Friday, July 30, 2010

USA water utility rates … making profit from basic service

Dear Colleagues

Later today I will be attending a public hearing about a water utility making an application to raise the rates it charges by a substantial amount … an increase that according to the opponents of the raise will increase the rates paid by some users by 240%.

I believe this is another example of the public being gouged by a community of corporate decision makers and their political allies who have a singular focus on top management and the stockholders. While these people may be opposed to socialism … communism … and apposed to government intervention and supportive of the free market system and enterprise on ideological grounds ... the fact is that unbridled monopolistic capitalism is not a free market and enterprise system but something quite evil requiring careful responsible regulation.

The idea of a regulated monopoly was incorporated into the communications legislation of 1907 which allowed AT&T to be the sole supplier of telephone service and the rates charged were regulated by government authorities according to a formula. The formula allowed for the company to earn a return on its investment … but over the years this “investment” was manipulated in such a way that it was ridiculously inflated. I authored a series of corporate “Directions Intelligence” reports in the early 1980s and these showed, for example, that if AT&T was using the same depreciation practices as IBM, then there would be a $4 billion shortfall in the balance sheet of AT&T … in other words AT&T had driven itself into bankruptcy. You may note that AT&T allowed itself to be “broken” up into multiple Baby Bells around this time … a move needed in order to mask the underlying reality that the company was failing and did not have the resources to modernize.

The water utility situation has some of the same characteristics. The water and sewage service at Saw Creek was originally supplied by the developers and was an integral part of the lot ownership and facilities service. As a lot purchaser you “paid” for a piece of this infrastructure. At some point about 20 years ago Saw Creek saw fit to sell off the water and sewage infrastructure and service responsibility to a private company. As a lot owner I now got a bill from a service that was previously part of what I “owned” … but I did not really get any payment for this change in structure. At the time Saw Creek was trying its best to be “profitable” and the owners of the development did everything in their power to “make money”. Eventually a “loss making” Saw Creek was taken over by an Owners Association and the current Owners Association is doing a fairly good job of managing the property.

Subsequent to the first sale of the water and sewage infrastructure to a private owner, the property has be sold and resold in mergers within the water utility industry. The consolidation of the industry delivers financial benefit to managers and stockholders, but does little for the operations and the customers. The infrastructure used … or needed … to deliver water and sewage service to my family property at Saw Creek is the same as it was 20 years ago.

At issue is what return should be reasonable for a water utility to earn from water and sewage service to a customer. I argue that this ought to be a technical engineering question and cost accounting … not a question of GAAP accounting where the law and the FASB rules allow for all sorts of distortions that favor the corporate entity. Bottom line … my water and sewage rates should be lower today than in the past because the infrastructure being used should have been correctly depreciated in the books of the corporate organization … when in fact my guess is that the books of the current organization consider me to be using more infrastructure assets. This is a ridiculous accounting and a legal construct completely at odds with real engineering.

As a small consumer I am not privy to the accounting being used in the water utility requesting the rate increase. I would like to see the internal accounting to verify what has been done to create the numbers that are the basis for their rate application.

My background is academic education at Sidney Sussex College, Cambridge University in the UK majoring in engineering and economics … and training as a Chartered Accountant with Coopers and Lybrand (now part of PriceWatrehouseCoopers) in London. I came to the USA in 1967 and worked in the corporate world in cost accounting, computerization of management information systems and as the CFO of a US based multinational corporation. Subsequently I went into international management consultancy and have been a consultant for the World Bank, the International Finance Corporation, the United Nations, foreign governments and other entities of the official relief and development assistance community. I am the founder and CEO of Tr-Ac-Net Inc. … an organization committed to international transparency and accountability and the deployment of systems of socio-economic metrics for a smart society that combines both profit and value in a comprehensive ubiquitous system.


Peter Burgess

Wednesday, July 28, 2010

Microfinance ... another conference without much on meaningful metrics!

Dear Colleagues

I just got this e-mail about an upcoming microfinance conference in October. Good ... I have saved the date. Bad ... I think it will be all talk about research and data about profit performance, with almost nothing that will serve to make the microfinance sector do a better job of getting sustainable progress out of poverty for the billions of people that need help!
On Wed, Jul 21, 2010 at 10:42 AM, dkarlan wrote
Save the Date!
October 21-23, New York City
Microfinance Impact and Innovations Conference
For researchers, practitioners, policymakers, investors and donors.
More information to come...

Microfinance reaches over 200 million clients globally, many of them impoverished and financially excluded. While the breadth and depth of outreach is impressive, there is comparatively little knowledge of which products and services work best for the poor and why. For over five years, Innovations for Poverty Action, the Financial Access Initiative, and the Jameel Poverty Action Lab have conducted dozens of rigorous studies to fill the knowledge gaps. This event, the Microfinance Impact and Innovation Conference, was created as a unique forum for both communication of accumulated knowledge as well as the generation of innovations in both microfinance product design and research. Sessions will touch on topics including microcredit, interest rates, microsavings and business training, among others, framed by questions of product design, marketing, usage and impact. Questions and issues to be discussed include:
* What is the impact of microfinance on the poor?
* How do interest rates affect the demand for microfinance products?
* How to design appropriate consumer regulation?
* Does business training help microenterprises?
* How to increase savings behavior among the poor?
* Microinsurance - impact and product design
My response to the MicroFinance Practice Group was as follows:
I have saved the date ... but my initial observation about the conference is that it does not seem to be planning on addressing the issue of metrics about microfinance and social value in a way that will ensure that the microfinance sector makes an ongoing contribution to the important matter of socio-economic progress and progress out of poverty.

My experience with microfinance since the 1970s suggests that socio-economic progress and performance depends on a whole portfolio of sector assets and activities ... and in some circumstances microfinance adds money that enables the social eco-system to improve the way it works ... and in other circumstances microfinance adds money but no progress.

The metrics need to have not only an organization focus, but also a community focus ... but I do not see anyone working on this in the academic space or with substantial foundation support at this time. Meanwhile, there are more and more metrics like the SEEP initiatives that seem to be heading us in a direction that turns microfinance into just another financial intermediary service aiming at profit performance more than anything else.

Maybe there are initiatives that I do not know about ... but I don't think so!


Peter Burgess
I am hopeful that soon there is going to be a change in the approach to socio-economic metrics so that value as well as profit is in play. Muhammad Yunus noted the need for value based metrics in his writings several years ago ... but since then the measure of profit has become bigger in the microfinance community and progress out of poverty is less and less prominent in the metrics. Worse ... data seem to show that progress out of poverty is not being helped very much by microfinance.

My own experience suggests that microfinance can be very valuable ... but the externalities are very important. The academic world does not seem to be able to get their work to embrace the multiple variables and externalities that are the norm in the real world ... and I would argue that this is the realm of "management information" more than it is rigorous statistical analysis so beloved by academics.


Peter Burgess

IRIN writes about the performance of the complex aid system.

Dear Colleagues

I have been writing since the early 1980s that the international official relief and development assistance (ORDA) community has performed atrociously ... and after 30 years nothing very much has changed. Unlike most of the people making decisions and allocating resources, I am an engineer and accountant by professional mindset ... and this makes me see the performance of this ORDA community as even more starkly bad.

The IRIN essay is at URL:

The overall conclusion has to be that something very different needs to be done ... but anyone who has done engineering rebuilding within and around an existing structure, this is very difficult. Typically success is achieved by many small steps that are in total going to add up to a complete new framework that works.

The IRIN text is below with my comments interspersed!
GLOBAL: Insights into the ever more complex aid system

DAKAR, 27 July 2010 (IRIN) - As the humanitarian “system” becomes more complex, with new actors and overlapping mandates, different definitions of humanitarian aid, and ever-more ambitious goals, humanitarian aid watchdog Development Initiatives outlines some of the needs, responses and funding trends over the past decade in its 2010 Global Humanitarian Assistance (GHA) report.
I do not think that the present humanitarian "system" is much more complex than it was 30 years ago ... the basic structure is still pretty much the same. But on top of this structure every issue on the planet has some been added into the overhead process and procedures. The unproductive overhead of the ORDA community is way bigger now than it was years ago ... but overhead does not translate easily in cost effective performance ... rather it does the exact opposite.
Here are some of the findings:

Private funding the rising star

NGO Médecins Sans Frontières received US$845 million of private funding in 2009, making it equivalent to the fourth largest donor country.

The total support received outside the UN-NGO Haiti earthquake flash appeal was three times the funding within the appeal, and exceeded total appeal requirements.
The role of private money in funding humanitarian relief is important ... and not surprising. All governments with a few notable exceptions are short of money and humanitarian relief and development assistance is not a priority for most voters. Furthermore, in the overall economic ecosystem the ownership of money is essentially a private matter whether corporate, foundation or individual. Government can talk a lot, but the money comes from somewhere else ... and much money chooses to go around government rather than through or to government!
“Since 2005 there have been a lot of initiatives to bring the humanitarian system together - but what about the actors that remain outside?” asks Jan Kellett, programme leader of the GHA. “There are some very significant non-DAC [OECD member countries’ Development Assistance Committee] donors; and private funding allows NGOs to choose where to spend the money in a more flexible way, which can be problematic for the system as you wouldn’t know what is met and what is not.”
Jan Kellett has this totally wrong ... the problem is not the decision making but the fact that at the end of the day few of the decisions are related to performance in any meaningful way. Most ordinary human beings will make good decisions when they are going to be held accountable ... but where the metrics are completely ineffective, then the use of money and decision making trends to what is the most self-serving, and in the end that is a disaster for performance.

The metrics being used in the ORDA community are completely inadequate, and have been for a very long time. Governments themselves are ill-equipped to do the metrics that are needed, and the solution is not coming from either the academic economists, the political community, or the civil service administrators. Corporate accountancy around money and profit does not help very much ... but a system of value accounting could change everything ... and this is going to happen!
Humanitarian assistance was up US$3.1 billion in 2009 compared with 2006, despite an 11 percent drop in reported government aid in 2009; private contributions increased by 50 percent since 2006, reaching $4.1 billion.

Since 2000, year on year, humanitarian aid has accounted for on average 8.35 percent of DAC governments’ official development aid.
These statistics are not surprising ... private contributions are always very strong when there is a highly publicized serious disaster ... and not strong at all when things are going relatively well and it is just the endemic poverty and dysfunctional economics that is the ubiquitous issue!
Several high-profile disasters have caused humanitarian aid spikes, following which aid then dipped but not to pre-spike levels. These include: Kosovo (1999), Iraq and Afghanistan (2003), the Indian Ocean tsunami and the Kashmir earthquake (2005); and smaller spikes for Afghanistan and Ethiopia in 2008.
Mixing the humanitarian disasters associated with war and government decisions with natural disasters is always problematic ... and confuses the statistics at a macro level. For me these conclusions are of little help in determining anything about performance ... though they make it very clear that performance of government at the highest levels is appalling from a humanitarian value perspective.
“Non-traditional donors” - governments outside DAC, gave US$224 million in 2009 - a sharp drop from the $1.1 billion in 2008 which had been largely due to Saudi Arabia’s contribution to the World Food Programme (WFP) for the food crisis.

Saudi Arabia was the largest non-DAC donor in 2009, giving $51.8 million; followed by United Arab Emirates, Kuwait and the Russian Federation: top recipients were the occupied Palestinian territory, with $99.7 million; followed by Pakistan and Afghanistan.
I have never been particularly impressed with the DAC role in humanitarian relief data collection and analysis after trying to reconcile its data with what was visible in various beneficiary countries. My simple conclusion was that the DAC donor countries were using the DAC to distribute misinformation about their efforts. I also concluded that this was a system problem that needed to be addressed with a completely different system of data acquisition and analysis.
Response to conflict the priority

Some 71 percent of aid in 1999-2008 was spent in conflict-affected states. The top five recipients of government and private humanitarian aid in 2009 were Sudan, the Democratic Republic of Congo (DRC), Somalia, Ethiopia and Zimbabwe.

Non-humanitarian donor spending on conflict-resolution and peace and security-related activities increased 20-fold between 1998 and 2008, particularly in the areas of peacebuilding and security sector reform, compared with the doubling of humanitarian assistance over the same period.
This is a terrible conclusion ... probably right! Again it confirms the need for society to be holding governments accountable for their behavior not only in the context of votes and elections, but also with respect to trade in war materials and the impact of decisions on the citizenry. For accountability, there has to be the right sort of data ... little of which is now easily accessible.
Some 34 national militaries deployed troops to the Haiti earthquake response.
Back in January there was some optimism that there would be good accountability for the resources mobilized in response to the Haiti disaster. In fact accountability is at a very very low level. Military units rank at the bottom in terms of "accountability" in the traditional way this is done. I argue that in rescue and relief, military should make and accounting of their performance just as everyone else. The data are simple ... how much cost are you claiming you contributed to the effort and what did you do! With value metrics it is possible to convert what was done into a value quantification.
Peacekeeping costs and personnel numbers hit an all-time high in 2009 with $7.4 billion going to UN peacekeeping missions, funding 98,000 personnel; while there were 112,000 non-UN peacekeepers, according to Stockholm International Peace Research Institute (SIPRI).

Eight UN peacekeeping missions are currently operational under civilian protection mandates, with the authorization to “use force to protect civilians under imminent threat of physical violence”. The largest UN peacekeeping missions are in Sudan, DRC, Liberia, Lebanon and Haiti.
The cost of soldiers is very high ... the cost of good governance quite low! The metrics of society are not helping to get resources allocated in the ways that make society function ... and nobody seems to understand or care!
“A major finding is that unless we understand the full complexity of all actors and money, then we cannot implement [humanitarian assistance] correctly,” said Kellett. “Humanitarian aid does not exist in a silo and cannot become an isolated thing in itself.”
Kellett has this right ... but how does anyone go about understanding the full complexity of all actors and money ... and he avoids the answer. The answer is that every actor in society has to be accountable ... there must be value analysis in every community, and for all the social and economic actors in the community ... and with these data, people everywhere will be able to hold their peers accountable.
Measuring need still not accurate

It is very hard to gauge to what degree aid meets needs as there is still no uniform, thorough, objective way of measuring needs, says the GHA.

Most needs assessments are still kept private.

The UN-led Consolidated Appeals Process (CAP) is still often viewed as a sign of needs, but rather: “[It] highlights what organizations present in the country feel they could do with programming they believe they could undertake for the people they believe they could reach. The true scale and severity of need remains out of reach [of the CAP].”

Many humanitarian needs are not included in CAPs. In 2009 $7 billion was spent inside the UN appeals process, while more than $4.1 billion of other humanitarian aid came in; and the unmet part of the appeals was $2.7 billion.
Data needs to be acquired about things that matter ... more and more detail about part of the dataset is not helpful. There needs to be a much clearer understanding at the community level ... and what consequences there are in all corners of society as a result of "big" policy and "big" decisions about allocation of resources!
Who gets what?

Aid to victims of the 2004 tsunami was on average $2,670 per capita; Haiti $993; and DRC $58 (a 10-fold increase on the previous decade in the case of DRC)
This is WRONG ... the money mobilized for aid to victims was maybe these numbers ... but what actually got delivered to needy beneficiaries was a very different number. Nobody has a clue how much of the money was diverted to inappropriate use ... but most people with knowledge of these situations would probably agree that it could be higher than 50%!

Aid for all sectors has increased in line with overall humanitarian aid increases. Food aid has gone up four-fold in the last decade, while low-funded sectors include mine action, coordination and support services, and protection.
And none of the planning has gone much beyond a poor welfare model for support to beneficiaries. What a terrible waste of development potential!
Protection doubled to $385 million between 2003 and 2009 but is still consistently underfunded. International response to natural disasters remains reactive rather than proactive, and prevention and preparedness still struggle to receive due attention and funding; as does education.
And the problem will persist as long as there are no meaningful metrics for "normal" times and getting progress funded in these "normal" times!
Over the last three years, 60 percent of DAC donor aid has been channelled mainly through UN agencies; just under 25 percent went to NGOs and civil society organizations; 0.4 percent to NGOs in developing countries; 0.2 percent to the International Movement of the Red Cross and Red Crescent.
Thanks for the article ... but where is the way forward?

My agenda is simple ... get meaningful metrics everywhere so that more decisions get made that are meaningful for the local community.

I would like to study the full report ... and hopefully I will in due course. I do not expect my basic conclusions to be changed, but reinforced. There is a need for data ... but my guess is that the full report will be more and more about the humanitarian relief silo!

Better metrics are coming. Stay tuned!

Peter Burgess

Sunday, July 25, 2010

Sustainability, Corporate Social Responsibility and the Pharmaceutical Industry

Dear Colleagues

On Monday (July 26th) I will attend a meeting at Fairleigh Dickerson University (FDU) to listen to some corporate folk talk about sustainability, corporate social responsibility and the pharmaceutical industry. It should be interesting.

I am not sure what to expect ... and in some ways I expect to be very disappointed. I hope not, but my expectations are low. Maybe after the presentation I will be able to write an update to show how much my opinions have been changed!


Sustainability is a "popular" subject, but I am never sure what is meant by the word. I see sustainability as a engineering construct, and in this construct very little in the modern economy is truly sustainable. In time, almost everything we do in our modern society will stop because the raw materials are no longer available. In most cases this generation can ignore the problem because we run out in the future ... but soon the future will be now!

Most people operate with the idea that "sustainability" is an accounting construct. In the business world a company can sustain itself as long as there is cash flow that will pay the bills. A company with a lot of cash can lose money for a long time ... but when the money is gone, then the company folds. The same is true of society ... and in the case of the US society the "system" has facilitated turning everything into cash that could be spent so that the society could sustain itself way longer than was good for its long term health.

In the international relief and development assistance sector "sustainability" is sometimes taken to mean having the money to do what the organization is aiming to do ... with the activity sustainable as long as someone is prepared to give money to fund it. This is not sustainable in my interpretation of the concept. Welfare is never sustainable ... but work for money may be when the work done is valuable for society!

If "sustainability" is an engineering construct ... then what metrics are going to help to guide decision making. I argue that people should be the focus of society ... and the community the entity where progress gets measured and gets reported. People have needs and people are a critical resource. People should be, more than anything else, doing things that will satisfy the needs of people, themselves included. Local trade and commerce is important ... not so much global trade which may be profitable for the organizations engaged in it but terribly damaging for local trade and commerce. A lot of happiness can be generated with activities that do not require huge investment and the consumption of all sorts of scarce resources ... but why bother when happiness is nowhere in any system of socio-economic performance measurement.

Corporate Social Responsibility (CSR)

If CSR was a big thing in the pharmaceutical industry there would be much less disease in the world. I have no idea what the pharmaceutical industry is going to say about its CSR efforts ... but I rather imagine it will be something about how much "free" product they deliver into the world's healthcare industry. This is good ... but my expectation is that the amount of this will be tiny relative to the total sales of the industry.

This is very bothersome. The sales of the pharmaceutical industry are very large with a big proportion going to markets where wealth is high, prices are high and the health situation relatively good. The pharmaceutical industry does little in absolute terms for the diseases that affect the poor of the planet.

The behavior of the big pharmaceutical industry as the global HIV-AIDS pandemic spread round the world was a disgrace ... with fight after fight to maintain very high prices for life saving drugs and to avoid at all costs the competition of "generic" manufacturers. During the Clinton administration the pharmaceutical industry and the EximBank came up with a cockamamie scheme for drugs purchased by South Africa from US pharmaceutical companies for HIVAIDS programs to be financed by EximBank at full price and full interest! The procurement program more recently organized by the Clinton Foundation and now in place to make drugs affordable in developing countries seems to be using donor funds to protect pharmaceutical company profits more than anything else.

I know something about what might be considered reasonable profits. I base this on the capital employed to generate profits. Mostly modern corporate decision makers base their profit expectation based on stock market expectations ... a metric that diminishes the potential of long term excellence in the sector.

How pharmaceutical CSR fits into this, I do not know. It will be interesting to find out!

Pharmaceutical industry.

The pharmaceutical industry can never be "sustainable" ... the industry is a cost that must be paid for by someone ... some organization ... that has money.

The industry argues that high profits are required in order to attract investors so that the industry can engage in high cost research. This argument is widely used, but is not in any way valid. The industry does not invest to do research and improve healthcare, but it allocates resources to make profit ... and attracts investors interested in profit and not in healthcare.

With a paradigm shift in metrics, the industry could position itself not to be the most profitable in the healthcare sector, but to be the most effective in the healthcare industry ... doing things that get the most value for money from healthcare moneys.

The pharmaceutical industry invests heavily in R&D ... but it also used large funding flows from institutions like the National Institutes for Health in the USA and the equivalent in other parts of the world. Are they efficient researchers? Not sure ... but my impression is that the answer is "maybe not!".

I am impressed with what can be accomplished by modern medical science ... but I am less than impressed by the way the profit motive has taken over from medical professionalism. I believe in enterprise and investment ... but the profit motive is not the only thing that motivates for efficiency and allocation of resources. The value of a good medical outcome is way more than the corporate profit arising from providing the medical care and the associated drugs and supplies. But value is ignored by the pharmaceutical industry ... and profits are not. In the end the pharmaceutical industry and its advocates have a huge responsibility for the rather pathetic state of global health.

Europe and the United States on downward slide to 3rd world status!

Dear Colleagues

Erle Frayne Argonza from the Philippines wrote the following. It reflects almost totally my own perspective about the failing socio-economic performance of the United States and Europe ... and the terrible misinformation that dominates both the political and economic dialog. Its URL is
Posted by Erle Frayne Argonza on July 24, 2010 at 3:20am

Magandang gabi! Good evening!

It’s dusk time as I write, and this dusk at a time of intensifying monsoon rains seems to bode images of a grim future for the West at large. The European Union or EU members and the USA, the gigantic pillars of the global economy, are particularly in dire straits as they have entered the zone of flat growth and perpetual recession.

As already tackled by me in diverse articles, the East is surging forward bringing life to the global economy as a whole. In contrast, the West is spiraling downwards, and the strategies their stakeholders are putting into place to arrest the downslide are at best palliative. As the East continues to surge upward, the West continues to stagnate and decay.

After World War II, both Europe and America embarked on massive infrastructures and heated industrialization that saw both economies dominating the global economy’s wealth production. The result of that was an OECD producing 60% of Gross World Product or GWP for some decades (today that’s down to 40% of GWP and will still go down).

That was the situation back then. By the 1990s, the situation had been badly reversed as a result of liberal economic policies instituted in the previous decade (80s). The rise of a ‘virtual economy’ dominated by predatory finance was instrumental in the West’s massive de-industrialization, decay of relatively unattended infrastructures, decline in science & technology research, and neglect of the transport sector (only Japan & Germany were actively pursuing maglev railways).

By the early 1990s yet, certain experts among economists and sociologists in America began echoing alarming notes about the possible downslide of the USA into a 3rd world country should the economic decay, such as that of relatively unattended infrastructures, be allowed to continue till past 2010s.

In the late 1990s, my own circle of political economists in Manila (Sunday Kapihan/Independent Review) saw such a possibility ourselves as we consolidated the data made available to us thanks to the internet. By 1998 all fellows of our circle were convinced of the catastrophic direction that the USA and Europe were plunging themselves into, which could begin with a depression past 2005 and a thirdworldization by 2010s (both have been hit by recession this decade as a matter of fact).

When Katrina struck the USA and when those floods struck Europe just a few years back, and the same free market policies stubbornly remained in place, I knew the downslide would turn out to be irreversible. The fate of New Orleans, with its residents lining up for food akin to a depressed city, revealed an appallingly decayed 3rd world city inside the USA which, to my mind,
is but a fractional tip of a gigantic iceberg that are America’s decaying cities on the way to 3rd world infamy.

If, for instance, just about 55% of the top 700 cities of the USA will be so badly decayed by 2015 and be declared as 3rd world or ‘developing cities’, then we know more or less that America had catastrophically seen its worst state. With 97% of U.S. population living in cities (urban), likewise will the whole of the USA be declared as a ‘developing economy’ as early as 2015.

That is, again, if the destructive ‘virtual economy’ policies will not be taken down and reversed sweepingly. As I’ve declared in previous articles before (when Obama was still campaigning for the presidency), America must quickly return to a New Deal-type policy regime: interventionist, with great stress on revivifying infrastructures, revitalizing transport R&D (railways, shipping, etc), upscaling science & technology investments (including rockets), returning heavy industries (revive steel and many dead manufactures), and ensuring agricultural productivity.

Europe is not far behind such near-catastrophic downslide of the USA, just to remind our friends in Europe and the globe. Decisively institute interventionist policies in the continent, regulate the financial-banking sectors (criminalize predatory finance), and revivify social policy that were hallmarks of a once strong and mighty European economy.

And there’s no better time to act then now. Failure to act soon, by stubbornly instituting the palliatives (e.g. bailing out failing big banks, semi-regulating stock exchange), will be the best sure-fire formula to see a rapid thirdworldization of the West.

Before long, some messianic mad leaders in both continents would be drum-beating their being "stubbed behind the back” and generate new Hitlers and Bonapartes in their backyards. Act now, Western peoples, to avoid this eventuality from ever taking place at all.

[Philippines, 21 July 2010]
I am not a defeatist ... and I do not subscribe to the idea that all is lost. I am old enough to know something of the stories of World War II and how many thought that Hitler had won and that the UK would quickly be defeated. Winston Churchill had other ideas and leadership made a huge difference so that in due course the war was won.

I believe that Obama has the potential to be an amazing leader ... but the experts in politics and economics are unlikely to serve him well. This is not entirely their fault, since they have been brought up on metrics that make no sense. How GDP growth can be the ultimate holy grail of economic performance is a nonsense ... how balancing the budget of any entity should take priority over balance the budget of society is equally farcical ... but it is the way we do the metrics and keep score.

I see the economy in engineering terms as much as in terms of economic mathematics. There are needs and there are resources. If the world's intellectual, financial and material capital were optimized to satisfy needs there would be amazing global progress ... but who is working on this? Nobody!

On the other hand the corporate world is sitting on all sorts of possibilities to make the world a better place ... but only allocating resources to those activities that are going to make the company profits. Really good things that do not make much profit are pushed aside ... because doing good is not part of the score-keeping that people take into consideration when valuing and buying corporate stocks. Value accounting and reporting needs to be as much in play for corporate performance as profit accounting.

Corporate Social Responsibility ... CSR ... would make a huge difference, starting off by getting corporate organizations to pay the right amount of tax. Governance at all levels has to be funded ... and the corporate world should be part of doing this funding. There needs to be scorekeeping that measures this and reports on it.

Government decision makers rarely do what is right, but mainly what is convenient ... for re-election or for a personal agenda! The inefficiency of government is fodder for humorists ... but it is also a disgrace and needs to be addressed. Again, the lack of appropriate scorekeeping makes it possible for political behavior to be anything the politicians want it be!

Britain did not lose in the battles of World War II ... a few good decisions and the world may be surprised how well the United States can perform in this evolving 21st Century. The same goes for Europe.

Both Europe and North America have a vast pool of intellectual capital ... a combination of leadership and a paradigm shift in the way socio-economic metrics are done and people around the world may well be surprised.

I hope so! Stay tuned!

Peter Burgess

Saturday, July 24, 2010

GRI reporting on Human Rights, Gender and Community

Dear Colleagues

A LinkedIn colleague asked the question "How is global reporting on Human Rights, Gender and Community going to change?" and referred to the pdf report of the Global Reporting Initiative (GRI) working group on human rights of September 2009.

The idea that the UN is taking an interest in the quality of corporate reporting is encouraging ... but I do not hold my breath that very much is going to change. The following is my comment on the matter.
The UN's initiative to improve reporting is to be commended ... but getting organizations to do a better job of reporting has very big limitations. I do not want to see less effort on improving what organizations tell the world, but I will argue that it is unlikely that organizations will do anything in the area of reporting that is of detriment to themselves. Mostly organizational misinformation is a very petty infraction compared to the profit performance that can be put at risk by really good organizational information.

Decades ago I was faced with similar issues as a young CFO doing computerization and centralizing data in the corporate environment ... nobody wanted the CFO to have control of the data since this is what everyone manipulated for their own benefit! Every manager wanted to be able to report what suited themselves and not have the central staff getting the right information.

Today I see the UN's Global Reporting Initiative (GRI) as being well intentioned ... but not likely to achieve very much. On the other hand, just as the computer transformed the inner management workings of the corporation, I see modern technology as having the capability to change how socio-economic reporting gets done. We have the opportunity to get data flows about organizational behavior not from the organization but from people affected by the behavior. Everyone on the planet that has a cell-phone can be the data originator ... and that will be paradigm change we can benefit from.

At the moment there is no "infrastructure" to manage dataflow of this scale ... but this is a management and money issue and not a technology issue.

I am committed to getting paradigm shift about data ... its acquisition and its analysis ... and am hopeful that something pretty amazing is going to emerge quite soon. Stay tuned.

Human rights ... gender ... community! These are all fashionable words and important ... and I would argue the community perspective needs to be in play as much as the organization. What goes on in an organization is one thing ... what goes on in a community is another ... and what the "non-organization" sector does in these areas may be an order of magnitude bigger than the organization, and by this I refer to military and para-military entities, political and security forces, and indeed the broad impact that totally failed economies have on these matters. This needs to get reported outside and independent of the organization view that the GRI encourages.

Again... the GRI is a step and useful ... but the big need is community perspective dataflows, and this is not part of GRI as far as I know.


Peter Burgess
The UN is an interesting organization ... a little over 60 years old, and maybe ready for retirement. Over the years, the UN has taken on all sorts of work, and in general has not done a particularly good job at many of them. This is a management problem ... but there is no top level organizational entity that has either the mandate or the interest in doing the reorganization needed.

I bring this up because it has been suggested that an initiative like Community Analytics (CA) should actually be done by government or the UN. This would be a big mistake, because the need is for community perspective analytics to be able to look at all aspects of the socio-economic activities and the organizational framework to understand performance and do something about it. Government and the UN are part of this framework ... and self analysis is rarely as objective as it needs to be!

Peter Burgess

Friday, July 23, 2010

World monopoly ... it is worse than we think!

Dear Colleagues

I like the blog that Polly Cleveland writes ... it is thought provoking. This item caught my attention today.

Cornered: The New Monopoly Capitalism and the Economics of Destruction, by Barry C. Lynn

This is the scariest book I’ve read since The Day of the Triffids. Back in the ‘70’s, when I worked on my dissertation, US business monopolization seemed bad, but not getting worse. Spinoffs and breakups balanced mergers. So I forgot about the problem. Since then, as documented in Cornered by financial journalist Barry Lynn, global monopolization has rapidly returned us to a new age of robber barons. A few items:
  • Some 30 years ago, one of my husband’s students landed a dream job at the DuPont labs in Delaware, doing cutting-edge research in his field of photosynthesis. Today, the DuPont labs have shrunk, and he’s reduced to applied research on sugarcane waste.
  • A medical equipment inventor has developed retractable needles and needleless syringes that greatly reduce blood-borne infections. But as told in the latest Washington Monthly, Dirty Medicine, he cannot sell to US hospitals–because the market is monopolized by a handful of giant group purchasing organizations, or GPO’s, which Congress exempted from antitrust in 1986. The GPO’s in turn have a comfortable kickback deal with medical supply giant Becton Dickinson, which controls 70% of the US syringe market.
  • Remember the great 2007 pet food recall? It turned out that most of the US pet food business depends on a single packager. That company purchased Chinese gluten, which had been doctored with melamine to increase the apparent protein content. Some 150 brands were contaminated, ranging from cheap Wal-Mart brands to luxury brands. Some 50% of pet food is sold through Wal-Mart.
  • If you buy eyeglasses, you may think you’re in a competitive market, with Lens Crafters, Pearl Vision and others. In fact, almost the entire worldwide optical business, from manufacturing to sales outlets, belongs to a single giant Italian firm, Luxottica.
  • Two giant distributors, InBev of Belgium and SAB of South Africa, control the world beer market—including famous brands like Budweiser, Michelob, Stella Artois, Kirin, Tsingtao and Corona.
  • And don’t forget those six TBTF banks (“too-big-to-fail”)—Bank of America, JP Morgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley. These now control assets equivalent to over 60% of GDP. B of A, JP Morgan and Wells Fargo between them hold 33% of US bank deposits. The megabanks arose from a blizzard of mergers over the last 20 years—topped off, after the 2008 crisis, by mergers forced by the US Treasury and the Federal Reserve.

As Barry Lynn reports, not only the scale but the structure of monopoly has changed. Back in the 1970’s, big oligopolies like the auto and oil industries were vertically-integrated, meaning they produced their own inputs, and controlled their sales. Today’s giants take the form of horizontally integrated trading companies like Dell Computer, buying their inputs all over the world. The auto companies now operate as a virtual monopoly, sharing all their suppliers.

Worse—which is what Lynn means by “the economics of destruction”—monopolists are often sole buyers as well as sole sellers. In that position, they squeeze their workers and suppliers, often at the expense of quality and variety. They cut wages, jobs and benefits. Retail chains force small suppliers out of business, and tell larger ones how to make and price their product. For example, Wal-Mart has told Coca-Cola what artificial sweeteners to use in its diet sodas, and has told Levis what fabric to use in its Jeans. Manufacturers cut R&D and buy up patents—not to make new products but to suppress innovation and competition.

Monopolization creates instability. This is evident in agriculture, where once independent farmers now operate as subcontractors to Tyson or Cargill or ADM or (now Brazilian-owned) Swift, raising genetically uniform corn or pigs or chickens according to prescribed recipes. A new blight or growing resistance to antibiotics can wipe them out. The TBTF banks epitomize instability.

Monopolization threatens political freedom. A friend’s husband works for the B of A. We recently suggested that she might contribute to the campaign of a promising young Democratic congressional candidate. She shook her head. Just as English lords monitored their tenants’ votes for Parliament, the bank monitors employees’ contributions.

Lynn traces the rush of monopolization to the “free-market fundamentalism” ideology of the Reagan era. The prophet of this ideology, Milton Friedman, proclaimed that government regulation impedes “efficiency”. So out went anti-trust enforcement, slowly at first, but gaining momentum. Lynn views President Clinton as the worst offender, allowing and even encouraging mergers not only among the banks, but in the media, where about fifty big firms quickly consolidated into six giants.

Lynn, libertarian by inclination, offers little remedy outside renewed anti-trust enforcement and a serious attention to checks and balances. For a better appreciation of how the tax, subsidy and regulatory systems favor the top one percent, read David Cay Johnston’s Perfectly Legal and Free Lunch. Lynn also misses how monopoly depends on control of natural resources including prime locations—like bank corners and auto strips. What is Wal-Mart, after all, but great swaths of real estate at major highway intersections? But let’s hope Lynn’s alarm summons up a new generation of trust-busters.

Meanwhile, Lynn should make us all acutely monopoly-conscious in our personal lives. Toronto-Dominion (TD) Bank recently gobbled up our local Commerce Bank. So we’re moving to a surviving local bank, Apple Bank for Savings. And no more Heineken! We’re switching to Brooklyn Lager.
This dialog is about important issues ... but the problem is that these matters are being reported as part of journalism rather than being part of a serious movement about meaningful metrics. Over and over again I see or hear thoughtful people working on very important matters with considerable competence ... and yet they have near zero traction in any of the places where decisions are being made.

I made the following comment on their blog ... not sure whether it will get accepted or be "moderated out". We shall see in due course!
Peter Burgess
July 23, 2010 at 2:30 pm
Dear Colleagues

The world is a mess … but as most everyone tells me, it always has been! My position is that the world would have been over a long time ago if good people had not worked very hard to keep things on track and to stop completely awful behavior in check.

In this 21st Century we have some things going for us. The world of science and technology has delivered to us some awesome knowledge and the capacity to do some amazing things. As we know from the experience with nuclear knowledge, this might be power or it might be bombs … so good decision making is needed and guidance about how the best decisions can be made.

I argue for more meaningful metrics. Some of the power of technology should be deployed to give us much better metrics about the state of society, and the decisions being made within this society. I argue that the power of information technology is about one million times greater now than at the beginning of my career … so why do we not have really great metrics about socio-economic performance.

My experience with metrics has been that good data usually tell me something I did not know … or did not expect. More decisions need to be based on data and not so much on opinions … especially political opinions. We should have access to data that are easy to understand and very meaningful … but it is a data system that is needed not just a big pile of more and more disorganized data. This presupposes that we know what we want … and I would observe that many of us do know what we want, and it is not what makes the most profit for the oligarchs of the world and their surrogates. Certainly we have to start measuring something I call value, and not just measuring money profit and driving everything from that perspective. Value based metrics can change the way we keep score … and in turn change the way we play the game.
I want, more than anything else to be able to say that we have deployed some easy to use meaningful metrics that are becoming widely accepted ... and as a result those with power are starting to change behavior. I know how powerful metrics can be ... and maybe so do the people who have most control over decision making in the system.

Stay tuned

Peter Burgess

Wednesday, July 21, 2010

Paradigm shift: Scorekeeping and intermediate investment vehicles!

Dear Colleagues

I picked up on this post for some reason ... and initially was not sure why it was. Then it clicked. Maybe there is a pattern emerging. This is the post ... its URL is:
Evolvence launches third India-focused fund of $400 Million
By PTI, Wednesday, 21 July 2010, 03:27 Hrs

Mumbai: Dubai-based alternative investment firm, Evolvence Capital, has announced the launch of Evolvence India Fund II-its third India focused fund. Evolvence India Fund II, which is a private equity fund of funds, is targeting a corpus of $400 million from institutional and high net worth clients from across the globe, a press release issued here said.

The fund aims to make select investments in the mid-market growth capital segment in the country's private equity market through fund investments, co-investments and direct investments.

This new fund from Evolvence Capital follows the successful closing of Evolvence India Fund I in 2007 and Evolvence India Life Sciences Fund, a healthcare and life sciences fund in 2008, the release said.

Evolvence India Fund II will invest with high quality private equity fund managers and established entrepreneurs in India and may selectively consider investments in secondary private equity opportunities, it said.

"Evolvence is committed to India and has been actively investing in this market since 2004. Our investors recognise India's potential and we strive to offer them exceptional returns by identifying attractive investment opportunities in the country," Evolvence Capital's CEO, Khaled Al Muhairy, said.
There is both bad news and there is good news.

The bad news is that the global capital markets are encouraging economic and social bad behavior in order to maximize profit and stockholder return. The last thirty years has seen many substantial changes in the way the global economy works, but the allocation of resources for investments has done less for social good than it has for the concentration of private wealth. The use of analytical techniques and the mass production of MBAs that understand simple financial analysis has made the business of banking better paid than the profession of engineering ... or worse, the business of health better paid than the profession of health ... or the business of law better paid than the pursuit of justice!

Most telling is that science and technology has become amazingly powerful ... but the number of people who are poor and hungry around the planet is at record levels. I use the figure of 4.5 billion people today who are poor and hungry ... not at all an acceptable achievement!

There is good news. The good news is that the capital markets and major decision makers would probably behave in a very different way if: (1) there was a more appropriate system of metrics; and, (2) there were investment vehicles that facilitated the allocation of resources in ways that would be more beneficial for both society and the investor.

This is what I saw in the post ... I saw some innovation in the post about the Evolvence India Fund II ... I saw a modest indication that there is interest in investment vehicles that are aiming to do different things.

Some people are engaged in innovation to have more impact on society ... but the wave is quite small. I am reminded of the Acumen Fund which sometimes describes itself as being "patient capital" ... but I am also reminded that the scale of innovation compared to the rest of the capital market is very very tiny.

In my youth I played rugby football ... I was a full-back ... the last line of defense! I was ... am ... quite small, but my tackling was very good. A small person can tackle ... pull down ... a fast moving big man if you do it right and use the right leverage. I used to tackle very low ... stop the ankles and the rest of the player is not going anywhere! Leverage!

So where is the leverage in the modern capital market? I would argue that the leverage is in the metrics. We have got to start measuring the right things, and do it everywhere, quickly and at low cost. If there are data about social performance and profit performance ... both ... and the profit performance is the same, but one has good social performance and the other does not, I think it is fair to say that the one with good social and profit performance will be valued more favorably. I would love to hear an argument that this is wrong ... but I am fairly certain that this is the way the capital markets would behave.

I do not know what the relationship would be between social good and profit good ... but that is what markets sort out. My guess is that the relationship is complex ... and that social good would have considerable value in the capital markets!

Intermediate investment vehicles have become an important part of the capital market in recent years ... and these could be another component of leverage. The Microfinance Investment Vehicle (MIV) is relatively new and has become a multi-billion segment of the capital market in just a few short years. A range of investment vehicles that embrace social performance as well as money profit could rapidly transform the way capital money resources are allocated to important activities that are needed in our modern global society.

From what I know of global economics ... the metrics make sense. With the information technology now available, putting the metrics together should not be an impossible task.

Stay tuned. You might be surprised!

Peter Burgess

Sunday, July 18, 2010

Ghana rethinking loan for housing after challenges from think tank professionals

Dear Colleagues

Franklin Cudjoe, the Executive Director of IMANI in Ghana is very pleased about this outcome ... and so he should be. I have said for a long time that Africa would be well served if the political people would listen to Africa's professional people, many of whom are well qualified to advise and deserve to be listened to. It is about thirty years ago since I realized to my considerable embarrassment that my local colleagues in Africa were doing excellent analytical work ... better than mine ... and getting neither much money nor recognition for their work. Nothing of importance changes fast, but slowly the African professional class is emerging, and I hope this is the beginning of a major paradigm shift. It has taken a long time!
Bravo! Ghanaian Government Listens to Think Tanks After All

Not often do ruling governments in Africa get praised for listening to voices of reason on important national issues. Contrition on the part of most African and particularly Ghanaian politicians is a rare commodity indeed. So, for the ruling Ghanaian government to have mustered courage to withdraw from Parliament, a draft loan agreement on the largest state-sponsored housing project in the history of Ghana (worth US $10 billion), even for all its gaping flaws deserves attention and applause.

We do hope however, that when the amended draft is reintroduced in Parliament, it will reflect our initial concerns first expressed in the articles below and summarised as follows;
  • Should the state be directly involved in providing houses to Ghanaians?
  • Shouldn’t the state facilitate loan acquisition for private sector building contractors?
  • Why should we sink US$ 10 billion into a housing project when we have general infrastructure deficits requiring US$2 billion annually to fix?
We at are IMANI are very pleased that through our pre-emptive analyses and public outcry on several media platforms, later to be supported by like-minded think tanks such as DI, we provided ‘fodder’ for our Parliamentarians to critically examine the draft loan agreement on the housing project.

We will continue to urge the ruling government and governments-in-waiting to pay attention to reasonable voices of critique on all national issues (petroleum revenue management included) as they strive to provide leadership for all.

Franklin Cudjoe,
Executive Director, IMANI.
Courtesy of IMANI Center for Policy & Education, a think tank ranked 5th for intellectual influence in Africa by Foreign Policy Magazine in 2009, and, an independent, pan-African, analysis platform.

Time Line on the STX Korea-Ghana Affordable Housing Project
IMANI Alert: How Affordable is the STX-Ghana Affordable Housing Project?
Tuesday, February 02, 2010

IMANI Special Report on the STX-Ghana Deal
Monday, July 05, 2010

Government withdraws controversial STX agreement from Parliament

IMANI, Danquah Institute Question US$10 Billion Korea Deal

IMANI Blasts NPP, CPP Over $10bn Korea Deal

IMANI slams GREDA on STX 'U-Turn'

Long wave economic perspective ... great technology but pathetic performance.

Dear Colleagues

Once in a while it is worth stepping back and looking at the long waves of socio-economic history.

I was thinking about the BP oil spill and its impact on the population of the Gulf States ... and then thinking that some of the American public expects that "government" should take control so that this never happens. This raised a question about the socio-economic history of the USA and the question "What would the stock market be valued at if the EPA rules had been introduced in the 1870s rather than in the 1970s?". I would guess that the Dow would not have broken 1,000, let alone 10,000 if the economy had been subject to EPA rules since the emergence of the industrial economy.

But then I thought that if politicians and business leaders were really making good decisions rather than spending most of their time scratching each others backs and figuring out what is optimized self interest, then perhaps the Dow would be around 20,000, or even more.

The progress in science and technology over the past fifty years is amazing ... but the performance of the corporate and political world in using this for public good is dismal. My one liner about information technology being a million times more powerful than when I started my career and information itself still in the stone age is a manifestation of quite pathetic leadership over several decades.

Hopefully a younger generation will "get it" and set about some reform that will enable meaningful data to be used to improve decision making and socio-economic performance ... hopefully these metrics will embrace value as well as profit. With good decision making and good allocation of resources and truly fair trade the productivity of society can be improved and some good progress made from poverty towards prosperity and widespread improvement in the world's quality of life.

Government needs to get out of the way ... but at the same time business leaders need to ensure that their decisions are responsible not only for the corporate owners and managers but all the stakeholders including customers, employees and society at large.

In recent years government (courtesy of convoluted legislation and regulation only a lawyer could love) has been getting in the way, but worse, corporate decision makers have been milking the system to serve themselves and their corporate stockholders at the expense of employees, customers and society at large on a scale that is arguably an order of magnitude worse than the era of the "robber barons!"

It is time for value accounting to be adopted. Stay tuned.

Peter Burgess

Friday, July 16, 2010

New York Center For Conflict Dialogue Celebrates Mandela Day

Dear Colleagues

This is an article from the web ... Africa Reporters Newspaper Online ... URL about an event in New York to honor Nelson Mandela organized by the New York Center for Conflict Dialog.

The event was very timely ... the apartheid era in South Africa would not have ended without amazing efforts of many, many people ... at considerable cost, but very much worth it. People forget very quickly how much sacrifice there had to be over a very long time to win this battle ... and we should NOT forget!
Africa Reporters Newspaper Online - View Current Issue
Friday, 16 July 2010 15:40
New York Center For Conflict Dialogue Celebrates Mandela Day with new documentary on Anti-Apartheid Divestment Movement
Written by Obi Ogadi

The New York Center For Conflict Dialogue, together with the American Friends Services ommittee, Street Corner Resources Inc. in Harlem and the Harlem Clergy and Community Leaders Coalition with campaign support from Active Voice, Clarity Films and major funding from the Ford Foundation, will host an exclusive screening of Have You Heard from Johannesburg: Bottom Line at The Adam Clayton Powell Jr. State Building 163 W 125th Street, 8th Floor on Friday, July 16, 2010 at 5:30pm.

The documentary will be followed by a panel discussion featuring:
  • David Wildman- Executive Secretary, Human Rights & Racial Justice, United Methodist Church, Board of Global Ministries,
  • Donna Katzin- who appears in the film and is Founding Executive Director of Shared Interest, a social investment fund that directs resources to South Africa’s lowest income of color,
  • Pastor Vernon Williams- Harlem Community Leaders and Clergy Coalition,
  • Sister Ivory Ann Black II Wolleta Sellassie- Executive Director, Afrikan Unity of Harlem,
  • Dr. Delois Blakely- Ambassador of Goodwill, Africa,
  • Ebrahim Ndure- Columbia University Pan African Student Movement,
  • Vincent Booys- A South African Activist whose nephew was killed by a stray bullet in the 1976 uprising during the apartheid era.
The Panel Discussion will be moderated by Spencer Chiimbwe - Coordinating Chairman, New York Center For Conflict Dialogue.

The film is part of a new seven-part documentary series that tells the story of the global movement to end apartheid. The screening and related activites celebrating Nelson Mandela Day come at a particular relevant time as the United States District Court for Southern District of New York considers a crucial decision about the liability of companies for apartheid era crimes.

The Bottom Line tells the dramatic story of people around the world who refused to let business with apartheid South Africa go on as usual and shows how international grassroots economic boycotts against Polaroid, Shell, Barclay’s, General Motors and others doing business in South Africa helped bring one of the world’s most brutally repressive governments to its knees. “A clear and rousing study of how economic sanctions, initiated by grassroots protests, can have a significant political effect – especially when the boards of corporations find themselves in a forced position of embarrassment” –Time Out London.

The Have You Heard from Johannesburg series is produced and directed by two-time Academy Award® nominee Connie Field, an American filmmaker whose previous work includes The Life and Times of Rosie the Riveter and Freedom On My Mind. The series is the first attempt in any medium to pull together the many threads of global anti-apartheid action that formed the international movement.

With a story that spans 12 countries and three decades, the dramatic series is being broadcast around the world in 2010 and is the basis of a global campaign Field hopes will inspire audiences to think about the legacies of the movement today and help groups reflect on long-term activism and boost current social justice efforts. This global project around the Have You Heard from Johannesburg series is funded by the Ford Foundation. The organizers of the Project are working with NGOs, community-based groups, and others in the U.S., South Africa and internationally to bring these untold stories to communities around the globe.

The Center for Conflict Dialogue is one of these groups and ties this screening to the 67 minutes campaign, symbolizing the 67 years since the former president first started fighting for human rights and the abolition of apartheid. Different community groups including the Harlem Streen Corner Resources, American Friends Services Committee, Harlem Clergy and Community Leaders Coalition and student groups will go into selected places and streets in Harlem and do community service earlier in the day, before the documentary screening. The participating groups will gather at the State Building to participate in making symbolic hand imprints, which
is emblematic of Mandela’s commitment to positively impact people for generations. The event calls upon each of us to give 67 minutes of our time to help others, rooted in the idea that, like Mandela, each individual has the ability to make an imprint and change the world around them for the better.

The Mission of the New York Center For Conflict Dialogue is to facilitate and coordinate platforms on which thematic areas of dialogue are addressed with a view to educating the communities and resolve conflict.

• SNEAK PREVIEW EVENT: Spencer Chiimbwe or + 1 646 730 0500
• CAMPAIGN: Sahar Driver or 1.415.487.2000 (U.S.A.);
campaign information at
• DOCUMENTARY SERIES: Connie Field at ;
information and trailers about the series at

BP, Obama and the Economics of Disaster

Dear Colleagues

This is an interesting essay ... some of which I agree with, and some I do not.

I agree with the idea that the bio-ecology of the BP Gulf has a huge value ... I consider the bio-value to be considerably higher than these experts, maybe because I spend a few years of my corporate career trying to build a business in the shrimp industry and the health of the coastal shrimp nursery grounds was absolutely critical to our company's profit performance. When the nursery grounds are shot ... the shrimp industry is over! But while shrimp was my business back then, I learned also about a lot of other marine resources ... and the damage being done is a lot more serious than anyone in the media seems to understand.

My guess is that the Earth Economics people are substantially underestimating the economic impact of damage to the bio-ecology ... not only because the questions about discounting, but simply because a lot of people choose a low money vocation because they get high value from the life-style. In the money economics calculation the value part of the quality of life equation is left out ... and the answer is massively wrong. If you think in terms of the answer being out by a factor of three ... that would probably be about right!

My calculation of the stock market value of BP at the time of the accident is about the same ... around $200 billion ... quite small compared to the socio-economic damage that the accident has caused. This is a total failure of corporate metrics and financial thinking to understand risk and to manage accordingly. In equity ... the whole of corporate BP should be put in escrow for the benefit of the people of the BP Gulf region.

As to what engineers can do ... I would argue that modern engineering is amazing. It has taken nearly three months for the engineers to come up with a "stop the flow" solution ... but it seems they may have succeeded. Well done. But the responsible executives that should have been managing risk and ensuring rapid response in the case of disaster clearly chose not to be adequately invested in risk mitigation solutions. In the short run the stockholders got profits ... in the longer run maybe the stockholders will find themselves losing their company!

Obama did right, in my view, by leaving BP responsible for engineering. Is there anyone in Washington and the Government bureaucracies that does engineering with any seriousness? The BP oil engineers ... and the other oil industry engineers are good ... though they do not think very much about the strategic financial and risk issues of their industry. Nor do they need to!

Society does not need Washington to take over the oil industry ... but it does need to make sure that legal obstacles to a correct "making whole" in the BP Gulf States are removed. Bottom line, expect that BP will invoke all sorts of legalities to remover themselves from responsibility. The law is on BP's side, essentially because most law is written with powerful special interests helping to do the writing!

Getting people to understand the cost of oil needs to happen ... but how. $4.50 a gallon at the pump in the USA has happened ... but low economic performance of the economy and the price is down to $3.00. What is the total cost of this product ... is it $1.00 a gallon or is it $15.00 a gallon. I don't think that gas should be taxed to make it expensive ... but I do think that the oil companies should be required to have a funded emergency pool so that disaster can be handled ... and to the extent that the pool is not funded, the government would tax punitively so that companies are encouraged to fund the pool. More on this another time.

I like this article ... I was a student of Roy Harrod a long time ago!

BP, Obama and the Economics of Disaster
Friday 16 July 2010
by: Max Ajl, t r u t h o u t | Op-Ed

The unceasing dribble of bad news from the Gulf of Mexico has been running before our eyes for weeks now: dead plankton; hypoxic zones looming and worsening, the product of massive methane releases into the Gulf waters; withered marsh grass; dolphin carcasses. This ruin is plenty bad on its own terms. No one wants to live in a filthy post-industrial wasteland. You don't need to read metaphysical or transcendentalist philosophy to understand that clean, sparkling, azure seas rife with life are preferable to seawater lacquered with oil and peppered with Styrofoam and the rotting corpses of sea mammals. Everyone - almost everyone - knows this instinctively.

But a healthy ecology does a lot more than make the world aesthetically enchanting. When marsh grasses absorb the tidal swell from hurricanes, they prevent coastal communities from being destroyed. Marsh plants also absorb CO2 from the atmosphere, as does plankton. When those marsh grasses and plankton are damaged or destroyed, there will be more atmospheric CO2, and human beings will feel the effects of that CO2. Hurricane storm surges will hammer coastal cities previously protected by vegetative buffers much harder, and in a warming world, the largest storms will come far more frequently. This destruction will cost money to fix - money that would not have been spent if the oil had never been spilled in the first place.

The Mississippi Delta provides climate stability, food, furs, habitat, natural waste treatment and hurricane protection for its inhabitants. More than 90 percent of these benefits come from coastal wetlands, which can include both freshwater and saltwater marshes, tidal bays, estuaries and cypress swamps, and their value adds up to a ridiculously large sum.

Researchers from Earth Economics, a think tank focused on applying economic analysis to ecological issues, recently compiled a rough-and-ready estimate of that sum. They found that "The Mississippi River Delta ecosystems provide at least $12-47 billion in benefits to people every year. If this natural capital were treated as an economic asset, the delta's minimum asset value would be $330 billion to $1.3 trillion," assuming a discount rate of 3.5 percent a year.

The discount rate is slightly abstruse, but deserves a bit of an explanatory detour. The rate refers to how we value the present relative to the future. In that way, it is inversely related to compound interest. The National Oceanic and Atmospheric Association (NOAA) explains that, "Compounding measures how much present-day investments will be worth in the future, discounting measures how much future benefits are worth today."

So, how do we value the well-being of future generations as compared to those currently alive? And to what extent will future generations live in a more affluent society, better able to mitigate the effects of current ruinous activities?

3.5 percent is a relatively "low" discount rate, meaning it values the future relatively highly, although many argue - I think correctly - that discounting is fundamentally immoral, because a long-enough time frame will make even a very low discount rate able to reduce ecological holocaust to a mere accounting problem. In that sense, discount rates are unacceptable, a "polite expression for rapacity," as economist Roy Harrod put it. Some economists agree. Others do not. (Economists never agree about anything).

Still, ecological economics is certainly far better than most other economic paradigms, in which, as the authors continue, "Ecosystem service values are outside the market. They continue to produce benefits unless an action like the spill damages them." It is when the birds are silent that we miss their songs.

Ecological economics relies on discount rates to consider and valorize ecosystems and ecosystem services, accomplishing in theory what is already descriptively accurate about the real world: that the economy is "embedded" in society and the environment, and the limits imposed by human society and ecology necessarily impose themselves on those operating as actors in a market system. Pretending otherwise would be folly.

As Hungarian economist Karl Polanyi put it, "A self-adjusting market implied a stark Utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness." Utopia for Polanyi was literal: a no-place, from the Greek, a place that could never exist.

The projected damages from the Deepwater Horizon explosion begin to suggest why Polanyi was correct. The team from Earth Economics notes that the pipeline leak is already harshly affecting the Mississippi Delta, although open water systems will also be polluted by the effusion, as well as the coasts of countries and states that ring the Gulf: Alabama, Mississippi, Louisiana, Texas, Mexico and Cuba. They add, "If we assume that the Mississippi River Delta will be the most affected region and that there will be a 10 to 50 percent reduction in the ecosystem services provided by the Delta, this amounts to a loss of $1.2 - $23.5 billion per year into the indefinite future until ecological recovery, or $34 - $670 billion in present value (at a 3.5 percent discount rate)."

Before the spill, BP was worth about $189 billion, or a fraction of the total measured value of the Mississippi Delta. Now, shareholders have dumped BP stock as projected damages mount, and the stock-market valuation of the company has dropped. It's at roughly $100 billion, while BP spokesmen bandy about rumors that their new "cap" has securely clamped down on the well. BP's assets, according to Fadel Gheit, an industry analyst, are "theoretically" worth $350 billion, while the projected clean-up costs run from $10 billion to $70 billion (although some high-end estimates put the costs at $560 billion). BP is getting walloped, but it is far from moribund. Soon enough, it will either (a) again be humming healthily along; (b) it will be temporarily taken over and managed by the federal government, which will restore it to fiscal health, socializing losses and the "costs" of trying to abate the damages to the ecosystem; or (c) it will be bought by another company in another massive illegal mega-merger.

None of those paths are acceptable. We know that other oil companies are operating their rigs in roughly the same manner as BP - they all had the same dim-witted emergency response plan. Even if we take the numbers on the ecosystem damages listed above as simply nebulous estimates, it's clear that catastrophes like the explosion aboard the Deepwater Horizon oil rig are literally intolerable. The paths above don't even target symptoms, and make further catastrophes inevitable.

Are there alternatives? Always. The best medium-term option would be a de-facto governmental takeover of America's energy infrastructure: massive gas taxes to bring gasoline's market-price to its real price of $15-or-so a gallon, which excludes the costs of CO2 emissions (with rebates for those without transportation alternatives), alongside government-built clean energy products funded using the proceeds from that tax. Energy production would be transformed into a socialized industry, like libraries or public hospitals. It might take a bit more than a nudge to bring Obama and a recalcitrant Congress around to that plan. People would need to flood the streets.

A more realistic option would be to dismantle BP, sell off its assets and use the money to repair the ecosystem to the extent possible - then set up a trust fund to be invested in green-energy products and distribute its profits to the injured parties. BP executives would see their pensions punitively garnished along with their houses and mutual funds, the misbegotten proceeds of BP's planet-killing added to the pot.

There is a precedent for this. Congress passed special legislation to target the bonuses of firms that received bailout money from the government, legislation which, recall, Obama proceeded to castrate nearly immediately. Congress has the power of taxation; it can tax what it wants and how it wishes to. The Supreme Court, under the impression that corporations are human beings, will certainly balk. Obama should pack it.

Perhaps the plan shouldn't stop at taxes. Perhaps we should be throwing oil executives into an Angola prison along with other thieves and murderers. As economist Dean Baker wonders aloud, "We still punish drunk drivers for their recklessness. This would be a good pattern to follow more generally. The executives of the major oil companies whose clean-up plans for the Gulf of Mexico involved procedures for rescuing walruses would find the matter far less humorous if it involved jail time. Is there any reason it should not?"

Baker's not an idiot. There's a reason we don't throw oil execs in jail. It's just a crappy reason: the defining measure of the American legal system is "special privileges for high-class criminals."

Does the electorate agree with such steps, steps which are not nearly as radical as $13-a-gallon gasoline taxes? Who knows? Pollsters don't compose surveys while looking at pictures of pelicans suffocating to death or oil workers burning to death, juxtaposed with snapshots of Obama in a harness with the reins in the hands of petroleum executives and financial firms. (Congress is worse, comprised mostly of marionettes who are almost incapable of independent action in the absence of a gale from below). Polls never ask, "Should we dismantle the oil companies and use the proceeds to transition to a green economy? Should oil company executives be thrown in prison? Is Obama, like every president, Republican or Democrat, in total thrall to large corporations, and if so, how should we deal with it?"

But polls do offer a few clues. They show that 62 percent of Americans think we're on the "wrong track." Forty-eight percent disapprove of Obama, while 45 percent approve of his presidency. The honeymoon is over, it's done. The only two things that voters dislike more than Obama's comportment in the White House are Congress - with 73 percent disapproval ratings, and 57 percent of respondents wanting a new representative - and BP. Right now, the American electorate probably likes Osama bin Laden and the National Socialist Party more than it likes BP. Two percent of the electorate has a "very positive" view of BP - they have probably been shorting its stock - and six percent has a "positive" view of BP; they probably were on Paxil when they were asked the question. Sixty-five percent want "more regulation" of the oil industry.

So what's the Obama administration doing? Well, the Mineral Management Service issued a permit recently to the Bandon Oil & Gas Corporation for a new offshore oil well some 50 miles off the coast of Louisiana. Bandon applied for the permit in April before the explosion, according to the San Francisco Chronicle. Obama is trying to impose a new moratorium on deepwater drilling. Who knows if our corrupt judiciary will toss it out. Increasingly large swathes of the population despise Obama, while their mirror image defends him religiously, perhaps amidst receding hope that Obama is retaining a miracle in reserve to repair his failing presidency and our failing country.

There are no miracles, just the slow grind of policymaking. If Obama wants to quiet his critics, perhaps he should do stuff instead of talk about doing stuff. Two-thirds of the population wants a transition to green energy. They don't like seeing the environment desecrated, seabirds floundering in hellish marshes and people incinerated on oil platforms.

Perhaps the oil companies should be disbanded and oil extraction categorically illegalized. Perhaps we can divert half of that $1 trillion defense budget to windmills, railroads, urban farms and an Apollo Project for green energy. That would be at least be a good start.

Does Obama get the depth of popular fury, or perceive the popular disappointment that will lead to a one-term presidency? Signs aren't good. Does Obama's bonhomie about the folks in Wisconsin needing jobs and $2 billion in "conditional" commitments to solar energy seem like enough to turn things around? It's like trying to stop a car going 60 miles an hour by using a toothpick as a roadblock. It's not an effort. It's a joke.

Writer Al Sandine comments on the "taming of the American crowd," the historical retreat from confrontation in the street. We better get untamed, and fast, because Obama isn't going to turn things around for us. We will have to turn him around, and give him a push, too. And we'd better do so before it's too late.

Why is adopting "best practices" considered "radical"?

Dear Colleagues

The recent article in IRIN PlusNews has the following caption for one of the web article images: "Expanded treatment could save lives and money in the long run". The article then goes on to describe the radical idea that simpler more cost effective approaches should be adopted ... to which my knee-jerk thought is "as opposed to the complicated costly approaches that are favored by many health experts and the international community including organizations like USAID and the Gates Foundation." The is the URL of the IRIN article with the text copied below.

But the article really is not about a cost effective approach with any useful information about this ... but is really part of a pitch for more money so that cost does not get in the way of WHAT?

According to the article, the five pillars of the new best practice are:
  • Creating a better pill and diagnostics
  • Treatment as prevention
  • Stop cost being an obstacle
  • Improve uptake of HIV testing and linkage to care
  • Strengthen community mobilization
Note the item "stop cost being an obstacle"!

Experience shows that expenses increase to consume the available money ... the experts in global health and the official relief and development assistance (ORDA) community are good at this business model ... but they are less good at rethinking what can be done with the money so that there is perhaps 10 times as much benefit delivered to those in need.

There is the item "strengthen community mobilization" and that is good ... but what I do not like about the community approach is the widespread expectation that community work by local people should be unpaid while all the people in the management of NGOs and ORDA institutions are paid very good salaries and many get wonderful pensions, travel allowances and all the rest. It would be good to have a database of the top salaries in the NGO and ORDA field to get an idea of where a lot of the money goes ... and then get a table of the per worker remuneration paid to community health workers in several thousand typical communities.

There are a lot of people in need of healthcare. Why is it that so few people can afford health care? Two reasons (1) healthcare has become clever but very expensive and (2) the vast bulk of the world's people are not very well remunerated. Both these reasons should be addressed in a serious way ... not by doing a study or holding a conference but by getting some practical changes in place and getting metrics to hold peoples' fee to the fire ... accountability!


GLOBAL: A radical new UNAIDS treatment strategy

JOHANNESBURG, 16 July 2010 (PlusNews) - UNAIDS has launched a simpler, more cost-effective approach to HIV treatment, aimed at simultaneously achieving two holy grails of the AIDS response: drastic reductions in AIDS-related deaths and new HIV infections.

The approach, dubbed "Treatment 2.0", aims to drastically scale up testing and treatment using current best practices and future innovations in antiretroviral (ARV) drugs and diagnostics. The prevention benefits of extending treatment to all those in need of it are based on mounting evidence that people on ARV treatment are much less likely to transmit the virus.

UNAIDS estimates that successful implementation of Treatment 2.0 could avert 10 million deaths by 2025, and reduce new infections by one-third.

A report on the new strategy has been released ahead of the International AIDS Conference, starting on 18 July in Vienna, where one of the hot topics will be why most countries will fail to meet the goals of universal access to HIV prevention, treatment and care by the December 2010 deadline.

Worrying indications that international financial support for the AIDS response is flagging will also be debated, but UNAIDS director Michel Sidibe is pitching the Treatment 2.0 approach as offering a potential solution to both concerns.

"For countries to reach their universal access targets and commitments, we must reshape the AIDS response," he said in a statement. "Through innovation we can bring down costs, so investments can reach more people."

Better drugs

Treatment 2.0 calls for the creation of "better" HIV drugs that would be less toxic, combine multiple ARVs into one pill, and be more tolerant of treatment interruptions, as well as quicker and cheaper diagnostic tools.

The current generation of ARVs have far fewer side effects than those of a decade ago, and some are available in fixed-dose combinations, but poor adherence quickly leads to the development of drug resistance and the need to switch to more expensive second-line medicines.

Second-line ARVs also incur a number of non-drug related costs, like laboratory monitoring and clinic visits, which are often enough to push treatment out of reach, but Treatment 2.0 urges all involved in fighting HIV/AIDS to "Stop cost being an obstacle".

Bernhard Schwartlander, Director of the Evidence, Strategy and Results Department at UNAIDS, told IRIN/PlusNews that short-term investments in developing and rolling out better ARVs could radically reduce non-drug related costs in the mid- and long-term.

A smart investment

Starting patients on treatment earlier is integral to the successful implementation of Treatment 2.0, and is in line with the latest guidelines from the World Health Organization.

Earlier treatment would require an initial increase in funding, but UNAIDS argues that the reduced need for hospitalization and treatment of opportunistic illnesses, as well as the potential to avert countless new infections, would eventually save money.

"We are living in a very resource-constrained situation," said Schwartlander, admitting that it would be difficult to convince donors and governments to increase AIDS funding in the current economic climate. "But what we see is that thinking is more and more shifting to seeing treatment as a very smart investment."

Treatment 2.0 also incorporates various strategies for simplifying and improving HIV treatment that already have a proven track record, including the use of local, community-based organizations to deliver HIV services to hard-to-reach but high-risk populations, such as injecting drug users and sex workers.

Organizations like The AIDS Support Organization (TASO) in Uganda, and the Treatment Action Campaign (TAC) in South Africa, are cited as examples of the successful use of community-based approaches to mobilize people infected and affected by HIV to become advocates, educators and service providers.

UNAIDS consulted extensively in drafting Treatment 2.0 and Schwartlander is optimistic that its positive, can-do approach will motivate the various sectors of the AIDS community that have tended to operate "in silos and sporadically" to work together to overcome the many obstacles to its implementation.

"So far the response has been very positive," he said. "It may be a way to re-inspire the major donors and the countries themselves."
The five pillars of Treatment 2.0
Creating a better pill and diagnostics
Treatment as prevention
Stop cost being an obstacle
Improve uptake of HIV testing and linkage to care
Strengthen community mobilization
Source: UNAIDS

Wednesday, July 14, 2010

Accountability ... Haiti ... World Vision

Dear Colleagues

It is now more than 6 month since the devastating earthquake in Haiti ... and as yet the NGO community and official development assistance community ... the UN, the US agencies, the Government of Haiti, etc ... have done almost nothing in the area of accountability.

A couple of days ago I got this message from World Vision. I have been in touch with them from time to time on the subject of accountability, and, bottom line my conclusion is that they do some good work at a huge cost. They might dispute this in a verbal dialog ... but no data are available, it would seem, for them to show that they are in fact cost efficient and cost effective. In fact ... I am not sure that these metrics are anywhere in their systems. This is not a great surprise since none of the organizations engaged in global relief and development seem to think that cost control, operational efficiency and real impact are important aspects of managing resources.

This is the e-mail message from World Vision!
Dear Sponsor,

Six months have passed since the devastating 7.0-magnitude earthquake struck Haiti on Jan. 12, 2010. During this time, support from partners like you has helped World Vision reach 1.86 million people with life-saving supplies and life-changing assistance.

For example, we've opened 22 Child-Friendly Spaces and 10 health clinics to help children like 6-year-old Louis have opportunities to heal from emotional distress, learn, and play.

And our work continues. In the midst of a hurricane season that is expected to be particularly severe, a lack of safe shelter has become a serious fear for displaced Haitians.

To give you an accurate picture of the current situation in Haiti, we've asked World Vision experts on the ground to share their personal stories and observations through a special video interview, which you can view on our new Haiti 6-month update website.

Many displaced families, like 14-year-old Wedley's, sleep in shelters made of flimsy materials that provide little protection from the rain. Their living conditions make them particularly vulnerable to the threat of secondary disasters — such as hurricanes and mudslides — and the spread of disease. World Vision sponsorship communities also have been burdened as displaced people have migrated to rural areas. These communities are receiving additional support to help them heal from the effects of this disaster. Now more than ever, these children and families need your prayers.

In response to this ongoing need, World Vision is helping communities prepare for future disasters and planning to build shelters to protect them from severe weather.

Thank you for helping to make these efforts possible. You can learn more about World Vision's progress, as well as our current and long-term efforts in Haiti, by listening to our expert interviews and viewing the full 6-month report online at

I pray that you'll continue to stand with us as we work together to build a brighter future for the children of Haiti.

God bless,

Rich Stearns
President, World Vision U.S.
When you look at the World Vision website you can navigate to Progress in Haiti and see the following. This is about as good as it gets in terms of accountability for the moneys being consumed in Haiti ... but by any absolute professional standards of accountability it is really pretty pathetic. This is the URL
Progress in Haiti

In the months immediately following Haiti’s devastating quake, partners like you enabled World Vision to care for the wounded and provide life-saving assistance to the displaced. Now we are helping children recover emotionally, equipping families to rebuild their lives, and preparing communities to face future disasters — including the immediate threat of hurricanes.

Prayers and support from partners like you continue to be vital to the success of these ongoing efforts. Thank you for joining us in our commitment to the future of Haiti — and Haiti’s children.

Protecting children: 22 safe spaces for children

Protecting children is a top priority following any disaster. As parents actively work to rebuild their lives, children need a safe place to play and find emotional support. Since the Haiti earthquake, World Vision has established 22 Child-Friendly Spaces where the youngest survivors can play, learn, and heal from the effects of this tragedy. More than 7,700 children have been assisted each week at Child-Friendly Spaces in camps in the greater Port-au-Prince area, Central Plateau, and in the border area with the Dominican Republic.

More than 100 children like Louis, 6, attend daily activities at the Child-Friendly Space in the Parc Acra camp. “Now, he can enjoy himself,” says Louis’ mother gratefully.

World Vision is also working with other partners in Haiti to protect children who were separated from their parents in the quake and to reunite as many as possible with their families. We’re also raising awareness of child rights, empowering children to have a voice in their communities, conducting reading workshops, and offering alternative educational opportunities for children whose schools were destroyed in the earthquake.

Shelter: More than 7,300 tents distributed

The rainy season in Haiti can be deadly, even before the threat of hurricanes — making adequate shelter for earthquake survivors essential. Within the first months following the earthquake, World Vision distributed more than 7,300 tents and nearly 64,000 tarpaulins. Now, World Vision is planning to build sturdy framed, long-lasting transitional shelters, which will protect children and families from harsh weather.

In Corail, where many families will struggle to stay dry during the rainy season, World Vision is partnering with other organizations to provide shelters. As additional land becomes available, we will help provide long-term shelters — and a sense of safety — for the displaced.

Water and sanitation: 28 displacement camps served

With hundreds of thousands of families in displacement camps, the threat of waterborne illness caused by poor sanitation and contaminated water is an immediate concern. In the first six months following the quake, World Vision worked in 28 displacement camps to build latrines and showers, and 23 camps to provide 16.8 million liters of clean water to children and families.

Twice daily, World Vision trucks deliver treated water to families in the Parc Acra camp, where it is used for drinking, bathing, and cooking. “If World Vision didn’t bring it, there would be no water at all,” says one mother.

Through cash-for-work programs, we are enabling Haitian adults to generate income while helping to improve sanitation facilities. Efforts include building and maintaining latrines and bathing facilities and digging trenches to prevent contaminated water from impacting the camps.

Nutrition: more than 1.86 million people fed

In the first six months following the earthquake, World Vision distributed more than 11,000 metric tons of food from the World Food Program and USAID, benefiting more than 1.86 million recipients. Now, World Vision’s cash-for-work programs are helping Haitians provide for their own families. “I have a 5-year-old son. This work will help me buy food, clothes, and repair my house,” said one sanitation project worker.

In addition, World Vision’s health teams are monitoring the nutritional status of young children through household visits and mobile clinics set up in displacement camps. Malnourished children are more susceptible to infection and illness, of which there is an increased risk during the rainy season. In camps like Parc Acra, supplementary food and early treatment are so far making a difference. “We have not had any child deaths,” declares Barbara, the clinic nurse.

Life-saving supplies: nearly 120,000 people served

Thousands of families lost everything in the earthquake. In the first stage of our response, World Vision provided close to 120,000 people, including Louis’ family, with essential supplies such as temporary shelters, cooking sets, blankets, and mosquito nets.

Recognizing the long-term nature of recovery, World Vision staff are continuing to assess and respond to the ongoing needs of children and families.
The problem with all of this information is that it is not organized in a systematic way so that meaningful conclusions can be drawn from the data. I characterize this information more as story telling or journalism than giving an "account".

Though there are quite a few numbers ... not one of the numbers is about the cost of what World Vision has done. There is nothing about how much was raised by World Vision or paid to World Vision for doing work in Haiti. All the fund flows are going on in deep shade! This is inexcusable ... but it has become the norm in the relief and development industry with nobody raising much hell about it.

There are also indications of multiple organizations getting to take the PR credit for the same number. Why would I not be surprised?
Example: World Vision distributed more than 11,000 metric tons of food from the World Food Program and USAID, benefiting more than 1.86 million recipients.
Now this is good ... I think ... but where is any rigorous accounting for this? What were the costs? What was the impact? What amount of the food got lost or stolen? How were the costs spent ... lots of high salaries or lots of low salaries? ... high cost accommodation for WV staff? ... lots of truck rentals at obscenely high costs, or donated transport? ... what type of food? 11,000 MT of high value food is one thing, 11,000 MT of a basic is a very different cost number. What is this compared to the total distributed? What is this compared to the total need? What is the reality of profiteering in the aftermath of disaster. Lots of questions that good accounting and reporting would easily answer!

I would like to invite someone from the World Vision accounting and accountability team for Haiti to engage in a dialog or a debate about these matters ... maybe at some upcoming University Workshop on the Haiti Relief and Rebuilding Program ... or any other venue that would be suitable.

These are important matters ... and it would be good to see some attention from the people that are in leadership positions.

Peter Burgess