The Economist Articles for May. 1st : May. 7th(Interpretation)

[Statesman]

The Economist Articles for May. 1st :  May. 7th(Interpretation)

Economist Reading-Discussion Cafe : http://cafe.daum.net/econimist

The botched invasion of Ukraine

How rotten is Russia’s army?

Vladimir Putin uses warfare to make up for Russia’s weaknesses. That is why he is so dangerous

Apr 30th 2022

The might of the modern Russian army was supposed to show the world that President Vladimir Putin had restored his country to greatness after the humiliation of the Soviet collapse. Instead, poor progress and heavy losses in Ukraine have exposed deep flaws within Russia. For those threatened by Mr Putin’s aggression, a diminished army is a relief. Unfortunately, it also leaves a nuclear-armed power with a point to prove.

So far, the invasion of Ukraine has been a disaster for Russia’s armed forces. About 15,000 troops have been killed in two months of fighting, according to Britain’s government. At least 1,600 armoured vehicles have been destroyed, along with dozens of aircraft and the flagship of the Black Sea fleet. The assault on the capital, Kyiv, was a chaotic failure.

Leon Trotsky wrote that “the army is a copy of society and suffers from all its diseases, usually at a higher temperature”. Fighting in the east and the south of Ukraine over the next few weeks will not only determine the course of the war, but it will also determine how much the Russian army can salvage its reputation—and the reputation of the society it embodies.

Our briefing this week sets out just how rotten the army has been. Russia’s defence budget, of over $250bn at purchasing power, is about three times that of Britain or France, but much of it is squandered or stolen. Mr Putin and his top commanders kept their invasion plans from senior officers, reflecting a crippling lack of trust. Disaffected troops, fed on out-of-date rations, have deserted their vehicles. Units have tortured, raped and murdered only to be honoured by the Kremlin. Russia has failed to win control of the skies or combine air power with tanks, artillery and infantry. Wallowing in corruption, unable to foster initiative or learn from their mistakes, its frustrated generals abandoned advanced military doctrine and fell back on flattening cities and terrorising civilians.

Ukraine’s highly motivated forces are a rebuke to these Russian failings. Despite being less numerous and less well armed, they resisted the invading army by passing decision-making to small, adaptable local units given up-to-the-minute intelligence. Even if the Russian campaign, now under a single commander, makes gains in Donbas, it will do so chiefly thanks to its sheer mass. Its claim to be a sophisticated modern force is as convincing as a tank turret rusting in a Ukrainian field.

For Mr Putin this is a crushing setback. That is partly because, although he controls a formidable propaganda machine to help drown out his critics, the loss of face threatens his standing at home. It is mostly because the use of military force is central to his strategy for making Russia count in the world.

Russia may be vast, but it is a medium-sized polity that still yearns to be a superpower. Its population ranks between Bangladesh and Mexico, its economy between Brazil and South Korea and its share of global exports between Taiwan and Switzerland. Although Russia enjoys some sympathy in non-aligned countries like South Africa and India, its soft power is ebbing—hastened by its display of incompetence and brutality in Ukraine.

To fill the gap between its power and aspirations—and to resist what he sees as America’s encroachment—Mr Putin has repeatedly turned to the only sphere where Russia can still purport to be world-class: military force. In the past 14 years he has invaded Georgia and Ukraine (twice) and fought in Syria. His mercenaries have deployed to Libya, the Central African Republic, Sudan and now Ukraine. Mr Putin is a global bully obsessed with his country’s inadequacies. Contrast that with China, which also has ambitions, but has so far been able to get results using its growing economic and diplomatic heft.

Humiliation in Ukraine weakens Russia’s last claim to superpower status. The war may yet drag on, and while it does Russia will not be able to mount big operations elsewhere. Equipment, ammunition and manpower are being used up fast. Restoring Russia’s forces to full strength and training them to avoid the mistakes in Ukraine could take years. Should sanctions remain because Mr Putin is still in power, the task will require even longer. Russian missiles are chock-full of Western components. The flight of talented, outward-looking Russians will weigh on the economy. All the while, the less that Russia can project military power, the less it will be able to disrupt the rest of the world.

That will be welcome. Yet, the invasion of Ukraine also holds lessons that are less comforting. For one thing, it shows that in pursuit of this strategy Mr Putin is willing to take risks that to many others—including many Russians—make no sense. Further decline in Russian power could lead to still more reckless aggression.

Ukraine also shows that in future wars if Russian forces cannot prevail on the battlefield, they will resort to atrocities. A weaker Russian army could be an even more brutal one. For those around the world facing Russian aggression, that is a terrible prospect.

Ultimately, weakness may lead Russia to the last arena where it is still indisputably a superpower: chemical, biological and nuclear weapons. From the start of this war, Mr Putin and his government have repeatedly brandished the threat of weapons of mass destruction. Mr Putin is rational, in that he wants his regime to survive, so the chances of their use probably remain slim. But as Russia’s armed forces run out of conventional options, the temptation to escalate will surely grow.

The message for the wider world is that Mr Putin’s military opportunism in Ukraine must be seen to fail by his own officers and strategists, who may then temper his next headstrong scheme. A stalemate in Donbas would merely set up the next fight and it could be even more threatening than today’s.

Yet, even if Mr Putin is defeated, he will remain dangerous. The message for nato is that it needs to update its tripwire defence. This rests on the idea that a Russian attempt to take a bite out of, say, the Baltic states may succeed at first, but would trigger a wider war which nato would eventually win. That defence involves the risk of miscalculation and escalation, which are more fraught than ever if Russia’s conventional forces are weak. Better to have a large forward force that Russia would find hard to defeat from the very start. The best way to be safe from Mr Putin and his rotten army is to deter him from fighting at all.

Apr 30th 2022 edition

Schumpeter
The weird ways companies are coping with inflation

Consumers are barely yet aware of what is hitting them

Apr 30th 2022

Inflation is making up for lost time. A word that many thought had gone the way of peroxide hair and trench coats in the early 1980s is now back on almost every ceo’s lips as they run through a barrage of compounding shocks—war, commodity crisis, supply-chain disruption and labour shortages—in their companies’ first-quarter results. From December to March, almost three-quarters of firms in the s&p 500 mentioned inflation in earnings calls, according to FactSet, a data gatherer. Such is the novelty, it runs the risk of making such turgid occasions almost riveting.

In rich countries, producer prices are surging at their fastest rate in 40 years. That sounds bad. On the ground some say it feels awful. Thierry Piéton, chief financial officer of Renault, said the French carmaker initially predicted raw-material costs would double this year. Now it thinks they will triple. Elon Musk says Tesla’s suppliers are requesting 20-30% increases in parts for electric cars compared to this time last year. Others talk of five-fold increases in the costs of sending containers between Europe and Asia, a dearth of truck drivers in America, and a scramble for everything from corn syrup to coffee beans and lithium.

Amid such a maelstrom, the perils of getting inflation wrong are obvious. You only need to look at Netflix, trying to raise prices in the midst of a brutally expensive streaming war, to get a sense of the risks involved. Yet in general, some of the world’s best-known companies are coping. After years of negligible increases, they have managed to push up prices without alienating their consumers. How long they can continue to do so is one of the biggest questions in business today.

In some cases, as Mark Schneider, boss of Nestlé, the world’s biggest food company, puts it, the public understands that “something has to give.” War, after all, is on the tv, and the pandemic is still fresh in people’s minds. Inflation is less alien by the day. In other cases, pricing is done more sneakily: offering premium products to those who are still able to splash out, or cutting costs for those for whom affordability is the overriding concern. Many of the biggest firms do both.

The immediate advantage goes to those with the strongest brands and market shares. That gives them more flexibility to raise prices. Coca-Cola, with almost half of the world’s $180bn fizzy-drinks market, used price and volume increases to deliver bumper earnings, which one analyst described as a “masterclass in pricing power.” Nestlé, which has barely increased prices for years, raised them by 5.2% year on year in the first quarter, its biggest increase since 2008. There may be more to come, it reckons. Mr Musk said Tesla’s price increases were high enough to cover the full amount of cost increases he expects this year. Yet still the vehicles continue to fly out the door.

Such firms benefit from another factor associated with brand power: premiumisation, or their ability to raise the cost of already pricey products. The trend appears to be holding fast. In Nestlé’s case there are, as yet, few signs that well-heeled consumers are trading down from, say, Nespresso pods to Starbucks capsules to (heaven forbid) spoonfuls of Nescafé.

Pet owners are the most bounteous. Nestlé’s Purina pet-care division, with telltale products like “Fancy Feast”, achieved the largest price increases across all categories during the quarter. Parents are far more parsimonious; they are much less willing to pay a high price for baby formula—though Kimberly-Clark, another consumer-goods company, has high hopes for premiumisation of nappies in China. As Michael Hsu, its ceo, put it, “the value per baby is less than half of what it is in developed markets like the United States”. Consumers in rich countries are also better able to cope with price rises than those in poorer ones. Firms like Coca-Cola offer better-packaged premium products in America and Europe, and more value-conscious ones in emerging markets.

So much for the haves. What about the have-nots? If firms can’t raise prices, why not shrink the products they sell instead. This tactic, baptised in Britain in 2013 as shrinkflation, dates back a lot further. Hershey’s, an American confectioner, proudly recalls how in the 1950s it responded to fluctuations in cocoa-bean prices by regularly changing the weight of the bar, rather than the five-cent price. No one admits to shrinkflation these days. But they are rebranding it in ways that are cool, thrifty—and in some cases even environmentally virtuous.

Renault, whose executives describe Dacia, a subsidiary making its cheapest cars, as an “everyday-low-price sort of brand”—somewhat like a soap powder—is hot on the trend. It is slashing the number of different parts across its models; that means more leverage with suppliers since fewer parts are bought but in larger volumes. Likewise, there’s plenty of talk among snack producers about reducing packaging sizes of cheap products, not just to cut costs but to save on waste. Coca-Cola is selling drinks by the cupful in India. In Latin America it is expanding its use of refillable bottles. In America’s south-west, it is piloting a scheme for use of returnable glass bottles. Rather like hotels asking guests to use fewer towels to spare the environment, it will surely be good for the bottom line, too.

Elastoplast

The good news is that consumers have, by and large, taken the inflationary shock in their stride so far. As chief executives have repeated in recent weeks, the sensitivity of shoppers to rising prices, or what they (and economists) call price elasticity, is not as bad as they had feared. But it is still only early days. Many consumers may not know yet how convulsive an inflationary environment can be. If prices continue to increase, and outpace growth in incomes, eventually the shock will sink in. Then the biggest question will not be how price-elastic people are, but whether spending snaps altogether. 

Buttonwood

Slow pain or fast pain? The implications of low investment yields

A new book on living with low expected returns

Apr 30th 2022

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In 1988 steve guttenberg, a comic actor, appeared on a British talk show. At one point he was asked why he had not appeared in “Police Academy 5”, having starred in the earlier films. He replied that, in his view, all the important philosophical questions had been addressed in the first four movies.

This brings us to the more serious business of investing, and a sequel of a very different kind. Ten years ago Antti Ilmanen, a finance whizz, published “Expected Returns”, a brilliant distillation of investment theory, practice and wisdom. His latest book, “Investing Amid Low Expected Returns”, is an update, taking in a decade’s worth of additional research and data. Mr Ilmanen has read all the books and papers, sorting the good stuff from the junk. He has a gift for explaining clearly and concisely the lessons of this research for investors. The new book is as invaluable a resource as the old one. If it has a fault, it is that it does not quite address all the important philosophical questions. A sequel may be necessary.

Start, though, with a recap of the expected-returns framework. There are two sources of return on an investment: income and capital gain. The income on, for instance, a government bond is the interest (or “coupon”) paid once or twice a year. Bond prices and yields move inversely. So when interest rates fall, as they did for much of the past four decades, bond investors enjoy a capital gain. In essence a capital gain of this kind brings forward future returns. You get the income now you were going to get later. But as yields fall ever lower the scope for further capital gains becomes more limited. So low yields imply low expected returns. This bond-like logic holds for other assets—equities, property, private equity and so on. Dividend and rental yields have fallen in response to the secular fall in interest rates. Owners of all kinds of assets have experienced windfall gains. But today’s low yields imply low expected returns in the future.

What now? As Mr Ilmanen sees it, low expected returns can materialise through either “slow” or “fast” pain. In the slow-pain scenario, assets remain expensive and investors receive desultory bond coupons, equity dividends and rental receipts for years on end. In the fast-pain scenario yields revert to their higher historical averages. This implies a spell of brutal capital losses followed by fairer returns thereafter. The choice is between well-heeled stagnation and a crash.

Mr Ilmanen is too much of an epistemological sceptic to put all his chips on one scenario. He is also too careful an analyst to miss that low inflation made the high-asset-price, low-yield 2010s what they were. Many of the factors that kept a lid on inflation in that decade—globalisation, efficient supply-chain management, tight fiscal policy, an expanding global workforce—are now attenuating or unwinding. Mr Ilmanen’s hunch is that the 2020s will see something of a reversal of the investment trends of the preceding decade. But he generally eschews investing on hunches.

Faced with lower expected returns, investors have three courses of action: they can take more risk to reach for higher returns; they can save more; or they can accept reality and play the hand they have been dealt as well as they can. The first approach may increase returns but also makes them more uncertain. Saving more means sacrificing today for the sake of tomorrow, a highly personal choice. Understandably, Mr Ilmanen’s focus is on the third approach. He sets out a chapter-by-chapter analysis of various investment assets and styles. He advises how to put them together in a truly diversified portfolio. Along the way, he explains why market timing is a snare (you end up taking too little risk); what the true appeal of private equity is (not superior returns); and why portfolio insurance will not save you (it is too expensive in the long run).

There are shortcomings. A quarter of the 500+ references are from authors affiliated with aqr Capital Management, Mr Ilmanen’s employer. This weighting gives the book a less independent air than “Expected Returns”. Readers would have benefited greatly from a chapter on the implications of low expected returns for different sorts of savers. The fast-pain scenario, for instance, is surely preferable for young savers, to whom the book is dedicated. Perhaps this and other gaps will be filled in “Expected Returns III”. Even Mr Guttenberg has been teasing fans with the prospect of “Police Academy 8”. The big philosophical questions are never truly settled.

The techno-king of Twitter

Elon Musk wants to re-engineer the “public square”

The world’s best-known engineer gives himself another grand problem to solve

Apr 30th 2022

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Sweeping statements about the future of humanity do not usually feature in discussions about leveraged buy-outs. But Elon Musk has never felt bound by convention. Asked about his plans to buy Twitter, a social network, and take it private—which were approved by the firm's board on April 25th—he went straight for the big idea. “My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilisation. I don’t care about the economics at all.”

Compared with its rivals—Facebook, Instagram and TikTok—Twitter is a minnow. But the deal matters. One reason is that Twitter’s size belies its importance. As a haunt of politicians, pundits and wonks, it does much to set the political weather—a digital “public square”, as Mr Musk put it.

Another is that Mr Musk made his name and his fortune by upending industries. This time, he will be grappling with a knotty problem of keen interest to governments around the world—how to regulate speech online. Most prescribe ever more rules. But Mr Musk wants to go the other way, removing restrictions instead of imposing new ones. The operators of other big social networks will be watching the experiment with interest.

At first blush, Mr Musk—best known for electric cars and reusable rockets—seems an unlikely social-media mogul. But a closer look suggests his acquisition of Twitter fits his approach to business. Mr Musk, a passionate engineer, likes to take poorly performing technologies and improve them. Tesla tore up the car industry’s rule book by replacing petrol with electricity, ditching dealerships and treating cars as computers. SpaceX proved that a hungry, move-fast-and-break-things startup run on a relative shoestring could outperform aerospace giants grown cautious and fat on the back of generous government contracts. Both firms were dismissed by bigger incumbents—until one day they weren’t.

All that engineering and disruption is animated by Mr Musk’s own, sometimes idiosyncratic conception of the social good. Tesla’s purpose is to prod the world more quickly towards a carbon-free economy (a goal vindicated by the speed at which other carmakers are now pivoting to electric vehicles). SpaceX’s ambition is so grandiose some commentators struggle to believe that Mr Musk is sincere: to establish a human presence on Mars, something that, were a catastrophe to befall Earth, might one day prove to have been an insurance policy for civilisation.

Assume that Mr Musk really is ready to spend billions of dollars of his own money to secure the “future of civilisation” (though he has a break clause should he get cold feet). The question is whether his vision of free speech on Twitter is sensible.

Twitter fits the pattern of Tesla and SpaceX, offering Mr Musk another complex engineering system to tinker with, and a grand reason for doing so. Social media deploy algorithms to highlight “engaging” content, using a thicket of rules that try to mitigate the worst side-effects, the better to sell users to advertisers. It is a business model full of inconsistencies and unexamined trade-offs that looks ripe for disruption. That Mr Musk wants to be its agent is perhaps no surprise, for he cut his entrepreneurial teeth in the 1990s, when techno-libertarianism and anti-censorship were the internet’s animating ideas.

The fact that Mr Musk is a billionaire should not disqualify him from owning an important media firm. He has already set out some ideas for Twitter, many of them cautious and sensible. The resulting fuss shows how illiberal much online opinion has become. He wants fewer outright bans and more temporary suspensions. Users should prove they are not bots. When in doubt, err on the side of leaving tweets up, not taking them down.

More significant, he thinks the cogs and ratchets of Twitter’s recommendation algorithm, which decides which tweets a user sees, should be public. Researchers could examine it; other programmers could tweak it. A version less prone to pushing “engaging” content—which, in practice, often means tweets that are enraging, controversial or plain daft—could lower the temperature of the entire platform, making the job of moderation easier and possibly leading to debate that is more thoughtful. Or perhaps Twitter could become an open platform, where different users may choose one of many different third-party algorithms—or none at all—according to their taste. Content moderation is the messy product of political and social pressures. It will be fascinating to see how easily it succumbs to engineering.

Mr Musk will not have an entirely free hand. Australia, Britain, the eu and India, have all been working on tech-regulation. Thierry Breton, a senior eu official, noted that “It’s not [Mr Musk’s] rules that will apply here.” Mr Musk’s other investors are nervous. The more time he devotes to Twitter, the less he will have for his other ventures. Shares in Tesla fell by 12% after news of the Twitter deal.

Mr Musk’s personality poses a big risk. He is clever, driven and ferociously hard-working. He can also be puerile and vindictive, traits on display in 2018 when he accused a British cave-rescue expert, with no evidence, of being a “pedo guy”. Such outbursts are one thing coming from a Twitter user with a big following. But when he is the owner, they will raise questions about whether he will be able to resist the temptation to exploit his new position to pursue his own obsessions and vendettas.

The bird and the oak tree

This newspaper shares Mr Musk’s free-speech convictions. Nobody has a monopoly on wisdom. Experts are sometimes wrong and blowhards sometimes right. Even in the internet age, the best response to a bad argument is a better one. Moderation on many platforms has become heavy-handed and arbitrarily enforced. If Mr Musk’s talent for shaking up industries can help cut the Gordian knot of online speech, everyone will benefit.

But we are also keen on another liberal principle, that institutions should be bigger than the person running them. Mr Musk can set new rules, but he should be seen to play no role in enforcing them. If he really wants to convince users that he will be an impartial guardian of his “digital public square”, he could implement his reforms—and then freeze his own account.

Apr 30th 2022 edition

Pillar talk
China plans to roll out private, personal pensions

About time

Apr 28th 2022

HONG KONG

“Astonishing”, “spectacular”, “unprecedented”: China has won plaudits from the World Bank and other experts for the rapid expansion of its basic state pensions over the past dozen years. The number enrolled in these schemes (including one for urban employees) crossed 1bn in 2021. But the speedy construction of this first “pillar” of China’s pension system has not been matched elsewhere in the planned edifice.

A second pillar is supposed to rest on firms, which can enroll employees in a company pension. But fewer than 29m people, less than 10% of the eligible workforce, had signed up for these “enterprise annuities” by the end of last year. China’s third pillar—personal pensions—is even stumpier. Although individuals in China save a lot, buying homes and other assets, they have little reason (or inclination) to set up personal pensions. To give them a nudge, China’s government launched pilot schemes in Shanghai, Fujian and part of Suzhou back in 2018. These schemes offered modest tax breaks to people willing to lock up their money in pension products offered by approved financial institutions. But take-up was disappointing and the third pillar has made little progress since.

The delay is a pity, because China is not getting any younger. By the end of this decade, it will have more people aged 60 or above than America will have people. Many of these old folk face a precarious retirement, balanced only on the first pillar. And time is also running out for China’s younger cohorts. Well-designed pension products work best when people start contributing in their 20s, allowing them to make high-risk, high-return investments they should avoid later in life. But China’s population of 20-somethings peaked in the 1990s and has shrunk by almost 50m in the past ten years.

The urgency is not entirely lost on China’s leaders. On April 21st the State Council, China’s cabinet, released a set of guidelines on private personal pensions, instructing ministries to launch more pilot projects, then roll out schemes nationwide. “There is not much meat on it,” says Nicholas Omondi of Z-Ben, a financial consultancy in Shanghai. But the announcement nonetheless sends a “strong message” to China’s rivalrous regulators “to get their act together and get this done”.

If personal pensions do take off, they could have salutary effects on China’s investment habits and financial markets. At the moment, city-dwellers keep two-thirds of their wealth in housing, according to a survey in 2019 by Southwestern University of Finance and Economics. Too much of the rest is either in barren cash or “rolling from one end of the stockmarket to another”, as Mr Omondi puts it, “without much of a fundamental anchor”. In China “saving is not a problem”, says Yothin Jinjarak of the Asian Development Bank. “But where the savings go, that’s the question.”

Well-run pension funds, with a longer-term horizon, could contribute to a better allocation of capital in China. That, in turn, would make future workers more productive—which they will need to be if they are to take care of themselves, their children and their elderly parents comfortably.

But even if China’s authorities speedily approve these better financial mousetraps, will customers beat a path to them? The tax breaks on offer are not wildly tempting. People can deduct contributions of up to 12,000 yuan ($1,800) a year from their taxable income, according to the guidelines. That is about a quarter of average disposable income in urban China. But it is only 15% in a place like Shanghai. That will seem meagre to the city’s higher earners. And if funds keep a tight lid on risk, as they should in a contributor’s later years, returns may not look enticing to Chinese investors, says Janet Li of Mercer, a consultancy, given that people dislike locking up their money for decades.

Thus, before Chinese households will invest enthusiastically in the third pillar, the government and industry will have to invest in educating them. As an example of what is required, Ms Li cites the animated videos prepared by the Insurance Asset Management Association of China. In one, a man sits behind a desk imagining all of his expenses—mortgage, children, car—and other burdens, such as elderly care. Even thinking about it turns his hair grey. The message is clear: if you fail to prepare for it, ageing will age you. 

Apr 30th 2022 edition

Covid hits the capital
China claims Beijing is the true test of its pandemic policy

Never mind all that chaos in Shanghai

Apr 30th 2022

BEIJING

If china’s public-health policies were decided by the people of Shanghai, the country would abandon its “zero-covid” strategy, which uses mass testing and strict lockdowns to crush the virus. The city’s 25m residents, among whom are some of China’s richest and most influential people, have complained loudly about the grim weeks of lockdown they have endured. But Beijing is where China’s covid strategy is devised. For now, the mood is rather different in the capital.

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Beijing’s 22m residents responded with wary resignation to news that the Omicron variant had been spreading stealthily in the capital for days. On April 27th mass testing revealed more than 150 infections. The next day many schools went online. Some neighbourhoods were sealed off. But after an initial flurry of panic-buying, shops quickly restocked. Pensioners could be seen in parks, enjoying the smoggy spring sunshine. Local pride, and a sense of privilege born of proximity to power, help to explain why some Beijingers sound confident that they will escape the harsh, chaotic lockdowns imposed on Shanghai.

Many of Beijing’s residents have a measure of disdain for Shanghai, the country’s more Western-oriented commercial hub. The Shanghainese are “unreasonable troublemakers”; their officials deserve blame for not locking down fast enough, says a typical resident of the capital. Censorship and propaganda have helped shape such feelings. Shanghai’s suffering is glossed over in news reports. Angry outbursts by the city’s residents on social media are quickly erased by state censors.

Officials in Beijing seem to regard Shanghai as a rare exception to their zero-covid success story—China has had a lower death rate from the virus than any big country and stronger economic growth. It is certainly not taken as a lesson that the policy needs to change. Rather, officials in Shanghai are chided for being too loose and moving too slowly. The central government has pushed for more testing and stricter lockdowns. Many residents recently found green fences outside their compounds, to seal them in.

Officials elsewhere are taking note. Those in Baotou, a mining hub in Inner Mongolia, recently locked down the entire city after finding just two cases.

Other countries, including some of China’s neighbours, pursued a similar approach to the virus initially. But most of them have abandoned the zero-covid strategy, conceding that the highly transmissible Omicron variant rendered it impractical. They have instead focused resources on getting vulnerable people vaccinated and caring for the sick. Some of China’s leading doctors and scientists have urged their country to do the same.

The single biggest barrier to a Chinese exit strategy from the zero-covid policy is the large number of over-60s who have not received two doses and a booster. That is the minimum level of inoculation needed to provide a high degree of protection against serious illness or death when using Chinese-made vaccines, which are the only shots approved by party chiefs. But Beijing’s authorities continue to use gentle inducements, rather than force, to nudge old people to accept vaccinations.

Zero-covid measures are distracting from that effort. As the first round of mass testing began in Beijing, all was oddly quiet at a blue tent erected as a vaccine station for old people. Health workers had all been diverted to help with the testing. That disappointed Song Wenxian, a spry 85-year-old who had come to the tent in search of a second shot. Her family, though, has no plans to vaccinate her husband, who is 86 and suffers from mild dementia. “He can’t walk and he doesn’t go out. So we’re not getting him one,” Ms Song said. Beijing’s elite status provides reassurance. “I think the leaders pay closer attention to Beijing,” Ms Song suggested.

China’s supreme leader, Xi Jinping, seems to believe that the right mix of science, perseverance and party spirit will lead to a successful containment of the virus. On April 25th he visited Renmin University in Beijing, sitting in on political-ideology classes, speaking about “red heritage” and basking in shouts of loyalty to the party from unmasked students. Foreign diplomats in Beijing worry that he is allowing politics to get in the way of good policy. So do critics of the government.

Some point to Shanghai, where Zhang Wenhong, a prominent doctor advising the city on its covid response, used to say that measures should not be overly disruptive to business or normal life. Recently, though, he has been overshadowed by appointees like Ye Caide, a practitioner of traditional Chinese medicine who has gone from working at a community health centre in Beijing to overseeing Shanghai on a national pandemic-control team. Mr Ye, who has won several awards from the party for heroic volunteering, told state media that Shanghai’s covid controls should be tightened, for example by installing electronic sensors and seals on people’s doors. If this is how China is going to choose its “experts”, one netizen quipped, “we won’t get out of lockdown even in the next life.”

The number of infections in Shanghai is dropping at last. But the costs of the state’s anti-covid measures are becoming clearer. Foreigners are leaving en masse. Many analysts have revised down their forecasts for economic growth this year. Investors have ditched Chinese securities at a record rate, putting pressure on the yuan (see Finance section).

The mood is relatively upbeat in the capital, though. A worker at a massage shop in Beijing shrugged off questions about whether he was stocking up on provisions. “We Chinese people don’t worry about a crisis until it hits,” he said, nursing a cigarette. “You have to believe in the party and the state, right?” Many of Shanghai’s residents once felt similarly. 

Apr 30th 2022 edition

Lexington
Kevin McCarthy’s accidental truthfulness

One of Donald Trump’s favourite congressmen considered the former president’s behaviour a disaster

Apr 30th 2022

Most politicians have a defining characteristic and Kevin McCarthy’s is not really believing in anything. The House Republican leader is voluble and clubbable, a relentless glad-hander and supremely effective fund-raiser. Yet even among grateful Republican beneficiaries of his efforts, the coiffed Mr McCarthy is not known to hold firm views on any particular issue.

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Once ranked alongside the previous Republican Speaker, Paul Ryan, as a pro-business “Young Gun” conservative, he now rails against the Chamber of Commerce for “selling out”. Formerly as relaxed about abortion as most Californian politicos, Mr McCarthy these days claims to have been fiercely pro-life for ever. Since he emerged from the wilderness of Golden State Republican youth politics two decades ago, the affable congressman has taken different sides of most big questions and, as the architect of no major policy, never threatened to settle any of them.

Political opportunism is not uncommon, especially in today’s Republican Party. Mr McCarthy’s counterpart in the Senate, Mitch McConnell, could teach Machiavelli a trick or two. The principled views of Senator Ted Cruz might be listed on a postage stamp. The party’s leading figure is Donald Trump. Yet Mr McCarthy’s fickleness stands out because of how clumsily he advertises it. He once acknowledged in a television interview that his party’s serial investigations into Hillary Clinton’s imagined tie to a jihadist attack in Benghazi were a political stunt. He was taped joshing with Mr Ryan about Mr Trump’s slavish loyalty to Vladimir Putin despite having become one of the former president’s most sycophantic defenders. And it now transpires that his role in covering up Mr Trump’s role in last year’s riot on Capitol Hill was even more dishonest than was previously known.

Mr McCarthy scuppered a bipartisan House investigation (that he had helped instigate) of the insurrection. He then turned viciously on the only two Republicans, Liz Cheney and Adam Kinzinger, who dared to co-operate with the Democrats’ alternative probe. This was despite the fact that he had himself initially acknowledged Mr Trump’s “responsibility” for the violence. Indeed, as the New York Times has now revealed he went so far as to tell a post-insurrection gathering of his House colleagues—including Ms Cheney—that the then president should resign and that he personally would tell him to do so. To Tucker Carlson of Fox News, he sounded “like an msnbc contributor”.

You might think Americans have nothing left to learn of Mr McCarthy’s hypocrisy. But this latest display is a big story in part because, with defeat looming for the Democrats in the mid-terms, he looks odds-on to become the next House Speaker. It is also because of how acutely the scandal speaks to the biggest source of journalistic frustration in the Trump era. Most Republican politicians ridicule and deride the former president to journalists in private, even as they grovel to him in public, including by excoriating the critical coverage that they are themselves enthusiastically contributing to. The arrangement could not be better designed to erode trust in both politics and the media, two of the country’s most precious and reviled institutions.

The chronology of Republican responses to Mr McCarthy’s blunders helps illustrate his party’s fall. In prelapsarian 2015, many House Republicans claimed to be so scandalised by his accurate characterisation of the Benghazi investigations that they rejected his bid to be Speaker in favour of Mr Ryan. For some this was a pretext; hard-right members considered Mr McCarthy an establishment squish. But neither objection now pertains.

Defending Mr Trump has made his party shameless. There has been no serious discussion in its ranks of what Mr McCarthy’s latest display of bad faith says about his fitness for America’s third-highest-ranking job. The scandal is being debated exclusively in terms of whether he can survive it—which is to say, whether Mr Trump is offended by it. Mr McCarthy was reported to have spent the days after the Times’s story broke calling around House Republicans to assure them that Mr Trump was ok with it. And it seems he is. Most members of the hard-right, Mr Trump’s attack dogs in the House, are still behind Mr McCarthy, in recognition of his efforts to curry favour with them. Where Mr Ryan sometimes held them in check, Mr McCarthy defends Trumpist head-bangers such as Marjorie Taylor Greene—currently the subject of a hearing over her role in the Capitol riot—against all comers.

Besides which, Mr Trump tends to prefer his lieutenants compromised, because that makes them more beholden. The former president intimated as much this week. Mr McCarthy’s trenchant early criticism of him only makes the congressman’s subsequent capitulation appear all the more complete, Mr Trump noted: “I think it’s all a big compliment, frankly.” Indeed the particular way in which Mr McCarthy is now damaged goods may suit Mr Trump especially well. His first demand of the next Republican Speaker will be to end all investigations of the Capitol riot. Mr McCarthy would now be expected to act on that with even more alacrity than he would otherwise have shown.

Purging the competition

His latest scrape may, then, have actually increased his chances of becoming Speaker. It has highlighted how little Republican competition for the role he faces, so long as Mr Trump stays his hand. Mr McCarthy’s fellow Republican House leaders, including Steve Scalise and Elise Stefanik, are similarly defined by their loyalty to Mr Trump, and have been less useful to the former president. Meanwhile, the lack of principled criticism of Mr McCarthy within the party is a reminder that many House Republicans of independent stature, such as Mr Ryan, Justin Amash and Will Hurd, have been driven out by Mr Trump. Ms Cheney, the only House Republican whom Mr McCarthy has disciplined, for having dared to say publicly what he said in private, will probably soon join them. 

Apr 30th 2022 edition

Pulling its wheat
Can Brazil help with food shortages around the world?

In the first two months of this year it has exported more wheat than in the whole of 2021

Apr 30th 2022

IPAMERI

When marize porto’s husband died suddenly in 2002, she was left with three small children and a failing cattle ranch that she had no idea how to run. Desperate, she turned to Embrapa, the Brazilian government’s agricultural research institute, for help. Today her farm in the state of Goiás is a model of technical know-how and productivity. Corn grows tall in the dry, red earth, planted upon the remnants of last season’s soyabeans. Once the corn is harvested, cattle come in to graze.

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The practice Ms Porto uses—which combines livestock, crops and forestry—requires less land and can make a farm five times more productive than the average Brazilian holding. It restores degraded pastures, making it ideal for use in the cerrado, the unwieldy savannah which covers a quarter of the country. Yet it has been slow to catch on. Despite the system’s advantages, it has been adopted on only 18.5m hectares, or around 5% of farmland.

This is worrying. In the past four decades Brazil has transformed itself from a net importer into the world’s fourth-biggest food exporter. In 2022 it is expected to produce 285m tonnes of grain, six times the amount it harvested in 1977. Still, the world is hungry for more. Stretched supply chains and shortages caused by Russia’s invasion of Ukraine have piled pressure on food markets. Even before the war, Brazil exported more wheat in the first two months of this year than it did in the whole of 2021. But extreme weather and soaring prices of fuel and fertiliser are making it harder for farmers to meet demand.

No rain, no grain

South America’s breadbasket is also balancing on precarious ecosystems. Cattle and soya farms are destroying parts of the Amazon. Advances in tropical agriculture have also come at the expense of half of the cerrado’s trees. The cerrado, known as the “birthplace of waters”, feeds eight of Brazil’s 12 major river basins. But it depends on moisture in the air from the rainforest for its water supply. So deforestation not only adds to climate change. It also undermines the conditions required to grow food.

Responding to these challenges requires innovation. In an executive order on April 22nd President Joe Biden said that the United States would try to reduce the import of food produced on illegally deforested lands, such as the Amazon. In polls, around half of consumers in rich and middle-income countries say that they consider sustainability when buying food and drink. But can Brazilian agriculture respond to this demand by becoming greener, while also ramping up food supply?

Jair Bolsonaro, the populist president, has overseen rapidly rising levels of deforestation and weakened laws protecting native vegetation. Yet on paper at least, his government’s plan for agriculture is ambitious. It aims to reduce emissions in the sector by the equivalent of 1.1bn tonnes of carbon dioxide by 2030. Part of the plan involves developing standards for what constitutes “low-carbon”, “carbon-neutral”, or “negative-carbon” for ten commodities. In 2017 Brazil became the first country in the world to create a label for “carbon-neutral”, or zero-net-emission, beef.

Beef production alone accounts for around 8.5% of the world’s greenhouse-gas emissions. Brazil, as the world’s largest beef exporter, has a big incentive to label its goods “carbon-neutral”. Not all are convinced. Such claims of neutrality rest largely on the metric of carbon sequestration: that the grass cattle graze on, or forests they slumber in, can act as a sink for carbon dioxide. But such calculations do not account for the carbon-opportunity cost, or what the land could have captured if it were used for other things. Biogas captures waste emissions, but not methane from cows’ belches. Carbon-neutral beef “sounds like an oxymoron to me”, says Matthew Hayek of New York University.

Even so, the quest for carbon neutrality is driving change across the sector. Carapreta, a meat company, owns three farms in Minas Gerais, in south-eastern Brazil. In one, tilapia fish are bred in tanks and the water they swim in is used on the farm’s grain. The grain becomes animal feed for the 70,000 cattle the farm slaughters every year. Meat scraps are processed into fish food, while animal waste is converted into fertiliser and biogas. This gas helps make the farm self-sufficient in renewable energy. All this, the company claims, will eventually make the farm carbon-negative. By 2024 Carapreta’s owners expect to have invested $1bn reais ($208m) in the company.

However even with such large resources, Carapreta still struggles to make its farming fully eco-friendly. In a country almost the size of the United States, but with shoddy infrastructure, some of its cattle are moved in trucks thousands of kilometres from other states. The company buys cattle feed from Cargill, an American food giant. Organic fertiliser is difficult to produce: fully 70% of Carapreta’s inputs are chemical.

Breadbasket breaking point

And the Carapreta team is keen to encourage more consumption of meat, not less. “It’s something that you can eat every day, it’s good for you and for the environment as a whole,” says Gabriel Géo, the chief marketing officer. But on the hectare that it takes to graze a Carapreta cow, an average Brazilian farm could produce 28 tonnes of potatoes or five tonnes of corn.

Most Brazilian farmers do not have millions to invest in satisfying conscientious consumers. This includes the small and medium-sized farms which produced around two-thirds of food by value in 2006, the latest year for which data are available. Only 15% of Brazilian farms report having access to credit, according to a study by the World Bank. It is also harder for farms to pivot to different commodities, such as wheat, says Lygia Pimentel of Agrifatto, a consultancy.

Brazil also imports 85% of its fertiliser. Nearly half of that came from Russia and Belarus last year. In March the farm minister said that the country only has enough fertiliser to last until October, raising the possibility of a crisis when the planting season begins in September. Its farmers already feed over 800m people, and more cheaply than other big producers. But filling all the bowls Vladimir Putin has emptied is too big a task for Brazil alone. 

Europe | “Judicial assassination”

A Turkish court sentences activist Osman Kavala to life in prison

The European Court of Human Rights long ago ordered that he be released

Apr 30th 2022 | ISTANBUL

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Over the course of the war in Ukraine, Turkey’s government has earned some goodwill in the West by publicly opposing Russia’s invasion and by providing Ukraine with armed drones. On April 25th a lot of that goodwill went up in smoke, when a court in Istanbul handed Osman Kavala, one of Turkey's most respected civil-society activists, a life sentence for “attempting to overthrow” the country’s government during protests almost a decade ago. Seven other defendants, accused of aiding Mr Kavala, were sentenced to 18 years each.

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Two of those people, Can Atalay, a lawyer, and Mucella Yapici, an architect, stood inside the courtroom facing a crowd of shocked onlookers, some of them wiping away tears, moments after hearing the verdict. “They will now take us to Silivri,” Mr Atalay shouted, referring to a notorious prison on the outskirts of Istanbul. “But know that we will not bow to tyranny.” In his closing statement, Mr Kavala, speaking by video link, called the case a “judicial assassination”.

Even by the standards of Turkey’s judiciary, which tends to do the government’s bidding, the prosecution of Mr Kavala has been a farce. The evidence against him should have been laughed out of court. The prosecution depended not only on unsubstantiated speculation but also on a wilful blurring of protest with treacherous insurrection. Mr Kavala was first arrested in late 2017 for his involvement in the Gezi Park protests which had engulfed the country in 2013. He maintained that he had supported the protests (and attended them), but had no role in organising them, much less in trying to overthrow the government. Despite the authorities’ efforts to depict his gift of some pastries to the protesters as proof of his treasonous intentions, he was acquitted in 2020. But he was rearrested hours later on separate but equally preposterous charges related to a violent coup attempt against Turkey’s president, Recep Tayyip Erdogan, in 2016. An appeals court then overturned the acquittals in the Gezi Park case, paving the way for the retrial that has just concluded.

When the European Court of Human Rights (echr) ordered Mr Kavala’s release, Turkey’s government refused to comply even though its membership of the Council of Europe requires it to do so. When the American ambassador to Turkey and nine of his European colleagues urged the government to abide by the echr ruling, Mr Erdogan ordered them out of the country, though he later relented.

The verdict will damage relations between Turkey and its Western allies further. America’s response to the ruling, a statement calling Mr Kavala’s conviction “unjust” and an example of “judicial harassment of civil society”, was even more harshly phrased than the one that almost got its envoy kicked out last year. eu officials have also condemned the decision.

The verdict may be a preview of things to come. The case against Mr Kavala and his colleagues has less to do with the events of 2013 than with those of 2023, when Turkey will hold presidential and parliamentary elections. These are likely to be the toughest of Mr Erdogan’s career. Turkey’s strongman now trails his rivals in the polls, largely as a result of his eccentric economic policies, which have burdened Turkey with an inflation rate of over 60% and a collapsing lira. Rather than attempting to fix the economy, it very much looks as though Mr Erdogan has decided to step up his repression. 

Apr 30th 2022 edition

Bartleby
The case for Easter eggs and other treats

Irreverence can foster loyalty rather than weaken it

Apr 30th 2022

Have you ever actually read a terms-and-conditions document? WordPress, a service for building websites whose clients include the White House and Disney, thinks anyone who has deserves congratulations. Its terms of service are the usual endless scroll of legalese, until you reach section 14, on disclaimers. Buried in the verbiage about warranties and non-infringement is a short, odd sentence: “If you’re reading this, here’s a treat.” Click on the link, and you see a picture of some appetising Texas brisket. Suitably revived, you can then move on to the stuff about jurisdictions and applicable law.

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Coming across an Easter egg, the name given to unexpected messages or features hidden somewhere in a product, is not like seeing funny advertising or following a humorous corporate social-media account. Easter eggs are winks, not gags; asides rather than stand-up. A new paper on their use in software, by Matthew Lakier and Daniel Vogel of the University of Waterloo in Canada, describes various motivations for them, from rewarding users’ curiosity and acknowledging the work of developers to building hype and recruiting employees. But their defining characteristic is that they are playful.

On Google’s search engine, treats famously abound: if you search for the word “askew”, for example, the results page is somewhat off-kilter. Tesla cars are jampacked with references to pop culture: entering 007 into a text box on the car’s console, for example, will change the image of the car to one used by James Bond in “The Spy Who Loved Me”. Tapping repeatedly on the software version number in the settings menu of an Android phone will usually open up a game (on version 11, the game is unlocked by repeatedly turning a dial that goes all the way up to that number, an in-joke nestled within an in-joke).

Not everyone likes playfulness in their products. Microsoft got rid of Easter eggs from its software in 2002, when it launched an initiative called Trustworthy Computing. It worried that they might introduce vulnerabilities, prompt questions among users about what else might be lurking in its code, or simply get people asking why its engineers did not have anything better to do. “It’s about trust. It’s about being professional,” explained a blog by one of its developers in 2005.

Obviously, playfulness has limits, particularly when applied to products that must not go wrong or to services whose reputation rests on sobriety. You probably don’t want engineers at Airbus or Boeing to spend too much time on giggles. The idea of a frisky auditor sounds more like a fetish than a recipe for commercial success. Giving rein to employees’ creativity has risks: jokes can easily backfire. But Easter eggs do not have to be embedded in code to have an impact: playfulness is a mindset which can show up in design choices or tweaks to wording. And in many contexts, irreverence can foster loyalty rather than weaken it.

Making references that rely on users’ knowledge of a product is a way of adding to a sense of community. Hit a broken page on the Marvel website and you’ll be taken to one of a series of quirky 404 pages; one shows Captain America grimacing and the tagline “hydra is currently attacking this page!” Elon Musk routinely uses playfulness to signal his anti-establishment credentials to his army of fans: by including the number “420” in his recent offer price for Twitter, he appeared to be making a reference to marijuana. (If you find this funny, you’ll be thrilled to know that Tesla vehicles can also make fart noises.)

In-jokes can be used to reinforce brands. While readers of the New Yorker wait for their app to load, messages like “Captioning cartoons” and “Checking facts” appear at the bottom of the screen. On an iPhone’s web browser, Apple uses circular-rimmed glasses as the icon for its reading-list feature, in an apparent tribute to Steve Jobs.

Showing playfulness is above all a way of bestowing humanity on companies and their products. Slack, a messaging platform, offers users a chance to pick various notification sounds. The explanation for the one marked “hummus” is that a British employee said this word in a way that tickled colleagues: it is her voice you can hear.

There is no utility at all to this feature, or to knowing the story behind it. But far from eroding trust, the decision to include this sound in the product creates a sense that a group of actual humans is behind it. Playfulness may sound unprofessional. It can be seriously useful.

Finance & economics | Free exchange

How would an energy embargo affect Germany’s economy?

Researchers draw some lessons from past episodes

Apr 30th 2022

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Russia’s decision to halt the supply of gas to Bulgaria and Poland has added fuel to an already heated debate in Germany, which is heavily reliant on the commodity. For weeks the country’s economists and officials have argued over just how much a ban on Russian hydrocarbons would harm the economy. Now it seems imaginable that Russia itself could turn off the taps. What toll would an embargo take? A wide body of research, which examines a range of past disruptions, sheds light on the question.

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The relationships between modern firms are not simple links connecting one producer with another, but a tangle of complex interactions. The breakdown of a seemingly insignificant link in the chain can disrupt firms that are either upstream or downstream of it, causing wider damage. In a paper published in 2019 David Baqaee of the University of California, Los Angeles, and Emmanuel Farhi of Harvard University used a model of complex supply networks to study the oil shocks of the 1970s. Linkages between firms and sectors meant that the overall economic effect was quite a bit larger than the direct impact on sectors that used oil. Recent research on the effect of social distancing on America by Jean-Noël Barrot, then of hec Paris, and his co-authors finds that ripple effects through production networks accounted for more than half of the total economic impact.

Another much-studied instance of disruption is the earthquake that struck north-eastern Japan in 2011. As the worst-hit areas only accounted for less than a twentieth of gdp, local disruption should not have had a noticeable nationwide effect. But it did. In a review Vasco Carvalho of the University of Cambridge and colleagues disentangle the impact on the affected areas from the ripple effects along supply chains, and find that the latter accounted for more than half the hit to Japanese growth.

Researchers have also uncovered the types of links and mechanisms that enable shocks to propagate widely. The shutdown of a company altogether is one way in which a jolt can create a much bigger economic hit, according to a paper by Daron Acemoglu of the Massachusetts Institute of Technology and Alireza Tahbaz-Salehi of Northwestern University (as well as another study by Mr Baqaee). That explains why Alan Mulally, then the chief executive of Ford, a carmaker, urged American lawmakers to bail out his competitors during the global financial crisis. Ford feared the collapse of the auto sector’s suppliers, which would cause severe disruptions at its own plants, too.

Intimate commercial relationships, such as those within firms, tend to be especially affected, because they are harder to replace. Another study of Japan’s 2011 earthquake by Christoph Boehm of the University of Texas, Austin, and others finds that the American subsidiaries of Japanese firms also suffered, as did their suppliers. Other research also concludes that the more customised the relationship between firms and their suppliers, the bigger the ripple effects. Mr Barrot and Julien Sauvagnat of Bocconi University examine 30 years of American natural disasters and find that disruption to just one supplier leads to a loss in sales for a downstream firm of two to three percentage points, which, considering that most suppliers provide a small portion of a firm’s production inputs, is a sizeable fall.

Such findings provide fodder for opponents of an energy embargo in Germany. And some estimates of the impact of an embargo also suggest that the short-term disruptions could be large. Six leading German research institutes conclude that an embargo could lead to a gdp loss for the country of around 1% this year and 5% in 2023. The Bundesbank estimates a hit of 5% in 2022.

Yet there are two reasons why things need not be so bad. For a start, just as past experience shows that supply disruptions can have sizeable near-term effects, it also shows that the economy in aggregate has a great ability to adjust. In 2010 China banned the export of rare-earth metals to Japan, one of the world’s biggest users of the minerals. Japanese firms were able to quickly substitute away from previously cheap rare earths and find alternative supplies, according to research by Eugene Gholz of the University of Notre Dame and Llewelyn Hughes of the Australian National University. In a study of the potential effects of a Russian energy embargo on Europe, Rüdiger Bachmann of the University of Notre Dame and his co-authors find that while the hit could be large, it would be partly offset by the economy’s ability to adapt. The overall impact, they reckon, could be in the region of 0.5-3% of gdp.

Production, interrupted

Moreover, it is within the gift of governments to mitigate the short-term pain of supply disruptions. eu officials, for instance, are mulling stricter sanctions on energy imports from Russia. The more notice firms receive about the measures, which could include a tax on Russian energy, the easier adjusting to them is likely to become. Past episodes suggest that if policymakers do want to change regulations or trade relationships, they should do so consistently and carefully. A liberalisation of Indian trade in the 1990s led to little wider disruption because it was gradual, helping firms adjust. A recent study by Alessandra Peter of New York University and Cian Ruane of the imf points out that Indian firms were able to find substitutes for inputs.

Governments could also take into account the fact that businesses may not do enough to ensure that networks are solid in the near term. Matthew Elliott of the University of Cambridge and others find that firms might invest in the robustness of their supply chains if they have a business case to do so. But they might not seek to ensure the resilience of the wider network, because they do not stand to reap the rewards from such investment. Encouraging firms and households to shift away from using fossil fuels, as a tariff would do, could enhance that resilience. Managed well, Germany’s supply disruptions need not be quite so disruptive. 

Apr 30th 2022 edition

Back Story
Philip Guston’s paintings are controversial.

But here they areA struggle over artistic freedom suggests a better way out of the culture wars

Apr 30th 2022

“Probably the only thing one can really learn”, Philip Guston eventually concluded, “is the capacity to be able to change.” The modern artist’s fate, he said, was “constant change”. As a painter he embraced that fate—and in posterity his work has proved both an index of change and a challenge to it. A new show in Boston charts his restless genius; it is also the canvas for a struggle over art’s freedom and obligations, and the contested balance between them.

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Twice Guston, who died in 1980, made a reputation and gave it up—first as a figurative artist and muralist in the 1930s and 1940s, next by plunging into abstraction with his friend Jackson Pollock and other mid-century American pioneers. Boldly he returned to figuration in the late 1960s, dwelling on banal yet somehow uncanny objects: light bulbs, bricks, boots. He painted heads, distorted or half-submerged. And he made a series of paintings of triangular hooded figures that recall the Ku Klux Klan.

When first exhibited in 1970, these caused an art-world scandal—not because of the imagery, or Guston’s right to use it, but over the brashly cartoonish technique. A retrospective staged in 2003-04 passed without uproar. But in 2020, in the ferment after the murder of George Floyd, the organisers of the then-upcoming new show quailed at Guston’s motifs and themes. The director of the National Gallery of Art in Washington, where it was due to open first, said he had “appropriated images of black trauma”. The problem, implicitly, was both what Guston painted and who he was.

Well, who was he? The son of Jewish refugees from Odessa, he changed his name from Goldstein to evade anti-Semitism. The Klan was active in the Los Angeles of his youth and his early work also evoked its crimes, alongside other fascistic atrocities. He turned away from abstraction in part out of an enduring sense of political duty. “What kind of man am I”, he felt in the 1960s, “sitting at home, reading magazines, going into a fury about everything—and then going into my studio to adjust a red to a blue.”

As for the later hoods themselves: Guston delighted in telling stories with them, and in the expressions he could conjure in their almost blank visages. At bottom, though, they were—and are—a reproach. They are terrible in their ordinariness, surrounded with everyday bric-a-brac, glimpsed smoking or riding in a boxy car. In “The Studio” one sketches a self-portrait, blood on his hand and costume. The stitching in the hoods matches and merges with the window slits in the buildings Guston painted. His hoods are knitted into society. They are everywhere.

These works are an indictment of racism, glaring or insidious, not a case of it. But it appeared today’s viewers might not get a chance to see that for themselves. In 2020 the exhibition (already hit by the pandemic) was postponed by the four museums involved in it, initially until 2024. Opponents of censorship protested, as did many artists. Some thought the delay smelled like a cancellation, and that “Philip Guston Now”, the show’s title, might become Philip Guston Never.

They were wrong. Ahead of the mooted schedule, it opens on May 1st at the Museum of Fine Arts (mfa) in Boston, and will be adapted in Houston, Washington and London. It is a magnificent exhibition and—at a febrile, polarised time—an important one. The mfa brought in African-American curators and has carefully laid out the political context of Guston’s life and work. Visitors can avoid the hoods if they choose to: they can make up their own minds.

But with a few forgivable exceptions, the intended artworks are there; Guston’s vision is honoured and explained. The format gives consideration to those who might be offended, but not a veto. It affirms and accommodates art’s power to provoke, and its right to. Lots of cultural skirmishes end in shouty hostility or shabby retreat. Here is a wiser sort of resolution, relying on a mix of principle, reflection and what you might call tact, or good manners.

Besides the hoods, other themes and motifs recur. Red was the main colour in Guston’s palette, bleeding into pink. He was always influenced by the Italian Renaissance masters, especially their gorgeous visions of the apocalypse and the damned. Heaven was dull, he noted, but “when they’re going to hell the painter really goes to town”. The same is true of him, and of the new show: they draw art from anguish and force you to think.

image credits:
"The Deluge", 1969. Museum of Fine Arts, Boston. Bequest of Musa Guston. © The Estate of Philip Guston, courtesy Hauser & Wirth
"The Studio", 1969. Private Collection. © The Estate of Philip Guston, courtesy Hauser & Wirth