The Economist

As Barack Obama embraces exports, trade friction looms

A GLOOMY office park in suburban Chicago is the home of NewMedical Technology. At the moment the young company has only one main product, silicone strips to reduce scarring after surgery. But in its tiny warehouse, employees busily pack boxes to be shipped to Brussels. In the past year the firm’s business has expanded quickly; NewMedical now exports to South America, Europe and Asia.

It is the type of growth Barack Obama dreams of. Consumers are nursing battered balance sheets and the government is wallowing in debt. That puts the burden on exports to carry the recovery; Mr Obama wants them to double over the next five years. ...

Temporary work may dim future employment prospects

IS ANY job better than no job? Some research has suggested that unemployed workers should take up any job they can get, including temporary work, as a bridge to higher-paying employment. But what may be good for the economy, reducing the drain on government coffers, may be bad for the individuals concerned. In a forthcoming paper in the American Economic Journal: Applied Economics, David Autor of the Massachusetts Institute of Technology and Susan Houseman of the W.E. Upjohn Institute for Employment Research in Michigan show that taking up temporary work after a spell of unemployment can hurt future earnings.

The authors looked at data from Detroit’s “Work First” welfare-to-work initiative, which uses placement agencies to put low-skilled unemployed people into paid jobs. They then assessed participants’ earnings and job tenure before and after their involvement in the programme. ...

The merits of inflation as a solution to the rich world’s problems are easily overstated

IT HAS long been considered a scourge, an obstacle to investment and a tax on the thrifty. It seems strange, then, that inflation is now touted as a solution to the rich world’s economic troubles. At first sight the case seems compelling. If central banks had a higher target for inflation, that would allow for bigger cuts in real interest rates in a recession. Faster inflation makes it easier to restore cost-competitiveness in depressed industries and regions. And it would help reduce the private and public debt burdens that weigh on the rich world’s economies. In practice, however, allowing prices to rise more quickly has costs as well as benefits.

The orthodoxy on inflation is certainly shifting. A recent IMF paper* co-authored by the fund’s chief economist suggests that very low inflation may do more harm than good. Empirical research is far clearer about the harmful effects on output once inflation is in double digits. So a 4% inflation target might be better than a goal of 2% as it would allow for monetary policy to respond more aggressively to economic “shocks”. If the expected inflation rate rose by a notch or two, wages and interest rates would shift up to match it. The higher rates required in normal times would create the space for bigger cuts during slumps. ...

Imposing quotas for women in boardrooms tackles a symptom of discrimination, not the cause

IF YOU are a youngish man who sits on a European corporate board, you should worry: the chances are that your chairman wants to give your seat to a woman. In January the lower house of France’s parliament approved a new law which would force companies to lift the proportion of women on their boards to 40% by 2016. The law would oblige France’s 40 biggest listed firms to put women into 169 seats currently occupied by men. Spain has also introduced a quota at 40%, to be reached by 2015. Italy and the Netherlands are contemplating similar measures. This week Britain’s government threatened to make companies report formally on their recruitment of female directors.

Compared with America, where women held 15% of board seats at Fortune 500 companies in 2009 according to Catalyst, a lobbying organisation, European countries have relatively few female board members. Britain is not too far behind at 12%, according to a survey of Europe’s 300 biggest firms by the European Professional Women’s Network (EPWN). Spain, Italy, France and Germany, however, all lag behind the European average of 10%. ...

Giving parents a real choice

BRENTWOOD in Essex is an unremarkable town, once derided as the most boring in Britain. It is home not only to Brentwood School, a moderately well-known independent school founded in 1558, but also to two more modern establishments: Sawyers Hall College and, five minutes down the road, Shenfield High School. In 2006 Sawyers Hall was deemed a failing school, one that was not educating its pupils as required. Since then, parents have voted with their feet. Rolls have fallen even as efforts to improve results have paid off. Sawyers Hall is slated to close as a comprehensive in the summer; a further-education outfit teaching hairdressing and the like will take its place.

The college is just one of many schools fingered for closure. On March 10th the schools inspectorate announced that 10% of the 2,140 schools it had assessed over the four months to the end of December were “inadequate”, a category that might more accurately be termed “dire”. Some of these will be turned around by good new head teachers. Others, though, will close. ...

Why independent candidates may yet break the political mould

ESTHER RANTZEN gestures at the gaslit machines in Wright’s hat factory in Luton. The iron machines are more than 100 years old, but the aluminium moulds on which the hats are shaped are new. “The queen may favour it, but I don’t like the asymmetric brim. How difficult is it to make a new mould?” she asks the milliner, Philip Wright. A little expensive, but not too difficult if you know how, he replies.

The television celebrity is hoping to redesign more than hats in Luton South, a marginal constituency about 30 miles north of London. She, like other independent candidates in the coming general election, would also like to break the mould of British politics. A flurry of them have appeared in seats where incumbent MPs were discredited in last year’s parliamentary-expenses scandal. ...

In the corporate-tax armoury the next government must pick carefully

WHAT do Shore Capital, a boutique financial firm, and Ineos, the remnant of various giant chemical companies, have in common? Both announced plans this month to move their headquarters to countries with lower taxes—Shore to Guernsey and Ineos to Switzerland. As Britain’s cash-strapped exchequer faces shrinking revenues from recession-hit businesses, the exodus of these firms and others raises an important question. Is Britain’s company-tax regime competitive?

The system isn’t fit for the 21st century, says Michael Devereux, professor of business taxation at Oxford’s Said Business School. It is a 19th-century apparatus, struggling—like many tax regimes around the world—to keep fiscal tabs on global earnings, intra-group cashflows, migration of intellectual property and the elusive proceeds of financial and other services. ...

An infamous murder returns to the national consciousness, with worrying implications

MOST eras have their symbolic murders: crimes that are not only terrible but seem also to reflect the nation’s pathologies. Victorian London had Jack the Ripper; modern Britain has the death of James Bulger, a two-year-old who in 1993 was abducted from a Merseyside shopping centre, tortured and killed by Jon Venables and Robert Thompson, both aged just ten. Their trial inspired national fury, revived in 2001 when they were released under new names. Mr Venables has now been returned to custody for an unspecified breach of his licence. Unspecified by the government, that is; channelling the ire the crime still arouses, newspapers have gleefully relayed rumours of his offence.

It is not surprising that this incident retains its power to appal: the grainy CCTV image that captured the small boy being led away by a bigger one has become an icon of depravity. The trouble is, the case held up a mirror less to the real state of Britain than to its dark, psychic fears. The confusion of those things has led to mistaken conclusions being drawn from it. They may be again. ...

The Slovak leader deploys national culture as a political weapon

IN THE run-up to Slovakia’s parliamentary election in June, Robert Fico, prime minister and leader of the centre-left Smer party (pictured), is busy bolstering his nationalist credentials. His supporters say that ordering schoolchildren to sing the national anthem is just an example of a legitimate effort by a newish country to strengthen its sense of self (Slovakia became fully independent only in 1993, after the break-up of Czechoslovakia). Critics find Mr Fico’s cocktail of history and culture stodgy or downright creepy.

The focus of protests is a new “patriotic act” just passed by parliament that awaits presidential approval. It mandates weekly anthem-playing in all state educational establishments. School officials who disobey risk being sacked. Its champion is Jan Slota, the bombastic leader of a nationalist party that is part of Mr Fico’s coalition. Mr Fico himself takes a softer line, defending only what he calls “reasonable historicism”. But even this is sparking angry squabbles over Slovakia’s past. ...

The pioneer of home births in Hungary faces jail

IF HISTORY were a guide, obstetrics in Hungary should be wonderful. In 1847 Ignac Semmelweis pioneered mother-friendly childbirth, insisting that doctors should wash their hands between autopsy and delivery rooms (they objected to this slur on gentlemanly cleanliness).

Obstetric care in Hungary is indeed excellent today. It is tightly run by skilled doctors, with low mortality rates. But those who challenge the medical profession still face problems. Agnes Gereb, a pioneer of home births, is facing up to eight years in jail. Prosecutors are going after her over one fatality in childbirth, one case in which a baby died some months after birth and two births that ended up as emergency hospital admissions. In the eyes of many Hungarians, such incidents show that home births are insanely risky and that those who promote them are little more than irresponsible cranks. ...

The new president of the European Council will be worth watching

TO ENGLISH ears, the word “compromise” often has a shabby ring. When safety or quality are compromised, people get hurt. Yet in continental Europe, compromise is often a political ideal. Nowhere is this truer than in Belgium, a country whose Dutch- and French-speaking populations tolerate each other (just), thanks to endless fudges and deals lubricated with taxpayers’ money. Belgium’s six governments are all baggy coalitions that balance social-market capitalism with a free-spending public sector (one in three active adults works for the state).

A third of parliamentarians from Flanders would like Belgium to vanish, says one senior politician. Belgian governments fall often, yet the place trundles along because most leaders agree to disagree. One thing that unites them is faith in deeper European integration. Apart from those on the extreme right, most Belgian politicians would welcome European Union taxes, a European army and nation-states reduced to a vestigial role. It is not hard to see why: to Belgian leaders trapped in the national equivalent of a bad marriage, the EU’s free love must look like bliss. ...

In the aftermath of fighting or repression, people are often told to forget things. But in free societies, selective memory cannot be imposed for ever

THE 15 boxes of bones were wrapped in the red, yellow and purple flag of the Second Republic. Each held the remains of a man whose support for a brief political experiment in the 1930s had proved fatal. At a ceremony in Madrid on March 6th the bones were given to descendants: mostly middle-aged grandchildren, but sometimes already aged sons or daughters.

They wept for men they had mostly never known. The victims had died of hunger and disease in one of the makeshift prison camps set up by General Francisco Franco in the early days of his 36-year dictatorship, established after the republic’s defeat in a bloody, three-year civil war. ...

It takes many hands to reconcile two peoples so divided by history

FOR centuries, a stone bridge spanning the emerald green waters of the Akhurian River connected the southern Caucasus to the Anatolian plains: a strategic pivot on the Silk Road, running through the ancient Armenian kingdom of Ani. Today the bridge would have linked tiny, landlocked Armenia to Turkey. But war and natural disasters have reduced it to a pair of stubs—a sad commentary on the relations between the two states.

This grim image prompted an Ankara-based think-tank, called Tepav, to devise a plan to rebuild the bridge and in so doing to reopen the long-sealed land border by stealth. “The idea is to promote reconciliation through cross-border tourism,” explains Tepav’s director, Guven Sak. Turkey’s doveish president, Abdullah Gul, has embraced the plan. The Armenian authorities and diaspora Armenians with deep pockets are also interested. If all went to plan, the bridge’s restoration would only be the start of a broader effort to repair hundreds of other Armenian architectural treasures scattered across Turkey. ...

The generals leave nothing to chance

THE junta ruling Myanmar has had 20 years to digest the lessons from the country’s most recent election. It was trounced by the National League for Democracy, even though the opposition’s charismatic leader, Aung San Suu Kyi, was already under house arrest. This year on an unnamed date (perhaps its astrologers cannot agree) the junta will hold another election. It will not lose this one.

Election laws published this week do not quite spell out the result. But a “political-parties registration law” bars Miss Suu Kyi and other political prisoners, of whom there are more than 2,000, from belonging to a party because of their criminal convictions. Cut off from politics by her house arrest, Miss Suu Kyi is anyway barred from office as the widow of a foreigner. Her party now has to expel her and other detainees. The law also bans civil servants from joining parties, along with monks, who led anti-government protests in 2007. ...

Technology complicates life for vote-riggers and counters alike

RIGGED elections and the instability they create have been the bane of the Philippines for much of its democratic history. Filipinos are fervently hoping that the computerisation of the vote-counting in May’s presidential, congressional and local elections will solve the problem. But faith in the technology is less fervent. Many fear it is no solution.

In past elections voters had to write down the names of their preferences for up to 32 national or local positions on blank ballot forms. Their votes were tallied by hand at the precinct, municipal, provincial and finally national levels. Definitive results could take weeks to emerge, giving ample opportunity for vote-padding and shaving. Vote-rigging by President Ferdinand Marcos led to his downfall in 1986. The incumbent president, Gloria Macapagal Arroyo, has had a shaky grip on power since she was accused of rigging her election in 2004. ...

That some liberals want and local governments fear

A GRANDMOTHER killed trying to stop developers flattening her home; university graduates forced to live in crowded slums: China’s ebullient property market has generated many tales of woe, and a promise from the prime minister, Wen Jiabao, to “rein in” the speculators. But calls for this to be achieved with a new property tax have put the government in a bind.

In the past year property prices have surged to new highs in some places, helped by a torrent of carefree lending from state-run banks. Mr Wen made his pledge on March 5th, in a speech to China’s parliament, the National People’s Congress (NPC), launching its annual ten-day session. The NPC is filled with party loyalists. But some have fretted openly about property bubbles. The government says house prices in 70 cities rose 10.7% in February compared with a year earlier, the fastest rise in 20 months. There are early signs that this is denting sales. In both January and February the volume of housing sales fell sharply from the previous month. ...

In a sea of international opprobrium. But a compromise may be at hand

IF YOU’RE tempted by a slab of meat gristle which surrenders little but an ooze of grease when chewed, then you’ll love whale. Add to the sensory experience the accumulated mercury to be found in whale meat. Consider the suffering caused by the hunt to these intelligent mammals; and a military-industrial approach to their extermination. Japan going a-whaling is, to borrow from Oscar Wilde, the unspeakable in pursuit of the almost uneatable.

As with foxhunting in Britain, views seem irreconcilable. Since 1986 the International Whaling Commission (IWC) has imposed a moratorium on commercial whaling. Yet every Antarctic summer, Japan sends a whaling fleet south to catch hundreds of whales for “research”. And every year at the IWC’s meeting, pro- and anti-whaling camps gather in sullen deadlock. On the whaling grounds the Japanese fleet encounters the Sea Shepherd Conservation Society. The ocean warriors hurl rancid butter on Japanese decks, use warps to foul propellers and attempt citizen’s arrests of the whaling captains. Early this year a Sea Shepherd boat sank after a collision. Now an American film has turned a spotlight on Japan’s coastal hunt for cetaceans. “The Cove”, shot largely in secret, shows the annual dolphin slaughter in Taiji, a village on Japan’s main island. This week it won an Oscar. ...

Attempts to stop drugs money corrupting public life in Guatemala are making some progress. In Jamaica (see article) the worries are growing

FOR the second time in less than a year, Guatemala’s national police chief has become one of its most prominent criminal defendants. Last August Porfirio Perez Paniagua was arrested for stealing drugs and cash. He was replaced by Baltazar Gomez (pictured above, left), a respected officer who had passed a polygraph test. Yet on March 2nd Mr Gomez was himself apprehended, along with Nelly Bonilla, the country’s anti-narcotics tsar. They were charged with involvement in drugs trafficking and with thwarting the investigation of a firefight last April, when five corrupt cops attempting to seize cocaine for resale were killed by the drugs’ owners. This parade of police chiefs in the dock shows both how much progress has been made in the fight for justice in Latin America’s most lawless country, and how much remains to be done.

Just a few years ago, such high-level arrests would have been unthinkable. Guatemala’s 36-year civil war was the Americas’ worst armed conflict of the 20th century: it killed 200,000 indigenous people, and was declared a genocide by a commission sponsored by the United Nations. Yet unlike most of its regional peers, the country was unable to establish a clear break with the past after a peace treaty was signed in 1996. A generous amnesty law meant that no members of the army were jailed for their participation until last year. One of the authors of a truth-commission report, Juan Jose Gerardi, was bludgeoned to death two days after its publication. Efrain Rios Montt, who was president of the military regime when the worst atrocities took place, remained a congressman until his unsuccessful bid to return to the presidency via the ballot-box in 2003. ...

Religion is causing the president headaches

IT COULD all come down to abortion. Health-care reform hangs in the balance. Nancy Pelosi, the speaker of the House of Representatives, is desperately trying to round up the last few votes. If the House passes a bill the Senate passed in December, it can then be tweaked through the “reconciliation” process and sent to President Barack Obama for signature. But every single House Republican is likely to vote no, so Ms Pelosi needs 216 Democratic votes (out of 253) for a majority. This is proving surprisingly hard. Among the holdouts are a dozen or so pro-life Democrats, several of them Midwestern Catholics, who object to the abortion provisions in the Senate bill.

Thanks to the Supreme Court, abortion has been legally protected since 1973 and neither Congress nor any state has the power to ban it. But a law called the Hyde amendment bars federal funding for abortion, except in cases of rape or incest, or to save the life of the mother. The question now is whether Obamacare will use taxpayers’ money to subsidise abortion more widely. Mr Obama insists that it will not. Under his plan, many individuals and small businesses will buy subsidised health insurance through state-sponsored exchanges. Under the Senate bill, they would only be able to obtain abortion coverage through these exchanges if they paid for it with a separate, unsubsidised, cheque. Thus, federal dollars would be kept out of abortion clinics, say the bill’s supporters. But many pro-lifers are not convinced. So the version of the health bill that was passed by the House would have required those who wanted abortion coverage to buy a completely separate insurance policy. The Democrat who wrote the House abortion provision, Bart Stupak, says he won’t back the Senate bill. Several other pro-life Democrats may also balk. ...

The president is trapped between an angry Congress and a stubborn China

HE HAS missed his own deadlines, he may not have enough votes and even if the measure passes it is likely to be a watered-down affair. That is the position in which Barack Obama finds himself not only on health reform but also in his efforts to prevent Iran from acquiring a bomb.

As with health care, Mr Obama entered office with a bold idea. He would break with his predecessor and extend the hand of friendship to Iran. If Iran failed to grasp it or to come clean about its nuclear activities, the world would know whom to blame for the continuing enmity between the two countries. That would enable the UN Security Council to impose a fourth lot of economic sanctions—“crippling” ones this time—that would force the ayatollahs to comply with their nuclear obligations. ...