Desicritics Category: BizTech: Economics

America's Foolish CEOs: Medco's Dave Snow Gets The First Award

Ashoka Chakra — Mon, 2 Mar 2009 09:45:46 EST

With the global economy heading south thanks to the tsunami that originated in the USA, many blame capitalism or globalization for all the economic travails. I think it has a lot to do with poor policies and oversight, individual greed, and last, but not the least, stupid CEOs running corporate America.

In the 2001 – 2003 recession, we came across lots of incompetent and/or ethically challenged CEOs and Chairpersons. They include illustrious names such as Ken Lay of Enron (dead of a heart attack before he could be tried) and Bernie Sanders of MCI (in jail for fraud).

This recession has bought to light a new crop. A fascinating list of politicians, celebrities, and CEOs can be found at Time. To this august list, I now nominate Dave Snow of Medco.

For those who do not know what Medco is, it is one of the largest drug re-distributors. To keep it simple, it buys drugs from pharmaceutical companies and sells it to retail chains such as Rite Aid. It profits from being a middleman.

Dave Snow recently wrote in a blog in the Wall Street Journal about his ideas and his interview was published on Jan 16, 2009. To quote from the WSJ:

Snow said the time has come for doctors to follow set protocols on how to treat patients, and to be paid based on whether they do it. Basically, ‘If X, then do Y,’ and ‘If Y, then do Z,’ sort of stuff. Snow concedes the public doesn’t trust the private sector to come up with these kinds of rules. So he wants some smart folks to get together in an “apolitical” body like the Fed, and do it themselves. “I’m fine with this big, national board creating this standard,” Snow says.

It is obvious that Snow has no clue how medicine is practiced. Patients and their disease do not read textbooks and come with single, well-defined problems. The permutations and combinations of problems are literally endless. For example, a patient with a headache could have a bullet in his head (true, happened to a patient of mine) or a tumor (alas, also true) or anything in between. If the patient has other issues such as weight problems, hypertension, etc, the possibilities are infinite with no set formula that can be designed. How would Snow handle so many permutations and combinations? Does he plan to install an IBM supercomputer in each physician’s office? Good for IBM and outsourcing for India, but it won’t help patients much. As this financial crisis has shown, mathematical quant formulas fail in complex environments, and a patient is about as complex a microenvironment as possible.

In addition, Snow wants the government to step in with an “apolitical” body like the Fed. Maybe the ‘body’ would also be just as adept in handling doctor’s offices as the Fed has been in handling the economy? I can see a diabetic suffering from hyperglycemia for 5 years, followed by hypoglycemia (just like interest rates) at which point the unfortunate individual would be pushing weeds.

It is obvious to any person with a scintilla of sense that Snow’s ideas are nonsensical. I have only one question. How do people like this become CEOs?

America's Healthcare Crisis, Part I

Ashoka Chakra — Sun, 1 Mar 2009 05:02:22 EST

A few months ago, one of my neighbors (lets call him Q) was driving from Pennsylvania to New Jersey on I-78 when he began to feel unwell. He felt weak and nauseas, and had a headache. Q managed to work half the day, but then his condition deteriorated. After calling his wife, he drove home, without informing his physician about his condition. The wife waited at home, wondering whom she would hear from first – her husband, the emergency medical services, or the highway patrol. He did end up reaching home safely, without causing a wreck or injuring other drivers on the highway, but they ended up going to the emergency room that night.

The story gets more fascinating at this point. After many tests in the ER, Q was hospitalized. He had a history or high blood pressure and was about 100 pounds overweight. Disregarding his doctor’s advice to loose weight and exercise, he had carried on, concluding that he was too young to worry about strokes or heart attacks. After all, he was only in mid-thirties. But Q wasn’t too young, and he ended up with a stroke. Fortunately for him, there was no permanent neurological damage. Unfortunately for him, the tests revealed another problem – he had a mass in his neck that was detected by computerized axial tomography (commonly known as the CAT scan). That it required a CAT scan to identify a mass that should have been detected by a physical exam is a point that will be addressed in a subsequent column, but to cut a long story short, he was suspected of suffering from a lymphoma. Many tests followed, most of them unnecessary, with attendant expenses and anxiety, till he was proven to be cancer free. And then, Q lost his job. While the company laid-off others as well, undoubtedly his case was complicated by medical bills. A few months after this, I asked Q what medications he was on, and he looked at me with a vacant expression and said, “I don’t know.” He now has trouble finding a new job that is commensurate with his experience and training. Part of the reason is the health care premium his new employer would have to pay.

This story reveals several aspects of what is wrong with the health care system, such as the attitude of patients, doctors, lawyers, and insurance companies. This column addresses the behavior of patients.

We in America have gotten used to being taken care of by someone else and over a period of time, have lost the sense of responsibility. Health has become the responsibility of everyone but the patient. However, shouldn’t health the patient’s own responsibility? Why should the government or a doctor be responsible? A doctor IS responsible for providing guidance and counsel. However, the ultimate responsibility is that of the individual. And if that individual chooses to live on a diet of hamburgers, fries, and considers watching sports on TV the best way to exercise, is it a surprise that obesity, diabetes, hypertension, and heart disease ensue? While suing physicians may enrich John Edwards and his ilk, it won’t solve the problem.

Avoiding disease should be the first health care priority and responsibility of an individual. That includes proper diet, exercise, vaccinations, and common sense actions such as wearing helmets, seatbelts, avoiding unprotected sex, etc. It is acknowledged that genetics, age, and environmental influences affect even those who are careful, and that is where the second priority comes in.

The second health care responsibility is to understand and educate oneself to disease(s) that afflict a person and also to familiarize oneself to the therapeutic modalities. If an individual has hypertension, s/he needs to know about the disease and the therapies available (which includes drugs and non-drug related activities such as diet, etc). Unlike Q, who did not his medications, a responsible individual should not only know the names and doses of the medications but also the side effects and interactions with other medications. In the Internet era, knowledge is not hard to come by and is no longer an excuse.

The third health care responsibility is to follow instructions meticulously. If exercise is advised, it should be followed. If an antibiotic is prescribed, it should be taken as prescribed, and not stopped half way through.

By taking responsibility for our own health, we can help save the health care system from a catastrophic breakdown.

Frankenstein or Frankincense Crops?

Dr Bhaskar Dasgupta — Tue, 17 Feb 2009 08:23:01 EST

Here is a quite interesting story about GM foods. Personally speaking, I like the idea of having more GM food around the world. Just because the prices are falling a bit, does not mean that the pressure for more food has gone away. The middle classes of the world are demanding higher quality food, meat and the lot. They still need to be fed and watered. Given the lack of additional farm land, water, the only thing to do is to improve productivity of the existing cropland. GM foods provides one with a way to do this. Here are some interesting quotes:

The International Service for the Acquisition of Agri-Biotech Applications (ISAAA) said the global area of GM crops increased from 114m ha in 2007 to 125m ha in 2008, producing a harvest worth $7.5bn. The number of farmers planting GM crops rose from 12m in 22 countries to 13.3m in 25 countries.
Clive James, ISAAA chairman, said the most significant development last year was the first commercial planting of biotech crops in two African countries: maize in Egypt and cotton in Burkina Faso. Both crops contain “Bt genes” from bacteria, which kill insect pests. In 2007 South Africa had been the only country on the continent with GM plants (cotton, maize and soya).

Look at some of the benefits:

Of the cumulative economic gains of $44bn over 10 years of growing GM crops, the report attributed 44 per cent to yield increases and 56 per cent to reduced production costs, including the use of 359,000 tonnes less pesticide.

Now isn't that just peachy? Good stuff to read that not only you increase productivity, but production costs are reduced and less pesticide is used therefore reducing pollution as well. Yes, there are quite a lot of issues in this relating to the sale of patented seeds, potential for gene mutation, and the lot, but I think the risks are well worth it. Here is a good report from Friends of the Earth as a counterpoint to this argument. Anyway, I really dont want to get into a head banging argument about this.

One thing which is quite interesting is that if you increase the usage of GM foods, then the sustainability size factor of farms reduces as well. What do I mean by this? Well, in vast swathes of the world, you will see that the actual plot sizes are tiny. Plus with more and more children, the plots of land become smaller and smaller down every generation, till the end where the land is practically too small to support even one family and poverty increases dramatically. But with increase in crop productivity, less production costs, the level at which land sizes are no longer sustainable or able to support even one family increases. So for countries like India and China, this is good news indeed.

But beyond that, countries are now getting desperate for food security. Here’s a great example of what South Korea is planning to do in Madagascar. I quote:

South Korea's Daewoo Logistics this week announced that it had negotiated a 99-year lease on some 3.2 million acres of farmland on the dirt-poor tropical island of Madagascar…….Daewoo plans to put about three quarters of it under corn. The remainder will be used to produce palm oil — a key commodity for the global biofuels market. A Daewoo manager, Hong Jong-wan, told the Financial Times that the crops would "ensure our food security" and would use "totally undeveloped land which had been left untouched."

Here is another example of how Saudi Arabia is doing the same in Pakistan. I quote:

To this end, the Saudis, the Emiratis, and the Bahrainis have been in talks with Egypt, Pakistan, Ukraine, Sudan, Turkey, Yemen, South Africa, the Philippines and Thailand to buy up or rent arable land and expand agricultural production in these countries.

This is actually good, I dont have an issue with this. This is pushing investments in poorer countries and combined with new types of crops, the food situation in the world will get a desperately needed fillip. So instead of these crops being Frankenstein type of horror for the world, I suspect they will more be frankincense.

Technorati Tags: agriculture, India, Egypt

The Grand Bailout- Part 2

Blokesablogin — Thu, 12 Feb 2009 19:41:54 EST

The Senate and Congress haggled while Mr. President went public, spurring support for his Stimulus Bill. Mr. Bush's TARP has yet to be accounted for and we have gone ahead and approved yet another colossal spending bill. In Tamil we say- jaan pona enna muzham pona enna- meaning once you lost a foot who cares if you lost a yard? Right now in America we pass bills to pay bills with printed bills! Now here is a wonderful way to teach children homonyms.

What is interesting to me, being in California, is that our state budget also is on the floor of the house. Unlike Mr. President's gentle but firm arm wrestling tactics, using his powerful oratory skills, Mr. Governor is unable to budge the folks in Sacramento with his real muscle power! He threatened them with no pay if they did not approve the state budget by this week and they are still out until this Friday.

Mr. President will give us some money back, and if I went to college, some tax credit. Being a 1.2 income family, we certainly fall within the eligibility of being "middle class", as defined by the President.

Sacramento will take away my check from the President as we will pay 1% more sales tax and a 5% surcharge on personal income tax. DMV fees will double and gas will go up by 12 cents/ gal. The irony cannot be missed. The democrats in DC are lowering taxes while the republicans here are raising them!

While the local drama continues, the national drama has been sealed and delivered for Mr. president to sign. He is thrilled that this Stimulus Bill is ready by Lincoln's B-day, today.

The State should get some relief from DC. The rise in taxes here will wipe out the tax relief check we will get from the President. Oh well, life continues...

Nations Turn to Barter To Secure Food

Dr Bhaskar Dasgupta — Fri, 6 Feb 2009 10:52:33 EST

A curious situation is emanating in the world of international intra-governmental trade. I quote:

Countries struggling to secure credit have resorted to barter and secretive government-to-government deals to buy food, with some contracts worth hundreds of millions of dollars. In a striking example of how the global financial crisis and high food prices have strained the finances of poor and middle-income nations, countries including Russia, Malaysia, Vietnam and Morocco say they have signed or are discussing inter-government and barter deals to import commodities from rice to vegetable oil. The revival of these trade practices, used rarely in the last 20 years and usually by nations subject to international embargoes and the old communist bloc, is a result of the countries’ failure to secure trade financing as bank lending has dried up.

But before you think that this is too strange, it is not, this is quite common. Take a look at this deal. In return for up to 600k barrels of oil per day to the UK, the UK promised to provide a ton of aircraft and other defence benefits to the Saudi Arabian Government.

Here is another example. The Venezuelan government promised to give oil to London (to use in running its buses), in return for London providing free consultancy and advice on policing, tourism, transport, housing and waste disposal. But you have to remember this, when barter deals are not denominated in currencies, the chances of getting a corrupt hand in the till is massively increased because you simply cannot compare (or mark to market if you will) with international prices. In this particular case, the people who lost out were the people of Venezuela who were not able to get the money that they could have earned in return for some dubious advice on those aspects. In the interests of transparency, its best to sell the oil and buy services clearly and transparently. But then, politics trumped and a bad deal signed.

Same thing happened with the Al Yamamah deal, it is absolutely a stinker for corruption and something that I have complained bitterly about before. Deals like that have corrupted this country and have made us a laughing stock. Why barter? Just lay the costs out in public, its not like anybody else will complain, would they?

Another example of corrupt, trade distorting and silly deals were the oil for sugar deals signed between Russia and Cuba. Here is a great overview of this spectacular failure. I quote:

The fall of the Berlin Wall in November 1989 and the breakup of the Soviet Union in December 1991 became the precursors for the collapse of the Cuban economy, central to which were the Soviet oil-for- sugar swaps over the preceding three decades. At its
zenith, this barter arrangement provided the financial basis for Cuba to sustain the agricultural inputs necessary to produce sufficiently large annual harvests to permit significant sugar export levels and oil re-ex-port revenues. At its nadir, the systemic failure in the oil-for-sugar arrangement created shortages through- out the Cuban economy including fuel, fertilizers, herbicides, and spare parts for farming equipment
and sugar mills. Over the past decade, this is marked by the simultaneous downward spiral of Cuba's oil imports along with its sugar exports. Cuba's historic energy dependence and limited oil resources coupled with the sudden disruption of the oil-for-sugar barter arrangement severely impacted the Cuban economy
from which it has yet to fully recover.

Here is another example of an African Country, Uganda, starting to face issues with its barter deals. Here is a good overview of the Barter Trade and how it is changing. While private firms are better suited at doing barter trade, I am certainly not in favour of having barter trade done by Governments. Also, these barter trades crystallise the generally bad subsidy scheme. You pay tons of money to your farmers to grow stuff that nobody wants to buy, so you then do a barter trade with a country who does need that stuff, and you underprice your agricultural stuff. Which means that the international trade in that agricultural commodity is distorted as one market has its price driven down. See here for an example of what India is trying to do with Russia relating to its wheat crop. Here’s another example of the domestic sugar lobby moaning about its bad economics and trying to resolve it using another bad economic barter deal. See how much they demand subsidies and help and all that? All classic signs of people who cannot compete in the open market and thus want to suck on the taxpayer’s tit.

The costs relating to corruption, lack of transparency, lack of built in productivity agreements, and so on and so forth means that these agreements are generally bad in the long run. Going for bartering further lets the governments off from taking necessary decisions. For example, the fact that governments are not getting sufficient financing is neither here nor there, there are international funding agencies (government owned, such as IMF, or Import Export Banks etc.) who can provide funding, but because going to these agencies would mean exposing their bad economic policies, they tend to hide their faults by pitching barter as a way of doing trade. Bad, bad bad.

Technorati Tags: trade, agriculture, economics, subsidies

The Grand Bailout

Blokesablogin — Tue, 3 Feb 2009 06:55:03 EST

They say that the US is the capital of capitalism! Given the new numbers of Obama's bailout package, it certainly smacks of nationalization of banks - even if you do not call it that. The Congress has approved it and the Senate is considering it before more money can be printed and passed around.

The bailout tag is set at almost $900 billion. Let us divide this number by the US population. That gives us about $3000 per person (approximately), cash (if at all). But this will not help me pay my mortgage for more than a month, then what do I do for the next month? Let us say, each of my family member, 4 of them, get this, then, I can pay 4 months worth of mortgage and have nothing to eat, if I do not have a job. Already, the consumer debt per capita is an astronomical $38,000 (approximately).

I think this entire bailout business is very wise on Obama's part. He knows that the US economy can handle such a big bailout over and above the one burped down by Bush, before he left office. But there needs to be a new vision plan.

It may actually be better if America learns to pay its debts, stop all its war spending and learn to build a wise society based on educating its children and caring for its sick and protecting the environment. Enough of this macho game of being a "super power". Even the adoption of the fiat money accentuates this self-aggrandizement of self-worth. Let the feminine shakthi prevail until all this mess is cleaned up. That means getting down to WORK.

For too long, America has learned to "tell" others to work and stopped working themselves. Of course, they got paid by others to tell them how to work!LOL! Now it is time for America to roll up her sleeves and get to work- the way she has done every time she has confronted historical moments. Time for new barn raisings.

However, the time calls for human values of compassion, trust, hard work, sacrifice and service. There needs to be a return to bartering of skills and work. You clean my house for an hour and I will tutor your kid for an hour. Neither has to exchange "money". For a change, this valuable exchange will deflate the ridiculously high "salaries" of some people and certain professions.

(aside) The banks need to stop charging any fees for some transactions as long as you trust them enough to put your money in them. The CEOs and the rest can learn to make do with minimums (and return their gold waste paper baskets). The previous bailout that our friend Bush initiated ensured that the CEOs could redecorate their offices and order private jets with tax money. Oh well.

This can be taken as a great opportunity to clean up the inflated self-worthiness of "great" financial institutions who have gone around the world insisting on "their" way of business and "their" rules that furthered swindling across the globe with political support from those respective countries. Wow! Now the kid has cried, "The emperor has no clothes!"

HOWEVER, if we look at the amount of debt carried by America after WWII, the current debt seems paltry, when compared to its income. Of course, America exploited earth's resources the last time (after WWII) to get up and fly. Tis time around, she cannot afford to not be green. So, we have got to think "outside" the proverbial box.

Having heard stories from my neighbor, who is 82 and had lived through the depression as a child, I know the American spirit is unbeatable and can handle this mess. For an obese nation, eating humble pie for a while may be just the right diet ordered by the doctor for a healthy, wealthy life ahead. And I know she will soar up to the skies once more like her eagle.

California is Becoming the Pakistan of the USA

Dr Bhaskar Dasgupta — Sun, 25 Jan 2009 02:49:11 EST

I read on a hedge fund report which said that California is the Pakistan of USA, the idea being that it is becoming seriously economically mismanaged and is in danger of imploding. This comparison with a country is not too far fetched, whatever you say. You hear statement after statement that California, if an independent country, would be the 6th or 8th biggest country in the world in terms of economic metrics. Since then, I have been keeping an eye on that state.

But this state is peculiarly badly governed. Its brand of democracy, the demographics of the state, the high reliance on income taxes, the way the political parties have carved up the state with the constituency units, all combine to make it a fascinatingly amazing place. Because of the fact that the boundaries of the electoral seats are carved out in such a way that they appeal to the extremist wings of the two political parties, the idea of appealing to the centre and doing bi-partisan work is strangely missing. Consequently, the parties are not willing to compromise. Add the "proposition" business and what you end up with is a stream of dollars which are tied ruthlessly to single spending streams. And let us not forget the public sector which is, simultaneously pathetic in terms of efficiency and horribly expensive.

So when faced with a huge economic slowdown, the republicans are refusing to let the governor raise taxes while the democrats are refusing to cut spending. And the credit crunch means that trying to raise money from the markets is nearly impossible because the markets fear the state will not be able to honour its rapidly rising debt. Result? Deadlock. Let me quote some results of this stupid set of circumstances:

California’s state controller said he won’t make $3.7 billion of payments due next month, cutting off income-tax refunds and money for welfare programs amid a record budget shortfall battering the most-populous U.S. state

And from here,

To conserve cash, Schwarzenegger has ordered state offices shut for two days a month and all workers to take two days of unpaid leave each month. The impasse forced a state panel on Dec. 18 to halt funding for $3.8 billion of construction on schools, roads and other public works, a decision officials said might cost tens of thousands of jobs.

And here:

The governor also said he and lawmakers should go without pay for every day they fail to enact a budget past its due date.

(Which might not be such a bad idea).

Schwarzenegger, a multimillionaire, has declined his $212,179 a year salary since he was elected. Lawmakers each make at least $116,208 a year plus $162 per day per diem; legislative leaders make more depending upon their position.

So the bunch of girly men and manly women have effectively driven the state to near fiscal disaster. Some say that people get the leaders they deserve, but surely this isn't the case here? Not sure what is the future of this problem nor the solution, but I can see muchas problemo's in this fiscal train crash of a state.

What do the resident Californians think?

Technorati Tags: USA, Economics

Bimaru States In India

Dr Bhaskar Dasgupta — Wed, 21 Jan 2009 04:53:38 EST

States and regions also become sick besides companies and human beings. When they become sick, you get a doctor, then you dose the patient with some foul smelling medicine, and then you get better, and to stay better, you keep on doing good healthy things so that you do not fall ill. But then, there are some fellows who will smoke, drink, eat fatty foods, then get a heart attack, and then continue on with being a bad old egg.

But what's with Bimaru in the title? It is a play on words, the word itself stands for 4 Indian states, Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh. When you select those letters together, they mean sick (Bimar in Hindi means sick). And yes, Sir, they are sick in terms of almost every socio-economic indicator that is going.

Obviously, the reasons are multifarious, but mainly is because of the venality of the politicians of all stripes. Corruption is rife, illiteracy rampant, health is poor, economics horrible, generally a sad old reflection of what India's missed opportunities are. What makes it even worse is that these are poor states in a poor country, but other states have done much better. I realise that somebody has to come bottom, but when we are talking about poverty levels which are at or below starvation levels, then being at the bottom has severe implications for rest of the country. It does not also help that these states are some of the most populous in the country.

One would expect that every state would be hell bent in trying to improve its investment climate so that jobs are produced and better quality of life is achieved. But no, most of the leaders of these states are too busy being corrupt and feathering their own nests. By and large, they are a venal lot, seriously. And having had experience of living, studying, working, running firms in these states, I can personally say that the situation isnt improving fast. For entrepreneurs, it is tough, really tough. When you have borrowed money from your father's General Provident Fund (pension fund), and have invested in the anticipation that you will provide sufficient returns so that your old man is not left on the street, the last thing you need is your own government and its officials being like vultures, bent on capturing your hard earned money. Well, perhaps it is too much to expect, but what exactly are the problems facing entrepreneurs?

The World Bank recently released a paper comparing the investment climate in 16 Indian states for which they had data. Here's their main graphic which shows the investment climate in the 16 states.

So what did the author evaluate to make up the index? This is what I mean by saying that the issues with these states are simple but implementation needs just simple hard work. Nothing magical, just keep on plugging away at it. Here are some of the factors relating to infrastructure: Hours of power outages last year, Hours of telephone outages last year, Percentage of sales lost in transit, percentage of sales lost due to power outages, Days of inventories kept for main input (proxy for quality of transportation). What about inputs? Excess labor, Cost of finance: value of collateral required to obtain a loan, Proximity to raw materials (share of inputs bought by domestic sources) Proximity to domestic customers, Share of firms using new technology, Trade credit: share of sales sold on credit, Trade credit: share of inputs bought on credit.

Finally institutions make a huge amount of difference to the investment climate and the authors included security cost, losses due to theft , Manager time spent dealing with regulations, Days spent with officials to deal with regulations, consistent interpretation of rules, Tax evasion (% of sales not declared), Days to obtain a telephone connection, Days to obtain a electric connection, Days to obtain a construction permit, Bribes to "get things done", Share of firms reporting officials request gifts etc. etc.

While one can only exhort the states at the top to do much better, but its the stogy lump of undigested mass of states at the bottom which is the issue. Not only do the good state's get their tax revenues diverted to support these Bimaru states, the diversion of tax revenues is then not invested in productive matters. So, all in all, these are giant holes where a significant proportion of productive wealth generated by India disappears.

The concluding paragraph from the author is particular important but would not be particularly surprising.

The analysis of 46 investment climate variables shows that power, transportation, corruption, tax regulations and theft
remain the major bottlenecks policymakers need to address in order to improve the business environment in India.

Same old, same old. Long way to go, my friends, long way to go.

Technorati Tags: Corruption,Public Sector,Development,Economics,India,World Bank

UK Maths Failures 'cost £2.4bn'

Dr Bhaskar Dasgupta — Sat, 17 Jan 2009 12:38:34 EST

Despite the fact that the UK is doing very well in math education, there are still a bunch of students who are not really that clued up in mathematics. I see this all the time, so many people are out there who do not look after their bank accounts, their savings, their pensions and are unnecessarily poor. And this is avoidable, we are talking about people who, due to a fear of mathematics, are unable to claim benefits or even move up the jobs ladder.

Here's an interesting story. I quote:

Accountants from KPMG tracked children with poor numeracy and found they were more likely to be unemployed, claim more benefits and pay less tax. The report by KPMG estimates that the long-term costs of children leaving schools unable to do maths could be as high as £44,000 per individual up to the age of 37.

I am assisting in a small but global charitable enterprise called as SIFE. And one of the things that I do is to try to get hold of undergraduate students who have just entered into university. Research has proven that if you inculcate the right habits into the students at that point, then they are much more inclined to look after their financial health. Over the past few years, I have seen a good rise in the number of undergraduate students who are worrying about their financial future and put aside some money for investments (pension, stock market, etc.). But mind you, these are mostly business and economics students, which means that I have the self selection bias.

Few months ago, teaching at Swansea, there were about 400 students in 2 lecture theatres. One was video conferenced in, so I could not interact with them, but the one which I was, they were quite interested, and several claimed to have investment accounts. But most of the students were not interested in it for now. I can understand, neither did I when I was their age, but after the lecture, I asked around about the reason. The main reason as it turned out, was because they were scared of the whole numbers thing. They are boring, they make you have to think and financial future? who cares.

But these numbers give you an indication of the scale of the problem. When you are talking about a small country like UK, with a very good mathematics education system, and you still end up 2.4 billion pounds poorer because some are not mathematically aligned. Just imagine what it would be for other countries who are much below the scale on mathematics achievements? Lack of this knowledge costs society dearly.

So what explains this behaviour? I went to the person who knows more than me on everything, my teenage son. He likes mathematics and has shown an interest in mathematics since the beginning. Does all right in that subject. (a function off the old block? if you excuse the rather sad pun?) and helps others as well. Furthermore, he has businesses running (he buys sweets in packs and sells them individually to the students in his school, runs a garage sale during the summer, and he runs a business selling artifacts/user id's from World of Warcraft, he is also good at the stock market, although currently his positions are roughly 12% down - pretty good going, if I might say so. Mind you, he did invest £50 in Woolworths, so lets not get too excited). So both theory and practical is fine.

So what does he think of the tendency to do poorly in mathematics? His answer was curious. He said that he thinks his friends who did poorly were so because of their parents. I was very much taken aback with this statement but on reflection and his further explanation, it sort of made sense. He said, "Baba, I can come and ask you about mathematics, but quite a lot of parents hate it so they groan, roll their eyes, make excuses and many times swear at the kids/teachers for asking them about mathematics. So they come ask me". Now, this is interesting. Does this mean that if a student is weak at mathematics, and he is being given remedial education, we should make sure that the parents enroll as well? Makes sense, if you keep on tearing down maths, abuse and look down on people who do and like mathematics, they will not be very good at it, no?

Mind you, it is not that bad, Kumon Mathematics is quite popular this corner of the world. You have hordes of parents carting their kids around the neighbourhoods of UK getting them trained up in Mathematics, but there is still an element of the populace which is not doing good, and that has some pretty big impacts on society. Perhaps it would be good to reflect on what Russell said about Mathematics, "Mathematics, rightly viewed, possesses not only truth, but supreme beauty - a beauty cold and austere, like that of sculpture." Then again, how many people appreciate sculpture but unlike sculpture, if you hate or dont "do" mathematics, it will cost you.

Technorati Tags: mathematics,schooling,university,economics

Risk Manager Role With Afghanistan International Bank

Dr Bhaskar Dasgupta — Thu, 8 Jan 2009 00:45:09 EST

Sometime in the dim and distant past, I had registered myself with an India based job site. This was when my father was ill, and I was considering moving back to India. Anyway, I had forgotten all about it, till today when this email landed in my inbox.

Post Title: Risk Manager
Organization: Afghanistan International Bank
Location: Kabul - Afghanistan
Duration: Permanent
No. of Post: 1
Sex: Any
Nationality Any
Salary: 4000 US $ p.m.+ accommodation + travel+ other benefits.
Background: Afghanistan International Bank (AIB), a commercial bank incorporated in Afghanistan and managed according to international best practices is looking for an experienced Risk Manager for its Head Office in Kabul.
Job Summary: Overall Job Purpose:
Due to rapid expansions of its business and operations the banking is looking for a Risk Manager. The position allows the successful candidate to be part of the senior management team of the bank and play a major role in its continued development.
The successful candidate will be expected to build a risk monitoring systems complying with Basel II requirements thus additional experience in market and operational risk management will be a distinct advantage.
Priority will be placed on credit management and the successful candidate will have had experience in:
1. â€¢ Credit Policies & Procedures
a. Credit policy, review and development
b. Acquisition or development of decision support tools for commercial and retail credit
c. Risk rating framework review
d. Underwriting standards development
2. â€¢ Risk Asset Review
a. Review of individual credit risk ratings
b. Credit quality assessments
3. â€¢ Portfolio Management Unit
a. Profitability and risk analysis
b. Pricing policy
c. Develop predictive dynamic monitoring
Qualification â€¢ Master degree
â€¢ Minimum 10 years experience directly related to risk management where at least 5 years in senior risk management capacity.
â€¢ Fully functional in monitoring of documentation, portfolios & exposure limits of the bank.
â€¢ Excellent analytical, creativity and problem solving skills.
â€¢ Posses good presentation and organizational skills.
Interested candidates can send their CVs with recent photo to this address:

Few thoughts crossed my mind.

The package is a bit low for what is a hardship posting for international bankers, so I am curious to know why would they have selected that compensation level.
Its an interesting job all right, but very ambitious. Candidates for this role with the required background and experience will be relatively few globally.
But it is good to read that they are aggressive, and I wish them luck with their hiring.
I researched the bank on the net and I was not really that comfortable to see that the address of the bank related to some house. Here is the address: House no. 1608 Behind Amani High School Wazir Akbar Khan, Kabul. Reminded me of the addresses I would see in the tiny lanes old Bhopal.
One of the unsung success stories in Afghanistan is the steady development of the banking system. Considering that the Mullah's had effectively eviscerated the banking system, in a matter of 5 months, they have passed a series of banking laws, have presence of many international and local incorporated banks, got some good governmental backing from the Ministry of Finance.
Here is an interesting Afghan review report for the IMF. Gives you hope, no? and no, I am not suffering from the curse of low expectations. Give the country a break, it is starting from near zero.

I further quote some numbers on how Afghanistan has progressed since 2001 from this speech. (even though the verbiage could be a bit optimistic and is after all, coming from a US State Department Employee, the figures, even if adjusted, are noteworthy).

Reconstruction and development work remains on track in most of the country and the Afghan economy continues to grow at impressive rates, with licit Gross Domestic Product more than doubling since 2002. Thanks in large part to our colleagues in the U.S. Government, the lives of millions of Afghans have improved considerably: In 2001, just 8 percent of Afghans had access to some form of healthcare; now, more than 80 percent of the population has access to medical care. Almost 11,000 medical professionals have been trained. More than 680 hospitals and clinics have been built and outfitted. For the first time in 10 years, the grain harvest was sufficient to meet consumption needs inside Afghanistan. In 2001, 900,000 children – mostly boys – were enrolled in school; now, there are more than 5 million and more than 1.5 million of these (34%) are girls and young women. Since 2001, there has been a 22 percent decline in mortality rates for infants and children under 5 years of age – we are saving 85,000 more young lives every year. Two years ago only 35 percent of children were being inoculated against the polio virus. Now more than 70 percent of the population – including 7 million children – are inoculated. In 2001, there was a dysfunctional banking system. Now, Afghanistan has a functioning Central Bank with more than 30 regional branches and an internationally-traded currency. There are now 3 mobile telephone companies serving over 3.5 million subscribers – this is almost 11 percent of the population. In 2001, there were 50 kilometers of paved roadway in the country, now there are more than 4000 kilometers of paved roads.

The main thing which struck me was the sheer banality and normality of this advertisement. A very small thing, but something which gave confidence to me that Afghanistan is improving little by little, despite all the gruesome news coming out of Afghanistan and all the efforts by the Taliban to drag that benighted country back into the medieval ages. Sometimes, its good to see the good side of the story as well. I can only wish the country the best of luck and here's hoping that the Taliban are defeated. And if it keeps on hiring professionals of the type in the advertisement, it can only get better.

PS: then I read something like this and feel very depressed.

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