If you want to help – you have to pay!

Corruption is one of the major problems in developing countries. More developed western countries have developed a more subtle method of corruption called lobbyism. Corrupt people can make money even from allowing to help the poor. In the Dafur region it is common practice that humanitory organizations have to get a permit before they are allowed to help with medical care, food or any other type of support. Similiar corruption patterns can be found in other poor countries. These permits are rather expensive and the money is partially used to fund the war in the country. Thus the “Goodies” finance the problems they are supposed to solve!     

Global housing desaster

The US finance industry is leading the market be it good or bad. It is interesting to note that European countries which copied the US finance stratgey like UK, Ireland, Spain, Iceland  (NY Times “Britain has one of the most developed home-financing industries, not far behind that of the United States” )   are hit hard by the housing crisis.  Whereas consumers in more conservative countries like Germany are hardly affected. Germany had a similar banking crash in 1931, when banks where using foreign, short term loans to finance long term investments in the industry resulting in a deep depression in Germany following the great US depression in 1929. Obviously there are not that much people around anymore who could advise bankers and their customers with their historical knowledge.

Private life of presidents

Whenever a new scandal in politics was reported in the newspaper our grandmother used to ask “How come politicians have time for these things?”.  Obviously some politicians can manage their time very well. However, there is a big difference in the public perception between USA and Europe. In Europe nobody expects politicians to be “saints” – it’s obviously not true! When the French president Nicolas Sarkozy married Carla Bruni after a divorce nobody was really upset in France. Even after old very open photos of Carla were sold in the internet 74% of the French people were satisfied with her role as the wife of the president although only 46 % were satisfied with the performance of their husband – this is a record low for a French president in his first year after election.  However, the French people are probably right – a president should be measured against the outcome of his work and not against his private life record. A perfect private life record is not a guarantee for good work as president which many Americans still assume.  However, the contrary is also true as Nicolas Sarkozy demonstrates!

Shareholder Value versus People Value

In the past prosperous areas were closely linked with large companies. The rust belt in the Great Lake area  or the upper Hudson valley (IBM) are striking US examples how bad management or successfull restructuring and globalization can hit prosperous communities. Even if companies are successfull they tend not to pay lots of taxes anymore in contrast they are asking for subsidies for every investment in maufacturing sites which very often are moved a couple years later to low wage countries. Very often growth and global operation to increase in shareholder value does result in significant losses. A striking example is the Chrysler adventure of Daimler which resulted in reduced profits of billions of $ for the Daimler company but also billions of $ in taxes lost. 

It is very interesting that the most prosperous area in Germany is now the Biberach area in Southern Germany where only owner or family managed companies are located. Unemployment rate is at 1.4 % and the city can’t come up with enough projects to spend the taxes flowing in.  Salaries are high in highly specialized and highly innovative pharma and machine industry. The larger local companies operate globally with worldwide manufacturing and service subsidiary companies. Some of the companies are operating for more than hundred years and their owners are supporting local education and science, welfare and arts activities.  Just a small example - when the mayor of Biberach city discussed problems with young jobless people he got immediate calls from companies offering jobs!

This could be a successfull model for communities to survive in the globalized world. Traditionally government and politicians prefer working with large companies and their lobbyists. However, consistent and long term oriented work with the local community will provide more people value.    

How to reduce public health care cost?

It is well known that in most developed countries there is a low correlation between the cost of health care and the actual health of people served. However, there is an almost linear correlation between number of doctors/capita and the cost of health care. The health industry has marketed the idea that you can become more healthy when you spend more on doctors and medication, which is certainly not true. Too much health care can result not only in more cost but also in more health problems. It is well known that doctors are very reluctant to see their colleagues because they know abut the risks! In a recent report the Mayo clinic has demonstrated that excellent health care can be provided at much lower cost, if the doctors are not paid by case but receive a (good) salary.

Public health care systems must have a system to control the cost. However, simple systems like the health system in UK where the doctors are not paid adequately result just in poor service and substandard health care for the public. The German system where doctors are paid for every service in detail but total amount of money for all doctors is not very effective either because good doctors are frustrated when they are outsmarted by “money makers”.  A Swiss model seems to be rather reasonable. Doctors get a flat base fee for every patient they serve. Thus good doctors will attract more patients and will also try to limit unnecessary services. Doctors will also be interested to have “healthy patients” whereas most public health systems force doctors to declare normal patients as “crititcal” or “high risk” because this will increase their income. The problem with this system is that people with chronic health problems may not be adequately served. This problem can be served by assigning these people to specialized care centers or hospitals. 

Regardless what public health care system the US will install, it will be a good idea to look around in the world and learn from the experience different countries made.