Lagarde on the road in Africa

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Christine Lagarde, the managing director of the International Monetary Fund (IMF), is on a four-day official visit in Nigeria, where she is holding meetings with President Muhammadu Buhari, stakeholders and policy makers.

Lagarde is also to visit Cameroon, where she will meet President Paul Biya and his economic team. She will also hold meetings with the finance ministers of the Central Africa Economic and Monetary Community (Cemac).  Lagarde speech in Nigeria

Top on the agenda is the discussion of insecurity oil-exporting countries face because of the activities of terror groups, specifically Boko Haram.

The IMF boss is hopeful despite an economic downturn, Cameroon will continue its oil production and increase public investments.

The country has met the challenge of achieving an economic growth rate of around 6% over the past two years.

No longer under the IMF program, Cameroon remains in need of a real boost. Expert insight into the financial situation says it has to do more.

It also expects the IMF’s share of guidelines for the conduct of new reforms for further regional integration and a diversification of sources of growth in government revenues of countries mainly dependent on exports of various materials.

The three-day visit includes an official meeting with Biya, as well as a visit to the Prime Ministers office.

Lagarde  also held metings at Cameroon’s Ministry of Finance.

Lagarde

Do Corporate Diversity Programs Help Women?

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U.S. companies spend millions annually on diversity programs and policies. Mission statements and recruitment materials touting companies’ commitment to diversity are ubiquitous. And many managers are tasked with the complex goal of “managing diversity” – which can mean anything from ensuring equal employment opportunity compliance, to instituting cultural sensitivity training programs, to focusing on the recruitment and retention of minorities and women.

Are all of these efforts working? In terms of increasing demographic diversity, the answer appears to be not really. The most commonly used diversity programs do little to increase representation of minorities and women. A longitudinal study of over 700 U.S. companies found that implementing diversity training programs has little positive effect and may even decrease representation of black women.

Most people assume that diversity policies make companies fairer for women and minorities, though the data suggest otherwise. Even when there is clear evidence of discrimination at a company, the presence of a diversity policy leads people to discount claims of unfair treatment. In previous research, we’ve found that this is especially true for members of dominant groups and those who tend to believe that the system is generally fair.

All this has a real effect in court. In a 2011 Supreme Court class action case, Walmart successfully used the mere presence of its anti-discrimination policy to defend itself against allegations of gender discrimination. And Walmart isn’t alone: the “diversity defense” often succeeds, making organizations less accountable for discriminatory practices.

In a recent experiment, we found evidence that it not only makes white men believe that women and minorities are being treated fairly — whether that’s true or not — it also makes them more likely to believe that they themselves are being treated unfairly.

We put young white men through a hiring simulation for an entry-level job at a fictional technology firm. For half of the “applicants,” the firm’s recruitment materials briefly mentioned its pro-diversity values. For the other half, the materials did not mention diversity. In all other ways, the firm was described identically. All of the applicants then underwent a standardized job interview while we videotaped their performance and measured their cardiovascular stress responses.

Compared to white men interviewing at the company that did not mention diversity, white men interviewing for the pro-diversity company expected more unfair treatment and discrimination against whites. They also performed more poorly in the job interview, as judged by independent raters. And their cardiovascular responses during the interview revealed that they were more stressed.

Thus, pro-diversity messages signaled to these white men that they might be undervalued and discriminated against.

In another set of experiments, we found that diversity initiatives also seem to do little to convince minorities that companies will treat them more fairly.

Groups that typically occupy positions of power may feel alienated and vulnerable when their company claims to value diversity. This may be one explanation for the lackluster success of most diversity management attempts.

So what can managers do? First, they must appreciate the potential effect of diversity messages on groups that have traditionally been favored in organizations.

Second, managers should know the limits of diversity initiatives for minorities and women.  They must be more than “colorful window dressing” that unintentionally angers a substantial portion of the workforce. Diversity policies must be researched, assessed for effectiveness, and implemented with care so that everyone in the workplace can feel valued and supported.

Diversity and Women

Women Make a Difference

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Rachael Jacobs writes:  A cursory review of 2015 reveals a world that’s far from inspiring. Bombings, gun violence, executions, domestic violence and a refugee crisis took centre stage. For these reasons we look to those who might bring light to dark places and use their influence to bring others to a places of hope rather than despair.

Here are five women who are are outspoken and controversial, using their intellect, skills, and tenacity to be highly influential on domestic, international and even intergalactic fronts.

Rose Batty  In 2015 Australia woke up the alarming epidemic of domestic violence. The choice of Rosie Batty as Australian of the Year was as brave as the woman herself, ensuring the issue would be kept at the forefront of our consciousness. Batty gave an articulate voice to the victims who would continue to suffer and be killed throughout the year.

Angela Merkel  The German Chancellor found herself at the forefront of several key world events of 2015. In her self-named “Year of Crises” Merkel showed leadership on the Greek financial saga, becoming the defacto leader of the European Union. Her response to the international refugee crisis gave a million refugees hope that they may be able to begin a new life.  Characterised by patience and compassion, Merkel has attracted deep criticism, even from her own party, for her moral leadership and open-door policy to refugees. As a result, her popularity has fallen.

Amy  Schumer made her mark in 2015 with the release of her first feature film, Trainwreck. Like Schumer herself, her character is unapologetically sexual, oozes attitude and is engaging to watch. She’s a refreshing celebrity who talks openly about dating, food, feminism and the media’s obsession with body.  Schumer has stated she’s not trying to be “likeable”, yet she’s the girl we all want on our team.  (Editor’s note:  When gun violence erupted in a theatre showing her film, Schumer immediately took to the airwaves discussing the irrational use of guns in the US)

Mhairi Black’s maiden speech to the British Parliament went viral, cementing herself and the Scottish National Party as forces to be reckoned with. The new 20-year old member for Paisley and Renfrewshire South was also the youngest person elected to parliament in the past 300 years.  Being from a traditionally Labour Socialist family, her words resonated with many as she declared that “it is the Labour party that left me, not the other way round”. Since then she’s been outspoken against the bombing of Syria and an advocate for women’s economic development. Her age, passion and sharp wit ensure that she’ll be heard for many years to come.

A fictional character, yes, but the scale of her influence is beginning to emerge. Played by little-known actor Daisy Ridley, this protagonist of Star Wars: The Force Awakens is undeniably kick-arse. More than that, Rey signals a departure from the previous episodes that portrayed female heroines as princesses.  She’s a leader to those around her, who are mostly men who are as flawed as they are moral.

Any list, by definition, is exclusionary. Aung San Suu Kyi’s victory, Patricia Arquette’s Oscar speech, and Clementine Ford’s activism against gender-based harassment make them all worthy of this list; 2015 was the year that Malala declared she’s a feminist, Nikki Minaj called out racism in the music industry, and the Matildas became the most successful Australian football team. Ever.

These achievements also highlight that there’s a long way to go in all these fields..The coming years will reveal even more influential women whose achievements must be celebrated.

Women holding up world

Is Portugal the New Greece?

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Is Portugall the new Greece?

F Willliam Engdah writes:  The illusion that all is well in the Euroland following the brutal Greek austerity agreement this summer is soon to be rudely disrupted by a new Eurozone crisis, this in what was hailed as the IMF and ECB “success story”–Portugal. Very soon, perhaps in a matter of weeks, it will become clear again, as in Greece, or in Germany in 1931, that austerity, spending cuts and tax increases are not a way out of a national economic crisis.

The October 4 national parliament elections have blown the pretty facade off of a game of statistical manipulation, financial tricks and outright fraud that allowed a conservative free market government to claim success in ending Portugal’s severe economic crisis.

The government of Prime Minister Passos Coelho, a free market neo-liberal, lost the majority. His right-wing Social Democratic Party (PSD) won the most votes of any party, but his austerity coalition lost their majority, winning only 38.5% of the vote. Almost two-third, 62% of all voters voted for one of the anti-austerity parties of the left socialist coalition. Coehlo has been in power since June 2011 when the Euro crisis caused panic exit of high-debt Eurozone countries by international investors.

The decisive campaign issue this time was the severe austerity Coehlo’s coalition had followed since 2011. Calling for easing of austerity and even a rethink of Portugal’s relation to the Euro, much as in Greece last January when Alexei Tsipras and his leftist anti-austerity propelled Syriza into power.  Is Portugal the New Greece

Portugal the Next Greece?

Getting the EU Strong Again?

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Eurozone inflation remained lower than expected in December, official data said on Tuesday, adding pressure on the European Central Bank to once again ramp up its efforts to boost the economy in Europe. ECB president Mario Draghi disappointed markets last month with a limited bid to revive the struggling eurozone given near-zero inflation levels across the 19 countries that share the euro..

Srimoyee Pandit writes:  The ECB has pledged to do all it can to pull inflation up “as quickly as possible”. The central bank on December 3rd decided to slash deposit rate by 10 basis points.

The ECB also extended its quantitative easing program (QE) to March 2017. The central bank not only decided to include euro-denominated regional and local debt in its QE program but said it will reinvest the principal payments on the securities purchased to support liquidity conditions.  Draghi has noted “our asset purchase program is flexible. It can always be adjusted. We decided the extension of our horizon and especially the re-investment of principal would be sufficient”.

The ECB Chief Mario Draghi, in an effort to assure markets that the central bank would do all that it takes to push up price pressures in the euro zone, stated on 14th December that there was no limit to the tools that it can opt for to raise inflation to target. He reassured that inflation target would be reached “without undue delay”. “After the recalculation of our tools carried out by the Governing Council earlier this month, we expect inflation to reach our target without undue delay,” Draghi said. He also said that the use of instruments can also be intensified further to achieve price stability in the bloc. With inflation hovering just above zero, the ECB is aware that further delays in achieving its inflation target of just below 2 per cent could damage its credibility.

The risks to the world economy and to the inflation outlook remain skewed to the downside. GDP is expected to grow 1.5 per cent in 2015, 1.6 per cent and 1.7 per cent in 2017. Economic activity will likely continue to be supported by sustained monetary stimulus, neutral fiscal stance and lower oil prices. However, high private indebtedness will remain a drag on consumption and investment in many countries of the bloc.

EMU GDP

The ECB expects inflation to come in at 1 per cent in 2016. Inflation forecast has been estimated at 1.6 per cent for 2017 as against 1.7 per cent estimated earlier. The central bank believes low oil price will support household disposable income thereby supporting private consumption.

The labour force is expected to expand only moderately in the next fiscal hindered by impact of still high unemployment in some countries of the bloc and adverse demographics in others. The unemployment rate edged down to 11.1% 

Draghi is aware that lower interest rates, though can ensure price stability, cannot guarantee lasting prosperity. He thus stressed on the need for “structural recovery” to lift potential growth in the euro zone. Draghi has called for increase in investment. He feels weak demand dynamics, the still-high private debt overhang and fragile private sector confidence have weighed on investment in the bloc. He has also urged countries to facilitate a “work-out” of toxic loans to facilitate recovery in credit and lending.

Interest rates ECB

If and only when relevant fiscal policies go hand in hand with expansionary monetary policy the bloc will attain the much needed boost to overcome disinflation and grow. Absolute reliance on monetary policy will not be able to help recovery. On the contrary, it will sow the seeds for the next financial crisis. 

Savings Problem in US and Its Impact on Retirement

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The retirement disconnect is highlighted in a new survey from the Transamerica Center for Retirement Studies, which includes responses from 4,550 full-time and part-time workers between the ages of 18 to 65+. Overall, some 59% reported they were “somewhat” or “very” confident that they will be able to retire comfortably.

To maintain this comfortable living standard, more than half think they’ll need at least $1 million saved by retirement, and 29% believe they’ll need $2 million. Those targets have increased in recent years, according to Transamerica—the typical savings goal was just $600,000 in 2011.

So how much have these workers got socked away? Overall, the typical worker savings account held $63,000. That’s up from $43,000 in 2012, but also far from what’s needed for a $1 million retirement. Even among baby boomer households, the group closest to retirement, the median account held just $132,000.

Given these relatively meager savings, you may well wonder how workers can still be so optimistic about their golden years. Part of the reason is the long-running bull market, which has led to a gradual recovery from the financial ravages of the recession. Some 56% of those surveyed say that they have bounced back fully or partially; 21% say they were not impacted by the downturn.

It’s also likely that many workers simply don’t understand what it will take to meet their goals. More than half (53%) say they “guessed” when asked how they estimated how much they need to save for retirement. Two-thirds acknowledged they don’t know as much as they should about retirement investment. And just 27% say saving for retirement is their greatest financial priority vs. “just getting by” (21%) and “paying off debt” (20%). The typical worker saves just 8% of salary, while most experts recommend 15% or more.

This savings shortfall was a focus of studies presented at the Retirement Research Consortium held recently in Washington. Following up an earlier study that found that roughly half of Americans die with $10,000 or less in assets, professors James Poterba of MIT and Harvard’s Steven Venti and David Wise looked at possible reasons that the money ran out. Perhaps retirees spend their money too quickly, or perhaps they have few assets to begin with.

Analyzing Health and Retirement Study data for different generational cohorts, the researchers found that how much subjects had the first year their assets were measured showed the strongest determinant of the amount of the wealth they had at the end of life. For older Americans, 52% who had less than $50,000 at the end also had that amount when first surveyed. For the younger cohort: 70% of those with less than $50,000 in assets when last surveyed also had that skimpy amount when first observed.

By contrast, those who had significant balances at the start also held those balances at the end—confirming both the persistence of wealth and, at the same time, the lack of savings progress for most Americans. Poterba offered possible reasons for this trend, including that workers may simply choose not to save; at each income level, he pointed out, there are high and low savers, so earnings aren’t the only factor.

Still, lack of wage growth, the disappearance of pensions, and the decline in 401(k) coverage among private sector workers, especially low- and middle-income households, contribute to the problem for younger Americans. This last point was emphasized by John Sabelhaus, an assistant director at the Federal Reserve, in a discussion of Poterba’s paper. Data from the Survey of Consumer Finances show that low- and middle-income workers are losing retirement plan coverage, he noted. (A similar trend can be found in the Transamerica survey, which showed that just 66% of workers were offered an employer retirement plan in 2015 vs. 76% in 2012.)

Both Poterba and Sabelhaus emphasized the importance of Social Security for Americans with few assets. Beyond that, the only solution is to save as much as you can. But there are behavioral hurdles to boosting the savings rate. In another study a team of researchers, including Gopi Shah Goda of Stanford and Aaron Sojourner of the University of Minnesota, found savers face two major mental blocks; some 90% of Americans hold one or both, which drag down retirement savings by an estimated 50%.

One of these mental blocks is procrastination—it’s hard to resist the immediate gratification you get from spending. The other hurdle, which is less obvious, involves financial literacy. Most people don’t grasp the power of compound savings. As Sojourner explained at the conference, the majority of people believe savings grow in a straight line. Only 22% understand that savings growth is exponential: as your savings compound, you earn interest on interest, which enables your savings to grow faster and faster.

In short, it can take a long time to save your first $1 million, but it’s a lot quicker to get to $2 million. If more Americans understood this, and acted on it, there would be good reason to be optimistic about retirement.

Savings?

Eliminating Negligence Concept from Health Care Lowers Costs and Benefits More Patients

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What happens when you end medical malpractice lawsuits?

The Danish health system’s treatment of negligence issues offers lessons for policymakers in the United States, where medical harm remains widespread and the mechanisms for addressing it are often cumbersome and adversarial. The Danes’ primary focus is on helping patients who have been hurt by the health care system. Data helps flag offenders.

The U.S. system for compensating injured patients – medical malpractice lawsuits – effectively shuts out patients when the potential damages are small. Proving negligence, the usual standard for winning compensation, is difficult. There are scant incentives for doctors and hospitals to apologize, reveal details about what happened, or report errors that might unveil a pattern.

Denmark offers a radically different alternative.  Alternative responses to patient harm have been tried on a smaller scale. Virginia, for example, has a program designed to compensate for severe neurological childbirth injuries that is similar in some ways to the Danish system.

Common to all these programs is a commitment to provide information and compensation to patients regardless of whether negligence is involved. That lowers the bar of entry for patients and doesn’t pit doctors against them, enabling providers to be open about what happened.

Denmark’s compensation program has been in place since 1992, replacing a lawsuit-based approach much like that in the U.S.  Today, medical injury claims aren’t handled by the Danish court system but by medical and legal experts who review cases at no charge to patients. Patients get answers and can participate in the process whether or not they ultimately receive a monetary award.

Filing a claim is free. Patients are assigned a caseworker to shepherd them through the process. The hospital or doctor is required to file a detailed response, which patients may rebut. Patients have access to their complete medical record and a detailed explanation of the medical reviewers’ decisions. All of this is available for patients and their families through an online portal, which alerts them when there are developments in their claims process.

Overall, about one in three patients who file a claim is compensated. The minimum eligible claim is under $2,000, and the average paid out is $30,000, or about 15 percent of the typical amount awarded in lawsuits against U.S. doctors.

However, it’s estimated that more than seven times as many claims are filed per capita in Denmark, and about four times as many patients per capita receive some award. A claim for a few thousand dollars would not be worth it in the U.S. system because of the high cost of pursuing lawsuits.

The Danish health care system helps patients file medical injury claims by providing an independent nurse with legal training to assist at every hospital.  Danish doctors are known to file compensation claims on behalf of patients, which occurs in about 10 percent of the cases.

The Danish system is not perfect. Although the data collected from claims is freely shared with researchers, injury and error rates are not published so that patients could use them to select providers. By design, there is not communication between the claims and disciplinary systems.

Proposed alternatives to the U.S. medical malpractice system have been strongly opposed by some powerful interest groups, most prominently trial lawyers.

 

Entrepreneur Alert: One Step Closer to Cars that Run on Water

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Scientists at Indiana University have created a highly efficient biomaterial that catalyzes the formation of hydrogen — one half of the “holy grail” of splitting H2O to make hydrogen and oxygen for fueling cheap and efficient cars that run on water.

A modified enzyme that gains strength from being protected within the protein shell — or “capsid” — of a bacterial virus, this new material is 150 times more efficient than the unaltered form of the enzyme.

“Essentially, we’ve taken a virus’s ability to self-assemble myriad genetic building blocks and incorporated a very fragile and sensitive enzyme with the remarkable property of taking in protons and spitting out hydrogen gas,” said Trevor Douglas, the Earl Blough Professor of Chemistry in the IU Bloomington College of Arts and Sciences’ Department of Chemistry, who led the study. “The end result is a virus-like particle that behaves the same as a highly sophisticated material that catalyzes the production of hydrogen.”

Other IU scientists who contributed to the research were Megan C. Thielges, an assistant professor of chemistry; Ethan J. Edwards, a Ph.D. student; and Paul C. Jordan, a postdoctoral researcher at Alios BioPharma, who was an IU Ph.D. student at the time of the study.

The genetic material used to create the enzyme, hydrogenase, is produced by two genes from the common bacteria Escherichia coli, inserted inside the protective capsid using methods previously developed by these IU scientists. The genes, hyaA and hyaB, are two genes in E. coli that encode key subunits of the hydrogenase enzyme. The capsid comes from the bacterial virus known as bacteriophage P22.

The resulting biomaterial, called “P22-Hyd,” is not only more efficient than the unaltered enzyme but also is produced through a simple fermentation process at room temperature.

The material is potentially far less expensive and more environmentally friendly to produce than other materials currently used to create fuel cells. The costly and rare metal platinum, for example, is commonly used to catalyze hydrogen as fuel in products such as high-end concept cars.

“This material is comparable to platinum, except it’s truly renewable,” Douglas said. “You don’t need to mine it; you can create it at room temperature on a massive scale using fermentation technology; it’s biodegradable. It’s a very green process to make a very high-end sustainable material.”

In addition, P22-Hyd both breaks the chemical bonds of water to create hydrogen and also works in reverse to recombine hydrogen and oxygen to generate power. “The reaction runs both ways — it can be used either as a hydrogen production catalyst or as a fuel cell catalyst,” Douglas said.

The form of hydrogenase is one of three occurring in nature: di-iron (FeFe)-, iron-only (Fe-only)- and nitrogen-iron (NiFe)-hydrogenase. The third form was selected for the new material due to its ability to easily integrate into biomaterials and tolerate exposure to oxygen.

NiFe-hydrogenase also gains significantly greater resistance upon encapsulation to breakdown from chemicals in the environment, and it retains the ability to catalyze at room temperature. Unaltered NiFe-hydrogenase, by contrast, is highly susceptible to destruction from chemicals in the environment and breaks down at temperatures above room temperature — both of which make the unprotected enzyme a poor choice for use in manufacturing and commercial products such as cars.

These sensitivities are “some of the key reasons enzymes haven’t previously lived up to their promise in technology,” Douglas said. Another is their difficulty to produce.

“No one’s ever had a way to create a large enough amount of this hydrogenase despite its incredible potential for biofuel production. But now we’ve got a method to stabilize and produce high quantities of the material — and enormous increases in efficiency,” he said.

The development is highly significant according to Seung-Wuk Lee, professor of bioengineering at the University of California-Berkeley, who was not a part of the study.

“Douglas’ group has been leading protein- or virus-based nanomaterial development for the last two decades. This is a new pioneering work to produce green and clean fuels to tackle the real-world energy problem,” said Lee.

Beyond the new study, Douglas and his colleagues continue to craft P22-Hyd into an ideal ingredient for hydrogen power by investigating ways to activate a catalytic reaction with sunlight, as opposed to introducing elections using laboratory methods.

“Incorporating this material into a solar-powered system is the next step,” Douglas said.

 

How Much Does Good Health Care Cost?

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Does being poor mean being less healthy? In the United States, the answer is generally yes: Income and health are intertwined, and the richer you are, the healthier you’re likely to be.

Still, the link between poverty and poor health isn’t ironclad. Take Costa Rica, where the poorest 25 percent of people live longer than their counterparts in the U.S., according to ananalysis published this week in the Proceedings of the National Academy of Sciences.

Costa Rica punches above its weight on many measures of health and social welfare. It’s a middle-income democracy with a population of 4.8 million—about the size of Alabama—and a per-capita gross domestic product about one-fifth that of the U.S. In other words, it’s much less wealthy than the U.S. As you would expect, the rich in America enjoy lower mortality rates than do the rich in Costa Rica. But when you look at the other end of the socio-economic scale, the reverse is true.

Why are the poor in one of the world’s wealthiest countries more likely to die at an earlier age than the poor in a small, middle-income country? Lifestyle factors have a lot to do with it. In the U.S., smoking and obesity are far more common at the bottom of the income scale. That’s not the case in Costa Rica.

“Poor people or lower socioeconomic-status people are thinner and less prone to obesity than rich people, while in the U.S., the inverse of that situation is true,” said Luis Rosero-Bixby, a demographer at the Universidad de Costa Rica and lead author of the study. Costa Ricans are more likely to adhere to traditional diets and lifestyles that don’t include junk food or cigarettes. Costa Rica’s health care system is not better than that of the U.S., according to Rosero-Bixby, but it manages to ensure that “the very basic needs are covered.”

While Costa Rica outperforms the U.S. on the health of its poorest, it’s not because the country has greater equality than America. Indeed, the income distribution in Costa Rica concentrates a greater share of wealth at the top, according to the paper. Somehow, though, skewed income doesn’t translate to skewed health outcomes.

The analysis linked census records in both countries with death registries from the 1990s. Matching that kind of data isn’t possible in many places, Rosero-Bixby said, so it’s hard to tell whether the pattern is similar elsewhere. Both countries are, to some extent, outliers. While Costa Ricans are generally healthier and live longer than the country’s income and health spending would predict, the reverse is true in the U.S..