

She was still operating when she was 92, stopping only when
she could no longer stand without her sticks to make that first in-
cision. She even built the midwifery school the original Lancet ad
had called for. She did all this, she told Oprah, because she believed
that was what God wanted her to do. She was not a missionary doc-
tor, but a doctor who was a Christian. She loved the spirituality of
the Ethiopians and was not rigid about where she herself wor-
shipped, moving from church to church wherever she liked the
message or the minister. She thought of herself as an ordinary
woman. The Ethiopians called her Emaye, Amharic for mother.
They thought of her as a saint. 7