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Snooping on shoppers

You shone a light on the harrowing implications of the Chinese Communist Party’s “social-credit system” (“Creating a digital totalitarian state”, December 17th). But private industries, too, have implemented a social-credit system. Through Alibaba’s finance arm, for example, Sesame Credit scores people based on their consumption habits and digital behaviour. The score can affect one’s ability to take out a loan, buy movie tickets or even find a significant other (dating firms often require courters to display their credit scores).

The technology powering such systems has significant benefits for Chinese consumers and the businesses serving them. Alibaba and other Chinese firms make this technology available to market researchers, who use it to assess where a likely customer lives, where they typically shop and how much it costs to get them to a store. This has spurred significant investment in China from multinationals that want a slice of its retail pie, and has also helped China become the largest retail e-commerce market in the world.

Related topics

Marketing director
Export Now Digital Solutions

High times
* Your article on the high price of medicines focused primarily on products that aren’t new (“Drug money”, December 10th). There is a fundamental difference between a company such as Valeant, which slashed R&D while raising prices on old, generic drugs, and true innovators like Gilead, which has provided major advances in HIV therapy and cures for Hepatitis C as a result of its costly, painstaking commitment to bringing medical breakthroughs to patients.
According to IMS, a health-care consultancy, the net growth in prices of branded drugs in the United States was only 2.8% in 2015. The share of spending on retail medicines remains the same as it was a half century ago: about 10-15%. Indeed, spending on all American health care, not just drugs, is around three times that of other developed countries. Yet unlike other components of the health-care system, the biopharmaceutical industry invests a sizeable share of its revenue in developing the next generations of innovative products, which can reduce other health-care costs.
High initial prices for innovative drugs, over a temporary period of exclusivity, are not the problem; they are a prerequisite for encouraging the enormous, high-risk investments needed to cure diseases. Constructive approaches to addressing access to medications include policies that promote the rapid approval of generics, value-based reimbursement, the elimination of excessive drug-price rises and insurance reform that prevents exploitively high deductibles and patient co-pays.
Biotechnology Innovation Organisation
Ardsley, New York

Ideas management

One may easily take issue with Schumpeter, who believes that management theorists have gone astray by subscribing to the dead ideas of increasing competition, widespread enterprise, the growing speed of business operations and globalisation (December 17th). For anecdotal evidence disproving Schumpeter, just glance at the article that preceded his column. It was about the competitive success of Zara, a highly entrepreneurial company with a global footprint, and the edge it has attained by adjusting its clothing lines in lightning speed to the most current fashion (“Behind the mask of Zara”, December 17th).

Ranging more widely, the bone-breaking changes in such industries as retail and media are now reaching finance, with fintech. Ford will become an information-technology company competing at that industry’s speed, using its autonomous cars and the services enabled by the internet of things. The cheap global connectivity of the internet, combined with the large and increasing share of information and knowledge in products, will obviate any political moves towards autarky.

Journal of Management Information Systems
Saddle River, New Jersey

Election advice for Italy

Why do you recommend first-past-the-post elections in Italy (“Salvaging the wreckage”, December 10th)? It is an inherently undemocratic voting system. Take the most recent British general election. In 2015 the Conservative Party won 330 seats with only 37% of the total vote, giving it a majority government without an actual electoral majority. The UK Independence Party got just one seat with 13% of the vote, whereas the Scottish Nationalists secured 56 seats with 5% of the vote.

The single-transferable vote, used in Ireland and Malta, is a better system, because it reflects the will of the electorate and keeps politicians more in tune with their constituents.


Nuclear v solar

I doubt that the El Romero Solar Plant in the Chilean desert would power a city of a million people (Bello, December 10th). In fact, it would power 120,000 Chilean households today, and far fewer in the future, if the forecasts of rapid growth in demand materialise. Globally, electricity consumption far outpaces new solar and wind power. Carbon-free electricity generation as a percentage of overall generation has fallen. This is explained by both the decline of nuclear power and the failure of renewables to make up the difference.

In the United States alone, five nuclear plants have closed over the past several years. Together they generated as much electricity as all of America’s solar plants and residential installations put together. Many more nuclear plants are at risk of closing in the Western hemisphere without any replacement in sight.

Clean electricity is likely to continue declining for years to come. Policymakers have been slow to realise that the mandated purchases of heavily subsidised renewables have depressed electricity prices. Even with very low fossil-fuel prices, ageing nuclear plants, which often have remaining lifetimes longer than new solar and wind facilities, are at a disadvantage. Yet they also do not pollute.

New York

Japan’s broadside

Lexington mentioned that Japan’s new destroyer is named the Izumo (December 10th). The original Izumo was an armoured cruiser that served as the Japanese navy’s flagship in China in the 1930s and 1940s. She saw battle in both the 1932 and 1937 Sino-Japanese wars, shelling Chinese positions from the middle of the Huangpu river in Shanghai. She also sank the last British gunboat and captured the last American gunboat in Shanghai in 1941.

By giving the new Izumo her name, and, indeed, naming the entire class of ships the Izumo class, Japan is sending a clear message to China.

Hong Kong

With winter here…

The British government’s response to the crisis in care for the elderly is, as you say, “Too little, too late” (December 17th). You are also right that funding services for old people through local-government taxes often leaves the councils that need it the most with the least cash. But there is an even greater defect in the system.

Responsibility for care of the elderly is divided between the National Health Service and local councils, and their interests are usually diametrically opposed. Every elderly person who has to remain in hospital because there is no space in a care home is a financial gain for the council but a considerable cost for the hospital (as well as denying a bed to someone who needs it). The only way to resolve this conflict of interest is to put social care in the community under the control of the NHS. This is perfectly logical as it is a national “health” service not a national “hospital” service.

Droitwich, Worcestershire

Grouping economists

Professor Ben-Gad answered your call for a collective noun for economists with the admirable suggestion of “aggregate” (Letters, December 17th). But given the befuddling diversity of economic mantras and economists, that suggestion risks mixing apples and oranges.

There must be at least two other collective nouns for economists: an inefficiency and a disutility.

Sturminster Newton, Dorset

* Letters appear online only



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