Likert scale

A Likert scale (pronounced 'lick-urt') is a type of psychometric response scale often used in questionnaires, and is the most widely used scale in survey research. When responding to a Likert questionnaire item, respondents specify their level of agreement to a statement. The scale is named after Rensis Likert, who published a report describing its use (Likert, 1932).

Sample question presented using a five-point Likert Scale

A typical test item in a Likert scale is a statement. The respondent is asked to indicate his or her degree of agreement with the statement or any kind of subjective or objective evaluation of the statement. Traditionally a five-point scale is used, however many psychometricians advocate using a seven or nine point scale.

Ice cream is good for breakfast

1. Strongly disagree
2. Disagree
3. Neither agree nor disagree
4. Agree
5. Strongly agree

Likert scaling is a bipolar scaling method, measuring either positive or negative response to a statement. Sometimes a four-point scale is used; this is a forced choice method since the middle option of "Neither agree nor disagree" is not available. Likert scales may be subject to distortion from several causes. Respondents may avoid using extreme response categories (central tendency bias); agree with statements as presented (acquiescence bias); or try to portray themselves or their organization in a more favorable light (social desirability bias).

Scoring and analysis

After the questionnaire is completed, each item may be analyzed separately or in some cases item responses may be summed to create a score for a group of items. Hence, Likert scales are often called summative scales.

Responses to a single Likert item are normally treated as ordinal data, because, especially when using only five levels, one cannot assume that respondents perceive the difference between adjacent levels as equidistant. When treated as ordinal data, Likert responses can be collated into bar charts, central tendency summarised by the median or the mode (but not the mean), dispersion summarised by the range across quartiles (but not the standard deviation), or analyzed using non-parametric tests, e.g. Chi-square test, Mann-Whitney test, Wilcoxon signed-rank test, or Kruskal-Wallis test.^[1]

Responses to several Likert questions may be summed, providing that all questions use the same Likert scale and that the scale is a defendable approximation to an interval scale, in which case they may be treated as interval data measuring a latent variable. If the summed responses fulfils these assumptions, parametric statistical tests such as the analysis of variance can be applied. These can be applied only when the components are more than 5.

Data from Likert scales are sometimes reduced to the nominal level by combining all agree and disagree responses into two categories of "accept" and "reject". The Chi-Square, Cochran Q, or McNemar-Test are common statistical procedures used after this transformation.

Consensus based assessment (CBA) can be used to create an objective standard for Likert scales in domains where no generally accepted standard or objective standard exists. Consensus based assessment (CBA) can be used to refine or even validate generally accepted standards.

Level of measurement

The five response categories represent an Interval level of measurement.

Rasch model

Likert scale data can, in principle, be used as a basis for obtaining interval level estimates on a continuum by applying the polytomous Rasch model, when data can be obtained that fit this model. In addition, the polytomous Rasch model permits testing of the hypothesis that the statements reflect increasing levels of an attitude or trait, as intended. For example, application of the model often indicates that the neutral category does not represent a level of attitude or trait between the disagree and agree categories.

Blake and Mouton: The Managerial Grid

The Managerial Grid

Blake and Mouton set out to apply the ideas of behavioural scientists such as Rensis Likert American educator and organizational psychologist Rensis Likert (pronounced 'Lick-urt') (1903–1981) is best known for his research on management styles.

He developed Likert Scales and the Linking pin model. to the practice of management. They built on studies conducted at Ohio State University and the University of Michigan in the 1940s which attempted to identify the behavioural characteristics of successful leaders. Blake and Mouton identified two fundamental drivers of managerial behaviour as concern for getting the job done, and concern for the people doing the work. They argued that, on the one hand, an exclusive concern for production at the expense of the needs of those engaged in production leads to dissatisfaction and conflict, thus adversely affecting performance; but that, on the other hand, an excessive concern to avoid conflict and maintain good relationships is also detrimental to the achievement of goals and objectives.

In order to provide a framework for describing management behaviours, the two variables of "concern for production" and "concern for people" were plotted on a grid showing nine degrees of concern for each, from 1 indicating a low level of concern, to 9 indicating a high level of concern. Five positions on the grid represent five differing managerial behaviour patterns.

The model is represented as a grid with concern for production as the X-axis and concern for people as the Y-axis; each axis ranges from 1 (Low) to 9 (High). The resulting leadership styles are as follows:

• The indifferent (previously called impoverished) style (1,1): evade and elude. In this style, managers have low concern for both people and production. Managers use this style to preserve job and job seniority, protecting themselves by avoiding getting into trouble. The main concern for the manager is not to be held responsible for any mistakes, which results in less innovative decisions.

• The accommodating (previously, country club) style (1,9): yield and comply. This style has a high concern for people and a low concern for production. Managers using this style pay much attention to the security and comfort of the employees, in hopes that this will increase -performance. The resulting atmosphere is usually friendly, but not necessarily very productive.

• The dictatorial (previously, produce or perish) style (9,1): control and dominate. With a high concern for production, and a low concern for people, managers using this style find employee needs unimportant; they provide their employees with money and expect performance in return. Managers using this style also pressure their employees through rules and punishments to achieve the company goals. This dictatorial style is based on Theory X of Douglas McGregor, and is commonly applied by companies on the edge of real or perceived failure. This style is often used in case of crisis management.

• The status quo (previously, middle-of-the-road) style (5,5): balance and compromise. Managers using this style try to balance between company goals and workers' needs. By giving some concern to both people and production, managers who use this style hope to achieve suitable performance but doing so gives away a bit of each concern so that neither production nor people needs are met.

• The sound (previously, team) style (9,9): contribute and commit. In this style, high concern is paid both to people and production. As suggested by the propositions of Theory Y, managers choosing to use this style encourage teamwork and commitment among employees. This method relies heavily on making employees feel themselves to be constructive parts of the company.

• The opportunistic style: exploit and manipulate. Individuals using this style, which was added to the grid theory before 1999, do not have a fixed location on the grid. They adopt whichever behaviour offers the greatest personal benefit.

• The paternalistic style: prescribe and guide. This style was added to the grid theory before 1999. In The Power to Change, it was redefined to alternate between the (1,9) and (9,1) locations on the grid. Managers using this style praise and support, but discourage challenges to their thinking.

Synergogy

Blake and Mouton also developed their own educational theories on how best to teach Grid theories and concepts in the work group context. These are described in the book Synergogy published in 1984. The term 'synergogy' was coined by Blake and Mouton, and describes a systematic approach to learning that leads team members to learn from each other in a co-operative and participative way. Synergogy, defined as "working together for shared teaching", was contrasted to pedagogy, where instruction is given by a teacher, and andragogy, where the teacher acts as a facilitator. Four synergogic learning designs were developed to provide a structure for the process of learning. The 'Team Effectiveness Design' and the 'Team Member Teaching Design' relate to the acquisition of knowledge. The 'Performance Judging Design' relates to the development of skills. Lastly, the 'Clarifying Attitudes Design' concerns awareness and development of appropriate attitudes. Techniques employed include individual preparation, presentations, multiple choice and true/false tests and team discussion. The role of the learning administrator is limited to making sure that the learning design is effectively implemented. These methods were first used by Blake and Mouton to teach university courses but were later adapted to workplace training sessions.

You can see disparate managing styles in a hospital and place your mangers accordingly .

Nano Ganesh,Ossian Agro Automation

Indian farmers use mobile phones to control irrigation
Developer of the technology Mr. Santosh Hiralal Ostwal
July 23, 2009, 12:50 AM — IDG News Service —
Mobile Operator Tata Teleservices is testing technology that allows farmers to use their mobile phones to remotely monitor and switch on irrigation pump sets in far flung locations.
The technology, called Nano Ganesh, is being tested in two villages in the Indian state of Gujarat.
In India, where the electricity supply is erratic, farmers often walk several kilometers to where their irrigation pumps are located, only to find that there is no electricity available, Lloyd Mathias, chief marketing officer of Tata Teleservices, said on Wednesday.
By dialing a code number from his mobile phone to a wireless device attached to the pump, farmers can now remotely monitor the electricity supply, and also switch the pump on and off, Mathias said.
The technology for this application was developed and is manufactured by Ossian Agro Automation in Pune in western India. To use the service, the farmer pays Tata Teleservices 2,700 rupees (US$56) for the device attached to the starter on the pump and another 2,000 rupees for the mobile phone, as well as monthly service charges. The mobile phone can be used by the farmer for other communications as well.
Voice communications and SMS (Short Message Service) on mobile phones are getting commoditized, and as in urban markets, customers are looking for value-added services, Mathias said. By introducing technology and services appropriate to rural markets, Tata Teleservices plans to differentiate itself in these markets, and increase customer "stickiness", he added.
The company already uses mobile phones to deliver education content, and agricultural information relevant to rural communities. It has tied up with specialist organizations to provide the content, Mathias said.
India had 109.7 million rural mobile subscribers at the end of the first quarter, up by 17.8 percent from 93.15 million users in the fourth quarter of last year, according to the Telecom Regulatory Authority of India (TRAI).
Rural wireless subscribers accounted for 28 percent of mobile subscribers at the end of the first quarter, TRAI said.
The rural market is seen as the next opportunity for mobile service providers and handset vendors. The key to these markets is the ability to offer appropriate local content and services, Kamlesh Bhatia, a principal research analyst at Gartner said.
Nokia, for example, launched its Life Tools service in June, after a pilot project in the Indian state of Maharashtra. The service offers agriculture information, education, and entertainment targeted at people in both rural areas and small towns.
It is not difficult to sell the concept of mobile phones in rural markets, but operators need to boost their revenue in these low-margin markets with other services besides voice, Bhatia said.
Value-added service revenue from rural markets will grow slowly, because customers in these markets will be concerned about the ease of use of new technology and the price for these services, Bhatia said. Many farmers are not technically savvy and are still getting used to using a mobile phone, let alone try out enhanced features and services, he added.
There are currently about 14.1 million irrigation pumps across India, Mathias said. Tata Teleservices plans to roll out the service across the country, once it tests consumer acceptance in the two villages in Gujarat, he added.
The company expects to increase revenue from current customers, as well as add new customers by offering specialized rural services, Mathias said.

Cheer on India ,Soon healthcare will leap into mobile handsets and then using that into rural India

India's Internet Users

'Global Online Population Forecast, 2008 to 2013',
the report noted that emerging markets like India would see a growth of 10 to 20 per cent by 2013.
"In some of the emerging markets in Asia such as China, India and Indonesia, the average annual growth rates will be 10 to 20 per cent over the next five years (2008-13)," the report said.
India's number of Internet users was estimated to be 52 million in 2008.

Reframing the Healthcare Debate in Business Terms

Harvard Business Publishing :Reframing the Healthcare Debate in Business Terms
Karen Berman and Joe Knight

The issues, concerns, and variables involved in finding solutions to the healthcare crisis are too numerous to list. Joe has been involved with healthcare issues for a number of years and in 2007 he was asked by the U.S. Chamber of Commerce to testify before the U.S. Senate finance committee on the subject of healthcare.
Here, we'd like to begin to consider how a business might think about possible solutions. There are two frames that we think are interesting to consider. The first is how innovation and costs are typically related.
In most industries as innovations occur costs come down dramatically. For example, in the personal computer industry, costs have gone down year after year as technology has improved. Innovation is driven by a variety of factors, such as improved speed and functionality. But it is also driven by a desire on the part of consumers and businesses to reduce costs. The consumer reaps the benefit of a less expensive product, which then becomes more accessible. And the business can improve its profit, increase its market share, and offer a more affordable product.
In healthcare, innovation also is driven by a variety of factors, especially the desire to increase our ability to diagnose and treat disease, improving the quality of life — clearly an important driver. However, innovation could also be driven by a desire to reduce costs. But in healthcare, it typically isn't. New treatments and improved procedures can be more expensive, not less. Why? In part because the consumer (the patient) isn't paying for the services. So, the consumer, who is choosing to "buy" the service, doesn't consider the price of the service. All he may pay is his co-pay. So, he may think, "Why not? It doesn't matter how much it costs." So the innovators in healthcare aren't rewarded for lowering costs because that is not the variable that people demand. People demand a better test, a better treatment and so on. But if consumers also knew the costs, and they had to "pay" for it (more on that in a bit), then there would be a demand for innovation to reduce costs, along with improving care.
The second frame we'd like to consider is how insurance typically works in other industries.
Let's look at both auto and homeowner's insurance. We purchase that insurance to protect us from catastrophic risks. The insurance company underwrites the risk and we pay a premium for their protection. When we experience a serious loss to our home (fire) or auto (collision) the insurance steps in to cover our losses. We ourselves, though, pay to maintain our cars and homes. Maintenance costs are not covered by insurance. The market handles the cost and pricing on maintenance and up-keep on our homes, and auto and homeowners' insurance covers us when unusual crises come along.
Medical insurance covers both maintenance and catastrophic health issues. And, because medical costs aren't fully borne by the consumer (except for a co-pay that isn't related to the market price of the service) we as consumers can't gauge whether the service is worth the cost or even demand that innovation bring the cost down. We don't spend time managing it. And that means we very well might overuse the service, because we don't really have to pay for it. The result is that the price of services isn't market based (think supply and demand, costs, etc.) Insurers end up raising premiums to cover higher costs and usage.
Joe is an owner of Setpoint Systems Inc., a business based in Utah. Setpoint has struggled with the issue of health insurance costs for years. It had some employees or their families with severe health problems, and its health insurance premiums skyrocketed. In 2004, when Health Savings Accounts or HSAs, were introduced, Setpoint immediately signed up. They provided the company with a way to intelligently manage healthcare costs, allowing Setpoint to save dramatically on premiums and also saving employees thousands of dollars. Setpoint was even able to contribute substantially to its employees HSA accounts because of the premium savings.
HSAs also have features that drive cost innovation and mimic other types of insurance — consumer involvement in costs and payment of maintenance services.
In a future blog we'll look in more in detail at Setpoint's experience with its HSA plan and the pros and cons of HSAs.

My comments

It is credible for the authors to condense the complex healthcare paradigm in to two simple notions.
Cudos.
I particularly like the piece on health care maintainence .It is true that some people pay more attention to maintain their health than the others.But it is also true that 'lifestyle illnesses' are just a subset of the whole realm of disease.Malignancy and congential disorders top the charts when we see the cost of care.People are born into these diseases dont acquire them after a lifetime of abuse( barring malignancies related to lifestyle issues).Subsidising a gym memberhip might help ,but more important is a closely knit physician-patient relationship at the primary health care level.For that primary health care should be free for all .Secondary health care insurable .And Tertiary health care pay for service.
This is not a universal antidote ,but thought leaders should start thinking on these lines.
Second is the drive to reduce costs in healthcare.We have to start from the medical companies backwards.Medical device makers and drug companies have always enjoyed a benefit of doubt .A benefit which says that they all work towards improving either diagnoses or treatment and all work towards making it affordable.This is far from the truth .Some innovations are cannibalistic .Dont add value but help generate parallel channels of revenue for health care firms.Some innovations are cheap to implement but then are marketed and maintained at a high price as they become revenue earners for the firms.For example ,It is difficult to understand why the price of surgical suture has not gone down over the years though their has been so much innnovation in production ,lean thinking in supply chain management and general decrease in cost of labour by outsourcing several parts of production .
Again on similiar grounds ,it is also difficult to understand why the cost of medication in India is one tenth of that in the States .( a simple paracetamol tablet used as an example ) .What multiplies the cost of medicine.Production ,licencing or just simple legislature.
It is time for debate .A debate which engages physicians ,health regulators ,health care device makers from the third world .A world which is resourceful and simple.And their is cross seeding of thought and action over internationsl boundaries.

How micro-finance institutions beat nationalized banks

26 Jul 2009, 0528 hrs IST, Swaminathan S Anklesaria Aiyar , ET Bureau

In his Budget speech, the FM hailed bank nationalization as visionary and revolutionary . Yet, nationalized banks have, by and large, not reached
the poor. However, micro-finance is now reaching people whom nationalized banks could not. Households getting micro-credit now outnumber poor households. Outstanding micro-finance loans total 80 million. Some borrowers have multiple loans, so net beneficiaries may total 60 million households. This is more than the 55 million poor households, and more than a quarter of India’s 220 million households. Of course, many poor households are still left out, while non-poor households have got loans. MFIs have yet to reach or saturate large areas in India. But they are spreading fast across most states. I am a co-promoter of three MFIs: Arohan in Kolkata, Sonata in Allahabad and Mimoza in Dehra Dun. Within 39 months of existence, Arohan has reached 100,000 poor women. The three MFIs together have 2,50,000 borrowers, and within three years should reach one million people. In another three years they may reach one million each. I am astounded that small ventures can scale up so fast. When launched, these MFIs expected to lose money for four years. But they broke even after two years, because loan defaults were below 0.5% against the expected 2%. Once, MFIs started with loans of Rs 3,000 in the first year, going up to Rs 4,000 in the second year, and so on. But now some MFIs start with Rs 10,000, go up to Rs 15,000 the next year, and so on. They charge around 30% interest. This looks usurious. But moneylenders lend at 50% or more, seize the land of defaulters and make them bonded labourers. MFIs, by contrast, rely on group lending for repayment. If one member of a joint lending group defaults, the others cannot get credit, so they put social pressure on the defaulter to pay up. Credit card companies charge an annual fee plus interest at around 30%. MFIs, like credit-card companies , give small, unsecured loans, and their interest rates are no higher . In both cases, the interest rate reflects the high cost of handling very small loans. Some advocates claim that micro-loans convert poor women into entrepreneurs and greatly reduce poverty. Alas, that’s a gross exaggeration. Loans of Rs 5,000 at 30% interest cannot end poverty.

Many studies (like a recent one of Hyderabad’s slums by Bannerjee, Duflo, Glennerster and Kinnan) show no short-term link between microcredit and
poverty or consumption. Only one in five loans
in Hyderabad created new businesses. Still, beneficiaries spent more pushcarts and cooking pans (for new businesses) and less on tobacco and alcohol. Localities with MFI branches had onethird more businesses than others. In due course, this could have a significant impact on poverty. Poor people have demonstrated an appetite for micro-loans
, and repay them. This proves there is a great demand , and that it’s viable. Even if it does not reduce poverty immediately , mere access to finance is a boon. Banks lose heavily in small loans to the poor — their wages are five times higher than in MFIs, and politicians encourage poor borrowers to default. These two problems, plus corruption, sank the Integrated Rural Development Programme, which provided subsidized micro-credit through nationalized banks in the 1980s. Banks now give loans to MFIs (classified as a priority sector), which then lend to the poor. This raises interest costs, but has proved viable. New problems are cropping up with MFI expansion. Without technical assistance, some businesses fail. Competition in some states is so intense that MFIs accuse rivals of stealing their clients through unethical offers. Some women have borrowed from four or more different MFIs, and could get into debt traps, which also hit MFIs through higher defaults. Moneylenders are said to have entered the MFI business, using thugs rather than group loyalty to enforce payment. Some private equity funds are investing in MFIs, fuelling misgivings that these have become purely commercial and shed their original social mission. These misgivings are legitimate but exaggerated. Micro-finance will always differ from commercial ventures in one respect — the loans go almost entirely to women. Although many husbands appropriate the money, MFIs nevertheless confer status and power on women in a country with oppressive male domination . That’s a huge social change. In Bangladesh, where micro-finance originated, female empowerment has spurred higher women’s education and falling fertility. Mullahs have attacked MFI offices as threats to traditional male and religious dominance. Even if micro-finance does not create instant poverty reduction, it creates profound social and gender changes. That makes it doubly inclusive. For that reason alone, micro-finance achieves what nationalised banks cannot.

My comments
There are two things I agree to and two I don't .The cynicism first.
Microfinance in rural india is as old as India itself.To simply taint rural money lenders and go ahead without regarding their contribution to the microfinance sector in India is probably naive.The Rastogi's from Lucknow,the Marwari's from Calcutta ,The pathan's etc have all been lending and recovering microcredit loans since ages.The terms of finance and methods of recovery does not always involve strong men .Infact ,Mohammad Yunus's Grameen is also a defaulter on the human rights agenda when you consider how they recover their loans.Though group loyalty is used significantly ,things go raw if you lift the viel off your eyes. This is a little write up on the same.http://mindmarinate.blogspot.com/2009/07/capitalist-inside-philanthrope.html
A rider on is .Microfinance probabably did not originate in Bangladesh .It was a spin off of the Mughal Tehsildari.Later picked up by the Lala's of India.
Now ,the two affiramative points.
Definately ,microfinance can be as bad a debt trap as any regular loan .Especially if the debtors get involved in multiple loans from multiple organisations.Also on several occassions the rural female is used as a front for the loan procurement.Just as many panchayats elect the female representative to make a 'puppet panch'.
Second the appetite for micro loans in the poor is also well established.These loans are often used in the sowing season to buy grain ,in the harvest season to transport the crop to the market, in the wedding season to wed the daughters off and then finally also for small ventures.

Brutus ...

"Had you rather Cæsar were living, and die all slaves, than that Cæsar were dead, to live all free men? As Cæsar loved me, I weep for him; as he was fortunate, I rejoice at it; as he was valiant, I honour him; but, as he was ambitious, I slew him." -- Act III, Scene II, Julius Caesar

Friends, Romans, healthcare insurers, lend me your ears. I come to bury health plans, not to praise them. If you read the pivotal scene cited above, in which Brutus explains why he slew the beloved Julius Caesar, he explains that while the man may have had many fine qualities, he simply couldn't be allowed to live--since his lust for power was far too great. And that, my friends, is where things may stand with the commercial health industry as it exists today.

---Anne Zeiger Fierce Healthcare

Insight from an Old timer:Thanks Mr Michael Lewis

I chanced up on this comment in a Fast Company article...I ve been trying to get on touch with the author...registered on Fast Company and all ...till then just "Warm Regards Mr .Lewis...."

I really like the words in italics below...curt and true.

ACCORDING TO THE FEDERAL GOVERNMENT TOO MUCH OF AMERICA’S GDP IS SPENT ON HEALTH CARE.

BUT THE FEDERAL GOVERNMENT CREATED THE PROBLEM:
Decades ago the government passed ‘pay or play’ tax incentives that encouraged employers to provide employees with health insurance.
And America was hooked on health care the way junkies get hooked on smack. The dealer gave free samples until the client was hooked.
When I was young America was the world’s wealthiest nation. And employer provided health insurance paid 100% of medical costs. Because it was free it was abused. Mom took children to the emergency room for a rash and to the doctor for a small cut. Demand was artificially high.
Cost shifting provided for the uninsured. Patients with good insurance policies and wealthy patients with no insurance policies received inflated invoices to cover the costs of those who could not pay. Health care providers and hospitals robbed from the rich to provide health care for the poor.
It is instructive that during the time when America enjoyed great wealth the Federal Government expressed no concern for the plight of the uninsured!
But over time manufacturing jobs moved overseas and were replaced with lower paying service economy jobs. Consequently, employers offered health insurance with less coverage and higher deductibles and co-pays.
Were factory jobs lost because America could not compete with manufacturers in countries where government paid for health care? Regardless, American leaders would not raise tariffs to level the playing field and signed GATT and NAFTA into law!
And America’s leaders permitted millions of ‘illegal’ aliens to cross the border to do work American’s would not do. Our schools educated their children, our State governments gave them drivers licenses, our banks granted them mortgages and our hospitals provided them health care.
BOGUS SOLUTION
Now that America is the worlds biggest debtor nation the Federal Government has decided the plight of the uninsured is unconscionable and universal coverage is a moral imperative.
But this is not about the 46 million uninsured. It is about assuring health insurance companies’ market share and health care professionals expected incomes and lifestyles.
The health system in America has been based on a larger and more affluent generation of young policy holders offsetting the health cost of middle aged and seniors. This formula is being upset by the WWII baby boomers generation approaching retirement and the global recession.

President Obama wants every American citizen to be required to buy a health insurance policy. He compares it to the requirement that motorists purchase auto insurance. But while driving is a privilege, life and the pursuit of happiness is a right!

Where in the Constitution or Bill of Rights is the Federal Governments authority to require the purchase of a health insurance policy as a condition of having been born?Where is freedom when government has the power to tell you how to spend after tax dollars? What distinguishes disposable income from taxes?
As for the proposal that the IRS be charged with fining citizens who do not purchase a health insurance policy, since the federal government just prints more paper money to pay debt why is taxation or the IRS even necessary. Just shutdown the IRS and transfer its budget to indigent care!
FREE MARKET IS THE SOLUTION
Is providing health care an enumerated power or responsibility of the Federal Government?
The Federal Government lacks any authority to preach fiscal responsibility. It has exhibited none in my lifetime and has reduced the wealthiest nation on the planet to world’s biggest debtor nation.
But Ma and Pa citizen have had to balance a checkbook their entire lives. The solution is to return control of health care spending to them.
Pass a law making it illegal for an employer to offer health insurance as an employee benefit. End wage stagnation and give employees raises instead.
Doing away with group health insurance and forcing insurance providers to compete for individual business will permit cost conscious Ma and Pa to shop for the best deal, like they do auto insurance. Then the free market will bring costs under control!

The capitalist inside the philanthrope

The Under belly of Grameen

My Bangladeshi barber has another story to tell about 'Grameen'.The more i told him about my days in Churni the more he told me about the misery and prostratism Grameen Bank has brought on the masses in Bangladesh .

Maybe I am not focusing on the macroeconomic picture but the anecdotes brimming on the lips of the regular Bangaldeshi are quite vulgar. 'A literal Blood sucker' the other barber chimed in when he heard the name Mohammad Yunus.

So why so much angst .I thought Mohd Yunus would be a celebrated 'Bangla' bhai.More Like a war hero, a man who helped build a nation .Received the highest accolades a western man can bestow . At least that is what you gather about him from the media.So why would there be such a disparate opinion.Why would not one but all Bangaldeshi's present in the saloon vehemently disgrace Mr Yunus.

Quite simply because Grameen is a modern day feudal establishment.There is nothing new in microfinance that the Mughals have'nt employed over the ages.The concept of Zamindari ,Jahagirdari brew up with the Mughals.The village rich gave money to the poor s.Both sustainance money and money to do business.

All looks well on the giving end.The issue is how do they behave when it comes to collecting this money with interest.

So if a farmer cant pay up on time.They would take his land,his cow, his daughter.And not necessarily in that order.

Grameen probably does not go as far as the daughter bit.But yes, if you cant make up your weekly installment they do take away whatever they can .The tin roof covering your little house is a particularly appealling commodity .So is your cattle heads . Or your house in case you cease to exist before you pay your due.

The way micro finance in rural areas works is like this. When you take money from 'grameen' .They pool you in to a group of ten debtors.The ten of you pay back a pooled amount in weekly installments and weekly installments alone.If any one of the ten peers defaults , 'grameen' does not accept the payment .This creates incredible peer pressure to pay on time.If you do not succumb to that, they take your roof away.

That should also be acceptable if you are going to take a loan .You would say.You should bear the repercussions of defaulting.I would say why not.

The question to ask is that why should this loan be at a 30 percent interest rate.Is the operational costs for such banks so high that they have to ask for a 3o percent interest rate.Or is the bad debt so significant that it has to be pricey .Or is there hidden capitalist within the hide of philanthrope .

Well the model has been so successful that not only has Mr Yunus catapulted to glory but also to a rather decent personal fortune.

More to come ..as I learn more...maybe I am completely wrong.

This is the link to my previous post on Grameen and Alex Counts

http://mindmarinate.blogspot.com/2009/05/grameen-bank-alex-counts-president-and.html