Posts tagged "complex"

Nigeria: State and City police

The former President of Nigeria  Olusegun Obasanjo fondly called “ Baba Iyabo” made an attempt to ask the nation if we needed a federal police system at the same time former Governor of Lagos state Asiwaju of Yoruba land Tinubu was advocating for a state police, the issue became so popular that it generated lots of opinions among Nigerians in and out of the country and in my contribution which was titled “ Towards internal Security” which was published online I was advocating for city and county police system similar to what is operated in the United States of America.

The article revealed Nigeria police as presently constituted was not only underpaid but under equipped for job in the 21st Century. A police recruit in the state of Texas gross pay is over $48,000  per annum in addition to this pay, if the recruit can speak other languages he earns more than his colleagues, his life insurance is over $250,000 if he dies in the line of his duty, the incentives attached to the job of Police in the state of Texas is so mouth watering that it will be difficult to accept bribe as a police officer and a mere look of a police officer in Dallas County is enough to convince any observer that the officer is not only well paid but also well equipped for the job.

The internal security of Nigeria is so broken down that kidnapping is more of an acceptable fashion like we used to read in James Hardly Chase novels with some notable titles like  “ Wants to stay alive? “  Believed violent ‘and Well now my Pretty” which were very popular with my generation in the seventies. Kidnapping as handled by police in those novels revealed how United States of America handled issues of serious nature and how crimes were departmentalized as federal, state and city issues, it revealed how the country was able to move beyond sentiment of federal to allowing state and city to handle crimes.

With the above understand, in mind, and actual real situation on the ground, research revealed more than what James Hardly Chase mentioned, it revealed US police system was just as corrupt and under equipped like Nigeria before each state was allowed to have its own police and with only a supervisory role from the FBI. The last administration made a cosmetic approach toward this by establishing the EFCC but failed to remove the federal police system which would have given the supervisory role to EFCC over the state and city police through out the country.

The questions in the mind of the readers will be as follows, what will happen to the states and cities that can not afford to set up the police administration right now? Suppose the governors turn the new police system to political control machine? Suppose non indigenes are victimized with state and city police? These are understandable fears of those who will rather look at negative effect than looking at how such problem was handled by nations that had similar problems.

Our nature and composition, does not allow us to effectively operate a single federal Police system in a nation with various ethnic compositions, to alley the fear as mentioned above, the laws to give power to state and city to establish police must make it difficult for governors, local government chairmen and city mayors in future to exercise undue influence on the system. The law will allow those states and cities which will  rather have the Federal police to stick with the present system while those states and cities in Lagos, Oyo, Anambra, kano to test the market for the state and city police.

The transition to state and city police can not happen overnight for all states  because some will rather stick with what they are used to,  it took the state of Oregon in America 100 years to adopt state police behind the state of Texas. Recruitment must reflect the state composition and federal character before funds can be released by the Federal government, and each state or City police must be subjected to EFCC supervision and when a complex which case can not be solved by the state or the city police the EFCC will move in to reorganize the police system of the state or city for a reasonable period that will be stated by the law.

The Present Mobile Police must be under the EFCC to take over any state or city police in case of emergency and the rest of the police force will be re-deployed to operate solely at state level and city that will require their services if they can not be totally employed by the states or cities they can be laid off and such men in uniform can work as security men for companies or private sectors.

The Yoruba has an adage “Opo kan ni eyin afaa, Iba je eyo kan ko sa le fi mu musa” meaning “The chief Imam does not need to have lots of functional teeth even if it is one as long as the Imam can pick donut with it” It is very funny, but it is true with the police system we have right now, it is not the numbers of men in uniform but a functional police system which can only be achieved by creating state and city police.

The current Federal police system is making a mockery of security in Nigeria, kidnapping today is more of lucrative business than 419 or internet advanced fee fraud, kings, wives and concubines, children and movies stars are being kidnapped on daily basis and the ransom are being announced by the press  like lottery winning games.

Finally, unlike what all the doubting “Thomases” will want us to believe on the shortcomings of State and City Police, establishing it, is where the solution to internal security of Nigeria lies, it will not only solve the problem it will put tribal “things” called OPC, Egbesu and area boys out of business, Governors and future Mayors of each city performances will be measured before re-election, State and City police will help to enforce all the local laws passed by the State House of Assembly and those of the local government, to ignore this, is to postpone the evil day, Nigeria Bless Your Hearts

Zents Kunle Sowunmi

New York USA the author of “Before the Journey became Home”

Kunle Sowunmi

Being a Security Guard

A security guard or security officer is, usually, a privately-employed person who is employed to protect property and/or people. Usually security guards are uniformed and act to protect property by maintaining a high visibility presence and observing (either directly, through patrols, or by watching alarm systems or video cameras) for signs of crime, fire or disorder; then taking action and/or reporting any incidents to their client, employer and emergency services as appropriate.

The security officer motto is to “detect, deter, observe and report.” Security officers are not normally required to make arrests (but has the authority to make a citizens arrest) or otherwise act as police officers except in some United States jurisdictions in which the security officer is invested with arrest powers like those of a county sheriff. In contrast to the above mentioned motto, a Private Security Officer’s actual primary duty is prevention of crime. Security personnel do enforce company rules and can act to protect lives and property. In fact, they frequently have a contractual obligation to provide these actions. Security Officers are often trained to perform arrests, operate emergency equipment, perform first aid, CPR, take accurate notes and write effective reports, and perform other tasks as required by the property they are protecting. In case of Armed Security Officers who are also called Private Police Officers , are required to go through additional training mandated by the state for carrying weapons such as baton , firearms , handcuffing , arrest and control and pepper spray trainings .

One major economic justification for security guards is that insurance companies (particularly fire insurance carriers) will give substantial rate discounts to sites which have a 24-hour presence; for a high risk or high value venue, the discount can often exceed the money being spent on its security program. This is because having a security guard on site increases the odds that any fire will be noticed and reported to the local fire department before a total loss occurs. Also, the presence of security guards (particularly in combination with effective security procedures) tends to diminish “shrinkage,” theft, employee misconduct and safety rule violations, property damage, or even sabotage. Many casinos hire security guards to protect the money when transferring it from the casino to the casino’s bank.

Security officers also perform access control at building entrances and vehicle gates by ensuring that employees and visitors display proper passes or identification before entering the facility. Security officers are often called upon to respond to minor emergencies (lost persons, lockouts, dead vehicle batteries, etc.) and to assist in serious emergencies by guiding emergency responders to the scene of the incident and documenting what happened on an incident report. In case of armed security officers, often they are required to respond like police officers until situation is under control and / or proper authorities arrive on the scene.

Although security officers are a distinct type of personnel from either police officers or the military, in the United States a very high proportion of security personnel, including most senior management personnel, are either former or retired members of one or both services. Many security officers who don’t fit this profile (young people in particular) use the job as a springboard into a police career.

Being a private security officer is by no means a lucrative endeavor. Most first line private security personal are paid a low wage which often does not reflect the risks they endure on the job.

Security officers are classified as either of the following
“In-house” or “proprietary” (i.e. employed by the same company or organization they protect, such as a mall, theme park, or casino)
“Contract,” (working for a private security company which protects many locations.)
“Public security” or security police
“Private Patrol Officers” , Patrol gated communities. i.e. Bel-Air Patrol
“Private Police Officers”, also known as Armed Security Officers

Industry terms for various security personnel include: Security , guards, agents, watchmen, officers, safety patrol , Armed Security , Private Police ,Loss Prevention Officers , Bodyguards , Executive Protection Officers . Other job titles in the security industry include dispatcher, receptionist, driver, supervisor, alarm responder, armed security officer, and manager.

Newer terms have been developing within the American security industry that tend to reclassify security personnel into three basic classes, as follows:
Security guards: These personnel, usually uniformed, are primarily responsible for the protection of property only and do not have a responsibility for anything other than basic visibility and reporting. Examples of security guards include night watchmen on construction sites, bank vault guards, and monetary transport guards of money and valuables.

Security officers: These personnel, also usually uniformed, are employed in functions that involve the protection of lives, property and the public peace on private property. Examples of security officers include apartment complex security officers, mall security officers, private patrol officers, and any security personnel that operate in an environment that includes a contractual obligation for the protection of lives and/or the public peace.

Security agents: These personnel, usually without a uniform, are primarily contracted or employed with a focus on apprehension rather than prevention on private property. Examples of security agents include loss prevention agents and personal protection agents (bodyguards).

Security personnel are not police officers but are often confused with them due to similar uniforms and behaviors, especially on private property. Security personnel derive their powers not from the state, as public police officers do, but from a contractual arrangement that give them ‘Agent of the Owner’ powers. This includes a nearly unlimited power to question with the freedom of an absence of probable cause requirements that frequently dog public law enforcement officers. Additionally, as legal precedents have further restrained the traditional police officers’ power of “officer discretion” regarding arrests in the field, requiring a police officer to arrest minor lawbreakers, private security personnel still enjoy such powers of discretion largely due to their private citizen status. Since the laws regarding the limitations of powers generally have to do with public law enforcement, private security is relatively free to utilize non-traditional means to protect and serve their clients’ interests. This does not come without checks, however, as private security personnel do not enjoy the benefit of civil protection, as public law enforcement officers do, and can be sued directly for false arrests and illegal actions if they commit such acts.

Josh Stone
http://www.articlesbase.com/careers-articles/being-a-security-guard-55257.html

Learn the Top Reasons Behind Poor Performance & Availability With Microsoft Exchange

As a professional, your clients know they can depend on you, and that you are there for them. But what happens when your technology is not there for you? Imagine you are on the phone with your client, telling him with great pride that at long last the document he has been waiting for is complete. While you chat, you attach the document to an email, send it off…and wait.

And wait. The email is no longer in your outbox and not in his inbox. You double-check the email address, and as the conversation becomes more and more awkward, you assure the client that the document really does exist and there really was an email sent. He is frustrated and you are at a complete loss. You decide you cannot wait any longer and switch to your personal Hotmail account to resend the document, which may or may not work immediately either. The result is wasted time, and if you switched email systems, you no longer have a cohesive record of the exchange.

Your system administrator will list a number of reasons why this incident happened, reasons that are beyond his control:

• Junk mail folders
• Anti-virus systems
• User errors
• Bottlenecks in the Internet that day

The real reasons may actually run much deeper, which means that this lost email will not be an isolated incident.

Lost Emails Mean Lost Opportunities

Consumers, accustomed to fast responses through websites, are quickly losing their tolerance for slow email responses. Evidence of this can be seen through a recent study by the WAV Group, who claims in the real estate industry, the first agent to respond to a customer email inquiry has a 73% chance of securing the business. The third to respond has virtually no chance.[1] Similarly, a study conducted by Vodafone released in December of 2008 estimates that lost opportunities due to failures to reply promptly to email messages cost businesses approximately $27,000 a year.[2]

What about email that goes missing entirely? This summer Apple Corp admitted to “losing” 10% of their MobileMe subscribers email between July 16th and July 18th.[3] A wave of blog posts have popped up as a result of this problem, with subscribers making claims of everything from lost job opportunities to lost business. We tend to view email as a low cost service, yet clearly when it fails, the costs can be startling. Apple would only remark that the problem was due to a “serious issue.” So what exactly does happen to these wayward email messages, delayed or lost?

The truth is there are dozens of potential reasons for email delivery delays and errors. With complex business-grade email systems, like Microsoft® Exchange and Lotus Notes, there are many ways to build and configure a system. Some conform to the highest standards, while others barely meet the minimum requirements. With very little effort, you can determine whether your system had been adequately configured to suit your needs.

High Availability

As the name implies, High Availability is a system or network that is operational, or available, with a high degree of certainty and frequency. Ceryx, a Hosted Exchange provider, has made high-availability one of their primary focuses. With data centers in New York and Toronto, they have developed various technologies to replicate all messaging data in real-time and can fail over to the secondary facility in the event of catastrophe, allowing them to provide a real 100% SLA. While most providers tend to choose between high availability and high performance, all of Ceryx’s Microsoft Exchange deployments have been built to meet the highest standard of availability uptime without sacrificing performance.

One benchmark for testing an application provider’s performance is to log in to the webmail application and switch from the email view to the calendar view. Pick a folder with lots of messages in it and try sorting by “sender” and then clicking through the various pages. If there is a noticeable delay between these actions then your application provider’s performance may not be adequate.

A system’s availability is determined by numerous factors, each of which is examined below.

Architecture

Delays are often a result of high server RPC latency. RPC, or Remote Procedure Call, is how the Outlook client or the Outlook Web Access client (OWA) communicates with the Exchanger servers. RPC latency refers to the delay between initiating a request and its completion. RPC latency, as seen from the client, is a combination of networking latency and server latency. For good performance, the Microsoft guideline is 50ms average latency on the mailbox servers.[4] If mailbox server RPC latency averages much higher than this, the desktop user can experience “pop-ups” and warnings about problems with the connection from Outlook to the Exchange server. In the background, inbound and outbound email is not being processed as the system tries to catch up with other requests. Excessive “pop-ups” can become more than just an irritant; they can slow down a PC to the point of being unusable while Outlook tries to establish a connection to the server.

Ceryx aims to maintain an RPC rate 20ms or less. To do this, they have avoided the tendency of many providers who built their systems with less expensive virtualized environments and network attached storage. Instead Ceryx has invested in server clusters and high-end SANs (Storage Area Networks) at each of their data centers. SANs provide disk access performance, as well as redundancy through RAID configurations and fibre channel connectivity to the mailbox servers.

Many providers, in an effort to reduce costs, combine the Client Access Server and the Hub Transport Server (servers used to facilitate email delivery) on a single physical machine. This dual role can introduce latency at times of peak usage and throttle the ability to handle large outbound mail queues. Ceryx has engineered the Hub Transport role to ensure message queues can be quickly cleared even during periods of heavy load. By combining multiple, dedicated physical Hub Transport servers with the built-in round-robin load balancing capabilities of Exchange 2007, messages are quickly distributed to their destination on the internet. For legitimate email, hardware load balancing is used to ensure optimal performance of the critical Hub Transport role, which processes every single message that passes through the system.

Monitoring

Most hardware load balancing configurations can achieve both high performance and high availability; however, to sustain high performance and high availability – with a dynamic system like a Hosted Exchange deployment, where usage and load can vary dramatically – you must have an advanced monitoring system and the processes in place to scale the system in response to constantly changing variables.

Some providers install generic monitoring packages that tend to monitor every single metric available, whether the metrics provide meaningful insight to system performance or not. With Ceryx, every aspect of the environment from key metrics around SAN queue length through to standard metrics like CPU utilization and memory usage are closely monitored, trended, and understood. This information is used to develop highly accurate forecasting and scheduled system scaling. Any provider who has not invested in such monitoring tools and resources will just react to spikes in usage and load. Ceryx plans for them.

Breathing Room

Another major reason for email delays and poor performance can again be attributed to basic economics. A “store” is the unique databases for storing messaging data. With Microsoft Exchange 2007 Enterprise, there is a limit of 50 stores per server, with a Microsoft recommended limit of 200 GB for each store. Some providers will try to maximize the number of customers they can support by pushing these limits. Ceryx does the opposite. Ceryx maintains a maximum of 50 GB per store – one quarter of the maximum – in order to deliver the best raw database performance and protect against data corruption, common with larger stores. With these hard restrictions in place, it’s difficult to imagine how some providers – who offer mailboxes up to 4GB – are able to run a sustainable business and maintain high performance and availability.

IOPS

Economics may also drive another cause of poor performance: IOPS, a measurement of the number of times data can be written and read to disk per second, can vary widely per system. With Microsoft Exchange, IOPS capacity is directly related to performance and a heavy user can use up to 1 IOPS under certain circumstances. Each disk has a maximum number of IOPS it can support, so a careful ratio of users per array of disks is essential to maintain decent performance.

Ceryx is careful to maintain a generous ratio of IOPS per user based on real-world metrics monitored from its large user base, taking into consideration peak activities times and not just daily averages.

Routing Issues

To be fair, email delays and errors may occur outside your environment. In the scenario where your colleague was eagerly sitting and waiting for an email to arrive, it may have got stuck somewhere “in the cloud” – somewhere in between both of your email environments.

On a pre-sales and support level, Ceryx has developed a number of troubleshooting tools to help identify potential routing issues. As with any application “hosted in the cloud,” bandwidth is an important consideration when trying to ensure a positive end-users experience. Microsoft Exchange, which consumes 3 KB of a client’s internet connection per active user, is no different. Ceryx has developed a tool that simulates a series of network connections to determine if the client has adequate bandwidth to support their user base. Through this exercise they have discovered that – with any client moving from an on-premise environment to a hosted environment – any increase in bandwidth required is partially offset by decommissioning and offloading SMTP traffic, external connections spam traffic and attacks.

Spam/Anti-Virus

Of course the most notorious place a message gets “stuck” or delayed is in a provider’s anti-virus and spam filtering system. Ceryx runs seven different anti-virus products in its environment to ensure system health and email hygiene. That level of protection could potentially cripple an ordinary system that wasn’t built for high performance; however, Ceryx has not only sized their solution with the performance hit associated with anti-virus scanning in mind, but also closely monitors its environment to ensure email delivery is never compromised by spam and anti-virus filtering.

Beware of any provider who either ignores this potential performance hit or, worse yet, removes backend anti-virus all together. Removing anti-virus may appear to be a good way to control costs, as high-end solutions can be very expensive, but removing them allows viruses in, and once in, are often hard to then find, never mind remove. Ceryx’s system scans incoming and outgoing messages as well as messages in the store on a scheduled basis. A regular scan of mailbox databases is just as important as gateway anti-virus to reduce the instance of catastrophic failure.

Mobility

The benefits and usability of the Ceryx architecture can be measured not only on the desktop level but for mobile users as well, who share the same highly optimized and redundant environment. Ceryx also maintains fully-replicated BES (BlackBerry Enterprise Servers) in both its environments to maintain maximum mobility uptime as well. Forum Oilfield Services, out of Houston Texas, currently has 600 employees using the Ceryx Hosted Exchange solution, with almost 100 mobile users.

Beware of “Bargains”

Unfortunately the market is crowded with Hosted Exchange providers who are not as concerned about delivering a dependable and resilient solution as they are about keeping their costs low and selling high volumes of mailboxes. Providers that offer 3 or 4 GB mailboxes are ignoring the commonly held understanding that mailboxes of this size do not perform well and are highly susceptible to data corruption. That corruption is not limited to just the user in question, but can impact all users on that store, potentially even the entire server.

These providers can only offer mailboxes of this size at a bargain price if they compromise on some other expense – dedicated servers, SANs, anti-virus solutions or a fully redundant architecture. Of course the much greater expense is the lost productivity and opportunity that results from using a solution that was designed with the primary goal of meeting the lowest possible price point to compete with free solutions in the market, and not delivering Enterprise performance and availability.

Ask all potential vendors for the following:

• Customer references
  (Quiz the references about any down-time they may have experienced)
• The SLA
  Have a close look at the financial penalties if high availability is not maintained. Professional hosting providers, confident in their systems ability to maintain high availability, will include clearly worded conditions in their SLA around the exact fees that will be paid to a customer should they not maintain an acceptable level of up-time.

How Do You Measure Up?

A lost or delayed email could be viewed as a nuisance or as a warning. Purchasing decisions need to be fiscally responsible, but often, seemingly bargain solutions can have a devastating and costly effect in the long run.

So how does your system measure up? Using Ceryx as a control, measure the speed, versatility, and resilience of your system.

Ceryx

SLA: 100%
Latency: < 20 ms
GB / Store: 50 GB / Store
IOPS per User: High
Bandwidth Sizing Tools: Yes
Spam / Anti-Virus: Gateway + Mailbox Server, Integrated
Mobile Device Access: Redundant BlackBerry, ActiveSync
 
Ceryx customers share the belief that their data is their companies most valued asset. As the most used collaboration tool in business, an individual Microsoft Exchange account typically contains a blueprint of an employee’s tenure: their schedule, correspondence (and commitments), contacts, contracts and much more. Ceryx customers trust that this real-time journal is safe, available and always accessible.

Footnotes:
[1] The Wav Group: Gaining an Edge in Real Estate with Smartphones http://wavgroup.com
[2] The Open Press: http://www.theopenpress.com/index.php?a=press&id=42004
[3] Apple Support Forum: http://support.apple.com/kb/TS1953
[4] Microsoft Exchange Team Blog: http://msexchangeteam.com/archive/2005/09/28/411674.aspx
[5] Microsoft TechNet: http://technet.microsoft.com/en-us/library/bb738147.aspx

John Carthy
http://www.articlesbase.com/communication-articles/learn-the-top-reasons-behind-poor-performance-availability-with-microsoft-exchange-751535.html

International Company and Ethics

International Company and Ethics
The issue of business ethics is engaging companies more and more – both domestically and internationally. This trend is accentuated by high-profile examples of breaches of accepted standards of ethical behavior. For example, the recent Enron case where inadequate checks and balances within the firm enabled unethical behavior to occur, a development made easier by the failure of the external auditor to fulfill its role properly. Assumptions about ethics and business are influenced inevitably by fundamental beliefs about the role of business in society. On the one hand, there are those who believe that the sole social responsibility of business is to generate profit. For some proponents of this view, profit generation itself takes on a moral dimension whereas others see profits as the key to wealth generation – the main way of addressing social issues (Davies, 1997, p. 88). On the other hand, others believe that the role of business is much broader than that of profit generation and that all those who are affected by the way a company operates – shareholders, employees, customers, suppliers, the local community, future generations (especially in relation to environmental issues) – have a legitimate interest and stake in the way a company conducts itself.
Many of these concerns are relevant to business whether it is domestic or international in nature. However, international business poses particular challenges and questions over and above those facing purely domestic business. In order to reconcile doing business internationally and remain ethical, the company should follow the main principles of human rights, comply with legal norms related to labor, avoid corruption and correspond to standards of environmental protection. Even though it is not easy to combine making profit and adjusting to ethical principles, sometimes failure to comply with legal norms and standards my result in negative public image for the international company and loss of customers. Therefore, international company can suffer even more damages if it decides not to follow the ethical principles.
The first issue related to ethics is human rights. It is a generally accepted principle that international company should not engage in direct infringement of human rights the UN Universal Declaration of Human Rights (UDHR) is commonly taken as the appropriate benchmark. However, some people would go further, preferring companies to refrain from doing business in countries known to infringe human rights on a systematic basis. Opponents of this view argue that if an international company abstains from conducting business in a country with an ethically dubious regime, the only concrete result is to hand over business opportunities to companies without such reservations (Barlett and Ghoshall, 1998, p. 110).
On coming to office in 1992, for example, President Clinton proposed to withdraw MFN status from China as a result of the Tiananmen Square massacre in 1989 in which many pro-democracy demonstrators were killed (Kepstein, 2001, p. 108). Such action would have provoked retaliation against US companies operating in China and US business lobbied hard to persuade the president to change his mind. They argued that US business interests would be irrevocably damaged in a rapidly growing market and that the outcome would not be an improvement in human rights in China but a boost to the business prospects of American business rivals in China. The lobbying campaign was successful: the link between trade and human rights was broken and replaced by the doctrine that the possibility of bringing about change is greater if business and other links and contacts are maintained.
International labor issues can be linked with human rights, especially regarding matters of forced labor and child labor. Ethical labor issues also occur outside the framework of the Universal Declaration of Human Rights in circumstances where certain labor practices may be legal and commonplace in the host country but do not necessarily represent fair and equitable treatment of the workforce. The issue facing an international company is: does it maximize its competitive advantage by locating in a low-cost/low-regulation country and adopt local practices or does it refrain from reaping all the labor cost benefits by adopting higher standards and more ethical practices than strict compliance with local legal norms requires? A firm may choose to take the latter path and still experience significant competitiveness gains.
Corporate codes of conduct governing general corporate behavior and treatment of the workforce in particular are not new. Their modern manifestation began in the mid-twentieth century in the form of codes from the International Chamber of Commerce and other collective codes (Donaldson, 1989, p. 55). Their popularity surged once more in the 1990s in response to pressure from NGOs, the emergence of corporate social responsibility as a key consideration for firms and the phenomenon of socially responsible investment and shareholder action. Additionally, discussion of the possible inclusion of labour regulation under the WTO umbrella encouraged international firms to assume greater responsibility for their own labor standards, if only to demonstrate that international regulation was unnecessary. Corporate codes of conduct take many forms. Many international firms have developed their own individual codes to cover their own employees and those of their contractors and suppliers. Some industries have developed their own codes. Whatever form they take, codes are necessary for the positive public image of international company and they demonstrate that the company reconciles doing business and acting ethically. Codes need to comply with a number of conditions before they can be said to operate equitably and with credibility (DeGeorge, 1993, p. 88):
1.the contents of the code must be clearly worded and, at a minimum, comply with core standards;
2.the company adopting the code must be committed to it and be prepared to provide the resources to ensure its implementation, including training, information systems for monitoring and compliance and staff to implement new procedures;
3.knowledge of the code throughout the organization is essential to its implementation: in particular, employees of the firm and its subcontractors and suppliers must know of the contents of the code and a reporting system must be established that enables workers to report infringements without fear of reprisals;
4.the code should be subject to verification by independent assessors who have access to the site unannounced at any time.
The application of such codes can enhance internal governance and facilitate internal management across geographically dispersed sites. There is some evidence to show that real commercial benefits can be gained from the proper application of fair and equitable labor standards, although more widespread research needs to be done on this (DeGeorge, 1993, p. 111). Provided the code of conduct adopted by a firm has external credibility, it can both protect and enhance a firm’s reputation, particularly important these days when more is expected of firms in terms of corporate social responsibility.
Levi Strauss is one of the world’s largest brand-name clothes manufacturers and also one of the first international companies to adopt a corporate code of conduct to apply to all contractors who manufacture and finish its products and to aid selection of which countries in which to operate (DeGeorge, 1993, p. 118). The Code of Conduct has two parts:
1.Business partner terms of engagement: Levi Strauss uses these to select business partners that follow workplace standards and practices consistent with its policies and to help identify potential problems. In addition to meeting acceptable general ethical standards, complying with all legal requirements and sharing Levi Strauss’s commitment to the environment and community involvement, Levi Strauss’s business partners must adhere to the following employment guidelines:
-Wages and benefits: business partners must comply with any applicable law and the prevailing manufacturing and finishing industry practices.
-Working hours: partners must respect local legal limits on working hours and preference will be given to those who operate less than a 60-hour working week. Levi Strauss will not use partners that regularly require workers to work in excess of 60 hours. Employees should also have at least one day off per week.
-Child labor: use of child labor is not permissible in any of the facilities of the business partner. Workers must not be below 15 years of age or below the compulsory school age.
-Disciplinary practices: Levi Strauss will not use business partners who use corporal punishment or other forms of physical or mental coercion.
-Prison/forced labor: no prison or forced labor is to be used by business partners nor will Levi Strauss use or buy materials from companies using prison or forced labor.
-Freedom of association: the rights of workers to join unions and to bargain collectively must be respected.
-Discrimination: while respecting cultural differences, Levi Strauss believes workers should be employed on the basis of their ability to do their job
-Health and safety: Levi Strauss undertakes to use business partners who provide a safe and healthy working environment and, where appropriate residential facilities
2.Country assessment guidelines: these are used to address broad issues beyond the control of individual business and are intended to help Levi Strauss assess the degree to which its global reputation and success may be exposed to unreasonable risk. It was an adverse country assessment that caused Levi Strauss to cease its engagement in China in the early 1990s, largely on human rights grounds – a decision that has subsequently been reversed. In particular, the company assesses whether:
-the brand image will be adversely affected by the perception or image of a country among customers;
-the health and safety of employees and their families will be exposed to unreasonable risk;
-the human rights environment prevents the company from conducting business activities in a manner consistent with the global guidelines and other company policies;
-the legal system prevents the company from adequately protecting trademarks, investments or other commercial interests;
-the political, economic and social environment protects the company’s commercial interests and brand corporate image.
Levi Strauss is the example of the company that successfully combines doing business and following ethical practices. As we see, the company code of ethics demonstrates that Levi Strauss complies with the most labor norms and environmental standards; at the same time such actions of the company do not have any negative impact upon its business. On the contrary, since Levi Strauss has positive public image the customers should be more attracted to its products.
Some of the other important ethical issues that the company should consider is bribery and corruption. Bribery/corruption is not as clear-cut an issue as might first appear; indeed it can be rather a grey area. In some cultures, it is regarded as perfectly normal to give an official or host a gift (Asgary and Mitschow, 2002, p. 245). In others, only minimal value token gifts or no gifts at all are allowed. A problem arises when it is the norm for a contract to be signed only after the payment of a ‘commission’ to a key official or officials (Asgary and Mitschow, 2002, p. 240). Such circumstances place international companies in a difficult position: without payment of these commissions, the contract will not materialize and, if they do not make the payment, many other companies will (although that is not an ethical justification for going ahead with the commission). The position of the US is unequivocal about this: it regards all such payments as bribes and, as such, they are both unethical and illegal. The Foreign Corrupt Practices Law forbids US companies from making improper payments to foreign governments, politicians or political parties to obtain or retain business. Therefore, the only choice that American companies have regarding bribery is not to make any payments regarded as bribes; otherwise, it can be considered that a company violates the law.
The last ethical challenge that international companies face is related to environmental protection. Firms can encounter damaging publicity as a result of the environmental outcome of their activities as pollution attracts more and more media attention (Barlett and Ghoshal, 1998, p. 98). For many, environmental protection and corporate responsibility in this field has a clear ethical dimension. This debate is couched in terms of the ‘global commons’ in which all human beings have both a stake and a responsibility to ensure the well-being of the environment for future generations (Donaldson, 1989, p. 211).
In order to reconcile doing business and meeting environmental ethical standards an international company should comply with the following underlying principles in environmental policy.
The first norm refers to the “polluter pays principle.” It stipulates that polluters should pay the full cost of the environmental damage they cause (DeGeorge, 1993, p. 100). Environmental costs are often referred to as ‘externalities’ (for example, damage to health, rivers, the air, etc. arising from economic activity) that are not incorporated into the costs of a product but are borne by society as a whole (DeGeorge, 1993, p. 100). By making the polluter pay the full cost of its activities, including externalities, this principle provides an incentive to make products less polluting and/or to reduce the consumption of polluting goods. This internalization of external costs can be met through the use of market-based, policy instruments.
The other principle refers to prevention. If the company decides to follow the prevention principle it changes to products and processes to prevent environmental damage occurring rather than relying on remedial action to repair damage after it has taken place (Davies, 1997, p. 108). This implies the development of ‘clean technologies’; minimal use of natural resources; minimal releases into the atmosphere, water and soil; and maximization of the recyclability and lifespan of products.
In conclusion, international business adds an extra dimension to ethical issues within the firm. All organizations have their own culture based on common language and terminology, behavioral norms, dominant values, informality/formality, etc. This inevitably becomes more complex when an organization has a presence in more than one country. Some companies believe a strong corporate culture is a means of overcoming diverse national cultures whereas others evolve different cultures in different organizations and incorporate cultural diversity in their management strategy. Many organizations like Coca-Cola and McDonald’s do use core brands but still adapt their products for local markets and follow ethical standards, either out of necessity or to maximize returns. Ethics and corporate social responsibility are closely related. Debates about corporate social responsibility have been dominated by labor and environmental issues but a growing number of corporate governance scandals involving multinationals is increasing pressure for stricter regulation. International companies can reconcile doing business internationally and remaining ethical if they comply with labor and environmental norms enacted at the international level and establish and follow the code of ethics. In the long run, corporate commitment to sound ethical principles and socially responsible behavior is good for business.
Produced by ProfEssays ( www.professays.com ) – professional custom essay writing service: custom essays, custom term papers, custom academic papers, custom research papers, compositions, book reports, case study. No plagiarism, high quality, prompt delivery.

Andrew Sandon
http://www.articlesbase.com/ethics-articles/international-company-and-ethics-67615.html

JFK – Exposing the New World Order

ATTENTION: I HAVE MISTAKENLY ATTRIBUTED THE QUOTE, “DISSENT IS THE HIGHEST FORM OF PATRIOTISM” TO THOMAS JEFFERSON.

THE TRUE ORIGINS ARE VAGUE AND AMBIGUOUS AT BEST.

NEVERTHELESS IT IS NO LONGER RELEVANT.

IT IS FINISHED.

REPENT, THE KINGDOM OF HEAVEN IS AT HAND.

Here’s something that seems suspicious. Possible false flags here in PA. Fires in coatesville: http://www.msnbc.msn.com/id/21134540/vp/29071226#29071084

Can’t say for sure, but it is a perfect example of how a false flag would be carried out:

Problem – fires (arsen, by some mysterious source)
Reaction by public – fear, uncertainty, anger.
Solution – Curfews, Martial Law, destruction of rights.

Under total consent, permission, and acceptance by the public.

Also, I have seen what appears to be military drills of helicopter patrols up and down the Susquehanna. Perhaps “counterterrorism.” Perhaps SOP.

On another occasion, there were no less than 8 helicopters, several appearing to be chinooks.

And my nanny reports police driving down the street blasting on loud speakers, as well as tanks being shipped. Could very well be standard shipping/maintenance to nearby armory. Or it could be preparation for martial law. In any case, we are in trouble America. We must prepare to meet our God.

SEE: America the Baleful

http://www.youtube.com/view_play_list?p=376F6511A0966873

Reasons for JFK’s murder:

1)This speech.

2)His intent of disbanding the CIA.

3)His intent of disbanding the Federal Reserve.

4)His intent of abandoning the fiat monetary system established in 1913 and replacing it with currency backed by silver.

5)His exposing of the military-industrial complex.

6)His prevention of Operation Northwoods.

The President, the Press, & THE DANGERS OF SECRET SOCIETIES

AUDIO IN FULL:

TRANSCRIPT IN FULL:

http://www.jfklibrary.org/Historical+Resources/Archives/Reference+Desk/Speeches/JFK/003POF03NewspaperPublishers04271961.htm

Songs:
Pink Floyd – Mother
28 Days Later Soundtrack – In the House – In a Heartbeat (Composed by John Murphy)

The video clip is Alex Jones in Richard Linklater’s “A Scanner Darkly,” based on the novel by Philip K. Dick.

trailer: http://www.youtube.com/watch?v=TXpGaOqb2Z8

AJ also appears in Linklater’s “Waking Life.”

http://www.youtube.com/watch?v=JJXspT2VtOE

Duration : 0:6:10

Read more…

Medical Malpractice Hurts Millions

What is Medical Malpractice? It occurs when the medical care (a health care provider – doctor, nurse, or hospital staff) falls below the appropriate standard of the medical profession. The practitioner or hospital staff member can make a stupid mistake because he or she is tired, distracted, or on prescription drugs himself or herself.

Has a medical care provider made a mistake in your case? Have you been hurt? You could get insurance money as a result of malpractice, even if you don’t personally carry insurance.

Medical malpractice can be as complex as shaving an area (thereby nicking the skin which opens the patient to infections), failing to diagnose a disease, or as simple as failing to turn someone over in their hospital bed (causing bed sores or fluid retention).

EXAMPLES OF MEDICAL MALPRACTICE INCLUDE:
-giving the wrong medicine
-giving too much or too little of the medication
-leaving a tool or gauze in the body after surgery
-failure to properly diagnose a disease or medical condition
-failure to obtain informed consent before performing a procedure
-failure to provide appropriate treatment
-unreasonable delay in providing treatment
-failing to timely deliver a baby
-giving an improper interpretation of radiology films

INFECTIONS CAN BE CAUSED BY SHAVING INSTEAD OF CLIPPING

Some physicians pay attention to hair removal to cut surgical infections. Clip the hair before surgery because shaving will often cause a nick and infections may enter the skin. Houston neonatologist Michael Speer, MD, a member of the TMA Board of Trustees and chair of the Texas Patient Safety Alliance, says it’s the “tyranny of small numbers.” If physicians, nurses, hospital administrators, or others don’t see large numbers of infections, they don’t perceive that there is a problem.

Within the United States the rate of surgical site infections is statistically low, they still impact hundreds of thousands of patients each year.

Have you been hurt as a result of a hospital visit?

SURGICAL SITE INFECTIONS ARE A PROBLEM

According to a study published in 2004 by the National Surgical Infection Prevention Collaborative, surgical site infections complicate 780,000 operations annually in this country.

WHAT IS THE STATUTE OF LIMITATIONS FOR MEDICAL MALPRACTICE?

The statute of limitations is a limit created by the legislature on the amount of time after the event in which you can bring a suit for any injuries suffered as a result of someone’s negligence.

The statute of limitations is about two years from the time you discovered the medical malpractice. You need to check with a local malpractice attorney as soon as possible to check the statue of limitations for your state so you don’t miss the deadline.

However, there are always exceptions to the limit if the case involves a child, a retained object, fraud, or concealment on the part of the health care provider.

Statutes of limitations can be difficult to calculate and you should consult medical malpractice attorneys before concluding that it is too late to pursue your case.

Taylore Vance
http://www.articlesbase.com/non-fiction-articles/medical-malpractice-hurts-millions-118648.html

Globalization: an Islamic Perspective

This paper investigates from an Islamic perspective the consequences of globalization in general. To specify my argument in accordance with my understanding of Islam, I would strive to argue that globalization might be very harmful before society reaches maturity but very useful after that. Allow me a brief prefatory note about my methodology in this essay: in the first part, I provide many specifics about how Islamic texts and sources view the human being as God’s creation and his ultimate goal in the world. In the second part, after a brief definition of globalization, I apply the analytic method employed in the conventional literature of economics to show why the market mechanism fails to satisfy equality and eradicate poverty in the globalization era. Finally, I try to explain how a free but virtuous, mature society can satisfy equality throughout the world in this era. Obviously, my argument relates, to some extent, to normative aspect of economics. However, it does not follow the ideological methodology at all.

Let me begin by elaborating briefly on the ultimate goal of man’s creation in Islam, since this is so essential to understanding my argument.

The Human Being as God’s Creation

From monotheism, the pivotal pillar of the Islamic worldview, we can conclude that the universe is the best and perfect manifestation of God’s beautiful names and that there is no better alternative system to govern the universe. Indeed, this principle refers to the conception of creation. That is, God is like a secret treasure, so He creates and expands the universe not only to give a clue to His throne but also to reveal His beauty and His brilliance. Some facets of His attributes such as His majesty may manifest themselves in a deterministic environment such as with galaxies and other physical phenomena. There are, however, other facets of His characteristics such as His wisdom and His mercifulness that are impossible to manifest themselves except in indeterministic form.

There seem to be many common elements in the explanation of the philosophy of man’s creation in all Abrahamic religions of which Islam is believed to be a sequel and culmination. By investigating the quality of Adam’s creation, which stands as the symbol of human being in the Quran, we can infer the kind of status he occupies in the sight of God in Islam, as well as in other religions.

In the beginning the Lord addresses all the angels[1]that He wants to create a viceroy[2] on earth. This position will be held by man. The angels object to Him and say that He wants to create a vengeful and vindictive creature to commit crime and bloodshed on earth again! But God responds that He knows something they do not know. And so, God became engaged in creating man. And this is the point which symbols, loaded with profound anthropological connotations, come into being.

From a faithful Muslim point of view, God is the greatest and most exalted. Thus, with this providential address the mission of man on earth is clarified. That is, man’s mission on earth is to fulfill God’s creative work in the universe. Therefore, man’s first superiority is that he represents God on earth.

Since God wants to create a viceroy for Himself on earth, He must, as a rule, choose the most valuable and sacred material. Yet He selects the basest matter. In the Quran there are three references relative to the material that man was made of: from sounding clay[3], like unto pottery[4], and from mud[5]. Finally, the Lord blew His spirit into the dry mud and man came into being.

In the human tongue, God is the most sacred and exalted being so the spirit of God refers to the most exalted, and the noblest manifestation of His being, while mud stands as a symbol of the meanest and the basest thing. Accordingly, He blew His own Soul, not something else like His breath, blood, or flesh, into man in its creating process. God is the most sublime being and His spirit is the finest entity for which man can possibly have an epithet in his language.

Thus, man who was formed from mud and God’s spirit is a two- dimensional being. For unlike all other beings which are one dimensional, man is two-dimensional; one dimension tends towards mud, lowliness, sedimentation, and stagnation while the other aspires to the loftiest imaginable point possible. Thus man’s significance and grandeur lie in the fact that he possesses two poles: mud and the spirit of the Lord. It is up to man to choose where to go, towards mud or providence. And as long as he has not selected either of the poles as his fate, struggle will perpetually rage within him.

Another surprising point in man’s creation in the Quran is that God calls upon the whole universe that He has a trust to offer it, but everything refuses to accept this offer except man[6]. This is indicative of the fact that man possesses another virtue; that is, his acceptance of a trust that everyone else refused. This means that man is a representative of God in the universe as well as His trustee. As to what the trust is, Islamic scholars mention many things. Some of them such as Mawlavi and Shariati[7], believe that it is will and choice. I agree with that, however, it means much more than that. It means that man has adopted a great responsibility to personify all His beautiful names; individually and collectively. Of course, such responsibility requires the ability of will and choice.

Shariati (1981) says that the only superiority that man has over all other beings in the universe is his will. He is the only being that can act contrary to his nature, while no animal or plant is capable of doing so. It is impossible to find an animal which can fast for two days. And no plant has ever committed suicide due to grief or has done a great service. Man is the only one who rebels against his physical, spiritual, and material needs, and turns his back against goodness and virtue. Further, he is free to behave irrationally, to be bad or good, and to be mud-like or divine. The point is that possession of will is the greatest characteristic of man and it throws light upon the relationship between man and God.

Man is a viceroy of God on earth as well as His trustee among the universe, and the spirit of both quenches their thirst from the same fountain of virtue: possession of will. God, the only being in the universe, who possesses an absolute will and can do whatever He wishes, blew His spirit in man. Hence, man is capable of working like God (not on par with Him, only as an image of God), or acting against the physiological laws of his own nature. Therefore, as in the Old Testament[8], He has created mankind as a potentially perfect image of Himself. Obviously, this perfect image goes beyond the interpretation that some distinguished scholars have given it[9]. It shows that all God’s beautiful names may manifest themselves with man and human society. Consequently, it requires the ability to mastery and rule over the universe.

Two kinds of rationality

As mentioned above, according to my Islamic understanding, man is a two-dimensional being. During his spiritual evolution, he should pass from being mud-like to approaching God-like. In other words, God has invited him to pass through an important reference point, maturity[10]. Thus, we can imagine that he has two distinct parts of his life: an individualistic, selfish period (before maturity of society, when the real love is not the dominant flow in the society); and a God-like, selfless period (after maturity of society). Clearly, each specific period requires a certain and separate corresponding rationality. The rationality[11] discussed in the conventional literature of economics, which is based on a low-level self-interest, only corresponds with the period of childhood. Mainstream economics, based on Adam Smith’s invisible hand and the market mechanism, quenches its thirst from this fountain of rationality. In the next part, I will explain how the market mechanism increases the gap between poor and rich countries as well as the gap between poor and rich classes. That is, the more international trade and the more integration of financial markets, the more market failure and more divergent economies! However, when society evolves from selfishness and being mud-like to altruism and being God-like, this rationality will not be effective at all and will collapse instantaneously. The alternative and mature rationality creates a special dynamism for the economy which is very powerful and without any failures. The driving force of this rationality is still self-interest, but a high-level one rooted in being God-like.

I would like to refer to one verse of the Quran, which clearly argues that the individual desires derived from a low-level self-interest lead to harm and corruption[12]: “Corruption doth appear on land and sea because of which men’s hands have done, that He may make them taste a part of that which they have done, in order that they may return.” We may deduce this corruption is only a part of the consequences of what man has done as a result of his selfishness, and that there might many other bad consequences washed clean by God’s forgiveness. In other words, the invisible hand in an immature society not only is not able to optimize social benefits, but also it creates a great deal of harm and corruption that surpasses our imaginations. However, most of this corruption will be removed by the mechanism provided in the universe by God. The remaining corruption serves to warn the people and deter them from being selfish.

Due to self-interest maximization in immature society, we may also observe clearly many, many problems such as global warming and environmental destruction which will definitely jeopardize future life, while the market mechanism and its price signals fail to reduce these consequences, much less to motivate sustainable development.

Globalization and the issue of equality

In this part of my essay, I would like to show why globalization in the context of low-level self-interest motivation and based on the market mechanism may not lead to equality. Instead, it is biased to developed countries where there is located a complex of various industries and the benefit of economies of agglomeration can be utilized. To do this, it is necessary to have a brief definition of globalization first.

The definition of globalization

As globalization is a multi-layer concept and it has become a buzzword in recent years, globalization has already been defined in many ways. I, in some extend, agree with what Thomas L. Friedman defines globalization. He says: “it is the inexorable integration of market, nation-states and technologies to a degree never witnessed before- in a way that it is enabling individuals, corporations, and nation states to reach around the world farther, faster, deeper and cheaper than ever before, and in a way that it is enabling the world to reach into individuals, corporations, and nation states farther, faster, deeper and cheaper than ever before” (Friedman 2000, 9). He says: globalization “also has one overarching feature- integration. The world has become an increasingly interwoven place, and today, whether you are a company or a country, your threats and opportunities increasingly derive from who you are connected to. This globalization system is also characterized by a single word: the Web”(ibid, 8). This system is a dynamic ongoing process, with a driving idea of free-market capitalism, and “its own dominant culture” involving “the spread of Americanization” (ibid, 9). It has its own defining technologies, and is measured by its speed, “speed of commerce, travel, communication and innovation” (ibid, 10). He suggests that “globalization is not simply a trend or a fad but is, rather, an international system. It is the system that has now replaced the old Cold War system, and, like that Cold War system, globalization has its own rules and logic that today directly or indirectly influence the politics, environment, geopolitics and economics of virtually every country in the world” (ibid, IX).

What I want to focus on is strictly the economic layer of globalization. In my view, economic globalization refers to a completely different process of internationalization. Although in internationalization the cross-border relations between countries will increase, the nation-state institution will play the main role in the economies, they can still make economic policies and decisions. Economic globalization, however, refers to the process of removing government-imposed restrictions on movements between countries in order to create an “open”, “borderless” world economy’ (Scholte 2000: 16) so that the nation-state institution will be eradicated and no longer play no role in economy. Instead, the Transnational Companies (TNCs) will be the main players in the economy. More technically speaking, the nation’s Production Possibility Frontier (PPF) makes nonsense in the literature and there is only the worlds PPF and TNCs follow fragmentization policy in their production and distribution which is definitely alien from conventional international trade and international finance.

The Inevitability of Asymmetry in Globalization

According to mainstream economics, policies of openness through liberalization of trade and investment regimes, and capital movements have been advocated worldwide for their growth and welfare enhancing effects on the basis of the propositions embedded in the well-known economic theories of international trade and investment (i.e. the Ricardian comparative advantage theory, the Heckscher-Ohlin-Samuelson (HOS) model, the new trade theories of Krugman, or the model of intertemporal international borrowing/lending or portfolio allocation models). In these models, the main goal of openness is assumed to increase social welfare through: (i) static efficiency gains associated with improved resource allocation for national economies as well as for the world economy due to increased specialization; (ii) dynamic efficiency gains from such factors as economies of scale, diffusion of information, technology transfers, knowledge spillover effects as well as intertemporal trade gains from cross-border borrowing/lending for increased investment and consumption smoothing and portfolio risk diversification.

Convergence in accordance with international trade theories is still a serious dilemma. That is, there is no doubt that the level of social surplus will increase totally after free trade or integration of financial markets. However, there is a lasting concern regarding how these gains are distributed between trade partners; are they biased toward developed countries or at least unbiased. Mainstream economics’ theories including static and dynamic insist that international trade will reduce the per capita income gap amongst the open countries. For instance, one of the main theorems that derived from the static model of HOS Theory, implies that when the prices of the output goods are equalized between countries as they move to free trade, then the rewards of the factors (capital and labor for instance) will also be equalized between countries. Therefore we should expect that the increase of free trade due to globalization will reduce the North-South per capita income gap. The dynamic version of this model also suggests a convergent per-capita income trend between north and south countries.

To explain cross-country differences in economic performance, Matsuyama (1996) employs symmetry-breaking methodology. Symmetry-breaking creates asymmetric outcomes in the symmetric environment. It is the key concept for understanding self-organized (a.k.a. endogenous) pattern formations[13].

As a key answer to the increasing gap between North and South countries in the level of cross-country differences as well as the increasing gap between poor and rich classes inside the countries, Matsuyama (2005), rejects coordination failures as the key notion to understand these questions. Instead, he argues that such emphasis is misplaced; the key to understanding the diversity is symmetry-breaking. The notion of coordination failures is not only irrelevant but also misleading when thinking about diversity.

Quoting Matsuyama’s (1996) explanation briefly, it will be shown how globalization can be considered as an endogenous (or a self-organized) factor to create the inequalities.

He offers a model of the world economy, where many (inherently) identical countries trade with one another. It is shown that cross-country differences in the standard of living and in income appear as a stable outcome of international trade. According to his model, the coexistence of rich and poor countries is not just a possibility. It is an inevitable aspect of the world trading system. Although his model adopts many assumptions for the sake of simplification and concreteness, the logic behind the result is fairly general and can be understood intuitively.

Imagine that there is a list of goods that need to be consumed. Furthermore, there are some agglomeration economies in the production of each of these goods. In the absence of international trade, these goods must all be produced in each country. Without any innate difference across countries, each country produces these goods in the same amount, and there is no cross-country difference.

Now introduce the possibility of international trade in these goods. As different countries start acquiring comparative advantage in different goods, the production of each good concentrates into some countries, which leads to an emergence of a system of international division of labor. The stable cross-country difference appears as a result of ‘‘symmetry-breaking’’ in the world economy, caused by international trade. Some countries become rich if they are lucky enough to acquire comparative advantage in goods associated with large agglomeration economies, while other countries, those which happen to acquire comparative advantage in goods with small agglomeration economies, become poor. They fail to achieve a necessary coordination to reach a Pareto-superior equilibrium and find themselves in a Pareto-inferior equilibrium. The problems thus seem just a matter of coordination failures. The global perspective, however, offers a different view. The international division of labor requires different countries to take charge of producing different tradable goods with differing degrees of agglomeration economies. International trade thus creates a kind of ‘‘pecking order’’ among nations. Not all countries can be rich: some countries must be excluded from being rich, just as in a game of musical chairs[14]. At the same time, the model does not rule out the possibility that some (but not all) countries might succeed in overcoming the coordination failures, and becoming rich. This feature of the model makes it possible to talk about the effects of such an ‘‘economic miracle’’ in the world economy.

Since the economies of agglomeration requires the diversity of industries which produce intermediates available in the marketplace, we can conclude that only those countries which have already bypassed the threshold of diversity have a chance to be industrialized and reach to a Pareto-superior equilibrium. Hence, this shows how the phenomena of economies of agglomeration cause a symmetry-breaking to separate the otherwise identical regions into the manufacturing belt and the agricultural hinterland.

Globalization in Mature Society

To explain how globalization in mature society accomplishes beneficial goals, first we have to take into account the two following challenges:

1. The problem of static market failure: This problem arises mainly because of externalities (including public goods, pollution and common pool resources), transaction cost, asymmetric information (such as incomplete markets[15], moral hazards and adverse selection), as well as organization failures. The most common response to a market failure in the literature of the public sector is to use the government to produce certain goods and services. However, government intervention may cause non-market failure. Besides, as mentioned above, globalization causes nation-state eradication so there will be no effective government in such an era. Furthermore, I can hardly believe that international institutions are able to fulfill this responsibility, even if they were independent from the USA.

2. The problem of dynamic market failure: As Matsuyama showed accurately, international trade creates a specific chaos in the symmetric environment so that the operations of markets normally lead to increasing inequality across the countries over time. Likewise, inequality across inherently identical households is caused endogenously by symmetry-breaking. Matsuyama (2004) explains how the class structure is an inevitable feature of capitalism. Even if every household starts with the same amount of wealth, the society will experience “symmetry-breaking,” and will be polarized into the two classes in steady state, where the rich maintain a high level of wealth partly due to the presence of the poor, who have no choice but to work for the rich at a wage rate strictly lower than the “fair” value of labor. Hence, in the capitalistic context we may consider these increasing gaps –whether between countries or inside countries – as an indication of market failure in a dynamic version.

It is now necessary to show how mature society, using a different rationality, may bypass these challenges. This rationality formally is very similar to the conventional one. It is, however, very different in content. I would like to refer to a few verses of Quran related to this subject. God says: “Man has been created restless, so he panics whenever any evil touches him, and withdraws when some good touches him; except for the prayerful who are constant at their prayers and whose wealth comprises an acknowledged responsibility towards the beggar and the destitute; and the ones who accept the Day for Repayment.” These verses show sufficiently that the rationality that guides immature people is definitely different than that which guides mature people, although they benefit from the same potential characteristics. The main distinction between mature and immature is that the mature direct these potentials toward a transcendental personality which is beyond selfishness. They are concerned with all human beings’ needs in all generations rather than their own selves individually or at most their families.

It is very appropriate to ask about the driving motivation in this society. Of course, conventional self-interest cannot motivate people efficiently to be concerned about others. It is extremely in need of a stronger motivation based on an exalted worldview. This worldview should consist of specific beliefs that grant the greatest reward to the doer when he considers all people of all generations altruistically. As I understand, the mature society may not be blind and aimless. Society can achieve this reference point of maturity only when the true beliefs such as the belief in oneness of God, the Day of Judgment, Justice drive it entirely. Passing this reference point is a necessary condition, but divine love, which requires perfection in selflessness, is the sufficient condition for the maturity. In general speaking, love when it appears, has no room but for itself and the lover thinks of no one except the beloved. In other words, selfishness destroys love and it can never be considered as co-existent of love. Nonetheless, worldly love is too weak and ineffective to last and motivate society toward its transcendental goals. In contrast, divine love is quite sustainable and powerful. Since nature is the realms where God’s beautiful names are exhibited, divine love implies, in turn, love of the entire world and the whole creation particularly human beings, the most comprehensive fruit of existence. Therefore, love is at the core of the concept of mature rationality and creates a specific invisible hand to satisfy social benefits including prosperity and equality for all regions and all generations.

Now, allow me to explain how globalization might be useful in a mature world society. As mentioned above, a mature society is a society where all God’s beautiful names have flourished. Therefore, as God provides mercifully all necessary requirements for all creatures, in such a society, each person possesses a certain portion of natural resources consistent with his area of interest. All initial endowments are redistributed by lump sum among the people so technically speaking, all individuals move to the central points of Edgeworth’s box. All members subject to all generations’ benefits do their best to produce more and more creatively because they are His representatives. According to symmetry-breaking methodology, there is still some potential of asymmetry. However, people will share their incomes voluntarily to produce public goods and to reduce the existent gap.

The communist system is as far away as the capitalistic system from the system based on love. The lack of motivation in people’s activities as well as the inefficiency of government –especially when the size of society grows enough- are the essential issues in communism while there is no concern about them in mature society. It is because the people are mature enough to understand that more being active means being closer to God. Besides, there is no need for the presence of strong and big government because this society is governed by many small components of authority connected together in a world wide network. There is hardly conflict of interest between these components because selfishness is the main source of confliction while here the people are selfless. Moreover, they are tolerant and educated enough to avoid violence and to discuss their problems peacefully.

It should be noticed that the economy in mature society serves only as a means by which we can improve the level of virtue so that we are not allowed to sacrifice humanity and its dignity and virtue because of economic benefits.

Endnotes

——————————————————————————–

[1] Quran, 2:30: And when thy Lord said unto the angels: Lo! I am about to place a viceroy in the earth, they said: wilt Thou place therein one who will do harm therein and will shed blood, while we, we hymn Thy praise and sanctify Thee? He said: Surely I know that which ye know not.

[2] It shows very clearly the worth of man in Islam. Even the Post-Renaissance European humanism has not been able to bestow such an exalting sanctity upon man.

[3] Quran, 15:26, 15:28, and 15:33

[4] Quran, 55:14

[5] Quran, 6:2, 7:12, 23:12, 32:7, 37:11, 38:71, 38:76

[6] Quran, 33:72 Lo! We offered the trust unto the heavens and the earth and the mountains, but they shrank from bearing it and were afraid of it. And man assumed it.

[7] See: Sahriati (1981)

[8] Old Testament, 1:27-28 Elohim said, “Let us make humanity as our image, according to our likeness. And let them rule over the fish of the sea, the bird of the heavens, the beast, the whole earth, and all the swarmers which swarm on the earth. And God created humanity as his image: as the image of God he created him, male and female he created them.

[9] Thomas Aquinas (1976) located the image in the human ability to think and reason, to use language and art, far surpassing the abilities of any animals. Leonard Verduin (1976) says that the image consists in our dominion over animals and plants, which continues despite our sinfulness. Emil Brunner (1976) says that it is our ability to have a relationship with God, reflected in the tendency of all societies to have forms of worship.

[10] Quran, 90:10-17 And [Did We not] guide him to the parting of the mountain ways? But he hath not attempted the Ascent. Ah, what will convey unto thee what the Ascent is! (It is) to free a slave, And to feed in the day of hunger, an orphan near of kin, or some poor wretch in misery, and to be of those who believe and exhort one another to perseverance and exhort one another to pity.

[11] I will discuss the other kind of rationality which corresponds with mature period later on.

[12] Quran, 30:41

[13] For example, cosmologists wonder why the matter in the universe is distributed in clusters, leaving much of the universe empty. Earth scientists study the formation of wave patterns, such as jet streams, ocean currents, and continental drifts. Material scientists study phase transitions, how molecules aligned themselves when they reach the critical temperature. Molecular biologists ask how life began in the primordial soup of amino acids, and developmental biologists attempt to explain how living organisms acquire forms through cell division and morphogenesis (Weyl 1969, Prigogine 1980). Similar questions of pattern formations also exist in economics. Why are there rich and poor countries? Why are industries clustered? Why are there booms and recessions? Why are some ethnic groups underrepresented in certain jobs or neighborhoods?

[14] Musical chairs is a game played by a group of people (usually children), often in an informal setting purely for entertainment such as a birthday party. The game starts with any number of players and a number of chairs one fewer than the number of players; the chairs are arranged in a circle (or other closed figure) facing outward, with the people standing in a circle just outside of that. A non-playing individual plays recorded music or a musical instrument. While the music is playing, the players in the circle walk in unison around the chairs. When the music controller suddenly shuts off the music, everyone must race to sit down in one of the chairs. The player who is left without a chair is eliminated from the game, and one chair is also removed to ensure that there will always be one fewer chair than there are players. The music resumes and the cycle repeats until there is only one player left in the game, who is the winner.

[15] The theory of incomplete markets is an extension of the general equilibrium approach to intertemporal economies with uncertainty, where the set of available contracts which can be used to transfer wealth across time is limited relative to the possible probabilistic states that an economy might find itself in. Unlike in the standard Arrow-Debreu model where all trade takes place at beginning of time, in an economy with incomplete markets, agents trade in sequential spot markets.

References

The Noble Quran.

Aquinas, T. (1976), Man to the Image of God, in Millard Erickson (ed.), Man’s Need and God’s Gift: Readings in Christian Theology, Grand Rapids: Baker, pp. 37-43.

Emil, B. (1976), Man and Creation,” in Millard Erickson (ed.), Man’s Need and God’s Gift: Readings in Christian Theology, Grand Rapids: Baker, pp. 45-54.

Friedman, T. L. (2000), The Lexus and the Olive Tree, New York: Anchor Books.

Krugman, P. (1992),Geography and Trade (Gaston Eyskens Lectures), The MIT Press

Matsuyama, K. (1996), Why Are There Rich and Poor Countries?: Symmetry-Breaking in the World Economy, NBER Working Paper Series

Matsuyama, K. (2005), Structural Change, forthcoming in L. Blume and S. Durlauf, eds., the New Palgrave Dictionary of Economics, 2nd Edition, Macmillan (available at: http://www.faculty.econ.northwestern.edu/faculty/matsuyama/Structural%20Change.pdf )

Prigogine, I. (1980), From Being to Becoming: Time and Complexity in the Physical Sciences, Freeman, 1980.

Scholte, J. A. (2000) Globalization. A critical introduction, London: Palgrave.

Shariati, A. (1981), Man and Islam, Translator: Fatollah Marjani, Houston: Free Islamic Literature-Filinc.

Verduin, L. (1976), A Dominion-Haver, in Millard Erickson (ed.), Man’s Need and God’s Gift: Readings in Christian Theology, Grand Rapids: Baker, pp. 55-74.

Weyl, H. (1969), Symmetry, Princeton: Princeton University Press.

Nasser Elahi
http://www.articlesbase.com/ethics-articles/globalization-an-islamic-perspective-293758.html

Mark Levin – Liberty & Tyranny

Mark Levin discusses his new book, “Liberty and Tyranny: A Conservative Manifesto,” with Rush Limbaugh. http://www.LibertyPen.com

Duration : 0:7:10

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Chinese Negotiation 101

Will your negotiation skills back home equip you for negotiating in China? Well they’re important, but they’re not quite enough. You’ll also need a good grasp of the cultural differences or you’ll be mystified by unexpected responses and they’ll run circles around you. So here are a few key principles for negotiating in the land of the dragon.

1. Be Objective

Many stories about China are exaggerated, one way or the other. We’ve heard of fabulous deals, providing goods and services at a fraction of local costs. We’ve heard of toxic Chinese products and business tycoons who will cheat you at the drop of a hat. But China is neither black nor white, and a successful business person needs to strip away the political agendas that get in the way of sound business decisions.

We should also be wary of snap judgments by people who bail out impatiently with accusations of rampant deception and contracts never honoured. Certainly we should heed all warnings of danger, and be constantly on our guard. But we must seek a realistic view, neither wearing rose-coloured glasses nor seeing treachery in every misunderstanding.

It’s important to be realistic regarding issues of honesty. As in any country, there is no shortage of scoundrels in China. Neither is there a shortage of good and respectable citizens at all levels striving to meet high standards. Nothing unusual about that. But cultural differences make it easy to misinterpret strategic manoeuvres on their part. We may see it as outright deception when – in their own view of proper behaviour – they are acting honourably but cleverly. And they may see our own clever manoeuvres as questionable behaviour within their ethical system. The point is not to judge each other and kill the deal, but to find that common ground which produces a good contract for both parties. That requires us to find a delicate balance between giving our opponents the benefit of the doubt when we fail to fathom the purpose of their actions, and avoiding the risk that someone will take advantage of our trust.

We need to be careful about old advice. Any economy, in the years before it gets properly regulated, has a lot of leeway, and plenty of opportunities for unscrupulous dealers to rip you off. So consultants used to give sound advice to clients – watch out for treachery and dishonesty. Serious caution is still good advice, but times are changing at an amazing pace. The Chinese have aspirations of becoming world economic leaders, and they fully recognize the need for strict professionalism and integrity to meet their goals. It’s not much of a stretch, since there’s no lack of professional pride in Chinese history. You’ll find that your major cautionary task in this century, apart from normal vigilance, is to identify the modern high-quality firms and separate them from the rogue elements. At the same time, the Chinese economy is still in flux, and there are still enough bandits out there to warrant serious caution.

2. Ease In Carefully

Think you can leap in, sign a great deal, and move on? Not likely. You need to get the feel of negotiating in China. You have to get to know your partners, to determine who can be trusted and where you need to be careful. You need to make your first mistakes on low-value and low-priority deals. This can be good advice in any case, but it’s especially important if you don’t have much experience in the treacherous waters of inter-cultural negotiations. Try out a couple of low-risk transactions before plunging into the deep end.

You need to rein in your western tendency to jump in, cut to the chase, and score a deal cleanly and quickly. The Chinese don’t quite work that way. Nonetheless, they’ve learned how to deal with we cowboys with money to burn, barging in to do serious business on the spot. We’ll get the runaround, as befitting someone who isn’t serious enough to develop a trusting relationship first. In their view – some barbarian who won’t take the time to build relationships deserves to be outfoxed.

At the same time, this isn’t universally the case. If you’re dealing in Beijing or Shanghai or any other highly developed centre, they’re more familiar with western styles of business. In fact, they’re quite sophisticated. They’re a little more willing to play the game your way, and make some compromises to western impatience in order to move the process along efficiently. In the less developed regions, they’re often a little more steeped in traditional Chinese ways. But they both know how to deal with your eagerness and get what they want. In either case, learn the culture first, and take your time.

3. Work with the Right People

Here’s where a good knowledge of Chinese relationship structures is important. Certain people are authorized to make a deal, while others are only intermediaries – and you may not find them in familiar positions. In your first set of meetings, perhaps even for a long time, you may be dealing only with the intermediaries. They won’t tell you that at the start, and you’ll be frustrated when you find out that nobody has the authority to cut a deal. This may be offensive in the west, but it’s proper protocol in the east. You’ll probably be escorted to several meetings and banquets, and the key officials will be present at some of them, but you won’t really know who’s who until late in the game. This is where you need your diplomatic skills, to show your respect for Chinese traditional ways at the same time as you badger them to get the proper authorities at the table.

Actually, the intermediaries do have considerable importance. They’re there to do the grunt work of finding out what’s possible, and to iron out the initial proposals, so that their superiors need only deal with the final decisions. So treat them with respect, or you’ll never get to see the key players. At the same time, be careful to determine if they really are properly connected to do the job. You may end up with some peripheral agent – who cites great experience in dealing with western business, but who really has little stature – because they want to feel you out before they have to deal with you directly. Beware if they send you a westerner who is really little more than an English teacher with grand aspirations. They don’t trust him any more than you do, but he’ll keep you at bay until they’re ready to move.

Check references, making sure they’re all in the same industry. Make the call to confirm. Be a detective, with an interpreter if necessary. Ask about track record. Did they meet deadlines? Did they understand the meaning of a completed job? In any environment of economic development, expect incompetence to be common, and search for the competent ones. Incompetence and inexperience are just as much trouble as dishonesty. Avoid firms dealing with westerners for the first time – they’ll be out to establish their cleverness by taking you for a ride. Your best bet is a western-invested company with western executives at the highest levels. Check out everything.

4. Seek Clarity

A good western negotiator, with any sense of strategy, will not offer his opponent a clear picture of his ultimate goals or what compromises he will accept. Chinese intermediaries have an even greater incentive to disguise their specific objectives and, in fact, to keep shifting them as the negotiation proceeds. They don’t feel obligated to adhere to their proposals from session to session, since they’re not the deciders. They don’t think it’s beneficial for either party if they stick rigidly to some “deal” they made with you yesterday. That would be viewed as irresponsible, since only the higher authority is entitled to make final decisions. They don’t delegate authority as readily as we do. Don’t expect to sign off some clause and then move on to the next, secure that the clause has been finalized, as you would back home. It doesn’t work that way. Intermediate deals are flexible, and can be sacrificed unilaterally in the end game. Since everything is tentative until the final act, they may be quite evasive in the early stages. Or they may overstate a verbal agreement due to difficulties in understanding our language and our culture. So during these intermediate stages, you may have to fight tooth and nail for clarity.

But don’t just treat it as fighting the culture, or trying to educate them in the straightforward ways of the west. The Chinese are indirect and group-oriented in ways that serve them well, even in business. They are rooted in a pre-market family-oriented culture, in which social harmony is maintained through a gentle style of communication – where individuals are not assaulted too directly with brutal facts. It’s a communication style that comes into sharp conflict with our blunt and unfeeling western directness. The Chinese view their communication style as the essence of civilization, as distinct from us barbarians, and they will not abandon it easily. So don’t just dismiss them – “The Chinese don’t do clarity”. Learn the language of indirect communication, and you will elicit much greater cooperation in finding what you need to know. Learn the trick of assertive indirectness.

5. Bargain Strategically

To begin with, get control of the agenda. They may use their position as host to load you down with meetings and banquets, especially if they are old school – though in the modern centres they’re more inclined to get straight down to business. Still, if you’re spending the money, you’re in charge. Determine if the meeting or banquet is important, if the officials you’re meeting are really relevant to the discussion, or whether they are just window dressing to show off their connections and keep you tied to their agenda. You have to find a balance between receiving their hospitality graciously and getting down to business. Overall it’s a polite power struggle right from the start, and you need to make it clear you want to negotiate the agenda. At the same time, remember that they want to deal with you and keep you away from their competitors, so leave the exit door open a little in case they’re too inflexible. If you come in wide-eyed about making a China deal, you’ll end up playing their game. Have a Plan B – an alternate source of supply will boost your confidence enormously.

Many western advisors will tell you to expect deception in China, but it’s often just a different vision of what’s legitimate and honourable in the competitive arena. It’s only deception if the other party expects something different. That doesn’t help you much. If you don’t know the culture well, it’s going to be deceptive in your eyes. So it’s safer to follow the rule: expect deception. But don’t express disrespect unless you catch them blatantly cheating or lying – and give them the benefit of the moral doubt if they’re just backtracking because they got into trouble. It’s a delicate game. Protect yourself without being offensive.

It’s important not to automatically accept any claims at face value, without good reason. Are they really an old established company with a healthy market valuation, a strong market share, exclusive rights and patents, all the proper certifications, and plenty of orders from Europe? Better check these things out, since their definitions may be different from yours. Is the new plant they’re preparing to build really going to bring dramatic improvement in quality and costs? You’re putting up the money, so you should be allowed to see the books, though sometimes their claims of inadequate bookkeeping may be valid. You may need help here, since legitimate Chinese accounting practices are different from ours, and in some ways hard to fathom. And finally, don’t accept the claim that they have the powerful connections that will make everything work out just fine in the end, because you have no way whatsoever of checking that out. Perhaps at this point they will throw the trust argument at you, claiming that your doubts are undermining a valued relationship. Don’t fall for it.

If you’re not picky, you’ll leave holes they can drive a truck through. “Best effort” sales agreements are not enough. Get the details on their marketing network. Cash in advance is dangerous, no matter how much they throw the trust argument at you. Present it as a strict matter of policy, and point out safer payment vehicles which are readily available. If they can’t get a bank to cooperate on a letter of credit, run for the hills. If you’re a buyer, insist on a test order. They will talk about not doing test orders because they’re building long-term relationships, but don’t buy that argument. Chinese firms will do test orders when pressed. Look behind the facade to see if there’s real brick and mortar and infrastructure in place. And remember that, if a firm is not very cooperative before the money has been transferred, they’ll probably be even less cooperative afterwards. So get everything you can firmed up in advance, even if it threatens to sour the deal. The politeness and respect that you demonstrated from the beginning of the process will serve you well when you have to hold the line at the end.

Even when you reach an agreement, you’ll find that many more things than you thought were unclear, or interpreted differently. Be prepared to renegotiate often, and get their agreement on a renegotiation process before you sign.

6. Learn the Price Game

In a country where they bargain for apples on the street, they’re not shy about bargaining, and they bargain hard. Don’t be put off by an outrageous initial price. It’s all part of the game. Whether or not they move to a reasonable price in short order is a clear indication of whether or not they’re ready to bargain seriously. Let the opening moves play out. With apples on the street, some will overcharge a foreigner just on principle, as well as to defend their national pride and to save face. So keep a clear eye on your own range of acceptable prices, and stick to it rigorously.

If you’re putting up the money, don’t let them talk you into quoting the first price. The first move should be theirs, though exceptions may be allowed if you already have a good relationship with them through past dealings. Present it as your firm’s policy, and refer to proper procedures. It’s a game of polite assertiveness, and this may be the opening power struggle. Insist they provide figures to back up their price, and eventually settle for just a first price offer. But keep up the demand for backup data as the price discussion progresses. Don’t let them win this opening round, or they’ll have the upper hand.

Be prepared to deal with an outrageous price, which will be especially outrageous if they’ve lost the battle over the first offer. Match an outrageous price with a fairly-outrageous counter, because they may only inch their way down and you need room to manoeuvre. Be prepared to walk if their moves are only tokens. Do your homework, and know the market, so that you can confidently hold the line until they bring it into the ballpark. Then the real bargaining begins.

Don’t accept a high price on a promise that they’ll lower the price in the near future,

“when we get the new technology online”,

“when we move to the new facility”,

“when we develop the new product”,

“when we hire the new engineer”,

“when we get approval from the government’,

“when we finish the merger”.

Maybe they’re sincere. But maybe they’re wishful thinking. Hold out for the price you need. Cut them off quickly. “Not a chance. We don’t do speculation. We need to work with real prices right off the bat.”

And you may have to leave your fancy management theory behind. It’s quite fashionable in the west to seek win-win solutions. But China’s a developing country, not long out of poverty, in a brutal marketplace. They’re quite accustomed to win-lose, and they’re quite happy to win. But again, you’ll find them somewhat more refined in the major centres.

7. Pay Attention to the Non-price Issues

Many traders will tell you that Chinese are motivated by price alone. They will attach little importance to issues of quality or delivery or service, assuming these are secondary issues that can be put aside. That view of Chinese negotiators is someone outdated. A narrow price orientation is not as prevalent as it used to be, but you will still run into it often enough, and you may need to insist that the price is contingent on the whole package. Insist that the price agreement will be void if certain conditions are not met. Price cannot be negotiated in isolation. Some may try to brush that off, figuring that you won’t push it. Push it. Be picky. Insist on engineering specs on the useful life of the product. Have them explain their quality control procedures, and their warrantee policy. Get a precise definition of how satisfactory performance is specified, and what constitutes a completed project.

8. Understand Networking and Contracts

This is a tough one. Networking isn’t the same in China. It’s a much deeper and more complex phenomenon, with implications that we westerners cannot easily fathom. The potential for misunderstanding is enormous.

It can be simplied a little. Think again of a pre-market society. How would a pre-market society organize themselves without benefit of the marketplace? They organize themselves into trusted circles of family and friends, and they exchange favours. The rules are strict – if someone offers you a favour, you owe an equal favour in return. These circles overlap and interconnect into complex networks. Over time some of these circles become more important than others, and if you find yourself linked into an important circle, you have “connections”. The Chinese call it “guanxi” (pronounced gwan-shee), and there are two main rules as far as you’re concerned. One, any favour or gift is a debt which must be repaid in full measure, or more if the giver belongs to a more important circle. And two, people with the right guanxi can accomplish anything for you, but it won’t be free. And it’s not guaranteed. Do him a favour and he will owe you something. But don’t count on him to spend his guanxi capital to repay you.

Connected with that is an attitude toward contracts. The guanxi circle is a relationship of trust among colleagues. To overstate the argument a little – it’s a western aberration to demand that all relationships be reduced to an impersonal rats-nest of contracts, as if no one can be trusted. For civilized people, your word is your bond. While in the modern Chinese business centres they’ve come to appreciate the value of a contract, and will even initiate it, there are still some who will try to convince you to make a commitment (and transfer your money) without one. They may play the trust card, so know how to deal with it.

Recognize that a westerner like you will never become a full member of any Chinese guanxi circle. You will always be an outsider, and a second-class citizen, with no rights and no recourse. “My guanxi is your guanxi – don’t worry, I can get it for you” is not in the slightest degree a commitment you can take to the bank. You need it explicitly detailed in black and white, no matter how much that may brand you as a western barbarian. But I hasten to repeat that, the more progressive Chinese managers are on the same page as you and I, fully appreciating the need for a water-tight contract. Those are the ones you should look for. But if you’re in a more traditional centre, you may have to fight for it.

9. Understand Indirectness and Face

China is a relationship based society, developed long before the market turned our European ancestors into disjointed individuals competing with each other in the marketplace. Again to overstate for the sake of argument – we have no need for relationships. Market contracts regulate our lives and how we interact with each other. But for the Chinese, relationships are everything.

So how have the Chinese kept it all functioning smoothly? We have civil order based on a system of contract law to keep us in line. How have they kept people in line for thousands of years without that? They have established a mature and stable hierarchy of status relationships, and they maintain certain strict norms of behaviour. Chief amongst these behavioral norms, essential for maintaining order in a relationship-based society, are the following two. First, never provoke a confrontation by issuing direct challenges to others – which results in the famous Chinese indirectness. Second, never undermine someone’s status in society by causing them to lose face. Understand how these rules lies at the root of the Chinese psyche, if you want to understand their reaction to our western brutishness.

So don’t wonder why sometimes they seem to be running around in circles, and never seeming to get to the point. Bluntness is insensitive and uncivilized. A way must be found to press the point gently. You’re just not understanding the language of indirectness. And don’t wonder why they seem so concerned about losing face. Humiliating others is insensitive and uncivilized. Actually they are insensitive and uncivilized, when you come to think of it. In the midst of a frustrating negotiation session, take a moment to look at it from their point of view. Then look for a way out of the impasse which will not put them on the defensive, and which will grant them face. In fact, face-giving is the key to success. Find ways to make them happy, and they’ll make you happy.

10. Play the Game, but Cleanly

China has a sophisticated set of laws. She’s come into the market only recently, but she’s done a remarkable job of setting up a legal framework for commerce in such a short time. However, there’s a Chinese way of doing everything, reflected in those laws and regulations, and you would do well to learn to play the game. At the same time, China still has a long way to go, and not everything is fully covered by laws and procedures. There’s a lot of leeway everywhere, in the gap between the socialist regulation of society and the law of the market.

Corruption ranges from black to shades of grey. There are many kinds of activities which anyone, east or west, would call corruption. And China’s come a long way in routing out real corruption in the major centres. At the same time, there are many activities which fall into a grey area – they’re not strictly illegal but not quite legitimate. Or the paperwork is lax, and nobody really knows what’s going on. How do we deal with those?

It’s often not so simple. The guanxi system runs by different rules, and it may be unclear what’s legitimate and what’s not – in their terms. What do we do when something is perfectly legitimate and honourable in Chinese eyes, but outright corruption in ours? After all, exchanging money for various considerations among in-groups is the essence of sound relationship economics, but we tend to view it in a market context as unethical. Do we call it corruption? Here’s where we have to find a balance. Don’t insult your adversaries by denouncing every favour that facilitates a transaction. But don’t agree to anything illegal or clearly unethical. You’ll have lot’s of company. In modern Chinese society, there is a strong sentiment for rooting out corruption.

It’s hard to know the prevalence of corruption. The government is probably correct to say that their anti-corruption campaigns have been effective, and there’s a critical mass of influential people who pride themselves on clean practice. In that view, widespread corruption is old news, and you may well get caught. But there are also people in many places who still credibly claim they can’t do a day’s business without passing the red envelope under the table, and you just have to play along if you want to get anywhere.

So you’ll have to play it by ear. Your general stance should be that you refuse to pay bribes. You run a clean ship with a clear set of transparent practices, and you want to keep it that way. At the same time, you may feel some need to look the other way when discretion dictates. But if you find yourself in a situation where bribes and kickbacks are the only game in town, you’ll have to make your own decision whether to hold your nose or bail out.

11. Do Your Due Diligence

Any economy like China, rapidly pulling out of underdevelopment, is going to be a contradiction containing many advanced firms with high standards alongside a significant still-backwards sector. So your primary due-diligence task is to sort them out. If you deal with a firm which is still trying to remain back in the lawless days, not only will you be propping up regressive forces, but you’ll get ripped off. And you may get in trouble with the authorities. In recent years, Chinese authorities have been pretty effective in using enhanced enforcement and professional peer pressure to shift the centre of gravity toward ethical practices in the major centres. If you’re working in the less developed areas, you’d better be on your guard.

In either case, you need to check their references rigorously. Conditions vary in China, and that dictates process. As a still-developing country, you can still expect to find many firms functioning at low levels with low standards. The days of poor quality, deadlines not honoured, work not finished, inappropriate substitutions, financial rip-offs, etc. are still alive in some quarters. It’s true enough that the famous Chinese national pride is impelling them to develop higher standards and join the world community of top-level professionalism. So don’t underestimate them, or the rapidity of their progress. Just don’t get caught with a dud.

Of course there is the matter of the language and culture gap, which is why you need to work with knowledgeable consultants. But these consultants themselves will vary in quality, so there’s the first item for strict reference checking. Who have they worked for? Contact past clients and ask how satisfied they’ve been. These are probably people who speak English, so you can readily get a useful reference. Stick to professional references, not just friends and colleagues, and look for a track record of successful international deals.

When checking out Chinese firms, specialize in naive questions and keep asking until you’re satisfied. Don’t let them deflect you with embarrassment. There’s no such thing as a stupid question, and there’s no shame in questioning repeatedly until you understand. Persistence may be effective in breaking through a runaround, and it’s helpful if you know how to use indirect language in a passive-aggressive manner. But you’ll do best when you can deal with the higher-quality firms that will be straight with you and won’t give you the runaround in the first place.

Got this all down? Done your homework? You’re ready to meet. Good luck.

Dr. Gary Russell
http://www.articlesbase.com/negotiation-articles/chinese-negotiation-101-382938.html

Analysis of Governance Issues in the Housing Market in Sierra Leone

Macro-Economic and Political Environment

The sluggish financial and economic progress of 2008, under the Koroma administration, nevertheless holds the possibility of strong and broad-based economic growth as the economy struggles to rebuild from the war years, together with moderate inflation levels. Over the medium term, any improvement in key sectors will offer hope that the economy will bottom out of aid dependency, given credible internal reform, strong policy-making and institutional investment. The country’s macroeconomic and financial policies devised and put to work within the context of the Poverty Reduction Growth Facility (PRGF) arrangement show the potential to accelerate trends that are promoting broad-based economic recovery.

The current democratic dispensation has created an enabling opportunity for the administration of Koroma to make a significant step in advancing economic and social development. Even better is the concept of “public value” and the “strategic triangle” approach adopted by the British international agency, Public Administration International, to have each Ministry and Department of the new administration in Sierra Leone to address and align questions of strategic goals and priorities in terms of public value outcomes to be achieved (Public Administration International). But the pervading deficiencies in the public administration are not a positive indication of good governance.

An aggressive effort, however, to involve the Diaspora resource in national development is gaining significance with the administration—a strategy likely to be more helpful. The current Diaspora engagement has opportunities to it for the economy and businesses. In addition, the PRGF recovery tool used by the Government of Sierra Leone—monetary and fiscal stimuli—will be relatively effective under the circumstances. This strategy of engaging the Diaspora has put the Koroma administration model of a free-market economy in the public interest.

With this new development in Sierra Leone’s political environment, the financial system is seen to be promising; and the regulatory framework, as having the potential to be fixed to curb widespread corruption. Now, searching for growth, the Koroma administration is opening up to ideas from the Diaspora to a degree that differentiates it from previous administrations. The government is turning a historic corner and heading into a period in which the role of the Diaspora will be formidable. The Office of Diaspora Affairs which has literally been recognized as an official agency of the government and is working “towards linking Sierra Leoneans from the Diaspora to different business opportunities, agencies, ministries, and departments in Sierra Leone” (Office of Diaspora Affairs) can be made to work better. The Office of Diaspora Affairs’ Diaspora Trust Fund, for instance, as a development vehicle for Diasporans to make an impact can be sufficiently used with specific terms of reference to mobilize Sierra Leoneans in the Diaspora to pool their remittances to buy into state-owned enterprises (SOEs) in Sierra Leone that are slated for privatization.

As it is the case, President Koroma has been quite open-minded, as well as the appeal of his style of democracy, appears to be restorative. Although Sierra Leone is fortunate that her governance problems have now being assumed with the promise inherent in the election of this insurance broker as president, historical forces—and the endemic nature of corruption in society—will pose a serious threat to his presidency regardless.

Indeed, the macroeconomic outlook is promising. The country shows the promise to benefit economically from the PRGF arrangement but only with unwavering commitment by the APC administration. The real estate sector is a growth market in Sierra Leone if given the attention it deserves. The export markets have the potential to grow as well and the overall growth rate of the tourism market and the service industry can also do very well with good governance. But the country is still rather stressed by unwilling cabinet ministers and public servants.

The balance of payments with higher merchandize imports is seemingly showing an increase accounted for mainly by an increase in imports of machinery and transport equipment, chemicals and manufactured goods; and mineral fuel and lubricants constituting the largest share of total imports look encouraging. Exports growth shows potential with diamond and gold exports forming by far the largest share of total exports. This relatively promising balance of payments position gives the country the opportunity to solidify its strategic advantages as the government struggles to rebuild. At the same time, this PRGF arrangement and the growing balance of payments may lead to a stable economy. Corruption minefields may be diminished, which may quicken the growth of the economy. And it is likely that, with Koroma less distracted by a corrupt cabinet, his administration will see more clearly than its predecessor that strengthening the economy by addressing corruption head on should become his government’s most important good governance strategy. The administration should now truly show commitment to lead efforts to improve Sierra Leone’s Human Development Index rating and expand the benefits of sound economic management to be felt at the household level in the form of improved income and job prospects as well as improved basic services that support the growth and productivity of the informal sector on which 80% of the active working population survive.

Underutilized Housing Market Sector

Sierra Leoneans are squeezed by a confluence of pressures, especially those with low incomes and uncertain formal access to secure land. There are images of famished existence seen in many places. Kroo Bay, for instance, is one of Sierra Leone’s largest informal settlements, with an estimated population of about 10,000 inhabitants. It is also the most impoverished and neglected area, with no supply of drinkable water, no electricity and lacking all public services. Kroo Bay is part of the urban core, located on the coastline in central Freetown. Informal settlements are also present in the Bormeh, Government Wharf and Susan’s Bay easements and on both private and public lands. The characteristics of these settlements share common features that are more evident in some areas than others. They are located on marginal land (including under bridges and flyovers) with poor drainage and extremely poor housing conditions with few foundations, makeshift roofs and impermanent building materials.

The government has a lot of work to do to make the housing sector in Sierra Leone viable. The country’s housing market crisis portends a combination of a much disorganized land tenure system and poorly developed mortgage market. The disorganized land tenure system reflects the Ministry of Land’s overly corrupt handling of land estates. The poorly developed mortgage market reflects, among other factors, a weakness in housing and nonresidential construction in Sierra Leone. Policy makers apparently lack appreciation for a stable mortgage market and has not created the enabling environment to encourage banks to reform bank business models and practices to accommodate the intricacies of commercial and mortgage banking. But it is obvious that access to land and housing for most Sierra Leoneans is still tantamount to the ultimate form of social security. It is for this reason that most urban and rural Sierra Leoneans would sell their houses only under the direst of circumstances, and they are generally comfortable with customary ownership of land. In reality, widely shared social values affect attitudes towards the marketability of land and housing.

Escalating prices on land with legitimate titles on the one hand, and multiple disputed sales of land with phony titles on the other, are especially inconvenient risks, especially in urban areas. A general lack of security, whether social, legal, or economic, is inimical to financing housing, and land problems in Sierra Leone represent the highest risk to the development of a vibrant housing system. Land banking by developing an integrated management information system with detailed property information for property development is essentially one critical response to the current inefficient land management system. Fundamentally, this requires also a sophisticated construction management and loan product development program in place.

Sierra Leone does not have a source of home loan money. Even though the Sierra Leone Housing Corporation (SALHOC) as a parastatal (semi official) body that “follows government housing policies is designed to create partnerships with the private sector, NGOs and the public sector to make housing services accessible to all sectors of society, particularly the poor” (Report on Country of Return Information), it does not have a matured mortgage operation that provides borrowers with major mortgage loans.

Facing the underutilized housing market in Sierra Leone, the government can act responsibly by promoting the growth of home ownership and facilitating the provision of a secondary mortgage market. This is how Fannie Mae succeeded to help millions of Americans achieve the dream of home ownership. A secondary mortgage market exists in the buying and selling of a mortgage from one lender to another. A bank or mortgage company that provides a loan turns around and sells that mortgage to the government parastatal that has to be properly set up to handle such purchases. This frees up their cash to make another mortgage loan. And the cycle of growth is expanded and sustained in this manner. The idea and concept worked for Fannie Mae, SALHOC can therefore adapt some features of the Fannie Mae concept to set up its mortgage operation in Sierra Leone as a privately held, stock ownership company that will promote the growth of the housing industry by making it possible for many low-to-middle income Sierra Leoneans to own homes. Investors, especially Sierra Leoneans at home and in the Diaspora can purchase stock in the Sierra Leone Housing Corporation, and this will not only increase their own wealth, but will also help to fund the home ownership possibilities for a new generation of Sierra Leoneans. Through the issuance of mortgage backed securities, for instance, the reformed Sierra Leone Housing Corporation can guarantee investors a return on their investment, and at the same time, providing a source of funding for issuing further mortgages. This provides the nation’s lenders with a steady stream of cash to continue to make mortgages available to the consumer thus supporting a steady and continual cycle of growth.

With a sustained flood of mortgage money, there will be a growth in residential and commercial real estate. Most Sierra Leoneans are squeezed by a variety of pressures, especially low income individuals and those with uncertain access to secure land. Urbanization has been a contributing factor to poor housing with more than 60% of communities in metropolitan Freetown, for instance, living in informal housing. There is sufficient evidence, however, to suggest that communities are able to become sufficiently organized to drive settlement upgrading in partnership with government and the private sector.

Rough-and-Tumble of Sierra Leone’s Economic Politics

It is increasingly evident that the government has to work to stave off a sustained slump in Sierra Leone’s economy. The healing wounds of war are still being used by politicians to justify Sierra Leone’s rating in the Index of Economic Freedom which remains significantly below the world average in seven areas. The judicial system is riddled with corruption (as is virtually all of the civil service). The labor market is highly inflexible and Sierra Leone is one of the world’s least free. Liberalization of the trade regime is progressing, but import taxes and fees, non-transparent regulations, inefficient customs implementation, inadequate infrastructure, and corruption add to the cost of trade. Sierra Leone has relatively high tax rates. The budget deficit has been somewhat reduced, but better spending management is needed as reiterated by the president himself that “it is no secret that due to … poor management of national resources, Sierra Leone has lagged behind in the areas of social and economic development” (Sierra Leone Web).

Inflation is high, averaging 10.6 percent between 2004 and 2006. Unstable prices explain most of the monetary freedom score. Corruption is perceived as pervasive. Sierra Leone ranks 142nd out of 163 countries in Transparency International’s Corruption Perceptions Index for 2006. International companies cite corruption in all branches of government as an obstacle to investment. Official corruption is exacerbated by low civil service salaries and a lack of accountability. Inflexible employment regulations hinder overall productivity growth and employment opportunities. Sierra Leone’s labor freedom is among the world’s 20 lowest. (Source: 2008 Index of Economic Freedom).

The Koroma administration has a responsibility to clear up the clouds of economic gloom and despair which have gathered over Sierra Leone’s economy for decades. The administration has to propel the engines that could pull the nation out of her chronic gloom. Even though some fear the worst: that “the real GDP growth for Sierra Leone is forecast to slow from an estimated 6% in 2008 to 4.8% in 2009, as post-war recovery tails off and the global financial crisis reduces demand for Sierra Leone’s exports” (Economist Intelligence Unit) as reported by the Economist Intelligence Unit, a division of London’s Economist Group; all is not lost.

The pessimism may be overdone. Sierra Leone is still one of the most resourceful parts of the world in terms of natural abundance. Even though the country faces such daunting economic difficulties that do not seem to go away, Koroma only has to prove the pessimists who see the regime change as all mouth and no trousers—that much of it made up by old budget commitments, double-counting and empty promises—wrong. He has to prove that it was not mainly propaganda; and to convince Sierra Leone’s own people and the outside world that his government is serious about stimulating development and is ready to take radical steps to spend infrastructure money and providing a decent social safety net for Sierra Leoneans, especially in housing, education and health care.

Financial Sector and the Housing Market

Sierra Leone’s financial sector holds promise for reaching broader and deeper into the housing market. The vast majority of Sierra Leoneans evidently do not have access to asset-backed finance or mortgage finance, but low and moderate income households are beginning to participate broadly in the maturation of the microfinance industry. The (PRSF), initiated in 2002, is one indication of the commitment of the government, the Bank of Sierra Leone, and the donor community to support financial sector development. The PRGF project was undertaken primarily to support concessional lending practices and debt relief under the joint Heavily Indebted Poor Countries (HIPC) Initiative. The targets and policy conditions in a PRGF-supported program are drawn from the country’s PRSP.  “Key policy measures and structural reforms aimed at poverty reduction and growth are identified and prioritized during the PRSP process” (IMF).

There is apparent need for improved housing conditions in Sierra Leone, especially for lower income Sierra Leoneans. There are potentials for the sector if the government could commission the Sierra Leone Housing Corporation and interested investors with substantial microfinance experience to assess trends in public and private sector delivery of affordable housing in the country and to make strategic recommendations for tangible, replicable and sustainable interventions that would enhance the amelioration of housing conditions for the majority of Sierra Leoneans. A technical assessment to broadly examine the trends, risks and opportunities to meet the critical challenge of affordable housing in Sierra Leone is critical at this point in time. The specific objectives for such an assessment is to:

·        analyze the strategies, experience and roles (public and private) for the delivery of affordable housing in Sierra Leone;

·        determine the main reasons for any constraints in the delivery of affordable housing solutions (including costs, appropriate construction approaches and materials, finance and land);

·        understand the extent and the characteristics of the potential market for affordable housing in Sierra Leone; and

·        recommend tangible strategies to the Government of Sierra Leone and other potential key players to meet current demand for affordable housing, focusing on the appropriate housing typologies, financing, and the legal and regulatory framework.

The government should be open-minded in terms of understanding of the optimal factors that comprise an “enabling environment” in which a vibrant and equitable housing sector may develop. A stable macro-economic and political environment in which low and moderate income people are able to create effective demand for housing finance and other inputs into the housing improvement process is a necessary condition for such an enabling environment. The right policies to ensure efficient and equitable land markets will promote a sense of security for all sectors of society and therefore spur household investment. Such supportive legal and regulatory frameworks will also promote broad community and private sector participation in housing development and upgrading processes.

The way out of the current economic woes of Sierra Leone is to have a macroeconomic policy designed to accelerate the process of growth and transformation of the economy under competitive conditions. A stable political environment has already been created with the successful democratic dispensation of 2007. In spite of some economic risks due to increases in oil prices, Sierra Leone possesses the potential for a stable macro-economic and socio-political environment under which an affordable housing sector could take off. The government only has to embark on a comprehensive macroeconomic stability strategy. The main thrust is to create wealth and reduce poverty as defined in the government’s PRSP, which was introduced to ensure the country benefited from debt cancellation. The PRSP supposed to be a demonstration of the government’s long-term commitment to reduce poverty and enhance economic and social growth in both rural and urban communities. Therefore, a developer-driven and household-led incremental housing or community-led settlement upgrading should be aligned with this strategy which seeks to protect the vulnerable segments of society. Improving public expenditure management and fiscal resources mobilization; and pursuing price and exchange rate stability are measures needing to be put in place by the government. The administration has to keep trends in the key economic parameters stable in order to grow the economy and to keep fiscal position in line with budget projections and revenue generation by the responsible agencies.

The bottom line is that the economy has to create jobs in order for people to afford a range of housing opportunities. Positively, Sierra Leone’s major exports of bauxite, diamond and gold enjoyed favorable prices in 2007 and 2008 which, together with inflows from both foreign donors and private remittances, have helped to improve the country’s import cover and reduced exchange rate volatility. The impact of remittances is equally phenomenal. Official private remittances are growing according to an International Monetary Fund (IMF) report on remittances (IMF).  Even though, therefore, Sierra Leone’s financial system has been a shadow of itself for many decades and the depreciation of the Leone has been dramatic, the potentials for growth exist. There are possibilities of investment opportunities with predictable inflation, exchange and interest rates to impact the housing market in Sierra Leone.

Reducing inflation to single digits thus has to be one of the corner stones of the present government. For this to happen, Koroma and his government must seriously commit to creating a dynamic private sector to fuel economic growth and improve people’s living standards. This commitment should be expressed in terms of closer collaboration and partnership with the private sector and the privatization of many state-owned enterprises (including the Sierra Leone Housing Corporation (SALHOC), the Sierra Leone Airport Authority, the Sierra Leone Telecommunications Company (SLTC), the Sierra Leone State Lottery Company, the Guma Valley Water Company Limited, the National Power Authority, the Sierra Leone Ports Authority, Sierra Leone Postal Services, the Sierra Leone Commercial Bank (SLCB), the National Insurance Company (NIC), the Rokel Commercial Bank (RCB), and the Sierra Leone Road Transport Corporation (SLRTC). In line with this vision, the mandate of the Sierra Leone Investment and Export Promotion Agency (SLIEPA), which now replaces SLEDIC, in addition to providing a range of services that aim at assisting exporters to source market and penetrate overseas markets, should be expanded to facilitate the development and growth of a competitive and vibrant private sector and also to help reduce the cost of doing business in Sierra Leone.

The land ownership system in Sierra Leone which is governed by a complex operation of customary, statutory, and common law also needs to be given considerable attention. Corruption and land disputes, especially involving public lands in urbanizing areas, have been experienced by significant majorities. The lack of uniformity, complex codes, administrative requirements, and the dualism in land tenure is a risk to an effective housing finance market due to the uncertainties and litigation potential. What could be an interesting response to the current inefficient land management system is to manage a comprehensive land banking system for an efficiently coordinated property development program. It is not clear at this time what the relationship is or will be between the government’s inventory-taking exercise and the current land banking efforts. A significant development within such a program is the National Social Security and Insurance Trust (NASSIT) and its underlying interests in the country’s housing sector.

The National Social Security and Insurance Trust (NASSIT) is a quasi-public entity involved in the government’s inventory-taking exercise and the current land banking efforts.  “It is a Statutory Public Trust set up by the National Social Security and Insurance Trust Act No. 5 of 2001 to administer Sierra Leone’s National Pension Scheme. The trust was established to provide retirement and other benefits to meet the contingency needs of workers and their dependants” (NASSIT). It is the sole legally authorized institution that manages a pension scheme for workers in Sierra Leone, in accordance with Act No. 5 of 2001, which requires Sierra Leonean employees of companies operating in Sierra Leone to be members of the scheme. In addition, to collection of contributions (30% of the insured’s average earnings for the first 15 years of coverage, plus 2% of the insured’s average earnings for each additional 12-month period) and administration of benefits. It also manages the assets of the scheme.  These assets include real property of various forms, including the development of a housing stock of formal rental units in the country in a joint venture with the American firm ‘Regimanuel Gray Constructors’ which has a plan of investing over 50 Million US Dollars in the country’s housing market in five years.

Policy Recommendations

One is tempted to deliver a whole host of recommendations for improving affordable housing policy and processes in Sierra Leone. A policy that stimulates more innovative and more intensive use of land in or nearby urban centers or in built-up environments can help the housing market in Sierra Leone. The national housing market should be understood and analyzed according to various market segments to enable more people to benefit from housing investment, whether personal or institutional.  A developer-driven housing conventional strategy for the supply of separate and semi-detached housing can be geared toward the formally employed professionals—a segment that could be served rather efficiently by the real estate development industry and the commercial banks, with mortgage finance. The majority of Sierra Leoneans are building, extending and improving their houses as circumstances and household resources warrant. Financing incremental housing may therefore be facilitated through forging a link with commercial banks.

The government should also facilitate informal settlement upgrading for areas like Kroo Bay, Bormeh, Susan’s Bay, and Government Wharf by the different groups that reside there with technical support from specialists in this field. Such a decision will release an enormous amount of good will. The ensuing results will be striking.  The country needs a well managed settlement upgrading and “de-densification” or resettlement of families program.

Wholesale financing arrangement between mainstream commercial banks and other qualifying private institutions that will ensure sustained funding for the market segment of incremental housing is also strategic. Such an arrangement takes advantage of the proportional benefits of each level in the finance system as well as the strengths of government. Market-related interest rates that will be charged at both the wholesale and retail levels, and accompanied by sound financial and risk management, will permit the possibility of an enabling financial sector integration. The use of market-related interest rates will enable the wholesale operation to gear additional private savings from other private institutions and develop a sound secondary market. Likewise, more low-income households will have the opportunity to establish sound, transferable credit histories and become repeat borrowers.

Also, a privatized Sierra Leone Housing Corporation can be very instrumental in institutionalizing the modern mortgage system in Sierra Leone. The Sierra Leone Housing Corporation can be transformed to a leading home loan supplier in lending to underserved populations in Sierra Leone. If done well, the reengineered Corporation can be a darling of socially responsible investing with lending policies that should not be a barrier to home ownership in Sierra Leone.

The problem, however, of urban households lacking sustainable access to finance and appropriate financial arrangements to improve their housing and shelter-related environments cannot be ignored. Because many households are generally financially challenged, lending institutions must understand that this incipient market is high risk. Taking on greater risk may therefore require wholesale financial institutions to undertake sophisticated risk management practices and investment strategies to protect stock holders and end-user clients.

Kenday S. Kamara
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