August 2009

The Castro regime in Cuba receives widespread praise for its advances in health care and literacy, and it’s true the country has  life expectancy and literacy rates similar to those that prevail in rich countries, at least according to the official statistics. This is not much of an achievement, however, when one considers Cuba’s position before the 1959 revolution.  Those who accept the Cuban government’s claims  may have fallen for Che Guevara and Fidel chic, or may desperately want to believe that somewhere in the world socialism actually works.

In 1959 Cuba had the 22nd highest per capita income in the world, about the same as Italy’s. It had the lowest infant mortality rate in Latin America and 9th lowest in the world, better than France. It had the world’s third-highest per capita concentration of physicians and dentists, above that of the U.K., and it already had 80% literacy, the third highest in Latin America. There have been incremental improvements since then, as one would expect over 40 years, but it’s an incredible achievement only in the sense that Cuba’s system of political and economic governance since 1959 would have been more likely to lead to sub-Saharan African levels of disease and illiteracy.


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Rarely does a news story address three of my biggest enthusiasms at once, so if I find one I pay close attention. Today’s New York Times reports that the U.S. Justice Department is considering antitrust action against Anheuser-Busch InBev and MillerCoors (itself a joint venture between SAB Miller and Molson Coors), which jointly control about 80% of the U.S. beer market (“Rising Beer Prices Hint at Oligopoly”). To be honest, the article itself only addresses beer and competition; the emerging markets angle is mine alone. It appears, in any case, that both brewing giants are raising their prices, even as the recession makes the average working man need a beer more than ever. [click to continue…]

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We have all seen the moment in countless movies when the intrepid band of commandos or bank robbers runs into an unforeseen problem and one of the group says, “Maybe it’s time to go to Plan B.” Someone else says, “What is Plan B?” and someone else, usually the leader of the group, says, “There is no Plan B.” This heightens the tension and drama, always a good thing in a thriller movie. In real life, at least in the public spheres of business and government, tension and drama are not such a good thing. Recent events, however, have made me suspect that not only do we not have a Plan B, we don’t even have a real Plan A.

In the movies, if you remember, Plan A  involves meticulous and detailed planning, usually requiring big expenditures, advanced technology, painstaking practice and rehearsal, and a team of crackerjack experts, each one the best in his field. There is a specific and measurable goal and a clear, if sometimes flawed, plan of execution. But in the current political and economic crisis, though we have the big expenditures and advanced technology, we seem to have neither a goal nor a plan. I don’t want to single out the Obama Administration, since governments in many other countries are equally culpable and besides, President Obama has inherited the result of eight years of less than meticulous planning by the Bush Administration. But we do have a problem.

Richard Cohen, in today’s Washington Post says the main issue is “the President’s inability to simply say what he wants and why that’s good for us,”  and he cites health care reform and the war in Afghanistan as two cases in point. It’s true that for all his “town hall meetings” and press conferences the President has not clearly told the American people what the problem is, why it’s important, what he plans to do about it, and, crucially, what success will look like, with respect to health care, Afghanistan, or any of a half-dozen other issues. Mr. Cohen chalks it up to Mr. Obama’s “coolness, an above-the-fray mien that does not communicate empathy…the fear that this man in the White House does not appreciate the anxiety that middle-class Americans feel.” If you follow this line of reasoning, if only we could get Bill “I Feel Your Pain” Clinton back in the White House everything would be okay.

On the health issue, President Obama says he wants universal coverage, lower costs, no increase in the budget deficit, no rationing of care, and no tax increases, but he knows it is impossible to achieve all of these things. He fears alienating any part of his political base by admitting this, structuring a reform package built around the bits he thinks are most important, and then taking his case to the people. So instead we get something no one understands and almost everyone opposes. It has nothing to do with empathy.

On Afghanistan, the New York Times reported yesterday that the White House “has been concerned about declining support for the war among the American public.” As he called for an increase in troop numbers in Afghanistan, Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff,  said, “the President’s given me and the American military a mission, and that focuses on a new strategy, new leadership, and we’re moving very much in that direction.” Excellent. Now if only someone could tell us what that mission and strategy are.

Seasoned counter-terrorism experts tell us it could take another 10 or even 20 years to end the Taliban insurgency, and historical examples from Kenya, Malaysia, the Philippines, and other countries support these estimates. Is President Obama prepared to commit the U.S. to fighting in Afghanistan for the rest of his Presidency and far beyond? If not, how do we decide we’ve finished the job and can come home?

For all his talk about being the one who makes the hard choices, it’s becoming distressingly apparent that President Obama can’t or won’t confront an issue and take a decision that might disappoint some part of his political base. This, more than the specifics of any particular problem of the day, is the tragic flaw likely to make Mr. Obama’s Presidency end in failure.

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I’ve been exiled to Seattle for a few months (in reality, I’m taking care of a family member).  While I feel disconnected from the emerging market issues that are constantly under discussion in D.C., I think a few local issues can provide lessons, or at least food for thought, for emerging markets. [click to continue…]

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The trouble with governments – you could say the trouble with people in general – is that they are constantly rushing around looking for problems to solve. But the law of unintended consequences, which is as immutable as Newton’s Third Law of Motion (for every action there is an equal and opposite reaction) guarantees that any effort to solve a problem will create a host of new and unforeseen problems. As supermodel Linda Evangelista once said, “I don’t get out of bed for less than ten thousand dollars.” In other words, unless there is a high probability of a significant benefit from doing something, it’s probably better to do nothing at all. [click to continue…]

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