EVER since the collapse of the Soviet Union ended the old, neat division between East and West, people have been inventing new ways of dividing up the world. In the 1990s it was fashionable to talk about America, Europe and Japan. Today pundits draw the line between emerged and the emerging markets.Joel Kotkin, a geographer, suggests another frame of reference. In “The New World Order”, a paper for the Legatum Institute, a think-tank in London, he looks at the world through the prism of culture. The ties of history and habit—of shared experiences and common customs—can explain a lot about who does business with whom. Mr Kotkin quotes Ibn Khaldun, a 14th-century Arab historian: “Only tribes held together by a group feeling can survive in a desert.” Substitute “globalised economy” for “desert” and this describes the modern world quite well.Mr Kotkin’s argument chimes with recent research. The World Values Survey divides the world into big cultural zones (the Confucian zone, the English-speaking zone, etc) on the basis of common values. These common values cannot be explained simply by income…

WITH a nudge from their pastor, the 25,000 members of the New Birth Missionary Baptist Church near Atlanta opened their hearts, and their wallets, to Ephren Taylor. And why not, given his glittering credentials? Mr Taylor billed himself as the youngest black chief executive of a publicly traded company in American history. He had appeared on NPR and CNN. He had given a talk on socially conscious investing at the Democratic National Convention. Snoop Dogg, a rapper, had tapped him to manage a charitable endowment.So when Mr Taylor’s “Wealth Tour Live” seminars came to town, faithful ears opened wide. Eddie Long, the mega-church’s leader, introduced Mr Taylor at one event with the words: “[God] wants you to be a mover and shaker…to finance you well to do His will.” Mr Taylor offered “low-risk investment with high performances”, chosen with guidance from God.Divine inspiration, alas, has given way to legal tribulation. For many investors, the 20% guaranteed returns proved illusory. Mr Taylor (whereabouts unknown) stands accused of fraud in a number of lawsuits. Bishop Long, a co-defendant, has urged Mr Taylor to “do…

http://www.theyoungturks.com/story/2011/10/22/152648/47/Diary/Slouching-Forward-to-1933http://www.washingtonsblog.com/2011/11/war-is-great-for-the-1-but-makes-the-99-poorer.htmlhttp://www.washingtonsblog.com/2009/03/war-is-a-racket.htmlhttp://louisproy…

EXHAUSTED after a shipwreck, the hero of “Gulliver’s Travels” wakes up on the island of Lilliput to find that he has been tied down by lots of “slender ligatures”. Gulliver is far stronger than his tiny captors; but by working together the Lilliputians subdue the giant.The bosses who will gather in Davos on January 25th-29th are more like Gulliver than they care to imagine. They may feel big, as they hobnob with politicians and stride from one soirée to another (in sensible shoes, to avoid slipping on the Swiss resort’s icy pavements). And pundits will fret, as they always do, that Davos Men are carving up the world. But when those bosses return to work they will discover that the tiny ligatures that non-Davosites have attached to them bind ever more tightly.Two decades ago bosses were relatively unbound. American chief executives struck heroic poses on the covers of Forbes and Fortune and appointed pliable cronies to their boards. Europeans such as Percy Barnevik, the boss of ASEA Brown Boveri, a Swedish-Swiss conglomerate, imported the…

Apparently it’s called a job application

THIS month Teva, an Israeli drug firm, announced that it had poached a new boss, Jeremy Levin, from Bristol-Myers Squibb, an American rival. Mr Levin is exactly the kind of immigrant Israel needs. He swotted at Oxford and Cambridge and has run companies in New York. He has lived in six countries and has contacts in dozens. And he loves Israel. “The opportunity to live and work in Israel”, he said, “is compelling.”The dynamism of Israeli business owes much to immigration. In the decade after the Soviet Union collapsed, 1m immigrants flocked to Israel. This huge influx of energy and talent helped kick-start Israel’s start-up boom.Diaspora ties help, too. Israeli entrepreneurs nearly all know people in other countries. Many divide their time between home and abroad. Their connections keep the latest ideas from Palo Alto and Hong Kong flowing into Tel Aviv, and help Israeli start-ups find new markets and new recruits.But Israel’s demographic advantage is fading. The Soviet Union will not collapse again. “We’re not going to get another…

THE young must shout if they want to be heard. In a stone hangar in the old port of Jaffa, 30 entrepreneurs have five minutes each to present their start-up companies to a panel of digital luminaries and an audience that includes potential investors. Not everyone in the room is ready to shut up and listen, so the hopefuls must battle against the din. Feng-GUI explains how, by simulating human vision, it can tell advertisers and designers which areas of a web page are most likely to grab people’s attention. CopyV promises to send large files quickly and securely. With Fooducate, “a dietician in your pocket”, on your smartphone, you can scan bar codes in the supermarket and find out what’s really going into your trolley.Israel’s legions of young technology firms clamour for attention and money. Rapid-pitch events like this one, at DLD Tel Aviv, a two-day conference in November, are common. More than 300 firms applied for a slot at DLD; 100 turned up; the lucky 30 were chosen by raffle. Yossi Vardi, a technology entrepreneur who has invested in 75 start-ups since 1996, says that he receives between three and eight…

PROFITS may be at a record high, but American businessfolk are feeling glum. Some moan that their pipeline-postponing president, Barack Obama, doesn’t understand how business works. Others fret that America itself is becoming dysfunctional. Much of this pessimism is uncalled for, but it matters nonetheless.A survey published on January 18th offers unsettling detail. Fully 71% of the businesspeople polled expected America’s competitiveness to decline over the next three years. (National competitiveness is a slippery concept: countries do not compete in the same way that firms do. But the businessfolk in question answered some clearer questions, too.) Some 45% said that American firms will find it harder to compete in the global economy. A startling 64% said that American firms will find it harder to pay high wages and benefits.The survey is from Harvard Business School, which in October persuaded nearly 10,000 of its 78,000 alumni to complete a questionnaire. Two-thirds were based in America; the remainder were spread across 121 countries. Some 91% had worked during the past year (over half in manufacturing, finance or professional services). This being Harvard, more than a quarter described themselves as a chief executive, chairman, founder, owner or something equally exalted.Intriguingly, the Harvard alumni were gloomy about where America is headed, rather than how it is…

Innovation can be risky

“WE MUST re-examine long-held assumptions about the global dominance of…American science and technology.” Those dark words come from Subra Suresh, director of America’s National Science Foundation (NSF), an official body. The NSF has just released its biennial report on global investment in science, engineering and technology. It gives warning that America is losing ground fast to Asian rivals, especially China.The ten largest economies in Asia now spend roughly $400 billion a year on research and development (R&D)—as much as America, and well ahead of Europe’s $300 billion. China’s investment leapt 28% in a year, propelling it past Japan to become the world’s second-biggest spender. “Troubling trends,” declares one of the report’s overseers.Hang on a minute. Merely counting pennies is no way to measure national prowess. Research spending is an input, not an output. Many a clever gizmo produced by well-endowed Japanese corporate labs has turned out to be worthless.Useful innovation means fresh thinking that creates value. Booz & Co, a consultancy…

THERE is a saying in the transport business that if it flies or floats, you should rent it (there are also much ruder versions of this epigram). Nevertheless, airlines have traditionally bought their planes, even if many purchases were arranged as “finance leases”, with the instalments dressed up as rent payments so as to make them tax-deductible.

However, airlines are turning increasingly to “operating” leases, in which they really are renting the planes, for a few years at a time, with a leasing company bearing the risk of any slump in their second-hand values. Over a third of the world’s airline fleet is now rented (see chart) and the proportion is likely to keep growing. Paul Sheridan of Ascend, an aviation consultancy, reckons that of the world’s top four owners of airliners, two are lessors: GECAS, with 1,732 planes, and ILFC, with 1,031, soar miles above Delta (800) and American Airlines (775). A chunk of the aircraftmakers’ bulging order books is from leasing firms betting that demand for rented planes will keep rising. Alafco, a Kuwaiti lessor, splashed out $4.6 billion (at list prices) on 50 Airbus A320neos in November…

BRAZIL is not an easy place to start a business. The World Bank ranks it 120th out of 183 countries—worse than Burkina Faso or Nigeria. Take one small example. Until recently, you needed at least two partners to form a limited-liability company. Sole traders had to find a “1% sócio”—an employee, friend or family member willing to lend his name to the articles of association, or a shell company set up solely to hold a tiny share.Things may have just got a little easier. A new law, which supposedly came into effect on January 9th, allows a lone business-owner to set up an Empresa Individual de Responsabilidade Limitada (Eireli for short): a single-holder limited-liability firm. The main requirement is capital of 62,200 reais ($35,250).This is a big deal. Alas, it may not happen as planned. In December the federal body that oversees state business registries told them to turn away firms trying to register Eirelis, as well as foreigners without permanent right of residence. No reason was given. Later, lawyers were briefed that the law’s aim was to let Brazilian sole traders protect their personal goods against lawsuits or bankruptcy—not to make life easier for big business or foreigners.Since the restrictions have no basis in the law, challenges are inevitable. Husam Abboud of Establish Brazil, a company-…

Floral and oaky, with a hint of sunscreen

LIKE champagne, tequila may be called tequila only if it comes from a specific region. Distillers in five of Mexico’s 31 states have the exclusive right to produce the famous firewater. Bottlers elsewhere must use alternative names, though their product is distilled in the same way from the sap of the agave, a spiky desert succulent often wrongly referred to as a cactus.Demand for tequila is growing fast. Americans now drink more of the stuff than Mexicans—a head-throbbing 120m litres a year. Producers outside the official tequila region are cashing in. The “agave liquor” they sell is cheaper than real tequila and tastes identical, at least to the barbarian gringo palate.Traditional tequileros hate to see others crashing what they see as their party. So a proposal sponsored by the National Chamber of the Tequila Industry would ban distillers outside the five-state boundary from using the word “agave” to describe their drinks. The proposal has won the support of Mexico’s intellectual-property agency, IMPI.Agave-lovers think this a bit…

REMEMBER the old joke about the dim tailor who makes a loss on each piece of clothing but hopes to make it up in volume? That describes the market for flat-panel screens for televisions. None of the companies that produce liquid crystal display (LCD) panels—Samsung and LG Display from South Korea, Japan’s Sharp and Panasonic, their Taiwanese rivals—makes money from it. Between 2004 and 2010 the industry suffered cumulative economic losses of $13 billion, calculates Alberto Moel of Sanford C. Bernstein, a broker.It is not because people hate their products. The world’s couch potatoes spent $115 billion on 220m flat-panel televisions last year. Many more displays—some 2.7 billion screens worth $110 billion—went into smartphones, tablets, gaming gadgets and the like, according to DisplaySearch, which measures such things. Yet profits for screenmakers are nowhere to be seen.There are several reasons for this. First, today’s products are tough to differentiate between: all are good, cheap and do the same thing. Second, many suppliers expanded capacity in recent years, creating a glut. Third, hard times in rich countries mean that fewer people will splurge on new televisions even if they are cheap.

RICH rewards for departing bosses are not popular. After Sir Fred Goodwin led Royal Bank of Scotland into a ditch and dumped the bill on British taxpayers, he left with a pension of over £700,000 ($980,000) a year. The Sun, a tabloid, said he had “screwed the nation”.Yet golden parachutes have their uses. If well-designed, they align the boss’s interests more closely with those of shareholders. Suppose, for example, a takeover is brewing. Takeovers are usually lucrative for shareholders of the target firm: in America between 1990 and 2008, they have received a median premium of 35%. But the boss’s interests are quite different. If the firm is acquired, he is likely to be fired.A golden parachute can persuade the boss not to obstruct a takeover. But their notoriety dissuades firms from using them. Dirk Jenter of Stanford University and Katharina Lewellen of Tuck Business School find that golden parachutes are rarer and stingier than they should be.To test whether bosses block takeovers, they looked at what happens when they are nearing retirement, and therefore have no future career to sacrifice. Using data on American public firms from 1992 to 2008, they found that companies with a boss aged 65 or over were 50% more likely to be taken over.Another paper, by Eliezer Fich and Ralph Walkling of Drexel University and Anh Tran of Cass Business School,…

Call that a bargain? Time to shop online

LAST summer, amid rumours that he was about to be sacked, Lars Olofsson was given another six months to revive Carrefour, the world’s second-biggest retailer. His time is up.Carrefour’s performance has grown mouldier since then—and not in a good way, like Roquefort cheese. In November 2011 it lost market share in France, its home market, which accounts for 42% of sales. This came after several profit warnings, a string of U-turns and a Brazilian merger plan that ended in failure. Carrefour’s shares fell by 45% between January and December last year. Another profit warning may come on January 19th, when the firm will announce its quarterly results—and possibly Mr Olofsson’s future.Carrefour’s woes are not all the chief executive’s fault. Mr Olofsson took over a struggling firm with a passé business model that mainly operates in a stagnant part of the world. However, he compounded these problems with inept management. A gifted marketer, he can make unrealistic goals sound reachable; but he cannot make them so. His plans for Carrefour have…

LENIN is said to have sneered that a capitalist will sell you the rope to hang him. The quote may be spurious, but it contains a grain of truth. Capitalists quite often invent the technology that destroys their own business.Eastman Kodak is a picture-perfect example. It built one of the first digital cameras in 1975. That technology, followed by the development of smartphones that double as cameras, has battered Kodak’s old film- and camera-making business almost to death.Strange to recall, Kodak was the Google of its day. Founded in 1880, it was known for its pioneering technology and innovative marketing. “You press the button, we do the rest,” was its slogan in 1888.By 1976 Kodak accounted for 90% of film and 85% of camera sales in America. Until the 1990s it was regularly rated one of the world’s five most valuable brands.

Then came digital…

WHEN Da Vinci, a retailer of expensive imported furniture, opened its new showroom in Shanghai recently, it spared no expense. The gallery, over 10,000 square metres spread over four stories, was filled with extravagant pieces from brands such as Armani Casa and Versace Home. The theme of the event was zhen de jia bu liao (roughly: “what is genuine cannot be counterfeited.”).Yet Da Vinci is embroiled in a scandal. CCTV, an official media outlet, alleged that some of its imported kit may actually have been made locally, shipped overseas or to a bonded warehouse, then brought back into the country to earn an undeserved “imported” seal. The firm hired a public-relations agency to put a more positive spin on the story. Da Vinci claims this involved paying $150,000 through a broker to a journalist who, it alleges, threatened to run more damaging stories if not paid off.All parties involved deny wrongdoing. An initial official ruling seemed to clear Da Vinci, but in December the Shanghai authorities slapped fines on the firm for alleged misdeeds including improper labelling. Da Vinci now…

IN A Republican primary field full of radicals, Mitt Romney is the establishment candidate. Yet earlier in his career he was a revolutionary. Hard though it may be to imagine Mr Romney waving a pitchfork or manning a barricade, Schumpeter is not joking. As a businessman, Mr Romney was at the heart of three revolutions.The first was the rise of meritocracy in corporate America. In the 1950s and 1960s many people thought management was just a matter of applied common sense. Companies wanted their executives to be “well-rounded men”, not rocket scientists. But the 1960s and 1970s saw the rise of a new kind of brain-intensive company: private-equity outfits such as Kohlberg Kravis Roberts and strategy consultancies such as the Boston Consulting Group (BCG) and its stepchild Bain and Company.These companies valued analytical skills above all else—certainly above experience or golf handicap. Bruce Henderson, BCG’s founder, recruited the smartest kids from the nation’s best business schools. Mr Romney was the archetype of this new breed: he graduated in the top 5% of his class at the Harvard Business School. The earnest…

HURLING brickbats at bankers is a popular pastime. The “Occupy Wall Street” movement and its various offshoots complain that a malign 1%, many of them bankers, are ripping off the virtuous 99%. Hollywood has vilified financiers in “Wall Street”, “Wall Street 2”, “Too Big to Fail” and “Margin Call”. Mountains of books make the same point without using Michael Douglas.Anger is understandable. The financial crisis of 2007-08 has produced the deepest recession since the 1930s. Most of the financiers at the heart of it have got off scot-free. The biggest banks are bigger than ever. Bonuses are flowing once again. The old saw about bankers—that they believe in capitalism when it comes to pocketing the profits and socialism when it comes to paying for the losses—is too true for comfort.But is the backlash in danger of going too far? Could fair criticism warp into ugly prejudice? And could ugly prejudice produce prosperity-destroying policies? A glance at history suggests that we should be nervous.Scorn for moneymen has a long pedigree. Jesus expelled the moneychangers from the Temple. Timothy tells us that “the love of money is the root of…

But don’t try to buy a ticket online

CHINA’S love affair with fast trains is gathering steam again. Undaunted by horrendous accidents and massive cost overruns, officials are planning further expansion of the country’s high-speed rail network. A new service has begun between the southern cities of Guangzhou and Shenzhen, nearly halving the travel time to 35 minutes. With trains capable of travelling up to 380kph (236mph), the service will eventually be extended to nearby Hong Kong. For those craving even faster speeds, CSR Corp, China’s biggest trainmaker, has unveiled a supertrain (pictured above) said to be inspired by the shape of an ancient Chinese sword. It should slice through the air at 500kph.Supertrains are sexy. Politicians love to show them off. But to allow more Chinese people to get where they want to go at a reasonable price, then three less glamorous types of investment would yield better returns. China Rail, the state near-monopoly, is deficient in all three.The first is safety. Standards are patchy. In July a high-speed train crashed near Wenzhou, leaving 40 dead….

TO GET an idea of where the world’s pharmaceutical industry is heading, a leafy complex tucked off a hectic road in Mumbai provides a clue. In one part of the building, Abbott, an American firm, is developing generic drugs—a privilege it won when it bought the copycat business of Piramal, an Indian firm, for $3.7 billion in 2010. In the other part of the building Piramal is developing new drugs. The American firm wants to sell cheap generics in India; the Indian firm plans to sell original drugs in America. One might think that they were having an identity crisis, if each were not so excited by the switch.The world’s drug industry is in flux. In the past, Western drugmakers thrived on innovation while firms in emerging markets made cheap copies of their products. Now they are invading each other’s turf. Blockbuster drugs are losing their patents and, despite some bright spots, research has become more costly and less fruitful. Big Western firms are now looking to emerging markets for growth, hoping to sell not just their patented drugs but generic ones, too. Firms in emerging markets are expanding their footprint…