Microfinance and Patriarchy: 'Drifts Away from Serving Women'

Microfinance -- an approach to poverty based on providing small loans and other financial services to poor people, primarily women -- has inspired extensive press coverage, a Nobel Peace Prize for founder Muhammad Yunus and reams of research in the decades that followed the launch of Grameen Bank in 1976.

Much of the research on microfinance focuses on factors associated with the efficient delivery of loans and their effect on borrowers -- in other words, on the financial and economic aspects of the microfinance movement.

But by ignoring microfinance's cultural aspects -- including the influence of patriarchal attitudes on lending practices -- the ability to make loans to the women whom microfinance was originally intended to serve can be seriously restricted, says Wharton management professor Tyler Wry.

Using data on more than 1,800 microfinance institutions (MFIs) in 168 countries compiled by the Microfinance Information Exchange, Wry and Eric Yanfei Zhao from the University of Alberta School of Business look at policies advocated by the United Nations, World Bank and other development agencies that are intended to build stable infrastructures for microfinance institutions.

"We found that countries that do have more liberalised markets, including increased flow of capital and thus the ability to make more loans, also [can] support a lot more microfinance activity, which is good," Wry says.

"But we also found that these same factors that would make a country attractive to MFIs also made it less likely that they would lend to women."

He and Zhao present preliminary findings in a working paper titled, "Culture, Economics, and Cross-National Variation in the Founding and Social Outreach of Microfinance Organizations."

Read the full article here

Modafinil and Sleep: A Sociological Speculation

Tyler Cowen at Marginal Revolution is a major proponent of the Great Stagnation thesis: that new innovations are not having the same impact on productivity as those we saw in the previous 150 years.

Think of iPads versus electricity and cloud computing versus the railroad.

Hence, we can expect to see slowing growth in GDP per capita as future productivity gains will take much more effort to unlock.

This week The Economist took up this line of thought with a thorough briefing on the subject that broadly agreed with Cowen, although with some equivocation.

Overall, I think the argument has a lot of merit but there may be at least one more piece of low hanging fruit: a vast reduction in our need for sleep.

The American Time Use survey reports that an average American work day includes 8.8 hours of work and 7.6 hours of sleep.

Sleep is the second largest single use of time. However, new drugs such as Modafinil appear to vastly reduce the need for sleep without significant side effects (at least so far).

Based on reports from users, it seems that people could realistically [edit: potentially (see update)] cut their sleep requirements to as few as 2.5 hours a night without a decrease in mental acuity. That gives us another 5 hours to distribute over the day.

Workers would probably prefer to allocate the bulk of that extra time to leisure but I doubt employers will let that happen.

Let's make a generous breakdown and give work an extra 3 hours and let workers spend another 2 as they wish. This increases working hours by around 34% and potentially increases leisure time by 80%.

This increases the number of hours a worker spends at work from around 1800 hours a year now to about 2,400.

The argument against the use of drugs such as Modafinil, is that a rapid introduction of these pills would amount to an increase in the labour supply and cause a fall in hourly wages or unemployment.

However, it's likely that individuals would generally still see an increase in their overall income and their additional leisure time (2 hours extra) would allow this to be translated into an increase in demand in the economy through increased consumption.

 Overall the transition to a sleepless world seems beneficial to humanity. There's nothing special about the 7 hours of sleep we get right now and I think people would rightly be opposed to a change that made everyone spend an extra hour asleep every day.

Caveats:

• I've never used Modafinil. This is because I don't know where to buy it, I have some moral qualms about using it when the rest of the world is not and because it is still a bit early to conclude that there are no long term health effects; 
• Some people I've talked to have raised the issue of environmental damage. I think the total environmental impact of a sleepless world could be positive or negative but surely the damage would be lower per unit of output (because there are a lot of fixed carbon outputs per work day such as commuting and building overheads). At the very least, a sleepless world looks like a more environmentally friendly growth strategy; 
• This argument is premised on the safety of these drugs. Clearly the calculus will change if they are shown to have negative long term consequences; 
• For those people who already work long hours with little sleep, these drugs should at least make that lifestyle less dangerous. There is convincing evidence that chronic lack of sleep is harmful in normal circumstances; 
• The precise amount of sleep that a Modafinil user can get by with seems to vary but all sources I've seen suggest it is dramatically lower; 
• The short term costs of a rapid change might be substantial so gradual adoption is probably preferable from the standpoint of welfare.

Real the full article here

Times Cartoon sums up US economy on Thanksgiving Day

......with the UK not far behind, along with Africa, South America, Australia, etc.....

Market Place - Looking at 5 Digits, Again, for the Dow - NYTimes.com

Market Place - Looking at 5 Digits, Again, for the Dow - NYTimes.com

The Dow, which closed up 124.17 points, at 9,789.36, on Monday, is within reach of 10,000. Who would have thought?

At the depths of Wall Street's crisis, when traders were despairing and shares of Citigroup were trading for just over a dollar, Dow 5,000 seemed a likelier prospect than this.

But now, one of the most-watched measures of the financial world is on the cusp of jumping back to five-digit territory.

That does not mean the economy's problems are over, or that 401(k)'s are going to be made whole anytime soon. In fact, this milestone could even stall the rally if enough investors use it as an opportunity to cash in their gains, analysts say.

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Workplace suicides in the US surges 28% in 2009

Workplace suicides in the US rose dramatically by 28% this year, according to the US Labor Department.

Circumstances have certainly not improved in the working environment, as anxious workers watched colleagues depart in a rash of layoffs and were left alone to manage their survivor's guilt.

At the same time, the agency's Bureau of Labor Statistics (BLS) said the total number of workers who died on the job from any cause fell 12%.

The 5,071 workplace fatalities recorded in 2008 was the lowest number since the agency began tracking the data in 1992. That number includes 251 suicides, the highest number since official reporting began.

Labor officials did not seek to explain the sudden rise in workplace suicides. A BLS spokesman said the agency plans to research it more extensively, and will anounce their findings at a later date.

The agency said that it is very likely that current economic factors could be responsible for the overall decline in fatalities. Workers on average worked 1% fewer hours last year and the construction industry, which usually accounts for a major share of serious accidents or accidental workplace deaths, posted even larger than normal declines in employment and hours worked.

Gary Chaison, a professor of industrial relations at Clark University, said the numbers show that the struggling economy is taking a direct toll and negative impact on worker morale.

"Those who are still working at companies where there have been substantial layoffs, are trying to cope with survivor's guilt, and the anxiety that they may be next." Chaison said. "I also think there's tremendous anxiety for the future, in the American workplace. It's not just being anxious, its gone beyond that it is now a true depression."

Chaison added a note of caution, saying that the numbers may be 'temporary extremes' that will drift back toward normal, historical levels once employment rises and economic conditions improve.

Labor Secretary Hilda Solis called the decline in workplace fatalities a "change in the right direction," but said it does not lessen the need for stronger safety enforcement to prevent accidental injuries.

"Today's report prompts us to step up our vigilance, particularly as the economy regains momentum," Solis said.

Here are some details on other findings:
• Fatal work injuries in the construction sector plummeted 20%.
• Workplace homicides dropped 18%.
• Fatal workplace falls declined 20% in 2008, after rising to a historic high in 2007.
• The number of fatal work injuries declined for all age categories except among the 'risk prone' 16 and 17-year-old workers.

The Ups, Downs and Wonders of Living in a Parallel Universe

In recent months economists, and even economics as a discipline, have received an unprecedented amount of negative publicity. They have been attacked by governments, bankers, unions, industrial corporations, and the press.

They have even been attacked by their own peers from the world of academia, possibly to divert attention from them. Economists have been accused of ineptitude for not predicting the current crisis and its magnitude.

Forecasting
Some have, of course, suggested that the dismal science was never intended to help predict where the economy was going to go in the future and that in fact it was established to help manage economies in a more efficient manner but, of course, those who have spent anything more than a few seconds with anyone considering themselves to be an economist would have experienced that the first thing they would do to prove their knowledge would be to make a prediction about some economic variable.

Predictions
The problem is that given the magnitude of information necessary to make any kind of prediction about anything that needs aggregate economic data it is literally impossible to make guess-timates that are even remotely accurate.

The recent bad economic news in the U.K. and the U.S. was a perfect example of that. Not only had the economists missed the first stages of the crisis they also misread or misinterpreted how the economy was recovering but, of course, it never stopped any of them from predicting that we have turned the corner as soon as we had all got used to the fact that the economy is in a bad state.

The Property Market
The same seems to be happening in the property market. Economists at major U.K. building societies have started suggesting the many people were sitting on mountains of cash waiting for a sign that the economy has turned a corner before starting their buying spree. Hence, they suggest cautiously that there is a chance that house prices in the U.K. could end 2009 in the positive territory.

Waiting for a Sign
The problem is that even if it was true that these investors were simply waiting for a sign of economic recovery before they started buying why have they started buying now? After all, the latest signs are that the economy is doing much worse than expected. Consequently, if anything, they should have delayed their purchases even further.

Mass Re-possessions
It seems that since building societies need house prices to rise in order to avert the risk of mass repossessions their economists somehow arrive at more than positive data. If prices do rise they can also reduce the amount of capital they need to keep against bad debts and hopefully increase the amount of mortgages they issue.

Unfortunately, the reality is that most people find it very hard to get mortgages, especially since few can afford the 20% or 25% deposits that most lenders demand. Add to that the ever increasing numbers of unemployed and you can get an idea of just how far from reality these predictions are.

A Parallel Universe
Based on the recent experience with economists, and those working for building societies in specific, it seems that they somehow live in a parallel universe to the rest of the world. Looking at useless data seems to give either a false sense of doom or growth.

It somehow seems as if they never actually have human contact with those who buy homes or spend money shopping. It is a wonderful cocoon to live in, completely oblivious to the rest of the world or they are trying to maintain the charade.

Published Reports
The only problem is that their outlandish predictions are actually published by leading news agencies. If the press stopped giving such predictions the amount of attention that they are, I am sure that they would also not feel compelled to publish data that while newsworthy are in no way related to what is happening in the real economy.

Perhaps it is time that the press also learn to ignore such predictions, like the rest of us have done for years.

Indian outsourcing fears being burned

Indian outsourcing firms are turning down business out of fear of their customer companies going bankrupt and leaving them holding a bad debt.

As a result of the current economy and the rush to reduce costs, there is an upturn in companies sending work offshore to places like India. So you would think Indian offshore companies would be happy about the potential new business opportunities and be very aggressive about going after them. Unfortunately, that is not the case and the Indian companies are very aware of the fragility of the world economy. They do not wish to be the one's left holding the cheque.

Only a few Indian offshore companies are chasing these new deals because of this, according to Partha Iyengar, vice president and regional research director at Gartner India. In a Reuters story published March 3, Iyengar went on to say that "Indian firms need to focus on revamping their sales models to help generate cost savings and add value to the client's operations," but not everyone agrees with this reason for not chasing potential new business.

In a follow-up comment to the story, one Indian commentator brought up the concern that clients could go bankrupt by the time payment is expected, a very plausible and valid point. Although offshore outsourcing does provide some cost savings to client businesses, it doesn't guarantee they'll come out of the recession in one piece.

The Indians have proved themselves to be excellent and well respected business people over the centuries. Therefore, it seems like a sensible and justifiably cautious approach by the Indian outsourcing companies that they do put themselves in a vulnerable position that may get them dragged down with someone else's sinking ship.