Can We Trust the Intuition of Experts?

Global Crisis Blog

Can We Trust the Intuition of Experts?

By Shlomo Maital

Nov. 10/2009

 

    An article in the latest American Psychologist, by Daniel Kahneman and Gary Klein, addresses the key issue:  When can we trust the intuitive judgment of experts? [1]

    Kahneman is identified with the HB (heuristic bias) approach.  His work, some of it done with the late Amos Tversky, shows how flawed our judgment is and how non-rational our decisions often are.[2]  Kahneman won the Nobel Prize in Economics for his research.

    Klein is identified with the NDM (naturalistic decision making) approach, which chronicles often-amazing successes of intuitive judgment.  The article is an interesting dialogue between the two approaches, ending in “a failure to disagree”, i.e. broad agreement.

     Here is what the two scholars agree upon:

• · An environment of high validity is a necessary condition for the development of skilled intuitions. Other necessary conditions include adequate opportunities for learning the environment (prolonged practice and feedback that is both rapid and unequivocal).If an environment provides valid cues and good feedback, skill and expert intuition will eventually develop in individuals of sufficient talent.

 ● Although true skill cannot develop in irregular or unpredictable environments, individuals will sometimes make judgments and decisions that are successful by chance. These “lucky” individuals will be susceptible to an illusion of skill and to overconfidence.   The financial industry is a rich source of examples.

    Let me translate.   If the ‘environment’ of decision-making is stable and predictable (i.e. that of a chess game),  experts develop startlingly accurate intuitive judgment.  Chess grandmasters, for instance, can choose the best move quickly in complex situations when amateurs fail to even consider that move.  But if the environment is unstable and unpredictable,  expert intuition is flawed.  True, such judgment will be right part of the time.  But this is solely through chance.   Those who ‘hit it’ by chance become overconfident, take excessive risk — and destroy their own businesses and the capital of others. 

      If “the financial industry is a rich source of examples” of flawed intuition,  then those enormous bonuses the industry is again paying itself are not justified.  Nor can we put our faith in investment advisors with superior rates of return over the past year.  Probably, an accident.   We can, however, better understand Warren Buffett’s surprisingly accurate intuition.  It is based on investing from the outset ONLY in stable environments, i.e. basic products like food, drink, machine tools or railroads, and holding on to the equities for decades.  

      Kahneman and Tversky once investigated the phenomenon of the ‘hot hand’ in basketball (streaks of baskets, without misses, by star players) and showed statistically that there was no such thing — it was simply random.  (Toss enough coins, and you will eventually get a dozen straight ‘heads’).   Why, then, do we still believe in ‘hot hands’ among financial advisors?   And why have they returned to paying themselves obscene bonuses? And why do we the people agree to it?   

       And finally, why in the world would anyone believe, in a world of overconfidence in flawed intuition in the financial services industry,  that the 2007-9 global crisis will not recur? 

   

 

 

---

[1] “Conditions for Intuitive Expertise: A Failure to Disagree”,  American Psychologist, Sept. 2009.

[2] See S. Maital, “Daniel Kahneman: on redefining rationality”, J. of Socioeconomics, 2004.

Fall of the Wall: 20 Years Later

                    Global Crisis Blog

Fall of the Wall:  20 Years Later

By Shlomo Maital

 

  As I write this, I am watching German Chancellor Angela Merkel on CNN, in a sea of Germans, speaking informally about the extraordinary events two decades ago — events she personally witnessed and took part in, when she, then a young scientist crossed from East to West.   Merkel chose not to create a formal diplomatic event with stuffy speeches, but simply stood elbow-to-elbow with thousands of Germans, some of whom had crossed with her on Nov. 9, 1989,  after symbolically crossing from East to West again, as she did in 1989.   Merkel thanked Mikhail Gorbachev, who was with her, for his policies that made the Fall of the Wall possible and eventually, on Dec. 25, 1991, led to the dissolution of the Soviet Union.  When Poland’s Solidarity movement won the June 4, 1989, election,  the Russian ambassador to Poland called the Kremlin in panic and asked,  what shall I do?   what shall we do?   Gorbachev had a simple answer.  Do nothing.  Let the election stand.   It was in part Gorbachev’s non-intervention policy that enabled the Wall to fall. 

     The Berlin Wall was erected in June 1961, after some 3.5 million Germans fled East Germany to the West.   The Wall had concrete walls, barbed wire, guard towers and a death strip that had anti-vehicle trenches, spikes and other types of defense.  Between 1961 and 1989 some 5,000 people tried to escape over the Wall;  an estimated 150 people died.

     Those most surprised at the fall of the Wall were the Germans themselves.  Most of them who witnessed the dramatic events of Nov. 9, 1989, said they never believed the monolithic German Democratic Republic would crumble so rapidly.  

     Today we know that British Prime Minister Margaret Thatcher and French Prime Minister Francois Mitterand were both worried and displeased by the fall of the Wall,  understanding that it would bring German reunification and create Europe’s largest and most powerful economy.    Indeed, unification came quickly.  On Oct. 30, 1990,   the new reunited Germany was announced.  West  Germany was in such a rush to implement the unification, that it offered to buy East German marks at a price of one such mark for a West German mark — at a time when the buying power was about eight to one.   The resulting flood of marks into the system caused inflation, led the Bundesbank to raise interest rates –  and ultimately, caused Britain to leave the European Monetary System, as the British wanted to free themselves from the straitjacket of high European interest rates and float the pound.  (On Sept. 16, 1992, George Soros’ massive sales of pounds caused Britain to leave the European Exchange Rate Mechanism).    So ironically, the fall of the Wall may have ultimately been responsible for keeping Britain out of the euro system.

     These events, from 1989 through 1992 and beyond, show how appropriate is the initiative taken by German students  to visually demonstrate the impact of the fall of the Wall.  The students created 1,000 styrofoam dominos, each three meters high, and placed them along the path of those who fled from East to West.   As one domino toppled another, we saw clearly how the Fall of the Wall led to a chain of remarkable events that forever changed history.  

    Congratulations to those innovative German students!

 

 

Poetry & Innovation: Mommy, Daddy, Tell Me a Story

Innovation Blog

Poetry & Innovation: Mommy, Daddy, Tell Me a Story!

By Shlomo Maital

Nov. 4/2009

  Do you want to build a powerful business innovation? I ask my students.

  If you do — tell me a story.  Build a powerful narrative that has real people in it, a plot, conflict, a story line, and above all, a happy end.   These are all elements of  every great children’s book, stories we all grew up on,   Good Night, Moon,    Where the Wild Things Are,  and so on.  Children make meaning out of the world through stories.  So do we adults, it seems.   War and Peace, Anna Karenina — great novels are all great stories.   

     So — I ask my students to write a great narrative, rather than a dull-as-dust business plan with a huge spreadsheet.  Tell me a story.  Tell me how you will build a prototype, sell to one customer, scale up — and change the world.   And make sure there is a vivid photographic happy end.

    Who is the main client for such a story?  Investors?  VC’s?  No.  The main is client  is YOU yourself!    Does your story excite you, does it reflect your deepest passions? If so, you have a business idea with potential to succeed. If not — you’re wasting your time.  If you cannot energize yourself, you will not energize others that you will need on your team, in order to succeed. 

    Great stories create meaning.  They are memorable.  They inspire.  No-one ever joined a business venture because of an inspiring spreadsheet.  They do join because of a powerful change-the-world visionary narrative.

    To tell the absolute truth — many of my students do not ‘get it’.  They have been polluted by follow-the-rules here-is-how-to-do-it MBA course formulas for writing conventional business plans.  Do it this way, students learn in their MBA studies.  Is it not ironic that we teach entrepreneurship and innovation, by instructing our students to avoid innovation (in business plans) like the plague?

    I find badly-needed moral support in last week’s New York Times column by Thomas Friedman, titled “More Poetry Please”.   Here is what Friedman says:

      “President Obama has not tied all his programs into a single narrative that shows the links [among all his ideas and initiatives].  …such a narrative would…evoke the kind of popular excitement that got him elected.   Without it, the President’s eloquence is lost in a thicket of technocratic details.  OBAMA NEEDS TO ENERGIZE THE PROSE  of his Presidency by recapturing the poetry of his campaign!”

     [Yesterday's (Tuesday) elections in the US prove the point.  The Democrats lost two key races for Governor (New Jersey and Virginia), despite Obama's intervention there.]

     Precisely!  Every innovator, including Mr. “Yes, we can”,  must energize the prose of his or her idea (the feet-on-the-ground business details)  with head-in-the-clouds narrative poetry, to excite himself or herself and to energize the team, the investors, and even the clients.

    But innovators, beware!  Building such a narrative is extraordinarily difficult.   Entrepreneurs are not supposed to be poets!   Many innovators are engineers;  engineers are trained to understand the Second Law of Thermodynamics, not the First Law of Rhetoric and Narrative. 

     Here is a suggestion.  Do you have a business idea?   Tell it to a six-year-old.  Make it into a story.  If you can hold their interest, and elicit questions,  maybe you have a good business idea.  If you cannot,  if you cannot respond to “Mommy, Daddy, tell me a story”,  with a good one –  go back to the drawing board.  

     

 

 

How to Say “I Love You” Without Saying “I Love You”!

Innovation Blog

How to Say “I Love You”  Without Saying “I Love You”!

By Shlomo Maital

Nov. 4/2009

      A BBC World Service program on the songs of Irving Berlin and  George and Ira Gershwin, American Jewish songwriters and musicians who lived in the 1930’s,  reveals a key innovation principle:

     Often, thinking IN the box [i.e. within difficult binding constraints or limitations] spurs enormous creativity.

     In the 1930’s composer George Gershwin (Rhapsody in Blue, An American in Paris] and his brother Ira, who wrote the words (lyrics), wrote wonderful love songs.  They did so, however, without using the words “I love you”, because those words were overused and tired.

     How do you say I love You without saying I Love You?  Wow, here are two great examples:  Gershwin’s Let’s Call the Whole Thing Off, and Irving Berlin’s  How Deep is the Ocean?

Let’s Call the Whole Thing Off

This song was written for the 1937 movie musical Shall We Dance?  By Ira and George Gershwin.  It was sung by Fred Astaire and Ginger Rogers, who did an innovative dance while singing it,  on …. roller skates!   It is pure magic!   Compare these lyrics with today’s rap!

Things have come to a pretty pass
Our romance is growing flat,
For you like this and the other
While I go for this and that,
Goodness knows what the end will be
Oh I don’t know where I’m at
It looks as if we two will never be one
Something must be done:
You say either and I say either,
You say neither and I say neither
Either, either
Neither, neither
Let’s call the whole thing off.

You like potato and I like potahto
You like tomato and I like tomahto
Potato, potahto,
Tomato, tomahto.
Let’s call the whole thing of
But oh, if we call the whole thing off
Then we must part
and oh, if we ever part, then that might break my heart

So if you like pyjamas
and I like pyjahmas,
I’ll wear pyjamas
and give up pyjahmas
for we know we need each other so
we better call the whole thing off
let’s call the whole thing off.

You say laughter and I say larfter
You say after and I say arfter
Laughter, larfter
after arfter
Let’s call the whole thing off,
You like vanilla and I say vanella
you saspiralla, and I saspirella
vanilla vanella
chocolate strawberry
let’s call the whole thing of
but oh if we call the whole thing off
then we must part
and oh, if we ever part,
then that might break my heart

So if you go for oysters
and I go for ersters
I’ll order oysters
and cancel the ersters
for we know we need each other
we better call the calling off off,
let’s call the whole thing off.

I say father, and you say pater,
I saw mother and you say mater
Pater, mater
Uncle, auntie
let’s call the whole thing off.

I like bananas and you like banahnahs
I say Havana and I get Havahnah
Bananas, banahnahs
Havana, Havahnah
Go your way, I’ll go mine

So if I go for scallops
and you go for lobsters,
So all right no contest
we’ll order lobseter
For we know we need each other
we better call the calling off off,
let’s call the whole thing off.

 

How Deep is the Ocean?

  Irving Berlin’s 1936 song, to which he wrote both words and music, conveys the deepest feelings of love , using I love you only twice, but as a question….

 

How can I tell you what is in my heart?
How can I measure each and every part?
How can I tell you how much I love you?
How can I measure just how much I do?

How much do I love you?
I’ll tell you no lie
How deep is the ocean?
How high is the sky?

How many times a day do I think of you?
How many roses are sprinkled with dew?

How far would I travel
To be where you are?
How far is the journey
From here to a star?

And if I ever lost you
How much would I cry?
How deep is the ocean?
How high is the sky?

 

Three Global Scenarios: Take Your Pick, Share Your Wisdom

 

 Global Crisis Blog

Three Global Scenarios: Take Your Pick, Share Your Wisdom

By Shlomo Maital

Nov. 3/2009

      In The Economist’s Oct. 1 issue,  a special report on The World Economy has an excellent and insightful lead article.   The question addressed: 

     *** Will the world economy recoup its huge losses from the 2007-9 global crisis, catch up to the pre-crisis trajectory, and return to the original baseline growth (a large but one-time loss)?  This is Scenario 1. (See Chart).    (Prof. Milton Friedman believes this has been the case in every American recession, for instance).

     ***   Will the world incur a permanent loss in output, returning to the original global growth rate but NOT recouping fully the losses in wealth and output. This is Scenario 2.

    ***   Will the world incur a permanent and growing loss in output, with global output growth emerging SLOWER than pre-crisis and never regaining its original rate.  This is Scenario 3.

      It makes a huge difference for every single manager, business, family, government — everyone! — which of these scenarios will actually occur.  If forewarned is forearmed, we all need to be forewarned. But as usual, our economists disagree and are of little help.

   If you have insights into which of these scenarios you believe is most likely, and why, please share them with us and submit a comment.

 

 

Global Crisis Act Two: Which Country Will Be Smart Enough to Find a Happy End?

Global Crisis Blog

Act Two: Which Country Will Be Smart Enough to Find a Happy End?

By Shlomo Maital

Oct. 31/2009

 

     As the world breathes a sigh of relief — the global crisis has not become a decade-long Depression, and GDP growth is restored in the U.S. –   there is room for gloom, or at least great caution.  We are not out of the woods yet.  Bad things still lie ahead. (What other message would you expect from an economist?).

     The reason is simple.  Both America and China, and to some degree other nations,  spent their way out of recession, through massive fiscal stimulus packages and huge deficits, plus enormous credit expansions.  America’s package exceeded $1.2 trillion.  China’s was over $586 b.  But as the Wall Street Journal’s widely-read column “Heard on the Street” notes,  “It is going to be a challenge for Beijing to rely on stimulus spending to keep growth going.”  And,  WSJ might have added, for America, Israel, and every country.

       America and China restored growth, or maintained it, respectively, by deficit spending.  For America, this has created a huge debt overhang, because the money was largely borrowed.  The deficits must be restrained, at some point.  Otherwise, the debt burden will soar impossibly and inflation may result.  But, what will replace government demand?  Exports?  We are seeing a wave of protectionism.  Investment?  No sign of that, only higher profitability will drive investment, and margins are down.  Consumer spending?  No way– with unemployment still high, and no signs that employment will revive any time soon,  why would consumers spend, rather than save? 

     There is no replacement for government demand. But governments cannot continue to give the economy artificial respiration, or CPR,  forever. 

     The near-term prognosis is for very very weak growth, in America and Europe,  and in China, a difficult transition from export-led growth to consumer-led domestic demand growth.

     Which country will be smart enough to write Act Two for its fiscal stimulus plans, and end the Act with a happy ending?  America? China?

      We are not yet out of the woods.

What Women Want!

Innovation Blog

WHAT WOMEN WANT

Shifting Consumer Mindset:

Are You Tracking It?  Part II

Oct. 31/2009

 

   Boston Consulting Group  expert Michael Silverstein and colleague, who head BCG’s global consumer practice, recently ran a web-based survey of some 25,000 women worldwide.  They published their results in a recent book  What Women Want.  The results are important and revealing. They show a rapidly developing and changing market, based on women who are increasingly stressed and pressed for time, and whose needs are not being fully met.  There is much room here for innovation.   If innovation is largely managed, led and conducted by men,  perhaps it is time to enlist women — unless men can suddenly become massively empathetic to the needs of half the world that has XX chromosomes.  The female economy, we learn, is a quiet economic and social revolution.   

 

   Here is a brief summary, taken from Singapore’s Business Times, Oct. 29, written by BCG principals in Southeast Asia:

 

      We are on the brink of a major business revolution. Over the next five years, women will have US$5 trillion in incremental earnings to spend and we see this as a commercial opportunity bigger than the rise of the consumer economies of China and India combined, and an economic stimulus far larger than any government bailout package.    Women control US$12 trillion of the overall US$18.4 trillion in global discretionary consumer spending, and they will have an even bigger share in the coming years. These women increasingly earn a substantial portion of the household income and control up to 65 per cent of household spending.   Taken from What Women Want – a Boston Consulting Group (BCG) global consumerism survey of more than 12,000 women in 22 countries around the world – these figures and survey analysis  highlight  their focus — the [need to] understand and serve this female economy.

 

     Much of the research from the survey findings shows that women are dissatisfied with the products and services available to them.   Companies fail to answer women’s needs and misunderstand the overwhelming demands placed on their time and the challenges they face when dealing with the myriad roles they typically play – as wives, mothers, sisters, daughters, partners, professionals, friends and colleagues.   These dissatisfactions need to be addressed by businesses in many industries before they can truly win the trust and consistent purchasing power of women.

  Specifically, companies fail to:

¨ address women’s need for time-saving solutions;

¨ design and customise products specifically for women;

¨avoid condescending and clumsy sales and marketing efforts;

¨align with women’s values or develop community; and,

¨increase their social initiatives and give back to society in more meaningful ways.

  The women surveyed in Women Want More indicated they are most dissatisfied with financial services (73 per cent), health care (71 per cent) and consumer durables (up to 47 per cent).

Of the three, financial services is the industry that frustrates women most. In general, women indicated they don’t have a desire to accumulate money for its own sake or experiment with complicated financial instruments.   A majority of the women value money as a means for caring for their families and themselves, improving their lives and assuring long-term security. Many indicated they want advisers and services that recognise their need for short-term simplicity and long-term stability.

  For the most part, women aren’t getting the financial management solutions they want. Instead, many experience a lack of respect, poor advice, contradictory policies and an obstacle course of red tape and paperwork.   Of the companies studied, very few understand the significance of the female economy to their business. If they respond to this economy at all, they do so by making small adjustments to their product line or to their organisations.

    To better understand the female audience, companies must reconsider how they do research, how they develop products, how they sell and merchandise and how they add services to their value proposition.   Companies must rethink how they segment the female audience and how these segments react to changes in consumer bahaviour.   To facilitate broader analysis of what women want, we created six key female consumer segments -

¨ fast-tracker, ¨  pressure cooker, ¨ relationship-focused, ¨  managing on her own, ¨ fulfilled empty nester and¨ making ends meet.

Each archetype is defined by income, age and stage of life. Such segmentation proved useful for our research and is now successfully informing the development and marketing of offerings to women.

Understanding what women want can be done through a four-R approach -

¨ recognise, ¨ research, ¨ respond and ¨refine. 

¨ Recognise the opportunity;

¨ research how a product or service is being consumed; and respond with new disruptive innovations that create new categories, new segments, or entirely new sources of products and services; and,

¨refine ideas in a way that creates lasting relationships with female consumers, builds connections and continually improves the offering to strengthen those relationships.

 Balancing ‘work at work’ and ‘work at home’ :  Women earn a substantial portion of the household income and yet they still do the bulk of the housework and home management. As a result, it is not surprising that women in every corner of the world are starved for time and many are stretched.

 BCG’s research has shown that women are struggling to balance the ‘work at work’ with the ‘work at home’. At the same time, they have high standards and even higher expectations of themselves.

These expectations – combined with the responsibilities women shoulder for caring about good nutrition, education, health care and making money for the family – create tremendous stress.

  Women hold approximately 50 per cent of university places throughout the world. Apart from the number of graduates entering the workforce, there is a global increase in the number of women going to work in full-time and part-time positions.

 The facts cannot be ignored, and increase in significance as companies recognise the importance of the female economy.  By systematically targeting this market and understanding women’s dissatisfactions, companies can holistically, rather than incrementally, participate in and profit from one of the most important commercial opportunities of the century. Women will benefit from and appreciate the outcomes too.

 

 

Source:   Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

 

 

Shifting Consumer Mindset: Are You Tracking It?

Global Crisis Blog

Shifting Consumer Mindset:

Are You Tracking It?

Oct. 30/2009

 

     Geophysicists tell us the earth is built on tectonic plates, that shift and slide — imperceptibly, only at the rate that fingernails grow, but, sometimes, when these plates collide, earthquakes and tsunamis result.

     Consumers are similar.  Their preferences change, often imperceptibly, but the changes add up to major shifts and trends — and unless we track them closely, we miss the boat.

     Consider this.  Singapore, the country, acts like Singapore Inc.  Its leaders track the country’s global rankings carefully and at the first sign of slippage, react and act.  For example, Singapore ranked only 17^th recently in the World Economic Forum Global Rankings for “consumer satisfaction”.  So Singapore initiated a large-scale survey of customer satisfaction (tourists and residents) across several industries. 

    The results are reported in the Straits Times, the leading Singapore newspaper, on Wed. Oct. 28.  The results:

 “Consumer Satisfaction Drops Again!”    Across-the-board declines in consumer satisfaction in transportation, retailing, tourist services, etc. 

      Is this truly the case?  In a country squeaky-clean with faultless customer service and Asian politeness,  has customer service suddenly deteriorated — at a time when businesses know that in a shrinking market and global downturn, they must redouble their efforts to please their customers?

       What has happened, I believe, is on the customer side, not the business side.  In a global downturn, which has impacted Singapore too,  people have new respect for money, even the wealthy, and demand greater value-for-money.  Unless businesses work hard to create the perception that they are delivering more value,  consumer satisfaction declines.  What worked in 2007 and 2008 may not work in 2009.

      The story is told of an old married couple…the wife complains, dear, we used to sit so close together in the car!  The husband (driver) replies:  Sweetheart — I haven’t moved.  

       Businesses haven’t “moved” in the way they treat customers. But the customers have.  Businesses should have moved in response — marketing, advertising, packaging, product design, pricing,   everything to build and strengthen the ‘value for money’ proposition, which has gained new importance in the downturn.   This is the real message of Singapore’s survey.

 

2 Million Women Suffer — Who Cares?

Innovation Blog

2 Million Women Suffer — Who Cares?

The Terrible Shame of Fistula

By Shlomo Maital

Oct. 27/2009

   If two million American, French, British or German  women suffered from a life-destroying humiliating and unbearable condition — how many thousands of innovators and billions of R&D dollars would be devoted to finding a rapid solution?

   But, fear not, it is only African, Asian and Arab women.  So, who cares?

   The condition is fistula.  It is horrendous just to read about it.  And despite a global campaign launched by that powerful, effective and efficient body called the United Nations, little progress has been made.  We have excuses rather than results.  It is a true disgrace, and a dark blot on the alleged humankindness of the wealthy half of the world.  

    The cost of curing the 2 million African, Asian and Arab women who suffer from the condition is $600 m., or $300 per woman,   a sum equal to about 12 hours’ worth of crude oil production, or 0.1 per cent of what the world spends annually on advertising. 

 

    According to the UN:

 

 Obstetric fistula is a hole in the birth canal caused by prolonged labour without prompt medical intervention, usually a Caesarean section. The woman is left with chronic incontinence and, in most cases, a stillborn baby.  The smell of leaking urine or faeces, or both, is constant and humiliating, often driving loved ones away. Left untreated, fistula can lead to chronic medical problems, including ulcerations, kidney disease, and nerve damage in the legs.  A simple surgery can normally repair the injury, with success rates as high as 90 per cent for experienced surgeons. The average cost of fistula treatment and post-operative care is just US $300. Sadly, most women with the condition do not know that treatment is available, or they cannot afford it.   Like maternal mortality, fistula is almost entirely preventable. But at least 2 million women in Africa, Asia and the Arab region are living with the condition, and some 50,000 to 100,000 new cases develop each year. The persistence of fistula is a signal that health systems are failing to meet the needs of women.

 

 

    If philanthropy is absent, where is creativity — a cheap effective solution poor women can afford?  Where are the world’s creative gynecologists? What about a mass-production ‘assembly line’ surgical unit, portable, that can do hundreds of such operations, for example?  What about enlisting 3,000 gynecologists  and surgeons to donate a month a year curing fistula?    

 

   In 2003, UNFPA spearheaded the global Campaign to End Fistula, “a collaborative initiative to prevent fistula and restore the health and dignity of those living with its consequences.” What a relief.  Rather — what a joke. 

      Perhaps we need a campaign to end the Campaign to End Fistula, and get down to some real action.  I don’t see how we wealthy people sleep at night when so many people are suffering so badly, and so needlessly.

Postscript:   Nicholas Kristof wrote his Sunday Oct. 31  NYT column on this subject — a topic he has been writing about since 2002.  Here are the first paragraphs…

October 31, 2009, 10:10 pm

<!– — Updated: 8:48 am –>A Heroic Doctor, a Global Scourge

By Nicholas Kristof

My Sunday column is about obstetric fistula, a horrendous childbirth injury that rarely gets attention or treatment because the victims are the most voiceless of the voiceless. Dr. Lewis Wall, the hero of the column, taught me about fistulas years ago, and so I’ve been writing about them periodically since my first column on the topic back in 2002.

For years, I’ve watched with admiration as Dr. Wall has persevered to try to build a fistula hospital in West Africa — and I’m thrilled that he is now fulfilling his dream. Those who want to help his Niger hospital can support his organization, the Worldwide Fistula Fund; tax-deductible donations to the hospital are possible right on the site, so please don’t send any money in my direction. For now the surgeries in Niger will be done in the existing leprosy hospital there, and he still needs significant sums to construct the new fistula wing beside it.

There’s another great fistula organization, the Fistula Foundation, that supports the Addis Ababa hospital and other places such as the remarkable Edna Adan maternity hospital in Somaliland.

Above all, I hope that we go even further and eradicate fistula globally. In the column, I mention Dr. Wall’s careful 12-year $1.5 billion proposal (written with Michael Horowitz of the Hudson Institute) to eradicate fistula. It’s also an effort to tackle maternal mortality; my sense is that fistula may be the best way to get traction for maternal health

 

 

China Gets It; America Doesn’t!

Global Crisis Blog

China Gets It; America Doesn’t.

By Shlomo Maital

Oct. 26/2009

    Nobel Laureate, and NY Times columnist,  Paul Krugman once said that if you matched 100 top economists against 100 senior managers,  the managers would be far far smarter.   As an economist who works with managers, I agree totally.

    But suppose you matched 100 Chinese political leaders against 100 American counterparts?  Who would be smarter, more effective, more capable?  

    Hands down, the Chinese.  China and its leaders get it.  America is out to lunch.

    America spent $1.2 trillion on its fiscal stimulus and bailout package.  A great deal of it was wasted, going to banks and financial companies who today thumb their noses at American taxpayers  by paying obscene bonuses á la 2001-6, and who kept bailout cash rather than lend it.  America is now left with an enormous debt hangover and little to show for it.

    China spent $586 b. on its stimulus package (less in absolute terms, but almost the same in proportion to GDP) and it worked beautifully.   Some went to building a superb fast-train rail network across China. Some went to stimulate consumer spending on cars and ‘white goods’. Chinese banks increased their lending by 150 percent year-to-year.  Why? Because the political leaders told them to, and  because the banks are mainly state-owned. 

    As a result, China’s GDP will grow by 8 per cent this year.  The latest quarter’s growth rate was a torried 8.9 per cent!  China will soon replace Germany as the world’s largest exporter, and will soon replace Japan as the world’s second largest economy.  China has $2 trillion in dollar assets and is using them cleverly to buy up real assets (companies, resources) all over the world, during a time when these assets’ prices are at bargain levels.  Next year, China will produce over 10 million vehicles, surpassing America.

     In contrast, America’s “recovery” is weak.  While GDP growth is above water, job growth is anemic and unemployment remains high.   But the major flaw in America’s business model is still unrecognized.  It is this.  American owners of capital made fortunes by sending their companies’ industrial plants to China.  In doing so, they screwed American workers, by destroying millions of well-paying industrial jobs.  And they also screwed themselves. Because, make no mistake, China’s business model is not based on “cheap labor”, as so many in the West seem to believe.  Instead, it is based on replacing America and Europe at the top of the innovation food chain.  “Created in China”, not just “Made in China”, is the goal.   As China’s engineers invent their own great new products, China is able to produce them in state-of-the-art plants.  They thus enjoy a double competitive advantage:  Innovation, and cost.  

    Can anyone cite an Obama speech, or a House or Senate initiative, to take immediate effective measures to bring America’s manufacturing home from Asia? 

     Does anyone believe America can sustain its middle class with low-paying service jobs at McDonald’s and Wal-Mart? 

     Does anyone see any signs that America “gets it”?    

 

Footnote:   Perhaps my own blog opinions carry little weight.  But those of America’s greatest economist alive or dead, MIT Professor Paul Samuelson, do.  Here is what Samuelson, now 89, wrote in The New York Times on Oct. 24: 

      We begin now a new era in which China will increasingly make obsolete America’s 1950-2009 world leadership. Your children and my grandchildren will live in this new and challenging era.   We’ll see China catch up and pass Japan as the economy second in total G.D.P. to the United States. Then, unless China’s one-party leadership explodes, the day will come when China’s total real G.D.P. will exceed America’s. Boohoo. But that’s the realistic expectation.    However, don’t expect smooth and quiet rotation of the globe pace-setters. More likely, within the coming decade, there will be a massive run against the U.S. dollar. Why? Because ever since the year 1000 A.D., export-led growth has been the rule whenever an educatable low-wage population has begun to imitate the technology of a more advanced nation, and thus out-compete the industries of the affluent regions.  So it was and so it will always be. Whenever a low-wage, educatable population can imitate the technology of a more advanced nation, it will do so.