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Health care in America: Shopping around for surgery
AMERICANS spent $2.6 trillion on health care in 2010, a staggering 18% of GDP. Yet few of them have the faintest idea what any treatment costs or how it compares with any other treatment. Prices vary wildly and seemingly without reason (see chart). Insurance terms require a dictionary. For most Americans, buying a procedure is akin to choosing a house blindfolded, signing a mortgage in Aramaic, then discovering the price later. Slowly, however, this is changing. The past decade has seen a shift in how people pay for medicine. Americans’ health spending is growing at a slower pace. This is partly because of the downturn, but not entirely. The rate of growth fell every year between 2002 and 2009, note David Knott and Rodney Zemmel of McKinsey & Company, a consultancy. There are many reasons for this—for example, many costly drugs have lost their...
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Carlos Slim: Let Mexico’s moguls battle
IN A futuristic art gallery which Carlos Slim opened last year in Mexico City, visitors can enjoy, among other things, a hall of rare coins and share certificates. Sometimes art speaks louder than words.Mr Slim is the richest man in the world. According to Forbes, he and his family have amassed a comfortable nest egg of $63 billion. (Bill Gates would be richer had he given away less of his stash, or Mr Slim more of his.) In Mexico Mr Slim is a giant: his companies account for more than a third of the stockmarket.The Slim fortune was made in telephony. After growing moderately rich from property, mining and other businesses, Mr Slim, the son of a Lebanese immigrant named Salim, bought Telmex, Mexico’s state-run telephone monopoly, in 1990. Telmex still has 80% of Mexico’s landlines, and about 75% of its broadband connections. Telcel, its sister company, has 70% of the mobile market. Both now belong to América Móvil, a Slim venture which has spread across 18 countries in the Americas and is the biggest or second-biggest player in all but three. With nearly 250m subscribers, it is the world’s...
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Fighter jets: Bomb bays to Delhi
“WE’VE been waiting for this day for 30 years,” said Nicolas Sarkozy, France’s president, on the news this week that India had gone into exclusive negotiations with Dassault Aviation, a French firm, to buy 126 of its Rafale warplanes for $15 billion-20 billion. France has not sold a single Rafale overseas, and until this week the plane’s future looked iffy. Shares in Dassault Aviation soared by 18.5%.The loser, ironically, was the Rafale’s cousin, the Eurofighter Typhoon, built by a consortium led by EADS, Europe’s defence and aerospace champion, which is jointly controlled by Germany and France. EADS itself owns a 46% stake in Dassault, a legacy of earlier French government meddling, so its own shares inched up on the news.Dassault won its exclusive-bidder status by offering the lower price. Both European jets had satisfied the technical requirements of the Indian Air Force, which wants zippier planes to guard against China’s Chengdu J-10 combat aircraft and Pakistan’s ageing American F-16s. In tests over the Himalayas and the Rajasthan desert, India had eliminated the F-16 and F/A-18, the Russian MiG-35 and Swedish JAS 39 Gripen from the process during 2009-10.The capabilities of both the Rafale and the Eurofighter were on display during the Libyan war. The Typhoon is the superior air-to-air interceptor. The Rafale switches more easily into a ground-attack mode.After...
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Big boats: Offshore finance
Nice boat, but where can I park it?
EVEN superyacht-owners are feeling the pinch. Last year only 173 superyachts (vessels over 30 metres long) slipped into the briny, according to Superyacht Intelligence, a consultancy. That’s 27 fewer than in 2010 and far below the peak in 2008, when 260 floating pleasure palaces hit the waves. The number of vessels on order, too, slipped from 453 in 2011 to 423 this year. But cheer up: their combined length rose from 20km (12 miles) to 23km. The super-duper rich are surprisingly unimaginative when it comes to dreaming up new ways to outdo each other.The biggest yacht ever was launched in 2010. Roman Abramovich, a Russian billionaire, reputedly forked out €500m ($660m) for the 164-metre Eclipse (pictured). It includes such essentials as a mini-submarine, a hair salon and two helipads. (Owning a yacht with only one helipad would be embarrassing—a bit like owning a football club that is only fourth in England’s Premier League.)Quite sensibly, Mr Abramovich has hung on to his other superyachts. On the brokerage market (second-hand...
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Bakers and chaebol in South Korea: Let them eat cake
SOME parents give their children cakes. A few give them cake shops. The hot topic in South Korea is the trend for daughters and grand-daughters of chaebol families to open bakeries and other small food outlets. The chaebol are the conglomerates that dominate the Korean economy, so these plutocratic pâtissières have deeper pockets than any of the little bakers they compete against.Their baking has provoked outrage. Lee Myung-bak, South Korea’s president, calls it a “hobby” business for rich girls that threatens the livelihood of poor shopkeepers. Lee Ju-young, a member of the national assembly, likens it to Park Ji-sung (Manchester United’s Korean midfielder) lording it over amateurs in a backstreet game of football. A restaurateur in Seoul puts it more plaintively: “These families already control everything else in Korea. Why can’t they leave something for the rest of us?”The chaebol families have decided that this is not a battle worth picking. Scions of the Samsung, LG and Hyundai dynasties are all hanging up their aprons. Artisée, a chain of swanky pastry shops run by Lee Boo-jin, whose dad is the chairman of Samsung, is to close. So is the Hyundai-affiliated Ozen.Whether this will help small bakers much is open to question. Artisée has only 27 shops; Ozen a mere two. Both are...
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Accounting in China: Seeing the forest for the trees
Careful where you tread
CAN you trust Chinese accounts? Many investors fear (and several short-sellers are betting) that the answer is “no”. Sino-Forest, a big forestry firm listed in Toronto, is a case in point. Last year Muddy Waters, a short-seller, accused it of running a Ponzi scheme, which it denies. On January 31st Sino-Forest released the final report of independent investigators into the charge. Insiders crow that the gumshoes found no smoking gun. The gumshoes grumbled that, lacking access to all the evidence, they were “not able to reach definitive conclusions”.America’s SEC is trying to force the Shanghai office of Deloitte Touche Tohmatsu, a big Western accountancy firm, to hand over papers related to Longtop, a Chinese software firm that was delisted by the New York Stock Exchange last year. Deloitte refuses, saying this would violate Chinese laws on “state secrets”. Deloitte may have a point. If it co-operates, its local staff could be jailed under Chinese law.Many accountancy problems spring from reverse takeovers, when a Chinese firm buys a foreign one to...
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Schumpeter: The coming retail boom
A COUPLE of years ago the Obamas visited Paris. One Sunday morning Michelle and her daughters decided to sample the city’s famous shops. There was only one problem: the shops were all firmly fermés (French secularism is mysteriously suspended when it comes to observing the Sabbath). Nicolas Sarkozy, France’s ever-helpful president, had to call a few places personally and ask them to open.Europe’s greatest achievement is supposed to be its single market. But actually taking advantage of that market can be frustrating. Retailing is a mess of restrictive practices and cultural oddities. Continental Europe boasts plenty of charming boulangeries and confiterías. But charm costs time and money. You may have to visit six or seven shops to fill your shopping bag—and one or two will inevitably be closed. Parisian butchers close on Tuesday afternoons and Thursdays—and whenever else the proprietor decides to put a “fermeture exceptionelle” sign in the window.Europe has some mighty supermarkets, to be sure. But they are often...
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Boeing: Faster, faster, faster
THERE are not many businesses in which the next six years’ worth of customers form an orderly queue, putting down fat deposits and topping them up with further instalments as they wait in line. But that is Boeing’s fortunate position. On January 25th it announced a 21% rise in annual net profits, to $4 billion.Last September, after three years of delay, Boeing made the first deliveries of its newest model, the 787 Dreamliner. A revamped version of the trusty but ageing 747 jumbo has also arrived, two years late. A few airlines got fed up and cancelled, but most had little choice but to keep waiting. Boeing’s main rival, Airbus, has an even longer backlog—up to eight years at current production rates. And the delivery schedule for Airbus’s answer to the Dreamliner, the A350, has been slipping.Last year, straining to ramp up production to meet soaring demand, the two big planemakers turned out a record 1,011 airliners between them. But for every plane they delivered, they won more than two fresh orders (net of cancellations), so the queue got longer. On January 25th Boeing won its largest-ever order from Europe:...
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The internet and file-sharing: Dotcom bust
This year’s beach sumo contest was surprisingly one-sided
MOST people running a business that could end up on the wrong end of a lawsuit would keep a low profile. Not Kim Dotcom (pictured). The boss of Megaupload, a popular website that let users store and share music, films and other content, Mr Dotcom went out of his way to attract attention—and not just by changing his surname from Schmitz. He surrounded himself with glamorous women and fast cars bearing number plates such as “GUILTY”. He likened himself to Dr Evil, a movie villain, though he looks more like Dr Evil’s henchman, Fat Bastard.American investigators examining Megaupload’s business concluded that it was encouraging its users to share pirated content. They persuaded authorities in Britain, Hong Kong and other countries to seize the firm’s assets and to arrest its owners, including Mr Dotcom, who was nabbed by police in New Zealand on January 20th after being found with a shotgun in a “safe room” at his mega-mansion. The raid occurred just as Hollywood was howling after Congress gave up on a bill to crack down on piracy....
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Grameen’s business empire: Grabbing Grameen
Some day, all this will belong to the state
HE IS probably Bangladesh’s most celebrated citizen. Muhammad Yunus, winner of the 2006 Nobel peace prize, founded Grameen Bank in 1983 to provide tiny loans to poor rural women. Grameen became a global model for microfinance. It also spawned 48 other firms in sectors that stretch from textiles to mobile phones. Yet the Bangladeshi government seems determined to take Mr Yunus down a peg.In May 2011 the government pushed him out of his job as boss of Grameen Bank, saying that he was past the retirement age for someone running a government bank. (Grameen Bank mostly belongs to its borrowers but the state owns a slice.) Mr Yunus says this is just a pretext for a power grab. The government now wants to assert more control over other firms in the Grameen network, which includes assets worth an estimated $1.6 billion.This is controversial, to put it mildly, not least because some Grameen firms have big foreign partners. Grameenphone, Bangladesh’s largest telecoms provider, was created with Norway’s Telenor and generates sales of nearly $1...
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