《经济学人》杂志原版英文(The Economist整理版4-5)

Digest Of The. Economist. 2006(4-5)

Hot to trot

A new service hopes to do for texting what Skype did for voice calls

TALK is cheap—particularly since the appearance of voice-over-internet services such as Skype. Such services, which make possible very cheap (or even free) calls by routing part or all of each call over the internet, have forced traditional telecoms firms to cut their prices. And now the same thing could be about to happen to mobilephone text messages, following the launch this week of Hotxt, a British start-up.

Users download the Hotxt software to their handsets, just as they would a game or a ringtone. They choose a user name, and can then exchange as many messages as they like with other Hotxt users for ￡1 ($1.75) per week. The messages are sent as data packets across the internet, rather than being routed through operators' textmessaging infrastructure. As a result, users pay only a tiny data-transport charge, typically of a penny or so per message. Since text messages typically cost 10p, this is a big saving—particularly for the cost-conscious teenagers at whom the service is aimed.

Most teenagers in Britain, and elsewhere in Europe, pay for their mobile phones on a “pre-paid” basis, rather than having a monthly contract with a regular bill. Pre-paid tariffs are far more expensive: bundles of free texts and other special deals, which can reduce the cost of text messaging, are generally not available. For a teenager who sends seven messages a day, Hotxt can cut the cost of texting by 75%, saving ￡210 per year, says Doug Richard, the firm's co-founder. For really intensive text-messagers, the savings could be even bigger: Josh Dhaliwal of mobileYouth, a market-research firm, says that some teenagers—chiefly boys aged 15-16 and girls aged 14-15—are “supertexters” who send as many as 50 messages per day.

While this sounds like good news for users, it could prove painful for mobile operators. Text-messaging accounts for around 20% of a typical operator's revenues. With margins on text messages in excess of 90%, texting also accounts for nearly half of an operator's profits. Mr Richard is confident that there is no legal way that operators can block his service; they could raise

data-transport costs, but that would undermine their own efforts to push new services. Hotxt plans to launch in other countries soon.

“The challenge is getting that initial momentum,” says Mr Dhaliwal. Hotxt needs to persuade people to sign up, so that they will persuade their friends to sign up, and so on. Unlike Skype, Hotxt is not free, so users may be less inclined to give it a try. But as Skype has also shown, once a disruptive, low-cost communications service starts to spread, it can quickly become very big indeed. And that in turn can lead to lower prices, not just for its users, but for everyone.

A discerning view

A new way of processing X-rays gives much clearer images

X-RAYS are the mysterious phenomenon for which Wilhelm R?ntgen was awarded the first Nobel prize in physics, in 1901. Since then, they have shed their mystery and found widespread use in medicine and industry, where they are used to reveal

the inner properties of solid bodies.

Some properties, however, are more easily discerned than others. Conventional Xray imaging relies on the fact that different materials absorb the radiation to different degrees. In a medical context, for example, bones absorb X-rays readily, and so show up white on an X-radiograph, which is a photographic negative. But Xrays are less good at discriminating between different forms of soft tissue, such as muscles, tendons, fat and blood vessels. That, however, could soon change. For Franz Pfeiffer of the Paul Scherrer Institute in Villigen, Switzerland, and his colleagues report, in the April edition of Nature Physics, that they have manipulated standard X-ray imaging techniques to show many more details of the inner body.

The trick needed to discern this fine detail, according to Dr Pfeiffer, is a simple one. The researchers took advantage not only of how tissues absorb X-rays but also of how much they slow their passage. This slowing can be seen as changes in the phase of the radiation that emerges—in other words of the relative positions of the peaks and troughs of the waves of which X-rays are composed.

Subtle changes in phase are easily picked up, so doctors can detect even small variations in the composition of the tissue under investigation, such as might be caused by the early stages of breast cancer. Indeed, this trick—known as phase-contrast imaging—is already used routinely in optical microscopy and transmission electron microscopy. Until now, however, no one had thought to use it for medical X-radiography.

To perform their trick, the researchers used a series of three devices called transmission gratings. They placed one between the source of the X-rays and the body under examination, and two between the body and the X-ray detector that forms the image. The first grating gathers information on the phases of the X-rays passing through it. The second and third work together to produce the

detailed phase-contrasted image. The approach generates two separate images—the classic X-ray image and the phase-contrasted image—which can then be combined to produce a high-resolution picture.

The researchers tested their technique on a Cardinal tetra, a tiny iridescent fish commonly found in fish tanks and aquariums. The conventional X-ray image showed the bones and the gut of the fish, while the phase-contrasted image showed details of the fins, the ear and the eye.

Dr Pfeiffer's technique would thus appear to offer a way to get much greater detail for the same amount of radiation exposure. Moreover, since it uses standard hospital equipment, it should be easy to introduce into medical practice. X-rays may no longer be the stuff of Nobel prizes, but their usefulness may just have increased significantly.

Here be dragons

With luck, you may soon be able to buy a mythological pet

PAOLO FRIL, chairman and chief scientific officer of GeneDupe, based in San Melito, California, is a man with a dream. That dream is a dragon in every home.

GeneDupe's business is biotech pets. Not for Dr Fril, though, the mundane cloning of dead moggies and pooches. He plans a range of entirely new animals—or, rather, of really quite old animals, with the twist that even when they did exist, it was only in the imagination.

Making a mythical creature real is not easy. But GeneDupe's team of biologists and computer scientists reckon they are equal to the task. Their secret is a new field, which they call “virtual cell biology”.

Biology and computing have a lot in common, since both are about processing information—in one case electronic; in the other, biochemical. Virtual cell biology aspires to make a software model of a cell that is accurate in every biochemical detail. That is possible because all animal cells use the same parts list—mitochondria for energy processing, the endoplasmic reticulum for making proteins, Golgi body for protein assembly, and so on.

Armed with their virtual cell, GeneDupe's scientists can customise the result so that it belongs to a particular species, by loading it with a virtual copy of that animal's genome. Then, if the cell is also loaded with the right virtual molecules, it will behave like a fertilised egg, and start dividing and developing—first into an embryo, and ultimately into an adult.

Because this “growth” is going on in a computer, it happens fast. Passing from egg to adult in one of GeneDupe's enormous Mythmaker computers takes less than a minute. And it is here that Charles Darwin gets a look in. With such a short generation time, GeneDupe's scientists can add a little evolution to their products.

Each computer starts with a search image (dragon, unicorn, gryphon, etc), and the genome of the real animal most closely resembling it (a lizard for the dragon, a horse for the unicorn and, most taxingly, the spliced genomes of a lion and an eagle for the gryphon). The virtual genomes of these real animals are then tweaked by random electronic mutations. When they have matured, the virtual adults most closely resembling the targets are picked and cross-bred, while the others are culled.

Using this rapid evolutionary process, GeneDupe's scientists have arrived at genomes for a range of mythological creatures—in a computer, at least. The next stage, on which they are just embarking, is to do it for real.

This involves synthesising, with actual DNA, the genetic material that the computer models predict will produce the mythical creatures. The synthetic DNA is then inserted into a cell that has had its natural nucleus removed. The result, Dr Fril and his commercial backers hope, will be a real live dragon, unicorn or what have you.

Tales of the unexpected

Why a drug trial went so badly wrong

IN ANY sort of test, not least a drugs trial, one should expect the unexpected. Even so, on March 13th, six volunteers taking part in a small clinical trial of a treatment known as TGN1412 got far more than they bargained for. All ended up seriously ill, with multiple organ failure, soon after being injected with the drug at a special testing unit at Northwick Park Hospital in London, run by a company called Parexel. One man remains ill in hospital.

Small, preliminary trials of this sort are intended to find out whether a drug is toxic. Nevertheless, the mishap was so serious that Britain's Medicines and Healthcare products Regulatory Agency (MHRA), a government body, swiftly launched a full inquiry. On April 5th it announced its preliminary findings. These were that the trial was run correctly, doses of the drug were given as they were supposed to have been, and there was no contamination during manufacturing. In other words, it seems that despite extensive tests on animals and human-cell cultures, and despite the fact that the doses in the human trial were only a five-hundredth of those given to the animals, TGN1412 is toxic in people in a way that simply had not shown up.

This is a difficult result for the drug business because it raises questions about the right way of testing medicines of this kind. TGN1412 is unusual in that it is an antibody. Most drugs are what are known as “small molecules”. Antibodies are big, powerful proteins that are the workhorses of the immune system. A mere 20 of them have been approved for human therapy, or are in latestage clinical trails, in America and Europe, but hundreds are in pre-clinical development, and will soon need to be tried out on people.

Most antibody drugs are designed to work in one of three ways: by recruiting parts of the immune system to kill cancer cells; by delivering a small-molecule drug or a radioactive atom specifically to a cancer; or by blocking unwanted immune responses. In that sense, TGN1412 was unusual because it worked in a fourth way. It is what is called a “superagonistic” antibody, designed to increase the numbers of a type of immune cell known as regulatory T-cells.

Reduced numbers, or impaired function, of regulatory T-cells has been implicated in a number of illnesses, such as type 1 diabetes, multiple sclerosis and rheumatoid arthritis. Boosting the pool of these antibodies seemed like a good treatment strategy. Unfortunately, that strategy fell disastrously to pieces and it will take a little longer to find out why.

The result highlights concerns raised in a paper just published by the Academy of Medical Sciences, a group of experts based in London. It says there are special risks associated with novel antibody therapies. For example, their chemical specificity means that they might not bind to their targets in humans as they do in other species.

Accidence and substance

Two possible explanations for the bulk of reality

THE unknown pervades the universe. That which people can see, with the aid of various sorts of telescope, accounts for just 4% of the total mass. The rest, however, must exist. Without it, galaxies would not survive and the universe would not be gently expanding, as witnessed by astronomers. What exactly constitutes this dark matter and dark energy remains mysterious, but physicists have recently uncovered some more clues, about the former, at least.

One possible explanation for dark matter is a group of subatomic particles called neutrinos. These objects are so difficult to catch that a screen made of lead a light-year thick would stop only half the neutrinos beamed at it from getting through. Yet neutrinos are thought to be the most abundant particles in the universe. Some ten thousand trillion trillion—most of them produced by nuclear reactions in the sun—reach Earth every second. All but a handful pass straight through the planet as if it wasn't there.

According to the Standard Model, the most successful description of particle physics to date, neutrinos come in three varieties, called “flavours”. These are known as electron neutrinos, tau neutrinos and muon neutrinos. Again, according to the Standard Model, they are point-like, electrically neutral and massless. But in recent years, this view has been challenged, as physicists realised that neutrinos might have mass.

The first strong evidence came in 1998, when researchers at an experiment called SuperKamiokande, based at Kamioka, in Japan, showed that muon neutrinos produced by cosmic rays hitting the upper atmosphere had gone missing by the time they should have reached an underground detector. SuperKamiokande's operators suspect that the missing muon neutrinos had changed flavour, becoming electron neutrinos or—more likely—tau neutrinos. Theory suggests that this process, called oscillation, can happen only if neutrinos have mass.

Since then, there have been other reports of oscillation. Results from the Sudbury Neutrino Observatory in Canada suggest that electron neutrinos produced by nuclear reactions in the sun change into either muon or tau neutrinos on their journey to Earth. Two other Japanese experiments, one conducted at Kamioka and one involving the KEK particle-accelerator laboratory in Tsukuba, near Tokyo, also hint at oscillation.

Last week, researchers working on the MINOS experiment at Fermilab, near Chicago, confirmed these results. Over the coming months and years, they hope to produce the most accurate measurements yet. The researchers created a beam of muon neutrinos by firing an intense stream of protons into a block of carbon. On the other side of the target sat a particle detector that monitored the number of muon neutrinos leaving the Fermilab site. The neutrinos then traveled 750km (450 miles) through the Earth to a detector in a former iron mine in Soudan, Minnesota.

Myths and migration

Do immigrants really hurt American workers' wages?

EVERY now and again America, a nation largely made up of immigrants and their descendants, is gripped by a furious political row over whether and how it should stem the flood of people wanting to enter the country. It is in the midst of just such a quarrel now. Congress is contemplating the erection of a wall along stretches of the Mexican border and a crackdown on illegal

workers, as well as softer policies such as a guest-worker programme for illegal immigrants. Some of the arguments are plain silly. Immigration's defenders claim that foreigners come to do jobs that Americans won't—as if cities with few immigrants had no gardeners. Its opponents say that immigrants steal American jobs—succumbing to the fallacy that there are only a fixed number of jobs to go around.

One common argument, though not silly, is often overstated: that immigration pushes down American workers' wages, especially among high-school dropouts. It isn't hard to see why this might be. Over the past 25 years American incomes have become less equally distributed, typical wages have grown surprisingly slowly for such a healthy economy and the real wages of the least skilled have actually fallen. It is plausible that immigration is at least partly to blame, especially because recent arrivals have disproportionately poor skills. In the 2000 census immigrants made up 13% of America's pool of workers, but 28% of those without a high-school education and over half of those with eight years' schooling or less.

In fact, the relationship between immigration and wages is not clear-cut, even in theory. That is because wages depend on the supply of capital as well as labour. Alone, an influx of immigrants raises the supply of workers and hence reduces wages. But cheaper labour increases the potential return to employers of building new factories or opening new valet-parking companies. In so doing, they create extra demand for workers. Once capital has fully adjusted, the final impact on overall wages should be a wash, as long as the immigrants have not changed the productivity of the workforce as a whole.

However, even if wages do not change on average, immigration can still shift the relative pay of workers of different types. A large inflow of low-skilled people could push down the relative wages of low-skilled natives, assuming that they compete for the same jobs. On the other hand, if the immigrants had complementary skills, natives would be relatively better off. To gauge the full effect of immigration on wages, therefore, you need to know how quickly capital adjusts and how far the newcomers are substitutes for local workers.

Roaming holiday

The EU hopes to slash the price of cross-border mobile calls

“TODAY it is only when using your mobile phone abroad that you realise there are still borders in Europe,” lamented Viviane Reding, the European commissioner responsible for telecoms and media regulation, as she announced plans to slash the cost of mobile roaming last month. It is a laudable aim: European consumers typically pay €1.25 ($1.50) per minute to call home from another European country, and €1 per minute to receive calls from home while abroad. With roaming margins above 90%, European mobile operators make profits of around €10 billion a year from the trade, the commission estimates.

Ms Reding's plan, unveiled on March 28th and up for discussion until May 12th, is to impose a “home pricing” scheme. Even while roaming, callers would be charged whatever they would normally pay to use their phones in their home countries; charges for incoming calls while roaming would be abolished. That may sound good. But, as the industry is understandably at pains to point out, it could have some curious knock-on effects.

In particular, consumers could sign up with operators in foreign countries to take advantage of lower prices. Everyone would take out subscriptions to the cheapest supplier and bring them back home, says John Tysoe of the Mobile World, a consultancy. “You'd end up with a complete muddle. An operator might have a network, bu t no customers, because they've all migrated.”

Another problem with Ms Reding's plan, he says, is that operators would compensate for the loss of roaming fees— thought to account for around 3% of their revenues and 5% of profits—by raising prices elsewhere. This would have the perverse effect of lowering prices for international business travellers, a big chunk of roaming traffic, while raising prices for most consumers.

The commission's proposals are “economically incoherent”, says Richard Feasey of Vodafo ne, which operates mobile networks in many European countries. Imposing price caps on roaming is legally questionable, he says, and Vodafone has, in any case, been steadily reducing its roaming charges. (European regulators prevented it from doing so for three years on antitrust grounds after its takeover of Mannesmann in 2000.) Orange, another multinational operator, says it is planning to make price cuts, too. “Of course, now everybody's got price cuts,” says Stefano Nicoletti of Ovum, a consultancy.

But perhaps Ms Reding's unspoken plan is to use the threat of regulation as a way to prompt action. Operators are right that her proposals make no sense, but they are charging too much all the same. So expect them to lobby hard against the proposals over the next couple of years, while quietly cutting their prices—an outcome that would, of course, allow both sides to claim victory.

Devices and their desires

Engineers and chemists get together

THERE used to be a world of difference between treating a patient with a device—such as a fake hip or a pacemaker—and using biology and biochemistry. Different ailments required wholly different treatments, often with little in common. But that is changing as medical advances—such as those being trumpeted at the biotechnology industry's annual gathering this week in Chicago—foster combinations of surgical implants and other hardware with support from medicines. Drug-releasing stents were one of the first fruits of this trend, which increasingly requires vastly different sorts of health-care firms to mesh their research efforts.

That will be a challenge. While pharmaceutical and biotech firms are always in search of the next big thing, devicemakers prefer gradual progress. Instead of hanging out with breathless entrepreneurs near America's east and west coasts, where most drug and biotechnology firms are based, many of the device-makers huddle in midwestern cities such as Minneapolis, Indianapolis and Kalamazoo. And unlike Big Pharma, which uses marketing blitzes to tell ailing consumers about its new drugs, medical-device sales teams act more as instructors, showing doctors how to install their latest creations.

Several companies, however, are now trying to bring these two business cultures together. Earlier this year, for example, Angiotech Pharmaceuticals, a Canadian firm, bought American Medical Instruments (AMI). Angiotech's managers reckon their company has devised a good way to apply drug coatings to all sorts of medical paraphernalia, from sutures and syringes to catheters, in order to reduce the shock to the body. AMI makes just the sorts of medical supplies to which Angiotech hopes to apply its techniques.

One of America's biggest makers of medical devices, Medtronic, has been doing joint research with Genzyme, a biotechnology company that is also keen on broader approaches to health care. Genzyme says that it was looking for better ways to treat ailments, such as coronary and kidney disease, and realised that it needed to understand better how electro-mechanical devices and information technology work. But combining its efforts with those of Medtronic “on a cultural level is very hard”, the company says. Biotechnology firms are used to much more risky projects and far longer development cycles.

Another difference is that device-makers know that if a problem emerges with their hardware, the engineers will tinker around and try to resolve the glitch. Biotech and pharmaceutical firms have no such option. If a difficulty emerges after years of developing and testing a new pill, as with Merck's Vioxx, there may be little they can do about it. “You can't futz with a molecule”, says Debbie Wang, a health-care industry analyst.

Strangely, says Ms Wang, some of the most promising engineering outfits were once divisions of pharmaceutical and

health-care companies, which got rid of them precisely because they did not appear to offer the rapid growth that managers saw in prescription drugs. Guidant, a maker of various cardiovascular devices, was spun off by Eli Lilly in 1994 and a decade later became the prize in a bidding war between Johnson & Johnson and Boston Scientific, which Boston won earlier this year.

Pfizer sold Howmedica, which makes joint replacements and prosthetics, to Kalamazoo-based Stryker in 1998. Another

joint-replacement maker, Zimmer, was spun off from Bristol-Myers Squibb in 2001. Now both those companies are looking for ways to add “anti-interactive coatings”—ie, drugs—to their business. One of the most troublesome complications in joint replacement is infection.

The big drug companies might be tempted to reacquire the firms that they let go. But, given the potential for cultural and strategic clashes, it may make more sense for a few big and broad medical-device makers, such as Medtronic, Boston Scientific and St Jude Medical, to continue consolidating their own industry while co-operating, along the lines of the Medtronic-Genzyme venture, with biotech and pharmaceutical firms as they see fit. There would still be irritation; but probably less risk of wholesale rejection.

Eat less, live more

How to live longer—maybe

DIETING, according to an old joke, may not actually make you live longer, but it sure feels that way. Nevertheless, evidence has been accumulating since the 1930s that calorie restriction—reducing an animal's energy intake below its energy expenditure—extends lifespan and delays the onset of age-related diseases in rats, dogs, fish and monkeys. Such results have inspired thousands of people to put up with constant hunger in the hope of living longer, healthier lives. They have also led to a search for drugs that mimic the effects of calorie restriction without the pain of going on an actual diet.

Amid the hype, it is easy to forget that no one has until now shown that calorie restriction works in humans. That omission, however, changed this month, with the publication of the initial results of the first systematic investigation into the matter. This

study, known as CALERIE (Comprehensive Assessment of Long-term Effects of Reducing Intake of Energy), was sponsored by America's National Institutes of Health. It took 48 men and women aged between 25 and 50 and assigned them randomly to either a control group or a calorie-restriction regime. Those in the second group were required to cut their calorie intake for six months to 75% of that needed to maintain their weight.

The CALERIE study is a landmark in the history of the field, because its subjects were either of normal weight or only slightly overweight. Previous projects have used individuals who were clinically obese, thus confusing the unquestionable benefits to health of reducing obesity with the possible advantages of calorie restriction to the otherwise healthy.

At a molecular level, CALERIE suggests these advantages are real. For example, those on restricted diets had lower insulin resistance (high resistance is a risk factor for type 2 diabetes) and lower levels of low-density lipoprotein cholesterol (high levels are a risk factor for heart disease). They showed drops in body temperature and blood-insulin levels—both phenomena that have been seen in long-lived, calorie-restricted animals. They also suffered less oxidative damage to their DNA.

Eric Ravussin, of Louisiana State University in Baton Rouge, who is one of the study's authors, says that such results provide support for the theory that calorie restriction produces a metabolic adaptation over and above that which would be expected from weight loss alone. (He also points out that it will be a long time before such work reveals whether calorie restriction actually extends life.) Nevertheless, such metabolic adaptation could be the reason why calorie restriction is associated with longer lifespans in other animals—and that is certainly the hope of those who, for the past 15 years, have been searching for ways of triggering that metabolic adaptation by means other than semi-starvation.

The search for a drug that will stave off old age is itself as old as the hills—as is the wishful thinking of the suckers who finance such efforts. Those who hope to find it by mimicking the effect of calorie restriction are not, however, complete snake-oil salesmen, for there is known to be a family of enzymes called sirtuins, which act both as sensors of nutrient availability and as regulators of metabolic rate. These might provide the necessary biochemical link between starving and living longer.

Universal service?

Proponents of “software as a service” say it will wipe out traditional software

SOMETHING momentous is happening in the software business. Bill Gates of Mi crosoft calls it “the next sea change”. Analysts call it a “tectonic shift” in the industry. Trade publications hail it as “the next big thing”. It is software-as-a-service (SaaS)—the delivery of software as an internet-based service via a web browser, rather than as a product that must be purchased, installed and maintained. The appeal is obvious: SaaS is quicker, easier and cheaper to deploy than traditional software, which means technology budgets can be focused on providing competitive advantage, rather than maintenance.

This has prompted an outbreak of iconoclasm. “Traditional software is dead,” says Jason Maynard, an analyst at Credit Suisse. Just as most firms do not own generators, but buy electricity from the grid, so in future they will buy software on the hoof, he says. “It's the end of software as we know it. All software is becoming a service,” declares Marc Benioff of https://www.360docs.net/doc/8d18102206.html,, the

best-known proponent of the idea. But while SaaS is growing fast, it still represents only a tiny fraction of the overall software industry—a mere $3.35 billion last year, estimates Mr Maynard. Most observers expect it to be worth around $12 billion by 2010—but even that is equal only to Microsoft's quarterly sales today. There is no denying that SaaS is coming. But there is much debate, even among its advocates, about how quickly it will grow, and how widely it will be adopted.

At the moment, small and medium-sized businesses are the most enthusiastic adopters of SaaS, since it is cheaper and simpler than maintaining rooms of server computers and employing staff to keep them running. Unlike the market for desktop software, which is dominated by Microsoft, or for high-end enterprise software, which is dominated by SAP and Oracle, the middle ground is still highly f ragmented, which presents an opportunity. “This is the last great software market left—the last unconsolidated market,” says Zach Nelson of NetSuite, which provides a suite of software services including accounting, sales-force automation and customer service. His firm is targeting small and medium-sized businesses by providing “verticalised” services—that is, versions of its software adapted to particular types of company, such as professional-service firms, wholesale distributors and software firms.

Large companies, says Mr Nelson, have already made big investments in traditional software. “They've already been through the pain,” he says. So they will not be in a hurry to ditch their existing investments in traditional software from the likes of SAP and Or acle. “I have no fantasy of replacing those guys,” says Mr Nelson. But Mr Benioff of https://www.360docs.net/doc/8d18102206.html, disagrees. His firm provides customer-relationship management (CRM) software as a service, which is already used by many big firms including Cisco, Sprint a nd Merrill Lynch. “The world's largest companies are now using https://www.360docs.net/doc/8d18102206.html, for the world's largest CRM implementations,” he says. “It's the future of our industry that everything will be a service.”

Even so, Mr Maynard reckons it will be some time before large companies fully embrace the service model. However,

lingering concerns over security, reliability, archiving and regulatory compliance will eventually go away, he believes, and basic functions—such as accounting, expense-management and human resources—will be switched over within five years. “How you handle accounts-payable doesn't determine your competitiveness,” he says. Eventually, only the bespoke software that provides competitive advantage to a firm will be left; everything else will be a service.

Filtering the evidence

Why do Europeans smoke more than Americans?

JUDGED by their waistlines, Europeans are much healthier than Americans. More than 30% of Americans are obese, compared with 13% of Germans and under 10% of the French. But judged by their lungs, Americans are fitter than their peers across the Atlantic. Only 19% of adult Americans smoke, against 34% of Germans and 27% of Britons. Why do Europeans light up so much more?

David Cutler and Edward Glaeser, of Harvard University, attempt to answer this question in a recent paper*. Since they are both economists, the first thing they look at is price. Perhaps smoking is more expensive in America? Not so. Relative to other commodities, cigarettes are in fact 37% cheaper in America than they are in the European Union. You can buy a pack for $3.60 on average stateside, but you have to pay $6.25 in Britain. The French add $2.06 in tax per packet, the Americans only 86 cents.

The second explanation an economist will look for is income. Smoking rises then falls with affluence. The very poor cannot afford to smoke as much as they might like. The rich, on the other hand, don't like to smoke as much as they could, because they put a higher value on a long and healthy life. This might explain why so many more Turks (about half of them) than Americans smoke, but it can cover only about a quarter of the gap between Americans and western Europeans.

In fact, the gap is best explained by neither prices nor incomes, but by ignorance. Europeans are less likely than Americans to believe that smoking is harmful. Only 73% of Germans, for example, believe smoking is dangerous, against 91% of Americans.

The two authors conjecture that beliefs are the result of smokers' habits, not the cause of them. A person who enjoys his cigarettes has an incentive to persuade himself that they will not do him much harm. But even non-smokers in Europe are less likely than their American counterparts to believe the weed is dangerous. These differences in beliefs may account for 20-40% of the transatlantic gap, the two authors argue.

What accounts for the rest of it? Vanity is one factor the two economists do not investigate. Since smoking suppresses appetite, perhaps those svelte European waistlines are bought at the expense of their unhealthy lungs.

Up from the dead

Genetically modified foods keep on growing

A DECADE ago, Franken-foods mauled Monsanto. The American agribusiness firm had hoped its fancy new seeds, genetically modified organisms (GMOs) designed to reduce pesticide use, would win over farmers the world over. In the event, a consumer backlash fomented byenvironmental activists in Europe scuppered those plans and even led to the fall of Robert Shapiro, the company's previously high-flying boss.

GMOs remain controversial. Despite a WTO ruling in February striking down Europe's moratorium on GM food, the European Commission pushed the EU's food-safety agency to make its GMO-evaluation process even stricter in April.

Another controversy erupted last month when British officials admitted that more than a hundred genetically modified trees are being grown in secret locations around the country. That reversed the government's previous position, and embarrassingly came on the heels of a rancorous UN meeting in Brazil where representatives warned that fast-growing GM trees could “wreak ecological havoc” by crowding out other species.

Companies that pursue GMOs are also still being hounded. On April 26th, DuPont faced a shareholder resolution at its annual meeting demanding that the fi rm “disclose any potentially material risk or …off-balance sheet liability?” related to its push into GM foods. The measure failed, but activists have vowed to try again next year—and to pursue Dow Chemical and other firms keen on this technology with equal vigour.

So is this Monsanto all over again, and are GMOs really destined for the rubbish heap of history? Not at all. In fact, there is even reason to think they are at last ready for prime time. One reason is that while the EU has dithered, other parts of the world have forged ahead with GM crops. The technology is now accepted in more than 20 countries, including India, China, South Africa and Iran. Last year the billionth acre was planted, and growth rates remain in the double digits (see chart on previous page). On one estimate, GMOs made up more than half the world's soya crop by area, a quarter of its corn and over a tenth of its cotton.

Monsanto still dominates the $5.6 billion market for agricultural biotechnology. As the market for conventional seeds

stagnates, however, rivals are taking aim. Last month, DuPont announced a cross-licensing deal and a joint venture with Syngenta, a Swiss seed giant, to sell GM corn and soyabean technology to seed producers. Peter Siggelko of Dow sees GMOs as such a big business opportunity that he vows his firm will remain steadfast in the face of activist shareholders: “We don't intend to budge—this is better and safer for farmers.”

Playtime

Toymakers are bringing childhood back to adults to broaden their market

TOYS are usually among the first industries that migrate to low-cost economies. And toymakers generally need plenty of children around. So it might seem like something of a miracle that Japan—the richest big country in Asia by far, and one that has an ageing and shrinking population—has retained a vibrant toy industry. A stress on technology and design is the predictable part of the reason why. Less obviously, Japanese manufacturers have realised that they can expand the ￥700 billion ($6 billion) domestic market for toys, by marketing to adults as well as children.

Japanese men in their early middle-age can now relive the hit television series of the 1970s, which featured super-heroes and super-robots piloted by brave men out to save the world. These champions are now back, with more gizmos. Robot Okoku (kingdom), a shop in Akihabara, Tokyo's geek district, has sold a couple of thousand remote-controlled robots, made by Kondo Kagaku, in the past two years. The walking robot has 17 motors and a 100-page manual and costs ￥126,000 ($1,105). Most customers, says Yamato Goto of Robot Okoku, are men who had fantasies of piloting their hero robots. Now, they can go into battle at robot tournaments held across the country.

Toymakers are rushing to come up with other new toys that appeal to adults. They are taking advantage of a growing trend among busy salarimen to put more emphasis on relaxation and fun. The stores in Akihabara that sell models and robots costing several thousand yen are not the only ones that are doing well. Retailers have also discovered that cheaper “masked raider” belts aimed at children have been a surprise hit among 30- and 40-year old men, highlighting the potential of a broader market for nostalgia.

Toys that help people to relax have also boosted sales. Primo Puel, a cuddly doll version of a fiveyear old boy, is fitted with sensors and five levels of happiness, can talk a bit and needs care. It has been a big hit with women over 40, whose own children have left home. “Little Jammer”, a toy jazz band, is also a hit—this time with men. Hidamari no tami (sunshine people), plastic dolls with simple smiley faces, are hot, not just in Japan but in America too. Other local successes include Sega's Homestar Planetarium, which brings the wonders of the night sky into the living room.

Abandoning high-tech for simplicity has been another surprising success. Toys such as Yakyuuban, a baseball game on a small field with plastic players who bat and field, have come back with a vengeance. Besides nostalgia and relaxation, there may be a slightly more sinister reason for the popularity of this and similar games. The toys enable fathers and sons to play together, says Fumiaki Ibuki, the editor of Toy Journal, a trade magazine, who suggests that parents might want more direct contact with their offspring because of disturbing, much-publicised stories of alienated children committing murder.

As if to underline their success, recent top-selling toys in America and Europe have been Japanese. Their zeal to rejuvenate the Japanese market might eventually turn around toymakers' fortunes abroad, too.

Uncle Sam says yes

An outbreak of xenophobia-free common sense in Congress

THINGS may be improving for foreign businesses that try to buy American firms. That, at least, is the obvious conclusion to draw from the utter lack of opposition in Congress to the Bush administration's decision to allow Dubai International Capital to acquire Doncasters Group, a maker of precision-engineered parts for American tanks and military aircraft, for $1.2 billion.

In February congressmen of every stripe turned apoplectic when the government's Committee on Foreign Investment in the US (CFIUS) approved the acquisition by Dubai Ports World of P&O, a British firm that operated several ports in America. The storm abated only after Dubai Ports World, controlled by the government of Dubai, agreed to spin off the American operations to an American-owned firm. But even the shrillest critics of the ports deal, including Senator Charles Schumer, declined to oppose the Doncasters sale. Mr Schumer even praised CFIUS for conducting a “careful, thoughtful” investigation. He argues that the latest deal is very different from Dubai Ports, because “this is a product, not a service, and the opportunity to infiltrate an d sabotage is both more difficult and more detectable.”

Perhaps that is a meaningful difference. But Kristin Forbes, an economist at the Massachusetts Institute of Technology and a former member of George Bush's Council of Economic Advisers, reckons that a “number of people in Congress have realised that

they over-reacted to the Dubai Port deal.” Although the ports deal was treated in Congress as trading off economic benefit against national security, on closer examination the deal would probably have actually improved security, she says.

Moreover, there has been a growing recognition that, given America's huge external deficit, scaring off foreign sources of capital without good reason was unwise. Also, in the past couple of months the Bush administration has made a big effort to educate Congress about the hitherto little-understood CFIUS reviews, so that politicians are now more comfortable with the committee's advice.

Many foreign would-be buyers of American firms remain sceptical, however, attributing the recent muted reaction in Congress to the fact that the politicians are having more fun slamming the president for failing to control soaring fuel prices. Coming after Congressional concerns over the sale to overseas buyers of Global Crossing, a telecoms firm, and to the would-be purchase of Unocal, an oil company, by the China National Offshore Oil Company, many foreign firms have interpreted the blocking of the Dubai Ports deal as proof of American hostility to foreigners buying its companies.

The weeds of destruction

Central banks need to worry about more than just inflation

THREE months after Ben Bernanke took over as chairman of America's Federal Reserve, financial markets are struggling to decipher his monetary smoke signals. His testimony to Congress on April 27th and some unguarded remarks to a journalist have left markets confused over whether or not the Fed has nearly finished raising interest rates. Some economists argue that the Fed would find its policy easier to explain if it had an explicit inflation target—something Mr Bernanke is known to favour. That might make it easier for financial markets to guess where interest rates are going, but would it necessarily result in better policy?

If candidates in an economics exam are asked: “What should b e the main objective of monetary policy?”, the “correct” answer today is price stability: central banks should single-mindedly reduce inflation and then keep it low; they should also avoid deflation. In that same exam in ten years' time, however, the required answer may be different. Or so implies a new paper by Bill White, the chief economist at the Bank for International Settlements, which asks: “Is price stability enough?”

Inflation is indeed a curse on economies. High inflation disrupts steady growth, and by blurring movements in relative prices it leads to a misallocation of resources. However, stable prices do not guarantee stable economies. The bursting of Japan's bubble in the early 1990s and East Asia's economic crisis in 1997-98 were both preceded by periods of low inflation. Furthermore, recent structural changes in the global economy could mean that a low, positive rate of inflation is not always best. Thanks to the

re-emergence of China and India and the productivity gains from information technology, the world is enjoying a terrific positive supply shock, which has reduced the prices of many goods. How should central banks respond?

Current received wisdom holds that if a negative supply shock (higher oil prices, say) causes inflation to rise, central banks should tolerate this so long as it does not increase inflationary expectations and lead to second-round effects on other prices. The logic is that central banks should ignore one-off changes in the price of things they cannot control. So, asks Mr White, shouldn't central banks also ignore the fall in inflation arising from a positive supply shock? To be consistent, they should allow inflation to fall below target. Instead, as the prices of traded goods fall, central banks have been propping up inflation by pursuing looser monetary policies.

Mr Bernanke would argue that back in 2003 when the Fed slashed interest rates to 1%, it was trying to prevent deflation. However, not all deflations are like that of the 1930s, a vicious circle of deficient demand, falling prices and rising real debt burdens, which further depressed demand and hence prices. Historically, most deflations have been benign, caused by technological innovation and associated with robust growth. During the rapid globalisation of the late 19th century, falling average prices went hand in hand with strong growth. Today's world has much in common with that period.

Are central banks targeting too high a rate of inflation now that China and India have boosted global capacity so dramatically? With hindsight, some of the deflation that the Fed was fretting about in 2003 was in fact benign deflation due to cheaper goods from China and the IT revolution. But its determination to prevent inflation falling caused it to push interest rates unusually low. This, argues Mr White, could have long-term costs to the extent that persistently easy money leads to too much borrowing, too little saving and unsustainable asset prices.

Most central banks base their policy analysis on models derived from Keynesian economics. In these, holding interest rates too low creates excessive aggregate demand and hence inflation. But Mr White believes that a model based on the Austrian school of economics, at its height between the world wars, may now be more relevant. In Austrian models, the main result of excessively low interest rates is excess credit and an imbalance between saving and investment—rather like the one in America today.

A heated debate

A clue to an old ecological mystery

OF ALL the patterns in nature, one of the simplest, yet hardest to unpick, is that the further you travel from the tropics, the fewer species there are. This trend is found both by land and by sea, and applies to a vast range of different organisms. Despite the pattern's simplicity, though, its explanation is elusive, and the quest to find that explanation is one of the enduring themes of ecology. The latest attempt to crack the problem has just been published in the Proceedings of the National Academy of Sciences by Shane Wright and Jeannette Keeling, of the University of Auckland, and Len Gillman of AUT University, both in New Zealand. They think it is all a question of heat.

Most ecologists who have studied the phenomenon agree that the climate explains it somehow. It can surely be no coincidence that it is a great deal warmer and more pleasant in the tropics than at the poles. But quite how a nicer climate ends up producing more species is a mystery.

That there is more sunlight—and so more opportunity for photosynthesis—at the tropics explains why warm climates create more living matter (or biomass, as it is known to ecologists). It does not, however, explain why this biomass is apportioned into more species. Theories have ranged from the mundane (the greater stability of tropical climates imposes fewer random extinctions on species that are already there, allowing varieties to accumulate) to the wacky (that centrifugal force caused by the Earth's rotation exerts a slight pull towards the equator, thus biasing migration patterns). The theory examined by Dr Wright, Dr Keeling and Dr Gillman, however, is that evolution happens faster in the tropics because tropical conditions increase the mutation rate, and thus the amount of genetic variation available for natural selection to act on.

To test this idea, the team studied the DNA of pairs of closely related plant species in which one member of the pair was tropical and the other was found closer to the poles. For each pair of species, they worked out the rate at which changes were happening to t he chemical “letters” in which the genetic message is encoded. This process, known as molecular evolution, results in changes in the genes, the proteins made from those genes and, ultimately, the organisms the genes reside in.

The researchers found that the rate at which nucleotides changed in tropical species was more than twice that found in species from temperate latitudes. That strongly suggests a faster mutation rate is at least part of the answer.

Dr Wright, Dr Keeling and Dr Gillman could think of three explanations why tropical plants might have higher rates of molecular evolution than temperate plants. The one they favoured is that the higher temperature of the tropics means that chemical reactions happen faster and metabolic rates are therefore higher. That increased metabolism would, in turn, generate more

oxygen-rich molecules of a type known as free radicals, which are potent inducers of mutation.

To support this idea, the team had to eliminate the two alternative explanations. One is that because tropical species often have smaller populations than temperate ones, they are more susceptible to genetic drift. (In other words, a mutation can more easily become ubiquitous by chance in a small population than in a large one.) The other is that the relationship between mutation rates and speciation is the other way round, because a higher speciation rate causes natural selection to preserve more of the mutations that arise, even though the mutation rate itself has not changed.

Oochy woochy coochy coo

Women can read men like books

A GROUP of scientists has discovered that women are attracted to men who are fond of children. In years gone by, that announcement might have qualified for one of the late Senator William Proxmire's Golden Fleece awards for pointless scientific research—except that what this particular group of scientists has shown is that women can tell who is and is not fond of children just by looking at their faces.

The members of the group in question, led by James Roney of the University of California, Santa Barbara, are part of the revival of a science that once dared not speak its name—physiognomy. In the late 18th century, and during most of the 19th, it was believed that the shape of a person's head could tell you something about his character. Such deterministic thoughts fell out of favour during the 20th century. Most behavioural scientists thought that environment, not biology, shaped behaviour, and even those who did not could not see how the shape of the head or features of the face could possibly be relevant. What Dr Roney and his colleagues have found is that they are.

Their 39 male subjects, selected from a variety of ethnic backgrounds, were shown 20 pairs of pictures, each depicting an adult and an infant. They were asked to signify their preference for either the adult or the child. Some reported no interest in the child at all. The rest expressed a range of interest, including a few who always preferred the pictures of infants. The men also provided saliva swabs to assess their testosterone levels. The researchers then took digital photographs of the men and doctored the images so

that their hairstyles were obscured, and could not affect the judgments of the female subjects.

These were a group of 29 women, from equally diverse backgrounds, who were shown the photographs. They were asked to rate the men according to whether they thought the men liked children, and whether those men appeared masculine and physically attractive. They were also asked to say which men they preferred for short-term and which for long-term relationships. The results, which have just been published in the Proceedings of the Royal Society, confirm that women are very good at reading faces.

The first part of the study provided confirmation of work done previously by other groups, using different methods. When asked to rate the men's masculinity, the women agreed on who was top and who was bottom, and their rankings correlated with the testosterone levels from the swabs. What was novel was that when asked to rate the men's liking of children from the photographs, they ranked them in the same order as the researchers had done from the interest the men themselves had shown in pictures of infants.

When asked with whom they would prefer to have a short-term relationship, women tended to pick the high-testosterone males. This makes sense from an evolutionary point of view, since testosterone suppresses the immune system. Like the proverbial peacock's tail, an excess of testosterone suggests that an individual must have particularly disease-resistant genes in order to compensate. These make desirable partners for a woman's own genes in her children. The problem with testosterone-fuelled males is that they are less likely to remain faithful to their partners.

By contrast, men who show an interest in children are also likely to make good partners, because they will care for their offspring. The study showed that women prefer these men for long-term relationships. Again, no surprise.

The surprise is this: some men were perceived both as masculine and as interested in children. From an evolutionary point of view, a trade-off between the two would have been predicted. That would produce what is known as an evolutionarily stable strategy in which the child-loving men father fewer babies to start with, but see as many live to maturity because they help to raise them rather than deserting the mothers. From the female point of view, the existence of men who are both hunky and child-friendly might seem too good to be true. For the men involved, it certainly seems like a lot of hard work.

Between bears and hawks

The Fed has more to fear from inflation than from slower growth

IT WOULD win no prizes for elegant prose, but the statement that accompanied the Federal Reserve's latest quarter-point increase in interest rates on May 10th was at least clear. The central bankers are not sure what to do next. “Further policy firming may yet be needed to address inflation risks,” they said, but they added that “the extent and timing of any su ch firming will depend importantly on the evolution of the economic outlook as implied by incoming information.”

The Fed's desire not to tie itself down is understandable. After 16 consecutive rate increases, American monetary policy is no longer loose and there are signs that areas of the economy that are sensitive to interest rates, notably the housing market, are feeling the effects of dearer money. Virtually all economists predict slower economic growth in the months ahead, a view given credence by April's surprisingly modest pace of job creation. Because higher interest rates take a while to show their full effect, prudence suggests a pause. Otherwise the central bankers risk slowing demand too sharply.

That said, the economy has hitherto been roaring along at a wholly unsustainable pace: output grew at an annualised rate of 4.8% in the first quarter of the year. Both labour and product markets are tight, global growth is looking ever stronger, commodity prices are soaring, the dollar is falling, and American inflation is already pressing against the limits of the tolerable.

The Fed's favourite measure of inflation, the annual increase in the “core” personal consumption expenditure (PCE) deflator (ie, excluding fuel and food), rose in March to 2%—the most that Ben Bernanke, the Fed's newish chairman, feels comfortable with. On balance, the chances are that, over the next few months at least, the Fed will worry more about inflation than about slower growth.

Short-term technicalities provide one reason for this. Arithmetical nuances alone suggest that the 12-month core PCE deflator will hover around, or even exceed, 2% for a while. More important, the housing component of core inflation, which is based on rental prices, is rising.

A core inflation rate temporarily above 2% need not automatically raise red flags. It has exceeded that threshold several times in recent years. And, as economists at Goldman Sachs have pointed out, the Federal Reserve stopped raising interest rates in early 1995 and mid-2000 despite a modest rise in core inflation. Then, however, the general trend of inflation was downwards; now it is rising.

Trouble at mill

Investors and the environment

ACROSS the Far East, Latin America and Central Europe, new pulp mills are springing up and existing mills are being extended. But these projects may carry a much bigger financial risk than investors have realised. Many schemes have exaggerated how much timber they can fell and crack downs on illegal logging threaten to make their new mills unprofitable.

Pulp mills are expensive. Building even a modest one from scratch can cost more than $1 billion. Small pulp mills tend to be financed by banks in their home markets. But the biggest projects, designed to produce more than 200,000 tonnes of pulp a year, generally seek funds from overseas. Over the past decade investment banks have invested some $40 billion in pulp mills, as demand for paper has soared. Some industry analysts foresee over $50 billion in new investment by 2015, much of it in Brazil, China and Indonesia.

The Centre for International Forestry Research, which is based in Indonesia, has just issued a new report on logging, which was paid for by the European Commission and Britain's Department for International Development. It examined 67 projects proposed between 1995 and 2003—just under half of them in Asia. The report argues that at least 20% of the projects had no proper environmental assessments. It is hardly surprising that a green lobby group should decry the practices of the logging industry. But what is new is that the report's author, Machteld Spek, a financial analyst, argues convincingly that a disregard for the sustainability of wood supplies and changing attitudes to logging, has exposed investors to considerable financial risk.

In Indonesia two pulp-mill companies, Asia Pulp & Paper and Asia Pacific Resources International, borrowed more than $15 billion in the 1990s from international capital markets, after convincing investors that they had sustainable supplies of cheap fibre for pulp. But both companies are still years away from planting enough trees to operate sustainably; and a recent crackdown on illegal logging in Indonesia promises to make their business even more difficult.

On the other side of the world Uruguay and Argentina are feuding over two pulp mills being built in Uruguay. The dispute has led to the blockade of a bridge between the two countries, and a halt to construction work on the mills. Argentina alleges that the mills will pollute the river on which they are being built, over which the two countries share sovereignty. Supporters of the mill argue that the Argentine government has taken no action against its own older, dirtier pulp mills, and argue that much of the opposition is driven by anti-capitalist militants. But David Kaimowitz, head of the Centre for International Forestry Research, says that the original environmental assessments failed to show that the mills will have enough wood from sustainable sources. He argues that private and public investors are going to have to be much more demanding with future projects.

The International Finance Corporation, the investment arm of the World Bank, is trying to tackle these problems by enforcing the “Equator Principles”. These allow lenders to sort projects into low, medium or high risk, and to demand environmental and social assessments accordingly. So far, more than 40 big banks have agreed to adopt them. A better grasp of environmental risk will help ensure that wood, and not investors' money, gets pulped.

An education in finance

America's colleges embrace the capital markets

IN THE lecture halls of America's universities, capitalism is far more likely to be damned than praised. Those who run the universities, however, have a keen appreciation of the capital markets. It is well known that some institutions, notably Harvard, have benefited greatly from putting top-notch managers in charge of their endowment funds. Less well known is the increasing willingness of colleges to borrow in the markets, too. On May 15th, for example, Cornell University sold $250m-worth of bonds. In recent weeks both Harvard and the University of Texas have also raised hundreds of millions of dollars in this way.

Such debt-raising is becoming more common, although the average bond issue is smaller than these. Lehman Brothers reckons that the overall market for highereducation debt has tripled since 2000, to $33 billion, and there are abundant reasons besides the recent trend to believe that the market will grow much bigger yet.

Largely this is because colleges are only belatedly becoming aware of how useful the financial markets can be. No doubt some of their hesitation has been cultural: academics may have been reluctant to look at their universities as businesses; or they may have misunderstood what was needed to help those businesses grow.

If they did look at their institutions in economic terms, people in education tended not to think that universities lacked capital. Rather, they thought that they had a structural inability to use capital and labour more efficiently. Unlike the car industry, say, which is continually cutting the number of worker-hours needed to assemble a vehicle, many schools felt that they must maintain, or even increase, the ratio of employees (teachers) to customers (students). Small class sizes are taken as a signal of high quality, so investing money to save on teachers' salaries is not an attractive strategy.

Schools had other reservations as well. Poor schools were worried about being unable to service debt. Rich schools with huge endowments ($25 billion at Harvard, $12 billion at the University of Texas, $4 billion at Cornell) may have seen no need. And college administrators may not have considered that their institutions' primary assets—reputation, inspiration and insights—were suitable as collateral.

So much for an academic perspective. A growing number of investors saw things differently. Those lovely buildings on rolling campuses, the better universities' reputations, taxpayers' backing of state-owned institutions: all this looked to them like a deep pool of assets against which lots of money could be borrowed. The money raised could be used to attract more customers, who are choosy about the product and whose demand varies little with the price (loudly though they may complain).

The idea has flourished. Colleges throughout America are building classrooms, stadiums, theatres, climbing walls and whatever else it takes to hold teenagers' imaginations. This costs a lot and much of it is financed by debt. So far, credit quality has been excellent. The last default was back in 2000, when Bradford College, an old Massachusetts institution, closed its doors leaving debts of almost $20m.

The kindest cut

Cutting down trees could be the best way to preserve tropical forests

DEPRESSING reports about how quickly the world's tropical forests are being felled are commonplace. But depressing reports about the state of the trees that are still standing are much rarer. In fact, a new study from the International Tropical Timber Organisation (ITTO), an offshoot of the United Nations, claims to be the first exhaustive survey of tropical-forest management ever undertaken. Its findings, although grim, do contain a kernel of hope.

The ITTO examined “permanent forest estate”, meaning land that the governments of its 33 members have formally set aside for forests, and is therefore subject to some form of regulation or protection. The category includes both national parks and timber concessions, in both public and private hands. It covers 814m hectares, and accounts for roughly two-thirds of the world's tropical forests.

The concept is important, explains Duncan Poore, one of the authors of the report, because it is not always possible, or desirable, to protect every last grove against encroaching farms or homes. Instead, governments should concentrate on maintaining the forests that are the most commercially and scientifically valuable. Yet the ITTO's researchers found that only 15% of the permanent forest estate has a management plan, and less than 5% of it is sustainably managed. That still amounts to an area the size of Germany, the report notes, and represents a dramatic improvement since 1988, when an earlier and less extensive survey found that only one country in the tropics—Trinidad and Tobago—had any well-run forests at all. But relative to the area of forest that has disappeared over the same period, the well-managed area is negligible.

The crux is bad government. Poor countries do not always have good forestry laws. Even when they do, they rarely have the capacity to enforce them. It is no coincidence that Malaysia, the country with the highest proportion of prudently managed forest in the study, is also one of the richest. Countries with the worst run forests, meanwhile, are war-torn places such as Congo and Cambodia.

More surprising, perhaps, is the difference the report found between forests where logging is allowed, and those that have been earmarked for conservation. Some 7% of “production” forests, it turns out, are in good shape, compared with just 2.4% of “protection” forests. As Dr Poore points out, it is easy to undertake to preserve a forest, but difficult to do so in practice. Timber concessionaires at least have an incentive (and probably the wherewithal) to look after their property, while ill-paid and ill-equipped forestry officials often have neither. Exploiting forests may prove the best way to preserve them.

Cast no shadows

How to weave a cloak that makes you invisible

IN NORSE mythology, a magic cloak granted invisibility to Sigurd, a demi-god and skilled warrior with superhuman strength. Millennia later, a similar garment bestowed invisibility on Harry Potter, a schoolboy wizard. In the mortal (or Muggle) realm, engineers have for years tried with varying degrees of success to build such a device. This week a team of physicists and materials scientists announced it had devised a pattern for a potentially perfect invisibility cloak.

Light is an electromagnetic wave, with a longer wavelength than X-rays and ultraviolet, and a shorter wavelength than

infra-red, microwaves and radio waves. All these electromagnetic waves are governed by four mathematical expressions established almost 150 years ago by James Clerk Maxwell. These equations represent one of the most elegant and concise ways to state the behaviour of electric and magnetic fields and how they interact with matter. However, because they are so concise, they also embody a high level of mathematical sophistication.

The team—Sir John Pendry of Imperial College London with David Schurig and David Smith of Duke University in North Carolina—used the equations to devise a way to cloak an object with a material that would deflect the rays that would have struck it, guide them around it and return them to their original trajectory. Maxwell's equations conserve certain properties—the magnetic field intensity, the electric displacement field and the Poynting vector that describes the electric flux of an electromagnetic field. These properties remain the same when others are altered. The team showed how these fields could be manipulated to flow around objects like a fluid, returning undisturbed to their original paths. The findings were published online this week by Science.

The trick is to use metamaterials: materials that owe their characteristics to features of their structure that are smaller than the wavelength of the electromagnetic radiation. For light, this is on the scale of tens of thousandths of a millimetre. Metamaterials can and have been designed and made to possess certain properties, even counterintuitive ones. Using metamaterials means the scheme should work for all objects, regardless of their shape. Moreover, unlike other proposed invisibility cloaks, it does not require knowledge of what is behind the wearer, nor are crude projections involved.

So far, so good: the theory is in place. Sadly, the implementation lags behind. Moreover, there are several other difficulties that may prevent a device conferring total invisibility from being built. The first is that the plan described by Sir John and his colleagues works only for a small range of wavelengths. A surgeon wearing metamaterial gloves tuned to make his hands invisible might benefit from being able to see exactly where the scalpel was cutting. However, an invisibility cloak designed to hide something from people who were looking for it would not work. An aeroplane shrouded in such kit might be invisible to the human eye but it would be picked up readily by radar, which operates at radio wavelengths.

Even if it ultimately proved possible to make an aeroplane completely invisible at all wavelengths, there would be a further problem. According to the laws of physics, an invisible person would necessarily be blind. In order to see light, the eye must absorb it, but in order for a person to be invisible, the body must not absorb any light. Thus, a spy plane could not be completely invisible if it were to be used for espionage or, indeed, flown at all, since its pilots would need to know its position relative to the ground.