2015/11/16 (Mon) The never-ending story

IT IS close to ten years since America’s housing bubble burst. It is six since Greece’s insolvency sparked the euro crisis. Linking these episodes was a rapid build-up of debt, followed by a bust. A third instalment in the chronicles of debt is now unfolding. This time the setting is emerging markets. Investors have already dumped assets in the developing world, but the full agony of the slowdown still lies ahead.

Debt crises in poorer countries are nothing new. In some ways this one will be less dramatic than the defaults and broken currency pegs that marked crashes in the 1980s and 1990s. Today’s emerging markets, by and large, have more flexible exchange rates, bigger reserves and a smaller share of their debts in foreign currency. Nonetheless, the bust will hit growth harder than people now expect, weakening the world economy even as the Federal Reserve begins to raise interest rates.


Chronicle of a debt foretold

In all three volumes of this debt trilogy, the cycle began with capital flooding across borders, driving down interest rates and spurring credit growth. In America a glut of global savings, much of it from Asia, washed into subprime housing, with disastrous results. In the euro area, thrifty Germans helped to fund booms in Irish housing and Greek public spending.

As these rich-world bubbles turned to bust, sending interest rates to historic lows, the flow of capital changed direction. Money flowed from rich countries to poorer ones. That was at least the right way around. But this was yet another binge: too much borrowed too fast, and lots of the debt taken on by firms to finance imprudent projects or purchase overpriced assets. Overall, debt in emerging markets has risen from 150% of GDP in 2009 to 195%. Corporate debt has surged from less than 50% of GDP in 2008 to almost 75%. China’s debt-to-GDP ratio has risen by nearly 50 percentage points in the past four years.

Now this boom, too, is coming to an end. Slower Chinese growth and weak commodity prices have darkened prospects even as a stronger dollar and the approach of higher American interest rates dam the flood of cheap capital. Next comes the reckoning. Some debt cycles end in crisis and recession—witness both the subprime debacle and the euro zone’s agonies. Others result merely in slower growth, as borrowers stop spending and lenders scuttle for cover. The scale of the emerging-market credit boom ensures that its aftermath will hurt. In countries where private-sector indebtedness has risen by more than 20% of GDP, the pace of GDP growth slows by an average of almost three percentage points in the three years after the peak of borrowing (see article). But just how much pain lies ahead will also depend on local factors, from the scale of the exchange-rate adjustment that has already taken place to the size of countries’ reserves. Crudely, most emerging economies can be put into one of three groups.

The first group includes those for which the credit boom will be followed by a prolonged hangover, not a heart attack. The likes of South Korea and Singapore belong in this category; so, crucially for the world economy, does China. It still has formidable defences to protect it against an exodus of capital. It has an enormous current-account surplus. Its foreign-exchange reserves stood at $3.5 trillion in October, roughly three times as much as its external debt. Policymakers have the ability to bail out borrowers, and show little sign of being willing to tolerate defaults. Shovelling problems under the carpet does not get rid of them. Firms that ought to go bust stagger on; dud loans pile up on banks’ balance-sheets; excess capacity in sectors like steel leads to dumping elsewhere. All this saps growth, but it also puts off the threat of a severe crisis.

For that risk, look instead to countries in the second category—those that lack the same means to bail out imprudent borrowers or to protect themselves from capital flight. Of the larger economies in this category, three stand out. Brazil’s corporate-bond market has grown 12-fold since 2007. Its current-account deficit means that it relies on foreign capital; its political paralysis and fiscal inflexibility offer nothing to reassure investors. Malaysia’s banks have lots of foreign liabilities, and its households have the highest debt-to-income ratio of any big emerging market; its cushion of foreign-exchange reserves looks thin and its current-account surplus is forecast to shrink. Turkey combines a current-account deficit, high inflation and foreign-currency-denominated debts that have become more onerous as the lira has fallen.

The third group of countries consists of those emerging markets that will either escape serious trouble or have already gone through the worst. Of the big ones, India is in healthier shape than any other big emerging economy and Russia might just surpass expectations. The rouble has already gone through a bigger adjustment than any other major currency, and the economy shows tentative signs of responding. Argentina, a perennial flop but one with little private debt, could also shine if a reformist wins the presidency this month.

Such brighter spots aside, everything else points to another pallid year for the world economy. The IMF has forecast higher growth in emerging markets next year; the lesson of past debt cycles suggests another year of slowdown is more likely. And weakness in the developing world, which accounts for over half of the global economy (in purchasing-power-parity terms), matters far more than it once did. Lower growth in emerging markets hits the profits of multinationals and the cash flows of exporters. Low commodity prices help oil importers but ratchet up the pressure on indebted miners, drillers and traders, which between them owe around $3 trillion.

Volume four?

Europe’s open economy is most exposed to a cooling in emerging-market demand, which is why more monetary easing there looks likely. But America’s policy dilemma is more acute. The divergence in monetary policy between it and the rest of the world will put upward pressure on the dollar, hurting exports and earnings. And waves of capital may again seek out the American consumer as the borrower of choice. If so, the world’s debt crisis may end up right back where it started.

http://www.economist.com/news/leaders/21678220-first-america-then-europe-now-debt-crisis-has-reached-emerging-markets-never-ending?fsrc=scn/tw/te/pe/ed/theneverendingstory

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2015/07/13 (Mon) Uncle Xi's bear market

China learns that stocks are beyond the Communist Party’s control

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BEFORE it met a violent end last month, China’s stockmarket rally was more than just your run-of-the-mill mania. It was political. Many investors called it a “state bull market”, believing the government was firmly in control, guaranteeing that shares would only go up. Others said it was an “Uncle Xi bull market”, as if it were a gift from China’s top leader, Xi Jinping. State media lent their official imprimatur to the frenzy: a People’s Daily editorial in May, shortly before the bubble popped, predicted the good times were just beginning. Buying stocks “is buying the Chinese dream”, proclaimed a top brokerage.

The plunge of nearly a third over the past four weeks has left the dream in tatters. Although the market is still up by 75% over the past year, many mom-and-pop investors were late to the party. Less than a fifth of respondents to a large online survey by Sina, a web portal, reported making any money from stocks this year.

In this section

• Uncle Xi's bear market
• The debt trap
• The trials of Saint Antony
• Aiming for the net
• Glitch perfect
• Tax them and they will grow
• Costly comparison

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• World markets
• Asia-Pacific markets
• Chinese markets
• Business
• Financial markets

For the government, the fall is damaging. Officials are seen to have promised the population a bull market, only to lure them into a bear trap. A flourishing of gallows humour in mobile-phone chat groups captures the sentiment. “Friends, don’t run, we’re here to save you,” cry the valiant soldiers in one joke, representing the state coming to the aid of the beleaguered market. Their refrain soon turns to, “Friends, don’t run, or we’ll shoot you.”

The warning signs had been flashing for some time. ChiNext, a venue for high-growth companies, reached a price-to-earnings multiple of 147 at its height in early June, in the same region as American tech stocks during the dotcom bubble of the late 1990s. When share prices started falling, many assumed that regulators would stay on the sidelines and let the correction unfold. But policymakers lost their nerve after the market fell by nearly 20% and negative headlines started to pile up, even in the domestic press.

Attempts to steady the market have been frantic and largely futile. Interest rates have been cut; short-selling capped; IPOs halted; share-buying schemes, backed by central-bank cash, hatched. “We have the conditions, the ability and the confidence to preserve stockmarket stability,” blared thePeople’s Daily, as the rout continued.

The CSI 300, an index of China’s biggest listed companies, fell by 16% in the eight trading days after the rate cut. Some $3.5 trillion was erased from China’s stockmarkets, more than the entire value of all listed firms in India. By the end of July 7th trading in over 90% of Chinese stocks had been suspended, either at the request of the firms concerned or because they had tumbled by the daily limit of 10%. “The government won’t let us take our money out of the market, and we don’t have the confidence to put any more into it,” says Wei Xinguo, a chef at a noodle restaurant in Shanghai and one of the country’s 90m stockmarket investors.

The preponderance of punters like Mr Wei makes Chinese stockmarkets volatile. Retail investors account for as much as 90% of daily turnover—the inverse of developed markets, where institutions dominate. But the government’s inability to calm things down despite such heavy-handed intervention is unprecedented. It stems from the degree to which the rally was predicated on debt (see chart).

At its peak, margin financing reached 2.2 trillion yuan ($355 billion), or about 12% of the value of all freely traded shares on the market and 3.5% of China’s GDP. Both proportions are “easily the highest in the history of global equity markets”, according to Goldman Sachs. With Chinese shadow banks and peer-to-peer lenders also offering cash to investors, the actual amount of leverage in the market is likely to have been even higher. That helped propel the original rally. It is now compounding the downturn as investors scramble to sell their holdings to cover their debts.

The sharpness of the slide has raised worries that Chinese growth itself is about to fall off a cliff. Mercifully, the stockmarket appears to be as disconnected from economic fundamentals on the way down as it was on the way up. At the same time as shares nearly tripled from the middle of 2014 until early June, China slouched to its slowest year of growth in more than two decades. In the past couple of months the economy has actually started to improve. A burst of government spending on infrastructure looks to have stabilised the industrial sector; property prices, long in the doldrums, have started to tick up again.

The stockmarket is still just a small part of the Chinese economy. The value of freely floating shares is about a third of GDP, compared with more than 100% in most rich countries. Stocks account for just 15% of household assets, so their slump should have limited impact on consumption. The systemic consequences of the margin debt are also limited. The funding has come from brokers, not banks, and equates to less than 1.5% of total bank assets.

There will undoubtedly be some spillover from the panic. Futures contracts for raw materials from lead to eggs fell by their daily limit on July 8th as investors sold to realise some cash. On international markets, the price of iron ore, which China consumes the bulk of, slid. Yet risks of a systemic nature remain remote.

The long-term consequences could be severe, however. Like any big, sophisticated economy, China needs a healthy equity market. For investors from households to pension funds, stocks should, in theory, provide a better return over time than low-yielding bank deposits. For companies, equity financing is an important alternative to bank loans, helping to reduce their reliance on debt. The scrutiny and rules that come with a share listing should also help improve corporate governance.

Before the crash, China was inching towards reforms that would fix some of the distortions in its market. A programme launched last year connected markets in Hong Kong and the mainland markets. Though subject to strict quotas, it promised to introduce more of an institutional presence on China’s exchanges. Regulators had stepped up supervision of insider trading and had also planned to change the way initial public offerings work, giving firms more control over the timing and size of their listings. But as the government’s all-out, if inept, response to the crash shows, it is reluctant to cede control.

Meanwhile, the crash has scarred a generation of investors. Xu Pengfei, a 25-year-old fitness coach, put 100,000 yuan in the market in April, two months before the crash. He managed to get out before losing any money but has no plans to reinvest. “I don’t have much faith now.”

http://www.economist.com/news/finance-and-economics/21657345-china-learns-stocks-are-beyond-communist-partys-control-uncle-xis-bear?fsrc=scn/tw/te/pe/ed/unclexisbearmarket

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2015/06/26 (Fri) Test case

THE American response to the Communist challenge in Korea has been swift and resolute. "I have ordered United States sea and air forces," said Mr Truman, "to give the Korean Government troops cover and support." That is the voice of Palmerston, speaking for the United Nations. For what the Security Council was powerless to do without American initiative, President Truman has done. The forces of the Korean Republic are being assisted by American fighters and bombers from Japan and Okinawa; weapons and supplies are on their way to the theatre of war by sea and air; American warships are to protect Formosa and the forces of Chiang Kai-shek against the attack from the Chinese mainland that is believed to be the next stage in the Communist plan. This aid may come too late to save South Korea from heavy damage and losses; but the essential thing has been done. The leaders of the free world have shown that they have the will to resist aggression, that they are ready to run risks now to stop militant Communism from picking off its victims one by one.

It has been a heartening spectacle. After a pause for thought, American opinion rallied behind the President and his reply to the Security Council appeal for action. A House of Commons that had been deep in a party debate only a few hours earlier closed its ranks behind Mr Attlee when he announced, without qualification, British support for the American decision. In Europe, opinion—save among the Communists—has proved remarkably steady, obviously relieved that a great moral and political decision should have been taken so quickly. For thirty-six hours one could wonder whether the free nations would rise to the occasion. Would it be said that neither the United States nor any other western government was bound by treaty to defend the Korean Republic? Would it be argued that this was not the issue on which the Communist bluff should be called? Would the voice of neutrality be heard from western Europe, claiming that what happens in the Pacific is a matter for the Americans and the Russians alone?

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• United Nations Security Council
• United Nations
• United States

The possibility that these things might happen must have crossed Mr Acheson's mind. It was doubtless the Communist calculation and hope that they would. They must have reckoned that a Blitzkrieg would overrun South Korea before the west could screw up its courage to the sticking point. It is very greatly to the credit of President Truman—and, it appears, of General MacArthur—that they were proved wrong. For the reasons that might have been found for doing nothing in Korea would have cast their shadows into the future, would have become arguments for doing nothing in Persia, Jugoslavia, Indo-China and Hongkong. That, surely, is the lesson of the early thirties; and to have spent the early fifties relearning it would have been disastrous. As it is, whatever happens in Korea, the warning has gone out—to the east German Bereitschaften, to the Cominform conspiring against Tito, to the would-be "liberators" of south-east Asia. The policy of creating situations of strength is serious—deadly serious—and the Security Council has, for the first time, been given the power to act in a crisis.

The western world was faced with two questions by the aggression on Korea. On both, public opinion visibly hesitated, but the governments, for once, did not. The first question was whether the Communist aggression should be met with the full measure of resistance. That was primarily a question for the Americans and at first it looked as if the President would not have a sufficient measure of support to answer it as it should be answered. But a day's reflection was enough to show that the challenge was one that the United States and the United Nations could not afford to ignore. For it was the boldest and most shrewdly calculated move in the cold war that has been seen since the blockade of Berlin. Bold, because a Communist army, trained and equipped by the Russians, was allowed—if not encouraged—by the Soviet Government to launch a full-scale attack into an American sphere of influence. Shrewdly calculated, because the area chosen for Communist aggression is one where the United States, alone among the western powers, has a vital strategic interest. Around the vast perimeter of the Communist empire, Korea was the soft spot least accessible to the combined action of the west, far beyond the range of the Atlantic Pact. There was impudence, too, in the move, a deliberate affront to American prestige; for, only a fortnight ago, Mr Foster Dulles, as Republican Party adviser in the State Department, was assuring the Korean parliament that it would have "the support, both moral and material," of the American people.

The American decision, however, still left open the second question: what should other governments—in particular the British—do? Voices were not wanting in London on Monday and Tuesday to suggest that Britain need give no more than moral support. For this also there were some temptations; after all, General MacArthur has always insisted that Japan and Korea are no concern of ours. But here also a day's reflection was quite enough. What hope of safety for the British people is there without reliance on American aid in time of danger? And how can we hope that the Americans will help us if we do not help them? By Tuesday evening it was clear that British policy was unqualified in its support of President Truman, that Parliament was virtually unanimous in support of the Government and its subsequent decision to engage British naval forces.

The purpose of the action now being taken on behalf of the United Nations is limited—that must be clearly understood. The purpose is to stifle the explosion, to restore and keep the peace, not to widen the area of conflict. The Americans have declared that their forces will not operate north of the 38th parallel that divides Communist from free Korea—a proof, if any were needed, that this is a defensive, police operation. "The United States," Mr Truman said, "will continue to uphold the law." It does not follow, unfortunately, even if the United Nations action can be kept to its limited purpose, that it can also be finished quickly. That depends on what is still the great unknown, the extent of the Soviet stake in this brutal adventure. There were no Russians present when the Security Council took its decision. The Soviet hand in the invasion has been well concealed. The most charitable and optimistic view would be that Moscow's fault lies not so much in any actual encouragement of aggression as in a failure to restrain it. If that is so—or if the Russians, though implicated in the plot, have been genuinely surprised at the strength of the resistance they have provoked—the American Note asking for their help in stopping the fighting offers them a chance not only of saving face, but also of undoing the immense damage that has been done by this aggression to the Communist campaign to pose all over the world as the champions of peace. If this is the optimistic interpretation, then at the other extreme there is the awful spectre that has so grievously troubled so many minds in the last few days, that the Soviet leaders have made up their minds to have war, knowing that it will be total and world-wide. No possibility should be excluded; but the probability is that the course of events will lie between these two extremes—that the Russians will neither call off their puppets, nor come openly to their support, nor fail to keep them supplied with all that is necessary to continue their aggression. This may, in short, be another Spain; and, if so, the struggle must not be expected to be over quickly or to be devoid either of dangers or of humiliations.

Whatever the outcome of events in Korea there will be bloodshed, civilian suffering, international tension and many searchings of heart. This is the crucial test for the United Nations; it is also the test of the Soviet Union's will to peace. No useful purpose would be served by attempting to minimise the risks that are being run. But the anxious citizen of the world can assure himself with certainty that, whatever may be the risks of picking up the challenge that the Communists have thrown down, they are smaller, and hardly even more immediate, than the risks of not doing so. With that assurance, and a clear conscience, the citizen's duty is to keep his nerves as steady as the statesmen's courage has been high.

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2015/06/03 (Wed) Graduates and employment Mismatch

Graduates and employment

Mismatch

THIS month Britain's universities will churn out 350,000 graduates in the class of 2015. But once the end-of-year celebrations are over, almost half of those who manage to find work will be entering jobs that do not formally require a degree (see chart). That has not stopped employers complaining of skills shortages. For instance, on June 1st Adzuna, a job-search-engine firm, reported the highest number of vacancies since the recession.

Economists believe that much of this difficulty lies in matching the supply of graduates to the available jobs. In 2010 Peter Diamond, Dale Mortensen and Christopher Pissarides won the economics Nobel prize by demonstrating that unemployment can stay high in times of vacancies. It is not possible to assume that buyers and sellers of labour immediately find each other; in many markets this only happens after a costly and lengthy search process. To understand this problem, economists have started to look in a surprising direction for inspiration: online dating.

With its complex matching processes, costs of looking around, and emotional highs-and-lows, a job search shares many characteristics with the world of virtual love (or virtual world of love). In both, there are search costs. It takes time and effort to create an online dating profile, just as it takes time and effort to create a curriculum vitae. And then there is the problem of so-called "mutual choosing options". Those looking for love and careers cannot simply make their choice and be done with it; they need the person or employer they like to also pick them as well.

But if digital dating suffers from many of the same afflictions as the graduate job market, it may also offer solutions. In 2012 Sean Rad, a college dropout, created Tinder, which shows users photos of potential suitors nearby and matches those who mutually "like" each other's pictures. Now it has accumulated over 50m users.

As a result, graduate recruiters are falling over themselves to copy the idea. Among the new crop is Switch, which allows candidates to thumb through job listings: flick left if uninterested and right to register for a potential work match. A competitor, Jobr, which also employs the swipe-if-you-like model, uses information from LinkedIn to recommend jobs that candidates might find interesting. Since its launch last year, Jobr has submitted more than 100,000 job applications for its members each month. Large firms are joining in, too. Last year, Zappos, an online retailer based in Nevada, scrapped formal job postings and replaced them with a new site encouraging candidates to engage with each other and the firm in a way not dissimilar to existing online-dating forums.

For the anxious 21-year-old leaving campus for the last time, the worlds of economics and online dating have a few lessons. First, pick a thick market. Just as the most successful lonely hearts go to the apps with the highest-number of potential suitors, so should graduates also head to where the most job opportunities are. Second, just as online daters "signal" their qualities by posting photos, job applicants should also try to communicate their strengths to employers effectively. And finally, settle. Expend the costs of searching for a partner or job only if those costs are outweighed by the expected benefits of a new opportunity or lover. Who said economics wasn't romantic?

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2015/04/04 (Sat) Japan’s working poor Struggling

THE residents of Kotobuki live not far from the glitzy shops and upscale restaurants of Yokohama, Japan’s second-biggest city, adjoining Tokyo, the capital. Yet Kotobuki is an altogether different world: a squalid district, it is a pit stop for local Japanese on their way to destitution. Men living here in cheap hostels have lost jobs and families. Some survive on casual day work, but many have no work at all. A 250-bed shelter dominates the centre of Kotobuki, part of a public network of around 40 built in the past decade. Though these have helped to take 18,000 people off Japan’s streets, it has been harder to check the creeping poverty that put many of them there in the first place.

Last year, the Japanese government recorded relative poverty rates of 16%—defined as the share of the population living on less than half the national median income. That is the highest on record. Poverty levels have been growing at a rate of 1.3% a year since the mid-1980s. On the same definition, a study by the OECD in 2011 ranked Japan sixth from the bottom among its 34 mostly rich members. Bookshops advertise a slew of bestsellers on how to survive on an annual income of under ¥2m ($16,700), a poverty line below which millions of Japanese now live.The country has long prided itself on ensuring that none of its citizens falls between the social cracks. Japan’s orderly, slum-free neighbourhoods seem to confirm that. Street crime, even in Kotobuki, is minuscule. Unemployment is below 4%, and jobs are being generated as the prime minister, Shinzo Abe, attempts to boost the economy through monetary easing. Yet the poor quality of new jobs is compounding the problem of the working poor, says Kaori Katada, a sociologist at Hosei University in Tokyo. Since Mr Abe took office in late 2012, the number of irregular workers—often earning less than half the pay of their full-time counterparts with permanent employment contracts—has jumped by over 1.5m. Casual and part-time employees number nearly 20m, almost 40% of the Japanese workforce.

The effects of this shift to irregular work have not always been visible. One reason is parents’ benevolence. Millions of young workers remain living at home, rent-free. But once the older generation that drove Japan’s post-war boom goes, underlying poverty will become more evident, says Ms Katada.

Mr Abe has been pushing Japan’s cash-rich corporations into hiring more people and paying better wages, with some success. In the past few weeks some of the biggest companies have announced pay hikes for elite salaried workers. But people on the margins are losing out even as Japan’s economy recovers. Welfare applications bottomed out at 882,000 in 1995 but have been rising steadily since. Last year they topped 2m for the first time.

Under pressure to limit Japan’s huge public debt, which stands at almost two-and-a half times GDP, the government cut benefits last summer. Tom Gill, an anthropologist and author of “Yokohama Street Life: The Precarious Career of a Japanese Day Labourer”, says that has pushed more people into official poverty. Yokohama is one of many local governments in the red. The men who now crowd its homeless shelter once earned a living on building sites or car production lines, paying national and local taxes. Today, construction at least has picked up again. But it is a much smaller industry than before, and wages are lower. Some men have found work. But most in Kotobuki remain a burden.

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2015/03/15 (Sun) Japan’s asylum laws

No entry

AROUND 9m people have fled their homes in Syria. Over 3m have taken refuge in neighbouring countries. But thousands more have fanned out across the world, some to as far away as Japan. There, they have found the drawbridge up. The world’s third-largest economy has yet to grant asylum to a single Syrian.

 

The treatment meted out to Syrians is consistent with Japan’s stingy record on sheltering people fleeing conflicts of all kinds. In the decade to 2013, the country gave asylum to just over 300 refugees. In 2014, the number fell to 11.

These figures are all the more remarkable considering that the number of stateless people is growing, and that many are knocking on Japan’s door. Last year, the number of refugees, asylum-seekers and internally displaced people topped 50m worldwide for the first time. In Japan there were more asylum applications than at any time since the country signed the UN refugee convention in 1981.

 

Once they arrive, asylum seekers can face a grim experience. Some are locked up for years while their claims are processed. Immigration officials give the impression that they just want refugees to leave, says Gloria Okafor Ifeoma, a Nigerian asylum-seeker who arrived in Tokyo in 2007 and has spent about 30 months under lock and key. Japan’s media revealed last month that there are no full-time doctors in the country’s three immigration centres. (Part-time doctors visit a few hours a day.) Last March two foreigners died in detention.

 

Not surprisingly, criticism is growing. On a visit to Tokyo last year, Antonio Guterres, the UN High Commissioner for Refugees (UNHCR), said Japan’s asylum system is rigid and restrictive. Hiroshi Miyauchi, a lawyer, calls the rejection of all 61 applications from Syrian refugees since 2011 “appalling”. He represents four Syrians who are suing the justice ministry to reverse its decision. Eri Ishikawa, chair of the Japan Association for Refugees, a non-profit organisation, says Japan’s system for gathering information about asylum seekers from the refugees’ countries of origin is primitive. She claims that many claimants are being needlessly rejected.

 

The government bristles at such criticisms. Japan, it points out, is the world’s fourth-largest financial contributor to UNHCR. Immigration officials merely apply standard criteria when reviewing asylum applications. If the approval rate is low, insists a spokesperson for the justice ministry, that’s a problem with the criteria. Anyway, over half the Syrian applicants have been granted special permission to stay on humanitarian grounds.

 

But pressure for change is building. The justice ministry is reviewing how it processes asylum claims. The UNHCR is helping draw up its final recommendations. Optimists expect the result to be fairer and more transparent. Perhaps. But Mieko Ishikawa, director of Forum for Refugees Japan, a network of refugee associations, fears it might actually make things worse. Immigration officials, she worries, could get more power to weed out “abusers” from the desperate human flotsam that increasingly washes up on Japan’s shores.

日本の難民法

入国者『ゼロ』

シリアでは約900万人の人が家を追われた。300万人の人々が隣接する国で難民生活を送っている。しかし数千人を超える人々が世界中に散らばり、遠い日本にまでたどり着いた人もいる。そこで彼らは足止めされている。世界第3位の経済大国はまだ一人のシリア人も難民としては認めていない。

シリア人に対する対応は、国難から逃れた人々を保護する日本のケチな対応と機を一にしている。2013年までの10年間に日本は300人の難民認定を行っただけである。2014年にはその数が11人に落ちている。住む国をなくした人々の増加し、たくさんの難民が去年日本に難民申請をし、そして難民や国内避難民は初めて5千万人を超えたということを考えれば、これらの数字は驚くべきものである。1981年に国連難民会議で日本が署名して以来、日本には最多の難民申請者がやってきた。

彼らは到着するや、厳しい対応に直面することになる。ある人は難民申請が通るまで閉じ込められる。入管職員は難民は早く去って欲しいという印象を与えると2007年に東京に来たナイジェリア難民のグロリアは言う。彼女は30ヶ月を施設に閉じ込められて過ごした。先月、これら3つの入管施設には医者が常駐していなかったと日本のメディアは報じている。（非常勤の医者が1日に数時間訪れている。）先月は二人の外国人が拘留中に亡くなっている。

当然のことながら、批判が大きくなっている。（つづく）

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2015/02/21 (Sat) Denmark’s “failed” multiculturalism

LAST weekend’s shootings in Copenhagen seemed to imitate those that took place in Paris a month earlier, which also targeted cartoonists who had made fun of the Prophet Muhammad. Yet Denmark has been grappling with such questions for longer. The long-running “Danish cartoons” debate began in 2005 when the newspaper Jyllands-Postenpublished satirical drawings of Muhammad, leading to protests around the world. To outsiders, it may seem surprising that such a row began in Denmark, which many picture as a free-thinking oasis devoted to generous social-welfare schemes and religious, ethnic, sexual and countercultural tolerance. Yet Denmark experienced a particularly sharp and early version of Europe’s debate over multiculturalism and Islam. For years, even liberal Danish politicians have been calling multiculturalism a “failure”. Why?

Denmark’s lefty image, if it was ever accurate, is at least 15 years out of date. In the late 1990s the Danish People’s Party (DPP), founded by Pia Kjaersgaard, began to denounce immigration, multiculturalism and Islam as alien to Danish society and values. The party tapped into fears of rising crime and fed on the resentment of working-class and conservative Danes who felt ignored by the liberal governing elite. From 2001 until 2011 the DPP’s support was needed by minority centre-right coalition governments run by the liberals and conservatives. In exchange, the DPP gained partial control of Denmark’s immigration policy, which quickly became among the most restrictive in Europe.

Denmark prides itself on an exceptionally open and frank political culture. The new right-wing politicians were willing to be very frank indeed. Ms Kjaersgaard accused Danish Muslims of living at a “lower stage of civilisation, with their own primitive and cruel customs”. The party has lost influence since a centre-left government was elected in 2011, but its restrictive immigration and asylum policies have become accepted across the political spectrum. The generosity of the country’s social-security net has made people quicker to accuse immigrants of exploiting it. Meanwhile, a highly cohesive and demanding civic culture, which was the basis of Denmark’s liberal social-welfare policies, has alienated anyone who finds it hard to conform. This has made the country fertile ground for Islamist recruitment. Over 100 Danish jihadists have gone to Syria and Iraq, one of the highest rates per person in Europe.

It would be a mistake to see Denmark’s 50-year-long encounter with immigrants from Muslim countries as a failure, or to treat Danish Muslims as a coherent, problematic group. They hail from Morocco, Somalia, Turkey and Denmark itself; most are simply Danes whose religion is Islam, as Danish as anyone else. For a minority, poor integration policies and a reluctance to conform to local norms have led to isolation, while modern Islamism has provided a new identity to claim and a violent way to assert it. Mainstream society has reacted to that violence by reasserting its own norms and values, widening the gulf. A similar process is playing out in almost every country in western Europe. If Denmark’s story is different from those of the Netherlands, Britain, France, Belgium and the rest, it is mainly because Denmark seems to have been a few years ahead of the curve.

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2015/01/30 (Fri) The Economist を読む ３

Seize the day

The fall in the price of oil and gas provides a once-in-a-generation opportunity to fix bad energy policies

Jan 17th 2015

MOST of the time, economic policymaking is about tinkering at the edges. Politicians argue furiously about modest changes to taxes or spending. Once in a while, however, momentous shifts are possible. From Deng Xiaoping’s market opening in 1978 to Poland’s adoption of “shock therapy” in 1990, bold politicians have seized propitious circumstances to push through reforms that transformed their countries. Such a once-in-a-generation opportunity exists today.

The plunging price of oil, coupled with advances in clean energy and conservation, offers politicians around the world the chance to rationalise energy policy. They can get rid of billions of dollars of distorting subsidies, especially for dirty fuels, whilst shifting taxes towards carbon use. A cheaper, greener and more reliable energy future could be within reach.

The most obvious reason for optimism is the plunge in energy costs. Not only has the price of oil halved in the past six months, but natural gas is the cheapest it has been in a decade, bar a few panicked months after Lehman Brothers collapsed, when the world economy appeared to be imploding. There are growing signs that low prices are here to stay: the rising chatter of megamergers in the oil industry (see article) is a sure sign that oilmen are bracing for a shake-out. Less noticed, the price of cleaner forms of energy is also falling, as our special report this week explains. And new technology is allowing better management of the consumption of energy, especially electricity. That should help cut waste and thus lower costs still further. For decades the big question about energy was whether the world could produce enough of it, in any form and at any cost. Now, suddenly, the challenge should be one of managing abundance.

Clean up a dirty business

That abundance provides the potential for reform. Far too many economies are littered with the detritus of daft energy policies, based on fears about supply. Even though fracking has boosted America’s oil output by two-thirds in just four years, the country still bans the export of oil and restricts exports of natural gas, a legacy of the oil shocks of the 1970s—and a boondoggle for American refiners and petrochemical firms. Congress also keeps handing out money to Iowa’s already coddled corn farmers to produce ethanol and has not reviewed generous subsidies for nuclear power despite the Fukushima disaster and ruinous cost over-runs at new Western plants. Instead, it has spent four long years bickering about whether to allow the proposed Keystone XL pipeline to Canada’s tar sands. In Europe the giveaways are a little different—billions have gone to wind and solar projects—but the same madness often prevails: Germany’s rushed exit from nuclear power ended up helping boost American coal and Russian gas.

The most straightforward piece of reform, pretty much everywhere, is simply to remove all the subsidies for producing or consuming fossil fuels. Last year governments around the world threw $550 billion down that rathole—on everything from holding down the price of petrol in poor countries to encouraging companies to search for oil. By one count, such handouts led to extra consumption that was responsible for 36% of global carbon emissions in 1980-2010.

Falling prices provide an opportunity to rethink this nonsense. Cash-strapped developing countries such as India and Indonesia have bravely begun to cut fuel subsidies, freeing up money to spend on hospitals and schools (see article). But the big oil exporters in the poor world, which tend to be the most egregious subsidisers of domestic fuel prices, have not followed their lead. Venezuela is close to default, yet petrol still costs a few cents a litre in Caracas. And rich countries still underwrite the production of oil and gas. Why should American taxpayers pay for Exxon to find hydrocarbons? All these subsidies should be binned.

What a better policy would look like

That should be just the beginning. Politicians, for the most part, have refused to raise taxes on fossil fuels in recent years, on the grounds that making driving or heating homes more expensive would not only annoy voters but also hurt the economy. With petrol and natural gas getting cheaper by the day, that excuse has gone. Higher taxes would encourage conservation, dampen future price swings and provide a more sensible way for governments to raise money.

An obvious starting point is to target petrol. America’s federal government levies a tax of just 18 cents a gallon (five cents a litre)—a figure that it has not dared change since 1993. Even better would be a tax on carbon. Burning fossil fuels harms the health of both the planet and its inhabitants. Taxing carbon would nudge energy firms and consumers towards using cleaner fuels. As fuel prices fall, a carbon tax is becoming less politically daunting.

That points to the biggest blessing cheaper energy brings: the chance to inject some coherence into the world’s energy policies. Governments have a legitimate role in making sure that energy is abundant, clean and secure. But they need to learn the difference between picking goals and deciding how to reach them. Broad incentives are fine; second-guessing scientists and investors is not. A carbon tax, in other words, is a much better way to reduce emissions of greenhouse gases than subsidies for windmills and nuclear plants.

By the same token, in the name of security of supply, governments should be encouraging the growth of seamless global energy markets. Scrapping unfair obstacles to energy investments is just as important as dispensing with subsidies. The more cross-border pipelines and power cables the better. America should approve Keystone XL and lift its export restrictions, while European politicians should make it much easier to exploit the oil and gas in the shale beneath their feet.

This ambitious to-do list will drive regiments of energy lobbyists potty. But for the first time in years it is within the realm of the politically possible. And it would plainly lead to a more efficient and greener energy future. So our message to politicians is a simple one. Seize the day.

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2015/01/30 (Fri) The Economist を読む 2

America’s new aristocracy

As the importance of intellectual capital grows, privilege has become increasingly heritable

Jan 24th 2015

WHEN the candidates for the Republican presidential nomination line up on stage for their first debate in August, there may be three contenders whose fathers also ran for president. Whoever wins may face the wife of a former president next year. It is odd that a country founded on the principle of hostility to inherited status should be so tolerant of dynasties. Because America never had kings or lords, it sometimes seems less inclined to worry about signs that its elite is calcifying.

Thomas Jefferson drew a distinction between a natural aristocracy of the virtuous and talented, which was a blessing to a nation, and an artificial aristocracy founded on wealth and birth, which would slowly strangle it. Jefferson himself was a hybrid of these two types—a brilliant lawyer who inherited 11,000 acres and 135 slaves from his father-in-law—but the distinction proved durable. When the robber barons accumulated fortunes that made European princes envious, the combination of their own philanthropy, their children’s extravagance and federal trust-busting meant that Americans never discovered what it would be like to live in a country where the elite could reliably reproduce themselves.

Now they are beginning to find out, (see article), because today’s rich increasingly pass on to their children an asset that cannot be frittered away in a few nights at a casino. It is far more useful than wealth, and invulnerable to inheritance tax. It is brains.

Matches made in New Haven

Intellectual capital drives the knowledge economy, so those who have lots of it get a fat slice of the pie. And it is increasingly heritable. Far more than in previous generations, clever, successful men marry clever, successful women. Such “assortative mating” increases inequality by 25%, by one estimate, since two-degree households typically enjoy two large incomes. Power couples conceive bright children and bring them up in stable homes—only 9% of college-educated mothers who give birth each year are unmarried, compared with 61% of high-school dropouts. They stimulate them relentlessly: children of professionals hear 32m more words by the age of four than those of parents on welfare. They move to pricey neighbourhoods with good schools, spend a packet on flute lessons and pull strings to get junior into a top-notch college.

The universities that mould the American elite seek out talented recruits from all backgrounds, and clever poor children who make it to the Ivy League may have their fees waived entirely. But middle-class students have to rack up huge debts to attend college, especially if they want a post-graduate degree, which many desirable jobs now require. The link between parental income and a child’s academic success has grown stronger, as clever people become richer and splash out on their daughter’s Mandarin tutor, and education matters more than it used to, because the demand for brainpower has soared. A young college graduate earns 63% more than a high-school graduate if both work full-time—and the high-school graduate is much less likely to work at all. For those at the top of the pile, moving straight from the best universities into the best jobs, the potential rewards are greater than they have ever been.

None of this is peculiar to America, but the trend is most visible there. This is partly because the gap between rich and poor is bigger than anywhere else in the rich world—a problem Barack Obama alluded to repeatedly in his state-of-the-union address on January 20th (see article). It is also because its education system favours the well-off more than anywhere else in the rich world. Thanks to hyperlocal funding, America is one of only three advanced countries where the government spends more on schools in rich areas than in poor ones. Its university fees have risen 17 times as fast as median incomes since 1980, partly to pay for pointless bureaucracy and flashy buildings. And many universities offer “legacy” preferences, favouring the children of alumni in admissions.

Nurseries, not tumbrils

The solution is not to discourage rich people from investing in their children, but to do a lot more to help clever kids who failed to pick posh parents. The moment to start is in early childhood, when the brain is most malleable and the right kind of stimulation has the largest effect. There is no substitute for parents who talk and read to their babies, but good nurseries can help, especially for the most struggling families; and America scores poorly by international standards (see article). Improving early child care in the poorest American neighbourhoods yields returns of ten to one or more; few other government investments pay off so handsomely.

Many schools are in the grip of one of the most anti-meritocratic forces in America: the teachers’ unions, which resist any hint that good teaching should be rewarded or bad teachers fired. To fix this, and the scandal of inequitable funding, the system should become both more and less local. Per-pupil funding should be set at the state level and tilted to favour the poor. Dollars should follow pupils, through a big expansion of voucher schemes or charter schools. In this way, good schools that attract more pupils will grow; bad ones will close or be taken over. Unions and their Democratic Party allies will howl, but experiments in cities such as battered New Orleans have shown that school choice works.

Finally, America’s universities need an injection of meritocracy. Only a handful, such as Caltech, admit applicants solely on academic merit. All should. And colleges should make more effort to offer value for money. With cheaper online courses gaining momentum, traditional institutions must cut costs or perish. The state can help by demanding more transparency from universities about the return that graduates earn on their degrees.

Loosening the link between birth and success would make America richer—far too much talent is currently wasted. It might also make the nation more cohesive. If Americans suspect that the game is rigged, they may be tempted to vote for demagogues of the right or left—especially if the grown-up alternative is another Clinton or yet another Bush.

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2015/01/29 (Thu) The Economist を読む １

AN ALARMING assumption is taking hold in some quarters of both Beijing and Washington, DC. Within a few years, China’s economy will overtake America’s in size (on a purchasing-power basis, it is already on the cusp of doing so). Its armed forces, though still dwarfed by those of the United States, are growing fast in strength; in any war in East Asia, they would have the home advantage. Thus, some people have concluded, rivalry between China and America has become inevitable and will be followed by confrontation—even conflict.

 

Diplomacy’s task in the coming decades will be to ensure that such a catastrophe never takes place. The question is how?

Primacy inter pares

 

Some Western hawks see a China threat wherever they look: China’s state-owned businesses stealing a march in Africa; its government covering for autocrats in UN votes; its insatiable appetite for resources plundering the environment. Fortunately, there is scant evidence to support the idea of a global Chinese effort to upend the international order. China’s desires have an historical, even emotional, dimension. But in much of the world China seeks to work within existing norms, not to overturn them.

 

In Africa its business dealings are transactional and more often led by entrepreneurs than by the state. Elsewhere, a once-reactive diplomacy is growing more sophisticated—and helpful. China is the biggest contributor to peacekeeping missions among the UN Security Council’s permanent five, and it takes part in anti-piracy patrols off the Horn of Africa. In some areas China is working hard to lessen its environmental footprint, for instance through vast afforestation schemes and clean-coal technologies.

 

The big exception is in East and North-East Asia—one of the greatest concentrations of people, dynamism and wealth on Earth. There, both its rhetoric and its actions suggest that China is unhappy with Pax Americana. For centuries China lay at the centre of things, the sun around which other Asian kingdoms turned. First Western ravages in the middle of the 19th century and then China’s defeat by Japan at the end of it put paid to Chinese centrality. Today an American-led order in the western Pacific perpetuates the humiliation, in the eyes of Chinese leaders. Soon, they believe, their country will be rich and powerful enough to seize back primacy in East Asia.

 

China’s sense of historical grievance explains a spate of recent belligerence. China has deployed ships and planes to contest Japan’s control of islands in the East China Sea, grabbed reefs claimed by the Philippines in the South China Sea and moved an oil rig into Vietnam’s claimed exclusive economic zone. All this has created alarm in the region. Some strategists say America can keep the peace only if it is firm in the face of Chinese expansionism. Others urge America to share power in East Asia before rivalries lead to a disaster.

 

America cannot walk away without grave consequences for the region and its own standing. Since the end of the second world war, American security has been the basis of Asian prosperity and an increasingly liberal order. It enabled Japan to rise from the ashes without alarming its neighbours. Indeed, China’s race to modernity could not have happened without it. Even Vietnam, America’s old foe, is clearer than ever that it wants America’s stabilising, reassuring presence.

 

Yet, if the liberal order is to survive, it must evolve. Denying the reality of China’s growing power would only encourage China to reject the world as it is. By contrast, if China can prosper within the system, it will reinforce it. That is why the United States needs to acknowledge one increasingly awkward aspect of its leadership: American advantage is hard-wired into the system in ways that a rising power might justifiably resent.

 

For a great power to find a new equilibrium with an emerging one is hard—because every adaptation looks like a retreat. Three principles should guide America.

 

First, it should only make promises that it is prepared to keep. On the one hand, America would be foolish to draw red lines around specks of reef in the South China Sea. On the other, if America is to count for anything, its allies need to know that they can depend on it. Although Taiwan is central to China’s sense of its own honour, America should leave Beijing in no doubt that it would come to the island’s defence.

 

Second, even in security, America must make room. China’s participation in America’s recent RIMPAC naval exercises off Hawaii was a start. China could be invited to join Asian exercises, including for disaster relief. And America should avoid a cold-war battle for the loyalty of regional powers.

 

Lastly, America will find it easier to include China in new projects than to give ground on old ones—and should make more effort to do so. It is nonsensical that America should be leading the formation of the region’s biggest free-trade area, the Trans-Pacific Partnership, without the inclusion of the region’s largest economy. And there is no reason to exclude China from co-operation in space. Even during the cold war American and Soviet astronauts worked together.

 

Let the dragon in

 

Why should China be satisfied with a bit more engagement when primacy is what it seeks? There is no guarantee that it will be. Just now the rhetoric coming out of Beijing is full of cold-war, Manichean imagery. Yet sensible Chinese understand that their country faces constraints—China needs Western markets, its neighbours are unwilling to accept its regional writ and for many more years the United States will be strong enough militarily and diplomatically to block it. And in the longer run, the hope is that the Chinese system will of itself adapt from one-party rule to some more liberal polity that, by its nature, is more comfortable with the world as it now is.

 

Drawing China into a strengthened regional framework would not be to cede primacy to it. Nor would it be to abandon a liberal order that has served Asia—and America—so well. It may, in the end, not work. But given the huge dangers of rivalry, it is essential now to try.

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