From time to time, I run across articles pertaining to subjects about which I have previously written. I had been saving the articles for future use and the time seems right to provide quick updates on a few past posts. The articles cover subjects from microfinance to healthcare. Let’s begin with microfinance.
Microfinance
I first started writing about microfinance (or microcredit) back in 2006 in a post entitled Programs that Fight Poverty. In that post, I discussed the work of Muhammad Yunus, the man who started the microfinance movement and who won the 2006 Nobel Peace Prize for his efforts. My latest post on the subject was entitled An Update on Microfinance. That post discussed how excesses in the microfinance industry had caused people to start questioning the value of microfinance. While admitting that the sector seemed to have wandered from Yunus’ initial vision, I concluded that the collapse of microfinance would be a terrible blow to the world’s most impoverished populations. In the latest twist on the subject, Yunus himself has come under scrutiny [“Saint under siege,” The Economist, 5 January 2011]. The article reports:
“In much of the world Muhammad Yunus is known as the genial pioneer of microcredit and the winner of the 2006 Nobel peace prize. Yet in his native Bangladesh Mr Yunus’s reputation is under attack. His supporters fear that the government plans to remove him from Grameen Bank, the microlender he founded, and take it over. In late December Mr Yunus had to issue a statement denying claims by some in the Bangladeshi government that he had resigned from his post as the managing director of Grameen. The initial trigger for the attack on Mr Yunus was a documentary screened on Norwegian television in November, which dredged up an old controversy about the use of development funds provided to Grameen by Norad, the Norwegian aid agency, in the 1990s. Grameen transferred the ownership of the Norwegian funds from one Grameen entity, fearing its tax-exempt status might be changed, to another. Discomforted, the Norwegian government asked Grameen Bank, which had originally been given the funds, to retain ownership. This was done in 1998. The Norwegian government said in early December that a probe by Norad had failed to uncover any evidence that its money was used for unintended purposes, or that Grameen had engaged in corrupt practices.”
Although it appears that Yunus and Grameen Bank did nothing wrong (concern over losing tax exempt status is a legitimate fear), people seem eager to believe the worst about people. “Sheikh Hasina, the prime minister, accused Mr Yunus of playing ‘a trick’ to evade taxes. She charged microlenders with ‘sucking blood from the poor in the name of poverty alleviation’ and treating the people of Bangladesh as ‘guinea pigs’.” The article continues:
“On December 24th the government announced that it was planning a ‘high-level investigation’ into Grameen’s operations. Another line of fire opened up on January 4th when a Bangladeshi news website alleged that Grameen’s 20-year-old relationship with a printing company called Packages Corporation, which had been owned by Mr Yunus’s family since the 1960s, was rife with conflicts of interest. Grameen took over the management of the firm in 1990 to use it for its own printing needs; it has also provided the printers with loans from a Grameen fund. The bank stresses that Mr Yunus’s family, who retained ownership, have not gained financially from the relationship (among other things, the agreement with Grameen restricted the owners from getting any of the printer’s profits).”
Despite the fact that Yunus’ efforts have helped and continue to help the world’s poor gain access to credit, the article states that “he has made some powerful enemies among Bangladesh’s politicians.” Apparently the animosity began when Yunus tested the political water by announcing that he might run for president of Bangladesh. He eventually dropped his bid, but politicians have long memories. It seems to me that Yunus has not lost his halo; but, as the article concludes: “Bangladeshi microlenders can no longer consider themselves safe from the country’s messy politics.”
Healthcare
In a post entitled Shortages of General Practice and Family Doctors are Impacting Emergency Health Care, I noted that “rising costs and a growing shortage of general/family practice physicians” continue to plague the future of the healthcare sector. Passage of the healthcare reform bill is expected to exacerbate the doctor shortage as 30 million new patients gain insurance benefits and begin seeking more regular health services. In a recent op-ed piece, Dr. Herbert Pardes, president and CEO of New York-Presbyterian Hospital, reiterates the potential impacts of this shortage and how Congress contributed to it. He writes:
“As they celebrate their 65th birthdays at the rate of 10,000 a day, Baby Boomers are now approaching the stage of their lives when they will need more medical care. But they—along with everyone else—are going to have a hard time getting appointments. The doctor shortage was fostered in 1996 when Congress capped the number of new doctors Medicare would pay to train, a practice that continues to this day. Teaching hospitals, which now make up about 10% of hospitals nationwide, depend on those Medicare funds to pay about two-thirds of the cost of doctor-training. (Training costs include residents’ salaries, malpractice insurance, equipment, the extra time that teaching procedures add to patient care, as well as the added costs associated with caring for the sickest patients.) Recently, the President’s National Commission on Fiscal Responsibility and Reform proposed cutting Medicare funding to train doctors even further, by $60 billion through 2020. If this cut is enacted, the doctor shortage would get far worse.”
In my previous post, I noted that one reason that the shortage of general practice doctors is particularly large is because they make less money than specialists yet still must pay back large student loans they took out as medical students. The larger the amount of debt that a medical student obligates to the greater the pressure he or she faces to become a specialist. That, however, is not the point of Dr. Pardes’ op-ed piece. He is not looking at the situation from the perspective of the student but from the perspective of the educator. The implied question Dr. Pardes is asking is: Do you really want to skimp on your doctor’s training? He continues:
“Training new doctors has substantial costs because of all they must learn and how carefully they must be supervised. Without Medicare reimbursements, many hospitals could not afford to maintain these critical training programs. Already, 30% of hospitals lose money, according to the American Hospital Association, and even more barely break even. Across the country, demand for doctors exceeds supply.”
Dr. Pardes writes about the “estimated 32 million people” who are going to be added to the ranks of the insured and continues to focus on the aging U.S. population (“the number of seniors who need more medical care is expected to soar to 72 million by 2020—nearly double today’s number”). What does all this mean? He continues:
“According to a 2010 report by the Association of American Medical Colleges, the increased demand means that our nation will need an additional 130,000 doctors, both general-practice physicians and specialists, 15 years from now. That’s about 20% more doctors than we have currently. But doctors are aging, too. Almost a third of doctors in the country—about 250,000—are over the age of 55. By 2020 they plan on retiring. Right now we train roughly 16,000 doctors a year. To keep pace with demand, this nation will need to train an additional 6,000 to 8,000 each year for the next 20 years. If we increased the number of training slots today, it would take seven to 10 years for the new doctors to see patients (four years of medical school, plus three years of residency and additional specialty training). In many parts of the country, the shortage of doctors is already a reality. Statistics from the Health Resources and Services Administration say that 10% of the population lives in an area where there is an inadequate supply of health-care providers. These people may wait months to see a doctor. Sometimes no specialists exist where they live. While some responsibilities of doctors can be absorbed through other trained medical professionals, including nurses and physician assistants, they don’t have the same unique expertise. If we don’t make changes, long waits and limited access will become much more common for all patients.”
Like any good doctor, Pardes writes a prescription to help cure this ailment. He concludes:
“The first step should be a political version of the Hippocratic oath: Do no harm. The deficit commission’s recommended cuts in training funds must be set aside. Secondly, the cap enacted in 1996 on training new doctors should finally be lifted. These two steps would go a long way to addressing our country’s medical needs. Patients searching fruitlessly for a physician or waiting months for a routine appointment are glimpsing what could be the future for millions more. That future is preventable, and we must ask Congress and the Obama administration to make sure it is.”
There are no quick fixes when it comes to training medical professionals. Even “importing” doctors from other countries isn’t likely to help close the gap. For an interesting side note on this subject, read the article “New Prize in Cold War: Cuban Doctors.” [Joel Millman, Wall Street Journal, 15 January 2011]
Food Crisis
In two recent posts (Fears Grow Concerning Possible Food Price Increases and Rising Food Prices), I discussed the fact that the world’s “grocery bill” could set a record this year. In the latter post, I quoted Gary Blumenthal, president and chief executive officer of World Perspectives, a Washington, D.C., agricultural consultant, who claims, “Imperfect weather has collided with perfect food demand.” Some of that “imperfect weather” has been the torrential rains that have struck countries like Pakistan, Sri Lanka, Australia, and Indonesia. Rains in Indonesia are adding to concerns over rising food prices [“Indonesian crop failures add to food fears,” by Anthony Deutsch, Financial Times, 16 January 2011]. Deutsch reports:
“Indonesia is in the grip of crop failures brought on by nearly a year of heavy rain, which are threatening millions of jobs and pushing up food prices for tens of millions of impoverished families when global food prices are already on the rise.”
Crop failure brought on by bad weather is neither a new nor surprising phenomenon. One effect of rising food prices that did surprise me is the reported increase in animal rustling [“Sheep thefts in Britain likely connected to rising global food prices,” by Anthony Faiola, Washington Post, 16 January 2011]. Faiola reports:
“The culprit? Globalization. The ovine crime wave began, insurance company and farm union officials say, after global food prices started jumping again. With bouts of bad weather in major producers such as Russia, Argentina and Australia and increasing demand in Asia, the price for many grains is now busting through the record highs they set in 2008. But meat prices have also surged, particularly for lamb. Because of escalating world demand and scaled-back production in such nations as New Zealand, a farmer’s price per pound for lamb here is now about 35 percent higher than in 2008. The 45 head of sheep stolen from Allen in late September, for instance, were worth $6,400 – or twice the price they would have fetched five years ago. Rising prices have fueled what authorities here describe as a thriving black market for lamb and mutton, with stolen animals butchered in makeshift slaughterhouses before their meat is illegally sold to small grocery stores, pubs and penny-wise consumers. But farmers here are counting more than lost sheep. Britain is also witnessing a surge in the theft of tractors and other farm machinery, with authorities blaming organized crime rings smuggling the stolen equipment into Eastern Europe – where farmers are rushing to cash in on high grain prices by cultivating more and more land.”
As you can see, the current food crisis is increasing the overlap between physical security and food security and the challenges are likely to grow (see my six-part series on food security that began with a post entitled Agriculture Old and New).
Emerging Markets
In a post entitled Knowing Your BRICs and CIVETS, I discussed the dizzying array of acronyms that have been used to label emerging market countries with the best near-term potential. The most famous, of course, is BRIC (Brazil, Russia, India, and China). Many people have now added Indonesia to that group (BRICI) while other analysts have argued that you can leave the BRICs by themselves and add a new group called the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa). Other analysts believe the CIVETS list is too confining and that the group under the BRICs should be called the Next 11 (South Korea, Mexico, Indonesia, Turkey, the Philippines, Egypt, Vietnam, Pakistan, Nigeria, Bangladesh and Iran). The man who came up the BRIC acronym in the first place, Jim O’Neill, has finally weighed in [“‘Bric’ creator adds newcomers to list,” by Jennifer Hughes, Financial Times, 16 January 2011] Hughes reports:
“Jim O’Neill, who coined the term ‘Bric’, is about to redefine further emerging markets and will explain the new approach to clients this month. The chairman of Goldman Sachs Asset Management plans to add Mexico, South Korea, Turkey and Indonesia into a new grouping with the Brics – Brazil, Russia, India and China – that he dubs ‘growth markets’. ‘It’s just pathetic to call these four emerging markets,’ he told the Financial Times. The new approach will involve looking at fresh ways to measure exposure to equity markets beyond market capitalisation – for example, looking at gross domestic product, corporate revenue growth and the volatility of asset returns. ‘Some emerging markets should be traded as emerging markets – they are illiquid and small, and investors should remember that,’ said Mr O’Neill. ‘But any economy from the emerging markets world that is already 1 per cent of global GDP or more, and has the potential for that to rise, has the ability to be taken seriously.'”
Hughes notes that some analysts have dismissed the BRICs as a marketing ploy. The fact of that matter is, “however, the nine-year-old term has spawned government summits, investment funds, business strategies and a host of countries keen to join.” According to Hughes, O’Neill believes that “growth market” countries need to be distinguished from “emerging market” countries because their impact on the global economy is greater and the risks of investing in companies there is lower. Hughes continues:
“Mexico and South Korea account for 1.6 per cent each of global GDP in nominal terms. Turkey and Indonesia are worth 1.2 and 1.1 per cent respectively. China is the world’s second-largest economy, at 9.3 per cent of global GDP (the US is worth 23.6 per cent), while Brazil, India and Russia combined provide a further 8 per cent. The concept of ’emerging markets’ was coined 30 years ago by Antoine van Agtmael, then a World Bank economist and now chairman of Emerging Markets Management, an investment firm. His aim was to replace patronising phrases such as ‘third world’. Like Mr Agtmael, Goldman and Mr O’Neill have little control of the Bric term as its popularity has spread. Last month, Chinese media reported that its government had invited South Africa to join a Bric summit this year. Mr O’Neill has strenuously resisted calls to add countries, including South Africa, to his Brics. His criteria for the group are based around a country’s size, demographics and its growth potential. South Africa currently accounts for 0.6 per cent of world GDP. ‘South Africa can be successful, but it won’t be be big,’ he said.”
I like the distinction between growth market countries and emerging market countries. It makes sense. The distinction is likely to draw the displeasure of countries like South Africa that don’t make “growth market” cut, but the terms were developed for investors not governments. For a humorous take on this subject, read From BRICs to PIGS: what’s in a name? by Jules Evans (Global Dashboard, 6 December 2010).
