Getting real on saving for retirement

Jul 24, 2012
 
By Teresa Ghilarducci

I WORK on retirement policy, so friends often want to talk about their own retirement plans and prospects. While I am happy to have these conversations, my friends usually walk away feeling worse - for good reason.

Seventy-five per cent of Americans nearing retirement age in 2010 had less than US$30,000 (S$38,000) in their retirement accounts. The spectre of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 per cent, will be poor or near poor in retirement, living on a food budget of about US$5 a day.

In my ad hoc retirement talks, I repeatedly hear about the 'guy'. He is a for-profit investment adviser, often described as, 'I have this guy who is pretty good, he always calls, doesn't push me into investments'. When I ask how much the 'guy' costs, or if the guy has fiduciary loyalty - to the client, not the firm - or if their investments do better than a standard low-fee benchmark, they inevitably do not know. After hearing about their magical guy, I ask about their 'number'.

To maintain living standards into old age, we need about 20 times our annual income in financial wealth. If at retirement you earn US$100,000, you need about US$2 million beyond what you will receive from Social Security. If you have an income-producing partner and a paid-off house, you need less. This number is startling in light of the stone-cold fact that most people aged 50 to 64 have nothing or next to nothing in retirement accounts and thus will rely solely on Social Security.

Even for those who know their 'number' and are prepared for retirement (it happens, rarely), these conversations are not easy.

At dinner one night, a friend told me how much he has in retirement assets and said he did not think he had saved enough. I mentally calculated his mortality, figured he would die sooner than he predicted, and told him cheerfully that he should not worry. ('Congratulations!') But dying early is not the basis of a retirement plan.

If we manage to accept our investments will likely not be enough, we usually enter another fantasy world - that of working longer. After all, people hear 70 is the new 50, and a recent report from Boston College says if people work until 70, they will most likely have enough to retire on.

Unfortunately, this ignores the reality that unemployment rates for those over 50 are rising faster than for any other group and that displaced older workers face a higher risk of long-term unemployment than their younger counterparts. If those workers ever do get rehired, it is not without taking at least a 25 per cent wage cut.

But the idea is tempting; people say they do not want to retire and feel useless. Professionals say they can keep going, 'maybe do some consulting' or find some other way to generate income well into their late 60s. Others say they can always be Walmart greeters. They rarely admit that many people retire earlier than they want because they are laid off or their spouse becomes sick.

Like the US wealth gap, the longevity gap has also widened. The chance to work into one's 70s primarily belongs to the most well- off. Medical technology has helped extend life - by helping older people survive longer with illnesses and by helping others stay active. The gains in longevity in the last two decades almost all went to people earning more than average.

It makes perfect sense for human beings to think each of us is special and can work forever. To admit you cannot, or might not be able to, is hard, and denial and magical thinking are underrated human coping devices in response to helplessness and fear.

So it is not surprising that denial dominates my dinner conversations, but it is irresponsible for Congress to deny that regardless of how much you throw 401(k) advertising, pension cuts, financial education and tax breaks at Americans, the retirement system simply defies human behaviour.

Basing a system on people voluntarily saving for 40 years and evaluating the relevant information for sound investment choices is like asking the family pet to dance on two legs.

Not yet convinced that failure is baked into the voluntary, self- directed, commercially run retirement plans system? Consider what would have to happen for it to work for you.

First, figure out when you and your spouse will be laid off or be too sick to work. Second, figure out when you will die. Third, understand that you need to save 7 per cent of every dollar you earn. (Didn't start doing that when you were 25 and you are 55 now? Just save 30 per cent of every dollar.) Fourth, earn at least 3 per cent above inflation on your investments, every year. (Easy. Just find the best funds for the lowest price and have them optimally allocated.) Fifth, do not withdraw any funds when you lose your job, have a health problem, get divorced, buy a house or send a kid to college. Sixth, time your retirement account withdrawals so the last cent is spent the day you die.

As we all know, these abilities are not common for our species.

The current model for retirement savings, which forces individuals to figure out a plan for their retirement years - whether through a 'guy' or by individual decision making - will always fall short. My friends are afraid, and they are not alone. In March, according to the Employee Benefit Research Institute, only 52 per cent of Americans expressed confidence that they will be comfortable in retirement. Twenty years ago, that figure was close to 75 per cent.

I hope that fear can make us all get real. The coming retirement income security crisis is a shared problem; it is not caused by a set of isolated individual behaviours.

My plan calls for a way out that would create guaranteed retirement accounts on top of Social Security. These accounts would be required, professionally managed, come with a guaranteed rate of return and pay out annuities. This is a sensible way to get people to prepare for the future.

You do not like mandates? Get real. Just as a voluntary Social Security system would have been a disaster, a voluntary retirement account plan is a disaster.

It is now more than 30 years since the 401(k)/Individual Retirement Account model appeared on the scene. This do-it-yourself pension system has failed. It has failed because it expects individuals without investment expertise to reap the same results as professional investors and money managers. What results would you expect if you were asked to pull your own teeth or do your own electrical wiring?

Although humans may be bad at some behaviours, we are good at others, including coming together and finding common solutions that protect all of us from risk. Surely we can find a way to help people save - adequately and with little risk - for their old age.

The writer is a professor of economics at the New School for Social Research in New York City.

NEW YORK TIMES SYNDICATE

[Before we congratulate ourselves on having CPF and a minimum sum in our retirement accounts, most Singaporeans are also not adequately prepared for retirement. Maybe we are not as badly off, but we are hardly living the good life either.]
 

4 (very powerful) friends

Jul 21, 2012

Helmut Schmidt, Lee Kuan Yew, Henry Kissinger, George Shultz are slowly saying farewell 40 years on

By Matthias Nass

ONCE they were powerful. Dreaded. Admired by many, hated by some. Their lives are coming to an end. Yet, there is still one story to tell, the story of a friendship.

It is about four men who cannot be more unemotional.

Helmut Schmidt, Lee Kuan Yew, Henry Kissinger and George Shultz: cool, if not cold, power-hungry politicians.

Yet, for more than 40 years, their friendship has been close, almost intimate. Now they are slowly saying their farewells to each other.

Singapore, at the beginning of May, conference room 'White Magnolia' at Shangri-La Hotel...

Schmidt wanted to meet Lee, the founding prime minister of the Asian metropolis, for the last time.

He has not looked forward to a trip for a long time as much as this one to see 'Harry', how Lee has been called among his friends since he was a student at Cambridge in England. From Singapore, Schmidt will be travelling to China for five days, also a long-cherished wish.

Schmidt is 93. Who would still go on a 15-hour trip from chilly Hamburg to hot and humid Singapore at that age? In March, his doctors gave the green light: The thrombosis he is suffering from does not prevent him from flying.

Lee, 89 years old, wrote to him to say how happy he was about the visit. Also, that his friend would need some rest after arrival, at least one night, to overcome the jet lag. The next evening, he would invite him to dinner.

Afterwards, they want to sit down together on three afternoons, to talk with each other. About China, America, Europe - the big picture, the way they always used to do.

A book shall be produced, a collection of their conversations on the world's situation. Neither would accept anything less.

And then the conversation begins very softly. 'My wife passed away and left me at the age of 91,' says Schmidt. 'Loki died at 91?' - 'Yes, it was a big loss. Must be the same for you.' - 'Yes, it creates a deep hole in our life; nothing can fill it.'

Three weeks before Loki Schmidt's death, at the beginning of October 2010, Lee's wife Choo died.

As students at Cambridge, the two Lees stood out intellectually. Driven by ambition, they returned to Singapore. Lee established an educational dictatorship there which, despite all its successes, was feared.

Lee could be merciless. He persecuted political opponents, sent them to their financial ruin with lawsuits, gagged the press.

But when his seriously ill wife had been bound to bed unable to talk or move for more than two years, he came to sit next to her and read to her every night. He wanted her to die in peace. They were married for 64 years.

'We were married for 68,' says Schmidt. 'We had hoped to stay together for 70 years,' he says. 'Yeah,' sighs Lee with a hoarse voice. 'Yeah.'

Schmidt is sitting in a wheelchair on Lee's right; he can hear only with his left ear. Lee is sitting upright. He is wearing a dark blue Chinese silk jacket, and with his almost bald head, he appears like an aloof Beijing mandarin.

Lee formulates articulately, in Oxford English full of nuances. In front of him stands a glass of hot water, but he does not take even one sip during the conversation.

Schmidt is not allowed to smoke for hours, a torture to him. Lee, in the past a heavy smoker himself, is now allergic to cigarette smoke.

Once, absorbed in thought, Schmidt reaches into the left pocket of his jacket, pulls out a box of cigarettes, lights a Reyno. Lee is going stiff, not saying anything, just looking at Schmidt, who is suddenly startled: Where is the ashtray? There is none.

He hesitates and flings the cigarette with verve into a deep coffee cup. Great hilarity!

'For me, this is a sentimental journey,' Schmidt says, picking up the thread again. He had been in Singapore for the first time in 1958 or 1959, had stayed at the famous Raffles Hotel back then. 'The old colonial officers pretended to drink tea but drank whisky instead!'

Schmidt abruptly switches to politics, wants to know when Lee met Deng Xiaoping for the first time. It was in 1978, Lee replies, two years after the death of Mao Zedong, when Vice-Premier Deng began the economic transformation of the giant country.

Lee believes that Singapore was Deng's example. A free market and a strong government - that's what he learnt from Singapore.

It was also in 1978 that Schmidt and Lee met for the first time. Lee does not recall their first meeting. Schmidt's recollection of that day is more vivid. He had come from Japan and had stopped in Singapore on the way back, Schmidt says. Lee showed Loki the Botanic Gardens, and she was very impressed.

Mr Olaf Ihlau, correspondent of Suddeutsche Zeitung at the time, wrote about Lee's and Schmidt's first meeting: 'Both politicians are very alike. They are men of action and pragmatists, experts on economic matters and are against ideological reveries.

'Both are of great intelligence prone to impatience, and find it difficult to control their sense of superiority. The head of the South-east Asian island of prosperity has stopped appearing at press conferences a long time ago, where he had to answer possibly annoying questions.

'Lee considers journalists to be 'crackpots'. Another stance that is probably not that far removed from Helmut Schmidt's.'

Back in those years, nobody, not even the crackpots, could deny that Singapore was blossoming. After separating from Malaysia, Lee was pushing the former outpost of the British Empire with an iron hand into modern times.

George Shultz also became interested in the South-east Asian economic miracle. On his way to an Asian summit meeting, America's then Treasury Secretary stopped in Singapore in 1972.

Forty years later, Shultz talks about this visit while we are sitting at the Adlon Hotel in Berlin.

It is May 24, and later that evening, he will receive the Henry Kissinger Award of the American Academy. Kissinger is also in town. And so is Schmidt, who will deliver the laudatory speech for Shultz.

One is missing. Lee was not able to join them last autumn, when Schmidt, Shultz and Kissinger met in New York.

Shultz remembers how both Lees proudly showed him their city, and how he told Kissinger about it after his return. 'It is very rewarding to talk to Lee, I said to Henry, who already knew him. We understand each other.'

Shultz is the great organiser; he was the one who brought all four together for the first time. That was in 1982.

Schmidt was still Federal Chancellor of Germany, and Shultz was just named Secretary of State by Ronald Reagan.

Shultz brought Schmidt along as his guest to 'Bohemian Grove', a kind of summer camp for America's economic and political elite in California, with lots of drinking, bawdy jokes, and little talk about politics and business.

Kissinger invited Lee, Shultz says. After the camp, they drove to Shultz's house on the campus of Stanford University for lunch. 'All four of us sat around my kitchen table and talked for two, three hours, until my wife and Choo (Mrs Lee) asked us to get up so they could prepare lunch. I was thinking to myself: What a great lesson for a new secretary of state!'

Lee remembers how Schmidt sat down at the piano and 'professionally played classical pieces without any sheet music'. The four were smitten with each other. This was the beginning of a friendship that still lasts today.

At that point, Schmidt and Shultz had already known each other for 10 years. They met at the 'Library Group' in 1972. In the wake of the annual meetings of the World Bank and the International Monetary Fund (IMF), he wanted to meet the most important finance ministers in Washington, Shultz recalls.

'Of course, Helmut was one of them.' He invited Schmidt, France's Valery Giscard d'Estaing, Britain's Tony Barber, and, later, Japan's Takeo Fukuda to a discussion over lunch.

'I told the President about this. Nixon said: Good idea! Why don't you add some style to the meeting and hold it at the White House? So we went to the library of the White House - a wonderful room. Great food! And it worked.

'We met again, we could talk on the phone, and it all led to mutual trust. Somebody then suggested to call our circle the 'Library Group'.'

And it would become even more. During the meetings at the library of the White House, the idea of the Group of Seven summits was born.

Of course, Kissinger and Shultz had known of each other before. Both had a career at university. Kissinger at Harvard, and Shultz just a couple of kilometres away at the Massachusetts Institute of Technology (MIT). One is a historian and political scientist; the other an economist. 'I didn't know him personally,' Shultz says, 'but I knew of him.' 'Because what he said had a high public profile.'

Richard Nixon brought the two of them together. Kissinger became National Security Adviser to the President, and later Secretary of State. Shultz was Secretary of Labour, then Treasury Secretary.

Have they ever been rivals?

'No,' Shultz says. They complemented each other. He, for instance, provided a study about the American dependence on oil imports, Shultz adds, while Kissinger was thinking about the strategic implications.

Even after their time under Nixon, they remained in touch. When Shultz himself became Secretary of State, he sought the advice of his friend and predecessor.

In old age, both Republicans have lent their authority to an astounding nuclear disarmament initiative: 'Global Zero' - total nuclear disarmament!

However, Schmidt does see some differences between the two. 'Shultz is convinced about the need for nuclear disarmament; Henry is more reserved.' With regard to nuclear matters, Kissinger is 'the most rational and realistic'. 'He exaggerates realism a bit, as I see it.' And Schmidt's own view? 'Almost entirely on Shultz's side.'

Why is there this surprising change of mind on nuclear policy matters by the former nuclear strategists? 'It was not a sudden change,' Schmidt explains. 'It was a slow development. I have always considered nuclear rearmament to be exaggerated.'

And nevertheless: The change of mind cannot be denied. And there are good reasons for this.

The former Cold Warriors had realised that a 'balance of terror' will only succeed between the high performance military of developed industrial nations, and that their cold instrumental rationality was only able to keep the peace through a stroke of luck.

They believe that in these times of unpredictable nations such as Iran and North Korea, or even terrorist groups striving for the bomb, it is no longer possible to rely on the stability of mutual deterrence.

Of course there are differences between the four when it comes to political issues. 'A great point of disagreement: Possibly opposed to Lee and definitely to Henry, I consider the American maritime nuclear deployment towards China to be quite exaggerated,' says Schmidt.

China! All four of them take a passionate interest in China's rise to its former greatness. Naturally, Schmidt has read Kissinger's new book On China. 'Something is missing. Too much Kissinger, too little China. The book could be called 'On Henry'! Overall, however, it displays great respect towards Chinese civilisation. Germans often mix up civilisation and culture!'

Kissinger and Schmidt first met at 1950s end. Where and how exactly - at Harvard or at the America House in Hamburg - is disputed between the two.

Kissinger likes to tell the story about how he, before their first meeting, confused Schmidt, introduced to him as an 'up-and-coming politician', with Carlo Schmid, one of the fathers of the German Basic Law. 'This was the more important German I knew.'

More than half a century has passed since then, and the dialogue between the two has never stopped. Schmidt explains that they obviously did not always agree when they were still both in office, Schmidt as Federal Chancellor, and Kissinger as National Security Adviser and Secretary of State.

During the East-West negotiations in the 1970s, for instance, 'Kissinger was much more sceptical about the closing meeting in Helsinki than me and his boss, Jerry Ford'. They also had opposing views when it came to the Vietnam War: 'He wanted to end the war, but much too slow. I wanted to speed it up.'

Were Chile and Cambodia an issue between the two, the overthrow of Allende by Pinochet and the bombardment of Vietnam's neutral neighbour by the Americans? 'Neither Cambodia nor Chile played a big role between us,' Schmidt replies, 'while I have always assumed, but never knew, that Henry was burdened.'

What lies at the core of this friendship?

'Human dependability,' Kissinger replies. 'I know when Helmut needs to talk, even when he would never ask for it. I know, on the other hand, that he would be there if I needed him.'

However, don't they say that friendships cannot exist in politics, we ask Helmut Schmidt.

'Yes, this is a mistake!' he grumbles. 'These four people can be sure that one of them does not say anything but what he considers to be his truth.'

'What he considers to be his truth,' Schmidt repeats. 'What you say in public may differ in some cases.'

Isn't there more: Are they not all typical political realists? Well, Schmidt says, 'more influenced by realism than by ideology, that is true for all four of us'. But he does not like the term political realist. 'We would have never used such a term! Why should we stick a label on us?'

Realists and internationalists at the same time. 'We do not think nationally when it comes to issues that affect all of us,' says Kissinger. 'It's about real global issues after all, so we discuss them from a global perspective.' Schmidt calls Kissinger, the Jew who fled Germany with his family in 1938, an 'American global citizen'.

'I have many friends,' Kissinger continues, 'but I would say that I always end up with these four. Most people do not even know this group exists. In this sense, it's exclusive.'

Our meeting in the afternoon before the award ceremony is short. Kissinger wants to go over to Helmut Schmidt's office next to the Reichstag. But he wants to know one more thing before he leaves: What did Lee say when we met him in Singapore? What does he think about the friendship of the four?

Lee also talked about trust and added: 'Our minds work in similar ways.' He talks on the phone with Kissinger at least once every two months, he said. They mostly talk about China or about other current major political issues. And one other thing: 'Henry called to console me when my wife Choo passed away.' This touched him.

Yes, says Kissinger: 'I called him almost every day back then.' Because in Lee's culture, it is very difficult to express personal grief, he adds. Was he able to console his friend? 'I think, he was consoled by being able to talk about Choo - so yes.'

At the end of life, when the final balance sheet is drawn up, one thing remains: friendship, partnership, love. 'If my former wife was still alive, we would be married for almost 70 years now,' George Shultz says. She died 16 years ago from cancer. The (former) husband of his current wife Charlotte also died from cancer. 'So we got married,' says Shultz.

A radiant Charlotte Shultz enters the room during our meeting in Berlin. She was Head of Protocol of California under Governor Arnold Schwarzenegger.

The wives, says Helmut Schmidt, played 'a certain role' in the friendship of the four. Nancy Kissinger is 'a politically interested and intelligent woman who is reserved when expressing her views'. 'The second Mrs Shultz likes to talk, as she is full of impulses.'

The atmosphere is completely different when the wives are present, but they are also talking politics. What else are they talking about? 'About age, old age dementia, about the world, and about Dear God!'

Just as last year in New York. They met at the Waldorf Astoria. 'There were two different meetings,' says Helmut Schmidt. 'One for several hours with just Shultz, Kissinger, and Schmidt. And then a dinner with all three and the two wives - Mrs Shultz and Nancy.' It was his trip to say goodbye to America. Schmidt happily takes another drag from his cigarette: 'But I'm still alive!'

Another trip to America? 'No!' And if a friend needs him? 'I wouldn't rule it out completely, but I have no plans to do so.' He is determined to not make any more big trips. 'Within Europe - that is something else. Or Moscow, that is also something else.'

So Moscow would be tempting? 'Yes.' Are there any plans? 'No, nothing is planned.'

How to go about plans when you are getting older? - This is what we ask Kissinger. 'You have to choose. The things you can do are limited. So you should be doing things that are important and rewarding. Therefore, each one of our meetings is something special.'

Of course, it is important that we see each other, Kissinger adds. 'But there is nothing left we need to tell each other. Nothing will remain unfulfilled because of it. Nevertheless, the loss will be great when one of us passes.'

The critical interest in each other is still alive, the constant curiosity. George Shultz says: 'Every once in a while, Helmut sends me one of his speeches. I always read it very thoroughly. And then I read it again.

'It usually includes some subtleties you have to search for. He is a careful thinker. But he knows how to think big. Most people say utter nonsense when they are thinking big. When Helmut thinks big, it has meaning.'

And so they continue working. And they impress the people around them with their presence and creative power. At this warm evening in May in Berlin, they are sitting next to each other on the podium of the 'Weltsaal' (World Room) of the Federal Foreign Office: George Shultz, 91, Helmut Schmidt, 93, and Henry Kissinger, 89. There is not one person in the room who can withdraw from this touching moment.

All three have made history. They comfortably scan the rows in front of them: Shultz, sitting proud and straight with a crimson bow tie; Kissinger, slumped and with a wavering gaze; and between the two, Schmidt in his wheelchair, his hands without cigarettes on his lap.

They are well aware of their aura, and enjoy it with the kind of ironic distance of people who have seen too much to take every praise seriously. And who, nevertheless, always enjoy hearing it! You can put on a grim expression. Or grumble a bit. There is nothing that delights people more.

Schmidt, who delivers the laudatory speech for awardee Shultz, remembers Franklin Roosevelt, Harry Truman, George Kennan, George Marshall, Eisenhower, and Kennedy. 'George, you are one of the American leaders that established the friendship with the Germans - after two world wars, in which we Germans were your enemies. And for this, I will forever be your thankful friend.'

The brief moment together in an adjoining room before the award ceremony is more important to the three than the actual event itself. This is what they were looking forward to. This is why they have travelled from Hamburg, New York, and San Francisco.

And this is why Schmidt flew to Singapore one last time.

'This is my last visit to this part of the world,' he said at the end of the third day. 'All the best to you, Harry.' - 'For you too,' Lee replies, and his voice is coarse. 'It was an honour to have known you.' They lean towards each other and hug. Very carefully.

For a moment everything is quiet in the room. Then Schmidt calls for his bodyguards. 'Wheel me out of here!'

The writer is the Chief International Correspondent of the German weekly Die Zeit. The article first appeared in German in the July 5, 2012 edition of Zeit Magazin, the magazine supplement of Die Zeit.

Why the dung beetle is his hero

Jul 20, 2012

THE LONG INTERVIEW | CHANGE-MAKERS

A man given to startling pronouncements, Alexandra Health group chief executive Liak Teng Lit gives Susan Long the lowdown on what ails the health-care system today: over-treatment, over-specialisation and over-generous subsidies.


A 78-YEAR-OLD nursing home resident was wheeled into hospital in a comatose state. He suffered from dementia, had one leg amputated and the other was gangrenous due to poorly controlled diabetes. He had no known family members.

Mr Liak Teng Lit, then chief executive of Alexandra Hospital, was discussing with over 200 doctors and health-care professionals whether they should proceed to amputate his remaining leg.

Two-thirds voted 'yes'. Doctors, after all, are under oath to save lives. When he asked how many would want to be operated on if they were the patient, two said 'yes'. The rest said 'no'.

It was a moment of epiphany, he says. 'We discussed why we do things for our patients that we wouldn't want done to ourselves. The answer that came back was, 'I don't know what he wants, so I do my best. My best is to prolong his life.' But if we were the patient, we wouldn't want those kinds of extra days.'

The human body is designed to die eventually, he says. Fighting death hooked up to ventilators and fed through intravenous tubes results in the patient having 'unnecessary procedures which do nothing but extend pain'.

'But it's easier to overdo than to underdo, because if you overdo, nobody is going to scold you.'

In April, the straight-talking 59-year-old was appointed group chief executive of Alexandra Health, a health-care cluster that serves northern Singapore.

Sitting in his office in the award-winning Khoo Teck Puat Hospital (KTPH), whose construction he oversaw, he muses that this is the age of overdoing, especially for the well-heeled desperate to buy more time with loved ones.

The father of three children aged 23, 22 and 14 has given strict instructions to his wife, a pharmacist turned housewife, that the day he can no longer recognise his family is when he does not want any form of artificial intervention such as tube feeding or even oral antibiotics. 'When the end comes, it should come,' he says, adding that many doctors and nurses choose this path because they, more than anyone else, understand the limits of medicine and 'have seen enough'.

When his mother died at 78 of advanced colon cancer in 1993 and his sister at 56 of late-stage liver cancer in 2008, both opted for palliative care rather than further treatment. 'They had a good death, surrounded by loved ones. There was no unnecessary pain and we had a little celebration of their lives,' he recounts.

The runner, who clocks 25km a week and has finished eight marathons - his first at age 51 - says his preferred way is to die during a race. 'That's exactly the way I want to go, being healthy and fit,' says the man known for making jaw-dropping statements with a deadpan face.

Doing too much

BESIDES over-treatment, what ails the health-care system here is over-specialisation and subsidies, he charges.

Even though pay structures incentivise it, he disapproves of the specialist and sub-specialist tracks that doctors take early in their careers. Today, he laments that many doctors have become 'technicians' of a very small part of the body and operate in 'silos'.

The eye doctor no longer looks at the whole eye. Some do only cataracts, some look after the retina, others the tear duct. Typically, a patient comes in with a host of issues effecting multiple organs. He or she is worked on by six different 'technicians', each focusing on one sq cm of the body, who don't have time to talk to each other, and end up asking the same questions and ordering the same tests. 'Even if they do talk, who's to decide what is the overall thing to do for the patient?' he asks.

What is needed, he suggests, are more 'T-shaped' doctors who have a broad-based foundation before they specialise.

He frowns upon how subsidies have inflated the demand for health care and led to shortages: 'The truth is when we go for a buffet, almost all of us eat a little bit more than we normally do. If you subsidise something, at the margin, there will always be more demand.'

Subsidised wards are so cheap, some children may prefer their elderly parents to stay a day or two longer. But if every patient delays discharge by just half a day, Singapore will need to build another Singapore General Hospital that costs $2 billion, and about half a billion a year in subsidies, to run.

The demand for subsidies is a 'bottomless pit', he warns. 'If you're going to subsidise my petrol, I won't drive the Toyota Prius, I will drive the Lexus 460.

'Follow the British National Health Service? That may mean that the Government has to increase the goods and services tax to, say, 20 per cent to cover the cost of these additional beds,' he says, adding that Singapore's 3M framework - Medisave, MediShield and Medifund - is sound.

As diseases are increasingly diagnosed at the molecular level with more expensive drugs, costs will shoot through the roof.

His fear for Singaporeans today is that they clamour for their rights but disown their responsibilities. 'In cyberspace, there are howling monkeys who scream, shout and demoralise others.

'My worry is that everybody is screaming about his rights as a citizen to get subsidies, but he doesn't feel he has a responsibility to contribute or pay his taxes. They have the right to treatment but don't have a responsibility to take care of their health,' he says.

One speed system

THE Ministry of Health, he says, should be renamed the 'Ministry of Illness' because most of its work is in illness care. Health - how individuals live their lives - is what takes place outside the hospital, he says, pointing to the HDB blocks in Yishun Central.

The problem with hospitals here today is they are a 'one-size-fits-all' model trying to do 'fast medicine' everywhere, but 'doing nothing well'. Singaporeans rush to the hospital with minor ailments, routine vaccinations or check-ups that can be done by GPs, dieticians and nurses.

Alexandra Health is trying to do it differently by integrating its work, facilities and staff fully with the community. He wants the health cluster to offer 'head-to-toe lifelong anticipatory health care of the whole person', with a team caring for the whole person, not each doctor caring for one body part.

It has six nurses who run up to the neighbouring blocks to check on frail people and change their tubes. It is also exploring virtual consultations for bedridden patients who would otherwise need an ambulance to be brought to hospital to see a doctor. Bank call centres are his prototype, as half of all banking transactions are now handled by phone. His target for health care: 30 to 40 per cent.

He is also planning the upcoming Yishun Community Hospital (to be ready in 2015), where an elderly person, after staying at KTPH for three days for a knee replacement operation, can move into for two weeks to get used to new medicine and a new routine. In the works is also an off-site specialist's centre - for outpatient and day surgery - at Admiralty MRT station by 2016.

But his end goal is really to enable someone who is bedridden to stay home until the end, minimising visits to the hospital. He hopes that slightly younger neighbours in their 60s, who are still fairly fit, will step up by helping to prepare an extra meal and sponge bathe them for a monthly fee of say, $500.

Work like hell

IRONICALLY, the man who ended up overhauling many hospitals and the face of health care here was turned down for medical school. He was the free-spirited seventh out of eight children of department store owners, who spent most of his time building aircraft models and catching fish in the drains of Johor Baru.

His report card through primary school was 'a sea of red with very few islands of blue'. He only bucked up nearing his O levels, making it to Victoria School here to do his pre-university, then the National University of Singapore (NUS) to study pharmacy, his second choice. He topped it off with an MBA from NUS and a masters in pharmaceutical sciences from the University of Aston in Britain.

The man whose mantra is 'learn from everyone, follow no one, look for patterns, work like hell' was involved in restructuring major hospitals, including the National University Hospital, KK Women's and Children's Hospital and Singapore General Hospital. He was chief executive variously of Alexandra Hospital from 2000 to 2010, Changi General Hospital from 1997 to 2000 and Toa Payoh Hospital from 1992 to 1996. From 2010 till earlier this year, he was chief executive of KTPH.

He ruffled feathers two years ago when he said excess weight might weigh down a health-care worker's career prospects.

Around KTPH, signs abound encouraging people to take the stairs. Healthy options in the hospital canteen, such as brown rice, are priced cheaper. He methodically picks up every piece of rubbish in sight, disapproves of bicycles not parked in assigned bays and clears tables of cups left behind.

Change, he believes, starts with himself, then getting the right people on the bus with him, then 'slowly inching towards perfection'. He has set bold benchmarks for his hospitals: to be as verdant as the Singapore Botanic Gardens, to orientate guests as well as Ritz-Carlton Millenia hotels, to operate with Ikea's efficient simplicity and to turn beds around as fast as Singapore Airlines does cabins.

The man who subscribes to Buddhist philosophy has this advice for aspiring change makers: Don't expect any support from higher-ups or people around you. 'All laws, all rules, all organisations, all systems and processes exist to maintain the status quo.' His goal is to plant a million trees and do his part to make Singapore 'a city in a tropical rainforest'. He reckons he has so far planted or commissioned the planting of over 300,000 trees - about a third of his target - through all the projects he has undertaken to bring healing nature everywhere.

He says straight-faced that his hero is the dung beetle, which feeds on faeces. 'They walk the ground, burrow underground, clean up the environment, recycle nutrients and improve soil aeration. Most of all, they solve problems others leave behind.'

suelong@sph.com.sg

Confessions of a former foreign misfit

Jul 13, 2012
 
By Asad Latif

ONE problem with foreign misfits - immigrants who love Singapore's wealth but not its people - is perception. They believe that Singapore is an extension of their lands.

I know because I used to be one of them myself.

When I came to Singapore in 1984, I brought along the baggage of history. Modern Singapore had been established by Stamford Raffles of the East India Company in 1819 and ruled as a dependency from Calcutta till 1867. Since I, too, had arrived from Calcutta, I came with a vicarious sense of entitlement.

I was incensed therefore by signs of cultural attrition. Roti prata was an unbearable tautology because prata is a kind of roti. When I heard what sounded like roti jaan, I thought that I had stumbled on a recipe by Umrao Jaan, the famous Lucknow courtesan. The briyani in many hawker centres was both a semantic and a culinary misnomer. It was nothing like the real briyani found in South Asia, where the meat is cooked in the rice and not added as a South-east Asian afterthought.

In my case, I realised quickly enough that these were Singaporean realities. They made the place different, authentic and exciting. It was futile to look for India in Singapore, as it was to look for Singapore in India. Singapore is itself because it is not India, and vice versa.

That is true of every other country as well. Singapore is not a distant cousin of China or the younger brother of Malaysia. Britain, China, India and Malaya are all a part of Singapore's history. But they are not Singapore's history.

Similarly, most Singaporeans are the descendants of immigrants: They are not immigrants themselves, floating forever up and down some imagined diasporic sea. Singapore's culture is not an imported commodity; Singapore's identity is not a derived one. It is what real people living on this actual piece of land have constructed, merged, changed and preserved over seven durable centuries.

The problem with foreign misfits, I suspect, is often that they look for the countries they have left behind. And if those countries have played defining roles in Singapore's history and culture, they believe that they have a right to judge Singapore in the light of their own national histories and cultures.

They are looking for the wrong things in the wrong place.

Of course, to go to the other extreme and deny the international provenance of modern Singapore would be equally wrong. It was mostly the labouring masses of the foreign-born who literally built Singapore and turned it into a global city of the time.

But the crucial point is not that they came but that they stayed. They were the proto-Singaporeans to whom we owe our historical depth and our cultural breadth as a people.

The moment I realised that, I repatriated the expatriate in me. On a day that was like a rebirth, I became a citizen. I became one of us.

Immigration angst

MY HUMBLE story bears a little on the angst over immigration today.

While competition for jobs, education, transport and living space is a genuine issue, it can be addressed by fine-tuning policies. What no policy can do is determine the culture of a people and hence the degree to which immigrants can be integrated. That culture comes from a people's sense of its place in time and from the habits of the heart produced by the everyday sharing of a common space.

When Singaporeans respect their authenticity and integrity as a people - a people with their own history and culture - they are less likely to feel that they will be absorbed into the lifespans of ancestral countries such as China or India.

Even a city-state will keep its place between the orbital pulls of continent-size and civilisation-long countries. Immigrants from them will not pose a cultural threat within Singapore.

By contrast, defensiveness is the opposite of confidence, just as arrogance is the alter ego of insecurity. As more foreigners look to make Singapore home, strident anti-foreign sentiments create a very poor impression of Singapore. Indeed, they make Singapore look parochial when in reality it is one of the most cosmopolitan cities in the world.

At the end of the day, it is the self-confidence of Singaporeans that will preserve them and protect the common space into which newer Singaporeans can fit.

After all, it is cultural self-confidence - ranging in attributes from accent and historical awareness to non-negotiable social norms - that makes America and Australia two of the most powerfully integrative societies of our time. It is not their size.

That should be the yardstick for integration in Singapore as well. One does not necessarily have to pass the durian and Singlish tests: I personally would have gone on hunger strike and adopted a vow of silence if forced to do so. But durian and Singlish are a part of Singapore culture and must be accepted.

There are more substantial norms that have to be respected. Singapore is a multiracial, multi-religious meritocracy and a secular Republic. It is not perfect but its people generally judge themselves by these standards.

Those to whom these standards appear alien will always remain alien in Singapore. Those who find these norms appealing will find a home in Singapore.

The writer, a former Straits Times journalist, is a visiting research fellow at the Institute of Southeast Asian Studies.

Do business schools incubate criminals?

by Luigi Zingales

Todayonline
Jul 18, 2012

The recent scandals at Barclays, JPMorgan Chase, Goldman Sachs and other banks might give the impression that the financial sector has some serious morality problems. Unfortunately, it's worse than that: We are dealing with a drop in ethical standards throughout the business world and our graduate schools are partly to blame.

Consider, for example, the revelations about two top executives at the elite consulting firm McKinsey & Co, which has avoided public vilification despite the transgressions of its former employees.

McKinsey Director Anil Kumar - a graduate of the University of Pennsylvania's Wharton School - pleaded guilty to providing insider information to hedge-fund manager and fellow Wharton alumnus Raj Rajaratnam.

Rajat Gupta, a graduate of Harvard Business School who served for nine years as McKinsey's worldwide Managing Director, was convicted of insider trading in the same case.

Although Gupta had long left McKinsey when the actions leading to his conviction took place, it would be shortsighted not to take the problem seriously. While every firm can have its bad apples, when these bad apples are at the top, it suggests that a company has either a corrupt culture or a defective selection process, or both.

This is particularly troubling at a company like McKinsey, which cites the integrity and quality of its consultants as key advantages. "Keep our client information confidential" is one of its credos proudly displayed on its website.

Where did Gupta, Kumar and others get the idea that this kind of behaviour might be okay?

ETHICS CLASSES - OF A SORT

Most business schools offer ethics classes, which are generally divided into two categories. Some simply illustrate ethical dilemmas without taking a position on how people are expected to act. It is as if students were presented with the pros and cons of racial segregation, leaving them to decide which side they wanted to take.

Others hide behind the concept of corporate social responsibility, suggesting that social obligations rest on firms, not on individuals. I say "hide" because a firm is nothing but an organised group of individuals.

So, before we talk about corporate social responsibility, we need to talk about individual social responsibility. If we do not recognise the latter, we cannot talk about the former.

Oddly, most economists see their subject as divorced from morality. They liken themselves to physicists who teach how atoms do behave, not how they should behave.

But physicists do not teach atoms and atoms do not have free will. If they did, physicists would and should be concerned about how the atoms being instructed could change their behaviour and affect the universe.


TEACHING GREED, UNINTENTIONALLY

Experimental evidence suggests that the teaching of economics does have an effect on students' behaviour: It makes them more selfish and less concerned about the common good. This is not intentional. Most teachers are not aware of what they are doing.

My colleague, Dr Gary Becker, pioneered the economic study of crime. Employing a basic utilitarian approach, he compared the benefits of a crime with the expected cost of punishment. While insightful, Dr Becker's model, which had no intention of telling people how they should behave, had some unintended consequences.

A former student of Dr Becker's told me that he found many of his classmates to be remarkably amoral, a fact he took as a sign that they interpreted Dr Becker's descriptive model of crime as prescriptive. They perceived any failure to commit a high-benefit crime with a low expected cost as a failure to act rationally, almost a proof of stupidity. The student's experience is consistent with the experimental findings I mentioned above.

In other words, if teachers pretend to be agnostic, they subtly encourage amoral behaviour without taking any responsibility. True, economists are not moral philosophers and we have no particular competence to determine what is ethical and what is not. We are, though, able to identify behaviour that makes people better off.

When economist Milton Friedman said the one and only responsibility of business is to increase its profits, he added: "So long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." That is a very big caveat - and one that is not stressed nearly enough in our business schools.

Lobbying to secure a competitive advantage from the government certainly does not represent "open and free competition". Similarly, preying on customers' addictions or cognitive limitations constitutes deception, if not outright fraud. Not to mention using clients' confidential information for personal gain, manipulating a major interest-rate benchmark such as Libor or selling financial products you know to be flawed.

The way to teach these ethics is not to set up a separate class in which a typically low-ranking professor preaches to students who would rather be somewhere else. This approach, common at business schools, serves only to perpetuate the idea that ethics are only for those students who aren't smart enough to avoid getting caught.


MAKE IT A VITAL CORE SUBJECT

Rather, ethics should become an integral part of the so-called core classes - such as accounting, corporate finance, macroeconomics and microeconomics - that tend to be taught by the most respected professors.

These teachers should make their students aware of the reputational (and often legal) costs of violating ethical norms in real business settings, as well as the broader social downsides of acting in one's individual best interest.

Of course, no amount of instruction can prevent some people from engaging in bad behaviour. It can, however, contribute to a social consensus that would discourage diffuse fraud, like the widespread misreporting of Libor rates or the wilful self-delusion and dishonest dealing that helped turn the sub-prime crisis into a global financial disaster.

The daily scandals that expose corruption and deception in business are not merely the doing of isolated crooks. They are the result of an amoral culture that we - business-school professors - helped foster. The solution should start in our classrooms. BLOOMBERG


Luigi Zingales is a professor at the University of Chicago Booth School of Business and the author of A Capitalism for the People: Recapturing the Lost Genius of American Prosperity.

Minimum wage (still) doesn't work

Jeff Jacoby

Todayonline
 Jul 16, 2012

The United States Congress enacted the first federal minimum wage in 1938. A provision of the Fair Labor Standards Act, it covered about 6 million workers and set a wage floor of 25 cents per hour.

It also cost a lot of people their jobs. The Labor Department reported that as many as 50,000 employees, mostly poor Southern blacks, were thrown out of work within two weeks of the law's taking effect. And the carnage spread.

"African-Americans in the tobacco industry were particularly hard hit,'' wrote Mr David Bernstein in his 2001 history of labour regulations and black employment. "In Wilson, North Carolina, for example, machines replaced 2,000 African American tobacco stemmers in 1939."

The economic pain inflicted by that first minimum wage law hasn't stopped Washington from repeating the same folly over and over.

In the 74 years since the lowest hourly wage at which most Americans could be hired was set at 25 cents - the equivalent in purchasing power of about US$4 (S$5) today - Congress has raised the amount 22 times. The federal minimum wage is currently US$7.25 an hour, and a push is underway to raise it yet again.

On Capitol Hill, Iowa Senator Tom Harkin has introduced legislation that would hike the minimum wage in three steps to US$9.80 per hour, a 35-per-cent increase. A more radical proposal by Representative Jesse Jackson Jr of Illinois would increase the wage floor immediately, to US$10 per hour.

At the state and local level, too, legislators have been pushing for minimum-wage hikes. In New York City, a "living wage" measure passed over Mayor Michael Bloomberg's veto would require companies that receive public subsidies to pay their employees at least US$11.50 an hour, or US$10 plus benefits.

Yet no matter how much politicians and activists may battle over minimum-wage laws, the real minimum wage in this country has never budged. It is $0.

According to the Bureau of Labor Statistics, that is the hourly wage being earned right now by 12.7 million Americans - the 8.2 per cent of the work force that is currently unemployed.


LEAST-SKILLED SUFFER MOST

The pain of unemployment isn't evenly distributed among all population groups. It is much more severe among those with the least experience and skills.

As of last month, the unemployment rate for black Americans had climbed to 14.4 per cent; among teenagers it stood at nearly 24 per cent. And the unemployment rate for black teens - the least skilled, least experienced subset of the workforce - was 44 per cent.

Minimum-wage laws are typically thought of as a mandate on employers. In reality they constrain employees. As it stands now, the federal wage law tells workers that unless they can find a company willing to pay them at least US$7.25 an hour, they can't get a job.

That may not seem like much of a barrier to Mr Harkin, one of Congress's wealthiest members, but it might as well be the Berlin Wall to an unskilled teen or young adult with no high-school diploma or employment history whose labour is only worth, say, US$5.50 an hour.

No matter how much that person might leap at the chance to work for what he's worth, the minimum wage forbids it. Should Mr Harkin's bill become law, life will become even harder for those seeking entry-level employment.


THE VALUE OF ONE'S LABOUR

With the best intentions in the world, lawmakers cannot raise the value of anyone's labour to US$9.80 an hour merely by passing a law. Making it more expensive to hire workers who are just starting out doesn't advance beginners' prospects, it worsens them.

Decades of economic research and empirical studies confirm what common sense should tell anybody: Boost the minimum wage beyond what low-skilled workers are worth, and more low-skilled workers will be priced out of a job.

That is why minimum-wage hikes are so devastating to those at the bottom of the economic ladder.

Minimum-wage laws are not cost-free. When legislators raise the price of low- and unskilled labour, it's usually low- and unskilled labourers who end up paying the price. As 50,000 Americans found out in 1938, jacking up the minimum wage turns the least employable into the unemployable.

It may not be easy to survive on US$7.25 an hour. But life gets a whole lot harder when your hourly wage is nothing. THE NEW YORK TIMES


Jeff Jacoby is an op-ed columnist for The Boston Globe and recipient of the Thomas Paine Award of the Institute for Justice in 2004. Follow him at @jeff_jacoby.

Why boys fall behind in education

Jul 11, 2012

by David Brooks

Henry V is one of Shakespeare's most appealing characters. He was rambunctious when young and courageous when older.

But suppose Henry went to an American school. By about the third week of nursery school, Henry's teacher would be sending notes home saying that Henry "had another hard day today". He was disruptive during circle time.

By mid-year, there would be sly little hints dropped that maybe Henry's parents should think about medication for attention deficit hyperactivity disorder. Many of the other boys are on it and they find school much easier.

By elementary school, Henry would be lucky to get 20-minute snatches of recess. During one, he would jump off the top of the jungle gym, and, by the time he hit the ground, the supervising teachers would be all over him for breaking the safety rules.

He would get in a serious wrestling match with his buddy Falstaff, and, by the time he got him in a headlock, there would be suspensions all around.

First, Henry would withdraw. He would decide that the official school culture is for wimps and softies, and he would just disengage.

In kindergarten, he would wonder why he just couldn't be good. By junior high, he would lose interest in trying and his grades would plummet.

Then he would rebel. If the official high school culture was uber-nurturing, he would be uber-crude. If it valued cooperation and sensitivity, he would devote his mental energies to violent video games and aggressive music. If college wanted him to be focused and tightly ambitious, he would exile himself into a lewd and unsupervised laddie subculture.

He would have vague high ambitions but no realistic way to realise them. Day to day, he would look completely adrift.

WORSE AND WORSE

This is roughly what is happening in schools across the Western world.

The education system has become culturally cohesive, rewarding and encouraging a certain sort of person: One who is nurturing, collaborative, disciplined, neat, studious, industrious and ambitious. People who do not fit this cultural ideal respond by disengaging and rebelling. Far from all, but many of the people who do not fit in are boys.

A decade or so ago, people started writing books and articles on the boy crisis. At the time, the evidence was disputable and some experts pushed back.

Since then, the evidence that boys are falling behind has mounted. The case is closed. The numbers for boys get worse and worse. By 12th grade, male reading test scores are far below female test scores.

The eminent psychologist Michael Thompson mentioned at the Aspen Ideas Festival a few days ago that 11th-grade boys are now writing at the same level as eighth-grade girls.

Boys used to have an advantage in maths and science, but that gap is nearly gone. Boys are much more likely to have discipline problems.

An article as far back as 2004 in the magazine Educational Leadership found that boys accounted for nearly three-quarters of the D's and F's.

PERFORMANCE GAP

Some colleges are lowering the admissions requirements just so they can admit a decent number of men. Even so, men make up just over 40 per cent of college students.

Two million fewer men graduated from college over the past decade than women. The performance gap in graduate school is even higher.

Some of the decline in male performance may be genetic. The information age rewards people who mature early, who are verbally and socially sophisticated, who can control their impulses. Girls may, on average, do better at these things.

After all, boys are falling behind not just in the United States, but in all 35 member-nations of the Organization for Economic Cooperation and Development.

But the big story here is cultural and moral. If schools want to re-engage Henry, they cannot pretend they can turn him into a reflective Hamlet just by feeding him his meds and hoping he will sit quietly at story time.

If schools want to educate a fiercely rambunctious girl, they cannot pretend they will successfully tame her by assigning some of those exquisitely sensitive Newbery award-winning novellas. Social engineering is just not that easy.

DIFFERENT HONOUR CODE

Schools have to engage people as they are. That requires leaders who insist on more cultural diversity in school: Not just teachers who celebrate cooperation, but other teachers who celebrate competition; not just teachers who honour environmental virtues, but teachers who honour military virtues; not just curriculums that teach how to share, but curriculums that teach how to win and how to lose; not just programmes that work like friendship circles, but programmes that work like boot camp.

The basic problem is that schools praise diversity but have become culturally homogeneous. The education world has become a distinct subculture, with a distinct ethos and attracting a distinct sort of employee. Students who don't fit the ethos get left out.

Henry has a lot going on inside. He is not the unfeeling, uncommunicative, testosterone-driven cretin of common boy stereotype.

Little Prince Hal is just inspired by a different honour code. He does not find much inspiration in school, but he should.


THE NEW YORK TIMES

David Brooks is a New York Times columnist.