Redesigning "The Economist"

Feb 20th-26th 2010

WHAT’S GONE WRONG IN WASHINGTON? • GERMANY’S FURY ABOUT THE EURO • THE OIL BONANZA IN IRAQ • A MACHINE THAT PRINTS BODY PARTS • CHINA’S LEADERSHIP: TETCHY & BRUTAL

IN THIS ISSUE

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ON THE COVER: TRIALS & TRIBULATIONS IN WASHINGTON American politics seems unusually bogged down at present.

Blame Barack Obama, not just the system.

8 The World This Week

(Un)employment, Techy Social Security, Tiger’s back, Census 2010, iPad, Obamacare + More

12 Nigeria’s New President

Be focused, and be bold, says Goodluck Jonathan

14 Greece and the Euro

Is the euro zone’s plan for Greece just plain flawed?

15 Rethinking Economics

Radical thoughts on 19th street

18 America’s Democracy A study in paralysis

22 Evan Bayh Retires

Another one bites the dust

24 State Pension Plans

Promises to keep, not break

27 Religion & Unemployment

God help the jobless

30 America’s Drug Laws A fine too far

32 Cabling in America Fiber in paradise

33 Denver’s Transport Woes

Back to the drawing board

35 A Canadian Conservative Split A wild rose blooms

37 Haiti a Month on Tarpaulin cities

38 China’s Politics of Repression What are they afraid of?

40 The Afghan War

NATO’s better week

46 R.I.P. Charlie Wilson

Our obituary of a cobgressman, party animal, and savior of Afghanistan

48 Spain’s Judiciary

Experiencing a new civil war

50 Terrorism in India

60

Running on a short fuse

58 Charlemagne

A grimm tale of euro-integration

63 Printing Body Parts Making a bit of me

65 Antitrust in Europe

Unchained watchdog

67 Chad & Sudan Make Up Good news for Darfur?

The Dead Sea Scrolls

52

The voice of reason behind The Story of the Scrolls, Geza Vermes

70 Political Corruption in Italy Mr. Fix-it in a fix

71 The Jobs Bill

Stuck in quicksand

76 Turkey & Armenia

Making zero progress

Iraq, Iran, and the Politics of Oil

Crude diplomacy implications for Iran and the rest of the region

78 Missile Defense in Europe The next Salvo

80 Repression in Myanmar Captive nation

82 British Exports

Trading out of trouble

83 Capital Controls

Fundamental questions

86 The Fertilizer Industry A growth business

87 Assassinations

An ancient practice

88 Killing’s Black Arts Low-tech hitmen

55 Face Value

We speak to Fazle Hasan Abed of Brac, one of the most successful NGOs ever

90 “The Ghost Writer”

Latest at the box office

93 America in 2050

The next hundred million

73 Papal Problem

Benedict’s legacy is threatened by sex scandals. How will he redeem his name?

READY FOR BIOMETRIC SOCIAL ID CARDS?

Could a national identity card help resolve the heated immigration-reform divide? Two Senators, New York Democrat Chuck Schumer and South Carolina Republican Lindsey Graham, certainly seem to think so. They recently presented an immigration-bill blueprint to President Barack Obama that includes a proposal to issue a biometric ID card—one that would contain physical data such as fingerprints or retinal scans—to all working Americans. The “enhanced Social Security card” is being touted as a way to curb illegal immigration by giving employers the power to quickly and accurately determine who is eligible to work. “If you say [illegal

Senator Chuck Shumer presents a glimpse at a possible new social security card.

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GOODBYE, GOOGLE?

Google appears ready to leave China and this year pales in comparison with the its more than 380 million Internet users company’s $22 billion global annual behind. When the search giant launched revenue. The pullout, however, could a local service in China in 2006, it adversely affect Chinese start-ups.This may be the most agreed to censor shocking part: In query results on conretrospect Yahoo troversial terms like has played China Tibet—while reservfar better than ing the right to alert Google. It pulled users that it was out of the country doing so. Initially years ago, knowing sanguine, Beijing it wouldn’t win and began to add restricowns nearly 40% of tions in 2009. Tenthe Alibaba, a sions reached a company that very breaking point in definitely knows January after a Chihow to grow in na-based cyberattack China. Entrepreon Gmail, Google neur and angel inthen vowed to stop vestor in China Bill self-censoring—a Bishop—who has move that, according A chinese flag flies high outside Google’s Beijing not always agreed to a Beijing spokes- Headquarters. with my China covman on March 12, would have “consequences.” Ironically, those consequenc- erage in the past—pointed this out, es might be gravest for China. The $600 adding “Not often Yahoo looks smarter million that Google could earn in China than Google.”

immigrants] can’t get a job when they come here, you’ll stop it,” Schumer told the Wall Street Journal. Proponents also hope legal hiring will be easier for employers if there’s a single go-to document instead of the 26 that new employees can currently use to show they’re authorized to work. But with a congressional skirmish over comprehensive immigration reform on the horizon, skeptics from the left and the right have raised numerous concerns about the biometric ID—some of which pop up every time a form of national identification is proposed, and some that hinge on the shape this plan ultimately takes.

IN DETAIL:

THE NEW HEALTHCARE PLAN •Children age 26 and younger can remain covered under their parents health insurance plans •Medicare recipients will receive a $250 rebate to help in closing the doughnut hole •Health insurance companies can no longer exclude coverage for preexisting conditions for children •Adults with pre-existing conditions will be eligible for coverage into high risk health insurance pools until future health care exchanges are in effect •Health insurance companies will be prohibited from levying annual limits and lifetime limits on coverage •All new health insurance plans must provide coverage for preventative services with no out of pocket cost •Companies that offer health benefits for early retirees ages 55 to 64 will receive assistance from a temporary reinsurance program •All new health insurance plans will have to comply with new regulations that lay out an appeals process for when health insurance claims are denied by the insurance company

SUICIDE BOMBING KILLS 37 IN MOSCOW Two female suicide bombers blew themselves up Monday in twin attacks on Moscow subway stations jam-packed with rush-hour passengers, killing at least 37 people and wounding 65, officials said. They blamed the carnage on rebels from the Caucasus region. The blasts come six years after Caucasus Islamic separatists carried out a pair of deadly Moscow subway strikes and raise concerns that the war has once again come to Russia’s capital, amid militants’ warnings of a renewed determination to push their fight. Chechen rebels claimed responsibility for a deadly bombing late last year on a passenger train en route from Moscow to St. Petersburg. Last month, Chechen rebel leader Doku Umarov warned in an interview on a rebel-affiliated Web site that “the zone of military operations will be extended to the territory of Russia ... the war is coming to their cities.”The first explosion took place just before 8 a.m. at the Lubyanka station in central Moscow.

Prime Minister Vladimir Putin, who built much of his political capital by directing a fierce war with Chechen separatists a decade ago, vowed Monday that “terrorists will surely be destroyed.”

President Barack Obama signs the new plan for American healthcare, on March 23rd, 2010.

SIGNED, SEALED, DELIVERED The Barack Obama who addressed Americans at near midnight on March 21st had every right to gloat. After a year in which his proposals for health reform were savaged by Republicans and leftists alike, and declared dead half a dozen times by everyone, he has somehow managed to get them over the finishing line. The reform package is made up of two bills. One, a flawed and pork-laden version of health reform passed by the Senate before Christmas, has now been approved by the House; Mr Obama signed this on March 23rd. The other is a “reconciliation” bill meant to fix some of its flaws, and the House also passed this. Because this is a new bill, the Senate has to pass it too. It can do so under special “reconciliation” rules that require only 50 votes, not a filibuster-proof 60. As The Economist went to press, it looked set to do so.What will it mean for America? The short answer is that the reforms will expand coverage dramatically, but at a heavy cost to the taxpayer. They will also do far too little to rein in the underlying drivers of America’s roaring health inflation.

APPLE’S HOT PRODUCT FOR THE NEW YEAR

Geeks are salivating with anticipation.

On Saturday April 3rd customers, in America get their hands on Apple’s iPad, a touch-screen device (rather like a large Iphone) that lets users search online, read electronic versions of books, play computer games and more. At least 190,000 units have been ordered in America. The iPad becomes available in other countries later. The fate of the device is likely to matter to more companies than just Apple: a variety of book, magazine and newspaper publishers are watching anxiously to see if enough

Apple’s iPad will not only shake up the tablet scene, but the computing world as a whole.

customers are willing to pay for digital access to their products. The iPad and other tablets could shake up the computing scene. The success of other technologies, such as digital-music players, was built in part on the popularity of Apple products, such as the iPod. Apple has positioned the device between the smartphone and the laptop, but the iPad doesn’t create a new category, it just improves upon the not-so-successful segment of tablet PCs. We’re salivating with the geeks to see how the iPad is received by consumers.

A TIGER OUT OF THE CAGE

Tiger walks the green for the first time since his ‘haitus.’

Tiger Woods arrived without warning on a lazy Sunday afternoon at the Masters.

He offered a playful jab when he greeted two reporters he had not seen in five months, acting as though nothing had changed. He then strolled onto the new practice facility at Augusta National and stopped to chat with Paul Casey. It’s where I’m used to seeing him,” Casey said, choosing to keep their conversation private.

“All of a sudden he appeared behind me. He was all business as usual—hit 10 balls and go play.” This Masters figures to be anything but that. Woods has not been seen in public, except for a few chosen media, since his middle-of-the-night car accident Nov. 27 that set off explosive revelations of a sordid life hardly anyone knew existed.

More than a four-time Masters champion and the No. 1 player in golf, he is currently facing the music for a sex scandal that have made him a regular in tabloids.

THE JOBS BILL: BOGGED DOWN

With the mid-term election looming in November, officials in Washington, DC are facing pressure to do something about jobs. By now, the litany of dismaying statistics is all too familiar. Nearly 15m Americans are unemployed, and over 6m have been out of work for more than six months. By the administration’s estimates, the economy will create only 95,000 jobs a month in 2010—not enough to reduce the unemployment rate, which is forecast to stay above 9% well into 2011. Meanwhile, government support programs are winding down. The stimulus bill passed a year ago will have a declining impact during the rest of this year, and although the Federal Reserve may not increase interest rates this year, it will end other interventions sooner. The House of Representatives moved to fill the gap last December, when it passed a $154 billion jobs bill focused on infrastructure, aid to the states and extended unemployment benefits. Earlier this month Barack Obama outlined his own approach to the problem of joblessness in the 2011 budget. His plan, worth about $250 billion in 2010 and 2011, mirrors the House’s in some ways, but it adds measures to create jobs, notably a $33 billion program of tax credits. Firms would get a $5,000 credit for each new worker hired, and money to offset payroll-tax expenses from increased wages or hours worked.

STAND UP, BE COUNTED

Every ten years, says the constitution, America’s government must count every person living in the United States. For

a country of more than 300m, this is an immense logistical feat: the Census Bureau mailed out or hand-delivered about 134m questionnaires for census day on April 1st. Little wonder, given the ways in which the results help to shape the distribution of political and economic power. As after every census, the population changes tallied will alter the state-by-state apportionment of seats in the House of Representatives and therefore the electoral college, the body that picks the president after elections. According to the non-profit Population Reference Bureau, the

southern and western states will do well; Texas is likely to gain three seats, with Arizona, Florida, Georgia and Utah each gaining one. The losers (one seat each) are likely to be Iowa, Louisiana (thanks to Hurricane Katrina), Massachusetts, Michigan, New Jersey, New York, Ohio and Pennsylvania. Another result of the census is to determine how much loot states bag from the federal government.

Andrew Reamer of the Brookings Institution in Washington, DC, estimates that in the 2008 fiscal year alone census data were used to apportion $447 billion of federal assistance grants.

DEVOLVING VOLVO It took more than a decade for Ford to create what it called its Premier Auto Group around a bunch of classy European brands— starting in 1987 with its purchase of A s t o n Martin, followed by the acquisitions of Jaguar, Volvo and then Land Rover.

It all proved a terribly expensive distraction. Now, it has taken Ford three years of tricky negotiations to dismantle the group, selling the European marques at a considerable loss. Aston Martin went to a British-led consortium in 2007, Jaguar Land Rover (JLR) was snapped up by Tata of India in 2008 and, on March 28th, a deal was signed to sell Volvo to Geely, a small but vastly ambitious Chinese carmaker. The sticker price is $1.8 billion, a fraction of the $6.45 billion that Ford paid for Volvo in 1999.

The cost to Ford is worse even than those figures suggest: it has had to support the Swedish carmaker through years of losses and even now it faces further expenses associated with the sale to Geely that will eat up much of the meagre sum it is getting for Volvo.

INCREASING THE PEACE

Obama has now struck an equally long-awaited deal with Russia to reduce the two countries’ nuclear stockpiles. On Friday March 26th he announced that Russia’s president, Dmitry Medvedev, had agreed to a follow-on treaty to the Strategic Arms Reduction Treaty ( S TA RT ) , which was signed in 1991 and expired last December. The new deal will cut both countries’ arsenals by about a third from the maximum that would have been allowed under a deal struck in 2002 between George Bush and Russia’s then-president, Vladimir Putin. The new deal will lower the countries’ arsenals to 1,550 deployed warheads each and 700 delivery systems (intercontinental landbased missiles, submarine-based missiles and strategic bombers). Russia has been keen to reduce the cost of maintaining its large stockpile of nuclear weapons and Mr Obama has talked about getting eventually to a world free of all nuclear weapons. The treaty must next be ratified in Russia’s Duma and in America’s Senate. Widely expected, and welcomed.

TAXING THE BANKS When you’re staring at a $250 billion budget deficit for the year, a fresh tax or two can come in handy. And if unpopular banks are the targets, better still. Few of Britain’s voters will quibble with Alistair Darling’s call Wednesday, March 24, for a global tax on banks to help recover the billions in public funds doled out during the crisis. “We intend to get all taxpayers’ money back,” the Chancellor of the Exchequer said during his budget speech to Parliament. Charging banks to help do that, Darling added, was an issue on which “more countries agree.” Moves to force lenders to pay up in response to the global financial blowout are gaining momentum. German officials announced plans Monday, March 22, to start taxing banks as a way of squirreling funds for any future bailouts, with details expected to come before the end of the month.

U.S. President Barack Obama unveiled proposals in January for a $90 billion bank tax designed to recoup public money used to shore up the nation’s lenders. No-nonsense Sweden, meanwhile, has already implemented its own version. But amid this consensus on the need to charge banks, doubts over the merit of the schemes remain.

MAKING A JOLT VENTURE Ford Motor Co. and Microsoft Corp. have signed a deal to work together on a computerized link between houses, electric cars and utility companies to help manage energy use.

The companies said Wednesday at the New York International Auto Show that this is the beginning of a smart system that will help utilities and customers manage energy costs and electrical generating capacity. The system would start with the all-electric Ford Focus compact car that is scheduled to go on sale late in 2011. Called “Microsoft Hohm,” it will allow utilities to vary electric rates based on the time of day.

A computer would determine the best time to recharge the car at the lowest cost and the least burden on the utility’s generating system. Charging an electric car can double the energy used at a home, and utilities worry about the increased burden on their power generators. But charging the cars late at night, when appliances and other big electricity users aren’t working, can help manage the load. The companies have time to work out details of exactly how the system will work, figuring out electric rates and loads on generating systems, said Derrick Kuzak, Ford’s global product development chief.

Microsoft already has computer nodes for home thermostats and appliances to manage electricity use, he said. “We’re doing a lot to bring vehicles to market, but there has to be a lot of other work done from both a consumer and utility perspective to make this viable and affordable,” Kuzak states.

THE ECONOMY IS NOT A TOTAL BASKET CASE.

BY BRAD TUTTLE

F

or quite some time, there was no shortage of indicators pointing to the fact that the economy wasn’t doing so hot—including some odd data about a falloff in men’s underwear sales, a rise in animals being abandoned at pet shelters, and the impressively overqualified status of this year’s census workers. Now, at long last, we’ve got signs that the economy is picking up.

Moms will feel $3 more worth of love this Mother’s Day. Consumer spending for the holiday is expected to total $14.6 billion this year, with the average person spending $126.90 in 2010, up from $123.89 in 2009. Since this is a per-person average, I guess if you’re a mom of three kids, you’ll actually feel $9 worth of love in a few weeks.

An extra half-million cars should be sold by year’s end. The latest estimates indicated that 12.5 million cars are expected to be sold in 2010. That’s 500,000 more than predictions made a few months ago.

Still, even while car sales should be up 20% compared to last year, cars just aren’t selling like they used to; a few years back, dealers typically handed buyers the keys to 16.5 million new cars annually.

Big unexpected drop in foreclosures. At least in California, where mortgage default notices fell 40% in the first three months on 2010. Also, the median price of a home in southern California was up 14% in March, compared to a year earlier. Around the country, people don’t feel aren’t feeling all that great about their homes, however: One in four homeowners with a mortgage—27 million people in total— think that underwater, in debt for more than the home is worth.

Big unexpected job boom. At least in North Dakota, where there’s plenty of employment to be had in the thriving oil industry. The state has the nation’s lowest unemployment rate at 4%. Unfortunately, North Dakota is having trouble housing the influx of workers, with motels, apartment complexes, and mobile home outposts all full to the brim. The odd result is that the rise in jobs has also caused a rise in rates of homelessness. The recession actually ended last summer. That’s what some economists say, even though many consumers don’t believe it.

THE APPLE FELL VERY FAR FROM THE TREE Steve Jobs will reshape the world.

Again. Hello, iPad. B Y D A N I E L LY O N S

The iPad will change the way you use

computers, read books, and watch TV—as long as you’re willing to do it the Steve Jobs way. What’s the big deal about Apple’s iPad, arriving in stores on the biggest wave of hype since, well, Apple’s iPhone? The easy answer is that the iPad comes from Apple, and we always expect big things from Apple because it is run by Steve Jobs, whose California garage was the birthplace of the personal computer in 1976. Since then, Jobs has transformed computing by making machines people actually like to use.

H

e’s changed the movie business, buying Pixar and ushering in the era of computer animation, and he’s led a takeover of the music business with the iPod and the iTunes music store. Then came the iPhone, and even now, nearly three years after its introduction, no other phone comes close. Jobs is a relentless perfectionist whose company creates such beautifully designed products that they have changed our expectations about how everything around us should work. He has an uncanny ability to cook up gadgets that we didn’t know we needed, but then suddenly can’t live without. The iPad is his personal pet project. It’s something he’s been working on for years, reportedly even while he was recuperating from a liver transplant.

Jobs calls it “a truly magical and revolutionary device,” and supposedly has told people close to him that the iPad is the most important thing he’s ever done.

Which is why so many of us raced to San Francisco in January to get an up-close view of the miraculous tablet. Yet my first thought, as I watched Jobs run through his demo, was that it seemed like no big deal. It’s a bigger version of the iPod Touch, right? Then I got a chance to use an iPad, and it hit me: I want one. Like the best Apple products, the user interface is so natural it disappears. The iPad runs on the iPhone operating system, so it’s even easier to use than a Mac. Like the iPhone, the iPad is a sleek, slim device. It has a nice 9.7-inch screen, weighs only one and a half pounds, and can play movies for 10 hours on a single battery charge. Right away I could see how I would use it. I’d keep it in the living room to check e-mail and browse the Web. I’d take it to the kitchen and read The New York Times while I eat breakfast. I’d bring it with me on a plane to watch movies and read books and magazines.

That may not be life-changing, but is it worth 500 bucks? Yup. Done. Sold.

No wonder, then, that by some accounts Apple has received preorders for 240,000 iPads, and some analysts project it could sell up to 5 million units in the product’s

“We all say we want things to be simpler, and now here is this simple thing. I think it will be a huge success.”

— Steve Wozniak, Apple

first 12 months. One early adopter is Steve Wozniak, who cofounded Apple with Jobs. Woz has already ordered three iPads and plans to camp out in front of an Apple store the night before the iPad’s debut, just for kicks. “We all say we want things to be simpler, and now here is this simple thing. I think it will be a huge success,” Wozniak says.

But the very simplicity of the iPad masks its transformational power. Some say the iPad heralds a new era of computing, and I’m inclined to believe them.

The interface is so intuitive—navigating with your fingers rather than a keyboard and mouse--that it will change what we expect from our computers. Today we talk about “getting on the Internet,” but with iPad you can have a persistent online connection, and that’s a pretty profound shift. Combine the form factor with the 24/7 link to a store, and you have the perfect machine for impulse purchases. The iPad could eventually become your TV, your newspaper, and your bookshelf. Pretty soon, Apple might even become your cable

company—sort of—by selling subscriptions, via iTunes, to individual shows or channels. Say you’re reading the latest Henning Mankell on your iPad. While you’re sitting there with it in your lap, why not check your e-mail or flip on an episode of The Office?

Perhaps more important, this elegant little device comes loaded with Jobs’s grandiose ambition and is yet another example of his willingness to defy conventional wisdom and bend the ethos of Silicon Valley to his own will. The Internet is supposed to be all about freedom and choice--yet here comes Steve Jobs with an Internet that is a completely closed system. Apple not only sells you the device, but also operates the only store on the planet that sells software for it. Such “walled gardens” were supposed to be a thing of the past, cracked open first by the freewheeling PC revolution and then demolished by the anything-goes-and-everything-is-free World Wide Web. Jobs figures he can get away with this radical lockdown because the products Apple makes are so good, outstripping the imaginations of even the most engaged consumer. Jobs argues that this tighter control allows Apple to create a more seamless user experience--your iTunes account stores your credit-card information, which makes it very, very easy to buy stuff. There’s no friction. Thinking about an old song from high school? Go to iTunes, grab it, pay a buck, and listen.

I do that all the time now on my iPhone, and I’ll probably make bigger purchases--movies, books, TV series--for my iPad. In fact, a closed system may be the only way to deliver the kind of technoZen experience that Apple has become known for.

The closed system also lets Apple make more money, because it collects 30 percent of whatever customers spend on apps or content. Same goes for movies, music, and books. Instead of making a one-time sale, each iPad sold becomes a recurring revenue stream for Apple. The company’s move toward a closed system actually began seven years ago, when it launched the iTunes Store to sell digital media for its iPods. Then came the iPhone and the App Store.

Thanks in part to these steady revenue

streams, Apple’s sales grew 12 percent last year despite the recession. No wonder this model is catching on with others. Amazon, with the Kindle, lets you download free books from sources other than Amazon, but for books that cost money, you must buy from Amazon. Microsoft connects its Zune music player to an online store called Zune Marketplace--its imitation of Apple’s iPod and iTunes Store.

This shift represents nothing less than a complete rethinking of the past 30 years of tech history, when we’ve had chips made by Intel and AMD; operating software like Windows made by Microsoft; computers made by Dell, HP, and others; and applications made by thousands of independent software companies.

With iPad, Apple is making its own microprocessor and its own operating system-basically, Apple is embracing the old vertical-integration model that was once the norm in the computer industry before the PC revolution Jobs helped create.

By having its own microprocessor, instead of a chip that everyone else can use, Apple can tightly integrate its operating system with the chip to get better, faster performance. Rivals won’t be able to match it.

All this is a dream come true for Jobs, but it’s a move so brazen that even Microsoft, at the height of its powers, would not have dared to attempt it. Buy into the World According to Steve, and you’re making a Faustian bargain--you sacrifice freedom for the sake of a lovely device that (mostly) works just the way it’s supposed to, eliminating the headaches and confusion that most tech products bring with them.

What are you giving up? Well, you can’t run any Web browser--only Safari, the one made by Apple. You can’t play videos that are created in -Adobe’s Flash software, which is used for about 75 percent of all Web videos, including everything on Hulu. Jobs has griped that Flash is glitchy, which may be the case, but blocking sites like Hulu also creates one more reason to buy shows on iTunes instead. And all the content you buy from iTunes is wrapped in encryption software so that it can run only on Apple devices. If at some point you want to buy another brand of device--some newer, faster, cooler gadget we can’t yet imagine--you won’t be able to take your Apple content with you. Apple could also decide to block the applications of rival technology--as happened last year, when the company wouldn’t approve Google Voice, a telecommunications application, for the iPhone.

It’s a dangerous path, according to Jonathan Zittrain, a professor at Harvard Law School and cofounder of the Berkman Center for Internet & Society. “The price is you are giving up the freedom to choose what code you run and what content you see or experience,” on a device you own, he says. “The fear is that we could be charmed by platforms that turn out to be not very good for us.”

Of course, bacon isn’t good for us, either, but it’s pretty tempting. For now, consumers seem perfectly willing to give up a little freedom to enter Apple’s world. The iPad arrives ready to run virtually all the 150,000 apps that have been created for the iPhone over the past two years. Thousands more, built specially for the iPad, will arrive in short order. Apple has created iPad versions of its Mac-based word processing, spreadsheet, and presentation apps (available for 10 bucks each) and will preload the device with a few simple apps of its own creation: calendar, address book, photo manager, notepad, maps, e-mail, YouTube.

Never mind that you’re giving up control to a company that doesn’t always play well with others.

Apple is nuts about secrecy, for example.

Even now, it won’t let most developers use actual iPads in their labs, so the programmers are all flying blind, writing code without being able to see what their software will look like on the actual device. The few developers who did get iPads have to keep the devices in secret rooms, chained to a desk. These folks all live in fear of Apple. Several contacted by The Economist either ignored our requests or wrote back saying they didn’t dare to comment. Others would talk to us but only if we promised them anonymity. When I called Apple PR to see if Jobs or some other Apple exec might do an interview for this article, the first thing the PR guy asked me was whether I’d talked to any outside developers, and if so, which ones. I didn’t name names. As for my interview request? Forget about it.

Let’s be honest: Jobs and his crew

make the Church of Scientology look like a bunch of easygoing sweethearts.

But that’s not deterring developers.

They saw the boom of the iPhone market and can’t wait to jump on the next wave. Apple may be a nightmare to deal with, but it’s rounded up a huge pool of customers--75 million iPhones and iPod Touch units have been sold-and created an online store that makes it easy for developers to reach them. The lucky developers will make a fortune.

“Apple has created an ecosystem that consumers trust. It’s a very compelling place to be as a developer,” says Bart Decrem, founder and CEO of Tapulous, maker of games like Tap Tap Revenge and Riddim Ribbon. Those apps have been smash hits on the iPhone and iPod

tech forecaster and professor at Stanford University, expects Apple to roll out a family of other iPad models--a small one the size of a paperback, a big one the size of two magazine pages--perhaps as soon as this fall. (Apple won’t confirm, natch.) Further out, we might have tablets on plastic sheets that you could roll up or fold like a map--”maybe by the second term of the Chelsea Clinton administration,” Saffo says.

When designers at Wired, the tech magazine, created a stunning demo of what a magazine might look like on a tablet like the iPad--with interactive graphics, videos embedded into stories, and an advertisement that let you spin a car around and see it from all sides-many of us in the media business were blown away. And that’s just the beginning. The main thing to know about the iPad is that right now nobody, not even Steve Jobs himself, really knows how this device will be used. “With the iPad, a lot of people are hoping there’s a killer app that we just can’t conceive of yet,” says Peter Farago, vice president of marketing at Flurry Analytics, which studies how people use mobile apps.

Flurry started tracking iPad use a few months ago--these were test units inside Apple--and found the biggest use appears to be games. Looking ahead to the future Farago says, “there are basic questions, almost anthropological questions: How am I going to use this through my day? Are there going to be things that just blow my head off, and I just haven’t seen it yet?”

No doubt there will be. Remember that it has been less than three years since the iPhone debuted, that the App Store has not yet reached its second birthday, yet it already offers 150,000 apps and has delivered more than 3 billion downloads. Now comes the iPad, with a bigger screen, faster processor, an ecosystem of eager developers, and millions of loyal customers who are hungry for Apple’s next big thing.

Magical? Revolutionary? You bet.

“There are basic questions, almost anthropological questions: How am I going to use this through my day? Are there going to be things that just blow my head off, and I just haven’t seen it yet? No doubt there will be.”

Touch, with more than 25 million downloads and a rumored $1 million a month in revenues. Tapulous is creating a new title for iPad, and Decrem says the device’s snappy Apple-developed microprocessor offers new freedom to game designers who in the past have had to make compromises because of the iPhone’s limited power. “Now that limitation gets blown away. My designers can do whatever they want to do,” Decrem says.

How big will the tablet craze be? Trip Hawkins--a tech-industry veteran who once worked at Apple, then founded videogame giant Electronic Arts, and currently is CEO of Digital Chocolate, a game maker--says that as Google and others rush into the tablet-computer space, the market is going to explode.

Within a decade there will be 1 billion tablet computers in the world, he predicts, adding that even then, “I’m probably being conservative.” Paul Saffo, a

Mixed Feelings fo

As Obama prepares to return to Indonesia, Asians aren’t sure if he has delivered on his promises

BY HANNAH BEECH

The curious bronze statue of a

10-year-old Barack Obama quickly turned into a tourist attraction. Foreigners flocked to the park in Jakarta to honor the U.S. President, who spent four years of his childhood in the Indonesian capital. Locals visited too, but they weren’t as pleased. “Indonesians didn’t want the statue here,” says Yunus, a park keeper. After three months, the monu

or a

favorite son ment was quietly moved to a nearby school

where Obama studied. “I’m not against Obama,” says Protus Tanuhandaru, one of the founders of a Facebook page that called for the figure’s removal, “but it’s wrong to have a statue in a public park of someone who has done nothing for Indonesia.”

BOY IN BRONZE Obama’s upcoming visit to Indonesia is After objections, a statue of the young being heralded as a homecoming. Millions of Obama was moved from this Jakarta park. Indonesians consider Barry Soetoro—he was

once known by his Indonesian stepfather’s surname—to be an honorary citizen of the country.

But even as Obama prepares to take a trip down memory lane, the fate of his boyhood likeness underscores his—and America’s—growing image problem across Asia. Soon after the statue of young Barry was moved, U.S. diplomats were busy in Beijing repairing relations with the world’s next superpower. Meanwhile, Japan, for decades the key U.S. ally in Asia, is calling for a more equal— that is, less submissive—relationship with Washington. Asia’s increasingly assertive leaders are demanding that the U.S. recognize the continent’s growth clout, and many feel that Obama isn’t giving it due respect.

Asia matters for America. After Canada and Mexico, China is the third biggest consumer of American goods, followed by the Association of Southeast Asian Nations (ASEAN), the 10country bloc that under U.S. prodding was founded in the 1960s as a bulwark against communism. The global recovery from the Great Recession has been led by China, India, and Indonesia. Asia would like to see its efforts appreciated.

Obama has spoken about Asia’s significance, “I want every American to know that we have a stake in the future of this region,” he said in Tokyo last November, “because what happens here has a direct effect on our lives at home.” But since then the Obama Administration has failed to do much to advance the free-trade agreements that Asia seeks. “We do hope that [Obama’s Asia visit] will not be like Santa Claus coming and just giving a few gifts and flying away,” says Thailand’s Deputy Commerce Minister Alongkorn Ponlaboot, “because what we need from America is real action.”

Indonesia itself deserves no less. The 17,000-island archipelago boasts the world’s biggest Muslim population and is also its third largest democracy, demonstrating that Islam and political freedom are not incompatible. Back when Obama lived in Jakarta, Indonesia was ruled by a dictator and mired in poverty. Today it is a member of the

A young Barack Obama in an Indonesian school, during his four year stay in Indonesia’s capital, Jakarta.

G-20 club of the wealthiest economies.

“Foreigners used to think of Indonesia as a place of natural disasters,” says Gita Wirjawan, the head of the nation’s in-

pace of U.S. investment in Southeast Asia has slowed in recent years. “If we are closer to China now, it is only because the U.S. has neglected us,” says Kavi Chongkittavorn, a columnist for the Nation, a Thai newspaper. Rivals for the region’s affections are not getting along. In recent weeks, China has attacked Obama for approving arms sales to Taiwan and meeting with the Dalai Lama, leading to talk in Beijing of a “serious disruption” in U.S.China ties.

Back in Jakarta, such geopolitical worries are far fromt he minds of children at the Menteng elementary school where Obama studied. Annisa Luthpia, 10, practicing a xylophone tune she hopes to perform for the U.S. president, giggles when asked what religion Obama is. She doesn’t know—and doesn’t care.

That’s the least of her concern. Says the Muslim girl Annisa of the Christian American President: “He seems like a very nice man.” It’s a compliment, and it’s a start, but the fact is that Obama’s challenge to these people is to persuade them that he’s more than just that.

“I’m not against Obama, but it’s wrong to have a statue in a public park of someone who has done nothing for Indonesia.” vestment board. “But now they realize that this is a $550 billion economy that’s on an upward trajectory.”

That is partly because Indonesia has done well at tackling extremism. The vast majority of its people practice a moderate form of Islam, but a small band of homegrown extremists is wedded to a bloody jihad; in 2002, for instance, the bombing of two Bali nightclubs killed 202 people. But of late, Indonesia has had impressive success netting hundreds of suspected extremists and re-educating youths susceptible to the call of militant clerics.

Obama’s trip will offer a challenge to the new top dog in Asia. China is now a larger trading partner of both Japan and ASEAN than the U.S. is, and the

Mar 27th-Apr 2nd 2010

HOPE, HYPE AND FAITH IN APPLE’S IPAD •AMERICA, CHINA AND EXCHANGE RATES •FACING THE TRUTH: TURKS AND ARMENIANS •THE GAS GLUT •HOW INDIA GOT AGRICULTURE WRONG