Tuesday, November 24, 2009

 

American healthcare drama

From The Hindu

The U.S. healthcare reform drama is moving towards a resolution. The House of Representatives narrowly passed a version of the reform bill that scaled down the public option while retaining some landmark elements of the original Obama reform. Most importantly, the bill extends healthcare cover to 36 million uninsured Americans, bringing 96 per cent of the eligible population under the insurance umbrella. With the Senate voting last week to take up the debate in December, the risk of delaying tactics, especially a filibuster by Senate Republicans, has diminished. Now all that stands between President Barack Obama and unprecedented success in reforming a bloated and fundamentally inequitable healthcare system is a Senate vote on and for the bill and, after that, a final vote on a House-reconciled version of it.

The real threat to the U.S. President’s Senate support comes not from three vacillating Democratic Senators but from a potentially ruinous failure to convince the American public that his reform proposals will create a system that is more equitable in its delivery and deficit-neutral in its cost. The recent fall in Mr. Obama’s approval ratings to below 50 per cent for the first time reflects a failure to come with a bold political initiative to engage with, and enthuse, the American public. To put this in perspective, one needs only to recall how his brilliant campaign for the presidency was powered by broad-based and innovative grassroots appeal — among other things, through the use of the social media, rousing speeches that somehow managed to strike the right social balances, and genuinely democratic internet-based fundraising. Candidate Obama had charisma but, more importantly, demonstrated a gift for inspiring ordinary people with his inclusive promise of leadership. This left the Republican campaign floundering amidst confused and bitter sound bytes. But given the highly polarised nature of American politics and with the White House team performing below par, the Republicans, and especially their right wing, have recovered some ground. Specifically on healthcare reform, until the recent upturn in its fortunes, the administration seemed to be retreating into a cocoon of policy analytics. President Obama may well be banking on regaining his touch, and the political advantage, on the strength of his adroit technical manoeuvres and Congressional victories. Paradoxically, the prospects of his most ambitious reform project hinge on whether he has the capability to persuade millions of ordinary Americans — many of whom suffer from poor healthcare by developed country standards and debilitating unemployment — of its vital necessity.

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Friday, November 20, 2009

 

Food summit let-down

From The Hindu

The recent World Food Summit in Rome clearly failed to do its job. It did well to focus attention on the risk of food price shocks of the magnitude experienced in mid-2008, which led to civil unrest in over 30 countries. Yet it abjured its responsibility to the vision of a world free from chronic hunger and malnutrition, especially child malnutrition. Behind-the-scenes wrangling over the wording of the summit declaration ensured that no tangible commitments were made by rich countries to put the first Millennium Development Goal, MDG 1 — to halve global hunger and poverty by 2015 and eliminate it altogether by 2025 — on high priority. Instead, the 2025 deadline was jettisoned. With one child dying of hunger and malnutrition every six seconds and over 20 million children at risk, such negligence may cost all nations, and perhaps even the world order as it stands, dearly. The summit also chose to put price shocks ahead of a sustainable vision for agriculture through investments in technology and projects for developing countries. The FAO failed to convince G8 countries to increase the three-year, $20 billion investment in agriculture they promised at L’Aquila in July. Despite the FAO’s efforts, the G8 declined to raise that investment to $44 billion annually — though even that would have meant only a return to 1980 levels as a percentage of official aid spent on this sector. Among the G8 leaders, only Silvio Berlusconi bothered to attend the Rome summit, something an Italian Prime Minister could hardly avoid doing.

Yet the signs that the world has run out of time to address food shortage and inaccessibility could not be more ominous. Private companies supplying ‘breakfast cereals’ have, out of desperation to avoid 2008-type price spirals, started investing in agriculture in poorer countries. This has raised, for example in the case of South Korea’s Daewoo Logistics investing in Madagascar, the spectre of land grabs and political conflicts. In developing countries such as India, the supply of rice has dwindled owing to one of the worst monsoons in 30 years, prompting cuts in import duty and expectations of a global price surge. As scientist M.S. Swaminathan has pointed out, unless agriculture is viewed not as a food-producing machine, but as the backbone of the livelihood of the majority of the people, MDG 1 is likely to turn into a pipe dream. Only pro-poor policy interventions on an unprecedented scale integrated with increased investments in agricultural technology and projects can deliver the world from endemic hunger. Meeting at a time when the economic scenario is still grim, the summit has failed to instil confidence that this is likely to happen.

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Monday, November 16, 2009

 

Stimulus-driven recovery

From The Hindu

As the United States economy continues to battle recessionary conditions, recent months have seen developments that some have hailed as indicators of economic recovery. First, stock markets witnessed an unexpected rally from early March, with the Dow Jones industrial average jumping 57 per cent — however volatility has soared since the crisis began, with $6.9 trillion of U.S. shareholder value wiped out in 2008 alone. Secondly, banks that accepted taxpayer money under the Troubled Asset Relief Program, including Goldman Sachs, J.P. Morgan, Morgan Stanley, and U.S. Bancorp, repaid their debt to the federal government. Subsequently, some of them went on to make record trading profits even as commercial banking languished, most notably Goldman Sachs which made $3.44 billion in profits for the second quarter. Thirdly, the U.S. economy posted growth results that heralded, technically, the end of the recession. Supported by massive stimulus packages to banks and automobiles, the third-quarter growth rate of 3.5 per cent marked the first quarter of positive growth in more than a year.

But juxtapose these indicators of recovery with the looming symptoms of recession that remain, and optimism about a full-fledged return to pre-crisis conditions seems hollow. Unemployment in the U.S. recently climbed to 10.2 per cent and, by some predictions, will remain above 8 per cent even two years from now. After the end of the ‘cash for clunkers’ scheme aimed at boosting automobile sales, many of the large car manufacturers reported a sharp fall in sales in September. Quantitative easing by the U.S. Federal Reserve has made little difference to bank lending to customers — total consumer credit decreased at an annual rate of 6 per cent in the third quarter of 2009, according to the Fed. The International Monetary Fund predicts that economic growth in the near-term will be “sluggish, credit constrained, and, for quite some time, jobless.” There is general agreement that the signs of what looks like a recovery are driven by the massive fiscal stimuli supplied. There is even a risk that these signs will encourage conservative lobbies to press for rolling back fiscal deficits. Such misguided efforts must be resisted if the current low ebb of economic activity is to revive. A premature 1930s-style rollback runs contrary to the need for even higher levels of spending on public infrastructure and social services, vital to individuals and households who will remain in the vice-like grip of housing foreclosures and job losses for years to come. President Obama cannot afford to be fearful of deficits.

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