Equatorial Guinea’s Kleptocracy: More on Why Africa is Poor

KristofNick.jpg  Nicholas D. Kristof.  Source of image:  online verison of the NYT commentary cited below.

 

The founding president of this country was a witch doctor who murdered tens of thousands, put enemies’ heads on pikes, denounced education and spread land mines on the road out of his country to prevent people from fleeing.  This was then so vile a place that an American diplomat stabbed another to death here in 1971 and claimed in his trial that he had been driven insane partly by the screams of all the people being tortured.

When the president was finally ousted in 1979, he ran off into the bush with $60 million packed in suitcases.  But he was pursued, and in a shootout, the nation’s entire foreign exchange reserves burned up.

. . .

Equatorial Guinea traditionally has been Africa’s poster boy for bad governance.  Even after the old witch doctor was ousted, the kleptocracy continued under Teodoro Obiang, the current president.  A new book about the country, “The Wonga Coup,” notes that in 2004 President Obiang bought a Boeing 737, one of six personal planes, for $55 million, and outfitted it with a king-sized bed and gold-plated fittings in the extra-large bathroom.

Schools and clinics are needy, but Forbes lists President Obiang as the world’s eighth richest ruler, with a net worth of $600 million.  Just last year, “The Wonga Coup” says, the president’s son spent the equivalent of a third of his country’s entire education budget on a vacation home in South Africa and three cars — two Bentleys and a Lamborghini.

 

For the full commentary, see:

NICHOLAS D. KRISTOF.  "Optimism and Africa."  The New York Times  (Tues., October 3, 2006):  A27.

(Note:  ellipsis added.)

 

The book mentioned in the commentary is: 

Roberts, Adam.  The Wonga Coup: Guns, Thugs and a Ruthless Determination to Create Mayhem in an Oil-Rich Corner of Africa.  PublicAffairs, 2006.

 

    Source of book image:  http://images.amazon.com/images/P/1586483714.01._SS500_SCLZZZZZZZ_V65100719_.jpg

The Missing Pillow: A Lack of Incentives Leaves an Obvious ‘Job’ Undone


In late July, I had an appointment for a treadmill stress-test at Omaha’s Methodist Hospital.  They told me the process would be over in an hour, but it took about two hours, due to another patient having some sort of crisis during their stress-test. 

They had me put on a gown, they stuck an I-V "dye" drip in back of my hand, and they pasted about six electrodes to my chest, after shaving and applying something like sand paper to the parts of the chest where the electrodes were attached.  Then they had me lie on my side on a hard table, to wait.  It was very uncomfortable.  The first nurse said that there was supposed to be a pillow on the table, but did nothing to obtain one.  Every several minutes some technician or nurse would stop in to ask if I was ready for them.  (I was always ready.)  But it turned out that someone needed to do something to me first, and that person was, I guess, taking care of the crisis next door.  At least one of these visitors also mentioned that I was supposed to have a pillow, but did nothing to acquire one.  If memory serves, the first nurse came back in, and again mentioned that I was supposed to have a pillow, but again did nothing to obtain one.

These people were all pleasant and friendly.  For example, they had a lot of friendly chats amongst themselves, that I could not help but over-hear.  (One of them was pregnant with twins, but did not know the genders of the babes-to-be, and so had not yet spent the time to come up with names.)

But two hours later, when the whole process was over, I still did not have a pillow.

A week or two after the test, I received a several page survey from Methodist Hospital asking a bunch of questions about how I thought they had done during the test.  You see they really "care" about my opinion.  (They also run frequent, slick TV ads about how much they "care.")

Marketers, and management gurus, say that organizations need to invest in surveys and the like to figure out what the customer wants and needs.  And Clayton Christensen advocates spending resources to figure out what "job" the customer needs to have done.  And maybe, sometimes, it does take surveys and research.

But sometimes it is obvious that the customer needs a pillow.

What is missing is not a survey, or statistical analysis.

What is missing is the incentive for someone to go get the pillow. 

 

P.S.  You may wonder, then, if it is simply a mistake for the hospital to send out the survey?  I suspect that those who send out the survey are not making a mistake, but are trying to get a different job done than the one that appears to be intended.  It appears that they are trying to find out what customers want and need.  But maybe they already know that.  Maybe they are mainly sending out the survey so that if anyone asks if they are "customer-oriented" they can whip out the survey to prove that yes-indeed, they sure are.  In other words, the point of the survey is not to learn about customers; it is to cover rear-ends.


How Speculators Stablilize Gas Prices

As long ago as 1953, Milton Friedman argued that speculation normally helps to stabilize prices rather than destabilize them.

Mr. Friedman’s argument was applied to currency trading, but the same reasoning works here.  If speculative trading tends to push prices higher when they are already high and lower when they are already low, then traders must be buying high and selling low.

That would mean that traders have to lose money on average — which does not seem very likely.  To the contrary, speculative traders try to buy low and sell high, activities that by their nature tend to push prices up when they are too low and down when they are too high.

Since Mr. Friedman’s 1953 article several papers have been published, both supporting and attacking this argument.  But the general principle seems quite robust.

 

For the full commentary, see: 

Hal R. Varian.  "ECONOMIC SCENE; The Rapidly Changing Signs at the Gas Station Show Markets at Work."  The New York Times  (Thurs., August 24, 2006):  C3.

 

The Milton Friedman article that Varian refers to, is: 

Friedman, Milton. "The Case for Flexible Exchange Rates." In Friedman. Essays in Positive Economics. Chicago:  University of Chicago Press, 1953.

United States Cardiologists Fail to Prescribe Fish Oil, Despite Low Cost, Safety, and Evidence of Efficacy


  Source of graphic:  online verison of the NYT article quoted and cited below.


United States cardiologists are reluctant to prescribe fish oil, wanting more definitive data on efficacy.  But a lack of definitive data on efficacy doesn’t stop them from performing costly and risky procedures such as the application of stents.  Possibly relevant:  installing stents is much more lucrative for cardiologists, than prescribing fish oil.  Doctors are not bad people, but like most of us, they respond to financial incentives.


(p. D5) ROME — Every patient in the cardiac care unit at the San Filippo Neri Hospital who survives a heart attack goes home with a prescription for purified fish oil, or omega-3 fatty acids.

“It is clearly recommended in international guidelines,” said Dr. Massimo Santini, the hospital’s chief of cardiology, who added that it would be considered tantamount to malpractice in Italy to omit the drug.

In a large number of studies, prescription fish oil has been shown to improve survival after heart attacks and to reduce fatal heart rhythms.  The American College of Cardiology recently strengthened its position on the medical benefit of fish oil, although some critics say that studies have not defined the magnitude of the effect.

But in the United States, heart attack victims are not generally given omega-3 fatty acids, even as they are routinely offered more expensive and invasive treatments, like pills to lower cholesterol or implantable defibrillators.  Prescription fish oil, sold under the brand name Omacor, is not even approved by the Food and Drug Administration for use in heart patients.

“Most cardiologists here are not giving omega-3’s even though the data supports it — there’s a real disconnect,” said Dr. Terry Jacobson, a preventive cardiologist at Emory University in Atlanta.  “They have been very slow to incorporate the therapy.”


For the full story, see:

ELISABETH ROSENTHAL  "In Europe It’ s Fish Oil After Heart Attacks, but Not in U.S."  The New York Times  (Tues., October 3, 2006):  D5.


Indian Infrastructure: “If the Public Sector Cannot Deliver, Let’s Try the Private Sector”

BANGALORE, India, Oct. 2 — About 25 miles south of the Chennai airport, past rows of ramshackle shops and pavements crowded with roadside vendors and assorted cattle, a short turnoff leads to a gated modern oasis.

Inside, at complete variance with the chaos of its surroundings, are the lakes, promenades, lush landscaping and security systems of Mahindra World City.  Its modern office high rises already house 4,000 workers with space for several thousand more.

This is the first of India’s special economic zones, or S.E.Z.’s, which could offer a partial solution to the extreme weaknesses in India’s infrastructure:  narrow, pothole-filled roads; erratic supplies of electricity and other utility services; and inadequate communication links.

The zone strategy borrows from China’s playbook, and in many ways, is a means to compete with China.  In fact, if all goes according to government plan, hundreds of these privately run zones will sprout like miniature foreign islands, offering better infrastructure and jobs, increasing exports and attracting investment from foreigners.

 

For the full story, see: 

SARITHA RAI.  "Oases of Modernity Amid India’ s Desert of Public Services."  The New York Times  (Tues., October 3, 2006):  C5.

In Egypt: The Authorities Versus the Entrepreneur


  Cairo entrepreneur serves good food to willing customers.  Source of image:  online version of the NYT article quoted and cited below.


In The Other Path, Hernando de Soto wrote about how governments in much of the world make it nearly impossible for the poor to legally get a start as entrepreneurs.  Here is a perfect example of de Soto’s point:


CAIRO, Oct. 2 — With his cart tucked beneath a highway overpass, just beside the railroad tracks and behind a parked taxi, Farouk Salem darted his eyes back and forth nervously as he awaited customers.

On most days, except during Ramadan, the sun has barely risen and worshipers are shuffling out of the nearby mosque after morning prayers as the first customers make their way to Mr. Salem.  A few quick flicks of a ladle, the shaking of a bottle or two, and breakfast is ready.

Mr. Salem sells ful, the fava bean stew that is a staple of Egyptian cuisine, as a cheap, hearty breakfast for just 20 cents.  But he is an unlicensed street vendor, one of the many hundreds of thousands of Egyptians who make their living in what economists here describe as Egypt’s informal work force:  selling, delivering, cooking, cleaning, serving, ferrying, shoeshining, anything that will provide income.

Dr. Rashad Abdou, a professor of economics at Cairo University, estimated that the informal sector might account for as much as 60 percent of Egypt’s economy.

“As long as I keep a low profile, they don’t bother me,” Mr. Salem said on a recent day, as his brother worked behind the parked metal cart, dishing out bowls of ful.  The police have forced him to move many times and have even confiscated his cart.  But it is hard to keep a really low profile when the food is good and the prices are cheap.

As the sun began to heat up the morning air, customers showed up in a steady stream, some still in their pajamas.

“It’s good,” said Muhammad Abbadi.  “It’s clean.  And the most important thing is it’s cheap.  We are poor.  You see how poor we are in Egypt.”

. . .

“If the authorities want to chase me away, they will do it,” he says, his face tight and nervous.  “If they want to put me in prison, they can.  If they want to take my cart away, they can.”

He walked over to get some more bread as Muhammad kept ladling.

 

For the full story, see:

MICHAEL SLACKMAN.  "CAIRO JOURNAL; A Hand on the Ladle, and an Eye Out for the Law."  The New York Times (Tues., October 3, 2006):  A4.

(Note: ellipses added.)

 

CairoFulFavaBeanStew.jpg  Ful is a fava bean stew that is popular in Cairo.  Source of image:  online version of the NYT article cited above.

 

The reference to the de Soto book is: 

Soto, Hernando de. The Other Path: The Invisible Revolution in the Third World. 1st ed: HarperCollins, 1989.

 

Laptops Update Read and Friedman’s “I, Pencil” Story

  Source of graphic:  scanned from p. B1 of NYT article cited below.

 

Leonard Read in his classic "I, Pencil" told the story of how the various compenents of a mere pencil came from different suppliers the world over.  People who did not know each other, and might not like each other if they met, but who were brought together in productive co-operation through the power of the market.  Milton Friedman frequently presented his own verison of this story.  The cover of my 1980 edition of Free to Choose has a picture of Friedman holding a pencil as if in the middle of this story.  And there is a short video-clip of Friedman telling the story.

A similar story could be told with many other products, and several sources have presented the raw materials in print to tell the story for laptop computers.  (By "raw materials" I mean that they list the diversity of sources of the inputs; but usually without drawing all the lessons that Reed and Friedman drew.)  One source is a chapter in Thomas Friedman’s The World is Flat. 

Two other sources are articles that appeared within a few days of each other in The New York Times and The Wall Street Journal. 

The reference to The New York Times article is:

DAVID BARBOZA.  "An Unknown Giant Flexes Its Muscles; Amid Talk of Deal With I.B.M., Lenovo of China Sheds Some Obscurity."  The New York Times (Sat., December 4, 2004):  B1 & B3.

The reference to The Wall Street Journal article is:

Jason Dean and Pui-Wing Tam.  "The Laptop Trail; The Modern PC Is a Model Of Hyperefficient Production And Geopolitical Sensitivities."   The Wall Street Journal  (Thurs., June 9, 2005):  B1 & B8. 

 

  Source of graphic:  scanned from p. B1 of WSJ article cited above.

 

Profit-Maximizing Infrastructure Installation

  Verizon employees in New York installing fiber optic cable.  Source of photo:  online version of the NYT article cited below. 

 

(p. C1)  Building a whole new state-of-the-art network is a laborious and expensive process that Verizon says it must undertake to fend off rivals like Comcast and Vonage, which are moving fast into the phone business.  As Verizon replaces more of its old copper network with more durable fiber lines, the company also expects to save billions of dollars in maintenance costs.

Verizon will spend about $20 billion by the end of the decade to reach 16 million homes from Florida to California. But it is in New York City where Verizon has the most at stake, because New Yorkers are some of the nation’s biggest buyers of video,  Internet and phone services.  The company plans to spend about $3 billion to reach the city’s 3.1 million homes and apartments.

With such a high concentration of potential customers, competition is fierce — and Verizon has been losing ground.  Time Warner Cable, Cablevision and others are stealing about 1,000 Verizon phone customers a day, and their discounted services are making it hard for Verizon to win them back — another reason to get the fiber network up quickly.

“The guys understand the importance of this fiber project,” said Robert Fighera, a lineman and chief union steward in the Bronx, nodding to the workmen nearby.  “We’re also stockholders, and we know we have to install this or we’ll fall by the wayside of all these other companies.”

 

For the full story, see: 

KEN BELSON.  "Verizon Is Rewiring New York, Block by Block, in a Race for Survival."  The New York Times  (Mon., August 14, 2006):  C1 & C6.

“Man in White Suit” Science Fiction, Now Nearly Science Fact

PART of what sold James Tirey on a change in attire was the coffee spilled on his legs during a rough flight.  ”It stayed sticky until it dried,” he said, ”about mid-Atlantic.”

To avoid such incidents, he bought a new pair of pants with an invisible, high-tech surface suited to the exigencies of business travel.  These pants look and feel like most others, but the ingenious finish on the fabric is different:  it is made of tiny, nanosized particles that repel water, ketchup, honey, blood, vinaigrette and a thousand other potential indignities.  With such a surface, he said, ”if coffee is spilled on you, it just beads up” or runs off.  The pants can be wiped with a paper napkin — even the skimpy cocktail kind handed out on airplanes — leaving the material dry and unscathed.

Mr. Tirey, who lives in northern Virginia, bought his pants, called the Steel Pant, at Beyond, a Eugene, Ore., company that makes and sells outerwear for men and women at BeyondFleece.com.  The material is manufactured by the Swiss company Schoeller Textil, which makes both the weave and the nanofinish, called NanoSphere.  On the Beyond Web site, the pants cost $119, the nanocoating an additional $15.  ”It was definitely worth the money,” Mr. Tirey said of the purchase.

 

For the full story, see: 

ANNE EISENBERG.  "NOVELTIES; The Chemist’s Find: A Way to Shrug Off Spills." The New York Times , Section 3(Sun., August 27, 2006):  5. 

The Opportunity Cost of a Bad Bottle of Wine

  Len Evans.  Source of photo:  http://www.smh.com.au/news/national/heart-attack-kills-len-evans-king-of-australian-wine/2006/08/17/1155407960581.html

 

BACK in the early 1990’s Len Evans, the Australian wine man and legend in his own lifetime, gave me some advice.

”I’d say you’re about 60,” he said, ”and from the looks of you, you’ll be lucky to make 75.  You’ve got about 15 years ahead of you, and it’s time for you to learn my Theory of Capacity.

”You’ve got to make the most of the time you’ve got left, man.  You’ve got to calculate your future capacity.  A bottle of wine a day is 365 bottles a year.  Which means you’ve probably only got 5,000 bottles ahead of you.

”People who say you can’t drink good stuff all the time are fools.  You must drink good stuff all the time.  Every bottle of inferior wine you drink is like smashing a superior bottle against a wall:  the pleasure is lost forever.  You can’t get that bottle back.”

 

For the full story, see: 

FRANK J. PRIAL.  "A Wine Man Who Vowed to Drain the Cup."  The New York Times  (Weds., August 30, 2006):  D7. 

Technology Liberates the Paralyzed

  Paralyzed from a stabbing, Matthew Nagle can move computer cursor by means of a sensor implanted in his brain.  Source of image:  online version of NYT article cited below.

 

(p. A1)  A paralyzed man with a small sensor implanted in his brain was able to control a computer, a television set and a robot using only his thoughts, scientists reported yesterday.

Those results offer hope that in the future, people with spinal cord injuries, Lou Gehrig’s disease or other conditions that impair movement may be able to communicate or better control their world.

“If your brain can do it, we can tap into it,” said John P. Donoghue, a professor of neuroscience at Brown University who has led development of the system and was the senior author of a report on it being published in today’s issue of the journal Nature.

 

For the full story, see: 

ANDREW POLLACK. "Paralyzed Man Uses Thoughts to Move a Cursor." The New York Times  (Thurs., July 13, 2006):  A1 & A21.