Sunday, September 20, 2009

Solution to China's "Cancer Villages" Is Health Insurance??

and solution to economic crisis is welfare reform?

Reuters ran the article about the dire plight of Chinese peasants suffering debilitating and deadly disease (various forms of cancer) due to contaminated water from a state-owned mining operation nearby.

China's cancer villages bear witness to economic boom
(9/16/09 Reuters)

It's a heavy metal poisoning (cadmium, lead, zinc, etc) poisoning of the river that the villagers use for bathing and irrigation for rice crops, which are contaminated with heavy metals and which the villagers sell. They use well water for drinking, but the wells are all contaminated with heavy metals. How or why they continue to use the river water is totally beyond me, as it doesn't look like water. The article describes the water, "The river's flow ranges from murky white to a bright shade of orange and the waters are so viscous that they barely ripple in the breeze."

The article says this is the price that China is paying for its rapid economic expansion. It is indeed, as the Chinese government ignored the warning of environmental disaster from the developed countries as an affront to China's ability to grow. The government continues to ignore.

But what I want to focus on is the last part of the article about China's health care system (or lack thereof). I find it a bit odd to focus on the health care system when the first and foremost solution to be applied right away is to stop further contamination of water and soil immediately and start the remedial process. The very first thing that the government should do is to shut down the mining operation. Instead, the article says people continue to suffer because they don't have national health care safety net in the form of some kind of national health insurance scheme.


Then I heard on the BBC Radio (which by the way has started to churn out very good programs in business and finance, again) a program on China's consumers that made me suspect that the major U.S. financial institutions (such as Morgan Stanley) are working very closely with the Chinese government to lay out the infrastructure for nationwide health insurance program and other social safety nets.

Business Daily: China's consumers (9/16/09 BBC Radio)

The program is about China's export and domestic consumption, discussing how Chinese could be induced to save less and spend more. 9 minutes into the program, Stephen Roach, chairman of Morgan Stanley Asia is interviewed. He says China needs much greater stimulus for internal private consumption by building social safety net. Social security, private pensions, medical insurance, and unemployment insurance.

Coincidence? I don't think so.

U.S. financial institutions are very good at what they do - smell a big, big wad of money and pile on to the opportunity. What more lucrative than working closely with a government that virtually controls all aspects of the nation's social, political, and economic life (they are still Communists, remember?)? Instead of getting back the clean water and soil, the Chinese peasants in the Reuter's article would get a government-mandated health insurance. The premium would be paid by the peasants from their meager earnings, with no guarantee that they would get the medical treatment that they need as there is no infrastructure yet. But the government would have a huge chunk of money in the "social safety net" available for investment.

Morgan Stanley's Roach and the Chinese official interviewed right after Roach are in perfect agreement. The logic is that if Chinese people feel they are well protected by the government (social security, health insurance, unemployment insurance, etc.) they will spend more instead of saving more to take care of themselves in times of trouble.

So the world still faces the biggest economic recession since the Great Depression. The U.S.'s priority is health care reform. Japan's priority is climate change. China's priority is welfare reform.

I want to invest in a country where the economic recovery is the first priority in an economic recession. If there is such a country left, that is.


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