Thursday, July 27, 2017

Cashless Society - When Push Comes to Shove, Visa is Right There

Throughout the history of this blog, I have written several postings on the concept of a cashless society and the forces behind this move.  A recent move by one of the big players in the field suggests that Corporate America is willing to financially reward merchants for making moves toward global digital payments.

Here's the press release dated July 12, 2017:


Here is a screen capture from the United States Visa website, announcing "The Visa Cashless Challenge":


In its drive to rid the world of those dirty fiat currency notes, Visa's Cashless Challenge will see the company awarding up to $500,000 to 50 eligible U.S.-based small business food service owners who commit to joining the challenge.
  
Visa states that there are three advantages to small business restaurants, cafes and food trucks adopting a cashless model:

1.) safer business

2.) boosted productivity

3.) more time to mentor employees

The company also states that if businesses in 100 cities transitioned from cash to digital, their cities would see net financial benefits of $312 billion annually.  New York City alone would see their businesses generate an additional $6.8 billion in revenue and save more than 186 million hours in labor by using digital payments.  Now that has got to be tempting!

Visa even offers some motivating stories about the advantages of cashless businesses:


Here's one showing how Lucas Mast, Visa's Vice President of Social Media made his way through Barcelona for an afternoon without using cash:


Here's one showing how a Visa representative in India, Abhishant Pant, managed to survive for 200 days without using cash:


Over the 200 days he:

1.) Paid for all forms of transport digitally, including auto (Jugnoo, OLA, ONGO), taxi (UBER/OLA/Taxi for Sure), Mumbai Local (unreserved ticket), NMMT Bus, Hirkani Bus (Pune to Mumbai) and Kaali Peeli (regular black and yellow cabs).
        
2.) Identified a barber who accepted digital payments. 
       
3.) Dealt with poor service, including having to walk 8 kilometers back to the office when my mobile was switched off.  
     
4.) Convinced my maid’s entire family that I will pay her salary—just that the money will go directly into her bank account rather than in cash.
        
5.) Pre-paid my laundry, vegetable delivery and newspaper vendors to prove that I mean business.   
     
6.) Had long conversations with neighborhood Kirana stores (mom-and-pop neighborhood grocery stores) on the benefits and challenges of cashlessness. 
   
He concludes that "anyone can go 95 percent cashless".  His biggest failure was having to use street vendors that only accept cash.

According to Visa's annual report for 2016, the company had the following operational highlights compared to 2014 and 2015:


The company had over 3.1 billion payment accounts to 44 million merchant locations globally and precessed total payments of $8.2 trillion and 83 billion payment transactions for the 12 months ending September 30, 2016.  The company has the following goals:


Over the past two years, Visa has provided payment accounts to more than 120 million people who did not have access to such programs.  Visa even has a Payroll card which it uses as an alternative to receiving paper paycheques.  This reduces the need for cheque cashing services and provides access to the companies electronic financial system.

Here is a summary look at the company's 2016 revenue:

  
...and, as I am prone to do and just in case you were curious, here's the bottom line that matters to the corner office dwellers (noting that Mr. Scharf left his job on December 1, 2016):



Obviously, it is in Visa's best interest to prod the restaurant business into a cashless model.  By doing this, Visa and its credit card peers are able to charge merchant fees for each transaction.  The potential for the abuse of cashlessness, particularly the threat to privacy, seems not to concern the promoters of the digital payments world in any form.  After all, these are the companies that will benefit hugely from the end of paper money. 

Wednesday, July 26, 2017

The Simmering Nuclear War

While the world focuses on the deteriorating geopolitical relationships between the United States and Russia and the United States and China and the potential for a conflict to accelerate into a nuclear exchange, a long-term simmering conflict between two populous nuclear powers has been pretty much ignored by the mainstream media.  Before you dive into this posting, I would like to apologize for its length, however, given the long history and complexity of the issue, a significant amount of background is necessary to put the conflict into context.

For decades, there have been tensions along the 4000 kilometre border between China and India.  After the 1962 Sino-Indian war in which the Chinese suffered 1400 casualties and India suffered 3120 dead, 3100 captured and 1000 wounded, China declared a unilateral ceasefire and withdrew from the front lines of the battle.  The war did, however, seal the fate of Tibet as a long-term source of tension between the two nations.  To this day, China claims the Indian state of Arunachal Pradesh and India claims the Chinese-controlled Aksai Chin territory as shown on this map:


While these two regions have proven to be a diplomatic nightmare, tensions over another border region located between Bhutan and Nepal have recently flared up. 

Let's now look at map to help us put the current events in another border region into perspective:


Sikkim, outlined in red, is bordered by Nepal to the west, Tibet to the north and Bhutan to the east and forms part of the Himalayas. 

Here is a closeup map of Sikkim:


As you can see, most of the state is mountainous and is quite remote with the closest major Indian city, Kolkata (aka Calcutta) being located 700 kilometres to the south.  Despite its relative remoteness from both China and the highly populated regions of India, this part of the border region remains as one of the long-term disputes between the two nations.  According to the Indian press (Hindustan Times), India is adopting a "patient and peaceful" approach to the problem whereas China is insisting that India withdraw its troops from Doklam (the narrow plateau in the  border junction of Bhutan, Tibet and India) and that the longer that India keeps its soldiers on "China's territory", the more likely that there will be a military confrontation.

Here is a summary of the military presence of the two nations along the disputed border regions from NDTV (New Delhi Television Limited):

"Defending the nearly 4,000 km-long Line of Actual Control (LAC) with India is the Lhasa-based Western Theatre Command of the Chinese army, a sprawling military formation spread across 4 provinces including the Tibetan Autonomous Region, where the drills were held. The command includes elements of the Chinese air force and its rocket (missile) forces.

In the event of an escalation, China can use its massive railway infrastructure to bring in additional troops. That has not happened. Since 2009, China has been training in Transregional Support Operations: shifting men and weapons between regions in training exercises.

Countering the Chinese presence along the de facto border are elements of the Northern, Western, Central and Eastern Commands of the Indian Army. Specifically, the Indian defense is centered around deployments made by the Leh-based XIV Corps, the Sukma-based XXXIII Corps, the Tezpur-based 4 Corps, the Dimapur-based III Corps and the Panagarh-based XVII Corps. The overall strength of the Indian Army here would be close to 2 lakh men and women. China's Western Theatre Command would have a similar number of soldiers though China doesn't deploy as many soldiers directly on the LAC but can, instead, use its superb road and rail network to surge troops to areas along the de facto border between the two countries. Despite the tension between the two countries, this has not happened.

NDTV has learnt that China cannot make any significant inroads with the present number of soldiers it has deployed in the region and would need to bring in soldiers from elsewhere, a move that would give Indian military planners a clear indicator of a potential attack. At the same time, India would be hard-pressed to deploy more soldiers along the LAC should that be required since several formations are busy defending the border and the Line of Control with Pakistan in addition to fighting terrorism in Jammu and Kashmir and in parts of the Northeast.

The Indian Air Force has 22 airfields and is developing a network of smaller air landing grounds in the Eastern sector. The Chinese air force has 15 air bases and 27 smaller airstrips but operates at a significant disadvantage vis-a-vis the Indian Air Force. This is because all of Chinese bases in the region are located high in the Tibetan plateau which makes it impossible for the jets to take off with a full weapon load because of the rarified atmosphere. The Indian Air Force, on the other hand, does not face any such constraints. All its major bases in the region are located in the plains and IAF fighters can take off with a full fuel and weapons load, a significant operating advantage in the event of a conflict between the two countries."

Here is a discussion about the ongoing border tensions between the two nations:


According to Firstpost, one of the main problems facing both nations was the poor surveying capabilities that were in existence when the Sikkim-Tibet border was surveyed back in the late 1800s and when the Anglo-Chinese Convention of 1890 was agreed upon.

Now, let's move to the present.  Here is what China has to say about the most recent flareup of the Sikkim border dispute through the Communist Party of China's outlet Global Times :

"On June 16, Indian border guards crossed over the Sikkim section of the China-India border to the Chinese side, triggering a face-off with Chinese troops. India's action this time is a blatant infringement on China's sovereignty.

As the confrontation goes on, China needs to get ready for the face-off becoming a long-term situation and at the same time, needs to maintain a sense of rationality. Within China, there are voices calling for the Indian troops to be expelled immediately to safeguard the country's sovereignty, while Indian public opinion is clamoring for war with China. However, the two sides need to exercise restraint and avoid the current conflict spiraling out of control.

One important reason that prompted India triggering the border dispute this time is its worry over China's development in recent years. As two big developing countries, India and China both had a history of past colonization, and now both are enjoying fast economic growth. But China has risen quickly to be the world's No.2 economy. As time is on China's side, New Delhi is deeply concerned with China's rapid rise. Provocation at the border reflects India's worry and attempt to sound out China.

China doesn't recognize the land under the actual control of India is Indian territory. Bilateral border negotiations are still ongoing, but the atmosphere for negotiations has been poisoned by India. China doesn't advocate and tries hard to avoid a military clash with India, but China doesn't fear going to war to safeguard sovereignty either, and will make itself ready for a long-term confrontation. 

According to the Indian media, Indian troops are stationed at the border area and have set up logistical support. They even claim that India will continue the confrontation with China at the Sikkim section of the China-India border until the Chinese troops withdraw. In response, China must continue strengthening border construction and speed up troop deployment and construction in the Doklam area. These are legitimate actions of a sovereign country. 

The 3,500-kilometer border has never been short of disputes. Since the 1962 border war, the Indian side has repeatedly made provocations. China must be prepared for future conflicts and confrontation. China can take further countermeasures along the Line of Actual Control (LAC). If India stirs up conflicts in several spots, it must face the consequence of an all-out confrontation with China along the entire LAC.  

If India plans to devote more resources in the border area, then so be it. China can engage in a competition with India over economic and military resources deployment in the border area. With growing national strength, China is capable of deploying resources in remote border areas. It is conducive to the economic growth of these regions, as well as to safeguarding integration of China's territory. Road and rail in the Tibetan area have been extended close to the border area with India, Nepal and Bhutan. It's a competition of military strength, as well as a competition of overall economic strength." (my bold)

In closing, let's look at a graphic which shows the total estimated global nuclear weapons inventory:


As you can see, India has an estimated 130 nuclear weapons compared to China's 270.  According to Global Firepower, China has 2.26 million active military personnel compared to India's 1.363 million and China has a total of 3.713 million military personnel compared to India's 4.207 million when reservists are included. 

A ramping up of the current tensions across the disputed India-China border could prove to be quite different than it was in the early 1960s; this time, both nations have nuclear weapons.  This decades-long simmering nuclear war could well have a far less palatable ending than the 1962 hostilities.   


Tuesday, July 25, 2017

United States Health Care - Paying More and Getting Less

Commonwealth Fund's most recent international comparison of health care certainly makes the United States health care system look like one of the weakest in the developed world.  The analysis compares the health care system in the U.S. to that of 10 other high-income nations, examining 72 indicators that measure health care performance in five domains - access, administrative efficiency, care process, equity and health care outcomes.  

Let's start by looking at a comparison of health care spending as a percentage of GDP among the 11 nations in the studying back to 1980:


As you can see, over the past 35 years, U.S. health care spending as a percentage of GDP has been the highest among all 11 high-income nations and the differential has been growing with time.  Back in 1980, U.S. health care spending totalled 8.2 percent of GDP; this has risen to 16.6 percent in 2014, 5.2 percentage points higher than the second place finisher, Switzerland.

Now, let's look at the rankings for the five domains as listed above:

1.) Access: includes two subdomains - includes two subdomains - affordability and timeliness of treatment


2.) Administrative Efficiency: includes four subdomains that measure barriers to care experienced by patients including availability of regular doctor, medical records and test results and three subdomains which measure patients' and physicians' time and effort required to deal with paperwork and insurance/government documentation.


3.) Care Process: includes four subdomains - preventative care, safe care, coordinated care and engagement and patient preferences


4.) Equity: compares health care performance for lower- and higher-income individuals


5.) Health Outcomes: includes three subdomains - population health outcomes, mortality amenable to health care and disease-specific health outcomes measures 


As you can see on this table, the United States performs well only on the care process domain and even then, it is still only in fifth place.  On all other domains, the American performance comes in last or second last place:


Obviously, when it comes to health care, the bottom line measure is mortality, particularly amenable mortality which is defined as:

 "...deaths from a collection of diseases such as heart disease, cancer, diabetes and appendicitis that are potentially preventable given effective and timely health care.  This serves as a marker that highlights the performance of a health care system.

Here is a graphic comparing the mortality amenable to health care rate for all eleven nations, showing the changes in the rate between 2004 and 2014:


In all countries, the rate of deaths related to a lack of effective and timely heath care dropped over the decade, however, the United States still has the highest amenable mortality rate.

Finally, let's close this posting with one last graphic that shows how, once again, the United States is the outlier when it comes to a comparison of health care system performance and health care system spending (as a percentage of GDP):


While Congress continues to quibble over health care for Americans, as we can see from the Commonwealth Fund study, no matter which political party is in control, Americans pay more and get less when it comes to health care provision and results.