The Economist (luyen thi IELTS READING )

INSIDE: A 14-PAGE SPECIAL REPORT ON MIGRATION
Who’s in charge in Iran?
Opioids in a world of pain
America’s tangled voting laws
Big-headed babies, big-brained parents
MAY 28TH– JUNE 3RD 2016

Life in the fast lane: CEOs and F1

A nuclear nightmare

Kim Jong Un’s
growing arsenal





The Economist May 28th 2016 5

Contents
8 The world this week
Leaders
11 North Korea’s weapons
A nuclear nightmare
12 Austria’s election
Disaster averted—for now
12 Online platforms
Nostrums for rostrums
13 American elections
Voting wrongs

14 Opioids
The ecstasy and the agony
On the cover
It is past time for the world
to get serious about North
Korea’s nuclear ambitions:
leader, page 11. Kim Jong Un
is on the home straight to
making his country a serious
nuclear power. Nobody knows
how to stop him, pages 19-22

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Volume 419 Number 8991
Published since September 1843
to take part in "a severe contest between
intelligence, which presses forward, and
an unworthy, timid ignorance obstructing
our progress."
Editorial offices in London and also:
Atlanta, Beijing, Berlin, Brussels, Cairo, Chicago,
Lima, Mexico City, Moscow, Mumbai, Nairobi,
New Delhi, New York, Paris, San Francisco,
São Paulo, Seoul, Shanghai, Singapore, Tokyo,
Washington DC

Letters
16 On genomics, migrants,
China, London, cronies,
country living
Briefing
19 Nuclear North Korea
By the rockets’ red glare
Asia
23 America and Vietnam
Pull the other one
24 Afghanistan’s Taliban
Aiming for the head
25 India’s deep south
Southern comfort
China
26 Retirement
China’s Florida

27 Social media
The dark art of astroturfing
28 Banyan
Disturbing the China dream
United States
29 Voting rights
The fire next time
31 The Libertarian Party
Guns, weed and relevance
31 The campaigns
Heard on the trail
32 Hillary Clinton’s e-mails
An indictment of sorts

32 Disability lawsuits
Frequent filers
33 Soccer flourishes
Kick turn
34 Lexington
Oh, Oklahoma
The Americas
35 Mexico’s elections
A test for the ruling party
36 Bello
Chávez’s little blue book
37 Britain and Argentina
Ending estrangement
37 Brazilian culture
A history of jeitinho
Middle East and Africa

39 Iranian politics
Who’s in charge?
40 Fighting Islamic State
Fallujah, again
41 Israeli politics
He’s back!
41 Tanzania
Government by gesture
42 The Torah in Abuja
Who wants to be a Jew?
Special report: Migration
Looking for a home
After page 42
Europe
43 Visa liberalisation
Europe’s deal with Turkey
44 Crimea’s Tatars
1944 all over again
45 Greece gets its bail-out
Temporary relief
45 Austria’s vote
Extremism loses, barely
46 German nationality
Name, date of birth,
migration background
48 Charlemagne
Le sexisme

Voting rules America’s
electoral laws are a recipe for

chaos in November: leader,
page 13. Today’s voting-rights
disputes are less clear-cut
than those of the civil-rights
era, but they are inflammatory
all the same, page 29.
Compulsory voting is hardest
to enact in the places where it
would make most difference:
Free exchange, page 66

Europe’s far right Extremist
parties are no longer a fringe:
leader, page 12. The far right
lost in Austria, but it is a
growing force in Europe, page
45. The migrant crisis in
Europe last year was only one
part of a worldwide problem.
The rich world must get better
at managing refugees. See our
special report after page 42

Who’s in charge in Iran? The
supreme leader is clipping the
wings of the reformist
president, page 39

1 Contents continues overleaf

6 Contents

The Economist May 28th 2016

49
50

50
51
Opioids Americans take too
many painkillers. Most other
people don’t get enough:
leader, page 14. The war on
drugs is depriving people in
poor countries of pain relief,
page 52

International
52 Opioids
The problem of pain

55
56
57
58
58
59
Regulating tech firms The
growing power of online

platforms is worrisome. But
regulators should tread
carefully: leader, page 12.
European governments are
not alone in wondering how to
deal with digital giants, page 55

Britain
Rural Britain
Countryside blues
Brexit brief
Yes, we have no straight
bananas
Teenage pregnancy
Not in the family way
Bagehot
The continental imperative

60

Business
Regulating tech firms
Taming the beasts
Alibaba
Under scrutiny
Oil-price reporting
Striking it rich
American media
Sumner’s lease
Alcohol in China

Reviving the spirits
The future of carmakers
Upward mobility
Schumpeter
Life in the fast lane

Finance and economics
61 Banks and Brexit
Wait and hope
62 Buttonwood
Ignorant investors
63 Quicken Loans
A new foundation
63 Japan’s pension fund
That sinking feeling

64 Payday loans
Regulators take interest
65 Cyber-attacks on banks
Heist finance
66 Free exchange
Compulsory voting
Science and technology
69 Human evolution
Of bairns and brains
70 Global warming
In the red
71 Drone countermeasures
Hacked off
71 Product design

The replicator
72 Additive manufacturing
Alloy angels
Books and arts
73 Dawn of the oil industry
Guts, greed and gushers
74 Genetics
Mix and match
74 Jacobean history
Forgotten hero
75 Mali
Paper trail
75 The invention of dating
Love’s labour
76 Opera
Fiery angel
80 Economic and financial
indicators
Statistics on 42 economies,
plus a closer look at GDP
growth in Africa
Obituary
82 Fritz Stern
Another German

Babies and intelligence
Children are born helpless,
which might explain why
humans are so clever, page 69

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8

The Economist May 28th 2016

The world this week
Politics

Alexander Van der Bellen, a
former head of the Green
party, won Austria’s presidential election by just 31,000
votes, defeating Norbert Hofer
of the Freedom Party. Had he
won this (largely ceremonial)
post, Mr Hofer would have
been the first far-right head of
state in the European Union.
His surprisingly high support
reflected voter anger over
immigration. As in several
European countries, the far
right has been making ground.
In Brussels Greece’s creditors
agreed on a deal to secure debt
relief for the country. The
measures, which were
thrashed out in late-night talks
after months of wrangling, are
intended to restructure Greek
debt, which is currently 180%
of GDP. Greece will receive €10
billion ($11 billion) in aid to
help it avoid a default, starting
with €7.5 billion next month.
After being detained in Russia

for two years Nadia
Savchenko, a Ukrainian pilot,
was released from jail and sent
home. She was exchanged for
two Russian prisoners captured in Ukraine. On her return
home Ms Savchenko ironically
thanked those who had
“wished me evil”, and was
greeted as a national hero.
In Turkey Binali Yildirim was
sworn in as prime minister
following the ouster of his
predecessor, Ahmet Davutoglu. Mr Yildirim is a loyal
supporter of Recep Tayyip
Erdogan, the president, and
vowed to continue with an
overhaul of the constitution
which is handing more powers
to the presidency.

New government, old problems
Romero Jucá, Brazil’s planning
minister, stepped aside after
tapes were leaked in which he
appeared to suggest that the
impeachment of the president,
Dilma Rousseff, would blunt
an investigation into the multibillion-dollar scandal centred
on Petrobras, the state-controlled oil company. Mr Jucá,
one of the targets of the investigation, says his remarks

were misinterpreted. He was
only recently appointed by the
interim president, Michel
Temer. The new government
proposed several reform measures, including a cap on the
growth of public spending.
Cuba’s Communist government said it would legalise
small and medium-sized
enterprises. That builds on
earlier reforms, which allow
“self-employed” Cubans to
own restaurants, bed-andbreakfasts and other small
businesses.

Coca-Cola stopped producing
sugary drinks in Venezuela
because it cannot obtain sugar.
Price controls have made
growing sugar cane unprofitable and the country suffers
from a shortage of foreign
exchange.

The push back
Iraq’s government announced
the start of an operation to
retake Fallujah, a city just a
30-minute drive from Baghdad
that has been held by Islamic
State for the past two years.
Avigdor Lieberman, who leads

Israel’s nationalist Yisrael
Beiteinu party, joined
Binyamin Netanyahu’s
coalition government, and
became defence minister. Mr
Lieberman, who lives in a
Jewish settlement in the West

Bank, has repeatedly derided
efforts to secure peace with the
Palestinians.
A series of bombings hit two
government strongholds on
Syria’s coast, killing as many
as 100 people.

this would remove a “lingering
vestige of the cold war”. China,
however, worries that
America’s efforts to improve its
relationship with Vietnam is
aimed at keeping it in check.

The government and opposition leaders in Burundi started
talks to resolve a crisis in
which more than 1,000 people
are thought to have been
killed. But the government
excluded key opposition figures from the talks, reducing
the chances of a successful

outcome.
The monetary-policy committee of Nigeria’s central bank
voted to allow the currency,
the naira, to float against the
dollar. The country has previously maintained an overinflated peg against the dollar
that is 40% higher than the
black-market rate, leading to a
shortage of hard currency.

Communications breakdown
In a report to Congress Hillary
Clinton was criticised by the
State Department’s inspectorgeneral for using a private
e-mail server when she was
secretary of state. Mrs Clinton
should have discussed the
security risks with officials, the
report said, though it recognised that the department had
a history of dealing inadequately with electronic messages. The issue continues to
dog Mrs Clinton’s campaign.
A bill that would help Puerto
Rico manage its $70 billion
debt pile was introduced in
Congress. The legislation
would set up a financial control board and restructure
some debt. It has bipartisan
support, but is opposed by
some of the American territory’s creditors. The governor of
Puerto Rico welcomed parts of
the bill, but worries that a

financial control board would
be too powerful.

Arms deal
During a visit to Vietnam,
Barack Obama announced an
end to America’s embargo on
the sale of weapons to the
communist country. He said

Tsai Ing-wen was sworn in as
Taiwan’s new president. She is
the island’s first female leader,
and the second from the
Democratic Progressive Party,
which favours independence
from China. Ms Tsai called for
“positive dialogue” across the
Taiwan Strait, but did not
mention the “one China”
notion that China insists
Taiwan must accept.
In Afghanistan the Taliban
named a new leader to replace
Mullah Akhtar Mansour who
was killed by an American
drone. He is Hibatullah
Akhundzada, a hardline
religious scholar who served
as Mullah Mansour’s deputy.

Protests by hundreds of
parents of university
applicants spread to a fourth
province in China. They are
angry about plans to reduce
the number of places reserved
for local students. Parents
worry that this will mean
greater competition for places
and reduce their privileges,
which is indeed the point.
China’s Communist Party
stepped up its efforts to persuade members to write out
the party’s constitution by
hand. Two newly weds have
become famous for doing so
on their wedding night. The
aim is to remind members of
their communist ideals, but the
army’s newspaper warned
that some people were—
believe it or not—just going
through the motions when
transcribing the document’s
1
15,000 characters.


The Economist May 28th 2016

Business

Faced with a future where
ride-hailing could reduce car
ownership, Toyota and Volkswagen became the latest carmakers to invest in startups
that provide such services.
Toyota formed a partnership
with Uber, the biggest ridesharing app, to develop
“mobility services”. And
Volkswagen invested $300m
in Gett, the Israeli outfit behind the largest taxi-hailing
app in Europe. Unlike Uber,
Gett signs up only regulated
drivers in the cities in which it
operates, such as London’s
black-cab drivers.
Prompted by the market dominance of Facebook, Google
and the like, the European
Commission set out suggestions for regulating online
platforms. The proposals
target specific problems such
as the ability to move personal
data from site to site. The commission also wants to make it
easier for consumers to shop
online by removing “geoblocking” tools that prevent shoppers in one country getting
deals offered in another.
Hewlett Packard Enterprise,
the smaller of the two businesses to emerge from Hewlett
Packard’s split last year, announced that it is spinning off
its enterprise-services unit. The

unit grew out of HP’s takeover
in 2008 of EDS, an IT outsourcing company founded by
Ross Perot.

If it could turn back time
Also picking up the pieces
from a takeover that hasn’t
worked out, Microsoft
announced more job cuts at
the mobile-phone business it

The world this week 9
acquired from Nokia two years
ago and will take another
write-down, of $950m. Never
a big player in the business, its
share of the global smartphone market shrank again in
the first three months of the
year, to 0.7%, according to
Gartner, a research firm.
Alibaba, China’s biggest
e-commerce company, disclosed that it is being investigated by America’s Securities
and Exchange Commission
over the way it accounts for
revenue, including sales from
Singles’ Day, China’s version
of Black Friday.
The drama over Sumner Redstone’s control of Viacom
continued. The 92-year-old
mogul removed Philippe

Dauman, Viacom’s chairman,
from a trust that will decide
what happens to Mr Redstone’s holdings when he dies.
Mr Dauman filed a lawsuit to
thwart the move, arguing that
Mr Redstone was mentally
incompetent and being manipulated by his daughter, Shari.
Federico Ghizzoni is to step
down as chief executive of
UniCredit, Italy’s biggest
bank. Speculation had increased about his future as the
bank’s problems mounted. Mr
Ghizzoni was heavily criticised

when UniCredit agreed to
underwrite Banca Popolare di
Vicenza’s disastrous capitalraising, which ended with a
government-orchestrated
rescue from a fund backed by it
and other Italian financial
firms.

Approaching vessels
The Singapore Exchange
(SGX) declared an interest in
taking over the Baltic
Exchange in London, which
would combine the two leading maritime-industry hubs.
The latter compiles the Baltic
Dry Index, which measures

the costs of shipping commodities, and has developed derivatives for shipowners to insure
against fluctuations in freight
prices. Founded in 1744, it also
provides a code of practice for
the shipping market.
BSI, a Swiss bank, was ordered
to close its business in Singapore after regulators identified
serious anti-money-laundering lapses in connection with a
corruption scandal at 1MDB, a
Malaysian state investment
fund. At the same time Switzerland fined the bank SFr95m
($96m), opened a criminal
probe and approved a takeover of BSI by EFG International, which is based in Zurich,
that would see it “integrated
and thereafter dissolved”.

Bayer presented its $62 billion
takeover bid for Monsanto,
the latest attempt at consolidation in the agricultural seeds
and chemicals business. The
American company said the
initial proposal from its German rival was “inadequate”,
but believes in the “substantial
benefits” of a deal.
Europe’s antitrust regulator
approved Anheuser Busch
InBev’s $108 billion merger
with SABMiller, after getting
the assurances it wanted that
the newly combined beer

giant will sell SABMiller’s
European brands. The deal still
needs to be cleared by competition authorities in America,
China and South Africa.

In, out, shake it all about
The European Central Bank
warned that the rise of populist parties in Europe could
slow the pace of economic
reforms. Populists on the left
and right ends of the political
spectrum have made gains in
elections by running against
spending cuts. Another big
concern of the ECB is the potential risk posed by the vote in
Britain on whether to leave the
European Union, which will
be held on June 23rd.
Other economic data and news
can be found on pages 80-81


The Economist May 28th 2016 11

Leaders

A nuclear nightmare
It is past time for the world to get serious about North Korea’s nuclear ambitions

B

ARACK OBAMA began his
presidency with an impassioned plea for a world without
nuclear weapons. This week, in
his last year in office (and as we
went to press), he was to become the first American president to visit Hiroshima, site of
one of only two nuclear attacks. Mr Obama has made progress
on nuclear-arms reduction and non-proliferation. He signed a
strategic-arms-control treaty (New START) with Russia in 2010.
A series ofnuclear-security summits helped stop fissile material getting into the wrong hands. Most important, he secured a
deal in July to curtail and then constrain Iran’s nuclear programme for at least the next 10-15 years.
But in one area, his failure is glaring. On Mr Obama’s watch
the nuclear-weapons and missile programme of North Korea
has become steadily more alarming. Its nuclear missiles already threaten South Korea and Japan. Sometime during the
second term ofMr Obama’s successor, they are likely also to be
able to strike New York. Mr Obama put North Korea on the
back burner. Whoever becomes America’s next president will
not have that luxury.
The other Manhattan project
The taboo against nuclear weapons rests on three pillars: policies to prevent proliferation, norms against the first use of
nukes (especially against non-nuclear powers) and deterrence.
North Korea has taken a sledgehammer to all of them.
No country in history has spent such a large share of its
wealth on nuclear weapons. North Korea is thought to have a
stockpile of around 20 devices. Every six weeks or so it adds
another. This year the pace of ballistic missile testing has been
unprecedented (see pages 19-22). An underground nuclear detonation in January, claimed by the regime to be an H-bomb
(but more likely a souped-up A-bomb), has been followed by
tests of the technologies behind nuclear-armed missiles. Although three tests of a 4,000-kilometre (2,500-mile) missile
failed in April, North Korean engineers learn from their mistakes. Few would bet against them succeeding in the end.

North Korea is not bound by any global rules. Its hereditary
dictator, Kim Jong Un, imposes forced labour on hundreds of
thousands of his people in the gulag, including whole families,
without trial or hope ofrelease. Mr Kim frequently threatens to
drench Seoul, the South’s capital, in “a sea of fire”. Nuclear
weapons are central to his regime’s identity and survival.
Deterrence is based on the belief that states act rationally.
But Mr Kim is so opaque and so little is known about how decisions come about in the capital, Pyongyang, that deterring
North Korea is fraught with difficulty. Were his regime on the
point of collapse, who is to say whether Mr Kim would pull
down the temple by unleashing a nuclear attack?
The mix of unpredictability, ruthlessness and fragility frustrates policymaking towards Mr Kim. Many outsiders want to
force him to behave better. In March, following the recent
weapons test, the UN Security Council strengthened sanc-

tions. China is infuriated by Mr Kim’s taunts and provocations
(it did not even know about the nuclear test until after it had
happened). It agreed to tougher measures, including limiting
financial transactions and searching vessels for contraband.
But China does not want to overthrow Mr Kim. It worries
that the collapse of a regime on its north-eastern border would
create a flood of refugees and eliminate the buffer protecting it
from American troops stationed in South Korea. About 90% of
North Korea’s trade, worth about $6 billion a year, is with China. It will continue to import North Korean coal and iron ore
(and send back fuel oil, food and consumer goods) as long as
the money is not spent on military activities—an unenforceable condition.
Protected by China, Mr Kim can pursue his nuclear programme with impunity. The sanctions are unlikely to stop
him. If anything, they may spur him to strengthen and upgrade his arsenal before China adopts harsher ones.
Understandably, therefore, Mr Obama has preferred to devote his efforts to Iran. Because the mullahs depend on sales of
oil and gas to the outside world, embargoes on Iran’s energy

exports and exclusion from the international payments system changed their strategic calculus. But this logic will not
work with North Korea.
Can anything stop Mr Kim? Perhaps he will decide to shelve
his “nukes first” policy in favour of Chinese-style economic reform and rapprochement with South Korea. It is a nice idea,
and Mr Kim has shown some interest in economic development. But nothing suggests he would barter his nuclear weapons to give his people a better life.
Perhaps dissent over Mr Kim’s rule among the North Korean elite will lead to a palace coup. A successor might be ready
for an Iran-type deal to boost his standing both at home and
abroad. That is a possibility, but Mr Kim has so far shown himself able to crush any challengers to his dominance.
The last hope is that tougher sanctions will contribute to the
collapse of the regime—which, in turn, could lead to reunification with the South and denuclearisation of the Korean peninsula. That would be the best outcome, but it is also the one that
carries the most danger. Moreover, it is precisely the situation
China seeks to avoid.
Fat boy
Without any good options, what should America’s next president do? A priority is to strengthen missile defence. New
THAAD anti-missile systems should be sent to South Korea
and Japan, while America soothes objections that their radar
could be used against China’s nuclear weapons. China should
also be cajoled into accepting that sanctions can be harsher,
without provoking an implosion. Were that to lead initially
only to a freeze on testing, it would be worth having. Because a
sudden, unforeseen collapse of Mr Kim’s regime is possible at
any time, America needs worked-out plans to seize or destroy
North Korea’s nuclear missiles before they can be used. For this
China’s co-operation, or at least acquiescence, is vital. So clear
and present is the danger that even rivals who clash elsewhere
in Asia must urgently find new ways to work together. 7


12 Leaders

The Economist May 28th 2016

Austria’s presidential election

Disaster averted—for now
Europe’s far right is no longer a fringe

A

USTRIA dodged a bullet this
week. So did Europe. NorFor far-right parties, %
bert
Hofer, a talented politician
0
10 20 30 40
with a winning smile, nearly beAustria
France
came the first far-right head of
Netherlands
state in western Europe since
Denmark
Sweden
the end of the second world
Germany
war—but failed, by a nerve-jangling 0.6% of the vote (see page 45).
This is scant cause for relief. Mr Hofer has shown that wellpackaged extremism is a vote-winner. He sounds so reasonable. Austria must maintain border controls for as long as the
European Union cannot enforce its external frontiers, he says.
Of course he supports the EU, but only on the basis of subsidiarity (“national where possible, European where necessary”).
It is easy to forget that his Austrian Freedom Party (FPÖ) was
partly founded by ex-Nazis, and that its manifesto—much of

which Mr Hofer wrote—bangs on about Europe’s Christian
culture and the German ethno-linguistic Heimat. Or that his
party demonises “fake” asylum-seekers and vows to outlaw
the distribution of free copies of the Koran.
The FPÖ’s popularity, like that of xenophobic parties across
Europe, is in part an angry reaction to the recent influx of Middle Eastern refugees. Alexander Van der Bellen, the former
Green Party leader who narrowly beat Mr Hofer, owes his victory to a broad alliance ofvoters trying to blockthe far right. Yet
a fringe party that draws half the vote is no longer a fringe. And
Austria is a harbinger: all over Europe, far-right parties are becoming too big to ignore (see chart).
In France Marine Le Pen will probably come first in the initial round of next year’s presidential election. In the Netherlands Geert Wilders is polling far ahead of any rival. Far-right
parties in Denmark and Switzerland have been winning pluralities for years, and Sweden’s may soon. This is not the 1930s.
Voting intention

Jan 2013
Latest

Ms Le Pen is unlikely to win the second round of the presidential election. In Denmark and the Netherlands, populists have
quit or refused to join coalitions for fear of being blamed for
unpopular decisions. But they still influence policy, and force
the centre-right and -left into grand alliances, leaving the populists as voters’ only plausible alternative.
How can mainstream parties beat them? Not by peddling
diluted versions of their Eurosceptic or anti-immigrant policies. Austria’s Social Democrats switched from welcoming
asylum-seekers to tightening border controls, and were flattened for it. Voters prefer real populists to centrists who fake it.
Besides, extreme policies fuel irrational fears rather than extinguish them. Look at France and eastern Europe: the far right is
thriving, though few Syrian refugees have arrived.
Stick to your guns
Moderates cannot defeat extremists by abandoning their ideals. Rather, they must fight for them. Voters are deserting mainstream parties because they stand for so little. They are hungry
for politicians with clear values. Radicals of the left have understood this: witness the passionate support aroused by Britain’s Jeremy Corbyn and Spain’s Pablo Iglesias. The world
needs leaders who can make an equally rousing argument for
moderation. The mushmouths that France’s mainstream parties appear set to nominate next year will not do.

Responsible parties must also bring results. As our special
report this week makes clear, the task of integrating refugees,
economically and socially, is more urgent than ever. And Mr
Hofer is right about one thing: to open its internal borders, the
EU must secure its external ones. Extreme nationalist parties
cannot integrate new immigrants, nor build an effective Europe of shared asylum burdens and orderly borders. Only the
parties of tolerance and liberal values can do that. They need
to convince voters of it. 7

Online platforms

Nostrums for rostrums
The growing power of online platforms is worrisome. But regulators should tread carefully

I

N1949 FrankMcNamara, an executive at a struggling finance
company, had the idea of a
charge card to settle the tab at
high-class eateries. First, he had
to solve a tricky problem. Restaurants would not accept a
charge card as payment unless
customers wanted to use one; and diners would not carry a
card unless restaurants accepted it. His solution was to give
away his card to a few hundred well-heeled New Yorkers: once
the elite of Manhattan’s gourmands were signed up, he could
persuade a few upscale restaurants to accept his new charge

card and also to pay him a commission. Within a year, the Diners Club card was accepted in hundreds of places and carried
by over 40,000 people.

The Diners Club may not seem to have much in common
with digital giants like Facebook, Google, Uber and Amazon.
But such businesses are all examples of “platforms”: they act
as matchmakers between various entities and they typically
charge different prices to different actors in the market. Google
connects websites, consumers and advertisers, who foot the
bill. Facebook does something similar for its members. Uber
matches passengers and drivers, who pay the ride-hailing app
a slice ofthe fare. Amazon brings together shoppers with retail1
ers, who pay a fee.


The Economist May 28th 2016
2

Leaders 13

The growing clout of online platforms is a boon to society
but a headache for trustbusters. Platforms benefit from the
power of networks: the more potential matches there are on
one side of a platform, the greater the number that flock to the
other side. The consequence may be a monopoly. That is normally a red flag for trustbusters, who are scrambling to keep
pace with the rise of platforms (see page 55). But they should
tread carefully. The nature of platforms means established
rules of regulation often do not apply.
Think different
In a conventional, “one-sided” market, prices are related to the
cost of supplying goods and services. If a business can charge a
big mark-up over its marginal cost of production, a wise regulator would strive to ensure there are enough firms vying for
business or, where that is not possible, to set prices in line with

the monopolist’s costs. Such precepts are little use in regulating
platforms. Their prices are set with an eye to the widest participation. Often consumers pay nothing for platform services—or
are even charged a negative price (think of the rewards systems
run by some payment cards). Pushing down prices on one side
ofthe platform may cause charges on the other side to rise, a bit
like a waterbed. That in turn may drive some consumers away
from the platform, leaving everyone worse off. Such uncertainties mean that regulators must not act precipitously.
But they are right to be thinking about the unique economics of platforms. Tech giants like to claim there is no need for
special regulation. The winner-takes-all aspect of networks
may mean there is less competition inside the market, but
there is still fierce rivalry for the market, because countless
startups are vying to be the next Google or Facebook. Unfortunately, incumbents may be able to subvert this rivalry.

One of their strategies is to use mergers. “Shoot-out” acquisitions is the name given to purchases of startups with the aim
of eliminating a potential rival. Many claim that Facebook’s acquisition of WhatsApp was in this category. A recent parliamentary report in Britain noted that Google had made 187 purchases of other tech firms. Trustbusters tend to ignore mergers
of businesses in unrelated markets and big firms hoovering up
small fry. Buyers of firms with an EU-wide turnover of less
than €100m do not have to notify the European Commission.
Rules that take into account how markets may develop over
longer periods will be fiendish to craft. But they are needed.
A second concern is talent. Tech firms are jealous of their secrets. When their best people leave, they take ideas with them.
Yet clauses in job contracts that restrict what types of work employees can do once they leave a company are also a means of
thwarting the emergence of rivals. California has shown the
way by clamping down on such practices.
A third issue is the power of personal data. Google is such
an effective search engine in part because its algorithms draw
on vast logs of past queries. Amazon can use customers’ trading history to guide its marketing with greater precision. These
data troves raise barriers to entry to the next Google or Amazon. There are no easy fixes, however. Even defining who
owns information is complex; making data portable is tricky.
As Frank McNamara and his heirs have found, a successful

platform company finds ways of balancing the interests of the
parties it brings together. Regulators of online platforms face a
similar balancing act—between the incentives for new firms to
emerge and the benefits to consumers of large incumbents.
That will require new ways of thinking and careful judgment.
In the meantime, however, the priority for trustbusters must
be to ensure they do no harm. 7

American elections

Voting wrongs
America’s electoral laws are a recipe for chaos

I

T IS the morning of November
9th, the day after the election,
and America is waking up to
find out who is the new president. The result turns on the
vote in North Carolina, where
the ballot papers are being recounted. Even when the tally is
in, the result will be in doubt.
North Carolina’s new voting laws are subject to a legal challenge, which could take weeks for the courts to resolve. Both
sides complain that the election is being stolen; the acrimony,
sharpened by allegations ofracial discrimination, makes Florida’s hanging chads and the Supreme Court’s ruling in favour
of George W. Bush in 2000 seem like a church picnic.
This is not as fanciful as it sounds. America organises its democracy differently from other rich countries. Each state
writes its own voting laws, there is no national register of eligible voters and no form of ID that is both acceptable in all polling booths and held by everyone. Across the country, 17 states
have new voting laws that, in November, will be tested for the
first time in a presidential contest. In several states these laws

face legal challenges, which allege that they have been designed in order to discourage African-Americans and Latinos
from voting. It is past time to start worrying about where these
challenges might lead.
The X factor
The new laws date largely from a Supreme Court decision in
2013. Before then, many states in the South, and a couple elsewhere, that had spent much of the 20th century finding ingenious ways to prevent minorities from voting, had to clear any
changes to their voting laws with the Justice Department or a
federal court. Three years ago, the Supreme Court ruled the
country had “changed dramatically” and that the formula for
choosing which states were covered was outdated. That allowed all the states to write laws unsupervised.
Handed power over the rules for electing themselves, Republican politicians in southern statehouses have, unsurprisingly, tilted them in their own favour. Early voting, which nonwhites (who lean Democratic) are keen on, has been restricted.
Another change has been to limit the kinds of ID that are acceptable at a polling station. In Texas student IDs are out, hand1
gun licences are in.


14 Leaders
2

The Economist May 28th 2016

The authors of these laws protest that they have nothing to
do with race or political advantage and claim that they are necessary to guard against voter fraud. Yet there is scant evidence
of fraud. To claim otherwise is cynical and corrosive. In the 12
years before Alabama passed its new voter-ID law there was
one documented case of impersonation.
The second argument made, in southern states, is that the
new voting laws merely bring them in line with those elsewhere in the country, some of which do not allow early voting
at all. This is true, but tantamount to an admission of guilt: politicians in some safely Democratic districts in the north have
not been above fiddling with election rules and redrawing district boundaries to protect incumbents either. Indeed, it is an

argument for a more general change.
The worst of all the arguments for the new voting laws is
that casting a ballot should not be made too easy, because if
people are not clever enough to understand the rules govern-

ing elections they should not be entrusted with choosing the
government. Any political party that hopes for lower turnout
has lost its way. William F. Buckley, a conservative pundit, once
wrote that he would rather be governed by the first 2,000 people listed in the Boston telephone directory than by 2,000
members of Harvard’s faculty. Republican lawmakers must
decide whether they still believe in the good sense of those
they aspire to govern, or whether they lost that faith somewhere on the way to the statehouse.
The new voting laws suggest the Supreme Court underestimated the grip the past still has on the present. Were politicians really concerned about voter fraud they would hand
over the running of elections and voter registers to non-partisan bodies. Unfortunately, this will not happen. Why disarm
when you have all the bullets? As a second best, therefore, the
courts should expedite cases on voting laws to reduce the
chances of legal challenges after the election. 7

Opioids

The ecstasy and the agony
Americans take too many painkillers. Most other people don’t get enough

“P

LEASURE is oft a visitant;
but pain clings cruelly,”
wrote John Keats. Nowadays
pain can often be shrugged off:
opioids, a class of drugs that includes morphine and other derivatives of the opium poppy,

can dramatically ease the agony
ofbroken bones, third-degree burns or terminal cancer. But the
mismanagement of these drugs has caused a pain crisis (see
page 52). It has two faces: one in America and a few other rich
countries; the other in the developing world.
In America for decades doctors prescribed too many
opioids for chronic pain in the mistaken belief that the risks
were manageable. Millions of patients became hooked. Nearly 20,000 Americans died from opioid overdoses in 2014. A belated crackdown is now forcing prescription-opioid addicts to
endure withdrawal symptoms, buy their fix on the black market or turn to heroin—which gives a similar high (and is now
popular among middle-aged Americans with back problems).
In the developing world, by contrast, even horrifying pain
is often untreated. More than 7m people die yearly of cancer,
HIV, accidents or war wounds with little or no pain relief. Fourfifths of humanity live in countries where opioids are hard to
obtain; they use less than a tenth of the world’s morphine, the
opioid most widely used for trauma and terminal pain.
Opioids are tricky. Take too much, or mix them with alcohol
or sleeping pills, and you may stop breathing. Long-term patients often need more and more. But for much acute pain, and
certainly for the terminally ill, they are often the best treatment. And they are cheap: enough morphine to soothe a cancer patient for a month should cost just $2-5.
In poor countries many people think of pain as inevitable,
as it has been for most of human existence. So they seldom ask
for pain relief, and seldom get it if they do. The drug war declared by America in the 1970s has made matters worse. It led
to laws that put keeping drugs out ofthe wrong hands ahead of

getting them into the right ones. The UN says both goals matter.
But through the 1980s and 1990s, as the war on drugs raged, it
preached about the menace of illegal highs with barely a whisper about the horror of unrelieved pain.
American policy has been especially misguided. By keeping cocaine and heroin illegal, drug warriors have empowered
criminal gangs that torture and kill. Even as American fee-forservice doctors overprescribed opioids at home, America
spread its harsh approach to illegal drugs worldwide. Poor
countries, scared of getting on Uncle Sam’s wrong side for not

trying hard enough to control narcotics, have written laws
even more restrictive than those recommended by the UN.
One passed in India in 1985 saw legitimate morphine use
plunge by 97% in seven years. In Armenia morphine is only
available to cancer patients, who must rush from ministry to
ministry filling in forms to receive a few days’ supply.
Opioids should be more widely available. That entails
risks. One is addiction: doctors need training to minimise it.
Long-term use is perilous; use by the terminally ill is not. Another risk—that the drugs will leak onto the black market—is
real, but less serious than America’s example might suggest.
Many American buyers of street opioids were first hooked by
their doctors; other countries can avoid that mistake. They can
also avoid the mix of fee-for-service provision and direct-toconsumer drug advertising that aggravated America’s lax prescribing. And they should copy Britain’s centralised system for
prescription records, which stops patients from doctor-hopping their way to addiction.
Biting on a stick is not good enough
Above all, the global bodies that monitor narcotics should recognise that easing suffering is as important as preventing addiction. Forcing people in great pain to jump through hoops to
get relief should be recognised as an infraction of international
rules. The UN has, belatedly, started to talk of unrelieved pain
as a problem. As the cause of needless suffering, it should be
trying harder to bring solace. 7


ADVERTISEMENT


16

The Economist May 28th 2016

Letters

Risk rewards in science
You note current efforts to
harness the promise of genomic medicine aimed at sequencing more genomes, to
understand labyrinthine
genetic susceptibilities arising
from variation in multiple
genes (“Encore une fois”, May
7th). However, it is also noteworthy that the initial sequencing of the human genome in 2000 enabled entirely
new fields of discovery, including transcriptomics (the
large-scale study of RNA molecules), proteomics (the same
for proteins) and big-data
science in biology. These innovations have revolutionised
translational research and may
now do the same for clinical
medicine. Yet they would have
been impossible without
substantial funding for risky
science, from governments,
investors and philanthropic
bodies.
Rather than failing to live
up to their potential, the largescale efforts to sequence the
human genome, and the resulting “omics technologies”,
have yielded tremendous
economic and scientific benefits for society.
PROFESSOR THOMAS VONDRISKA
David Geffen School of Medicine
University of California, Los
Angeles
Suffer the children

It is not only a humanitarian
imperative to help unaccompanied child migrants who
arrive in Europe (“Under-age
and at risk”, May 7th). European states also have a legal
obligation to do so, having
ratified the 1989 Convention
on the Rights of the Child.
Every child has a right to adequate shelter, to a caregiver
and to an education. It is
shameful that many of the
world’s richest countries,
which see themselves as the
cradle of human rights, deny
children those very rights.
The children who arrive in
Europe without their parents
have fled their homes in fear of
their lives. They have entrusted themselves to gangs of
smugglers and put themselves
at risk of abuse and child

labour. With borders closing
around them, some are
trapped in Serbia and Macedonia, with no way forward and
no way back. Many have been
illegally detained in Greece.
We all need to see those
children for what they are: not
as migrants, financial burdens
or threats to society but as

children in need of protection.
They have rights and they
deserve to be given a future.
VITO ANGELILLO
Director-general
Terre des Hommes
Zurich
Foolish academics
“It was the worst of times”
(May 14th) marked 50 years
since the start of the Cultural
Revolution in China. Your
article brought back memories
of Western intellectuals at the
time who supported Mao
Zedong’s eradication of old
customs, culture, habits and
ideas. I recall one of my fellow
graduate students in London,
an avowed Maoist, bursting
into the college’s common
room to announce that in
China mathematics teachers
were now being sent to the
land to labour along with the
peasants.
In a challenging tone, he
asked whether we did not
think that was wonderful.
“Certainly”, responded one of

our finest scholars with wideeyed, possibly disingenuous
innocence, “as long as the
peasants reciprocate by going
to the towns to teach algebra
and calculus.” They never
spoke to each other again.
MICHAEL SINGER
Dickson Poon School of Law
King’s College London
Mao believed that knowledge
was too powerful a tool, leading to wisdom, thoughts and
questions which could undermine his rule. Both my
great-aunt and uncle were
teachers at the Beijing Dance
Academy. Both were denounced as intellectuals and
sent to be reformed. What
made it worse was not the
forced hardship, but the confiscation of all the books, art
works and other culturally
related items they possessed.

They managed to hide some,
but many more were destroyed. This is the real reason
behind the atrocity. Purging his
rivals at the same time was just
convenient for Mao.
LOUISA VAN DIJK
The Hague
On the right track
There is a way for the new

mayor of London to realise his
objective of connecting the
development of housing to
public transport (“Going
underground”, May 14th). He
could compulsorily purchase
land to build rail connections
and homes and then sell or
rent the new homes in partnership with a developer to
pay for the railway. Crucially,
he should keep in public ownership any stations and other
commercial properties in the
area to provide ongoing rental
income.
This is the strategy used by
the Mass Transit Railway Corporation in Hong Kong. MTRC
is 77% owned by the Hong
Kong government. It already
runs light-rail services in London and will operate Crossrail.
It has also won a contract to
extend Stockholm’s urban
network to the city’s commuter belt by using the profit from
rising land-values to pay for
the railway. Its profits help pay
for public services in Hong
Kong by way of dividends.
We don’t need to hand
London’s underground to the
MTRC. We could leave it to
Transport for London, allowing it in time to become a

profitable business as opposed
to one with a permanent
public subsidy.
ANDREW PURVES
London
Tech cronies
The technology industry
should have been included in
your crony-capitalism index
(“The party winds down”,
May 7th). Microsoft was innovative in its early years, but
if it isn’t now a monopolist, I
don’t know what is. You cited
Google as a potential candidate because it is involved in
anti-competitive litigation. But
litigation is the wrong test. The

American government takes
the view that there is a difference between a monopoly
that is established through its
own growth and one that is
established through acquisitions. The government brings
many cases against mergers
that would have resulted in a
company taking enough market share to extract rents, but
fewer against those that gained
their monopoly position
through growth.
There is no reason why
there should be any difference

in the government’s treatment
of a monopoly. Yet there is,
despite the lack of litigation.
The fact that more anti-competitive cases aren’t brought
against such technology companies suggests that cronies
have managed to convince
government about the merits
of this false distinction.
ANDY EDSTROM
Los Angeles
The great escape

Your review of Adrian
Tinniswood’s “The Long
Weekend” asserts that the
“English country house casts a
long, rose-tinted shadow”
(“Partying, hunting, shooting”,
May 7th). I think that’s right.
“Country House”, a song
released by Blur in 1995, comes
to mind, describing the leisured life of a modern-day
nouveau-riche on his landed
estate who is “reading Balzac
and knocking back Prozac”.
RICHARD SPENCER
Woodland Hills, California 7
Letters are welcome and should be
addressed to the Editor at
The Economist, 25 St James’s Street,

London sw1A 1hg
E-mail:
More letters are available at:
Economist.com/letters


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18

Executive Focus

The Economist May 28th 2016


Briefing North Korea’s nuclear weapons

By the rockets’ red glare
Kim Jong Un is on the home straight to making his country a serious nuclear power.
Nobody knows how to stop him

I

N JANUARY North Korea detonated a nuclear device underground, its fourth such
test and the first, it claimed, to show that it
could build a thermonuclear weapon. In
February it successfully launched a satellite. It has since been testing missile technology at a hectic pace. In March, its leader,
Kim Jong Un, posed with a model of a nuclear weapon core and the re-entry vehicle
of a long-range missile. On May 7th he told

the congress of the Korean Workers’ Party
in Pyongyang that his nuclear-weapons
and missile programmes had brought the
country “dignity and national power”. He
boasts of his ability to “burn Manhattan
down to ashes”.
The nuclear test, most experts believe,
did not in fact demonstrate the ability to
build a thermonuclear hydrogen bomb.
The satellite does not seem to be working.
Some of the missile tests failed. Mr Kim
says a lot of nasty things. But there is a limit
as to how much you can downplay this sequence of events. As Mark Fitzpatrick of
the International Institute for Strategic
Studies, a think-tank, puts it: “Just because
Pyongyang wants us to pay attention, that
doesn’t mean we shouldn’t.”

It is always tempting for America and
other countries to put North Korea’s nuclear ambitions on the back burner of policy priorities, in large part because of a
chronic absence of good options for dealing with them. But only an extreme optimist can today doubt that North Korea has
developed missiles that threaten not just
its southern neighbour but also Japan and,
soon, the American base on Guam. Many
experts, such as John Schilling, who writes
about missile technology at 38 North, a
website on North Korea run from Johns
Hopkins University, believe that North Korea is on track to have a nuclear-capable
missile with the range to reach the continental United States by early next decade—
which is to say, within America’s next two

presidential terms. Stopping that from happening needs to be a front-burner priority.
The history of unsuccessful responses
to North Korea’s nuclear ambitions began
in 1994, when Mr Kim’s father, Kim Jong Il,
threatened to pull out of the nuclear NonProliferation Treaty (NPT) (see timeline on
following page). The Clinton administration promised him two proliferation-resistant reactors—that is, reactors from which

The Economist May 28th 2016 19

North Korea would not have been able to
derive weapons-grade nuclear material—
economic aid and an easing of sanctions if
he agreed to freeze and then dismantle the
country’s nuclear-weapons programme.
This “Agreed framework” collapsed in
2002 when evidence of North Korean
cheating became impossible to ignore.
North Korea duly quit the NPT.
The next diplomatic efforts were the
“Six-party talks”, which included China,
Japan, Russia and South Korea as well as
America and North Korea. They appeared
to bear fruit in 2005 when America confirmed its recognition of North Korea as a
sovereign state that it had no intention of
invading, and North Korea agreed to return
to the NPT, thus putting all its nuclear facilities under the oversight of the International Atomic Energy Agency (IAEA), and to
forsake “all nuclear weapons and existing
nuclear programmes”.
So different from Iran
Despite North Korea carrying out its first

nuclear weapon test in 2006, the six-partytalks process somehow limped on until
April 2009. Then, over a period of little
more than seven weeks, North Korea tried
to launch a satellite with a three-stage
Unha-2 rocket in defiance of UN Security
Council Resolution 1718, chucked IAEA inspectors out of its Yongbyon reactor complex and carried out a second underground nuclear test. Since then it has been
pretty much downhill all the way. A final
attempt at a deal based on aid in exchange 1


20 Briefing North Korea’s nuclear weapons

The Economist May 28th 2016

North Korea’s nuclear path
Says it is leaving NPT

Threatens to leave Nuclear
Non-Proliferation Treaty
(NPT), then relents

Fires Taepodong
missile over Japan

Declares reactivation
of nuclear facilities
Announces it has
nuclear weapons

First test of Nodong 1 missile

UN inspectors say North Korea
is hiding evidence of nuclear
fuel for bombs

Agrees to
freeze testing
on long-range
missiles

Signs “Agreed framework”
with US to freeze and
dismantle nuclear
programme in exchange
for nuclear reactors, aid
and easing of sanctions

1993

94

95

NK supreme leaders and
US presidents
Kim Il Sung
Kim Jong Il
Bill Clinton

96

97

98

99

2000

Expels UN
inspectors from
Yongbyon
nuclear facility

01

02

stillborn when North Korea announced a
new missile launch only a fortnight later.
Faced with such a record of duplicity
and intransigence, Barack Obama had apparently long since concluded that if he
was to achieve anything in the sphere of
nuclear non-proliferation, Iran offered at
least a chance of success; with North Korea
there was virtually none.
It was a cool calculation typical of the
president. For a start, North Korea was a lot
further down the road to a nuclear-weapons capability than Iran, which had remained within the NPT and was still a few
years from being able to test a device. And
Mr Obama realised there was also much

more leverage to be had over Iran than
North Korea. Bill Clinton had come close to
authorising an air strike on Yongbyon in
1994, but pulled back in the belief it would
trigger a new war on the peninsula that, by
some estimates, could cost a million lives.
After the nuclear test in 2006 the military
option was off the table for good. That was
never true of Iran. The Iranian leadership
could not fully discount the threat of a preemptive strike by either Israel or America.

Agrees to return
to NPT and
“forsake nuclear
weapons”.
One day later,
demands reactor
from the US

03

04

05

Agrees testing
moratorium in
exchange for aid

Launches

Unha-2 rocket
in defiance of
UN security
resolution

Launches a
satellite using
the Unha-3
rocket

Expels UN
inspectors; pulls
out of talks and
restarts nuclear
facilities

Carries out first
underground
nuclear test

06

07

Second
underground
nuclear test

Sinks the South
Korean warship

Cheonan

08

10

09

11

Claims to have
carried out a
hydrogenbomb test

Third
nuclear
test

Launches satellite
on Unha-3

Restarts
Yongbyon
nuclear
reactor

UN agrees new
sanctions
Three unsuccessful
launches of

Musudan
missiles

Claims it
has tested
submarinelaunched
missile

12

13

14

Apparently
successful
launch of
missile from
submarine

15

16

Six-party talks with China, Russia,
United States, Japan and South Korea

Series of US-North Korean talks

2 for a testing moratorium in early 2012 was

Says it will disable nuclear
facilities. America agrees to
unfreeze assets and provide aid

Kim Jong Un
George W. Bush

Sanctions were also a much more potent weapon against Iran than they ever
could be with North Korea. Iran was vulnerable because it is dependent on oil and
gas exports. And even though the country
is only minimally democratic, its leadership has to pay attention to falling living
standards and the anger they can bring.
That helped make the removal of sanctions a greater priority than pressing ahead
with the nuclear programme.
By contrast, sanctions have had a relatively low impact on North Korea’s closed
economy. In large part that is because 90%
of the trade it does is with China, which refuses to cut it off because of fears that a subsequent economic collapse would bring
with it a torrent of refugees and the demise
of a useful buffer against a close American
ally. Nor does Mr Kim have to worry much
about the political consequences of hardship for his people. So effective is the regime’s brutal system of control—anyone
suspected of disloyalty may be killed or
banished to a frozen gulag—that there was
little sign of dissent even when hundreds
of thousands died of starvation during the
1990s.

Whizz for atoms: a science and technology centre in Pyongyang

Barack Obama

Lastly, Iran always (if implausibly) denied that it was seeking the capability to
make nuclear weapons—the supreme
leader Ali Khamenei even issued a fatwa
that described possessing nuclear weapons as a “grave sin”. Mr Kim believes that
nuclear weapons are essential. Like his father before him he has built them into the
national narrative and iconography, seeing
them as fundamental to the dynasty’s survival. Even without nuclear weapons, Iran
is a regional power that America has to
take seriously. North Korea has no other
claim to fame except its nastiness. Its ruler
sees nuclear weapons as the key to gaining
the respect he demands from the outside
world. They are not bargaining chips to be
traded for other benefits.
You can observe a lot just by watching
That is why the evidence of an almost
manic amount of nuclear-weapons-related testing since January is so alarming, and
why interpreting what it means both in
terms of political signalling and technical
progress has become urgent. Gary Samore,
Mr Obama’s arms-control adviser until
2013 and now research director at Harvard’s Belfer Centre, cautions how little
outsiders really know for sure about North
Korea’s capabilities. Jonathan Pollack, a
Korea expert at the Brookings Institution,
agrees the data are limited. Nevertheless,
he says: “In the words of Yogi Berra, you
can observe a lot by watching.”

David Albright, the president of the Institute for Science and International Security, a think-tank, and a former IAEA inspector in Iraq, has carried out detailed
analysis of what is known of North Korea’s
capacity to reprocess plutonium and enrich uranium. If the country is producing
bombs similar in yield to the one that
America dropped on Hiroshima—that is, of
10 to 20 kilotons, which would be small by
modern standards, but would therefore require less-capable missiles for their delivery—his central projection is that it can pro- 1


The Economist May 28th 2016

Briefing North Korea’s nuclear weapons 21

2 duce enough fissile material for around

...(which just happens to fit inside this)

gines from Soviet-era R-27 submarinelaunched ballistic missiles were coupled
together to provide the propulsive power
and range for a warhead carried by a KN-08
to hit the east coast of the United States. It is
not known how many R-27s North Korea
has, but up to 150 went missing from Russia
in the post-Soviet 1990s. Mr Schilling reckons flight testing of a KN-08 enhanced in
this way could begin soon, leading to a
“limited operational capability by 2020”.
Other recent tests include a large solidfuelled rocket motor of the kind needed to
launch a mobile medium-range missile at
very short notice (liquid-fuelled rockets,
like those on the KN-08, take much longer

to prepare for flight and are harder to move
around) and the launch of a ballistic missile apparently from a submerged submarine in late April.
Not all North Korea’s tests meet with

success. Three recent test fires of the Musudan flopped. Michael Elleman, a missile
expert at the IISS, speculates that perhaps
the missiles were solid-fuelled and the engines still at an early stage of development.
Mr Elleman reckons that getting the Musudans working, and thus being able to
threaten the American base in Guam over
3,000km away, must be a priority. He cautions that a string of failures is not grounds
for optimism; the North Korean approach
is to try it, find out what went wrong, find a
fix and then validate it. “Their systems never work first time,” says Mr Schilling, “but
they persevere.”
Some of what Mr Fitzpatrick describes
as “this extraordinary amount of activity”
may have been related to the seventh congress of the Workers’ Party, a sanctification
ofMr Kim’s leadership. A less frenzied pace
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seven warheads a year and that its current
stockpile is about 20.
Mr Albright, like most analysts, is deeply sceptical that the device tested in January was, as Mr Kim claimed, a true hydrogen bomb. In hydrogen bombs a
“primary”, which gets its power from nuclear fission in uranium or plutonium, sets
off a “secondary”, which gets its power
from the fusion of deuterium and tritium.

Such bombs have yields in the hundreds
of kilotons, or megatons. Estimates based
on seismology suggest this year’s test, like
its predecessors, had a yield of no more
than ten kilotons, though the fact that the
bomb was more deeply buried than the
first three suggests its makers may have expected something bigger. Mr Albright suspects the engineers were trying a technique developed by South Africa’s defunct
nuclear programme in which a lithium,
deuterium and tritium tablet at the centre
of a fission device boosts its yield with a bit
of fusion.
The next issue is whether the North Koreans have graduated from devices that
can be tested to devices that can be fitted
onto either its existing medium-range Nodong missile (developed from the Sovietera Scud C) or its two missiles under development, the Musudan intermediate-range
ballistic missile (IRBM) and the KN-08 intercontinental ballistic missile (ICBM). Mr
Schilling thinks that they would not have
carried out four nuclear tests on something
they did not think they could deliver. On
March 9th, Mr Kim was photographed paying a visit to what may have been the
Chamjin missile factory outside Pyongyang. In a hall packed with several ballistic missiles, Mr Kim posed beside a plausible-looking re-entry vehicle that would be
consistent in size with a fission device
about 60cm in diameter and weighing up
to 300 kilograms. Both American and
South Korean officials are convinced that
North Korea can indeed make a warhead
small enough to fit on the Nodong, which
can reach targets in Japan, including American bases (see map).
A further question concerns the re-entry vehicle Mr Kim was proudly showing
off: would it survive its passage through
the Earth’s atmosphere? Until recently,

Western intelligence believed that North
Korea had not yet mastered this technology. But on March 15th pictures appeared in
the North Korean media of what appeared
to be a nose-cone from a KN-08 placed on
an engine test stand one and a half metres
beneath an ignited Scud rocket motor. Another picture (above, right) showed Mr
Kim examining the re-entry vehicle after it
had seemingly passed its test.
Another ground test on April 9th has,
according to Mr Schilling, put to rest any
doubts about North Korea’s ability to build
an ICBM sooner rather than later. Two en-

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IN DEVELOPMENT
Sources: IISS; 38 North


22 Briefing North Korea’s nuclear weapons
2 Kim has talked of his byungjin policy of

combining nuclear deterrence with economic development. Mr Pollack says that
if Mr Kim wants the sort of bells-and-whistles deterrent deployed by the large nuclear powers, with submarine-launched
and mobile missiles, the ruinous expense
would make such a policy impossible. If,
on the other hand, Mr Kim just wants what
Mr Pollack calls a “don’t fuck with us” deterrent—one that keeps outside powers
from interfering with his regime—he probably has one now.
Given what he has been testing, it
seems likely that Mr Kim has his heart set
on the former. His talk of economic reform—he laid out the first new five-year
plan for decades at the congress—is short

on specifics. If his enthusiasm for growth
has led him to be worried by the supposedly tougher sanctions agreed to by the UN
Security Council in Resolution 2270 on
March 2nd in response to the nuclear test,
he has shown no sign of it.
Deterrence, defence, despair
These latest sanctions reflect China’s increased willingness to co-operate with
America and others on North Korea, a new
mood born of frustration and annoyance
that Mr Kim continues his nuclear provocations when China has asked him to stop.
Still, unlike the sanctions on Iran, those on
North Korea remain focused on hobbling
the nuclear programme and denying luxury goods to Mr Kim and his cronies, rather
than on damaging the general economy.
North Korea is free to buy fuel oil and sell
iron ore and coal as long as the revenues
are not used to fund military activities.
This is not a condition that can be practically enforced.
Chun Yung-woo, South Korea’s former
chief negotiator at the six-party talks and
national-security adviser to President Lee
Myung-bak until 2013, says that although
China has toughened its stance towards
North Korea, it has “not fundamentally
changed its policy of putting stability before denuclearisation—it will only implement sanctions that are tolerable to North
Korea”. He hopes that the next American
president, with support from Congress,
will put China on the spot by applying a
“secondary boycott” to any Chinese businesses trading with North Korea.
Another South Korean official, who

talks regularly to the Chinese, is more sympathetic to their dilemma. The official says
Beijing has been disturbed by an almost
complete lack of communication with the
North Korean regime since Mr Kim executed his uncle, Jang Song Taek, in 2013. Jang
was the one senior figure in Pyongyang
with whom the Chinese had close ties. The
Chinese are changing their tactics, if not
their strategy, in response to what they see
as continuing provocations, looking for a
sanctions “sweet-spot”—harsh enough to

The Economist May 28th 2016
change Mr Kim’s mind but not so punitive
as to risk the collapse of the regime. However, if Mr Kim believes he is now on the
“home straight”, his instinct may be to
sprint for the finishing line and talk afterwards. Mr Chun thinks that North Korea
will never denuclearise; if it agreed to stop
testing it would be because it had achieved
the nuclear power and status it craves.
The rest of the world will not agree to
that. Still, Mr Fitzpatrick says that some
kind of high-level engagement is overdue:
he thinks it preposterous that the only
American who knows Mr Kim is Dennis
Rodman, a retired basketball player. Peacetreaty talks with North Korea to bring
about a formal end to the Korean war, he

Is THAAD the best you can do?
reckons, would not require recognition of
North Korea’s nuclear status and could be

part of an agreement to freeze nuclearweapons development.
Mr Samore thinks Mr Kim’s behaviour
may eventually exasperate China so much
that it will bring into play sanctions which
really hurt. In the absence of such leverage,
though, the focus must be on strengthening deterrence and containment. That
means resisting or defusing Chinese displeasure over the proposed fielding of the
THAAD (terminal high-altitude area defence) ballistic-missile defence system in
South Korea. The Chinese oppose THAAD
on the basis that its powerful AN/TPY-2 radar could undermine the effectiveness of
their nuclear deterrent against America, a
claim that Mr Samore rejects.
China fears that, over time, a regional
network of anti-missile systems deployed
by America’s allies might come to threaten
the deterrent effect of its relatively small
strategic nuclear forces. In this instance

that concern seems far-fetched. The
THAAD system is designed to destroy missiles during the terminal phase of their trajectories, when they are coming back
down; it can do nothing against missiles
during their boost or midcourse phase, so
Chinese missiles aimed at America would
have nothing to fear from a THAAD battery
in South Korea. Still, the Chinese claim to
be worried that THAAD’s radars, if used in
“look mode” rather than “terminal mode”,
could reach deep into their territory.
Americans point out that using the radar that way would decouple it from the
missile-defence system it was deployed

with, which would defeat its purpose.
More generally, they say that this is just
something China will have to put up with.
As America’s defence secretary, Ash Carter, said last month: “It’s a necessary thing.
It’s between us and the South Koreans, it’s
part of protecting our own forces on the
Korean peninsula and protecting South Korea. It has nothing to do with the Chinese.”
The message to China was clear: as you
have done such a lousy job persuading
your ally to rein in his nukes, you will have
to accept the consequences.
Mr Elleman has calculated that, faced
with 50-missile salvoes, a layered defence
consisting of two THAAD batteries and
South Korea’s existing Patriot systems
would be able to stop all but 10% of what
was fired. He and Michael Zagurek, in a paper for 38 North, base their calculations on
what is known in the jargon as “single-shot
probability of kill” (SSPK). With two layers
of defence, the SSPK of each interceptor
need only be a bit over 0.7 for 90% of the incoming missiles to be destroyed.
That would be an impressively effective defence against conventionally armed
missiles. But only one or two nuclear warheads need to get through for the casualties
to be immense (420,000 killed and injured
in Seoul for each 20 kiloton warhead, reckon Mr Elleman and Mr Zagurek). And if nuclear-tipped missiles were launched alongside or behind conventional decoys the
system would be clueless as to which was
which. If Mr Kim were to add submarinelaunched missiles to his arsenal, defence
would be harder still; they could be fired
out of sight of THAAD’s radar.
Like tougher sanctions, THAAD is well

worth deploying. But neither can fully contain the threat. Nor is it certain that conventional deterrence (which rests upon the assumption that the regime to be deterred is
sufficiently rational not to invite its own
destruction) will necessarily work against
North Korea. Another reason the Chinese
give for their unwillingness to tighten the
screw on the regime is that they fear its imminent collapse could result in a last act of
suicidal nuclear defiance by Mr Kim. That
may just be what Mr Kim wants his adversaries to believe. But if it is a bluff, it is not
one that anybody wishes to call. 7


The Economist May 28th 2016 23

Asia

Also in this section
24 War in Afghanistan
25 India’s deep south

For daily analysis and debate on Asia, visit
Economist.com/asia

America and Vietnam

Pull the other one
SINGAPORE

America’s president plays the Vietnam card

B

ARACK OBAMA fooled no one this
week when, having announced that
America was lifting its embargo on selling
weapons to Vietnam, he denied that the
decision was “based on China or any other
considerations”. It was a tactful fib, to portray the move as merely part of Mr
Obama’s legacy-building mission ofreconciliation with historic enemies, to be followed days later by a historic visit to the
site of America’s atom-bombing of Hiroshima. But at a time of increased tension in
the South China Sea, where Vietnam is
among the countries disputing territory
with China, America’s policies there are
bound to be seen in a different context. The
headline in Global Times, a fire-breathing
Chinese tabloid, read simply: “Washington
uses past foe to counter China”.
The American president made his announcement a few hours into his first state
visit to Vietnam, following a meeting with
the country’s new president, Tran Dai
Quang, in Hanoi. Official enthusiasm was
mirrored in the thick crowds lining the
streets in the capital and in Ho Chi Minh
City to greet Mr Obama, whose visit between May 23rd and 25th was only the
third by an American leader since the end
of the Vietnam war in 1975. His star power
contrasted with the indifference most Vietnamese show for the stiff apparatchiks of
the ruling Communist Party. Locals in Hanoi gawped at Mr Obama tucking into bun
cha, a cheap meal of grilled pork and rice

noodles bought from a street stall.

The end of the arms ban will have little
immediate impact. America had already
twice loosened it, first in 2007 and again in
2014, allowing the sale of needed patrol
vessels. It will take years for the Vietnamese, short on cash and largely reliant on
Russian weaponry, to integrate American
hardware. Moreover, weapon sales to Vietnam (like to anywhere else) will still need
to be approved case by case, and the first
purchases are likely to be of relatively inoffensive systems, such as radar. China’s
press has warned that America risks turning the region into a “tinderbox of conflicts”, yet its diplomats, not normally slow
to accuse America of stoking tensions,
played down the decision. A spokeswoman for the foreign ministry welcomed
the normalisation of ties between Vietnam and America, and painted the arms
ban as a kooky anachronism.
America’s move is partly a sop to conservative factions within Vietnam’s Communist Party in need of reassurance. Behind this week’s smiles they still fret that
America harbours hope of overthrowing
the party. Bigwigs in government feel
bounced into their friendship with America by virulent anti-Chinese sentiment
among ordinary Vietnamese, some of
whom accuse the cadres of going soft on
Vietnam’s overbearing northern neighbour. Trust earned by dropping the embargo might eventually gain advantages for

America’s own armed forces, such as a return to Cam Ranh Bay, once an American
naval base on the south-eastern coast.
America had previously insisted that
lifting the embargo would depend on Vietnam’s progress on human rights, which
even Mr Obama admits has been only
“modest”. The regime’s thuggishness
makes even a largely symbolic concession
hard to swallow. The party was seen to

have eased up on critics during 2015, when
it was negotiating access to the Americanled Trans-Pacific Partnership (TPP), a freetrade deal—but it has since reverted to
form, and its new leadership, reshuffled in
January, contains several former secret policemen. Mr Obama’s arrival in Vietnam
coincided with a ludicrous parliamentary
“election”, boasting a 96% turnout, and
with a crackdown on environmentalists
who have been gathering in the cities to
protest about polluted canals and seas. The
authorities even sabotaged Mr Obama’s efforts to meet critics of the party by briefly
detaining several campaigners whom the
president had invited to his hotel for a chat.
China plays the Gambia gambit
Boosters say that improving Vietnam’s human-rights record is bound to be a long
slog, and that gaining the regime’s trust is a
prerequisite. They say that arms sales are
far from America’s only bargaining chip:
the terms of the TPP, for example, oblige
Vietnam to begin tolerating independent
unions, a reform that could loosen the
Communists’ monopoly on public life. But
that deal will have no impact if, as seems
all too possible, America’s Congress refuses to ratify it.
So Mr Obama is taking the long-term
view that closer partnership with Vietnam
is worth sacrificing some principles for.
America and its regional friends are
alarmed by China’s forcefulness in the 1

24 Asia
2 South China Sea—notably its building

boom, turning disputed rocks and reefs
into artificial islands, which may well, despite Chinese denials, become military
bases. Both diplomacy and American displays of might have failed to stop this.
America currently has an aircraft-carrier battle group in the South China Sea to remind the world of its military strength. To
Chinese protests, it has sent ships and
planes close to Chinese-claimed rocks and
reefs. Meanwhile, the Philippines has challenged China’s territorial claims at an international tribunal in The Hague, which is
expected to rule soon. China has said it
will ignore the ruling. The Philippines’
new president, Rodrigo Duterte, has not
made clear how he would react to a decision in his country’s favour.
Although nobody expects America and
China to go to war over some remote rocks
and man-made islands, an accidental clash
in or over the South China Sea remains a

The Economist May 28th 2016
risk. On May 17th Chinese fighter jets dangerously intercepted an American reconnaissance plane over the sea. China denies
its planes did anything provocative.
China does seem to worry about its image, however. Its foreign minister, Wang Yi,
recently toured the smallest South-East
Asian countries—Brunei, Cambodia and
Laos—and announced that China had
reached “consensus” with them on handling disputes in the sea. This was news to
the countries concerned, and alarmed
their fellow members of the Association of
South-East Asian Nations, who saw a blatant attempt to divide them. China has also

lobbied G7 countries in the hope that the
statement their leaders issue on May 27th
after their summit in Japan will not scold
China over the South China Sea. Already
China’s newest diplomatic partner, the
Gambia, in distant west Africa has, bizarrely, confirmed China’s “indisputable sovereignty” over the sea. So that’s that, then. 7

War in Afghanistan

Taliban reshuffled
ISLAMABAD AND KABUL

The Americans’ killing of Mullah Akhtar Mansour will deepen divisions within
the Taliban but not end the insurgency

F

OR the second time in under a year, senior men from the Afghan Taliban have
descended on Quetta, capital of Balochistan, the largest but least populated of Pakistan’s four provinces, to elect a new supreme leader. The first time was hurriedly
to choose a successor to Mullah Muhammad Omar, the Taliban’s founding leader,
after attempts to hide his death in a Karachi
hospital two years earlier were exposed.
But now that successor, Mullah Akhtar
Mansour, who was involved in the cover-up of Omar’s death and in a ruthless
purge of rivals afterwards, is himself dead.
He was killed on May 21st, on a lonely road
in Balochistan, by an American drone.
For his Pakistani hosts, Mullah Mansour’s death has embarrassing echoes of
Osama bin Laden, who was killed by
American special forces five years ago in

his secret home near a Pakistani military
academy. But Mullah Mansour was no
fearful recluse. He had the backing of a
Pakistani state that gives sanctuary to Taliban leaders as a means of maintaining influence in Afghanistan. And whereas
American drone strikes against militants in
the tribal area ofNorth Waziristan are longestablished and carried out under rules secretly agreed with Pakistan, Balochistan
was considered to be off-limits. No longer.
The Americans, whose strikes are usually
clandestine, were quick to announce Mullah Mansour’s elimination (so much for

Pakistani feelings). They said he was an
“obstacle to peace and reconciliation” who
had stopped more reasonable Taliban
leaders from “participating in peace talks
with the Afghan government”.
Mullah Mansour got about. On his final
day he had travelled 450 kilometres (280
miles) by taxi from the border with Iran (he
was struck shortly after stopping for
lunch). His Pakistani passport (under an assumed name) that was found at the scene

Out of a clear blue sky

showed that he had also frequently flown
from Karachi to Dubai and Bahrain. That
American spooks tracked him after a
lengthy stay in Iran may lead comrades to
wonder about traitors in their midst.
In Afghanistan, people sick of endless
Taliban attacks emanating from Pakistan

were delighted. Afghan leaders had long
wanted America to take the war against
the Taliban to Pakistan. That it has now
done so is a boost for President Ashraf
Ghani. His attempts to befriend Pakistan in
hopes of support for peace talks earned
him scorn at home. The talks have gone nowhere, violence has escalated and the Taliban have grabbed more territory than at
any time since their ouster in 2001.
The peace talks, hosted by Pakistan in
the capital, Islamabad, involve Afghanistan, America and China. But in five meetings, there has been ever less to talk about.
Mullah Mansour was more interested in
sending militants to Kabul than envoys to
the talks (in April over 60 Afghans were
killed in one attack alone in the Afghan
capital). The Afghan government, believing Pakistan had promised to use force
against “irreconcilable” insurgents, did not
even bother to send a senior official, bar its
ambassador, to the last meeting on May
18th. It is not clear how much of a reputation Pakistan can salvage as a self-proclaimed peace broker, especially as Mullah
Mansour’s sojourns in Iran suggest that he
may have been slipping from the Pakistani
orbit. Some in the Pakistani establishment
may even have been happy for the Americans to kill him.
But America remains royally fed up
with Pakistan, not least because of its reluctance to go after a key Taliban ally, the Haqqani network, sheltering in North Waziristan. In February the American Congress
refused to give Pakistan financial help to
buy eight F-16 fighter jets. As for China, a
key Pakistani ally, it has promised billions 1

The Economist May 28th 2016

Asia 25

2 of dollars in roads and more, but is likely to

remain uncomfortable about its investments until the region’s Islamist insurgencies are stamped out. Meanwhile, on May
23rd the leaders of Iran, India and Afghanistan signed a deal to create a transit hub at
the Iranian port of Chabahar on the Arabian Sea. That would challenge Pakistan’s
own port joint-venture with the Chinese at
Gwadar, 170km farther east.
On May 24th the Taliban appointed as
their new leader Haibatullah Akhundzada, a former head of the courts with little
military experience but with a line in fatwas endorsing executions and amputations. He inherits a death sentence from
America, and a squabbling outfit at war
with itself as well as with the Afghan government and its sponsors.
Mullah Mansour was viewed by some
field commanders as being too close to
Pakistan. Mr Akhundzada may need to
prove his credentials by redoubling a Taliban offensive in Afghanistan that has been
raging since last summer. With the spring
fighting season under way, and a profitable
opium harvest gathered, the Taliban are
well placed to tighten their pincer around
Lashkar Gah, the capital of Helmand province in the south, and to expand their offensive in the north. They may even attempt to retake Kunduz, the northern
provincial capital that was briefly captured
last year. Peace will have to wait. 7

India’s deep south

Southern comfort
COIMBATORE

Tamil Nadu and Kerala dance to a
different tune from the rest of India

M

AHATMA GANDHI would not have
enjoyed Texfair 2016 in Coimbatore
in the southern state of Tamil Nadu. The
man hated machines and factories, and
promoted Indian independence by urging
every household to spin its own cotton
yarn. But on display at the textile fair were
bobbins, rollers, waste balers, quality-control sensors and much, much more.
Indeed, India is vying with China to be
the world’s biggest producer of yarn, with
over 45m spindles twirling around the
clock. But what is striking about the trade
fair is how so much of the modern wizardry on show is made not in better-known
industrial centres around the world but in
Coimbatore itself, a city of just 1.6m some
500 kilometres (310 miles) south-west of
Chennai, the Tamil Nadu capital.
The fast-growing city is an inelegant
sprawl stretching into groves of coconut
palms. It teems with technical institutes,
bustling factories and civic spirit. Earnest

Coimbatore: bobbin and weavin’
and ambitious, Coimbatore evokes the
American Midwest of a century ago. A regional manufacturers’ group that was
founded in 1933 during Gandhi’s homespun campaign has now designed, built
and marketed a hand-held, battery-operated cotton picker that it claims is six times
more efficient than human fingers.
Gandhi would have been appalled. But
the gadget says something about the quiet
success of parts of India’s deep south. Mill
owners worry that with day wages in Tamil Nadu and neighbouring Kerala to the
west now far higher than those in northern
India, local cotton may grow uncompetitive. Tea planters in the hills west of Coimbatore are already squeezed. One landowner, in Kerala’s Wayanad region, where
silver oaks shade trim ranks of tea bushes,
says that his pickers get 300 rupees (about
$4.50) a day, nearly three times the wage in
Darjeeling in India’s north.
It may not sound like much, but it is also
more than the average Indian earns. And
as a whole, GDP per person in Tamil Nadu
and Kerala is 68% and 41% higher respectively than the national average of $1,390 a
year. With the south’s booming new industries, better education and higher wages
contrasted with declining industries in the
north and east, India is undergoing a shift a
bit like the American one from the rustbelt
to the sunbelt in the 1980s. Kerala shares in
this new industrialisation less than Tamil
Nadu, but that is balanced by another
source of prosperity: remittances from
abroad. As many as one in ten of Kerala’s
35m people workin the rich Arab countries

ofthe Persian Gulf. Their remittances boost
local incomes, property prices and demand for better schools. Kerala, under leftist governments for the past six decades, already has India’s best state education and
its highest literacy rate. Its school district
has again topped nationwide exams for 17-

year-olds, followed by Chennai region,
covering the rest of southern India.
Yet India’s deep south has not transmuted growing prosperity into greater political clout. It remains largely aloof from
broader political trends, including a slugging match between the Bharatiya Janata
Party (BJP), in office nationally under Narendra Modi, the prime minister, and Congress, the once-dominant centre-left party
that worships Gandhi. In elections across
four Indian states that wrapped up on May
19th, attention elsewhere focused largely
on the fortunes of those two parties. The
BJP’s capture from Congress of Assam in
the north-east was seen as a big boost for
Mr Modi. Congress’s failure to take any
state was seen as a sign of decay.
Voters in both Kerala and Tamil Nadu,
which has 72m people, paid hardly any attention at all. In both states the contest was
between long-established state-level parties. Keralites and Tamils alike admit that in
terms of policy not much distinguishes the
rival parties. For a generation, power in
Kerala has alternated between two left-ofcentre coalitions. Tamil Nadu, meanwhile,
has been in thrall to parties that both make
“Dravidian progress”—a reference to South
India’s linguistic and racial separateness
from the “Aryan”, Hindi-dominated
north—part of their name.
Elections are often bidding wars. In

Tamil Nadu this has meant offers of household goods or simple cash. The favoured
lure in Kerala, where politics is so staid that
rival party bands traditionally deliver a
joint crescendo in village squares to mark
the end of campaigning, has been promises of ever more generous welfare.
In practice, voters often punish the
party in power. But this year voters in Tamil Nadu re-elected the incumbent government for the first time in a generation. The
AIADMK, whose boss is a former actress
known as Jayalalithaa, had the stronger
party machine and a track record of generosity. It secured victory over the DMK, from
which it split in 1972. The outcome in Kerala
was more traditional. The corruption-tainted ruling coalition, led by a local affiliate of
Congress, was trounced by the communist-led Left Front.
Interestingly, gains were made by a
newcomer to Keralite politics since the last
state elections in 2011: Mr Modi’s BJP. It
picked up just one seat in the 140-member
state assembly, but almost doubled its proportion of votes, to 15%. To some, the Hindu-nationalist party’s entry reflects the impatience of Kerala’s growing (and mostly
Hindu) middle class with the handout politics that tends, on paper at least, to favour
religious minorities in a state that is 27%
Muslim and 18% Christian. But Keralites fed
up with both Congress and the hammerand-sickle mob, both of which have failed
to foster industrialisation and jobs, may
have felt they had nowhere else to go. 7


26

The Economist May 28th 2016

China

Also in this section
27 Astroturfing the internet
28 Banyan: Failings of the China dream

For daily analysis and debate on China, visit
Economist.com/china

Retirement

China’s Florida
SANYA

People used to retire where they lived and worked. That is beginning to change

T

HE cheongsam modelling contest
starts at 7pm; at 8pm it is group dances
in the style of ethnic Uighurs from China’s
far west, and of fan-waving north-easterners from provinces adjoining Russia and
North Korea. Participants and spectators
alike are pensioners: retired miners, teachers and industrial workers. They sit in the
evening cool, gossiping and applauding. A
man in a Hawaiian shirt keeps the beat
with castanets. Fei Liyue, a former construction manager, says that he and his relatives come every evening. He is 3,200km
(2,000 miles) from his home in the bleak
oil city of Daqing.
Almost everyone is, like Mr Fei, from

the rust belt of the north-east, a region that
is gripped in winter by an Arctic chill. But
the scene here is by the beach in the subtropical city of Sanya in Hainan, an island
province as far south from their native region as it is possible to go without leaving
the country (see map). Palm fronds and
bougainvillea rustle in the breeze. Bikiniclad tourists dash by. The crowds of elderly
visitors (some are pictured) are something
new in Sanya. They may herald a profound
social change.
Chinese people used to live, work, retire and die where they were born. The
country’s filial traditions reflect this: children are supposed to look after their parents. The bureaucracy enforces it: everyone has a hukou (household registration)
which provides subsidised health and
education, almost always in a person’s

place of birth.
Thanks to the migration of workers,
however, 260m people, about one-fifth of
the population, now live somewhere other than their birthplace. In the past five
years, the pattern of retirement has also begun to change. Increasing numbers spend
some or all of their pensionable years
away from where they used to work. Neither filial tradition nor the hukou system
have proved strong enough to prevent this.
In the 1950s and 1960s Americans
flocked from cold industrial cities, such as
New York and Chicago, to subtropical FlorRUSSIA
Daqing

MONGOLIA

HEILONGJIANG

JILIN

LIAONING

New York’s
latitude

N. KOREA

Beijing

C H I N A
’s
Miami

YUNNAN

de
latitu

GUANGXI

HAINAN

Sanya

Climate

Tropical
Continental

Humid temperate
Dry

500 km

Dry temperate
Mountain

Source: “Mapping Crop Cycles in China Using MODIS-EVI Time Series”,
by Le Li et al. Remote Sensing. March 2014

ida. Now Chinese people are moving from
the industrial heartland of Heilongjiang, Jilin and Liaoning (the three north-eastern
provinces) to Hainan. And just as movement to America’s sunbelt helped transform a backward region, so the same thing
could happen in China.
Fifty years ago Sanya was a small fishing village. Ye Yaer, who was born there in
1961, survived on discarded ends of sugar
cane and did not get a pair of shoes until he
was 12. Every day his mother walked 25km
to the nearest market town, carrying those
of her children too young to walk as well as
20 kilos of fish to sell. Now Mr Ye is a successful fish-dealer whose business extends
across southern China; Sanya is full of fivestar resorts. And as happened in Florida, a
retirement business is being built on the
back of Hainan’s tourism.
According to Sanya’s government,
400,000-500,000 pensioners head to the
city each year, perhaps half of them from
the north-east. That compares with the

city’s total population (those resident for
six months or longer) of 749,000. The incomers are not the new rich. Huang Cheng
of Sanya University says one-third of the
sun-seeking pensioners have a monthly income of 2,000-3,000 yuan ($305-460),
about the average for a working person. A
quarter receive only 1,000-2,000 yuan a
month. Most come for six months and return to the north-east in summer. “It’s too
hot here then,” says Mr Fei, the oil-city
man, though he admits he is thinking of
settling in Sanya full-time. Rather like Florida’s “snowbirds”, many rent an apartment
just for the winter.
Fewer than 100,000 migrant pensioners live on the island year round, thinks Mr
Huang. But there are signs that more are
settling. Half of those he interviewed said
they had bought property in Sanya. The
number staying permanently started to
soar in 2010 when the city’s retirement 1