Economist (2007-8) (1회차 수업 background)

[charliek]

READING LEVEL-UP(1/4회), AUGUST, 2007                TERMS & BACKGROUND         INSTRUCTOR KIM SOO-YEON

Cloud, or silver linings?

FOR intriguing evidence of the way Japan's 127m people (1)are g***ing faster than any others on earth, look at the boom in pokkuri dera. Pokkuri is an onomatopoeic word for a sudden bursting, while a tera or dera is a Buddhist temple.

(2) More dramatic evidence of the a***** e***** may come with (3) n********* elections on July 29th. (4)Japan's o**** voters have the ability, for probably the first time in democratic history, to humiliate and (5)even b**** (전치사) a government, that of Shinzo Abe, prime minister since September 2006. (6)The elections are (전치사) h*** the seats in the u**** house of the **** (parliament), and are ordinarily something of a political sideshow: after all, it is (7)the l**** house that chooses the prime minister. (8) A g****** election in 2005 gave (9) the r***** c******** led by the Liberal Democratic Party (LDP) an easy majority. Yet these elections, in which the coalition may (10) lose its upper-house m*******, (11) have become a vote of c********* (전치사) Mr Abe, whose (12)p*** r*****s have slithered since almost the moment (13) he c*** to o*****.

While the prime minister's priorities are patriotic ones—instilling a sense of national pride in schoolchildren and pushing for (14) a revision of Japan's p******* constitution—(15)those of o******* Japanese lie with b****-and-b***** issues. (16)The economy is now (전치사) its f**** year of recovery after a decade-long slump, but (17)d***** jobs are still s****. As for pensions, everyone knows that (18) a s*****ing workforce supporting an ever higher number of retired people (19) adds (전치사) an already s*****ed budget.

In this context, a fiasco that was uncovered in May at (20) the government a***** that h*****s pensions could not have come at a worse time for Mr Abe. The agency, which appears never (21) to have c*** to t****s with the digital age, is unable to match 50m computerised pension records to people who have (22) p*** into public s*****s. A further 14m records, it seems, never made it into the computer system at all.

If disgruntled voters punish the ruling coalition on July 29th (23) with a h**** loss of seats, then the LDP may seek a new leader. If Mr Abe survives as prime minister, he will be under pressure (24) to f*** a government of a different h**, one that (25) brings l********* issues to the f***. Either way, (26) g*** power will have e********ed itself as a force to be r*****ed with.

Certainly Japan is (27) g***ing at an astonishing r***. Shortly after the second world war the proportion of Japanese over 65 was around 5% of the population, (28) e***** below that in Britain, France or America. Today (29) the e****** account for one-fifth of the population, and (30) average l*******s have g**** remarkably. Life expectancy today is 82, up from a little over 50 in 1947.

1.        세계 어느 나라보다 빠른 속도로 노령화하다

2.        노령화가 미치는 영향의 좀 더 극적인 예

3.        총선

4.        일본의 노인 유권자들

5.        정권을 몰락시키다

6.        이번 선거에서 참의원 전체 의석의 반을 뽑게 된다

7.        중의원

8.        2005년 총선

9.        자민당이 이끄는 집권 연정

10.     참의원에서 다수당 지위를 잃다

11.     아베에 대한 신임 선거 성격이 되다

12.     지지도

13.     취임하다

14.     일본의 평화헌법 개정

15.     일본 국민들의 최우선 문제는 먹고 사는 문제이다

16.     경제가 5년째 연속 회복 중이다.

17.     괜찮은 일자리는 아직도 부족하다

18.     줄어드는 노동 인구

19.     이미 예산 부담이 큰데 그 부담을 가중시키다

20.     연금을 관리하는 정부 기관

21.     디지털 시대에 발맞춰 변모하다

22.     정부 연금에 납입하다

23.     상당수의 의석을 상실

24.     다른 색깔의 정부를 구성하다

25.     민생 문제를 최우선시하다

26.     노인 파워가 무시못할 세력으로 자리매김하다

27.     놀라운 속도로 노령화하다

28.     영국의 노인 인구 비율에 훨씬 못 미치다

29.     노인 인구가 전체 인구의 5분의 1을 차지하다

30.     평균 수명이 크게 늘다

Cloud, or silver linings?

FOR intriguing evidence of the way Japan's 127m people (1)are greying faster than any others on earth, look at the boom in pokkuri dera. Pokkuri is an onomatopoeic word for a sudden bursting, while a tera or dera is a Buddhist temple.

(2) More dramatic evidence of the ageing effect may come with (3) nationwide elections on July 29th. (4)Japan's older voters have the ability, for probably the first time in democratic history, to humiliate and (5)even bring down a government, that of Shinzo Abe, prime minister since September 2006. (6)The elections are for half the seats in the upper house of the Diet (parliament), and are ordinarily something of a political sideshow: after all, it is (7)the lower house that chooses the prime minister. (8) A general election in 2005 gave (9) the ruling coalition led by the Liberal Democratic Party (LDP) an easy majority. Yet these elections, in which the coalition may (10) lose its upper-house majority, (11) have become a vote of confidence in Mr Abe, whose (12)poll ratings have slithered since almost the moment (13) he came to office.

While the prime minister's priorities are patriotic ones—instilling a sense of national pride in schoolchildren and pushing for (14) a revision of Japan's pacifist constitution—(15)those of ordinary Japanese lie with bread-and-butter issues. (16)The economy is now into its fifth year of recovery after a decade-long slump, but (17)decent jobs are still short. As for pensions, everyone knows that (18) a shrinking workforce supporting an ever higher number of retired people (19) adds to an already strained budget.

In this context, a fiasco that was uncovered in May at (20) the government agency that handles pensions could not have come at a worse time for Mr Abe. The agency, which appears never (21) to have come to terms with the digital age, is unable to match 50m computerised pension records to people who have (22) paid into public schemes. A further 14m records, it seems, never made it into the computer system at all.

If disgruntled voters punish the ruling coalition on July 29th (23) with a heavy loss of seats, then the LDP may seek a new leader. If Mr Abe survives as prime minister, he will be under pressure (24) to form a government of a different hue, one that (25) brings livelihood issues to the fore. Either way, (26) grey power will have established itself as a force to be reckoned with.

Certainly Japan is (27) greying at an astonishing rate. Shortly after the second world war the proportion of Japanese over 65 was around 5% of the population, (28) easily below that in Britain, France or America. Today (29) the elderly account for one-fifth of the population, and (30) average lifespans have grown remarkably. Life expectancy today is 82, up from a little over 50 in 1947.

Demography
How to deal with a falling population

Worries about a population explosion have been replaced by fears of decline

THE population of bugs in a Petri dish typically increases in an S-shaped curve. To start with, the line is flat because the colony is barely growing. Then the slope rises ever more steeply as bacteria proliferate until it reaches an inflection point. After that, the curve flattens out as the colony stops growing.

Overcrowding and a shortage of resources constrain bug populations. The reasons for the growth of the human population may be different, but the pattern may be surprisingly similar. For thousands of years, the number of people in the world inched up. Then there was a sudden spurt during the industrial revolution which produced, between 1900 and 2000, a near-quadrupling of the world's population.

Numbers are still growing; but recently—it is impossible to know exactly when—an inflection point seems to have been reached. The rate of population increase began to slow. In more and more countries, women started having fewer children than the number required to keep populations stable. Four out of nine people already live in countries in which the fertility rate has dipped below the replacement rate. Last year the United Nations said it thought the world's average fertility would fall below replacement by 2025. Demographers expect the global population to peak at around 10 billion (it is now 6.5 billion) by mid-century.

As population predictions have changed in the past few years, so have attitudes. The panic about resource constraints that prevailed during the 1970s and 1980s, when the population was rising through the steep part of the S-curve, has given way to a new concern: that the number of people in the world is likely to start falling.

The shrinking bits

Some regard this as a cause for celebration, on the ground that there are obviously too many people on the planet. But too many for what? There doesn't seem to be much danger of a Malthusian catastrophe. Mankind appropriates about a quarter of what is known as the net primary production of the Earth (this is the plant tissue created by photosynthesis)—a lot, but hardly near the point of exhaustion. The price of raw materials reflects their scarcity and, despite recent rises, commodity prices have fallen sharply in real terms during the past century. By that measure, raw materials have become more abundant, not scarcer. Certainly, the impact that people have on the climate is a problem; but the solution lies in consuming less fossil fuel, not in manipulating population levels.

Nor does the opposite problem—that the population will fall so fast or so far that civilisation is threatened—seem a real danger. The projections suggest a flattening off and then a slight decline in the foreseeable future.

If the world's population does not look like rising or shrinking to unmanageable levels, surely governments can watch its progress with equanimity? Not quite. Adjusting to decline poses problems, which three areas of the world—central and eastern Europe, from Germany to Russia; the northern Mediterranean; and parts of East Asia, including Japan and South Korea—are already facing.

Think of twentysomethings as a single workforce, the best educated there is. In Japan (see article), that workforce will shrink by a fifth in the next decade—a considerable loss of knowledge and skills. At the other end of the age spectrum, state pensions systems face difficulties now, when there are four people of working age to each retired person. By 2030, Japan and Italy will have only two per retiree; by 2050, the ratio will be three to two. An ageing, shrinking population poses problems in other, surprising ways. The Russian army has had to tighten up conscription because there are not enough young men around. In Japan, rural areas have borne the brunt of population decline, which is so bad that one village wants to give up and turn itself into an industrial-waste dump.

A fertile side-effect

States should not be in the business of pushing people to have babies. If women decide to spend their 20s clubbing rather than child-rearing, and their cash on handbags rather than nappies, that's up to them. But the transition to a lower population can be a difficult one, and it is up to governments to ease it. Fortunately, there are a number of ways of going about it—most of which involve social changes that are desirable in themselves.

The best way to ease the transition towards a smaller population would be to encourage people to work for longer, and remove the barriers that prevent them from doing so. State pension ages need raising. Mandatory retirement ages need to go. They're bad not just for society, which has to pay the pensions of perfectly capable people who have been put out to grass, but also for companies, which would do better to use performance, rather than age, as a criterion for employing people. Rigid salary structures in which pay rises with seniority (as in Japan) should also be replaced with more flexible ones. More immigration would ease labour shortages, though it would not stop the ageing of societies because the numbers required would be too vast. Policies to encourage women into the workplace, through better provisions for child care and parental leave, can also help redress the balance between workers and retirees.

Some of those measures might have an interesting side-effect. America and north-western Europe once also faced demographic decline, but are growing again, and not just because of immigration. All sorts of factors may be involved; but one obvious candidate is the efforts those countries have made to ease the business of being a working parent. Most of the changes had nothing to do with population policy: they were carried out to make labour markets efficient or advance sexual equality. But they had the effect of increasing fertility. As traditional societies modernise, fertility falls. In traditional societies with modern economies—Japan and Italy, for instance—fertility falls the most. And in societies which make breeding and working compatible, by contrast, women tend to do both.

READING LEVEL-UP(1/4회), AUGUST, 2007                TERMS & BACKGROUND         INSTRUCTOR KIM SOO-YEON

Sovereign-wealth funds
Governments go shopping

Investment funds run by authoritarian governments sound scary. They are not

GO FOR a walk in Chelsea, an expensive bit of London, and you may stroll by the Coldstream Guards' barracks, now the property of the government of Qatar; a branch of the venerable Barclays bank, soon to be part-owned by the People's Republic of China; and then buy a picnic at Sainsbury's, Britain's oldest supermarket, which the Anglophile Qataris are trying to buy too. What goes for Chelsea may soon be true for neighbourhoods in open economies all over the

world: 주제문: governments are on a shopping spree.

주제문: The cash they are using mostly comes from sovereign-wealth funds, a catch-all term that describes investment pools into which governments channel money, usually earnings from oil exports or foreign-exchange reserves built up to keep their currencies cheap. These funds are already huge—worth between $1.5 trillion and $2.5 trillion, according to estimates by America's Treasury—and will swell further as governments switch a bigger share of their reserves from low-yielding assets like Treasury bonds to more adventurous investments. Morgan Stanley predicts that by 2015 sovereign-wealth funds could be managing $12 trillion.

주제문: The rich world's politicians are increasingly worried by this trend. Angela Merkel, Germany's chancellor, recently argued that the European Union needs new rules to regulate what the funds may buy. Their concern is understandable. The regimes that bankroll sovereign-wealth funds are often authoritarian and sometimes downright dangerous. What if a hostile government takes a stake in a strategic industry? What if it starts playing politics with its cash?

주제문: That's less dangerous than it might seem. In deals where national security is a concern—say, if a sovereign fund attempted to take a big stake in a defence manufacturer—processes to block takeovers already exist. And national security is at risk less often than most politicians believe. Even in sensitive industries, small foreign stakes pose little risk. Dubai International Capital, a sovereign-wealth fund, for instance, already owns 3% of EADS, maker of Airbuses and Eurofighters: that should not trouble anybody.

주제문: But what if, say, Russia, which already uses its gas supplies to further its political ends, were to try to take a large stake in a west European energy business? Shouldn't European governments worry about that? Not if the energy market is competitive and properly regulated. Ensuring that the market functions well is the best way to insulate consumers against the vagaries of a single supplier.

Open the books

주제문: The main reason to worry about sovereign-wealth funds' acquisitiveness is a narrowly financial one. With a couple of exceptions—the most notable being Norway's government pension fund—those funds make private-equity partnerships look like paragons of transparency. No one knows much about their internal checks and balances, investment strategy or commercial goals. Murkiness brings unpredictability, which financial markets do not like. If the Abu Dhabi Investment Authority, with an estimated $875 billion under management, decided to unwind a big position and nobody knew why, it could start a panic.

주제문: For their own good, sovereign funds should follow Norway's example and open up a little. More and better information on their strategy and holdings would reduce the odds of market panics and could even help to defuse political tensions. Western governments should agitate for greater transparency from sovereign funds. But they should resist the urge to put up the barricades.

READING LEVEL-UP(1/4회), AUGUST, 2007                TERMS & BACKGROUND         INSTRUCTOR KIM SOO-YEON

Regulating business
Smelly old SOX

Sarbanes-Oxley is not as bad as it's cracked up to be

서론: FIVE years ago this week, in the aftermath of the Enron and WorldCom scandals, George Bush signed the Sarbanes-Oxley Act into law.

Today, SOX, as it is known, is widely reviled. In boardrooms across the world's mightiest economy, it has become shorthand for (1)foolish, heavy-handed state interference in the wealth-creating marvel that is corporate America. (2)The cost of complying with its requirements, it is said, has been far higher than predicted. It is blamed for (3)promoting risk aversion and mistrust in corporate boardrooms, (4)driving a growing number of public companies into the clutches of private-equity firms, and (5)undermining the global competitiveness of America's capital markets .

본론: Much is wrong with SOX. It was passed in haste, and shoddily written. It took little account of current thinking about what a well-designed regulatory system should look like. Section 404 has caused the biggest problems. It makes top managers responsible for a firm's internal risk controls, and requires companies to produce an annual report in which outside auditors “attest” to their quality—a requirement that has turned out to be unreasonably expensive for small public companies.

But (2-1)section 404 is being dealt with. Small companies have already won temporary exemption from full compliance. A newly issued set of guidelines for auditors ought to reduce the cost of complying with section 404 for other firms. And the other criticisms of the act are overdone.

(1-1)At a time when profits and share prices are touching record highs, it is hard to argue convincingly that America's bosses have lost their capitalist zeal. (3-1)Boardroom processes have certainly become more bureaucratic since SOX took effect, and board membership has shifted from entrepreneurs to watchdog types. That, however, is not necessarily a bad thing. Bosses may take fewer risks than they did in the past—but they may be taking the sensible risks, and avoiding the bad ones.

(4-1)Firms are indeed flooding away from public markets; but that is happening across the world, so cannot obviously be blamed on SOX. More likely, SOX is a convenient scapegoat for the bosses of public companies, who tend to get more money and less exposure to complaints about fat-cattery when their companies go private.

(5-1)As for capital-market competitiveness, some measures—such as the share of initial public offerings—do indeed suggest that America has lost out to other financial centres like London. But debate continues about whether that loss is due to regulatory excesses in America or improvements in other financial centres. London's regulator, the Financial Services Authority, has won praise for its light, but effective, touch. Even those who think America has done itself harm tend to pin the blame not on SOX but on other aspects of American life that impinge on business—an over-active Justice Department, for instance, over-powerful trial lawyers and excessive penalties for white-collar criminals.

In the raw (=swimming naked)

결론: Once they have stopped fulminating, many bosses privately admit that SOX has brought benefits. Managers are now (1)far more confident about the quality of the numbers they get from their business units. And if buoyant share prices are any indication, (2)the public seems to have plenty of confidence in the markets. Since the purpose of SOX was to get a better deal for shareholders, it may deserve some credit for that.

Still, it is too soon for a final verdict on SOX. Only after the next economic downturn will it become clear whether the tighter rules have made American capitalism stronger or weaker. As Warren Buffett likes to say, “It's only when the tide goes out that you learn who's been swimming naked.”