BENEATH a lustrous 33-metre bronze statue of Guanyin, the Buddhist bodhisattva of mercy, a young monk on Mount Putuo tallies the cash donated by visiting faithful: “Daily, anywhere between tens of thousands and hundreds of thousands of yuan,” he says (100,000 yuan is a little under $16,000). Over 8m trips are made yearly to the tiny islet in Zhoushan city, about a four-hour drive from Shanghai (11m visited Shanghai Disneyland in its first year, after it opened in 2016). When it comes to temple fundraising, the monk is resolute. “The traditional way is the best way,” he says.

The Putuoshan Tourism Development Company has other ideas. A state-owned enterprise whose biggest shareholder is controlled by the government of Zhoushan and some state asset-management firms, it manages tourist facilities in the location, such as ferries, cable cars and joss-stick shops. Since 2012 it has mulled an initial public offering (IPO) of these services on Shanghai’s stock exchange; last year it...Continue reading
First published here: http://j.mp/2Hu7ZUB

GLOBAL deals may be growing at a rapid clip, but they seldom offer instant gratification. Qualcomm, an American chipmaker, first bid for NXP Semiconductors, a Dutch company, in October 2016. The union has since been blessed by eight regulators worldwide, but one hurdle remains: China. With no decision yet from its regulator, the companies, which were expecting to have closed the $44bn deal this week, now hope to conclude it by July. The purchase of the chip unit of Toshiba, a troubled Japanese company, by a consortium led by Bain Capital, an American private-equity firm, is similarly awaiting sign-off from China.

Some suspect the delays stem from the threat of a trade war with America. Holding back regulatory approval, particularly on sensitive high-tech deals, could be part of the arsenal in any trade conflict. Organisational change may also be to blame. Fay Zhou, who works in Beijing for Linklaters, a law firm, points out that a recent reshuffle, which took merger reviews away from the commerce ministry...Continue reading
First published here: http://j.mp/2r4f96S

ECONOMISTS have spent the past decade wringing their hands over the health of the euro area’s economy. Last year, in a welcome respite, it expanded by a robust 2.3%, outstripping forecasts and matching America’s growth rate. But it has appeared less rosy-cheeked since.

Symptoms include moderation in a number of monthly indicators. Industrial production fell in January and February, as did business confidence; retail-sales growth was disappointing. The purchasing managers’ index (PMI), an output survey regarded as a good early indicator of GDP growth, has fallen from exuberant—and perhaps unsustainable—levels at the turn of the year, though it still points to decent growth (see chart).

Germany, the bloc’s largest economy, has not been immune. A summary indicator compiled by the Macroeconomic Policy Institute, a German think-tank, which includes production, sentiment and interest-rate data, suggests that the probability of a recession has risen, from 7% in March to 32% in April. A...Continue reading
First published here: http://j.mp/2HtHazP

THE rise of the big tech firms is easy to spot in downtown Chicago. Apple’s minimalist store looms over the riverfront, close to a skyscraper carrying the name of another omnipresent brand—Trump. At a bus stop a Facebook advertisement promises that its new algorithm will combat fake news. On the Magnificent Mile’s digital hoardings Google urges pedestrians to swoon into the arms of its voice-activated assistant.

Inside the University of Chicago, a bastion of free-market thinkers and of free speech, tech has become more prominent, too. On April 19th and 20th most of America’s antitrust establishment—officials, economists and lawyers—as well as a smattering of Silicon Valley types, gathered to discuss whether big tech needed to be tamed. The conclave came just days after Mark Zuckerberg, Facebook’s chief, testified before Congress.

One Facebook executive was brave enough to show his face in Chicago, bearing the smile of someone stuck at the dentist for two days without...Continue reading
First published here: http://j.mp/2r5AD3l

THE concept of a universal basic income (UBI), an unconditional cash payment to all citizens, has in recent years captured the imagination of a wide spectrum of people, from leftist activists to libertarian Silicon Valley techies. Proponents see a neat solution to poverty and the challenges of automation; detractors argue it would remove the incentive to work. Trials of UBI have been launched, or are about to be, in several countries. Most are publicly funded, although Y Combinator, a Silicon Valley startup accelerator, is starting a privately funded experiment in America.

Finland was one of the first movers. In January 2017 it began a trial for 2,000 people, each receiving €560 ($680) a month. That drew legions of foreign journalists and camera crews. This week, however, international media attention abruptly centred on the ending of the experiment in December 2018. Headlines suggested that it had been “scrapped” or had “failed”. The truth is more nuanced.

The trial...Continue reading
First published here: http://j.mp/2Hu7ObT

Parag Pathak penned a pupil-picker paper

BOSTON parents were fed up. To get their children into public schools they had to submit a list of their preferences. Spots were allocated first to those who put a school top. Only then would schools consider pupils who put them second or third. Sounds fair? Hold on. The best schools are popular. Picking them risks rejection. Good schools are sought after, too. If put second they may also fill up, leaving only places at worse schools. Should parents aim for the best and risk mediocrity, or settle for the good?

On April 20th the American Economic Association (AEA) awarded the John Bates Clark medal, given annually to a leading economist under 40, to Parag Pathak of the Massachusetts Institute of Technology. He researches market design—eg, creating mechanisms to allocate resources without money, such as school places in Boston. Solutions he devised there have been applied widely, from New York to New Orleans. The AEA says...Continue reading
First published here: http://j.mp/2r2mMLi

THE notion that the gentle flap of a butterfly’s wings can cause chaos on the other side of the world is well known. But commodity markets have been tested in recent weeks by what could be called the 800-pound-gorilla effect: the idea that chest-beating in the White House can unleash turmoil in global metals, agricultural and energy markets.

President Donald Trump has slapped sanctions on Russia’s biggest aluminium producer, Rusal, intensified a trade tiff with China and tweeted a gibe against OPEC, the oil-producing cartel. His actions have shaken commodity markets at a time when speculation in futures is near the record heights of 2012, making markets even more volatile (see chart). Aluminium, nickel and palladium prices have soared and then plummeted. Soyabean markets are under threat. Oil prices are at their highest levels for more than three years.

TECHNOLOGY has transformed finance. Consumers bank and buy their insurance policies online. They use technology to manage their pensions and other investment portfolios. But can tech improve returns? Only if it is used wisely.

If it is cheaper to trade, then costs will take a smaller chunk out of long-term returns. Technology also allows fund managers to replicate stockmarket indices, giving investors access to broadly diversified equity portfolios for a fraction of a percentage point in annual fees.

But the ease and cheapness of trading, along with the vast range of options available, create a terrible temptation. Worldwide there are nearly 7,400 exchange-traded funds (ETFs) and related products. These funds are not used only by “buy and hold” investors. Nearly half of the top 20 traded securities on American markets, by value, are ETFs.

Just because you can trade does not mean you should. And just because there is a fund specialising in smaller Vietnamese companies, or one...Continue reading
First published here: http://j.mp/2qYhlgi

MICROECONOMISTS are wrong about specific things, Yoram Bauman, an economist and comedian, likes to say, whereas macroeconomists are wrong in general. Macroeconomists have borne the brunt of public criticism over the past decade, a period marked by financial crisis, soaring unemployment and bitter arguments between the profession’s brightest stars. Yet the vast majority of practising dismal scientists are microeconomists, studying the behaviour of people and firms in individual markets. Their work is influential and touches on all aspects of social policy. But it is no less fraught than the study of the world economy, and should be treated with corresponding caution.

For decades non-economists have attacked the assumptions underlying economic theory: that people are perfectly informed maximisers of their own self-interest, for instance. Although economists are aware that markets fail and humans are not always rational, many of their investigations still rely on neoclassical assumptions as “good...Continue reading
First published here: http://j.mp/2HtGQ45

The new NAFTA model has many moving parts

ONE year ago, a member of President Donald Trump’s administration drafted a short executive order to withdraw America from the North American Free-Trade Agreement (NAFTA), a trade deal with Canada and Mexico. The obvious interpretation was that Mr Trump was irresponsibly bullying the Mexicans and Canadians into giving America better terms. A kinder view held that he was aiming at a domestic audience. Congress was dragging its feet at the time over the confirmation of Robert Lighthizer, the president’s chosen trade negotiator. Mr Trump’s threats were a way to kick it into action.

One year on, with Mr Lighthizer long since in place, America’s attitude to NAFTA seems no less hostile. Its threat of withdrawal still hangs over the talks, and in March Mr Trump waved the stick of tariffs on steel and aluminium in case a deal to revise NAFTA could not be reached by May 1st. This tough talk may yield an agreement within the next few...Continue reading
First published here: http://j.mp/2r5ADjR