oUt c Economist Deora Sc DC ee Oma ae BOD Ce rd CET Rac ta) Birla Quine lirs4(y Electric supercars‘Smarter business for a Smarter Planet: The role of today’s CFO is evolving. Find out where over 1,900 think it’s going. Through recent face-to-face discussions with CFOs and senior Finance executives in 81 countries, IBM has identified essential findings today’s leaders need to know. For example, 83% of CFOs now advise on risk mitigation, while 72% help guide information management strategy. In the 2010 IBM Global CFO Study, the largest study of its kind, IBM outlines four key profiles of finance organizations and provides access to executive-level thinking and critical information, It isn’t just essential reading— it's a guide to smarter leadership. Get The New Value Integrator at ipm.com/ctostudy3 One in a series of C-suite studies. Assmarter business needs smarter thinking. Let's build a smarter planet.Ifyou can't eve therdata, RUB (Oman alyt eai e{ ariel It’s all in our approach. DA Lea UT Royal Bank of Canaga Supplementary Financial information: 2004 o 2008 This advertisements forinformational purposes, RBC Capital Marketsic the global ere reser eee enn seen een et eet cert eee ates nest arora tee eto Eien a oe roo ects Canada. Used under license. © Copyright 2010 Allrights reserved,‘Onthe cover: Action on ctimateis justified, ‘not because the scienceis, certain, but precisely because it isnot: leader, age13. There are lots of uncertainties in climate science. But that does not meanitis fundamentally ‘wrong, pages 83-86. The declineofa once wildly popular idea, page 32 The Economist ontine Daily news and views: news analysis, online-only columns, blogs on polities, economicsand travel andacorrespondent’s diary E-mailenewslettersand mmobileedition Feonomist.com/emait Research: search articles since 4997, special reports Ecomomist.com/research Print edition: available online by7pm London timeeach Thursday Economist.com/print ‘Audi edition: available ontne to dovnload each Friday, Economist. com/audioedtion ‘Starch, Sora eager 9 The world this week Leaders 413 Climate science Spin, science and climate change 14 Showdown in Bangkok The battle for Thailand 15 American health care Pass the bill 46 The Cathoticchurch and paedophitia Crimes and sins 16 Israeland America ‘Stop tie bungling 417 Eastern Europe What went right 417 Reregulating finance In praise of Doddery 18 Trade and conservation Fin times Letters: 20 Onmanaging {nformation, Iraq, American politics, food, cheese Briefing 26 Thailand's succession As father fades, his children fght United States American-Israeli relations Where did allthe love go? 32 Climate-change politics Cap-and-trade's last hurrah 34 Schools reform The next test 34 Health care and the states Sound and fury 36 Harvisburgin crisis ‘Aburning issue 38 Plans for broadband Not what was asked for 38 The inflation rate Price puzzle 40 Lexington Nancy Pelosi's challenge 3 ‘The Americas 43 Chile's new government Runningto rebuild a shaken country 44 Canada’s rival cities The charms of Calgary 44 Colombia's congressional election Allurbistas now Asia 47 Chinese foreign poticy Worse than itsite 48 Homosexuality in China Collateral damage 48 Pakistan’s rote in Afghanistan Tickets to the endgame 49 Child pornography in Japan Outraged innocence 50 Banyan The rights approach to India’s development Middle East and Africa 51 South Africa A chastened president 52 Food aid for Africa ‘The polities of hunger 52 Sudan's elections They're off 54 Iran's film-makers Sucking outthe air 54 The struggle inside Tran ‘The opposition marks time 56 Alcohol in Morocco Glug ifyou're not local Europe 57 East European economies Fingered by fate 58 German dialects and migration Sprachen Sie Deutsch? '58 Police brutality in Russia Cops for hire 59 Corruption in Kosovo Timeto go straight 60 Saving Venice Brunetta’s offensive 60 France and Vichy Remembering the Vel d'Hiv 62 Charlemagne There's na one ike Gordon Brown, The Economist Mi ‘America Israel Bibi Netanyahu has enraged hismainally and hurtthe peace process: itis not too lateto change course: leader, page 16. Where dd all thelove ‘go? Page 31 Health care Hugely expensive and full offiaws though itis, Barack Obama's plans till worth having: leader, pages Virginia bans mandatory health insurance. Doesit matter? Page 34. Nancy Pelosi rounds up thevates: Lexington, page4o Thailand Political chaos beckons—unless thereisan electionandan honest discussion aboutthe rmonarciy's Future: leader, page 14. Behind the present uncestin Thailand tiefar deeper fears about theroyal succession. And those may not bespoken publicly, pages 26-28 >» Contents continues overleaf63 64 66 65 Productivity thas surgedin ‘Americaand slumped in 66 Europe. Neither trend can be sustained, page75. Alan Greenspan nd Ben Bernanke still do not betieve monetary policy bearsanyblameforthe 67 Economicsfocus, page 82 68 69 70 Corporate feuds Personal n animosityisa mighty forcein business, for good aswell as, n ill: Schumpeter, page 74 n R % 15 Electric supercars Fast 76 automabiles ll go even faster with electric power, page 87 1B 8 Britain New media and the lection Thus farand no farther Labour and the unions Unite's kingdom University finances The posh, the poorand the pushed Skills for the future The plot so far Bagehot TheTory dilemma International Paedophilia and the Catholic church Fvilorders New aid for old Crumbs from the BRIC-man’s table Business New competition for Airbus and Boeing Startyour engines Google ponders leaving China Failed search Hiring practices in Japan Anew iceage Cross-shareholdings in Italy Tes that bind ‘Share buy-backs are back Because they're worth it Face value Ron Dennis of McLaren Schumpeter In praise of feuds Finance and economics Productivity growth Slash and earn Financial reform in America The hand of Dodd Municipatities and derivatives: Cities in the casino Hotel finance Unpaid bits 80 Buttonwood Private equity 81 The Lehman report Beancountersina bind 81 Buy-outs in Japan ‘The waiting game 82 Economics focus Greenspan's defence Briefing 83 The science of imate change The clouds of unknowing Science and technology 87 Electric supercars Highly charged motoring 88 Theorigins of selflessness Fairplay 90 The battle of the sexes Face off Books and arts 91 Blame game ‘Joseph Stiglitz and Simon Johnson 92 John Lanchester ‘The Financial ersis explained 92 Prophets of the slump Brain game 93 British foreign secretaries Pessimists v optimists 94 Derek Walcott Tnfall fight 94 Luc Bondy Happy contrarian Obituary 95 John Thorbjarnarson Saviour of crocodiles, 109 Economic and financial indicators Statistics on 42 economies, plus closer looks at producer prices and natural disasters The Vatican The pope should say plainly and loudly that sexualabuse of childrens not just sinful. 1tis criminal: leader, page 15. The growing scandalabout child abuse reaches thetop ofthe Vatican, pages7 Principaleommercialoffies: Pistlinesrsoee anton si Tecezo7ane7on0 Fnce20 783 2068/8 Suelo. 75008Pars ance Tose 15926600 F033 159 90603 swe 7h Ss, wero Telszizsosoe fans sus37 SojFcenaas Iahrsertons, Mocha, Mog tang ela522585 3808 Fos2002 788 tnercanmarcatties: San Frencsenand Singopore ‘Subscription service Ferabenn sree etecontty ‘ear mcmama “Rlehne: 1200456 4086 (rom ease ‘elSané rege sta ee? Ss) Fact 1866 607s (Fomeusie theuSaracarod 134 8065) ait catoereip@coomitcom ost The emomitsabctien Severs tater Slane mise sre usa “Suberpten for yen (340) Unie Sites uss stot ances see @ recent PEFC uae Cire-TEAMWORK: ACA NAR MOIR AES LLL Dice take a eeu taro toa Su RCN oa ee Nog ae Na aOR thee eT ar Cor aca a a Roa A Nt ella anlar e Te Mere atone Lerten Gti GREAT HAPPENS rere nate recs eee Bee Caan eas Oagal anle 3 WHAT WE KNOW. BUSINESS IS pe) N Sama FACE-TO-FACE. = BRITISH AIRWAYS ee)The world this week Politics (A ‘America’s envoy to the Middle East, George Mitchell, pointed- ly putoff a visitto Israel after senior peoplein Barack Obama's administration accused Israel's prime min: ister, Binyamin Netanyahu, of insulting the vice-president, Joe Biden. The Americans hoped Mr Netanyahu would letindirect talks between Israelis and Palestinians resume by rescinding his decision toallow anew spate of building in East Jerusalem, which the Palestinians see as theirfuture capital. With afifth of the votes stillto be counted after Iraq's general election on March 7th, an electoral alliance led by the incumbent prime minister, Nuri al-Maliki isnecle-and neck with a group led by one of his predecessors, lyad Al- lawi. A Shia religious alliance that includes followers ofa populist cleric, Muqtada al Sadnis coming third. Months of wrangling averthe for ‘mation ofa coalition govern: ‘ment slikely and Mr Maliki may not etain his post ‘The authoritiesin Iran said thatsix people who took part, in opposition demonstrations inDecemberhad been sen. tencedto death for “waging war on God" South Africa’s president, Jacob Zuma, embarked on a thiee-day visit to neighbouring Zimbabwe to try to mediate between President Robert Mugabe and his prime min- istet, Morgan Tsvangirai, ‘whose government of nation: al unity has stalled in recent ‘months, Anelection next year isbeingmooted. Nigeria's acting president, Goodluck Jonathan, dissolved hiseabinetin an attemptto exert hisauthority amonth after taking over from the ailing president, Umaru ‘Yar'Adua, who returned from. hospital in Saudi Arabia but has yettobeseenin public. The Greek drama continues Workersin Greece staged a general strike—the thirdin a ‘month=to protest against spending utsand tax rises Other European countries offeredloansto support the government, but with few details, Angela Merkel, Ger ‘many's chancellor called for new rulesfor the eurozone, allowing errant members to be excluded if necessary. Latvia's coalition government lostits parliamentary majority after the ailing People’s Party leitin protest against contin: ued austerity measures. Elec tionsare duein October. Nicolas Sarkozy's governing centre-right party iared poorly inthe firstround of the French regional elections, polling barely a quarterof the votes ‘Thefar tight National Front, under the 8 year-old Jean: Marie Le Pen, gained a surpris. ingly high:2%, ‘The primate of the Catholic churchin Ireland, Sean Brady, thas apologised for his ole in mishandling child-abuse scandal in2975 where two boys weresworn tosecrecy and information waskept from the police. television station in Georgia sparked panic with aspoof broadcast thatreporteda Russian invasion of the capita, ‘Thilisi,and the death of the country’s president, Mikheil Saakashvili France is hunting suspects from the Basque separatist group Era aftera French po- Ticeman wasshot dead during acarrobbery near Paris. One vote ata time The chances for health-care reform improved asa promi- nent opponent, Dennis Kucin: ich, aleft leaning Democrat ‘who had previously voted against the bill in the House because itdoesnot gofar enough, said he would now supportit. The speaker, Nancy Pelosi,needs to find 216 Demo- rats to votefor abill earlier passed by the Senate; as The Feonomist went to pressshe ‘was till few vores short. ‘The Senate passed an $8 billion jobs bill hat will en- courage employers to take on more staff by temporarily ‘exempting them from the payroll tax. Demoerats hope thisisjustthe tart of alarger cffort to tackle unemployment. Barack Obama unveiled his latest plans for education reform, which will encourage states (0 evaluate their schools according anationally de fined set of standards. Deating out death Therntand other American agencies were helping Mex ican officials to investigate the murderof anemployeeat the ‘American consulate in Ciudad Juarez, her husband and the partnerof another consular ‘worker. The murders,appar- ently by drug gangsters, “out- raged” Barack Obama. They ‘were justthreeamong some 4odrugrrelatedkillingsin Mexicoin one weekend. Ina report drawn up fora donors’ conference later this, ‘month, Haiti's government saiditneeded Sits billion to rebuild the country after Janu- ary’s catastrophic earthquake. Allies of Alvaro Uribe,the ‘outgoing president, did well in an election for anew Congress in Colombia. The largest block of seatsin the Congress will be held by the party of Juan ‘Manuel Santos, a former de fine ‘make the front-runner fora presidential election in May. ‘Cuban police briefly detained the wivesand mothers of political dissidents protesting atthe death of a hunger striker. Red faces More than 100,000 protesters, ‘many of them from Thai Jand’s northeast gathered in the capital, Bangkok, in sup: port of Thaksin Shinawatra, a fugitive former prime minister, andio demand he dissolution ‘of parliament and an early election. Abhisit Vejajiva, the present prime minister, reject: ‘edtheir ultimatum butsaid he wouldlisten to their griev- anees. The protests, which ‘were peaceful, went on for days, but dwindled in size. Sarath Fonscka,a defeated candidate in Sri Lanka's prest dential election, and a former army chief, appeared beforea ‘court martial, charged with ‘engaging in politics while still in uniform. The trial was ad: journedto April th. A second ‘court martial, on charges of iregulatitis in military pro ‘curement, was postponed with no date et Ina series of co-ordinated attacks, including two suicide ‘carbombings, onthe southem ‘Afghan city of Kandahar, the Taliban killed 35 people. spokesman forthe insurgents said the attacks were are sponse to General Stanley McChrystal,the NATO com- ‘manderin Afghanistan, who has pledgedto drivethe Tali- ban out of Kandahar, ‘Two suicide bomb attacksin Lahore, in the Pakistani prov- ince of Punjab, killed at least 45, people. The target appeared to bea convoy of army vehicles. »»