As many as 200,000 men, women, and children reportedly languish in North Korea's vast prison camp system, jailed for defying the state's strict edicts on anything from possession of foreign media to petty theft. Even being associated with someone who has broken the law can be grounds for imprisonment. Now, new satellite imagery of two of North Korea's infamous gulags suggest that the prison population is growing.
Satellite imagery analysis commissioned by Amnesty International and released Thursday reveal new housing blocks and an expanded industrial zone in kwanliso 16, a camp three times the size of Washington, D.C. In 2011, the organization estimated that 20,000 people were imprisoned in kwanliso 16. Another camp, kwanliso 15, is believed to have 50,000 prisoners; satellite images show that within the camp, housing blocks have been recently demolished and replaced. Both camps appear to exhibit significant economic activity, such as mining, logging, and the processing of timber in what appears to be a furniture factory.
The grave human rights conditions inside the camps -- forced labor, torture, rape, executions -- have been documented by eyewitnesses and former prisoners. Less well known is the extent to which activity within the camps benefits the national economy.
Recession be damned: There are more billionaires today than there were during the global financial crisis in 2008 and 2009 -- and they're twice as rich, says a new report released Wednesday.
The Billionaire Census, jointly compiled by Swiss financial company UBS and Singapore-based firm Wealth-X, is a comprehensive survey of the world's ultrarich -- essentially a thumbnail view of their interests, assets and social networks. The report's findings are equal parts predictable (billionaires love yachts!) and intriguing (women are richer). As of 2013, there are 2,170 billionaires enjoying a collective fortune of $6.5 trillion. Over the past five years, they've increased in number by 60 percent, their combined wealth has doubled and they're more liquid than ever.
Just over the past year, billionaire wealth has increased in every region of the world, as depicted by the map below, with the biggest gains in Asia. Europe was the only region to lose billionaires (29, to be exact), but it still boasts among the richest in the world. What's more: The global population is still growing -- expected to reach 3.900 by the year 2020.
Billionaires, it seems, are taking over our world (what little of it they don't already own, anyway).With that in mind, here are some of the report's highlights, framed as your most pressing questions about the richest people on Earth.
Who are these people?
The average billionaire is a 67-year-old man worth about $3 billion -- 18 percent of which is liquid (the recent financial crisis taught him a thing or two about carrying cash). He went to Harvard, or maybe to Penn State. His passions include art, aviation, real estate, traveling, and golf -- in that order. He's married, with two children and -- though he owns four $20 million homes -- he tends to spend most of his time in the city where his business is headquartered (probably New York).
Just 13 percent of billionaires are women, but they are an enviable minority -- richer than their male counterparts by about $200 million on average.
How did they get so rich?
An astounding 60 percent of billionaires are self-made. Twenty percent have inherited their wealth (most of whom live in Europe) while another 20 percent managed to leverage inheritances into even greater fortunes. The world's "mega-billionaires," each of whom are worth upwards of $50 billion, are self-made, according to the report: Bill Gates, Carlos Slim, Amancio Ortega and Warren Buffet. Interestingly, only 17 percent of women billionaires are self-made. China boasts the highest number of self-made billionaires, at 89 percent.
Where do they live?
New York, Hong Kong, Moscow, London and Mumbai, in that order. The world's super-rich tend to congregate in wealth "hot spots." The majority live in the United States, which boasts more billionaires (515) than any other country. China has the second largest population -- and the youngest cohort -- with 157 billionaires.
Do they swim in a vault of golden coins, in the manner of Scrooge McDuck?
The report doesn't say, but it does note that billionaires spend a lot of money on luxury goods, chiefly: yachts, private jets, and art, but also antiques, clothes, jewelry and collectible cars. They also give to charity, to the tune of $32 million each over the last three years. American billionaires tend to be the most giving, with education topping favorite causes. So don't hate them completely.
The full report is here.
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Many Americans already believe, intuitively, that cheap imports from China threaten manufacturing jobs in the United States. But while there's plenty of anecdotal evidence to support this -- stories of factories closing and companies relocating -- economists and policymakers have always asserted that the benefits of increased trade outweigh the initial costs.
Now, a study by the National Bureau of Economic Research proves that increased trade with China has more significant long-term effects on blue-collar workers than previously thought. The impact has been particularly profound because China's dramatic export growth has outpaced U.S. firms' ability to adjust.
The study, by economists David Autor, David Dorn, Gordon Hanson, and Jae Song, looked at the impacts of increasing trade with China on the employment and earnings of nearly 900,000 American workers between 1991 and 2007. During that period, China's share of world manufacturing exports grew considerably, from just two percent in 1990 to 12 percent in 2007 and 16 percent in 2011. Meanwhile, the number of US factory workers fell by nearly 10 percent between 1991 and 2001, and by another 16 percent in the subsequent years.
India's space scientists must be tired, by now, of defending their cosmic ambitions. Though the nation has made a valiant effort to recast itself as a pioneer of space exploration in recent years, it can't seem to get around criticisms of how it spends its money.
The concerns, which India's space agency has often addressed but to no one's satisfaction, is newly relevant in the lead-up to its first Mars mission. As the Indian Space Research Organization (ISRO) prepares to launch a spacecraft bound for the red planet on Tuesday, many are wondering: How does a country with one of the lowest development levels in the world justify spending on a space program? Most assume that India's space program is fueled by competition with China's, and that India's dream of becoming the first Asian nation to the reach the red planet has more to do with establishing regional dominance than with scientific inquiry.
There may be something to that argument, given that the goal of this Mars-bound spacecraft is to orbit the planet in search of methane -- the presence of which would indicate potential for life. It would be a worthwhile scientific endeavor, if NASA's Curiosity rover hadn't already accomplished it.
Given the perceived redundancy of the mission, many have wondered whether the government should divert funding from its space programs to human development efforts.
Saudi Arabia has long relied on foreign workers to fill millions of low-paying construction, clerical and service jobs, in many cases illicitly. But as the government cracks down on illegal workers, tens of thousands of Filipino and Indonesian migrants are being forced to leave the country by November 3, or face up to two years in jail.
In response, senior Philippine officials flew to Saudi this week to negotiate the repatriation of 5,000 Filipino laborers who still have not been issued exit permits five days before the deadline, while Vice President Jejomar Binay wrote to Saudi King Abdullah pleading for more time. Indonesia, meanwhile, expects to repatriate 18,000 migrant workers, only 4,000 of whom have obtained exit permits. The repatriation process is costly for both governments and workers: The Philippine Department of Foreign Affairs has offered to shoulder penalties and fines imposed upon their citizens in Saudi, and opened a temporary shelter in Jeddah for undocumented mothers and children; the Indonesian government is trying to facilitate low-cost flights for its citizens.
The Saudis' crackdown on foreign workers is part of a broader push to create more jobs for its own citizens. The government began prioritizing job creation in 2011, in an effort to stave off popular unrest (At the time, 25 percent of Saudi youths were unemployed), and instituted a "Saudization" policy. Now, fewer firms are allowed to employ foreign workers and, because migrant laborers require employer sponsorship to obtain work permits, many lost their legal right to remain in the country. (Some were already in the country illegally, having entered with the help of recruiters who operate outside the regulatory system). Since then, more than 800,000 migrant laborers have been deported.
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In China's battle between cupcakes and Communists, the cupcakes appear to be winning. While Chinese President Xi Jinping promotes the "Chinese Dream" of national rejuvenation with mixed success, the U.S. sitcom 2 Broke Girls has drawn Chinese audiences by depicting a more modest dream: the chance to open a cupcake shop.
First airing in the United States in October 2011, 2 Broke Girls tells the story of Max and Caroline, two 20-something women who wait tables at a diner in New York City while saving to open their own cupcake shop. The show's first season appeared on Youku, China's YouTube, in August 2012, and has risen to become the most popular U.S. sitcom on the site, with over 81 million views.
Perhaps Chinese viewers prefer 2 Broke Girls because they can empathize with the characters, who work hard for low pay. In 2012, the average Chinese took home a little less than $4,000 of income, according to official figures. One fan commented on Weibo, China's Twitter, that she wanted to be like Max and Caroline. "Although they are poor," she wrote, "They work hard together to achieve a shared dream."
While wages are much higher in China's urban areas, the country's income gap and the rising cost of living have many worried that hard work will not translate into success, or even security. For these people, 2 Broke Girls represents the dream of a meritocracy. One Weibo user wrote that she felt 2 Broke Girls was about girls "at the lowest tiers of society" pursuing their dreams "with bravery and determination." Millions of Chinese, especially university students and recent graduates facing a tough job market, admire the protagonists' optimism and positive attitude in the face of adversity.
The show depicts a more avowedly individualistic aspiration than the Chinese Dream, which Xi defined in November 2012 as "the national rejuvenation of the Chinese people." The Economist noted in May 2013 that the Chinese Dream contains elements of the American Dream, but also "a troubling whiff of nationalism and of repackaged authoritarianism." On Weibo, some have criticized the official definition, maintaining that the Chinese Dream should focus more on improving overall quality of life and less on the country's GDP.
The Chinese Dream and what can perhaps be called the Cupcake Dream are not mutually exclusive. Numerous senior officials have emphasized the importance of an entrepreneurial spirit, but in the service of nationalism. By contrast, 2 Broke Girls has not appealed to Chinese nationalist sentiment. If anything, Chinese viewers might be offended by the show's stereotyping of its Asian character -- the New Yorker described 2 Broke Girls as "so racist it is less offensive than baffling."
Yet fans of the show in China are drawn in by its feel-good message. "I don't just watch 2 Broke Girls for fun," one viewer explained on Weibo. "I am studying the spirit with which they pursue their dream. At the end of every episode, when they count how much they've saved, I feel an indescribable positive energy. The girl who grew up rich can pick herself back up even though she lost all her money. The girl who grew up poor still has a positive outlook and sharp tongue." The viewer concluded by asking, rhetorically, "Why on earth shouldn't I pursue the life that I want to live?"
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Women of the world: pack your warmest sweaters, and head immediately to Iceland. According to a newly-released report from the World Economic Forum[pdf], Iceland is the #1 country in the world for gender equality, for the fifth year in a row. And that equality is helping propel Iceland and its fellow Nordic nations to new economic heights. Turns out, the smaller the gender gap, the more economically competitive the nation. Even when that nation is totally freezing.
The notion that gender equality drives development (rather than the other way round) has been so widely celebrated in recent years that it begins to seem trite. But as the newly released 2013 Global Gender Gap Index -- which measures gender parity in 136 countries -- reminds us, gender equity isn't simply a matter of equal rights. It's a matter of efficiency. Many countries have closed the gender gap in education, for example, but gender-based barriers to employment minimize their returns on that investment; Their highly educated women aren't working. The highest ranking countries in the index have figured out how to maximize returns on their investment in women, and are consequently more economically competitive, have higher incomes, and higher rates of development.
The report notes a strong correlation between Global Gender Gap Index rankings (which measure health, education, labor political and participation) and measures of global competitiveness, as the graph below illustrates. The smaller the gender gap, the better off the economy. Perhaps it's no surprise that less-developed nations lke Yemen and Pakistan are near the bottom of the Index. What's more surprising is that relatively economic powerhouses like Turkey and Japan are right there in the basement with them.
Take the Philippines. It ranks #5 on the Global Gender Gap Index, higher than any other Asian nation. It's the only country in Asia that has fully closed the education gender gap, and its labor force boasts growing ranks of women workers, especially professionals and managers. Not surprisingly, the Philippines is now the fastest growing economy in Asia, having recently edged out China (#69 on the index). There are many reasons for this, including macroeconomic policy reforms under Aquino, but the role of a large, educated and diverse work force shouldn't be discounted; Indeed, gender parity in Filipino education and labor preceded recent economic growth.
Though not exactly analogous, something similar is playing out in the corporate world. A 2012 report by Credit Suisse found that companies with at least one woman on the board outperformed those without by about 26 percent. A 2012 report by McKinsey & Company similarly found that companies with more diverse boards boasted higher profit and higher returns on equity than others. It could be that better performing companies are in a better position to give women a chance, but the researchers at Credit Suisse suggest that simply diversifying the leadership pool can generate surprisingly positive results.
So, what are the highest ranking countries doing right, exactly?
One major factor, which the report notes every year, is that high ranking countries "have made it possible for parents to combine work and family, resulting in high female employment, more shared participation in childcare, more equitable distribution of labor at home [and] better work-life balance for both women and men."
Meanwhile, in the United States, the notion that women could conceivably someday successfully combine work and family is still constantly under debate. Incidentally, the U.S. dropped one place in the rankings to #23 -- below Burundi, Cuba and, god forbid, Canada.
The lowest ranking country is Yemen, which has only closed about half of its gender gap. Japan fell four places to #120, due in part to a widening gap in political participation: The number of women in parliament fell from 11 percent to 8 percent during the past year. And, though Japan has made significant investments in education over the years, it has not removed barriers to employment for women meaning it has yet to cash in on this investment. The report argues that simply closing the gap between male and female employment in Japan would boost GDP by up to 16 percent. Turkey remains among the lowest ranking countries in Europe. Despite some gains in literacy, educational enrollment and labor force participation, the country still has fewer women professionals, managers, and politicians relative to other European nations.
In short: It's awesome to be a woman if you're in Iceland. In Yemen, not so much.
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The lure of K-pop and the easy availability of cosmetic surgery have nearly doubled the number of tourists to South Korea in the past few years. But soon discerning travelers may flock to the country's shores for a new reason: nude beaches.
Officials from the northeast province of Gangwon are hoping to open the nation's first nude beach by 2017, in an effort to draw tourists away from South Korea's more popular -- and notably warmer -- western beaches. At first blush, the combination of cold water and naked flesh seems problematic, but officials are confident that the novelty of the beach will trump its chill. ''As vacation cultures diversify, the interest in conventional beaches is decreasing," one official told the Korea Times. "This is part of our plans to create beaches with specific purpose, like a beach for families, a beach for couples, a beach for pets, and yes, a nude beach."
The idea is part of a broader effort to boost tourism in South Korea, which already has its fair share of novel attractions. Annual mud festivals (like the one pictured above) draw both internal and foreign tourists to South Korea's beaches. The number of foreign tourists coming to Seoul's Beauty Belt for cosmetic procedures has increased fivefold since 2009. Tourism surged to new heights in 2012, following the global success of PSY's K-pop single "Gangnam Style."
Officials keen on prolonging the trend are devising increasingly clever ways of attracting new visitors. Last week, the tourism board unveiled a new, "Gangnam Style" tourist police force styled by one of PSY's own designers. At the launch, a police drill team even performed the horse-riding dance from the "Gangnam Style" video.
Seoul's tourism board also hired director Park Chan-wook, who is known for producing incredibly violent films like Vengeance and Old Boy, to create a promotional video for the city. Though Park says that video likely won't feature death or killing, he acknowledges that the final product will be "perfectly unpredictable."
Obviously, tourism officials in South Korea aren't afraid to get creative. But the nude beach remains a long shot. In 2004 and 2009, municipal leaders attempted to open nude or clothing-optional beaches in South Korea, but both proposals failed due to lack of public support. Gangwon officials acknowledge that South Koreans may be reluctant to embrace the idea, let alone the practice, so they're mulling over a plan to open the beach exclusively to foreign tourists. Foreigners, they reason, might be less shy about stripping down, and this could have a liberalizing effect on the local population.
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As fears mounted this week about a possible (and now, it seems, averted) U.S. government default, the U.S. press stumbled upon an Oct. 13 editorial in Xinhua, China's largest news agency, calling for a "de-Americanized world" in light of Washington's fiscal dysfunction. News outlets including CBS, USA Today, and Bloomberg picked up the editorial, while the Los Angeles Times ran a story with the headline "Upset over U.S. fiscal crisis, China urges a 'de-Americanized world.'" CNBC emphasized that Xinhua was a "government voice," and that the editorial was "government propaganda" intended for local readers. The op-ed hit something of a sweet spot for shutdown-traumatized Americans, touching on, as Max Fisher at the Washington Post put it, "the dual American anxieties that we are letting down the rest of the world and that China is finally making its move to replace us as the global leader."
But what much of the coverage failed to mention is that the article appeared on Xinhua with the byline Liu Chang, indicating that the editorial more likely represents the views of Liu (who is identified simply as a "Xinhua writer") and his colleagues rather than China's top leaders, or "China" itself. The op-ed does not claim to reflect broader Chinese views, and just because an article appears in Xinhua does not mean it represents the views of the Communist Party (which, as an organization of tens of millions of people, does not speak in one voice). China's Ministry of Foreign Affairs issued its last official comment on the fiscal showdown in Washington on Oct. 9: "China and the U.S. are economically intertwined and inseparable. We hope that the U.S. can resolve this issue and ensure the security of Chinese assets in the U.S." Admittedly, "Xinhua Journalist Calls for a 'De-Americanized World'" makes for a less compelling -- if more accurate -- headline.
Xinhua also published the editorial in English only, which suggests it was directed at an international rather than a domestic audience. In fact, there was virtually no mention of the article in Chinese -- until, that is, U.S. media began responding to the provocative op-ed. By Oct. 16, there were at least 15 articles in major Chinese-language media outlets on the international response to the piece. Xinhua published one titled, "Incisive wording of Xinhua's call for 'de-Americanization' surprises American media," and the Communist Party mouthpiece Global Times' top headline on Oct. 16 was "Washington Worried by 'de-Americanization' editorial run in China's state-run media." In other words, for Chinese state-run media, the international reaction to the editorial was more newsworthy than the editorial itself.
Despite all the international attention, the call for global de-Americanization didn't make a big splash among Chinese readers. China's criticism of America's role in international affairs is nothing new, and many Chinese readers felt the Xinhua editorial was unremarkable. As one user of Weibo, China's version of Twitter, wrote in response to the Xinhua editorial, "The articles of certain media outlets are like the farts of a dog: There's no need to pay them any mind."
Predictions about the potential effects on the global economy of a U.S. default have verged on the apocalyptic. This weekend, World Bank President Jim Yong Kim characterized the possibility as "disastrous" for both the developing world and developed economies, while International Monetary Fund Managing Director Christine Lagarde argued that a default "would mean massive disruption the world over." Financial leaders speculate that a failure to raise the debt ceiling could trigger higher interest rates, stalled growth, or even a global recession reminiscent of (or worse than) the one caused by the collapse of Lehman Brothers in 2008.
But not all economists are ready to jump on that bandwagon (which is not to say that they necessarily sympathize with the GOP's vocal camp of "default deniers"). Some maintain that a partial, or technical, default (meaning the government would pay some of its debts late) would be short-lived, if still potentially catastrophic. And others argue that the consequences of such a default would be much tamer than headlines suggest.
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Asian markets seemed pleased by the news, which broke Tuesday evening (or Wednesday morning, Asia time) that President Obama would nominate Janet Yellen for the position of Fed chair this afternoon. Policymakers in the region, who'd been cheering for her, spoke warmly of the selection -- mostly because the relatively dovish Yellen is seen as someone who'll be slower to roll back the easy money policies of her predecessor, giving Asia more time to prepare for the day the greenback spigot turns off.
But Yellen also has something of a special relationship with the region, which Bank of Japan Deputy Governor Hiroshi Nakaso alluded to when he told the Wall Street Journal that "we already have a relationship of mutual trust with each other." Yellen spent six years, from 2004 to 2010, as president of the Federal Reserve Bank of San Francisco, a position that involved traveling to Asia at least once a year on fact-finding missions, and brought her to countries across the region from South Korea to Vietnam to India. The reports she produced after each trip are typically brief -- and sometimes rather dry -- accounts of the state of each country's economy and the challenges it is likely to face. But they do give us an occasional hint about the likely new Fed chair's thoughts on the world's most economically dynamic region.
There's no end in sight to the standoff on Capitol Hill, and that had markets reacting with something of a nervous laugh on Tuesday.
If market graphs could speak, they might be asking lawmakers in Washington something like the following: "You maniacs! You're not actually thinking of going through with this are you?"
The lack of a resolution to the impasse in Washington has raised the very real prospect that the U.S. government might default on its debt, a reality reflected in the markets today.
On Tuesday afternoon, President Obama went before reporters at the White House to press his case for an end to the stalemate, one that would require recalcitrant Republicans in the House to back off their demands to roll back the president's signature health care overhaul. That has created a situation in which what seemed like the impossible -- that the U.S. government would stop paying its bills -- now seems possible.
Curious what a burgeoning era of political lunacy might mean for world markets? Here's your preview.
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Myanmar's economy has always run on cash -- thick bricks of it, used by residents to pay for everything from household sundries to homes and cars. That's slowly changing as global banks and financial services giants trickle into the country -- but even in Yangon, Myanmar's commercial capital, ATMs remain scarce and few businesses accept foreign credit cards. For those who bank with local Myanmar institutions, plastic is still a distant dream.
All of which makes the launch Tuesday of the country's first-ever bank card a minor but significant victory. Offered jointly by Myanmar's Cooperative Bank (CB Bank) and MasterCard, the reloadable prepaid card is intended only for accountholders traveling abroad. For now, that's a small group: Just one in five Myanmar residents vacationed outside the country during the past year. Meanwhile, less than 10 percent of all residents have a bank account, in large part due to public distrust of the banking system.
For now, the cash spigot in Washington, D.C. will remain wide open and continue spewing dollars onto global markets.
On Wednesday, Chairman Ben Bernanke announced that the Federal Reserve's massive bond-buying program -- better known as quantitative easing -- will continue for the foreseeable future, a surprise move that sent stock markets to record highs.
Emerging market currencies and stock markets also rose on the news, and in all likelihood more than one central banker in the world will be lighting candles tonight at his shrine to Bernanke.
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Europe's four-year economic collapse has left an indelible scar on the continent, and the depressing data-points documenting its decline just keep rolling in. On Thursday, a Spanish suicide help-line reported that it saw a 30-percent increase in the number of calls it fielded in 2012. With a quarter of the Spanish population and half of its youth out of work, despair is just around corner for Spaniards these days, and Thursday's numbers offer a glimpse of what has become one of the more dismal sub-plots of the eurozone recession: a marked increase in the number of suicides.
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On Wednesday, Eurostat released statistics showing that the eurozone economy has finally exited its 18-month recession, growing by o.3 percent in the second quarter of 2013. That sound you're hearing is a collective sigh of relief from the European policymakers who have somehow managed to shepherd the continent through its agonizingly slow-moving crisis.
So does this -- coupled with other recent good news, such as Greece's surprising budget surplus -- mean that the eurocrisis is finally receding? Not exactly. "There are still substantial obstacles to overcome: the growth figures remain low and the tentative signs of growth are still fragile," European Commission Vice President Olli Rehn cautioned today.
Here, in graphic form, is a guide to the considerable challenges still facing the European economy.
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Late Wednesday evening, the lower house of Uruguay's legislature passed a bill providing for the establishment of a fully legal, regulated marijuana market. If the bill is approved by the Senate -- a likely outcome, given the ruling Broad Front's sizeable majority in the chamber -- the tiny Latin American country will become the first to fully legalize the growth, sale, and distribution of the world's most popular illegal drug.
The passage of the bill has been controversial inside and outside the country. Polls consistently show that the majority of Uruguayans are opposed to legalization, and Wednesday's vote only succeeded by a narrow majority of 50 votes to 44. Less than 24 hours after its passage, the legislation drew criticism from the United Nations' International Narcotics Control Board, which warned of "serious consequences for the health and welfare of the population" should the bill become law. But the move has also drawn support from some drug policy activists, who praise its creation of a legal market as an important step toward a more sensible law enforcement paradigm.
Uruguay's marijuana bill differs from liberal drug laws in other countries like the Netherlands and Portugal in that it provides not only for decriminalization of personal possession and use, but also for the legalization and regulation of every aspect of the production and distribution process. The law establishes three categories of cannabis production: home cultivation for personal use, "membership clubs" where small numbers of individuals can establish growing and sharing cooperatives, and licensed private enterprises that will be allowed to grow marijuana commercially. All sales are to be conducted through state-run pharmacies, and a new government agency, the Institute of Regulation and Control of Cannabis (IRCCA), will be established to monitor and regulate consumption, production, and distribution. And -- sorry stoners the world over -- legal purchase is limited to Uruguayan citizens.
The downside (or upside) of creating a market for marijuana, however, is that in order to attract consumers, officially sanctioned marijuana will have to compete with the old illegal stuff in both price and quality. Which means -- you guessed it -- for this bill to work, the Uruguayan government is going to have to start distributing some quality weed on the cheap.
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The city of Detroit has sorrows to spare. Its government -- officially, as of Thursday -- can't pay its bills. Its police don't arrive in time to stop criminals, and its ambulances don't arrive in time to save lives. Its citizens are fleeing in droves. It's likely the most dysfunctional municipality in the United States. All of which got us wondering: If Detroit were a country, would it be considered a failed state?
To answer that question, we reached out to the folks at Fund for Peace, who put together our annual Failed States Index (FSI), for help. They applied their CAST framework and methodology (the same set of indicators they use for the index) to Detroit and -- after pointing out the risks of comparing apples to oranges, and that scoring a country is very different from scoring a non-state entity -- came back with this: With its score of 59.5, Detroit falls into the category of "borderline" states (the higher the score, the worse off the state).
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Another day, another ballooning corruption scandal in southern Europe. On Monday, the former treasurer of Spain's ruling center-right Popular Party (PP), Luis Bárcenas, admitted in court to authoring handwritten ledgers detailing the secret flow of cash from private firms to top-level officials in the PP. Bárcenas also alleged, after months of speculation in the media, that Spanish Prime Minister Mariano Rajoy accepted regular payments from the illegal slush fund.
A day after Bárcenas's damning testimony, the opposition Socialist Party has threatened to call a vote of no-confidence against the prime minister -- a symbolic gesture given the PP's dominant parliamentary majority. And while it's unclear whether the scandal will bring down Rajoy's government, it has played into the common narrative these days about the connection between government corruption and economic stagnation in Europe's periphery. As the BBC notes, the revelations in Spain "have enraged a country in the depths of recession and record unemployment."
But just what is the relationship between malfeasance and economic performance? The answer might surprise you.
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On Monday, the United States and the European Union officially launched talks on creating a new free trade zone -- one that could become the largest in the world, covering roughly $31 trillion in combined GDP and 30 percent of global trade -- by 2014. But while the U.S. and EU may be allies, don't expect the talks to go smoothly. The world's two largest economies don't always see eye-to-eye when it comes to economic and regulatory policy, and bickering over things like gluten and fancy cheese has become something of a tradition.
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In the global economy these days, there are known unknowns, unknown unknowns, and then there's the Chinese credit market.
On the heels of Federal Reserve Chairman Ben Bernanke's announcement Wednesday that the Fed is set to ease its program of large-scale bond purchases, global markets have been in turmoil, which has only been exacerbated by a sudden spike in the Shanghai interbank offer rate. That rate indicates the willingness of banks to lend to one another, and its surprising rise on Thursday has reinvigorated fears that the Chinese banking system is far more rickety than Beijing would like to let on.
The problem is that very little is known about just how much debt Chinese banks have taken on amid that country's infrastructure-fueled growth. This has resulted in fears that a massive credit bubble may be about to pop. If that's true, the results could be catastrophic.
With the economic crisis in Spain (and Europe as a whole) showing few signs of abating, it shouldn't come as a surprise that robberies are on the rise in the country. This is especially true in Spain's agricultural eastern regions, where the large-scale theft of fruit, garlic, and farm equipment is growing more frequent.
In Valencia, whose orange industry has helped Spain become Europe's biggest producer of the fruit, rural thefts rose 20 percent in the first quarter compared to the previous year, according to AVA, the local agricultural association.
AVA forecasts that the robberies could cost the region's farmers, many of whom barely cover their costs from selling oranges, 20 million euros this year, up from 15 million euros in 2012 and 2011, because of lost produce and damage.
To counter the problem, Spain's police have sent in the cavalry, dispatching two squadrons of mounted Civil Guards to the region to help run down thieves.
Though they arrived in late May, as the orange picking season ended, police say the horseback patrols have at least led to a hiatus in crimes, and are effective in startling robbers unable to hear them coming through the fruit trees....
Valencia's Civil Guard - responsible for smaller towns outside the remit of national police - said they had already made 50 arrests related to orange thefts in April, when they began a crackdown. Those charged so far are all Spaniards.
Incidents like these have been common for a few years -- 2011 saw 5,000 more agriculture-related thefts than 2010 -- with criminals operating independently or in gangs to steal produce and equipment for their resale value. More recently, the phenomenon has turned violent, with the death in April of a watchman who was shot while attempting to stop a group of suspected thieves.
The reasons for the thefts range from the obvious to the arcane. It seems hardly worth pointing out that a country with 26.8 percent unemployment will experience a rash of property crime, especially if that unemployment is coupled with cuts to social services on which unemployed people would normally depend. In addition, agriculture is a sector in which defense against theft is difficult, owing to the vast amounts of land that must be policed at all hours -- a problem just as present in California as in Spain -- leaving farmers to fend for themselves with community patrols or hired hands.
On a more local level, Spanish law provides for little more than a slap on the wrist for those convicted of petty theft, which means that robbery could remain lucrative even if you're caught in the act.
The economic crisis and the difficulty of policing vast tracts of land are problems that won't disappear any time soon, and Spain's budget troubles make additional investment in policing or surveillance technologies unlikely. Strengthening the laws for theft could offer the country some relief. But, in the meantime, orange you glad you're not a Spanish farmer?
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Hugo Chávez's Bolivarian Revolution was supposed to offer ordinary Venezuelans political power and social services. On some of these counts, it has at least partially succeeded. On others -- such as the provision of toilet paper -- not so much.
On Tuesday, Alejandro Fleming, the country's commerce minister, announced that the government would make the equivalent of a frantic grocery store run to pick up some rolls. "The revolution will bring the country the equivalent of 50 million rolls of toilet paper," he told the state news agency AVN. "We are going to saturate the market so that our people calm down." (Not that long ago, the "revolution" was promising to provide housing and health care but hey, Marx said something about the importance of toilet paper, right?)
"This is the last straw," Manuel Fagundes, a shopper trying to track down some toilet paper in Caracas, told the Associated Press. "I'm 71 years old and this is the first time I've seen this."
Though the lack of toilet paper represents a new low for Venezuela's reeling economy, this isn't the first time the country has been hit by goods shortages. Staples like cooking oil, sugar, and flour are often missing from supermarkets. Because the government has imposed strict capital controls, Venezuelan companies say they lack the foreign reserves to buy the goods they need on the international market, leaving shelves bare and consumers furious.
These debilitating shortages, which seem like a throwback to the Soviet era, don't bode well for Nicolás Maduro, who won a narrow victory in presidential elections in April. Opposition figures have wasted little time in making hay out of the government's troubles. Responding to this week's toilet-paper proclamation, for example, the opposition academic Alex Capriles quipped on Twitter, "50 million rolls of toilet paper come out to 1.75 rolls per person. These are the great revolutionary solutions." And writing for the paper El Universal, Diego Bautista Urbaneja described the shortages as the central problem facing the Maduro government:
If [Maduro does not possess], as Chávez did, a great ability to shape popular understandings of the country's problems, they will be imposed on the collective imagination more forcefully the more the government fails to interpret the problems correctly, as the result of years of misguided economic policies.
But the government doesn't appear to be taking this latest shortage as an indication that economic reforms are necessary. Look no further than Fleming, the commerce minister, who blamed the toilet-paper shortage on "a media campaign that has been generated to disrupt the country."
Speaking collectively for the media here, I only want to ask Fagundes one question: How'd you know?!
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The world of anti-austerians is abuzz (and maybe somewhat gleeful?) this afternoon about news that a paper by Carmen Reinhart and Kenneth Rogoff -- the paper for those policymakers looking for serious academic work to back up their proposals for debt-slashing cutbacks -- has some serious issues (Josh Keating summarizes those problems on his War of Ideas blog here)
Why is this causing such a stir? One of the conclusions of the paper is that when countries hit a debt-to-GDP ratio of 90 percent, they reach a tipping point after which they'll start experiencing serious growth slowdowns. It's a conclusion that many have found either important or useful, depending on your level of cynicism.
Take a look at some of the ways Reinhart and Rogoff -- and their conclusions -- have been marshaled in the austerity vs. Keynesianism debate that has dominated much of the post-financial crisis discussion about fiscal policy:
This House Budget Committee response to President Obama's budget proposal from just a few days ago cites R&R by name before going on:
Instead of taking steps to reduce the excessive burden of debt, the President's budget, even if fully implemented, never reduces gross federal debt below the important 90 percent threshold.
Olli Rehn, European Commission vice president on Economic and Monetary Affairs and the Euro (and noted austerity champion) pulls out the R&R 90-percent rule in this February call for continued "fiscal consolidation":
It is widely acknowledged, based on serious academic research, that when public debt levels rise above 90% they tend to have a negative impact on economic dynamism, which translates into low growth for many years.
Sen. Tom Coburn (R-OK), in this excerpt from his book, rhapsodizes about a briefing Reinhart and Rogoff gave before a group of forty senators:
"Reinhart echoed Conrad's point and explained that countries rarely pass the 90 percent debt-to-GDP tipping point precisely because it is dangerous to let that much debt accumulate. She said, "If it was not risky to hit the 90 percent threshold, we would expect a higher incidence."
"Thank you for your depressing presentation," Senator Dick Durbin, D-Ill., said in closing, to self-conscious laughter around the room."
These are just a few examples that turned up from a quick search in English -- who knows what a search in Italian, Greek, or German would yield.
When, in 2012, New York Times columnist Paul Krugman chose to title a blog post about Estonia's less-than-stellar economic recovery "Estonian Rhapsody," we should have known that this was no run-of-the-mill fiscal commentary -- but rather an omen of far more dramatic things to come. The slew of angry tweets that the post elicited from Estonian President Toomas Hendrik Ilves included the phrase "Nostra culpa" and provoked mixed responses in the international press, with some glorifying the president and others lambasting his rashness.
Conflict, rhapsodies, Latin -- in retrospect, it's easy to understand why Estonia-based writer Scott Diel and U.K.-based composer Eugene Birman thought this bizarre online feud had the makings of an opera. Their much-anticipated 16-minute production, Nostra Culpa, is set to premier on Sunday at the Estonian Music Days festival.
So how exactly does one go about turning six tweets and a blog post into opera? Foreign Policy caught up with Birman to find out what we can expect.
The opera will be divided into two acts, according to Birman, with the first detailing Krugman's philosophy and the second Ilves's tweets. "I thought the most powerful thing would be to take those things verbatim and oppose them -- not to put them into conversation because there was no conversation," Birman told FP. The two acts are fairly different in style, with Krugman's movement set to loud and fast music and the Estonian president's sung against a more varied and slower score.
For Birman, the decision to separate the exchange into two acts using a single female soloist, Iris Oja, underscores the problems with communication in today's world. "The nature of Twitter for example, or writing an article is that there's no real discussion," he said. "You can respond to something but it's not really a discussion format. They're speaking at each other instead of to each other." In the digital age, where everything is mediated through our computer screens, having one voice speaking directly to the audience does seem fitting.
Diel and Birman hope the opera will stimulate deeper discussion in Estonia about the political and economic issues behind the spat. "Estonia became independent through music," Birman tells FP, referencing the mass singing demonstrations, known as the Singing Revolution, that helped the country peacefully overthrow the Soviet government. "There is something Estonian about this -- that we're using music to have a discussion about what the political policy of Estonia should be," he says.
But more than anything, the opera's purpose is to highlight the absurdity of all the squabbling over economic recovery -- and in particular the terms so often thrown about by pundits. Librettist Scott Diel achieves this by transforming Krugman's 70-word blog post into a series of almost tweet-like phrases imploring the Estonians to follow his advice. "There's this line in the libretto that says stimulate over and over again and it becomes almost sexual," Birman says. "The words when you take them out of their context become really strange."
One of the stranger moments comes in the second movement, when in adapting Ilves' sarcastic tweet "Let's sh*t on East Europeans," the singer will make a high-pitched whistling sound with her voice in place of the asterisk.
While Birman concedes the content is amusing, he cautions "in the end there's nothing really funny about what they're discussing. If you think about it, if you look at the words and you look at the argument, then it's pretty ridiculous. But that makes good theater." We won't argue with that.
Here's the libretto in full, as written by Scott Diel:
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A day after President Obama announced that he will give back five percent of his salary this year in solidarity with federal workers facing furloughs, skimming $20,000 from his $400,000 annual wage, other U.S. political figures are following suit. On Thursday, Secretary of State John Kerry pledged to donate five percent of his salary to charity. Attorney General Eric Holder, meanwhile, was a bit more tepid, offering to give back a portion of his salary if the Department of Justice faces furloughs.
While Obama -- who himself was following in the footsteps of Defense Secretary Chuck Hagel -- may be at the forefront of the current trend in the United States, he's hardly the first world leader to stomach a self-imposed pay reduction during tough economic times, and his voluntary cutback is certainly not the most dramatic.
In 2010, for instance, British Prime Minister David Cameron agreed to trim his earnings by £7,500 (roughly $11,400) when his coalition took over. While this also amounted to about five percent of his salary -- that salary was significantly lower than Obama's at £150,000 (around $230,000). And rather than a one-off pay cut, Cameron's belt-tightening was part of a long-term, government-wide move toward austerity.
Two years later, Lee Hsien Loong, the prime minister of Singapore, accepted a 36-percent cut in annual income, which seems pretty drastic until you consider that the reduction still left him earning a comfortable $1.7 million a year. While the Singaporean government has long held the belief that inflated salaries curb corruption and draw talented people to public service, they ultimately caved to pressure from voters and adjusted wages for all of the country's top leaders. Even with the pay cut, however, the prime minister remains the highest-paid elected head of state.
Still, there's no more radical example of personal sacrifice among world leaders than José Mujica, the notoriously low-maintenance president of Uruguay, who donates 90 percent of the roughly $144,000 he earns a year to charity. Mujica shuns the typical presidential perks, living on a farm with his wife and tending the land themselves. Barack and Michelle might not be up for that lifestyle. But as far as symbolic gestures go, it definitely makes the president's five-percent cut look a bit paltry.
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After his appearance on a BBC radio program Monday, British Work and Pensions Secretary Iain Duncan Smith probably wishes he could eat his words -- because now he may not be eating much of anything for a year. Smith said in the interview that he could survive on £53 ($80) a week -- the amount one welfare recipient complained he was forced to survive on after his housing stipend was cut -- and now Britons are asking him to prove it. As of Wednesday morning, roughly 350,000 people had signed a petition on Change.org urging the secretary to make good on his pledge.
The petition calls on Smith to stick to the budget for "at least one year," thereby helping to "realise the conservative party's current mantra that 'We are all in this together.'" Doing so would require him to take a 97-percent salary cut while living in London, one of the world's most expensive cities.
Smith has been less than enthusiastic about the petition, which he called a "complete stunt" in an interview with the Wanstead & Woodford Guardian. The demand "distracts attention from the welfare reforms which are much more important and which I have been working hard to get done," he said.
If he warms to the idea, however, Smith won't be the first politician to take a trial run on the dole. In 2012, Jagrup Brar, a member of British Columbia's Legislative Assembly, spent a month living on $610, the province's welfare rate for a single, unemployed adult. After the last night of the month, which he spent "couch surfing," Brar was 26 pounds lighter and $7 in debt -- even after selling his backpack to buy a train ticket home.
Cory Booker, mayor of Newark, N.J. pulled a similar stunt several months later, living on the equivalent of food stamps for a week. The mayor was forced to cut caffeine out of his diet, eat "singed" yams for lunch, and consider "making a meal out of mayonnaise and salsa."
As appealing as it sounds, Smith may not be interested in the politics of empathy, having already gone through two real periods of unemployment in the 1980s. As he said in an interview Tuesday, "I know what it is like to live on the breadline."
We here at Foreign Policy had been preparing for the day Cyprus's banks reopened by collecting pictures of bank runs from around the world -- on the chance that this morning we'd wake up to long lines of frantic depositors.
But with headlines like "Euro Rises Amid Cyprus Calm" and "All Is Calm as Cyprus Banks Re-Open After 12 Days," that idea has sort of fizzled out. (Come back to this space next time there really is a bank run, though, for some great pictures!)
So instead, we present you with this: a Cyprus so calm that a man feels comfortable standing in front of a bank with a parrot on his head.
Yiannis Kourtoglou/AFP/Getty Images
Last month, we posted interviews with the authors of the books nominated for the 2013 Gelber Prize, a literary award for the year's best non-fiction book in English on foreign affairs sponsored by the Munk School of Global Affairs at the University of Toronto in cooperation with Foreign Policy. The panel of five jurors -- William Thorsell, Gaynor Lilian Johnson, Walter Russell Meade, Margaret Wente, and FP's own Dan Drezner -- reviewed books on topics as varied as nuclear politics, the rise of the Soviet Union, and the legacy of the British empire.
Today, Patricia Rubin, president of the Lionel Gelber Prize Board, announced that the 2013 Gelber Prize will go to Chrystia Freeland for her book Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. Thorsell, the jury chair, explained the decision, saying, "Plutocrats took the prize for its immediacy and authority about the future -- the world that we must comprehend and hope to manage in radically new circumstances." Here's the full jury's citation:
In Plutocrats, Chrystia Freeland describes the evolution of a new global elite of unprecedented economic, social and political power. This mobile, denaturalized community affects the lives of billions as its wealth and values distance it from even the wealthiest of societies. Freeland explores consequent issues of equity and accountability with fluency and intimacy, capturing the human dimension of a powerful and disturbing phenomenon.
Egyptian President Mohamed Morsy has spent the past three days in India on his first state visit to the country. Before heading to New Delhi, though, he floated an odd -- and more than a little ambitious -- idea.
"I am hoping BRICS would one day become E-BRICS where E stands for Egypt," he told India's The Hindu in an interview in Cairo published this week.
It's a bold proposal. The Kremlin has acknowledged the comments but didn't seem particularly enthused about the idea, and it's unclear whether Morsy broached the subject in his meetings with Indian Prime Minister Manmohan Singh. The BRICS -- that's Brazil, Russia, India, China, and South Africa -- are an economic alliance of top-tier rising powers, the crème de la crème of the developing world. Egypt? Not so much.
Let's put this in perspective. The average GDP of the BRICS countries in 2011 (in current U.S. dollars, according to the World Bank) was $2.78 trillion dollars. Egypt? $230 billion. The country's development isn't exactly in high gear, either. The instability of the revolution has dealt a blow to Egypt's economy, and its estimated growth rate for 2012 is a meager 2 percent, which places it behind four of five BRICS countries. Even as Morsy was meeting with Singh, he was sharing the front page of Egyptian dailies with the news that BMW, Mercedes-Benz, and Hyundai are planning to withdraw from the Egyptian market as new customs laws take effect.
Morsy knows this, and clarified that he hopes "the E-BRICS would emerge when we start moving the economy." So it's something of a longer-term goal. Perhaps Morsy might consider one of these starter coalitions instead? Then again, the MIKT (Mexico, Indonesia, South Korea, Turkey) countries, which are moving beyond "emerging market" territory, have an average GDP of $973 billion, so it might still be a stretch. In the same interview with The Hindu, Morsy expressed a desire to be more active in the Non-Aligned Movement. It's probably a good place to start; the NAM is far less discriminatory.
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