Quantum computers will break the encryption that protects the internet

Quantum computers rely on the famous weirdness of quantum mechanics to perform certain sorts of calculation far faster than any conceivable classical machine. Their fundamental unit is the “qubit”, a quantum analogue of the ones and zeros that classical machines manipulate. By exploiting the quantum-mechanical phenomena of superposition and entanglement, quantum computers can perform some forms of mathematics—though only some—far faster than any conceivable classical machine, no matter how beefy.

In 1994 Peter Shor, a mathematician then working at Bell Laboratories, in America, came up with a quick and efficient way to find a number’s prime factors. The only catch was that for large numbers his method—dubbed Shor’s algorithm—needs a quantum computer to work.

Big quantum computers will have applications in fields such as artificial intelligence and chemistry. But it is the threat posed by Shor’s algorithm that draws most public attention. Large organisations may be able to get around the problem using so-called quantum cryptography. This detects eavesdroppers in a way that cannot be countered. But it is expensive, experimental and unsuitable for the internet because it must run on a special, dedicated network. For most people, therefore, the best hope of circumventing Shor’s algorithm is to find a bit of one-way maths that does not give quantum computers an advantage.

But translating a piece of maths into usable computer code and then delivering it to the zillions of machines that will need updating will not be easy.

Despite—or perhaps because of—the information-technology industry’s obsession with novelty, the internet resembles ancient cities like Rome and Istanbul, with modern structures built atop forgotten layers of old, unmaintained code.

Read the complete article in The Economist here.

 

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After a year of #MeToo, American opinion has shifted against victims

Oct 15th 2018 by THE DATA TEAM

ONE year ago Alyssa Milano, an American actress, posted on Twitter: “If you’ve been sexually harassed or assaulted write ‘me too’ as a reply to this tweet.” Within 24 hours she had received more than 500,000 responses using the hashtag “#MeToo”. Ms Milano’s tweet came days after the New York Times and New Yorker had published detailed allegations of sexual harassment by Harvey Weinstein, a Hollywood producer. Mr Weinstein was the first in a long line of prominent entertainers and executives to be toppled by such investigations, which dominated the headlines throughout late 2017.

Even as these stories broke, it was #MeToo that resonated most on social media, as millions of women shared their experiences of abuse, intimidation and discrimination. In the past 12 months, the hashtag has been tweeted 18m times according to Keyhole, a social-media analytics company. The phrase has come to encapsulate the idea of sexual misconduct and assault. In recent months American journalists have used the hashtag in their articles more frequently than they have mentioned “sexual harassment”, according to Meltwater, a media analytics company.

Yet surveys suggest that this year-long storm of allegations, confessions and firings has actually made Americans more sceptical about sexual harassment. In the first week of November 2017, YouGov polled 1,500 Americans about their attitudes on the matter, on behalf of The Economist. In the final week of September 2018, it conducted a similar poll again. When it came to questions about the consequences of sexual assault and misconduct, there was a small but clear shift against victims.

Read the complete article on The Economist here.

Big Mac Index 2018

The Economist’s Big Mac index gives a flavour of how far currency values are out of whack. It is based on the idea of purchasing-power parity, which says exchange rates should move towards the level that would make the price of a basket of goods the same everywhere. Our basket contains only one item, but it is found in around 120 countries: a Big Mac hamburger.

If the local cost of a Big Mac converted into dollars is above $5.28, the price in America , a currency is dear; if it is below the benchmark, it is cheap. The average cost of a Big Mac in the euro area is €3.95, or $4.84 at the current exchange rate. That implies the euro is undervalued by 8.4% against the dollar.

THE Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. For example, the average price of a Big Mac in America in January 2018 was $5.28; in China it was only $3.17 at market exchange rates. So the “raw” Big Mac index says that the yuan was undervalued by 40% at that time.

Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of at least 20 academic studies. For those who take their fast food more seriously, we have also calculated a gourmet version of the index.

This adjusted index addresses the criticism that you would expect average burger prices to be cheaper in poor countries than in rich ones because labour costs are lower. PPP signals where exchange rates should be heading in the long run, as a country like China gets richer, but it says little about today’s equilibrium rate. The relationship between prices and GDP per person may be a better guide to the current fair value of a currency. The adjusted index uses the “line of best fit” between Big Mac prices and GDP per person for 48 countries (plus the euro area). The difference between the price predicted by the red line for each country, given its income per person, and its actual price gives a supersized measure of currency under- and over-valuation.

Link to the Interactive Currency-Comparison.

What to do about China’s “sharp power”

China is manipulating decision-makers in Western democracies. The best defence is transparency

WHEN a rising power challenges an incumbent one, war often follows. That prospect, known as the Thucydides trap after the Greek historian who first described it, looms over relations between China and the West, particularly America. So, increasingly, does a more insidious confrontation. Even if China does not seek to conquer foreign lands, many people fear that it seeks to conquer foreign minds.

Australia was the first to raise a red flag about China’s tactics. On December 5th allegations that China has been interfering in Australian politics, universities and publishing led the government to propose new laws to tackle “unprecedented and increasingly sophisticated” foreign efforts to influence lawmakers (see article). This week an Australian senator resigned over accusations that, as an opposition spokesman, he took money from China and argued its corner. Britain, Canada and New Zealand are also beginning to raise the alarm. On December 10th Germany accused China of trying to groom politicians and bureaucrats. And on December 13th Congress held hearings on China’s growing influence.

This behaviour has a name—“sharp power”, coined by the National Endowment for Democracy, a Washington-based think-tank. “Soft power” harnesses the allure of culture and values to add to a country’s strength; sharp power helps authoritarian regimes coerce and manipulate opinion abroad.

The West needs to respond to China’s behaviour, but it cannot simply throw up the barricades. Unlike the old Soviet Union, China is part of the world economy. Instead, in an era when statesmanship is in short supply, the West needs to find a statesmanlike middle ground. That starts with an understanding of sharp power and how it works.

China has a history of spying on its diaspora, but the subversion has spread. In Australia and New Zealand Chinese money is alleged to have bought influence in politics, with party donations or payments to individual politicians. This week’s complaint from German intelligence said that China was using the LinkedIn business network to ensnare politicians and government officials, by having people posing as recruiters and think-tankers and offering free trips.

Bullying has also taken on a new menace. Sometimes the message is blatant, as when China punished Norway economically for awarding a Nobel peace prize to a Chinese pro-democracy activist. More often, as when critics of China are not included in speaker line-ups at conferences, or academics avoid study of topics that China deems sensitive, individual cases seem small and the role of officials is hard to prove. But the effect can be grave. Western professors have been pressed to recant. Foreign researchers may lose access to Chinese archives. Policymakers may find that China experts in their own countries are too ill-informed to help them.

To ensure China’s rise is peaceful, the West needs to make room for China’s ambition. But that does not mean anything goes. Open societies ignore China’s sharp power at their peril.

Part of their defence should be practical. Counter-intelligence, the law and an independent media are the best protection against subversion. All three need Chinese speakers who grasp the connection between politics and commerce in China. The Chinese Communist Party suppresses free expression, open debate and independent thought to cement its control. Merely shedding light on its sharp tactics—and shaming kowtowers—would go a long way towards blunting them.

Read the complete article on The Economist magazine web site.

A prosecutor of Klansmen captures Jeff Sessions’s old seat, as the Republicans’ Senate majority shrinks

Roy Moore watching results

INITIALLY the mood at Doug Jones’s election-night party was genial but uneasy. Guests knew Mr Jones was closer to winning one of Alabama’s Senate seats than any Democrat in a quarter-century; they also knew that Mr Trump won the state by 28 points, and the last two Republican Senate candidates won 63.9% and 97.3% of the vote. So they smiled, and made all the right hopeful noises, but around the corners of their eyes you could see them bracing for disappointment.

Mr Jones’s victory was narrow—he took 49.9% of the vote to Mr Moore’s 48.4%, with the remaining 1.7% going to write-in votes—but decisive. He flipped every one of the counties that Mr Trump won by 10 points or less last year, banking large numbers of votes in the counties housing Alabama’s five biggest cities, and running up sizable margins in Alabama’s majority African-American “black belt”.  Mr Moore, meanwhile, underperformed Mr Trump’s results from November 2016 in every one of Alabama’s 67 counties, faring especially poorly in those with large numbers of educated voters.

At a rally in south-eastern Alabama the night before the election, Steve Bannon, Mr Trump’s former chief strategist and the architect of his presidential campaign, headlined a motley crew of far-right Republicans who offered a cavalcade of bilious, resentment-filled speeches promoting Mr Moore while pandering to Alabamians’ prickliness. “Nobody comes down here and tells Alabamians what to do,” said Mr Bannon, a Virginian, speaking after a Texan and several Midwesterners. Other speakers attacked George Soros, Islam and “the lynch-mob media”. No name got longer and more sustained boos than Mr Shelby’s. Two days before the election he went on a prominent talk show just to say, “I wouldn’t vote for Roy Moore…The state of Alabama deserves better.” Mr Moore’s wife defended her husband against charges of bigotry by revealing that “one of our attorneys is a Jew.”

White evangelicals—Mr Moore’s core supporters—comprised a smaller share of the electorate this year than in past elections. Some of them stayed home, or even voted for Mr Jones, despite vehemently disagreeing with his pro-choice position on abortion. Rushton Mellen Waltchack, a Christian and lifelong Republican from Birmingham, compared Mr Moore to “a televangelist who falls from grace,” and said she could not bring herself to vote for him. “He makes statements that to me don’t represent Jesus in the Bible…What does it say about us as a party if we continue to choose policy over character?”

Read the complete article on The Economist magazine web site.

Donald Trump’s big test in 2018 – The Economist video

The ninth in The Economist series of films previewing some of the big themes of 2018 considers America’s mid-term elections. A bad result for Donald Trump could lead to his impeachment. Can he unite and rally Republican voters?

How bookmakers deal with winning customers

888, an online betting firm, was fined a record £7.8m ($10.3m) in August after more than 7,000 customers who had chosen to ban themselves from their betting accounts were allowed to retain access. Yet away from the regulator’s gaze, bookies often stand accused of the opposite excess: being too prompt to shun winning customers. Successful bettors complain that their accounts get closed down for what are sometimes described as business decisions. Others say their wagers get capped overnight to minuscule amounts. The move may be unpopular with punters, but in most parts of the world it is legal.

Operators say scrutinising winners is necessary to help prevent fraud. Competition in the gambling industry increased with the arrival of online betting, prompting bookmakers to offer odds on markets they did not previously cover. In some, such as Eastern European football leagues, low wages and late payments make fertile ground for match-fixing. A winning streak at the windows can signal foul play. Most often, however, efforts to spot savvy customers are not rooted in a desire to thwart dodgy schemes. Rather, they are part of what industry insiders call “risk management”: to remain profitable, bookies seek to cap potential losses. As one betting consultant puts it, “Bookmakers close unprofitable accounts, just as insurance companies will not cover houses that are prone to flooding.” Betting outlets get to know their customers by gleaning information online, tracking web habits and checking whether punters visit odds-comparison sites. Profiling has also been made easier by the tightening of anti-money laundering regulations, which require online punters to provide detailed information when opening accounts.

Professional gamblers rarely do business with high-street bookmakers. They often place their trades on betting exchanges like Betfair or Smarkets, which do not restrict winning customers (though Betfair charges a premium to some of its most successful users). Alternatively they work with those bookmakers who use successful gamblers to improve the efficiency of their betting markets, and make most of their money on commission. These profess not to limit winning accounts and accept much bigger bets (Pinnacle, an influential bookie, often has a $1m limit for major events). Betting professionals also sneak in big trades via brokers, like Gambit Research, a British operation that uses technology to place multiple smaller bets with a range of bookmakers. Asian agents, in particular, have made their names in that trade: many are able to channel sizeable bets to local bookies anonymously. Unlike the sports they love, the games played by professional gamblers and bookmakers are kept out of the spotlight.

Sources: The Economist magazine web site.