China + 1 Manufacturing

from www.nytimes.com

June 18, 2008
Labor Costs Rise, and Manufacturers Look Beyond China
By KEITH BRADSHER

HANOI — Canon is no longer building or expanding factories in China, but the company is doubling its workforce at a printer factory outside Hanoi to 8,000.
Nearby, Nissan is expanding a vehicle engineering center. Hanesbrands, the underwear company based in Winston-Salem, N.C., is building two new factories here, as is the Texhong Textile Group from Shanghai.
China remains the most popular destination for foreign industrial investment in the world, attracting almost $83 billion last year. But a growing number of multinational corporations are pursuing a strategy that companies and analysts call “China plus one,” establishing or expanding Asian bases outside China, particularly in Vietnam.

A long list of concerns about China is feeding the trend: inflation, shortages of workers and energy, a strengthening currency, changing government policies, even the possibility of civil unrest someday. But most important, wages in China are rising close to 25 percent a year in many industries, in dollar terms, and China is no longer such a bargain.
More than corporate profit margins are at stake. When the cost of making goods in Asia rises, American consumers inevitably feel pain. The Labor Department said Thursday that import prices were 4.6 percent higher in May than a year earlier for goods from China and 6.4 percent higher for goods from southeast Asia.

Companies are using the China-plus-one strategy to mitigate the risks of overdependence on factories in one country.

Multinational corporations are “thinking about all the world and keeping a balance” between China and other countries, said Edward Kang, the chief executive of Ever-Glory International, a sportswear manufacturer in Nanjing, China. Ever-Glory, which sells to Wal-Mart and Kohl’s, is building a factory in Vietnam to supplement its three factories in China.
Companies remaining in China are desperately seeking to control costs.
“We will maintain our capacity in China, but we will make it more automatic and reduce the number of employees,” said Laurence Shu, the chief financial officer of Shanghai-based Texhong, one of the world’s largest manufacturers of cotton and spandex fabric.
To limit labor costs, Hanesbrands is building a largely automated factory in Nanjing. But the company is also building a factory in Vietnam, in addition to a factory it bought here, and two more in Thailand.
Gerald Evans, the president of global supply chain at Hanesbrands, said that compared to China, “we found more ready availability of both land and labor in both Vietnam and Thailand.” Hanesbrands will be shifting some manufacturing from Mexico and Central America to Asia.

In China, where rural villages are running low on able-bodied young workers to send to factories, wages are rising more than 10 percent a year for many assembly-line workers. And pay is rising even faster for skilled workers, like machinery repair technicians, company executives said.
In coastal provinces with ready access to ports for exports, even unskilled workers now earn $120 a month for a 40-hour work week, and often considerably more. Factory workers in Vietnam still earn as little as $50 a month for a 48-hour work week that includes a full day on Saturdays.

Texhong estimates that average labor costs per textile industry worker in China will rise 16 percent this year, including increases in benefits costs — on top of a 12 percent increase last year. New regulations are making it harder for companies to avoid paying for benefits, like pensions, further increasing labor costs.
When those increases are combined with a currency rising against the dollar at an annual pace of up to 10 percent, labor costs in China are now climbing at 25 percent a year or more in dollar terms.
Inflation in China — more than 8 percent in February, March and April and 7.7 percent in May — raises the prospect that labor costs will soar even faster soon. That could push up prices for a wide range of goods exported to the United States.
China is also phasing out its practice of charging lower corporate tax rates for foreign-owned companies. By contrast, Vietnam still offers foreign investors a corporate tax rate of zero for the first four years, and half the usual rate of 10 percent for the next four years.
Foreign direct investment in China has grown by a third over the last three years. By contrast, foreign direct investment has more than doubled in this period in the Philippines, quintupled in India, and soared more than eight-fold in Vietnam.
Faster rates of increase in other Asian countries partly reflect lower starting points. but investment is still growing quickly, and now it’s growing from high levels. For example, foreign investment in Vietnam reached nearly $18 billion last year.
A popular saying among Western investors these days is that Vietnam is the next China. Cambodia, with even lower wages attracting garment manufacturers, is called the next Vietnam.
But how long those analogies will hold — in a world where economies evolve from agriculture to manufacturing to services in a couple of decades — is unclear.
As foreign investors leap into each new country, they drive up the cost of workers and goods, a dynamic that makes it less likely that a shift in investment patterns will hold down inflation in American imports.
A recent survey by Grant Thornton, the global accounting and consulting firm, found that companies were more worried about attracting and retaining key staff in Vietnam than anywhere else in the world. (China was a close second.)
“We trained them, we educated them and then they quit,” said Akira Akashi, the chairman of Nissan Techno, a division of Nissan that designs vehicles.
The company plans to expand to 1,400 engineers in Vietnam by 2010. Beginning engineers here still earn just $200 a month, less than half the salary in China and less than a tenth of American and Japanese salaries.
Even blue-collar labor is becoming harder to find. In addition to the size of the labor force, infrastructure is also likely to be a brake on how fast China plus one can expand. Most countries in Asia, including Vietnam, have not improved transportation links as quickly as China has. Lengthy traffic jams slow down shipments and drive up costs.
Vietnam’s biggest selling point for many companies is its political stability. Like China, it has a nominally Communist, one-party system that crushes dissent, keeps the military under tight control and changes government policies and leaders slowly.
“Communism means more stability,” Mr. Shu, the chief financial officer of Texhong, said, voicing a common view among Asian executives who make investment decisions. At least a few American executives agree, although they never say so on the record.
Democracies like those in Thailand and the Philippines have proved more vulnerable to military coups and instability. A military coup in Thailand in September 2006 was briefly followed by an attempt, never completed, to impose nationalistic legislation penalizing foreign companies.
“That sent the wrong signal that we would not welcome foreign investment — this has ruined the confidence of investors locally and internationally,” finance minister Surapong Suebwonglee said in an interview in Bangkok.
Yet, like China, Vietnam does not offer complete tranquillity either. For instance, workers are becoming more vocal and staging more strikes, despite a government ban on independent unions.
Nearly 20,000 workers walked out this spring at a Nike shoe factory run by a Taiwanese contractor. The workers only went back to work when given a 10 percent raise, to $55 a month, and a larger meal subsidy.
That restive pattern is evident in the only country with enough workers to accommodate more than a fraction of the investment China sees: India, which demographers expect to surpass China in population in the next two decades.
But many companies are leery of poor roads and congested ports in India, as well as long sailing times for components that must be shipped from existing factories in China.
And even in India, workers with industrial skills or the ability to speak English are increasingly scarce — and their wages have been rising by 10 to 20 percent a year.
That has led to worries about India’s long-term competitiveness, even at companies investing heavily there, like Ford, which is planning to spend $500 million on factory expansion.
“I keep saying to our people, ‘How long will it be until we’re priced out of the market?’ ” said John Parker, Ford’s executive vice president for Asia, Pacific and Africa. “The impact of that some day is you’re no longer low-cost.”

As a long term investor, it would be worth keeping a Vietnam ETF in your portfolio at some point. I have not researched it yet or determined a good entry point.

Mental Focus

From www.nytimes.com

June 17, 2008
Op-Ed Columnist
The Frozen Gaze
By DAVID BROOKS

Rocco Mediate’s head swiveled about as he walked up the fairway of the sudden-death hole of the U.S. Open on Monday. Somebody would catch his attention, and his eyes would dart over and he’d wave or make a crack. Tiger Woods’s gaze, on the other hand, remained fixed on the ground, a few feet ahead of his steps. He was, as always, locked in, focused and self-contained.

The fans greeted Mediate with fraternal affection and Woods with reverence. Most were probably rooting for Rocco, but only because Woods, the inevitable victor, has risen above mere human status and become an embodiment of immortal excellence. That frozen gaze of his looks out from airport billboards, TV commercials and the ad pages. And its ubiquity is proof that every age finds the heroes it needs.

In a period that has brought us instant messaging, multitasking, wireless distractions and attention deficit disorder, Woods has become the exemplar of mental discipline. After watching Woods walk stone-faced through a roaring crowd, the science writer Steven Johnson, in a typical comment, wrote: “I have never in my life seen a wider chasm between the look in someone’s eye and the surrounding environment.”

The coverage of him often centers upon this question: How did this creature come about? The articles inevitably mention his precocity (at age 3, he shot a 48 on the front nine of a regulation course) and provide examples of his athletic prowess: Once Woods tried out four drivers that Nike was experimenting with and told the lab guys that he preferred the heavier one. The researchers thought the clubs were the same weight, but they measured and Woods was right. The club he’d selected was heavier by the equivalent of two cotton balls.

But inevitably, it is his ability to enter the cocoon of concentration that is written about and admired most. Writers describe the way Earl Woods, his lieutenant colonel father, dropped his golf bag while Tiger was swinging to toughen his mind. They describe his mother’s iron discipline at home. “Old man is soft,” Kultida Woods once said of her husband. “He cry. He forgive people. Not me. I don’t forgive anybody.”

Tiger was the one dragging them out on the course to practice. At age 6 months, he was put in a baby chair and had the ability, his father claimed, to watch golf for two hours without losing focus.

As an adult, he is famously self-controlled. His press conferences are a string of carefully modulated banalities. His lifestyle is meticulously tidy. His style of play is actuarial. He calculates odds and avoids unnecessary risks like the accounting major he once planned on being. “I am, by nature, a control freak,” he once told John Garrity of Sports Illustrated, as Garrity resisted the temptation to reply, “You think?”

And for that, in this day and age, he stands out. As I’ve been trying to write this column, I’ve toggled over to check my e-mail a few times. I’ve looked out the window. I’ve jotted down random thoughts for the paragraphs ahead. But Woods seems able to mute the chatter that normal people have in their heads and build a tunnel of focused attention.

Writers get rhapsodic over this facility. “Woods’s concentration often seems to be made of the same stuff as the liquid-metal cyborg in Terminator 2: If you break it, it reforms,” David Owen wrote in Men’s Vogue.

Then they get spiritual. In Slate, Robert Wright only semi-facetiously compared Woods to Gandhi, for his ability to live in the present and achieve transcendent awareness. Analysts inevitably bring up his mother’s Buddhism, his experiments in meditation. They describe his match-mentality in the phrases one might use to describe a guru achieving nirvana. He achieves, they say, perfect clarity, tranquility and flow. We’re talking about somebody who is the primary spokesman for Buick, and much of the commentary about him is on the subject of his elevated spiritual capacities.

And here we’re getting to the nub of what’s so remarkable about the “Be A Tiger” phenomenon: He’s become the beau ideal for golf-loving corporate America, the personification of mental fortitude.

The ancients were familiar with physical courage and the priests with moral courage, but in this over-communicated age when mortals feel perpetually addled, Woods is the symbol of mental willpower. He is, in addition, competitive, ruthless, unsatisfied by success and honest about his own failings. (Twice, he risked his career to retool his swing.)

During the broadcast of Monday’s playoff round, Nike ran an ad that had Earl Woods’s voice running over images of his son: “I’d say, ‘Tiger, I promise you that you’ll never meet another person as mentally tough as you in your entire life.’ And he hasn’t. And he never will.”

You can like this model or not. Either way, the legend grows.


Tiger is undoubtedly one of the most unique people in the world. I have always admired and tried to have a keen mental ability to focus on the problem at hand and drown out the world. One of the sacred ancient Indian texts Mahabharata refers to the archer Arjun's ability to focus on his target inspite of significant distractions and a very unsettling context.

Prices Higher - Food and Energy

from www.nytimes.com

June 14, 2008
Oil and Food Push Consumer Prices Higher in May
By MICHAEL M. GRYNBAUM
Inflation hit hard in May as prices for a wide swath of consumer goods rose at their fastest pace in six months, underscoring warnings from central bankers and adding to a growing consensus that the Federal Reserve might raise interest rates by the end of the year.

The Consumer Price Index, which measures prices of a batch of common household products, rose 0.6 percent last month, as Americans were forced to cope with a sharp increase in fuel costs. The report, released Friday by the Labor Department, is considered a benchmark measure of inflation.

On Wall Street, the major stock indexes rose after the report, with the Standard & Poor’s 500-stock index up 0.76 percent in afternoon trading. The Dow Jones industrials, which had gained more than 140 points, in morning trading was up about 80 points.

The index, which rose more than economists had forecast, comes on the heels of repeated warnings about inflation from the world’s central banks. Ben S. Bernanke, the chairman of the Fed, joined other top officials this week in focusing on higher prices, citing the economic damage wrought by the record run-up in food and oil prices around the world.

The speeches have fueled a growing sense on Wall Street that the Fed has shifted its focus from supporting growth to fighting inflation. The May C.P.I. will probably heighten expectations that higher interest rates, which tend to hold down prices, may be in the offing.

In May, gasoline prices rose 5.2 percent, and were up 21 percent compared with a year ago, according to the report. They may rise again in June: the nationwide average for gasoline topped $4 a gallon last weekend as the price of oil leaped to a new high.

The cost of eating rose, as well, as Americans paid 5 percent more for foods and beverages in May than a year ago.

On an annual basis, inflation worsened for the first time in three months, reversing a downward trend. Inflation ran at 4.2 percent in May compared with a year ago.

High oil prices also pushed up costs for other products, as businesses, squeezed by higher shipping and production costs, sought to raise the prices paid by their customers. Prices for transportation, commodities, tobacco and utility fuels all increased for the month. Excluding the cost of food and gasoline, inflation ran at 0.2 percent for the month.

“Both consumers and financial market participants are becoming sensitized to large headline price rises, and were especially ready this month amid heightened inflation anxiety,” Peter Kretzmer, an economist at Bank of America, wrote in a note.

Consumers, however, do not appear content with rising prices. A measure of Americans’ confidence in the economy fell to its lowest level since 1980, another period of high inflation and slow growth. The University of Michigan’s consumer confidence survey dropped to 56.7 in June, the fifth consecutive month of decline.

The New Mom and Dad

from www.nytimes.com

June 15, 2008
Cover Story
When Mom and Dad Share It All
By LISA BELKIN

On her first day back to work after a four-month maternity leave, Amy Vachon woke at dawn to nurse her daughter, Maia. Then she fixed herself a healthful breakfast, pumped a bottle of breast milk for the baby to drink later in the day, kissed the little girl goodbye and headed for the door.

But before she left, there was one more thing. She reached over to her husband, Marc, who would not be going to work that day in order to be home with Maia, and handed him the List. That’s what they call it now, when they revisit this moment, which they do fairly often. The List. It was nothing extraordinary — in fact it would be familiar to many new moms. A large yellow Post-it on which she had scribbled the “how much,” “how long” and “when” of Maia’s napping and eating.
“I knew her routines and was sharing that with Marc,” Amy recalls.
She also remembers what he did next. Gently but deliberately, he ripped the paper square in half and crumbled the pieces into a ball.
“I got the message,” Amy says.

That message was one the Vachons had agreed on from the evening they met, though they were clearly still tinkering with the details. They would not be the kind of parents their parents had been — the mother-knows-best mold. Nor the kind their friends were — the “involved” dad married to the stressed-out working mom. Nor even, as Marc put it, “the stay-at-home dad, who is cooed at for his sensitivity but who is as isolated and financially vulnerable as the stay-at-home-mom.”

Instead, they would create their own model, one in which they were parenting partners. Equals and peers. They would work equal hours, spend equal time with their children, take equal responsibility for their home. Neither would be the keeper of the mental to-do lists; neither of their careers would take precedence. Both would be equally likely to plan a birthday party or know that the car needs oil or miss work for a sick child or remember (without prompting) to stop at the store for diapers and milk. They understood that this would mean recalibrating their career ambitions, and probably their income, but what they gained, they believed, would be more valuable than what they lost.

There are Marcs and Amys scattered throughout the country, and the most interesting thing about them is that they are so very interesting. What they suggest, after all, is simple. Gender should not determine the division of labor at home. It’s a message consistent with nearly every major social trend of the past three decades — women entering the work force, equality between the sexes, the need for two incomes to pay the bills, even courts that favor shared custody after divorce. And it is what many would agree is fair, even ideal. Yet it is anything but the norm.
“Women entering the work force changed the work force far more dramatically than it changed things back home,” says Jessica DeGroot, whose senior thesis for college 27 years ago was about this conundrum and who, as the founder and president of the ThirdPath Institute, coaches families wanting a shared lifestyle. “When I graduated, I thought things would change, if not for me, then for my children.” Her daughter, Jocelyn, is now 17, and her son, Julian, is 11.
“If you gave people a survey they would probably check all the answers about how things should be equal,” says Francine M. Deutsch, a psychology professor at Mount Holyoke and the author of “Halving It All: How Equally Shared Parenting Works.” But when they get to the part where “you ask them how things work for them day to day,” she says, “ideal does not match reality.”
Deutsch has labeled the ideal “equally shared parenting,” a term the Vachons have embraced. DeGroot prefers “shared care,” because “shared parenting” is used to describe custody arrangements in a divorce, and while “equal” would be nice, it is a bar that might be too high for some families to even try to clear. Whatever you call it, the fact that it has to have a name is a most eloquent statement of both the promise and the constraints facing families today.
“Why do we have to call it anything?” Amy asks.

Marc adds, “Why isn’t this just called parenting?”
Marc Vachon was one of six children, raised in a working-class Massachusetts town with a high crime rate and, for a few bad months, a nightly curfew. His mother stayed home, his father worked for a small manufacturing company and neither had a college education. “My father’s job was a means to an end,” he told me when I first met him and Amy at their home last fall, “a way to put food on his family’s table.”
Marc paid his way through the University of Massachusetts at Lowell and then set out with his degree in mechanical engineering (and later an M.B.A.) to earn a lot of money. Working on the management track at an electric company, “I was playing the game,” he remembers. “I was working 60 hours a week. I bought a fancy sports car.”
But a few years in, he came to see that he only used that car to drive to and from work. When the human-resources department sent out a memo outlining a reduced-hours plan, he applied. His manager seemed surprised that a single man was asking for part-time status, but eventually he agreed.
For six months he worked three eight-hour days, at a reduced salary. When his temporary “leave” ended, he had to go back full time, and he stayed at the company for only another year. “Once I got the sniff of other interests in my life,” he says, “there was no going back into the box.” He trained himself in computers and took a job doing information and technology-support, ultimately working five days a week, 7 a.m. to noon. When his bosses offered a promotion, he agreed to work his personal version of full time: 7 a.m. to 2 p.m., with no lunch, at a big jump in pay. Periodically he would be offered a management position, which he turned down because “you can’t work part time as a manager.”
The only downside to this laid-back worldview was its chilling effect on his romantic life. The women he was meeting, he says wryly, did not aspire to say, “My husband works at the help desk.”
The last of those women was Amy, and they found each other eight years ago on matchmaker.com, when they were both 37. Their first date was on a dreary March evening, and over dinner they learned each other’s stories.
Amy’s began with a childhood in Ann Arbor, Mich., shattered at the age of 8 when her father, a brilliant but troubled professor of biochemistry at the University of Michigan, committed suicide. Her mother, who had been a lab assistant until Amy was born, was forced back to work. Her “chemistry skills were rusty beyond repair,” Amy says. She eventually found a job as preschool teacher.
Watching her mother “get up each morning to face another day as the only parent” made Amy determined “to assume full responsibility for myself, because anything can happen at any time, and to share the entirety of my life with a true partner, because I saw how hard and sometimes empty it was for my mother to play all the parts alone.”
Like Marc, Amy also paid her own way through school, getting a doctor of pharmacy degree from the University of Michigan and starting a career as a clinical pharmacist. She married at 20 and then divorced at 31 because she was not ready to have children. All the married mothers she knew seemed nearly as alone in their roles as her own mother had been.
She and Marc talked for hours that first night. At the end of dinner, they split the check. Amy went home wary, thinking that “this guy was too good to be true.” Marc woke up a friend and announced he had met the woman he would marry.
Their wedding was in September 2001, and they moved into a house with a picket fence that Amy bought a few years earlier. Maia was born in July 2002, and during her pregnancy, Amy kept thinking: It’s real now. There’s no turning back. If this partnership promise doesn’t work, I’ll be saddled with all I feared.
Social scientists know in remarkable detail what goes on in the average American home. And they have calculated with great precision how little has changed in the roles of men and women. Any way you measure it, they say, women do about twice as much around the house as men.
The most recent figures from the University of Wisconsin’s National Survey of Families and Households show that the average wife does 31 hours of housework a week while the average husband does 14 — a ratio of slightly more than two to one. If you break out couples in which wives stay home and husbands are the sole earners, the number of hours goes up for women, to 38 hours of housework a week, and down a bit for men, to 12, a ratio of more than three to one. That makes sense, because the couple have defined home as one partner’s work.
But then break out the couples in which both husband and wife have full-time paying jobs. There, the wife does 28 hours of housework and the husband, 16. Just shy of two to one, which makes no sense at all.
The lopsided ratio holds true however you construct and deconstruct a family. “Working class, middle class, upper class, it stays at two to one,” says Sampson Lee Blair, an associate professor of sociology at the University at Buffalo who studies the division of labor in families.
“And the most sadly comic data is from my own research,” he adds, which show that in married couples “where she has a job and he doesn’t, and where you would anticipate a complete reversal, even then you find the wife doing the majority of the housework.”
Housework, in this context, is defined as things like cooking, cleaning, yardwork and home repairs. Child care is a whole separate category — one that is even more skewed. The social scientist’s definition of child care “is attending to the physical needs of a child — dressing a child, cooking for a child, feeding and cleaning them,” Blair says. It doesn’t include the fun stuff, like playing and reading and kissing good night.
Where the housework ratio is two to one, the wife-to-husband ratio for child care in the United States is close to five to one. As with housework, that ratio does not change as much as you would expect when you account for who brings home a paycheck. In a family where Mom stays home and Dad goes to work, she spends 15 hours a week caring for children and he spends 2. In families in which both parents are wage earners, Mom’s average drops to 11 and Dad’s goes up to 3. Lest you think this is at least a significant improvement over our parents and grandparents, not so fast. “The most striking part,” Blair says, “is that none of this is all that different, in terms of ratio, from 90 years ago.”
Back when women had to tend fires to cook and put clothes through the wringer and then onto the clothesline, they spent 50 hours a week on housework and men spent 20. (A ratio of 2.5 to 1.) And back in the 1950s, when no one was even bothering to measure how many hours men spent on child care because it was thought to be negligible, the average mother spent 12 to 15 hours caring for her children — the same as they spend today.
Which does not mean women are happy about this. There are plenty of studies of that too, and according to Blair’s research, 58 percent of women say the division of labor in modern families is not fair to them. (Eleven percent of men, in turn, feel that the division of labor in their own marriage is unfair to them.) When couples argue, it is most likely to be about children, money or the division of labor. “Those are always the Top 3,” Blair says. “The order changes around, but the topics don’t.”
Why then does the status quo continue? “You assume people will look at relationships rationally, and if there is such inequity and such a sense of unfairness, they would end it,” Blair says. “When you look at this rationally, it is very difficult to understand why things are the way they are.”
The obstacles to equity are enmeshed and interwoven, almost impossible to separate from one another. Deutsch did a study of 150 couples who tried sharing to various degrees, and her results suggest that social norms play a large part in why so few marriages are truly equal. Choices are made in a context. It is rare that you choose something you have never seen. So men who do more around the house than their fathers and spend as much time with children as their neighbors feel that they are doing their share and their wives feel grateful to have such involved partners. That is why the single-most-predictive factor of how equal a couple will be, Deutsch says, is how equal their friends are.
Messages, loud and soft, direct and oblique, reinforce contextual choice. “A pregnant woman and her husband,” Deutsch says, “how many people have asked her if she is going to go back to work after the baby? How many have asked him?”
Looked at through that lens, what seems like an external institutional barrier to equal sharing becomes something else entirely. He makes more money than she does, so of course she should be the one to step back her career; she has a more flexible line of work than he does, so of course she should be the one to work part time. Those may seem like choices, but they have their roots in social norms.
“They weren’t born in those jobs; they chose them,” Deutsch says. What decision tree, planted decades earlier and steeped in unspoken assumption, she wonders, led him to be a surgeon and her to be a social worker? What led her to work in a field where four-day weeks are common and him to work where they are unheard of?
“It’s a chicken-and-egg thing,” she says. “Even when men and women start off with equal jobs, they make decisions along the way — to emphasize career or not, to trade brutal hours for high salary or not.”
She goes on to suggest that the perception of flexibility is itself a matter of perception. In her study, she was struck by how often the wife’s job was seen by both spouses as being more flexible than the husband’s. By way of example she describes two actual couples, one in which he is a college professor and she is a physician and one in which she is a college professor and he is a physician. In either case, Deutsch says “both the husband and wife claimed the man’s job was less flexible.”
She has a similar response to those who say that they would love to share equally but that one parent — almost always the wife — has parenting or housekeeping standards that the other cannot (or will not) meet. Dad dresses the children wrong and diapers them wrong and sends inadequate thank-you notes and leaves the house a mess. This may look like a cranky power struggle, Deutsch says, but the dynamic, which sociologists call “gatekeeping,” also reflects social pressures.
Women, she says, know that the world is watching and judging. If the toddler’s clothes don’t match, if the thank-you notes don’t get written, if the house is a shambles, it is seen as her fault, making her overly invested in the outcome. Many women will also admit to the frisson of superiority, of a particular form of gratification, when they are the more competent parent, the one who can better soothe the tears in the middle of the night.
Deutch says that equality in parenting should be every couple’s goal. Yet, as we all know, the nuances of relationships are complicated, built on foundations that even we may not see until we try to alter them. If your partner’s ambition is what attracted you in the first place and if his/her decision to dilute that ambition would make you think less of him/her, then this is not for you. If part of the security and warmth you feel from marriage is because of the familiarity and tradition of husband and wife roles, this won’t work for you, either. And if one of you is dead set against it or if both of you think the required regimentation that comes with equal sharing just isn’t a way to live, then Deutsch probably won’t persuade you. So go with your comfort level. But understand where that feeling of comfort comes from.
When Jo and Tim Pannabecker first met, their work was at the center of their lives. They knew they would not get rich trying to better the lot of the poor in Africa, but they did think they could change the world.
Jo, born in New Zealand, was working in Chad, researching how to grow crops in the dry season, and Tim was stateside coordinating the effort of development workers like Jo. They were both in their early 30s, having put off marriage for their peripatetic careers, and Jo in particular was worried that having children would table her dreams. “I was scared that if we had kids, I would be left home with the cooking, the cleaning and the children,” she says.
Jo had not yet put those fears aside when she married Tim in 2001. Living in Lancaster, Pa. (where their employer, the Mennonite Central Committee, was based), they tried sharing all housework equally so that they didn’t slip into the “wife as caretaker” pattern, and they got a dog and a cat “as our first step toward children,” Jo says.
“It was a test,” Tim explains. “We would have to decide who would take the dog out at night, who would walk her early in the morning, who could work with vomit.”
A test he passed, his wife says: “The dog was the only evidence I had that Tim would change his schedule to accommodate the dog. That was my intellectual bridge, into ‘I think I can trust this.’ ”
While pregnant with their first child in 2003, Jo read a short description in a woman’s magazine about ThirdPath, and the couple signed on to be coached in the ways of shared parenting. Jessica DeGroot and her husband, Jeff Lutzner, lead the life DeGroot teaches (they have done so for all 18 years of their marriage), and they keep track of who is home and who is working with the help of a color-coded computer chart. Lutzner’s schedule is blue, DeGroot’s is pink, child care from nearby grandparents is purple and time at school is gray.
To Jo and Tim, the idea of the chart was concrete evidence that sharing was more than just talk. “We saw it could be done,” he says. “It’s like a puzzle. You have a certain number of hours during the day, and you decide who does what when.”
At about the same time in a Boston suburb, Bill and Alexandra Taussig were also learning about ThirdPath and shared parenting. They met as undergraduates at Cornell, stayed together while she was at business school and he was at law school and were fiercely committed to work.
“My career is extremely important to me,” Alexandra says, referring to her job in marketing at a large financial-services firm. “It’s a big part of how I define myself.” When their first child was born in 1997, “it did not occur to me to opt out or go on the mommy track or take an offramp,” she says. “I wanted a career and wanted to be a good mother, but I thought it was up to me to figure it all out.” She did as she had assumed she would do — took a four-month maternity leave and then returned to the office on a four-day schedule.
Instead, it was Bill who did the unexpected. His firm had a gender-neutral policy offering three months of paid parental leave, and he asked for one. Looking back, he thinks he was responding as much to a desire to spend time with his son as to a gnawing realization that he wasn’t interested in the intense life of those who would make partner.
When the leave was over, he didn’t want to go back to his 60-hour weeks, but he didn’t want to become a stay-at-home parent either. “The work is very important,” he says. With a baby at home, he learned that sometimes he couldn’t “wait to get back to work because there’s sanity. It can be an oasis.”
The couple hired a nanny, and Bill switched jobs a few times — to a clerkship for a judge, to a solo practice, to a smaller firm — looking for the right fit. Alexandra rose through the ranks at her company, and after their second son was born in 2000, she continued working four days a week. Her schedule — every Friday off, spent with the children — appealed to Bill, who took a job in the compliance department of his wife’s employer, though it would be a while before he would get up the nerve to ask for a four-day week too.
In 2004, when Jo and Tim’s son was born, Alexandra was pregnant for the third time (she would have another boy), and Bill came across a ThirdPath conference about “Creating Work-Life Balance in the Law.” That was the first he knew that what he was trying to fashion had a name. Like Jo and Tim, he was reassured and inspired by DeGroot’s orderly charts, and while he did not go as far as making his own, he did adopt her worldview.
Jo and Tim did draft a chart. After her three-month maternity leave, their schedule worked like this, as Tim explains: “I would get up extra early and head to work, and Jo would be home until later in the morning and then take him to day care. She would leave work again at lunch for an hour to nurse him. I would take half a lunch and leave work by 2:30 or 3, pick Seth up and take him home. Jo would stay at work until 6.”
They agreed to share chores at home too, but their varying definitions of “done” soon made things unequal. “He would do the laundry,” Jo says, “but he was so slow about it that I took it back. His level of alertness to mess is quite different than mine. I see dirt two or three days before he does.” So she took back a lot of the cleaning too.
Their work-home time was evenly divided for about a year, and then in the summer of 2005, their daughter, Kate, was born. Jo tried to envision a schedule that would account for the demands of two children under the age of 2. “I realized what it would take to get all of us out of the house by a certain time in order for us to keep the life we had . . . ,” she says, trailing off. She calculated that her take-home salary, which was substantially lower than her husband’s, would barely pay for child care. She took a hard look at the satisfaction she got from her office job, which was nil compared with the joy she had found while planting crops in Chad. “If I could get a job that would pay me $50,000 a year, that would rival or compete with Tim’s . . . ,” she says, letting that thought trail off as well.
Jo would not disagree with Deutch’s point that she had a role in creating that inequity — choosing to major in international rural development, with little practical career application, while her husband obtained two master’s degrees, one in counseling and the other in college student personnel, with better job potential. Even marrying a man who was ahead of her on the career ladder, and therefore likely to remain ahead of her, was a choice. But there comes a point where the origin of the cards you hold becomes irrelevant, and you have to play the hand you are dealt.
Jo left the work force completely. Now she is home full time, doing nearly all the cooking, child care and cleaning — exactly the life she feared a few years ago when she returned from Africa and married Tim. While there are “a lot of days” that she thinks “this isn’t what I signed on for,” for the most part she is far more content with her choice than she could have predicted before the children were born.
Contrast their lives with those of Bill and Alexandra. What Bill took from his involvement with ThirdPath was that he had the same right to flexibility as his wife, and he requested a four-day schedule. While hers was granted automatically, his met with resistance, and eventually he “just took it,” he said, by negotiating a paternity leave that he would parcel out one day per week for 10 weeks. When the 10 weeks were up, he kept taking Fridays off.
A year later, his somewhat amenable manager was replaced by “the kind of guy who came in early and stayed late and had a stay-at-home wife” and who called each employee in for a schedule review. Bill was asked to return to a full-time schedule.
And that was how he worked until Alexandra, who has always had a more senior position than her husband, was offered a new job within the company. That job would require a five-day week, at least at the start. She made it clear to Bill that it was his turn to spend an extra weekday with their children.
Bill was able to negotiate a 90 percent plan — every other Friday off — in part, he thinks, because the company didn’t want to risk losing both of them. Eventually Alexandra took on that schedule, too, and now they alternate being home on Fridays. The 10 percent salary cut that they each take is a price they consider worth paying, understanding that this is an option available only to those who can make ends meet in the first place.
They are each equally likely to plan birthday parties or put the children to bed or be the parent who goes along on the school field trip. They have noticed that whoever is home on a Friday becomes the boys’ “favorite” parent — the one they call when they are hurt or want a bedtime story — for the rest of the weekend, which they see as the payoff for making sure that Bill is equally immersed in and responsible for their lives.
Less equal is their allotment of household chores. Alexandra shops for groceries. Bill deals with the cars. She calls the baby sitter. He drives the baby sitter home. He has gotten better at putting birthday invitations on the calendar, but she is the one who remembers to buy the gift. Most of all, she keeps the literal and mental lists. “I know that Teddy missed his dentist appointment and needs another appointment, and that was three months ago, and it hasn’t happen yet, but at least I am tracking it,” Alexandra says.
The keeping of those lists, they agree, makes her the defacto C.E.O. of the Taussig family. “Ideally that should be 50-50,” Bill says, “but Alex is just better at that. Also, outsiders expect her to do it — we both gave the teachers our e-mail addresses, but the teachers only e-mail her.” (But of course, says Deutch. There’s the world getting in the way again.)
Periodically they make an effort to rebalance, but it feels forced and accusatory, “too much like keeping score,” as Bill puts it.
“I’d prefer to have it unequal than spend all our time measuring,” Alexandra says.
“It’s a 60-40 split, with her doing the 60,” Bill says. “I am aiming to bring my percentage up to 42.”
For Amy and Marc Vachon, 42 percent is not enough. After Maia was born, they negotiated part-time schedules, which turned out to be the easy part. Amy worked four days a week, Monday through Thursday; Marc worked three 10-hour days, Monday, Wednesday and Friday.
The division of work led naturally to the division of child care. On the days he went to the office, Marc would leave early and bike to work (having only one car, despite two commutes, is one way they are able to afford life on two part-time salaries), while Amy did the entire morning child routine. On Monday and Wednesday, when she worked too, she would take Maia to family day care across the street from their house. On Friday, she and Maia would spend the day together. On Tuesday and Thursday, Amy would sleep a little later and leave Maia in Marc’s care. If Maia got sick on a Monday, they agreed in advance that Marc would take off from work, and Amy would do the same if the sick day was a Wednesday. It was a schedule that continued after Theo was born three years later.
Less seamless, though, was the division of everything but child care because they had lapsed into unequal patterns during their parenting leaves. Amy, the planner of the duo, spent those months reading every child-care book she could find — and hating most of them. “Those books don’t mention men,” she says.
But while she disagreed with what she read, she was learning nonetheless. How to structure a nap schedule. How to introduce solid foods. How to soothe a colicky baby. “We had fallen into the trap,” she says, “of master and apprentice.” Marc, despite all their intentions and expectations, “was settling into the helper role.”
The problem made itself clear on the morning Amy went back to work and in that clarifying moment handed her husband the List. She was feeling anxious and vulnerable when she scribbled the schedule, she says. He ripped it not in anger (because Marc is the laid-back type who rarely gets angry), “but he clearly was telling me to butt out of his day with Maia.”
Other couples might have resigned themselves to inequity, redefining it as choice, but Marc and Amy fought back. If they were to avoid skirmishes over their parenting standards and if they were to avoid defaulting to Amy as the expert, they would have to decide what those parenting standards were. Marc explains: “Did we want to work toward a set nap schedule? Yes. Did our daughter’s outfits have to match perfectly? No. Did we need to take the diaper bag when our daughter came with us to the grocery store? Not necessarily.”
They also had to give the other the freedom to do things the “wrong” way — i.e., not “my” way. In the hours before bed, they decided, Maia would be the responsibility of the parent who would be tucking her in that night. If it was Marc’s turn and he wanted to roughhouse and “party in the tub,” Amy would bite her tongue and not object. She would not point out that this might not be the best way to ease a baby toward sleep. She would not point out that the books suggest evening calm. After all, if Maia was too worked up, that would be Marc’s problem, wouldn’t it?
That settled, they moved on to the details of housework. Like Jo Pannabecker, Amy feels happier and more centered when her house is clean enough for unexpected company. Marc thinks fretting about cleaning is “an undue burden.” In many homes, as in the Pannabecker home, the result would be that the wife cleaned to her standards. But in an equally shared home, what is the solution? That he clean to her standards? That she lower her own?
Each question led to another. How often should the dishes be done? What constitutes “doing the laundry”: Washing it? Folding it? Putting it away in the drawer? How often do we need to vacuum, mow the lawn or dust the shelves? Does the litterbox need to be scooped every day or is once a week acceptable?
Marc’s first reaction was to point out that he was far more of a contributor to home and hearth than any man he knew. Amy told him — à la Francine Deutsch — that other men were beside the point.
Slowly, consensus emerged. The cooking is done by whoever is home from work that day. The laundry is divided in half, with Marc doing the darks and Amy doing the lights. And yes, it has to be put away. Marc pays most of the bills, because he enjoys it and Amy does not. Ditto for mowing the lawn. Amy, in turn, buys nearly all the clothes for the children, an activity she loves and would feel “cheated” if she couldn’t do. And thank-you notes to Marc’s family? Amy has agreed that if Marc doesn’t want to write them, they won’t get written, and she will stop feeling as if his relatives are somehow blaming her.
Sure, some of their tasks would fall along traditional gender lines. The point, they say, is not to spit at tradition for the heck of it but rather to think things through instead of defaulting to gender. The result of all their talking, Amy says, is that “there is no nagging, passive-aggressive forgetting, feigned incompetence, unspoken resentment or honey-do lists.”
There is one pocket of American parenting in which equality is the norm or, at least, the mutually-agreed-upon goal. Same-sex couples cannot default to gender when deciding who does what at home. How these parents make their decisions, therefore, sheds some light on why married men and women act the way they do. They are the exceptions that both prove and challenge the rules.
“Heterosexual couples can learn from gay couples about sharing housework and child care,” says Esther D. Rothblum, a professor in the women’s studies department of San Diego State University whose comparative study of the relationships of 342 couples — lesbian, gay, heterosexual — was published in the journal Developmental Psychology in January. “They are good role models.”
One standard research questionnaire for looking at the division of household labor has been a survey known as “Who Does What?” created by Philip and Carolyn Cowan, both emeritus professors at U.C. Berkeley. Respondents are asked to rate “How It Is Now” and “How I Would Like It to Be” in dozens of household and child-care tasks. Created with straight couples in mind, it was adapted by Charlotte Patterson, a professor of psychology at the University of Virginia, for lesbian parents. The study found little of the inequity that shows up when heterosexuals fill it out. (There has not been the same research attention paid to gay men raising children because only recently have gays begun adopting or hiring surrogates in large enough numbers to support a study.)
Which is not to say that lesbian mothers do not argue often over child care. But, says Dr. Nanette Gartrell, a psychiatrist with the University of California at San Francisco who has been studying lesbian families for 22 years, the arguments among those in her study sample tend to be the opposite of heterosexual couples’. While “straight parents get into the blame game about who is shirking responsibility,” she says, “lesbian moms bicker about not getting enough time with the kids,” a dynamic that can be intensified in families in which one of the women gives birth to the baby.
Harlyn Aizley, mother of a 6-year-old daughter, describes the moment that her then-partner, Faith Soloway, first took their newborn in her arms in the delivery room. “Just moments after I gave birth,” Aizley writes in the anthology “Confessions of the Other Mother: Nonbiological Lesbian Moms Tell All,” “Faith scooped up the baby, cooed into her squishy newborn face and said: ‘Hello there. I’m your mommy.’ I wanted to kill her. Faith, that is. I wanted to be Mommy, the only Mommy.”
Where a birth mother can feel possessive, the nonbiological mother (or co-mother, eliminating the negative vibe) can feel left out. For lesbian parents, as with straight biological parents, breast feeding means one partner has an additional, intimate, way to bond. In Gartrell’s study, 64 percent of co-mothers acknowledged feelings of jealousy and competitiveness around bonding and child-rearing issues. “Whenever [the child] is tired or sick or cranky, [the child] wants the breast,” said one co-mother, quoted by Gartrell. “I sometimes get upset that I can’t soothe [the child] in the same way that [the birth mother] can.”
Aizley says that while she felt possessive, her partner in fact felt excluded, referring often to “the holy trinity — baby, Mommy, breast.” As a result, she theorizes, Soloway became “more like a working dad, and I was the default mom.”
Most lesbian couples work hard to return to equal balance, however, Gartrell says. And how do they do that? More or less the way Marc and Amy Vachon did. They trade off breast and bottle feedings, share bathtime and bedtime rituals and talk out the conflicts. “We talked, and we talked, and we talked, and we talked,” says Dorea Vierling-Claassen of feeling like the odd-woman-out when her wife, Angela, was breast-feeding their daughter, who is almost 2 years old.
“We developed a wonky theory,” Dorea says of all that talking. “You need a rabid N.G.P. — nongestational parent. The N.G.P. has to push if you are going to get an equal relationship.”
All this deliberate sharing means that 75 percent of couples in Gartrell’s study considered themselves “co-parents.” The other 25 percent said they consider the birth mother the primary parent, but that the day-to-day tasks of child care are nonetheless equally shared.
Who does what, lesbian couples say, is instead determined by personality and logistics. “Gaeta tends to be the soccer mom, the coordinator of the sports, while I am the coordinator of music lessons,” says Dr. Audrey Koh, an ob-gyn in San Francisco whose sperm donor was a close relative of her partner, Gaeta, so that both mothers would share a genetic link to their two children. “Gaeta keeps mental track of the children’s shoe sizes, shops for their clothes,” Koh says, “but when they are sick in the middle of the night, they come for me.”
Lesbian couples also have a more equal division of housework. Rothblum found that it is only heterosexual mothers who do the lion’s share of housework for the family each week — between 11 and 20 hours for her survey respondents. Lesbian parents, gay parents and heterosexual fathers all look the same on paper when it comes to cooking and cleaning — they all report doing between 6 and 10 hours a week.
Both partners in lesbian couples seem to make equal professional sacrifices in exchange for this equality. That does not mean there are no “traditional” relationships — Koh works long hours and earns more money as a doctor, while Gaeta, a naturalist for the local park district, earns less and is home more. Similarly, Aizley’s partner worked full time while she was home with their daughter for several years. (The couple split up about two years ago; Aizley has gone back to work and says Soloway is still very involved in their child’s life.) But more common is the couple in which both women “typically work shorter hours or have declined career opportunities so they can be more available at home,” Gartrell says.
Their work schedules look far more like those of Marc and Amy Vachon or Jessica DeGroot and Jeff Lutzner than like a “typical” family. Patterson found that while heterosexual fathers work an average of 47 hours for pay each week and heterosexual mothers work 24, the average for lesbian mothers, both biological and nonbiological, is about 35. Added together, both sets of families are working a total of slightly more or less than 70 hours; they just divide the work differently.
It is not clear, however, why lesbian couples split parenting more equally. “Is it because you take gender out of the equation or because women are better at sharing or because parents of the same gender see things more similarly?” Gartrell asks. “We don’t know,” and won’t know, she says, until there is equivalent data on gay men who become parents.
In the absence of statistics, however, Rothblum’s informed guess is that it is the last of these reasons. “If men are from Mars and women are from Venus, it’s really a miracle that hetero couples manage to ever make things work,” she says.
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Bill Taussig, the lawyer married to the marketing executive, was recently promoted to a vice president of his company, giving him some confidence that his 90 percent schedule will not sideline his career. He has also joined the board of ThirdPath. “I am a poster child for being equally engaged with your children and still succeeding at work,” he says. As far as the chores go, he adds, “we outsource a lot.”
Mia Pannabecker was born last May, which means that Jo is home caring for three children under age 4. That home is now in Bluffton, Ohio, where Tim grew up, where his parents still live and where he works in the development office at Bluffton University.
He is at the office from 8 until 5 and travels often. The children spend a lot of time with their grandparents. Jo is now pursuing a degree in dietetics, the science of food, hoping to eventually establish a career in nutrition.
She says that she is pleased that she tried equal parenting but that she is also fine with the fact that it was not right for her family — at least not right now. Yes, she misses work, she says, and yes, she still wonders how she became “the happy homemaker,” but sometimes you take the least stressful route for the family as a whole, and this seems to be it.
“The question should not be, Is it all exactly equal, but, What is best for all of us as a group right now?” she says. “If we decided it’s really important that we are 50-50 on everything, we would work on that. If we decide it’s really important that we be close to family, then we work on that.”
Rather than thinking in terms of equality day to day, she says, she has begun to strive for equality over the course of a working life. Before getting married, she and Tim agreed that they would live, for several years at least, in New Zealand, where she plans to go back to work. Maybe then, she says, Tim will stay home.
A year ago, Marc’s department was eliminated. At first, he wasn’t worried. He and Amy deliberately live well below their means, so their necessary bills can be paid with one salary. He spent a relaxed summer buffered by a separation package, enjoying time with the children and working on their Web site, equallysharedparenting.com, because he and Amy wanted to spread the word.
As the months passed, the dynamic of home changed. Amy started letting Marc take charge of the children every morning while she took a “long leisurely shower.” While she was at work, he did most of the cooking and the grocery shopping. He began to feel frustrated with the imbalance. She, in turn, began to feel guilty that she wasn’t having one-on-one time with Maia and Theo. She also felt stressed. “I had guilt that I wasn’t doing enough around the house, and also I could understand what a primary breadwinner guy would feel, especially if his wife was complaining,” she says.
The solution? They divided the days as if Marc were working. On Monday, Wednesday and Friday, he left the house early and went for a bike ride while she had her usual morning time with the kids.
As he sent out résumés, Marc struggled with how much of his tale to tell upfront. At first he bared all, stating in his cover letter that he had been working reduced hours for several years and that he planned to continue with that schedule. No one responded.
Next he took the information out of his letter, waiting to raise the question of schedule in person. That led to many interviews, but when he asked about a three-day-a-week option, friendly conversations became frosty, and he did not hear from the companies again.
In February, he got a lead on a job that looked like a perfect fit. It was advertised as a full-time position, and he said nothing about hours in his cover letter, during phone interviews or even at the interview. He waited until he received a firm offer, which was far lower for 40 hours a week than he earned for 27 hours at his previous job.
He used that as an opening, but was told the job required at least 55 hours a week. He turned it down.
In April, he had another hot lead, and again he kept his goals to himself. When an offer was made, he replied that he needed to come in and talk in person about some details. Before he left home that Monday morning, he and Amy agreed that he would turn down the job if the schedule was not negotiable. “There was a point where I would take a full-time job, because I have a responsibility to my family and to my kids’ future,” he says. “We weren’t at that point yet. We were close, but we weren’t there.”
His prospective bosses at the marketing firm of Chadwick Martin Bailey were surprised, but they didn’t say no. Instead, they asked what schedule he had in mind. He offered two choices: four eight-hour days, which would be his preference so he would still have a full day off to be with the children, or a five-day week, with three days working 9 to 5 and two days working 8 to 12.
They chose the five-day option, a 32-hour week with a 32-hour salary and an agreement that he will always carry a BlackBerry and be available in emergencies.
Now he bikes to work every day, and when he leaves on his two short days, at least five hours earlier than everyone else, he must walk through the center of the office, dressed for cycling. There is no way to hide the fact that he is leaving. Not that he wants to — he’s proud of how he has constructed his life and work — but he sees no reason to rub it in either. So he has learned to walk on the sides of his biking clamps, making the noise a little less noticeable on the polished wood floor as he heads out the door.
Lisa Belkin, a contributing writer, last wrote for the magazine about her former nanny, who was accused of assaulting two elderly patients in Ireland.

Bernanke on Inflation and Inflation expectations

from www.federalreserve.gov

Chairman Ben S. Bernanke
At the Federal Reserve Bank of Boston’s 52nd Annual Economic Conference, Chatham, Massachusetts
June 9, 2008
Outstanding Issues in the Analysis of Inflation

Good evening. I am pleased to be able to participate in the Federal Reserve Bank of Boston's 52nd annual economic conference, on the topic of inflation and the Phillips curve. Forecasting and controlling inflation are, of course, central to the process of making monetary policy. In this respect, policymakers are fortunate to be able to build on an intellectual foundation provided by extensive research and practical experience. Nonetheless, much remains to be learned about both inflation forecasting and inflation control. In the spirit of this conference, my remarks this evening will highlight some key areas where additional research could help to provide a still-firmer foundation for monetary policymaking.
Before turning to those issues, however, I would like to provide a brief update on the outlook for the economy and policy, beginning with the prospects for growth. Despite the unwelcome rise in the unemployment rate that was reported last week, the recent incoming data, taken as a whole, have affected the outlook for economic activity and employment only modestly. Indeed, although activity during the current quarter is likely to be weak, the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so. Over the remainder of 2008, the effects of monetary and fiscal stimulus, a gradual ebbing of the drag from residential construction, further progress in the repair of financial and credit markets, and still-solid demand from abroad should provide some offset to the headwinds that still face the economy. However, the ongoing contraction in the housing market and continuing increases in energy prices suggest that growth risks remain to the downside.
One of the most effective means by which the Federal Reserve can help to restore moderate growth over time and to reduce the associated downside risks is by supporting the return of financial markets to more-normal functioning. We have taken a number of actions to promote financial stability and remain strongly committed to that objective.
Inflation has remained high, largely reflecting sharp increases in the prices of globally traded commodities. Thus far, the pass-through of high raw materials costs to the prices of most other products and to domestic labor costs has been limited, in part because of softening domestic demand. However, the continuation of this pattern is not guaranteed and future developments in this regard will bear close attention. Moreover, the latest round of increases in energy prices has added to the upside risks to inflation and inflation expectations. The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation.
Turning now to the principal topic of my remarks, I will briefly touch on four topics of particular interest for policymakers: commodity prices and inflation, the role of labor costs in the price-setting process, issues arising from the necessity of making policy in real time, and the determinants and effects of changes in inflation expectations. Economists within the Federal Reserve System and at other central banks have made and will continue to make important contributions in these areas. However, researchers in academia and elsewhere have long been essential partners in building the intellectual foundations for the conduct of monetary policy. One of my objectives today is to encourage the continuation of this fruitful collaboration.
Commodity Prices and InflationRapidly rising prices for globally traded commodities have been the major source of the relatively high rates of inflation we have experienced in recent years, underscoring the importance for policy of both forecasting commodity price changes and understanding the factors that drive those changes.
Policymakers and other analysts have often relied on quotes from commodity futures markets to derive forecasts of the prices of key commodities. However, as you know, futures markets quotes have underpredicted commodity price increases in recent years, leading to corresponding underpredictions of overall inflation. The poor recent record of commodity futures markets in forecasting the course of prices raises the question of whether policymakers should continue to use this source of information and, if so, how.
Despite this recent record, I do not think it is reasonable, when forecasting commodity prices, to ignore the substantial amounts of information about supply and demand conditions that are aggregated by futures markets. Indeed, the use of some simple alternatives--such as extrapolating recent commodity price trends--would require us to assume that investors in commodity futures can expect to earn supernormal risk-adjusted returns, inconsistent with principles of financial arbitrage. However, it does seem reasonable--and consistent with the wide distributions of commodity price expectations implied by options prices--to treat the forecasts of commodity prices obtained from futures markets, and consequently the forecasts of aggregate price inflation, as highly uncertain.
These considerations raise several questions for researchers: First, is it possible to improve our forecasts of commodity prices, using information from futures markets but possibly other information as well? For example, the markets for longer-dated futures contracts are often quite illiquid, suggesting that the associated futures prices may not effectively aggregate all available information. Second, what are the implications for the conduct of monetary policy of the high degree of uncertainty that attends forecasts of commodity prices? Although theoretical analyses often focus on the case in which policymakers care only about expected economic outcomes and not the uncertainty surrounding those outcomes, in practice policymakers are concerned about the risks to their projections as well as the projections themselves. How should those concerns affect the setting of policy in this context?
Whatever the forecasting value of futures market quotes, these and other financial market prices provide limited information about the structural relationships between commodity prices and their determinants. Absent a specification of those structural relationships, one cannot analyze the effects of alternative monetary policies or the implications of other shocks to the economy.
Empirical work on inflation, including much of the classic work on Phillips curves, has generally treated changes in commodity prices as an exogenous influence on the inflation process, driven by market-specific factors such as weather conditions or geopolitical developments. By contrast, some analysts emphasize the endogeneity of commodity prices to broad macroeconomic and monetary developments such as expected growth, expected inflation, interest rates, and currency movements. Of course, in reality, commodity prices are influenced by both market-specific and aggregate factors. Market-specific influences are evident in the significant differences in price behavior across individual commodities, which often can be traced to idiosyncratic supply and demand factors. Aggregate influences are suggested by the fact that the prices of several major classes of commodities, including energy, metals, and grains, have all shown broad-based gains in recent years. In particular, it seems clear that commodity prices have been importantly influenced by secular global trends affecting the conditions of demand and supply for raw materials. We have seen rapid growth in the worldwide demand for raw materials, which in turn is largely the result of sustained global growth--particularly resources-intensive growth in emerging market economies.1 And factors including inadequate investment, long lags in the development of new capacity, and underlying resource constraints have caused the supplies of a number of important commodity classes, including energy and metals, to lag global demand. These problems have been exacerbated to some extent by a systematic underprediction of demand and overprediction of productive capacity for a number of key commodities, notably oil. Further analysis of the range of aggregate and idiosyncratic determinants of commodity prices would be fruitful.
I have only mentioned a few of the issues raised by commodity price behavior for inflation and monetary policy. Here are a few other questions that researchers could usefully address: First, how should monetary policy deal with increases in commodity prices that are not only large but potentially persistent? Second, does the link between global growth and commodity prices imply a role for global slack, along with domestic slack, in the Phillips curve? Finally, what information about the broader economy is contained in commodity prices? For example, what signal should we take from recent changes in commodity prices about the strength of global demand or about expectations of future growth and inflation?
The Role of Labor Costs in Price SettingBasic microeconomics tells us that marginal cost should play a central role in firms' pricing decisions. And, notwithstanding the effects of changes in commodity prices on the cost of production, for the economy as a whole, by far the most important cost is the cost of labor.
Over the past decade, formal work in the modeling of inflation has treated marginal cost, particularly the marginal cost of labor, as central to the determination of inflation.2 However, the empirical evidence for this linkage is less definitive than we would like.3 This mixed evidence is one reason that much Phillips curve analysis has centered on price-price equations with no explicit role for wages.4
Problems in the measurement of labor costs may help explain the absence of a clearer empirical relationship between labor costs and prices. Compensation per hour in the nonfarm business sector, a commonly used measure of labor cost, displays substantial volatility from quarter to quarter and year to year, is often revised significantly, and includes compensation that is largely unrelated to marginal costs--for example, exercises (as opposed to grants) of stock options. These and other problems carry through to the published estimates of labor's share in the nonfarm business sector--the proxy for real marginal cost that is typically used in empirical work. A second commonly used measure of aggregate hourly labor compensation, the employment cost index, has its own set of drawbacks as a measure of marginal cost. Indeed, these two compensation measures not infrequently generate conflicting signals of trends in labor costs and thus differing implications for inflation.
The interpretation of changes in labor productivity also affects the measurement of marginal cost. As economists have recognized for half a century, labor productivity tends to be procyclical, in contrast to the theoretical prediction that movements along a stable, conventional production function should generate countercyclical productivity behavior. Many explanations for procyclical productivity have been advanced, ranging from labor hoarding in downturns to procyclical technological progress. A better understanding of the observed procyclicality of productivity would help us to interpret cyclical movements in unit labor costs and to better measure marginal cost.
The relationship between marginal cost, properly measured, and prices also depends on the markups that firms can impose. One important open question is the degree to which variation over time in average markups may be obscuring the empirical link between prices and labor costs. Considerable work has also been done on the role of time-varying markups in the inflation process, but a consensus on the role of changing markups on the inflation process remains elusive.5 More research in this area, particularly with an empirical orientation, would be welcome.
Real-Time PolicymakingThe measurement issues I just raised point to another important concern of policymakers, namely, the necessity of making decisions in "real time," under conditions of great uncertainty--including uncertainty about the underlying state of the economy--and without the benefit of hindsight.
In the context of Phillips curve analysis, a number of researchers have highlighted the difficulty of assessing the output gap--the difference between actual and potential output--in real time.6 An inability to measure the output gap in real time obviously limits the usefulness of the concept in practical policymaking. On the other hand, to argue that output gaps are very difficult to measure in real time is not the same as arguing that economic slack does not influence inflation; indeed, the bulk of the evidence suggests that there is a relationship, albeit one that may be less pronounced than in the past.7 These observations suggest two useful directions for research: First, more obviously, there is scope to continue the search for measures or indicators of output gaps that provide useful information in real time. Second, we need to continue to think through the decision procedures that policymakers should use under conditions of substantial uncertainty about the state of the economy and underlying economic relationships. For example, even if the output gap is poorly measured, by taking appropriate account of measurement uncertainties and combining information about the output gap with information from other sources, we may be able to achieve better policy outcomes than would be possible if we simply ignored noisy output gap measures. Of course, similar considerations apply to other types of real-time economic information.
Inflation itself can pose real-time measurement challenges. We have multiple measures of inflation, each of which reflects different coverage, methods of construction, and seasonality, and each of which is subject to statistical noise arising from sampling, imputation of certain prices, and temporary or special factors affecting certain markets. From these measures and other information, policymakers attempt to infer the "true" underlying rate of inflation. In other words, policymakers must read the incoming data in real time to judge which changes in inflation are likely to be transitory and which may prove more persistent. Getting this distinction right has first-order implications for monetary policy: Because monetary policy works with a lag, policy should be calibrated based on forecasts of medium-term inflation, which may differ from the current inflation rate. The need to distinguish changes in the inflation trend from temporary movements around that trend has motivated attention to various measures of "core," or underlying, inflation, including measures that exclude certain prices (such as those of food and energy), "trimmed mean" measures, and others, but other approaches are certainly worth consideration.8 Further work on the problem of filtering the incoming data so as to obtain better measures of the underlying inflation trend could be of great value to policymakers.
The necessity of making policy in real time highlights the importance of maintaining and improving the economic data infrastructure and, in particular, working to make economic data timelier and more accurate. I noted earlier the problems in interpreting existing measures of labor compensation. Significant scope exists to improve the quality of price data as well--for example, by using the wealth of information available from checkout scanners or finding better ways to adjust for quality change. I encourage researchers to become more familiar with the strengths and shortcomings of the data that they routinely use. Besides leading to better analysis, attention to data quality issues by researchers often leads to better data in the longer term, both because of the insights generated by research and because researchers are important and influential clients of data collection agencies.
Inflation ExpectationsFinally, I will say a few words on inflation expectations, which most economists see as central to inflation dynamics. But there is much we do not understand about inflation expectations, their determination, and their implications. I will divide my list of questions into three categories.
First, we need to understand better the factors that determine the public's inflation expectations. As I discussed in some detail in a talk at the National Bureau of Economic Research last summer, much evidence suggests that expectations have become better anchored than they were a few decades ago, but that they nonetheless remain imperfectly anchored.9 It would be quite useful for policymakers to know more about how inflation expectations are influenced by monetary policy actions, monetary policy communication, and other economic developments such as oil price shocks.
The growing literature on learning in macroeconomic models appears to be a useful vehicle to address many of these issues.10 In a traditional model with rational expectations, a fixed economic structure, and stable policy objectives, there is no role for learning by the public. In such a model, there is generally a unique long-run equilibrium inflation rate which is fully anticipated; in particular, the public makes no inferences based on central bankers' words or deeds. But in fact, the public has only incomplete information about both the economy and policymakers' objectives, which themselves may change over time. Allowing for the possibility of learning by the public is more realistic and tends to generate more reasonable conclusions about how inflation expectations change and, in particular, about how they can be influenced by monetary policy actions and communications.
The second category of questions involves the channels through which inflation expectations affect actual inflation. Is the primary linkage from inflation expectations to wage bargains, or are other channels important? One somewhat puzzling finding comes from a survey of business pricing decisions conducted by Blinder, Canetti, Lebow, and Rudd, in which only a small share of respondents claimed that expected aggregate inflation affected their pricing at all.11 How do we reconcile this result with our strong presumption that expectations are of central importance for explaining inflation? Perhaps expectations affect actual inflation through some channel that is relatively indirect. The growing literature on disaggregated price setting may be able to shed some light on this question.12
Finally, a large set of questions revolve around how the central bank can best monitor the public's inflation expectations. Many measures of expected inflation exist, including expectations taken from surveys of households, forecasts by professional economists, and information extracted from markets for inflation-indexed securities. Unfortunately, only very limited information is available on expectations of price-setters themselves, namely businesses. Which of these agents' expectations are most important for inflation dynamics, and how can central bankers best extract the relevant information from the various available measures?
ConclusionThis evening I have touched on only a few of the questions that confront policymakers as we deal with the challenges we face. The contributions of economic researchers in helping us to address these and other important questions have been and will continue to be invaluable. I will conclude by offering my best wishes for an interesting and productive conference.

Inflation expectations in the limelight

from www.nytimes.com

June 11, 2008
Inflation Worries Unsettle Global Markets
By MATTHEW SALTMARSH and KEITH BRADSHER
PARIS — Fears of rising interest rates in Europe and the United States and their effect on already faltering consumption dragged share prices lower in Europe on Tuesday after a sell-off in Asia.
In afternoon trading, the main European indexes had pared earlier losses of over 1 percent but remained lower, taking their cue from Asia.
Stock-index futures in New York also dropped amid mounting concern that the Federal Reserve will raise borrowing costs to fight inflation.
Chinese stocks fell 8.1 percent on Tuesday, their biggest single-day drop in nearly 16 months, leading a downturn in Asian stock markets.
The plunge in the Shanghai and Shenzhen markets followed an increase in Chinese bank reserve requirements, heightened worries about food and oil prices, and fears about exports to the United States.
Comments late Monday from the chairman of the Federal Reserve, Ben S. Bernanke, who said that threats to the American economy had diminished and that the central bank would “strongly resist” inflation pressure, added to the sense in the market that rates in the United States have hit a low point in this cycle.
The remarks, coupled with a signal last week from the president of the Europe Central Bank, Jean-Claude Trichet, that borrowing costs in the euro zone could rise as soon as next month, have led to fears that consumer activity will weaken further.
“The mood has changed quite dramatically in the last two or three weeks,” said Roger Cursley, equity strategist at Investec, a banking group in London. “Central banks are focusing on inflation, and seemingly they have put worries about the effects of the credit crisis behind them.”
The expectation of higher rates, just as consumers struggle to adapt to higher oil and food prices, has led to a raft of downward revisions to growth estimates in the West from institutions like the Organization for Economic Cooperation and Development. The OECD said last week that growth among its members would slow to 1.8 percent this year and 1.7 percent next year, compared with its previous forecast of 2.3 percent in 2008 and 2.4 percent in 2009.
That in turn is lowering the expectation among analysts for earnings growth, particularly among banks, retailers, homebuilders and leisure stocks. Those stocks with more exposure to emerging markets, particularly food and tobacco stocks, and those that benefit from rising prices, like utilities, appear less vulnerable to the downturn.
In London, the FTSE 100 was down 0.6 percent to 3,576.11 points in early afternoon trading. The CAC-40 was down by the same amount at 4,769.76 in Paris and the broader Stoxx 600 also shed 0.6 percent, to 306.99. In Frankurt, the DAX was off 0.8 percent to 6,760,29.
Among individual stocks, ABB, the world’s largest builder of power networks, lost 2.3 percent to 31.56 Swiss francs. Tesco, the giant British retailer, dropped 3.2 percent to 389.1 pence after higher food and energy prices curbed its revenue.
Among American stocks traded in Europe, Bank of America sank 24 cents to $29.37 in Germany. Texas Instruments fell 57 cents to $30.76 in Germany after predicting second-quarter sales that met analysts’ forecasts.
In Asia, Industrial and Commercial Bank, the largest Chinese lender, slumped 8.4 percent to 5.38 yuan. Shanghai Pudong Development Bank dropped 10 percent to 25.75 yuan.
Elsewhere in the region, the Hong Kong stock market fell 4.1 percent; the Nikkei stock market index in Tokyo dipped 1.1 percent; the South Korean market declined 2.1 percent; the Taiwanese market was down 2.5 percent and the Australian stock market fell 2.8 percent.
Stock markets in mainland China and Hong Kong had been closed on Monday as a continuation of the Dragon Boat Festival on Sunday.
Economists attributed the steepness of the Chinese market’s plunge to broader worries among investors about how far the Chinese government will go to slow the economy to prevent food and oil prices from triggering a broader rise in inflation.
Chinese markets have lost 45 percent of their value since setting a record in October during a period of feverish speculation when many small investors began buying stocks for the first time.
The People’s Bank of China, the country’s central bank, announced on Saturday that it would raise the proportion of assets that banks must hold as reserves by a full percentage point, in two equal steps on June 15 and June 25. The increase — the fifth this year — tightens monetary policy by leaving banks with less money to lend.
“People can’t see the end of inflation,” said Stephen Green, the head of China research in the Shanghai office of Standard Chartered. “People are worried about the government having to continue to tighten.”
China is scheduled to announce on Thursday its statistics for consumer price inflation in May. During trading hours on Tuesday, news wire services cited unidentified Chinese officials as saying that the inflation rate was 7.7 percent; that would represent a decline from 8.5 percent in April, but would still be well above the rate of 5 percent that Chinese officials have described as the maximum they can tolerate.
Officials at the National Bureau of Statistics in Beijing could not be reached on Tuesday evening for comment.
China depends fairly heavily on exports, which have already slowed along with growth in the American economy.
Weaker growth in the United States could further reduce demand for the Chinese electronics, clothing and other products that already crowd the shelves of American stores.
China’s current account — the broadest measure of trade in goods and services as well as remittances and overseas investment returns — reached 11.3 percent of its entire economic output last year. Together with massive currency market intervention to slow the rise of the Chinese currency against the dollar, the current account surplus was a central reason why Chinese foreign exchange reserves grew by a record $462 billion last year.
Keith Bradsher reported from Hong Kong and Matthew Saltmarsh from Paris.

A tale of two Indias

from www.nytimes.com

June 9, 2008
Inside Gate, India’s Good Life; Outside, the Servants’ Slums
By SOMINI SENGUPTA
GURGAON, India — When the scorch of summer hit this north Indian boomtown, and the municipal water supply worked only a few hours each day, inside a high-rise tower called Hamilton Court, Jaya Chand could turn on her kitchen tap around the clock, and water would gush out.
The same was true when the electricity went out in the city, which it did on average for 12 hours a day, something that once prompted residents elsewhere in Gurgaon to storm the local power office. All the while, the Chands’ flat screen television glowed, the air-conditioners hummed, and the elevators cruised up and down Hamilton Court’s 25 floors.
Hamilton Court — complete with a private school within its gates, groomed lawns and security guards — is just one of the exclusive gated communities that have blossomed across India in recent years. At least for the newly moneyed upper middle class, they offer at high prices what the government cannot, at least not to the liking of their residents.
These enclaves have emerged on the outskirts of prospering, overburdened cities, from this frontier town next to the capital to the edges of seam-splitting Bangalore. They allow their residents to buy their way out of the hardships that afflict vast multitudes in this country of more than one billion. And they reflect the desires of India’s small but growing ranks of wealthy professionals, giving them Western amenities along with Indian indulgences: an army of maids and chauffeurs live in a vast shantytown across the street.
“A kind of self-contained island” is how Mrs. Chand’s husband, Ashish, describes Hamilton Court.
India has always had its upper classes, as well as legions of the world’s very poor. But today a landscape dotted with Hamilton Courts, pressed up against the slums that serve them, has underscored more than ever the stark gulf between those worlds, raising uncomfortable questions for a democratically elected government about whether India can enable all its citizens to scale the golden ladders of the new economy.
“Things have gotten better for the lucky class,” Mrs. Chand, 36, said one day, as she fixed lunch in full view of Chakkarpur, the shantytown where one of her two maids, Shefali Das, lives. “Otherwise, it is still a fight.”
When the power goes out, the lights of Hamilton Court bathe Chakkarpur in a dusky glow. Under the open sky, across the street from the tower, Mrs. Das’s sons take cold bucket baths each day. The slum is as much a product of the new India as Hamilton Court, the opportunities of this new city drawing hundreds of thousands from the hungry hinterlands.
In China, the main Asian competitor to which India is often compared, the state managed early on to harness economic expansion for huge public works projects and then allow more and more Chinese to partake of the benefits. There, the poor are far less likely to be deprived of basic services, whether clean water or basic schooling.
In India, poverty has also dropped appreciably in the last 17 years of economic change, even as the gulf between the rich and poor has grown. More than a quarter of all Indians still live below the official poverty line (subsisting on roughly $1 a day); one in four city dwellers live on less than 50 cents a day; and nearly half of all Indian children are clinically malnourished.
At the same time, the ranks of dollar millionaires have swelled to 100,000, and the Indian middle class, though notoriously hard to define and still small, has by all indications expanded.
For those with the right skills, the good times have been very good. Mr. Chand, 34, a business school graduate who runs the regional operations for an American manufacturing firm, has seen his salary grow eightfold in the last five years, which is not unusual for upper class Indians like him.
The Chands are typical of Hamilton Court residents: Well-traveled young professionals, some returnees to India after years abroad, grateful for the conveniences. Some of them are also the first in their families to live so comfortably.
Mr. Chand attended an elite but government-financed school. His father was in the military. Mrs. Chand’s father was a civil servant; her mother, a teacher. Some of their expenses, Mr. Chand said, their elders consider lavish.
Gurgaon, a largely privately developed city and a metonym for Indian ambition, has seen a building frenzy to satisfy people like the Chands. The city’s population has nearly doubled in the last six years, to 1.5 million. The skyline is dotted with scaffolds. Glass towers house companies like American Express and Accenture. Not far from Hamilton Court, Burberry and BMW have set up shop.
State services, meanwhile, have barely kept pace. The city has neither enough water nor electricity for the population. There is no sewage treatment plant yet; construction is scheduled to begin this year.
India has long lived with such inequities, and though a Maoist rebellion is building in the countryside, the nation has for the most part skirted social upheaval through a critical safety valve: giving the poor their chance to vent at the ballot box. Indeed, four years ago, voters threw out the incumbent government, with its “India Shining” slogan, because it was perceived to have neglected the poor.
It is little wonder then that the current administration has seized on “inclusive growth” as its mantra, and as elections approach in less than a year, it is spending heavily on education, widely acknowledged as a key barrier to upward mobility for the poor.
That the bottom of the pyramid votes became obvious to the Chands when they last went to the polls. “I didn’t see too many people like us,” Mr. Chand recalled.
Hamilton Court, meanwhile, is rarely courted at election time. Inside its gates, the Chands have everything they might need: the coveted Sri Ram School, a private health clinic and clubhouse next door, security guards to keep out unwanted strangers and well-groomed lawns and paths for power walks and cricket games.
“Women and children are not encouraged to go outside,” said Madan Mohan Bhalla, president of the Hamilton Court Resident Welfare Association. “If they want to have a walk, they can walk inside. It’s a different world outside the gate.”
For the Chands, the school was one of the building’s main draws. They bought their apartment just after the birth of their eldest, Aditya, who is now in first grade. Next year, they hope to enroll their youngest, Madhav.
The school recently hosted a classical music concert. The business school guru C.K. Prahalad gave a lecture the following week. Mr. Chand called Hamilton Court a community of “like-minded people.”
Some 600 domestic staff members work at Hamilton Court, an average of 2.26 per apartment. The building employs its own plumbers and electricians. At any one time, 22 security guards and 32 surveillance cameras are at work.
“We can’t rely on the police,” Mr. Bhalla said. Gurgaon has one policeman for every 1,000 residents — lower than the national average — and a surfeit of what Mr. Bhalla calls official apathy. “We have to save ourselves,” he said.
The guards at the gate are instructed not to let nannies take children outside, and men delivering pizza or okra are allowed in only with permission. Once, Mr. Bhalla recalled proudly, a servant caught spitting on the lawn was beaten up by the building staff.
Recently, Mr. Bhalla’s association cut a path from the main gate to the private club next door, so residents no longer have to share the public sidewalk with servants and the occasional cow.
The Gurgaon police chief, Mohinder Lal, said the city’s new residents had unrealistic expectations of the Indian police. If a police officer does not arrive quickly, Mr. Lal rued, the residents complain. “They say, ‘You’re late. Come back tomorrow.’ ”
He, too, said that the police could not cope with the disorder of Gurgaon’s growth. “Development comes, mess comes, then police come and infrastructure,” he said.
Gurgaon’s security guards, most of whom live in Mrs. Das’s slum, likewise have little love for law enforcement. They accuse the police of raiding their shanty, hauling men to the local stations and forcing them to clean and cook before releasing them back to their hovels, often without a single charge. The police say migrant workers are a source of crime.
One afternoon, Mrs. Das returned from her duties at Hamilton Court, cleaned up the lunch plates that her sons had left on the floor and took her plastic water jugs to stand in line under the acacia tree, only to discover that there was a power failure, which meant the water pump could not be turned on. Next to the water line, workers were ironing a pile of orange janitors’ uniforms from a neighborhood mall; the laundry service is one of Chakkarpur’s many thriving private enterprises.
Mrs. Das already had two of her sons in a charity-run school nearby, but much to her shame, she missed the registration deadline for her youngest, now 6, who will now be a year behind his peers.
Her biggest regret is being unable to check her sons’ homework. Mrs. Das has worked in other people’s homes since she was 7. She cannot read. “If they are educated,” she said of her boys, “at least they can do something when they grow up.”
Next door to Mrs. Das’s brick-and-tin room, a 2-year-old lay on a cot outside, flies dancing on his face. His mother, Sunita, 18, said the child had not been immunized because she had no idea where to take him, and no public health workers had come, as they are supposed to. The baby is weak, Sunita reckoned, because she cannot produce breast milk.
During repeated visits in recent months, a government-financed childhood nutrition center was closed. The nearest government hospital was empty.
Mrs. Chand, a doctor who decided to stay home to raise her children, trained in a government hospital. Her other maid told her recently that her own daughter had given birth at home, down there in the slum.
Sometimes, Mrs. Chand said, she thinks of opening a clinic there. But she also said she understood that there was little that she, or anyone, could do. “Two worlds,” she observed, “just across the street.”

India is undoubtedly beginning to prosper. Imagine a country with 3 times the population of the USA but only one third the land mass. Yet a country that is driven not just by exports (like China primarily seems to be) but by its own energy and drive. It is really, really hard to visit India and not come away a different person than when you went there. It WILL change you.